Re Cavallaro, Antonietta & Anor Ex Parte Composite Buyers Ltd

[1996] FCA 344

CATCHWORDS

BANKRUPTCY - bankruptcy notice requiring payment of sum "and no more" in para.(a) but omitted from para.(b) - whether formal defect - whether cured by s.306(1).

Bankruptcy Act 1966, s.306(1)

Re The Bankruptcy Act 1966; Ex parte Commercial Banking Co. of   Sydney Ltd. (1979) 23 ALR 522 - followed
Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71 - followed

RE ANTONIETTA CAVALLARO & ANOR;  EX PARTE COMPOSITE BUYERS LIMITED

No. NP 2167 of 1995

BEAUMONT J.

SYDNEY

30 APRIL 1996

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
GENERAL DIVISION                  ) No. NP2167 of 1995
  )
BANKRUPTCY DISTRICT               )
  )
OF THE STATE OF NEW SOUTH WALES    )

RE:ANTONIETTA CAVALLARO AND MARIA GRAZIA CAVALLARO

EX PARTE:COMPOSITE BUYERS LIMITED

CORAM:  BEAUMONT J.
PLACE:  SYDNEY
DATE:   30 APRIL 1996

MINUTES OF ORDER

THE COURT ORDERS THAT:

1. A sequestration order be made against the estate of the debtors.

1. The petitioning creditor's costs, including reserved costs, should be taxed and paid in accordance with the Bankruptcy Act 1966.

Note:     Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA  )
  )
GENERAL DIVISION                  )      No.NP2167 of 1995
  )
BANKRUPTCY DISTRICT               )
  )
OF THE STATE OF NEW SOUTH WALES    )

RE:ANTONIETTA CAVALLARO AND MARIA GRAZIA CAVALLARO

EX PARTE:COMPOSITE BUYERS LIMITED

CORAM:  BEAUMONT J.

DATE:   30 APRIL 1996

REASONS FOR JUDGMENT

In this creditor's petition, there is in evidence a bankruptcy notice issued by the Registrar, relevantly, in the following terms:

"TO:ANTONIETTA CAVALLARO AND MARIA GRAZIA CAVALLARO

OF: 40 CROYDON ROAD HURSTVILLE NSW 2220

WHEREAS:COMPOSITE BUYERS LIMITED A.C.N. 004 201 343 OF:     3 MOOREBANK AVENUE MOOREBANK NSW 2170

(hereinafter referred to as `the judgment creditor') has claimed that the sum of $57,908.88 and no more is due by you to it being $52,123.20 the amount due under a final judgment obtained by it against you in the District Court at SYDNEY on 4 October 1994 being a judgment the execution of which has not been stayed plus interest accruing on the judgment from 5 October 1994 which at 25 September, 1995 amounts to $5,785.68 as set out in the attached Schedule.

THEREFORE TAKE NOTICE that within fourteen (14) days after service of this notice on you, excluding the day on which this notice is served on you, you are required:-

(a)to pay the sum of $57908.88 and no more so claimed by the judgment creditor to the Registrar, District Court of New South Wales;  OR  [emphasis added]

(b)to secure the payment of the sum referred to in the last preceding paragraph to the satisfaction of the Federal Court of Australia or the judgment creditor or compound the sum so specified to the satisfaction of the judgment creditor.

AND FURTHER TAKE NOTICE that if, within the period set out above, you fail either to comply with either of the abovementioned requirements of this notice or to satisfy the Federal Court of Australia that you have a counter-claim, set-off or cross-demand equal to or exceeding the sum specified in paragraph (a) of this notice, being a counter-claim, set-off or cross demand that you could not have set up in the action in which the judgment was obtained, you will have committed an act of bankruptcy on which bankruptcy proceedings may be taken against you.

DATED thisday of   3 OCT   1995

..."

Notably, whilst in para.(a) of the notice, the words "and no more" are used, those words do not appear in para.(b). 

In Re The Bankruptcy Act 1966; Ex parte Commercial Banking Co. of Sydney Ltd (1979) 23 ALR 522, Lockhart J dealt with a similar situation involving the use of the words "and no more" in bankruptcy notices. In that case, his Honour entertained an application under s.145 of the Bankruptcy Act 1966 ("the Act") for the review of a refusal by the Registrar in Bankruptcy to issue bankruptcy notices containing the words "and no more" appearing after the total amount claimed in two places in the notices. The Registrar had considered it undesirable to issue such notices unless the amount of the judgment debt claimed in the notice was less than the original
judgment.  As the report of that case shows, the words "and no more" were included in an attempt to overcome practical difficulties associated with the issue of bankruptcy notices in terms of the delay between the date of application for the issue of a bankruptcy notice and the date on which it was ultimately issued.  

Lockhart J upheld the decision of the Registrar and went on to hold that the creditor, a bank, was entitled to the issue by the Registrar of bankruptcy notices containing the words "and no more" in the two places sought by the creditor, but that there ought to be consistency between paras. (a) and (b) and that the words "and no more" ought also to appear in para.(b).  His Honour said (at 529):

"I asked Mr Hely [for the bank] why the bank had not sought to include the words `and no more' in para (b) of the notice after the words `the last preceding paragraph' so that (b) would read: `to secure the payment of the sum referred to in the last preceding paragraph and no more to the satisfaction' etc.  ...

His response was that paras (a) and (b) were alternatives and that the additional words were not necessary in para (b).  I do not accept that this is so.  There ought to be consistency between paras (a) and (b) and the introductory paragraph of the bankruptcy notice.  If the words `and no more' are to appear at all, they ought to appear in the same sense throughout the document in all relevant places.

The only matter I wish to add is that the problem confronting the bank and other judgment creditors is a real one.  The bank is entitled to the issue of a bankruptcy notice which includes a claim for interest.  The bank runs the risk that if there is an understatement in the bankruptcy notice of the sum claimed as interest, the notice may be vitiated or, at best, entitled to the benefit of the ameliorating effect of s.306.  The bank should not be placed in this position.  Nor should the Registrar, especially as the bankruptcy notice is his document.

For these reasons, in my opinion the bank is entitled to the issue by the Registrar of bankruptcy notices containing the words `and no more' in the two places sought by the bank and in para (b) where I have indicated.  The bankruptcy notices ought not to be issued by the Registrar in the form sought by the bank without the addition of the appropriate words to para (b).  Hence I am not prepared to set aside the decision of the Registrar as sought by the bank, as that would be tantamount to approving the issue of bankruptcy notices in an incomplete, and perhaps misleading, form.  It must be remembered that the decision of the Registrar under review is his refusal to issue bankruptcy notices in the form of the particular documents submitted by the bank and not otherwise.

The Registrar will, of course, be mindful of what I have said and will not refuse to issue bankruptcy notices, including those under review, if they are in accordance with the document annexed to these reasons for judgment with the addition of the words `and no more' in para (b)."

With respect, I agree with his Honour's reasons and conclusions.  It follows, in my view, that there was a formal defect in the present notice. 

However, on behalf of the petitioning creditor in the present matter, it is submitted that this defect is cured by the operation of s.306(1) of the Act. For this purpose, reliance is placed upon the observations by Mason CJ, Wilson, Brennan and Gaudron JJ in Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71. Their Honours there said (at 81):

"Section 306(1) operates automatically unless `the court ... 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'.   In the present case no evidence was presented and no claim was made of actual injustice. There was thus no basis upon which an opinion could be formed to deny the operation of s.306(1)."

In the present case, there is and has been, no appearance on behalf of the debtor, and the petition is also supported by another substantial creditor.  In those circumstances, in my view, this is a case which falls within the description given in Crowl's case, i.e., it is one where no evidence has been presented, and no claim made of actual injustice. In those special circumstances, I am of the view that s.306(1) of the Act operates, with the result that the notice should be treated as valid.

There being no other matters upon which the debtor could base an opposition to the creditor's petition, I order that a sequestration order be made against the debtors' estate and that the petitioning creditor's costs, including reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Beaumont.

Associate

Dated:  3 May 1996

Counsel and Solicitors      Sally Nash of Nash & Co

for Creditor:

Date of hearing:            30 April 1996     

Date Judgment delivered:         30 April 1996