Re Milutin, B. Ex parte Jovetic, N.

[1992] FCA 558

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JUDGMENT NO. .....a...w..ean me-

IN THE FEDERAL COURT OF AUSTRALIA	)
,
VICTORIA DISTRICT REGISTRY
GENERAL DMSION	1

RE:  BORO MILUTIN

(Judgment Debtor)	I :
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EX PARTE:  NOVAC JOVETIC and
WALTER WIILIAM MCLAREN

Coram:	Ryan J
Date:	29 July 1992

Place: Melbourne

EX TEMPORE REASONS FOR JUDGMEWl?

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Rvan J: In this matter, the debtor Boro Milutin apparently took action in the County Court claiming damages arising out of a	.	I..
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motor vehicle collision against Novac Jovetic and William Walter	i I
McLaren. Those proceedings were defended in the name of the defendants by an authorised insurer to whose rights and	C
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obligations the Transport Accident Commission succeeded by virtue	L,
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of s.164 of the Transuort Accident Act 1986. That section provides :

"164.(1) For the purposes of any contract of insurance under the repealed Division the authorised insurer - , ,

(a) may undertake the settlement of any claim against the owner or agalnst any driver insured under the contract of insurance; and

(b) may take over during such period as it thlnks proper the	, .
conduct and control on behalf of the owner or such driver of any	I.
proceedings taken or had to enforce such claim or for the settlement of any question arising with reference to the clam; and	,. I
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(c) may defend or conduct the proceedings in the name of the	!
owner or driver and on his or her behalf and if need be may

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without the consent of the owner or driver to the extent of the liability of the authorised insurer but no further or otherwise admit liability; and

(d) subject to this Division must indemnify the owner or driver agarnst all costs and expenses of or incidental to any such proceedings while the insurer retains the conduct and control of the proceedings.

(2). The owner or such driver must sign all such warrants and authoritres as the insurer requires for the purpose of enabling the authorised insurer to have the conduct and control of any such proceedings."

"Authorised insurer" is defined by s.152 of the same Act as
follows :

""Authorized insurer" means a body corporate approved under the repealed Division as an authorized insurer at any time before the commencement of thrs section and includes the Commission as the successor in law of the body corporate so approved mediately before that commencement in its capacity as authorized msurer."

It appears that an appeal by the debtor to a Full Court of the Supreme Court of Victoria failed and he was ordered to pay the respondents' taxed costs of that appeal which amounted to $9953.20. A bankruptcy notice requiring payment of that amount was issued in the name of Messrs Jovetic and McLaren and has not been complied with.

A creditors' petition invoking the resultant act of bankruptcy was then issued in the names of the same nominal judgment creditors but was signed by Mr Chappell, the solicitor to the

Transport Accident Commission, over the inscription "signed by the petitioner in the presence of..."

M r Batt QC, who appears with Mr Lenczner for the petitioning

creditor, has submitted first, that the petition has been validly issued because it was signed by an agent of the petitioning creditors as contemplated by s.308(d) of the Bankruutcv Act. I am satisfied that M Chappell held all necessary delegations to enable him to execute an instrument on behalf of the Transport Accident Commission. However, I am not persuaded that s.164 of the Trans~ort Accident Act authorises the Transport Accident Commission to institute, on behalf of an insured owner or driver, proceedings for a sequestration order based on a judgment debt obtained in the name of that owner or driver for unpaid costs.

In my view, the proceedings referred to in each of paragraphs (b), (C) and (d) of s.164(1) of the TransDort Accident Act are all proceedings taken or had to enforce a claim against the owner or driver insured under a contract of insurance. Consequently, proceedings taken to obtain a sequestration order are not "for the settlement of any question arising with reference to the claim" within the meaning of s.l64(l)(b) of the Trans~ort

Accident Act. However, I consider that if in the course of defending proceedings in the name of an insured owner or driver, an entitlement arises to recover costs thereby incurred, that entitlement is by application of the principles of subrogation, enforceable by the authorised insurer; see, for example, Sim~son

and ComDanv v Thomson (1877) 3 A.C. 279, where at p.284 the Lord

Chancellor observed:

"I know of no foundation f o r t h e r i g h t of underwriters , except t h e

well-known p r i n c i p l e of law, t h a t where one person has agreed t o

indemnify another , he w l l l , on making good t h e indemnity, be e n t i t l e d t o succeed t o a l l t h e ways and means by which t h e person indemnified might have p ro tec ted himself agains t o r reimbursed h m s e l f f o r t h e

loss . It is on t h i s principle t h a t t h e underwri ters of a s h i p t h a t has

been l o s t a r e e n t i t l e d t o t h e s h l p i n spec ie i f they can f i n d and

recover it; and it is on t h e same p r ~ n c l p l e t h a t they can a s s e r t any

r i g h t which t h e owner of t h e s h i p might have asse r t ed aga ins t a

wrongdoer f o r damage f o r t h e a c t whlch has caused t h e loss . But t h i s

r i g h t of a c t l o n f o r damages they must a s s e r t , not i n t h e i r own name but

i n t h e name of t h e person insured, and i f t h e person lnsured be t h e

person who has caused t h e damage, I a m unable t o s e e how t h e r i g h t can

be asse r t ed a t a l l . "

I refer also to Castellain v Preston (1883)ll Q.B.D. 380 where

Brett LJ at p.388 observed:

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"Now it seems to me that in order to carry out the fundamental rule of	f . .
insurance law, this doctrlne of subrogation must be carried to the	I
extent which I am now about to endeavour to express, namely, that as	!-
between the underwriter and the assured the underwriter is entitled to	i -
the advantage of every right of the assured, whether such rlght
consists in contract, fulfilled or unfulfilled, or in remedy for tort	i-
capable of being inslsted on or already insisted on, or in any other	I .
right, whether by way of condation or otherwise, legal or equitable,	I
which can be, or has been exercised or has accrued, and whether such	i
right could or could not be enforced by the insurer in the name of the	i
assured by the exercise or acquirang of which right or condition the	!~
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loss against whrch the assured as msured, can be, or has been
diminished."	I

Any rights derived by exercise, in the name of the insured, of that right of subrogation vest in equity in the insurer: Hartford Fire Insurance ComDanv v Hurse [l9621 WAR 187, per Hale J at 191.

~t follows that the petition in this case could have been presented in the name of the Transport Accident Commission as beneficial owner of the judgment debt obtained by an authorised insurer in exercise of its right of subrogation. Thus in Australian Workers' Union v Bowen (1946) 72 CLR 575 Dixon J, (as he then was) said, at p.590:

"But if the defendants, other than the Australian Workers' Union, had ! '

come to have no benef~caal interest in the decree against the	m .
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plarntiffs for costs and were in the position of absolute trustees of
their rights under the decree for the union, it may be sald that the	I
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union became a cred~tor	to whom the debt under the decree was due in
equity: see s.55(1).	In that case perhaps the petition might be
presented in the name of the Australian Workers' Unlon alone:	Ex uarte
Coouer: In re Baillie (1875) LR 20 Eq 762 and see per Starke J an	L '
McIntosh v Shashoua, (1931) 46 CLR 494 at pp.506, 507, and cf, at	I ,
pp.504, 517, 519.
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The form of the pet~tion. however, seemed to acknowledge the necessity	j '
of joining the other defendants as persons entitled to enforce the	!  , ,
decree, and the facts were not proved in detail which would enable the Court to say with any certainty that the Australian Workers' Union was the absolute beneficial owner of the debt payable under the decree for Costs."
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Here, by contrast with the position described by his Honour at

the conclusion of those remarks, the Court is able to say with	.' ,
certainty that the Transport Accident Commission is the absolute beneficial owner of the debt payable by virtue of the order made in the Supreme Court of Victoria for costs. It has been made clear by the High Court in Growden v Wiltshire (1935) 52 CLR 286 that this Court may grant leave to amend a petition to alter the name of the petitioning creditor to that of the person in whose name the petition should have been brought. Such an amendment is not precluded by the fact that the bankruptcy notice has been presented in the names of persons who were the trustees of the judgment debt: Ex Darte Dearle. In re Hastinus (1884) 14 QBD 184. No injustice will be caused to the debtor by such an amendment since he can have been under no misapprehension about the debt which founded the bankruptcy notice or about what had to be done to comply with that notice.
Accordingly, I grant leave to amend the petition by inserting, in lieu of the names of the petitioning creditors, the name "Transport Accident Commission". In the light of the conclusion to which I have come, I consider Mr Chappell an appropriate
person to swear to the existence of the debt and the fact that it continued to be due and unpaid today. There has been no	suggestion that the requirements of the Act and the Rules have
not otherwise been complied with.
Accordingly, I order that a sequestration order be made against the estate of the debtor, and that the petitioning creditor's costs, including any reserved costs, be taxed and paid in accordance with the statute. I note the date of the act of bankruptcy as 9 December 1991.

I c e r t i f y t h a t t h i s and t h e preceding f i v e

( 5 ) pages a r e a t r u e copy of t h e reasons f o r

judgment	here in of	h i s Honour	Mr	J u s t i c e
Ryan

Associate: we - ,	l
Date:	d q \ 7 \ 4 ~

Counsel	f o r t h e Judgment	Credi tors:	M r J M Ba t t QC and
M r J Lenczner
S o l i c i t o r f o r t h e Judgment	Creditors:	Septimus Jones	and Lee

The Judgment Debtor appeared i n person