CATCHWORDS Bankruptcy - bankruptcy notice ~ costs not claimed in notice - whether notice defective if costs not taxed at time of issue of bankruptcy notice — bankruptcy notice not defective. Bankruptcy - bankruptcy notice ~- understatement of interest due ~ whether confusing or perplexing to the debtor - notice not defective. RE: GEORGE JOHN KNIGHT EX PARTE: TURIMETTA PROPERTIES PTY, LIMITED 17 SEPTEMBER 1979 - LOCKHART J. NO. 310 OF 1979 tilted adi ate teria tenet ree + tendon Netet Teale Subandt Aland sbeebs tink aetna at Mee eel Pin ie ee oe te oster onpe 6s meant re ' a) te eee weeebeay Sh a IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF No. 310 of 1979 NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY RE: . GEORGE JOHN KNIGHT EX PARTE: TURIMETTA PROPERTIES PTY, LIMITED ORDER JUDGE MAKING ORDER: LOCKHART J. WHERE MADE: SYDNEY DATE OF ORDER: 17 SEPTEMBER 1979 THY COURT ORDERS THAT: The petition be adjourned to a date to be fixed by arrangement between counsel and my associate for the purpose of hearing any applacation by the petitioning creditor to amend the petition following the delivery of my reasons for judgment. IN THC FEDERAL COURT OF AUSTRALIA GENERAL DIVISION ———— BANKRUPTCY DISTRICT OF THE STATE OF } NO. 310 of 1979 ) ) ) NCW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY RE: GEORGE JOHN KNIGHT EX PARTE: TURIMETTA PROPERTIES Pry. LIMITED REASONS FGR JUDGMENT {7 September 1979 CORAM: LOCKHART J. This is a petition for sequestration of the estate of George John Knight ("the debtor"), The debtor opposes the petition on grounds which may be summarised as follows:- l. That the bankruptey notice upon which the petition is based is invalid by reason of the following:- (a) It claims a sum of money in excess of the sum to which the petitioning creditor is entitled pursuant to its judgment in the Supreme Court of New South Wales; noe mene (b) It wrongly states the nature and basis of ithe petitioning creditor's entitlement to interest on the judgment by stating that the petilioniang creditor is entitled to interest on the sum of $461,522.73 at the rate of 22% per annum; (c) It understates the judgment debt by failing to include any amount for costs to which the petitioning creditor was entitled by order of the Supreme Court of New South Wales (Sheppard J.) and the order of the Court of Appeal; and (d) It understates the gyudgment debt by failing to correctly state the amount af interest owing at the date of issue of the bankruptcy natice. That the petitioning creditor 1s a secured creditor of the debtor, and the petition filed by the petitioning creditor is in the form of a petition by an unsecured creditor. The security alleged by the debtor is a mortgage given by Louis John Holdings Pty. Limited _3-~ ("Holdings") to the petiticning credilor to / secure the debt claimed in these proceedings. Holdings halds the property the subject of the security upon trust for the debtor and Louis James Florance absolutely, The facts and the issues are the same as in the case of petition No. P 309 of 1979 against Wr. Florance save that the grounds of opposition to the petition by the debtor and referred io above as 1. (ec) and (d) do not apply in the case of Ifr. Florance and the ground of objection raised by Mr. Flocance that the petition was not served on him is not raised by the debtor. J have set oul the facts and dealt with the issues in my reasons for judgment in the case of Hr. Florance and need not repeat then. In the matter of Florance I faund against Hr. Florance on all grounds of objection except that described in 2. above relating to the petitioning creditor being a secured creditor of Mr. Florance which I found aun his favour. It follows that to the extent that there are common issues between the case of Mr. Florance and that of the debtor I resolve them the same way. The only different question of fact is one which relates to the possible application of s, 306 to save the bankruptcy notice from invalidity if I had reached the conclusion, which I did not in the case of Hr. Florance, that the bankruptcy notice was defective. In the Court of Appeal the debtor conducted his awn case and Wr. Florance was represented by counsel. However, the debtor adopted the reasoning presented by counsel for Hr. Florance. The debtor was present in court throughout the whole of the proceedings before the Court of Appeal. In my opinion the conclusions I reached as ta the operation of s. 306, if it were to apply in the case of Mr. Florance, apply equally in the case of the debtor. It remains for me to consider the two grounds of attack on the validity of the bankruptcy nolice made by the debtor, but not by Mr. Florance, being grounds 1. (c) and (d) above. I turn fiest to ground 1. (c). Mr. Kindred, who appeared for the debtor, submitted that as there was no mention of casts in the bankruptcy notice it was invalid. The point was but faintly argued. When the bankruptcy notice was issued is was impossible to give a notice that included costs. They had not been taxed se execution could not issue -5- for their recovery. This grotind of ohbjertton to the validity of the bankruptcy notice fails: see In Re G. J.3; Ex parte G. J. 1905 2 K.B. 678; and Re Ali David; Ex parte Abda Lahood, an unreported decision of Evatt J. delivered 15 Narch 1979, As to ground 1. (d) Mr. Kindred submitted that the calculation of interest in the bankruptcy notice was understated by the equivalent by two days' interest. The variatron of 2 days was a result of the gap between the date of lodgment of the application for the issue of the bankruptcy notice with the registrar and the date of issue itself. It is agreed that the amount of the understatement is $556.36. This understatement does not necessarily vitiate the bankruptcy notice. In Re The Bankruptcy Act, 1966; Ex ee 23 A.L.R. 522 I said in relation to this very point:- "Tf ai ygudgment creditor chooses to claim interest on a judgment debt, it is necessary for the calculation of the claim to be accurate, and for the period during which the claim is made to be specified: Re Mullavey; Ex parte A.N.Z. Banking Group (1977) 20 A.L.R. 276; Re Davis; Ex parte Deputy Commissiones of Taxation (1963) 19 A.B.Cc. TOD; L963 ALCLR. 7645 and Re McDonald (1978) 18 A.L.R. 505, Understatement of the-amount of statutory interesl accrued from the date of judgment ta the date of issue of a bankruplcy notice or other date specified ain the notice does not necessarily vitzrate the bankruptcy notice. Section 306 of the Acl may be capable of operating to validate a bankruptcy notice that atherwise would be invalid. -6- See the decision of Riley J. in Re Munson; (supra) and my own decision in Re Manion; Ex parte Deput Commissioner of re stion (a decision of ayeeit) UI979) 2S ALR. 270. [ Having regard to all the facts, including the small amount of the understalement, namely $556.36, and the fact that the amount claimed by the notice totals $554,712.38, in my opinion the understatement could not be said to be capable of perplexing or embarrassing the debtor. In my cpinion s. 306 saves the notice from invalidity. For these reasons the attacks made upon the validity of the bankruptcy notice fail. - As I have found in favour of Mr. Florance, and therefore ihe debtor in this case, on the graund that the petitioning creditor is a secured creditor of the debtor, [I shall adopt the same course es I did in the case of Hr. Florance namely, to stand over the further hearing of the petition to a date to be fixed by arrangement with Counsel soa that the petitioning creditor may consider whether it wishes to apply to amend the petition to comply with the provisions of the Act relating to the presentation of petitions by secured creditors. Accordingly, the pelition is adjourned to a dale to be fixed by arrangement between counsel and my associate for we rt ere ee rn wee ee cr reer re me re eg wg rrr re ee re rr re re re re renee re re op -7~ the purpose of hearing any application by the petitioning creditor to amend the petition following the delivery of my reasons for judgment. i oy . 4 | cost 'y tat ins and ine Sfow Z preecd ra pages are a tus ccry ci ite Reasons for Jloagtent heran of [ic Honcur ars tar Justice Losaraet . Lott TE Manat ~ " ' é / Assoc'ste ' - a Dated. // fj. Lod Ler fF fy¥