Coshott v B & W Windows Pty Ltd
[2007] FMCA 981
•21 June 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| COSHOTT v B & W WINDOWS PTY LTD | [2007] FMCA 981 |
| BANKRUPTCY – Creditor’s petition – opposition to petition on the grounds that the bankruptcy notice is invalid – whether error invalidates bankruptcy notice. |
| Bankruptcy Act 1966 (Cth), ss.41(7), 40(1)(g), 306 Bankruptcy Regulations Amendment Act 1996 (Cth), s.16.01(1)(c) |
| Adams v Lambert [2006] HCA 10 Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 |
| Applicant | ROBERT GILBERT COSHOTT |
| Respondent | B & W WINDOWS PTY LIMITED |
| File number: | SYG1575 of 2007 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 5 June 2007 |
| Delivered at: | Sydney |
| Delivered on: | 21 June 2007 |
REPRESENTATION
| Advocate for the Applicant Debtor: | Mr Coshott appears on his own behalf |
| Advocate for the Respondent Creditor: | Mr D’arcy (agent) |
| Solicitors for the Respondent Creditor: | Heckenberg & Associates Solicitors |
ORDERS
The bankruptcy notice (NN844/07) is set aside.
The creditor’s petition SYG1391/2007 is dismissed.
The respondent is to pay the applicant’s costs of these proceedings.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG1575 of 2007
| ROBERT GILBERT COSHOTT |
Applicant
And
| B & W WINDOWS PTY LIMITED |
Respondent
REASONS FOR JUDGMENT
Introduction
By creditor’s petition, the creditor, B & W Windows Pty Limited, seeks a sequestration order against the estate of the debtor, Robert Gilbert Coshott. Mr Coshott, who appears in person, opposes the making of the sequestration order on the basis that the bankruptcy notice issued (NN844/07) is invalid.
Evidence
The following evidence was filed in these proceedings:
a)Affidavit of Robert Gilbert Coshott, affirmed on 18 May 2007 (“first affidavit of Mr Coshott”).
b)Affidavit of Adrian Voits, sworn on 1 June 2007 (“affidavit of Mr Voits”).
c)Affidavit of Robert Gilbert Coshott, affirmed on 1 June 2007 (“second affidavit of Mr Coshott”).
Background
On 21 December 2004 in Local Court of New South Wales proceedings 1397/04 (Local Court, Waverley) and proceedings 1784/05 (Local Court, Downing Centre), Mr Coshott sued B & W Windows Pty Limited (ACN 003 048 477) in respect of a breach of contract. B&W Windows filed a cross-claim.
Judgment in the Local Court proceedings was delivered by O’Shane SM on 27 October 2005, which dismissed the plaintiff’s claim, upheld the first defendant’s cross-claim and awarded the sum of $9,500.00 to be paid to B&W Windows by Mr Coshott together with costs on an indemnity basis.
On 8 May 2006, the bankruptcy notice NN1870/06 was filed against Mr Coshott pursuant to the Local Court judgment. Mr Coshott paid
B & W Windows Pty Limited $9,000 on 18 May 2006 and $500 on
19 May 2006. These sums were the balance of the contract price which amounted to $38,000.00 in total.
Mr Coshott appealed the Local Court judgment to the Supreme Court of New South Wales, which was dismissed with costs by Macready AJ on 11 October 2006. Costs in respect of the Supreme Court appeal are currently being determined by a costs assessor.The respondent indicated that those costs will be pursued when the assessment is completed.
The costs in respect of the Local Court proceedings were assessed and a Certificate of Assessment registered as a judgment in the Local Court on 16 February 2007. In March 2007, B&W Windows instructed its solicitor to effect service of the bankruptcy notice upon Mr Coshott. Evidence was tendered by B & W Windows, which was disputed by Mr Coshott, that the bankruptcy notice was served upon the applicant pursuant to s.16.01(1)(c) of the Bankruptcy Regulation Amendment Act 1996 (Cth) on 31 March 2007 at his last known residential address.
Mr Coshott did not comply with that bankruptcy notice on or before
21 April 2007, thereby committing an act of bankruptcy on 21 April 2007. On 11 May 2007 Mr Coshott was served with a creditor’s petition and the petition is listed for hearing on 21 June 2007.
The first affidavit of Mr Voits states that on 6 February 2007, B&W Windows Pty Limited ACN 003 048 477 changed its name to ‘Voits Holdings Pty Limited’ and that a new company, B&W Windows Pty Limited ACN 123 250 224, was incorporated.
Validity of bankruptcy notice NN844/07
Mr Coshott submits that the bankruptcy notice served on him is invalid in that the name of the creditor on the notice, being B & W Windows Pty Limited, is the incorrect company. In support of that contention, Mr Coshott referred to the notice which reads:
B&W Windows Pty Limited
(‘the creditor’)
of: 3/3 Captain Cook Drive, Caringbah NSW 2229
Claims you owe the creditor a debt of $15,544.63, as shown in the Schedule.
The date of issue is stamped 6 May 2007.(first affidavit of Mr Coshott, annexure “A”, pp.10-14)
The Judgment/Order relied upon by B&W Windows was made by the Local Court of New South Wales (proceedings 1266/07) on
16 February 2007 and entered on the same date.(first affidavit of Mr Coshott, exhibit “A”, p.15) The Local Court judgment is based on a “Certificate of Determination of Costs by Costs Review Panel – Review of Party/Party Costs” (829 of 2006) which was issued on
12 January 2007.(second affidavit of Mr Coshott)
A company extract of B & W Windows Pty Limited ACN 123 250 224 was registered on 2 January 2007.(first affidavit of Mr Coshott, annexure “A”, p.31) Mr Coshott drew the Court’s attention to the bankruptcy notice and in particular to the section reproduced at [9] above which does not show an ACN number for B&W Windows Pty Limited. In the creditor’s petition, however, the creditor is recorded as:
B&W Windows Pty Limited
(ACN 003 048 477)
Applicant (first affidavit of Mr Coshott, annexure “A”, p.1)
This is a different ACN number to the one which appears on the Australian Securities and Investments Commission company extract referred to above.
Paragraph five of the affidavit of Mr Voits states:
On 6 February 2007 B&W Windows Pty Limited ACN 003 048 477 changed its name to Voits Holdings Pty Limited and that a new company was incorporated as B&W Windows Pty Limited ACN 123 250 224.
Mr Coshott submits that the above statement implies that the new company was incorporated some time on or after 6 February 2007, however, the company extract shows that it was in existence from
2 January 2007. It also shows that the bankruptcy notice was issued in an incorrect name. Mr Coshott questioned why the bankruptcy notice was issued in the name B&W Windows Pty Limited if the creditor was known as Voits Holdings Pty Limited from 6 February 2007. Further that B & W Windows Pty Limited is a different company and no ACN number appears on the bankruptcy notice to confirm the identity of the creditor. Therefore, the creditor’s petition was founded on an invalid bankruptcy notice which was a fundamental defect.
In support of his contention that the notice is invalid because of a fundamental defect, Mr Coshott referred to the approach in Adams v Lambert [2006] HCA 10 at [5] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ:
…The error in this case is a convenient focus for an examination of the effect of s 306 of the Act.
Then at [16]-[17], their Honours state:
16 The act of bankruptcy identified in s 40(1)(g) of the Act depends upon service on a debtor of "a bankruptcy notice under [the] Act". Bearing in mind the consequences which the Act attaches to such a notice, the courts have long insisted upon "strict compliance with the requisites of a bankruptcy notice" if it is to be valid, subject, of course, to the express provisions of s 41. At the same time, bankruptcy legislation in the United Kingdom and Australia has also, for a long time, contained a provision of a kind which is now found in s 306 of the Act. That section provides, so far as presently relevant:
"(1) 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 that court."
17 It is well settled that a bankruptcy notice is a proceeding under the Act. In Kleinwort Benson Australia Ltd v Crowl there was an understatement, rather than an overstatement, of the amount owing by the debtor. The error arose from a miscalculation of interest on a judgment. The interest was understated by some $23,000. That was treated by this Court as a formal defect or irregularity within s 306, and the error was held not to have invalidated the notice.[Authorities omitted]
Mr Coshott contends that the error referred to in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 was actually about calculation of interest, not the type of error which is currently before this Court. Adams v Lambert at [18] goes on to say:
…In the event of such a failure, it must be asked whether the defect or irregularity is a formal defect or irregularity within the purview of s 306. If it is, then it becomes necessary to consider whether substantial injustice has been caused by the defect or irregularity, and whether the injustice cannot be remedied by an order of the court… But the absence of claimed injustice does not conclude the separate question that arises under s 306 about whether the defect or irregularity is a formal defect or irregularity…
Mr Coshott argues that the error in the bankruptcy notice in this matter is not a formal defect or irregularity but rather a defect in naming the wrong creditor. It is submitted that this Court does not have the power to amend a bankruptcy notice, therefore such an error cannot be remedied by the Court. Bankruptcy notices are not processed nor issued by the Court. In effect, Adams v Lambert states that s.306 will only allow correction of a procedural defect of the bankruptcy notice if the Court is able to do so. Mr Coshott submits that the defect in this bankruptcy notice was not a formal defect but one of substance. That is, a defect of a basic condition in the issuing of a bankruptcy notice. The creditor who seeks issue of the notice must be the creditor who obtained the judgment, otherwise a debtor could pay a person or company monies to which they were not entitled.
Adams v Lambert at [24] and [25] states:
24 …What is excluded from the section is a defect or irregularity of such a nature that, reading s 306 in the context of the whole Act, it is not "a formal defect or an irregularity"…
25 …In [Kleinwort Benson Australia Ltd v Crowl], the majority contrasted the concept of a formal defect or irregularity with a defect or irregularity that renders a bankruptcy notice a nullity that cannot be saved by s 306…
In respect of the bankruptcy notice, Mr D’arcy submits that the corporate fingerprint of a company in Australia is its ACN number and that all the documents before the Court show B&W Windows properly identified by its ACN number. Mr D’arcy maintains that throughout the relevant period, B & W Windows’ corporate identity (or fingerprint) never changed, although it did change its name. Mr D’arcy argues that Adams v Lambert stands for the proposition that judgment debtors should not be absolved of their financial obligations by relying on mistakes such as the name of a company in a notice.
Mr D’arcy argues that the intent of the bankruptcy notice and the identity of the creditor would have been clear to Mr Coshott from that document. Mr D’arcy contends that even if the bankruptcy notice was found not to have been validly served on 31 March 2007, it was effectively served when Mr Coshott was served with the creditor’s petition on 11 May 2007, which had the notice attached to it.
I accept the argument of Mr Coshott that the bankruptcy notice has been issued by the wrong company in that the Judgment/Order made on 16 February 2007 was in the name of B & W Windows Pty Limited as a result of the Certificate of Determination of Costs by a Costs Review Panel (829 of 2006) issued on 12 January 2007 for the same company B & W Windows Pty Limited. Adrian Voits’ affidavit states on oath that on 6 February 2007, B&W Windows Pty Limited ACN 003 048 477 changed its name to Voits Holdings Pty Limited.
The bankruptcy notice NN844/07 issued on 6 March 2007 identifies the creditor as B & W Windows Pty Limited but contains no ACN number for that company. Based on the evidence before the Court, that bankruptcy notice is invalid. Mr D’arcy, for the respondent debtor, argues that the incorrect name is a formal defect or irregularity and should be corrected by this Court under s.306 of the Act, and based on the principle in Adams v Lambert. Mr D’arcy, while acknowledging the error on the bankruptcy notice, suggests that an examination of all the supporting documents contains sufficient extrinsic evidence to identify the creditor, which thus enables the bankruptcy notice to be amened. I am not satisfied that this is the correct approach. Clearly the bankruptcy notice has been issued in the name of the wrong corporate entity and there is no ACN number to aid in any identification. The extrinsic evidence is insufficient to clarify whether the company identified on the bankruptcy notice is the entity now entitled to the judgment debt, or was merely incorrectly named. As the bankruptcy notice is invalid, the creditor’s petition dated 26 April 2007, SYG1391/2007, must be dismissed.
Section 41(7) of the Bankruptcy Act 1966 (Cth)
Mr Coshott submits that if his argument in respect of the validity of the bankruptcy notice fails, he wishes to raise s.41(7) of the Act:
(7) Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.
Mr Coshott submits that he does not have a claim against the company that issued the bankruptcy notice. If that company is B & W Windows Pty Limited ACN 123 250 244, he states that he has a cross-claim against Voits Holdings Pty Limited (ACN 003 046 477) formally known as B & W Windows Pty Limited as of 6 February 2007. In the circumstances, it is unnecessary for the Court to consider this issue in light of the invalidity of the bankruptcy notice.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM.
Associate:
Date: 21 June 2007
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