Foote v Mid-West Finance Pty Ltd
[1997] FCA 990
•9 SEPTEMBER 1997
FEDERAL COURT OF AUSTRALIA
BANKRUPTCY - bankruptcy notice - notice provided incorrect address for nearest Federal Court Registry - whether notice reasonably capable of misleading the debtor - whether notice a nullity.
Bankruptcy Act 1966 (Cth) - s 306(1), s 41(2)
Bankruptcy Regulations - reg 4.02(2)
Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71
Re Francis; Ex parte Gartrell (1983) 77 FLR 80
BARRY JOHN FOOTE v MID-WEST FINANCE PTY LIMITED (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)
NG 7744 of 1997
FOSTER J 9 SEPTEMBER 1997 SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 7744 of 1997
RE:
BARRY JOHN FOOTE EX PARTE:
MID-WEST FINANCE PTY LIMITED (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)
JUDGE:
FOSTER J
DATE OF ORDER:
9 SEPTEMBER 1997
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
The creditor’s petition be dismissed.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 7744 of 1997
RE:
BARRY JOHN FOOTE EX PARTE:
MID-WEST FINANCE PTY LIMITED (RECEIVER AND MANAGER APPOINTED) (IN LIQUIDATION)
JUDGE:
FOSTER J
DATE:
9 SEPTEMBER 1997
PLACE:
SYDNEY
REASONS FOR JUDGMENT
(Extempore)
This creditor's petition has been referred by a Registrar to the Court because of a perceived problem with the bankruptcy notice, non-compliance with which is the ground upon which sequestration of the debtor's estate is sought. The bankruptcy notice, which follows the form prescribed pursuant to s 41 of the Bankruptcy Act 1966 (Cth) (“the Act”) by reg 4.02(2) of the Bankruptcy Regulations, contains at the end of paragraph three of the section entitled “Information to Debtors” a statement that the Federal Court Registry nearest to the debtor's address is located at the “Law Courts Building, Level 18, Exchange Plaza, 2 The Esplanade, Perth in the State of Western Australia”. Unfortunately, this information is incorrect. The address is not that of the Federal Court Registry in Perth but, as I am informed, is the address of the Insolvency Trustee Service of Australia office in that city.
Paragraph three, when properly completed, is clearly intended to inform a debtor as to the location of the relevant Federal Court Registry should he or she wish to make any of the applications to the Court referred to in paragraphs one and two of the “Information to Debtors” section. Those applications, if successful, would result in the avoidance of the commission of an act of bankruptcy by the debtor at the expiration of the stipulated time for compliance with the requirements of the bankruptcy notice.
It has been submitted on behalf of the petitioning creditor that this is a situation which attracts the operation of s 306(1) of the Act in that the inclusion of the incorrect address amounted relevantly to a formal defect or irregularity which would not invalidate the notice. If that was so, no substantial injustice would have been demonstrated in the case as, according to evidence before me, the debtor would not in any event have applied to the Court for the relief referred to in paragraphs one and two and was consequently not misled by the notice. The question is whether the inclusion of the wrong address is only a formal defect or irregularity or whether it operates to make the bankruptcy notice a nullity. Guidance is provided to me by the case of Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71. In the majority judgment of the High Court (at 79) the following passage appears:
“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 ... In such cases the notice is a nullity whether or not the debtor is in fact misled.”
The case of Re Francis; Ex parte Gartrell (1983) 77 FLR 80 provides an illustration. In that case the bankruptcy notice required the debtor to pay the judgment debt to the District Court Registrar at Orange whereas the District Court judgment required the debtor to pay the amount of the judgement debt to the Registrar of the District Court at Dubbo. Justice Lockhart considered the effect of this error in the notice at page eighty-four. His Honour said:
“The notice does not comply with section 41(2)(a)(i) or with the prescribed form. In my opinion the defect in the notice is of a kind which could reasonably mislead the debtor and cannot be regarded as merely formal under s 306.”
His Honour cited authority which I shall not repeat here.
Clearly, the underlying rationale of these cases is that the bankruptcy notice must make clear to the debtor what he or she must do to comply with its requirements and thus avoid the consequences of committing an act of bankruptcy. If he or she is left uncertain in this regard then the notice is rendered invalid and non-compliance with it does not have that serious result.
The earlier forms of notice with which these cases were concerned did not contain the "Information to Debtors" section or make provision for the inclusion of the address of the nearest Registry of the Court. I am satisfied that the legislature required the inclusion of this material in order to inform the debtor fully of the other avenues available to him or her to avoid committing an act of bankruptcy through non-compliance, namely the taking of steps to obtain an extension of the time for compliance with or for the setting aside of the bankruptcy notice. Consequently, I am of the view that if a bankruptcy notice is reasonably capable of misleading the debtor as to the manner in which he or she could take those important steps in the time frame of the notice then it must be regarded as a nullity, even if the debtor is not in fact misled. I have, accordingly, come to the view that the bankruptcy notice in this case must be regarded as a nullity and, therefore, not capable of grounding the act of bankruptcy relied upon in this petition. The result, of course, is that the petition must be dismissed.
If there is any question of costs involved in the matter application can be made at some later stage.
I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.
Associate:
Dated: 9 September 1997
Mr S Pearlman, solicitor, instructed by Gordon & Johnston appeared for the creditor.
There was no appearance on behalf of the debtor.
Date of Hearing: 9 September 1997 Date of Judgment: 9 September 1997
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