Bryant, J.R. v Commonwealth Bank

[1995] FCA 219

IN THE FEDERAL COURT OF AUSTRALIA )
  )
NEW SOUTH WALES DISTRICT REGISTRY )    No. NP 1922   of  1994
  )
GENERAL DIVISION                 )

BETWEEN:JOSEPH RICHARD BRYANT

Applicant

AND:COMMONWEALTH BANK

Respondent

30 MARCH 1995

REASONS FOR JUDGMENT
LOCKHART J.

This is the hearing of a petition by the Commonwealth Bank of Australia to sequestrate the estate of Joseph Richard Bryant.  The petitioning creditor has proved the formalities requisite for the making of a sequestration order.  The issues on the hearing of the petition are the issues raised by Mr Bryant, the debtor, and are set out in his notice of appearance filed in the Sydney Registry on 13 December 1994.  Mr Bryant has appeared for himself in this proceeding as indeed he has in other proceedings.  It is obviously desirable that litigants have the benefit of counsel or solicitors to assist them and I have done my best, consistent with the duties of a judge to remain impartial, to be of some assistance to him in relation to his presentation of argument and of evidence. Mr Bryant has, I think, shown an awareness of the issues and a perception of the relevant facts and has conducted his case as well as could be expected of a layman.
     The first argument that is relied upon by Mr Bryant is that the service of the petitioning creditor's petition was not properly effected.  Two grounds of objection are raised.  The first is that the petition was served by a licensed commercial agent by dropping the petition near Mr Bryant, but not actually delivering it into his hands. The second is that it was served in that fashion in the precincts of the court in this building.

The facts relating to service of the petition are set out in the affidavit of Malcolm Hill of 25 August 1994, and in his oral evidence which he gave today.  Mr Hill served Mr Bryant with an official copy of the creditor's petition together with the customary documents in support of it in this building in the following circumstances.  Mr Bryant was present in court room 7A of the Supreme Court of New South Wales in this building.  He left the court room and proceeded to the lift area on level 7 of this building.  He entered the lift in the company of a male person.  Mr Hill followed them into the lift and the three men then ascended to level 10.  As they did so Mr Hill said to Mr Bryant:  "Mr Bryant is it?"  To which Mr. Bryant replied:  "Yes."  Mr Hill said:  "That is Joseph Richard Bryant, isn't it?"  Mr Bryant said:  "Yes."  Mr Hill then said:  "I have a creditor's petition and other documents here for you in the matter of yourself and the Commonwealth Bank, will you please accompany me outside to effect service."  The lift had by then reached level 10 and Mr Bryant left the lift saying to Mr Hill:  "No, I've got other business up here."  Mr Hill then said:  "Well, I will serve you here then."  And he dropped the documents on the floor outside the lift in Mr Bryant's presence.

There is some difficulty in determining the precise point at which the documents were dropped, but it would appear to be a matter of a metre or two away from the lift, though in my view this does not matter.  Mr Hill has said that, immediately after he served Mr Bryant in this fashion, he observed him turn around towards him and that Mr Bryant observed the documents then upon the floor.  Mr Hill has said he cannot say if Mr Bryant retrieved the documents as he immediately returned to the lift.

Mr Bryant appeared on the return date of the petition and has appeared thereafter at subsequent directions hearings and, as I say, appears for himself today.  Obviously he is aware of the petition.

The bankruptcy rules require that a petition be served personally by a debtor: see rule 15.  The requirements of the rules as to service of bankruptcy petitions must be complied with as has been observed in a number of cases including Re Florence ex parte Turrameta Properties Proprietary Limited (1979) 36 FLR 256 per Lockhart J at 263.

There are cases which have discussed what constitutes service upon, or delivery of documents to, a debtor personally.  It is clear that documents do not have to be put into the hands of the debtor where he refuses to accept them:  see Henry Ditford ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347; and the cases collected by Hill J in his judgment concerning Mr. Bryant relating to a challenge to a validity of a bankruptcy notice which founds the present petition, his Honour's judgment being delivered on 4 May 1994. See in particular pages 23 to 27 where his Honour dealt with service of a bankruptcy notice upon Mr. Bryant. The general principles are not different from those governing service of petitions.

In all the circumstances as related by Mr Hill, and I accept his evidence, I am satisfied that the service of the documents in the fashion that I have indicated was personal service upon Mr Bryant. 

The next objection is whether the service of the documents in the precincts of courts on level 7 of this building in some way vitiates the service.  Speaking generally it is not desirable that process is served upon persons in the precincts of a court or in this court building but there are occasions when that course is permissible.  Indeed, it is possible for the service of process within the precincts of a court to constitute contempt and the cases are replete with references to this but, it all depends upon the circumstances of the case surrounding the service of the process.

The cases are conveniently collected in a comprehensive judgment of Yeldham J of the Supreme Court of New South Wales in Baldry v Jackson (1976) 1 NSWLR 19 which was affirmed on appeal by the Court of Appeal of New South Wales at (1976) 2 NSWLR 415, though the point as to service with which I am dealing was not a point raised on the appeal. See also Re Tole (1933) 50 Weekly Notes NSW 216. 

In my opinion the service of the documents as outlined in Mr Hill's evidence, including his evidence as to experiencing prior difficulties with service of documents upon Mr Bryant, was not service that was otherwise than in compliance with the rules by virtue of being served in the precincts of courts on level 7 of this building.  It was in my view proper service.   I therefore find no substance in that ground of objection by Mr Bryant.

A third ground of objection taken by Mr. Bryant in his notice of intention to appear, though not mentioned in argument is that the creditor's petition was said to fail to include the proper address for service of the solicitor for the petitioning creditor.  That is based upon some evidence which at one stage Mr Bryant sought to rely, that the solicitors for the petitioning creditor may have changed their address at or about the time of the presentation of the petition. There is no evidence which would support a finding that the address stated in the petition of the solicitors for the petitioning creditor, namely first floor, 140 Phillip Street, Sydney, New South Wales, was not the proper address for service of process upon the petitioning creditor.  Even if that evidence had been led and had established that point, it would have been in my opinion an immaterial defect.

The next argument of Mr Bryant is that he says evidence establishes that he is solvent.  Solvency is the ability of a person to pay his or her debts as and when they fall due and again, the cases are replete with what this means and I need not cite them.  It is, of course, a distinct concept in the law of insolvency, from their being a surplus of assets over liabilities.  Sometimes, the two are equated, though often not. 

When I dealt with an earlier application by Mr Bryant to adjourn the petition, I set out in some detail the evidence that is before the Court today dealing with Mr Bryant's financial position, which included evidence of the financial position of corporations and trusts with which he is associated.  The evidence before the court on the hearing of the petition is not evidence that could conceivably satisfy a court that Mr Bryant is solvent.

The next argument that is raised by Mr Bryant is that he says the petition has been presented and prosecuted maliciously.  He relies upon the fact (there is no evidence of it, but he made the assertion in Court) that at some stage in the late 1980s when interest rates were high in the community, he made some criticism of banks in this country in some newspaper or magazine. He says that in some way this influenced the presentation of this petition and the bank's prosecution of him to recover its debt.

He relies also on a letter from Coopers & Lybrand, which is exhibit 6, who would have been retained by the petitioning creditor for certain purposes concerning Mr Bryant and his corporations.  He relies upon statements in that letter to the effect that:

"42.The bank may also wish to take such action as a precedent to demonstrate to other possibly recalcitrant debtors that such actions will be taken when necessary.

43.Finally, I believe that the bank should immediately enforce realisation of all real property, security and commence proceedings to bankrupt Mr Bryant and any other guarantors to the group's debt."

He relies also on a note at the last page of the letter, in which the writer or some other person within Coopers & Lybrand, or possibly within the bank - it is hard to tell - recommended the "bankruptcy of the guarantor"; that is Mr. Bryant.

I have considered the material which is relied upon to found the allegation of malice.  In my opinion, there is no substance in it. 

Mr Bryant asks the court to go behind the judgment debt, which is the foundation of the present proceeding.  The petitioning creditor relies upon the failure of Mr Bryant to comply with the requirements of a bankruptcy notice as constituting the relevant act of bankruptcy.  The bankruptcy notice upon which the petition is based is a notice which claims from Mr Bryant $2,427,329.34, being the amount due under a final judgment obtained against Mr Bryant in the Supreme Court of New South Wales on 27 October 1993.

That notice was the subject of challenges expressed on a variety of grounds before another judge of this court, Hill J, who gave judgment as I indicated earlier on 4 May 1994, on a number of points taken by Mr Bryant unsuccessfully before his Honour for the purpose of challenging the validity of the notice and service of it upon him.  His Honour's judgment was the subject of an appeal to a Full Court of this court, which dismissed the appeal with costs on 9 November 1994, and I have read both judgments.

The judgment upon which the bankruptcy notice was based was a judgment of a judge of the Supreme Court of New South Wales, Levine J, and this decision is the subject of an appeal presently on foot brought by Mr Bryant in the Court of Appeal of New South Wales. I am informed by him that it is an appeal which may well be expedited before the Court of Appeal.

The Full Court's judgment in this court, dismissing the appeal from Hill J, is also the subject of a motion for special leave to appeal before the High Court, which is yet to come on for hearing by the High Court. 

Mr Bryant's supplementary notice of appeal in the Court of Appeal of New South Wales, exhibit 1 in these proceedings, is a document which I have perused.  A large number of grounds of appeal are relied upon.  One of the matters upon which Mr Bryant places reliance is that he says he was denied natural justice at various points in proceedings before the Supreme Court before Levine J and indeed, before other judges of the Supreme Court and a master of the Supreme Court at other stages of the proceeding in that court.

He relies upon two things in particular. Firstly, certain observations which appear to have fallen from a member of this court in hearing argument on the appeal from Hill J's decision, as reported at pages 47 and 48 of the transcript (which is exhibit 4). And secondly, certain amendments which he says should be made to the transcript of proceedings before a master and other judges of the Supreme Court at various stages in the proceedings there, which are part of exhibit 2. 

I do not regard the observations from the judge of this court in argument on 21 September 1994 as necessarily conveying a view about anything in relation to any prospect of success, on any points relating to natural justice or otherwise.  They were simply observations made in the to and fro of argument, which may or may not prove to have foundation when the appeal is considered by the only court that can really consider them, that is, the Court of Appeal of the Supreme Court of New South Wales.

There is no material before the Court which, in my opinion, justifies this Court in going behind the judgment of the Supreme Court of New South Wales, on which the relevant bankruptcy notice and later petition were based.

Even if I were to go behind the judgment, I would not be disposed on the material before the Court today to find fault with the judgment of the Supreme Court on which the bankruptcy notice is based.  Hill J made an observation in the course of his judgment of 4 May 1994 at page 19 where he said:

Whilst there is some embarrassment in this court commenting on the prospect of the success of an appeal in another court it must be said that the prospects of success of Mr Bryant in the appeal are very slight.

I prefer to express no view on a matter of that kind but nothing has been put before me in evidence or argument which would lead me to take a view contrary to that of Hill J.

No ground has been made out to go behind the judgment or to suggest that the debt is not a debt that is due to the petitioning creditor. 

I am asked by Mr Bryant to adjourn the petition, pending the resolution of the appeal to the Court of Appeal of New South Wales from Levine J's judgment, and pending further the determination of the motion for special leave to appeal to the High Court from the Full Court of this court's judgment and, if that is successful, then pending the determination of that appeal to the High Court.

Again there are many cases that govern the exercise of the court's discretion in these circumstances.  There are cases where it is appropriate for petitions to be adjourned, pending the hearing of appeals which are brought to challenge the validity of the judgments which are the foundation of the bankruptcy proceedings.  This is not such a case in my opinion.  I repeat what I have said in relation to why I would not go behind the judgment, and I am not persuaded that it is an appropriate course to take to adjourn the hearing of this petition.

Accordingly I find that none of the grounds of opposition has been established.  I am satisfied that the debtor committed the act of bankruptcy alleged in the petition.  I am satisfied with the proof of the other matters of which section 52(1) of the Act requires proof.  I note that John Howard Mann, a registered trustee, has consented to act as the trustee of the estate of the debtor.  I make a sequestration order against the estate of the debtor. I order the costs including reserved costs, if any, be taxed and paid according to the Act.

The Court orders that all proceedings under the sequestration order be stayed up to and including 19 April 1995.

I certify that this and the preceding eleven (11) pages are a true copy of the reasons for judgment herein of the Honourable Justice Lockhart.

Associate          
  Dated:  30 March   1995

Applicant appeared in person

Counsel for the Respondent   :        Mr. W. H. Nicholas, QC

Solicitors for the Respondent     :        Shaw McDonald

Date of Hearing             :        30 March 1995

Date of Judgment            :        30 March 1995