Re Thomas, K.R.

[1991] FCA 861

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THI$	) No. P2820 of 1991
STATE OF NEW SOUTH WALES	)

JOHN ROBERT THOMAS

JILL KATHLEEN THOMAS

Debtors/Respondents

EX PARTE:  STATE BANK OF NEW SOUTH WALES
Creditor/Applicant

CORAM:	HILL J
PLACE :	SYDNEY
DATED :	4 DECEMBER 1991

EX TEMPORE REASONS FOR JUDGMENT

The creditor's petition in this matter, dated 29 July 1991, was duly served on the debtors on 11 September 1991 and was referred by a Registrar of this court to Davies J on 26 November 1991.

In the course of the hearing before his Honour it became clear that the petition, which on its face stated that it was executed by the State Bank of New South Wales by its attorney, John William McCoy, although executed by Mr McCoy, was executed at a time when he was not indeed the attorney of the bank. The power of attorney, which was apparently tendered before his Honour, named as attorneys certain persons holding certain offices and Mr McCoy was not such a person.

A further question arose from the petition in that it referred to the bank holding a second unregistered

equitable mortgage but did not go into detail on that matter. His Honour, after hearing argument upon the matter, was inclined to the view that a petition not signed by the petitioner, or a person authorised by the petitioner so to do, was a nullity. It appears that his Honour initially made an order dismissing the petition but on hearing further argument by the petitioner, who sought leave to amend the petition, revoked his Honour's initial order and adjourned the

proceedings "to the Bankruptcy List on 3 December". His

Honour ordered that the debtor should have the costs of the day.

The matter then came on for hearing on 3 December before a Registrar of the court and was referred to me. The petitioner sought leave to amend the petition in two respects. The first was to insert additional detail about the second mortgage and the second was to have the petition signed by Mr McLennan as attorney for the petitioning creditors. Mr	McLennan is the branch manager of the 52 Martin Place branch	of the bank and is a person holding an office as a result of
which he has been appointed attorney for the bank, inter alia, for the purposes of signing petitions.
For the debtor, counsel submitted firstly that his Honour had initially dismissed the petition so the matter was not competently before the court at all. Secondly, it was not competent to amend the petition in any event and thirdly, that if it were, as a matter of discretion the court should refuse, at this late stage of the proceedings, to entertain an application for the amendment of the petition.
As to the first matter, there is no transcript of the proceedings before his Honour. However, the associate's note of his Honour's order indicates that his Honour had changed his mind in that the words "petition dismissed" have been crossed out and there then follows a note of an order that the proceedings be adjourned until 3 December.
I have spoken to his Honour and his Honour's recollection is as I have already indicated, that his Honour revoked the order dismissing the petition and adjourned the proceedings until 3 December.
Prima facie, one would have thought that a petition, if required to be signed and signed by a person not authorised so to do, would be a nullity and should be dismissed. That indeed was the view taken by Pincus J in Re Tavlor: Ex Darte

(1986) 14 FCR 472. The first question is whether the

Bankru~tcv Act 1966 (Cth) ("the Act") requires the petition to

be signed at all.

The Act itself does not explicitly require a petition to be signed at all. It merely requires that the petition should be in the form set out in the rules. Reference to the form as set out in the rules, indicates a space for a signature. The question that then arises, however, is whether the failure to sign a petition, or as in the present case a purported signing by a person not authorised, is a formal defect or irregularity within the provisions of s.306 of the Act.

This is not a matter free from authority. It has been discussed by full courts of this court in Russell, v Australia & New Zealand Bankina GrouD Limited (1987) 14 FCR 72; and Pe~utv Commissioner of Taxation (Vicl v Boxshall (1988) 19 FCR 435. It was also the subject of discussion by a single judge of this court, Burchett J in Re Colin Patrick Holden: Ex Darte Maureen Holden (unreported, 25 August 1989). These cases indicate that deficiencies in execution of petitions are within the area covered by s.306 of the Act and indeed constitute deficiencies which would not tend to confuse or mislead a debtor. See Kleinwort Benson Australia Limited v

Growl, (1988) 165 CLR 71 at 81.

More cogent is the argument that as a matter of discretion the amendment should not be made, having regard to the lateness of time at which the application was made.

It was submitted that I should not give leave to amend the petition, the implication being that such leave was required under the provisions of s.306 of the Act. It might perhaps be noted that 8.306 operates of its own force without the necessity of leave, unless the court forms the view that substantial injustice has been caused. Even if this were not the case, I would be of the view that leave should be given to amend the petition, the present being a case where there is no suggestion that the debtor is other than insolvent, where the debtor has appeared as a result of a petition and clearly has not been in any way misled by it and where there is no real prejudice to the debtor other than of course that the amendment of the petition will lead inevitably to the making of a sequestration order. Accordingly, as a matter of discretion I permit, if such permission be necessary, the amendment of the petition in the two respects to which I have made mention.

Counsel for the debtor then objected, in the course
of further evidence being tendered, to evidence going to the
value of the bank's second mortgage security to which the

amendment to the petition related. The objection was partly

an objection as to hearsay, but went also to the capacity of

the person referred to in the affidavit to give a valuation of the security. I upheld the objection. This then caused counsel for the petitioning creditor to seek to make yet another amendment to the petition to provide specifically that the bank was willing to surrender its security for the benefit of creditors generally, thus obviating the necessity to have evidence of the value of the bank's security.

Counsel's instructions to make this amendment were then challenged on the basis that proof was sought that Mr McLennan had authorised the making of such an amendment. I adjourned the case until this morning to permit the bank to file an affidavit by Mr McLennan, or appropriate person, indicating his authorisation of the amendment. That affidavit has now been filed and it is now clear of course that the challenge to the instructions to make the amendment can not succeed.

In the circumstances I propose to make sequestration orders against the estates of the debtors. On the evidence which I have heard I am satisfied that the debtors have committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters of which s.52(1) of the Act requires proof. I note that Mr Max Christopher Donnelly has consented to act as the trustee of the estates of the debtors.

I make a sequestration order against the estate of John Robert Thomas. I make further a sequestration order against the estate of Jill Kathleen Thomas. I order that Mr Donnelly be appointed trustee of the estates of both of the debtors. I order that costs, other than the costs the subject of the order of Davies J, including any reserved costs, be taxed and paid according to the Act. I direct that a draft of the order be delivered to the Registrar within seven days, in accordance with r.124. In respect of the sequestration order made in respect of Mr Thomas, I would stay the operation of that order for a period of seven days. I do not stay the operation of the order in respect of his wife.

I certify that this and the
preceding six (6) pages
are a true copy of the Reasons
for Judsment herein of his Honour

Mr ~ustice Hill.

Associate:
Date: 4 ~fember fig1

Counsel and Solicitors	V.R.W. Gray instructed by
for Debtors/Respondents:	Minter Ellison
Counsel and Solicitors	T.A. Alexis instructed by
for Creditor/Applicant	Blake Dawson Waldron
Dates of Hearing:	3 & 4 December 1991
Date Judgment Delivered:	4 December 1991