FEDERAL COURT OF AUSTRALIA

Lake and Worley Pty Limited v Blackford (in the matter of Alan Blackford) [2004] FCA 208

Lake and Worley Pty Limited v Blackford (in the matter of Alan Blackford)

N 7164 of 2003

ALLSOP J

16 MARCH 2004

SYDNEY

THE COURT ORDERS THAT:

1.         The application be dismissed.

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

REASONS FOR JUDGMENT

1                     This is an application by a creditor Lake and Worley Pty Limited under s 43 of the Bankruptcy Act 1966 (Cth) (the Act) for a sequestration order against the estate of the debtor, Alan Blackford.

2                     The debtor did not appear.

3                     A Registrar referred the matter to a judge because of a perceived issue concerning the form of the bankruptcy notice.

4                     On 21 March 2003 the creditor served a bankruptcy notice on the debtor.  The notice claimed that the debtor owed the creditor a debt of $21,790.08 “as shown in the Schedule”.  The body of the notice appears to have been in conformity with Form 1 of Schedule 1 to the Bankruptcy Regulations 1996.  The schedule to the notice was in the form provided for by Form 1 and was as follows:

[emphasis in original]

5                     Also annexed to the notice was a certificate of judgment issued by the Local Court at Sutherland recording that the creditor (as plaintiff) recovered judgment against the debtor (as defendant) on 22 June 2001 in the sum of $15,457.54.  The certificate of judgment also stated the following:

3.                  Interest is payable on the judgment debt at the rate PRESCRIBED FOR THE PURPOSE OF SECTION 95(1) OF THE SUPREME COURT ACT, 1970.

4.                  The judgment creditor has incurred costs of attempting to enforce the judgment, recoverable against the judgment debtor, in the amount of $6,630.28.

            [capitalisation in original]

6                     The notice also set out the calculations of accrual of interest, as follows:

CLAIMS OF INTEREST ACCRUED

Interest is claimed on the judgement pursuant to Section 39 of the Local Courts (Civil Claims) Act, 1970.  The rates of interest are prescribed by Part 13 Rule 3 of the Rules under the Local Court (Civil Claims) Act.

Interest on Judgement debt of $15,457.54

From     23.6.01 to 31.8.01         ie         70 days at 11% p.a     =     $      326.09

From     1.9.01 to 28.2.02          ie         181 days at 10% p.a   =     $      766.52

From     1.3.02 to 14.3.03          ie         379 days at 9% p.a     =     $   1,444.53

Total interest                                                                                    $   2,537.14

Interest on Costs on Appeal of $6,630.28

From      3.12.02 to 14.3.03        ie         101 days at 9% p.a     =     $      165.12

7                     By reading the schedule in the body of the notice the sum of $6,630.28 would appear to be the legal costs in the Local Court proceedings if ordered to be paid and not included in the judgment or order.  The note being note 1 was in the terms of Form 1:  “If legal costs are being claimed in this Bankruptcy Notice, a certificate of taxed or assessed costs in support of the amount claimed must be attached to this Bankruptcy Notice”.

8                     Attached to the bankruptcy notice was a minute of judgment of the Supreme Court of New South Wales in the sum of $6,630.28.  This was in respect of an order that the debtor pay the creditor’s costs in the appeal brought by the debtor from the Local Court judgment.

9                     Thus, what the bankruptcy notice was claiming was:

(a)      a Local Court judgment of $15,457.54 plus interest payable at rates prescribed under s 95 of the Supreme Court Act 1970 (NSW);

(b)      a Supreme Court judgment for costs in an appeal from the Local Court plus interest.

10                  However, the costs of the appeal were described variously in the bankruptcy notice and its annexures as:  (a) costs of attempting to enforce the (Local Court) judgment, (b) costs on appeal, (c) legal costs (implicitly in respect of the original judgment) if ordered to be paid.

11                 The interest claimed is said to be claimed under s 39 of the Local Courts (Civil Claims) Act 1970 (NSW).  However, the interest on the Supreme Court judgment accrued not from any provision of the Local Courts (Civil Claims) Act 1970 but from s 95 of the Supreme Court Act.

12                  I reject the creditor’s submissions that the terms of ss 33, 34, 35, 39 and 39A of the Local Courts (Civil Claims) Act 1970 or any of them authorise by law interest to be payable on a judgment of the Supreme Court of New South Wales.

13                  Thus, for this reason the bankruptcy notice is misleading in its assertion that the provision under which interest is claimed is s 39 of the Local Court (Civil Claims) Act 1970.

14                  The confusion in the bankruptcy notice derives from the fact that it contains two judgment sums – a Local Court judgment plus interest and a Supreme Court judgment plus interest and mistakes the provision authorising the payment of interest on the Supreme Court judgment.  For these reasons I conclude that the bankruptcy notice is misleading and fails to comply with essential requirements of the Act:  Marshall v General Motors Acceptance Corporations Australia Limited [2003] FCAFC 45.

15                  Section 41 of the Act now permits a bankruptcy notice in respect of two or more final judgments.  That is, in effect, what happened here, but the notice misleadingly describes the second judgment as costs of the primary judgment and as costs of attempting to enforce the judgment.  Further, the provision entitling interest on the second judgment sum was misstated.

16                  The notice does not conform with the Act and is misleading and confusing.

17                  The application will be dismissed.

Associate:

Dated:              16 March 2004