Lewis v Lamru Pty Limited, in the matter of Lewis

the court 1 On 19 October 2010, the Official Receiver issued a bankruptcy notice addressed to the appellant. The bankruptcy notice was issued on the application of the respondent. It was served on the appellant on 21 October 2010. The notice recited that the respondent claimed that the appellant owed "the following debt". The debt was identified as the "[a]mount as per the attached final judgment/s or final order/s" said to be $424,969.29. The attached final judgment is that of the Supreme Court of New South Wales in its Equity Division. The judgment was given in two different proceedings identified as numbers 2002/061144 and 1997/025260. It is said to have been entered on 23 July 2010. It is said also to have been made or given on that date. However, it seems that the date it was made or given was previously shown as 23 May 2006. That date was deleted by hand and the later date inserted. 2 The judgment indicates that the Court had found that Peter Lawrence Lewis (the appellant in this appeal) had participated in various breaches of trust. Mr Lewis was ordered to pay various amounts to Lamru Pty Limited (the respondent to this appeal), together with interest and costs. The judgment embodying these orders was sealed and signed by a Deputy Registrar of the Supreme Court of New South Wales. These orders as sealed, signed and dated 23 July 2010 are referred to as the consolidated orders. 3 On 9 November 2010 the appellant applied to this Court for an order setting aside the bankruptcy notice. On 10 February 2011 that application was heard by a Registrar and dismissed. The appellant then applied for review of the Registrar's decision. That matter was heard by Foster J on 28 June 2011 and dismissed on 6 July 2011 (Lewis v Lamru Pty Ltd; In the Matter of Lewis [2011] FCA 758). On 27 July 2011 the appellant appealed against his Honour's decision. The grounds of appeal are as follows: 1. His Honour erred in determining the validity of the bankruptcy notice number NN4655 of 2010 (the "Bankruptcy Notice") upon a subjective basis in circumstances where the authorities required that he do so on an objective basis. 2. Considered on the materials before the Court, on an objective basis, the Court ought to have reviewed the decision of the Registrar and set aside the Bankruptcy Notice. 3. There was no dispute before the trial judge that the operative orders of the Supreme Court of New South Wales giving any entitlement to payment on the part of the creditor were the orders of Justice Hamilton on 23 May 2006 (Affidavit of Paul Andrew Chapman sworn 9 November 2010, Annexures A and B) and the orders of the Supreme Court of New South Wales, Court of Appeal on 21 December 2009 (Affidavit of Paul Andrew Chapman sworn 9 November 2010, Annexure C) and not the document attached to the Bankruptcy Notice. 4 Although a number of other grounds were ventilated before Foster J, only one ground was pressed on appeal. His Honour outlined that ground at [7] as follows: (a) In the Bankruptcy Notice, the judgment which is the foundation of the Bankruptcy Notice is misdescribed in that, in the copy of the sealed orders made by the Supreme Court of New South Wales which is attached to the Bankruptcy Notice, the relevant orders are said to have been "made or given" on 23 July 2010 when, according to the applicant, no orders at all affecting him were made by that Court on that day. The applicant concedes, as he must, that orders were made on other occasions which do affect him. However, his simple point was that no orders were made on 23 July 2010 …. 5 The circumstances leading to this somewhat unusual submission appear at [22]-[27] of the judgment below. It seems that the matter arises out of two actions commenced in the Supreme Court of New South Wales - one in 1997 and one in 2002. After 103 days of hearing, Hamilton J delivered reasons for judgment on 29 November 2004 and made formal orders on 23 May 2006. Those orders were entered on 15 August 2006. An appeal and a cross-appeal resulted in some variations to those orders. The Court of Appeal published its reasons on 12 June 2009 and made orders varying those made by Hamilton J. However, the Court stayed the orders pending further submissions. On 21 December 2009, the Court of Appeal delivered further reasons and made orders which were entered on 21 December 2009. That date has also been changed. It was originally shown as 13 January 2010. The latter date still appears as the date of signing and sealing. 6 As to the consolidated orders, Foster J observed at [27]: On 23 July 2010, a Registrar of the Supreme Court of New South Wales caused to be entered the orders, a copy of which is attached to the Bankruptcy Notice. The terms of orders (3)(d), (3)(e) and (3)(f) of the orders entered on 23 July 2010 are identical to the terms of orders 3(d), 3(e) and 3(f) of the orders made by the Court of Appeal on 12 June 2009 which that Court, on 21 December 2009, had ordered be entered forthwith and which had, in fact, been entered on 21 December 2009. Thus, the Supreme Court entered orders (3)(d) to (3)(f) made on 12 June 2009 twice - once on 21 December 2009 and again on 23 July 2010. 7 We infer that the orders made by the Court of Appeal on 21 December 2009 were subsequently incorporated into the orders at first instance made on 23 May 2006, the Court of Appeal's orders having amended those orders. 8 The consolidated orders made on 23 July 2010 have not been set aside or varied. Indeed, as we understand it, no application has been made by any person to the Supreme Court of New South Wales to vary or set aside the consolidated orders. 9 As we have previously indicated, the ground of appeal is based upon an assertion that his Honour erred in determining the validity of the bankruptcy notice "upon a subjective basis in circumstances where the authorities required that he do so on an objective basis". The appellant's outline of submissions suggests that the source of this submission is the decision of the High Court in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 (Kleinwort Benson Australia). The reference appears to be to the statement made by Mason CJ, Wilson, Brennan and Gaudron JJ at 79-80, as follows: The authorities show that a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice …. In such cases the notice is a nullity whether or not the debtor in fact is misled …. 10 The notice of appeal does not identify the question required to be resolved upon an objective rather than a subjective basis save that it went to the validity of the bankruptcy notice. The primary judge understood the point to be that the bankruptcy notice did not satisfy the requirements of ss 41(1)(a)(i), 41(1)(d) and 41(2) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) because the consolidated orders included a reference to the "date made or given" said to be 23 July 2010 when the orders had not been made or given on that date and when no other final orders affecting the appellant had been made or given on that date. 11 It is true that reg 4.02 of the Bankruptcy Regulations 1996 (Cth) (the Regulations) prescribes the form of a bankruptcy notice and that the form provides for attachment of the final judgment or order pursuant to which the bankruptcy notice has been issued. The evidentiary burden which the appellant therefore undertook was to demonstrate either that the requirement as to form was not met by attachment of the consolidated judgment or that the bankruptcy notice was otherwise misleading on an objective basis. As to the question of compliance with the formal requirements of the Regulations, the bankruptcy notice was to state the amount claimed pursuant to the attached final judgment or order. The consolidated orders, on their face, are an order of the Supreme Court of New South Wales and so much has not been disputed. The consolidated orders assert that the appellant has a legal obligation to pay moneys amounting to the amount of the debt specified in the bankruptcy notice. On its face, accordingly, there has been compliance with the requirements as to form. 12 What the appellant actually seeks to do is to challenge the consolidated orders upon the sole basis that they were not made or given on 23 July 2010. The appellant did not seek to expand upon his submission by any reference to the Rules or Practice of the Supreme Court of New South Wales. Instead the appellant relied upon observations in the reasons for judgment of the Court of Appeal of New South Wales in Kation Pty Ltd v Lamru Pty Ltd; Lewis v Nortex Pty Ltd (in liq) (No 5) [2010] NSWCA 294 at [13]-[14] that a notice of motion seeking to correct the consolidated orders was "incorrect" insofar as it referred to orders entered on 23 July 2010 as the relevant orders had been made on 12 June 2009 and were directed to be entered on 21 December 2009. These observations were made in passing and not in the context of an application such as the present. 13 Part 36 of the Uniform Civil Procedure Rules 2005 (NSW) is relevant. Rule 36.1 provides: At any stage of proceedings, the court may give such judgment, or make such order, as the nature of the case requires, whether or not a claim for relief extending to that judgment or order is included in any originating process or notice of motion. 14 Rule 36.4 deals with the date upon which a judgment or order takes effect. It provides: (1) A judgment or order takes effect: (a) as of the date on which it is given or made; or (b) if the court orders that it not take effect until it is entered, as of the date on which it is entered. (2) Despite subrule (1), if an order of the court directs the payment of costs, and the costs are to be assessed, the order takes effect as of the date when the relevant cost assessor's certificate is filed. (3) Despite subrules (1) and (2), the court may order that a judgment or order is to take effect as of a date earlier or later than the date fixed by those sub-rules. 15 Finally, Rule 36.11 deals with the entry of judgments and orders. It provides: (1) Any judgment or order of the court is to be entered. (2) Unless the court orders otherwise, a judgment or order is taken to be entered when it is recorded in the court's computerised court record system. (2A) If the court directs that a judgment or order be entered forthwith, the judgment or order is taken to be entered: (a) when a document embodying the judgment or order is signed and sealed by a registrar; or (b) when the judgment or order is recorded as referred to in sub-rule (2), whichever first occurs. (3) In this rule, a reference to a judgment or order of the court includes a reference to any judgment, order, determination, decree, adjudication or award that has been filed or registered in the court, or of which a certificate has been filed or registered in the court, as referred to in section 133(2) of the Civil Procedure Act 2005. (4) This Rule does not limit the operation of rule 36.10. 16 Under s 133(1) of the Civil Procedure Act 2005 (NSW) a judgment or order of the court may not be enforced until it has been entered in accordance with the uniform rules. 17 Pursuant to s 157 of the Evidence Act 1995 (Cth): Evidence of a public document that is a judgment, act or other process of an Australian court or a foreign court, or that is a document lodged with an Australian court or a foreign court, may be adduced by producing a document that purports to be a copy of the public document and that: (a) is proved to be an examined copy; or (b) purports to be sealed with the seal of that court; or (c) purports to be signed by a judge, magistrate, registrar or other proper officer of that court. 18 There can be little doubt that the consolidated orders, a copy of which is attached to the bankruptcy notice, are a judgment of an Australian court. The judgment appears to be a photocopy of a sealed document, but in any event no point has been taken concerning the way in which the document has been proven. There can be no doubt that the document attached to the bankruptcy notice was a judgment as contemplated by the Regulations. It follows that there has been compliance with the formal requirements of the Bankruptcy Act and Regulations. 19 The appellant's real claim is that he is to be entitled to go behind the consolidated orders to demonstrate that the orders are in some way "void". It was pointed out to counsel in the course of argument that this attempt confronted considerable difficulty given that the Supreme Court of New South Wales is a superior court of record. That would not prevent a court exercising jurisdiction in bankruptcy from examining the circumstances in which the judgment came into being in order to determine whether or not there truly was a debt suitable to found a bankruptcy notice. However, it is clear that in the present case the appellant does not deny that he is indebted to the respondent pursuant to a judgment of the Supreme Court of New South Wales. His complaint is only that the debt was not owed pursuant to a judgment made or given on 23 July 2010. 20 That complaint is not open. The consolidated orders are regular on their face. They bear the seal of the Supreme Court of New South Wales and were made and entered as orders of that Court on 23 July 2010 and are thus enforceable in accordance with their terms. The fact that the consolidated orders involved the making and entry of orders already made and entered by the court does not render them void or unenforceable or as anything other than a made and entered order of the Supreme Court of New South Wales. And as Foster J said at [29] there is no doubt that the consolidated orders correctly reflect the orders previously entered. This, no doubt, is the reason for Foster J's observation, with which we agree, that the fact that the orders have been entered twice is "neither here nor there" (at [30]). Indeed, the only matter upon which we might depart from Foster J is his observation at [32] that the fact that the consolidated orders contain an incorrect statement of fact as to the date when the relevant orders were "made or given" is also immaterial. The fact is the Deputy Registrar did make and give the orders as consolidated. 21 The fact that the Deputy Registrar did so based on orders previously made and entered, we also would say, is neither here nor there. On this basis, and as the respondent submitted, there is no incorrect statement in the consolidated orders. They correctly reflect the dates on which they were made or given and entered. The notion that there has been a failure to comply with some essential requirement of the Bankruptcy Act is unsustainable. The essential requirements of s 41(1) of the Bankruptcy Act are met. The bankruptcy notice requires payments in accordance with the judgment, the judgment being the consolidated orders made and entered on 23 July 2010 which have not been set aside, varied or stayed. As the respondent submitted, the existence of orders founding the indebtedness is essential under s 41(1) of the Bankruptcy Act but the specification of the correct judgment date is not. Nothing in s 41 or otherwise would indicate to the contrary. Accordingly, Kleinwort Benson Australia provides no assistance to the appellant. 22 Even if it be otherwise, as Foster J also said at [32]-[34] the defect, if there be one, is a formal defect or irregularity such that s 306 of the Bankruptcy Act is engaged. This is not a case where the amount specified in the bankruptcy notice was otherwise than in fact due and payment was claimed in accordance with the judgment. The fact that the judgment in question is the consolidated orders, being sealed and entered orders of the Supreme Court of New South Wales, correctly reflecting the orders earlier made and entered, does not take the bankruptcy notice outside the scope of s 41(1) of the Bankruptcy Act. As Foster J said at [32], the creditor attached a copy of the sealed orders to the bankruptcy notice, it being no part of the creditor's function to alter or tamper with those orders. The exception to the provision in s 306 that proceedings under the Act are not invalidated by a formal defect or an irregularity, "unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court" cannot possibly be enlivened on the facts of the present case. The appellant was not and could not have been misled by the statement as to the date when the orders were made or given. 23 The appellant's submissions alleging error by Foster J in applying a subjective rather than objective test to the application of s 306 are unfounded. Foster J's finding at [34] that there was "no prospect that the [appellant] was misled by the statement in the relevant orders to the effect that they had been made on 23 July 2010" reflects the application of the objective test. 24 The appeal should be dismissed with costs. I certify that the preceding twenty four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Dowsett, Jagot and Yates.