Leadenhall Australia Pty Ltd v Doman - [2024] SASCA 77

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
LEADENHALL AUSTRALIA PTY LTD v DOMAN & ANOR
[2024] SASCA 77
Judgment of the Court of Appeal
(The Honourable Chief Justice Kourakis, the Honourable Justice Bleby and the Honourable Justice Blue)
26 June 2024
INTEREST - RECOVERABILITY OF INTEREST - AWARD OF INTEREST ON DEBTS AND SUMS CERTAIN - INTERPRETATION
BANKRUPTCY - ADMINISTRATION OF PROPERTY - PROOF OF DEBTS - WHAT DEBTS PROVABLE – INTEREST
BANKRUPTCY - ADMINISTRATION OF PROPERTY - PROOF OF DEBTS - WHAT DEBTS PROVABLE - JUDGMENT DEBTS
BANKRUPTCY - ADMINISTRATION OF PROPERTY - DISTRIBUTION OF PROPERTY - SURPLUS - RIGHT OF CREDITOR TO INTEREST ACCRUING AFTER SEQUESTRATION
The appellant sued the respondents in the Magistrates Court for post-judgment interest on a District Court judgment from the date on which the respondents became bankrupt. A Magistrate granted summary judgment in favour of the appellant for $100,000 plus costs and interest.
A Judge allowed the respondents’ appeal against the judgment and set it aside. The Judge held that, on the proper construction of sections 82 and 153 of the Bankruptcy Act 1966 (Cth), interest accruing on a pre-bankruptcy interest-bearing debt between the date of bankruptcy and discharge from bankruptcy does not survive bankruptcy but rather is postponed in bankruptcy pending a surplus, at which time it is paid or, in the absence of a surplus, the liability is discharged by section 153. The Judge held that consequentially subsection 58(3) precludes the institution of a legal proceeding for bankruptcy-period interest because such a proceeding is in respect of a provable debt.
The appellant seeks leave to appeal against that judgment. The appellant contends that bankruptcy-period interest is not a provable debt under, and for the purposes of, sections 58, 82, and 153 and is not the subject of discharge under section 153 or moratorium under section 58 of the Bankruptcy Act 1966 (Cth).
The respondents contend under a notice of alternative contention that interest accrues automatically on the District Court judgment and cannot be the subject of a separate action in the Magistrates Court.
Held by Blue AJA (Bleby JA agreeing):
1On the proper construction of section 40 of the District Court Act 1991 (SA) and of the Enforcement of Judgments Act 1991 (SA), interest accrues on and augments a District Court judgment debt automatically; is enforceable as such and is not capable of being the subject of a separate action for such post-interest judgment (at [110]).
2On the proper construction of subsections 82(3B), 153(1) and 58(3) of the Bankruptcy Act 1966 (Cth), although by reason of subsection 82(3B) a creditor cannot prove for bankruptcy-period interest on an interest-bearing debt under Part VI, bankruptcy-period interest forms part of a single debt which is a provable debt for the purposes of subsections 153(1) and 58(3) (at [414]).
3It follows that the appellant was not entitled to sue the respondents for the bankruptcy-period interest in the Magistrates Court (at [415]).

4 Appeal dismissed (at [417]).
Held by Kourakis CJ (dissenting in relation to the Bankruptcy Act 1966 (Cth)):
1On the proper construction of section 40 of the District Court Act 1991 (SA) and of the Enforcement of Judgments Act 1991 (SA), interest accrues on and augments a District Court judgment debt automatically; is enforceable as such and is not capable of being the subject of a separate action for such post-interest judgment (at [1]).
2On the proper construction of subsections 82(3B), 153(1) and 58(3) of the Bankruptcy Act 1966 (Cth), bankruptcy-period interest is not a provable debt for the purposes of subsections 153(1) and 58(3) and the debtor is not release from liability to pay it on discharge from bankruptcy (at [1]).

Acts Interpretation Act 1901 (Cth) s 15AB; Bankruptcy Act 1966 (Cth) s 5, s 43, s 55, s 58, s 82, s 84, s 89, s 102, s 104, s 108, s 109, s 116, s 148, s 149, s 153, s 153A, s 156A, s 160; Corporations Act 2001 (Cth) s 459E; District Court Act 1991 (SA) s 40; District Court Civil Rules 2006 (SA) r 261; District Court Civil Supplementary Rules 2014 r 217; Enforcement of Judgments Act 1991 (SA); Magistrates Court Act 1991 (SA) s 8(1)(a), s 10(1), s 35; Magistrates Court (Civil) Rules 2013 (SA) r 134; Supreme Court Act 1935 (SA) s 114; Uniform Civil Rules 2020 (SA) r 185.1, referred to.
Agusta Pty Ltd v Provident Capital Limited [2011] NSWSC 807; Anderson Formrite Pty Ltd v CASC Hire Pty Ltd (2005) 147 FCR 379 ; Berenguel v Minister for Immigration and Citizenship (2010) 264 ALR 417; Chapman v WOC Offshore BV [1993] I L Pr 229; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; Clyne v Deputy Commissioner of Taxation (Cth) (1981) 150 CLR 1; Coventry v Charter Pacific Corporation Ltd (2005) 227 CLR 234; Edwards v Stocks (2008) 17 Tas R 408; Esso Australia Pty Ltd v Australian Workers’ Union (2017) 263 CLR 551; Estate of Nitopi (No 3) [2021] NSWSC 1136; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd (2012) 250 CLR 503; Foots v Southern Cross Mine Management Pty Ltd (2007) 234 CLR 52; Gaunt v Taylor (1834) 3 My & K 302 (40 ER 115); Grace v Grace (No 9) [2014] NSWSC 1239; Harrison v Melhem (2008) 72 NSWLR 380; In re Clagett; ex parte Lewis (1888) 36 WR 653; In re Follows; ex parte Follows [1895] 2 QB 521; In the matter of Colour Metal Pty Ltd [2021] NSWSC 1012; Jones v Director of Public Prosecutions [1962] AC 635; JS McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337; Landmark Operations Limited v J Tiver Nominees Pty Ltd (No 3) [2009] SASC 329; Leadenhall Australia Pty Ltd v Doman [2018] SADC 123; Mackenzie v Rees (1941) 65 CLR 1; Midland Montague Australia Ltd v Harkness (1994) 119 FLR 374; Milevski v Paltos (No 2) [2022] NSWSC 437; Momcilovic v The Queen (2011) 245 CLR; Mondelez Australia Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union (2020) 271 CLR 495; Murphy v Farmer (1988) 165 CLR 19; Newton v Grand Junction Railway Co (1846) 153 ER 1133; P Aker Flowerbulbs Pty Ltd v Coulter (2004) 140 FCR 410; Page v Commonwealth Life Assurance Society Ltd 1935) 36 SR(NSW) 85; Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; R v A2 (2019) 269 CLR 507; Re Estate of Low; ex parte Low (1899) 20 LR(NSW) B & P 17; Re Hyman; ex parte Law (1930) 3 ABC 61; Re Lehmann; ex parte Hasluck (1890) 7 Morr 181; Re Manion; ex parte Deputy Commissioner of Taxation (1979) 37 FLR 78; Re Mullavey; ex parte Australia and New Zealand Banking Group Ltd (1977) 32 FLR 1; Re O’Keefe; ex parte Australian Factors Ltd (1963) 19 ABC 101; Re Paul & Gray Ltd (1933) 33 SR(NSW) 295; Re Scott [2006] FCA 718; Re Wilson (1877) 3 VLR 95; Reis v Carling (1908) 5 CLR 673; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252; SST Consulting Services Pty Ltd v Rieson (2006) 225 CLR 516; Storey v Lane (1981) 147 CLR 549; SZTAL v Minister for Immigration and Border Protection (2019) 262 CLR 362; The London, Chatham & Dover Railway Co v The South Eastern Railway Co [1893] AC 429; Thiess v Collector of Customs (2014) 250 CLR 664, considered.

LEADENHALL AUSTRALIA PTY LTD v DOMAN & ANOR
[2024] SASCA 77
Court of Appeal -– Civil: Kourakis CJ, Bleby JA and Blue AJA

KOURAKIS CJ:   For the reasons given by Blue AJA, I too would hold that interest on the judgment debt is not recoverable by action in the Magistrates Court. Interest accrues on a judgment only by reason of the rules of court in which the judgment is given and by force of those rules is an integral component of the judgment itself. An award, or the accrual, of post-judgment interest does not amount to a separate judgment debt, the benefit of which inures to the successful party’s use. Rather, it is, and has long been recognised as, a disincentive for the delay of satisfaction of the judgment debt by the judgment debtor and a reflection of the judgment debt’s use value to the judgment creditor.[1] Such an award reflects no more than the fact that the judgment debt has been ‘fructifying in the wrong pocket’.[2] However, for the following reasons, I would hold that post-bankruptcy interest is not a provable debt and the Domans were not discharged from that component of the judgment debt on their discharge from bankruptcy.
[1]     See, eg, The London, Chatham & Dover Railway Co v The South Eastern Railway Co [1893] AC 429, 437 (Lord Herschell LC, Lord Watson, Lord Morris and Lord Shand agreeing); P Aker Flowerbulbs Pty Ltd v Coulter (2004) 140 FCR 410, 420 [50] (Weinberg J).
[2]     Newton v Grand Junction Railway Co (1846) 16 M & W 139; 153 ER 1133, 1134 (Alderson B arguendo), quoted in Grace v Grace (No 9) [2014] NSWSC 1239, [64] (Brereton J); Estate of Nitopi (No 3) [2021] NSWSC 1136, [18] (Parker J); Milevski v Paltos (No 2) [2022] NSWSC 437, [10] (Parker J).
I state my reasons in short form by reference to the applicable provisions of the Act as it stands which are the provisions which must necessarily determine the question.
First, the terms of s 82(3B) of the Bankruptcy Act 1966 (Cth) are intractable. Interest accrued in the bankruptcy-period which, but for sub-s (3B), would have otherwise fallen within sub-s (1) as a component of a provable debt, is expressly declared not to be a provable debt. The subsection creates a statutory construct, by which what might otherwise be a single debt is split into two debts for the purposes of the Act: one of which is provable; the other of which is not. That that is the effect of sub-s (3B) is apparent from a plain reading of the language of that subsection. It is only ‘in so far’ as the debt in question ‘consists of interest accruing’ on a provable debt that it is not provable in a bankruptcy. The use of the phrase ‘in so far’ suggests that it is only to the extent[3] that an otherwise provable debt consists of an unprovable component of bankruptcy-period interest that it is unprovable in the bankruptcy, with the balance remaining provable and, thus, liable to discharge under s 153(1) of the Act. The language of s 153(1) is similarly intractable, and, by its terms, does not encompass debts unprovable in a bankruptcy, such as, on my reading of s 82(3B), that component of a judgment debt comprising post-judgment interest.
[3] See, eg, JS McMillan Pty Ltd v Commonwealth (1997) 77 FCR 337, 356 (Emmett J); SST Consulting Services Pty Ltd v Rieson (2006) 225 CLR 516, 528-9 [35]-[37] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ). Cf Chapman v WOC Offshore BV [1993] I L Pr 229, 237-8 [21]-[26] (Hirst J).
Secondly, the balance of competing interests as between creditors and the bankrupt and, as amongst creditors so affected, may be thought less than perfect but that is not reason enough to depart from the plain meaning of the provisions. The division of the assets of a bankrupt necessarily requires pragmatic compromises, especially around interest on a debt. Those compromises are informed by historical attitudes to the charging of interest. So much is clear from the history of bankruptcy legislation very helpfully surveyed by Blue AJA which shows that caps were placed on the payment of contractually charged interest and a different rate was paid in the absence of any contractual provision. The balance struck by s 82(3B) of the Act is to exclude post-bankruptcy interest all together.
Thirdly, that balance is workable. If there is no surplus after payment of all provable debts, there is no reason why those creditors with a right to contractual interest cannot choose to pursue it if they assess it cost effective to do so. It does not adversely affect the interests of other creditors to allow them to do so. True it is that the bankrupt will be twice, perhaps even thrice or more, vexed but that is in respect of a debt which s 82(3B) states is not provable. Any surplus after payment of all provable debts would be returned to the discharged bankrupt subject to any garnishee order a creditor entitled to post-bankruptcy interest might obtain.
Fourthly, the authorities on early bankruptcy legislation do not support a construction which departs from the ordinary meaning of the critical provisions. What may be loosely described as the ‘common law of bankruptcy’ is an amalgam of decisions construing the provisions of the 1705 English Statute and explicating the discretions exercisable thereunder. The relevant provisions in Mackenzie v Rees[4] included post-bankruptcy interest as a provable debt (s 81(1) of the Bankruptcy Act 1924-1933 (Cth)), and required pro rata payment of all debts ‘proved’ in bankruptcy (s 89 of the Bankruptcy Act 1924-1933 (Cth)). The interpretation of the provisions adopted by the decision in Mackenzie (leaving aside the question of whether those interpretations were given obiter or as a necessary step in the disposition of the appeal) was that, until proved, the otherwise provable debt of post-bankruptcy interest did not have to be satisfied pari passu. The decision also accepted a, perhaps surprising, discretion to defer proof of the debt unless and until there was a surplus over and above all provable debts including post-bankruptcy interest. There is no need for such sophistry under the current Act. Post-bankruptcy interest is simply not provable.
[4] (1941) 65 CLR 1 (‘Mackenzie’).
I would allow the appeal. I would make orders confirming the dismissal of the action, but I would declare that the respondents have not been discharged from their obligation to pay post-bankruptcy interest, so that the debt can be enforced. It is unnecessary to consider the mechanism by which the latter declaration might be made because my construction of the Act in that respect is not shared by the majority of the Court.
BLEBY JA: I would dismiss the appeal and uphold the notice of contention for the reasons given by Blue AJA.
BLUE AJA: The appellant Leadenhall Australia Pty Ltd (Leadenhall) sued the respondents Peter Doman and Jason Doman (the Domans) in the Magistrates Court for post-judgment interest on a District Court judgment (November 2018) from the date on which the Domans became bankrupt (January 2019). A Magistrate granted summary judgment in favour of Leadenhall for $100,000 plus costs and interest.
A Judge of this Court allowed the Domans’ appeal against the judgment and set it aside.[5] The Judge held that, on the proper construction of sections 82 and 153 of the Bankruptcy Act 1966 (Cth) (the Act), interest accruing on a pre-bankruptcy interest-bearing debt between the date of bankruptcy and discharge from bankruptcy (bankruptcy-period interest) does not survive bankruptcy but rather is postponed in bankruptcy pending a surplus, at which time it is paid or, in the absence of a surplus, the liability is discharged by section 153. The Judge held that consequentially subsection 58(3) precludes the institution of a legal proceeding for bankruptcy-period interest because such a proceeding is in respect of a provable debt.
[5] Doman v Leadenhall Australia Pty Ltd [2023] SASC 97.
Leadenhall seeks leave to appeal against that judgment. Leadenhall contends under its notice of appeal that bankruptcy-period interest is not a provable debt under and for the purposes of sections 58, 82 and 153 and is not the subject of discharge under section 153 or moratorium under section 58 of the Act.
The Domans contend under a notice of alternative contention that interest accrues automatically on the District Court judgment and cannot be the subject of a separate action in the Magistrates Court.
The notice of appeal and the notice of alternative contention raise two issues of general importance:
1Can a creditor pursue a debtor personally for interest accruing after the bankruptcy of the debtor when the creditor is precluded from pursuing the principal against the debtor personally?
2Can a judgment creditor sue a judgment debtor in the Magistrates Court for interest accruing under the District Court Act 1991 (SA) on a judgment granted by the District Court?
Background
Leadenhall sued the Domans in the District Court. On 30 November 2018 the District Court granted judgment against the Domans for $706,019.40.[6]
[6] Leadenhall Australia Pty Ltd v Doman [2018] SADC 123.
Interest from 30 November 2018 accrued on the judgment debt under section 40 of the District Court Act 1991 (SA) (the District Court Act) and the combination of rule 261 of the District Court Civil Rules 2006 (SA) and rule 217 of the District Court Civil Supplementary Rules 2014 (SA) at a rate (the District Court post-judgment interest rate) equal to the cash rate of interest last set by the Reserve Bank of Australia (adjusted biannually) (the Cash Rate) plus six per cent per annum.
Leadenhall took steps under the Enforcement of Judgments Act 1991 (SA) (the Enforcement Act) to enforce the judgment.
On 2 January 2019 Jason Doman became bankrupt and on 4 January 2019 Peter Doman became bankrupt. At the date of the bankruptcies, post-judgment interest had accrued on the judgment debt at 7.5 per cent per annum.
The District Court post-judgment interest rate reduced on 1 July 2019 to 7.25 per cent per annum and further reduced on 1 January 2020 to 6.75 per cent per annum.
On 18 May 2020 the Uniform Civil Rules 2020 (SA) (the Uniform Civil Rules) commenced and repealed prospectively amongst others the District Court Civil Rules 2006 (SA) and the District Court Civil Supplementary Rules 2014 (SA). Rule 185.1 provides that post-judgment interest on a District Court (and Supreme Court and Magistrates Court) judgment debt accrues at six per cent per annum.
On 23 March 2021 Leadenhall instituted a claim in the Magistrates Court against the Domans for post-judgment interest on the District Court judgment from their respective dates of bankruptcy (2 and 4 January 2019) up to 25 February 2021. The claim was prima facie expressed to be for $100,394.93 against Peter Doman and $100,685.08 against Jason Doman but was limited to $100,000 against each due to the monetary limit of the jurisdiction of the Magistrates Court.
Leadenhall subsequently filed an interlocutory application seeking summary judgment.
On 6 October 2021 a Magistrate granted summary judgment in favour of Leadenhall for $100,000 and reserved the questions of costs and interest. The Magistrate rejected a contention by the Domans that the action was precluded by sections 58 and 153 of the Act.
In January 2022 the Domans were discharged from bankruptcy.
The Domans appealed against the judgment. On 23 June 2023 a single Judge allowed the appeal and set aside the judgment. The Judge upheld the contention by the Domans that the action was precluded by sections 58 and 153 of the Act.
Reasoning of courts below
The Magistrate
The Magistrate referred to the legislative provisions and authorities cited by the parties.
The Magistrate concluded:
I have reached the view that the respondents have no real prospects of successfully defending the applicant’s claim for the following reasons:
·The overarching feature of the Bankruptcy Act is the concept of a provable debt in bankruptcy.
·Those debts which are provable are spelled out by s 82 of the Bankruptcy Act: matters falling outside those categories are not provable.
·The scope and operation of s 58(3) of the Bankruptcy Act turns on the proper interpretation of s 82 and the concept of a provable debt.
·Similarly, the discharge provided by s 153 of the Bankruptcy Act is expressly dependent upon the status of the debt or liability as a provable debt.
·The language in s 82(3B) and its application is clear: the post-bankruptcy interest on a provable debt (ie. Running Interest) is not a provable debt. This provision does no more.
It follows that a debt consisting of the Running Interest is not discharged after bankruptcy under s 153(1) which only operates to release the bankrupt from all debts provable in the bankruptcy. Likewise, s 58(3) is not engaged, nor is there any other provision in the Bankruptcy Act that precludes the applicant from commencing this action for the Running Interest from the respondents at this stage.
The appeal Judge

The Judge on appeal referred to the legislative provisions and authorities cited by the parties.
The Judge said:
The equitable distribution of the assets of the insolvent debtor to prevent one creditor obtaining an undue advantage over others is a fundamental purpose of bankruptcy law. The legislation as a whole is aimed at marshalling assets, ascertaining debts and claims and applying the former towards satisfaction of the latter. It is aimed at releasing a bankrupt from an ever-escalating cycle of debt. Whilst there is no doubt that there are debts and liabilities that will sit outside of the Bankruptcy Act where the legislation is reasonably open to more than one construction, a construction that would promote the purpose or object of the Act must be preferred to a construction that would not.
…
The first amendment to [section 82] occurred in 1987 with the introduction of s 82(3B). The purpose of that amendment could not have been made clearer in the accompanying detailed explanatory memorandum. It was to codify the common law or remove doubt to give ‘statutory standing’ to the rule in MacKenzie.
…
To my mind it would be a perverse outcome to determine that the effect of this amendment is the opposite of what was expressly intended by Parliament that is to preserve the common law in relation to the post-bankruptcy interest.
This interpretation gains support from of the nature of the debt that is the subject of s 82(3B). Unlike the debts that have been the subject of the other amendments this debt is the product of an original debt that is in fact provable in the bankruptcy. Each of the other debts stands alone as part of a relevant legislative regime. In my view it would add to the absurdity of the result that a creditor could potentially receive only a very small percentage of the provable debt but subsequently be entitled to litigate for the full amount of the interest that became payable post-bankruptcy. It begs the question of when the liability for the interest will end.
The appellants’ argument is further supported by s 153A – Annulment on payment of debts. This section relates to circumstances in which there are sufficient funds in the estate to pay the provable debts in full. This section adopts the position of the common law in relation to post-bankruptcy interest by stipulating that:
… [i]n determining whether there has been full payment of a debt that bears interest, the interest must be reckoned up to and including the date on which the debt (including interest) is paid.
In other words as under the common law the bankrupt will not receive any surplus until such time that all outstanding interest is paid. This section reflects the unique historical context of post-bankruptcy interest and creates provision for its payment albeit only at a point in time that all other debts are paid. That is despite the fact that it is not provable in the bankruptcy. It is consistent with a fair approach to the distribution of assets between the creditors.
…
The respondent contends that [section 153] makes it plain that the discharge is only from debts provable in the bankruptcy and it follows that liability for post-bankruptcy interest continues…
…
In my view s 153 must be read together with s 153A. The latter provides the means which post-bankruptcy interest should be dealt with which sits outside of the normal position in relation to the discharge of a bankrupt. In reading the two sections in this manner, results in a legislation framework which reflects and preserves the common law position.
The Judge held that in any event a proceeding for, or enforcement of, bankruptcy-period interest is in respect of a provable debt within the meaning of subsection 58(3). The Judge said:
For a claim to fall within s 58(3) it must be ‘in respect of a provable debt. The words ‘in respect of’ have a wide meaning and are to take their colour from the context in which they are found. The expression only requires ‘some discernible and rational link’ between the matters in question. The width of the words in the context of this section has been the basis for the courts to conclude that the nexus between the proceedings and the relevant provable debt may even be indirect.
Post-bankruptcy interest cannot be found to exist unless the original debt is in existence. It follows that it is ‘in the respect of’ a provable debt. The Magistrate erred in finding that s 58(3) of the Bankruptcy Act did not apply.
Interest on judgment debt
It is convenient to address the issue arising on the notice of alternative contention before turning to the issue arising on the notice of appeal.
Legislative regime: interest on judgment debts
Current statutory provisions
Section 40 of the District Court Act provides:
40—Interest on judgment debts
(1)A judgment debt bears interest at a rate prescribed by the rules.
(2)Subject to any direction by the Court to the contrary, the interest runs—
(a) in the case of adjudicated costs—from the date the costs are adjudicated or an earlier date fixed by the adjudicating officer;
(b) in the case of any other monetary sum—from the date of the judgment.
The “rules” referred to in subsection 40(1) are defined by subsection 3(1) to mean the rules of the District Court in force under the District Court Act. In turn section 51 empowers the making of rules of the court by the Chief Judge and two other Judges of the Court.
Section 40 is modelled on section 114 of the Supreme Court Act 1935 (SA) (the Supreme Court Act) which provides in similar (but not identical) terms that money payable under a Supreme Court judgment bears interest at the rate prescribed by the rules of court made by the Supreme Court.
Section 35 of the Magistrates Court Act 1991 (SA) (the Magistrates Court Act), which was enacted at the same time as the District Court Act, provides in otherwise identical terms that a judgment debt bears interest at a rate prescribed by the rules of the Magistrates Court made by the Chief Magistrate and two other Magistrates of the Court.
As observed above, the District Court Civil Rules 2006 (SA) and the District Court Civil Supplementary Rules 2014 (SA) prescribed post-judgment interest at the Cash Rate plus six per cent per annum. Rule 134 of the Magistrates Court (Civil) Rules 2013 (SA) prescribed post-judgment interest at ten per cent per annum.
Legislative history
At common law and in equity, judgments did not carry interest (post-judgment interest).[7] The creditor could bring a separate action claiming interest on a judgment debt as damages.[8] Thus, in 1834 in Gaunt v Taylor[9] Sir John Leech MR said:
At law a judgment does not carry interest, but interest may be recovered at law, in the shape of damages, by an action on the judgment.
…
It appears by the authorities which have been cited that equity in this respect follows the law; and, as a general rule, a judgment creditor is not allowed interest on his judgment in the Master’s office. The same vexatious course of proceeding, which would entitle the creditor to interest at law, will certainly entitle him to interest on his judgment in equity.[10]
[7]     Gaunt v Taylor (1834) 3 My & K 302 (40 ER 115) at 309-310 per Sir John Leach MR; Reis v Carling (1908) 5 CLR 673 at 676 per Griffith CJ (with whom Barton J agreed) and 684 per O'Connor J.
[8]     Gaunt v Taylor (1834) 3 My & K 302 (40 ER 115) at 309-310 per Sir John Leach MR.
[9] (1834) 3 Myl & K 302 (40 ER 115).
[10]   At 309-310.
In 1837 An Act for the Establishment of a Court to be called the Supreme Court of the Province of South Australia (No 5 of 7 Wm IV) 1837 (SA) (the Supreme Court Act 1837 (SA)) was enacted. It established the Supreme Court of South Australia. The Court was given the jurisdiction and powers (including of enforcement) of the English common law and equity courts.
In 1837 An Act to establish Courts of Resident Magistrates, to appoint Resident Magistrates to confer on Justices of the Peace certain Powers until such Resident Magistrates’ be appointed, to provide for the Recovery of small Debts and the punishment of certain Offences within the Province of South Australia (No 2 of 1 Vic) 1837 (the Magistrates and Justices Act 1837 (SA)) was enacted. It empowered the Governor to create Courts of the Resident Magistrate for different districts. Such Courts were vested with jurisdiction to hear, amongst other things, civil actions subject to a monetary limit.
In 1838 An Act for abolishing Arrest on Mesne Process in Civil Actions, except in certain Cases; for extending the Remedies of Creditors against the Property of Debtors; and for amending the Laws for the Relief of Insolvent Debtors in England 1 & 2 Vict c 110 (UK) (the 1838 English statute) was enacted. Section 17 provided:
… That every judgment debt shall carry interest at the rate of four pounds per centum per annum from the time of entering up the judgment, or from the time of the commencement of this Act in case of judgments then entered up and not carrying interest, until the same shall be satisfied, and such interest may be levied upon a writ of execution on such judgment.
In 1845 An Ordinance for adopting in South Australia certain parts of an Act made and passed in the Imperial Parliament, which was held in the first and second years of the reign of her Majesty, intituled An Act for abolishing Arrest on Mesne Process in Civil Actions, except in certain Cases; for extending the Remedies of Creditors against the Property of Debtors; and for amending the Laws for the Relief of Insolvent Debtors in England (SA) (the Debtors Act 1845 (SA)) was enacted. Section 10 was in largely the same terms as section 17 of the 1838 English statute. It provided:
10 Judgment debts to carry interest
That every judgment debt shall carry interest at the rate of five pounds per centum per annum from the time of entering up the judgment, or from the time of the commencement of this ordinance in case of judgments then entered up and not carrying interest, until the same shall be satisfied, and such interest may be levied upon a writ of execution on such judgment.
This provision applied to judgments of the Supreme Court as well as of the Courts of the Resident Magistrate.
In 1850 An Ordinance for the Recovery of Small Debts and Trial and Punishment of Minor Offences in South Australia (No 5 of 1850) (SA) (the Small Debts Act 1850 (SA)) was enacted. It repealed the Magistrates and Justices Act 1837 (SA). It empowered the Governor to establish Local Courts. Such Courts were vested with jurisdiction among other things to hear civil actions subject to a monetary limit. Section 10 of the Small Debts Act 1850 (SA) applied to Local Courts as well as to the Supreme Court. The Small Debts Act 1850 (SA) contained provisions for enforcement of judgments by writs of fieri facias and unsatisfied judgment summonses.
In 1861 the Local Courts Act 1861 (SA) was enacted. It repealed the Small Debts Act 1850 (SA). It contained similar but more extensive provisions creating, conferring jurisdiction on and providing for the enforcement of judgments of Local Courts.
In 1867 the Supreme Court Act 1867 (SA) was enacted. It supplemented the Supreme Court Act 1837 and intermediate Acts which had amended or supplemented it. Section 33 provided:
33 Ten per cent interest on judgment debts
Every judgment debt shall carry interest at the rate of Ten Pounds per centum per annum, from the time of entering up the judgment until the same shall be satisfied, in lieu and instead of Five Pounds per centum per annum, as provided by the Ordinance No. 9 of 1845.
This provision effectively amended, but did not repeal, section 17 of the Debtors Act 1845 (SA).
In 1886 the Local Courts Act 1886 (SA) was enacted. It repealed the Local Courts Act 1861 (SA). It contained similar provisions creating, conferring jurisdiction on and providing for the enforcement of judgments of Local Courts. Section 141 provided:
141 Execution to issue against goods
Judgments and orders of any Local Court, Judge, or Special Magistrate, for the payment of moneys may be enforced in a case of default or failure of payment thereof forthwith, or at the time or times thereby directed, in the manner hereinafter set out, and shall carry interest on the amount thereof at the rate of Eight Pounds per centum per annum from the date thereof until Payment.
In 1926 the Local Courts Act 1926 (SA) was enacted. It repealed the Local Courts Act 1886 (SA). It contained similar provisions creating, conferring jurisdiction on and providing for the enforcement of judgments of Local Courts. Section 153 provided:
153 Execution to issue against goods
Judgments and orders of any Local Court, Judge, or Special Magistrate for the payment of money —
(a)may be enforced in case of default or failure of payment thereof forthwith, or at the time or times thereby directed, in the manner hereinafter set out; and
(b)shall carry interest on the amount thereof at the rate of Eight Pounds per centum per annum from the date thereof until payment.
In 1935 the Supreme Court Act was enacted. It repealed the Supreme Court Act 1867 (SA). It also repealed the Debtors Act 1845 (SA). Section 114 provided:
114    Interest on judgment debts
(1)All money, including costs, payable under any judgment or order shall bear interest at the rate from time to time prescribed by the rules of court.
(2)The interest shall be computed from the following times:
(a)     in the case of money other than taxed costs, from the time specified in the judgment or order, and if no time is so specified from the date of the judgment or order;
(b)    in the case of taxed costs, from the date of the certificate of the taxing officer by whom the costs were taxed.
In 1947 the Local Courts Act 1926 (SA) was amended[11] to change the post-judgment interest rate from eight to five per cent per annum.
[11] By the Local Courts Amendment Act 1947 (SA).
In 1991 the Magistrates Court Act 1991 (SA) was enacted. It created the Magistrates Court of South Australia and repealed the Local Courts Act 1926 (SA).[12] As described above, section 35 was modelled on section 114 of the Supreme Court Act.
[12] In 1969 the title of the Act had been amended to the Local and District Criminal Courts Act 1926.
In 1991 the District Court Act1991 (SA) was enacted. It created the District Court with civil (as well as criminal) jurisdiction. As described above, section 40 was and is in materially identical terms to section 35 of the Magistrates Court Act.
In 1991 section 114 of the Supreme Court Act was amended[13] by inserting at the end of paragraph (2)(b) “or an earlier date specified by the taxing officer in the certificate” to bring it into line with the equivalent sections in the District Court Act and Magistrates Court Act.
[13] By the Statutes Repeal and Amendment (Courts) Act 1991 (SA).
In 2013 section 114 of the Supreme Court Act was amended[14] to substitute references to “adjudication” of costs for “taxation” of costs.
[14] By the Statutes Amendment (Attorney-General's Portfolio No 2) Act 2013 (SA).
The notice of alternative contention
By the notice of alternative contention, the Domans contend that the Magistrate erred in finding that there was an identifiable proper claim by Leadenhall against them. They contend that post-judgment interest automatically becomes part of a judgment debt pursuant to section 40 of the District Court Act; which is enforceable directly under the Enforcement Act; which provides the exclusive mechanism for recovery and enforcement; and the Magistrates Court has no jurisdiction to entertain a claim for such interest.
Leadenhall contends that post-judgment interest is not enforceable directly under the Enforcement Act and, even if it is, the Magistrates Court is not deprived of jurisdiction to entertain a claim for such interest, which can be sued for as a standalone debt.
This issue turns on the proper construction of section 40 of the District Court Act and of the relevant provisions of the Enforcement Act. Ultimately, it is necessary to construe those provisions in conjunction with each other. I first address the construction of the provisions before considering authorities cited by the parties.
Section 40 of the District Court Act provides:
40—Interest on judgment debts
(1)A judgment debt bears interest at a rate prescribed by the rules.
(2)Subject to any direction by the Court to the contrary, the interest runs—
(a) in the case of adjudicated costs—from the date the costs are adjudicated or an earlier date fixed by the adjudicating officer;
(b) in the case of any other monetary sum—from the date of the judgment.
The only matter left by the section to be prescribed by the Rules is the rate of interest. There is no provision empowering the Rules to prescribe compound interest or compounding intervals.
The section provides for interest to run on the monetary sum the subject of the judgment (including any pre-judgment interest) and on any costs the subject of the judgment upon their being fixed. In each case, the section provides that interest runs from the date of fixing of the monetary sum (the date of the judgment and the date of fixing costs respectively). This is subject only to exercise of discretion by the Court (including the adjudicating officer in the case of costs) to order otherwise.
Starting with the text of subsection 40(1), the provision is expressed to operate automatically of its own force: it does not require any order or judgment by the District Court (or any other court) for its operation.
The subsection is expressed in terms of the judgment debt “bearing” interest. This connotes that the post-judgment interest augments the judgment debt rather than being separate and distinct from it. Although post-judgment interest is separately identifiable, the principal, pre-judgment interest and costs are separately identifiable (and may be fixed at different times) but form component parts of a judgment debt, rather than pre-judgment interest and costs being separate and distinct from the principal.
Section 40 is not expressed in a manner to create a statutory cause of action for which the judgment creditor may sue in another court. When the legislature creates a statutory cause of action, it uses language apposite to do so. For example, section 236 of the Australian Consumer Law as applied by section 14 of the Fair Trading Act 1987 (SA) creates a statutory cause of action for damages caused, amongst other things, by misleading conduct. Similarly, section 20L of the Retail and Commercial Leases Act 1995 (SA) creates a statutory cause of action for recovery of a lease premium. By contrast, section 40 does not create a statutory cause of action to recover post-judgment interest but directly augments the judgment debt with post-judgment interest.
If, as Leadenhall contends, a judgment creditor could not directly enforce payment of post-judgment interest under the Enforcement Act but were required first to sue for and obtain judgment in that court (or another court), it would not only defeat the evident purpose of section 40 (addressed below) but it would also be contrary to the plain meaning of the words that the judgment debt “bears” interest.
Further, as observed above, section 40 provides for simple interest and not compound interest. If, as Leadenhall contends, a judgment creditor were able to sue (whether in the same court or a different court) and obtain judgment for such post-judgment interest, it would be contrary to the operation of section 40. For example, assume that a judgment creditor obtains judgment for $1,000,000 in the District Court on 1 January 2022 and the judgment bears interest up to 1 January 2023 at ten per cent per annum, resulting in post-judgment interest accruing under section 40 of $100,000. Assume that the judgment creditor sues for and obtains judgment in the District Court for the interest of $100,000 on 2 January 2023. Pursuant to section 40, the new judgment would start to accrue its own interest at ten per cent per annum, resulting in a compounding of interest contrary to the intent and effect of section 40.

Turning to the context of section 40 in parallel legislation, section 114 of the Supreme Court Act and section 35 of the Magistrates Court Act provide for post-judgment interest on judgments of those Courts.
Under the rule making power of each Court under its respective Act,[15] it is a matter for each Court to fix its own interest rate under the post-judgment interest legislative provision. There is nothing in the legislative provisions to prevent the different courts fixing different interest rates (and indeed that was the case prior to 2020 when the Uniform Civil Rules were made). Accordingly, the legislature must necessarily have contemplated that different interest rates might be fixed by the different Courts.
[15] Supreme Court Act1935 (SA) section 127; District Court Act1991 (SA) section 51; Magistrates Court Act1991 (SA) section 49.
If, as Leadenhall contends, a judgment creditor were able to sue in a second court for post-judgment interest in respect of a judgment in a first court, it could result in post-judgment interest accruing after the second judgment at a different rate to that prescribed in respect of the first judgment. For example, as observed at [17] above, in the first half of 2019 the post-judgment interest rate prescribed under section 40 of the District Court Act was 7.5 per cent per annum. However, the post-judgment interest rate prescribed under section 35 of the Magistrates Court Act was ten per cent per annum. If a District Court judgment creditor could obtain judgment for post-judgment interest in the Magistrates Court, the judgment in the Magistrates Court would bear interest at ten per cent per annum contrary to the purpose and effect of section 40 of the District Court Act that it bear interest at the rate prescribed by the District Court, namely 7.5 per cent per annum.
These matters point strongly in favour of a construction of section 40 of the District Court Act (and its counterparts) that interest accrues on and augments a judgment debt automatically; is enforceable as such and is not capable of being the subject of a separate action for such post-judgment interest.
The context of section 40 of the District Court Act includes the legislative history of statutory provisions for post-judgment interest summarised above. This history strongly supports the construction referred to in the previous paragraph.
First, it is clear that the purpose of section 10 of the Debtors Act 1845 (SA) was to avoid the bringing of a separate action at common law for post-judgment interest and to provide instead that the judgment, by force of the statute, automatically bear interest at the prescribed rate. As described above, section 40 of the District Court Act is derived by direct lineage from section 10 of the Debtors Act 1845 (SA).
Secondly, section 10 of the Debtors Act 1845 (SA) and the immediate predecessors of section 40 of the District Court Act, namely section 141 of the Local Courts Act 1886 (SA) and section 153 of the Local Courts Act 1926 (SA) contained provisions for the direct enforcement of post-judgment interest together with the judgment debt augmented by that interest. This demonstrates that a separate action was not needed to recover post-judgment interest before enforcement and, on the contrary, it was to be enforced directly.
The evident purpose of section 40 of the District Court Act is to provide that interest runs automatically on a District Court judgment debt and is enforceable without bringing a separate action seeking judgment for the post-judgment interest.
Turning to the Enforcement Act, it is expressed in its long title to “make provision for the enforcement of judgments; and for other purposes”.
The Enforcement Act distinguishes between monetary judgments and non-monetary judgments. The term “judgment” is defined broadly and non-exhaustively by section 3 as follows:
judgment includes an order, declaration or decree;
The term “monetary judgment” is defined by section 3 as follows:
monetary judgment means a judgment for the payment of a sum of money (whether or not the judgment provides for any other form of relief);
Part 2 deals with monetary judgments. It provides five alternative methods of enforcement of monetary judgments. It empowers “the court”, on application by the judgment creditor, to make various enforcement orders. The term “the court” is defined by section 3 to mean the Supreme Court, District Court or Magistrates Court (a court).
Part 2 empowers a court:
(a)to order (after investigating the judgment debtor’s means under an investigations summons) payment by the judgment debtor of the judgment debt by one or more instalments in accordance with a timetable fixed by the court (sections 4 and 5);
(b)to make a garnishee order that money of, or owing to, the judgment debtor in the hands of or from a third person be attached to answer the judgment and paid to the judgment creditor (section 6);
(c)to issue a warrant of sale authorising the seizure and sale of a judgment debtor's property to satisfy a monetary judgment (section 7);
(d)to charge property of a judgment debtor with a judgment debt or part of a judgment debt (section 8);
(e)to appoint a receiver for the purpose of enforcing a judgment (section 9).
Whether post-judgment interest is encompassed in the definition of “monetary judgment” turns on the effect of section 40 of the District Court Act (and its counterparts). If the effect of section 40 is that post-judgment interest augments the judgment debt, it will be encompassed in the definition of judgment debt in section 3 of the Enforcement Act. Conversely, if the effect of section 40 is that post-judgment interest is separate and distinct from the judgment debt, it will not be encompassed in the definition of judgment debt in section 3 of the Enforcement Act.
The provisions of the Enforcement Act support the construction of section 40 of the District Court Act that post-judgment interest augments the judgment debt.
First, there is nothing in Part 2 of the Enforcement Act that suggests that separate enforcement steps are required in respect of the original judgment debt and post-judgment interest. On the contrary, sections 4 to 9 proceed on the basis that a single enforcement proceeding (of the given type) is taken in respect of a given judgment debt.
Secondly, it would be extremely cumbersome if a judgment creditor were required to sue for and obtain a judgment for post-judgment interest and to bring enforcement proceedings under the Enforcement Act to enforce payment of the original judgment debt and separately again to enforce payment of the post-judgment interest. There appears to be no purposive reason to read the scheme as operating in such an inefficient matter.
Leadenhall contends that, despite the construction advanced by it, in some circumstances a judgment creditor may receive post-judgment interest as a result of enforcement steps taken in respect of the original judgment debt (excluding post-judgment interest). In particular, Leadenhall contends that, if a warrant of sale is issued to satisfy the original judgment debt, even on the construction advanced by it post-judgment interest accruing on the original judgment debt would be payable to the judgment creditor. Leadenhall contends that such post-judgment interest would be so payable on the basis that it would be inequitable for any excess proceeds of the sale of property to be returned to the judgment debtor when a readily calculable debt is still owed by the judgment debtor to the judgment creditor.
I reject that contention. Leadenhall cites no authority in support of its proposition. On Leadenhall’s premise that post-judgment interest is not directly enforceable under the Enforcement Act on enforcement of the original judgment debt, there is no reason to distinguish between post-judgment interest and any other debt that may happen to be owing by the judgment debtor to the judgment creditor. On Leadenhall’s premise, the sole purpose of the grant and execution of the warrant of sale is payment of the original judgment debt. Once that purpose has been achieved by payment of the original judgment debt, the debtor would be entitled to the balance of the sale proceeds. There is no principle of equity which would render it inequitable for the balance of the sale proceeds to be paid to the debtor.
In any event, even if Leadenhall’s contention were accepted, it would not apply to other enforcement steps such as an order under section 5 for payment of the judgment debt by instalments; a garnishee order under section 6 or a charging order under section 8. Further, it would not detract from the matters addressed above pointing towards a construction of section 40 of the District Court Act (and its counterparts) that post-judgment interest augments the judgment debt and is enforceable under the Enforcement Act.
Having regard to the text, context and evident purpose of section 40 of the District Court Act (and its counterparts) in conjunction with the provisions of the Enforcement Act relating to the enforcement of monetary judgements, post-judgment interest automatically augments the judgment debt and is enforceable under the Enforcement Act. No separate judgment is required to be obtained for the enforcement of payment of post-judgment interest.
Leadenhall contends that, even if a separate judgment is not required to be obtained for the enforcement of payment of post-judgment interest, nevertheless the Magistrates Court has jurisdiction under section 8(1)(a) of the Magistrates Court Act to entertain a claim for post-judgment interest.
Section 8(1)(a) of the Magistrates Court Act provides:
8—Civil jurisdiction
(1)The Court has jurisdiction—
(a) to hear and determine an action (at law or in equity) for a sum of money where the amount claimed does not exceed $100 000;
Leadenhall contends that a claim for post-judgment interest is an action at law or in equity for a sum of money within the meaning of that provision and there is no exclusion within section 8 of a claim for post-judgment interest.
Subsection 10(1) of the Magistrates Court Act provides:
10—Statutory jurisdiction
(1) The Court has any jurisdiction conferred on it by statute.
It appears to be the intention of section 8(1)(a) to confer jurisdiction to hear common law and equitable causes of action and of section 10 to confer jurisdiction to hear statutory causes of action. Assuming in favour of Leadenhall that jurisdiction need not be conferred by another statute expressly on the Magistrates Court, nevertheless it is necessary for the other statute to create a statutory cause of action. For the reasons given above, section 40 of the District Court Act does not do so.
Sections 8 and 10 of the Magistrates Court Act do not confer jurisdiction on the Magistrates Court to hear a claim for a judgment debt insofar as it comprises the principal component of a judgment of another Court (or indeed of the Magistrates Court itself), nor insofar as it comprises the pre-judgment interest component or the costs component of such a judgment. Likewise, they do not confer jurisdiction on the Magistrates Court to hear a claim for post-judgment interest on the judgment of another Court (or indeed of the Magistrates Court itself).
The construction of the Magistrates Court Act advanced by Leadenhall would, in any event, be inconsistent with section 40 of the District Court Act, which provides for post-judgment interest to augment the District Court’s judgment debt rather than to be the subject of a separate action in a different court.
Having regard to the text, context and evident purpose of section 40 of the District Court Act, the provisions of the Enforcement Act and sections 8 and 10 of the Magistrates Court Act, post-judgment interest augments the District Court’s judgment debt and is enforceable under the Enforcement Act and the Magistrates Court does not have jurisdiction to entertain a claim for post-judgment interest on the District Court judgment debt.
Turning to authority, the parties cite a decision by a Supreme Court Master and a decision by a District Court Master in relation to the enforcement of post-judgment interest accruing on a Supreme Court and a District Court judgment respectively. They also cite, or those decisions refer to, authorities in other jurisdictions.
The authorities in other jurisdictions by and large address issues different to the issue of construction in the present case and they arise in different contexts. They are tangential to the issue of construction in the present case and ultimately offer little assistance, being little more than straws in the wind.
First, in In re Clagett; ex parte Lewis[16] Lewis obtained judgment against Clagett for £329 and Clagett became an insolvent debtor under the Insolvency Acts. Section 92 of the 1838 English statute provided that, if a surplus remained after the debts of an insolvent debtor had been discharged, the Court had power to order that the surplus be vested in the insolvent debtor. The principal of £329 had been paid to Lewis’s estate but not post-judgment interest. The issue was whether such interest should be paid to Lewis’s estate before payment to Clagett’s estate pursuant to section 92. This raised an issue of construction of section 92. The Court of Appeal held that the interest was required to be paid.
[16] (1888) 36 WR 653.
Lord Esher MR said:
It is not necessary to say that it is part of the judgment debt; it is enough to say that it is a debt necessarily and inevitably attached to the judgment debt if not paid immediately.[17]
Lindley LJ said:
The effect of section 17 is that in order to satisfy a judgment debt you must pay principal and interest up to the time of payment. The original debt is merged in the judgment, and the judgment debt carries interest till satisfied… Has this debt been satisfied? No; it is not satisfied till interest is paid.[18]
Bowen LJ said:
The judgment debt is to carry interest. The meaning seems to be this—that the judgment debt is to bear interest, as it were like a tree bears fruit, the interest to be a legal liability accruing de diem in diem from the time when judgment is entered up till payment. The section, in addition, gives the judgment creditor a remedy by execution; but I think it is open to him to recover the interest in any way known to the law for recovering debts like this. It may be recovered by substantive action of debt. It is an obligation in the nature of debt, annexed and tied to the judgment debt by statute, and the judgment debt is not satisfied until it is satisfied in such a way as to put an end to the obligation to pay interest as well is principal.[19]
[17] At 654.
[18] At 654.
[19] At 654.
The observation by Bowen LJ appears to support the construction advanced by Leadenhall but the observation by Lindley J tends to support the construction advanced by the Domans. In any event the case involved the operation of section 92 and the issue in the present case did not arise for decision.
Secondly, in Reis v Carling[20] Carling & Co obtained judgment in the Queensland Supreme Court against Reis Bros amongst other things for costs. Reis Bros paid the taxed costs promptly before Carling & Co levied execution. Unlike the position in South Australia, Queensland had not enacted any provision for post-judgment interest modelled on section 17 of the 1838 English statute. The only provision for interest on a judgment was in the rules of Court related to the issue of a writ of fieri facias. The High Court held that post-judgment interest was not recoverable by Carling & Co. The decision is therefore not relevant in the present case.
[20] (1908) 5 CLR 673.
O’Connor J, in the course of his reasons for judgment, contrasted the position in Queensland with the position under the 1838 English statute. He said:
At common law a judgment debt did not carry interest, and the only way of recovering interest on such a debt was by action on the judgment. In England that defect was remedied by 1 & 2 Vict. c. 110, s. 17, which provided that every judgment debt should carry interest at the rate named in the Statute from the time of entering up judgment, and that there might be a levy for the recovery of such interest under a writ of execution on the judgment. … In 1876 the Queensland Judicature Act was passed, and then, for the first time, a statutory right was given to a successful suitor in respect of interest on a judgment. The right, however, was not given as in the English Act, 1 & 2 Vict. c. 110, which enacts that the judgment shall carry interest. The sole provision relating to the recovery of interest is that contained in Order XLI., r. 14 of the Schedule, and the forms of writ for carrying that rule into effect. No right of action is given in respect of interest on the judgment, and interest becomes part of the judgment under one set of circumstances only, that is, when a writ of execution to recover the moneys due on the judgment is issued.
…
... The intention of the legislature of Queensland as expressed by their enactment clearly was not to make interest on a judgment a judgment debt payable by the judgment debtor as part of that debt, but to make it recoverable only in cases where the creditor was driven to put in force his remedy by execution and as incidental to the exercise of that remedy.[21]
[21] At 684, 685.
The observations by O’Connor J support the construction advanced by the Domans but the issue in the present case did not arise for decision.
Thirdly, there are a series of cases concerning the ability of a creditor to include post-judgment interest in a bankruptcy notice issued under section 41 of the Act. That section empowers the issue of a bankruptcy notice in respect of a judgment debt. It is established by case law that a bankruptcy notice can only demand payment of a sum of money for which execution may issue.[22] It has been held that post-judgment interest can be included in a bankruptcy notice, thereby implicitly holding that it can be enforced by execution.[23]
[22] In re Follows; ex parte Follows [1895] 2 QB 521 at 525 per Williams J (with whom Wright J agreed); Re O’Keefe; ex parte Australian Factors Ltd (1963) 19 ABC 101 at 103-104 per Clyne J; Re Manion; ex parte Deputy Commissioner of Taxation (1979) 37 FLR 78 at 83 per Lockhart J.
[23] Re Wilson (1877) 3 VLR 95 at 96 per Molesworth J; Re Lehmann; ex parte Hasluck (1890) 7 Morr 181 at 183 per Cave J; Re O’Keefe; ex parte Australian Factors Ltd (1963) 19 ABC 101 at 103-104 per Clyne J; Re Mullavey; ex parte Australia and New Zealand Banking Group Ltd (1977) 32 FLR 1 at 8-9 per CA Sweeney J; Re Manion; ex parte Deputy Commissioner of Taxation (1979) 37 FLR 78 at 83 per Lockhart J.
Fourthly, there are a series of cases concerning the ability of a creditor to include post-judgment interest in a statutory demand issued under section 459E of the Corporations Act 2001 (Cth) without a verifying affidavit. Subsection 459E(3) requires a verifying affidavit for all debts except for a “judgment debt”. In several cases[24] it has been held that post-judgment interest is not part of a “judgment debt” within the meaning of that subsection. On the other hand, in Agusta Pty Ltd v Provident Capital Limited[25] Hammerschlag J held that post-judgment interest is part of a “judgment debt” within the meaning of that subsection. This conflict has apparently not been resolved at intermediate appellate court level. However, these cases related to the meaning of “judgment debt” in subsection 459E(3) and the issue in the present case did not arise for decision.
[24] See for example Anderson Formrite Pty Ltd v CASC Hire Pty Ltd [2005] FCA 1424, (2005) 147 FCR 379 at [63] per Siopsis J; In the matter of Colour Metal Pty Ltd [2021] NSWSC 1012 at [37] per Leeming JA.
[25] [2011] NSWSC 807.
Turning to the two South Australia cases, in Landmark Operations Limited v J Tiver Nominees Pty Ltd (No 3)[26] Landmark had obtained charging orders in February and June 2009 over plant and equipment under section 8 of the Enforcement Act, and an order in August 2009 that it be at liberty to sell most of those items and apply the proceeds to the judgment debt entered in November 2008. Landmark had also, exercising its mortgagee powers, sold real estate for in excess of $8 million. Ms Tiver sought a stay of execution in respect of the sale of the plant and equipment, contending that Landmark would fully recover its judgment debt, albeit without post-judgment interest, out of the proceeds of sale of the real estate. She contended that post-judgment interest was not recoverable under the August 2009 order for the sale of the plant and equipment. Master Lunn refused the application for a stay of execution.
[26] [2009] SASC 329.

Master Lunn referred to some of the cases referred to above. Master Lunn said:
I accept the submission of counsel for the third defendant that such post judgment interest is not part of the judgment given on 26 November 2008 and hence is not part of the “judgment” referred to in the Order of 12 August 2009. However, I do not accept that its recoverability by the plaintiff is confined to where the plaintiff obtains a separate judgment for it.
…
… If [Landmark] can sell, and obtain payment for, the plant and equipment before settlement on the land sales, it is entitled to receive this money... What it is likely to mean in practice is that the plaintiff will get partial satisfaction of its judgment through the Order of 12 August 2009 and then when the settlements on the land sales do occur it will received [sic] amounts which, when taken with the other amounts previously received, will exceed the amount of the judgment. At that point the plaintiff will then be required to account to the third defendant for any surplus recovered by it. If necessary this Court will adjudicate upon that account and determine any amount properly refundable. Doubtless in that account the plaintiff will claim a debit to the third defendant for the post judgment interest. It is certainly arguable that it is entitled to have this debt brought into account on the taking such an account, but I need not now finally determine the point.[27]
[27] At [10]-[11].
Master Lunn proceeded to exercise his discretion against the grant of a stay because Ms Tiver would suffer no hardship if a stay were not granted. Master Lunn did not decide the issue which arises in the present case.
In Leadenhall Australia Pty Ltd v Doman[28] Leadenhall had procured the issue of investigations summonses against the Domans in respect of the judgment the subject of this appeal. The Domans applied to set aside the summonses on the grounds of lack of utility because all of the Domans’ assets had vested in their bankruptcy trustees and in any event the summonses were impermissibly broad. Master Keith upheld those two grounds and decided to set aside the summonses.
[28] [2018] SADC 123.
Master Keith went on to consider an alternative contention by the Domans that the statutory right to examine them under section 5 of the Enforcement Act was confined to their means to satisfy the original judgment and did not extend to post-judgment interest. Master Keith upheld that contention but it was unnecessary for his decision given that he had already decided to set aside the summonses on other grounds. On this appeal, the parties have reversed their positions and now make opposite contentions to their contentions put to Master Keith. However, it is not suggested that Master Keith’s decision gives rise to an issue estoppel.
Master Keith referred to some of the cases referred to above. He also referred to the judgment of Master Lunn in Landmark Operations Limited v J Tiver Nominees Pty Ltd (No 3)[29] but proceeded on the misunderstanding that Master Lunn had decided the point in question. The reasoning of Master Keith is not persuasive as to the proper construction of section 40 of the District Court Act or the relevant provisions of the Enforcement Act.
[29] See for example Anderson Formrite Pty Ltd v CASC Hire Pty Ltd [2005] FCA 1424, (2005) 147 FCR 379 at [63] per Siopsis J; In the matter of Colour Metal Pty Ltd [2021] NSWSC 1012 at [37] per Leeming JA.
The cases cited by the parties do not change the conclusion reached above based on the text, context and evident purpose of the relevant statutory provisions; that is, post-judgment interest augments the District Court judgment debt and is enforceable under the Enforcement Act, and that the Magistrates Court does not have jurisdiction to entertain or grant judgment on a claim for post-judgment interest in respect of the District Court judgment debt.
It follows that the Domans’ alternative contention is established. Leadenhall was not entitled to summary judgment on its claim in the Magistrates Court. On the contrary, the Magistrates Court lacked jurisdiction to entertain the action.
Legislative regime: bankruptcy
The Bankruptcy Act
Section 43 of the Act vests jurisdiction in the Federal Court and the Federal Circuit and Family Court of Australia, on presentation of a creditor’s petition, to make a sequestration order against the estate of a debtor, which results in the debtor becoming a bankrupt. Section 55 empowers a debtor to present a debtor’s petition to the Official Receiver which, upon acceptance, results in the debtor becoming a bankrupt.
Upon a debtor becoming a bankrupt, under sections 156A and 160, a registered trustee who has consented to act as trustee of the debtor, or otherwise the Official Trustee, becomes the trustee of the estate of the bankrupt (the bankruptcy trustee).
Section 58 vests, subject to the Act, existing property and after-acquired property of the bankrupt in the bankruptcy trustee. Subsections 58(1), 58(2) and 58(6) relevantly provide:
58 Vesting of property upon bankruptcy—general rule
(1)Subject to this Act, where a debtor becomes a bankrupt:
(a) the property of the bankrupt, not being after‑acquired property, vests forthwith in the Official Trustee or, if, at the time when the debtor becomes a bankrupt, a registered trustee becomes the trustee of the estate of the bankrupt by virtue of section 156A, in that registered trustee; and
(b) after‑acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee.
…
(2)Where a law of the Commonwealth or of a State or Territory requires the transmission of property to be registered and enables the trustee of the estate of a bankrupt to be registered as the owner of any such property that is part of the property of the bankrupt, that property, notwithstanding that it vests in equity in the trustee by virtue of this section, does not so vest at law until the requirements of that law have been complied with.
…
(6)In this section, after‑acquired property, in relation to a bankrupt, means property that is acquired by, or devolves on, the bankrupt on or after the date of the bankruptcy, being property that is divisible amongst the creditors of the bankrupt.
Part VI provides for the collection and realisation by the trustee of the property of, and contributions from, the bankrupt; the proof of debts by creditors; and distributions to creditors.
Section 116 identifies property that is divisible amongst the creditors of the bankrupt. Its principal provision is section 116(1)(a), which provides:
116 Property divisible among creditors
(1)Subject to this Act:
(a) all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and
…
is property divisible amongst the creditors of the bankrupt.
Section 82 identifies debts and liabilities that are provable in a bankruptcy. It relevantly provides:
82 Debts provable in bankruptcy
(1)Subject to this Division, all debts and liabilities, present or future, certain or contingent, to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his or her discharge by reason of an obligation incurred before the date of the bankruptcy, are provable in his or her bankruptcy.
…
(2)Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy.
(3)Penalties or fines imposed by a court in respect of an offence against a law, whether a law of the Commonwealth or not, are not provable in bankruptcy.
(3AA)An amount payable under an order made under section 1317G of the Corporations Act 2001 is not provable in bankruptcy.
(3AB)A debt incurred under any of the following is not provable in bankruptcy:
(a)Part 4‑1 of the Higher Education Support Act 2003 (HELP debts);
(aaa)Part 3A of the VET Student Loans Act 2016 (VETSL debts);
(aa)Part 2AA.3 of the Social Security Act 1991 (student start‑up loan debts);
(ab) Division 3 or 4 of Part 2 of the Student Assistance Act 1973 (ABSTUDY student start‑up loan debts);
(b) Part 3.1 of the Australian Apprenticeship Support Loans Act 2014 (Australian apprenticeship support loan debts).
(3A)An amount payable under an order made under a proceeds of crime law is not provable in bankruptcy.
(3B)A debt is not provable in a bankruptcy in so far as the debt consists of interest accruing, in respect of a period commencing on or after the date of the bankruptcy, on a debt that is provable in the bankruptcy.
(4)The trustee shall make an estimate of the value of a debt or liability provable in the bankruptcy which, by reason of its being subject to a contingency, or for any other reason, does not bear a certain value.
(5)A person aggrieved by an estimate so made may appeal to the Court not later than days after the day on which the person is notified of the estimate.
(6)If the Court finds that the value of the debt or liability cannot be fairly estimated, the debt or liability shall be deemed not to be provable in the bankruptcy.
(7)If the Court finds that the value of the debt or liability can be fairly estimated, the shall assess the value in such manner as it thinks proper.
(8)In this section, liability includes:
(a)compensation for work or labour done;
(b) an obligation or possible obligation to pay money or money’s worth on the breach of an express or implied covenant, contract, agreement or undertaking, whether or not the breach occurs, is likely to occur or is capable of occurring, before the discharge of the bankrupt; and
(c) an express or implied engagement, agreement or undertaking, to pay, or capable of resulting in the payment of, money or money’s worth, whether the payment is:
(i)in respect of amount—fixed or unliquidated;
(ii)in respect of time—present or future, or certain or dependent on a contingency; or
(iii)in respect of the manner of valuation—capable of being ascertained by fixed rules or only as matter of opinion.
Subsection 5(1) defines a provable debt to mean “a debt or liability that is, under this Act, provable in bankruptcy”.
Section 84 provides for the lodgement of proofs of debts. Subsections 84(1) and 84(2) provide:
84 Manner of proving debts
(1)Subject to this Division, a creditor who desires to prove a debt in a bankruptcy shall lodge, or cause to be lodged, with the trustee a proof of debt in accordance with this section.
(2)A proof of debt:
(a)shall set out particulars of the debt;
(b)shall be in accordance with the approved form;
(c)shall specify the vouchers, if any, by which the debt can be substantiated; and
(d)shall state whether or not the creditor is a secured creditor.
Section 102 provides for the trustee to admit or reject proofs of debt (subject to a right of appeal under section 104). Subsection 102(1) provides:
102 Admission or rejection of proofs
(1)The trustee shall examine each proof of debt and the grounds of the debt sought to be proved and, subject to the power of the Court to extend the time, shall, not later than 14 days after the expiration of the period specified in the notice of intention to declare a dividend as the period within which creditors may lodge their proofs of debt, either:
(a)admit the proof of debt in whole;
(b)admit it in part and reject it in part;
(c)reject it in whole; or
(d)require further evidence in support of it.
Section 108 provides a default position that (subject to priorities prescribed by section 109 and any other provisions of the Act) all proved debts rank equally and in the event of a deficiency are to be paid proportionately. It provides:
108 Debts proved to rank equally except as otherwise provided
Except as otherwise provided by this Act, all debts proved in a bankruptcy rank equally and, if the proceeds of the property of the bankrupt are insufficient to meet them in full, they shall be paid proportionately.
Note: The rules under this Subdivision for payments of debts can be affected by proceeds of crime orders and applications for proceeds of crime orders: see Subdivision B.
Section 109 provides that nine classes of debts or liabilities are to be paid in priority to other payments.
Section 89 applies to a secured debt consisting partly of principal and partly of interest and provides a rule for pro rata apportionment of payments to those components of the debt. It provides:
89 Apportionment where security realized before or after bankruptcy
(1)Where a debt that consisted partly of principal and partly of interest was secured and the security has been realized before the debtor became a bankrupt, the proceeds of the realization shall, for the purposes of this Act but not otherwise, notwithstanding any agreement to the contrary, be deemed to have been apportioned in satisfaction of principal and interest in the proportion that the principal bore, at the time of the realization, to the amount then payable as interest at the agreed rate.
(2)Where a debt that consists partly of principal and partly of interest is secured and the security is realized after the debtor became a bankrupt or the value of the security is estimated in the creditor’s proof of debt, the amount realized or estimated shall, for the purposes of this Act but not otherwise and notwithstanding any agreement to the contrary, be deemed to have been apportioned in satisfaction of principal and interest in the proportion that the principal bears to the amount payable as interest at the agreed rate.
Section 58 precludes the institution or prosecution of a legal proceeding against, or enforcement of a remedy against the personal property of, the bankrupt in respect of a provable debt. Subsections 58(3) to 58(5A) provide:
(3)Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a)     to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b)     except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
(4)After a debtor has become a bankrupt, distress for rent shall not be levied or proceeded with against the property of the bankrupt, whether or not the bankrupt is a tenant of the landlord by whom the distress is sought to be levied.
(5)Nothing in this section affects the right of a secured creditor to realize or otherwise deal with his or her security.
(5A)Nothing in this section shall be taken to prevent a creditor from enforcing any remedy against a bankrupt, or against any property of a bankrupt that is not vested in the trustee of the bankrupt, in respect of any liability of the bankrupt under:
(a)     a maintenance agreement; or
(b)     a maintenance order;
whether entered into or made, as the case may be, before or after the commencement of this subsection.
Sections 149 to 149Q provide for automatic discharge and court ordered discharge from bankruptcy.
Subsection 153(1) provides:
(1)Subject to this section, where a bankrupt is discharged from a bankruptcy, the discharge operates to release him or her from all debts (including secured debts) provable in the bankruptcy, whether or not, in the case of a secured debt, the secured creditor has surrendered his or her security for the benefit of creditors generally.
None of the qualifications in the other subsections of section 153 to the scope of a discharge are applicable in the present case.
Section 153A provides for annulment of a bankruptcy. Subsections 153A(1), (1A) and (6) provide:
153A Annulment on payment of debts
(1)If the trustee is satisfied that all the bankrupt’s debts have been paid in full, the bankruptcy is annulled, by force of this subsection, on the date on which the last such payment was made.
(1A)In determining whether there has been full payment of a debt that bears interest, the interest must be reckoned up to and including the date on which the debt (including interest) is paid.
…
(6)In this section:
bankrupt’s debts means all debts that have been proved in the bankruptcy and includes interest payable on such of those debts as bear interest, and the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee.
Predecessor legislation
The Domans and the appeal Judge relied, in the construction of the Act, on the history of bankruptcy legislation before the enactment of the Act.
English legislation
An Act against such Persons as do make Bankrupt 34 & 35 Henry VIII c 4 (Eng & Wales) (the 1542 English statute) was enacted in 1542. It is generally regarded as the origin of bankruptcy and of bankruptcy legislation.[30]
[30] WS Holdsworth, A History of English Law vol 8, p 236; Bromley v Goodere (1743) 1 Atk 75 (26 CR 49) at 77; Page v Commonwealth Life Assurance Society Ltd (1935) 36 SR(NSW) 85 at 89 per Jordan CJ (with whom Bavan J agreed).
I refer to “bankruptcy” as an institution in which control (and usually ownership) of property of the subject (the bankrupt) is taken by a third party for the purpose of realisation and payment to creditors of the bankrupt collectively and (from 1705) the bankrupt is or may be released from debts or liabilities. I do not encompass imprisonment for debt, which both pre-dated (at common law and under statute) and post-dated 1542.
The preamble of the 1542 English statute referred to diverse and sundry persons who fled to parts unknown or kept their houses not minding to pay their creditors their debts. It was not limited to English or Welsh subjects or to traders (contrast the 1571 English statute referred to below).
The statute empowered the Lord Chancellor, Keeper of the Great Seal and other named officials, on complaint by a creditor, to take and sell real and personal property of the “offender”. They were empowered to pay the proceeds to:
… every of the said creditors a portion rate and rate-like according to the quantity of his or their debts.
The statute did not further describe or define the debts of creditors. It did not exempt interest (pre- or post-bankruptcy) from the debts to be paid pro rata.
The statute expressly provided that, if creditors were not fully satisfied and paid for their debts, they could pursue the debtor for the balance as if the Act had not been enacted.
An Act touching Orders for Bankrupt 13 Elizabeth I c 7 (Eng & Wales) (the 1571 English statute) was enacted in 1571. Section I provided that merchant subjects who fled, kept house or committed certain other acts to defraud or hinder creditors were deemed and taken for a Bankrupt.
Section II empowered the Lord Chancellor or Lord Keeper of the Great Seal, on complaint by a creditor, to appoint Commissioners who were empowered to take and sell real and personal property of the bankrupt. The Commissioners were empowered to pay the proceeds to:
…every of the said creditors a portion, rate and rate like, according to the quantity of his or their debts.
Like the 1542 statute, the 1571 statute did not further describe or define the debts of creditors.
Section IV required the Commissioners, on request by the bankrupt, to provide an account of receipts and payments and to make payment of the overplus, if any such shall be, to the bankrupt.
Section X provided that, if creditors of such offenders were not fully satisfied and paid for their debts, they could pursue the debtor for the balance as if the Act had not been enacted.

The evident reason for the release effected by section 153 not extending to the other exclusions contained in subsections 82(2) to 82(3A) is that the bankrupt should not in principle be released from debts of that character (criminal penalties,[123] certain pecuniary penalty orders,[124] student/apprenticeship government loans[125] or unliquidated damages demands subject to the proviso[126]). This reason does not apply to bankruptcy-period interest. On the contrary, the general purpose of the Act is to enable the bankrupt to make a clean start subject only to liabilities that should not as a matter of principle be released.
[123] Bankruptcy Act 1966 (Cth) subsection 82(3).
[124] Bankruptcy Act 1966 (Cth) subsection 82 (3AA).
[125] Bankruptcy Act 1966 (Cth) subsection 82(3AB).
[126] Bankruptcy Act 1966 (Cth) subsection 82(2). This exemption was historically implied by the courts.
On Leadenhall’s construction, bankruptcy-period interest over a three year bankruptcy might well equal the principal owing at the commencement of the bankruptcy. For example, a credit card debt with interest at 24 per cent per annum compounding monthly would accrue interest in excess of the principal over three years. If the debtor again became bankrupt at the end of three years and so on, the debtor could be in perpetual bankruptcy if their earnings were not sufficient to make contributions to their bankruptcy trustee.
It is true that the debtor in this situation could become bankrupt a second time during the currency of the original bankruptcy, in which case the bankruptcy-period interest would be lower and would diminish further with successive early bankruptcies. However, it is an unlikely intention to impute to the legislature that there be successive bankruptcies resulting from bankruptcy-period interest being excluded from the release effected by section 153.
Contextual considerations include legislative history. There are two aspects of the legislative history that support the Domans’ construction. First, as outlined at [278] and following above, prior to the 1987 amendments, the regime under the Act (and under its antecedents since at least 1825) was that bankruptcy-period interest was not payable at first instance but was payable in the event of a surplus after payment of proved debts and bankruptcy administration costs (a prima facie surplus) and was encompassed in the release effected by section 153 (and its antecedents). This was a rational regime that was in accordance with the purposes of the Act. It is an unlikely intention to impute to the legislature that the regime be changed to produce an irrational result not in accordance with the purposes of the Act.
Secondly, when the Act was amended in 1987 to introduce subsection 82(3B), section 148 provided explicitly that, in the event of a prima facie surplus, bankruptcy-period interest was payable and the bankrupt was only entitled to any surplus still remaining. This explicitly subordinated bankruptcy-period interest to other debts and liabilities arising from obligations incurred before bankruptcy but provided for its payment in the event otherwise of a surplus. It would have been anomalous in and after 1987 (until section 148 was repealed in 1992) if a creditor was given both the right to share in the proceeds of the property divisible in bankruptcy (albeit contingent because subordinated) and a right to proceed against the bankrupt outside the bankruptcy.
In 1992, as summarised at [230] and following above, substantial amendments were made to Part VII. They included the repeal of section 148 and the insertion of a new section 153A which automatically annulled a bankruptcy of its own force if the trustee was satisfied that all of the bankrupt’s debts (including bankruptcy-period interest) had been paid in full.
The repeal of section 148 left the Act silent as to two matters. First, what was the source of power for the bankruptcy trustee to make payments out (to bankruptcy-period interest creditors and the remaining surplus to the bankrupt) in the event of a prima facie surplus and what were the mechanisms for the trustee to determine to whom bankruptcy-period interest was payable and in what amounts? Secondly, what was the trustee to do in the event of a prima facie surplus sufficient to pay some but not all bankruptcy-period interest?
As to the first matter, section 148 had previously expressly empowered the trustee to make payments out in the event of a prima facie surplus. Given the existence of new section 153A, it must necessarily be implied that the trustee has power to pay out bankruptcy-period interest to creditors with interest-bearing debts. Further, it must be implied that the trustee is to adopt a mechanism to determine to whom bankruptcy-period interest is payable and in what amounts. Part VI contains a detailed regime for the lodgement and admission or rejection of proofs of debt. It might be implied that the trustee is empowered to adopt a regime of the trustee’s devising provided that it is reasonably adapted to its purpose. Alternatively, it might be implied that the trustee is to adopt the same regime under Part VII as applies under Part VI. Either way, both the power to determine bankruptcy-period interest and the power to pay it out and to pay the remaining surplus to the bankrupt must be implied.
As to the second matter, in the absence of a provision formerly contained in the Act until 1992 (such as section 148), an implication must arise from the Act as to how a trustee is to deal with a prima facie surplus. Self-evidently, the trustee cannot retain the surplus for themselves.
There are only two possible rational implications. First, the trustee is to pay the prima facie surplus in partial satisfaction of bankruptcy-period interest. Secondly, the trustee is to pay the prima facie surplus to the bankrupt. Either way, the requirement to pay the prima facie surplus must be implied.
If the latter implication is drawn, it entails that the trustee is required to go through the process of calling for details of bankruptcy-period interest from creditors and determining the amount of bankruptcy-period interest payable to them but, if it transpires that the prima facie surplus is insufficient to pay all bankruptcy-period interest (a partial surplus), the trustee is to pay no such interest but rather pay the prima facie surplus to the bankrupt. This is an unlikely construction.
It is much more rational that a consistent approach is adopted in the event of a prima facie surplus, namely it is used in either event to pay bankruptcy-period interest. If that is insufficient to pay in full, the bankrupt will be discharged from bankruptcy under section 153. If that is sufficient to pay in full (a complete surplus), the remaining balance will be paid to the bankrupt and the bankruptcy will be annulled pursuant to section 153A.
It might be argued that the legislature must have intended to change the effect of the law by repealing section 148. However, on any view the repeal left a lacuna in the event of a partial surplus. The legislature addressed a complete surplus but did not address a partial surplus. This circumstance negates any implied intention to change the effect of the law. On the contrary, there is no rational reason for the legislature to have changed the effect of the law in this respect.
As observed above, it is permissible at common law to have regard unconditionally to explanatory memoranda for the purpose of identifying the mischief intended to be addressed by and the purpose of a legislative provision.
Clause 26.1 (addressing repeal of section 148) and clause 29.7 (addressing insertion of new section 154) of the explanatory memorandum presented to Parliament by the Minister during the Minister’s second reading speech in respect of the Bill that became the 1992 Amending Act relevantly contained the following passage:
26.1 Subsection 148(1) of the Act provides that where the debts of the bankrupt, including interest on interest-bearing debts, and the costs, charges and expenses of the administration, including the expenses and remuneration of the trustee have been paid in full, the bankrupt is entitled to whatever property or money remains. The Bill proposes the amendment of the Act so that where the bankruptcy is paid out, it will be automatically annulled, and surplus property will revert automatically to the former bankrupt. This will be provided for in new section 154 proposed to be inserted by clause 29 of the Bill…
…
29.7 As with existing subsection 154(2), proposed new section 154 is a validating provision, in relation to acts and things done since the date of bankruptcy, up to the annulment of the bankruptcy… The trustee may apply the property of the bankrupt which is still vested in the trustee in payment of the costs, charges and expenses of the administration of the bankruptcy and the remuneration and expenses of the trustee (proposed paragraph 154(1)(b)). Where there remains property of the bankrupt still vested in the trustee, that property will revert to the former bankrupt (proposed paragraph 154(1)(c)).[127]
[127] Explanatory Memorandum, Bankruptcy Amendment Bill 1991 (Cth).
The explanatory memorandum confirms what appears from the Act and the 1992 Amending Act itself, that the purpose of the repeal of section 148 and insertion of new section 153A was to provide for annulment in the case of a complete surplus. That purpose did not include addressing the case of a partial surplus.
This conclusion is supported by the decision in Mansfield J Re Scott[128] referred to at [391] below.
[128] [2006] FCA 718.
On the proper construction of the Act since 1992, the implication that must necessarily be drawn is the former implication referred to at [361] above, namely that in the event of a prima facie surplus, the trustee is to pay in partial satisfaction of bankruptcy-period interest.
I note that, if Leadenhall’s contention that bankruptcy-period interest is payable out of a prima facie surplus due to operation of an equitable principle is rejected (as it has been), it is common ground that an implication arises from the Act that in the event of a prima facie surplus, the trustee is to pay the prima facie surplus in partial satisfaction of bankruptcy-period interest.
The fact that, at the time of and since the 1987 Amending Act that inserted subsection 82(3B), the Act provided explicitly and since 1992 implicitly that bankruptcy-period interest is to be paid in the event of a prima facie surplus supports the Domans’ construction for the reasons given above.
Pausing at this point before considering whether regard should be had to the explanatory memorandum in respect of the Bill that became the 1987 Amending Act, textual considerations considered in isolation in respect of subsections 58(3B) and 153(1) leave ambiguous the construction of the provisions. However, contextual and purposive considerations support the Domans’ construction. Considered overall, the Domans’ construction is the preferable construction.
It is permissible to have regard to the explanatory memorandum at common law to identify the mischief intended to be addressed by and the purpose of a legislative provision.
Clause 235 of the explanatory memorandum presented to Parliament during the Minister’s second reading speech in respect of the Bill that became the 1987 Amending Act relevantly contained the following passage:
Section 82 provides that all debts are provable in bankruptcy subject to certain exceptions specified in the section and elsewhere in Division 1 of Part VI of the Act. Subclause 39(1) proposes the insertion of a new subsection 82(3B) which in fact states an existing principle of law enunciated by the High Court in Mackenzie v Rees (1941) 65 C.L.R. 1. That principle is that a creditor cannot prove for interest on an interest bearing debt for any period subsequent to the bankruptcy. It is proposed to insert the principle into the Act because creditors preparing proofs of debt are frequently unaware of the requirement to exclude post-bankruptcy interest. A clear statement of the principle in the Act will assist creditors in an understanding of the principles to be observed in preparing a proof of debt.[129]
[129] Explanatory Memorandum, Bankruptcy Amendment Bill 1987 (Cth).
This passage identifies the mischief to be addressed by the insertion of subsection (3B) that creditors were unaware of the existing principle of law enunciated by the High Court in Mackenzie v Rees[130] and in consequence were mistakenly including bankruptcy-period interest in their proofs of debt. The corresponding purpose was to confirm the existing principle of law and make creditors aware that they should not include bankruptcy-period interest in their proofs of debt.
[130] (1941) 65 CLR 1.
This passage supports the Domans’ construction that the amendment was confirmatory of the existing law rather than effecting a radical change to it.
It is true, as Leadenhall submits, that the explanatory memorandum referred explicitly only to that aspect of the decision in Mackenzie v Rees that bankruptcy-period interest could not be included in proofs of debt and did not refer to the aspect that it was a subordinated debt and could be claimed at a later stage in the event of a prima facie surplus and accordingly was encompassed in the release effected on discharge.
Even if use of the explanatory memorandum were limited to that first aspect of the decision in Mackenzie v Rees, it would still support the Domans’ construction that the mischief and purpose did not entail any change to the existing law. However, the component parts of the principle enunciated in Mackenzie v Rees form an integral whole and, read as a whole, the passage refers to that integrated principle and not merely one part.
I return to subsection 58(3). That subsection provides:
Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a)to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b)except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
The references in that subsection to a “provable debt” are references to the same concept of a “provable debt” that will in due course be released by the operation of section 153. The two provisions operate in harmony with each other. The purpose and effect of subsection 58(3) is to preclude a creditor during the interim bankruptcy period from enforcing a provable debt that will be released at the end of the bankruptcy period.
On the one hand, the contention by the Domans that the use of the phrase “in respect of” extends the subject matter of the moratorium effected by subsection 58(3) beyond provable debts to non-provable debts merely because they have some connection with provable debts must be rejected.
On the other hand, if subsection 153(1) refers, in the case of an interest-bearing debt, to the entire debt including bankruptcy-period interest as the provable debt released, subsection 58(3) refers to the same concept as the subject of the moratorium.
In conclusion, prima facie the references in subsections 82(2B) and 153(1) to a debt provable in bankruptcy, being a provable debt as defined, are to be given the same meaning by reason of the same meaning presumptions. However, those presumptions readily yield to context. Contextual and purposive considerations rebut the presumptions and indicate that a provable debt for the purposes of proof under Part VI does not include bankruptcy-period interest but the entire debt including bankruptcy-period interest is a provable debt for the purposes of and the subject of the release on discharge effected by section 153(1) (and consequentially the moratorium effected by subsection 58(3)).
By reason of the ambiguity referred to at [333] and following above, it cannot be said that the natural and ordinary meaning of the phrase “debt provable in bankruptcy” in subsection 82(3B) (or in subsection 153(1)) is the meaning for which Leadenhall contends. For the reasons given above, the provisions are ambiguous from a textual point of view and the ambiguity is to be resolved having regard to context and purpose in favour of the construction for which the Domans contend. Even if the natural and ordinary meaning were the meaning for which Leadenhall contends, contextual, purposive and rationality considerations indicate that the subsection should be construed in accordance with the Domans’ construction.
Having regard to textual, contextual and purposive considerations and subject to consideration of authority below, on the proper construction of subsections 82(3B), 153(1) and 58(3), bankruptcy-period interest forms part of a single provable debt for the purposes of subsections 153(1) and 58(3) notwithstanding that it cannot be included in a proof of debt pursuant to subsection 82(3B). Bankruptcy-period interest is payable out of a prima facie surplus in the bankruptcy.
Given that the explanatory memorandum can be considered at common law for the purpose of discerning mischief and purpose, it is not necessary to consider the application of section 15AB of the Interpretation Act. However, for the sake of completeness, the preconditions are established and the discretion should be exercised in favour of reference on any view. If the meaning identified at paragraph [384] above is the ordinary meaning conveyed by text, context and purpose, regard can be had to the explanatory memorandum to confirm that meaning under section 15AB(1)(a). If the meaning of the provisions in ambiguous, regard can be had to the explanatory memorandum under section 15AB(1)(b)(i). If the meaning advanced by Leadenhall is the ordinary meaning conveyed by text, context and purpose, regard can be had to the explanatory memorandum under section 15AB(1)(b)(ii). Reference to the explanatory memorandum pursuant to section 15AB would support the Domans’ construction.
Direct authorities
The parties cite four authorities on the issue of construction of the Act post the amendments effected by the 1987 and 1992 Amending Acts the subject of this appeal.
In Midland Montague Australia Ltd v Harkness[131] Equiticorp Finance Holdings Ltd and Equiticorp Finance Ltd (both in liquidation) were each severally liable to the financiers. An issue arose as the appropriation of dividends received by the financiers from the liquidator of the companies as between principal and interest. Subsection 438(2) of the Companies Code provided that, in the winding up of an insolvent company the same rules applied as under the Act in relation to bankrupts. McClelland CJ in Eq said:
[I]t seems clear to me that the rule relating to the appropriation of dividends for the purpose of payment of interest was and is the same both in equity and in bankruptcy, to the effect stated in Bower v Marris.
One of the premises upon which this rule is based is the proposition that neither bankruptcy nor winding up, as such, effects a discharge of a debtor’s liability for future interest, although each limits the means by which and the assets against which, such a liability may be enforced. That proposition, as a matter of general law, is overwhelmingly supported by the authorities from Bromley v Goodere onwards, including, in Australia, Re Paul & Gray Ltd and Mackenzie v Rees. This proposition is not affected by s 82(3B) of the Bankruptcy Act 1966, which provides… That subsection does no more than enact in statutory form a principle as to the proof of liabilities carrying interest which has been part of the general law of bankruptcy since 1729: see Mackenzie v Rees. That no change to the law was intended is confirmed by the Explanatory Memorandum presented to each House by the respective ministers moving the second reading of the Bankruptcy Amendment Bill 1987…[132]
[131] (1994) 119 FLR 374.
[132] At 388.

This authority supports the construction advanced by the Domans. As observed above, the decisions in Re Paul & Gray Ltd[133] and Mackenzie v Rees,[134] to which McClelland CJ in Eq referred, established that bankruptcy-period interest could not be included in proofs of debt at the initial stage, as it was a subordinated provable debt that could be claimed at a second stage in the event of a prima facie surplus and was encompassed in the release effected on discharge.
[133] (1933) 33 SR(NSW) 295.
[134] (1941) 65 CLR 1.
Leadenhall points to the fact that, in the second paragraph reproduced above, McClelland CJ in Eq said that bankruptcy as such does not effect “a discharge of a debtor’s liability for future interest, although [it] limits the means by which and the assets against which, such a liability may be enforced.” This is inconsistent with the Act placing no limit on enforcement against the bankrupt themself. Further, the context in which McClelland CJ in Eq immediately referred to Re Paul & Gray Ltd and Mackenzie v Rees shows that the reference to not discharging a liability for future interest was a reference to the ability of the creditor to claim against the bankrupt estate in the event of a prima facie surplus.
In Re Scott[135] Scott’s trustee paid a dividend of 100 cents in the dollar to the Commonwealth Bank, which appears to have been the only creditor. The trustee also paid the bankruptcy administration expenses, leaving a prima facie surplus of $369,210. By that stage, bankruptcy-period interest in respect of the Commonwealth Bank’s debt amounted to $671,347. Mansfield J held that the prima facie surplus was to be paid to the Commonwealth Bank towards the bankruptcy-period interest and not to Mr Scott.
[135] [2006] FCA 718 .
Mansfield J said:
Interest accruing on a debt post-bankruptcy is not itself a provable debt: s 82(3B) of the Act. That section reflects what was previously a rule of “justice and convenience”: see per Dixon J in Mackenzie v Rees. In the case of a surplus after payment to the creditors from the bankrupt estate, Mackenzie v Rees (in the passage referred to) also lays down that, if admitted debts bore interest to the bankruptcy, the creditors are also entitled to participate in the surplus by way of interest accruing on them after the bankruptcy, and before the debtor may obtain the surplus. See also Midland Montagu Australia Ltd v Harkness. McLelland CJ at 164 in that case said the proposition is ”overwhelmingly supported by the authorities”.[136]
[136] At [8]. (Citations omitted)
This authority also supports the construction advanced by the Domans. It is true, as Leadenhall points out, that Mansfield J did not refer expressly to bankruptcy-period interest being released upon discharge (and the question did not arise).
However, first, the fact that Mansfield J held that bankruptcy-period interest was payable in the bankruptcy in the event of a prima facie surplus in itself supports the Domans’ construction due to there being a natural choice between the legislation enabling a creditor to participate in the proceeds of bankruptcy as opposed to proceeding against the debtor outside bankruptcy.
Secondly, for the same reasons as in respect of the judgment of McClelland CJ in Eq in Midland Montague Australia Ltd v Harkness (to which Mansfield J also referred), the context in which Mansfield J referred to Mackenzie v Rees shows that Mansfield J was referring to the entirety of the pre-existing position as enunciated in Mackenzie v Rees not having been altered by the enactment of subsection 82(3B).
In Edwards v Stocks[137] Mr and Mrs Stocks became bankrupt on 15 December 1988 and were discharged from bankruptcy on 15 December 1991. On 30 August 1992 the Official Trustee assigned to them the right to claim damages against the Retirements Benefits Fund Board for misrepresentation in respect of a transaction before their bankruptcies. They obtained a judgment for damages against the Board and the Board in turn obtained judgment by way of indemnity against Mr Edwards and Mr Ellwood who it joined as third parties. The damages included interest of $25,000 in accordance with Hungerfords v Walker[138] principles, calculated on the financial damages assessed at $27,558.42 in respect of the period from 30 August 1992 until judgment.
[137] [2008] TASSC 12.
[138] (1989) 171 CLR 125.
Mr Edwards and Mr Ellwood appealed, amongst other things, against the interest award on the ground that any interest liability of the Stocks could not survive the expungement of their debts on bankruptcy. The Full Court of the Supreme Court of Tasmania upheld their appeal on this ground.
Crawford J (with whom Slicer J and Blow J agreed on this point) said:
The statement [by the trial Judge] that creditors had the right to prove interest at the relevant rates until payment was incorrect, and the statement that the creditors still had the right to recover interest due if there was property available for payment to the creditors, needs explanation. A creditor, upon whose debt interest is running at the time of bankruptcy, is not entitled to prove for the interest for the period after the date of bankruptcy. Bankruptcy Act, s 82(3B). However, against the bankrupt, the creditor is entitled to receive, out of any surplus of the bankrupt estate, interest for the period from the date of the bankruptcy to the payment of the provable debt before any such surplus is payable to the bankrupt. The interest is only payable out of a surplus and if there is no surplus, interest after bankruptcy cannot be claimed from the debtor. There is no suggestion of any such surplus in this case. Therefore, the respondents and their estates were not liable to pay any interest that may have fallen due after the date of the bankruptcy.[139]
[139] At [41]. (Citations omitted)
Leadenhall accepts that this decision is authority in support of the Domans’ construction and against its own construction. However, it contends that the decision is per incuriam because the Court made no reference to the decisions of the High Court in Coventry[140] and Foots.[141] In the alternative, it contends that the decision is plainly wrong.
[140] (2005) 227 CLR 234.
[141] (2007) 234 CLR 52.
I address the two decisions of the High Court relied upon by Leadenhall below. For the reasons given below, the decisions do not relevantly touch on the construction of subsections 82(3B) and 153(1) and there was no necessity for the Full Court in Edwards v Stocks to refer to them.
For the reasons given above, the decision in Edwards v Stocks is not plainly wrong. On the contrary, I consider that it is correct.
In White v Spithas[142] White sought an order for weekly payments in respect of a judgment debt on an examination summons under the Enforcement Act. Spithas had become bankrupt and the order was sought only in respect of bankruptcy-period interest. Spithas contended that the order was precluded by subsection 58(3) of the Act. Master Norman held that it was not.
[142] Unreported, District Court of South Australia, Master Norman, 27 October 2015 Decision No 54 of 2015.
Master Norman referred to the decisions in Edwards v Stocks and Coventry v Charter Pacific Corporation Limited and Foots v Southern Cross Mine Management Pty Ltd and concluded that the decision of the Tasmanian Full Court was inconsistent with those decisions of the High Court. Master Norman said:
The plaintiff is this case does not take issue with the positive proposition [in Edwards v Stocks]…
However in my view the negative proposition is, as contended by Mr Finlayson, directly at odds both with the provisions of the legislation and with the reasoning of the High Court in Coventry and Foots. With the greatest respect, the court’s finding in Edwards that interest was payable only in qualified circumstances (namely if there was a surplus in the estate) appears to be inconsistent with the legislation and the High Court’s reasoning in these cases. This court is bound by the High Court and the intention of the legislation is clear.[143]
[143] At [73]-[74]. (Citations omitted)
For the reasons given below, the decisions of the High Court relied upon by Master Norman do not relevantly touch on the construction of subsections 82(3B) and 153(1) and do not dictate the construction of those provisions in respect of bankruptcy period interest.
Coventry and Foots
In Coventry v Charter Pacific Corporation Limited[144] Coventry engaged in misleading conduct that induced Charter Pacific to enter into contracts (to which Coventry was not a party) to invest in and fund Evtech Pty Ltd. Coventry became a bankrupt and was discharged from bankruptcy. Damages for misleading conduct were awarded against him. The issue on the appeal to the High Court was whether his liability for damages was excluded as a provable debt by subsection 82(2) of the Act (“demands in the nature of unliquidated damages”) and in particular whether the proviso to that exclusion (“arising by reason of a contract, promise or breach of trust”) applied.
[144] (2005) 227 CLR 234.
The High Court held that proviso did not apply because Coventry was not a party to the contract induced by his misleading conduct; it would have applied if he had been such a party. The issue in that case involved the construction of subsection 82(2) and in particular of the proviso referring to a demand “arising by reason of a contract [or] promise”. That issue and the High Court decision is not relevant to the present appeal and Leadenhall does not suggest that it is relevant.
However, Leadenhall relies upon the passages that I have italicised for identification in the first and third paragraphs reproduced below from the judgment of Gleeson CJ, Gummow, Hayne and Callinan JJ:
If the claim for unliquidated damages made pursuant to the Corporations Law is a debt provable in that person's bankruptcy, discharge from bankruptcy operates to release that person from that claim. If it is not a debt provable in the bankruptcy, discharge from bankruptcy does not operate to release the bankrupt from the claim and, subject to any question of limitation of actions, the claim can be pursued against the former bankrupt after discharge. Moreover, s 58(3) of the Bankruptcy Act 1966 (Cth) does not prevent the claimant, during the bankruptcy, from commencing a legal proceeding in respect of the claim or enforcing any remedy against the person or the property of the bankrupt in respect of that claim. The sub‑section denies such competency to a creditor only in respect of "a provable debt".
The central question in the appeal hinges on the meaning of s 82(2) of the Bankruptcy Act 1966 and, in particular, what is meant by a demand in the nature of unliquidated damages arising otherwise than by reason of a contract or promise. That expression, used to identify an exception to the definition of debts provable in bankruptcy, has been held not to include a claim for unliquidated damages for fraudulent misrepresentation which induced the party misled to make a contract with the bankrupt (a "bilateral" case). That is, such a claim for damages has been held to be a debt provable in the bankruptcy, and a claim that was to be set off against a claim by the bankrupt estate. But a claim for unliquidated damages for fraudulent misrepresentations where the representations induced the claimant to make a contract with another (a "tripartite" case) has been held not to be a claim provable in the bankruptcy. The bankrupt having made no contract with the party who claims damages from the bankrupt, the claim for damages for fraudulent misrepresentation has been held to be a demand arising otherwise than by reason of a contract or promise.
These reasons demonstrate that a statutory claim for unliquidated damages for misleading or deceptive conduct which induced the claimant to make a contract not with the bankrupt but with a third party is not a debt provable in bankruptcy. It is a demand in the nature of unliquidated damages arising otherwise than by reason of a contract or promise. The bankrupt is not discharged from liability. The claim may be pursued by the claimant during the bankruptcy and after discharge from bankruptcy. By contrast, a claim for unliquidated damages for misleading or deceptive conduct by the bankrupt, which induced the claimant to make a contract with the bankrupt, would be a debt provable in bankruptcy.[145]
[145] At [4]-[6]. (Citations omitted)
Leadenhall contends that the passages on which it relies were not confined to the context in which the issue involved subsection 82(2) but applied to the entirety of section 82 including, in particular, subsection 82(3B).
I reject that contention. The High Court simply was not concerned with the construction, operation or effect of subsection 82(3B). It was only concerned with subsection 82(2). It was making a general statement about the general operation of section 82 and section 153. For the reasons explained above, subsection 82(3B) differs in both substance and form from both subsection 82(2) and the other subsections which create exceptions to subsection 82(1). The High Court did not purport to address, let alone decide, the issue of construction that arises on the present appeal.
In Foots v Southern Cross Mine Management Pty Ltd[146] Ensham Resources Pty Ltd obtained judgment against Foots for $2,460,000. In September 2005, Foots became bankrupt. In February 2006, Ensham obtained an order that Foots pay its costs of action on an indemnity basis. The issue on the appeal to the High Court was whether Foots’ liability for costs fell within subsection 82(1). No issue of any exceptions to the general rule in subsection 82(1) arose.
[146] (2007) 234 CLR 52.
The High Court held that Foots’ liability for costs did not fall within subsection 82(1) essentially because costs orders are discretionary and the liability therefore only arose on the making of the costs order. The issue in that case involved the construction of subsection 82(1) and in particular construction of the words “to which he or she may become subject … by reason of an obligation incurred before the date of the bankruptcy”. That issue and the High Court decision is not relevant to the present appeal and Leadenhall does not suggest that it is relevant.
However, Leadenhall relies upon the passage that I have italicised for identification in the paragraph reproduced below from the judgment of Gleeson CJ, Gummow, Hayne and Crennan JJ:
Atypically, this case does not involve an attempt by a creditor to bring its claim within s 82 so as to prove in the bankruptcy of the debtor. Rather, it is the bankrupt debtor, Mr Foots, who wishes to bring a claim against himself within the statutory definition. He does so apparently for two reasons. First, if the costs order made by the Supreme Court were a debt or liability provable in his bankruptcy within the meaning of s 82, the proceedings in which the costs order was made would have been subject to s 58(3) of the Bankruptcy Act. This requires the leave of the Federal Court or Federal Magistrates Court before a creditor takes any fresh step in such a proceeding and that leave was neither sought nor given. Conversely, if the costs order did not give rise to a provable debt, the Supreme Court was free to proceed, subject only to the requirements of Queensland procedure contained in r 72 of the Uniform Civil Procedure Rules 1999 (Q) (‘the UCPR’"). Secondly, if the costs order did produce a provable debt or liability, then Mr Foots would be free of it upon his discharge from bankruptcy. This is because the release provided by s 153 of the Bankruptcy Act releases a bankrupt from debts which were provable in the bankruptcy, but not otherwise.[147]
[147] At [3]. (Citations omitted)
Leadenhall contends that the passage on which it relies was not confined to the context in which the issue involved subsection 82(1) but applied to the entirety of section 82 including in particular subsection 82(3B).
I reject that contention. The High Court simply was not concerned with the construction, operation or effect of subsection 82(3B). It was only concerned with the construction, operation and effect of subsection 82(1). It was making a general statement about the general operation of section 82 and section 153. For the reasons explained above, the construction of subsection 82(3B) raises its own unique issues different to issues in relation to the construction of other subsections of section 82. The High Court did not purport to address, let alone decide, the issue of construction that arises on the present appeal.
Conclusion on construction issue
Having regard to the text, context and evident purpose of subsections 82(3B), 153(1) and 58(3), although by reason of subsection 82(3B) a creditor cannot prove for bankruptcy-period interest on an interest-bearing debt under Part VI, bankruptcy-period interest forms part of a single debt which is a provable debt for the purposes of subsections 153(1) and 58(3).
It follows that the institution and prosecution of a proceeding for, and enforcement of payment of, bankruptcy-period interest against the Domans was precluded by the moratorium effected by subsection 58(3) and their liability to pay bankruptcy-period interest was released on their discharge from bankruptcy.
The appeal should therefore be dismissed.
Conclusion
I would grant leave to appeal but would dismiss the appeal.
I would uphold the notice of contention.
I would hear the parties as to orders to be made for the disposition of the appeal, including whether an order should be made for the disposition of the underlying action in the Magistrates Court and in relation to costs.