Undoubtedly, the failure to file appropriate affidavits constituted a formal defect or irregularity. The first enquiry must be whether the defect or irregularity has caused substantial injustice which cannot be remedied by an appropriate order. The absence of an affidavit in support of an application to set aside a bankruptcy notice causes substantial injustice simply because it places the creditor in the position of not knowing the case to be met. It most cases that injustice may be remedied by the subsequent provision of such an affidavit in time for the final hearing, assuming that the applicant has a bona fide basis for seeking to set aside the notice. If, however, it is clear that the applicant has no proper basis for setting aside the notice - that the issues which he or she seeks to ventilate are irrelevant or illusory - then to allow the applicant to file such an affidavit would cause a further injustice to the judgment creditor. Allowing late delivery of a pointless affidavit could hardly remedy the original injustice. Thus it is necessary to address the substance of Mrs Hubner's claims in order to determine whether the initial injustice to the bank will be remedied by allowing her to correct the procedural defect. I should say that although counsel for the bank submitted to the contrary, I am satisfied that the court has power to dispense with compliance pursuant to O 1 r 8 or to extend time for compliance pursuant to O 3 r 3. s 51 may itself confer such a power. The reasoning which leads to the conclusion that those provisions do not permit the extension of time for an application to set aside a bankruptcy notice has no application to the power of the court to relieve from non-compliance with the requirements of O 77 r 13. In the former case, it is the construction of the Act which leads to the relevant conclusion that there is no power to excuse from compliance with its terms. 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.
I indicated at the hearing that I considered that there was power to extend time or to excuse non-compliance. As I understood him, counsel for the Hubners, whilst not conceding the need for any such indulgence, was anxious that I should exercise such a discretion should it be necessary. Of course, there is no discretion to be exercised in the case of Mr Hubner because his applications must fail for the reasons given above. In Mrs Hubner's case, I must consider the substantive issues sought to be raised by her in support of her applications to set aside the notices to see if she has any basis for those applications. If so, I should allow her to remedy her irregular process. With one exception, her grounds are the same as those which Mr Hubner sought to raise.
The one ground peculiar to Mrs Hubner is said to arise out of the decision of the High Court in Garcia v National Australia Bank Ltd (1998) HCA 48 (6 August 1998). That case was concerned with the circumstances in which a wife who guarantees her husband's debt will be excused from liability, and in particular, with the circumstances in which such a guarantee will be set aside where the creditor has not taken steps to explain the nature of the transaction to the wife. The High Court re-affirmed the approach taken in the earlier decision of Yerkey v Jones (1939) 63 CLR 649.
In her affidavit material, Mrs Hubner asserts that she is of Italian descent, was brought up to honour her husband and, in matters of business, to follow his instructions. She says that Mr Hubner handled their business affairs, that she did not understand the papers which the bank asked her to sign and that no explanation was offered. She did not guarantee her husband's debts, but rather those of the company, Cairns Glass Co Pty Ltd, through which he traded and of which she subsequently became a director. I was told in argument that she was, at all material times, indirectly interested in the company in that it was owned by a family company of which she was a shareholder. However, for present purposes I am willing to assume that Mrs Hubner has established a prima facie case of entitlement to the setting aside of the guarantee for the reasons advanced by the High Court in Garcia. Although this would relieve her of liability under the guarantee, leading to the setting aside, as against her, of the substantive judgment in the Supreme Court action, that would not affect her liability under the orders for costs which are the subject matter of the bankruptcy notices. Those orders were obtained as the result of abortive attempts by Mr & Mrs Hubner to set aside the judgment and/or to stay it. As I have said, in the absence of successful appeals against those orders, they will stand. Further, any right to have the guarantee set aside does not give her a counter-claim, set-off or cross demand as against the various orders. The Garcia point is of no assistance to Mrs Hubner for present purposes.
Mr & Mrs Hubner make a number of other claims against the bank. It was very difficult to extract a firm indication of the nature and limits of those claims. These matters were argued before Byrne J upon the first application to set aside the Supreme Court judgment. His Honour concluded that there was insufficient evidence to establish such claims. Mrs Hubner must satisfy me that she has such a claim, although it is not necessary that she prove the claim at this stage, or even offer all of the evidence which may be available. It is firstly alleged that an officer of the bank, one Poulsen, gave advice which led to the Hubners or their company acquiring an interest in Cairns Glass Company. There is little more detail of this claim. Poulsen subsequently gave advice concerning JML, leading to Cairns Glass Co becoming a sub-contractor to JML, in which capacity the former company was not paid. The only specific assertion against Mr Poulsen appears to be that Mr Hubner asked him make enquiries about JML. Mr Poulsen reported that they were a company of high corporate morals. Accepting Mr Hubner's evidence as to his inquiry of Mr Poulsen and the response thereto, there is, as was pointed out by Byrne J in the Supreme Court, no evidence that the response was untrue or that if it was, it caused any loss to Cairns Glass Co or to Mr or Mrs Hubner. Mr Hubner is very firm in his views that Mr Poulsen, on behalf of the bank, has caused him and his wife grave financial loss. However it is simply not possible to identify any cause of action sufficient to ground a claim of the kind contemplated by s 40(1)(g) or s 41(7). Similar comments apply to the more generalized allegations concerning the Hubners' initial investment in Cairns Glass Co.
It is also claimed that in the liquidation of Cairns Glass Co, the bank has been guilty of actionable misconduct in connection with the liquidator's compromise of that company's claim against JML. I can see no basis for a claim against the bank arising out of that step taken by the liquidator. A further claim arises out of an allegation that the bank honoured various cheques drawn on the account of Cairns Glass Co contrary to the terms of the mandate. It is said that the mandate required two signatures for cheques over $500, but that the bank honoured some such cheques bearing only one signature. There is considerable doubt as to the extent of any actual loss to Cairns Glass Co as a result of such conduct. Experience indicates that in such cases, most of the cheques will have been used to pay just debts, notwithstanding the technical error by the bank. However, for present purposes, there is another answer to this claim. It is a claim properly made by Cairns Glass Co and not by the Hubners. It cannot be a basis for a counter-claim, set-off or cross demand for the purposes of the bankruptcy notices. Even if the Hubners are entitled, as guarantors, to take advantage of this claim as a defence to any claim on the guarantee, it could not operate as a counter-claim, set-off or cross demand in connection with the debt owed by them personally to the bank pursuant to the costs orders. To the extent that the amount of any such claim exceeds the amount of the debt on the guarantee, it belongs to Cairns Glass Co. Further unspecified allegations of fraud are made against the bank arising out of the totality of its dealings with the Hubners and Cairns Glass Co. However no appropriate basis has been demonstrated for setting aside the bankruptcy notices, either because there is some counter-claim, set-off or cross demand equalling or exceeding the amount thereof or on any other ground.
Mrs Hubner has had an opportunity to demonstrate any valid basis for attacking the bankruptcy notices and has failed to do so. There would be no point in excusing her from compliance with the requirements of the rules or in extending time for her to do so. To so order would not remedy the injustice suffered by the bank as a result of her unsubstantiated applications to set aside the notice.
Notices to Joint Debtors
Although the matter was not raised in oral argument, one further matter was raised in the supplementary written submissions on behalf of the Hubners. They submit that the Act does not authorise the issue of a bankruptcy notice addressed to joint debtors as occurred in this case. There is certainly no express authorization for this course, although s 23(b) of the Acts Interpretation Act 1901 provides that where the singular form of a word is used in legislation, the section in which it appears is to be read as if it also includes a reference to the plural form of the word. Applied to s 41 and Form 1 of the Act, this might be sufficient to authorise the issue of bankruptcy notices to more than one person.
Such authority as there is suggests that such a course is permissible. In Re Ward and Another; Ex parte R W Brown & Company Pty Limited (1991) 28 FCR 329, one of two joint debtors made an application to set aside a bankruptcy notice addressed to both of them. The application was unsuccessful, but the registrar made orders extending time for compliance. On appeal, Hill J was required to determine whether an order extending time for compliance with a bankruptcy notice addressed to joint debtors would extend time for compliance only in respect of the debtor making the application or both. Hill J did not doubt the validity of the notice.
In Emerson & Anor v Wreckair Pty Limited (1991) 33 FCR 581, the Full Court of this Court considered an appeal concerning a bankruptcy notice addressed to joint debtors. Neither Pincus J at first instance nor the Full Court (Morling, Neaves and Spender JJ) on appeal questioned the validity of a notice to joint debtors.
Finally, in McLeod & Anor v Beneficial Finance Corporation Limited (Branson J, 5 October 1995, unreported), her Honour was required to determine whether a bankruptcy notice could be issued to several (as opposed to joint) debtors. Branson J observed, at p 13, that in her view, "the right to issue a Bankruptcy Notice cannot be wider than the right to present a creditor's petition". Section 46(1) of the Act expressly authorises the presentation of a creditor's petition against joint debtors. Her Honour concluded that a bankruptcy notice could be addressed to joint debtors but not to several debtors.
I see no reason to doubt the correctness of the practice of addressing a bankruptcy notice to joint debtors. Each is obliged to pay the full debt and is therefore able to comply with such a notice. Neither the purpose of the notice nor its method of operation is compromised by such a course.
Orders
It follows that there are no issues between the parties which require ventilation. Discovery will serve no purpose. The motions for discovery are dismissed. I have already dismissed Mr Hubner's application as out of time. Mrs Hubner's applications should be dismissed as incurably irregular. I should add that quite apart from the question of formal irregularity, the material demonstrates that Mr and Mrs Hubner's challenges to the bankruptcy notices are frivolous and vexatious and therefore liable to be dismissed pursuant to O 20 r 2. I was somewhat reluctant to proceed under that rule in light of the assertions by counsel for the Hubners that his understanding had been that only the matter of discovery was to be argued, and given the fact that the letter from the bank's solicitors only gave notice of an intention to argue the question of formal defects. However, I have enquired of the legal advisers, and both sides have indicated that they consider the wider issues referred to in O 20 r 2 to have been raised and argued. In those circumstances, I would also dismiss the applications on the basis that they are frivolous and vexatious.
I will hear submissions as to costs.
I certify that this and the preceding fourteen (14) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett