Re David; Ex Parte Lahood [1979] FCA 10; (1979) 36 FLR 433 (15 March 1979)

FEDERAL COURT OF AUSTRALIA

Re DAVID; Ex parte LAHOOD [1979] FCA 10; (1979) 36 FLR 433
Bankruptcy

COURT

FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
Evatt J.(1)

CATCHWORDS

Bankruptcy - Notice - Form of bankruptcy notice - Invalidity - Amount of debt - Costs untaxed at date of issue and service of bankruptcy notice - Petition claiming judgment debt and taxed costs - Bankruptcy Act 1966 (Cth.). On 21st June, 1977, P. obtained judgment against D. in the sum of $5,000 with costs to be taxed. On 26th July, 1978, P. applied for and obtained the issue of a bankruptcy notice addressed to D. claiming $5,000 together with interest thereon in the sum of $548. The bankruptcy notice, served on D. on 23rd August, 1978, gave D. twenty-one days within which to comply with its provisions. On 24th August, 1978, P.'s costs in respect of the judgment were taxed in the sum of $3,644.94. On 5th December, 1978, a bankruptcy petition was presented to the court alleging that D. was indebted to P. in the sum of $8,644.94 being the sum of $5,000 judgment debt and taxed costs of $3,644.94 together with interest thereon, D. having failed to comply with the bankruptcy notice,

Held, that the bankruptcy notice was valid.

In Re G.J., (1905) 2 KB 678, applied.

In Re H.B., (1904) 1 KB 94; Re Jack; Ex parte C.V. Holland (Holdings) Ltd. (1959), 19 ABC 268, and Re Schierholter; Ex parte Geis [1978] FCA 6; (1978), 32 FLR 22, distinguished.

HEARING

Sydney, 1979, February 27; March 15. 15:3:1979
PETITION.

On the hearing of the bankruptcy petition D. sought to challenge the validity of the bankruptcy notice. The court upheld the validity of the bankruptcy notice and determined to give its reasons later.

P. Dowdy, for the judgment debtor.

Miss C.A. Marlow, for the petitioning creditor.
Cur. adv. vult.

Solicitor for the judgment debtor: Frank A. Davenport & Mant.

Solicitor for the petitioning creditor: Higgins, Morgan & Partners.
D. LEVIN

DECISION

March 15.

The following reasons for decision were given.
EVATT J. (After setting out the facts, continued:) In my view the decisions

in In Re H.B. (1904) 1 KB 94 , Re Jack; Ex parte C.V. Holland (Holdings) Ltd. (1959) 19 ABC 268 and Re Schierholter; Ex parte Geis [1978] FCA 6; (1978) 32 FLR 22 , are distinguishable from the present case. In each of those cases the total indebtedness of the debtor to the petitioning creditor referred to in the petition was greater than that claimed to be due in each respective notice even though the total of the indebtedness was known to each petitioning creditor at the date when each respective notice was issued. This clearly was not the position in the present case. (at p434)

2. Part 34, r. 3 of the District Court Rules, 1973 (N.S.W.), provide:

"Where -
(a) there is a judgment for the payment of money and for the
payment of costs; and
(b) when the money (other than costs) becomes payable under
the judgment the costs have not become payable (because the
costs have not been taxed or for any other reason),
a person entitled to enforce the judgment by execution may -
(c) have execution issued to enforce payment of the money
(other than costs); and
(d) when the costs become payable, have execution issued
separately to enforce payment of the costs." (at p434)

3. Such rule clearly shows that two separate writs of execution may issue, one to enforce payment of "money" (other than costs), and the other to enforce payment of costs when such costs become payable. (at p434)

4. The effect of this rule is similar to the old r. 280 of the District Court Rules, the relevant part of which is set out in Re Jack; Ex parte C.V. Holland (Holdings) Ltd. (1959) 19 ABC, at p 270 . In that case Manning J. after quoting the relevant part of r. 280 said: "This rule is based upon the English rule which is r. 18 of O.XLII. The English rule was considered in the case of In Re G.J. (1905) 2 KB 678 . In that case judgment had been entered for the petitioning creditor for a sum with costs to be taxed. A bankruptcy notice was issued shortly after the judgment was entered and before the costs had been taxed and it was there held that the bankruptcy notice required the debtor to pay the judgment debt in accordance with the terms of the judgment. Vaughan Williams L.J. said: 'Having regard to the amount of the judgment debt as set forth in the judgment, and to the form of the bankruptcy notice, it seems to me that it was made quite plain to the debtor that what the notice required him to pay was the amount of the judgment debt independently of the costs, and I think the creditor was under no obligation to abandon the right given to him by rule 18 to levy execution afterwards for the costs' (1905) 2 KB 682 . But where, as in this case, the judgment creditor's costs have been taxed before the bankruptcy notice issues and the amount of the judgment, exclusive of costs, is described in the notice as the amount due on the judgment, there is much to be said for the view that the judgment creditor, in order to succeed, must waive the amount of the costs and make it clear in the notice that nothing more is claimed beyond the amount specified" (1959) 19 ABC, at p 270 . (at p435)

5. In my view the present case is indistinguishable from In Re G.J. In that case Vaughan Williams L.J., after stating the passage cited by Manning J. above, said "in my opinion the bankruptcy notice complied with all the requirements of sub-s. 1(g) and was a valid notice" (1905) 2 KB, at p 682 , whilst Stirling L.J. stated that "In Re H.B. (1904) 1 KB 94 does not apply to the present case" (1905) 2 KB, at p 683 . . . . (at p435)

ORDER

In my view the effect of r. 18 of O.XLII is the same as r. 3 of Pt 34 of the District Court Rules. With respect, the reasoning of the court in In Re G.J. in this regard is correct and applies to the instant case. Accordingly the bankruptcy notice herein is a valid notice.