Bunbury Foods Pty Ltd v National Bank of Australasia Ltd

[1984] HCA 10

HIGH COURT OF AUSTRALIA

Mason, Murphy, Wilson, Brennan and Dawson JJ.

BUNBURY FOODS PTY. LTD. v. NATIONAL BANK OF AUSTRALASIA LTD.

(1984) 153 CLR 491

13 March 1984

Contract

Contract—Debt—Payable on demand—Default—Right to enforce security—Demand—Whether amount payable must be correctly specified—Whether reasonable time should be allowed to comply.

Decision

1984, March 13.
THE COURT delivered the following written judgment:-
This appeal arises out of an action for damages for breach of contract brought by the first appellant Bunbury Foods Pty. Ltd. ("Bunbury") and its promoter, principal shareholder and director, Dr. Shrian Oskar, against the National Bank of Australasia Ltd. ("the Bank") and James William Robertson, whom the Bank appointed to act as receiver and manager of Bunbury pursuant to a debenture, dated 20 October 1978, given by Bunbury to the Bank to secure moneys lent. Bunbury was formed to set up and carry on an edible oil refinery at Bunbury in Western Australia. The Bank agreed to provide "start-up finance, working capital and import facilities initially required" for the project. In return the Bank obtained a mortgage as well as a debenture executed by Bunbury. These securities ranked second to a security held by the Western Australian Government. At all relevant times the Bank's agreement to provide finance was limited to $3,000,000. By cl. 1 of the debenture Bunbury undertook "to pay to the Bank on demand all moneys which are now or may from time to time hereafter be owing or remain unpaid to the Bank". By cl. 8 of the debenture it was provided that the Bank might "at any time after the moneys secured have become payable" appoint a receiver and manager of the property charged. On 5 April 1982 the Bank demanded payment of the moneys then owing by Bunbury which then exceeded $3,000,000. On Bunbury's failure to comply with the notice of demand, the Bank appointed Mr. Robertson as receiver and manager of Bunbury on 8 April 1982. (at p493)

2. In the action the appellants claimed, as well as damages for breach of contract, a declaration that Mr. Robertson was not validly appointed as receiver and manager. At first instance before Wallace J. the appellants succeeded on the issue of liability and obtained, in addition to an order for the assessment of damages, a declaration that Mr. Robertson had not been validly appointed. On appeal the Full Court took a contrary view and dismissed the action. The appellants now appeal to this Court from that decision. (at p493)

3. The appellants' case of breach of contract, as presented in this Court, is that the Bank, by demanding payment of the loan moneys on 5 April 1982, without previously terminating certain negotiations then in progress concerning the "re-structuring" of Bunbury's finances and without giving prior notice of its intention to call up the loan moneys, was in breach of contract by reason of the parties having agreed to a variation of the provisions of the debenture. The appellants claim that the variation was constituted by (a) a later agreement between the parties made on 17 and 18 August 1981 whereby the Bank agreed that it would not call up the moneys lent pending its consideration of proposals put forward by Bunbury for the "re-structuring" of its finances; and alternatively (b) an agreement constituted by a telex dated 8 March 1982 from Mr. Bolto, a solicitor acting for Bunbury, to the Bank and the Bank's reply in the form of a telex dated 9 March 1982, whereby the Bank agreed that it would not call up the loan moneys without bringing the negotiations to an end or without prior warning. The appellants also submit that the transactions referred to in (a) and (b) above and the Bank's participation in the "re-structuring" negotiations constitute conduct on its part which induced the appellants to believe that the loan moneys would not be called up without further notice and that the Bank was estopped from demanding payment accordingly. Finally, the appellants submit that the Bank's notice of demand was defective and of no effect because it failed to nominate a specific sum as the amount then owing by Bunbury and that, in consequence, the receiver and manager was not validly appointed. (at p494)

4. The moneys payable under the debenture pursuant to cl. 1 were expressed to include:
"(c) . . .
(ii) Interest on the moneys and amounts for the time being owing or remaining unpaid as aforesaid so long as the same remain unpaid . . . as follows

RATE: Such interest shall be calculated at the rate charged by the Bank from time to time computed as from the day or from the respective days of the moneys or amounts respectively becoming owing or being advanced or paid all such interest as aforesaid to be considered as accruing from day to day PAYABLE: Such interest shall be payable and paid as and when demanded but unless previously demanded to be payable on the usual half-yearly days of balancing the books of the Bank

which charges and interest may (at the Bank's option) be turned into principal on every such half-yearly day and thenceforth become principal and bear interest . . . PROVIDED THAT interest which has become payable hereunder shall not be deemed to have been turned into principal by reason only of interest being charged thereon or of the inclusion thereof in any balance of account or account stated." (at p494)

5. That the meaning to be given to the expression "on demand" in cl. 1 of the debenture might be affected by a subsequent agreement between the parties was recognized by cl. 18 which provided:

"That except to the extent that such interpretation may be excluded by or be repugnant to the context when herein used 'on demand' shall be construed subject to any agreement in writing between the Company and the Bank to give any notice specified in such agreement or to allow any lapse of time specified in such agreement prior to making such demand."

The appellants' case is that each of the variations which they seek to establish is an "agreement in writing" within the meaning of cl. 18. (at p495)

6. At first instance Wallace J. found that the Bank's notice of demand and the appointment of the receiver and manager were invalid and of no effect on the ground that the Bank had agreed in writing within the meaning of cl. 18 of the debenture not to call up the loan moneys before considering the reconstruction proposals and without giving prior warning. His Honour found that agreements (a) and (b) as alleged by the appellants had been made. He also found that the Bank was estopped from calling up the loan moneys by reason of the telex of 9 March 1982. In addition, he held that a term should be implied in the parties' agreement in order to give it business efficacy. The term to be implied was that the Bank was obliged to give reasonable notice to Bunbury of its intention to call up the loan moneys so that the appellants would have time to rearrange their finances. As the appellants do not seek to maintain their claim to relief on this ground - the implied term being plainly inconsistent with cl. 1 of the debenture - it may be put to one side. (at p495)

7. A major issue at the trial was the conflict of evidence between the appellants' witnesses, notably Dr. Oskar, and the Bank's witnesses, notably Mr. King, the manager of the Perth branch, with respect to events which occurred on 17 and 18 August 1981. So that this issue and its significance for the case as a whole may be appreciated, we should state shortly what the undisputed evidence reveals in relation to Bunbury's history and its relationship with the Bank. The refinery was opened in October 1979 and began to operate fully by April 1980. Bunbury's indebtedness to the Bank reached $2,800,000 towards the end of 1979. The Bank considered that Bunbury's financial arrangements were unsatisfactory and by August 1980 the Bank no longer regarded Bunbury as a desirable customer. Interest due on 31 March 1981 brought the debt over the agreed limit. Discussions then began with a view to a possible re-organization of Bunbury's finances. The Perth branch of the Bank recommended renewal of the existing loan facilities until 30 September 1981. By letter dated 19 May 1981 the Bank confirmed that the facilities would be renewed until that date, but subject to a review in the meantime. By letter dated 12 August 1981 the Bank asked Bunbury to supply materials so that it could make the proposed review. Dr. Oskar and Mr. Barber, the chief executive of Bunbury, then made an appointment to meet the Bank's officers on 18 August 1981. It was at this point that the accounts given by the appellants' witnesses and the Bank's witnesses sharply diverged concerning the events that then transpired. (at p496)

8. According to Dr. Oskar, Mr. King telephoned him at the Parmelia Hotel in the evening of 17 August. In the course of conversation which ensued Dr. Oskar read a draft letter to the Bank in which he sought confirmation by the Bank that if he continued to make finances available to Bunbury the Bank would maintain its loan facilities at the existing limit, so long as there was no excess, interest payments to be made annually on 30 September in each year instead of half yearly. According to Dr. Oskar, Mr. King dictated certain amendments to the letter. Subsequently Dr. Oskar handed the draft letter incorporating the amendments to his Secretary, Miss Hall, who typed the letter. The appellants' case was that this letter, with certain enclosures, was handed to Mr. King at his office the next day by Dr. Oskar in the presence of Mr. Barber and Mr. Smith who is now the State manager of the Bank. (at p496)

9. Mr. King denied that he had any telephone conversation with Dr. Oskar and also denied that the Bank had received the letter. The Bank did receive a letter bearing the same date, 17 August, enclosing cash flow projections and a balance sheet signed by Mr. Barber and by Mr. Pender, the company's secretary and confirmed by Dr. Oskar's signature. Mr. Smith and Mr. Dick, the assistant State manager of the Bank, both denied seeing the first letter written by Dr. Oskar. The appellants' witnesses claim that the letter which the Bank acknowledged it had received was one of the enclosures accompanying the critical letter whose receipt was disputed. (at p496)

10. Having resolved this conflict of evidence in favour of Dr. Oskar, Mr. Barber and Miss Hall in preference to Mr. King, the primary judge construed the letter of 17 August as limiting the Bank from making demand on Bunbury "without first giving reasonable notice that it will not extend its facility and will require payment thereof failing which notice of demand will be forthcoming". Subsequently, his Honour concluded that the discussion between Dr. Oskar and Mr. King -
". . . and the contents of Oskar's letter of 17 August 1981 and King's reply of 18 August 1981 establish an agreement on the Bank's part not to call up its facility before considering the company's reconstruction proposals". (at p496)

11. Discussions with respect to the re-structuring of the Bank's loan continued through November and December 1981 into the early part of 1982. Mr. Bolto submitted heads of agreement which were received by Mr. King of 4 March 1982 and sent by him to his head office on 26 March 1982. On 25 January 1982 the Bank had withdrawn its credit facilities but it did not freeze Bunbury's credit at the Bunbury branch of the Bank. The primary judge found that the exchange of telexes on 8 and 9 March 1982 constituted "an agreement within cl. 18 of the bank's debenture not to call up the loan facility without prior warning". He also found that the Bank's telex in reply to Mr. Bolto's telex of 8 March 1982 "constitutes . . . an assurance or guarantee" grounding an estoppel. (at p497)

12. Finally, the primary judge found that the amount demanded by the Bank - $3,191,359.49 - was excessive in that it failed to give credit for $11,000 then standing to the credit of Bunbury's account in the Bunbury branch of the Bank and did include $40,000 in respect of guarantees given by the Bank, the guarantees not then being payable or having been paid by the Bank. The Bank's formal notice of demand dated 5 April 1982 was expressed in general terms. It was the amount mentioned in the particulars given on 8 April 1982 of the debt claimed which the primary judge found to be excessive. Nevertheless he considered that this invalidated the demand and the appointment of the receiver and manager. (at p497)

13. The Full Court concluded that the conversation on 17 August, when taken together with the letters on 17 and 18 August 1981, did not constitute an agreement limiting the Bank from making demand without giving reasonable notice. Wickham J. observed that there was no agreement that the Bank would continue to provide the facilities if the limit of accommodation was exceeded. He declined to read the letter of 17 August as providing that accrued interest was to be paid on 30 September each year instead of at six monthly intervals. Likewise, the Full Court refused to read the exchange of telexes on 8 and 9 March 1982 as constituting an agreement to refrain from calling up the loan moneys without notice. Having concluded that the Bank had not agreed to stay its hand, the Full Court had no difficulty in rejecting the appellants' claim to the extent that it was based on estoppel. The consequence was that on the Bank's failure to make the interest payment on 31 March 1982, the Bank was at liberty to make demand and, in default of compliance with that demand, to appoint a receiver and manager. (at p497)

14. The evidence given by Dr. Oskar of his conversation with Mr. King on the evening of 17 August 1981 forms an important ingredient in the appellants' submission that an agreement was made on 17 and 18 August. It is urged that because his evidence was accepted by the primary judge it follows that an oral agreement was reached in that conversation, the terms of which were recorded in Dr. Oskar's letter which was then confirmed by the Bank's letter of 18 August. However, when Dr. Oskar's evidence is closely scrutinized, it falls short of establishing an oral agreement that one only interest payment should be made on 30 September in lieu of half yearly payments. On this point Dr. Oskar's evidence is quite consistent with the view that Mr. King was suggesting or advising amendments to Dr. Oskar's draft letter, so that it expressed to the best advantage the proposal which he was putting to the Bank for its consideration. (at p498)

15. The relevant evidence given by Dr. Oskar is contained in the following questions and answers:

"Can you tell his Honour, as best you recollect it, the substance of what was said by you and what was said by Mr. King in that telephone conversation on 17 August? . . . Yes, I will try. I left my office about 5.45 or 6 o'clock because it was a very busy day. We were trying to put several resolutions and prepare various accounts, which I wanted to present to the Bank. I had drafted a letter which I wanted to send to the Bank and the letter was to the effect that as long as I continued to put money into the company, the Bank would maintain its facilities at $3 million until restructuring had been completed, and there will be no excesses above $3 million and all the interest payments will be on 30 September. The Bank knew, your Honour, all along - Perhaps I could interrupt you there. I want you to tell his Honour what you said to Mr. King and what he said to you, as you recollect it, in this telephone conversation? . . . I read to him this draft. I am not a lawyer or banker by profession. He said he would like to make certain amendments and he dictated those amendments to me, and I amended my letter accordingly. Was the matter left on the basis that you would see him the following morning? . . . That is right. I will ask you about that letter in a moment but before I do, you said that one of the matters that you had mentioned in the letter related to the time when interest was to be paid? . . . That is right.

Was that a matter that you had mentioned to Mr. King on any earlier occasion? . . . Many times with Mr. King and other people who were present, because our problem was that we had interest payments to make in March and September. We wanted to divide the payments, so that the company could bear the burden of interest, so that some people could be paid in March and some people could be paid in September, as I was the only one who was putting the money in. That was the purpose of writing this line on 30 September: 'All payments to be made . . . ' Mr. King at that time was quite content, in fact. Most of the language of that letter was amended by him." (at p498)

16. The letter of 17 August from Dr. Oskar to Mr. King was in these terms:

"As desired by you I am writing this letter to place on record the understanding reached with you in relation to banking facilities granted by your Bank to Bunbury Foods. (a) In consideration of my continuing to provide funds, or arrange alternate source of funding outside the National Bank facilities that cannot be met from within the Company's own cash flows, the Bank will continue to provide banking facilities to Bunbury Foods to the extent of A$3,000,000.00 until such time that restructuring proposals have been accepted by the Bank and other lenders to the Company. (b) No excesses above the limit of $3 million will be allowed unless agreed by the Bank. (c) Interest payments to be made on 30th September. Please confirm your acceptance of (b) and (c) on the basis of the agreement outlined in paragraph (a). In the meantime, I enclose Company's Status Report signed by the Chief Executive of the Company and Company's Secretary which I have confirmed in this respect.

I await your comments." (at p499)

17. Mr. King's letter of 18 August was addressed to Dr. Oskar and headed "Personal &Confidential". It opened by referring to "your letter of 17.8.81" and to the "general discussion with you and Mr. Barber". The letter then went on to express disappointment that monthly trading figures had not been supplied, to say that the Bank would not consider increasing its present exposure unless it was completely satisfied that Bunbury had the capacity to carry and service its debt load and to assert that continuation of existing facilities was conditional upon Dr. Oskar providing finance or making other suitable arrangements. The letter concluded with the following paragraphs:

"Meantime we must insist on strict observance of limit arrangements with adequate provision made to cover all drawings and interest charges as and when they fall due. In particular we refer to interest due on September 30th. Your assistance in meeting these objectives will be appreciated. We remain open to discuss these matters in greater detail if you feel it necessary."

It was not suggested that the discussion on 18 August related to the contents of Dr. Oskar's letter to Mr. King. (at p499)

18. That letter commences with the statement that at the request of Mr. King it was written "to place on record the understanding reached with you in relation to banking facilities granted by your Bank to Bunbury Foods". The request later in the letter "Please confirm your acceptance of (b) and (c) on the basis of the agreement outlined in paragraph (a)" is not clearly expressed. Whether the author was seeking acceptance of an offer or confirmation of an understanding or arrangement already made is by no means clear. The opening sentence of the letter suggests the former construction, but the oral evidence of Dr. Oskar to which we have already referred is quite consistent with the latter construction. Mr. King's letter of 18 August is plainly a reference to the interest payment falling due on 30 September. It is not an assent to Dr. Oskar's par. (c) and it cannot readily be understood as relating to the substitution of an annual interest payment or two six monthly interest payments. (at p500)

19. It is particularly significant that the parties subsequently proceeded on the footing that interest was due and payable to the Bank on 31 March 1982. In a document entitled "Cash Flow Projections 1/7/82 to 30/6/83" which was enclosed with Dr. Oskar's letter to Mr. King dated 20 January 1982 provision was made for the payment by Bunbury in September 1982 of interest amounting to $320,000. The amount payable to the Bank on that date, if one annual interest payment was to be made, would have been $520,000 approximately. Consequently, it seems that the amount of $320,000 was computed on the footing that a half yearly interest payment was to be made to the Bank on 30 September 1982. In a similar document relating to the period from December 1981 to June 1982 provision was again made for the payment of $403,000 interest in March 1982, apparently calculated on the footing that a half yearly payment of interest would be due to the Bank at that time. (at p500)

20. On 12 March 1982 the Bank by telex requested Mr. Bolto:
"TO FURTHER ASSIST PRESENT CONSIDERATIONS, PLEASE ADIVSE WHAT FIRM ARRANGEMENTS HAVE BEEN MADE TO PROVIDE COVER FOR BANK INTEREST DUE ON 31/3/82. AMOUNT DUE APPROX. $258,000." (at p500)

21. On the same day Mr. Bolto replied:

"NO SPECIAL ARRANGEMENTS ARE REQUIRED TO MEET NBA INTEREST OF 258,000 WHICH WILL BE PAID FROM CASH FLOW AS INDICATED IN FIGURES SUPPLIED."

At no stage prior to service of the notice of demand and appointment of the receiver and manager did the appellants assert that no interest was due and payable on 31 March 1982. (at p500)

22. All this supports the view that there was no evidence of a pre-existing agreement relating to the substitution of one annual interest payment for two half yearly payments and that the letter of 17 August should be read, not as a request for written confirmation of an antecedent arrangement, but as a request for acceptance of an offer. (at p500)

23. Notwithstanding that Mr. King's letter of 18 August does not appear to address directly the matters raised by Dr. Oskar's letter of 17 August, the appellants submit that the former should be construed as a general assent to the latter so that the two constitute an agreement in writing within the meaning of cl. 18. We are unable to regard the letter as amounting to such an assent. And, as we have already said, the reference to interest due in September is not an assent to Dr. Oskar's proposal for an annual interest payment. The consequence is that, even if there was an agreement for deferment of interest it was not in writing. (at p501)

24. The appellants' alternative case for relief by way of damages commences with a telex dated 8 March 1982 from Mr. Bolto to the Bank. It was in these terms:
"I CONFIRM YOUR ADVICE THAT THE COMPANY'S PROPOSAL IS BEING SUBMITTED TO YOUR HEAD OFFICE. I SEEK YOUR CONFIR- MATION THAT NO ACTION WILL BE TAKEN TO CALL UP THE COMPANY'S FACILITY WHILST WE AWAIT THAT DECISION AND PENDING JOINT AGREEMENT ON DOCUMENTATION."
Mr. King replied the next day as follows:

"WE CONFIRM COMPANY'S PROPOSAL IS IN PROCESS OF BEING REPORTED TO OUR HEAD OFFICE, BUT UNTIL REVIEW IS COM- PLETE, WE ARE NOT IN A POSITION TO CONFIRM WHAT ACTION WE MAY OR MAY NOT TAKE RE COMPANY'S FACILITIES STOP SHALL ADVISE IN THIS REGARD AS SOON AS POSSIBLE."

There is in this response no intimation that the Bank will stay its hand pending completion of the review. The telex confirms as a fact that Bunbury's proposal is being reported to head office and then goes on to state unequivocally that the sender cannot confirm what course the Bank may or may not take in relation to the facilities until the review is completed. There is in this statement no room for an implication that the Bank will take no action to call up the loan moneys without further notice. (at p501)

25. It must also be remembered that any discussions concerning the re-structuring of Bunbury's financial arrangements were taking place against the background of an insistence by the Bank that Bunbury's indebtedness would not be permitted to exceed $3,000,000. If the interest payment due on 31 March 1982 were not met promptly the total indebtedness of Bunbury would exceed that limit and the telex to Mr. Bolto of 12 March evidences the Bank's concern in this regard. It is plain that even if there were any ground for a belief by Bunbury that the Bank would not call up the loan moneys until the re-structuring discussions were completed any such undertaking would be conditional upon the loan limit not being exceeded. In fact, the interest payment in question was not paid on the due date or at all. (at p501)

26. The reasoning which underlies the appellants' failure to succeed on its claim for relief in contract necessarily leads to the rejection of so much of the case as depends on estoppel. As we have seen, the communications relied on do not yield a promise by the Bank of the kind asserted. For the same reasons the materials fail to yield a representation of the kind asserted, the existence of a clear and unequivocal representation being an essential element in the estoppel which the appellants seek to set up. And the subsequent history which we have narrated fails to demonstrate that the appellants or either of them acted on the footing that no interest was payable on 31 March 1982. (at p502)

27. There remains for consideration the validity of the Bank's demand. The appellants rely on the statement of Cleasby B. in Massey v. Sladen (1968) LR 4 Ex13, at p 19 where the defendants seized goods the subject of a bill of sale which provided that in certain circumstances the sum due was to be payable instantly on demand and default the goods were liable to seizure. Cleasby B. said:

"The defendants are seeking to enforce the strict construction of a very stringent clause, by which the sum due is to be paid instantly on demand, without any delay, and on default the goods are to be seized. But if you are to enforce such a right, you must make a demand which is specific, you must let the debtor know what is the sum you insist on the payment of."

Bramwell B., in Wharlton v. Kirkwood (1873) 29 LT 644, at p 647 agreed with the proposition expressed by Cleasby B. And in Local Board of Health for Ballarat East v. Carvalho (1885) 11 VLR 71, at p 73 Higinbotham J. thought that - "wherever a person is required to make a payment, he ought to be informed of the amount . . . unless his liability arises under a contract created by himself, as by a bill of exchange or by money lent, which enables him to know the exact state of his liability". However, in Stephenson Developments Pty. Ltd. v. Finance Corporation of Australia Ltd. (1976) Qd R 326, at p 328 Douglas J. held that the failure of a notice under s.84(1)(a) of the Property Law Act 1974-1975 (Q.), demanding payment of interest secured by the mortgage, as a preliminary to the exercise of the statutory power of sale, to specify the amount of interest, was not fatal to its validity. (at p502)

28. It will be noticed that the proposition advanced by Cleasby B. was expressed to relate to the case where the demand was to pay the debt instanter, no time being allowed to the debtor to comply before the security was enforced against him. The proposition is designed to afford some protection to a debtor against the oppressive operation of a provision entitling a creditor to enforce a security on the debtor's failure to make payment immediately once demand is made for a debt expressed to be payable on demand. However, it is now a well established principle of law that a debtor required to pay a debt payable on demand must be allowed a reasonable time to meet the demand. Even in a case where a deed provided that the debt was payable "immediately upon demand thereof in writing" it was held that the provision must be given a reasonable construction so that the debtor had a reasonable time to get the money from some convenient place (Toms v. Wilson (1862) 4 B &S 442, at pp 453-455 (122 ER 524, at p 529) ). This does not mean that the notice calling up the debt is invalid unless it requires payment "within a reasonable time". It means no more than that the debtor must be allowed a reasonable opportunity to pay before it can be said that he has failed to comply with the demand. A notice requiring payment forthwith will be regarded as allowing the debtor a reasonable time within which to comply. Until a reasonable time in the sense discussed has elapsed the creditor cannot enforce his security. As Pigott B. stated in Massey v. Sladen (1868) LR 4 Ex, at p 19 :

"It is not necessary to define what time ought to elapse between the notice and the seizure. It must be a question of the circumstances and relations of the parties, and it would be difficult, perhaps impossible, to lay down any rule of law on the subject, except that the interval must be a reasonable one. But it is quite clear that the plaintiff did not intend to stipulate for a merely illusory notice, but for some notice on which he might reasonably expect to be able to act."

See also per Kelly C.B. (1868) LR 4 Ex, at pp 17-18 ; Wharlton v. Kirkwood (1873) 29 LT, at p 646 , per Kelly C.B.; and Ronald Elwyn Lister Ltd. v. Dunlop Canada Ltd. (1982) 135 DLR (3d) 1, at pp 16-17 . (at p503)

29. When this principle is given full weight the situation in which Cleasby B. thought it appropriate to require the creditor to specify the amount of the debt the subject of the demand is significantly altered. Upon the making of a demand the debtor has a reasonable time to obtain the money. True it is, that in the absence of a specific statement of the debt, he may lack precise knowledge of the amount which he must pay in order to avoid enforcement or realization of the security. On the other hand, to require the creditor in all cases to specify the amount of the debt may operate to impose an onerous burden upon him. Some accounts may be so complex and so constantly changing that it is difficult at any given time to ascertain or to assert the precise amount that is due and payable. Indeed, the ascertainment of the amount may in some instances require the resolution over time of complex issues of fact and law. Yet, in order to preserve the value to the creditor of his security, he may need to call up the debt as a matter of urgency. (at p503)

30. It is of some materiality to note that it is not essential to the validity of a notice calling up a debt that it correctly states the amount of the debt. Even a notice given to the mortgagor by the mortgagee as a condition precedent of a power of sale is not rendered invalid because it demands payment of more than is due (Humphery v. Roberts (1866) 5 SCR (NSW) 376, at pp 385, 387 ; Campbell v. Commercial Banking Co. of Sydney (1879) 2 LR (NSW) 375, at 385 ; Clyde Properties Ltd. v. Tasker (1970) NZLR 754, at pp 757-758 ; MIR Bros Projects Pty. Ltd. v. 1924 Pty. Ltd. (1980) 2 NSWLR 907, at p 926 ). It may be thought that this provides sufficient reason for insisting that the creditor should specify the amount of the debt in his notice demanding payment for the validity of the notice will not be imperilled by an error in the statement of the amount. However, there is little point in requiring that the notice should state the amount if the correctness of the amount is not essential to the validity of the notice. In this situation insistence on the requirement may result in creditors taking insufficient care in stating the amount of the debt, thereby contributing to confusion on the part of debtors. (at p504)

31. The foregoing examination supports the view that the interests of the parties will be more adequately protected by the principle that the debtor must be allowed a reasonable opportunity to comply with the demand before the creditor can enforce or realize the security than by the adoption of the suggested proposition that the notice of demand must specify the amount of the debt. In determining whether the debtor has had such an opportunity it will be relevant to take account of the debtor's knowledge, lack of knowledge and means of knowledge of the amount due and of the information which the creditor has provided in that respect, including the response which he has made to any inquiry by the debtor. (at p504)

32. There is perhaps a stronger case for saying that, when a third party, for example, a guarantor, is called upon to pay the debt of another, the creditor should specify the amount. But in the circumstances of this case it is unnecessary to explore the problem further. (at p504)

33. In our opinion, therefore, the notice of demand given on 5 April 1982 was a valid notice but Bunbury was to be allowed a reasonable time in which to meet the demand. In this regard, the events of 8 April 1982 are relevant. On that day a letter giving details of the debt was handed to a responsible officer of the company who replied that Bunbury could not pay, as was indeed the case. There was therefore no question of allowing Bunbury any further time in which to get the money and the Bank was accordingly entitled to appoint the receiver and manager immediately. As we have seen, it matters not that the letter of 8 April incorrectly stated the amount of the debt. (at p505)

34. Counsel for the respondent endeavours to support the Full Court's judgment by asking us to reject the primary judge's acceptance of Dr. Oskar's evidence in preference to that of Mr. King. Being independently of opinion that the grounds argued in support of the appeal should be rejected, we have no need to venture upon this minefield. (at p505)

35. In the result the appeal should be dismissed. (at p505)

Orders

Appeal dismissed with costs.