Re Walker, A Ex parte Noble Einsiedel Pty Ltd

[1992] FCA 327

JUDGMENT No. .S~L. J 92

IN THE FEDERAL COURT OF AUSTRALIA

EXERCISING FEDERAL JURISDICTION

IN BANKRUPTCY

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE: ANTHONY WALKER

Judgment Debtor

EX PARTE: NOBLE EINSIEDEL PTY LTD

(RECEIVER AND MANAGER APPOINTED1

Judgment Creditor

COURT :	NORTHROP J
PLACE :	MELBOURNE
a:	16 APRIL 1992

EX TEMPORE REASONS FOR JUDGMENT

This is the return of a petition seeking a sequestration order against the estate of Anthony Walker. The petition is based upon an act of bankruptcy alleged to be the failure to comply with a bankruptcy notice on or before 19 December 1991. The judgment debtor has given notice of intention to oppose the petition, the notice being dated 27 March 1992, and there are six grounds set out. Grounds 1 and 2 were not pursued, but the other four were, and they are as follows:

judgment made 26 July 1991.

"3. That the Bankruptcy Notice is defective and such as to mislead, confuse or confound the Debtor in that:-

a)	it claims an amount due under two judgments when in fact there was no judgment against the debtor on 4 October 1991.
b)	the Order of the Taxing Master of 4 October

1991 is not a final order but is an order on

taxation of costs ordered to be paid by the

4.    If the Bankruptcy Notice is based on two judgments as on its face it purports to be then it is void.

5.  The Creditor's Petition has not been properly executed by the Judgment Creditor or alternatively no evidence of the authority of Peter Robert Vince to execute the Petition on behalf of the Judgment Creditor has been served on the Debtor.

6.   That the address of the Judgment Creditor stated on the Bankruptcy Notice is incorrect."

I shall deal first with ground 4. It is conceded that a bankruptcy notice can rely upon one judgment only, and that if it purports to be based on a number of judgments it is bad, and will not be sufficient to support a valid bankruptcy notice based upon a failure to comply with it. In the present case the bankruptcy notice is in a rather unusual form. The petitioning creditor is a company under the control of a

receiver and manager. It is addressed to M r Walker and reads:

"WHEREAS NOBLE EINSIEDEL PTY. LTD. (Receiver and Manager Appointed) C/- Ferrier Hodgson & Co. of 20 Mason Street, Dandenong (hereinafter referred to as "the judgment creditor") has claimed that the sum of $12,514.34 (which sum is calculated as set-out hereunder) is due by you to

it under the final judgments obtained by it against you in the Supreme Court of Victoria at Melbourne on the July	26, 1991 and October 4, 1991, being judgments the
execution of which have not been stayed:
THEREFORE TAKE NOTICE that within fourteen 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 $12,514.34 so claimed ..."

Towards the end of the bankruptcy notice there is the following paragraph:

"FURTHER NOTE:	The said sum of $12,514.34 is calculated
as follows:

(i) Judgment Debt pursuant to Order

of the Honourable Mr. Justice

Crockett made July 26, 1991

Less payment received on August
2, 1991

(ii) Judgment Debt pursuant to Order

of Master Bruce made October 4, 1991 $ 4,839.40

TOTAL $12,514.34"

The problem arises from the use in the bankruptcy notice of a reference to two judgments. This is compounded by the details which refer again to two judgments. A reference to what are said to be the judgments themselves shows that on 26 July 1991 the Supreme Court of Victoria constituted by Crockett J made an order in a case, where the judgment creditor and the debtor were represented by counsel, as follows :

"THE COURT ORDERS THAT: 

1.	(a)	The requirements of Rules 5.03(1) and 8.02 are dispensed with.
(b)	The Plaintiff is authorised to commence this proceeding by Originating Motion in Form 5C.

2.   The Defendant pay the Plaintiff the sum of $68,183.86, such payment to be made within 7 days.

3.    The Defendant pay the costs of the application."

The form of the judgment or order is on the form appearing in the Supreme Court Rules, and is headed: "GENERAL

FORM OF ORDER". It is noted that it requires the defendant to pay the costs of the application.

The second document is also on a similar form headed: "GENERAL FORM OF ORDER". It was made by Master Bruce on 4 October 1991, and was obtained on a summons for taxation filed on 4 September 1991. Counsel appeared for the judgment creditor and for the debtor. The order states that the taxation was pursuant to the order of Crockett J made 26 July 1991. The operative part of the order is as follows:

"THE COURT ORDERS THAT:

The costs of the Plaintiff are taxed and allowed at

$4,839.40, including $265.80 taxing fee."

It is noted that nowhere in that document is there any direction or order that the defendant pay that amount of costs. The order to pay appears in the order of 26 July 1991 which directs the defendant to pay the costs of the application. The costs were then taxed by the taxing master

at that specified amount.

The solicitor for the debtor has argued that having regard to the rules of the Supreme Court of Victoria, orders made by the taxing master are now in the form of a judgment or order which is different from the general practice prior to the more recent amendments to the Supreme Court Rules. In this regard he relied upon the authorities referred to by Beaumont J in Wilmot v Buckley (1984) 2 FCR 540 which make it clear that a certificate of taxation specifying the amount of costs taxed by a taxing master did not constitute a judgment or order sufficient to found a valid bankruptcy notice.

In my opinion that submission is unsound. The only judgment or order here is the order of Crockett J directing the payment of the amount of the judgment plus the costs. The order of the taxing master does not require the payment of any money at all. It merely identifies the amount of the costs as taxed, which then become payable under the judgment of Crockett J. The rules have not changed the position at all, in my opinion. The order for the amount of the costs is not a separate judgment or order. Therefore the ground of opposition number 4 is rejected.

That still leaves open the other ground, ground 3, that the bankruptcy notice is defective because it is likely to mislead, confuse or confound the debtor in that it claims an amount due under two judgments, when in fact there was no

of the taxing master was not a final order. judgment against the debtor on 4 October 1991, and the order There is more substance in this ground of objection. The

solicitor for the judgment creditor has relied upon the decision of Re Wheeler (1982) 1 All ER 345, a judgment of the Court of Appeal in England where there had been orders for payment of costs, the amounts of which had been determined, and where there had been a number of proceedings between the parties. What was relied upon there was the total amount of those various orders for costs. At p 350 Lawton L.J. said:

"On 11 December 1980 Master Matthews completed his taxation of the composite, bill of costs and found that there was an additional $22,000-odd due to the judgment creditors in respect of the costs awarded to the plaintiffs by Foster J. That&22,000 was, of course, mentioned to the registrar, but we are not concerned with it, save on a minor point concerned with the wording of the receiving order, because the bankruptcy petition was presented on the basis of the bankruptcy notice served on Mr Wheeler on 6 November 1980.

Counsel for the judgment creditors has taken the point that the Divisional Court in Bankruptcy misdirected itself in deciding that the bankruptcy notice was concerned with four orders. It is relevant for this court to remind itself that what had happened in Re Low [l8911 1 QB 147 was that there had been two separate actions and judgment had been given in each. In this case there was one action with a number of interlocutory orders made in that action. So it was a very different situation altogether from that with which the court was concerned in Re Low."

At p 351 His Lordship continued:

"Counsel for the judgment creditors submitted that what

by Foster J arising out of one action had been channelled had happened in this case was that the four orders made	into one order requiri g the payment by Mr Wheeler and Mr
Argent of the sum of &' 20,000; that, as a result of that channelling into the interim certificate, there was in
the end only one final order, which was for the payment of the sum of~20,OOO; and that as the bankruptcy notice made it clear what was the origin of the debt on which the bankruptcy notice was based, there was compliance with the provisions of both s l(l)(g) and s 2.
Mr Wheeler, on the other hand, submitted that on the face of the bankruptcy notice there were four orders and that it followed, having regard to the decision of this court in Re Low, that the bankruptcy notice was bad. For the reasons I have already stated, in my judgment, those four orders were channelled into the interim certificate so as to constitute one order."

The solicitor contended that in substance the same line of reasoning should be applied in the present case, and, despite the fact that the bankruptcy notice made reference to two judgments, they did merge into one, as it were, or were channelled into one judgment and one order. This is in conformity with the views I have expressed in rejecting ground

4. But insofar as ground 3 is concerned, it is quite clear that if a bankruptcy notice is unclear, uncertain, and can

cause confusion, that is a sufficient ground for saying that

the bankruptcy notice is bad. But in looking at this, it is

also clear that it is not necessary to show that the

particular debtor was confused, but whether a reasonable

person of the type of debtor concerned would have been

confused by the bankruptcy notice. In this regard a very

useful judgment was given by Pincus J in Re Gilmore; Ex Darte

Carlvle, Federal Court of Australia, unreported, 22 November

1990. There is a fairly lengthy passage commencing at page 5

of the judgment where, after reference is made to the general principles and reference to the case of Re Browne; Ex Darte S~irulina Products ComDanv Ptv Limited (1985) 7 FCR 251, his

Honour says:

"There are, however, differences between this case and Browne's case; one is that there "neither the debtor's prior knowledge of litigation nor any document to which he had ready access would necessarily have resolved the ambiguity in the notice". Here, the amount of the overstatement in figures was $20,000 precisely. Because of his knowledge of the District Court proceedings, one would have expected any reasonable debtor situated as M r Gilmore was to realise that the over-statement was merely a slip. The second difference between this case and Browne's case is that here the mistake is made only once; there, in both places at which the amount claimed was mentioned, the figures did not match the words.

Since Browne's case was decided the effect of s.306 of the Bankru~tcv Act on defects in bankruptcy notices has been considered by the High Court in Kleinwort & Benson JAustralial Limited v Crow1 (1988) 79 ALR 161. In my view, the reasons of the majority are such as to discourage rigid categorisation of certain sorts of defects as fatal. The Court remarked:

"The authorities show that a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice. In such cases the notice is a nullity whether or not the debtor is in fact misled

... .

Here there is no reason to think that the debtor was in fact misled, but I must treat that as irrelevant. Nevertheless, it is my view that, in considering whether the notice was capable of misleading the debtor, I must have in mind, not a hypothetical debtor, but the debtor to whom the notice is directed: Re Wimborne: ex Darte The Debtor (1979) 24 ALR 494 per Lockhart J at 500. See

also v ~ e ~ u t v commissioner of Taxation (1982) 42

ALR 703.	~ ~ - -	Re W i m b o m was referred to with ap~roval in
De~utv	Commissioner of Taxation v Boxshall ( 1 9	83 ALR

175 at 181, in the Full Court."

In resolving this ground of objection one must have

regard to the debtor who is a solicitor, who was represented

costs, and who in fact had paid part of the judgment. The	at the Supreme Court proceedings, and at the taxing of 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. There reference is made to the judgment of Crockett J, the payment made by the debtor and the costs. Accordingly I reject the ground of opposition listed in paragraph 3.
Paragraph 5 of the grounds of opposition relates to the execution of the petition. The petition names the petitioner as Noble Einsiedel Pty Ltd (Receiver and Manager Appointed). The petition is executed by Peter Robert Vince as Receiver and Manager for and on behalf of Noble Einsiedel Pty Ltd (Receiver and Manager Appointed). In support of the petition, M r Vince swore an affidavit in which he exhibited the mortgage debenture under which the mortgagee appointed him as the receiver manager. That debenture confers powers upon the received manager. Clause 14 provides:

"A Receiver so appointed shall be deemed to be the Agent of the Mortgagor and the Mortgagor shall be solely responsible for his acts and defaults and for his

the following powers, authorities and discretions (which	remuneration. The Receiver may exercise any or all of
shall be interpreted separately and not by reference to one another) in addition to all other powers, authorities and discretions conferred on him by law:
(a) To take possession of, collect and get in the mortgaged property and the rents and profits therefrom and for that purpose to take any proceedings in the name of the Mortgagor or otherwise as seems expedient and to give effectual receipts accordingly for the same; ..."

The petition is a proceeding within the meaning of that
clause and therefore the receiver is able to bring this

I

I ,

clause and therefore the receiver is able to bring this	I
I-'
petition. Likewise, Clause 14 concludes as follows:	L.. l
F:

"Any person paying money to or otherwise dealing with a Receiver shall not be concerned to inquire whether any case happen to authorise a Receiver to act and the receipt of any such Receiver for any moneys arising under any of the powers aforesaid shall be a sufficient discharge without obliging the person paying the same to see the application thereof."

Clause 17 is another clause which confers power upon the

mortgagor:

"The Mortgagor hereby irrevocably appoints the Bank and each person who for the time being purports to be any class of Manager or Accountant of the Bank and each Receiver appointed by the Bank severally to be the true and lawful Attorney of the Mortgagor. ..."

So there it is quite clear that the receiver has power to act as attorney for the purposes of any document. In these circumstances the petition which was signed by Mr Vince is, in my opinion, a proper signature for the purposes of this

petition. A petition may be under the seal of a company which	is the petitioning creditor, but it need not be. In this case
the receiver has sufficient power to sign in his own right as the receiver and manager of the petitioning creditor which has had a receiver manager appointed. For these reasons, opposition ground number 5 is rejected.
The final ground relates to the fact that the address of the judgment creditor stated on the bankruptcy notice is incorrect. It is quite clear that the bankruptcy notice must
be in a form which states the creditor's address. The bankruptcy notice is directing the debtor to pay and, in the present case, the bankruptcy notice is as follows:

"WHEREAS NOBLE EINSIEDEL PTY. LTD. (Receiver and Manager Appointed) C/- Ferrier Hodgson and CO of 20 Mason Street, Dandenong ... has claimed that the sum of $12,514.34 ..."

It was submitted by the solicitor for the debtor that that is not the address of the company and that in those circumstances there has been a non-compliance with the requirements of the Act and the Rules. It seems clear law that the purpose of the address is to indicate a place where the debtor can make payment and receive a discharge, if not immediately at least within a reasonable time. For instance, a branch of a bank may be a sufficient address even though the branch manager may not be able to give a discharge immediately. Here the difficulty arises from the use of the signs "C/-", an abbreviation for "care of", and questions arise as to whether that is the address of the company.

It is quite clear that the judgment debt in this case was obtained by the company "(Receiver and Manager Appointed)". - There is no suggestion that the firm Ferrier Hodgson and CO has not got power to give a discharge, particularly since that is the firm of which Mr Vince, the receiver, is a member. In these circumstance, in my opinion, the use of the expression "C/-" is not sufficient to constitute a non-compliance with the requirements of the Act and the Rules which state that the address of the petitioning creditor must be given. Therefore, ground 6 also is rejected.

In these circumstances, the grounds of opposition have failed. On the material presented to the Court, including the certificate of the Registrar under Rule 22, normally a sequestration order ought to be made. Are there any reasons why I should not make the order now?

(Further submissions were made).

For the reasons given, I am satisfied that the debtor on 19 December 1991 committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters, of which s52(1) of the Act requires-proof. I make a sequestration order against the estate of the debtor. I order that costs, including reserved costs be taxed and paid according to the Act. I direct that a draft of this order be delivered to the Registrar within seven days in accordance

with rule 124, sub-rule 2. I stay all proceedings under the

sequestration order for a period of 21 days on condition that the meeting of the debtor's creditors convened under Part X of the Bankruptcy Act be adjourned sine die or abandoned altogether.

I certify that this and the preceding eleven (11) pages are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Mr Justice R.M. Northrop.

Associate: < - /? P&