Re Rochester, G. Ex parte Wiskich, D

[1993] FCA 459

Re: GRAHAM ROCHESTER
Ex parte: DAVID WISKICH and BARBARA WISKICH
No. NB159 of 1993
FED No. 459
Number of pages - 3
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Burchett J(1)

CATCHWORDS

Bankruptcy - whether a deemed judgment of the District Court of New South Wales under the provisions of s. 63A of the District Court Act 1973 (NSW) alleged to have been obtained by virtue of service of an arbitrator's award could validly found a bankruptcy notice and bankruptcy petition in the absence of compliance with the terms of r. 9(5) of Part 51A of the District Court Rules - question raised whether such a deemed judgment, referred to by Kirby P in El Ali v GIO of New South Wales as a "notional judgment" could be treated as a judgment for the purposes of Commonwealth legislation, even if the conditions for deeming it to be a judgment under the New South Wales Act were fulfilled - bankruptcy annulled.

Bankruptcy Act 1966 (Cth), s. 40(1)(g)

District Court Act 1973 (NSW), s. 63A(5)

District Court Rules (NSW), Part 51A, rr. 9 and 10

El Ali v. GIO of New South Wales (1988) 15 NSWLR 303

HEARING

SYDNEY, 29 June 1993

#DATE 29:6:1993

Counsel for the Judgment Debtor: Mr W.R. Ward

Solicitors for the Judgment Debtor: Messrs Patrick King and Co

Counsel for the Petitioning Creditors: Mr D. Smallbone

Solicitors for the Petitioning Creditors: Messrs Bryden Doherty and Shead

Solicitor appearing for the
Official Trustee in Bankruptcy: Mr M. Hayter of Messrs

Gordon and Johnstone

JUDGE1

BURCHETT J In this matter, annulment is sought of a sequestration order, made in respect of a creditor's petition based on a bankruptcy notice. One matter argued, the success of which would render argument on a number of other matters unnecessary, is that there was no judgment to found the bankruptcy notice. A question of discretion, of course, would arise even if the applicant succeeded on that issue.

1. The dispute between the parties goes back some way. It led to proceedings in the District Court of New South Wales, which were referred to arbitration under the provisions of the Arbitration (Civil Actions) Act 1983 (NSW). By the District Court Act 1973 (NSW), an award may, upon certain conditions, become what Kirby P described in El Ali v. GIO of New South Wales (1988) 15 NSWLR 303 at 310 as "a notional judgment or order of the District Court." The relevant section is s. 63A, subs. (5) of which actually provides: "Except" - and there follows a case which it is agreed is not relevant - "the award of an arbitrator in relation to an action referred to him under subs. (1) shall, after the expiration of the time prescribed by the rules for the purposes of this subsection, be deemed to be a judgment or order of the Court."

2. Whether such a notional judgment of the District Court can be regarded as an actual judgment or order within s. 40(1)(g) of the Bankruptcy Act 1966, for the purposes of a bankruptcy notice, was not argued. It might be said that s. 63A does not make it a judgment, and that a deeming section of a State Act cannot operate to make a mere notional judgment an actual judgment for the purposes of a Commonwealth Act unless the Commonwealth Parliament says so in its own statute. I do not have to reach any conclusion on this question, which was not argued before me.

3. What was argued was that an essential condition for the transformation of an award into a deemed judgment was not fulfilled in this case. Section 63A(5), it will have been noticed, refers to the award as being deemed to be a judgment or order of the court "after the expiration of the time prescribed by the rules for the purposes of this subsection". The prescription contained in the rules of the District Court is made by Part 51A r. 10, that rule referring back to r. 9. The scheme was considered by the Court of Appeal in El Ali, where it was held the time can be extended, even after its expiry, by an order of the District Court.

4. In order to understand the point which arises in the present case, it is necessary to set out the provisions of r. 9(5) and r. 10. The first of these provides:
   "A registrar shall, forthwith after receiving the award of an
   arbitrator, send to each of the parties to the action to
   which the award relates, or to the representative of such a
   party, a copy of the award on which he has endorsed the
   date of sending and the registrar's notice in the approved form."
   

5. Rule 10 then provides:
   "For the purposes of section 63A(5) of the Act, the time
   prescribed is" - and firstly there is given a case which is
   not relevant, and then follows -
   "(b) In any other case - the period of 28 days immediately
   

following the date so endorsed."

1. Here, service was, on the evidence, effected as required by r. 9(5) of a copy of an award, but unfortunately the Registrar had not endorsed on that copy the date of its sending, nor was there any seal of the court then placed on the document. I accept, as probable, the evidence of the applicant's solicitor that he did not at the time appreciate that the document was other than just a copy sent as a matter of courtesy by the arbitrator.

2. The question is whether r. 10 was satisfied in these circumstances. It can hardly be suggested that r. 9 was complied with. The contention of the petitioning creditor is that his copy was endorsed, and further, a copy on the file of the District Court was endorsed. But to regard that as establishing compliance would, it seems to me, make a mockery of the scheme of the Act, which seeks, as was made perfectly clear in El Ali, to secure an absolute right to a party vanquished in an arbitration to have the matter reconsidered by the District Court. I am satisfied that r. 10 can only sensibly be read in conjunction with r. 9, and that it refers to an endorsement on the copy document served on the party to be bound by an adverse ruling. It is that party who must file a request within the time which runs from the date endorsed on the document.

3. An actual judgment of the District Court irregularly procured in a fundamental respect is a nullity: Cameron v. Cole (1944) 68 CLR 571 at 590-591. But here there is not even an irregular judgment; there is alleged to be a notional judgment under statutory conditions, but those conditions have simply not been fulfilled. Therefore, there was nothing to base the bankruptcy notice or the petition.

4. It is suggested that nevertheless I should exercise a discretion against granting an annulment of the bankruptcy. I accept that I have a discretion; but in the absence of positive satisfaction that the applicant has no case, which I do not have, I do not think, in the particular circumstances here in evidence, including the further details which I have not fully set out in these reasons contained in the material put before me, that I should exercise my discretion so as to leave in place a sequestration order which lacks any foundation in a valid judgment. Accordingly, the bankruptcy will be annulled.

5. However, the applicant's failure to take appropriate steps, at a number of stages, has exacerbated the position produced by the original error of the District Court Registrar. Costs have mounted up as a consequence. I order that the applicant pay the costs of the Official Trustee, and also the costs of the petitioning creditor of the petition, limited to costs incurred after the service of the bankruptcy notice, by which stage the debtor should, in my opinion, have taken prompt action. I further order that the applicant debtor pay the costs of this application.