Goldsmith, C.J. v First Pacific Mortgage Ltd

[1993] FCA 366

CHRISTOPHER JOHN GOLDSMITH v. FIRST PACIFIC MORTGAGE LIMITED
No. P3927 of 1992
FED No. 366
Number of pages - 2
Bankruptcy
(1993) 115 ALR 175
(1993) 42 FCR 522

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
GENERAL DIVISION
Davies J(1)

CATCHWORDS

Bankruptcy - appeal from dismissal of petition - failure of bankruptcy notice to specify address at which the judgment debt should be paid - whether omission of words "to the judgment creditor" was fatal defect.

Bankruptcy Act 1966 (Cth) - ss.41(2), 306

In re Howes; Ex parte Hughes (1892) 2 QB 622

Re Stogden; Ex parte Leigh (1985) 2 QB 534

Re Donald Andrew Bunn; Ex parte Marjory Dalziel Bunn (unreported, 7 April 1989) Neaves J

James v. Federal Commissioner of Taxation (1955) 93 CLR 631

HEARING

SYDNEY, 4 May 1993

#DATE 4:6:1993

Solicitor for the applicant: Miss Glass of Dunhill Madden Butler

ORDER

THE COURT ORDERS THAT:

The application be dismissed.

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

DAVIES J In these proceedings a petitioning creditor, First Pacific Mortgage Limited, seeks review of a decision of a Registrar in Bankruptcy dismissing the petition. The decision was based on the failure of the debtor to comply with the requirements of a bankruptcy notice issued at the request of Five Dock Enterprises Pty Limited, which was served on 17 July 1992 by substituted service pursuant to an order of the Court made on 12 June 1992. There was no appearance for the debtor before the Registrar or at this hearing.

1. The bankruptcy notice read inter alia:-
   

"WHEREAS FIVE DOCK ENTERPRISES PTY LIMITED of Watson Erskine and Co, Chartered Accountants of 52 Clarence Street, Sydney (hereinafter referred to as `the judgment creditor') has claimed that the (balance) sum of $207,041.61 together with interest thereon at the rate(s) of fifteen (15) per centum per annum from 4 October 1991 to 18 November 1991 which amounts to $2,978.15 making a total of $210,019.76 is due by you to it/him .. under a final judgment/order obtained by it/him against you in the Supreme Court of New South Wales on the *4th day of October 1991, being a judgment/an order the execution of which has not been stayed: THEREFORE TAKE NOTICE that within fourteen (14) days after 14th July 1992, excluding that date, you are required -

(A) to pay the sum of $210,019.76 so claimed by the judgment creditor.

- OR -

(B) to secure the payment of the sum referred to in paragraphy (sic) (A) to the satisfaction of the Federal Court of Australia or the judgment creditor (or his agent whose name and address .. is RICHARD BOOKER of 11/172 Pacific Highway, North Sydney) or compound the sum so specified to the satisfaction of the judgment creditor (or his agent):"

1. The issue arises from the form of para (A) therein. Rule 8 of the Bankruptcy Rules requires that a bankruptcy notice shall be in accordance with Form 4. That form includes, after the words "so claimed by the judgment creditor" in para (a), the words:-
   

"to (here insert `the judgment creditor', or, if the judgment or order requires payment to be made to a court or a person other than the judgment creditor, the name and address of the court or the other person to whom payment is required to be made); or"

The bankruptcy notice issued at the request of Five Dock Enterprises Pty Limited omitted the words "to the judgment creditor" which, in accordance with the form, should have been inserted.

1. Section 41(2) of the Bankruptcy Act 1966 (Cth) ("the Act") provides:-
   

"The prescribed form of bankruptcy notice shall be such that the notice -

(a) requires the debtor named in it, within a specified time (being the time referred to in sub-paragraph 40(1)(g)(i) or (ii), whichever is appropriate) to -

(i) pay the judgment debt or sum ordered to be paid in accordance with the judgment or order; or

(ii) secure the payment of the debt or sum to the satisfaction of the Court or the creditor or his agent, if any, specified in the notice or compound the debt or sum to the satisfaction of the creditor or his agent, if any, specified in the notice; and

...." (the emphasis is mine).

As can be seen, the Act and the Rules provide that the bankruptcy notice shall require the debtor not merely to pay the judgment debt within a specified time, but to pay it "in accordance with the judgment or order". Therefore the Rules require that the notice shall specify how the debt shall be paid, namely to the judgment creditor if the judgment so requires or, if the judgment or order requires that payment be made in some other manner, then in that manner.

1. The solicitor for First Pacific Mortgage Limited submitted that payment to the judgment creditor was a necessary implication from the notice, especially as the recital states that "$120,019.76 is due by you to it ... under a final judgment". However, the Act requires that such a matter be stated explicitly. This is not a case such as Re Merfield; Ex parte Comalco Aluminium Ltd (1984) 1 FCR 107, where a word omitted in error was necessarily to be implied.

2. My attention has not been drawn to any case where this precise defect has been considered. An illustration of the general principle may be seen in Re Stogden; Ex parte Leigh (1985) 2 QB 534, where a bankruptcy notice which stated the incorrect address of the issuing creditor was held to be invalid. As Lord Esher MC stated at 535-6:-
   

"In my opinion regard must be had to the substance and meaning of the Bankruptcy Act and Rules, and not merely to the words. Unless the requirements of the Act and Rules are complied with in substance they are not complied with at all."

There have been many cases in which bankruptcy notices, which have required payment otherwise than in accordance with the judgment, have been held to be invalid. In Re Donald Andrew Bunn; Ex parte Marjory Dalziel Bunn (unreported, 7 April 1989), for example, Neaves J dismissed a petition because the bankruptcy notice had required the debtor to pay the debt to the creditor's solicitors at their address. That requirement was not in accordance with the judgment. Another example is In re A Debtor (1911) 2 KB 718 in which the Court of Appeal held to be bad a bankruptcy notice which required payment to the creditors "or to their solicitors" whose name and address were given. This was described as "an extreme technicality" by Farwell LJ in In re a Debtor (1912) 1 KB 53 at 62, but nevertheless the decision has been referred to without dissent, as in James v. Federal Commissioner of Taxation (1955) 93 CLR 631 at 640-1. In James' case, a notice which failed to refer to the judgment creditors in the paragraph as to the securing or compounding of the debt was held to be invalid. In In re Howes; Ex parte Hughes (1892) 2 QB 622, a bankruptcy notice was held to be invalid because, after referring to the creditors, it added the words "trustees of the charity known as St John's Hospital" which were not in the judgment on which the notice was founded.

1. The above are examples of cases where the bankruptcy notice did not require payment in accordance with the judgment. In the present case, the judgment provided "That the defendant pay to the plaintiff $207,041.61 ...". The bankruptcy notice entirely omitted to specify that the payment should be made to the judgment creditor. Therefore, it did not require payment in accordance with the judgment.

2. The defect in the bankruptcy notice was not merely one of form which could be rectified or excused under s.306 of the Act. As Sweeney J pointed out in Re Wheelahan Ex parte Commissioners of the State Bank of Victoria (1982) 58 FLR 91 at 97, bankruptcy notices are matters of strict form in which defects of substance will be fatal. If a bankruptcy notice fails to specify a matter which the Act and the Rules require to be specified, then the notice is invalid.

3. I am therefore of the view that the order of the Registrar in Bankruptcy was correct. The application must be dismissed.