FEDERAL COURT OF AUSTRALIA Owners – Strata Plan No 14120 v McCarthy [2017] FCA 242 Appeal from: The Owners – Strata Plan No 14120 v McCarthy (No.2) [2016] FCCA 2007 File number: NSD 1484 of 2016 Judge: FARRELL J Date of judgment: 14 March 2017 Catchwords: BANKRUPTCY – appeal against a decision by a judge of the Federal Circuit Court of Australia to set aside a bankruptcy notice – where amount stated as owing on bankruptcy notice exceeds amount due – whether notice complies with s 41(5) of the Bankruptcy Act 1966 (Cth) – where notice comprises various communications – notice found to be sufficient – appeal dismissed Legislation: Bankruptcy Act 1966 (Cth) s 41(5) Cases cited: Re Serafino; Ex parte Classic Manufacturing Pty Ltd (1989) 86 ALR 283; [1989] FCA 159 Seovic Civil Engineering Pty Ltd v Groeneveld (1999) 87 FCR 120; [1999] FCA 255 The Owners – Strata Plan No 14120 v McCarthy [2016] FCCA 1583 The Owners – Strata Plan No 14120 v McCarthy (No.2) [2016] FCCA 2007 Date of hearing: 20 December 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 32 Counsel for the Appellant: Mr D F Elliott Solicitor for the Appellant: Grace Lawyers Counsel for the Respondent: Mr D P Robinson SC Solicitor for the Respondent: Cogent Lawyers ORDERS NSD 1484 of 2016 BETWEEN: THE OWNERS - STRATA PLAN NO 14120 Appellant AND: CATHERINE ESTELLE MCCARTHY Respondent JUDGE: FARRELL J DATE OF ORDER: 14 March 2017 THE COURT ORDERS THAT: 1. The appeal is dismissed. 2. The appellant must pay the respondent's costs as agreed or taxed. 3. Any costs payable by The Owners Corporation – Strata Plan No 14120 pursuant to order 2 be paid from contributions levied only in relation to Lots 2 and 3 and not Lot 1. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT Introduction 1 This is an appeal from orders made in the Federal Circuit Court of Australia (FCCA) on 18 August 2016: see The Owners – Strata Plan No 14120 v McCarthy (No.2) [2016] FCCA 2007. The primary judge set aside Bankruptcy Notice BN 180646 issued on 28 April 2015 and dismissed the creditor's petition filed by the applicant (SP 14120) on 16 September 2015. The primary judge also ordered that SP 14120 pay the costs of the respondent (Ms McCarthy) and that those costs be paid from contributions levied on lots owned by the other two owners in the strata plan. 2 The orders were made following the separate determination of two questions in reasons published on 5 July 2016: see The Owners – Strata Plan No 14120 v McCarthy [2016] FCCA 1583. Unless otherwise indicated, references in these reasons to paragraphs of the primary judge's reasons are references to this judgment, which I may also refer to as the July Judgment. Issue on appeal 3 The primary judge answered "yes" to the following questions which are set out at J[28]: i. Whether the amount specified as the amount due to the petitioning creditor in bankruptcy notice BN 180646 issued on 28 April 2015 exceeds by the amount of $51.29 the amount in fact due to the petitioning creditor by the respondent debtor as at 28 April 2015. ii. In the event that the answer to question (i) is in the affirmative, whether the respondent debtor in the circumstances gave to the creditor notice which complies with s.41(5) of the Bankruptcy Act 1966 (Cth) of the misstatement. 4 The issue raised on the appeal is whether the primary judge erred in answering "yes" to question (ii). The primary judge's finding in relation to issue (i) is no longer in dispute. 5 The Bankruptcy Notice was founded on the second and third of three judgment debts obtained by SP 14120 against Ms McCarthy for unpaid strata levies (see [11] below). SP 14120 served the Bankruptcy Notice on Ms McCarthy on 12 May 2015. Item 6 of the Bankruptcy Notice stated that the "total debt amount" claimed was $11,201.03. This amount was calculated by adding the aggregate of the second and third judgment debts ($11,477.27, which was Item 1 in the Bankruptcy Notice) to accrued interest ($392.47, which was Item 3 in the Bankruptcy Notice), and deducting an allowance for "payments made and/or credit allowed since judgment/s or order/s" ($668.71, which was Item 5 of the Bankruptcy Notice): J[22]. The misstatement in Item 5 (and therefore also in Item 6) arose from SP 14120's failure to apply, in full, to the second judgment debt, the first of three $240 payments which SP 14120 acknowledges that it received from Ms McCarthy on 15 August 2014, 12 September 2014 and 31 January 2015. Instead, SP 14120 allocated $51.29 to the unpaid balance of the first judgment debt, which was not the subject of the Bankruptcy Notice. The result was that Item 5 of the Bankruptcy Notice stated that SP 14120 had credited an amount of $668.71 for payments received after judgment, not $720. 6 For completeness, Ms McCarthy claimed to have made 24 payments of $240 each in accordance with an instalment payment order made on 3 April 2014. SP 14120 acknowledged receipt of only the three payments referred to in [5] at the time the Bankruptcy Notice was issued. There was a second ground of attack by Ms McCarthy on the Bankruptcy Notice relating to 21 payments of $240 made by electronic means to a Direct Electronic Funds Transfer (DEFT) account with SP 14120's bank for which SP 14120 gave no credit to Ms McCarthy. SP 14120 says that those payments were made to the wrong account and SP 14120 did not receive them until June 2015. Whether or not the payments amounted to a pro tanto discharge of Ms McCarthy's liability is a matter which must be decided by the FCCA if the matter is remitted back to the FCCA: J[26]-[27]. 7 There is no dispute that a bankruptcy notice is invalid if it claims an amount greater than the amount for which the creditor is entitled to issue execution as at the date the bankruptcy notice was issued, provided the debtor gives timely notice to the creditor that the debtor disputes the validity of the bankruptcy notice. Section 41(5) of the Bankruptcy Act 1966 (Cth) provides: A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement. 8 The primary judge held that a telephone conversation in the morning of 1 June 2015 between Ms Blair from Legal Aid NSW (Ms McCarthy's solicitor) and Ms Panuccio (a law clerk employed by the solicitor for SP 14120) and an email Ms Blair sent to Ms Panuccio at 11.34 am on that day were "so related and contemporaneous" that they should be "viewed together" for the purpose of determining whether s 41(5) had been complied with by Ms McCarthy: J[75]. SP 14120 does not cavil with that finding. 9 However, SP 14120 says that the primary judge erred by finding that the 1 June 2015 communications were sufficient to enable SP 14120 to identify a misstatement in the Bankruptcy Notice by $51.29 in the amount said to be owing to SP 14120. SP 14120 says that a fair reading of the communications on 1 June 2015 leads to the conclusion that Ms McCarthy notified SP 14120 that only three of 24 payments had been allocated to her account, a different misstatement. Background 10 Ms McCarthy is the registered proprietor and owner of a lot in SP 14120. It is one of three residential apartments in the strata plan; they are located in a country town in New South Wales. She has been in "unfortunate circumstances" for some time. She struggled to service her mortgage repayments and pay strata levies soon after she bought the apartment in 2005: J[6]-[7]. Judgment debts 11 SP 14120 commenced three sets of proceedings in the Local Court of New South Wales seeking to recover unpaid levies from Ms McCarthy. The proceedings resulted in three judgment debts being obtained against Ms McCarthy which were the subject of findings by the primary judge: (1) The first judgment debt was entered against Ms McCarthy on 26 April 2013 for an amount of $4,445.29. From the time the proceedings commenced until the first judgment debt was entered, Ms McCarthy had made payments amounting to $2,031. Ms McCarthy obtained orders that the first judgment debt be paid in fortnightly instalments of $190 each. She made 16 instalment payments from around 15 August 2013 to 14 March 2014, leaving an unpaid balance of $51.29 as at 15 August 2014: J[9]-[11]. (2) The second judgment debt was entered against Ms McCarthy on 19 February 2014 for an amount of $4,047.90. On 3 April 2014, Ms McCarthy obtained an order that the second judgment debt be paid by fortnightly instalments of $240 each commencing on 1 May 2014. Ms McCarthy submitted to the primary judge that she made payments of $240 on 27 March 2014 and 28 April 2014 in anticipation of the instalment order being made. It appears that Ms McCarthy made a further seven payments up to and including 4 August 2014. SP 14120 submitted to the primary judge that Ms McCarthy made these payments to the wrong DEFT account with its bank, it did not know of the payments at the time they were made and it did not receive them until June 2015. Nevertheless, SP 14120 accepted, and the primary judge found, that Ms McCarthy made three payments of $240 each (totalling $720) which were received by SP 14120 on 15 August 2014, 12 September 2014 and 31 January 2015: J[12]-[17]. (3) The third judgment debt was entered against Ms McCarthy on 13 April 2015 for the amount of $7,429.38. That judgment debt was based on SP 14120's claim that Ms McCarthy had not paid strata levies between 13 November 2013 to 26 February 2015: J[20]-[21]. Item 5 of the Bankruptcy Notice 12 How SP 14120 arrived at the amount set out in Item 5 of the Bankruptcy Notice only became clear at the hearing before the primary judge. In considering whether there was an overstatement by $51.29, the primary judge noted that the position of SP 14120 developed in the following way: (1) In an affidavit sworn on 28 January 2016, before the hearing, a solicitor employed by the lawyers for SP 14120 (who had carriage of the matter) gave evidence that payments of $240 each had been received by SP 14120 on 15 August 2014, 12 September 2014 and 31 January 2015 in accordance with the orders made on 3 April 2014 for payment of the second judgment debt by instalments: J[53]. (2) However, SP 14120's position at the hearing relied on an affidavit sworn by the same solicitor on 15 March 2016. He said that on 15 August 2015 [sic 2014], SP 14120 received the first of three payments of $240 from Ms McCarthy. SP 14120 credited $51.29 out of the $240 instalment made on 15 August 2014 towards the final payout of the first judgment debt. It was because of this that SP 14120 allowed credit for only $668.71 in Item 5 of the Bankruptcy Notice as amounts received after the second and third judgment debts: see J[35]-[37]. 13 The primary judge found that Ms McCarthy appropriated the payment made on 15 August 2014 to the second judgment debt and SP 14120 was not entitled subsequently to appropriate it to the first judgment debt. Accordingly, there was an overstatement of the amount due in the Bankruptcy Notice by $51.29: J[57]. 1 June 2015 communications 14 There is no prescribed method for giving notice under s 41(5) of the Bankruptcy Act. The primary judge found that it could be given in writing, orally or both: J[63]. 15 The primary judge found (at J[73]) that the telephone conversation between Ms Blair and Ms Panuccio on the morning of 1 June 2015 was relevantly to the following effect: Our client has been served with a bankruptcy notice wrongfully in this matter because your client has failed to credit several payments made by her and on that basis your client had no right to take legal action against her or serve her with a bankruptcy notice. 16 The primary judge found that relevant portions of the follow-up email sent by Ms Blair at 11.34 am were (as written at J[74], save that emphasis has been added): Dear Marie, I refer to our telephone conversation this morning. As you are aware, we are assisting Catherine McCarthy in this matter. As discussed this morning it appears as though your client has not credited our client's fortnightly payments of $240 to her strata plan. We are instructed that at some stage in the past our client was paying SMS $677 per month for strata fees. When she could not afford that, she applied to the Court to pay by instalments of $190 per fortnight, which was granted. It appears her payments of $190 per fortnight have been credited to her account by SMS. Following this, her payments increased to $240 per fortnight. It appears that SMS have only credited 3 of these payments to her account on 15 August 2014, 12 September 2014 and 31 January 2015 (please see the ledger attached). We are instructed that our client has made payments of $240 per fortnight in accordance with that agreement. On that basis please find attached receipts for our client's payments made. SMS have not credited her for 21 payments made. We consider that your client's conduct in failing to credit our client's account for payments which were clearly made is quite serious. It appears that your client had no legal right to commence proceedings and obtain a judgment against our client in the circumstances. Please provide us with your client's explanation as soon as possible. 17 The "ledger attached" listed 22 payments. There are three payments of $677 each listed as having occurred on 4 April 2013, 2 May 2013 and 29 May 2013. There are 16 payments of $190 each listed as having occurred between 15 August 2013 and 14 March 2014. There are three payments of $240 each listed; these are the payments made on 15 August 2014, 12 September 2014 and 30 January 2015. The bottom of the ledger page relevantly reads: 14/03/2014 … 190.00 15/08/2014 … 240.00 12/09/2014 … 240.00 30/01/2015 … 240.00 The handwritten mark ">" appears between the dates 14/3/2014 and 15/8/2014 and between 12/9/14 and 30/1/2015. The words "24 payments" are handwritten below the table. Consideration by the primary judge of question (ii) 18 The primary judge's reasoning in determining question (ii) was informed by the decision of the Full Court (Hill, Sackville and North JJ) in Seovic Civil Engineering Pty Ltd v Groeneveld (1999) 87 FCR 120; [1999] FCA 255: J[61]. He said at J[64]-[67]: [64] In Seovic (supra) the Full Court considered the proper construction of s.41(5) of the Act and its meaning and effect. At page 127 ([30]) it was pointed out that this question of statutory construction was within an area of the law notorious for its technicality. At page 128 ([32–33]) the Full Court said: 32. The notice the debtor is required to give, in order to challenge the validity of the bankruptcy notice by reason of an over-statement of the amount due, must do two things: • first, it must give notice to the creditor that the debtor disputes the validity of the notice; and • secondly, it must give notice to the creditor that the debtor does so on the ground of "the misstatement". Clearly enough, the expression "the misstatement", as used in s 41(5), is a reference to the amount claimed in the bankruptcy notice being incorrect by reason of it exceeding the amount in fact due by the debtor to the creditor. 33. It follows from the language of s 41(5) of the Bankruptcy Act that a debtor does not comply with s 41(5) simply by asserting in the notice to the creditors that the bankruptcy notice is invalid. The debtor's notice must at least give notice that the validity of the bankruptcy notice is disputed "on the ground of the misstatement". What, then, is meant by the concluding words of s 41(5)? [65] At pages 128–129 ([36]) the Full Court set out its view that the debtor had to do more than simply assert that the amount specified in the bankruptcy notice exceeded the amount actually due. The Full Court said: 36. While it is not strictly necessary for us to decide, we think that the better view is that a notice by the debtor which simply asserts, without more, that the amount specified in the bankruptcy notice exceeds the amount actually due, does not comply with the requirements of s 41(5) of the Bankruptcy Act. The expression "the misstatement" strongly suggests that the debtor must do more than merely assert that there is a misstatement in the bankruptcy notice. The subsection requires the debtor to provide sufficient information in the notice to enable the creditor to identify what is said to be the alleged misstatement. Only then does the debtor's notice displace the general rule established by s 41(5), that the bankruptcy notice is not invalidated only by reason that the sum specified therein as the amount due to the creditor exceeds the amount in fact due. [66] At page 129 ([37]) the Full Court stated the policy considerations and rationale behind the construction given by it to s.41(5) of the Act in the following terms: 37. This construction of s 41(5) of the Bankruptcy Act is supported by policy considerations. The object of a debtor's notice under s 41(5) is to inform the creditor that the debtor disputes the bankruptcy notice and does so on the ground of a misstatement contained in that notice. The point of the notice is to draw to the creditor's attention the misstatement, thereby giving the creditor the opportunity to consider, for example, whether the bankruptcy notice should be withdrawn and a fresh notice, correcting the misstatement, issued. If the creditor is given no hint in the notice as to the nature of the misstatement, there is a considerable risk that the debtor will be able to take unmeritorious advantage of minor errors (such as the small mistake in the present case) and that unnecessary and wasteful litigation will eventuate. It is no answer to say that the creditor can ask for particulars, since the debtor would not be obliged to give any until after litigation had been instituted. Indeed, a debtor wishing to take advantage of the technicalities of the law of bankruptcy might be well-advised to say as little as possible for as long as possible about the true nature of the alleged misstatement in the bankruptcy notice. [67] So far so good. However, the Full Court went on to offer to the debtor a potential tabula in naufragio by enjoining that a notice under s.41(5) of the Act should be given a "benevolent construction". It said: 38. This view of s 41(5) of the Bankruptcy Act does not mean that a debtor, who is quite likely to be unrepresented, must identify the misstatement with complete precision or specify the exact amount of the alleged excess of the claim. To borrow the language of Lockhart J in Re Brink; Ex parte Commercial Banking Co of Sydney Ltd (1980) 44 FLR 135 at 142, the Court should adopt a "benevolent construction" of the debtor's notice. His Honour's comments related to the then s 41(7) of the Bankruptcy Act, which provided for an automatic extension of time for compliance with a bankruptcy notice where the debtor filed an affidavit to the effect that he or she had "such a counter-claim, set-off or cross demand as is referred to in [s 40(1)(g)]". Lockhart J held that the affidavit had to contain more than a mere assertion that the debtor had a counter-claim, set-off or cross-demand of the relevant kind. It was necessary to provide evidence in support of the debtor's claims. However, having regard to the time limit for the filing of the affidavit and the difficulties facing an unrepresented debtor, a "benevolent construction" of the affidavit was warranted. Lockhart J's approach was subsequently adopted by the Full Court: Eastick v Australia and New Zealand Banking Group Ltd (1981) 53 FLR 91. 19 The primary judge found that the telephone conversation of 1 June 2015 gave SP 14120 "clear notice" that Ms McCarthy disputed the validity of the Bankruptcy Notice. He found that the email of 1 June 2015 also gave "implicit disputing of its validity" even though the term "Bankruptcy Notice" was not used expressly in the email. This was because the email said that "your client had no legal right to commence proceedings and obtain a judgment against our client in the circumstances": J[76]-[77]. 20 The primary judge came to the view that the 1 June 2015 communications, whether viewed "cumulatively or independently", provided sufficient information to enable SP 14120 to identify the alleged "misstatement" and a "more than sufficient 'hint' as to the nature of the misstatement was thereby given": J[79]. Ms Blair expressly stated in her telephone call that several payments made to SP 14120 had not been credited. While the email contained inaccuracies in assertions made and it seemed to have the 21 payments which were in the wrong DEFT account more in mind, it "expressly asserts the making and crediting of payments of $240 made on 15 August 2014, 12 September 2014 and 31 January 2015". What was very significant for the purposes of s 41(5) of the Bankruptcy Act was Ms McCarthy's "lack of knowledge…of the purported appropriation of $51.29 out of the payment of $240 made on 15 August 2014 to the final discharge of the first judgment debt and not to the second judgment debt" (emphasis added). There was no evidence before the primary judge that she was ever told of the appropriation; it is not referred to in the Bankruptcy Notice and it was not referred to in SP 14120's solicitor's affidavit of 28 January 2016 which referred to the three payments as having been made in relation to the second judgment debt. With Ms McCarthy's limited means of knowledge, it was sufficient for the purpose of s 41(5) for her to identify the fact that several credit payments of $240 made by her had not been credited. That is even more the case if the Court adopts a "benevolent construction" of the notice given by the 1 June 2015 communications: J[80]-[83]. SP 14120's Submissions 21 SP 14120 submitted that the primary judge erred in holding that the notice given by means of the 1 June 2015 communications was sufficient to enable it to identify the misstatement in relation to the amount of $51.29 in the Bankruptcy Notice. SP 14120 says the primary judge erred at J[79] in finding that the notice given through communications on 1 June 2015 provided a "more than sufficient hint" as to the nature of the misstatement in circumstances where Ms McCarthy had no notice (and could not have known) of the appropriation of $51.29 to the first judgment debt. 22 Relying on Seovic at [36], SP 14120 submitted that s 41(5) requires the debtor to provide sufficient information in the notice of an alleged misstatement in a bankruptcy notice to enable the creditor to identify what is said to be the alleged misstatement. It says that the point of the notice is to draw the misstatement to the creditor's attention, thereby giving the creditor the opportunity to consider, for example, whether the bankruptcy notice should be withdrawn and a fresh bankruptcy notice, correcting the misstatement, issued. 23 Relying on Seovic at [37], SP 14120 submitted that if the creditor is given no hint as to the nature of the misstatement, there is a considerable risk that the debtor will be able to take unmeritorious advantage of minor errors (such as the small mistake in the present case) and that unnecessary and wasteful litigation will eventuate. It acknowledged that the Full Court in Seovic said (at [38]) that this view of s 41(5) does not mean that a debtor, who is quite likely to be unrepresented, must identify the misstatement with complete precision or specify the exact amount of the alleged excess. In this respect, the Court should adopt a "benevolent construction" of the debtor's notice. 24 SP 14120 says that, nonetheless, a debtor's notice which wrongly identifies a misstatement in the bankruptcy notice and does not provide sufficient information to enable the true misstatement (if any) to be identified by the creditor, does not comply with s 41(5): see Seovic at [40]. 25 SP 14120 says that the primary judge found that Ms Blair's phone call was limited to notifying SP 14120's solicitors that "your client has failed to credit several payments made by [Ms McCarthy]" and a plain reading of Ms Blair's email raises the following matters: (1) SP 14120 had credited payments of $190 per fortnight to Ms McCarthy's account. Those payments related to the first judgement debt; (2) Ms Blair conceded that SP 14120 had credited three payments of $240 each to Ms McCarthy's account, being those made on 15 August 2014, 12 September 2014 and 31 January 2015. Those payments related to the second judgment debt; and (3) SP 14120 had not credited 21 additional payments of $240 each made by Ms McCarthy. Those payments related to the second judgment debt. 26 On this basis, SP 14120 submitted that: (1) A "simple comparison" between the three payments of $240 each acknowledged to have been received with Item 5 would have revealed the discrepancy of $51.29. It was open to Ms Blair, as Ms McCarthy's legal adviser, to identify the discrepancy and notify SP 14120 of it but she failed to do so. Ms Blair needed to provide a "hint" as to the nature of the misstatement in respect of the amounts credited by SP 14120. (2) The handwriting of "24 payments" on the copy of the ledger attached to the email (see [17] above) confirms that Ms McCarthy's objections were limited to the complaint that SP 14120 has not credited her for 21 payments made. (3) The position of the creditor must be considered based on an objective interpretation of the notice of misstatement because the purpose of that notice is to give the creditor sufficient information on which to act. It was not necessary for the notice given to SP 14120 to identify the amount of $51.29, but the "hint" needed to be to the effect that "[one] of the payments received ha[s] not been recorded correctly". Taken on its face, Ms Blair's objection was that 21 payments totalling $4,560 had not been credited. If they had been credited, the second judgment debt would have been repaid in full but an amount of $5,717.27 would have remained outstanding in relation to the third judgment debt. As there would have been debt remaining, SP 14120 would still have acted on the Bankruptcy Notice. The Bankruptcy Notice would still have been overstated by $51.29 and SP 14120 would not have known it. The notice of misstatement was insufficient to identify the error. It was irrelevant that Ms McCarthy had no notice of the appropriation of $51.29 and could not know of it. (4) The primary judge also erred by finding that a "benevolent construction" permitted him to find that the alleged ground of misstatement had been made out. As the primary judge recognised at J[68], a "benevolent construction" cannot uphold a meaning and sense which is not reasonably and plausibly open as the true meaning and construction. Further, Ms McCarthy was represented so a "benevolent construction" should be applied less generously. Consideration 27 I find no error in the approach of the primary judge in coming to his answer to question (ii) or the orders he made as a consequence. 28 It does not matter that the 1 June 2015 communications did not identify the "misstatement" of $51.29 with precision: see Seovic at [38]. On any view, Item 5 was wrong and as a result, so was the "total amount due" set out in Item 6. The telephone conversation between Ms Blair and Ms Panuccio on 1 June 2015 (as found by the primary judge) identified SP 14120's failure to credit payments made by Ms McCarthy as the "misstatement" in the Bankruptcy Notice. While it is true that Ms Blair's email at 11.34 am on 1 June 2015 was directed primarily at SP 14120's failure to recognise 21 payments of $240 each which Ms McCarthy claimed to have made, the 1 June 2015 communications directed SP 14120's attention to "the misstatement" being an error in Item 5 in relation to the credit given for payments made by Ms McCarthy. 29 As the primary judge noted at J[84], the Full Court accepted that the debtor's notice under consideration in Re Serafino; Ex parte Classic Manufacturing Pty Ltd (1989) 86 ALR 283; [1989] FCA 159 was likely to be sufficient to alert the creditor to the misstatement for the purposes of s 41(5): see Seovic at [39]. The debtor's notice in Re Serafino was to the effect that interest claimed in a bankruptcy notice appeared "to be excessive of the amount due under the terms of the judgment relied [on]". I accept the submission made by Mr Robinson SC (counsel for Ms McCarthy) that Ms Blair's identification of an error in the accounting for "payments received" bears the same character. 30 Further, the 1 June 2015 communications were not a bald assertion that the Bankruptcy Notice was wrong with no attempt made to identify the misstatement. The email referred to the fact that SP 14120 acknowledged receipt of three payments of $240 each, the date of those payments was specified in that email and shown in the ledger attached to that email. Considered in the context of the instalment order made in relation to the second judgment debt, it was open to SP 14120 to understand that Ms McCarthy claimed that these payments had not been fully accounted for in Item 5. There was, at least, an error of $51.29 which derived from SP 14120's actions in failing to appropriate each of those $240 payments in full to the second judgment debt. For the claim that another 21 payments had been made for which no credit had been given, Ms McCarthy provided evidence by way of receipts for DEFT payments. The notice therefore does not suffer from the policy defects which so concerned the Full Court in Seovic and SP 14120 in its submissions. 31 I do not accept SP 14120's assertion that Ms Blair should have made the "simple comparison" between the three payments which SP 14120 admitted receiving from Ms McCarthy and the amount in Item 5 so that she could have, and should have, identified the error with precision to SP 14120. This is for a number of reasons. First, I accept Mr Robinson's submission that the amount of $668.71 stated in Item 5 could have come about in any number of ways which Ms McCarthy was not in a position to know. Second, if SP 14120's own lawyer did not identify the fact that $51.29 had been appropriated to the first judgment debt in his evidence given by affidavit dated 28 January 2016, there is no reason why Ms McCarthy or her lawyer should have been able to do so. Ms Blair was not in a better position to know this than the lawyer for the party that made the purported appropriation. Third, and more importantly, in essence, SP 14120 is contending that it should be entitled to take advantage of its own erroneous action of which it gave no notice to Ms McCarthy until the hearing before the primary judge. There is nothing in the obiter dicta of the Full Court in Seovic which would compel that conclusion. To do that would be at least as offensive to public policy as allowing debtors to make generalised and unmeritorious claims that the amount claimed by the creditor in a bankruptcy notice is overstated. Conclusion 32 I will dismiss the appeal and order that SP 14120 pay Ms McCarthy's costs. Any costs payable by SP 14120 are to be paid from contributions levied only in relation to Lots 2 and 3 and not Lot 1. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Farrell. Associate: Dated: 14 March 2017