Lee v Smith
[2002] FMCA 59
•26 March 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LEE v SMITH [2002] FMCA 59 |
| BANKRUPTCY – Application to set aside Bankruptcy Notice – address at which payment can be made. Bankruptcy Regulations 1996, r 4.02 Donald Andrew Bunn, ex parte Marjorie Dalziel Bunn (unreported, Neaves J, 7 April 1989) |
| Applicant: | CHARLES LEE |
| Respondent: | KENNETH RAYMOND SMITH |
| File No: | SZ860 of 2001 |
| Delivered on: | 26 March 2002 |
| Delivered at: | Sydney |
| Hearing Date: | 26 March 2002 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Solicitor for the Applicant: | Mr D Bowles of Bowles Lawyers |
| Counsel for the Respondent: | Mr R Marshall |
| Solicitors for the Respondent: | Lazarus Smith Lawyers |
ORDERS
Application dismissed.
Time for compliance of the bankruptcy notice extended to 5.00pm,
27 March 2002.Applicant pay the Respondent’s costs as agreed or taxed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ860 of 2001
| CHARLES LEE |
Applicant
And
| KENNETH RAYMOND SMITH |
Respondent
REASONS FOR JUDGMENT
In this matter a bankruptcy notice was issued against Mr Charles Lee, a judgment debtor at the suit of the creditor in respect of whom judgment was entered in the District Court of New South Wales in the sum of $13,003.60 on 6 November 1998. The bankruptcy notice is in accordance with form 1 of Bankruptcy Regulation 4.02 and in paragraph 1 names the creditor as Kenneth Raymond Smith and provides an address for him at 53 Hood St, Yagoona, New South Wales 2199. On the second page of the bankruptcy notice at paragraph 4 it states:
Payment of the debt can be made to: Lazarus Smith Lawyers of St Martins Tower, Level 13, 31 Market St, Sydney, New South Wales, 2000.
The debtor argues that by failing to insert the name of the creditor and the words, care of or C/O, before the words, Lazarus Smith Lawyers, in paragraph 4, effectively causes the bankruptcy notice to be avoided. He says this because he believes that paragraph 4 in the notice serves a dual purpose. It requires the creditor to identify a payee and provide an address at which payment can be made. He also says that by not including the name of the judgment creditor in paragraph 4 there is a confusion between paragraph 4 and paragraph 1 which would mislead a debtor who would not know to whom or where payment should be made.
In support of his argument, Mr Bowles refers me to the case of Donald Andrew Bunn, ex parte Marjorie Dalziel Bunn, an unreported decision of Neaves J of 7 April 1989 in the Federal Court of Australia. That case, which was decided at a time when the form of a bankruptcy notice was known as form 4 and was different in its terms to the current form which is known as form 1, required the debtor to make payment to the judgment creditor's solicitors, Messrs Tietyens, in Albury. His Honour found that this notice was invalid because the order upon which it was based clearly stated that the judgment monies were to be paid to Mrs Bunn, the petitioning creditor. Therefore the terms of the bankruptcy notice did not follow the order of the Court.
I am prepared to accept that this is undoubtedly good law but it is not the case with which we are currently dealing. We are also not dealing with what might appear at first sight to be for the respondent the most helpful case of Elvio Angelo Pugliese v Chase Manhattan Bank Australia Limited (1993) 44 FCR 536. In that case the Judgment form commenced with the words:
Whereas the Chase Manhattan Bank Australia Limited (ACN001531586) of C/- Swersky McPhee v Velos Solicitors ...
In that case Heerey J found that to place in form 4 the name of the judgment creditor care of the address of his solicitors was perfectly in order. Mr Marshall accepts that judgment and says that if the creditor here had named himself before referring to his solicitors, that would have been in order, but otherwise the document is confusing.
It is my view that the amendments which were made in 1996 to the form of the bankruptcy notice were made to assist parties and to provide a clearer form to be used. The name of the creditor was clearly stated in paragraph 1 together with his address. One might ask what is the point of the words used in paragraph 4 "payment of the debt can be made to". Unless it provides some form of alternative to payment of the creditor at the address listed in paragraph 1. Mr Marshall rightly points out that not all creditors are resident in Australia and therefore the note that is found in paragraph 4 may well indicate an address in Australia whereas paragraph 1 may indicate an address outside Australia.
The creditor could hardly be heard on an application for a sequestration order based upon a failure to comply with the bankruptcy notice if his debtor had actually sought him out at an address which was outside the jurisdiction and paid him. In Australian Steel v Lewis (2000) FCA 1915 his Honour, Gyles J, who was in the dissenting minority, reminded us at paragraph 124 that:
The backdrop, after all, is that "it is the duty of a debtor to seek out the judgment creditor and pay the judgment debt to the creditor if he is in Australia" (James v Federal Commissioner of Taxation) (1955) 93 CLR 631 at 639.
In my view the purposes of paragraphs 1 and 4 in the form are to do just that. It is to allow the debtor to seek out his creditor and pay him. But it also provides an alternative in paragraph 4 and allows payment to be made to persons at a place nominated. The notes to the old form 4 make it clear that the payment of the debt is to be made to the judgment creditor but there is no such note in the new form 1.
I think that paragraph 4 provides a genuine alternative and provided that the alternative is clearly stated, it should be valid. In this case, the alternative is clearly stated. The tender of cash to this firm of lawyers at the address stated or the provision of a cheque made payable either to those lawyers or to the judgment creditor would seem to me to be bound to be accepted as satisfaction of the bankruptcy notice.
I do not believe that any confusion arises in these matters. I do not believe that the notice in the form expressed here is misleading and for those reasons I dismiss the application and I extend time for compliance of the bankruptcy notice to 5.00pm on 27 March 2002. I order that the applicant pay the respondent's costs to be taxed, if not agreed, in accordance with the Federal Court Rules.
I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
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