Sweeney v WorleyParsons Services
[2006] FMCA 425
•21 March 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SWEENEY v WORLEYPARSONS SERVICES | [2006] FMCA 425 |
| BANKRUPTCY – Application to set aside Bankruptcy Notice where order for costs made more than six years prior to issue of notice but assessment of costs and judgment given less than six years prior – where there was a judgment of the Court of Appeal (NSW) which was later replaced by a judgment of Supreme Court in the same amount – whether no application had been made to set aside Court of Appeal judgment – whether this rendered the Bankruptcy Notice invalid. |
| Bankruptcy Act 1966, s.41(3) Legal Profession Act 2004 |
| Franks v Warringah Council [2003] FCA 1047 Stec v Orfanos [1999] FCA 457 |
| Applicant: | CHARLES SWEENEY |
| Respondent: | WORLEYPARSONS SERVICES PTY LIMITED (ACN 001 279 812) |
| File Number: | SYG574 of 2006 |
| Judgment of: | Raphael FM |
| Hearing date: | 21 March 2006 |
| Date of Last Submission: | 21 March 2006 |
| Delivered at: | Sydney |
| Delivered on: | 21 March 2006 |
REPRESENTATION
| Solicitors for the Applicant: | Noel F Bracks & Company |
| Solicitors for the Respondent: | Colin Biggers & Paisley |
ORDERS
Application dismissed.
Applicant to pay the respondent’s costs of the application, such costs to be taxed, if not agreed, in accordance with the Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG574 of 2006
| CHARLES SWEENEY |
Applicant
And
| WORLEYPARSONS SERVICES PTY LIMITED (ACN 001 279 812) |
Respondent
REASONS FOR JUDGMENT
I have before me an application by Charles Sweeney QC to set aside a bankruptcy notice numbered NN3404/05 issued against Charles Sweeney and Geraldine Sweeney by Worleyparsons Services Pty Limited. Mrs G Sweeney has not been served and does not take part in these proceedings. The bankruptcy notice claims a debt of $118,814.38 made up of two judgments, the first being in the sum of $108,354.14 and the second in the sum of $10,460.24. Both judgments were given in respect of proceedings numbered 16433 of 1991 in the Supreme Court of New South Wales. The first judgment was allegedly given at Sydney on 3 December 2003 and the second was allegedly given at Sydney on 20 July 2004. Both judgments are for costs in relation to proceedings between the parties that had, it has been accepted by both sides, concluded more than six years prior to the issue of the bankruptcy notice. Section 41(3) of the Bankruptcy Act 1966 states:
“(3) A bankruptcy notice shall not be issued in relation to a debtor
(a) ...
(b) ...
(c) in respect of a judgment or order for the payment of money if:
(i) a period of more than six years has elapsed since the judgment was given or the order was made; or
(ii)...”
The first point that the debtor makes in relation to the bankruptcy notice is that it is a notice in respect of a judgment that is more than six years old. There is annexed to the bankruptcy notice a copy of both of the judgments to which I have referred. The first judgment is issued out of the Supreme Court of New South Wales Common Law Division Sydney Registry and states:
“1. The respondents pay the applicant the sum of $108,354.14 pursuant to the certificate of determination of costs dated 30 January 2001.
2. This judgment shall take effect on 3 December 2003.”
The second judgment is also of the Supreme Court and reads:
“1. The first and second respondent pay the applicant the sum of $10,460.24 pursuant to the certificate of determination of costs issued on 30/1/01 in relation to the order for costs made by the Court of Appeal in proceedings CA 40750 of 1996.
2. The judgment shall take effect on 20 July 2004.”
Whilst it is correct to say that the orders for costs which I have set out above arose out of judgments of the Supreme Court of New South Wales dated 8 November 1996 and the Court of Appeal dated 16 February 1999, both of which were more than six years before the issue of the bankruptcy notice, it is equally clear that the amount of costs ordered thereunder was not ascertained until the dates of those judgments, neither of which are more than six years old. In Franks v Warringah Council [2003] FCA 1047 her Honour Branson J considered a similar matter. Her Honour, following a number of decisions of the Federal Court, the most relevant of which to my mind is Stec v Orfanos [1999] FCA 457, concluded that the original orders of a court for the payment of costs are not orders which can found a bankruptcy notice:
“[31]In each case the amount of the costs which the order required Mr Franks to pay needed first to be quantified.”
It was her Honour's view that it is the quantification of the costs and the procedures that the local legislation requires thereafter that founds the debt upon which the bankruptcy notice issues. In the case of Stec it was the issue by the South Australian Supreme Court of an allocator. In the case before me it is the filing with a court of competent jurisdiction of the certificate under the Legal Profession Act 2004 following a determination by an assessor of the amount due for costs.
I am satisfied that the two judgments which are annexed to the bankruptcy notice are not judgments for the payment of money in respect of which a period of more than six years has elapsed since the judgment was given and therefore this ground of objection to the bankruptcy notice fails.
The second ground of objection is that the smaller of the two orders, the one dated 20 July 2004 for a figure of $10,460.24 is an irregular document. The irregularity alleged appears to arise out of the fact that the decision on the costs was appealed to the Court of Appeal of New South Wales and originally an order was taken out by the judgment creditors from that court. A copy of the Court of Appeal judgment is found annexed to an affidavit of Lincoln Francis Kelly dated 17 March 2003 as exhibit B. It states:
“Judgment that:
1. The first and second respondent pay the applicant the sum of $10,460.24 pursuant to the certificate of determination of costs issued on 30/1/01.
2. This judgment shall take effect on 4 December 2003.”
It is not contested by either party who appeared before me today that the Court of Appeal judgment was not irregular. The Court of Appeal had made no separate orders in this case, merely upholding the original order of the Supreme Court. In those circumstances the court which should have issued the order for the payment of costs was the Supreme Court and the Supreme Court did indeed issue an order in the form of the minute of judgment which I have already set out at [2]. This was done after a letter was received by the Supreme Court registry from the solicitors for the creditors.
Mr Kelly, who appears on behalf of the debtor, says that what has occurred is irregular. He also says that the Court of Appeal judgment is still in existence, although there is an apparent finding by Associate Justice Malpass made on 15 October 2004 in certain proceedings to set aside the costs assessment that the judgment entered in the Court of Appeal had been set aside. Mr Kelly argues, without providing me with any assistance by way of references to the Supreme Court practice, that judgments cannot be set aside in the absence of the party. So much I am prepared to accept. But, to my mind, what has occurred here is not a judgment having been set aside, but an invalid judgment having been issued and that mistake being corrected by the registry. If the first judgment of the Court of Appeal was a nullity because the Court of Appeal was unable, as has been accepted by both parties, to issue such a judgment, then it does not exist. It is not a question of setting it aside because there is nothing to set aside. The only valid judgment is the judgment of the Supreme Court upon which the bankruptcy notice has been based. For these reasons I believe that the second objection to the bankruptcy notice fails too.
There being no other objections to the bankruptcy notice, I dismiss the application and order that the applicant (the judgment debtor Charles Sweeney QC) pay the respondent (the creditor's) costs as taxed if not agreed.
I have been requested to extend the time for compliance with this bankruptcy notice for a further short period in order to allow the second respondent to make payment of the debt. Unfortunately, although the second respondent is a Queen's Counsel, he did not go upon affidavit in relation to these proceedings. He has not followed up an appeal from the decision of Associate Justice Malpass in relation to the costs orders and I am unable to be satisfied that any genuine offer to deal with his indebtedness is likely to be made, especially as I am advised by Mr Harkin for the respondent that no offer has yet been put or, to the extent that any offer might have been put, it was less than the amount of the judgment debt and has been withdrawn.
So my order remains as it was, that the application to set aside the bankruptcy notice is dismissed. The applicant has until midnight tonight to make payment.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
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2
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