FEDERAL COURT OF AUSTRALIA

BANKRUPTCY – application to set aside bankruptcy notice – respondent appointed as receiver – applicant applied for appointment of receiver – remuneration and expenses of receiver fixed by Supreme Court of Victoria – debt claimed by creditor being sum fixed by the Court

Bankruptcy Act 1996 – s 41

Federal Court of Australia Act 1976 – s 18AB(1A)

Trade Practices Act 1974

Emerson v Wreckair (1992) 109 ALR 539 - cited

THOMAS MURRAY HALEY v PAUL ANTHONY PATTISON

VG 7498 of 1998

BEFORE:             RYAN JR

PLACE:               MELBOURNE

DATE:                  21 SEPTEMBER 1998

THE COURT ORDERS THAT:

1.      The application to set aside Bankruptcy Notice VN 968/98 is dismissed.

2.      All aspects of the application encompassed by the document entitled “Defence and Counter Claim of Bankruptcy Notice VN 968/98” are dismissed.

3.      The applicant is to pay the costs of the respondent in respect of the application as agreed or taxed.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

THE APPLICATION

On 8 July 1998 the applicant filed a document entitled “Defence and Counter Claim of Bankruptcy Notice VN 968/98”.  The document contained an application to set aside Bankruptcy Notice VN 968/98 and sought a variety of other orders from the Court.

On 9 July the applicant served the respondent with material which included the application to set aside the bankruptcy notice.

On 25 August the application was adjourned to 9.30 a.m. today and about 11.15 a.m. Olney J referred the matter to me for hearing at 2.15 p.m.  It is clear that the application has been referred to me as a Judicial Registrar pursuant to s 18AB(1A) of the Federal Court of Australia Act 1976. The applicant is unrepresented and appears on his own behalf. Counsel appears for the respondent.

EVENTS LEADING TO BANKRUPTCY NOTICE

On 17 October 1997 the respondent was appointed as receiver of Aust China Auctions by order of Byrne J in Supreme Court proceeding No. 7457 of 1997.  The appointment of the respondent as receiver was made on an ex parte application on behalf of the applicant in this proceeding.  In his statement of claim in the Supreme Court proceeding the applicant sought the dissolution of a partnership and the appointment of a receiver.

The respondent reported to the Supreme Court in affidavits sworn on 21 October and 30 October 1997 and on 31 October 1997 Byrne J ordered:

·        the appointment of the respondent as receiver be terminated

·        remuneration and expenses of the respondent as receiver be fixed by the Taxing Master

·        the remuneration and expenses of the respondent as receiver be paid by the applicant

·        legal costs be paid on a solicitor/client basis by the applicant and the defendants in the Supreme Court proceeding (these costs and expenses are not the subject of the bankruptcy notice and are not relevant to the application before me today).

The respondent’s bill (for remuneration and expenses) dated 28 November 1997 was personally handed to the applicant on 2 December 1997 by a solicitor acting for the respondent with a request for payment in accordance with the Supreme Court order of 31 October 1997.

By letter dated 8 December 1997 the applicant refused to pay the bill and a solicitor’s bill not relevant to proceedings before me and required itemisations of both bills.

On 15 January 1998 an application was filed before the Taxing Master to fix the respondent’s remuneration and expenses.  On 17 February 1998 Master Bruce fixed the respondent’s expenses and remuneration in the sum of $13,808.43.  The applicant appeared in person at that hearing and appears to have opposed the application to fix the expenses and remuneration.

On 6 March and 16 March 1998 the solicitors acting for the respondent demanded payment of the remuneration and expenses.  No response was received to either demand.

On 19 June 1998 the solicitors for the respondent issued bankruptcy notice VN 968/98. The Notice was served upon the applicant on 23 June 1998.

GROUNDS SUBMITTED IN SUPPORT OF APPLICATION

The grounds in the application entitled Defence and Counter Claim of Bankruptcy Notice VN 968/98 are numerous and it is not easy to identify them with precision. I accept that counsel for the respondent has identified them with reasonable accuracy as follows:

(a)    the amount claimed by the receiver is excessive

(b)   the receiver agreed to cap his fees

(c)    the receiver was invalidly appointed

(d)   an order of the Supreme Court has had the effect of staying the order for payment of the receiver’s remuneration and expenses

(e)    the receiver has acted in breach of various provisions of the Trade Practices Act

(f)     the receiver was not diligent or was negligent.

FINDINGS

The receiver was appointed by the Supreme Court pursuant to order 39 of the Supreme Court rules. The application for appointment was made ex parte on behalf of the applicant.  Whatever view one may take of the decision to make the application in the Supreme Court in the first place, or the circumstances of the receiver’s removal, the receiver cannot be held accountable for the difficulties faced by the applicant as a consequence of those matters. I do not discount or downplay those difficulties as they face the applicant but the receiver was required to fulfil his duties as an officer of the Court.

It is up to the Supreme Court to fix the appropriate remuneration to be paid to its officer subject, of course, to any submission either party may make. In this case, after hearing submissions of the parties (including the applicant), Byrne J ordered that the receiver’s expenses and remuneration be fixed by the Taxing Master of the Supreme Court by reference to the IPAA’s guide to hourly rates.  Legal costs and expenses were dealt with separately. The calculation of the remuneration and expenses ultimately came before Master Bruce who again heard submissions from affected parties, including the applicant, before making the order that forms the basis of this Bankruptcy Notice.

Many of the arguments raised by the applicant would, if successful, operate only to reduce the sum claimed in the Bankruptcy Notice. None of the arguments or submissions are sustained. The Court will not go behind a judgment “where the grounds upon which the judgment is challenged are such that, if accepted, they would only support a finding that the amount of debt be reduced and would not support a finding that there was in truth no debt at all”: Emerson v Wreckair (1992)109 ALR 539 at 546-547.

The respondent was personally appointed receiver in his capacity as an Official Liquidator of the Supreme Court of Victoria. Accordingly, in carrying out his duties as receiver, he was acting personally and not through his firm. The respondent is not a corporation within the meaning of the Trade Practices Act 1974 and therefore is not amenable to the operation of that Act.

The assertions as to lack of diligence or negligence on the part of the receiver are in no way established and, in any event, even if established, would be unlikely to be applicable where the receiver, as here, appears to have acted honestly in the discharge of his duties.

In the circumstances I must dismiss the application to set aside the bankruptcy notice and all aspects of the application before me.

ORDERS

4.      The application to set aside Bankruptcy Notice VN 968/98 is dismissed.

5.      All aspects of the application encompassed by the document entitled “Defence and Counter Claim of Bankruptcy Notice VN 968/98” are dismissed.

6.      The applicant is to pay the costs of the respondent in respect of the application before me today as agreed or taxed.

Associate:

Dated:              21 September 1998