Orix Australia Corporation Limited v McCormick
[2005] FCA 1032
•28 JULY 2005
FEDERAL COURT OF AUSTRALIA
Orix Australia Corporation Limited v McCormick [2005] FCA 1032
BANKRUPTCY – Effect of a debtor’s petition presented by the donee of a Power of Attorney against the donor; effect of purported acceptance by the Official Receiver of a debtor’s petition where requirements of s 55 and Regulation 4.11 have not been satisfied; review by the Court of an act done by an Official Receiver; exercise of discretion to order the annulment of a bankruptcy
POWER OF ATTORNEY – Scope of an enduring Power of Attorney under s 32 of the Powers of Attorney Act 1998 (Qld); whether sufficiently wide to enable a debtor’s petition to be presented against the donor of the Power, if otherwise permissibleBankruptcy Act 1966 (Cth) ss 5(1), 6A(2), 15(5), 37, 43-4, 54D, 55, 153B, 156A, 244, 247, 303, 306(1), 308(d), 315
Bankruptcy Regulations 1996 Regs 4.11, 4.12
Bankruptcy Forms 3 and 6
Powers of Attorney Act 1998 (Qld) ss 8, 11, 32, 77, Schedule 2
Powers of Attorney Act 2003 (NSW) s 25
Bankruptcy Legislation Amendment Act 1996 (Cth)
Bankruptcy Act 1914 (UK) s 16(1)
Deeds of Arrangement Act 1914 (UK) s 5(1)
Water Act 1912 (NSW)
Wills Probate and Administration Act 1898 (NSW) ss 7, 18A
Commonwealth Electoral Act 1918 (Cth) ss 229, 231
Road Transport (Driver Licensing) Act 1998 (NSW)Re J. A. Bagley (1929) 29 SR (NSW) 333; (1929) 1 ABC 28 not followed
Ex parte Blain; In re Sawers (1879) 12 Ch. D. 522 cited
The Queen v Davison (1954) 90 CLR 353 cited
Ex parte Registrar in Bankruptcy; Re Eric Ambrose Gibson (1983) 67 FLR 370 cited
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 referred to
In re Prince Blücher; Ex parte Debtor (1931) 2 Ch 70 referred to
Re Shead; Ex parte Shead by his Attorneys Bear and anor (1954) 16 ABC 188 referred to
In re Wilson; ex parte Jones (1916) 85 LJKB 1408 referred to
McRae v Coulton (1986) 7 NSWLR 644 cited
Tobin v Broadbent (1947) 75 CLR 378 referred to
Perry v Holl (1860) 2 De G F & J 38 at 48; 45 ER 540 referred to
Donnelly v Edelsten (1992) 34 FCR 556 referred to
Boral Johns Perry Industries Pty Limited v Piccardi [1989] FCA 346 referred to
Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 referred to
Layton v Westpac Banking Corporation (2000) 181 ALR 603 referred toORIX AUSTRALIA CORPORATION LIMITED v McCORMICK and ORS
NSD 957 of 2005
GRAHAM J
28 JULY 2005
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 957 OF 2005
BETWEEN:
ORIX AUSTRALIA CORPORATION LIMITED
APPLICANTAND:
DARREN McCORMICK
FIRST RESPONDENTOFFICIAL RECEIVER FOR NEW SOUTH WALES & AUSTRALIAN CAPITAL TERRITORY
SECOND RESPONDENTNICHOLAS JAMES DAVID CROUCH
THIRD RESPONDENTJUDGE:
GRAHAM J
DATE OF ORDER:
28 JULY 2005
WHERE MADE:
SYDNEY
THE COURT:
1. Declares that the purported acceptance by the Official Receiver on 23 May 2005 of a petition dated 10 May 2005 and presented by the First Respondent against Raymond Alexander McCormick on 23 May 2005 was null and void.
2. Orders that
(a)the bankruptcy of Raymond Alexander McCormick be annulled pursuant to s 153B(1) of the Bankruptcy Act 1966 (Cth)
(b) the First Respondent pay the Applicant’s costs of the Amended Application;
(c) otherwise, there be no orders as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NSD 957 OF 2005
BETWEEN:
ORIX AUSTRALIA CORPORATION LIMITED
APPLICANTAND:
DARREN McCORMICK
FIRST RESPONDENTOFFICIAL RECEIVER FOR NEW SOUTH WALES & AUSTRALIAN CAPITAL TERRITORY
SECOND RESPONDENTNICHOLAS JAMES DAVID CROUCH
THIRD RESPONDENT
JUDGE:
GRAHAM J
DATE:
28 JULY 2005
PLACE:
SYDNEY
REASONS FOR JUDGMENT
This case raises a number of novel issues:-
(a)Can a debtor become bankrupt by force of s 55(4A)(b) of the Bankruptcy Act1966 (Cth) (“the Act”) on a debtor’s petition presented to the Official Receiver against the debtor by an attorney ostensibly on the debtor’s behalf?
(b)Does an Enduring Power of Attorney executed by a debtor in accordance with s 32 of the Powers of Attorney Act 1998 (Qld) extending powers to the donee in respect of financial matters authorise the presentation to the Official Receiver of a debtor’s petition by the donee against the donor of the Power?
(c)Can s 55(3A) of the Act be satisfied by the Official Receiver giving the information prescribed by the Regulations (see Regulation 4.11(1) of the Bankruptcy Regulations 1996) to an attorney of the debtor?
(d)What consequences flow from a failure by the Official Receiver to comply with s 55(3A) of the Act before accepting a debtor’s petition?
(e)Can a signed acknowledgment that a debtor has received and read the prescribed information mentioned in Regulation 4.11(1) be given by an attorney on behalf of a debtor (see Regulation 4.11(3); see also Regulation 4.11(5))?
(f)What consequences flow if the Official Receiver purports to accept a debtor’s petition under s 55(4A) of the Act in circumstances where to do so would involve a contravention of Regulation 4.11(3) of the Bankruptcy Regulations?
(g)If a debtor’s petition has been wrongly accepted by the Official Receiver, should the Court review that acceptance in accordance with s 15(5) of the Act?
(h)If a debtor’s petition ought not to have been presented or ought not to have been accepted by the Official Receiver, should the Court make an order under s 153B of the Act annulling the bankruptcy?
For the reasons given hereunder I would answer the questions as follows:-
(a) No.
(b) No.
(c) No.
(d) and (f)It would render any purported acceptance of the petition by the Official Receiver null and void.
(e)Subject to what appears below in respect of Regulation 4.11(5), no.
(g)Yes.
(h)In the circumstances of this case, yes.
In Re J. A. Bagley ((1929) 29 SR (NSW) 333 at 334; (1929) 1 ABC 28 at 30) Long Innes J said:-
“I see no reason why a debtor’s petition should not be presented by the agent of the debtor, acting under a power of attorney, if such action is expressly authorised by the power of attorney. …”
In support of that proposition His Honour said at p 335:-
“… I have no doubt that a debtor of sound mind may commit an act of bankruptcy by his agent, providing that he has specially authorised the commission of that act; for instance a debtor may by his agent give notice of suspension of payment: Re Lamb (4 Morr. 25). The statement to the contrary in the headnote in Ex parte Blain; In re Sawers (12 Ch. D. 522) is, in my opinion, wrong and not borne out by the judgments; see the judgment of Brett MR (at page 529).”
With great respect to His Honour I consider that the relevant passage from the judgment of Brett LJ in Ex parte Blain; In re Sawers(“Blain”) (1879) 12 Ch. D. 522 at p 529 is consistent with the headnote. In Blain the relevant issue was whether a foreigner domiciled and permanently resident in Chile who had never been to any part of Great Britain could commit an act of bankruptcy by virtue of execution being levied and goods sold which were goods of a firm in England in which he was a partner. At p 529 Brett LJ held that the foreigner could not commit an act of bankruptcy in such circumstances. His Lordship said:-
“… I am of opinion that a firm as such cannot commit an act of bankruptcy. An act of bankruptcy must be the personal act or the personal default of the person who is to be made a bankrupt.
…
It was said that a person may commit an act of bankruptcy by his agent, and that the partner in England was the agent of these foreign partners, and therefore they committed an act of bankruptcy by their agent in England, that is, by allowing the execution to go without satisfying the judgment, and that, this having been done by their agent in England, they ought to be adjudged bankrupts. That assumes that a man can commit an act of bankruptcy by his agent, whether he has authorized the particular act or not, and that assumption seems to me to be equally wrong. I think that a man cannot commit an act of bankruptcy by a particular act of his agent which he has not authorized, and of which he has had no cognizance. …” (emphasis added)The proposition that a debtor’s petition may be presented by an agent of the debtor acting under a power of attorney has been questioned in later authorities. In The Queen v Davison (1954) 90 CLR 353 at 384 Kitto J said:-
“And not only may there be a question as to whether the presentation of the petition is an abuse of the process of the court …, but there may even be a necessity to decide whether the petition is in truth the debtor’s, as where it is presented by an attorney under power and his authority is questioned: cf. Re J. A. Bagley …”
To like effect, in Ex parte Registrar in Bankruptcy; Re Eric Ambrose Gibson (1983) 67 FLR 370, a case where a father who held a power of attorney from his son, had signed an authority purportedly pursuant to s 188 of the Act authorising a Mr Treloar to call a meeting of creditors of the debtor, McGregor J said at p 375:-
“There may well be a real question as to whether the power of attorney properly construed did authorise the attorney to set up the composition; or whether such an action can be taken without personal participation of the debtor; or, at least, explicit authorisation thereto. …”
Section 308 of the Act deals with the representation of corporations, partnerships, persons of unsound mind and others. Relevantly, it provides:-
“308 Subject to this Act, for the purposes of this Act:
…
(d)any person may act by his or her agent duly authorized in that behalf.”
To enable the issues referred to above to be resolved it will be necessary to consider, inter alia, what is meant by the expression “Subject to this Act” at the beginning of s 308 (see, inter alia, s 55(9)-(11) of the Act).
In relation to debtors’ petitions the primary provisions are to be found in s 55 of the Act. In respect of creditors’ petitions they are to found in ss 43-4 of the Act.
In relation to the estates of deceased persons in bankruptcy s 247 of the Act makes provision for persons administering the estates of deceased persons to present petitions for orders for the administration of the estates under Part XI of the Act, which petitions are brought before the Court, and s 244 makes provision for creditors of deceased persons to present petitions to the Court for orders for the administration of the estates of deceased persons under Part XI of the Act.
In relation to debtors’ petitions the relevant steps are as follows:-
(a) A debtor may present a petition against himself to the Official Receiver (s 55(1));
(b)Such a petition should be in accordance with the approved form, meaning the form approved by the Inspector-General in Bankruptcy (s 55(2)(a) and s 5(1); see also Form 6);
(c)The debtor’s petition should be accompanied by a statement of the debtor’s affairs, meaning a statement in a form approved by the Inspector-General and published in the Gazette which includes a statement identifying any creditor who is a related entity of the debtor and contains a declaration “signed by the debtor …, that, so far as the debtor … is aware, the particulars set out in the statement are correct” (s 55(2)(b) and s 6A(2); see also Form 3);
(d)Before accepting a debtor’s petition the Official Receiver must give the debtor the information prescribed by the Regulations, meaning the information referred to in Regulation 4.11(1) (s 55(3A) and s 315 of the Act);
(e)Where a debtor presents a debtor’s petition to the Official Receiver and there is in force under s 156A of the Act the consent of a registered trustee to act as the trustee of the estate of the debtor, the petition to the Official Receiver must have with it the original, or a clearly legible photocopy of the instrument of consent (Regulation 4.12);
(f)A debtor’s petition may not be accepted by the Official Receiver “unless the debtor has given to the Official Receiver a signed acknowledgment (which may be included in or appended to the petition) that the debtor has received and read the prescribed information”, meaning the information referred to in Regulation 4.11(1). If a person intending to present a debtor’s petition is blind, partially sighted, illiterate or partially literate or insufficiently familiar with the English language, the petition and acknowledgment may be signed by another person if that person signs a statement that he or she has carefully read the relevant material to the intending petitioner or that he or she has carefully interpreted the relevant material to the intending petitioner in a language with which both persons are familiar, as the case may be (Regulation 4.11(3) and (5));
(g)Unless the Official Receiver rejects a debtor’s petition under s 55 of the Act or is directed by the Court to reject it, he must accept it by endorsing the petition accordingly (s 55(4)-(4A)).
Section 55(4A)(b) provides for a debtor who has presented a debtor’s petition to the Official Receiver to become a bankrupt “by force of this section” upon the Official Receiver endorsing the petition with his acceptance thereof.
Section 55(3) confers a discretion on the Official Receiver to reject a debtor’s petition if:
(a) the petition does not comply substantially with the approved form; or
(b) the petition is not accompanied by a statement of affairs; or
(c)the Official Receiver thinks that the statement of affairs accompanying the petition is inadequate.
Section 55(2A) of the Act specifies certain circumstances in which the Official Receiver “must reject” a debtor’s petition and s 55(3AA) specifies other circumstances in which the Official Receiver “may reject” a debtor’s petition.
Sections 55(5A), (6) and (6A) specify circumstances in which a debtor “must not” or “is not entitled to” present a debtor’s petition against himself. In relation to such circumstances s 55(7) provides as follows:-
“55(7)Where a petition is presented by a debtor against himself or herself in contravention of subsection (5A), (6) or (6A), the debtor does not become a bankrupt by virtue of its presentation.”
Under s 55(8) a person who becomes a bankrupt by force of s 55 continues to be a bankrupt until he or she is discharged by force of subsection 149(1) or his or her bankruptcy is annulled by force of subsection 74(5) or 153A(1) or under s 153B of the Act.
In the event that exception is taken in proceedings before the Court to a formal defect or an irregularity the proceedings will not be invalidated unless the Court, in the circumstances, finds they should be invalidated in accordance with s 306(1) of the Act. Section 306(1) provides:-
“306(1)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.”
It is significant to note that in relation to a debtor’s petition no sequestration order is made. Accordingly, s 37 of the Act has no application.
An act done in breach of a condition regulating the exercise of a statutory power is not necessarily invalid and of no effect. Whether it is depends upon whether there can be discerned a legislative purpose to invalidate any act that fails to comply with the condition. The existence of the purpose is ascertained by reference to the language of the statute, its subject matter and objects, and the consequences for the parties of holding void every act done in breach of the conditions (per McHugh, Gummow, Kirby and Hayne JJ in Project Blue Sky Inc v Australian Broadcasting Authority (“Project Blue Sky”) (1998) 194 CLR 355 at [91] and [93]).
There is no decisive rule that can be applied in finding such a purpose or no purpose nor is there a ranking of relevant factors or categories that may give guidance on the issue (see Project Blue Sky at [91]).
A Court, determining the validity of an act done in breach of a statutory provision, may easily focus on the wrong factors if it asks itself whether compliance with the provision is mandatory or directory and, if directory, whether there has been substantial compliance with the provision. A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid (per McHugh, Gummow, Kirby and Hayne in Project Blue Sky at [93]).
Sections 55 and s 153B of the Act provide as follows:-
“55(1)Subject to this section, a debtor may present to the Official Receiver a petition against himself or herself.
(2)A petition presented by a debtor under this section:
(a)shall be in accordance with the approved form; and
(b)shall be accompanied by a statement of the debtor’s affairs and a copy of that statement.
(2A) The Official Receiver must reject a debtor’s petition unless, at the time when the petition is presented, the debtor:
(a)was personally present or ordinarily resident in Australia; or
(b)had a dwelling-house or place of business in Australia; or
(c)was carrying on business in Australia , either personally or by means of an agent or manager; or
(d)was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager.
(3) The Official Receiver may reject a debtor’s petition if:
(a)the petition does not comply substantially with the approved form; or
(b)the petition is not accompanied by a statement of affairs; or
(c)the Official Receiver thinks that the statement of affairs accompanying the petition is inadequate.
(3AA)The Official Receiver may reject a debtor’s petition (the current petition) if:
(a)it appears from the information in the statement of affairs (and any additional information supplied by the debtor) that, if the debtor did not become a bankrupt, the debtor would be likely (either immediately or within a reasonable time) to be able to pay all the debts specified in the statement of affairs; and
(b)at least one of the following applies:
(i)it appears from the information in the statement of affairs (and any additional information supplied by the debtor) that the debtor is unwilling to pay one or more debts to a particular creditor or creditors, or is unwilling to pay creditors in general;
(ii)before the current petition was presented, the debtor previously became a bankrupt on a debtor’s petition at least 3 times, or at least once in the period of 5 years before presentation of the current petition.
(3AB)The Official Receiver is not required to consider in each case whether there is a discretion to reject under subsection (3AA).
(3AC)The debtor may apply to the Administrative Appeals Tribunal for the review of a decision by the Official Receiver to reject a petition under subsection (3AA).
(3A) Before accepting a debtor’s petition the Official Receiver must give the debtor the information prescribed by the regulations.
(3B) The Official Receiver must refer a debtor’s petition to the Court for a direction to accept or reject it if there is a creditor’s petition pending against a group of debtors (whether they are joint debtors or members of a partnership) that includes the debtor against whom the debtor’s petition is presented.
[The examples under sub-section (3B) have not been reproduced]
(3C) If the Court directs the Official Receiver to accept the debtor’s petition, the Court must specify the time of the commencement of the bankruptcy that results from acceptance of the debtor’s petition.
(4) The Official Receiver must accept a debtor’s petition, unless the Official Receiver rejects it under this section or is directed by the Court to reject it.
(4A) Where the Official Receiver accepts a petition presented under this section:
(a)he or she shall endorse the petition accordingly, and
(b)upon the Official Receiver endorsing the petition, the debtor who presented the petition becomes a bankrupt by force of this section and by virtue of presentation of the petition.
(5) If a registered trustee is the trustee of the estate of a debtor who becomes a bankrupt under this section, the Official Receiver must:
(a)notify the trustee of the bankruptcy; and
(b)give the trustee a copy of the statement of affairs that accompanied the debtor’s petition.
(5A) A debtor who is a party (as debtor) to a debt agreement must not present a debtor’s petition unless the Court gives the debtor permission to do so.
(6) A debtor who has executed a personal insolvency agreement is not, except with the leave of the Court, entitled to present a petition against himself or herself unless:
(a)the agreement has been set aside; or
(b)the agreement has been terminated; or
(c)all the obligations that the agreement created have been discharged.
(6A) A debtor in relation to whom a stay under a proclaimed law applies is not, except with the leave of the Court, entitled to present a petition against himself or herself.
(7) Where a petition is presented by a debtor against himself or herself in contravention of subsection (5A), (6) or (6A), the debtor does not become a bankrupt by virtue of its presentation.
(8) A person who becomes a bankrupt by force of this section continues to be a bankrupt until:
(a)he or she is discharged by force of subsection 149(1); or
(b)his or her bankruptcy is annulled by force of subsection 74(5) or 153A(1) or under section 153B.
(9) A person who states in writing that he or she is a creditor of a bankrupt who has become a bankrupt by force of this section may without fee, and any other person may on payment of the fee prescribed by the regulations, inspect, personally or by an agent, the statement of affairs that accompanied the petition presented by the bankrupt, and may obtain a copy of, or take extracts from, the statement.
(10) A bankrupt who has become a bankrupt by force of this section may, without fee and either personally or by an agent:
(a)inspect the bankrupt’s statement of affairs, and
(b)obtain a copy of, or make extracts from, the bankrupt’s statement of affairs.
(11) If the approved form for a statement of affairs indicates that particular information in the statement will not be made available to the public, then the Official Receiver must ensure that the information is not made available under this section to any person other than the bankrupt (or an agent of the bankrupt).
(12) The Official Receiver may refuse to allow a person access under this section to particular information in a bankrupt’s statement of affairs on the ground that access to that information would jeopardise, or be likely to jeopardise, the safety of any person.
…
153B(1)If the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor’s petition, that the petition ought not to have been presented or ought not to have been accepted by the Official Receiver, the Court may make an order annulling the bankruptcy.
(2)In the case of a debtor’s petition, order may be made whether or not the bankrupt was insolvent when the petition was presented.”
Regulation 4.11, made under s 315 of the Act, provides as follows:-
“4.11(1)For the purposes of subsections 54D(1), 55(3A), 56B(5), 57(3A) and 185E(1) of the Act, the following information is prescribed:
(a) information about alternatives to bankruptcy;
(b) information about the consequences of bankruptcy;
(c) information about sources of financial advice and guidance to persons facing or contemplating bankruptcy;
(d) information about a debtor’s right to choose whether the bankruptcy is administered by a registered trustee or the Official Trustee;
(e) a statement that it is an act of bankruptcy for a debtor:
(i)to present to the Official Receiver, under section 54A of the Act, a declaration of intention to present a debtor’s petition; or
(ii)to give to the Official Receiver, under section 185C of the Act, a written proposal for a debt agreement.
(2)The information must be factual and objective.
(3)The Official Receiver must not accept a debtor’s petition under section 55, 56B or 57 of the Act, or a debt agreement proposal under Division 2 of Part IX of the Act, unless the debtor has given to the Official Receiver a signed acknowledgment (which may be included in or appended to the petition) that the debtor has received and read the prescribed information.
(4)If the debtor presents a petition without having given the acknowledgment, the Official Receiver must:
(a) if the debtor presents the petition in person – give the prescribed information to the debtor; or
(b) if the debtor presents the petition by post – post the prescribed information to the debtor.
(5)Where a person intending to present a petition (‘the intending petitioner’) is unable to properly read the petition, prescribed information and acknowledgment (‘the relevant material’) because he or she is:
(a)blind, partially sighted, illiterate or partially literate; or
(b)insufficiently familiar with the English language;
the petition and acknowledgment may be signed by another person if that person signs a statement:
(c) where paragraph (a) applies – that he or she has carefully read the relevant material to the intending petitioner; or
(d) where paragraph (b) applies – that he or she has carefully interpreted the relevant material to the intending petitioner in a language with which both persons are familiar.”There appear to be two ways in which a critical failure to comply with a provision of the Act or Regulations may be remedied in circumstances where a debtor’s petition has been presented. One is under s 15(5) of the Act and the other under s 153B.
Section 15(5) of the Act, which was inserted by the Bankruptcy Legislation Amendment Act 1996 (Act No. 44 of 1996 which introduced 98 pages of amendments to the Act) provides:-
“15(5) The Court may review an act done by an Official Receiver”
By the same Act s 55(4A) was amended to confer upon the Official Receiver, as opposed to a Registrar, the power to accept a debtor’s petition.
Section 303 of the Act gives a person aggrieved by or interested in a matter locus standi to make an application to the Court for a review under s 15(5) of the Act.
In relation to the Bankruptcy Legislation Amendment Act 1996 the then Attorney-General and Minister for Justice said in his Second Reading Speech in relation to “ADMINISTRATIVE ARRANGEMENTS” and a “One Stop Service”:-
“The bill is designed to ensure that most persons in financial difficulty will only have to deal with one agency in relation to bankruptcy and personal insolvency matters, rather than two, as at present. People who lodge debtor’s (sic) petitions will benefit most from this change, although those involved in administrations resulting from creditors’ petitions will also find that there has been a significant decrease in the paperwork and administrative red tape that will be required.
At present, when a debtor presents a debtor’s petition for bankruptcy, he or she must go to the Registrar’s office in the Federal Court to complete a petition and a statement of affairs. When the petition is accepted, the debtor becomes a bankrupt. A file in relation to the bankruptcy is held by the Court. Under the proposed arrangements the debtor’s petition will be lodged with ITSA [Insolvency and Trustee Service Australia] and all records relating to any bankruptcy will be held in ITSA. If the bankruptcy is administered by ITSA, as 92 per cent of them are, then the debtor need go no further.
The bill provides that ITSA will be responsible for providing information to all debtors who want to lodge a debtor’s petition. It is envisaged that this information will cover such things as possible alternatives to bankruptcy, the effect of bankruptcy on their assets and income, as well as employment disqualifications associated with becoming a bankrupt. This information should enable debtors to give more careful consideration to whether bankruptcy is really appropriate or whether it would be better to try other options, or seek further advice about their financial difficulties, before lodging a debtor’s petition.
…”The approved form of Debtor’s Petition under the Act (Form 6) includes the following:
“To the Official Receiver:
·I am presenting this Debtor’s Petition …:-
…
1. Name
…
2. Address
…
3. Current occupation
…
4. Date of birth
…
I acknowledge that I have read the prescribed information about the alternatives to, and the consequences of bankruptcy; sources of financial advice and guidance; and my right to choose a registered trustee or the Official Trustee to administer my bankruptcy.
I have an association with Australia because –
…
I am not aware of any law which prevents me from filing this petition.5. Signature of debtor
…
Office use only
Petition presented on / /
Petition accepted on / /
Under subsection at am/pm
…
By ……………………………..
For Official Receiver”The form approved for the provision of a Statement of Affairs (Form 3) includes:-
“You need to complete this form if you are:
· lodging a debtor’s petition to voluntarily make yourself bankrupt
…
Please complete this form to the best of your knowledge and belief
…
Contents of the Statement of Affairs
Part A Personal Details (confidential)
Part B Personal Details (recorded on the public register)
Part C Assets and Liabilities
…
Part D Business Details
Part E Asset Details
…6. You must complete and sign the declaration.
…
Part A – Personal Details
CONFIDENTIAL1 Your personal details
Telephone …
Email address …
Name and Address of a contact person who does not live with you.
…
Do you have any passports? …
What language do you most commonly use?…
Occupation
What is your usual trade or profession? …2 Accountant
Do you have an accountant? …
3 Solicitor
Do you have a solicitor? …
4 About your Insolvency
What do you believe is the primary cause(s) of your insolvency? …
When did you first have difficulty paying your debts? …
…
Who provided you with information about bankruptcy and the alternatives?
…
Have you previously been bankrupt or entered into a formal arrangement with creditors? …
…5 About your family
Do you have a spouse/partner?
…
Do you live with your spouse/partner?
What is your spouse/partner’s separate gross income? …
Do you have any dependants residing with you?
…6 Child Support
In the next 12 months, do you expect to pay or receive any financial support under the Child Support (Assessment) Act or the Family Law Act 1975?
…7 Family Court Arrangements
Have you been a party to an order or agreement made by the Family Court in relation to a property settlement?
…
Are there any proceedings currently before the Family Court involving you?
…8 Legal Actions
Are your involved in any legal processes or disputes?
…9 Summary of your income in the last 12 months
Please provide details of your taxable income (before tax) over the past 12 months.
…10. Summary of your expected income in the next 12 months
Please provide details of your taxable income (before tax) that you expect to receive in the next 12 months. If you are not sure, please estimate.
…
You must provide evidence of your current income eg payslips, tax returns, statements
…11 Employment Status
Are you currently employed? …
How long have you been unemployed? …
What was your occupation when you were last employed?12 Current Employment
…
13 Employment Income
…
14 Do you have private patient hospital cover?
15 Relationship to Employer
Is your employer a relative? …
Do you or any member of your family have a financial interest in your employer’s business? …16 Motor Vehicle Benefits
Do you use a vehicle which is owned by someone else? …
…17 Superannuation Benefits
Does any party make a superannuation contribution for you? …
18 Salary Sacrifice
Is your salary now or at any time in the last 2 years, subject to a salary sacrifice arrangement? …
…19 Other Benefits
Do you, or any member of your family, receive or expect to receive any benefit from any other person or entity? These include rent, low interest loans, payment of your expenses or children’s education. …
…Part B – Personal Details
20 About you
Gender …
Title …
Family Name …
Given Names …
List all other names used in the last 10 years …
Date of Birth …
Residential address …
Do you own or are buying this property? …
Previous 2 addresses …
…21 Occupation
What is your usual trade or profession? …
22 Business
In the past 5 years have you operated a business as a sole trader, via a partnership, via a company or a trust? …
Part C – Your Assets & Liabilities
23 Cash
How much cash do you have?
24 Banks/Building Societies/Credit Unions
Do you have any money in banks, building societies, credit unions or with other deposit takers? …
…25 Tax Refund
Do you expect to receive a tax refund?
26 Tools of Trade
Do you have tools of trade and what is their estimated resale value?
27 Superannuation and Life Insurance Policies
…
Have you received a superannuation payout from any fund in the last 5 years? …
Have you made a lump sum payment to any superannuation fund in the last 5 years?
Do you expect to receive payment from any superannuation fund in the next 3 years?28 Vehicles
Do you own, or have an interest, in any vehicles?
…29 Real Estate
Do you own, or are you buying, any land or buildings in Australia or overseas?
…30 Shares
Do you own, or are you entitled to any shares, options, rights, convertible notes or other securities?
31 Investments
Do you have any managed investments, insurance bonds, debentures or other investments? …
32 Money owed to you
Do you have any debts owed to you?
…33 Deceased Estate
Do you have an interest in a deceased estate? …
34 Sale, Transfer or Gift of Assets
Have you transferred , given away or sold any assets worth more than $1,000 in the last 5 years? …
35 Assets in somebody else’s possession
Do you own any assets which are not currently in your possession? …
36 Assets you contributed towards or helped purchase
Have you contributed or otherwise assisted in the purchase or improvement of any asset valued over $1000 which is held by someone else?
37 Other items of value
Other than your general household furniture, do you own any other assets or items of value?
(eg jewellery, camera, artworks, antiques, copyrights)
…38 Assets/Money paid to Creditors
As a result of pressure for payment from creditors have you, in the last 12 months, paid a total amount of more than $1000 over and above your normal repayments or surrendered any assets to a creditor? …
…39 Secured Creditors
…
40 Unsecured Creditors
…
Part D – Business Details
41 Sole trader/Partnership
…
42 Sole trader/Partnership – operating or ceased in past 6 months
…
43 Companies
…
44 Trusts
…
Part E – Asset Details
45 Real Estate
…
46 Shares
…
47 Investments
…
48 Money Owed to you
…
49 Deceased Estate
…
50 Sale, Transfer or Gift of Assets in the last 5 years
…
51 Assets you own which are in somebody else’s possession
…
52 Assets you contributed towards or helped purchase
…
DECLARATIONNote:S267(2) of the Bankruptcy Act provides that a person must not sign a declaration that the person knows to be false.
Penalty:Imprisonment for 12 months.
I declare that the particulars set out in this statement are correct.
Signature of debtor …
…
If you received assistance completing this form, the person providing the assistance should sing the statement below.
To be completed by any person or interpreter who assisted a person to complete this form.
Signature …
Date …
Full Name …
Address …
Reason the person required your assistance? …”
It can be seen from the information required for inclusion in a Statement of Affairs by a debtor presenting a debtor’s petition, that a considerable amount of personal detail is required to be disclosed which, by its nature, would not be available to an attorney. Where questions require the disclosure of material that could only be in the mind of the debtor, an attorney’s answers could not, in my view, suffice.
On 14 October 2004 Raymond Alexander McCormick (“Mr McCormick Snr”) then of 79/100 Old Burleigh Road, Broadbeach, Queensland executed a power of attorney in favour of his son Darren McCormick (“Mr McCormick Jnr”) of 17 Selin Place, Currumbin, Queensland being “an enduring power of attorney, for financial and personal/health matters” within the meaning of s 32 of the Powers of Attorney Act 1998 (Qld). Such a form of power of attorney may be contrasted with a general power of attorney within the meaning of s 8 of the Powers of Attorney Act 1998 (Qld) (see also s 11).
This power of attorney appears to have been executed by Mr McCormick Snr in the presence of Paul Anthony Bolster, a lawyer and to have been accepted by Mr. McCormick Jnr on 18 October 2004 and registered in Queensland under dealing No. 708251837 on 30 November 2004. Such an enduring power of attorney is recognised in New South Wales (see s 25 of the Powers of Attorney Act 2003 (NSW)).
At some stage a written communication appears to have passed between Mr McCormick Snr and Mr McCormick Jnr which included the following:
“Well Darren … you are going to have to take care of your mother first you have to get here (sic) to get here (sic) money out of st george bank give it to you hide it in your account … I would move the furniture out … as soon as possible and store it in your name … Ring guy Tickle he will sell the boat … it is worth $350.000 or a bit more tell guy he is probly (sic) better of (sic) moving to hide it till you sell it … Darren don’t f… around because this is going to blow up within 2 weeks …
Goodbuy (sic) Good Luck”In early May 2005 Nicholas James David Crouch (“Mr Crouch”) made an inquiry of a Deputy Official Receiver in the Office of the Official Receiver as to whether a debtor’s petition signed and presented under a power of attorney could be accepted by the Official Receiver under s 55 of the Act. By letter dated 4 May 2005 Mr Crouch was advised, with reference to s 308(d) of the Act, that
“it would appear that the debtor’s son who holds a Power of Attorney for the debtor would fit that description [a duly authorized agent]. …
…
…it is considered that the debtor’s son would need to have full knowledge of the debtor’s personal, financial and business affairs, to have the ability to adequately complete a statement of the debtor’s affairs.
…”On 23 May 2005 a debtor’s petition dated 10 May 2005 was presented to the Official Receiver against Mr McCormick Snr together with a statement of Mr McCormick Snr’s affairs dated 10 May 2005 and a consent of Mr Crouch to act as trustee of the bankrupt estate of Mr McCormick Snr dated 9 May 2005.
The debtor’s petition was not signed by Mr McCormick Snr. Rather, it was signed by Mr McCormick Jnr as attorney for Mr McCormick Snr. Where provision was made on the form for the signature of the debtor, the words “R. A. McCormick by his duly appointed attorney pursuant to attorney dated 14/10/04 and registered under dealing number 708251837 by Darren McCormick as attorney” were added. The signature of Darren McCormick also appeared in the relevant space.
The accompanying statement of affairs was similarly signed by Mr McCormick Jnr with the words added reading “R. A. McCormick by his duly appointed attorney pursuant to attorney dated 14/10/04 and registered under dealing number 708251837 by Darren McCormick as attorney”.
When presented these documents were also accompanied by a copy of the enduring power of attorney referred to above.
In the present case no prescribed information within the meaning of Regulation 4.11(1) of the Regulations was given to Mr McCormick Snr before the purported acceptance of the debtor’s petition and no signed acknowledgment that Mr McCormick Snr had received and read the prescribed information was given by Mr McCormick Snr to the Official Receiver but the debtor’s petition, executed in the manner described above, did include the approved words of acknowledgment.
Whilst it is the practice of the Official Receiver to give to debtors lodging debtors’ petitions a document entitled “Important Information and Instructions”, it appears that no such document was given to Mr McCormick Snr in this case. The “Important Information and Instructions” document happens to include a paragraph 7 under the heading “Completing the documents”:-
“7Where you are signing this form on behalf of another person as their Power of Attorney or court appointed guardian, attach a copy of these documents evidencing your role.”
Amongst other things, this case puts in question the propriety of paragraph 7 of the “Important Information and Instructions” form and the advice given to Mr Crouch in the letter dated 4 May 2005.
On 23 May 2005 the Official Receiver purported to accept the debtor’s petition presented against Mr McCormick Snr, although there was no indication provided in the form of acceptance to indicate that the acceptance was under subsection 4A of s 55.
In the foregoing circumstances Orix Australia Corporation Limited has instituted the current proceedings against Mr McCormick Jnr, the Official Receiver for New South Wales & Australian Capital Territory and Mr Crouch by Application filed 15 June 2005, in which the power and authority of Mr McCormick Jnr to present and of the Official Receiver to accept the debtor’s petition against Mr McCormick Snr has been challenged.
Mr McCormick Snr would appear to have been a co-owner with Gweneth McCormick, who is also now a bankrupt, of the Broadbeach property which was given as Mr McCormick Snr’s residential address in the enduring power of attorney. It appears that the Applicant lodged a caveat against dealings with the property on 12 November 2004. When the property was sold and completion of the sale effected on 3 December 2004, $411,624 appears to have been paid to the Applicant. Mr Crouch has formed the view that the amount of $411,624 paid to the Applicant constitutes a voidable preference in respect of the bankrupt estates of both Mr McCormick Snr and Gweneth McCormick.
The steps being taken by the applicant in respect of Mr McCormick Snr’s alleged bankruptcy have been opposed by two supporting creditors namely Macquarie Leasing Pty Limited and Suncorp Metway Advances Corporation Pty Limited.
On the hearing of the Applicant’s Amended Application filed 20 July 2005 Mr J K Chippindall of counsel appeared for the Applicant, there was no appearance for Mr McCormick Jnr, Mr M H Murray, Solicitor, appeared for the Second Respondent, Mr B J Skinner of Counsel appeared for the Third Respondent and Ms E K Glover of Counsel appeared for Macquarie Leasing Pty Limited.
The Application and supporting affidavit were personally served on Mr McCormick Jnr on 17 June 2005 but he did not appear.
Suncorp Metway Advances Corporation Pty Limited did not appear on the hearing of the Amended Application, having advised the Court that it was “content to adopt the submissions to be put on behalf of the Third Respondent, Mr Crouch”.
CBFC Limited, a company within the Commonwealth Bank of Australia Group, which also claims to be a creditor, has supported the continuation of Mr McCormick Snr’s bankruptcy. However, it did not seek leave to appear on the hearing of the Amended Application.
The Official Receiver has presented written submissions by way of “assistance to the Court on general issues”. Likewise, Mr Crouch has presented submissions “to assist the Court and not in an adversarial role”.
As indicated above, it seems to me that the power which a debtor has to present a debtor’s petition against himself is incapable of lawful delegation notwithstanding s 308(d).
Counsel for the Applicant submitted that there was no power of delegation in respect of what he described as “personal matters”. He contended that the presentation of a debtor’s petition against a debtor should be included in this category. In support of this proposition he relied upon In re Prince Blücher; Ex parte Debtor (1931) 2 Ch 70. In that case the Court of Appeal held that a proposal for a scheme of composition filed and signed on behalf of a debtor by his solicitors was not a proposal within s 16(1) of the Bankruptcy Act 1914 (UK). That section provided that a debtor must “lodge with the Official Receiver a proposal in writing signed by him embodying the terms of the composition or scheme” (emphasis added). At p 74 Lord Hanworth MR said:-
“The words of the statute are ‘signed by him’. Where a statute intends that the authorization may be by a person on behalf of a debtor the Legislature knows how to provide for it.”
Slesser LJ said at p 76:-
“I find myself quite unable to think here that the words are other than explicit. The language of the statute is ‘signed by him’ and as my Lord has pointed out in considering very similar words in a writing or letter of acknowledgment under Lord Tenterden’s Act, it was held by the Court that the words ‘signed by him’ could not be extended to signed by an agent or some other person on behalf of the required signatory.”
Romer LJ agreed.
Counsel for the Applicant also relied on Re Shead; Ex parte Shead by his Attorneys Bear and anor (1954) 16 ABC 188 however I do not understand that case to be authority for the proposition that power could not be given to an attorney to petition for the sequestration of a debtor’s estate on the ground that the debtor is unable to pay his debts (see p 194).
Reference was also made by counsel for the Applicant to In re Wilson; ex parte Jones (1916) 85 LJKB 1408. That case concerned a deed of arrangement executed by an attorney on behalf of a debtor purportedly under the Deeds of Arrangement Act 1914 (UK) where the attorney also purported to make an affidavit which under s 5(1) of the Deeds of Arrangement Act 1914 (UK) must be made “by the debtor”. It was argued that the deed had to be executed by the debtor personally and the affidavit in support had to be sworn by the debtor personally. The Court of Appeal opined that the deed had been validly executed but was void because there was no affidavit by the debtor. Major Wilson had given his sister “as full a power of attorney as ever could be devised, a power of attorney which authorised the sister not merely to execute a deed of arrangement on his behalf, but also to make the affidavit as required by the statute” (at p 1414). The deed was executed pursuant to that power of attorney and an affidavit was made by the sister, who held the power of attorney, such as was required to be done by the Act by the debtor himself.
Lord Cozens-Hardy, MR said at p 1414:-
“As to whether the deed was void because it was executed by the attorney under a power, I do not desire to say anything. I think that is probably not a good objection to take, but certainly it was plainly void under the Deeds of Arrangement Act, 1914, because there was no affidavit by the debtor.”
Phillimore, LJ said at p 1417:-
“He executed a deed, … which was good as a deed, but bad ultimately, because within the seven days no proper affidavit was obtained …”
Sargant J said at p 1418:-
“… it seems to me perfectly clear that an affidavit sworn by an attorney is not an affidavit by the debtor so as to comply with the requirements of the Deeds of Arrangement Act, 1914. …”
In re Prince Blücher; Ex parte Debtor was not followed by the New South Wales Court of Appeal in McRae v Coulton (1986) 7 NSWLR 644. In that case it was held that an application for the grant of authorities for joint water supply schemes by a solicitor “for and on behalf of all applicants per” sufficiently complied with the requirements of the Water Act 1912 (NSW). In his leading judgment at pp 663-4 Hope JA said:-
“… it has been strongly submitted for Coulton that the signature on the application by the solicitors on behalf of the applicants was not a compliance with the terms of the prescribed form which provides at its end for ‘signatures of all applicants’.
The first question is whether the applicants must sign personally, or whether signature by an agent on behalf of the applicants was permissible. It has long been the law that, where a provision of a statute or of delegated legislation requires that a document shall be signed by a particular person, prima facie that provision does not exclude the common law rule qui facit per alium facit per se [he who acts through another is deemed to act in person] and if the person authorises another to sign on his behalf, a signature made by the other pursuant to the authority is equivalent to the signature of the person giving the authority: R v Kent Justices (1873) LR 8 QB 305; Re Whitley Partners Ltd (1886) LR 32 Ch D 337; France v Dutton [1891] 2 QB 208; Furnivall v Hudson [1893] 1 Ch 335; Dennison v Jeffs [1896] 1 Ch 611; Grahame v Commissioner for Railways (1946) 46 SR (NSW) 430; 63 WN 277. An intention that a personal signature is required may appear from the language of the statute or delegated legislation or from its subject matter. Thus other provisions in the statute or in cognate legislation expressly authorising signature by agents may preclude the application of the principle where no such provision is made: Hyde v Johnson (1836) 2 Bing (NC) 776; 132 ER 299. A statute whose subject matter indicated the necessity for a personal signature is Lord Tenterden’s Act (9 Geo 4, c 14) which provided that no action should be brought to charge a person upon a representation made concerning the correct conduct and the like of any other person to the intent or purpose that that other person might obtain credit, money or goods unless the representation was made in writing signed by the party to be charged: Williams v Mason (1873) 28 LT 232; Swift v Jewsbury (1874) LR 9 QB 301. A decision out of line with this general course of authority is Re Prince Blucher; Ex parte Debtor [1931] 2 Ch 70. That case concerned the Bankruptcy Act 1914 (imp), s 16, which required that a proposal for a scheme of composition by a debtor in satisfaction of his debts should be ‘in writing signed by him’. Purporting to apply Re Whitley Partners Ltd, it was held that the words ‘signed by’ required a personal signature, and that any other conclusion would amount to an amendment of the legislation. As Jordan CJ pointed out in Grahame v Commissioner for Railways (at 435; 281), this conclusion was the very opposite to that reached in Re Whitley Partners Ltd. That decision concerned the signing of a memorandum of association of a company. The Companies Act 1862 (Imp), s 6 and s 11, provided for persons ‘subscribing their names’ to the memorandum, and that the memorandum ‘shall be signed by each subscriber in the presence of, and attested by, one witness at the least’. It was held that this language did not preclude signature by an agent. Re Prince Blucher should not be regarded as disturbing the long line of authority to the contrary. As well there is a line of authority concerning the question of how, if at all, a corporation can sign if that is what a statute requires: Motel Marine Pty Ltd v IAC (Finance) Pty Ltd (1964) 110 CLR 9; UBAF Ltd v European American Banking Corporation [1984] QB 713; Ralph Symonds Ltd v J A Ewing & Co (London) Ltd [Court of Appeal, 25 September 1980, unreported]. I shall refer later to some of the corporation decisions but they cast no doubt upon the basic principle I have described.
In my opinion there is nothing in the language or context of the Water Act or in the regulations, including the prescribed form of application, which would preclude the application of the general principle or require a personal signature. Accordingly the application was not invalid because it was not signed personally by the applicants.”Whether the power to present a debtor’s petition against a debtor can be lawfully delegated to an attorney depends upon whether the language of the Act, the Regulations made thereunder, the approved forms and/or the relevant subject matter requires that the signature on the petition be the personal signature of the debtor.
It is clear that an attorney, no matter how wide the power appointing him, could not make a valid will for the donor of the power. In New South Wales this would be because of the express provisions of s 7 of the Wills Probate and Administration Act 1898 (NSW) which specify the requirements for the valid execution of a will (see also s18A). However, s 7(4) contemplates the signing of a testator’s will by a third party if it is signed by that third party in the presence and by the direction of the testator, subject to due attestation.
Similarly, an attorney could not cast a valid vote at a federal parliamentary election for the donor of the power because of the provisions of, inter alia, ss 229 and 231 of the Commonwealth Electoral Act 1918 (Cth). So also, an attorney could not, in New South Wales at least, secure a motor vehicle driver’s licence for the donor of a power, given the restrictions imposed upon the issuing of licences by and under the Road Transport (Driver Licensing) Act 1998 (NSW).
In relation to the presentation of debtors’ petitions there are a number of provisions which indicate that it is not within the power of an attorney to present such a petition against the donor of the power. Firstly, ss 55(9), 55(10) and 55(11) make express provision for certain matters to be done “personally or by an agent” and for information to be made available to “the bankrupt (or an agent of the bankrupt)”. There is no comparable provision in relation to the presentation of petitions under s 55(1).
Secondly, a petition presented by a debtor is required to be “in accordance with the approved form”. As can be seen from the extracts from Form 6, set out above, there is a requirement for personal matters to be disclosed above the provision for signature of the debtor’s petition by the debtor. I cannot see how an attorney can stand in the shoes of the donor of a power and say “I acknowledge that I have read …”, “I have an association with Australia because …” and “I am not aware of any law which prevents me from filing this petition”. These matters require an insight into the mind of the debtor which would not be available to the debtor’s attorney. Furthermore, Regulation 4.11(5) expressly provides that in very limited circumstances, which have no application in the present case, a person other than the debtor may sign a debtor’s petition and an acknowledgment that the debtor has received and read the prescribed information under Regulation 4.11(1).
Thirdly, s 55(2) requires that a petition presented under s 55(1) be accompanied by a statement of the debtor’s affairs in the form approved by the Inspector-General and published in the Gazette (s 6A(2)) but the Official Receiver is not compelled by s 55(3) to reject a debtor’s petition if it is not accompanied by a statement of affairs.
As indicated by the excerpts from the approved form of Statement of Affairs (Form 3) set out above, the form requires the disclosure of a considerable amount of personal detail of which the debtor alone would be aware. Take, for example, question 4 which requires the debtor to answer the question “What do you believe is the primary cause(s) of your insolvency?”
Fourthly, s 55(3A) requires the Official Receiver to give the debtor the information prescribed by Regulation 4.11(1) before accepting the debtor’s petition. Plainly, this requirement has been imposed so that the debtor, not an attorney for the debtor, may read the prescribed information before acting in the matter (see Regulation 4.11(3)).
Given that s 308(d) is expressed to be “Subject to this Act”, I do not consider that the section has any application in the light of the several matters to which I have just referred and, in particular, the express references to matters that may be done by agents in s 55 itself.
For the foregoing reasons, I am of the opinion that a person in the position of Mr McCormick Jnr could not, as an attorney for Mr McCormick Snr, present a debtor’s petition against Mr McCormick Snr under s 55(1) of the Act.
The next question to be considered is whether, contrary to the conclusion which I have reached, delegation were found to be possible, the power of attorney in fact granted by Mr McCormick Snr to Mr McCormick Jnr, as a matter of construction, extends sufficient power to Mr McCormick Jnr to enable him to present a debtor’s petition against Mr McCormick Snr.
That powers of attorney are strictly construed and are interpreted as giving only such authority as they confer expressly or by necessary implication has not been challenged (see per Latham CJ in Tobin v Broadbent (1947) 75 CLR 378 at 391). If there is a power of attorney to do a particular act followed by general words, those general words are not to be extended beyond what is necessary for doing that particular act for which the power of attorney is given (per the Lord Chancellor, Lord Campbell, in Perry v Holl (1860) 2 De G F & J 38 at 48 (45 ER at p 540)).
Section 32(1) of the Powers of Attorney Act (1998) (Qld) provides in relation to enduring powers of attorney:-
“32(1) By an ‘enduring power of attorney’ an adult (principal) may –
(a)authorise 1 or more other persons who are eligible attorneys (attorneys) to do anything in relation to 1 or more financial matters or personal matters for the principal that the principal could lawfully do by an attorney if the adult had capacity for the matter when the power is exercised; and
(b)provide terms or information about exercising the power.”
Section 77 of the Powers of Attorney Act (1998) (Qld) provides:-
“77To the extent an enduring document does not state otherwise, an attorney is taken to have the maximum power that could be given to the attorney by the enduring document. …”
What constitutes a “financial matter” or a “personal matter” is to be determined by reference to the definitions of those expressions contained in Parts 1 and 2 of Schedule 2 to the Powers of Attorney Act 1998 (Qld). The only relevant question is whether or not the presentation to the Official Receiver of a debtor’s petition by a donee of a power of attorney against the donor of the power could be said to be within the purview of a power “to do anything in relation to [a] financial matter”. In this regard “financial matter” is relevantly defined as follows:-
“A financial matter, for a principal, is a matter relating to the principal’s financial or property matters, including, for example, a matter relating to 1 or more of the following –
…
(b) paying the principal’s debts, …
…
(p) a legal matter relating to the principal’s financial or property matters;
…”In Part 3 of Schedule 2 “legal matter” is defined as follows:-
“A legal matter, for a principal, includes a matter relating to –
(a)use of legal services to obtain information about the principal’s legal rights; and
(b) use of legal services to undertake a transaction; and
(c)use of legal services to bring or defend a proceeding before a court, tribunal or other entity, including an application under the Succession Act 1981, part 4 or an application for compensation arising from a compulsory acquisition; and
(d)bringing or defending a proceeding, including settling a claim, whether before or after the start of a proceeding.”
Whilst the definition of “financial matter” sets out in 16 separate paragraphs matters by way of “example” which follow the word “including” and the definition of “legal matter” is expressed in an inclusive form, I do not consider that the presentation of a debtor’s petition which, if accepted, would affect the status of a principal comes within the power of an attorney under an enduring power of attorney within the meaning of the Power of Attorneys Act 1998 (Qld), given the restrictive approach which is to be adopted in relation to the construction of powers of attorney and notwithstanding the terms of s 77. In my opinion s 77 does no more than ensure that an enduring power of attorney will be as wide as s 32(1)(a) would allow in the absence of terms within the power restricting its scope. I do not consider presenting a debtor’s petition to be something in relation to a matter or legal matter relating to the principal’s financial or property matters within the meaning of the Powers of Attorney Act 1998 (Qld).
Turning now to the question of whether s 55(3A) of the Act can be satisfied by the Official Receiver giving the information prescribed by the Regulations to the attorney of the debtor, I am of the opinion that it cannot. For the reasons indicated by me in respect of the first question, I see the obligation set out in s 55(3A) as one which the Official Receiver can discharge by dealing with the debtor personally who must then proceed, if he wishes to present a debtor’s petition against himself, by providing a signed acknowledgment that he has received and read the prescribed information.
The next question is, what consequences flow from the failure by the Official Receiver to comply with s 55(3A) of the Act before accepting the debtor’s petition. It is appropriate to observe that in Division 2A of Part IV of the Act, which deals with the giving by a debtor of a declaration of intention to present a debtor’s petition, a provision similar to s 55(3A) is included (see s 54D(1)). However, unlike s 55(3A), s 54D also contains a provision dealing with the consequences of non compliance with s 54D(1). It provides as follows:-
“54D(1)Before accepting a declaration presented by a debtor under section 54A, the Official Receiver must give the debtor the information prescribed by the regulations.
(2)A contravention of subsection (1) does not affect the validity of the Official Receiver’s acceptance under section 54C of a declaration presented under section 54A”.
Given the absence in s 55 of a provision similar to s 54D(2) after s 55(3A) it would seem that the legislature intended non compliance with s 55(3A) to render invalid any purported acceptance of a debtor’s petition under s 55(4A) thereafter. A contrary view can be advanced by reference to s 55(7) of the Act which spells out the consequences of a contravention of s 55(5A), (6) or (6A) of the Act. Those sections, of course, impose restraints on the presentation of debtor’s petitions whereas s 55(3A) imposes a restraint upon the acceptance by the Official Receiver of a debtor’s petition.
Non compliance by the Official Receiver with s 55(3A) begs the question as to whether the procedure for the acceptance of debtors’ petitions involves “Proceedings under this Act” within the meaning of s 306(1) and further whether non compliance with s 55(3A) could be seen to be “a formal defect or an irregularity”.
In my opinion the administrative task of accepting a petition does not involve proceedings under the Act within the meaning of s 306(1). Furthermore, non-compliance with s 55(3A) goes to the very substance of the matter. Compliance with s 55(3A) is a condition precedent prescribed by the Act to a debtor becoming bankrupt under s 55(4A) of the Act (see Donnelly v Edelsten (1992) 34 FCR 556 at 562 – 3. Such a non-compliance could not be saved by s 306(1)).
Notwithstanding the manner in which non-compliance with ss 55(5A), 55(6) and 55(6A) is dealt with, a legislative purpose can nevertheless be discerned that a failure to comply with s 55(3A) should invalidate any subsequent purported acceptance of a debtor’s petition under s 55(4A) of the Act. This is re-inforced by reference to Regulation 4.11(3) and Form 6.
For the reasons indicated above I am of the opinion that a signed acknowledgment that a debtor has received and read the prescribed information mentioned in Regulation 4.11(1) cannot be given by an attorney on behalf of a debtor. Furthermore, I am of the opinion that, having regard to the terms of the constraint imposed by Regulation 4.11(3) of the Regulations, any purported acceptance by the Official Receiver of a debtor’s petition under s 55(4A) of the Act would be invalid in circumstances where such acceptance would involve a contravention of Regulation 4.11(3). The limited circumstances in which under the Regulations a person other than the debtor may sign the requisite acknowledgement under Regulation 4.11(3) are clearly identified in Regulation 4.11(5) and such circumstances do not apply in the present case.
In my opinion it is within the power of the Court to review the acceptance by the Official Receiver of a debtor’s petition under s 55(4A) as a review of “an act done by an Official Receiver” under s 15(5).
For the reasons given above I consider that the Applicant should be granted relief under the Amended Application along the lines sought by counsel for the Applicant during the course of his oral submissions to the effect that the purported acceptance by the Official Receiver of the debtor’s petition presented against Mr McCormick Snr was null and void.
In relation to relief under s 153B of the Act it is clear that even if a case for annulment is made out, the Court still retains a discretion as to whether an order annulling a bankruptcy should be made. In deciding whether to exercise the discretion the Court must have regard both to the interests of the various parties and to the interests of the public. Neither is paramount over the other (per Wilcox, Burchett and Hill JJ in Boral Johns Perry Industries Pty Limited v Piccardi [1989] FCA 346; see also Re Finn Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 494 and Layton v Westpac Banking Corporation (2000) 181 ALR 603 at 606 [17]). Given my finding that the purported acceptance by the Official Receiver of the debtor’s petition was void and a nullity and that there have been substantive failures to comply with the Act both in respect of the presentation of the petition and also its acceptance, it seems to me that an order should also be made under s 153B formally annulling the bankruptcy (see s 55(8)(b)), although such an order may strictly speaking be unnecessary.
Turning to the question of costs, the Applicant’s position is that if it is successful it would seek costs against the First and Third Respondents. Its position in relation to seeking an order for costs against the Third Respondent is coloured by the fact that the Third Respondent has sought costs against the Applicant, should the Application fail and also by the fact that, whilst in his written submissions the Third Respondent indicated that he desired to put submissions with a view to assisting the Court and not in an adversarial role, nevertheless he did take a part in the proceedings in circumstances where he could simply have submitted to such orders as the Court thought fit except in respect of costs. The Second Respondent does not seek an order for costs. The supporting creditor, Macquarie Leasing Pty Limited, does not seek an order in respect of costs regardless of the outcome and the Applicant does not seek any order for costs against Macquarie Leasing Pty Limited.
Whilst the Third Respondent’s involvement in the matter may have prolonged the hearing, it did not do so to an undue extent. Even though the Third Respondent expressed its submissions as being directed at assisting the Court, my observation is that a somewhat more partisan approach was taken directed at the relief sought being denied to the Applicant. Nevertheless, the submissions of counsel for the Third Respondent were of assistance in the ultimate resolution of the matter. In the circumstances, I do not consider that any order for costs should be made against the Third Respondent.
However, it is clear that, but for the action taken by Mr McCormick Jnr, these proceedings would have been unnecessary. True it is that he may have been led into error by the response given by the Second Respondent to the Third Respondent’s enquiry as to whether a debtor’s petition could be presented by an agent for the debtor. Nevertheless, on the findings which I have made, Mr McCormick Jnr should never have presented the debtor’s petition which he did. Accordingly, I consider that an order for costs should be made in the Applicant’s favour against Mr McCormick Jnr.
I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Graham.
Associate:
Dated: 28 July 2005
Counsel for the Applicant:
J K Chippendall
Solicitor for the Applicant:
M D Nikolaidis & Co
The First Respondent:
No appearance
Solicitor for the Second Respondent:
Australian Government Solicitor (M H Murray)
Counsel for the Third Respondent
B J Skinner
Solicitor for the Third Respondent
Ledlin Partners
Counsel for the Supporting Creditor
E K Glover
Solicitor for the Supporting Creditor
Douros Lawyers
Date of Hearing:
20 July 2005
Date of Judgment:
28 July 2005
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