Wood v Prentice

[2001] FCA 1225

FEDERAL COURT OF AUSTRALIA

Wood v Prentice [2001] FCA 1225

BANKRUPTCY – notice of objection to discharge from bankruptcy – where notice of objection to discharge from bankruptcy is invalid and of no force and effect – date of discharge

Bankruptcy Act 1966 (Cth) ss 77(a), 149(4), 149A(3), 149H, 149J, 149N

Re Hall (1994) 14 ACSR 488 applied

IN THE MATTER OF RICHARD BOYNE WOOD
RE: RICHARD BOYNE WOOD
EX PARTE: RICHARD BOYNE WOOD v MAXWELL WILLIAM PRENTICE

N 7180 OF 2001

TAMBERLIN J
SYDNEY
28 AUGUST 2001

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	7180 OF 2001

IN THE MATTER OF RICHARD HERBERT BOYNE WOOD

RE:

RICHARD HERBERT BOYNE WOOD
BANKRUPT

EX PARTE:

RICHARD HERBERT BOYNE WOOD
APPLICANT

MAXWELL WILLIAM PRENTICE
RESPONDENT

JUDGE:	TAMBERLIN J
DATE OF ORDER:	28 AUGUST 2001
WHERE MADE:	SYDNEY

THE COURT DECLARES THAT:

1.The applicant was discharged from bankruptcy on 6 September 1999 pursuant to s 149(4) of the Bankruptcy Act 1966 (Cth).

2.The request dated 1 February 2001 issued by the respondent under s 77(a) of the Bankruptcy Act 1966 (Cth) is invalid and of no force or effect.

THE COURT ORDERS THAT:

3.The notice of objection to discharge dated 31 August 1999 be set aside.

4.The request dated 1 February 2001 issued by the respondent under s 77(a) of the Bankruptcy Act 1966 (Cth) be set aside.

5.The respondent pay the applicant’s costs of and incidental to this application as agreed or taxed.

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	7180 OF 2001

IN THE MATTER OF RICHARD HERBERT BOYNE WOOD

RE:

RICHARD HERBERT BOYNE WOOD
BANKRUPT

EX PARTE:

RICHARD HERBERT BOYNE WOOD
APPLICANT

MAXWELL WILLIAM PRENTICE
RESPONDENT

JUDGE:	TAMBERLIN J
DATE:	28 AUGUST 2001
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. In this matter, I published my reasons for judgment in relation to a notice of objection to discharge from bankruptcy.  The reasons were published on 3 August 2001 and the conclusion which I then reached was that the notice of objection was invalid and I was prepared to make the appropriate declarations.  I made no order at that stage, but directed the bankrupt to provide short minutes to give effect to my reasons.  The present dispute before me concerns the form of the minutes to give effect to those reasons.

2. On 24 August 2001, I made an order that the notice of objection to discharge of the applicant from bankruptcy dated 31 August 1999, filed by the respondent with the Official Receiver, is invalid and of no force and effect. Another order sought was that the applicant was discharged from bankruptcy on 6 September 1999 pursuant to s 149(4) of the Bankruptcy Act 1966 (Cth) (“the Act”).

3. Essentially, this second order sought by the applicant is the principle issue in the discussion which has occurred this morning. The trustee has referred me to the provisions of section 149A(3) of the Act, which provides that:

   “If the objection is withdrawn or cancelled:
              (a) the objection is taken never to have been made; and
              (b) if:

   (i)the period specified in whichever of subsections 149(2), (3) and (4) applies in relation to the bankrupt has ended; and

   (ii)no other objection against the discharge of the bankrupt is in effect; and

   (iii)the bankrupt has not been discharged in accordance with Division 3;

   the bankrupt is taken to be discharged under section 149

   immediately the objection is withdrawn or cancelled.”

4. The contention advanced by the trustee in relation to this provision is that the discharge takes effect from the date when the validity of the notice of objection is challenged and found by the Court to have been ineffective.  The matter has previously been considered, although it does not appear to have received detailed argument, in a decision of Branson J, in Re Hall (1994) 14 ACSR 488 at 490. At 494, her Honour stated her conclusion in these terms:

   “I conclude that the notice of objection does not satisfy the requirements of s 149C(1)(c) of the Act.
              What is the consequence of findings that the notice of objection does not comply with either s 149C(1)(b) or s 149C(1)(c)? Mr Vaughan, counsel for the applicant, argued that the consequence of non-compliance was that the notice of objection is a nullity.  As a consequence, he argued, the applicant was discharged from his bankruptcy by operation of law on 16 February 1993.

   …
   In my opinion the notice of objection of which complaint is made in this case fails to satisfy the requirements of s 149C(1)(b) and (c) in any substantial way. I conclude that the notice of objection was and is ineffective to avoid the discharge from bankruptcy of the applicant by operation of law pursuant to s 149 of the Act on 16 February 1993.”

5. Her Honour therefore made appropriate declarations, including the declaration that the applicant was discharged from bankruptcy on 16 February 1993 pursuant to s 149 of the Act: ibid.

6. In my view, this reasoning is substantially appropriate in the present case. When a determination is made that a notice is invalid or ineffective, it operates in such a way that the notice never had any legal affect. It is true that in s 149A(3), which I have referred to earlier, there is a provision that where there is a withdrawal or cancellation of the objection, then the discharge is to take place “immediately the objection is withdrawn or cancelled”. However, in the present case, there has simply been no withdrawal or cancellation.

7. The Act provides for withdrawal and also provides for cancellation of notices: see ss 149H, 149J, 149N and 154. However, there is no power to which I have been directed whereby the Court can directly cancel or withdraw a notice. The notice can be withdrawn by a trustee or it may be cancelled by the Inspector General under s 149N(1) in certain circumstances. In the present case, however, those circumstances have not arisen even so far as the trustee is concerned or the Inspector General. Therefore, in my view, s 149A has no effect. I should add in passing that it is a curious provision insofar as it provides that the objection is taken never to have been made, yet the discharge only takes place from the date the objection is withdrawn or cancelled.

8. The consequence of the above reasoning is, in my view, that the notice never had any force and effect and, therefore, the discharge takes place from the date when the bankrupt is ordinarily discharged pursuant to the provisions of the Act.

9. Consequential on this finding is an argument advanced for Mr Wood to the effect that a request issued by the respondent under s 77(a) of the Act is invalid and of no force and effect. That notice, issued by the trustee and directed to the bankrupt, is dated 1 February 2001. It requires the production as at 12 February 2001 of a comprehensive list of all solicitors and other clients from whom Mr Wood had accepted instructions to act as a legal representative from the period 1 January 1998 to date.

10. In my view, having regard to the fact that the discharge took place prior to that date, this notice is of no force and effect.  I have not been asked to decide, nor do I decide, that it may not be effective for a certain period.  However, it seems to me that the whole of the notice must fail in view of the fact that the discharge had taken place prior to the issuing of the notice.

11. I have been asked, in relation to the orders which have been sought, to make an order to the effect that the notice of objection to discharge of 31 August 1999 be set aside and that it be withdrawn or cancelled.  As I indicated earlier, I do not have any power to do this.  That circumstance in any event has not arisen and therefore it is not appropriate to provide for withdrawal or cancellation.  Although the application which was made before me in relation to restraining the trustee from enforcing the request of 1 February 2001 was made on an interlocutory basis, I grant leave to seek that relief on a final basis.  In my view, for reasons which I have given, it is appropriate that such an order be made.

12. Finally, in relation to the question of costs, I am satisfied that Mr Wood has been substantially successful on the matters raised and, accordingly, the costs should follow the normal principle that they follow the event.  I therefore award costs in favour of Mr Wood.

13. The orders which I make are those set out in the short minutes of order which were presented to me, as amended, in relation to order 5 by noting s 77(a) rather than s 88A, which was a clear typographical error. Accordingly, I make the declarations. I have already made declaration one. I make declaratory orders two and three and I make orders four, five, as amended, and six.

I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate:

Dated:             4 September 2001

Counsel for the Applicant:	Mr M J Stevens
Solicitor for the Applicant:	Abbott Tout
Counsel for the Respondent:	Mr J T Johnson
Solicitor for the Respondent:	Sally Nash & Co
Date of Hearing:	28 August 2001
Date of Judgment:	28 August 2001