ex parte

CATCHWORDS

Bankruptcy - Bankruptcy petition - Authority of

petitioning creditor to sign petition - Whether

petitioning creditor bound to prove authority -

omnia praesumuntur rite esse acta.

DENIS SPITZER EX PARTE: WELTFLANS AGENCY ESTABLISHMEST

No. P 911 of 1978

LOCKHART J.

8 AUGUST 1979

FEDERAL <;CURT OF

I N T H E FEDERAL COLJXT O F AUSTR4LIA

GENERAL

D I V I S I O N

BANKRUPTCY D I S T R I C T OF THE STATE

No, P 911 of 197,8

O F NEW SOUTH WALES AND THE	1
AUSTRALIAN CAPITAL TERRITORY	1

RE:

D E N I S

S P I T Z E R

EX PARTE:	WELTRANS AGENCY ESTABLISHME1
LOCKHART J.

WHERE MADE:	SYDNEY
DATE O F ORDER:	31 JULY 1979
THE COURT ORDERS THAT:

-	A sequestration order be made against the estate of 'the debtor, and that the costs, including reserved costs, of the

petitioning creditor be taxed and paid according to the Act.

Exhibits may be handed out.

JN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION

BANKRUPTCY BISTRICT OF THE STATE	1 No. P 911 of 1978
OF NEW SOUTH WALES AND THE
1

AUSTRALIAN CAPITAL TERRITORY

RE:

DENIS SPITZER

EX PARTE :

WELTRANS AGENCY EST-4BLISHFIENT

FUCASONS FOR JUDGMENT

This is a petition for seques.tration of the

estate of Denis Spitzer by Weltrans Agency Establishment.

On 26 June 1979 a notice of intention to oppose

the petition was filed by the debtor alleging the following

grounds of opposition:-

"1)	The Petition does not disclose the authority of the purported agent of the Petitioner.

2) The Affidavit of KEITH CfiARLES FLEMING HARRIS sworn on the 26th July 1978 does not disclose the source of authority whereby the Deponent is the "duly authorised agent" of Weltrans Agency Establishment."

The petition is dated 24 July 1978 and was

presented to the court on 1 August 1978. The petition

alleges that the debtor is indebted to it in the sum of

$37,748.89, together with interest, being the amount due

under a final judgment recoverecl in the Supreme Court of

New South Wales on 1 December 1977. The act of bankruptcy

is the failure by the debtor to comp.1~

with the requirements

of a bankruptcy notice served on him on 1 July 1978.

The petition is signed by Keith Charles Fleming

Harris, a solicitor, being a member of the petitioning creditorts Sydney solicitors, Messrs. Cutler, Hughes & Harris. He has purported to sign the petition on behalf

of the petitioning creditor as its duly authorised agent.

The evidence establishes that the petitioning

creditor is a corporation f~rrned

under the laws of

Liechtenstein. It is known under the laws of Liechtenstein

as an Establishment which is a corporation formed under the

statute, in the principality of Liechtenstein, known as the

"20th January 1976 Personen - Und Gesellschaftsrecht" (law

concerning individuals and corpo~ations).

An Establishment is not required by the laws

of Liechtenstein to have any seal or to affix any seal to

documents executed by it. No other formalities are required

by the laws of Liechtenstein.

Under the laws of Liechtenstein any document to

be executed by an Establishment may be signed under hand

on behalf of the Establishment by someone authorised under

the Constitution of the Establishment to do so. The person

signing on behalf of the Corporation is usually a director,

and it is customary to place the name of the Establishment

near the signature to show that the person concerned is

signing on behalf of the Establishment.

The first question for determination is whether

the petitioning creditor is bound to prove the authority

of Mr. Harris to sign the petition on its behalf.

Mr. Harris swore an affidavit verifying the

petition in which he said:-

" 1 .	I am the duly authorised agent
of Weltrans Agency Establishment.

2. I am authorised by Weltrans Agency

Establishment to make this affidavit.

3. The statements contained in paragraphs one to three inclusive of the Petition are within my own knowledge true.

4. The signature upon the Petition is my signature."

An authority dated 9 December 1977 purporting

to be issued by the petitioning creditor to Mr. Harris

'authorised him to do various things,including specific authority on behalf of the petitioning creditor to sign a creditor's petition relating to bankruptcy proceedings

against the debtor.

At its foot the authority is signed by a

Dr. Enrico Walser over a rubber stamp of the petitioning

creditor which are both set opposite a notation saying:

I1The common seal of Weltrans Agency Establishment was hereto affixed in accordance with the requirements of the Articles of the company in the

presence

of ."

There followed Dr. Walser's signature a second time and that of Ing. Joseph F. Spacek.

A petitioning creditor is not, being a

corporation, required specifically by the Bankruptcy Act

1966 or the Bankruptcy Rules to prove that a person who

purports to sign the petition on behalf of the petitioning

creditor is in fact authorised to do so:	See ss. 44, 47
rule 12 and form 5.

Section 52 of the Act provides that, at the

hearing of a creditor's petition, the court shall require

proof of the matters stated in the petition (for which

purpose the court may accept the affidavit verifying the

petition as sufficient), service of the petition and the

fact that the debt on which the petitioning creditor relies

is still owing and, if it is satisfied with the proof of thost

matters, may make a sequestration order against the estate of

the debtor.

It has been the practice of this court and of the

Federal Court of,Bankruptcy to require a petitioning creditor to prove all essential facts including matters that are not

specified in the Act or the Rules.

One of these matters,

where the petitioning creditor is a corporation and the

petition is signed by a person purporting to have the

authority of the corporation to do so, is proof that the

person is in fact authorised ta sign the petition. This

practice is in accord with the well established practice of

(1904)

long standing in England:

See Wace on ~ankruptc~/at

p. 463.

The requirement that all essential facts be proved

exists whether a debtor has filed a notice of intention to

oppose the petition or not.

However, the requirement is not inflexible. The

reported cases contain a number of instances where courts have dispensed with proof of an agent's authority to sign

a bankruptcy petition where the petitioning creditor is a

corporation. For instance, proof of such authority will

not necessarily be required if, on the facts of the case, it

appears that all that will be achieved by requiring the proo:

is mere delay which will benefit the debtor and perhaps

jeopardize the interests of his creditors: See Re Sanders

(1894) 1 Mans. 382 or 71 L . T. 2 3 6 .

Turning to the facts of the present case. The

authority on which the petitioning creditor relies to

establish the entitlement of Mr. Harris to sign the petition

and dated 9 December 1977 contains the signatures of Dr.

Walser and Mr. Spacek. Those signatures have been proved

to be the signatures of those gentlemen.

I am satisfied

that Dr. Walser has at all material times, since at lease 19

been a director of the petitioning creditor and that Mr.

Spacek has been its export manager. Both gentlemen have signed documents and conducted the affairs of the petitionin creditor in relation to certain events in Australia includin litigation brought by the petitioning creditor against the

debtor.

It is not disputed that Dr. Walser was authorised by the petitioning creditor to sign documents as a sole

signatory in 1971 and as late as October, 1974. Strict proc

of that authority s h c e 1974 has not been established.

Correspondence is in evidence between the

petitioning creditor's Sydney solicitors and the petitioning creditor, including documents signed by both Dr. Walser and Mr. Spacek, over the period 1974 to 1978, from which it is

clear that the petitioning creditor held out both gentlemen

as having authority to bind the petitioning creditor in

various respects including authority to sign documents

relevant to the litigation in Australia between the

petitioning creditor and the debtor.

The petitioning creditor has gone to considerable

pains and expense to produce the necessary documents to

establish the due authorisation of Mr. Harris to sign the

petition.

In my opinion that authority has not been strictly

proved but falls short of it to a slight degree only. There

is nothing on the evidence before me to suggest that there

is any doubt about the petitioning creditor's having duly

authorised Mr. Harris to sign the petition. It is simply a

case where there is a slight gap in the proof necessary to

establish that authority.

The petition was, as I have said, presented

on 1 August 1978. On 12 December 1978 I made orders for

substituted service of the petition upsn the debtor Secause

substantial difficulty had been experienced by the

petitioning creditor in serving the debtor personally.

The petition came into the list for hearing on

19 February 1979 when I adjourned it until 20 Warch 1979.

On 19 February the petitioning creditor was represented by

a solicitor and the debtor by Mr. Bell. The petition was

adjourned on Mr. Bell's application so that certain

commercial properties in which the debtor apparently had an

interest could be sold and the petitioning creditor's debt

discharged.

I was informed that the debtor had signed

an authority under S. 188 of the Act on 24 January 1979.

On 20 March 1979 I adjourned the petition by consen

until 26 June 1979 based on what the debtor deposed to in

his affidavit of 26 February 1979. That affidavit contained,

amongst other things, a statement by the debtor that he

shared witA his sister, aunt and uncle the ownership of a commercial property in Vienna, that he was travelling to Viennqto arrange for the sale of the property and

they'expected to receive about $200,003.00 net from that

sale of which his share was $50,000.00. He hoped from

that to be able to meet the claims of his creditors.

On 26 June 1979 the debtor filed the notice

of intention to oppose the petition raising for the first

time _the question of the authority of Mr. Harris to sign

the petition.

The argument on the questions raised by the

notice of intention to oppose the petition concluded on

31 July 1979 when I found against the debtor and made a

sequestration order against his estate. The petition

would have lapsed on 1 August 19'79 being twelve months

from-the date of its presentation: see S . 5 2 (4).

When making the sequestration order I informed

counsel that I would give my reasons for judgment as soon

as possible thereafter, which I now do.

For these reasons I am satisfied that this is an

appropriate case not to require strict proof of the authorit:

to Mr. Harris to sign the petition.

Mr. McEwan, who appsared for the petitioning

creditor, submitted that the petitioning creditor had

established actual authority of Mr. Harris to sign the

petition. He relied, in particular, upon the maxim omnia

praesumuntur rite esse acta. That rule presumes that the

necessary formal requisites to certain acts or offices

have been complied with.

For instance, in some instances

acting in public office is taken as evidence of due appoint-

ment. Mr. McEwan was not able to refer me to any case

directly in point where the maxim was applied in relation to

the execution by a corporation of a power of attorney. There

are cases where the rule was applied, entitling an outsider

to a corporation, d€aling with the corporation, to assume

that all internal regulatio~ls of the corporation had been

complied with and where everything appeared to be regular

so far as it could be checked from public documents. Those

cases do not, in my opinion, apply to this case.

Oneof the clearest statements of principle as to

the application of the maxim is to be found in the judgment

of Lindley L. J. in Harris v. Knight (1890) 15 P.D. 1'70 at

P* 179.

In my opinion the maxim cannot be invoked in this case by the petitioning creditor. '

The petitioning creditor has not strictly proved

the authority to Mr. Harris to sign the petition.

Mr. Bell submitted that the petitionkng creditor

was a foreign company within the meaning of the C0mpanj.e~ Act, 1961 (N.s.w.) that it was carrying on business or had

a place of business in New South Wales, yet had not lodged

with the Commission of Corporate Affairs the documents

required by S. 346 (1) including thdse required under

paragraph (3) of that sub-section, namely a memorandum

of' appointment or power of attorney under the seal. of the

foreign company stating the name and address of the person

resident in New South Wales authorised to accept on behalf of the petitioning creditor service of process and notices required to be served on it. He submitted that by not

lodging these documents the petitioning creditor had committed

an offence under S. 361 of the Companies Act and that this

court would not aid a breach of the law by allowing the

petitioning creditor to rely on proof of Mr. Harrisl axthoritj

pursuant to the power of attorney. The foundation of this

argument is that the document referred to in S. 346 (1) (e)

of the Companies Act is the same document as was tendered in

this case before me as evidence of Mr. Harrisl authority to

sign the petition.

The short answer to the subrnission is that the

power of attorney in this case has nothing to do with the

document referred to in paragraph (e) of sub-sectj on ( 1 ) of s

346 of the Companies Act. That lastmentioned document is

merely a memorandum of appointment of or power of attorney to the foreign company's agent which is required to be lodged so

that thereis with the Commission of Corporate Affairs the

prescribed material facilitating the service and receipt of

notices and process upon the foreign company. It has nothing

to say about documents such as the power of attorney in the

present case.

For these reasons,and following due proof of' all

the matters of which proof' is ordinarily required before a

sequestration order is made, I made that order on 31 July

last.

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[1979] FCA 184

31 Jul 1979