FEDERAL COURT OF AUSTRALIA

BANKRUPTCY – filing statement of affairs – whether leaving statement at unattended counter constitutes “filing” – whether copy statement of affairs may be filed – whether s 306(1) of the Bankruptcy Act 1966 (Cth) permits a deficiency in filing to be cured

Bankruptcy Act 1966 (Cth) ss 33(1)(c), 54(1), 149(4), 306(1)

Nilant v Macchia, (1997) 148 ALR 329 referred to

Purden Pty Limited v Registrar of Bankruptcy (1982) 43 ALR 512 distinguished

Re Staples v Anor; Ex parte Baker (1996) 67 FCR 541 followed

Re Wheeler v Reynolds; Ex parte Kerr and Crowe v Anor (1988) 20 FCR 185 followed

JOHN SOFIA & GRAcE SOFIA v PAUL PATTISON (AS TRUSTEE OF THE PROPERTY OF JOHN SOFIA AND GRACE SOFIA, BANKRUPTS) and OFFICIAL RECEIVER IN AND FOR THE BANKRUPTCY OF THE STATE OF VICTORIA

FINKELSTEIN J

MELBOURNE

20 OCTOBER 1997

THE COURT declares THAT:

1.         The applicants have complied with s 54(1) of the Bankruptcy Act 1966 (Cth) by filing copies of their statements of affairs with the Registrar of Bankruptcy District of Victoria on 22 September 1994.

and THE COURT ORDERS THAT:

2.         The time provided for the filing of the applicants’ statements of affairs be extended to 22 September 1994.

3.         The applicants pay the second respondent’s costs of the application.

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

REASONS FOR JUDGMENT

HIS HONOUR: On 23 August 1993, a sequestration order was made by the Deputy Registrar in Bankruptcy against the estate of each of the first applicant, John Sofia, and his wife, the second applicant, Grace Sofia. 

Section 54(1) of the Bankruptcy Act 1966 (Cth), as in force at that time, provided that where a sequestration order is made the person against whose estate it is made shall within 14 days of being notified of the bankruptcy make out and file in the office of the Registrar in bankruptcy in the district where the sequestration order was made a statement of his or her affairs and provide a copy of that statement to the trustee of the estate of the bankrupt.

In November 1993, shortly after the sequestration orders were made, Mr Sofia attended at the office of the Insolvency and Trustee Service of Australia.  During the course of his attendance he provided to an officer of the Service an original statement of his affairs and a statement of his wife’s affairs.  Those statements were taken by the officer and copies were made.  The officer then handed to Mr Sofia either the original statements or copies of them and advised Mr Sofia that he should file those statements at the Registrar’s office at the Federal Court.  According to his affidavit Mr Sofia immediately went to the Registry with the statements he had been given.  When he arrived at the Registry there was no one at the counter so Mr Sofia left those documents on the counter.  A later search of the files maintained in respect of the applicants revealed that the statements had not been placed on the files nor was there any record that they had been left at the Registry.  Consequently a copy of each statement was delivered to the Registry on 22 September 1994.

Section 149(4) of the Bankruptcy Act 1966 (Cth) provides that where a person has become bankrupt after the commencement of s 27 of the Bankruptcy Amendment Act 1991 (Cth) he or she will be discharged from bankruptcy three years from the date on which the bankrupt filed his or her statement of affairs in accordance with s 54(1).  Mr Sofia and Mrs Sofia had become bankrupt after the commencement of s 27 of the Bankruptcy Amendment Act.  Accordingly they will only be discharged from bankruptcy three years from the date on which each of them filed his or her statement of affairs.

The questions that arise on this application are: (a) does the three year period under
s 149(4) commence when the copy statements of affairs of Mr and Mrs Sofia were left at the counter at the unattended Registry in November 1993? or (b) does the three year period commence when the copy statements were filed on 22 September 1994? 

The answer to the first question depends upon whether leaving a statement of affairs at an unattended counter at the Registry will constitute the “filing” of that statement for the purposes of s 54(1).  There is no definition of the word “file” in the Act.  The ordinary meaning of the word is to place on a file and that may be its meaning in s 54(1).  In Purden Pty Limited v Registrar of Bankruptcy (1982) 43 ALR 512 the Full Court discussed the meaning of the word “filed” when used in a number of sections of the Bankruptcy Act but not in s 54(1).  The Full Court said (at 515):

“Filing is the word traditionally used to describe the act or process of placing documents in the records of courts or registries.”

The Full Court made this statement in the context of drawing a distinction between the ‘filing’ of a document and the ‘presentation’ of a document.  With regard to this distinction the Full Court said (at 515):

“The act of presentation has been said to be the act of a party and the act of filing to be the act of the court.”

Whether the word “file” in s 54(1) is intended to be a reference to the act of the bankrupt or the act of the Registrar is unclear.  But, having regard to the context in which the word is used it should be regarded as a reference to the act of the bankrupt.  In the first place, the obligation that is imposed by s 54(1) is an obligation that is imposed on the bankrupt.  In the second place the obligation is to file a document at a particular place namely at a Registry.  This suggests that the statement will be filed when it is left with an officer at the Registry rather than when it has been placed on a file that is maintained at the Registry.  Thus the subsection will be complied with whether or not the statement is subsequently placed on a file by the officer who received it. 

It is now necessary to determine whether a statement of affairs has been filed if it is left at an unattended counter.  I do not have any doubt that s 54(1) would not be complied with in those circumstances.  Such an act would not ensure that the statement of affairs reached the Registrar.  It could easily happen that some person who was in the Registry when the document was left at the counter might take that document.  That could have happened in this case. 

In September 1994 a copy of each statement of affairs was left at the office of the Registrar.  This raises the question whether filing a copy statement is sufficient compliance with s 54(1).  Section 54(1) provided that the bankrupt must:

“(a)     make out and file in the office of the Registrar for the District in which the sequestration order was made a statement of his affairs; and

(b)  furnish a copy of the statement to the trustee.”

It will be noticed that the subsection draws a distinction between an original statement and a copy statement.  Section 54(3A) also draws this distinction by providing that a copy statement must be given to the Official Receiver.  In my view when s 54(1)(a) provides for the filing of a statement of affairs it is referring to the original statement and not a copy statement.

Because Mr and Mrs Sofia did not file an original statement of their affairs, the period of three years that must elapse before they can be discharged from bankruptcy has not commenced to run unless some other provision of the Act can overcome the difficulty.

Here Mr and Mrs Sofia rely on s 306(1) to relieve them from the consequences of non-compliance with s 54(1).  Section 306(1) provides that proceedings under the Bankruptcy Act are not invalidated by a formal defect or irregularity unless the Court is of the opinion that substantial injustice has been caused by the defect or irregularity. 

No injustice will be caused by the fact that Mr and Mrs Sofia filed a copy rather than an original statement of their affairs with the Registry.  But the question remains whether        s 306 can have application to a failure to comply with s 54(1).  That depends on what is meant by the word “proceedings” in s 306(1) for it is only a defect or irregularity in a “proceeding” that can be validated by that subsection. 

Section 5(1) contains a definition of the word “proceeding”.  It means a “proceeding under this Act”.  This is not a helpful definition for present purposes.  On one view the word may mean a curial proceeding under the Bankruptcy Act.  But the cases that deal with s 306 make it clear that the word is not to be confined to such proceedings.  In McDonald Henry & Meek, “Australian Bankruptcy Law and Practice” (5th ed) in the commentary dealing with s 306, reference is made to cases where it has been accepted that deficiencies in a bankruptcy notice may be cured by an order under s 306(1).  A bankruptcy notice is plainly not a curial proceeding.  Further, there are two decisions of the Federal Court that establish that the word “proceeding” should be given a wide meaning.  The first is Re Wheeler v Reynolds; Ex parte Kerr and Crowe v Anor (1988) 20 FCR 185.  There Spender J said in relation to the application of the section to a defective bankruptcy notice:

“Although the Registrar’s act in issuing the notice is an administrative rather than a judicial act, it is nonetheless a proceeding as contemplated by s 307.  It is a proceeding under the Act but is not a step in any proceeding in the court.”

The second decision is Re Staples v Anor; Ex parte Baker (1996) 67 FCR 541 which was concerned with the conduct of an investigation under s 12 of the Bankruptcy Act and a deficiency in connection with that investigation which was sought to be overcome by
s 306(1).  In that case Spencer J said (at 547):

“I think the word, ‘proceeding’ has to be read more widely than  a reference to a proceeding in court.”

If the word “proceedings” in s 306(1) is not given the wide meaning which his Honour thought it should be given, it might fairly be said that s 306(1) has little work to do.  This case is a good example of one where a provision such as s 306(1) should, if the circumstances permit, be used to overcome the problem that confronts these applicants.  I am of the view that s 306(1) does apply to “proceedings” taken under s 54(1). 

I have already found that no injustice will result from the fact that each applicant filed a copy statement of affairs rather than an original statement.  Accordingly, I will declare that the statements of affairs that were filed on 22 September 1994 should be treated as having regularly been filed.

It is also necessary for me to make an order extending the time fixed by s 54(1) for the filing of a statement of affairs until 22 September 1994.  It is clear that I have power to make that order under s 33(1)(c) and it is appropriate that such an order be made.

I certify that this and the preceding

four (4) pages are a true copy of the

Reasons for Judgment herein of the

Honourable Justice Finkelstein 

Associate:

Dated:                                      28 August 1998

Counsel for the Applicants:       M Galvin

Solicitor for the Applicants:       JM Smith & Emmerton

Counsel for the                         S Linden

Respondents:

Solicitor for the                                     Australian Government Solicitor

Respondents:

Date of Hearing:                                   20 October 1997

Date of Judgment:                                 20 October 1997