Australia & New Zealand Banking Group Ltd v Hubner

Federal Court of Australia|1999-09-20|Before: Byrne J, Jones J, Spender J

REASONS FOR JUDGMENT 1 This is a contested creditor's petition QG 7483 of 1998. At the start of the hearing of the petition this morning, the petition was in the form set out in the attachments to the affidavit verifying paragraphs 1, 2 and 3 of it in the affidavit of Robert George Petty, filed 26 November 1998. The creditor's petition alleges that Mr and Mrs Hubner owe to the Australia and New Zealand Banking Group Limited ('ANZ Bank') an amount of $707,768.64. The petition indicates how the petitioner says that that amount is made up. The first item of it, which is important for present purposes, is the amount of taxed costs of $8907.02. That amount is said to be the ANZ Bank's legal costs "ordered to be paid by the Respondents pursuant to the judgment of Justice Byrne in the Supreme Court of Queensland held at Cairns in writ…331 of 1997 dated 15 September 1997 which costs were taxed in the amount of $8907.02 by certificate of taxation dated 18 May 1998…" 2 There are other elements, of course, making up the total sum of $707,768.64. The petition says that the ANZ Bank holds security over the property of the respondent debtors to the value of $275,000, and the petition asserts that there is an unsecured debt of $432,768.64. The petition alleges that the debtors were personally present and ordinarily resident in Australia. 3 In its original form the petition alleged six acts of bankruptcy: three committed by the respondent male debtor and three by the respondent female debtor. Each of those three relates to interlocutory costs orders: the first of those orders being the judgment of Byrne J, the other four being two separate sets of costs orders by Jones J in the Supreme Court of Queensland. The petition alleged: "The following acts of bankruptcy were committed by the Respondent Debtors within 6 months before the presentation of this petition:

C/- MINTER ELLISON Level 22, Waterfront Place 1 Eagle Street BRISBANE QLD 4000." 5 The petition at the foot of the front page states: "Filed on behalf of the applicant" and then: "MINTER ELLISON Lawyers Waterfront Place 1 Eagle Street BRISBANE QLD 4000" with DX, telephone, and facsimile numbers, and a reference PYP 9604838. 6 The first question in this matter concerns the allegation of three acts of bankruptcy against the male debtor and three acts of bankruptcy against the female debtor. 7 Section 40 of the Bankruptcy Act 1966 relevantly provides: "40(1) A debtor commits an act of bankruptcy in each of the following cases:

… (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:

(i) where the notice was served in Australia - within the time specified in the notice…

comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained;

..." 8 It is clear that an act of bankruptcy is committed where there is non-compliance with the requirements of a bankruptcy notice as set out in s 40(1)(g). There are many cases to the effect that a bankruptcy notice must be founded on a single judgment. McDonald Henry and Meek note in Australian Bankruptcy Law and Practice (5th ed) at paragraph 40.1.290: "Two or more judgment debts cannot be included in the same notice: Re Low; Ex parte Argentine Gold Fields Ltd [1891] 1 QB 147 (CA); In Re Bassett (1895) 2 Mans 177; Re OCS (A Debtor); Ex parte Debtor [1904] 2 KB 161; Re A Bankruptcy Notice (1906) 96 LT 133; Re Brinda (1906) 51 Sol Jo 133; Re Application for Issue of a Bankruptcy Notice; Ex parte Tinson (1946) 14 ABC 41 at 43; Re Stephenson; Ex parte Cintee Nominees Pty Ltd (1988) 18 FCR 375; Re Bond; Ex parte Hongkong Shanghai Bank of Australia Limited (1991) 33 FCR 426 at 434-436; Catalano v Commonwealth Bank of Australia (unreported, Fed Ct of Aust, 3 July 1997, Sundberg J); GPW Aussie Exports v Latin (unreported, Fed Ct of Aust, 7 July 1998, Goldberg J), at pp 2-3." 9 The learned authors note that a contrary view was taken in The Illawarra Credit Union Limited v Olejniczak, an unreported judgment of Beaumont J of 26 May 1998, in which the effect of the operation of para 23(b) of the Acts Interpretation Act 1901 (Cth) was considered. However, the learned authors also note that the effect of the Acts Interpretation Act in this context was considered in GPW Aussie Exports v Latin (Goldberg J, 7 July 1998, unreported) where Goldberg J declined to follow the reasoning in the Illawarra Credit Union Case because, in his Honour's view, in the light of the line of authority listed above, the context of the Bankruptcy Act in s 40(1)(g) did "otherwise require". The singular term "final judgment or order" should accordingly not be interpreted as including the plural. Thus, McDonald et al conclude: "While it may require a decision of an appellate court to clarify the situation, the better view at present is that a bankruptcy notice cannot be founded on more than one judgment". 10 It is by a parity of reasoning that a question arises as to whether the context of the statutory provisions dealing with creditor's petition permit a creditor's petition to allege more than one act of bankruptcy against a particular debtor. Mr P. Hack, counsel for the ANZ Bank, contended that the provisions of the Acts Interpretation Act and the difference between a bankruptcy notice and a creditor's petition (which is a pleading) meant that a petitioning creditor could allege in the petition more than one act of bankruptcy against a debtor, and there are two cases to which he referred where a number of acts of bankruptcy seem to have been included in the relevant petition. However, nothing turned on that circumstance in the matters in dispute in those two cases. 11 I refer to Re A Debtor; Ex Parte A Person Aggrieved v Petitioning Creditors and the Official Receiver (1912) 106 LT 344 and Dean v QUF Industries Ltd (1981) 51 FLR 317. Notwithstanding these references, it seems to me that there is a serious question as to whether, given the statutory provisions of the Bankruptcy Act, it is competent to allege more than one act of bankruptcy. If it is competent, it seems to me that it has to be alleged in the alternative, and it is not competent to found a petition on a combination of more than one act of bankruptcy. 12 First of all, s 43 provides: "43.(1) Subject to this Act, where:

(a) a debtor has committed an act of bankruptcy; and

(b) at the time when the act of bankruptcy was committed, the debtor;

(i) was personally present or ordinarily resident in Australia;

(ii) had a dwelling-house or place of business in Australia;

(iii) was carrying on business in Australia, either personally or by means of an agent or manager; or

(iv) was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;

the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor." 13 Section 44 relevantly provides: "44.(1) A creditor's petition shall not be presented against a debtor unless:

(a) there is owing by the debtor to the petitioning creditor a debt that amounts to $2,000 or 2 or more debts that amount in the aggregate to $2,000, or, where 2 or more creditors join in the petition, there is owing by the debtor to the several petitioning creditors debts that amount in the aggregate to $2,000;

(b) that debt, or each of those debts, as the case may be:

(i) is a liquidated sum due at law or in equity or partly at law and partly in equity; and

(ii) is payable either immediately or at a certain future time; and

(c) the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition." 14 Section 47(1) provides: "A creditor's petition must be verified by an affidavit of a person who knows the relevant facts." 15 Section 47(1A) provides: "If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed." 16 Order 77 r 16 of the Federal Court Rules prescribes that the form of creditor's petition shall be as in Form 150. That form contains the following in part: "(4) The following act of bankruptcy was committed by the respondent debtor within 6 months before the presentation of this petition:

(Give full details of the act of bankruptcy mentioned in section 40 of the Bankruptcy Act 1966 on which you are relying, including details of any judgment on which a bankruptcy notice is founded.)

(signed, petitioner or solicitor for petitioner)" 17 Form 150 later provides: "This petition is filed by (name of solicitor for petitioner) for (name of petitioner).

The petitioner's address for service is: (address for service)." 18 Section 52 of the Bankruptcy Act provides: "(1) At the hearing of a creditor's petition, the Court shall require proof of:

(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor." 19 Counsel for the ANZ Bank sought the Court to rule on whether the form of the creditor's petition adopted in this case was valid and foreshadowed that, if the Court expressed dissatisfaction with that form, he would seek to amend the petition by deleting the second and third acts of bankruptcy alleged against each of the male and female debtors. On the Court not being minded to permit the case to be conducted on a staged basis of that kind, counsel for the applicants sought and was granted leave to amend the petition in the essential respect of deleting the second and third acts of bankruptcy alleged against each of the male and female debtors. 20 A notice of intention to oppose the petition was filed by both Mr and Mrs Hubner. However, none of the grounds expressed in that notice of intention took issue with either the service or non-payment on the matters said to ground the remaining acts of bankruptcy on which the petitioner relied. The requirements of the Act in relation to the making of a creditor's petition on the material before me are satisfied, subject to the three matters which Mr Fitzgibbon of counsel sought to argue upon behalf of Mr and Mrs Hubner. 21 The first concerns the permitting of amendment of the petition. As I have indicated, I granted leave to do. In that respect it seemed to me that there was no prejudice to the respondents by making the amendments which were sought by the ANZ Bank at the end of argument. 22 The major criticisms or grounds on which the making of a sequestration order was opposed come down to these matters: first, in an affidavit filed 13 January 1999, Mr Hubner deposed to the following: "7. This whole proceeding is being pursued by the ANZ BANK to remove Yvonne Hubner and me, this deponent, from disclosing in a jury trial the fraud and criminal activity I discovered as against The Cairns Glass Company Pty Ltd (in Liq) where the ANZ BANKING GROUP LTD (ACN 005 357 522) colluded with the Administrator of The Cairns Glass Company Pty Ltd before liquidation, to settle a legitimate claim, between The Cairns Glass Company Pty Ltd and JML Constructions Pty Ltd which should have been paid and such payment would not have activated my guarantee. 8. The appointed Liquidators of The Cairns Glass Company Pty Ltd (in Liq), Ivor Worrell and Raj Khatri, have refused to provide copies of all correspondence generated between them and the ANZ BANK while they were acting as the voluntary appointed Administrators of the Company. As a Director I am entitled to any Company documents or reports as of right and I say there can be no legitimate claim that the correspondence was privileged, available to the Administrators. The ANZ BANK colluded with the Administrators to settle a Company account in excess of $400,000.00 for $25,000.00 and then hold my wife and myself accountable for the shortfall. Evidence of this fact is filed in our joint affidavit deposed jointly by us on 30th day of July 1998 in the matter number 7247 of 1998. The proof of this will be forthcoming once Court ordered total discovery is made available." 23 In relation to this ground of opposition, the amended statement of claim in proceedings in the Far Northern District Registry of the Supreme Court of Queensland, which is in evidence before me, does not seek to address the matters that are explicitly referred to in paragraphs 7 and 8 of Mr Hubner's affidavit. Whatever be the position in relation to that litigation, I am not satisfied that there is some mala fide or ulterior purpose in pursuing the making of sequestration orders based on the non-payment of interlocutory costs orders made by Byrne J. 24 The second basis on which the making of sequestration orders is opposed concerns the fact that the creditor's petition is dated 26 November 1998, and precedes the making of orders in Mrs Hubner's case, and the provision of reasons in the case of both Mr and Mrs Hubner, in respect of applications by them to have the six bankruptcy notices, which originally were specified in the creditor's petition, set aside. It was said that prior to the giving of reasons by Dowsett J on 7 December 1998 in proceedings QG 7247 to 7257 of 1998, there was no available act of bankruptcy on which the petition could be founded. 25 However, as the reasons of Dowsett J of 7 December 1998 make plain, the application in Mr Hubner's case was lodged out of time, and so the acts of bankruptcy had already been committed prior to the initiation of the applications to have the bankruptcy notices addressed to him set aside. 26 In the case of Mrs Hubner, no affidavits as required by O 77 r 13 of the Federal Court Rules accompanied the application to set aside the bankruptcy notices addressed to her. In this particular case, Dowsett J addressed the substance of Mrs Hubner's claims in order to determine whether the initial injustice to the bank would be remedied by allowing her to correct the procedural defect. For the reasons which he then gave, he said: "The Act does not purport to apply to the Rules of Court. I should say that there was no suggestion that s 51(2) of the Federal Court Act would be of assistance to Mrs Hubner in this case." 27 His Honour considered that, while there was discretion to entertain the applications notwithstanding the failure to file the appropriate accompanying affidavit, it would be futile to do so because, in Mrs Hubner's case, the applicant had no proper basis for setting aside the notice and therefore the affidavit could serve no useful purpose. 28 The orders made by Dowsett J were the subject of an appeal to the Full Court of the Federal Court who dismissed the appeal and indicated that they saw no error in his reasons. In those circumstances, it seems to me plain that there is no substance in the assertion that, because the creditor's petition was presented prior to the delivery of the reasons for judgment of Dowsett J, there was, in that circumstance, no available act of bankruptcy to found the petition. 29 The third ground concerns the form of the creditor's petition, where the signature on it consists of the handwritten words "Minter Ellison" above the printed words "Minter Ellison, Solicitors for the Applicant Creditor". 30 It was submitted by counsel for the ANZ Bank that the signature "Minter Ellison" being, it was said, the signature of the firm of solicitors acting for the petitioning creditor, was in compliance with the requirement that the creditor's petition be in the form of Form 150 which, in turn, requires the petition to be signed by, inter alios, the solicitor for the petitioner. In my opinion, the mere writing of the name of the firm is not the appending of a signature of the solicitor for the petitioner. 31 In Re A Debtor (No 23 of 1939), Debtor v Petitioning Creditor and Official Receiver (1939) 2 All ER 338, the circumstance was one where the petitioning creditor was a firm. In that sense, it differs from the facts here, where the signature of the solicitor for the petitioner is the name of a firm, and the question is whether that difference is sufficient. In Re A Debtor (No 23 of 1939), the petition was signed in the firm's name by a partner, and at the hearing the Registrar allowed an amendment whereby the signature of one partner was inserted. 32 Denning of King's Counsel was for the unsuccessful appellant; he sought to have the amendment disallowed. His submission is similar to the submission made by Mr Fitzgibbon on behalf of Mr Hubner to me: namely, that where a petition is presented by a firm, it must be signed by a partner, and it is not validly presented unless it is so signed; the mere writing of the firm name would not be sufficient to meet the requirements of the Rules; the amendment of the petition should therefore not be allowed. 33 However, in the Court of Appeal, the judgment of the court was given by Sir Wilfrid Greene MR. He indicated that: "[t]he petition as filed was signed by one of the partners in the firm name, and under the signature was written by a clerk the following words: 'by [the partner who had signed], a partner in the said firm'." 34 The Master of the Rolls indicated that at the hearing of the petition, the Registrar had allowed the petition to be amended by inserting the signature of the partner who had originally signed the petition, and as a result of the insertion, the Master of the Rolls said: "…the petition in point of form satisfied the requirements of the Bankruptcy Rules, 1915, r 278." 35 As to the question of whether the Registrar ought not to have allowed the amendment, Sir Wilfrid Greene said "…this argument cannot be supported", and he rejected the contention that the non-compliance with the rules as to signature, where a firm of creditors was petitioning, was not such an irregularity as could be cured by amendment. 36 I should also mention on this question a number of cases not directly in point. In Re Manias; Ex parte Edsill Pty Ltd (1986) 15 FCR 1, a petition commenced with the words "I, ROBERT HINE, Company Director of Edsill Pty Limited" and was signed by Mr Hine without there being any indication that he signed on behalf of Edsill Pty Limited. There was evidence before Jackson J that a resolution ratifying the earlier actions of Mr Hine in the presentation of the petition had been passed by the directors of the company. His Honour referred to the High Court judgment in Growden v Wiltshire (1935) 52 CLR 286 where the High Court had rejected an argument that a petition was invalid because it was brought in the name of a liquidator rather than in the name of the company in liquidation, a matter which it had regarded as an irregularity. In that case, the High Court directed the judge of the Court of Bankruptcy to amend the petition by substituting the name of the company for that of the liquidator, and to make any consequential amendments. 37 Of less direct relevance is the decision of the Full Court of the Federal Court (Lockhart, Burchett & Gummow JJ) in Deputy Commissioner of Taxation (Vic) v Boxshall (1988) 83 ALR 175. 38 In the case before this Court, the evidence is plain that the original petition was signed by a solicitor, Mr Garry Hamilton, who was then and is now a partner in the firm of Minter Ellison, which firm was acting for the Australia and New Zealand Banking Group Limited in relation to that bank's dealings with Mr and Mrs Hubner. In those circumstances, it seems to me right, and such as not constituting any prejudice to Mr and Mrs Hubner, to permit the amendment of the petition by Mr Hamilton, instead of having written in his own hand "Minter Ellison" as the solicitor for the applicant creditor, writing the name "G J Hamilton, PARTNER" as the solicitor for the applicant creditor. 39 All of the cases which touch on the question of whether there has been compliance with the requirement that the actual name of the person who should have signed a document appear on that document, or whether a document by reference to a firm is sufficient, have regarded the error (if it be error) as one of a formal kind, capable of amendment. There is no case of which I am aware which suggests that it is unfair to make such an amendment, or in which such an amendment has not been permitted where there has been no evidence of any misleading or injustice. 40 I am satisfied of the act of bankruptcy alleged against the male debtor and the female debtor in the amended creditor's petition, and I am satisfied of the other acts of which the Bankrupytcy Act requires proof. I note that Paul Sweeney has consented to act as trustee of the estate of each of Mr and Mrs Hubner in the event of the making of a sequestration order. I make a sequestration order against the estate of Colin Richard Hubner and I make a sequestration order against the estate of Yvonne Hubner. I order that the costs of and incidental to the petition, including reserved costs, be paid in accordance with the Act. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

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