Formal irregularities
29 The next issue which needs to be determined is a number of formal irregularities in the bankruptcy petition and supporting documents and in steps taken in the prosecution of the bankruptcy petition.
30 Section 52(1) of the Bankruptcy Act 1966 (Cth) provides that:
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);
(b service of the petition; and
(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;
and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.
31 There is an affidavit by the applicants verifying the matters set out in the amended petition, namely the fact of the debt, that the applicants do not hold security over Mr Brown's assets, that he was in Australia and ordinarily resident in Australia when the act of bankruptcy occurred, and that on 27 November 2020 he committed that act of bankruptcy by failing to pay the debt. There are affidavits establishing that the petition was served on Mr Brown and that the debt is still owing.
32 The applicants have, however, properly drawn the court's attention to a number of defects in the documents filed with the court. Section 306(1) of the Bankruptcy Act provides that proceedings under the Act 'are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court'.
33 When asked to comment on the irregularities which had been drawn to the court's attention in a letter to the court which Mr Brown acknowledges he also received, Mr Brown said that the whole process has been something of a 'shambles' and claimed that there was only one occasion on which he had been personally served with any documents. I will take that to be him making objection to the defects which I am about to describe.
34 First, the affidavit verifying the amended petition is incorrectly dated 19 January 2020 in its opening line. But it is correctly dated 19 January 2021 in the jurat. The incorrect date is clearly a slip and a formal defect.
Second, the correct date, 19 January 2021, on which the affidavit was sworn is the day before the date which appears on the amended petition which it purports to verify, namely 20 January 2021. If that is a defect, it is a formal defect only. What it means is that the affidavit, when sworn by the petitioning creditors, must have verified a petition which was, at that stage, unsigned. But the petition and affidavit are in the form of a single document. That is, they are in the form often taken of the affidavit being appended to the petition itself, so that they are both part of the same document. The relevance of this is that it may be inferred that when the deponents swore the affidavit, they had before them and were, in fact, verifying, the contents of the petition, albeit it was a petition which was at that time unsigned. The substantive requirement of s 52(1) is proof on affidavit of the matters stated in the petition. In view of the form in which the affidavit and petition take, there can be no doubt that the affidavit verified the things said in the petition, whether the petition was at that stage signed or not.
35 Third, the petition is signed by 'Hammond Legal', not the individual lawyer named in the petition as the applicant's lawyer, as required by r 2.15(1) of the Federal Court Rules. In ANZ Banking Group Ltd v Elferkh [1999] FCA 1049; (1999) 92 FCR 195 at [23], Emmett J held that a failure to sign a petition at all was a formal defect only. It must follow that a failure to comply with r 2.15(1) as to the manner of signature (if that is what has occurred) is a formal defect too.
36 Fourth, the amount of the judgment debt stated in the amended petition does not include an amount of post-judgment interest which has accrued, in the sum of $497.82. Section 47(1A) of the Bankruptcy Act requires the petition to be in the form prescribed by the rules of court. Rule 4.02 of the Federal Court (Bankruptcy) Rules prescribes the form. That form requires the petition to state the amount which the debtor owes to the creditor. It follows that this petition does not comply with that, as it understates the amount owing by omitting the interest.
37 In Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 80-81, however, a majority of the High Court held that a failure to state the amount of interest in a bankruptcy notice was a formal defect or irregularity, although it could constitute a substantive defect if the understatement is objectively capable of misleading the debtor as to what is necessary for compliance with the bankruptcy notice. The approach to assessing defects in a bankruptcy notice is stringent, because it performs the important function of informing the debtor what he or she must do to avoid committing an act of bankruptcy: Metledge v Hopkins [2020] FCA 561 at [4], [7]; Kleinwort at 81 (Deane J, in dissent but not on this point). A creditor's petition performs a different function, namely that of satisfying the court that the court's jurisdiction under s 43(1) of the Bankruptcy Act to make a sequestration order has been enlivened. The court will be satisfied of that even if the amount shown in the petition understates the judgment debt by omitting interest. If that is only a formal defect in a bankruptcy notice, it must be a formal defect in a petition too.
38 Fifth, there are other minor defects in the petition: the postcode has been omitted from Mr Brown's address, his occupation has been left out and the petition states a business name for him which is, in fact, a company name that is not used as a business name. These defects are formal only.
39 No reason has been advanced to think that any of these defects have caused substantial injustice, so I am satisfied that s 306 of the Bankruptcy Act means that they do not invalidate these proceedings. While I acknowledge Mr Brown's submission that the process has been 'a bit of a shambles' and while the number of defects which the court has had to address in these reasons might rather tend to support that submission, the fact remains that with one exception I am about to come to, service on him of all of the necessary documents, including the crucial bankruptcy notice in which no defect has been alleged, has been proved to the satisfaction of the court. The matters set out in the petition including the existence of the debt and the committing of the act of bankruptcy, have all been established. Nothing arises on the evidence to suggest that any of these defects, regrettably numerous as they have been, have caused substantial injustice.
40 The exception to which I said I would come is that r 4.05(d) of the Federal Court (Bankruptcy) Rules requires that a copy of any consent to act as trustee of the debtor's estate is served on the debtor at least five days before the hearing of the petition. There is an affidavit showing that the consent was sent to Mr Brown by email. But he has not filed a notice of address for service and has not filed any notice authorising service by electronic communication as required by r 10.31(d) of the Federal Court Rules to permit service by email. However the email address used is one which Mr Brown has used to communicate with the court and which he has specifically confirmed to my Chambers could be used for that purpose. I am satisfied that sending the consent to act as trustee to him by email is likely to have brought the consent to his attention, and that this is a case where I should exercise the discretion under r 1.34 of the Federal Court Rules to dispense with the requirement that it be served in any other way.