Winn v Blueprint Instant Printing Pty Ltd
[2009] FMCA 1074
•30 October 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| WINN v BLUEPRINT INSTANT PRINTING PTY LTD | [2009] FMCA 1074 |
| BANKRUPTCY – Whether Taxing Master’s order a final order for purpose of a bankruptcy notice – whether Taxing Master’s order subject to review – whether potential costs order a counterclaim or set-off. |
| Bankruptcy Act 1966 (Cth) ss.40(1)(g), 41(2), 41(3)(c)(i) Bankruptcy Regulations 1996 (Cth) r.4.02 Supreme Court (General Civil Procedure) Rules 2005 (Vic) rr.63.56.1, 63.56(2) |
| Commonwealth Bank of Australia v Horvath (Junior) (1999) FCA 143 Franks v Warringah Council [2003] FCA 1047; (2003) 131 FCR 287 Moran v Lydiard Financial Services Pty Ltd (2005) 222 ALR 333 Scott v Charitopoulos [2008] FCA 1914 Scott v Evia Pty Ltd (2008) VSC 324 Mineo v Etna [2009] FCA 337 Winn v Blueprint Instant Printing Pty Ltd [2008] VSC 522 Winn v Blueprint Instant Printing Pty Ltd [2008] FMCA 1450 |
| Applicant: | JULENE WINN |
| Respondent: | BLUEPRINT INSTANT PRINTING PTY LTD |
| File Number: | MLG 920 of 2009 |
| Judgment of: | Phipps FM |
| Hearing date: | 12 October 2009 |
| Date of Last Submission: | 12 October 2009 |
| Delivered at: | Melbourne |
| Delivered on: | 30 October 2009 |
REPRESENTATION
| The Applicant appearing on their own behalf. |
| Counsel for the Respondent: | Mr T. Scotter |
| Solicitors for the Respondent: | Herbert Geer |
ORDERS
The application filed 20 July 2009 to set aside Bankruptcy Notice VN 358 of 2009 is dismissed.
The applicant pay the respondents costs. The costs in this application be also creditors costs in any creditors petition brought based on Bankruptcy Notice VN 358 of 2009.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 920 of 2009
| JULENE WINN |
Applicant
And
| BLUEPRINT INSTANT PRINTING PTY LTD |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant, Ms. Winn, applies to set aside a bankruptcy notice. The debt claimed is costs fixed by an order of Master Bruce in the Supreme Court of Victoria dated 9 November 2005 after taxation of costs pursuant to an order of Byrne J. made 2 August 2002.
The issues raised by the applicant can be dealt with under the headings:
a)Is the Master’s order or Byrne J’s order the final order?
b)May the attached order be a copy?
c)Is the bankruptcy notice out of time;
d)Is the Master’s order still subject to review?
e)Do the costs include another person's costs?
f)Is the debt overstated?
g)Does the applicant have a counterclaim?
h)Is the Bankruptcy Notice an abuse of process?
Background
In 2001 the applicant, the respondent and Roderick Goodwin were parties in four proceedings in the Victorian Civil and Administrative Tribunal. The tribunal heard them together in September 2001 and made orders.
In January 2002 the applicant commenced three appeals in the Supreme Court of Victoria against the orders of the tribunal. The appeals are proceeding numbers 4215, 4216 and 4217 of 2002.
Byrne J and Master Bruce made their orders in proceeding 4215 of 2002. This proceeding was between the applicant, Ms. Winn and the respondent, Blueprint Instant Printing Pty Ltd. The other two proceedings included Mr. Goodwin as a party.
On 2 August 2002 Byrne J. dismissed all three appeals with costs against the applicant with separate orders in each proceeding. The respondent relies on the taxation order of Master Bruce in proceeding 4215 of 2002, that is, a proceeding with only two parties, the applicant, Ms. Winn and the respondent, Blueprint Instant Printing Pty Ltd.
Ms. Winn applied for leave to appeal. The Victorian Court of Appeal dismissed her application with costs. She applied to the High Court of Australia for special leave to appeal. The application was eventually deemed to be abandoned.
The applicant applied for review of the taxation of costs. Supreme Court (General Civil Procedure) Rules 2005 (Vic) r.63.56.1 provides for such an application and requires the master to reconsider and review the taxation of the objected items; and make an order confirming the taxation or other order as necessary.
Master Bruce struck out the application for review on 31 January 2006 and awarded costs against the applicant.
Ms. Winn filed a notice of appeal against Master Bruce’s strikeout order. On the 3 August 2006 she applied for an adjournment of the appeal. Byrne J. granted the adjournment, ordered the applicant to pay the defendant’s cost of the day fixed at $1,750 and that if the costs were not payed by 7 August 2006 the adjourned date of 21 August 2006 be stayed until those costs had been paid or until further order of the Court.
Fifteen months later the applicant paid $1,750 to the solicitors for the respondent. The respondent says that money has been applied to the costs in proceeding 4215 of 2002, that is, the order of Master Bruce of 9 November 2005. The applicant says the money should be applied to the costs ordered by Byrne J. on 3 August.
The applicant filed a number of other proceedings in the Supreme Court of Victoria. These include;
a)a summons filed 21 February 2008 in which she sought an order that the taxing master conduct a review of the taxation in the 9 November 2005 order; and
b)a Notice of Appeal filed 6 March 2008 in which she sought a rehearing de novo of the application she filed on 9 November 2007 to set aside the Taxing Master's order of 31 January 2006 striking out her the application for review of taxation.
Smith J. dismissed both applications with indemnity costs against the applicant on 28 November 2008. The decision is Winn v Blueprint Instant Printing Pty Ltd [2008] VSC 522.
The current bankruptcy notice is number 358/2009 issued 20 February 2009. It claims a debt of $21,655.63 made up as follows
Amount of Judgment or Order $17,139.20
Interest $ 6,266.43
Subtotal $23,405.63
Less paid $ 1,750.00
Debt claimed $21,655.63
An earlier Bankruptcy Notice, number VN 1372 of 2007, was issued by the Official Receiver on 25 June 2007. It required payment of the same debt, that is the order of Master Bruce of 9 November 2005.
On 11 February 2008 Registrar Luxton dismissed the applicant's application to set aside that bankruptcy notice.
On 17 July 2008 the respondent filed a creditor’s petition. On 11 August 2008 the applicant filed an application to review the decisions of a Registrar Luxton.
Federal Magistrate Riley dismissed the application for review with costs on 17 October 2008: Winn v Blueprint Instant Printing Pty Ltd [2008] FMCA 1450.
On the 24 November 2008 Federal Magistrate O’Dwyer set aside service of the creditor’s petition and dismissed the creditor’s petition. His Honour ordered the respondent to pay the applicant $750 costs.
The applicant has filed a notice of appeal against the decision of Federal Magistrate Riley. It has not been heard. The petition relying on an act of bankruptcy for failing to comply with that bankruptcy notice was dismissed by Federal Magistrate O'Dwyer so the appeal has no utility.
Issues
Is the Master’s order or Byrne J’s order the final order?
Section 40(1)(g) of the Bankruptcy Act 1966 (Cth) provides for the act of bankruptcy of not complying with a Bankruptcy Notice. A creditor may serve a bankruptcy notice on a debtor if the creditor “has obtained against the debtor a final judgment or final order".
The bankruptcy notice must be in accordance with the form prescribed in the regulations: Bankruptcy Act s.41(2). Regulation 4.02 of the Bankruptcy Regulations 1996 (Cth) requires a notice to be in accordance with Form 1. Clause 2 of Form 1 requires that a copy of the judgment or order relied upon by the creditor be attached to the bankruptcy notice.
The applicant argues that the final judgment or final order which compels her to pay the costs is not the Master’s Order of 9 November 2005 but Byrne J’s order of 2 August 2002. Therefore, she argues, since the Master’s order is attached the Bankruptcy Notice is invalid.
The issue is decided by authority.
Supreme Court (General Civil Procedure) Rules 2005 )Vic), O.63 r. 56(2) provides that the Taxing master “may make a final order with respect to the amount at which he or she allows the costs or of his or disallowance of the costs.”
Decisions in the Federal Court stood for the proposition that the Master’s order on taxation was not a final order for the purpose of a bankruptcy notice: Commonwealth Bank of Australia v Horvath (Junior) (1999) FCA 143, Franks v Warringah Council [2003] FCA 1047; (2003) 131 FCR 287 and Moran v Lydiard Financial Services Pty Ltd (2005) 222 ALR 333.
In the Supreme Court of Victoria in Scott v Evia Pty Ltd (2008) VSC 324 Hansen, J. held that a taxing master’s order is a judgment that is enforceable in the same manner as any other judgment for the payment of money. It does not just determine the amount of costs.
The plaintiffs before Hansen J. were subject to a costs order in previous proceedings which had been taxed and then fixed by an order of the Taxing Master. The creditors brought a creditors petition in the Federal Magistrates Court. The act of bankruptcy relied upon was failure to comply with a bankruptcy notice which had attached to it the order of the Taxing Master. Counsel for the debtors argued that the bankruptcy notice was invalid. The hearing of the creditor’s petition was adjourned to enable proceedings challenging the enforceability of the Taxing Master's order to be heard in the Supreme Court of Victoria. These are the proceedings decided by Hansen J.
The question of the validity of the bankruptcy notice then came before Finklestein J. in the Federal Court in the Scott v Charitopoulos [2008] FCA 1914. His Honour had decided Commonwealth Bank of Australia v Horvath (Junior). He considered that his reasoning in that case was correct and that Scott v Evia Pty Ltd was wrongly decided. Nevertheless, that did not provide the answer to the case. The answer was that a judge of the Supreme Court had held that a particular rule was to be given a particular construction. That construction binds those who must enforce the rules. This means that officers of the Supreme Court who enforce judgments will enforce any final order made by a taxing master. The practice must be given effect to for the purposes of the Bankruptcy Act. Finkelstein J. said at [13] and [14]:
13 Neither the foregoing nor my view that Scott is wrongly decided provides the answer to this case. The reason is this. In common with other common law jurisdictions, in Victoria, subordinate legislation either means what it says or, in cases of difficulty, means what judges say it means. If a judge of the Supreme Court holds that a particular rule is to be given a particular construction then, whether the construction be right or wrong, that holding binds those who must enforce the rules until the judgment is set aside. Put simply, the power of the taxing master and the effect of his orders depend not only upon the language of the rules, but also upon the construction which has been placed upon them by judges in the relevant jurisdiction.
14 What that means for the present case is this. The officers of the Supreme Court who enforce judgments will enforce any final order made by a taxing master. This will occur because that is what Scott decided. That practice must be given affect for the purposes of the Bankruptcy Act.
Consequently, the order of Master Bruce of 9 November 2005 is a final order for the purposes of the Bankruptcy Act.
May the attached order be a photocopy
In her outline of submission the applicant argues that an original copy of the order relied on is required to be attached to the notice. She says that only a photocopy of a stamped but not apparently signed order of Master Bruce was sent to the applicant.
What the applicant argues is not clear. A copy of the order authenticated by the Prothonotary of the Supreme Court of Victoria is attached to the bankruptcy notice. Clause 2 of Form 1 of the Bankruptcy Regulations requires that a copy of the judgment or order relied upon by the creditor be attached to the bankruptcy notice. A copy has been attached. Finally, the bankruptcy notice served on the debtor may be a copy: Mineo v Etna [2009] FCA 337.
Is the Bankruptcy notice out of time;
Section 41(3)(c)(i) of the Bankruptcy Act provides that a bankruptcy notice shall not be issued “in respect of a judgment or order for the payment of money if….a period of more than 6 years has elapsed since the judgment was given or the order was made.
The applicant's argument that the bankruptcy notice is out of time depends on the success of her argument that the final order was the order of Byrne J. of 2 August 2002, not the order the Taxing Master of 9 November 2005. That argument has not been successful.
Is the Master’s order still subject to review?
The applicant argues that because the Taxing Master has not conducted a review of the taxation the order is not final. This argument was dealt with by Federal Magistrate Riley Since then Smith J. in the Supreme Court of Victoria has dismissed these applications of the applicant
a)a summons filed 21 February 2008 in which she sought an order that the taxing master conduct a review of the taxation in the 9 November 2005 order; and
b)a Notice of Appeal filed 6 March 2008 in which she sought a rehearing de novo of the application she filed on 9 November 2007 to set aside the Taxing Master's order of 31 January 2006 striking out her the application for review of taxation.
The applicant has no basis for arguing that there is still a pending review of the taxation. The Taxing Master’s order is a final and currently enforceable order.
Do the costs include another person's costs?
The applicant argues that the Taxing Master has included costs from proceedings 4216 and 4217 of 2002, proceedings which include Mr. Goodwin as a party. Therefore, she argues, the order of the Taxing Master relied upon as the judgment debt includes money due to another party.
Again, this argument was dealt by Federal Magistrate Riley. Again, since her Honour’s decision Smith J. has dealt with this issue. He said that the evidence showed that the Taxing Master had allocated costs between Blueprint and Mr. Goodwin. His Honour said at [34]:
34 Whether her claim has any merits or not, the court should not assist her. The reality is, however, that she has not demonstrated any merits. The major point identified by counsel for her, that the taxing Master should have taken steps to ensure that the costs were properly allocated between Blueprint and Goodwin, is met by the evidence of the taxation which shows that the Taxing Master approached the taxing of the costs bearing that very concern in mind. There might be issues of detail here and there in the taxation but that is all and she has not demonstrated the sort of clear issue needed to have her application taken seriously.
The Supreme Court has conclusively dealt with the validity and accuracy of the Master’s taxation of costs and order. The applicant has no grounds for attempting to go behind the order.
Is the debt wrongly stated?
The applicant argues that the respondent’s allocation of the amount of $1,750 to the order of 5 November 2005 is wrong. It should have been allocated against the costs ordered by Byrne J. on 3 August 2006. Smith J. dealt with this argument. His Honour said that when the applicant paid that amount she did not appropriate it expressly to the order. She cannot complain that Blueprint did not do so. He said at [30]:
30 I proceed on the basis that, there being no time limit in his Honour’s order for payment of the $1750.00, the fact that Ms Winn waited 15 months to pay the amount of $1750.00 does not prevent the payment complying with the order. But she has the difficulty that she did not appropriate that payment expressly as a payment pursuant to the relevant order. There were in fact other orders which acquired payments of the same amount. Not having appropriated the payment to a particular order, she cannot now complain that Blueprint did not appropriate that payment to the order which she now seeks to have lifted to have a review conducted of the original taxing decision.
The debt is not wrongly stated.
Does the applicant have a counterclaim?
The applicant claims she has a counterclaim for the costs incurred by her in the proceedings:
a)before Federal Magistrate Riley and the appeal from her Honour’s order dismissing the application to set aside the previous bankruptcy notice;
b)before Federal Magistrate O’Dwyer when he dismissed the creditor’s petition.
Federal Magistrate Riley ordered costs against the applicant. The applicant argues she has incurred costs of the appeal, and there will be further costs.
The appeal has not been heard. It will not be because it has no utility. The applicant currently does not have a counterclaim or set off for these costs.
Federal Magistrate O'Dwyer dealt with the costs of the creditor’s petition. He awarded $750 in costs to the applicant. The applicant cannot now claim any further costs.
The respondent has many other costs orders against the applicant in the Supreme Court of Victoria, and the costs order made by Federal Magistrate Riley, the total of which far exceed the amount of $750. The applicant does not have a set off or counterclaim for costs arising from the previous creditor’s petition.
The applicant has a judgment against Mr. Goodwin in the County Caught of Victoria for $34,900 plus costs. The applicant argues that because she asserts that the Taxing Master's order includes costs of Mr. Goodwin this judgment can be set off against the debt in the Taxing Master's order.
The taxing Master's order does not include costs of Mr. Goodwin. The judgment against a third party, Mr. Goodwin, cannot be set off against the respondent’s debt.
Is the Bankruptcy Notice an abuse of process?
The applicant argues that the bankruptcy notice has been issued for a collateral purpose. She alleges that it is to pressure her to pay to Blueprint Mr. Goodwin's costs, and that it is for the collateral purpose of frustrating or avoiding a review of the Taxing Master's costs order.
None of these allegations are correct. Nor are allegations that the history of litigation between her and the respondent shows oppression of her by the respondent. Smith J. said [33]:
33 The history of this matter in fact reveals an extreme example of a person misusing the law and the legal system to try to avoid her legal obligations. It would appear that Ms Winn has been engaged in a holding operation to delay having to pay the total of the taxed costs awarded against her. She has been accommodated a number of times and has had ample opportunity to seek the review that she now seeks. In the meantime, Blueprint has been delayed for a long time in recovering its costs and has been put to great expense in pursuing them. It is only now, faced with being made bankrupt, that Ms Winn has attempted to take the steps that she had to take to seek a review - namely, to comply with the order of Byrne J by paying the amount fixed costs and seeking an order for a review.
There has been no abuse of process or other conduct by the respondent which justifies setting aside the bankruptcy notice.
Conclusion
All of the applicant's arguments fail. Her application to set aside the bankruptcy notice must be dismissed.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Phipps FM
Associate: Jan Smith
Date: 29 October 2009
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