JUDGME hy JUDGMENT No, 681 7-Sh- CATCHWORDS Bankruptcy - amount stated to be due on a judgment debt understated in bankruptcy notice because of miscalculation of interest - effect of decision of Full Court in Crowl_v. Kleinwort Benson Australia Limited (1987) 74 A.L.R. 148 - whether room for application of de minimis rule. Bankruptcy Act 1966, ss. 41, 306. RE: COL FRANCIS; EX PARTE PREMIER PLASTERBOARD SUPPLIERS PTY LIMITED No. P1767 of 1987 Coram: Sheppard J. Place: Sydney Date : 24 November 1987 tas 7 we a - +o? IN_THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF NEW SOUTH WALES No. P1767 of 1987 wee ewww AND THE AUSTRALIAN CAPITAL TERRITORY RE: COL FRANCIS EX PARTE: PREMIER PLASTERBOARD SUPPLIERS PTY LIMITED MINUTES OF ORDER JUDGE MAKING ORDER: SHEPPARD J. DATE ORDER MADE : 24 NOVEMBER 1987 WHERE MADE : SYDNEY THE COURT ORDERS THAT the petition be dismissed with costs. NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules. a etetetetetd toate tenet moos eneianerremaaonaieled IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISTON BANKRUPTCY DISTRICT OF NEW SOUTH WALES No. P1767 of 1987 wesw eww AND THE AUSTRALIAN CAPITAL TERRITORY RE: COL FRANCIS EX PARTE: PREMIER PLASTERBOARD SUPPLIERS PTY LIMITED CORAM: SHEPPARD J. DATE : 24 November 1987 REASONS FOR JUDGMENT HIS HONOUR: The petition in this matter is opposed on a number of grounds. Two only need be referred to, Qne is that the petitioning creditor was not correctly named in the petition because it was described as Premier Plasterboards Suppliers Pty Limited. The petition was sealed with the common seal of a company, Premier Plasterboard Suppliers Pty Limited. I do not regard the discrepancy, such as it is, as being of any consequence, and I would not uphold the ground of opposition based on that matter. The more serious ground which has been relied upon relates to the form of the bankrupty notice. The copy bankruptcy notice which is annexed to the affidavit of service of it, insofar as it is material, says:- "Whereas PREMIER PLASTERBOARD SUPPLIERS PTY LIMITED of reqistered office 41 Brisbane Water io. ST nies Tin meaner Drive Point Clare N.S.W. (hereinafter referred to as 'the judgment creditor') has claimed that the sum of $5,410.83 together with interest thereon at the rate of 18.25 per centum per annum from 30th dune, 1986 to Sth November, 1986 amounts to $345.60 making a total of $5756.43 is due by you to it under a final judgment obtained by it against you in the District Court of Gosford on the 30th day of June 1986 ..." The notice which was actually served did not refer to 5 November 1986 but continued after "30th of June 1986" where firstly appearing by saying:- "which at the date of issue of this Notice amounts to $345.60..." The notice was issued on 10 December 1986. It is common ground that the calculation of interest from the date of judgment up to 10 December 1986 would yield an amount approximately $100 more than the sum of $345.60 which is referred to in the notice. To that extent, the notice which was served understates the amount of interest which was due at the date of the issue of the bankruptcy notice. If, however, one has regard to the notice which was annexed to the affidavit of service, the interest, subject toa discrepancy of 80 cents, which I regard as de minimis, would in fact be the amount stated, namely, $345.60. Unfortunately for the petitioning creditor, it is the notice served which must be considered. Uninstructed by the decision of the Full Court of this Court in Crowl v. Kleinwort Benson Australia Limited (1987) 74 A.L.R. 148, I would myself, with great respect, have come to the in anne conclusion that the defect in the notice resulting from the understatement of interest was a formal defect or irreqularity occasioning no substantial injustice to the debtor; see s. 306 of the Bankruptcy Act 1966. However, a different view has been expressed by the majority of the Court in Crowl's case, which reversed the decision of another Judge of this Court who was of a agifferent opinion. I am bound to follow the decision of the majority. The only point of distinction which has been put to me by the solicitor for the petitioning creditor is the comparatively small amount which is involved when one compares the figures in this case with those which were involved in Crowi's case. There the judgment debt was approximately $1.400,000 and the interest had been understated by $23,000. Here, the judgment debt was $5,410.83 and the amount of interest $345 to the 5 November or approximately $445 to 10 December. I find it difficult to take the view that, in the range of figures which are in play here, there is any substantial difference between the two cases simply because of the differences in the amounts involved. If one compares the proportion of the amount of the understated interest to the total amount of the debt in each case, I think it will be found that the proportion involved in Crowl's case was slightly smaller than it is here. As Wilcox Jd. said in his dissenting judgment in Crowl's case (p. 154) :- "IT say that the majority's view is that any erroneous understatement invalidates the notice - fer pomene oe on Aes we nna, because there is here no scope for the operation of the maxim de minimis non curat lex. The whole point of the appellants' argument is that a debtor who chose to check the interest calculation would realise that the amount properly payable exceeded the sum demanded and would then be uncertain how much to pay, secure or compound. The assumption is that this uncertainty might so affect the debtor's response to the notice as to lead toa failure to act in accordance with its requirements; where, in the absence of the error, the notice might have been complied with. Upon this argument the amount of the discrepancy is irrelevant; an error of $10 must be regarded as having the same paralysis potential as one of $10,000". Notwithstanding my dislike of matters which, with respect, seem to me to involve the Court in an overly strict view of the formalities and technicalities which are involved, I think, with some hesitation, that Crowl's case obliges me to take the view that the notice here is not one which can be cured by the provisions of s. 306. I reach that decision with some regret, notwithstanding my recognition that bankruptcy is still sadly a technical jurisdiction and that technicalities of this kind sometimes have to be upheld. I recognize also that mistakes of the kind made here ought not to be made. Almost always they are due to carelessness on the part of someone for whom the judgment creditor must take responsibility. Usually the error involves miscalculation. Here this was not the case; the error was failure to correct the copy of the bankruptcy notice actually served on the debtor by making it clear that the interest was calculated to 10 November 1986, about 5 days after the request for the bankruptcy notice was made, rather than to 10 December 1986 when the notice issued from the Registry. Maybe one can wash one's hands of the problem by saying that it is the ce oreYs 9 roa pow profession's responsibility to get things right. That, of course, is true, but the error is one which experience shows is common, notwithstanding some checking of amounts which occurs in the Registry before a bankruptcy notice is issued. In the light of the judicial disagreement which there obviously is in relation to this matter as revealed by Crowl''s case, it would seem to me to be desirable, if a suitable vehicle can be found for it, for there to be some test of the decision by perhaps the constitution of a Court of five. Alternatively, notwithstanding the Law Reform Commission's investigation into the whole matter of bankruptcy law, it might be advisable for the legislature to make some stop-gap amendment to overcome the problen. A simple amendment could be made applying the provisions of sub-sec. 41(5) of the Act, which deals with the consequences of an over statement of the amount of a judgment debt in a bankruptcy notice, to understatements of amounts due. In the result, there will be in this case, and I would think in many others, a substantial delay and a great deal of money thrown away in costs all to no constructive purpose. However, for the reasons I have given, I have reached the conclusion that the point is good and must be upheld. The petition will be dismissed with costs. i certify that this and the dp preceding pages are a true copy of the reasons for judgment herein of The Honourable Mr Justice Sheppard. / KtL Associate Dated 2A AWovEsrSER L987 oo Solicitor for the Debtor: Solicitor for the Petitioning Creditor: . Date of hearing: Miss S. Nash of Sally Nash & Co. Mr. M. Kennedy of Turner, Whelan & Wells, City Agents for Peter Blackwell & Co. of West Gosford 24 November 1987 tp ae ee ee y x weng See ee oe eres in a - y