Lithgow Enterprises Pty Ltd v Sparrow - [2005] FMCA 26

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LITHGOW ENTERPRISES PTY LTD v SPARROW

[2005] FMCA 26

BANKRUPTCY – Preliminary issue – application for review of registrar’s decision – whether reference to rules of Supreme Court sufficient reference to ‘provision’ for the purpose of Note 2 of Prescribed Bankruptcy Notice – whether notice is invalid for failure to refer to relevant statutory authority.

Bankruptcy Act 1966
Supreme Court Rules 1987, Rules 84.14, 84.19
Enforcement of Judgments Act 1991 (SA), s.7

Adams v Lambert (2004) FCAFC 322 (9 December 2004)
Australian Central Credit Union Ltd v Annette Marsha Laing (2001) FCA 1154 (21 August 2001).
Australian Steel (Operations) Pty Ltd v Lewis (2000) 109 FCR 33
McDowell v Fox [2002] FMCA 254
General Motors Acceptance Corporation v Marshall (2002) FCA 1006

Applicant:

LITHGOW ENTERPRISES PTY LTD (ACN 080 275 136)

Respondent:

ROBYN JESSICA MARGARET SPARROW

File No:

ADG142 of 2003

Delivered on:

18 January 2005

Delivered at:

Adelaide

Hearing Date:

17 January 2005

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Mr M Sykes

Solicitors for the Applicant:

Sykes Bidstrup

Counsel for the Respondent:

Ms H Pertsinidis

Solicitors for the Respondent:

Andersons Solicitors

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
ADELAIDE

ADG142 of 2003

LITHGOW ENTERPRISES PTY LTD (ACN 080 275 136)

Applicant

And

ROBYN JESSICA MARGARET SPARROW

Respondent

REASONS FOR JUDGMENT

This is an application for review of a decision of a Registrar made on 12 October 2003 whereby the Registrar had dismissed a creditor’s petition and made no order as to costs.
The application for review filed on 28 November 2003 had previously been heard by a differently constituted Court on 9 March 2004. Due to illness of that presiding Federal Magistrate I have been directed by the Chief Federal Magistrate to re-hear the application for review.
Although the application for review of a creditors petition is a hearing de novo, it was made clear both in the written submissions previously relied upon by the parties and transcript of the previous hearing that a narrow issue had been the focus of attention. The narrow issue relates to the question of whether there has been a failure to correctly identify the relevant provision concerning interest and whether that amounts to a fatal defect in the Bankruptcy Notice relied upon by the petitioning creditor. In the circumstances I indicated to the parties that it is desirable for a decision to be made on this matter which I regard as a preliminary issue. Given the application for review is a hearing de novo, then in the event that I decide that the Registrar was incorrect on this issue then I should give both parties the opportunity to be further heard on any other issues concerning the Bankruptcy Notice and the petition which were previously agitated in written submissions before the Registrar and the subject of the affidavit material. Obviously updated material would need to be provided by the petitioning creditor in any event to comply with the provisions of the Bankruptcy Act 1966

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Lithgow Enterprises Pty Ltd v Sparrow

Details

AGLC: Lithgow Enterprises Pty Ltd v Sparrow [2005] FMCA 26
Case: [2005] FMCA 26
Decision Date: 18 January 2005

CaseChat Overview and Summary

Lithgow Enterprises Pty Ltd was the plaintiff in a case against Sparrow, who was the defendant. The dispute involved the calculation of interest on a judgment debt under the Supreme Court Rules 1987 (SA). Specifically, the plaintiff sought interest on a judgment debt at a rate not prescribed by statute, rule, or the judgment itself, as per Rule 84.19 of the Supreme Court Rules 1987 (SA). The court was tasked with determining the appropriate interest rate to be applied to the judgment debt in accordance with the Supreme Court Act 1935 (SA).

The primary legal issue before the court was whether the Full Court of the Federal Court’s decision in Adams v Lambert could be distinguished or disapproved, particularly in light of the earlier decision in Australian Steel (Operations) Pty Ltd v Lewis. Both cases dealt with errors in bankruptcy notices, but the court had to discern whether these errors invalidated the notices and whether the correct interest rate should be applied as prescribed by statute or rule. The court also needed to consider whether the error in the interest claim in the present case should be treated similarly to the error in Australian Steel.

The court examined the reasoning behind the decisions in Adams and Australian Steel, noting the Full Court's invitation to distinguish or disapprove the majority decision in Australian Steel. The court highlighted that the error in the bankruptcy notices in both Adams and Australian Steel related to the misdescription of the statutory provision for post-judgment interest, which led to the invalidation of the notices. The court concluded that the decisions in Adams and Australian Steel were not distinguishable and correctly applied, affirming that the errors in the bankruptcy notices indeed invalidated them. Consequently, the court held that the interest on the judgment debt should be calculated at the rate prescribed by statute or rule, as per Rule 84.19 of the Supreme Court Rules 1987 (SA).

As a result of the court's decision, it was ordered that the interest on the judgment debt should be calculated at the prescribed rate, as outlined in the relevant statutes and rules. The court's ruling provided clarity on the application of interest rates on judgment debts in similar cases, ensuring consistency with the established legal principles regarding bankruptcy notices and interest claims.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

It is useful to set out Rule 84.19 of the Supreme Court Rules 1987 (SA) which provides as follows:-“Interest on judgments84.19A judgment debt shall carry interest at such rate as is prescribed by any Statute or Rule or by the judgment of the Court. If no rate is prescribed the rate shall be set out in the third schedule.” It is also appropriate to set out s.114(1) of the Supreme Court Act 1935 (SA) (the Supreme Court Act) which provides that:-“(1)All money, including costs, payable under any judgment or order shall bear interest at the rate from time to time prescribes by the rules of the court.” Both parties were given the opportunity to present any further submissions considered appropriate in this matter since the date of the hearing in March 2004. Both brought to the attention of the Court the decision of the Full Court of the Federal Court of Australia in Adams v Lambert (2004) FCAFC 322 (9 December 2004) (Adams). Counsel for the petitioning creditor also drew to the Court’s attention a decision which had been forwarded to the Court as previously constituted namely the decision of Mansfield J in Australian Central Credit Union Ltd v Annette Marsha Laing (2001) FCA 1154 (21 August 2001). It is to be noted that the Full Court of the Federal Court in Adams was invited according to the Court to distinguish or else to disapprove the decision of the third judge majority of the five member bench of the Federal Court in Australian Steel (Operations) Pty Ltd v Lewis (2000) 109 FCR 33 (Australian Steel). It is useful to set out the reasons for judgment in the Adams decision of the Full Court of the Federal Court the following paragraphs:“1.The grounds of appeal in these two matters which have been heard together are scarcely arguable in this Court, though not so in another place. They invite us contrivedly to distinguish, or else to disapprove, the decision of the three judge majority of a five member bench of this Court in Australian Steel Co (Operations) Pty Ltd v Lewis (2000) 109 FCR 33. The Court in that case was constituted to provide an authoritative determination on a question upon which divergent opinions have been expressed in earlier Full Court decisions. That question related to when an error in, or omission from, a bankruptcy notice could be said to relate to a matter that was an essential requirement of a bankruptcy notice such that the error or omission would invalidate the notice.2.In these appeals, as in Australian Steel, the bankruptcy notices upon which the appellant grounds his respective creditor’s petitions suffer from the identical vice of misdescribing the provision under which the specified amount of post-judgment interest was claimed. Here the error lay in ascribing the interest claim to s.83A of the District Court Act 1974 (NSW) (which dealt with pre-judgment interest), rather than to s.85 of that Act (which dealt with post-judgment interest). In Australian Steel the error was that the claim was made under the wrong Act. Both in that case and in the present case, there was no error in the actual amount claimed.3.The majority in Australian Steel held that the error so made invalidated the bankruptcy notice with the consequence that the creditor’s petition founded on the debtor’s non-compliance with that notice had to be dismissed. In the present matter Gyles J considered himself obliged to follow Australian Steel, notwithstanding his distaste for the effect of the majority decision. His Honour held invalid the two bankruptcy notices.4.The two issues this appeal raises, as already noted, are (i) is Australian Steel properly distinguishable? And (ii) was it incorrectly decided?”

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.