Allan v Thorn Australia Pty Ltd - [2015] FCCA 1479

FEDERAL CIRCUIT COURT OF AUSTRALIA

ALLAN v THORN AUSTRALIA PTY LTD

[2015] FCCA 1479

Catchwords:
BANKRUPTCY– Notice of Opposition – asserts the debt “grossly unfair” – disputes service of originating process – disputes personal service of Creditor’s Petition.

Legislation:
Bankruptcy Act 1966 (Cth) ss.40(1)(g); 41(1); 41(2); 52(3)

Evidence Act1995 ss.57; 69

Federal Circuit Court of Australia Act1999 (Cth) ss.83; 102;

Federal Circuit Court Rules2001 r.6.14

Adams v Lambert(2006) 228 CLR 409
Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915
Capital Finance Aust Pty Ltd v Nathan [2008] FMCA 1363
Jones v Dunkel [1959] 101 CLR 298
Kleinworth Benson (1988) 165 CLR 71
Lawindi v Elkateb [2001] FCA 1527
Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53
Schmidt v Pandja & Ors [2015] FCCA 111
Sherman v Latrobe University [2007] FCA 1911
Taylor v White (1964) 110 CLR 129
Weeden v Rambaldi [2013] FCAFC 12
Wenkart v Abignano [1999] FCA 354
Wren v Maloney [1972] HCA 5

Wong v Robinson [1995] FCA 805

Applicant:

SHAWN GLENDON ALLAN

Respondents:

THORN AUSTRALIA PTY LTD TRADING AS THORN EQUIPMENT FINANCE

File Number:

SYG 2559 of 2014

Judgment of:

Registrar Chuan Ng

Hearing date:

4 May 2015

Date of Last Submission:

4 May 2015

Delivered at:

Sydney

Delivered on:

4 June 2015

REPRESENTATION

For the Applicant:

In person

Counsel for the Respondents:

Mr H Woods of counsel

ORDERS

The Notice Stating Grounds of Opposition to the Creditors’ Petition filed on 10 December 2014 be dismissed.
Costs be reserved.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 2559 of 2014

SHAWN GLENDON ALLAN

Applicant

And

THORN AUSTRALIA PTY LTD TRADING AS THORN EQUIPMENT FINANCE

Respondent

REASONS FOR DECISION

Before the Court is a Notice Stating Grounds of Opposition filed by the Applicant on 10 December 2014 against a Creditor’s Petition presented by the Respondent on 16 September 2014.

BACKGROUND

On 19 March 2014, a Statement of Claim was filed in Bankstown Local Court seeking liquidated damages against Saba Security Consultants Pty Ltd trading as Saba Security (“Saba”) as the 1^st Defendant and the Applicant as the 2^nd Defendant. At the relevant time, the Applicant was the company director of Saba.
On the Respondent’s case, on 28 April 2014 the Statement of Claim was personally served on the Applicant and on the registered address of Saba. The Applicant disputes this service ever took place.
On 27 May 2014, a Notice of Motion seeking Default Judgment was filed at Bankstown Local Court.
On 3 June 2014, Default Judgment was entered against the Applicant and Saba in the amount of $10,580.
On 18 June 2014, the Respondent obtained a Bankruptcy Notice (NN 172722) against the Applicant from the Official Trustee: sections 41(1) and (2) of the Bankruptcy Act1966 (Cth)
4 July 2014, the Respondent arranged for the Bankruptcy Notice annexing the Default Judgment to be personally served on the Applicant. The Applicant concedes this occurred.
21 days passed with no action taken by the Applicant…

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: [2015] FCCA 1479
Decision Date: 4 June 2015

CaseChat Overview and Summary

This matter concerned an application by Allan (the Applicant) to set aside a bankruptcy notice issued by Thorn Australia Pty Ltd (the Respondent). The Applicant contended that the bankruptcy notice was a nullity due to a misspelling of his address.

The central legal issue before the Registrar was whether the misspelling of the Applicant's address on the bankruptcy notice constituted a formal defect or an irregularity that rendered the notice invalid, or whether it was a nullity. The Registrar was required to consider the principles established in cases such as *Australian Steel Company (Operations) Pty Ltd v Lewis* and *Adams v Lambert* regarding the requirements for a valid bankruptcy notice and the application of section 306(1) of the *Bankruptcy Act 1966* (Cth).

The Registrar reasoned that a bankruptcy notice is a nullity if it fails to meet an essential requirement of the Act or if it could mislead the debtor. Applying this principle, the Registrar found that the misspelling of the Applicant's address did not render the notice a nullity, particularly as the Applicant had been personally served and no substantial injustice was caused. The Registrar drew support from *Sherman v Latrobe University*, where a similar error in a bankruptcy notice was held not to invalidate it when personal service had occurred and the debtor's identity was not in doubt. Consequently, the Registrar viewed the misspelling as a formal defect to which section 306(1) of the *Bankruptcy Act 1966* (Cth) could apply, allowing for potential amendment. The Registrar also granted leave to the Applicant to add a ground of opposition asserting non-personal service of the creditor's petition.

Orders

Orders of the court

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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

The principles relating to what constitutes a formal defect have been discussed in a number of cases. In Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915, a five member Bench of the Federal Court (Black CJ, Lee, Heerey, Sundberg and Gyles JJ) relied on the High Court in Kleinworth Benson (1988) 165 CLR 71 and held at paragraph [59] that: “A bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice.” In Adams v Lambert (2006) 228 CLR 409, the High Court evaluated the circumstances upon which a defect or irregularity was or was not a “formal defect or an irregularity” for the purposes of s.306(1). Expressly examining sections 40(1)(g) and 41 of the Bankruptcy Act 1966 (Cth), the High Court held at paragraph [32]:“... Gyles J accurately identified the question as whether correct completion of the form prescribed by the regulations in every respect is a requirement made essential by the Act. Bearing in mind that, in the present case, the error could not have misled the respondent as to what it was necessary to do in order to comply with the requirements of the notice, it is difficult to understand how, consistently with Kleinworth Benson, the respondent could succeed without an affirmative answer to that question.” Section 306(1) of the Bankruptcy Act1966 (Cth) provides a mechanism to cure such defects:Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the Court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of the Court. In my view, the misspelling of the Applicant’s address in the Bankruptcy Notice does not constitute a nullity, especially where there is no contest that he was personally served with the Bankruptcy Notice and in circumstances where I cannot discern any substantial injustice being caused to the Applicant. Supportive of my view is Sherman v Latrobe University [2007] FCA 1911. In that decision, Ryan J dealt with analogous facts and held that the Bankruptcy Notice remained valid despite having wrongly ascribed the Respondent debtor’s address in circumstances where he was personally served and where there was no issue as to his identity. Accordingly I am of the view that the misspelling of the address on the Bankruptcy Notice is only a formal defect where section 306 of the Bankruptcy Act1966 (Cth) may be invoked. If the matter proceeds to sequestration and if required, I would grant leave under this provision for the Bankruptcy Notice to be amended to reflect the correct address. Towards the end of the hearing on 4 May 2015, I granted leave to the Applicant to add this fourth ground to his Notice of Opposition. This arose in circumstances where the Applicant asserted in his evidence that he had not been personally served with the Creditor’s Petition.