Thorne ATF Thorne Family Trust v Ozibar Pty Ltd ATF Ozibar Unit Trust
[2017] FCCA 3273
•21 December 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| THORNE ATF THORNE FAMILY TRUST v OZIBAR PTY LTD ATF OZIBAR UNIT TRUST | [2017] FCCA 3273 |
| Catchwords: BANKRUPTCY – Proceedings in connection with sequestration – bankruptcy notice – stay of execution – orders for payment by instalments. |
| Legislation: Bankruptcy Act 1966, ss.40(1)(g), 41(3)(a), 41(3)(b) Civil Proceedings Act2011 (Qld), ss. 83(2), 90, 91, schedule 1 Property Law Act 1974 (Qld), ss. 199, 200 Uniform Civil Procedure Amendment Rule (No. 1) 2004 (Qld) |
| Cases cited: Abigroup Ltd v Abigano (1992) 39 FCR 74 |
| Applicant: | SUZANNE MAREE THORNE AS TRUSTEE FOR THORNE FAMILY TRUST |
| Respondent: | OZIBAR PTY LTD AS TRUSTEE FOR OZIBAR UNIT TRUST |
| File Number: | BRG 242 of 2015 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 3 August 2015 |
| Date of Last Submission: | 3 August 2015 |
| Delivered at: | Brisbane |
| Delivered on: | 21 December 2017 |
REPRESENTATION
| Solicitors for the Applicant: | Morrow Petersen Solicitors |
| Counsel for the Respondent: | Mr Land (directly instructed) |
ORDERS
Bankruptcy Notice BN 178955 issued 27 February, 2015 be set aside;
The respondent pay the applicant’s costs of and incidental to the application to be assessed in accordance with the Federal Circuit Court (Bankruptcy) Rules 2006.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 242 of 2015
| SUZANNE MAREE THORNE AS TRUSTEE FOR THORNE FAMILY TRUST |
Applicant
And
| OZIBAR PTY LTD AS TRUSTEE FOR OZIBAR UNIT TRUST |
Respondent
REASONS FOR JUDGMENT
By this application, the applicant seeks that a bankruptcy notice issued on the basis of two judgments given against her in favour of the respondent, be set aside. She contends that execution on those judgments has been stayed and so the bankruptcy notice is bad. She also argues that the bankruptcy notice is bad because at least one of the judgments was given in favour of two judgment creditors and only one has applied for the issue of the bankruptcy notice.
The respondent opposes the application. It argues that the bankruptcy notice is valid because execution of the orders of the Magistrates Court is not stayed. It also argues that in the particular circumstances of this case it is unnecessary for the second of the two judgment creditors in whose favour at least one of the judgments was given, to have joined in the issue of the bankruptcy notice.
The second ground relied upon by the applicant was raised after the application was heard and written submissions had been delivered. In the circumstances, the respondent opposed the applicant relying upon that ground. The applicant sought leave to do so. To the extent that it is necessary to grant the applicant leave to rely upon that ground, I grant the applicant that leave. The respondent is not prejudiced. It had the opportunity to put before the Court any further evidence that it wished to rely upon in respect of that ground and it took up that opportunity. That evidence, in the end, went unchallenged.
However, for the reasons that follow, both grounds pressed by the applicant fail. Consequently, the application should be dismissed with costs.
Background
On 12 January, 2010 the respondent obtained judgment against the applicant in two proceedings in the Magistrates Court of Queensland at Mackay.
In the first proceeding, M746/2009, judgment was given for the sum of $28,782.49. The plaintiff in that proceeding was the present respondent and the defendants were Brett John Thorne & Suzanne Maree Thorne as trustees for the Thorne Family Trust.
In the second proceeding, M749/2009, judgment was given for the sum of $11,180.17. The plaintiffs in that proceeding were the present respondent and Long Development Management Pty Ltd. The first defendant was described as Brett John Thorne & Suzanne Maree Thorne as trustees for the Thorne Family Trust and the second defendant was described as Blue Chip Property Services Pty Ltd. The form of the judgment is:
THE JUDGMENT OF THE COURT IS THAT the defendants pay to the plaintiffs the amount of $11,180.11 including $1,177.80 costs and $502.37 interest.
The form of the judgment makes it clear that Ozibar Pty Ltd and Long Development Management Pty Ltd are joint judgment creditors.
I note that in respect of the judgment in M746/2009, the respondent asserts that the judgment date was 10 January, 2010 despite referring to 12 January, 2010 in the affidavits of Mr Long. To the extent it is necessary to do so, I prefer the date contained in the sworn material and find that the judgment was given on 12 January, 2010.
On 19 July, 2010 the applicant paid $14,920.40 in respect of the judgment in proceeding M746/2009 leaving a balance of $13,862.09.
On 14 November, 2014 the respondent issued two enforcement summonses seeking examination of the applicant – one in respect of each of the judgment debts. Those summonses – M88/14 and M89/14 – were heard in the Magistrates Court of Queensland at Gladstone on 18 December, 2014. They were filed in Gladstone because there had been a previous enforcement application commenced by the respondent in that registry and, to use the words of the applicant’s solicitor, “the subject matter of both applications were obviously related.”
At the hearing of the enforcement summonses on 18 December, 2014 the applicant’s solicitor made an oral application for an order that the judgment debts be paid by instalments. The Court refused that application, apparently indicating that a formal application would have to be filed and prosecuted.
It appears that no orders were made by the Magistrates Court at Gladstone on the hearing of the enforcement summonses. The respondent’s evidence (given by affidavits from Mr Gregory Long) is that at the conclusion of the hearing the respondent submitted that it would apply for a bankruptcy notice to be issued against the applicant. Mr Long says that he also made submissions in respect of the foreshadowed instalment application and outlined several grounds of objection to an instalment order.
On 5 January, 2015 the applicant filed an application for an instalment order in respect of both outstanding judgments in the Magistrates Court at Gladstone.
On 20 January, 2015 a bankruptcy notice was issued against the applicant by the respondent for the total of the two judgment debts plus interest. The respondent served the applicant with a copy of the bankruptcy notice on 23 January, 2015. On that date, the respondent submits, it also advised the applicant that it had not been served with any applications for instalment orders and that it maintained its opposition to such orders being made.
On 28 January, 2015 the applicant served the instalment order applications filed in the Magistrates Court at Gladstone on 5 January, 2015 on the respondent.
On 29 January, 2015 the instalment order applications came before the Magistrates Court at Gladstone in the absence of the respondent’s solicitors or other representative. The respondent did not appear, on the basis that there was insufficient time in which to do so. Mr Long, a director of the respondent swears that he was suffering from an illness at the time and a letter had been sent to the registrar of the court on 23 January, 2015 explaining the situation in any event. The court at Gladstone refused to hear the instalment order applications on the basis that they should have been brought in the Magistrates Court at Mackay.
On 30 January, 2015 the applicant sent applications for instalment orders in respect of each judgment debt to the Magistrates Court at Mackay for filing. The applicant’s evidence is that the Mackay registry did not return service copies of the applications to the applicant but sought to proceed on an ex parte basis. The respondent argues that the applicant did not advise it that it had sent those applications to the Court nor provide service of the applications or supporting affidavits. That indeed seems to be the case.
On 12 February, 2015 the respondent withdrew the first bankruptcy notice on the basis that the interest claimed therein had been miscalculated. The respondent applied for the issue of another bankruptcy notice on the same day.
On 13 February, 2015 a deputy registrar of the Magistrates Court at Mackay purported to make orders authorising payment of each judgment debt by instalments. The deputy registrar did so ex parte on the deputy registrar’s own initiative. I am satisfied that no notice that the application would be dealt with ex parte was given to either the applicant’s solicitor or the respondent.
The respondent argues that it was not advised that the deputy registrar proposed to deal with the applications ex parte and that it ought to have been given notice of his intention to do so. However, that the respondent was not so notified of either the making of the applications or the registrar’s intention to deal with the applications ex parte is hardly surprising. Rule 868(3) of the Uniform Civil Procedure Rules 1999 (Qld) permitted the application to be made without notice to any other party to the proceedings. The deputy registrar was authorised by the rules to proceed ex parte.
Once made, UCPR 868 required the instalment order to be served upon the respondent to the order. UCPR 868(5) provides that a party served with an instalment order who was not before the court when the order was made may apply to the court, on notice to the applicant for the instalment order, for an order to set aside or vary the instalment order.
On 16 February, 2015 (a Monday) the applicant’s solicitor discovered that the instalment orders had been made on 13 February, 2015 (the immediately preceding Friday). He obtained a copy of the orders and on 19 February, 2015 a copy of the orders were sent to the respondent by email. In that email, the applicant’s solicitors sought details of an account into which the instalments could be made by way of direct debit. A second request for those details was made on 23 February, 2015. No response was received to those requests.
On 27 February, 2015 a second bankruptcy notice was issued by the Official Receiver based upon the two judgment debts totalling $25,042.26. That was served on the applicant the following day, 28 February, 2015.
Correspondence ensued between Greg Long, a director of Ozibar Pty Ltd and the solicitors for the applicant. It is apparent from that correspondence that Mr Long was aware that the respondent could apply to set aside the instalment orders. In his email to the applicant’s solicitors dated 4 March, 2015 Mr Long said:
An application will be filed shortly seeking to set aside the order along with a supporting affidavit which exhibits details of all of the monies received by your client since 12 January 2010, when the two Magistrates Court money judgments were made.
On 9 March, 2015 the applicant’s solicitors suggest that they wrote to the respondent requesting that the respondent withdraw the second bankruptcy notice by 13 March, 2015 on the basis that the orders in M746/2009 and M749/2009 had been stayed by reason of the making of the instalment orders. The applicant apparently provided the respondent with an extension within which to withdraw the bankruptcy notice until 18 March, 2015 on the basis of Mr Long’s ill health.
On 18 March, 2015 Mr Long advised the respondent that the applicant would not withdraw the bankruptcy notice. The following day, the applicant filed the present application in this Court.
The issues
The primary issue in this case is whether the bankruptcy notice that issued on 27 February, 2015 was invalid because the judgment or order upon which that notice was founded had been stayed by the operation of the UCPR. As the application developed and further submissions were received, a second significant issue was raised by the applicant, namely that the bankruptcy notice was invalid because all of the creditors that were entitled to the benefit of the judgments were not named in the bankruptcy notice.
A stay
Generally speaking, the Civil Proceedings Act 2011 (Qld) applies to all civil proceedings in the courts of the state of Queensland, including the Magistrates Court of Queensland. Many relevant words and phrases are defined in the dictionary found in Schedule 1 to the Act. Some definitions contained within that Act are important. Relevantly:
enforcement creditor means—
(a) a person entitled to enforce an order for the payment of money; or
(b) a person to whom the benefit of part of the order has passed by way of assignment or in another way.
enforcement debtor means a person required to pay money under an order.
…
enforcement warrant means a warrant to enforce an order other than an order for the payment of an amount into court.
…
money order means an order of the court, or part of an order of the court, for the payment of money, including an amount for damages, whether or not the amount is or includes an amount for interest or costs.
money order debt means the amount of money payable under a money order.
…
order includes a judgment, direction, decree, decision or determination of a court whether final or otherwise.
Enforcement is dealt with in Part 13 of the Civil Proceedings Act. Division 1 of Part 13 deals with “Judgments”. Section 83(2) provides:
(2) A money order may be enforced only under this part regardless of whether the order was made in a court’s common law jurisdiction or its equitable jurisdiction.
Division 2 of Part 13 of the Act deals with “Enforcement generally” and Division 3 of Part 13 deals with “Enforcement warrants”. Relevantly, s.90 (which appears in Division 3) provides:
90 Enforcement warrant
(1) To enforce an order (the original order) other than an order for the payment of money into court, a person entitled to enforce the original order may obtain an enforcement warrant from the court.
(2) An enforcement warrant may contain any order directed to enforcing the original order, including an order authorising—
(a) an enforcement officer to seize and sell, in satisfaction of a money order debt, all real and personal property (other than exempt property) in which an enforcement debtor has a legal or beneficial interest; or
(b) redirection to an enforcement creditor of particular debts, belonging to an enforcement debtor, from a third person; or
(c) redirection to an enforcement creditor of particular earnings, of an enforcement debtor, from a third person; or
(d) an enforcement officer to enter and deliver possession of land; or
(e) an enforcement officer to seize and deliver specific goods; or
(f) an enforcement officer to seize and detain property.
(3) An enforcement warrant may contain more than 1 order directed to enforcing the original order and may be issued to enforce an original order that is a money order and a non-money order.
Some observations about enforcement warrants are necessary:
a)the entitlement to obtain an enforcement warrant from the court is given to “a person entitled to enforce the original order”: s.90(1);
b)the term warrant is not defined in the Civil Proceedings Act;
c)an enforcement warrant may contain an order, or more than one order, directed to enforcing the original order: ss.90(2), 90(3); and
d)an enforcement warrant ends one year after it issues unless the warrant states that it ends at an earlier time: s.91.
Generally speaking, the UCPR applies to all civil proceedings in the Magistrates Court of Queensland. Enforcement of money orders is dealt with in UCPR Chapter 19 and a money order may be enforced under that chapter: UCPR 794.
Part 1 of Chapter 19 deals with some general matters and has some definitions that are specific to that Chapter of the UCPR including:
enforceable money order, of a court, means—
(a) a money order of the court; or
(b) a money order of another court or tribunal filed or registered under an Act in the court for enforcement.
…
enforcement warrant means a warrant issued under this chapter to enforce a money order.
The terms enforcement creditor and enforcement debtor have the same meanings as those ascribed by the Civil Proceedings Act, whilst the term order debt has the same meaning as money order debt provided in the Civil Proceedings Act.
A court exercising jurisdiction under the UCPR is given power, on application by an enforcement debtor, to stay the enforcement of all or part of the money order, including because of facts arising or discovered after the order was made. A court may make the orders it considers appropriate including an order for payment by instalments: UCPR 800(1).
Part 2 of Chapter 19 deals with enforcement hearings, the purpose of which is to obtain information to facilitate the enforcement of a money order: UCPR 803.
An enforceable money order is enforced by the issue of an enforcement warrant pursuant to Part 3 of Chapter 19 of the UCPR. UCPR 817 sets out the procedure for applying for an enforcement warrant. Its terms are important so I will set them out in full:
817 Procedure
(1) A person applying for an enforcement warrant must file—
(a) an application attaching the enforcement warrant the person wants the court to issue; and
(b) if the person is an enforcement creditor, a statement in the approved form sworn by the enforcement creditor, or the enforcement creditor’s agent or solicitor, not earlier than 2 business days before the date of the application disclosing the following—
(i)the date the money order was made;
(ii) the amount for which the order was made;
(iii) the date and amount of any payment made under the order;
(iv) the costs incurred in previous enforcement proceedings in relation to the order debt;
(v) any interest due at the date the statement is sworn;
(vi) any other details necessary to calculate the amount payable under the order at the date the statement is sworn and how the amount is calculated;
(vii) the daily amount of any interest that, subject to any future payment under the order, will accrue after the date the statement is sworn;
(viii)any other information necessary for the warrant being sought.
(2)An enforcement creditor may apply for an enforcement warrant without notice to another party.
(3)A copy of the enforcement warrant must be filed.
(4)Subject to this chapter, it is not necessary to request an enforcement hearing before applying for an enforcement warrant.
(5)Unless the court or a registrar directs otherwise, an application for an enforcement warrant or an application for renewal of an enforcement warrant must be dealt with by the registrar without a formal hearing.
By UCPR 819 an enforcement debtor may apply to the court to set an enforcement warrant aside or to stay enforcement at any time. However, the filing of the application does not stay the operation of an enforcement warrant.
UCPR 820 is also important. It provides:
820 Issue and enforcement of enforcement warrant
(1)An enforcement warrant must state—
(a) the name of the enforcement debtor; and
(b) the date, within 1 year after the warrant’s issue, the warrant ends; and
Note—
The Civil Proceedings Act 2011, section 91, provides that an enforcement warrant ends 1 year after it issues unless it states that it ends at an earlier time.
(c) the amount recoverable under the warrant; and
(d) any other details required by these rules.
(2)The amount recoverable under the warrant must include—
(a) unless the court orders otherwise, the unpaid costs of any previous enforcement proceeding of the same money order; and
(b) the costs relating to the enforcement warrant; and
(c) the amount of interest on the order debt.
(3)The registrar must give the enforcement warrant to the enforcement creditor to be enforced, unless the warrant is an enforcement warrant for the seizure and sale of property.
The power to make an instalment order is found in UCPR 868. Its terms are as follows:
868 Order may authorise payment by instalments
(1) A court may make an order authorising satisfaction of an order debt by instalment payments (an instalment order).
(2) A court may make the instalment order—
(a) when making a money order; or
(b) on the application of a party (the applicant), at any later time before the money order has been satisfied.
(3) The application may be made without notice to any other party.
(4) However, if the application is made without notice to another party and an instalment order is made on the application, the applicant must serve the instalment order on the other party.
(5) If a party—
(a) is served with an instalment order under subrule (4); and
(b) was not before the court when the instalment order was made;
the party may apply to the court, on notice to the applicant, to set aside or vary the instalment order.
(6) If the applicant was not before the court when an order setting aside or varying the instalment order was made, the party who applied for the order must serve the order on the applicant.
UCPR 870 provides:
870 No enforcement warrant to issue while instalment order
Unless the court orders otherwise, while an instalment order is in force, no enforcement warrant may be issued in relation to the money order to which the instalment order relates.
Neither party suggests that there is any express order that operates to stay the execution or enforcement of the judgments under consideration. No order had been made pursuant to UCPR 819. Had such a stay been in place at the time of the respondent’s application for the issue of the bankruptcy notice, s.41(3)(b) of the Bankruptcy Act 1966 (Cth) would have been engaged and the Official Receiver would have had no authority to issue a bankruptcy notice. That subsection is not engaged on the facts of the case.
However, the applicant argues that the orders made on 13 February, 2015 – which the applicant argues were instalment orders – engage UCPR 870. If that is the case, no enforcement warrant may be issued in relation to the money order to which the instalment orders relate. In those circumstances, the applicant argues that the bankruptcy notice must be set aside because it was not issued in respect of a final judgment or final order, the execution of which had not been stayed, for the purposes of ss.40(1)(g), 41(1) or 41(3)(a) of the Bankruptcy Act.
I think the applicant’s argument about that is correct if UCPR 870 is engaged. The authorities demonstrate that the existence of an instalment order for the payment of the relevant judgment debt by instalments when coupled with a rule similar to UCPR 870 is sufficient to invalidate a bankruptcy notice: Re Nath; Ex parte Ghysels (1996) 63 FCR 523. The words “a judgment the execution of which has not been stayed” in s.40(1)(g) of the Bankruptcy Act are not restricted to cases where there is an express stay by order of the court. It is necessary that in order to entitle a creditor to issue a bankruptcy notice, the creditor has to be in the position to issue execution on the judgment at the time when the bankruptcy notice was issued: Re Johnson; Ex parte Johnson v Tonkin (1994) 53 FCR 70 at 77.
The requirement that execution on the judgment not be stayed has been consistently construed to mean that a person who may issue and serve a bankruptcy notice in compliance with the Act is a judgment creditor who has the immediate right to issue execution on the judgment: Ex parte Ide; In re Ide (1886) 17 QBD 755, Re Seers (1955) 17 ABC 11 and Re Pannowitz; Ex parte Wilson (1975) 38 FLR 184. The judgment creditor must be in a position to issue execution on the judgment at the time of issue of the bankruptcy notice and that right must continue up to the time of service: Re Moss; Ex parte Tour Finance Limited (1968) 13 FLR 101; Re Schekeloff Ex parte Schekeloff v. Hopkins Group Pty Ltd (1989) 86 ALR 645 and Paterson v Commonwealth (1990) 23 FCR 412. There are many other cases reiterating the point.
The authorities indicate that where execution of the relevant judgment is stayed (expressly or by operation of law) after service of the bankruptcy notice, the position is quite different. The bankruptcy notice may remain valid and an application to set it aside on that basis dismissed: Re Kim Schekeloff, Ex Parte Kim Schekeloff v The Hopkins Group Pty Limited and Ranier Pty Limited [1989] FCA 91 applied in Horton v Warranted Financial Solutions Pty Ltd (In Liquidation) [2011] FMCA 748 and Girgis v Geils Lawyers Pty Ltd [2012] FMCA 669. See also Re Nath; Ex parte Ghysels (above).
If the orders made by the Mackay Magistrates Court on 13 February, 2015 in M746/2009 and M749/2009 were instalment orders for the purposes of UCPR 870, the applicant’s submissions that as at the date of issue and the date of service of the bankruptcy notice both judgments attached to the bankruptcy notice had been stayed in the sense that no further enforcement warrant could be issued in respect of them is plainly correct. However, for the following reasons, in my view, neither of the purported instalment orders engaged UCPR 870.
For UCPR 870 to have operation there must be an instalment order in force. To properly constitute an instalment order, the relevant order must be “an order authorising satisfaction of an order debt by instalment payments”.
The respondent argues that the two orders made by the Magistrates Court at Mackay on 13 February, 2015 were not valid instalment orders.
First, the respondent argues that the orders were applied for by the applicant in her personal capacity whereas the judgment debts are against her in her capacity as trustee for the Thorne Family Trust. There is nothing in this point however. Ms Thorne is the defendant to the proceedings in which the judgments were given. She was also the applicant for the instalment orders. She may have a right to indemnity from the trust for which she is a trustee, but that does not affect the constitution of the proceedings even though she is described in the proceedings in her capacity as trustee. The position was explained by McPherson J in General Credits Limited v Tawilla Pty Ltd [1984] 1 QdR 388.
Second, and the point with more substance, is that the respondent argues that the orders on their proper construction are not instalment orders at all because they do not authorise satisfaction of an order debt by instalment payments. Here, the purported instalment orders provide for payment of part of the judgment debt by way of instalments limited to a period of 12 months. As the respondent points out, if the relevant instalments provided for in those orders are paid, only a very small portion of the money order will be discharged.
The text of UCPR 868 does not refer to satisfaction of part of the order debt or to part satisfaction of the order debt, but rather satisfaction of the order debt. Even if the purported instalment orders made on 13 February, 2015 were wholly met, the order debt would not be satisfied. Only a small proportion would be paid and it would be insufficient to meet the interest accruing on the order debt. This point was made by Young CJ in Cahill v Howe [1986] VR 630. In that case, a judgment debtor applied pursuant to the Judgment Debt Recovery Act 1984 (Vic) for an order that he pay a judgment debt of $71,389.50 (inclusive of $14,468.00 for interest) by instalments. The order sought was for the payment of the debt by an instalment of $1000 followed by 1408 instalments of $50 per week extending to the year 2013. The proposal ignored that interest would be payable on the debt outstanding from time to time. The judgment debtor was a pensioner with a total weekly income of $92.15. His total assets amounted to $33,950 which included his interest in a house property and a car owned jointly with his wife. The application was refused initially by a Senior Master of the Supreme Court, but the judgment debtor filed an objection to that decision which came before a judge. Young CJ held that the order for payment of the judgment debt by instalments should not be made because:
a)the proposal would not result in the payment of the amount owing under the judgment together with interest accruing from time to time but would result in the judgment debtor’s incurring an ever-increasing debt; and
b)it would not be proper to make an order requiring the judgment debtor to pay a very large proportion of his weekly income for the purpose of incurring an ever-increasing debt.
Of particular interest is his Honour’s determination at p.634:
The proposal of the judgment debtor as set out in the application would not result in the payment of the judgment debt, as I think that expression should be interpreted. That is to say it would not result in the payment of the amount now owing under the judgment together with interest accruing from time to time. The proposal would result in the judgment debtor’s incurring an ever-increasing debt to the judgment creditors. Thus the order sought would not be an “instalment order” in the sense that it would not be an order that the judgment debt, as I have interpreted that expression, be paid by instalments.
If the application were modified to encompass no more than $55,464.79, an order might be made which might result in that amount being eventually paid, but in the meantime, a substantial debt for interest would be incurred and that is a debt which might ultimately be recovered under the writ of fi. fa.
It thus seems to me, that for the reason that it would not result in the judgment debt being paid I have no power to make the order originally sought.
(my emphasis)
And so it is the case here. The orders that have been issued do not provide, and cannot provide, for the payment of the judgment debts in full even if the orders are carried out according to their terms.
It is argued by the solicitor for the applicant that the form of the instalment orders is consistent with the “practice” of the Magistrates Court to make instalment orders that are limited in time. If that is so, it is difficult to determine a proper basis for that practice from the UCPR. Perhaps the practice is based on the notion that an instalment order is an enforcement warrant and thus might only be in force for a period of 12 months: s.91 of the Civil Procedure Act and UCPR 820(1)(b). But an instalment order is not an enforcement warrant. There are at least five reasons for that conclusion.
First, the right to obtain an enforcement warrant is only given to a person who is entitled to enforce the original order: s.90(1) of the Civil Procedure Act. The applicant had no right to enforce the original money orders. She was the enforcement debtor under those orders. She was not within that class of persons defined by s.90(1) of the Civil Procedure Act authorised to apply for the issue of an enforcement warrant.
Second, the text of the UCPR is against such a construction. Nowhere in the UCPR is an order for payment of an order debt by instalments described as an enforcement warrant. The heading to Part 7 of Chapter 19 UCPR stands in stark contrast to the headings to Part 4 (“Enforcement warrants for seizure and sale of property”), Part 5 (“Enforcement warrants for redirection of debts”), Part 6 (“Enforcement warrants for redirection of earnings”), Part 8 (“Enforcement warrants for charging orders”) and Part 10 (“Enforcement warrants for appointment of a receiver”) which each deal with specific types of enforcement warrants.
An instalment order is defined to mean an order authorising satisfaction of an order debt by instalment payments. Further, the text of UCPR 870, 871 and 872 tell against the proposition that an instalment order is an enforcement warrant. In particular, UCPR 872(1)(d) provides that an instalment order ceases to have effect if, unless the court orders otherwise, an enforcement warrant is issued in relation to the order debt. That is inconsistent with the notion that an instalment order is also an enforcement warrant.
Third, an enforcement warrant is a warrant issued to enforce a money order. An instalment order is an order which, if made, has the effect of preventing the issue of an enforcement warrant in respect of the money order to which the instalment order relates: UCPR 870. It is not an enforcement warrant. Hence, on an application by a judgment debtor for an order for the stay of enforcement of a money order, the Court might order that the money debt be paid by instalments: UCPR 800(1)(b).
Fourth, the instalment orders did not include all of the information required to be included in the enforcement warrant by UCPR 820.
Fifth, and finally, originally the text of UCPR 868 suggested that an enforcement warrant could provide for the payment of an order debt by instalments. That is to say, the instalment order was part of an enforcement warrant. UCPR 868 in its original form provided:
Enforcement warrant may authorise payment by instalments
868. (1) A court may issue an enforcement warrant authorising satisfaction of an order debt by instalment payments.
(2) A court may, on the application of a party, issue the warrant—
(a) when making a money order; or
(b) at any time after the order issues.
(3) An enforcement warrant authorising payment by instalments continues in force until—
(a) the amount specified in the warrant is paid; or
(b) the warrant is set aside, varied or expires according to its conditions.
By amendments that were made in 2004 (Uniform Civil Procedure Amendment Rule (No. 1) 2004 (Qld)), that form of UCPR 868 was repealed and replaced by the current version. The significant departure in the text of the rule is consistent with the proposition that an instalment order is not an enforcement warrant and so not affected by UCPR s.91 of the Civil Procedure Act and UCPR 820(1)(b).
Whatever the practice of the Magistrates Courts might be, in my view the orders made on 13 February, 2015 are not instalment orders for the purposes of r.868(1) of the Uniform Civil Procedural Rules. The orders do not provide for payment of the order debt by way of instalments. At best, they provide for payment of part of the order debt by way of instalments for a limited period of time. Accordingly, UCPR 870 was not, and is not, engaged and enforcement of the original money orders is not stayed by the operation of the UCPR.
The applicant nonetheless argues that unless those orders are “removed or varied, at a practical level” they impede the ability of the respondent to be in a position to immediately issue execution upon the judgment orders. To make good that proposition, I was referred to Wiltshire-Smith v Mellor Olsson (1995) 57 FCR 572. In that case, the Full Court of the Federal Court discussed the position where there was no order of a court staying execution of a judgment upon which a bankruptcy notice was based, but there was some impediment at law to the access to the debtor’s property. The Full Court said:
There is however a further matter which arises from the reliance by the appellant on the order of 10 March 1993 which was not. precisely articulated before us as a distinct issue for consideration and which was not raised before Branson J. That issue is whether the order of the Family Court had the effect of restraining or preventing the appellant from paying or otherwise discharging liabilities incurred by him in connection with the conduct and operation of the newsagency business before the order was made. For present purposes it should be assumed that an order to that effect would be within the jurisdiction of the Family Court if it were made for the purpose of protecting the property of a party to a marriage to maintain an existing situation until the Court could decide what should be done under a substantive application for maintenance or a property settlement: Sanders v Sanders (1967) 116 CLR 366 at 372. If the order had the effect of so restraining or preventing the appellant on 30 June 1994, the question would arise whether the bankruptcy notice could properly be issued on that day and whether the failure to make payment in answer to the demand made by the bankruptcy notice after it was served constituted an act of bankruptcy.
…
Once it is recognised that a petitioning creditor may be disqualified from issuing a bankruptcy notice by reason of a restraint imposed by order of a court on all the property of the judgment debtor thereby removing his ability to make payment, there is no reason why a court order imposed on some only of the property of the judgment debtor which has the same practical effect should not be recognised as a, relevant circumstance sufficient to disentitle a judgment creditor from proceeding immediately to execution. In our opinion such an order will have this consequence where in practical reality, although not strictly in law, the order “in any way prevent(s) the debtor from paying his debt” (In re Bond; Ex parte Capital and Countries Bank, Ltd at 991) or where it “deprives or may well deprive the judgment debtor of assets which he could otherwise use to pay the judgment creditor and thus comply with the bankruptcy notice” (Wallace v Trade Credits Ltd at 254). To adapt the test proposed by Lord Esher MI in Re Sedgwick; ex parte Sedgwick cited above, the factual enquiry to determine the practical effect of the order is whether in the eyes of ordinary fairness in business it will be said that the order has in a business sense prevented the debtor from paying.
There is no practical difficulty here. The applicant is not prevented from paying the debt should she choose to do so. There is nothing at law, or of practical effect, which would operate to prevent access to the applicant’s assets for the purposes of payment of the judgment debts in question.
The bankruptcy notice cannot be set aside on this basis.
Joint Creditors
After the initial hearings in this matter, the applicant raised a further ground upon which she said the bankruptcy notice should be set aside. She argues that the bankruptcy notice, issued only in the name of the respondent, but in respect of at least one judgment given in favour of the respondent and Long Development Management Pty Ltd jointly, offends the rule to the effect that where a judgment is obtained in the name of joint creditors the bankruptcy notice should be applied for and issued in the names of all those creditors. The applicant relies upon Australian Workers Union v Bowen (1946) 72 CLR 575.
The point is of some significance because as I have set out above, the judgment in proceeding M749/2009 was a judgment given in favour of the present respondent and Long Development Management Pty Ltd. They are joint creditors.
As the applicant points out, the cases on this point were reviewed in Dudzinski v Kellow [2003] FCAFC 207, Scook v Sims Construction Pty Ltd (2004) 3 ABC(NS) 43 and Rookharp Pty Ltd v Webb (2011) 254 FLR 410.
Mr Long annexes to one of the two affidavits sworn by him on 13 April, 2015 (at paragraph 10 of the affidavit with 11 paragraphs) a letter from Long Development Management Pty Ltd to Ozibar Pty Ltd which is in the following terms:
I refer to our previous discussions concerning the Magistrates Court of Queensland Enforcement Hearing on 18 December 2014 involving Ozibar Pty Ltd as Enforcement Creditor and Mrs Suzanne Maree Thorne as Enforcement Debtor. It was confirmed that our companies agree that Ozibar Pty Ltd alone will prosecute the further action against Mrs Suzanne Thore in matter no. M749/09, in conjunction with its prosecution of the recovery action against the same debtor in matter no. M746/09.
As joint Judgment Creditor with Ozibar Pty Ltd in matter no. M 749/09, I herewith provide you with our formal consent letter which we understand you will provide to the Australian Financial Security Authority, in support of Ozibar Pty Ltd’s application for a bankruptcy notice to be issued against Mrs Suzanne Thorne in respect to both matters M746/09 and M749/09, with Ozibar Pty Ltd as sole creditor/plaintiff.
In that regard, we note for the benefit of AFSA, to whom copy of this letter is being forwarded, that the Ozibar interests and the Long Development Management interests are owned and controlled by the Long family, and those interests are represented by you as the sole Director of Ozibar Pty Ltd and me as the sole Director of Long Development Management Pty Ltd.
Accordingly, to put the matter beyond doubt in regard to the proposed bankruptcy notice for matter no. M749/09, I hereby confirm that it has been agreed between the joint Judgment Creditors that Long Development Management Pty Ltd disclaims any interest in prosecuting the application for a bankruptcy notice against Mrs Thorne: further it is agreed that Ozibar Pty Ltd can proceed by itself with the application for issuing of a bankruptcy notice against Mrs Suzanne Thorne in respect of matter no. M749/09.
I trust this letter is adequate for your purpose of having a bankruptcy notice issued by AFSA, but please have AFSA contact me direct if it needs further advice.
Additionally, Mr Long’s wife, Narelle Long swore an affidavit filed on 8 June, 2015 to which she annexes a copy of minutes of a directors’ meeting of Long Development Management Pty Ltd. Those minutes are as follows:
PRESENT:
Directors: Narelle Kay Long (sole Director)
CHAIR: Narelle Kay Long
Meeting Commenced: 8.00am
Item 1
The company has been informed that Ozibar Pty Ltd has arranged an enforcement hearing in the Gladstone Magistrates Court on 18 December 2014, in respect of the judgment against Suzanne Maree Thorne as trustee of Thorne Family Trust in matter no M7 49/2009. The company is a creditor in that matter, along with Ozibar Pty Ltd.
The costs of enforcing the judgment including travelling to Gladstone, loss of Narelle Long’s income while she was away from her contract employment at the Australian Electoral Commission, and the likelihood of further costs to the company if bankruptcy procedures were necessary against Mrs Thorne, and the risk of an adverse costs order were discussed.
In view of these cost implications, and the fact that Ozibar Pty Ltd is owned and controlled in the Long family interests, just as is the case for Long Development Management Pty Ltd, it was proposed that the company should disclaim its legal and beneficial interests in the judgment in matter no. M7 49/2009 and assign (absolutely) its interest in the judgment to Ozibar Pty Ltd, and allow Ozibar Pty Ltd to pursue enforcement in its own name without the company being further involved.
The Chair advised that the matter has been discussed with Greg Long as Director of Ozibar Pty Ltd, who was agreeable to the assignment, and who advised that Ozibar Pty Ltd was prepared to enforce the judgment and any subsequent bankruptcy procedures (if necessary) in its own name and at its cost. No payment to the company in consideration of the assignment is to be involved, because the company will receive the benefit of not incurring further costs and the risk of adverse costs, when the reward was relatively small, being 50% of a judgment debt of only some $11, 180.17 plus interest and costs.
Resolution
The Directors resolved to disclaim the company’s legal and beneficial interests in the judgment in matter no. M749/2009 and assign (absolutely) its interest in the judgment to Ozibar Pty Ltd, and allow Ozibar Pty Ltd to pursue enforcement in its own name without the company being further involved.
The applicant argues that the letter and the company resolution will not avail the respondent in these proceedings. The applicant relied upon the following passage in Rookharp (above) where Barnes FM (as her Honour then was) said at [62]:
It was submitted that in this case Mr Rooke authorised the issue of both the bankruptcy notice and the creditor’s petition (as stated in his affidavit of 27 April 2011). This was also said to be implicit in the fact that he had verified the petition as director of Rookharp and sworn an earlier affidavit of debt filed in these proceedings. However there is a distinction between authorising one creditor to obtain a bankruptcy notice in the names of both creditors (which, according to Bowen, is permissible) and one joint creditor obtaining the issue of a bankruptcy notice in the sole name of that creditor. Such authority would only assist the applicant if both creditors were named in the bankruptcy notice.
After considering the authorities bearing on this issue at length, including those I have referred to above, her Honour continued:
[81] In the face of such Federal Court authority and having regard to the actual issue before the court in Maher, I am not persuaded that Maher is clear authority for the proposition that a bankruptcy notice can be issued in the name of only one joint creditor (as distinct from the view that a bankruptcy notice issued in the name of all joint creditors can demand payment to one creditor if this is done with the authority of all creditors). If it were to be taken as supporting such a proposition (as the applicant submitted), it would not be supported by or consistent with the approach taken by the High Court and Federal Court in Bowen, Re Thomson, Re Pollnow, Dudzinski and Scook and should not be followed (and also cf McDonnell v Fernwood Fitness Centre Pty Ltd [2005] FMCA 877 at [18]–[20] and Wilson v Hambrook [2009] FMCA 991 at [6]–[7]).
[82] While Mr Rooke’s evidence is that he authorised the issue of both the bankruptcy notices and the creditor’s petition, the bankruptcy notices (and the petition) should have been issued in the names of both Rookharp and Mr Rooke, even if they could have been obtained by Rookharp (with Mr Rooke’s authority) and directed payment to one or the other of the creditors (see Re Hamor) or to Rookharp on the basis that it was authorised by Mr Rooke to collect payment of the debt by the Webbs. This is not what occurred. Hence the bankruptcy notices were invalid on the authority of Bowen, Dudzinski and Scook.
The applicant argues that by reason of this analysis, the bankruptcy notice in this case is bad because all creditors are not parties to it.
However, the applicant’s argument pays no attention to the proposition that one of a number of joint creditors may issue a bankruptcy notice in that creditor’s name alone if the others have assigned absolutely their interest in the relevant debt to that creditor. In Australian Workers Union v Bowen Dixon J (as his Honour then was) said at 590 (citations omitted):
But if the defendants, other than the Australian Workers’ Union, had come to have no beneficial interest in the decree against the plaintiffs for costs and were in the position of absolute trustees of their rights under the decree for the union, it may be said that the union became a creditor to whom the debt under the decree was due in equity: see s. 55 (1). In that case perhaps the petition might be presented in the name of the Australian Workers’ Union alone; Ex parte Cooper ; In re Baillie and see per Starke J. in McIntosh v. Shashoua .
In the present case, the respondent argues that there has been an assignment in equity by Long Development Management Pty Ltd of its interest in the judgment debt to the respondent. Long Development Management Pty Ltd, the respondent argues, holds its interest in the judgment debt (if it retains any at all) as bare trustee for the respondent. It is in the position of an “absolute trustee of” its rights under the judgment for the respondent and in those circumstances, the respondent was entitled to have the bankruptcy notice issued in its name alone, notwithstanding the joint nature of the underlying judgment debt.
The resolution of Long Development Management Pty Ltd that I have set out above and the letter from the company to the respondent is sufficient in equity to assign the benefit of the company’s interest in the judgment to the respondent. There are clear words of assignment.
The judgment debt is a legal chose in action. It is capable of assignment. For there to be a valid legal assignment, the provisions of s.199 of the Property Law Act 1974 (Qld) need to be met. One of the requirements is that the debtor is given notice of the assignment. It is only upon the giving of such notice that the debtor becomes bound by the assignment to pay the assignee. Until then, only the assignor can give a good discharge for the debt. Here, neither party suggests that any notice of the assignment was given to the applicant before the issue of the bankruptcy notice.
Recognising that no notice has been given to the applicant of the assignment, the respondent relies upon s.200 of the Property Law Act to argue that there has been an equitable assignment of Long Development’s interest in the judgment debt. That section provides:
200 Efficacy in equity of voluntary assignments
(1)A voluntary assignment of property shall in equity be effective and complete when, and as soon as, the assignor has done everything to be done by the assignor that is necessary in order to transfer the property to the assignee—
(a) even though anything remains to be done in order to transfer to the assignee complete and perfect title to the property; and
(b) provided that anything so remaining to be done is such as may afterwards be done without intervention of or assistance from the assignor.
(2)This section is without prejudice to any other mode of disposing of property, but applies subject to the provisions of this and of any other Act.
The applicant argues that the respondent’s reliance upon this section is misplaced. She argues:
(vii) Unfortunately for the Respondent judicial exegesis of s.200 does not support the Respondent’s view that it has complied with the requirements of this section. In particular the section has been construed (see Carter, Choses in Action and their Assignment, pp.21-22) to mean that:
(a) the assignor must expressly empower the assignee to give a good discharge to the debtor;
(b) the assignee, when suing the debtor in the assignee’s own name, must join the assignor (Carter, p.44-45);
(c) the assignee can sue in the assignor’s name but only if the assignor consents or with leave of the court.
(viii) The position is even more problematic for the Respondent by reason of the purported assignment being for no consideration: as a voluntary equitable assignment is only valid if “everything necessary has been done to achieve a legal assignment.” Milroy v Lord (1862) 45 ER 1185.
(ix) This proposition necessarily infers that notice of the assignment has been given that being a necessary step to achieve a valid legal assignment. Carter, p.24.
(x) The operation of the principle in Milroy v Lord has been considered by the High Court a number of times. The leading cases are Anning v Anning (1907) 4 CLR 104, Corrin v Patton (1990) 169 CLR 540 and for present purposes Olsson v Dyson (1969) 120 CLR 365.
(xi) The first two cases were concerned with real property transfers. However in Olsson v Dyson, a case involving a purported assignment of a debt, the Court found the assignment was ineffective in equity because it was ineffective at law-as is the conceded position here. There is no material distinction between assignment of a debt simpliciter and assignment of a judgement debt.
The reference to “Carter, Choses in Action and their Assignment, pp.21-22” I take to be a reference to Carter, Choses in Action and their Assignment, Blackstone Press, 1997. In that work at the pages referred to by the applicant’s solicitor, there is no reference to any judicial exegesis of s.200 of the Property Law Act. Indeed, s.200 of the Property Law Act is not mentioned at all, anywhere throughout that book. No authorities are referenced by the author to support the propositions set out on those pages. That is not a criticism because the book in question is plainly not intended to be a text book in the generally accepted sense. At the commencement of the work the author even says:
Disclaimer:
No person should rely on the contents of this publication without first getting advice from an independent, qualified professional.
This publication is sold and distributed on the understanding that the publisher and the author:
• cannot guarantee that the contents of this publication are accurate, reliable or complete
• · do not take responsibility for errors or missing information
• do not take responsibility for any loss or damage that happens as a result of using or relying on the contents of this publication, and
• are not giving legal advice in this publication.
Anning v Anning (1907) 4 CLR 1049 is seen to be the seminal case on the voluntary assignment of choses in action in Australia. In that case, the three members of the Court gave separate reasons. Mr Carter, in his work to which the applicant refers summarises, accurately in my respectful view, the position adopted by each judge as follows (at p.23):
A voluntary assignment is one by way of gift, that is, there is no consideration given by the assignee, who is accordingly described as a volunteer.
A voluntary equitable assignment of a legally assignable legal chose in action is only valid if everything ‘necessary’ has been done to achieve a legal assignment: Milroy v Lord (1862) DeGF & ] 264; [1861-73) All ER Rep 783; (1862) 45 ER 1185.
There are three views as to the meaning of ‘necessary’. These are set out in Anning v Anning ( 1907) 4 CLR 1049:
View 1: Griffith CJ:
‘necessary’ means necessary to be done by the assignor, that is, those things which the assignor and only the assignor could do to achieve a legal assignment. This is the most liberal view in favour of the assignee and is the view preferred by Meagher, Gummow and Lehane. ‘Equity looks to the intent .not the form.’ This view was approved in Corin v Patton (1990) 169 CLR 540: whether the donor has done all that is necessary without further action on the donor’s part to place the vesting of the legal title within the control of the donee and beyond the recall or intervention of the donor; once that stage is reached and the gift is complete and effective in equity, the equitable interest vests in the donee who is bound in conscience to hold the property as trustee for the donee pending the vesting of the legal title.
View 2: Higgins J:
‘necessary’ means everything which it was within the assignor’s power to do so that if there is something which must be done in order to achieve a legal assignment and which can be done either by the assignor or by some other person it must be done by the assignor. This is the middle view.
View 3: Isaacs J:
‘necessary means that everything must be done to achieve a legal assignment, that is an equitable assignment only occurs at the same time as, and not before, a legal assignment. ‘There is no equity to perfect an imperfect gift.’ ‘Equity will not assist a volunteer.’ This is the strictest view against the assignee
It is the approach taken by Griffiths CJ that became codified in s.200 of the Property Law Act: Commissioner of Australian Federal Police v Cox (1986) 14 FCR 279 at 289; Denham Bros Limited v W Freestone Leasing Pty Ltd [2004] 1 Qd R 500 at [33]. Both of these cases emphasise that by s.200, an assignment in equity is taken to be complete when the assignor has done all that is to be done by him in order to transfer the relevant property to the assignee. In the former case, Pincus J explained at p.289:
Section 200 of the Property Law Act 1974 (Qld) makes a voluntary assignment of property effective and complete in equity when the assignor has done everything to be done by him in order to transfer the property, thus settling the law in this State in favour of the views expressed by Griffith CJ in Anning v Anning (1907) 4 CLR 1049. Mr Seddon in his article in 48 ALJ 13, “Imperfect Gifts of Torrens Title Land”, suggests at 18 that where the relevant Act requires it, it would be necessary for the donee to have possession, or at least be able to obtain possession, of the certificate of title. But as the author says: “This means that the test in such a case is slightly more stringent than that laid down by Griffith CJ in Anning v Anning for the assignment of land under the Torrens system.” The relevant passage is to be found in the report of Anning v Anning 4 CLR 1049 at 1057.
(emphasis in the original)
In Cox, Pincus J found that the assignment there in question failed to meet the requirements of s.200 because the donor had not done all that was necessary to be done by him in order to transfer the property in that case to the donee. The property in question was real property and to complete the assignment the donor had to put the donee in possession of the relevant certificate of title. In the circumstances of the case, that was not something that the donee could have done for herself.
In Denham Bros Limited McPherson JA said:
[33] Another weakness in the submission is that s. 200 of the Property Law Act has now made a voluntary assignment of property effective and complete in equity when and as soon as the assignor has done everything to be done by the assignor that is necessary in order to transfer the property to the assignee: (a) even though anything remains to be done in order to transfer to the assignee complete and perfect title to the property; and (b) provided that anything so remaining to be done is such as may afterwards be done without intervention or assistance from the assignor. The section is in substance a legislative codification of the rule adopted by Griffith C.J. in Anning v. Anning (1907) 4 C.L.R. 1049, 1057. Here the only thing, if any, remaining after the assignment of 18 July 2002 to be done by Freestone to transfer to Denham Bros the equitable title to the freehold reversion in the land was for notice to be given by the lessor or its assignee Freestone of its exercise of the option under cl. 33. Such notice was given to Denham Bros on 26 July 2002, and it was something which could be and was done without assistance from SGIO as the original lessor and the assignor of the chose in action under cl. 33.
(my emphasis)
Earlier, in Norman v Federal Commissioner for Taxation (1963) 109 CLR 9 Windeyer J had come to the same conclusion (at pp. 28 – 29):
If an attempt is made to assign, by way of gift, a chose in action assignable under the statute, then, as I see the matter, the requirements of the statute cannot be ignored; for the general rule of equity is that an effective assignment occurs only if the donor does all that, according to the nature of the property, he must do to transfer the property to the donee. But the weight of authority is, I think in favour of the view that in equity there is a valid gift of property transferable at law if the donor, intending to make, then and there, a complete disposition and transfer to the donee, does all that on his part is necessary to give effect to his intention and arms the donee with the means of completing the gift according to the requirements of the law: see Brunker v. Perpetual Trustee Co. (Ltd.) (1937) 57 CLR 555 per Dixon J. (1937) 57 CLR, at pp. 600-602; Re Smith (1901) 84 LT 835; In re Rose (1949) Ch 78; In re Rose (1952) 1 Ch 499. I think therefore that, if a man, meaning to make an immediate gift of a chose in action that is his, executes an instrument that meets the requirements of the statute and delivers it to the donee, actually or constructively, he has put it out of his power to recall his gift. It is true that until notice is given to the debtor or person against whom the chose is enforceable at law, all the requirements of the statute have not been complied with. But the notice can be given by the donee; and, if the donee has express or implied authority to give it, I think that equity would not allow the donor to deny the right of the donee to do so and so intercept his gift. I reach this conclusion with some hesitation, for it involves some departure from the majority view in Anning v. Anning (1907) 4 CLR 1049 But it accords, it seems to me with general principle.
(my emphasis)
In the present case, the only matter left to be done to have the assignment meet the requirements of s.199 of the Property Law Act was for notice to be given of the assignment to the applicant. That did not need to be done by Long Development Management Pty Ltd. Notice of an assignment for the purposes of s.199 of the Act might be given by someone other than the assignor: Anning v Anning (above); Norman (in the passage extracted above); Batemen v Hunt [1904] 2 KB 530 at 538 and Mango Boulevard Pty Ltd v Mio Art Pty Ltd [2016] QCA 148.
In any event, the absence of that notice does not mean that the respondent’s title to the relevant chose in action was not perfect and complete. In Thomas v National Australia Bank Ltd [2000] 2 Qd R 448 the assignee of a chose in action (a discharged bankrupt) commenced proceedings on it in the assignee’s own name. The assignor (the former bankrupt’s trustee in bankruptcy) was not a party to the proceedings. No notice of the assignment was given to the putative debtor. Pincus JA (with whom McMurdo P and Thomas JA agreed) concluded that title in a chose in action passes on assignment, whether or not notice of the assignment has been given. After considering the relevant authorities (at [18] – [23]) and the reliance of the primary judge upon a particular New Zealand authority, Mountain Road (No. 9) Ltd v Michael Edgley Corporation Pty Ltd [1999] 1 N.Z.L.R. 335, (at [24]), his Honour concluded that:
[25] There are authorities tending both ways. But it appears, with respect, clear enough that the weight of authority on this point, at least so far as Australia is concerned, favours the appellant. The proper conclusion is that the view adopted in the New Zealand case, that the assignee’s title is not complete, so as to enable suit to be brought before notice is given to the person liable, should not be followed.
His Honour turned to deal with the question of title to sue on the cause of action so assigned. His Honour said:
[31] The proposition that the absence of the assignor from the proceedings instituted rendered them a nullity is plainly wrong.
…
[33] There remains the question whether as a matter of procedure, which it is, the trustee in bankruptcy should have been joined, or should now be joined, in the present case. It is difficult to see any practical advantage in doing so, unless it be the advantage to the respondents of further delay and complexity. It was argued for the respondents that joinder of the trustee was desirable so that he might be made liable for costs; unless, improbably, the trustee agrees to be a plaintiff that would not occur. The possibility of getting costs has not, in any of the authorities which I have found, been put forward as a reason for the practice of joining the assignor; the advantage of having the assignor present as a party is generally said to be to avoid the possibility that, having paid the assignee, the debtor may be then faced with a claim by the assignor. That is not put forward here, where no suggestion has been made that the respondents are fearful of an action against them by the trustee. Of course, if the trustee were joined one would not expect him to take any part in the proceedings.
Consistently with that approach is the proposition that an assignee in equity of a legal debt can present a petition in bankruptcy against the debtor without joining the assignor as a co-petitioner: Ex parte Cooper; In re Baillie (1875) LR 20 Eq 762; In re Izatt; Ex parte Smith [1903] St R Qd 135 and McIntosh v. Shashoua (1931) 46 CLR 494 at 507.
But the efficacy of the assignment leads to another problem. Although the respondent had title to the debt by reason of the assignment, was it otherwise entitled to enforce the judgment in its name alone? The issue arises because a creditor who derives their entitlement to the benefit of a money order through an assignment does not have an unqualified right to enforce that money order pursuant to the UCPR. Rule 799 UCPR provides:
799 Enforcement period
…
(2) In addition to another law requiring a court’s leave before an order may be enforced, an enforcement creditor requires a court’s leave to start enforcement proceedings if—
(a) it is more than 6 years since the money order was made; or
(b) there has been a change in an enforcement creditor or enforcement debtor, whether by assignment, death or otherwise.
For the purposes of UCPR 799(2)(b) the relevant change here, is a change in an enforcement creditor. I have set out the definition of enforcement creditor above, but it is useful to record that it includes a person to whom the benefit of part of the order has passed by way of assignment.
The enforcement creditor in respect of the joint judgment debt has changed from the respondent and Long Development Management Pty Ltd, to just the respondent.
The Official Receiver is only authorised to issue a bankruptcy notice on the application of a creditor who has obtained against a debtor a final judgment or final order (or two or more final judgments or orders) that is of the kind described in s.40(1)(g) of the Bankruptcy Act and which is for an amount of at least $5,000. Relevantly, s.40(1)(g) provides:
40 Acts of bankruptcy
(1) A debtor commits an act of bankruptcy in each of the following cases:
…
(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act …
(my emphasis)
A long line of authority establishes that if a judgment creditor requires leave to issue execution on the judgment supporting the bankruptcy notice and such leave has not been obtained, the judgment is not one that can be described as a judgment or order the execution of which has not been stayed. Any bankruptcy notice issued in respect of such a judgement or order will be set aside: Re Pannowitz; Ex parte Wilson (1975) 38 FLR 184 at 188; Penning v Steel Tube Supplies Pty Ltd (1988) 18 FCR 568 at 577; Reasonable Endeavours Pty Ltd v Dennehy (2001) 107 FCR 144 at 147, 148 .
In Abigroup Ltd v Abigano (1992) 39 FCR 74 at [79] – [80] the Full Court of the Federal Court of Australia considered the operation and effect of s.40(1)(g) and 40(3) of the Bankruptcy Act in its historical context. Their Honours said:
It is clear from the reported cases and the text books on Bankruptcy, in particular the writings of the early text writers (where the English Bankruptcy Act of 1883 as amended by the 1890 Act were considered) that the ground of non-compliance with the requirements of a Bankruptcy Notice now embodied in section 40(1)(g), is available only, to borrow the words of Bowen LJ in Blanchett (at 307):
‘To a creditor who has prosecuted his claim to judgment, and if execution on the judgment has not been stayed – to a creditor between whom and the full fruition of his claim there stands only a process of the law uncompleted. It is only this kind of creditor who is now entitled to issue a Bankruptcy Notice. This affords an excellent reason for not extending the construction of subs (1)(g), beyond the plain letter of the words.’
Woodall, Ide and Re Richards; Ex parte Sommers (1947) 14 ABC 112 are all examples of numerous cases where execution had not been stayed, but the judgment creditor had not put himself in the position of being able to issue execution, so execution was deemed or considered to be stayed on the ground that he was not entitled at the date of the issue of the Bankruptcy Notice to issue immediate execution on the judgment: see also Re Pannowitz (supra) at 291.
Here, there is no evidence that the respondent has obtained the leave of a court pursuant to UCPR 799(2). In the circumstances of this case, where at least part of the respondent’s title to the relevant debt accrues to it via an assignment, the respondent requires a court’s leave under UCPR 799(2) to start enforcement proceedings. The absence of such leave means that the respondent was not entitled to apply for the issue of a bankruptcy notice in respect of the joint judgment debt and the Official Receiver was not authorised to issue a bankruptcy notice based upon, at least in part, that debt.
The bankruptcy notice must be set aside for that reason.
Conclusions
The requirements of s.200 of the Property Law Act were fulfilled. The voluntary assignment of the legal chose in action constituted by Long Development’s interest in the judgment debt was in equity effectively and completely assigned to the respondent when, and as soon as, Long Developments resolved to assign its interest in the judgment debt to the respondent. That is so notwithstanding that no notice to the applicant of the assignment was given. Long Development Management Pty Ltd did not need to be named in the bankruptcy notice.
However, although the bankruptcy notice could properly be issued notwithstanding that the applicant had purported to obtain instalment orders in respect of the judgment debts, the failure of the respondent to obtain leave pursuant to UCPR 799(2) to start enforcement proceedings, as an assignee of part of the one of the judgment debts, is fatal to the validity of the bankruptcy notice.
The bankruptcy notice must be set aside with costs. To the extent that the applicant sought her costs on an indemnity basis, in my view, costs on a party and party basis are appropriate. The matters raised by the parties in the proceedings were not such as to engage any of the well-known types of cases discussed, for example, in Colgate-Palmolive Company & Anor v. Cussons Pty Ltd (1993) 46 FCR 225.
I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of Judge Jarrett.
Date: 21 December 2017
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