JUDGMENT No. 2 Sonal oS 33 g CATCHWORDS Bankruptcy - sufficiency of bankruptcy notice - claim for further interest abandoned --in yecital- of - bankruptcy notice = whether. uncertainty is induced. Bankruptcy ~ service of petition - official copy of petition ~ document served appearing to be a machine copy of petition - whether document served was an official copy of the petition. Bankruptcy Act, 1966 - ss. 41, 306 Bankruptcy Rules - r.4. Re The Bankruptcy Act 1966; Ex parte Commercial Banking Company of Sydney Limited (1979) 23 A.L.R. 522 In re H.B. £19043 1 K.B. 94 Re McDonald (1978) 18 A.L.R. 505 Re Schierholter (1978) 19 A.L.R. -113 Re Munson (1977) 29 F.L.R. 479 McKenzie v. Rees (1941) 65 C.L.R. 1 Re: Richard Zikesch Ex Parte: A.M.M. Pty. Ltd. No. P.407 of 1984 Jenkinson J. Melbourne 22 October, 1984 -- IN THE FEDERAL COURT oF AUSTRALIA GENERAL DIVISION: No. P407 of 1984 ) ) BANKRUPTCY DISTRICT OF THE. STATE 2 OF VICTORIA ) IN THE MATTER of aPetition dated 'the 5th day of April, 1984 - |. CORAM: PLACE: DATE: RE: RICHARD ZIKESCH The Debtor EX PARTE: A.M.M. PTY. LTD. The Creditor Mr. Justice Jenkinson Melbourne 22 October, 1984 ORDERS The Court orders that the grounds of apposition to the petition specified in paragraphs 1 and 1A of the amended notice of the grounds on which the debtor intends to oppose the petition be and are hereby overruled. The Court further orders that the costs of the hearing of the petition to and including this day be reserved. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION } BANKRUPTCY DISTRICT OF THE STATE > ' ) OF VICTORIA No. P407 of 1984 IN THE MATTER of a Petition dated the 5th day of April, 1984 RE RICHARD ZIKESCH The Debtor EX PARTE: A.M.M. PTY. LTD. The Creditor CORAM: Mr. Justice Jenkinson PLACE: Melbourne DATE: 22 October, 1984 REASONS FOR JUDGMENT Determination of issues raised on the hearing of a bankruptcy petition. The first question is as to the sufficiency of the bankruptcy notice upon which the alleged act of bankruptcy is grounded. The material parts of the bankruptcy notice are: "Whereas (the judgment _.creditor). has -_-. Claimed that the sum of $11,643.75 is due by you to 1t being a total of - (i) The sum of $11,169.43 due by you to it under a final judgment obtained by it against you in the District Court of New South Wales at Albury on the thirteenth day of September 1983, being a judgment the execution of which has not been stayed, and (ii) the sum of $474.32 being interest on the said sum of $11,169.43 at . the rate of 15.5 percentum per- - annum computed from the 13th day of September, 1983 to the 22nd day of December, 1983, due by you to it pursuant to the terms of the said judgment, any claim for further interest being abandoned for the purpose of compliance with this Bankruptcy Notice. THEREFORE TAKE NOTICE that within 21 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 $11,643.75 so claimed by the judgment creditor to the Registrar of the District Court at Albury; or (b) to secure the payment of the sum referred to in the last preceding paragraph to the satisfaction of the Federal Court of Australia or the Judgment Creditor or compound the sum so specified to the satisfaction of the Judgment Creditor." It was submitted by Mr. Braun of counsel for the debtor that a person reading the requirement which is stated in the notice and the rest of the notice would be uncertain as to what the requirement was. Uncertainty would be occasioned, in Mr. Braun's submission, by the circumstances that the words "any claim for further interest being abandoned for the purpose of compliance with this Bankruptcy Notice" appear at the end of the recital with which the notice commences and that no reference to any abandonment of claim for "further interest" is to be found in the statement of the requirement which follows the recital. Those circumstances, it was submitted, would induce in the mind of the reader an uncertainty whether commission of an act of bankruptcy might be avoided by payment of $11,643.75 within the period specified (or by :'achieving, within that period, in relation to that sum, one of the legal consequences specified in paragraph (b) of the statement of the requirement) or whether, on the other hand, what was required included some further payment (or a legal consequence of the kind specified) in respect of interest which had accrued on the sum of $11,169.43 by reason of the passage of time after 22 December, 1983 or, perhaps, after the date of service of the bankruptcy notice. Obscure as is the meaning of the adverbial phrase with which the recital ends, the preceding phrase "any claim for further interest being abandoned" seems to me to preclude any supposition that the requirement which the notice thereafter expresses might have to do with interest accruing after 22 December 1983. The concluding adverbial phrase of the recital may have been intended to mean "for the purpose of ascertaining hereafter whether there has been compliance with the requirements of this Bankruptcy Notice", or to mean "for the purpose of achieving correspondence between the claim being recited and the requirements which are hereafter - stated in this Bankruptcy Notice". Whatever it means, it does not, I think, cast into doubt the conclusion, which :the-rest of paragraph (ii) -'compeis, that - what is recited to have been claimed includes nothing in respect of interest accrued or to accrue after 22 December 1983. Then in paragraph (a) of the statement of requirement the phrase "so claimed by the judgment creditor" makes it plain that the several 4. requirements relate only to what has been recited to have been claimed. Mr. Braun relied -in support of 'his submissions on the reasoning of Lockhart J. in Re The Bankruptcy Act 1966; Ex parte Commercial Banking Co. of Sydney (1979) 23 A.L.R. 522, and particularly on that learned judge's conclusion (stated at 23 A.L.R. 529) that in the notice he was considering verbal consistency ought to be maintained, between the statement of what was being~ claimed to be due under judgment and the statements of the several alternative requirements of the notice, by repetition of the phrase "and no more" after the sum of money. But Lockhart J. reached that conclusion upon a consideration of what it was desirable that a bankruptcy notice containing particular verbiage, not found in the notice before me,-should include : he was not purporting to determine whether the omission of what he thought it desirable to include would vitiate the notice he was considering, much less a notice in which that particular verbiage is not found. Nor was he in my opinion deciding that use of the phrase "and no more" was the only appropriate means by which the requirements of a bankruptcy notice maybe limited to a particular sum ina case where part of that sum is. interest accrued on a judgment debt. I find nothing in that case inconsistent with the conclusion I have reached, that the terms of the notice do not create uncertainty as to what its several. alternative requirements are... __. Mr. Braun further submitted that the words "any claim for further. interest being -abandoned for the purpose of compliance with this Bankruptcy Notice" indicated an intention on the part of 5. the judgment creditor.,:--and constituted a-stipulation by him, that . interest in respect of the period after..22 December. -1983. was "abandoned" oniy_in. the sense that compliance with the requirements of- the - bankruptcy -notice would be achieved .by paying .: - or securing or compounding the specified sum, which included nothing for interest in respect of that period. The quoted verbiage reserved, by implication, the right of the judgment creditor to assert, otherwise than in relation to the requirements of the bankruptcy notice, that interest in respect of that period was due and payable, Mr. Braun submitted. The notice was therefore, according to the submission, "a notice to pay part of a judgment debt, leaving any balance that may be due to he subsequently claimed", which had been declared by Romer L.J., in In re H.B. £1904] 1 K.B. 94 at 103, to be "clearly bad". If the meaning of the words quoted were as suggested by Mr. Braun, yet in my opinion the notice would not be bad. The authorities which declare the legal consequences of understating in a bankruptcy notice, as the sum concerning which the requirements of the notice are expressed to apply, the amount due in respect of the judgment debt on which the notice is founded, are concerned with three topics :uncertainty as to what those reguirements are; failure to comply with a provision of the Bankruptcy Act; contravention -of the: policy of-the law of bankruptcy. The submission presently under consideration does not. raise the first topic. From .the phrase .!in.:accordance with the terms of the judgment"--in s.4(1)(g) of the English Bankruptcy Act 1883 (8.41(2)(a)(i) of " the Bankruptcy" Act '1966 (C'with) : "in accordance with the judgment or order") there have been educed the 6. . conclusions that-a requirement - ina: bankruptcy: notice to pay part - -- -only of what is unpaid under a judgment fails to comply with those - statutory provisions and that such a notice is for that reason inefficacious -to:--occasion an act _ of 'the bankruptcy -: 'In re H.B. £1904] 1K.BS '93 at 101-102, 103, 104; Re McDonald (1978) 18 A.L.R. 505 at 507; Re Schierholter (1978) 19 A.L.R. 113. Upon this doctrine has been engrafted the qualification that, if the notice made it clear that "nothing more was claimed to be due on the judgment beyond the amount specified in the notice", less than the amount due might be specified inthe notice' as the sum required to be paid, without impairment of the efficacy- of the notice. And the doctrine has been held inapplicable to understatement occasioned by the accrual of statutory interest on a judgment debt between the date on which a notice is submitted to a registrar for issue and the date on which the notice is dated, signed and issued by the registrar, in a case where the requirement of the notice is to pay a sum which includes the amount of interest accrued at the earlier of those dates : Re Munson (1977) 29 F.L.R. 479 at 482-483. In the case I am considering the notice was submitted on 22 December 1983 and was dated, signed and issued on 19°dJanuary, 1984. Following Re Munson, supra, I reject so much of Mr. Braun's submission as relates to interest which accrued on the judgment between 22 December 1983 and 19 January 1984. -Concerning interest -in respect of the period after 19 January, 1984,.-I say that, if the verbiage quoted from this bankruptcy notice purports -- as Mr.- Braun submitted it did ~- to reserve the judgment creditor's right to assert,. otherwise-than in relation to the requirements of the bankruptcy notice, that interest in respect of that period was due 7. and-payable, the. bankruptcy notice..was not..thereby. invalidated, in. my opinion. The doctrine to which the observations of 'Romer L.J. in Re _H.B., supra give expression, like the statutory provisions on which the - doctrine vis based, ixis concerned with-indebtedness under a judgment at the time of issue of a bankruptcy notice, not with the possibility of an indebtedness under the judgment to accrue thereafter. Whether and in what circumstances such a possibility will be realised may be a question : see, for example, McKenzie v. Rees (1941) 65 C.L.R. 1. To include in a bankruptcy notice assertions - whether express or implied - about the possibility is no doubt to travel outside the subject with which the notice should be concerned, but it is not, in my opinion, to contravene any provision of the Bankruptcy Act, except that which requires a bankruptcy notice to be in accordance with the prescribed form (s.41(1)(a)). The inclusion of such assertions in a bankruptcy notice will not in my opinion cause injustice unless uncertainty as to the requirements of the notice is thereby occasioned. If no uncertainty results, proceedings under the Bankruptcy Act founded on such a notice will not in my opinion be invalidated : see s.306(1). The objections to the sufficiency of the bankruptcy Notice are overruled. The other issue raised for determination was whether -due service of the petition had been proved.- ---> ->----~ The affidavit >.of David Charles Hall sworn -12: June 1984 included the statement that "an official copy" of the petition had 8. been served 'on 17 -May 1984 on'the debtor personally. Rule -:15(b) (i) of the Bankruptcy Rules..requires that an official copy of the petition be served on the debtor. Annexed to that affidavit was a document--which the deponent described as "an official copy" of the petition. It was not submitted that 'the document -so annexed and so described did not answer the description which the deponent had given it. Reliance was placed by Mr. Braun on the following paragraph of an affidavit sworn on 13 dune 1984 by the debtor: "2. %In or about the month of dune, 1984, Io was served with the following documents in this matter: (a) A photostat copy of an Affidavit purporting to be sworn by one Douglas C. Hall the Sth day of April, 1984 which annexed what appears to be a machine copy of a Creditors Petition; (b) A photostat copy of an Affidavit purportedly sworn by Stephanie Heath Kirby the lst day of May, 1984; and (c) A photostat copy of an Affidavit purportedly sworn by Timothy Hemsley the 16th day of ' April, 1984." Counsel for the parties did not suggest that the expression "machine copy":. differed in meaning from the expression .. "photostat copy"...: If all the writing on the document served were the product of. photographic sreproduction,: then. it was common ground that the document was not an -official copy of the petition, for the definition .of ._the.expression::"officiai copy" in Rule 4(1) of the Bankruptcy Rules provides that, in relation to a petition, it "means a copy :of -the petition that has attached to it,.or written on it, a mnote-in accordance with-Form 6, signed and stamped by the Registrar". The original petition filed in this proceeding has: the required note -written.on it; not attached to it. There is no oral evidence on the issue, nor any documentary evidence but that which I have described. (Further affidavits were filed, but I was asked to determine the issue without regard to those affidavits, for reasons which appear in the transcript of the proceedings on 17 July 1984.) The onus of proof of the issue is on the petitioner. The description by the debtor of a document served on him as "what appears to be a machine copy of a Creditors Petition" is not in my opinion unequivocally «inconsistent with a finding ..that. the - document was an official copy of the petition. There is no unequivocal denial that the signature or the stamping of the prescribed note is original. The debtor's use of the present tense of the verb, to appear, suggests that the document was still in existence when his affidavit was sworn, but the document was not produced, nor was his failure to produce the document explained. In the circumstances I am persuaded that the document served was an official copy. -- --:- It was submitted -that the annexation of .the document to an affidavit vitiated-service.. No authority in support --of 'the submission was cited. I reject the submission. 10. It is ordered- that the grounds of opposition --to the petition specified in paragraphs 1 and 1A of the amended: notice of the grounds on which the debtor intends to oppose the petition be and are hereby. overruled and that-: the costs-of the hearing~of -the -. petition to and including this day be reserved. ———————————————— SS = =— =] h | teste "~~ oT Os Ane Y Pay ov T12Q Ocfoher 193% K Loe.