Manias, Re N. Ex Parte Edsill Pty Ltd

[1986] FCA 374

Re: NICK MANIAS
Ex parte: EDSILL PTY. LIMITED
No. P537 of 1985
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Jackson J.

CATCHWORDS

Bankruptcy - creditor's petition - petitioner a company - petition executed by individual director of company - whether director had authority to present petition on behalf of company - retrospective ratification by all directors - whether effective - opening words of petition referred to individual director as petitioner - whether formal defect or irregularity.

Bankruptcy Act 1966 ss. 33(1)(b), 306(1).

Alexander Ward & Co. Ltd. v. Samyang Navigation Co. Ltd. (1975) 1 WLR 673

Danish Mercantile Co. Ltd. v. Beaumont (1951) Ch. 680

Re Spitzer; Ex parte Weltrans Agency Establishment (1979) 25 ALR 447

Growden v. Wiltshire (1935) 52 CLR 286

HEARING

SYDNEY

#DATE 25:3:1986

Counsel for the debtor: No appearance by or on behalf of the debtor

Solicitors for the debtor: No appearance by or on behalf of the debtor

Counsel for the petitioning creditor: Mr A. Cramer-Roberts

Solicitors for the petitioning creditor: A.R. Yates & Co. by their city agents Duncan Barron & Co.

ORDER

It be declared that Mr Hine had authority to sign the petition on behalf of the company.

The petitioning creditor be granted leave to amend the petition in accordance with these reasons for judgment.

The need for re-verification and re-service of the petition be dispensed with.

A sequestration order be made against the estate of the debtor.

Costs be taxed and paid according to the Act, but the costs shall not include the costs of making the amendments above referred to.

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

JUDGE1

This is a petition for a sequestration order on the ground that the debtor failed to comply with the requirements of a bankruptcy notice served on him in November 1984.

1. The bankruptcy notice referred to the judgment debt as a debt due to Edsill Pty. Limited and that company is the petitioning creditor named in the heading to the creditor's petition. The difficulty which arises, however, is that the petition commences with the words:-
   
   

"I, ROBERT HINE, Company Director of Edsill Pty. Limited, of 11 Shoobert Crescent, KEIRAVILLE in the State of New South Wales, petition the Court for a sequestration order against the estate of NICK MANIAS whose address was care of Normandi Motor Inn, 30 Bourke Street, Wollongong but more recently of "Le Sands" Restaurant, The Grand Parade, Brighton-le-Sands, N.S.W., and whose occupation is a Chef hereinafter referred to as "the debtor""

The petition is also signed by Mr Hine without there being any indication that he signs on behalf of Edsill Pty. Limited.

1. Mr Hine was a director of that company at the time when the petition was presented and at all material times. I am not satisfied, however, that at the time when the petition was presented Mr Hine had authority to do so on behalf of the company. The evidence on this question is contained in the affidavit of Mr Wilson, another of the directors of Edsill Pty. Limited who said, relevantly:-
   
   

"2. On the 4th September, 1984 I met with my co-director Robert Hine and discussed the indebtedness of Nick Manias with our company. It was agreed between us that Robert Hine would have all necessary authority to act on behalf of Edsill Pty. Limited to commence bankruptcy proceedings against Manias.

3. It was resolved at our meeting that all necessary steps be taken by Robert Hine on behalf of Edsill Pty. Limited for the purpose of making Nick Manias bankrupt."

1. That evidence does not show, of course, that Mr Wilson and Mr Hine were the only directors - indeed it seems probable that they were not - or that any other directors had notice of the meeting to which Mr Wilson refers.

2. A further feature, however, is that the three directors of Edsill Pty. Limited (Hine and Wilson, and a Patricia Collins) met on 18 March 1985 and resolved:-
   
   

"(a) That it be recorded in the minutes as at this date, notwithstanding there is (sic) no minutes for the 4th September, 1984 that the Board authorised Robert Hine to act as its Agent in doing all things necessary on behalf of the Company for the purpose of the company obtaining a sequestration order against Nick Manias.

(b) That whereas Robert Hine acted on behalf of the Company as its Director and signed his name as petitioner to the Company's petition dated 14th March, 1985, such action of Robert Hine and all such other steps as may have been taken by him be hereby approved, ratified and confirmed."

I am not prepared, in the absence of oral evidence to clarify the point, to accept that resolution (a) shows that Mr Hine in fact had the necessary authority at the time when the petition was presented. It is clear, however, that resolution (b) purports to be a ratification of the earlier actions of Mr Hine in the presentation of the petition.

1. In Alexander Ward & Co. Ltd. v. Samyang Navigation Co. Ltd. (1975) 1 WLR 673 the House of Lords approved the decision of the Court of Appeal in Danish Mercantile Co. Ltd. v. Beaumont (1951) Ch 680 to the effect that if legal proceedings are initially commenced by an agent without the authority of his principal the institution of the proceedings may be later ratified and the ratification respectively clothes with authority what was earlier done. I see no reason why such a principle should not apply in the presentation of a petition for a sequestration order. It is clear from the terms of the petition that Mr Hine was purporting to act on behalf of the company and it seems to me that the principle to which I have referred applies in the present case.

2. The result of the remarks which I have so far made would be that the authority of Mr Hine to sign the petition on behalf of the company, a matter of which proof is normally required (see Re Spitzer; Ex parte Weltrans Agency Establishment (1979) 25 ALR 447 at 449) is established. The petition remains defective in form, however, because the opening words of it refer to Mr Hine as the petitioning creditor. In Growden v. Wiltshire (1935) 52 CLR 286 the High Court rejected an argument that a petition was invalid because it was brought in the name of a liquidator rather than in the name of the company in liquidation, a matter which it regarded as an irregularity. It directed the Judge of the Court of Bankruptcy to amend the petition by substituting the name of the company for that of the liquidator and to make any consequential amendments.

3. I am satisfied that I should adopt a similar view when dealing with the present case where an officer of the company, stating his position as such, has purported to present a petition on behalf of the company but has used his own name. Accordingly, I shall give leave to the petitioning creditor to amend the petition as it may be advised to deal with this aspect of the case.

4. There is also another matter which I should mention at this point and that is in relation to a date mentioned in paragraph 4 of the petition and I give leave to the petitioning creditor to amend paragraph 4 of the petition, by deleting the date, 14 December 1984, and substituting in lieu the date, 13 December 1984.