Stubberfield, John Richard v Paradise Grove Pty Ltd
[1996] FCA 383
•22 May 1996
IN THE FEDERAL COURT OF AUSTRALIA )
)
QUEENSLAND DISTRICT REGISTRY ) No QG 1 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A DECISION OF A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: JOHN RICHARD STUBBERFIELD
(Appellant)
AND: PARADISE GROVE PTY LTD
(Respondent)
CORAM: Ryan, Whitlam and Kiefel JJ
DATE: 22 May 1996
PLACE: Brisbane
MINUTES OF ORDER
THE COURT ORDERS:
That the appeal be dismissed.
That the appellant pay the respondent's costs of the appeal, such costs to be taxed.
NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA )
)
QUEENSLAND DISTRICT REGISTRY ) No QG 1 of 1996
)
GENERAL DIVISION )
ON APPEAL FROM A DECISION OF A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA
BETWEEN: JOHN RICHARD STUBBERFIELD
(Appellant)
AND: PARADISE GROVE PTY LTD
(Respondent)
CORAM: Ryan, Whitlam and Kiefel JJ
DATE: 22 May 1996
PLACE: Brisbane
REASONS FOR JUDGMENT
THE COURT: This is an appeal, curiously by the debtor, against an order by a single Judge of the Court dismissing a bankruptcy petition. The petition was based on a failure by the appellant debtor to comply with a bankruptcy notice founded on a judgment debt of $6,582.68 which arose on an order for costs. The learned primary Judge declined, in the exercise of his discretion, to make a sequestration order because he found that the debtor had more than sufficient assets from which to discharge the judgment debt. Those assets included a sum of $100,000 deposited with the Suncorp Building Society on joint account with his wife. The learned primary Judge noted in the course of his reasons:
The judgment creditor says that, on legal advice, it directed the bankruptcy proceedings be taken against Mr. Stubberfield to enforce the costs order because the judgment creditor could not execute on that order against assets owned by Mr. Stubberfield jointly with his wife and because Mr. Stubberfield has persistently refused to pay the amount of the costs. He does not challenge what the judgment creditor says, through its director, as to its reasons for pursuing bankruptcy proceedings against him. I accept that the prosecution of bankruptcy proceedings is an act of a creditor who believes that no other avenue is open to it to recoup payment of the not insignificant debt owing by Mr. Stubberfield.
After examining several authorities, including Re Sarina; Ex parte Wollondilly Shire Council (1980) 32 ALR 596, Re Stirling; Ex parte Webb Ross & Co [1990] 1 NZLR 569 and Trojan v Corporation of Hindmarsh (1987) 16 FCR 37, the learned primary Judge considered various forms of enforcement of the judgment debt which were available to the petitioning creditor as alternatives to bankruptcy proceedings. He adverted to the writ of elegit available under O.47 r.3 of the Rules of the Supreme Court of Queensland and possible appointment by way of equitable execution of a receiver of Mr Stubberfield's half share of interest receivable from time to time on the money at deposit with the Suncorp Building Society.
His Honour rejected an argument that the costs order and the taxing officer's certificate pursuant to it, which together gave rise to the judgment debt on which the bankruptcy notice was based, did not amount to a "final order" within the meaning of s. 40(1)(g) of the Bankruptcy Act.
By his notice of appeal which was amended by leave at the commencement of the hearing of the appeal, the appellant debtor, who appeared in person, has contended that the judgment below should be varied to include the following declarations:
a)There is no concluded determination of the amount of costs, if any, owed by Mr Stubberfield to the claimed creditor.
b)The claimed creditor through its solicitors was at all material times aware:
i)Legal execution was available to it against proprietary assets: but:
ii)Execution was effectively stayed pending completion of the review process.
iii)Was also effectively stayed within the meaning of s. 41(3)(b) of the BANKRUPTCY ACT.
c)The Court of Appeal Order was not a final order within the meaning of s.40(1)(g) of the Act.
d)The petition was invalid and could not be legally amended.
e)The institution of Bankruptcy proceedings was an abuse of process of the Court, instituted without reasonable and probable cause, founded on, and maintained by falsely sworn testimony.
To understand the real nature of the appellant's complaint it is necessary to examine the subsequent paragraphs in the notice which purport to set out the grounds of appeal.
Ground 3
This paragraph stigmatises his Honour's analysis of the other methods of enforcement available to the judgment creditor as "judicial instruction" as to how the debtor and his family might be deprived of their proprietary assets. We reject this criticism and regard his Honour's discussion as no more than a proper consideration of alternative procedures as a necessary prerequisite to the exercise of the discretion in view of the established solvency of the debtor. His Honour's consideration was confined to legal aspects of facts already before the Court on which both parties had ample opportunity to make any relevant and appropriate submissions. The reflections in the reasons for judgment about alternative modes of recovering the
judgment debt were not calculated to disparage the debtor and contain nothing capable of damaging his name or reputation in the eyes of any reasonable reader.
Grounds 4, 5 and 7
In the course of argument, it became clear that the contention which the appellant desired to assert, and which he claimed had been rejected by the learned primary Judge, was that, because he had applied for a review of the certificate of costs issued by the taxing officer of the Supreme Court, that certificate and the judgment on which it was based did not constitute a "final order" at the time when the bankruptcy notice was issued. His Honour's findings of fact relevant to this issue were as follows:
Mr. Stubberfield engaged in litigation in the Planning and Environment Court with the Redland Shire Council and the judgment creditor, a land developer. The petitioning creditor developed land adjacent to Mr. Stubberfield's. It is out of this development that the litigation arose. Mr. Stubberfield's appeal against an order made in the planning court was dismissed by the Court of Appeal on 23 June, 1993; that Court also then ordered that the Council and the judgment creditor each recover against Mr. Stubberfield their costs of the appeal to be taxed. The costs were duly taxed and a certificate of taxation issued on 22 December, 1993. Mr. Stubberfield failed to deliver, within the time allowed by the Supreme Court Rules, objections to the judgment creditor's bill of costs, so he was not entitled to require the taxing officer to consider those objections. On 4 February, 1994, on Mr. Stubberfield's summons, Thomas J, in the Supreme Court, made orders retrospectively extending the time for the lodgment by Mr. Stubberfield of his objections with the taxing officer. Thomas J also made an order adjourning the summons to 25 February, 1994 for the review by the Court of the taxation of the judgment creditor's bill of costs. On 14 February, 1994 Mr. Stubberfield took out a second summons, repeating his claim for a review by the Court of the taxing officer's decision pursuant to O. 91, r. 119 of the Supreme Court Rules and, in the alternative, seeking an order that the order of the Court "in determination of such aforesaid review be stayed pending the determination by the High Court of the Appellant's application for Special Leave to Appeal this matter", i.e., the Court of Appeal's dismissal of Mr. Stubberfield's appeal against the order of the Planning and Environment Court. On 25 February, 1994, Lee J, in the Supreme Court, adjourned Mr. Stubberfield's summonses to a date to be fixed to allow him to bring his application for a stay before a judge of the Court of Appeal and gave leave to either party to bring this summons on for hearing on two days' notice to the other. The evidence indicates that Mr.
Stubberfield took no action to seek the stay (although his application to the High Court for special leave to appeal the decision of the Court of Appeal was pursued, but dismissed on 10 May, 1994). Neither he nor the judgment creditor has taken any action to bring the summons for the review of the taxing officer's decision back on for determination. Instead, the judgment creditor issued the bankruptcy petition on 23 March, 1994. Mr. Stubberfield elected not to proceed with a challenge he made to the bankruptcy notice in the affidavit which he filed in this Court on 2 March, 1994.
In the course of discussion with Counsel for the petitioning creditor, as revealed by the transcript for 16 December 1994, the learned primary Judge was at first inclined to the view that the certificate of the taxing officer did not constitute a final judgment. That was because of the concluding words of O.91 r. 119 of the Rules of the Supreme Court of Queensland which provides:
Any party who is dissatisfied with the certificate or allocatur of the taxing officer as to any item or part of an item which has been objected to as aforesaid, may within 14 days from the date of the certificate or allocatur or such other time as the Court or a Judge, or the taxing officer at the time when the taxing officer signs his or her certificate or allocatur, may allow, apply to a Judge at chambers for an order to review the taxation as to the same item or part of an item, and the Judge may thereupon make such order as the Judge may think just; but the certificate or allocatur of the taxing officer shall be final and conclusive as to all matters which shall not have been objected to in manner aforesaid.
However, when he came to deal with the question in his reasons for judgment, his Honour concluded that the order for costs and the certificate issued by the taxing officer constituted a "final order" for the purposes of the Bankruptcy Act. We agree that, in their context, the concluding words of O. 91 r. 119 mean only that the certificate of the taxing officer is not subject to appeal in respect of any item or part of an item to which objection has not been taken as contemplated by the earlier part of the rule and by O. 91 r. 117. The learned primary Judge referred to Pepper v McNiece (1941) 64 CLR 642,
Re a Debtor [1954] 3 All ER 74 and Re a Debtor [1981] L.S. Gaz R 631 in support of the conclusion that the possibility of an appeal or review does not detract from the finality of an order for the purposes of s. 40(1)(g). Having carefully examined his Honour's analysis of the authorities to which he referred, we regard it as completely unexceptionable. To the authorities canvassed by his Honour, we would add a reference to Re Pannowitz; Ex parte Wilson (1975) 38 FLR 184 where Riley J said, at 192:
In Pepper v. McNiece (1941) 64 C.L.R. 642 an order under the Moratorium Act, 1932-1939 (N.S.W.), for the payment of arrears of interest was held to be a final order within the meaning of s. 52(j) of the Bankruptcy Act 1924-1933. I do not overlook that the relevant section of the Moratorium Act, which gave the Court of Petty Sessions power to rescind or vary an order made by it, also provided specifically that such an order should be final, conclusive and without appeal. The judgments in my opinion draw a distinction between two classes of order. On the one hand, there is the order for payment (such as the order for alimony pendente lite in Re Henderson; Ex parte Henderson (1888) 20 Q.B.D. 509, which is not final because, of its very nature, it carries within it the possibility of rescission or variation. On the other hand, there is the order which is final, though subject to appeal or to reconsideration or rescission or variation, because until rescinded, set aside or varied, it stands "with its quality and condition unimpaired" (per Starke J. (1941) 64 C.L.R., at p. 649). Rich J. spoke of the order he was considering in words which are equally applicable to the order in this case: "The court in making it pronounced the order as a final and definitive command that the appellant should pay the money. No doubt the court could not renounce its power of reconsideration, but it did not mean the order to be provisional or defeasible. No attempt has been made on the part of the respondents to move the court which made the order to reconsider the matter or to rescind or vary the order" (1941) 64 C.L.R., at p. 647. Examples of cases in this class are Boswell v. Coaks (No. 2) (1894) 86 L.T. 365 and Re a Debtor [1912] 3 K.B. 242 (as explained by Williams J. in Pepper v. McNiece (1941) C.L.R., at pp. 657-658).
In the present case all that Mr Stubberfield had done before the issue of the bankruptcy notice on 31 January 1994, was, on 4 January 1994, to move the Supreme Court for an extension of time within which to apply for a review of the taxation embodied in the taxing officer's certificate which had issued on 22 December 1993. The learned primary Judge was thus
factually correct when he said in the course of his reasons for judgment:
The taxing officer's certificate of 22 December, 1993 was effective to quantify the amount of Mr. Stubberfield's liability to the judgment creditor under the costs order. It was not subject to review either on the date it was issued or on the date when it was served. Even though it was subject to a pending review by the Court by the time the petition was issued and when the petition came on for hearing, that does not prevent the costs order in respect of which the certificate was issued being a final judgment for the purposes of s. 40(1)(g).
Even if the extension of time for review had predated the issue of the bankruptcy notice, on the authority of Re a Debtor [1981] L.S. Gaz. R 631 cited by the learned primary Judge, the requirements of s. 40(1)(g) would still have been satisfied unless the Supreme Court had been persuaded before 31 January 1994 or, at the latest, before service of the bankruptcy notice to stay execution on the judgment and certificate for costs. Re Johnson ex parte Johnson v Tonkin (1994) 53 FCR 70 to which we were referred by Mr Stubberfield concerned the staying effect of O. 47 r.24(a) of the Rules of the Supreme Court of Queensland which made it necessary to obtain the leave of that Court to levy execution after six years had elapsed since the date of the judgment. Although Spender J there accepted that a judgment founding a bankruptcy notice must be one which is not stayed both at the time of issue of the bankruptcy notice and at the time of its service, that decision does not avail the appellant in the present case.
In Re a Debtor (supra), where the facts were similar to those of the present case, there were pending summonses to review certificates issues by a taxing officer. In the Court of Appeal, Brightman LJ, with whom O'Connor LJ and Fox J agreed, held that:
... the mere fact that an order was subject to a pending appeal was not a reason for treating it as other than a final order and did not prevent the issue of a bankruptcy notice. Though not described in terms as an appeal, the review of a taxation certificate was in all essential respects an appeal and the existence of a summons to review did not prevent the order for costs and the certificate from being a final order.
Mr Stubberfield sought to cast doubt on that authority by pointing out that it is not referred to in the treatment of bankruptcy in Halsbury's Laws of England 4th Edn. Vol 3(2) and that the appellant had appeared in person. He also suggested that it was inconsistent with Re Crump (1891) 8 Mor. 174.
The lack of reference to Re a Debtor [1981] S.J. Gaz R 631 in the fourth edition of Halsbury is explicable by the supervening enactment in England of the Insolvency Act 1986 which erected, in place of a bankruptcy notice, a statutory demand not predicated on a final judgment or order. Re Crump (which similarly is not cited in the same volume of Halsbury) was a case which turned on the practice of the Queens Bench Division not to allow execution of a judgment for costs in which the note certifying the amount taxed and allowed by the taxing master had not been completed. That case has no application where the form of the substantive judgment requires no addition to be made to it after the certificate or allocatur of the taxing master has been issued. The point for which Re Crump stands was succinctly identified by Walton J in Cartwright v Barker [1975] 2 All ER 970 at 973:
Counsel for the petitioning creditor tried to persuade us that there was some inconsistency between Re Crump (1891) 64 LT 799, Re Faithfull (1885) 14 QBD 627 and Re Alexander [1892] 1 QB 216, but it is no disrespect to his argument to say that, at any rate so far as I am concerned, he completely failed in that. The whole point of Re Crump, as it seems to my mind, is that an allocatur is not a judgment or an order for the payment of money. In order to find that, one has to go back to the original judgment. In going back to the original judgment in Re Crump of course one found a blank which meant that the judgment could not be relied on as a final judgment or order, notwithstanding the fact that the allocatur had in fact been granted, the taxing master's certificate had been made. In the other two cases there was no blank in the original order, but it was just an order in each case for the costs to be taxed. They had been taxed and the certificates were available. In each of those cases it was held that the original judgment was in fact a final order, which now that it had been worked out through the allocatur could be properly enforced by means of a bankruptcy notice. But that, to my mind, has absolutely nothing whatsoever to do with the point in Re Crump.
The appellant was critical of what he called a finding below that he "has persistently refused to pay the amount of the costs". That expression occurs in the passage from the reasons of Drummond J quoted at p. 2 above. In its context, it is clear that his Honour was doing no more than identifying a reason given by the judgment creditor for bringing the bankruptcy proceedings. It is obvious from the longer passage set out at pp. 4-5 of these reasons, which does contain findings of fact, that his Honour clearly understood that the costs had not been paid because Mr Stubberfield was actively pursuing challenges to both the substantive order of the Court of Appeal and the taxation of costs.
Ground 6
The debtor maintains that the substantive order of the Court of Appeal was obtained by fraud and, accordingly, invited his Honour sitting in bankruptcy to go behind that judgment. It is true that a Court of Bankruptcy is required to inquire into the validity of a judgment debt where there are substantial
reasons for questioning whether, behind the judgment debt, there was in truth and reality a debt due to the petitioning creditor. (See Wren v Mahony (1972) 126 CLR 212 and the cases there cited.) Those substantial reasons may include evidence that there has been fraud or collusion in procuring the judgment. In the present case, the judgment debt was at one remove from the judgment in the substantive proceedings in respect of which the appellant's rights of appeal had been exhausted when he was refused special leave by the High Court. There was no scope for a Court of Bankruptcy to consider for itself the facts underlying the order in those substantive proceedings. Moreover, the conclusion to which his Honour came that the debtor was solvent made it unnecessary for him to entertain a collateral attack on any of the orders in the Supreme Court. We are quite unable to say that his discretion miscarried. Had we been called upon to do so ourselves, we would have exercised it in the same way.
The appellant also complains of a failure by the primary Judge to find that the petitioning creditor had been actuated by malice or vindictiveness in commencing and prosecuting the bankruptcy proceedings. In the same context, he attacks the finding that the petitioning creditor could not otherwise have readily enforced its judgment. As we have already pointed out in relation to Ground 3, the latter finding was made only as part of his Honour's consideration of alternative modes of recovering the judgment debt as part of a proper formation of a discretionary judgment whether or not to make a
sequestration order against a manifestly solvent debtor. The resolution of the former issue going to the motive of the petitioning creditor depended upon, amongst other things, an assessment of the credit of witnesses for the petitioning creditor. This Full Court is in no position to undertake such an assessment. Nor would it be appropriate for an appellate Court to refer the petition for reconsideration at first instance unless it were first persuaded that the ground on which the primary Judge had chosen to dismiss it was not available. We have not been so persuaded in the present case.
Conclusion
For these reasons we are unable to hold that the appellant has made out any of the grounds for declaratory or other relief appended to his amended notice of appeal or developed in oral argument before the Full Court. Accordingly, the appeal must be dismissed with costs.
I certify that this and the preceding ten (10) pages are a true copy of the Reasons for Judgment of their Honours Justices Ryan, Whitlam and Kiefel.
Associate:
Date:
Counsel for the Appellant : Appellant in Person
Solicitors for the Appellant : N/A
Counsel for the Respondent : Mr M.D. Martin
Solicitors for the Respondent : Baker Johnson
Date of Hearing : 22 April 1996
Date of Judgment : 22 May 1996
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