FEDERAL COURT OF AUSTRALIA

Worchild v The Drink NightClub (QLD) Pty Ltd ACN 090 830 854, in the matter of Worchild [2005] FCA 863

ANDREW WORCHILD v THE DRINK NIGHTCLUB (QLD) PTY LTD ACN 090 830 854 AND BILL CROSS

QUD 37 OF 2005

DOWSETT J

15 JUNE 2005

BRISBANE

THE COURT ORDERS THAT:

1.         The application to set aside the bankruptcy notice be dismissed. 

2.         The applicant pay the respondents’ costs of the application. 

3.         The parties have liberty to apply within 14 days concerning the costs of proceedings before the Deputy District Registrar.

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

REASONS FOR JUDGMENT

1                     On 30 May 2005, a Deputy District Registrar refused an application by the present applicant to set aside a bankruptcy notice, dealing with various grounds upon which the application was based.  I am in substantial agreement with all that the Deputy District Registrar said, and need only make brief comments as to the specific submissions made before me today. 

2                     I commence with the proposition that irregularities in a bankruptcy notice are to be dealt with according to the following passage from the decision of the High Court in Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71 at 77:

‘Three questions arise as to the validity of the bankruptcy notices in this case:  are they defective or irregular; if so, is the defect or irregularity substantive or formal; and if it is formal only, has it occasioned substantial and irremedial injustice?’

3                     I take ‘substantial and irremedial injustice’ to include circumstances in which the irregularity has a potential capacity to mislead the applicant, whether or not he or she is actually misled. 

4                     The present bankruptcy notice was based upon an order of this Court made on 26 November 2004 as follows:

‘On 24 May 2004, the Court ordered that the applicant pay the respondents’ costs of and incidental to the application, including reserved costs, to be taxed if not agreed.

On 20 September 2004, an estimate of the respondents’ bill of costs was made pursuant to the provisions of Order 62 Rule 46 and allowed in the sum of $24,000.00, for which sum a Certificate of Taxation was issued on 12 October 2004.

The court orders that the applicant pay the sum of $24,000.00 to the respondents.’

5                     Those orders appear to have been made pursuant to O 62 subr 45(3) of the Rules of Court.  The order of 24 May 2004 was made by Cooper J in proceedings (Q175/03)  between the present applicant, who was also the applicant in those proceedings and the two present respondents, The Drink NightClub (Qld) Pty Ltd and Bill Cross.  The costs order was made in favour of the respondents jointly. 

6                     The applicant, the judgment debtor, makes a number of criticisms of the bankruptcy notice.  Firstly, he points out that the “creditor” for the purposes of the notice is described as “The Drink NightClub (Qld) Pty Ltd and Bill Cross”, the respondents in the original proceedings before Cooper J.  Their address is given as:

‘1.        The Drink Nightclub (Qld) Pty Ltd and Bill Cross

(“the creditor”)

of:       C/- Hynes Lawyers Gold Coast

Level 6, 50 Appel Street

Surfers Paradise QLD 4217.’ 

7                     In par 4 of the bankruptcy notice, it is stated that:

‘4.  Payment of the debt can be made to:

Hynes Lawyers Gold Coast

of:       Level 6, Gateway Building

50 Appel Street

Surfers Paradise QLD 4217.’

8                     It is suggested that this has the potential to cause confusion, leading to the bankruptcy notice being void.  The bankruptcy notice seems to comply with the requirements of the regulations.  In particular, the regulations require insertion of the creditor’s name and address in par 1 and the statement in par 4 that payment of the debt can be made to an identified person at an identified address. There is no requirement that the relationship between the nominated payee and the creditor be stated.

9                     The applicant’s complaint appears to be based upon the decision of Lindgren J in Re St Leon; Ex parte National Australia Bank Limited (1994) 54 FCR 371.  In that case it was thought possible that a solicitor’s address might be taken to be the address of the creditor.  There was, in that bankruptcy notice, no statement to the effect that ‘Payment of the debt can be made to “an identified person” at an identified address.’  The decision in St Leon is of no present relevance.

10                  The second criticism relates to the form of the order for costs made by Cooper J, and reflected in the order subsequently made pursuant to O 62 r 45.  That order was that:

‘The applicant pay the respondents’ costs of and incidental to the application, including reserved costs, to be taxed if not agreed.’

11                  The applicant asserts that because the order was made in favour of two respondents, there were, in fact, two orders.  The argument is without merit.  There is one order for costs in favour of two respondents, who both jointly enjoy its benefit.  I do not really understand the significance of this point, but to the extent that it relies upon the assertion that there are two orders for costs, it is wrong.

12                  The third point is that the bankruptcy notice does not mirror the judgment.  This argument appears to focus upon the distinction in the schedule to the prescribed form of bankruptcy notice between the amount of any judgment or order (which is item 1) and item 2, which relates to legal costs.

13                  Item 2 and footnote 1, which is specifically referred to in item 2, contemplate the situation in which an order for costs has been followed by a certificate of taxation, without any further formal order.  Such a situation arises under the practice which obtains in some other courts.  However it is not relevant where, as here, the judgment creditor has the benefit of a judgment for costs in a specific amount.  In those circumstances it is appropriate, as has occurred here, for the judgment creditor to include the amount of the costs  in item 1 as an amount owing pursuant to a judgment or order.  Item 2 and note 1 are therefore irrelevant.

14                  The next point is the suggestion that the bankruptcy notice is misleading  in that, in par 3, it offers the judgment debtor the opportunity either to pay or to make an arrangement to the creditors’ satisfaction for settlement of the debt.  It then goes on, in par  4, to identify the address for payment, without identifying any separate address at which the creditors may be reached for the purposes of making an arrangement.  As I have said, this is the form prescribed by the bankruptcy regulations.  I cannot see that any complaint can be made about the fact that the judgment creditors have complied with that form, nor can I see that there is any basis for confusion, given that the judgment creditors’ address, as opposed to the address specified in par 4, is to be found in par 1.  It is the same address, but no difficulty arises from the fact that if the debtor wishes to enter into discussions as to the making of any arrangements, he is to do so by contacting the creditors at their solicitors’ office as specified in par 1.  There is nothing in this point.

15                  It is also submitted that the form itself is in some way misleading.  As far as I can see, that question only arises pursuant to Kleinwort if there is some irregularity, which is “formal” rather than “substantive”.  There is no merit in this criticism.

16                  It is then said that there is some capacity to mislead arising from the fact that in the bankruptcy notice, one of the two creditors is described as “Bill Cross”, whereas, at some stage in the proceedings before Cooper J, he swore affidavits in the name “Billy Cross”. However he was named as “Bill Cross” in the title of those proceedings which were commenced by the applicant.  It is difficult to see how any capacity to mislead could arise from this matter.  In any event, there is no irregularity.  The name specified in the bankruptcy notice is the name specified in the order.  There is nothing in this point.

17                  It was suggested that the decision of Wilcox J in McWilliam v Jackson (2000) 96 FCR 561 was in some way supportive of the debtor’s argument.  The factual basis of that decision was quite different from that with which I am presently concerned.  In that case, the judgment creditor had been identified as one named person “and others”, apparently reflecting the form in which judgment had been given in favour of numerous plaintiffs in the Supreme Court. His Honour was understandably surprised at that.  It seems to have been an important aspect of the decision in that case.  The decision does not offer any support for the applicant’s submission. 

18                  Finally, it is complained that the bankruptcy notice was signed by Ian Bisson, apparently on behalf of the creditors.  The relevant execution clause is as follows:

‘The person who applied for this notice to be issued is:

Ian Bisson

who confirms by the following signature that he or she is the creditor/the creditor’s authorised agent:

(signature)

and whose address for service is:       C/- Hynes Lawyers Gold Coast

                                                            Level 6, Gateway Building

                                                            50 Appel Street

                                                            Surfers Paradise QLD 4217.’

Telephone and fax numbers follow. 

19                  It is said that the failure to delete one of the alternatives, ie, “the creditor” or “the creditor’s authorised agent” is misleading, or constitutes an irregularity.  It is probably an irregularity, but I cannot see how it could possibly lead to any misunderstanding on the part of the applicant.  It is quite clear that “the creditor” means The Drink NightClub (Qld) Pty Ltd and Bill Cross.  The identification of Mr Bisson as the person who applied for the notice and his signature are in close proximity to the name and address of the firm of solicitors.  That address has elsewhere been identified as the place at which the creditors can be contacted.  This indicates quite clearly that that firm is acting as agent for the creditors.  It follows that Mr Bisson is acting on behalf of that firm.  However the judgment debtor suggested that there is support for his position in the authorities.  He referred to the decision of a Federal Magistrate in Blackshaw Services Pty Ltd v Cureton [2003] FMCA 591.  However in that case, the solicitor signed the notice in such a way as to assert that he was, himself, the creditor.  That could cause some confusion, but it is not the present case. 

20                  The applicant also relies upon a decision of a Magistrate in SGRO v Liberty Funding Pty Ltd [2004] FMCA 320.  In that case, the Federal Magistrate, in my view correctly, rejected the argument now advanced.  See par 38 of the reasons.

21                  Finally, the applicant asserts that an aggregation of all of these arguments creates a basis for saying that he might have been confused or misled by the bankruptcy notice.  As I have said, that question only arises if there is an irregularity in the notice.  The failure to delete the alternatives in signing the petition is the only demonstrated irregularity which I have been able to identify.  It is, in my view, a formal matter.  I do not consider that it could conceivably have misled the applicant.

22                  In those circumstances, I cannot see that the aggregation of all of these arguments can add anything to their merits.  In my view, the application to set aside the bankruptcy notice must be dismissed.  I order that the applicant pay the respondents’ costs of the application.  I will give liberty to apply within 14 days concerning the costs of proceedings before the Deputy District Registrar.

Associate:

Dated:              27 June 2005