Nugent v Brialkim Pty Ltd

[1985] FCA 416

Re: MARK T. NUGENT
And: BRIALKIM PTY. LTD. and OWEN PTY. LTD.
No. QLD G27 of 1985
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.
Lockhart J.
Beaumont J.

CATCHWORDS

Bankruptcy - bankruptcy notice - statement of address of creditor in bankruptcy notice - authority to receive payment - proof of inadequacy of address.

HEARING

BRISBANE
#DATE 17:7:1985

ORDER

1. The appeal be dismissed;

2. The appellant pay the respondent's costs of the appeal;

3. The date for compliance with the bankruptcy notice be extended to 24 July 1985.
   
   NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

I would also dismiss the appeal with costs and I agree with the reasons given by Lockhart J.

JUDGE2

This appeal from a judgment of a single judge of this Court (Pincus J.) involves a short, but interesting, question of bankruptcy law.

On 14 February 1985 a bankruptcy notice was issued by the Registrar in Bankruptcy for the Bankruptcy District of the Southern District of Queensland against the debtor (Mark T. Nugent) ("the appellant") at the request of Brialkim Pty. Ltd. and Owen Pty. Ltd., two companies which had signed judgment against the appellant (I shall refer to the companies as "the respondents") on 12 June 1984 in the Magistrates Court of Queensland in the sum of $1,760.75. The bankruptcy notice recited that the respondents had "their registered office at c/- Messrs. Lyons, Dunlop and Pratt, 8th Level, MLC Centre, Cnr. George & Adelaide Streets, Brisbane in the State of Queensland".

The notice required the appellant, within fourteen days after service of the notice upon him excluding the date of service, to pay the said sum of $1,760.75 to the respondents or to secure the payment of that sum to the satisfaction of the Supreme Court of Queensland or this Court, or other Court exercising Federal jurisdiction in bankruptcy or to the respondents, or to compound it to the satisfaction of the respondents.

The appellant applied to this Court to set aside the bankruptcy notice on the ground that it failed to give an address at which there was present a person or persons with the authority of the respondents to receive payment or to secure or compound.

The learned primary Judge considered in the light of the decided cases that the relevant question was whether the bankruptcy notice gave an address at which it was reasonably practicable for the appellant to make payment or to offer to secure or compound. His Honour held that the appellant failed to establish that the address of the respondents given in the notice was one at which it was not reasonably practicable to make payment or to secure or compound, and that the application to set aside the notice therefore failed. His Honour dismissed the application with costs. The appellant appealed to this Full Court from his Honour's judgment.

Counsel for the appellant submitted that, for the address which is stated in a bankruptcy notice as the address of a judgment creditor to support a valid notice, there must be some person or persons present at the address stated in the notice at all reasonably practicable times having authority from the judgment creditor during the currency of the notice to receive payment or to enter into an arrangement to secure or compound in each case at that address. Counsel did not go so far as to say that such a person must be present at the address at all times during the currency of the notice.

Neither the Bankruptcy Act 1966 itself nor the Bankruptcy Rules contain any provision requiring the address of the creditor to be stated in the bankruptcy notice. That requirement is contained in Form No. 4 in Schedule 1 to the Bankruptcy Rules, and is not in terms a requirement that it state the judgment creditor's address at which payment may be made by the debtor or where he may secure or compound. It simply provides, in what is for convenience sometimes called the recital to the bankruptcy notice, for the insertion of the name and address of the judgment creditor. However, the prescribed form does make provision in the operative part of the notice for the debtor to pay the amount claimed by the judgment creditor to 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.

Judgments of long standing have held in relation to comparable provisions in the bankruptcy legislation of England and the Australian Bankruptcy Act 1924 that a judgment creditor must give an address or addresses where he, or, if more than one, they, or one of them, or some agent authorised on his or their behalf, may be found: see In re Beauchamp ex parte Beauchamp (1904) 1 K.B., 572 and James v. Federal Commissioner of Taxation (1955) 93 C.L.R. 631 at p. 639. The question before this Court must be considered in the light of the following passage from James' Case at p. 639:

"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. The debtor has the correlative right to pay the creditor wherever he can find him so that a debtor could be seriously prejudiced if he was led to believe that he was bound to pay the creditor at one particular place."

As I perceive it, the rationale of these and other decisions is that the address of the creditor must be stated in order to comply with the prescribed form of notice and because non-compliance with the requirements of a bankruptcy notice constitutes an act of bankruptcy and may have quasi-penal consequences.

It is not sufficient that a creditor merely give an address where he is known. It must be an address at which he can be paid or where an agreement may be made with him or on his behalf to secure or compound it. If the creditor gives his home as his address he is not bound to remain there all day and night during the currency of the notice. Obviously that would be absurd. Similarly, if he gives his business address he is not bound to remain there always, or even throughout the whole of normal business hours (whatever that expression may mean these days) during the currency of the notice.

However, I agree with the primary Judge that, where the creditor is a company, it is desirable that there be someone present at the address given in the notice during ordinary business hours with authority to receive payment immediately and without having to get in touch with the Board or any other person capable of conferring authority. I would add that it is desirable, though not essential, that such a person also have authority to secure or compound the debt if that is the wish of the creditor and he does not merely insist, as he may if he wishes, upon payment of the debt in full.

In my opinion the address stated must be one at which the debtor may, during the currency of the notice, make payment of the amount claimed in the notice, or one where he may make arrangements to secure or compound the debt. It may be that in certain circumstances, although he may make arrangements to secure or compound by calling at the address stated in the notice, he will do so by speaking to persons who are themselves not physically at that address, but are, for example, available on the telephone. The examples of the possibilities are manifold and need no elaboration.

The test must satisfy the demands of commonsense in the highly ordered and busy world in which we live, tempered by a consideration of the implications of a bankruptcy notice and the serious consequences that can flow from non-compliance with its requirements. I respectfully agree with the primary Judge that the basic principle is that the address given should be one at which during the relevant period it is reasonably practicable for the debtor to make payment or to offer to secure or compound.

Counsel for the appellant relied in his argument before this Court on the judgment of the English Court of Appeal In re Stogdon Ex parte Leigh (1895) 2 Q.B. 534. In that case a bankruptcy notice stated the address of the creditor to be "White's Club, St. James S.W.". The creditor did not in fact reside at the club and was not in England during the whole of the seven days limited by the notice for the payment of the debt. There was evidence that if the debtor had gone to the club he would have been referred to the creditor's London solicitor who held a general power of attorney for the creditor and could have received payment of the debt on his behalf. It was held by the Court that an address at which the creditor could not be found, but at which he could only be heard of, was not an address as was required by the Bankruptcy Act 1883 and the Bankruptcy Rules 1886, that the notice was consequently invalid and further, that the non-payment of the debt within the period of seven days did not constitute an act of bankruptcy.

In Beauchamp's Case (supra) Vaughan Williams L.J., when delivering the judgment of the Court of Appeal, said at p. 584:

"I wish to add that the decision of the Court of Appeal in In re Stogdon seems to me, so far as the observations contained in the judgments are concerned, to be difficult of practical application. Perhaps it might be considered whether the rules and forms might not be somewhat altered."

In my opinion, Stogdon's Case must be read in the light of its special facts. The views which I have expressed are not inconsistent with any principles that may be gleaned from it.

Those are the principles which, in my view, govern the present case. The facts may be dealt with briefly. The evidence in the case was reviewed carefully by the primary Judge, and I see no reason to repeat it. His Honour concluded that the appellant had not established that the address of the creditor given in the notice was one at which it was not reasonably practicable to make payment or to secure or compound. In my opinion, no ground has been established for disturbing those findings of his Honour. I would dismiss the appeal with costs.

JUDGE3

I agree with the reasons given by Lockhart J. and agree with the orders proposed.