Glambed v GIO Workers Compensation

EX TEMPORE REASONS FOR JUDGMENT 1 I have before me an application to set aside a bankruptcy notice. The bankruptcy notice was served on the debtor on 18 March 1999 and the application was lodged on 7 April 1999. On 7 April 1999, an order was made under section 41(6A) of the Bankruptcy Act 1966 (Cth) extending the time for compliance with the requirements of the bankruptcy notice to 20 April 1999, the date for the return of the application. 2 On 20 April 1999, orders were made by Registrar Quinn as follows: "(1) The respondent file and serve any affidavit upon which it relies by 27 April 1999. (2) The applicant make all necessary inquiries to determine the position of the stated case said to have been filed on 28 July 1998. (3) Application be adjourned till 9.15am on 4 May 1999. (4) Costs reserved." 3 No order was made for the further extension of time for compliance with the bankruptcy notice. However, it is apparent that the parties contemplated that that would happen, otherwise the orders made on 20 April 1999 would have been futile and pointless. 4 On 4 May 1999, the matter came before Hill J who made further orders for the filing of affidavits relating to a calculation of interest said to form part of the judgment debt. His Honour also stood the matter over for directions before the Registrar at 9.30am today. Once again, no order was made extending the time for compliance with the bankruptcy notice. However, it is also clear that had Hill J been asked to do so, he would have extended the time for compliance. 5 I am satisfied that I have power to extend the time for compliance with the bankruptcy notice - see Streimer v Tamas (1981) 54 FLR 253. Accordingly, I propose to order that the time for compliance with the bankruptcy notice be extended up to and including today. The question, however, is whether I should extend the time further to enable the applicant to file further affidavits in support of the application to set the bankruptcy notice aside. 6 The bankruptcy notice is based on a judgment debt of the Local Court of New South Wales entered on 16 December 1997 in the sum of $31,087.05. The applicant contends that the bankruptcy notice should be set aside because the certificate of the judgment upon which the bankruptcy notice is based is erroneous. Second, it is contended that the bankruptcy notice should be set aside because the judgment is the subject of an appeal by way of stated case. Third, it is contended that the bankruptcy notice does not give credit for payments said to have been made in reduction of the judgment debt. 7 The judgment debt is based on the creditor's claim for workers compensation premiums. Under section 172 of the Workers Compensation Act 1987 (NSW), the full amount of premium or the balance of premium unpaid where no instalment has been paid together with interest calculated at the rate of 1.2 per cent per month compounded monthly may be recovered as a debt in a court of competent jurisdiction. 8 The creditor brought the proceedings in the Local Court for recovery of premium unpaid together with interest and sought summary judgment. The creditor relied principally on the evidence of Melinda Mary Willoughby given by way of affidavit sworn 9 December 1997. In that affidavit Miss Willoughby set out detailed calculations of premium and interest sought to be recovered from the debtor. 9 In the course of argument, the magistrate referred to a calculation of interest as from 5 July 1995 when proceedings were commenced. The debtor asserts that, in doing so, the magistrate was intending to limit the judgment for interest to the period from that date until the date of judgment. 10 That appears to me to be a misconception. Section 172 makes clear that the liability for interest accrues from the time when the premium was payable. The transcript of the proceedings before the magistrate indicates that the amount claimed by the creditor was in fact the amount for which judgment was entered and the amount shown in the certificate of judgment. In those circumstances any attack on the judgment based on an incorrect calculation of interest appears to me to be without foundation. 11 Second, as I have said, reliance is placed upon the existence of an appeal from the judgment of the magistrate by way of stated case. There has apparently been some confusion as to the status of the stated case and the current physical form of the stated case is unclear. Several appointments have been had before the magistrate for the purposes of settling the case, but the case to be stated has not yet reached finality. 12 I have before me the draft stated case filed on 26 June 1998 in the Local Court. That draft records that the debtor's contentions of error on the part of the magistrate are as follows: "(1) Not granting an adjournment or stay of the proceedings in the circumstances and that a discretion in this matter miscarried. (2) My interpretation of the Workers Compensation Act to the effect that will prevent a challenge to the calculations of the premium by the Defendants in the present proceedings or proceedings before a Court generally. (3) Allow the evidence in [sic] Ms Willoughby to be admitted without the opportunity of the Defendant to cross-examine Ms Willoughby as requested." 13 I have no material before me as to the merits of the complaint that an adjournment was refused and that the opportunity to cross‑examine Ms Willoughby was denied other than the transcript of the proceeding before the Magistrate. That indicates that although the debtor indicated that he wished to ask Ms Willoughby some questions, he had not requested her presence for that purpose. There is no explanation as to why such a request was not made or the detail of any questions that might have been put to Ms Willoughby. 14 In any event, the question of cross-examination of Ms Willoughby appears to me to be taken up with the second of the grounds set out in the draft stated case, namely the contention that the Magistrate misinterpreted the Workers Compensation Act in refusing to permit a challenge to the calculations. The debtor indicated that he wished to challenge many of the calculations made by Ms Willoughby, although he was unable to be specific as to any calculation which he said was incorrect. Rather, he indicated that he wanted the opportunity to investigate further to see whether the calculations were in fact correct. That does not appear to me to be a valid basis for challenge to the decision of the Magistrate. 15 I have been referred to Employers Mutual Indemnity (Workers Compensation) Limited v A. Donald Pty Limited (23 October 1997, NSW Court of Appeal, unreported). At page 11, Cole JA, with whom Priestley and Stein JJA agreed, said as follows: "The provisions of the Act and regulations to which I have referred make plain, to my mind, that the legislature intended to and has established a regime whereby the quantum of an insurance premium is to be determined in the first instance by the insurer in accordance with an insurance premiums order pursuant to section 169. If the employer is dissatisfied with the premium so calculated and sought by the insurer, the employer's rights are to apply pursuant to section 170, and in accordance with the regulations, to the Authority to determine the correct premium. If the premium as determined by the insurer is not so queried or challenged, or if after challenge the premium is determined by the Authority, that is the premium which the employer must pay. It is that premium which is recoverable pursuant to section 172 by the insurer or if there be an overpayment resulting from a re-determination by the Authority, recoverable by the employer pursuant to section 170(4). Whilst it may be possible perhaps to challenge by way of administrative review an asserted error of statutory application of the formula (a matter which it is unnecessary to decide) the legislature has, in my view, made clear that any factual determination in application of the statutory formula for premium determination is not a matter for review within the courts, but is to be determined by the Authority." 16 Those observations suggest to me that any ground of appeal from the determination of the Magistrate, asserting a misinterpretation of the Workers Compensation Act in preventing any challenge to the calculations, is doomed to failure. That is to say, any appeal by way of case stated from the decision of the Magistrate based on that ground will be faced with the judgment of the Court of Appeal to which I have just referred and would fail. 17 On the material presently before me, I do not consider that there is any basis for concluding that there is any prospect of success for the stated case. That, of course, is not to pre-empt the outcome. I am not sitting on the hearing of the stated case. That is a matter for the court before which it comes. All I can determine is whether or not there is any basis for concluding that the court might ultimately go behind the judgment of the Local Court. As I have said, there is nothing in the material before me at present which suggests that this Court should have any doubt as to the existence of the debt for which the certificate has been given. 18 The third matter relied on by the debtor concerns payments said to have been made by way of reduction of the amount outstanding. It is common ground that the parties entered into discussions for compromise of the creditor's claim against the debtor. A barrister who was formerly acting for the debtor wrote to the creditor on 27 July 1998, saying as follows: "I understood that we had agreed to settle the matter by the payment by the defendant of the sum of $5,000 per month on the 15th of each month, commencing 15 August 1998 and continuing until extinguishment of the judgment debt. The issue of costs was on the basis of an agreed or assessed amount. I am not in a position to agree to the amount suggested by you. Accordingly, it is not possible to settle the matter in the terminology proposed by you. Further, it is not possible to settle both the Federal Court and Local Court matters on one document as they are different jurisdictions." 19 Thereafter, a number of payments were made by the debtor. The calculation in the Bankruptcy Notice of the amount claimed gives credit for payments in the sum of $6,248.11, although there is no explanation of that sum. There does not appear to be any dispute as to the amounts of the payments. The debtor contends, however, that when those payments are taken into account, the amount claimed in the bankruptcy notice is excessive. The amount claimed is $28,286.69 whereas it is common ground that, if all the amounts paid are taken into account, the amount owing would be some several thousand dollars less than that figure. 20 That difference is explained by the creditor in an affidavit by its solicitor, Mr David McCrostie. That affidavit contains the following paragraph 28: "On 25 August 1998, I met with Glambed in my office. During that meeting a conversation took place during which words to the following effect were said: AG: Here is my first $5000 payment. You know this is also for the 1997 matter. DM: Yes, the payment will first be applied to clear those other two small matters, then it will go to clearing the big one. AG: Okay. Glambed then handed to me a 'with compliments slip' dated 25 August 1998, attached to which was a bank cheque in favour of GIO in the amount of $5000." The "with compliments slip" had a handwritten note as follows: "Please find attached bank cheque No.659639 for $5,000 being the August payment of my liability to GIO as per agreement and further discussions between you and Mr C. Stomo. Monthly payments will be done until the debt/liability will be paid off and that includes the 1997 matter in the Downing Centre - as agreed to be incorporated into this agreement." 21 The debtor in his affidavit in support of the application to set the bankruptcy notice aside simply made the following assertion: "There have been paid to date $13,000 towards the debt." No evidence was put on in response to the affidavit by the creditor's solicitor. However, I have been informed by the debtor from the bar table that there is some question as to whether or not the moneys which have been paid should in fact have been applied to some other debt. 22 It is common ground that there are other debts owing by the debtor and that, if the moneys have not been applied in satisfaction of those debts, those debts are still outstanding. That is the only matter that, it seems to me, could indicate a basis for setting aside the bankruptcy notice. That is to say, if the bankruptcy notice is in fact a claim for a sum in excess of the amount owing, then that would be a ground for setting it aside. 23 I am troubled by the possibility that there has been a misunderstanding in relation to those payments. The correspondence to which I have referred indicates that there was no formal agreement made concerning settlement of the matter and, accordingly, it cannot be said that the payments were made pursuant to any agreement between the parties. There is, however, nothing to indicate that the debtor when he made the payments requested that the payments be appropriated to any particular debt. 24 There is, in fact, a reference in the 'with compliments slip' to which I have referred to other matters which tends to corroborate the discussion which is deposed to by the creditor's solicitor. In those circumstances, it appears to me that either there was an appropriation or a request to appropriate by the debtor. Alternatively, there was no request to appropriate, in which case the recipient would be entitled to appropriate the payment to whichever debt it chose. It is apparent that the creditor has appropriated the payments first to the outstanding debts and, in the circumstances, I am not satisfied on the material before me that the creditor has failed to give credit for payments which should have been attributed to the judgment debt. 25 On that basis I consider that the final attack on the bankruptcy notice will fail. Accordingly, I consider the appropriate course is to dismiss the application to set aside the bankruptcy notice and to dismiss any application for further extension of the time to comply. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.