Re Pacer, Nathan Francis Ex Parte Westpac Banking Corp Pty Ltd [1995] FCA 1119

IN THE FEDERAL COURT OF AUSTRALIA ) BANKRUPTCY DISTRICT ) No. NP 3620 of 1994 OF THE STATE OF NEW SOUTH WALES ) Re: NATHAN FRANCIS PACER Applicant Ex parte: WESTPAC BANKING CORP. P/L Respondent REASONS FOR JUDGMENT EINFELD J SYDNEY 24 APRIL 1995 The applicant bankrupt seeks an order under section 14(5) of the Bankruptcy Act for review of a sequestration order made by Registrar on the 4 April 1995. According to the evidence there was an order for substituted service made on the 6 March 1995 which required that the petition be served in the office of the solicitors for the bankrupt. The documents were in fact served on 17 March but pursuant to the orders for substituted service they were deemed to have been served on the applicant on 31 March 1995. Meanwhile, the petition had been adjourned to and listed for hearing on 4 April 1995 with the consequence that rule 15(b)(iv) was not complied with in that the petition was not served more than eight days before the hearing date. As a consequence, the bankrupt seeks to have reviewed the sequestration order on the grounds of that defect of service and seeks to have the matter re-listed for further hearing of the petition. The application has been opposed by the judgment creditor largely on discretionary grounds in that, amongst other things, that the bankrupt made no effort to oppose the petition after it was given to him by his solicitor on or about the 24 March 1995. Another ground of opposition is that a motion to set aside the judgment on which the original bankruptcy notice and subsequently the petition was based took some six months to file and be heard and was ultimately dismissed with costs. So it is said, I presume, by the creditor that there is no substantive basis upon which sequestration order can be opposed and this application is entirely technical and without substantive merit. The evidence before me indicates that when the bankrupt's solicitor provided his client with a copy of the petition and supporting documents, he was instructed to oppose the petition on the grounds that the guarantee relied upon by the creditor had been terminated prior to the debt being incurred and had not been revived so that the applicant was without personal liability for the debt upon which the petition was based. Presumably, this argument was at least part of the argument put before the Supreme Court when the motion to set aside the judgment was made and heard but appears not to have found favour with the Supreme Court. It seems that subsequent to the solicitor's receipt of these instructions from the bankrupt, the documentation was misplaced in his office as a consequence of which there was an error in the notation of the return date or adjourned date of the petition and as a consequence some delay in the preparation of the notice of intention to oppose the petition. It had still not been done by the time the believed date had arrived. Bankruptcy is, regrettably or not, a rather technical jurisdiction. It is true that the jurisdiction given to the court under section 14(5) is wholly discretionary but it seems that the discretion should be exercised in a way which gives the best conceivable expression to the statutory and regulatory environment in which the application takes place. A number of rules exist for the protection of persons against whom bankruptcy notices are served and bankruptcy proceedings taken. Many of these provisions are steeped in a long history of an attempt to protect reputation which bankruptcy was once regarded as seriously affecting. Although since that time there have been substantial changes in the whole of this environment to the extent that the atmosphere surrounding bankruptcy is no longer quite as disapproving as it once was, nonetheless the strict legislative environment in which bankruptcy proceedings are still entrenched should, I think, not be ignored. It is reasonable of the judgment creditor to, in effect, attack the failure of the bankrupt to show any argument on the merits that might enable him to resist a sequestration order when ultimately brought before the Court in a fully compliant and proper way but many bankruptcy petitions have failed on lesser grounds than exist here. I do not know what the history is of providing an eight days gap between the service of a petition and the hearing but no doubt it was instituted for good purpose and to achieve at least the object that a bankrupt should have the opportunity of not only resisting by way of the steps in the litigation the inevitability of a sequestration order but also possibly of meeting the financial demands which the petition presented. The denial to him in this case of that opportunity, although not supported by any affidavit evidence that suggests he could have put the extra few days to good use in the relevant way, nonetheless seems to me to entitle him to the order which he seeks today in this application. I therefore accept an application to review the sequestration order made on the 4 April and set that order aside. The petition will be re-listed for hearing in the Bankruptcy List on 16 May. (After discusson) I direct that any notice of opposition to the petition be filed by not later than 4 pm on Monday 1 May and that any affidavits in support of the opposition be filed and served by not later than 4 pm on Friday 5 May. Any further affidavit evidence on behalf of the creditor is to be filed and served by not later than 4 pm on Thursday 11 May.