Stafford, J.C. v Bank of New Zealand

[1992] FCA 920

Re: JOHN CLYDE STAFFORD
And: BANK OF NEW ZEALAND
No. V B3374 of 1992
FED No. 920
Number of pages - 4
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Heerey J.(1)

CATCHWORDS

Bankruptcy - creditor's petition - whether debtor solvent - expectation of recovery in other litigation - alleged errors in bankruptcy notice and petition and verifying affidavit - whether formal defect or irregularity.

Bankruptcy Act 1986 - s.306(1).

Re Moore (1986) 11 FCR 400

HEARING

MELBOURNE

#DATE 18:11:1992

Counsel for the judgment
creditor: Ms A Sharp

Solicitor for the judgment
creditor: Messrs Lander and Rogers

Counsel for the judgment
debtor: Mr Hussey

Solicitors for the judgment
debtor: Messrs Hussey and Co

JUDGE1

HEEREY J. In my opinion the grounds raised by the debtor in his amended notice of intention to oppose the petition of 6 November 1992, do not make out a case of invalidity or provide grounds for not exercising the discretion to make a sequestration order. I will deal with the grounds sequentially.

1. It is claimed that at all material times the debtor was solvent. The basis of that is that the debtor says there is litigation in New Zealand which he expects will produce by way of settlement or judgment an amount in excess of the judgment debt. There is very little detail given about the court in which this litigation is being conducted, or the likely future progress of it. But the fact remains, however, that the mere possibility of obtaining money out of this litigation is not the equivalent of money which the debtor has available to pay the petitioning creditor's debt. The debtor in my opinion has not established that he is solvent.

2. That being so, I do not see any ground on which the Court should exercise a discretion so as not to make a sequestration order.

3. There is an error in the bankruptcy notice in that although the judgment on which it was founded was obtained on 7 November 1990, as appears in the recital in the bankruptcy notice itself, there is a schedule in the bankruptcy notice setting out calculations of interest which refers to the date of the judgment as 7 November 1991. I think that is an obvious error, and a formal defect or irregularity within the meaning of s.306(1) of the Bankruptcy Act 1966. It is plain from the reading of the schedule that dates elsewhere appear on two occasions indicating that the date of the judgment was in 1990, as the body of the bankruptcy notice itself indicates.

4. The fact that the petition claims an amount in excess of the amount in the notice is not a matter going to invalidity. This is not an error since the increased amount is reached by the addition of interest which had accrued in the meantime.

5. Again, the creditor's petition also refers to final judgment being obtained on 7 November 1991, which is an error, but one I find to be a formal defect or irregularity.

6. The calculations of interest in the petition are admittedly incorrect because figures calculated for 1992 are based on 365 days, whereas this year is a leap year containing 366 days. The actual difference amounts to $7.99. A defect in the petition of this nature does not bear on the fundamental issues before the Court, that is to say whether an act of bankruptcy has been committed and whether the debtor is solvent.

7. There is an obvious error on the first page of the creditor's petition in that it speaks of the "attached schedule in respect of a in breach of an agreement". The word "in" has been obviously inserted by error. This is I find a formal defect or irregularity.

8. The petition itself is dated 17 March 1992, although it is executed by attorneys under power, and a stamp opposite their signatures gives the date 16 March 1992. It is admitted that the act of bankruptcy occurred on 16 March, when the time fixed by the notice expired, not 10 March, as indicated in the petition. The point seems to be directly covered by Re Moore (1986) 11 FCR 400 where a petition was executed before the expiration of the bankruptcy notice. Muirhead J. held that that was a formal defect or irregularity covered by s.306(1). His Honour said (at p 402) that he saw
   

"... no possibility of substantial injustice to the debtor, and there is nothing to be served by refusal to make the

order sought."

I would respectfully consider that those observations apply to the present case.

1. There were claims that the affidavit verifying the creditor's petition was defective in that it did not allege that the deponent is familiar with the signature of the senior manager, that her signature appears, that she knows the provisions of the purported power of attorney, and that the purported power of attorney is valid in the State of Victoria. It was not suggested that these alleged defects arose from failure to follow any statutory form. I think the points are without substance. In any case, on the face of it the deponent Vanessa Jenkins is based in the Sydney office of the Bank and is Manager Collections in the employ of the bank. I think it is a reasonable inference that she would know the senior manager, Mr Sirakowski and be familiar with his signature.

2. It is said that the affidavit verifying paragraph 4 of the creditor's petition is invalid because it does not refer to any extension of time granted to the debtor. That does not seem to me to be a statutory defect or one causing any injustice.

3. There will be a sequestration order.