FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - Motion for reversal of decision of Deputy Registrar affirming validity of bankruptcy notice - where address of liquidator changed between time of issue of notice and time of service of notice - where no person at old address possessed of actual authority to receive payments from debtor on behalf of judgment creditor or liquidator - whether failure to state an address for the creditor in the bankruptcy notice.

Bankruptcy Act 1966 (Cth)

Barnes, Re; Ex parte Barnes v Makhoul (1994) 53 FCR 135, refd

Beauchamp, In re; Ex parte Beauchamp [1904] 1 KB 572, cons

Buchanan, Re; Ex parte Mervac Finance Ltd (1991) 31 FCR 135, refd

Haritos, Re; Ex parte Hill (1968) 15 FLR 378, refd

James v Federal Commissioner of Taxation (1955) 93 CLR 631, cons

Johnson, Re; Ex parte Johnson v Tonkin (1994) 123 ALR 607, refd

Moss, Re; Ex parte Tour Finance Ltd (1968) 13 FLR 101, refd

Nugent, Re; Ex parte Nugent (1985) 5 FCR 161, appl

Padagas, Re; Ex parte Carrier Airconditioning Pty Ltd (1976) 30 FLR 170, refd

Persse, In re (1911) 55 SJ 314, refd

Schekeloff; Ex parte Schekeloff v  The Hopkins Group Pty Limited (1989) 22 FCR 407, refd

St Leon, Re; Ex parte National Bank of Australia Ltd (1994) 54 FCR 371, refd

Vittoria Di Giacomo, Re; Ex parte Boral Steel Ltd (1983) 68 FLR 106, refd

Walsh, Re (1982) 65 FLR 87, refd

Walsh v Deputy Commissioner of Taxation (1983) 77 FLR 61, refd

Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337, appl

RE DENIS LYNCH; EX PARTE DEPELA PTY LTD (IN LIQUIDATION)

NG 8384 of 1997

DAVIES J

6 MARCH 1998

SYDNEY

MINUTES OF ORDER

THE COURT ORDERS THAT:

1.         The decision of the Deputy Registrar be set aside and in lieu thereof it be ordered that the bankruptcy notice be set aside.

2.         The debtor have the costs of this motion and of the proceedings before the Deputy Registrar.

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

REASONS FOR JUDGMENT

This motion seeks the reversal of a decision of a Deputy Registrar refusing to set aside a bankruptcy notice on the ground that the notice did not, as required by Form 1 to the Schedule of the Bankruptcy Regulations, specify the address of the judgment creditor and the address of a person to whom payment of the debt could be made. 

It is not in dispute that the failure to state an address for the creditor in a bankruptcy notice constitutes non-compliance with the Bankruptcy Act 1966 (Cth) and with the Regulations and that such a failure is not a formal defect or a regularity to which s 306 of the Bankruptcy Act will apply.  See Re St Leon; Ex parte National Bank of Australia Ltd (1994) 54 FCR 371.  The bankruptcy notice specified the name and address of the creditor as follows:

            "1.       DEPELA PTY LIMITED (IN LIQUIDATION)

                        (`the Creditor')

                        of C/- John Vouris, Liquidator, Court & Co, Level 29

                        Australia Square, 264 George Street, Sydney NSW 2000".

The notice specified the name and address of the person to whom the debt could be paid as follows:

                        "DEPELA PTY LIMITED (IN LIQUIDATION)

                        (`the Creditor')

                        of C/- John Vouris, Liquidator, Court & Co, Level 29

                        Australia Square, 264 George Street, Sydney NSW 2000".

Mr John Vouris was the liquidator of the judgment creditor.  The address given was his address.  He was at the time a partner of Messrs Court & Co, Chartered Accountants.

However, on 29 August 1997, Mr Vouris left Court & Co and, from 1 September 1997, conducted in partnership the practice of Vouris & Bell, Chartered Accountants, at Level 1, 2 O'Connell Street, Sydney.  Service of the bankruptcy notice was effected on 19 November 1997 after Mr Vouris had changed firms and his business address.

On the hearing of this motion, Mr P Walsh of counsel appeared for the debtor and Mr JT Johnson of counsel appeared for the judgment creditor.  It was submitted by Mr Walsh that the bankruptcy notice was a nullity as the addresses stated in the notice were incorrect.

In an affidavit filed in the Court, the debtor deposed:

            "In paragraph 4 of the Notice I was required to pay the debt claimed at c/- John Vouris, Liquidator, Court & Co., Level 29 Australia Square, 264 George Street, Sydney.  So far as I am aware Mr Vouris is no longer at Court & Co, nor does he have an address at Level 29 Australia Square, 264 George Street, Sydney.  I am not aware of his present address."

The debtor was not cross-examined.  In an affidavit filed in the Court, Mr Vouris deposed:

            "5.       Had the Applicant, Mr Lynch attended the offices of Court & Co at level 29, Australia Square, 264 George Street to pay the judgment debt then my former partners or their staff, if requested, would have issued a receipt for the payment and forwarded that payment to me.

             6.        There are presently approximately 6 partners and 50 staff working at Court & Co."

However, those paragraphs do not suggest that anyone at Court & Co had been authorised to receive money on behalf of the judgment creditor or Mr Vouris or that anyone at Court & Co had been authorised to make an arrangement to the creditor's satisfaction for the settlement of the debt.  Mr Vouris was not cross-examined.

It was not suggested that the debtor had attempted to pay or compound the debt but had been unable to do so as he had been unable to locate the judgment creditor.

Mr Walsh submitted that the operative time at which the validity of a bankruptcy notice must be tested was the time at which it was served, not the time it was issued.  Mr Johnson submitted that the time at which the validity of a bankruptcy notice should be tested was the date of  its issue.

In Re Walsh (1982) 65 FLR 87, Lockhart J considered such an issue and at 93, his Honour said:-

            "A bankruptcy notice can only say what it does, and this must be determined when the ink is dry namely, at the time of its issue."

His Honour's decision was upheld by a Full Court of this Court in Walsh v Deputy Commissioner of Taxation (1983) 77 FLR 61 and by the High Court of Australia in Walsh v  Deputy Commissioner of Taxation (1984) 156 CLR 337.  The issue in that case is whether a bankruptcy notice was invalidated by the fact that the sum demanded in the notice overstated the amount due by the time of the service of the notice because of payments which had been made between the date of issue and the date of service.  At 340, Gibbs CJ, with whom Mason, Brennan, Deane & Dawson JJ agreed, said:

            "In form the notice speaks as at the date which it bears, that is the date of its issue, and although service is essential to make non-compliance an act of bankruptcy, and although the time fixed for compliance runs from the date of service, the notice must be understood as speaking as at the date of its issue and the requirements of the notice, for the purposes of s 40(1)(g) of the Bankruptcy Act must be ascertained in that context."

I am satisfied that the judgments in Walsh must be read in the light of the subject which was there under consideration, which was an overstatement in the amount demanded alleged to have been due to a payment between the time of issue of the notice and the time of service.  The judgments in Walsh did not discuss the many cases both in the United Kingdom and in this country in which it had been held that aspects of the notice must be correct and applicable both at the time of issue and at the time of service.  Some of them are Re Moss; Ex parte Tour Finance Ltd (1968) 13 FLR 101 at 103-4; Re Padagas; Ex parte Carrier Airconditioning Pty Ltd (1977) 30 FLR 170 at 172; Re Vittoria Di Giacomo; Ex parte Boral Steel Ltd (1983) 68 FLR 106.  Another example is Schekeloff; Ex parte Schekeloff v  The Hopkins Group Pty Limited (1989) 22 FCR 407 wherein Burchett J held that the staying of a judgment after a bankruptcy notice had been issued and served did not invalidate the notice.  His Honour discussed cases in which the criterion that the judgment not be stayed had been discussed either in relation to the date of issue of the notice or the date of service.  Subsequently, in Re Johnson; Ex parte Johnson v Tonkin (1994) 123 ALR 607, Spender J specifically held that the requirement that the judgment not be stayed must be satisfied both at the time of the issue of the bankruptcy notice and at the time of its service. 

In relation to the judgment creditor's address and the address at which the debtor may pay the debt or may attend to seek to secure or compound the debt, the principle is somewhat different in that the addresses stated must be effective addresses at the time of the issue of the notice and throughout the period for compliance.

In In re Beauchamp; Ex parte Beauchamp [1904] 1 KB 572, Vaughan Williams LJ, giving the judgment of the Court (Vaughan Williams, Romer and Stirling LJJ) said at 583-4:

            "What then are the necessary conditions of the address?  We think that the address must be of a place where the creditor is to be found during the seven days, and this is so whether that address is of the residence or of the place of business of the creditor; and we think that, if the address given in the bankruptcy notice is such an address at the date of the service of the notice, occasional absence of the creditor from that address, even for a whole day, will not render the bankruptcy notice inefficient, unless the absence is such as to deprive the debtor of a reasonable opportunity of paying the debt or securing it or compounding for it according to the terms of the notice.  And we do not think that it would make any difference that the address was the temporary home of the creditor who happened to have no permanent home, or that the absence relied on as depriving the bankruptcy notice of its efficiency happened to occur on the last day of the seven. 

            On the other hand, we think that, if the creditor, after the service of the notice, abandoned his place of address, so that it ceased to be a place where at reasonable times the creditor could be found (or some authorized agent on his behalf) to receive payment of the judgment debt, or to deal with the question of security, the bankruptcy notice would cease to be efficient."

That authority has been cited with approval on many occasions, both in the United Kingdom and in this country, including by Williams, Kitto and Taylor JJ in James v Federal Commissioner of Taxation (1955) 93 CLR 631.  In James, the present issue was not before the Court but the remarks of their Honours are consistent only with their full agreement with the passages I have set out above.  When discussing the judgments of Fletcher Moulton LJ and Farwell LJ in In Re Persse (1911) 55 SJ 314, a case which applied the principles enunciated in In re Beauchamp, their Honours said at 642 that:

            "They held that a foreign creditor would be within the realm for the purpose of the notice, even if he was not there in person during the seven days, provided he had an agent at the address given during this period duly authorised to receive payment." 

Accordingly, their Honours approved the principle that the addresses given must be effective addresses throughout the period of the notice. 

In Re Nugent; Ex parte Nugent (1985) 5 FCR 161 at 163, Pincus J, after citing a passage from James, said:

            "This passage, and the fact that the judgment treats Re Beauchamp; Ex parteBeauchamp [1904] 1 KB 572 as authoritative, constitute clear authority for   the  view that the address given in the notice is not necessarily sufficient if it   is the creditor's true address and that its propriety must be judged by   reference to the opportunity afforded to the debtor to pay, or to arrange to   secure or compound,  there.  

I am inclined to think that the basic principle, in accordance with which   most of the authorities are capable of being reconciled, is that the address   given should be one at which, during the relevant period, it is reasonably   practicable to make payment or offer to secure or compound.   There may be   quite a number of   reasons why difficulty in making payment at the address   given arises: for example, because it is in some remote place, or otherwise   physically difficult of access, or because it is, during part of the relevant time,   unattended.  Re Beauchamp (above) shows that  `occasional absence of the   creditor from that address, even for a whole day' is not fatal: see Re Beauchamp at 583.  The qualification the court added was that the notice would be `inefficient' if `the absence is such as to deprive the debtor of a reasonable opportunity of paying the debt or securing for it or compounding for it according to the terms of the notice.'  The test of  `reasonable opportunity of paying' is roughly equivalent to the test of reasonable practicability mentioned above."  

Re Beauchamp was referred to with approval by Gibbs J in Re Haritos; Ex parte Hill (1968) 15 FLR 378 at 379-80.  In Re Buchanan; Ex parte Mervac Finance Ltd (1991) 31 FCR 135 at 139-141, Beaumont J referred with approval to the principles stated in Re Beauchamp, in James and in like cases. In Re Barnes; Ex parte Barnes v Makhoul (1994) 53 FCR 169, Cooper J also referred to these cases and after mentioning the issue of form said at 174:

            "Whether the address given is a proper address in the sense that as a matter of fact there was at `2/33 Riviera Road Miami' during the 28 days after service of the bankruptcy notice, the judgment creditor or some person duly authorised to receive payment and give a discharge is a different issue."

In the present case, the address given for the judgment creditor and the address given at which payment might be made or the debt might be secured or compounded was not an address at which the judgment creditor or its agent, the liquidator, could be found during the period of compliance.  The evidence given by Mr Vouris that payment would have been accepted at the old address by a member of the staff of Court & Co is not sufficient.  In my opinion, the address must be the address at which a person, duly authorised by the judgment creditor, can be found.  The evidence of Mr Vouris does not suggest that Messrs Court & Co had any actual authority to receive payments on behalf of the judgment creditor or Mr Vouris. 

For these reasons, I am of the view that the decision of the Deputy Registrar should be set aside and, in lieu thereof, it should be ordered that the bankruptcy notice be set aside.  The debtor should have the costs of this motion and the cost of the proceedings before the Deputy Registrar.  I should add that many of the authorities which I have discussed, including Re Beauchamp and Re Nugent, were not cited to the Deputy Registrar, the case before the Deputy Registrar being argued, as it was before me, on the principles enunciated in Walsh.

Associate:

Dated:              6 March 1998