Boss Lawyers Pty Ltd v Winn
[2021] FedCFamC2G 44
•14 September 2021
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)Boss Lawyers Pty Ltd v Winn [2021] FedCFamC2G 44
File number(s): BRG 41 of 2021 Judgment of: JUDGE JARRETT Date of judgment: 14 September 2021 Catchwords: BANKRUPTCY – Application for declaration as to service – declaration that creditor’s petition invalid – service of creditor’s petition. Legislation: Bankruptcy Act 1966 (Cth), ss 41, 41(6A), 44(1)(c), 180, 306(1)
Bankruptcy Regulations 1996 (Cth), regs 16.01, 16.01(1), 16.01(2)
Evidence Act 1995 (Cth), s 160(1)
Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), rr 1.04, 1.04(2), 4.04(1)(a)(i), 4.04(1)(a)(ii), 4.04(1)(a)(iii), 4.05
Federal Circuit Court Rules 2001 (Cth), 1.06, 6.01(2), 6.06(1), 6.06(2), 6.06(2)(a), 6.11, 6.11(1), 6.11(1)(b)
Federal Court (Bankruptcy) Rules 2005 (Cth), rr 1.03, 103(2)(a),1.04(1), 8.02
Federal Court Rules 2011 (Cth), r 1.34
Cases cited: Allen, in the matter of Allen [2020] FCA 376
de Vries, in the matter of the bankrupt estate of Cunningham [2021] FCA 188
Nixon, in the matter of Nixon [2015] FCA 976
Pei Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2013] FCA 419,
Winn v Boss Lawyers Pty Ltd [2021] FCCA 1067
Number of paragraphs: 41 Date of last submission/s: 11 June 2021 Date of hearing: 11 June 2021 Place: Brisbane Solicitor for the Applicant: Boss Lawyers Pty Ltd The Respondent: In person ORDERS
BRG 41 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN:
BOSS LAWYERS PTY LTD
Applicant
AND: JULENE WINN
Respondent
ORDER MADE BY:
JUDGE JARRETT
DATE OF ORDER:
14 SEPTEMBER 2021
THE COURT ORDERS THAT:
1.The application in a case filed on 13 April, 2021 is dismissed.
2.The creditor’s petition filed on 10 February, 2021 be adjourned for hearing at 9:30am on 7 October, 2021.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).
REASONS FOR JUDGMENT
JUDGE JARRETT:
On 10 February, 2021 Boss Lawyers Pty Ltd filed a creditor’s petition against Julene Winn. The creditor’s petition was listed before a registrar of the Court on 17 March, 2021.
On 16 March, 2021 Ms Winn filed a notice of appearance. In that notice of appearance she gave an address for service as 32 Danube Drive Strathpine, QLD, 4500.
On 17 March, 2021 there was no appearance for Ms Winn before the registrar. The solicitor for the petitioning creditor informed the registrar that the petition had not been served on her. The petition was adjourned to 24 March, 2021.
After the hearing on 17 March, 2021, the principal solicitor of the petitioning creditor posted a copy of the creditor’s petition to Ms Winn together with notice of the adjourned date of 24 March, 2021. There is an affidavit of service to that effect filed on 17 March, 2021. In that affidavit, Mr Mark Harley, the principal of the petitioning creditor swears that on 17 March, 2021 he posted a letter by express post to Ms Winn notifying her of the adjournment of the hearing. The letter enclosed a copy of the creditor’s petition, the affidavit verifying paragraphs 1, 2 and 3 of the petition together with an affidavit of service of the bankruptcy notice addressed to the address notified in the notice of address for service, namely 32 Danube Drive, Strathpine QLD 4500.
Ms Winn did not request the opportunity to cross-examine Mr Harley. She argues that she has not been personally served with the creditor’s petition or supporting documents and therefore the proceedings are invalid and until she is personally served, no further steps can be taken in the proceedings. She is, however, wrong about that. There are two reasons why.
The first is the reason raised by the petitioning creditor in submissions. From the filing of the creditor’s petition there were current proceedings on foot for the purposes of r.6.06(2)(a) of the Federal Circuit Court Rules 2001 (Cth). From the filing of her notice of appearance on 16 March, 2021 containing an address for service, Ms Winn gave an address for service for the purposes of FCCR 6.01(2). Having notified the creditor of an address for service, FCCR 6.06(2)(a) was engaged so that service by hand of the creditor’s petition and the accompanying documents was no longer required. Relevantly FCCR 6.06(1) and (2) provide:
6.06 When is service by hand required
(1) Service by hand is required for an application starting a proceeding or a subpoena requiring attendance of a person.
(2) However, service by hand is not required if:
(a) there are current proceedings for which there is a notice of address for service for the person to be served; or
Rule 6.11 FCCR provides that if service of a document by hand is not required, the document may be served on a person at the person’s address for service in one of a number of ways specified in FCCR 6.11(1). The evidence shows that Mr Harley posted the relevant documents to Ms Winn at her address for service in accordance with FCCR 6.11(1)(b) and I so find.
The second reason is this. At the time Mr Harley posted the creditor’s petition and other documents to the debtor on 17 March, 2021 the Bankruptcy Regulations 1996 (Cth) were still in force. Regulation 16.01(1) provided that a document required or permitted by the Bankruptcy Act 1966 (Cth) to be served on a person could be sent by post to the person at his or her last known address. Regulation 16.01(2) provided that a document served on a person by sending it to them by post is taken, in the absence of proof to the contrary, to have been received when, in the due course of post, it would have been delivered to the person’s address. Section 160(1) of the Evidence Act 1995 (Cth) provides that it is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia was received at that address on the seventh working day after having been posted.
Thus, the documents posted by Mr Harley on 17 March, 2021 are presumed to have been received by Ms Winn on 26 March, 2021. There is no evidence to the contrary of the presumption.
To the extent that Ms Winn argues that the creditor’s petition has not been properly served, I reject her argument.
Further, she argued that the creditor’s petition needed to be served upon her before 17 March, 2021 and in the absence of service before that date, the petition is invalid. However, that argument too, cannot be accepted. It is not uncommon for a creditor’s petition not to be served before the first date allocated for its hearing because of difficulties with service. A petition may be adjourned and provided notice of the adjourned date is given to the debtor, there is no irregularity if service of the petition occurs after the first date allocated for hearing the petition. What is important, of course, is that the petition is not heard in the absence of the debtor if the debtor has not been served with the petition.
On 23 March, 2021 Ms Winn filed a notice stating her grounds of opposition to the creditor’s petition. She confirmed her address for service in that notice. It was the same as the address that she had earlier notified in her notice of appearance.
When the matter came before the Court on 24 March, 2021 (two days before Ms Winn was deemed to have been served with the creditor’s petition (by operation of s.160 of the Evidence Act) there was no suggestion by her that she had not received a copy of the creditor’s petition or the other documents. Her argument to the registrar was that she had not been served personally with those documents or had not received them within the five business days prior to the hearing date before the registrar. She sought an adjournment on a number of grounds including that she had commenced an application to set aside the bankruptcy notice upon which the creditor’s petition was based.
In the result, the registrar adjourned the creditor’s petition to allow the application to set aside the bankruptcy notice to be heard and determined. The petition was adjourned to 14 April, 2021 to allow that application to be heard and determined. Thus, any prejudice to Ms Winn that had occurred by short service of the creditor’s petition and the other documents upon her was cured by the adjournment. That short service did not affect the validity of the petition.
Ms Winn further argued before me that the petition needed to be amended before it was served to show the new adjourned date. I reject that argument. There is nothing to which I was taken in the Federal Circuit Court Rules 2001 (Cth), the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), the Bankruptcy Act 1966 (Cth) or the Bankruptcy Regulations that made good that argument. The evidence shows that notice of the adjourned date was given to Ms Winn by the petitioning creditor. The notice was not given by an endorsement to the creditor’s petition itself, but by a separate notice. In my view, that was sufficient. Ms Winn does not suggest that she was not aware of the adjourned date.
Ms Winn further argues that the petition is invalid because it and the other documents required to be served by the Federal Circuit Court (Bankruptcy) Rules were not served at least five days before the date fixed for the hearing of the petition as required by FCC(B)R 4.05. However that submission must be rejected because Ms Winn was taken to have received the documents on 26 March, 2021. The next return date for the petition (if that was to be a hearing date rather than simply a directions date) was 14 April, 2021. The relevant documents were served at least five days before the date fixed for the hearing of the petition.
On 14 April, 2021 the creditor’s petition was transferred to a judge of the Federal Circuit Court to be listed on a date sometime after 18 May, 2021. As it turned out, the application was adjourned to me and Ms Winn’s application in a case filed on 13 April, 2021 was listed before me for hearing and the creditor’s petition for directions.
In the meantime, on 18 May, 2021 another judge of the Federal Circuit Court sitting in Sydney, heard and determined Ms Winn’s application to set aside the bankruptcy notice upon which the petitioning creditor based its petition that is now before me. Why that application was filed in Sydney and listed before a judge there is a mystery but nonetheless, there it is.
On 18 May, 2021 Ms Winn’s application to set aside the bankruptcy notice was dismissed: Winn v Boss Lawyers Pty Ltd [2021] FCCA 1067. It is clear from the reasons for judgment in that application that Ms Winn argued that the bankruptcy notice had not been properly served on her because it was given to her by email. That argument was rejected and the Court noted that service of the bankruptcy notice by sending it to the recipient’s last known email address in accordance with reg. 16.01 of the Bankruptcy Regulations was sufficient service of the bankruptcy notice. Moreover, the judge noted that s.41 of the Bankruptcy Act made it “crystal clear that an application to set aside the Bankruptcy Notice must be made before the act of bankruptcy”. His Honour noted that an act of bankruptcy occurred on 29 December, 2020 having regard to service of the bankruptcy notice which occurred by email. His Honour came to the conclusion that there was no jurisdiction to set aside the bankruptcy notice given the late filing of the application. Even if that were not so, his Honour’s reasons make it clear that no basis for setting aside the bankruptcy notice was established in the evidence.
Before me, Ms Winn argued that the petition was invalid because s.44(1)(c) of the Bankruptcy Act had been contravened. Subsection 44(1)(c) of the Act provides that a petition shall not be presented unless the act of bankruptcy on which the petition is founded was committed within six months before the presentation of the petition. Ms Winn argues that the Court extended time for compliance with the bankruptcy notice until 18 May, 2021. To make good that argument she points out that on 6 April, 2021 her application to set aside the bankruptcy notice came before a registrar and directions were made for the hearing of that application (which subsequently took place on 18 May, 2021). On that day, the registrar ordered:
Pursuant to subsection 41(6A) of the Bankruptcy Act 1966, the time for compliance by the Applicant with the requirements of the Bankruptcy Notice Number 250042 issued on 29 June 2020 is extended up to and including 18 May, 2021.
However, given that the application to set aside the bankruptcy notice was made well after time for compliance with the bankruptcy notice had passed, the registrar had no power to make an order pursuant to s.41(6A) of the Bankruptcy Act extending time for compliance with the bankruptcy notice. That order was not valid and is of no effect.
Ms Winn’s argument that the petition was based upon an act of bankruptcy which had not yet been committed, must be rejected. The evidence establishes that there was an act of bankruptcy committed by Ms Winn within the six months before the presentation of the petition.
Finally, Ms Winn argues that the petitioning creditor did not file the affidavit required by FCC(B)R 4.04(1)(a)(i), (ii) or (iii) (usually referred to as the affidavit of search). She submits that the petition is invalidated by that failure. However, whilst Ms Winn is correct to say this rule has not been complied with. She is mistaken about the consequence.
Rule 4.04 required the petition to be accompanied by an affidavit which deposed to either that the Courts’ records had been searched and no application in relation to the bankruptcy notice had been found or an application to set aside an existing bankruptcy notice had been made and determined or an application for an order extending time for compliance with a bankruptcy notice had been made and finally decided.
I am inclined to consider that the failure to file such an affidavit is a defect to which s.306(1) of the Bankruptcy Act applies. Section 306(1) provides that proceedings under that Act are not invalidated by a formal defect or irregularity unless the Court is of the opinion that a substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of the Court.
I think the failure to file the affidavit is a formal defect or an irregularity. The affidavit is required by the rules of practice and procedure. It is not a matter required by the Act as a condition precedent to the making of an order. Thus the failure to file the affidavit is a failure to comply with a matter of procedure rather than a failure to establish something which is made essential for the making of a sequestration order.
Nothing before me indicates that there has been any prejudice to Ms Winn flowing from the petitioning creditor’s failure to comply with FCC(B)R 4.04(1). She relies merely upon the non-compliance with the rule. Indeed, had the rule been met, an affidavit of search would have revealed no proceedings, either to set aside the relevant bankruptcy notice or for an extension of time within which to comply with its terms. Her application to set aside the bankruptcy notice was made after the creditor’s petition was presented and the day before the first court date.
Moreover, the hearing of the petition was adjourned so that the application to set aside the bankruptcy notice could be heard and determined. I do not consider that any substantial injustice has been caused by the omission.
Moreover, I am able to remedy this procedural defect pursuant to FCC(B)R 1.04 which provides as follows:
(1) Unless the Court otherwise orders, these Rules apply to a proceeding in the Court to which the Bankruptcy Act applies.
(2) The other Rules of the Court apply, to the extent that they are relevant and not inconsistent with these Rules, to a proceeding in the Court to which the Bankruptcy Act applies.
This rule permits me to remedy the defect in one of two ways.
In Pei Xu v Wan Ze Property Development (Aust) Pty Ltd (in liq) [2013] FCA 419, Robertson J considered an application which ought to have been filed pursuant to the Federal Court (Bankruptcy) Rules 2005 (Cth) but which had been erroneously filed pursuant to the Federal Court Rules 2011 (Cth). Robertson J was similarly faced with a party’s procedural mistake which, pursuant to s.306(1), he did not consider could invalidate the proceedings. At [5], his Honour remedied this defect pursuant to r.1.03 of the Federal Court (Bankruptcy) Rules 2005 (Cth).
Rule 1.04 of the Bankruptcy Rules of this Court is in nearly identical terms to r.1.03 as applied by Robertson J. The differences between the sections that do exist have no substance. As such, I consider that if Robertson J had the power to order as he did, I am comparably empowered.
With that said, there is another approach taken in the authorities. In Nixon, in the matter of Nixon [2015] FCA 976 Edelman J considered at [10] that r.1.03(2)(a) of the Federal Court (Bankruptcy) Rules 2005 (Cth) allowed him recourse to r.1.34 of the Federal Court Rules 2011 (Cth), which stated “the Court may dispense with compliance with any of these Rules, either before or after the compliance arises”. Edelman J used r.1.34 to dispense with the requirement under the bankruptcy rules that an application and supporting documents for the resignation or release of a trustee be served upon the bankrupt or anyone else.
In Allen, in the matter of Allen [2020] FCA 376, Murphy J considered a similar application for release from the requirements of r.8.02 of the Federal Court (Bankruptcy) Rules 2016 (Cth). His Honour used r.1.04(1) of the Federal Court (Bankruptcy) Rules 2016 (Cth), which mirrors the bankruptcy rules of this Court, to similarly have recourse to r.1.34 of the Federal Court Rules and do away with similar procedural requirements as Edelman J did in Nixon. The approach in Nixon and Allen was followed in de Vries, in the matter of the bankrupt estate of Cunningham [2021] FCA 188 at [13] – [17].
While, at least as regards bankruptcy proceedings, the rules of this Court and the Federal Court of Australia are harmonised, there are distinctions. However, I do not think that there is any distinction which would make it inappropriate for me to follow a similar pathway as was followed in Nixon, Allen and de Vries. I note that these three matters all considered applications under s.180 of the Bankruptcy Act and sought relief from requirements of service.
This is a very different issue to that which I am considering here. One important similarity, however, is that they were all entirely procedural questions in circumstances where no prejudice would be suffered if compliance with the relevant requirement were excused.
Pursuant to FCC(B)R 1.04(2), the general Federal Circuit Court Rules apply “to the extent that they are relevant and not inconsistent with [the Bankruptcy] Rules”. On 11 June, 2021 the relevant rules of this Court were the Federal Circuit Court Rules 2001 (Cth), including r.1.06. Rule 1.06 of those rules provides that “the Court may in the interests of justice dispense with compliance, or full compliance, with any of these Rules at any time.”
I therefore consider that, pursuant to FCC(B)R 1.04 I am able to apply FCCR 1.06 to order that the requirements of FCC(B)R 4.04(1) be dispensed with. To the extent necessary I would so order, but I do not think it is necessary. It is sufficient to excuse the non-compliance under s.306(1) of the Bankruptcy Act.
No basis for the dismissal of the petition, on a summary basis or otherwise has been demonstrated. No basis is demonstrated to make the declarations sought by her. Accordingly, the application in a case filed on 13 April, 2021 by Ms Winn is dismissed.
The petitioning creditor did not seek to proceed on the creditor’s petition as part of the hearing before me. I is appropriate to set a hearing date for the petition. At the hearing of the creditor’s petition I will hear the parties as to the costs of this application.
The creditor’s petition is adjourned for hearing to 7 October, 2021.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Jarrett delivered on 14 September 2021. Associate:
Dated: 14 September 2021
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