Re Demarco, Godfrey Charles; Ex Parte Demarco, Godfrey Charles v Australia & New Zealand Banking Group Ltd

Godfrey Charles Demarco has applied to the Federal Court of Australia to set aside a bankruptcy notice issued by Australia & New Zealand Banking Group Ltd. The primary issue before the Court was whether the creditor was entitled to claim interest calculated on a compound basis in the bankruptcy notice, when the statutory provision referenced for the interest calculation allowed only for simple interest. The Court also considered whether any defects in the bankruptcy notice were formal or substantive, and if they could be rectified under the Bankruptcy Act 1966.

The Court held that under section 95(1) of the Supreme Court Act 1970, the interest payable was simple interest unless otherwise ordered by the Court. The creditor had calculated the interest on a compound basis, which was not permissible under the statutory provision. Furthermore, stating in the bankruptcy notice that the interest was calculated in accordance with section 95, when it was not, was a substantive defect that could mislead the debtor. The Court concluded that the defects in the bankruptcy notice were not merely formal and therefore could not be rectified under section 306(1) of the Bankruptcy Act 1966.

The Court set aside the bankruptcy notice and ordered the costs of the application. The costs of the application in respect of the alleged counterclaim were reserved.