CATCHWORDS JUDGMENT ie. 7) / ff 'wesevov0@evensveel aoceveceeeee Bankruptcy - Bankruptcy petition - Authority of petitioning creditor to sign petition - Whether petitioning creditor bound to prove authority - omnia praesumuntur rite esse acta. No. DENIS SPITZER EX PARTE: P 911 of 1978 LOCKHART J. 8 AUGUST 1979 WELTRANS AGENCY ESTABLISHMENT \| IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION : BANKRUPTCY DISTRICT OF THE STATE No. P 911 of 1978 & 7 OF NEW SOUTH WALES AND THE 4 AUSTRALIAN CAPITAL TERRITORY § 3 RE: DENIS SPITZER ; EX PARTE: WELTRANS AGENCY ESTABLISHME) ORDER JUDGE MAKING ORDER: LOCKHART J. WHERE MADE: SYDNEY DATE OF ORDER: 31 JULY 1979 THE COURT ORDERS THAT: A sequestration order be made against the estate of 'the debtor, and that the costs, including reserved costs, of the petitioning creditor be taxed and paid according to the Act. Exhibits may be handed out. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE No. P 911 of 1978 OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY RE: DENIS SPITZER EX PARTE: WELTRANS AGENCY ESTABLISHMENT f wat 197 LOCKHART J. REASONS FOR JUDGMENT This is a petition for sequestration of the estate of Denis Spitzer by Weltrans Agency Establishment. On 26 June 1979 a notice of intention to oppose the petition was filed by the debtor alleging the following grounds of opposition:- "1) The Petition does not disclose the authority of the purported agent of the Petitioner. 2) The Affidavit of KEITH CHARLES FLEMING HARRIS sworn on the 26th July 1978 does not disclose the source of authority whereby the Deponent is the "duly authorised agent" of Weltrans Agency Establishment." The petition is dated 24 July 1978 and was presented to the court on 1 August 1978. The petition alleges that the debtor is indebted to it in the sum of $37,748.89, together with interest, being the amount due under a final judgment recovered in the Supreme Court of New South Wales on 1 December 1977. The act of bankruptcy is the failure by the debtor to comply with the requirements of a bankruptcy notice served on him on 1 July 1978. 2/2 The petition is signed by Keith Charles Fleming Harris, a solicitor, being a member of the petitioning creditor's Sydney solicitors, Messrs. Cutler, Hughes & Harris. He has purported to sign the petition on behalf of the petitioning creditor as its duly authorised agent. The evidence establishes that the petitioning creditor is a corporation formed under the laws of Liechtenstein, It is known under the laws of Liechtenstein as an Establishment which is a corporation formed under the statute, in the principality of Liechtenstein, known as the "20th January 1976 Personen - Und Gesellschaftsrecht" (law concerning individuals and corporations). An Establishment is not required by the laws of Liechtenstein to have any seal or to affix any seal to documents executed by it. No other formalities are required by the laws of Liechtenstein. Under the laws of Liechtenstein any document to be executed by an Establishment may be signed under hand on behalf of the Establishment by someone authorised under the Constitution of the Establishment to do so. The person signing on behalf of the Corporation is usually a director, and it is customary to place the name of the Establishment near the signature to show that the person concerned is signing on behalf of the Establishment. The first question for determination is whether the petitioning creditor is bound to prove the authority of Mr. Harris to sign the petition on its behalf. Mr. Harris swore an affidavit verifying the .--/3 petition in which he said:- "1, I am the duly authorised agent of Weltrans Agency Establishment. 2. I am authorised by Weltrans Agency Establishment to make this affidavit. 3. The statements contained in paragraphs one to three inclusive of the Petition are within my own knowledge true. 4, The signature upon the Petition is my signature." An authority dated 9 December 1977 purporting to be issued by the petitioning creditor to Mr. Harris authorised him to do various things,including specific authority on behalf of the petitioning creditor to sign a creditor's petition relating to bankruptcy proceedings against the debtor. At its foot the authority is signed by a Dr. Enrico Walser over a rubber stamp of the petitioning creditor which are both set opposite a notation saying: "The common seal of Weltrans Agency Establishment was hereto affixed in accordance with the requirements of the Articles of the company in the presence of." There followed Dr. Walser's signature a second time and that of Ing. Joseph F. Spacek. A petitioning creditor is not, being a corporation, required specifically by the Bankruptcy Act 1966 or the Bankruptcy Rules to prove that a person who purports to sign the petition on behalf of the petitioning ereditor is in fact authorised to do so: See ss. 44, 47 rule 12 and form 5. oe /4 Pn ee SS ccc nineteen openness tlie nhl uote tndetientnrnetsd ale intact teeta et ti Section 52 of the Act provides that, at the hear ing of 'a creditor's petition, the court shall require proof of the matters stated in the petition (for which purpose the court may accept the affidavit verifying the petition as sufficient), service of the petition and the fact that the debt on which the petitioning creditor relies is still owing and, if it is satisfied with the proof of thos: matters, may make a sequestration order against the estate of the debtor. It has been the practice of this court and of the Federal Court of Bankruptcy to require a petitioning creditor to prove all essential facts including matters that are not specified in the Act or the Rules. One of these matters, where the petitioning creditor is a corporation and the petition is signed by a person purporting to have the authority of the corporation to do so, is proof that the person is in fact authorised to sign the petition. This practice is in accord with the well established Practices of long standing in England: See Wace on pankruptey/St p. 463. The requirement that all essential facts be proved exists whether a debtor has filed a notice of intention to oppose the petition or not. However, the requirement is not inflexible. The reported cases contain a number of instances where courts have dispensed with proof of an agent's authority to sign a bankruptcy petition where the petitioning creditor is a corporation, For instance, proof of such authority will not necessarily be required if, on the facts of the case, it fe i i i i | i | | ; appears that all that will be achieved by requiring the prooi is mere delay which will benefit the debtor and perhaps jeopardize the interests of his creditors: See Re Sanders (1894) 1 Mans. 382 or 71 L. T. 236. Turning to the facts of the present case. The authority on which the petitioning creditor relies to establish the entitlement of Mr. Harris to sign the petition and dated 9 December 1977 contains the signatures of Dr. Walser and Mr. Spacek. Those signatures have been proved to be the signatures of those gentlemen. I am satisfied that Dr. Walser has at all material times, since at lease 19 been a director of the petitioning creditor and that Mr. Spacek has been its export manager. Both gentlemen have signed documents and conducted the affairs of the petitionin creditor in relation to certain events in Australia includin litigation brought by the petitioning creditor against the debtor. ~ It is not disputed that Dr. Walser was authorised by the petitioning creditor to sign documents as a sole signatory in 1971 and as late as October, 1974. Strict proa of that authority since 1974 has not been established. Correspondence is in evidence between the petitioning creditor's Sydney solicitors and the petitioning ereditor, including documents signed by both Dr. Walser and Mr. Spacek, over the period 1974 to 1978, from which it is clear that the petitioning creditor held out both gentlemen as having authority to-bind the petitioning ereditor in various respects including authority to sign documents relevant to the litigation in Australia between the 4€ petitioning creditor and the debtor. The petitioning creditor has gone to considerable pains and expense to produce the necessary documents to establish the due authorisation of Mr. Harris to sign the petition. In my opinion that authority has not been strictly proved but falls short of it to a slight degree only. There is nothing on the evidence before me to suggest that there is any doubt about the petitioning creditor's having duly authorised Mr. Harris to sign the petition. It is simply a case where there is a slight gap in the proof necessary to establish that authority. The petition was, as I have said, presented on 1 August 1978. On 12 December 1978 I made orders for substituted service of the petition upon the debtor because substantial difficulty had been experienced by the petitioning creditor in serving the debtor personally. The petition came into the list for hearing on 19 February 1979 when I adjourned it until 20 March 1979. On 19 February the petitioning creditor was represented by a solicitor and the debtor by Mr. Bell. The petition was adjourned on Mr. Bell's application so that certain commercial properties in which the debtor apparently had an interest could be sold and the petitioning creditor's debt discharged. I was informed that the debtor had signed an authority under s. 188 of the Act on 24 January 1979. On 20 March 1979 I adjourned the petition by consen until 26 June 1979 based on what the debtor deposed to in ~2-/7 his affidavit of 26 February 1979. That affidavit contained, amongst other things, a statement by the debtor that he shared with his sister, aunt and uncle the ownership of a commercial property in Vienna, that he was travelling to Vienna, to arrange for the sale of the property and they expected to receive about $200,000.00 net from that sale of which his share was $50,000.00. He hoped from that to be able to meet the claims of his creditors. On 26 June 1979 the debtor filed the notice of intention to oppose the petition raising for the first time the question of the authority of Mr. Harris to sign the petition. The argument on the questions raised by the notice of intention to oppose the petition concluded on 31 July 1979 when I found against the debtor and made a sequestration order against his estate. The petition would have lapsed on 1 August 1979 being twelve months from the date of its presentation: see s. 52 (4). When making the sequestration order I informed counsel that I would give my reasons for judgment as soon as possible thereafter, which I now do. For these reasons I am satisfied that this is an appropriate case not to require strict proof of the authorit: to Mr. Harris to sign the petition. Mr. McEwan, who appsared for the petitioning creditor, submitted that the petitioning creditor had established actual authority of Mr. Harris to sign the petition. He relied, in particular, upon the maxim omnia praesumuntur rite esse acta. That rule presumes that the ../8 necessary formal requisites to certain acts or offices have been complied with, For instance, in some instances acting in public office is taken as evidence of due appoint- ment. Mr. McEwan was not able to refer me to any case directly in point where the maxim was applied in relation to the execution by a corporation of a power of attorney. There are cases where the rule was applied, entitling an outsider to a corporation, dealing with the corporation, to assume that all internal regulations of the corporation had been complied with and where everything appeared to be regular so far as it could be checked from public documents. Those cases do not, in my opinion, apply to this case. Oneof the clearest statements of principle as to the application of the maxim is to be found in the judgment of Lindley L. J. in Harris v. Knight (1890) 15 P.D. 170 at p. 179. In my opinion the maxim cannot be invoked in this case by the petitioning creditor. The petitioning creditor has not strictly proved the authority to Mr. Harris to sign the petition. Mr. Bell submitted that the petitioning creditor was a foreign company within the meaning of the Companies Act, 1961 (N.S.W.) that it was carrying on business or had a place of business in New South Wales, yet had not lodged with the Commission of Corporate Affairs the documents required by s. 346 (1) including those required under ' paragraph (3) of that sub-section, namely a memorandum of appointment or power of attorney under the seal of the 22/9 ~9- foreign company stating the name and address of the person resident in New South Wales authorised to accept on behalf of the petitioning creditor service of process and notices required to be served on it. He submitted that by not lodging these documents the petitioning creditor had committed an offence under s. 361 of the Companies Act and that this court would not aid a breach of the law by allowing the petitioning creditor to rely on proof of Mr. Harris' authority pursuant to the power of attorney. The foundation of this argument is that the document referred to in s. 346 (1) (e) of the Companies Act is the same document as was tendered in this case before me as evidence of Mr. Harris' authority to sign the petition. The short answer to the submission is that the power of attorney in this case has nothing to do with the document referred to in paragraph (e) of sub~section (1) of s 346 of the Companies Act. That lastmentioned document is merely a memorandum of appointment of or power of attorney to the foreign company's agent which is required to be lodged so that there is with the Commission of Corporate Affairs the prescribed material facilitating the service and receipt of notices and process upon the foreign company. It has nothing to say about documents such as the power of attorney in the present case. For these reasons, and following due proof of: all the matters of which proof is ordinarily required before a .../10 -10- sequestration order is made, I made that order on 31 July last.