Re Lindsay-Field, T. Ex Parte Australian Feed Company P/L

[1992] FCA 991

Re: TIM LINDSAY-FIELD
Ex Parte: AUSTRALIAN FEED COMPANY PTY LIMITED
No. P1854 of 1991
FED No. 991
Number of pages - 5
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
Einfeld J.(1)

CATCHWORDS

Bankruptcy - judgment creditor obtained judgment for goods sold and delivered after assigning debt to purchaser of judgment creditor's business - purchaser later changed its name to that of judgment creditor and issued bankruptcy notice and petition - neither bankruptcy notice nor petition referred to assignment of debt or differentiated which company had provided the relevant goods - petition executed by company seal of petitioning creditor not judgment creditor - whether bankruptcy notice and petition misleading as to identity of judgment creditor and petitioning creditor - whether leave of District Court necessary to issue bankruptcy notice because of assignment - whether equitable assignee can present petition

Bankruptcy Act 1966 s.40(1)(g), 40(3)(a), 306

District Court Act s.107

District Court Rules part 34

McIntosh v Shashoua (1931) 46 CLR 494

Re Hansen Ex parte Hansen (1984) 4 FCR 590

Re Crisafulli Ex parte National Commercial Banking Corporation of Australia Limited (1985) 11 FCR 272

Anthony Walker v Noble Einsiedel Pty Ltd Full Court of the Federal Court, Sweeney, Burchett and Einfeld JJ., unreported 15 October 1992

Re Paravicini (1931) 3 ABC 15

Re Richards Ex parte Sommers (1947) 14 ABC 112

Ex parte Woodall Re Woodall (1884) 13 QBD 479

Re Macoun (1904) 2 KB 700

Re Morrissey (1899) 20 ALT 279

HEARING

SYDNEY

#DATE 24:12:1992

Counsel and solicitor : Mr S Roberts for Makinson
for the applicant/debtor and d'Apice

Solicitor for the : Mr J Lichtenberger
respondent/petitioning instructed by Tesoriero
creditor Henderson Cottler and Welch

ORDER

1. Petition dismissed.

2. Respondent to pay applicant's costs of the motion.
Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.

JUDGE1

EINFELD J. By motion dated 24 July 1992, the debtor applies to set aside the bankruptcy notice issued against him by the petitioning creditor, or to have the petition of 28 May 1991 dismissed. The debtor's assertion is that the petitioning creditor is not competent to take bankruptcy proceedings against him. The facts appear to be as follows:

1. Prior to 1 September 1989, a company bearing the name of the

petitioning creditor (the company) commenced proceedings against the debtor in the Gosford District Court.

2. On 1 September, the company assigned the debt to Pershore Pty

Limited as part of a sale of its business.

3. On 26 September, the company obtained judgment in the Gosford

District Court and Pershore changed its name to Australian Feed Company (Sales) Pty Ltd (Sales).

4. On 23 May or 14 June 1990, the company changed its name to Somac Pty Limited.

5. On 19 June Sales changed its name to that of the petitioning

creditor.

6. On 26 November the present bankruptcy notice was issued by the

petitioning creditor. It was served on 7 March 1991.

7. On 28 May 1991, the petitioning creditor presented its petition.

8. On 10 July 1991, the petitioning creditor changed its name to AFC

(Investments) Pty Limited (Investments).

9. Notice of the assignment was not given to the debtor and there is quite minimal evidence of the assignment agreement itself or the consideration given for it.

1. The debtor first submits that if there was a valid and effective assignment, it was necessary to obtain the leave of the District Court to execute the judgment debt: Ex parte Woodall Re Woodall (1884) 13 QBD 479; Re Richards Ex parte Sommers (1947) 14 ABC 112. Leave was not obtained and therefore the creditor is not entitled to issue the bankruptcy notice.

2. The debtor next argues that the petition is defective because it asserts the recovery of a judgment which the petitioning creditor itself did not recover. The consideration for the debt was stated to be goods sold and delivered by the petitioning creditor when in fact the debtor says they were sold and delivered by the company. At most these matters could be implied as the petition is not explicit in these regards. Moreover, the debtor argues that because the petition does not assert that the petitioning creditor had obtained by assignment the right to the money sought, the petition is therefore so confusing and inaccurate as to be incapable of formal amendment or curing.

3. In the event that the purported assignment was not effective, the debtor first argues that the company issued the bankruptcy notice and petition under a name it did not still have at the respective times of issue.

4. On the same question, Justice Beaumont said in Re Hansen Ex parte Hansen (1984) 4 FCR 590 at 594:
   

In my opinion, it is essential to the validity of a

bankruptcy notice that the judgment debtor be in no

reasonable doubt as to the identity of the judgment

creditor. In the present case, the judgment creditor was

identified by a name which it had abandoned some

considerable time previously. That name was quite different

from the name of the judgment creditor at the time of

issuing of the bankruptcy notice and the judgment debtor

could hardly be expected to connect the two corporate names.

The judgment debtor could thus have been misled as to the

identity of the party with whom he had to deal in order to

comply with the requirements of the bankruptcy notice. The

notice was accordingly defective.

1. In Re Crisafulli Ex parte National Commercial Banking Corporation of Australia Limited (1985) 11 FCR 272, Justice Toohey when a member of this Court said at 274 that it is the capacity of the bankruptcy notice to mislead the debtor to whom the notice is directed that matters, not some hypothetical debtor. See also Anthony Walker v Noble Einsiedel Pty Ltd (Full Court of the Federal Court, Sweeney, Burchett and Einfeld JJ., unreported 15 October 1992). The debtor says that he could reasonably have been misled as to the identity of the party whom he had to pay to comply with the bankruptcy notice.

2. Secondly the debtor says that the petition was not executed by the company in that the company seal was that of the petitioning creditor. The judgment creditor is not the petitioning creditor and thus the incorrect company executed the petition.

3. The petitioning creditor asserts that an equitable assignee can present a petition: McIntosh v Shashoua (1931) 46 CLR 494 at 504 (per Gavan Duffy C.J. and Dixon J.), 507 (Starke J.), 518 (McTiernan J.); Re Paravicini (1931) 3 ABC 15; Re Macoun (1904) 2 KB 700, Re Morrissey (1899) 20 ALT 279. The petitioning creditor says that it was such an equitable assignee. It did not need the leave of the District Court because a bankruptcy notice is not a writ of execution: see s.107 of the District Court Act and Part 34 of the District Court rules, and section 40(1)(g) of the Bankruptcy Act was complied with. See also s.40(3)(a) and McIntosh v Shashoua. The petitioning creditor suggests that the party entitled to issue the petition is correctly named but if a change is needed it would be to Investments. This is said to be a formal defect capable of cure by the use and application of section 306.

4. I think that there probably was an assignment of the debt but I do not think that McIntosh v Shashoua lays down a general principle that an equitable assignee can present a petition. Evatt J.. held to the contrary, and Gavan Duffy C.J. and Dixon J. expressed no opinion on the matter. Moreover, unlike in that case, this petition does not allege an entitlement by assignment and does not make clear that it is not the company which established a right to the judgment for the debt. The petitioning creditor could only have been entitled to do so by differentiating itself from the judgment creditor whereas in effect it held itself out to be one and the same entity, despite different company registration numbers. As such the petition is defective and confusing.

5. It is therefore not necessary to decide whether the leave of the District Court was necessary to issue the bankruptcy notice but nothing has been advanced to suggest that Woodall and Richards are not good law. It is difficult to imagine that section 40(1)(g) of the Bankruptcy Act does not include execution by way of bankruptcy notice.

6. The motion will be granted and the petition will be dismissed. As to costs, the debtor has already agreed to pay some costs of the petitioning creditor in connection with some earlier adjournments. Some adjournments sought by the debtor appear to have been for tactical rather than genuine reasons. On the other hand, the debtor has succeeded in the case overall. In the circumstances, I think that the just order would be that the petitioning creditor should only be required to pay the debtor's costs of the motion.