FEDERAL COURT OF AUSTRALIA

Jensen v Queensland Law Society Incorporated [2006] FCA 1206

BANKRUPTCY - Bankruptcy notice - whether notice in prescribed form - copy signature on bankruptcy notice - formal defect or irregularity - whether ‘other sufficient cause’ shown - relevant act of bankruptcy - whether failure to establish set-off constitutes act of bankruptcy - whether misstatement of date of act of bankruptcy be amended when within prescribed period

Bankruptcy Act 1966 (Cth), ss 33(1)(b), 40(1)(g), 41(2), 41(7), 43, 44, 52(1), 52(2)(b), 306

Adams v Lambert [2006] HCA 10 Considered

Bryant v Commonwealth Bank of Australia [1995] FCA 971 Considered

Evans v Duff [2004] FCA 1643 Considered

Jensen v Queensland Law Society Incorporated [2004] FCA 1630 Cited

MacDonald v Official Trustee in Bankruptcy (2001) 101 FCR 72 Cited

Matthews v Collet [2000] FCA 224 Considered

Project Blue Sky v Australia Broadcasting Authority (1998) 194 CLR 355 Cited

Prudential-Bache Securities (Australia) Ltd v Warner [1999] FCA 1143 Considered

In Re Hastings (a bankruptcy) (1985) 1 WLR 969 Considered

Re O’Sullivan: Ex Parte Bank of New Zealand (1991) 30 FCR 112 Considered

PETER JENSEN v QUEENSLAND LAW SOCIETY INCORPORATED

QUD 84 OF 2006

KIEFEL J

8 SEPTEMBER 2006

BRISBANE

THE COURT ORDERS THAT:

1.                  The petition be amended by deleting the date 1 July 2004 in paragraph 4 and inserting in lieu the date 16 August 2004.

2.                  The appeal be dismissed.

3.                  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.

REASONS FOR JUDGMENT

1                     The appellant, Mr Jensen, was formerly a solicitor and is presently serving a term of imprisonment, having been convicted of defrauding some of his clients. The respondent, the Queensland Law Society Incorporated, has paid in excess of $1.3 million to those clients from the Legal Practitioners Fidelity Guarantee Fund and on 20 March 2003 obtained judgment against the appellant in the amount of $589,772.88.

2                     On 10 June 2004 a bankruptcy notice was served upon the appellant. He applied to the Federal Magistrates Court to have that notice set aside, on the grounds that he had a set-off, cross-claim or cross-demand equal to or exceeding the amount of the judgment debt. That application was refused on 16 August 2004. A subsequent appeal from that decision was refused and an application for special leave to appeal also refused. The respondent filed a petition on 14 September 2004 in which it identified the act or acts of bankruptcy upon which it was founded as follows:

‘* that he failed either to comply on or before 1 July 2004 with the requirements of a bankruptcy notice duly served on him on 10 June 2004. The bankruptcy notice was issued pursuant to a final order obtained in the Surpreme[sic] Court at Brisbane on 20 March 2003, being a judgement or order the execution of which has not been stayed; or

* the respondent debtor failed to satisfy the Court that he had a counter-claim, set-off or cross-demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, being a counter-claim, set-off or cross-demand that he could not have set up in the action or proceeding in which the judgment or order was obtained.’

3                     The appellant opposed the petition and a Federal Magistrate made a sequestration order on 14 February 2006. The appellant appeals from that decision on three grounds.

Notice not in prescribed form

4                     This ground relies upon the appellant having received a bankruptcy notice which did not contain an original signature of the solicitors acting as agent for the respondent.

5                     Section 41(2) of the Bankruptcy Act 1966 (Cth) (‘the Act’) provides that a bankruptcy notice must be in accordance with the form prescribed by the regulations. Regulation 4.02 provides that, for the purposes of s 41(2), the form of bankruptcy notice set out in Form 1 is prescribed and a bankruptcy notice must follow Form 1. The appellant submitted that it may be seen from the contents of Form 1 that a signature is essential. Non-compliance with that requirement will therefore invalidate the notice.

6                     Form 1 requires the identification of the person who applied for the bankruptcy notice to be issued. That person, according to the form, ‘confirms by the following signature that he or she is the creditor/creditor’s agent’. A space is provided for ‘(signature)’. The notice is not issued by the judgment creditor or their agent, but by the Official Receiver or an officer authorised by the Official Receiver. The body occupying that position is Insolvency Trustee Services of Australia (‘ITSA’). Towards the end of the notice, and under the words ‘for official use only’ is a box which contains the advice ‘this notice was issued by the Official Receiver (or a delegate or an officer authorised by the Official Receiver) for the Bankruptcy District of;’. Provision for the address of the Official Receiver is provided. Under the space provided the following then appears in parenthesis: ‘Signature or stamp of Official Receiver or delegate or authorised officer’.

7                     The copy of the bankruptcy notice served upon the appellant bore a signature for ITSA and its stamp, but the signature of the respondent’s solicitor was a copy of the original signature. His Honour the Federal Magistrate accepted the respondent’s submission that there was compliance with the relevant regulation, reg 4.01(1)(c). That regulation requires a person to lodge with the Official Receiver a duly completed draft bankruptcy notice and a copy of it for the Official Receiver’s records ‘and sufficient additional copies of the draft bankruptcy notice for service’. It is to be inferred that his Honour considered that the regulation permitted a bankruptcy notice which was a copy in all respects to be served.

8                     The submissions for the respondent also relied upon the decision of Emmett J in Prudential-Bache Securities (Australia) Ltd v Warner [1999] FCA 1143. In that case the copy notice served on the debtor bore neither the signature nor the stamp of the Official Receiver or other authorised officer. Justice Foster in Re O’Sullivan: Ex Parte Bank of New Zealand (1991) 30 FCR 112 (‘Re O’Sullivan’), had held that there was no ‘issue’ of a bankruptcy notice where, under the statutory provisions then in force, the Registrar of the Court had signed, but not stamped, the notice. His Honour considered that the defect meant that there was no notice. This followed upon a concession by the petitioning creditor that authentication was essential to the act of issue by the Registrar.

9                     Justice Emmett did not consider there to be any material difference between the statutory provisions applying in Re O’Sullivan and those now in force. His Honour observed that Foster J had not considered whether the deficiency in the bankruptcy notice was a formal defect or an irregularity, within the meaning of s 306 of the Act. Justice Emmett considered that the non-compliance would be an irregularity within the meaning of that section. It provides that proceedings are not invalidated by a formal defect or irregularity unless the court considers that substantial injustice has been caused by it, being an injustice which cannot be remedied by the court. His Honour did not consider there to be any substantial injustice caused by the deficiency in that case (at [13] - [15]). His Honour accepted that it may be that reg 4.01 was intended to prescribe and define the process of issuing bankruptcy notices by the Official Receiver. His Honour did not accept that the regulations posed the relevant question (at [17]). The true question arose from a consideration of s 41. If, upon a true construction of that section, the Official Receiver issued the document that was served, there could have been no more than an irregularity, in His Honour’s view. If however that issue required authentication, by means of a signature or stamp, it had not occurred. In His Honour’s view ‘issue’ involves the notion of something passing from one person to another, sending forth or delivering (at [19]). It was clear that that had occurred. The next question was whether the issue had been done by an Official Receiver, as the section required. His Honour considered the evidence surrounding the issue of the bankruptcy notice and found that the Official Receiver had issued it (at [35]). An act of bankruptcy had therefore been committed on the debtor’s failure to comply with the notice.

10                  More recently, in Adams v Lambert [2006] HCA 10, the High Court reviewed the operation of s 306 of the Actand what might be said to be a formal defect or irregularity for the purposes of that section. As a matter of statutory construction, the question raised by the section is whether it is essential that there be no error or defect of the kind in question (at [28] and following). Another aspect of the requirements of s 306 is that the error not mislead a debtor as to what is necessary to comply with the notice, although their Honours observed that any error may be capable of misleading somebody about something (at [27]).

11                  I do not think that it could be suggested that a copy signature could mislead a debtor or that an original signature on a service copy is regarded by the Act as essential in the sense that, were it not provided, the notice should be taken as so defective as to be invalid. If the copy signature does amount to a defect in the bankruptcy notice s 306 would apply and the notice would not be invalidated. In the present case however I do not think that point is reached. It may be that the original application lodged with the Official Receiver should bear an original signature, since it forms part of the requirement of personal confirmation by the judgment creditor’s agent. It is not however the original draft bankruptcy notice which is here relevant, but the copy served upon the judgment debtor. There is nothing in the regulations to suggest that a copy of the bankruptcy notice must also bear an original signature and I can discern no reason why that would be a requirement. In my view his Honour was correct to hold that there had been compliance with the requirements of the regulations.

The discretion not to make an order of sequestration

12                  Section 52(2)(b) provides that if the court is satisfied for ‘other sufficient cause’ that a sequestration order ought not to be made, it may dismiss the petition. Shortly prior to the hearing before his Honour the appellant had filed an application in the Supreme Court of Queensland seeking a declaration, but it had not been heard and determined. The declaration was based upon the appellant’s contention, which had been raised earlier, in connexion with the validity of the bankruptcy notice, that the flying minute of the respondent, pursuant to which receivers were appointed to his property, was invalid because the committee members of the respondent voting on the resolution were not physically present to do so. He believed the minute to be valid and did not contest the receivership for that reason. The appellant has submitted that he has a claim for damages for false and misleading conduct on the part of the respondent and for trespass to his property, although this claim was not part of the proceedings for a declaration.

13                  His Honour considered that the proceedings instituted might take a considerable time to finalise and observed that the creditor’s petition was due to expire in September 2006. It could not therefore be said that the respondent would not be prejudiced by any delay, his Honour found. The appellant may have brought the proceedings at a much earlier time. Moreover, his Honour observed, the appellant had not brought an action for the damages he said were owed to him and any benefit which could be said to accrue to creditors was not apparent. In any event, the question as to whether the resolution was valid or not was before the Supreme Court of Queensland and it was not for the Federal Magistrates Court to determine that question. His Honour was clearly not satisfied that ‘other sufficient cause’ had been shown why an order of sequestration should not be made.

14                  Subsequent to his Honour’s decision in the matter a judge of the Supreme Court of Queensland dismissed the application for a declaration on the basis that it did not have any utility. The order sought following the declaration was an account, but the Law Society had already accounted and there was no serious prospect of Mr Jensen being entitled to be paid anything. The receivership was in any event valid from at least February 2003, P D McMurdo J held (at [16]). The Committee of the Law Society had ratified the purported resolution on 20 February 2003.

15                  The appellant’s submission on this point is that his Honour the Federal Magistrate ought to have considered whether his potential claim for damages had any reasonable prospect and was meritorious as a set-off. His Honour knew that the Supreme Court proceedings were only for declaratory relief and put on because of time restraints. The exercise of his discretion, the appellant submitted, required the consideration of his allegations, any evidence upon it and his contentions. The appellant relies upon the statement of P D McMurdo J in the Supreme Court proceeding, that his argument concerning the respondent’s actions, at least so far as they concern its validity, has substance (at [6]). His Honour however went on to identify the arguments for and against such a conclusion and later observed that it was arguable either way (at [16]).

16                  The appellant had earlier alleged that he had a set-off or cross-claim in the proceedings in which he challenged the validity of the bankruptcy notice. At that time I observed that the claim, if there be one, was not properly characterised as one based upon deceit or a contravention of s 52 of the Trade Practices Act 1974 (Cth) (see Jensen v Queensland Law Society Incorporated [2004] FCA 1630 at [11]). If there was an invalid resolution there had been a wrongful appointment of a receiver and a wrongful dealing with property, namely monies which he claimed to be entitled by way of fees. Regardless of the true nature of the claim, it was for the appellant to satisfy his Honour the Federal Magistrate that he did have a good claim to an amount equal to or exceeding the judgment debt. It was not for the court to undertake an enquiry to see if that might be the case. The appellant has never properly articulated how he might be awarded damages to the necessary amount. There would appear to be considerable difficulty in his doing so since, regardless of the validity of the receiver’s appointment, the respondent has recovered only some of the amount paid out of the Fidelity Fund and there is a valid judgment against him for a substantial amount, some $589,772.88. Moreover the resolution alleged to be invalid has been ratified by the respondent, as P D McMurdo J found. In either case it is difficult to see that the appellant would be likely to recover anything more than nominal damages in the event that the receiver’s appointment was held to be invalid.

17                  In my reasons for judgment on the application to set the bankruptcy notice aside I was not satisfied that Mr Jensen had shown good reason why he could not have earlier brought any claim for damages. His Honour the Federal Magistrate was clearly of the same view. It cannot be said that there was no basis for his Honours view that sufficient reason had not been shown that an order for sequestration should not be made.

Date of act of bankruptcy – amendment of petition

18                  The appellant also relies upon a ground which was raised before his Honour, but not determined by him. It has always been the applicant’s case that the act of bankruptcy constituted by a failure to comply with the bankruptcy notice was not committed until 16 August 2004, when the Federal Magistrate refused to set aside the bankruptcy notice. The petition relies upon an act of bankruptcy constituted by the failure to comply with the notice by 1 July 2004.

19                  The appellant’s contention is based upon the combined operation of s 40(1)(g) and s 41(7). The contention is correct, as the respondent concedes. The latter subsection provides that where, before the time fixed for compliance with the requirements of a notice has expired, the debtor applies to the court for an order setting aside the bankruptcy notice and the court has not, before the expiration of that time determined whether it is satisfied that the debtor has a counter-claim, set-off or cross-demand, that time shall be deemed to have been extended until and including the day upon which the court determines whether it is so satisfied.

20                  The respondent attempts to meet the difficulty presented in two ways. In the first approach it relies upon the second act of bankruptcy identified in the petition, namely that the appellant failed to satisfy the court about the set-off. If that contention is not accepted it seeks leave to amend the date with respect to the act of bankruptcy constituted by failure to comply with notice.

21                  Section 40(1)(g) provides:

‘40 (1) a debtor commits an act of bankruptcy in each of the following cases: …

(g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:

(i) where the notice was served in Australia - within the time specified in the notice; or

(ii) where the notice was served elsewhere - within the time fixed for the purpose by the order giving leave to effect the service;

comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross-demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.’

22                  Amongst the other acts of bankruptcy listed in s 40 are: where a person conveys or assigns property for the benefit of creditors (s 40(1)(a)); where execution is issued against them or their property and is returned unsatisfied (s 40(1)(d)); where the debtor presents a debtor’s petition (s 40(1) (daa)): and where a debtor admits insolvency at a meeting of creditors and does not, within the time limited, take the steps required following upon the resolution of his or her creditors (s 40(1)(f)).

23                  The appellant submits that the failure to satisfy a court of the existence of counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or final order, referred to in s 40(1)(g) is not itself an act of bankruptcy. He relies upon the opinion expressly of Neasey J in the Re Abrahamson; Ex parte Crisp & Gunn Ltd (1978) 34 FLR 217, at 220 – 221:

‘The relevant act of bankruptcy under s 40(1)(g) so far as to the present creditor’s petition is concerned, is the failure to “comply with the requirements of the [bankruptcy] notice or satisfy the court that he has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt … being a counter-claim, set-off or cross demand that he could not have set up in the action or proceeding in which the judgment or order was obtained”. The creditor’s petition in this case alleges only failure to comply with the relevant bankruptcy notice. Such failure is not of itself an act of bankruptcy under s 40(1)(g). The act of bankruptcy is to fail to comply with the requirements of the notice or to satisfy the court that the debtor has failed on both counts. That is elementary. The creditor’s petition served upon the debtor has therefore not specified an act of bankruptcy, as it is required by s 47(1)(a), r. 12(2), and form 5 to do; and is invalid. The defect is a matter of fundamental substance and cannot be cured by s 306.’

24                  Rule 4.02(1) of the Federal Court (Bankruptcy) Rules 2005 requires a petition to be in accordance with Form 6. Paragraph 4 of that form is in these terms:

‘The following act of bankruptcy was committed by the respondent debtor within 6 months before presentation of this petition:

[include the following paragraph if the act of bankruptcy is failure to comply with a bankruptcy notice]

The respondent debtor failed to comply on or before [date of act of bankruptcy] with the requirements of a bankruptcy notice served on *him/*her on [date of service of bankruptcy notice] or to satisfy the Court that *he/*she had a counter-claim, set-off or cross demand equal to or more than the sum claimed in the bankruptcy notice, being a counter-claim, set-off or cross demand that *he/*she could not have set up in the action in which the judgment referred to in the bankruptcy notice was obtained.

[If the act of bankruptcy is an act of bankruptcy mentioned in section 40 of the Bankruptcy Act 1966 (other than a failure to comply with a bankruptcy notice), give full details of the act of bankruptcy including details of any judgment.]’

25                  The form identifies the relevant act of bankruptcy referred to in s 40(1)(g) as the failure to comply with the bankruptcy notice, correctly in my view. The following reference in the form to the debtor also having failed to satisfy the court about the existence of a counter-claim, set-off or cross-demand to the requisite amount may be seen as necessary because, in practical terms, the petitioning creditor must exclude the possibility that the debtor has successfully taken that action before the court can act upon the failure to comply with the bankruptcy notice. There is a difficulty in reading the reference to the court being satisfied by the debtor about the existence of some right, which may sound in money, as part of the act of bankruptcy referred to in s 40(1)(g). The matters listed in the section as amounting to an act of bankruptcy, concern action (or inaction) by a debtor or relating to his or her property from which it may be inferred that they are unable to pay their debts. The relevant failure to act to which s 40(1)(g) refers, and which is indicative of insolvency, is the failure to meet the demand for payment of the monies referred to in the bankruptcy notice. Where a debtor satisfies the court about the prospect of an entitlement to monies which equal the amount in the notice, an act of bankruptcy constituted by a failure to comply with the notice is not made out. The provision recognises that the judgment creditor may not ultimately be in a position to demand the amount of the judgment. An inference as to the debtor’s solvency, which might otherwise be drawn from the failure to pay on the notice, is not possible at that point. The provision concerning a counter-claim, set-off or cross-demand does not create an obligation on the part of a debtor in every case to satisfy the Court. Relevantly, for present purposes, a failure to do so does not result in an act of bankruptcy being committed.

26                  There remains the question whether the petition can be amended. An order to that effect was first sought on the hearing of the petition and the appellant was unable to present argument upon it at that time. I now have his submissions.

27                  Section 43(1) of the Act provides that the court may make a sequestration order against the estate of the debtor on the petition presented by a creditor where an act of bankruptcy has been committed and where certain requirements about the debtor are present. Section 44 conditions the presentation of a petition. Subsection (1) of that section requires the debt to be for a minimum liquidated sum, which is payable either immediately or at a certain future time. Paragraph (c) of the subsection requires that the act of bankruptcy on which the petition is founded to have been committed within 6 months before the presentation of the petition. The relevant part of Form 6, which is set out above, requires the provision of the date of act of bankruptcy and the date of service of the bankruptcy notice, where the act of bankruptcy relied upon in the failure to comply with the notice.

28                  Section 52(1) of the Act states that, at the hearing of a creditor’s petition, the court shall require proof of:

‘(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b) service of the petition; and

(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing;’

and may make a sequestration order against the estate of the debtor ‘if it is satisfied with the proof of those matters’. It follows from the misstatement of the date of the act of bankruptcy that the respondent could not satisfy the requirements of s 52(1) with respect to that matter.

29                  The respondent relies upon s 33(1)(b) which provides that the court may at any time ‘allow the amendment of any written process, proceeding or notice under this Act…’. The appellant submits that the amendment should not be made because the requirement to state the date of the act of bankruptcy is one to state it accurately and it is a requirement which must be fulfilled.

30                  Justice Spender in Evans v Duff [2004] FCA 1643 at [29] – [32] held that the requirement of proof of the matters stated in the petition is a necessary pre-condition to the making of a sequestration order and that the command of s 52 is mandatory. The act of bankruptcy referred to in the petition in that case was a failure to comply with the requirements of a bankruptcy notice said to have been served on the debtor on 30 March 2003. The date for compliance with it was calculated from that time. The bankruptcy notice filed in the Court however referred to a notice having been served on 6 February 2003. It appears that there were in fact two bankruptcy notices served on each of the two dates. It was the notice served on 6 February 2003 which had been relied upon by the petitioning creditor and its validity adjudicated upon. The result was that the act of bankruptcy which did occur was not that referred to in the petition. His Honour considered that an attempt to correct the petition would amount to an entirely different case being alleged and refused to make such an order.

31                  The appellant also relies upon his Honour’s decision in Matthews v Collett [2000] FCA 224, where the act of bankruptcy, one arising in connexion with execution on the debtor’s property, had been misdescribed. The amendment sought would allege an act of bankruptcy of a different kind. His Honour would not allow the amendment and added that there were powerful discretionary reasons against a grant, citing the time at which the application to amend was made and the inability of the debtor to meet it. His Honour would not have permitted the amendment in any event because the application was not brought within the period prescribed by s 44(1)(c) for presentation of a petition after the act of bankruptcy. In re Hastings (a bankrupt) (1985) 1WLR 969 (‘re Hastings’) had held that amendment should not be made in such a case, at least where the amendment sought was one of substance rather than form. Elsewhere in his reasons his Honour observed that if the defect in the petition was one only of form, the power in s 306 might be utilised. A misdescription of the act of bankruptcy was not a defect of form, his Honour held.

32                  The approach of the court in re Hastings has been described as one which treated an application for leave to amend a petition as equivalent to the presentation of the petition, so that the available act of bankruptcy had to occur within the prescribed period prior to the application for leave to amend. It was for that reason that the amendment was treated as a matter of substance and not form: Bryant v Commonwealth Bank of Australia [1995] FCA 971 (‘Bryant’). In what followed in the reasons in Bryant it would appear that the Full Court did not accept that approach (and see MacDonald v Official Trustee in Bankruptcy (2001) 107 FCR 72 at [36]). It had regard to the date of the act of bankruptcy proposed by the amendment in connexion with the date when the petition was presented and not the date when the amendment was sought. Moreover the Court considered that the amendment was merely formal. Even without amendment the primary judge could have dealt with the petition on the basis that s 306 applied to it, given that the debtor would have known that the petition was based upon an act of bankruptcy occurring on the correct date.

33                  The question as to whether an application for leave to amend a petition is to be treated as a new presentation date must be answered by reference to the Act and in particular s 44(1)(c) and the power to amend given by s 33(1)(b) at any time. As their Honours pointed out in Bryant, the concept of amendment involves alteration or addition to an existing document the amendment does not create a ‘new’ petition. In the present case the date sought to be introduced into the petition was one within the period of six months prior to the presentation of the petition. Section 44(1)(c) does not operate as a bar.

34                  The question whether a defect in the proceedings, in the nature of an error as to the date of act of bankruptcy referred to in the petition, is formal is to be answered by reference to whether any requirement as to it is essential, in the sense spoken of in Adams v Lambert. The requirement that the date of the act of bankruptcy in Form 6 be stated with accuracy may be regarded as necessarily implied. It could not be thought that the legislation would intend a wrong date to be stated. The question then is what was intended to in the event that there was an error as to the date? Regard should be had to the purpose of such a provision: Project Blue Sky v Australia Broadcasting Authority (1998) 194 CLR 355 at 381. The identification of the date of the act of bankruptcy may have importance for other transactions, in the event that an order for sequestration is made. If it is incorrect it should be amended. So far as concerns the debtor at the time when an order for sequestration is sought, that person needs to know is alleged as the act of bankruptcy in order to assess what course he or she should take. Obviously a debtor should not be misled about what is alleged, but it does not follow that in every case a debtor will be misled where a wrong date is given for the act of bankruptcy. The error is not of such a kind that it may be inferred in all cases that it will have an adverse effect upon the debtor. At least where the act of bankruptcy is the failure to comply with a bankruptcy notice, and there has been personal service, the debtor will be able to calculate the date when the act of bankruptcy was committed. And the debtor is to be taken to be aware that s 41(7) has the effect of extending the time fixed for compliance in the notice until the court’s determination of their application to set aside a bankruptcy notice, where they have applied before the expiration of that time. If a debtor is prejudiced by an error as to the date of the act of bankruptcy, s 306 will not apply.

35                  It follows in my view that the error in question does not invalidate the petition. Section 306 may apply, since the appellant has not been prejudiced by it. Indeed he had always contended that the date was wrong. The petition should however be amended to reflect the correct position. There is nothing in the Act which would preclude an order for amendment and no reason is shown why it should be refused.

36                  The appeal will be dismissed with costs.

Associate:

Dated: 8 September 2006