Genovese v BGC Construction Pty Ltd

REASONS FOR JUDGMENT 1 This is an application to set aside Bankruptcy Notice 190 of 2005 ("the Notice") issued to the applicant ("Genovese") under the Bankruptcy Act 1966 (Cth) ("the Act") by the Official Receiver for the Bankruptcy District of Western Australia on 13 June 2005 at the request of the respondent ("BGC"). 2 The Notice is the fourth such notice to be issued to Genovese at BGC's request based on a judgment obtained by BGC against Genovese in the Local Court of Western Australia on 17 October 2003. Judgment was entered by consent for a sum of $10,000 and costs to be taxed. Those costs were taxed and certified on 23 December 2003 in a sum of $11,432.94. 3 Prior to 17 October 2003 other orders for costs had been made in the proceeding in BGC's favour namely, on 28 February 2003, 15 April 2003 and 9 June 2003. On 22 May 2003 costs were taxed pursuant to the orders made on 28 February and 15 April 2003 and certified by the Taxing Officer in a sum of $2,010.42. That sum was duly paid by Genovese. In respect of the order for costs made on 9 June 2003 taxed costs were certified on 29 October 2003 in a sum of $4,979.33. 4 The first bankruptcy notice, issued on 12 March 2004, was set aside by consent. The second and third bankruptcy notices were issued on 21 April 2004 and 8 September 2004 respectively. BGC elected not to proceed on the second notice and the third notice was set aside by an order made by a judge of this Court (Lander J) on 11 March 2005 on appeal from a judgment of the Federal Magistrates Court. The reasons for decision of his Honour set out the history of the matter in detail. (See: Genovese v BGC Construction Pty Ltd (2005) 215 ALR 440). 5 An unresolved issue that arose out of the hearing in the Federal Magistrates Court and not dealt with in the appeal is whether a further sum of $3,000 was paid to BGC by Genovese on 30 April 2004 in reduction of the judgment entered on 17 October 2003 being a sum not accounted for in the Notice. (See: Genovese v Homestyle Pty Ltd [2004] FMCA 673 at [33]). 6 On 25 July 2005 Genovese filed an application in the Federal Magistrates Court seeking an order that the Notice be set aside. On 21 September 2005 the Federal Magistrates Court ordered that the application be transferred to this Court by reason of the complexity of the issues raised. 7 Upon transfer of the matter the Court determined pursuant to Order 80 of the Rules of the Federal Court that it was appropriate that the Registrar be directed to obtain pro bono legal representation for Genovese in order that the Court may be assisted by submissions from counsel for each party. Up to that point Genovese had been unrepresented. 8 As far as the instant matter is concerned s 40(1)(g) of the Act provides that a debtor commits an act of bankruptcy if a creditor who has obtained against the debtor a final judgment or final order, the execution of which has not been stayed, has served on the debtor a bankruptcy notice under the Act requiring the debtor to pay the judgment debt and the debtor does not, within the time specified in the notice, comply with the requirements of the notice. 9 Section 41(1) states that 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 (or two or more final judgments or final orders) in an amount of at least $2,000. 10 Section 41(2) stipulates that the notice must be in the form prescribed by the Bankruptcy Regulations 1966(Cth) ("the Regulations"). Regulation 4.02(1) provides that Form 1 in Schedule 1 of the Regulations is the prescribed form. Regulation 4.02(2) also states that a bankruptcy notice must follow Form 1 in respect of its format - "for example, bold or italic typeface, underlining and notes". 11 Item 1 of Form 1 gives notice to a debtor that the creditor claims that the debtor owes the creditor a debt in a specified amount arising under a judgment and states that details of the amount of the debt are shown in the Schedule to the Form. The Schedule provides for details of the amount owing to the creditor by the debtor under judgments or orders to be inserted. Item 2 of Form 1 states that "a copy" of the judgments or orders "relied upon" by the creditor is attached to the notice. Failure to attach a copy of a judgment or order relied upon is a failure to comply with s 41(2) and represents a fundamental defect in the notice and invalidates it. (See: The Australian Steel Company (Operations) Pty Ltd v Lewis (2000) 109 FCR 33; Commonwealth Bank v Horvath (Junior) (1999) 161 ALR 441). 12 In relevant respects the Schedule to Form 1 reads as follows: " Column 1 Column 2 1 Amount of judgments or orders plus 2 Legal costs if ordered to be paid and a specific amount was not included in the judgments or orders (see Note 1, below) plus 3 If claimed in this Bankruptcy Notice, interest accrued since the date of judgments or orders (see Note 2, below) 4 Subtotal less 5 Payments made and/or credits allowed since date of judgments or orders 6 Total debt owing