Taylor v Bice, in the matter of Bice

[2004] FCA 1259

FEDERAL COURT OF AUSTRALIA

Taylor v Bice, In the matter of Bice [2004] FCA 1259

BRYAN WILLIAM TAYLOR & ANOR v NORMAN BICE, IN THE MATTER OF NORMAN BICE
N 1124 OF 2004

STONE J
21 SEPTEMBER 2004
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1124 OF 2004

IN THE MATTER OF NORMAN BICE

BETWEEN:

BRYAN WILLIAM TAYLOR
FIRST APPLICANT

JOANNE LEA TAYLOR
SECOND APPLICANT

AND:

NORMAN BICE
RESPONDENT

JUDGE:

STONE J

DATE OF ORDER:

21 SEPTEMBER 2004

WHERE MADE:

SYDNEY

THE COURT ORDERS BY CONSENT THAT:

1.The sequestration order made on 23 August 2004 be set aside and the bankruptcy of Norman Bice be annulled ab initio.

2.The applicant’s creditors petition be dismissed.

THE COURT ALSO ORDERS THAT:

3.The applicant’s pay the respondent’s cost of and incidental to the creditors’ petition and of his application for review.

4.These orders be entered forthwith.

5.The parties have liberty to apply on reasonable notice.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 1124 OF 2004

IN THE MATTER OF NORMAN BICE

BETWEEN:

BRYAN WILLIAM TAYLOR
FIRST APPLICANT

JOANNE LEA TAYLOR
SECOND APPLICANT

AND:

NORMAN BICE
RESPONDENT

JUDGE:	STONE J
DATE:	21 SEPTEMBER 2004
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This is an application to review a decision of a Registrar of this Court under s 35A of the Federal Court of Australia Act 1976 (Cth). On 23 August 2004 the Registrar, pursuant to a creditors petition filed by the applicants, made a sequestration order against the respondent debtor under s 43 of the Bankruptcy Act 1966 (Cth). Unfortunately, the solicitor for the debtor was delayed in attending the hearing before the Registrar through circumstances that, I accept, were beyond his control. As a result the matter was called in his absence and the order made.

2. The respondent’s solicitor had been instructed to oppose the creditors petition on the basis that the respondent was solvent and in the process of making arrangements to pay the debt.  Since then, however, counsel for the respondent has raised another issue and one that is determinative of the application to set aside the sequestration order. 

3. The bankruptcy notice claims a debt of $42,947.97.  This sum includes an amount of interest that in the notice is stated to be claimed pursuant to s 35 of the Local Court Civil Claims Act 1970 (NSW).  It is not in contention that the reference to s 35 is incorrect and that the correct section is s 39 of that Act. 

4. The decision of the Full Federal Court in The Australian Steel Company (Operations) Ltd v Lewis (2001) 109 FCR 33 (‘Australian Steel’), which is directly on point, is authority for the proposition that this error is fatal to the validity of the notice and, accordingly, failure to comply with it does not constitute an act of bankruptcy.  As a result the parties have asked the court to make orders by consent that the sequestration order be annulled ab initio and the creditors petition be dismissed.  Clearly, those orders should be made. 

5. There is, however, a dispute between the parties as to responsibility for costs.  Again, given the decision in Australian Steel, I see no reason why costs should not follow the event.  Although it would have been desirable had the error been noted earlier the responsibility ultimately falls on the creditors who issue the bankruptcy notice to issue a valid notice.  The consequences of a failure to issue a valid notice must also fall on them. 

6. In anticipation of any claim for costs to be made by the Trustee who did not appear at the hearing today, counsel for the respondent has also asked that the parties be given liberty to apply. This order is sought in anticipation of an application under s 154B of the Bankruptcy Act.  For these reasons I will make the orders sought by consent and the orders for costs. 

I certify that the preceding six (6) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Stone.

Associate:

Dated:             27 September 2004

Counsel for the Applicant:	Mr M Condon
Solicitor for the Applicant:	Bull Son & Schmidt
Counsel for the Respondent:	Mr H Packer
Solicitor for the Respondent:	Sage Solicitors
Date of Hearing:	21 September 2004
Date of Judgment:	21 September 2004