Re Stubberfield; Ex parte Paradise Grove Pty Ltd
[1995] FCA 1011
•12 DECEMBER 1995
CATCHWORDS
BANKRUPTCY - creditor's petition - bankruptcy notice founded on an order for costs and a certificate of taxation of costs - debtor solvent and "able to pay his debts" within s 52(2) the Bankruptcy Act - whether Court to exercise its discretion within s 52(2) the Bankruptcy Act to make a sequestration order considering the debtor's ability to pay his debts, but refusal to do so - execution on the costs order by writ of elegit and appointment of a receiver against debtor's share of jointly owned assets considered - an order for costs and a taxing officer's certificate, even though the certificate is subject to pending Court review, is a final judgment within s 41(1)(g) the Bankruptcy Act
Bankruptcy Act 1966 (Cth) - ss 40(1)(g), 52(1) and (2)
Supreme Court Rules - O 47 rr 3 and 36; O 91 rr 117, 118 and 119
Cases Considered
Deputy Commissioner of Taxation (NSW) v Westpac Savings Bank Ltd (1987) 72 ALR 634
Hawkesley v May [1956] 1 QB 304
Hills v Webber (1901) 17 TLR 513
Hirschorn v Evans [1938] 2 KB 801
Lord Abergavenny's Case (1607) 6 Co Rep 78b
Pepper v McNiece (1941) 64 CLR 642
Re a Debtor [1954] 3 All ER 74
Re a Debtor [1981] LS Gaz R 631
Re Sarina; Ex parte Wollondilly Shire Council (1980) 32 ALR 596
Re Stirling; Ex parte Webb Ross & Co [1990] 1 NZLR 569
Trojan v Corporation of Hindmarsh (1987) 16 FCR 37
Re John Richard Stubberfield;
Ex parte Paradise Grove Pty. Ltd.
QP 676 of 1994
Drummond J
Brisbane
12 December, 1995
IN THE FEDERAL COURT OF AUSTRALIA ) No. QP 676 of 1994
GENERAL DIVISION )
BANKRUPTCY DISTRICT OF )
THE STATE OF QUEENSLAND )
RE:JOHN RICHARD STUBBERFIELD
Debtor
EX PARTE:PARADISE GROVE PTY. LTD.
(ACN 053 003 302)
Judgment Creditor
MINUTES OF ORDER
JUDGE MAKING ORDER: Drummond J
DATE OF ORDER: 12 December, 1995
WHERE MADE: Brisbane
THE COURT ORDERS THAT:
The creditor's petition is dismissed.
Costs are reserved.
Liberty to apply.
NOTE:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) No. QP 676 of 1994
GENERAL DIVISION )
BANKRUPTCY DISTRICT OF )
THE STATE OF QUEENSLAND )
RE:JOHN RICHARD STUBBERFIELD
Debtor
EX PARTE:PARADISE GROVE PTY. LTD.
(ACN 053 003 302)
Judgment Creditor
CORAM: Drummond J
PLACE: Brisbane
DATE: 12 December, 1995
REASONS FOR JUDGMENT
The petitioning creditor seeks a sequestration order against Mr. Stubberfield on the ground of the latter's failure to comply with a bankruptcy notice demanding payment of a judgment debt for $6,582.68.
The notice calls on Mr. Stubberfield to pay the sum of $6,582.68 as "the costs payable ... pursuant to a Certificate of Taxation issued on the 22nd day of December 1993 which Certificate of Taxation was obtained by the Judgment Creditor under a Final Judgment which the Judgment Creditor obtained ... in the Court of Appeal of the Supreme Court of Queensland held at Brisbane on the 23rd day of June 1993". It was served on 2 February, 1994 and Mr. Stubberfield was required to comply with it by 2 March, 1994. Mr. Stubberfield has raised a large number of objections to the making of a sequestration order, including one focusing on the $1 difference between the amount of the judgment debt set out in the certificate of taxation and that set out in the bankruptcy notice and the petition.
Mr. Stubberfield contends that a sequestration order should not be made against him because he is solvent. The judgment debt is for $6,583.68. Mr. Stubberfield and his wife are the joint owners of unencumbered freehold properties at Redland Bay (where they live) and at Carseldine, the value of which he estimates is in excess of $700,000 and $250,000 respectively, with Valuer-General's unimproved land valuations in 1993 of $160,000 and $133,000; the Carseldine land is tenanted at $800 per month; he and his wife have cash of over $100,000 on deposit with the Suncorp Building Society and neither he nor his wife has any creditors (save in respect of a disputed rates assessment of approximately $2,000). The judgment creditor acknowledges that it is aware of these properties at Redland Bay and Carseldine, although it is unaware of the $100,000 cash deposit with the building society: its directors have been involved in carrying out preliminary work on subdivision layouts on Mr. Stubberfield's land at Redland Bay, although he did not request this to be done. The judgment creditor says that, on legal advice, it directed that bankruptcy proceedings be taken against Mr. Stubberfield to enforce the costs order because the judgment creditor could not execute on that order against assets owned by Mr. Stubberfield jointly with his wife and because Mr. Stubberfield has persistently refused to pay the amount of the costs. He does not challenge what the judgment creditor says, through its director, as to its reasons for pursuing bankruptcy proceedings against him. I accept that the prosecution of bankruptcy proceedings is an act of a creditor who believes that no other avenue is open to it to recoup payment of the not insignificant debt owing by Mr. Stubberfield.
It is plain that Mr. Stubberfield is solvent: he has vastly more assets, including cash, than he needs to meet what is, on the evidence, his only debt, viz., the amount of the costs owing to the judgment creditor. Although Mr. Stubberfield is well able to pay the amount of the judgment debt, he is intransigent in his refusal to do that.
The Full Court of this Court considered whether it was proper to make a sequestration order against a debtor who had proved his solvency, but who, like Mr. Stubberfield, refused to pay the judgment creditor's debt in Re Sarina; Ex parte Wollondilly Shire Council (1980) 32 A.L.R. 596. The first issue was whether the expression "able to pay his debts" in s. 52(2) the Bankruptcy Act meant "able and willing to pay his debts". The Full Court, at 599, rejected the creditor's argument to this effect, saying:
"An act of bankruptcy is the foundation of the doctrine of relation back which operates, upon the making of a sequestration order, retrospectively to vest title to the property of the bankrupt in the trustee of his estate. When a person becomes bankrupt his property is vested in the trustee for the benefit of his creditors generally. His property is realized and distributed amongst his creditors rateably, subject to priorities. The very notion of priorities postulates an insufficiency of assets to pay all creditors the full amount of their debts.
In bankruptcy, rights of creditors to sue the bankrupt are converted into rights of proof against his estate and he is protected from suit. The avoidance of preferences, voluntary settlements and fraudulent dispositions of property by the bankrupt is intended to restore the property or money of the bankrupt to his estate to achieve a fair and rateable division of the bankrupt's property among his creditors.
The bankrupt is disqualified from holding certain offices. Bankruptcy involves a change of status and quasi-penal consequences. Upon discharge from bankruptcy, the bankrupt is released from his debts subject to certain exceptions.
These considerations negate the existence of any policy underlying the Act that a debtor should be made bankrupt if he is able to pay his debts but is unwilling to do so. If a debtor is able to pay his debts but is recalcitrant, his creditors may resort to the remedies otherwise afforded by the law such as execution against his property and garnishee proceedings. The words `able to pay his debts' in s. 52(2) of the Act do not mean `willing and able' to do so."
The second question was whether the bankruptcy court, upon being satisfied that a debtor was able, although not willing to pay his debts, was bound to dismiss the petition or whether it had a discretion nevertheless to make a sequestration order, i.e., whether the word "may" in s. 52(2) the Bankruptcy Act was mandatory or facultative. The Full Court, at 600, said:
"The power conferred upon the court by s. 52(2) is permissive, not mandatory, although it seems that the occasions on which the discretion not to dismiss the petition might be exercised would not be frequent. It may, in a proper case, require the refusal of a sequestration order, yet permit the adjournment of the petition rather than its dismissal. The variety of circumstances that may arise in particular cases renders plain the undesirability of seeking to define parameters of the exercise of the power."
The Full Court, however, held that it would not be a proper exercise of the discretion to make a sequestration order in the case before it nor was it proper, notwithstanding the ambit of the discretion conferred by s. 52(2), to do anything except dismiss the petition. Re Sarina was applied in Re Stirling; Ex parte Webb Ross & Co. [1990] 1 N.Z.L.R. 569 where Smellie J said, at 575:
"...In my view the interpretation sought by the creditor [viz., `able to pay his debts' in the relevant section of the Bankruptcy Act meant `willing and able to pay'] would not best achieve the original purpose. It may put the petitioning creditor in a better position, but it must be remembered that the fundamental difference between execution and bankruptcy is that the former is for the benefit of the creditor taking the proceedings, while bankruptcy is to ensure that all creditors are treated fairly and equally. In this case, if the petition were founded on an available act and allowed to go to adjudication despite the debtor's ability to pay, it would operate to the prejudice of creditors ... Here Mr Stirling is paying his other debts as they fall due and there is little doubt as to his continuing ability to do so. If the petition was granted and an adjudication followed there would inevitably be delay in payments to all creditors. They would be put in the position of having to file proofs, the Assignee would have to collect in the various assets and so on."
I take what was said by the Full Court in Re Sarina to be a clear statement that proceedings in bankruptcy are not an alternative means of enforcing a money judgment, convenient though they may be for putting pressure on a reluctant but solvent debtor to pay, and inconvenient though ordinary methods of execution may be for the creditor. I do not consider there is any material difference between the facts of this case and those considered in Re Sarina.
Trojan v Corporation of Hindmarsh (1987) 16 F.C.R. 37, a decision relied on by the judgment creditor, is a case involving a debtor who alleged he was able to pay his debts but who, in truth, was not in that position, because the assets he relied on to make good the proposition were not his to command. Nor do I accept that this is a case in which the judgment creditor has no possible means of obtaining satisfaction of its entitlement unless the debtor is bankrupted. If that were the case, then a question would arise as to whether what was said in Trojan, at 48, would justify bankrupting Mr. Stubberfield, notwithstanding his solvency. The Full Court in Trojan there said:
"... the principle laid down in the Sarina case would not necessarily be satisfied by a sterile demonstration of an ability to achieve a payment which was not in reality at all likely to be compelled. Section 52(2)(a) envisages a situation which will probably bear fruit in payment. It is not easy to see any other reason why the legislature saw fit to make a demonstration of ability to pay only a discretionary ground of dismissal of a petition, and not an absolute bar to its success."
I do not think it is correct that the judgment creditor cannot execute at law on its judgment debt against Mr. Stubberfield's own interests in his Redland Bay home or in the Carseldine property. Pursuant to O. 47, r. 3 the Supreme Court Rules, the judgment debt may be enforced by writ of elegit against his interest in both properties. There is a full description of proceedings under a writ of elegit in 14 Halsbury, 2nd Ed., paras. 127-140. Under this procedure, the judgment creditor would not be able to sell either of the properties in order to satisfy its judgment debt. But it would be entitled to go into possession of Mr. Stubberfield's own interest in each, including his interest in the rent from the Carseldine property. It could retain this possession for howsoever long it took either for Mr. Stubberfield to be persuaded to pay that debt or, in the absence of payment, for howsoever long it took for the creditor to satisfy the debt from the rents and profits generated during its possession of those properties. (Should the existing tenancy be terminated, it would also be able to grant a lease, even without Mrs. Stubberfield's consent, of Mr. Stubberfield's share of the Carseldine property: see Meagher, Gummow and Lehane, Equity, Doctrines and Remedies, 3rd Ed., para. 2512). In Queensland, joint tenancies continue to exist at law in land; so a writ of elegit will issue in respect of land, even though the judgment debtor holds it only as joint tenant with a third party: Halsbury, supra, para. 133 and Lord Abergavenny's Case, (1607) 6 Co. Rep. 78b. The "extension", i.e., the identification of land as that of the judgment debtor by the Sheriff's inquisition conducted under the writ, operates as a severance of the joint tenancy, "or at all events creates an estate in the creditor until his debt be levied", i.e., satisfied: Edwards, Law of Execution, (1888), p. 178. Archaic, cumbrous and ultimately expensive for Mr. Stubberfield though execution by writ of elegit may be, the judgment creditor can enforce payment of the judgment debt by this procedure by insisting on possession, to the exclusion of Mr. Stubberfield, of his undivided interest in the jointly owned home and in the Carseldine land.
If there is any barrier to enforcing satisfaction of the judgment debt by writ of elegit, it would be open to the judgment creditor to obtain equitable relief in aid of its legal right to satisfaction of that debt. The appointment of a receiver is a well-established form of equitable relief, commonly described as "equitable execution". Order 47, r. 36 the Supreme Court Rules limits the circumstances in which a judgment for debt, damages or costs may be enforced, pursuant to O. 47, r. 3, by the appointment of a receiver of any moneys payable to the judgment debtor to cases where it is impracticable to enforce the judgment otherwise than by appointment of a receiver, i.e., to circumstances in which the Court of Chancery would have granted this form of equitable relief in aid of the enforcement of legal rights. Where the appointment of a receiver is sought by way of equitable execution, it must be shown that legal execution is impossible, save that, in special circumstances, the Court may appoint such a receiver, even though the legal remedy against the judgment debtor's property of which he is the owner at law has not been exhausted. See 17 Halsbury, 4th Ed., para. 576. In Hills v Webber (1901) 17 T.L.R. 513, a receiver was appointed to receive, by way of equitable execution, a judgment debtor's share of the rents from three houses owned by the debtor and a third party as joint tenants. Equitable assistance for the judgment creditor to enforce his judgment in this way was required because the judgment debtor's interest in two of the properties was an equitable one only, the legal titles being in his and the third party's mortgagee. But Collins LJ said that, in the special circumstances, which included the debtor avoiding payment of the judgment debt and the absence of evidence as to the value of the third property in which the debtor had a legal interest as joint tenant, the judgment creditor did not have to exhaust his remedies at law before seeking equitable execution; he also said that he could see no reason in principle why the judgment creditor should not be put in the shoes of the judgment debtor, as regards his joint equitable interest; he added that there would be no difficulty in enforcing a legal remedy if the joint interest were legal instead of equitable. (A legal remedy in the form of execution under a writ of elegit against land of which the debtor is the owner at law as joint tenant is available, for the reasons already mentioned.) Stirling LJ was of the same opinion.
There would seem to be no reason why such a receiver could not also be appointed to receive Mr. Stubberfield's half share of interest payable by the building society on the joint deposit. Mr. Stubberfield's evidence as to the nature of this cash deposit with the building society leads to the inference that he and his wife were entitled to the moneys as joint tenants: he says nothing to suggest the deposit was made on any special terms which would suggest otherwise. On the authority of Hawkesley v May [1956] 1 Q.B. 304 at 314, Mr. and Mrs. Stubberfield would be entitled, during their joint lives, to share equally in the interest income paid on this deposit, but the joint tenancy in that income would be severed, as to each instalment of interest, as it became payable, although the joint tenancy in the underlying chose in action - the building society's indebtedness to them for the amount of the capital sum deposited - would continue. So as each interest payment fell due, one half would become Mr. Stubberfield's own separate property in respect of which a receiver could be appointed. This result may flow from legislation, introduced in 1705 and now contained in s. 43 the Property Law Act 1974 (Qld), which obliges a joint tenant to account to each other joint tenant, if he receives from the property more than his proportionate share, according to his interest in the property. In Hirschorn v Evans [1938] 2 K.B. 801 and in Deputy Commissioner of Taxation (NSW) v Westpac Savings Bank Ltd. (1987) 72 A.L.R. 634 an attempt, in the one case, to attach by garnishee the whole of the amount standing to the credit of one of two joint owners of a deposit account and an attempt, in the other, to attach by special statutory garnishees the whole of the amount standing to the credit of a deposit account in the joint names of the three debtors, failed. The principle applied in both cases was that a bank is not indebted severally to each of the joint owners of a deposit account, but only jointly to all of them, i.e., there is nothing owing in respect of a joint account by the bank to any one of the joint account holders severally. Neither case involved an attempt to attach only the income (or part of the income) earned on the jointly owned corpus. It was therefore unnecessary to consider the principle in Hawkesley v May.
It may be impracticable for the judgment creditor to enforce payment of its judgment debt at law, even if it went into possession of his interest in the home at Redland Bay, given that Mr. Stubberfield's wife would be entitled to remain in possession of her interest in that residence; if Mr. Stubberfield were not prepared to allow the tenancy of the Carseldine property to continue and were thus to deprive the judgment creditor of the right under an elegit to his half share of the rentals, it might be impracticable for the judgment creditor to find a new tenant since, without Mrs. Stubberfield's consent, it could only let Mr. Stubberfield's share in that property. Mr. Stubberfield is determined not to pay the judgment debt; if he were not prepared to undertake to maintain the existing tenancy of the Carseldine property, it might well be appropriate for orders to be made by way of equitable execution, including an order appointing a receiver of the share of interest income from the building society deposit that belongs to Mr. Stubberfield in his sole right, together with an injunction restraining Mr. Stubberfield from authorising or permitting any change in the terms upon which interest accrues to him in respect of the building society deposit. See The Supreme Court Practice 1991, para. 51/1-3/2.
Since I will not make a sequestration order against Mr. Stubberfield because I am satisfied he is solvent and since none of the issues he has raised to answer the petition can provide any answer to his continuing liability to pay the amount of the judgment debt, it is unnecessary to deal with his many other objections to the petition. However, because of the significance attached to the points at the hearing, I will explain why I reject Mr. Stubberfield's arguments that the appeal court costs order was not a final order because the notice issued before the taxation of costs had been completed and that, even if the order for costs is a final one, it is not one which the judgment creditor can enforce by execution because of the pendency of a review by the Supreme Court of the taxation.
Mr. Stubberfield engaged in litigation in the Planning and Environment Court with the Redland Shire Council and the judgment creditor, a land developer. The petitioning creditor developed land adjacent to Mr. Stubberfield's. It is out of this development that the litigation arose. Mr. Stubberfield's appeal against an order made in the planning court was dismissed by the Court of Appeal on 23 June, 1993; that Court also then ordered that the Council and the judgment creditor each recover against Mr. Stubberfield their costs of the appeal to be taxed. The costs were duly taxed and a certificate of taxation issued on 22 December, 1993. Mr. Stubberfield failed to deliver, within the time allowed by the Supreme Court Rules, objections to the judgment creditor's bill of costs, so he was not entitled to require the taxing officer to consider those objections. On 4 February, 1994, on Mr. Stubberfield's summons, Thomas J, in the Supreme Court, made orders retrospectively extending the time for the lodgment by Mr. Stubberfield of his objections with the taxing officer. Thomas J also made an order adjourning the summons to 25 February, 1994 for the review by the Court of the taxation of the judgment creditor's bill of costs. On 14 February, 1994 Mr. Stubberfield took out a second summons, repeating his claim for a review by the Court of the taxing officer's decision pursuant to O. 91, r. 119 the Supreme Court Rules and, in the alternative, seeking an order that the order of the Court "in determination of such aforesaid review be stayed pending the determination by the High Court of the Appellant's application for Special Leave to Appeal this matter", i.e., the Court of Appeal's dismissal of Mr. Stubberfield's appeal against the order of the Planning and Environment Court. On 25 February, 1994, Lee J, in the Supreme Court, adjourned Mr. Stubberfield's summonses to a date to be fixed to allow him to bring his application for a stay before a judge of the Court of Appeal and gave leave to either party to bring this summons on for hearing on two days' notice to the other. The evidence indicates that Mr. Stubberfield took no action to seek the stay (although his application to the High Court for special leave to appeal the decision of the Court of Appeal was pursued, but dismissed on 10 May, 1994). Neither he nor the judgment creditor has taken any action to bring the summons for the review of the taxing officer's decision back on for determination. Instead, the judgment creditor issued the bankruptcy petition on 23 March, 1994. Mr. Stubberfield elected not to proceed with a challenge he made to the bankruptcy notice in the affidavit which he filed in this Court on 2 March, 1994.
The first question is as to the effect of Thomas J's order of 4 February, 1994: is it an order that not only extended the time for the purposes of O. 91, r. 117 the Supreme Court Rules for the lodging by Mr. Stubberfield of his objections to the allowance by the taxing officer of various items in the judgment creditor's bill of costs, but an order which sent back to the taxing officer those objections for his consideration or is it only an order which, by extending time, operated to ensure that Mr. Stubberfield would be treated as a person who, in terms of r. 119, had "objected as aforesaid", i.e., pursuant to r. 117, to the taxing officer's decisions and so was entitled to the review by the Court under r. 119 of the taxing officer's decision. If the proper construction of Thomas J's order is the former, then it would mean that the certificate of taxation issued on 22 December, 1993 would have to be treated as void of effect, so that on the hearing of the petition the judgment creditor would be unable to prove that Mr. Stubberfield was then indebted to it in an amount sufficient to permit of the making of a sequestration order. If the latter is the correct interpretation of the order, then the certificate of taxation stands and the taxing officer has always been functus officio since 22 December, 1993, notwithstanding the extensions of time granted and notwithstanding the fact that the certificate itself is now subject to review by the Court under r. 119. In my opinion, the latter is the correct interpretation. Thomas J had before him Mr. Stubberfield's objections which he delivered late and which the taxing officer, in his letters of 22 December, 1993 to Mr. Stubberfield and the judgment creditor, stated, for that reason, he could not take into account prior to issuing his certificate of taxation; however, notwithstanding this, the taxing officer did say he went on to consider each objection and "nothing therein would persuade me to alter the decisions made on taxation". Although on a review by the taxing officer under r. 118, it is open to the taxing officer to receive further evidence, on the material before me, Mr. Stubberfield did not seek to raise any objections to the taxing officer's decision embodied in his certificate of taxation additional to those in his belated objections. There would therefore have been little practical point in Thomas J sending the objections back to the taxing officer for further consideration under r. 118, something he had already done, in an unofficial way. Moreover, Thomas J did not order that the certificate of taxation of 22 December, 1993 be set aside and, importantly, he adjourned the summons "to 25 February 1994 for review". That is clearly a reference to adjourning the summons in so far as it raised for determination an issue not disposed of by the order of 4 February, 1994, i.e., in so far as it claimed the relief sought in paragraph 2 by way of an order for review of the taxation by the Court pursuant to r. 119: it would have been premature for Thomas J to have made that order if, by his first order of 4 February, 1994, he had intended to send the whole matter back to the taxing officer for review under r. 118. If, as I think is the case, Thomas J by his first order allowed the certificate of taxation of 22 December, 1993 to stand, but put Mr. Stubberfield in the position of a person who had objected in time to the proceedings before the taxing officer that resulted in the issue of the certificate, that would have cleared the way for the Supreme Court review of the taxation under r. 119 that Mr. Stubberfield sought in his summons.
On 4 May, 1994, the solicitor then acting for Mr. Stubberfield wrote to Mr. Enright, the taxing officer who issued the certificate of 22 December, 1993, calling on Mr. Enright to consider Mr. Stubberfield's objections anew; to provide his reasons for disallowing them and asserting that Mr. Stubberfield was not in any position to continue with the Court review of the taxing officer's decision until he had those reasons; the solicitor also invited the taxing officer to set aside the certificate of 22 December, 1993 as invalid. Mr. Enright's response was to issue a document on 16 May, 1994 in the following terms:
"In consequence of the declaration of 4 February 1994 and pursuant to Order 91 rule 118 ... I state that I have reconsidered and reviewed the taxation and I confirm the allowances previously made ..."
The document goes on to deal with specific objections. Mr. Enright did not, however, issue any further certificate of taxation. The taxing officer had no authority to act under r. 118. Nothing that he did requires any different view to be taken as to the proper interpretation of Thomas J's order of 4 February, 1994.
The matter must therefore be considered on the basis that a valid certificate of taxation issued on 22 December, 1993 but there has been pending, since 4 February, 1994, a review by the Supreme Court of that taxation pursuant to r. 119.
Under r. 119, a party is only entitled to have the Supreme Court review those items in his opponent's bill of costs to which he has taken objection under r. 117; r. 119 concludes: "but the certificate or allocatur of the taxing officer shall be final and conclusive as to all matters which shall not have been objected to in manner aforesaid." To say that the implication from these words is that the certificate in respect of all the items objected to is not final, pending review by the Court, is to state the obvious. But because items covered by a certificate of taxation in respect of which there is a review pending by the Court are necessarily not final, in the sense that the Court has jurisdiction under r. 119 to disallow those items, does not, I think, mean that, until the Court determines the review under r. 119, the costs order and the certificate issued pursuant to it cannot be a final order for the purposes of the Bankruptcy Act. In Pepper v McNiece (1941) 64 C.L.R. 642, the High Court held that an order for the payment of money under the Moratorium Act 1932-1939 (NSW) was, while it stood, a final order for the purposes of the precursor of s. 40(1)(g) the Bankruptcy Act. Section 30(7) the Moratorium Act 1932-1939 (NSW) declared the order for payment to be "final and conclusive and without appeal" while s. 30(8) provided that the Court could "reconsider any matter which has been dealt with by it or rescind or vary any decision or order previously made by it". No application for reconsideration of the order in question had been made by the debtor. Each member of the Court considered that, notwithstanding the fact that the Court that made the order had power to review it, at the time the order was made, it finally determined the rights of the parties. In Re a Debtor [1954] 3 All E.R. 74, the Court of Appeal took the same view, holding that the validity of a bankruptcy notice, on which depended the creditor's entitlement to the sequestration order, had to be tested by reference to the facts which existed at the date of issue of the notice; for this reason, an appeal lodged after issue of the bankruptcy notice, but prior to the date for compliance with the notice which appeal was ultimately successful in extinguishing the debtor's liability on the judgment debt on which the notice was based, did not prevent that judgment being a final one for the purposes of the Bankruptcy Act: see [1954] 3 All E.R. at 77-78. In Re a Debtor [1981] L.S. Gaz. R. 631, the Court of Appeal held that a costs order, under which a certificate of taxation had been issued, was a final order capable of supporting a bankruptcy notice, even though there was a review of the certificate of taxation by the Court pending when the notice was issued; the Court held that the fact that the order was subject to a review, which was in essence an appeal, did not prevent it being a final order for the purposes of the Bankruptcy Act.
The taxing officer's certificate of 22 December, 1993 was effective to quantify the amount of Mr. Stubberfield's liability to the judgment creditor under the costs order. It was not subject to review either on the date it was issued or on the date when it was served. Even though it was subject to a pending review by the Court by the time the petition was issued and when the petition came on for hearing, that does not prevent the costs order in respect of which the certificate was issued being a final judgment for the purposes of s. 40(1)(g). Of course, if Mr. Stubberfield had been successful in overturning the costs certificate by the time the petition came on for hearing, the Court would not have been able to find that the matter referred to in s. 52(1)(c) had been proved and would have been bound to dismiss the petition. But an unresolved review of the certificate is of no assistance to Mr. Stubberfield.
The petition will be dismissed.
I certify that this and the preceding
19 pages are a true copy of the
reasons for judgment herein of the
Honourable Justice Drummond.
Associate:
Date: 12 December, 1995
The debtor appeared in person.
Counsel for the judgment creditor: Mr. P. Favell
Solicitors for the judgment
creditor:Baker Johnson
Dates of Hearing: 5 and 16 December, 1994
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