Nilant v Macchia

Case [2000] FCA 1528

FEDERAL COURT OF AUSTRALIA
Nilant v Macchia [2000] FCA 1528

BANKRUPTCY – statement of affairs – requirements of s 54(1) of Bankruptcy Act 1966 (Cth) – whether “Proceedings” in s 306 extends to the making out and filing of a statement of affairs – whether failure to comply with s 54 is a “formal defect” or “irregularity” capable of rectification by s 306 Bankruptcy Act.

Bankruptcy Act 1966 (Cth), ss 54(1), 306

Nilant v Macchia (1997) 78 FCR 419 referred to
Sofia v Pattison (Federal Court of Australia, Finkelstein J, unreported, 20 October 1997) referred to
Tsingaris v Official Receiver (Vic) [1999] FCA 1389 referred to
Trihakis v Official Receiver (Vic) [1999] FCA 1426 referred to
Nikoglou v Official Receiver in Bankruptcy (2000) 171 ALR 223 referred to
Official Trustee in Bankruptcy v Street [2000] FCA 216 referred to
Official Trustee in Bankruptcy v Halls [2000] FCA 354 referred to
In re a Debtor; Ex parte the Debtor v Bowmaker Ltd (No. 1) [1951] CH 313 referred to
Pillai v Comptroller of Income Tax [1970] AC 1124 referred to
Kleinwort Benson v Crowl (1988) 165 CLR 71 referred to
Coleman v Lazy Days Investments Pty Ltd (1994) 55 FCR 297 referred to
Bull v The Attorney-General for New South Wales (1913) 17 CLR 370 referred to
Re Wheeler and Reynolds; Ex parte Kerr v Crowe (1988) 20 FCR 185 referred to
Re Wimborne; Ex parte the Debtor (1979) 24 ALR 494 referred to
R v Westminster (City) London Borough Rent Officer; Ex parte Rendall [1973] 3 All ER 119 referred to
Krextile Holdings Pty Ltd v Widdows [1974] VR 689 referred to
Ex parte Johnson (1883) 53 LJ Ch 309 referred to
Re A Debtor (No 819 of 1970);Ex parte Biart [1974] 1 WLR 1475 referred to
Re Laxon & Co [1892] 3 Ch 31 referred to

CHARLES PHILIPPE LOUIS NILANT v MARIO SILVERIO MACCHIA
W 62 of 2000

HILL, CARR and WEINBERG JJ
27 OCTOBER 2000
PERTH


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W 62 OF 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

CHARLES PHILIPPE LOUIS NILANT
APPELLANT

AND:

MARIO SILVERIO MACCHIA
RESPONDENT

JUDGES:

HILL, CARR AND WEINBERG JJ

DATE OF ORDER:

27 OCTOBER 2000

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

1.        The appeal be allowed.

2.Within 7 days, the appellant shall file and serve a minute of orders and submissions in support of that minute. 

3.The respondent shall, within 7 days of service of the above documents file and serve his submissions in response and his suggested minute of orders.

4.The matter be otherwise adjourned.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W 62 OF 2000

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

CHARLES PHILIPPE LOUIS NILANT
APPELLANT

AND:

MARIO SILVERIO MACCHIA
RESPONDENT

JUDGES:

HILL, CARR AND WEINBERG JJ

DATE:

27 OCTOBER…

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AGLC
Nilant v Macchia [2000] FCA 1528
Case
[2000] FCA 1528
Decision Date

CaseChat Overview and Summary

The appeal in Nilant v Macchia involved the trustee of a bankrupt estate challenging the primary Judge's authority to deem a statement of affairs to have been properly filed in compliance with the Bankruptcy Act 1966. The central issue before the court was whether the primary Judge had the power to make such an order under section 306 of the Act. The court was required to determine the meaning and scope of the term "proceedings" in section 306(1), which states that proceedings under the Act are not invalidated by a formal defect or irregularity unless the court determines that substantial injustice has been caused and cannot be remedied. The court needed to consider whether the term "proceedings" could encompass administrative actions, such as the filing of a statement of affairs, or if it was limited to judicial proceedings.

The court found that the term "proceedings" in section 306(1) should be interpreted broadly, extending beyond judicial proceedings to include administrative actions taken under the Act. This interpretation was supported by several previous decisions where courts had held that section 306(1) could be applied to non-curial proceedings. The court acknowledged that if the term "proceedings" was not given a broad interpretation, section 306(1) would have limited utility. The court concluded that section 306(1) was indeed applicable to the filing of a statement of affairs under section 54(1) of the Act, and that the primary Judge had the power to make a declaration that the statement of affairs was deemed to have been filed in compliance with the statutory requirements.

The court allowed the appeal and ordered the trustee to file and serve a minute of orders and submissions within seven days, with the respondent having a further seven days to file and serve his submissions and suggested minute of orders. The matter was then adjourned to allow for the preparation and consideration of these documents.

Orders

Orders of the court

1. The appeal be allowed.

2. Within 7 days, the appellant shall file and serve a minute of orders and submissions in support of that minute.

3. The respondent shall, within 7 days of service of the above documents file and serve his submissions in response and his suggested minute of orders.

4. The matter be otherwise adjourned.

Note:

Background

Background to the litigation

The appellant, Mr Nilant (“the Trustee”), is the trustee of the bankrupt estate of the respondent, Mr Macchia (“the Bankrupt”), who became bankrupt as the result of a sequestration order made on 16 September 1991. The substantial issue in the appeal is whether the learned primary Judge, whose decision is the subject of the appeal, had power to make an order under s 306 of the Bankruptcy Act 1966 (Cth) (“the Act”) to declare that a statement of affairs signed by the bankrupt on 4 September 1991 and presented to the Registrar in Bankruptcy on that date was deemed to have been made out and filed in the office of the Registrar and a copy furnished to the trustee on 16 September 1991 in compliance with the requirements of s 54(1) of the Act.The background facts On 16 May 1991 a creditor of Mr Macchia presented a petition to the Court seeking a sequestration order against his estate. On 16 July 1991 Mr Macchia and his brother signed a joint authority under s 188 of the Act authorising the trustee to take control of their joint and several property and to convene a meeting of their creditors under Part X of the Act. At or around that time Mr Macchia and his brother gave to the trustee a statement of their respective affairs and a statement of their joint affairs prepared as at 9 July 1991. The creditors resolved that the debtors be required to lodge petitions in bankruptcy within seven days. Accordingly on 4 September 1991 each of Mr Macchia and his brother presented his own petition to the Registrar. Each petition was accompanied by a statement of affairs verified by affidavit sworn on 4 September 1991. The petition lodged by Mr Macchia was referred by the Registrar to the Court pursuant to s 55(3B) of the Act for a direction whether to accept or reject the petition, there being a pending creditors petition before the Court. The brother became a bankrupt on his own petition. Ultimately the Registrar was directed by a Judge of the Court to reject Mr Macchia’s petition and a sequestration order was made on the creditors petition and the trustee became his trustee in bankruptcy. It is unnecessary to chronicle the correspondence passing thereafter between the trustee and the bankrupt. It suffices to say that much of that correspondence indicates that Mr Macchia was at least to some extent misled by the trustee as to his obligations under the Act and its consequences. It was not until 21 January 1994 that Mr Macchia filed with the Registrar a statement of affairs completed by him which bore the date 6 April 1993. A copy of that document had, so the bankrupt said, been forwarded to the trustee by Mr Macchia’s solicitor on or around 6 April 1993. It was the trustee who finally forwarded the statement of affairs to the Registrar. A consequence of the failure to file with the Registrar the statement of affairs until January 1994 was that Mr Macchia was not eligible for discharge until three years had elapsed from the date of filing, ie 22 January 1997. In the result the bankrupt remained a bankrupt for some 5½ years.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Ultimately an amended application came before the learned primary Judge seeking orders that would have the consequence of treating one or other of the statements of affairs made by Mr Macchia to have been deemed to have been filed in the office of the Registrar in Bankruptcy on 17 September 1991. As the learned primary Judge observed, “[i]n effect, the applicant relied upon ss 30(1)(b) and 306 of the Act to seek a declaration that a ‘proceeding’ under the Act had not been invalidated by a formal defect or irregularity”. Section 306(1) reads as follows:“Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court.”The decision appealed from The learned primary Judge noted a number of single judge decisions including Sofia v Pattison (Federal Court of Australia, Finkelstein J, unreported, 20 October 1997), Tsingaris v Official Receiver (Vic) [1999] FCA 1389 per Weinberg J, Trihakis v Official Receiver (Vic) [1999] FCA 1426 per Kenny J, Nikoglou v Official Receiver in Bankruptcy (2000) 171 ALR 223 per Marshall J and Official Trustee in Bankruptcy v Street [2000] FCA 216 where judges of the Court sitting at first instance had held that the word “proceeding” in s 306 was not confined to curial proceedings but rather was to be given a wide meaning. In particular Finkelstein J in Sofia held that s 306(1) could operate to permit the making of a declaration that a statement of affairs not filed with the Registrar as required by s 54 be treated as having been filed on a nominated date in accordance with s 54 with the consequence that the failure to file the statement of affairs did not operate to extend the period of bankruptcy. In the particular circumstances of that case a statement of affairs had been left on the counter of the registry though not filed. The case was one where no injustice was seen by his Honour to result. Further it was his Honour’s view that there was clear power to make the order sought. His Honour said:“Section 5(1) contains a definition of the word ‘proceeding’. It means a ‘proceeding under this Act’. This is not a helpful definition for present purposes. On one view the word may mean a curial proceeding under the Bankruptcy Act. But the cases that deal with s 306 make it clear that the word is not to be confined to such proceedings. In McDonald Henry & Meek, Australian Bankruptcy Law and Practice (5th ed), in the commentary dealing with s 306, reference is made to cases where it has been accepted that deficiencies in a bankruptcy notice may be cured by an order under s 306(1). A bankruptcy notice is plainly not a curial proceeding. Further, there are two decisions of the Federal Court that establish that the word ‘proceeding’ should be given a wide meaning. The first is Re Wheeler & Reynolds; ex parte Kerr and Crowe v Anor (1988) 20 FCR 185. There Spender J said in relation to the application of the section to a defective bankruptcy notice:‘Although the Registrar’s act in issuing the notice is an administrative rather than a judicial act, it is nonetheless a proceeding as contemplated by s 307. It is a proceeding under the Act but is not a step in any proceeding in the court.’The second decision is Re Staples & Anor; Ex parte Baker (1996) 67 FCR 541 which was concerned with the conduct of an investigation under s 12 of the Bankruptcy Act and a deficiency in connection with that investigation which was sought to be overcome by s 306(1). In that case Spender J said (at 547):‘I think the word, ‘proceeding’ has to be read more widely than a reference to a proceeding in court.’If the word ‘proceedings’ in s 306(1) is not given the wide meaning which his Honour thought it should be given, it might fairly be said that s 306(1) has little work to do. This case is a good example of one where a provision such as s 306(1) should, if the circumstances permit, be used to overcome the problem that confronts these applicants. I am of the view that s 306(1) does apply to ‘proceedings’ taken under s 54(1).”

Ratio Decidendi

Legal Principle Established

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