Re Henry Saade Ex Parte: Collins Marrickville Pty Limited [1991] FCA 69 (8 March 1991)

FEDERAL COURT OF AUSTRALIA

Re: HENRY SAADE
Ex Parte: COLLINS MARRICKVILLE PTY LIMITED
No. B 3019 of 1990
FED No. 115
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
GENERAL DIVISION
Davies J.(1)

CATCHWORDS

Bankruptcy - bankruptcy notice - calculation of interest - whether amount of interest claimed was excessive - whether a failure to take into account a leap year - Federal Court Rules Order 62 Rule 45 - meaning of "taxations taking place on or after 4 June 1990" - whether referring to taxations commenced on or after 4 June 1990 or to taxations completed by the issue of a certificate of taxation on or after 4 June.

Bankruptcy Act 1966 (Cth) - ss.41(5), 306

Federal Court Rules Order 62, Rule 45

Re Clubb; ex parte Clubb v Westpac Banking Corporation (1990) 93 ALR 123

Doro v Victorian Railway Commissioners (1960) VR 84

Robertson v City of Nunawading (1973) VR 819

HEARING

SYDNEY
8:3:1991

Counsel for the debtor: Mr J. Simpkins

Solicitors for the debtor: Swaab and Solicitors

Counsel for the creditor: Mr D.M. Yates

Solicitors for the debtor: Sly and Weigall

ORDER

The bankruptcy notice be set aside.

The respondent, Collins Marrickville Pty Limited, pay the costs of the application.

NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

DECISION

This is an application brought on behalf of Henry Saade, a judgment debtor, seeking an order that a bankruptcy notice dated 2 October 1990 issued in favour of Collins Marrickville Pty Limited, the judgment creditor, be set aside. The bankruptcy notice recited:-
"WHEREAS Collins Marrickville Pty Limited of 3 South Avenue, Double

Bay, New South Wales (hereinafter referred to as `the judgment
creditor') has claimed that the sum of $80,651.70 together with
interest thereon at the rate of fifteen per centum per annum from 26
February 1988 to 11 March 1990 which amounts to $24,659.53 and at
the rate of seventeen per centum per annum from 12 March 1990 which
as at 27 September 1990 amounts to $7,475.20 making a total of
$112,786.43 is due by you to the judgment creditor under an Order
obtained by the judgment creditor against you in the Federal Court
of Australia New South Wales District Registry General Division on
the 21st day of September 1990 being an Order the execution of which
has not been stayed:..".

The notice then went on to require Mr Saade, inter alia:-

"(A) to pay the sum of $112,786.43 so claimed by the judgment
creditor to the judgment creditor".

2. The application is brought on the ground that the sum claimed was overstated. The $80,651.70 claimed was the amount of the taxed costs ordered to be paid by Mr Saade and Henjo Investments Pty Limited to Collins Marrickville Pty Limited pursuant to an order made by the Full Federal Court on 26 February 1988 (reported [1988] FCA 40; (1988) 79 ALR 83. The certificate of taxation issued on 5 July 1990.

3. This present application arises out of the calculation of interest.

4. Two overstatements in the notice have been alleged. The first is that the period in respect of which the interest was calculated, 26 February 1988 to 11 March 1990, was a period of 2 years and 13 days in respect of which interest at 15% on the taxed costs amounted to $24,626.34, a difference of $33.19. The difference arose from the fact that the interest was calculated on the days which had elapsed and failed to observe that an additional day, 29 February, occurred in the leap year 1988.

5. The relevant authorities on this point were fully examined by Burchett J. in Re Clubb; ex parte Clubb v Westpac Banking Corporation (1990) 93 ALR 123 and I need not add to his Honour's careful expositions. His Honour held at p 129:-

"There is nothing nominal about 29 February; it takes its place in
the succession of days of the week as a Sunday or other designated
day - there are not two Sundays (allowing the added day to be
nominal) because one is an intercalary day. It is the year which is
conventional, its length being adjusted artificially to correct an
error of approximation in the calendar."

It follows that, as the interest payable was an annual interest, it was not to be calculated in respect of periods of 365 days but in respect of periods of 12 months. As the bankruptcy notice did not do this, the interest was overstated by $33.19.

6. The second issue, and one in respect of which a notice was given under s.41(5) of the Bankruptcy Act 1966 (Cth) involves an interpretation of the Federal Court Rules. Order 35 Rule 8 provides that a judgment debt shall carry interest at the rate per annum which it specifies. Over the subject period, the rate was 15% until increased to 17% by Statutory Rule 72 of 1990 as from 12 March 1990. At the date when the order was pronounced, 26 February 1988, Order 62, Rule 45(4) provided:-

"Interest calculated in accordance with Order 35, Rule 8 is payable
from the date the order is pronounced."

However, Statutory Rule 102 of 1990, which commenced on 4 June 1990, amended Order 62 Rule 45 by, inter alia, inserting the following sub-rules:-

"(5) Sub-rule (4) shall not apply to taxations taking place on or
after 4 June 1990.
(6) Every award of costs under a judgment of the Court shall carry
interest calculated in accordance with Order 35 Rule 8 from the date
of the certificate of taxation quantifying the same.
(7) Sub-rule (6) shall apply to taxations taking place on or after
4 June 1990."

In the taxation of the costs, hearings before the Deputy Registrar took place on several dates commencing on 8 August 1989 and concluding on 14 June 1990. The certificate of taxation issued on 20 July 1988. The issue therefore arises whether the interest should have been calculated from the date the order was pronounced, 26 February 1988 or from the date of the certificate of taxation.

7. There is no doubt that the amendment to the Rules had and was intended to have retrospective effect in the sense of affecting the entitlement to interest on judgments pronounced before 4 June 1990. Statutory Rule No. 102 of 1990 specifically provided that its provisions were to commence on 4 June 1990 and the amendments made to Order 62 Rule 45 were expressed to "apply to taxations taking place on or after 4 June 1990." The question is what does that provision mean. Counsel for the judgment creditor, Mr D.M. Yates, submitted that it refers to taxations commenced on or after 4 June 1990. Mr J. Simpkins, counsel for Mr Saade, has submitted that the provision refers to taxations which were completed by the issue of a certificate on or after 4 June 1990. I prefer the submission put on behalf of Mr Saade.

8. It should be noted in the first instance that proceedings to enforce payment of costs ordered to be paid could not be taken until the bill of costs has been taxed, indeed until, in the event of non-payment, the Registrar has drawn up, signed and sealed an order in favour of the party for the sum shown on the certificate of taxation. See Order 62 Rule 45(3). Thus, if the amendment applied to taxations which had not been completed by the issue of a certificate of taxation, it would not offend the presumption against retrospectivity. It is sufficient in this regard, for present purposes, to refer to and adopt the examination of the presumption made by Adam J. in Doro v Victorian Railways Commissioners (1960) VR 84 and by Winnecke C.J., Gowan and Starke JJ. in Robertson v City of Nunawading (1973) VR 819.

9. Secondly, the amending rules speak of taxations "taking place on or after 4 June 1990". The ordinary meaning of that expression is that of taxations which have not been completed by the issuance of a certificate of taxation prior to 4 June 1990 and to taxations commenced on or after that date. That interpretation provides a clear determinant and accords both with the ordinary use of the language of the amendment and with its clear intendment.

10. It follows that, as the interest claimed was interest from 26 February 1988, there was an overstatement to the extent of $29,542.83. As the overstatement was a substantial one and could not be corrected by the operation of s.306 of the Bankruptcy Act 1966 (Cth), it follows that the bankruptcy notice should be set aside.

11. The application will be granted with costs.