SJD Marketing Pty Ltd v Sutherland (Trustee), in the matter of Venn (Bankrupt)

[2018] FCA 1406

FEDERAL COURT OF AUSTRALIA

SJD Marketing Pty Ltd v Sutherland (Trustee), in the matter of Venn (Bankrupt) [2018] FCA 1406

File number:

VID 709 of 2018

Judge:

MIDDLETON J

Date of judgment:

6 September 2018

Catchwords:

BANKRUPTCY AND INSOLVENCY – leave sought pursuant to s 58(3)(b) of the Bankruptcy Act 1966 (Cth) to take fresh steps in related proceeding ¬– leave appropriate – matter of practice and procedure in County Court of Victoria – appropriate for County Court judge to determine issue between the parties – self executing-orders in County Court and interpretation and effect thereof.

Legislation:

Bankruptcy Act 1966 (Cth)

Cases cited:

Freeman v Rabinov [1981] VR 539

Graham & Linda Huddy Nominees v Byrne [2017] FCA 1638

Jorgensen v Slater & Gordon [2008] VSCA 110

Power v Kenny [1977] WAR 87

Date of hearing:

6 September 2018

Registry:

Victoria

Division:

General Division

National Practice Area:

Commercial and Corporations

Sub-area:

General and Personal Insolvency

Category:

Catchwords

Number of paragraphs:

21

Counsel for the Applicant:

Mr G Moffatt

Solicitor for the Applicant:

Falcone and Adams

Counsel for the First Respondent:

The First Respondent did not appear

Counsel for the Second Respondent:

Mr P Fary

Solicitor for the Second Respondent:

Madgwicks

ORDERS

VID 709 of 2018

IN THE MATTER OF THE BANKRUPT ESTATE OF PENNI VENN

BETWEEN:

SJD MARKETING PTY LTD (ACN 067 270 857)

Applicant

AND:

RODERICK MACKAY SUTHERLAND AND MALCOLM KIMBALL HOWELL (AS TRUSTEES OF THE BANKRUPT ESTATE OF PENNI VENN)

First Respondent

PENNI VENN

Second Respondent

JUDGE:	MIDDLETON J
DATE OF ORDER:	6 SEPTEMBER 2018

THE COURT ORDERS THAT:

1.Leave be granted to obtain judgment of her Honour Judge Kennedy in the County Court of Victoria delivered on 27 November 2014 in the proceeding CI1400078.

2.Such leave be deemed to be granted on 27 November 2014.

3.Costs of the Application for leave be reserved.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

MIDDLETON J:

INTRODUCTION

1. I have before me an Application which seeks the following orders: 

   (1)that pursuant to s 58(3)(b) of the Bankruptcy Act 1966 (Cth) (the 'Act'), the applicant be granted leave to obtain judgment of her Honour Judge Kennedy of the County Court of Victoria delivered on 27 November 2014 in proceeding CI1400078, and

   (2)that such leave be deemed to have been granted on 27 November 2014. 

2. The Application is supported by affidavit material and there is a response to the Application by affidavit material filed by the respondent.  I need not set this material out in these reasons.

3. Section 58(3)(b) of the Act provides:

   (3)Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:

   …

   (b)except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.

4. The question is whether leave should be granted and on such terms as the Court thinks fit for moving Judge Kennedy to enter judgment in the County Court. 

   RELEVANT BACKGROUND

5. The facts leading up to the obtaining of that judgment need not be rehearsed, but importantly, the earlier orders made in the County Court need to be considered. 

6. On 29 September 2014, his Honour Judge Anderson made these orders:

   1.Upon the condition that, prior to 4pm on 26 October 2014, the defendants pay into court the sum of $101,410.44 (or otherwise provide security for that sum in a form previously agreed to in writing by the plaintiff) the defendants shall have leave to defend the plaintiff's claim.

   2.If the defendants, by 4pm on 26 October 2014, fail to comply with paragraph 1, there shall be judgment for the plaintiff as follows:

   (a)Against the first defendant that the first defendant pay to the plaintiff the sum of $104,715.49 together with interest pursuant to statute from 8 January 2014 to 26 October 2014.

   (b)Against the second defendant that the second defendant pay to the plaintiff the sum of $95,578.41 together with interest pursuant to statute from 8 January 2014 to 26 October 2014.

   (c)That the first defendant's counterclaim and the second defendant's counterclaim be dismissed.

   (d)That the defendants pay the plaintiff's costs of the plaintiff's claim and the defendants' counterclaims including any reserve costs and the costs of the plaintiff's summons filed 22 July 2014 and of the hearing today to be assessed by the costs court in default of agreement.

   3.The trial date of 27 January 2015 is reinstated and confirmed provided the plaintiff, by 12 noon on 1 October 2014, pays the setting down for trial fee.

7. On 24 October 2014, his Honour Judge Cosgrave made an order that the date 26 October 2014 in order 1 and order 2 of his Honour Judge Anderson should be read as 7 November 2014.

8. Then, on 27 November 2014, her Honour Judge Kennedy made the following orders:

   (a)Against the first defendant that the first defendant pay to the plaintiff the sum of $104,715.49 together with interest pursuant to statute from 8 January 2014 to 26 October 2014.

   (b)Against the second defendant that the second defendant pay to the plaintiff the sum of $95,578.41 together with interest pursuant to statute from 8 January 2014 to 26 October 2014.

   (c)That the first defendant's counterclaim and the second defendant's counterclaim be dismissed.

   (d)That the defendants pay the plaintiff's costs of the plaintiff's claim and the defendants' counterclaims including any reserve costs and the costs of the plaintiff's summons filed 22 July 2014 and of the hearing today to be assessed by the costs court in default of agreement.

9. It is apparent that her Honour Judge Kennedy was effectively making the order that had been made by his Honour Judge Anderson. 

10. The issue which needs to be determined in the County Court concerns these orders and their operation.

    CONSIDERATION

11. This is an unusual situation where the Court is called upon to exercise its discretion in the context of s 58(3)(b) of the Act. It is not in contention that the Court has power to make the orders that are sought in the Application.

12. In opposition to the Application it was correctly brought to my attention that the normal circumstances where the discretion is exercised is where the plaintiff in the related proceedings is asserting proprietary rights, or liability is covered by an insurance policy, or where the facts are complex and it is preferable for those facts to be resolved at a related hearing rather than by way of a proof of debt. 

13. The respondent submitted that the leave sought by the Application in this proceeding is, in effect, seeking to get around the decision in the case of Power v Kenny [1977] WAR 87, and if leave were granted it would undermine the principles underlying the Act.

14. The main issue that will need to be determined, which is before the County Court at this moment, concerns the practice and procedure of the County Court.  As I have indicated, this issue concerns the purpose, effect and operation of the various orders made by the County Court, significantly the orders of Judge Anderson and Judge Cosgrave.  However, in looking at the matter, any court would look at the three orders I have mentioned to determine the ambit of the operation of each, and to determine how each may impact upon the other.  

15. I do not see that granting leave would, in any way, undermine the control and supervision of this Court having jurisdiction in bankruptcy, or as being inconsistent with the principles behind the Act.

16. The issue between the parties as to the purpose, effect and operation of the various orders made by the County Court is one that needs to be determined by a court.  The County Court is currently still seized of the matter.  It is a matter of practice and procedure of the County Court.  The most efficient and effective way to determine the dispute between the parties is for the County Court to make a determination having regard to the whole circumstances that have occurred before that Court. 

17. My initial impression would be that an order which is self-executing operates of its own force.  In Jorgensen v Slater & Gordon [2008] VSCA 110, at [5], the Court of Appeal said:

    that is, if an order has not been complied with, the sanction specified in the order takes effect automatically upon the expiration of the time fixed for compliance.

    The Court of Appeal referred to the well-known authority on self-executing orders, Freeman v Rabinov [1981] VR 539.

18. However, as to what is the correct position as to the purpose, effect and operation of the various orders, having regard to the circumstances surrounding the making of the various orders, is a matter which is properly within the domain of the County Court.  I would therefore grant leave so that the whole dispute between the parties can be determined by the County Court.

19. Having decided that leave should be granted, the question arises as to whether or not that leave should be subject to any conditions, or such terms as the Court thinks fit, to use the terminology of the Act.

20. I observe that in Graham & Linda Huddy Nominees v Byrne [2017] FCA 1638, Logan J did impose a term that leave be granted without prejudice to any issues of substance that may arise in the related proceedings. I do not know to the extent to which a similar term or condition would assist the parties in this proceeding. I hope I have made it clear that granting leave would allow for all the arguments that relate to the main issue between the parties - namely the purpose, effect and operation of the relevant orders - to be determined by the County Court. Other than obviously allowing for the order of Judge Kennedy to be taken into account now, the grant of leave otherwise does not change the arguments that would otherwise be agitated before the County Court judge.

    CONCLUSION

21. I will order that leave be granted to obtain judgment of her Honour Judge Kennedy in the County Court delivered on 27 November 2014 in the proceeding CI1400078, and that such leave be deemed to be granted on 27 November 2014, and otherwise costs be reserved.

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Middleton.

Associate:

Dated:       12 September 2018