Re: Clubb

[1988] FCA 867

IN THE FEDERAL COURT	OF AUSTRALIA	1 1
GENER?iG DIVISION	1

No. B 1517 of 1987

BANKRUPTCY	DISTRICT	THE	IN	1
1

STATE OF NEW SOUTH WALES AND THE 1 1

AUSTRALIAN CAPITAL TERRITORY 1

Re

- A N D R E W GEORGE C L W B

Debtor

Ex parte WESTPAC BANKING CORPORATION

Respondent

CORAM: Einfeld J.

- DATE: 29 March 1988

PLACE: Sydney

EX-TEMPORE .llJEGMENT

This is an application by the debtor to set aside a bankruptcy notice

dated 11 January 1987. A notice under section 41 (5) of the Bankruptcy

Act 1966 (the Act) dated 22 February 1988 was provided to the creditor

disputing the validity of the bankruptcy notice on the ground of

misstatement of the sum specified in the notice, especially as	regards
the.amount of interest.	On one view of the notice, it was said that the
amount of interest claimed exceeded	the amount in fact due by an agreed

l	amount of $172.86.
!
i	I say that this is on one view of the matter, because the actual notice
j
!	claims interest from 3 May 1987 to 30 November 1987, even though the

judgment on which the bankruptcy notice is based was actually dated 3

May 1985. I understand that the agreement between the parties that $172.86 is the relevant excess assumes that the date, 3 May 1987,should in fact have read 3 May 1985. The total amount claimed to be due under the bankruptcy notice is $623,217.73. of which some $195.279.44 was said to be the interest. It is this latter sum which is said to claim $172.86 too much.

Four submissions are made on behalf of the applicant.

1. In the light of section 41 ( 5 ) and the notice provided to the

creditor thereunder, and in the light of the concession of the excess claim for interest, the bankruptcy notice is, as a matter of law, invalid.

1	2.	That the inclusion of the date, 3 May 1987, to which I have
already referred, renders the bankruptcy notice perplexing and
misleading to the debtor, in that if the date is right, the
amount claimed for interest is hopelessly wrong; but, if the
date is wrong, then it is not clear what date is the commencing

date of the claim for interest.

3. That in claiming that the interest should be "calculated at the

rates prescribed in the Supreme Court Rules", what in fact is

being said is that the rate of interest is variable in

accordance with those rules and is not a fixed rate. Therefore,

it is said that the bankruptcy notice is unclear, vague and

misleading because it does not tell the	bankrupt how and at what
rates from time to time the	interest is calculated.

4 .        That in any event, the variations in the Supreme Court Rules concerning interest (Part 4 0 rule 7). are not retrospective and that, in fact, the interest should have been calculated at the

rate applicable at the time of the judgment and at no other

rate.

Because of the view which I have formed in relation to the	first of
those submissions,	it is not necessary for me to rule on the other
three. Eowever.
I will say in relation to the second	submission, that the respondent's

answer, namely, that this error of date is a matter of formal concern or

is an irregularity which is curable by the exercise of powers under

section 306 of the Act is, in my opinion, not to be upheld. I am not of

the view that a date of that kind can be regarded as a formal or

irregular act within the meaning	of that section, and if the	case were
to	turn on that matter, I would be inclined to find in favour of	the

applicant.

However, in my opinion, the bankruputcy notice is invalid on the grounds

that it has charged an excessive amount of interest that could	not under
any circumstances be regarded as being dealt with by the	principle of

'de minimis non curat lex', and therefore is fatal to the notice. It

has been held over and over again in the courts that bankruptcy notices

and the rules applicable to them are to be construed strictly. (See

Crow1 v Kleinwort Benson Australia Ltd (1987) 74 ALR	l48 and James v
Federal Commissioner of Taxation (1955) 93	CLR 631).
There is ample authority such	as Re Greenhill; ex parte Myer (NSW) Ltd
(1984 -5) 5 FCR 84 and Re Willi'ams; ex parte Alberton Electrical	Service

Pty Ltd (1982) 43 ALR 552, which were mentioned in argument, that the

charging of excess interest in a bankruptcy notice is fatal to the

notice. I see no reason why those authorities should not be applicable

in this case as well. It was submitted, on behalf of the respondent,

that because of some observations of Mr Justice Lockhart in Re Manion;

ex parte Deputy Commissioner of Taxation (1978-79) 23 ALR 270 at 273,

line 40, I should read section 41(5), when it speaks of "the sum

specified in the notice as the amount due to the creditor", as referring

to the principal and	not interest.
I am not disposed to read down the section in that	way, and I have been

referred to no authority which suggests that I should do so. More importantly, however, in this particular case, the bankruptcy notice says that "a total of $623,217.73 and no more" was due by the debtor.

Expressly included in that sum is the alleged	but	excessive claim for
interest.

In those circumstances, whatever be the meaning of section 41(5),

nothing that fell from Justice Lockhart in the case to which I have

referred, could rewrite the bankruptcy notice which the respondent has expressly chosen to serve on the debtor. and the words contained in it. It was argued that by the time of the bankruptcy notice itself, the

amount of interest claimed was in fact less than would have been due if

the bankruptcy notice had claimed interest, as it was entitled to do, up

to the date of its own issue. I do not see how this argument can even be entertained, as the judgment creditor has expressly and apparently

deliberately chosen the cut-off date for interest as 30 November 1987,

f

- 5 -

some one-and- a half months before the bankruptcy notice was issued. In

all these circumstances, it seems to me that this bankruptcy	notice
clearly infringes continued and clear-cut authority	in relation to the
claim of interest and I am unable to see how the bankruptcy notice	can
therefore remain on	foot.

In accordance with the application, I therefore set aside the bankruptcy

notice and order that the respondent pay the costs of the applicant	in
this application.