Re Pease, Raymond Victor Ex Parte Malser Pty Ltd v Pease, Raymond Victor

[1997] FCA 147

IN THE FEDERAL COURT OF AUSTRALIA  No. VP 1039 of 1996
EXERCISING FEDERAL
JURISDICTION IN BANKRUPTCY  

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE :  RAYMOND VICTOR PEASE  Judgment Debtor

EX PARTE:  MALSER PTY LIMITED  Applicant

RAYMOND VICTOR PEASE  Respondent

COURT:         NORTHROP J
DATE: 26 FEBRUARY 1997
PLACE:         MELBOURNE

REASONS FOR JUDGMENT

This is the hearing of a petition brought by the judgment creditor against the judgment debtor based upon a bankruptcy notice dated 13 June 1996.  The petition alleges an act of bankruptcy occurring on 8 August 1996, but it appears that date was in error. In fact the act of bankruptcy occurred on 7 August 1996, the bankruptcy notice, being a 21 day notice, having been served on 17 July 1996.

The debtor has given notice of opposition to the making of a sequestration order and the ground of the objection is:

"That the debtor has not committed any act of bankruptcy as the Bankruptcy Notice relied upon by the Judgment Creditor is invalid as it does not comply with requirements of the Act.

PARTICULARS

1.The bankruptcy notice is based upon and requires compliance with more than one judgment order.

2.It wrongly refers to the order of Master Bruce as a source of the debtor's liability to pay the amount claimed."

The only substantive issue argued before the Court in opposition to the granting of the petition was based on the two grounds referred to in the notice of opposition.  In order to understand the grounds of opposition, reference is made first to the bankruptcy notice itself.  Essentially, it is in the required form.  It is directed to the debtor, it refers to the fact that the creditor:

".... has claimed that the sum of $149,219.74 and no more" [being made up of the Order of $148,417.10 and $749.64 being interest calculated on the Order from 29 May 1996 to 11 June 1996 at the rates prescribed under the Penalty Interest Rates Act 1983 (Vic.) any further claim for interest being abandoned]

is due by you to it under a final Order obtained by it against you in the Supreme Court at Melbourne on 28 May 1996 being a final Order made by Master Bruce, the Taxing Master in respect of costs ordered to be paid by you pursuant to the Orders of Master Kings made 2, 4 and 11 November 1994 and the Order of the Honourable Mr Justice Hansen made 22 November 1995, the execution of which has not been stayed."

I need not refer to the other parts of the bankruptcy notice, except to say that they required that sum of $149,219.74 be paid within 21 days or that the debtor secure payment, and notice is to be given of the effect of subsection 41(7) of the Bankruptcy Act 1966.

In this regard reference may be made to paragraph 40(1)(g) of the Bankruptcy Act and the requirements of section 41 of the Bankruptcy Act in relation to the contents of bankruptcy notices.

The background material to the giving of the bankruptcy notice is made clear by reference to the orders referred to in the bankruptcy notice.  It appears that the debtor commenced action against the judgment creditor claiming damages for injuries arising out of the negligence of the creditor in relation to scuba diving. The order of Master Kings of 2 November 1994 was quite clearly an order made in an interlocutory step in that proceeding where the debtor was required to pay the creditor's costs of the day before Master Kings.  Likewise, the order of Master Kings of 4 November 1994 was an order that the debtor pay the creditor's costs of the application to have the hearing date vacated and costs thrown away by reason of the vacation of the trial date.  The third order of Master Kings was also quite clearly an order in an interlocutory matter in the proceedings in the Supreme Court where the judgment debtor was required to pay the judgment creditor's costs of the day before Master Kings. The final order referred to in the bankruptcy notice was that of Hansen J made on 22 November 1995 where the Court ordered that the proceeding be dismissed and that the plaintiff - that is, the debtor - pay the defendant's - that is the creditor's - costs of the proceeding.  So there were those four orders, each of which is referred to in the bankruptcy notice, ordering the debtor to pay costs.  Those orders did not specify any amount of costs to be paid and to that extent could not be enforced.

Following the order made on 22 November 1995, the judgment creditor obtained a taxation of costs of each of those four orders and the Taxing Master by Order made on 28 May 1996 ascertained or determined the amount of the costs to be paid, a single amount
referrable to the orders, each of the orders I referred to.

The actual order of Master Bruce as authenticated shows that the action was in the Supreme Court, there being one action only in which the four orders already referred to had been made.  The orders were made by Master Bruce on 28 May 1996 and were obtained as a result of the creditor having a summons for taxation filed on 18 March 1996.  The solicitor for the creditor appeared.  There was no appearance by or on behalf of the debtor.  In the Order, under the heading, "Other Matters", appear the words:

"Taxation pursuant to the Orders of Master Kings made 2, 4 and 11 November 1994, and of the Honourable Mr Justice Hansen made 22 November 1995."

There then appear the words:

"THE COURT ORDERS THAT

1.The costs of the Defendant are taxed and allowed in the sum of $148,470.10."

That is the amount referred to in the bankruptcy notice.

The first point raised by way of objection is that the bankruptcy notice is based upon and requires compliance with more than one judgment or order.

It is to be noted that one sum only for costs has been determined by the Taxing Master and that until the amount of costs has been taxed and certified or determined by a Taxing Master pursuant to the relevant provisions of the Supreme Court Rules, there can be
no judgment which can be enforced in any way at all against a judgment debtor. In this case the solicitors for the judgment creditor took the course of seeking costs for all four orders in the one taxation, and one amount of those costs was, in fact, certified to or made the subject of the order by the Taxing Master.

Looking at the form of the words in the bankruptcy notice, it is my view that they are clear and there is no basis for saying that, objectively considered, they are capable of misleading a debtor as to what is necessary for compliance with the notice.  It is a demand for an amount, including interest, which is specific, and requires payment within a specific time or requires the judgment debtor to take some other steps.  Those other steps for present purposes can be ignored.

On the face of the bankruptcy notice there is a specific demand to pay a specific amount within a specified time. This, essentially, is the test which must be applied in determining whether, on the face of it, a bankruptcy notice is good or bad.  If authority is required for that proposition, reference may be made to the case of Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71, and in particular what is said in the joint judgment of the then Chief Justice and Wilson, Brennan and Gaudron JJ, at pages 79 to 80. That passage is set out in a Full Court judgment of the Federal Court of Australia in Gardiner v Gardiner (1992) 39 FCR 259, in a passage in the joint judgment of Foster J and myself commencing at page 266.

In fact, I think, eventually counsel for the debtor in this case, did not persist with a submission that the bankruptcy notice, on its face, was capable of misleading a debtor as to what it was necessary to do to comply with the bankruptcy notice, although there were shades of that submission, in the submissions in fact made.  And so the Court holds that on its face there is nothing misleading or capable of misleading, objectively, the debtor as to what he had to do to comply with the notice.  The bankruptcy notice, on its face, refers to the order of the Taxing Master made on 28 May 1996, in respect of costs ordered to be paid pursuant to the orders of Master Kings made on 2, 4 and 11 November 1994 and the order of Hansen J made on 22 November 1995.

On its proper construction that must mean that the order of Master Bruce was the final step in determining the amount of costs to be paid pursuant to the orders made by Master Kings and Hansen J respectively.

The essence of the first ground of objection taken by or on behalf of the judgment debtor was that the bankruptcy notice requires compliance with more than one judgment or order. For present purposes, it can be accepted that having regard to the provisions of paragraph 40(1)(g) of the Bankruptcy Act and section 41 of the Bankruptcy Act the reference to a judgment or order carries with it a limitation that it can only rely upon one judgment or one order and not a number of them. There are a number of authorities to that effect.  I do not need to refer to them but I do draw attention to the fact that the main case is Re Low ex parte Argentine Goldfields Limited (1891) 1 QB 147.

I also draw attention to the fact that I have not been referred to any authority today where the Court has considered the effect of section 23 of the Acts Interpretation Act 1901 which provides that in Commonwealth statutes words in the singular include words in the plural. Accordingly on its ordinary reading, the words "judgment" and "order" in section 40 and 41 of the Bankruptcy Act would include more than one judgment or order, unless the context otherwise required.  I do not need to decide that matter in this case.

It was put on behalf of the debtor that here there were four orders or judgments and that this was contrary to the views expressed in Re Low and other cases in Australia which have adopted and applied that authority.  In my opinion, that submission ignores what is the true position on the facts of this case.  Here there is, in reality, one judgment or order only derived from a number of sources including the four orders of the Supreme Court and the order of the Taxing Master determining the amount of costs to be paid in respect of those four orders. The order for the amount of the costs is an essential part of the order for costs and in my opinion this case comes within an exception - if that is the right word - of the general principle referred to in Re Low. That exception is discussed in a number of cases in Australia and is the exception referred to in Re Wheeler (1982) 1 WLR 175. Re Wheeler was referred to in an unreported decision of Wilcox J in the case of Gardiner, matter No NB3712 of 1990 where his Honour at page 4 of the report after referring to the case of Re Low, recites the requirements of paragraph 40(1)(g) of the Bankruptcy Act and says:

"This paragraph and its predecessors, both in Australia and the United Kingdom, have always been interpreted as requiring that a bankruptcy notice refer to only one final judgment or order - see Re Low ---- The principle has been subjected to one gloss, by the decision of the United Kingdom Court of Appeal in Re Wheeler (1982) 1 WLR 175 -

In that case a Court was concerned with a bankruptcy notice which sought payment of the sum of £20,000 being the amount of an interim certificate for costs.  The interim certificate related to the taxation of a composite bill of costs covering an order for costs made in favour of plaintiffs in the principal proceeding, as a result of it succeeding in the principal proceeding together with orders made by the trial judge on the same day by which he dismissed three outstanding procedural summonses. 

The solicitors for the plaintiff took the view that all four orders might properly be the subject of a single bill of costs.  They presented a bill on that basis.  Without any objection from the debtor's then solicitor, the bill was commenced to be taxed.

Before taxation was completed, the taxing officer gave an interim certificate covering the sum of £20,000 and the certificate was used to support a bankruptcy notice.  Objection was taken to the bankruptcy notice on the basis that it offended the rule against a bankruptcy notice referring only to a single order, but the Court of Appeal held that the principle was not offended in the particular case.

At page 182 Lawton LJ giving judgment on behalf of the Court, referred to a submission of counsel for the creditors that the four orders made by the trial judge "had been channelled into one order requiring a payment by the debtor and Mr Argent of the sum of £20,000.  That as a result of that channelling into the interim certificate there was, in the end, only one final order which was for the payment of £20,000, and that as a bankruptcy notice made it clear what was the origin of the debt upon which a bankruptcy notice is based, there was compliance with provisions of both section 11G and section 2.  His Lordship upheld this argument."

In my opinion the same line of reasoning applies to the facts of this case.  It is immaterial that the order has been made on the one day in relation to four separate matters.  What is of importance is that they were all made in the same action. In the present case, they were made on different days but they could not become effective until the amount of the costs had been certified or determined by the Taxing Master. The Taxing Master adopted the course of having one composite bill. He made orders accordingly. As a result, for the first time, there was one order comprising all parts of the orders made by Master Kings and Hansen J as well as the order made by Master Bruce.  This one order formed the basis of the bankruptcy notice.  The bankruptcy notice on its face is very clear.  It makes reference to the four orders concerned. This is a case which would be an exception to the general rule enunciated in Re Low.

Accordingly the first particular of the ground of objection relied upon by a judgment debtor in this case is rejected.

The second particular of the ground taken is that the bankruptcy notice wrongly refers to the order of Master Bruce as a source of the debtor's liability to pay the amount claimed.  In my opinion that ground must fail also because the bankruptcy notice makes it clear that all the orders together form the basis of the liability to pay.  The bankruptcy notice makes it very clear that the costs ordered to be paid were so ordered pursuant to orders of Master Kings and Hansen J, and that the amount to be paid was that ordered by Master Bruce.

I have expressed my view that there is no ambiguity. On a reasonable examination there could be no dispute as to what the hypothetical debtor was required to do namely to pay a specified amount arising from a specified judgment in specified ways.  Accordingly the opposition to the petition must be refused.

There remain two matters:  the first is the application to amend the petition to amend the date of the act of bankruptcy from 8 August 1996 to 7 August 1997. I can see no reason why leave should not be granted.

I order that the petitioning creditor have leave to amend the petition by substituting the date 7 August 1996 for the date 8 August 1996 as the date upon which the act of bankruptcy occurred, and I direct that there be no need to re-serve the petition.

For reasons already given, and in regard to the affidavits filed now, the Court is satisfied that the debtor on 7 August 1996 committed the act of bankruptcy alleged in the petition as amended. I am satisfied with the proof of the other matters of which section 52(1) of the Bankruptcy Act requires proof.  It is noted that James Stewart, a registered trustee, has consented to act as the trustee of the estate of the debtor. I make a sequestration order against the estate of the debtor.  I order that costs, including reserved costs, be taxed and paid according to the Act, and I direct that a draft of this order be delivered to the Registrar within seven days in accordance with rule 124(2) of the Bankruptcy Rules.

Since giving these reasons at the conclusion of the hearing, I have read the judgment of Drummond J in Re Gibbs; Ex parte Truscott (1995) 65 FCR 80. The parts of the judgment under the headings "Is the bankruptcy notice defective in form" and "Was the costs order able to be enforced by execution" at pages 83 and 85 respectively, confirm the views I had expressed. By analogy of reasoning in the present case the order for costs was, at the time the bankruptcy notice was issued, able to be enforced by execution.

I certify that this and the preceding nine (9) pages are a true copy of the Reasons for Judgment of the Honourable Justice R M Northrop.

Associate:

Date:

ATTACHMENT

Counsel for the Judgment Debtor/Respondent:  T Irlicht
Solicitors for the Judgment Debtor/Respondent:                  Irlicht & Broberg

Counsel for the Petitioning Creditor/Applicant:  M McNamara
Solicitors for the Petitioning Creditor/Applicant:                  Herbert Geer & Rundle

Date of hearing:         26 February 1997