GLEESON CJ, GUMMOW, KIRBY, HAYNE, CALLINAN, HEYDON AND CRENNAN JJ
COLIN ADAMS APPELLANT
AND
MATTHEW LAMBERT RESPONDENT
Adams v Lambert [2006] HCA 10 4 April 2006 C11/2005
ORDER
1. Appeal allowed with costs.
2. Set aside the orders of the Full Court of the Federal Court of Australia made on 9 December 2004 and in their place order that:
(a)the appeal to that Court be allowed with costs; and
(b)the orders of Gyles J made on 1 July 2004 be set aside.
3. Remit the matter to a judge of the Federal Court of Australia for further hearing in accordance with the reasons of this Court.
On appeal from the Federal Court of Australia
Representation:
D A Hassall for the appellant (instructed by Kinneally Miley)
No oral argument for the respondent (represented by Marler & Darvall)
Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.
CATCHWORDS
Adams v Lambert
Bankruptcy – Bankruptcy notice – Formal defect or irregularity – Interest due on judgment debt – Misdescription in notice of statutory provision under which interest claimed – Validity of notice.
GLEESON CJ, GUMMOW, KIRBY, HAYNE, CALLINAN, HEYDON AND CRENNAN JJ. The issue in this appeal concerns the effect upon the validity of a bankruptcy notice of a misdescription of the statutory provision under which an amount of interest ($66.58) on a judgment debt was claimed. The bankruptcy notice referred to s 83A of the District Court Act 1973 (NSW). That section deals with interest up to judgment. The notice should have referred to s 85, which deals with interest after judgment. For reasons that will appear, the resolution of the issue turns on the application of s 306 of the Bankruptcy Act 1966 (Cth) ("the Act"), which provides that proceedings under that Act are not invalidated by a formal defect or an irregularity unless substantial injustice has been caused. There being no suggestion that any substantial injustice has been caused, the question is whether the error was a formal defect or an irregularity.
The facts
The appellant obtained judgment against the respondent, in the District Court of New South Wales, on 22 March 2004, in the amount of $54,000. That amount represented an agreed sum, being the balance of a loan together with interest and legal costs up to the date of judgment. On 1 April 2004, the appellant served on the respondent a bankruptcy notice claiming as a debt due and payable the amount of $54,066.58. That amount comprised the judgment debt of $54,000 plus interest from 22 March 2004 to 26 March 2004 (both dates inclusive) at the rate of 9 per cent per annum. It is not contended that the amount of interest claimed was erroneous. The date of 26 March 2004 was the date of issue by the Official Receiver of the bankruptcy notice.
The respondent failed to…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Adams v Lambert [2006] HCA 10
Case
[2006] HCA 10
Decision Date
CaseChat Overview and Summary
The appeal concerned a bankruptcy notice issued by the appellant against the respondent. The dispute arose from a misdescription in the bankruptcy notice regarding the statutory provision under which interest on a judgment debt was claimed. The notice referred to s 83A of the *District Court Act 1973* (NSW), which pertains to interest up to judgment, when it should have referred to s 85, which deals with interest after judgment. The respondent failed to comply with the notice, leading the appellant to file a creditor's petition. The Federal Court, applying existing Full Court precedent, found the notice invalid and dismissed the petition. This appeal was heard by the High Court of Australia.
The central legal issue before the High Court was whether the misdescription of the statutory provision for claiming post-judgment interest constituted a formal defect or an irregularity that did not invalidate the bankruptcy notice, pursuant to s 306 of the *Bankruptcy Act 1966* (Cth). This section provides that such proceedings are not invalidated unless substantial injustice has been caused. The High Court was required to determine if the previous Full Court decisions, particularly *The Australian Steel Company (Operations) Pty Ltd v Lewis*, which held that such a misdescription invalidated a bankruptcy notice, were correctly decided.
The High Court allowed the appeal, holding that the misdescription of the statutory provision was a formal defect or an irregularity and did not cause substantial injustice to the respondent. The Court reasoned that the amount of interest claimed was not in dispute, and the respondent was not misled as to the nature or amount of the debt. The reference to the incorrect section was a technical error that did not prejudice the respondent's ability to understand and comply with the notice. Consequently, the High Court overruled the decision in *Lewis* and remitted the matter for further hearing. The orders of the Full Court of the Federal Court were set aside, and the matter was remitted to a judge of the Federal Court for further hearing.
Orders
Orders of the court
1. Appeal allowed with costs.
2. Set aside the orders of the Full Court of the Federal Court of Australia made on 9 December 2004 and in their place order that:
(a) the appeal to that Court be allowed with costs; and
(b) the orders of Gyles J made on 1 July 2004 be set aside.
3. Remit the matter to a judge of the Federal Court of Australia for further hearing in accordance with the reasons of this Court.
Background
Background to the litigation
GLEESON The issue in this appeal concerns the effect upon the validity of a bankruptcy notice of a misdescription of the statutory provision under which an amount of interest ($66.58) on a judgment debt was claimed. The bankruptcy notice referred to s 83A of the District Court Act 1973 (NSW). That section deals with interest up to judgment. The notice should have referred to s 85, which deals with interest after judgment. For reasons that will appear, the resolution of the issue turns on the application of s 306 of the Bankruptcy Act 1966 (Cth) ("the Act"), which provides that proceedings under that Act are not invalidated by a formal defect or an irregularity unless substantial injustice has been caused. There being no suggestion that any substantial injustice has been caused, the question is whether the error was a formal defect or an irregularity.The facts The appellant obtained judgment against the respondent, in the District Court of New South Wales, on 22 March 2004, in the amount of $54,000. That amount represented an agreed sum, being the balance of a loan together with interest and legal costs up to the date of judgment. On 1 April 2004, the appellant served on the respondent a bankruptcy notice claiming as a debt due and payable the amount of $54,066.58. That amount comprised the judgment debt of $54,000 plus interest from 22 March 2004 to 26 March 2004 (both dates inclusive) at the rate of 9 per cent per annum. It is not contended that the amount of interest claimed was erroneous. The date of 26 March 2004 was the date of issue by the Official Receiver of the bankruptcy notice. The respondent failed to comply with the requirements of the bankruptcy notice within the time specified. On 27 May 2004, the appellant filed a creditor's petition alleging that such failure was an act of bankruptcy, and seeking a sequestration order against the respondent's estate. The matter came for hearing before Gyles J in the Federal Court of Australia on 1 July 2004. Gyles J found that the bankruptcy notice was invalid, and dismissed the petition[1]. He was bound by the decision of the Full Court of the Federal Court in the indistinguishable case of The Australian Steel Company (Operations) Pty Ltd v Lewis ("Lewis")[2] (a case in which Gyles J was part of a dissenting minority), which was followed by the Full Court in Marshallv General Motors Acceptance Corporation Australia[3]. An appeal to the Full Court from the decision of Gyles J was dismissed[4]. [1]Adams v Lambert [2004] FCA 928.[2](2000) 109 FCR 33.[3](2003) 127 FCR 453.[4]Adams v Lambert [2004] FCAFC 322. In Lewis, the Full Court of the Federal Court was divided three (Black CJ, Heerey and Sundberg JJ) to two (Lee and Gyles JJ). All the members of the Full Court regarded the decision of this Court in Kleinwort Benson Australia Ltd v Crowl[5] as laying down the principles to be applied. There are conflicting decisions within the Federal Court about the application of those principles to various errors in bankruptcy notices. To the forefront of the appellant's submissions in the present appeal was the proposition that Lewis was wrongly decided, and that the minority conclusions in that case are to be preferred. For reasons that will appear, that proposition should be accepted. The decision in Lewis should be overruled.[5](1988) 165 CLR 71.