Thomas v RAFTOPOULOS
[2020] FCCA 3515
•22 December 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| THOMAS v RAFTOPOULOS | [2020] FCCA 3515 |
| Catchwords: BANKRUPTCY – Application to set aside bankruptcy notice – bankruptcy notice defective – no final judgment or order attached – bankruptcy notice set aside. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.40(1)(g), 41(2), 40(3), 306 Bankruptcy regulations 1996 (Cth), reg.4.02(1) |
| Cases cited: ANZ Banking Group Ltd v Menso [2006] FMCA 1522 Franks v Warringah Council (2003) 131 FCR 281 |
| Applicant: | LUKE THOMAS |
| Respondent: | PETER RAFTOPOULOS |
| File Number: | BRG 1062 of 2019 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 16 April 2020 |
| Date of Last Submission: | 18 December 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 22 December 2020 |
REPRESENTATION
| The Applicant in person via telephone link |
| Counsel for the Respondent: | Mr Trewavas |
| Solicitors for the Respondent: | SLF Lawyers |
ORDERS
Set aside orders 2 and 3 of the orders made on 5 March, 2020;
Bankruptcy Notice Number BN247278 issued on 8 November, 2019 be set aside.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 1062 of 2019
| LUKE THOMAS |
Applicant
And
| PETER RAFTOPOULOS |
Respondent
REASONS FOR JUDGMENT
On 8 November, 2019 the respondent caused the issue of a bankruptcy notice against the applicant. The bankruptcy notice had attached to it a costs assessor’s certificate issued on 25 October, 2019. The cost assessor’s certificate records that the cost assessor was appointed pursuant to an order of a Registrar dated 13 September, 2019. According to the certificate costs were assessed in the sum of $6,367.40.
By application made on 11 December, 2019, the applicant applied for an order that the bankruptcy notice be set aside. He also sought orders that:
a)the bankruptcy notice be set aside on grounds “the applicant has applied to set aside and/or stay the judgment or order in respect of which the Bankruptcy Notice was issued”;
b)that the bankruptcy notice “be set aside pursuant to the provisions of section 40(1)(g) of Bankruptcy Act 1966 (Cth) on the following grounds:
a.the applicant has a counterclaim, set off and/or cross demand.
b.the applicant has established that there are grounds for a counterclaim, set off and/or cross demand.
c.the counterclaim, set off and/or cross demand is greater than the (sic) that is claimed in the Bankruptcy Notice
d.The applicant did not have an opportunity to raise the counterclaim, set off and/or cross demand in the proceedings that resulted in the judgments or orders to which the Bankruptcy Notice relates.
e.the applicant has provided sufficient details of the counterclaim set-off and or cross demand on the basis of the details contained within the Applicant’s affidavit sworn on 7th December 2019 and any subsequent affidavit that is filed in these proceedings”
c)he also sought an order that the time for compliance with the bankruptcy notice be extended on the grounds that he had applied to set aside and/or stay the judgment or order in respect of which the bankruptcy notice was issued.
By an interlocutory application made on 3 March, 2020 the applicant sought further orders, namely an order that the matter be adjourned until a date fixed by the court, after a decision is made by the Supreme Court of Queensland in case 8834/18 in relation to an application under rule 668 of the Uniform and Civil Procedure Rules 1999 (Qld) for costs to be set aside. Further and alternatively, he sought an order under rule 1.39 of the Federal Court Rules 2011 that the applicant be granted an extension of time to comply with the orders of Registrar Buckingham made on 29 January, 2020.
On 5 March, 2020 the application in a case filed on 3 March, 2020 was heard by a Registrar and dismissed. An adjournment was refused as was the request for an extension of time within which to comply with the orders made on 29 January, 2020. The application filed on 11 December, 2019 for an order setting aside the bankruptcy notice was also dismissed.
By this application the applicant seeks to review the Registrar’s orders. The application to review the Registrar’s orders is opposed by the respondent.
The review is a hearing de novo of the applicant’s application upon the material before the registrar and any other material that the Court gives the parties leave to rely upon: rule 20.03 Federal Circuit Court Rules 2001 (Cth). The applicant sought leave of the Court to file and read an affidavit (unsworn) of Luke Thomas filed 15 April, 2020. Leave was not opposed and I granted the applicant that leave.
The applicant filed an outline of submissions on 15 April, 2020. In it he argues that he has a valid counterclaim, set off and/or cross demand sufficient to justify the setting aside the bankruptcy notice. He makes a similar arguments in a related case (Thomas v Taiaora: BRC1061/2019).
However, in the present case there is a far more fundamental difficulty with the bankruptcy notice which demands that it be set aside.
Section 40(1)(g) of the Bankruptcy Act1966 (Cth) requires that there be a “final judgment or final order” in favour of a creditor against a debtor. Section 40(3) of the Act relevantly provides:
“(3) For the purposes of paragraph (1)(g):
…
a judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action shall be deemed to be a final judgment so obtained…”.
Subsection 41(2) of the Act requires that a bankruptcy notice be in accordance with the form prescribed by the Bankruptcy Regulations 1966 (Cth). Regulation 4.02(1) provides that for the purposes of s.41(2), the form of bankruptcy notice set out in Form 1 is prescribed. In the present case, there is no submission that the correct form was not used. The form of bankruptcy notice prescribed for the purposes of s.41(2) of the Act requires that the final judgment or final order upon which the bankruptcy notice is based is to be attached to the bankruptcy notice.
Whether a cost assessor’s certificate or an allocatur issued by a taxing officer is sufficient to meet the description of final judgment or final order for the purposes of s.41(2) of the Act depends upon the particular regime in force in the relevant jurisdiction for the assessment and recovery of legal costs: Franks v Warringah Council (2003) 131 FCR 281 at [17]. In Franks Branson J pointed out that the status of an order of an officer of a court authorised to assess an amount payable under an order of a court which requires the payment of unquantified legal costs is dependent on the terms of the statutory instrument governing the relevant order or certificate.
Branson J’s observations were applied by Wilson FM in ANZ Banking Group Ltd v Menso [2006] FMCA 1522. In that decision, his Honour, with respect, undertook a very thorough review of the relevant authorities. His Honour concluded that the regime for the assessment of costs ordered to be paid by a court pursuant to the Uniform Civil Procedure Rules1999 (Qld) (as they then stood) was such that it was the initial order for costs made by the Court that was required to be attached to the bankruptcy notice, not the order made by the Registrar assessing those costs. A bankruptcy notice that attached only the latter order was not valid.
However, soon after his Honour’s judgment, the UCPR were amended. His Honour had cause to consider the amended form of those Rules in Ivory v Telstra Corporation Limited & Ors [2010] FMCA 123. At paragraph 14 of that decision his Honour said:
As Senior Counsel for the respondent explained, in his excellent written submissions, the costs provisions of the Uniform Civil Procedure Rules (Qld) were changed on 10 December 2007, such that the issues addressed by me in Australian and New Zealand Banking Group Limited v Menso [2006] FMCA 1522 are no longer apposite. Now, the effect of the Uniform Civil Procedure Rules is that the order signed by the Deputy Registrar after an assessment of legal costs takes effect as a ‘money order’ and is enforceable in its own right. UCPR 740 makes it clear that the order made by the Deputy Registrar after the assessment of costs itself takes effect as a judgment of the court. The fact that the order of the Registrar is a money order, as defined in Schedule 2 to the Supreme Court Act 1991 means that it is a final judgment or order as required by s.40(3)(b) Bankruptcy Act 1966. I accept the submissions of the respondent and find that the Bankruptcy Notice is not defective by reason of the attachment only of the order of the Deputy Registrar made 3 September 2008.
There is no reason to think that the decision of Wilson FM in Ivory v Telstra is clearly wrong. Indeed, and with respect, it is clearly correct and I followed and applied that decision in Smits v Lillas & Loel Lawyers Pty Ltd [2015] FCCA 1092.
The document attached the bankruptcy notice here is a cost assessor’s certificate. It is not an order of the Supreme Court that the applicant before me pay any money to the respondent, let alone a final judgment or final order.
The defect in the bankruptcy notice is fatal. It cannot be cured pursuant to s.306 of the Bankruptcy Act.
Accordingly, it is appropriate to set aside orders two and three of the orders made by the Registrar on 5 March, 2020 and order that Bankruptcy Notice Number BN247278 issued on 8 November, 2019 set aside.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 22 December 2020.
Associate:
Date: 22 December 2020.
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