Walker v Primac Limited
[2003] FMCA 472
•14 October 2003
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WALKER v PRIMAC LIMITED | [2003] FMCA 472 |
| BANKRUPTCY – Application to set aside – whether correct judgement attached – notice understates the debt due – whether final order was “enforceable” and capable of immediate execution – whether an abuse of process – no grounds established – application dismissed. Bankruptcy Act 1966 (Cth), ss.30, 40(1)(g), 40(3), 41(3)(a), 41(3)(b) Wren v Mahoney (1972) 126 CLR 212 Shephard v Blueberry Farms Of Australia Ltd (2001) FMC 2 |
| Applicant: | JOHN EDMOND WALKER |
| Respondent: | PRIMAC LIMITED |
| File No: | BZ175 of 2001 |
| Delivered on: | 14 October 2003 |
| Delivered at: | Brisbane |
| Hearing date: | 23 April 2002 |
| Judgment of: | Baumann FM |
REPRESENTATION
| Applicant: | In person |
| Solicitors for the Respondent: | Ms J. M. Rosengren of McCullough & Robertson |
ORDERS
The Application is dismissed.
The Applicant shall pay the Respondent’s costs of and incidental to these proceedings (including reserved costs) as agreed or taxed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BZ175 of 2003
| JOHN EDMOND WALKER |
Applicant
And
| PRIMAC LIMITED |
Respondent
REASONS FOR JUDGMENT
Introduction
The Applicant John Edmond Walker relies upon an amended Application filed 14 September 2001 to seek an order that the Bankruptcy Notice QN795 of 1999 be set aside on the following grounds:
a)the Bankruptcy Notice is irregular pursuant to s.41(2) of the Bankruptcy Act1966 (Cth) (“the Act);
b)there was no right of immediate execution on the judgment debt pursuant to s.41(3)(b) of the Act;
c)the Bankruptcy notice amounts to an abuse of process.
The Application is opposed by the Respondent Primac Limited.
History
It is not necessary to chronicle the whole of the history in this matter, which is well known to the parties, however for context I recite the following history which is not seriously in issue:
a)The Applicant purchased farming machinery from the Respondent in 1990 and as a result of non-payment, the Respondent (then known as Primac Association Limited) obtained judgment by default in the Magistrates Court of Queensland at Brisbane on 19 March 1991 (“the said Judgment”).
b)Bankruptcy Notice Q451 of 1999 founded on the said Judgment was set aside on 6 August 1999, and subsequently an application was filed by the Applicant in the State Magistrates Court to set aside the judgment on, it seems, at least a basis that the originating process had not been served;
c)The Application to set aside the judgment was dismissed on 31 August 1999 and leave to enforce as requested as a result of the age of the Judgment granted. A stay of enforcement was granted for 14 days by Taylor SM.
d)After the stay period had expired, the current Bankruptcy Notice QN795 of 1999 was issued on 22 September 1999.
e)The Applicant filed on 28 September 1999 a Notice of Appeal in the District Court and on 25 October 1999 he filed an Application in the Federal Court of Australia seeking to set aside the said Bankruptcy Notice;
f)The Applicant says he discontinued his Appeal to the District Court by Notice. The Order of Judge Boulton on 8 November 2000 was that:
“1. The Appeal be dismissed.
2. The Appellant pay the Respondent’s costs of and incidental to
the Appeal to be assessed on the indemnity basis.”g)As a result of a transfer from the Federal Court to this court and a number of interlocutory steps, the matter proceeded to hearing before me on 23 April 2002. It is a matter of regret that I have not delivered these Reasons earlier.
The Applicant appeared on his own behalf from North Queensland, and filed well researched and fulsome written submissions. I have carefully considered those submissions. The Respondent has also filed submissions in response. Neither party sought to cross-examine any of the witnesses relied upon by the parties.
Issues
The issues identified in the written, and oral, submissions are:-
a)Should the Bankruptcy Notice be set aside;
b)Was the issue of the said Bankruptcy Notice an “abuse of the process”;
c)Can, and should, the Court entertain the application seeking to restrain the Respondent from “commencing or continuing further action or applications to the Magistrates Court in respect of MC4477 of 1991”.
The legislation
This application is brought under s30 of the Act, which empowers the Court to set aside a bankruptcy notice. Section 41 of the Act deals specifically with the Bankruptcy Notices and relevantly provides that:
“41. (1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor a final judgment or final order that:
(a) is described in paragraph 40(10(g); and
(b) is for an amount of at least $2,000.
(2). The notice must be in accordance with the form prescribed by the regulations.
(3) A bankruptcy notice shall not be issued in relation to a debtor:
(a) except on the application of a creditor who has obtained against the debtor a final judgment or final order within the meaning of paragraph 40(1)(g) or a person who, by virtue of paragraph 40(3)(d), is to be deemed to be such a creditor.
(5) A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement.”
For the purpose of understanding s.41(3)(a), s40(1)(g) provides that a debtor commits an act of bankruptcy:
“(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 and the debtor does not:
(i)where the notice was served in Australia – within the time specified in the notice; or
(ii)where the notice was served elsewhere – within the time fixed for the purpose by the Order giving leave to effect the service,
comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;
and further that
(3)For the purpose of paragraph (1)(g):
“(d) a person who is for the time being entitled to enforce a final judgment or final order for the payment of money shall be deemed to be a creditor who has obtained a final judgment or final order;”
The bankruptcy notice
As earlier noted, the Applicant raises matters which he says invalidate the Notice.
I am not asked to “go behind the judgment”. No evidence to support such a contention was lead (other than a vague assertion of “fraud”). The judgment has been enlivened (after the coming into effect of the Uniform Civil Procedure Rules 1999 (Qld)), and an application to set it aside has been dismissed (see Wren v Mahoney (1972) 126 CLR 212).
As was succinctly and correctly stated by Driver FM in Shephard v. Blueberry Farms of Australia Ltd. 2001 FMC 2 at paragraph 27:
“27. It is accepted that s.41(2) of the Bankruptcy Act provides that a bankruptcy notice must be in accordance with the form prescribed by the Regulations. The relevant Regulation is Regulation 4.02. The relevant form is incorporated by Regulation 4.02 as Form 1. The requirements of a bankruptcy notice are subject to the provisions of s.25C of the Acts Interpretation Act 1901 and s.306 of the Bankruptcy Act. Section 25c of the Acts Interpretation Act applies to the format of the bankruptcy notice: Bankruptcy Regulations 4.02(2) and (3). If that section has any application to the content of a notice, it seems that application is quite limited: Australian Steel Company v Lewis (op cit) at paragraph 43. Section 306 relevantly provides that proceedings under the Bankruptcy Act are not invalidated by ‘a formal defect or irregularity unless the Court…..is of the opinion that substantial injustice has been caused by the defect….’ It has long been held that s.306 is applicable to bankruptcy notices; Kleinwort Benson Australia v Crowl (1998) 165 CLR 71 at 77. Accordingly, the respondent has correctly submitted that a bankruptcy notice will not be invalidated by a defect or irregularity if that defect or irregularity is ‘formal’ and it does not cause substantial and irremediable injustice. A defect or irregularity will be characterised as ‘substantive’ rather than formal if it fails to meet a requirement made ‘essential’ by the Act or it is one which ‘could reasonably mislead a debtor as to what is necessary to comply with the notice’. Kleinwort Benson, op cit at 79.”
The Applicant says the incorrect Order is attached to the Bankruptcy Notice. The Order attached is a certified copy of the Order made
19 March 1991. The Applicant says the Order of Taylor SM giving leave to execute the judgment ought to have been exhibited. The Order which is the source of the obligation to pay is the Order of 19 March 1999 (see Stec v Orfanios (1999) FCA 457). As the correct order has been annexed, this ground must fail.
The Applicant in his submissions says the amount obtained in the Notice of $16,357.19 understates the amount due under the judgment by –
·1 days interest; and
·costs awarded on 31 August 1999 of $462.00.
Whilst the Act provides a legislative right to dispute an amount claimed in a Notice which exceeds the amount due, no such right exists for an understatement. The reason seems to be that if a Creditor claims a lesser amount AND the Debtor pays that sum within the prescribed time, then the Notice is satisfied and no act of bankruptcy can be alleged. No irregularity invalidating the notice on this ground exists in my view.
It is clear on the evidence that the Judgment Creditor at the time of judgment in 1991 was known as Primac Association Limited. The Company changed its name to Primac Limited on 3 May 1994. The Applicant says the Notice is invalid because the Judgment Creditor did not return to the Queensland Magistrates Court and seek an order under Rule 661 of the Uniform Civil Procedure Rules 1999. The real issue is whether the creditor is correctly named in the Bankruptcy Notice – as Primac Limited ACN 010 023 284 (formerly Primac Association Ltd). I am satisfied that the Creditor is correctly named and further that it cannot be said objectively that the Debtor could have been misled.
In this regard I accept paragraph 4.10 of the Respondent’s submissions as supported by the evidence. The names are so similar. The authority of Re: Crisafulli; Ex parte National Commercial Banking Corporation of Aust. Ltd (1985) 11 FLR 272 makes it clear that the essential point is the Debtor needs to know and understand what he has to do to avoid committing an act of bankruptcy. This ground must fail.
At the date of issue of the Notice (namely 22 September 1999), the Applicant says the Creditor was not entitled to enforce a final judgment for the payment of money as defined by s.40(1)(g) of the Act.
The Applicant’s submission was that:
a)the creditor named in the judgment was not the creditor issuing the Bankruptcy Notice;
b)By operation of Rules 817 and 661 of the Uniform Civil Procedure Rules 1999 (Qld), the Order was not capable of enforcement.
It is clear that R817 sets out the procedure for a person applying to a State Court for an enforcement warrant. R661(4) provides that unless an Order is filed;
“(a) the Order may not be enforced under Chapter 19 or by other process; and
(b) no appeal may be brought against the Order without the leave of the court…….”
It is clear on the face of the Certificate of Judgment that it was “filed” on 19 March 1991. It is reasonable to infer that the Order of Taylor SM made 31 August 1999 was “filed”, as the Applicant brought an appeal against that Order to the District Court of Queensland. It is common ground that, with the Uniform Civil Procedure Rules 1999 coming into force on 1 July 1999 the Respondent could not enforce its money order of 19 March 1991 without the leave of the Court under R799. That was precisely the reason for the Application heard by Taylor SM on 31 August 1999. His reasons, which were before me, resulted in an Order, inter alia:
“1.…….
2. that the Plaintiff have leave to start enforcement proceedings for the judgment debt of $16,263.62 and interest accruing only from this date.
3.……….
4. that enforcement proceedings be stayed for 14 days.”
Interestingly, but not surprisingly, the Plaintiff is named as “Primac Limited”. This makes it clear in my view that the Court was authorising, by its Order, Primac Limited to proceed with enforcement of the 1991 Order, qualified only by the extent to which it could claim interest on the debt. The Bankruptcy Notice was filed after the 14 day stay had expired. Even though the Applicant in these proceedings filed an Appeal on 28 September 1999, that appeal does not amount to a stay of the Order.
I am not satisfied that a stay of enforcement was in existence. The Order of Taylor SM makes it clear that any impediments to the immediate enforcement of the judgment debt had been cleared.
Finally, in this respect, the Applicant argues that the Official Receiver should not have issued the Notice without the Order of 31 August 1999 being produced. In my view the exercise of discretion of the Official Receiver under s41 is administrative in character, the exercise of which is reviewed by applications, similar to those made by the Applicant in these proceedings. If it had been necessary for the Order of 31 August 1999 to be produced (and that is not my view) then such defect be determined by an Application to set aside the Notice.
Abuse of process
The Applicant finally asserts that the issue of the Bankruptcy Notice is an abuse of process. In part he relies upon the setting aside, by the Federal Court, of an earlier Notice (No. Q451/99). No reasons or judgment for this setting aside are produced – the Respondent saying that it did not contest the proceedings or even enter an appearance. The reasons seem clear. At the time of the issue of the earlier Notice, leave under R799 of the Uniform Civil Procedure Rules had not been obtained. The Notice was therefore fatally flawed.
Whilst Bankruptcy proceedings are not to be used as debt recovery proceedings, and there have been long delays in the attempts to recover the judgment debt ordered in 1991, no other evidence was offered to satisfy me that the Respondent is not genuinely intending to pursue the proceedings. Whilst the issuance of repeated Bankruptcy Notices or Notices issued vexatiously can constitute oppressive conduct and an abuse of process, this is not a case where I am satisfied the Creditor has so acted.
Because of the view I have taken on all these matters, it is not necessary for me to consider the power of this Court to restrain the Judgment Creditor from pursuing any other relief in the Queensland Magistrates Court.
Conclusion
The Applicant has not made out any of his purported grounds. The Application will be dismissed. This is an appropriate matter where costs should follow the event.
I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate:
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