Hudson Junior, Robert v Donald, Thomas James - [1997] FCA 852

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - application to set aside bankruptcy notice - claim of two defects in the notice - amount of judgment or order overstated by $2.00 - consequently, amount of “total debt owing” overstated by $2.00 - application of Bankruptcy Act 1966 (Cth), subs 41(5) - in the alternative, whether “formal defect or an irregularity” for the purposes of Bankruptcy Act 1966 (Cth), subs 306(1) - whether incomplete attachment of the judgment or order relied upon constitutes a “formal defect or an irregularity” for the purposes of Bankruptcy Act 1966 (Cth), subs 306(1) - application to “go behind the judgment or order”.

Bankruptcy Act 1966 (Cth), subss 415(5), 41(6), 306(1)
Bankruptcy Regulation 4.02, Bankruptcy Form 1 (Bankruptcy Notice)

ROBERT HUDSON JUNIOR v THOMAS JAMES DONALD and STEPHEN WILLIAM MICHAEL WHALAN

NG 7501 of 1997

LINDGREN J
SYDNEY
12 AUGUST 1997

IN THE FEDERAL COURT OF AUSTRALIA )

)

NEW SOUTH WALES DISTRICT REGISTRY ) NG 7501 of 1997

)

GENERAL DIVISION )

BETWEEN:
ROBERT HUDSON JUNIOR
Applicant (Debtor)

AND:
THOMAS JAMES DONALD and STEPHEN WILLIAM MICHAEL WHALAN
Respondents (Creditors)

JUDGE: LINDGREN J

PLACE: SYDNEY

DATED: 12 AUGUST 1997

REASONS FOR JUDGMENT
(ex tempore)

INTRODUCTION

The applicant (“Mr Hudson”) applies to set aside bankruptcy notice NN 639/97 dated 8 April 1997. The respondents (“the Creditors”) are the creditors named in that bankruptcy notice. According to the affidavits that were read on the hearing before me, the bankruptcy notice was served on Mr Hudson on 20 April 1997.

The proceeding was commenced when Mr Hudson filed an application to set aside on 5 May. In circumstances to which I will refer later, that application was dismissed by consent on 26 May by Deputy District Registrar Quinn. Notwithstanding that fact, on 19 June Mr Hudson filed, also in this proceeding, a second application seeking an identical order setting aside the bankruptcy notice. It is that second application with which I have to deal. The Creditors have not sought dismissal of the second application as an abuse of process or otherwise summarily. The parties have treated the second application as superseding the original one.

BACKGROUND

The dispute between the parties goes back to an election of members of the Gosford City Council held on 9 September 1995. Mr Hudson was an unsuccessful candidate. On 8 December 1995 he applied in the Local Court at Gosford under s 329 of the Local Government Act 1993(NSW) for an order dismissing from civic office, five individuals, including the Creditors, who had been successful in the election. Section 330 provided that a person against whom an order of dismissal is made may appeal against the order on a question of law to the Supreme Court. But an unsuccessful applicant for an order of dismissal is given no right of appeal.

Following a hearing on 10 and 11 October 1996, Magistrate Cocks dismissed Mr Hudson’s substantive application on 11 October. On 24 October he ordered Mr Hudson to pay the costs of the fourth and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1997] FCA 852
Decision Date: 12 August 1997

CaseChat Overview and Summary

The applicant, Robert Hudson Junior, sought to set aside a bankruptcy notice issued against him by the respondents, Thomas James Donald and Stephen William Michael Whalan. The bankruptcy notice was based on a judgment for costs in a Local Court proceeding. Hudson argued that the notice contained two defects: an overstatement of the amount of the judgment or order by $2.00, and the incomplete attachment of the judgment or order relating to one of the creditors. The case was heard in the Federal Court of Australia by Lindgren J.

The legal issues the court needed to address were whether the overstatement and the incomplete attachment of the judgment or order constituted grounds for setting aside the bankruptcy notice. The court considered the relevant provisions of the Bankruptcy Act 1966 (Cth) and Bankruptcy Regulation 4.02, particularly subsections 41(5), 41(6), and 306(1). The court also examined whether it had the jurisdiction to go behind the judgment or order.

The court found that the overstatement of $2.00 did not invalidate the bankruptcy notice because it did not cause any substantial injustice to the debtor. The court held that subsection 41(5) of the Act did not apply to the overstatement in the amount of the judgment or order, but subsection 306(1) prevented the overstatement from invalidating the notice. Similarly, the incomplete attachment of the judgment or order did not warrant setting aside the notice, as the debtor was not misled or confused by the defect, and no injustice was caused. The court declined to go behind the judgment or order, as there was no evidence of error by the Magistrate.

The court dismissed the application to set aside the bankruptcy notice, holding that neither of the grounds advanced by the debtor was sufficient to warrant setting aside the notice. The court ordered the debtor to pay the costs of the respondents for the application.

Orders