Re Henderson, N.B. & anor Ex parte A debtors petition

[1985] FCA 446

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CATCHWORDS c*'

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Bankruptcv Act - Debtor's petition - Reference by Registrar -

Formal defect or irregularity - Husband and wife both purported

petitioners under s.55 though wife simultaneously made bankrupt

on her separate petitlon under s.55 - Amendment.

Bankruptcv Act 1966, sections 55, 57, 306.

Federal Court Rules 6, 24, 195.

RE: NIGEL BRUCE HENDERSON and

MARLENE HENDERSON

EX PARTE: A DEBTOR'S PETITION

No. P. 974 of 1985

Burchett J.

Sydney

25 July, 1985

IN THE FEDERAL COURT OF AUSTRALIA ) )

BANKRUPTCY DISTRICT OF NEW SOUTH ) )

WALES AND THE AUSTRALIAN CAPITAL	)	No. P. 974 of 1985
)
TERRITORY	)

NIGEL BRUCE HENDERSON and

MARLENE HENDERSON

EX PARTE:

A DEBTOR'S PETITION

MINUTE OF ORDER

Judse makins order:	Burchett J.
Date order made:	25 July 1985
Where made:	Sydney
THE COURT DIRECTS:

The Registrar to accept the debtor's petition presented

herein insofar as it relates to the debtor Niqel Bruce

Henderson, and reserves liberty to the Official Receiver

to apply for a consolidation under 5.53.

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

IN THE FEDERAL COURT OF AUSTRALIA )

BANKRUPTCY DISTRICT OF NEW SOUTH

)

WALES AND THE AUSTRALIAN CAPITAL	)	No. P. 974 of 1985
)
TERRITORY	)

NIGEL BRUCE HENDERSON and

MARLENE HENDERSON

EX PARTE:

A DEBTOR ' S PETITION

REASONS FOR JUDGMENT

BURCHETT J.

This is a reference by a registrar under s.55(4) of the

Bankruptcy Act, 1966. I should say at the outset that I think it

is entirely correct that any debtor's petition which, on the face

of it, raises a question of compliance, should be so referred.

That is what the Act envisages.

This reference arises in novel circumstances. Nigel

Bruce Henderson and Marlene Henderson, a husband and wife,

presented a debtor's petition pursuant to s.56 of the Act on 3

April 1985, in respect of a partnership consisting of themselves

and two others. The petition was referred to Beaumont J., who

held, upon the objection of the other two partners, that the

petition could not be entertained, since it was not presented by

L .

all or a ma~ority of the partners: re Henderson, unreported, 14

June 1985.

However, in the course of his judgment he said:

"Having conceded their insolvency, it is clear

that they should now become bankrupt ...

Although it was open to (scilicet, them) to

present their individual debtors' petitions

pursuant to s.55(1) of the Act, the petition

was purportedly presented pursuant to s.56 of

the Act..

the Registrar to accept or amend a petition where less than a majority of partners have presented it. It follows that I must direct the Registrar not to accept the petition.	In my view, the Court has no power to direct the entitlement of the debtors to present a
petition against their own partnership (this
refers to aseparate partnership) under
s.56(1) or otherwise to proceed under 5.55,
if appropriate. "

The debtors, in response to this invitation, returned to the

Registry once more with fresh sets of forms. One set complied

with the requirements of s.55 and resulted in the bankruptcy, on

her own petition, of Mrs. Henderson. But the other set of forms,

for some reason which is not clear to me, was completed by both

Mr. and Mrs. Henderson, they utilising documents, the formal

parts of which were as prescribed under s.55.

There is authority, although laymen could not be

expected to know this, which prevents a joint petition being

presented under s.55: re Pepper (1969) 14 FLR 282. Hence, this

3 .

reference to me.

Since the decision in re Pepper, the Act has been

amended to provide, by 5.57. for the joint presentation of a

petition by joint debtors who are not in partnership with one

another. Accordingly, the debtors were strictly entitled to

present a single petition jointly, being as the documents

indicated, joint debtors.

The Act does not state that a petition under 5.55, s.56

or s .57 shall nominate the particular section, though it daes

state that the petition shall in each case be in accordance with

the prescribed form. “Prescribed“, by 5.5, “means prescribed by

this Act or by rules under this Act”. Forms are in fact

prescribed by rule 24, which must be read with rule 4(4).

By rule 6(1) it is provided:

“Strict compliance with the forms in Schedule

1 is not necessary and substantial

compliance, or such compliance as the special

circumstances of a particular case allow, is

sufficient” .

Rule 24 is to be found in part I1 of the rules, headed

“Proceedings in Connexion with Bankruptcy“. Rule 195 provides:

“(1)	Subject to sub-rule (21 , non-compliance with these Rules does not render a
proceeding void unless the Court so
directs.

4.

( 2 ) Where the provisions of these Rules

have not been complied with in relation

to a proceeding -

(a)	the proceeding may be set aside,
either wholly or in part, as

irregular, or may be amended or

otherwise dealt with in such
manner and upon such terms as the Court thinks fit; or
(b)	the Court may, upon such terms as
the Court thinks fit, relieve a
party from the consequences of non-compliance with these Rules."

Sections 55, 56 and 57 are in part IV of the Act, which

is headed "Proceedings in Connexion with Bankruptcy". Section

306(1) of the Act provides:

'"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."

Power to allow "the amendment of any written process,

proceeding or notice under this Act" is also given by 5.33.

In my opinion, since 5.57 was enacted, it cannot be said

that the mere joining of both debtors in the one petition strikes

it with Invalidity. It may be valid under that section.

The naming correctly of the section, which in law is the

source of authority for lodgment of the petition is not

5.

essential, being a formal matter, not decisive as to substantial

compliance. Sections 55, 56 and 57, although they command

accordance with prescribed forms, contemplate that a petition

which appears not to comply with the command may yet be directed

by the Court to be accepted by the Registrar. In my opinion,

that feature of the provisions for debtors' bankruptcies, m

combination with the sections and rules to which I have referred,

lndlcates the legislature intended, when referrmg to a form to

be prescribed by the rules, to incorporate in the statutory

scheme the same consequences as would flow, in respect of other

proceedings, from formal defects or irregularities, and not to

set up a juridical obstacle course with rules of unique rigidlty.

There is no doubt in the present case that Mrs.

Henderson, having become bankrupt on a separate petition,

simultaneously lodged by her, is now immune from any operation of

the pe'tition under consideration: Clvne -v- Deputy Commissioner

of Taxation (No. 3) (1984) 58 ALJR 398. The position is

distinguishable from that in re Pepper where, under the Act as it

then stood, the petition could not be accepted as that of two

petitioners, and it was not possible to give effect to the

petition as that of one debtor, there b mg no ratlonal ground of

selection of one rather than the other.

II

As the present petition, if it is to have effect, can

only do so in respect of Mr. Henderson, who on the material

before me both desires to become bankrupt and is in a situation

6 .

where his bankruptcy seems entirely appropriate, there will be no

injustice in applying the dispensatory provisions earlier

referred to in order to permit the petition to be operative. I

think the addition of the wife's name in a petition which cannot

affect her status	is a formal defect which does not invalidate
the proceedings.

Mrs. Henderson has come to court, her husband being

unable to do so,	and I have given her leave to appear for him.
For herself, she	of course does not now desire to pursue the

~oint petition, and she has asked me, on her own and her

husband's behalf, to permit its amendment to delete from it her

name as a petitioner. I think I have power under s.33 and rule

195 to allow this amendment, and that it is appropriate to

exercise that power. Accordingly, I allow an amendment of the

petition to delete the name of Marlene Henderson as a petitioner.

So far as the accompanying statement of affairs is concerned,

although it introduces the name of the wife, Mrs. Henderson, I think it should be read as a statement of affairs applicable to

her husband. In this regard I have been assisted by comparing it

with that presented separately by Mrs. Henderson.

The case of re Shead (1954) 16 ABC 188 does not apply,

since there no statement of affairs at all was filed at the

relevant time. I think the statement of affairs here can also be

treated as defective only in formal respects, whlch in all the

circumstances should not be regarded as invalidatmg It.

7

I note that s.55(4A)(b)(i) applies and I give a

direction under s.55(4) to the Registrar to accept the petition

insofar as it relates to the debtor Nigel Bruce Henderson. I

give liberty to the Official Receiver to apply for consolidation

under s.53, should heconsider this advisable in the

circumstances.