Re Geerin, K. Ex parte Adia Executive Pty Limited

[1992] FCA 1019

1014 lssa i

JUDGMENT No. ........ ........ ..I	.,........ ,.	!
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IN THE FEDERAL COURT OF AUSTRALIA	1	, ..
GENERAL DIVISION BANKRUPTCY DISTRICT	j NO P 1500 of 1992
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OF THE STATE OF NEW SOUTH WALES	1

BETWEEN:  KEVIN GEERIN

Debtor

EX PARTE:  ADIA EXECUTIVE PTY LIMITED

Petitioner

Coram:	Davies J.
M:	17 December 1992
m:	Sydney  REC I.

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-1 FEB 1993	, .
FEDERAL COURl

AUSTRALIA	I
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3 PRINCIWL
REOISTRY ,

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REASONS FOR JUDGMENT ' ,

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This unopposed creditor's petition has been referred to the Court by a Deputy

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Registrar in Bankruptcy.	?
On 30 April 1991, an earlier petition brought by Adia Executive Ptv Limited v. Kevin Geerin was dismissed but it was ordered that the petitiomg creditor's costs,	l ,
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includ~ng reserved costs, be taxed and paid by the debtor.	Subsequently, on 3	1
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December 1991, the taxing officer certified that the costs had been taxed and allowed	i
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at $2,077.12.	f
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On 14 February 1992, a bankruptcy notice was issued which recited inter alia:

"Whereas (b) Adia Executive Ply Limlted

of 167 Kcnt Street Sydney

(hereinafter rcferrcd to as 'the judgment creditor') has claimed that the balancelsum of $2,077.12 together with interest tliereon at the rate of 15 per centuln per annum on so much of the judgment debt (mcluding costs) as is from tune to time unpaid from 3rd Dcccmber 1991 (here inscrt date of judgment) which at the date of the Issue of tlus Nollcc amounts to $311.57 making a total of $2,388.69 is due by you to the judgment credltor under a final judpwtlorder obtained by the judgment credltor against you in the Federal Court of Austral~a on the 3rd day of Dccember 1991, being a jdgmzulorder the exccutlon of which has not been stayed"

I need not set out the remainder of the bankruptcy notice.

The petition, dated 30 April 1992, contains the following paragraphs inter alia:-

"2	The debtor is justly and truly indebted to ADIA EXECUTIVE PTY LIMITED in the sum of $2,077.12 bcing the amount due under the Certilicate of Taxation made in thc Federal Court on the 3rd day of Dccember 1991, the considcratlon for such debt being monics due by the debtor to the creditor by way of costs ordered against the debtor and m favour of the cred~tor by the Court relating to a former
Pctll~on for Bankruptcy.
3.	The debtor w1t11in 6 months before the presentation of this petition, commitlcd the following act of bankruptcy namely that the debtor fallcd on or before the 13th day of Apr~l 1992, cithcr to comply with the rcqu~rcments of a Bankruptcy Notice served on h ~ m on the 29th day of March 1992, or to satisly the Court that he had a counter- claim, set-off or cross demand equal to or exceeding the sum specified m paragraph (A) of the Bankruptcy Noticc."
The order of 30 April 1991 was not, however, taken out unt~l	26 August 1992

and, although a sealed copy of the certificate of taxatlon had been forwarded to Mr Geerin's solicitors on 5 December 1991, a copy of the certificate of taxation was not

served personally on Mr Geenn until August 1992. Copies of the formal order and
certificate were served on Mr Geerin on 30 August 1992.

On the hearing of this matter, Mr T.R.G. Parker, counsel for the petitioning creditor, stated that there were several issues involved. Mr Parker said that the problems arose under s.40(1) of the Bankruvtcv Act 1966 which reads inter a1ia:-

"40(1)	A debtor cornnuts an act of bankruptcy in each of the following cases:
~f a crcd~tor who has obta~ned against the debtor a h a 1 judgment or final
(g)	order, be~ng a judgment or order the execution of which has not been stayed, has sewed on tlie debtor in Auslralla or, by leave of the Court, elsewhere, a
bankruptcy not~ced under this Act and the debtor does not:
(i) where the noticc was sewed in Australia - with~n the Llme

rued by the Reg~strar by whom thc notice was issued; or

(11)	where the notice was served elsewhere - within tlie time fved for the purpose
by the order giv~ng leave to effect the sewice,

comply with the requirements of the notice or satlsfy the Court that be has a counter-clam, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-clam, set-off or cross demand that he could not have set up in the action or proceeding in

wh~ch the judgment or order was obtained"

FINAL ORDER

Mr Parker said that the first issue was whether the order for costs was a final

order for the purposes of s.40(l)(g). He referred to the decislon of Clyne J. in &

Honour held that such an order was not a final order.	Ravasio: ex oarte Leonard Norman Ptv L~rmted (1965) 6 F.L.R. 373 in which his
I need not go into this matter in great detail. Clyne J. expressed principles which were similar to those apphed by the English courts prior to the introduction of s.lG of the Bankruvtcv and Deeds of Arrangement Act (1913) (U.K.). The differences in the United fingdom before and after the 1913 Act may be observed in
the differences between an early ed~tion of Williams Bankruptcy Practice such as the 7th Edition, 1898 at p. 24-5 and a later edition such as the 15th Edition, 1937 at 25-6.
The change in pr~nciple was noted by Lockhart, Morling and Gummow JJ. in
Abierour, . Ltd v. Gennaro Abianano (unreported, delivered 27 November 1992).
Section 40(l)(g) uses the expression "a final judgment or final order" and therefore
may encompass an order for the payment of costs made on the dismissal of the proceedmg.

In the course of the reasons for judgment in Ahiaroup Ltd v. Gennaro

Abi~nano, their Honours said at p.8 :-

"The 1890 English enaclmcnt did not however affect the rule (estabhshed on the ground of necessary lmpllcat~on arising Crom the words 'execut~on thereon not having

been stayed') that in order to Issue a bankruptcy not~ce	the judgment creditor must be
In a posil~on	to issue execulion."

Mr Parker put to me a complex argument that was designed to overcome the decision

of Pincus J. in Re Basile: ex parte Ancich (1985) 8 F.C.R. 287 m which his Honour held that an order for costs on the dismissal of a petition could not be the subject of a

writ of executlon.

Mr Parker submitted that the rules of the Supreme Court of New South Wales allowed for such executlon and he relied upon s.79 of the Judiciaw Act 1903 (Cth). However, since the judgment of Pincus J. in Re Basile, the Banluuptcy Rules have been amended to include Rule 114B which provides, in effect, that the ordinary rules

of the Federal Court shall apply with respect to the execution of orders in its Bankruptcy jurisdiction. I need not set out the terms of s.l14B, though I adopt its terms rather than relylng upon my inexact precis of them. Rule 114B was introduced by Statutory Rule No. 19 of 1988 effective from 1 March 1988, which was after &

m. I need not elaborate on Mr Parker's submission for, since March 1988, there

has been a means of enforcing an order for costs made in bankruptcy.

There remain, however, two problems with respect to execut~on. The first is

that there could not have been execution levied under the order of 30 Apnl 1991,
until such time as that order was taken out. That was not until 6 August 1992.
Accordmgly, as at the date of the lssue and service of the Bankruptcy notice and of

the issue and service of the petition, there was no debt on which execution could be levied. In these circumstances, it seems to me to be inevitable that the petitlon must

fall, for it is essential for the validity of a bankruptcy notice and of a petition founded

on a bankruptcy notice that the debt be one m respect of which execution can be

levied.

At the time of the issue of the bankruptcy notice, and even at the time of the

issue of the petition, the judgment credltor d ~ d	not have a judgment on which it could
execute. That is because the judgment creditor had falled to take out the order.	Beaumont J. dealt with that issue in Wilmot v. Bucklev (1984) 2 F.C.R. 540. It is
sufficient for me to refer to and adopt 111s Honour's comments.
I should also draw attention to the fact that the Federal Court Rules by Order 62
Rule 45(3) provide:-

"If, afler 14 days from the date of service oI the certificate of taxation, the costs remaln unpaid then the Registrar shall, at the request of the parly in whose favour thc costs are awarded draw up sign and seal an order in favour of that parly for 1l1c sum shown in the certlficalc of taxation and enter the same."

Such a provision is not contamed in Part XI11 of the Bankruptcy Rules. I assume that

it is not picked up by Rule 114B of the Bankruptcy Rules. The point has not,

however, been discussed before me.

DESCRIPTION OF THE FINAL ORDER

The last matter raised is that the bankruptcy notice referred to the final order as an order "obtained in the Federal Court on 3 December 1991". Such a description was held to be a fatal defect in In Re Cartwriaht v. Barker (1975) 1 W.L.R. 573. Mr Parker submitted that that decision should not be followed since the approach taken

by the High Court of Australia in Kleinwort Benson Australia Ltd v.	(1988) 165
C.L.R. 71.	However, it seems to me that In Re Cartwrieht dealt with a different ~ssue

than that in Kleinwort Benson and, as presently advised, I would follow the dec~sion,

as did Beaumont J. in Wilmot v. Buckley.

Certainly, in this case, the final order of the Court was mlsdescribed as a

matter of substance, particularly as a copy of the certificate was not served on the
debtor personally until August 1992.

ORDER

I shall remit the matter to the Deputy Registrar to finalise the matter in

accordance with these reasons.

I certi@ that this and the 6 preceding pages
are a true copy of the reasons for judgment herein of

the Honourable Mr Justice Dames.

Counsel for the Petitioner:	T.G.R. Parker
Solicitors for the Petitioner:	Whitehead Green & Cooper
Date of hearing:	24 November 1992
Date of judgment:	17 December 1992