Re Munro, D.C. Ex Parte Australia & New Zealand Banking Group Ltd

[1993] FCA 510

IN THE FEDERAL COURT OF AUSTRAL14	1 1
VICTORIA DISTRICT REGSTRY	1
\

No VP 1541 of 1992

RANKRUPTCY DIVISION

BETWEEN :  DAVID CHARtES NONRO

(Judgment Debtor)

EX PARTE:  AUSTRAI;IA h NEW ZEALAND
RANKING GROUP LIMITED
JA.C.N. 005 357 5221

(Judgment Creditor)

Place: Melbourne

Date

-- 21 April 1993

EX TEMPORE REASONS FOR JUDGMENT

Rvan J: The petitioning creditor, the Australia and New

Zealand Bank Limited ("the Bank"), seeks a sequestration order

.

against the estate of the debtor based on non-compliance with a bankruptcy notice which was served on 14 October 1992. The grounds of the debtor's opposition to the petition as amended by leave at the beginning of this hearing are:

at Melbourne on 17 August 1992 whereas the Creditor's

Petition at paragraph 2 thereof relies upon a "Judgment

. . . .

. . obtained in the Supreme Court at Melbourne on 17 August 1992" and "a guarantee and indemnity of the

obligations of Hydra Genetics & Pastoral Pty Ltd . . . . . " .

It is submitted that the Creditor's Petition is substantially misleading. The Judgment obtained in the Supreme Court of Victoria was a Consent Order, paragraph 2 of which was in the following terms:

1.   The person executing the Petition on behalf of the Petitioning Creditor was not authorized to do so by the Petitioning Creditor.

2.    The statements of the Deponent in the Affidavit of Truth of Statements in paragraphs 1, 2 and 3 of Petition and Verifying Execution are disputed by the Judgment Debtor.

1. That the Bankruptcy Notice is not in the prescribed form pursuant to Section 41(l)(a) of the Bankruptcy Act 1966.

4.   That the Creditor's Petition is at variance with the Bankruptcy Notice and relies upon an act that does not constitute an act of bankruptcy and is misleading. The Bankruptcy Notice purports to rely on an unsatisfied Final Judgment obtained in the Supreme Court of Victoria

"There is Judgment for the Plaintiff in the sum of $905,766.40
against the Defendants."

There was not at any stage of the Supreme Court proceedings any determination on the respective rights of the parties pursuant to "a guarantee and indemnity of the obligations of Hydra Genetics & Pastoral Pty Ltd."

5.   The Bankruptcy Notice is misleading. The Debtor refers to the Affidavit of Warren Koopmans sworn 12 January 1992 in support of the Petition. At paragraph 1 of the Affidavit Koopmans deposes that:

"On 21 December 1992 I did duly search the proceedings filed wrth the Registrar under a Bankruptcy Notrce rssued on the Application of Australia & New Zealand Bankrng Group Lunited agarnst David Charles Munro and bearing date 6 October 1992."

It appears from the proceeding that the Judgment Creditor seeks to rely upon non-compliance with a Bankruptcy Notice bearing another date, namely 9 October 1992. It is submitted that the Judgment Debtor is capable of being misled as to which of possibly two Bankruptcy Notices the Creditor has sought to rely upon and as such is capable of misleading the Debtor.

6. Service of the Bankruptcy Notice is defective. The Court cannot be satisfied as to the requirements of service of the Bankruptcy Notice. I refer to paragraph 1 of the

Affidavit of Service sworn by Erwin Code and dated 18 December 1992. Such Affidavit does not make plain whether a Bankruptcy Notice issued on 9 October 1992 or 6 October 1992 was served. It was submitted that paragraph

3 of Code's Affidavit does not cure the anomaly.

I propose to deal separately and in order with each of those grounds of opposition.

(1) The petition was executed by Phillip Randolph Goodier,

the chief manager, retail banking, of the Bank. There was in

force, at the date of the execution of the petition, a power of attorney granted by the Bank, granting various powers to its chief manager, retail banking including:

23.   "To become and be a petitioning or detaining creditor for or on behalf of the Bank in any proceeding against any person indebted to the Bank which may be taken under or by virtue of any law or Act or Ordinance relating to bankruptcy or insolvency of persons or winding up or official management of Corporations or Companies."

24:	"To commence become party to and prosecute any actions suits or other proceedings at law or in equity insolvency bankruptcy or in liquidation winding up or offrc~al management or otherwise against any person, Company or corporation, in respect of any matter or thing relating to the business of the Bank and to do all acts necessary for any of such purposes. And to accept service of process, and to appear to and defend any actions suits or other proceedings connnenced or to be commenced against the Bank and either to proceed to judgment and execution or to be non suited or to suffer 1udgment to go by default in any such last mentioned actions suits or other proceedings or to compromise or abandon the same as shall seem most expedient or to apply or appeal to any Superior Court in reference to any such actions surts or proceedings as aforesaid and in relatlon thereto to give security or indemnity for costs or any other security or indemnity required by any Court to pay money into Court and to obtain payment of money lodged in Court."
27:	"For or in relation to all of any of tlre purposes or matters referred to and powers given in these presents to executr'sign or seal and deliver register file serve enter into and do all such conveyances leases mortgages reconveyances releases discharges transfers (either as Transferor or Transferee) memorrals caveats wrthdrawals of caveat consents surrenders assurances bonds undertakings guarantees indemnities applications contracts agreements declarations affidavrts recerpts deeds Instruments returns documents notrces acts and thrngs as the Attorney may deem necessary or proper. ..."
of power to an attorney contained in paragraph 23 to institute	It was argued on behalf of the debtor that the express grant
a petition apparently in his or her own name impliedly negatived the existence of the power in the attorney to sign a petition in which the Bank is named as a petitioning creditor.
I am unable to read any such implied limitation into the power
of attorney when examined as a whole. In my view, there is a discrete grant of power in each of the operative paragraphs of the power of attorney and it would be an impermissibly
restrictive construction to regard the express power to institute proceedings in the attorney's own name as importing a limitation on the power to sign a petition or other document in which the Bank itself is named as the petitioner or moving party.
In my view the power of attorney exhibited to M r Goodier's
affidavit conferred ample authority on him tc execute a creditor's petition in the name of the Bank. The power of attorney was clearly wide enough to make applicable to it the observations of a Full Court of this Court in Russell v The ANZ Banking Group Limited, (1987) 14 FCR 72 at 74, where the court observed:

"Before the learned trral judge, the respondent submitted that the grant of power to the branch manager, Mr Guthrey, to manage the branch "and do all things necessary or expedient to be done for properly and effrciently conducting t'h business of the Bank" at the branch was wrde enough to include a power to present a petition in bankruptcy. Hls Honour, &n an ex tempore judgment, held that these words when coupled with the rest of the document, particularly clause 5 which empowered the attorney "generally to do all acts and execute all deeds and other instruments whether of the nature of deeds or not relating to all or any of the matters aforesaid" were sufficient to authorise Mr Guthrey to sign the petitron on behalf of the respondent.

In our opin~on his Honour's finding was justifred upon the

material before him. In Re Anderson [l9091 VLR 465 at 468, his Honour, Cussen J thought similar wide words might be sufficient, though his decisron was based on a clause authorising the institution of "any action suit or other proceeding" see also Pepper v HcNiece (1941) 64 CLR 642."

(2) The second ground of objection went to the truth of paragraphs 1, 2 and 3 of the petition. Those grounds have not been pursued in the course of argument by M r Phillip Ginnane of Counsel who appeared for the debtor and I need not consider them further.

( 3 ) The third ground is that the bankruptcy notice is not in

the prescribed form. As developed in argument, this ground was really to the effect that the bankruptcy notice was not supported by a final judgment or order as required by s.40(1) (g) of the Bankruptcy Act.

I reject this contention. A copy of the judgment was annexed

to the bankruptcy notice and it clearly recited that an order

was made by consent which included the following terms:

"(2) there is judgment for the plaintiff in the sum of $905,766.40

against the defendants.

(3) the Counterclam of the Firstnamed Defendant ie dismissed.

(4) the Defendants pay the Plaintiff's costs of the claim and counter

claim on a solicitor and own client basis."

That in my view was a final judgment which finally disposed of

.

the rights of the parties in the action in which it was pronounced. See, for example, Bozson v Altrincham Urban District Council (1903) 1 KB 547 per Lord Alverstone, C. J. at

548.

divergence between paragraph 2 of the creditor's petition and	(4) The fourth ground of opposition is that there is a
the debt specified in the bankruptcy notice. Paragraph 2 of the petition is in these terms:

"The debtor is justly and truly indebted to the petitioner in the sum of $905,776.40 for moneys owing pursuant to a guarantee and indemnity of the obligations of Hydra Genetics and Pastoral Pty Ltd to the petitioner dated 28 October 1988, for which sum judgment was obtained in the Supreme Court at Melbourne on 17 August, 1992."

The following recital prefaced the demand in the bankruptcy notice:

"Whereas Aus t ra l i a and New Zealand Banking Group of 55 Col l ins street, Melbourne ("the judgment c red i to r " ) has claimed t h a t

t h e sum of $905,776.40 is due by you t o t h e judgment c r e d i t o r

under a f i n a l judgment obtained by t h e judgment c r e d i t o r

agains t you i n t h e Supreme Court of V ~ c t o r i a a t Melbourne on 17

August 1992, being a judgment t h e execution of which has been stayed but which is no longer stayed."

In my view this ground of opposition is misconceived. Paragraph 2 of a petition in the form prescribed as Form 5 in Schedule 1 to the Bankruptcy Rules is directed to satisfying the requirements in s.44(l)(a) and (b) of the Act. Those paragraphs provide:

"A c r e d i t o r ' s p e t i t i o n s h a l l not be presented agains t a debtor

unless

(a) t h e r e i s owing by t h e debtor t o t h e p e t i t i o n i n g c r e d ~ t o r a

debt t h a t amounts t o $1,500 o r two o r more deb t s t h a t amount i n

t h e aggregate t o $1,500 o r where two o r more c r e d i t o r s join i n

t h e p e t i t i o n t h e r e Is owing by t h e debtor t o t h e severa l

pe t i t ion rng	c r e d i t o r s	debts	t h a t	amount	i n	t h e	aggregate	t o
$1,500;

( b ) t h a t debt o r each of those debts a s t h e case may be

(i) is a l iquidated sum due a t law o r i p equi ty o r p a r t l y

a t law and par ty i n equity and

(ii)	is payable	e i t h e r	rmmediately	o r a t a	c e r t a i n f u t u r e
time."

By contrast, a bankruptcy notice, which is required to conform with Form 4 of Schedule 1 to the Bankruptcy Rules, requires

the judgment creditor to identify the sum due under a final	judgment obtained in a specified court on a specified day.
There obviously need be no coincidence between the judgment debt on which the bankruptcy notice is founded and the debt owing to a petitioning creditor at the date of issuing the petition. Accordingly, I reject the contentions based on this fourth ground of opposition.
(5) The fifth ground of opposition is that the bankruptcy

notice was misleading. The only bankruptcy notice in evidence in this matter clearly bears the date of 9 October, 1992. It is true that Mr Koopmans* affidavit verifying paragraph 4 of the petition speaks of a bankruptcy notice bearing date 6 October 1992, but, in the absence of evidence of the existence of any bankruptcy notice dated 6 October 1992, the reference by Mr Koopmans to that date is obviously an error as has been confirmed by the affidavit of Andrew John Green sworn 22 April

It cannot be suggested that the debtor was misled when he received the bankruptcy notice because that occurred on 14 October, 1992, before he had been served with Mr Koopmans' affidavit. Nor was Mr Koopmans' error perpetuated in the body of the petition itself so as to make that document capable of misleading the debtor.

On the question of whether the bankruptcy notice was capable of misleading the debtor, and the related question of whether there is acceptable evidence of service of the bankruptcy	notice, I adopt what was said by Northrop J in an unreported	judgment in R e walker; Ex parte Noble Einsiedel P t y Limited
( r ece i ve r and manager appointed) (16 April, 1992) in which his
Honour said, at page 8:

"In resolving this ground of objection one must have regard to the debtor who is a solicitor who was represented at the Supreme Court proceedings and at the taxing of the costs and who in fact had paid part of the judgment. The bankruptcy notice on its face is to some extent misleading by referring to two judgments but the view I have expressed does not mean that there were in fact two judgments. There was only one judgment both in law and in fact. But a debtor of the type of the respondent with the knowledge he had of the judgment would not,

in my opinion, be misled by the bankruptcy notice, particularly having regard to the particulars set out in the notice itself showing how the sum of $12,514.34 was arrived at."

His Honour's judgment in that case was affirmed by a Full Court of this Court comprising Sweeney, Burchett and Einfeld JJ in reasons for judgment given on 15 October 1992. In the course of his ex tempore judgment on that appeal, Einfeld J said at page 3:

"The appellant next says that the notice is capable of misleading but only if, as on the facts of this case must be the zpproach, the question rs examined from the standpoint Of a hypothetical debtor. He is forced to take this stance by reason of the fact that he is, himself, a practising solicitor. Not that all solicitors are or would be expected to be skilled at bankruptcy law but no doubt all solicitors who receive a bankruptcy notice and lack the requisite knowledge know where advrce might be sought in this connection and how therr rights mrght best be advanced and protected. No argument was therefore put that the appellant, the debtor in this case might, himself, have been misled.

I would reject the consequent formulation propounded by the appellant in this regard. I think zt un]ustrfiable at this time to accept a formulatron which would invalidate a notrce by which the particular debtor could not reasonably have been misled but which might have deceived another 'debtor who had no qualificatrons or background of a similar krnd."

Those observations can be paraphrased to apply even more strongly in the present case where the evidence discloses that the debtor is a practising barrister of considerable standing

ambiguity on the face of the bankruptcy notice or the	and where, as I have indicated, there is no discernible
petition.
(6) Similar considerations lead me to reject the final ground of objection that the service of the bankruptcy notice was defective. The affidavit of service of the bankruptcy notice was sworn on 18 December 1992 and has exhibited to it a copy of a bankruptcy notice dated 9 October 1992 which has not been
suggested to depart in any way from the original b-ptcy notice filed with the Deputy Registrar for the Bankruptcy District of the State of Victoria.
The only basis on which it has been suggested that there was some defect in the proof of service of the bankruptcy notice has been the reference, which I have held to be mistaken, by
M.r Koopmans in his subsequent affidavit to a bankruptcy notice
bearing date 9 October 1992. As I have already indicated, that error did not invalidate the service of the bankruptcy notice in the present case and, for the reasons which I have given, was not capable of, misleading, and, as I find on the evidence, did not mislead, the debtor.
For all of these reasons, the various grounds of opposition to the petition are rejected.
[After hearing submissions from Counsel as to costs, his Honour continued]:
I am not disposed to depart from the usual orders as to costs
which are made in these matters. It may be that matters to which M.r McLean of Counsel for the Bank has adverted could provide cogent reasons for making an order for taxation on a solicitor-client basis if the burden of such an order were to fall on the debtor. However, the likely consequence of any order as to costs is that the burden will fall on the estate of the debtor distributable between his various creditors, and

- l0 -

it would be inappropriate to make an order of that kind at the
present time.

Although reference has been made to the terms of a guarantee in which the debtor bound himself to pay costs taxed as between solicitor and own client, it has often been said that a creditor's petition is not a means of execution of a judgment like that obtained in the present case in the Supreme Court on the guarantee which confers on the Bank that right to solicitor-client costs. Accordingly, the application for a variation of the usual order as to costs is refused.

The orders of the Court will be:

(1) That a sequestration order be made against the estate of

the debtor.

(2) That the petitioning creditor's costs including any

reserved cost be taxed and paid in accordance with the

statute;

(3) That the date of the act of bankruptcy be noted as 28

October 1992:

(4) That the Official Trustee be the trustee; and

(5) That there be a stay of proceedings on the sequestration

order for 21 days from this day. .

I cert i fy that t h i s and the

preceding nine ( 9 ) pages

are a true copy of the&
reasons for judgment of h i s

Honour Mx Justice Ryan

Associate:

Date :

Solicitor for the debtor:	Barbour Arnold & Cousins
Counsel for the debtor:	Mr P Ginnane
Solicitor for the creditor:	Corrs
Counsel for the creditor:	Mr T J McLean