IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY VG 7478 of 1997 RE: GABRIEL GEORGE HAROS and IRENE HAROS Judgment Debtors AND: NATIONAL AUSTRALIA BANK LIMITED (ACN 004 044 937) Judgment Creditor JUDGES: RYAN J DATE: 24 NOVEMBER 1997 PLACE: MELBOURNE EX TEMPORE REASONS FOR JUDGMENT HIS HONOUR: This petition raises the question of the sufficiency of service of a bankruptcy notice which, as served and annexed to the affidavit of service, did not have attached to it a copy of the judgment or order on the basis of which the bankruptcy notice had been issued. Regulation 4.01 of the Bankruptcy Regulations provides: 1. In order to apply for the issue of a bankruptcy notice, a person must lodge with the Official Receiver: (a) a duly completed draft bankruptcy notice; and (b) one of the following documents in respect of the final judgment or final order specified by the person on the approved form: (i) a sealed or certified copy of the judgment or order; (ii) a certificate of the judgment or order sealed by the court or signed by an officer of the court; (iii) a copy of the entry of the judgment or order certified as a true copy of that entry and sealed by the court or signed by an officer of the court; (iv) in the case of an award referred to in paragraph 40(3)(a) of the Act: (A) a copy of the award certified as a true copy by the arbitrator who made the award or, failing the arbitrator, by an officer of the court after having compared the copy with the original award; and (B) a sealed or certified copy of the order giving leave to enforce the award; and (c) a copy of the draft bankruptcy notice for the Official Receiver's records and sufficient additional copies of the draft bankruptcy notice for service and for annexure to any required affidavits of service. Form 1 of the forms specified in Schedule 1 to those regulations prescribes the form of the bankruptcy notice and provides by Item 2 of that form: The creditor claims that the debt is due and payable by you. A copy of the judgment or order relied upon by the creditor is attached. At the time of applying for this Notice, execution of the judgment or order had not been stayed. There is also provision for the supply to the debtor of an analysis of the amount claimed into amount of judgment or order, legal costs if ordered to be paid and, (if claimed in the bankruptcy notice), interest accrued since the date of judgment or order. Note 2 to that part of the form requires that: If interest is being claimed in this Bankruptcy Notice, details of the calculation of the amount of interest claimed are to be set out in a document attached to this Bankruptcy Notice. Details are then given of what is required to be set out in that document in relation to interest. It is common ground that the bankruptcy notice in the present case had attached to it the requisite interest schedule, but did not have attached the judgment or order. The judgment or order relied on was that pronounced by Master Wheeler in the Supreme Court of Victoria on 4 June 1996 whereby it was adjudged by consent that: The Defendant pay the Plaintiff the sum of $1,102,411.00 plus costs agreed at $3000.00. I have been told from the Bar table that it does appear from the file maintained by the Official Receiver in respect of this matter that a copy of the judgment or order to which I have just referred was put before the Official Receiver at the time of the issue of the bankruptcy notice. Whether that copy was attached to the copy of the draft bankruptcy notice retained for the Official Receiver's records does not appear. However, it is clear that no such copy was attached to the additional copies of the draft bankruptcy notice for service and for annexure to any required affidavits of service. It is, I suppose, possible that copies of the judgment or order were attached to those copies of the bankruptcy notice at the time when it was issued, but the more likely hypothesis seems to be that they were inadvertently omitted from those copies of the bankruptcy notice at the time when it was issued. The narrow question which the Court is required to resolve is whether the failure to attach a copy of the judgment or order to the bankruptcy notice as served should be regarded as nullifying the bankruptcy notice or as merely an irregularity curable by the terms of s 306 of the Bankruptcy Act. In my view, the complete omission of a judgment or order is of such a character that it does have the effect of avoiding the notice. I consider that the failure to supply the debtors at the time of service of the bankruptcy notice with a copy of the judgment or order on which the bankruptcy notice is based created a real risk that the debtors might have been misled. I have been reminded that, in cases of this kind, the Court is required to have regard to the circumstances of the particular debtor and not to erect a hypothetical ordinary or reasonable debtor. In this context I have been referred to the judgment of Lockhart J in Re Wong; Ex parte Kitson (1979) 27 ALR 405 where his Honour said at 410: In Re Wimborne; Ex parte The Debtor (1979) 24 ALR 494, I said that the test is not whether the debtor was in fact misled, it is sufficient that he could be misled; but that to determine whether the debtor could be misled, the court may look at facts extraneous to the notice itself and that the debtor whose liability to confusion is relevant is not some hypothetical debtor but the very debtor in question. I need not repeat what I said there or refer to the authorities on which I relied to support that conclusion. However, when one has regard to the circumstances of the debtors in question here, it is apparent from the evidence that there was more than one judgment obtained against those debtors by the petitioning creditor at whose instance the bankruptcy notice was served. There was a judgment obtained in the Supreme Court of Victoria on 20 October 1995 whereby the petitioning creditor recovered possession of a property being the land described in Certificate of Title, Volume 6730, Folio 981, being the land situated at 28 Carn Avenue, Ivanhoe. That judgment, as well as ordering recovery of possession of the land, required the defendants to pay the plaintiff's costs to be taxed. In those circumstances, I consider that, in the absence of a copy of the judgment or order relied on, which was a judgment or order made as I have explained in proceedings described as the guarantee proceedings, there was a real possibility for confusion to exist in the minds of these debtors as to which judgment formed the basis of the bankruptcy notice with which they were served. In those circumstances, I consider that the defect in the form of the bankruptcy notice is not a mere irregularity, but went to the validity of the notice and, accordingly, the petition should be dismissed. I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Ryan. Associate: Dated: 24 November 1997 Counsel for the Judgment Debtors: Mr J Nolan Solicitors for the Judgment Debtors: White Cleland Pty Counsel for the Judgment Creditor: Ms S Horovitz Solicitors for the Judgment Creditor: Scott Bache, Solicitor National Australia Bank Date of Hearing: 24 November 1997 Date of Judgment: 24 November 1997