Re Litherland, B.R. & Anor v Ex Parte Showerama Products Pty Ltd
[1985] FCA 82
•14 MARCH 1985
Re: BARRY RAYMOND LITHERLAND and JANIS MAE LITHERLAND
Ex Parte: SHOWERAMA PRODUCTS PTY LTD
No. 1054 of 1984
Bankruptcy 5 FCR 137
COURT
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF
QUEENSLAND
Beaumont J.(1)
CATCHWORDS
Bankruptcy - bankruptcy notice based on summary judgment for costs - Whether final - Whether defective because notice failed to state explicitly that only balance of judgment was due.
Bankruptcy - Bankruptcy notice - Final judgment or final order - Summary judgment including order as to costs - Whether bankruptcy notice could be based on an order for costs - Bankruptcy Act 1966 (Cth), ss 40(1)(g), 40(3)(b), 52(1), 52(1A)(b)(ii), 156A(1).
HEADNOTE
On application by the creditor for summary judgment the Supreme Court of Queensland ordered that the creditor recover against the debtors its claim "and costs of and incidental to the action and this application to be taxed". Subsequently the taxing officer certified pursuant to that order that costs had been taxed and allowed in a specified sum. The debtors having failed to pay the costs awarded, the creditor applied for a bankruptcy notice supported by the said order and certificate and, on the debtors' failure to comply therewith, petitioned for the sequestration of the estates of the debtors.
Held: (1) The judgment being final under O, 18, r 1 of the Supreme Court Rules was therefore final for the purposes of s 40(1)(g) of the Bankruptcy Act 1966.
(2) A. bankruptcy notice can be based on an order for costs.
(3) Failure to specify in the bankruptcy notice that the sum claimed represented the balance due under the judgment as costs was not likely to mislead or confuse the debtors and therefore was not fatal to the bankruptcy notice.
Re Skinner's and Smith's Application (1982) 45 ALR 553; Re Cartwright; Ex parte Cartwright v. Baker (1975) 1 WLR 573; Kayo Contractors v. Fernandez (1984) 27 NTR 21; Wilmot v. Buckley (1984) 2 FCR 540, referred to.
HEARING
Brisbane, 1985, February 25; March 14. #DATE 14:3:1985
PETITION
Petition for a sequestration order.
A. J. H. Morris, for the petitioning creditor.
Cur adv vult
Solicitors for the petitioning creditor: Cannan & Peterson.
GFV
ORDER
A sequestration order be made against the estates of the debtors.
Seven-eighths of the costs of the petitioner be taxed and paid according to the Act.
Direct that a draft of this order be delivered to the Registrar within seven days in accordance with Rule 124(2).
1. I. make a sequestration order against the estates of the debtors.
2. I. order that seven-eights of the costs of the petitioner be taxed and paid according to the Act.
3. I. direct that a draft of this order be delivered to the Registrar within seven days in accordance with Rule 124(2).
JUDGE1
A number of objections - some formal defects only - are raised in this bankruptcy petition. It is convenient to deal with the substantive objection first.
The act of bankruptcy relied on is the debtor's failure to comply with a 14 day bankruptcy notice. The bankruptcy notice claimed that the sum of $1,715.52 was due to the petitioner "under a final order obtained by the (petitioner) against (the debtor) in the Supreme Court of Queensland on 11 December 1981". The application for the issue of the bankruptcy notice was supported by an order of the Supreme Court of Queensland under the hand of a Deputy Registrar in these terms:
"BEFORE MASTER WELD THE ELEVENTH DAY OF DECEMBER 1981
The defendants having appeared to the Writ of Summons herein and the plaintiff having applied for summary judgment under Order 18 Rule 1
AND UPON HEARING Mr. Keane of counsel for the plaintiff and Mr Fryberg of counsel for the defendants
AND UPON READING the Summons filed herein on the 3rd day of December 1981, the Writ of Summons filed herein on the 20th day of November 1981, the Entry of Appearance fled herein on the 27th day of November 1981, the Affidavit of John Frederick Tregonning filed herein on the 3rd day of December 1981, the Affidavit of Michael Shane McNamara filed in action number 4584 of 1981 on the 3rd day of December 1981 and the Affidavit of Barry Raymond Litherland filed herein by leave
IT IS THIS DAY ADJUDGED pursuant to the Order of Master Weld that the plaintiff do recover against the defendants the sum of SEVEN THOUSAND FIVE HUNDRED DOLLARS ($7,500) and costs of and incidental to the action and this application to be taxed."
The application for the issue of the bankruptcy notice was further supported by a certificate of taxation under the hand of the Taxing Officer of the Supreme Court in the matter dated 4 July 1984 in these terms:
"Plaintiff's costs against the defendants pursuant to Order dated 11 December 1981
I HEREBY CERTIFY that the abovementioned costs have been taxed and allowed at the sum of ONE THOUSAND SEVEN HUNDRED AND FIFTEEN DOLLARS AND FIFTY TWO CENTS ($1,715.52)."
It is submitted on behalf of the petitioner that an order for costs is a "final judgment or final order" for the purposes of s. 40(1)(g) of the Bankruptcy Act, 1966. By virtue of Order 18 Rule 1 of the Supreme Court Rules (Qld), the judgment, although summary, is final. It follows, in my opinion, that the judgment dated 11 December 1981 was "final" for present purposes. Further, in my view, even apart from the operation of s. 40(3)(b) of the Bankruptcy Act (see Re Skinner's and Smith's Application (1982) 45 A.L.R. 553 at p. 555) a bankruptcy notice can be based upon an order for costs (see In Re Cartwright; Ex parte Cartwright v Baker (1975) 1 W.L.R. 573, cf. Kayo Contractors v Fernandez (1984) 27 N.T.R. 21 at p. 27). Further, the present case may be distinguished from Wilmot v Buckley, unreported, Beaumont J., 5 November 1984, where it was sought to base a bankruptcy notice upon a certificate of taxation for costs rather than the judgment ordering the costs.
Finally, although it would have been preferable if the bankruptcy notice had stated explicitly that the sum of $1,715.52 was the balance remaining due under the Supreme Court judgment as costs, I do not think that the debtors could have been confused or misled on this account or otherwise. Whilst the failure to express the position explicitly is not fatal to the bankruptcy notice if the debtor could not reasonably be misled (see Re Wimborne; Ex Parte The Debtor (1979) 24 A.L.R. 494), it is nonetheless a matter to be taken into account on the question of the costs in the petition.
I turn now to the defects which should be treated as formal defects only. The date of the act of bankruptcy is wrongly stated in paragraph 4 of the petition. I grant leave to the petitioner to amend that paragraph and substitute "4 October 1984" for "5th day of October 1984". I dispense with re-verification and re-service of the petition. Further, the affidavit of debt wrongly states the date of the Supreme Court judgment and the affidavit of service of B.J. McCosker is undated. Again, whilst these defects are not fatal, they are matters to be taken into account on the question of costs.
In the circumstances, I am satisfied that the debtors have committed the acts of bankruptcy alleged in the petition (as amended). I am satisfied with the proof of the other matters of which s. 52(1) of the Act requires proof. I am further satisfied, for the purposes of s. 52(1A)(b)(ii) of the Act, that the petitioner has been unable to obtain from registered trustees a consent under s. 156A(1). I make the following orders:
1. I make a sequestration order against the estates of the debtors.
2. I order that seven-eighths of the costs of the petitioner be taxed and paid according to the Act.
3. I direct that a draft of this order be delivered to the Registrar within seven days in accordance with Rule 124(2).
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