FEDERAL COURT OF AUSTRALIA

Parianos v Lymlind Pty Ltd [1999] FCA 684

BANKRUPTCY – Bankruptcy notice founded on a judgment given in a foreign currency – conversion calculation not in accordance with Bankruptcy Regulations, reg 4.04 – Whether reg 4.04 creates an essential requirement for a bankruptcy notice

Bankruptcy Act 1966 (Cth), s 41(2A), 41(2B), 41(2C), 41(5), 41(6A)

Bankruptcy Regulations, regs 4.01, 4.02, 4.04(1), 4.04(2), 4.04(3)

Statute Law (Miscellaneous Provisions) Act (No 2) 1985 (Cth), Schedule 1

Bankruptcy Legislation Amendment Act 1996 (Cth), Schedule 1

Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71, followed

James v Federal Commissioner of Taxation (1955) 93 CLR 631, cited

Re Walsh Ex parte Flying Tiger Line Inc (1985) 7 FCR 579, cited

Miliangos v George Frank (Textiles) Ltd [1976] AC 443, cited

Maschinenfabrik v Altikar Pty Ltd [1984] 3 NSWLR 152, cited.

Re Ikin; Ex parte Same & Lamborghini Tractors of Australia Pty Ltd (1985) 4 FCR 582, cited

Re Bond; Ex parte HongKongBank of Australia Ltd (1991) 33 FCR 426, cited

Re Bond; Ex parte HongKongBank of Australia Ltd (1991) 34 FCR 447, cited

Bond v HongKongBank of Australia Ltd (1992) 34 FCR 453, cited

GEORGE PARIANOS v LYMLIND PTY LIMITED & ORS

N 7276 OF 1999

JUDGE:          SACKVILLE J

PLACE:          SYDNEY

DATE:            28 JUNE 1999

THE COURT ORDERS THAT:

1.         The Bankruptcy Notice No NN 2750 of 1998, which was served on the applicant on 18 February 1999, be set aside.

2.         The respondents pay the applicant’s costs.

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

REASONS FOR JUDGMENT

The Issues

1                     This is an application to set aside a bankruptcy notice served on the applicant (“the debtor”) on 18 February 1999.  The application was filed within the twenty-one day period provided for compliance with the notice: see s 41(6A) of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”).  The time for compliance with the bankruptcy notice has been extended until delivery of judgment in these proceedings.

The Bankruptcy Notice

2                     The bankruptcy notice served on the debtor claims that he owes the respondents (“the creditors”)

“a debt of AUS$1,685,272.47, as shown in the Schedule headed ‘Australian dollars’ which amount is the equivalent of 1,422,369.98 Swiss Francs shown in the schedule headed ‘Schedule of Swiss Francs’ and pursuant to Regulation 4.04 Bankruptcy Regulations, payment can be made in that foreign currency or in the equivalent Australian currency.”

3                     The bankruptcy notice did not contain a schedule headed “Schedule of Swiss Francs”.  It did, however, contain a “Schedule for payment in Swiss Francs”, in the following form:

“          COLUMN 1                                                                COLUMN 2

            1.         Amount of judgment or order                         SF$1,336,584.98

plus     2.         Legal costs if ordered to be paid and

                        a specific amount was not included in

                        the judgment or order (see Note 1 below)      $                     

plus     3.         If claimed in this Bankruptcy Notice,

                        interest accrued since the date of

                        judgment or order (see Note 2 below)            SF$       91,195.33

            4.         Subtotal                                                           SF$  1,427,780.31

less      5.         Payments made and/or credits allowed

                        since date of judgment or order                     SF$       5,410.33

            6.         Total debt owing                                          SF$ 1,422,369.98”

4                     The reference in item 1 to a judgment or order for SF1,336,584.98 was (as is common ground) to an order made by a Judge of this Court on 11 July 1997, in proceedings between the creditors as applicants and two respondents, one of whom was the debtor.  The Court ordered that there be:

“Judgment for the [creditors] against the [debtor] for Swiss Francs 1,336,584.98 together with interest at the daily rate of Swiss Francs 172.77 from 11 July 1997 until payment.”

5                     The bankruptcy notice also included a “Schedule for payment in Australian dollars” as follows:

            “COLUMN 1                                                              COLUMN 2

            1.         Amount of judgment or order             AUS$1,583,631.49

plus     2.         Legal costs if ordered to be paid

                        and a specific amount was not

                        included in the judgment or order

                        (see Note 1 below)                              $                     

plus    3.         If claimed in this Bankruptcy

                        Notice, interest accrued since the

                        Date of judgment or order (see

                        Note 2 below)                                      AUS$   108,051.33

            4.         Subtotal                                               AUS$1,691,682.82

less      5.         Payments made and/or credits

                        allowed since date of judgment

                        or order                                               AUS$      6,410.35

            6.         Total debt owing                                AUS$1,685,272.47”

Note 3 to this schedule was in the following form:

“Note 3:          Foreign currency amount conversion

                        (see Bankruptcy Regulations, reg 4.04)

Total debt owing, expressed in foreign currency                    

Order 11/7/97                                                             1,336,584.98 Swiss Francs

Interest pursuant to Order 11/7/97 from 11/7/97

Until 22/12/98 (529 days) @ 10% p.a. on 172.77

Swiss Francs                                                               91,195.33 Swiss Francs

Commonwealth Bank of Australia opening

Telegraphic transfer rate on 18/12/98

$1.00 =                                                                                   $0.8440 Swiss Francs

Australian Dollar equivalent on 1,336,584.98

Swiss Francs (1,336,584.98 divided by 0.8440) =      AUS$1,583,631.49

Australian Dollar equivalent on 91,195.33

Swiss Francs (interest)

(91,195.33 divided by 0.8440)                                                AUS$108,051.33

·         The conversion of the amount of foreign currency into Australian currency has been made in accordance with Regulation 4.04 of the Bankruptcy Regulations.”

The Erroneous Calculation

6                     It will be seen that Note 3 states that the conversion of the judgment sum of SF1,336,584.98 into Australian currency had been made in accordance with Bankruptcy Regulations, reg 4.04.  Regulation 4.04 provides as follows:

“4.04(1)          This regulation applies to a bankruptcy notice if the judgment or order lodged under subregulation 4.01(1) in relation to the notice is expressed in an amount of foreign currency (whether or not the judgment or order is also expressed in an amount of Australian currency).

4.04(2)                        A bankruptcy notice to which this regulation applies must:

(a)       contain a statement to the effect that payment of the amount of foreign currency expressed in the judgment or order may be paid in that foreign currency or by means of a specified amount of Australian currency that is stated to be equivalent to the amount of foreign currency; and

(b)       set out:

(i)         the applicable rate of exchange, being the rate worked out in accordance with subregulation (3); and

(ii)        the conversion calculation; and

(iii)              a statement that the conversion of the amount of foreign currency into Australian currency has been made in accordance with this regulation.

4.04(3)             For the purposes of paragraph (2)(b), the conversion of an amount of foreign currency into an equivalent amount of Australian currency must be done in accordance with the exchange rate that, on the second working day before the day on which the relevant application is lodged under subregulation 4.01(1), is the relevant opening telegraphic transfer rate of the Commonwealth Bank of Australia.”

7                     The applicant’s argument rests on the undisputed fact that the conversion of the amount of SF1,336,584.98 (plus interest) into Australian currency as recorded in the bankruptcy notice, was not in fact done in accordance with reg 4.04.  Regulation 4.04(3) requires the conversion to be calculated in accordance with the exchange rate that, on the second working day before the day on which the application for a bankruptcy notice is lodged with the Official Receiver under reg 4.01, is the opening telegraphic transfer rate of the Commonwealth Bank of Australia (“CBA”).

8                     In this case, the creditors lodged the relevant application with the Official Receiver on Monday, 21 December 1998.  The second working day before that day was Thursday, 17 December 1998.  The calculation in the bankruptcy notice was made by reference to the opening telegraphic transfer rate of the CBA on Friday, 18 December 1998 (namely A$1=SF 0.8440).  The opening telegraphic transfer rate of the CBA on Thursday, 17 December 1998, was A$1=SF 0.8463. 

9                     Had the rate prescribed by reg 4.04(3) been used, the bankruptcy notice would have claimed a debt (including interest), according to the creditors’ calculations, of A$1,687,321.63 before allowing for payments made by the debtor.  That is, the amount of indebtedness claimed in the bankruptcy notice after conversion into Australian currency, but before allowing for payments made (a total of A$1,691,682.82) was A$4,361.19 higher than it should have been had the formula in reg 4.04(3) been faithfully followed.  (The calculations on behalf of the debtor were slightly, but not materially, different.)

The Submissions

10                  The debtor’s argument is simply that the bankruptcy notice failed to comply in an essential respect with the Bankruptcy Regulations.  According to Mr Skinner, who appeared for the debtor, the defect is fatal to the validity of the notice, which is therefore liable to be set aside on the debtor’s application.

11                  For his part, Mr Aldridge, who appeared for the creditors, contended that the appropriate test is whether the notice is capable of misleading a debtor as to what must be done to comply with it.  He submitted that the object of reg 4.04 is to permit a judgment in a foreign currency to be the subject of a bankruptcy notice.  The regime created by reg 4.04 (so it was argued) is artificial, in that the conversion rate almost inevitably will vary between the date prescribed by reg 4.04 and the date of issue of the notice of bankruptcy.  Moreover, the rate is likely to vary even more during the twenty-one days after service of the notice within which the debtor must comply with the notice.

12                  Mr Aldridge pointed out that the debtor always has the choice of complying with the bankruptcy notice by paying the amount of the foreign currency judgment or by paying the Australian currency equivalent claimed in the bankruptcy notice.  A debtor will obviously choose the mode of payment most advantageous to him or her.  It follows, Mr Aldridge argued, that it is enough for the bankruptcy notice to specify an amount in Australian currency approximately equivalent to the amount of the foreign currency judgment calculated at the date of issue of the notice, even if the calculations are not precisely in accordance with reg 4.04.  He submitted that the bankruptcy notice in this case substantially complied with reg 4.04, since if the notice itself had in fact been lodged and issued one day later, the conversion calculation would have been correct.

Reasoning

13                  There was some common ground between the parties.  The debtor contended, and the creditors accepted, that the applicable principle is that stated by the joint judgment in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71, at 79-80:

“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) 93 CLR 631, at 644; Pillai v Comptroller of Income Tax [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 [1908] 2 KB 474, at 481”.  (Emphasis added.)

It is clear from this passage that a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Bankruptcy Act, whether or not the notice could reasonably mislead a debtor.

14                  An illustration of the application of the principle that a bankruptcy notice is a nullity if it fails to comply with a requirement made essential by the Bankruptcy Act is James v FCT, cited in the passage from Kleinwort Benson.  Section 53 of the Bankruptcy Act 1924 (Cth) provided that a bankruptcy notice was to require the debtor to pay the judgment debt in accordance with the terms of the judgment.  It was held that a notice which required the debtor to pay the creditor at a specified address failed to comply with s 53. The High Court held that a direction of this kind was not in accordance with the terms of the judgment, unless the judgment or order itself directed that the judgment debt was to be paid at a particular address.

15                  The creditors did not suggest that a distinction should be drawn between a requirement made essential to the validity of a bankruptcy notice by the Bankruptcy Act and one rendered essential by a valid regulation made pursuant to the Bankruptcy Act.  There is no sensible basis for drawing such a distinction, since the requirements for a bankruptcy notice can be and often are stated in regulations.  The question is therefore whether reg 4.04(3) states an essential requirement for a bankruptcy notice and, if so, whether the notice in this case failed to comply with that requirement.

16                  The language of reg 4.04 strongly suggests that it is intended to create requirements essential to the validity of a bankruptcy notice.  It applies to the specific case of a bankruptcy notice issued in relation to a judgment expressed in an amount of foreign currency (reg 4.04(1)).  The regulation is expressed in emphatic language.  The notice must contain a statement to the effect that the amount of foreign currency expressed in the judgment or order may be paid in that foreign currency or by means of a specified amount of Australian currency that is stated to be the equivalent to the amount of foreign currency (reg 4.04(2)(a)).  The notice also must set out the applicable rate of exchange worked out in accordance with reg 4.04(3), the conversion calculation and a statement that the conversion of the foreign currency amount into Australian currency has been made in accordance with the regulation (reg 4.04(2)(b)).

17                  Regulation 4.04(3) itself specifies the manner in which the conversion must be done.  In particular, it requires the conversion to be done in accordance with the opening telegraphic transfer rate of the CBA on the second working day before the day on which the application for a bankruptcy notice is lodged under reg 4.01.  Thus reg 4.04(3) identifies a particular exchange rate prevailing at a particular time in a particular institution.

18                  Regulation 4.04 is clearly intended to establish a specific scheme for bankruptcy notices issued in relation to foreign currency judgments.  The scheme has two principal objects.  The first is to inform the judgment debtor that, in order to comply with the bankruptcy notice, he or she has an option.  The debtor may pay the judgment debt in the foreign currency in which the judgment is expressed.  Alternatively, he or she may choose to pay “by means of a specified amount of Australian currency that is stated to be the equivalent to the amount of foreign currency”.  The second and related object is to identify the precise means by which the “specified amount of Australian currency” must be calculated and therefore to notify the debtor of the precise amount of Australian currency that must be paid, if he or she exercises the option to pay in local currency.  The means chosen to identify the exchange rate recognises the obvious fact that exchange rates may vary, not merely from day to day, but from hour to hour or even by the minute or second.  For this reason, a clearly identified and readily ascertainable rate of exchange is nominated for the purpose of undertaking the calculation required by reg 4.04.

19                  In my opinion, it would be inconsistent with the scheme established by reg 4.04 to hold that a bankruptcy notice which incorporates calculations by reference to a rate of exchange prevailing on a day other than that nominated by reg 4.04(3) is nonetheless valid.  It is true, as Mr Aldridge pointed out, that the option conferred on the debtor may give him or her a commercial advantage (at least in relation to compliance with the bankruptcy notice), depending on movements in exchange rates after the date nominated in reg 4.04(3).  But the drafters of reg 4.04 plainly intended that the debtor should have the option of paying a sum in Australian currency equivalent to the amount of the foreign currency debt, and that that sum should be calculated in accordance with the precise directions given in reg 4.04(3).  Whether this gives a debtor an unfair advantage (as Mr Aldridge rather suggested) is not to the point.  Regulation 4.04 is designed to afford the debtor the choice and to ensure that if payment is to be made in Australian currency, the debtor understands precisely how much is to be paid.

20                  This conclusion is supported by the structure of Part 4 of the Bankruptcy Regulations, of which reg 4.04 forms part.  Regulation 4.01(1) provides that, in order to apply for the issue of a bankruptcy notice a creditor must lodge with the Official Receiver a draft bankruptcy notice and certain other documents, including a sealed or certified copy of the judgment.  This procedure replaces that which prevailed under the Bankruptcy Act, prior to the amendments effected by the Bankruptcy Legislation Amendment Act 1996 (Cth), which came into force on 16 December 1996 (the same date as the commencement of the Bankruptcy Regulations).  Under the earlier regime, an application for a bankruptcy notice was made to the Registrar of the Court.  Since it was difficult to know when the notice would actually be issued by the Registrar, it was very difficult to calculate an amount to be incorporated in the bankruptcy notice in accordance with exchange rates prevailing on a date referable to the issue of the notice.  (The difficulty is illustrated by Re Walsh Ex parte Flying Tiger Line Inc (1985) 7 FCR 579 (Beaumont J), at 581; cf Kleinwort Benson, at 77.)

21                  Regulation 4.04 requires the relevant exchange rate to be ascertained on the second working day before the application for a bankruptcy notice has been lodged.  Since the date of lodgment is within the control of the creditor, there is no difficulty in the creditor ascertaining the relevant exchange rate in accordance with reg 4.04(3), regardless of the date of issue of the bankruptcy notice.  Regulation 4.04 has clearly been carefully drafted with the new procedure in mind.

22                  Confirmation that reg 4.04 is to be interpreted as creating an essential requirement for a bankruptcy notice is provided by the wording of reg 4.02.  Mr Aldridge submitted that minor departures from the prescribed form of a bankruptcy notice could hardly be intended to lead to the invalidity of the notice.  This is plainly correct.  However, the conclusion follows from the express language of reg 4.02, which prescribes the required form.  Regulation 4.02(3) states that the requirement that a bankruptcy notice must follow the prescribed form is not to be taken as expressing an intention contrary to s 25C of the Acts Interpretation Act 1901 (Cth).  Since s 25C provides that, in the absence of a contrary intention, strict compliance with a prescribed form is not necessary, reg 4.02(3) makes it abundantly clear that substantial compliance with the prescribed form is sufficient.  Had the drafter of Part 4 intended that, in the case of a bankruptcy notice founded on a foreign currency judgment, substantial compliance with reg 4.04 should be enough, it would have been very easy to adopt a formula similar to that employed in reg 4.02(3).  The absence of any such formula in reg 4.04 strongly suggests that strict compliance was required, at least in relation to the date by which the conversion calculation is to be made.

23                  In the light of the emphatic language of reg 4.04, it is perhaps unnecessary to refer to the legislative history of reg 4.04.   However, in my opinion, the history further strengthens the conclusion I have reached.

24                  Prior to 1985, the Bankruptcy Act made no specific provision for the issue of bankruptcy notices founded on foreign currency judgments.  This was not surprising since it was only in 1976 that the House of Lords established that courts in England had power to enter a judgment expressed in terms of a foreign currency: Miliangos v George Frank (Textiles) Ltd [1976] AC 443.  By 1984, courts in New South Wales and doubtless elsewhere in Australia had regularly entered judgments for plaintiffs in foreign currency: Maschinenfabrik v Altikar Pty Ltd [1984] 3 NSWLR 152 (Rogers J), at 153.

25                  The absence of any specific provision, in the Bankruptcy Act, or subordinate legislation for the issue of bankruptcy notices founded on foreign currency judgments created difficulties.  In Re Ikin; Ex parte Same & Lamborghini Tractors of Australia Pty Ltd (1985) 4 FCR 582, Pincus J held that a bankruptcy notice founded on a judgment in United States dollars (“USD”) was bad where the notice itself requested payment in USD.  His Honour held that the requirement in s 41(1)(a) of the Bankruptcy Act, as it then stood, that a bankruptcy notice be in the prescribed form, required the debtor to be informed that he or she could satisfy the notice by paying an amount of Australian currency which, at the time of payment, was equivalent to the USD judgment.

26                  In Re Walsh, decided in 1985, Beaumont J held that a bankruptcy notice whichrequired the debtor to pay an amount in Australian currency, calculated by reference to the exchange rate applicable on the date of the foreign currency judgment, was defective.  His Honour considered that, where a bankruptcy notice quantified a sum in Australian dollars equivalent to the foreign currency judgment, the appropriate exchange rate was that prevailing at the close of business on the day preceding the date of issue of the bankruptcy notice (at 581).  His Honour also considered that the bankruptcy notice had to include a notification to the debtor substantially in the form proposed by Pincus J in Re Ikin.

27                  The difficulties illustrated by these cases prompted the Parliament to enact legislation dealing specifically with bankruptcy notices founded on foreign currency judgments.  Schedule 1 to the Statute Law (Miscellaneous Provisions) Act (No 2) 1985 (Cth) introduced subss (2A), (2B) and (2C) into s 41 of the Bankruptcy Act.  These provisions read as follows:

“(2A)  Where the judgment debt or sum ordered to be paid in accordance with the judgment or order is expressed by the judgment or order as an amount in the currency of a foreign country (in this subsection referred to as the ‘amount of foreign currency’), the bankruptcy notice shall state that payment is to be made in either:

(a)       the amount of foreign currency; or

(b)       a specified amount of Australian dollars, being an amount that is the equivalent in Australian dollars of the amount of foreign currency on the second business day before the day on which application was made for the issue of the bankruptcy notice.

(2B)                 The rate for ascertaining on a particular day for the purposes of paragraph (2A)(b) the equivalent in Australian dollars of an amount of foreign currency is the average of the rates at which Australian dollars may be bought in that foreign currency at:

(a)       11 o’clock in the morning; or

(b)       if another time is prescribed for the purposes of this subsection – that other time;

on that day from 3 authorised foreign exchange dealers selected by the creditor who applied for the issue of the bankruptcy notice.

(2C)                 In this section:

‘authorised foreign exchange dealer’ means a person authorised by a general authority issued by the Reserve Bank of Australia under regulation 38A of the Banking (Foreign Exchange) Regulations to buy and sell foreign currency;

‘business day’, in relation to an application for the issue of a bankruptcy notice, means a day that is not a Saturday, a Sunday or a public holiday or bank holiday in the place where the application is made.”

28                  It will be seen that these provisions are similar in important respects to the present reg 4.04, although there are significant differences, especially in the means adopted to select the appropriate exchange rate.  In Re Bond; Ex parte HongKongBank of Australia Ltd (1991) 33 FCR 426, Foster J held (at 432) that the new statutory provisions were designed to provide

“debtors with alternative methods of payment in foreign or Australian currency set out clearly in the body of the bankruptcy notice”.  (Emphasis added.)

Later cases in the Bond litigation endorsed this approach and addressed certain questions of construction arising from the statutory language: Re Bond; Ex parte HongKongBank of Australia Ltd (1991) 34 FCR 447 (Morling J), at 451; aff’d Bond v HongKongBank of Australia Ltd (1992) 34 FCR 453 (FC). 

29                  In the last-mentioned case, the Full Court explained the purpose of the 1985 amendments as follows (at 458):

“The evident purpose of the 1985 amendments was to give to the judgment debtor an election between payment of the amount of foreign currency (for this purpose a fixed amount or quantity) and of an amount in Australian dollars specified in the bankruptcy notice and quantified, relative to the foreign currency, in the manner provided for in subss (2A), (2B) and (2C).

If one takes the hypothesis of a judgment debtor who will, within the time fixed for compliance, pay the judgment debt, there is inherent in the statutory scheme the possibility of a variation between the amount of Australian dollars specified in the bankruptcy notice and the amount in Australian currency that would be required immediately before the time fixed for compliance with the bankruptcy notice, in order to obtain the amount of foreign currency.  The debtor has the advantage of being able to select, at the time he effects payment, that which then is the more favourable course.  The legislation supplies a yardstick for the making of that election by providing for the amount in the election of Australian dollars to be fixed before issue of the notice and by reference to events two days before the making of the application for the issue of the bankruptcy notice.  Other times might have been chosen by the legislature, as is illustrated by the result under the previous law in Re Walsh.” (Emphasis added.)

It seems to me that this passage also accurately describes the purpose of reg 4.04 except of course that reg 4.04(3) provides for the conversion calculation to be carried out by reference to an exchange rate identified in a somewhat different manner.

30                  I have already referred to the Bankruptcy Legislation Amendment Act 1996 (Cth).  Schedule 1 to that Act, inter alia, repealed subss 41(2A), (2B) and (2C).  The repeal took effect on the same day as the date of commencement of the Bankruptcy Regulations.  The view was taken that the provision governing bankruptcy notices founded on foreign currency judgments should be placed in the Bankruptcy Regulations rather than retained in the Bankruptcy Act itself (see Senate Explanatory Memorandum, Bankruptcy Legislation Amendment Bill 1996, at par 41.2).  But the Bankruptcy Regulations retained the essentials of the approach previously embodied in the legislation, while establishing a simpler and more specific means of determining the appropriate rate of exchange for the necessary currency conversion.

31                  Given the similarities between reg 4.04 and subss 41(2A), (2B) and (2C), it seems to me that the drafter intended that the regulation should have much the same effect, except for the changes necessarily flowing from the differences in language.  In particular, the legislative history supports the proposition that an Australian currency amount included in a bankruptcy notice which is derived from a conversion carried out by reference to a day other than that specified in reg 4.04(3), will render the bankruptcy notice invalid.

32                  I should add that the creditors placed no reliance on s 41(5) of the Bankruptcy Act, notwithstanding that the debtor apparently did not give the notice contemplated by the sub-section.  Section 41(5) provides 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 gives timely notice to the creditor that he or she disputes the validity of the notice on the ground of the mis-statement.  In my view, the creditors were correct not to invoke s 41(5), since the bankruptcy notice in this case was not invalidated merely by reason of an overstatement of the amount due.  It was invalidated because of the failure to comply with a requirement made essential by the Bankruptcy Regulations.

Conclusion

33                  The bankruptcy notice served on the debtor should be set aside.  The creditors should pay the debtor’s costs.

Associate:

Dated:              28 June 1999