FEDERAL COURT OF AUSTRALIA

Garvin v Patterson [2001] FCA 1253

BANKRUPTCY – application to set aside bankruptcy notice – where debtor claimed to have a counter-claim set off against or cross-demand equal to or exceeding sum specified in the notice – where mistake in notice – where mistake involved reference to year of statue – where provision under which interest being claimed not stated in notice – where statute referred to but particular provision not referred to – whether irregular bankruptcy notice invalid – ordinary and commonsense approach to construction of bankruptcy notice.

Bankruptcy Act 1966 (Cth)

Supreme Court Act 1995 (Qld)

Wright v Australian & New Zealand Banking Group Limited [2001] FCA 386 followed

FRANK JAMES GARVIN v NORMAN JOHN PATTERSON & RUTH JESS PATTERSON

NO. N 7283 OF 2001

BEAUMONT J

21 AUGUST 2001

SYDNEY

UPON NOTING that the judgment debtor undertakes to the Court (1) that he will forthwith hand to the judgment creditors a direction addressed to the mortgagees of the property, 4 Molloy Avenue, South Coogee, being Lot 15 in deposited plan 247151, directing the mortgagees to pay the sum of $42,610.80 to the judgment creditors out of the judgment debtor’s entitlement to the net proceeds of sale of that property scheduled for completion on 29 August 2001;  and (2) that he will not revoke that direction –

The Court orders:

1.                  Time for compliance with the bankruptcy notice be extended up to and including 29 August 2001.

2.                  Judgment debtor to pay the judgement creditors’ costs of the present application.

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

REASONS FOR JUDGMENT

BEAUMONT J:

INTRODUCTION

1                     Before me is an application by a judgment debtor to set aside a bankruptcy notice.  Two grounds are relied upon. 

2                     The first ground is a claim, purportedly in accordance with the provisions of par 7 of the notice, that the debtor has a counter-claim set off against, or cross-demand equal to, or exceeding, the sum specified in the notice as owing to the creditor.  The sum specified in the notice is the amount of $42,610.80.

3                     The judgment debtor, who now appears in person, seeks to rely in this connection upon an amount (said to be agreed at $1,100), being an amount ordered to be paid by the judgment creditors to the judgment debtor by this Court in connection with a previously successful application to set aside an earlier bankruptcy notice.  That application being successful, it was, by consent, ordered that costs follow the event, such costs to be agreed or taxed.  The costs have not been taxed.  There is a dispute as to whether the amount of the costs has been agreed.  For present purposes, I am prepared to assume that they have been agreed in the sum of $1,100 as alleged by the judgment debtor.  However, the judgment debtor, who appears without the benefit of legal representation, must accept the inevitable in this respect.  That is to say, on no view does that (assumed) claim of his exceed the sum of $42,610.80. For that reason I reject that ground of the present application.

4                     The second ground, however, has more substance to it.  In this connection the debtor, through solicitors who previously appeared for him, raises the following point. 

5                     Note 2 to the bankruptcy notice contains the usual provision that if interest is claimed the notice must state “the provision under which the interest is being claimed” (emphasis added).  In the present case the particulars of interest given are prefaced with the following statement – “ Interest is claimed pursuant to the Supreme Court Act 1994” (emphasis added).

6                     Annexed to the bankruptcy notice is the judgment of the Supreme Court of Queensland and it is clear that the reference to “the Supreme Court Act 1994” was intended to be a reference to “the Supreme Court Act 1995” of Queensland.  Although there is a mistake in the reference to the year of the statute, for the reasons I gave in Wright v Australia & New Zealand Banking Group Limited [2001] FCA 386, I would interpret this reference to the statute in the bankruptcy notice to be a reference to the Supreme Court Act 1995 of Queensland, given the context in which the statement in the notice appears.  That context, of course, includes the annexed copy of the judgment relied upon, which states on its face that it is a judgment of the Supreme Court of Queensland, and thus the only logical interpretation that can be placed upon the reference to “Supreme Court Act 1994” is that the draftsman plainly intended to refer to the Queensland statute governing the operation of the Supreme Court and, in the events that had happened, that statute is the Supreme Court Act 1995 of the State of Queensland.

7                     There is however, as I have mentioned, another point, one of rather more substance.  As I understand it, the point is that it is a requirement of Note 2 to the bankruptcy notice that “the provision” under which interest is being claimed is stated in the notice;  yet all that is mentioned in the statement in the notice is the reference to the statute itself, and not to the particular section of the Act (namely s 48 which provides for interest to be payable on debt under a judgment or order).

8                     In my opinion, although there is some force in the argument, it should be rejected essentially for the reasons I gave in Wright (supra).  Although in this respect there is a mistake apparent on the face of the document, and although in its dictionary meaning, the word “provision” means “a clause in a legal instrument or a law, etc, providing for a particular matter” (Macquarie Dictionary), in the ordinary process of interpretation, a reader of the statement made in the present notice would, in my view, interpret the reference to the Supreme Court Act to be a reference to that statute in its relevant application in the present context. 

9                     That would be the ordinary and common sense interpretation of the statement in the bankruptcy notice, and by this process of interpretation, that is to say, by spelling out the obvious and intended meaning of the statement, one reads the statement in the notice as if it had said “Interest is claimed pursuant to the Supreme Court Act (1995) in its relevant application in the present context, namely section 48”.  That being so, it seems to me that there is no error or other defect in the notice which may have call for a consideration of the potential application here of s 306 of the Bankruptcy Act 1966 (Cth).

10                  For those reasons, I propose to refuse the first order sought in the application, that is to say, an application to set aside the bankruptcy notice. 

11                  However, in the alternative, the debtor seeks an order for time for compliance to be extended.  He has informed me that a property, in which he has an interest, has been agreed to be sold and that completion is due next week, that is to say, on 29 August 2001.  He is prepared to give an undertaking to direct the mortgagees effecting the sale to pay out of the proceeds of his entitlement on the sale, the sum of $42,610.80 to the judgment creditors.  I am prepared to accede to his application to extend time for compliance on that basis.

ORDERS

12                  The order I make, therefore, is that I note that the judgment debtor undertakes to the Court that he will forthwith hand to the judgment creditors a direction addressed to the mortgagees of the property, 4 Molloy Avenue, South Coogee, being Lot 15 in deposited plan 247151, directing the mortgagees to pay the sum of $42,610.80 to the judgment creditors out of the judgment debtor’s entitlement to the net proceeds of sale of that property scheduled for completion on 29 August 2001. 

13                  I further note that the judgment debtor undertakes to the Court not to revoke that direction.  Upon noting those undertakings, I order that time for compliance with the bankruptcy notice be extended up to and including 29 August 2001.

14                  I order that the judgment debtor pay the costs of the present application.

Associate:

Dated:              21 August 2001