Re Natividad, v Ex parte Deputy Commissioner of Taxation

[1992] FCA 1049

JUDGMENT NO. ........ .... kOb9,1 19q.a .m . . . . .mwrnrnoa

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IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF THE	) No. W2687 of 1992
STATE OF NEW SOUTH WALES	)

RE :  VIOLETA NATIVIDAD

Debtor

EX PARTE:  DEPUTY COMMISSIONER OF TAXATION

Creditor

CORAM :	HILL J
PLACE :	SYDNEY
DATED :	6 OCTOBER 1992

MINUTES OF ORDER

THE COURT DECLARES THAT:

1.	Sub-section 306(1) of the Bankru~tcv Act 1966 (Cth)	> .
("the Act") applies to the defect in para.(l) of the	, ,
bankru~tcv notice dated 31 Januarv 1992. in that the figure- $15,886.51 where first appearing should read $11,947.71.

THE COURT ORDERS THAT:

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2.    A sequestration order be made against the estate of the Debtor.

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3. Costs, including reserved costs, be paid in accordance with the Act.	I
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Note:	Settlement and entry of orders is dealt with in
Order 124 of the Bankruptcy Rules.

4. A draft of this order be delivered to the Registrar wlthin seven (7) days in accordance with rule 124(2) of the Bankruptcy Rules. r

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION )

BANKRUPTCY DISTRICT OF THE ) N O . W2687 o f 1992

STATE OF NEW SOUTH WALES )

RE :  VIOLETA NATIVIDAD

Debtor

E X PARTE:  DEPUTY COMMISSIONER OF TAXATION

C r e d i t o r

C O W :	HILL J
PLACE :	SYDNEY
DATED :	6 OCTOBER 1992

E X TEMPORE FSASONS FOR JUDGMENT

T h e p e t i t i o n e r , the Deputy Commissioner o f T a x a t i o n ,

upon	the	h e a r i n g	before me	o f	h i s	pe t i t ion ,	re l i es	upon	the
commiss ion	by	the	d e b t o r ,	V i o l e t a	N a t i v i d a d ,	o f	an	ac t	o f

b a n k r u p t c y s a i d t o be her fa i lu re t o comply w i t h a b a n k r u p t c y

notice d a t e d 31 January 1992 . The notice i s re levant ly i n the

f o l l o w i n g	terms:
"Whereas t h e Depu ty Commiss ioner o f
T a x a t i o n ... has c l a l m e d -
( 1 ) t h e b a l a n c e sum o f $15,886.51 d u e by

you	t o	h i m	u n d e r	a	f i n a l	judgment
o b t a i n e d	by	h i m	a g a i n s t	you	i n	the

District Court o f New S o u t h W a l e s a t

S y d n e y ,	on	the	E i g h t e e n t h	d a y	o f
A p r i l	1990 ,	b e i n g	the	amount	o f

$15,886.51 d u e u n d e r the s a i d

judgment since reduced by $3,938.80;

and

( 2 ) in teres t amount ing t o $4,228.26. . .

making a t o t a l o f $16,175.97 the s a i d

judgment b e i n g a judgment t h e

execution	o f wh ich	has not	been
s t a y e d :

THEREFORE TAKE NOTICE that within 14 days after service of this notice on you, excluding the day on which this notice is served on you, you are required

(a)	to pay the sum of $16,175.97 so claimed by the judgment creditor to The Registrar, District Court of New South Wales at 225 Macquarie Street
Sydney. . . ".

It will be noted that the figure of $15,886.51 where first appearing in para.(l) is clearly incorrect. The figure that should have been there is the sum of $15,886.51 less $3,938.80. The debtor submits that the misstatement of the amount in that paragraph constitutes a defect or irregularity which would not be remedied by an order of the Court under s.306(1) of the Bankru~tcv Act 1966 ("the Act"), in that the bankruptcy notice misstates the amount due or, alternatively, is so perplexing by a person in the position of the debtor that it should be treated as void. The petitioning creditor, on the other hand, relies upon s.306(1) of the Act and submits that the defect is but a formal defect capable of being

remedied by an order of the Court under that section.

The fundamental principles are dealt with in the decision of the High Court in Kleinwort Benson Australia Limited v Crowl (1988) 79 ALR 161 particularly at 164-166. That case makes it clear that a bankruptcy notice which misstates the amount due to the creditor will ordinarily be defective. However, in Crow1 it was submitted that any understatement of a judgment debt in a bankruptcy notice

invalidated t h e not ice unless it was clear t h a t t h e excess was

waived by t h e judgment creditor.	That proposition was
rejected by t h e Court which said	( a t 165-6):

"The a u t h o r i t ~ e s show tha t a bankruptcy

no t ice i s a n u l l i t y i f it f a i l s t o meet a

requirement made essent ia l by the Act, o r

i f it could reasonably mislead a debtor as	t o w h a t i t i s necessarv t o c o m ~ l v w i t h t he
not ice . . . In such cases the not ice i s a
n u l l i t y whether or not t he debtor i n fact
i s misled ...
I f t he amount spec i f i ed i n the bankruptcy
no t ice i s i n fact due and payment i s claimed i n accordance with the judgment, t h e essential r e q u i r e m e n t s o f
S . 41 ( 2 ) ( a ) ( L ) - t he only requirements
p r e s e n t l y r e l e v a n t - are met . Understatement o f t he amount due, whether
it be an understatement o f the judgment
debt o r o f i n t e r e s t payable thereon, w i l l thus cons t i t u t e a de f ec t which i s substantive rather than formal only i f the understatement i s ob jec t ive ly capable o f
misleading the debtor a s t o what i s
necessarv for com~liance with the no t ice .
(emphasis added)
As t h e judgment i n t ha t case makes c lear , i f ,

notwithstanding t h a t there has been a misstatement, t h e

bankruptcy not ice requires t h e debtor t o pay an amount i n f a c t

due ( a l b e i t a greater amount may have been due ) , so t h a t there i s no uncertainty as t o t he requirement required t o be met, t h e not ice w i l l not be void and any d e f e c t i n it may be

corrected under s .306(1) . I t i s , o f course, se l f -ev iden t t h a t

i f t h e d e f e c t i n t h e not ice i s one which i s obviously a

c l e r i ca l error t h a t d e f e c t may be corrected.

In the present case, there is no doubt that the sum

of $16,175.97 is due. It is not suggested to the contrary.

The notice requires that amount to be paid. In that sense, the notice clearly conforms with the requirements of s.41(2) (a) (i) of the Act and there can be no uncertainty in the minds of a debtor, in the position of debtor in this case, as to what is necessary to comply with the notice. Although a debtor may wonder at the original sum of $15,886.51 as first stated in para.(l), it does not seem to me that in the relevant sense the debtor can be said to have been misled or likely to be misled by what in essence is ultimately but a clerical error.

Indeed, it is fairly clear on a perusal of para. (l) that what is intended to be said is that there was a final judgment of $15,886.51 following which there was a payment of $3,938.80 resulting in a balance amount due. All that has happened is that that balance amount due has not been stated.

formal defect and I would, accordingly, treat that defect as In my view, the defect in the bankruptcy notice is but a

one to which the provisions of s.306(1) would apply and I

would make orders accordingly.

I certify that this and the
preceding three (3) pages
are a true copy of the Reasons
for Judgment herein of his Honour
Mr Justice Hill.

Associate:  7, /('(%h

Date: 30 March 1993

Solicitors for the Debtor:	Herro & Martin
Solicitors for the	The Australian Government
Petitioning Creditor:	Solicitor
Date of Hearing:	6 October 1992
Date Judgment Delivered:	6 October 1992