Re Theodore Anthony Greenland and Norma Lorraine Greenland Ex Parte: National Westminster Finance Australia Limited [1989] FCA 109 (10 April 1989)

FEDERAL COURT OF AUSTRALIA

Re: THEODORE ANTHONY GREENLAND AND NORMA LORRAINE GREENLAND
Ex Parte: NATIONAL WESTMINSTER FINANCE AUSTRALIA LIMITED
No. QLD P95 of 1989
FED No. 139
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Pincus J.(1)

CATCHWORDS

Bankruptcy - creditor's petition - writ of fi. fa. - whether execution returned unsatisfied - return did not deal with all property mentioned in writ - whether a proper return - to whom return must be made - whether defect cured by second return after presentation of petition.

Bankruptcy Act 1966, s.40(1)(d)(ii)

HEARING

BRISBANE
10:4:1989

Counsel for the creditor: Mr J.D.M. Muir Q.C. with Mr

P.R. Dutney

Solicitors for the creditor: MacGillivray & Co.

Solicitors for the debtor: Andrew P. Abaza

ORDER

The petition be dismissed.

The creditor pay the debtor's costs of and incidental to the proceedings, to be taxed.

NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

DECISION

This is an opposed creditor's petition for a sequestration order. The debtors have taken a number of points and also argued a question concerning the amount claimed by the creditor; that cannot be determined on the information before me.

2. The petition was filed on 26 January 1989 and is based on an allegation that execution was levied against the debtors under process of the Supreme Court of Queensland and has been returned unsatisfied. The affidavit verifying that allegation said that a writ of fi. fa. was issued on 23 November 1988 and returned unsatisfied.

3. The writ which is exhibited is directed to the Sheriff of Queensland and contains a command that he "cause to be made" a certain sum. It concludes by requiring that the Sheriff report back to the Court:

"And in what manner you shall have executed this Our
writ make appear to Us and Our said Court
immediately after the execution hereof And have
there then this writ" (emphasis added).

Here, there has been some suggestion that a report to solicitors is just as efficacious as one to the Court; I disagree.

4. The command just quoted was, so far as the writ shows, complied with, if at all, by a note on the writ saying that the debtors -

"... have no goods or chattels in my bailiwick
whereof I can cause to be made the moneys and
interest within mentioned, or any part thereof, as
I am within commanded.
The answer of Neville Stuart Greig Esq.
Acting Sheriff
23 January 1989"

5. The answer just quoted is, on the face of it, incomplete in that the writ required the sum in question be made of "the lands, tenements, goods, chattels, choses in action and other property ..." of the debtors, whereas the answer speaks only of goods and chattels. That point being taken, a further affidavit was filed on behalf of the creditor which exhibited two letters written before issue of the petition to the creditor's solicitors by Mr Greig. The letters, in turn, contained notes to the Sheriff from a bailiff who set out in them what he had been doing by way of attempting to levy execution. One note said that the debtors' assets were "virtually nil". Next, the Acting Sheriff wrote to the creditor's solicitors on 1 March 1989 purporting to amend the return to the Supreme Court of 23 January 1989, so as to include reference to "lands, tenements, goods, chattels, choses in action and other property".

6. A question arises as to whether the evidence I have mentioned shows the commission of the act of bankruptcy alleged, but before dealing with that substantial point, it is desirable to dispose of some subsidiary questions.

7. It was argued for the debtors that the petition should have included an allegation as to security held by the creditor. The answer is simply that there is nothing before me to suggest the creditor holds a "mortgage, charge or lien on property of the debtor" as set out in the definition of "secured creditor" in s.5(1) of the Bankruptcy Act 1966. Apparently the creditor has security on the property of other persons than the debtors, but that is of no present consequence. Next, it was argued that the petition should be dismissed because both it and affidavits verifying it do not set out their respective dates of signature. The dates are indeed missing but that is, in my opinion, an irregularity, within the meaning of s.306(1) of the Act of 1966. It follows that I cannot give effect to the objection unless of opinion that substantial injustice has been caused by the absence of the dates. It is impossible so to hold. It was then contended that a certain undertaking given to the Supreme Court of Queensland produced the result that the issue of the petition was an abuse of process. The objection has no substance; the undertaking given in the Supreme Court was not to issue execution against a certain sum by way of costs ordered to be paid to the debtors. That undertaking has not been breached.

8. To come now to the substantial question, the petition is based on the act of bankruptcy defined in s.40(1)(d)(ii): "execution has been issued against him under process of a court and has been returned unsatisfied". There must, on the authorities, be a proper "return" to the writ if the petition is to succeed and a miscellany of documents is relied on as constituting such a return.

9. The debtor has argued that, although execution has been issued, it has not been returned unsatisfied because:

(a) A "return" must be made by the person to whom the writ of
execution issued.
(b) The return is a report to the Court, not to the creditor.
(c) The note by the Sheriff on the writ referred to goods and
chattels only and not to real property.

10. I was referred to no Queensland statutory provision or rule governing the process of execution in this State which might assist in deciding the validity of the debtor's objection, nor have I myself found any. The material discloses that, in accordance with the practice (see Re Coras; Ex parte The Deputy Commissioner of Taxation (1943) 13 ABC 136), the Sheriff to whom the writ was addressed made out a warrant to a bailiff for its execution. The remarks of the bailiff quoted by the Sheriff in his correspondence with the creditor's solicitors were progress reports dealing with what was done under the warrant. It does not appear to me that those reports prove that an act of bankruptcy was committed, although they may have some relevance if the return of 23 January 1989 is treated as merely irregular. In my view, a bailiff's report to the Sheriff, whether or not passed on to solicitors, is not a "return". What is contemplated is a report to the Court out of which the writ issued. It is the response to the command in the writ quoted above, to "make appear" to the Court "in what manner you shall have executed this Our writ" which is the necessary return.

11. A return of the kind mentioned in s.40(1)(d)(ii) is a statement in writing signed by or on behalf of the Sheriff setting forth what has been done under the writ: Re Hunter; Ex parte Dowell Industries (Aust.) Pty. Ltd. (1968) 11 FLR 265 at 266; Re Johnson; Ex parte Greendale Engineering and Cables Pty. Ltd. (1967) 11 FLR 335 at 339. Those decisions were given, not under the present provision, but on the corresponding provision of the 1924 Act, s.52(e), whose wording was somewhat different. They are nevertheless authoritative with respect to the present Act. What must be shown is the existence of such a report; so much is plain enough. What is not quite so obvious is that there must be a proper return:

"In the present case the writ in effect directed the
bailiff to seize and sell the goods and lands of
the debtors, and the writ would have been returned
unsatisfied if the bailiff had reported that there
were no goods or lands of the debtors within the
bailiwick the proceeds of which were available to
satisfy the writ. It was not a proper return to
say that the premises to which the bailiff went
were shut and that the bailiff had no response, for
that did not mean that there were no goods in those
premises available for execution. ... An act of
bankruptcy within s.52(e) is only committed if
there has been a proper return, and there has been
no proper return in the present case." (Re:
Johnson (above) p 339)

12. That decision is consistent with the New Zealand case of Re Boddie (1933) 34 NZLR S 6.

13. Here, all the return said was that there were no goods or chattels; it gave no information about any other property. Is that a proper return? There are three authorities suggesting that it is not.

14. Such a return was held to be "at least, irregular" by Evatt J. in McIntosh v. Shashoua (1931) 46 CLR 494 at 511. In Re Huntington; Ex parte The Council of the Shire of Warringah (1935) 8 ABC 161, Long Innes J., without expressing a concluded view, suggested that such a defect might be cured by a second return, made after presentation of the bankruptcy petition, referring to property other than goods and chattels; the letter of 1 March 1989 referred to above raises a similar problem.

15. In principle, the suggestion in Huntington's case is difficult to follow; if it is the presence of a proper return which is necessary, it cannot be enough to show that such a return came into existence after issue of the petition. In Re Johnson; Ex parte Atkins (WA) Ltd. (1968) 14 FLR 147, Nevile J., agreeing that such a return as is here in question was "improper", declined to follow the expression of opinion of Long Innes J., which I have just mentioned. Nevile J. held that the earlier view was inconsistent with the High Court's decision in King v. Commercial Bank of Australia Ltd (above) and dismissed the petition.

16. Mr Muir Q.C., senior counsel for the creditor, said that I should follow the view of Long Innes J. rather than that of Nevile J. and argued that the latter's reliance on the High Court decision was misplaced. I agree that what the High Court said does not seem decisive of the point, but I prefer the conclusion of Nevile J. The petition must fail unless it is made to appear that the execution has been returned unsatisfied before the petition issued. Accepting as I do that the return must be a proper one and that the return here in question was not of that description, I am unable to agree that the situation can be saved for the creditor by proving a "return" after issue of the petition which amplifies or explains the earlier one. The purported amendment came too late to show what has to be shown, namely an act of bankruptcy committed before issue of the petition: s.44(1)(c) of the Act, Re Egar (1986) 68 ALR 509.

17. In summary, the return made was not of the kind required because it merely disclosed there were no goods or chattels and did not deal with any other property mentioned in the writ of execution; the act of bankruptcy alleged in the petition is not made out.

18. The petition must be dismissed with costs.