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

CWDS
  Bankruptcy - bankruptcy notice requiring payment to the Registrar of a New
South Wales Local Court - change to rules of that Court after recovery of
judgment and before issue of bankruptcy notice - provision no longer made for
payment to Registrar - whether bankruptcy notice required payment in
accordance with the Local Court judgment - whether notice bad.
  Bankruptcy - application for issue of bankruptcy notice - provision of
certificate of judgment - clerical error in certificate - effect on validity
of bankruptcy notice.
  Bankruptcy Act 1966, sub-s. 41 (2)
  Bankruptcy Rules, R. 7
  In re a Debtor (1908) 2 KB 692
  Re a Debtor; Ex parte Bolam (1909) 26 WN (N.S.W.) 78
  Re Martin (1971) 18 FLR 372
  Re Mellick (1971) 19 FLR 1
  Re Gyngell; Ex parte Speedo Group Limited, Federal Court of Australia,
11/12/90 unrep.)
  Coleman v The Shell Company of Australia Limited (1943) 45 SR (N.S.W.) 27
  La Macchia v Minister for Primary Industry (1986) 72 ALR 23
  Maxwell v Murphy (1957) 96 CLR 261
  Rodway v The Queen (1990) 169 CLR 515

HRNG
SYDNEY
#DATE 13:3:1991
  Counsel and solicitors for         Mr R.K. Eassie instructed
  the petitioning creditor:          by Messrs J.E. Mills and Associates
  Counsel and solicitors for         Mr R. Tregenza instructed
  the debtor:                        by Messrs Constantine G. Paolis and Co.

ORDER
  1. The petition dated 15 October 1990 be dismissed.
  2. The petitioning creditor pay the costs of the debtor, including any
reserved costs.

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

JUDGE1
  In this matter, the Court has had the assistance of considered and
thoughtful oral and written submissions by both counsel.
2.  The creditor's petition is dated 15 October 1990.  It relies for the act
of bankruptcy upon failure to comply with the requirements of a bankruptcy
notice issued 13 September 1990 and served upon the debtor on 25 September
1990.
3.  By Notice of Opposition to Petition, dated 10 December 1990, the debtor
denies commission of the act of bankruptcy relied upon by the petitioning
creditor.
4.  Paragraph 2 of the petition is in the following terms:
            "The debtor is justly and truly indebted to
            Crest Air Conditioning Pty. Limited, in the sum
            of $12645.15 under the judgment recovered in the
            Local Court at Ryde on the twenty-fifth day of
            October, 1989 in the sum of $10,991.22 plus
            interest at the prescribed rate up to and
            including 9th October, 1990 amounting to
            $1,580.93 plus costs of attempting to enforce
            the judgment of $73.00.  The consideration for
            such debt being the cost of supply and
            installation of ventilation and air conditioning
            systems by the creditor for the debtor at the
            debtor's request in May, 1989 being the balance
            of monies out-standing from Invoice No. 7705."
5.  The bankruptcy notice issued upon an application dated 29 August 1990
which was made by the solicitor for the judgment creditor.  The application,
in accordance with Form 3, stated:
            "I produce a certificate of the judgment under
            the seal of the Court certified by the Registrar
            against the judgment debtor obtained by default
            in the Local Court at Ryde in the State of New
            South Wales on the twentyfifth day of October, 1989."
6.  Sub-rule 7 (2) of the Bankruptcy Rules ("the Rules") provides, in para.
(a), that at the time when an application for the issue of a bankruptcy notice
is filed, the applicant shall file one of the following documents in respect
of the final judgment in question, namely:
      "(i)        an office, sealed or certified copy of the judgment or
                  order;
       (ii)       a certificate of the judgment or order under the seal
                  of the court or under the hand of an officer of the
                  court;
       (iii)      a copy of the entry of the judgment or order certified
                  by an officer of the court to be a true copy of that
                  entry . . ."
7.  As I have indicated, the application for issue of the bankruptcy notice,
dated 29 August 1990, identified the judgment as one obtained on 25 October
1989.  However, the certificate produced with the application and attached to
the Court file states in para. 1:
            "In this matter the plaintiff recovered judgment
            against the defendant on October 25th 1990."
The certificate itself is stated by the Registrar of the Local Court at Ryde,
as given on "23/08/90".  Thus, there is an internal contradiction in the
certificate itself; also, the certificate is inconsistent with the description
of it in the application for the bankruptcy notice.  The petitioner and the
debtor accepted that the judgment in question was indeed obtained on the date
specified both in the application for the bankruptcy notice, and in the
bankruptcy notice itself, namely 25 October 1989.  Nevertheless, the debtor
relies upon the disconformity between the certificate and the application for
issue of the bankruptcy notice (and the bankruptcy notice) as assisting his
case in opposing the petition.  That is one ground upon which there was
argument on the hearing of the petition.
8.  The debtor, after the conclusion of oral argument, sought leave to add to
the Notice of Opposition the following ground:
      "4.   That the Bankruptcy Notice be set aside as irregular as it
            was issued without there being filed with the Application
            for Issue of the Bankruptcy Notice pursuant to Rule 7 a
            certificate of judgment or other such document as is
            prescribed in paras. (i) - (v) of r. 7 (2) which was the
            certificate or judgment or other such document in relation
            to which the Bankruptcy Notice was to be issued."
9.  I would grant such leave, but hold that there is no substance in the fresh
ground.  Counsel for the petitioning creditor pointed to several obstacles in
the path of success for the debtor's case on this ground.  It is sufficient to
say that I accept the following submissions for the petitioning creditor:
      (a)   Sub-rule 7 (2) (a) requires that one of the specified
            documents be filed by the applicant at the time when the
            application for issue of the bankruptcy notice is filed;
            there is no requirement that the certificate be free from
            any errors on its face; here the application, dated 29
            August 1990, stated the date of recovery of judgment was 25
            October 1989 and the statement on the certificate that this
            date was 25 October 1990 was plainly a clerical error in the
            Local Court.
      (b)   It was for the Registrar (or in this case the Deputy
            Registrar) to decide whether he or she was satisfied that
            the application had been duly made and that the copies of
            the form of bankruptcy notice which had been furnished were
            in order for signature (sub-rule 7 (5)); the Deputy
            Registrar indicated that satisfaction by signing and
            stamping the copies and returning them to the applicant;
            there is no requirement that the Deputy Registrar be
            satisfied that the certificate of judgment which was filed
            with the application be free from any error.
      (c)   There was no defect in the observance of the procedures
            attending issue of the bankruptcy notice, and no failure to
            comply with the Rules, such as to make it necessary to seek
            the intervention of the Court under Rule 195.
10.  For these reasons, the debtor fails in his submissions on this branch of
the case.
11.  The second ground arises in the following way.  Sub-section 41 (2) of the
Bankruptcy Act 1966 ("the Bankruptcy Act") requires the prescribed form of
bankruptcy notice, inter alia, to require the debtor to pay the judgment debt
or sum ordered to be paid "in accordance with the judgment or order . . ."
These are words with a long legislative history, dating back at least to para.
4 (1) (g) of the Bankruptcy Act 1883 (Imp.) and, in New South Wales, to s. 4
of the Bankruptcy Act 1887 (N.S.W.) and para. 4 (1) (g) of the Bankruptcy Act
1898 (N.S.W.).
12.  The bankruptcy notice issued on 13 September 1990 referred to the final
order obtained in the Local Court at Ryde on 25 October 1989 and went on to
require the debtor:
      "(a)        to pay the sum of Twelve thousand four hundred and
                  fifty nine dollars and ninety five cents ($12,459.95)
                  so claimed by the judgment creditor to the Registrar
                  of the Local Court at 814 Victoria Road, Ryde 2112 in
                  the State of New South Wales;
                  (Emphasis supplied). or;
       (b)        to secure the payment of the sum referred to in
                  paragraph (a) to the satisfaction of the Federal Court
                  of Australia or the judgment creditor or compound the
                  sum so specified to the satisfaction of the judgment
                  creditor."
The second issue that was debated before me is whether para. (a), which I have
set out, answers the statutory requirement that the debtor be required to pay
the judgment debt or some order to be paid "in accordance with the judgment or
order" (emphasis supplied).  The text of the certificate is relevantly in the
following terms:
      "1.   In this matter the plaintiff recovered judgment against the
            defendant on OCTOBER 25th 1990 (sic) in the sum of 10,991.22
       2.   I am informed by the judgment creditor that $ NIL has been
            paid in respect of the judgment debt.
       3.   Interest is payable on the judgment debt at the rate of: 15%
            p.a.
       4    The judgment creditor has incurred costs of attempting to
            enforce the judgment, recoverable against the judgment
            debtor, in the amount of $73.00"
The certificate states that what I have set out is a true and correct copy of
the entry of the judgment in the records of the Local Court at Ryde.  It will
be apparent from the certificate that payment to the Registrar is not
something required by the terms of the judgment itself.
13.  The Local Courts (Civil Claims) Rules 1988 ("the Local Courts Rules") are
made under the Local Courts (Civil Claims) Act 1970 (N.S.W.).  At the time of
the recovery of judgment on 25 October 1989, and until 26 April 1990, the
Local Courts Rules provided, in Part 27 Rule 1, as follows:
      "1.   (1)   The court may, on the application of any party to an
                  action, or without any such application being made,
                  when giving judgment in the action, order that the
                  judgment debt (if any) be paid at such time, or by
                  such instalments payable at such times, as it thinks
                  fit.
            (2)   Subject to this Part, every judgment debt shall be
                  payable forthwith.
            (3)   Subject to subrule (5), the amount of every judgment
                  debt arising from an action shall be payable to the
                  registrar where -
                  (a)  it is payable in one sum; or
                  (b)  an order for its payment by instalments requires
                       the instalments to be paid to the registrar.
            (4)   Where the court or registrar orders payment of a
                  judgment debt by instalments and does not require
                  payment of the instalments to the registrar, the
                  instalments are payable to the judgment creditor or at
                  the judgment creditor's direction.
            (5)   Notwithstanding subrule (3), any payment by or on
                  behalf of a judgment debtor made on account of a
                  judgment debt to or at the direction of the judgment
                  creditor shall, if accepted by or on behalf of the
                  judgment creditor, operate to reduce the judgment debt
                  by the amount of the payment.
            (6)   Where the court makes an order under subrule (1) the
                  order shall, while it remains in force, operate as a
                  stay of enforcement of the judgment.
            (7)   Where a judgment creditor files an affidavit for the
                  purpose of requiring the issue of any document for or
                  in connection with the enforcement of a judgment, the
                  affidavit shall, in any action (whether in a court or
                  in any other Court) by the judgment debtor against the
                  registrar for the wrongful issue of the document, be
                  conclusive evidence in favour of the registrar that at
                  the time of the issue of the document -
                  (a)  where an amount is stated in the affidavit as
                       having been paid in reduction of the judgment
                       debt - that amount and no other amount had been
                       paid; or
                  (b)  where there is a statement in the affidavit that
                       no amount has been paid in reduction of the
                       judgment debt - no amount had been paid,
                  by or on behalf of the judgment debtor in reduction of
                  the judgment debt."
14.  A further Rule was made with effect from 27 April 1990.  This amended
Part 27 by omitting sub-rule 1 (3) and omitting from sub-rule 1 (5) the
opening words "Notwithstanding subrule (3)".
15.  The result of this was that at the time of the application on 29 August
1990 for the issue of the bankruptcy notice and at the time of the issue of
the notice on 13 September 1990, there was no provision in the Local Courts
Rules for the method of payment of a judgment debt payable in full, other than
the implicit indication in sub-rule 1 (5), as amended, that payment would be
made to or at the direction of the judgment creditor.
16.  Counsel for the debtor submitted that (i) in the absence of a direction
as to payment in the judgment itself, the judgment should be interpreted as
requiring payment in accordance with the Local Courts Rules and, by analogy,
counsel relies upon what was said as to the procedures of other courts, in,
inter alia, In re a Debtor (1908) 2 KB 692 and Re a Debtor; Ex parte Bolam
(1909) 26 WN (N.S.W.) 78; (ii) at the time of recovery of the judgment in the
Local Court, the relevant Rules provided that the judgment debt was payable to
the Registrar; (iii) at the time of the issue of the bankruptcy notice, the
relevant Rules no longer so provided, (following the amendment effective 27
April 1990) yet the bankruptcy notice stipulated payment to the Registrar of
the Local Court at Ryde; and (iv) the requirement under the federal law that
the debtor be required by the bankruptcy notice to pay the judgment debt or
sum ordered to be paid "in accordance with the judgment or order" was
ambulatory in character in the sense that what was required by the federal law
in the present case was payment in accordance with the State law as it stood
during the time for payment specified in the bankruptcy notice, that is to say
from the date of service of the notice until the expiration of the period
prescribed in it, and (v) it followed that the bankruptcy notice and thus the
petition were bad.
17.  There was some debate before me upon point (i) as I have described it
above.  On one view, the bankruptcy notice was bad simply because it required
payment in accordance with a particular procedure and to a particular person
whilst the judgment itself was silent on the point.
18.  Counsel referred to various authorities concerned with the consequences
of the requirement that the bankruptcy notice required a debtor to pay the
judgment debt "in accordance with" the judgment.   In Re a Debtor (1908) 2 KB
692 turned upon a bankruptcy notice based upon a County Court judgment; by the
judgment, the defendant was ordered to pay the judgment debt to the Registrar,
but the bankruptcy notice required payment to the judgment creditor.  The
Court of Appeal held that the bankruptcy notice did not require payment
according to the terms of the judgment within the meaning of para. 4 (1) (g)
of the British Bankruptcy Act of 1883.
19.  Three decisions deal with bankruptcy notices based on judgments recovered
in New South Wales District Courts.  Re a Debtor; Ex parte Bolam (supra) was
argued on the footing that the District Courts (Amendment) Act 1905 (N.S.W.),
s. 44, had the result that a District Court judgment had to contain a
direction that the amount of the judgment be paid into Court.  The bankruptcy
notice in question required payment to the debtor, and in setting aside the
bankruptcy notice issued under para. 4 (1) (g) of the New South Wales
Bankruptcy Act of 1898, Street J. held that the earlier English decision was
"precisely in point".
20.  However, it is to be noted that in fact sub-s. 44 (4) of the 1905 statute
provided that where a judgment for the plaintiff had been given or entered up
in a District Court, all such moneys whether payable in one sum or by
instalments "shall be paid into Court".  The obligation apparently was imposed
directly in these terms by the legislation, not indirectly by the legislation
requiring the Court order to take a particular form.  It does not appear from
the report of Re a Debtor; Ex parte Bolam (supra) whether in fact the District
Court judgment in question did contain a direction that the amount of the
judgment be paid into Court, or whether the obligation to do so arose simply
by force of s. 44.
21.  The matter is taken somewhat further by Re Martin (1971) 18 FLR 372.  It
concerned a petition based upon failure to comply with a bankruptcy notice
which required payment of the District Court judgment to the petitioning
creditor.  The judgment simply ordered that "the defendants do pay the said
sum"; sub-s. 100 (4) of the District Courts Act 1912 (N.S.W.) was in the same
terms as sub-s. 44 (4) of the 1905 Act.  Sweeney J. held that the bankruptcy
notice did not comply with sub-s. 41 (2) of the Bankruptcy Act because notice
did not require payment "in accordance with the judgment".  His Honour also
held that the debtor could have been misled by the bankruptcy notice in this
form, and that the defect could not be regarded as merely formal for the
purposes of sub-s. 306 (1) or properly cured by amendment under sub-s. 33 (1).
Accordingly, the petition was dismissed.  To the same effect is his Honour's
earlier decision Re Mellick (1971) 19 FLR 1.
22.  From these decisions has come the view (commented upon by Einfeld J. in
Re Gyngell; Ex parte Speedo Group Limited, 11/12/90, unrep., p 4) that whilst
a judgment in form may make no requirement as to the manner or method of
payment of the judgment debtor, the judgment will, for the purposes of sub-s.
41 (2) of the Bankruptcy Act, be treated as so doing if provision as to the
method or manner of payment is made by legislation or Rules of Court governing
the procedures of the court in which the judgment is recovered.
23.  There had been, it was submitted before me, a misapplication in the later
decisions of In re a Debtor (1908) 2 KB 692, because in that case the
requirement to pay the Registrar appeared on the face of the judgment.  There
is, to my mind, much force in that view.  But to accept it would be to depart
from a practice in this country which is long established, however uncertain
its antecedents.  I would not, as a judge at first instance, depart from the
approach taken in the Australian bankruptcy decisions to which I have
referred.  Accordingly, I should accept point (i) in the series of steps taken
in the argument by counsel for the debtor.  There remains the question arising
from counsel's point (iv).
24.  The issue thus becomes one of whether the removal, by an amending rule
taking effect on 27 April 1990, of the provisions in the Local Courts Rules
for payment to the Registrar of the Local Court, had the result that under the
relevant State law from 27 April 1990 there was no provision for payment to
the Registrar, not only as regards judgments recovered on and after that date,
but also as regards judgments recovered before 27 April 1990 but still
unsatisfied at that date.  The judgment in the present case fell into the
latter category, having been obtained on 25 October 1989.
25.  The issue as I have isolated it is not whether the amendments with effect
on 27 April 1990 were retrospective in the sense of applying to facts or
events which had occurred before 27 April 1990, such as payments already made
to the Registrar, in such a way as to confer or impose or otherwise affect
rights or liabilities defined by reference to those past events.  Rather, the
question is whether, in respect of a judgment recovered before 27 April 1990
and still unsatisfied, the rights and liabilities of the parties thenceforth
were to be changed, such that future payments were not to be made to the
Registrar; see the distinction drawn by Jordan C.J. in Coleman v The Shell
Company of Australia Limited (1943) 45 SR (N.S.W.) 27 at 31, and by the Full
Court of this Court in La Macchia v Minister for Primary Industry (1986) 72
ALR 23 at 26-27, 33-34.
26.  In my view, the reasoning in these authorities is applicable to the
situation with which the Court is presented in this case.  I accept that the
requirement as to payment "in accordance with" the judgment or order, as it
appears in sub-s. 41 (2), is ambulatory in the sense I have described it.  It
would be a strange result if a bankruptcy notice was bad unless it required
payment in a manner not in accordance with what the applicable law now
required to discharge the judgment debt in question, but in accordance with
what had been required at a past time.
27.  It follows that subject to consideration of one further aspect of the
matter, the notice in issue here was bad.  I would not regard the defect as
merely formal for the purposes of sub-s. 306 (1) or as having been susceptible
of amendment under para. 33 (1) (b) of the Bankruptcy Act.  I have already
referred, in this connection, to Re Martin supra.
28.  There was some discussion before me as to the correct construction of
Part 27 Rule 1 of the Local Courts Rules as it stood before 27 April 1990.  I
have set out the text earlier in these reasons.  In my view, the position was
that every judgment debt was payable forthwith, subject to the stay effected
by an order under sub-rule (1), which might provide for payment by
instalments.  The instalments were payable to or at the direction of the
judgment creditor, unless the order for instalments required payment to the
registrar.  Payment of a judgment payable in one sum and not by instalments
was to be to the registrar.  But, in any case where payment was to be made to
the registrar, any payment to or at the direction of the judgment creditor
nevertheless would reduce the judgment debt, if accepted by or on behalf of
the judgment creditor.
29.  I accept that, as this case illustrates, changes in these provisions
might have substantive consequences for the rights and liabilities of
creditors and debtors, in particular, by reason of the inter-action between
the Local Courts Rules and other laws, here the Bankruptcy Act.  I appreciate
also that the line between substance and procedure is, as Fullagar J. pointed
out, not easy to draw, and when drawn often appears unsatisfactory; see
Maxwell v Murphy (1957) 96 CLR 261 at 286.
30.  But in my view the Local Courts Rules in question were concerned with
enforcement or recovery of judgment debts by specified procedures, and, as it
has been said, no one has a vested right in any form of procedure: Rodway v
The Queen (1990) 169 CLR 515 at 521.  Accordingly, and contrary to the
submissions of its counsel, the petitioning creditor did not acquire before 26
April 1990 any substantive right to have the Registrar of the relevant Local
Court receive payment which right would, whether at general law or pursuant to
the Interpretation Act 1987 (N.S.W.), para. 30 (1) (b), still survive and so
sustain the validity of a later bankruptcy notice expressed as requiring
payment to that Registrar.
31.  The petition should be dismissed with costs.