JUDGMENT No. LL Qual Ladadele GENERAL DISTRIBUTION IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY NG 7618 of 1998 BETWEEN: TREVOR GROENEVELD APPLICANT AND: SEOVIC CIVIL ENGINEERING PTY LTD RESPONDENT JUDGE: THE HON JUSTICE MARCUS EINFELD DATE: 6 OCTOBER 1998 PLACE: SYDNEY REASONS FOR JUDGMENT This case does not require or deserve a lengthy judgment, and I do not propose to give one. If necessary, at a later time I shall supplement it with the detailed facts and dates, but they are well set out in the affidavits and submissions and it is not necessary to repeat them. All I need say now is that by consent orders made in this Court on 12 October 1995, judgment for a debt of $120,000 was ordered in favour of the present respondent against the present applicant. The consent orders made provision for payment of the debt by instalments. In many instalment programs, a default in the payment of instalments represents an automatic termination of the instalment program and the reinstatement of the original sometimes much larger debt. In contrast to them, a feature of this instalment regime was that the debtor, the present applicant, was given a second chance to remedy a default because there was a provision that where there was a default in any instalment payment, the respondent would give written notice of the default to the applicant. The relevant clause in the terms of settlement included, in clause 5(a), a sentence which says - and J do not quote it in full: (a) Upon default - the applicant will give written notice of the default to the second respondent. Service of such notice will be deemed to have been effected if sent to or left at... -2- one of three addresses set out. The references to the applicant and second respondent are a reference to the present respondent and the present applicant respectively. The clause went on to say that the present respondent would not enforce the judgment on the basis of a default provided it was rectified within seven days — ... after the said written notice is served on... the present applicant. Only if rectification was not then made did the original debt then become payable and did interest then accrue. Manifestly, clause 5 in context means that the applicant must receive the notice. In other words, he must be notified that he is in default and he then gets seven days after the notice is received to rectify the default. In the current proceedings the applicant moves to set aside a bankruptcy notice issued because of the non-payment of an instalment. What is sought in effect is a declaratory construction of the consent orders in this connection. The primary issue before the Court is whether a notice dated 29 January 1998 in respect of an instalment on the relevant debt was received or not. There is evidence that the notice was posted but overwhelming evidence that it was never received. As the invitation to cross-examine the relevant witnesses in respect of the receipt was declined, I have little option but to conclude that, although posted, the notice was not received. In my opinion, that disposes of the argument on the construction of the consent orders which settled this original debt, that the word "sent" means posted, in support of which there has been quoted sections 28A and 29 of the Acts Interpretation Act 1901 (Cth) (the Act) and some authority. But those sections and the quoted authority all concern the date upon which the person who received a letter or notice or document is deemed to have received it. None is about proving an actual or constructive receipt when receipt is manifestly disproved. There is nothing in the Act which deems something to have been received when it is proved that it has not been received. In any case, clause 5(b) is entirely based upon the concept that notice is given and received, and that the default is rectified within seven days after its receipt. In my opinion, where a notice is not received, there can be no failure to rectify because seven days after receipt cannot be computed. If this were a dispute about when it was received, the -3- Act and the cases might have some room for operation. But in a case where it is clear that the notice was not received, there can be no pretence by a deeming provision that it has been received and no default because the failure to make an instalment payment was not rectified within the seven day period. In my opinion, there has been no failure to rectify the default in respect of the relevant instalment and therefore there can be no debt, at least not the debt claimed in this bankruptcy notice. A second argument of the applicant, related to the first, is that if there has been a failure in this regard, the present debt can only be the unpaid instalment and not the original debt less whatever has been paid, as claimed in the bankruptcy notice. In my view, that point is connected inexorably to the first point and for the same reasons must be correct. Although it is not necessary to decide it in view of the earlier conclusions, a third point raised is that the bankruptcy notice overstates the amount due because there was a failure to make provision for a leap year and therefore, the amount of interest was overstated. This point is conceded and for that we all have to be indebted to the intense learning of Burchett J in Re Clubb v Westpac Banking Corporation (1990) 93 ALR 123. The respondent, however, states that the claim for the overstatement required by section 41(5) of the Act and made in a letter from the applicant's solicitor of 25 May 1998 did not state that this was the claim being made. The respondent says that the context both of that letter and of the applicant's affidavit filed with the application is that the overstatement claim had nothing to do with the leap year problem, but was based upon an error in crediting the payments already made. In fact, the letter of 25 May did not make any statement at all about what the overstatement was, although the actual reference to the overstatement is followed by a comment related to the amount of money that the applicant had paid up to that time. Ifthe respondent had been in any doubt about the matter, it could have sought details of the alleged overstatement. It did not do so, but two days after the applicant's letter claiming the overstatement, the respondent's solicitors wrote that they had noted the comments but were instructed to proceed with the bankruptcy notice. In other words, the respondent had decided that it was going ahead with the bankruptcy notice regardless of the alleged overstatement. This attitude is consistent with the attitude of the respondent's principal in his evidence in the witness box here in which quite imperiously he did not seem to show any concern at all about the fact that he had continued to accept -4- instalment payments while at the same time alleging that the instalment regime was at an end and that he was entitled to resurrect the original debt. In the context of a letter in which he wrote about a Christian attitude towards debt, I find it quite impossible to accept the respondent's alleged understanding of the overstatement. Moreover, the respondent's application that, in effect, the overstatement should be ignored or waived or that some variation of the ordinary consequence which flows from an overstatement in a bankruptcy notice should be granted to it in the exercise of the Court's discretion does not come well from the mouth of a party whose principal has, from the first instance of this particular matter, apparently, taken a quite uncompromising and inflexible view about what is in fact a late payment of some $4,500 in a sum of $200,000. I can in the circumstances see no basis for extending the discretion or understanding of the Court in this regard and were it necessary to decide the case on such a basis, I would decline to exercise my discretion in favour of the respondent. The proper conclusion to be drawn from all the facts is that the bankruptcy notice number 510 of 1998 should be set aside. I order that the respondent pay the applicant's costs. I certify that this and the preceding three (3) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Marcus Einfeld Associate: VA tlfil_> . Dated: 6 October 1998 Counsel for the Applicant: Mr M. Aldridge Solicitor for the Applicant: Murphy & Moloney with Pryor Tzannes & Wallis Counsel for the Respondent: Mr P. Gray Solicitor for the Respondent: Toomey Pegg Drevikovsky Date of Hearing: 6 October 1998 Date of Judgment: 6 October 1998