FEDERAL COURT OF AUSTRALIA

Sarks v Cassegrain [2014] FCA 972

THE COURT ORDERS THAT:

1.    The Application filed on 14 July 2014 in proceeding NSD 697 of 2014 is dismissed.

2.    The time for compliance with Bankruptcy Notice No. 172691 is extended to 24 September 2014.

3.    The Applicant in proceeding NSD 697 of 2014 is to pay the costs of the Respondents.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

THE COURT ORDERS THAT:

1.    The Application filed on 14 July 2014 in proceeding NSD 698 of 2014 is dismissed.

2.    The time for compliance with Bankruptcy Notice No. 172688 is extended to 24 September 2014.

3.    The Applicant in proceeding NSD 698 of 2014 is to pay the costs of the Respondents.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    On 27 April 2012 Bergin CJ in Equity published her reasons for decision in Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors [2012] NSWSC 403. There were competing claims as to the orders to be made. Submissions were thereafter filed. On 24 July 2012 her Honour published further reasons in respect to the orders to be made: Denis Cassegrain & Ors v Gerard Cassegrain & Co Pty Ltd & Ors (Final Orders) [2012] NSWSC 834, (2012) 264 FLR 392. The Orders then made were entered on that date.

2    Order 16 as made on 24 July 2012 was as follows:

Claude Cassegrain, Anthony Sarks and Felicity Cassegrain pay the Plaintiffs’ costs of the statutory derivative and oppression proceedings concerning Gerard Cassegrain & Co Pty Limited on a party/party basis.

Pursuant to that order, costs were thereafter assessed and two orders for costs were made: the first being an order made on 18 December 2013 in the sum of $1,399,870.71; the second being made on 16 May 2014 in the sum of $2,662.00. Order 17 provided for the holding of an inquiry “as to the existence and quantum of any loss to Gerard Cassegrain & Co Pty Limited…”.

3    On 23 October 2012 Mr Claude Cassegrain and Mr Anthony Sarks filed a Notice of Appeal. The appeal was expressed to be “brought from the whole of the Judgment of Bergin CJ in Eq delivered on 27 April 2012 and the Orders made by her Honour on 24 July 2012”. Appeal Ground 14 stated that the “primary judge erred in making the consequential orders numbered 12-17 made by her on 30 July 2012”. That appeal was heard together with two other appeals also filed in respect to the decision of Bergin CJ in Eq on 20 December 2012. The Court of Appeal dismissed the appeal filed by Mr Claude Cassegrain and Mr Anthony Sarks: Gerard Cassegrain & Co Pty Ltd (in liq) v Cassegrain [2013] NSWCA 455, (2013) 305 ALR 687. An Application for Special Leave to Appeal to the High Court of Australia was filed on 17 January 2014 but discontinued on 14 February 2014.

4    The costs ordered to be paid by Bergin CJ in Eq were not paid.

5    On 24 June 2014 Mr Anthony Sarks was served with a Bankruptcy Notice claiming a total debt of $1,461,682.70. The Bankruptcy Notice was issued on 18 June 2014. The sum of $1,461,682.70 represented the combined amount of the two costs orders (i.e., $1,402,532.71) together with a further amount of $59,149.99 (being interest payable pursuant to s 101 of the Civil Procedure Act 2005 (NSW)). Also on the same day Mr Claude Cassegrain was served with a Bankruptcy Notice. The Bankruptcy Notice served on Mr Claude Cassegrain claimed a total debt of $1,546,781.09. Nothing turns on the difference in the amounts being claimed.

6    Both Bankruptcy Notices required payment with 21 days. The time for compliance has been extended, most recently by an order made on 26 August 2014 extending the time for compliance to 12 September 2014.

7    On 14 July 2014 two separate Applications were filed in this Court, one by Mr Anthony Sarks; the other by Mr Claude Cassegrain. Each Application sought to have the Bankruptcy Notices set aside. Both Applications were heard together. The arguments advanced on behalf of both Messrs Sarks and Claude Cassegrain were that:

(i)    the orders relied upon are not “final” orders;

(ii)    the amounts claimed “are not presently payable” by reason of the operation of r 42.7 of the Uniform Civil Procedure Rules 2005 (NSW) (“Uniform Civil Procedure Rules”), that contention being that until an order is made for the payment of monies there has been no “conclusion” of the proceeding before Bergin CJ in Eq;

and that:

(iii)    the Bankruptcy Notices were not founded upon a final “judgment”.

8    It was common ground that s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”) requires a bankruptcy notice to be relevantly founded upon “a final judgment or final order”. Section 40 sets out the various ways in which a debtor may commit an “act of bankruptcy”, including s 40(1)(g) which provides as follows:

A debtor commits an act of bankruptcy in each of the following cases:

…

(g)    if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:

…

comply with the requirements of the notice …

Section 41 of the Bankruptcy Act provides that a bankruptcy notice may be issued where (inter alia) a creditor has obtained against a debtor a “final judgment” of the kind described in s 40(1)(g).

9    The first two arguments, to the extent that they can be separated one from the other, are to be rejected. The orders made on 24 July 2012, it is concluded, were “final” orders – and not mere interlocutory orders – even though an inquiry was yet to be undertaken and even though further orders were yet to be made. And, being final orders, r 42.7 of the Uniform Civil Procedure Rules cannot be invoked to support a contention that such costs as were ordered to be paid were not presently payable because the proceeding had not as yet reached “conclusion”. The final argument that there was no final “judgment” for the purposes of s 40(1)(g) is also rejected.

A judgment on liability & an order for an inquiry – finality?

10    The arguments advanced by Senior Counsel on behalf of the Applicants focussed upon the form of the orders made on 24 July 2012 – and, in particular, the terms of Order 17 which contemplated the making of a future order for the payment of equitable compensation after the holding of an inquiry.

11    In the course of giving reasons for her decision on 24 July 2012, Bergin CJ in Eq observed:

[7]     The next issue between the parties is the nature of the orders that should be made in respect of the compensation sought by the plaintiffs. There is no issue between the parties that consequent upon the judgment of 27 April 2012 an order for equitable compensation should be made. However the plaintiffs seek an order that the amount of equitable compensation be quantified immediately. It was submitted that it is a straightforward quantification of the difference between the amounts Felicity Cassegrain paid for the shares and the value of the shares recorded in the judgment. I am not satisfied that this is the appropriate way in which to proceed. Rather I agree with the defendants’ submissions that there should be an inquiry in relation to the amount of compensation to be paid to GCC. Accordingly an order will be made for an inquiry in respect of the assessment of equitable compensation as against Claude Cassegrain, Felicity Cassegrain and Anthony Sarks.

Orders 10 and 17 as made on that date give effect to this reasoning. Those Orders were in the following terms:

Corporations Act 2001

10.    Claude Cassegrain, Anthony Sarks and Felicity Cassegrain are jointly and severally liable to compensate Gerard Cassegrain & Co Pty Limited for any loss to Gerard Cassegrain & Co Pty Limited arising from the transfer of Gerard Cassegrain & Co Pty Limited’s shares in CaTTO and OAL to Felicity Cassegrain on 19 and 20 January 2005 respectively.

The Court orders that:

…

17.    An Inquiry be held as to the existence and quantum of any loss to Gerard Cassegrain & Co Pty Limited by reason of the transfer of Gerard Cassegrain & Co Pty Limited’s shares in CaTTO and OAL to Felicity Cassegrain for the purpose of making orders for equitable compensation to be paid to Gerard Cassegrain & Co Limited by Claude Cassegrain, Anthony Sarks and Felicity Cassegrain. That Inquiry is to include the assessment of any damage to Gerard Cassegrain & Co Pty Limited by reason of the contravensions of ss 180, 181(1) and 182(1) of the Corporations Act 2001 by Claude Cassegrain and Anthony Sarks (including any profits made by Claude Cassegrain and/or Anthony Sarks resulting from the contraventions) referred to in Declarations 5 and 6 and the determination of any amount of compensation to be ordered under s 1317H of the Corporations Act 2001 against Claude Cassegrain and Anthony Sarks.

Emphasis was placed by Senior Counsel for the Applicants upon the terms of this order and, in particular, the phrase “for the purpose of making orders for equitable compensation…”. The importance sought to be ascribed to this phrase was that Bergin CJ in Eq expressly contemplated that the orders she was making on 24 July 2012 were not the “final” orders she would be called upon to make and that the proceeding before her would not be “concluded” until the inquiry had been undertaken and the orders for equitable compensation made.

12    Notwithstanding the fact that Order 17 ordered an inquiry to be undertaken and a further Order to be made, it is concluded that the orders otherwise made on 24 July 2012 were “final” Orders of the Court. The form of Order 17 does not dictate that any different conclusion be reached.

13    It was common ground that orders made by a court of equity may be regarded as final even though further proceedings may be required, such as the holding of an inquiry: Derrawee Pastoral Company Pty Limited v McConochie [1995] NSWCA 123. There in question was whether an order was final or interlocutory for the purposes of an appeal. Handley JA summarised the position as follows:

As far as I can determine the distinction drawn between interlocutory and final orders for the purposes of determining rights of appeal dates from the Judicature Act 1875 (Imp) and the Rules of Court made thereunder. Judgments for damages to be assessed have been treated as interlocutory until completed by the assessment. See Electricity Commission v Lapthorne (1971) 124 CLR 177. However after a period of uncertainty and some confusion in the authorities, it became established in England that judgments of a kind formerly granted in the Court of Chancery were final although further proceedings, even of an elaborate kind, were required for their working out. Thus in Smith v Davies [1886] 31 Ch D 595 an order nisi for foreclosure was held to be final although it directed accounts and inquiries in the Master's Office which would have to be completed before the order absolute could be made foreclosing the mortgagor. In Blakey v Latham [1889] 43 Ch D 23 at 25 Cotton LJ said:

Any order, in my opinion, which does not deal with the final rights of the parties, but merely directs how the declarations of right already given in the final judgment are to be worked out is interlocutory.

Fry LJ at 26 said:

…where a final judgment has been pronounced in an action, and subsequently an order has been obtained for the purpose of working out the rights given by the final judgment, that order has always been deemed, and rightly deemed, to be interlocutory.

See also In Re Herbert Reeves & Co [1902] 1 Ch 29; Re Jerome [1907] 2 Ch 145 and Norton v Norton [1908] 99 LT 709.

This decision has been relied upon by Brereton J, together with other decisions, in Qu v Kuang [2008] NSWSC 991. There in question was the characterisation of orders made by Gzell J, including an order for an inquiry to be held as to the amount Ms Kuang had contributed to the repayment of a mortgage and the amount Ms Qu should reimburse Ms Kuang. Brereton J relevantly concluded:

[7]     …Since his Honour's judgment, Ms Kuang has attempted to file a Notice of Intention to Appeal, which the Court is informed was rejected by the Registry on the basis that there was not yet a final decision from which an appeal could be brought as of right. If that be so then, with respect, the view taken by the Registry is wrong: although at common law a judgment for damages to be assessed is interlocutory and the subsequent judgment quantifying those damages is regarded as the final judgment; in equity, a judgment on liability with a reference for an inquiry is regarded as a final judgment, and the decision on the subsequent inquiry is regarded as interlocutory…

See also: Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22 at [35], (2002) 54 NSWLR 146 at 153 per Giles JA (Sheller and Beazley JJA agreeing).

14    The holding of an inquiry, on this approach, was but the “working out” of the remedy to which a claimant in equity was otherwise entitled.

15    But different considerations, so it was submitted on behalf of the Applicants, applied where the orders made by a court of equity contemplated the reservation to the court of matters which require “further consideration” by the court. Where a court has reserved to itself the need to give “further consideration” to a matter, there may be no “final judgment” or no “perfect judgment”: Meehan v Glazier Holdings Pty Ltd [2002] NSWCA 22 at [33], (2002) 54 NSWLR 146 at 152 per Giles JA. The form of order made in that case, Order 4, was in the following terms:

An account be taken of the dealings and transactions of the first defendant as trustee and that the defendants be ordered to pay to the new trustee the amount found to be due on the taking of such accounts together with interest.

The contrast sought to be emphasised by the Applicants between that order and Order 17 as made by Bergin CJ in Eq was that Order 4 was itself an order to pay an amount found to be due; Order 17 provided for the making of a further order. Order 4 in Meehan, it was concluded, was a final order. In so concluding Giles JA observed:

[33]    If order 4 had ordered no more than the taking of accounts, and the orders made on 18 March 1998 had included that the proceedings be adjourned for further consideration, it could readily enough be said that order 4 did not determine Glazier's claim for relief and was interlocutory. The composite claim to relief had two stages, and its culmination was the order that money be paid. Until the order that money be paid there would not be “a perfect judgment”…

[34]    But order 4 was not in that form…

With reference to the reasons for decision of Handley JA in Derrawee Pastoral, Giles JA continued on to observe:

[35]    It is not inconsistent with order 4 being a final order that further orders or directions would be required to enable the accounts to be taken. In Derrawee Pastoral Company Pty Ltd v McConachie (Handley JA, 24 February 1995, unreported) consent orders were made by which one party was to purchase the shares of another at a price determined by an accountant and the purchase was to be completed within 21 days of the accountant's report. There was no reservation of further consideration (although there was liberty to apply, which is different:…). After the accountant provided his report orders were made to compel completion of the purchase. Handley JA said that the consent orders were the final orders, because they finally determined the rights of the parties, and the subsequent orders “merely worked out the rights of the parties under that final order”…

Sheller and Beazley JJA agreed with Giles JA.

16    Subsequently, and in explaining the observations of Giles JA in Meehan, Campbell JA in Carantinos v Magafas [2008] NSWCA 304 said:

[145]    At first instance in Meehan v Glazier Holdings the trial judge had made an order for the taking of accounts (in common form) of a trustee, and for the trustee to pay the amount found due on the taking of those accounts…When later inquiries revealed what was thought to be a basis for the taking of accounts on the basis of wilful default or neglect, the trial judge made an order varying his initial order, so that the account was to be taken on the basis of wilful default and neglect, and the amount so found due be paid (at [20]). The substantial reason why Giles JA held that there was no power to make that variation was that the order for taking accounts in common form and payment of the amount so found due was a final order, that had been entered, and so could not be changed (at [31]–[45]). If the order had been for the taking of accounts on the common basis, with reservation of further consideration, and no order for payment of any amount, the order would have been interlocutory, so far as the basis upon which any payment ought ultimately be made was concerned, and so might have been changed.

Campbell JA, it will be noted, placed emphasis upon the form of the order in Meehan, namely an order for the taking of accounts “and” payment. As such, the order was “final”. In Carantinos the primary Judge had concluded that there was a partnership or joint venture between Magafas and Carantinos. An order was made for the payment of sums found to be due upon the taking of accounts. In concluding that that order should be set aside and that an order should be made generally reserving future consideration and consideration of specific matters, Hodgson JA observed:

Form of Orders

[107]    As appears from what I have written, there are a number of unresolved questions that may require consideration beyond that which would ordinarily happen in the taking and settling of accounts. In relation to these matters, in my opinion the best course is to have an express reservation for further consideration, which may be activated under the liberty to apply. In relation to some issues, it could be that further proceedings will be necessary; but whether or not that is so could be considered on an application under the liberty to apply. There are six matters that need to be dealt with in this way.

It was in this context, as to the appropriate form of orders to be made on appeal, that Campbell JA made the above observations. See also: Juul v Northey [2010] NSWCA 211 at [194] to [195] per McColl JA.

17    Notwithstanding the form of Order 17 as made by Bergin CJ in Eq on 24 July 2012, the Orders then made were final Orders, which completely resolved the Plaintiffs’ claims to relief. Order 10 of the Orders provided that (inter alia) Messrs Claude Cassegrain and Sarks were “jointly and severally liable for any loss…”; Order 17 provided for the holding of an inquiry to determine the quantum of any such loss. Order 17, it is concluded, is not the reservation to the Court of any power of reconsideration. The case before Bergin CJ in Eq presented none of the “unresolved questions” of the kind that warranted the variation of orders as made in Carantinos. Order 17 was but a means of “working out” the quantum of “any loss” (cf. Derrawee Pastoral). As such, the orders are final orders. The fact that Order 17 expressly contemplated the making of “orders for equitable compensation” after the holding of an inquiry did not render the remaining orders – and Order 16 in particular – any the less “final.”

Rule 42.7

18    But for the operation of r 42.7 of the Uniform Civil Procedure Rules, there could thus be no impediment to Order 16 founding the Bankruptcy Notices served on Messrs Sarks and Cassegrain.

19    Separate from any argument as to whether Order 16 was a “final order” was the Applicants’ further argument that the proceeding before Bergin CJ in Eq had not “concluded”. Common to both arguments, however, remained the terms of Order 17.

20    Rule 42.7 provides as follows:

Interlocutory applications and reserved costs

(1)    Unless the court orders otherwise, the costs of any application or other step in any proceedings, including:

(a)    costs that are reserved, and

(b)    costs in respect of any such application or step in respect of which no order as to costs is made,

are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

(2)    Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.

This rule, it may be noted, stands in contrast to r 40.13 of the Federal Court Rules 2011 (Cth) (the “Federal Court Rules”). That rule provides as follows:

Taxation of costs awarded on an interlocutory application

If an order for costs is made on an interlocutory application, the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished.

Rule 42.7 refers to “any application or other step in any proceeding”; r 40.13 expressly refers to cost orders made on an “interlocutory application”. Rule 42.7(2) refers to the “conclusion” of a proceeding; r 40.13 refers to a proceeding having been “finished”.

21    On behalf of the Applicants, Senior Counsel contended that for the purposes of r 42.7 the Orders made on 17 and 24 July 2012 were but a “step” in the proceeding. That proceeding, it was further submitted, had not been “concluded” until the inquiry was undertaken and orders made for the payment of such equitable compensation as may be found to be payable as a result of the inquiry. Although it would arguably have been open to the Plaintiffs before Bergin CJ in Eq to have sought:

    an order that costs be payable “forthwith” or to “otherwise” order; and/or

    an order in different terms to that made in Order 17 – for example, an order that payment be made of such amount as may be quantified as a result of an inquiry

the fact is, so it was argued, such orders differently expressed were not sought and not made.

22    Rule 42.7(2), for example, expressly contemplates that the Supreme Court may “otherwise” order. A similar power is conferred upon this Court. With reference to the former Order 62 r 3 of the now-repealed Federal Court Rules 1979 (Cth), Heerey, Branson and Merkell JJ in Bailey v Beagle Management Pty Ltd (2001) 105 FCR 136 at 145 observed in respect to the former Order:

… The policy behind O 62, r 3 is that, in the ordinary course of litigation, costs awarded in interlocutory proceedings need not be paid until the conclusion of the proceeding when set-offs can be made in the light of the ultimate orders for costs. There is an access to justice aspect in this. Impecunious litigants who have a meritorious claim or defence should not be forced out of court because of inability to meet interlocutory costs orders…

There is also the “undesirability of having taxation issues dealt with seriatim rather than at the completion of a matter, and the possible consequence of a recovery of costs which might otherwise be the subject of some overall resolution of such issues when the final result of the application is known”: Murran Investments Pty Ltd v Aromatic Beauty Products Pty Ltd [2000] FCA 1732 at [70], (2000) 191 ALR 579 at 595 per Mansfield.

23    The exercise of the discretion for the Court to “otherwise order” in r 42.7 has been exercised by the Supreme Court (e.g., Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 at 3; Ken Tugrul v Tarrants Financial Consultants Pty Ltd (No 1) [2013] NSWSC 1561 at [41] per Kunc J) in a manner largely comparable to the manner in which this Court has exercised a like discretion (e.g., Spotwire Pty Ltd v Visa International Service Association (No 2) [2004] FCA 571 at [104] per Bennett J; Crosby v Kelly [2012] FCAFC 96 at [47], (2012) 203 FCR 451 at 460 per Robertson J). In Morningstar Research, Barrett J referred to the comparability between the then applicable rules in the Supreme Court and the Federal Court and went on to “consider the factors which have caused courts to depart from the normal rule … that costs are payable at the conclusion of the proceeding”. In identifying such factors his Honour observed:

[11]    This identifies the first recognisable category of case, namely, where the application or aspect in respect of which the particular costs order is made before conclusion of the proceedings represents the determination of a separately identifiable matter or may be viewed as the completion of a discrete aspect…

[12]    A second factor which may incline the court to order that costs be payable forthwith is some unreasonable conduct on the part of the party against whom costs have been ordered…

[13]    A third factor is, as it was put by Giles J in Doran Constructions Pty Ltd v University of Newcastle (Giles J, 16 December 1994, unreported) at 21, that “there was much to come in these proceedings” and “one can see a fairly long time before the proceedings are disposed of”. …: (2002) 55 NSWLR at 4 to 5.

This is by no means an exhaustive list of “factors” that may lead a court to make an order that the costs (for example) of an interlocutory application should be payable “forthwith”. The present importance of giving some consideration to those situations in which a court may “order otherwise” for the purposes of r 42.7(2) is that those cases inform both the content and purpose of r 42.7(1).

24    The argument founded upon r 42.7 should be rejected for either of at least two reasons.

25    First, there is no reason to construe the phrase “until the conclusion of the proceedings” as meaning anything other than when final orders have been made. When final orders had been made, the proceeding in which the competing rights of the parties were advanced for resolution has “concluded”. The liabilities of the parties were resolved by the decision of Bergin CJ in Eq and by the dismissal of the appeal from her Honour’s decision. And that liability included the liability to pay costs. That part of the proceedings, in particular, in which orders were made for the payment of costs has “concluded”. The orders made by Bergin CJ in Eq cannot be properly characterised as a mere “step in any proceeding” with the “conclusion of the proceeding” only occurring once the inquiry has been undertaken. The liability of the parties on the issues as agitated at first instance and on appeal has been “concluded”. The purpose of r 42.7(1), it is respectfully concluded, is not to defer the finality of a costs order made in equity proceeding until such time as an “inquiry” may thereafter be concluded and a further order made.

26    Second, albeit a reason which is unnecessary for the conclusion that the present argument should be rejected, r 42.7 should most probably be construed as referring to orders in the nature of interlocutory orders. To so construe the phrase gives effect to the circumstances in which the discretion has been exercised to order “otherwise” or to make an order that costs be payable “forthwith”. To give r 42.7 any wider operation would not seem to promote the object and purpose sought to be achieved by the rule. Given that r 42.7, however, is a rule of the Supreme Court – rather than a rule of this Court – it is preferable to express no more than a tentative view. It is best for that Court to construe and apply its own Rules of Court – unless it is necessary for this Court to do so. In the present proceeding, it is unnecessary to express any more certain conclusion.

27    Rule 42.7 does not provide any reason for concluding that the costs ordered to be paid are not presently “payable” and do not constitute a “final … order” for the purposes of s 40(1)(g) of the Bankruptcy Act. Nor does r 42.7 operate as a “stay” upon the order for costs previously made.

A final “judgment”

28    The last argument advanced on behalf of the Applicants was that the “judgments” relied upon in issuing the Bankruptcy Notices were not in fact “judgments” for the purposes of s 40(1)(g).

29    The Form of Bankruptcy Notice set forth in Schedule 1 to the Bankruptcy Regulations 1996 (Cth) refers to an “attached final judgment or final order”.

30    The form of the “judgment(s)/order(s)” annexed to the two Bankruptcy Notices in the present proceeding, it is said on behalf of the Applicants, assume importance.

31    Annexed to those two Bankruptcy Notices are judgments/orders entered after an assessment as to costs and a review process was conducted. In January 2013, requests were made for an assessment as to the party/party costs ordered by Bergin CJ in Eq pursuant to s 353 of the Legal Profession Act 2004 (NSW) (the “Legal Profession Act”). In December 2013 certificates of determination were issued. The Supreme Court thereafter made and entered judgments/orders in December 2013. In January 2014, a request was then made for a review of those determinations. In May 2014 a costs review panel issued certificates of determination affirming those costs determinations.

32    Such judgments or orders, it is said, was but a “ministerial act” which took its “force from the statute” and could not be regarded as a “judgment” of the court for the purposes of s 40(1)(g) of the Bankruptcy Act.

33    In the present statutory context, s 368 of the Legal Profession Act provides that a costs assessor is to issue a certificate in respect to a determination made as to costs. Rule 36.10(1) of the Uniform Civil Procedure Rules thereafter provides that a cost assessor’s certificate may be “filed in the proceeding to which it relates”. Section 368(5) provides:

In the case of an amount of costs that has not been paid, the certificate is, on the filing of the certificate in the office or registry of a court having jurisdiction to order the payment of that amount of money, and with no further action, taken to be a judgment of that court for the amount of unpaid costs, and the rate of any interest payable in respect of that amount of costs is the rate of interest in the court in which the certificate is filed.

Emphasis is placed by the Applicants upon the phrase “taken to be a judgment”.

34    In commenting upon a predecessor provision to s 368, Giles JA in Frumar v The Owners of Strata Plan 36957 [2010] NSWCA 172 observed:

[8]    … under s 208KF(2) of the Legal Profession Act 1987 (since repealed, see now s 368(5) of the Legal Profession Act 2004) on the filing of the review panel’s certificate it was taken to be a judgment of the District Court. In truth, there was no District Court judgment. So-called judgments under s 208J(3) of the 1987 Act, which is relevantly replicated in s 208KF(2), have been considered in Doyle v Hall Chadwick [2007] NSWCA 159 at [47]–[54] and cases there mentioned, with recognition of their distinct nature, and while reference to them as judgments is convenient (and I will hereafter refer to the District Court judgment as such) they take their force from the statute and are not judgments of the court.

This decision is clearly the source of the Applicants’ present submission. But nothing said in that case touched upon whether a certificate of a determination as to costs that is “taken to be a judgment” may not constitute a “judgment” for the purposes of s 40(1)(g) of the Bankruptcy Act. Nothing said in that decision precludes a conclusion that something which is to be “taken to be a judgment” may not constitute a “judgment” for the purposes of s 40(1)(g).

35    Moreover, and notwithstanding the fact that each of the Bankruptcy Notices annexed as the “judgment/order” that which is to be “taken to be a judgment” of the Court by reason of s 368(5), each of the Bankruptcy Notices is ultimately founded upon the orders made by Bergin CJ in Eq on 16 May 2014. And those orders constituted “final orders” for the purposes of s 40(1)(g). The “judgment(s)/order(s)” attached to each of the Bankruptcy Notice were but the quantification of the amounts claimed in respect to those costs ordered to be paid by Bergin CJ in Eq. Whether or not such “judgments” had been entered as a “ministerial” process, each quantified the amount of monies payable pursuant to the “final orders” previously made.

36    Although not determinative of the matter, the contention advanced on behalf of the Applicants – if accepted – could well mean that many (if not all) bankruptcy notices would fail if founded upon “judgments” entered pursuant to provisions such as s 365 of the Legal Profession Act. Such a result would be surprising.

37    The last of the arguments advanced on behalf of the Applicants is, accordingly, also rejected.

CONCLUSIONS

38    The Bankruptcy Notices served on Messrs Sarks and Cassegrain on 24 June 2014 should not be set aside. Each of their Applications filed on 14 July 2014 should be dismissed.

39    The time for compliance with each of the Bankruptcy Notices served on each of the Applicants should be extended for a short period of time to enable the Applicants to appeal from this decision, if they so wish.

40    The Applications should be dismissed with costs.

THE ORDERS OF THE COURT ARE:

In proceeding NSD 697 of 2014:

1.    The Application filed on 14 July 2014 in proceeding NSD 697 of 2014 is dismissed.

2.    The time for compliance with Bankruptcy Notice No. 172691 is extended to 24 September 2014.

3.    The Applicant in proceeding NSD 697 of 2014 is to pay the costs of the Respondents.

In proceeding NSD 698 of 2014

1.    The Application filed on 14 July 2014 in proceeding NSD 698 of 2014 is dismissed.

2.    The time for compliance with Bankruptcy Notice No. 172688 is extended to 24 September 2014.

3.    The Applicant in proceeding NSD 698 of 2014 is to pay the costs of the Respondents.

Associate:

Dated:    10 September 2014