Case: Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34 ; (1988) 165 CLR 71
Outcome: considered
The appellant's Notice of Appeal filed 29 February 2008 contained eight grounds, the first five of which encapsulate the crux of the appellant's appeal to this Court. They provide: His Honour erred in law in A1 failing to hold that the Bankruptcy Notice served on the appellant by the respondent was invalid A2 failing to hold that, as an invalid Bankruptcy Notice, the Notice was not able to be amended because as a matter of construction ss 40 and 41, (in providing for a bankruptcy notice founding an Act of Bankruptcy cognisable under the Act) and s 33 (power to amend) must as a matter of construction refer only to a valid notice; and the Court below (FMC) had no jurisdiction to amend or deal in any way with an invalid notice except to pronounce it invalid. A3 failing to hold that s 41(5) of the Act, in stating that a bankruptcy notice "is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity on the ground of the misstatement" carries the meaning that if notice is duly given of dispute on that ground, the notice is invalid, and invalid ab initio. A4 failing to hold that the "amendment" is not within the Court's jurisdiction because it is in reality an assumption of jurisdiction that the legislation does not allow ie the Court cannot hold something made essential by the Act, leading to invalidity of the Bankruptcy Notice) to be inessential. ( Kleinwort Benson. ) A5 purporting to make an amendment where to do so is not merely to amend but to give validity to what is invalid. 18 Ground A6 went to his Honour's decision to hear the Interim Application before the Amended Application to set aside; it does not arise if the appellant succeeds on her primary ground. Grounds A7 and A8 were not pressed on the hearing of the appeal and can be put to one side. 19 Section 41(5) of the Act provides: (5) A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement. The power to amend a notice under the Act is relevantly contained in s 33 of the Act: (1) The Court may: ... (b) at any time allow the amendment of any written process, proceeding or notice under this Act; or ... 20 A bankruptcy notice is clearly a notice under the Act; however, contrary to the submission of the respondent, it is not a proceeding under the Act. It is the issue of a bankruptcy notice which is a proceeding under the Act: Pillai v Comptroller of Income Tax [1970] AC 1124 at 1131; quoted with approval in Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34 ; (1988) 165 CLR 71 at 77 per Mason CJ, Wilson, Brennan and Gaudron JJ. 29 The respondent submitted that even if a bankruptcy notice is invalid by reason of an overstatement of the amount due to the creditor and the timely giving by the debtor to the creditor of a notice complying with the requirements of s 41(5), the most that this does is make failure to comply with it a non-event or, to use the words of Deane J in Kleinwort Benson 165 CLR at 81 '... failure to comply with it does not constitute an act of bankruptcy'. In the respondent's submission, s 33(1)(b) of the Act nevertheless empowers the court to 'cure' the invalidity by amending the notice so that the amount referred to therein corresponds with the amount due to the creditor. 30 This latter submission was predicated on three underlying arguments: (1) There is no express or implied restriction in the power conferred by s 33(1)(b) of the Act, such that it does not apply where a bankruptcy notice is invalid; (2) a defective bankruptcy notice is still a bankruptcy notice and therefore s 33(1)(b) applies to it; and (3) a bankruptcy notice that is liable to be invalidated is not invalid until a court declares it to be so and therefore the Bankruptcy Notice is not invalid. 31 I have already dealt with the third argument at [27] above and I reject it. 33 In Kleinwort Benson 165 CLR at 79, 80, Mason CJ, Wilson, Brennan and Gaudron JJ said: The authorities show that a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice: James v Federal Commissioner of Taxation [1955] HCA 75 ; [(1955) 93 CLR 631 at 644]; Pillai [[1970] AC 1124 at 1135]. In such cases the notice is a nullity whether or not the debtor in fact is misled: In re A Judgment Debtor, 530 of 1908 [[1908] 2 KB 474 at 481].