Marshall v General Motors Acceptance Corporation Australia

Federal Court of Australia (Full Court)|2003-03-18|Before: Sch J, Gyles J, Cooper J, North J, North JJ, Spender J

REASONS FOR JUDGMENT SPENDER J: 1 In this appeal, I have had the particular advantage of reading the reasons for judgment of both Cooper J and North J. I, however, differ from their Honours, and would dismiss the appeal. In my opinion it is still not the law that, in relation to questions of the validity of a bankruptcy notice, form must triumph over substance. 2 The contention of the appellant, both below and on this appeal, was that the bankruptcy notice was of no force and effect because it failed to comply with the requirements of s 41(2) of the Bankruptcy Act 1966 (Cth) ("the Act") which provides: "The notice must be in accordance with the form prescribed by the regulations." 3 It is necessary to identify with some precision what is said to be the want of compliance with the prescribed form. It is to be noted that the respondent, General Motors Acceptance Corporation Australia ("GMAC"), is not the original petitioning creditor. The petition was filed on 14 May 2001 by E A Bourne Pty Ltd ("Bourne") and was based on the non-compliance with a bankruptcy notice, the validity of which is the central issue on this appeal. 4 The bankruptcy notice was founded upon a debt of $4,978.16 pursuant to a judgment of the Local Court at Tumut in New South Wales entered on 16 January 1997. GMAC was substituted as applicant creditor on 13 December 2001 pursuant to s 49 of the Act. It was upon the hearing of the amended creditor's petition filed by GMAC on 15 February 2002 that, for the first time, the question of the validity of the bankruptcy notice was raised by the debtor, the present appellant. There had been no application made by the debtor, before the expiration of the time fixed for compliance with the requirements of the bankruptcy notice, to have the bankruptcy notice set aside. Section s 41(6A) of the Act contemplates that such an application can be made. That subsection empowers the Court to extend the time for compliance with the bankruptcy notice where, inter alia, such an application has been made. 5 Since the judgments of Cooper J and North J are based on what is said to be non-compliance with the form prescribed by the Regulations, it is relevant to have regard also to the provisions of s 41(3), (5) and 6: "(3) A bankruptcy notice shall not be issued in relation to a debtor: (a) except on the application of a creditor who has obtained against the debtor a final judgment or final order within the meaning of paragraph 40(1)(g) or a person who, by virtue of paragraph 40(3)(d), is to be deemed to be such a creditor; (b) if, at the time of the application for its issue, execution of the judgment or order to which it relates has been stayed; or (c) in respect of a judgment or order for the payment of money made by the Court in the exercise of the jurisdiction conferred on it by this Act if: (i) a period of more than 6 years has elapsed since the judgment was given or the order was made; or (ii) the operation of the judgment or order is suspended under section 37. … (5) 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 mis-statement. (6) Where the amount specified in a bankruptcy notice exceeds the amount in fact due and the debtor does not give notice to the creditor in accordance with subsection (5), he or she shall be deemed to have complied with the notice if, within the time allowed for payment, he or she takes such action as would have constituted compliance with the notice if the amount due had been correctly specified in it." Section 41(3) specifies essential preconditions to the issue of a valid bankruptcy notice. Pursuant to s 41(5), an incorrect and excessive statement of the amount due does not invalidate a bankruptcy notice, unless a debtor gives timely notice that he or she disputes the validity of the notice on that ground. 6 Item 3 of the Schedule in the bankruptcy notice the subject of present consideration provided: "plus 3. If claimed in this Bankruptcy Notice, interest accrued since the date of judgment or order (see Note 2 below) $1,810.45"

7 Note 2 to the Schedule to the Notice relevantly provided (under the heading "For the Information of the Creditor"): "Note 2. Interest accrued (item 3 of the Schedule) If interest is being claimed in this Bankruptcy Notice, details of the calculation of the amount of interest claimed are to be set out in a document attached to this Bankruptcy Notice. The document must state: (a) the provision under which the interest is being claimed; and (b) the principal sum on which, the period for which and the interest rate or rates at which the interest is being claimed. (NB: if different rates are claimed for different periods, full details must be shown)" The attached document was as follows: " 'A' Interest Calculations Interest pursuant to Section 95(1) of the Supreme Court Act 1970, as follows: Judgment dated 16 January 1997 for $4,978.16

For the period 17.1.97 to 28.2.97 (both dates inclusive) (43 Days) on $4,978.16 At 12% 70.37
For the period 1.3.97 to 31.8.97 (both dates inclusive)(184 Days) on $4,978.16 At 10.5% 263.50
For the period 1.9.97 to 31.8.98 (both dates inclusive)(365 Days) on $4,978.16 At 10% 497.81
For the period 1.9.98 to 29.2.00 (both dates inclusive)(547 Days) on $4,978.16 At 9.5% 708.73
For the period 1.3.00 to 1.5.00 (both dates inclusive (62 days) on $4,978.16 at 10% 270.04 AMOUNT OF JUDGMENT $4,978.16 AMOUNT OF INTEREST $1,810.45 TOTAL CLAIMED $6,788.61 and no more" 8 It is a most curious result, if the conclusion of Cooper J and North J is correct, that the Act provides that an incorrect and excessive statement of the amount due does not invalidate a bankruptcy notice, unless a debtor gives notice to the creditor that the debtor disputes the validity of the notice on the ground of the mis-statement, but if the document referred to in Note 2 to the Schedule to the bankruptcy notice incorrectly or incompletely refers to the provision under which the interest is being claimed, that mis-statement results in the automatic invalidity of the notice. 9 A copy form of the Certificate of Judgment verifying the judgment debt relied upon in the petition was attached to the bankruptcy notice. This Certificate is headed, "Local Courts (Civil Claims) Act, 1970" and is issued from the Local Court at Tumut. Paragraph 3 of that Certificate provided: "3. Interest is payable on the judgment debt at the rate PRESCRIBED FOR THE PURPOSES OF SECTION 95(1) OF THE SUPREME COURT ACT, 1970." 10 Sections 39(1) and (2) of the Local Courts (Civil Claims) Act 1970 (NSW) provided: "39 Interest on judgment debt (1) Unless a court orders in any particular case that interest be not payable, interest shall, subject to subsection (3), be payable on so much of the amount of a judgment debt as is from time to time unpaid. (2) Interest payable under subsection (1) in respect of a judgment debt shall - (a) subject to subsection (3), be calculated as from the date when the judgment debt came into being or from such later date as a court in any particular case fixes; (b) be calculated at such rate as may be prescribed by the rules; and (c) form part of the judgment debt, but not so as to require the payment of interest upon interest." Part 13 r 3 of the Local Courts (Civil Claims) Rules 1988(NSW) provided (so far as is relevant): "Interest on judgment debt 3. For the purposes of section 39(2)(b) of the Act, the prescribed rate per cent yearly, in respect of any period mentioned in Column 1 of the Table below, is the rate specified in Column 2 of that Table in respect of that period. TABLE Column 1 Column 2 … After 27 May 1993 the rate prescribed for the Purposes of s 95(1) of the Supreme Court Act 1970." 11 Section 95(1) of the Supreme Court Act 1970 (NSW) provided: "95 Interest on debt under judgment or order (1) Where judgment is given or an order is made for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the judgment or order takes effect on so much of the money as is from time to time unpaid." Rates have been prescribed from time to time since 27 May 1993. There is no suggestion that the rates set forth in the interest calculations in the bankruptcy notice are not as prescribed. The undisputed facts are that the statement of the amount due is correct, that interest was properly payable on the judgment sum of $4,978.16, and that the calculations of interest are correct, both as to rates and the relevant periods. The naming of the source of the provision under which the interest was being claimed was, at the worst, merely incomplete. 12 The contention of the appellant, both below and on the appeal, was that the statement "Interest pursuant to Section 95(1) of the Supreme Court Act 1970" is not the "source provision" which should have been identified, the correct "source provision" being s 39(1) of the Local Courts (Civil Claims) Act 1970 (NSW), and that this error should be held fatal in reliance on the decision of a majority of a Full Court of the Federal Court in Australian Steel Company (Operations) Pty Ltd v Lewis (2000) 109 FCR 33 ("Australian Steel"). 13 Australian Steel was a matter heard by a Full Court of five judges convened pursuant to s 20(1A) of the Federal Court of Australia Act 1976 (Cth) which provides: "If the Chief Justice considers that a matter coming before the Court in the original jurisdiction of the Court is of sufficient importance to justify the giving of a direction under this subsection, the Chief Justice may direct that the jurisdiction of the Court in that matter shall be exercised by a Full Court." As Gyles J noted in the judgment under appeal, the binding quality of the majority judgment in that case is conjectural. What is clear to me is that this Court is bound by the judgment of the High Court in Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 ("Kleinwort Benson"), rather than the majority judgment in Australian Steel, which judgment is inconsistent with that of the High Court in Kleinwort Benson. 14 The majority in Australian Steel (Black CJ, Heerey and Sundberg JJ) held not only that the statement of the provision under which interest is being claimed was a requirement made essential by the Act, but further, that the provision had to be correctly stated: that too was a requirement made essential by the Act. Specifically, their Honours held at 42: "… Having regard to the purpose behind the requirement that the provision under which interest is being claimed, and correctly claimed, be included in the notice, that requirement is made essential by the Act, and a notice issued in breach of the requirement will be invalid." 15 Kirk v Ashdown [1999] FCA 1664 was a case where there was a want of compliance with the form prescribed for the bankruptcy notice. There, there was an omission to state in the notice the "provision under which the interest is being claimed". 16 Australian Steel, in truth, is not a case where there has been a want of compliance with the form prescribed by the Regulations for a bankruptcy notice. It was a case where the provision under which the interest was being claimed was incorrectly stated, the bankruptcy notice stating that interest was claimed "… pursuant to section 101 of the Supreme Court Act 1986 (Vic)." That section provided for interest to be payable on money judgments of the Supreme Court of Victoria and had no operation in respect of money judgments of the Magistrates' Court of Victoria. Interest on a Magistrates' Court judgment in Victoria was payable under the provisions of s 100(7) of the Magistrates' Court Act 1989 (Vic). Australian Steel was a case where the information contained in the form was incorrect. This was precisely the situation which was the subject of consideration by the High Court in Kleinwort Benson. 17 In Kleinwort Benson, the majority of the Full Court (Mason CJ, Wilson, Brennan and Gaudron JJ, with Deane J dissenting) held that the understatement in a bankruptcy notice of the interest due was a formal defect or irregularity within s 306(1) and that the notice in question was valid. The majority said at 76: "Mis-statement of the amount due to a creditor is not necessarily fatal to the validity of a bankruptcy notice. Sub-sections (5) and (6) of s 41 of the Act make specific provision for overstatement, providing that a bankruptcy notice will not be invalidated by reason only that the sum specified in the notice as due exceeds the amount in fact due, 'unless the debtor, within the time allowed for payment, gives notice to the creditor that he disputes the validity of the notice on the ground of the mis-statement': sub-s (5). Although no specific provision is made in relation to understatement, s 306(1) of the Act provides: 'Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court.' The issue of a bankruptcy notice is a proceeding under the Act: Pillai v Comptroller of Income Tax [1970] AC 1124 at 1131." 18 As earlier indicated, in my respectful opinion, the judgment of the majority in Australian Steel is inconsistent with the determination of the High Court in Kleinwort Benson. It elides the difference between compliance with the form, albeit that the information included in the form is incorrect, with a mis-statement or error in what is included in a bankruptcy notice. The judgment of the majority in Australian Steel fails to follow the judgment of the High Court in Kleinwort Benson. 19 In my respectful opinion, the law is correctly stated in the dissenting judgment of Lee J in Australian Steel, a judgment with which Gyles J agreed. I respectfully agree with every word of the judgment of Lee J. 20 At the time of the decision in Kleinwort Benson and currently, s 306(1) of the Act was in the terms set out in par [17] above. 21 In Kleinwort Benson there had been an error in what was stated to be the amount of the debt, yet this was held not to be fatal, notwithstanding that the relevant part of s 41 at the time of the decision in Kleinwort Benson provided: "(1) A bankruptcy notice: (a) shall be in accordance with the prescribed form; and (b) shall be issued by the Registrar." (Emphasis added) 22 There is no material difference between that provision and s 41(2) in the terms that apply to the bankruptcy notice in the present case, namely, "The notice must be in accordance with the form prescribed by the regulations." The factual circumstance in Kleinwort Benson was that the amount inserted as due under the final judgment, including interest, understated the interest and so understated the amount claimed to be due under the judgment. The correct form had been used and had been followed, but the amount said to be due was an understatement of the amount due under the judgment. The High Court found that filling in the wrong amount in the prescribed form was an irregularity, but was not a breach of an essential requirement of the Act. In Kleinwort Benson the majority of the High Court said, at 79: "The authorities show that a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice: James v Federal Commissioner of Taxation (1955) 93 CLR 631 at 644; Pillai v Comptroller of Income Tax [1970] AC 1124 at 1135. In such cases the notice is a nullity whether or not the debtor in fact is misled: In re A Judgment Debtor, 530 of 1908 [1908] 2 KB 474 at 481." 23 What the High Court decided in Kleinwort Benson, contrary to what the majority in Australian Steel decided, was that the insertion of incorrect information in a form did not breach an essential requirement of the Act. That circumstance called for consideration of the application of s 306 of the Act. Quite simply, in my respectful opinion, it is putting an impermissible gloss on s 41(2) to say that that section requires that the form must be correctly and accurately filled in in all respects, and that if that is not done, there is a failure to meet a requirement made essential by the Act. 24 The majority in Australian Steel said at par 42: "In our view the purpose of the requirement that the source of the creditor's entitlement to interest be stated can only be to enable the debtor to verify that the amount claimed is in fact due. … The applicable interest rate can often be a matter of dispute: see, for example, EMCL Pty Ltd v Esanda Finance Corp Ltd [1999] FCA 978 at [58] et seq. That case dealt with the different issue of an award of interest by a court at the time of judgment, but it illustrates the potential for confusion and uncertainty as to applicable rates of interest in litigation in a multi-jurisdictional country. The form prescribed by the regulations provides the answer. Having regard to the purpose behind the requirement that the provision under which interest is being claimed, and correctly claimed, be included in the notice, that requirement is made essential by the Act, and a notice issued in breach of the requirement will be invalid." In respect of the first sentence of that paragraph, the reference in the bankruptcy notice in Australian Steel to s 101 of the Supreme Court Act 1986 (Vic),being a reference to an act which did not apply to judgments in the Victorian Magistrates' Court, would not enable a debtor to verify that the amount claimed is in fact due. However, in my view, neither would a reference to s 100(7) of the Magistrates' Court Act 1989 (Vic). It would be necessary in addition to refer to s 2 of the Penalty Interest Rates Act 1983 (Vic). The reference in the bankruptcy notice in Australian Steel to the source provision in respect of the interest claimed was wrong, but what is suggested should have been the reference is, arguably, incomplete and would not, in my opinion, enable the debtor to verify that the amount claimed is in fact due. 25 Paragraph 13 of the reasons of the primary judge in this case record the submission on behalf of the present appellant that: "… the correct source provision is the Local Courts (Civil Claims) Act 1970 (NSW) s 39(1)." Section 39(1) simply provides that in the absence of a court order, interest is payable on so much of an amount of the judgment debt as is, from time to time, unpaid. The majority in Australian Steel said that: "… the purpose of the requirement that the source of the creditor's entitlement to interest be stated can only be to enable the debtor to verify that the amount claimed is in fact due. …" 26 In order to ascertain the correctness of a claim for interest, it would be necessary to have regard to s 39(2), which relevantly provides that the interest payable under subsection (1) in respect of a judgment debt: "shall - (a) … be calculated as from the date when the judgment debt came into being …; (b) be calculated at such rate as may be prescribed by the rules; and (c) form part of the judgment debt, but not so as to require the payment of interest upon interest." 27 In the present case, to enable the debtor to verify that the amount claimed is in fact due, reference would have to be made, not only to s 39(1) and (2) of the Local Courts (Civil Claims) Act 1970 (NSW), but also to Part 13 r 3 of the Local Courts (Civil Claims) Rules 1988(NSW), s 95(1) of the Supreme Court Act 1970 (NSW), r 40.7(2) of the Supreme Court Rules 1970(NSW) and Schedule J of those Rules. It is hardly to be contemplated that Parliament intended that a bankruptcy notice refer to all of those provisions which are in truth the source of the creditor's entitlement to interest and, moreover, to require that there be no mis-statement or omission in respect of any of those provisions. Is it seriously to be contended that a reference solely to s 39(1) of the Local Courts (Civil Claims) Act 1970 (NSW) would result in invalidity of the bankruptcy notice in the present case? 28 In par 40 of the judgment, the majority in Australian Steel said: "In 1996 Parliament chose to make a form to be prescribed by regulation the sole criterion of whether a bankruptcy notice complied with the Act, with the consequence that an act of bankruptcy would be committed in the case of non-compliance with such a notice." 29 The bankruptcy notice in the present case, to comply with the prescribed form, should have said: "10. The Federal Court Registry for your State or Territory is located at: (set out the address and telephone number of the relevant Registry)" It did not. It was never at any stage, at first instance or on appeal, suggested that this omission invalidated the bankruptcy notice. 30 If the reasoning of the majority in Australian Steel is to be followed rather than that of the High Court in Kleinwort Benson,an incorrect address or an incorrect telephone number in the bankruptcy notice would be fatal to the bankruptcy notice. 31 Prior to 14 April 1997 when a new Form 1 was substituted by Regulation 35.1 of the Bankruptcy Amendment Regulations 1997 (Cth), Form 1 was as set out in Schedule 1 of the Regulations published as Statutory Rule 1996 No. 263. Paragraph 3 under the heading "Information for Debtors" in that form provided: "3. The nearest Federal Court Registry to the debtor's address as shown on this Bankruptcy Notice is located at: [set out the address of the relevant Registry]" This was the content of the form that was the subject of decision in Australian Steel. 32 If meticulous and correct attention to the requirements of the form is necessary for the validity of a bankruptcy notice, as the majority in Australian Steel would hold, a bankruptcy notice where the debtor's address was in Albury which showed the nearest Federal Court Registry as Melbourne rather than Canberra would be invalid. 33 An even more extreme example would be where a debtor lived at a place which was nearer to Canberra than Melbourne as the crow flies, but was nearer to Melbourne than Canberra by the most direct route on land. It surely cannot be that the validity of the bankruptcy notice depended on the debtor selecting the correct method of determining which was the nearer Federal Court Registry, and then getting the choice right. 34 Such examples, in my view, make it plain that it is not necessary to the validity of a bankruptcy notice that all the information required by the new form has to be included and has to be correct. The continued existence of s 306 of the Act (which has been unaltered since its introduction in 1966) merely confirms this position. 35 In my opinion, in ordering that the estate of the appellant be sequestrated, Gyles J did not err. 36 I would dismiss the appeal, with costs. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Spender.

AND: GENERAL MOTORS ACCEPTANCE CORPORATION AUSTRALIA (ARBN 007 480 382)

COOPER J 37 The appellant was made bankrupt on 13 August 2002 on the petition of the respondent, which was substituted as petitioner for I E A Bourne Pty Ltd ACN 000 026 666 ("Bourne"). The act of bankruptcy relied upon was the failure of the appellant to comply with the provisions of a bankruptcy notice which Bourne procured to be issued in reliance upon a judgment of the Local Court at Tumut, New South Wales. 38 At first instance and on appeal, the appellant contended that the bankruptcy notice was of no force and effect because it failed to comply with the requirements of s 41(2) of the Bankruptcy Act 1966 (Cth) ("the Act"). Section 41(2) requires that a bankruptcy notice must be in accordance with the form prescribed by the Bankruptcy Regulations 1996 (Cth) ("the Regulations"). 39 Form 1 prescribed by the Regulations is the statutory form for a bankruptcy notice. The form includes a note which provides that if interest is being claimed in the bankruptcy notice, there must be attached to the notice a document which sets out, amongst other things, the provision under which the interest is being claimed: note 2(a) to the statutory form. 40 The bankruptcy notice of Bourne, as creditor, stated that it "claims you owe the creditor a debt of $6,788.61 and no more as shown in the Schedule". 41 The Schedule separated the debt claimed into the "amount of judgment or order" of $4,978.16 and "interest accrued since the date of judgment or order" of $1,810.45. The interest is stated to be "claimed in this Bankruptcy Notice" and directs the debtor's attention to note 2 on the bankruptcy notice. That note is in the statutory form. 42 Attached to the bankruptcy notice was a document headed "Interest Calculations" and the statement "Interest pursuant to Section 95(1) of the Supreme Court Act 1970 as follows: …". There was also attached to the bankruptcy notice a Certificate of Judgment issued by the Tumut Local Court in New South Wales. The Certificate is headed "Local Courts (Civil Claims) Act 1970". The Certificate records that Bourne recovered judgment in the sum of $4,978.16. It stated that: "3. Interest is payable on the judgment debt at the rate prescribed for the purposes of section 95(1) of the Supreme Court Act 1970." 43 In New South Wales, by virtue of s 39(1) of the Local Courts (Civil Claims) Act 1970 (NSW) ("the LCA"), interest is payable on so much of the amount of a judgment of a Local Court as is from time to time unpaid. Interest payable under s 39(1) of the LCA is to be calculated at the rate prescribed by the Local Courts (Civil Claims) Rules (1988) (NSW) ("the Rules"): s 39(2)(b) of the LCA. 44 Part 13 r 3 of the Rules provides that after 27 May 1993, for the purposes of s 39(2)(b) of the LCA, the prescribed rate of interest is "… the rate prescribed for the purposes of section 95(1) of the Supreme Court Act 1970". 45 The appellant submitted on appeal, and at first instance, that: (a) the bankruptcy notice in question included, in terms, a claim for interest in the bankruptcy notice in the sum of $1,810.45; (b) the claim for interest required satisfaction of the requirements of note 2 to the statutory form: s 41(2) of the Act and reg 4.02 of the Regulations; (c) s 95(1) of the Supreme Court Act 1970 ( NSW) provides for the payment of interest on judgments of the Supreme Court of New South Wales and gives no entitlement to interest on judgments of Local Courts in New South Wales; (d) the entitlements to the interest claimed on the judgment in issue was under s 39(1) of the LCA; (e) having failed to specify s 39(1) of the LCA on the document attached to the notice as the provision under which interest was being claimed, the notice failed to comply with the statutory requirements and was, in consequence, of no force and effect; (f) failure to comply with the bankruptcy notice did not constitute an act of bankruptcy and that, in consequence, there was no relevant act of bankruptcy on which to base the sequestration order. 46 In support of the proposition that failure to specify s 39(1) of the LCA in the document attached to the bankruptcy notice was fatal to its efficacy as a bankruptcy notice, the appellant relied on the reasons for decision of the majority of the Full Court in Australian Steel Company (Operations) Pty Ltd v Lewis (2000) 109 FCR 33. 47 Prior to the decision of the Full Court in Australian Steel Company (Operations), there was a divergence of opinion as to whether, in a case where interest was claimed in a bankruptcy notice, compliance with the requirements of note 2(a) to the statutory form was an essential requirement of a valid notice. The decision in Kirk v Ashdown [1999] FCA 1664 held that compliance with note 2(a) was not essential. A differently constituted Full Court came to the contrary conclusion in Bendigo Bank v Williams (2000) 98 FCR 377. A special Full Court of five judges of the Court sat in the original jurisdiction of the Court to resolve the controversy: s 20(1A) Federal Court of Australia Act 1976 (Cth). 48 At first instance in the present appeal, it was held that the notice and certificate of judgment make it clear that the judgment was governed by the LCA, s 39 of which led to Part 13 r 3 of the Rules which in turn led to s 95(1) of the Supreme Court Act 1970 (NSW) and the rate of interest prescribed for in that section. Accordingly, it was held that there was no defect or irregularity in the notice as alleged, but if there was, there would be substantial compliance with the form as permitted by s 25C of the Acts Interpretation Act 1901 (Cth). In any event his Honour held that there was no evidence of substantial injustice; accordingly, s 306 of the Act would save the notice from invalidity by reason of a formal defect or irregularity in it. 49 His Honour acknowledged that if the circumstances of this case fell within those before the Full Court in Australian Steel Company (Operations), he would be bound by that decision and required to hold the bankruptcy notice in issue to be invalid. However, his Honour was of the opinion that the factual circumstances were materially different and that he was not bound by the Full Court decision. 50 In Australian Steel Company (Operations), the bankruptcy notice stated that interest was claimed "… pursuant to s 101 of the Supreme Court Act 1986 (Vic)". That section provided for interest to be payable on money judgments of the Supreme Court of Victoria. It had no operation in respect of money judgments of the Magistrates Courts of Victoria. Interest on a Magistrates Court judgment was payable under the provisions of s 100(7) of the Magistrates Court Act 1989 (Vic). 51 The majority in Australian Steel Company (Operations) held, at [42]: "… Having regard to the purpose behind the requirement that the provision under which interest is being claimed, and correctly claimed, be included in the notice, that requirement is made essential by the Act, and a notice issued in breach of the requirement will be invalid". 52 Their Honours continued, at [44]: "Unlike Kirk, a provision founding the claim for interest was inserted in the notices under consideration here. But it was not the provision under which interest could validly be claimed. A debtor could not verify the interest entitlement asserted in the notice by resort to s 101 of the Supreme Court Act, even though it would produce the same amount of interest as resort to s 100(7) of the Magistrates' Court Act would produce. That is adventitious. The evident purpose behind the requirement that the source of entitlement to interest be disclosed having been thwarted by the omission of the source, the notices are invalid. …". 53 In the present case, the interest is claimed pursuant to s 95(1) of the Supreme Court Act 1970 (NSW) in the notice attached to the bankruptcy notice. It is a claim based on a provision which does not give an entitlement to interest. That is insufficient for the purpose of compliance with Form 1 note 2(a), which requires disclosure of a provision which correctly identifies the entitlement to interest: Australian Steel Company (Operations) at [42]. The attachment of a certified copy of the Local Court judgment does not, in my view, materially alter the situation. 54 The requirement of note 2 to the statutory form is that details of the calculation of the amount of interest claimed are to be set out in a document attached to the bankruptcy notice. That document is to state: (a) the provision under which the interest is being claimed; and (b) the principal sum on which, the period for which, and the interest rate at which the interest is being claimed. 55 The certified judgment is not such a document in terms. It includes no claim for, or calculation of interest. On the proper construction of the document attached to the bankruptcy notice in the present case, the notice of Bourne as to the provision under which the interest was claimed was s 95(1) of the Supreme Court Act 1970 (NSW) and not otherwise. The claim was not well based and the notice did not comply with the requirements of the statutory form. 56 There are no material differences between the circumstances of the bankruptcy notice in issue in the Australian Steel Company (Operations) decision and the notice the subject of this appeal. In those circumstances, as his Honour acknowledged at first instance, he was bound to apply the decision of the majority in Australian Steel Company (Operations) and to dismiss the petition on the ground that the bankruptcy notice was invalid, and that in consequence, the appellant had not committed an act of bankruptcy in failing to comply with its terms. 57 The respondent has not made out any basis on this appeal as to why this Court ought not to apply the decision and reasoning of the majority in Australian Steel Company (Operations) to hold that the bankruptcy notice in suit was invalid. As the decision of the Full Court in Australian Steel Company (Operations) was intended to resolve an existing controversy, there is even more reason for this Court to refrain from itself revisiting the issue: see generally Telstra Corporation Ltd v Treloar (2000) 102 FCR 595 at 602 - 603, 604 - 606. 58 In my view the appeal should be allowed and the orders appealed from set aside. In lieu thereof, it should be ordered that the bankruptcy petition be dismissed. The appellant should have his costs of the appeal, and of the hearing at first instance, including reserved costs, if any, to be taxed if not agreed. I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Cooper.

AND: GENERAL MOTORS ACCEPTANCE CORPORATION AUSTRALIA [ARBN 007 480 382]

NORTH J: 59 Before the Court is an appeal against an order made by the primary judge on 13 August 2002 for the sequestration of the estate of the appellant, Garry Brent Marshall, and an order made by his Honour on 26 August 2002 that the appellant pay the costs of the respondent, General Motors Acceptance Corporation Australia (General Motors). 60 The sequestration order was made in reliance on an act of bankruptcy constituted by the failure of the appellant to comply with a bankruptcy notice issued on 6 October 2000. 61 The central issue in the appeal concerns the validity of the bankruptcy notice. That issue in turn depends on the way the notice dealt with interest on a judgment claimed to be owing to the judgment creditor by the appellant. 62 Further arguments raised in the appeal are dealt with after resolution of the central issue.

the statutory context 63 The relevant provisions concerning the issue of a valid bankruptcy notice are set out as follows. Section 41 of the Bankruptcy Act 1966 (Cth) (the Act) provides: "41(1)An Official Receiver may issue a bankruptcy notice on the application of a creditor who has obtained against a debtor a final judgment or final order that: (a) is described in paragraph 40(1)(g); and (b) is for an amount of at least $2000. (2) The notice must be in accordance with the form prescribed by the regulations." [emphasis added] 64 Regulation 4.02 of the Bankruptcy Regulations 1996(Cth) (the Regulations) prescribes the form that a bankruptcy notice must take: "(1) For the purposes of subsection 41(2) of the Act, the form of bankruptcy notice set out in Form 1 is prescribed. (2) A bankruptcy notice must follow Form 1 in respect of its format (for example, bold or italic typeface, underlining and notes). (3) Subregulation (2) is not to be taken as expressing an intention contrary to section 25 C of the Acts Interpretation Act 1901." 65 Section 306 of the Act provides: "(1) Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court." 66 Form 1 includes: "Note 2: Interest accrued (item 3 of the Schedule) If interest is being claimed in this Bankruptcy Notice, details of the calculation of the amount of interest claimed are to be set out in a document attached to this Bankruptcy Notice. The document must state: (a) the provision under which the interest is being claimed; and (b) the principal sum on which, the period for which, and the interest rate or rates at which, the interest is being claimed." [emphasis added]

the bankruptcy notice and attachments 67 In the present case, the bankruptcy notice was relevantly in the following terms: "1. E. A. BOURNE PTY LTD ACN No. 000 026 666 ("the creditor") a company whose registered office is at 85 Johnston Street, WAGGA WAGGA in the State of New South Wales 2640 (and which trades at 140 Wynyard Street, Tumut in that State). claims you owe the creditor a debt of $6,788.61 and no more, as shown in the Schedule. 2. The creditor claims that the debt is due and payable by you. A copy of the judgment or order relied upon by the creditor is attached. At the time of applying for this Notice, execution of the judgment or order had not been stayed." 68 The Schedule referred to in the bankruptcy notice relevantly provided: "Schedule Column 1 Column 2

Amount of judgment or order $4,978.16 plus 2. Legal costs if ordered to be paid and a specific amount was not included in the judgement [sic] or order (see Note 1 below) $0.00 plus 3. If claimed in this Bankruptcy Notice, interest accrued since the date of judgment or order (see Note 2 below) $1,810.45
Subtotal $6,788.61 less 5. Payments made and/or credits allowed since date of judgement [sic] or order $0.00
Total debt owing $6,788.61

(NB: Amounts, where applicable, are to be inserted in column 2) For the Information of the Creditor - Notes to the Schedule Note 1: Legal costs (item 2 of the Schedule) If legal costs are being claimed in this Bankruptcy Notice, a certificate of taxed or assessed costs in support of the amount claimed must be attached to this Bankruptcy Notice. Note 2: Interest accrued (item 3 of the Schedule) If interest is being claimed in this Bankruptcy Notice, details of the calculation of the amount of interest claimed are to be set out in a document attached to this Bankruptcy Notice. The document must state: (a) the provision under which the interest is being claimed; and (b) the principal sum on which, the period for which and the interest rate or rates at which the interest is being claimed. (NB: if different rates are claimed for different periods, full details must be shown)" [emphasis added] 69 An attachment labelled "A" followed the Schedule and was as follows: "Interest Calculations Interest pursuant to Section 95(1) of the Supreme Court Act 1970, as follows: Judgment dated 16 January 1997 for $4,978.16

For the period 17.1.97 to 28.2.97 (both dates inclusive) (43 Days) on $4978.16 At 12 % 70.37
For the period 1.3.97 to 31.8.97 (both dates inclusive) (184 Days) on $4978.16 At 10.5% 263.50
For the period 1.9.97 to 31.8.98 (both dates inclusive) (365 Days) on $4978.16 At 10% 497.81
For the period 1.9.98 to 29.2.00 (both dates inclusive) (547 Days) on $4978.16 At 9.5% 708.73
For the period 1.3.00 to 1.5.00 (both dates inclusive) (62 Days) on $4,978.16 at 10% 270.04 AMOUNT OF JUDGMENT $4978.16 AMOUNT OF INTEREST $1,810.45 TOTAL CLAIMED $6,788.61 and no more" [emphasis added] 70 Also attached to the bankruptcy notice was a certificate of judgment issued by the Tumut Local Court in New South Wales. The certificate was as follows: "USER ID/DOC No: KPII6/6 Form 49 Local Courts (Civil Claims) Act, 1970 CERTIFICATE OF JUDGMENT (Pt 26 r.7.) Issued from the Local Court at: CNR WYNYARD & FITZROY STS TUMUT 2720 in the State of New South Wales Telephone no: 02 69 472 218 File no: 153/96 Judgment Creditor: E A BOURNE PTY LTD Ref: 110289 Judgment Debtor: GARRY MARSHALL 1. In this matter the plaintiff recovered judgment against the defendant on 16/01/1997 in the sum of $4,978.16 2. I am informed by the judgment creditor that $0.00 has been paid in respect of the judgment debt. 3. Interest is payable on the judgment debt at the rate PRESCRIBED FOR THE PURPOSES OF SECTION 95(1) OF THE SUPREME COURT ACT, 1970. 4. The judgment creditor has incurred costs of attempting to enforce the judgment, recoverable against the judgment debtor, in the amount of $149.00. Registrar CERTIFICATE I CERTIFY THAT THE ABOVE IS A TRUE AND CORRECT COPY OF THE ENTRY OF THE ABOVEMENTIONED JUDGMENT IN THE RECORDS OF THIS COURT. Dated:15/8/2000 A FEE OF $11.00 HAS BEEN PAID FOR THIS CERTIFICATE. Registrar"

the statutory provisions relating to interest - Local Courts 71 The Local Courts (Civil Claims) Act 1970 (NSW) (Local Courts Act) provided for payment of interest on judgments of the Local Courts in New South Wales as follows:

39 (1) Unless a court orders in any particular case that interest be not payable, interest shall, subject to subsection (3), be payable on so much of the amount of a judgment debt as is from time to time unpaid.

(2) Interest payable under subsection (1) in respect of a judgment debt shall: (a) subject to subsection (3), be calculated as from the date when the judgment debt came into being or from such later date as a court in any particular case fixes, (b) be calculated at such rate as may be prescribed by the rules, and (c) form part of the judgment debt, but not so as to require the payment of interest upon interest." [emphasis added] 72 Part 13 rule 3 of the Local Courts (Civil Claims) Rules 1988 (NSW) states: "Interest on judgment debt For the purposes of section 39 (2) (b) of the Act, the prescribed rate per cent yearly, in respect of any period mentioned in Column 1 of the Table below, is the rate specified in Column 2 of that Table in respect of that period. Table Column 2 Column 1 On or before 3 April 1977 5 4 April 1977 to 31 December 1982 10 1 January 1983 to 5 January 1984 15.5 6 January 1984 to 31 December 1984 14.5 1 January 1985 to 2 January 1986 13.5 3 January 1986 to 31 July 1986 18.25 1 August 1986 to 1 November 1987 19.5 2 November 1987 to 1 March 1988 18 2 March 1988 to 16 February 1992 15 17 February 1992 to 27 May 1993 11.25 After 27 May 1993 the rate prescribed for the purposes of Section 95 (1) of the Supreme Court Act 1970"[emphasis added]

the statutory provisions relating to interest - supreme court 73 Section 95(1) of the Supreme Court Act 1970 (NSW) (Supreme Court Act) provides for the payment of interest on a judgment of the Supreme Court of New South Wales as follows: "Where judgment is given or an order is made for the payment of money, interest shall, unless the Court otherwise orders, be payable at the prescribed rate from the date when the judgment or order takes effect on so much of the money as is from time to time unpaid." 74 Rule 40.7(2) of the Supreme Court Rules 1970 (NSW) provides that the prescribed rate of interest is contained in Schedule J of those Rules: "The prescribed rate of interest for the purposes of section 95 of the Act is, in respect of any period mentioned in column 1 of Schedule J, the rate per cent yearly mentioned in column 2 of that Schedule beside that period."

The Authorities 75 In each of the relevant authorities it has been accepted, following Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 (Kleinwort Benson), that a bankruptcy notice is invalid if it fails to provide for a matter made essential by the Act. 76 In Kirk v Ashdown [1999] FCA 1664 (Kirk),the Court (Spender, Ryan and Weinberg JJ) held that the requirement to state the provision under which interest was claimed was not made essential by the Act. In Bendigo Bank v Williams & Ors (2000) 98 FCR 377; [1999] FCA 1546 (Bendigo Bank), the majority (Moore and Lehane JJ, Kiefel J dissenting) held that this requirement was made essential by the Act. The majority regarded Kirk as wrongly decided, and declined to follow it. 77 In order to provide authoritative guidance on the issue, a court of five judges was convened in Australian Steel Company (Operations) Pty Ltd v Lewis (2000) 109 FCR 33; [2000] FCA 1915 (Australian Steel). In the result, a majority (Black CJ, Heerey and Sundberg JJ, Lee and Gyles JJ dissenting) expressed the view that Bendigo Bank was correctly decided and that Kirk was wrongly decided. 78 In Australian Steel, interest was claimed on a judgment of the Magistrates' Court in Victoria. The bankruptcy notice wrongly stated that the provision under which interest was claimed was s 101 of the Supreme Court Act 1986 (Vic). This section provided for interest to be paid on judgments of the Supreme Court, not on judgments of the Magistrates' Court. Australian Steel was thus a case of an erroneous statement of the source of the obligation to pay interest on a judgment. In both Kirk and Bendigo Bank there was a complete absence of reference to any provision concerning interest. 79 The essence of the reasoning of the majority in Australian Steel appears in the following passage: "39. Kleinwort Benson decides that a bankruptcy notice that does not contain a requirement made essential by the Act is not a valid notice. In Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 390-391 McHugh, Gummow, Kirby and Hayne JJ, after discarding the elusive distinction between directory and mandatory requirements as a test of validity, said: 'A better test for determining the issue of validity is to ask whether it was a purpose of the legislation that an act done in breach of the provision should be invalid … In determining the question of purpose, regard must be had to "the language of the relevant provision and the scope and purpose of the whole statute".' In the light of this passage, it can be seen that a requirement is 'made essential' within the Kleinwort Benson principle when the inquiry as to purpose discloses the intention that an act done in breach should be invalid. See also Deputy Commissioner of Taxation v Woodhams (2000) 199 CLR 370 at 383-385; 169 ALR 503 at 512-513. 40. In 1996 Parliament chose to make a form to be prescribed by regulation the sole criterion of whether a bankruptcy notice complied with the Act, with the consequence that an act of bankruptcy would be committed in the case of non-compliance with such a notice. This being the will of Parliament, it is not for a court to treat the terms of the prescribed form as inherently less important than a requirement specified in the Act itself, so as to attract a more lenient view in the case of non-compliance. Valid delegated legislation (and there is no suggestion that the present regulations are otherwise) is binding law because that is what Parliament has willed. As Lindgren J said in Re St Leon; Ex parte National Australia Bank Ltd (1994) 54 FCR 371 at 378 (obviously in relation to a pre-1996 notice): '… the statutory requirement that a bankruptcy notice be in accordance with the prescribed form is itself a requirement made essential by the Act.' 41. This proposition is a fortiori since the 1996 amendments as the majority in Bendigo Bank, correctly in our view, pointed out (at 384[19]). Moreover, this is a case where the 1996 amendments resulted in 'a framework built on by contemporaneously prepared regulations', in which case the latter may be a reliable guide to the meaning of the former: Hanlon v Law Society [1981] AC 124 at 194. The law now is that a bankruptcy notice has to contain substantially more information than it did prior to the 1996 amendments. The law now is not just that a notice shall have certain characteristics stipulated in the Act. The notice 'must be in accordance with the form prescribed by the regulations'. 42. In our view the purpose of the requirement that the source of the creditor's entitlement to interest be stated can only be to enable the debtor to verify that the amount claimed is in fact due. The same purpose lies behind the requirement that a copy of the judgment relied on be attached to the notice. Bankruptcy notices can be served anywhere in Australia, a country with 10 separate court jurisdictions, containing some 22 levels of courts, each with its own statutory foundation, quite apart from tribunals and other bodies with power to make enforceable orders for the payment of money. The applicable interest rate can often be a matter of dispute: see, for example, EMCL Pty Ltd v Esanda Finance Corp Ltd [1999] FCA 978 at [58] et seq. That case dealt with the different issue of an award of interest by a court at the time of judgment, but it illustrates the potential for confusion and uncertainty as to applicable rates of interest in litigation in a multi-jurisdictional country. The form prescribed by the regulations provides the answer. Having regard to the purpose behind the requirement that the provision under which interest is being claimed, and correctly claimed, be included in the notice, that requirement is made essential by the Act, and a notice issued in breach of the requirement will be invalid." [emphasis added] 80 The reasoning led to the following conclusion: "44. Unlike Kirk a provision founding the claim for interest was inserted in the notices under consideration here. But it was not the provision under which interest could validly be claimed. A debtor could not verify the interest entitlement asserted in the notice by resort to s 101 of the Supreme Court Act, even though it would produce the same amount of interest as resort to s 100(7) of the Magistrates' Court Act would produce. That is adventitious. The evident purpose behind the requirement that the source of the entitlement to interest be disclosed having been thwarted by the omission of the source, the notices are invalid."

The reasoning of the primary judge 81 In concluding that the bankruptcy notice was not invalidated by reason of the way in which it dealt with the interest claimed, his Honour said: 13. The provision identified in the interest calculation appendix to this Notice, the Supreme Court Act 1970 (NSW) s 95(1), is, it is argued by counsel for Marshall, the 'rate provision' in this case and not, as should have been identified, the 'source provision'. It is submitted that the correct source provision is the Local Courts (Civil Claims) Act 1970 (NSW) s 39(1). Counsel argued that this defect should be held fatal to the notice pursuant to the decision in Australian Steel Company (Operations) Pty Ltd v Lewis (2000) 109 FCR 33 ("Australian Steel Co"). … 14. With respect to this alleged deficiency in the Notice, counsel for GMAC submitted that this case is to be distinguished from Australian Steel Co as the Notice in this case refers to both supporting statutes, whereas in Australian Steel Co there was a complete failure to refer to the source provision, and relied upon decisions of Beaumont J in Wright v Australia & New Zealand Banking Group Ltd [2001] FCA 386, of Madgwick J in St George Bank Ltd v Baldwin [2001] FCA 161, and of the Full Court in Kirk v Ashdown [1999] FCA 1664. It was argued that the Notice contains the essential elements as required and would not reasonably mislead a debtor. It was submitted that the approach the Court should take in respect of alleged deficiencies in bankruptcy notices is that determined by the High Court in Kleinwort Benson v Crowl (1988) 165 CLR 71 and that even if there is a deficiency it is cured by s 306 of the Act, … 15. This case is a further illustration of the minefield that bankruptcy law has become for judgment creditors since the decision in Australian Steel Co. There is a real question as to what was authoritatively decided by that judgment. The majority declined to follow the reasoning in another, earlier, Full Court decision of Kirk v Ashdown. They did not, and could not have, overruled that decision (or George v Tricontinental Corporation Ltd (1994) 53 FCR 284) for reasons I endeavoured to express in Australian Steel Co (at [123]). 16. In my opinion, the decision in Australian Steel Co should be understood by reference to the facts which arose for decision in that case. Having in mind the earlier Full Court decisions in George v Tricontinental Corporation Ltd, Kirk v Ashdown and Trustees of the Franciscan Missionaries of Mary v Weir (2000) 98 FCR 447 and the reasoning of the High Court in Kleinwort Benson, I do not agree that the effect of the current provisions is that any failure to follow the detail of the prescribed form is a failure to comply with an essential statutory requirement and so fatal to validity as (on one view) may have been held by the majority in Australian Steel Co (see [40] but cf [42] and [44]). The decision in Re St Leon; Ex parte National Australia Bank Ltd (1994) 56 FCR 371 to which reference is made in that connection is impossible to reconcile with Kleinwort Benson and the Full Court decisions to which I have referred. 17. Nonetheless, Australian Steel Co decided that a particular form of bankruptcy notice was invalid, and there is no other contrary decision of a Full Court on the same form. In those circumstances, if the form of bankruptcy notice here were the same as that considered in Australian Steel Co, then I should follow the decision in that case regardless of the reasoning leading to it. … 20. It will be seen that in that case the relevant provision which fixed the rate was not the Supreme Court Act 1986 (Vic) (to which reference was made in the Notice) but the Penalties Interest Rates Act 1983 (Vic) (to which reference was not made). In the present case, the provision of the Supreme Court Act 1970 (NSW) to which reference was made in the Notice did fix the rate as it was expressly incorporated by reference in the relevant Local Court rule. Further, the Notice and the Certificate of Judgment make it plain that the judgment is governed by the Local Courts (Civil Claims) Act 1970 (NSW). The only provision of that Act which deals with post judgment interest is s 39, which leads inexorably to Pt 13 r 3 of the Rules, which unequivocally identifies the provision referred to in the Notice. Put another way, the debtor could actually verify the interest entitlement by reference to s 95(1) of the Supreme Court Act 1970 (NSW), which was the identified provision by contrast with the position in Australian Steel Co ([44]). The debtor would not be misled. … 21. My conclusion is that there was no defect or irregularity in the Notice as alleged, but if there were there would be substantial compliance with the form as permitted by s 25C of the Acts Interpretation Act 1901 (Cth). In any event, as there is no evidence of substantial injustice, s 306 of the Act would apply to any such irregularity."

consideration 82 The majority in Australian Steel, in the passage referred to in par 21 of these reasons, was concerned with the question whether adherence to the form was a requirement made essential by the Act. The Court determined that the requirement to comply with the form was essential. It did so for several reasons. One of the reasons (referred to in par 42 of the judgment in Australian Steel) was by reference to the purpose of the requirement concerning interest in the form, namely, the need to provide the debtor with a means of verifying the source of the entitlement to interest claimed by the creditor. 83 It follows from the reasoning of the majority that the only question to be asked in assessing whether the requirements of the Act in this respect have been complied with, is, has the source of the interest claimed been stated. The majority in Australian Steel did not say that the enquiry should be whether the reference to the source of the interest claimed, in the particular case, allowed the debtor to verify the source of the interest claimed. A reference to the purpose of the form was made in the course of determining whether the requirement to state the source of the interest claimed was a requirement made essential by the Act. 84 Thus, following Australian Steel in the present case, the question is whether s 95(1) of the Supreme Court Act, which was referred to in the document marked "A" and attached to the bankruptcy notice in purported compliance with the requirement of note 2, was the source of the obligation to pay interest. It was not. The source of the obligation was s 39(1) of the Local Courts Act. That provision was not referred to in the document concerned, and, hence, the bankruptcy notice did not comply with the requirements of the Act. 85 The reasoning of the primary judge did not adopt this approach in a number of respects. 86 First, the primary judge said that there was doubt as to what Australian Steel authoritatively determined. As stated earlier, it is clear enough that Australian Steel held that a failure to state the source provision of the claim for interest is a failure to comply with an essential requirement of the Act, and renders the bankruptcy notice invalid. 87 Second, his Honour, having confined Australian Steel to its facts, found that the facts in this case were distinguishable. He said at par 20: "It will be seen that in that case [Australian Steel] the relevant provision which fixed the rate was not the Supreme Court Act 1986 (Vic) (to which reference was made in the Notice) but the Penalties Interest Rates Act 1983 (Vic) (to which reference was not made). In the present case, the provision of the Supreme Court Act 1970 (NSW) to which reference was made in the Notice did fix the rate as it was expressly incorporated by reference in the relevant Local Court rule." 88 It is difficult to understand the distinction sought to be made. Section 101 of the Supreme Court Act 1986 (Vic), which was referred to in the bankruptcy notice in Australian Steel, provided as follows: "Every judgement debt carries interest at the rate for the time being fixed under s 2 of the Penalty Interest Rates Act 1983 from the time the judgment is given or, in the case of costs which are taxable by the taxing master, from the date of the order from the taxing master stating the result of the taxation or such other date as the Court orders." 89 The provision which should have been referred to was s 100(7) of the Magistrates Court Act 1989 (Vic), which provided as follows: "Every judgment debt carries interest at the rate for the time being fixed under s 2 of the Penalty Interest Rates Act 1983 (Vic)." 90 Those sections refer to the very same provision which fixes the rate of interest, namely, s 2 of the Penalty Interest Rates Act 1983 (Vic). 91 The circumstances of the present case were relevantly the same as those in Australian Steel on this central issue. In the present case the Supreme Court Act provision referred to in attachment A related to Supreme Court judgments only. It led, in turn, to a common provision for the fixing of the rate of interest payable on both Supreme Court and Local Court judgments. 92 His Honour accepted that he should follow Australian Steel if the particular form of bankruptcy notice in the present case was, in respect of interest, the same as in Australian Steel. In this, his Honour was correct. As the form in the present case was relevantly the same as in Australian Steel, that authority should have been held to govern the outcome in this case. 93 Third, the primary judge relied on the reference to the Local Courts Act in the certificate of judgment, another document attached to the bankruptcy notice, to find that the debtor would not be misled by the reference in attachment A to the Supreme Court Act alone. There are two problems with this approach. First, note 2 requires that the document which details the interest calculation set out the provision under which the interest is being claimed. That requirement does not allow for the source of the interest to be stated in some other part of the bankruptcy notice or its attachments. This requirement is for the good reason that the source provision should be stated at the place where the calculation of interest claimed is set out. It is to that claim that the provision is directly relevant. Second, in any event, once it is found that the source provision is not stated in the document, it is immaterial whether the debtor would be misled or not by the omission or wrong information. It is the failure to comply with the essential requirement of the Act which renders the bankruptcy notice invalid. 94 The present appeal was argued for the appellant on the principal basis that the circumstances of this case are indistinguishable from the circumstances in Australian Steel, and the trial judge was wrong to draw a distinction between the two. The respondent contended that the trial judge rightly distinguished the circumstances of Australian Steel. So far in these reasons I have dealt with the arguments so put. Since writing the judgment dealing with those arguments, I have read in draft the judgment of Spender J in which he holds that the majority view in Australian Steel is inconsistent with the majority view in Kleinwort Benson. 95 The majority in Australian Steel provide in pars 27 to 38 a detailed analysis of Kleinwort Benson. The minority judgments propose a different analysis. While judicial minds have differed as to the proper analysis of Kleinwort Benson, the majority view of that case expressed in Australian Steel is not plainly wrong: Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485; Transurban City Link Ltd v Allan (1999) 95 FCR 553; [1999] FCA 1723 (Transurban). It would be wrong to depart from Australian Steel "merely because the matter was one on which minds might differ": Transurban, per Black CJ, Hill, Sundberg, Marshall and Kenny JJ at par 29. Consequently, this Full Court should follow the majority view expressed in Australian Steel.

the further argumentS 96 The appellant also argued that the petition wrongly stated the amount and nature of the debt owed to General Motors. It was argued that this meant that the petition should have been dismissed. Whilst the arguments were not free from confusion, they seemed to mirror arguments rejected by the primary judge at par 34 of his reasons. In view of my conclusion on the central issue in this appeal it is not necessary to determine these further arguments. However, in case the matter goes further, I should say that I would reject these arguments for the reasons stated by the primary judge.

costs 97 It follows from these reasons that General Motors should pay the costs of the proceedings before the primary judge and the costs of this appeal. The order for costs made by the primary judge on 26 August 2002 also made provision for the costs of the original creditor, E A Bourne Pty Ltd, up to 13 December 2001 to be paid from the estate of the bankrupt. The appellant did not seek to disturb that part of his Honour's order which related to the costs of the original creditor, E A Bourne Pty Ltd. I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice North.

Associate: Dated: 17 March 2003 Counsel for the Appellant: Mr D Ash Solicitor for the Applicant: Bryan Killalea

Counsel for the Respondent: Mr D A Hassall Solicitor for the Respondent: Corrs Chambers Westgarth

Date of Hearing: 8 November 2002 Date of Judgment: 18 March 2003

Bankruptcy Act 1996(Cth)

Local Courts (Civil Claims) Act 1970(NSW)s 39(1).

Bankruptcy Amendment Regulations 1997(Cth)

Local Courts (Civil Claims) Rules 1988(NSW)

Magistrates Court Act 1989(Vic)

Notice, the Supreme Court Act 1970(NSW)s 95(1), is, it

Penalties Interest Rates Act 1983(Vic)

At a glance

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Legislation Cited (16)

Cases Cited (20)

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