Owners - Strata Plan No. 23007 v Cross, in the matter of Cross [2006] FCA 900

FEDERAL COURT OF AUSTRALIA

Owners – Strata Plan No. 23007 v Cross, in the matter of Cross [2006] FCA 900 BANKRUPTCY – Proceedings in connection with sequestration – petition and sequestration order – where petition served personally on mentally disabled debtor – where sequestration order made by registrar in absence of debtor – where application for review out of time – where alternative application based on debtor's absence – whether service of petition defective – whether sequestration order effective – whether formal defect or irregularity – whether sequestration order should be set aside or bankruptcy annulled – whether costs, charges and expenses of bankruptcy to be borne by debtor EVIDENCE – Burden of proof, presumptions, and weight and sufficiency of evidence – mental capacity – consideration of interaction between presumption of capacity and presumption of continuance – evidence of involuntary admission to psychiatric hospital PROCEDURE – Disability – mentally disabled persons – consideration of matters relevant to determining whether a person is, owing to mental illness, incapable of managing his or her affairs in respect of the proceedings HELD – Debtor was a mentally disabled person at the time of service – personal service upon the debtor constituted a breach of the rules and a defect in the proceedings on the petition – the defect was not a formal defect or an irregularity – the sequestration order was effective though voidable – the order ought to be set aside rather than the bankruptcy annulled. WORDS & PHRASES 'mentally disabled person' Federal Court of Australia Act 1976 (Cth) s 35A Bankruptcy Act 1966 (Cth) ss 30, 153B, 154 Federal Court Rules O 43 r 13, O 35 r 7 Adams v Lambert (2006) 225 ALR 396 applied Cameron v Cole (1944) 68 CLR 571 referred to Capsalis v Ozdemir [2005] FMCA 1163 referred to Gibbons v Wright (1953) 91 CLR 423 referred to Ginane v Diners Club Limited (1993) 120 ALR 375 referred to Hadjimouratis v Casanova [2005] FMCA 1468 referred to In re Daskalavski (Applicant); Ex parte The Austral Brick Co Pty Ltd [1998] FCA 782 distinguished Kirby v Leather [1965] 2 QB 367 referred to Kleinwort Benson Australia Ltd v Crowl 165 CLR 71 applied Kyriackou v Shield Mercantile Pty Ltd (No. 2) [2004] FCA 1338 considered Masterman-Lister v Brutton & Co (Nos 1 and 2) (CA) [2003] 1 WLR 1511 applied Mason v Tritton (1994) 34 NSWLR 572 referred to Murphy v Doman (2003) 58 NSWLR 51 applied Official Trustee v Nedlands (2000) 173 ALR 255 referred to Re Ditfort; Ex Parte DCT (1988) 19 FCR 347 referred to Re Long; Ex parte Fraser Confirming Pty Ltd (1975) 12 ASR 130 referred to Re Millar; Ex parte Commonwealth Development Bank of Australia (No. 388/1993, unreported, 27 April 1993, Burchett J) applied Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372 applied State Rail Authority of New South Wales v Hammond (1988) 15 NSWLR 395 referred to The Fore Street Warehouse Company Limited v Durrant & Co. (1883) 10 Q.B.D. 471 referred to Vaucluse Hospital Pty Ltd v Phillips & Anor [2006] FMCA 44 referred to White v Fell (Court of Appeal, unreported, 12 November 1987, Boreham J) applied L Shelford, A Practical Treatise of the Law Concerning Lunatics, Idiots, and Persons of Unsound Mind, 2nd edn, S Sweet, London 1847 J H Wigmore, A Treatise on the Anglo-American System of Evidence in Trials at Common Law, 3rd edn,Little Brown & Co., Boston, 1940 T Snow et a., The Annual Practice, 11th edn, Sweet & Maxwell, London, 1893 T W Chitty, Chitty's Archbold's Practice of the Queen's Bench Division of the High Court of Justice,14h edn, H Sweet & Son, London, 1885