Biggs v CNH Capital Australia Pty Ltd

[2006] FMCA 147

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BIGGS & ANOR v CNH CAPITAL AUSTRALIA PTY LTD [2006] FMCA 147

BANKRUPTCY – Review of the decision of the Registrar – sequestration orders.

Bankruptcy Act 1966 (Cth) ss.40, 41

Australian Steel Company (Operations) Pty Limited v Lewis [2000] FCA  Kleinwort Benson Australia Limited v Crowl [1988] 165 CLR 71
Hubner v Australia & New Zealand Banking Group Ltd [1999] FCA 385
McLeod & Anor v Beneficial Finance Corporation Limited unreported

First Applicant: DARREN BIGGS

Second Applicant: MARK BIGGS

Respondent: CNH CAPITAL AUSTRALIA PTY LIMITED

File Number: SYG 2877 of 2005

Judgment of: Scarlett FM

Hearing date: 24 January 2006

Date of Last Submission: 24 January 2006

Delivered at: Sydney

Delivered on: 24 January 2006

REPRESENTATION

Solicitors for the Applicant: Douglas Knaggs Solicitor

Solicitors for the Respondent: Mr Wilson
Bayside Solicitors

ORDERS

1. The application is dismissed.

2. The Applicants are to pay the Respondent’s costs as agreed or taxed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2877 of 2005

DARREN BIGGS

First Applicant

MARK BIGGS

Second Applicant

And

CNH CAPITAL AUSTRALIA PTY LIMITED

Respondent

REASONS FOR JUDGMENT

Application

1. In the matter of Darren Biggs and Mark Biggs and CNH Capital Australia Pty Limited and the Official Receiver, Insolvency Trustee Service Australia, there is an application for review of a decision of the Registrar given on 1^st December 2005 making sequestration orders against each of the applicants.

2. There were two grounds given and the applicants are not proceeding with the first ground so I will not deal with it any further.  The ground that is given is that the Registrar erred in failing to hold that the petition was defective and invalid and that it did not follow the prescribed form since it failed to show an act of bankruptcy in paragraph 4 of the petition.

3. The particulars are set out as follows; first, that the bankruptcy notice did not require compliance by Darren Biggs on 20^th September 2005 but on or by that date so any resulting act of bankruptcy should have been asserted by the petition to be a failure to comply on or by that date.  Second, that the bankruptcy notice did not require compliance by Mark Biggs on 21^st September 2005 but on or by that date so any resulting act of bankruptcy should have been asserted by the petition to be a failure to comply on or by that date.

4. The particulars continue; the form of petition does not follow the prescribed form as required by the Federal Magistrates Act and Rules. Further, the prescribed form of bankruptcy notice does not permit more than one debtor to be included in the form, joint or otherwise, whereas this form notice is directed to two debtors this there was no act of Bankruptcy within ss. 40 and 41 of the Act to found the petition.

5. In support of those arguments, Mr Knaggs, solicitor, refers to the decision of Australian Steel Company (Operations) Pty Limited v Lewis [2000] FCA 1915 which was not confined to bankruptcy notices. The submission is that since the petition must be in the form prescribed by the regulation the present petition is invalid because it fails to show an act of bankruptcy. Section 40 prescribes:

   No act of bankruptcy in the way this petition describes it.

6. Paragraph 4 would need to have said "on or by" given dates and the Act requires that the petition shall be in a prescribed form.

7. The second ground in the submission is that the bankruptcy notice was against two debtors and thus invalid and the applicants concede that they have in their path the Full Court decision of Hubner v Australia & New Zealand Group Ltd [1999] FCA 385. The submission is that this is by no means a persuasive decision.

8. For the respondent Mr Wilson submits that Australian Steel specifically refers to bankruptcy notices and not a creditor's petition and as such can be distinguished.  He also relies on the decision of the Full Federal Court in Hubner (supra) particularly paragraphs 19 to 21.  He also submits that paragraphs 4A and B of the creditor's petition clearly define the act of bankruptcy and contains all of the details that the debtor requires.

9. As to the decision in Australian Steel (supra) I note that it was held by the Full Court that:

   A bankruptcy notice which fails to meet a requirement made essential by the Act contains a substantive defect and is a nullity even if it could not reasonably mislead a debtor as to what is necessary for compliance.  Further, the purpose of the requirement that the source of the creditor's entitlement to interest be stated is to enable the debtor to verify that the amount claimed is due having regard to the purpose the requirement is made essential to the Act and a notice not meeting that requirement is a nullity.

10. In paragraph 39 their Honours looked at the test for determining whether a requirement is made essential referring to the decision in Kleinwort Benson Australia Limited v Crowl [1988] 165 CLR 71 which said that:

    A bankruptcy notice that does not contain a requirement made essential by the Act is not a valid notice.

11. Their Honours went on at paragraph 40 to refer to the 1996 amendments to the Act where Parliament chose to make a form to be prescribed by regulation the sole criterion of whether a bankruptcy notice complied with the Act with the consequence that an act of bankruptcy would be committed in the case of non-compliance with such a notice.

12. In my view the decision in Australian Steel refers specifically to bankruptcy notices and I am not satisfied that it is authoritative in respect of the point that the applicants seek to make.

13. I turn to the claim first of all relating to the alleged defects in the bankruptcy notice that did not require compliance by the applicants on a specific date but on or by that date so that the resulting act of bankruptcy should have been asserted by the petition to be a failure to comply on or by that date.

14. The submission is that paragraphs of the creditor's petition do make it clear what the acts of bankruptcy were which was in fact the decision of the learned Registrar.  I am of a view that the description of the act of bankruptcy in paragraphs A and B was sufficient so as to make quite clear that there was a failure to comply with a bankruptcy notice and then it was that failure to comply that constituted the act of bankruptcy.

15. As to the decision in Hubner it is put to me that this is not a decision that should be given the same weight as a decision that was fully argued.  It is submitted that this is by no means a persuasive decision and it does not satisfy the primary requirement for a case to be authoritative, i.e. a precedent that the issue should have been fully argued. 

16. Mr & Mrs Hubner were unrepresented and the decision of the three justices clearly reflects this at paragraphs 15 to 22.  I note at paragraphs 18 to 21 that the issue of joint debtors to a bankruptcy notice was considered.  In paragraph 18 their Honours refer to an unreported decision of McLeod & Anor v Beneficial Finance Corporation Limited, a decision of Branson J on 15^th October 1995 which is unreported where her Honour considered whether a bankruptcy notice could be issued to several debtors.  Her Honour observed at 13 that:

    The right to issue a bankruptcy notice cannot be wider than the right to present a creditor's petition because subsection 46(1) of the Act expressly authorised the presentation of a creditor's petition against joint debtors.

17. Her Honour concluded that a bankruptcy petition could be addressed to joint debtors but not to several debtors.  At 19 Dowsett J saw no reason to doubt the correctness of the practice indicated by these cases of addressing a bankruptcy notice to joint debtors because each debtor was obliged to pay the full debt and therefore was able to comply with such a notice.  Their Honours went on to say:

    In our view the decision of his Honour was correct.

    At 21:

    The essential requirement of the bankruptcy notice is that payment is claimed in accordance with the judgment (see Kleinwort Benson Australia Limited v Crowl [1988] 165 CLR 71 at 80.

    In addition, there is nothing in the context of the Act which prevents the application to it of s. 23 of the Acts Interpretation Act 1901 which deems references to the singular to include plural.

18. The submission, of course, is that the decision in Hubner is by no means a persuasive decision.  I am not considering whether I should regard Hubner as persuasive.  It is a decision of the Full Court of the Federal Court and it is a decision which is binding on the Federal Magistrates Court.  As long as it is on point, and I believe that it is, the decision in Hubner is binding on this court and I am obliged to follow it.

19. The question of whether their Honours erred in Hubner to my mind is a decision for the Full Federal Court itself to decide or the High Court but unless and until one or other of those higher courts makes such a decision Hubner is binding on the Federal Magistrates Court and I am obliged to follow it.

20. In my view there was no defect in the creditor's petition in the way that the applicants in this case were described or the way the bankruptcy notice was issued against them nor, in my view, does the description in paragraphs 4A and 4B fail to comply with the requirements.  I am satisfied therefore that the creditor's petition was not defective and in my view the application should be dismissed.

21. Costs will be as agreed or taxed.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Scarlett FM

Associate:  S.Polley

Date: