FEDERAL COURT OF AUSTRALIA Sarks v Cassegrain [2015] FCAFC 38 Citation: Sarks v Cassegrain [2015] FCAFC 38 Appeal from: Sarks v Cassegrain [2014] FCA 972 Parties: ANTHONY BLAKE SARKS v DENIS CASSEGRAIN, CATHERINE DUNN, PATRICK CASSEGRAIN and JOHN CASSEGRAIN File number: NSD 961 of 2014 Parties: CLAUDE CASSEGRAIN v DENIS CASSEGRAIN, CATHERINE DUNN, PATRICK CASSEGRAIN and JOHN CASSEGRAIN File number: NSD 963 of 2014 Judges: EDMONDS, PAGONE AND GLEESON JJ Date of judgment: 19 March 2015 Catchwords: PRACTICE AND PROCEDURE – BANKRUPTCY AND INSOLVENCY – Judgments and Orders – whether order final or interlocutory for the purposes of s 40(1)(g) Bankruptcy Act 1966 (Cth) – where orders contain declaration of liability but damages to be assessed by an inquiry – whether declaration of liability final order for the purposes of issuing a bankruptcy notice or merely interlocutory pending final determination of quantum by inquiry PRACTICE AND PROCEDURE – Judgments and Orders – whether costs order stayed until conclusion of proceedings – where orders contain declaration of liability but damages to be assessed by an inquiry whether proceedings concluded for the purposes of r 42.7(2) Uniform Civil Procedure Rules 2005 (NSW) BANKRUPTCY AND INSOLVENCY – whether costs determination "judgment" for the purposes of s 40(1)(g) Bankruptcy Act 1966 (Cth) – whether determination of costs deemed to be a judgment for the purposes of issuing a bankruptcy notice Legislation: Bankruptcy Act 1966 (Cth) ss 40, 41 Legal Profession Act 2004 (NSW) s 368 Civil Procedure Act 2005 (NSW) s 101 Federal Court Rules 2011 r 40.13 Uniform Civil Procedure Rules 2005 (NSW) r 42.7 Cases cited: Abigroup Ltd v Abignano (1992) 39 FCR 74 cited Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201 cited Bailey v Marinoff (1971) 125 CLR 529 cited Carantinos v Magafas [2008] NSWCA 304 considered Derrawee Pastoral Company Pty Limited v McConochie [1995] NSWCA 123 considered Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172 cited Hurstville City Council v Renaldo Plus 3 Pty Ltd [2006] NSWCA 248 cited Juul v Northey [2010] NSWCA 211 considered Ku-Ring-Gai Municipal Council v Bonnici [2002] NSWCA 313 cited Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146 considered Phillips v Walsh (1990) 20 NSWLR 210 cited Qu v Kuang [2008] NSWSC 991 cited Roads and Traffic Authority of New South Wales v Palmer (No 2) [2005] NSWCA 140 cited Worchild v The Drink Nightclub (Qld) Pty Limited (2005) 224 ALR 339 followed Date of hearing: 11 February 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 47 Counsel for the Appellant: Mr MLD Einfeld QC with Mr P Bolster Solicitor for the Appellant: Oliveri Lawyers Counsel for the Respondents: Mr M Ashhurst SC with Mr GB Colyer Solicitor for the Respondents: McCabes Lawyers IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 961 of 2014 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: ANTHONY BLAKE SARKS Appellant AND: DENIS CASSEGRAIN First Respondent CATHERINE DUNN Second Respondent PATRICK CASSEGRAIN Third Respondent JOHN CASSEGRAIN Fourth Respondent JUDGES: EDMONDS, PAGONE AND GLEESON JJ DATE OF ORDER: 19 MARCH 2015 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondents' costs, as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 963 of 2014 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: CLAUDE CASSEGRAIN Appellant AND: DENIS CASSEGRAIN First Respondent CATHERINE DUNN Second Respondent PATRICK CASSEGRAIN Third Respondent JOHN CASSEGRAIN Fourth Respondent JUDGES: EDMONDS, PAGONE AND GLEESON JJ DATE OF ORDER: 19 MARCH 2015 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The appellant pay the respondents' costs, as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 961 of 2014 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: ANTHONY BLAKE SARKS Appellant AND: DENIS CASSEGRAIN First Respondent CATHERINE DUNN Second Respondent PATRICK CASSEGRAIN Third Respondent JOHN CASSEGRAIN Fourth Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 963 of 2014 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: claude cassegrain Appellant AND: DENIS CASSEGRAIN First Respondent CATHERINE DUNN Second Respondent PATRICK CASSEGRAIN Third Respondent JOHN CASSEGRAIN Fourth Respondent JUDGES: EDMONDS, PAGONE AND GLEESON JJ DATE: 19 MARCH 2015 PLACE: SYDNEY REASONS FOR JUDGMENT EDMONDS AND GLEESON JJ: 1 These are appeals from the judgment of a judge of this Court dismissing applications to set aside bankruptcy notices issued in reliance on s 40(1)(g) of the Bankruptcy Act 1966 (Cth) ("Bankruptcy Act") and served on each of the appellants on 24 June 2014. Background 2 On 27 April 2012, Bergin CJ in Equity published her Honour's reasons for judgment in Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors [2012] NSWSC 403. There were competing claims as to the orders to be made. Submissions were thereafter filed. On 24 July 2012, her Honour published further reasons "in respect of the final orders to be made consequent upon the delivery of my judgment in this matter on 27 April 2012" (emphasis added): Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors (2012) 264 FLR 392 at [1]. The Declarations and Orders then made were entered on that date. 3 Declaration 10 made on 24 July 2012 was as follows: 10. Claude Cassegrain, Anthony Sarks and Felicity Cassegrain are jointly and severally liable to compensate Gerard Cassegrain & Co Pty Limited for any loss to Gerard Cassegrain & Co Pty Limited arising from the transfer of Gerard Cassegrain & Co Pty Limited's shares in CaTTO and OAL to Felicity Cassegrain on 19 and 20 January 2005 respectively. 4 Orders 16 to 19 inclusive made on 24 July 2012 were as follows: 16. Claude Cassegrain, Anthony Sarks and Felicity Cassegrain pay the Plaintiffs' costs of the statutory derivative and oppression proceedings concerning Gerard Cassegrain & Co Pty Limited on a party/party basis. 17. An Inquiry be held as to the existence and quantum of any loss to Gerard Cassegrain & Co Pty Limited by reason of the transfer of Gerard Cassegrain & Co Pty Limited's shares in CaTTO and OAL to Felicity Cassegrain for the purpose of making orders for equitable compensation to be paid to Gerard Cassegrain & Co Limited by Claude Cassegrain, Anthony Sarks and Felicity Cassegrain. That Inquiry is to include the assessment of any damage to Gerard Cassegrain & Co Pty Limited by reason of the contraventions of ss 180, 181(1) and 182(1) of the Corporations Act 2001 by Claude Cassegrain and Anthony Sarks (including any profits made by Claude Cassegrain and/or Anthony Sarks resulting from the contraventions) referred to in Declarations 5 and 6 and the determination of any amount of compensation to be ordered under s 1317H of the Corporations Act 2001 against Claude Cassegrain and Anthony Sarks. 18. The parties are granted liberty to restore the matter to the List for the purposes of the management of the preparation for the Inquiry. 19. These Declarations and Orders are to be entered forthwith. 5 Pursuant to Order 16, costs were thereafter assessed and two judgments/orders for costs were made and entered, the first on 18 December 2013 in the sum of $1,399,870.71; the second on 16 May 2014 in the sum of $2,662.00. 6 On 23 October 2012, Mr Claude Cassegrain and Mr Anthony Sarks filed a notice of appeal. The appeal was expressed to be "brought from the whole of the Judgment of Bergin CJ in Eq delivered on 27 April 2012 and the Orders made by her Honour on 24 July 2012". Appeal Ground 14 stated that the "primary judge erred in making the consequential orders numbered 12–17 made by her on 30 July 2012". That appeal was heard together with two other appeals also filed in respect of the decision of Bergin CJ in Eq on 20 December 2012. The Court of Appeal dismissed the appeal filed by Mr Claude Cassegrain and Mr Anthony Sarks: Gerard Cassegrain & Co Pty Ltd (in liq) v Cassegrain (2013) 305 ALR 687. An application for special leave to appeal to the High Court of Australia was filed on 17 January 2014 but discontinued on 14 February 2014. 7 The costs ordered to be paid by Bergin CJ in Eq were not paid. 8 On 24 June 2014, Mr Anthony Sarks was served with a bankruptcy notice, issued on 18 June 2014, claiming a total debt of $1,461,682.70. The sum of $1,461,682.70 represented the combined amount of the two costs judgments/orders (i.e., $1,402,532.71) in [5] above, together with a further amount of $59,149.99 (being interest payable pursuant to s 101 of the Civil Procedure Act 2005 (NSW)). Also on the same day, Mr Claude Cassegrain was served with a bankruptcy notice issued on 18 June 2014. The bankruptcy notice served on Mr Claude Cassegrain claimed a total debt of $1,546,781.09. Nothing turns on the difference in the amounts being claimed. 9 On 14 July 2014, two separate applications were filed in this Court, one by Mr Anthony Sarks; the other by Mr Claude Cassegrain. Each application sought to have the bankruptcy notice set aside. Both applications were heard together. BEFORE THE Primary Judge 10 According to the primary judge (at [7] of his Honour's reasons for judgment ("R")), the arguments advanced on behalf of both Messrs Anthony Sarks and Claude Cassegrain were that: (1) The orders relied upon are not "final" orders; (2) the amounts claimed "are not presently payable" by reason of the operation of r 42.7 of the Uniform Civil Procedure Rules 2005 (NSW) ("UCPR"), that contention being that until an order is made for the payment of equitable compensation in an amount determined by the Inquiry contemplated by Order 17, there has been no "conclusion" of the proceeding before Bergin CJ in Eq; and (3) the bankruptcy notices were not founded upon a final "judgment". 11 The primary judge rejected all three arguments for the reasons summarised below. First Argument 12 The primary judge noted at R [8] that it was common ground that s 40(1)(g) of the Bankruptcy Act requires a bankruptcy notice to be relevantly founded upon "a final judgment or final order". Section 40 sets out the various ways in which a debtor may commit an "act of bankruptcy", including s 40(1)(g) which provides as follows: A debtor commits an act of bankruptcy in each of the following cases: … (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: … comply with the requirements of the notice … 13 Relevant to the construction and application of s 40(1)(g) and to one or more of the arguments raised by the appellants below, are the following provisions of the Bankruptcy Act: (1) Section 40(3)(b): For the purposes of paragraph (1)(g): (a) … (b) a judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action shall be deemed to be a final judgment so obtained and the proceeding in which, or in consequence of which, the judgment or order was obtained shall be deemed to be the action in which it was obtained. (2) Section 41(1), (2) and (3): (1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor: (a) a final judgment or final order that: (i) is of the kind described in paragraph 40(1)(g); and (ii) … … (2) The notice must be in accordance with the form prescribed by the regulations. (3) A bankruptcy notice shall not be issued in relation to a debtor: (a) except on the application of a creditor who has obtained against the debtor a final judgment or final order within the meaning of paragraph 40(1)(g) … (b) if, at the time of the application for the issue of the bankruptcy notice, execution of a judgment or order to which it relates has been stayed; … 14 At R [13], the primary judge noted that it was also common ground that orders made by a court of equity may be regarded as final even though further proceedings may be required, such as the holding of an inquiry. His Honour referred to what was said by Handley JA in Derrawee Pastoral Company Pty Limited v McConochie [1995] NSWCA 123 at 2–3 where the question was whether an order was final or interlocutory for the purposes of an appeal. 15 The primary judge noted reliance on what Handley JA said in Derrawee Pastoral by Brereton J in Qu v Kuang [2008] NSWSC 991 at [7]: [A]lthough at common law a judgment for damages to be assessed is interlocutory and the subsequent judgment quantifying those damages is regarded as the final judgment; in equity, a judgment on liability with a reference for an inquiry is regarded as a final judgment, and the decision on the subsequent inquiry is regarded as interlocutory [see Spencer Bower, Res Judicata, 3rd Ed (1996) Butterworths, London, [159]; cited in Brunninghausen v Glavanics (1999) 46 NSWLR 538, 562 [122] (Handley JA); Kara Kar Holdings Pty Ltd v Brookton Holdings Ltd (NSWCA, 27 March 1997, unreported); Derrawee Pastoral Co Pty Ltd v McConochie (NSWCA, Handley JA, 24 February 1995, unreported); Bromley v Forestry Commission of NSW [2003] NSWCA 252, [13]; Pollicino v Pollicino [2000] NSWCA 4, [2], [7]; Meeha[n] v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146, [35]]. 16 At R [15] and [16], the primary judge referred to the submission made on behalf of the appellants that different considerations applied where the orders made by a court of equity contemplated the reservation to the court of matters which require "further consideration" by the court, and contained no order for payment of any amount. In support of this submission, the appellants relied on the observations of three NSW Judges of Appeal in different cases: (1) Meehan v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146 at [33] and [34] per Giles JA (with whom Sheller and Beazley JJA agreed): [33] If order 4 had ordered no more than the taking of accounts, and the orders made on 18 March 1998 had included that the proceedings be adjourned for further consideration, it could readily enough be said that order 4 did not determine Glazier's claim for relief and was interlocutory. The composite claim to relief had two stages, and its culmination was the order that money be paid. Until the order that money be paid there would not be "a perfect judgment" … [34] But order 4 was not in that form … As the primary judge observed at R [15], the contrast sought to be emphasised by the appellants between that order and Order 17 made by Bergin CJ in Eq was that Order 4 was itself an order to pay an amount found to be due; Order 17 provided for the making of a further order. Order 4 in Meehan, it was concluded, was a final order. (2) Carantinos v Magafas [2008] NSWCA 304 at [145]–[147]. At [145], Campbell JA said: At first instance in Meehan v Glazier Holdings the trial judge had made an order for the taking of accounts (in common form) of a trustee, and for the trustee to pay the amount found due on the taking of those accounts … When later inquiries revealed what was thought to be a basis for the taking of accounts on the basis of wilful default or neglect, the trial judge made an order varying his initial order, so that the account was to be taken on the basis of wilful default and neglect, and the amount so found due be paid (at [20]). The substantial reason why Giles JA held that there was no power to make that variation was that the order for taking accounts in common form and payment of the amount so found due was a final order, that had been entered, and so could not be changed (at [31]-[45]). If the order had been for the taking of accounts on the common basis, with reservation of further consideration, and no order for payment of any amount, the order would have been interlocutory, so far as the basis upon which any payment ought ultimately be made was concerned, and so might have been changed. (Original Emphasis.) (3) Juul v Northey [2010] NSWCA 211 at [194] and [195]. At [194], McColl JA said: An order that an account be taken and that the defendant pay the amount found to be due on the taking of such accounts, particularly one which has been entered, will constitute a final order which cannot thereafter be varied: Meehan (at [23], [34], [45]). However an order merely for the taking of accounts, under which the proceedings are adjourned for further consideration will not determine the plaintiff's claim for relief and is characterised as an interlocutory order – it will not be a "perfect judgment" until an order that money be paid: Meehan (at [33]); see also Carantinos v Magafas [2008] NSWCA 304 (at [145]) per Campbell JA. However, that does not mean the earlier hearing lacks any binding quality. The fact that issues have been reserved for further consideration does not mean that any such decision in so far as it decided "the rights of the parties" can be overturned or varied as a consequence of the inquiry or the further consideration of the matter; the judge cannot review and reconsider what he or she has decided at an earlier hearing: Carantinos (at [147]) per Campbell JA referring to Australian Hardboards Limited v Hudson Investment Group Ltd [2007] NSWCA 104; (2007); 70 NSWLR 201 (at [73]) and cases there cited; see also Handley AJA (at [165]-[166]). 17 At R [17], the primary judge concluded: Notwithstanding the form of Order 17 as made by Bergin CJ in Eq on 24 July 2012, the Orders then made were final Orders, which completely resolved the Plaintiffs' claims to relief. Order 10 of the Orders provided that (inter alia) Messrs Claude Cassegrain and Sarks were "jointly and severally liable for any loss…"; Order 17 provided for the holding of an inquiry to determine the quantum of any such loss. Order 17, it is concluded, is not the reservation to the Court of any power of reconsideration. The case before Bergin CJ in Eq presented none of the "unresolved questions" of the kind that warranted the variation of orders as made in Carantinos. Order 17 was but a means of "working out" the quantum of "any loss" (cf. Derrawee Pastoral). As such, the orders are final orders. The fact that Order 17 expressly contemplated the making of "orders for equitable compensation" after the holding of an inquiry did not render the remaining orders – and Order 16 in particular – any the less "final.". Second Argument 18 This argument had as its fulcrum that the proceeding before Bergin CJ in Eq had not been "concluded" for the purposes of r 42.7(2) of the UCPR. 19 Rule 42.7 of the UCPR provides: Interlocutory applications and reserved costs (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings. 20 The primary judge made certain observations concerning the contrast between this rule and r 40.13 of the Federal Court Rules 2011 at R [20]. 21 At R [21], the primary judge noted the contention on behalf of the appellants that for the purposes of r 42.7 of the UCPR, the Orders made on 17 and 24 July 2012 were but a "step" in the proceeding. His Honour said: That proceeding, it was further submitted, had not been "concluded" until the inquiry was undertaken and orders made for the payment of such equitable compensation as may be found to be payable as a result of the inquiry. 22 Ultimately, the primary judge rejected the argument founded upon r 42.7 "for either of at least two reasons": (1) First, his Honour said that there was no reason to construe the phrase "until the conclusion of the proceedings" as meaning anything other than when final orders have been made. At R [25] his Honour said: [25] … When final orders had been made, the proceeding in which the competing rights of the parties were advanced for resolution has "concluded". The liabilities of the parties were resolved by the decision of Bergin CJ in Eq and by the dismissal of the appeal from her Honour's decision. And that liability included the liability to pay costs. That part of the proceedings, in particular, in which orders were made for the payment of costs has "concluded". The orders made by Bergin CJ in Eq cannot be properly characterised as a mere "step in any proceeding" with the "conclusion of the proceeding" only occurring once the inquiry has been undertaken. The liability of the parties on the issues as agitated at first instance and on appeal has been "concluded". The purpose of r 42.7(1), it is respectfully concluded, is not to defer the finality of a costs order made in equity proceeding until such time as an "inquiry" may thereafter be concluded and a further order made. (2) Second, his Honour said that r 42.7 should most probably be construed as referring to orders in the nature of interlocutory orders. In his Honour's words at R [26]: To so construe the phrase gives effect to the circumstances in which the discretion has been exercised to order "otherwise" or to make an order that costs be payable "forthwith". To give r 42.7 any wider operation would not seem to promote the object and purpose sought to be achieved by the rule. His Honour expressed this view "as no more than a tentative view" as it was "unnecessary to express any more certain conclusion". 23 The primary judge's ultimate conclusion on this second argument was stated at R [27]: Rule 42.7 does not provide any reason for concluding that the costs ordered to be paid are not presently "payable" and do not constitute a "final … order" for the purposes of s 40(1)(g) of the Bankruptcy Act. Nor does r 42.7 operate as a "stay" upon the order for costs previously made. Third Argument 24 The third argument advanced on behalf of the appellants before the primary judge was that the "judgments" relied upon in issuing the bankruptcy notices were not in fact "judgments" for the purposes of s 40(1)(g). 25 The form of the "judgment(s)/order(s) "annexed to the two bankruptcy notices in the present proceeding were judgments/orders entered after an assessment as to costs and a review process was conducted. In the primary judge's words at R [31]–[33]: [31] … In January 2013, requests were made for an assessment as to the party/party costs ordered by Bergin CJ in Eq pursuant to s 353 of the Legal Profession Act 2004 (NSW) (the "Legal Profession Act"). In December 2013 certificates of determination were issued. The Supreme Court thereafter made and entered judgments/orders in December 2013. In January 2014, a request was then made for a review of those determinations. In May 2014 a costs review panel issued certificates of determination affirming those costs determinations. [32] Such judgments or orders, it is said, was but a "ministerial act" which took its "force from the statute" and could not be regarded as a "judgment" of the court for the purposes of s 40(1)(g) of the Bankruptcy Act. [33] In the present statutory context, s 368 of the Legal Profession Act provides that a costs assessor is to issue a certificate in respect to a determination made as to costs. Rule 36.10(1) of the Uniform Civil Procedure Rules thereafter provides that a cost assessor's certificate may be "filed in the proceeding to which it relates". Section 368(5) provides: In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed. Emphasis is placed by the Applicants upon the phrase "taken to be a judgment". 26 The primary judge identified the source of the appellants' submission as being what was said by Giles JA in Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172 at [8] in commenting upon a predecessor provision to s 368: [U]nder s 208KF(2) of the Legal Profession Act 1987 (since repealed, see now s 368(5) of the Legal Profession Act 2004) on the filing of the review panel's certificate it was taken to be a judgment of the District Court. In truth, there was no District Court judgment. So-called judgments under s 208J(3) of the 1987 Act, which is relevantly replicated in s 208KF(2), have been considered in Doyle v Hall Chadwick [2007] NSWCA 159 at [47-[54] and cases there mentioned, with recognition of their distinct nature, and while reference to them as judgments is convenient (and I will hereafter refer to the District Court judgment as such) they take their force from the statute and are not judgments of the court. 27 But the primary judge went on to observe (at R [34]) that nothing said in that case touched upon whether a certificate of a determination as to costs that is "taken to be a judgment" may not constitute a "judgment" for the purposes of s 40(1)(g) of the Bankruptcy Act. Nothing said in that decision precludes a conclusion that something which is to be "taken to be a judgment" may not constitute a "judgment" for the purposes of s 40(1)(g). 28 Finally, in relation to this third argument, the primary judge said at R [35]: Moreover, and notwithstanding the fact that each of the Bankruptcy Notices annexed as the "judgment/order" that which is to be "taken to be a judgment" of the Court by reason of s 368(5), each of the Bankruptcy Notices is ultimately founded upon the orders made by Bergin CJ in Eq on 16 May 2014. And those orders constituted "final orders" for the purposes of s 40(1)(g). The "judgment(s)/order(s)" attached to each of the Bankruptcy Notice were but the quantification of the amounts claimed in respect to those costs ordered to be paid by Bergin CJ in Eq. Whether or not such "judgments" had been entered as a "ministerial" process, each quantified the amount of monies payable pursuant to the "final orders" previously made. 29 For these reasons, the primary judge also rejected this third argument. The Appeal to this Court 30 The same three arguments were advanced by the appellants on their appeal to this Court, although the appellants' written submissions in reply sought to support the third argument on the alternative basis that failure to attach the orders of Bergin CJ in Eq made and entered on 24 July 2012 to the bankruptcy notices invalidated them; if there were any "final" orders founding the bankruptcy notices it was those orders, not the two judgments/orders for costs referred to in [5] above attached to the bankruptcy notices, so the submission went. We return to this below. 31 During the course or argument, it was put to senior counsel for the appellants, that if this Court were of the view that the orders made by Bergin CJ in Eq on 24 July 2013 were final orders, do the appellants concede that the proceedings are concluded for the purposes of r 42.7 of the UCPR? (T 7.44–8.23). The response was "not necessarily"; the explication of this response was put in the following way (T 8.35–8.43): If it be accepted that the orders relating to the substantive liability of the appellants were final, then the answer to your Honour's question is yes so that … if the declaration as to liability, which I think is paragraph 10 and the order for the inquiry [paragraph 17] and what's to happen after the date upon which those orders were pronounced are to be treated as final, as his Honour found they were, then the answer to your Honour's question is yes. We would accept that the proceedings have concluded. The mere fact, however, that the costs order is a final order does not mean that the proceedings as a whole have concluded. In our view, the concession, and the premise upon which it was made, is undoubtedly correct. When proceedings have been disposed of by a final order which has been entered (as here), the proceedings are at an end: Bailey v Marinoff (1971) 125 CLR 529 at 530 (Barwick CJ); Hurstville City Council v Renaldo Plus 3 Pty Ltd [2006] NSWCA 248 at [95] (Tobias JA, Mason P and Hodgson JA agreeing); Roads and Traffic Authority of New South Wales v Palmer (No 2) [2005] NSWCA 140 (Giles JA, Spigelman CJ and Handley JA agreeing); Ku-Ring-Gai Municipal Council v Bonnici [2002] NSWCA 313 at [18] (Meagher JA; Sheller and Santow JJA agreeing). First Argument 32 In our view, all the orders made by Bergin CJ in Eq on 24 July 2012 were final orders. 33 In the case of the declaration as to liability (Order 10) and the costs order (Order 16), there can be, and there is, no argument to the contrary. 34 The only paragraph where there might be room for argument is Order 17. The appellants contended on the appeal that because this order did not contain an order for the appellants to pay the quantum of equitable compensation which the Inquiry found should be paid to Gerard Cassegrain & Co Pty Limited, but left that to further order, Order 17 was not itself a final order. This contention was put on the basis of the observations of the three NSW Judges of Appeal referred to in [16] above. 35 In our view, this contention misconceives what their Honours were saying in the cases referred to in [16] above, and ignores the context in which Order 17 was made, namely, that liability of the appellant was finally determined by Order 10 of the same orders. In Meehan, Giles JA drew a contrast between two forms of order, neither of which is relevantly the same as the orders made by Bergin CJ in Eq. In Carantinos and Juuls, unlike the orders 10 and 17, the orders explicitly revealed that further judicial consideration was required. 36 If Order 17 of Bergin CJ in Eq's orders made on 24 July 2012 had adjourned the matter for further consideration pending an inquiry and made no declaration of liability then, on the basis of their Honours' observations in Meehan, Carantinos and Juuls, Order 17 would be interlocutory and not final. But that is not this case. There is no reservation for further consideration; on the contrary, there is a final declaration of liability: Order 10. It is true that Order 17 contains no order for payment of the quantum of equitable compensation to be paid found by the Inquiry, but that is a mere step in giving effect to the final order on liability. The power to make orders concerning the "working out" or implementation of Order 17 does not detract from the finality of the order: Phillips v Walsh (1990) 20 NSWLR 210 at 209 to 210; Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201 at [50] (Campbell JA, Tobias JA agreeing); Abigroup Ltd v Abignano (1992) 39 FCR 74 at 88. It does not impede or otherwise inhibit the conclusion that Order 17 of Bergin CJ in Eq's orders of 24 July 2012 is itself a final order. All that is left outstanding is quantification of the liability. 37 For these reasons, we agree with the primary judge's conclusion to reject the first argument. Second Argument 38 It follows that, on the basis of the appellants' concession referred to in [31] above, we also agree with the primary judge that this argument must be rejected. Third Argument 39 In our view, this argument is totally misconceived. The fact the judgments/orders entered after an assessment as to costs and a review process was conducted are not judgments of the court and take their force from statute – s 368(5) of the Legal Profession Act 2004 (NSW) – and are merely taken to be a judgment of [the] court" in the registry of which the certificate of costs is filed – no longer means, if it ever did, that it cannot found a bankruptcy notice in reliance on s 40(1)(g). The judgments/orders attached to the bankruptcy notices are not mere certificates of taxation; while "the entry of judgment on a filed certificate is a ministerial act[,] [i]t makes the certificate enforceable as a judgment": per Handley JA in Frumar at [42]. By s 40(3)(b) of the Bankruptcy Act, it is deemed to be a final judgment obtained in an action. 40 So much is to be drawn from what the Full Court said in Worchild v The Drink Nightclub (Qld) Pty Limited (2005) 224 ALR 339, an authority on which the appellants relied at [8]–[10]: [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 [the Deputy District Registrar] 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. 41 While the court was there concerned with an order made under this Court's rules, there is no reason to distinguish the judgments/orders made on the certificate for costs in the present case. Conclusion 42 The appeal must be dismissed with costs. I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Edmonds and Gleeson. Associate: Dated: 19 March 2015 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 961 of 2014 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: ANTHONY BLAKE SARKS Appellant AND: DENIS CASSEGRAIN First Respondent CATHERINE DUNN Second Respondent PATRICK CASSEGRAIN Third Respondent JOHN CASSEGRAIN Fourth Respondent IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 963 of 2014 ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA BETWEEN: CLAUDE CASSEGRAIN Appellant AND: DENIS CASSEGRAIN First Respondent CATHERINE DUNN Second Respondent PATRICK CASSEGRAIN Third Respondent JOHN CASSEGRAIN Fourth Respondent JUDGES: EDMONDS, PAGONE AND GLEESON JJ DATE: 19 MARCH 2015 PLACE: SYDNEY REASONS FOR JUDGMENT PAGONE J: 43 I have had the advantage of reading the joint reasons for judgment of Edmonds and Gleeson JJ and respectfully agree with their Honours in all but one respect. I have a different view in relation to the second argument put by the appellants and, more particularly, about the concession made by senior counsel in argument. 44 The issue engaged by the appellants' second argument concerns the extent to which the finality of orders determine whether the proceedings are concluded for the purposes of r 42.7(2) of the Uniform Civil Procedure Rules 2005 (NSW). Rule 42.7 provides: 42.7 Interlocutory applications and reserved costs (1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including: (a) costs that are reserved, and (b) costs in respect of any such application or step in respect of which no order as to costs is made, are to be paid and otherwise dealt with in the same way as the general costs of the proceedings. (2) Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings. Counsel for Cassegrain argued that the relevant inquiry for the purposes of the application of the rule was whether the proceedings in question had concluded. That was because r 47.2(2) provides that costs orders do not, unless otherwise ordered, become payable "until the conclusion of the proceedings". Counsel for the appellant argued that the combined effect of orders 10 and 17 made by Bergin CJ on 24 July 2012, and in particular order 17, necessarily required something more to occur in the proceeding which meant that it had not concluded for the purposes of rule 42.7(2). 45 It was in that context that counsel for the appellant was asked by the court during the hearing of the appeal whether it was accepted by the appellants that the proceedings had concluded if order 17 was found to be a final order. The essential part of the response made by senior counsel for the appellants is set out in the joint judgment but it may be desirable to set out more of the exchange between bench and bar from the transcript between T7 line 44 and T9 line 44: EDMONDS J: Do you accept that – or do you not accept that if the court was to find that the orders made by her Honour were – we were of the view that they were final orders, that the proceedings had concluded? MR EINFELD: Not – with a slight adjustment, if I may be permitted, to the question. The question is whether the proceeding – the question is whether the proceedings concluded and, therefore, the questions will be – well, there might be some final orders. The question is whether the substantive orders, that is, the orders addressing this question of the liability of our clients to pay our friend's clients, are final. Yes. EDMONDS J: But if – well, I will rephrase it. Court were to find that the relevant orders which her Honour made – I will just get the date – 24 July ..... MR EINFELD: ..... come. Yes. EDMONDS J: 24 July. The relevant orders with which we're concerned I think were – in particular, the costs order was 16, I think. MR EINFELD: Yes. EDMONDS J: And it's also relevant as to what her Honour had to say in order 17. MR EINFELD: Yes. Correct. EDMONDS J: But if the court was to find that they were final orders, do you say the proceedings are concluded for the purpose of 42.7? MR EINFELD: Not necessarily - - - EDMONDS J: Not necessarily. No doubt - - - MR EINFELD: - - - for this reason - - - EDMONDS J: Well, you can expand that. That's something I – in your own time. MR EINFELD: No. No. I will do it now. I say not necessarily for this reason. A division has to be made. Let it be accepted for the moment that the order for costs was a final order. That – I will go the other way around. If it be accepted that the orders relating to the substantive liability of the appellants were final, then the answer to your Honour's question is yes so that if the declaration relating to liability, order 16 and 17 – sorry – if the declaration as to liability, which I think is paragraph 10, and the order for the inquiry and what's to happen after the date upon which those orders were pronounced are to be treated as final, as his Honour found they were, then the answer to your Honour's question is yes. We would accept that the proceedings have concluded. The mere fact, however, that the costs order is a final order does not mean that the proceedings as a whole have concluded. Every time an order for costs is made in proceedings, even in an interlocutory application, that costs order ..... certainly, for example, there's authority - - - EDMONDS J: Until it's set aside. MR EINFELD: Until set aside is a final order. EDMONDS J: Yes. MR EINFELD: So in this case let it be accepted that order 16 is a final – has the stamp of - - - EDMONDS J: I suppose I - - - MR EINFELD: - - - finality on it - - - EDMONDS J: I suppose I - - - MR EINFELD: - - - and it doesn't - - - EDMONDS J: I put it – I think I've got the concession I was looking for from you because I was more concerned about her Honour's finding about liability and, as you rightly say, that was order 10. So - - - MR EINFELD: Yes. The declaration was - - - EDMONDS J: The declarations. MR EINFELD: - - - 10. EDMONDS J: So that if the court were to find that that was a final order - - - MR EINFELD: Yes. EDMONDS J: - - - then you would agree that the proceedings have concluded. MR EINFELD: If the combination of 10 and 17, that is, the declaration of liability - - - EDMONDS J: And the setting up of inquiry. MR EINFELD: And 17, what is happen – what is to happen with that declaration are to be treated by the court as final, we would have to accept the proceedings - - - EDMONDS J: You would have to accept the proceedings - - - MR EINFELD: - - - had concluded. EDMONDS J: - - - had concluded. Thank you very much, Mr Einfeld. The concession made by senior counsel for the appellant in this exchange is, in my view, heavily qualified. He did concede that the proceedings had concluded if the proper construction of the combination of orders 10 and 17, and in particular of order 17, was to be treated by the court as final, but the concession in those terms does not fully reveal the qualification of the concession. The argument which senior counsel for the appellants was making was that the orders could not be regarded as final because on their face they required something to be done which, in turn, when done, required the matter to come back to court and, therefore, that until then neither could the orders be regarded as final nor could the proceedings relevantly be concluded. 46 The submissions returned to these matters after the exchange set out above with counsel submitting at T14 line 20 to T15 line 19: So what's to be done with that declaration in a case in which the plaintiffs in the Supreme Court sought monetary compensation? The answer to that follows at 17, but your Honour the presiding judge has correctly drawn attention already to paragraph 16, and we pause there, because there is, it may be accepted, what might be described for perhaps the purpose of an appeal a final order for costs. The question is a bit academic, because in New South Wales, at least, leave is needed to appeal on a question of costs in any event. But the appellants here were ordered to pay the plaintiff's costs. But the question of conclusion of the proceedings is not to be determined by whether or not there was a final costs order, and the question in this case will turn, we respectfully submit, upon the terms of order 17. And we just want to pause at a couple of important points to note a couple of important points. An inquiry be held as to the existence and quantum – just stopping there, not just quantum but existence and quantum, that is, of any loss; that is, the inquirer will need to be determined whether there is any loss, and if so, the quantum of that loss. And it may, of course, be that the referee or inquirer might conclude that there was no such loss. And then it's necessary to determine whether that loss was caused by reason of the transfer of the subject shares. And the next words are vital, we submit, in the third line: The purpose of that inquiry is for the purpose of making orders for equitable compensation to be paid. Now, at first instance the primary judge, we submit, simply swept up this order and said, "Well, it was pretty final." I'm paraphrasing perhaps without due respect to the precise reasons, to which we will come, but, "This all had the stamp of finality about it." But it doesn't, because her Honour has herself expressed the view that the inquiry was to be undertaken for the purpose of making orders – that is, in the future – for equitable compensation to be paid. In our submission, that language is unequivocally clear, that her Honour did not intend that the proceedings be concluded, but that – to answer our friends' question in their written outline, "What more remained to be done" – the answer to this appeal, they submit, is to be answered by the – is to be determined by answering the question, "What else was there left to be done?" And the answer is right in front of us. What's left to be done is an inquiry, a decision as to whether any money is payable at all, and if so, the matter is to come back to the court in order that her Honour or the court will then make orders for the payment of compensation. So long as that be construed in the manner in which we respectfully submit it ordinarily ought, it is manifest, we submit, to pick up the words of rule 42.7 subrule (2), that the proceedings are not concluded, because what remained to be done was that the matter had to come back to the court for the making of final orders. And then it proceeds to identify the contents of the inquiry, the terms of which perhaps don't matter for present purposes, save that at the end there's the reference to a determination of any amount to be ordered. And again, it may be that there might or might not be amounts to be ordered pursuant to the Corporations Act. The earlier concession made by senior counsel was, it seems to me, more limited than the court had sought to determine by the questions. The concession was conditional and based upon the hypothesis that the court was concluding that the orders were "final" in a practical sense of there being nothing further to be done to give effect to the combined operation of orders 10 and 17 which had been made by Bergin CJ. Order 10 had declared joint and several liability to compensate the respondent by declaring: 10. Claude Cassegrain, Anthony Sarks and Felicity Cassegrain are jointly and severally liable to compensate Gerard Cassegrain & Co Pty Limited for any loss to Gerard Cassegrain & Co Pty Limited arising from the transfer of Gerard Cassegrain & Co Pty Limited's shares in CaTTO and OAL to Felicity Cassegrain on 19 and 20 January 2005 respectively. Order 17, however, required an inquiry to be conducted to determine the existence and quantum of any loss which had been suffered by reason of the transfer of the shares, and that inquiry was expressly required to be undertaken for the purpose of making further orders in the future for equitable compensation to be paid. Order 17, thus, provided: 17. An Inquiry be held as to the existence and quantum of any loss to Gerard Cassegrain & Co Pty Limited by reason of the transfer of Gerard Cassegrain & Co Pty Limited's shares in CaTTO and OAL to Felicity Cassegrain for the purpose of making orders for equitable compensation to be paid to Gerard Cassegrain & Co Pty Limited by Claude Cassegrain, Anthony Sarks and Felicity Cassegrain. That Inquiry is to include the assessment of any damage to Gerard Cassegrain & Co Pty Limited by reason of the contraventions of ss 180, 181(1) and 182(1) of the Corporations Act 2001 by Claude Cassegrain and Anthony Sarks (including any profits made by Claude Cassegrain and/or Anthony Sarks resulting from the contraventions) referred to in Declarations 5 and 6 and the determination of any amount of compensation to be ordered under s 1317H of the Corporations Act 2001 against Claude Cassegrain and Anthony Sarks. (Emphasis added) There was, therefore, pursuant to the terms of order 17, something further to be done in the proceeding, including the making of orders. The fact of liability had been declared and the mechanism for determining the quantum of the liability had been ordered but, so the argument ran, the proceedings had not yet concluded within the meaning of r 42.7(2) because the orders themselves, although final in one sense, required the matter to come back to the court for the making of the orders contemplated by order 17. 47 In my view, the words "the conclusion of the proceedings" in r 42.7(2) are deliberately wide and contemplate the practical termination of the proceedings in which cost orders have been made. The purpose of the rule is to defer the payment of costs until that practical point in time is reached when the proceeding has come to an end, subject, of course, to a court making a contrary order. No such order was sought by the respondents in the proceeding before Bergin CJ and, therefore, their ability to require the payment of the costs depended upon a factual inquiry into whether the proceedings had concluded. In my view the proceedings had not concluded by the orders made but, rather, the orders made contemplated an inquiry to be undertaken which, in itself, could be expected to incur additional costs which might themselves bear upon amounts payable as between the parties. Rule 42.7(2) has made the payment of costs dependent upon "the conclusion of the proceedings" subject to any order to the contrary and not to the juristic analysis of whether specific orders were final. The concession made by senior counsel, as I understand it, was that the finality of the orders would result in the proceeding being concluded if the orders themselves, and the terms of order 17 in particular, meant that there was nothing more in the proceeding that needed to be done. In my view the orders were not final in that sense and I would therefore have allowed the appeal. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Pagone. Associate: Dated: 19 March 2015