Bendigo Bank Ltd v Williams

Case [2000] FCA 482

FEDERAL COURT OF AUSTRALIA

Bendigo Bank Ltd v Williams [2000] FCA 482

BANKRUPTCY – bankruptcy notice failed to state ‘the provision under which interest is being claimed’ – whether such a notice was ‘in accordance with the form prescribed the regulations’ – whether such a failure was merely ‘a formal defect or an irregularity’

STATUTORY INTERPRETATION – legislative scheme governing bankruptcy notices – use of Bankruptcy Regulations in interpreting Bankruptcy Act 1966 (Cth)

PRACTICE AND PROCEDURE – precedent – circumstances in which a Full Court may decline to follow a decision of another Full Court

Bankruptcy Act1966 (Cth) ss 40, 41, 306
Bankrupty Regulations reg 4.02
Acts Interpretation Act 1901 (Cth) s 25C

Kirk v Ashdown [1999] FCA 1664 not followed
Transurban City Link Ltd v Allan [1999] FCA 1723 applied
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 applied
Deputy Commissioner of Taxation v Woodhams [2000] HCA 10 considered
Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 considered
Hunter Resources Ltd v Melville (1988) 164 CLR 234 referred to
Thorn EMI Pty Ltd v Commissioner of Taxation (1987) 13 FCR 491 considered
Hanlon v The Law Society [1981] AC 124 considered
Elazac Pty Ltd v Commissioner of Patents (1994) 53 FCR 86 referred to
Government of Canada v Aronson [1990] 1 AC 579 referred to
British Amusement Catering Trades Association v Westminster City Council [1989] 1 AC 147 referred to
James v Federal Commissioner of Taxation (1955) 93 CLR 631 considered
Pillai v Comptroller of Income Tax [1970] AC 1124 considered
Re St Leon; Ex parte National Australia Bank Ltd (1994) 54 FCR 371 considered
Hilti (Australia) Pty Ltd v Millard (1997) referred to
Re Ma; Ex parte Farrow Mortgage Services Pty Ltd (in liq) (1995) 58 FCR 444 referred to
Commonwealth Bank of Australia v Horvath [1999] FCA 143 referred to
Re Scerri (1998) 82 FCR 146 referred to
Thompson v Metham [1999] FCA 935 referred to
American Express International Inc v Held [1999] FCA 321 referred to
Parianos v Lymlind Pty Ltd [1999] FCA 684 referred to
Yu v Farrow Mortgage Services Pty Ltd (in liq) (1995) 60 FCR 300 referred to
Bank of Melbourne v Hannan (1997) 78 FCR 249 referred to
Ashdown v Kirk [1999] FCA 1263 not followed
Bendigo Bank Ltd v Scerri [1999] FCA 1215 discussed
Foote v Mid-West Finance Pty Ltd (1997) 78 FCR 306 discussed
Re O’Keefe; Ex parte Australian Factors Limited (1963) 19 ABC 101 cited
Shanahan v Scott (1957) 96 CLR 245 cited
Morton v Union Steamship Co Of New Zealand (1951) 83 CLR 402 cited

BENDIGO BANK LIMITED (ACN 068 049 178) v GARY JOHN WILLIAMS

V 703 OF 1999

BENDIGO BANK LIMITED (ACN 068 049 178) v SABINA HUSSEIN-BARBOUR

V 704 OF 1999

BENDIGO BANK LIMITED (ACN 068 049 178) v KAREN FLORENCE YOUNG

V 705 OF 1999

MOORE, KIEFEL AND LEHANE JJ
18 APRIL 2000
SYDNEY (HEARD IN MELBOURNE)

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

ON…

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AGLC
Bendigo Bank Ltd v Williams [2000] FCA 482
Case
[2000] FCA 482
Decision Date

CaseChat Overview and Summary

Bendigo Bank Ltd appealed against the dismissal of three creditor’s petitions based on the debtor’s failure to comply with a demand in a notice. The notice, purportedly in conformity with the Bankruptcy Act 1966 (Cth) and the Bankruptcy Regulations, demanded payment of a debt. The central issue was whether the notice was a valid bankruptcy notice under s 40(1)(g) of the Act. The Bank argued that the failure to comply with the notice constituted an act of bankruptcy, while the debtor contended the notice was invalid due to a defect.

The court examined the legislative framework, including s 306, which states that proceedings are not invalidated by formal defects unless substantial injustice is caused. The court considered the construction of the Act, particularly the requirements for a bankruptcy notice, and whether the defect in the notice was substantial enough to invalidate it. The primary judge had noted that the notice did not specify "the provision under which the interest is being claimed," as required by Note 2 in the Schedule.

The court concluded that while the notice was generally in the prescribed form, the omission of specifying the provision under which interest was claimed constituted a defect. However, the court held that this defect did not cause substantial injustice that could not be remedied. The failure of the debtor to comply with the notice was considered an act of bankruptcy under s 40(1)(g) of the Act.

The appeals were dismissed, affirming the primary judge’s decision that the defect in the notice did not invalidate the bankruptcy proceedings. The court found that the defect did not result in substantial injustice, and the failure to comply with the notice constituted an act of bankruptcy.

Orders

Orders of the court

1. The appeals be dismissed.

Background

Background to the litigation

These are three appeals against orders made under s 52 of the Bankruptcy Act 1966 (Cth) (“the Act”) dismissing three creditor’s petitions of the appellant, Bendigo Bank Ltd (“the Bank”). Each petition was based on the failure of the debtor to comply with a demand in a notice purportedly in conformity with the provision of the Act and the Bankruptcy Regulations (“the Regulations”). Each appeal raises the same issue and matter V 703 of 1999 illustrates sufficiently the facts necessary to consider that issue.The Factual Background (V 703 of 1999) On 11 February 1999 the Bank obtained judgment against Mr Gary Williams, the respondent in V 703 of 1999, in the sum of $4,927.88 in the Melbourne Magistrates’ Court. A notice dated 9 April 1999 was served on Mr Williams demanding either payment of an amount of $5,474.20 within 21 days of service or to make arrangements to the satisfaction of the Bank for settlement of the debt. The notice was generally in the form prescribed by the Act and Regulations for a bankruptcy notice. The notice claimed Mr Williams owed the debt of $5,474.23 “as shown in the Schedule”. The Schedule provided:"Schedule1. Amount of judgement or order $4927.882. Legal costs if ordered to be paid and a specific amount was not included in the judgment or order (see Note 1, below)3. If claimed in this Bankruptcy Notice, interest $546.35accrued since the date of Judgment or order (see Note 3, below) $4. Subtotal $5474.235. Payments made since date of judgment order $0.006. TOTAL DEBT OWING $5474.23(NB: Amounts, where applicable, are to be inserted in column 2)For the Information of the CreditorNotes to the ScheduleNote 1: Legal costs (item 2 of the Schedule)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.Note 2: Interest accrued (item 3 of the Schedule)If interest is being claimed, in this Bankruptcy Notice, details of the calculation of the amount of interest claimed are to be set out in the document attached to this Bankruptcy Notice. The document must state:(a) the provision under which the interest is being claimedAND(b)the principal sum on which, the period for which, and the interest rate or rates at which, the interest is being claimed.ANNEXURE 'INTEREST'BENDIGO BANK LIMITEDREFERENCEGARY JOHN WILLIAMSSTART END NO. OF INTEREST $ DEBT $ INTEREST $ AMOUNTDATE DATE DAYS RATE % AMOUNT AMOUNT PER DAY13/05/98 06/04/99 329 12.3000 4927.88 546.35 1.66TOTALS 329 546.35”The learned primary judge said of the schedule:“It can be seen immediately that the details of the calculation of the amount of interest claimed, and the principal sum on which, the period for which and the interest rate at which, the interest is being claimed are set out in the document attached to the bankruptcy notice. But that document does not set out or state ‘the provision under which the interest is being claimed’ as is contemplated by sub‑paragraph (a) of Note 2 in the Schedule.” The issues and the legislative framework

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

MOORE, KIEFEL AND LEHANE JJ

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: MOORE, KIEFEL AND LEHANE JJ

It is also convenient to set out the terms of s 306: “306. (1) 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.(2) A defect or irregularity in the appointment of any person exercising, or purporting to exercise, a power or function under this Act or under a deed entered into under this Act does not invalidate an act done by him in good faith.”We now turn to the issue raised in the appeal. Consideration of the issue in the appeal A failure to comply with a bankruptcy notice can constitute an act of bankruptcy: s 40(1)(g). Ascertaining what, for that purpose, is a bankruptcy notice (or a valid bankruptcy notice as it has conventionally been described) is a matter of construction of the Act: see Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 388-390 and Deputy Commissioner of Taxation v Woodhams [2000] HCA 10; (2000) 169 ALR 503. The characterisation of elements in a bankruptcy notice as elements evidencing a “requirement made essential by the Act” in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 (“Kleinwort Benson”) was in a statutory context in which s 41 identified matters that had to be dealt with in a specified way in the form prescribed by the Regulations. Significantly those matters included the requirement to make payment, doing so within a specified time and in accordance with the judgment debt or order and the consequences of non-compliance with the notice. Section 41 qualified the power conferred by s 315(1)(a) to prescribe a form by directing that the prescribed form address those matters. Having regard to the function a bankruptcy notice serves it can be readily understood why these matters were both identified by the legislature in s 41 as matters a notice must address and characterised as essential (with certain consequences) by the High Court in Kleinwort Benson. Section 41 now contains no explicit directions concerning the contents of a notice but deals with the contents of the notice in two more limited ways. The section contemplates the prescription of a form and directs that the notice be in accordance with that form: s 41(1). Evident in s 41 are two assumptions about the contents of any notice conforming with the prescribed form. The first is that the notice will specify an amount due to the creditor: s 41(5) and (6), and the second is that it will, if served in Australia, specify a time within which the payment will be made: s 41(6A) (and also in s 40(1)(g)). However it is scarcely likely that the legislature was, in framing s 41 in the way it did in the 1996 amendments, intending to abandon the notion that a notice must have certain characteristics for it to be a bankruptcy notice for the purposes of s 40(1)(g). The question that then arises is by what means has the legislature identified those characteristics and what are they.