Re Lyons, J.R. Allpass, Ex Parte J.G. (as trustee of the Estate of J.R. Lyons) v Qantas Staff Credit Union Ltd
[1989] FCA 216
•09 MAY 1989
Re: JOHN ROBERT LYONS (debtor)
Ex Parte: JOHN GEOFFREY ALLPASS (as trustee) of the Estate of John
Robert Lyons (Applicant); QANTAS STAFF CREDIT UNION LIMITED (Respondent)
No. QLD PET No. 816 of 1985
FED No. 216
Judgment and Orders
COURT
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Spender J.(1)
CATCHWORDS
Judgment and Orders - preferential payment declared void as against trustee in bankruptcy - interest on preferential payment to date of judgment - whether available in Federal Court - relevance of State Court's powers in bankruptcy proceedings.
Judiciary Act 1903 (C'th.) s. 79
Common Law Practice Act 1867 (Qld.) s. 72
Centrepoint Freeholds Pty. Ltd. v. Lucas (TN) Pty. Ltd. (1985) 60 ALR 187, considered.
HEARING
BRISBANE
#DATE 9:5:1989
Counsel for applicant: Mr. Morrisey
instructed by: Goss Downey & Carne
Counsel for respondent: Mr. Urquhart Q.C. and Mr. D.L. Davies
instructed by: T. Hartmann & Associates
Counsel for applicant: Mr. M. Morrisey
instructed by: Goss Downey & Carne
Counsel for respondent: Mr. D. L. Davies
instructed by: Conwell Kirby & Lilley
ORDER
The receipt, by the respondent, between 24 October 1985 and 31 October 1985, from Qantas Airways Limited of an amount of $64,374.95 is void against the applicant as trustee of the divisible property of the debtor as being a payment having the effect of giving the respondent a preference, priority or advantage over other creditors.
The respondent pay to the applicant the sum of $64,379.94 within fourteen days from the date of this order.
That the respondent pay to the applicant interest upon the sum of $64,379.94 at the rate of 12.5 per cent from 28 October 1985 until date of this order.
The respondent pay four-fifths of the applicant's costs of and incidental to the application, including reserved costs, up to and including the costs of 28 September 1988 and pay all of the applicant's costs after that date; the costs to be taxed if not agreed.
NOTE: Settlement and entry of orders is dealt with by r. 124 of the Bankruptcy Rules.
JUDGE1
There are two subsidiary questions arising out of reasons which I gave concerning an application by John Geoffrey Allpass, the trustee of the estate of John Robert Lyons (against whom a sequestration order was made on 28 October 1985) for an order that a certain payment was a preference.
I indicated that Qantas Staff Credit Union Limited was a secured creditor of the bankrupt to the extent of his contributions to the Qantas Staff Superannuation Plan, namely $10,586.48, and indicated that the payment to the credit union by Qantas Airways Limited as to $64,374.95 was void as against the trustee.
The subsidiary questions are whether it is competent to order the recipient of the preference to pay interest on the amount which it has wrongfully received and of which it has had the use and, secondly, what order I should make on costs.
There was no opposition to the proposed orders set out in paras. 1(a) and 1(b) of the written submissions on behalf of the applicant and I indicated that I would make those orders.
As to the question of interest, the Bankruptcy Act 1966 and the Bankruptcy Rules together constitute something of a code in respect of jurisdiction in bankruptcy matters. Particular reference can be made to ss. 27 to 38 of the Bankruptcy Act; that conclusion is reinforced by O. 1 r. 11 of the Federal Court Rules.
The Bankruptcy Act 1966 is, of course, a Commonwealth statute. Section 27 confers jurisdiction on the Federal Court of Australia and the various Supreme Courts of the States and the Supreme Court of the Northern Territory. The Supreme Court of Queensland, when it exercises jurisdiction in bankruptcy pursuant to s. 27, is exercising federal jurisdiction.
I accept that a statutory provision enabling the award of interest, while frequently appearing in statutes dealing with procedural matters, does not by that fact categorise such provision as procedural; such a provision may confer a substantive right. In Commonwealth of Australia v. Crothall Hospital Services (Aust.) Limited, (1981) 36 ALR 567, Blackburn and Deane JJ. held that an award of interest could not be made in reliance on the Supreme Court Act 1970 (NSW) s. 94. They held that that section was not applicable in the Australian Capital Territory by reason of s. 27 of the ACT Supreme Court Act 1933 because awards of pre-judgment interest were not a matter of "practice and procedure" within s. 27, and s. 94, although a procedural statute, created a substantive right. The majority judgment in that case followed Simonius Vischer & Co. v. Holt & Thompson (1979) 2 NSWLR 322.
The applicant, in acceptance of those decisions, did not submit that the award of interest could be based on s. 38 of the Federal Court of Australia Act (1976). Nor was reliance placed upon s. 51A of that Act.
The applicant's claim for interest was based on s. 79 of the Judiciary Act 1903 (Cth.), as amended, which relevantly provides:-
"The laws of each State or Territory, including the laws relating to procedure, evidence, and the competency of witnesses, shall, except as otherwise provided by the Constitution or the laws of the Commonwealth, be binding on all Courts exercising federal jurisdiction in that State or Territory in all cases to which they are applicable."
The applicant's submission was that, by virtue of s. 79 of the Judiciary Act 1903 (Cth.), s. 72 of the Common Law Practice Act 1867 (Qld.), as amended, applied. Section 72 of that Act, provides:-
"(1) In any proceedings in respect of a cause of action that arises after the commencement of the Common Law Practice Act Amendment Act 1972 in a court of record for the recovery of money (including proceedings for debt, damages or the value of goods) the court may order that there shall be included in the sum for which judgment is given interest at such rate as it thinks fit on the whole or any part of that sum for the whole or any part of the period between the date when the cause of action arose and the date of the judgment. ..."
Section 72 of the Common Law Practice Act 1867 (Qld.) is of general application to all courts of record in Queensland.
In Centrepoint Freeholds Pty. Ltd. v. Lucas (TN) Pty. Ltd. (1985) 60 ALR 187, Sweeney and Woodward JJ. held (Neaves J. dissenting) that s. 79 of the Judiciary Act 1903 (Cth.) was applicable to pick up s.79A(1) of the Supreme Court Act 1958 (Vic.) ,and that the trial judge in that case should have given effect to the relevant Victorian section to give damages in the nature of interest unless good cause was shown to the contrary. In that case, the primary judge had held that Centrepoint Freeholds were liable on a claim based on s.52 of the Trade Practices Act 1975, and was also liable in deceit.
The majority in that case referred, at p 196, to the difficulties involved in the application of s. 79 of the Judiciary Act to various types of actions:-
"In State Bank of NSW v. Commonwealth Savings Bank of Australia (1984) 58 ALJR 394; 53 ALR 625, Gibbs C.J. (at ALJR 397; ALR 629) referred to the view expressed by Mason J. in Australian National Airlines Commission v. Commonwealth (1975) 49 ALJR 338; 6 ALR 433, that s.79 did not render the provision in the Supreme Court Act 1970 (NSW) which gave the Supreme Court of New South Wales power to award interest applicable to proceedings in the High Court, and went on to say:- 'If that view is correct, of course s. 79 equally does not render s. 94 applicable in the Federal Court. The expression of opinion made by Mason J. was unnecessary for his decision, since the action in that case was not commenced until after the Supreme Court Act had come into operation and s. 16(1) of that Act made it clear that s. 94 was not intended to apply to proceedings already commenced, with certain exceptions which Mason J. held inapplicable. The operation of s. 79 of the Judiciary Act in a case such as this raises very difficult questions, as the differences of opinion manifested in John Robertson & Co. Ltd. v. Ferguson Transformers Pty. Ltd. (1973) 129 CLR 65; 1 ALR 21, reveal.
Without having heard full argument I would not express any concluded opinion on the question whether s. 79 does render s. 94 applicable to proceedings in this court or in the Federal Court.' The opinion expressed by Mason J. was adopted by Lockhart J. in Hubbards Pty. Ltd. v. Simpson
(1982) 41 ALR 509 at 525-6."
As the expressions of opinion referred to in that judgment demonstrate, the matter is difficult, but I think it right to follow the undoubted effect of the observations of the majority of the Full Court of the Federal Court in Centrepoint Freeholds v. Lucas (supra).
Unlike, for instance, s.79A(1) of the Victorian Supreme Court Act 1958 which was considered in Centrepoint Freeholds v. Lucas, s. 72 of the Common Law Practice Act 1867 (Qld.) does not direct that interest shall be awarded unless good cause is shown. That difference, in my view, is not critical. The basis of the statutory amelioration of the common law rule that pre-judgment interest was not to be awarded was the recognition that until the money is paid the person entitled to the sum, not only is kept out of its money, but also of the use of that money until payment. The circumstances of this case do not suggest any factual basis why a successful party should be denied compensation for the circumstance of being kept out of his money until that money is paid, if there is power to award interest: see Jefford v. Gee (1970) QB 130 at 147 and Ruby v. Marsh (1975) 132 CLR 642 at 664.
It seems to me clear that the combined effect of s. 79 of the Judiciary Act 1903 (Cth.) and s. 72 of the Common Law Practice Act 1867 (Qld.) would permit the Supreme Court of Queensland, by way of example, to award interest if the present proceedings in bankruptcy had been brought in that Court. That conclusion I regard as a most telling consideration in favour of a recognition of a similar power in this court to award interest in respect of payment of monies which constitute a preference.
There is no dispute that an appropriate rate of interest would be 12.5%.
I should indicate that the power to award interest is a separate question from the appropriate order as to costs. Contrary to the submissions in this case, I would regard it as quite wrong to make a decision in respect of costs which in some way reflected an incapacity to award interest on the sum ordered to be paid.
On the question of costs, the respondent succeeded on the issue concerning the bankrupt's own contributions to the superannuation scheme. That issue occupied a lesser role in the proceedings but I think the order for costs ought to reflect in some measure the respondent's success in that regard.
In my opinion an appropriate order by way of costs is to order that the respondent pay four-fifths of all costs up to and including 28 September 1988 and all costs since then, the costs to be taxed if not agreed.
The orders that I make are:-
1. The receipt, by the respondent, between 24 October 1985 and 31 October 1985, from Qantas Airways Limited of an amount of $64,374.95 is void against the applicant as trustee of the divisible property of the debtor as being a payment having the effect of giving the respondent a preference, priority or advantage over other creditors.
2. The respondent pay to the applicant the sum of $64,379.94 within fourteen days from the date of this order.
3. That the respondent pay to the applicant interest upon the sum of $64,379.94 at the rate of 12.5 per cent from 28 October 1985 until date of this order.
4. The respondent pay four-fifths of the applicant's costs of and incidental to the application, including reserved costs, up to and including the costs of 28 September 1988 and pay all of the applicant's costs after that date; the costs to be taxed if not agreed.
0
7
0