Case: The Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915 ; (2000) 109 FCR 33
Outcome: discussed
Apart from the reference to the Regulations in the last paragraph (to which see Gyles J at [113] in The Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915 ; (2000) 109 FCR 33 referred to later which correctly indicates that the task is to focus on the Act not the Regulations), in my view Jacobson J correctly states the matters relevant to the inquiry whether the defect or irregularity in the Notice is a formal defect or an irregularity. 16 However, a preliminary matter to consider is whether the Notice was defective or irregular in any event by reason of a failure to include an interest calculation in accordance with note 2, having regard to the circumstances of this case and to the operation of s 25C of the Acts Interpretation Act . This preliminary matter was raised by the respondent, the federal magistrate having found, in favour of the appellant, that there was a relevant defect or irregularity in the Notice. 17 If there was such a defect or irregularity, then the only remaining issue that I have been asked to determine is whether the Notice failed to meet a requirement made essential by the Act. The appellant did not contend that the failure to include an interest calculation could reasonably mislead a debtor as to what was necessary to comply with the Notice, but said that this was not relevant to determining whether there was a failure to comply with a requirement made essential by the Act. I agree. The relevant inquiry as described by Jacobson J consists of two aspects, which need to be addressed separately, and to the extent the federal magistrate treated both aspects together, in my respectful view he fell into error. 18 However, I turn first to the preliminary matter as to whether the Notice substantially complied with the requirements of the form prescribed by the Regulations. In my view, the Notice does provide an equivalent to the required details of the calculation of the interest claimed as is necessary and prescribed, in the unusual circumstances surrounding the Notice. 19 The following information is contained in or can be derived from the Notice: &#8226; The 2003 Orders were made on 12 June 2003 in the amount of $569,589.65 which was the principal sum of the final judgment debt. &#8226; Interest which accrued since the date of the 2003 Orders was claimed pursuant to s 101(1) of the Supreme Court Act 1986 (Vic) ('the Supreme Court Act '). &#8226; Interest was determined by the Supreme Court of Victoria on the basis of the rate set by the Penalty Interest Rates Act 1983 (Vic) ('the PIR Act') from the date of the 2003 Orders to 11 October 2006. &#8226; The 2006 Orders were made on 31 October 2006 and the sum of $619,757.22 remained payable by the appellant to the respondent as at 11 October 2006. &#8226; The sum of $619,757.22 included the interest claimed in the sum of $190,167.57 pursuant to the PIR Act and according to the calculation made by the binding determination of the Supreme Court of Victoria. &#8226; No further interest was claimed. 33 In Lewis [2000] FCA 1915 ; 109 FCR 33, Lee J considered the amendments to the Act, which were enacted in 1996, reviewed the legislation and considered whether the calculation of interest was a necessary requirement of a bankruptcy notice. His Honour held at [70]-[73]: Under s 41(2) as it now stands, the Act goes no further than restating that which was formerly provided in s 41(1) , namely that a bankruptcy notice be in accordance with the form prescribed. Nothing turns on the fact that the old form was prescribed by rules and the new form prescribed by regulations. On its face, therefore, the amendment has made the Act less prescriptive in operation than it was before the amendment. In the old notice, identification of the judgment relied upon was essential and was provided for in the form. As a matter of practice, costs and interest could be included as part of the sum owing under the judgment provided they were sums for which the creditor could enforce payment by execution, but no further identification of the source of the obligation, other than the judgment, was necessary. (See Kleinwort Benson at 77; Re Manion; Ex parte Deputy Commissioner of Taxation (1979) 23 ALR 270 at 273.) Identification of the authority to claim costs or interest flowed from identification of the judgment or order relied upon and provision of information in respect of costs and interest was not essential for the debtor to obtain an understanding the requirements of the bankruptcy notice. It was suggested in CBC Sydney at 526 that inclusion of particulars of the calculation of interest in the bankruptcy notice was essential to the validity of the notice. It is not clear on the authorities referred to in CBC Sydney that such particulars were ever an essential requirement. It would appear that there was no greater requirement than that the amount claimed for interest be calculated accurately and recited in the notice and not be claimed as an uncalculated amount. (See Re Davis; Ex parte Deputy Commissioner of Taxation (1963) 19 ABC 100; Re McDonald; Ex parte Elder Smith Goldsbrough Mort Ltd (1978) 18 ALR 505 at 507.) The new notice does not require the judgment or order relied upon to be identified in the body of the notice but par 2 of the substantive part of the notice directed to the debtor states that a copy of the judgment or order relied upon by the creditor is attached. It may be said, therefore, that the attachment referred to now performs the essential requirement of the old notice that there be identification of the judgment or order relied upon. It can be seen that if a notice does not recite in the body thereof, particulars of the judgment or order relied upon, it may be necessary to provide a copy of the relevant judgment or order for the debtor to understand the requirements of the notice. (See Haros v National Australia Bank Ltd ( unreported, Federal Court, Ryan J , No 1391 of 1997, 24 November 1997).) However, where a creditor is instructed by a note endorsed on the new notice to attach other documents that relate to matters of costs and interest, it does not follow that such an endorsement expresses the intention of Parliament that provision of that material become an essential requirement of the notice. Furthermore, the only document required to be lodged with the Official Receiver pursuant to reg 4.01, other than the draft bankruptcy notice and additional copies thereof, is the sealed or certified copy of the judgment or order. The Regulations do not require the person applying for the issue of a bankruptcy notice to lodge with the Official Receiver a certificate of the taxed costs or a document showing how interest was calculated if the draft bankruptcy notice includes a claim for costs or interest. As noted earlier, the form of bankruptcy notice in force before the amending Act was enacted did not refer to external documents. As noted above, reg 4.01 does not require more than one sealed or certified copy of the relevant judgment or order be lodged with the Official Receiver and is silent on whether the Official Receiver retains that document or returns it to the party seeking the issue of a bankruptcy notice. Paragraph 2 of the new notice, which seems to place greater reliance on its substance than form, states that a "copy" of the judgment or order relied upon is "attached" and does not state that the "attached" document is a sealed or certified copy of the judgment or order. (See St George Bank Ltd v Klintworth (1998) 86 FCR 240 at 242). (Emphasis added) 34 Justice Gyles agreed with the views of Lee J, and made additional comments at [113]: It is suggested that the 1996 amendments can be construed by reference to the new regulations. I do not agree. The regulations do not control the construction of the Act in any way. The 1996 amendments to the Act itself have nothing new (or relevant) to say concerning the required content of bankruptcy notices. As I have said, the only material change to the Act was to make the position less, rather than more, prescriptive than previously. The circumstance that the form now provides for much more information and is more complicated than hitherto would tend against a conclusion that the correctness and completeness of all information is a statutory requisite in the Kleinwort Benson sense. The varying nature and importance of the contents of the form which appears from the analysis by Lee J supports this conclusion. Delegated legislation is, of course, binding. That proposition is of no assistance in deciding whether strict compliance with a form prescribed by delegated legislation is made essential by the Act within the meaning of the majority judgment in Kleinwort Benson . Consideration of what was said by the majority at 76 of Kleinwort Benson shows that the phrase "made essential by the Act" in this context means what it says, and does not encompass the effect of a form prescribed by the executive government. 35 The High Court of Australia in Adams [2006] HCA 10 ; 225 ALR 396 considered all judgments of the court in Lewis [2000] FCA 1915 ; 109 FCR 33. After considering the minority decisions of Gyles and Lee JJ, the court approved their approach and applied the legislative purpose test applied by Gyles and Lee JJ (at [33] to [34]). I do not conclude, however, that the High Court necessarily approved the comments of Lee J concerning Re Bankruptcy Act 1966 ; Ex parte Commercial Banking Co of Sydney Ltd (1979) 23 ALR 522. Further, his comments in this regard were made concerning the old notice prescribed pursuant to s 41(2) of the Act as it was prior to the amendments made in 1996 where there was no requirement in the same terms as note 2 of the new form of the bankruptcy notice, although reflections were made by his Honour on the new notice which impacts upon his views as to what would be expected by the new notice. 42 Justice North did not have the advantage of the reasoning in the subsequent cases referred to in this judgment, particularly Adams [2006] HCA 10 ; 225 ALR 396; Lewis [2000] FCA 1915 ; 109 FCR 33 and Snelgrove 157 FCR 313. With the benefit of the reasoning in these decisions, North J would have needed to have undertaken an analysis of the failure to comply with note 2 of the Schedule to the form in the context of the Act to determine whether it was an essential requirement. Merely equating such a failure to a failure to attach a copy of the judgment to the bankruptcy notice without the further analysis now required, would not be sufficient. In the circumstances, I do not regard the decision of North J as one I should follow. In any event, the circumstances of the case before me are quite different from those confronting his Honour, for he did not have a binding determination of the Supreme Court of Victoria declaring the amount of interest payable which was the basis of the interest claimed in the bankruptcy notice.