Case: Nilant v Macchia [2000] FCA 1528 ; (2000) 104 FCR 238
Outcome: cited
The respondent appealed that decision and the Full Court upheld the appeal finding that s 306 of the Act does not confer a power to treat a failure to comply with s 54(1) of the Act as compliance with it. The case is reported as Nilant v Macchia [2000] FCA 1528 ; (2000) 104 FCR 238. 40 The Full Court held that relief under s 306(1) of the Act was not available because the bankrupt had not made any attempt to comply with s 54(1) of the Act which required a filing of a statement of affairs after the date of sequestration. 41 Weinberg J said at 249, at [54]: 'In the present case, the plain fact is that the appellant did not file a statement of affairs in accordance with the requirements of s 54(1) of the Act, but assumed erroneously that a statement of affairs previously filed with the Registrar on a debtor's petition would serve that purpose. There was no act on the part of the appellant which could be described as even purported compliance with the requirements of the section. His failure to comply with the requirements of s 54(1) does not give rise to a "proceeding under this Act" which would be invalidated but for the fact that any defect or irregularity is merely formal. In these circumstances, there is no proceeding capable of being brought before the Court on an objection concerning that invalidity.' (original emphasis) 42 At 251, at [64] and [65], Weinberg J said: 'Where there has been an attempt to comply with the obligations of s 54(1) , whether within the fourteen day period specified, or on some other occasion thereafter, it is entirely apt to speak of that attempt being a "proceeding under this Act", and being capable of being regarded by the Court as "not invalidated" by reason of any formal defect or error. Section 306(1) in such a case is to permit the period of bankruptcy to run from the date of purported compliance with the Act, or perhaps some later date. It follows that the bankruptcy will not continue for an unconscionably long period merely because of some relatively minor failure on the part of the bankrupt to comply with the strict requirements of s 54(1). Regrettably, it seems to me that s 306(1) cannot be invoked in the circumstances of the present case, where no step whatever has been taken by the bankrupt in purported compliance with the requirements of s 54(1). There is simply no "proceeding" or "step" taken in the course of the bankruptcy which is capable of being the subject of an order that it not be invalidated.' 43 Carr J at 246, at [36] said: '3. In the present matter, where there has been no attempt to comply with s 54 until (at the earliest) 6 April 1993, there was no proceeding which by the operation of s 306 could escape invalidity due to formal defect or irregularity.' 44 There was no case made by the applicant at the hearing of the second application before Lee J in 2000, nor at the hearing before the Full Court in 2000, that the applicant had made a statement of affairs dated 7 October 1991 and delivered it to the respondent. Indeed, the finding by the Full Court that the applicant made no attempt to make a statement of affairs until 6 April 1993 at the earliest, is at the heart of the Full Court's decision. It was a crucial finding on which the whole decision rested. 45 In addition to the legal proceedings referred to above, the applicant also took proceedings against the respondent for compensation in respect of the manner in which the respondent had carried out his duties as trustee of the applicant's bankrupt estate. These proceedings included an action against the respondent in the Supreme Court of Western Australia for the negligent conduct of the applicant's bankruptcy administration. 46 On 20 May 2002, the applicant and the respondent entered into a deed of release in respect of mutual claims made by each of the parties against each other in the various proceedings then pending. Pursuant to the deed of release the respondent agreed to pay the applicant a settlement sum. Clause 4 of the deed of release is particularly relevant to these proceedings. Clause 4 provides as follows: ' 4. BAR TO PROCEEDINGS 4.1 Party not to take action Subject to clause 4.3, a Party must not at any time take or continue any action, suit or proceeding, or make any claim or demand of any nature against the other Party relating to, or arising out of, or connection with, the Dispute or Macchia's bankruptcy except that the terms of this Document do not affect, limit or restrict: (a) any issue between the Parties in relation to the estate of Macchia's mother; (b) the existing rights of any party to receive a distribution or benefit from that estate; or (c) any right of Nilant or Macchia's creditors in relation to any property or income of Macchia which Macchia failed to disclose to Nilant and which would have been vested in Nilant as his trustee in bankruptcy or been available to his creditors.' 47 The respondent sought the summary dismissal or a permanent stay of the claims made in the substantive application by relying on the inherent power of the Court to prevent an abuse of process, alternatively upon O 20 r 2(1) of the Rules. The gravamen of the respondent's argument is that by his current application the applicant is attempting to relitigate a matter which has already been litigated.