FEDERAL CIRCUIT COURT OF AUSTRALIA
| ALLAN v THORN AUSTRALIA PTY LTD | [2015] FCCA 1479 |
| Catchwords: BANKRUPTCY– Notice of Opposition – asserts the debt “grossly unfair” – disputes service of originating process – disputes personal service of Creditor’s Petition. |
| Legislation: Evidence Act1995 ss.57; 69 Federal Circuit Court of Australia Act1999 (Cth) ss.83; 102; Federal Circuit Court Rules2001 r.6.14 |
Adams v Lambert(2006) 228 CLR 409
Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915
Capital Finance Aust Pty Ltd v Nathan [2008] FMCA 1363
Jones v Dunkel [1959] 101 CLR 298
Kleinworth Benson (1988) 165 CLR 71
Lawindi v Elkateb [2001] FCA 1527
Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53
Schmidt v Pandja & Ors [2015] FCCA 111
Sherman v Latrobe University [2007] FCA 1911
Taylor v White (1964) 110 CLR 129
Weeden v Rambaldi [2013] FCAFC 12
Wenkart v Abignano [1999] FCA 354
Wren v Maloney [1972] HCA 5
Wong v Robinson [1995] FCA 805
| Applicant: | SHAWN GLENDON ALLAN |
| Respondents: | THORN AUSTRALIA PTY LTD TRADING AS THORN EQUIPMENT FINANCE |
| File Number: | SYG 2559 of 2014 |
| Judgment of: | Registrar Chuan Ng |
| Hearing date: | 4 May 2015 |
| Date of Last Submission: | 4 May 2015 |
| Delivered at: | Sydney |
| Delivered on: | 4 June 2015 |
REPRESENTATION
| For the Applicant: | In person |
| Counsel for the Respondents: | Mr H Woods of counsel |
ORDERS
The Notice Stating Grounds of Opposition to the Creditors’ Petition filed on 10 December 2014 be dismissed.
Costs be reserved.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 2559 of 2014
| SHAWN GLENDON ALLAN |
Applicant
And
| THORN AUSTRALIA PTY LTD TRADING AS THORN EQUIPMENT FINANCE |
Respondent
REASONS FOR DECISION
Before the Court is a Notice Stating Grounds of Opposition filed by the Applicant on 10 December 2014 against a Creditor’s Petition presented by the Respondent on 16 September 2014.
BACKGROUND
On 19 March 2014, a Statement of Claim was filed in Bankstown Local Court seeking liquidated damages against Saba Security Consultants Pty Ltd trading as Saba Security (“Saba”) as the 1st Defendant and the Applicant as the 2nd Defendant. At the relevant time, the Applicant was the company director of Saba.
On the Respondent’s case, on 28 April 2014 the Statement of Claim was personally served on the Applicant and on the registered address of Saba. The Applicant disputes this service ever took place.
On 27 May 2014, a Notice of Motion seeking Default Judgment was filed at Bankstown Local Court.
On 3 June 2014, Default Judgment was entered against the Applicant and Saba in the amount of $10,580.
On 18 June 2014, the Respondent obtained a Bankruptcy Notice (NN 172722) against the Applicant from the Official Trustee: sections 41(1) and (2) of the Bankruptcy Act1966 (Cth)
4 July 2014, the Respondent arranged for the Bankruptcy Notice annexing the Default Judgment to be personally served on the Applicant. The Applicant concedes this occurred.
21 days passed with no action taken by the Applicant to set the Bankruptcy Notice aside. An Act of Bankruptcy occurred on 25 July 2014: section 40(1)(g) of the Bankruptcy Act1966 (Cth).
On 16 September 2014, the Respondent presented a Creditor’s Petition in the Sydney Registry. The matter was then listed on 21 October 2014.
On 21 October 2014 the matter came before District Registrar Wall. As the Creditor’s Petition had not yet been served, no orders were made. The District Registrar adjourned the Creditor’s Petition to 17 December 2014.
On 21 November 2014, the Respondent arranged for the Creditor’s Petition and associated documents to be served on the Applicant. While the Applicant denies he was personally served with this material, he accepts that the Creditors Petition came to his attention.
On 10 December 2014, the Applicant fax filed a Notice of Appearance, Notice Stating Grounds of Opposition to the Creditors Petition, and a supporting Affidavit in the Registry.
On 17 December 2014, the matter came before Registrar Morgan. The Applicant appeared as a self-representing litigant by telephone from Queensland. Timetabling orders were made and the matter was adjourned to 27 January 2015.
Further affidavit evidence was filed by both parties in the intervening period.
On 27 January 2015, the matter came before me as the presiding Registrar. The matter was then set down for hearing on 5 March 2015.
Prior to 5 March 2015, the Applicant and Respondent communicated with the Registry that they were not ready to proceed on the next court date and jointly sought an adjournment.
On 5 March 2015, the parties (the Applicant again by telephone) appeared before me for further directions. By consent the hearing date was vacated and re-listed to 4 May 2015.
THE HEARING
On 4 May 2015, the hearing of the Notice stating Grounds of Opposition proceeded before me.
The Applicant appeared in person representing himself. The Respondent was represented by Mr Woods of counsel.
The grounds argued in the Applicant’s Notice of Opposition
The Applicant identified three grounds in his Notice stating Grounds of Opposition. At the end of the evidence I granted leave for him to argue a fourth ground. These Grounds are:
(1)No opportunity to dispute the original debt, prior to judgment;
(2)No documents served to opponent regarding judgment;
(3)Debt is inaccurate and grossly unfair; and
(4)The Creditor’s Petition was not personally served on the Applicant.
In relation to Grounds (1) and (2), the Applicant’s case is that he was never personally served with the Statement of Claim which initiated the proceedings in the Bankstown Local Court on 28 April 2014.
In relation to Ground (3), the Applicant concedes that there was a pre-existing contract between Saba and himself with Thorn Equipment Hire to rent PABX telecommunications equipment. But at some point the Applicant unilaterally terminated the contract as he considered the repayment amounts were excessive and grossly unfair.
In relation to Ground (4), the Applicant’s case is that while the Creditor’s Petition and related documents came to his attention on 21 November 2014, it was never personally served on him by the Respondent’s process server. Despite this, the Applicant on 10 December promptly filed a Notice of Appearance, Notice stating Grounds of Opposition, and a supporting Affidavit in these proceedings on 10 December 2014.
THE EVIDENCE AT HEARING
The Applicant’s evidence
In support of his case, the Applicant relied on the following evidence:
(a)Affidavit of Shawn Glendon Allan deposed 5 December 2014 (with annexures);
(b)Affidavit of Shawn Glendon Allan deposed on 12 February 2015;
(c)Affidavit of Erin Jaye Williams deposed on 12 February 2015 (with Annexures);
(d)Sworn evidence of Shawn Glendon Allan given at the hearing;
(e)Sworn evidence of Erin Jaye Williams given at the hearing.
Objections to certain portions of the Applicant’s affidavit evidence
At the start of the hearing, counsel for the Respondent objected to several paragraphs contained in the Applicant’s affidavits. The objections traversed a number of areas: various paragraphs were in improper form; they drew conclusions where no proper foundation having been established; and comprised of inadmissible hearsay evidence.
In resolving these objections, counsel for the Respondent did not object to certain paragraphs if they were treated by way of submissions, which was accepted by the Applicant. In others, the Applicant agreed that his wording could have been better framed and the objection was not pressed if I treated it in the agreed context. Objections were also taken to hearsay references made by third parties in the Applicant’s Affidavits[1].
[1] See pages 16.25 – 26.
I proceeded to admit these paragraphs (whether amended by agreement or still in dispute) on a provisional basis pursuant to section 57 of the Evidence Act1995 (Cth). But as these reasons will demonstrate, nothing in those disputed paragraphs impact on to the relevant issues which impact on the questions I need to determine.
The Respondent’s evidence
The Respondent relied on the following evidence:
(a)Affidavit of Peter Liedtke deposed on 16 January 2015 (with Annexures);
(b)Affidavit of Samuel William Brown deposed on 2 May 2015 (tendered as Exhibit A)
(c)Affidavit of Samuel William Brown deposed on 15 August 2014 (tendered as Exhibit B)
(d)Affidavit of Samuel William Brown deposed on 28 November 2014 (tendered as Exhibit C).
(e)Sworn evidence of Samuel William Brown given at the hearing via audio-visual link from the Maroochydore Magistrates Courthouse.
No objection was taken by the Applicant to the evidence tendered by Respondent.
The status of the debt
I should note from the outset that the Applicant does not dispute that he entered into a contract with the Respondent. Both parties have adduced various documents evincing the contractual relationship in their respective affidavits[2].
[2] By the Applicant (in his Affidavit identified at paragraph 24 above) and the Respondent (in the Affidavit of Peter Liedtke at paragraph 28 above).
In summary, on 8 March 2012 the Applicant and Saba entered into a contract with Thorn Equipment Finance (“Thorn”) to rent some PABX equipment on 8 March 2012. The Applicant signed the contract on behalf of Saba in his capacity as the business owner and guarantor as well as an authority for monthly amounts to be deducted from his credit card. The contract committed Saba and the Applicant to pay fixed instalments of $251.90 per month over a period of 60 months.
The PABX equipment was supplied to the Applicant and he commenced making repayments on 21 March 2012.
Some two years into the contract the Applicant complained to Thorn that the PABX equipment was overpriced. His negotiations to resolve the dispute was unsuccessful. At this point the Applicant placed a stop on further credit card repayments to Thorn but retained the PABX equipment. No further payments were received after 23 April 2014.
This contractual dispute led to the Respondent commencing proceedings against the Applicant by way of the Statement of Claim filed at Bankstown Local Court.
The Applicant’s case
Grounds 1 and 2 are inter-related and can be addressed together:
(1)No opportunity to dispute the original debt, prior to judgment; and
(2)No documents served to opponent regarding judgment.
In considering these 2 grounds, the only relevant question in dispute is whether the Applicant was ever served with the Statement of Claim, to which the Respondent asserts to the contrary. By never receiving it, the Applicant contends that he was deprived of the opportunity to dispute the original debt in the Local Court.
THE EVIDENCE OF THE RESPONDENT CREDITOR
It is convenient to start by summarising the evidence of the Respondent, who is wholly reliant on the evidence of the process server, Samuel Brown.
The service of the Statement of Claim on 28 April 2014: denied by the Applicant
In his first Affidavit[3], Mr Brown deposes he attended at 32 Westholme Circuit Pelican Waters Queensland on 28 April 2015. At 11.10 am he spoke to a male person who acknowledged he was Shawn Glendon Allan (“he replied yes”) and identified him as the second defendant in this action. The male person then agreed to accept the documents and was served with an Amended Statement of Claim filed in the Bankstown Local Court and a Form 1 Service and Execution of Process Act 1992 Notice to the Defendant.
[3] Affidavit of Samuel William Brown sworn on 2 May 2014.
The Applicant’s case is that on 28 April 2014 he was never personally served with the Statement of Claim and was unaware of its existence until later.
The service of the Bankruptcy Notice on 4 July 2014: acknowledged by the Applicant
In his second Affidavit[4], Mr Brown deposes that he again attended at 32 Westholme Circuit Pelican Waters Queensland on 4 July 2014. At 2.21 pm he spoke to a male person who acknowledged he was Shawn Glendon Allan. Mr Brown then personally served him with a Bankruptcy Notice attaching a sealed copy of the Judgement obtained at Bankstown Local Court.
[4] Affidavit of Samuel William Brown sworn on 15 August 2014
The Applicant concedes he was served with these documents on this date.
The service of the Creditor’s Petition on 21 November 2014: denied by the Applicant
In his third Affidavit[5], Mr Brown deposes that he attended at 7 Artunga Place Pelican Waters Queensland on 21 November 2014. At 7.05 pm He spoke to a male person who agreed he was Shawn Glendon Allan. Mr Brown proceeded to show him a sealed Creditor’s Petition; an Affidavit verifying Creditor’s Petition sworn by Matt Ingram; an Affidavit of Personal Service of Bankruptcy Notice (no. 172722) of Samuel William Brown; and an Affidavit of Search sworn by Rosa Martinez on 24 September 2014.
[5] Affidavit of Samuel William Brown sworn on 28 November 2014.
When he asked the male person to confirm he was the named respondent in the action and asked him to accept the documents, the male person replied: “I’m not accepting these”. At this point Mr Brown placed the documents at his feet stating: “Shawn Glendon Allan, you have been served with this Creditor’s Petition.”
The Applicant denies he was personally served with the Creditor’s Petition but acknowledges he received them later when he reached home.
The oral evidence of Samuel Brown
In his sworn evidence, Mr Brown adopted his three affidavits. These were respectively tendered without objection as Exhibits A, B and C.
Mr Brown then gave oral evidence via video-link from Maroochydore Courthouse in Queensland[6]:
(a)He was currently employed as a District Court and Magistrates Court bailiff and a licensed commercial agent;
(b)As a commercial agent for the past 6 years, this work involved serving court process;
(c)When serving court process, his usual practice was to ask the person’s name as recorded in the documents and identify who they are according to the pleadings, such as asking if they were the second respondent or third respondent (“that’s when I usually do”).
(d)Apart from his sworn affidavits, he did not retain any contemporaneous notes unless he was required or informed by his clients to do so. Otherwise his usual practice was to destroy them after 30 days.
(e)While he had a recollection of serving the Applicant “a few times, around three times”, he did not recollect specific conversations or memories.
(f)While Mr Brown vaguely remembered what the Applicant looks like, he did recall that “there was a black boat usually parked out the front of his house.”
(g)When asked in court to view the Applicant (via video-link) sitting at the bar table, he recognised him as the person whom he had served with the court documents on the 28 April 2014, 4 July 2014, and 21 November 2014.
[6] Transcript at pages 3.25 – 7.36.
In cross-examination of Mr Brown conducted by the Applicant[7]:
(a)He recalled he had served the Applicant “roughly three to four times” and this occurred at two separate addresses.
(b)He had a vague memory that the Applicant’s motor vehicle was a “Hummer” but could “not be 100 percent sure”.
(c)When asked whether he noticed anything else when he visited him and knocked on the door, Mr Brown initially recalled seeing “a couple of dogs”. He then corrected his recollection by remembering “seeing quite a furry dog at your property”. When asked by the Applicant, he couldn’t recall if the dog had barked at him.
(d)He spoke to the Applicant on all three occasions that he served him with court process, and reaffirmed their discussions as identified in his three affidavits.
[7] Transcript at pages 7.41 – 8.32
No re-examination of Mr Brown was conducted by counsel for the Respondent.
THE APPLICANT’S EVIDENCE
The affidavit evidence of the Applicant
In his first Affidavit[8]:
(a)The Applicant asserts that at no stage before being served with a Bankruptcy Notice on 4 July 2014 was he given any notice advising him that a Statement of Claim had been filed against him.
(b)The first he learnt of the Local Court judgment obtained against him was via the Bankruptcy Notice served upon him by Hudson Lawyers on 4 July 2014.
(c)While he maintains he was never personally served with the Creditor’s Petition on 21 November 2014, he first became aware of the full details of the debt when he received the Creditor’s Petition later on the same date, discovering that a judgment had been issued against him and Saba on 3 June 2014 in the amount of $10,570.80 at the Local Court of NSW, Small Claims Division, Bankstown Registry, Case Number 2014/00084532.
[8] Affidavit of Shawn Glendon Allan dated 5 December 2014.
In his second Affidavit[9]:
(a)The Applicant repeated he was never served with the Statement of Claim at 11.10 am on 28 April 2014. On that day he was with his girlfriend, Erin Jaye Williams and annexed Ms Williams’ Affidavit in support (Annexure A). As corroboration of his movements on 28 April 2014 the Applicant annexed a one page extract from his Mastercard statement (Annexure B).
(b)The Applicant deposed he was incarcerated from 5 September 2013 until 5 March 2014 at Woodford Correctional Facility, so that any documents sent to him in this period would not have been received.
[9] Affidavit of Shawn Glendon Allan dated 12 February 2015.
The sworn evidence of the Applicant
The Applicant proceeded to give sworn evidence after adopting his affidavits.
To a large extent the Applicant’s testimony was rambling and a combination of submission and evidence. The following can be distilled from the transcript:
(a)While he “believed” the process server came to his house to serve him with the Statement of Claim, prior to being served by him with the Bankruptcy Notice he had never seen him before and did not recognise him. This leads him to question the process server’s attendance and presumes “he either left [the Statement of Claim] in the door or on the ground on in the mailbox”[10].
(b)The contract for the equipment listed the wrong address of “541 Colleen Crescent”[11].
(c)Had he received the Statement of Claim at the time, the Applicant would have had the opportunity to defend himself and dispute the debt in the Local Court[12].
(d)Before this event he had a good credit history and was able to get finance and loans. This judgment was detrimental to him (“this would definitely go against me”) and he preferred to “keep a good clean credit history”[13].
[10] Transcript at page 28.20.
[11] Transcript at pages 28.30 – 29.1.
[12] Transcript at page 29.5 – 29.15.
[13] Transcript at page 29.20 – 29.25.
The Applicant was then cross-examined where:
(a)He continued to deny never receiving the Statement of Claim[14].
[14] Transcript at page 29.10.
(b)When he was served with the Bankruptcy Notice on 4 July 2014[15], he did not know whether he was served by the process server Mr Brown and could not recognise him from the video-link in the courtroom[16].
[15] Transcript at page 30.14 – 30.24.
[16] Transcript at page 29.17.
(c)After being shown a historical extract of a company search of Saba, he agreed he was a previous director of the company and confirmed:
(i)the registered office address as Absolute Taxation, Suite 4, 7 – 9 York Street Sydney;
(ii)the principal place of business as 32 Westholme Crescent Pelican Waters; and
(iii)The current director was Erin Williams and that from September 2012 her address is listed as 32 Westholme Crescent Pelican Waters.
(iv)He acknowledged that payments had been made towards the rental contract; acknowledged his signature on the rental agreement; and agreed there were outstanding repayments which had gone unpaid[17].
[17] Transcript at pages 32.10, 34.12.
(d)Up until March 2014 he was in gaol serving a sentence for an arson offence[18]. Upon his release in April 2014 he immediately moved into 32 Westholme Crescent Pelican Waters and lived with his girlfriend, Erin Williams, whom he has since married[19].
[18] Transcript at page 37.24 – 37.45.
[19] Transcript at page 31.25 – 31.37; 39.4 – 39.
(e)While the Applicant maintained he was never served with the Statement of Claim and did not have an opportunity to defend himself in the Local Court, he agreed he became aware of the debt when he was served with the Bankruptcy Notice in July 2014[20];
[20] Transcript at page 31.37.
(f)Despite being served with the Bankruptcy Notice in July 2014, he has not made any application to set aside the Default Judgment in the Bankstown Local Court[21].
[21] Transcript at page 32.9.
(g)In further questioning by me from the Bench, the Applicant explained that his failure to take steps to set aside the Default Judgment was because he lived in Queensland and was unable to get legal aid in NSW to represent him, but had since made enquiries with a Sydney-based solicitor[22].
[22] Transcript at page 31.42 – 32.24.
(h)When asked when he first turned his mind to whether he was served with the Statement of Claim, he replied “I think it was back in May”[23]. But after explaining his memory was “a bit blurry”, he varied this recollection and stated it would have been after he received the Creditors Petition in November 2014[24].
[23] Transcript at page 34.17.
[24] Transcript at page 34.29.
(i)In response to the suggestion that he was either mistaken or was not telling the truth about being personally served with the Statement of Claim, he replied he could not recall receiving these court papers on 28 April 2014[25].
[25] Transcript at page 34.40.
(j)While the Applicant could not remember the exact dates, he now recalled that he travelled overseas to Thailand with his wife for a 2 week resort holiday in April 2014[26] and that this could be one reason why he was not served with the Statement of Claim[27]. He agreed that this was the first time he had referred to the overseas trip and had not previously mentioned this in his two affidavits[28].
[26] Transcript at page 34.43; 36.4 – 36.20.
[27] Transcript at page 36.5 – 36.25.
[28] Transcript at page 38.4 – 38.34.
(k)He owned one dog[29].
[29] Transcript at page 38.36.
(l)Parked adjacent to his home (“next to the side fence”) was a boat which was covered with a black tarpaulin, but which he did not own[30].
[30] Transcript at page 38.35 – 39.2.
(m)Sometime in July 2014, both he and his wife moved to 7 Artunga Place Pelican Waters[31].
[31] Transcript at page 39.15.
(n)His brother-in-law had been living with them on and off following his separation with his wife but moved out about a month ago[32].
[32] Transcript at page 39.25.
(o)In answers to further questions I posed, the Applicant stated (on three occasions) that he and his wife had separate cards which were able to access his Westpac accounts for ATM and EFTPOS transactions[33]:
[33] Transcript at page 36.31 – 37.5.
Q. Okay. Is that a card that is used by you or jointly with your wife? Does she have a – does she have like a supplementary card or how does it work?
A. We – we have a joint – no, we have separate cards.
Q. All right?
A. And a joint account. I think that’s it, yes.Q. So your wife has a card that you use to draw ATM, pay EFTPOS?
A. Yes.Q. And you also have a card, is that right?
A. Yes.Q. And that’s from the one account; is that right?
A. Yes.
Q. Okay?
A. I think – I believe so.Q. And who pays those expenses on that card?
A. My wife.Q. Okay. Well, what is it? A credit card or is it a debit card? Sorry, is that drawn from your savings or is that a credit facility?
A. I – I’m pretty sure it’s a savings card. Yes. But we do have two. We, obviously, have the savings card and then we have a MasterCard but it’s a – it’s a debit card.
The evidence of the Applicant’s wife, Erin Jaye Williams
The Applicant relied significantly on both the affidavit and oral evidence of his wife, Erin Jaye Williams.
The affidavit evidence of Erin Jaye Williams
In her Affidavit[34], Ms Williams deposed:
[34] Affidavit of Erin Jaye Williams dated 12 February 2015.
(a)She was with the Applicant from 8 am until 10 pm on 28 April 2014. On that date, the Applicant accompanied her to an eyelash extension appointment at 10 am and used his Westpac debit card to pay for her treatment.
(b)After the eyelash treatment both she and the Applicant went to the Caboolture Squash Courts where they played squash with Mr Greg Smythe who was the Operations Manager of Morayfield Shopping Centre. The hire of the squash court was paid for by the Applicant using his Westpac debit card. If required, she could to obtain an affidavit from Mr Smythe to this effect.
(c)Both she and the Applicant then did some shopping at multiple locations before having a meal at the Mon Komo restaurant in Redcliffe. Again, these transactions were paid for with the Applicant’s Westpac debit card.
(d)To corroborate that these activities occurred on 28 April 2014, Ms Williams annexed to her Affidavit a one page extract from the ‘Westpac Choice’ account in the name of the Applicant, Shawn Glendon Allan (account no. 734-640 65-8292) (Annexure A) “which showed we were exceptionally busy all day”.
(e)Annexure A represented transactions on the Applicant’s Mastercard which took place on 28 and 29 April 2015. No objection was taken to its tender and I admit it as a business record under s.69 of the Evidence Act1995. For convenience I have reproduced verbatim the contents of that extracted page:
Electronic Statement
WestpacAttachment A
Westpac Choice
Account name
MR SHAWN GLENDON ALLAN 732-640 65-8292
Details of your account
From last Statement Dated 07 Feb 2014 to 08 May 2014
Date Description of transaction Debit Credit Balance 28 Apr Debit Card Purchase Paypal “swreg Wondersh 4029357733 Aus 30.98 Deleted 28 Apr Debit Card Purchase Crazy Domains Internet Cyp 53.88 Deleted 28 Apr Debit Card Purchase Ticketmaster Com Melbourne Aus 107.10 Deleted 28 Apr Debit Card Purchase Paypal ‘techrepairs” 4029357733 Aus 195.00 Deleted 28 Apr Withdrawal by Eftpos 00022298 Dream Lashes Beauty Cabooltureqld 26/04 60.00 Deleted 28 Apr Withdrawal by Eftpos 0004352 Caboolture Squash Caboolture 28/04 44.50 Deleted 28 Apr Withdrawal by Eftpos 0034716 Dougs Family Meats Currimundi Qld 27/04 58.50 Deleted 28 Apr Withdrawal by Eftpos 0035145 M&a Seckel Entrpris Currimundi QLD 27/04 31.30 Deleted 28 Apr Withdrawal by Eftpos 0037717 Woolworths 2854 Pelicanwat 26/04 105.81 Deleted 28 Apr Withdrawal by Eftpos 0346945 Caloundra Drive Thru Caloundra 25/04 6.75 Deleted 28 Apr Withdrawal by Eftpos 0764723 Mon Komo 25/04 125.50 Deleted 28 Apr Withdrawal by Eftpos 0827627 Caloundra Drive Thru Caloundra 27/04 6.85 Deleted 29 Apr Withdrawal by Eftpos 0026576 Lollywood and Sweet- Tallawnton 29/04 44.82 Deleted 29 Apr Withdrawal at Handybank Nrthlkes 1 O/S 09019110 29/04/14 200.00 Deleted 30 Apr Debit Card Purchase Drake Supermarkets C Caboolture S Aus 37.75 Deleted 30 Apr Debit Card Purchase Woolworths 2854 Pelicanwatql Aus 50.32 Deleted 30 Apr Withdrawal – Internet Online Banking 1615072 Fnds Tfr 30-Apr 700.00 Deleted 30 Apr Withdrawal by Eftpos 0905246 Tides Waterfront Din0001 Caloundra 29/04 182.00 Deleted 30 Apr Withdrawal At Cal ATM Venience\NSW Cald7897059865 300414 100.00 Deleted
(f)Turning to 21 November 2014, Ms Williams deposed that she was again with the Applicant from 8 am to 10 pm and spent the majority of the day together.
(g)Around 5 pm, they met with a Warren Kratzmann and dropped off some uniforms to him at Deception Bay. Mr Kratzmann could provide an affidavit to confirm the meeting if one was requested.
(h)Around 6.19 pm, Ms Williams received a text message from her brother Tim Williams explaining he had found court documents “on our front door”. If required, her brother could make his phone available and provide an affidavit.
(i)Annexure B of Ms Williams’ Affidavit contained a screenshot purporting to be an exchange of text messages between her and her brother. I reproduce verbatim the contents of the screenshot (where Ms Williams in her sworn evidence identifies the sender):
Fri 21 Nov 6.19 pm
Time Message Sender 6.19 pm Dude Ive got some bad news though Tim Williams 6.20 pm My stomach just knotted up Erin Williams 6.20 pm What is it Erin Williams 6.20 pm Not sure you should say anything to Shawn tonight though Tim Williams 6.20 pm Why what is it Erin Williams 6.21 pm There is a creditors petition on your front door from the courts Tim Williams 6.21 pm For what? Erin Williams
While there appeared to be more text in furtherance of these messages, no additional screenshots were provided.
(j)At no stage did anyone come to their door on 21 November 2014 before they went out in the afternoon.
(k)The Applicant remained in her company on both 28 April 2014 and 21 November 2014,
(l)She wholly disputed the evidence contained in the affidavits of the process server, Mr Brown.
The sworn evidence of Erin Jaye Williams
Ms Williams was then cross-examined by counsel for the respondent and answered a number of questions posed by me:
(a)She was currently married to the Applicant and had access to his bank accounts[35].
[35] Transcript at page 41.25
(b)She was presently a director of Saba as well as working for a senator; was aware that Saba had entered into the lease agreement with Thorn for the PABX equipment[36]; and knew of the claim against the Applicant in relation to the unpaid rental payments for the rental of the PABX equipment[37].
[36] Transcript at page 41.40.
[37] Transcript at page 41.43.
(c)She vigorously affirmed that she was with the Applicant from 8 am to 10 pm on 28 April 2014 and relied on her affidavit to depict the places they both visited throughout that day[38];
[38] Transcript at page 42.1.
(d)She could not recall when she first turned her mind to what she was doing with the Applicant on 28 April 2014, but agreed she started to do so by looking at their bank statements[39].
[39] Transcript at page 42.5 – 42.24.
(e)She could not recall anyone ever coming to their door to serve any documents on the Applicant, whether it was a Bankruptcy Notice or any other documents (“I think I’ve been pretty clear about that”)[40].
[40] Transcript at page 42.26 and 42.45.
(f)When told that the Applicant had in fact agreed in his evidence that he had been served with the Bankruptcy Notice at 32 Westholme Avenue, Ms Williams responded that “if this happened at that particular point in time, I did not see the gentleman come to the door”[41].
[41] Transcript at page 43.4.
(g)When asked whether she would concede that she was not home at all the same times that the Applicant was, she replied she was pretty much with the Applicant for “24/7” and there “no reason for them to be separated”[42].
[42] Transcript at page 42.36.
(h)She adamantly refused to concede that there was probably an occasion when she wasn’t present at the house when the Applicant was there on his own to receive service of the Bankruptcy Notice, responding: “That’s not necessarily true. I certainly didn’t see the gentleman come to the door but I certainly hold hands with [the Applicant] and walk around the house with him either.”[43]
[43] Transcript at page 43.8.
(i)Returning to the question as to when she first turned her mind to what occurred on 28 April 2015, Ms Williams “assumed” this may have been around February 2015, which was the time she swore her affidavit[44]. Whenever this occurred, she recalled she went through bank statements and other documents to see if this would assist her say to the Court that the Applicant was not served with the Statement of Claim on 28 April 2015[45].
[44] Transcript at page 43.7.
[45] Transcript at page 43.19 - 43.17.
(j)Ms Williams was then taken to the Westpac Bank statement which was annexed to her Affidavit. When it was put to her that she did not have a recollection of the Applicant being with her on 28 April 2014, she vigorously responded:
Q. I would suggest to you that you don’t have a recollection of what – of Mr Allan being with you at all times on 28 April 2014?
A. I suggest I do….[46]
[46] Transcript at page 43.32.
(k)It her continued response (and in marked contrast to the Applicant’s sworn evidence), Ms Williams volunteered that there was only “one key card” which both she and the Applicant used to pay for the transactions on 28 April 2014:
A. …Because he is a squash player. We only have one key card. You can see on the 28th that I had an eyelash appointment which was in Caboolture, nowhere near our home. You can see that there’s a withdrawal at Caboolture Squash Court. That wasn’t me playing squash necessarily by myself. My husband is the professional squash player. I may have played that day with him but it is his sport and you will also see a dinner at Mon Komo Hotel which is at Red Cliff. I didn’t go there by myself.[47]
[47] Transcript at page 43.31.
(l)When it was put to her that none of the transactions in the Westpac Bank statement identified the time of the payments, she responded forcefully:
A. No, they don’t but I can tell you that they did occur in Caboolture which is quite a distance from our home. Playing squash is not a quick sport and also the lashes appointment takes a couple of hours and dinner took a few hours. I can guarantee you, sir, that we were gone from the morning until night.[48]
[48] Transcript at page 43.40.
(m)Ms Williams then went on to recall that on 28 April 2014 her eyelash extension appointment went for an hour and a 45 minutes; the Applicant waited the entire time and was friendly with her technician (“her name is Nicole Hertferd”); the Respondent was “welcome to contact her to confirm that [the Applicant] does come to my appointments with me”[49]; and that she used the Applicant’s keycard to pay for the treatment (“Well, this is Mr Shawn Glendon Allan’s bank statement. It is his key card that is used and we – we attended the appointment together”[50]).
[49] Transcript at page 44.5.
[50] Transcript at page 44.25.
(n)When it was put to Ms Williams that she had authority to use his account and was the one who used the Applicant’s key card that day, she testily responded: “He paid for that….I’m not sure what you are getting at, sir. I’ve been quite clear about what we were doing that day.”[51]
[51] Transcript at page 44.24 – 44.26.
(o)While she could have accessed records from the people who treated her eyelashes, she relied on the Applicant’s Mastercard statement to corroborate this event happening on 28 April 2014[52].
[52] Transcript at page 44. 14 – 44.21.
(p)After her eyelash treatment, both Ms Williams and the Applicant travelled together to the Caboolture Squash Courts to play squash with Greg Smythe. Estimating that if her eyelash treatment took an hour and a half, they must have arrived at the squash court around 11.30 am[53] (“it’s just a few minutes from the lash parlour”).
[53] Transcript at page 44.34 – 44.43.
(q)When asked why she had not obtained an affidavit from Mr Smythe, she responded: “I’ve got to be honest with you. I wasn’t entirely familiar with how these sorts of things work, sir. And when I’ve offered in my affidavit to gain – to gain those things, I thought it would be something that might be requested by you. I’m not 100 per cent certain”[54].
[54] Transcript at page 44.45 – 45.8.
(r)Ms Williams had prepared and typed both hers and the Applicant’s affidavits where they “went through everything together.”[55]
[55] Transcript at page 45.10 – 45.20.
(s)Ms Williams denied that the Applicant gave her any assistance when she prepared her Affidavit, aside from going through what they did on 28 April 2014 and speaking to Greg Smythe[56].
[56] Transcript at page 45.20.
(t)Counsel for the Respondent Creditor then put to Ms Williams a number of propositions as to her motivations to assisting the Applicant in his case, including suggesting that she did so because she had a financial interest in assisting him avoid the debt and bankruptcy. The following heated exchange ensued:
Q. Well, it would assist you financially, wouldn’t it, if he didn’t become bankrupt? Or if you didn’t have to pay that debt?
A. Exactly what’s going to happen to me if he becomes bankrupt? I don’t own anything. My cars are leased. I rent my property. There’s nothing I can lose. The biggest inconvenience that will happen to me, sir, is that he will lose his passport for three – for three years or something like that and I might not be able to travel.
Q. You’re still a director of the company?
A. Yes.
Q. I suggest to you that you’re either mistaken or you’re not telling the truth to this court in relation to the whereabouts of Mr Allan on 28 April 2014?
A. I suggest that it’s your own best interests to suggest that to me.
(u)Cross-examination then turned to the circumstances on 21 November 2014 where Ms Williams had testified that her brother texted her to advise her that documents had been pinned to their door[57].
[57] Transcript at page 43.20.
(v)Ms Williams agreed that although the print-out of the text messages reflected the time as 6.19 pm to 6.21 pm, it did not provide a year.
(w)When it was suggested to her that she was not home at the time, was not telling the truth, and that the Applicant had in fact been served personally with the Creditor’s Petition, Ms Williams conceded the documents had been received. She then went on to attack the credibility of the process server:
Q. I suggest to you that you were either not home or that you’re not telling the truth to this court and that Mr Allan was served personally with the documents at – on 21 November 2014?
A. I suggest to you that you check the affidavit that I sent – I gave you again because in attachment B it shows the text messages when my brother was the one to find those documents. Mr Allan was in my company that entire day again. We’re not disputing that we received those documents. What we’re saying is that your – the gentleman who did your process work was dishonest.
(x)Ms Williams denied that the text messages exchanged with her brother had no relationship to the Creditor’s Petition and was a fabrication to counter the Respondent’s case that the Applicant had been served personally on 21 November 2014. In so doing, she again conceded the Creditor’s Petition was received and again attacked the credibility of the process server:
A. Okay. Well, you would also need to suggest that, wouldn’t you, because it’s the only think you’ve got to discredit it? These are 100 per cent accurate and honest and he was not served in person that day. At the end of the day, we’re not saying, again, that we didn’t receive those documents. We did. They were pinned to the door. It was your process server that was dishonest about it and how it was delivered.
…..
Q. I suggest to you they were served personally on Mr Allan on 21 November?
A. Thank you. I was with Mr Allan all day so you can suggest that until you’re red in the face but it didn’t happen.
(y)Ms Williams then recalled that it was only in February 2015 (when she deposed her Affidavit) that she first turned her mind as to whether she was with the Applicant all day on 21 November 2014:
A. 21 November was easier to remember, sir, because I’ve – I definitely remember getting those text messages from my brother. I knew exactly what had happened that day. I knew I was in the car when I received those text messages so it was much easier to recall what occurred that day. It started at 6.19 pm. Your process worker, Mr Brown, suggested that he served Mr Allan at 7 o’clock at night. You can see from those text messages they came well and truly before Mr Brown actually says he attended our residence.
Q. I suggest to you they’ve got nothing to do with either service on Mr Allan of the creditor’s petition personally on him on 21 November 2014?
A. That’s fine. You can suggest that. You’re incorrect.
(z)I then asked Ms Williams a series of questions relating to the events she said occurred 28 April 2014, as well as her reliance on the Applicant’s Westpac Mastercard statement to corroborate their movements on that day[58]:
[58] Transcript at pages 48.29 – 54.30.
i.She reaffirmed that the Applicant attended the eyelash appointment with her on 28 April 2014; he is quite close friends with her lash technician; and that he produced his keycard to pay for this appointment.
ii.There was only one keycard for this account in the Applicant’s name (at this point the Applicant produced a keycard and began waving it at Ms Williams, to which I told him to refrain from trying to give evidence from the Bar table)[59].
[59] Transcript at pages 48.35 – 49.30.
iii.She sometimes used the keycard and went by herself to the shops to get groceries.
iv.I then took Ms Williams to each of the entries recorded on 28 April 2014 on the Westpac Mastercard statement (reproduced above in paragraph 55(e)). After recognising the merchants identified in the second column headed “Description of Transaction” as being patronised by her and the Applicant, she could offer any explanation why there was a further date reference contained within that column (which is highlighted in bold). For convenience, I reproduce the relevant portion of the transcript (my emphasis added)[60]:
[60] Transcript at pages 49.34 – 52.4.
Q. Do you have that Westpac statement in front of you at the moment?
A. Yes.
Q. Just have a look at that, please? I think Mr Woods asked and said that there’s no time date stamped next to the entry; is that right?
A. That’s right.
Q. And I don’t think that shows up in any of the entries on that page?
A. I don’t think time stamps ..... generally on bank statement ‑ ‑ ‑
Q. All right. So is that the entry which has an amount of $60?
A. Yes.
Q. So that’s on 28 April?
A. Yes.
Q. Why does it say “26/04” next to the word “DreamLashes Beauty Caboolture Queensland”?
A. I’m not sure.
Q. And if you look at the next entry there’s the squash – is that where you say your husband went to play squash at?
A. Yes
Q. This Caboolture Squash; is that right?
A. Yes.
Q. Okay. And that’s for an amount of $44.50?
A. Yes.
Q. Why does it have “28/04” next to that entry?
A. I don’t know. I don’t know how these work.
Q. And then if you look at the next entry there was a withdrawal at Doug’s Family Meats, Currimundi. Is that a butcher that you normally shop at?
A. I’ve shopped there before. Yes.
Q. And so you would agree that there was a purchase of $58.50 on that date?
A. Yes.
Q. But then next to that it has got “27/04”
A. I honestly don’t know what those dates mean.
Q. And if you go to the next entry there’s a withdrawal by EFTPOS at a Woolworths at Pelican – is that Pelican Waters?
A. Yes.
Q. Is that your suburb where you live?
A. Yes.
Q. So you shop there and there was a purchase of $105.81?
A. That will be the groceries. Yes.
Q. And next to that is a reference to “26/04”?
A. Mmm.
Q. And if you go to the next one, which is where you referred to eating at Mon Komo, Komo Hotel?
A. Mmm.
Q. And where is that?
A. Redcliffe.
Q. Is that a neighbouring suburb…
A. No.
Q. To Caboolture or?
A. Yes. It’s near Caboolture. Yes.
Q. So is that the dinner that you referred to having with Mr Allan on that day?
A. Yes.
Q. And I think in your affidavit you said that – you are still referring to this paragraph 4 and you say:
“We then did some shopping at multiple locations, had a meal at Mon Komo Restaurant in Redcliffe.”
A. Mmm.
Q. And if you look at that entry – if go back to that. It was for $125.50. Was that just the two of you at that meal – having that meal?
A. Yes. It was a seafood platter.
Q. Okay. And then next to that entry it has “25/04” next to that?
A. I honestly can’t explain that. I don’t know how it works.
Q. And if you go to the next one there was a withdrawal of EFTPOS at somewhere at Caloundra Drive. Is there a drive-through? Is that like a drive-through restaurant that you may have bought something from there?
A. I’m not sure. $6.75. It could be.
Q. And then if you look at that entry there’s a reference to “27/04”?
A. I don’t know. I don’t remember what that purchase was.
Q. So those are the main entries on 28 April, Mrs Allan; you see that?
A. Yes.
Q. And although those entries appear to be recorded on 28 April, next to each of those specific entries there seems to be another date which is either the 26th of April?
A. Mmm.
Q. The 24th of – sorry. The 25th of April, 26th or the 27th?
A. Hmm.
Q. You see that?
A. Yes.
Q. So isn’t it possible that those refer to the dates of those specific transactions?
A. I suppose it’s possible. I did go back and check my diary to make sure that it lined up with what was in the bank statement.
Q. Okay?
A. I don’t know what those second dates mean but ‑ ‑ ‑
Q. And then similarly we go down – I’m not going to go through every entry but you don’t see every – for each on the left-hand side that seems to reflect when it was recorded in your account. But there appears to be other dates next to those specific entries which suggests that those may be the days when the actual transaction took place?
A. I’m not sure. I would have to clarify with Westpac. I – you know, it’s probably foolish of me not to.
While answering these questions, I formed the impression that Ms Williams inability to provide any explanation was because she did not appear to have previously noticed these date references in the second column.
(aa)Following my questions, counsel for the Respondent asked a conducted further cross-examination on this topic. When asked whether the date information in the second column headed “Description of Transaction” meant that the Dream Lashes appointment actually occurred on 26 April 2014, she responded “I honestly don’t know”. However, she remained adamant that this appointment and the squash appointment was listed on the 28 April 2014 coincided with her diary entries, and insisted her recollection of these events was that they all occurred on 28 April 2014[61].
[61] Transcript at pages 52.15 – 36; 53.5 – 53.24.
(bb)In response to further cross-examination, Ms Williams vehemently denied that she had reconstructed the events without regard to the accuracy in order to assist the Applicant:
Q. I suggest that you have prepared your affidavit reconstructing events, without regard to their accuracy, to assist Mr Allan?
A. I suggest that this occurred quite a significant amount of time ago and this is the best way that I could reconstruct that day. Not with any interest to help Mr Allan but with the interest of actually trying to construct, you know, an accurate way of – you know, I don’t – I can’t even think of the words. Basically, reconstructing that day. We knew that we hadn’t been served. This is not a document that I’ve handed to try to make a lie seem plausible, sir. This is basically us knowing that we weren’t served with anything and trying to find a way to defend ourselves because we – we can’t afford legal counsel or anything. We’re here simply because my husband was tricked into a legally binding document for something that was worth absolutely nothing and we – this is the best we can do. It is not dishonest and in no way are we trying to be dishonest. We’re just here to defend ourselves[62].
[62] Transcript at page 52.38.
(cc)At this point I asked Ms Williams why she only relied on the Westpac Mastercard statement and had not tendered any other corroborative material, such as the relevant pages from her diary, which she had repeatedly referred in her answers during cross-examination:
Q. So you relied on this document to – so when you prepared your affidavit in February of 2015, which you swore on 12 February?
A. Yes.
Q. You were looking at something that happened something like eight months before?
A. Yes. Yes. And my diary. That’s all I had to go on.
Q. So you have a, what – is it like a written diary? Is that what you use?
A. Yes, sir
Q. Have you tendered those relevant pages to your affidavit or not, from your diary?
A. I didn’t. Because it’s a handwritten diary I didn’t see any value in – I could have just written that; do you know what I mean? Like, it just has no value[63].
[63] Transcript at page 54.4.
(dd)My questions from the Bench then returned to 21 November 2014, being the day Ms Williams asserted that she received the text messages from her brother. She elaborated that she received these messages when she and the Applicant were running late and on their way home to meet her brother (and his then partner) for dinner. At the time her brother lived with them and had let themselves in with a key he had to their house. It was when her brother and his partner arrived that he discovered the Creditor’s Petition and notified her by the text messages depicted in Annexure B.
(ee)Ms Williams recalled she was very embarrassed by her brother discovering the Creditor’s Petition. In the next series of answers to me, she now conceded she had previously been aware about the debt from as early as July 2014 as the Applicant had been served with the Bankruptcy Notice. In so doing she now reversed her earlier oral evidence when she denied that she first became aware of this service on 4 July 2014:
Q. So you do have a recollection of being served with something else, now, in July; is that right?
A. Yes. There was – I knew that there was something at some stage and I said to Mr Woods that I could remember there had been one document but I couldn’t remember what date it was. I think he said it was the 21st of July or something around – in July. It was the April ones and the November 21st – the April one and the November 21st one that I’m disputing.
Q. You said before that you’re often with your husband all the time. I think you said the words “24/7.”?
A. Pretty much.
Q. Do you recall that?
A. Yes.
Q. But you are adamant that you didn’t receive anything around April?
A. April and November. Yes.
Q. Okay. But sometime in?
A. In July, I think it was.
Q. In July. So in July – you now accept that your husband did receive something; is that right?
A. I knew that there was something. I didn’t know what the date was until Mr Woods pointed it out.
Q. So does it mean that in relation to what your husband received in July you acknowledge that he did receive it; is that right?
A. I think so. I think that was the one – I remember there was one thing that we did get. I just can’t remember which – I just remember that it wasn’t the one on 21 November and it wasn’t the one in April. So whatever the other date was.
Q. Were you there when that happened?
A. I was in the house but I didn’t see Mr Brown.
Q. So how did you know about it? Did your husband come back into the house and say “hey, have a look at this thing”?
A. Something to that effect. Yes.
Q. Try to recall as best you can what happened on that day?
A. I think – all I can remember is just trying to figure out what it was for. I remember my husband going through all of his filing cabinets trying to figure out what it was about. I remember there was a lot of confusion. We didn’t understand what the document pertained to. He didn’t know who Thorn Finance was, I remember that. And I remember we had a little bit of an argument because I was really irritated by the fact that we didn’t know what it was and what was happening.[64]
[64] Transcript at page 55.24 – 56.15.
(ff)When asked in further cross-examination why she did not include the balance of the text message exchanged with her brother beyond the first screenshot, Ms Williams responded: “I could obtain that right now, though. My – like I said, my brother is in Sydney. He can screenshot that for me and send it through as we speak.”[65]
(gg)Ms Williams then went on to explain that following the receipt of the Judgment (either as part of the Bankruptcy Notice in July 2014 or as part of the Creditor’s Petition in November 2014), both she and the Applicant got advice from their accountant and tried unsuccessfully to “get help from about five or six lawyers in the last 8 weeks.”[66]
(hh)In final questions posed by me from the Bench, Ms Williams recollected (after initially not recalling in earlier questions[67]) that both she and the Applicant travelled to Thailand for a holiday after the Applicant was released from gaol. But she remained certain they were both physically in Australia on 28 April 2015 and that this was corroborated by the transactions recorded in the Applicant’s Westpac Mastercard statement[68].
[65] Transcript at page 58.35.
[66] Transcript at pages 57.25 – 57.48.
[67] Transcript at pages 54.5 – 54.27.
[68] Transcript at pages 60.42 – 61.20.
CLOSING SUBMISSIONS
At the conclusion of the evidence, both the Applicant and counsel for the Respondent made oral submissions in support of their respective cases. The Respondent also relied on written submissions prepared by counsel. The relevant issues raised by both parties are identified below.
GROUNDS 1 AND 2: RESOLVING THE FACTUAL DISPUTE REGARDING THE SERVICE OF THE STATEMENT OF CLAIM
Grounds 1 and 2 essentially rely on an objective assessment of the contest of facts between the Applicant and the Respondent.
In the Applicant’s case, he claims he was never served with the Statement of Claim and was therefore deprived of the opportunity to defend the Local Court proceedings. The Respondent Creditor asserts otherwise and maintains that the Applicant was personally served with this originating process.
It is trite to say that in civil proceedings such as in Bankruptcy matters the burden of proof in asserting one’s case is on the balance of probabilities: Taylor v White (1964) 110 CLR 129; Weeden v Rambaldi [2013] FCAFC 12; Schmidt v Pandja & Ors [2015] FCCA 111.
In arguing that he was never served with the Statement of Claim on 28 April 2014, the Applicant bears the onus of proving this assertion on the balance of probabilities.
For the following reasons, I am of the view that the Applicant has failed to discharge this onus.
Reliance on the Westpac Mastercard statement
The Applicant mainly relies on the evidence of his wife, Ms Williams, to corroborate their joint movements on 28 April 2014. In turn, she relies entirely upon the transactions depicted in the one page extract of the Applicant’s Westpac Mastercard statement as independent corroboration of the various locations they attended on that date to argue that they could not have been home when the process server claimed he served the Applicant with the Statement of Claim.
Accepting as I do that Annexure A of Ms Williams’ Affidavit is a genuine extract of the Applicant’s Westpac Mastercard statement, I am not persuaded on the balance of probabilities that all the transactions which record “28 Apr” on the left-hand column did in fact occur on 28 April 2014. In relying on this extract, the Applicant has failed to have regard to the highly relevant date reference for each transaction contained in the second column under the heading “Description of transaction”.
As I identified during the sworn evidence of Ms Williams (reproduced at paragraph 55(y)(iv) above), each of the transactions which are recorded next to the date “28 Apr” in the left-hand column also contains a detailed description of the transaction in the corresponding second column. By way of example, I reproduce again the three transactions of Dream Lashes; Caboolture Squash Courts; and Mon Komo:
Date Description of transaction Debit Credit Balance 28 Apr Withdrawal by Eftpos 00022298 Dream Lashes Beauty Cabooltureqld 26/04 60.00 Deleted 28 Apr Withdrawal by Eftpos 0004352 Caboolture Squash Caboolture 28/04 44.50 Deleted 28 Apr Withdrawal by Eftpos 0764723 Mon Komo 25/04 125.50 Deleted
The second column not only identifies the merchant, but contains a specific date reference, such as “25/04”, “26/04”, “27/04”, and “28/04” for the 8 EFTPOS transactions where the date “28 Apr” is in the first column. But of particular relevance is the fact that for all the transactions where a date is recorded on the left-hand column, none of the dates in the second column fall after this date. So for example, the 8 EFTPOS transactions which refers to “28 Apr” in the left-hand column either had dates in the second column which either pre-date 28 April 2014, such as “25/04”, “26/04’, “27/04”, or is the same date “28/04”.
When asked, Ms Williams could not give any explanation about the presence of the date references in the second column (“I’m not sure. I would have to clarify with Westpac. I – you know, it’s probably foolish of me not to”).
During closing submissions I gave the Applicant an opportunity to address me on this aspect. Like Ms Williams, he was unable to offer any explanation for the date references in the second column. In so doing, he conceded that “25/04” (for the Mon Komo restaurant transaction), and “26/04” (for Dreams Lashes salon transaction), and “28/04” (for Caboolture Squash Club transaction) in the Mastercard statement allowed the inference that the actual date of the transaction was the one contained in the second column under the heading “Description of transaction”, as opposed to the reference to “28 Apr” in the left-hand column. Counsel for the Respondent invited me to draw this inference.
In circumstances where the Applicant bears the burden of proof on the balance of probabilities, the onus lies with him to adequately explain the contents of the Mastercard statement and how the transactions were recorded. To achieve this end, it was incumbent on him to adduce evidence, perhaps from a representative of Westpac or Mastercard, to explain the details of the statement, especially if he sought to argue that all of the relevant transactions did in fact occur on 28 April 2014.
Where no independent evidence was adduced by the Applicant to explain the procedure utilised by Westpac or Mastercard to record the information contained in their statements issued to customers, the document speaks for itself. After careful consideration, I am satisfied that the date references reflected under this second column are the actual dates on which these transactions occurred, and that the left-hand column referring to “28 Apr” is simply the date the transaction is recorded by Mastercard or Westpac on their database.
On closer reading, I have also observed that the 28 April 2014 falls on a Monday. In her sworn evidence, Ms Williams recalls that the meal at Mon Komo was a “seafood platter” which she shared with the Applicant for dinner. If this occurred in the evening of Friday 25 April 2015 (reflected as “25/04” in the second column) at the Mon Komo Restaurant, this EFTPOS transaction took place after close of banking business hours. Similarly, the other transactions recorded in the second column as occurring on “26/04” and “27/04” means that they occurred on Saturday 26 April 2014 and Sunday 27 April 2014. Because they either fell after business hours on a Friday night and during the weekend, the only plausible explanation why the statement records these EFTPOS transactions in the left hand column as “28 Apr” implies that Westpac did not register these transactions until the next business day, being Monday 28 April 2014.
Based on this assessment, I make the following factual findings regarding the 8 EFTPOS transactions where there is a date reference of “28 Apr” recorded in the left-hand column:
1.The withdrawal by EFTPOS at “Caloundra Drive Thru” of $6.75 occurred on Friday 25 April 2014 (recorded in the second column as ‘25/04’);
2.The withdrawal by EFTPOS at “Mon Komo” (identified by Ms Williams as the restaurant where they had a seafood platter) of $125.50 occurred on Friday 25 April 2014 (recorded in the second column as ‘25/04’);
3.the withdrawal by EFTPOS of $60 at the “Dream Lashes Beauty Caboolture” (identified by Ms Williams as where she had her eyelash extension treatment) occurred on Saturday 26 April 2014 (recorded in the second column as ‘26/04’);
4.the withdrawal by EFTPOS of $105.81 at “Woolworths Pelicanwat” occurred on Saturday 26 April 2014 (recorded in the second column as ‘26/04’);
5.the withdrawal by EFTPOS of $58.50 at “Dougs Family Meats” occurred on Sunday 27 April 2014 (recorded in the second column as ‘27/04’);
6.the withdrawal by EFTPOS of $31.30 at “M&a Seckel Entrpris” occurred on Sunday 27 April 2014 (recorded in the second column as ‘27/04’);
7.the withdrawal by EFTPOS of $6.85 at “Caloundra Drive Thru” occurred on Sunday 27 April 2014 (recorded in the second column as ‘27/04’);
8.The withdrawal by EFTPOS of $58.50 at the “Caboolture Squash Caboolture” occurred on Monday 28 April 2014 (recorded in the second column as ‘28/04’).
It then follows that I do not accept the evidence presented in the Applicant’s case that the 7 EFTPOS transactions which record “28 Apr” in the left-hand column all occurred on 28 April 2014. I am far from persuaded on the balance of probabilities that the specific events relied upon by Ms Williams, particularly her eyelash treatment at Dream Lashes or the dinner at Mon Komo (or anything in between) all happened on 28 April 2014.
As I am satisfied that the only transaction that occurred on 28 April 2014 was the visit to the Caboolture Squash Courts by the Applicant, the Applicant has failed to discharge on the balance of probabilities that he was with his wife were in fact together for the entirety of 28 April 2014. He certainly cannot rely on the Mastercard statement to corroborate his claim that they were out at these various locations throughout the day and therefore could not be home to be personally served with the Statement of Claim.
The question turns to whether this is an attempted fabrication on both the Applicant and Ms Williams’, or was a genuine misreading of the transactions which led to an misconceived reconstruction of the events which transpired on that date?
Whether or not this was a deliberate attempt to falsely recreate the events of the 28 April 2014, it is clear that the Applicant and his wife sought to rely on his Mastercard statement to help reconstruct the events which they recollect occurred on 28 April 2014. Ms Williams admits as much in her evidence[69]. But based upon the way the Applicant ran his case, it would seem that both he and his wife’s attention was consumed and entirely reliant on the reference to “28 Apr” in the left hand column for these EFTPOS transactions. But by introducing this Mastercard evidence, the Applicant adduced evidence (as depicted in the second column) which runs counter to their case.
[69] See the transcript extracted at paragraph 56(aa) above.
The credibility of the witnesses called by both the Applicant and the Respondent
In circumstances where sworn evidence was adduced by both parties, I have had regard to the credibility and veracity of all three witnesses: the Applicant; Ms Williams; and Mr Brown.
The Applicant
On my assessment, the Applicant presented as a confused and ambivalent witness. During his sworn evidence he appeared unsure of his case (attributing his anomalies to memory problems) and changed his stance on various aspects. He also sought to adduce evidence for the first time in cross-examination about the trip to Thailand, although nothing ultimately turns on this. The Applicant was also very much reliant on Ms Williams, who presented as a more dominant personality.
I should indicate that while the Applicant adduced evidence of the fact that he previously served a sentence for an arson conviction, I have disregarded this fact in assessing his credibility, despite the fact that Ms Williams twice attacked the process server as “dishonest” during her cross-examination and potentially open the door for the Applicant’s character to be impugned: s.104 of the Evidence Act1995 (Cth). But other than ascertaining the purpose of his incarceration (which was originally introduced by the Applicant in his Affidavit evidence), counsel for the Respondent did not seek to cross-examine on the Applicant’s criminal conviction or make any adverse references to his character in his closing submissions.
The Applicant’s wife, Ms Williams
In contrast to the Applicant’s passive nature, Ms Williams came across as an aggressive witness who was prepared to do everything she could to defend her husband. During her cross-examination she adopted a hostile stance towards counsel for the Respondent whenever she denied propositions put to her. Her vehement denials highlighted her animosity towards to the Respondent, whom she blamed for tricking her husband “into a legally binding document for something that was worth absolutely nothing”[70]. Some of her overtly feisty responses have been reproduced verbatim above when summarising her evidence, and I need not repeat them here.
[70] Transcript at page 52.47.
In her evidence Ms Williams also adopted an unwavering and somewhat unrealistic position on subjects which had otherwise been conceded by the Applicant. One clear example was her initial stance that the Applicant was never served with any court process as she was with him “24/7” on all three occasions. Ms Williams would later resile from this position when she realised that the Applicant had conceded that he had in fact been served with the Bankruptcy Notice on 4 July 2014. This concession to something which was not disputed by the Applicant only arose when she recalled during her cross-examination of her brother’s purported discovery of the Creditor’s Petition pinned to the front door on 21 November 2014. But in explaining how embarrassed she felt when he found out about it, she now acknowledged she had been aware of the existence of the judgment from as early as when the Bankruptcy Notice was personally served on the Applicant.
The evidence given by the process server
In contrast to the evidence led in the Applicant’s case, I formed the view that Mr Brown gave his evidence credibly and objectively. He did not seek to embellish his evidence, such as to bolster his recognition of the Applicant. No issue was taken by the Applicant during the cross-examination of Mr Brown which challenged his credibility or integrity, although Ms Williams sought to discredit him later in her cross-examination by accusing him of being “dishonest”.
As an independent party to the proceedings, I accept the submission by counsel for the Respondent that there was no reason for Mr Brown to concoct an account that he had personally served the Applicant with the court process on the two dispute occasions. There was nothing in Mr Brown’s responses which lead me to conclude he was lying or being untruthful. Accordingly I would accept Mr Brown’s evidence over that adduced by the Applicant.
The attack on the credibility of the process server, but not during his cross-examination
At this point it would be convenient to refer to the attack on the credibility of the process server by the Applicant in his case.
As expressed above, the Applicant did not directly challenge the sworn testimony of the process server. In fact, during his cross-examination of Mr Brown the Applicant elicited answers which were consistent with the process server’s evidence that he did in fact meet and serve the Applicant with court papers on all three occasions; such as the fact that Mr Brown saw a “furry dog” in the house (the Applicant later adduced from Ms Williams they owned a Tibetan Mastiff) and that he observed the presence of a black boat parked outside his home (the vessel conceded by the Applicant).
During his cross-examination of Mr Brown, the Applicant did not put any propositions to him that he failed to personally serve him with the Statement of Claim on the Applicant on 28 April 2014, or failed to personally serve him with the Creditor’s Petition on 21 November 2014.
But Ms Williams in her evidence went on to attack the credibility of Mr Brown, suggesting (twice) that he was “dishonest” and had only left the documents at their premises on 28 April 2014 (the Statement of Claim) and on 21 November 2014 (the Creditor’s Petition). None of these suggestions of impropriety were directly put to Mr Brown in cross-examination so as to afford him an opportunity to respond: Brown v Dunn (1893) 6 R 67 HL. There was no foundation for the Applicant’s wife to make these allegations of dishonesty and I reject them.
The inconsistency regarding the Mastercard debit card: how many were there?
There was another significant inconsistency which arose in the respective evidence of the Applicant and Ms Williams: their access to the Mastercard keycard.
In his evidence, the Applicant testified thrice that both he and Ms Williams had separate key cards which they could utilise to draw funds from the debit card[71]. In contrast Ms Williams gave evidence that there was only one keycard[72] in existence which was retained by the Applicant who sometimes gave it to her to use, but not on 28 April 2014. It was at this point of Ms Williams’ cross-examination that I observed the Applicant suddenly pull out a plastic card from his wallet and wave it at his wife. This led me to direct him to cease trying to give evidence at the Bar table.
[71] See paragraph 53(o) above.
[72] See paragraph 56(k) above.
In my view, this inconsistency between the Applicant and Ms Williams’ recollection of how many key cards, coupled with his theatrics in waving a card at her during her cross-examination, further diminishes their credibility.
The corroborative witnesses who were never called by the Applicant
The Applicant’s case, as reflected in Ms Williams’ evidence, sought to assert that he had several witnesses who could corroborate his account of their movements on 28 April 2014 and 21 November 2014.
Ms Williams repeatedly referred in her evidence to being able to provide corroborative evidence from a number of witnesses:
(a)from her eyelash technician (“Nicole Hertferd”) to prove that the Applicant was with her during her treatment on 28 April 2014;
(b)from a Greg Smythe (who apparently played squash with them on 28 April 2014);
(c)from a Walter Kratzmann (who they met at Morayfield on 21 November 2014); and
(d)from her brother Tim Williams (who texted her on 21 November 2014).
Even putting aside for the moment my factual findings that the visit to the Dream Lashes and Mon Komo Restaurant (and all other transactions) did not occur on 28 April 2014[73], the Applicant did not file any Affidavits from these “corroborative” witnesses. Nor did he arrange for them to attend Court to testify on his behalf.
[73] See paragraphs 63 – 75 above.
Again, the Applicant and his wife’s responses for not adducing this evidence were inconsistent. Ms Williams deposed that they were ready and willing to testify on behalf of the Applicant. But in cross-examination she now stated that she expected the Respondent to ask for this evidence before the Applicant was required to produce it. She even volunteered that her brother was able to attend court to provide corroborative evidence. In contrast, The Applicant submitted that he could not afford to fund these witnesses travelling to Sydney to testify on his behalf.
In circumstances where the history of the court proceedings meant that the Applicant had more than ample opportunity to prepare his case and marshal his evidence, either from when he received the Creditor’s Petition on 21 November 2014 or from when he filed his Notice of Opposition on 10 December 2014, the explanations proffered by him and Ms Williams are simply deficient.
As no corroborative evidence was adduced from the four persons identified by Ms Williams, I give no weight to her assertions that they would have been able to corroborate the Applicant’s account of what he said occurred on 28 April 2014 or 21 November 2014.
Drawing a Jones v Dunkel inference due to the failure of the Applicant to call these witnesses
In final submissions, counsel for the Respondent submitted that I should draw the inference that the absence of these witnesses meant that their evidence could not have advanced his case: Jones v Dunkel [1959] 101 CLR 298.
That principle was enunciated in Sagacious Legal Pty Ltd v Wesfarmers General Insurance Ltd [2011] FCAFC 53 (13 April 2011). At paragraph [79], the Full Court (Besanko, Perram and Katzmann JJ) held:
“It is accepted that where a party fails, without explanation, to call a witness who that party might have been expected to call and whose evidence might have elucidated the matter in dispute, then the inference may be drawn that the evidence of the absent witness would not have assisted the party that failed to call that witness: Jones v Dunkel - disp13at 308, 312 and 320-321. By itself that inference is frequently somewhat barren, for knowing that the evidence of a witness would not have assisted tells one nothing about what the witness’s evidence affirmatively would have been. Often more directly useful is the allied principle that in such a case the trier of fact may more confidently draw any inference unfavourable to the party that failed to call that witness if that witness appears to be in a position to cast light on whether the inference should be drawn: Jonesv Dunkel at 308 per Kitto J, 312 per Menzies J, and 320-321 per Windeyer J. Neither inference is mandatory and, generally speaking, these inferences only become material where the balance of the evidentiary record is equivocal.”
Notwithstanding the force of counsel’s submission, I decline to make a finding pursuant to Jones v Dunkel. I do not believe I need to go so far as to draw these inferences to the detriment of the Applicant. When coupled with the aforementioned deficiencies, Ms Williams repeated assertions of the availability of these “corroborative” witnesses simply have no weight in assisting the Applicant discharge his burden on the balance of probabilities that he was never served with the Statement of Claim and was not personally served with the Creditor’s Petition.
Ample opportunity for the Applicant to challenge the Judgment entered in the Local Court
Even if I had been satisfied on the balance of probabilities by the Applicant that he had not been served with the Statement of Claim by Mr Brown, Grounds 1 and 2 faces a fatal flaw.
In circumstances where the Applicant concedes he was served with the Bankruptcy Notice on 4 July 2014 (where the Judgment from the Local Court was attached), he has had some 11 months since that date to this hearing on 4 May 2015 to apply to the Local Court for the judgment to be set aside.
Even if the Applicant argued that he only became aware of the full particulars of the judgment when he received the Creditor’s Petition in 21 November 2014, this still affords him over 5 months to pursue any available remedies in the Local Court.
At the very least, the Applicant had an additional 2 months from when the matter was last in this Court for directions on 5 March 2015 to the date of the hearing on 4 May 2015 to pursue this application.
The Applicant’s evidence and submissions in this regard that he experienced what can be described as logistical difficulties (being based in Queensland, that he is not a lawyer, and that he could not obtain free legal aid) do not persuade me that he has not had ample opportunity to challenge the original judgment debt. Notwithstanding his protestations of his limited abilities, the Applicant was able to file a defence to these Bankruptcy proceedings and represent himself in the present hearing, where he filed affidavits, presented evidence, adduced sworn evidence, cross-examined a witness, and make final submissions.
For these reasons, Grounds 1 and 2 are dismissed.
GROUND 3: THE DEBT WAS INACCURATE AND GROSSLY UNFAIR
The Applicant’s 3rd Ground seeks to challenge the debt as “inaccurate and grossly unfair”.
In both his evidence and in closing submissions, the Applicant referred to the transactions between himself (as the former company director of Saba) with the sales representative from Thorn. Evidence of this contractual dispute is contained in his two Affidavits. He also conceded that a rental agreement existed between himself, Saba, and Thorn.
In raising this Third Ground, the Applicant would need to persuade me that the Court should go behind the judgment to ascertain whether there was in truth and reality a debt due to the Petitioning Creditor.
In Capital Finance Aust Pty Ltd v Nathan [2008] FMCA 1363, Barnes FM (as she then was) referred to the High Court in Wren v Maloney [1972] HCA 5. While the Court has the discretion to accept such a judgment as satisfactory proof of the petitioning creditor’s debt, the High Court remarked that:
“That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner.”
In the present case, there is no dispute of the existence of a debt. Both parties have adduced uncontroverted evidence of the rental agreement entered between the parties, and that a debt resulted due to the failure of Saba and the Applicant to meet their repayment obligations in compliance of the rental agreement.
There is also no dispute that the Applicant was personally served with a Bankruptcy Notice issued by the Official Receiver on 18 June 2014. Attached to that Bankruptcy Notice is the Judgment issued by Bankstown Local Court on 3 June 2014.
I am satisfied that the Respondent has presented undisputed evidence of the existence of a debt owing to it by the Applicant that exceeds $5000 (being $10,570.80), which is a liquidated sum within s.44(1)(b)(i) of the Bankruptcy Act1966 (Cth).
While the Full Court of the Federal Court held in Wenkart v Abignano [1999] FCA 354 that a Court exercising Bankruptcy jurisdiction does not go behind a judgment as a matter of course, it is entitled to do so where “there has been fraud, collusion, or a miscarriage of justice”.
Based on the evidence adduced in the present case, I am not persuaded that there has been any “fraud, collusion or miscarriage of justice” or any reason for questioning whether there was in fact and reality a debt due to the Respondent. Nor can I discern any substantial reasons apparent on the evidence to warrant going behind the judgment.
During his closing submissions the Applicant submitted that he did not ask me to go behind the judgment[74]. In so doing, he accepted that his complaint that the debt was “inaccurate” or “grossly unfair” was something which should be ventilated in the Local Court.
[74] Transcript at page 70.40.
Accordingly I dismiss Ground 3.
Formal defect in the incorrect address contained in the Bankruptcy Notice
While this was not challenged or raised as a ground by the Applicant, it is convenient to deal with a defect I discovered in the Bankruptcy Notice.
In reviewing the documents filed with the Registry which now forms the Court file, I note that the address identified on Bankruptcy Notice incorrectly stated the Respondent’s address as “541, Colleen Street Burpengary Queensland 4505” when in fact the correct address recorded in the Rental Agreement entered between the parties is actually “5 – 11 Colleen Street Burpengary Queensland 4505.”
The question turns to whether this error in the Bankruptcy Notice is a fatal flaw so as to nullify the proceedings or is merely a formal defect which can otherwise be cured.
The principles relating to what constitutes a formal defect have been discussed in a number of cases. In Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915, a five member Bench of the Federal Court (Black CJ, Lee, Heerey, Sundberg and Gyles JJ) relied on the High Court in Kleinworth Benson (1988) 165 CLR 71 and held at paragraph [59] that:
“A bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice.”
In Adams v Lambert (2006) 228 CLR 409, the High Court evaluated the circumstances upon which a defect or irregularity was or was not a “formal defect or an irregularity” for the purposes of s.306(1). Expressly examining sections 40(1)(g) and 41 of the Bankruptcy Act 1966 (Cth), the High Court held at paragraph [32]:
“... Gyles J accurately identified the question as whether correct completion of the form prescribed by the regulations in every respect is a requirement made essential by the Act. Bearing in mind that, in the present case, the error could not have misled the respondent as to what it was necessary to do in order to comply with the requirements of the notice, it is difficult to understand how, consistently with Kleinworth Benson, the respondent could succeed without an affirmative answer to that question.”
Section 306(1) of the Bankruptcy Act1966 (Cth) provides a mechanism to cure such defects:
Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the Court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of the Court.
In my view, the misspelling of the Applicant’s address in the Bankruptcy Notice does not constitute a nullity, especially where there is no contest that he was personally served with the Bankruptcy Notice and in circumstances where I cannot discern any substantial injustice being caused to the Applicant.
Supportive of my view is Sherman v Latrobe University [2007] FCA 1911. In that decision, Ryan J dealt with analogous facts and held that the Bankruptcy Notice remained valid despite having wrongly ascribed the Respondent debtor’s address in circumstances where he was personally served and where there was no issue as to his identity.
Accordingly I am of the view that the misspelling of the address on the Bankruptcy Notice is only a formal defect where section 306 of the Bankruptcy Act1966 (Cth) may be invoked. If the matter proceeds to sequestration and if required, I would grant leave under this provision for the Bankruptcy Notice to be amended to reflect the correct address.
GROUND 4: WAS THERE PERSONAL SERVICE OF THE CREDITOR’S PETITION? DOES THIS MATTER?
Towards the end of the hearing on 4 May 2015, I granted leave to the Applicant to add this fourth ground to his Notice of Opposition. This arose in circumstances where the Applicant asserted in his evidence that he had not been personally served with the Creditor’s Petition.
Pursuant to Rule 4.05 of the Federal Circuit Court (Bankruptcy) Rules 2005, a Creditor’s Petition and associated documents should be served personally on a Respondent Debtor unless the Court otherwise orders:
Rule 4.05 Documents to be served
Unless the Court otherwise orders, at least 5 days before the date fixed for the hearing of a creditor's petition, the applicant creditor must serve on the respondent debtor:
(a) the creditor's petition; and
(b) a copy of the affidavit, or affidavits, verifying the petition required by subsection 47(1) of the Bankruptcy Act; and
(c) if applicable, a copy of the affidavit required by paragraph 4.04(1)(a); and
(d) if applicable, a copy of the affidavit of service of the bankruptcy notice required by paragraph 4.04(1)(b); and
(e) a copy of any consent to act as trustee filed under section 156A of the Bankruptcy Act.
For instance, the Court has the power to make orders that in lieu of personal service, substituted service of a Bankruptcy Notice or a Creditor’s Petition may be effected: sections 83 and 102 of the Federal Circuit Court of Australia Act1999 (Cth); Rule 6.14 of the Federal Circuit Court Rules2001.
Again, there is a dispute where the Applicant claims he was not personally served and where the Respondent Creditor claims he was.
If the Applicant presses this Ground, the onus lies on him to persuade the Court on the balance of probabilities that he was not served personally.
The Applicant’s evidence in this regard is reliant on the evidence of Ms Williams, who claims she engaged in a series of text messages with her brother, where she asserts that sometime around 6.19 – 6.21 pm on 21 November 2014 he notified her that a Creditor’s Petition had been left at or affixed to the front door of their home.
The evidence of the process server was that after he identified the Applicant as the debtor, he left the Creditor’s Petition at his feet. The Applicant disputes this. Instead, both he and Ms Williams acknowledge that they received this court process when they reached home later that evening and found it waiting for him on the dining room table.
In support, Ms Williams annexed a screenshot sent to her representing a portion of a series of text messages she exchanged with her brother[75]. That screenshot was incomplete as it did not reflect the entirety of the discussion. It also only identified the day and month (“21 November”) but not the year.
[75] See paragraph 55(i) above.
When asked in cross-examination why the remainder of the message was not provided, Ms Williams retorted that her brother was available in Sydney and could either attend Court to give oral evidence and/or produce the complete trail of messages from his phone[76].
[76] Transcript at page 58.35.
Despite being the recipient of these emails, Ms Williams gave no explanation why she could not produce the messages herself from her own phone, but instead had to rely on her brother’s phone to adduce this information.
Again, there was no direct challenge to the evidence of Mr Brown regarding the service of the Creditor’s Petition when he was cross-examined by the Applicant.
Having considered the credibility of the Applicant and his wife vis-à-vis Mr Brown for the reasons I identified above[77], I prefer the evidence of the latter over that given by the Applicant and Ms Williams.
[77] See paragraphs 76 – 82 above.
On the available evidence, I accept that on 21 November 2014 Mr Brown did meet the Applicant, explained he was serving him with the Creditor’s Petition and associated documents, before placing them at his feet. Even though the Applicant refused to accept the documents, the authorities have held that this constitutes personal service: Wong v Robinson [1995] FCA 805; Lawindi v Elkateb [2001] FCA 1527.
Therefore I am not persuaded that the Applicant has discharged this onus on the balance of probabilities and also dismiss Ground 4.
But even if I were to be persuaded by the Applicant that the Creditor’s Petition had not been served personally on him, the Court is empowered to dispense with personal service in circumstances where there is no prejudice to a Debtor, such as where the Court was satisfied that the Debtor had sufficient notice of the Creditor’s Petition.
The Applicant has conceded that he received the Creditor’s Petition on 21 November 2014; he just denies being personally served with it. His awareness of these proceedings from very early on in the peace is demonstrated by the fact that on 10 December 2014 the Applicant filed a Notice of Appearance along with his Notice Stating Grounds of Opposition and a supporting affidavit.
Even if I were to accept the Applicant’s version of events (to which I remain unpersuaded) that he was not personally served with the Creditor’s Petition, I am of the view that he has not been prejudiced by the non-personal service. This is because that since the filing of the Creditor’s Petition the Applicant has had the benefit of several adjournments: 17 December 2014; 27 January 2015; 5 March 2015; before the final hearing on 4 May 2015. So he has had ample opportunity to understand the nature and terms of the Creditor’s Petition and be fully appraise of the nature of these Bankruptcy proceedings.
I dismiss Ground 4.
ORDERS
The Notice Stating Grounds of Opposition to the Creditors’ Petition filed on 10 December 2014 be dismissed.
Costs be reserved.
I certify that the preceding one hundred and forty-five (145) paragraphs are a true copy of the reasons for judgment of Registrar Chuan Ng.
Date: 4 June 2015
- AGLC
- Allan v Thorn Australia Pty Ltd [2015] FCCA 1479
- Case
- [2015] FCCA 1479
- Decision Date
CaseChat Overview and Summary
The central legal issue before the Registrar was whether the misspelling of the Applicant's address on the bankruptcy notice constituted a formal defect or an irregularity that rendered the notice invalid, or whether it was a nullity. The Registrar was required to consider the principles established in cases such as *Australian Steel Company (Operations) Pty Ltd v Lewis* and *Adams v Lambert* regarding the requirements for a valid bankruptcy notice and the application of section 306(1) of the *Bankruptcy Act 1966* (Cth).
The Registrar reasoned that a bankruptcy notice is a nullity if it fails to meet an essential requirement of the Act or if it could mislead the debtor. Applying this principle, the Registrar found that the misspelling of the Applicant's address did not render the notice a nullity, particularly as the Applicant had been personally served and no substantial injustice was caused. The Registrar drew support from *Sherman v Latrobe University*, where a similar error in a bankruptcy notice was held not to invalidate it when personal service had occurred and the debtor's identity was not in doubt. Consequently, the Registrar viewed the misspelling as a formal defect to which section 306(1) of the *Bankruptcy Act 1966* (Cth) could apply, allowing for potential amendment. The Registrar also granted leave to the Applicant to add a ground of opposition asserting non-personal service of the creditor's petition.
Orders
Orders of the court
Full text does not contain this section.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
The principles relating to what constitutes a formal defect have been discussed in a number of cases. In Australian Steel Company (Operations) Pty Ltd v Lewis [2000] FCA 1915, a five member Bench of the Federal Court (Black CJ, Lee, Heerey, Sundberg and Gyles JJ) relied on the High Court in Kleinworth Benson (1988) 165 CLR 71 and held at paragraph [59] that: “A bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice.” In Adams v Lambert (2006) 228 CLR 409, the High Court evaluated the circumstances upon which a defect or irregularity was or was not a “formal defect or an irregularity” for the purposes of s.306(1). Expressly examining sections 40(1)(g) and 41 of the Bankruptcy Act 1966 (Cth), the High Court held at paragraph [32]:“... Gyles J accurately identified the question as whether correct completion of the form prescribed by the regulations in every respect is a requirement made essential by the Act. Bearing in mind that, in the present case, the error could not have misled the respondent as to what it was necessary to do in order to comply with the requirements of the notice, it is difficult to understand how, consistently with Kleinworth Benson, the respondent could succeed without an affirmative answer to that question.” Section 306(1) of the Bankruptcy Act1966 (Cth) provides a mechanism to cure such defects:Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the Court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of the Court. In my view, the misspelling of the Applicant’s address in the Bankruptcy Notice does not constitute a nullity, especially where there is no contest that he was personally served with the Bankruptcy Notice and in circumstances where I cannot discern any substantial injustice being caused to the Applicant. Supportive of my view is Sherman v Latrobe University [2007] FCA 1911. In that decision, Ryan J dealt with analogous facts and held that the Bankruptcy Notice remained valid despite having wrongly ascribed the Respondent debtor’s address in circumstances where he was personally served and where there was no issue as to his identity. Accordingly I am of the view that the misspelling of the address on the Bankruptcy Notice is only a formal defect where section 306 of the Bankruptcy Act1966 (Cth) may be invoked. If the matter proceeds to sequestration and if required, I would grant leave under this provision for the Bankruptcy Notice to be amended to reflect the correct address. Towards the end of the hearing on 4 May 2015, I granted leave to the Applicant to add this fourth ground to his Notice of Opposition. This arose in circumstances where the Applicant asserted in his evidence that he had not been personally served with the Creditor’s Petition.