Walker, D.G.C. v Amev-Udc Finance Ltd

[1985] FCA 554

Re: DAVID GREGORY CHARLES WALKER and CHRISTOPHER NEIL CAMPBELL WALKER
Ex Parte: AMEV-UDC FINANCE LIMITED
No. P1545 of 1985
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Beaumont J.

CATCHWORDS

Bankruptcy - Bankruptcy Act, 1966, ss.40(1)(g), 40(3)(b) - act of bankruptcy - bankruptcy notice based on Supreme Court judgment - not final - whether deemed to be final by s.40(3)(b) - further judgment obtained - whether bankruptcy notice understated amount claimed.

HEARING

SYDNEY
#DATE 28:10:1985

ORDER

The Petition be stood over to 29 October 1985.

Note: Settlement and entry of orders is dealt with by Bankruptcy

Rule 124 of the Bankruptcy Act, 1966.

JUDGE1

The petitioning creditor, AMEV-UDC Finance Limited, petitions for a sequestration order against the estates of the debtors, David Gregory Charles Walker and Christopher Neil Campbell Walker. The act of bankruptcy relied on by the petitioner is the debtors' failure to comply with a 21 day bankruptcy notice requiring the debtors to pay or secure payment of the amount owed by the debtors to the petitioner under a judgment obtained in the Supreme Court of New South Wales on 28 May 1985. The debtors oppose the petition on two grounds: first, that the judgment upon which the bankruptcy notice was based was not a "final" judgment or order for the purposes of s.40(1)(g) of the Bankruptcy Act, 1966; and secondly, that the bankruptcy notice is bad in any event because it requires payment of less than the amount due under the judgment obtained by the petitioner.

1. By orders made on 28 May 1985, entered on 3 July 1985, judgment was entered in the Supreme Court in proceedings between the petitioner as plaintiff and the debtors as defendants in the following terms:
   
   

"JUDGMENT -

that the defendant is liable to the plaintiff for the sum of $2,981,502.49.

This Judgment takes effect on 28 May, 1985.

THE COURT ORDERS THAT -

...

3. The plaintiff is at liberty to prove additional items of damage, namely fees alleged to have been incurred in respect of:-

Advertising and Auction of Mortgaged properties;

Receives and Managers Fees;

Legal costs.

THE COURT DIRECTS that -

the matter be set down for further hearing on 4 June, 1985."

1. By a further judgment, apparently entered on 4 June 1985, the Supreme Court made the following order -
   
   

"JUDGMENT -

that the defendant is liable to the plaintiff for the further sum of $56,452.40.

This Judgment takes effect on 4 June, 1985."

1. The bankruptcy notice, which was issued on 16 July 1985, was in the following terms:
   
   

"To (a) DAVID GREGORY CHARLES WALKER of "Bushman's Run", Nevertire, N.S.W., Grazier and CHRISTOPHER NEIL CAMPBELL WALKER of "Little River", Geurie, N.S.W., Grazier

WHEREAS...AMEV-UDC FINANCE LIMITED of l18 Walker Street, North Sydney, N.S.W. (hereinafter referred to as "the judgment creditor") has claimed that the sum of $2,981,502.49 together with interest thereon at the rate of 13.5 per centum per annum from 28 May, 1985 which at 10 July, 1985 amounts to $47,418.14 making a total of $3,028,920.63 is due by you to it under a final judgment/order obtained by it against you in the Supreme Court of New South Wales on the 28th day of May 1985, being a judgment/an order the execution of which has not been stayed:

THEREFORE TAKE NOTICE that within (21) twenty one days after service of this notice on you, excluding the day on which this notice is served on you, you are required -

(A) to pay the sum of $3,028,920.63 so claimed by the judgment creditor to...the Judgment Creditor...."

1. In my opinion, apart from the operation, if any, of s.40(3)(b) in the present case, the judgment obtained by the petitioner on 28 May 1985 was not a final judgment for the purposes of s.40(1)(g). Apart from the deeming provision in s.40(3)(b), a final judgment has been held to mean a judgment obtained in an action by which the question whether there was a pre-existing right of the plaintiff against the defendant is ascertained or established (see Opie v. Opie (1951) 84 CLR 362 at p 372). In other words, it is a judgment which finally disposes of the rights of the parties (see Licul v. Corney (1976) 50 ALJR 439 at p 444; Carr v. Finance Corporation of Australia Limited (1981) 147 CLR 246; Clyne v. Deputy Commissioner of Taxation (1983) 48 ALR 545 per Gibbs, C.J. at p 548).

2. In Computer Edge Pty. Ltd. v. Apple Computer Inc. (1984) 54 ALR 767, an objection to competency of an appeal lodged as of right was upheld in circumstances similar to the present case. There, two permanent injunctions had been granted but liberty was reserved to the respondents to the appeal to pursue a claim for damages. Thus, the judgment appealed from comprised two orders which, viewed by themselves and apart from the rest of the judgment, were final orders, and one order which was plainly interlocutory. The result of the judgment as a whole was that some of the questions in issue in the case were determined and others were not. Gibbs, C.J., with the concurrence of Murphy and Wilson, JJ., said (at pp.767-768) -
   
   

"The test for determining whether a judgment is final...is whether the judgment finally determines the rights of the parties, and the authorities have held that the court in applying the test must have regard to the legal rather than the practical effect of the judgment. So that the question in the present case is whether the whole judgment finally determined, in a legal sense, all the rights of the parties that were at issue in these proceedings. And the answer is, plainly, that it did not, because it left undetermined the question whether any, and what, damages were payable."

1. In my opinion, the present case may be distinguished from the authorities such as Ex Parte Moore. In Re Faithfull (1884) 14 QBD 627. There, at the trial of an action in the Chancery Division, upon motion for judgment in default of pleading, judgment was given ordering that the defendant be perpetually restrained from acting in breach of his covenant with the plaintiff. It was further ordered that an inquiry should be made as to the amount of the damages which the plaintiff had suffered by reason of the breach of covenant. It was further ordered that the defendant pay to the plaintiff his taxed costs of the action. The costs were taxed and were partly paid by the defendant. The inquiry as to damages was not prosecuted. It was held that the order for the payment of costs was a "final judgment" within the meaning of s.4, sub-s.l(g) of the Bankruptcy Act, 1883, and that the plaintiff was entitled to serve the defendant with a bankruptcy notice for the unpaid balance of costs. Brett, M.R. said at pp.633-634 -
   
   

"A final judgment at Common Law was always a judgment for debt or damages, and the taxed costs of the action. In such a case the costs formed part of the judgment. The question is whether in the Chancery Division there cannot be a "final judgment" when everything which has to be done by the Court itself is finished. Is that a final judgment which directs certain things to be done and certain inquiries to be made, and certain other things to be done on those inquiries being answered? If the Court ordered the result of the inquiries to be reported to itself before the judgment was given, it would not be a final judgment. But, if the Court orders something to be done according to the answer to the inquiries, without any further reference to itself, the judgment is final, and an order for the payment of costs when taxed, which is part of the judgment, is a final judgment for the costs. The costs when taxed are then a debt due in respect of a final judgment." (Emphasis added.)

1. A similar approach was taken by Manning, J. in Re Webster (1893) 4 B.C. (N.S.W.) 36. But, in the present case, the judgment given on 28 May 1985 contemplated that the plaintiff could apply to the Court and not to a registrar or a master for further damages. In any event, the reasoning in Computer Edge Pty. Ltd. v. Apple Computer Inc. (1984) 54 ALR 767 is squarely in point in the present case with the result that, s.40(3)(b) apart, the judgment obtained on 28 May 1985 was not, in my view, a final judgment.

2. The question then arises as to whether s.40(3)(b) has any application here. The rationale underlining the introduction of this provision was explained by the Committee appointed to review the bankruptcy law of the Commonwealth under the Chairmanship of the Honourable Sir Thomas Clyne in its report given in 1962, as follows ( at p.21):
   
   

"58. Thirdly, the Committee recommends that, for the purpose of this paragraph, a judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action should be deemed to be a final judgment so obtained and that the proceeding in which, or in consequence of which, the judgment or order was obtained should be deemed to be the action in which it was obtained. Such a provision will have the effect of altering the law as declared in the case of Opie v. Opie ((1951) 84 CLR 32) in which a judgment entered in the Supreme Court of New South Wales upon the filing of a certificate granted under section 13A of the Deserted Wives and Children Act of that State (which was enforceable under State law as a final judgment obtained in an action) was held by the High Court not to be a judgment in an action for the purposes of the Bankruptcy Act and that a bankruptcy notice issued on the basis of the judgment must therefore be set aside. The Committee takes the view that, if State law provides that a judgment is to be enforceable as a final judgment in an action, the Bankruptcy law should treat the judgment similarly."

1. The effect of a judgment or order obtained in the Supreme Court of New South Wales is dealt with by s.96 of the Supreme Court Act, 1970 (N.S.W.) as follows:-
   
   

"96 (1) Any judgment or order of the Court for the payment of money shall have the effect of a judgment at law.

(2) Subject to sections 98 and 99 and subject to the rules, a person to whom money is payable under a judgment or order of the Court -

(a) may have execution on the judgment or order; and

(b) shall be entitled to the remedies given to a judgment creditor by the Judgment Creditors' Remedies Act, 1901.

..."

1. The provisions of ss.98 and 99 have no application here. By Pt.44 r.2 of the Supreme Court Rules, leave to issue a writ of execution is required where, inter alia, under the judgment a person is entitled subject to fulfilment of a condition (see r.2(1)(d)). However, no such condition was imposed by the terms of the judgment obtained on 28 May 1985 and, in my view, there is no basis for implying any such condition. It follows that upon obtaining that judgment, the plaintiff in that action was entitled to execute upon the judgment in the sum of $2,981,502.49 and interest (see Re Milne (1949) 14 ABC 192). It further follows, in my view, that, by virtue of the operation of the deeming provision in s.40(3)(b), that judgment is deemed to be a final judgment for the purposes of s.40(1)(g).

2. I turn now to the second submission put on behalf of the debtor. The suggestion is that the bankruptcy notice understates the amount claimed by the petitioner, because, as at the date of issue of the notice, i.e. 16 July 1985, the petitioner had recovered two judgments in a sum in excess of $2,981,502.49 when regard is had to the additional sum of $56,452.40 recovered under the judgment taking effect on 4 June 1985.

3. It may be accepted that a bankruptcy notice should be set aside if it is unclear as to whether, if the debtors paid the sum of $2,981,502.49, together with interest, the judgment recovered on 28 May 1985 would thereby be satisfied or would still subsist in part (see Re Thomson; Ex parte Associated Midland Corporation Ltd. (1981) 53 FLR 97). However, in the present case, there is not, in my view, any such ambiguity in the terms of the bankruptcy notice. That notice refers to the judgment recovered on 28 May 1985 and makes no reference to the judgment to take effect on 4 June 1985. In other words, the notice makes it clear to the debtors that its requirements are confined to the first of the two judgments recovered.

4. In the result, in my opinion, the bankruptcy notice is valid. There being no other grounds of opposition to the petition, I propose to proceed, in due course, to make sequestration orders. I direct that the petition stand over to 29 October 1985 before the Registrar at 9.30 a.m. for this purpose.