Farthing & Alegna P/L v Boylan
[2000] FMCA 8
•14 November 2000
IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA Registry Adelaide Applicant Stephen Farthing and Alegna Pty Limited Respondent Fred Boylan File No: AZ 23/2000 Hearing Date: 14 November 2000 Date of Decision: 14 November 2000 Before: Kenneth Raphael FM Primary Legislation: Bankruptcy Act 1966 (Cth) s.41(2) Application: To oppose Petition Matter for Decision Principal Matter REPRESENTATION: Applicant Self-litigant Respondent: Self-litigant ORDERS: Petition Dismissed
IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
ADELAIDE REGISTRY
No SZ 23/2000
BETWEEN:
STEPHEN FARTHING & ALEGNA PTY LIMITED
Applicant
and
FRED BOYLAN
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
Mr Frederick Boylan is the judgment debtor of Mr Stephen Farthing pursuant to a Judgment of the District Court of South Australia dated 1 November 1996. This Judgment was the subject of an unsuccessful appeal to the Full Bench of the Supreme Court of South Australia and the moneys payable thereunder were demanded in a previous bankruptcy notice which was the subject of an unsuccessful application to the Federal Court and the Full Federal Court. That bankruptcy notice, although held to be valid, was replaced by another notice dated 22 December 1999. The second notice was considered by Finn J, who on 9 June 2000 published revised reasons as to its validity. That decision has been appealed by the debtor to the Full Bench of the Federal Court.
There was no extension of the bankruptcy notice so an act of bankruptcy was committed as a result of the debtor’s non-compliance therewith. The creditor then issued a petition dated 4 August 2000 to which was annexed the usual affidavit that included the bankruptcy notice and the certificate of judgment upon which that notice was based.
The bankruptcy notice was in the form mandated by schedule 1 to the Bankruptcy Act 1966 it is prescribed under sub-section 41(2) and by Rule 4.02 of the Bankruptcy Regulations. The address of the creditor given in the bankruptcy notice is 45 Main Road South, Reynella, South Australia, 5161 (para 1) and the address to which payment can be made was Stephen Farthing of 45 Main Road South, Reynella, 5161 (para 4).
THE APPLICATION
Although the matter was not raised in the application before Finn J the debtor now states that the bankruptcy notice is invalid because the creditor was not, at the relevant time (the time for compliance with the notice) able to be found at the address stated.
The ground of objection to the petition recited above is not the only ground upon which Mr Boylan moves. He also moved on the following two grounds.
“(i)The judgment on which the bankruptcy notice is founded, was obtained by fraud;
(ii)…
(iii)The Federal Court did not make on 9 June 2000, the determination described at 4.9 of the creditors petition. Further, the Federal Court Judgment of 9 June 2000 is currently under appeal to the Full Court of the Federal Court”
When the matter came before the Registrar he was advised that the case may take between 1 and 5 days. This estimate was given, presumably, on the basis that Mr Boylan would take that long to establish his claim of fraud. Prior to the hearing a series of transcripts of the original case were filed in court. The creditor filed a substantial document entitled “Applicant’s Submissions” which dealt in some considerable detail with what the creditor anticipated the debtor would say.
In reviewing the file I took the view that if the debtor succeeded on ground 2 there would be no need for the court to hear the debtor’s argument on ground 1 and the best interests of justice would be served by dealing first with that point.
When the parties appeared before me I advised them of my thinking and I also advised them that it appeared to me that the authorities favoured a view that the petition was indeed based upon an invalid bankruptcy notice. I adjourned the matter to give the applicant creditor time to discuss the matter with his solicitor who was present in court and provided for him a reference to authority on the matter, namely reLynch; ex-parte Depala Pty Limited (In Liquidation) (1998) 81 FCR 444. Upon my return from the adjournment Mr Farthing advised that the address given in the bankruptcy notice in paragraph 1 and paragraph 4 was not an address at which he could be found. He advised that it was his former address but the property had been sold by the bank exercising its power of sale under a mortgage. He did not indicate that he had made any arrangements with the person presently occupying those premises for that person to collect the debt in a way which would bring him within re Nugent; ex-parte Debtor (1985) 5 FCR 168.
Mr Farthing submitted that Mr Boylan had the names and addresses of his lawyers, of members of his family (Mr Boylan is Mr Farthing’s uncle) and to say he could not make payment would be stretching it. Mr Farthing went on to say that at that time he and his wife had no fixed address, the bank had taken their house and they had no address to put on the document. They were transients.
It would, of course, have been possible for Mr Farthing to have put a temporary address in the notice as his own address and his solicitor’s address as the address at which payment could be made re Pugliese; ex-parte Chase Manhattan Bank Australia Limited (1993) 44 FCR 536; Bank of Melbourne Limited v Hannan (unreported), FCA, Northrop ACJ, 5 September 1997.
Mr Farthing also made the point that the matter had not been raised before Finn J and he was therefore under the impression that it was not to be argued in this court. He thought that the Registrar had dealt with grounds 2 and 3 of the opposition to the petition but a review of the file revealed that this was not the case and Mr Farthing reluctantly accepted this.
The question of the objection to the bankruptcy notice not having been raised before Finn J was a matter which concerned me. There was certainly no reference to this alleged fault in the notice found in his reasons for judgment. One can quite understand a creditor who has already fought off a challenge to the notice being very upset that a further challenge could be made at the time the petition is considered. This concern was raised in National Australia Bank Limited v Westbrook [2000] FCA 246 at 15 (disapproved on other grounds in Trustees of the Franciscan Missionaries of Mary v Weir [2000] FCA 574).
In National Australia Bank Limited v Westbrook at [15] Gray J held that:
“Counsel for the applicant attempted faintly to suggest that the respondents were estopped from arguing that the notice is a nullity because they have already applied unsuccessfully to set aside the notice. He referred to Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589. The submission was not developed fully. The short answer to it is that it is the applicant which relies on the bankruptcy notice to found its petition. If the bankruptcy notice is a nullity, the court’s jurisdiction to make the orders sought by the applicant has not been invoked validly. Thus the court requires knowledge that the jurisdictional facts for which s.40(1)(g) of the Bankruptcy Act 1966 (Cth) provides that it cannot be established because the bankruptcy notice is a nullity, it is impossible for the court to proceed to make a sequestration order.”
It is for this reason that I am required to decide whether or not the current bankruptcy notice, which contains an address at which the creditor could not then be found so that the debt could be paid, is a nullity.
In recent years there have been a number of legislative changes to the Bankruptcy Act and a number of decisions such as Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71 and Trustees of the Franciscan Missionaries of Mary v Weir (2000) FCA 574 that have sought to make the jurisdiction less a martyr to form. However, nothing in these changes has had the effect of negating what could be described as the “golden rule” of bankruptcy notices, namely that they should not contain information that is likely to confuse or mislead the debtor. In Wenkart v Abignano unreported FCA 28 August 1998 Hill J [14] his Honour said:
“A notice which is likely to mislead or even perplex a person in the circumstances of the debtor will generally, perhaps even invariably, be set aside and it will be immaterial that the particular debtor may not have been misled.”
The most recent authority on the address of the creditor is re Lynch; ex-parte Depela Pty Limited (In Liquidation) (1998) 81 FCR 444 where his Honour Davies J considered the older authorities and in particular Re Beauchamp; Ex-parte Beauchamp [1904] 1 KB 572, At page 448 Davies J said:
“In the present case, the address given for the judgment creditor and the address given at which payment might be made or the debt might be secured or compounded was not an address at which the judgment creditor or its agent, the liquidator could be found during the period of compliance…in my opinion, the address must be the address at which a person, duly authorised by the judgment creditor can be found.”
This judgment was given in 1998 after the regulations to the Bankruptcy Act had changed so as to make substantial amendments to the bankruptcy notice Form 1. It was this form that first used the words “payment of the debt can be made to”. It could be suggested that this phraseology gives some leeway that would enable the strict requirement for a correct address laid down in re Beauchamp no longer applicable. It could be suggested that the old common law requirement for a debtor to seek out his creditor has thus been revived. I do not think that this can be correct in circumstances where an admittedly wrong address is put into the notice. That would mislead or confuse. I further believe that I am bound by the authority of re Lynch and of that of Eastern Pastoral Co Pty Limited v McFarlane [1999] FCA 172 where Finkelstein J held:
The notice must state an address at which the creditor can be found in order, among other things, to notify the debtor where documents might be served and where the debt might be paid.”
It would to my mind be lesé majesté for this court to disregard these authorities in order to support the application of that notion into current bankruptcy law. This is particularly the case when I am aware that the question of the extent to which the bankruptcy form is mandatory is being considered by a specially appointed Full Bench of the Federal Court and also by the High Court of Australia.
In these circumstances I am obliged to find that the petition, being based upon an invalid bankruptcy notice, is itself invalid and that there is therefore no need to consider the other points raised by the debtor.
I order that the petition be dismissed.
I certify that the preceding twenty (20)
Numbered paragraphs are a true copy of
the Reasons for Judgment herein of
Federal Magistrate Kenneth Raphael
Associate:
Dated: 14 November 2000
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