FEDERAL COURT OF AUSTRALIA Moran v Lydiard Financial Services Pty Ltd [2005] FCA 1167 BANKRUPTCY – bankruptcy notice – setting aside – orders of taxing officer, fixing costs, attached to notice – orders under which taxing officer taxed costs not attached – whether notice invalid – whether defect curable COURTS AND JUDGES – notice of motion – whether filed before time limit expired – left at registry after 4.00 pm on last day of time limit – stamped as received at registry on that day – whether registry open when officer available after hours of opening prescribed by rules – whether litigant entitled to rely on notice advertising times of opening of registry Federal Court of Australia Act 1976 (Cth) s 35A(1)(h) Bankruptcy Act 1966 (Cth) ss 41(1), 41(2), 306(1) Federal Court Rules O 77 r 7, O 77 r 8(2) and (3), O 1 r 5A(1)(a), O 3 r 6(1) and (3), O 3 r 3(1) Bankruptcy Regulations (Cth) reg 4.02(1), sch 1 form 1 Commonwealth Bank of Australia v Horvath (Junior) [1999] FCA 143, (1999) 161 ALR 441 followed JOHN GERARD MORAN v LYDIARD FINANCIAL SERVICES PTY LTD (ACN 005 932 276) (PREVIOUSLY CUTHBERTS NOMINEES PTY LTD (ACN 005 932 276)) V 243 of 2005 GRAY J 20 JUNE 2005 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 243 of 2005 BETWEEN: JOHN GERARD MORAN APPLICANT AND: LYDIARD FINANCIAL SERVICES PTY LTD (ACN 005 932 276) (previously CUTHBERTS NOMINEES PTY LTD (ACN 005 932 276)) RESPONDENT JUDGE: GRAY J DATE OF ORDER: 20 JUNE 2005 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The order of Registrar Bardsley made on 12 April 2005 be set aside. 2. In lieu of that order, it be ordered that the bankruptcy notice dated 17 February 2005 be set aside. 3. The respondent pay the applicant's costs of the proceeding, fixed at $150. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 243 of 2005 BETWEEN: JOHN GERARD MORAN APPLICANT AND: LYDIARD FINANCIAL SERVICES PTY LTD (ACN 005 932 276) (previously CUTHBERTS NOMINEES PTY LTD (ACN 005 932 276)) RESPONDENT JUDGE: GRAY J DATE: 20 JUNE 2005 PLACE: MELBOURNE REASONS FOR JUDGMENT 1 Two issues arise in the motion before me today. The first concerns whether the time within which the motion could be filed had expired before the motion was filed and, if so, whether that time should be extended. The second is the substantive issue, which is whether the bankruptcy notice issued by the respondent, and directed to the applicant, should be set aside. 2 The bankruptcy notice was served on the applicant on 8 March 2005. In it, the respondent claimed that the applicant owed to it a total of $83 891.40, as shown in the schedule. The notice in par 2 advised the applicant that the creditor claimed that the debt was due and payable by him and that 'A copy of the judgments or orders relied upon by the creditor is attached.' The schedule to the bankruptcy notice referred to 'Amount of judgments or orders', of which three were listed, two dated 30 June 2003 and one dated 30 July 2003. These were for the amounts of $53 400.40, $11 310.40 and $5924.50 respectively. The balance of the amount claimed as a debt was made up of interest said to have accrued 'since date of judgments or orders'. 3 Attached to the bankruptcy notice are three documents emanating from the Supreme Court of Victoria. Each bears the seal of that court and an initial, presumably of an officer of the Prothonotary's Office of that court. Each is an order made by Master Bruce and each is described as having been obtained on a summons for taxation. Under the designation of 'Other Matters', there is information that, in each case, taxation is pursuant to some other order. The other orders are an order of Mandie J made on 5 March 2003, an order of the Court of Appeal made on 28 February 2003, and an order of the Court of Appeal made on 16 May 2003. It is plain from the text of the first two orders of Master Bruce that those orders involve the costs claimed in certain proceedings being 'taxed and allowed' in certain sums. The order made on 30 July 2003 is by consent. Its terms require that: 'The Defendant/Appellant pay the Plaintiffs/Respondents' party/party costs and disbursements of this proceeding pursuant to the order of the Court of Appeal made 16 May 2003 fixed in the sum of $5,924.50.' 4 The order of Mandie J made on 5 March 2003 and the respective orders of the Court of Appeal made on 28 February 2003 and 16 May 2003 are not attached to the bankruptcy notice. 5 By application filed in the Court on 29 March 2005, the applicant applied to set aside the bankruptcy notice. His application was dealt with initially by a registrar on 12 April 2005. The registrar dismissed that application and ordered that the applicant pay the respondent's costs, to be taxed in default of agreement. In making that order, the registrar was exercising a power delegated to him pursuant to O 77 r 7 of the Federal Court Rules and s 35A(1)(h) of the Federal Court of Australia Act 1976 (Cth). By O 77 r 8(2) and (3) of the Federal Court Rules, a decision made by a registrar may be reviewed by the Court or a judge, and an application for review of a decision must be made within 21 days of the date of the decision. 6 The 21st day after 12 April 2005 was 3 May 2005. So much is common ground. There is on the Court file a notice of motion, in effect seeking review of the registrar's decision. That notice of motion is stamped with an official stamp of the Victoria District Registry of the Court, as having been received or filed on 3 May 2005. It appears, from information that has come to the notice of the Court, that the document may not have been processed until 4 May 2005 and that, in the absence of any service of the document upon the respondent, the respondent's solicitors proceeded to file a creditor's petition on the assumption that the bankruptcy notice would remain in force and that an act of bankruptcy had been committed by the applicant's failure to comply with the requirements of that notice. 7 The circumstances of the filing of the notice of motion are dealt with in an affidavit of the applicant affirmed on 6 May 2005 and filed in Court by leave today. The contents of the affidavit are unchallenged. According to that affidavit, the applicant attended at the registry on the seventh floor of this building at approximately 4.15 pm. He was required to wait while others were attended to. At 4.23 pm an officer of the registry refused to take the document. The applicant complained that it was not yet 4.30 pm and that the sign on the door of the registry itself indicates that it is open until 4.30 pm. The officer is said to have replied that it takes 15 minutes to process an application and that she would not do it. 8 The situation seems to have been left somewhat unclear, although the applicant certainly left his documents with the registry, and contended that he had filed them on the due date. That suggestion is confirmed by the stamp on the original of the document on the Court file. 9 According to O 1 r 5A(1)(a) of the Federal Court Rules, a document that is required or permitted by those rules to be filed or lodged may be presented to a registry when the registry is open for business. It appears from that provision that the act of filing is the act of presenting the document to the registry. Order 3 r 6(1) provides that the district registries of New South Wales and Victoria shall be open to the public for business between 10 in the morning and 4 in the afternoon, except on Saturdays, Sundays and other holidays. It is common ground that, in fact, there is a sign on the door of the Victoria District Registry office in this building, indicating that the opening hours are until 4.30 pm. Regard should also be had to O 3 r 6(3) of the Federal Court Rules, which provides that: 'A Registry may in the discretion of the Registrar, and shall on the direction of a Judge, be opened at other times for urgent business.' 10 It appears then, on any view of the facts in this case, that the applicant presented his document after 4.00 pm, ie after the hour at which the registry is required to be open. There might be an interesting question as to whether the registry can be opened at other times. It may be that the hours from 10.00 am until 4.00 pm could be regarded as core opening times, for which the rules make provision, and that it would be possible for the registry to be open at other times. That interpretation is to some extent undermined by subr (3), which makes specific provision for opening at other times, but only for urgent business. There might be a difficult question as to whether the presentation of a document on the last day of the expiration of a time limit for its filing, and late in the day, could be regarded as urgent business, but it seems to me that I need not determine issues such as that in the present case. In accordance with the record, as it is shown on the Court file, and the affidavit evidence (which, as I have said, is unchallenged) I find that the notice of motion was filed on 3 May 2005. 11 If I were to be wrong in making that finding, then I should have no hesitation in exercising the power found in O 3 r 3(1) of the Federal Court Rules, to extend the time fixed by O 77 r 8(2), within which this notice of motion might be filed. If the impression is conveyed to a litigant that the registry is open until 4.30 pm, it is obviously difficult to rely on the strict reading of the rules that would be involved in holding that the registry could not be open for business after 4.00 pm, except for urgent business. The litigant should have the benefit of the representation involved in the sign on the door. Therefore, if it were necessary to do so, I should extend the time to regularise the filing of the document. 12 I turn then to the substantive question. Section 41(1) of the Bankruptcy Act 1966 (Cth) provides for the issue by the Official Receiver of 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, falling within the provisions of that subsection. Section 41(2) provides that the notice must be in accordance with the form prescribed by the regulations. 13 By reg 4.02(1) of the Bankruptcy Regulations (Cth), for the purposes of subs 41(2) of the Bankruptcy Act, the form of the bankruptcy notice set out in form 1 is prescribed. Form 1 is found in sch 1, the schedule of forms to the Bankruptcy Regulations. The form contains cl 2 in the following terms: 'The creditor claims that the debt is due and payable by you. A copy of the judgments or orders relied upon by the creditor is attached. At the time of applying for this Notice, execution of the judgments or orders had not been stayed.' 14 In Commonwealth Bank of Australia v Horvath (Junior) [1999] FCA 143 (1999) 161 ALR 441, Finkelstein J dealt with a case remarkably similar to the present. At [5], his Honour identified that the bankruptcy notice in that case might be invalid for two reasons, the first of which was that the notice did not have attached to it a copy of the three costs orders on which the notice was based. It appears from [4] of his Honour's reasons for judgment that the bankruptcy notice had attached to it orders of the same kinds as those attached in the present case, ie orders of the taxing master, taxing and allowing costs in proceedings in the Supreme Court of Victoria. In the case of each of the three orders in Horvath's case, the order for payment of costs had been made by a judge of the Supreme Court of Victoria, and copies of the orders of the judges were not attached to the bankruptcy notice. At [7], Finkelstein J said: 'It is clear enough that an allocatur by a taxing master is not a judgment or order for the payment of money: Re Crump, Ex parte Crump (1891) 64 LT 799. The obligation to pay costs is founded in the judgment or order of the court requiring a party to pay costs to be taxed. Under the Rules of the Supreme Court of Victoria it is provided that where a taxing master assesses costs the result shall be stated in the form of an order: see O 63.56(1). However, by O 63 r 11 such an order can only be enforced as a judgment for the payment of money where the costs are taxed otherwise than under a judgment or order for costs. So, where the rules make provision for the payment of costs in the absence of an order, for example when an action is discontinued (see O 63 r 15), the order of the taxing master will be an order that is capable of being enforced and one that may be described as a final order: see Pepper v McNiece (1941) 64 CLR 642 at 657. Where, as here, a taxing master undertakes a taxation in consequence of an order made by a judge of the court, the taxing master's order is not capable of enforcement. It is not, therefore, a final judgment or order of the Supreme Court and cannot be relied upon to found a petition. Accordingly, the bankruptcy notice is defective in that there was not attached to it copies of the final orders which were the foundation for the debt described in the notice.' 15 His Honour went on to deal with the submission that the failure to attach the orders was a formal defect or irregularity, cured by s 306(1) of the Bankruptcy Act, and to reject that submission. At [14], his Honour held that the notice was a nullity and could not be validated. At [22], his Honour held that s 306(1) had no application, on the ground that the bankruptcy notice was fatally flawed. 16 No reason has been advanced to me why I should not follow Horvath's case. Indeed, with respect to Finkelstein J, it appears to me that his Honour was correct to hold as he did. 17 Since Horvath's case is directly in point, it follows that the Bankruptcy Act in the present case should be set aside. As in Horvath's case, there are attached to the bankruptcy notice only the orders of the taxing master of the Supreme Court of Victoria and not the orders of the judge and of the Court of Appeal pursuant to which the taxations of costs were conducted. The consequence of failing to attach the judgments or orders relied upon, in accordance with cl 2 of the form of notice, is that the notice is fatally flawed. Like Finkelstein J, I would not regard the absence of the judgments or orders as a formal defect or irregularity cured by s 306(1). 18 It follows then I should set aside the order of the registrar made on 12 April 2005 and substitute for that order an order that the bankruptcy notice be set aside. 19 The orders I make are: 1. The order of Registrar Bardsley made on 12 April 2005 be set aside. 2. In lieu of that order, it be ordered that the bankruptcy notice dated 17 February 2005 be set aside. 3. The respondent pay the applicant's costs of the proceeding, fixed at $150. I certify that the preceding nineteen (19) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gray. Associate: Dated: 29 August 2005 Counsel for the applicant: The applicant appeared in person Counsel for the respondent: M Barrett Solicitor for the respondent: Wisewoulds Date of hearing: 20 June 2005 Date of judgment: 20 June 2005