Jackson v Conway

Case [2000] FCA 1530

FEDERAL COURT OF AUSTRALIA

Jackson, in the matter of Conway v Conway [2000] FCA 1530

BANKRUPTCY – bankruptcy notice – whether obligation to pay interest on judgment debt resulted in notice improperly claiming interest on interest – whether an appeal is a proceeding to set aside a judgment for the purposes of s 41(6A) Bankruptcy Act 1966 (Cth) – whether time for compliance with bankruptcy notice should be extended

PRACTICE AND PROCEDURE – time and place for the presentation of evidence and argument is the hearing – supplementary material may only be filed after the close of the hearing with leave – timetables for the filing of supplementary submissions to be strictly complied with

District Court Act1973 (NSW) s 85(2)(c)
Supreme Court Act 1970 (NSW)
Bankruptcy Act 1966 (Cth) s 41(6A)

Re Wong; ex parte Kitson (1979) 27 ALR 405, considered
Ex parte Fewings; In re Sneyd (CA) (1883) 25 Ch D 338, considered
Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1993) 7 ANZ Insurance Cases 61-202, cited
Lentini; ex parte Lentini v CSR Limited (1991) 29 FCR 363, cited
Re Maddox (Federal Court of Australia, Neaves J, 12 May 1987, unreported), cited
Re Halliday; ex parte Halliday v ACN 003 075 394 Pty Ltd (1993) 44 FCR 349, cited
Vincent v State Bank of New South Wales (1995) 60 FCR 290, cited
Stavrianos v Commonwealth Bank of Australia Ltd (Federal Court of Australia, Branson J, 9 September 1998, unreported), cited
Bryant v Commonwealth Bank of Australia (Federal Court of Australia, Davies, Foster and O’Loughlin JJ, 9 November 1994, unreported), followed
Benaharon v Fabric Dyeworks (Aust) Pty Ltd [1998] FCA 1109, cited
Pak Sun Liew v JNS Technologies (M) Sdn Bhd [1999] FCA 1428, cited
Re Baker; ex parte Baker v Staples (Federal Court of Australia, Kiefel J, 4 September 1995, unreported), cited
Re Geard; ex parte Reid (Federal Court of Australia, Shepphard J, 11 February 1994, unreported), cited
Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685, considered
Carr v Finance Corporation of Australia Ltd (1981) 147 CLR 246, cited
Al Raied v Minister for Immigration & Multicultural Affairs [2000] FCA 1357, cited

IN THE MATTER OF DENISE CONWAY
ALAN JACKSON v DENISE CONWAY
N 7834 of 2000

BRANSON J
SYDNEY
31 OCTOBER 2000


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7834 of 2000

IN THE MATTER OF DENISE CONWAY

BETWEEN:

ALAN JACKSON
APPLICANT

AND:

DENISE CONWAY
RESPONDENT

JUDGE:

BRANSON J

DATE OF ORDER:

31 OCTOBER 2000

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The application to set aside the bankruptcy notice be dismissed.

2.The time for compliance with the bankruptcy notice be extended until ten (10) days after the hearing and determination or earlier disposition by the Court of Appeal of the Supreme Court of New South Wales of the appeal in matter No CA 40495 of 2000, or further order.

3.Each party has liberty to apply…

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AGLC
Jackson v Conway [2000] FCA 1530
Case
[2000] FCA 1530
Decision Date

CaseChat Overview and Summary

In Jackson v Conway, the Supreme Court of New South Wales was called upon to address the enforceability of a bankruptcy notice issued by the appellant against the respondent. The appellant had obtained a judgment in the District Court against the respondent for the payment of $111,449.59, including interest. The respondent challenged the validity of the bankruptcy notice, arguing that it should not include interest on the judgment debt. The court had to determine whether the interest on the judgment debt was payable under the relevant statutory provisions and if the bankruptcy notice was correctly issued.

The central legal issue was whether interest on the judgment debt could be compounded and if the interest was correctly calculated and included in the bankruptcy notice. The court examined sections 85(1) and 85(2)(c) of the relevant legislation, focusing on the definition of a "judgment debt" and whether interest on such a debt could accrue further interest. The court concluded that while interest was to be treated as part of the judgment debt for enforcement purposes, compound interest was not permissible. The interest payable was to be calculated on the unpaid principal amount of the judgment debt, which in this case was $111,449.59. Given that no part of this amount had been paid, the respondent was entitled to claim interest on the entire judgment debt.

The Supreme Court of New South Wales dismissed the respondent's application to set aside the bankruptcy notice, ruling that the interest was correctly calculated and included in the notice. The court found that the respondent was indeed liable for the full amount of the judgment debt, including interest. The court also extended the time for compliance with the bankruptcy notice until ten days after the hearing or disposition of the appeal in the Court of Appeal of the Supreme Court of New South Wales. Each party was granted liberty to apply on three days’ written notice to the other.

ORDERS:
1. The application to set aside the bankruptcy notice be dismissed.
2. The time for compliance with the bankruptcy notice be extended until ten (10) days after the hearing and determination or earlier disposition by the Court of Appeal of the Supreme Court of New South Wales of the appeal in matter No CA 40495 of 2000, or further order.
3. Each party has liberty to apply on three days’ written notice to the other.

Orders

Orders of the court

1. The application to set aside the bankruptcy notice be dismissed.

2. The time for compliance with the bankruptcy notice be extended until ten (10) days after the hearing and determination or earlier disposition by the Court of Appeal of the Supreme Court of New South Wales of the appeal in matter No CA 40495 of 2000, or further order.

3. Each party has liberty to apply on three days’ written notice to the other.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

BRANSON J
The significance of the concluding words of s 85(2)(c), in my view, is to make clear that although, for the purpose of enforcement of the statutory obligation to pay interest on a judgment debt, the interest is to be treated as if it were part of the judgment debt, compound interest on the judgment is not permitted. That is, further interest on such interest is not payable. The paragraph, however, has nothing to say concerning the payment of interest on the judgment debt itself. That issue is governed by s 85(1) read with the definitions of “judgment” and “judgment debt” contained in s 84(1) of the DC Act. Section 84(1) provides:“In this Division, except in so far as the context or subject matter otherwise indicates or requires –judgment includes any order of the Court for the payment of an amount of money as costs or otherwise;judgment debt includes –(a)any amount ordered by the Court to be paid as costs or otherwise; and(b)any amount payable as provided by the rules as costs without any order of the Court.” The above definitions make it plain that the amount of the judgment debt upon which interest was payable, unless the District Court ordered otherwise, was the sum of $111,449.59 plus any amount ordered by the District Court to be paid as costs or any amount payable as provided by the rules as costs without an order of the District Court. Although the respondent obtained a costs order in her favour in the District Court, it has not been suggested that the judgment debt includes any amount representing costs. Interest is thus payable under s 85(1) of the DC Act on so much of the sum of $111,449.59 as is from time to time unpaid. As no amount of the sum of $111,449.59 has been paid, the respondent was entitled by the bankruptcy notice to claim interest on the entire amount of the judgment debt of $111,449.59 at the rate prescribed for the purposes of s 95(1) of the Supreme Court Act 1970 (NSW) (see s 85(2) of the DC Act). It is appropriate to note that the position might be otherwise had the parties entered into an agreement that interest was payable on the principal sum of $70,000 so long as any part of the sum remained unpaid. The relevant principle was explained by Fry LJ in Ex parte Fewings; In re Sneyd (CA) (1883) 25 Ch D 338 at 355:“When there is a covenant for the payment of a principal sum, and a judgment has been obtained upon the covenant for that sum, it is plain that the covenant is merged in the judgment, and, if there is a covenant to pay interest which is merely incidental to the covenant to pay the principal debt, that covenant also is merged in a judgment on the covenant to pay the principal debt. Of course a covenant to pay interest may be so expressed as not to merge in a judgment for the principal; for instance, if it was a covenant to pay interest so long as any part of the principal should remain due either on the covenant or on a judgment”. For a recent application of the above principle see Fruehauf Finance Corporation Pty Ltd v Zurich Australian Insurance Ltd (1993) 7 ANZ Insurance Cases 61-202.

Ratio Decidendi

Legal Principle Established

Established by: BRANSON J

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