Toward v Read
[2014] FCCA 1100
•30 May 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TOWARD v READ | [2014] FCCA 1100 |
| Catchwords: BANKRUPTCY – Application to set aside bankruptcy notice – where bankruptcy notice issued within six years of date of judgment – where bankruptcy notice served more than six years from date of judgment – where judgment creditor did not obtain leave to issue execution in respect of judgment debt more than six years old before service of bankruptcy notice on judgment debtor – bankruptcy notice set aside. |
| Legislation: Bankruptcy Act 1966, s.40(1)(g) Uniform Civil Procedure Rules 1999 (Qld), r.799(2) |
| Acciarito v Enfield Bond Pty Ltd [2009] FMCA 1147 Mbuzi v Favell (No 3) [2012] FCA 1078 Re Johnson, Ex parte Johnson v Tonkin (1994) 123 ALR 607 |
| Applicant: | BENJAMIN WARREN TOWARD |
| Respondent: | KATE ALEXANDRA READ |
| File Number: | BRG 358 of 2014 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 9 May 2014 |
| Date of Last Submission: | 23 May 2014 |
| Delivered at: | Brisbane |
| Delivered on: | 30 May 2014 |
REPRESENTATION
| The Applicant appeared in person |
| Solicitor for the Respondent: | Mr Gardiner |
| Solicitors for the Respondent: | MSB Lawyers |
ORDERS
Bankruptcy notice BN 168233 issued on 16 December, 2013 be set aside;
The respondent pay the applicant’s outlays limited to filing fees and any other court fees, to be agreed between the parties, and failing agreement, to be taxed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 358 of 2014
| BENJAMIN WARREN TOWARD |
Applicant
And
| KATE ALEXANDRA READ |
Respondent
REASONS FOR JUDGMENT
On 14 January, 2008 Kate Read obtained judgment in the Magistrates Court of Queensland at Southport against Benjamin Toward for $6,322 including interest and $152 for costs. On the same day she obtained a second judgment in the same court for $5301.66 together with interest and $152 for costs.
On 16 December, 2013 Ms Read caused the Official Receiver to issue a bankruptcy notice to Mr Toward based upon the two judgments. The bankruptcy notice was served upon Mr Toward on 8 March, 2014.
On 18 March, 2014 Mr Toward applied to the Magistrates Court of Queensland at Southport to have each of the judgments upon which the bankruptcy notice was based, set aside. His application, however, was unsuccessful. The judgments remain in place.
On 26 March, 2014 Mr Toward commenced this application to have the bankruptcy notice issued against him set aside. The application was commenced in the Federal Court of Australia, but by order made on 23 April, 2014 it was transferred to the Federal Circuit Court of Australia.
Initially Mr Toward’s application was based on three grounds, namely:
a) Debt does not exist
b)Judgement debt schedule for hearing to be set aside court date 11th of April 2014
c)Creditor has been served with a Section 41(5) Notice on 21st March 2014 by email and hard copy sent by registered post, details alleging overstatement of Amount in Bankruptcy Notice
Whilst Mr Toward did not abandon any of his grounds at the hearing of the application before me, he added a further ground. He argued that because the judgments were more than six years old when the bankruptcy notice was served upon him, the judgments were no longer judgments, the execution of which had not been stayed, for the purposes of s.40(g)(i) of the Bankruptcy Act 1966. On that basis he argues that his application should succeed.
Because the argument relied upon by Mr Toward had not been foreshadowed by him in his application, I gave the respondent an opportunity to file further written submissions in relation to the new point raised by him. However on 16 May, 2014 the respondent’s solicitors wrote to my associate indicating that the respondent would not be filing any further submissions on the point.
Mr Toward’s application to have the bankruptcy notice set aside should succeed on the ground most recently raised by him. For the following reasons that ground is a complete answer to the bankruptcy notice issued against him.
Rule 799(2) of the Uniform Civil Procedure Rules 1999 (Qld) provides that 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 it is more than 6 years since the money order sought to be enforced was made. Each judgment in question here is a money order for the purposes of the UCPR.
When the bankruptcy notice was issued based upon those judgments, execution could have been issued on each of the judgments without leave. However, from 14 January, 2014 before enforcement proceedings could be issued in respect of the judgments, leave pursuant to the UCPR was required.
Although issued within the relevant six year period, the bankruptcy notice was not served upon Mr Toward until 8 March, 2014. By that time Ms Read required leave to issue enforcement proceedings in respect of the judgments.
In Re Johnson, Ex parte Johnson v Tonkin (1994) 123 ALR 607 Spender J was dealing with a case where a bankruptcy notice was issued in respect of a judgment entered on 13 April, 1988. The judgment creditor issued the bankruptcy notice on 4 February, 1994. However, the bankruptcy notice was not served on the judgment debtor until May, 1994. Leave of the court giving the judgment was required to issue execution upon the judgment after six years had elapsed from the date of the judgment. Thus, the bankruptcy notice was issued within the six-year period following the giving of the judgment, but it was not served until after the expiry of that period. After considering a number of authorities, his Honour concluded (at 613):
In my opinion, it is a necessary requirement of the Act that a judgment or order founding a bankruptcy notice be one which is not stayed (within the wide meaning given to that phrase) both at the time of issue of the bankruptcy notice and at the time of service. This conclusion is consistent not only with the cases I have cited but with the judgment of Burchett J in Re Schekeloff; Ex parte Schekeloff v Hopkins Group Pty Ltd (1989)22 FCR 407 and Beaumont J in Re Frasersmith; Ex parte J Blackwood & Son Ltd (1992) 36 FCR 144.
Re Johnson was followed in Acciarito v Enfield Bond Pty Ltd [2009] FMCA 1147. In that case, the bankruptcy notice was issued at a time when the judgment creditor did not require leave to issue execution upon the judgment upon which it based its bankruptcy notice. However, the bankruptcy notice was served upon the judgment debtor after the expiry of the period in which the judgment creditor might have issued execution upon the judgment without leave. Applying Re Johnson, the Federal Magistrates Court of Australia determined that the bankruptcy notice was invalid and that it should be set aside because at the time the bankruptcy notice was served upon the judgment debtor, the notice relied upon a judgment, the execution of which had not been stayed in the wide sense given to that phrase for the purposes of s.40 (1)(g) of the Bankruptcy Act.
The bankruptcy notice in this case must be set aside. It is unnecessary to deal with the other three grounds relied upon by Mr Toward.
Mr Toward seeks costs of the application. However, he was not legally represented and so has no legal costs that might sound in an order for costs. He is, however, entitled to his outlays: Mbuzi v Favell (No 3) [2012] FCA 1078. Although he presented no evidence of any outlays that he may have incurred, no doubt there was a filing fee payable on his application. There may have been other court fees. The respondent should meet any filing fees or other court fees paid by Mr Toward.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered 26 May, 2014
Associate:
Date: 30 May 2014
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