CATCHWORDS BANKRUPTCY - Debtor incorrectly named - affidavit verifying certain paragraphs of petition defective - matters not within solicitor's personal knowledge - misdescription cured by s.306(1) Bankruptcy Act 1966 - affidavit verifying petition "will necessarily be one of information and belief". Bankruptcy Act 1966, s.306(1), s.47(1)(b). Bankruptcy Rules, Rule 12(3)(b). Re Wimborne; Ex parte The Debtor (1979) 24 A.L.R. 494 Clyne v. Deputy Commissioner of Taxation (1982) 42 A.L.R. 703. RE: TREVOR PETER McSWINEY; EX PARTE MARK SIDNEY DAVIES No. P1611 of 1986 Beaumont, J. Sydney 24 November 1986 aA GENERAL DIVISION BANKRUPTCY DISTRICT OF NEW SOUTH WALES IN THE FEDERAL COURT OF AUSTRALIA ee ee ee we AND THE AUSTRALIAN CAPITAL TERRITORY) RE: TREVOR PETER McCSWINEY EX PARTE: MARK SIDNEY DAVIES MINUTES OF ORDER Judge making order: Beaumont, J. Date order made: 24 November 1986 Where made: Sydney THE COURT ORDERS THAT: 1. The petition stand over to 1 December 1986. 2. Costs be reserved. Note: Settlement and entry of orders is dealt with in Bankruptcy Rule 124. No. P1611 of 1986 "* IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF NEW SOUTH WALES No. P1611 of 1986 AND THE AUSTRALIAN CAPITAL TERRITORY) RE: TREVOR PETER MCSWINEY EX PARTE: MARK SIDNEY DAVIES CORAM: Beaumont, J. DATED: 24 November 1986 REASONS FOR JUDGMENT This is a petition by a judgment creditor, Mark Sidney Davies, seeking to sequestrate the estate of his debtor, Trevor Peter McSwiney. The petition is opposed by the debtor on two grounds: (1) the debtor was incorrectly named in the bankruptcy notice - he was there described as "Trevor John McSwiney"; (2) the affidavit verifying paras. 1, 2 and 3 of the petition, sworn by the petitioner's solicitor, was defective because the matters there deposed to were not within the solicitor's personal knowledge. The background to the proceedings is as follows. In June 1984, the petitioner commenced an action against the debtor in the District Court of New South Wales. On 8 November 1985 judgment was entered by consent in the action in favour of the 2. petitioner as plaintiff in the sum of $42,500.00. However, the terms of settlement, which were drawn by the plaintiff's solicitors, erroneously described the defendant as "Trevor John McSwiney". The terms were signed by Mr. G.J. Adelstein as solicitor for the defendant. Mr. Adelstein now appears for the debtor in these proceedings. The terms of settlement, which were described as a "judgment", noted that the defendant had that day delivered to the plaintiff a cheque in the sum of $2,500.00 "as a sign of his good faith". It appears that the plaintiff received the proceeds of this cheque. On 4 April 1986, the District Court issued a certified . ! copy of the judgment showing the defendant as "Trevor John McSwiney". On '22 April 1986, a bankruptcy notice was issued which, so far as presently relevant, was as follows: "BANKRUPTCY DISTRICT OF ) THE STATE OF NEW SOUTH WALES AND THE )No. B1716 of 1986 AUSTRALIAN CAPITAL TERRITORY ) RE: TREVOR JOHN McSWINEY To: (a) TREVOR JOHN McSWINEY 14 Milner Road, Artarmon, in the State of New South Wales, Music Studio Proprietor WHEREAS (b) MARK SIDNEY DAVIES OF 3 Stuart Street, Paddington, Publican (hereinafter referred to as "the judgment creditor") has Claimed that the balance of $40,000.00 together with interest thereon at the rate of 13.5 per centum per annum on so much of the judgment debt (including costs) as is from time to time unpaid from 2 April, 1986 which at 14 April, 1986 amounts to $177.53 making a total of $40,177.53 is due by you to the judgment creditor under a final judgment obtained by the judgment creditor 3. against you in the District Court of New South Wales at Sydney on the 8th day of November 1985, being a judgment the execution of which has not been stayed:" On 22 July 1986, the bankruptcy notice was served upon the debtor in circumstances to be mentioned later. On 6 August 1986, Mr. Adelstein wrote to the petitioner's solicitors: "We act for Mr. McSwiney, and have received instructions with regard to a Bankruptcy Notice purported to be served upon him on or about the 22nd July, 1986. We note that the Notice is addressed to Trevor John McSwiney, and we note that our Client's proper names are Trevor Peter McSwiney. This is as per the District Court pleadings in Matter No. 9847 of 1984, and in respect of which reference is made in the Bankruptcy Notice to a final judgment on the 8th November, 1985. With respect, it is our view that the Bankruptcy Notice is nugatory in that it wrongly describes the Debtor...." On 29 August 1986, apparently pursuant to the ""slip" rule, the District Court issued a fresh certified copy of its judgment. The defendant was named as "Trevor Peter McSwiney". Accordingly, the petition in these nroceedings correctly named the debtor. On 17 September 1986, the solicitors for the petitioner filed an affidavit of service of the bankruptcy notice. The affidavit, sworn by Richard Barry Fitzgerald on 12 September, was so far as presently relevant, as follows: "1. On Tuesday 22nd July, 1986, at 1.15 in the afternoon, I served TREVOR PETER MCSWINEY with the Bankruptcy Notice herein by delivering a true copy thereof signed by the Deputy Registrar 4. in Bankruptcy to him personally outside the New South Wales Industrial Commission Court, 50 Phillip Street, Sydney in the State of New South Wales. 2. I identified the- person I served as the said TREVOR PETER McCSWINEY by saying to him "I am Richard Barry Fitzgerald, a duly licensed commercial agent within the State of New South Wales. Are you Trevor Peter McSwiney, residing at 14 Milner Road, Artarmon in the State of New South Wales?' He replied 'Yes thats me' I then said 'Are you the person referred to in this Bankruptcy Notice?' he looked at the Notice and said 'Yes its me'." It will be seen that no attempt was made by Mr. Pitegerald to explain the apparently different second christian name of the debtor. Their attention having been drawn to the difficulty, the solicitors for the petitioner filed a further affidavit by Mr. Fitzgerald sworn on 13 October. After explaining some background matters, Mr. Fitzgerald said: "10. Mr. Adelstein, Mr. McSwiney and a lady with them and myself all went down in the same lift together from the Fourth Floor to the Ground Floor. I then went outside the Industrial Commission Court House with them to Phillip Street. We turned right and stopped at an entrance of a laneway in Phillip Street which is known as Phillip Lane. Mr. Adelstein and the lady stood at the opening of the laneway. I together with Mr. McSwiney walked 8 metres in to the laneway. I then said to Mr. McSwiney, 'I am Richard Barry Fitzgerald a duly Licensed Commercial Agent within the State of New South Wales. Are you Trevor John McSwiney?' He replied: 'No, I am Trevor Peter McSwiney, there's no Trevor John.' I said: 'I am Richard Barry Fitzgerald a duly Licensed Commercial Agent within the State of New South Wales. Are you Trevor Peter McSwiney, residing at 14 Milner Road, Artarmon?' He said: "Yes, that's me.' I said: 'Are you the person referred to in this Bankruptcy Notice?' I gave him the Bankruptcy Notice and he looked at it and 5. said to me "Yes, it's me' He then walked off and joined Mr. Adelstein and the lady who had been standing and watching my conversation with Mr. McSwiney from a distance of approximately 8 metres." Mr. Adelstein and Mr. McSwiney also gave evidence of the circumstances surrounding the service of the bankruptcy notice. Their evidence conflicted in some respects with Mr. Fitzgerald's evidence. However, the debtor, who did not himself give evidence, does not dispute that he was properly served. Since the respective versions of the service of the notice were at odds on peripheral matters only, it is unnecessary to attempt to resolve the conflict of evidence. It will suffice to note that service of the notice is admitted by Mr. Adelstein on behalf of his client. As has been noted, it is submitted on behalf of the debtor that the bankruptcy notice is bad because of the wrong statement of the debtor's christian name. The petitioner accepts the misdescription but submits that the defect would be cured by s.306(1) of the Bankruptcy Act 1966. In my opinion, the defect is cured by s.306(1). In discussing the operation of this provision, Lockhart J. observed in Re Wimborne; Ex parte The Debtor (1979) 24 A.L.R. 494 at p.500: "It is clear from the cases to which I have referred that, although the courts draw a definite distinction between the possibility of \ 6. the debtor being misled and the question whether he was misled in fact, the latter being an impermissible field of inquiry, it is the capacity of the bankruptcy notice to mislead the debtor to whom the notice is directed that matters, not some hypothetical debtor. Hence the relevance of the facts relating to the conduct of the proceedings in the Supreme Court of New South Wales and the High Court as gleaned from the orders of those courts and forming part of the evidence in this application. Mr. Chippindall's final submission was that the bankruptcy notice could mislead the judgment debtors in that it refers to the order of the High Court made on 3 March 1976 as the source of the liability of the judgment debtors to pay $6734.28 interest rather than the order of the Bigh Court made on 27 October 1977. This constitutes a defect in the bankruptcy. The question is whether the defect is fatal to its validity. The facts as to the proceedings before both the Supreme Court and the High Court, which I have mentioned already, clearly establish that the judgment debtors must have known that it was the later order of the High Court that established their liability to pay intererst. They could not have been misled by the mis-statement in the bankruptcy notice. Accordingly, s.306 saves the bankruptcy notice from invalidity." (See also Clyne v. Deputy Commissioner of Taxation (1982) 42 a-L.R. 703 per Lockhart J. at pp.706-7). In the present case, there is evidence that the debtor resides at 14 Milner Road, Artarmon, the address shown in the bankruptcy notice. Reference is, of course, made in the notice to the details of the judgment obtained by the petitioner against the debtor. In my opinion, the notice, read as a whole, could not reasonably have misled the debtor. 7. The debtor's other challenge is to the affidavit verifying the petition. The affidavit is as follows: "I, DAVID PETER JACKSON of 30 Bay Street, Double Bay in the State of New South Wales, Solicitor make oath and say: 1. I hold Power of Attorney from MARK SIDNEY DAVIES the Petitioner named in the Petition hereunto annexed and marked with the letter 'A'. 2. I am authorised by MARK SIDNEY DAVIES to make this Affidavit pursuant to Power of Attorney document dated 7 August 1986. 3. The statements contained in paragraphs 1, 2 and 3 of the Petition are within my knowledge true." By the Power of Attorney, dated 7 August 1986, the petitioner authorised Mr. Jackson, inter alia, to "sign Bankruptcy Petitions and Affidavits verifying". Paras. 1, 2 and 3 of the petition are as follows: "1. The debtor was at the date of the commission of the act of bankruptcy specified in paragraph 4 personally z.cesent in Australia. 2. The debtor is justly and truly indebted to me in the sum of $40,177.53 being the amount due under the final judgment recovered in the District Court New South Wales 225 Macquarie Street, Sydney on the 8th day of November 1985 the consideration for such debt being moneys loaned to the debtor by the creditor. 3. I, do not, nor does any person on my behalf, hold any security over the property of the debtor or any part of it for the payment of the amount specified in paragraph 2." 8. By s.47(1)(b) of the Act, a creditor's petition "shall be verified by the affidavit of a person who has knowledge of the facts." By rule 12(3)(b) of the Bankruptcy Rules, at the time when a petition is filed, the petitioning creditor shall file the affidavit verifying the petition required by s.47(1)(b). According to the authors of McDonald, Henry & Meek's Australian Bankruptcy Law and Practice (Mr. C.-Parvall g.c. and Mr. N.T.F. Fernon), an affidavit under rule 12(3)(b) "will necessarily be one of information and belief. It will be for the court to decide what weight will be given to the statements contained in the affidavit." I agree. In the present case, there is evidence that, at the material time, the debtor was personally present in Australia (see para.l of the petition). (A late application was made on behalf of the petitioner to amend para.l of the petition to allege that the debtor was "ordinarily resident" in Australia. Since I am satisfied that the debtor was personally present in Australia at the relevant date, the application is unnecessary and is refused.) There is unchallenged evidence of the amount due under the District Court judgment (see para.2 of the petition). There is no suggestion that the debtor has given any security for his debt (see para.3 of the petition). I am satisfied that Mr. Jackson's affidavit complies with the Act and with the Rules. I propose to make a sequestration order. However, given the difficulties experienced by the petitioner in proving service 9. of the bankruptcy notice, I propose to deprive the petitioner of a ptoportion of his costs. I propose to order that the petitioner receive eighty percent of his costs as taxed. I propose now to adjourn the proceedings for a period of one week. I will then make formal orders. I now make the following orders: 1. Petition is stood over to 1 December 1986. 2. Costs reserved. I certify that this and the preceding ~a<cr2.- (7) pages are a true copy of the Reasons for Judgment herein of his Honour Mr. Justice Beaumont. oSetletreto_/ n/ Associate Dated: 24 November 1986 Counsel and Solicitors G.J. Adelstein instructed by for Debtor: Lasky & Adelstein Counsel and Solicitors P. Dowdy instructed by Bray for Petitioning Creditor: Jackson & Co. Dates of hearing: 7 & $22 October 1986, 18 November 1986. Date Judgment Delivered: 24 November 1986