Worchild v The Drink Nightclub

REASONS FOR JUDGMENT THE COURT: 1 On 25 January 2005 the appellant, a solicitor, was served with a bankruptcy notice. In it the respondents were named as 'the creditor'. Payment of the debt was directed to the address of the respondents' solicitors. The total debt owing was stated to be $24 000. The person who was said to have applied for the notice was one Ian Bisson. His name appeared above the words 'the creditor/the creditor's authorised agent'. His signature appeared below them. The notice was in the form required by the Regulations to the Bankruptcy Act 1966 (Cth) ('Bankruptcy Act') (Form 1, and see Regulation 4.02). 2 On 24 May 2004 Cooper J made an order for costs against the appellant and in favour of the respondents jointly. Taxation of costs followed. The amount certified was not paid by the appellant and an order pursuant to O 62 r 45(3) of the Federal Court Rules was made. That rule provides that where costs remain unpaid 14 days after taxation, the Registrar shall, at the request of the party in whose favour the costs are awarded, draw up, sign and seal an order in their favour. Such an order was made by a Deputy District Registrar on 26 November 2004. It recited the contents of the costs order made on 24 May 2004 and the fact of taxation in the sum of $24 000. The operative part of the order reads: 'THE COURT ORDERS THAT the applicant pay the sum of $24,000.00 to the respondents.' The appellant does not dispute that a copy of that order was attached to the bankruptcy notice. 3 The appellant applied to set the bankruptcy notice aside. The application was refused by a Deputy District Registrar on 13 May 2005 and an application to review that decision was dismissed by Dowsett J on 15 June 2005. 4 The appellant's first ground of appeal relies upon the decision of Lindgren J in Re St Leon; Ex parte National Australia Bank Limited (1994) 54 FCR 371 ('Re St Leon'). Section 41 of the Bankruptcy Act requires a bankruptcy notice to be in accordance with the prescribed form. Form 1 requires an address for the creditor to be stated in the notice. In Re St Leon the address of the creditor did not appear in the body of the bankruptcy notice. The creditor's solicitors' address appeared in another place on the document. The notice conveyed only that they were responsible for the preparation and filing of the document. The notice was held not to comply with the Bankruptcy Act because there was a total failure to state the creditor's address. In the present case, the respondents' solicitors address is clearly given as the respondents' address as creditors and as the address for payment. Dowsett J held that Re St Leon was of no relevance to the notice in this case. His Honour was clearly correct in that view. 5 The appellant's second ground is that the bankruptcy notice does not direct payment of the debt in accordance with the Court's order. The point taken before Dowsett J was that Cooper J's order for costs was made in favour of two individuals, so that there are, in effect, two orders. It is submitted that the order provided no warrant for a composite order following taxation. The appellant's submission misunderstands the nature of the original order for costs and taxation. As Dowsett J pointed out, there was one order for costs in favour of two respondents who both jointly enjoy its benefits. There is not the uncertainty contended for by the appellant as to how much he should pay and to whom payment should be directed. The order requires one payment of $24 000. Payment to one creditor would discharge any obligation to pay the other. 6 The appellant referred the Court to the decision In Re Wheeler [1982] 1 WLR 175 ('Wheeler') in connexion with this argument. That decision concerned orders for costs made on different occasions and whether they could be regarded as 'channelled' into one final order after taxation. The decision has been applied in Australia. Its correctness has also been doubted: Biritz v National Australia Bank Limited [2002] FCAFC 172; Commonwealth Bank of Australia v Horvath (Junior) [1999] FCA 143. The decision in Wheeler however has no application to the present case where there was one order for costs. 7 The finality of the order made following taxation was also a matter raised by the appellant in connexion with another ground of appeal. He contended that his Honour was wrong in finding that the copy of the judgment or certificate of assessed costs relied upon was not required to be attached to the bankruptcy notice. His Honour made no such finding for the reason that this issue was neither raised before his Honour nor the Deputy District Registrar. In any event the ground is misconceived. 8 A bankruptcy notice may be based upon a final judgment or final order of the kind described in s 40(1)(g) of the Bankruptcy Act, such as to found an act of bankruptcy: s 41(1)(a) Bankruptcy Act. A certificate of taxation is not such an order: Re Crump; Ex parte Crump (1891) 64 LT 799. It is not one for the payment of money. In any event a certificate is not required to be attached to a bankruptcy notice in Form 1. It is however essential that the judgment relied upon by the creditor as founding the bankruptcy notice be attached: Australian Steel Company (Operations) Pty Ltd v Lewis (2000) 109 FCR 33 ('Australian Steel') at [42]. Non-compliance with such a condition would invalidate the notice. 9 The appellant submits that the only order having the necessary finality, and the order which should have been attached to the bankruptcy notice, was Cooper J's order. He submits that the order which was attached, that of the Deputy District Registrar following taxation, does not qualify as a final order. It was not apparent to us how the appellant arrived at such a conclusion. 10 In our view the order of 26 November 2004 is a final order within the meaning of the Bankruptcy Act, one in which the respondents' rights were ascertained and given effect to. Unlike a mere Certificate of Taxation, an order made under O 62 r 45(3) of the Federal Court Rules directs the payment of money. This was a feature absent in Re Walker; Ex parte Noble Einsiedel Pty Ltd [1992] FCA 327, a decision of Northrop J of 16 April 1992 at p 4. A purpose of the rule is to permit enforcement and execution under the order. The latter is an important element in determining whether an order is final or not: Pepper v McNiece (1941) 64 CLR 642 at 657. In Re Draper; Ex parte Australian Society of Accountants, an unreported decision of 3 February 1989, von Doussa J held that an order made under the rule was final, within the meaning of s 40(1)(g) of the Bankruptcy Act. In his Honour's view, if there be any doubt about that, it is removed by the provisions of s 40(3)(b) of the Bankruptcy Act, as the orders are ones which can be enforced as final judgments. See also Re Luckins; Ex parte Columbia Pictures Industries & Anor (1996) 67 FCR 549, a decision of Beaumont J at p 559. 11 The appellant also contended that the costs order was made in favour of 'Bill Cross' whereas reference has been made at other points in Court proceedings to 'Billy Cross', which he assumes is an alias of Bill Cross. He says this is misleading. There is nothing in the point. We are surprised that a legal practitioner would seriously raise it. As Dowsett J pointed out, the name in the bankruptcy notice is the same as that in the order. 12 The next ground of appeal is that the notice fails to notify the appellant that he may secure or compound the debt to the satisfaction of the creditors' agent. The point argued before his Honour was that, whilst the notice offers the appellant the opportunity to pay or make an arrangement to the creditors' satisfaction, it did not identify a separate address to contact them. The appellant argued that this was necessary because the respondents' solicitors might not have authority to negotiate. However the notice follows the form required by the Regulations. There can be no confusion about where payment is to be made or how the respondents may be contacted with respect to any proposed arrangement. The point now sought to be made by the appellant is that there should appear in the notice advice to the effect that the respondents' solicitors could themselves accept the securing or compounding of the debt on behalf of the respondent. There is no such requirement. 13 The appellant also argued before his Honour, and on appeal, that the failure to delete either of 'the creditor' or 'the creditor's authorised agent' before the reference to Mr Bisson invalidates the notice. The form requires that one be deleted as appropriate. This would not appear to us to be an essential requirement, in the sense referred to in Australian Steel and Project Blue Sky Inc v Australia Broadcasting Authority (1998) 194 CLR 355. It could not be inferred that a failure to cross out a reference to one of the two alternatives, to a creditor or to their agent, was intended to invalidate a notice. The purpose of this part of the form is to identify the person who applied for the notice to be issued. It does not touch upon the debtor's rights or involve the withholding of critical information. It will be apparent from other parts of the form whether the person named is the creditor. Further, in our view, there can be no suggestion that the notice here was misleading, as his Honour held. 14 The seventh ground of appeal reads: 'His Honour misdirected himself in that he failed to contemplate if the identified defects were not essential by the Act they could still reasonably mislead the debtor in the alternative.' 15 Before his Honour it was suggested that an aggregation of the appellant's complaints creates a basis for saying he may have been confused or misled by the notice. There is nothing in the point. 16 The last ground of appeal reiterates some of the preceding grounds. The only additional reference in it is that 'the debt was liquidated'. This is no more than a reference to the fact that it was an ascertained sum. 17 The appellant also sought leave to amend his notice of appeal to add three further grounds: '9. His Honour erred in failing to make a decision or giving reasons in relation to the application seeking an extension for time for compliance with the Bankruptcy Notice. 10. His Honour erred in holding that the order of the Federal Court was a final judgment or order with the meaning of the act. 11. His Honour failed to appreciate that security for costs is required to contest costs.' 18 The appellants' proposed 9th ground is that his Honour failed to deal with the application for an extension of time for compliance with the bankruptcy notice. A review of the hearing transcripts however discloses that the matter was argued before his Honour, unsuccessfully, as a discrete application when the matter came on for directions on 3 June 2005. It was not sought to re-argue it when the application to set aside the notice was later heard by his Honour and it forms no part of the orders appealed from. We would add that there would not appear to be any basis for the making of such an order in the circumstances of this case. The appellant appears to consider that he is automatically entitled by s 41(6A) of the Bankruptcy Act to an extension of time to comply with the bankruptcy notice in the event that it is found valid. He sees it operating as a stay whilst he considers his position. The power to extend is however a discretionary one. The appellant has filed no material to explain why an extension should be granted. The points taken by the appellant in order to have the notice set aside were technical and groundless. They would not suggest that the application was brought bona fide, a matter most relevant to the exercise of the discretion. 19 The proposed ground 10 has been dealt with elsewhere in these reasons. That numbered 11 refers to his Honour's order granting liberty to apply with respect to the costs of the proceedings before the Deputy District Registrar. The order was unexceptional and is not in any event relevant to the question whether the notice should have been set aside. 20 Leave to amend the notice of appeal is therefore refused. The appeal will be dismissed with costs. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Kiefel, Jacobson and Greenwood.