Penrith Waste Services Pty Ltd v Brown [2005] FCA 781

FEDERAL COURT OF AUSTRALIA

Penrith Waste Services Pty Ltd v Brown [2005] FCA 781 PENRITH WASTE SERVICES PTY LTD v DAVID ALISTAIR BROWN NSD597 OF 2005 EMMETT J 31 MAY 2005 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD597 OF 2005

BETWEEN: PENRITH WASTE SERVICES PTY LTD

APPLICANT CREDITOR

AND: DAVID ALISTAIR BROWN

RESPONDENT DEBTOR

JUDGE: EMMETT J

DATE OF ORDER: 31 MAY 2005

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. the estate of the respondent debtor, David Alistair Brown, be sequestrated;

2. the Official Receiver in Bankruptcy be appointed the trustee in bankruptcy of the estate;

3. that the applicant creditor's costs of the creditor's petition be paid out of the estate,

4. notes that the relevant act of bankruptcy occurred on 17 March 2005,

5. upon terms that the debtor file a statement of affairs pursuant to section 54 of the Bankruptcy Act no later than 20 June 2004,

6. all proceedings under the sequestration order be stayed for the period of 21 days.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NSD597 OF 2005

BETWEEN: PENRITH WASTE SERVICES PTY LTD

APPLICANT CREDITOR

AND: DAVID ALISTAIR BROWN

RESPONDENT DEBTOR

JUDGE: EMMETT J

DATE: 31 MAY 2005

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 I have before me a petition for a sequestration order under the Bankruptcy Act 1966 (Cth) ('the Act') in respect of the estate of David Alistair Brown ('the Debtor'). The applicant creditor is Penrith Waste Services Pty Ltd ('the Creditor'). The Creditor's petition is based on the act of bankruptcy of failing to comply with a bankruptcy notice dated 17 February 2005. The bankruptcy notice was served on the Debtor on 24 February 2005. 2 The bankruptcy notice was not complied with. The issue before me is whether or not the bankruptcy notice could be complied with. The Debtor says that the bankruptcy notice was a nullity and that, accordingly, there was no act of bankruptcy, because failure to comply with a nullity does not constitute an act of bankruptcy. Section 40(1)(g) of the Act provides that a debtor commits an act of bankruptcy if a creditor who has obtained against the debtor a final judgment, has served on the debtor a bankruptcy notice and the debtor does not, within the time specified in the notice, 3 comply with the requirements of the notice or satisfy the Court that he has a counter claim, set-off or cross demand equal to or exceeding the amount of the judgment debt. 4 On 6 December 2004, the Supreme Court of New South Wales ordered that judgment be entered in favour of the Creditor against the Debtor in the sum of $300,000. It is common ground that that order is a final judgment within the meaning of s 40(1)(g). Section 41(1) provides: 'An official receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor a final judgment or final order that is of the kind described in section 40(1)(g) and is for an amount of at least $2000.' 5 Bankruptcy notice NN411-05 was issued by the Official Receiver on 17 February 2005. Section 41(5) provides: 'A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the missed statement.' That provision is not attracted in the present case, but it has some bearing on the question that has been raised before me. 6 Section 43(1)(a) of the Act provides: 'Where a debtor has committed an act of bankruptcy [and the prerequisites of section 43(1)(b) have been satisfied] the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.' It is common ground that those prerequisites have been satisfied in the present case. Section 52(1) of the Act then provides: 'At the hearing of a creditors petition, the Court shall require proof of: