JUDGMENT No. sacl Ledvl <2 toon ATCHWORD: BANKRUPTCY - Bankruptcy Notice - omission of judgment creditor's address on notice - whether statement of judgment creditor's address made essential by s 41 of the Bankruptcy Act 1966 and prescribed form of bankruptcy notice - whether such omission invalidates the notice. ESTOPPEL - Issue Estoppel - whether debtors precluded from questioning validity of notices by virtue of earlier judgment relating to same notices - "Anshun principle" - whether debtors waived, abandoned or were estopped from relying upon the defect. Bankruptcy Act 1966 s 41. Re Pugliese; Ex parte The Chase Manhattan Bank of Australia Ltd (1993) 44 FCR 536. Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71. Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Re Haritos; Ex parte Hill (1968) 15 FLR 378. RE: ISABELL KARIN MARION GERTRUD ST LEON: EX PARTE: NATIONAL AUSTRALIA BANK LIMITED RE: REGINALD PHILLIP FRANCIS ST LEON; EX PARTE: NATIONAL AUSTRALIA BANK LIMITED Nos NP2426 of 1994 and NP2427 of 1994. Lindgren J RECEIVED Sydney 23 DEC 1994 16 December 1994 FEDERAL COURT OF AUSTRALIA PRINCIPAL FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF NEW SOUTH WALES CORAM: PLACE: DATE: Lindgren J Sydney 16 December 1994 MI ) ) ) No NP2426 of 1994 RE: ISABELL KARIN MARION GERTRUD ST LEON Debtor EX PARTE: BANK LIMITED Creditor NATIONAL AUSTRALIA No NP2427 of 1994 RE: REGINALD PHILLIP FRANCIS ST LEON Debtor EX PARTE: BANK LIMITED Creditor NATIONAL AUSTRALIA E OF ORDER: THE COURT ORDERS IN BACH PROCEEDING THAT: (A) The following questions be decided separately from any other question in the proceeding: L o 1. D Whether the omission of an address of the judgment creditor in the bankruptcy notice is a defect - (B) (a) which renders the bankruptcy notice a nullity; (b) which is a formal defect or irregularity which attracts the operation of section 306(1) of the Act. Whether the debtor is precluded from asserting that the bankruptcy notice is defective by reason of an issue estoppel arising out of the determination of issues by the Honourable Justice Lockhart on 2 August 1994. Whether the debtor is precluded from asserting that the bankruptcy notice is defective by reason of the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Whether the debtor has waived, abandoned or is estopped from relying upon the alleged defect. The questions be answered as follows: Question 1 (a) It is. (b) It is not. Question 2 The debtor is not so precluded. an Bays (Cc) (D) Question 3 The debtor is not so precluded. Question 4 The debtor has not so waived or abandoned and is not so estopped. The creditor's petition be dismissed. The creditor pay the debtor's costs of the proceeding. Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. he FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF NEW SOUTH WALES CORAM: Lindgren J PLACE: Sydney DATE: 16 December 1994 NATURE OF PROCEEDIN There are before the Court relating to the ) ) ) No NP2426 of 1994 RE: ISABELL KARIN MARION GERTRUD ST LEON Debtor EX PARTE: NATIONAL AUSTRALIA BANK LIMITED Creditor No NP2427 of 1994 RE: REGINALD PHILLIP FRANCIS ST LEON Debtor EX PARTE: NATIONAL AUSTRALIA BANK LIMITED Creditor REASONS FOR JUDGMENT validity certain preliminary questions of two bankruptcy notices in relevantly identical form, and if they should be held invalid, as to whether the debtors are estopped from relying on their invalidity. HISTORY OF THE LITIGATION In view of the nature of the submissions made, it is necessary to give an account of the proceedings in some detail. The judgment creditor, National Australia Bank Limited ("NAB"), obtained judgments against the debtors in the Supreme Court of New South Wales. In the case of the debtor Reginald Phillip Francis St Leon ("Mr St Leon") the judgment took effect on 3 March 1994 and was for $522,289.04 plus costs of $2,997.00 making a total of $525,286.04. In the case of the debtor Isabell Karin Marion Gertrud St Leon ("Mrs St Leon") the judgment took effect on 23 March 1994 and was for $526,191.56 plus costs of $2,997.00 making a total of $529,188.56. Fourteen-day bankruptcy notices dated 9 May 1994 No. NN1491 of 1994 in the case of Mr St Leon and dated 17 May 1994 No. NN1476 of 1994 in the case of Mrs St Leon, were issued and served. In the case of Mr St Leon, the bankruptcy notice was served on Saturday morning 28 May 1994, and the last day for compliance with its requirements was, because of sub-section 36 (2) of the Acts Interpretation Act 1901, Tuesday 14 June 1994. In the case of Mrs St Leon, the bankruptcy notice was served on the morning of 31 May 1994, and the last day for compliance with its requirements was Tuesday 14 June 1994. On 14 June 1994 Mr St Leon, and on i5 June 1994 Mrs St Leon, filed applications for orders suspending the operation of the respective bankruptcy notices pending the hearing of a cross-— demand against NAB. The applications were made returnable for 27 June 1994. The applications were filed by Mr St Leon. They appear to have been prepared without the benefit of professional legal advice. Each application was accompanied by an affidavit by the debtor in question explaining why the cross-demand had not been asserted in the Supreme Court proceedings. On 14 June, a Deputy Registrar ordered that upon condition that Mr St Leon had indeed been served on 28 May 1994, the time for compliance with the bankruptcy notice served upon him was, pursuant to sub-section 41 (6B) of the Bankruptcy Act 1966 ("the Act"), extended to 27 June 1994, the return date of his application. Similarly, on 15 June 1994 a Deputy Registrar ordered that upon condition that Mrs St Leon had indeed been served on 3 June 1994, the time for compliance with the bankruptcy notice served upon her was, pursuant to sub-section 41 (6B) of the Act, extended to 27 June 1994, the return date of her application. On 27 June 1994 NAB and the debtors were represented when the Registrar stood over the debtors' applications to 12 July 1994, and further extended the time for compliance with the two bankruptcy notices to that date under sub-section 41 (6B) of the Act. On 1 July 1994, NAB filed applications returnable on 12 July 1994 seeking orders that the orders made by the Deputy Registrars on 14 and 15 June and the order made by the Registrar on 27 June be reviewed, that they were beyond power and of no effect or in the alternative be set aside ab initio, and that there had been no deemed extensions of the times for compliance with the bankruptcy notices and declarations that they had expired on 12 June 1994. On 12 July 1994, there was no appearance by or on behalf of Mr or Mrs St Leon, but NAB appeared and a Registrar ordered that the debtors' applications be dismissed. NAB'S own applications were adjourned and were ultimately heard by Lockhart J on 2 August 1994 when, again, there was no appearance by or on behalf of the debtors. His Honour construed the debtors' applications, notwithstanding their reference to suspension of the bankruptcy notices, as applications to set them aside for the purposes of sub-section 41 (6B) of the Act. Accordingly, so far as the form of the applications was concerned, the applications had been apt to enliven the Registrar's power to extend time given by sub-section 41 (6B) of the Act, and so to make the orders for extension which had in fact been made. In the case of Mr St Leon his Honour decided that there had been no deemed extension of time to comply with the requirements of the bankruptcy notice beyond 12 July 1994 for the reason that the claim which Mr St Leon propounded was one which he could have set up in the Supreme Court proceedings in which the judgment was obtained against him, and so Mr St Leon's affidavit had not activated the provision for extension contained in sub-section 41 (7). Lockhart J expressed the opinion that the time for compliance by Mr St Leon with the bankruptcy notice served upon him had expired on 12 July 1994. In the case of Mrs St Leon, his Honour found that the condition as to service of the bankruptcy notice on 3 June 1994 had not been satisfied, and that since the bankruptcy notice had in fact been served on Mrs St Leon on 31 May 1994, the time for compliance had expired on 14 June 1994 so that her application on 15 June 1994 had been made one day out of time. It followed in her case that there had been no effective extension of time for compliance, and his Honour declared that the last day for compliance by her with the requirements of the bankruptcy notice No. NN1476 of 1994 was Tuesday 14 June 1994. NAB filed a creditor's petition in each matter on 18 August 1994. Each debtor filed a notice of intention to appear specifying as one of the two grounds of opposition that the debtor had not committed an act of bankruptcy as_ the bankruptcy notice was "irregular and invalid in that it did not contain an address of the judgment creditor". On 15 November 1994, the creditor's petitions were referred to me as Duty Judge. QUESTIONS FOR SEPARATE DECISION The parties joined in asking that I decide the questions set out below as preliminary questions, because if the debtors succeeded on them the creditor's petitions would be dismissed, and I acceded to that request: "1. Whether the omission of an address of the judgment creditor in the bankruptcy notice is a defect - (a) which renders the bankruptcy notice a nullity; (b) which is a formal defect or irregularity which attracts the operation of section 306(1) of the Act. 2. Whether the debtor is precluded from asserting that the bankruptcy notice is defective by reason of an issue estoppel arising out of the determination of issues by the Honourable Justice Lockhart on 2 August 1994. 3. Whether the debtor is precluded from asserting that the bankruptcy notice is defective by reason of the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. 4. Whether the debtor has waived, abandoned or is estopped from relying upon the alleged defect. " For convenience, a copy of the bankruptcy notice dated 9 May 1994 No. NN1491 of 1994 addressed to Mr St Leon is annexed to this judgment and marked "A" and a copy of the bankruptcy notice dated 17 May 1994 No. NN1476 of 1994 addressed to Mrs St Leon is annexed to these reasons for judgment and marked "B", It will be convenient to address the four questions in sequence. FIRST ESTION FOR SEPARATE DECISION 1. Whether the omission of an address of the judgment creditor in the bankruptcy notice is a defect — (a) which renders the bankruptcy notice a nullity; (b) which is a formal defect of irregularity which attracts the operation of section 306(1) of the Act. Relevantly sub-sections 41(1) and (2) of the Act are as follows: "41(1) A bankruptcy notice — (a) shall be in accordance with the prescribed form; and (b) shall be issued by the Registrar. (2) The prescribed form of bankruptcy notice shall be such that the notice - (a) requires the debtor named in it, within a specified time (being the time referred to in subparagraph 40(1)(g)(i) or (ii), whichever is appropriate) to - (1) pay the judgment debt or sum ordered to be paid in accordance with the judgment or order; or (ii) secure the payment of the debt or sum to the satisfaction of the Court or the creditor or his agent, if any, specified in the notice or compound the debt or sum to the satisfaction of the creditor or his agent, if any, specified in the notice; and (b) states the consequences of non-compliance with the requirements of the notice." The prescribed form of bankruptcy notice is in accordance with annexure ""C" to these reasons for judgment. As can be seen, the form of recital of the judgment creditor's claim provides for the name and address of the judgment creditor to be stated, and the operative part of the notice requires the debtor to pay the amount claimed to the judgment creditor or to secure payment of the amount claimed to the satisfaction of the judgment creditor or his agent whose name and address are to be stated. The debtors relied on Re Haritos; Ex parte Hili (1968) 15 FLR 378, a decision of Gibbs J when sitting as a judge of the Federal Court of Bankruptcy. Gibbs J said that there could be no doubt that "as a general rule a bankruptcy notice which omits to show the address of the creditor, or which shows an incorrect address, is bad, being defective in substance and not merely in form". His Honour cited In re Stogdon; Ex _parte Leigh [1895] 2 QB 534; In re Beauchamp; Ex parte Beauchamp [1904] 1 KB 572; In re a Debtor [1908] 2 KB 692; Re Smith; Ex parte Closer Settlement Ltd (1916) 34 WN (NSW) 48 ("Re Smith"); and Re Lehane; Ex parte Potter (1933) 6 ABC 32 ("Re Lehane"). The requirement of the statement of the creditor's address has been recognised as serving the important purpose of indicating a place at which, throughout the period specified in the bankruptcy notice, the debtor may pay the amount specified in the bankruptcy notice to the judgment creditor or secure or compound for that amount to the satisfaction of the judgment creditor. These considerations apply to the bankruptcy notices in the present case. In Re Smith, supra, 1t was submitted that the omission to give the address of the judgment creditor was overcome by the facts that the debtor knew where its office was and that there was no hardship to the debtor. But Street J said that it was not necessary to consider whether the debtor was prejudiced, the only question being whether the defect was a formal one or one of substance. His Honour held that the defect was one of substance and that the bankruptcy notice must be set aside. Re Lehane, supra, was a strong case. The title of the bankruptcy notice described the judgment creditor as being "of Forest Hill" but the body of the notice required the debtor to pay the judgment creditor described as being "of Grandchester". In fact the judgment creditor resided and carried on business at Forest Hill and not at Grandchester, the debtor's own address being at Grandchester. Henchman J held that the defect was more than a "formal defect" within sub-s 7(1) of the Bankruptcy Act 1924 and was not one which could be amended under s 27 of that Act. It was submitted for NAB that the bankruptcy notices in the present cases did state its address, namely "Mallesons Stephen Jaques, Solicitors, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000", that being the name and address of NAB's solicitors appearing at the foot of the first page and of the typing on the second page of each bankruptcy notice. In this regard, NAB referred me to Re Pugliese; Ex parte The Chase Manhattan Bank of Australia Ltd (1993) 44 FCR 536 (FCA/Heerey J) ("Re Pugliese). In that case, the address of the judgment creditor being c/o its solicitors was stated in the body of the notice, the opening words of the notice being as follows: "Whereas THE CHASE MANHATTAN BANK AUSTRALIA LIMITED (ACN 001 531 586) (previously CHASE AMP BANK LTD) of C/- Swersky McPhee and Velos, Solicitors, 7th Floor, 469 La Trobe Street, Melbourne, in the State of Victoria (hereinafter referred to as "the Judgment Creditor")". Heerey J said, citing the Macquarie Dictionary, that the term "address" meant, amongst other things, "a place where a person lives or may be reached", and that the purpose of the requirement that a bankruptcy notice state the 'judgment creditor's address is to identify a place where the judgment creditor may be reached for the purpose of paying, securing or compounding. His Honour noted that it was not suggested that the named solicitors were not in fact the petitioning creditor's solicitors or that they did not practise at the address stated or that they "did not have authority to accept payment of the judgment debt on behalf of the petitioning creditor". His Honour did not refer to the question whether the solicitors had authority to represent the judgment creditor for the purpose of being "satisfied" as to any security or composition proposed by the debtor. In my opinion Re Pugliese is distinguishable from the present case. In that case, what was purportedly stated was, by reason of its juxtaposition to the name of the judgment creditor, an address of the latter. I do not think that the statement of the name and address of NAB's solicitors below the line at the foot of the front page and at the foot of the typewritten material on the second page of the bankruptcy notices purported to be a statement of NAB's address for the purpose of receipt of payment or the acceptance of security or of a composition. Rather, the statement of the solicitors' name and address at the foot of the first page is no more than an identification of the solicitors who were responsible for preparation and filing of the document, and the words at the end of the typewritten material on its second page constitute an express identification of the particular solicitor on whose application the bankruptcy notice had been issued. A fair reading of the notices would indicate that they were calling for payment to be made to NAB itself and not as implying that this could be achieved if the debtor were to attend with the money at the office of the named solicitors. A similar observation applies to the making of an agreement with NAB relating to security or to a composition. The next submission for NAB was founded upon a distinction expressed in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 ("Kleinwort Benson"). In Kleinwort Benson the bankruptcy notice understated the amount of the judgment and interest: it claimed a total amount of $1,442,438.30 said to be due as at 30 September 1986, whereas in truth at that date - 12- the amount due was some $23,000 more. The majority judgment of Mason CJ, Wilson, Brennan and Gaudron JJ (Deane J dissented) contains the following passage: "The authorities show that a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice: James v Federal Commissioner of Taxation [(1955) 93 CLR 631, at p.644]; Pillai [v Comptroller of Income Tax [1970] AC 1124, at p.1135]. In such cases the notice is a nullity whether or not the debtor is in fact misled: In re A Judgment Debtor, 530 of 1908 [([{1908] 2 KB 474, at p.481.]. If the amount specified in a bankruptcy notice is in fact due and payment is claimed in accordance with the judgment, the essential requirements of s_ 41(2)(a)(i) — the only requirements presently relevant - are met. Understatement of the amount due, whether it be an understatement of the judgment debt or of interest payable thereon, will thus constitute a defect which is substantive rather than formal only if the understatement is objectively capable of misleading the debtor as to what 1s necessary for compliance with the notice". (at 79-80) (emphasis supplied) The submission proceeded by suggesting that sub-s 41(2) made it clear that what was "made essential by the Act" in any form which might be prescribed were the matters referred to in paragraphs (a) and (b) of sub-section 41(2). The submission was that although sub-s 41(1) required that a bankruptcy notice be in accordance with the prescribed form, and the prescribed form in fact required a statement of the judgment creditor's address, this was not something "made essential by the Act", because it was not referred to in sub-s 41(2) as one of the matters required to be contained in any form which might be prescribed. It was then submitted that once this was accepted, the effect of the non-statement of the creditor's address was to be considered by reference to the second "limb" mentioned in the Passage quoted above from Kleinwort Benson, namely, whether the bankruptcy notice, by reason of the non-statement of the creditor's address, could reasonably mislead a "debtor as to what 1s necessary [to comply] with the notice". In relation to the "liability to mislead" limb, it was submitted that the approach to be taken was the same as that taken under s 306 of the Act. Counsel for NAB took me to the decision of Lockhart J in Re Wimborne; Ex parte The Debtor (1979) 24 ALR 494, and in particular to the following passage (at 498-499): "A 'formal defect or any irregularity' is one that could not reasonably mislead the debtor. If the defect is of such a kind as could reasonably mislead the debtor upon whom it was served the defect is fatal to the notice: see Re_a Debtor; Ex parte The Debtor v Bowmaker Ltd [1951] Ch 313 and Pillai v Comptroller of Income Tax [1970] Ac 1124 at 1135. The test is not whether the debtor was in fact misled. It is sufficient that he could be misled. eeeeeeeeceeeeee- Lt is well established that to determine whether the debtor served with the bankruptcy notice could be misled the court may look at facts extraneous to the notice itself". In the present case there was evidence that the debtors had dealt with the University of Sydney branch of NAB at Science Road, University of Sydney over many years, that Mr St Leon had been a customer at that branch since at least 29 June 1987, and that Universitas College Pty Limited, of which both Mr and Mrs St Leon were directors and secretaries, had conducted an account at that branch since at least November 1989. As well, there was evidence of the numerous branches of NAB throughout New South Wales and in particular in the Sydney area. It was submitted that the debtors could have paid NAB at any branch. There was no evidence to this effect and I do not find it necessary to determine whether they could have done 50. I find that the debtors knew the location of the University of Sydney branch and I take judicial notice of the fact that NAB has numerous branches throughout New South Wales and would be prepared to infer that this was a fact also known to the debtors. However, I do not think that this detracts from the purpose to be served by the statement in a bankruptcy notice of an address for the judgment creditor. In James v Federal Commissioner of Taxation (1955) 93 CLR 631 ("James") it seems to have been assumed by the High Court that the existence of a multiplicity of addresses of a corporate judgment creditor such as Qantas Empire Airways Ltd did not obviate the necessity that at least one address be given where the prescribed form of bankruptcy notice provided for the judgment creditor be shown as being "of" an address. In Re Persse (1911) 55 Sol Jo 314 and Re Mullavey; Ex parte Australia and New Zealand Banking Company Ltd (1977) 32 FLR 1 (FCA/Sweeney J) it was held that any one of several addresses of the creditor at which someone was authorised to give a receipt for payment of the debt would suffice to be stated, whether or not there was a person at that address with authority to agree to security or to a composition. The James and Mullavey cases assume the necessity of the statement of an address in the case of a well known corporate creditor with many branches or offices throughout Australia. In relation to the submission that the statement of address is not a matter made essential by the Act, there are, in my view, several difficulties. First, para 14(1)(a) provides that a bankruptcy notice "shall be in accordance with the prescribed form" and it is difficult, in the face of such plain and mandatory terms, to assume that anything which is in fact in the prescribed form though not required to be in it by sub-s 41(2), 1s not made "essential" by the Act. For example, it is difficult to accept that the note at the foot of the prescribed form could be omitted without rendering the notice invalid. A second difficulty, although it may be but another aspect of the first, is that if the submission is correct there would appear to be no sanction for non-compliance with para 41(1)(a), except perhaps in so far as the prescribed form satisfied sub-section 41(2). I do not think that Parliament intended the mandatory terms of para 41(1)(a) to have that restricted operation. Thirdly, I do not think that their Honours in the joint judgment in Kleinwort Benson were contemplating by their reference to "a requirement made essential by the Act" a dissection of the prescribed form of bankruptcy notice into - 16 - parts specifically referred to in the Act and other parts. To construe their Honours' words in that way is to approach them as if they were the language of a statute. I think that it is consistent with the terms of the joint 'judgment that the statutory requirement that a bankruptcy notice be in accordance with the prescribed form is itself a requirement made essential by the Act. The passage quoted from the joint judgment contemplated that a bankruptcy notice might be in accordance with the prescribed form yet still be liable to mislead. That this is so is indicated by their Honours' reference at page 80 of the judgment to the possibility that an understatement of the amount due might be capable, in a particular case, of misleading the judgment debtor as to whether, if an act of bankruptcy was to be avoided, payment was required of the amount in fact due or of the amount specified in the notice. The two "limbs" in the passage quoted from Kleinwort Benson distinguish between that which the Act requires on the one hand, and the way in which a particular bankruptcy notice is "filled in" on the other hand. The distinction may not always be clear, but I regard a total failure to state an address for the judgment creditor as a non-compliance with para 41 (1) (a), as distinct, for example, from an ambiguous or unclear statement of an address. The latter would be an instance of a notice in accordance with the prescribed form which could nonetheless reasonably mislead the debtor. In my opinion, the bankruptcy notices do not comply with the Act for failure to be in accordance with the prescribed form by reason of non-statement of the creditor's address, and this is not a "formal defect or irregularity" within the meaning of 8s 306 of the Act. ECOND, THIRD AND FOURTH ESTIONS FOR SEPARATE DECISION The second, third and fourth questions for separate decision assume the invalidity of the bankruptcy notices. Critical to an understanding of those questions are sub-sections 41 (6B) and (7) of the Act, and the history of the litigation. Sub-section "(6B) (7) 41(6B) and (7) provide as follows: Where, before the expiration of the time fixed by the Registrar for compliance with the requirements of a bankruptcy notice: (a) proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or (b) an application to set aside the bankruptcy notice has been filed with the Registrar; the Registrar may, subject to sub-section (6C), extend the time for compliance with the bankruptcy notice. aa eee em ee ee ee ee ee meee eee ee eee eres e rere res se resvroeD Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has filed with the Registrar an affidavit to the effect that he has such a counter-claim, set-off or cross demand as is - 18- referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied." I have given an account earlier of the steps taken down to the hearing by Lockhart J on 2 August 1994 of NAB's applications and of his Honour's decision on them. It will be recalled that there was no hint in the debtors' applications to set aside the bankruptcy notices or in the accompanying affidavits of any challenge to the formal validity of the bankruptcy notices. Against the above background the second, third and fourth questions may be considered. 2. Whether the debtor is precluded from asserting that the bankruptcy notice is defective by reason of an issue estoppel arising out of the determination of issues by the Honourable Justice Lockhart on 2 August 1994. Lockhart J held that the debtors' applications were properly to be treated as applications to set aside the bankruptcy notices; found that Mr St Leon's application had been made within time with the result that the Deputy Registrars had had power to make the orders which they made in his case on 14 and 27 June; and held that Mr St Leon's affidavit did not refer to - 19 - a counter-claim, set-off or cross-demand which he could not have set up in the Supreme Court proceedings, with the result that sub-section 41 (7) was not activated to extend the time for compliance further beyond 12 July 1994. Lockhart J said this in relation to Mr St Leon's case: "I do not think it appropriate to express my reasons in the form of a declaration, but the relevance, particularly of the finding that there is no room for the application of 41 (7) is really a matter to be determined by a registrar or a judge upon the hearing of the petition if presented by the creditor against the debtor. However, no doubt the view I have expressed will be brought to the attention of the registrar or judge, as the case may be." NAB submitted before me that Lockhart J's "determinations are predicated on a necessary and implicit finding that the notices were good and not defective" and that "in finding that the notices had expired at a particular time his Honour must have concluded, at least implicitly, that the notices were good, no point having put to the contrary". I do not agree. The issue of the validity of the bankruptcy notices was not before Lockhart J and there is no reason why his Honour should be taken to have determined it. The only issues dealt with by his Honour were whether the debtors' applications had been such as to activate the powers of the Deputy Registrars to make the orders which they made on 14 and 27 June respectively, and whether the debtor's affidavit had activated sub-section 41 (7). - 20 - I should also record that I do not think that an issue estoppel arose from the effective orders granting extensions of time for compliance in the case of Mr St Leon because the extensions of time were in support of Mr St _ Leon's applications to set aside the bankruptcy notices served on him (McLean v Australia and New Zealand Banking Group Ltd (1993) 42 FCR 300 (FCA/Ryan J)) and were therefore not inconsistent with his present challenge to the validity of the bankruptcy notice served upon him. In relation to Mrs St Leon, his Honour (a) found that she had not been served with the bankruptcy notice on 3 June 1994, and held that it followed that a condition of the Deputy Registrar's order made on 15 June 1994 extending time had not been satisfied, and (b) found that she had in fact been served on 31 May 1994 and held that it followed that the Deputy Registrar had not had power on 15 June 1994 to make an order for extension of the time for compliance. Again, the issue of the formal validity of the bankruptcy notice served on Mrs St Leon was not before his Honour. No effective order for extension of the time for compliance was made in her case. 3. Whether the debtor is precluded from asserting that the bankruptcy notice is defective by reason of the principle in Port of Melbourne Authority v Anshun Pty Ltd /1981) 147 CLR 589. NAB submitted that the principle of Port of Melbourne Authority v Anshun Pty Ltd (1991) 147 CLR 589 applied. As I understand it, the submission was that the debtors could and should have propounded in their applications to set aside or even in their affidavits the legal point now raised as additional support for their applications to set aside, and not having done so, are now precluded from raising the point on the hearing of the creditor's petitions. I do not accept the submission. Whatever might be the precise scope of "the Anshun principle", in my opinion it has no application in the present case, if for no other reason than because there was no hearing of the debtors' applications to set aside the bankruptcy notices which were dismissed in their absence on 12 July 1994. All that happened here is that the debtors lodged what were held to be applications to set aside the bankruptcy notices and affidavits which explained why their alleged cross-claim had not been propounded in the Supreme Court proceedings. On 14 June and 15 June when the initial orders for extension to 27 June were made, there were no appearances by Mr St Leon or Mrs St Leon respectively, the orders being made in the Registry on the basis of the filing of the applications and accompanying affidavits. Both they and NAB were represented on 27 June when the further orders extending time were made by a Registrar but there was again no hearing on the merits. On 1 July, NAB's application was filed. On 12 July, the debtors' applications to set aside were dismissed when the debtors did not appear to prosecute them further. It is not unreasonable in these circumstances for the debtors to raise the absence of an act of bankruptcy on the hearing of the judgment creditor's petitions against them. It was not suggested that it was open to the debtors not to file any applications to set aside the bankruptcy notices, and to reserve their challenge to the validity of the bankruptcy notices until the hearing of the creditor's petitions. 4. Whether the debtor has waived, abandoned or is estopped from relying upon the alleged defect. There was no waiver or abandonment by Mr or Mrs St Leon. Their conduct consisted of the filing of their applications and accompanying affidavits on 14 and 15 June 1994 respectively, appearing on 27 June 1994 and applying for a further extension of time for compliance, and their non- prosecution of the application to set aside on 12 July 1994 when their applications were dismissed. In order to establish a waiver in the present context, NAB would have to show that the debtors deliberately chose not to take the point as to the invalidity of the bankruptcy notices or failed to take it when it came to their notice, that is to say, "an intentional act with knowledge"; see Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305 at 326-328; The Commonwealth v Verwayen (1990) 170 CLR 394 at 466-473 (Toohey J), 480-485 Gaudron J). Moreover, in my view there is no estoppel of the kind to which the fourth question refers because there was not any representation by the debtors to the effect that they regarded the bankruptcy notices as valid or were proceeding on the assumption that they were valid; no reliance by NAB on any such representation; and no detriment suffered by NAB even if any such representation was made. NAB has taken the stance throughout, even since the matter of the defect in the bankruptcy notices has been raised, that the notices are valid. There is no evidence that NAB would have taken a different course if the point had been raised earlier. It is possible that the hearing of that issue would have been brought on at an earlier time but I do not think that the loss of that opportunity to save some time is a "detriment" of the kind which is required to be proved in order to activate an estoppel. INCLUSION: In each case there will be an order that the four questions to which I referred earlier be decided separately from any other question in the proceedings, and the questions will be answered as follows: - 24 - 1. (a) it is. (b) it is not. 2. The debtor is not so precluded. 3. The debtor is not so precluded. 4. The debtor has not so waived or abandoned and is not so estopped. The creditor's petitions should be dismissed and NAB should be ordered to pay the debtors' cost of the proceedings. I certify that this and the preceding 23 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren. Dated: 16 December 1994. Heard: 15 November 1994 Place: Sydney Decision: 16 December 1994 Appearances: Mr C R C Newlinds of counsel instructed by Kemp Strang & Chippindall appeared for the debtors. Mr S M P Reeves of counsel instructed by Mallesons Stephen Jacques appeared for the creditor.