OA IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) ) ) BANKRUPTCY DISTRICT OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY No. B.3930 of 1986 RE: JEAN SHIRLEY MCMAHON Bankrupt EX PARTE: OFFICIAL TRUSTEE IN BANKRUPTCY Respondent EX-TEMPORE REASONS FOR JUDGMENT BURCHETT J. In this matter an order for costS was made upon dismissal of a petition on 25 March 1986. The judgment debtor required the bill of costs to be taxed, and .an appointment for that purpose was obtained. The judgment debtor does not suggest that she did not receive adequate notice of the taxation of the costs. What she does assert is that, on the day when the costs were taxed, she was unwell and did not attend upon the taxation, nor did she notify the court office, or the other party, or 1ts solicitor. Upon becoming somewhat better shortly afterwards, her evidence indicates she consulted a barrister who told her that it was not necessary for her to take any active step at that stage. And she did not, then, notify either the court, or, the opposing vy" - ' x v* \ NEECTIVOTY FEDERAL COURT OF AUSTRALIA PRINCIFAL REGISIAY 2. party, or its solicitor, that it was because of her illness that she had not attended upon the taxation. On the day of the taxation, the costs were, in fact, taxed and a certificate of taxation issued, dated 29 May 1986, in the sum of $3819-75. The precise form of the order which had been made on 25 March 1986 was: "(1) The creditor's petition be dismissed; (2) The judgment debtor to pay the petition (scil. petitioning) creditor's taxed costs of the petition, including reserved costs." Under rule 172, provision is made, where a bill of costs has been taxed, for the taxing officer to sign a certificate; and by rule 172 sub-rule (3) it is provided: "The person who lodges a bill of costs for taxation shall upon the issue to him of a certificate of taxation in relation to that bill, serve the certificate of taxation on the person,liable to pay the costs or charges." It 1s perhaps noteworthy, in the language of that sub-rule, that 1t assumes the person 1s already liable to pay the costs or charges, because 1t describes him as "the person liable". This 1s in keeping with the decision of Atkin J., as Lord Atkin then was, in Hambleton v. Brown [1917] 2 K.B. 93, which was concerned with an assiqnment covering an order for costs which had been duly taxed, but the amount of which had not 3. been entered upon the record. The assignment was without consideration, and the material question for present purposes was whether it could be regarded as a valid legal assignment of a present debt. It was held that it was. At p.97, his Lordship said: "The debt is said to be a future debt because, 1t 1S contended, there was no effective judgment for the costs until the amount of the Master's certificate was filled in in the judgment: see In re Crump 64 L.T. 799. The obligation to pay arose entirely from the judgment, and until that was effective there was only an expectancy of future property. It appears to me that the true view is that in a judgment for costs there is an actual judgment giving rights to the successful party aS soon as pronounced. It is adjudged that the party recover costs to be taxed. The amount to be recovered has to be ascertained in a prescribed manner by taxation and, when the taxing Master has ascertained the amount and so _ certified, nothing further remains to be done but the ministerial act of completing the record." Atkin J. went on to refer to a case where the court was satisfied that the practice was not to allow execution to issue until the amount of the certificate was entered on the judgment. In that case, that not having been done, it was held that service of a bankruptcy notice did not give rise to an act of bankruptcy because the power to issue a valid bankruptcy notice depended upon the right to 1ssue execution on the judgment. Although Hambleton v. Brown 1S not cited in T.A. Field v. Frigmobile of Australia Proprietary Limited [1978] 2 N.S.W.L.R. 488, a similar view of the effect of a judqment for 4. costs appears to have been taken by Allen M. (as Allien J. then was) in that case. Mr. Torrington, for the judgment debtor, has argued that the effect of rule 172 is to invalidate a bankruptcy notice served prior to the receipt by the judgment debtor of the certificate of taxation, which 1s required to be served on him by that rule, It seems to me, however, that the rule does not purport to affect the positzon under which, once the amount of the costs has been ascertained by the issue of a certificate of taxation, there is an effective order upon which execution could issue, Under s.309, provision is made the effect of which 1s that where service of a document is reguired but no special manner of service is prescribed, 1t may be sent by post as a prepaid letter to the last known address of the person to be served. In the present case it is proved that everything that should have been done by the judgment creditor to comply with s.309 was done. The certificate of taxation dated 29 May 1986 was sent to the judgment debtor by prepaid post on 2 June 1986, addressed to 39 Osborne Street, Lane Cove, which she agreed in evidence was at all relevant times her address. In addition, a letter dated 14 July 1986 was sent to her then solicitors, Messrs. Teakle, Ormsby and Associates, through their DX number, an@ evidence has been given of a personal conversation with her then solicitor, some ten days later, which clearly proceeded on the basis that the letter had been received. However, the judgment debtor says that she neither received the certificate of taxation nor was advised by her then solicitor of the letter of 14 July 1986, which showed the amount at which the costs had been taxed. JI am not prepared to reject her evidence that she did not receive either of these. But I do infer from her own evidence that she must have been well aware that the costs had been ascertained, since she knew the date at which they were to be taxed, and knew that she had made no arrangements for the taxation to be adjourned and, further, knew that that date had long passed so that, even if there had been for some reason some delay, the overwhelming probability was that the taxation would have been long since concluded. The situation, as I find it to be, is simply that she had taken no further steps to ascertain the precise figure. In those circumstances, 1t seems to me that the order for costs was effective. It was quantified, and 1t was sufficient to form the basis under s.40(1)(g) for the issue of a bankruptcy notice. Rule 172 provides that something shall be done, and when read with s.309, provides that that shall be done which in this case was done. It does not provide that, if by some mischance the procedure laid down in the Act and the rules does not give the judgment debtor prior notice, invalidity will be visited upon the issue or service of a bankruptcy notice. Indeed, there 15s 6. nothing 1n rule 172 to prevent the certificate being served personally on one day, and the bankruptcy notice being issued and served on the next, so that if any such invalidity were visited upon the proceedings for the reason alleged, 1t would seem to be a technical invalidity serving no particular purpose. Accordingly, if I had thought that what was done amounted to a non-compliance with the requirement of rule 172, I would have thought the matter appropriate for an application of rule 195(2)(b), relieving the judgment creditor of the consequences of any such non-compliance. However, I do not think there was any non-compliance, to be the subject of relief. For these reasons, I dismiss the application to set aside the bankruptcy notice. However, I think the making of that application does, under s.41(6A), enliven the Court's jurisdiction to grant some further extension of the bankruptcy notice, which has already been extended until today. I do not think sub-s.(6C) applies. In other words, I do not think that it can be said the present proceedings to set aside the bankruptcy notice were not instituted bona fide, and certainly it cannot be said they were not prosecuted with due diligence. In all the circumstances, I think it is appropriate to grant a further extension of 14 days to enable the judgment debtor to proceed to comply with the notice, 7. Accordingly, I extend the bankruptcy notice until 4.00pm on 1 December 1986. The judgment debtor is ordered to pay the costs of the application. I certify that this and the preceding six (6) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Burchett. Lien a3 Associate Dated: 17 November, 1986.