TOUMA v Gold Holdings Pty Ltd
[2002] FMCA 233
•16 October 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| TOUMA v GOLD HOLDINGS PTY LTD | [2002] FMCA 233 |
| BANKRUPTCY – Bankruptcy notice – letter from Local Court attached to notice – no copy of judgment attached – letter did not constitute “copy” – paragraph 2 of Form 1 not complied with – notice held invalid. |
Bankruptcy Act 1966 (Cth) s.306
Local Court (Civil Claims Act) 1970 (NSW) s.31
Australian Steel Company (Operations) Pty Limited v Lewis (2001) 109 FCR 33
Re Scerri (1998) 82 FCR 146
Commonwealth Bank of Australia v Horvath (Junior) [1999] 161 ALR 441
American Express International Inc v Held [1999] 87 FCR 583
St George Bank Limited v Klintworth (1998) 86 FCR 240
Stankovic v Footers Pty Limited [2001] FMCA 119
Thompson v Metham [1999] FCA 935
| Applicant: | DANIEL TOUMA |
| Respondent: | GOLD HOLDINGS PTY LTD ACN 056 695 535 |
| File No: | SZ 666 of 2002 |
| Delivered on: | 16 October 2002 |
| Delivered at: | Sydney |
| Hearing Date: | 8 October 2002 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Counsel for the Applicant: | Mr J K Chippindall |
| Solicitors for the Applicant: | Chahoud Kalouche & Associates |
| Counsel for the Respondent: | Mr V Bedrossian |
| Solicitors for the Respondent: | Smith Monti Legal |
ORDERS
The bankruptcy notice dated 22 July 2002 be set aside.
The respondent pay the applicant’s costs on and after 1 October 2002 pursuant to the Federal Court Rules to be taxed if not agreed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ 666 of 2002
| DANIEL TOUMA |
Applicant
And
| GOLD HOLDINGS PTY LTD ACN 056 695 535 |
Respondent
REASONS FOR JUDGMENT
The applicant (debtor) in this matter was served with a bankruptcy notice dated 22 July 2002 on 23 July 2002. The debt allegedly owed arises out of an order for costs following the judgment of Fleming SM in the Local Court of New South Wales. The learned Magistrate had assessed costs against the debtor in the sum of $9,638.00.
The judgment was not stayed although it is now the subject of an appeal to the Supreme Court of New South Wales. The existence of the appeal formed part of the grounds of a wider application to set aside the bankruptcy notice. But the matter before me turned solely on a narrow issue at to the validity of the bankruptcy notice. The amount of the debt and the ability of the learned Magistrate to assess the costs were both conceded.
Mr Chippindall, who appeared on behalf of the debtor, provided me with some helpful submissions in which he identified the failure to strictly comply with the terms of the bankruptcy notice as arising out of the annexing to that notice of, what can best be described as, a letter from the Local Court of New South Wales, a copy of which is reproduced below:
“ Local Court,
7-9 Belmore Street
BURWOOD 2132
Telephone no: 9744 4044
Dear Sir/Madam
Civil Claims File No: 997/01
Plaintiff: DANIEL TOUMA
Ref: MC:HT:7410
Defendant: GOLD HOLDINGS PTY LTD ACN 056-695-535
Ref:
*********
Please note that at the hearing on 18/06/2002
The Court made the following order in respect of the above matter:
1. Vacate any costs order of 22/02/2002
2. Verdict for the Defendant. Plaintiff to pay Defendant $9638.00 costs within 28 days.
For any further enquiries please contact the above Court.
Yours faithfully
Registrar
GOLD HOLDINGS PTY LTD
ACN 056-695-535
SMITH MONTI LEGAL
1st FLR 113-115 THE CRESCENT
FAIRFIELD NSW 2165”
Mr Chippindall’s point is that this letter does not constitute “a copy of the judgment” referred to in paragraph 2 of the bankruptcy notice nor does it comply with the provisions of Regulation 4.01(1)(b) of the Bankruptcy Regulations. Mr Chippindall argues that compliance with the bankruptcy notice by attaching a copy of the judgment or order relied upon was a requirement made essential by the Act and was not a formal defect or an irregularity which could be cured by the application of s 306(1) cf Australian Steel Company (Operations) Pty Limited v Lewis (2001) 109 FCR 33. In support of his contention Mr Chippindall cited re Scerri (1998) 82 FCR 146, Commonwealth Bank of Australia v Horvath (Junior) [1999] 161 ALR 441 and American Express International Inc v Held [1999] 87 FCR 583.
Scerri is a case in which no judgment was attached. Beaumont J said:
“The debtor, as has been noted, also relies upon the third ground and that is that the copy of the judgment was not attached to the bankruptcy notice. The prescribed form of notice in Form 1 does, in par 2, stipulate that a copy of the judgment be attached. Again, that provision was not complied with. Again, I would regard this as more than a formal defect for the purposes of s 306.”
In CBA v Horvath a copy of an order of the taxing master was annexed and Finkelstein J held that the bankruptcy notice was invalid because it did not have attached to it copies of the three individual costs orders. In American Express International v Held Kenny J dealt with a case where no copy of the judgment or order was attached to the bankruptcy notice and said:
“The purpose of the requirement to be implied from clause 2 of Form 1 is to identify for the debtor the judgment or order upon which the notice is founded: cf Commonwealth Bank of Australia v Horvath (Junior) [1999] FCA 128. In a case such as this, the identification of the relevant judgment or order is an essential element in establishing an adequate foundation for the bankruptcy notice which, in turn, is an essential element in establishing a sufficient foundation for the debtor’s bankruptcy. “
Her Honour followed Horvath and re Scerri in finding that the bankruptcy notice was a nullity.
The situation in this case is not as simple as that which faced their Honours in Scerri and American Express. Here something was attached and it most certainly told the debtor the amount of the debt, the person to whom it was owed, the court in which the judgment was entered, the date of the order and the time within which the money was due to be paid. Mr Chippindall rightly conceded that this was not a case in which the applicant could allege that he was confused.
Mr Chippindall pointed to s 31 of the Local Court (Civil Claims) Act 1970 (NSW) which states inter alia:
“The entry of a judgment in the records of the court shall be the record of that judgment and that entry, or a copy thereof certified to be a true copy under the hand of the Registrar shall be received as evidence of that judgment.”
He also pointed to Part 26 Rules 6 and 7 of the Local Court Rules. Rule 6 is in the following terms:
“(1) A form of judgment, and a form of order for signature by the Registrar, shall when filed be sealed with the seal of the court.
(2) Except, where otherwise provided by these Rules or required by the court, it shall not be necessary to file a form of judgment or order unless application is made for a certificate or certified copy thereof.”
And Rule 7 is in the following terms:
(1) Subject to sub-rule 3, the Registrar shall, on the filing of a request therefore, furnish to any party to any action a certificate of any judgment or a certified copy of any judgment or order, a form of which is filed in the action.
(2) A party applying for a certificate of the judgment shall include in the request filed therefore a statement of any amount paid in respect of the judgment.
(3) While enforcement of a judgment is stayed the Registrar shall not issue a certificate or certified copy of the judgment except by order of the court.”
There are forms (Forms 47, 48 and 49) for a judgment, a request for a certificate of judgment and a certificate of judgment.
The letter which is annexed to the bankruptcy notice is not one of these forms. It is not a document which is issued under the seal of the Local Court.
The respondent sought to argue that the document which was attached to the bankruptcy notice fell within the category of documents which Hill J in St George Bank Limited v Klintworth (1998) 86 FCR 240 found would satisfy the definition of “a copy of the judgment or order relied upon by the creditor”. His Honour said:
“There is no need in my view to give the word “copy” a narrow interpretation. A computer generated document which contains the particulars of the judgment as the present document does amounts in my view, having regard to modern technology, as an appropriate copy of the order or judgment so that Form 1 (and thus s 41(2) of the Act) have been complied with.”
In that case His Honour found that the document which was one entitled “Notice of entry of default judgment” did not comply with Regulation 4.01(1) but that this failure could be excused under s 306. I followed that case in my own decision Stankovic v Footers Pty Limited [2001] FMCA 119 in relation to a document emanating from the Magistrates Court of South Australia entitled “Copy of record” finding that such a document could fall within the definition of “copy”.
The document in this present case is not a “copy of record”, it is a letter. In the light of the strict regime now applying to bankruptcy notices since the decision in Australian Steel I believe that it would be stretching the analogy of St George Bank too far to hold that this document came within the definition of “copy of a judgment or order relied upon by the creditor.”
In Thompson v Metham [1999] FCA 935 Katz J dealt with a document that was asserted to be a certified copy of a District Court Judgment of 26 January 1977 against the debtor. His Honour set out the document in full and said:
“[10] The original of the disputed notice was in evidence before me and I have examined the second document attached to it, the terms of which document I have just set out. It is a photocopied document, bearing an indecipherable signature above the words “Assistant Registrar”. I have found it impossible to be satisfied as a result of my examination of the photocopy that the original bore the District Court’s seal, although Pt 1, r 6, of the District Court Rules, 1973 (NSW) provides relevantly that a registrar shall seal or stamp with the seal of the Court any certificate or copy of a judgment issued by him. The debtor does not dispute that the original of the document was signed by an Assistant Registrar of the District Court. However, what the document’s effect was is another question.”
His Honour indicated what a proper certificate of judgment should say by reference to the appropriate Form 64 and said:
“[12] The Assistant Registrar’s document does not comply, even substantially, with the requirements of Form 64 for a certificate of judgment.”
Katz J then discussed Scerri, CBA v Horvath and American Express and at [26] opined:
“To my mind, the notice in the present case is to be treated in the same way as the bankruptcy notices in those three cases. The notice in the present case did not literally have attached to it a copy of the judgment upon which the debtor relied, whether certified (as claimed in the first document attached to the notice) or not; the notice did not have attached to it a certificate of judgment of the type provided for in the Rules of the court which had given the judgment; further there was no evidence before me that the document attached to the notice had been produced according to some administrative arrangements for the production of such documents which have been put in place by the court which had given the judgment (as in the St George case). … All that the notice had attached to it was a document the creation of which appears to have been unauthorised either legislatively or administratively, which may or may not have been sealed (sealing being required by the Rules of the court concerned if the document was to be effective… I consider that I should treat the attachment of such a document to the notice as failing to satisfy the requirements that a bankruptcy notice have attached to it “A copy of the judgment… relied on by the creditor”. Consistently with the three cases to which I have referred above, such notice was therefore invalid and incapable of being saved by subs 306(1) of the Act.”
The remarks made by Katz J concerning the document before him are apt in relation to the Registrar’s letter. There was no reason why the creditor could not have obtained a certificate of judgment in accordance with the Rules and attached it to the document. He failed to do so and he has not complied with the requirements of Form 1. Consistent with all of the cases referred to herein I would hold that this is an incurable invalidity which cannot be saved by s.306(1) of the Act.
The bankruptcy notice issued in this matter is a nullity and I set it aside. I order that the respondent pay the applicant’s costs on and after 1 October 2002 pursuant to the Federal Court Rules to be taxed if not agreed.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
3
6
0