FEDERAL COURT OF AUSTRALIA

Klewer v Walton [2004] FCA 410

BANKRUPTCY - application to set aside bankruptcy notice - judgment debt - order for costs pursuant to s 213 of the Criminal Procedure Act 1986 (NSW) - claim that judgment creditor has no immediate right of execution of the judgment debt - court order made in favour of respondent - registrar not the judgment creditor - application dismissed. 

In re A Debtor [1929] 2 Ch 146 referred to

IN THE MATTER OF LUCY KLEWER

LUCY KLEWER v IAN WALTON

N 236 OF 2004

TAMBERLIN J

SYDNEY

7 APRIL 2004

IN THE MATTER OF LUCY KLEWER

THE COURT ORDERS THAT:

The application to set aside the Bankruptcy Notice is dismissed with costs.

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

IN THE MATTER OF LUCY KLEWER

REASONS FOR JUDGMENT

1                     The applicant, Ms Klewer, applies to set aside a Bankruptcy Notice served on her on 11 February 2004.  The Bankruptcy Notice was issued by the Official Receiver on 12 December 2004.  It specifies the total debt owing as $10,504.00, being the amount of a judgment.  Annexed to the Bankruptcy Notice is a Certificate of Conviction under s 178 of the Evidence Act 1995 (Cth) issued by the Court House at Coffs Harbour.  It gives particulars as to the dismissal of an information by Ms Klewer, and records an order for her to pay the costs of the respondent, Mr Ian Walton, in the amount of $10,504.00.  This amount is ordered to be paid within fourteen days, that is to say, on or before 24 December 2001.  It is common ground that this amount has not been paid.

2                     The Certificate of Conviction records a certification with the seal of the Local Court of Coffs Harbour by the clerk to the effect that the above particulars are a true record of the Court.  The Certificate is dated 21 January 2002.

application to set aside bankruptcy notice

3                     In her affidavit of 25 February 2004 in support of her application to set aside the Bankruptcy Notice, Ms Klewer relies on the following ground:

‘The judgment creditor has not taken all the steps necessary to entitle him to reap the fruits of the judgment in his favour (see details below).’

4                     The affidavit states and Ms Klewer submits that the respondent, Mr Walton, is not entitled to immediately enforce or issue execution on the order which is appended to the Bankruptcy Notice.  Ms Klewer states that the order is an order for costs against a prosecutor acting in a private capacity in summary proceedings pursuant to s 213 of the Criminal Procedure Act 1986 (NSW) (“the Criminal Procedure Act”), and submits that an order under that section makes the costs payable to the Registrar of the Local Court at Coffs Harbour, and does not of itself entitle the respondent to immediately enforce the order, or to issue execution against her.

reasoning on the application

5                     On the hearing of the application, Ms Klewer appeared in person.  She provided the Court with a handwritten note dated 26 March 2004, together with some annexed documents, which she said were the result of legal advice given to her.  This note raises a number of grounds in support of the application.

6                     The first ground raised is that the costs order against Ms Klewer is not payable until the Court Order is registered under s 110 of the Fines Act 1996 (NSW).  The Certificate of Conviction annexed to the Bankruptcy Notice indicates that the order to pay Mr Walton’s costs are a true record of the Local Court.  In these circumstances I am satisfied that under s 110 of the Fines Act, the order can be enforced as an order on the Court record. 

7                     The second ground raised is that a costs order in the Local Court cannot be enforced in that court until it has been entered in that court.  In this regard Ms Klewer refers to s 58 of the Local Courts (Civil Claims) Act 1970 (NSW) (“the Civil Claims Act”), which provides that the registrar of a court in which a judgment is given may, on the application of a judgment creditor, issue a writ of execution, which shall be in force for a prescribed period.  This is really a repetition of her submission in relation to s 110 of the Fines Act.  I consider that the costs order has been entered in the Local Court, as recorded in the Certificate of Conviction.

8                     The third ground raised is simply a bald assertion that s 35 does not apply to the present case.  This appears to be reference to s 35 of the Civil Claims Act, which provides that any costs payable by a judgment debtor under that Act shall form part of the judgment debt.  In the absence of any reasonable argument to support her assertion on this aspect, I consider that the costs payable to the respondent in this case are part of the judgment debt.

9                     The fourth and main ground, as indicated in Ms Klewer’s affidavit of 25 February 2004, is that Mr Walton has no immediate right to execute the judgment debt.  Ms Klewer annexes to her handwritten note a series of extracts from texts and judgments in support of this submission.  These refer to the test of validity of a bankruptcy notice as being whether the creditor is in a position to issue immediate execution on the judgment.  It is clear that these extracts refer to cases of an implied stay, where a creditor has taken some steps to enforce the judgment, but no further execution can be levied because of the particular circumstances of the case.  However, in the present case it is not necessary, in my view, for the creditor to take any additional steps in order to enforce the judgment debt.  The submission that the judgment creditor has no right of immediate execution has no substance in the present circumstances.

10                  Ms Klewer submits, in further support of the fourth ground, that the order was made under s 213 of the Criminal Procedure Act, which relevantly provides:

‘213(1)            A court may at the end of summary proceedings order that the prosecutor pay costs to the registrar of the court, for payment to the accused person, if the matter is dismissed or withdrawn.

…’  (Emphasis added)

11                  The submission by Ms Klewer is that by this order, it is the Registrar of the Local Court, rather than the respondent, who is identified as creditor or beneficiary of the obligation.  Accordingly, it is submitted that the respondent cannot rely on this order as proof that he is a judgment creditor for the purposes of issuing a bankruptcy notice.

12                  I do not accept this proposition for two reasons.  First, the order that was actually made by the Magistrate of the Local Court, as recorded in the Certificate of Conviction annexed to the Bankruptcy Notice, is that the informant, Ms Klewer, is ordered to pay Mr Walton’s professional costs of $10,504.00 within fourteen days.  This is clearly an order directly in favour of Mr Walton.  Secondly, the power to order that costs be paid to the registrar under s 213 of the Criminal Procedure Act, in my view, clearly constitutes the accused person against whom a matter is dismissed, and not the registrar, as the creditor who can bring proceedings in bankruptcy as a judgment creditor.  Clearly, the registrar is not the judgment creditor.  This provision only prescribes a procedure for the way in which payment is to be made.  It does not support a claim that the accused person is not the relevant creditor. 

13                  The respondent referred to and relied on the judgment of In re A Debtor [1929] 2 Ch 146, where an order of the Divorce Court directed payment by the co-respondent to the solicitors of the petitioner of his costs of the suit.  A bankruptcy notice was issued by the solicitors against the debtor for payment.  The Court of Appeal held that the solicitors were not “creditors” within the meaning of the Bankruptcy Act 1914 (UK), who could present a bankruptcy notice against the co-respondent.  In the course of his judgment, Lord Hanworth MR, with whom Lawrence and Sankey LJJ, agreed, said:

‘ … there is the same intention to indicate that the person at whose suit proceedings are taken must be the principal, the person in whose interest those proceedings are necessary.  In my opinion the petitioning husband in this case was the person who was really the principal, for whose indemnity legal proceedings were necessary.  The solicitors were merely acting as a necessary part of the machinery, under which the sum enured for the benefit of the petitioner; but they were not the principals as against the debtor.’

14                  In my view, this statement applies in the present case.  The registrar referred to in s 213(1) of the Criminal Procedure Act is, to use the language of Lord Hanworth MR, merely acting as a necessary part of the machinery under which the sum enured for the benefit of Mr Walton. 

conclusion

15                  This matter has a long and complex history in which the latest stage is that Ms Klewer intends to appeal a decision of the New South Wales Court of Appeal in respect of a challenge by her to the obligation to pay the debt claimed.  This is a challenge in respect of which she has been unsuccessful to date.  In order to pursue an appeal she will first have to obtain special leave from the High Court.  Furthermore, there is in force no stay of the relevant judgment order.  I am satisfied on the material before me that there is a judgment debt in force, execution of which has not been stayed.  Accordingly, the application to set aside the Bankruptcy Notice should be dismissed with costs, as the applicant has not made out any of the submissions on which she seeks to rely.

Associate:

Dated:              7 April 2004