De Robillard v Carver [2007] FCAFC 73 (30 April 2007)

Last Updated: 31 May 2007

FEDERAL COURT OF AUSTRALIA

De Robillard v Carver [2007] FCAFC 73

APPEAL – whether Federal Court has power to set aside a sequestration order on appeal – power not limited by the Bankruptcy Act – order on appeal has the result that no valid sequestration order was made.


BANKRUPTCY – service of bankruptcy notice not proved to the required standard – evidentiary onus lies with serving party – service must be strictly proved – document exchange – document exchange number – document exchange facility – delivery to one branch of a document exchange facility does not constitute effective contemporaneous service of that document when the recipient maintains a facility at another branch of a document exchange facility – service of creditor’s petition – personal service required – appearance at a court proceeding is taken to satisfy requirement for personal service – no facility for conditional appearance in Bankruptcy Rules – an order for sequestration can be made despite non-compliance with the rules regarding service of a creditor’s petition – a bankruptcy notice may be signed on behalf of or in the name of firms, partnerships and corporations.



Bankruptcy Act 1966 (Cth): s 5, 33, 37, 41, 43, 52, 54, 64A, 153B, 154, 306, 307, 308
Bankruptcy Regulations 1996: 4.01, 4.02, 4.02A, 4.05, 16.01, 16.02
Federal Court (Bankruptcy) Rules 2005: r 1.03, 2.06, 4.02, 4.04
Federal Court of Australia Act 1976 (Cth): s 28
Federal Court Rules: O 1 r 5A, 5AB, 5AC; O 4 r 1, 7; O 7 r 1, 3, 4, 4A, 7; O 9; O 41 r 3; O 48 r 11; O52 r 17; O 52A r 11

Adams v Lambert [2006] HCA 10; (2006) 80 ALJR 679
Bryant v Commonwealth Bank of Australia (unreported 24 November 1995)
Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571
Cavanagh v Bank of New Zealand (1990) 22 FCR 124
Chng v Shome [2000] FCA 753
Clyne v Deputy Commissioner of Taxation (No. 4) (1982) 42 ALR 703
Coleman v Lazy Days Investments Pty Ltd [1994] FCA 1442; (1994) 55 FCR 297
Commissioner for Railways (NSW) v Cavanagh [1935] HCA 45; (1935) 53 CLR 220
Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1
Daly v Watson (1994) 50 FCR 544
Ex parte Deputy Commissioner of Taxation [1988] FCA 490; (1988) 19 FCR 347
Glassford, Cook & Co Pty Ltd v William Higson & Co (1899) 25 VLR 177
Jensen v Queensland Law Society Inc [2006] FCA 1206; (2006) 154 FCR 525
Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34; (1988) 165 CLR 71
MacDonald v Official Trustee in Bankruptcy [2001] FCA 140; (2001) 107 FCR 72
McWilliam v Jackson [2000] FCA 175; (2000) 96 FCR 561
Meekin v Commonwealth Bank of Australia [1999] FCA 682
National Australia Bank Ltd v Westbrook, in the matter of Westbrook [2000] FCA 246
Nilant v Macchia [2000] FCA 1528; (2000) 104 FCR 238
Oates v Commissioner of Taxation (1990) 27 FCR 289
Pattison v Hadjimouratis [2006] FCA 153; (2006) 155 FCR 226
Rangott v Marshall [2004] FCA 961; (2004) 139 FCR 14
Re Cook (1946) 13 ABC 245
Re Coyle [1993] FCA 161; (1993) 42 FCR 72
Re Ditfort; Ex parte Deputy Commissioner of Taxation (NSW) [1988] FCA 490; (1988) 19 FCR 347
Re Finn; Ex parte Finn v Amoco Australia Ltd [1982] FCA 49; (1981) 58 FLR 54
Re Florance; Ex parte Turimetta Properties Pty Ltd (No 2) [1980] FCA 5; (1980) 39 FLR 400
Re Hanby; Ex parte Flemington Central Spares Pty Ltd (1967) 10 FLR 378
Re Schierholter; Ex part Geis (1978) 32 FLR 22
Re Vella; Ex parte Seymour [1983] FCA 115; (1983) 67 FLR 287
Re Williams (1968) 13 FLR 10
Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372
Simon v Vincent J O’Gorman Pty Ltd [1979] FCA 75; (1979) 41 FLR 95
Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321; (2004) 141 FCR 107
Sogelease Australia Ltd v Griffin [2003] FCA 453; (2003) 128 FCR 399
Trustees of the Franciscan Missionaries of Mary v Weir [2000] FCA 574; (2000) 98 FCR 447
Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212



















CHRISTIAN ROGER DE ROBILLARD v GEORGE LINDSAY CARVER
NSD 1621 OF 2006

MOORE, CONTI AND BUCHANAN JJ
30 MAY 2007
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1621 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CHRISTIAN ROGER DE ROBILLARD Appellant
AND:	GEORGE LINDSAY CARVER Respondent

JUDGES:	MOORE, CONTI AND BUCHANAN JJ
DATE OF ORDER:	30 MAY 2007
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal is upheld.
2. The order for sequestration of the appellant’s estate made on 11 August 2006 is set aside.
3. The creditor’s petition filed on 19 April 2006 is dismissed.
4. The order for payment of the petitioning creditor’s costs is set aside.
5. There be no order as to the costs of the appeal or the proceedings below.

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	NSD 1621 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CHRISTIAN ROGER DE ROBILLARD Appellant
AND:	GEORGE LINDSAY CARVER Respondent

JUDGES:	MOORE, CONTI AND BUCHANAN JJ
DATE:	30 MAY 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

MOORE AND CONTI JJ:

1 We have had the benefit of reading the judgment of Buchanan J in draft form. For the reasons his Honour has given, we agree with his Honour's construction of the provisions concerning service through a document exchange and that the evidence concerning the service of the bankruptcy notice does not permit a finding, in relation to service at the appellant's last known address, that it was served in accordance with the regulations and, in relation to service at this document exchange, served on the day relied on by the respondent. We agree that the sequestration order made below should be set aside and agree with the orders proposed by his Honour.

2 We should add our voice to the observations of his Honour about the conduct of the appellant concerning his failure to file a statement of affairs which involved an apparently wilful refusal to comply with a direction of a judge of this Court. It is appropriate the reasons for judgment of the Full Court be referred to the President of the Bar Association of
New South Wales.

I certify that the preceding two (2) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Moore and Conti.

Associate:

Dated: 30 May 2007

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 1621 OF 2006

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	CHRISTIAN ROGER DE ROBILLARD Appellant
AND:	GEORGE LINDSAY CARVER Respondent

JUDGES:	MOORE, CONTI AND BUCHANAN JJ
DATE:	30 MAY 2007
PLACE:	SYDNEY

REASONS FOR JUDGMENT

BUCHANAN J:

3 On 11 August 2006, a judge of this Court made an order for the sequestration of the appellant’s estate, finding that he had committed an act of bankruptcy on 7 December 2005 (Carver v de Robillard [2006] FCA 1041).

4 The act of bankruptcy found proven was a failure to comply with a bankruptcy notice which his Honour found was served on the appellant on 16 November 2005.

5 The debt alleged by the bankruptcy notice was $57,375.87. The bankruptcy notice was founded upon a judgment debt obtained by the respondent against the appellant in the Newtown Local Court on 2 November 2004 for $55,368.94. That debt arose out of a loan of $40,000. Interest had accrued. It continued to accrue after the judgment debt was obtained. The debt was not disputed. No part of it had been repaid, either before or after the issue of the bankruptcy notice, before the order of sequestration was made.

6 The bankruptcy notice was dated 30 March 2005. It was required to be served on the appellant by 30 September 2005 (Bankruptcy Regulations 1996 (‘the Bankruptcy Regulations’) reg 4.02A(a)). For reasons which need not be explored service had not been effected by that date. On 9 November 2005 an extension of bankruptcy notice was issued (reg 4.02A(b)) extending the bankruptcy notice to 30 March 2006. (Reference made hereafter to the bankruptcy notice should generally be understood to include reference to the extension of bankruptcy notice also, unless the context otherwise indicates.) On 19 April 2006 the respondent filed a creditor’s petition alleging failure to comply with the bankruptcy notice on or before 7 December 2005 and that the appellant had, as a result, committed an act of bankruptcy.

7 The Notice of Appeal challenging the sequestration order advanced 16 grounds. Five were abandoned shortly before the appeal. One of those was reinstated at the hearing of the appeal. In my view the appellant’s contentions can be summarised in the following way:

(a) the bankruptcy notice was not effectively served;

(b) service of the bankruptcy notice was not proved to the required standard by the respondent’s principal witness;

(c) the creditor’s petition was not personally served;
(d) the creditor’s petition was defective when ‘presented’;
(e) the bankruptcy notice was defective and therefore a nullity.

8 The last argument was raised for the first time on the appeal. The other arguments were rejected by the primary judge.

Service of the Bankruptcy Notice

9 Service of the bankruptcy notice was governed by reg 16.01 of the Bankruptcy Regulations . Regulation 16.01 (so far as immediately relevant) provides:

‘(1) Unless the contrary intention appears, where a document is required or permitted by the Act or these Regulations to be given or sent to, or served on, a person (other than a person mentioned in regulation 16.02), the document may be:

(b) left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility; or
(c) left, in an envelope or similar packaging marked with the person’s name, at the last-known address of the person;’

10 I shall return, in due course, to a discussion of the meanings of ‘document exchange number’, ‘document exchange’ and ‘document exchange facility’ as those terms appear in reg 16.01(1)(b).

11 The primary judge’s factual findings on the issue of service of the bankruptcy notice were as follows:

‘... I have no doubt that on 16 November 2005 copies of the Bankruptcy Notice with the Extension Notice stapled to it were:

• deposited by Mr Cotsis in the Document Exchange facility at Newtown in an envelope addressed to the Debtor at the Debtor’s Document Exchange box DX 1091, Sydney; and

• delivered personally by Mr Cotsis to the receptionist at the address at Level 12, 111 Elizabeth Street, Sydney.

12 There is no issue that the addresses in question were appropriate ones for the purposes of reg 16.01(1)(b) and (c) respectively, but the appellant argues that these factual findings do not go far enough to constitute effective service under either (b) or (c) of reg 16.01(1).

13 The missing elements are said to be:

(a) delivery to the Newtown DX does not complete delivery to the document exchange where the appellant maintains his DX address - there is no proof that delivery to the Sydney DX address occurred on 16 November 2005 so as to provide supporting evidence that an act of bankruptcy occurred, as alleged, 21 days later on 7 December 2005;

(b) there is no proof of all the elements of reg 16.01(1)(c).

14 To examine whether there is any substance in these arguments some scrutiny of the affidavit and oral evidence is required.

15 The bankruptcy notice (and the extension to bankruptcy notice) were both obtained by Mr William Cotsis, solicitor for the respondent. He gave affidavit evidence and was cross-examined by the appellant. He swore two affidavits dealing specifically with service of the bankruptcy notice – 4 May 2006 and 14 June 2006.

16 In his affidavit of 4 May 2006 Mr Cotsis deposed to the following:

‘4. On 16 November 2005, I served Christian Roger De Robillard with the following document: Extension of Bankruptcy Notice NN 848/2005.

5. I served the document by sending it to the Respondent’s document exchange number at DX 1091 Sydney.

6. On 16 November 2002, I personally delivered the Extension of Bankruptcy Notice NN 848/2005 to the Respondent’s business address at Level 12, 111 Elizabeth Street, Sydney. At the time of delivery, I spoke with the receptionist. I said:

"I have some documents for Mr De Robillard, can you give these to him?"

She said:
"Yes, alright."’

17 This affidavit refers only to service of the extension of bankruptcy notice and not the bankruptcy notice, a matter which also has some significance for the fourth contention, earlier set out, which I discuss later.

18 At the hearing before his Honour objection was taken to the word ‘served’ in paragraphs 4 and 5. His Honour ruled:

‘I will not read that as evidence of service.’

and shortly thereafter ruled that he would read paragraphs 4 and 5 as Mr Cotsis saying:

‘On 16 November I sent the Extension of Bankruptcy Notice to the respondent’s document exchange number DX 1091.’

19 In the affidavit of 14 June 2006 dealing with service of the bankruptcy notice (there was another dealing with the creditor’s petition) Mr Cotsis deposed:

‘On 16 November 2005, I served Christian Roger De Robillard with the following document: Extension of Bankruptcy Notice NN848/2005 dated 9 November 2005 and Bankruptcy Notice NN848/2005 dated 30 March 2005. The Extension of Bankruptcy Notice NN848/2005 was stapled to the front of the Bankruptcy Notice NN848/2005. Annexed hereto and marked "A" is a copy of the Extension of Bankruptcy Notice NN848/2005 dated 9 November 2005 and Bankruptcy Notice NN848/2005 dated 30 March 2005.


I served the document by sending it to the Respondent’s document exchange number at DX 1091 Sydney. Annexed hereto and marked "B" is a copy of covering letter dated 16 November 2005 and mail book register for the date 16 November 2005.

On 16 November 2002, I also personally delivered the Extension of Bankruptcy Notice NN 848/2005 and Bankruptcy Notice NN 848/2005 to the Respondent’s business address at Level 12, 111 Elizabeth Street, Sydney. At the time of delivery, I spoke with the receptionist. I said:
"I have some documents for Mr De Robillard, can you give these to him?"
She said:
"Yes, alright."’

20 Similar objections to the word ‘served’ were taken and it was accepted that they would be read as ‘sent’. This affidavit refers to both the bankruptcy notice and the extension of bankruptcy notice. The extract from the mail book register annexed to the affidavit records a despatch on 16 November 2005 to ‘Mr C R De Robillard DX 1091 Sydney’ in the matter of ‘Carver C01/00073R’. C01/00073R was evidently the identifying number for the solicitor’s file about the matter. The covering letter, dated 16 November 2005, to the appellant at his DX address, bore the same file number.

21 Before turning to the oral evidence it may be useful to identify the issues which are left unresolved by this affidavit evidence.

22 Paragraph (b) of reg 16.01(1) requires that a document be in an envelope or similar packaging, marked with the person’s name and any relevant document exchange number, and left at a document exchange where a person maintains a document exchange facility. Although Mr Cotsis attached to his affidavit of 14 June 2006 the letter dated 16 November 2005 addressed: Mr Christian R De Robillard, DX 1091, Sydney, his affidavit evidence does not explicitly depose that the documents were in an envelope or that any envelope or packaging was marked with the applicant’s name and document exchange number. The mail book register extract however supports an inference that there was an envelope or package so marked. It is also important to note, as mentioned earlier, that the appellant’s DX number was at Sydney.

23 As to paragraph (c) of reg. 16.01(1), Mr Cotsis’ affidavit evidence did not state that the documents he said were personally delivered to the appellant’s business address at Level 12, 111 Elizabeth Street, Sydney were either in an envelope or similar packaging or marked with the appellant’s name.

24 As the oral evidence is considered, it is convenient to look first at whether reg 16.01(1)(c) was satisfied before turning again to reg 16.01(1)(b).

25 Mr Cotsis was cross-examined about the issue of delivery to the appellant’s business address. The following passages occurred in his cross-examination:

‘Mr de Robillard, there was a letter with your street address attached onto the extension of bankruptcy notice and bankruptcy notice which I hand-delivered to your street address on 16 November.

When you say the street address what do you mean?--Level 12, 11 Elizabeth Street, Sydney.

and:

‘Now, in relation to the extension of bankruptcy notice, I take it it is clear from your evidence that both documents stapled together were, you said, delivered to my office on 16 November?--- That’s correct.

And so there is no possibility that you would have one document, bankruptcy notice, and then the extension of that bankruptcy notice?---No, there is – the extension of bankruptcy notice has to be stapled on to the bankruptcy notice. It was served on 16 November which is after the extension was granted. Both documents were served – were delivered to your place of business on 16 November.

I just want to make sure that we are clear that there was no separate service of the extension of bankruptcy notice at any time?---No, they were attached together and they were served on 16 November.

In relation to that, when you say they were attached together, they were in an envelope?---They were in an envelope, they were stapled.

And at no time did you tell the secretary that these were documents regarding a bankruptcy notice or anything to that effect?---No, I didn’t advise that they were documents of a bankruptcy notice.

So you simply said, this is for Mr de Robillard?---These documents are for Mr de Robillard, yes.’
(emphasis added)

26 Apart from the two affidavits sworn by Mr Cotsis to deal specifically with service of the bankruptcy notice there were a number of affidavits dealing with other issues. One of them, sworn 5 July 2006, attached a number of pieces of correspondence, including a copy of the letter which was hand-delivered to the appellant at his business address.

27 However, there was no evidence from Mr Cotsis (either affidavit or oral) that the envelope, mentioned by him in his cross-examination, was marked with the appellant’s name. There was no corresponding entry in the mail book register. I do not think that gap can be filled by an assumption. Having regard to Mr Cotsis’ evidence of the terms of his conversation with the receptionist at the appellant’s business address it cannot be concluded that the envelope itself bore the appellant’s name when handed to her, as reg 16.01(1)(c) requires.

28 These circumstances lead me to conclude that it was not established that the provisions of reg 16.01(1)(c) were satisfied. The evidence does not supply the final ingredient necessary to conclude that service was effected in accordance with reg 16.01(1)(c). There is no written or oral evidence that the envelope left for the appellant, with the bankruptcy notice inside, was marked with his name as required. I therefore find myself unable to agree with the primary judge that service by this method was proved.

29 Accordingly, it is necessary to see whether the alternative method of service attempted was effective – i.e. whether it can be concluded from the evidence that service was effected at the appellant’s document exchange facility before midnight on 16 November 2005.

30 However, before turning to that issue in greater detail it is necessary to deal with the question of the meaning to be attributed to the words ‘document exchange number’, ‘document exchange’ and ‘document exchange facility’. I have found no authority which bears directly upon these issues. None was cited by the appellant.

31 None of the Bankruptcy Act 1966 (Cth) (‘the Bankruptcy Act’), the Bankruptcy Regulations or the Federal Court (Bankruptcy) Rules 2005 (Bankruptcy Rules) define any of the terms. Apart from reg 16.01 of the Bankruptcy Regulations the only other reference to any of them is contained in s 64A(1)(b)(iv) of the Bankruptcy Act which requires notice, by a trustee of a bankrupt, to a creditor known to have any of a number of forms of address, including a ‘document exchange number’.

32 By contrast, provision is made in a number of places in the Federal Court Rules (Federal Court Rules) for service at or through a document exchange. Order 1 r 4 contains the following definitions:

‘document exchange means a facility or service through which a member of the facility or service may send a document to another member of the facility or service.

document exchange box means a box in a document exchange.’

33 Thereafter, a number of Orders, rules and forms make use of the defined terms (O 1 r 5A, 5AB, 5AC; O 7 r 7 (see also r 4 and 4A); O 41 r 3(b); O 48 r 11; O 52A r 11; Forms 12 and 55CA).

34 Order 1 r 5A permits filing or lodging of documents with the Federal Court itself ‘at its box at the Australian Document Exchange’. Order 7 r 7 refers to use of ‘facilities of a document exchange’. Some of these provisions seem to suggest that a document exchange facility or document exchange service is a whole network, others that it is a location. They do not govern the use or meaning of similar terms in the Bankruptcy Regulations and, in any event, are inconclusive. I must therefore try to assign a meaning to the terms used in reg 16.01, unassisted, but striving to give the meaning best suited to the purpose suggested by the particular context in which the terms appear.

35 In my view in reg 16.01 ‘document exchange number’ is simply the ‘DX’ number assigned as a document exchange address for a particular recipient. In the present case the relevant ‘document exchange number’ is DX 1091. The appellant gave the following oral evidence in cross-examination:

‘Mr de Robillard, you’re a practicing barrister of the Supreme Court of New South Wales and the Federal Court?--Yes.

You maintain your contact details through the Bar Association website?---Yes.


Your document exchange facility or number, identified through the Bar Association website, is DX1091?---Yes.’

36 As this passage touches upon the meaning of the term ‘document exchange facility’ it is convenient to deal with that next. As the question to the appellant set out above, and his response, imply the concept is linked to the document exchange address. The document exchange facility referred to in reg 16.01(1)(b) which is maintained by a person is the arrangement whereby documents addressed to the recipient’s document exchange number are kept for collection by or on behalf of that person.

37 Greater difficulty arises from the term ‘document exchange’ in the composite phrase ‘document exchange where the person maintains a document exchange facility’. In particular, does the term refer to the overall enterprise or organization (eg the Australian Document Exchange) or does it refer to the locality at which a number of boxes or addresses are physically maintained to permit collection of documents – eg Melbourne, Canberra, Newcastle, North Sydney, Sydney Stock Exchange or, as in this case, Sydney and Newtown.

38 In other words, did the appellant ‘maintain(s) a document exchange facility’ simply with the document exchange as a network or at Sydney? In my view the context requires that the latter view be taken. I think a location is being referred to. The word ‘where’ in the phrase adds support to the conclusion. This view is also reinforced by reg 16.02.

39 Reg 16.01(2)(a) provides:

‘(2) A document given or sent to, or served on, a person in accordance with subregulation (1) is taken, in the absence of proof to the contrary, to have been received by, or served on, the person:

(a) in the case of service in accordance with paragraph (1)(a) or (b) – when the document would, in the due course of post or business practice, as the case requires, be delivered to the person’s address or document exchange facility; ...’

40 The immediacy which is attributed to service effected in this way (cf Federal Court Rules O 7 r 4(3)(b) where service is deemed effected two days after a document is left at a document exchange box) suggests that delivery to the relevant document exchange number where it will then be available for collection is an integral part of delivery to the document exchange facility.

41 It follows from this excursion into textual analysis that delivery to a document exchange facility maintained at Sydney is not effected simply by leaving documents at some other location. Some further step in the overall process of delivery is required.

42 Mr Cotsis was cross-examined about the manner in which he effected delivery of the bankruptcy notice. One issue concerned the time and manner of delivery to the document exchange. Mr Cotsis’ evidence was that, in accordance with his usual practice, on 16 November 2005 he took the documents to the Newtown document exchange ‘of a night time’. He also said: ‘When the mail is prepared it is entered in the mail book the day that it is prepared and it is put in the envelope. It is then, at the end of the day, taken to the DX.’

43 In my view this oral evidence provided a sufficient further basis to conclude the documents were in an envelope. Although there was still no direct evidence to the effect that the envelope containing the documents was addressed to the applicant, it would be unreal to proceed upon that basis in light of the character of the document exchange. Necessarily, the envelope bore at least the document exchange address of a recipient. The extracts from Mr Cotsis’ mail book register indicate that the material was sent to the applicant in his name at his Sydney document exchange address. The evidence as a whole in my view establishes that the documents were left in an envelope marked with the appellant’s name and document exchange address.

44 However that does not dispose of the question of time of service. Under reg 16.01(2)(a) service of a document in accordance with reg 16.01(1)(b) is deemed to occur when, in the due course of business practice, the document would be delivered to the recipient’s document exchange facility. In written submissions in reply before the primary judge the appellant sought to argue, for the first time, that it could not be assumed documents would be delivered to his Sydney document exchange facility at Sydney on the same day as they were left (at night) at Newtown.

45 The primary judge did not permit the appellant to rely upon this argument for two reasons. The first was that the respondent had been denied an opportunity to lead evidence showing that in the ordinary course of business the documents would have been delivered to the Sydney document exchange later on the evening of 16 November 2005. The second was that the argument would not impugn the service of the bankruptcy notice that his Honour found took place when it was left on 16 November 2005 at the appellant’s business address. His Honour made no finding, however, that delivery at Sydney had been, or should be taken to have been, effected on 16 November 2005. It was not necessary that he do so. Because I have concluded that service at the appellant’s business address on 16 November 2005 was not proved it will be necessary to consider whether (or when) delivery at the Sydney document exchange was proved, if the appellant is permitted to rely on this point.

46 I think the appellant is entitled to argue the issue that the date of service at Sydney was not proved. Regulation 16.01(2) permits proof of a different date of delivery (or perhaps non-delivery) although it does not permit reliance simply on alleged non-receipt (Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321; (2004) 141 FCR 107 at [16] and [25]). However, before the onus shifts to the appellant to prove a different time of delivery (or non-delivery) it must first be established what would happen in the due course of business practice. Although it is true, as the primary judge said, that the respondent had no chance to deal further with this matter in response to the appellant’s written arguments, this was in my view an issue where the evidentiary onus always lay on the respondent and was not discharged.

47 The facts of the present case, as they were clearly known to the respondent, themselves throw up the issue for consideration. The appellant’s document exchange facility was at Sydney. Delivery was made to Newtown. That delivery occurred at night. Further transport and delivery of the documents was necessary before they could be ‘left ... at a document exchange where [the appellant] maintains a document exchange facility’. In my view it cannot be assumed delivery would be carried out before midnight. There was certainly no evidence that it would. As I indicated earlier, the primary judge made no finding that delivery at the appellant’s document exchange address at Sydney had been effected, or should be presumed, on 16 November 2005.

48 Mr Cotsis’ evidence that delivery by him was to Newtown and at night was elicited in cross-examination before the evidentiary case for the respondent to the appeal had closed. Mr Cotsis was not re-examined. I think the appellant is entitled to point to the gap in the respondent’s evidentiary case revealed by this cross-examination.

49 The creditor’s petition alleged that the act of bankruptcy committed by the appellant was his failure ‘to comply on or before 7 December 2005 with the requirements of a bankruptcy notice served on him on 16 November 2005’.

50 Because proof of delivery of the bankruptcy notice to Newtown on 16 November 2005 was not proof that it was delivered on that day to the appellant’s document exchange facility it could not sustain a finding of an act of bankruptcy on 7 December 2005 – i.e. 21 days later.

51 Next, it must be asked what the consequence is, for the present appeal at least, of this deficiency in proof of the time at which delivery was taken to be effected in accordance with reg 16.01.(2). One question to be answered is whether the Court lacked jurisdiction to make a sequestration order or alternatively might have declined to do so in the exercise of its discretion. If the latter, should the discretion have been exercised against, or in favour of, the appellant?

52 No submission was made by the appellant as to the legal consequence of a mistaken allegation in the creditor’s petition that the relevant act of bankruptcy had occurred on 7 December 2005, whereas it might have in fact occurred, for example, on 8 December 2005 or shortly thereafter. He appeared to think it a sufficient answer to the creditor’s petition that the date of the alleged act of bankruptcy was misstated. In my view such a circumstance would not, of itself, deny the Court jurisdiction to make a sequestration order.

53 Section 52 of the Bankruptcy Act provides (relevantly for present purposes):

‘52(1) At the hearing of a creditor’s petition, the Court shall require proof of:

(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b) service of the petition; and
(c) the fact that the debt or debts on which the petitioning creditor relies is or are still owing:

and, if it is satisfied with the proof of those matters, may make a sequestration order against the estate of the debtor.

(1A) ...

(2) If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:

(a) that he or she is able to pay his or her debts; or
(b) that for other sufficient cause a sequestration order ought not to be made;

it may dismiss the petition.’

54 The power of dismissal in s 52(2) has been held to be permissive, or facultative, and not mandatory (see Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372 at 377).

55 Section 33(1)(b) of the Bankruptcy Act permits the Court to ‘allow the amendment of any written process, proceeding or notice under this Act’. This power was clearly available to the primary judge in appropriate circumstances (MacDonald v Official Trustee in Bankruptcy [2001] FCA 140; (2001) 107 FCR 72 at [25] (MacDonald). It is well established that a petitioning creditor may amend a petition to correctly allege a matter required by the Bankruptcy Act whether before or after the making of a sequestration order (Re Florance; Ex parte Turimetta Properties Pty Ltd (No 2) [1980] FCA 5; (1980) 39 FLR 400 at 402; Re Finn; Ex parte Finn v Amoco Australia Ltd [1982] FCA 49; (1981) 58 FLR 54 at 60; MacDonald [2001] FCA 140; 107 FCR 72 at [27]).

56 A relevant consideration for the court, if a sequestration order has already been made, is the case which would have been disclosed ‘had all the true facts been before the Court on the making of the order’ (Re Cook (1946) 13 ABC 245 at 259; Re Williams (1968) 13 FLR 10 at 23; Re Ditfort; Ex parte Deputy Commissioner of Taxation [1988] FCA 490; (1988) 19 FCR 347 at 350).

57 It was accepted by the appellant that he was indebted to the respondent in the sum alleged in the creditor’s petition and that he had not paid any part of that debt by the time of the hearing. If an act of bankruptcy was extant at the time of filing the creditor’s petition and at the time of hearing before the primary judge the Court would not lack jurisdiction to deal with the matter (see Re Hanby; Ex parte Flemington Central Spares Pty Ltd (1967) 10 FLR 378 at 381; Re Vella; Ex parte Seymour [1983] FCA 115; (1983) 67 FLR 287 at 288-289). It has been authoritatively determined that a creditor’s petition may be amended to correctly identify the date of an act of bankruptcy (MacDonald [2001] FCA 140; 107 FCR 72 at [36]; see also Jensen v Queensland Law Society Inc [2006] FCA 1206; (2006) 154 FCR 525 at [29] to [35]).

58 However, those considerations do not arise unless first it is established that service of the bankruptcy notice was proved (or is taken to have been effected) during the extended period for its service. This is an evidentiary question. It may be established in any of the conventional ways: proof by affidavit or oral evidence, presumption, admission or judicial notice.

59 The affidavit and oral evidence was insufficient. The presumption erected by reg 16.01(2) itself requires an evidentiary foundation which was absent. What then of admission or judicial notice?

60 No admission of service or receipt was made by the appellant. He denied receipt of the bankruptcy petition before May 2006 or any knowledge that service had been attempted in the ways described by Mr Cotsis. The appellant swore two affidavits, which were read before the primary judge, and gave oral evidence under cross-examination.

61 In an affidavit sworn on 26 May 2006 he said:

‘1. I am the Applicant herein and the Respondent in relation to a Creditor’s Petition filed on 19 April 2006.

2. I received a copy of the said Petition by facsimile transmission late on 3^rd May 2006.

3. On 5 May 2006 I attended the Registry of the Federal Court and searched file No. SD 735 of 2006.

4. There was no document on the file except for a copy of the said Petition.

5. On 19 May 2006 I attended the offices of the Insolvency & Trustee Services Australia (ITSA) & spoke to Mr Mark Findlay of that office. I was provided with a copy of a Bankruptcy Notice apparently issued on 30 March 2005; that is more than eight (8) months prior to the alleged date of service [16 November 2005] mentioned in paragraph 5 of the Creditor’s Petition.’

62 In a further affidavit sworn on 28 June 2006, responding to an affidavit of Mr Cotsis (where, in paragraph 4 as I set out earlier, Mr Cotsis’ referred to serving both the bankruptcy notice and extension to bankruptcy notice) the appellant said:

‘I did not become aware of any of the documents mentioned in paragraph 4 of the said affidavit until after 3 May, 2006, some time after Mr. Cotsis had forwarded to me by facsimile transmission a copy of the Creditor’s Petition.’

63 In cross-examination of the appellant the following passage appears:

‘Now Mr de Robillard, finally, the fact is that you did receive the bankruptcy notice and the extension of bankruptcy notice by virtue or through the facility of your document exchange in November 2005, isn’t it?---I’ve never seen that copy of the bankruptcy notice until I went to the trustee and got a copy there.

And it’s the fact that you received those documents, upon them being delivered to the office, to the receptionist that was working at the office in November 2005, isn’t it?---Well that’s false.’

64 No finding was made by the primary judge that the appellant’s evidence was not to be believed. Having regard to other findings made by his Honour it was not necessary to either accept or reject it. I can see nothing in the material which contradicts the appellant’s assertions. He did concede in cross-examination that he was aware, around 19 April 2005, that ‘a bankruptcy notice would have been issued’ but on Mr Cotsis’ evidence the bankruptcy notice had not been served before 16 November 2005, by which time an extension had been necessary, and it is not possible to transpose the appellant’s earlier awareness into a concession on the question of service.

65 Nor does there appear to be any recognized category of judicial notice which could be employed in the present circumstances.

66 Despite the appellant’s uncontradicted denials, and even though when documents would be delivered in the ordinary course of business is a fact to be proved like any other, the mind naturally rebels against any suggestion that the Court could not be satisfied the documents were transferred from Newtown to Sydney some time between 16 November 2005 and 28 March 2006 (21 days before the creditor’s petition was presented). If this was the fact then the appellant should be taken to have failed to comply with the bankruptcy notice even though service on 16 November 2005 was not proved. However, notwithstanding an instinctive inclination to accept that delivery occurred at Sydney shortly after delivery at Newtown there are, in my view, five reasons at least why I should not yield to it.

67 First, it is appropriate in principle to require strict proof. Before the introduction of reg 16.01 bankruptcy notices were required to be served personally unless an order for substituted service was made. The requirements for service were strictly enforced (Re Ditfort; Ex parte Deputy Commissioner of Taxation (NSW) [1988] FCA 490; (1988) 19 FCR 347 per Gummow J at 358). For example, in Clyne v Deputy Commissioner of Taxation (No. 4) (1982) 42 ALR 703, Lockhart J set aside a bankruptcy notice served by post because, although by order of the Court service was deemed effective 14 days after posting and compliance was required 28 days after due service, the alleged debtor could not know when posting had in fact occurred and therefore could not reliably calculate the time for compliance. Although the introduction of reg 16.01 has removed the need for personal or substituted service, a strict approach to satisfaction of the elements of service remains appropriate.

68 Secondly, although reg 16.01(2) casts upon the appellant the burden of displacing a presumption as to time of service, as I earlier pointed out that onus does not arise until, first, proof of delivery in the due course of business practice is available. If there is no proof of that fact then proof of the chain of delivery simply breaks down inconclusively.

69 Thirdly, no admission of service or of receipt was made by the appellant which might constitute evidence of failure to comply with the bankruptcy notice after actual or presumed service of it.

70 Fourthly, there is no category of imputed judicial notice available to supply the missing element, no matter how straightforward or reasonable it might appear to be.

71 The final reason is that I have come to the view that the appellant is entitled to succeed on this first issue on another ground which makes it unnecessary to resolve the dilemma.

72 As will already be apparent I think it should be concluded that the creditor failed at the hearing to prove the elements required by s 52 of the Bankruptcy Act by failing, on the evidence, to prove the specific act of bankruptcy alleged in the creditor’s petition. Despite the power of the Court to permit an amendment of a creditor’s petition in appropriate circumstances no such amendment was sought in the present case. It is not necessary therefore to decide whether an act of bankruptcy was committed, after 7 December, 2005, as a consequence of service of the bankruptcy notice after 16 November 2005 rather than on that day. The petitioning creditor did not acknowledge or deal with the difficulty which arose from the gaps in its case. In those circumstances the creditor’s petition, in the form pressed before the primary judge, invited rejection under s 52(2) of the Bankruptcy Act. I conclude that it would have been open to, and appropriate for, his Honour to find in favour of the appellant for that reason.

Standard of Proof

73 In the submissions on appeal some attempt was made (as it was before the primary judge) to impugn Mr Cotsis’ evidence as a sufficient foundation for his Honour’s findings that service had been effected. The argument amounted to a claim that Mr Cotsis was evasive and an unreliable witness. This line of argument should be rejected. Although I have concluded that the evidence was insufficient to prove service of the bankruptcy notice that is not because such evidence as Mr Cotsis gave should not be accepted. There is no reason to go behind his Honour’s finding:

‘The Debtor cross-examined Mr Cotsis at some length. Ultimately, I did not find the cross-examination or the submissions based on it persuasive. Mr Cotsis was plainly honest and straightforward in his evidence, and had good recall.’

Personal Service of Creditor’s Petition

74 At the outset of proceedings before the primary judge the appellant conceded service of the creditor’s petition. The following exchange occurred:

‘MR DE ROBILLARD: Yes, your Honour, but in any event there is no issue, your Honour, as to the service of the creditor’s petition. The only issue is in relation to the bankruptcy notice and the validity thereof as affidavit of service.

HIS HONOUR: All right, so it is common ground that the petition was served on 3 May.

MR DE ROBILLARD: Yes, your Honour.’

75 During an overnight adjournment the appellant became aware of the judgment of Emmett J in Sogelease Australia Ltd v Griffin [2003] FCA 453; (2003) 128 FCR 399 (‘Sogelease’). Relying on Sogelease the appellant submitted that, contrary to his concession the previous day, effective service of the creditor’s petition had not occurred.

76 In Sogelease Emmett J held that reg. 16.01 did not apply to bankruptcy petitions (including a creditor’s petition) because they were not documents required or permitted by the Bankruptcy Act to be given or sent to or served on a person. Rather, his Honour found at [36]:

‘There is no requirement of the Act that a petition be served, in the sense of imposing an obligation upon a creditor. A creditor is free to determine whether it will present a petition to the Court and is also free, after presentation of a petition, to decide whether or not to serve the petition on the debtor. Of course, a sequestration order cannot be made until those events occur but in no sense is there any requirement that they occur.

To permit an act is to allow the doing or occurrence of the act or to give leave or opportunity for the act. The Act does not permit the service of a petition in any such sense. Insofar as the Act does not prohibit the service of a petition or specify the manner in which a petition must be served, it "permits" a petition to be served in some sense. In that sense, however, the Act also permits any other act that might be committed by any creditor or any other person in any circumstances. I do not consider that the Act, in any relevant sense, permits a petition to be served on a debtor.’
(emphasis in original)

77 Emmett J found that, as reg. 16.01 did not apply, and as a bankruptcy petition is an originating process, a creditor’s petition is required to be served in accordance with Order 7 rule 1 of the Federal Court Rules. As a result, personal service is required (subject to the other provisions of O 7).

78 Since Sogelease the Bankruptcy Rules have come into operation. The proceedings before the primary judge were proceedings to which the Bankruptcy Rules applied. Rule 1.03(2) of the Bankruptcy Rules provides:

‘The other rules of the Court apply, so far as they are not inconsistent with these Rules, to a proceeding to which the Bankruptcy Act applies.’

79 The primary judge found, and I respectfully agree, that the analysis in Sogelease of reg 16.01 remains relevant and applicable. There is no inconsistency between O 7 of the Federal Court Rules and the Bankruptcy Rules in this respect. As a result O 7 r 1 required personal service of the creditor’s petition (subject to the other provisions of O 7). Personal service did not occur. Instead, Mr Cotsis served the creditor’s petition by DX delivery, facsimile and electronic mail. In another affidavit sworn and filed on 14 June 2006 Mr Cotsis deposed:

‘4. On 3 May 2006, I served Christian Roger De Robillard with the following document: Creditors Petition NSD 735/2006. Annexed hereto and marked "A" is a copy of the Creditors Petition NSD 735/2006.

5. I served the document by sending it to the Respondent’s document exchange number at DX 1091 Sydney.

6. On 3 May 2006, I also served the document by sending it to the Respondent by facsimile and by sending the document by electronic mail. Annexed hereto and marked "B" is a copy of the facsimile record, electronic mail and mail book register.’

80 It was conceded by the respondent that Mr Cotsis had not served, or attempted to serve, the creditor’s petition personally.

81 Nevertheless that, as the primary judge found, did not dispose of the matter in the appellant’s favour. Order 7 rule 1 provides:

‘(1) Subject to the provisions of this Order, originating process shall be served personally on each respondent.

(2) The copy for service shall be signed and sealed as mentioned in Order 4, rule 7.

(3) If a respondent to an originating process:
(a) enters an appearance; or
(b) files a defence; or
(c) appears before the Court in response to the process;

the originating process is taken to have been served on the respondent personally when the earliest of those events occurred, unless personal service on an earlier day is established.’

82 It may be seen that if any of (a), (b) or (c) of O 7 r 1(3) applies then personal service is taken to have been effected. The appellant sought to rely upon the fact that he had neglected, as required by the Bankruptcy Rules, to file a formal appearance in the proceedings. This argument does not assist him. He filed a Notice of Opposition to the creditor’s petition, supported by affidavit, on 26 May 2006 and he appeared personally in the proceedings. The latter, at the least, is sufficient for the operation of O 7 r 1(3).

83 Some suggestion was made by the appellant that his appearance became conditional in nature and could not be used against him. Although there is provision in the Federal Court Rules in O 9 permitting a conditional appearance, that reservation is not available under the Bankruptcy Rules. The requirements which apply in relation to creditor’s petitions are set out in Part 2 of the Bankruptcy Rules. In particular R 2.06(2) provides:

‘A person who intends to oppose an application or petition must, at least 3 days before the date fixed for the hearing of the application or petition or, with the leave of the Court, at the hearing:

(a) file a notice of appearance in accordance with Form 4; and
(b) file a notice in accordance with Form 5 stating the grounds of opposition; and
(c) file an affidavit in support of the grounds of opposition; and
(d) serve the notices and supporting affidavit on the applicant.’

84 In my view this is one area in which there is a relevant inconsistency between the Bankruptcy Rules and the Federal Court Rules, with the result that to the extent of the inconsistency the Federal Court Rules do not apply. There is, accordingly, no facility for a conditional appearance.

85 In any event, at no time did the appellant apply to withdraw his unconditional appearance or have it regarded by the Court as converted to a conditional appearance (see Glassford, Cook & Co Pty Ltd v William Higson & Co (1899) 25 VLR 177).

86 In light of his appearance at, and participation in, the hearing before the primary judge there is no substance in the contention that the appellant was not properly served with the creditor’s petition. There can be no doubt that, under O 7 r 1, the creditor’s petition is taken to have been served on him personally.

Creditor’s Petition Defective as ‘Presented’

87 A further proposition advanced by the appellant is to the effect that at the date of presentation of the creditor’s petition to the Court (19 April 2006) there was no accompanying affidavit to prove service of the bankruptcy notice and none was served as required before the date fixed for hearing that petition. It was suggested these were incurable defects with the result that the jurisdiction of the Court was not engaged. Rule 4.02 relevantly provides, with respect to a creditor’s petition:

‘4.02(3) The petition must be accompanied by:
(c) if appropriate, the affidavits required by rule 4.04.’

88 Rule 4.04 relevantly provides:

‘(1) If a creditor’s petition is founded on an act of bankruptcy mentioned in paragraph 40(1)(g) of the Bankruptcy Act, the petition must also be accompanied by:

(b) an affidavit of service of the relevant bankruptcy notice.’

89 Rule 4.05 requires the affidavit referred to in the rules immediately above (and other documents) to be served, with the creditor’s petition, at least 5 days before the date fixed for hearing the creditor’s petition.

90 The appellant’s propositions are: first, there was no affidavit of service of the bankruptcy notice accompanying the creditor’s petition when presented, and; secondly, there was no affidavit of service of the bankruptcy notice served 5 days before the day fixed for hearing (initially 31 May 2006) because Mr Cotsis’ affidavit sworn 4 May 2006 (filed 25 May 2006) referred to in paragraph 15 above, (which is the only affidavit of service served before the 5 day period commenced) does not refer to the bankruptcy notice but only to the extension to bankruptcy notice.

91 These arguments were not raised by the Amended Grounds of Notice of Opposition permitted by the primary judge. They were included in written submissions filed after the oral hearing. The primary judge ruled that he would not permit reliance upon them.

92 The appellant’s contentions appear to be factually correct. There is no evidence of an affidavit of service of the bankruptcy notice accompanying the creditor’s petition when presented on 19 April 2006. Furthermore, Mr Cotsis’ affidavit of 4 May 2006 does not refer to the bankruptcy notice but only to the extension of bankruptcy notice. However, in my view the matters advanced by the appellant do not go to the Court’s jurisdiction and do not provide any basis upon which to decide the appeal in his favour.

93 As the primary judge pointed out, the jurisdiction of the Court to make the sequestration order is granted by s 43 of the Bankruptcy Act. The Court must be satisfied that an act of bankruptcy has been committed in order to make an order of sequestration. Furthermore, s 52 of the Bankruptcy Act requires proof of certain matters ‘at the hearing of a creditor’s petition’, including that ‘the debt or debts on which the petitioning creditor relies is or are still owing’.

94 When the matter came before the primary judge proof of the matters required by s 52 of the Act was an evidentiary issue. The jurisdiction of the Court is not fixed in time in the way suggested, nor is it to be measured simply by the adequacy of one party’s initial documents (see Daly v Watson (1994) 50 FCR 544 at 552-3; Bryant v Commonwealth Bank of Australia (unreported 24 November 1995 per Beaumont, Whitlam and Moore JJ at pp 12-13)). As was said in MacDonald [2001] FCA 140; 107 FCR 72 at [31] in relation to a similar argument:

‘A sequestration order can still be made, at the discretion of the Court, if the necessary evidence is before the Court at that stage even though no affidavit verifying the petition was filed with it.’

95 The contention that proceedings commenced by filing the creditor’s petition were incurably flawed and beyond jurisdiction because of non-compliance with r 4.02 of the Bankruptcy Rules should be rejected.

Further Challenge to Bankruptcy Notice

96 In his Notice of Appeal the appellant sought leave to raise an issue which was not argued or identified before the primary judge, namely that the bankruptcy notice was invalid because it did not properly identify the person applying for it to be issued, as required by law.

97 The relevant ground of appeal (Ground 16) reads as follows:

‘Leave will be sought to raise one issue which was not raised at the hearing: invalidity of the Bankruptcy Notice because the person signing the Notice was not properly identified according to law.

Particulars

(a) The firm was identified not the person;
(b) the signature was indecipherable;

(c) National Australia Bank Limited v Westbrook (2000) FCA 246 at paragraphs 6-14.’

98 The respondent to the appeal elected not to appear at the hearing of the appeal but submitted to any order of the Court except as to costs. As a result there was no-one to be heard in opposition to the application for leave to argue this point.

99 Although it is, generally speaking, undesirable that appeals should deal with matters not argued in the court below, and there are strict limitations upon the circumstances in which that might be permitted to occur (see Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1 at 7-8), in the present case no prejudice can be claimed by the respondent, who has chosen not to put any argument to us to sustain his Honour’s judgment, and leave should therefore be granted.

100 Section 41 of the Bankruptcy Act requires a bankruptcy notice to be obtained on the application of a creditor. The notice must be in accordance with the form prescribed by the Bankruptcy Regulations (s 41(2)). The Bankruptcy Regulations require that in order for the issue of a bankruptcy notice ‘a person’ must lodge specified documents (reg 4.01(1)). A bankruptcy notice must be in the form set out in Form 1 (reg 4.02). Form 1 includes the following:

‘The person who applied for this notice to be issued is:
(name).....................................................................................
who confirms by the following signature that he or she is the creditor/the creditor’s authorised agent*
(*delete as appropriate)
...........................................................................................................................
(signature)
and whose address for service is:
...........................................................................................................................................................................................................................................................................................................................
(address)
Telephone and fax numbers (including STD code): ....................................
..........................................................................................................DX number (if applicable): ..................................................................’

101 In the bankruptcy notice relied upon in the present case the ‘person’ who applied for the notice to be issued was identified as ‘William Cotsis & Associates’. The signature below is, as the appellant points out to us, indecipherable although it certainly appears to be the same signature with which Mr Cotsis subscribed to affidavits in the proceedings both as deponent and as witness.

102 The appellant’s argument is that ‘William Cotsis & Associates’ is not a ‘person’ for the purpose of the bankruptcy notice. The first difficulty this argument encounters is the Bankruptcy Act itself. A bankruptcy notice is a proceeding under the Bankruptcy Act (Adams v Lambert [2006] HCA 10; (2006) 80 ALJR 679 at [17]). Section 307 of the Bankruptcy Act provides:

‘Any person or persons carrying on business under a firm name may take proceedings or be proceeded against under this Act in the firm name, but in that case the Court may, on the application of an interested person, order the name of the person or the names of the persons so carrying on business to be disclosed and verified in such manner as the Court directs.’
(emphasis added)

Plainly, in my view, a firm may apply, in its own name, for a bankruptcy notice.

103 The argument is also directly contrary to authority. As will have been noted the appellant’s Notice of Appeal drew attention to a judgment of Gray J in National Australia Bank Ltd v Westbrook, in the matter of Westbrook [2000] FCA 246 (‘Westbrook’). Gray J applied observations and conclusions of Wilcox J in McWilliam v Jackson [2000] FCA 175; (2000) 96 FCR 561. I shall discuss those two cases in a moment. However, attention should first be drawn to s 306 of the Bankruptcy Act. Section 306(1) provides:

‘306(1) Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court.’

104 In Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34; (1988) 165 CLR 71 it was held, notwithstanding s 306 of the Bankruptcy Act (at 79):

‘A bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act ...’

105 In McWilliam v Jackson [2000] FCA 175; (2000) 96 FCR 561 a solicitor signed a bankruptcy notice in the place of the principal of the firm by whom she was employed. Wilcox J ruled for this (and another) reason that the bankruptcy notice was not valid. He said (at [28]):

‘I do not think it can properly be said that certification other than by the authorised person constitutes a substantial compliance with the requirement of Form 1 for execution of the notice by the creditor or a person who, by his or her signature, "confirms ... that he or she is the creditor’s authorized agent".   Nor do I think the omission of proper certification is a "formal defect" or "irregularity" within the meaning of s 306 of the Act.  The receipt by a debtor of a bankruptcy notice is a serious matter; non-compliance with the requirements of the notice constitutes an act of bankruptcy and exposes the person to the possibility of being made a bankrupt.  Certification is required in order to give an assurance to the addressee of the notice that it comes with the authority of the creditor and its demand is the demand of the creditor himself or herself.  For that reason, the notice is required to be signed personally by either the creditor or the person who is disclosed as the creditor’s agent.  To use the words of the Crowl majority, this is a "requirement made essential by the Act".’

106 In Westbrook, whose facts are close to the present one, Gray J considered the case of an employed solicitor who signed a notice stating that the person who applied for the notice was the solicitor’s firm. He said (at [2000] FCA 246 [10]-[11]):

‘The facts of this case may be even worse for a petitioning creditor than were the facts of McWilliam.  In that case, the name given as the name of the person who applied for the notice to be issued was the name of a natural person.  In the present case, the name of the person who applied for the notice to be issued is given as the name of a firm.  The use of the word "person" in the prescribed form raises issues of construction.

Section 22(1)(a) of the Acts Interpretation Act 1901 (Cth) provides that, unless the contrary intention appears, expressions used to denote persons generally, such as the word "person", include a body politic or corporate as well as a natural person.  Section 23(b) of the Acts Interpretation Act 1901 (Cth) provides that, unless the contrary intention appears, words in the singular number include the plural.  There are powerful arguments for concluding that the prescribed form of a bankruptcy notice displays a contrary intention for the purposes of both these provisions.  The use of the words "he or she is" in the prescribed form suggests that the applicant for the issue of a bankruptcy notice must be one person and that person must be a natural person.  If the purpose of the signature of a bankruptcy notice is that characterised by Wilcox J in McWilliam, there is every reason why the recipient of the notice should not be left wondering which of a number of partners of a firm is the applicant for the notice or which officer or employee of a corporation had the authority of the creditor.  These issues were not argued fully and I express no concluded view of them.’

107 He concluded (at [16]-[17]):

‘I take the view that I should follow McWilliam.  Even if I were not convinced of its correctness, the need for certainty in the administration of the Bankruptcy Act 1966 (Cth) would dictate that I should follow it, unless persuaded that it is fundamentally wrong.  I am far from being persuaded that it is wrong at all.

For the foregoing reasons, I am of the view that the bankruptcy notice served on the respondents is a nullity.’

108 Our attention was not drawn by the appellant to an earlier judgment of Moore J in Meekin v Commonwealth Bank of Australia [1999] FCA 682 (‘Meekin’). Neither Wilcox J or Gray J referred to Meekin.

109 In Meekin Moore J took a different view (at [26]-[27]). There a solicitor, identified by name, was the applicant for the bankruptcy notice but it was signed for him by an employed solicitor who added in handwriting after the signature ‘by his employed solicitor’. Moore J held that at general law an agent (the solicitor) can delegate the signing of documents in his name. His Honour said (at [27]):

‘A can affix his or her own mark and indicate that is being done on behalf of B and such a mark can be treated as the signature of B: see McRae v Coulton (1986) 7 NSWLR 644 at 651, 663 and Muirhead v Commonwealth Bank of Australia (1996) 139 ALR 561. In the present case it is plain that de Jersey was signing on behalf of Bartrop. It is equally clear that the application was being made by Bartrop as the Bank's solicitor and agent. The signature of de Jersey was, in my opinion, a sufficient signature of the agent for the purpose of both securing the issue of the notice and identifying the applicant who had sought its issue and the capacity in which it was sought.’

110 Our attention was also not drawn to a judgment of a Full Court in Trustees of the Franciscan Missionaries of Mary v Weir [2000] FCA 574; (2000) 98 FCR 447 ("Weir’). In Weir the Full Court approved Meekin and disapproved McWilliam v Jackson and Westbrook.

111 In Weir an employed solicitor signed a bankruptcy notice, with her own signature, on behalf of her principal, adding the words ‘per employ’. The signature would not have been decipherable to someone not acquainted with her handwriting, unless perhaps the names of employed solicitors in the firm were known. The Full Court explicitly approved the approach taken by Moore J in Meekin, which was supported by much prior authority, that it is permissible for an authorised agent of the person applying for a bankruptcy notice to sign in his stead. This conclusion necessitated disapproval of the approach taken by Wilcox J in McWilliam v Jackson.

112 The facts before Gray J in Westbrook were, as I have already said, close to the present case in that the bankruptcy notice was applied for by a firm of solicitors. Gray J, in the passage I extracted earlier, observed this was impermissible and, in any event, followed McWilliam v Jackson. The Full Court set out the passage from [10] – [11] of Westbrook (extracted above) and expressly disapproved it. It said:

‘With respect, it is not possible to accept the reasoning in the passage we have quoted.  Neither the use of the singular number nor the use of the masculine and feminine genders can require the form to be read as excluding, on the one hand, several applicants, and on the other, an inanimate applicant, such as an ordinary corporation. Apart from obvious questions of convenience, the language of the form – "he or she is the creditor/the creditor’s authorised agent" – requires the rejection of his Honour’s tentative conclusion.  For the summary expression "he or she" must be accommodated to the case of joint creditors and to the case of a corporate creditor, just as much as to the case of an authorised agent.  The draftsman plainly did not intend corporations and joint creditors to be excluded; but neither was it intended that differences of number and gender should be ignored by the multiplication, in the issue of bankruptcy notices, of psittacine recapitulations of the very words of the form, whether appropriate or not.  Once both of these points are recognized, the words "he or she is" must be seen to be subject to amendment as required, and cannot have a controlling operation on the construction of the form:  cf. Downey v Pryor [1960] HCA 49; (1960) 103 CLR 353 at 361-362, per Kitto J.
In the final analysis, the fundamental question is simply whether the prescribed form requires the personal signature of the applicant for the issue of the bankruptcy notice.  In our opinion, the language of the form should not be construed as having that confining effect.  It is unnecessary to consider how a corporate applicant, whether as creditor or as authorised agent, could have applied for the issue of a bankruptcy notice had we held otherwise.  It is also unnecessary to consider whether s 41(2) of the Act, which provides that "[t]he notice must be in accordance with the form prescribed by the regulations", would authorise the prescription, not merely of a form of bankruptcy notice, but of a regulation restricting the mode of application for its issue, an application authorised in perfectly general terms by the statute itself:  s 41(1).’

113 The conclusions in Weir spell the end of Ground 16 in the Notice of Appeal and any reliance on Westbrook.

114 In Chng v Shome [2000] FCA 753 a bankruptcy notice identified, as the person applying for the notice to be issued, both a firm and an employed solicitor. The employed solicitor wrote the name of the firm as a signature (not her own signature). Ryan J applied Weir and found the bankruptcy notice valid. He also referred to s 308 of the Bankruptcy Act which provides:

‘Subject to this Act, for the purposes of this Act:

(a) a corporation may act by any person duly authorized in that behalf by the corporation;
(b) a partnership may act by any of its members or a duly authorized agent;
(c) a person of unsound mind may act by a person authorized or empowered by law to act for him or her; and
(d) any person may act by his or her agent duly authorized in that behalf.’
(emphasis added)

115 It is clear from the authorities I have discussed that the firm was able to apply for the bankruptcy notice to be issued through the agency of a personal signatory. Section 308(b), in the present case, also authorized Mr Cotsis to act in the name of his firm.

116 All these considerations strike directly at the proposition advanced on the appeal that the bankruptcy notice in the present case was a nullity.

117 The Full Court in Weir also stated a firm view that s 306 of the Bankruptcy Act would be available to deal with the defect suggested in that case. It pointed out (at [13]-[14]) that, since the decision of the High Court in Kleinwort Benson Australia Ltd v Crowl, s 41(2) of the Bankruptcy Act had been amended to require compliance with a prescribed form rather than by stating ‘the substance of what the bankruptcy notice must contain’. The Full Court said (at [16]):

‘In our opinion, as a matter of construction,  the very fact that the new s 41(2) is expressed in terms of form aligns it directly and naturally with s 306.  The new s 41(2) does not amend s 306; it is inserted into an Act that already contains that provision, and it is intended to operate accordingly in the statutory setting into which it is received.  The form must be complied with, but in the context of an Act containing s 306, a "formal defect" by the express terms of the statute does not attract the invalidating consequences once associated with a mandatory provision:  Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28; (1998) 194 CLR 355.’

and concluded (at [17]):

‘If we had held the mode of signature to be defective, we should have gone on to hold that s 306 saved the bankruptcy notice from invalidation.’

118 The primary judge in the present case also said (although by reference to the appellant’s contention that he had not been personally served with the creditor’s petition):

‘If I had thought it necessary, I would have made a formal order under s 306 of the Act or O 1 r 8 of the FCRs: cf Re Florance; Ex parte Turimetta Properties Pty Ltd [1979] FCA 58; (1979) 28 ALR 403.’

119 That facility would apply equally to a suggested defect in the bankruptcy notice although, as I have endeavoured to show, authority does not permit the contention advanced in Ground 16 of the Notice of Appeal to be countenanced.

120 In Adams v Lambert [2006] HCA 10; (2006) 80 ALJR 679 the High Court pointed out (at [18]):

‘In its application to a bankruptcy notice, s 306 assumes the possibility of some failure to comply with a statutory requirement; that is, some defect or irregularity. In the present case, if there had been no failure to comply with a requirement of the Act and Regulations, there would be no issue as to the effect of s 306. In the event of such a failure, it must be asked whether the defect or irregularity is a formal defect or irregularity within the purview of s 306. If it is, then it becomes necessary to consider whether substantial injustice has been caused by the defect or irregularity, and whether the injustice cannot be remedied by an order of the court. The questions whether the defect or irregularity is a formal defect or irregularity, and whether substantial injustice has been caused and cannot be remedied, are separate and distinct, the latter question arising only if the former is answered in the affirmative.’

121 Had it been necessary, in response to a demonstrated irregularity in the bankruptcy notice, to consider whether any substantial injustice had been caused to the appellant, the answer would be, plainly, that it had not.

Preliminary Conclusions

122 It will be apparent from what I have said that I would reject most of the arguments relied upon by the appellant in the appeal. However, in my view the appellant has succeeded in his contention that the creditor failed to prove at the hearing that he had committed the act of bankruptcy alleged. No amendment was sought by the creditor to remedy that defect. The next question is whether the appeal should therefore be upheld and the order for sequestration of the appellant’s estate made on 11 August 2006 be set aside. The creditor’s petition in that event should be dismissed pursuant to s 52(2) of the Bankruptcy Act.

Further Matters for Attention

123 There are two further issues that merit discussion. The first concerns the conduct of the appellant and the second the nature of the power exercised by the Court in an appeal against a sequestration order.

124 On 1 September 2006 a judge of the Court, by consent in chambers, granted a stay of the orders made by the primary judge. Evidently the judge’s attention was not drawn by any of the parties to s 37 of the Act. Section 37(2) provides:

‘(2) The Court does not have power to rescind or discharge, or to suspend the operation of:

(a) a sequestration order; or
(b) an order for the administration of the estate of a deceased person under Part XI.’

125 In ordinary circumstances the Court may not grant a stay of proceedings on a sequestration order for longer than 21 days (Bankruptcy Act, s 52(3)). However, under O 52 r 17 of the Federal Court Rules there is power to stay proceedings on a sequestration order pending the hearing of an appeal (Coleman v Lazy Days Investments Pty Ltd [1994] FCA 1442; (1994) 55 FCR 297).

126 On 9 February 2007 Branson J vacated the stay order earlier made but granted the appellant a stay of all proceedings under the sequestration order made by the primary judge on condition that he ‘file a statement of his affairs as required by s 54(1) of the Bankruptcy Act 1966 (Cth) and the Bankruptcy Regulations 1996 within 10 days of today’s date’.

127 That order was not complied with before the hearing of the appeal on 9 March 2007, one month later.

128 Section 54(1) and (3) of the Act provide:

‘(1) Where a sequestration order is made, the person against whose estate it is made shall, within 14 days from the day on which he or she is notified of the bankruptcy:

(a) make out and file in the office of the Official Receiver for the District in which the sequestration order was made a statement of his or her affairs; and
(b) furnish a copy of the statement to the trustee.

...

(3) Subsections (1) and (2) are offences of strict liability.’

129 This provision does not operate solely for the benefit of a petitioning creditor. Subject to the outcome of the appeal the appellant became bankrupt upon the making of the sequestration order by the primary judge (see definition of ‘bankruptcy’ in s 5 of the Bankruptcy Act, s 43(2) of the Bankruptcy Act and Cavanagh v Bank of New Zealand (1990) 22 FCR 124 at 128). Neither the filing of an appeal, nor a stay upon proceedings in relation to the sequestration order changed that circumstance. His failure to file a statement of affairs was a breach of s 54(1) of the Bankruptcy Act. In any event he was required to do so by the order made by Branson J on 9 February 2007. He accepted, at the hearing of the appeal, that he had not complied with her Honour’s order.

130 Shortly after the hearing of the appeal commenced the following exchange occurred between the appellant and the presiding judge:

‘MOORE J: Can I just understand one matter, the sequestration order has been made, is your estate presently being administered by a trustee?

MR DE ROBILLARD: Not, now, your Honour because there has been an order under, I think it is order 52, staying any proceedings under the order, so I understand it, and therefore I understood that the matter was awaiting today’s decision before the trustee intervenes, your Honour.

MOORE J: So you haven’t, for example, filed a statement of affairs?

MR DE ROBILLARD: Not yet, your Honour, no. I should say, your Honour, in relation to that, I was supposed to have done that, I understand, but I have just run out of time doing it. I was extremely busy doing this, preparing for this matter I was stretched to the limit and that hasn’t been done yet but I was directed to do so by Branson J when the hearing was adjourned I believe earlier at the sittings of the Full Court, your Honours.

MOORE J: So Branson J directed you to file a statement of affairs and you have not yet done so?

MR DE ROBILLARD: I haven’t done so and she had granted leave to the other side to approach the Court if there was some difficulty there and they haven’t done so.

MOORE J: Well, you haven’t done so?

MR DE ROBILLARD: I haven’t done so, your Honour, yes.

MOORE J: Well, that is, if I might say so, entirely unsatisfactory, isn’t it?

MR DE ROBILLARD: Well, it is your Honour, but –-’

131 Then, shortly after, the following is recorded:

‘MOORE J: Well, just come back to the thing we discussed a moment ago before we moved(sic) to the merits of the appeal. If Branson J ordered that you file a statement of affairs by a specified date, she probably did so on the basis that the trustee would have the benefit of that statement of affairs before this appeal was actually heard.

MR DE ROBILLARD: Well, I am not sure why - - -

MOORE J: When did you have to file the statement of affairs; by when?

MR DE ROBILLARD: It was 14 days after the last time the matter came before the Court, your Honour. So it was recently, your Honour. It probably should have been filed – well, within the last fortnight, your Honour. It came before the Court just before the date of the hearing that was set down and I think that was on 10 or 12 February.

MOORE J: Well, I wasn’t aware of this and I suspect my colleagues weren’t aware of it, but one possibility would be for us to adjourn this appeal until such time as you do that which Branson J directed you do, namely, file a statement of affairs.

MR DE ROBILLARD: Yes, your Honour, I understand that.

MOORE J: If I might say so, you can’t ignore a direction of a Judge of the Court in the fairly casual way you dealt with it about five minutes ago.

MR DE ROBILLARD: With respect, your Honour, it is not casual and that is why I did bring your Honour’s attention to it, otherwise I wouldn’t have, but obviously it wasn’t casual. The problem is, your Honour, as your Honours would appreciate, and I have put in a hell of a lot of work in preparing for this appeal. It wasn’t easy. It is something which is quite, you know, personally upsetting to me and it took me a great deal of time and effort to do what I have done in preparation of the appeal, your Honours.

In my respectful submission given the fact that as far as I was concerned solvency would not be an issue. I had to more or less give priorities to the matter and I probably was wrong in doing it but, in my respectful submission, the issue of my solvency only comes about if my grounds of appeal are not upheld by the Court.

CONTI J: Are you saying that there is no issue of insolvency?

MR DE ROBILLARD: Well, no, your Honour.

CONTI J: You have always been solvent.

MR DE ROBILLARD: I am not saying I was solvent. ...’

132 The appellant’s virtual admission of his insolvency throws the present problem into sharp relief. However, the appellant was permitted to put his arguments on the appeal, at which the respondent had chosen not to appear. The matter was raised again with him towards the conclusion of argument. The following is recorded:

‘MOORE J: Mr De Robillard, can I just on a related issue ask you this and it is something that we haven’t discuss [sic] and would need to discuss. But, there is an extant order or direction of Branson J requiring you to file a statement of affairs. Now, I’m not going to traverse our earlier discussion about it, but simply to ask you this. Would you have any submissions to make about us requiring you to file an affidavit when you do comply with Branson Js direction, deposing to the fact that firstly you have, and secondly annexing a copy of the statement of affairs?

MR DE ROBILLARD: Yes, your Honour. What I will be requesting, I know, your Honour, what I would be - - -

MOORE J: Sorry, you would oppose?

MR DE ROBILLARD: No, I would not oppose it. I would comply with that. But, with respect your Honour, what I would be seeking your Honour is simply that instead of filing a statement of affairs with ITSA that I file a statement of affairs with record - - -

MOORE J: No, no. I’m not suggesting for one moment that we would vary the direction that was made by Branson J.

MR DE ROBILLARD: All right.

MOORE J: Indeed, I think it is probably important that we not do so - - -

MR DE ROBILLARD: Okay, your Honour.

MOORE J: - - - because it is a direction that was made in the context of proceedings in this Court - - -

MR DE ROBILLARD: Yes, your Honour.

MOORE J: - - - and you have failed to comply with it.

MR DE ROBILLARD: Okay.

MOORE J: Now, I’m really canvassing with you whether we should require you to file an affidavit when you have complied with Branson Js directions. Simply deposing to the fact that you have, and also, annexing a copy of the statement of affairs. Branson J, I would rather suspect plainly had in mind that this statement of affairs would be filed before this appeal was concluded - - -

MR DE ROBILLARD: Yes, your Honour.

MOORE J: - - - in the event that, for example, a trustee would wish to intervene in the proceedings to say certain things about your circumstances, and to say certain things about what should flow from the issues you are seeking to raise in the appeal - - -

MR DE ROBILLARD: Yes, your Honour.

MOORE J: - - - that is always a possibility.

MR DE ROBILLARD: Yes, your Honour.

MOORE J: Now, just coming back to the question I’m raising with you. Do you have anything to say about us making such a direction that is requiring you to file an affidavit, (a) saying you have complied with Branson Js directions and (b) annexing a copy of your statement of affairs?

MR DE ROBILLARD: I have no objection to that, you Honour.’

133 Finally, after a short adjournment, the following occurred:

‘ADJOURNED [12.14pm]

RESUMED [12.22pm]

MOORE J: Mr De Robillard, what I propose to do on behalf of the Court is to make a direction that when you have complied with the order of Branson J concerning the filing of a statement of affairs, that you then file in this Court an affidavit deposing to the fact that you have complied with the direction or order of Branson J requiring the filing of a statement of affairs; and secondly, annexing a copy of the statement of affairs.

MR DE ROBILLARD: If the Court pleases.’

134 A substantial period of time then elapsed. After the appellant had been advised when judgment was to be delivered he filed (shortly before 4pm on the day before judgment) an affidavit purporting to comply with the directions of the Court to file an affidavit once he had complied with Branson J’s order. He annexed an unexecuted and undated document purporting to be a statement of his affairs which, he deposed, he had attempted (unsuccessfully) to file. Even accepting his affidavit at face value, he failed to meet each of the obligations to which I have referred by a substantial margin. It is impossible to resist the conclusion that he chose simply to disregard each of them.

135 The position disclosed by these circumstances would be a serious one regardless of the status of the appellant. Failure to comply with the provisions of the Act and orders of this Court can have serious consequences. In the case of the present appellant there is further cause for concern. He is a practicing barrister and an officer of this and other courts. However, the question which now arises is whether, in light of the conclusion I have reached that the appellant has made good one ground for upholding the appeal, an order should be made which would have the effect of relieving him of the obligation under s 54 of the Bankruptcy Act to file a statement of affairs.

136 The policy behind s 54 was described by Hill J in Nilant v Macchia [2000] FCA 1528; (2000) 104 FCR 238 as follows (at 245);

‘Given the penal nature of the obligation created by s 54, it is difficult to see that breach of the section, no matter how inadvertent, could be categorised as merely formal. The policy behind s 54 is clear. The obligation to file a statement of affairs in a public register is intended to make information concerning the bankrupt’s affairs available to creditors and, for that matter, members of the public. The former may inspect without payment of a fee, the latter only on payment of a fee. But it is in the interests of the public in the encouragement of morality in trading that the financial situation of a bankrupt debtor be open to inspection. Because, ordinarily, the administration of the estate and ultimate distribution of dividends from the estate, will be dependent upon the trustee having full details of the trade dealings and debts of a debtor, the statement is to be made available as well to the trustee in bankruptcy. Given the scheme of the legislation and the important role that the statement of affairs plays in it, there is considerable difficulty in seeing that Parliament would have intended that the Court, through s 306, have the ability to treat non-compliance with the statutory obligation as merely formal.’

137 In order to deal with the issue for present attention it is necessary to examine the circumstances in which a sequestration order may be set aside, the consequences of such an order and, in particular, the nature and effect of such an order made on an appeal such as the present one.

138 Section 37 of the Bankruptcy Act establishes a limitation on the power of the Court to rescind or discharge its own orders. The Court may not use the general power granted by s 37 to rescind, discharge or suspend a sequestration order. Section 37 provides:

‘37 Power of Court to rescind orders etc.

(1) Subject to subsection (2), the Court may rescind, vary or discharge an order made by it under this Act or may suspend the operation of such an order.

(2) The Court does not have power to rescind or discharge, or to suspend the operation of:
(a) a sequestration order; or
(b) an order for the administration of the estate of a deceased person under Part XI.’

139 Although the Bankruptcy Act does not refer to setting aside sequestration orders, a source of power to that effect may be found in s 153B of the Bankruptcy Act, which provides:

‘If the Court is satisfied that a sequestration order ought not to have been made ... the Court may make an order annulling the bankruptcy.’

140 The general effect of an order of annulment (subject to statutory qualifications - see s 154 of the Bankruptcy Act) is to remit a debtor to his original situation (see Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571 and Oates v Commissioner of Taxation (1990) 27 FCR 289 (‘Oates’) at 297). As a result it has been held that it is generally not possible for a debtor to make out a case for annulment if he was in fact insolvent at the time he was made bankrupt (see Re Coyle [1993] FCA 161; (1993) 42 FCR 72 at 77-78). In the present case, therefore, if notwithstanding success in the appeal a further, consequential, order of annulment is necessary, success in the appeal would not bring the appellant’s bankruptcy to an end automatically. That would remain a matter for further consideration and if he was, as appears likely, in fact insolvent when the sequestration order was made a statement of affairs filed in accordance with s 54(1) of the Bankruptcy Act would furnish relevant and important information. In addition it would probably be necessary to invite submissions from the Official Trustee in Bankruptcy.

141 The power to set aside a sequestration order on appeal, however, (as I will demonstrate shortly) does not come from, and is not limited by, the Bankruptcy Act but is contained within the general appellate powers granted by s 28 of the Federal Court of Australia Act 1976 (Cth) relevantly as follows:

‘Form of judgment on appeal
28 (1) Subject to any other Act, the Court may, in the exercise of its appellate jurisdiction:
(a) affirm, reverse or vary the judgment appealed from;

(b) give such judgment, or make such order, as, in all the circumstances, it thinks fit, or refuse to make an order;
(c) set aside the judgment appealed from, in whole or in part, and remit the proceeding to the court from which the appeal was brought for further hearing and determination, subject to such directions as the Court thinks fit.’

142 Difficult questions arise about the interaction of this power and the comprehensive regime in the Bankruptcy Act. In Simon v Vincent J O’Gorman Pty Ltd [1979] FCA 75; (1979) 41 FLR 95 the question was squarely raised whether there was power to set aside a sequestration order on appeal or whether a bankrupt was confined to an application for annulment or discharge under the Bankruptcy Act (per Lockhart J at 107). Lockhart J concluded (at 109):

‘In my opinion an appeal lies from the making of a sequestration order by the Federal Court of Bankruptcy in this case.’’

He also referred to Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212 and Re Schierholter; Ex part Geis (1978) 32 FLR 22 and said:

‘These decisions confirm the view I have reached notwithstanding that the point asserted by the respondents does not appear to have been argued in either case.’

143 Franki J referred (at 102) to the form of order made by the High Court in Wren v Mahoney and by a Full Court in Re Schierholter; Ex parte Geis. He said:

‘In all the circumstances I consider that if we decide that the sequestration order was wrongly made we should uphold the appeal in such a way as to avoid the consequences and stigma of bankruptcy attaching to the appellants and possibly affecting the rights of any other creditors.’

144 In Oates (27 FCR 289) Hill J also appeared to entertain no doubt that, apart from annulment, an independent power existed to set aside a sequestration order on appeal (see at 299, 300 and 303).

145 The issue was addressed directly by Gyles J in Rangott v Marshall [2004] FCA 961; (2004) 139 FCR 14. A Full Court on appeal had set aside a sequestration order made by his Honour. His Honour stated the issue at [6]:

‘The point for decision is whether the respondent remains a bankrupt and whether the applicant remains his trustee in bankruptcy notwithstanding the orders of the Full Court. The short point is that the bankruptcy has not been annulled. There is importance in the point as bankruptcy is a status that has significant consequences for the bankrupt and for those with whom the bankrupt deals and has dealt.’

146 His Honour dealt with the following argument (at [11]):

‘It is submitted for the applicant that bankruptcy is not something declared or ordered by the Court as such.  It is a status that arises by virtue of the statute upon the making of a sequestration order or acceptance of a petition in the case of a debtor’s petition.  The making of a sequestration order triggers the status of bankruptcy but, once triggered, the status remains until brought to an end by virtue of the provisions of the Act, namely by annulment or discharge.’

147 The countervailing argument was (at [17]):

‘If a sequestration order is set aside on appeal, it is as if it were never made and thus it is taken that there never was any valid triggering of the statutory consequence of bankruptcy.’

148 His Honour reviewed a number of authorities. He concluded (at [26] – [29]):

‘26 It has been pointed out by counsel for the respondent that the actual order in Re Schierholter (referred to by Franki J and Lockhart J in Simon v Vincent J O’Gorman Pty Ltd) was that the appeal should be allowed and the sequestration order made in respect of the estate of each of the appellants should be set aside and so was the same in substance as the orders of the Full Court in this case.  There were apparently no other consequential orders. 

27 It has been submitted for the respondent that one of the effects of the Full Court judgment was that there was no failure to comply with the bankruptcy notice and thus no act of bankruptcy, a circumstance upon which much turns in the administration of a bankrupt estate.

28 There is no decision precisely in point. The problem is real. What is the result of many months of active administration of the affairs of the respondent? He cannot be restored to his former position. By what mechanism is partial restoration to take place? Is the applicant immune from action? Is the applicant entitled to remuneration and, if so, from where?  Could those issues have been dealt with by consequential orders of the Full Court?  If so, what is the effect of no such orders having been made?

29 I am bound by Simon v Vincent J O’Gorman Pty Ltd to conclude that the appellate provisions apply to a sequestration order. That being so, they cannot be read down. It would follow from the Full Court decision that the sequestration order made on 13 August 2002 and the consequent appointment of the applicant as trustee are set aside. If full effect is given to these provisions it is as if the sequestration order had never been made and the respondent had never been a bankrupt. On that basis the applicant is no longer trustee of the estate of the respondent and was not trustee at the date this proceeding was commenced.  That conclusion appears to be consistent with the reasoning in Guss v Johnstone [2000] HCA 26; (2000) 171 ALR 598 at [56]–[63] that concerned a different, but not dissimilar, issue although no argument by counsel was directed to that decision.  Precisely how the eggs broken from 13 August 2002 to the present day are to be unscrambled is a question that does not arise in the present proceeding (cf the authorities referred to by Sackville J in Shephard v Chiquita Brands (South Pacific) Limited (2004) 1 ABC(NS) 610 at [65]).’

149 We, of course, are not strictly bound by Simon v Vincent J O’Gorman Pty Ltd except by considerations of comity. However, with respect, any other approach would accept an implicit fetter upon the appellate powers clearly granted by s 28 of the Federal Court of Australia Act 1976 (Cth). In my respectful opinion the course followed by Gyles J was not only correct as a matter of precedent but was correct in law. The power of this Court on appeal to set aside a sequestration order with the result that ‘it is as if no valid sequestration order was ever made’ was also referred to, and not doubted, in Pattison v Hadjimouratis [2006] FCA 153; (2006) 155 FCR 226 (per Nicholson J at [14]; see also per Jacobson J at [51] - [53] and per Lander J at [177] – [181]).

150 The consequence, for the present appeal, is that an order upholding the appeal and setting aside the sequestration order made by the primary judge will have the consequence that the appellant is not to be treated as bankrupt from the pronouncement of the sequestration order, notwithstanding the effect of s 43(2) of the Bankruptcy Act (see Commissioner for Railways (NSW) v Cavanagh [1935] HCA 45; (1935) 53 CLR 220 at 224-225).

151 I feel no option but to conclude that despite the appellant’s disregard of the provisions of the Bankruptcy Act, the orders made by Branson J, his professional obligations and the assurances he gave to us at the hearing of his appeal he is nevertheless entitled as a matter of law to have his appeal upheld.

152 As a result I would make the following orders:

1. Appeal upheld.
2. The order for sequestration of the appellant’s estate made on 11 August 2006 is set aside.
3. The creditor’s petition filed on 19 April 2006 is dismissed.
4. The order for payment of the petitioning creditor’s costs is set aside.

153 The appellant was self-represented. The respondent did not appear on the appeal. I would make no order as to costs either of the appeal or the proceedings below.

I certify that the preceding one hundred and fifty-one (151) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan.

Associate:

Dated: 30 May 2007

Counsel for the Appellant:	The Appellant was self represented
Date of Hearing:	9 March 2007
Date of Judgment:	30 May 2007