Greater Building Society Ltd v McGRATH

[2002] FMCA 164

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GREATER BUILDING SOCIETY LTD v McGRATH [2002] FMCA 164

BANKRUPTCY – Defective bankruptcy notice – provision under which interest claimed.

Local Courts (Civil Claims) Act 1970 (NSW), s.39
Supreme Court Act 1970 (NSW), s.95

Boorowa Shire Council v Booth [2001] FMCA 31
Cary and Anor v The Owners of Strata Plan Number 7241 [2002] FMCA 18
Commonwealth v Gilbert [2002] FMCA 165
GMACv Marshall [2002] FCA 1006
Jiminez v Welcome Homes Real Estate [2001] FMCA 122
Shephard v Blueberry Farms of Australia (Corindi) Limited [2001] FMCA 2
Wright v Australian and New Zealand Banking Group [2001] FCA 386

Applicant: GREATER BUILDING SOCIETY LTD

Respondent: MICHAEL McGRATH

File No: SZ341 of 2002

Delivered on: 6 August 2002

Delivered at: Sydney

Hearing Date: 6 August 2002

Judgment of: Driver FM

REPRESENTATION

Solicitors for the Applicant: Ms V Theodore
Sparke Helmore

No appearance by the respondent

ORDERS

1. The creditor’s petition is dismissed.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ341 of 2002

GREATER BUILDING SOCIETY LTD

Applicant

And

MICHAEL McGRATH

Respondent

REASONS FOR JUDGMENT

1. In this matter, the issues arising are similar to those arising in Commonwealth v Gilbert [2002] FMCA 165, in which I have just delivered judgment. The difference is that the schedule annexed to the bankruptcy notice identifies the provision under which interest is claimed as s. 95(1) of the Supreme Court Act 1970 (NSW) (“the Supreme Court Act”) (including the words “per the certificate of judgment”). The bankruptcy notice was based upon a certificate of judgment from the NSW Local Court in its civil jurisdiction. It is accepted that the statutory provision supporting a claim of interest in such circumstances is s.39(1) of the Local Courts (Civil Claims) Act 1970 (NSW) (“the Local Courts Act”). In support of the validity of the bankruptcy notice Ms Theodore has referred me to the decision of his Honour Beaumont J in Wright v Australian and New Zealand Banking Group [2001] FCA 386, in which case his Honour held that a bankruptcy notice which referred to both s. 39 of the Local Courts Act, which was incorrect in that case, and section 95(1) of the Supreme Court Act, which was correct in that case, was valid.

2. His Honour held this was an obvious error which did not constitute a defect or irregularity and that he could ignore the incorrect reference to the Local Courts Act in favour of the correct reference to section 95(1) of the Supreme Court Act. Ms Theodore submits to me that I should ignore in this case the incorrect reference to section 95(1) of the Supreme Court Act as the provision under which interest is claimed on the basis that the interest schedule includes a correct reference to the certificate of judgment annexed to the bankruptcy notice.

3. I cannot accept that submission for the following reasons.  A finding that the bankruptcy notice in this case is valid would contradict judgments of this Court in a series of earlier cases, including the case of Cary and Anor v The Owners of Strata Plan Number 7241 [2002] FMCA 18 in which I held that a bankruptcy notice in very similar circumstances was invalid. If a creditor chooses to include in the schedule of interest the legislative provision under which interest is claimed, it is necessary for the creditor to state the correct provision.

4. I acknowledge the authority of the Federal Court decision in Wright, so that a statement of the correct legislative provision under which interest is claimed will be sufficient, even where the incorrect provision is also included.  However, it seems to me that that is not the same thing as including a reference to the incorrect provision under which interest is claimed, as well as a reference to the certificate of judgment annexed to the bankruptcy notice.

5. In the first place, the certificate of judgment itself only relies upon the provision under which interest is calculated; that is, s. 95(1) of the Supreme Court Act. In the second place, I think there is a material difference between correct and incorrect legislative provisions and an incorrect legislative provision and a certificate of judgment. While I have found in Commonwealth v Gilbert that it is open to me to hold valid a bankruptcy notice which simply relies upon a certificate of judgment from the Local Court as the provision under which interest is claimed, on the basis of decided authority, including authority from this Court, it is not open to me to hold valid a bankruptcy notice which contains a schedule of interest which asserts a claim of interest under an incorrect legislative provision.

6. In the circumstances, I will find that the bankruptcy notice in these proceedings is invalid and accordingly, I will dismiss the creditor’s petition.

ADDENDUM

1. Since delivering ex tempore reasons in this matter, my attention has been drawn to the decision of his Honour Gyles J  (delivered on 13 August 2002) in GMAC v Marshall [2002] FCA 1006, in which His Honour disagreed with the decisions of this Court in Jiminez v Welcome Homes Real Estate [2001] FMCA 122 and Boorowa Shire Council v Booth [2001] FMCA 31. His Honour expressed agreement with the earlier, and contrary, views that I expressed in Shephard v Blueberry Farms of Australia (Corindi) Ltd [2001] FMCA 2 concerning the adequacy of a reference to s.95(1) of the Supreme Court Act in a case such as the present. Obviously, the approach taken by the Federal Court on this issue will require this Court to give further consideration to this vexed issue at the next opportunity.

I certify that the preceding seven (7) paragraphs are a true copy of the reasons for judgment of Driver FM

Associate: 

Date:  14 August 2002