CATCHWORDS Bankruptcy Act - Debtor's petition - Reference by Registrar - Formal defect or irregularity - Husband and wife both purported petitioners under s.55 though wife simultaneously made bankrupt on her separate petition under s.55 - Amendment. Bankruptcy Act 1966, sections 55, 57, 306. Federal Court Rules 6, 24, 195. RE: NIGEL BRUCE HENDERSON and MARLENE HENDERSON EX PARTE: A DEBTOR'S PETITION No. P. 974 of 1985 Burchett J. Sydney 25 July, 1985 fem ee eo eee ere on oe on — i pap armen momen — ~— ee = on emma =. -~ rear WO Ween errT ITT IN THE FEDERAL COURT OF AUSTRALIA BANKRUPTCY DISTRICT OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL No. P. 974 of 1985 TERRITORY RE NIGEL BRUCE HENDERSON and MARLENE HENDERSON EX PARTE: A_ DEBTOR'S PETITION MINUTE OF ORDER dudge making order: Burchett J. Date order made: 25 July 1985 Where made: Sydney THE COURT DIRECTS: The Registrar to accept the debtor's petition presented herein insofar as it relates to the debtor Nigel Bruce Henderson, and reserves liberty to the Official Receiver to apply for a consolidation under 5.53. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA BANKRUPTCY DISTRICT OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL No. P. 974 of 1985 TERRITORY RE: NIGEL BRUCE HENDERSON and MARLENE HENDERSON EX PARTE: A DEBTOR'S PETITION REASONS FOR JUDGMENT . BURCHETT J. This is a reference by a registrar under s.55(4) of the Bankruptcy Act, 1966. I should say at the outset that I think it is entirely correct that any debtor's petition which, on the face of it, raises a question of compliance, should be so referred. That is what the Act envisages. This reference arises in novel circumstances. Nigel Bruce Henderson and Marlene Henderson, a husband and wife, presented a debtor's petition pursuant to 5.56 of the Act on 3 April 1985, in respect of a partnership consisting of themselves and two others. The petition was referred to Beaumont J., who held, upon the objection of the other two partners, that the petition could not be entertained, since it was not presented by ek 2. all or a majority of the partners: re Henderson, unreported, 14 June 1985. However, in the course of his judgment he said: "Having conceded their insolvency, it is clear that they should now become bankrupt... Although it was open to (scilicet, them) to present their individual debtors' petitions pursuant to s.55(1) of the Act, the petition was purportedly presented pursuant to s.56 of the Act... In my view, the Court has no power to direct the Registrar to accept or amend a petition where less than a majority of partners have presented it. It follows that I must direct the Registrar not to accept the petition. This direction will be without prejudice to the entitlement of the debtors to present a petition against their own partnership (this refers to a separate partnership) under s.56(1) or otherwise to proceed under s.55, if appropriate." The debtors, in response to this invitation, returned to the Registry once more with fresh sets of forms. One set complied with the requirements of s.55 and resulted in the bankruptcy, on her own petition, of Mrs. Henderson. But the other set of forms, for some reason which is not clear to me, was completed by both Mr. and Mrs. Henderson, they utilising documents, the formal parts of which were as prescribed under s.55. There is authority, although laymen could not be expected to know this, which prevents a joint petition being presented under 8.55: re Pepper (1969) 14 FLR 282. Hence, this nnentnnenteteweh NE reference to me. Since the decision in re Pepper, the Act has been amended to provide, by 38.57, for the joint presentation of a petition by joint debtors who are not in partnership with one another. Accordingly, the debtors were strictly entitled to present a single petition jointly, being as the documents indicated, joint debtors. The Act does not state that a petition under s.55, 3.56 or s.57 shall nominate the particular section, though it does state that the petition shall in each case be in accordance with the prescribed form. "Prescribed", by s.5, "means prescribed by this Act or by rules under this Act". Forms are in fact prescribed by rule 24, which must be read with rule 4(4). By rule 6(1) it is provided: "Strict compliance with the forms in Schedule 1 is not necessary and substantial compliance, or such compliance as the special circumstances of a particular case allow, is sufficient". Rule 24 is to be found in part II of the rules, headed "Proceedings in Connexion with Bankruptcy". Rule 195 provides: "(1) Subject to sub-rule (2), non-compliance with these Rules does not render a proceeding void unless the Court so directs. 4. (2) Where the provisions of these Rules have not been complied with in relation to a proceeding - (a) the proceeding may be set aside, either wholly or in part, as irregular, or may be amended or otherwise dealt with in such manner and upon such terms as the Court thinks fit; or (b) the Court may, upon such terms as the Court thinks fit, relieve a party from the consequences of non-compliance with these Rules." Sections 55, 56 and 57 are in part IV of the Act, which is headed "Proceedings in Connexion with Bankruptcy". Section 306(1) of the Act provides: "Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court." Power to allow "the amendment of any written process, proceeding or notice under this Act" its also given by s.33. In my opinion, since s.57 was enacted, it cannot be said that the mere joining of both debtors in the one petition strikes it with invalidity. It may be valid under that section. The naming correctly of the section, which in law is the source of authority for lodgment of the petition tis not ---- weeeee eee ee -- -- twee ewe oe - 4 5. essential, being a formal matter, not decisive 'as to substantial compliance. Sections 55, S56 and 57, although they command accordance with prescribed forms, contemplate that a petition which appears not to comply with the command may yet be directed by the Court to be accepted by the Registrar. In my opinion, that feature of the provisions for debtors' bankruptcies, in combination with the sections and rules to which I have referred, indicates the legislature intended, when referring to a form to be prescribed by the rules, to incorporate in the statutory scheme the same consequences as would flow, in respect of other proceedings, from formal defects or irregularities, and not to set up a juridical obstacle course with rules of unique rigidity. There is no doubt in the present case, that Mrs. Henderson, having become bankrupt on aé_ée separate petition, simultaneously lodged by her, 1s now immune from any operation of the petition under consideration: Clyne -v- Deputy Commissioner of Taxation (No. 3) (1984) 58 ALJR 398. The position is distinguishable from that in re Pepper where, under the Act as it then stood, the petition could not be accepted as that of two petitioners, and it was not possible to give effect to the petition as that of one debtor, there being'no rational ground of selection of one rather than the other. As the present petition, if it is to have effect, can only do so in respect of Mr. Henderson, who on the material before me both desires to become bankrupt and is in a situation 6. where his bankruptcy seems entirely appropriate, there will be no injustice in applying the dispensatory provisions earlier referred to in order to permit the petition to be operative. I think the addition of the wife's name in a petition which cannot affect her status is a formal defect which does not invalidate the proceedings. Mrs. Henderson has come to court, her husband being unable to do so, and I have given her leave to appear for him. For herself, she of course does not now desire to pursue the joint petition, and she has asked me, on her own and her husband's behalf, to permit its amendment to delete from it her name as a petitioner. I think I have power under 3.33 and rule 195 to allow this amendment, and that it is appropriate to exercise that power. Accordingly, I allow an amendment of the petition to delete the name of Marlene Henderson as a petitioner. So far as the accompanying statement of affairs is concerned, although it introduces the name of the wife, Mrs. Henderson, I think it should be read as a statement of affairs applicable to her husband. In this regard I have been assisted by comparing it with that presented separately by Mrs. Henderson. The case of re Shead (1954) 16 ABC 188 does not apply, since there no statement of affairs at all was filed at the relevant time. I think the statement of affairs here can also be treated as defective only in formal respects, which in all the circumstances should not be regarded as invalidating it. a To onote that s.55(4A)(b)(i) applies and TI give a direction under s.55(4) to the Registrar to accept the petition insofar as it relates to the debtor Nigel Bruce Henderson. I give liberty to the Official Receiver to apply for consolidation under s.53, should he consider this advisable in the circumstances. >a true copy of the Reasons for Judgement ner oa See Associate ° Dated: Ish Fualy | SS. "ein of his Honour