Alan Morrow v K.A. Reed (Group) Pty Ltd - [1985] FCA 353

Re: ALAN MORROW
Ex Parte: K.A. REED (GROUP) PTY LTD
No. P 1056 of 1984
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF
THE STATE OF VICTORIA
Woodward J.

CATCHWORDS

Bankruptcy - service of bankruptcy notice - conflicting evidence of date of service - creditor's petition - power of court to go behind judgment - whether judgment obtained by fraud - error in heading of summons on which bankruptcy notice founded - misdescription of court from which summons issued - whether error amounts to an irregularity or renders summons a nullity.

Bankruptcy Act 1966 (C'th) s.40

Magistrates' (Summary Proceedings) Act 1975 (Vic) ss.8,9,94,157

HEARING

MELBOURNE
#DATE 30:7:1985

ORDER

1. Upon the petitioning creditor filing fresh affidavits

(a) made by a person who has searched in the indexes kept by the Registrar stating whether any bankruptcy proceedings in the District are pending against the debtor or whether the debtor is a bankrupt; and

(b) made by a person who has knowledge of the facts stating that the debt on which the petitioning creditor relies is still owing,

there will be an order of sequestration against the estate of the debtor, the act of bankruptcy being the failure of the debtor to comply with the provisions of a bankruptcy notice on on before 7 August 1984.

2. Costs, including all reserved costs, will be in accordance with the statute.

(Settlement and entry of orders is dealt with by O.36 of the Federal Court Rules.)

JUDGE1

This creditor's petition for a sequestration order has a rather protracted history. A bankruptcy notice, naming Alan Morrow ("the debtor") as the judgment debtor and K.A. Reed (Group) Pty Limited ("the petitioner") as judgment creditor, was issued by a Deputy Registrar of this Court on 3 July 1984. The notice alleged that a judgment in the sum of $3860.90 on a claim for work and labour done had been obtained by the petitioner against the debtor on 23 February 1984 in the Magistrates' Court at Collingwood. An affidavit of personal service of the bankruptcy notice was sworn by David Sebastian Manville-Smythe on 29 August 1984, and was filed on 22 November 1984. In that affidavit, to which I will refer in greater detail later, the deponent swears to serving the debtor with a copy of the bankruptcy notice on 24 July 1984.

On 9 August 1984 the debtor filed an affidavit drawn by himself, setting out in detail a number of matters relating to the Magistrates' Court order, including details of service of the original default summons, steps taken by both parties throughout that action, and details of the hearing on 23 February 1984. Paragraph 18 of that affidavit stated:

"I have a valid and lawful counter-claim against K.A. Reed (Group) Pty Ltd for breach of contract in the sum of $100,000 in that the said K.A. Reed

(Group) Pty Ltd failed to (a) follow the specifications given to them, and (b) failed to complete the work, and (c) failed to do satisfactory work,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1985] FCA 353
Decision Date: 30 JULY 1985

CaseChat Overview and Summary

Alan Morrow has petitioned for the sequestration of the estate of K.A. Reed (Group) Pty Ltd, following the debtor's failure to comply with a bankruptcy notice. The debtor contests the petition on several grounds, including the validity of the bankruptcy notice. The dispute was heard in the Federal Court of Australia. The debtor argues that the bankruptcy notice was invalid due to procedural errors in the summons on which it was founded.

The court had to determine whether the errors in the summons rendered the bankruptcy notice invalid, and if the creditor's petition could be based on a failure to comply with an invalid notice. The debtor further claimed that the creditor obtained the judgment in a previous case by fraud, and sought to have the court go behind the judgment. The primary legal issues were the validity of the summons, the consequences of any errors in it, and the court's power to reconsider a prior judgment.

The court found that while the errors in the summons were significant, they did not render the summons a nullity. The court did not accept that the creditor had obtained the previous judgment fraudulently. The court held that the summons, despite its errors, was sufficient to allow the bankruptcy notice to stand. The court also confirmed that it did not have the power to reconsider a previous judgment on the basis of fraud unless there was clear and compelling evidence of such fraud. The court ordered that the creditor file fresh affidavits to support the petition and, if those affidavits were satisfactory, an order of sequestration would be made.

The final orders of the court included an order for the creditor to file fresh affidavits and, upon their satisfactory filing, an order of sequestration would be made against the debtor's estate. Costs were to be awarded in accordance with the statute.

Orders

Orders of the court

1. Upon the petitioning creditor filing fresh affidavits

(a) made by a person who has searched in the indexes kept by the Registrar stating whether any bankruptcy proceedings in the District are pending against the debtor or whether the debtor is a bankrupt; and

(b) made by a person who has knowledge of the facts stating that the debt on which the petitioning creditor relies is still owing,

there will be an order of sequestration against the estate of the debtor, the act of bankruptcy being the failure of the debtor to comply with the provisions of a bankruptcy notice on on before 7 August 1984.

2. Costs, including all reserved costs, will be in accordance with the statute.

(Settlement and entry of orders is dealt with by O.36 of the Federal Court Rules.)

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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