STATEWIDE SECURED INVESTMENTS PTY LTD v TARRANT (NO.2)
[2011] FMCA 862
•18 October 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| STATEWIDE SECURED INVESTMENTS PTY LTD v TARRANT (NO.2) | [2011] FMCA 862 |
| BANKRUPTCY – Creditor’s petition – notice of objection – whether petition should be amended to insert correct date of the judgment – whether the multiple crossings out invalidated the petition. |
| Bankruptcy Act 1966, ss.33, 52 |
| Adams v Lambert [2006] HCA 10 Statewide Secured Investments Ltd v Hawkins & Tarrant [2011] NSWSC 144 Tarrant v Statewide Secured Investments Ltd [2011] NSWCA 248 |
| Applicant: | STATEWIDE SECURED INVESTMENTS PTY LTD |
| Respondent: | SANDRA LEE TARRANT |
| File Number: | SYG 425 of 2011 |
| Judgment of: | Raphael FM |
| Hearing date: | 18 October 2011 |
| Date of Last Submission: | 18 October 2011 |
| Delivered at: | Sydney |
| Delivered on: | 18 October 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr P Cutler |
| Solicitors for the Applicant: | Carrolls Lawyers |
| Solicitors for the Respondent: | Pope & Spinks |
ORDERS
Petition to be amended by altering the date of the judgment in paragraph 1 to 17 June 2009.
Requirement to serve the amended Petition be dispensed with.
A sequestration order be made against the estate of Sandra Lee Tarrant.
The Applicant Creditor’s costs (including any reserved costs) be taxed and paid from the estate of the Respondent Debtor in accordance with the Act.
Under the Bankruptcy Regulations a copy of this sequestration order shall be given to the Official Receiver in Sydney within 2 days.
THE COURT NOTES:
(i)That the date of the act of bankruptcy is 22 December 2010.
(ii)A Consent to Act as Trustee has been signed by Paul Leroy and has been lodged with the Official Receiver in Sydney.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 425 of 2011
| SANDRA LEE TARRANT |
Applicant
And
| STATEWIDE SECURED INVESTMENTS PTY LTD |
Respondent
REASONS FOR JUDGMENT
On 10 March 2011 the applicant creditor presented a petition seeking a sequestration order against the respondent debtor. In paragraph 1 of the petition it is stated that:
“The respondent debtor owes the applicant creditor the amount of $2,675,419.31 pursuant to a judgment of the Supreme Court of New South Wales dated 14 May 2009 in proceedings 2008/286952, formerly known as 14583 of 2008.”
On 22 July 2011 the debtor filed a notice stating grounds of opposition to the petition. There were seven grounds in respect to which only three are relied on today. The first states:
“The debtor is not indebted to the creditor for the amount of $2,675,419.31 as the amount specified in the judgment of the Supreme Court of New South Wales dated 14 May 2009 is an incorrect calculation of the mortgage debt then due to the creditor by the debtor as a co-borrower under mortgage AD17908X.”
At first sight this seems to indicate that there was something wrong with the manner in which the creditor calculated the amount owed, but in fact it is being put as an error in the date of the judgment which all parties now agree was entered on 17 June 2010. The creditor seeks leave under s.33 of the Bankruptcy Act 1966 (the “Act”) to amend the petition to substitute the correct date and it is well that I should just explain the background to the change.
The debtor had resisted proceedings brought for possession in the New South Wales Supreme Court which were heard before Adams J. That resistance was unsuccessful and his Honour made orders, including an order for judgment against the debtor in the sum of $2,675,419.31 on 14 May. When the debtor sought leave to appeal against the decision of Adams J it was discovered that the judgment had not been properly entered by the court under what is known as its “JusticeLink” process. In his judgment Basten JA makes reference to this commencing at [6] where he states:
“The procedural history underlying this matter reveals, not for the first time, disturbing aspects of the system of computerised court records, known by those familiar with the system as “JusticeLink”. The system has two facets relevant to the present matter. First, it requires that a number be assigned to a matter; secondly, it requires that orders are “entered” as recorded in the computerised court record. To what extent the confusion revealed in this case is a function of the system, a function of the Uniform Civil Procedure Rules 2005 (NSW), or a function of the difficulties faced by court staff, associates to judges and judges in administering the system, is unclear and need not be explored. “
His Honour continues at [8] and [9]:
The proceedings were identified as matter no. 14583/08, but are now known as 2008/286952. It was understood by the parties, until quite recently, that judgment had been given by Adams J in the Possession List in the Common Law division on 14 May 2009. Even at that stage, however, there was doubt about the form of the orders. The record made on that date read:
“Confirm order made in accordance with the statement of claim in matter no. 14583/08. Stood over for seven days before the duty judge.”
“Understandably, this formula gave rise to some problems in entering the order, although the language set out above appears verbatim on the JusticeLink record. In addition to seeking judgment for possession and leave to issue a writ of possession (and costs) the statement of claim sought judgment in a specified amount as at 28 August 2008, together with interest at a specified rate “on the judgment sum”. The figure needed to be corrected in order to enter judgment. That calculation was undertaken and, on 17 June 2009, Adams J signed a minute recording the judgment in matter 14583 of 2008.”
His Honour continues with the story until at [14] he states:
“There remains the application for leave to appeal. By an amended notice of motion, filed on 7 February 2011, the applicant sought to set aside the judgment referred to above. One ground of that application was that the judgment had been entered “irregularly” on 17 June 2009, because the judgment, in fact given by Adams J on 14 May 2009, was entered at a time when there was a stay in existence. It was that contention which required an understanding of exactly what orders were made, they were both on 14 May and 17 June, as discussed above.”
At [22] his Honour proposed that the court make the following orders, which included at [2] an order that the Court:
“Directs that the judgment and orders of Adams J be taken to have been entered on 17 June 2009, this order having effect from that date.”
The judgment of the Court of Appeal was given on 18 August 2011, which was after the bankruptcy petition had been presented, and was after the bankruptcy notice, upon which the petition had been based, had been issued. In the bankruptcy notice the judgment of Adams J, which had the court’s seal upon it, was said to have been made on 14 May and entered on 17 June.
In her application to set aside the bankruptcy notice the applicant debtor made reference to the judgment stating:
“The judgment upon which the bankruptcy notice is based, dated 17 June 2009, was granted in error and is therefore defective.”
But the debtor did not press the point and the application to set aside the bankruptcy notice was dismissed by consent. The judgment of the Court of Appeal had not been properly dated when the debtor filed her notice stating grounds of opposition to the petition, but it would have been clear to her from a reading of the judgment of Basten JA what the problem was and what the proper date for the entry of the judgment should have been. When the court comes to consider an application for the dismissal of a petition, or for an amendment to that petition, it should look at the possibility of the petition in its original form creating confusion in the mind of the debtor or any prejudice to her.
Paragraph 1 of a petition is a paragraph setting out the amount that a creditor believes the debtor owes it. It has no active role to play in consideration of the validity of the petition. That is found by looking at paragraph 4 which sets out the acts of bankruptcy relied upon. It is this paragraph which provides the basis for the issuance of the petition, although of course a debtor must owe a creditor a sum in excess of $5,000.00. The act of bankruptcy here relied upon was the failure to comply with a bankruptcy notice that contained a judgment for the sum referred to in paragraph 1 and from which it is quite clear that the decision of Adams J was made on 14 May but the judgment itself was entered into on 17 June. I am unable to see what possible prejudice arose when the debtor herself declined an opportunity to make any point about this by consenting to the dismissal of her application to set aside the bankruptcy notice and was, after 18 August 2011, made aware of the reason for entering the judgment upon a date later than the date on which it was originally given.
Mr Pope, who appears for the debtor, seeks that I should apply the dicta of the High Court in Adams v Lambert [2006] HCA 10 and claims that this is a defect that cannot be remedied by s.306 of the Act, but I do not see it in this way. Adams v Lambert has only tangential relevance to petitions, which have always been capable of amendment under s.33. It is fair to say that at the time the petition was presented it was arguable that the judgment was dated 14 May 2009 because the final decision, upon its correct dating, was only made some months thereafter. This fact would also add to the court’s discretion to grant the amendment.
The second ground of the notice of objection is ground 4. It relates to the application for leave to appeal against the decision of Adams J, but that appeal has been heard and decided against the debtor. Mr Pope now wishes to relate it to the application for special leave to appeal to the High Court. In an earlier decision this morning I determined not to grant a further adjournment of this matter whilst that special leave application was considered because, as at today’s date, the application has been deemed to have been withdrawn, although efforts are being made to reinstate it. I also made reference to the fact that I had not been given any indication of whether the application had merits or not. I do not believe that the existence of this appeal constitutes any “other sufficient cause” under s.52 of the Act.
The third ground relied upon relates also to the form of the petition.
It states:
“The petition by the creditor is defective as to form and content as the notice to respondent lists three different dates for hearing, has multiple deletions and insertions, and is confusing and unclear as to the notice being given to the debtor.”
The front page of the petition is the one impugned. The time and date for hearing, which was originally placed in handwriting onto the petition as 9.45am, Thursday, 14 April 2011, is crossed out and there is found underneath it a red stamp which states that the date of hearing of the petition is amended to 9.45am on 25 May 2011. That, itself, is crossed out and a seal is placed over the crossing out. There is then another similar stamp which states that the date of the hearing of the petition has been amended to 9.45am on 8 July 2011.
There are three seals of the Federal Magistrates Court upon the front page, one covering the first crossing out, one covering the second crossing out, and one covering the third stamp. There is a reason why these dates were changed and that is that the debtor did not make herself available for service and an application for substituted service was required.
It seems to me, from my perusal of the document, that the original date and the secondary date were quite clearly excised from the petition and the date upon which the applicant was to attend was equally clearly stated. In fact on 7 July 2011 (possibly a misstatement for the 8th) Mr Pope, the solicitor for the debtor, appeared and signed short minutes of order. In such circumstances it is difficult to mount an argument that the debtor was in some way confused by the alleged multiple deletions and insertions.
I have by the above indicated that I would dismiss the grounds of opposition to the petition. I have obtained from the creditor the required details of the proceedings, including affidavits of final debt and final search. These enable me to be satisfied that the respondent has committed the act of bankruptcy alleged in the petition as amended. The petition is to be amended by altering the date of the judgment in paragraph 1 to 17 June 2009. The requirement to serve the amended petition shall be dispensed with. I am also satisfied with the proof of the other matters required by s.52 of the Act and make a sequestration order against the estate of Sandra Tarrant. I order that the Applicant Creditor’s costs (including any reserved costs) be taxed and paid from the estate of the Respondent Debtor in accordance with the Act. Under the Bankruptcy Regulations a copy of this sequestration order shall be given to the Official Receiver in Sydney within 2 days.
THE COURT NOTES:
i)That the date of the act of bankruptcy is 22 December 2010.
ii)A Consent to Act as Trustee has been signed by Paul Leroy and has been lodged with the Official Receiver in Sydney.
I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Raphael FM
Date: 8 November 2011
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