FEDERAL COURT OF AUSTRALIA
Abu‑Amsha v Wagner [2019] FCA 900
File number: WAD 7 of 2019 Judge: BANKS-SMITH J Date of judgment: 12 June 2019 Catchwords: BANKRUPTCY AND INSOLVENCY - application for review of registrar's decision to dismiss creditor's petition and application for substituted service of petition - where copy of judgment not attached to bankruptcy notices - where insufficient evidence of service - where absence of reliable evidence as to address - where no act of bankruptcy established - where petition relies on act of bankruptcy that cannot be established - whether futile to order substituted service of petition Legislation: Acts Interpretation Act1901 (Cth) s 29
Bankruptcy Act 1966 (Cth) ss 40, 47, 306, 309
Evidence Act 1995 (Cth) s 160
Federal Court of Australia Act 1976 (Cth) s 35A
Bankruptcy Regulations 1996 (Cth) regs 4.02, 16.01
Federal Court (Bankruptcy) Rules 2016 (Cth) r 4.04
Cases cited: American Express International Inc v Held [1999] FCA 321
Civic Video Pty Ltd v Warburton [2013] FCA 934; (2013) 216 FCR 61
Commonwealth Bank of Australia v Horvath (Junior) [1999] FCA 143
Curtis v Singtel Optus Pty Ltd [2014] FCAFC 144; (2014) 225 FCR 458
de Robillard v Carver [2007] FCAFC 73; (2007) 159 FCR 38
Deputy Commissioner of Taxation v Josway Hospitality Pty Ltd [2018] FCA 466
Derma Pharmaceuticals Pty Ltd v HSBC Bank Australia Ltd [2005] SASC 48; (2005) 188 FLR 373
Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87
Fletcher (Trustee) v Keating [2017] FCA 1050
Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84
Jones v Superannuation Complaints Tribunal [2011] FCA 1255; (2011) 198 FCR 71
Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34; (1988) 165 CLR 71
Mbuzi v Favell (No 2) [2012] FCA 311
Napiat Pty Ltd v Salfinger; in the matter of Salfinger (No 7) [2011] FCA 1322; (2011) 202 FCR 264
Re Ferrarese; Ex parte Aloisio (1995) 60 FCR 586
Re Rustic Homes Pty Ltd (1988) 49 SASR 41
Re Scerri (1998) 82 FCR 146
Re Vincent; Ex parte State Bank of New South Wales Ltd (1996) 71 FCR 58
Silvas (a bankrupt) v Official Trustee in Bankruptcy [1997] FCA 206
Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321; (2004) 141 FCR 107
Soong v Deputy Commissioner of Taxation [2011] NSWCA 26; (2011) 278 ALR 538
Date of hearing: 5 June 2019 Registry: Western Australia Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 66 Counsel for the Applicants: Mr MJ McPhee Solicitor for the Applicants: MJ McPhee Barrister & Solicitor Counsel for the Respondents: The Respondents did not appear ORDERS
WAD 7 of 2019 BETWEEN: SAMI ABU-AMSHA
First Applicant
PETER EUGENE MARSZAL
Second Applicant
AND: GERALD ERNEST WAGNER
First Respondent
SHARON DENISE GADE
Second Respondent
JUDGE:
BANKS-SMITH J
DATE OF ORDER:
12 JUNE 2019
THE COURT…
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- AGLC
- Abu-Amsha v Wagner [2019] FCA 900
- Case
- [2019] FCA 900
- Decision Date
CaseChat Overview and Summary
The case of Abu-Amsha v Wagner concerns a creditor's petition for the bankruptcy of a debtor, where the primary issue was the validity of the bankruptcy notices issued by the creditor. The matter was heard in the Federal Court of Australia, with the primary focus being on whether the creditor's petition could be reviewed and if the application for substituted service of the petition was valid.
The legal issues the court had to decide included whether the bankruptcy notices were correctly issued and served, and if there was a failure to attach a copy of the default judgment to the bankruptcy notices. Additionally, the court had to determine if there was sufficient evidence of service and whether the absence of a reliable address meant that substituted service should be ordered. The court also considered the fundamental importance of proper service in bankruptcy proceedings and the high standard of proof required.
The court found that there was no evidence that a copy of the default judgment was attached to the bankruptcy notices at the time they were issued or served, despite this being a requirement under the Bankruptcy Regulations. The court held that the absence of the judgment invalidated the bankruptcy notices. Furthermore, the Australia Post tracking reports indicated that the bankruptcy notices were not delivered to the debtor's address, and there was insufficient evidence to prove service. The court concluded that ordering substituted service would be futile given the lack of a reliable address. Consequently, the court affirmed the Registrar's order dismissing the creditor's petition and application for substituted service.
The final orders of the court were to affirm the Registrar's order made on 25 February 2019 and to dismiss the application for review otherwise. The court found that the creditor had not met the stringent requirements for service and proof of service in bankruptcy proceedings, leading to the dismissal of the petition.
The legal issues the court had to decide included whether the bankruptcy notices were correctly issued and served, and if there was a failure to attach a copy of the default judgment to the bankruptcy notices. Additionally, the court had to determine if there was sufficient evidence of service and whether the absence of a reliable address meant that substituted service should be ordered. The court also considered the fundamental importance of proper service in bankruptcy proceedings and the high standard of proof required.
The court found that there was no evidence that a copy of the default judgment was attached to the bankruptcy notices at the time they were issued or served, despite this being a requirement under the Bankruptcy Regulations. The court held that the absence of the judgment invalidated the bankruptcy notices. Furthermore, the Australia Post tracking reports indicated that the bankruptcy notices were not delivered to the debtor's address, and there was insufficient evidence to prove service. The court concluded that ordering substituted service would be futile given the lack of a reliable address. Consequently, the court affirmed the Registrar's order dismissing the creditor's petition and application for substituted service.
The final orders of the court were to affirm the Registrar's order made on 25 February 2019 and to dismiss the application for review otherwise. The court found that the creditor had not met the stringent requirements for service and proof of service in bankruptcy proceedings, leading to the dismissal of the petition.
Orders
Orders of the court
1. The Registrar's order made 25 February 2019 is affirmed.
2. The application for review is otherwise dismissed.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
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Evidence
Evidence Before The Court
The justification for the high standard of proof was explained by Lehane J in Re Ferrarese; Ex parte Aloisio (1995) 60 FCR 586:[6]Proper service of process is of fundamental importance, and it is perhaps particularly so in the context of bankruptcy proceedings given their potentially penal consequences. It is of great importance that those whose task it is to effect service perform the task meticulously. It is equally important that the evidence given of service be meticulously accurate. Because it is essential that the Court be able to rely on evidence of service, it must be expected that the Court will regard very seriously any departure from that standard.The Willetton address - 'evidence to the contrary' Assuming the bankruptcy notices were valid and were contained in the relevant registered post envelopes, the question is whether the applicants have proved service, in circumstances where the Australia Post tracking reports indicate that the two relevant envelopes were not left at the premises but were noted as 'attempted delivery - incorrect address on item' and 'return to sender, not known at this address'. Provisions as to service such as those in reg 16.01 have given rise to detailed consideration of the second limb: that is, whether a party who is said to have been served with a document is restricted under a provision such as reg 16.01(2) to proving a different time of service (that is, different from in the ordinary course of the post), or may by proving non‑delivery establish that service itself was not effective. There have been a number of cases which have alluded to the two possible interpretations: Fancourt v Mercantile Credits Ltd [1983] HCA 25; (1983) 154 CLR 87; Re Rustic Homes Pty Ltd (1988) 49 SASR 41 (favouring the latter view); Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321; (2004) 141 FCR 107 at [12]‑[25]; Derma Pharmaceuticals Pty Ltd v HSBC Bank Australia Ltd [2005] SASC 48; (2005) 188 FLR 373; Soong v Deputy Commissioner of Taxation [2011] NSWCA 26; (2011) 278 ALR 538. The position was left open in both Fancourt v Mercantile Credits Ltd (at 96‑97) and Skalkos (at [25]). Had it been necessary to do so I would have been disposed to follow the approach in Re Rustic Homes (and see to similar effect Jones v Superannuation Complaints Tribunal [2011] FCA 1255; (2011) 198 FCR 71 at [44]). I am satisfied there is sufficient proof to the contrary that the registered post items were not delivered, such proof comprising the nature of the Australia Post tracking reports that indicate delivery was unsuccessful and that the letters were returned to sender only two days later, taken with the fact that the evidence disclosed that the respondents were not at that time residing or otherwise present at the Willetton address and were apparently residing in Melbourne. I should add that the applicants properly disclosed the Australia Post tracking reports to the Court. I also note that s 29 of the Acts Interpretation Act1901 (Cth) and s 160 of the Evidence Act 1995 (Cth) in essence recognise the possibility that delivery may not have been effected by post: Deputy Commissioner of Taxation v Josway Hospitality Pty Ltd [2018] FCA 466 at [2] (in the context of s 109X of the Corporations Act 2001 (Cth)).Were any of the three identified addresses the 'last‑known address' of the respondents within the meaning of the rule?
Decision
Reasons for decision
There is no evidence that the bankruptcy notices had attached to them a copy of the default judgment when they were issued or served (a copy of the judgment was provided separately to the Court by affidavit but there was no suggestion it was attached at any stage to the bankruptcy notices). There is no other reference to the judgment in the bankruptcy notice.Failure to attach a copy of the judgment to the bankruptcy notices Regulation 4.02 of the Bankruptcy Regulations provides:Form of bankruptcy notices(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 25C of the Acts Interpretation Act 1901.Note: Under section 25C of the Acts Interpretation Act 1901, where an Act prescribes a form, then, unless the contrary intention appears, strict compliance with the form is not required and substantial compliance is sufficient; see also paragraph 46(1)(a) of that Act for the application of that Act to legislative instruments other than Acts. The applicants did not contest that there was no formal judgment or order attached to the bankruptcy notices that were purportedly sent to the respondents. The lack of evidence to such effect is telling, that matter having been brought to the attention of the applicants by the Registrar. Rather, the applicants submitted that the judgment was 'identified' and that if the final judgment or order was not attached and this constituted a defect, then this was a formal defect or irregularity and did not invalidate the bankruptcy notice. I do not accept that any judgment was 'identified' - at most, the quantum of a sum said to be payable by way of an unidentified judgment was set out at item 1 of the relevant notices. If the copy judgment was not attached to the bankruptcy notice at the time of issue by the official receiver, then the bankruptcy notice would be a nullity. The defect or irregularity would not be cured by s 306(1) of the Act: Curtis v Singtel Optus Pty Ltd [2014] FCAFC 144; (2014) 225 FCR 458 at [59]. Further, as referred to in Curtis at [35], there are many authorities that refer to the importance of attaching a copy of the final judgment or order at the time of service: see for example Thompson v Metham [1999] FCA 935 at [26]; Commonwealth Bank of Australia v Horvath (Junior) [1999] FCA 143 at [12]‑[14]; Re Scerri (1998) 82 FCR 146 at 149 and American Express International Inc v Held [1999] FCA 321 at [14]. In Curtis, the Full Court, although concerned with attachment at the time of issue, considered such cases stand as authorities for the proposition that attachment at the time of service is also essential: at [63]. It is true that reg 4.02(2) only requires substantial compliance. If there has been substantial compliance, then there is no defect and, accordingly, s 306(1) does not then need to be considered. However, as there is no evidence in this case as to whether or how the judgment was provided or attached at the time of issue and as there is no evidence that it was attached at the time of purported service, I am not satisfied there has been 'substantial compliance'. It then falls to consider s 306(1).
Ratio Decidendi
Legal Principle Established
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