Worldwide Timber Traders Pty Ltd v Brouwer [2005] FCA 1929

FEDERAL COURT OF AUSTRALIA

Worldwide Timber Traders Pty Ltd v Brouwer [2005] FCA 1929 Bankruptcy Act 1966 (Cth) ss 5(1), 58(3)(b), 82(2), 153(1) Trade Practices Act 1974 (Cth) ss 51A, 52, 82, 87 Federal Court Rules O 8 r 1, O 8 r 2 Australian Competition and Consumer Commission v Kritharas (2000) 105 FCR 444 WORLDWIDE TIMBER TRADERS PTY LTD v JAN WILLEM BROUWER and AURIMA ENTERPRISES SDN BHD WAD 341 of 2005 NICHOLSON J 19 DECEMBER 2005 PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 341 OF 2005

BETWEEN: WORLDWIDE TIMBER TRADERS PTY LTD

(ABN 93 009 384 454)

APPLICANT

AND: JAN WILLEM BROUWER

FIRST RESPONDENT

AURIMA ENTERPRISES SDN BHD

SECOND RESPONDENT

JUDGE: NICHOLSON J

DATE OF ORDER: 19 DECEMBER 2005

WHERE MADE: PERTH

THE COURT ORDERS THAT: 1. The applicant have leave pursuant to O 8 r 2(2) of the Federal Court Rules to serve the application and statement of claim on the second respondent in Malaysia. 2. The proceedings be re-listed for directions on 8 February 2006 at 10.00 am. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 341 OF 2005

BETWEEN: WORLDWIDE TIMBER TRADERS PTY LTD

(ABN 93 009 384 454)

APPLICANT

AND: JAN WILLEM BROUWER

FIRST RESPONDENT

AURIMA ENTERPRISES SDN BHD

SECOND RESPONDENT

JUDGE: NICHOLSON J

DATE: 19 DECEMBER 2005

PLACE: PERTH

REASONS FOR JUDGMENT 1 This is the first directions hearing in this proceeding. The applicant has filed an application claiming as against the first respondent, a sum of AU$110 595.28, together with interest; as against the second respondent, the claim is for recision of an agreement, alternatively an injunction. 2 The application lists two matters as being sought by way of interlocutory relief. The first is leave to serve the second respondent out of the jurisdiction pursuant to Federal Court Rules ('FCR') O 8 r 2; the other is leave to proceed against the bankrupt first respondent under s 58(3)(b) of the Bankruptcy Act 1966 (Cth) ('the Act'). 3 Turning to the second of those interlocutory claims, the applicant has advised that the application for leave is abandoned. This is because, in the applicant's view, such leave is no longer required. The reasoning of the applicant in reaching that view is set out in an aide memoire handed to the Court. It refers to s 58(3)(b) of the Act as providing: 'Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor: (a) … (b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.' Section 5(1) of the Act provides a 'provable debt' is a debt or liability provable in bankruptcy. Section 82(2) provides: 'Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.' A debt that is not provable in bankruptcy can be paid by the debtor out of 'non-divisible' property which is generally expressed property that bankruptcy law recognises should not be subject to creditors' claims. It is also to be noted that s 153(1) of the Act provides: 'Subject to this section, where a bankrupt is discharged from a bankruptcy, the discharge operates to release him or her from all debts (including secured debts) provable in the bankruptcy, whether or not, in the case of a secured debt, the secured creditor has surrendered his or her security for the benefit of creditors generally.' 4 It follows from these provisions that in the case of a non-provable debt, the discharge from bankruptcy does not release the debtor from payment of the debt. 5 The claims against the second respondent, in addition to providing for recision of the agreement and, alternatively, injunction, also seek unliquidated damages arising from failed contracts to supply timber. It is that fact which attracts the character of unliquidated damages and the application of s 82(2) quoted above. There is authority, much of it referred to in Australian Competition and Consumer Commission v Kritharas (2000) 105 FCR 444 per Katz J, for including within s 82(2) claims for damages under s 82 of the Trade Practices Act 1974 (Cth) for contravention of s 52(1) of that Act being the prohibition against misleading or deceptive conduct or conduct likely to be misleading or deceptive. 6 The statement of the claim makes clear that the case in respect of the second respondent is that at all times it did not communicate any disagreement to the applicant of written representations made by the first respondent. It is said that such failure was conduct in trade or commerce amounting to adoption of the written representations by the second respondent. In reliance on the representations, it is pleaded that the applicant paid certain moneys to the bank account of the second respondent and ordered timber. It is further pleaded that the representations were in some respect future representations. 7 It therefore is apparent that the applicant has correctly abandoned the second of the proposed forms of interlocutory relief. 8 Turning to the first form of interlocutory relief, the applicant seeks leave for service of the second respondent out of the jurisdiction. As provided by FCR O 8 r 1, subject to r 2 and Div 2 and Div 3 of O 8, there are certain cases in which originating process may be served outside the Commonwealth. Rule 2 provides in subrule (1) that service outside the Commonwealth of originating process is not valid under O 8 unless the service is in accordance with the prior leave of the Court, given under subrule (2). 9 That subrule provides that such leave may be granted on such terms and conditions as the Court thinks appropriate if the Court is satisfied as to three matters. The first is that the Court has jurisdiction; the second is that r 1 applies to the proceeding; the third is that the party seeking leave has a prima facie case for relief sought by the party in the proceeding. 10 The claim for relief is brought pursuant to ss 51A, 52, 82 and 87 of the Trade Practices Act. The Court is therefore satisfied it has jurisdiction. 11 For r 1 to be applicable, there must be one of the 'cases' appearing in the subpars invoked by the circumstances of the proposed action. Here, it is provided in case (g) that: 'Where the proceeding is properly brought against a person served or to be served in the Commonwealth and the person to be served outside the Commonwealth is properly joined as a party to the proceeding' - such a case will be satisfied. For the reasons which have been given, the first respondent is a person properly served or to be served in the Commonwealth. It appears to the Court, and the Court is satisfied that the second respondent, given the nature of the claims, is properly joined. Consequently, that case would be satisfied. 12 In the event that the leave had been required in respect of the first respondent, there is, in any event, the cases referred to in pars (a) and (b) which may also be invoked in that respect. The Court is therefore satisfied that r 1 applies to this proceeding. 13 The Court is also satisfied that the applicant has a prima facie case for relief sought in terms of the application and the statement of claim. 14 For these reasons, it is appropriate that leave to serve the second respondent out of the jurisdiction pursuant to FCR O 8 r 2 be granted. That is also the case because, having regard to Div 2 and Div 3 of that order, Div 2 relating to Convention countries is not applicable. Malaysia, where the second respondent is said to be located, not being a Convention country. 15 Accordingly such leave will be granted. I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholson.