Re McMahon, Jean Shirley Ex Parte Official Trustee in Bankruptcy

[1986] FCA 624

No. 8 . 3 9 3 0 of 1986

- RE :

JEAF!	S H I R L E Y	MCMAHON
B a n k r u p t

EX PARTE:

O F F I C I A L TRUSTEE I N

BANKRUPTCY

R e s p o n d e n t

EX-TEMPORE REASONS FOR JUDGMENT

BURCHETT	J .
I n t h l s mat ter a n order for costs was made upon

d l s m l s s a l o f a p e t l t i o n on 25 March 1 9 8 6 . T h e ~ u d g m e n t d e b t o r

r e q u i r e d t h e b l l l of costs t o b e t a x e d , a n d .an a p p o i n t m e n t for

t h a t purpose was o b t a l n e d . T h e j u d g m e n t d e b t o r d o e s not sugges t

t h a t s h e d l d n o t r e c e l v e a d e q u a t e n o t i c e of t h e t a x a t i o n o f t h e

costs.

What s h e d o e s assert is t h a t , o n t h e d a y when t h e costs

were t a x e d , s h e was u n w e l l a n d d I l d n o t a t . t e n d u p o n t h e t a x a t l o n ,

nor d l d s h e n o t l f y t h e c o u r t o f f l c e , or t h e o the r p a r t y , or i t s

solicitor. Upon becoming somewhat bet ter s h o r t l y a f t e r w a r d s , h e r

e v l d e n c e i n d i c a t e s s h e c o n s u l t e d a b a r r i s t e r who t o l d h e r t h a t I t

was n o t n e c e s s a r y for h e r t o t a k e a n y a c t l v e s t e p a t t h a t s t a g e .

And s h e d l d n o t , t h e n , n o t l f y e l t h e r t h e c o u r t ,

3 1 i; I c ;?F?

PRIhCIFAL	/
H t G l b l H ?

2.

party, or its sollcitor, that it was because of her illness that she had not attended upon the taxation. On the day of the taxation, the costs were, in fact, taxed and a certificate of taxatlon issued, dated 29 May 1986, in the sum of $3819-75.

The precise form of the order which had been made on 25

March 1986 was:

"(l) The creditor's pet~tion be dismissed;

(2) The judgment debtor to pay the petltion (scil. petitioning) credltor's taxed costs of the p tltion, including reserved costs."

Under rule 172, provision is made, where a bill Of Costs

has been taxed, for the taxing offlcer to sign a certificate; and

by rule 172 sub-rule ( 3 ) it is provided:

"The person who lodges a blll of costs for

taxation shall upon the issue to him of a certificate of taxation in relation to that bill, serve the certificate of taxation on the person liable to pay the costs or charges."

It is perhaps noteworthy, ln the language of that sub-rule, that it assumes the person is already liable to pay the

costs or charges, because 1 t describes him as "the person

llable". This 1s in keeping with the decision of Atkln J . , as

Lord Atkin then was, in Hambleton v. Brown 11917) 2 K.B. 93, which was concerned with an assignment covering an order for costs which had been duly taxed, but the amount of whlch had not

3 .

been entered upon the record. The assignment was without

consideration, and the material question for present purposes was

whether it could be regarded as a valid legal asslgnment of a

present debt. It was held that it was. At p.97, his Lordship

said :

"The debt is said to be a future debt because,

it is contended, there was no effective

~udgment for the costs until the amount of the Master's certificate was filled in in the Judgment: see In re Crump 6 4 L.T. 799. The obligation to pay arose entirely from the judgment, and until that was effective there was only an expectancy of future property. It appears to me that the true view is that in a judgment for costs there is an actual judgment giving rights to the successful party as soon as pronounced. It is adjudged that the party recover costs to be taxed. The amount o be recovered has to be ascertained in a prescribed manner by

taxatlon and, when the taxing Master has

ascertalned the amount and s o certified, nothlng further remains to be done but the ministerlal act of completing the record."

Atkin J. went on to refer to a case where the court was satisfied that the practice was not to allow execution to issue until the amount of the certificate was entered on the judgment. In that case, that not having been done, it was held that service

of a bankruptcy notice did not give rise to an act of bankruptcy

because the power to issue a valid bankruptcy notice depended

upon the right to issue execution on the judgment.

Although Hambleton v. Brown is not cited in T.A. Field

v. Frigmobile of Australia Proprietary Llmited 119781 2

N . S . W . L . R . 4 8 8 , a similar view of the effect of a judqment for

4

costs appears to have been taken by Allen M. (as Allen J. then

was) in that case.

Mr. Torrington, for the ~udgment debtor, has argued that

the effect of rule 1 7 2 is to invalidate a bankruptcy notlce

served prlor to the receipt by the ludgment debtor of the certificate of taxation, which is required to be served on him by

that rule. It seems to me, however, that the rule does not

purport to affect the posltlon under which, once the amount of the costs has been ascertained by the Issue of a certificate of taxatlon, there is an effective order upon which executlon could issue.

Under s.309, provlsion is made the effect of which is that where service of a document is requlred but no speclal manner of service is prescribed, it may be sent by post as a prepald letter to the last known address of the person to be

served. In the present case It is proved that everything that

should have been done by the judgment creditor to comply with

s.309 was done. The certificate of taxation dated 29 May 1986

was sent to the judgment debtor by prepaid post on 2 June 1986,

addressed to 39 Osborne Street, Lane Cove, whlch she agreed In

evldence was at all relevant times her address. In addition, a

letter dated 14 July 1986 was sent to her then solicitors,

Messrs. Teakle, Ormsby and Associates, through thelr DX number,

and evldence has been glven of a personal conversatlon with her then solicitor, some ten days later, which clearly proceeded on the basis that the letter had been recelved.

5 .

However, the judgment debtor says that she neither

received the certlficate of taxat~on nor was advised by her then solicltor of the letter of 1 4 July 1986, whlch showed the amount at whlch the costs had been taxed. I am not prepared to reJect her evldence that she dld not recelve e~ther of these. But I do infer from her own evidence that she must have been well aware that the costs had been ascertained, since she knew the date at which they were to be taxed, and knew that she had made no arrangements for the taxatlon to be adjourned and, further, knew

that that date had long passed so that, even if there had been for some reason some delay, the overwhelming probability was that

the taxation would have been long since concluded. The

situation, as I find it to be, is simply that she had taken no

further steps to ascertain the precise figure.

In those circumstances, it seems to me that the order

for costs was effective. It was quantlfled, and It was sufficient to form the 'basis under s.40(1)(g) for the issue of a bankruptcy notice.

Rule 172 provides that something shall be done, and when read wlth s.309, provides that that shall be done which in thls case was done. It does not provide that, if by some mischance the procedure laid down in the Act and the rules does not give the judgment debtor prior notice, ~nvalldity will be visited upon the Issue or service of a bankruptcy notice. Indeed, there is

6

nothing in rule 172 to prevent the certificate being served

personally on one day, and the bankruptcy notice being issued and served on the next, so that if any such lnvalldlty were visited upon the proceedings for the reason alleged, it would seem to be a technical invalidity serving no particular purpose. Accordingly, if I had thought that what was done amounted to a non-compliance with the requirement of rule 172, I would have thought the matter appropriate for an application of rule

195(2)(b), relievlng the judgment creditor	of the consequences of
any such non-compliance.

However, I do not thlnk there was any non-compliance, to

be the subject of relief. For these reasons, I dismiss the

application to set aside the bankruptcy notice.

However, I thlnk the making of that application does, under s . 4 1 ( 6 A ) , enliven the Court's jurisdlctlon to grant some further extension of the bankruptcy notice, whlch has already been extended until today. I do not think sub-s.(6C) applies.

In other words, I do not think that it can be said the present proceedings to set aslde the bankruptcy notice were not instituted bona flde, and certalnly it cannot be said they were not prosecuted with due diligence. In all the circumstances, I think it is appropriate to grant a further extensron of 14 days

to enable the judgment debtor to proceed to comply wlth the

notlce.

7 .

Accordingly, I extend the bankruptcy notlce until 4.00pm on 1 December 1986. The judgment debtor	is ordered to pay the
costs of the appllcation.

I certify that this and the

preceding s1x (6) pages are a

true copy of the Reasons for

Judgment herein of his Honour

Mr. Justice Burchett.

Associate

Dated: 17 November, 1986.

.r . '