IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION Bankruptcy District of the State of New South Wales and the Australian No. P.1582 of 1978 Capital Territory Re: ALI DAVID Debtor Ex parte: ABDA_LAHOOD Creditor EVATT J. 15 March, 1979 REASONS FOR JUDGMENT The bankruptcy petition herein, dated 13 October 1978, was presented on 5 December 1978 when the matter was fixed for hearing for 27 February 1979. On the latter date Mr Dowdy of Counsel appeared for the judgment debtor and Miss Marlow of Counsel appeared for the petitioning creditor . Mr Dowdy then informed the Court that, if the petitioning creditor sought to proceed, his original instructions were to seek an adjournment of the proceedings upon grounds which are not material to this judgment. On Miss Marlow objecting to any adjournment Mr Dowdy informed the Court that before making his application for an adjournment he, having had an opportunity, during the time whilst he was waiting for the matter to be called on for hearing, of inspecting the bankruptcy notice and the petition filed herein, wanted first to submit that the bankruptcy notice was invalid and consequently to ask that an appropriate order be made. ae/2.e Mr Dowdy submitted that the invalidity resulted from the fact that whereas the bankruptcy notice claimed that the sum of $5,000 together with an amount of $548.00 being interest thereon was due by the debtor to the judgment creditor under a final order obtained in the District Court held at Sydney on 21 June 1977, the petition in paragraph 2 thereof claimed that the debtor was "indebted in the sum of $8,644.94 being the sum of $5000 judgment debt and taxed costs of $3644.94 together with interest theron being the amount due under the final judgment recovered in the District Court at Sydney on 21 June 1977, the consideration for such debt being final judgment obtained in the proceedings commenced by the creditor for breach of promise to marry". Mr Dowdy submitted that a bankruptcy notice which understates the amount of indebtedness and gives no indication in the notice that such understatement is not intended to be claimed renders the notice bad. He referred the Court to the decisions in In re H.B. (1904) 1 K.B. 94; Re Jack; Ex parte C.V. Holland (Holdings) Ltd. 1959) 19 A.B.C. 268 and Re Schierholter; Ex parte Geis 19 A.L.R. 113. Miss Marlow, in her submissions, referred to the following facts, which were not disputed :- (a) the application for the issue of the bankruptcy notice herein dated 26 July 1978 and filed herein shows that at the time of that application a certified copy of the judgment against the judgment debtor obtained by the judgment creditor in the District Court of New South Wales at Sydney on 21 June 1977 was filed in the Bankruptcy Registry. (b) The certaficate, dated 1 December 1977, states that on 21 June 1977 it was adjudged that - .-/3.- (c) (a) (e) and (f) 1. The Plaintiff (judgment creditor) recover against the Defendant (judgment debtor) $5,000 on her claim and the costs of the action be taxed. 2. The Defendant pay $5,000 to the Registrar forthwith. 3. The Defendant pay the costs to the Registrar forthwith after taxation thereof. the bankruptcy notice was served on 23 August 1978 as appears from the affidavit of service filed herein. as the notice to comply with the said bankruptcy notice was a "21 days notice", the judgment debtor had until 13 September 1978 to comply therewith. that on 26 July, 1978 the date of the bankruptcy notice, the costs of the District Court action had not been taxed so that the amount of such costs were then not known. that on 24 August 1978 the Assistant Registrar of the District Court certified that the Plaintiff's (judgment creditor) costs of the District Court action had then been taxed and allowed at the sum of $3,644.94, Miss Marlow submitted that as the plaintiff's costs in the District Court action had not been taxed at the date of the issue of the bankruptcy notice such costs were not known and accordingly were not a liquidated amount. Further, she submitted that as such costs had not been taxed at that date they were not due and owing. This being so the bankruptcy notice was not misleading nor had it under- stated the amount then due and owing but that before the date of the act of bankruptcy, namely,13 September 1978, a further liquidated debt due and owing by the debtor to the petitioning creditor became known and that consequently the petitioning creditor was entitled to claim in the petition the total of both liquidated debts together with the appropriate interest thereon. -«/4.- ~4- Miss Marlow further submitted that the provisions of s.44 of the Bankruptcy act' Germitted the claiming of the total of the creditor's debts which had accrued due before the act of bankruptcy on which the petition is founded as long as such are liquidated debts. Miss Marlow stressed the fact that the liquidated debt for costs became due and payable before the act of bankruptcy, and not merely before the date of the petition. Mr Dowdy in reply submitted that the judgment creditor before issuing the bankruptcy notice should have waited until the costs of the action in the District Court had been taxed so that a liquidated amount (being the total of the verdict and taxed costs) could be claimed in a bankruptcy notice that the judgment creditor might issue. The Court, then being of the view that the submissions of Miss Marlow were correct, determined that the bankruptcy notice was valid/indicated that it would publish its reasons at a later date. Such reasons for judgment are published hereunder. In my view the decisions in In re H.B., re Jack: Ex parte C.V. Holland (Holdings) Ltd. and re Schierholter; Ex parte Geis (supra) are distinguishable from the present case. In each of those cases the total indebtedness of the debtor to the petitioning creditor referred to in the petition was greater than that claimed to be due in each respective notice even though the total of the indebtedness was known to each petitioning creditor at the date when each respective notice was issued. This clearly was not the position in the present case. Part 34, rule 3 of the District Court Rules 1973, provide : "3. Where -" (a) there is a judgment for the payment of money and for the payment of costs; and we/De- -5- (b) when the money (other than costs) becomes payable under the judgment the costs have not become payable (because the costs have not been taxed or for any other reason), a person entitled to enforce the judgment by execution may ~ (c) have execution issued to enforce payment of the money (other than costs); and (d}) when the costs become payable, have execution issued separately to enforce payment of the costs. " Such rule clearly shows that two separate writs of execution may issue, one to enforce payment of "money" (other than costs), and the other to enforce payment of costs when such costs become payable. The effect of this rule is similar to the old r.280 of the District Court Rules, the relevant part of which is set out in Re Jack; Ex parte C.V. Holland (Holdings) Ltd. (supra) at 270. In that case Manning J. after quoting the relevant part of r.280 said : - "This rule is based upon the English rule which is r.18 of O.XLII. The English rule was considered in the case of In re G.J., (1905) 2 K.B. 678. In that case judgment had been entered for the petitioning creditor for a sum with costs to be taxed. A bankruptcy notice was issued shortly after the judgment was entered and before the costs had been taxed and 1t was there held that the bankruptcy notice required the debtor to pay the judgment debt in accordance with the terms of the judgment. Vaughan Williams L.J. said (at p.682): "Having regard to the amount of the judgment debt as set forth in the judgment, and to the form of the bankruptcy notice, it seems to me that it was made quite plain to the debtor that what the notice required him to pay was the amount of the judgment debt independently of the costs, and I think the creditor was under no obligation to abandon the right given to him by rule 18 to levy execution afterwards for the costs". But where, as in this case, the judgment creditor's costs have been taxed. before the bankruptcy notice issues and the amount of the judgment, exclusive of costs, is described in the notice as the amount due on the judgment, there is much to be said for the view that the judgment creditor, in order to succeed, must waive the amount of the costs and make it clear in the notice that nothing /6 more is claimed beyond the amount specified. " In my view the present case is indistinguishable from in In re G.J. (supra). In that case Vaughan Williams L.J. at p.682 after stating the passage cited by Manning J. above said "in my opinion the bankruptcy notice complied with all the requirements of sub-s.1 (g) and was a valid notice." whilst Stirling L.J. at p.683 stated that "In re H.B.(supra) does not apply to the present case.". Sub-s.1(g) refers to s.4(1)(g) of the Bankruptcy Act 1883 which, together with Order XLII, r.18, is set out at the foot of p.679. In my view the effect of r.18 of Order XLII is the same as District Court r.3 of Part 34. With respect, the reasoning of the Court in In re G.J.(supra) in this regard is correct and applies to the instant case. Accordingly the bankruptcy notice herein is a valid notice. The Court on 27 February 1978, having determined that the bankruptcy notice was valid, granted an adjournment to the judgment debtor in order that he might, if so advised, seek to set aside the District Court judgment or prosecute an appeal which had apparently been instituted within time but which had not been set down for hearing and reserved the question of costs, this and the in-< are a true enpy of the a2 jonent herein of bis Honour Hlelenr 6 fphite rly Se ery | SSA aL TY EE a TET oe ee TN EES AP TECmE IP Cee i mete