Practitioners seeking to enforce maintenance arrears through bankruptcy proceedings cannot rely on a judgment entered pursuant to s 13A of the Deserted Wives and Children Act (or analogous statutory certificate procedures) as a 'final judgment' to support a bankruptcy notice under s 52(j) of the Bankruptcy Act.
Later decisions that cite Opie v Opie
OPIE v. OPIE [1951] HCA 47; (1951) 84 CLR 362
Bankruptcy
High Court of Australia
Dixon(1), McTiernan(2) and Williams(1) JJ.
CATCHWORDS
Bankruptcy - Bankruptcy notice - "Final judgment" - "Action in &which judgment obtained" - Judgment entered in Supreme Court pursuant to magistrate's certificate - Bankruptcy Act 1924-1950 (No. 37 of 1924 - No. 80 of 1950), s. 52 (j)* - Deserted Wives and Children Act 1901-1939 (N.S.W.) (No. 17 of 1901 - No. 17 of 1939), s. 13A.
*The relevant provisions of s. 52 (j) of the Bankruptcy Act 1924-1950 are
set out in the judgment of Dixon and Williams JJ., at
pp. 371, 372 [1951] HCA 47; (1951) 84
CLR 362
HEARING
Sydney, 1951, August 2, 3; September 13. 13:9:1951DECISION
September 13.2. Section 13A of the Deserted Wives and Children Act is in the following terms:- "(1) Where an order has been made under section seven for the support of a wife or child and it is made to appear upon oath to a police or stipendiary magistrate that default has been made by the defendant in making the payments directed by the order, and that an amount of more than ten pounds is due thereunder, the magistrate may grant a certificate in the prescribed form stating the amount due under the order at the date thereof without requiring notice of the application to be given to the defendant. (2) The person entitled to receive the money ordered to be paid may file or cause to be filed such certificate in the Supreme Court or in any District Court having jurisdiction within the district wherein the defendant resides or wherein any real property of his is situate, and the Prothonotary or the registrar of such District Court, as the case may be, shall enter judgment for such person for the amount stated to be due in the certificate together with the fees paid therefor and for filing the same and entering the judgment. Such judgment may be enforced in any manner in which a final judgment in an action may be enforced. Rules of court may prescribe the practice and procedure in the Supreme Court and in District Courts to be observed in connection with the filing of certificates and entering up of judgments thereon in pursuance of this section, and the fees to be paid." (at p369)
3. The Rules of the Supreme Court made on 22nd March 1932 provide that (1) upon the filing of a certificate granted under s. 13A(1) of the Deserted Wives and Children Act, 1901-1931, the Prothonotary shall enter judgment pursuant to s. 13A(2) of the said Act in a book to be kept by him and to be called the "Register of Judgments for Maintenance - Deserted Wives and Children Act"; (2) the following filing fees shall be paid (a) on filing certificate 1s. 6d.; (b) on entering judgment 6s. (at p369)
4. On 19th September 1950 a stipendiary magistrate certified under s. 13A(1) that the above sum of 261 pounds was due under the above orders on that date. The certificate of the magistrate was filed in the Supreme Court on the same day. On the following day the respondent issued a bankruptcy notice in the usual form calling upon the appellant within seven days after service of the notice to pay her the sum of 261 pounds 12s. 6d. claimed by her as being the amount due on a final judgment obtained by her against the appellant in the Supreme Court on 19th September 1950. The 12s. 6d. was apparently added for court fees. The appellant did not comply with the notice, but moved the Federal Court of Bankruptcy to set it aside. (at p370)
5. The hearing of the matter proceeded upon the basis that judgment had been entered for the respondent pursuant to the rules of court. The only evidence before his Honour, however, consisted of a copy of the certificate of the magistrate and a notation thereon certified by the Chief Clerk of the Supreme Court as follows:- "I certify this to be a true copy of the judgment signed herein and filed of Record in the office of the Supreme Court of New South Wales. Dated this nineteenth day of September A.D. 1950". Section 20 of the Evidence Act 1898 (N.S.W.), so far as material, provides that evidence of any judgment of the Supreme Court may be given by the production of a copy thereof certified under the hand of the Chief Clerk. Under s. 133 of the Common Law Procedure Act 1899 (N.S.W.) and rule 174 of the Rules of the Supreme Court, it is not necessary before issuing execution to enter the proceedings upon any roll, but an incipitur may be made upon paper shortly describing the nature of the judgment and judgment may thereafter be signed and the costs taxed and execution issued as upon a judgment duly enrolled. In Storer v. Smith's Newspapers Ltd. (1939) 39 SR (NSW) 77, at p 79; 56 WN 42, at p 43 Jordan C.J., in reference to s. 133, said, speaking of a judgment after a trial, that "the present practice is that the postea is constituted by an informal note of the jury's verdict; and judgment is signed by procuring the stamping of a separate incipitur of judgment which is prepared from the informal postea". A duly certified copy of an informal incipitur of judgment is therefore now sufficient evidence of the judgment under the Evidence Act and entry on the roll is unnecessary. But the document signed by the Chief Clerk on 19th September 1950 is not a certified copy of an incipitur of a judgment. It is merely a copy of the certificate of the magistrate pursuant to which it became the duty of the Prothonotary to enter judgment in the "Register of Judgments for Maintenance - Deserted Wives and Children Act." (at p370)
6. Accordingly it would seem that there was no evidence of a judgment of the Supreme Court before his Honour and that the motion to set aside the bankruptcy notice should have succeeded on this ground. On the contrary, inasmuch as the Chief Clerk certified that a document not amounting to a judgment was "the judgment signed herein", it may be said that it appeared affirmatively that in point of law there was not a judgment. An affidavit was tendered on the part of the appellant with a view of showing that in fact no judgment was entered until upon the eve of the hearing of this appeal, but, in accordance with the practice of this Court, we refused to admit further evidence on the hearing of the appeal. The appellant did not take before the Bankruptcy Court the objection that no formal judgment existed, but there can be no suggestion that the point might have been met by further evidence and it therefore remains open on appeal. The objection depends upon what doubtless is a matter of form; yet, even if it stood alone, it must be fatal to the orders under appeal. But it does not stand alone. For the appellant relies upon the substantial objection that the judgment, had it existed, would not have been a final judgment or final order within s. 52(j) of the Bankruptcy Act 1924-1950(Cth.). That objection the appellant took upon the hearing of the motion to the Bankruptcy Court to set aside the bankruptcy notice. (at p371)
7. His Honour dismissed the motion on its merits. He held that the judgment of the Supreme Court was a final judgment within the meaning of s. 52(j) of the Bankruptcy Act 1924-1950(Cth.) and that the bankruptcy notice had not been complied with. He extended the time for compliance, but the debt was not paid within the extended time. The respondent then filed a petition to sequestrate the appellant's estate, the act of bankruptcy alleged being failure to comply with the bankruptcy notice. Upon this petition the sequestration order under appeal was made. The substantial question on the appeal is whether the bankruptcy notice was valid. If it was, it is not disputed that the sequestration order was properly made. Section 52(j) provides, so far as material, that a debtor commits an act of bankruptcy if a creditor has obtained a final judgment or final order against him for any amount, and execution thereon not having been stayed, has served on him in Australia . . . a bankruptcy notice under this Act, and the debtor does not, . . . either comply with the requirements of the notice, or satisfy the court that he has a counter-claim, set-off, or cross-demand which equals or exceeds the amount of the judgment debt, and which he could not set up in the action or proceeding in which the judgment or order was obtained. It was contended for the appellant that the bankruptcy notice was invalid on several grounds. One ground was that the judgment to which the Chief Clerk certified was for 261 pounds, whereas the bankruptcy notice alleged a debt of 261 pounds 12s. 6d. But s. 53(ii.) provides that a bankruptcy notice shall not be invalidated by reason only that the sum specified in the notice as the amount due exceeds the amount actually due, unless the debtor within the time allowed for payment gives notice to the creditor that he disputes the validity of the notice on the ground of such mis-statement. The appellant gave the respondent no such notice so that this ground vanishes. (at p372)
8. The substantial ground is that the judgment of the Supreme Court was not a final judgment within the meaning of s. 52(j). It was contended (1) that the judgment was simply machinery for enforcing an order under the Deserted Wives and Children Act and depended upon the existence of such an order. As such an order was capable of being varied, suspended or discharged under s. 21 of that Act, it was not a final order and the judgment in the Supreme Court entered pursuant thereto was not a final judgment; (2) the judgment was not a judgment recovered in an action and final judgment in s. 52(j) of the Bankruptcy Act means such a judgment and none other. The first contention raises a difficult question, but we do not find it necessary to discuss it because we are of opinion that the appellant must succeed on the second contention. Section 52(j) includes final judgments and final orders. Before final orders were included it had been held on numerous occasions that a final judgment on which a bankruptcy notice could be founded was a final judgment obtained in an action by which a previously existing liability of the defendant to the plaintiff is ascertained or established - unless there is something to show an intention to use the words in a more extended sense (Ex parte Chinery; In re Chinery (1884) 12 QBD 342, at p 345 ; Onslow v. Inland Revenue Commissioners (1890) 25 QBD 465 ; In re Binstead (1893) 1 QB 199 ; In re a Bankruptcy Notice (1895) 1 QB 609 ). A judgment entered in the Supreme Court pursuant to a certificate of a magistrate under s. 13A of the Deserted Wives and Children Act is not a judgment in an action. The solicitor for the respondent relied upon the concluding words of the first paragraph of s. 52(j) "which he (the debtor) could not set up in the action or proceeding in which the judgment or order was obtained", as indicating that the sub-section contemplates that a judgment within its meaning can now be obtained not only in an action but also in a proceeding and submitted that the judgment under discussion was obtained in a proceeding. We cannot accept this construction. In their ordinary natural signification the words refer to judgments in actions and orders in proceedings. It would require clear words to induce a court to hold that the legislature intended so to extend the settled meaning of what constitutes a final judgment for the purposes of a bankruptcy notice. If the words "in the action or proceeding in which the judgment or order was obtained" mean, as we think they must mean, the action in which the judgment was obtained and the proceeding in which the order was obtained, they are decisive to show that the judgments to which s. 52(j) refers are judgments in actions; and that, of course, accords with the construction placed upon the provision judicially. It is scarcely necessary to add that a judgment entered in pursuance of s. 13A of the Deserted Wives and Children Act is not an order. (at p373)
9. Section 13A of the Deserted Wives and Children Act provides that the judgment entered pursuant to the section may be enforced in any manner in which a final judgment in an action may be enforced. It is unnecessary to decide whether the issue of a bankruptcy notice is a method of enforcing a judgment. Assuming that it is, the provisions of s. 13A of the Deserted Wives and Children Act could not determine the meaning of a final judgment for the purposes of s. 52(j) of the Bankruptcy Act, and the judgment could not be enforced by the issue of a bankruptcy notice unless it is a final judgment within the meaning of that sub-section. It may be a final judgment obtained in a proceeding. But it is not a final judgment obtained in an action. It is not, therefore, a final judgment within the meaning of the sub-section. (at p373)
10. For these reasons the appeals must be allowed and the orders of 13th November and 19th December 1950 set aside. In lieu thereof orders must be made setting aside the bankruptcy notice and dismissing the petition. (at p373)
McTIERNAN J. In my opinion a judgment entered pursuant to s. 13A of the Deserted Wives and Children Act 1901-1939 (N.S.W.) cannot be the basis of a bankruptcy notice, because it is not a final judgment or a final order within the meaning of s. 52 (j) of the Bankruptcy Act 1924-1950 (Cth.). (at p373)
2. Section 13A provides a statutory procedure for summarily turning the liability of a person in default under an order made by virtue of s. 7 of the Act for the support of his wife or child into a judgment debt. The person for whom the judgment is entered necessarily becomes a judgment creditor, because what the section directs to be entered is described as "judgment". Under the order itself the liability of the defaulter is not strictly a debt which is within the province of bankruptcy, but when judgment is entered pursuant to s. 13A the person entitled to receive the arrears of maintenance can claim to be a creditor within the meaning of s. 52 (j) of the Bankruptcy Act. In the case of Ex parte Moore; In re Faithful (1885) 14 QBD 627, at p 632 , the Earl of Selborne L.C. said: "I cannot accede to the argument that the word 'creditor' in sub-s. 1 (g) (of s. 4 of the Bankruptcy Act 1883) means only a person who was a creditor before the judgment. In my opinion, it means a creditor under the judgment - a judgment creditor". (at p374)
3. The entering of a judgment pursuant to s. 13A is an administrative act done by an officer of the court under the direction contained in the section. It is not the recording of any judgment, order or act of the court in which the judgment is entered. The duty of entering judgment is imposed by s. 13A when the certificate for which the section provides is filed in court. The entering of judgment is not incidental to anything in the nature of an action or any judicial proceeding begun in the court. The judgment is not a judgment in an action or an order in a proceeding in the court. The final judgment of which s. 52 (j) of the Commonwealth Bankruptcy Act speaks is a final judgment in the technical sense. Section 13A provides that judgment entered pursuant to it may be enforced in any manner in which a final judgment in an action may be enforced. When judgment is entered nothing more has to be done and execution can at once issue. That is not sufficient to give the judgment the essential character of a final judgment upon which a bankruptcy notice can be founded. In Ex parte Chinery; In re Chinery (1884) 12 QBD 342 the question was whether a garnishee order absolute was a final judgment within the meaning of sub-s. 1 (g) of s. 4 of the Bankruptcy Act 1883 (Imp.). It was argued in that case that the order was a final judgment because execution could at once issue against the garnishee for the amount necessary to satisfy the judgment debt. This sub-section of that Act did not contain the words "final order". In the case, the court distinguished between a judgment and an order and held that the garnishee order was not a final judgment. In drawing the distinction the court went into the question of what is a final judgment within the meaning of sub-s. 1(g). The words "a final judgment" in s. 52 (j) have the same meaning. Cotton L.J. said: "I think we ought to give to the words 'final judgment' in this sub-s. 1 (g) their strict and proper meaning, i.e., a judgment obtained in an action by which a previously existing liability of the defendant to the plaintiff is ascertained or established - unless there is something to show an intention to use the words in a more extended sense. Is there then anything in this sub-section which shows such an intention? Undoubtedly, a garnishee order absolute is a final order in the proceeding in which it is obtained, but is it a final judgment in the sense which I have mentioned? I think there is a good deal to be found in this sub-section which is against that view. It speaks of a 'final judgment' obtained by a creditor against his debtor. To my mind this points to a liability of the debtor to the creditor being established in an action" (1884) 12 QBD, at pp 345, 346 . (at p375)
4. In Ex parte Moore; In re Faithful (1885) 14 QBD, at p 632 the Earl of Selborne L.C. said: "To constitute an order a final judgment nothing more is necessary than that there should be a proper litis contestatio, and a final adjudication between the parties to it on the merits". (at p375)
5. More light is thrown on the meaning of the words "final judgment" in sub-s. 52 (j) by the observations made by Vaughan Williams L.J. in the case of In re G.J.; Ex parte G.J. (1905) 2 KB 678, at pp 680, 681 : "There is a series of cases in which it has been held that in order to support a bankruptcy notice there must be what is properly called a 'final judgment' against the debtor for a sum of money, and that the mere fact that the creditor is entitled to issue execution against the debtor for a sum of money is not conclusive that there has been a 'final judgment' against him within the meaning of sub-s. 1(g) of s. 4 of the Bankruptcy Act, 1883. . . . What has been held essential to constitute a 'final judgment' within sub-s. 1(g) is that there must have been something amounting to a cause of action which has been dealt with on the basis of a cause of action, at any rate to this extent, that the debtor has had the opportunity of setting up a counter-claim, set-off, or cross-demand. And, if the debtor has not had the opportunity of doing that, the judgment or order does not come within the term 'final judgment' as used in sub-s. 1(g). This is what I understand was meant by Cotton L.J. in Ex parte Moore (1885) 14 QBD, at p 635 when he said that a 'final judgment' is a judgment in an action between parties brought to establish some right of the plaintiff against the defendant". A judgment entered under s. 13A of the Deserted Wives and Children Act lacks the characteristics which, according to these decisions, distinguish a final judgment which can be the basis of a bankruptcy notice. (at p375)
6. It follows that the bankruptcy notice and the sequestration order made in consequence of the failure to comply with it should be set aside. (at p375)
7. It may be added that if s. 13A brought into existence a final judgment within the meaning of s. 52(j) of the Bankruptcy Act, and the words of s. 13A relating to enforcement were not capable of extending to bankruptcy proceedings, that would not prevent the judgment being the basis of a bankruptcy notice. In the case of In re a Bankruptcy Notice (1907) 1 KB 478, at p 482 Fletcher Moulton L.J. said: "In my judgment an application for a bankruptcy notice is not a method of enforcing a judgment. It is the commencement of proceedings of far wider effect". In this view of the limits of the language of s. 13A the result of deciding that a judgment entered under that section cannot support a bankruptcy, is not to deprive a wife or child of any relief which the State legislature might have contemplated would be available by reason of the enactment of the section. (at p376)
8. In my opinion the appeals should be allowed but without costs, and the following orders made, in lieu of the orders made by Clyne J.: - Motion to set aside bankruptcy notice allowed without costs; petition dismissed without costs; bankruptcy notice and sequestration order set aside. (at p376)
ORDER
Appeals allowed: Order dismissing motion to set aside bankruptcy notice set aside: in lieu thereof order that motion be allowed without costs: sequestration order dated 19th December 1950 set aside and in lieu thereof order that petition be dismissed without costs: no order as to costs of either appeal.