Snelgrove v Roskell

Case [2007] FCA 122

FEDERAL COURT OF AUSTRALIA

Snelgrove v Roskell [2007] FCA 122

BANKRUPTCY – appeal by Appellant against decision of Federal Magistrate dismissing creditor’s petition – whether errors identified in bankruptcy notice fall within purview of s 306 of Bankruptcy Act 1966 (Cth) – application of principles stated by the High Court in Adams v Lambert – whether errors amount to a ‘formal defect or irregularity’ – proper construction of bankruptcy notice – extraneous material may be referred to in determination of whether bankruptcy notice could reasonably mislead debtor – Federal Magistrate failed to correctly apply principles in Adams v Lambert – appeal allowed

BANKRUPTCY – whether creditor’s petition has lapsed – proceedings adjourned pending delivery of High Court decision in Adams v Lambert – no application for extension made by Appellant – application of s 52 of Bankruptcy Act 1966 (Cth) – order made by Federal Magistrate more than 12 months after creditor’s petition presented – matter remitted for consideration by Federal Magistrates Court

Bankruptcy Act 1966 (Cth) – ss 52, 306
Bankruptcy Regulations 1996 (Cth) – Reg 4.02
Legal Profession Act 1987 (NSW) – s 208J(3)

Adams v Lambert (2006) 225 ALR 396 followed
Clyne v Deputy Commissioner of Taxation (1982) 42 ALR 703 cited
Franks v Warringah Council (2003) 131 FCR 287 cited
Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 followed
Makhoul v Barnes (1995) 60 FCR 572 cited
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 referred to
Re Howell; Ex parte Commissioner of Taxation (1996) 70 FCR 261 cited
Re Wimborne; Ex parte the Debtor (1979) 24 ALR 494 cited
Re Young; Ex parte Smith (1985) 5 FCR 204 cited
Roufos v Andrea (1981) 57 FLR 10 cited
Wren v Mahony (1972) 126 CLR 212 cited

McDonald, Henry and Meek, Australian Bankruptcy Law and Practice, 5th ed, Lawbook Co

JOHN ANTHONY SNELGROVE v DAVID ROSKELL
NSD 1239 OF 2006

JACOBSON J
15 FEBRUARY 2007
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1239 OF 2006
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

JOHN ANTHONY SNELGROVE
Appellant

AND:

DAVID ROSKELL
Respondent

JUDGE:

JACOBSON J

DATE OF ORDER:

15 FEBRUARY 2007

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Appeal be allowed.

2.Orders made by Driver FM on 6 June 2006 be set aside.

3.Matter be remitted to the Federal Magistrates Court to be determined in accordance with these reasons for judgment.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 1239 OF 2006
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

JOHN ANTHONY SNELGROVE
Appellant

AND:

DAVID ROSKELL
Respondent

JUDGE:

JACOBSON J

DATE:

15 FEBRUARY 2007

PLACE:

SYDNEY

REASONS FOR JUDGMENT

Introduction

  1. In Adams v Lambert (‘Adams’) (2006) 225 ALR 396 the High Court held that a misdescription of the statutory source of an entitlement to claim interest on a…

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AGLC
Snelgrove v Roskell [2007] FCA 122
Case
[2007] FCA 122
Decision Date

CaseChat Overview and Summary

In Snelgrove v Roskell, the appellant, Mr. Snelgrove, a solicitor, appeals against the decision of his Honour to dismiss his petition. The primary focus of the appeal is on the dismissal of Mr. Snelgrove’s creditor’s petition against Mr. Roskell, which was based on a bankruptcy notice issued due to a debt of $50,477.58. The case revolves around the validity of the bankruptcy notice, specifically errors within the notice and the certificate attached to it, which his Honour deemed to be significant enough to dismiss the petition. The court must consider whether these errors were substantial enough to invalidate the bankruptcy notice, and if the petition should stand despite the identified defects.

The key legal issues before the court were whether the errors in the bankruptcy notice and the accompanying certificate were sufficient to render the notice invalid and thus dismiss the petition. His Honour found that there were two significant errors in the bankruptcy notice: the incorrect statement regarding the non-payability of interest on the assessed costs and the misidentification of the statutory source for post-judgment interest. Additionally, there was potential confusion regarding the certificate of judgment attached to the notice, although this specific issue was not argued before the court. The court had to determine whether these errors were material and if they justified the dismissal of the petition.

The court held that the errors in the bankruptcy notice were indeed material, particularly the misidentification of the statutory source for post-judgment interest, which was incorrect in citing s 85 of the District Court Act 1973 (NSW) instead of s 39 of the Local Court (Civil Claims) Act 1970 (NSW). The court found that these errors undermined the validity of the bankruptcy notice. His Honour also noted the potential issue with the certificate of judgment, although it was not explicitly addressed in his ruling. The court concluded that the errors were significant enough to warrant the dismissal of the petition, but also recognised the need to ensure the appeal was conducted in accordance with the legal standards set by the High Court's decision in Adams.

The appeal was allowed, and the orders made by Driver FM on 6 June 2006 were set aside. The matter was remitted to the Federal Magistrates Court to be reconsidered in light of these reasons for judgment. The court emphasized the importance of accuracy and compliance with statutory requirements in the issuance of bankruptcy notices to ensure the validity and enforceability of the debt claims they represent.

Orders

Orders of the court

1. Appeal be allowed.

2. Orders made by Driver FM on 6 June 2006 be set aside.

3. Matter be remitted to the Federal Magistrates Court to be determined in accordance with these reasons for judgment.

Background

Background to the litigation

The creditor appeals against his Honour’s order dismissing the petition. He seeks an order under s 52(1) of the Act. However, if the appeal is allowed a difficulty arises because the creditor’s petition appears to have lapsed under s 52(4) of the Act, in the circumstances referred to below. Factual Background The appellant, Mr Snelgrove, is a solicitor. In legal proceedings which appear to have a long history dating back to the 1990’s, he represented a company of which Mr Roskell was a shareholder and director. The proceedings were unsuccessful, the company went in to liquidation, and Mr Snelgrove claimed his costs from Mr Roskell personally. Driver FM found at [4] that in the course of the proceedings Mr Roskell agreed to become personally liable for the costs, although he later sought to dispute his liability. As a result, Mr Snelgrove brought proceedings against Mr Roskell in the Supreme Court of New South Wales. On 15 May 2000, a costs assessor of that Court issued a certificate as to determination of costs in the amount of $33,967.62. This was the certificate upon which bankruptcy notice NN3366/04 was founded.The Bankruptcy Notice The bankruptcy notice was issued on 20 December 2004. It claimed that Mr Roskell owed Mr Snelgrove a debt of $50,477.58 as shown in the schedule. The schedule stated the amount of the judgment as $33,967.62 and went on to claim “interest accrued since the date of Judgments or Orders” of $16,509.96. Attached to the bankruptcy notice was an interest calculation. It stated that judgment was entered against Mr Roskell in the Local Court on 22 June 2000 and that interest was claimed from the date of judgment to 15 December 2004. The attachment went on to say that interest was claimed under s 39 of the District Court (Civil Claims) Act 1970 (NSW). That was an error and was struck out by a handwritten amendment, apparently by an officer of the Official Receiver prior to the issue of the bankruptcy notice. It was replaced by a reference to s 85 of the District Court Act 1973 (NSW). However, that too was an error because in fact interest should have been claimed under s 39 of the Local Court (Civil Claims) Act 1970 (NSW). The attachment then set out the applicable interest rates payable for the period from 22 June 2000 to 15 December 2004 and a calculation of the total amount of interest payable. The certificate as to determination of costs was also attached to the bankruptcy notice. It stated that interest was not payable on the amount of costs assessed, ie $33,967.62. This was followed by an incorrect reference to s 203E of the Legal Profession Act. The certificate was accompanied, as the last page of the attachments to the bankruptcy notice, by a backsheet from the Local Court with a handwritten plaint number and an illegible stamp. The stamp may be from the Local Court indicating that the costs certificate was filed in that Court.The Federal Magistrate’s Decision His Honour heard Mr Snelgrove’s creditor’s petition against Mr Roskell on 12 August 2005 prior to the decision of the High Court in Adams. The petition was filed on 26 April 2005.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

JACOBSON J
The certificate was accompanied, as the last page of the attachments to the bankruptcy notice, by a backsheet from the Local Court with a handwritten plaint number and an illegible stamp. The stamp may be from the Local Court indicating that the costs certificate was filed in that Court.The Federal Magistrate’s Decision His Honour heard Mr Snelgrove’s creditor’s petition against Mr Roskell on 12 August 2005 prior to the decision of the High Court in Adams. The petition was filed on 26 April 2005. The only ground on which Mr Roskell opposed the petition was that he was not personally liable for the debt. His Honour satisfied himself that this objection had no substance but during the hearing he raised two issues concerning the validity of the bankruptcy notice. Mr Roskell was not legally represented and was happy to adopt those points as grounds of opposition to the petition; see at [5]. The first ground was that the certificate stated that interest was not payable on the amount of costs assessed but the bankruptcy notice claimed interest of $16,509.96. The second ground was the incorrect statement of the statutory source of liability for post-judgment interest. Having raised both of these issues, his Honour adjourned the matter pending delivery of the judgment by the High Court in Adams. After the decision in Adams was handed down, Driver FM called for written submissions to be delivered by the parties by 26 April 2006. He then determined the matter, delivering judgment on 6 June 2006. When his Honour handed down judgment he noted, at footnote 11, that there may be a third error in the bankruptcy notice because of the illegible certificate of judgment attached to the notice. He noted that judgment was entered in the Local Court on 22 June 2000 but queried whether the annexure satisfied the description of a certificate of judgment. However, this issue was not raised before Driver FM and his Honour did not deal with it. His Honour described the bankruptcy notice and the certificate of judgment attached to it as “scrappy”. It was in this context that he went on to deal with the two errors that he had identified. His Honour seems to have proceeded on the basis that the statement in the costs certificate that interest was not payable was an error. He described it as an error in [16] although he accepted the appellant’s submission that it was a reference to pre-judgment interest. It would have followed from this that the statement was perfectly correct, the only error being the incorrect reference to s 203E of the Legal Profession Act. Indeed, his Honour went on to say that if the correct provision of the Legal Profession Act had been identified, Mr Roskell could probably have worked out that the statement in the costs certificate referred only to pre-judgment interest. His Honour then referred to the second error, namely the statement in the interest calculation attached to the bankruptcy notice, that interest was claimed under s 85 of the District Court Act. He referred in this regard to the fact that the reference to the District Court (Civil Claims) Act had been struck out.

Ratio Decidendi

Legal Principle Established

Established by: JACOBSON J

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