(2011) 84 ACSR 296
NA Investment Holdings Pty Ltd v Perpetual Nominees Limited [2010] NSWCA 210
Source
Original judgment source is linked above.
Catchwords
(2011) 84 ACSR 296
NA Investment Holdings Pty Ltd v Perpetual Nominees Limited [2010] NSWCA 210
Judgment (3 paragraphs)
[1]
Judgment (EX TEMPORE)
HIS HONOUR: On 14 November 2013, in proceedings in the Federal Court of Australia New South Wales District Registry numbered 2140/2013 ("2140 proceedings"), in which the present plaintiff Fewin Pty Limited was the applicant and the present defendant Maxwell William Prentice was the respondent, Perry J made orders that:
1. The applicant is to pay the costs of the first respondent on an indemnity basis for the interlocutory application made in this proceeding and dismissed by this Court on 21 October 2013.
2. The taxation of the costs, if not agreed, be conducted by a taxing officer under the Federal Court Rules 2011 on the basis of common costs between proceeding NSD 2016/2013 and NSD 2140/2013 incurred on or from 21 October 2013 in respect of the three applications for a stay dealt with in the judgment delivered on 31 October 2013, and following such assessment apportioned 50 per cent in respect of proceeding NSD 2016/2013 and 50 per cent in proceeding NSD 2140/2013.
3. Leave be granted for the first respondent to proceed to taxation of the costs forthwith.
On 19 November 2015, Mr Prentice lodged electronically in the Federal Court of Australia 2140 proceedings a bill of costs pursuant to that order in which the claimed costs and disbursements totalled $26,106.50. So far as I have been able to ascertain, the bill relates only to the costs of the application that was before Perry J in the 2140 proceedings, and where items in the bill related both to those proceedings and to the 2016 proceedings, only half of the amount was claimed.
On 23 December 2015, a Deputy District Registrar of the Federal Court, T Morgan, sent a letter to the solicitors for the applicant and the solicitors for the respondent in the 2140 proceedings, giving notice under Federal Court Rules 2011, r 40.20(3), that the estimate made of the approximate total for which if the bill were to be taxed the certificate of taxation would be likely to issue, was $25,000. The letter drew attention to r 40.20(4), which provides that unless a party interested in the bill objects to the estimate in accordance with r 40.21, the amount of the estimate is the amount for which the certificate of taxation will be issued, and also provides for the filing of a notice of objection and the procedure that follows it. The letter also advised that should a notice of objection not be filed, the party that filed the bill of costs - being Mr Prentice - "should prepare and lodge a draft certificate of taxation (original and copies) in accordance with form 132", and set out a suggested wording for the certificate in the sum of $25,000". Apparently, no notice of objection was filed and on 20 January 2016, Mr Prentice's solicitors electronically lodged with the Federal Court a draft certificate of taxation using the form of words that had been suggested in the Registrar's letter. On 21 January 2016, the Federal Court issued electronically a notice of filing in respect of that Certificate of Taxation, which relevantly recorded that the document was lodged electronically on 20 January 2016, "and has been accepted for filing under the courts rules", that the notice of filing had been inserted as the first page of the document which had been accepted for electronic filing, and was now taken to be part of that document for the purpose of the proceedings, and must be included in the document served on each of the parties to the proceedings; and that the date and time of lodgement shown above on the notice are the date and time that the document was received by the Court. The second page of the document was the draft certificate of taxation itself, in the form in which it had been lodged. It does not bear a signature, nor is it dated, and though a seal of the Federal Court appears on it, it is the seal associated with the notice of filing.
On 12 April 2016, Mr Prentice's solicitors served on Fewin a creditor's statutory demand for payment of the amount of $25,000, described in the schedule to the demand as "Certificate of Taxation issued by the Federal Court pursuant to costs ordered on 14 November 2013, $25,000". The date of the certificate of taxation was said to be 21 January 2016, and the Court, from which it had issued to be the Federal Court of Australia. Attached to the demand was a copy of the notice of filing and the certificate in the form as I have described it, and a copy of the order of Perry J of 21 November 2013. There was no accompanying affidavit verifying the debt the subject of the demand, because the demand relies on the debt in question as a judgment debt.
By originating process filed in these proceedings on 29 April 2016, Fewin applies pursuant to (CTH) Corporations Act 2001, s 459G, for an order that the statutory demand be set aside. Ultimately, two grounds were relied on. The first was that there was no judgment debt due and payable, no certificate of taxation having actually issued; and the second was that if there was a certificate, it was not calculated in and did not comply with the order of Perry J in respect of common costs and apportionment. Other grounds that might have been considered to be raised by the s 459G affidavit of Ronald Michael Coshott of 29 April 2016 were not pressed.
So far as the second ground to which I have referred is concerned, the s 459G affidavit raised, in paragraph 6, the point that the orders of Perry J required that the costs be apportioned 50% to each of the 2140 proceedings and the 2016 proceedings, and in paragraph 7 contended that those orders had not been obeyed, because the costs had not been apportioned as ordered. Whatever may be the position in that regard, if there were a valid certificate of taxation, it seems to me that that would not be a matter that would, in the present circumstances justify setting aside the creditor's statutory demand. In Douglas Aerospace Pty Limited [2015] NSWSC 167, I endeavoured to summarise (at [53]) the principles that apply in respect of judgment debts:
It is well established that a judgment debt is beyond dispute while it stands. This applies even in the case of a default judgment. It applies also to an arbitration award, and it applies notwithstanding that the judgment is subject to an appeal or an application to set it aside, although the pendency of an arguable appeal may provide 'some other reason' for setting aside the demand, at least if the judgment is the subject of a stay pending the appeal or security is given. Essentially that is so because the judgment, so long as it stands, binds the parties and concludes any dispute as to the existence or amount of the debt.
Accordingly, if there be a valid certificate of taxation, it binds the parties and concludes any dispute as to the existence or amount of the debt. If there were a pending application to set aside the certificate of taxation, or an application for review of it, that might provide "some other reason" for setting aside the statutory demand at least if there were a stay or if security were given. However, there is no such application, there is no stay, there is no offer of security, and in those circumstances I am entirely unsatisfied that the possibility that there might be an application to vary or set aside the certificate, if it be valid, provides reason for setting aside the creditor's statutory demand. The second ground relied on therefore fails.
I turn then to the first ground. In paragraph 5 of the s 459G affidavit, Mr Coshott annexes "a copy of an undated and unsigned form of certificate of taxation" in the 2140 proceedings, which had been attached to the statutory demand. The certificate in that form was also annexed to the affidavit, and it was also annexed to the originating process. Although at first I questioned whether the issue had been sufficiently raised in the s459G affidavit, the problem with the demand is discernible on the face of the documents annexed to the s459G affidavit. Where the argument upon which the demand is to be impugned can be supported by reference only to the s459G affidavit and documents attached to it, it may be said to be discernible even if not obvious from the s459G affidavit. [1] That test was met in the current case, illustrated by the circumstance that the plaintiff's submissions proceeded exclusively on the basis of what was in or attached to the s 459G affidavit, and it is reinforced by the circumstances to which Mr Johnson very properly drew notice - that paragraph 5 of the affidavit draws attention to the circumstance that the Certificate of Taxation attached to the statutory demand was "an undated and unsigned form of certificate of taxation".
The question then is whether the purported certificate of taxation attached to the statutory demand is in fact a certificate of taxation at all. It is well established that where in proceedings a court makes an order for costs as between the parties to be taxed or assessed, no judgment debt arises until the process of assessment or taxation is completed and a certificate issues. Although when a judge pronounces a judgment or order in open court the judgment takes effect when pronounced, Federal Court Rules, r 39.01 provides that in the case of a liability arising upon a process of assessment or taxation, the liability arises not from the pronouncement of the order but from the issue of the certificate which quantifies them. Federal Court Rules, r 40.32, relevantly provides:
(1) A taxing officer is to issue a sealed certificate of taxation, in accordance with Form 132, that must be served, within 14 days after the date it is issued, by the party who filed the bill, on the party responsible for payment of the costs.
(2) A certificate of taxation has the force and effect of an order of the Court.
In the dictionary to the Rules, "certificate of taxation" is defined to mean "a certificate issued by a taxing officer in accordance with r 40.32". Form 132, referred to in r 40.32, includes provision for a date and for signature by a Registrar. It is noteworthy that r 40.32 contemplates that a certificate of taxation is to be sealed and issued, not merely filed.
(CTH) Federal Court of Australia Act 1976, s 37, provides as follows:
(1) All writs, commissions and process issued from the Court shall be:
(a) under the seal of the Court; and
(b) signed (including by way of electronic signature) by the Chief Executive Officer, a District Registrar or an officer acting with the authority of the Chief Executive Officer or a District Registrar.
(2) For the purposes of paragraph (1)(b), a document is taken to be signed by the Chief Executive Officer if the electronic signature of the Chief Executive Officer is applied to the document by an officer acting with the authority of the Chief Executive Officer.
(3) In this section:
"electronic signature " of a person means the person's unique identification in an electronic form that is approved by the Chief Executive Officer.
In speaking of writs and process issued from the court - which can be distinguished from documents filed with the Registry - it requires that they be under the seal of the court and signed by a relevant functionary, such as a District Registrar or authorised officer. It certainly contemplates that such a document may be electronically signed by the Chief Executive Officer.
The notice of filing, to which I have referred, evidences and records that the draft certificate of taxation was lodged and has been filed by the Court, but it does not seem to me to evidence or record that the certificate has been "issued". The absence of a signature - even an electronic signature - authenticating the certificate of taxation itself - as distinct from the covering notice of filing - is material in that respect. The first page of the document records that the attached document has been accepted for filing, but it does not state that the document has been issued by the court.
In my view, the electronic signature of the Principal Registrar on the cover sheet does not constitute the issue of the attached certificate of taxation. What appears to have happened is that the process has been treated as if it proceeded by way of electronic filing under Federal Court Rules, r 2.23 and r 2.24. Rule 2.23 provides that a document that is sent by electronic communication to a Registry for filing must be sent in a certain means and format. Rule 2.24 provides that if a document is sent to a Registry by electronic communication in accordance with r 2.23 is accepted at the Registry, and is a document that must be signed or stamped, the Registrar will relevantly insert a notice of filing as the first page of the document, and if such a notice has been inserted the notice is taken to be part of the document. Those two rules appeared in the context of r 2.2, which provides that documents may be lodged with the court by being presented to a registry or being posted to a registry or being faxed to a registry or being sent by electronic communication to a registry. They are concerned with the filing of documents by parties, not with the issue of process such as writs or certificates by the court. It follows that in my view, no certificate of taxation has been issued.
This view is confirmed by a printout of the Federal Court electronic record in respect of the matter. Under the heading "Bill of Costs Filed by Prentice Maxwell William on 19 November 2015", it records that that application was closed on 15 December 2015, the relevant court event being the issue of the estimate on 15 December 2015. Under the heading "Documents Filed", there are listed the bill of costs on 19 November 2015, an affidavit of service on 23 November 2015, and a certificate of taxation filed by Maxwell William Prentice on 20 January 2016. The certificate of taxation is recorded only as a document filed, and there is no associated court event or order. While it is recorded that the Registrar has estimated the bill, there is no reference to any certificate having issued. That confirms my conclusion on the face of the documents attached to the creditor's statutory demand that no certificate of taxation has actually been issued. It follows that, there is no judgment debt underlying the creditor's statutory demand, and no basis for the demand, as costs to be taxed are not payable unless and until there is a certificate. (An affidavit which deposed to the absence of objection to the estimate would still not establish that there was a debt due and payable, because the essential condition of the issue of the certificate has not yet occurred).
It follows that on the first ground, the statutory demand must be set aside.
The Court orders that:
1. the creditor's statutory demand served by the defendant on the plaintiff dated 12 April 2016 be set aside;
2. the defendant pay the plaintiff's costs assessed in the sum of $16,500.
[2]
Endnote
See NA Investment Holdings Pty Ltd v Perpetual Nominees Limited [2010] NSWCA 210; (2010) 79 ACSR 544 in particular at [85]-[87] (Lingren AJA); see also Fitness First Australia Pty Ltd v Dubow [2011] NSWSC 531; (2011) 84 ACSR 296 at 119, 121 (Ward J, as her Honour then was).
[3]
Amendments
16 November 2017 - typographical error - cover page
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Decision last updated: 16 November 2017