Re Ikin, H. & Ors v Ex parte Same and Lamborghini Tractors of Australia Pty Ltd

[1985] FCA 142

Re: HARRY IKIN, MONICA IKIN and HARRY ANTHONY IKIN
Ex parte: THE ABOVENAMED; SAME AND LAMBORGHINI TRACTORS OF AUSTRALIA PTY LTD
No. 339 of 1985
Bankruptcy
58 ALR 759 / 4 FCR 582

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Pincus J.(1)

CATCHWORDS

Bankruptcy - bankruptcy notice in foreign currency - invalid.

Bankruptcy - Bankruptcy notice demanding payment in foreign currency - Notice invalid - Bankruptcy Act 1966 (Cth), s 41(1a), Currency Act 1965 (Cth), s 9.

HEADNOTE

Held: (1) A bankruptcy notice requiring payment in United States currency is bad as not complying with s 41(1)(a) of the Bankruptcy Act 1966 (Cth).

(2) A bankruptcy notice requiring payment of the sum of $US482,628.69 is not sufficient to inform the debtor of his entitlement to satisfy the notice by payment of the amount in Australian currency which at the time of payment was the equivalent of the United States dollar amount. The notice does not therefore implicitly permit payment in Australian currency.

(3) Rule 6(1) of the bankruptcy rules requiring only substantial compliance with the forms is applicable to a bankruptcy notice notwithstanding the mandatory requirements of s 41(1) that the notice "shall be in accordance with the prescribed form". However a requirement for payment in United States rather than Australian currency was not a substantial compliance with Form 4, which contained a reference to Australian dollars.

HEARING

1985, March 29; April 4. #DATE 4:4:1985
APPLICATION

Application to set aside a bankruptcy notice.

J A Dowsett QC and D J S Jackson, for the applicants.

R N Chesternma QC and M A Wilson, for the respondents.

Solicitors for the applicants: Chambers McNab Tully Wilson.

Solicitors for the respondents: McCullough & Robertson.

GFV

ORDER

The bankruptcy notice be set aside.

Orders accordingly

JUDGE1

This is an application to set aside a bankruptcy notice on the sole ground that it requires payment in U.S. dollars.

1. On 20 December 1984 McPherson J. in the Supreme Court of Queensland gave judgment for the petitioning creditor in a sum of U.S.$338,351.79 together with interest in the sum of U.S.$144,276.90. The bankruptcy notice recited the judgment and required the debtors "to pay the sum of U.S. $482,628.69 so claimed by the judgment creditor to the judgment creditor". Mr D.J.S. Jackson on behalf of the debtors submits that a bankruptcy notice simply cannot issue, under the Act, requiring payment in a foreign currency. He points to s.41(1)(a) which requires that a bankruptcy notice be in accordance with the prescribed form and says that the form in question, Form 4, requires the insertion of a sum in Australian currency.

2. The form recites that a judgment has been obtained and has a space for insertion of figures in the recital ("... the sum of $ is due ...") and the operative part of the form requires the debtor "to pay the sum of $ so claimed ...".

3. In my view, it is correct that the dollar sign is a reference to Australian currency. Where the name of a currency appears in a document, one must of course gather from the context whether local currency, or some foreign currency, is meant: cf. National Bank of Australasia Ltd v. Scottish Union and National Insurance Co. 86 CLR 110 at pp 119-120.

4. One would ordinarily presume that references to dollars in Australian statutes are to Australian dollars, just as references to "pounds" in an English statute were taken to mean English pounds in Asiatic Steam Navigation Co. v. The Commonwealth 96 CLR 397 at pp 401-403. In that case an action was brought before Taylor J. to limit liability in respect of a collision, under s.503 of the Imperial Merchant Shipping Act 1894. It was argued that the statutory limitation was to be measured by reference to Australian pounds, but that was rejected because, amongst other reasons, the statute was English.

5. Another argument put by Mr Jackson was that when the Bankruptcy Act was passed, in 1966, there could have been no question of having a judgment in foreign currency, since Parliament could not then have anticipated the development in Miliangos v. George Frank (Textiles) Ltd (1976) AC 443. A rather similar point was made by Taylor J. in the case just cited at p.404:-
   
   

"But in any event there are no grounds for

concluding that the word 'pounds' in s.503 was

intended to refer to what are now known as

Australian pounds for these are units of a system which depends for its existence on Commonwealth

law and which was unknown in 1894."

I did not understand Mr Chesterman Q.C., on behalf of the creditor, to dissent from the proposition that the dollar symbol in the form is a reference to Australian dollars. His argument was that under R.6 the creditor was entitled to vary the form by inserting a reference to whatever might be the currency of the judgment. Rule 6(1) is as follows:-

"Strict compliance with the forms in schedule 1 is not necessary and substantial compliance, or such compliance as the special circumstances of a

particular case allow, is sufficient."

In reply it was said that that rule cannot apply to a bankruptcy notice which, according to the mandatory provisions of s.41(1), "shall be in accordance with the prescribed form". It is my view that R.6 does indeed apply to bankruptcy notices; it is of course, common enough to overlook minor departures from the statutory form and I have no doubt that that practice is justified; were R.6 inapplicable, any departure would invalidate the notice. Nevertheless, it is a question whether the licence to depart from the form on the ground of the special circumstances of the particular case permits, as Mr Chesterman Q.C. argued, the insertion of whatever might be the appropriate currency in the spaces I have referred to. The overriding intention in my view is to be derived from the specific provision in s.41(1)(a) - viz. that the notice shall be in accordance with the prescribed form.

1. I agree that when the Act was passed Parliament could not have contemplated that there might be an Australian judgment in foreign currency. Not only was there a considerable line of English authority against the view which was later adopted in the Miliangos case, but that line of authority was, very plainly, accepted in this country. For example, in A.H. McDonald and Co. Pty Ltd v. Wells 45 CLR 506 at p 515 the High Court held, applying English authority, that "the rule is, that in translating damages from foreign currency into sterling, the date at which that process has to be effected is the date of the breach of contract", a view which is of course inconsistent with the recent English cases. I hasten to add that no argument was advanced that I should go behind the judgment of McPherson J.

2. It is a logical development, no doubt, of the Miliangos doctrine that methods of enforcement of judgments should be adapted to it. The method of doing so with respect to bankruptcy, put forward on behalf of the creditor, was that the debtors should be entitled to pay either in U.S. currency or in that sum in Australian currency which, on the day of payment, was its equivalent; I understand that there is now a continually fluctuating market and it would be necessary, to achieve a proper conversion, for the debtors to ascertain the exchange rate at the precise time of payment. Mr Chesterman Q.C. said, no doubt correctly, that the proper rate for conversion to Australian dollars would be that at which Australian dollars were then being bought, rather than the selling rate. As to the question of set-off, which is not an academic point in this case, various solutions may be put forward, but there is no need to analyse them.

3. There is no legal reason why payments of sums, large or small, should not be made in this country in American dollars. Section 9 of the Currency Act 1965 is designed to achieve the result that one must pay, in this country, either in foreign currency or in the official Australian currency; it places no inhibition, however, on payments in foreign currency. There may be an indirect restraint on such payments, from the practical point of view, arising from reg. 5(1)(a) of the Banking (Foreign Exchange) Regulations, which prevents borrowing in foreign currency without the permission of the Reserve Bank of Australia. However, the argument for the creditor seeks to escape that and other such difficulties by asserting that under this bankruptcy notice the debtor may pay in the equivalent amount of Australian currency, as just discussed.

4. If the bankruptcy notice was really intended to have the effect contended for, it is not helpfully worded. The debtors would not, on receipt of such a notice, readily arrive at the conclusion that their obligations under it were as I have just described. It was said by Mocatta J. in Barclays Bank Ltd v. Levin Bros (Bradford) Ltd (1977) 1 QB 270 at p 277 that:-
   
   

"... when someone is under an obligation to pay

another a sum of money expressed in a foreign

currency but to pay it in this country, the person under the obligation has an option, if he is to

fulfil his obligation at the date when the money is payable, either to produce the appropriate

amount in the foreign currency in question or to pay the equivalent in sterling at the rate of

exchange prevailing at the due date."

Are the debtors assumed to know this, or obliged to ascertain it, if it does indeed represent the law here? Requiring them to make the assumption that the bankruptcy law permits the alternative payment is in my view too much. To be effective the notice must state clearly what the debtor has to do in order to avoid committing an act of bankruptcy. The decisions, and in particular James v. The Federal Commissioner of Taxation (1955) 93 CLR 631 at pp 643-644 show that the courts have insisted upon strict adherence to this principle. While it may well be fair that the obligations of the debtors should be as stated by Mr Chesterman Q.C., they are not set out in the notice, nor, I think, are they reasonably deducible from that document other than by a process of legal inference. It would not be clear to the debtors, on receipt of the notice, that they could comply with the notice by payment, other than paying precisely that which it demands. They would be unlikely to be able to form a confident view about the propriety or content of alternative modes of satisfaction of the notice, leaving aside altogether the complications attending the question of set-off.

1. The notice cannot, therefore, be defended by reading it as implicitly permitting payment in Australian dollars, at the exchange rate at the precise time of payment (chosen by the debtor) being the telegraphic transfer Australian dollar buying rate. The only other question is whether it is good as simply being a requirement to pay in American dollars. Although it is clear that R.6 applies to Form 4, despite the terms of s.41(1)(a), the intention of the legislature was not to permit simple substitution of any foreign currency, whether U.S. dollars, roubles or yen, for the Australian currency therein mentioned. It may be arguable, although I would not favour the argument, that it is a permissible departure from the form to provide express alternatives, requiring payment in a foreign currency or alternatively in an amount of Australian dollars determined in a precisely defined way; I do not have to determine that. The requirement of payment in American dollars simpliciter is, however, such a significant departure from the statutory form that it does not fulfil the requirement in s.41(1)(a).

2. It was pointed out on behalf of the creditor that the notice would be bad if it did not follow the judgment. However, it is clear that the fact that the requirement in the notice follows the judgment is not necessarily enough to make it good. For example, a notice requiring delivery of property or payment of money would plainly be bad.

3. The introduction of a change in bankruptcy law, for such it clearly is, allowing the use of this new type of notice must be a matter for statutory and not judicial initiative.

4. In summary I hold that a bankruptcy notice simply requiring payment in a foreign currency is bad. The notice will be set aside.