RMG Acquisitions No 8 Pty Ltd v Collard
[2011] FMCA 596
•5 August 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RMG ACQUISITIONS NO 8 PTY LTD v COLLARD | [2011] FMCA 596 |
| BANKRUPTCY – Whether requirement for the words “in liquidation” to appear in description of creditor in Bankruptcy Notice – whether Bankruptcy Notice is a “public document” for the purposes of s.541 of the Corporations Act 2001 (Cth) – whether Receiver can initiate bankruptcy proceedings on behalf of a creditor whilst creditor is in liquidation – whether Court should issue a sequestration order. |
| WORDS AND PHRASES – “public document” – “of”. |
| Bankruptcy Act 1966 (Cth), ss.41(1), 43, 44, 52(1) and (2) Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), rr.4.02, 4.04, 4.06(2), (3) and (4) |
| Bufalo Corporation Pty Ltd (rec & mgr apptd) (in liq) v Leone (2001) 40 ACSR 327; [2001] VSC 505 Genovese v Homestyle Pty Ltd (2004) 187 FLR 13; [2004] FMCA 673 Gould v Companies Auditors & Liquidators Disciplinary Board (2009) 71 ACSR 648; [2009] FCA 475 McClymont v Wright Designed Pty Ltd (2006) 196 FLR 344; [2006] FMCA 4 Re Leslie Homes (Aust) Pty Ltd (1984) 8 ACLR 1020 Re Sanders (2003) 1 ABC(NS) 408; [2003] FCA 1079 Sanders v Knudsen & Yates trading as the Hargreaves Practice [2004] FCAFC 305 St George Bank Ltd & Ors v JB (Northbridge) Pty Ltd (2009) 262 ALR 538; [2009] NSWSC 1347 Yu v Farrow Mortgage Services Pty Limited (In Liquidation) (1995) 60 FCR 300 |
| Applicant: | RMG ACQUISITIONS NO 8 PTY LTD |
| Respondent: | DEAN COLLARD |
| File Number: | PEG 252 of 2010 |
| Judgment of: | Lucev FM |
| Hearing date: | 26 July 2011 |
| Date of Last Submission: | 26 July 2011 |
| Delivered at: | Perth |
| Delivered on: | 5 August 2011 |
REPRESENTATION
| Counsel for the Applicant: | Ms S Hanuman |
| Solicitors for the Applicant: | Mossensons |
| For the Respondent: | In person |
ORDERS
A sequestration order be made against the estate of Dean Collard.
The applicant creditor’s costs, including all reserved costs, which if not agreed, to be taxed by a Registrar pursuant to O.62 of the Federal Court Rules, and be paid out of the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
AND THE COURT NOTES
The date of the act of bankruptcy is 17 September 2010.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH |
PEG 252 of 2010
| RMG ACQUISITIONS NO 8 PTY LTD |
Applicant
And
| DEAN COLLARD |
Respondent
REASONS FOR JUDGMENT
Application
The applicant, RMG Acquisitions No 8 Pty Ltd,[1] applies for a sequestration order under s.43 of the Bankruptcy Act 1966 (Cth)[2] against the estate of Dean Collard, the respondent, in relation to an amount of $16,174.62. This amount arises from a judgment of the Magistrates Court of Victoria, dated 12 September 2006, for $15,552.08 plus interest of $3,077.54, less payments made in the sum of $2,455.00.
[1] “RMG Acquisitions”.
[2] “Bankruptcy Act”.
Issues arising before the Registrar
The application has been referred to this Court by a Registrar of this Court in relation to two issues, namely:
a)the consequences of the omission of the words “in liquidation” from the description of the creditor, RMG Acquisitions, in the Bankruptcy Notice; and
b)whether a Receiver can institute bankruptcy proceedings on behalf of a creditor, here RMG Acquisitions, whilst that creditor is in liquidation.
If those issues are determined favourably to RMG Acquisitions, then RMG Acquisitions seeks that this Court issue a sequestration order against the estate of Mr Collard.
The Court heard submissions from Counsel for RMG Acquisitions in relation to the above issues, and the issuance of the sequestration order. Mr Collard also appeared, but made no submissions to the Court.
Omission of words “in liquidation”
The words “in liquidation” appear after the description of the plaintiff, RMG Acquisitions, in the certified extract of judgment from the Magistrates Court of Victoria, which was attached to the Bankruptcy Notice. However, in the Bankruptcy Notice the words “in liquidation” do not appear after the description of RMG Acquisitions as the creditor.
The question arises as to whether it was necessary for the words “in liquidation” to appear in the Bankruptcy Notice.
RMG Acquisitions submits that it was not necessary for the words “in liquidation” to appear in the Bankruptcy Notice because the Bankruptcy Notice is not a “public document” for the purposes of s.541 of the Corporations Act 2001 (Cth).[3] In support of its argument, RMG Acquisitions relies upon a number of decisions in which the absence of a company’s Australian Company Number[4] on a Bankruptcy Notice has been found not to invalidate the Bankruptcy Notice on the basis that a Bankruptcy Notice is not a “public document” of the creditor for the purposes of the Corporations Act. Rather the document is said to be one issued by the Official Receiver, at the request of the creditor, and not issued by the creditor itself.
[3] “Corporations Act”.
[4] “ACN”.
The relevant provisions of the Corporations Act are:
a)section 541(1) which provides that:
(1) A company that is being wound up must set out, in every public document, and in every negotiable instrument, of the company, after the name of the company where it first appears, the expression in liquidation.
b)section 88A(1) which provides that:
(1) Subject to this section, public document, in relation to a body, means:
(a) an instrument of, or purporting to be signed, issued or published by or on behalf of, the body that:
(i) when signed, issued or published, is intended to be lodged or is required by or under this Act or the ASIC Act to be lodged; or
(ii) is signed, issued or published under or for the purposes of this Act, the ASIC Act or any other Australian law; or
(b) an instrument of, or purporting to be signed or issued by or on behalf of, the body that is signed or issued in the course of, or for the purposes of, a particular transaction or dealing; or
(c) without limiting paragraph (a) or (b), a business letter, statement of account, invoice, receipt, order for goods, order for services or official notice of, or purporting to be signed or issued by or on behalf of, the body.
In Yu v Farrow Mortgage Services Pty Limited (In Liquidation)[5] the Federal Court stated that it was not a requirement of a Bankruptcy Notice that a creditor’s ACN appear therein because the Bankruptcy Notice was not a public document of the creditor for the purposes of the then Corporations Law (Cth). Although not expressly stated, this appears to be on the basis of s.41(1)(b) of the Bankruptcy Act which then provided that a Bankruptcy Notice be issued by the Registrar.
The reference to s.88A of the then Corporations Law, which was for present purposes in the same terms as s.88A of the Corporations Act,[6] suggests that the issuance of a Bankruptcy Notice by the Registrar meant that it was not a document issued by the creditor in liquidation. Hence, it was not a “public document”, and it was, therefore, unnecessary for the ACN to appear on the Bankruptcy Notice.
[5] (1995) 60 FCR 300 (“Yu”).
[6] Corporations Legislation Amendment Act (No.2) 1991 (Cth), Schedule 3.
In Genovese v Homestyle Pty Ltd[7] the ACN number was not stated on the Bankruptcy Notice, and it was submitted by the respondent creditor that it was not necessary to do so because the notice was not a public document of the creditor for the purposes of the Corporations Law.[8] This Court held that the absence of the ACN number did not provide a basis upon which the Bankruptcy Notice ought to be set aside.[9] Specifically, it was observed that:
The bankruptcy notice is not issued by the creditor but rather issued by the Official Receiver at the request of the creditor. Although the request for the document is signed, the fact remains that a bankruptcy notice is not issued by the creditor but rather by the Official Receiver. The absence of the ACN number in those circumstances, in my view, do not provide a proper basis upon which the bankruptcy notice … should be set aside.[10]
[7] (2004) 187 FLR 13; [2004] FMCA 673 (“Genovese”).
[8] Genovese FLR at 22 per McInnis FM; FMCA at para.46 per McInnis FM, citing Yu.
[9] Genovese FLR at 23 per McInnis FM; FMCA at para.50 per McInnis FM.
[10] Genovese FLR at 23 per McInnis FM; FMCA at para.50 per McInnis FM.
In McClymont v Wright Designed Pty Ltd[11] the underlying certificate of judgment was attacked on the basis that there was a failure to mention that the respondent creditor was subject to a deed of company arrangement. This was argued to be in breach of s.450E(2) of the Corporations Act which requires that every “public document” of a company set out that it is “subject to deed of company arrangement”.[12] Having cited Yu, this Court went on to observe that:
A certificate of judgment is a document prepared, not by the company, but by the registrar of the Local Court of NSW. I am unable to see how it can be considered a public document of the company either.[13]
[11] (2006) 196 FLR 344; [2006] FMCA 4 (“McClymont”).
[12] McClymont FLR at 346 per Raphael FM; FMCA at para.6 per Raphael FM.
[13] McClymont FLR at 346 per Raphael FM; FMCA at para.7 per Raphael FM.
In Gould v Companies Auditors & Liquidators Disciplinary Board[14] the Federal Court held that letters written on the letterhead of a chartered accountant who had been appointed administrator of a company, and signed by him as “Administrator”, were not letters “of” the company for the purposes of s.450E(2) of the Corporations Act. Although the chartered accountant described himself as “Administrator”, the Federal Court was not persuaded that the letters, which were addressed to creditors and informed them in relation to aspects of the administration, were letters “of” the company.[15] Rather they were held to be letters of the chartered accountant which informed the addressees of the capacity in which he was entitled to write to them.[16]
[14] (2009) 71 ACSR 648; [2009] FCA 475 (“Gould”).
[15] Gould ACSR at 671 per Lindgren J; FCA at paras.154-157 per Lindgren J.
[16] Gould ACSR at 671 per Lindgren J; FCA at para.158 per Lindgren J.
Relevantly, s.41(1) of the Bankruptcy Act now provides that:
(1) An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor:
(a) a final judgment or final order that:
(i) is of the kind described in paragraph 40(1)(g); and
(ii) is for an amount of at least $5,000; or
(b) 2 or more final judgments or final orders that:
(i) are of the kind described in paragraph 40(1)(g); and
(ii) taken together are for an amount of at least $5,000.
In this case the Bankruptcy Notice was issued by the Official Receiver under s.41(1) of the Bankruptcy Act. The Bankruptcy Notice was not issued by RMG Acquisitions. The Bankruptcy Notice is not “an instrument of” or “purporting to be signed, issued or published by or on behalf of” RMG Acquisitions, and therefore it does not meet the description of a “public document” in s.88A(1)(a) of the Corporations Act. Because the Bankruptcy Notice is not a “public document” as defined, the requirement in s.541(1) of the Corporations Act for the expression “in liquidation” to appear after the name of RMG Acquisitions does not apply to the Bankruptcy Notice. There is, therefore, no deficiency in the Bankruptcy Notice, and no basis upon which it can be set aside, or said to be invalid.
Institution of proceedings by the Receiver
It is not disputed that:
a)Receivers were appointed to RMG Acquisitions on 30 May 2005;
b)a liquidator was appointed to RMG Acquisitions on 22 July 2005; and
c)
the Receiver initiated the bankruptcy proceedings against
Mr Collard on behalf of RMG Acquisitions.
Section 420 of the Corporations Act relevantly provides as follows:
(1) Subject to this section, a receiver of property of a corporation has power to do, in Australia and elsewhere, all things necessary or convenient to be done for or in connection with, or as incidental to, the attainment of the objectives for which the receiver was appointed.
(2) Without limiting the generality of subsection (1), but subject to any provision of the court order by which, or the instrument under which, the receiver was appointed, being a provision that limits the receiver's powers in any way, a receiver of property of a corporation has, in addition to any powers conferred by that order or instrument, as the case may be, or by any other law, power, for the purpose of attaining the objectives for which the receiver was appointed:
…
(k) to execute any document, bring or defend any proceedings or do any other act or thing in the name of and on behalf of the corporation; …
It is therefore readily apparent from the provisions of s.420(2)(k) of the Corporations Act that the Receiver had power to initiate bankruptcy proceedings in respect of a debt owed to RMG Acquisitions by
Mr Collard. There is no suggestion in this case that there is any limitation on the Receiver’s powers for the purposes of s.420(2) of the Corporations Act.
It is also not in dispute that:
a)the Receivers were appointed pursuant to a right conferred under a charge granted in favour of a creditor of RMG Acquisitions;
b)pursuant to clause 25.1(1) of the charge, the Receiver had the power, even if RMG Acquisitions was “under administration, … insolvent, … wound up or … dissolved: … to take possession of, have access to, make use of, collect and give valid receipts for the Property and its rents, profits and other income and, for that purpose, take proceedings in the company’s name or otherwise”; and
c)the “Property” of RMG Acquisitions is defined at clause 1.1(22) of the charge to mean “all of the company’s property, privileges, goodwill of its business, rights, undertaking and other assets whether owned at present or acquired in the future.”
In Re Leslie Homes (Aust) Pty Ltd[17] the New South Wales Supreme Court observed that:
In this state of affairs it does not seem to me to be entirely accurate to say (as is said in some of the cases) that a winding up terminates a receiver’s agency (if the receiver is appointed before the winding up) or prevents a receiver’s agency arising (if the receiver is appointed, as in the present case, after the winding up). Rather the agency remains or arises (as the case may be) but the receiver’s authority as agent is necessarily limited so as to be consistent with the existence of the winding up. Accordingly the agency subsists for the purpose of the receiver’s dealing with property charged by the relevant security, but not (it seems) so as to permit the creation of any pecuniary liability provable against the company in the winding up.[18]
[17] (1984) 8 ACLR 1020 (“Leslie Homes”).
[18] Leslie Homes at 1023 per McLelland J.
In Bufalo Corporation Pty Ltd (rec & mgr apptd) (in liq) v Leone[19] the Victorian Supreme Court said that:
The fact that the plaintiff by resolution was wound up after the appointment of the receiver and manager and after the commencement of this proceeding does not affect the receiver’s and manager’s authority and capacity to prosecute this proceeding as agent for and in the name of the plaintiff company to enforce the proprietary rights of the grantee as created by the debenture charge. The receiver and manager, however, cannot create liabilities provable against the plaintiff company in the winding up.[20]
[19] (2001) 40 ACSR 327; [2001] VSC 505 (“Bufalo Corporation”).
[20] Bufalo Corporation ACSR at 331 per McDonald J; VSC at para.10 per McDonald J.
In Bufalo Corporation the fact that the mortgagee had an order for possession of the property against the plaintiff and defendant, did not impede the receiver and manager, as agent for and in the name of the plaintiff, and in reliance on its proprietary rights under the debenture charge, prosecuting the proceedings against the defendant for an order for possession of the property.[21] But rather the Victorian Supreme Court held that such an order, if obtained, would be subject to the orders of possession obtained by the mortgagee and, in particular, the order for possession obtained against the plaintiff.[22]
[21] Bufalo Corporation ACSR at 332 per McDonald J; VSC at para.15 per McDonald J.
[22] Bufalo Corporation ACSR at 332 per McDonald J; VSC at para.15 per McDonald J.
In St George Bank Ltd & Ors v JB (Northbridge) Pty Ltd[23] the Supreme Court of New South Wales, having reviewed various English and Australian authorities (including Leslie Homes), concluded that:
… these cases establish that while the winding up order incapacitates a company from carrying on business, and deprives the receiver of power to bind the company personally by acting as its agent, it does not affect the rights of a receiver given under a security that pre-dated the liquidation, although the company is no longer liable for any debts which the receiver may incur in exercising those rights; and an option to renew a lease is such a right.[24]
[23] (2009) 262 ALR 538; [2009] NSWSC 1347 (“JB (Northbridge)”).
[24] JB (Northbridge) ALR at 547 per Brereton J; NSWSC at para.24 per Brereton J.
In the present case the Receiver, appointed prior to winding up, was able to initiate bankruptcy proceedings against Mr Collard to recover monies owing to RMG Acquisitions. That right being part of the property of RMG Acquisitions to which the charge affixed, and which existed under both the charge and the Corporations Act, and was exercisable as such.
Should a sequestration order issue?
Prior proceedings and debt
There is no dispute that there is a judgment of the Magistrates Court of Victoria, dated 12 September 2006, in favour of RMG Acquisitions against Mr Collard in the amount of $15,552.08, plus interest of $3,077.54.
Debt
The debt which is alleged to be outstanding in the Bankruptcy Notice is $16,174.62, which is the amount of the judgment debt less payments made of $2,455.00. Mr Collard did not dispute the amount of the debt said to be outstanding.
Law
The Court may make a sequestration order upon proof of the matters set out in s.52(1) of the Bankruptcy Act, subject to:
a)the jurisdiction to make sequestration orders under s.43 of the Bankruptcy Act; and
b)the conditions on which a creditor may petition under s.44 of the Bankruptcy Act,
being met.
RMG Acquisitions, as petitioning creditor, is obliged to put before the Court affidavits:
a)verifying the petition;[25]
b)as to search of the records of the Court and the Federal Court as to any application in relation to the Bankruptcy Notice;[26]
c)of service of the Bankruptcy Notice;[27]
d)of service of documents required to be served under the FMC (Bankruptcy) Rules, r.4.05;[28]
e)of search of the National Personal Insolvency Index no earlier than the day before the hearing date for the petition;[29] and
f)of debt on which RMG Acquisitions relies as still owing.[30]
[25] Bankruptcy Act, s.47(1); Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.4.02 (“FMC (Bankruptcy) Rules”).
[26] FMC (Bankruptcy) Rules, r.4.04(1)(a) and (2).
[27] FMC (Bankruptcy) Rules, r.4.04(1)(b).
[28] FMC (Bankruptcy) Rules, r.4.06(2).
[29] FMC (Bankruptcy) Rules, r.4.06(3).
[30] FMC (Bankruptcy) Rules, r.4.06(4).
The Court may decline to issue a sequestration order if:
a)it is not satisfied with the proof of any of the above matters;[31] or
b)it is satisfied by Mr Collard that:
i)he is able to pay his debts;[32] or
ii)for other sufficient cause a sequestration order ought not be made.[33]
[31] Bankruptcy Act, s.52(2).
[32] Bankruptcy Act, s.52(2)(a).
[33] Bankruptcy Act, s.52(2)(b).
Consideration
The Court is satisfied as to the matters required to be proved for the making of a sequestration order. Specifically, the Court accepts that in compliance with the relevant requirements there is:
a)an affidavit verifying the petition;
b)an affidavit of search of court records;
c)an affidavit of service of the Bankruptcy Notice;
d)an affidavit of service of relevant documents;
e)an affidavit of search of the National Personal Insolvency Index; and
f)an affidavit of debt still owed.
A petitioning creditor who has made out the requirements set out above has a prime facie right to a sequestration order unless very special circumstances are shown to justify the Court departing from its usual practice.[34] Mr Collard did not dispute the fact of the judgment, the judgment debt or the amount said to be owing under the Bankruptcy Notice. On that basis, having made out the relevant requirements under the Bankruptcy Act, there is nothing to supplant the prime facie right that RMG Acquisitions has to a sequestration order. Further, there is nothing in the materials which would constitute an “other sufficient cause” warranting dismissal of the petition under s.52(2)(b) of the Bankruptcy Act.
[34] Re Sanders (2003) 1 ABC(NS) 408; [2003] FCA 1079 (“Re Sanders”); affirmed on appeal in Sanders v Knudsen & Yates trading as the Hargreaves Practice [2004] FCAFC 305 at para.14 per Whitlam, Branson and Sackville JJ.
Conclusion
In the circumstances set out above, the creditor’s petition will be granted, and a sequestration order will issue. RMG Acquisitions’ costs should be paid out of the estate of Mr Collard in accordance with the Bankruptcy Act. The date of the act of bankruptcy is 17 September 2010.
I certify that the preceding thirty-one (31) paragraphs are a true copy of the reasons for judgment of Lucev FM
Date: 5 August 2011
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