MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 | Case summary

Federal Court of Australia|1995-11-24|Before: Nicholson JJ

1 This is an appeal from the dismissal by a judge of the Court of the appellant's application under s 153B the Bankruptcy Act 1966 (Cth) for the annulment of his bankruptcy on the ground that the sequestration order ought not to have been made. 2 The appellant's case both at first instance and in this Court is that there were defects in the petition incapable of remedy and also certain defects in the proceedings before the Registrar who made the sequestration order on the petition; it was accordingly said that the petition should have been dismissed and no sequestration order made. The appellant accepts that, in seeking annulment, it was necessary for him not only to show that the sequestration order ought not to have been made, but also to persuade the Court to exercise in his favour the discretion to grant or withhold annulment conferred by s 153B. 3 The learned primary judge rejected the appellant's contentions that there were deficiencies in the petition and in the procedure followed by the Registrar such as prevented the making of the sequestration order. His Honour also held that, even if he were wrong in so holding, he would nevertheless exercise the discretion to refuse annulment. On appeal, the appellant attacks both these conclusions. 4 The sequestration order was made on 19 November 1991. According to the trustee's report to the Court in respect of the appellant's annulment application, the trustee, on 2 March 1993, objected to the appellant's discharge from bankruptcy on the ground that he had continued after bankruptcy to manage a corporation without leave (see s 149D(1)(b)) and on the further ground that he had failed, whether intentionally or not, to disclose to the trustee his beneficial interest in certain property (see s 149D(1)(n)). The trustee also reported that on 20 September 1995 he withdrew these objections following a determination made by the Inspector-General in Bankruptcy on application by the appellant that the objections should be withdrawn, as to the first, because the Australian Securities and Investments Commission had declined to prosecute the relevant offence and, as to the second, because the trustee had been able to realise the asset that was the subject of that objection. The bankrupt was thereupon discharged from his bankruptcy on 20 September 1995. The respondent does not suggest that discharge is any jurisdictional impediment to the annulment application. 5 The appellant is now facing charges under s 266(1) and 263(A) the Bankruptcy Act in respect of his conduct during his bankruptcy. It is said that, notwithstanding s 275(a), annulment now may give the appellant a forensic advantage in defending these criminal charges or at least one of them. It was this consideration which motivated the very belated annulment application of 2 September 1998, the delay being explained by appellant's counsel as due to the fact that the charges were brought only shortly before the application was made. 6 Appellant's counsel submitted firstly that the way the learned primary judge dealt with the discretionary issue was flawed with appealable error, saying that if he could not persuade this Court of the existence of such error: "the appeal must fail at the outset". This overstates the position. But appellant's counsel invited this Court to exercise for itself the discretion conferred by s 153B on the materials that were before the learned primary judge, should it allow the appeal: hence the practical importance of showing error in the way the learned primary judge dealt with the discretionary issue. 7 In seeking to demonstrate error in the learned primary judge's reasons for holding that he would have exercised the discretion under s 153B to refuse annulment, even if he were wrong in concluding that the deficiencies in the proceedings that culminated in the making of the sequestration order were such as to show that that order ought not to have been made, the appellant pointed to what was said to be inconsistencies in the learned primary judge's reasoning on this issue. 8 We do not think that, even if his Honour could have expressed himself with a little more clarity, there is inconsistency between what his Honour said in the first part of [21] of his reasons about the relevance of the pending criminal charges and what he subsequently said in the last sentence of [21] and [22] (and following) about the appellant's "post-bankruptcy conduct", which includes his conduct out of which the pending charges appear to have arisen. The effect of what we think his Honour said in the passages attacked was that, while it would be inappropriate for him to express any opinion on whether the appellant was, in fact, guilty of the pending charges, he was still entitled to have regard to the appellant's underlying conduct, which, as his Honour pointed out, the appellant did not dispute. The appellant did not suggest that his Honour was in error in making this limited use of such conduct, in deciding to exercise the discretion against the appellant. Cf Re Finn; Ex parte Amoco Australia Ltd (1982) 41 ALR 487 at 493. 9 It was said also that, while the learned primary judge correctly approached the discretion issue by first assuming that there were fundamental deficiencies in the proceedings before the Registrar sufficient to show that the sequestration order ought not to have been made, in explaining why he would nevertheless have exercised the discretion against the appellant, his Honour referred to the attacks on the sequestration order as being "of entirely technical kinds". It is, however, wrong for the appellant to suggest that, in making this comment, his Honour ignored his earlier assumption that these defects were sufficiently serious to have required dismissal of the petition. The judge here went on to acknowledge the importance of strict compliance with the requirements of the bankruptcy law because of the change in status involved upon bankruptcy, but concluded that "those considerations have less relevance when it is clear, from events occurring and evidence acquired after the making of a sequestration order, that every consideration of substance lay with the creditors". It is, we think, clear that the learned primary judge considered that these circumstances of the case militated against exercising the discretion in favour of the appellant even if there were deficiencies in the proceedings before the Registrar, which can fairly be described as "technical" ones, in so far as they involve non-compliance with procedural requirements of the Bankruptcy Act and Rules and even if those deficiencies were sufficiently serious to have justified dismissal of the petition. 10 It is impossible to show that the learned primary judge was in error in saying that every consideration of substance lay with the creditor. As his Honour noted, the appellant did, in fact, commit the act of bankruptcy on which the petition was founded. He was, as the judge observed, "hopelessly insolvent" when the sequestration order was made: there was a very large deficiency between the $58,027 ultimately paid out from the $87,595 realised by the trustee to unsecured creditors in respect of the proofs of debt of those creditors that totalled $706,423. His Honour also correctly took into account that the appellant was at all stages legally represented before the Registrar, including the critical occasion on 19 November 1991 when the petition was amended and the sequestration order made, and so was able to assert "every legal right he had", including his rights to object in respect of what are said now to be fundamental flaws in the proceedings. It is also fair to infer from what the learned primary judge said about the appellant's motivation for making the application that he was also alert to the fact that the application for annulment was brought long after discharge, another relevant discretionary consideration. 11 Without expressing any opinion as to the actual guilt of the appellant on the charges he is now facing, the learned primary judge took into account the appellant's undenied conduct during his bankruptcy in seeking to hide assets and in being engaged unlawfully in the management of corporations. His Honour was criticised for doing this. It was said that, since the appellant is facing criminal charges under the Bankruptcy Act, it is not surprising that he did not choose to go into evidence in this Court about such matters. That does not explain the appellant's refusal to deal with the evidence to the effect that he had breached the Bankruptcy Act by being engaged in the management of corporations during his bankruptcy: the relevant prosecuting authority long ago declined not to proceed against him for any such offence or offences. Further, the appellant had the onus of satisfying the learned primary judge that the circumstances of the case were such as to justify the exercise in his favour of the discretion to grant annulment. The evidence of his involvement in these two breaches, not disputed, was sufficient to entitle the learned primary judge to find, as he did, such a want of frankness on the part of the appellant during his bankruptcy as to be a relevant consideration in deciding whether to exercise the discretion to annul against the appellant. The learned primary judge was also criticised for taking into account what the trustee had to say in his report to the Court about having objected to the appellant's discharge from bankruptcy because of his involvement in the management of corporations, when the trustee ultimately withdrew that objection. But that was done only after the Inspector-General had reviewed it and determined it should not stand because the prosecuting Authority had declined to prosecute the particular offence. The appellant did not dispute he had committed the offence; nor did he explain why the Authority declined to prosecute. In these circumstances, the learned primary judge was not in error in taking into account, as evidencing want of candour on the appellant's part, his undisputed misconduct in this respect. 12 The appellant's attack on the manner of exercise by the learned primary judge of the discretion to refuse annulment therefore fails. 13 We would add that if error in the exercise of the discretion had been demonstrated so that it would be for this Court to exercise the discretion afresh on the materials before the primary judge, we would reach the same conclusion on this issue as the judge for the reasons he gave and also because of the litany of misconduct by the appellant alleged against him in the trustee's report to the Court, which the appellant has never attempted to dispute; because of the long delay in seeking annulment and because we do not consider it would be in the public interest, in all the circumstances of this case, to grant annulment when the appellant's avowed object in seeking it is to provide him with a possible defence to a bankruptcy offence the commission of which he has not denied. 14 The appellant's contentions that a sequestration order should not have been made because of deficiencies in the petition and the procedures followed by the Registrar leading up to the making of that order remain to be dealt with. 15 The creditor's petition first came before the Court on 14 October 1991, was adjourned on the appellant's application by consent to 22 October and was then adjourned to 19 November 1991. On all occasions, the appellant was legally represented. The appellant did not at any stage file a notice then required by r 20 the Bankruptcy Rules of intention to oppose the petition and of the grounds for such opposition. Nor does it appear that the deficiency now said to make the proceedings before the Registrar a nullity was ever raised by him until he made the annulment application. Moreover, the bankruptcy notice served on him complies in all respects with the requirements of the Bankruptcy Act and the appellant has never disputed his failure to pay the amount demanded by the notice and his failure to satisfy the Court of the existence of a relevant cross-demand. On 19 November 1991, immediately before making the sequestration order, the Registrar, without objection from the appellant's legal representative, amended the petition under s 33(1)(b) to cure the defect now relied on. (The failure of the Registrar to strike out the original par 4(a) of the petition after writing on it the amended par 4(a) is of no moment, despite a submission to the contrary. It is manifest from the face of the amended petition that handwritten par 4(a) replaces the original paragraph.) 16 It was first said that the petition did not allege any act of bankruptcy, asserting only that the appellant had failed to comply by a specified date with the requirements of a particular bankruptcy notice. In reliance on Re Abrahamson; Ex parte Crisp & Gunn Ltd (1978) 34 FLR 217, it was submitted that the failure of the creditor to allege not only non-compliance with the requirements of the notice, but also failure by the appellant to satisfy the Court of a cross-demand of the kind referred to in s 40(1)(g) made the petition incurably bad. The contention, in effect, was that the Registrar had no jurisdiction to make the sequestration order for want of a "petition" and could not cure the deficiency by amendment. 17 In Re Abrahamson, Neasey J dismissed a petition on a number of grounds, one of which was a similar deficiency, so far as the statement of the act of bankruptcy under s 40(1)(g) there relied on was concerned, to that in the petition initially presented against the appellant. In finding this defect to be a sufficient ground for dismissal of the petition, his Honour said, at 221:

"The defect is a matter of fundamental substance and cannot be cured by s.306."

18 His Honour did not consider whether the petition could be amended in the way the Registrar here amended the petition. The reason may be that the petition came before him without any appearance by or on behalf of the debtor. 19 We do not think Neasey J was correct in holding that the omission from par 4 of the petition based on non-compliance with a bankruptcy notice of an allegation of failure by the debtor to satisfy the Court of a relevant cross-demand involves a failure by the petitioning creditor to comply with r 12(2) and Form 5 of the Bankruptcy Rules in force in 1991. Paragraph 4 of Form 5 required the creditor, in alleging the commission by the debtor of an act of bankruptcy, to "set out nature and date … of the act … of bankruptcy relied on". The Bankruptcy Act 1883 (UK), which was the model for the Australian legislation, created an act of bankruptcy in the same terms as s 40(1)(g) and contained provisions not materially different from r 12(2) and Form 5. In In re Dunhill; Ex parte Dunhill [1894] 2 QB 234 at 236, Vaughan Williams J recorded that:

"The form which has been adopted in the High Court of Justice, in cases where the act of bankruptcy relied on is non-compliance with a bankruptcy notice, is as follows: 'that (the debtor), within three months before the date of this petition, has committed the following act of bankruptcy, namely: - Has failed, before the 9th day of July 1890, to comply with the requirements of a bankruptcy notice, duly served on him on the 1st day of July 1890.'…"

2019This was long accepted in the United Kingdom as a sufficient allegation in a petition of the act of bankruptcy provided for by the United Kingdom equivalent of s 40(1)(g): see Atkin's Court Form, 2nd ed (1972), p 228. The allegation in par 4 of the petition here in question is to this same effect. 20 This was long accepted in the United Kingdom as a sufficient allegation in a petition of the act of bankruptcy provided for by the United Kingdom equivalent of s 40(1)(g): see Atkin's Court Forms, 2nd ed, Vol 7,(Butterworths: London, 1972), p 228. The allegation in par 4 of the petition here in question is to this same effect. 21 The reason why such a brief statement of an act of bankruptcy within s 40(1)(g) is sufficient compliance with the legislative requirements for a petition is clear enough. Like the form of bankruptcy notice prescribed under the English legislation, the form of bankruptcy notice prescribed by the Rules in force at the time here relevant, Form 4, gives the debtor notice that within a nominated number of days after service he is required either to pay the amount of the relevant judgment debt or to secure that payment to the satisfaction of the judgment creditor; the form also gives the debtor notice that if, within that same period, he fails to comply with either of those two requirements or he fails to satisfy the Court that he has a relevant cross-demand, then: "You will have committed an act of bankruptcy on which bankruptcy proceedings may be taken against you." To allege in a petition failure to comply with the requirements of such a notice in the manner adopted by the petitioning creditor here is to allege non-compliance with all three requirements of the notice (at least where as here, the particular notice is in the statutory form). Such an allegation can fairly be said to adequately set out the nature and date of the act of bankruptcy arising under s 40(1)(g) for the purposes of Form 5. 22 Even if, contrary to what we consider to be the position, there was an omission from par 4 of the petition of a full statement of the nature of the act of bankruptcy relied on, that deficiency in the petition would, in any event, be no more than "a formal defect or an irregularity" within s 306(1). "A formal defect or an irregularity in the context of a defect of form [in a petition], is one that could not reasonably mislead the debtor": Deputy Commissioner of Taxation v Boxshall (1988) 19 FCR 435 at 440. The petition alleged non-compliance by a specified date with a particular bankruptcy notice; the notice complied in all respects with Form 4 and the relevant Rules. It could not therefore, on an objective view, mislead the debtor as to what was the act of bankruptcy relied on in the petition. Further, far from there being any evidence before the Registrar that any prejudice or injustice was caused by that omission, the appellant acquiesced in the amendment made to the petition to cure it. Boxshall at 440 - 441 is therefore authority that the amendment to the petition was unnecessary on any view of the case because s 306 operated automatically in those circumstances to prevent invalidation of the proceedings that culminated in the making of a sequestration order. 23 But even if the alleged deficiency in the petition here relied on by the appellant is properly characterised as it was by Neasey J as more significant than "a formal defect or an irregularity" that alone is curable by s 306, that is not the end of the matter. As Spender J pointed out in Matthews v Collett [2000] FCA 224 at [17]:

"If the amendment to the petition is to cure a formal defect or irregularity, the petitioner can rely on the provisions of s 306 of the Act. However, a defect of substance requires leave of the Court pursuant to s 33(1)(b) of the Act …"

24 In our opinion, s 33 authorised that amendment. In terms, s 33(1)(b) expressly permits amendment, at the discretion of the Court, of "any written process, proceeding or notice under this Act". This phrase, in its ordinary meaning, is well capable of including creditor's petitions. The appellant relies on the isolated dictum in Re Abrahamson directed to s 306 the Bankruptcy Act as justifying a construction of s 33(1)(b) so as to imply into the otherwise unqualified words of that provision a limitation that would deny power to amend process, including petitions, to remedy defects, at least if they could be said to be of fundamental substance. No other basis upon which it would be permissible to restrict the wide words of this provision was identified. To read s 33(1)(b) down in the way suggested is inconsistent with the object of the Parliament in conferring on the Court an unqualified discretion to amend process in bankruptcy, a discretion exercisable in all cases according to the circumstances of the particular case and, in particular, whether the exercise of the discretion would inflict injustice on or avoid injustice to any person. 25 The appellant's submission is also inconsistent with authority. There is extensive authority for the proposition that the power of amendment in s 33(1)(b) extends to authorising the amendment of petitions to cure omissions of allegations made mandatory by the various provisions of the Bankruptcy Act and Rules, ie, to cure what can be accepted to be more serious deficiencies in petitions than "formal defects or irregularities" within s 306. 26 In a case on the English equivalent of par 4 of Form 5, involving the omission from the petition of the mandatory allegation of the date of commission of the act of bankruptcy constituted by failure to comply with a bankruptcy notice, the Court, in Re Dunhill at 236, held that the English equivalent of s 33(1)(b) "required" the Court to put this defect right by amendment. 27 Under s 47(1)(a) the Bankruptcy Act and r 12(2) the Bankruptcy Rules in force at the time the sequestration order was made, a creditor's petition was required to be in accordance with Form 5; by par 4 of Form 5, the creditor was required to set out in the petition the "nature and date or dates of the act or acts of bankruptcy relied on". By par 3, a secured creditor who presented a petition was required to give particulars of the security, its value and the amount of the unsecured balance owing to that creditor or to state the creditor's willingness to surrender the security for the benefit of the creditors generally in the event of a sequestration order being made. The reason for these requirements for secured creditors is contained in s 44(4), (2) and (3) respectively. Only if a secured creditor complies with them will he have the right to present a petition: see s 44(1). The omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition. Yet it is well-established that s 33(1)(b) confers power on the Court (to be exercised according to the justice of the particular case) to amend a secured creditor's petition, both before and after the making of a sequestration order, to correct such omissions: see Re Florance; Ex parte Turimetta Properties Pty Ltd (No 2) (1980) 39 FLR 400 at 402 - 403 and Re Finn. 28 Re Abrahamson, in our opinion, provides no authority for holding that s 33(1)(b), on its true construction, does not confer any power on the Court to amend a petition that fails to contain accurate particulars of the act of bankruptcy relied on by the petitioning creditor. The petition as presented was not a nullity. In Bryant v Commonwealth Bank of Australia (Full Court, unreported, 24 November 1995), the Full Court held that failure of a petitioning creditor to comply with the requirements of s 47(1)(b) and r 12(3)(b) of the Bankruptcy Rules then in force requiring the filing of the affidavit verifying the petition at the time when the petition is filed did not render the filing of a petition a nullity. The failure of a petitioner to comply with r 12(2) and par 4 of Form 5 in force at the time the petition here in question was presented by failing to set out full details of the "nature" of the act of bankruptcy relied upon has no more claim to making the petition a nullity. In Bryant v Commonwealth Bank of Australia (Full Court, unreported, 24 November 1995), the Full Court held that failure of a petitioning creditor to comply with the requirements of s 47(1)(b) and r 12(3)(b) of the Bankruptcy Rules then in force requiring the filing of the affidavit verifying the petition at the time when the petition is filed did not render the filing of a petition a nullity. The failure of a petitioner to comply with r 12(2) and par 4 of Form 5 in force at the time the petition here in question was presented by failing to set out full details of the "nature" of the act of bankruptcy relied upon has no more claim to making the petition a nullity. Even if it could be said that this petition failed to comply with r 12(2) and Form 5 in the manner alleged, the Registrar was authorised by s 33 in the circumstances set out above to amend the petition in the way she did to pick up the entirety of the language of s 40(1)(g) the Bankruptcy Act in the petition. The appellant did not, and could not, make any complaint about the manner in which the Registrar exercised this discretionary power of amendment on 19 November 1991. 29 Further, r 20(1) the Bankruptcy Rules in force at the time of the hearing of the sequestration order required the appellant to file and serve on the creditor a notice prior to the hearing of the petition (or with the consent of the Court or Registrar, at the hearing) in accordance with Form 8 setting out the grounds on which the debtor intended to oppose the petition. Though legally represented throughout, the appellant never filed such a notice. This was in circumstances, moreover, in which the inference is open that the appellant never intended to oppose the petition but, while acknowledging his insolvency, was seeking to delay the hearing of the petition to enable him to try to persuade his creditors to enter into an arrangement under Pt X the Bankruptcy Act then in force. The omission to file such a notice is not without consequences for a debtor where he later seeks to attack the making of a sequestration order on the ground that mandatory requirements of the Bankruptcy Act and Rules governing the presentation of petitions have not been complied with. In Bryant, one of the grounds on which the bankrupt relied in appealing the making of the sequestration order was error by the learned primary judge in failing to dismiss the creditor's petition because there was no affidavit verifying the allegation of the commission of an act of bankruptcy in par 4, as well as other deficiencies in the petition. The Full Court said, at 11:

"The first thing that may be observed is that none of these alleged deficiencies was either specified in the appellant's grounds of opposition or pressed by him at the hearing of the petition. It is, therefore, quite wrong to submit that the primary judge erred in these respects."

30 Non-compliance by the creditor with the requirements for a petition with the Act or Rules will not, in the absence of a notice of opposition, deprive the Court of power to make a sequestration order, if the Court is satisfied on the material before it of the matters in s 52(1)(a) to (c) and considers it proper to exercise the discretion to make the order. 31 Next, it was said that the sequestration order should not have been made because, contrary to s 47(1)(b), the petition had not been verified by the affidavit of a person with knowledge of the facts. The point made here is that the affidavit of Mr Osborne filed with the petition in terms verified only the allegedly incomplete statement of the act of bankruptcy: it was said that it was incapable of establishing that, in addition to failing to pay the amount demanded by the bankruptcy notice, the appellant also failed to satisfy the Court of the existence of a relevant cross-demand. But, as has already been pointed out, the Full Court in Bryant held that failure of a petitioning creditor to comply with the requirements of s 47(1)(b) and r 12(3)(b) of the Bankruptcy Rules then in force, which required the affidavit verifying the petition to be filed with the petition, did not render presentation of the petition a nullity. See also Re Chu; Ex parte RSL Permanent Building Society Ltd (1976) 15 ALR 173. A sequestration order can still be made, at the discretion of the Court, if the necessary evidence is before the Court at that stage even though no affidavit verifying the petition was filed with it. 32 But there is nothing in the point taken by the appellant. Appellant's counsel was wrong when he said that the creditor relied only upon the affidavit of Mr Osborne to verify the petition. Filed with the petition was also the affidavit of Ms Hare, entitled "Affidavit Verifying Paragraph 4 of the Petition". This verified that the appellant had not filed any affidavit deposing to his having a counter-claim, set-off or cross-demand, which he would have had to file before 19 March 1991 if he were to satisfy the Court of the existence of such a cross-demand. Ms Hare's affidavit also deposed to the appellant never having made any application to the Court to set aside the bankruptcy notice. Even if it be assumed that the petition as originally presented did not fully state the act of bankruptcy relied upon, there was nevertheless evidence before the Court both at the time the petition was presented on 30 July 1991 and when it was heard on 19 November 1991 verifying all elements of the act of bankruptcy relied on. This unchallenged affidavit was sufficient, as the learned primary judge observed, to provide verification that the debtor had not furnished proof to the Court of the existence of a relevant cross-demand and that "on any reasonable view the contents of the amended petition were verified" at the time the sequestration order was made. There was, accordingly, no basis upon which the sequestration order should not have then been made for want of sufficient evidence to establish the requisite facts. See Bryant. 33 The Registrar, having granted leave to amend the petition on 19 November 1991 to correct the statement of the act of bankruptcy without objection from the appellant's legal representative, was not obliged to require re-verification (or re-service) of the amended petition. See Bryant. 34 We do not accept, for the reasons given, that there was any deficiency in the allegation of the act of bankruptcy in the petition. But even assuming that to be the case, Re Abrahamson, upon which the appellant here relies, provides no support for the argument now advanced with respect to alleged want of verification. There, Neasey J also held that there was a non-compliance with s 47(1)(b) where the only affidavit relied on did not sufficiently identify the petition before the Court as that which it purported to verify; he held that this was not a mere formal defect or irregularity curable under s 306 and was a sufficient ground of itself upon which to require dismissal of the petition there in question. The petition in Re Abrahamson was heard ex parte in circumstances in which there is no suggestion that the petitioning creditor sought to supplement the deficient affidavit at the hearing. There is no reason to doubt the correctness of this particular ruling. But the factual situation in the present case is quite different from that in Re Abrahamson. 35 Finally, the appellant pointed out that the act of bankruptcy was committed on 19 March 1991 (twenty-one days after service on him of the bankruptcy notice) and that it was not until 19 November 1991 that it was amended to properly state the act of bankruptcy, ie, it was amended outside the six month period between commission of the act of bankruptcy and presentation of the petition allowed by s 44(1)(c) the Bankruptcy Act. It was submitted the amendment should not therefore have been permitted. The point is a bad one, even if the amendment had been necessary to save the petition. 36 In Bryant, the sequestration order was challenged on the ground that the petition presented on 28 June 1994 wrongly alleged an act of bankruptcy on 4 May 1994 and could not properly be amended in early 1995, as it was, ie, outside the six months referred to in s 44(1)(c), to allege the true date of the act of bankruptcy, viz, 15 March 1994. The Court, at 15, distinguished In re Hastings [1985] 1 WLR 969, holding that "the altered date of 15 March 1994 was within the prescribed [six months] period, the petition having been presented on 28 June 1994". Bryant shows that the discretionary power of amendment extends to amending a petition presented within six months of the true date of bankruptcy to correctly allege that date, even though the amendment is not sought until long after six months has elapsed between the commission of the act of bankruptcy and the making of the application for amendment. Here, the petition was presented on 30 July 1991, ie, well within six months of commission of the act of bankruptcy on 19 March 1991; it was amended on 19 November 1991, more than six months after the date of that act of bankruptcy. But that was authorised by Bryant. 37 In any event, In re Hastings does not support the appellant's contention that the amendment was wrongly allowed even if it is assumed that incomplete particulars of the act of bankruptcy were alleged in the petition. In In re Hastings, the petition alleged as the act of bankruptcy non-compliance by 12 July 1983 with the requirements of a bankruptcy notice served on him on 29 June 1983. In truth, the debtor had been served with a bankruptcy notice on 29 July 1983, which he had failed to comply with by 12 August 1983. The debtor applied for rescission of the sequestration order on the ground that it was based on an allegation in the petition as to an act of bankruptcy which had never been committed. It was held that the Registrar was not entitled, after expiry of the period corresponding to that set out in s 44(1)(c) to amend the petition to allege a different act of bankruptcy that had occurred on 12 August 1983; and the sequestration order was set aside. Peter Gibson J, with whom Warner J agreed, said, at 973 - 974:

"The date of the commission of the act of bankruptcy relied on is an important part of the description. It may be that the omission to state the date of completion of the act of bankruptcy will not be fatal if it is possible to ascertain that date from elsewhere in the petition. For example, if the date of service of the bankruptcy notice is alleged, it is a mere matter of calculation to ascertain the date of the act of bankruptcy … It is possible that an error in such date would be remediable even outside the three months' period if the true date were ascertainable from elsewhere in the petition. But where, as in the present case, the erroneous description of the act of bankruptcy relied on in the petition includes dates for service of the bankruptcy notice and for the completion of the act of bankruptcy which are entirely consistent and there is nothing elsewhere in the petition from which the debtor can infer that the creditor is relying on an act of bankruptcy occurring at a different date, in my judgment it is wrong to treat such misdescription as a mere defect in form and as not being a defect of substance … From the viewpoint of the debtor such an amendment introduces a new act of bankruptcy relied on by the creditors and that cannot be allowed outside the three months' period."

38 The position here is quite different. The petition when filed on 30 July 1991 accurately alleged that within six months before that date the appellant committed an act of bankruptcy constituted by his failure to comply, within twenty-one days of service of the notice on him on 26 February 1991, with the requirements of bankruptcy notice B3470 of 1990 issued on 16 November 1990. The amendment did not set up an act of bankruptcy different from that originally relied on. The appellant can never have been left in any doubt by what was stated in the petition as originally filed that he was alleged to have committed an act of bankruptcy twenty-one days after 26 February 1991 by failing to comply with the requirements of a particular bankruptcy notice which accurately informed him that he would then commit an act of bankruptcy if he either failed to pay the amount of the judgment debt claimed in the notice or failed to satisfy the Federal Court that he had a relevant cross-demand. He has never suggested the contrary. 3938Nothing I have said as to why deficiencies of the kind alleged by the appellant to have existed in the petition and the procedure followed by the Registrar are not necessarily fatal to any sequestration order ultimately made should be taken as encouragement to relaxed compliance with the procedures prescribed by the Act and Rules for the presentation and hearing of bankruptcy petitions. The fact that the Court has wide powers to cure deficiencies in procedures does not mean that in any particular case it will automatically excuse non-compliance. 39 Nothing we have said as to why deficiencies of the kind alleged by the appellant to have existed in the petition and the procedure followed by the Registrar are not necessarily fatal to any sequestration order ultimately made should be taken as encouragement to relaxed compliance with the procedures prescribed by the Act and Rules for the presentation and hearing of bankruptcy petitions. The fact that the Court has wide powers to cure deficiencies in procedures does not mean that in any particular case it will automatically excuse non-compliance. 40 We would dismiss the appeal with costs. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

MacDonald v Official Trustee in Bankruptcy

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