351 CATCHWORDS Bankruptcy - defect in bankruptcy notice - omission of paragraph B of prescribed form. James v. Federal Commissioner of Taxation (1955) 93 C.L.R. Re Wong; Ex parte Kitson (1979) 27 A.L.R. 405 - con. Bankruptcy Act, 1966, ss.41, 306 KEN BROWN Ex parte: PENELOPE JANE HUNSTEAD No. P.1629 of 1984 Beaumont, J. 2 November 1984 Sydney. 631 - cor IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION ) ) BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE ) AUSTRALIAN CAPITAL TERRITORY No. P1029 of 1984 Re: KEN BROWN Debtor Ex parte: PENELOPE JANE HUNSTEAD Creditor CRDER Judge making order: Beaumont, d. Date order made: " 2 November 1984 Where made: Sydney THE COURT ORDERS THAT: 1. Petition dismissed. 2. No order as to costs. IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY No. P1029 of 1984 Re: KEN BROWN Debtor Ex parte: PENELOPE JANE HUNSTEAD Creditor CORAM: Beaumont, J. DATED: 2 November 1984. REASONS FOR JUDGMENT Upon the hearing of the bankruptcy petition in this matter, it appeared that the bankruptcy notice relied upon by the petitioner departed from the prescribed form in one important respect: although the notice required the debtor to pay the judgment creditor the amount claimed unier the judgment debt (paragraph A), the alternative provided by s.41(2)(a)(ii) that the debtor may secure the payment of the debt or compound the debt as therein provided was struck out. The word "or" and paragraph B in the prescribed form were struck out. In my opinion, this defect is fatal. James v. Federal Commissioner of Taxation (1955) 93 C.L.R. 631 (at pp.643-4), emphasises the importance of the statement in a pankruptcy notice that the debtor has the alternative of securing the payment of the sum claimed or of compounding it in the manner provided by s.41(2)(a)(ii). Those observations are squarely in point here. It was suggested in argument that, even if a defect existed, this was an appropriate case for the application of s.306. In my opinion, the defect is not merely formal. It is capable of misleading the debtor and the effect of the deletion of paragraph B was to convey to the debtor the impression that the option proviied under s.41(2)(a)(i1) was not available. These are fundamental breaches of the scheme provided by s.41 and, for that reason, s.306 cannot, in my view, be invoked (see James at p.644). In Re Wong; Ex parte Kitson (1979) 27 A.L.R. 405, Lockhart, J. held that a bankruptcy notice was bad ina situation similar to the present case. There, the alternatives to be provided between paragraph A and B in the prescribed form of the bankruptcy notice were not properly stated: the word "or" between the paragraphs was omitted. Lockhart, J. held that this defect could reasonably mislead 3. the debtor and that the notice was therefore invalidated. From the debtor's standpoint, stronger. The petition must be the present case 1s even dismissed. Since the debtor was not present, there will be no order for costs. I make the following orders: Petition dismissed. No order as to costs. bar the & preceding copy cf iia reasons for nue Honourable vusuce Beaumont poets 7] Bssoctates "a ae Dated / aN [2&* :