Re Campbell, Keith Malcolm Ex Parte Metway Leasing Ltd

[1996] FCA 625

IN THE FEDERAL COURT OF AUSTRALIA     )
GENERAL DIVISION  )

BANKRUPTCY DISTRICT OF THE           )  No. NP 414 of 1996
STATE OF NEW SOUTH WALES                  )

RE:KEITH MALCOLM CAMPBELL

Debtor

EX PARTE:METWAY LEASING LIMITED

Creditor

CORAM:    HILL J
PLACE:    SYDNEY
DATED:    6 JUNE 1996

REASONS FOR JUDGMENT

Metway Leasing Limited ("Metway Leasing") petitions the Court that an order be made for the sequestration of the estate of Mr Campbell, the debtor.  No notice of opposition was lodged to the petition and indeed, when an application for an adjournment of the matter was before me on 4 June 1996 it was indicated that the matter would be in short compass and accordingly, I set it down for this morning.  Although some time was lost for reasons having nothing to do with the parties or, for that matter, the Court, the half hour or so available then was not sufficient to deal with the matter and in the meantime, a further two and a quarter hours of hearing have taken place.

A number of matters have been raised by counsel for the debtor and it is perhaps convenient to deal with each of them separately.  The first matter raised concerned the authority of Messrs Tindall and Aylmer to sign the petition on behalf of Metway Leasing.  That authority can be traced to a power of attorney dated 1 August 1994 that was in evidence.  For the appointments to be valid, it is necessary that both Mr Aylmer and Mr Tindall be "persons for the time being who hold in Metway Bank Limited" a position which is either a Level II or Level III attorney.  (References to "the Bank" in the power of attorney are to Metway Bank Limited ("Metway Bank")).

Before me also was a power of attorney of Metway Bank appointing persons who hold in that bank certain positions as attorneys with respect to the various levels.  Also before me were certificates purported to by signed pursuant to cl 3 of the Metway Leasing power of attorney, such certificates being conclusive evidence that the person holds the relevant position.  Similar certifications were tendered in evidence in respect of Metway Bank.

The combination of these documents show to my satisfaction that Messrs Aylmer and Tindall were appointed by Metway Bank as Level II attorneys and were thus qualified to be appointed and were appointed as Level II attorneys of Metway Leasing.  Insofar as there was an argument that, as a matter of construction the words I have quoted require the attorneys to be actual employees of Metway Bank, they have each deposed that they are.     There has been no evidence to the contrary nor any cross-examination to that effect.  I am therefore of the view that Metway Bank has satisfied me that both Messrs Aylmer and Tindall were authorised as attorneys of the petitioning creditor to file the petition and sign it.

The next point advanced arose out of s47 of the Bankruptcy Act 1966 (Cth) ("the Act"). That section requires that a creditor's petition is to be verified by the affidavit of a person who has knowledge of the facts. The petition was indeed verified by Mr Aylmer and I am satisfied that he had knowledge of all the relevant facts, having regard to his position with both Metway Bank and Metway Leasing as Collection Manager. However, the argument is that under the power of attorney such an affidavit could only be given jointly by two attorneys. The argument is put that no other person could bind Metway Leasing as a result of the form of the power of attorney. With respect, that argument is, in my view, not tenable either as a matter of construction of the power of attorney, nor is it tenable as a matter of construction of s47. That section is not concerned with whether the person who verifies the petition is or is not an attorney, or otherwise authorised by the petitioning creditor to file the affidavit, but rather the ability of that person to depose as to the correctness of the facts having regard to that particular person's knowledge of them. In my view, there is no substance to the submission.

The next matter raised which was of slightly more substance, concerned the bankruptcy notice which indicates that the petitioning creditor has a company number ACN 002 977 237.  The petition and documents lodged in support of it, on the other hand, refers to the company number of the petitioning creditors as being ACN 835 875 90.  It is conceded that that number is not the correct number but the number on the bankruptcy notice was.

Application is therefore brought on behalf of the petitioning creditor to amend the petition to alter the company number shown on it to the correct company number as shown on the bankruptcy notice. Section 219(2) of the Corporations Law requires a corporation registered in the local law to display documents with the appropriate corporation number.  Failure so to do is an offence.  The law distinguishes between the name of the company and the registration number.  A company can, if it desires, include the registration number as part of its name, but with the exception of such a case, the registration number is distinct from the company name.

Nothing in the law seeks to render in any way invalid the public document upon which the corporation number is not properly stated. In my view, and contrary to the submission on the part of the debtor, the mistake in using a wrong number is not a material matter or a matter of substance, but rather is a matter within the Court's power to allow amendments in s33 of the Act. In my view the incorrect company number, in the present circumstances where Mr Campbell has not in any sense been misled and has raised the matter only at the last moment, is a formal defect or irregularity falling within s306 of the Act, and in accordance with r195 of the Bankruptcy Rules, does not render the petition void. I am not of the opinion that a substantial injustice has been caused by the defect or irregularity which could not be remedied by an order.

Accordingly, I give leave to the petitioning creditor to amend the petition by substituting for the number appearing on it (ie ACN 835 875 90) the number ACN 002 977 237.  I note also that there appears to be an error shown in the registered office of Metway Leasing which is not a New South Wales corporation but a Queensland corporation, and I give leave to the petitioning creditor to further amend the petition to show the correct address of 36 Wickham Terrace, Brisbane, in place of the address, 1 Bligh Street, Sydney.

The next series of matters were matters said to go to the exercise of my discretion pursuant to s52(2) of the Act. I shall deal shortly with these matters, however in doing so I note that: no matter in opposition to the petition has been put; no evidence has been led on the part of the debtor contradicting any matter in the petition; and although various matters were put to me in an application for an adjournment, it is not proper that those matters be considered as evidence before me in the actual petition proceedings.

The first matter to which my attention is drawn arose out of cross‑examination of Mr Aylmer.  The petition indicates that at its date the petitioning creditor held security over a property at Baulkham Hills estimated to be worth $180,000, subject to a first mortgage of $172,000.  It seems that this property has been the subject of a sale, but that that sale has not been completed.  The sale was for a consideration considerably in excess of $180,000, although not in an amount sufficient in any way to eliminate the debt.

Secondly, reference is made to a property, "Metro Units" about which Mr Aylmer was cross-examined.  It seems that this property is owned by a company which is jointly a debtor with Mr Campbell.  Mr Aylmer said that Metway Leasing had no security interest in the property but had applied for the appointment of a receiver of the property.  I assume that appointment had been successful.  There seems to have been some suggestion that in proceedings in the Supreme Court, counsel had indicated to the Court that there was such a security.  Mr Aylmer denied that there was and said that relatives of Mr Campbell claimed to be entitled to the
proceeds after presumably payment of any first mortgagee not being Metway Leasing.

The evidence before me on this matter is so nebulous that it is difficult for me to do more than note the facts which I have indicated.  In my view, they do not suggest in any way that the moneys said to be owing under the petition are not owing, nor do they suggest that I should be satisfied that Metway Leasing had some form of security interest which it would be required to value to comply with the provisions of s44(3).

I am asked to take into account Mr Campbell's age; his occupation; matters such as that he might cease to be a building licensee; that there is an appeal against the judgment which forms the basis of the bankruptcy notice; and the interest of creditors as a whole.  The difficulty I have is I do not know Mr Campbell's age (although I do not doubt that he is not a young man) and I have no evidence before me of any of the other matters to which reference has been made.  Certainly there is nothing before me as to the interest of creditors as a whole which would have any effect on my exercise of discretion, nor do I have before me any material which would suggest that Mr Campbell was solvent, a matter which I would obviously have taken into account in the exercise of discretion.

I think I have dealt with each of the matters which has been raised by counsel.  On the evidence before me I am satisfied of the matters of which s52 requires proof.  Particularly, I am satisfied that the debtor has committed an act of bankruptcy as alleged in the petition.

I would accordingly make a sequestration order against the estate of the debtor.  I have been requested by the debtor to appoint as a trustee a named person of his own choosing.  No evidence of the consent of that person has been filed and no evidence has been submitted of any matters which would suggest that the present case is in any way out of the ordinary.  The ordinary principle of the legislation is that the Official Trustee be appointed, which I accordingly order.

Where private trustees have been appointed it is at the instance of the creditor, not at the instance of the debtor.  It is said that Mr Rogers, the trustee, has done a considerable amount of work in the matter.  I am not unmindful, even if there is no evidence directly before me, that Mr Rogers has been a trustee of a proposed scheme of arrangement.  But that of itself is not a reason why the debtor should have the ability to ensure that the trustee of his own choosing is appointed.

If a meeting of creditors agrees to the removal and appointment of a new trustee, then that is another matter; but it is not a matter for the debtor, it is a matter for the creditors acting in a meeting to determine.  Therefore, I reject the application.

As I indicated, I have made a sequestration order against the estate of the debtor. I order that the costs be taxed and paid according to the Act. Those costs are to include the costs of adjournment and the adjournment application on 4 June 1996. I direct the draft of the order be delivered to the Registrar within seven days in accordance with the Federal Court Rules.  I direct that there be no need for the petitioning creditor to serve a copy of the amended petition upon the debtor, but the same should be filed within seven days.

I certify that this and the
preceding eight (8) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Justice Hill.

Associate:

Date: 

Counsel and Solicitors      J Dupree instructed by

for Debtor:Kenneally & Co

Counsel and Solicitors      J Johnson instructed by

for Petitioning Creditor:    Pigott Stinson Stuart & Thom

Date of Hearing:            6 June 1996

Date Judgment Delivered:         6 June 1996