Ritson v Commissioner of Police, New South Wales Police Force
[2018] FCCA 916
•20 April 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| RITSON v COMMISSIONER OF POLICE, NEW SOUTH WALES POLICE FORCE | [2018] FCCA 916 |
| Catchwords: BANKRUPTCY – Application to set aside Bankruptcy Notice – whether the Bankruptcy Notice met the requirements under the Bankruptcy Act 1966 (Cth) – whether the Commissioner of Police is capable of being a creditor – whether the Bankruptcy Notice is founded on an irregular judgment – application dismissed. |
| Legislation: Bankruptcy Act 1966, ss.40, 41, 306 Bankruptcy Regulations 1996 (Cth), reg.4.02 |
| Cases cited: Adams v Lambert (2006) 228 CLR 409; [2006] HCA 10 Brown v Rezitis (1970) 127 CLR 157; [1970] HCA 56 Ritson v Commissioner of Police [2013] NSWSC 1396 Ritson v Commissioner of Police, New South Wales Police Force [2017] FCA 1192 |
| Applicant: | BRENDAN RITSON |
| Respondent: | COMMISSIONER OF POLICE, NEW SOUTH WALES POLICE FORCE |
| File Number: | SYG 1139 of 2017 |
| Judgment of: | Judge Smith |
| Hearing date: | 25 January 2018 |
| Date of Last Submission: | 25 January 2018 |
| Delivered at: | Sydney |
| Delivered on: | 20 April 2018 |
REPRESENTATION
| The applicant appeared in person. |
| Counsel for the Respondent: | Mr P Afshar |
| Solicitors for the Respondent: | Coleman Greig Lawyers |
ORDERS
The application be dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1139 of 2017
| BRENDAN RITSON |
Applicant
And
| COMMISSIONER OF POLICE, NEW SOUTH WALES POLICE FORCE |
Respondent
REASONS FOR JUDGMENT
(As corrected)
The applicant commenced proceedings in the Supreme Court of New South Wales against the respondent in October 2012. On 27 September 2013, Garling J dismissed those proceedings and ordered the applicant to pay the respondent’s costs. Those costs were assessed under the Legal Profession Act 2004 (NSW) (LPA) and judgment was entered in the Local Court of New South Wales in respect of that assessment on 23 November 2016.
On 7 December 2016, Bankruptcy Notice ‘BN210799’ was issued by the Official Receiver at the request of the respondent and was served on the applicant. In these proceedings, the applicant seeks an order that the Bankruptcy Notice be set aside.
In his amended application, the applicant raises six separate grounds in support of the application. One of those grounds is that the solicitors representing the respondent in these proceedings do not have, and never have had, any authority to act on behalf of the respondent. The applicant relies upon the same argument in support of his application to restrain those solicitors from acting in these proceedings.
The applicant has also raised, late and without leave, another argument in support of his application. Leave is refused to rely upon that argument and the application will otherwise be dismissed. The application to restrain the respondent’s solicitors from acting will also be dismissed. The following are the reasons for those conclusions.
Background
The applicant was a police officer serving in the New South Wales Police Force (NSW Police Force) for almost 10 years until 10 March 2011. On that day, he was discharged as a result of recognised work related injuries.
In October 2012, the applicant complained to an Inspector who was the Duty Officer of the King’s Cross Local Area Command of the NSW Police Force that a person resident in Victoria had made knowingly false accusations against him and the applicant asked that there be an investigation into those accusations. That request was declined.
On 29 October 2012, the applicant commenced proceedings in the Supreme Court seeking an order in the nature of mandamus requiring the respondent to investigate his complaint. Garling J refused that application because he found that there was no enforceable duty to investigate a complaint such as that made by the applicant (see Ritson v Commissioner of Police [2013] NSWSC 1396 at [75]) and also because, even if there was a duty, the discretion to grant relief would not have been exercised: Ritson at [90]. For those reasons, his Honour made orders dismissing the applicant’s summons and requiring the applicant to pay the respondent’s costs.
The respondent applied for an assessment of the costs in accordance with the provisions of div.11 of pt.3.2 of the LPA. On 7 September 2015 a costs assessor issued 2 certificates of determination of costs: the first, showing an assessment of the respondent’s costs in the Supreme Court proceedings in the amount of $42,375.34; and the second assessing the costs of the assessment as $1,591.45 and indicating that they were to be paid by the costs respondent (the applicant in these proceedings).
Both of those certificates were filed by the respondent in the Registry of the Local Court and a single judgment was given in that Court requiring the applicant to pay the respondent the amount of $43,966.79. That amount is the sum of the amounts in the 2 certificates of assessment.
One of the applicant’s grounds is that the judgment given by the Local Court was irregular because the amounts of the 2 certificates were included in it. It will be necessary to return to the certificates and judgment in more detail when considering that ground.
The respondent’s solicitors then requested the Official Receiver to issue a Bankruptcy Notice on the basis of the judgment of the Local Court and the Bankruptcy Notice was issued on 7 December 2016. The applicant was served with the Bankruptcy Notice on or about 22 March 2017.
On 11 April 2017, the applicant wrote to the respondent’s solicitors by email stating:
…
The validity of the bankruptcy notice is disputed on grounds that include misstatement, namely the sum specified in the bankruptcy notice as the amount due to the creditor exceeds the amount in fact due.
…
No further details of that claim were given, but it was noted that the “notice” was given pursuant to s.41(5) of the Bankruptcy Act 1966 (Cth) (Act). These proceedings were commenced the following day. In the affidavit filed by the applicant in support of his application, the applicant explained that the Bankruptcy Notice failed “to include the payment made or credit allowed in respect to the sum of $89.30 debited from [the applicant’s] Police Bank account on 4 September 2016”.
The proceedings came before a Registrar of this Court and on 10 May 2017 the Registrar made certain procedural orders and adjourned the proceedings to 16 June 2017. The applicant sought review of those orders. On 6 June 2017, a Judge of the Court, rather than dealing with the orders the subject of the review, dismissed the application with costs. An appeal from that decision was successful and the matter was remitted to this Court for further hearing and determination: Ritson v Commissioner of Police, New South Wales Police Force [2017] FCA 1192. Further procedural orders were made by me and, rather than leaving the matter to be determined by a Registrar, the proceedings were transferred to my docket to be heard by me.
The matter was heard on 25 January 2018 and judgment was reserved.
Consideration
General principles
Before turning to the grounds raised by the applicant it is convenient to set out the general principles to be applied in proceedings in which the validity of a bankruptcy notice is in issue.
A bankruptcy notice is a “proceeding” for the purposes of the Act notwithstanding that it is not a curial process: Adams v Lambert (2006) 228 CLR 409 at [17]; [2006] HCA 10.
Section 306(1) of the Act provides:
Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court.
In Adams, the Court explained at [18]:
In its application to a bankruptcy notice, s 306 assumes the possibility of some failure to comply with a statutory requirement; that is, some defect or irregularity. In the present case, if there had been no failure to comply with a requirement of the Act and Regulations, there would be no issue as to the effect of s 306. In the event of such a failure, it must be asked whether the defect or irregularity is a formal defect or irregularity within the purview of s 306. If it is, then it becomes necessary to consider whether substantial injustice has been caused by the defect or irregularity, and whether the injustice cannot be remedied by an order of the court. The questions whether the defect or irregularity is a formal defect or irregularity, and whether substantial injustice has been caused and cannot be remedied, are separate and distinct, the latter question arising only if the former is answered in the affirmative. It may be accepted that, if a defect could cause substantial injustice, it may not easily be classified as a formal defect or irregularity. But the absence of claimed injustice does not conclude the separate question that arises under s 306 about whether the defect or irregularity is a formal defect or irregularity. Neither in Lewis (where the provision under which the interest was being claimed was stated to be s 101 of the Supreme Court Act 1986 (Vic) whereas it should have been s 100(7) of the Magistrates’ Court Act 1989 (Vic)) nor in the present case was it suggested that substantial injustice had been caused by the defect or irregularity.
(Emphasis added)
A bankruptcy notice is a nullity in 2 circumstances, namely, “if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice”: Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 79; [1988] HCA 34. Although the question of whether a bankruptcy notice could mislead a debtor is an objective one, regard may be had to relevant extraneous facts: Fuller JR, in the matter of Alford v Alford (2017) 252 FCR 168 at [64]; [2017] FCA 782, and the cases cited there.
With those principles in mind, I turn to consider each of the grounds in the application.
First ground: “There is no debt owing by the applicant to the Commissioner of Police, New South Wales Police Force.”
This ground is supported by the following particulars:
(a)The “Commissioner of Police” is:
(i)not a juristic (legal) person;
(ii)an office pursuant to section 24 of the Police Act 1990 (NSW);
(iii)incapable of being conferred with the costs order (being a chose in action or personal right of property) made in Ritson v Commissioner of Police [2013] NSWSC 1396.
(b)The said costs order was not made in favour of the natural person who occupied the office of Commissioner of Police, namely Mr Andrew Scipione AO, APM.
Section 41 of the Act relevantly provides that the “Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor” a final judgment or order of the kind described in sub-s.40(1)(g) of the Act.
The kind of judgment described in sub-s.40(1)(g) is one “the execution of which has not been stayed”.
There is no issue that the respondent has obtained a final judgment. There is also no issue (subject to what follows) that, as a result of the judgment of Garling J and the costs assessment that followed, the applicant owed the respondent money for costs incurred in the Supreme Court proceedings. What the applicant contends is that the judgments in the Supreme Court and the Local Court were irregular because the Commissioner of Police is a position, not a person. The applicant shows considerable chutzpah in that contention, given that he commenced proceedings against the respondent qua the Commissioner of Police. Leaving that aside, the ground is misconceived in any event.
The parties each relied on a number of authorities concerning different bodies and offices. None of those authorities is of direct assistance. Rather, the issue is to be determined by the proper construction of the relevant statute, the Police Act 1990 (NSW) (PA), and the law concerning the proper parties to proceedings seeking relief in the nature of prerogative writs such as mandamus.
Although the NSW Police Force has a history going back at least to The Police Regulation Act 1862 (NSW), the NSW Police Force as it now stands is established by s.4 of the PA. Section 5 of the PA provides that the NSW Police Force consists of the Commissioner, NSW Police Force senior executives and all other police officers and non-executive administrative employees employed under the PA.
The Commissioner is, pursuant to s.8 of the PA, “responsible for the management and control of the NSW Police Force”. It was no doubt for this reason that the applicant sought an order in the Supreme Court requiring the Commissioner to investigate the accusations made against him.
The Commissioner is “appointed by the Governor on the recommendation of the Minister”: s.24(1) of the PA. Given the numerous references to “person” in the remaining provisions in s.24, it is clear that only a person may be appointed as Commissioner. Thus, although the “Commissioner of Police” is an office, a reference to the Commissioner is, in fact and law, a reference to a natural person, namely, the person who holds the office of Commissioner from time to time by virtue of appointment under s.24: see also s.19(1) of the Interpretation Act 1987 (NSW) (IA).
However, that does not change the fact that the “Commissioner of Police”, named as such, was the correct respondent to the Supreme Court proceedings rather than the individual who held the office at the time: Brown v Rezitis (1970) 127 CLR 157 at 169; [1970] HCA 56; Kerr v Commissioner of Police [1977] 2 NSWLR 721 at 724; Commonwealth v Sex Discrimination Commissioner & Ors (1998) 90 FCR 179 at 191; [1998] FCA 1607. An order made against the Commissioner would bind the person who held that position from time to time. By parity of reasoning, an order in favour of the Commissioner in those proceedings would inhere in the person who held the position from time to time.
For those reasons, the applicant has not established that the respondent was not a “creditor” within the meaning of s.41 of the Act. The first ground is rejected.
Second ground: “The Official Receiver did not issue the Bankruptcy Notice on the application of the Commissioner of Police, NSW Police Force.”
This ground is supported by the following particulars:
(a)Rebecca Ann Hegarty of Coleman Greig Lawyers applied to the Official Receiver for the issue of the Bankruptcy Notice.
(b)Neither Rebecca Ann Hegarty nor Coleman Greig Lawyers was duly authorised to apply to the Official Receiver for the issue of the Bankruptcy Notice on behalf of the Commissioner of Police, NSW Police Force.
Rebecca Ann Hegarty is a solicitor employed by Coleman Greig Lawyers. They are the lawyers who act for the respondent in these proceedings.
On 1 July 2016, Coleman Greig was appointed as a NSW Government legal services panel firm of solicitors. That appointment included the areas of “Routine/standard property advice and transactions” and “Debt recovery”. They still held that appointment at the end of 2017.
On 16 November 2016, Ms Hegarty received an email from Bernadette Keating, a senior solicitor at the Office of the General Counsel, NSW Police Force (OGC). The subject heading of the email was “Re: Costs Estimate from Coleman Greig for a Debt Recovery Matter re: Ritson …”. The reference to “Debt Recovery” supports the conclusion that this email was within the authorisation provided by Coleman Greig’s appointment as a panel firm in respect of debt recovery. In the body of the email, Ms Keating wrote:
… what you say about the extra cost being outside the jurisdiction and am happy with that. I also note your suggestion re a bankruptcy notice, which is what I had been thinking.
So I confirm instructions to proceed. I will forward you the PO details separately.
Although this was disputed by the applicant, this email clearly constituted written instructions to proceed to request the issue of a bankruptcy notice. Indeed, there can be no other sensible construction of its plain words.
The applicant makes the following arguments in support of his contention that, in spite of this clear instruction, there was no authority to request the issue of the Bankruptcy Notice:
41.Firstly, neither the Commissioner of Police (Mr Scipione) nor his delegate personally lodged the application with the Official Receiver.
42.Secondly, the notification from the delegate of the Commissioner of Police under the Government Information (Public Access) Act 2009 (NSW) that the following documents do not exist:
(a)Documents evidencing, concerning or referring to the authorization of the Commissioner of Police in respect to the application for the issue of the Bankruptcy Notice; and
(b)Documents constituting instruments of delegation relating to the subject matter in 41(a) above,
is sufficient evidence from which the absence of authority can be inferred.
43.Thirdly, the affidavit of Ms Hegarty sworn 8 December 2017 (“Hegarty Affidavit”) does not contain any evidence that Ms Hegarty and/or Coleman Greig Lawyers was authorized personally by the Commissioner of Police (Mr Scipione) or personally by his delegate.
44.Fourthly, the Hegarty Affidavit states that Ms Hegarty “received email instructions from Bernadette Keating, a solicitor within the OGC, to issue a bankruptcy notice against the Applicant.” The email does not explicitly give instructions to issue a bankruptcy notice to the applicant. Rather, the email merely states that Ms Keating notes the suggestion regarding a bankruptcy notice, which is what she “had been thinking”.
45.Fifthly, the email from Ms Keating does not state that she was authorized by the Commissioner of Police to make an application to the Official Receiver for the issue of a bankruptcy notice to the applicant or give instructions to Ms Hegarty or Coleman Greig Lawyers to do so.
46.Sixthly, Ms Keating was not the Commissioner of Police nor did she have a delegation from Mr Scipione to make an application to the Official Receiver for the issue of a bankruptcy notice to the applicant.
47.Seventhly, an unfavourable inference ought to be drawn from the failure to adduce evidence directly from Ms Keating addressing the question whether she was authorized by, or a delegate of, the Commissioner of Police to make an application Official Receiver for the issue of the bankruptcy notice to the applicant.
48.Eighthly, the email instructions from Ms Keating were given only in her personal capacity as a member of the NSWPF. This conclusion is fortified by Ms Keating’s words, “So I confirm instructions to proceed” (emphasis on the “I”). There is no suggestion in the email that the Commissioner of Police had confirmed the instructions to proceed.
49.Ninthly, the email from Ms Keating states, “I also note your suggestion re a bankruptcy notice, which is what I had been thinking”. The use of the word “also” indicates that the suggestion regarding the bankruptcy notice was secondary to another subject matter. Therefore, it is unclear which subject matter the “instructions to proceed” are referring to.
(Emphasis in original and citations omitted)
The majority of the applicant’s arguments are based on the proposition that the Commissioner must fulfil each of his or her functions and responsibilities either personally or through a delegate. That proposition must be rejected. First, the question whether the Commissioner (or any other repository of statutory power) may act through an agent or must act personally “depends on the nature of the power and all the other circumstances of the case”: O’Reilly v State Bank of Victoria Commissioners (1983) 153 CLR 1 at 11 (Gibbs CJ); [1983] HCA 47.
Secondly, there is nothing in the PA that requires the Commissioner personally to issue instructions in respect of a bankruptcy notice or, indeed, in respect of any proceedings.
Thirdly, there is nothing in the power to delegate under s.31 of the PA that requires it to be exercised in all instances in which delegation is possible.
Fourthly, given the very broad nature and wide scope of the Commissioner’s duties and responsibilities and the specific attention required to be given to the potential commencement of bankruptcy proceedings, there is a practical necessity for the conduct of such proceedings to be undertaken by an officer under the control of the Commissioner, that is, by an agent: see O’Reilly at 12 and De Angelis v Pepping [2015] NSWCA 236 at [83].
For those reasons, it was permissible for the Commissioner to act through an agent, Ms Keating, in giving instructions to Ms Hegarty to take steps to have the Bankruptcy Notice issued in respect of the applicant. There can be no question that, as a solicitor within the OGC, being part of the NSW Police Force under the control and management of the Commissioner, Ms Keating had at the very least ostensible authority to issue those instructions. She did so as an agent of the Commissioner. In light of that conclusion, all of the applicant’s arguments fall away and this ground is rejected.
As a further consequence of that conclusion, the application to restrain the respondent’s solicitors from acting in these proceedings must also be dismissed.
Third ground: “The Bankruptcy Notice is invalid because the Commissioner of Police is not a “creditor” and incapable of making a valid application for the issue of a bankruptcy notice for the purposes of section 41(1) of the Bankruptcy Act 1966 (Cth).”
This ground is supported by the following particulars:
(a)The “Commissioner of Police” is:
(i)not a juristic (legal) person;
(ii)an office pursuant to section 24 of the Police Act 1990 (NSW);
(iii)limited to the powers or functions under the statute creating that office.
(b)The Police Act 1990 (NSW) confers no power or function on the office of Commissioner of Police to make an application for the issue of a bankruptcy notice or petition for a sequestration order under the Bankruptcy Act 1966 (Cth).
(c)The Commissioner of Police was ultra vires the Police Act 1990 (NSW) when purporting to make the application for the issue of the Bankruptcy Notice.
I have already rejected the first and essential component of this ground, namely, that the respondent is not a juristic person. For that reason, this ground, too must be rejected. In any event, the ground must fail for another reason. While it is true that the PA does not expressly confer any power to make an application for the issue of a bankruptcy notice, it does not have to.
The functions of the NSW Police Force include the power “to do anything necessary for, or incidental to, the exercise of its functions”: sub-s.6(2)(c) of the PA. The NSW Police Force consists of a number of members including the Commissioner. The Commissioner’s responsibilities include, under s.8, “the management and control of the NSW Police Force”. “Management” and “control” are words with a very broad meaning: CJ Burland Pty Ltd v Metropolitan Meat Industry Board (1968) 120 CLR 400; [1968] HCA 77.
By operation of s.6, and in any event, by implication, this responsibility is extended to include anything necessary for or incidental to the management or control of the NSW Police Force. Engagement in the Supreme Court proceedings involved the exercise of this function because it directly concerned the scope of the Commissioner’s responsibility under s.8. Further, incurring costs in those proceedings and recovering those costs were both incidental to that function.
For those reasons, it was within the scope of the respondent’s functions to apply for the issue of a Bankruptcy Notice under the Act.
In any event, authority is given to the Commissioner by s.41 of the Act, as a creditor who has obtained a final judgment to apply to the Official Receiver for the issue of a Bankruptcy Notice.
Fourth ground: “The Bankruptcy Notice is liable to be set aside because it is founded on an irregular judgment of the Local Court of NSW made and entered on 30 October 2015.”
This ground is supported by the following particulars:
(a)The said judgment is a result of the respondent having filed the following:
(i)Certificate of Determination of Costs; and
(ii)Certificate of Determination of Costs of Costs Assessment.
(b)[not pressed]
(c)The said judgment was wrongly drawn up because the person who should be named in the judgment for the costs of the costs assessment is the person entitled “Manager, Costs Assessment”, pursuant to section 369 of the Legal Profession Act 2004 (NSW) (repealed).
There were, as I have observed, two certificates of costs issued by the costs assessor: one in respect of the assessment of party/party costs in the Supreme Court proceedings and the other in respect of the costs assessment itself. That reflects the operation of the LPA[1], the relevant provisions of which are set out below. The respondent lodged both certificates in the Local Court, as he was entitled to do, and one judgment was issued in the following terms:
[1] The LPA was repealed by s.167(a) of the Legal Profession Uniform Law Application Act2014 (NSW) with effect from 1 July 2015; however the provisions of the LPA relating to ordered costs continue to apply to a matter if the proceedings to which the costs relate commenced before 1 July 2015: Legal Profession Uniform Law Application Regulation 2015 (NSW), reg.59.
Brendan Ritson, First Defendant is to pay the Commissioner of Police, New South Wales Police Force, First Plaintiff the sum of
Claim amount $43,966.79
Total $43,966.79
Determination of Costs
The amount of $43,966.79 is the sum of the party/party costs as assessed ($42,375.34) and the costs of the costs assessment ($1,591.45).
In Kassem & Anor v Koutavas [2012] NSWSC 236, Ward J (as her Honour then was) found that a judgment of the Local Court based on both the assessed amount of party/party costs and the costs of the costs assessment was an irregular judgment. The applicant relied on that judgment to argue that the Court ought to go behind the judgment of the Local Court and so set aside the Bankruptcy Notice.
Leaving aside for one moment the correctness of the decision in Kassem, this argument faces the real difficulty that the applicant did not dispute that he in fact owed the respondent the amount in the judgment. The result in Kassem flowed from similar circumstances. Having found that the judgment in question was irregular, Ward J set aside the judgment and, in its place, ordered that judgment be entered, in effect, requiring the defendant to pay both the amount of the assessed party/party costs and the costs of the costs assessment: see Kassem at [63]. In the context of an application to set aside a bankruptcy notice, that would be sufficient to dispose of this argument. However, for the reasons that follow, I consider that Kassem was wrongly decided and that the judgment of the Local Court was not irregular.
At the relevant time, div.11 of pt.3.2 of the LPA dealt with the assessment of legal costs in New South Wales. The relevant provisions of that Division for present purposes were ss.368 and 369:
368 Certificate as to determination
(1)On making a determination of costs referred to in Subdivision 2 or 3 of this Division, a costs assessor is to issue a certificate that sets out the determination.
(2)A costs assessor may issue more than one certificate in relation to an application for costs assessment. Such certificates may be issued at the same time or at different stages of the assessment process.
(3)However, any such certificate may not set out the costs of the costs assessment within the meaning of section 369.
Note. Section 369 makes provision for the recovery of the costs of costs assessments relating to costs to which either section 317 (Effect of failure to disclose) or 364 (Assessment of costs–costs ordered by court or tribunal) applies. The section requires a costs assessor to issue a separate certificate setting out the costs of such costs assessments. That section also makes provision for the effect of such a certificate.
(4)In the case of an amount of costs that has been paid, the amount (if any) by which the amount paid exceeds the amount specified in any such certificate may be recovered as a debt in a court of competent jurisdiction.
(5)In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed.
(5A)The costs assessor must forward the certificate or a copy of the certificate to:
(a)the Manager, Costs Assessment, and
(b)each party to the assessment, unless subsection (6) applies.
(6)If the costs of the costs assessor are payable by a party to the assessment as referred to in section 369, the costs assessor must:
(a)forward a copy of the certificate to the Manager, Costs Assessment only, and
(b)advise the parties that the certificate has been so forwarded and will be available to the parties on payment of the costs of the costs assessor.
(7)Subsection (6) does not apply:
(a)in respect of a certificate issued before the completion of the assessment process under subsection (2), or
(b)in such circumstances as may be prescribed by the regulations.
369 Costs of costs assessment
(1)This section applies to the costs of a costs assessment in relation to:
(a)costs to which section 317 (Effect of failure to disclose) applies, and
(b)costs to which section 364 (Assessment of costs–costs ordered by court or tribunal) applies, and
(c)costs that on assessment are reduced by 15% or more.
(2)A costs assessor is, subject to this section, to determine the costs of a costs assessment to which this section applies.
(2A)Subject to any order of or the rules of the relevant court or tribunal, the costs assessor may determine by whom and to what extent the costs of an assessment referred to in section 364 (Assessment of costs–costs ordered by court or tribunal) are payable and include the determination in the certificate issued under this section in relation to the assessment.
(3)The costs of a costs assessment to which this section applies are payable:
(a)for a costs assessment in relation to costs to which section 317 (Effect of failure to disclose) applies–by the law practice that provided the legal services concerned, or
(b)for a costs assessment in relation to costs to which section 364 (Assessment of costs–costs ordered by court or tribunal) applies–by such persons, and to such extent, as may be determined by the costs assessor, or
(c)for a costs assessment in relation to costs that on assessment are reduced by 15% or more–by the law practice that provided the legal services concerned or, if the costs assessor so determines, by such persons, and to such extent, as may be determined by the costs assessor.
(4)The costs assessor may refer to the Supreme Court any special circumstances relating to a costs assessment and the Court may make any order it thinks fit concerning the costs of the costs assessment.
(5)On making a determination, a costs assessor may issue and forward to each party and the Manager, Costs Assessment a certificate that sets out the costs of the costs assessment.
(6)If the application for a costs assessment has been dealt with by more than one costs assessor, a certificate issued can set out the costs of any other costs assessor.
(7)The certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs.
(8)The costs of the costs assessor are to be paid to the Manager, Costs Assessment.
(9)The Manager, Costs Assessment may take action to recover the costs of a costs assessor or Manager, Costs Assessment.
(10)In this section:
costs of the costs assessment includes the costs incurred by the costs assessor or the Manager, Costs Assessment in the course of a costs assessment under this Division, and also includes the costs related to the remuneration of the costs assessor.
(Emphasis in original and added)
In Dennis v Miller & Ors (2012) 257 FLR 64; [2012] FMCA 25, judgments had been issued in the Local Court that included both the assessed costs and the costs of the costs assessment. It was contended, as it is here, that the inclusion of both types of costs in the one judgment was an irregularity. Smith FM rejected that contention. His Honour said, at [14]:
… s 369(8) and (9) need to be understood in the context of the preceding provisions. These include s 368(6), which authorises the Manager to withhold a certificate from the benefiting party until either that party or the party principally liable for costs has paid the costs of the costs assessor as certified under s 369. In this context, although s 369(9) also authorises the Manager to “take action to recover” those costs, this does not, in my opinion, implicitly preclude the party identified in the costs certificates as entitled to the certified costs of the assessment, from filing a certificate under s 369(7) and from thereby seeking to gain reimbursement of costs it has paid to the Manager. In my opinion, a sensible construction of these provisions supports the judgments obtained by the respondents in the present case, in so far as they included the amounts payable under the s 369 certificates. …
In Kassem, Ward J agreed with the central reasoning of Smith FM in Dennis, namely, that there is “nothing in s 369(9) to preclude the filing by the party certified as entitled to the costs of a s 369 certificate”: see [42]. However, her Honour considered that the real issue was the manner in which that judgment was to be enforced. In that regard, her Honour found that the question turned on what was the judgment that arises on the filing of the s.369 certificate. The answer, according to her Honour (at [43]) was that the effect of s.369(8) was “that any such judgment is for the payment of those costs to the Manager, Costs Assessment”. That was because otherwise “there would be scope for conflicting claims to the costs by both the recipient of the costs certificate and the Manager, Costs Assessment”.
Her Honour explained the operation of her construction of the provisions at [44]:
The s 369 Certificate in this case states that the said costs are “to be paid by the Costs Respondent”, that being the relevant determination under sub-s 369(2A). Therefore, the judgment that arises on the filing of that certificate, having regard to the provisions of the Legal Profession Act to which I have referred above, must (it seems to me) be a judgment to the effect that, as between the parties to the assessment, Mrs Koutavas is liable to pay the costs of the costs assessment, in the amount so assessed, to the Manager, Costs Assessor. In effect, this may be seen as operating as a declaration as to who (as between the parties to the cost assessment) is to bear the responsibility for the costs of someone not party either to the principal proceedings or to the costs assessment. It supports the making of an order that Mrs Koutavas is to pay those costs to the Manager, Costs Assessor. Seen in this way, it makes sense that the Manager, Costs Assessor is then statutorily entitled to take action to recover those costs (ie to enforce a judgment in its favour though one made in proceedings to which it is not a party).
(Emphasis in original)
The same issue arose before Garling J in Weber v Aquaqueen International Pty Ltd; Aquaqueen International Pty Ltd v Weber [2013] NSWSC 1181. His Honour came to the same conclusion as Smith FM and expressly disagreed with the decision in Kassem. His Honour explained his reasons at [104]-[114]:
Was the Judgment Irregular?
104For my part, I cannot accept that the judgment entered in these proceedings was irregular by reason of the inclusion in the judgment of a sum payable for the costs of the costs assessment, and, in particular, the costs assessor’s costs component, because the judgment included sums contained on a s 369 Certificate.
105I have formed that conclusion because I am satisfied of the following propositions dealing with a s 369 Certificate.
106First, the fees (or costs) charged by a Costs Assessor are included within the definition of the term “costs” of the costs assessment in s 369(10) of the LP Act. Accordingly, it is expected that they will form a part of the assessment process which is initiated by one party or another, in order to obtain a determination of the fair and reasonable amount of costs as between the parties.
107Secondly, at the conclusion of the costs assessment process, the LP Act gives to the Costs Assessor the obligation to determine in what sum, and by whom, the costs of the costs assessment ought be paid: s 369(2), and s 369(2A) of the LP Act;
108Thirdly, that determination is to be recorded in a Certificate: s 369(2A) of the LP Act.
109Fourthly, that Certificate, consequent upon being filed in a court of competent jurisdiction, becomes a judgment which determines that one of the parties to the costs assessment process is obliged to pay to the other party, the sum which the costs assessor has determined. The party determined by the Certificate to be liable, and obliged by the judgment, to pay the sum so determined, is the party who has had a right under the LP Act to participate in the costs assessment process, to put arguments and objections to the costs assessor, and who has the right under the LP Act to challenge in the ways there permitted, the contents of the Certificate.
110Fifthly, the Manager, Costs Assessment does not have any right to participate in the costs assessment process, nor to make any submissions as to the outcome of that process. The Manager is not named as, nor is he or she in fact, a party to the matter. No obligation is created in favour of, or against, the Manager, by the issue of a determination, and then a Certificate under the LP Act. In fact, rather than being a party, the Manager, Costs Assessment is the person given the responsibility for the effective operation of the costs assessment scheme: see LP Act, Part II Subdivisions 1, 2, 4 and 5.
111Sixthly, it is clear that the judgment once entered, is then enforceable as a judgment of the Court in the terms which it is entered. That is a judgment by one party against the other party named in the Certificate as liable for a fixed and identified sum. Again, the Manager is not a party to the judgment. The judgment is not expressed to be in favour of (or against) the Manager. There is no requirement under the UCPR, for the Manager to be joined as a party when the Certificates are registered. Nor would the Manager be a necessary party to those proceedings.
112Seventhly, the fact that the legislation provides a mechanism by which the Manager, Costs Assessment is entitled to be paid the costs of the costs assessor, and that the Manager may be entitled to exercise a right to collect those costs, does not seem to me to make a judgment in the sum determined in accordance with the legislation between the parties to the costs assessment matter to be irregular. On the contrary, the judgment so entered is a regular one, entered just as the UCPR permits.
113Lastly, this construction means that it remains open, at all times, where the costs of the costs assessment have not been paid, for the Manager, Costs Assessment to take action to recover those costs. In those circumstances, the Manager would be party to the recovery action, as the plaintiff, and if successful, would obtain a judgment in his or her favour, upon which enforcement action could then be taken in the same way as for any other debt.
114I appreciate that this conclusion differs from that reached by Ward J in Kassem. However, to the extent that it is necessary for me to disagree with her Honour’s central finding, which I have described above, I do so with the utmost respect. However, I do so because it seems that her Honour’s view, that a judgment entered against a party to the proceedings, in consequence of the filing and registration of a s 369 Certificate, is one which takes effect in favour of a person who is not a party to the proceedings (the Manager, Costs Assessment), and not in favour of the party filing the judgment, in whose favour it is expressed to be, is in the absence of any specific provision in the LP Act which enables this to occur, erroneous.
(Emphasis in original)
With great respect to Ward J, I disagree with her Honour’s reasoning except to the extent that she agreed with Smith FM and I agree with, and adopt the reasoning of Garling J. I would only add that I would give no weight to one of the central concerns that led Ward J to her conclusion, that is that there would be conflicting claims for the costs of an assessment. I consider that that possibility is remote given that, by operation of ss.368(5) and (6), the certificate of the assessed costs need only be given to a party if the Manager, Costs Assessment has been sent the certificate and the parties notified that it will not be given to them unless the costs of the costs assessor have been paid. The practical operation of those provisions, in the context, was that the party in whose favour a costs assessment was made would pay the costs of the assessment, obtain certificates for that assessment and for the costs of the assessment and proceed to judgment against the costs respondent in respect of both. Where the costs applicant did not pay, however, the Manager, Costs Assessment could take steps to recover the amount of the costs under s.369(9) of the LPA.
For those reasons, the judgment of the Local Court in this matter was not irregular and this ground is rejected.
Fifth ground: “The Bankruptcy Notice is invalid because it fails to meet the requirements made essential by the Bankruptcy Act 1966 (Cth).”
This ground is supported by the following particulars:
(a)The Bankruptcy Notice fails to state an address at which it is reasonably practicable for the applicant to make arrangements for settlement of the alleged debt during the period of compliance fixed in the Bankruptcy Notice.
Particulars
(i)The Bankruptcy Notice contains the wrong address of the Commissioner of Police, namely “1 Charles Street, Parramatta, Sydney, Australia”, which is the address of Police Headquarters of NSW Police Force.
(ii)On 5 May 2017, the applicant personally attended the said address but was unable to make arrangements for settlement of the alleged debt.
(iii)The correct address of the Commissioner of Police is [address], which is the address of the office of Commissioner of Police at Police Executive Offices.
(b)The Bankruptcy Notice fails to identify the creditor with clarity.
Particulars
(i)The Bankruptcy Notice describes the creditor as follows:
(A) “Commissioner of Police, New South Wales Police Force”; and
(B) “ABN/ACN 43408613180”.
(ii)The “NSW Police Force” is established by section 4 of the Police Act 1990 (NSW).
(iii)The “Commissioner of Police” of the “NSW Police Force” is established by section 3(1), section 5(a) and section 24 of the Police Act 1990 (NSW).
(iv)There is no “Commissioner of Police, New South Wales Police Force” because there is no “New South Wales Police Force”.
(v)“ABN/ACN 43408613180” is the Australian Business Number for the “NSW Police Force”, not “New South Wales Police Force” nor the “Commissioner of Police”.
(c)The Bankruptcy Notice fails to attach a final judgment or final order.
Particulars
(i)The Bankruptcy Notice fails to attach the following:
(A) Certificate of Determination of Costs; and
(B) Certificate of Determination of Costs of Costs Assessment.
(ii)The said certificates constitute the judgment when the certificates are filed with the court pursuant to section 368 and section 369 of the Legal Profession Act 2004 (NSW) (repealed).
(Emphasis in original)
There are four parts to this ground: the address in the Bankruptcy Notice; the description of the Commissioner by reference to New South Wales rather than NSW; the reference to an ABN and the failure to attach the certificates of assessment. None of these parts has any merit.
Address
Section 41(2) of the Act requires a bankruptcy notice to be in the form prescribed by the Bankruptcy Regulations 1996 (Cth). Regulation 4.02(1) prescribes Form 1 for the purposes of s.41(2). There was no issue that the bankruptcy notice in this case was in the same form as Form 1. Relevantly, the notice included the following:
2.Payment of the debt can be made to:
Commissioner of Police, New South Wales Police Force C/- Coleman Greig Lawyers Pty Ltd
Level 11, 100 George Street, Parramatta, Sydney, NSW 2150, Australia
Phone: +61 02 98959200
Email: [email protected]
(Emphasis in original)
In light of this, the applicant “was not left uncertain as to what he should do to comply with the notice, and to avoid the consequences of committing an act of bankruptcy”: see Croker v Commonwealth (2011) 9 ABC(NS) 44 at [27]; [2011] FCAFC 25, citing Foote v Mid-West Finance Pty Ltd (1997) 78 FCR 306 at 307; [1997] FCA 990. It is permissible, in a bankruptcy notice, for the address for payment to be identified as the office of the creditor’s solicitors, provided that those solicitors are authorised by the creditor to collect payment on its behalf: see Nugent v Brialkim Pty Ltd (1985) 61 ALR 725 at 726-7; [1985] FCA 416. There is no question that there was such authority here.
The applicant argues that the notice was invalid because an address was given that was not the address of the respondent. That address was “1 Charles Street, Parramatta, Sydney, NSW, Australia”[2]. I reject the argument simply because the address of 1 Charles Street was not given in connection with the payment of the amount the subject of the Bankruptcy Notice. Further, and in any event, the applicant did not establish that 1 Charles Street was not the address of the respondent. No doubt, given his responsibilities, the Commissioner might have offices in many different locations throughout the State of New South Wales; however, the fact that he does have such other offices does not mean that the address in Parramatta is not his address.
NSW
[2] Emphasis in original.
The applicant’s point here is that the PA establishes the ‘NSW Police Force’ and not the ‘New South Wales Police Force’. For that reason, the description of the creditor as the “Commissioner of Police, New South Wales Police Force”[3] is incorrect and misleading. The argument overlooks not only s.12 of the IA that incorporates a reference to “New South Wales” into every reference to an office, officer or statutory body but also the plain, and obvious fact that NSW is an acronym for “New South Wales”. As the applicant well knew, and any reasonable person would know, the two mean the same thing.
ABN
[3] Emphasis in original.
In the Bankruptcy Notice an ABN was given that the applicant says was that of the New South Wales Police Force. A search of the Australian Business Register reveals that the ABN in question is registered in respect of the NSW Police Force. The applicant claims that that, together with the incorrect address, was objectively capable of misleading a person reading the notice because he or she would be presented with 2 possible creditors. I reject that. Only one creditor was identified. The ABN did not identify a separate creditor at all. In any event, bearing in mind that the Commissioner is one of the constituent parts of the NSW Police Force and that it is his function to manage and control the NSW Police Force, there is little surprise that the same ABN is used by the Commissioner as the NSW Police Force.
Certificates of assessment
The applicant asserts that, rather than the certificate of judgment issued by the Local Court, the certificates of assessment given under the LPA ought to have been, but were not, attached to the Bankruptcy Notice. Simply put, the argument is that, upon filing in the Local Court, the certificates of assessment themselves become a judgment of that Court: ss.368(5) and 369(7) of the LPA.
The applicant relied on the decision of Judge Manousaridis in Harris & Ors v De Robillard [2017] FCCA 2451. However, that decision stands against the applicant’s argument. As here, the “judgment” attached to the Bankruptcy Notice was a judgment issued by the Local Court after certificates of assessment had been lodged in that Court. The certificates were not attached to the notice. It was argued that this invalidated the Bankruptcy Notice. His Honour considered the meaning of “judgment” in the Act and, after examining the statutory context in which judgments for costs are given in New South Wales, said, at [35]:
In the context of s.40(1)(g) and s.41 of the Act, therefore, the expressions “judgment” and “order” denote the words by which courts pronounce decisions they make that finally determine the controversy between the parties or otherwise determine finally the rights of the parties. The word “judgment” also denotes any judgment that has as its basis something other than a decision of a court. Whether or not a particular form of words is a “judgment” or an “order” of a court is to be determined by reference to the statutory provisions that define the powers of the court that has pronounced the judgment or order and regulate its procedures, or to some other statutory provision, such as the LP Act. In my opinion, “judgment” includes a judgment in relation to a certificate of costs that was issued and filed under the LP Act and which has been entered under s.133 of the CP Act and r.36.11 of the UCPR.
(Emphasis in original)
I agree with his Honour and, in any event, as it was not argued that his Honour was clearly wrong I ought to apply it to the indistinguishable facts before me.
The fifth ground is rejected.
The applicant raised a related argument in his written submissions without having amended his application. At [56] to [61] of his second set of submissions (which were filed outside the time provided for in the Court’s orders), the applicant relies on the fact that a notice from the Local Court showing what orders were made against him is in the amount of $44,142.79 (an amount which includes a filing fee of $176) which is different from the judgment attached to the Bankruptcy Notice.
Item 3 of pt.5 of sch.1 of the Civil Procedure Regulation2012 (NSW) provides the amount of the fee payable for registration of costs certificates. Clause 7(1) of those regulations provides that the fee is payable by the person at whose request such documents are filed, but no provision takes the additional step of making that fee recoverable from a debtor. That means that the inclusion of the filing fee in the amount owed in the document from the Local Court was beyond power. If the bankruptcy notice had referred to or relied on that statement, it may have reasonably misled the applicant as to how he could comply with the notice and so may have been defective: Tu v Chang (No.2) [2016] FCA 1568. However, there was no reference here to the misstatement. Rather, the “judgment” relied on what was the undisputed amount of the costs assessment. That “judgment” was one issued by the Local Court upon the filing of the certificates of assessment. In my view this means that the ground is without merit and, in addition to it being raised late, means that leave to raise it ought to be refused.
Sixth Ground: “The Bankruptcy Notice is invalid because the sum specified in it as the amount due to the respondent exceeds the amount in fact due by at least $89.30.”
This ground is supported by the following particulars:
(a)The applicant gave notice to the respondent that he disputes the validity of the Bankruptcy Notice on the ground of the misstatement in accordance with section 41(5) of the Bankruptcy Act 1966 (Cth);
(b)On 16 April 2017, within the time allowed for payment by reason of the extension of time ordered on 13 April 2017, the applicant gave notice to the respondent by serving a copy of his affidavit sworn on 12 April 2017 on the respondent.
(c)Paragraph 7 of the applicant’s affidavit sworn on 12 April 2017 states:
“The bankruptcy notice fails to include the payment made or credit allowed in respect to the sum of $89.30 debited from my Police Bank account on 4 September 2016.”
This ground is based on the fact that the applicant paid $89.30 to the respondent in connection with a summons addressed to the respondent issued at his request by the NCAT[4]. The applicant claims that he was wrongly charged that amount because the respondent in fact produced no documents in response to the summons. He argues that, as a consequence, the amount in the Bankruptcy Notice is overstated and, because he drew that fact to the respondent’s attention, the Bankruptcy Notice is invalid.
[4] NSW Civil & Administrative Tribunal.
The way in which the ground is stated reflects the operation of s.41(5) of the Act which provides:
A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement.
This ground is entirely misconceived. In effect, the applicant is claiming that he has a counter-claim set off or cross-demand against the respondent for the amount of $89.30 and that that should be deducted from the amount of the judgment of the Local Court. However, s.41(5) is not addressed to the situation where a judgment debtor has a counter-claim set off or cross-demand for an amount against the judgment debtor, but where, as at the time of the issue of the bankruptcy notice[5], the amount owing by reason of the judgment is misstated. Where a debtor has a counter-claim set off or cross-demand against the creditor he or she may “satisfy” the court of that and either have the Bankruptcy Notice set aside (if the amount of the claim equals or exceeds the amount of the bankruptcy notice): sub-s.40(1)(g) and s.41(7).
[5] Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337 at 340 (Gibbs CJ); [1984] HCA 33.
In Curtis v Singtel Optus Pty Ltd (2014) 225 FCR 458; [2014] FCAFC 144, the Full Court of the Federal Court, at [31], described the judgment relied on by the creditor as the “foundational element” and “fundamental substratum” of the bankruptcy notice. That is firstly, as I have noted at [23] above, because a bankruptcy notice is issued by the Official Receiver in accordance with the Act[6] and is in excess of $5,000 (ss.41(1) and (3)):
[6] That is, one the execution of which has not been stayed.
41Bankruptcy Notices
(1)… on the application of a creditor who has obtained against a debtor:
(a)a final judgment or final order that:
(i) is of the kind described in paragraph 40(1)(g)…
(Emphasis in original)
The centrality of the judgment, and its amount, to the validity of the Bankruptcy Notice is highlighted by the requirement that a copy of it be attached to the bankruptcy notice upon issue: Curtis at [42]. Secondly, the act of bankruptcy described in sub-s.40(1)(g) of the Act also includes the obtaining of a final judgment as a precondition.
The combination of the centrality of the judgment to a bankruptcy notice and the availability of an argument before the Court that there is a counter-claim set off or cross-demand against the judgment creditor compel the conclusion that the amount of such a counter-claim set off or cross-demand is not relevant to whether the bankruptcy notice is valid.
For those reasons, this ground must be rejected and it is unnecessary to deal with the arguments raised by the applicant as to why it was beyond the respondent’s power to charge any amount in respect of the summons.
Conclusion
The applicant has not established any reason for which the bankruptcy notice should be set aside. The application will be dismissed.
I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of Judge Smith
Associate:
Date: 20 April 2018
CORRECTIONS
Reasons for Judgment: Page 22, Paragraph 62, delete the address of the Commissioner of Police, insert “[address].
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