FEDERAL COURT OF AUSTRALIA

Matheson v Scottish Pacific Business Finance Pty Ltd [2005] FCA 670

BANKRUPTCY – whether service of originating proceedings breached the Privacy Act 1988 (Cth) – whether irregular service invalidates the sequestration order – whether error in the name of the debtor on bankruptcy notice and petition an irregularity – whether such irregularity invalidates petition – whether debt previously extinguished

PRACTICE AND PROCEDURE – service of creditors petition in precincts of court – whether such service invalid

Statutes

Bankruptcy Act 1966 (Cth) s 306(1)

Privacy Act 1988 (Cth)

Cases

Baldry v Jackson [1976] 1 NSWLR 19 Foll

Brookfield and Septic Products Australia Pty Ltd (In Liq) v Davey Products Pty Ltd [1988] FCA 1201 Foll

Re Draper;  Ex parte Australian Society of Accountants (1989) 154 FCR 41 App

Re Wimbourne; Ex parte The Debtor (1979) 24 ALR 494 Foll

FREDERICK MATHESON v SCOTTISH PACIFIC BUSINESS FINANCE PTY LTD

QUD 64 OF 2004

KIEFEL J

BRISBANE

27 MAY 2005

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.                  The appeal be dismissed.

2.                  The appellant pay the respondent’s costs of the appeal.

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

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

REASONS FOR JUDGMENT

1                     On 14 April 2004 the creditor, Scottish Pacific Business Finance Pty Ltd (‘Scottish Pacific’), obtained a judgment against the debtor Mr Matheson in the sum of $87 153.93 together with interest.  The proceedings were initially brought by Allens Services Pty Ltd (‘Allens’), a company which had hired equipment to Mr Matheson.  The debt due to that company was factored to Scottish Pacific.  The District Court permitted the creditor to be joined as plaintiff in the proceedings and judgment was entered in its favour.

2                     A bankruptcy notice issued when the judgment debt was not paid.  This led to an application to set the notice aside which was heard and determined by the Federal Magistrates Court.  An appeal from that decision was heard by Dowsett J on 14 October 2004.  The notice was not set aside.

3                     On the hearing of the petition, Mr Matheson opposed the making of a sequestration order on grounds which are now contained within his Notice of Appeal to this Court and upon additional grounds to which I shall refer.  A sequestration order was made.

4                     The grounds of appeal are not amenable to summary.  I set them out as follows:

‘1.        The District Court order dated 14 April 2004 was irregularly entered as respondent avoided issuing to Court a affidavit of service.

2.         The bankruptcy notice dated 19 May 2004 was founded on a order irregularly entered which invalidates such notice.

3.         The District Court order dated 14 April 2004 in claim D 781–03 was obtained by respondent pursuant to breaches Privacy Act 1988 which voids such order & thus voids bankruptcy notice.

4.         The Federal Magistrates Court does not have authority to amend a  order dated 14 April 2004 of District Court’.

5.         A bankruptcy notice is void if full legal name of person is not complete.’

5                     Two further matters were raised before Rimmer FM.  The first concerned the effect of service of the creditors petition upon Mr Matheson in the precincts of the Court.  The second was a claim that there was no debt due by him because the liquidator’s report with respect to the company Allens showed that Scottish Pacific had been paid in full by Allens.  This latter point was a matter also raised before Dowsett J, although the liquidator’s report was not then available.  Three other grounds were raised before his Honour concerning the bankruptcy notice which are not relevant here.

6                     Grounds 1, 2 and 3 would appear to be inter-related.  Mr Matheson’s point does not concern a failure to serve him.  He accepts that he was served and that he appeared for himself at the hearing before the District Court.  His point is essentially that the then plaintiff acted in contravention of the Privacy Act 1988 (Cth) (‘Privacy Act’).  It breached that Act in order to obtain his residential address so that he could be served with the originating proceedings.  Since that time the plaintiff or creditor has avoided serving him at that address.  This shows that they were aware that they were in breach of the legislation.

7                     Mr Matheson appears to consider that any such unlawful conduct somehow taints the claim for the debt with illegality.  Rimmer FM held that even if there was a breach of the Privacy Act, this did not affect the validity of the debt upon which the District Court judgment was founded.  This is clearly correct.

8                     Grounds 4 and 5 both relate to Mr Matheson’s assertion that all official documents, including court proceedings, must refer to a party by their full name.  Nothing less will suffice.  In both the District Court and in these proceedings he has only been referred to as ‘Frederick Matheson’ and not by his full name ‘Frederick James Matheson’.

9                     Ground 4 is also based upon an assumption that her Honour changed the reference to Mr Matheson’s name on application by the creditor.  In fact this did not occur.  It was apparently pointed out, in argument before her Honour, that there was power under s 306 of the Bankruptcy Act 1966 (Cth) (‘Bankruptcy Act’) to cure any irregularity with respect to his name, but her Honour found that there was not such an irregularity. 

10                  Mr Matheson has referred me to the definition of ‘legal name’ in Black’s Law Dictionary, 8th edn, ed BA Garner, West Pub Co, USA (2004) pg 1048 as ‘a person’s full name as recognised in law’.  That does not however mean that a court document such as a bankruptcy notice or petition is void if the full legal name of the person is not provided.  There is no doubt that Mr Matheson is the person named in the District Court proceedings and in these proceedings and that he has understood that to be the case.  He has represented himself and appeared.  There was no ambiguity created by the bankruptcy notice or petition.  In any event if there was an irregularity in the mode of description, it is of a formal nature and one that can be validated by s 306(1) of the Bankruptcy Act:  Re Draper;  Ex parte Australian Society of Accountants (1989) 154 FCR 41.  A ‘formal defect or an irregularity’ within the meaning of that section is one that could not reasonably mislead the debtor:  Re Wimbourne; Ex parte The Debtor (1979) 24 ALR 494.  In my opinion, the petition notice does not cause any injustice as it was not likely to mislead the debtor. 

11                  Mr Matheson’s written submissions also contain reference to the matter raised before the Federal Magistrates Court of the service of the creditors petition on him in the precincts of the Court.  This was not contained in his Notice of Appeal and leave to amend is not sought to add it.  There is in any event no reason for doubting her Honour’s finding that there was effective service on the evidence before her.  Service in the precincts of the Court might, on one view, amount to a contempt if it has ‘such a deterrent effect as to obstruct the administration of justice’:  Baldry v Jackson [1976] 1 NSWLR 19 at 25;  see also Brookfield and Septic Products Australia Pty Ltd (In Liq) v Davey Products Pty Ltd [1988] FCA 1201.  In the present case the service of the creditors petition upon Mr Matheson, when he was present in the Court precincts in connexion with earlier aspects of this matter, does not amount to any interference in the administration of justice.  I did not understand Mr Matheson to say that it had any deterrent effect.  Objectively it is difficult to see how that could be the case.

12                  Mr Matheson also sought leave to amend his Notice of Appeal to add a further ground to the effect that the debt was not due by him.  His point is that the true creditor is the company Allens, or more particularly, its liquidator because it appears that the debt to Scottish Pacific has been extinguished.

13                  Although the liquidator’s report was not available at the time Dowsett J gave his reasons in October 2004, his Honour was apparently apprised of this issue.  There was before his Honour an affidavit by the credit manager of Scottish Pacific who swore that the debt was still due to it and he was cross-examined by Mr Matheson.  His Honour considered that there was no evidence that Scottish Pacific had assigned the relevant debt back to Allens.

14                  The solicitor for Scottish Pacific points out that when a court has dealt with an issue arising with respect to a bankruptcy notice it rarely reconsiders the same point in connexion to the creditors petition. 

15                  In any event I would not be disposed to grant leave to amend since the point would not seem to be one of substance.  I shall assume for present purposes that the monies owed by Mr Matheson and the subject of the factoring arrangement between Scottish Pacific and Allens are included in the reference to payments in the liquidator’s report.  It is not clear.  If Allens has paid a sum representing Mr Matheson’s debt, Scottish Pacific may be liable to account to Allens if they recover the debt from Mr Matheson’s estate, if these arrangements have not been put in place.  But neither the payment of the debt by Allens nor any obligation arising from it as between those parties extinguishes or releases Mr Matheson’s obligation to pay Scottish Pacific.  There is no evidence of any assignment of the debt back to Allens.

16                  The appeal will be dismissed with costs.

Associate:

Dated:              27 May 2005