FEDERAL COURT OF AUSTRALIA
Thompson v Metham [1999] FCA 935
BANKRUPTCY - validity of bankruptcy notice - whether notice in required form - whether copy of judgment relied upon by creditor attached to notice - where document attached not in proper form and contained errors as to date and terms of judgment - whether sum specified in notice exceeded amount in fact due - whether fresh notice had been issued - whether overstatement by over 50% of the amount due automatically invalidated notice - whether notice could reasonably have misled debtor.
Bankruptcy Act 1966 (Cth) ss 41(2), 41(5), 306(1)
Bankruptcy Regulations (Cth) regs 1.03(2), 4.02(1), 4.02A(2)(b), Sch 1
District Court Act, 1973 (NSW) s 85(2)(a)
District Court Rules, 1973 (NSW) Pt 1 r 6
District Court Forms (NSW) Forms 64, 66
Palmer v Clarke (1989) 19 NSWLR 158, cited
St George Bank Limited v Klintworth (1998) 157 ALR 286, followed
Re Scerri (1998) 82 FCR 146, followed
Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71, cited
Commonwealth Bank of Australia v Horvath (1999) 161 ALR 441, followed
American Express International Inc v Held [1999] FCA 321 (Kenny J; unreported; 29 March 1999), followed
Seovic Civil Engineering Pty Limited v Groeneveld (1999) 161 ALR 543, followed
Re Serafino; Ex parte Classic Manufacturing Pty Ltd (1989) 86 ALR 283, cited
Re Greenhill; Ex parte Myer (NSW) Ltd (1984) 5 FCR 84, cited
Re Emerson; Ex parte Wreckair Pty Ltd (1991) 101 ALR 315, cited
Re Walsh (1982) 65 FLR 87, cited
IN THE MATTER OF ALAN THOMPSON; ALAN THOMPSON v BRIAN ROGER METHAM
N 7320 OF 1999
KATZ J
SYDNEY
9 JULY 1999
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IN THE FEDERAL COURT OF AUSTRALIA |
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N 7320 OF 1999 |
IN THE MATTER OF ALAN THOMPSON;
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BETWEEN: |
ALAN THOMPSON Applicant
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AND: |
BRIAN ROGER METHAM Respondent
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DATE OF ORDER: |
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WHERE MADE: |
THE COURT ORDERS THAT:
1. Bankruptcy Notice No NN0073 of 1999 be set aside.
2. Within two days of entry, the respondent provide a copy of these orders to the Official Receiver in Sydney.
3. The respondent pay the applicant’s costs of the proceeding.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
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IN THE FEDERAL COURT OF AUSTRALIA |
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N 7320 OF 1999 |
IN THE MATTER OF ALAN THOMPSON;
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BETWEEN: |
Applicant
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AND: |
Respondent
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JUDGE: |
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DATE: |
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PLACE: |
REASONS FOR JUDGMENT
1 On two grounds, Mr Alan Thompson (“the debtor”) disputes the validity of a purported bankruptcy notice (“the notice”) served on him by Mr Brian Roger Metham (“the creditor”) on 6 March 1999.
2 The first ground of invalidity alleged by the debtor is that the notice was not in the required form. I set out immediately below the three statutory provisions on which reliance is placed in making that allegation.
3 First, subs 41(2) of the Bankruptcy Act 1966 (Cth) (“the Act”) provides, “The [bankruptcy] notice must be in accordance with the form prescribed by the regulations”.
4 Secondly, subreg 4.02(1) of the Bankruptcy Regulations (Cth) (“the Regulations”) provides, “For the purposes of subsection 41(2) of the Act, the form of bankruptcy notice set out in Form 1 is prescribed”. (The reference in subreg 4.02(1) of the Regulations to “Form 1” is a reference to Form 1 in Sch 1 to the Regulations: see subreg 1.03(2) of the Regulations.)
5 Thirdly, Form 1 in Sch 1 to the Regulations relevantly provides for the inclusion within a bankruptcy notice of the words, “A copy of the judgment … relied upon by the creditor is attached”.
6 The disputed notice bore the date 14 January 1999 and claimed that the debtor owed the creditor $29,627.66. That sum was said in the Schedule to the notice to be comprised of $24,712, being the amount of a judgment, and $4,915.66, being the amount of interest accrued on the judgment debt since the date of judgment.
7 In a document attached to the notice, dealing with the amount of interest accrued, details were given of the calculation of the sum of $4,915.66. That document also included the following three statements:
“Judgement [sic] was entered against Alan Thompson in the District Court of New South Wales, at Sydney on 26th January 1997 for the sum of $24,712.00. A certified copy of the Judgment made [sic] in the District Court, Sydney is attached.
Interest is being claimed for the period from 26th January 1997 until 13th January 1999.”
8 Of those three statements, only the third of them was true; the first and second of them were false.
9 A second document attached to the notice, asserted by the creditor in the first attached document to be a certified copy of the District Court’s judgment of 26 January 1997 against the debtor in the sum of $24,712, read in its entirety as follows:
“IN THE DISTRICT COURT
OF NEW SOUTH WALES
AT SYDNEY
No. 13844 of 1990
BETWEEN Brian Roger METHAM
(Plaintiff)
AND Alan Thompson
(Defendant)
JUDGMENT
26th January, 1997
It is this adjudged [sic] that:
1. That [sic] the plaintiff recover against the defendant $24,712.00 on his claim and the question of costs reserved.
2. The defendant pay $24,712.00 to the plaintiff forthwith.
3. On delivery to the plaintiff within 28 days at the plaintiff’s current residential address, or such other address within the Sydney metropolitan area, as directed by the plaintiff, at the defendant’s expense, and acceptance by the plaintiff of the Narwee tables on or before 23rd February, 1997, the judgment debt shall be deemed to be satisfied to the extent of $14,000.00.
Dated: 20th March, 1997.
By the Court,
Assistant Registrar.”
10 The original of the disputed notice was in evidence before me and I have examined the second document attached to it, the terms of which document I have just set out. It is a photocopied document, bearing an indecipherable signature above the words “Assistant Registrar”. I have found it impossible to be satisfied as a result of my examination of the photocopy that the original bore the District Court’s seal, although Pt 1, r 6, of the District Court Rules, 1973 (NSW) provides relevantly that a registrar shall seal or stamp with the seal of the Court any certificate or copy of a judgment issued by him. The debtor does not dispute that the original of the document was signed by an Assistant Registrar of the District Court. However, what the document’s effect was is another question.
11 Contrary to the second of the three statements which I have quoted in par 7 above, the Assistant Registrar’s document plainly was not (nor did it even purport to be) a certified copy of a judgment which had actually been given by Tapsell ADCJ in January 1997, to which judgment I will later refer. (The form of a certified copy of a District Court judgment can be found in Form 66 of the District Court Forms (NSW).) Nor did the Assistant Registrar’s document comply, even substantially, with Form 64 of those Forms, which form prescribes a form of certificate of judgment as follows:
“CERTIFICATE OF JUDGMENT
I, E.F., Registrar of the District Court of New South Wales for (place), being the officer having ordinarily the custody of the records, documents, proceedings and minutes of the Court at that place, do hereby certify that:-
1. In this action the plaintiff recovered judgment against the defendant on , 19 , for $ and his costs of the action to be taxed, which costs have since been taxed and allowed at $ (or such other extract as is appropriate to the judgment).
2. I am informed by the judgment creditor that no amount has been paid (or $ has been paid on , 19 ) in respect of the judgment.
3. Interest is payable at % per annum on so much of the judgment debt (including costs) as is from time to time unpaid.
4. (Where appropriate: The judgment creditor has incurred costs of attempting to enforce the judgment, recoverable against the judgment debtor, in the amount of $ .)
Dated:
Registrar.”
12 The Assistant Registrar’s document did not comply, even substantially, with the requirements of Form 64 for a certificate of judgment, because, as well as not containing the information which is required by that form to be certified secondly and thirdly, it did not contain “such … extract as is appropriate to the judgment” concerned, as is required by that form to be certified first; the document was in error both in its statement of the date of the judgment concerned and in its statement of the terms of that judgment.
13 I will deal first with the error in the Assistant Registrar’s document as to the date of the relevant judgment.
14 There is affidavit evidence before me from the debtor’s solicitor that, on 29 January 1997, he appeared in the District Court before Tapsell ADCJ, “who delivered a written judgment in the proceedings” then on foot between the creditor and the debtor, the nature of which proceedings I will mention in a moment. Annexed to the debtor’s solicitor’s affidavit is a copy of that “judgment”. The annexed document, which was dated 26 January 1997 and signed by Tapsell ADCJ, actually contained both Tapsell ADCJ’s reasons for judgment and his judgment.
15 I accept the debtor’s solicitor’s evidence that Tapsell ADCJ gave judgment on 29 January 1997, at which moment, incidentally, his judgment took effect: see Palmer v Clarke (1989) 19 NSWLR 158 at 168 (Kirby P) and 173 (Samuels JA). The fact that Tapsell ADCJ’s written reasons for judgment and judgment were dated three days earlier (which was the only matter relied upon by the creditor to contradict the debtor’s solicitor’s evidence) does not cause me to doubt that Tapsell ADCJ’s judgment was actually given when the debtor’s solicitor says it was, especially since 26 January is Australia Day.
16 I deal now with the error in the Assistant Registrar’s document as to the terms of the relevant judgment.
17 The proceedings between the creditor and debtor determined by Tapsell ADCJ had involved allegations by the creditor of wrongful detention by the debtor of certain billiard tables belonging to the creditor, some of which tables had been detained by the debtor at Narwee, New South Wales. Tapsell ADCJ held in favour of the creditor with respect to the tables at Narwee and, in his reasons for judgment and judgment, said (at pars 68 to 70),
“68 I make the following orders under S.83(1)(b) of the District Court Act:
68.1The defendant shall deliver the Narwee tables to the plaintiff within 28 days.
68.2The delivery shall be at the defendant’s expense.
68.3The place of delivery shall be the plaintiff’s current residential address, or such other address within the Sydney metropolitan area, as directed by the plaintiff.
68.4In default of delivery, the defendant shall pay to the plaintiff the sum of $14,000.
69 The defendant shall pay to the plaintiff damages by way of detention of the goods in the sum of $10,712.
70 Costs reserved.”
18 Comparison of the Assistant Registrar’s document with the orders which I have just set out discloses that the Assistant Registrar’s document was in error in stating that the debtor had been ordered to pay $24,712 to the creditor forthwith. In fact, only $10,712 had been ordered to be paid forthwith, with the remaining $14,000 payable at the expiration of the period within which the debtor was permitted to return the Narwee tables and then only if he chose not to return the tables. Furthermore, return of the Narwee tables had been a matter solely within the debtor’s discretion. No question arose of “acceptance by the plaintiff of the Narwee tables”, whether by 23 February 1997, as was specified in the Assistant Registrar’s document, or by the date on which the period within which the debtor was permitted to return the Narwee tables actually expired.
19 Apart from the matter of the reference to the creditor’s “acceptance” of the tables by 23 February 1997, the errors in the Assistant Registrar’s document to which I have referred in pars 13 to 18 above were relied upon by the debtor in support of his argument that the notice was not in Form 1, as required by subs 41(2) of the Act, because there was not attached to the notice a copy of the judgment relied upon by the creditor.
20 The debtor conceded that the requirement in Form 1 for the attachment to a bankruptcy notice of a copy of the judgment relied upon by the creditor could be satisfied by the attachment to the notice of a certificate of judgment of the sort provided for in Form 64 of the District Court Forms, but he submitted at the same time that, if such document were being relied upon, it must be substantially accurate, unlike the Assistant Registrar’s document.
21 I consider that the debtor’s concession was wisely made. In St George Bank Limited v Klintworth (1998) 157 ALR 286 (FCA), Hill J was concerned with the validity of a bankruptcy notice which had had attached to it a document generated by the computer system of the District Court of New South Wales, which document gave details of a judgment given by that Court. There was evidence before Hill J that the document had been generated according to administrative arrangements put in place by the District Court itself for the production of such computer-generated documents. His Honour said (at 288),
“… Form 1 requires that the bankruptcy notice … have attached to it ‘a copy of the judgment or order relied upon by the creditor’. There is no need in my view to give the word ‘copy’ a narrow interpretation. A computer-generated document which contains the particulars of the judgment as the present document does amounts in my view, having regard to modern technology, as [for ‘as’, read ‘to’] an appropriate copy of the order or judgment so that Form 1 (and thus s 41(2) of the Act) have been complied with.”
22 However, that concession by the debtor does not, it appears to me, detract from the force of his submission that, if a document other than a copy of the relevant judgment itself is being relied upon, the particulars of the judgment which that document contains must at least be substantially accurate, something which was manifestly not so in the present case.
23 In Re Scerri (1998) 82 FCR 146, Beaumont J considered the validity of a bankruptcy notice which had had attached to it neither a copy of the relevant judgment nor a document purporting to contain particulars of the judgment. His Honour held that the notice was invalid, saying (at 149), “The prescribed form of notice in Form 1 does, in par 2, stipulate that a copy of the judgment be attached. … [T]hat provision was not complied with. … I would regard this as more than a formal defect for the purposes of s 306 [of the Act]”.
24 (Subsection 306(1) of the Act, to which Beaumont J was referring, provides,
“Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made 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 that court.”
It was held by the High Court in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 76 (Mason CJ and Wilson, Brennan and Gaudron JJ), that the act of issuing a bankruptcy notice is a proceeding under the Act, with the consequence (it appears) that subs 306(1) is capable of applying to the form of a bankruptcy notice itself.)
25 Essentially the same view as that which had been taken by Beaumont J in Scerri was later taken by Finkelstein J in Commonwealth Bank of Australia v Horvath (1999) 161 ALR 441 (FCA) and by Kenny J in American Express International Inc v Held [1999] FCA 321 (unreported; 29 March 1999), each of their Honours holding that failure to attach to a bankruptcy notice a copy of the judgment or order relied upon by the creditor led to incurable invalidity of the notice. Subsection 306(1) of the Act could not save it.
26 To my mind, the notice in the present case is to be treated in the same way as were the bankruptcy notices in those three cases. The notice in the present case did not literally have attached to it a copy of the judgment upon which the debtor relied, whether certified (as claimed in the first document attached to the notice) or not; the notice did not have attached to it a certificate of judgment of the type provided for in the rules of the court which had given the judgment; further, there was no evidence before me that the document attached to the notice had been produced according to some administrative arrangement for the production of such documents which had been put in place by the court which had given the judgment (as in the St George Case). (I add that there was no need for any such administrative arrangement in the case of documents not generated by computer in any event, since the Forms of the court which had given the judgment already made adequate provision for such documents.) All that the notice had attached to it was a document the creation of which appears to have been unauthorised either legislatively or administratively, which may or may not have been sealed (sealing being required by the rules of the court concerned if the document was to be effective) and which was manifestly erroneous, not only as to the date of the relevant judgment, but also as to its terms. I consider that I should treat the attachment of such a document to the notice as failing to satisfy the requirement that a bankruptcy notice have attached to it a “copy of the judgment … relied upon by the creditor”. Consistently with the three cases to which I have referred above, such notice was therefore invalid and was incapable of being saved by subs 306(1) of the Act.
27 I said at the outset of these reasons that the debtor disputed the validity of the notice on two grounds. The second of those two grounds was that the notice was invalid because the sum specified in it as the amount due to the creditor exceeded the amount in fact due. Nonetheless though I have already accepted the debtor’s first argument of invalidity of the notice, I propose to deal with his second argument as well.
28 I begin by setting out subs 41(5) of the Act, which provides,
“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.”
29 It is not in dispute that, within the time allowed in the notice for payment of the sum specified, the debtor notified the creditor that he disputed the notice’s validity on the ground that the sum specified in it exceeded the amount in fact due. The debtor’s notification, which was prepared and signed by the debtor’s solicitor, elaborated his position only by saying“The amount of the misstatement is $24,000”.
30 At the outset of the hearing before me, counsel for the debtor told me that the $24,000 referred to in the debtor’s notification had been comprised of the sum of $14,000, being the $14,000 which Tapsell ADCJ had ordered the debtor to pay to the creditor in lieu of the return of the Narwee tables, and the sum of $10,000, which represented a payment which had been made to the creditor on the debtor’s behalf in respect of the judgment debt before the issue of the notice. (I was not told why the debtor’s notification had not also included, as part of the alleged overstatement, appropriate amounts of interest on those two sums.)
31 In response, counsel for the creditor made it plain that he had always understood the $24,000 being referred to in the debtor’s notification as having been comprised of those two particular sums.
32 Counsel for the debtor also told me that it was no longer being claimed that the amount of the overstatement was $24,000. Instead, it was now his case that the amount of the overstatement was $10,000 (being the $10,000 to which I have referred in the next preceding paragraph), together with two unquantified amounts of interest, namely, interest on $24,712 from 26 January 1997 to 29 January 1997 and interest on $14,000 from 30 January 1997 to 26 February 1997. (I was not told why the debtor was not also including, as part of the alleged overstatement, an appropriate amount of interest on the $10,000.)
33 In response, counsel for the creditor made it plain that he was content to meet the altered case of overstatement being made by the debtor and, in fact, he ultimately made submissions as to all three instances of alleged overstatement relied upon by the debtor. He did not seek to argue either that the debtor’s notification to which I have referred in par 29 above had not complied with subs 41(5) of the Act (as to which, see Seovic Civil Engineering Pty Limited v Groeneveld (1999) 161 ALR 543 (FCA, Hill, Sackville and North JJ)) or that, assuming it did comply with subs 41(5) of the Act, it nevertheless did not cover the argument about the two unquantified amounts of interest.
34 Dealing now with the debtor’s three overstatement arguments, I mention first that it is common ground between the parties that the debtor did not deliver the Narwee tables to the creditor within twenty-eight days from Tapsell ADCJ’s judgment, so that, at the end of that period, the amount of the judgment debt payable was $24,712. It is also common ground between the parties that the $10,000 payment to which I have referred above was made and was made on or shortly after 15 September 1997.
35 Prima facie, therefore, there was in the notice at least a $10,000 overstatement of the amount in fact due by the debtor to the creditor. (I add that, since the notice claimed interest on that $10,000 to 13 January 1999, it must prima facie have contained an overstatement in that respect as well, although that overstatement is not precisely quantifiable, since I have no evidence as to the exact date of the payment of the $10,000. As I have already mentioned, the debtor did not, for some reason not apparent to me, rely before me upon that particular prima facie overstatement, in spite of the fact he was attempting to rely upon other alleged interest overstatements.)
36 The creditor’s answer to those prima facie conclusions was to argue that the notice served on the debtor on 6 March 1999, although carrying the date 14 January 1999, was actually a notice which had been issued in June 1997, but not thereafter served on the debtor. (It was common ground that such a notice had been issued at that time and that it had not been served.) In that respect, the creditor relied upon the fact that par 4.02A(2)(b) of the Regulations confers upon the Official Receiver a power at any time to allow a further period for service than the normal six months within which a bankruptcy notice must be served. The creditor also relied upon two letters from the creditor’s solicitors addressed to “The Registrar, Insolvency Trustee Service of Australia”, apparently sent in the month before 14 January 1999. It was argued in reliance upon the terms of those letters that, by issuing the notice dated 14 January 1999, the Official Receiver had actually been exercising his power under par 4.02A(2)(b) of the Regulations to allow a further period of time for service of the June 1997 bankruptcy notice, and that therefore the Official Receiver had not issued a fresh notice.
37 Without troubling myself to discuss the terms of the two letters, I can say that I regard the argument as untenable. It is sufficient for present purposes to mention only one reason why it cannot be accepted. That is because the notice dated 14 January 1999 claimed interest on the judgment debt, not to some date no later than June 1997, as would be the case if the notice had been one issued in June 1997 as to which an extended period for service was being allowed, but to 13 January 1999.
38 It therefore follows that the prima facie conclusions which I expressed in par 35 above are correct and that the notice did contain an overstatement of $10,000 plus an overstatement of the interest claimed on that amount from the date of its payment to 13 January 1999.
39 In addition to the two overstatements to which I have just referred, there was also an overstatement in the notice to the extent to which interest was claimed on $24,712 from 26 January 1997 to 29 January 1997, since, as I have found, the relevant judgment was given on the latter, not the former, date. (As to the overstatement’s including 29 January 1997, see: Re Serafino; Ex parte Classic Manufacturing Pty Ltd (1989) 86 ALR 283 (FCA, Burchett J).)
40 I turn now to the debtor’s argument that there was yet a further overstatement in the notice, in that it claimed interest on $14,000 of the $24,712 for the period from 30 January 1997 until 26 February 1997, the date of expiration of the period within which the debtor had the option of returning the Narwee tables. The argument was that, on a proper construction of s 85 of the District Court Act, 1973 (NSW), interest only became payable on the $14,000 at the expiration of that period, when the debtor had not returned the tables. Although the argument was not fully developed, I gather that it relied upon the terms of s 85(2)(a), which provides a general rule that interest on a judgment debt is to be calculated “as from the date when the judgment debt came into being”, and upon the judgment debt’s not coming into being, so far as $14,000 of it was concerned, until the expiration of the twenty-eight day period.
41 I was told from the Bar table that Taylor DCJ had recently heard argument between the creditor and the debtor on the very question whether or not interest ran on the $14,000 from judgment and had held that it did. I was not, however, favoured by either the creditor or the debtor with a copy of his Honour’s reasons for judgment in the matter. In any event, according to the debtor, it was open to me to reach a different conclusion on the question than had Taylor DCJ and I should do so.
42 The debtor’s argument is really a very unattractive one. Acceptance of it would mean that a defendant in the position of the debtor who chose not to exercise his option of returning the goods, but to pay damages instead, would have got an interest holiday at the expense of the plaintiff during the period when the option was available to him, which interest holiday would not have been available if he had not been given the option and which is not available to other defendants. Nor do I see that s 85(2)(a) requires such an unattractive argument to be accepted. No good reason appears to conclude that the $14,000 judgment debt did not come into being on 29 January 1997, when judgment was given, although the conclusion that it did come into being on that date was not plain until after the expiration of the defendant’s option period. In any event, however, I consider it unnecessary for me to express a concluded view on the matter, given the other respects in which the amount in fact due was overstated in the notice.
43 Thus, to sum up the position I have so far reached on the overstatement argument, I am satisfied that the disputed notice contained two overstatements relied upon before me by the debtor: first, $10,000; and, secondly, an unquantified amount of interest on $24,712 from 26 January 1997 to 29 January 1997. I am also satisfied that it contained a third overstatement, not relied upon before me by the debtor, namely, an unquantifiable amount of interest on $10,000 from the date of its payment on or shortly after 15 September 1997 to 13 January 1999.
44 However, given the circumstances which I have outlined in pars 30 to 33 above, I consider that I should proceed upon the basis that, of the three overstatements which I have identified, only the $10,000 overstatement was within the debtor’s subs 41(5) notice; the other two overstatements were not.
45 In Seovic, to which I referred in par 33 above, the Full Court said (at 555),
“The effect of a debtor’s notice
[49] We have observed that s 41(5) of the Bankruptcy Actappears to be drafted on the assumption that a bankruptcy notice is liable to be ‘invalidated’ if the sum specified in the notice exceeds the amount in fact due to the creditor. In Re Walsh[(1982) 65 FLR 87], Lockhart J challenged this assumption, by holding that under the Bankruptcy Act, an overstatement of the amount due by the debtor does not necessarily vitiate the bankruptcy notice. His Honour considered (at FLR 91) that the bankruptcy notice would be avoided only if the overstatement could reasonably mislead the debtor. He said he would decline to follow Re a Debtor [[1908] 2 KB 684] and Re Prossimo [(1952) 16 ABC 86] if they stood in the way of this conclusion.
[50] In Re Greenhill; Ex parte Myer (NSW) Ltd (1984) 5 FCR 84; 58 ALR 185, Morling J declined to follow Re Walsh and held that an overstatement in a bankruptcy of the amount actually due renders the notice invalid, whether or not the overstatement could reasonably mislead the debtor. Morling J considered that observations by the High Court in Walsh v DCT (on appeal from the Full Court affirming Lockhart J’s decision) (at FCR 86), were inconsistent with Lockhart J’s analysis. A similar view was subsequently taken by Pincus J in Re Emerson; Ex parte Wreckair Pty Ltd (1991) 101 ALR 315 at 318-319 (affirmed on other grounds: Emerson v Wreckair Pty Ltd (1992) 33 FCR 581; 109 ALR 539 (Full Court)).
[51] We have acted on the assumption, not challenged by either party, that Re Greenhill and Re Emerson correctly state the law. However, our view would not be changed if Lockhart J’s decision in Re Walsh were ultimately found to be correct (as to which we express no view).”
46 If Re Greenhill and Re Emerson correctly state the law, then it must follow that the disputed notice in the present case was invalid, not only because there was not attached to it a copy of the judgment upon which the creditor relied, but also because of its overstatement by (at least) $10,000 of the amount in fact due, such overstatement by over 50% of the amount in fact due having been the subject of a subs 41(5) notice.
47 If, on the other hand, Re Walsh correctly states the law, then the disputed notice in the present case was invalid only if the $10,000 overstatement in the notice could reasonably have misled the debtor.
48 In this case, I am of the view that the $10,000 overstatement in the notice could reasonably have misled the debtor, so that, as in Seovic, it matters not which of the two approaches is correct. I am of the view that the overstatement could reasonably have misled the debtor because of the circumstances in which the $10,000 had been paid to the creditor. I have mentioned in par 30 above that the $10,000 was paid to the creditor on the debtor’s behalf. The circumstances in which that occurred were that the creditor’s solicitors held $10,000 in their trust account to the credit of the debtor. They requested the debtor’s consent to the application of that sum in satisfaction of the creditor’s judgment debt and, on 15 September 1997, the debtor gave that consent. There is no evidence before me that the debtor had become aware by 14 January 1999, the date of issue of the disputed notice (which is the relevant date for present purposes), that the creditor’s solicitors had acted upon his consent. In those circumstances, if confronted on 14 January 1999 with a bankruptcy notice claiming that the entire amount of the judgment debt (plus interest) remained owing, the debtor could reasonably have been misled into thinking that, for some reason, the creditor’s solicitors had not applied the $10,000 in the way to which he had earlier agreed.
49 In all the circumstances, the notice must be set aside on both of the grounds upon which the debtor relied.
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I certify that the preceding forty-nine (49) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Katz. |
Associate:
Dated: 9 July 1999
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Counsel for the Applicant: |
Mr R W Tregenza |
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Solicitor for the Applicant: |
John Bettens & Co |
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Counsel for the Respondent: |
Mr C Stomo |
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Solicitor for the Respondent: |
Johnston Vaughan |
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Date of Hearing: |
30 June 1999 |
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Date of Judgment: |
9 July 1999 |
