Capel v Caram Finance Australia Ltd [1999] QCA 26 [2000] 2 Qd R 126

1 99.26 COURT OF APPEAL de JERSEY CJ PINCUS JA THOMAS JA Appeal No 5698 of 1998 ELWYN JOHN CAPEL Appellant/Plaintiff and CARAM FINANCE AUSTRALIA LIMITED (FORMERLY KNOWN AS MARAC FINANCE AUSTRALIA LIMITED) (ACN 000 098 402) Respondent/Defendant BRISBANE ..DATE 19/02/99 JUDGMENT -- 1 of 6 -- 190299 T15/AW16 M/T COA 24/99 2 JUDGMENT THE CHIEF JUSTICE: The respondent brought a motion to commit the appellant for contempt in failing to honour undertakings to meet costs orders. The undertakings were given on 31 October 1996 in these terms. "(a) Pay to the solicitors for the defendant the costs referred to in each of sub-paragraphs 2(a), 2(b) and 2(c) of the affidavit of Craig Anthony Wilkins made and filed herein on 15 October 1996 forthwith upon the dismissal of his application to the High Court of Australia for special leave to appeal from the decision of the Court of Appeal herein given on 26 March 1996. (b) Pay to the solicitors for the defendant the costs referred to in each of sub-paragraphs 2(d), 2(e), 2(f) and 2(g) of that affidavit of Craig Anthony Wilkins forthwith upon the delivery to him of a certificate of taxation for those costs which delivery later occurred on or about 14 March 1997." The costs aggregated about $30,000. They were not paid. On 11 May 1998 the respondent filed a motion for committal. It was heard before a Judge of the trial division, who on 29 May 1998, having found the appellant guilty of the alleged contempt, which in fact the appellant conceded, made this order: "The respondent pay a fine of $30,000 before 4 p.m. on 13 July 1998 in default of payment of which he stands committed to Her Majesty's prison at Brisbane for a term of imprisonment of 21 days." The appellant appeals against that order. This Court noted at the outset that the respondent had not sought the leave -- 2 of 6 -- 190299 T15/AW16 M/T COA 24/99 3 JUDGMENT of the Court to bring the proceedings as was arguably necessary because of section 58(3) of the Bankruptcy Act 1996 (Cth). That subsection provides: "Except as provided by this Act after a debtor has become a bankrupt it is not competent for a creditor: (a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt or (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." The Federal Court has exclusive jurisdiction under that provision (see section 27). It should be noted that this point was not ventilated before the learned Judge. Mr Bain, QC, who appears for the respondent, submitted that section 58(3) was inapplicable notwithstanding the bankruptcy of the appellant because the motion was not a legal proceeding in respect of a provable debt. He conceded that the subject matter of the undertakings were provable debts. The only question was whether the motion was in respect of those debts or rather, as he would submit, in respect of a broader concept of committal for contempt for failure to meet undertakings given to the Court. I consider it unarguable but that this was a proceeding in -- 3 of 6 -- 190299 T15/AW16 M/T COA 24/99 4 JUDGMENT respect of provable debts within the meaning of section 58(3). It has frequently been confirmed that the words "in respect of" are wide words and the fact that these proceedings were directed towards committal rather than recovery of the debts was not enough, in my view, to exclude the need to comply with section 58, a provision designed to foster the orderly administration of bankrupt estates. The connection here is sufficient, arising as it does from the intent to seek committal of the appellant for his failure to discharge his promise to pay these provable debts. The words in paragraph (b) of the subsection are proceedings in respect of a provable debt, not proceedings to recover a provable debt. Because the section sets up a prohibition which was contravened and because this Court has always required strict adherence to procedural requirements in respect of contempt proceedings especially in light of the serious possible consequences I consider that these proceedings should be struck out. I would allow the appeal; set aside the orders made on -- 4 of 6 -- 190299 T15/AW16 M/T COA 24/99 5 JUDGMENT 29 May 1998; strike out the notice of motion filed on 11 May 1998 and depending on the attitude taken by the other members of this Court receive shortly submissions with relation to costs. PINCUS JA: I agree. THOMAS JA: I agree. I would add that the proceeding that was brought before the learned Judge below was plainly based upon the appellant's failure to pay the provable debt. The decision of Fraser v. Deputy Commissioner of Taxation (1996) 138 ALR 689 at pp. 700-702 amply supports the conclusion which the Chief Justice has stated. I agree with the orders so far proposed by the Chief Justice. THE CHIEF JUSTICE: Mr Capel, do you seek any order with relation to costs? APPELLANT: Yes, Your Honour. I seek costs - reserved costs and the costs of the hearing on 26 May and the handing down the decision on 29 May. THE CHIEF JUSTICE: Mr Bain? MR BAIN: I cannot say anything as to the costs below, Your Honour. THE CHIEF JUSTICE: I would order that the respondent pay the appellant's costs to be taxed of and incidental to the -- 5 of 6 -- 190299 T15/AW16 M/T COA 24/99 6 JUDGMENT proceedings including this appeal. MR BAIN: Well, Your Honour, with respect to this appeal I did wish to be heard. The appellant only asked for costs below and he had counsel and solicitors below. There is, in respect of this appeal in which he has always appeared in person, no entitlement to costs and the basis for that is Cachier v Haines, if I pronounce it correctly. THOMAS JA: I think it is a matter of taxation and there may be some filing fees. There will be some. It is a matter of taxation is it not? He will not get professional costs as I understand it. MR BAIN: Well, if it is left to a matter of taxation, I have made that position clear. There may be some filing costs and the like. That is true as Your Honour, Justice Thomas says. THE CHIEF JUSTICE: There are filing costs. That is what I had in mind. MR BAIN: Very well. I do not wish to say anything about that, of course. THE CHIEF JUSTICE: The order will be that the respondent pay the appellant's costs to be taxed of and incidental to the proceedings including the appeal. The other orders I earlier indicated will also therefore become orders of the Court. ----- -- 6 of 6 --