FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - bankruptcy notice - form - requirement to specify address of Federal Court registry “for your State or Territory” - notice, served on NSW resident in NSW, specified address of Adelaide registry - incurable defect.

Bankruptcy Act 1966, s 41(2)

Acts Interpretation Act 1901, s 25C

Bankruptcy Regulations, reg 4.02

Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71 at 79 applied

Foote v Midwest Finance Pty Limited (Receiver and Manager Appointed) (In Liquidation) (Foster J, unreported, 9 September 1997) followed

HILTI (AUSTRALIA) PTY LIMITED v PAUL MILLARD

NG 7840 of 1997

Burchett J

Sydney

30 September 1997

THE COURT ORDERS THAT:

                        The petition be dismissed.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

The question raised by this petition, and it has been treated as a separate issue, is whether the bankruptcy notice is a nullity by reason of non-compliance with the prescribed form, or should be regarded as containing merely an irregularity which does not have the effect of avoiding the notice because of the terms of s 306.

The starting point, in my opinion, is the statement in Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71 at 79 that, and I quote:

“[A] bankruptcy notice is a nullity if it fails to meet a requirement made

essential by the Act ...” -

I leave out words that relate to a different point and continue the quotation:

“In such cases the notice is a nullity whether or not the debtor in fact is misled.”

This principle was applied by Foster J in his unreported decision, delivered on 9 September 1997, in Foote v Midwest Finance Pty Limited (Receiver and Manager Appointed) (In Liquidation).  The bankruptcy notice contained a statement that the Federal Court Registry nearest to the debtor's address was located at, and I quote:

“Law Courts Building, Level 18, Exchange Plaza, 2 The Esplanade,

Perth in the State of Western Australia.”

That information was simply wrong.  It referred to the address, not of the Federal Court Registry in Perth, but of the Insolvency Trustee Service of Australia office in that city.  Foster J held that the notice was incurably bad.

In the present case, the bankruptcy notice, which was served on a debtor resident in New South Wales and was so served at a place in New South Wales, contained in its paragraph 10 the following statement:

“The Federal Court Registry for your State or Territory is located at:-

Federal Court

8th Floor

25 Grenfell Street

Adelaide”,

followed by the postcode and telephone and fax numbers applicable to the Adelaide Registry.  The address is, of course, the address of a Federal Court Registry, and on that ground I was asked to distinguish the decision in Foote.   But plainly it is not the address of the Federal Court Registry “for your State or Territory”, when the document was served on a resident of New South Wales and in New South Wales. 

Section 41(2) of the Bankruptcy Act 1966 provides:

“The notice must be in accordance - and I interpolate that is the bankruptcy notice -  with the form prescribed by the regulations.”

I was referred to regulation 4.02 which provides:

“(1)  For the purposes of subsection 41(2) of the Act, the form of

bankruptcy notice set out in Form 1 is prescribed.

(2)  A bankruptcy notice must follow Form 1 in respect of its format (for

example, bold or italic typeface, underlining and notes).

(3)  Subregulation (2) is not to be taken as expressing an intention

contrary to section 25C of the Acts Interpretation Act 1901.”

Section 25C is the section to the effect that where an Act prescribes a form, then, unless the contrary intention appears, strict compliance with the form is not required and substantial compliance is sufficient.  Of course, if the contrary intention does appear by s 41(2) of the Bankruptcy Act, it would not be possible to regard the regulation as amending the Act by requiring it to be read, notwithstanding the proviso contained in s 25C of the Acts Interpretation Act, as having an effect different from that which the Act itself has when properly construed.

Form 1 contains statements addressed to the recipient of a bankruptcy notice indicating steps that he can take, each of a number of which would require attendance at or contact with a Federal Court Registry.  The form then provides, and I quote:

“10.  The Federal Court Registry for your State or Territory is located

at: -”

and the form goes on in brackets to issue the instruction, and I quote:

“[S]et out the address and telephone number of the relevant Registry.”

It seems to me that the Act is quite explicit in requiring that the bankruptcy notice must be in accordance with the form, and the form itself is quite explicit in requiring the address and telephone number of the Registry, for what it calls the debtor's state or territory, to be set out in the form.  That, on the face of it, would seem to invoke in plain terms the principle laid down by the High Court which I have drawn from the decision in Kleinwort Benson.

It is perhaps unnecessary to add that if the matter could be looked at as a matter of discretion, there would be competing considerations.  It is all very well to suggest that the error is minor, and that a sensible debtor might be able to ascertain where he should go by making some inquiries.  However, not all debtors are sensible.  Ex hypothesi, they may be in a seriously disturbed state of mind, may be greatly harassed, and may lack the means to obtain legal advice, or certainly to travel from Sydney to Adelaide. This underlines the often cited warning of Cardozo J (in Burnet, Commissioner of Internal Revenue v Guggenheim (1933) 288 US 280 at 286) that when a court is asked to be liberal, it should view all facets of the suggested liberality, since what is liberal to one litigant may be very illiberal to another.

I am not prepared, in a matter as serious as bankruptcy, to stretch the law to validate a document, such as a bankruptcy notice, which does not in fact comply with the requirements laid down by the legislature.  For these reasons, the petition will be dismissed. 

I should only add that, on behalf of the petitioning creditor, my attention was directed to the proposition that, since people do move interstate in modern society, the strict requirements of the form may lead to difficulties in particular cases.  I do not think, however, that a policy consideration of that kind can be allowed to influence the decision of the court, which must assume that the problem, which is obvious, was taken into account when the form was drafted. It is, after all, a problem capable of being overcome by the exercise of a little care.

Associate:

Dated:    28 October 1997