FEDERAL COURT OF AUSTRALIA
Dua v Dawn Jade Limited [2015] FCA 505
Citation: Dua v Dawn Jade Limited [2015] FCA 505 Parties: HIMANSHU GIRDHAR DUA v DAWN JADE LIMITED and GAO FU HOLDINGS LIMITED File number: NSD 289 of 2014 Judge: RARES J Date of judgment: 22 April 2015 Catchwords: BANKRUPTCY – application to set aside bankruptcy notice issued under s 41(1) of the Bankruptcy Act 1966 (Cth) – where bankruptcy notice claimed payment of judgment debts in foreign currency made by foreign court and registered as orders of Supreme Court under Foreign Judgments Act 1991 (Cth) – where Supreme Court order included foreign court’s order for interest on foreign judgment debts – where creditor claimed different sum in bankruptcy notice than any or all of actual sums constituting foreign currency judgment debts – where creditor had included in amount claimed in bankruptcy notice pre-judgment interest of the amount of foreign court’s post-judgment interest, due up to date of Supreme Court judgment without explanation in note to bankruptcy notice – whether such explanation required in bankruptcy notice – whether debtor could be misled by failure to give such explanation – whether bankruptcy notice invalid if sum claimed did not appear on face of Supreme Court judgment – whether failure to explain how sum claimed was calculated could reasonably have misled debtor as to requirements for compliance with bankruptcy notice Legislation: Bankruptcy Act 1966 (Cth)
Bankruptcy Regulations 1996 (Cth)
Foreign Judgments Act 1991 (Cth)Cases cited: Adams v Lambert (2006) 228 CLR 409
Cameron v Cole (1944) 68 CLR 571
James v Federal Commissioner of Taxation (1955) 93 CLR 631
Re Farrugia; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 1
Re HB [1904] 1 KB 94
Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71
Re Macks; Ex parte Saint (2000) 204 CLR 158
Re Wong; Ex parte Kitson (1979) 27 ALR 405Date of hearing: 22 April 2015 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 27 Counsel for the Applicant: Mr A Spencer Solicitor for the Applicant: Baker & McKenzie Counsel for the Respondents: Mr N Kabilafkas Solicitor for the Respondents: Holman Fenwick Willan
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 289 of 2014
BETWEEN: HIMANSHU GIRDHAR DUA
ApplicantAND: DAWN JADE LIMITED
First RespondentGAO FU HOLDINGS LIMITED
Second Respondent
JUDGE:
RARES J
DATE OF ORDER:
22 APRIL 2015
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The application be dismissed.
2.The time for compliance with the bankruptcy notice issued by the first respondent be extended to 6 May 2015.
3.The time for compliance with the bankruptcy notice issued by the second respondent be extended to 6 May 2015.
4.The applicant pay the respondents' costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 289 of 2014
BETWEEN: HIMANSHU GIRDHAR DUA
ApplicantAND: DAWN JADE…
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- AGLC
- Dua v Dawn Jade Limited [2015] FCA 505
- Case
- [2015] FCA 505
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court were whether such an explanation was required in the bankruptcy notice, whether the debtor could be misled by the failure to provide such an explanation, and whether the bankruptcy notice was invalid if the sum claimed did not appear on the face of the Supreme Court judgment. The court also had to determine if the failure to explain how the sum claimed was calculated could reasonably have misled the debtor as to the requirements for compliance with the bankruptcy notice. The court needed to decide whether the bankruptcy notice was a nullity due to its formal defects or if it could be considered valid despite the discrepancies and lack of explanation.
The court concluded that while there might have been a formal defect in the bankruptcy notice for not identifying the specific paragraphs of the Supreme Court judgment on which each creditor relied, this defect did not invalidate the notice under section 306(1) of the Act. The court found that the notices failed to expressly identify the particular orders in the Supreme Court judgment on which the creditors relied, and the debtor could not definitively ascertain the composition of the sums claimed. However, the court held that if the amount specified in a bankruptcy notice was in fact due and payment was claimed in accordance with the judgment, the essential requirements of the Act were met. The understatement of the amount due would constitute a substantive defect only if it was objectively capable of misleading the debtor as to what was necessary for compliance with the notice. Since it was clear that payment of the amount specified in the notice would constitute compliance, the notices were not invalid.
Accordingly, the court dismissed the application to set aside the bankruptcy notice, finding that the debtor could not rely on the points raised. The court accepted the creditor’s argument that the Supreme Court judgment was valid and binding unless set aside. The court extended the time for compliance with each bankruptcy notice until 6 May 2015 and ordered that the debtor pay the respondents' costs.
ORDERS:
1. The application to set aside the bankruptcy notice be dismissed.
2. The time for compliance with the bankruptcy notice issued by the first respondent be extended to 6 May 2015.
3. The time for compliance with the bankruptcy notice issued by the second respondent be extended to 6 May 2015.
4. The applicant pay the respondents' costs.
Orders
Orders of the court
1. The application be dismissed.
2. The time for compliance with the bankruptcy notice issued by the first respondent be extended to 6 May 2015.
3. The time for compliance with the bankruptcy notice issued by the second respondent be extended to 6 May 2015.
4. The applicant pay the respondents' costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
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Decision
Reasons for decision
Ratio Decidendi
Legal Principle Established
I accept the creditor’s argument and will not allow the debtor to rely on that point. The fact is that the Supreme Court judgment is a judgment of a superior court of record. It is valid and binding unless and until it is set aside: Cameron v Cole (1944) 68 CLR 571 at 590 per Rich J; Re Macks; Ex parte Saint (2000) 204 CLR 158.Consideration Each notice failed to identify expressly the particular order or orders in the Supreme Court judgment on which the respective creditor relied for the purpose of claiming the debt it identified in item 1, namely, “amount as per the attached final judgment/s or final order/s (note A)”. Note A explained that if the attached final judgment or order “is expressed in an amount of foreign currency”, the debtor could pay the amount of foreign currency or an Australian dollar equivalent calculated in a particular way. As is evident, only orders 1(a) and (b) of the Supreme Court judgment expressed an amount of United States dollars, namely, USD400,000 and USD600,000. However, orders 2(a) and (b) provided a manner of calculation for the interest due on the United States dollar sums. There was no claim for post-judgment interest in the notices, that is, interest due on the registered judgment amounts in the Supreme Court judgment. The debtor’s argument essentially is that it is impossible to know whether the United States dollar sums referred to in Note A of each notice were comprised of the Hong Kong judgment debt together with some amount in respect of the costs obligation jointly owed to each of the creditors or simply interest and the United States dollar judgment debt or some unexpressed amount of the HKD10,000 costs order, some interest and the amount of the Hong Kong judgment debts, or various permutations of those possibilities. In my opinion, the debtor’s argument is in the teeth of what Mason CJ, Wilson, Brennan and Gaudron JJ said in Kleinwort 165 CLR at 79-80, namely, that:The authorities show that a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice: James v Federal Commissioner of Taxation [(1955) 93 CLR 631, at 644]; Pillai [v Comptroller of Income Tax] ([1970] AC at 1135). In such cases the notice is a nullity whether or not the debtor in fact is misled: In re A Judgment Debtor, 530 of 1908 (1908] 2 KB 474 at 481).If the amount specified in a bankruptcy notice is in fact due and payment is claimed in accordance with the judgment, the essential requirements of s. 41(2)(a)(i) – the only requirements presently relevant – are met. Understatement of the amount due, whether it be an understatement of the judgment debt or of interest payable thereon, will thus constitute a defect which is substantive rather than formal only if the understatement is objectively capable of misleading the debtor as to what is necessary for compliance with the notice.It may be that, in a given case, understatement is capable of misleading the judgment debtor particularly if the notice is capable of producing uncertainty as to whether the debtor is required to pay the amount in fact due or the amount specified in the notice. In such a case uncertainty arises, not merely from the understatement, but from the understatement in the context of the particular bankruptcy notice. No such uncertainty arises if it is clear that payment of the amount specified in the notice will constitute compliance with the notice. (emphasis added)