Wilson v Hambrook
[2009] FMCA 991
•24 September 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WILSON v HAMBROOK | [2009] FMCA 991 |
| BANKRUPTCY – Creditor’s petition – presented by one of joint creditors – validity – appropriate orders. |
| Australian Workers Union and Others & Bowen (1946) 72 CLR 575 Dudzinski & Kellow (2003) FCAFC 207 Scook & SIMS Construction Pty Ltd (2004) 3ABC |
| Applicant: | PATRICK SHAUN WILSON |
| Respondent: | JOANNE MARIE HAMBROOK |
| File Number: | BRG 457 of 2009 |
| Judgment of: | Wilson FM |
| Hearing date: | 24 September 2009 |
| Date of Last Submission: | 24 September 2009 |
| Delivered at: | Brisbane |
| Delivered on: | 24 September 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr. E. Smith |
| Solicitors for the Applicant: | Fraser Power |
| Counsel for the Respondent: | Mr. P. McQuade |
| Solicitors for the Respondent: | James Conomos Lawyers |
ORDERS
That the Creditor’s Petition filed 10 July 2009 be dismissed.
That the applicant pay three quarters (3/4) of the respondent’s costs of and incidental to the application, to be taxed if not agreed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 457 of 2009
| PATRICK SHAUN WILSON |
Applicant
And
| JOANNE MARIE HAMBROOK |
Respondent
REASONS FOR JUDGMENT
In this matter, the applicant presented a creditor’s petition consequent upon obtaining two orders for costs in the Supreme Court of Queensland. Each of those orders for costs was made in favour of both the applicant and Frances Mary Wilson Fitzgerald. The applicant and Ms Fitzgerald are both defendants to Supreme Court proceedings brought by the respondent debtor.
The orders for costs were made on 12 December 2006 and 29 April 2008 respectively. Orders assessing the awarded costs were made on 25 September and 29 October 2008. Those orders for costs remain unsatisfied. Two bankruptcy notices were issued, one in respect of each order for costs. The applicant was the only named creditor. The total amount said to be owing is $26,158.64.
The applicant experienced difficulties in serving both the bankruptcy notices and the creditor’s petition on the respondent debtor. An order for substituted service was made in respect of the creditor’s petition. At the time of the making of that order, the applicant creditor’s costs were reserved.
A notice of opposition was filed on 21 September and was amended on the same day. The grounds of opposition are said to be six. However, the principal legal point raised by the respondent is that the applicant does not have the requisite authority to issue either a bankruptcy notice or a creditor’s petition as he is but one of joint creditors. The respondent also intends to oppose the creditor’s petition on the ground that she is solvent and further that she has a set off, cross-demand or counterclaim exceeding the amount of the two debts said to be owed by her.
The solicitors for the applicant have endeavoured to elicit from the solicitors for the respondent the legal basis on which they contended that the creditor’s petition and bankruptcy notices were not valid, but, until this morning, that was not made clear to them. Upon the legal argument being drawn to their attention, the applicant sought to withdraw the creditor’s petition. In my view, the appropriate order is that the creditor’s petition be dismissed rather than withdrawn.
The legal ground intended to be argued by the respondent is well settled and has been since 1946. In Australian Workers Union and Others & Bowen (1946) 72 CLR 575, the High Court made it clear, particularly in the judgment of the Sir John Latham CJ, at 583, that a bankruptcy notice issued without the authority of all judgment creditors was, prima facie, invalid. That position has been followed relatively recently in two decisions referred to by counsel for the respondent, Dudzinski & Kellow (2003) FCAFC 207 and Scook & SIMS Construction Pty Ltd (2004) 3ABC and S43.
It ought to have been apparent to the creditor or those advising him that a bankruptcy notice and a creditor’s petition could not be issued by the applicant alone. In those circumstances, the applicant will have to pay the respondent’s costs.
However, two matters need to be taken into consideration. The first is that the applicant was put to expense in obtaining an order for substituted service of the creditor’s petition, and, secondly, the respondent’s material is extensive in the sense that it deals with the issue of solvency that has not been determined by this court. To order that the applicant pay all of the respondent’s costs would necessarily mean that the applicant would not recover his costs of seeking the order for substituted service and would have to pay for the preparation of extensive affidavit material that was, arguably, not required.
The respondent was entitled to and, proceeding cautiously, cannot be criticised for covering all bases in responding to the application for a sequestration order although, in my view, the legal position concerning the validity of the creditor’s petition was clear.
The applicant was put to expense in seeking an order for substituted service, the details of which are set out in the affidavits of Mr Power, filed both as to service of the bankruptcy notice and in support of the application for substituted service. It seems to me, therefore, that doing justice between the parties, the respondent should recover three quarters of her costs against the applicant.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Wilson FM
Associate: Lynnette Chin
Date: 20 October 2009
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