FEDERAL COURT OF AUSTRALIA

Commonwealth Bank of Australia v Booth, In the matter of Booth

[2002] FCA 430

BANKRUPTCY – Validity of bankruptcy notice – whether notice failed to comply with an essential element of the Bankruptcy Act – whether notice misleading or confusing - incorrect section of the District Court Act 1973 (NSW) under which interest was claimed cited in one part of the notice but correct section cited in another part.

Bankruptcy Act 1966 (Cth)

St. George Bank Ltd v Baldwin [2001] FCA 161 followed

COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) v STUART EDGAR BOOTH; IN THE MATTER OF STUART EDGAR BOOTH

N 7038 of 2002

MOORE J

9 APRIL 2002

SYDNEY

IN THE MATTER OF STUART EDGAR BOOTH

THE COURT ORDERS THAT:

1.         A sequestration order be made against the estate of Stuart Edgar John Booth.

2.         The applicant creditor’s costs (including reserved costs, if any) be taxed (under the Federal Court Rules) and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

3.         Order 1 is stayed for a period of twenty-one days from the date of this order.

The Court notes that the date of the act of bankruptcy is 10 November 2001.

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

IN THE MATTER OF STUART EDGAR BOOTH

REASONS FOR JUDGMENT

1                     This is an application by a judgment creditor, the Commonwealth Bank of Australia ("the Bank"), for an order sequestrating the estate of Mr Stuart Edgar Booth ("the debtor").  The petition is opposed on one ground.  It concerns the form of the bankruptcy notice.  The notice served on the debtor generally complied with the provisions of the Bankruptcy Act 1966 (Cth) ("the Act") and the Bankruptcy Regulations except, it was contended, in one respect.  Consistent with the prescribed form, the notice contained a schedule setting out the interest.  Annexed to the notice was a further schedule identifying the interest on the judgment.  That latter schedule contained a statement that the interest was "pursuant to s 83A of the District Court Act, 1993".  It was common ground that this was wrong and the relevant section was s 85.

2                     However also annexed to the notice was a certificate of judgment signed by the Registrar of the District Court. Annexed, in turn, to that certificate was a further schedule of the interest which was headed "S.85 INTEREST SCHEDULE".

3                      It was submitted on behalf of the debtor that the misdescription of the relevant section in the notice constituted a failure to comply with an essential requirement of the Act.  It was further submitted the misdescription of the section was likely to have misled or confused the debtor.  Reference was made, in support of these submissions, to a judgment of Hely J in Cosco v Tsatsoulis [2002] FCA 358 and a judgment of a Federal Magistrate in Shephard v Blueberry Farms of Australia [2001] FMCA 2 which raised the same issues in broadly similar factual circumstances.  Reference was also made to authorities of more general application.  However the difficulty the debtor confronts is that the very issues presently raised were addressed by Madgwick J in a judgment given on 20 February 2001 in St. George Bank Ltd v Baldwin [2001] FCA 161 in almost identical circumstances (so far as relevant).  The only possible point of difference is that his Honour appears to have found, as a matter of fact, that the correct section was referred to by the Registrar of the District Court in his or her certificate.  I should note, that the solicitor appearing for the debtor candidly conceded that the certificate in that matter was in the same terms as the certificate in the present case.  If so, his Honour's finding may have been intended to be a finding that the correct section was incorporated, by reference, in the certificate.  In any event, I am plainly bound to consider his Honour's judgment by reference to the findings he made.  However I do not view this possible difference as a material one.  The annexed certificate, in the present matter, viewed as a whole, fairly clearly referred to the correct section.

4                     In this area of the law, it is particularly important, in my opinion, that confusion is not created by judges taking different views on legal issues concerning what constitutes a valid bankruptcy notice unless a judge is comfortably satisfied that an earlier judgment is plainly or clearly wrong.  In this case I am not, though I accept that views may well differ about the validity of a bankruptcy notice of the type presently under consideration.  Accordingly I should follow the approach of Madgwick J which results in the rejection of both contentions of the debtor.  If his Honour was wrong, the appropriate means of redressing my perpetuation of his error is by an appeal.  If the debtor is successful then any decision of a Full Court would bind all judges of this Court.  While I accept that having to appeal would place a burden on the debtor, if it is the course he follows, I trust he would understand that uncertainty in this area of the law is ultimately of benefit to no-one.

5                     I am otherwise satisfied that a sequestration order should be made and I so order.

Associate:

Dated:              10 April 2002