Re Hutchins, P.G. v Ex parte Borden Australia P/L

[1993] FCA 710

IN THE FEDERAL COURT OF AUSTRALIA	) )
VICTORIA DISTRICT REGISTRY	) No. W 632 of 1993
)
GENERAL DIVISION	)
B E T W E E N :

Re: PETER GRAEME HUTCHINS

Judgment Debtor

Ex Parte: BORDEN AUSTRALIA PTY LIMITED

Judgment Creditor

JUDGE :  Heerey J

m s 8 September 1993

PLACE :  Melbourne

FEDERAL COURT OF

PRINCIPAL

REASONS FOR J U D ~ N T REGISTRY

This is an application for a sequestration order. The act of -bankruptcy relied on is failure to comply with a bankruptcy notice which was served on 26 March 1993. The amount claimed in the bankruptcy notice was owing under a judgment in the Supreme Court of Victoria. The bankruptcy notice stated that the judgment creditor

notice was overstated. This essentially arises from the fact that on 27 August 1991 the debtor was successful in some

"has claimed that the sum of $687,743.06 (which amount includes $132,330.44 interest calculated on the sum of $555,412.62 at the rates applicable pursuant to the Penalty Interest Rates Act 1983 (Victoria) from 21 June 1991 to 23 March 1993) is the balance due by you to it ..."

The debtor has opposed the making of an order on the ground that the bankruptcy notice was not a proper bankruptcy notice in accordance with the Bankruptcy Act. In support of that contention he argued that the amount claimed in the bankruptcy

bankruptcy proceedings in this court and an order for costs of

$720 was made in his favour.

The petitioning creditor gave credit for that amount by deducting it from the amount of the judgment but the judgment debtor says that that should not have been done. The consequence of that, he says, is that the interest is also understated. Counsel for the petitioning creditor did not seek to justify setting off the $720 or the consequent understatement of interest so the consequence is that the bankruptcy notice claimed less than was in fact due.

On the debtor's figures, which I accept for the purpose of this argument, the total amount due would be $688,644.55 as against the amount claimed of $687,743.06. In this setting the petitioning creditor relies on a decision of the High

Court in K l e i n w o r t B e n s o n A u s t r a l i a L i m i t e d v Crow1 (1988) 165

CLR 71.	In that case Mason CJ, Wilson, Brennan and Gaudron JJ
said (at p.80):

"If the amount specified in a bankruptcy notice is in fact due and payment is claimed in accordance with the judgment the essential requirements of s.41(2)(a)(l) - the only requirements presently relevant - are met. Understatement of the amount due, whether it be an understatement of the judgment debt or of interest payable thereon, will thus constitute a defect which is substantive rather than formal only if the understatement is objectively capable of misleading the debtor as to what is necessary for compliance with the notice.

It may be that, in a given case, understatement is capable of misleading the judgment debtor, particularly if the notice is capable of producing uncertainty as to whether the debtor is required to pay the amount in fact due or the amount specified in the notice. In such a case uncertainty arises not merely from the understatement but from the understatement in the context of a particular bankruptcy notice. No such uncertainty arises if it is clear that the payment of the amount specified in the notice will constitute compliance with the

notice. "

In my opinion, that principle applies squarely to the present

case. The debtor said that he had expressed doubt at the amount due in a letter dated April 1993 to the petitioning creditor a letter to which no response was given. However, that letter merely said:

"I refer to the above bankruptcy notice. In accord-

ance with the B a n k r u p t c y A c t I hereby give you notice that I dispute the validity of the notice on the ground of the misstatement of the amount owing."

The letter does not, in my view, indicate any doubt on the part of the debtor. But in any case, it is clear from the passage from the judgment in K l e i n w o r t that the question is an objective one, that is to say, whether a reasonable person in the position of the debtor reading the notice would be misled	as to what was necessary to comply with it. In the present	case there can be no doubt as to what compliance was required
by the notice; it was payment of the amount of $687,743,015.
That being the case, K l e i n w o r t indicates that it is appropriate to apply s.306(1) of the Act unless it can be shown that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of the court. It was not put to me that there was, in fact, any injustice in this case caused by the understatement, let alone substantial injustice. In the circumstances it is difficult to see how that could be the case. Therefore, I hold that the objection to the petition is not made out.
I will order a sequestration order against the estate of the debtor. I will order that the petitioning creditor's costs of and incidental to the petition including reserved costs be taxed and paid in accordance with the statute. The act of bankruptcy occurred on 14 April 1993.

I certify that this and the

preceding three (3) pages are a true copy of the reasons for judgment of his Honour Mr Justice Heerey.

ADwarances

Counsel for the judgment debtor: In person

Solicitor for the judgment debtor: In person

Counsel for the judgment creditor: Mr Ellis

Solicitor for the judgment	Minter Ellison Morris
creditor:	Fletcher
Date of hearing:	8 September 1993