Curtis v Singtel Optus Pty Ltd
[2014] FCCA 1286
•19 June 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CURTIS v SINGTEL OPTUS PTY LTD & ANOR | [2014] FCCA 1286 |
| Catchwords: BANKRUPTCY – Validity of a Bankruptcy Notice issued by the Official Receiver electronically – attachment of the judgment/order at the time of issue – whether electronically issued bankruptcy notice is invalid as it does not “attach” judgment/order founding the notice – whether defect in bankruptcy notice can be cured by s.306 of the Bankruptcy Act 1966 (Cth). |
| Legislation: Bankruptcy Act 1966, ss.41(1), 41(2), 306 Electronic Transactions Act 1999 (Cth), ss.3, 8, 11, 15C |
| Adams v Lambert (2006) 228 CLR 409 Frenchmans Lodge Nursing Home Pty Ltd v Kim Lutman [2014] FCCA 287 |
| Applicant: | LEON CURTIS |
| First Respondent: | SINGTEL OPTUS PTY LTD |
| Second Respondent: | OFFICIAL RECEIVER |
| File Number: | SYG 924 of 2014 |
| Judgment of: | Judge Lloyd-Jones |
| Hearing date: | 13 May 2014 |
| Delivered at: | Sydney |
| Delivered on: | 19 June 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr J Johnson |
| Solicitor for the Applicant: | Mr J Prowse of MCW Lawyers |
| Counsel for the First Respondent: | Mr D Mackay |
Solicitor for the First Respondent: | Ms Hannah Mcleod of Minter Ellison |
| Counsel for the Second Respondent: | Mr M Heath |
| Solicitor for the Second Respondent: | Ms L Buchanan of Australian Government Solicitor |
ORDERS
The application filed on 4 April 2014 be dismissed.
The applicant is to pay the respondents’ costs of and incidental to the application.
The time for compliance with Bankruptcy Notice BN 169768 of 2014 be extended up to and including 21 days from the date of today’s date.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 924 of 2014
| LEON CURTIS |
Applicant
And
| SINGTEL OPTUS PTY LTD |
First Respondent
| OFFICIAL RECEIVER |
Second Respondent
REASONS FOR JUDGMENT
Introduction
In this matter the applicant debtor, Leon Curtis, filed an application in this Court on 4 April 2014 seeking to set aside Bankruptcy Notice BN 169768 of 2014 (the “Bankruptcy Notice”) which had been served on him by the respondent creditor. The application seeks various orders and significantly the following:
2. A declaration that the document entitled Bankruptcy Notice, numbered issued and dated No BN 169768 25 February 2014 was not at the time of its issue a valid and effectual Bankruptcy Notice issued pursuant to s.41 of the Bankruptcy Act 1996 and Bankruptcy Regulation 4.02 and the prescribed form of Bankruptcy Notice as at the time of issue the Bankruptcy Notice did not have attached to it a copy of the final judgment or order relied upon.
The respondent creditor, Optus Singtel Pty Ltd (“Optus”) opposed the application.
Leave was granted for the Official Receiver to intervene in these proceedings given the nature of the claim made by the applicant.
In the affidavit of Danny Roland Klopovic affirmed 12 May 2014 (the “Klopovic Affidavit”), Mr Klopovic states that he is employed by the Australian Financial Security Authority (“AFSA”) as the Assistant Director of the National Registry and excises powers delegated by the Official Receiver under the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”). At [18] of the Klopovic Affidavit he states that AFSA is of the view that the current proceedings raise an issue of public interest and, in particular, an untested issue of the construction of the Act and the Bankruptcy Regulations 1996 (Cth) (the “Bankruptcy Regulations”) which could impact on the administration of the Bankruptcy Act by AFSA, particularly in respect of the current method of issuing bankruptcy notices by the Official Receiver.
The thrust of the argument advanced on behalf of the applicant was that the Bankruptcy Notice at the date of its issue was not a valid bankruptcy notice in that it did not comply with the requirements of s.41(2) of the Bankruptcy Act, Reg. 4.02 of the Bankruptcy Regulations and the prescribed form of a bankruptcy notice. The contention is that for the purported Bankruptcy Notice to be valid it was required to have attached to it a copy of the final judgment/order founding the Bankruptcy Notice and at the time of its issue, the Bankruptcy Notice did not have attached to it a copy of the final judgment/order.
It is not disputed between the parties that at the time of service of the Bankruptcy Notice on the applicant (debtor) a copy of the final judgment/order was attached to the Bankruptcy Notice.
I have formed the view that the argument advanced on behalf of the applicant that if taken in isolation a bankruptcy notice, issued electronically, is invalid because it does not strictly comply with s.41 of the Bankruptcy Act and Bankruptcy Regulation 4.02. However, when considered in context of the complete Bankruptcy Act, the operation of the Electronic Transactions Act 1999 (Cth) (the “Electronic Transactions Act”) and the conventional approach to statutory interpretation this claim cannot be sustained for the reasons discussed below.
Material before the Court
The Applicant Debtor relied on the following material at the hearing:
a)Form 2 Application filed 4 April 2014;
b)Applicant’s Genuine Steps Statement;
c)The Affidavit in Support of Application to set aside Bankruptcy Notice of Jonathon Craig Prowse affirmed 3 April 2014;
d)The Affidavit of Jonathon Craig Prowse affirmed 24 April 2014; and
e)Exhibit “A1” – a colour print out of Screen Format Subject: Bankruptcy Notice accepted for Leon Curtis and attachments.
Optus relied on the following material:
a)The Affidavit of Service of Bankruptcy Notice sworn by Mark Slater on 20 March 2014;
b)Notice Stating Grounds of Opposition to Application filed 28 April 2014; and
c)The Affidavit of Angela Faye Watts sworn 24 April 2014 (the “Watts Affidavit”).
AFSA relied on the following material:
a)The Klopovic Affidavit.
Background
In setting out the following background material I have quoted directly from the various affidavits filed in these proceedings as set out above. Where this information is extracted from an affidavit, each item contains a reference for that material. I have not made further attributions as this would make the background summary unwieldy. This section is not included to establish any evidentiary basis, but rather as a general introduction to the issue.
The Klopovic Affidavit indicates at [3]-[6]:
3. I am delegated to perform the powers and functions of the Official Receiver under s.15(4) of the Bankruptcy Act 1966 (the Act and Bankruptcy Regulations 1996 (the Regulations). I have oversight of the Registry teams based in Melbourne and in Sydney who conduct the process of Notices.
4. The Official Receiver has issued approximately 9,800 Bankruptcy Notices in the past year.
5. There are two ways in which a Creditor can apply to have a Bankruptcy Notice issued by the Official Receiver. The first is by sending a completed approved form by post to an office of the AFSA. The second is by completed an online application using the online services contained on the AFSA website: The online system has operated since 11 February 2013. In the past year about 95 per cent of the Bankruptcy Notices issued are applied for online using the website of AFSA.
The Klopovic Affidavit then outlines the procedures involved the in issuing of a bankruptcy notice where an application is made online at [9]-[14] where he states:
9. If a creditor wishes to use the online service they must register their details with AFSA through its website.
10. Once registered, a creditor can use the online service to submit a bankruptcy notice for approval. The online service requires the creditor or their agent to complete a number of on screen ‘fields’ which correspond with the details required to complete a prescribed Bankruptcy Notice as set out in Form 1 of Schedule 1 to the Regulations. The first screen requires a creditor to complete details of the judgment or order of a Court upon which they rely for the issuing of the notice. A required step for the completion of the online form is fir the creditor to upload a copy of the sealed or certified judgment or order of a Court evidencing the debt owed to the creditor by the debtor.
…
11. Prior to the creditor being able to submit the applicant online, the online service asks the creditor to review the details entered. The review screen allows for proof reading and editing of the online form. The service also allows the user to view a draft copy of the Bankruptcy Notice prior to submission. Payment of the prescribed fee must also be made.
12. Upon receipt of an electronic application a delegate of the official Receiver will review the online application. The delegate will ensure that all requirements under the Act and Regulations for the issuing the notice have been met and, if the form appears to comply with those requirements, the notice is approved and endorsed by6 the delegate of the Official Receiver. If any errors are detected by the delegate, the application is not processed and the creditor is notified by email of the errors and advised to revise and resubmit their application.
13. Upon approval by the delegate, the system automatically generates a covering letter to the creditor and a bankruptcy notice in the prescribed form containing the details as entered into the online fields by the creditor and the signature of the Official Receiver. The system then automatically creates and sends an email to the address supplied by the creditor with their application. Attached to the email is the covering letter, the endorsed bankruptcy notice and the judgment or order which the creditor uploaded with their application for a bankruptcy notice as documents in .pdf format. The system inserts into the endorsed bankruptcy notice a unique Bankruptcy Notice number, issued date and signature of the Official Receiver in the ‘Office use only” field.
14. Each bankruptcy notice has its own online file which acts as a correspondence history for that application. The online file contains several ‘folios’. The ‘folios’ mark a correspondence events such as an application being received, assessed, approved, and any file notices. Any supporting documentation received are also attached to the appropriate folio.
Legislative Requirements
Section 41(2) of the Bankruptcy Act states:
Bankruptcy notices
…
(2) The notice must be in accordance with the form prescribed by the regulations.
Regulation 4.02 of the Bankruptcy Regulations states:
Form of bankruptcy notices
(1) For the purposes of subsection 41(2) of the Act, the form of bankruptcy notice set out in Form 1 is prescribed.
(2) A bankruptcy notice must follow Form 1 in respect of its format (for example, bold or italic typeface, underlining and notes).
(3) Subregulation (2) is not to be taken as expressing an intention contrary to section 25C of the Acts Interpretation Act 1901.
Note: Under section 25C of the Acts Interpretation Act 1901, where an Act prescribes a form, then, unless the contrary intention appears, strict compliance with the form is not required and substantial compliance is sufficient; see also paragraph 46(1)(a) of that Act for the application of that Act to legislative instruments other than Acts.
Procedure followed to obtain the Curtis Bankruptcy Notice electronically
In the Watts Affidavit at [9], Ms Watts describes the procedure she followed to log on to the AFSA website and complete a bankruptcy notice form which included the uploading of a copy of the final judgment/order upon which the notice was founded. Subsequently, in the Watts Affidavit at [19], Ms Watts indicates that she receives from AFSA an email automatically attached which attaches:
a)A letter from the Australian Financial Security Authority;
b)The Bankruptcy Notice signed by the Official Receiver; and
c)A copy of the final judgment/order.
The interim steps performed internally by the Official Receiver to ensure compliance with the Bankruptcy Act and Bankruptcy Regulations is not relevant to this application and is not commented on further.
Mode of Electronic Delivery of Curtis Bankruptcy Notice
The applicant tendered an exhibit, identified as “A1” and the front page of the exhibit is a coloured screen-shot/screen-capture from a computer of the email account of Ben Pascoe from [email protected]. The Watts Affidavit at [14] identifies Ben Pascoe as the Business Services Melbourne Disbursement Manager of Minter Ellison. The firm of solicitors requesting the issue of the Curtis Bankruptcy Notice is Minter Ellison. The Portable Document Format (“PDF”) files identified in the exhibit:
a)A covering letter from AFSA;
b)The Bankruptcy Notice; and
c)Orders from the Supreme Court dated 17 October 2013.
The email which was sent Tuesday 25 February 2014 at 16:35 is an automatically generated email from AFSA. The subject heading of the email is “Bankruptcy Notice Accepted for Leon Curtis. Bankruptcy Notice Number 169768, Issued on 25-Feb-2014 [SEC=UNCLASSIFIED]”.
Attached to the email are three separate PDF (Portable Document Format) files. The PDF files are titled:
a)C169768_CORR-BN001R-01_5_1.pdf (28 KB);
b)BankruptcyNotice.pdf (11 KB); and
c)ORDERS – 17 October 2013 – Leon Mark Curtis.pdf (292 KB).
The message contained in the email states:
Please find attached correspondence from the Australian Financial Security Authority.
This email was sent via an automated system, please do not reply to this email address. Contact details for reply are included in the attached correspondence.
IMPORTANT: This email is intended for the use of the addressee and may contain confidential or legally privileged information. If you are not the intended recipient, you are notified that any use or dissemination of this communication is strictly prohibited. If you have received this email in error, please reply to this email address immediately and advise AFSA.
Important: If you have received this transmission in error please notify us immediately by return email and delete all copies. If this email or any attachments have been sent to you in error, that error does not constitute waiver of any confidentiality, privilege or copyright in respect of information in the email or attachments.
Mandatory Requirements of the Act at the time of issue
The argument advanced on behalf of the applicant is that the requirement of the attachment of the final judgment/order to a bankruptcy notice at the time of issue is a matter made essential by the Bankruptcy Act having regard to the use of the word “must” in s.41(2). The alternative position, taken by the respondents, is that there is no requirement at the time of issue of a bankruptcy notice that a copy of the judgment/order has to be attached, as all that is required is that the judgment/order be attached at the time of service. The respondents’ contention is addressed below.
As the challenge in this application is restricted to the electronic application and issue, the procedures adopted for a manual application will be ignored. Pursuant to reg.4.01 of the Bankruptcy Regulations in order to apply for the issue of a Bankruptcy Notice, a person must lodge online with the Official Receiver (AFSA) a draft Bankruptcy Notice in electronic form on the AFSA online services web page ( and upload a sealed copy of the judgment/order founding it. Section 41(2) of the Bankruptcy Act provides that a bankruptcy notice must be in accordance with the form prescribed by the Bankruptcy Regulations. Regulation 4.02 of the Bankruptcy Regulations provides that for the purposes of s.41(2) the form of a bankruptcy notice set out in Form 1 is prescribed and the Bankruptcy Notice must follow Form 1, with the specific issue being the attaching of the judgment/orders to the notice.
Turning to the face of Form 1, there are only two references within that document that specifically refers to “attached final judgment/orders” on the first page of the form it reads “claim/s that you owe the following debts”:
The amount as per the attached final judgment/s or final order/s (Note A)
Further down the page, the box that is headed “Notes” states:
A – if an attached final judgment or final order is expressed in an amount of foreign currency you may pay the amount in that foreign currency or pay an equivalent amount in Australian dollars that has been calculated using the opening telegraphic transfer rate of …
(emphasis added)
The question of being attached
A convenient starting point in respect of the meaning of the word “attached” is found in the Shorter Oxford English Dictionary, Sixth Edition 2007, which provides a number of different circumstances where the word can be used, including the following:
5. Fasten, to join (a thing to another);
6. Join or connect functionally to.
The Oxford Dictionary also gives a definition associated with the law as seize (a person or property) by legal authority. The use of the word attached in the context of the issue before this Court is used in a normal, non-technical sense with the meaning of a physical presence or close proximity. This can also be expressed as “attached to”. Mr Heath in his submissions describes in the following way as to “attach” something is to fasten, join or cause it to adhere to something (Macquarie Dictionary).
It is noted that in the decision of Re Edelsten; Donnelly v Edelsten & Ors (1988) 84 ALR 547, his Honour Burchett J undertook a review of the meaning of the word “attached” in the law, particularly before the word came to be associated with the statutory power given to Courts to make garnishee orders. His Honour concluded that generally “attachments” are by Court order, but the legal authority by which an “attachment” may be given may take then more than one form. This issue is raised as a point of clarification as the word and the context addressed by his Honour are not relevant to the consideration currently before this Court.
Further assistance is found in the Federal Court of Australia, Practice Note CM 6 – Electronic Technology in Litigation issued by His Honour Keane CJ (as he then was) on 1 August 2011. In the glossary to Practice Note CM 6 and Related Materials the following appears:
Attached Document means a Document attached to, or embedded in, a Host Document. See also Embedded Document.
…
Container means a store which contains Documents or other Containers. A Container may be:
(a) an electronic file or directory.
(b) an email box (or email store), such as a PST and NSF file, which contain emails, email attachments, tasks, notes and diary or calendar entries.
(c) a compressed file, such as a ZIP file containing other files that may be extracted.
(d) a hard copy folder or box.
A Container is not a Document and can not be a Host Document.
…
Document means a document as defined in Order 1 rule 4 of the Federal Court Rules.
…
Document Group means a Host Document and the Attached Documents associated with it. For example, an email and any Documents attached to it constitute a Document Group, as does an Electronic Document and any Documents embedded within it. However, a Container (such as a ZIP file) and the Documents contained in it do not constitute a Document Group.
…
Document Type means the Document Description data field containing the category or classification of a Document (e.g. Letter, Facsimile, Report, E-mail).
…
Electronic Document means a Document or component of information that was originally created using a computer system, software application or database. This is often referred to as Electronically Stored Information (‘ESI’). The Metadata embedded within an Electronic Document is considered part of that Document. The definition of Electronic Document includes an email, email attachment or a Loose File. A Container is not an Electronic Document for the purposes of Practice Note CM 6 and the Related Materials.
…
Embedded Document means a Document that is embedded within an Electronic Document. An Embedded Document is to be treated as an Attached Document, with the Document within which it is embedded being its Host Document. A Document attached to an email is not an Embedded Document.
Host Document means a Document with one or more Attached Documents. For example, an email is a Host Document and any Documents attached to the email (including any Documents stored in a Container that is attached to the email) are its Attached Documents. A Container is not a Host Document.
The Klopovic Affidavit refers to the procedures adopted by the Official Receiver to issue online/electronic bankruptcy notices which have been operational since 11 February 2013 (see [11] above). Mr Klopovic at [13] of the Klopovic Affidavit states that upon approval by the delegate, the system automatically generates a covering letter to the creditor and the bankruptcy notice in the prescribed form, containing the details as entered into the online fields by the creditor and the signature of the Official Receiver. The system then automatically creates and sends an email to the address supplied by the creditor or their representative with their application. Attached to the email is a covering letter, the endorsed bankruptcy notice and the judgment/order which the creditor uploaded with the application for a bankruptcy notice documents in PDF format.
Validity of an electronically delivered Bankruptcy Notice
The submission advanced by Mr Johnson, appearing for the applicant, is it is clear from Exhibit “A1” that in the manner in which the Official Receiver has issued the Bankruptcy Notice exercising the powers under the provision of s.41 of Bankruptcy Act the final judgment/order is not “attached to” the bankruptcy notice as issued. The argument is that there are in fact three separate attachments forwarded with the email issued by AFSA, acting on behalf of the Official Receiver. It is claimed that this is not a situation involving a document that is misleading, rather a situation where the document fails to meet a statutory requirement.
Mr Johnson, in his written submissions, states that the attaching of the judgment/order is an essential part of a bankruptcy notice and is not something that can be rectified at the whim, discretion or enthusiasm of a creditor once the document is received as the document is not the creditor’s, rather that of the Official Receiver and only the Official Receiver can issue the document and amend it.
The Klopovic Affidavit states at [18]:
…If AFSA is required to issue Bankruptcy Notices in a different way, I anticipate that this would require a significant amount of work redesigning the online systems presently being used or if a suitable technological solution were not possible, increased staff to manually process aspects of the online system presently used, in addition to distribution to clients due to any change to the system.
I have formed the view that if electronic delivery of bankruptcy notices is to be continued in its current form and s.41 of the Bankruptcy Act and reg.4.02 of the Bankruptcy Regulations remain unchanged, then using this regime at the time of issue a bankruptcy notice is not strictly valid having regard to the strict wording of the Bankruptcy Act and Bankruptcy Regulations.
I limit this analysis to the following extent that the evidence on front page of Exhibit “A1”, being the screen shot of the AFSA email to the recipient (Optus’ solicitor) contains PDF icons and files. While it is acknowledged other software systems and computer programmes exist they are not considered here on this limited point.
Adopting the nomenclative of Practice Note CN6 (see [26] above), Exhibit “A1”, the AFSA email is a Host Document. The PDF files that are identified as:
a)C169769_CORR-BN001R-01 5.1pdf;
b)Bankruptcy Notice.pdf; and
c)ORDER-17 October 2013 – Leon Mark Curtis.pdf
are attached documents.
The AFSA email and the three attached PDF files constitute a Document Group, also known as Electronically Stored Information (“ESI”). There are references to Embedded Documents in the Practice Note, however, that reference does not apply to these proceedings and needs no further consideration.
In Exhibit “A1” the attachments are in PDF format and can be viewed, read, printed, saved and forwarded but the content cannot be amended or changed by the recipient without great difficulty. The recipient can, in effect, only carry out some basic functions which are to print or save the document. The Court is making the assumption that the AFSA is releasing the PDF files with a ‘read only’ setting. From a policy point of view this would be a logical approach to prevent the unauthorised amendment of any part of the Bankruptcy Notice. As it is not possible to staple one virtual/digital attachment to another or to make two discrete PDF attachments attach to each other the recipient can only print each PDF file separately to obtain a physical copy of all the documents.
The front page (colour print) of Exhibit “A1” is a screenshot of the AFSA email and interpreting the Bankruptcy Act in terms of the normal understanding of the current Bankruptcy Act and Bankruptcy Regulations the emails is not the point of issue of the Bankruptcy Notice. The Klopovic Affidavit states that once the delegate of the Official Receiver ensures that all the requirements under the Bankruptcy Act and Bankruptcy Regulations for a bankruptcy notice have been met, the bankruptcy notice is approved and endorsed by a delegate of the Official Receiver. Upon the approval of the delegate, the system automatically generates:
a)A cover letter to the creditor and the Bankruptcy Notice in the prescribed form; and
b)An AFSA email (in the form of Exhibit “A1”) containing a cover letter, an endorsed Bankruptcy Notice and the judgment/ order.
At this point the consideration is limited to these steps taking place electronically, being the generation and release of the AFSA email is the point of issue, as opposed to the receipt of the email that appears on the front page of Exhibit “A1”. At the point where the computer system operated by AFSA automatically creates and sends the email, the attached documents have the status of virtual documents in PDF format. These documents themselves cannot be observed unless upon receipt and opening of the AFSA email, at which point the recipient can open and/or print the virtual document.
If the argument by the applicant in these proceedings is that this problem of attachment could be overcome by a process of merging or copy and pasting electronically of the Bankruptcy Notice (consisting of three pages) and the judgment/order (consisting of three pages) to give a file identified as Bankruptcy Notice and judgment/orders (consisting of six-consecutive pages) when printed out to give the physical appearance of the judgment/orders being attached to the Bankruptcy Notice, this must fail. A file containing the six consecutive pages is then technically the one document with no attachments. The purpose of this steps in the analysis and adopting of a strict interpretation (the validity of which is discussed below) of the requirements of s.41 of the Bankruptcy Act and Reg. 4.02 cannot be satisfied.
An alternative approach would be to place a “hyperlink” in the bankruptcy notice connecting to the judgment/order. To obtain physical copies of the bankruptcy notice and the judgment/order the recipient would need to open the bankruptcy notice, then locate the judgment/order hyperlink, click to open it and print the document. This would invalidate the Bankruptcy Notice because it would not comply with Reg. 4.02 of the Bankruptcy Regulations as it would not strictly follow Form 1 because of the presence of the hyperlink on its face.
Another approach would be to electronically insert the judgment/orders file into the Bankruptcy Notice during the creation stage. This would require the AFSA software to be specifically modified to perform this task as commercially available licensed software within the restrictions identified in [35] above does not readily carry out this function. This would be a partial solution as long as the documents remained in virtual/digital form because upon the printing of a bankruptcy notice issued in that manner, it would be printed as a single document. This would result in the same apparent defect as it would not comply with Reg. 4.02 of the Bankruptcy Regulations as it would not strictly follow Form 1.
Application of the Electronic Transactions Act 1999 (Cth)
I now turn my attention to legislative steps made by the Commonwealth to address the use of electronic communications, particularly in circumstances where the adoption of electronic communications in transactions does not readily mesh with existing legislative instruments. The Electronic Transactions Act at s.3 states its objectives to provide a regulatory framework that namely is to:
a) recognise the importance of information economy to the future economic and social prosperity of Australia; and
b) facilitate the use of electronic transactions; and
c) promote business and community confidence in the use of electronic transitions; and
d) enable business and the community to use electronic communications in their dealings with government.
In the revised Explanatory Memorandum provided to the Senate and incorporating amendments made by the House of Representatives to the Electronic Transactions Act at the stage where it was a bill before Parliament, the following statement appears in the general outline:
The Electronic Transactions Bill is part of the Government's strategic framework for the development of the information economy in Australia. The strategic framework reflects the Government's commitment to ensuring that Australians enjoy the social and economic benefits offered by the growth of the information economy.
The Electronic Transactions Bill creates a light handed regulatory regime for the use of electronic communications in transactions. The Bill facilitates the development of electronic commerce in Australia by broadly removing existing legal impediments that may prevent a person using electronic communications to satisfy obligations under Commonwealth law. The Bill generally gives business and the community the option of using electronic communications when dealing with Government agencies.
…
The Bill is based on two principles: functional equivalence (also know as media neutrality) and technology neutrality. The term functional equivalence means that transactions conducted using paper documents and transactions conducted using electronic communications should be treated equally by the law and not given an advantage or disadvantage against each other. Technology neutrality means that the law should not discriminate between different forms of technology - for example, by specifying technical requirements for the use of electronic communications that are based upon an understanding of the operation of a particular form of electronic communication technology.
The Bill establishes the basic rule that a transaction is not invalid because it took place by means of an electronic communication. It contains specific provisions which state that a requirement or permission under a law of the Commonwealth for a person to provide information in writing, to sign a document, to produce a document or to retain information or a document can be satisfied by an electronic communication, subject to certain minimum criteria being satisfied. The Bill also sets out rules, which apply in the absence of any contrary agreement, to determine the time and place of dispatch and receipt of electronic communications and the attribution of electronic communications…
None of the parties to these proceedings in their written or oral submissions raised or commented on the impact of the Electronic Transactions Act. Whether it was the view of the parties that this particular piece of legislation had no impact on this application or the broader interpretation of the Bankruptcy Act and Regulations was not explained or mentioned. I have adopted a contrary view as the Bankruptcy Act and Bankruptcy Regulations were introduced at the earliest in 1966 and it is acknowledged that since then numerous pieces of amending legislation have been passed, amending both the Bankruptcy Act and the Bankruptcy Regulations. However, none of these amendments specifically address the issue of electronic delivery of a bankruptcy notice by the Official Recover.
The Electronic Transactions Act, Part II, s.8 addresses the validity of electronic transitions and states:
Validity of electronic transactions
(1) For the purposes of a law of the Commonwealth, a transaction is not invalid because it took place wholly or partly by means of one or more electronic communications.
(2) The general rule in subsection (1) does not apply in relation to the validity of a transaction to the extent to which another, more specific provision of this Part deals with the validity of the transaction.
The other significant provision of Part II of the Electronic Transactions Act is s.11 which addresses the production of a document. It states therein:
Production of document
Requirement to produce a document
(1) If, under a law of the Commonwealth, a person is required to produce a document that is in the form of paper, an article or other material, that requirement is taken to have been met if the person produces, by means of an electronic communication, an electronic form of the document, where:
(a) in all cases--having regard to all the relevant circumstances at the time of the communication, the method of generating the electronic form of the document provided a reliable means of assuring the maintenance of the integrity of the information contained in the document; and
(b) in all cases--at the time the communication was sent, it was reasonable to expect that the information contained in the electronic form of the document would be readily accessible so as to be useable for subsequent reference; and
(c) if the document is required to be produced to a Commonwealth entity, or to a person acting on behalf of a Commonwealth entity, and the entity requires that an electronic form of the document be produced, in accordance with particular information technology requirements, by means of a particular kind of electronic communication--the entity's requirement has been met; and
(d) if the document is required to be produced to a Commonwealth entity, or to a person acting on behalf of a Commonwealth entity, and the entity requires that particular action be taken by way of verifying the receipt of the document--the entity's requirement has been met; and
(e) if the document is required to be produced to a person who is neither a Commonwealth entity nor a person acting on behalf of a Commonwealth entity--the person to whom the document is required to be produced consents to the production, by means of an electronic communication, of an electronic form of the document.
Permission to produce a document
(2) If, under a law of the Commonwealth, a person is permitted to produce a document that is in the form of paper, an article or other material, then, instead of producing the document in that form, the person may produce, by means of an electronic communication, an electronic form of the document, where:
(a) in all cases--having regard to all the relevant circumstances at the time of the communication, the method of generating the electronic form of the document provided a reliable means of assuring the maintenance of the integrity of the information contained in the document; and
(b) in all cases--at the time the communication was sent, it was reasonable to expect that the information contained in the electronic form of the document would be readily accessible so as to be useable for subsequent reference; and
(c) if the document is permitted to be produced to a Commonwealth entity, or to a person acting on behalf of a Commonwealth entity, and the entity requires that an electronic form of the document be produced, in accordance with particular information technology requirements, by means of a particular kind of electronic communication--the entity's requirement has been met; and
(d) if the document is permitted to be produced to a Commonwealth entity, or to a person acting on behalf of a Commonwealth entity, and the entity requires that particular action be taken by way of verifying the receipt of the document--the entity's requirement has been met; and
(e) if the document is permitted to be produced to a person who is neither a Commonwealth entity nor a person acting on behalf of a Commonwealth entity--the person to whom the document is permitted to be produced consents to the production, by means of an electronic communication, of an electronic form of the document.
Integrity of information
(3) For the purposes of this section, the integrity of information contained in a document is maintained if, and only if, the information has remained complete and unaltered, apart from:
(a) the addition of any endorsement; or
(b) any immaterial change;
which arises in the normal course of communication, storage or display.
Certain other laws not affected
(4) This section does not affect the operation of any other law of the Commonwealth that makes provision for or in relation to requiring or permitting electronic forms of documents to be produced, in accordance with particular information technology requirements:
(a) on a particular kind of data storage device; or
(b) by means of a particular kind of electronic communication.
Taking into account the evidence provided by Mr Klopovic in respect of the automatic preparation and releasing of bankruptcy notices, Part III, s.15C of the Electronic Transactions Act is relevant. It states:
Use of automated message systems for contract formation--non-intervention of natural person
A contract formed by:
(a) the interaction of an automated message system and a natural person; or
(b) the interaction of automated message systems;
is not invalid, void or unenforceable on the sole ground that no natural person reviewed or intervened in each of the individual actions carried out by the automated message systems or the resulting contract.
Significantly, for the purposes of the current analysis s.9(1) of the Electronic Transactions Act provides that a requirement under a law of the Commonwealth to give information in writing is satisfied by giving the information electronically if it reasonable to expected that the information will be readily accessible so as to be usable for subsequent reference, and the person to whom the information is given consents to it being provided electronically. As indicated in the Klopovic Affidavit, since the introduction of the online system in February 2013, approximately 95 per cent of bankruptcy notices issued thereafter have been applied for and issued electronically.
In Getup Ltd v Electoral Commissioner (2010) 189 FCR 165 his Honour Perram J considered the validity of electronic enrolment and digitally signed applications for the purposes of s.102 of the Commonwealth Electoral Act 1918 (Cth). His Honour made the following observations at [10]:
10. In another context, minds might perhaps legitimately differ as to whether the word “sign” in the Electoral Act encompassed digital signatures such as Ms Trevitt’s. However, the present context includes the Electronic Transactions Act 1999 (Cth). That Act applies to “transactions” a term defined in s 6 to include “a transaction of a non-commercial nature”. The Act sets up a general rule about the validity of transactions arising from electronic communication. It is in s 8 which is as follows:
For the purposes of a law of the Commonwealth, a transaction is not invalid because it took place wholly or partly by means of one or more electronic communication.
In Stuart v Hishon [2013] NSWSC 766 his Honour Harrison J, in a matter concerning authenticated signatures, made the following observations at [33]:
In Kavia Holdings Pty Ltd v Suntrack Holdings Pty Ltd [2011] NSWSC 716, Pembroke J accepted that a requirement that notice be given "in writing" could be satisfied by a communication via email. In C & P Syndicate Pty Ltd v Reddy [2013] NSWSC 643 at [111], Lindsay J referred to the use of emails to effect service of notices in contractual contexts as being "consistent with the policy objectives of the Electronic Transactions Act ... as well as modern business practice and the routine course of communications between the respective solicitors" involved in the transaction. I note that Mr Stuart has unsurprisingly taken no point that email communication as such was somehow incapable otherwise of meeting the requirements of the section.
In my view, since the introduction of the online system for the electronic application for and issuing of bankruptcy notices on 11 February 2013, the operation of the Electronic Transactions Act has been relevant. This view is reinforced by the philosophy of the Electronic Transactions Act as expressed in the then Bill’s Explanatory Memorandum set out at [42] above. I particularly note the following passages:
…Technology neutrality means that the law should not discriminate between different forms of technology - for example, by specifying technical requirements for the use of electronic communications that are based upon an understanding of the operation of a particular form of electronic communication technology.
The second reference states:
The Bill establishes the basic rule that a transaction is not invalid because it took place by means of an electronic communication…
This appears in the Electronic Transactions Act at s.8 which addresses the validity of electronic transactions. I refer particularly to s.8(2) (see [44] above) and note that the Bankruptcy Act in its current form, in that it includes all legislative amendments makes no specific reference dealing with the validity of documents prepared in compliance with the Act that are subject to the special provision regarding the validity of that transaction. The language used in s.41(1) of the Bankruptcy Act and Regulation 4.02, together with the interpretation and inferences of those sections is drafted in the context of a physical hard-copy documents and clearly does not contemplate any part of those provisions, including or being dependent upon an electronic component. The complete absence of that contemplation has led to this particular application being before this Court.
In the submissions made by the parties the provisions of the Electronic Transactions Act and its application were not brought to the Court’s attention. Further, on its own review the Court has not been able to identify any authority that specially addresses the issue.
I move, to the requirement for the production of a bankruptcy notice in hard-copy/physical form. This is addressed by s.11 of the Electronic Transactions Act (see [50] above). If the Bankruptcy Notice and the judgment/ order are downloaded from the .pdf file provided in the AFSA email onto paper, the requirements of s.11(1)(a)-(e) are satisfied. As the bankruptcy notice is delivered in the form of an email with three attached documents it has to be seen, in effect, to be one entire document. When downloaded and produced in print form there will be a number of sheets of paper, which may be stapled, clipped or by some method adhered or fastened together, which is merely a mechanism for convenience. On inspection the first three pages will be the bankruptcy notice, and adhered or fastened to the back of that document will be a copy of the judgment/order. Accordingly, that bankruptcy notice with the attached judgment is not invalid because it took place by means of electronic communication and in the absence of any legislative provision within the Bankruptcy Act itself, there is no basis that the bankruptcy notice is not in prescribed form as at the time of its issue.
Operation of s.306 of the Bankruptcy Act
All of the parties have made submissions in respect of the operation of s.306 of the Bankruptcy Act. Mr Mackay and Mr Heath made submissions that s.306 cures this defect because it has the characteristic of being a formal defect or irregularity that was not essential. The argument advanced by Mr Mackay is that in recent cases in the High Court in respect of the operation of s.306 if a defect or irregularity could mislead the debtor then it is the essential issue. So in circumstances where there is no evidence that a debtor was misled it cannot be essential, therefore it is just a formal defect and s.306 cures that defect.
In Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 the High Court dealt with an understatement of interest that was required to determine whether s.306 cured any defect. In the joint judgment of Mason CJ, Wilson, Brennan and Gaudron JJ at 80-81, their Honours stated:
There could thus be no uncertainty as to what would constitute compliance with the notice. The notice can be regarded as capable of misleading and accordingly cannot be said to be a nullity. The understatement thus constituted a formal defect or irregularity which attracts the operation of s.306(1) of the Act.
Section 306(1) operated automatically unless “the Court… is of the 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 the present case no evidence was presented and no claim was made of actual injustice. There was thus no basis upon which an opinion could be formed to deny the operation of s.306(1).
Mr Mackay submits that in this matter there is no evidence presented by the applicant claiming to have been misled by the Bankruptcy Notice. When the applicant was served with the Bankruptcy Notice it had the judgment/order attached and the applicant knew the circumstances in which the judgment had arisen. I do not believe that this is disputed by any of the parties in these proceedings.
In Adams v Lambert (2006) 228 CLR 409 the High Court considered the validity of a bankruptcy notice which concerned the misstatement of a statutory section number used for the calculation of interest. The notice contained an incorrect reference to the District Court Act1973 (NSW) which quoted s.83A instead of s.85. At 418-422 the High Court examined carefully what is a defect or irregularity and what is essential under the Bankruptcy Act. Within this analysis the High Court overturned the Full Federal Court decision in Australian Steel Co (Operations) Pty Ltd v Lewis (2000) 109 FCR 33 in which a defect was found and the bankruptcy notice was struck down, however in Adams v Lambert (supra) the Court found that s.306 cured the defect.
At [24] Of Adams v Lambert the High Court consisting of Gleeson CJ, Gummow, Kirby, Hayne, Cullen, Heydon and Crennan JJ stated per curiam:
24. The composite expression “a formal defect or an irregularity”, in its application to a bankruptcy notice, conveys a meaning with elements of both inclusion and exclusion. A failure to comply with a requirement, to be found in the Act, imposed by reference to the regulations as to information to be furnished by the notice, is a defect or irregularity. So, in Kleinwort Benson, an erroneous statement of the amount of interest owing on a judgment debt was a defect or irregularity. 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”. What kind, or degree, of defect is to be regarded as having such a nature?
25. In some cases the answer to that question may be easy. In others, a difficult question of judgment may be involved. The matter for judgment was identified by this court in Kleinwort Benson.18 In that case, the majority19 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. To describe a defect as merely formal, or to describe a notice as a nullity, is, of course, to state a conclusion, rather than the reason for reaching that conclusion. Even so, it is necessary to identify the question that arises for judgment. The majority, referring to James,20 and Pillai v Comptroller of Income Tax, summarised the exclusionary aspect of the meaning of “a formal defect or an irregularity” by saying:
The authorities show 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.
(footnotes omitted)
At [26] their Honours proceeded to examine what is meant by the expression of a formal defect or irregularity and stated:
26. The question of construction raised by the words “a formal defect or an irregularity” is one to be decided by reading s 306 in the context of the whole Act, informed by the general purpose of the legislation, and the particular purpose of the provisions relating to bankruptcy notices. It is similar to the question that, in former times, would be explained by asking whether a statutory requirement was mandatory or directory. In Project Blue Sky Inc v Australian Broadcasting Authority it was said: “A better test … is to ask whether it was a purpose of the legislation that an act done in breach of [a] provision should be invalid … In determining the question of purpose, regard must be had to ‘the language of the relevant provision and the scope and object of the whole statute’”.
(footnotes omitted)
The Court then stated at [27] of Adams v Lambert:
27. If, as in the present case, what is in question is an error in the form of a misdescription of a statutory provision, then a consideration of the general purpose of the Act, and the particular purpose of the legislative scheme relating to bankruptcy notices, leads readily to a conclusion that if the error could reasonably mislead a debtor as to what is necessary to comply with the notice it is not merely a formal defect or irregularity…
At [28] the Court commenced its analysis of whether a formal defect or irregularity may constitute something essential by the Bankruptcy Act and stated:
28. The other exclusionary aspect of the expression “a formal defect or an irregularity” in s 306 was said to consist in a failure to meet a requirement made essential by the Act. Here again, the word “essential”, in its application in a particular case, involves a conclusion. If a requirement is made essential by the Act, then a failure to meet that requirement is not a formal defect or an irregularity within the meaning of s 306. Whether a requirement is made essential is to be decided by a process of statutory construction undertaken in the manner described above. The majority in Lewis regarded the error in that case as involving a failure to meet a requirement made essential by the Act.
At [29] the Court made reference to the majority decision in Australian Steel Co v Lewis (supra) which was the Full Federal Court decision that was overturned on the basis the Full Federal Court “place[d] undue emphasis on the imperative terms of the Act and Regulations”. In this respect, their Honours stated at [29] of Adams v Lambert:
29… In this respect, the majority in Lewis placed undue emphasis on the imperative terms of the Act and Regulations. If there were no failure to meet a requirement, there would be no defect or irregularity. Furthermore, as noted earlier, the fact that the requirement is expressed by the use of the term "must" is not conclusive. How otherwise might a requirement as to form be expressed25?
25. In a different statutory context "must" will sometimes require an imperative interpretation: SAAP v Minister for Immigration and Multicultural and Indigenous Affairs (2005) 79 ALJR 1009 at 1014 [16], 1024 [70], 1035 [136], 1040 [173], 1046 [208]; 215 ALR 162 at 166–167, 180, 196, 203, 211.
At [30] their Honours continued:
30. The misdescription of the relevant section of the District Court Act was not capable of misleading the respondent as to what he had to do to comply with the notice. This is not a matter of dispute. The question is whether the misdescription involved a failure to meet a requirement made essential by the Act. On the true construction of the Act, is it essential that there be no misdescription of the relevant section? Is it the purpose of the legislation that any slip, such as giving a reference to the statutory provision governing pre-judgment interest when what is intended is a reference to the provision governing post-judgment interest, should invalidate the notice? Is this so no matter how clear it might be from other parts of the notice that the claim is for post-judgment interest?
At [31] the Court indicated that on a true construction of the Bankruptcy Act, is it essential that there be attached at the time of issue a copy of the judgment/orders. Section 306, in its application to bankruptcy notices makes it plain that some incidences of non-compliance with the requirements as to the form of the notice will not invalidate the notice. The High Court stated at [31]:
31. Section 306, in its application to bankruptcy notices, makes it plain that some instances of non-compliance with the requirements as to the form of a notice will not invalidate the notice. The practical significance of an error or deficiency could vary according to the circumstances of each particular case. Errors or deficiencies in compliance with requirements as to form may involve questions of degree as well as of kind. At the same time, the decision in Kleinwort Benson Australia Ltd v Crowl shows that an error may be covered by s 306 even though it involves a substantial misstatement of an amount of money. It was essential that the bankruptcy notice state the amount claimed. Was it essential that the amount be correct? Section 41(5) made it clear that an overstatement, even a large overstatement, would not necessarily invalidate the notice. This Court concluded that it was not the legislative purpose that a substantial understatement should necessarily invalidate the notice. That is to say, accurately stating the amount of interest owing was not a matter of such importance that error necessarily resulted in invalidity. In the present case, overstatement or understatement of the amount of post-judgment interest owing would not necessarily have invalidated the notice. That is part of the context in which legislative purpose is to be considered in deciding whether the reference to s 83A rather than s 85 was fatal.
At [32] the Court made further reference to Australian Steel Co v Lewis (supra) and to the dissenting judgments of Gyles and Lee JJ which they approved. At [32] the Court indicates that Gyles J accurately identified the question as whether the correct completion of the form prescribed by the Bankruptcy Regulations in every respect is a requirement made essential by the Bankruptcy Act.
At [34] of Adams v Lambert the High Court cited the decision of Lee J in Australian Steel Co v Lewis (supra) and stated:
34. That view of the legislative purpose is persuasive. The effect of the majority view in Lewis is to attribute to the legislature an overwhelming preference for form over substance. That should not be done. Given that s 306 relieves against the invalidating consequences of some mistakes in the preparation of bankruptcy notices, the mistake that was made in this case falls within its terms.
The effect of the majority view in in Australian Steel Co v Lewis (supra) is to attribute to the legislature an overwhelming preference for form over substance which should not be done, given that s.306 relieves against the invalidating consequences of some mistakes in the preparation of bankruptcy notices.
I agree with the argument advanced by both Mr Mackay and Mr Heath in the matter before this Court that if there is a defect in the Bankruptcy Notice at the point of issue it is a defect that is cured by s.306. The error could not have misled the debtor as to what it was necessary to be done in order to comply with the requirements of the Notice. There is no possible way that the debtor can say that he has been misled by the Bankruptcy Notice he has been served with.
In Prudential-Bache Securities (Australia) Ltd v Warner [1999] FCA 1143 his Honour Emmett J had to determine whether an unsigned bankruptcy notice had been issued by the Official Receiver. It was found and held that non-compliance with the Regulations is an irregularity. His Honour made the following observations at [14]-[15]:
14. Under s306, proceedings under the 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. There has been no suggestion that any substantial injustice has been caused by the deficiency in the present case. Further, the issue of a bankruptcy notice is a proceeding under the Act.
15. In so far as the Regulations prescribe a form which requires a signature or stamp, there is a deficiency in the present case in the sense that the purported bankruptcy notice is not in accordance with the form prescribed by the Regulations. The form of bankruptcy notice served on the Debtor contained the box that I have set out above, including the words in parenthesis referring to signature or stamp. On one view, therefore, there was incomplete accord with the form. The deficiency was the failure to comply with reg4.01(2). Non-compliance with the Regulation is an "irregularity", assuming the Regulations are valid, and no submission has been made that the Regulations are invalid. Such an irregularity, however, is one to which s306 would apply.
I agree with the submissions that s.306 cures this claimed defect because it has the characteristics of a formal defect or irregularity that cannot be described as being an essential requirement of the Bankruptcy Act.
Requirements of the Bankruptcy Act and Regulations
The argument advanced on behalf of the applicant is conveniently expressed as having two limbs. The first being, that at the time the Bankruptcy Notice is issued, it must have with it the judgment/order. The second limb is that when the Bankruptcy Notice was issued, it did not have the required sense of “attached” of the judgment/order. That argument is countered on the ground that the Bankruptcy Act is absolutely silent on such a requirement as there is nowhere in the Bankruptcy Act or the Bankruptcy Regulations that at the time of issue the judgment/order must be attached. On that basis, Mr Heath on behalf of the Official Receiver, advances the propositions that it is open to the Official Receiver, if she so chose, not to attach the judgment/order. In the Klopovic Affidavit, a party seeking the issue of a bankruptcy notice fills out the online application which is based upon a judgment/ order. The party applying for the bankruptcy notice then uploads the PDF copy of the judgment/ order onto the AFSA system.
In order for the Official Receiver to process and issue the Bankruptcy Notice from a policy perspective, she requires not only the requisite information to be supplied to her, but she also requires a copy of the judgment/order if that is the basis for the issue of the notice. Again, from a policy perspective all that is required is that the Official Receiver can view the application that is made, review the judgment/order on which it is based, then she can proceed to issue the notice. As there is not requirement in the Bankruptcy Act or Bankruptcy Regulations, the Official Receiver does not have to return the PDF file that has been supplied in support of the application.
As pointed out elsewhere in this judgment, all of the parties agree that the creditor, when serving a bankruptcy notice must have attached a copy of the judgment/order on which the notice is based, but the argument advanced on behalf of the respondent creditor and the Official Receiver is that that the Official Receiver does not have to issue the bankruptcy notice in a manner that it must be arranged for valid service, although it is current practice, since the introduction of online applications using the service contained on the AFSA website, which has operated since 11 February 2013, that the AFSA email includes a copy of the judgment/orders. However, on examination of that document there is no marking based on the face of that document verifying that it is the judgment/order examined and approved by the Official Receiver prior to issue. It would not be possible to determine at the time of service whether another copy of the judgment/order had been substituted as the attachment.
Regulation 4.02(2) of the Bankruptcy Regulations states “a bankruptcy notice must follow Form 1”. Form 1 is contained within the Schedule 1 to the Bankruptcy Regulations and on examination does not have any judgment/order attached to it. Further, the judgment/order does not appear as part of the standard form. I agree with the argument canvassed by Mr Heath that reg.4.02(2) simply states the form of the notice has to comply with Form 1 in respect its format and the drafting of the legislation goes on to make it clear that there is no specific reference to any judgment/order because the regulation contains the qualification “for example, bold or italics typeface, underlining and notes”. In effect, the regulation is limited to what Form 1 looks like and makes no reference to any requirement that it be issued with the judgment/orders.
In respect of the meaning of the term “issued” reference is made by his Honour Emmett J in Prudential-Bache Securities (Australia) Ltd v Warner (supra) which involved a previous method of issuing bankruptcy notices, however, the term “issued” was considered:
18. The term "issue" is defined as follows:
• “Give or send out authoritatively or officially; publish, emit, put into circulation" - the New Shorter Oxford English Dictionary;
• “To put out; deliver for use; to send out, discharge" - the Macquarie Dictionary;
• “The act of delivery; emission; sending" - Butterworths Australian Legal Dictionary.
19. The word "issue" involves the idea of something passing from one person to another, sending forth or delivering. Thus, a document which is at all times retained by a person in his own sole control cannot be said to have been issued by him. He might execute or create the document and then decide not to give it to anybody. In such a case, he would not have issued the document - Koon Wing Lau v Calwell (1949) 80 CLR 533 at 568 per Latham CJ. More specifically, a certificate is not "issued" to a person until it is delivered to him, which means that it must pass from the possession of the authorities either into his manual custody or under his control or into his legal possession so as to be at his command - per Dixon J at 574.
As the structure and policy of the Bankruptcy Act 1966 was introduced in an era reliant on hard-copy, physical documents being created, assembled and delivered, it is not inconsistent to assume that the process of issuing the Bankruptcy Notice involves the delivery to the party making the application until it is in hard copy form. In effect, transferring the document, in this case a bankruptcy notice, from PDF format file to a printed hard copy version. Provided that the process of printing is performed in the correct sequence and on assembly the documents are marshalled and stapled, clipped, adhered or affixed (i.e. attached) in the correct order the notion of the judgment/orders being attached to the bankruptcy notice is achieved.
Since the introduction of the current Bankruptcy Act which was proclaimed to commence operation on 4 March 1968, there have been a number of Federal Court, Full Federal Court and High Court decisions in respect of the operation of s.41(2), Reg. 4.02 and Form 1. Mr Mackay, appearing for Optus referred the Court to the decision in Bank of Melbourne Ltd v Hannan (1997) 78 FCR 249 at 251 where his Honour Northrop ACJ held that, despite the use of the word “must” in Reg. 4.02(2) of the Regulations, strict compliance with Form 1 is not required. His Honour stated at 251:
the second issue arising in this petition did not arise is Lydan and Birrell. Bankruptcy Reg.4.02(1) provides that for the purposes of s.41(2) of the Bankruptcy Act 1901, the form of bankruptcy notice set out in Form 1 is prescribed. By reason of Regulation 1.03(2) this means form 1 in Schedule 1 to the Regulations is the prescribed form. Reg. 4.02(2) provides that the bankruptcy notice must follow Form 1 in respect of its format but that regulation is not to be taken as expressing an intention contrary to section 25C of the Acts Interpretation Act. Thus, despite the use of the word “must” in regulation 4.02(2) strict compliance with Form 1 is not required.
A different approach was adopted by the majority in the Full Federal Court decision in Australian Steel Co v Lewis (supra). In the majority judgment of Black CJ, Heerey and Sundberg JJ their Honours held that the Bankruptcy Act provided that a bankruptcy notice must be in accordance with the form prescribed. In the dissenting judgment of Lee J (approved by the High Court) his Honour made the following observation at [88]:
88. Furthermore, reg 4.02, does not exclude the operation of s 25C of the Acts Interpretation Act 1901 (Cth) ("the AI Act") and, therefore, strict compliance with the form prescribed pursuant to that regulation, is not required. Thus there will be accordance with the form prescribed for the purposes of s 41(2) where there has been substantial compliance with the form. (See: Bank of Melbourne Limited v Hannan (1997) 78 FCR 249; Kirk v Ashdown [1999] FCA 1664 at [16]- [18]; Trustees v Weir at [15]-[16].) The same conclusion may be reached if regard is given to the terms of s 41(2) without resort to s 25C of the AI Act. (See: Farrugia v Farrugia [2000] FCA 385; (2000) 99 FCR 16 per Katz J at [61]-[68].)
The other dissenting judgment in Australian Steel Co v Lewis (supra) was that of his Honour Gyles J, who made the following observation at [110]-[111]:
110. In my opinion, the 1996 amendments did not operate to make compliance with the prescribed form essential where it had not been essential previously. Section 41(2) which is the critical provision now is indistinguishable from the former s 41(1)(a) - there is no difference in effect between "shall be" and "must be". Furthermore, the 1996 amendment actually omits the mandatory requirements of s 41 referred to by the High Court in Kleinwort Benson. In other words, the section is less prescriptive than it was. Section 306 has remained unamended throughout. In my opinion, the change of the issuing authority from Registrar of the Court to Official Receiver has no impact upon the question of construction involved here.
111. There is nothing in the language of reg 4.02 which points to the necessity of strict compliance. Sub-regulation (1) simply prescribes the form as Form 1. This is not materially different from the Rule which applied at the time of the decision in Kleinwort Benson. Where mandatory language is used in sub-reg (2), it is in relation to format only, and this is immediately qualified by recognition of the impact of s 25C of the Acts Interpretation Act. Furthermore, the express wording of the regulation provides the clearest possible indication that s 25C would, rather than would not, apply to compliance with the form as far as content is concerned. I agree with the opinion of the Full Court in Trustees of the Franciscan Missionaries of Mary v Weir [2000] FCA 574 (“Weir”) as to that point (at par 16).
In Adams v Lambert (supra) 10 the Court stated at [4]-[5]:
4. In Lewis, the Full Court of the Federal Court was divided three (Black CJ, Heerey and Sundberg JJ) to two (Lee and Gyles JJ). All the members of the Full Court regarded the decision of this Court in Kleinwort Benson Australia Ltd v Crowl as laying down the principles to be applied. There are conflicting decisions within the Federal Court about the application of those principles to various errors in bankruptcy notices. To the forefront of the appellant's submissions in the present appeal was the proposition that Lewis was wrongly decided, and that the minority conclusions in that case are to be preferred. For reasons that will appear, that proposition should be accepted. The decision in Lewis should be overruled.
5. The scope for error in a bankruptcy notice is as wide as the scope of the contents of such a notice. The cases provide examples of many different kinds and degrees of error. As Gyles J and the Full Court pointed out, there is no material difference between the error in the bankruptcy notice in this case and the error in the bankruptcy notice in Lewis. It seems to be a not uncommon mistake. An apparent source of confusion is the difference between pre-judgment interest and post-judgment interest. There is nothing to be gained by reviewing all the decisions in the Federal Court in recent years concerning different errors in bankruptcy notices. The error in this case is a convenient focus for an examination of the effect of s 306 of the Act. Because the error in the notice in this case is not materially different from the error in the notice in Lewis, success of the present appeal necessarily involves a conclusion that Lewis was wrongly decided. That may mean that a number of other decisions that followed Lewis and applied its reasoning to somewhat different errors were also incorrect, but those decisions are not directly under review.
(footnote omitted)
In Adams v Lambert (supra) the Court then proceeded to review the legislation, and made the following observation at [14]:
14. The requirement in question is established by three levels of prescription. Sub-section 41(2) of the Act states that a bankruptcy notice must be in the form prescribed by the regulations. Regulation 4.02 states that, for the purposes of sub-s 41(2), the form set out in Form 1 is prescribed. Note 2 to the Schedule in Form 1 states that a document attached to the notice must state the provisions under which interest is being claimed. The use of the word "must" is significant, but it should be kept in perspective. A prescription as to a form to be followed will normally be expressed in language of obligation rather than of permission. That is the idea of a form. Such a prescription raises the question to be considered in the present case; it does not answer it.
As indicated in the Introduction above the structure of the Bankruptcy Notice at the time of service is not in issue in this application. Consequently, my earlier decision in Frenchmans Lodge Nursing Home Pty Ltd v Kim Lutman [2014] FCCA 287 does not specifically address the specific issues currently under consideration. Similarly, decisions in Thompson v Metham [1999] FCA 935 and American Express International Inc v Held (1999) 87 FCR 583 which were relied upon in Frenchmans Lodge Nursing Home Pty Ltd v Kim Lutman (supra) do not assist.
The Court was also referred to Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337 at 340 where the issue was whether a Bankruptcy Notice was valid at the time of issue because payment had been made before it had been served. I acknowledge and agree with the written submissions made on behalf of the respondents that Walsh (supra) has no application to the present facts because in this matter at the time of the issue of the Bankruptcy Notice the amount was correctly stated and had attached a copy of the final orders which verified that amount.
Conclusion
Accordingly, for the reasons stated above the application filed on 4 April 2014 cannot succeed. The application should be dismissed with costs awarded to the respondents. The applicant should also be given a further 21 days from today’s date to comply with the Bankruptcy Notice.
I certify that the preceding eighty-five (85) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones
Associate:
Date: 19 June 2014
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