JUDGMENT No. ........ ........ .. ......,,....
| IN THE FEDERAL COURT OF AUSTRALIA | 1 |
| GENERAL DIVISION | ) |
| BANKRUPTCY DISTRICT OF THE | |
| STATE OF OUEENSLAND | ) |
| RE : | ALAN HOWELL JAMES and LYNETTE
MARGARET JAMES |
Judgment Debtors
| EX PARTE: | CARTER HOLT HARVER ROOFING
(AUSTRALIA) PTY LTD |
Judgment Creditors
| PLACE | : | BRISBANE |
| DATED | : | 17 NOVEMBER 1993 |
AUSTRALIA
PRINCIPAL
| EX TEMPORE REASONS FOR JUDGMENT | REGISTR~ |
Mr and Mrs James "the debtors" applied to the Court to set aside a bankruptcy notice served upon them and issued at the request of Carter Holt Harvey Roofing (Australia) Proprietary Limited "the judgment creditor". Alternatively, they claim that the bankruptcy notice has been spent because they are entitled to a cross-claim, cross demand or set-off of an amount equal to or greater than the judgment debt, which they say they were unable to set up in the proceedings in which judgement was obtained by the judgment creditor against them.
| Those sub-sections provide as follows: |
The claim to set aslde the bankruptcy notice is based
upon ss.41(5) and (6) of the Bankruptcy Act 1966 ("the Act").
"41 ( 5 ) A bankruptcy notice is not invalidated by reason only that the sum specified in the notlce as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he disputes the validity of the notice on the ground of the mls-statement.
41(6) Where the amount specified in a bankruptcy notice exceeds the amount in fact due and the debtor does not give notice to the creditor in accordance wlth subsection
(5), he shall be deemed to have complied
with the notice if, within the tlme allowed for payment, he takes such action as would have constituted compliance wlth the notlce
if the amount due had been correctly
specified in it."
These sub-sections make it clear that provided a timely notlce is given by a debtor within sub-sec. (5), a bankruptcy
notice which claims an amount greater than that in fact due will be void. In the present case notice was not given within the time allowed for payment in the notice, so the debtors seek to extend the time for compliance on the ground that the failure to give a timely notice was a result of an error on the part of
| their solicitor, which should not be visited upon them. They | rely upon the decision of Burchett J in Re Clubb: Ex Darte Clubb |
| v Westpac Banking Cor~oration (1990) 93 ALR 123, and say that, like the debtor in that case, they should be permitted an extension of time for the giving of the notice under s.41(5). Although there are some differences between the facts of the present case and those discussed in Re Clubb (for example, the number of days which expired after the time for payment had arisen in Re Clubb was less than that in the present case), I |
| would be disposed, for the reasons given by Burchett J in that case, to extend the time for glving of the notlce if I were of the view that there was substance in the argument ralsed by the applicant. I propose, therefore, to consider first the submissions raised. |
| The debtors' submissions assume that the date of issue of the bankruptcy notice was 27 September 1993, that being the date shown upon the notice. Although I am of the view that this does not matter in the present case, there was evidence that the Registrar did not return the duly stamped and signed bankruptcy notlce to the solicitors for the judgment creditor until the next day, 28 September 1993. In my view there is no room for doubt that the Registrar issues a bankruptcy notice only when he has signed and stamped the copies of that notice and has returned them to the applicant for the notlce; cf r. 7 (5) of the Bankruptcy Rules and the judgment of Foster J in Re O'Sullivan: Ex parte Bank of New Zealand (1991) 30 FCR 112 and Koon Wing Lau v Calwell |
| somewhat different context. | (1949) 80 CLR 533 at 567-568, 574-575 and 591-592, albeit in a | |
| The significance of the date of issue of the bankruptcy notice is to be found in comments by the High Court in Walsh v Deputy Federal Commissioner of Taxatlon (1984) 156 CLR 337. In that case, between the date of issue of the bankruptcy notice and the date of service of it, the debtor had made a payment in part- satisfaction of the judgment debt, so that as at the date of |
| service o f t he bankruptcy not ice , t ha t notice overstated t h e amount the debtor then owed, notwithstanding tha t a t t he date o f i t s i s sue the sum stated as owlng was correct. I t was held t h a t t h e relevant time t o determine whether there was an overstatement was t h e date o f i s sue . The Chief Just ice , Sir Harry Gibbs, wi th whose judgment Mason, Brennan, Deane and Dawson J J a l l agreed |
| |
"A bankruptcy notice i s a document issued by the reg is t rar , under s tatutory authority: see s . 4 1 ( 1 ) o f the Bankruptcy Act. Normally, therefore , it would be expected that the v a l i d i t y o f the not ice should be tes ted a s a t the date o f i t s i s sue . The prescribed form o f notice bears a date and the not ice i t s e l f s ta t e s that the judgment
| credi tor | 'has claimed | t h a t | [ the speci f ied |
sum] i s due by you t o him' . In form the not ice speaks a s a t the date whlch i t bears, that i s the date o f i t s i s sue , and although service i s essential t o make non-compliance an act o f bankruptcy, and although the tlme f ixed for compliance runs from the date o f service , the notice must be understood a s speaking a s a t the date o f i t s Issue and the
| requirements o f the not ice , | for the purposes |
| o f S . 4 0 ( l ) ( g ) o f the Bankruptcy | Act, | m u s t be |
| ascertained | i n | that | context. | This |
| re inforces the view that the amount which |
| m u s t be correct ly stated | i s the amount | o f |
| judgment | debt owing a t the date o f i s sue . |
| This | conclusion | i s sa t i s fac tory from | a |
practical point o f vlew slnce i t i s ordinari ly within the knowledge o f the debtor whether or not any payments have been made since the i s sue o f the not ice and the a b i l l t y t o invalidate a notice on the ground that payments were subsequently made opens the way t o evasion. "
I do not th ink tha t Walsh's case i s necessarily
authority upon which I should conclude there was no overstatement
| i n t h e b a n k r u p t c y notice | i f | t h e c a l c u l a t i o n o f i n t e r e s t | a s a t 27 |
| September was erroneous, | for t he f a c t s o f t he present | c a s e d i f f e r |
| somewhat | from those i n W a l s h . |
| The | b a n k r u p t c y notice | i n W a l s h m e r e l y | c l a i m e d | payment |
| o f a | sum o f money which was, | i n f a c t , owed | a s a t the d a t e o f |
| i s s u e . | The p r e s e n t | b a n k r u p t c y n o t i c e c l a i m e d payment | o f the | sum |
| o f | $124,989.56 | " s o c l a i m e d | by | t h e | Judgment | C r e d i t o r | t o | the |
| Judgment | C r e d i t o r | [ s i c ] " . | The | reference t o " s o c l a i m e d " | i s a |
| reference t o r e c i t a l s | i n the | f o l l o w i n g | terms | so | f a r | a s | a r e |
| relevant : |
| "WHEREAS | CARTER | HOLT | HARVEY | ROOFING |
| AUSTRALIA | PTY | LIMITED | . . . h a s c l a i m e d | t h a t |
| t h e t o t a l sum o f ONE HUNDRED AND | TWENTY FOUR |
THOUSAND NINE HUNDRED AND EIGHTY NINE DOLLARS AND FIFTY SIX CENTS ($124,989 .56) i s owed by you t o it u n d e r a F i n a l Judgment
| o b t a l n e d | by | it | a g a i n s t | you | i n t h e Supreme |
| C o u r t | o f Queens land h e l d | a t B r i s b a n e | on | t h e |
| 1 4 t h d a y o f Sep tember 1993 | ... |
| F u l l | p a r t i c u l a r s | o f | t h e | t o t a l | sum | a r e | a s |
| Judgment | o f t h e Supreme Cour t o f |
| Queens land | a t | B r i s b a n e | d a t e d | 14 |
| S e p t e m b e r , | 1993: | $124,545.97 |
| I n t e r e s t | pur suan t | t o t h e | Common |
| Law | P r a c t i c e | Ac t | a t t h e rate | o f |
| 10% p e r | annum | from | 1 4 / 0 9 / 9 3 | t o |
| the | 2 7 / 0 9 / 9 3 | ( 1 3 d a y s ) : | $443.59 |
| amount due and owing: | $124.989.56" |
| I f t he amount | o f i n t e res t | i n the b a n k r u p t c y not ice | h a s |
| been | o v e r s t a t e d | c a l c u l a t e d | t o | 27 | September | 1993 , | then | the |
bankruptcy notice may well be described as claiming more than was in fact due, notwithstanding that as at the true date of issue, the next day the total figure clalmed may have been correct. The difficulty in the present case is compounded by the fact that the debtor could never know when the bankruptcy notice was issued. If there is an overstatement in the figure said to be owing as at a date stipulated in the bankruptcy notice as the date of issue, a debtor is likely to be misled and confused, notwithstanding that as at some date unknown to the debtor, being the true date of issue, the figure may turn out to be correct or at least not an overstated figure.
Registrars issuing bankruptcy notices could and, in my view, should obviate difficulties arising by ensuring that bankruptcy notices are only dated when they are, in fact, returned to those seeking them rather than when they are signed or sealed.
| There is, however, another answer to the debtor's |
argument in the present case which renders it unnecessary for me to decide whether I can simply look at the position on 28 September 1993, when an extra day's interest will have accrued, because on that day, at least, $124,989.56 will have been owing to the judgment creditor.
To understand the argument it is convenient to set out
the submissions made in writing on behalf of the debtors. In
| t h e s e s u b m i s s i o n s , | t he d e b t o r s | s a y , | a f t e r r e f e r r i n g t o the | f a c t |
| t h a t judgment | had | been o b t a i n e d o n 14 | Sep t ember | 1 9 9 3 : |
| 2 . | P u r s u a n t | t o s.73 | o f | the | Common | Law |
| P r a c t i c e A c t | ( O l d ) where | a | l u d g m e n t | i s made |
| b y | a | C o u r t | o f | r e c o r d | for | the | payment | o f |
| money | ' in teres t | s h a l l , | u n l e s s | the | C o u r t |
| o t h e r w i s e | o r d e r s , | be | p a y a b l e | a t | the | r a t e |
| p r e s c r i b e d | from | t i m e | t o t i m e by | order | i n |
| C o u n c i l . . . . f rom the d a t e o f t h e judgment or o r d e r o n so much o f the money i s a s from | t i m e | t o t i m e | unpa id . ' |
| 3 . | The | b a n k r u p t c y n o t i c e was | i s s u e d | (o r a t |
| l e a s t | a u t h e n t i c a t e d | and | d a t e d ) | o n | 27 |
| 4 . | T h e | b a n k r u p t c y | notlce | c l a l m s | the |
| ' i n t e r e s t | p u r s u a n t | t o | the | Common | Law |
| P r a c t i c e A c t | a t the | r a t e o f 10% p e r | annum |
| f rom the 14 .09 .93 | t o the 27 .09 .93 | (13 d a y s ) : |
| $ 4 4 3 . 5 9 ' . |
| 5 . | A c c o r d i n g l y , | i n t e r e s t | f o r | the | en t i re | o f |
| e i ther the d a y o n w h i c h judgment | was g r a n t e d |
| o r | t h e | d a y | o n | wh ich | the | b a n k r u p t c y not ice |
| was | i s s u e d | (or d a t e d ) was | c l a i m e d . |
| 6 . | In teres t | a c c r u e s from | the d a y a f t e r the |
| judgment | was | g r a n t e d | so | t h a t | no | i n t e r e s t |
| a c c r u e s o n | t h e d a y on wh ich | t h e judgment | i s |
g r a n t e d , the judgment c r e d i t o r not b e i n g
| R e S e r a f i n o : Ex p a r t e C l a s s i c M a n u f a c t u r i n q | e n t i t l e d t o i n t e r e s t i n r e s p e c t o f t h a t d a y : |
| P t y L t d | ( 1 9 8 8 ) 86 ALR | 283; | see a l s o The A c t s | |
| I n t e r ~ r e t a t i o n | A c t | ( O l d ) (1954 J | ( a s amended) | |
| s . 3 8 . |
| 7 . | N o r | d i d | an | e n t i r e | d a y ' s | i n t e r e s t | h a v e | |
| a c c r u e d | a t | the | t i m e | a t w h l c h | the b a n k r u p t c y | |
| not ice was I s s u e d | (or d a t e d ) . | Accordingly, | |
| on | t h a t d a y it | d i d n o t | r e q u i r e | the d e b t o r s | |
| t o ' p a y the judgment | d e b t | . . . | i n a c c o r d a n c e | |
| w i t h | the | j u d g m e n t ' ; | see | a l s o R e | C lubb : | Ex | |
| p a r t e | C l u b b | v | W e s t p a c | Bank ing | C o r ~ o r a t i o n | |
| ( 1 9 9 0 ) | 9 3 | ALR | 123; | Wa l sh | v | T h e | D e p u t v | |
| Commls s ioner o f T a x a t l o n | ( 1 9 8 4 ) 156 CLR 337; | |
| R e | S e r a f i n o | ( s u p r a ) . " | |
Neither of the decisions in Re Clubb or in Re Seraflno deal with the submissions advanced by the debtors. The overstatement in Re Clubb arose because the daily interest was calculated on the basis of a 365 day year when a leap year was involved. The question in Re Serafino was whether, in computing interest on a judgment given in the District Court of New South Wales, interest should be computed as including the date of the day of the judgment. It was held on the language of the District Court Act 1973 [NSW) that it should not, as the interest was payable "as and from the date when the judgment debt came Into being" and the judgment debtor was not required to pay a day's interest on the very day of judgment, or in respect of that day. Although it is not determinative of this case, particularly as the matter was not an issue in Re Serafino, it does seem that the interest ultimately calculated in that case was calculated as
including the next day.
| However, the fallacy in the debtor's argument in the present case is readily apparent. |
| It is clear that interest accrues from day to day. | So |
much was decided as early as 1755 in Wllson v Harman (1755) 2 Ves Sen 672, 28 ER 428; and see also Re Rogers' Trusts (1860) 1 Dr
& SM 338, 62 ER 408; Chow Yoong Honq v Choong Fah Rubber
Manufactory (1962) AC 209 at 217 and Fisher and Lightwood's
of Mortaaae, 10 Ed., (1988) at 649. But that does not mean that
a whole day must pass before the entitlement to interest arises.
To the contrary, it means that for each whole day, not including the day of the loan or, as in the present case, the date of the judgment, there is an entitlement to interest. That this is so appears from what was sald by the Vice Chancellor in Wilson v Harman, where his Lordship said (at 673) (ER at 429):
"...interest is supposed to grow due from day to day to be sure; and the person intitled to the produce is intitled to it to the last hour of the day".
Thus, for example, in calculating an apportionment of interest due to the estate of a life tenant, or a remainderman, the rule is that in calculating the number of days from the time when interest became due and payable to the date of death of the life tenant, the first day is not counted but the last day is. See, for example, Jacobs' Law of Trusts, ed. Meagher and Gummow 5th Ed. (1986) at para.1927.
| Thus the common law, against which the Common Law pass before interest became due, but rather that the interest | Practice Act must be construed, did not require that a whole day | accrue due from the beginning of the day, in that the judgment credltor was entitled to the v~hole day's interest. Accordingly, even if the matter is looked at as at 27 September, rather than 28 September, there was no overstatement of interest. |
In these circumstances I would not extend t h e time for
t h e giving o f a notice under s .41(5) because t o do so would be |
| |
The claim o f t he debtors t o re l y upon a cross-claim,
| cross-demand | or se t -o f f equal t o or greater i n value than t h e |
| ludgment | debt , | r e l i e s | upon | t h e | provisions | o f | s s . 4 0 ( l ) ( g ) and |
| 41(7 ) o f t he Act, those sub-sections | provide | as fol lows; |
" 4 0 ( l ) ( g ) i f a creditor who has obtalned against the debtor a f inal ludgment or f lnal order, being a judgment or order the execution o f whlch has not been stayed, has served on the debtor i n Australia or , by leave o f the Court, elsewhere, a bankruptcy not ice under t h i s Act and the debtor does not -
| ( i ) where | the | notice | was | served | i n |
Australia - within the time f ixed by the Registrar by whom the not ice was issued; or
(ii)where the notice w a s served elsewhere -
within the time fixed for the purpose by the order giving leave t o e f f e c t the service;
| comply with the requirements o f the not ice |
| or s a t i s f y the Court | that he has a counter- |
claim, s e t - o f f or cross demand equal t o or exceeding the amount o f the ludgment debt or sum payable under the f inal order, a s the case may be, being a counter-claim, s e t - o f f or cross demand that he could not have se t u p i n the action or proceeding i n which the judgment or order was obtalned;
4 1 ( 7 ) Where, before the expiration o f the
time fixed for compliance wlth the requirements o f a bankruptcy no t ice , the debtor has f i l e d with the Registrar an a f f i d a v i t t o the e f f e c t that he has such a
counter-claim, set-off or cross demand as is referred to in paragraph 40(1) (g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, untll and including the day on which the Court determines whether it is so satisfled."
The debtors, within the time limited for compliance with the bankruptcy notice, filed two affidavits. These affidavits, individually or cumulatively, did little more than assert the existence of a cross-claim, cross demand, or set-off, and in my view did not comply with the provisions of s.41(7).
The affidavit of which s.41(7) speaks must do more than merely assert the existence of a cross-claim etc of the relevant value. It must contain evidence which establishes that there is an effective cross-claim, a claim that is real; cf Lukin J in
Voawell: Ex parte Vocrwell (1939) 11 ABC 75 at 77, affirmed on
| appeal by the High Court in Vop~ell | v Voqell (1939) 11 ABC 83 |
at 85; Ebert v Union Trustee CO of Australia Limited (1960) 104
| CLR 346 at 350; Re McKechnie: Ex Darte Weir (1991) 27 FCR 515 at |
519-520 per Foster J. This is so because the affidavit in question is required to "show" a relevant counter-claim, set-off or cross demand. An insufficient affidavit does not bring the provisions of s.41(7) lnto operation.
Although the debtors flled out of time an affidavit setting out the facts upon which they would rely to show a relevant cross-claim, cross demand or cross-action, that
affidavit, while it might be read to expand matters in an affidavit otherwise complying with s.41(7) filed in time, cannot be used to supplement any deficiency where no sufficient affidavit has been filed within the terms of s.41(7).
There is another reason why the debtors claim to terminate the operation of the bankruptcy notice, or suspend it, must fail. For there to be a relevant cross-claim, cross demand or set-off, that cross-claim, cross demand or set-off must be one which could not have been set up in the proceedings in which the judgment was obtained.
As a matter of law there was no reason why the debtors'