Colin Richard Hubner v ANZ Banking Group Ltd [1998] FCA 1779 (7 December 1998)

Last Updated: 22 April 1999

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - Bankruptcy notices - application to set aside bankruptcy notice - where application filed after expiry of time for compliance with notice - whether application competent.

BANKRUPTCY - Bankruptcy notices - failure to file supporting affidavits with application to set aside bankruptcy notice - whether such failure constitutes formal defect or irregularity - whether such failure caused substantial injustice - whether injustice can be remedied by subsequent provision of affidavit - where subsequent affidavit does not demonstrate a valid basis for setting aside the bankruptcy notice - whether court has power to dispense with or extend time for compliance with O 77 r 13.

BANKRUPTCY - Bankruptcy notices - whether issue of a notice addressed to joint debtors valid.

Bankruptcy Act 1966 (Cth) s 40(1)(g), s 41, s 41(6A), s 41(7), s 33(1) (c), s 46(1), Form 1

Federal Court Rules, O 77 r 13, O 1 r 8, O 3 r 3, O 20 r 2

Federal Court of Australia Act 1970 (Cth) s 51

Act Interpretation Act 190 (Cth) s 23(b)

Re Barker; Ex parte Mitchell (1958) 18 ABC 195 Cited

Stirling; Ex parte Esanda Ltd [1980] FCA 61; (1980) 44 FLR 125 Ref'd

Duckworth; Ex parte Lockett (Unreported - No P635/86) Ref'd

Sol Theo v The Official Trustee in Bankruptcy & Ors (Unreported QG 182/96 and QG 216/96 - 28 April 1997) followed

Garcia v National Australia Bank Ltd (1998) HCA 48 (6 August 1998) Ref'd Yerkey v Jones [1939] HCA 3; (1939) 63 CLR 649 Ref'd Re Ward and Another; Ex parte R W Brown & Company Pty Limited (1991) 28 FCR 329 Ref'd

Emerson & Anor v Wreckair Pty Limited [1992] FCA 16; (1991) 33 FCR 581 Ref'd

McLeod & Anor v Beneficial Finance Corporation Limited (Branson J, 5 October 1995, unreported) Ref'd

Colin Richard Hubner v ANZ Banking Group Ltd

QG 7247 of 1998

Yvonne Hubner v ANZ Banking Group Ltd

QG 7248 of 1998

Colin Richard Hubner v ANZ Banking Group Ltd

QG 7249 of 1998

Yvonne Hubner v ANZ Banking Group Ltd

QG 7250 of 1998

Colin Richard Hubner v ANZ Banking Group Ltd

QG 7251 of 1998

Yvonne Hubner v ANZ Banking Group Ltd

QG 7252 of 1998

Dowsett J

Brisbane

7 December 1998

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7247 of 1998

BETWEEN:	COLIN RICHARD HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7248 of 1998

BETWEEN:	YVONNE HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7249 of 1998

BETWEEN:	COLIN RICHARD HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7250 of 1998

BETWEEN:	YVONNE HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7251 of 1998

BETWEEN:	COLIN RICHARD HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7252 of 1998

BETWEEN:	YVONNE HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent

JUDGE:	DOWSETT J
DATE OF ORDER:	7 DECEMBER 1998
WHERE MADE:	BRISBANE

THE COURT ORDERS THAT:

1. The motions for discovery are dismissed.

2. The applications are dismissed.

3. The applicants are to pay the respondent's costs of the proceedings, including the costs of the motions for discovery, and reserved costs.

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

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7247 of 1998

BETWEEN:	COLIN RICHARD HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7248 of 1998

BETWEEN:	YVONNE HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7249 of 1998

BETWEEN:	COLIN RICHARD HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7250 of 1998

BETWEEN:	YVONNE HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7251 of 1998

BETWEEN:	COLIN RICHARD HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG 7252 of 1998

BETWEEN:	YVONNE HUBNER Applicant
AND:	ANZ BANKING GROUP LTD Respondent

JUDGE:	DOWSETT J
DATE:	7 December 1998
PLACE:	BRISBANE

REASONS FOR JUDGMENT

Preliminary

I am presently concerned with six applications to set aside bankruptcy notices. In each case, the applicant moves for discovery, and in each case, the respondent has given notice of intention to move to strike out the application on the ground of irregularity in the process adopted by the relevant applicant. Before turning to the substance of the matter, I should record the history of the hearing. The matters were listed for hearing on Monday, 9 November 1998. At that stage the applicants indicated that they had expected that only the motions for discovery were to proceed. However the respondent had previously given notice to the applicants of its intention to argue the irregularity points, and such argument ensued. The hearing commenced relatively late on the morning of 9 November (because of another court commitment) but it also took rather longer than was anticipated. This was, to some extent, attributable to the fact that Mr Hubner, the male applicant, insisted upon giving instructions to his counsel on numerous occasions and in a quite loud voice. Although I tolerated this for most of the day, at 4.00 pm it became obvious that Mr Hubner was becoming agitated by his difficulties in communicating his views to the court, and so I indicated that I would adjourn the matter until 10 November to enable Mr Hubner to give appropriate instructions to his counsel upon the basis that I would not tolerate any further interruption of the proceedings. Counsel for the applicants indicated that, because of Full Court commitments, he would prefer that the hearing terminate at mid-day on the 10th, and I agreed. Counsel for the respondent was not available on the 10th, and his position was taken by his instructing solicitor.

The hearing re-commenced at 9.30 am on 10 November and continued until mid-day, at which time counsel for the applicants had not completed his submissions. To some extent, this was attributable to numerous questions posed by me with a view to clarifying his arguments, and also to a number of questions by me to the solicitor for the respondent, designed to ascertain whether or not there was any common ground and to identify the respondent's position with respect to various issues. In any event, as counsel for the applicants had other commitments after midday, and as submissions were not completed, the parties agreed to make submissions in writing, and appropriate directions were given. As can be seen, considerable efforts have been made to accommodate the parties and in particular, the applicants.

The Debts

The relevant debts all arose in connection with proceedings in the Supreme Court of Queensland described as action no 331 of 1997 between the present respondent, Australia and New Zealand Banking Group Ltd (the "bank") as plaintiff, and the applicants, Colin Richard Hubner and Yvonne Hubner ("Mr & Mrs Hubner") as defendants. The writ sought recovery of possession of land situated at 333 Draper Street, Cairns. The bank claimed possession as mortgagee following alleged default by the Hubners. The mortgage had been granted by the Hubners to support guarantees given by them to secure advances made by the bank to a company or companies controlled by the Hubners or by Mr Hubner. The Hubners initially entered a conditional appearance. When the bank applied for summary judgment, it was declined upon the basis that an unconditional entry of appearance was a condition procedent to the right to summary judgment. The Hubners subsequently appeared unconditionally. Upon expiry of the time for delivery of a defence, the bank entered judgment by default in the registry. There has been some criticism of the promptness with which the bank proceeded, given that it must have been aware that the Hubners intended to defend the matter, but that has no relevance for present purposes.

Subsequently, the Hubners applied to a judge in chambers to set aside the judgment by default upon the basis that they had a meritorious defence. This application was dismissed by Byrne J on 15 September 1997. The Hubners were ordered to pay the costs of the application. These costs are the subject of the bankruptcy notice against the Hubners which they seek to set aside by applications QG 7249/98 (Mr Hubner) and QG 7250/98 (Mrs Hubner). The debt is $8,907.02. On 14 October 1998, Mr Hubner commenced proceedings against the bank in this court, being application QG 163/97. In that action Mr Hubner claims:-

"1. ... restitution and damages from the ANZ Banking Corporation in the amount equal to the loss and damage caused by their negligence, breach of duty, breach of statute and contract in the administration of their customer's instructions with regard to the guarantee given by Colin Richard Hubner and Yvonne Hubner;

2. Damages for loss of reputation occasioned by the negligent acts of the respondent;

3. A claim for distress to be determined;

4. Loss of profits occasioned by the negligent acts of the respondent;

5. Loss of expectation of profits occasioned by the negligent acts of the respondent;

6. Claim for interest;

7. Claim for additional monies in respect of Australian Tax Office Ruling TR95/35;

8. Costs;

9. A declaration that the judicial power of the Commonwealth is sufficient to support a caveat under the Queensland Land Title Act 1994."

There is also a claim for interlocutory relief, in particular, an order restraining the bank, until trial or further earlier order, from prosecuting or taking any further proceedings in action no 331 of 1997 in the Supreme Court. Mr Hubner also moved for orders preventing the execution of the judgment for possession and for premature discovery. The matter came on before Beaumont J on 21 November 1997. His Honour cross-vested the matter to the Supreme Court of Queensland. It is now proceeding in the Cairns registry of the Supreme Court. On 16 October 1997 Mr and Mrs Hubner applied in the Supreme Court for a stay of execution of the writ of possession pending determination of proceedings in the Federal Court. On 16 November 1997, Jones J dismissed that application with costs. A bankruptcy notice concerning this order for costs, taxed in the amount of $7,956.15 is the subject of applications QG 7247/98 (Mr Hubner) and QG 7248/98 (Mrs Hubner).

On 27 November 1997 a further application was made in the Supreme Court to restrain the bank from dealing with the land pending the hearing of a proposed application to the High Court. I was told in argument that this application was actually made in the High Court, Jones J being invited to exercise the chamber jurisdiction of that court which, in certain circumstances, is conferred upon judges of the Supreme Court. On 10 December 1997, this application was dismissed with costs. A bankruptcy notice concerning those costs, taxed at $5,123.76, is the subject of applications QG 7251/98 (Mr Hubner) and QG 7252/98 (Mrs Hubner).

The Hubners filed a further application in the Supreme Court to set aside the default judgment upon the basis that it had been entered irregularly. That application was also dismissed with costs, but the Hubners have appealed. That appeal has not yet been determined.

The Bankruptcy Notices

On 4 June 1998 the bank issued bankruptcy notices against the Hubners in connection with each of the three costs orders against which there has been no appeal. They were served on Mr Hubner on 5 June 1998 and on Mrs Hubner on 11 June 1998. The present applications were filed on 30 June 1998. They seek dismissal of the various bankruptcy notices. It is alleged that the notices are vexatious, malicious and an abuse of process. Mr & Mrs Hubner also claim that the bank should pay "to the account of The Cairns Glass Company (in liq) an amount equal to all irregular cheques debited when no mandate to debit existed, as evidenced by the signature card, in breach of the Bank Customer Contract." On 15 July 1998 the bank gave notice of intention to oppose each application. The Hubners seek discovery in connection with each application. The Registrar ordered that all motions for discovery be listed before me. On 29 September 1998 the bank gave notice to Mr & Mrs Hubner that it intended, at the hearing of the notices of motion, to challenge the validity of their applications to set aside the bankruptcy notices. As previously mentioned, counsel for Mr & Mrs Hubner initially indicated that he understood the current hearing to be limited to the motions for discovery, but obviously, the question of discovery cannot be addressed without consideration of the issues in respect of which discovery is sought. In any event, the contested motions by the Hubners for discovery and the contested motions by the bank to strike out the applications have been argued.

Time in Which to Apply to Set Aside a Bankruptcy Notice

The bank's motions are based upon irregularities in the procedure adopted by Mr & Mrs Hubner in commencing their proceedings. It is said firstly that Mr Hubner's applications were made out of time. The bankruptcy notices were issued on 4 June 1998 and served personally upon Mr Hubner on 5 June 1998. They called for compliance within 21 days. Mr Hubner was therefore obliged, pursuant to s 40(1)(g) to comply on or before 26 June. It was not suggested that any significance attached to the different dates of service on Mr and Mrs Hubner. The Bankruptcy Act 1966 does not expressly provide for the making of an application to set aside a bankruptcy notice, but such an application is clearly contemplated by sub-sections 41(6A) and (7).

Pursuant to sub-section 41(6A):-

"Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice;

(a) proceedings to set aside the judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or

(b) an application has been made to the court to set aside the bankruptcy notice;

the Court may, subject to sub-section (6C), extend the time for compliance with the bankruptcy notice."

Sub-section (7) operates to extend time when an application to set aside a bankruptcy notice on certain specified grounds has been made. It provides:-

"Where, before the expiration of the time fixed for compliance with the requirements of a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g) and the court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied."

Section 33(1)(c) provides that the Court may:-

"... extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with the requirements of a bankruptcy notice), for doing an act or thing or abridge any such time."

Whatever may be said about the respective spheres of operation of sub-sections (6A) and (7), it is clear that the court may not extend time for compliance with a bankruptcy notice save where the application to set aside has been made before the expiration of the time fixed for compliance. One must therefore question whether there is power to set aside a notice when the application is made after the time prescribed for compliance therewith has expired. The question might be posed in a slightly different way, namely whether or not there will be any purpose in setting aside a notice once the time for compliance has expired.

The process prescribed by sub-section 40(1)(g) provides a formal system for demanding a judgment debt, with a clear outline of the consequences of non-compliance. Non-compliance will, itself, constitute a basis for bankruptcy, presumably because it provides evidence of insolvency. The tacit process of reasoning may be as follows:-

(a) The creditor has the benefit of a money judgment against the debtor.

(b) The debtor has been advised that unless he pays by a fixed date he may be bankrupted.

(c) He has not paid by the fixed date.

(d) The reasonable inference is that he cannot pay, ie he is insolvent.

(e) Therefore he should be bankrupted.

The statutory scheme is designed to facilitate both the recovery of debts and the administration of insolvent estates. Where an act of bankruptcy has been committed, any creditor qualified to present a petition may rely upon it. See Re Barker; Ex parte Mitchell (1958) 18 ABC 195. Thus the significance of a failure to comply with a bankruptcy notice goes beyond the relationship between the judgment creditor and the judgment debtor.

The court has power to set aside a bankruptcy notice, both in the specific circumstances contemplated by sub-section 41(7) and on other grounds. The precise source of the power is unclear. See Re Stirling; Ex parte Esanda Ltd [1980] FCA 61; (1980) 44 FLR 125 (per Lockhart J) and Re Duckworth; Ex parte Lockett (Unreported - No P635/86), (per French J). Sub-sections 41(6A) and (7) contemplate such an order. The latter sub-section applies where the judgment debtor seeks to comply with the bankruptcy notice by satisfying the court as to the existence of an appropriate counter-claim, set-off or cross demand. Presumably, sub-section (6A) is concerned with applications to set aside notices on other grounds. Each sub-section permits extension of time to comply with a bankruptcy notice provided that the appropriate application to set aside has been made before the expiry of the time fixed for such compliance. It seems probable that Parliament contemplated such an application being made only within that time. There would, in any case, be no point in setting aside a notice after expiry of the time for compliance in the absence of a power to extend time. Once time has expired, the bankruptcy notice is, in effect, spent in that the act of bankruptcy has been committed and is available for use by all creditors for the purpose of presenting a petition. This has long been understood to be the position although, as was pointed out by Lockhart J in Stirling at p 130, there have been surprisingly few reported cases dealing with the procedure. I conclude that any such application must be made before the prescribed time has expired. Mr Hubner's applications are therefore incompetent.

I should deal with one other submission in this context. As I have said, no attempt has been made to set aside the relevant costs orders, although the Hubners have appealed against the refusal to set aside the substantive judgment on the ground of irregularity. Counsel for the Hubners asserts that if the appeal is successful, then the presently relevant costs orders will also be nullified. The submission implies that this is a basis for setting aside the bankruptcy notices or perhaps, for an extension of time pursuant to s 41(6A)(a). The submission is, in any event, incorrect. The orders for costs are orders of a superior court of record and must stand unless set aside on appeal. There is no appeal against those orders and therefore they cannot be set aside. If any authority for this proposition is needed, it is to be found in the reasons of the Full Court delivered by Burchett J in Sol Theo v The Official Trustee in Bankruptcy & Ors (Unreported QG 182/96 and QG 216/96 - judgment delivered 28 April 1997) at p 7 where his Honour said:-

"Mr Theo appears to think the success of his appeal requires any interlocutory order against him in respect of costs to be set aside. That is simply not so, and nothing has been put before us to suggest error in the original exercise of discretion. It was open to Kiefel J to make, in her discretion, interlocutory orders for costs against any party, and the ultimate success or failure of any party could not be said necessarily to affect any such interlocutory orders that had been made. Indeed, quite frequently, a party who is ultimately successful remains bound to pay costs, even substantial costs, under earlier interlocutory orders."

Dismissal of Mr Hubner's Application

At the conclusion of the hearing, I dismissed Mr Hubner's applications with costs. I now publish my reasons for that decision as set out above.

Mrs Hubner's Grounds

The applications by both Mr and Mrs Hubner are attacked upon another ground. Order 77 rule 13 of the Federal Court Rules requires that an application to set aside a bankruptcy notice be accompanied by an appropriate affidavit. It is common ground that no such affidavits were filed with the applications, although subsequently, affidavits have been filed and served. Section 51 of the Federal Court of Australia Act 1976 provides:-

"(1) No proceedings in the Court are invalidated by a formal defect or an irregularity, unless the Court 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 the Court.

(2) The Court or a Judge may, on such conditions (if any) as the Court or Judge thinks fit, make an order declaring that the proceeding is not invalid by reason of a defect that it or he or she considers to be formal, or by reason of an irregularity."

Undoubtedly, the failure to file appropriate affidavits constituted a formal defect or irregularity. The first enquiry must be whether the defect or irregularity has caused substantial injustice which cannot be remedied by an appropriate order. The absence of an affidavit in support of an application to set aside a bankruptcy notice causes substantial injustice simply because it places the creditor in the position of not knowing the case to be met. It most cases that injustice may be remedied by the subsequent provision of such an affidavit in time for the final hearing, assuming that the applicant has a bona fide basis for seeking to set aside the notice. If, however, it is clear that the applicant has no proper basis for setting aside the notice - that the issues which he or she seeks to ventilate are irrelevant or illusory - then to allow the applicant to file such an affidavit would cause a further injustice to the judgment creditor. Allowing late delivery of a pointless affidavit could hardly remedy the original injustice. Thus it is necessary to address the substance of Mrs Hubner's claims in order to determine whether the initial injustice to the bank will be remedied by allowing her to correct the procedural defect. I should say that although counsel for the bank submitted to the contrary, I am satisfied that the court has power to dispense with compliance pursuant to O 1 r 8 or to extend time for compliance pursuant to O 3 r 3. s 51 may itself confer such a power. The reasoning which leads to the conclusion that those provisions do not permit the extension of time for an application to set aside a bankruptcy notice has no application to the power of the court to relieve from non-compliance with the requirements of O 77 r 13. In the former case, it is the construction of the Act which leads to the relevant conclusion that there is no power to excuse from compliance with its terms. The Act does not purport to apply to the Rules of Court. I should say that there was no suggestion that s 51(2) of the Federal Court Act 1901 would be of assistance to Mrs Hubner in this case.

I indicated at the hearing that I considered that there was power to extend time or to excuse non-compliance. As I understood him, counsel for the Hubners, whilst not conceding the need for any such indulgence, was anxious that I should exercise such a discretion should it be necessary. Of course, there is no discretion to be exercised in the case of Mr Hubner because his applications must fail for the reasons given above. In Mrs Hubner's case, I must consider the substantive issues sought to be raised by her in support of her applications to set aside the notices to see if she has any basis for those applications. If so, I should allow her to remedy her irregular process. With one exception, her grounds are the same as those which Mr Hubner sought to raise.

The one ground peculiar to Mrs Hubner is said to arise out of the decision of the High Court in Garcia v National Australia Bank Ltd (1998) HCA 48 (6 August 1998). That case was concerned with the circumstances in which a wife who guarantees her husband's debt will be excused from liability, and in particular, with the circumstances in which such a guarantee will be set aside where the creditor has not taken steps to explain the nature of the transaction to the wife. The High Court re-affirmed the approach taken in the earlier decision of Yerkey v Jones [1939] HCA 3; (1939) 63 CLR 649.

In her affidavit material, Mrs Hubner asserts that she is of Italian descent, was brought up to honour her husband and, in matters of business, to follow his instructions. She says that Mr Hubner handled their business affairs, that she did not understand the papers which the bank asked her to sign and that no explanation was offered. She did not guarantee her husband's debts, but rather those of the company, Cairns Glass Co Pty Ltd, through which he traded and of which she subsequently became a director. I was told in argument that she was, at all material times, indirectly interested in the company in that it was owned by a family company of which she was a shareholder. However, for present purposes I am willing to assume that Mrs Hubner has established a prima facie case of entitlement to the setting aside of the guarantee for the reasons advanced by the High Court in Garcia. Although this would relieve her of liability under the guarantee, leading to the setting aside, as against her, of the substantive judgment in the Supreme Court action, that would not affect her liability under the orders for costs which are the subject matter of the bankruptcy notices. Those orders were obtained as the result of abortive attempts by Mr & Mrs Hubner to set aside the judgment and/or to stay it. As I have said, in the absence of successful appeals against those orders, they will stand. Further, any right to have the guarantee set aside does not give her a counter-claim, set-off or cross demand as against the various orders. The Garcia point is of no assistance to Mrs Hubner for present purposes.

Mr & Mrs Hubner make a number of other claims against the bank. It was very difficult to extract a firm indication of the nature and limits of those claims. These matters were argued before Byrne J upon the first application to set aside the Supreme Court judgment. His Honour concluded that there was insufficient evidence to establish such claims. Mrs Hubner must satisfy me that she has such a claim, although it is not necessary that she prove the claim at this stage, or even offer all of the evidence which may be available. It is firstly alleged that an officer of the bank, one Poulsen, gave advice which led to the Hubners or their company acquiring an interest in Cairns Glass Company. There is little more detail of this claim. Poulsen subsequently gave advice concerning JML, leading to Cairns Glass Co becoming a sub-contractor to JML, in which capacity the former company was not paid. The only specific assertion against Mr Poulsen appears to be that Mr Hubner asked him make enquiries about JML. Mr Poulsen reported that they were a company of high corporate morals. Accepting Mr Hubner's evidence as to his inquiry of Mr Poulsen and the response thereto, there is, as was pointed out by Byrne J in the Supreme Court, no evidence that the response was untrue or that if it was, it caused any loss to Cairns Glass Co or to Mr or Mrs Hubner. Mr Hubner is very firm in his views that Mr Poulsen, on behalf of the bank, has caused him and his wife grave financial loss. However it is simply not possible to identify any cause of action sufficient to ground a claim of the kind contemplated by s 40(1)(g) or s 41(7). Similar comments apply to the more generalized allegations concerning the Hubners' initial investment in Cairns Glass Co.

It is also claimed that in the liquidation of Cairns Glass Co, the bank has been guilty of actionable misconduct in connection with the liquidator's compromise of that company's claim against JML. I can see no basis for a claim against the bank arising out of that step taken by the liquidator. A further claim arises out of an allegation that the bank honoured various cheques drawn on the account of Cairns Glass Co contrary to the terms of the mandate. It is said that the mandate required two signatures for cheques over $500, but that the bank honoured some such cheques bearing only one signature. There is considerable doubt as to the extent of any actual loss to Cairns Glass Co as a result of such conduct. Experience indicates that in such cases, most of the cheques will have been used to pay just debts, notwithstanding the technical error by the bank. However, for present purposes, there is another answer to this claim. It is a claim properly made by Cairns Glass Co and not by the Hubners. It cannot be a basis for a counter-claim, set-off or cross demand for the purposes of the bankruptcy notices. Even if the Hubners are entitled, as guarantors, to take advantage of this claim as a defence to any claim on the guarantee, it could not operate as a counter-claim, set-off or cross demand in connection with the debt owed by them personally to the bank pursuant to the costs orders. To the extent that the amount of any such claim exceeds the amount of the debt on the guarantee, it belongs to Cairns Glass Co. Further unspecified allegations of fraud are made against the bank arising out of the totality of its dealings with the Hubners and Cairns Glass Co. However no appropriate basis has been demonstrated for setting aside the bankruptcy notices, either because there is some counter-claim, set-off or cross demand equalling or exceeding the amount thereof or on any other ground.

Mrs Hubner has had an opportunity to demonstrate any valid basis for attacking the bankruptcy notices and has failed to do so. There would be no point in excusing her from compliance with the requirements of the rules or in extending time for her to do so. To so order would not remedy the injustice suffered by the bank as a result of her unsubstantiated applications to set aside the notice.

Notices to Joint Debtors

Although the matter was not raised in oral argument, one further matter was raised in the supplementary written submissions on behalf of the Hubners. They submit that the Act does not authorise the issue of a bankruptcy notice addressed to joint debtors as occurred in this case. There is certainly no express authorization for this course, although s 23(b) of the Acts Interpretation Act provides that where the singular form of a word is used in legislation, the section in which it appears is to be read as if it also includes a reference to the plural form of the word. Applied to s 41 and Form 1 of the Act, this might be sufficient to authorise the issue of bankruptcy notices to more than one person.

Such authority as there is suggests that such a course is permissible. In Re Ward and Another; Ex parte R W Brown & Company Pty Limited (1991) 28 FCR 329, one of two joint debtors made an application to set aside a bankruptcy notice addressed to both of them. The application was unsuccessful, but the registrar made orders extending time for compliance. On appeal, Hill J was required to determine whether an order extending time for compliance with a bankruptcy notice addressed to joint debtors would extend time for compliance only in respect of the debtor making the application or both. Hill J did not doubt the validity of the notice.

In Emerson & Anor v Wreckair Pty Limited [1992] FCA 16; (1991) 33 FCR 581, the Full Court of this Court considered an appeal concerning a bankruptcy notice addressed to joint debtors. Neither Pincus J at first instance nor the Full Court (Morling, Neaves and Spender JJ) on appeal questioned the validity of a notice to joint debtors.

Finally, in McLeod & Anor v Beneficial Finance Corporation Limited (Branson J, 5 October 1995, unreported), her Honour was required to determine whether a bankruptcy notice could be issued to several (as opposed to joint) debtors. Branson J observed, at p 13, that in her view, "the right to issue a Bankruptcy Notice cannot be wider than the right to present a creditor's petition". Section 46(1) of the Act expressly authorises the presentation of a creditor's petition against joint debtors. Her Honour concluded that a bankruptcy notice could be addressed to joint debtors but not to several debtors.

I see no reason to doubt the correctness of the practice of addressing a bankruptcy notice to joint debtors. Each is obliged to pay the full debt and is therefore able to comply with such a notice. Neither the purpose of the notice nor its method of operation is compromised by such a course.

Orders

It follows that there are no issues between the parties which require ventilation. Discovery will serve no purpose. The motions for discovery are dismissed. I have already dismissed Mr Hubner's application as out of time. Mrs Hubner's applications should be dismissed as incurably irregular. I should add that quite apart from the question of formal irregularity, the material demonstrates that Mr and Mrs Hubner's challenges to the bankruptcy notices are frivolous and vexatious and therefore liable to be dismissed pursuant to O 20 r 2. I was somewhat reluctant to proceed under that rule in light of the assertions by counsel for the Hubners that his understanding had been that only the matter of discovery was to be argued, and given the fact that the letter from the bank's solicitors only gave notice of an intention to argue the question of formal defects. However, I have enquired of the legal advisers, and both sides have indicated that they consider the wider issues referred to in O 20 r 2 to have been raised and argued. In those circumstances, I would also dismiss the applications on the basis that they are frivolous and vexatious.

I will hear submissions as to costs.

I certify that this and the preceding fourteen (14) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett

Associate:

Dated: 7 December 1998

Counsel for the Applicant:	Mr D. Fitzgibbon
Solicitor for the Applicant:	Applicant instructed counsel in person
Counsel for the Respondent:	Mr P. Hack
Solicitor for the Respondent:	Minter Ellison
Date of Hearing:	9, 10 November 1998
Date of Judgment:	7 December 1998