Blackshaw Services Pty Ltd v Cureton - [2003] FMCA 591

FEDERAL MAGISTRATES COURT OF AUSTRALIA

BLACKSHAW SERVICES PTY LTD v CURETON

[2003] FMCA 591

BANKRUPTCY – Application for sequestration order – whether bankruptcy notice valid – where figure indicating debt crossed out and rewritten by hand – where amendments were allegedly made prior to notice being issued – whether holograph amendments on the notice were capable of misleading the debtor – where the bankruptcy notice required payment to the creditor’s solicitor – whether this was confusing for the debtor – where the creditor’s solicitor signed the bankruptcy notice – where notice failed to state that the solicitor is acting as agent for the creditor – whether this fact is capable of misleading debtor as to the true identity of the creditor – whether o 45 r1 Federal Court Rules allows the creditor’s solicitor to sign on his client’s behalf.

Bankruptcy Act 1966 (Cth), ss.52, 306
Bankruptcy Regulations 1996 Reg 4.02
Local Courts (Civil Claims) Act 1970
Federal Court of Australia Act 1976
Federal Court Rules

Circle Credit Co-op Ltd v Lilikakis [2002] FCA 667
Chandramouli v Wallader [2001] FCA 808
Keith John McAlpine Ex parte: Amev Finance Limited (unrep) Fed Court 1412 1987

Owners Corp (formerly The Proprietors) Strata Plan 3438 v Geoffrey Stephen Hudson [1998] 762 FCA
E A Pugliese v The Chase Manhattan Bank Australia Limited (1993) 44 FCR 536

Re Maddox; Ex parte The Debtor (1979) 24 ALR 279
Re Moss; Ex parte Tour Finance Ltd [1969] ALR 285
Clyne v Deputy Commissioner of Taxation (NSW) (1982-83) 45 ALR 323
DCT v Boxshall (1988) 83 ALR 175
Meekin v Commonwealth Bank of Australia [1999] FCA 682
Trustees of the Franciscan Missionaries of Mary v Weir (2000) 176 ALR 501

Applicant:

BLACKSHAW SERVICES PTY LTD

Respondent:

WILLIAM CURETON

File No:

SZ 2385 of 2003

Delivered on:

19 December 2003

Delivered at:

Sydney

Hearing date:

12 December 2003

Judgment of:

Raphael FM

REPRESENTATION

Counsel for the Applicant:

Peter Bruckner

Solicitors for the Applicant:

Meehans Solicitors

Solicitors for the Respondent:

J Merewether of Merewether & Co

ORDERS

Application dismissed.
Applicant creditor pay the respondent debtor’s costs to be taxed if not agreed under the Federal Court Act and Rules.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 2385 of 2003

BLACKSHAW SERVICES PTY LTD

Applicant

And

WILLIAM CURETON

Respondent

REASONS FOR JUDGMENT

This matter comes before me by way of an application for a sequestration order. The debtor seeks to have the application dismissed upon the ground that the bankruptcy notice on which the petition is based is invalid. The parties have agreed that I should first decide this issue before proceeding to consider whether or not the matters required by s.2 of the Bankruptcy Act 1966 (Cth) have been established.
The bankruptcy notice in question was numbered NN2479/03 and was issued by the Official Receiver for the Bankruptcy District of New South Wales on 2 October 2003. The debtor submits there are three invalidating faults with the notice.
The first matter identified by the debtor is that on page 1 of the bankruptcy notice, which is in Form 1 (Regulation 4.02 Bankruptcy Regulations 1996) after the creditor and debtor are identified, the amount which it is alleged the debtor owes the creditor has been printed in the sum of $35,747.41 which figure is crossed out and there appears in handwriting below it the figure of $35,806.41. Underneath the handwriting is a holograph initialling. In the schedule to the notice there are two columns. In the second column the amount of the judgment or order, the sub total and the total debt owing all had printed in the sum of $35,747.41. In each case that figure is crossed out and replaced with the figure of $35,806.41 in handwriting, next to which there appears on each occasion the same initials. There was filed on 8 December 2003 an affidavit by Maryanne Demeri on behalf of the creditor. Ms Demeri deposed to the fact that she attended at the ITSA to issue the bankruptcy notice. She deposes to the fact that the amendments to which I have previously referred were made by her at the request of the service prior to the bankruptcy notice being issued. In those circumstances I accept, and I believe, the debtor also accepts that the case falls outside the authorities of Circle Credit Co-op Ltd v Lilikakis [2002] FCA 667 and Chandramouli v Wallader [2001] FCA 808. These cases held that an amendment to a bankruptcy notice made after its issue invalidated the notice because the notice which was served upon the debtor was not the notice issued by the Official Receiver. However, the debtor argues that the existence of the holograph amendments to the notice were alterations that were likely to mislead the debtor. The debtor relied heavily on the findings of Spender J in Keith John McAlpine Ex parte: Amev Finance Limited (unrep) Fed Court 1412 1987 where at [9] His Honour said:
“The relevant enquiry as to whether a bankruptcy notice is valid is whether the notice is capable of misleading the debtor as to the manner in which he may comply with its requirements. The High Court said in James v Federal Commissioner of Taxation (1955) 93 CLR 631 at 644:
The court cannot inquire whether the debtor has in fact been misled or not. In this case it is probable that he was not misled. It is sufficient that he could be misled. But strict compliance with the requisites of a bankruptcy notice is essential to its validity and in these two respects the bankruptcy notice does not comply with these requisites. The defects cannot be regarded as formal defects or irregularities. …”
I am satisfied that this particular notice is not capable of misleading the debtor. I say this because the figure in question is solely the amount of a judgment or order. It does not include any amount for interest. There is annexed to the bankruptcy notice (as is required) a copy of a certificate of judgment issued under the Local Courts (Civil Claims) Act 1970. That certificate of judgment identifies the creditor and the debtor and indicates that a figure of $35,806.41 is payable by the judgment debtor. There is a reference in paragraph 2 of the bankruptcy notice to the fact that a copy of the judgment or order relied upon is attached. The debtor says that the notice might be confusing because it does not indicate whether or not it was issued in that form by the Official Receiver. Accepting this for the purposes of argument I would still not find that the notice is capable of misleading the debtor as to the manner in which he may comply with its requirements. It is clear that he complies with its requirements by paying the amount claimed.
The second complaint made by the debtor about the bankruptcy notice relates to paragraph 4. This is in the following form:
“4. Payment of the debt can be made to:
Sean Cahill

____________________________

Meehans Solicitors
of: Campbelltown City Centre Gallery Level, 171-179

Queen Street, Campbelltown NSW 2560”
The debtor argues that this might also confuse the debtor because a person other than the creditor has been appointed to receive the money at an address which was not the creditor’s address. In Owners Corp (formerly The Proprietors) Strata Plan 3438 v Geoffrey Stephen Hudson [1998] 762 FCA Lindgren J said:
“Although the Act, the Regulations and the Form do not, in terms, qualify the address which may be stated in a bankruptcy notice, it is well established that the address stated must be one at which it is reasonably practicable for the debtor to pay the creditor throughout the period fixed in the notice.”
In E A Pugliese v The Chase Manhattan Bank Australia Limited (1993) 44 FCR 536 at [6] Heerey J said:
“… The purpose of a bankruptcy notice is to convey to the debtor the amount which the judgment creditor claims and to give the debtor the opportunity of paying or securing that amount. For that purpose the judgment debtor must be told what the amount is and where the creditor can be reached to accept payment or security. The requirement of providing the address of the creditor was satisfied in this case by giving the address of the creditor’s solicitors, since that was a place where payment of the debt would be accepted, even though it was not a place where the creditor carried on business.”
The debtor’s final complaint about the notice relates to the signature section on the last page. This states as follows:
“The person who applied for this notice to be issued is:
Sean Patrick Cahill

__________________________
who confirms by the following signature that he or she is the Creditor:

__________________________
SEAN P. CAHILL

Solicitor
and whose address for service is:
Meehans Solicitors

Campbelltown City Centre

Gallery Level, 171-179 Queen Street

Campbelltown NSW 2560
Telephone and fax numbers

(including STD code):
Tel: (02) 4627 3333

Fax: (02) 4627 3167

DX number: DX 5136 Campbelltown”
The debtor says that Mr Cahill is not the creditor. He is the creditor’s solicitor but he does not say that he is acting as agent for the creditor. The standard form contained in the Regulation uses these words:
“The person who applied for this notice to be issued is:
_________________________

(Name)
Who confirms by the following signature that he or she is the creditor/the creditors authorised agent*
__________________________

(Signature)

and whose address for service is:

( address )
Telephone and fax numbers
(including STD code):

DX number (if applicable):”
The debtor says that this failure to indicate that Mr Cahill is the creditor’s agent (as opposed to the creditor) is capable of misleading the debtor. The debtor says that the misleading element is compounded by what appears in paragraph 4 so that the debtor could be confused as to the true identity of his creditor.
The creditor makes a number of points in reply. He argues that the Federal Court Rules and in particular o 45 r 1 which is in the following form:
“1 (1) Every matter or thing which under the Act or the Rules or otherwise by law is required or allowed to be done by a party may be done by his solicitor.”
allows the solicitor for the creditor to sign on the creditor’s behalf.

I have two problems with his submission. The first is that I believe that o 45 r 1 should be read with o 45 r 9(1) which is in the following form:
“9 (1) Where any signature by a solicitor is required or permitted for the purpose of any proceeding, the signature for the solicitor by any of the following persons shall be sufficient:
(a) a partner of the solicitor;
(a) a solicitor who is agent of the solicitor for the purpose of the proceeding;
…
(c)a partner of the agent;
(d) a solicitor employed by the solicitor or by the agent.
(2) A signature made pursuant to this rule shall be accompanied by a statement of the capacity in which the signature is made.”
The reference in o 45 r 1 to a party would seem to me to refer to a party in a proceeding. It is well established that the issue of a bankruptcy notice is not a proceeding. (See Re Maddox; Ex parte The Debtor (1979) 24 ALR 279, Re Moss; Ex parte Tour Finance Ltd [1969] ALR 285, Clyne v Deputy Commissioner of Taxation (NSW) (1982-83) 45 ALR 323). I do not think that the Federal Court Rules are of any assistance to the creditor.
There are a number of cases about signatories to bankruptcy notices. DCT v Boxshall (1988) 83 ALR 175 related to the signatory of a delegatee of the Deputy Commissioner for Taxation. Meekin v Commonwealth Bank of Australia [1999] FCA 682 related to an employed solicitor signing on behalf of his principal as was the case in Trustees of the Franciscan Missionaries of Mary v Weir (2000) 176 ALR 501. Those cases establish that a form signed by a person who is not the person who claims to be signing the form is at worst a formal defect capable of being cured by s.306 of the Bankruptcy Act. The creditor submitted that this was all that had occurred in this case i.e. the solicitor had signed on behalf of the creditor and particularly referred me to the joint judgment of Lockhart, Burchett and Gummow JJ in Boxshall where at [178] Their Honours held that:
“At common law, where a person authorises another to sign for him, the signature of the person so signing is the signature of the person authorising it.”
I think that looking at the matter in this way detracts from the fundamental principle made clear in James that a bankruptcy notice must not be capable of misleading a debtor. The creditor filed a detailed affidavit setting out the long history of this matter between the parties. He argued that it was quite clear that the debtor knew perfectly well who Mr Cahill was and his relationship with the creditor. That is as may be. James makes it clear that this is not an appropriate consideration. I would also add that to my mind the existence of this knowledge might make matters even more likely to be confused. The debtor might think that Mr Cahill had bought the debt from his client or had come to some arrangement with him to take the debt (perhaps in lieu of fees). The debtor could not be sure exactly why Mr Cahill was describing himself as the creditor. The debtor is not expected or required to work these things out for himself. But if he had even looked at the standard form of bankruptcy notice he would have noticed the difference between it and the document that was before him. In his document there was the omission to the reference to the agent of the creditor and that might set him thinking as to exactly who the creditor was. I think that the completion of the form in this way was sufficiently misleading to render the notice invalid.
In the circumstances I would dismiss the application for a sequestration order and order that the applicant creditor pay the respondent debtor’s costs to be taxed if not agreed under the Federal Court Act and Rules.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: