Battenberg v Restom, in the matter of Battenberg

[2005] FCA 1184

FEDERAL COURT OF AUSTRALIA

Battenberg v Restom, in the matter of Battenberg [2005] FCA 1184

BANKRUPTCY – substituted service of bankruptcy notice within jurisdiction but debtor outside jurisdiction at time of service – service valid

PRACTICE AND PROCEDURE – order for substituted service of Bankruptcy Notice in Australia – subsequently ascertained that debtor outside Australia at time of order and time of service – order not disturbed

Bankruptcy Act 1966 (Cth), s 40(1)(g)

Sheahan v Joye (1995) 57 FCR 389, applied

IN THE MATTER OF ANDREW CHARLES ROBERT EDWARD ALBERT BATTENBERG
ANDREW CHARLES ROBERT EDWARD ALBERT BATTENBERG v CONWAY ANTHONY RESTOM, PETER JAMES CALDWELL, ANTHONY JAMES CORDATO, BRIAN STUART OLLIVER, PHILIP MARK DAY, ALAN WILKIE NICOL (TRADING AS MICHELL SILLAR)

NSD 612 OF 2005

GYLES J
26 AUGUST 2005
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 612 OF 2005

IN THE MATTER OF ANDREW CHARLES ROBERT EDWARD ALBERT BATTENBERG

BETWEEN:	ANDREW CHARLES ROBERT EDWARD ALBERT BATTENBERG APPLICANT
AND:	CONWAY ANTHONY RESTOM, PETER JAMES CALDWELL, ANTHONY JAMES CORDATO, BRIAN STUART OLLIVER, PHILIP MARK DAY, ALAN WILKIE NICOL (TRADING AS MICHELL SILLAR) RESPONDENTS
JUDGE:	GYLES J
DATE OF ORDER:	26 AUGUST 2005
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.   The application be dismissed. 

2.   The applicant pay the costs of the respondents of the application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NSD 612 OF 2005

IN THE MATTER OF ANDREW CHARLES ROBERT EDWARD ALBERT BATTENBERG

BETWEEN:	ANDREW CHARLES ROBERT EDWARD ALBERT BATTENBERG APPLICANT
AND:	CONWAY ANTHONY RESTOM, PETER JAMES CALDWELL, ANTHONY JAMES CORDATO, BRIAN STUART OLLIVER, PHILIP MARK DAY, ALAN WILKIE NICOL (TRADING AS MICHELL SILLAR) RESPONDENTS

JUDGE:	GYLES J
DATE:	26 AUGUST 2005
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. This case concerns the effect of substituted service of a bankruptcy notice in Australia where the debtor is out of Australia.

2. On 9 January 2004 Conway Anthony Restom, Peter James Caldwell, Anthony James Cordato, Brian Stuart Olliver, Philip Mark Day, Alan Wilkie Nicol, trading as Michell Sillar, (the respondents) obtained a judgment against Andrew Charles Robert Edward Albert Battenberg (the applicant) in the Supreme Court of New South Wales in the sum of $203,308.61.

3. On 26 August 2004 the respondents caused the issue of a Bankruptcy Notice to the applicant based upon that judgment.  The Bankruptcy Notice was extended from time to time.  On 9 March 2005, Registrar Tesoriero of the Federal Magistrates Court ordered that:

   ‘1.Service of Bankruptcy Notice No NN 2186 of 2004 addressed to Andrew Charles Robert Edward Albert Battenberg may be effected by serving:

   (i)the Bankruptcy Notice together with a sealed copy of this order as follows:

   (a)by sending on or after 23 March 2005 by pre paid ordinary post addressed to the judgment debtor at Salvatore Russo, Russo & Partners, 12 Smalls Road, Arcadia, NSW, 2159; and

   (b)by personal service on or before 23 March 2005 on any person apparently over the age of sixteen years at Russo & Partners, 12 Smalls Road, Arcadia, NSW, 2159.

   2.Service in accordance with this order shall be deemed good and sufficient service of the Bankruptcy Notice upon the Debtor.

   3.The Bankruptcy Notice shall be deemed to be served on the Debtor on 30 March 2005.

   4.A copy of the Bankruptcy Notice to be served pursuant to paragraph 1 of this order is to be annexed to any Affidavit proving that service.

   5.The copies of the Bankruptcy Notice for service and proof of service all be amended by deleting the words in paragraph 3 of the notice “after service on you of this Bankruptcy Notice” and substituting “after 30 March 2005”.

   6.A copy of this order be given to the Official Receiver in Sydney.

   7.Costs of this application be served for the purposes of any future Creditors Petition based on this Bankruptcy Notice.’

4. On 20 April 2005 this proceeding was commenced on behalf of the applicant debtor seeking the following orders:

   ‘ANDREW CHARLES ROBERT EDWARD ALBERT BATTENBERG, Debtor, intends to set aside the Bankruptcy Notice issued against him on the 9^th March 2005 on the grounds that the Court has no jurisdiction to issue the Bankruptcy Notice against the Debtor.

   A.       DETAILS OF CLAIM

   On the grounds stated in the accompanying affidavit the applicant claims:

   1.        That the Bankruptcy Notice be set aside.

   2.That the Creditor pay the Debtor’s cost of this application on an indemnity basis.’

5. On 20 April 2005 Registrar Segal of this Court ordered:

   ‘Pursuant to subsection 41(6A) of the Bankruptcy Act 1966 and Order 77, rule 14 of the Federal Court Rules, on condition that Bankruptcy Notice No. NN 2186 of 2004 was served on the Applicant on 30 March 2005, the time for compliance by the Applicant with the requirements of the Bankruptcy Notice is extended up to and including 3 May 2005.

   There be liberty to any party to apply to vary or discharge Order 1, on 24 hours notice.

   The Applicant serve a sealed copy of these orders on the Respondent at the time of service of the application.’

6. The Bankruptcy Notice, together with the order of 9 March 2005, was served on 30 March 2005 in accordance with the order of 9 March 2005.

7. I find that the applicant was absent from Australia on 30 March 2005 and was, more probably than not, out of Australia on and from 9 March 2005 until 30 March 2005.

8. The application has been amended to include the following claims for relief:

   ‘2.Alternatively that the Orders made by Registrar Tesoriero on 9 March 2005 be set aside;

   3.Alternatively a declaration that any purported compliance with the Orders made by Registrar Tesoriero on 9 March 2005 does not constitute valid service of Bankruptcy Notice MN2186 of 2004 upon the Applicant;’

9. At the hearing, counsel for the applicant did not pursue the claim for Order 1.  Counsel for the applicant submitted that it is a settled principle that a person outside the jurisdiction cannot be served within the jurisdiction by means of an order for substituted service, referring to Laurie v Carroll (1958) 98 CLR 310. It was submitted that the decision of Branson J in Sheahan v Joye (1995) 57 FCR 389 establishes that the Court may now review the Registrar’s decision of 9 March 2005 in the light of the facts as now known. It was submitted that, in the case of a Bankruptcy Notice, s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (the Act) establishes that the critical time to be considered is not the time of the issue of the notice but, rather, the time of service.

10. Counsel for the respondent creditor submitted that Laurie v Carroll was not a bankruptcy case and referred to a number of bankruptcy authorities, commencing with Re Mendonca; Ex parte Federal Commissioner of Taxation (1969) 15 FLR 256 and including Re Trimbole; Ex parte Deputy Commissioner of Taxation (1984) 4 FCR 586; Re Skase (1991) 32 FCR 212; and Ginnane v Diners Club Limited (1993) 42 FCR 90 recognising extraterritorial jurisdiction and service. He submitted that s 40(1)(g) did not establish the time of service as the relevant time to consider. He submitted that the debtor has been served in Australia by virtue of an order of the Court. That is the place of service and s 40(1)(g) is complied with. In the alternative, if leave is required, it ought to be granted nunc pro tunc, referring to Emanuele v Australian Securities Commission (1997) 188 CLR 114 per Toohey J at 131–132; and Re Saunders (a bankrupt) [1997] Ch 60.

11. In my opinion, the case for relief has not been established.  The order for substituted service was properly made upon the evidence before the Registrar.  I am not satisfied that in this case the unknown absence of the applicant from the jurisdiction at the time of the order for substituted service and at the time of service is sufficient to warrant reversing the effect of that order, assuming there to be jurisdiction to do so.  Branson J held in Sheahan v Joye (at 397–399) that the time at which presence in the jurisdiction is essential is the time of issue of the initiating process – in that case a summons to attend for examination about the examinable affairs of a corporation. I do not consider that s 40(1)(g) (or any other factor) leads to a different conclusion in relation to a bankruptcy notice. Therefore, the absence of the applicant from the jurisdiction at the time of the order and at the time of service is irrelevant for present purposes. Order 2 will not be made. In my view, it is not appropriate to determine any question as to the adequacy of service in this proceeding. This is an issue which may arise upon a proceeding for sequestration.

12. The application is dismissed.  The applicant is to pay the costs of the respondents of the application.

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Gyles.

Associate:

Dated:             26 August 2005

Counsel for the Applicant:	MR Aldridge SC
Solicitor for the Applicant:	Russo & Partners
Counsel for the Respondents:	P Walsh
Solicitor for the Respondents:	Sally Nash & Co
Dates of Hearing:	6 June 2005
Date of Judgment:	26 August 2005