Bankruptcy pitfall – joint judgment creditors must enforce together

The recent decision in Rookharp Pty Ltd v Webb & Anor [2011] FMCA 801 (at paragraphs [27] to [83]) is a reminder that a joint judgment debt must be enforced by all of the judgment creditors, not just one of them.  The issue commonly comes up in relation to orders for costs, which are joint, not joint and several, debts.  Costs orders are final orders which can be the subject of a bankruptcy notice.

In Rookharp, only one of the joint judgment creditors was named as a creditor on the bankruptcy notice and was, in turn,  a petitioning creditor.  The other judgment creditor was not named as a joint petitioner or as a respondent.

The petition was set aside on the basis that one of a number of joint creditors has no title to issue a bankruptcy notice or otherwise deal with the judgment debt alone:  since it is a joint debt, all such actions must be taken jointly.

The petitioning creditor unsuccessfully argued that the other joint creditors had authorised them to act for all petitioning creditors.  The court found that all of them had to be named.

Regards

Mark

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