Gardiner v Gardiner
[1992] FCA 964
•15 DECEMBER 1992
Re: FREDERICK JOHN GARDINER; DAVID PERCY GARDINER; GWEN MARY PRESS and ADELE
CLARE CORDEROY
And: BERNARD GEORGE GARDINER and SUSANNE LEONIE GARDINER
No. N G332 of 1992
FED No. 964
Number of pages - 31
Bankruptcy
(1992) 39 FCR 259
COURT
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Northrop(1), Neaves(2) and Foster(1) JJ.
CATCHWORDS
Bankruptcy - Practice and Procedure - defect in bankruptcy notice due to inaccurate calculation of interest due but period for interest claimed made clear - whether bankruptcy notice objectively capable of misleading debtor as to what is necessary for compliance with the notice - whether miscalculation of interest can be treated as formal rather than substantive - whether substantial injustice caused by the defect.
Bankruptcy - Practice and Procedure - bankruptcy notice based on consent orders made by Deputy Registrar in Equity - whether bankruptcy notice based on a "final" order - whether orders of Deputy Registrar final or interlocutory - whether order of Deputy Registrar constituted a final determination of the rights of the parties - distinction between final orders and interlocutory orders discussed.
Bankruptcy Act 1966 (Cth) - s 306(1) s 41(g), s 40(3)(b)
Supreme Court Act (NSW) 1970 - s 95(2)
Supreme Court Rules - Pt 40 r 3, Pt 52 r 50A, Pt 52 r 60
Re Lowe; Ex parte Argentine Goldfield Limited (1989) 1 QB 147
Re Application for issue of Bankruptcy Notice; Ex parte Tinson (1946) 14 ABC 41
Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71
Re Farrugia (1988) 80 ALR 651
Hall v Nominal Defendant (1966) 117 CLR 423
Southern Cross Exploration NL and Ors v Fire and All Risks Insurance Company Ltd and Ors (No 2) (1990) 21 NSWLR 200
HEARING
SYDNEY
#DATE 15:12:1992
Counsel for the appellants : Mr J.S. Drummond
Solicitors for the appellants : Cropper and Parkhill
Counsel for the respondents : Mr R.E. Montgomery
Solicitors for the respondents: McGirr James Hall and
Associates
ORDER
The Court orders that:
1. The appeal be dismissed.
2. The appellants pay the respondents' costs of the appeal.
Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules.
JUDGE1
NORTHROP AND FOSTER JJ. This is an appeal from a decision of Einfeld J. given at Sydney on 25 February 1992. His Honour held that bankruptcy notice B 3660 of 1991, caused to be issued on 9 October 1991 by the appellants against the respondents, be set aside and ordered that the appellants pay the respondents' costs.
The bankruptcy notice required payment within the period of 21 days specified in the notice of the amount of $7,574.10 claimed by the appellants as judgment creditors. The relevant portion of the notice reads as follows:-
"WHEREAS ... (the Judgment Creditors) have claimed that the sum of:- A. $7,574.10 being the interest only due to the Judgment Creditors in respect of the sum of $21,125.97 calculated as follows:- - 29 November, 1988 to 28 February, 1989 (92 days) at the rate of 15% per annum amounting to $798.74
- 28 February, 1989 to 31 August, 1989 (183 days) at the rate of 17% per annum amounting to $1,800.63
- 1 September, 1989 to 31 August, 1990 (336 days) at the rate of 21% per annum amounting to $4,083.97
- 1 September, 1990 to 22 November, 1990 (81 days) at the rate of 19% per annum amounting to $890.76
making a total of $7,574.10 due by you to the Judgment Creditors under a final judgment or final order obtained by the Judgment Creditors against you in the Supreme Court of New South Wales, Sydney Registry, Equity Division made on 22 May, 1989 and entered on 31 October, 1990 being interest only in respect of costs in the sum of $21,125.97 as certified as the Plaintiffs' costs in Certificate of Taxation dated 31 October, 1990."
In order to understand the issues that were presented to his Honour and to this Court for decision, it is necessary to set out, briefly, the history of the proceedings between the appellants and the respondents.
The present appellants, as plaintiffs, obtained against the present respondents, as defendants, a judgment in the Equity Division of the Supreme Court of New South Wales. The judgment was given by Needham J. on 4 June 1986 and was entered in accordance with the Rules of the Supreme Court on 24 June 1986. As part of the judgment the respondents (defendants) were ordered to pay the appellants' (plaintiffs') costs of the proceedings.
Although no documentary evidence bearing upon the matter has been placed before us, it is accepted by the parties that the appellants proceeded to have these costs taxed by the taxing authorities of the Supreme Court. A Certificate of Taxation was issued on 29 November 1988 in the sum of $21,458.37. It appears that, belatedly, the respondents sought to dispute the amount of costs thus ordered to be paid by them. The procedure by which they sought to mount this challenge is not made clear in the material placed before us. In a chronology provided to the Court for its assistance the respondents were said to have made an "application to extend time for examination of appellants' taxed bill of costs". In his judgment, Einfeld J., says that "subsequently a notice of motion was filed by the (respondents) seeking to extend the time for objecting to the bill of costs which had been taxed six months earlier, and seeking a new hearing of the taxation of costs." Whatever the procedures that were invoked, they resulted in the parties coming before a Deputy Registrar on 22 May 1989. On that occasion, the Deputy Registrar made orders, which, we are informed, were, in fact, made by consent. Although made on that day they were not formally entered by the filing of the appropriate document until 31 October 1990. The orders were as follows:-
"1. Time to file a notice in accordance with form 62 be extended up to and including 29 May 1989.
2. In respect of all disputed items eventually found in favour of the plaintiffs interest shall run as from 29 November 1988.
3. The defendants pay the plaintiffs' costs of the motion."
The form of these orders has caused problems to which we shall refer later. It may be noted at this point, however, that the reference to "form 62" is accepted as being erroneous, in that the form that should have been referred to was form 64.
It seems that the making of these orders had the result that a re-taxing of the bill of costs took place. We have nothing before us to indicate whether this re-taxing took place on the basis of objection to certain specified items in the bill which the respondents wished to dispute. Having regard to the orders made by consent on 22 May 1989, this seems most likely to have occurred. This taxation took place on 1 August 1989, when the amount of costs was reduced to $21,125.97, a reduction of about $330. For some reason, the Certificate did not issue on or close to the date of the taxation. It was not formally provided in the prescribed manner until 31 October 1990.
On 10 July 1989 the costs ordered by the Deputy Registrar to be paid by the respondents in relation to the notice of motion of 22 May 1989 were duly taxed in the sum of $518. Again the formal Certificate of Taxation in this amount did not issue until 31 October 1990.
On 12 December 1990 the appellants caused bankruptcy notice number B 3712 of 1990 to issue against the respondents. This bankruptcy notice contained two claims, the first being for the amount of $21,125.97 together with calculated amounts of interest. The second was for $518 together with calculated amounts of interest. These amounts together with the calculated amounts of interest made a total of $29,344.79. This amount was claimed by the notice.
The respondents brought proceedings to have this notice set aside on the basis that (inter alia) it offended the principle that a bankruptcy notice must refer to only one final judgment or order (Re Lowe; Ex parte Argentine Goldfield Limited (1989) 1 QB 147; Re Application for issue of Bankruptcy Notice; Ex parte Tinson (1946) 14 ABC 41). On 20 March 1991 Wilcox J. heard and determined this application. His Honour found that the bankruptcy notice clearly infringed this principle and accordingly set it aside.
Thereafter, on 18 May 1991, the appellants caused to be issued a further bankruptcy notice number B 1667 of 1991 against the respondents.
In this bankruptcy notice, which was a 21 day notice, the appellants as "the Judgment Creditors" claimed in the following terms:-
"A. $21,125.97 together with interest thereon from:- - 22 November, 1990 to 28 February, 1991 (98 days) at the rate of 19% per annum amounting to $1077.71 - 1 March, 1991 to 14 May, 1991 (74 days) at the rate of 17% per annum amounting to $728.12
making a total due by you of $22,931.80, and no more to the judgment creditors under a final judgment or final order for costs obtained by the judgment creditor against you in the Supreme Court of New South Wales, Sydney Registry, Equity Division, such order being made on 4 June, 1986 being the costs certified as the plaintiffs' costs in Certificate of Taxation dated 31 October, 1990."
It may be noted that we were advised by counsel that the date 22 November 1990 was selected on the basis that it was 21 days from the issuing of the Certificate of Taxation on 31 October 1990, it being considered that the allowance of this period was required by s 95(2) of the Supreme Court Act (NSW) 1970. This must be a matter of considerable doubt, as the subsection applies only to judgments for damages in proceedings on a common law claim. The order for costs of 4 June 1986 was, of course, part of the judgment given by Needham J. in the Equity Division. However, nothing turned upon this matter in the argument of the appeal.
After extensions of time for compliance were granted payment of all monies claimed in this bankruptcy notice was made by the respondents on 27 September 1991. Fairly promptly thereafter, on 9 October 1991, the bankruptcy notice number B 3660 of 1991, the subject of these proceedings, was issued by the appellants and served on the respondents. The terms of it have already been set out. It is to be observed that it relates to a claim for interest for a number of consecutive periods covering the total period from 29 November 1988 to 22 November 1990. The first of these dates is, of course, the date of issue of the first Certificate of Taxation in respect of the costs order made by Needham J. on 4 June 1986. The last date was the date chosen for the commencement of the interest calculation in bankruptcy notice B 1667 of 1991. Thus viewed, it may be seen as an attempt to recover interest not claimed in the previous bankruptcy notice. It must also be noted that this bankruptcy notice makes no reference to the costs order of 4 June 1986 upon which the previous notice B 1667 had been based. It refers to the order of the Deputy Registrar made by consent on 22 May 1989 as being the relevant order upon which the claim was based. It may also be noted that this notice does not refer in any way to the sum of $518 being the amount of taxed costs in respect of the costs order made by the Deputy Registrar on 22 May 1989. The Court was advised by counsel that this amount had been dealt with separately and had been paid by the respondents.
Einfeld J. upheld the respondents' application to set aside this bankruptcy notice. His Honour pointed out that the interest calculations were incorrect on the face of the notice. The second period 28 February to 31 August 1989, a claimed period of 183 days, was incorrect in that the previous period claimed included 28 February. In these circumstances the second period should have commenced on 1 March. Additionally, the calculation of 183 days for that period was incorrect even if this adjustment was not made. A correct calculation involving the adjusted commencing date would have been 184 days. The third period, 1 September 1989 to 31 August 1990 was clearly a one year period of 365 days. However, it was stated in the notice to be a period of 336 days. The fourth period 1 September 1990 to 22 November 1990 was said to be 81 days when in fact it was 83. The calculation was however further vitiated by the fact that 22 November 1990 was the commencing date for the interest claimed for the previous bankruptcy notice which had been paid in full. Accordingly, the last day for the fourth period claimed in the subject notice should have been 21 November 1990. His Honour indicated that appropriate adjustments would have produced a result that the interest owing was "almost $400 more than the amount claimed in the bankruptcy notice".
His Honour considered this understatement of the relevant amount of interest along with the fact that the previous bankruptcy notice, B 1667 of 1991 had claimed:-
"... a total due by you of $22,931.80 and no more ... under a ... final order for costs ... in the Supreme Court of New South Wales ... Equity Division ... made on 4 June 1986, being the costs certified as the plaintiff's costs in Certificate of Taxation dated 31 October 1990." (emphasis added by Einfeld J.)
In respect of the claim so expressed his Honour made the following comment:-
"In Re The Bankruptcy Act 1966; Ex parte Commercial Banking Company of Sydney Limited (1979) 23 ALR 522 at 528 Justice Lockhart, in dealing with a notice in similar form to the notice No B 1667 of 1991 so far as it used the words 'and no more' in respect of the alleged debt, said this: In my opinion a judgment debtor reading the notice would conclude that whether he owed the judgment creditor more than the total sum mentioned in the bankruptcy notice or not, all that was being claimed from him was the total sum specified and that, if there were any further sums due, they were being claimed no longer.
I respectfully agree with his Honour's assessment."
We gather from this comment that his Honour was expressing the view that the passage referred to from the earlier bankruptcy notice was objectively capable of conveying to the respondents the same impression as that referred to in the passage from the judgment of Lockhart J.
His Honour also referred to the authoritative passage from the judgment of Mason C.J. and Wilson, Brennan and Gaudron JJ. in Kleinwort Benson Australia Limited v Crowl (1988) 165 CLR 71 at 80:-
"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."
His Honour then considered the question whether the present bankruptcy notice was objectively capable of misleading the respondents, and was thus subject to a substantive defect, in the following passage:-
"This bankruptcy notice therefore falls to be read with notice No B 1667 of 1991, which named, was served on and was paid out by the same persons as those on whom the current bankruptcy notice was served. Looked at objectively, it seems to me that any person reading bankruptcy notice No B 1667 of 1991 and paying the amount sought thereby, would come to the conclusion that what they were doing was paying the costs which had been ordered in and had arisen out of the Equity Court proceedings which concluded in June 1986, and the interest due on that amount. They would also have assumed that what they were doing was paying the costs as certified on 31 October 1990, and that no other sums were being claimed in respect either of the costs or the interest.
The same recipients would be in a highly confused state when, just a few days after paying that claim, they received the present bankruptcy notice claiming more interest, particularly because of the misstatement of days, the miscounting of days in an obvious way, such as one complete year being described as 336 days, claiming one day twice, and including a day in respect of which interest had already been claimed and paid. In that regard, the observations of Justice Lockhart in Commercial Banking Company are particularly pertinent. I must confess to having been somewhat confused myself, until it was painstakingly explained by counsel."
His Honour went on to say that the present bankruptcy notice was "significantly misconceived". It made no mention of "the only particularly relevant date", 4 June 1986, the date on which Needham J.'s order for costs was made, without which "there would not have even been one taxation let alone two, and no certificate of taxation could have taken effect at all."
His Honour concluded his deliberations on the validity of the bankruptcy notice in the following passage:-
"I doubt that anyone reading that notice would be able to square it with the earlier bankruptcy notice, which mentioned exactly the same figure for costs, but dated it as becoming due and payable from a completely different date. In my judgment therefore the bankruptcy notice is bad and must be set aside."
We read this passage as indicating that, in the ultimate, his Honour set aside the bankruptcy notice on the basis that it was objectively capable of misleading the respondents as to what was required of them to comply with it. Although, as appears from other parts of his Honour's judgment, it was argued on behalf of the respondents that the appellants, by indicating in bankruptcy notice B 1667 of 1991 that they claimed "no more" than the total of $22,931.80 had waived any further claims, including the claim for interest in the subject bankruptcy notice, we are unable, with respect, clearly to discern whether his Honour made any final decision on this point. Similarly, it was submitted before him, on behalf of the respondents, that the Deputy Registrar's order of 22 May 1989 was not a final order for the purpose of its providing a foundation for the issue of a bankruptcy notice. Again, it would appear, that his Honour did not find it necessary to reach any conclusion on this point, although what he says in his judgment, in the passage cited above as to the importance of Needham J.'s order of 4 June 1986 perhaps indicates that his Honour was of the view that this order was the only final order upon which reliance could be placed by the appellants, the Deputy Registrar's order of 22 May being interlocutory only.
In the course of argument before this Court, there was discussion as to the circumstances in which the Deputy Registrar's order of 22 May 1989 came to be made. It was noted that the order did not vacate the previous certificate of taxation which was referred to in his Honour's judgment as having been issued on 29 November 1988. It is clear that a fresh certificate issued on 31 October 1990 following upon a further taxation of costs on 1 August 1989. Form 64 (erroneously referred to as form 62), the time for filing of which was extended by the first of the Deputy Registrar's orders, appears to be appropriate to an application under Pt 52 r 60 of the Supreme Court Rules to a taxing officer to reconsider his decision in accordance with a statement of objections in respect of specific items set out in the form. It is not clear from the material before the Court whether the objection was to the whole of the bill or specific items only.
If, as seems to be the case, the bill had been taxed and a certificate issued, without the respondents having lodged a form 64 statement of objection, then the respondents, most likely, were proceeding by way of seeking a reconsideration of items already decided. However, there is an absence of evidence on these matters. In the circumstances, we are of the opinion that, no point in this regard having been taken before the learned trial judge nor in the outlines of argument provided to this Court, that we should simply accept that the procedure adopted before the Deputy Registrar was in all respects adequate to produce the result that a regular taxation of the costs order in favour of the appellants took place on 1 August 1989 and that the certificate of taxation issuing on 31 October 1990 was in all respects regular and consistent with the prescribed procedures.
In a similar way, reference was made in argument to the terms of the Deputy Registrar's second order. It relates only to "disputed items" in the bill of costs. The subject bankruptcy notice claims amounts of interest on the whole of the amount of the certificate of 31 October 1990. It seems unlikely that the whole of this amount could relate to items in the November 1988 bill of costs sought to be disputed by the filing of the form 64 statement of objections. In view of the fact that only $330 was ultimately taxed off, it would follow that almost the whole of the previous bill had been made the subject of dispute after the making of the Deputy Registrar's consent order. Again there was no evidence bearing upon this question. It appears that no submission was made to the learned trial judge on the subject, nor was any submission made to this Court in the party's outlines of argument. In these circumstances we think it best to assume that the total amount of the October 1990 certificate related to "disputed items" contemplated in the second order of the Deputy Registrar.
We turn, then, to the question whether bankruptcy notice B 3660 of 1991 was vitiated as found by his Honour. It clearly contained an understatement of the interest due, assuming all else in its favour. Was it, however, "objectively capable of misleading the debtor as to what (was) necessary for compliance (with it)"?
In the first place, it plainly states that the amount claimed is for "interest only" on the amount of $21,125.97, the costs certified as being due to the appellants in "Certificate of Taxation dated 31 October 1990". This is plain enough. It has in itself no misleading quality.
The notice then provides particulars of how the total amount of interest claimed is made up. A reading of that portion of the notice indicates clearly enough that the interest calculation covers the period from 29 November 1988 to 22 November 1990. It must, of course, be assumed that the respondents on reading these dates would quickly become aware of their significance, namely that they were intended to be the commencing and finishing dates for the period from the first Certificate of Taxation to the commencement of interest payments under the calculation in bankruptcy notice 1667 which they had recently paid in full. Closer examination of the periods and calculations referred to in the notice would have elicited the errors set out in his Honour's judgment, already referred to in these reasons. That further scrutiny would have resulted in the realisation that, on the face of those calculations, less interest was being claimed than was appropriate. A comparison with the previous notice number B 1667 of 1991 would have quickly revealed that the interest claimed for the day 22 November 1990 was duplicated.
If, as is unlikely, the respondents had forgotten that this previous notice contained the words "and no more", reference to that notice would have reminded them of that fact. His Honour, in the passage cited above expressed the view that the respondents would have been "in a highly confused state" when they received the second notice following hard upon their payment of the first, containing as it did, those words. It may readily be accepted that they would have been disappointed at the receipt of the second notice but the question is whether they would have been relevantly confused or misled as to its requirements.
In deciding this aspect of the case it is necessary to bear in mind the whole of the passage from Kleinwort Benson in which the passage already cited is to be found. It reads as follows (at 79-80):-
"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
(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."
Also in Re Farrugia (1988) 80 ALR 651 at 655 the Full Court of this Court said:-
"A bankruptcy notice is a statutory document which must be complied with by the debtor if he is to avoid committing an act of bankruptcy. It must be unequivocal in its terms and clear to the debtor. Strict compliance with the requisites of a bankruptcy notice is essential to its validity: James v FCT (1955) 93 CLR 631 at 644.
If a bankruptcy notice claims interest on a judgment debt, it must be so expressed that it is clear that all that is claimed by the creditor from the debtor in the notice is the amount or the amounts specified, so that the debtor is informed that if he wishes to comply with the requirements of the notice he may do so and that, if he does not, he shall commit an act of bankruptcy.
It is a question of interpretation of the bankruptcy notice in each case whether this requirement is complied with. ... All that is necessary is that the bankruptcy notice should clearly and unequivocally state what the debtor is required to do to avoid the commission of an act of bankruptcy. Such clear and unequivocal statement in turn requires an accurate statement of the amount which the debtor is required to pay, secure or compound."
Was the subject notice capable of misleading in the relevant sense? With some hesitation we have come to the conclusion that it was not. Despite the obvious inaccuracies of calculation, it makes clear the period in respect of which interest is claimed. It also makes clear that that period relates to the order made in the Supreme Court on 22 May 1989. It must be presumed, of course, that the respondents would be aware of that order and its contents. In those circumstances they would reasonably be aware that the notice was claiming that they were indebted to the appellants for interest owing in respect of that order. Although close scrutiny of the calculations in the notice would reveal the errors and discrepancies referred to, there would, in our opinion, still be no significant doubt in the minds of the respondents that the notice could be complied with by the payment of the amount of $7,574.10, being the amount clearly claimed in the notice. That being so, the miscalculations and discrepancies can properly be treated as formal defects or irregularities within the meaning of s 306 of the Bankruptcy Act 1966 (Cth). As there is no indication that "substantial injustice has been caused by the defect or irregularity" (s 306(1)), these defects or irregularities do not operate to invalidate the notice.
We have, however, for reasons that follow, come to the conclusion that the subject notice is a nullity in that "it fails to meet a requirement made essential by the Act." It has been submitted, correctly in our view, that the notice is not based upon a "final order" (ss 41(g); 40(3)(b) Bankruptcy Act 1966 (Cth)). In our opinion, the order of the Deputy Registrar of 22 May 1989 must be regarded as interlocutory only.
As already indicated, the order was made by consent of the parties, the relevant part being:-
"2. In respect of all disputed items eventually found in favour of the plaintiffs interest shall run as from 29 November 1988."
It is noted that the order does not require the defendants to pay the plaintiffs' costs, nor, for that matter, interest on costs. The final order requiring the defendants to pay the plaintiffs' costs was made by Needham J. on 4 June 1986 and entered on 24 June 1986. It is accepted that the order of the Deputy Registrar must be seen as having been made pursuant to the provisions of Pt 40 r 3 of the Supreme Court Rules as they stood on 22 May 1989. The rule read as follows:-
"3. (1) Where a judgment is entered pursuant to a direction of the Court the judgment shall take effect as of the date of the direction.
(2) Where a judgment is entered otherwise than pursuant to a direction of the Court the judgment shall take effect as of the date of entry.
(3) Subject to subrules (1) and (2) an order shall take effect as of the date on which it is made.
(4) Notwithstanding subrules (1) and (3), where an order of the Court directs the payment of costs and the costs are, pursuant to any Act or the rules, to be taxed, the order shall take effect as of the date of the certificate of taxation.
(5) Notwithstanding subrules (1), (2), (3) and (4), the Court may order that a judgment or order take effect as of a date earlier or later than the date fixed by those subrules."
Attention is drawn to sub-rule 3(4). That sub-rule prescribes the date on which an order of the Court directing the payment of costs is to take effect, namely the date of the certificate of taxation. Section 95 of the Supreme Court Act 1970 then applies with respect to the time from which interest is to run on the amount specified in the certificate of taxation. The relevant part of subs 95(1) provide:-
"95(1) Where ... an order is made for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the ... order takes effect on so much of the money as is from time to time unpaid."
It follows that the effect of sub-rule 3(4) is, when read in conjunction with subs 95(1), to determine the date from which interest is to run. The rule does not require the amount of the costs or the amount of interest thereon to be paid.
The Deputy Registrar, acting as "the Court" pursuant to powers given elsewhere in the Rules, made his order as to the running of interest from 29 November 1988 pursuant to rule 3(5). Was the order so made a "final order"?
The distinction between final and interlocutory orders has been the subject of many pronouncements in cases of high authority. We find it necessary to mention only a few.
In Hall v Nominal Defendant (1966) 117 CLR 423, Taylor J. (at 439) said as follows:-
"A great deal has been said concerning the distinction between final and interlocutory orders but it has, in the main, been the practice of courts to confine themselves to a consideration of the character of the particular order in question in each case. Indeed, in In re Page; Hill v. Flagdale (1910) 1 Ch 489 Cozens-Hardy M.R. commenced his judgment by saying: 'I have no intention of attempting the task of defining exhaustively or accurately the meaning of an interlocutory order. I leave that to others. The only point we have to decide here is whether the order in this particular case is an order which must be appealed against within the time limited for appeals from interlocutory orders' (1910) 1 Ch at p 491. 'Others' have, however, not, in general, attempted the task which the Master of Rolls declined to undertake. However, at an earlier stage Lord Alverstone C.J., when called upon to say whether a particular order was interlocutory or final said: 'It seems to me that the real test for determining this question ought to be this: Does the judgment or order, as made, finally dispose of the rights of the parties? If it does, then I think it ought to be treated as a final order; but if it does not, it is then, in my opinion, an interlocutory order': Bozson v. Altrincham Urban District Council (1903) 1 KB 547 at pp 548-549. Much the same test has been proposed on other occasions and, if I may say so with respect, it provides a broad test which is unexceptionable. So an order made in the course of an action or suit which does not conclude the rights of the parties inter se, although it may, of course, conclude the fate of the particular application in which it is made, is interlocutory only."
In the same case, Windeyer J., (at p 443) stated:-
"In most cases the test that seems to be most satisfactory, and the one that accords most nearly with what has been said on the subject in this Court, is it seems to me to look at the consequences of the order itself and to ask does it finally determine the rights of the parties in a principal cause pending between them. It is never enough to ask simply does the order finally determine the actual application or matter out of which it arises; because, subject to the possibility of an appeal, every order does that, unless it be an order that is expressly declared to be subject to variation."
His Honour, after considering earlier cases continued: "these cases are all illustrative of the general proposition that a final order is one which finally disposes (subject only to appeal) of an action or an existing dispute between parties."
In Southern Cross Exploration NL and Ors v Fire and All Risks Insurance Company Ltd and Ors (No 2) (1990) 21 NSWLR 200 Handley J.A. at 216-217 says as follows:-
"The first question is whether the orders were final or interlocutory. The High Court has held that the test of a final order is 'does the judgment or order, as made, finally dispose of the rights of the parties': see Licul v Corney
(1976) 50 ALJR 439 at 444; 8 ALR 437 at 446. This test does not depend on the practical but on the legal effect of the order. The High Court consistently applied this test after 1976 until the question ceased to be relevant for that Court with the abolition of any appeal as of right in 1984: see Port of Melbourne Authority v Anshun Pty Ltd (No 1) (1980) 147 CLR 35; Carr v Finance Corporation of Australia Ltd (No 1) (1981) 147 CLR 246 and Sanofi v Parke Davis Pty Ltd (No 1) (1982) 149 CLR 147.
The test accepted by the High Court in these cases was that propounded by Windeyer J. in Hall v Nominal Defendant (1966) 117 CLR 423 at 442-445. According to his Honour the question to ask is (at 443) 'does (the order) finally determine the rights of the parties in a principal cause pending between them', whether (at 444) 'it results in a final determination of that action', or (at 455) 'is the effect of the order (to establish) finally or otherwise the rights of the disputant parties - does it put an end to an existing dispute or existing action?'"
Whilst agreeing with respect that these tests are not always easy to apply, we have, nevertheless, come to the clear conclusion that the order made by the Deputy Registrar on 22 May 1989 cannot be seen in any relevant way as constituting a final determination of the rights of the parties. The order does no more than Pt 40 r 3(5) does, namely determine the date from which interest is to run with respect to some items on the taxation of costs. The order does not impose any new rights or obligations on any of the parties to the litigation. Even though it has been entered, there is no reason why it cannot be set aside or varied without an appeal being taken.
The order is no more than an interlocutory order made in the course of the dispute between the parties. As such, whatever effect it may have otherwise, it cannot provide the foundation for a bankruptcy notice. Accordingly, we are of the view that the subject bankruptcy notice "fails to meet a requirement made essential by the Act". It is therefore a nullity and must be set aside.
We would dismiss the appeal and order the applicants to pay the respondents' costs.
JUDGE2
NEAVES J. This appeal concerns the validity of a bankruptcy notice, numbered B3660 of 1991 and dated 9 October 1991, addressed to Bernard George Gardiner and Susanne Leonie Gardiner ("the respondents"). The notice claimed that the respondents were indebted to Frederick John Gardiner, David Percy Gardiner, Gwen Mary Press and Adele Clare Corderoy ("the appellants") for interest on an amount representing the taxed costs of the appellants of certain proceedings in the Supreme Court of New South Wales. The appeal is brought from a judgment of a judge of this Court (Einfeld J.) setting aside the bankruptcy notice.
To appreciate the circumstances in which the bankruptcy notice was issued, some reference must be made to the history of the matter.
On 4 June 1986, the Supreme Court of New South Wales, Equity Division (Needham J.) gave judgment in a proceeding in that Court numbered 3305 of 1982 in which the present appellants were the plaintiffs and the present respondents were the defendants. The Court declared that the defendants were liable to pay to the executors of the estate of the late George Gardiner and the estate of the late Adele May Gardiner the sum of $40,615.50 together with interest from 23 June 1979 to 21 May 1986 in the sum of $17,114.15 and made a number of consequential orders. The defendants were ordered to pay the plaintiff's costs of the proceedings. Leave was granted "to enter the above declaration, judgments and orders forthwith". The formal order of the Court bears the notation:
"Ordered: 4 June 1986 and Entered: 24 June 1986".
The costs so ordered to be paid were subsequently taxed and a certificate of taxation issued on 29 November 1988. Although no copy of that certificate is contained in the material before the Court, it is common ground that the costs were taxed and allowed at $21,458.37. Pursuant to the provisions to which reference is made in the following paragraph, interest was payable on that amount at the prescribed rate from 29 November 1988 until the date of payment.
By virtue of the provisions of s.95 of the Supreme Court Act, 1970 (NSW) and Part 40, rule 3 of the Supreme Court Rules, 1970 made thereunder, an order directing the payment of costs which were to be taxed was to take effect as of the date of the certificate of taxation and the costs were, accordingly, to carry interest from that date. The Supreme Court had power, however, to order that an order for costs take effect as of a date earlier or later than the date of the certificate of taxation.
On 22 May 1989, a Deputy Registrar in the Equity Division of the Supreme Court made orders, by consent - though in what circumstances and pursuant to what power does not appear - in the following terms:
"1. Time to file a notice in accordance with form 62 be extended up to and
including 29 May 1989.
2. In respect of all disputed items
eventually found in favour of the
plaintiffs interest shall run as
from 29 November 1988.
3. The defendants pay the plaintiffs'
costs of the motion."
The reference in Order 1 to form 62 appears to be incorrect. It would seem that the order should have referred to form 64, a form prescribed for the purposes, inter alia, of Part 52, rule 60 of the Supreme Court Rules. That rule provided that where a taxing officer had decided to allow or disallow, wholly or in part, any item in a bill of costs, or to allow some amount in respect of any item, a party to the taxation proceedings who objected to the decision might apply to the taxing officer to reconsider his decision. The application was to be made by motion to the taxing officer. Notice of the motion was to be filed within 14 days after the date of the decision. The applicant was to file with or subscribe to the notice a statement of his objections specifying by a list the items as to which the applicant objected and stating briefly, but specifically, the nature and grounds of each objection. Part 52, rule 61 of the Supreme Court Rules provided:
"61 (1) Upon motion made under rule 60, the taxing officer -
(a) shall reconsider the decision to which objection is made and shall give his certificate in accordance with his decision on reconsideration; and
(b) shall, upon request by any party, state, in his certificate or some other document, and by reference to the objections to his previous decision, his reasons for his decision on reconsideration.
(2) On the reconsideration, a party shall not, unless the the taxing officer otherwise directs, rasie any ground of objection not stated in a statement of objection.
(3) A request under subrule (1)(b) shall be made within 14 days after the date of the decision on reconsideration to which the request relates."
It may be supposed - though there is no evidence before the Court to that effect - that on or before 29 May 1989 the respondents filed a notice in accordance with form 64 objecting to the amounts allowed by the taxing officer in respect of specified items in the bill of costs. That the objections would relate to specific items was contemplated by Order 2 of the orders made on 22 May 1989 though that order is expressed somewhat elliptically. It was clearly intended to mean that the amounts (if any) ultimately allowed in respect of the disputed items should carry interest, not from the date when a certificate was issued consequent upon the reconsideration of those items, but from the date of the original certificate of taxation, viz. 29 November 1988.
It appears that the reconsideration took place on 1 August 1989 when the amount of the taxed costs payable pursuant to the order of Needham J. made on 4 June 1986 was reduced by $332.40 to $21,125.97. It was, however, not until 31 October 1990 that a further certificate of taxation issued. Although, so far as appears, the certificate of taxation dated 29 November 1988 was not at any stage set aside, the certificate dated 31 October 1990 refers to the total amount of the costs payable, namely $21,125.97. The certificate correctly states that the costs had been taxed and allowed at that sum "pursuant to the Order made 4 June 1986".
On the same day, 31 October 1990, a certificate of taxation was also issued in respect of the costs payable pursuant to the order of the Deputy Registrar made on 22 May 1989. The certificate certified that, pursuant to that order, the costs had been assessed at a taxation hearing on 10 July 1989 to be $518.00.
On 12 December 1990, a bankruptcy notice numbered B3712 of 1990 was issued at the instance of the appellants addressed to the respondents claiming that the sum of $29,344.79 was due from the respondents to the appellants. That sum was made up of the sum of $21,125.97 together with interest thereon from 29 November 1988 to 20 November 1990 and the sum of $518.00 together with interest thereon from 10 July 1989 to 20 November 1990. The sum of $29,344.79 was said to be due -
"under final judgments obtained by the judgment creditors in the Supreme Court of New South Wales, Sydney Registry, Equity Division for costs which were taxed on 1 August, 1989 and 10 July, 1989 pursuant to the judgments granted on 4 June, 1986 and 22 May, 1989".
That bankruptcy notice, which was served on the respondents on 16 January 1991, was set aside by order of this Court (Wilcox J.) made on 20 March 1991 on the ground that the notice offended the principle that a bankruptcy notice must refer to only one final judgment or order. The appellants were ordered to pay the respondents' costs of the application to set aside the notice.
On 17 May 1991, a bankruptcy notice numbered B1667 of 1991 addressed to the respondents was issued at the instance of the appellants. It contained the following recital:
"WHEREAS (the appellants) (hereafter referred to as 'the judgment creditors') have claimed that the sum of:-
A. $21,125.97 together with interest
thereon from:-
- 22 November, 1990 to 28 February,
1991 (98 days) at the rate of 19%
per annum amounting to $1,077.71
- 1 March, 1991 to 14 May, 1991 (74
days) at the rate of 17% per annum
amounting to $728.12
making a total due by you of $22,931.80 and no more to the judgment creditors under a final judgment or final order for costs obtained by the judgment creditor against you in the Supreme Court of New South Wales, Sydney Registry, Equity Division, such order being made on 4 June, 1986 being the costs certified as the plaintiffs' costs in Certificate of Taxation dated 31 October, 1990."
The notice was served on the respondents on 11 June 1991. The sum of $29,931.80 referred to in the notice was paid by the respondents to the appellants on 27 September 1991.
The bankruptcy notice which was set aside by the judgment the subject of the present appeal required the respondents to pay the sum of $7,574.10 within 21 days after service of the notice. The recital in that notice read:
"WHEREAS (the appellants) (hereinafter
referred to as 'the Judgment Creditors') have claimed that the sum of:-
A. $7574.10 being the interest only due to the Judgment Creditors in respect of the sum of $21,125.97 calculated as follows:- - 29 November, 1988 to 28 February, 1989 (92 days) at the rate of 15% per annum amounting to $798.74 - 28 February, 1989 to 31 August, 1989 (183 days) at the rate of 17% per annum amounting to $1,800.63 - 1 September, 1989 to 31 August, 1990 (336 days) at the rate of 21% per annum amounting to $4,083.97 - 1 September, 1990 to 22 November, 1990 (81 days) at the rate of 19% per annum amounting to $890.76 making a total of $7,574.10 due by you to the Judgment Creditors under a final judgment or final order obtained by the Judgment Creditors against you in the Supreme Court of New South Wales, Sydney Registry, Equity Division made on 22 May, 1989 and entered on 31 October, 1990 being interest only in respect of costs in the sum of $21,125.97 as certified as the Plaintiffs' costs in Certificate of Taxation dated 31 October, 1990."
That notice was served on the respondents on 29 November 1991. On 20 December 1991, the respondents filed an application in this Court for an order setting the notice aside.
Section 41 of the Bankruptcy Act 1966 (Cth) provides that a bankruptcy notice is to be in the prescribed form and that the prescribed form is to be such that the notice requires the debtor named in it to pay the judgment debt or sum ordered to be paid in accordance with the judgment or order. The prescribed form (Form 4 in Schedule 1 to the Bankruptcy Rules) requires details to be included in the notice of the final judgment or order under which the sum claimed in the notice is said to be due. A bankruptcy notice which does not correctly identify the judgment or order under which the amount claimed is said to be due is not a valid notice: In re Cartwright; Ex parte Cartwright v. Barker (1975) 1 WLR 573; Wilmot v. Buckley (1984) 2FCR 540.
The notice now under challenge identifies the judgment or order under which the amount of $7,574.10 is claimed to be due as being "the final judgment or final order obtained by the Judgment Creditors against you in the Supreme Court of New South Wales, Sydney Registry, Equity Division made on 22 May 1989 and entered on 31 October 1990". In my opinion this description does not correctly identify the judgment or order under which the amount is claimed. The respondents' liability to pay the amount claimed has its source in the judgment of Needham J. given on 4 June 1986 and that judgment is not referred to in the notice. The amount claimed is for interest on the costs ordered by Needham J. to be paid by the respondents. Interest was payable on the amount of those costs when ascertained pursuant to the provisions of s.91 of the Supreme Court Act. Interest commenced to run from the date of the certificate of taxation, viz. 29 November 1988. The effect of the order made by the Deputy Registrar on 22 May 1989 was simply to preserve that situation in respect of what were referred to in the order as "all disputed items eventually found in favour of the (appellants)". While it may have been necessary to include in the bankruptcy notice a reference to the order made on 22 May 1989 and, perhaps, to the certificate of taxation dated 29 November 1988, the omission of any reference to the source of the respondents' liability, namely the judgment of 4 June 1986, is, in my opinion, fatal to the validity of the notice. The defect is not a formal defect to which s.306 of the Bankruptcy Act could apply.
Although in the light of what is said above it is unnecessary to express a definitive opinion on the point, there is another basis upon which the bankruptcy notice could be set aside. Reference has been made to the bankruptcy notice numbered B1667 of 1991 in which the amount claimed, $22,931.80, represented the costs ordered to be paid by Needham J. together with interest calculated from 22 November 1990 to 14 May 1991 on the amount of the costs quantified in the certificate of taxation dated 31 October 1990. The notice stated that the amount claimed was $22,931.80 "and no more", though it may be noted that the notice did not contain those words in either par.(a) or par.(b) of the operative part of the notice (see Re the Bankruptcy Act 1966; Ex parte Commercial Banking Co. of Sydney Ltd (1979) 23 ALR 522). Thus, the notice numbered B1667 of 1991 required the respondents to pay only part of the interest claimed to be payable on the amount of the costs directed to be paid by the judgment given on 4 June 1986. As Romer L.J. said in In re HB (1904) 1 KB 94 at p 103:
".... a notice to pay part of a judgment debt, leaving any balance that may be due to be subsequently claimed is, to to my mind, clearly bad."
See also Re Sly; Ex parte Broadlands International Finance Ltd (1988) 79 ALR 681. If, therefore, the appellants are to be taken by the issue of the notice numbered B1667 of 1991 to have abandoned, at least for bankruptcy purposes, any claim to interest other than that referred to in that notice, the notice presently in question could not have been validly issued.
The judgment appealed from identified defects in the bankruptcy notice arising from the mis-statement of certain of the periods in respect of which interest was claimed and the miscalculation of the number of days included in some of the periods specified. Although I have not dealt with this aspect of the matter in any detail, I should not be taken as assenting to the view that those defects were not sufficient, in themselves, to invalidate the notice.
In my opinion, the appeal should be dismissed with costs.
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