George John Knight Ex Parte Turimetta Properties Pty Ltd

[1979] FCA 95

Bankruptcy - banlcruptcy notice - costs not clalmed in

notice - vhether notice defective if costs not taxed

at time of issue of banlrruptcy notice - bankruptcy

notice not defective.

Bankruptcy - bankrupi;cy notice - understatement of

interest due - whether confusing or perplexing to

the debtor - notice not defective.

:	GEORGE JOHN ISNIGHT EX 1'-4RTE: TURI>fElTA PROPERTIES
-

- PTY. LIMITED

17 SEPTEMBER 1979

LOCIm4RT J.

NO. 310 OF 1979

I N TILE F E D E U COLTT OF AUSTRALIA

GENERAL D I V I S I O N

l

B A N I ~ T C Y DISTRICT OF T I ~ STATE OF NO. 3 1 0 of 1979

NEW SOUTH WALES hVD THE A U S T R m I A N

CAP1TX.L. TERRITORY 1

RE:	GEORGE JOHN I(hT%GHT
EX PARTE:	TURIhlETTA PROPERTIES PTY. L I H I T E D
ORDER

JITDGE MAKING ORDER: LOCICHNlT J.

E PIADE: SYDNEY

DATE OF ORDER:	1 7 SEPTEMBER 1979
THX COURT ORDERS THAT:

The petltion be adjourned to a date to be fixed by arrangement between counsel and my associate for the purpose of hearlng

any application by the petitioning creditor to amend the

petition following the dellvery of my reasons for judgment.

I N TMC FEDERAL C O U R T OF AUSTRALIA

GCNERAL DIVISION 1 1

BANKRUPTCY D I S T R I C T OF	THE	STATE OF	I NO.	310 o r 1 9 7 9
j

IdCW SOUTH \!ALES AND THE AUSTRALIAN	-	)
)
CAPITAL TERRITORY
RE: - GEORGE JOHld - KNIGHT -

EX PAR1 E: TURIl4ETTA PRDPERTIES -

P T Y .	LIHITED
-

REASONS FGR JUDGMENT

/7 September 1 9 7 9 C O R A M : LOCKHART J.

T h i s i s a p e t i t l o n f o r s e q u e s t r a t i o n o f t h e e s t a t e

o f Gcorge John K n i g h t ( " t h e d e b t o r " ) .

The d e b t o r opposes t h e p e t i t i o n on g rounds i vh i ch

may be summarised as f o l 1 o t r s : -

1. That t h e b a n k r u p t c y n o t i c e upon wh ich t h e

p e t i t i o n is	based	i s i n v a l i d by	r e a s o n o f	t h e
following: -

( a ) I t c l a i m s a sum o f money i n excess o f t h e

sum t o t t h i c h t h e p e t i t i o n i n g c r e d i t o r IS

e n t i t l e d p u r s u a n t t o i t s judgment i n t h e

Supreme CourL o f N ~ H South Wales;

( b ) I t w r o n g l y s t a t e s t h e n a t u r e a n d b a s i s o f

i t h e p e t i t i o n i n g c r e d i t o r ' s e n t i t l e m e n t t o

i n t e r e s t o n t h e ~ u d g r n e n t b y s t a t i n g t h a t

t h e p e t i L i o n i n g c r e d i t o r i s e n t i t l e d t o

i n t e r e s t o n t h e sum o f $ 4 6 1 , 5 2 2 . 7 3 a t t h e

r a t e o r 22% p e r a n n u m ;

( c ) I t u n d e r s t a t e s t h e j u d g m e n t d e b t b y

f a r l i n g t o i n c l u d e a n y a m o u n t f o r c o s t s

t o w h i c h t h e p e t i t i o n i n g c r e d i t o r w a s

e n t i t l e d b y o r d e r o f t h e S u p r e m e C o u r t o f

New 5 0 9 t h \ ' : a l e s ( S h e p p a r d J . ) a n d t h e

o r d e r o r t h e C o u r t o f A p p c a l ; a n d

( d ) I t u n d e r s t a t e s L h e j u d g m e c t d e b t b y

f a i l i n g t o c o r r e c t l y s t a t e t h e a m o u n t o f

i n t e r e s t o w i n g a t t h e d a t e o f i s s u e o f

t h e b a n k r u p t c y n o r r c e .

2 . T h a t t h e p e t i t i o n i n g c r e d i t o r i s a s e c u r e d

c r e d l t o r o f t h e d e b t o r , a n d t h e p e t i t i o n f i l e d

b y t h e p e t i t i o n i n g c r e c 2 i L o r i s i n t h e f o r m o f

a p e t i t i o n b y a n u n s e c u r e d c r e d i t o r . T h e

s e c u r i t y a l l e g e d b y t h e d e b t o r is a m o r t g a g e

g i v e n b y L o u i s J o h n l l o l d i n g s P t y . L i m i t e d

( " H o l d i n g s " ) t o t h e p e t i t i o n i n g c r e d i t o r t o

/ s e c u r e t h e d e b t c l a i m e d i n t h e s e p r o c e e d r n g s .

H u l d i n g s h o l d s t h e p r o p e r t y t h e s u b j e c t o f t h e

s e c u r i t y u p o n t r u s t f o r t h e d e b t o r a n d L o u i s

J a m e s F l o r a n c e a b s o l u t e l y .

T h e f a c t s a n d t h e i s s u e s a r e t h e s a m e a s i n t h e

c a s e o f p e t i t i o n No. P 309 o f 1979 z g a i n s t Mr. F l o r a n c e s a v e

t h a t t h e g r o u n d s o f opposition t o t h e p e t i t i o n b y t h e d e b t o r

a n d r e f e r r e d t o a b o v e a s 1. ( c ) a n d ( d ) d o n o t a p p l y i n t h e

c a s e o f flr. F l o r a n c e a n d t h e g r o u n d o f o b j e c t i o n r a i s e d b y

l . F l o r a n c e t h a t t h e p e t i t i o n w a s n o t s e r v e d o n h i m i s n o t

r a i s e d b y	t h e d e b t o r .
J h a v e s e t o u t t h e f a c t s a n d d e a l t w i t h t h e i s s u e s

i r ~ my r e a s o n s f o r j u d g m e n t i n t h e c a s e o f H r . F l o r a n c e a n d

n e e d n o b r e p e a t t h e n .

I n t h e m a t t e r o f F l o r a n c e I f o u n d a g a i n s t 14r.

F l o r a n c e o n a l l g r o u n d s o f o b j e c t i o n e x c e p t t h a t d e s c r i b e d i n

2 . a b o v e r e l a t i n g t o t h e p e t i t i o n i n g c r e d i t o r b e l n g a s e c u r e d

c r e d i t o r o f Mr. F l o r a n c e w h l c h I f o u n d r n h i s f a v o u r .

I t f o l l o w s t h a t t o t h e e x t e n t t h a t t h e r e a r e common

i s s u e s b e t w e e n t h e c a s e o f Mr. F l o r a n c e a n d t h a t o f t h e

d e b t o r I r e s o l v e t h e m t h e s a m e way .

The o n l y d i f f e r e n t q u e s t i o n o f f a c t i s o n c w h i c h

r e l a t e s t o t h e p o s s i b l e a p p l i c a t i o n o f S . 3 0 6 t o s a v e t h e

b a n k r u p t c y n o t i c e f r o m i n v a l i d i t y i f I had r e a c h e d t h e

c o n c l u s ~ o n , w h l c h I d i d n o t i n Lhe c a s e o r t l r . F l o r a n c e , t h a t

Lhe b a n k r u p t c y n o t i c e was d e i e c t i v e . I n t h e C o u r t o f A p p e a l

t h e d e b t o r c o n d u c t e d h i s own c a s e a n d Mr. F l c i r a n c e w a s

r e p r e s e n t e d by c o u n s e l . However , t h e d e b t o r a d o p t e d t h e

reasoning p r e s e n t e d by c o u n s e l f o r Hr. F l o r a n c e . The d e b t o r

was p r e s e n t r n c o u r t t h r o u g h o u t t h e w h o l e o f t h e p r o c e e d i n g s

b e f o r e t h e C o u r t o f A p p e a l . I n my o p i n i o n t h e c o n c l u s i o n s I

r e a c h e d a s t o t h e o p e r a t i o n o r S . 3 0 6 , i f it w e r e t o a p p l y i n

t h e c a s e o f Clr. F l o r a n c e , a p p l y e q u a l l y i n t h e c a s e o f t h e

d e b t o r .

I t r e m a i n s T o r me t o c o n s ~ d e r t h e t.wo g r o u n d s o f

a t t a c l : o n t h e v a l i d i t y o f t h e b a n k r u p t c y n o t i c e made by t h e

d e b t o r ,	b u t	n o t	by	Mr.	F l o r a n c e ,	b e i n g	g r o u n d s	1.	( c )	a n d	( d )
a b o v e .

I t u r n i i t s t t o g r o u n d 1. ( c ) . I K i n d r e d , who

a p p e a r e d f o r t h e d e b t o r , s u b m i t t e d t h a t a s t h e r e \ / a s n o

m e n t i o n OF c o s t s i n t h e b a n l c r u p t c y n o t i c e i t rras i n v a l i d .

The p o i n t was b u t i a i n t l y a r g u e d . When t h e b a n k r u p t c y n o t i c e

was ~ s s u e d is \ / a s i i n p o s s i b l e t o g i v e a n o t l c e t h a t i n c l u d e d

c o s t s . They had n o t b e e n t a x e d s o e x e c ~ ~ t r o n c o u l d n o t i s s u e

f n r t h r i r r e c o v e r y . T h i s g r n ~ ~ n d o f o h j e r t t o n t o t h e v a l i d i t y

o f t h e b a n k r u p t c y n o t i c e f a l l s : s e e I n R C G . J . ; Ex p a r t e

G . J . 1 9 0 5 2 K.B. 6 7 8 ;

-- and Re A l i D a v i d ; Ex p a r t e Abda

L a h n o d ,	a n	u n r e p o r t e d	d e c r s i o n	o f	E v a t t	J .	d e l i v e r e d	1 5 H a r c h
1 9 7 9 .

A s t o g r o u n d 1. ( d ) Hr. K i n d r e d s u b m i t t e d t h a t t h e

c a l c u l a t i o n o f i n t e r e s t i n t h e b a n k r u p t c y n o t i c e w a s

u n d e r s t a t e d by t h e e q u r v a l e n t by t \ r o d a y s ' i n t e r e s C . The

v a r i a t ~ o n o f 2 d a y s was a r e s u l t o f t h e g a p b e t w e e n t h e d a t e

o f l o d g m e n t o f t h e a p p l i c a t i o n f o r t h e i s s u e o f t h e

b a n k r u p t c y n o t i c e i r i t h t h e r e g i s t r a r a n d t h e d a t e o f i s s u z

r t s c l f . I t i s a g r e e d t h a t t h e amoun t o f t h e u n d e r s t a t e m e n t

i s $556 .36 . T h i s u n d e r s t a t e m e n t d o e s n o t n e c e s s a r i l y v r t i a t e

t h e	b a n k r u p t c y	n o t r c e .	I n	Re	The	B a n k r u p t c y	A c t ,	1 9 6 6 ;	E x
-

p a r { - e The C o n m ~ . f c ~ a l B a n k i n q - C o f S y d n e ) L r m l t e d ( 1 9 7 9 )

2 3 A . L . R . 5 2 2 I s a i d i n r e l a i l o n t o t i ~ r s v e r y p o i n t : -

" I f a j u d g m e n t c r e d i t o r c h o o s e s t o c l a i m i n t e r e s t

o n a j u d g m e n t d e b t , i t i s n e c e s s a r y f o r t h e

c a l c u l a t i o n o f t h e c l a i i n t o b e a c c u r a t e . a n d f o r

t h e p e r i o d d u r i n g w h i c h t h e c l a l m is wade t o b e

s p e c i f i e d : Re M u l l a v e y ; E x p a r t e A.N.Z . Bankinq-

Group	( 1 9 7 7 )	20	A . L . R .	276 ;	Re	D a v i s ;	Ex	p a r t e
-

De C o m m i s s i o n e r o f T a x o t ~ o n ( 1 9 6 3 ) 1 9 A.R.C:

; T T ? 6 ~ ; 7 ( . 164; and fi McDonald ( 1 9 7 8 ) 1 0

A . L . R . 505.

U n d e r s t a t e m e n t o f t h e . a m o u n t o f s t a t u t o r y r n t e r e s L

a c c r u e d f r o m t h e d a t e o f j u d g m e n t t o t h e d a t e o f

r s s u a o f a b a n l c r u p t c y n o t i c e o r o t h e r d a t e

s p e c i f i e d i n t h e n o t i c e d o e s no t . n e c e s s a r i l y

v i t r a t e t h e b a n k r u p t c y n o t r c e . S e c t i o n 3 0 6 o f t h e

A c t may b e c a p a b l e o f o p e r a t i n g t o v a l l d a t e a

b a n k r u p t c y n o t r c e t h a t o t h e r w i s e i rou ld be i n v a l i d .

See t h e d e c i s i o n o f R r l e y J. i n Re t funson; ( s u p r n )

a n d my own d e c i s i o n i n Re t . l a n i o m

C o m m i s s i o n e r -------p- ~ f T a x a t i o n ( a 7 e c l s i o n o f m y s e l f )

7iVB)-23	A . L . R .	270. ' '
I

H a v i n g r e g a r d t o a l l t h e f a c t s , i n c l u d i n g t h e s m a l l

amount o f t h e u n d e r s t a t e m e n t , n a m e l y $ 5 5 6 . 3 6 , a n d t h ~ : f a c t

t h a t t h e amount c l a i m e d by t h e n o t i c e t o t a l s $ 5 5 4 , 7 1 2 . 3 8 , i n

my o p i n i o n t h e u n d e r s t a t e m e n t c o u l d n o t b e s a i d t o b e c a p a b l e

o f p e r p l e x i n g o r embarrassing t h e d e b t o r . I n my c p i n i o n S .

3 0 6 s a v e s t h e n o t i c e f r o m i n v a l i d i t y .

F o r t h e s e r e a s o n s t h e a t t a c k s made u p o n t h e

v a l r d i t y o f t h e b a n k r u p t c y n o t i c e f a i l .

A s I h a v e f o u n d i n f a v o u r o f Hr. F l o r a n c e , a n d

t h e r e f o r e t l ~ e d e b t o r i n t h i s c s s e , on t h e g r o u n d t h a t t h e

p e t ~ t i o n i n g c r e d i t o r IS a s c c u r e d c r e d l t o r o f t h e d e b t o r , I

s h a l l a d o p t t h e same c o u r s e e s I d i d i n t h e c a s e o f llr.

F l o r a n c e n a m e l y , t o s t a n d o v e r t h e f u r t h e r h e a r r n g o f t h e

p e t i t i o n t o a d a t e t o b e f i x e d by a r r a n g e m e n t u i t h C o u n s e l s o

t h a t t h e p e t i t r o n i n g c r e d i t o r may c o n s i d e r w h e t h e r i t w i s h e s

t o a p p l y t o amend t h e p e t i t i o n t o comply w i t h t h e p r o v i s i o ~ s

o f t h e Ac t r e l a t i n g t o t h e p r e s e n t a t ~ o n o f p e t i t i o n s by

s e c u r e d c r e d i t o r s .

~ c c o r d i n g l ~ , t h e p e t i t i o n is a d j o u r n e d t o a d a t e t o

b e f i x e d by a r r a n g e m e n t b e t w e e n c o u n s e l a n d my a s s o c i a t e f o r

t h e p u r p o s e o f h e a r i n g a n y a p p l i c a t i o n b y t h e p e t i t i o ~ i i n q

c r e d i t o r t o a m e n d t h e p e t i t i o n f o l l o v i n g t h e d e l i r r e r y o f my

r e a s o n s T o r j u d g m e n t . I