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American Express Australia Limited v Michaels [2010] FMCA 103 (9 February 2010)

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American Express Australia Limited v Michaels [2010] FMCA 103 (9 February 2010)

Last Updated: 25 February 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

AMERICAN EXPRESS AUSTRALIA LIMITED v MICHAELS

BANKRUPTCY – Creditor’s petition – jurisdiction – whether debtor ‘had a dwelling-house’ in Australia – service of bankruptcy notice by email – identification of time and place of receipt – formal validity of notice – omission of notes to creditors – hearing conducted in absence of debtor – sequestration order made.

Bankruptcy Act 1966 (Cth), ss.40(1)(g), 43, 43(1), 43(1)(b), 43(1)(b)(ii), 52, 306, 306(1)
Bankruptcy Regulations 1996 (Cth), regs.16, 16.01, 16.01(1)(e), 16.01(1)(e)(i), 16.01(1)(e)(ii), 16.01(2), 16.01(2)(b)
Electronic Transactions Act 1999 (Cth), ss.14, 14(3), 14(4), 14(5), 14(6), 14(6)(a)
Federal Court Rules (Cth), O.7 r.1
Federal Magistrates Court Rules 2001 (Cth), rr.9.03(2), 13.03C(1)(e)

Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409
Battenberg v Restrom [2006] FCAFC 20; (2006) 149 FCR 128
Battenberg v Restom (2005) 223 ALR 692
De Robillard v Carver [2007] FCAFC 73; (2007) 159 FCR 38
Derriman v National Australia Bank Limited [2005] FCA 75; (2005) 142 FCR 475
Envee Energy Pty Ltd (In Liquidation) v Stockford [2007] FMCA 1426
Malek v Macquarie Leasing Pty Limited (2007) 156 FCR 55
Mathai v Kwee [2005] FCA 932
National Australia Bank Limited v Derriman [2004] FMCA 689
Reed Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678
Sainju v Minister for Immigration & Anor [2009] FMCA 1206
Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321; (2004) 141 FCR 107

Applicant:
AMERICAN EXPRESS AUSTRALIA LIMITED
ACN 108 952 058

Respondent:
DAVID MICHAELS

File Number:
SYG 1922 of 2009

Judgment of:
Smith FM

Hearing date:
9 February 2010

Delivered at:
Sydney

Delivered on:
9 February 2010

REPRESENTATION

Counsel for the Applicant:
Mr S Docker

Solicitors for the Applicant:
Kemp Strang Lawyers

Counsel for the Respondent:
No appearance by or on behalf of the Respondent

ORDERS

(1) A sequestration order be made against the estate of DAVID MICHAELS.
(2) The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
(3) Note that the date of the act of bankruptcy is 7 July 2009.
(4) Note that a consent to act as trustee has been signed by Mrs Shabnam Amirbeaggi, and has been lodged with the Official Receiver in Sydney.
(5) The applicant must within 2 days give a copy of this order to the Official Receiver in Sydney.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 1922 of 2009

AMERICAN EXPRESS AUSTRALIA LIMITED
ACN 108 952 058

Applicant


And


DAVID MICHAELS

Respondent


REASONS FOR JUDGMENT

(revised from transcript)

  1. American Express Australia Limited (“AMEX”) filed a creditor’s petition on 12 August 2009, seeking a sequestration order against Mr Michaels. Its petition relies upon a consent judgment in the commercial list of the Supreme Court of New South Wales, which was signed on 14 January 2009 and was entered on 2 February 2009. It required Mr Michaels to pay AMEX $1,238,236.88, plus interest calculated from 9 January 2009 by reference to two rates indicated in the judgment. The amended petition alleged that an amount of $1,056,312.31 was then owing, and an affidavit of debt sworn today deposes to that amount still being owing. I accept that evidence.
  2. The petition alleged an act of bankruptcy arising from the failure of Mr Michaels to comply on or before 7 July 2009 with the requirements of a bankruptcy notice served on him on 16 June 2009. The affidavit of service of the bankruptcy notice establishes that a PDF electronic copy of it was sent to him by email in the afternoon of 16 June 2009. I shall below consider the contents of the bankruptcy notice and the effectiveness of its service by email.
  3. Service of the petition and the supporting affidavits occurred in accordance with an order for substituted service in Australia, and this is proved by affidavit. It is unnecessary for me to examine that evidence, since Mr Michaels instructed solicitors, who filed a notice of appearance on 19 October 2009, and subsequently a solicitor appeared for Mr Michaels on four occasions. He is therefore taken to have been served personally, pursuant to O.7 r.1 of the Federal Court Rules (Cth) (see De Robillard v Carver [2007] FCAFC 73; (2007) 159 FCR 38 at [86]).
  4. The solicitor’s attendances included a listing before me on 8 December 2009, when I fixed the petition for hearing today and appointed a pre-hearing directions hearing on 29 January 2010 to deal with any application for evidence from Mr Michaels to be received by video link. No such application was made on 29 January 2010, but Mr Michaels’s solicitor attended and sought leave to file a notice of withdrawal in Court, leave being required by reason of r.9.03(2) of the Federal Magistrates Court Rules 2001 (Cth). I gave leave, on the condition that the solicitor file an affidavit verifying that Mr Michaels had received ample warning of the 8 December 2009 orders, and also that he had received sufficient informal notice of their intention to withdraw. Such an affidavit is now on the file.
  5. I am satisfied that Mr Michaels personally has been on notice since last year of the listing of the petition today. I am also satisfied that my 29 January 2010 order confirming today’s hearing, and the written submissions of counsel for AMEX, have been sent to Mr Michaels by email. I note that he acknowledged receipt of the latter by email sent on 4 February 2010, that is, last Thursday. In all these circumstances, I therefore have proceeded with the hearing today notwithstanding the unexplained absence of Mr Michaels in person or by a legal representative, pursuant to Federal Magistrates Court Rules r.13.03C(1)(e).
  6. The evidence relied upon by AMEX is detailed in the written submission of its counsel, and I am satisfied that it addresses all of the formal requirements of the Bankruptcy Act and Regulations in relation to a creditor’s petition. I am satisfied on that evidence as to all of the matters required to be established under s.52 of the Bankruptcy Act.
  7. I consider it necessary for me to discuss only the points which were raised by me with counsel for AMEX in the course of today’s hearing. These addressed a notice of opposition filed by Mr Michaels on 9 November 2009. It made the following three contentions:
  8. Neither Mr Michaels nor his former solicitors have filed any evidence or submissions supporting or explaining these contentions. However, I thought it appropriate to consider whether they revealed a flaw in the evidence relied upon by AMEX.

Mr Michaels’s connection to Australia

  1. The first ground of opposition invokes the jurisdictional requirement of s.43(1)(b) of the Bankruptcy Act, which provides:
  2. AMEX’s amended petition contends that an act of bankruptcy occurred on or around 7 July 2009, and that Mr Michaels’s circumstances were such that the Court could conclude that he was “ordinarily resident in Australia”, or “had a dwelling-house or place of business in Australia”, or “was carrying on business in Australia, either personally or by means of an agent or manager” at that time. AMEX has filed and served extensive evidence supporting these various connections with Australia at the time of the alleged act of bankruptcy, but I find it necessary only to address the evidence concerning whether he “had a dwelling-house ... in Australia”.
  3. The meaning of this condition was explained by Graham J in Mathai v Kwee [2005] FCA 932:
  4. In my opinion, there is abundant evidence showing that throughout July 2009 Mr Michaels had a dwelling-house in Australia, being a home unit in a prestige block of home units at 127 Kent Street, Sydney. In particular, there is evidence from its managing agent, annexing documents and deposing to her personal encounters with Mr Michaels in relation to letting the home unit and, ultimately, terminating the lease on the ground of rent defaults. The documents show that Mr Michaels applied for the tenancy on 15 September 2008, and then executed a standard form of residential tenancy agreement. It provided a tenancy of 12 months beginning on 18 September 2008 plus a 12-month option, and a monthly rent of $13,035.71. There is evidence that many payments of rent were made by Mr Michaels after that date, albeit frequently in arrears. The agent deposed to various contacts with Mr Michaels about the payment of rent and his arrears, and deposed to visiting him in the unit at times, including in early 2009, and then contacts with him up until August 2009 in relation to a notice of termination. On her evidence, the premises showed abundant evidence of personal occupancy by Mr Michaels and of its use by him as his home, where he ate, slept and conducted a domestic life in Australia. It is clear that he had not ceased to have this connection with the home unit before the service of the bankruptcy notice, but continued to regard it as his home until he vacated it in August or September 2009. Thus, there is an email from Mr Michaels sent to the agent on 10 August 2009, in which he appears to acknowledge that he is still in residence at that time, and “I have started to remove things from the apartment and will be vacated approximately 3 weeks before the end of the tenancy”.
  5. The characterising of his occupation of the home unit as ‘having’ a dwelling-house in Australia within the authorities referred to by Graham J, is assisted by the evidence concerning Mr Michaels’s broader connections with Australia at that time. The evidence shows that he developed substantial business interests in Australia during 2007, and he resided in Sydney at another home unit in Kent Street for 15 months before taking the tenancy to which I have referred above. He was involved between 2007 and 2009 as director of a number of Australian companies, giving his first Kent Street address as his current address in the company documents. He engaged in publicity activities concerning his Australian businesses and his home unit, and was frequently present in Australia attending to his various businesses over those years. All this evidence points clearly to Mr Michaels’s having a continuing connection to Australia over the period of his indebtedness to AMEX and leading up to the act of bankruptcy, which was far more than a “passing or casual visitor making a journey through the country”.
  6. On all the evidence before me, I accept the submission of AMEX that Mr Michaels had a dwelling-house in Australia at the date of an act of bankruptcy occurring during July 2009. I therefore find that s.43(1)(b)(ii) is satisfied to empower me to make a sequestration order against Mr Michaels. It is unnecessary for me to address the evidence suggesting that he was also carrying on business, and was ordinarily resident in Australia at the relevant time, notwithstanding some uncertainty as to his physical location at that time.

Service of the bankruptcy notice by email

  1. Turning to the second ground of opposition, no particulars are given as to the alleged invalidity of the service of the bankruptcy notice, and it appears that no particulars were provided by Mr Michaels’s former solicitors before they withdrew from the matter. Mr Michaels himself has not attended today to present any arguments going to the issue. Counsel for AMEX has, however, assisted the Court by presenting various submissions supporting the validity of the service by email.
  2. Provision for service in that mode is made in Bankruptcy Regulation reg.16, which can apply to bankruptcy notices (see Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321; (2004) 141 FCR 107 at [31]). It provides:
  3. AMEX submits that the evidence establishes that Mr Michaels had a “facility ... for receipt of electronically transmitted documents” within reg.16.01(1)(e)(i), consisting of an email mail box on a Yahoo server which was frequently accessed by him. There is abundant evidence of his using this facility over the relevant time and currently, and it appears to have been his favourite mode of written communication. In particular, he used it to communicate in writing with the representatives of AMEX and also with the agent of his landlord. I am satisfied that his use of his Yahoo mail box over the relevant period amounted to his ‘maintaining’ that facility, so as to allow it to come within reg.16.01(1)(e)(i). I also consider that his demonstrated use of the email address provides sufficient grounds for being satisfied that electronic transmission of documents to the mail box should be received by him ‘in the ordinary course’ within reg.16.01(1)(e)(ii).
  4. In her affidavit of service of the bankruptcy notice, Ms Roppolo deposed that “on 16 June 2009 at 03:58pm, I sent an e-mail to the respondent at [his yahoo address] which attached a copy of the bankruptcy notice”. I accept this evidence, and am therefore satisfied that service of the bankruptcy notice was effected in accordance with reg.16.01(1)(e).
  5. However, it may be pertinent to consider the time when, and place where, the notice is taken to have been served by email. The time of service is relevant to calculating exactly when the act of bankruptcy occurred. Pursuant to the terms of the notice it is to be calculated as: “21 days after service on you of this Bankruptcy Notice”. The place of service is relevant when considering the requirement of s.40(1)(g) that a notice must be “served on the debtor in Australia”, since AMEX concedes that no leave was obtained to serve it “elsewhere”.
  6. In relation to receipt, it was submitted by AMEX that reg.16.01(2)(b) raises a presumption, which Mr Michaels has not challenged in any evidence, that the emailed bankruptcy notice was received by him at the time “when the document is ... transmitted”. I accept this submission.
  7. However, the time when an email is “transmitted” might not be as clear as might at first be thought. I had occasion recently in a migration judgment to examine the ambiguity of the word ‘transmit’, and the possible uncertainties if the time of actual receipt, either by the recipient of an email or by his or her internet mail provider’s server, is required to be established (see Sainju v Minister for Immigration & Anor [2009] FMCA 1206). As that judgment illustrates, it is necessary to construe the legislation allowing service by email and deeming its receipt at time of transmission, to decide whether it refers to the sending electronically from the sender’s computer terminal or mail server, or to the subsequent time when the electronic transmission reaches the recipient’s electronic mail box at his or her internet mail provider’s server, or even, when he or she actually reads the email by accessing the mail box on a computer terminal. Since ‘transmit’ in ordinary language can have the sense of either “send” or “communicate”, the word itself is ambiguous. As the expert’s evidence to which I referred in Sainju indicated, it is possible that breakdown or delay in mail transmission can occur between these events, and proof that an addressee has actually received an email may be much more difficult than merely proving the sending of a document by email.
  8. The Electronic Transactions Act 1999 (Cth) contains in s.14 a general provision, which is subject to contrary intent in specific legislation, governing the time and place of receipt of electronic communications. It relevantly provides:
  9. I am unaware of any cases where the application of these provisions has been considered in the context of service of a bankruptcy notice. The specific provisions in Bankruptcy Regulations regs.16.01(1)(e) and (2)(b) appear to be self-supporting, and appear intended to identify a deemed time of receipt of service which is simple to establish, and which is rebuttable by the recipient. In my opinion, these provisions implicitly exclude the application of ss.14(3) and (4) of the Electronic Transactions Act in relation to findings as to receipt and time of receipt.
  10. This conclusion still leaves the possible ambiguity of the word ‘transmitted’ in reg.16.01(2)(b), which must be solved by a consideration of the context and objects of the provision. Clearly, it is intended to assist the making of findings as to receipt of an emailed document, and to dispense with proof of actual receipt of the email, “in the absence of proof to the contrary”. It takes its flavour from the language of reg.16.01(1)(e), which it is intended to assist. That provision refers to a document “sent by” electronic transmission, referring to a mode of dispatch by a sender. Regulation 16.01(2)(b) appears to make an understandable assumption that electronic transmissions will normally reach the intended destination almost instantaneously. Considering all these points, and the general context of the regulation, I accept the submission of counsel for AMEX that reg.16.01(2)(b) raises a rebuttable presumption of receipt and time of receipt occurring when the email is transmitted by its sender, being when it is irretrievably sent by the electronic mail facility used by the person serving the electronic document.
  11. On that construction of the regulation, and without applying s.14(3) of the Electronic Transactions Act, the affidavit of service of the bankruptcy notice proves that service was effected on Mr Michaels on 16 June 2009, and that time for compliance expired on 7 July 2009.
  12. The same conclusion would in my opinion also be reached, if s.14(3) of the Electronic Transactions Act were to be applied, although it gives rise to its own uncertainties. It requires consideration of the definition of “information system” in s.5 as “a system for generating, sending, receiving, storing or otherwise processing electronic communication”. It is necessary to find such a system “designated by the addressee” and identify the time “when the electronic communication enters that system”.
  13. There is uncertainty in my mind, particularly in the absence of expert evidence or fuller submissions about the underlying technology of internet email communications, as to the identification of the relevant ‘system’ which is ‘designated’ and ‘entered’ for the purposes of s.14(3). I can conceive of at least three significantly different approaches in relation to emailed documents: (i) the software and hardware systems for sending or receiving emails used by the sender, or by its mail server provider; or (ii) the systems used by the intended recipient, or by its mail server provider; or (iii) the entire electronic mail system governing the dispatch and receipt of emails over the internet using recognised protocols for electronic ‘handshakes’ between email servers.
  14. I am inclined to take the broadest of these interpretations, i.e. meaning (iii) (but compare Macready AsJ in Reed Constructions Pty Ltd v Eire Contractors Pty Ltd [2009] NSWSC 678 at [29]- [31]). This would identify the ‘information system’ for internet emails as including the email facility used by the sender of the email when irretrievably dispatching the document electronically, so that s.14(3) would locate the receipt and time of the receipt of the email as occurring instantaneously at the time when it was dispatched by the sender, and thereby ‘entered’ the global internet email system. This construction is supported by the analogy that a posted article can be regarded as ‘entering’ the global postal system, when it is deposited by the sender in the local postal authority’s post box. Section 14(3) would then achieve the same objects as a statutory presumption of service in the ordinary course of post, so as not to require proof of actual transmission, delivery and reading by its recipient. In effect, it raises a presumption of instantaneous delivery into the recipient’s designated electronic mail box.
  15. If, contrary to the above two approaches, I were required to make findings as to actual receipt by Mr Michaels of the emailed bankruptcy notice, then the evidence is not precise. I am satisfied on the balance of probabilities that he did actually receive the bankruptcy notice, and that this was not long after it was sent. I draw this inference because of an extensive email exchange which had occurred prior to that time and which continued afterwards. It included AMEX’s solicitor emailing Mr Michaels on 2 July 2009, in an email which commenced “I note that my client’s bankruptcy notice was served on you on 16 June 2009”. Mr Michaels responded on 6 July 2009 without disputing that contention, but requesting that “we can arrange to meet” after he returned to Sydney “next Monday, 13th July”. In a context where Mr Michaels has presented no evidence to the Court denying that he received the bankruptcy notice, and where he appears not to dispute the fact of receipt of the bankruptcy notice, I would infer that it was actually served on him by coming to his attention at least prior to 6 July 2009.
  16. Moreover, the evidence points to a probability that the communication occurred instantly, or at least within a minute or two of the dispatch of the email. There are a number of subsequent email communications to Mr Michaels at his Yahoo mail box, including service of the petition and service of some recent documents, in relation to which the solicitors for AMEX obtained from their own email server confirmations of nearly instantaneous transmission to Mr Michaels’s email server. On all the evidence, I find that it is probable that Mr Michaels actually received on 16 June 2009 in his Yahoo mail box the email attaching the bankruptcy notice, wherever he was in the world, and wherever the relevant Yahoo server was in the world.
  17. Turning to consider the place at which service should be found to have occurred, there is no clear evidence showing where either Mr Michaels or his Yahoo mail box server were located at that time. In circumstances where Mr Michaels has not led any evidence to establish that neither he nor his electronic mail box were located in Australia, and where he is in the best position to establish such facts, I would be slow to find that the bankruptcy notice was in fact served ‘elsewhere’ than Australia without leave under s.40(1)(g).
  18. There is authority that s.40(1)(g) addresses the place of deemed service, including under a substituted service order, rather than the place where the notice actually came to the attention of the debtor (see Battenberg v Restom (2005) 223 ALR 692 at [11], upheld in Battenberg v Restrom [2006] FCAFC 20; (2006) 149 FCR 128 at [19]). On this construction, it is irrelevant whether Mr Michaels was actually present in Australia when he received the bankruptcy notice.
  19. On my above opinion reg.16.01(2)(b) provides a presumption of receipt ‘when’ the notice was transmitted, in the sense of dispatched in Australia by Ms Roppolo. If the regulation is construed as a code identifying not only a presumed time of receipt but also a place of receipt, then the notice was not served ‘elsewhere’ than in Australia.
  20. If it is necessary to apply ss.14(5) or (6) of the Electronic Transactions Act to determine a ‘place’ of receipt, then on the balance of probabilities, I find that Mr Michaels’s receipt of the bankruptcy notice is deemed to have occurred in Australia, since this appears to be the site of his place of business having closest relationship to his relevant transactions with AMEX. From the evidence, it is clear that Mr Michaels had a number of places of business in Australia at the time of the email. There are also vague suggestions that he may have had places of business elsewhere in the world, although the evidence is most imprecise about this, and Mr Michaels has not presented any evidence about his overseas business activities. Assuming that he had more than one place of business and that he had other places outside Australia, I accept the submission that s.14(6)(a) would apply to deem his “only place of business” to be one of his places of business in Sydney which has a “closer relationship to the underlying transaction”.
  21. The underlying transaction giving rise to the judgment debt relied upon in the bankruptcy notice was an AMEX credit facility, which was obtained by Mr Michaels upon an application for a “pre-approved platinum credit card” which he completed on 2 March 2007. In that application he gave his residential address in Kent Street, Sydney as his “current residential address”, and he gave a local telephone number as his telephone number. Although his credit card accounts show a variety of personal and business debits incurred overseas as well as in Sydney, there is no clear evidence showing that these did not relate to Mr Michaels’s Australian businesses. There is evidence that his account was accessible by various employees in relation to his Sydney business for their work-related expenses. On the balance of the evidence before me, I find that the judgment debt deriving from Mr Michaels’s credit facility with AMEX had its closest relationship to underlying transactions related to his Sydney places of business. I note that Mr Michaels has not presented any evidence pointing to a contrary conclusion.
  22. As I have noted, it is unclear whether a dispute as to place of service was intended to be raised by the second of Mr Michaels’s grounds of opposition. If it were, and if I were wrong in finding that the bankruptcy notice is deemed to have been served on him in Australia, then the point would not necessarily give rise to invalidity of the bankruptcy notice or the dismissal of the petition. This is because a failure to obtain leave required under s.40(1)(g) is able to be cured by applying s.306(1) of the Bankruptcy Act, or by granting leave nunc pro tunc (cf. Wilson FM in Envee Energy Pty Ltd (In Liquidation) v Stockford [2007] FMCA 1426 at [24]). Mr Michaels has not presented any circumstances or submissions showing that these powers would not be appropriately exercised. Since I have found that he appears to have had actual and immediate receipt of the bankruptcy notice, and since no particular prejudice has been pointed to arising from any service of the bankruptcy notice outside Australia, I consider that any such defect would be curable by one of these approaches.
  23. For all the above reasons, I am not satisfied that any defect in relation to service of the bankruptcy notice appears in the evidence before me. I am satisfied that valid service of the bankruptcy notice has been established by AMEX.

The form of the bankruptcy notice

  1. The third ground of Mr Michaels’s notice of opposition challenges the formal validity of the bankruptcy notice, although again it fails to particularise the “requirements made essential by the Bankruptcy Act” which are said to have not been observed.
  2. Counsel for AMEX told me that Mr Michaels’s former solicitor informally identified two areas of possible contention, being the absence of the four notes headed “For the information of the creditor” which appear at the end of the prescribed form of bankruptcy notice, and the adequacy of the calculations of interest attached to the bankruptcy notice.
  3. AMEX concedes that the document served on Mr Michaels omitted the four information notes. The first three notes explain how to complete the Schedule appearing under clause 9, in relation to legal costs, interest accrued, and foreign currency conversions. The fourth note is headed “For the Information of the Creditor – Note about use of information”, and informs the creditor that it might be necessary to disclose information to government agencies.
  4. AMEX contends that the omission of all notes is only a ‘formal defect’, and that no substantial injustice should be found to have resulted from their omission. It relies upon s.306(1):
  5. It was established under the stricter principles which prevailed before Adams v Lambert [2006] HCA 10; (2006) 228 CLR 409, that the presence of the fourth note was not an essential requirement of the prescribed form so as not to be amenable to relief under s.306(1) of the Bankruptcy Act. This was decided by Wilcox J in Derriman v National Australia Bank Limited [2005] FCA 75; (2005) 142 FCR 475 upholding my judgment in National Australia Bank Limited v Derriman [2004] FMCA 689, and in my opinion Wilcox J’s judgment remains good authority which is appropriately applied in the present case.
  6. I was referred to no authorities whether the omission of notes 1, 2 and 3 is amenable to relief under s.306(1). However, it was submitted by AMEX, and I accept, that consistently with Adams v Lambert, the omission of these notes would also be regarded as “a formal defect or an irregularity” which may be overlooked under s.306(1). Such a view of these notes appears consistent with Malek v Macquarie Leasing Pty Limited (2007) 156 FCR 55, in which the Full Court applied s.306(1) to the omission of the footnote to clause 7, notwithstanding that the footnote appears directed at assisting the debtor’s understanding of the bankruptcy notice. The present notes are expressly directed at assisting the creditor to complete the Schedule, rather than to assisting the debtor’s understanding of the bankruptcy notice.
  7. Turning to whether the omission of any of these notes has caused substantial injustice, there is no evidence from Mr Michaels suggesting that this has occurred, and prima facie I would not draw a conclusion that any injustice would have occurred. I am not satisfied that substantial injustice was caused by the omission of these notes. Section 306(1) therefore would have the effect of validating the notice served on Mr Michaels.
  8. In relation to the interest calculations attached to the notice, no particular contention is identified by Mr Michaels, and it is obscure and speculative what arguments might have been presented on his behalf if he had been represented at the hearing. The calculations which were attached prima facie appear adequately to relate to the interest provisions of the consent judgment, which was also attached to the notice, and no error in arithmetic is apparent. Perhaps the components of Mr Michaels’s indebtedness might have been differently set out in the Schedule to cl.9 and in the calculation sheet. However, the total amount of indebtedness appears to have been correctly calculated and set out in a manner which is not manifestly misleading nor inaccurate. I am not persuaded that any defect essential to a valid bankruptcy notice can be identified in relation to the interest calculations attached to this bankruptcy notice.
  9. For the above reasons I am unpersuaded that the bankruptcy notice served on Mr Michaels suffers from any incurable defect. I find that the notice was valid in form, and its service has given rise to the act of bankruptcy now relied upon by AMEX.
  10. For all the above reasons, I am not satisfied that any of the contentions made in the notice of grounds of opposition gives rise to a ground for declining to make a sequestration order. As I have indicated, I am satisfied as to all the matters required to be established by s.52 of the Bankruptcy Act and the relevant Regulations. No ground of discretionary refusal of a sequestration order has been made out to my satisfaction. I therefore propose to make a sequestration order in the terms sought by AMEX.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of Smith FM


Associate: Lilian Khaw


Date: 24 February 2010

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