Richardson v RSPCA NSW
[2010] FMCA 491
•15 July 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RICHARDSON v RSPCA NSW | [2010] FMCA 491 |
| BANKRUPTCY – Application to set aside bankruptcy notice – where application filed after time for compliance with the bankruptcy notice expired. |
| Bankruptcy Act 1966 (Cth), ss.33, 40, 41, 52 Bankruptcy Regulations 1996 (Cth), reg.16.01 Federal Court (Bankruptcy) Rules 2005 (Cth), r.3.02 Fines Act 1996 (NSW), s.122 Prevention of Cruelty to Animals Act 1979 (NSW), ss.30A, 31, 34AA |
| Australian Securities and Investment Commission v Forge (2003) 133 FCR 487; [2003] FCAFC 274 Batterham v Makeig (2010) 7 ABC(NS) 575; [2010] FCA 50 Brookfield v Yevad Products Pty Ltd(formerly Davey Products Pty Ltd) (2002) 192 ALR 111; [2002] FMCA 82 Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264; [1997] FCA 151 Constantinidis v Hatton (2006) 201 FLR 252; [2006] FMCA 860 Corney v Brien (1951) 84 CLR 343; [1951] HCA 31 Emerson and Another v Wreckair Pty Ltd (1992) 33 FCR 581; (1992) 109 ALR 539 Favelle Mort Limited v Murray (1976) 133 CLR 580; [1976] HCA 13 James v Abrahams (1981) 51 FLR 16; [1981] FCA 46 Klewer v Walton [2004] FCAFC 284 Minister for Immigration and Multicultural and Indigenous Affairs v SZANS (2005) 141 FCR 586; [2005] FCAFC 41 Olivieri v Stafford and Others (1989) 24 FCR 413; (1989) 91 ALR 91 O'Meara v Deputy Commissioner of Taxation [2009] FCA 1575 Re Ferguson; Ex parte E.N. Thorne & Co. Pty Ltd(In Liq.) (1969) 14 FLR 311; [1970] ALR 177 Singh v New Zealand Breweries Limited (No. 2)[2009] FMCA 1281 Streimer v Tamas (1981) 54 FLR 253; (1981) 37 ALR 211 Swarbrick v Burge and Others (2009) 236 FLR 311; [2009] FMCA 985 Walton v National Mutual Life Association of Australasia Limited (1994) 49 FCR 406; [1994] FCA 1114 Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5 |
| Applicant: | JANICE LESLEY RICHARDSON |
| Respondent: | ROYAL SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS NSW |
| File Number: | SYG 1039 of 2010 |
| Judgment of: | Barnes FM |
| Hearing date: | 1 July 2010 |
| Delivered at: | Sydney |
| Delivered on: | 15 July 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms F Sinclair |
| Solicitors for the Respondent: | Sally Nash & Co |
ORDERS
The application be dismissed.
The applicant pay the costs of the respondent as agreed and in the absence of agreement taxed in accordance with the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1039 of 2010
| JANICE LESLEY RICHARDSON |
Applicant
And
| ROYAL SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS NSW |
Respondent
REASONS FOR JUDGMENT
This application
This is an application to set aside a bankruptcy notice. For the reasons given below I am of the view that the application should be dismissed with costs.
By application filed on 11 May 2010 Ms Richardson sought that Bankruptcy Notice NN461 of 2010 be set aside “to allow cross-demand of $45,000.00 against respondent RSPCA”. Ms Richardson, who at that time was self-represented, also sought an extension of time for compliance with the Bankruptcy Notice. She stated in her application that the Bankruptcy Notice was served on her on 19 April 2010.
Background
On 22 January 2008 charges brought against Ms Richardson under the Prevention of Cruelty to Animals Act 1979 (NSW) (the POCAA) were heard by the Local Court of New South Wales. A Certificate of Appeal issued under s.178 of the Evidence Act 1995 (NSW) (which, together with a sealed certificate of the District Court orders and an extract from the transcript of the proceedings in the District Court before Norrish DCJ, is the only evidence before this court of what occurred in the Local Court at first instance and in the District Court on appeal) states that a number of fines were imposed on Ms Richardson and records under the heading “Costs and disbursements” that Ms Richardson was ordered to meet witness expenses and to pay the amount of $5,388.76 to the RSPCA under s.30A (which, it is not disputed, is a reference to s.30A of the POCAA which provides that the court may order payment of certain costs incurred by an entity such as the RSPCA where a person is convicted of an offence against that Act). Section 30A(2) of the POCAA provides that:
[w]here the court has made [such] an order…the person or organisation to whom or which the specified amount is required by the order to be paid, or a person acting on behalf of any such organisation, may recover the amount as a debt in a court of competent jurisdiction from the person who is required by the order to pay that amount.
In addition, according to the Certificate of Appeal the Local Court ordered:
Fined $500 (each) total $9000) Court costs $70 other costs (concurrent on each).
Costs and disbursements:
(S215) $37311.00 Witness expenses: $3272.50 Total S30A expenses: $5388.76
Total amount $45972.26. Costs and disbursements by RSPCA.
S9 Bond period 2 years (each). To be of good behaviour.
The Local Court made other orders under s.31 of the POCAA and also ordered:
Notify – S122 of the Fines Act 1996 be made Prosecution 50%.
Section 122 of the Fines Act 1996 (NSW) provides for payment of a share of a fine to a prosecutor other than a police officer where the Act imposing or authorising the imposition of a fine does not make any provisions for its application when recovered.
The District Court upheld Ms Richardson’s appeal against her convictions in some respects and dismissed her appeal against findings of guilt in other respects but varied the penalties imposed and the consequential orders. The Certificate of Appeal records that the following orders were also made by Norrish DCJ on 30 January 2009:
4. I award costs for the local court proceedings to the RSPCA (the prosecutor) in the sum of $12681.00.
5. I confirm s 30A POCAA expenses awarded in the sum of $5388.76.
6. Each party pays its own costs of the appeal.
7. Costs and s 30A POCAA expenses to be paid to the Registrar of the Local Court at Tenterfield within 28 days of this order.
On 10 February 2010 Bankruptcy Notice NN461 of 2010 was issued by the Official Receiver. The Bankruptcy Notice claims that Ms Richardson owes the RSPCA a debt of $18,069.76, which is described in the Schedule as the “[a]mount of judgments or orders”. Annexed to the copy of the Bankruptcy Notice served on Ms Richardson is a sealed copy of the judgment/order of the District Court of New South Wales, Criminal Appeal Division made on 30 January 2009 in matter number 2008/00005021, the appeal proceedings described in the Certificate of Appeal, that records the Royal Society for the Prevention of Cruelty to Animals (NSW) as plaintiff and Ms Richardson as defendant. The certificate of order, which is dated 29 January 2010, sets out the terms of the orders made on appeal, including the variation of penalties, an order made under s.31 of the POCAA in relation to disposition and keeping of cattle by Ms Richardson and the following:
4. That Janice Lesley Richardson pay the costs of Royal Society for the Prevention of Cruelty to Animals NSW of the Local Court proceedings in the sum of $12,681.00.
5. That Janice Lesley Richardson pay the s 30A POCAA costs to the Royal Society for the Prevention of Cruelty to Animals NSW in the sum of $5,388.76.
6. Each party pays its own costs of the appeal.
7. Costs and s 30A POCAA expenses to be paid to the Registrar of the Local Court at Tenterfield within 28 days of this order.
These proceedings
Ms Richardson was represented by counsel at the hearing. In addition, a telephone link with Ms Richardson was arranged so that she was able to hear the proceedings. She relied on three affidavits sworn by her on 6 May 2010, 9 May 2010 and 15 June 2010.
In oral submissions counsel for Ms Richardson confirmed that, contrary to the application to set aside the Bankruptcy Notice, no reliance was now placed in these proceedings on any contention that Ms Richardson had a counter-claim, set-off or cross demand within s.40(1)(g) of the Bankruptcy Act 1966 (Cth) (the Act). Rather, it was now sought to be asserted by Ms Richardson that she was not a debtor of the respondent (the RSPCA) and that on that basis the Bankruptcy Notice was a nullity and should be set aside.
By a notice of opposition filed on 17 May 2010 the respondent, the RSPCA, asserted that the application was filed out of time, that the application and affidavit in support did “not disclose a genuine counter claim to satisfy Part 3.02(2)(sic) of the Federal Court (sic) (Bankruptcy) Rules”; that there was and could be no application to set aside the judgment on which the Bankruptcy Notice was based as the claim arose by virtue of an appeal to the District Court of New South Wales by Ms Richardson; and that an act of bankruptcy had been committed. The respondent relied on an affidavit of Sally Nash and an affidavit of Christie Boyd filed on 17 May 2010. The affidavit of Ms Boyd states that it was sworn on 14 January 2010, although it attests to service of the bankruptcy notice on 14 May 2010.
The solicitor for the RSPCA submitted that the application to set aside the Bankruptcy Notice was out of time because it was filed after the time for compliance with the Bankruptcy Notice, that it was not in compliance with r.3.02 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) and hence was not competent and that in any event Ms Richardson had not established that there was no debt due to the RSPCA. It was contended that an act of bankruptcy had been committed and that the court should not make any order other than to dismiss the application.
A number of issues emerged in the hearing.
Service of the Bankruptcy Notice
Ms Richardson did not state the date on which the Bankruptcy Notice was served on her in any affidavit accompanying the application to set aside the Bankruptcy Notice as required by r.3.02(1)(b)(ii) of the Federal Magistrates Court (Bankruptcy) Rules. However in the application it was stated that service took place on 19 April 2010.
The Bankruptcy Notice provides that the debtor is required within 21 days after service to comply with the Bankruptcy Notice. The parties agree that in this case the time for compliance expired no later than 10 May 2010. The application to set aside the Bankruptcy Notice was filed on 11 May 2010.
The affidavit of service of Christie Boyd attests to service of the Bankruptcy Notice on Ms Richardson by letter sent by ordinary pre-paid express post on 14 April 2010 addressed to Ms Richardson’s last-known address (in accordance with reg.16.01 of the Bankruptcy Regulations 1996 (Cth)), although the affidavit states that it was sworn on 14 January 2010. The applicant did not raise any issue in this respect. In any event, it is not necessary for present purposes to determine precisely when service should be deemed to have occurred (see reg.16.01(2)(a) of the Bankruptcy Regulations), because even if Ms Richardson was not served with the Bankruptcy Notice until 19 April 2010, it is not in dispute that her application to set aside the Bankruptcy Notice was filed after the expiration of 21 days after that date and hence that it was made outside the time fixed for compliance with the requirements of the Bankruptcy Notice.
No extension of time for compliance
Insofar as the applicant is seeking an order extending the time for compliance with the Bankruptcy Notice, no such order can be made. The application to set aside the Bankruptcy Notice was filed outside the time fixed for compliance with that Bankruptcy Notice.
This is not a case in which the application to set aside the Bankruptcy Notice was made within the time fixed for compliance so that the principles in Streimer v Tamas (1981) 54 FLR 253; (1981) 37 ALR 211 could be applied to make an order outside that time extending the time for compliance on the basis that there had been some inadvertent omission to make such an order. Nor could the time for compliance be extended under s.33(1)(c) of the Bankruptcy Act or pursuant to some general inherent power, given the express exclusion from that provision of the time fixed for compliance with the requirements of a bankruptcy notice and the express power granted by s.41(6A) of the Act. As stated in James v Abrahams (1981) 51 FLR 16; [1981] FCA 46, the effect of these provisions is to preclude the implication of a general inherent power in the court to extend the time for compliance with the requirements of a bankruptcy notice.
The power in s.41(6A) of the Act does not arise for consideration in this case because no application was made to set aside the Bankruptcy Notice before the expiration of the time fixed for compliance and there is no suggestion that any proceedings to set aside the District Court judgment or order in respect of which the Bankruptcy Notice was issued were instituted within the time fixed for compliance. There is no evidence of any application to set aside or vary the orders made by the District Court or of any appeal to the Supreme Court of New South Wales.
Nor are the preconditions in s.41(7) of the Act met, as the debtor did not apply to the court before the expiration of the time fixed for compliance with the requirements of the Bankruptcy Notice. Hence there could be no deemed extension of the time for compliance with the Notice. In these circumstances it is not necessary to consider the court’s discretion in relation to an application for an extension of time for compliance with a bankruptcy notice.
Section 40(1)(g) of the Bankruptcy Act
The application to set aside the Bankruptcy Notice appears to assert the existence of a cross demand and to be based on s.40(1)(g) of the Act, which provides that a debtor commits an act of bankruptcy:
… if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia--within the time specified in the notice; or
(ii) where the notice was served elsewhere--within the time fixed for the purpose by the order giving leave to effect the service;
comply with the requirements of the notice or satisfy the Court that he or she has a counter‑claim, set‑off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter‑claim, set‑off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
The application was made after 21 days from the date of service of the Bankruptcy Notice. The debtor cannot satisfy the court within the time specified in the Bankruptcy Notice that she has a cross demand within s.40(1)(g). In any event, her Counsel stated that Ms Richardson no longer sought to rely on this ground.
Rule 3.02 of the Federal Magistrates Court (Bankruptcy) Rules 2006
Under r.3.02(1) of the Federal Magistrates Court (Bankruptcy) Rules an application to set aside a bankruptcy notice must be accompanied by:
(a) a copy of the bankruptcy notice; and
(b) an affidavit stating:
(i)the grounds in support of the application; and
(ii)the date when the bankruptcy notice was served on the applicant; and
(c) a copy of any application to set aside the judgment or order in relation to which the bankruptcy notice was issued and any material in support of that application.
Further, under r.3.02(2):
If the application is based on the ground that the debtor has a counter‑claim, set‑off or cross demand mentioned in paragraph 40 (1) (g) of the Bankruptcy Act, the affidavit must also state:
(a) the full details of the counter‑claim, set‑off or cross demand; and
(b)the amount of the counter‑claim, set‑off or cross demand and the amount by which it exceeds the amount claimed in the bankruptcy notice ; and
(c)why the counter‑claim, set‑off or cross demand was not raised in the proceeding that resulted in the judgment or order in relation to which the bankruptcy notice was issued.
The respondent submitted that the application did not comply with all the requirements of r.3.02. First, an application to set aside a bankruptcy notice must be accompanied by a copy of the bankruptcy notice. A partial, but not complete, copy of the Bankruptcy Notice was annexed to Ms Richardson’s “Affidavit in Support”. Secondly, r.3.02(1)(b) requires the application to be accompanied by an affidavit stating the grounds in support of the application and the date when the bankruptcy notice was served on the applicant. Strictly speaking, this requirement was not met, notwithstanding the later assertion (in the hearing) that the applicant sought to contend that the Bankruptcy Notice was a nullity because the debt was not owed to the RSPCA. The supporting affidavits filed on 11 May 2010 do not state the grounds now sought to be relied on in support of the application to set aside the Bankruptcy Notice (as required by r.3.02(1)(b)(i)).
While the solicitor for the respondent took no issue with the fact that the statement as to the date when the Bankruptcy Notice was served on the applicant was in the application and not in the sworn affidavit accompanying the application (insofar as it was not in dispute that the application to set aside the Bankruptcy Notice was filed outside the time for compliance), strictly speaking r.3.02(1)(b)(ii) was not met.
At the time that the application was filed it was said to be based on the ground that the debtor had a cross demand of $45,000 against the RSPCA. In such circumstances r.3.02(2) would apply. The respondent submitted that the necessary “full details of the counter-claim, set-off or cross demand” were not stated in the accompanying affidavits. In her supporting affidavit of 6 May 2010 Ms Richardson stated that the RSPCA “nearly killed” three of her heifers and had failed to “ear tag” cattle and that her health had been severely affected by the “illegal and unnecessary activities of the RSPCA”. These contentions do not constitute a statement of full details of any cross demand.
Ms Richardson also made claims about whether the RSPCA inspectors had a warrant and when she was served with a notice of seizure and took issue with the fact that the RSPCA had proceeded with a prosecution despite an earlier reassurance to the contrary in circumstances where she had been hospitalised and her farm help had not been feeding the cattle. While these matters may have been relevant to the prosecution proceedings and penalties, the affidavits do not, strictly speaking, state full details of any asserted cross demand. Ms Richardson claimed that her then solicitor had refused to counter-claim against the RSPCA in the Local Court (but see Walton v National Mutual Life Association of Australasia Limited (1994) 49 FCR 406; [1994] FCA 1114).
Even if a liberal approach could be taken to the question of whether the specification of a cross demand in an initial supporting affidavit met the requirements of r.3.02(2), in this case not only did the application not meet the other strict requirements of r.3.02, but also it was not made within the time for compliance with the Bankruptcy Notice.
The solicitor for the respondent submitted that the application should be dismissed on the basis that it was not competent as the requirements of r.3.02 were not met, in accordance with the approach taken by Edmonds J in O'Meara v Deputy Commissioner of Taxation [2009] FCA 1575 (and see Batterham v Makeig (2010) 7 ABC(NS) 575; [2010] FCA 50). In O'Meara, no affidavit was filed with or accompanying an application to set aside a bankruptcy notice which was filed within the time for compliance with the bankruptcy notice. Edmonds J held that there had been a non-compliance with r.3.02 of the Federal Court (Bankruptcy) Rules 2005 (Cth) (which are, relevantly, in the same form as the Federal Magistrates Court (Bankruptcy) Rules) because no affidavit was filed with or accompanying the application and, while affidavits were filed subsequently, no affidavits satisfying the requirements of the Rules had been filed before the expiration of the time fixed for compliance with the bankruptcy notice, even though the application to set aside the bankruptcy notice was filed within that time.
His Honour stated at [10]:
It follows that whether Mr O’Meara relies on para 40(1)(g) (when sub-rule 3.02(2) would be relevant) or some other ground (when para (b) of sub-rule 3.01 would be relevant) to set aside the Bankruptcy Notice, his application is not competent. It is as if no application to set aside the Bankruptcy Notice was ever filed. Moreover, because the deemed extension of time under s 41(7) is not triggered and in the absence of an actual extension of time for compliance with the Bankruptcy Notice, Mr O’Meara committed an act of bankruptcy on the expiration of the time prescribed in the Bankruptcy Notice for compliance with its requirements.
Nonetheless, Edmonds J went on to state that even if Mr O’Meara’s application was competent and the evidence in his later affidavits could be relied upon, he would nevertheless dismiss the application as he was not satisfied that the debtor had a counter-claim, set-off or cross demand within s.40(1)(g) of the Act, there was no contention that the bankruptcy notice was an abuse of process and no suggestion that the form or content of the bankruptcy notice, its service or the existence of the debt on which the bankruptcy notice was founded were in issue.
In O’Meara Edmonds J referred to the remarks of Emmett J in Australian Securities and Investment Commission v Forge (2003) 133 FCR 487; [2003] FCAFC 274 at [27] pointing out that the Bankruptcy Act gives no general discretion to the court to set aside bankruptcy notices “that are valid in form and not an abuse of process”. Emmett J had stated that the grounds upon which a bankruptcy notice may be set aside must relate to the form or content of the bankruptcy notice, service, or the existence of the debt upon which the judgment, and in turn the notice, was founded. His Honour observed that the jurisdiction differed from the expressly discretionary jurisdiction to make a sequestration order under s.52(1) of the Bankruptcy Act.
The approach taken in O’Meara was followed Buchanan J in Batterham in circumstances where the affidavit accompanying the bankruptcy notice did not state the date on which the bankruptcy notice was served. His Honour pointed (at [3]) to the fact that Edmonds J in O’Meara had referred to the “necessity for strict compliance with rule 3.02” of the Rules. Buchanan J observed (at [4]):
There is a further requirement which arises under section 41 of the Bankruptcy Act 1966 (Cth), namely that an application to set aside a bankruptcy notice must be made within the time for compliance with the notice (see in particular section 41(6A) and (7)).
In Batterham the application had been made within “the time required by s 41” (at [4]) but this was said not to address the requirement that the affidavit accompanying the application state the date of service of the bankruptcy notice (albeit that an annexure to the affidavit consisting of an affidavit filed in another court referred to service). Buchanan J stated that as a matter of comity he would not depart from the view of Edmonds J in O’Meara as to the proper construction of r.3.02. Hence an order extending time for compliance with the bankruptcy notice was not made and the application to set aside the bankruptcy notice was dismissed as not competent (at [8]).
Counsel for the applicant raised no arguments as to why this court should not follow the strict approach taken in relation to the construction of r.3.02 by Edmonds J in O’Meara. Notwithstanding the consequences of such a strict approach I cannot say that it is clearly wrong. Even if this court is not bound by judgments of the Federal Court at first instance (see Favelle Mort Limited v Murray (1976) 133 CLR 580; [1976] HCA 13), I am of the view that as a matter of comity I should not depart from the approach taken by Edmonds J (and Buchanan J) (see Minister for Immigration and Multicultural and Indigenous Affairs v SZANS (2005) 141 FCR 586; [2005] FCAFC 41 at [35] – [39]).
On this basis the application to set aside the Bankruptcy Notice would not be competent because the requirements of r.3.02 were not met. As Edmonds J stated in O’Meara at [10]: “It is as if no application to set aside the Bankruptcy Notice was ever filed.”
Other issues
However, in O’Meara Edmonds J went on to state that even if the application to set aside the bankruptcy notice was competent despite the non-compliance with r.3.02, he would nevertheless dismiss the application. I consider that it is appropriate to consider the other matters raised in these proceedings on this basis.
In this instance, apart from the r.3.02 issue, the applicant faces the obstacle that the application to set aside the Bankruptcy Notice was not filed within the time for compliance with the Bankruptcy Notice. She provided a partial explanation for the delay, based on her isolation and physical incapacity, a broken facsimile machine and the need to rely on another person to fax her application to the court. However the time for compliance is fixed in the Bankruptcy Notice and the date of filing is not in dispute. The court does not have any discretion in that respect. On this basis the respondent contended that, consistent with O’Meara, an act of bankruptcy was committed. It is important and in accordance with public policy that such an act be made certain (see Byron v Southern Star Group Pty Ltd (1997) 73 FCR 264; [1997] FCA 151).
As the solicitor for the respondent pointed out, no issue was raised as to the form or service of the Bankruptcy Notice. There is no suggestion that the amount claimed has been paid. There is no doubt that there was a final judgment or order of the District Court sufficient to support the issue of a Bankruptcy Notice. There has been no stay of execution with respect to the orders made by the District Court. As indicated above, the applicant initially sought to assert the existence of a cross demand, but did not file the application within the time fixed for compliance so no issue arose as to any deemed extension of time and there is otherwise no basis on which any discretion to extend the time for compliance with the Bankruptcy Notice can be exercised given the time at which the application was filed.
Counsel for the applicant submitted, however, that the debt relied on in the Bankruptcy Notice (consisting of the costs of the Local Court proceedings ordered by the District Court) was not owed to the RSPCA but rather to an individual RSPCA inspector as “prosecutor” and hence that the Bankruptcy Notice should be set aside as a nullity.
Apart from the competency of the application, an issue that arises in this instance is whether a bankruptcy notice can be set aside where the application is not filed until after the time for compliance with the notice has expired. Counsel for the applicant submitted generally that the court should set aside the Notice notwithstanding the time at which the application was filed, based on what was said to be the approach taken in Streimer v Tamas. However, as set out above, Streimer v Tamas was concerned with the different issue of whether the time for compliance with a bankruptcy notice could be extended where the application to extend the time for compliance was made after it had already expired. In that case Deane and Ellicott JJ found that the court could make orders extending the time for compliance with the bankruptcy notice under s.41(6A) of the Act notwithstanding that at the time of making the order the time for compliance with the bankruptcy notice had already expired, provided that one of the two limbs of sub-section (6A) had been fulfilled. However in this case neither of the limbs of s.41(6A) has been satisfied. The application to set aside the Bankruptcy Notice was not made before the time fixed for compliance. Nor were any proceedings instituted to set aside the District Court judgment or order within that time.
The solicitor for the respondent referred to the decision of Lucev FM in Swarbrick v Burge and Others (2009) 236 FLR 311; [2009] FMCA 985. In that case his Honour was dealing with circumstances in which an application to set aside a bankruptcy notice was made before the expiration of the time fixed for compliance with the notice. However neither the application nor the supporting and subsequent affidavits filed within the time for compliance expressly set out grounds on which the bankruptcy notice was sought to be set aside. Relevantly, his Honour found that as the issues of concern expressed by the debtor provided no basis on which to impugn the bankruptcy notice (and in particular the costs order on which the bankruptcy notice rested), they could not constitute grounds to set aside the bankruptcy notice under s.41(6A) of the Bankruptcy Act. On that basis Lucev FM concluded that there had been no application to set aside the bankruptcy notice under s.41(6A) and no application for an order of the type envisaged by s.41(7) made prior to the time fixed for compliance with the bankruptcy notice (notwithstanding that the applicant subsequently sought to make such a claim). Lucev FM held (at [50]) that the later claim for relief was made outside the time for compliance with the bankruptcy notice and hence could not trigger the deemed extension of time in s.41(7) and that as there had been no application to set aside the bankruptcy notice made before the time for compliance expired the application must fail. His Honour held that in such circumstances the act of bankruptcy had already been committed. Nonetheless, his Honour considered the merits of the asserted cross demand before concluding that the application under s.41(7) could not succeed.
It is well-established that the court’s power to extend the time for compliance with a bankruptcy notice when an application to set aside the notice has been filed within time fixed for compliance carries with it the power to set aside the bankruptcy notice (Australian Securities and Investment Commission v Forge and see s.30 of the Act). This is not such a case. Insofar as the application purported to be of the nature referred to in s.41(6A) or s.41(7) of the Act it has not been established that the court has power to extend the time for compliance with the Bankruptcy Notice or to set aside the Bankruptcy Notice. The applicant has not met the requirements of either s.41(6A) or s.41(7) of the Act.
The applicant did not address the court on any authorities relevant to the issue of whether and when the court has power to consider an application to set aside a bankruptcy notice made after the time fixed for compliance (see for example Singh v New Zealand Breweries Limited (No. 2)[2009] FMCA 1281). Counsel for the applicant submitted that because the applicant sought to have the Bankruptcy Notice set aside on a ground that went to the existence of the debt on which the Bankruptcy Notice was based the court would have power to hear such an application notwithstanding that the time for compliance with the Bankruptcy Notice had passed.
However, even if in some circumstances an application to set aside a bankruptcy notice made outside the time fixed for compliance may be considered (in particular where issue is taken with liability for the debt on which the notice is based), in this case I am not persuaded that the Bankruptcy Notice should be set aside.
In essence, the applicant contended that that part of the debt that related to the costs of the Local Court proceedings as ordered by the District Court was not in fact a debt owed to the RSPCA and that the court should in these proceedings go behind the judgment/order of the District Court for the purpose of considering whether the costs order was founded on a real debt to determine whether Ms Richardson in reality owed the RSPCA the costs which Norrish DCJ held that she owed it. Reliance in that respect was placed on Re Ferguson; Ex parte E.N. Thorne & Co. Pty Ltd(In Liq.) (1969) 14 FLR 311; [1970] ALR 177.
The applicant contended that on appeal Norrish DCJ of the District Court erred in awarding costs to the RSPCA as the prosecutor, in that he named the organisation rather than the inspector. On this basis it was submitted that the orders taken out by the RSPCA as the basis for the Bankruptcy Notice were null and void and that the court should set aside the Bankruptcy Notice.
Counsel for the applicant submitted that the respondent (the RSPCA) was not in fact a creditor of the applicant, but rather that the creditor was RSPCA Inspector Alistair Hills, on the basis that the Court Attendance Notices issued prior to the Local Court proceedings stated (in details of the court listing) beside the word “Prosecutor: RSPCA Inspector Alistair Hills” (albeit it was also stated beside the heading “Department/Organisation: Royal Society for the Prevention of Cruelty to Animals”). It was contended that the Local Court proceedings were brought by Inspector Hills, consistent with the fact that under s.34AA of the POCAA proceedings for an offence against that Act may be instituted by an inspector within the meaning of Division 2 of Part 2A of that Act (as well as by an approved charitable organisation such as the RSPCA and certain other specified entities or persons).
The applicant submitted on this basis that the orders as entered in the District Court proceedings were incorrect, in that they named the RSPCA as the entity to which costs should be paid as prosecutor. The applicant took issue not only with the sealed copy of orders annexed to the Bankruptcy Notice but also with the Certificate of Appeal issued by the District Court on 6 December 2009, which by virtue of s.178 of the Evidence Act is evidence of the orders made by the Local Court and the District Court. As set out above, it refers to orders made for payments of costs to the RSPCA in the Local Court and in the District Court. It was nonetheless contended by the applicant that under s.215 of the Criminal Procedure Act1986 (NSW) costs may only be awarded to “the prosecutor”, who in this case was said to be Inspector Hills and not the RSPCA.
The applicant submitted that the Local Court at Armidale in fact ordered that Ms Richardson pay fines and costs to Inspector Hills as prosecutor. However there is no evidence before the court to support this submission. The Certificate of Appeal is to the contrary. It refers to orders made by the Local Court for payment of costs and disbursements incurred by the RSPCA.
Even if the court can consider a ground such as that raised by the applicant on the basis that it goes to the existence of the debt on which the Bankruptcy Notice was based, notwithstanding that the application was filed outside the time for compliance and did not meet the requirements of r.3.02 (see Brookfield v Yevad Products Pty Ltd(formerly Davey Products Pty Ltd) (2002) 192 ALR 111; [2002] FMCA 82), I am not persuaded that the court should, in these proceedings, go behind the judgment/order of the District Court in the manner contended for by the applicant, rather than accepting it as proof of the debt due (see Wren v Mahony (1972) 126 CLR 212; [1972] HCA 5 and Corney v Brien (1951) 84 CLR 343; [1951] HCA 31).
The District Court ordered that Ms Richardson pay the RSPCA (as prosecutor) costs for the Local Court proceedings in the sum of $12,681.00. This is the order disputed by the applicant. However, in addition the court ordered that Ms Richardson pay the s.30 POCAA costs of $5,388.76 to the RSPCA. The Bankruptcy Notice was based on a total costs order of $18,069.76. Critically, even if there was an irregularity in the identification of the prosecutor in the costs order made by the District Court in relation to the costs of the Local Court proceedings, no issue is taken with that part of the costs order in favour of the RSPCA that relates to s.30A of the POCAA. Hence the grounds of challenge are such that, even if accepted, the amount of the debt to the RSPCA would still be equal to or in excess of the minimum amount for which a creditor can petition for bankruptcy (see s.44 of the Act; Olivieri v Stafford and Others (1989) 24 FCR 413; (1989) 91 ALR 91 and Emerson and Another v Wreckair Pty Ltd (1992) 33 FCR 581; (1992) 109 ALR 539). Insofar as it may be intended to be submitted that there was an overstatement of the debt in the Bankruptcy Notice, there is no suggestion that any notice was given under s.41(5) of the Act.
The “defect” asserted is not such that if made out the Bankruptcy Notice would be invalid or a nullity because there was no debt at all owed to RSPCA (and see Brookfield v Yevad Products Pty Ltd at [7] – [13] per Raphael FM).
In all the circumstances the evidence before the court is not such as to satisfy me that the court should go behind the judgment of the District Court or set aside the Bankruptcy Notice as contended for by the applicant, even if the application were to be regarded as competent.
Finally, while counsel for the applicant suggested generally that the Court should not follow the approach I took in Constantinidis v Hatton (2006) 201 FLR 252; [2006] FMCA 860, that case did not involve going behind a judgment, but rather the issue of whether a judgment was irregularly obtained or otherwise defective or deficient on its face in circumstances where, among other things, an order had been made for payment of costs to a registrar of the Local Court. Insofar as it is intended to raise an issue in that respect (because such an order was made by the District Court), in Klewer v Walton [2004] FCAFC 284 the Full Court of the Federal Court rejected any argument that a creditor was not entitled to enforce a costs order by the issue of a bankruptcy notice where there was such an order in place. The Court did not have the benefit of detailed submissions in relation to such issues. I am not persuaded that any concerns raised in that respect form a basis on which the Bankruptcy Notice should be set aside.
I note, for the benefit of Ms Richardson, that the issues raised in her affidavit and in counsel’s submissions about her personal circumstances and her attempts to obtain further finance to pay the debt are not matters that can be taken into account in determining whether there is a basis on which the Bankruptcy Notice can be set aside, albeit issues about a debtor’s solvency and personal circumstances may be relevant on the hearing of any creditor’s petition, should such a petition eventuate.
On the material before the court I am not satisfied that the Bankruptcy Notice should be set aside. The application should be dismissed with costs.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of Barnes FM
Associate:
Date: 15 July 2010
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