CATCHWORDS BAWKKUPTCY = Crealtor's petition - Creuitor a company in liquidation ~ Petition presented by liquidator in own name — Petition amendec to make plain that the company in liquidation was the petitioner - Whetner petition valia - Whether power of amendment available - Petition served in unamendea form accompanied by order yiving leave to amend - Whether service duly effected - Kelief from non compliance with the Rules. Bankruptcy Act lyoe (Cth), s. 33 Bankruptcy Rules, rules lus, 169(1), 195(2) Companies Act 1987 (Cth), s. 377(2) Re DAVID MALCOLM REYNOLUS; Ex Parte PLAZA PRINT PTY LIMITED (IN CIQGUIDATION). No. P.1422 of 19387 Neaves J. 3 December 19387 Canberra ~ Feo 2 i867 FEDERAL COvnr AUSiRALIA OF PR' CiPal REGISIAY IN THE FLLERAL COURT OF AUSTRALIA GENEKAL DIVISION No. P.1422 of 1987 BANKRUPTCY DISTRICT OF THre STATE OF NEW SOUTH WALES AND ThE AUSTRALIAN CAPITAL TERRIOURY -- Re: DAVID MALCOLM REYNOLDS Debtor Ex Parte: PLAZA PRINT PTY LIMITED (IN LIQUIDATION) Petitioner CORAI: wWNeaves J. DATE: 3 December 19387 REASOWS FUR JUDGMENT In this matter a preliminary question has been argued concerning the validity of a creditor's petition presented under the Bankruptcy Act lyv6 (Ctn). The question has arisen in the following circumstances. On £3 February 1947 Plaza Print Pty Limited (In Liquidation) ("the company") obtained a final juugment against David Malcolm Reynolds ("tne uebtor") in the sum of $41,511.28 together with costs to be taxed or agreed. On 25 May 1987 a bankruptcy notice was 1ssueu based on that judgment. It recited that the company claimed that the sum of $41,5f1.2u, together with interest thereon at the rate of $15.00 per centum per annum from 23 February 1937 until 7 May 1987 amounting to $750.61, making a total of $42,261.89, was due by the debtor to the company under the. judgment. The notice required the debtor, within 14 days after service of the notice upon him, to pay that sum to the company or to secure the payment of that sum to the satisfaction of the Feaeral Court of Australia or the company or to compound that sum to the satisfaction of the company. The bankruptcy notice was served on the debtor on 10 June 1987. On lo July 147 a creuitor's petition was presented. -- It was intituled "ke: David Ilalcolm Reynolds, Lebtor; Ex parte Plaza Print Pty Limited (ln Liyuidation), Petitioner". Tne petition began: "I, \JAmES CLIFFOkD _CARRICK WARREN of 32 kndeavour Street, Rea dill in tne Australian Capital Territory petition the Court tor a sequestration order against the estate ot DLAVIv MALCOLM REYNOLDS who resides at 147 Springvale Drive, Weetangera in the Australian Capital Territory hereinafter referred to as "the vbebtor'." Paragraph z of the petition alleged that the debtor was "justly and truly indebted to me" in the sum of $42,261.49, being tne amount ($41,511.20) due unger the final judgment "obtained by me" ayainst tne aebtor in the Supreme Court ot the Australian Capital Territory on 23 February 1987 together with an amount of $750.61 by way of interest. Paragraph 3 of the petition was in the Following terms: "3. I ago 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 the last preceding paragraph." Paragraph 4 set out the act of bankruptcy which the debtor was alleged to have committed, being the failure of the debtor to comply with the bankruptcy notice served on him on 10 June 1987. Tne date of the commission of the act of bankruptcy was statea, incorrectly, as 25 June 1987, the correct date being 24 June 1987. The petition was signed by Mr Warren, the word "Petitioner" appearing immediately uncer his signature. The affidavit of truth of the statements in the petition was that of mr Warren sworn on 3 July 1967. In the opening worus oc tne affidavit he described himself as "the Petitioner namea in the Petition hereunto annexeu". The affidavit daeposeda to tne following: "li. I am the official liquidator of Plaza Print Pty Limited ({n Liquidation). 2. That the several statements contained in parayraphs 1, 2 and 3 of the_ said Petition are within my own knowledge true. 3. That as to the statement in paragraph 4 of the said Petition that the Debtor fa1rled on or before the 25 June 1987 to comply with the requirements of a Bankruptcy Notice served on the 10th day of June 1987 the Debtor did not during that period pay to me the sum of Forty two thousand two hundred and sixty one dollars ana elgnty-nine cents (942,261.89) referred to in the - Bankruptcy Notice or to [sic] secure tne payment of that sum to my satisfaction." The affidavit was subsequently amended and was re-sworn on 28 August 1987. The amendments were to insert "the Otficial Liquidator of" before the reterence to the petitioner in the Opening words of the affidavit and to correct the date of the act of bankruptcy. On ll September lyo7, upon an application made to him in writing by the solicitors for "the petitioner", a Deputy kegistrar in Bankruptcy, purporting to act under sub~s. 33(2) of the Bankruptcy Act 1966 (Cth), gave leave to amena the petition in the following respects: -- "lL. Tne words 'Plaza Print Pty Limited (in liguidation) of C/- Luesbury's Chartered Accountants, CNL Building, University Avenue, Canberra City in the Australian Capital Territory' replace tne woras 'I, JAMES CLIFFORD CARRICK WARREN of 82 Enageavour Street, Red Hill in the Australian Capital Territory' on the farst paye of tne creditor's petition. 4 That the woras '24tn day of June 1987" be substituted for the words '25th day or June 19&87' in the second paye of the creditor's petition," The petition filed in the Registry was subsequently amended as required by rule LU8% of the Bankruptcy kules. On 2 October 1947 the debtor was served with, inter alia, an office copy ot the petition in its unamended form, the re-sworn arfidavit verifying the petition and the order made by the Deputy Registrar in Bankruptcy on ll September 1987. The serving of the petition in its unamended form aid not, by virtue of sub-rule 109(1) of the Bankruptcy Rules, amount to aque service for the purposes of those Rules. The 5. circumstance that service was effected at the same time of a copy of the order made by the Deputy Registrar setting out the respects in which leave to amend the petition had peen granted did not overcome the difficulty. The Court may, however, under sub-rule 195(z) relieve a party from the consequences of non compliance with the Rules. As the gebtor has appearea to oppose the petition and as he was Given notice ot the proposeu amendments at the time the petition was delivered to him, it 1s, in my opinion, appropriate to relieve the company from tne consequences of non compliance with sub-rule luy(1). As official liquidator of the company, Mr Warren was autnorisea by sup-s. 377(2) of the Companies Act I1g9bl (Cth) to bring any legal proceeding in the name ana on pehalf of the company (par. (a)) ana to execute in the name and on behalf of the company all deeus, receipts and other vocuments ana tor tnat purpose to use wnen necessary the company's common or official seal (par. (d)). It 1S common groung that the assets of the Company were not vested in the liguidator pursuant to sub-s. 374(2) of the Act or otherwise. In those circumstances it 1s clear that 1t was to the company and not to the liquidator that the debtor was indebted. That this 1s the situation is reflected in the circumstance that the judyment was obtained in favour of the company. The bankruptcy notice clearly followed the judgment and no challenge 1s, or could be, made to the validity of that document. It follows that the correct procedure would have been for the creditor's petition to be issued in the company's name. Although the title to the proceedings commenced by the creditor's petition presented on 15 July 1987 descrived the company as the petitioner, the petition was incorrect in a number of respects. First, the opening words stated that Mr Warren was the person petitioning the Court. Secondly, tne uebtor was alleged to be indebted to him under a jJuagment optained by him. Thirdly, 1t was stated that he did not hola any security for the dept. Lastly, the wora "Petitioner" appeared immediately under tr Warren's Slgnature. Tnere was, of course, an additional error in Stating the uate of the act of bankruptcy but that error 1s of no consequence for present purposes. For the debtor, it was submitted that the petition was not etfective to commence the proceedings as 1t was based on the assertion, contrary to the fact, that there was a uebt owing by the debtor to the liquidator. Tne petition was, SO 1t was submittea, a nullity and, that being so, there was no power in the Deputy Reyistrar in Bankruptcy to give leave to amend the petition. That power, it was said, could only be exercised in respect of a petition which was valid when presented. It was also submitted that what the Deputy Registrar in Bankruptcy had purported to do was to Substitute a new petitioner, namely the company, for the petitioner named in the petition as presented, namely the liquidator (see Bankruptcy Act 1966 (Cth), s. 49). To do this was said to be beyond the power of the Leputy Registrar. In my opinion, the petition as presented, notwithstanding its deficiencies, cannot properly be said to have been a nullity. On the evidence before the Court, I am satisfied that the petition was presented on behalf of the company. That 1s clear from its title, from the reference to the date and the amount of the judgment obtainea by the company in the Supreme Court of the Australian Capital Territory and from the reference to the bankruptcy notice served on the debtor on lu June 1907, a notice clearly based on that judgment. When the documents came to the notice of tne aevtor he can have been in no doupt that tne company, acting through its liquidator, was seeking to have a sequestration order made against his estate. In such circumstances I am unaple to conclude that there was no power in the Deputy Registrar in Bankruptcy to allow such amendments to the petition as would cure the irregularities which appeared on the face of tne petition. Nor am I able to conclude that the exercise of that power by the Deputy Registrar worked any injustice to the debtor. The amenaments made plainly accorded with the substance of what was being alleged to found the making of a sequestration order: see Growden v. Wiltshire (1935) 52 C.LeR. 286. It 1S apparent, however, that the amendments sought by the liquidator did not go far enough. He should have sought further amendments to make plain that the debt was not due to him but to the company under a judgment obtained 8. by the company, that the company did not hola security over any of the property ofthe debtor for payment of the aebt and that he had signed the petition as liquidator for and on behalf of the company. In the circumstances anu subject to any submissions which either of the parties may wish to put, I think 1t would be appropriate to give the company leave further to amend the petition in the above respects. That would seem to me to be an appropriate course to follow as, 1f the present petition were to be dismissed, a further petition coula be presented torthwith as a period of s1x months has not yet expired since the uate upon which the debtor 1s alleyed to nave committea the act of bankruptcy relied upon. I would also propose to direct that, in the event that the company turtner amends the petition, the petition as so amendea be verified by affidavit ana a copy of the petition as so amended and of the affidavit verifying the same be served on the solicitors for the debtor on the day on which the amendments to the petiton shall have been made in accordance with rule 106 of the Bankruptcy Rules or on the next tollowing aay. I shoula add that I do not accept the argument presented on behalf of the debtor that the effect of what the Deputy Registrar in Bankruptcy did was to give leave to the company to be substituted as petitioner in place of the liquidator. The Veputy Registrar did no more than give leave to amend the petition to make clear the true situation that the petition was 'presented on behalf of the company. He did not purport to make a substitution order and what he did cannot be so construed. For the above reasons, the preliminary question should be answered by stating that the creditor's petition 1S not invalid on any of the grounds submitted to the Court on behalf of the debtor. The further heariny of the petition 1S aujourneu to a date to be fixed. I reserve the costs of the hearing on the preliminary question. I certify that this and the preceding % pages are a true copy ot the keasons for Judgment herein of the Honourable Mr Justice Neaves. <A Z Tesociath Dated: 3 December 1987 Counsel for the debtor: Mr 1.J. Nicol Solicitor for the debtor: Barrads Counsel tor the petitioner: Mr D.S. Galbraith Solicitors for the petitioner: Abbott Tout Creer & Wilkinson Date of hearing: 27 November 1987