Bankruptcy Act 1966 (Cth) - s 40(1)(g), s 41(1), s 41(2), s 41(2A), s 41(2C), s 306

Re Pannowitz; Ex parte Wilson (1975) 6 ALR 287

Re Ikin; Ex parte Lamborghini Tractors of Australia Pty Limited (1985) 58 ALR 759

Re Walsh; Ex parte The Flying Tiger Line Inc. [1985] FCA 399; (1985) 62 ALR 318

Kleinwort Benson Australia Limited v Crowl [1988] HCA 34; (1988) 165 CLR 71

In re Low; Ex parte The Argentine Gold Fields Limited (1891) 1 QB 147

In re O.C.S. (A Debtor) (1904) 2 KB 161

Re a Bankruptcy Notice (1906) 96 LTR 133

Re Application for Issue of a Bankruptcy Notice; Ex parte Tinson (1946) 14 ABC 41

Re Stephenson; Ex parte Cintee Nominees Pty Limited (1988) 18 FCR 375

Ex parte Bryant [1813] EngR 78; (1813) 35 ER 83

In re Beauchamp (1904) 1 KB 572

Re Ferguson; Ex parte E.N. Thorne (1969) 14 FLR 311

Re Briggs; Ex parte Briggs v Deputy Commissioner of Taxation (W.A.) (1986) 75 ALR 554

Re Bedford; Ex parte H.C. Sleigh (Qld) Pty Ltd (1967) 9 FLR 497

Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212

Re Wheeler (1982) 1 All ER 345

with D.P. Robinson and C.R.C. Newlinds

Instructed by: Neil Lawson and Co

Counsel for the Creditor: F.M. Douglas QC

with S.M.P. Reeves

Instructed by: Mallesons Stephen Jaques

That bankruptcy notice number BN 3567 of 1991 be set aside.

That the creditor pay the costs of this application.

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

The Court has before it two applications, one by the HongKongBank of Australia Limited (the "Bank"), the judgment creditor, and the other by the debtor, Alan Bond ("Bond"). The first seeks that I vacate an order previously made by me on 26 October 1991 extending until further order the time for compliance with a bankruptcy notice served upon the debtor and substitute therefore an order extending the time for compliance until 12 midnight on Monday 16 December 1991. The second seeks an order that the bankruptcy notice be set aside because of essential invalidity. The second motion is the one of substance and I have heard it first. Before dealing with the issues raised by this application it is convenient to set out briefly the relevant history of the matter.

2. In action 50191 of 1991 in the Supreme Court of New South Wales Commercial Division the Bank sued Bond claiming the sum of USD194,644,433.97. In that action there were other defendants, Bond being the fifth defendant. The Bank sued him upon a guarantee, the details of which do not matter for present purposes. During the course of the proceedings, a clear issue arose as to whether service of the relevant notice of demand under the guarantee had been properly effected upon Bond. As recovery under the guarantee depended upon proper service of such a notice of demand, it was decided by those advising the Bank that service should be effected of a further notice of demand which would not involve the difficulties which had arisen in respect of the first. This was done and fresh proceedings were brought in respect of the debt allegedly arising under the guarantee based upon this new notice of demand. These proceedings were numbered 50431 of 1991 in the Commercial Division. Finally, apparently for a similar reason, another notice of demand was served and a third set of proceedings brought in the Commercial Division. These were numbered 50489 of 1991. The two fresh proceedings had as parties only the Bank and Bond. All three proceedings were thus brought in respect of the same alleged debt but based upon three different notices of demand made under the guarantee.

3. These actions were finally heard together by Rogers J. (CJ, Comm Div). They were not consolidated, his Honour having expressly refused to make such an order. At the substantive hearing his Honour rejected all defences raised by Bond, including the defence that service of the notice of demand in the first action, 50191 of 1991, had been defective. At the conclusion of his reasons for judgment given on 23 September 1991, his Honour, having rejected all Bond's defences, said "there will be a verdict for the plaintiffs".

4. Pursuant to his Honour's decision, judgment was taken out in the Supreme Court. The judgment on its face was a judgment in all three actions. The body of the judgment read as follows:-

"JUDGMENT -

That -

1. The Fifth Defendant pay the First Plaintiff the sum of

USD194,644,443.97.

2. The Fifth Defendant pay the Plaintiff's costs of the

proceedings as to one third thereof on an indemnity

basis and as to the balance thereof on a party to party basis.

This judgment takes effect on 23 September 1991."

5. It will be observed that although the judgment clearly stated on its face that it was in respect of all three actions, the description of Bond as Fifth Defendant was appropriate only to the first action. Of course, as the actions had not been consolidated, it was necessary for their disposal that there be a judgment in each action.

6. Bond appealed to the Supreme Court of New South Wales Court of Appeal. That appeal was brought in respect of the judgments in all three actions. At the hearing, apparently for the first time, it was noticed that there were difficulties arising from the form of the judgments entered in the Commercial Division. The judgments so entered were judgments in favour of the Bank against Bond in each action for the same debt, being the amount owing to the Bank under the guarantee. It was never intended, of course, that the Bank should be entitled to payment of the debt three times over. It was, apparently, accepted that, in the entering of judgment, the actions had been erroneously treated as though they had been consolidated. This error had been repeated in the notice of appeal. The result was, necessarily, that the Court of Appeal had before it an appeal in each of the actions. This was important in the final result.

7. In relation to the problems arising from the form of judgment, Gleeson C.J. said, in his reasons for judgment:-

"It was common ground on the appeal that, if he were not

prepared to consolidate the actions, then, consistently with

his reasons for judgment, the trial judge should have given

judgment for the plaintiffs in the first action and

dismissed the second and third actions. The reason for

this, it was said, is that when judgment was given for the

plaintiffs in the first action the cause of action merged in

that judgment and no longer subsisted to form the foundation

for a judgment in the second or third actions. (cf

Halsbury, Laws of England, 4th Ed Vol 16 par 1536)."

8. His Honour also indicated that: "it was also common ground that the judgment that was entered should be understood as a judgment in each of the three actions".

9. It has not been suggested in these proceedings that I should take a different view of these matters. I respectfully agree with these comments, which were the unanimous views of the judges hearing the appeal. Having regard to the fact that the actions were not consolidated this would clearly have been the appropriate result in light of the trial judge's findings.

10. In the result, the Court of Appeal was of the view that his Honour had been in error in holding that there had been effective service of the notice of demand in the first action. There was, however, effective service in the second action. As the court had before it appeals in all actions, it dealt with the matter by upholding the appeal in the first action and setting aside the Bank's judgment against Bond in that action. It dismissed the appeal in the second action, with the result that the judgment entered in favour of the Bank against Bond in that action was left standing. Then, consistent with principle, it allowed the appeal in the third action, setting aside the Bank's judgment against Bond in that action.

11. The result is, of course, that the Bank now has judgment against Bond in the second action, being the action based upon service of the second notice of demand, while it no longer has a judgment in the first action, based upon service of the first notice of demand. The third action may be disregarded. The extant judgment is for the same amount, being the amount of the guaranteed debt, as was recoverable under each of the judgments appealed from.

12. I turn then to the bankruptcy notice, the subject of these proceedings before me. It was issued on behalf of the Bank on 24 September 1991. It was addressed to Bond. Omitting irrelevant parts it read as follows:-

"WHEREAS HONGKONGBANK OF AUSTRALIA LIMITED of 20 Bond Street,

Sydney, New South Wales (hereinafter referred to as "the judgment

creditor") has claimed that the sum of United States Dollars

194,644,443.97 is due by you to it under a final judgment obtained

by it against you in the Supreme Court of New South Wales on 23rd

day of September 1991, being a judgment the execution of which has

not been stayed:

AND WHEREAS the sum of Australian Dollars 244,774,200.16 in an

amount that is the equivalent in Australian Dollars of the said

sum of United States Dollars 194,644,443.97 calculated at the

exchange rate of $US0.7952 to $A1 as at 20 September 1991, being

the second business day before 24 September 1991 the day on which

application was made for the issue of this notice:

THEREFORE TAKE NOTICE that within 28 days after service of this

notice on you, excluding the day on which this notice is served on

you, you are required -

(a) to pay the sum of either:

(i) United States Dollars 194,644,443.97; or

(ii) Australian Dollars 244,774,200.16;

so claimed by the judgment creditor to the judgment

creditor; or

(b) to secure the payment of the sum referred to in paragraph

(a) to the satisfaction of the Federal Court of Australia or

the judgment creditor or compound the sum so specified to

the satisfaction of the judgment creditor.

AND FURTHER TAKE NOTICE that if, within the period set out above,

you fail either to comply with either of the abovementioned

requirements of this notice or to satisfy the Federal Court of

Australia that you have a counter-claim, set-off or cross demand

equal to or exceeding the sum specified in paragraph (a) being a

counter-claim, set-off or cross demand that you could not have set

up in the action in which the judgment was obtained, you will have

committed an act of bankruptcy on which bankruptcy proceedings may

be taken against you."

13. As already indicated, time for compliance for this bankruptcy notice was extended until further order of this Court. This extension was granted in the circumstances that Bond was then bringing his appeal to the Court of Appeal against the decision of Rogers J. The result of that appeal being that Bond remains indebted to the Bank, the Bank now claims that the extension be brought to an end. Bond, however, asserts that the bankruptcy notice is invalid and incapable of grounding a relevant act of bankruptcy on his part. It is a matter of regret that this attack was not made previously when only extension of time for compliance was sought. However, it may be stated in fairness, that it appears that the major ground for this attack only emerged with any clarity when difficulties in association with the form of judgment at first instance were noticed in argument in the Court of Appeal. I shall consider the attack based upon these matters later in these reasons. At this stage it is convenient to refer to other claims of invalidity which were asserted on behalf of Bond. As this, and other arguments, depend upon the wording of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (the "Act") I shall set it out now. It provides as follows:-

"(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 fixed by the Registrar by whom

the notice was issued; or

(ii) where the notice was served elsewhere - within

the time fixed for the purpose by the order

giving leave to effect the service,

comply with the requirements of the notice or satisfy

the Court that he 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 could not have set up in the

was obtained."

14. Mr Coles QC submitted on behalf of Bond that the judgment of 23 September 1991 was so irregular that it could not properly be the subject of execution. He relied upon Re Pannowitz; Ex parte Wilson (1975) 6 ALR 287 for the proposition that this section does not require that there have been an actual stay of execution in respect of the judgment relied upon, it being sufficient if "at the date of the issue of the notice, the judgment creditor is not entitled to issue immediate execution on the judgment" (per Riley J. at p 291). It was put that the form of judgment entered was such that the Bank could not have obtained execution on it, such as by the issue of a writ of fi fa. This submission was but faintly argued. I am not persuaded that the judgment could not have been used for this purpose. I reject this submission.

15. Bond's next submissions were based upon the wording of s 41 of the Act. As more than one part of it is relied upon, I shall, for convenience, set it out now. It provides so far as relevant as follows:-

(a) shall be in accordance with the prescribed form; and

(b) shall be issued by the Registrar.

(2) The prescribed form of bankruptcy notice shall be such

that the notice -

(a) requires the debtor named in it, within a

specified time (being the time referred to in

sub-paragraph 40(1)(g)(i) or (ii), whichever is

appropriate) to -

(i) pay the judgment debt or sum ordered to be

paid in accordance with the judgment; or

(ii) secure the payment of the debt or sum to

the satisfaction of the Court or the

creditor or his agent, if any, specified

in the notice or compound the debt or sum

to the satisfaction of the creditor or his

agent, if any, specified in the notice; and

(b) states the consequences of non-compliance with

the requirements of the notice.

(2A) Where the judgment debt or sum ordered to be paid in

accordance with the judgment or order is expressed by

the judgment or order as an amount in the currency of

a foreign country (in this sub-section referred to as

the "amount of foreign currency"), the bankruptcy

notice shall state that payment is to be made in either -

(a) the amount of foreign currency; or

(b) a specified amount of Australian dollars, being

an amount that is the equivalent in Australian

dollars of the amount of foreign currency on the

second business day before the day on which

application was made for the issue of the bankruptcy

(2B) The rate for ascertaining on a particular day for the

purposes of paragraph (2A)(b) the equivalent in

Australian dollars of an amount of foreign currency is

the average of the rates at which Australian dollars

may be bought in that foreign currency at -

(a) 11 o'clock in the morning; or

(b) if another time is prescribed for the purposes

of this sub-section - that other time,

on that day from 3 authorised foreign exchange dealers

selected by the creditor who applied for the issue of

the bankruptcy notice.

(2C) In this section -

"authorised foreign exchange dealer" means a person

authorised by a general authority issued by the

Reserve Bank of Australia under regulation 38A of the

Banking (Foreign Exchange) Regulations to buy and sell

foreign currency;

"business day", in relation to an application for

the issue of a bankruptcy notice, means a day that is

not a Saturday, a Sunday or a public holiday or bank

holiday in the place where the application is made."

16. The applicant's first submission is based upon the fact that the judgment debt is expressed in a foreign currency, United States Dollars. It is asserted that the bankruptcy notice was essentially defective in that it contained the paragraphs requiring the debtor to pay the sum of either (i) USD194,644,443.97 or (ii) AUD244,774,200.16. Mr Coles' point is that s 41(2A), as a matter of construction, requires that the creditor be put to his election as to whether to state his claim in the foreign currency or in the equivalent amount of Australian dollars. It is not for the debtor to be confused by alternative claims in the bankruptcy notice. In other words the bankruptcy notice, if it to comply with the section and not be defective must state that the payment is to be made only in the foreign currency or only in the equivalent amount of Australian dollars.

17. I am quite satisfied that the correct construction of s 41(2A) requires that this submission be rejected. For that section to convey the meaning relied upon the word "either" would, in my opinion, necessarily be found before the word "state" and (probably) that the word "state" be repeated after the word "or" at that end of sub-paragraph (a). As the section stands, it quite clearly, in my view, requires that the bankruptcy notice state alternative payments in foreign currency or Australian dollars where judgment has been obtained in a foreign currency.

18. Moreover, reference to the cases of Re Ikin; Ex parte Lamborghini Tractors of Australia Pty Limited (1985) 58 ALR 759 and Re Walsh; Ex parte The Flying Tiger Line Inc. [1985] FCA 399; (1985) 62 ALR 318, makes it clear that s 41(2A), (2B) and (2C) were introduced into the Act in 1985 to overcome the problems thrown up by those decisions where bankruptcy notices were based upon judgments given in United States dollars. I am satisfied that the amendments were intended to overcome those difficulties by providing debtors with alternative methods of payment in foreign or Australian currency set out clearly in the body of the bankruptcy notice. I therefore reject this submission.

19. Mr Coles QC also criticised the bankruptcy notice on the basis that it contained an unauthorised paragraph, being the second paragraph in which reference is made to the calculation of the Australian dollar equivalent of the amount of the judgment in United States dollars. He pointed out that this paragraph is not to be found in Form 4, the prescribed form of bankruptcy notice, referred to in s 41(1)(a). This is true. It would appear, in fact, that some amendment to the prescribed form is called for having regard to the 1985 amendments introducing sub-paragraphs (2A), (2B) and (2C) into s 41. I would not, however, be at all disposed to hold the bankruptcy notice invalid as a result of the inclusion of this paragraph which is clearly designed to assist the debtor in his understanding of the notice and its requirements. If I were wrong in this then, in my view, the situation would be governed by the application of s 306 of the Act. The inclusion of this paragraph would amount only to a formal defect or an irregularity not occasioning substantial injustice and therefore not invalidating the notice.

20. The next attack made on the notice by Mr Coles relates to the procedure in obtaining the issue of the bankruptcy notice. Section 41(2B) speaks of the obtaining of exchange rates from three authorised foreign exchange dealers "selected by the creditor". The statutory declaration required to be filed by rule 7(4A) reveals that Mr Young, the solicitor acting for the Bank in the matter, personally telephoned "the Barclays Australia Limited Foreign Exchange Dealing Room", "the Chase AMP Bank Limited Foreign Exchange Dealing Room", and "the Bank Nationale De Paris Foreign Exchange Dealing Room" to ascertain the relevant exchange rates on the appropriate day. It was put that this was not a compliance with the section as there was no indication that the dealers had been "selected by the creditor". There is nothing in this point. Mr Young was clearly acting as solicitor for the Bank and making the relevant enquiries on its behalf. The inference is clearly open that he either selected the dealers on behalf of the Bank or, having regard to the fact that he was acting for the Bank, approached those dealers which the Bank itself had selected.

21. It was further put that it was not established that the enquiries were made from "authorised foreign exchange dealers" within the meaning of s 41(2C). This point was but faintly argued. There is other material in the case indicating satisfactorily that the organisations approached were in fact authorised foreign exchange dealers. Non-compliance with rule 7(4A) is not established to my satisfaction. I reject this submission.

22. I come, then, to what have been referred to as the more substantial questions in Bond's application. The submissions made on behalf of the debtor in this connection relate to the effect of the judgments entered before Rogers J. upon the validity of the bankruptcy notice issued upon the obtaining of those judgments. These submissions may certainly be characterised as "technical". However, in approaching them I must bear in mind that the law relating to bankruptcy notices has always been applied in a way which could be described as strict and technical. In Kleinwort Benson Australia Limited v Crowl [1988] HCA 34; (1988) 165 CLR 71 (at p 81) Deane J. said:-

"It has long been a fundamental precept of the law of

bankruptcy that `a bankruptcy notice, which is the

foundation of a bankruptcy, attended as a bankruptcy is with

penal consequences, is a matter in which great strictness is

required': per Cozens-Hardy M.R., In re A Judgment Debtor,

550 of 1908 (1908) 2 KB 474, at pp 476-477; see also James

v Federal Commissioner of Taxation [1955] HCA 75; (1955) 93 CLR 631, at p

644. A defect in a bankruptcy notice will invalidate it

`except in the case of a merely formal defect': per Vaughan

Williams L.J., In re O.C.S. (A Debtor); Ex parte The Debtor

(1904) 2 KB 161, at p 163, see also In Re a Debtor, No 21 of

1950; Ex parte The Debtor v Bowmaker Ltd. (1951) Ch 313,

at p 317. If a defect in a bankruptcy notice is other than

a formal one, the notice itself is defective and failure to

comply with it does not constitute an act of bankruptcy."

23. His Honour was in dissent in that case, but I do not understand anything said in the majority judgment to be at variance with what appears in this passage. In the majority judgment (Mason C.J., Wilson, Brennan, Gaudron JJ.) it is said (at p 79):-

"the authorities show that a bankruptcy notice is a nullity

if it fails to meet a requirement made essential by the Act,

or if it could reasonably mislead a debtor as to what is

necessary to comply with the notice: James v Federal

Commissioner of Taxation [1955] HCA 75; (1955) 93 CLR 631, at p 644; Pillai

v Comptroller of Income Tax (1970) AC 1124, at p 1135. In

such cases the notice is a nullity whether or not the debtor

in fact is misled: In re A Judgment Debtor, 530 of 1908

(1908) 2 KB 474, at p 481."

24. It may be noted that no claim is made on behalf of Bond that he was misled by the bankruptcy notice or could reasonably have been so misled. The claim made on his behalf is that the bankruptcy notice failed, in an essential manner, to comply with the Act.

25. The bankruptcy notice in these proceedings does not in terms indicate the judgment debt upon which it is based. That is, it does not identify by reference to the court number the precise curial proceedings in respect of which the judgment was obtained. It is not required to do so. The "prescribed form" (s 41(1)(a)) does not provide for this degree of particularity. However, it is obviously essential to the validity of the notice that it require the debtor to "pay the judgment debt" (s 41(2)(a)(i)). Consequently, that debt must be capable of ascertainment from the provisions of the notice. As appears from the text of the notice, the amount of USD194,644,443.97 is claimed to be due "under a final judgment obtained ... against you in the Supreme Court of New South Wales on the 23rd day of September 1991".

27. First, he says that on a proper construction of the judgment, the text of which is set out above, it is entered only in respect of the first action brought by the Bank against Bond as fifth defendant. This was action number 50191 of 1991. The judgment debt upon which the bankruptcy notice was founded was therefore the judgment debt resulting from the Bank's success in this action before Rogers J. Consequently, although the bankruptcy notice was, in these circumstances, properly issued upon a judgment execution of which had not been stayed it was, nevertheless, liable to be set aside because the judgment itself was set aside on appeal. This would appear necessarily to be correct. No act of bankruptcy could take place through failure to comply with a bankruptcy notice based upon a judgment debt which had ceased to exist. So much was conceded in argument on behalf of the Bank.

28. However, in my view, Mr Coles cannot, in the ultimate, rely upon this argument. It flies in the face of the decision of the Court of Appeal which, as already indicated, approached the matter on the basis that Rogers J. entered judgment for the Bank in all three of the actions and not merely the first. Consequently, although the first judgment was set aside, as was the third, the second judgment, for the same amount, remained valid and extant.

29. This led, however, to Mr Coles' second submission, which was a true alternative to the first. This was that the bankruptcy notice was necessarily founded on all three of the judgments entered by Rogers J. and, as such, was a nullity. He supported this submission by reference to authority which I shall consider. Before doing so, however, I should indicate that I, with respect, agree with the Court of Appeal's decision that there were in fact three judgments each for the same amount entered in favour of the Bank against Bond in the Commercial Division. Mr Coles' submission is, simply, that by virtue of s 41 and s 40(1)(g) of the Act, a bankruptcy notice can be validly issued against a debtor only in respect of one final judgment obtained against him. This bankruptcy notice has necessarily been issued and served in respect of more than one judgment. It consequently does not comply with an essential requirement of the Act and is thereby invalid.

30. In support of this submission reliance was placed upon a line of cases commencing with In re Low; Ex parte The Argentine Gold Fields Limited (1891) 1 QB 147. In that case the company had recovered judgments against Low in two separate actions and applied to have issued a bankruptcy notice including in it both the judgments. The registrar of the Court declined to issue such a bankruptcy notice. He offered to issue two notices, one in respect of each judgment debt. The company appealed to the court, which upheld the decision of the registrar. Lord Esher MR, in a short judgment, in which Lopes and Kay L.J.J. concurred, said:-

"The only difficulty suggested in following the words of the

section is that, if they are taken literally, in a case

where there are two notices, one in respect of each judgment

debt, the debtor might pay on one, and so no bankruptcy

petition could be presented. I do not think that is a

sufficient reason for reading the words of the section

otherwise than as they are written. In the section itself

one debt is only spoken of, and the rule and the form of

notice carry out the same idea. That this was intentional

appears from a comparison with s.6, sub-s.1(a), where in a

case where two or more creditors may join in an act this is

expressed in terms. The power to join two or more judgment

debts in one notice could equally have been expressed, and,

as it is not, I think it must have been meant that only one

judgment debt should be the subject of each bankruptcy

notice. Another reason for coming to the same conclusion is

that otherwise there would be taken away from the debtor a

right that he undoubtedly has to satisfy one of the notices,

or to raise a counter-claim, set-off or cross-demand to it,

and so prevent its being used for the presentation of a

bankruptcy petition. The registrar was right, and the

appeal must be dismissed.

31. This decision was followed in In re O.C.S. (A Debtor) (1904) 2 KB 161, a case involving a bankruptcy notice founded on two judgement debts. It was held that the notice was bad for this reason by the Court of Appeal in England. Vaughan Williams L.J., with whom Stirling and Cozens-Hardy L.J.J. concurred, said (at p 163): "it is not disputed that the bankruptcy notice was defective by reason of its being based upon two judgment debts". In re Low had been relied upon for this proposition.

32. Again in Re a Bankruptcy Notice (1906) 96 LTR 133, the bankruptcy notice in question was based on two judgment debts due to different persons. The Court of Appeal, Vaughan Williams, Moulton and Buckley L.J.J., followed In re Low and held that the bankruptcy notice was bad.

33. These authorities have been followed in Australia. In Re Application for Issue of a Bankruptcy Notice; Ex parte Tinson (1946) 14 ABC 41, Clyne J. had before him a bankruptcy notice based upon two orders for costs made in previous proceedings between the parties. His Honour said (at p 43): "as the bankruptcy notice before me requires the payment of moneys which became payable in pursuance of two orders, it is not a valid notice".

34. Similarly in Re Stephenson; Ex parte Cintee Nominees Pty Limited (1988) 18 FCR 375, Jenkinson J. had before him a creditors petition based on a bankruptcy notice founded upon two separate orders for costs made against the debtor in prior proceedings. Jenkinson J. said (at p 376) that in submissions made to him there had not been "a denial of the proposition, for which Re Low and Ex parte Tinson are authorities, that no more than one `final judgment or final order' may be the subject of a bankruptcy notice". He accordingly held the notice to be defective.

35. Mr Douglas QC, appearing for the Bank, has sought to distinguish these decisions on the basis that they apply only in circumstance where the creditor has sought to aggregate two or more judgment debts in the one bankruptcy notice, thus increasing the amount claimed under the notice. He submits that the present situation is essentially different in that although there were three judgment debts grounding the notice they were debts in respect of essentially the same causes of action and for the same amount. There was, therefore, no attempt being made to aggregate the amount of the judgment debts. Indeed, the bankruptcy notice claimed only the single amount recovered in the actions in the Commercial Division.

36. I was initially very attracted to this argument, but, on further consideration, have decided that I must reject it. I find myself quite unable to distinguish the authorities on this basis. Although the later authorities do not make express mention of the relevant sections of the Act, it is clear that Re Low itself is firmly based upon those sections in so far as they clearly require that a bankruptcy notice be founded on one judgment debt only. There is nothing in the Act which, so far as I can see or has been put to me, would require that that prohibition should apply only in situations where a creditor was seeking to join in the one bankruptcy notice judgment debts for separate amounts arising from separate actions. The present situation is, of course, quite unusual. However, it appears to me, to fall squarely within these principles and cannot be excluded from their operation by Mr Douglas's argument.

37. Mr Douglas advances a second argument. He submits that the present situation is more akin to one of a procedural irregularity in the judgment obtained which does not prevent the court from going behind the judgment for the purpose of considering whether it was founded on a real debt. He cited a number of cases in which the court had gone behind a judgment relied upon in order to determine whether a debt was due in "truth and reality" (per Lord Eldon, Ex parte Bryant [1813] EngR 78; (1813) 35 ER 83 at p 84). The cases he specifically referred to, in this regard, were In re Beauchamp (1904) 1 KB 572; Re Ferguson; Ex parte E.N. Thorne (1969) 14 FLR 311; Re Briggs; Ex parte Briggs v Deputy Commissioner of Taxation (W.A.) (1986) 75 ALR 554; Re Bedford; Ex parte H.C. Sleigh (Qld) Pty Ltd (1967) 9 FLR 497; Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212; Re Wheeler (1982) 1 All ER 345.

38. I do not propose to discuss these cases individually as I have come to the conclusion, on a reading of them, that they do not assist the Bank to support the present bankruptcy notice. In part they illustrate the proposition that the Court can go behind the judgment debt on which a bankruptcy notice has been founded to determine, at the debtor's request, whether, despite the judgment, there was truly a debt owing. Wren v Mahony is such a case. Bedford and Ferguson might be thought to be more helpful to the Bank's case (see in particular Bedford at p 499 and Ferguson at p 320). However, in each of these cases, Gibbs J. (as he then was) was dealing with a situation where a debtor, who in truth owed the debt, was nevertheless complaining that the judgment upon which the bankruptcy notice was founded was irregular or wrong in form (see also Beauchamp at p 501). Gibbs J. held that in circumstances where he found that the debtor was really indebted to the petitioning creditor in the amount for which the judgment was given, then wrong procedure or wrong form in relation to the judgment was no bar to proceedings in bankruptcy. However, his Honour, in those cases, was dealing with procedural defects or irregularities in relation to a single judgment upon which a bankruptcy notice was founded. In circumstances where he was satisfied of the existence of the underlying debt, he was able to ignore such irregularities, hold the relevant bankruptcy notice to be valid, and proceed with the hearing of the bankruptcy petition. The present case, however, is not one of irregularity in a single judgment upon which a bankruptcy notice is based. Here the complaint is that the bankruptcy notice is based upon three judgments which is contrary to the relevant sections of the Act. In my view, this cannot be cured by the fact that the debt itself is truly due and owing. The bankruptcy notice remains a nullity in that "it fails to meet a requirement made essential by the Act".

39. I am, accordingly, of the view that the present bankruptcy notice must be set aside. I come to this conclusion with regret as it is perfectly clear that the amount claimed in the bankruptcy notice is in fact owing and there is currently a valid and extant judgment debt in respect of it. It has not been suggested that Bond is able to pay the amount of this debt or will be able to do so in the period which must necessarily elapse before a fresh bankruptcy notice is served upon him and duly expires. However, for the reasons I have given, I must necessarily accede to Bond's application. In view of this, the application brought by the Bank seeking a vacation of my order of 26 October 1991 no longer requires decision.

1. that bankruptcy notice number BN 3567 of 1991 be set aside;

2. that the creditor pay the costs of this application.