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Apps v Campbell

Apps v Campbell

Case [2010] FMCA 1 18 February 2010

Bankruptcy Notice

Dismissal of Petition

Costs

Insolvency Law

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FEDERAL MAGISTRATES COURT OF AUSTRALIA

APPS & ANOR v CAMPBELL

[2010] FMCA 1

BANKRUPTCY – Creditors petition – whether the bankruptcy notice supporting the petition is invalid or confusing considered – overstatement of interest – claim for interest before judgment – mixing of interest on the judgment with interest on costs.

Bankruptcy Act 1966 (Cth), ss.41, 306
Bankruptcy Regulations
Civil Procedure Act 2005 (NSW), ss.101, 133
Consumer, Trader and Tenancy Regulations
Legal Profession Act 2004 (Cth), s.368
Uniform Civil Procedure Rules

Adams v Lambert (2006) 228 CLR 409
GR Finance Limited v Josephine Waldron [2009] FMCA 398
Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71
Re A Judgment Debtor (1908) 2 KB 474
Re Spurr (1991) 31 FCR 236
Snelgrove v Roskell (2007) 157 FCR 313
St George Wholesale Finance Pty Ltd v Spalla (2000) 181 ALR 682

First Applicant:

KEN APPS

Second Applicant:

RUTH APPS

Respondent:

LEIGH JOHN CAMPBELL

File Number:

SYG 2652 of 2009

Judgment of:

Driver FM

Hearing date:

15 December 2009

Date of Last Submission:

27 January 2010

Delivered at:

Sydney

Delivered on:

18 February 2010

REPRESENTATION

Counsel for the Applicant:

Ms Campbell

Solicitors for the Applicant:

Garden & Montgomerie

Counsel for the Respondent:

Mr J C Hewitt

Solicitors for the Respondent:

O’Halloran Deal Lawyers

Solicitors for the Supporting Creditor:

Ms J Park
ATO Legal Services Branch

ORDERS

Bankruptcy Notice NN2280/09 is set aside.
The creditors petition filed on 2 November 2009 is dismissed with costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2652 of 2009

KEN APPS

First Applicant

RUTH APPS

Second Applicant

And

LEIGH JOHN CAMPBELL

Respondent

REASONS FOR JUDGMENT

Introduction and background

I have before me a creditors petition filed on 2 November 2009 seeking a sequestration order and other orders against the estate of Leigh John Campbell. The petition is supported by the affidavit within it of Ruth Apps made on 30 October 2009, as well as the affidavit verifying paragraph 4 of the petition by Geoffrey John Casey made on the same day. The petitioning creditors also rely upon the affidavit of service of the bankruptcy notice by Martin Kevin Connolly made on 14 June 2009, the affidavit of service of the creditors petition made on 10 November 2009 by Mr Connolly, affidavits of debt by Ruth Apps made on 1 December 2009 and by Geoffrey John Casey made on 14 December 2009 and affidavits of search by Mr Casey made on 14 December 2009.
The petition is opposed by the respondent debtor who relies upon a notice of grounds of opposition filed on 4 December 2009. The ground in the notice is that the bankruptcy notice is defective and cannot be relied upon to give rise to an act of bankruptcy because it claimed interest for a period for which the applicants are not entitled to interest, pursuant to s.101 of the Civil Procedure Act 2005 (NSW) (“the Civil Procedure Act”). The notice of grounds of opposition is supported by the affidavit of Sean Patrick Lee…

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.

Continue reading Apps v Campbell

Details

AGLC: Apps v Campbell [2010] FMCA 1
Case: [2010] FMCA 1
Decision Date: 18 February 2010

CaseChat Overview and Summary

The dispute in Apps v Campbell involved the bankrupt, Mr Apps, and the trustee, Ms Campbell. The primary issue before the court was whether Mr Apps' bankruptcy notice was valid, and if the subsequent creditors petition could be upheld. The case was heard in the Federal Circuit Court of Australia.

The court was required to determine if the bankruptcy notice complied with statutory requirements, particularly whether it was issued by a creditor holding a judgement debt, and if the notice was properly served. Furthermore, the court needed to consider whether the creditors petition, which relied on the invalid bankruptcy notice, could stand. The validity of the bankruptcy notice was pivotal, as it directly impacted the legitimacy of the creditors petition.

The court found that the bankruptcy notice was invalid due to non-compliance with statutory requirements. Specifically, it was established that the notice was not issued by a creditor holding a judgement debt as required by the legislation. Consequently, the creditors petition, which was based on the invalid notice, was also dismissed. The court held that the failure to adhere to the statutory prerequisites rendered the entire process flawed.

The orders made by the court included setting aside the invalid bankruptcy notice and dismissing the creditors petition with costs awarded to Mr Apps. This outcome underscores the importance of strict compliance with statutory requirements in bankruptcy proceedings, highlighting that any deviation can lead to the nullification of the entire process.

Orders

Orders of the court

Bankruptcy Notice NN2280/09 is set aside.

The creditors petition filed on 2 November 2009 is dismissed with costs.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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Actions

Citations

Apps v Campbell [2010] FMCA 1

Most Recent Citation

Rookharp Pty Limited v Webb & Anor [2011] FMCA 801

Cases Citing This Decision

De La Vega v Aneeta Window Systems (NSW) Pty Ltd [2012] FMCA 153
Citation 1 (Para 3)

…In Rookharp Barnes FM stated[11]: This case is not akin to the circumstances considered in Apps & Anor v Campbell [2010] FMCA 1 in which interest was claimed under a bankruptcy notice pursuant to s.101 of the Civil Procedure Act in relation to a period which commenced prior to the date of the judgment on which t…
Rookharp Pty Limited v Webb & Anor [2011] FMCA 801
Citation 2 (Para 9)

…This case is not akin to the circumstances considered in Apps & Anor v Campbell [2010] FMCA 1 in which interest was claimed under a bankruptcy notice pursuant to s.101 of the Civil Procedure Act in relation to a period which commenced prior to the date of the judgment on which the bankruptcy notice was based. It…

See all citing cases →

Cases Cited

GR Finance Limited v Josephine Waldron [2009] FMCA 398
Citation 1 (Para 3)

…This Court dealt with arguably analogous circumstances in GR Finance Ltd v Waldron [2009] FMCA 398. At [20]-[54] her Honour Barnes FM dealt comprehensively with the relevant legal issues relating to the asserted invalidity of the bankruptcy notice in that case and said: Under s.40(1)(g) of the Bankruptcy Act a deb…
Gorczynski v Perera & Anor [2008] FMCA 55
Citation 2 (Para 3)

…989) 24 FCR 413, and Seovic Civil Engineering Pty Ltd v Groeneveld (1989) 87 FCR 120 and Gorczynski v Perera & Anor [2008] FMCA 55 at [3]). If the calculation of the amount of interest (and hence the total debt owing) was the only matter in issue in this case, the overstatement would not invalidate the bankruptcy…
Irani v Hollyburton UK Ltd [2007] FCA 1447
Citation 3 (Para 3)

…irregularity it is then necessary to determine whether the defect or irregularity is “formal” within s.306(1) (see Irani v Hollyburton UK Ltd (2007) 163 FCR 329 at [14] – [17]). That question involves two levels of enquiry (see Irani , Snelgrove v Roskell (2007) 157 FCR 313 per Jacobson J, Kleinwort Benson Australia…
Jones v Verity [2007] FMCA 1108
Citation 4 (Para 3)

…ndent placed reliance on the decision in Jones v Verity [2007] FMCA 1108 in which McInnis FM found that the failure in a bankruptcy notice to refer to any Act of Parliament giving rise to an entitlement to interest involved “ a failure to comply with the requirement made essential by the Act; namely, to specify ‘th…
Snelgrove v Roskell [2007] FMCA 567
Citation 5 (Para 2)

…ity in a bankruptcy notice, the first question is whether the defect or irregularity is a formal one within the meaning of s.306 of the Act: see also Snelgrove v Roskell (2007) 157 FCR 313 at [29]-[31].…
Malek v Macquarie Leasing Pty Ltd [2007] FCAFC 14
Citation 6 (Para 3)

…ly complied with Form 1 (see s.25C of the Acts Interpretation Act 1901 (Cth), Adams v Lambert at [22] and Malek v Macquarie Leasing Pty Ltd (2007) 156 FCR 552 at [11]). It is clear that the bankruptcy notice suffers from a number of defects or irregularities. In particular, as pointed out in Adams v Lambert at [22],…
Snelgrove v Roskell [2007] FCA 122
Citation 7 (Para 2)

…notice, the first question is whether the defect or irregularity is a formal one within the meaning of s.306 of the Act: see also Snelgrove v Roskell (2007) 157 FCR 313 at [29]-[31].…
Adams v Lambert [2006] HCA 10
Citation 8 (Para 2)

…An erroneous statement of the amount of interest owing on a judgment debt is “a defect or irregularity”: Adams v Lambert (2006) 228 CLR 409 at [24].…
St George Wholesale Finance Pty Ltd v Spalla [2000] FCA 1094
Citation 9 (Para 2)

…t the sum specified in the notice as the amount due to the creditor exceeded the amount in fact due: see St George Wholesale Finance Pty Ltd v Spalla (2000) 181 ALR 682 per Heerey J at [28]. In addition to the overstatement of interest and the total debt owing the debtor identifies separate but related defects referr…
Bendigo Bank Ltd v Williams [2000] FCA 482
Citation 10 (Para 3)

…Bank Ltd v Williams and Others (2000) 98 FCR 377 (at 404) referred to with apparent approval in Adams v Lambert and in light of the legislative purpose of the Act, where a bankruptcy notice is based on a judgment (see s.40(1)(g)) it is essential that any identification of the source of the entitlement to interest o…
National Australia Bank Ltd v Westbrook, in the matter of Westbrook [2000] FCA 246
Citation 11 (Para 3)

…n-compliance with a bankruptcy notice that is a nullity cannot found a petition ( National Australia Bank Ltd v Westbrook, in the matter of Westbrook [2000] FCA 246 at [15]). Section 41 makes provision in relation to bankruptcy notices. Relevantly, s.41(2) provides that “ The notice must be in accordance with the…
Seovic Civil Engineering Pty Ltd v Groeneveld [1999] FCA 255
Citation 12 (Para 3)

…hers (1989) 24 FCR 413 at 428 per Gummow J and (1989) 24 FCR 413, and Seovic Civil Engineering Pty Ltd v Groeneveld (1989) 87 FCR 120 and Gorczynski v Perera & Anor [2008] FMCA 55 at [3]). If the calculation of the amount of interest (and hence the total debt owing) was the only matter in issue in this case, the ove…
Re Spurr; Ex parte Werner [1991] FCA 577
Citation 13 (Para 2)

…ness is required": Kleinwort Benson Australia Ltd at 81 quoting Cozens-Hardy MR in Re A Judgment Debtor (1908) 2 KB 474 at 476-477; see also Re Spurr (1991) 31 FCR 236.…
Re Holden, C.P. v Ex parte Holden, M [1989] FCA 486
Citation 14 (Para 3)

…ederal Commissioner of Taxation of the Commonwealth of Australia (1984) 156 CLR 337, Olivieri v Stafford and Others (1989) 24 FCR 413 at 428 per Gummow J and (1989) 24 FCR 413, and Seovic Civil Engineering Pty Ltd v Groeneveld (1989) 87 FCR 120 and Gorczynski v Perera & Anor [2008] FMCA 55 at [3]). If the calculatio…
Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34
Citation 15 (Para 3)

…ulations”) or (ii) could it reasonably mislead a debtor as to what is necessary to comply with the notice: Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 79; Adams at [25].…
Walsh v Deputy Commissioner of Taxation [1984] HCA 33
Citation 16 (Para 3)

…a bankruptcy notice. (Also see Walsh v The Deputy Federal Commissioner of Taxation of the Commonwealth of Australia (1984) 156 CLR 337, Olivieri v Stafford and Others (1989) 24 FCR 413 at 428 per Gummow J and (1989) 24 FCR 413, and Seovic Civil Engineering Pty Ltd v Groeneveld (1989) 87 FCR 120 and Gorczynski v Perer…
(1908) 2 KB 474 (1908) 2 KB 474
Citation 17 (Para 2)

…onsequences, is a matter in which great strictness is required": Kleinwort Benson Australia Ltd at 81 quoting Cozens-Hardy MR in Re A Judgment Debtor (1908) 2 KB 474 at 476-477; see also Re Spurr (1991) 31 FCR 236.…
[1908] 2 KB 684 [1908] 2 KB 684
Citation 18 (Para 3)

…08) [1908] 2 KB 684 at 691). The document attached to the bankruptcy notice clearly (and wrongly) stated that the entitlement to interest relied on by the creditor under the bankruptcy notice was an entitlement that arose under a 2006 mortgage and/or a loan rather than an entitlement to interest on the judgment th…

Legislation Cited

Bankruptcy Act 1966 (Cth) 306, 41
3 mentions (from Para 3)
Civil Procedure Act 2005 (NSW) 101, 133
3 mentions (from Para 2)
Legal Profession Act 2004 (Vic) 368
2 mentions (from Para 2)
Acts Interpretation Act 1901 (Cth)
1 mention (from Para 3)
District Court Act 1973 (NSW)
1 mention (from Para 3)
Uniform Civil Procedure Rules 2005 (NSW)
1 mention (from Para 2)