Unicomb v Cairns - [2009] FCA 988

FEDERAL COURT OF AUSTRALIA
Unicomb v Cairns [2009] FCA 988
MICHAEL CHARLES UNICOMB and WARREN DONALD TURNER v SUZANNE CAIRNS
NSD 277 of 2009
PERRAM J
4 SEPTEMBER 2009
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 277 of 2009

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:
MICHAEL CHARLES UNICOMB
First Appellant

WARREN DONALD TURNER
Second Appellant

AND:
SUZANNE CAIRNS
Respondent

JUDGE:

PERRAM J

DATE OF ORDER:

4 SEPTEMBER 2009

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:
1.The appeal be dismissed with costs.

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

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 277 of 2009

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:
MICHAEL CHARLES UNICOMB
First Appellant

WARREN DONALD TURNER
Second Appellant

AND:
SUZANNE CAIRNS
Respondent

JUDGE:

PERRAM J

DATE:

4 SEPTEMBER 2009

PLACE:

SYDNEY

REASONS FOR JUDGMENT

The question in this case is whether a bankruptcy notice should be set aside. Messrs Unicomb and Turner – who are the appellants in this Court – claim that the notice issued to them is invalid by reason of three defects. The three defects they allege are:
(a)the notice is based on a judgment debt for $105,925.86, but, despite that, claims an entitlement to a judgment sum of $102,653.36. Generally, formal defects do not invalidate a bankruptcy notice. Messrs Unicomb and Turner deny the defect is a formal one;
(b)the judgment, regardless of the amount claimed, was issued on 9 October 2008. Although the notice claims interest for the period 10 October 2008 to 16 October 2008 (a period of seven days) it does not claim interest for the actual day of the judgment. They claim that interest is due for the day on which a judgment is handed down. It follows, so they submit, that the interest claimed ($196.87) is understated. Again, they contend that that defect is not formal; and
(c) if the judgment sum had been paid within 28 days of the date of the judgment, no interest would have been payable because the law gives a discount to those who meet judgments promptly. The notice was issued on 20 October 2008 (that is on the 11^th day after the judgment and within the 28 day period). Messrs Unicomb and Turner submit that it was not possible to say that the interest then claimed was due since it remained possible until the expiry of the 28^th day after 9 October – that is, 6 November 2008 – that no interest might be due if the judgment sum was paid before that time. Accordingly, the notice claims too much which, so they submit, is a non-formal defect.
Messrs Unicomb and Turner applied to the Federal Magistrate’s Court to set aside the notice. At that time they put their case only…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2009] FCA 988
Decision Date: 4 SEPTEMBER 2009

CaseChat Overview and Summary

Unicomb and Turner appeal against a decision of a Federal Magistrate which found that a bankruptcy notice served on them by Suzanne Cairns was valid. The bankruptcy notice claimed a sum which was slightly less than the amount of a judgment entered in favour of Mrs Cairns against the appellants. The appellants argued that the understatement of the amount of the debt in the bankruptcy notice rendered it invalid. The primary judge found that, even if the understatement constituted a formal defect, it did not amount to a substantial injustice and did not invalidate the bankruptcy notice. The appellants sought to appeal that decision.

The court considered whether the understatement of the debt in the bankruptcy notice constituted a formal defect which rendered the notice invalid. The court noted that the understatement of the amount due in a bankruptcy notice could constitute a substantive defect if it were objectively capable of misleading the debtor as to what was necessary for compliance with the notice. However, the court found that there was no such uncertainty in this case as it was clear that payment of the amount specified in the notice would constitute compliance with the notice.

The appeal was dismissed with costs. The court found that, even if the understatement of the debt in the bankruptcy notice constituted a formal defect, it did not amount to a substantial injustice and did not invalidate the bankruptcy notice. The understatement did not mislead the appellants as to what was necessary for compliance with the notice and there was no uncertainty as to whether the appellants were required to pay the amount in fact due or the amount specified in the notice. As such, the bankruptcy notice was valid and the appeal was dismissed with costs.

Orders

Orders of the court

1. The appeal be dismissed with costs.

Note:

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

PERRAM J

In my opinion, for reasons which follow, each of the three grounds advanced by Messrs Unicomb and Turner should be rejected and the appeal should be dismissed with costs. Issue (a): Underclaimed judgment sum The bankruptcy notice claimed a judgment sum of $102,925.86 whereas the judgment sum entered on 9 October 2008 was for $105,925.86. There appeared therefore to be an understatement of the judgment debt in the order of some $3,272.50. Before the Federal Magistrate, and in written submissions in this Court, Mrs Cairns argued that the figure of $3,272.50 could lawfully be demanded from Messrs Unicomb and Turner. The reasons for this are not simple. However, in oral argument in this Court counsel for Mrs Cairns was content to assume that the sum of $3,275.50 could lawfully be demanded from the debtors. The burden of counsel’s submission was that, even assuming that to be so, the defect was but a formal one. That description mattered because of s 306(1) of the Bankruptcy Act 1966 (Cth) which provides: (1) Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of the opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court. Of this provision Mason CJ, Wilson, Brennan and Gaudron JJ said in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at [80]: Understatement of the amount due, whether it be an understatement of the judgment debt or of interest payable thereon, will thus constitute a defect which is substantive rather than formal only if the understatement is objectively capable of misleading the debtor as to what is necessary for compliance with the notice.It may be that, in a given case, understatement is capable of misleading the judgment debtor particularly if the notice is capable of producing uncertainty as to whether the debtor is required to pay the amount in fact due or the amount specified in the notice. In such a case uncertainty arises, not merely from the understatement, but from the understatement in the context of the particular bankruptcy notice. No such uncertainty arises if it is clear that payment of the amount specified in the notice will constitute compliance with the notice. (emphasis added) See also Adams v Lambert (2006) 228 CLR 409 at 415-416 [17]-[18]. The relevant portions of the judgment were as follows:Judgment/Order …Plaintiff SUZANNE ROSE CAIRNS…Date made 12 August 2008 as to $3,272.50 14 September 2008 as to $102,653.36TERMS OF ORDER 1. Judgment for the plaintiff in the sum of $105,925.86 as per certificate as to determination of costs issued on 12 August 2008 and 14 September 2008. The relevant portion of the bankruptcy notice was as follows:1. SUZANNE ROSE CAIRNS (“the creditor”)of: C/- Mullane & Lindsay SolicitorsLevel 3, 418 Hunter StreetNEWCASTLE NSW 2300claims you owe the creditor a debt of $102,850.23, as shown in the Schedule.2. The creditor claims that the debt is due and payable by you. A copy of the judgments or orders relied upon by the creditor is attached. At the time of applying for this Notice, execution of the judgments or orders had not been stayed.

Ratio Decidendi

Legal Principle Established

Established by: PERRAM J

Full text does not contain this section.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 277 of 2009

JUDGE:	PERRAM J
DATE OF ORDER:	4 SEPTEMBER 2009
WHERE MADE:	SYDNEY

JUDGE:	PERRAM J
DATE:	4 SEPTEMBER 2009
PLACE:	SYDNEY