mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Adams v Lambert [2006] HCA 10 ; (2006) 225 ALR 396
Outcome: cited
what happened in the verification of the petition could in one sense be said to be a formal defect or irregularity for the purpose of s 306 of the Bankruptcy Act 1966 (Cth), the conduct of Wright Designed in this litigation would negate any beneficial exercise of the discretion which I have to validate its conduct (cp: Adams v Lambert [2006] HCA 10 ; (2006) 225 ALR 396 at 404-405 [27] - [31] per Gleeson CJ, Gummow, Kirby, Hayne, Callinan, Heydon and Crennan JJ). However, I do not think that this is a case in which the proceedings have been invalidated by the defect. The authorities show that the defect could be cured by an amendment pursuant to s 33(1)(b) of the Bankruptcy Act 1966 (Cth). The question is whether or not the petitioning creditor which has not been prepared to comply with the provisions of the Bankruptcy Act 1966 (Cth) so as to make available to creditors generally its security if required by the trustee in bankruptcy should be allowed to proceed to obtain a sequestration order while retaining the benefit of its security. No offer has been made to make the security so available, nor was any application to amend made. I have also considered whether to afford Wright Designed an opportunity to apply for an amendment. Having regard to the way the hearing was conducted and to the findings which I have made above, it would not be fair to do so. If Wright Designed, which was legally represented, could amend and reopen, then, in the interests of justice, Mr and Mrs McClymont could also seek to do so to supplement their evidence on solvency. This would render the above reasons and the hearing otiose. The parties chose to conduct the proceedings on the issues which were contested. I am of opinion that it would not be in the interests of justice or fair to grant to Wright Designed, at this late stage, an opportunity to amend its defective creditor's petition and evidence.
Case: Barry v Heider [1914] HCA 79 ; (1914) 19 CLR 197
Outcome: applied
Designed argued that no relevant interest in land could be created because Mr and Mrs McClymont had not executed a mortgage under s 56 of the Real Property Act 1900 and, therefore no interest in land existed at all. This is fundamentally misconceived. It ignores decisions of the High Court on the existence of equitable estates and interests in land under Torrens title: Barry v Heider [1914] HCA 79 ; (1914) 19 CLR 197 at 216 per Isaacs J. In Chan v Cresdon Pty Limited [1989] HCA 63 ; (1989) 168 CLR 242 at 257 Mason CJ, Brennan, Deane and McHugh JJ approved Isaacs J's statement that where parties had a right to have an instrument executed and registered, that right according to accepted rules of equity is an estate or interest in the land. Until the instrument is executed neither ss 41 or 56 of the Real Property Act 1900 could affect the matter. If the instrument is executed, inefficacy until it is registered can not cut down or merge the pre-existing right which led to its execution. The antecedent agreement is effective in accordance with the principles of equity to bring into existence an equitable estate or interest in the land. Their Honours pointed out that it was the antecedent agreement, evidenced by the unregistered instrument, not the instrument itself, which created the equitable estate or interest.
Case: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995)
Outcome: cited
failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.'
Case: Chan v Cresdon Pty Limited [1989] HCA 63 ; (1989) 168 CLR 242
Outcome: applied
the very definition of the word 'mortgage' in s 3 of the Real Property Act 1900 (NSW) encompasses a charge on land of the kind created by cl 23, when that is perfected into the instrument of mortgage required to be brought into existence in order to create a registered mortgage of which Wright Designed would be the registered proprietor under s 56 of that Act. Until such registration occurred, Wright Designed's interest in land existed only in equity in the sense explained in Chan v Cresdon Pty Limited [1989] HCA 63 ; (1989) 168 CLR 242. Wright Designed argued that no relevant interest in land could be created because Mr and Mrs McClymont had not executed a mortgage under s 56 of the Real Property Act 1900 and, therefore no interest in land existed at all. This is fundamentally misconceived. It ignores decisions of the High Court on the existence of equitable estates and interests in land under Torrens title: Barry v Heider [1914] HCA 79 ; (1914) 19 CLR 197 at 216 per Isaacs J. In Chan v Cresdon Pty Limited [1989] HCA 63 ; (1989) 168 CLR 242 at 257 Mason CJ, Brennan, Deane and McHugh JJ approved Isaacs J's statement that where parties had a right to have an instrument executed and registered, that right according to accepted rules of equity is an estate or interest in the land. Until the instrument is executed neither ss 41 or 56 of the Real Property Act 1900 could affect the matter. If the instrument is executed, inefficacy until it is registered can not cut down or merge the pre-existing right which led to its execution. The antecedent agreement is effective in accordance with the principles of equity to bring into existence an equitable estate or interest in the land. Their Honours pointed out that it was the antecedent agreement, evidenced by the unregistered instrument, not the instrument itself, which created the equitable estate or interest.
Case: Ex parte Leung (1986) 9 FCR 518
Outcome: cited
failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.'
Case: Harvey v Commercial Bank of Australia Ltd [1937] HCA 81 ; (1937) 58 CLR 382
Outcome: cited
am of opinion that s 44(5) does not permit Wright Designed to claim falsely in the petition that it holds no security and, if that is proved wrong, to turn around and say that it could present the petition anyway without having voluntarily offered, under s 44(3) , to surrender the security for the benefit of creditors generally. Such a construction of s 44 reflects the principle of bankruptcy law that all unsecured creditors should be treated equally and a secured creditor should not be allowed to prove for its full debt as an unsecured creditor as well as keeping its security: see Harvey v Commercial Bank of Australia Ltd [1937] HCA 81 ; (1937) 58 CLR 382 at 392-393 per Dixon J with whom Rich J agreed at 386; see too per Starke J at 387. Wright Designed was a secured creditor. It incorrectly caused the petition to be verified without complying with s 44(3). It was well aware of the provisions of the contract entitling it to security, for it lodged a caveat making a claim that it had an interest in Mr and Mrs McClymont's home unit at Killara. The caveat lapsed after they caused a lapsing notice to be issued under the provisions of the Real Property Act 1900 (NSW). The holder of an equitable mortgage is a secured creditor: Re Roberts; Ex parte Australian Telecom Employees Credit Co-operative Ltd (1982) 84 FLR 88; Re Florance; Ex parte Turimetta Properties Pty Ltd (1979) 28 ALR 403 at 414-415 per Lockhart J, applying Harvey v Commercial Bank of Australia [1937] HCA 81 ; (1937) 58 CLR 382.
Case: MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72
Outcome: cited
failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.'
Case: McClymont v Wright Designed Pty Limited [2006] FMCA 4
Outcome: cited
Designed issued a bankruptcy notice seeking payment of the then outstanding Local Court judgment debt of $11,898.95. The bankruptcy notice was served on Mr and Mrs McClymont on 1 November 2005. They applied to the Federal Magistrates Court to set it aside. On 16 January 2006 that court dismissed the application in consequence of which an act of bankruptcy was committed on that day by each of Mr and Mrs McClymont ( McClymont v Wright Designed Pty Limited [2006] FMCA 4). Each of Mr and Mrs McClymont had a dwelling house in Australia, namely their home unit, at the time when the act of bankruptcy was committed. Each of Mr and Mrs McClymont was served subsequently with a creditor's petition which relied on the act of bankruptcy. Mr McClymont appeared on behalf of himself and his wife. They oppose the making of sequestration orders on the following grounds: (a) the petition incorrectly alleged that Wright Designed did not hold security over their property; (b) they are solvent; (c) they had sufficient cause to object against payment of the judgment debts due to Wright Designed or its authorized agents; (d) the affidavits verifying the petition were not sworn by a person who knew the relevant facts.
Case: Montagu v The Earl of Sandwich (1885) 32 Ch D 525
Outcome: approved
Re Roberts; Ex parte Australian Telecom Employees Credit Co-operative Limited (1982) 84 FLR 88, Sweeney J held that a loan contract which provided that the borrower should execute an equitable charge in favour of the lender over the relevant real property and agreed to the lodging of a caveat to protect that interest, created a security in favour of the creditor. He said that the debtor having executed the agreement and accepted the loan pursuant to it had done everything needed to entitle the creditor to require him to execute an equitable charge in a form chosen by the creditor. He referred to Montagu v The Earl of Sandwich (1886) 32 Ch D 525 at 538-539 per Cotton LJ. His Honour held that the loan agreement itself constituted a charge over the interest of the debtor in the relevant real property and that the holder of such a charge was a secured creditor within the meaning of the Bankruptcy Act 1966 (Cth). His Honour's analysis is in my opinion correct and can be applied to the present case.
Case: Re A Debtor [1943] 1 Ch 210
Outcome: discussed
Re A Debtor [1943] 1 Ch 210 at 219 Lord Greene MR, with whom MacKinnon and Goddard LJJ agreed, said that it was true that in a case of inadvertence or of some reasonable excuse, the Court had jurisdiction to allow an amendment to enable compliance with the provisions of the English bankruptcy legislation, requiring a petitioning creditor to set out the fact and value of its security in the petition. His Lordship said at 219, in refusing to allow an amendment: was no inadvertence here, and no mistake of fact. On the other hand, there has been a deliberate attempt by the petitioning creditor throughout to maintain the position that he holds no security and is entitled to disregard the shares [which were the security] . I do not suggest that there has been any bad faith about that. He held, no doubt, a genuine belief that that was the legal position, but, in view of what I consider to be a very unfair attitude, I do not think we ought to allow an amendment.' The position of Wright Designed in the present circumstances is not as clear in relation to its good faith. The verification of the grounds supporting the caveat are in flat contradiction to the verification of the petition. The arguments put forward by Wright Designed in support of its position that it is an unsecured creditor are, in my view, untenable. However, I am mindful of the fact that there is an unsecured creditor, Mr Wright, and of the fact that the McClymonts have not paid that judgment debt. Moreover, there is a public interest in the Court protecting the public generally against insolvents continuing to incur liabilities. But the purpose of ss 44(3) , (4) and (5) is that a secured creditor must make available for the purposes of the bankruptcy which it is seeking to procure in the presentation of the petition, the security which advantages that creditor over all unsecured creditors if the trustee so requires. Obviously, if the secured creditor values the security at nil, the trustee may decide not to require it to be made over, but the secured creditor must also make clear that it has a debt of at least the minimum statutory amount ($2,000) which may be proved for in the bankruptcy the petition seeks to bring about. That is, that sum is unsecured because the security is inadequate.
Case: In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308
Outcome: cited
failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.'
Case: Re Finn; Ex parte Finn Amoco Australia Limited (1982) 41 ALR 487; 58 FLR 54
Outcome: cited
failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.' And s 33(1)(b) confers power on the Court (to be exercised according to the justice of the particular case) to amend a secured creditor's petition, both before and after the making of a sequestration order correct such omissions: Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402-403 and Re Finn; Ex parte Finn v Amoco Australia Ltd (1982) 58 FLR 54 at 60-61; 41 ALR 487 at 493.
Case: Re Florance; Ex parte Turimetta Properties Pty Ltd (1979) 28 ALR 403; 39 FLR 400
Outcome: cited
holder of an equitable mortgage is a secured creditor: Re Roberts; Ex parte Australian Telecom Employees Credit Co-operative Ltd (1982) 84 FLR 88; Re Florance; Ex parte Turimetta Properties Pty Ltd (1979) 28 ALR 403 at 414-415 per Lockhart J, applying Harvey v Commercial Bank of Australia [1937] HCA 81 ; (1937) 58 CLR 382. The failure of a secured creditor correctly to state in a creditors' petition that it is secured at all can be cured by the Court permitting an amendment under s 33(1)(b) of the Bankruptcy Act 1966 (Cth): Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402 per Lockhart J; In Re A Debtor; Ex parte Okill v The Debtor; Okill v Gething [1977] 1 WLR 1308 at 1314C-D per Goulding and Fox JJ; Re Finn; Ex parte Amoco Australia Limited (1982) 41 ALR 487 at 495 per Fitzgerald J. A secured creditor who does not value its security appropriately can also have the petition amended to regularize the position, provided that what is valued is its estimate made in good faith of the value of the security: Bryant v Commonwealth Bank of Australia (unreported FCAFC 24 November 1995 per Beaumont, Whitlam and Moore JJ at 12; see also Re O'Leary; Ex parte Bayne (1985) 61 ALR 674 at 678, 682-683 per Sheppard J applying Lockhart J's decision in Re Wiggins; Ex parte Credit Assistance Pty Ltd (1979) 30 ALR 443 at 446; 36 FLR 182 at 185; see too Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 529-530 per Burchett J; Re Kwiatek; Ex parte Big J Ltd v Pattison (1989) 21 FCR 374 at 383 per Northrop J; see too MacDonald v Official Trustee in Bankruptcy [2001] FCA 140 ; (2001) 107 FCR 72 at 78-79 [27] - [28] ). In the latter case the Full Court said: omission by a petitioning secured creditor from the petition of the matters required to be stated by s 44(3) and (4) is, in our opinion, no less entitled to be called a fundamental defect in the petition as the failure by a petitioner to fully describe the act of bankruptcy referred to in s 40(1)(g) in his petition.' And s 33(1)(b) confers power on the Court (to be exercised according to the justice of the particular case) to amend a secured creditor's petition, both before and after the making of a sequestration order correct such omissions: Re Florance; Ex parte Turimetta Properties Pty Limited (No 2) (1980) 39 FLR 400 at 402-403 and Re Finn; Ex parte Finn v Amoco Australia Ltd (1982) 58 FLR 54 at 60-61; 41 ALR 487 at 493.