Findlay, I.W. v Ampol Petroleum (Victoria) P/L

[1993] FCA 372

IAN WILLIAM FINDLAY
Ex parte: AMPOL PETROLEUM (VICTORIA) PTY LIMITED
No. VP784 of 1992
FED No. 372
Number of pages - 12
Bankruptcy - Contract

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
GENERAL DIVISION
Heerey J(1)

CATCHWORDS

Bankruptcy - bankruptcy notice - whether notice requires payment "in accordance with the judgment" - s.41(2)(a)(i) of the Bankruptcy Act 1966 - sum paid into trust account to await outcome of dispute between petitioning creditor and another creditor - whether debtor had interest in sum - whether compromise beteween creditors covered by express or implied terms of agreement - whether amount received by petitioning creditor under compromise properly credited against judgment debt.

Contract - implied term - agreement for determination as to sum disputed between competing creditors - whether agreement extends to compromise of dispute.

Bankruptcy Act (Cth) 1966 s.41(2)(a)(i)

BP (Westernport) Pty Ltd v Shire of Hastings (1977) 52 ALJR 20.

In Re HB (1904) 1 KB 94.

Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71.

Pillai v Comptroller of Income Tax (1970) AC 1124.

Re Taylor (1985) 8 FCR 568.

Shirlaw v Southern Foundries (1926) Ltd (1939) 2 KB 206.

Walsh v Deputy Commissioner of Taxation (1984) 58 ALJR 368.

HEARING

MELBOURNE, 24 May 1993

#DATE 3:6:1993

Counsel for the debtor: Mr R J Broberg

Solicitor for the debtor: Irlicht and Broberg

Counsel for the petitioning creditor: Mr H W Fraser

Solicitor for the petitioning creditor: Hall and Wilcox

ORDER

THE COURT ORDERS THAT:

1. A sequestration order be made against the estate of the debtor.

2. The petitioning creditor's costs of and incidental to the petition

in this matter, including reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966.

Date of Commission of Act of Bankruptcy: 8 June 1992

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

HEEREY J The petitioning creditor Ampol Petroleum (Victoria) Pty Limited (Ampol) seeks a sequestration order. The act of bankruptcy relied upon is the failure to comply with a bankruptcy notice served on the debtor on 17 May 1992. The notice required payment of the sum of $741,417.60 "and no more". The notice gave particulars as to how this amount was calculated. I shall return to these a little later as they are best understood in the light of a somewhat complex history of dealings which involved not only the debtor and the petitioning creditor but also the debtor's former wife.

Judgment
2. On 30 October 1986, after an 11 day trial, Ampol obtained judgment against the debtor in the Supreme Court of Victoria in the sum of $1,118,999.03 plus costs. On 28 November the debtor obtained judgment against Ampol in the sum of $50,502 plus costs. There was an order for set-off resulting in a balance due to Ampol of $1,068,497.03.

The January 1987 Agreement
3. The debtor had been married to Winifred Florence Findlay (Mrs Findlay). The marriage was dissolved by the Family Court. On 13 November 1985 that court made an order for lump sum payments and periodical maintenance in favour of Mrs Findlay.

1. On 4 December 1986 Mrs Findlay made an application to the Family Court for an order that the debtor give security over certain real estate for the purpose of securing those payments. On 19 December the Family Court dismissed that application. On the same day she was granted a mortgage by the debtor over properties at Swan Hill, Echuca and Kerang to secure payments under the order. The lump sum payments were then up to date but annual sums totalling $224,000 were due in November 1987, 1988 and 1989 as well as 36 monthly payments of $1000 for maintenance from January 1987 onwards. On 23 December Ampol issued a writ of fieri facias out of the Supreme Court commanding the Sheriff to seize the debtor's assets to satisfy the judgment. On 28 December the debtor entered into contracts for the sale of properties.

2. On 22 January 1987 the debtor, Mrs Findlay and Ampol entered into an agreement under seal (the agreement). The agreement recited the foregoing matters, and also that Ampol had threatened to apply to the Supreme Court for orders restraining the distribution of proceeds of the sale of the debtor's properties and that in consideration of Ampol not making such an application the parties agreed to a distribution of the proceeds of the sale on the terms set out in the agreement.

3. The operative terms of the agreement were as follows.
   

"1. From the proceeds of sale:

(a) secured creditors other than the former wife shall be paid out;

(b) The sum of approximately $153,210.00 (plus or minor the normal adjustment at settlement of rates and taxes; less any increase in accrued interest to mortgagees other than the former wife in the period from 19th January to 22nd January 1987; and less the reasonable legal costs of Findlay associated with the sale of the properties referred to in Recital G) shall be paid to Ampol in part payment of the said judgment obtained by Ampol against Findlay;

(c) the balance of deposit after deduction of agent's commission shall be paid to Ampol in part payment of the said judgment obtained by Ampol against Findlay;

(d) the sum of $194,000.00 shall be paid into an interest bearing account in the name of Messrs Stewart and Sons of Echuca, the present solicitors for the former wife. This payment shall not constitute or evidence any abandonment by the former wife of the rights that she claims under the mortgage referred to in Recital E hereof;

(e) the sum of $30,000 shall be paid to the former wife in part satisfaction of her entitlement to payment of moneys other than maintenance pursuant to the Order of the Family Court referred to in Recital B hereof.

2. The said interest bearing account shall be held on the following conditions:

(a) the said sum and any interest thereon shall be held in the account until such time as the question of the former wife's entitlement thereto is determined by action by Ampol to be commenced on or before 20th July 1987 and/or by action commenced by a Trustee in Bankruptcy of Findlay appointed on or before 31st December 1987;

(b) subject to any direction by a trustee in bankruptcy the said sum and any interest thereon to be paid out to the former wife in the event that she is found to be entitled thereto;

(c) subject to any direction by a trustee in bankruptcy the said sum and any interest thereon to be paid out to Ampol in the event that the former wife is found not to be entitled thereto, in further part payment of the said judgment obtained by Ampol against Findlay;

(d) notwithstanding anything contained in sub-paragraphs

(a), (b) or (c) hereof no part of the said sum or any interest thereon shall be paid without the written consent of Messrs Hall and Wilcox of 140 William Street Melbourne.

3. Pending a determination of the former wife's entitlement to the said sum, any further sums which become payable to the former wife under any or any purported security held by her over assets of Findlay shall be invested with the said sum and on the terms set out in paragraph 2 hereof. Payments of monthly maintenance pursuant to the Order made by the Family Court referred to in Recital B hereof shall not be considered payments for the purposes of this paragraph.

4. Nothing in this Agreement is to operate as a release or discharge of any liability on the part of Findlay to pay forthwith the balance owing under the judgment referred to in Recital A hereof."

Settlement Between Ampol and Mrs Findlay
7. On 17 July 1987 Ampol issued a writ out of the Supreme Court of Victoria against the debtor and Mrs Findlay. The statement of claim pleaded the matters already referred to. It also alleged that from at least early December 1986 the debtor had been insolvent. It alleged that on 22 January 1987 the contracts of sale were settled and that the debtor had paid from the proceeds "to or at the direction of" Mrs Findlay the sum of $224,000 in purported satisfaction of his liability under the Family Court order. Since 22 January 1987 was also the date of the agreement, it is reasonably clear that the $224,000 referred to was made up of the $194,000 which had been paid into an account in the name of Messrs Stewart and Sons under par.1(d) of the agreement and the $30,000 which had been paid to the wife under par.1(e).

1. Ampol's solicitors sent the writ to Messrs Irlicht and Broberg, who had acted as solicitors for the debtor in the 1986 proceedings and in relation to the January 1987 agreement. They also act for him in the present application. However they returned the writ stating they had no instructions to accept service. Attempts were made to serve the writ personally, but without success.

2. In December 1987 negotiations took place between Mrs Findlay and Ampol through their respective solicitors. By a letter of 8 February 1988 Messrs Stewart and Sons on behalf of Mrs Findlay confirmed settlement on terms that Mrs Findlay would retain the sum of $55,000; the balance of the sum held, including interest, would be paid to Ampol and Mrs Findlay would provide a discharge of the mortgage. The terms of that settlement were carried out on 12 February 1988. The debtor took no part in these negotiations. There is no evidence that he was aware of them at the time.

The 1990 Bankruptcy Proceedings
10. On 11 November 1989 Ampol served a bankruptcy notice on the debtor claiming $741,417.60 (ie the same amount as in the present notice) said to be "the balance due by you to it under the final judgment obtained by it against you in the Supreme Court at Melbourne on 30 day of October 1986, being a judgment execution of which has not been stayed". No particulars of the amount were given in the notice, but in the course of the hearing of the petition it was said the sum was made up as follows:

Balance due under judgment after

deduction of amount recovered by

debtor on his cross-claim $1,068,497.03 Less received par.1(b) 158,016.44 Less received par.1(d) 169,062.99 327,079.43 $741,417.60

1. In an affidavit sworn on 19 October 1990 in opposition to the petition the debtor, after referring to a certain payment which is not in dispute, deposed:
   

"A further sum of $194,000 out of the proceeds of the said sale was paid into an interest bearing account from the proceeds of settlement. This sum was paid to await the outcome of proceedings between the judgment creditor and Winifred Florence Findlay, my former wife and was held in trust for them. I verily believe that a substantial part of that sum has been paid to the creditor on the settlement of those proceedings. I am unable to say the precise amount of that payment but state that any such amount paid should be taken into account in calculation of the balance owing pursuant to the judgment."

1. The petition came on for hearing before Sheppard J. On 21 December 1990 his Honour ordered that the petition be dismissed. Although in his notice of opposition the debtor claimed that the sum stated in the bankruptcy notice was overstated, it appeared that the opposite contention was put, as appears from his Honour's judgment at p 6. After referring to the calculation put forward by the debtor referred to above, his Honour said:
   

"The debtor disputes this calculation by saying that he is not bound by the settlement achieved between the petitioning creditor and Mrs Findlay so that the whole of the sum of $194,000 referred to in para. 1(d) of the deed remains outstanding with the consequence that he is indebted to the petitioning creditor in the sum of $910,480.59 rather than in the sum of $741,407.60 which the petitioning creditor claims to be the correct amount."

1. After referring to the evidence concerning the negotiations between Ampol and Mrs Findlay his Honour said (at p 9):
   

"In those circumstances she was content that the balance should be paid to the petitioning creditor. What is not clear is what the debtor's attitude to her claim in respect of the mortgage was. There is no evidence which discloses whether he conceded that such a mortgage had been given and there is no evidence either whether he thought it appropriate that his wife should be paid any part, and if so, what part, of the sum of $194,000. The difficulty is to perceive how, in the absence of any participation by the debtor in the negotiations that took place over the disposition of $194,000, the debtor could be bound by what the other parties did, that is by either the payment of $169,062.99 to the petitioning creditor or the payment of the balance to Mrs Findlay. Paragraph 1(d) of the deed does not itself recognise any right on the debtor or, for that matter, the petitioning creditor or Mrs Findlay, to any part of the $194,000. It is really a holding provision and it provides that the payment into the bank account is not to constitute any abandonment by Mrs Findlay of the rights claimed by her under the mortgage. But there is nothing in the provision, particularly if one construes the deed as a whole, to suggest that the debtor had no interest in the sum or that he was content that it should be applied either to the petitioning creditor or to Mrs Findlay or partly to one and partly to the other."

1. With respect, this view is difficult to reconcile with the debtor's own statement in his affidavit of 19 October 1990, which implicitly accepts that Mrs Findlay and Ampol could settle their dispute and only asks that any amount received by Ampol should be credited against the judgment debt. As will hereafter appear, that in fact occurred.

2. In any event his Honour reached the conclusion (at 10)
   

"... that the bankruptcy notice in this case not only could have been, but was in fact, misleading or uncertain in a critical respect, bearing in mind the obligation which it imposed upon the debtor to comply with it. Nothing appears on the face of the notice which could possibly tell the debtor how the amount claimed in it was arrived at. When one adds to this the fact that the debtor was not privy to any agreement between the petitioning creditor and Mrs Findlay as to how the sum of $194,000 and interest referred to in paragraph 1(d) of the deed (to which the debtor himself was a party) was arrived at, the only conclusion open is that the bankruptcy notice was misleading and perplexing and not one upon which the petitioning creditor is entitled to rely."

The Present Bankruptcy Notice
16. The present notice recites that Ampol

"has claimed that the sum of $741,417.60 is the balance due by you to it under a Final Judgment obtained by it against you in the Supreme Court of Melbourne on 30 October 1986 being a judgment the execution of which has not been stayed".

1. The notice then gives particulars of the sum of $741,417.60. As only two items are in dispute I shall not set out the full terms of the calculations. They start with the net amount of the judgment and then give credit for payments to the judgment creditor pursuant to par.1(b) and 1(c) of the agreement. Credit is then given for "further payment by the judgment debtor to the judgment creditor on 12 February 1988 being part of the monies referred to in par.1(d) and 2(a) and 2(c) of the said agreement of $169,062.99". The calculations then show how the last mentioned sum is made up. Commencing with the sum of $194,000 referred to in par.1(d) of the agreement, amounts of interest are added which bring the total to $224,130.45. From that are deducted two amounts
   

"Bank charges and financial

institutions duty on the (Stewart

and Sons Account) $67.46 Sum paid out to Winifred Florence

Findlay on the said account and

pursuant to pars.2(a) and 2(b) of the

said agreement $55,000.00"

1. The deduction of those two amounts from the $224,130.45 leaves $169,062.99. That amount plus the amounts under pars. 1(b) and 1(c) total $327,079.43 which subtracted from the net amount of the judgment gives the balance claimed of $741,417.60.

2. The notice concludes by requiring payment within 21 days after service of the notice of "the sum of $741,417.60 and no more".

The Debtor's Case
20. By an amended notice of intention to oppose petition filed at the commencement of the hearing, the debtor gave the following grounds:

"1. The sum stated on the bankruptcy notice is overstated.

2. The bankruptcy notice requires payment of a sum not in accordance with the judgment but in accordance with the judgment as varied by collateral agreement. PARTICULARS

The amount claimed in the bankruptcy notice is calculated by reference to an agreement between the judgment creditor and Winifred Florence Findlay made either 22 January 1987 or on or about 23 December 1987 whereby part of the payment made by the judgment debtor was paid to the said Winifred Florence Findlay in lieu of the judgment creditor."

1. At the outset it should be noted that the present case is fundamentally different from that considered by Sheppard J. There the petitioning creditor failed because the bankruptcy notice did not state how the figure claimed in the bankruptcy notice was calculated or made up. In the present case, there can be no such complaint. The present notice of objection really raises two aspects of the same question, viz whether the notice complies with s.41(2)(a)(i) of the Bankruptcy Act 1966 by requiring the debtor to "pay the judgment debt or sum ordered to be paid in accordance with the judgment or order". The notice required by s.41(5) has been given.

Alleged Overstatement
22. Counsel on behalf of the debtor contended that the notice overstated the amount because a bankruptcy notice can only issue for the amount for which execution could issue: Walsh v Deputy Commissioner of Taxation (1984) 58 ALJR 368. He said that as at the date of the agreement the judgment creditor would have to give credit for the full amount of $194,000 because that amount was "at least a conditional payment for which the judgment creditor had to give credit". Reliance was placed on Re Taylor (1985) 8 FCR 568. In deducting from the $194,000 the two amounts of $67.46 and $55,000 the petitioning creditor had reduced the credit to which the debtor was entitled.

1. Taylor is however distinguishable. In that case the creditor's solicitors held the balance of proceeds of a sale of the debtor's property by the creditor as mortgagee. At the date of the bankruptcy notice the settlement had not yet taken place and was subject to the approval of the transfer of the liquor licence by the New South Wales Licensing Commission. The creditor's bankruptcy notice did not give credit for this amount. Spender J held that the monies held in the trust account were held beneficially for the creditor even though the creditor was under a contractual obligation vis-a-vis his purchaser to dispose of the money in a certain way on the happening or non happening of a defined event. The solicitors nevertheless held the money as agent for the creditor.

2. In the present case, the $194,000 was not held on behalf of the debtor. (Reference to the $194,000 is intended to include also the substantial interest, about $30,000, which accrued between 22 January 1987 and 9 February 1988. It is worth remembering that the debtor is getting the benefit of this amount, which includes interest on the $55,000 that ultimately went to Mrs Findlay, while not being debited with any interest on the judgment debt from 1986.) As counsel for the debtor conceded in argument, the debtor could not claim that any part of the $194,000 be repaid to him. The true position was that any right he might have had to the money as part of the proceeds of the sale of his properties was, at the time of the agreement, subject to the mortgage to Mrs Findlay or, if that turned out to be invalid, to Ampol by virtue of its writ of fieri facias.

1. The debtor's conduct is inconsistent with his regarding the money as being held on trust for him. In his affidavit in the earlier bankruptcy proceedings he admitted that the sum was paid "to await the outcome of proceedings between Ampol and Mrs Findlay and was held in trust for them". Further, it is difficult to avoid the conclusion that he could have been involved in the 1987 proceedings had he wished but deliberately chose otherwise because he recognised he had no interest in the sum in issue. Of course to the extent that Ampol in fact received the $194,000 or any part thereof, it would do so in its capacity as a creditor of the debtor and the debtor ought to be given credit accordingly - as he himself said in his affidavit of 19 October 1990.

2. The language of the agreement itself suggests that the parties had at the forefront of their minds two alternatives: Mrs Findlay's mortgage either being upheld or declared invalid. In terms of legal analysis, the issue between Mrs Findlay and Ampol was an all or nothing one. Nevertheless, such disputes can be, and very often are, settled on a basis which makes allowance for risk and other commercial factors with each party recovering something. The courts recognise the public interest in such negotiated settlements. Therefore, considered objectively, it would be an unbusinesslike approach to construe the agreement as having no operation at all in the event of the dispute between Mrs Findlay and Ampol being compromised rather than fought to judgment for one or the other. Given the surrounding circumstances in which the debtor was asserting no claim to the $194,000, the parties, including the debtor himself, must be treated as having agreed that in the event of a compromise which left Ampol with part of the sum that part would be applied in reduction of the judgment debt.

3. Counsel for Ampol argued that the express terms of the agreement covered the eventuality of a compromise between Ampol and Mrs Findlay. In support of this conclusion he contended that "determined by action" in par.2(a) included determination by way of compromise. He referred to the Oxford English Dictionary meaning of "determine" where one of the meanings is given as "To bring to an end a dispute, controversy, or doubtful matter; to conclude, settle, decide, fix". I have some doubt about this as a matter of language. Most, if not all, of the examples in the OED are of determination by some person or authority other than the disputing parties themselves. The examples are consistent with the primary meaning given by the Macquarie Dictionary of "determine" as a transitive verb - "To settle or decide (a dispute, question etc) by an authoritative decision". Moreover the structure of par.2 suggests that par.2(a) states the purpose for which the money is to be held and pars.2(b) and 2(c) deals with the disposition of it in the event of either of the eventualities contemplated by the parties, viz Mrs Findlay being "found to be entitled" (which suggests a judicial determination) to the money or not.

4. A conceptually sounder basis in my view is that a term is to be implied that in the event of a compromise between Mrs Findlay and Ampol each shall be paid out of the fund her or its agreed amount and, in the case of Ampol, the amount is to be treated as payment on account of the judgment debt. Such a term would satisfy all the criteria for an implied term laid down by the Privy Council in BP (Westernport) Pty Ltd v Shire of Hastings (1977) 52 ALJR 20 at 26:
   

"(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that 'it goes without saying';

(4) it must be capable of clear expression; (5) it must not contradict any express term of the contract."

1. If at the time of the agreement the famous officious bystander (see Shirlaw v Southern Foundries (1926) Ltd (1939) 2 KB 206 at 227) had asked "What happens if Mrs Findlay and Ampol settle their dispute; will the amount received by Ampol be credited against the judgment debt?" the parties would have replied "Oh, of course]" The debtor could not be heard to say then, just as he does not say now, that he was entitled to any of the $194,000 freed from the claims of both Mrs Findlay and Ampol. The circumstances could not give rise to any expectation on the part of the debtor that Mrs Findlay and Ampol would bargain otherwise than at arms length. In any case, the smaller the amount received by Ampol as a result of negotiations, the larger the amount which would be credited to the debtor's liability against his other creditor, Mrs Findlay.

2. Mention was also made in argument of the deduction from the amount credited of the sum of $67.46 for bank charges and financial institutions duty incurred in respect of the bank account. To my mind it goes without saying that when a bank account is to be opened that people of ordinary intelligence would recognise that charges of this nature were to be incurred.

"In Accordance With the Judgment"
31. The debtor argues that the sum demanded by the notice is not in accordance with the judgment but "in accordance with the judgment as varied by a collateral agreement to which the debtor was not a party". Reliance was placed on In Re HB (1904) 1 KB 94. A careful examination of the facts of this case is required. Vaughan William LJ said (at 101):

"In this case there was a negotiation between the debtor and the creditor which resulted in an agreement and that agreement included, amongst other things, an agreement that the debtor owed a particular sum, and that that sum was to be paid by certain instalments. The agreement is not very plain or easy of construction, but generally that was the effect of it. There was also an agreement by way of collateral security for the due performance of that agreement, that the debtor should consent to a judgment being signed against him. In the agreement nothing is said as to whether the whole of the instalments are to be deemed to become due upon default in payment of any one of them, nor is there anything said with regard to the successive executions on the judgment. A sum of 300 was to be paid down on or before the execution of the agreement, and the judgment debt was to be paid by monthly instalments. Default having been made in the payment of three monthly instalments that had become overdue, a bankruptcy notice was issued, and that bankruptcy notice was issued in respect of the whole of the judgment debt. That notice came under the consideration of the registrar upon an application to set it aside, and it was set aside and, in my judgment, rightly set aside, because it is quite plain that under the agreement the sum was not due. That being so, the judgment creditor presently issues a second bankruptcy notice. That notice is issued for the amount of the overdue instalments, credit being given to the debtor in respect of a sum that had been attached under a garnishee order; and the balance is described as "the amount due on the final judgment." The question which we have to decide is whether, at the time when that second bankruptcy notice was issued, it was a notice served on the debtor, within s.4, sub-s.1(g), of the Bankruptcy Act, 1883, 'requiring him to pay the judgment debt in accordance with the terms of the judgment.' I do not think it was. I think it was a notice requiring the debtor to pay a debt in accordance with the terms, not of the judgment, but of an agreement; and I think that in dealing with a section of this nature in an Act of Parliament creating a new legislative act of bankruptcy, the actual language of the section ought to be considered."

1. In HB the second bankruptcy notice, which was the one before the Court of Appeal, was bad because the creditor's right to the money arose under the prior agreement and not under the judgment. The notice claimed the overdue instalments, the right to those being founded in the agreement. It is to be contrasted with the present case where Ampol's title to the money demanded in the notice comes from its judgment with credit being given for monies paid in reduction of that judgment.

2. Looked at another way, the defect with the notice in HB was that it was a notice to pay part of the judgment debt, leaving any balance to be subsequently claimed. Romer LJ said (at 103) that a bankruptcy notice
   

"... must require payment of a sum alleged to be due according to the terms of the judgment - that is to say, it must state the amount that is claimed as remaining unpaid on the judgment debt. Clearly, in a bankruptcy notice the debtor is entitled to see from the notice exactly what is claimed to be due on the judgment debt. No doubt a sum might be claimed which is less than the real amount due, and that would not of course be fatal to the notice so long as the notice made it clear that nothing more was claimed to be due on the judgment beyond the amount specified in the notice. But a notice to pay part of a judgment debt, leaving any balance that may be due to be subsequently claimed, is to my mind, clearly bad.

Now, the notice in the present case does not allege that the balance of the judgment debt is claimed; and it is clear, on the facts, that what is claimed in the bankruptcy notice is only part of the debt, and that something more is claimed to be due on the judgment debt as a whole. That form of notice clearly could only be justified by the special agreement alleged to exist between the parties. That being so, this notice is not one founded simply on the judgment according to its terms; it is founded on the judgment as modified by the agreement, and it seems to me that the notice is no better than if it had, on the face of it, set forth the facts and required the debtor to pay only part of the judgment debt, according to the terms of the agreement, outside the judgment."

1. Lest there be any suggestion that the decision might cast doubt on the validity of a bankruptcy notice which gave credit for payments made on account of the judgment, Vaughan Williams LJ added an explicit reminder. At the end of the judgments (at 105) his Lordship said:
   

"I wish to add one statement that I omitted by mistake from my judgment, and it is this. A bankruptcy notice issued for a smaller sum than the judgment debt by reason of credit being given for amounts already paid is, in my judgment, a notice to pay 'in accordance with the terms of the judgment.'"

1. In Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 Mason CJ, Wilson, Brennan and Gaudron JJ said (at 79):
   

"It is clear enough from the terms of s.41(2)(a)(i) of the Act that a notice must require payment 'in accordance with the judgment'. A notice specifying payment in accordance with some other arrangement does not satisfy this requirement. On one view In re HB merely gives expression to this requirement, making it clear that a judgment debt will not found the issue of a bankruptcy notice whilst ever the obligation to pay in accordance with the judgment is suspended or qualified by operation of an agreement. With that proposition we agree. But see cf. Pillai as to partial discharge by agreement of the obligation."

1. In Pillai v Comptroller of Income Tax (1970) AC 1124 it was argued that a bankruptcy notice was bad as not claiming an amount "in accordance with the terms of the judgment" because there had been an agreement between the Comptroller and the taxpayer which superseded the judgment. A judgment was obtained against the taxpayer for income tax and statutory penalties but before the issue of the bankruptcy notice the assessment on which the judgment was based was reduced by certain amounts in respect of tax and penalties. The Privy Council noted (at 1129):
   

"It is not wholly clear on the evidence whether this reduction was made by an order of the Board of Review or by agreement between the Comptroller and the taxpayer. From what their Lordships have been told from the Bar, however, it would appear to be the former, although the order may have been made by consent. After the judgment, but before the issue of the bankruptcy notice, the taxpayer also made payments totalling $53,402.75 in part satisfaction of the judgment. The sum of $54,826.68 specified in the bankruptcy notice as the amount due on the judgment represents the balance then outstanding of the original judgment for $309,660.53 after giving credit for the payments made by the taxpayer and the amounts by which the assessment and statutory penalties which form the basis of the original judgment had been reduced as a result of the proceedings by way of appeal before the Board of Review."

1. The Privy Council rejected the attack on the validity of the notice saying (at 1130):
   

"A judgment debt may, with the consent of the judgment creditor, be discharged in part and where this has been done a bankruptcy notice may be issued for the balance remaining undischarged. This is what appears to have been done in the instant case."

1. For the reasons already mentioned, on its proper construction the agreement made provision for Ampol to credit the debtor with such part of the $194,000 as it might receive as a result of the resolution of its dispute with Mrs Findlay, whether that be the whole amount or some part. The debtor was a party to the agreement. Therefore the amount claimed in the notice was in my opinion "in accordance with the judgment".

2. The objections to the petition fail. There will be a sequestration order in the usual terms.