Camtech Video Surveillance Pty Ltd v Fernando - [2003] FMCA 182

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CAMTECH VIDEO SURVEILLANCE PTY LTD v FERNANDO

[2003] FMCA 182

BANKRUPTCY – Service of Bankruptcy Notice – debtor denies service – sequestration order.

Bankruptcy Act 1966, s.52

Federal Court Rules 2001, O.62
Federal Magistrate Court Rules 2001, Rule 21.14

Applicant:

CAMTECH VIDEO SURVEILLANCE PTY LTD (ACN 080 823 356)

Respondent:

JEROME FERNANDO
T/A ORBVISION-ONLINE B1572764A

File No:

MZ 1277 of 2002

Delivered on:

12 May 2003

Delivered at:

Melbourne

Hearing date:

12 May 2003

Judgment of:

McInnis FM

REPRESENTATION

Counsel for the Applicant:

Mr T. Ellis

Solicitors for the Applicant:

Jones King Lawyers

Counsel for the Respondent:

Mr S. Isaiah

Solicitors for the Respondent:

Hill Legal

ORDERS

A Sequestration Order be made against the estate of Jerome Fernando.
The Applicant creditor’s costs be taxed in accordance with the Federal Court Rules and paid from the estate of the Respondent debtor in accordance with the Bankruptcy Act 1966.
The Respondent shall pay the costs of the Applicant, including reserved costs, in accordance with the Federal Court Scale to be taxed pursuant to Order 62 of the Federal Court Rules in default of agreement.

THE COURT CERTIFIES:

Pursuant to Rule 21.15 of the Federal Magistrates Court Rules 2001 that it was reasonable to employ an advocate to appear for the Applicant in the proceedings.

The Court notes that the date of the act of bankruptcy is 23 September 2002.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MZ1277 of 2002

CAMTECH VIDEO SURVEILLANCE PTY LTD
(ACN 080 823 356)

Applicant

And

JEROME FERNANDO
T/AS ORBVISION-ONLINE B15727764A

Respondent

REASONS FOR JUDGMENT

(Revised from Transcript)

This is an application by way of a creditor's petition filed on

17 December 2002 by Camtech Video Surveillance Pty Ltd (the Creditor). The creditor's petition seeks orders by the Creditor arising from what is said to be a judgment debt of a sum of $10,112.39, owing pursuant to an order made by the Magistrates Court of Victoria at Melbourne on 1 May 2002. The creditor's petition is directed to Jerome Fernando (the Respondent) trading as Orbvision-Online. The address of the business from which the Respondent debtor is said to have traded is 173 Springvale Road, Springvale (“the premises”).
The matter proceeded this day upon a fairly narrow issue of whether or not the bankruptcy notice relied upon as the foundation stone for the creditor's petition was properly served or indeed served at all on the Respondent debtor. The bankruptcy notice is attached to the affidavit of a process server, Maxwell McDonald, sworn 3 September 2002.
In his affidavit Mr McDonald deposes that:
“1.On the day of 2-9-2002 at 5.15 o'clock pm, I served JEROME FERNANDO trading as ORBVISION-ONLINE (“Respondent”) with a copy of the bankruptcy notice signed by an officer authorised by the Official Receiver issued on the application of CAMTECH VIDEO SURVEILLANCE PTY LTD ACN 080 823 356 (“Bankruptcy Notice”) by delivering it to the Respondent personally at 173 Springvale Road Springvale.”
The deponent goes on to say:
“2.I identified the person I served by the following conversation:
I asked "Are you JEROME FERNANDO trading as ORBVISION-ONLINE B1572764A?"
The Respondent replied, “Yes I am.”
I then showed the Respondent the Bankruptcy Notice and asked "Are you the person named in this bankruptcy notice?”
The Respondent replied “Yes, I am.”
I then handed the respondent the Bankruptcy Notice.”
The deponent to the affidavit then annexes to that affidavit what is said to be a true copy of the bankruptcy notice served upon the Respondent as alleged.
The Creditor has further relied upon an affidavit of Mr McDonald sworn 11 April 2003. In that affidavit Mr McDonald confirms the earlier affidavit to which I have referred and states:
“2.Upon entering I was met in the foyer area by a male person 45-50 years of age and I said, ‘Jerome FERNANDO” He replied, "No, he is out the back, I will get him.
3.A male person then entered the foyer area where I said “Jerome FERNANDO’ TO which he replied, "Yes.
4.I have some documents for you and I handed him the Bankruptcy Notice numbered B1572764a.
5.I said, Are you the person mentioned in the Bankruptcy Notice, to which he replied, “Yes”

In paragraph 6 of the further affidavit Mr McDonald states:
“6.The respondent is described as dark skinned, of small build, dark hair, and small in height.”
He says in the affidavit:
“7.I then left the premises.”
Mr McDonald gave evidence and was cross-examined. During the course of his evidence-in-chief and cross-examination he adhered to the contents of the affidavit and appeared to be adamant that he had served the document, that is, the bankruptcy notice, in the manner described in the affidavits. He was particularly taken to paragraph 6 of the second affidavit and indeed a great deal of criticism was made of that part of the affidavit where he deposed that:
“The respondent is described as dark skinned, of small build, dark hair, and small in height.”
Despite the way in which that sentence is phrased Mr McDonald in evidence indicated that that was meant to represent his own description of the Respondent, rather than a description given to him by other parties. During the course of his evidence-in-chief Mr McDonald was asked whether or not he was able to identify the person served in court. He identified the Respondent as being the person upon whom he had served the bankruptcy notice referred to in his affidavits.
The Respondent filed a notice to oppose on 4 April 2003, which raises quite properly the issue of whether or not the bankruptcy notice was served. The opposition to the creditor's petition in that notice of intention to oppose the application contains the following grounds:
1.The Bankruptcy Notice was not served on the respondent.
2.The Bankruptcy Notice did not come to the respondent's attention at any time prior to the service of the Creditor's Petition on him.
In support of that notice of intention to oppose the application the Respondent has relied upon two affidavits. The first affidavit is an affidavit sworn by the Respondent on 2 April 2003. In that affidavit the Respondent refers to the affidavit of Maxwell McDonald sworn

2 September 2002, and I interpolate there the witness would mean 3 September 2002, and otherwise refers to the alleged service in the following terms. He states:
“3. In March 2002 I vacated the premises situated at 173 Springvale Road Springvale (“the premises”) when my lease expired.
4.   The business has not been trading since March 2002.
5.   Since I vacated the premises the new tenant and owner of the business, Eyewatch Professional Security, has been collecting my mail and I have been back to the premises approximately once a month to collect my mail and any faxes.
6.   On Monday, 2 September 2002 at 5.15 pm, the date of service, to the best of my knowledge I was on an installation job or service call at another location.
7.   Contrary to what is alleged I did not receive nor have I ever been served with a Bankruptcy Notice in this proceeding. I was not aware that a Bankruptcy Notice had been issued against me until on or about 3 February 2003”
The Respondent has claimed that he became aware of the alleged service of the bankruptcy notice only after he'd been served with the creditor's petition. The service of the creditor's petition is the subject of an affidavit by another process server, namely Mr Andrew Walker, who has sworn an affidavit on 4 February 2003 deposing that he had served the creditor's petition on 1 February 2003.
The Respondent gave evidence and was cross-examined. During the course of his evidence-in-chief he tendered and relied upon a lease of real estate in relation to the premises. It should be noted that the lease refers to the tenant as being SMA Australia Pty Ltd ACN 094 129 398. It is further noted from the lease, which became exhibit R1, that it was duly executed by the parties on 23 March 2001. The lease has been signed by the Respondent, who is said to be sole director and sole company secretary of the company SMA Australia Pty Ltd. It is said by the Respondent that upon the expiration of that lease period he had in fact vacated the premises.
The Respondent further relies upon tax invoices where he seeks to demonstrate that in fact rental payable on the premises was paid by him up to and including 16 March 2002 and as I understand his evidence no further rental payments were then made. During the course of his evidence-in-chief the Respondent gave further evidence in relation to his whereabouts on 2 September 2002. In the affidavit he had indicated that:
“On Monday, 2 September 2002 at 5.15 pm to the best of my knowledge I was on an installation job or service call at another location.”
In the affidavit sworn 2 April 2003 he does not refer to any details as to the precise duties he was then performing. In evidence-in-chief however he produced documents which appear to be copy documents in a folder which are referred to as ‘job details’. Those job details refer to 2 September 2002 and it is sufficient for the purpose of this judgment to indicate that reference is made to client details at premises at Bunyip in the State of Victoria.
It is said in the evidence on oath by the Respondent that on that day he had attended Bunyip and had been there most of the day. When cross-examined in relation to his departure the Respondent had indicated that he thought the departure time would have been around 4.30 pm.

He had indicated clearly in his evidence that on that day he would have been in attendance at the Bunyip premises for all of the day and then returned to Melbourne. He indicated that he had not attended the premises on that day.
When cross-examined about the time it would take for the Respondent to travel back and forth to Bunyip he indicated initially in his evidence that it would take approximately one and a half hours to travel from Bunyip to Springvale at the relevant time of day. It is important to bear in mind that the job that alleged to have been performed at Bunyip is a job which finished at around 4.30 pm. The time when it is alleged the service occurred of the bankruptcy notice is 5.15 pm. In his evidence the Respondent said, “I'd say about 4.30 pm”. He was asked whether it would be earlier than that, say 3.30 pm, and denied it. He was then asked whether it would be later than that and he said it would not be 5.30 pm because the premises he was working at “closed at 5 pm”.
When I asked about the duration of the journey and the distance travelled he indicated that it was a distance of approximately 70 to 80 kilometres. Initially, he said that it was probably about a one and a half hour journey. When further questioned about the matter by both Counsel for the Creditor and by the court he concluded that it would take “at least an hour”.
The Respondent then further relied upon the evidence and affidavit of the witness, Wignarajah Muraleetharan, who is also known as Wignarajah Murali. Mr Murali gave evidence on affirmation and adopted the affidavit sworn by him on 2 April 2003. In that affidavit he deposes that he is the manager and director of the business Eyewatch Professional Security that trades at the premises. He goes on to say in his affidavit:
“2.I have been trading at the premises for a continuous period since 29th April 2002. Jerome Fernando, the Respondent in this proceeding, does not trade out of the premises and has not done so since I took possession on 29th April 2002.
3.To the best of my knowledge Mr Fernando vacated the premises sometime in March 2002
4.Since I took possession of the premises members of the public have made inquiries regarding the Respondent and his business and these have been directed to me or another member of my staff. At all times I and my staff have informed them that the Respondent no longer conducts business from the premises.”
He goes on in the affidavit to say:
“5.The Respondent’s solicitors advise me that a Bankruptcy Notice was served on the Respondent at the premises on

2nd September 2002 at 5.15pm. To the best of my knowledge no one attended the premises on the 2nd September 2002 or any other date to serve a Bankruptcy Notice or any other legal process on behalf of the Respondent.
6.In any inquiry regarding the Respondent’s whereabouts had occurred on 2ndSeptember 2002 at 5.15pm I would have informed the person that the Respondent is no longer at the premises and I have no knowledge of his whereabouts.”
In evidence before this court Mr Murali adopted the affidavit to which I have referred but added that upon becoming aware of the date 2 September 2002 being significant, just two or three days before he swore his affidavit on 2 April 2003, he checked a diary which he had kept and after consulting that diary was able to inform himself of his whereabouts on 2 September 2002. He indicated that it was routine and common practice at the premises that he conducted for him to be present at those premises later in the evening and certainly at or around 5 pm. He indicated that the business conducted what he referred to as telemarketing from close of business at the premises until approximately 8 pm each day and that this was a routine followed by the business at the relevant time and my impression was a routine followed by the business up to the present time.
During the course of his evidence Mr Murali was adamant that he had no memory of any person entering the premises indicating that that person wished to serve a bankruptcy notice upon the Respondent.

He confirmed that he had known the Respondent for five or six years and/or somewhat longer. I should add that in his evidence the Respondent indicated that he had known Mr Murali for something in the order of 10 years.
In any event Mr Murali, in his evidence, confirmed that he had known the Respondent for that period of time and further confirmed in his evidence that in fact the Respondent continues to undertake installation work for and on behalf of Mr Murali's business, though that would only involve one or two installations per month. He further stated that the equipment used for that work would be supplied by the supplier direct to the Respondent.
In relation to that issue the Respondent, on my recollection of the evidence, stated that he would be supplied with kits or equipment for the purpose of installation for and on behalf of Mr Murali's business and that upon being supplied with a number of those kits would use the kits in stock and would attend the premises to restock from time to time. At one point he appeared to give evidence that this attendance might occur on a weekly basis but then suggested during the course of further evidence in re-examination that it might occur once or twice a month. In any event he gave clear evidence that there was at least that ongoing business arrangement between the parties.
During the course of his evidence Mr Murali was asked whether or not persons would sometimes attend the premises asking about the Respondent, that is, inquiring as to his whereabouts. He agreed that that would occur. He agreed further that when it did occur he would say, “We don't know where he is. He doesn't trade out of these premises any more”. To that extent his evidence before this court was to some extent consistent with paragraph 6 of the affidavit. It is also true to say that if persons were told by Mr Murali that he does not know the whereabouts of the Respondent that would simply be untrue. It seems to me clear from the material that Mr Murali would know of the whereabouts of the Respondent and, if he chose to do so, would be able to pass on that information to people making relevant inquiries.
In any event not a great deal perhaps turns on that, save that Mr Murali was prepared to indicate that he would not be frank with those persons asking about the whereabouts of the person he had known for some number of years, namely the Respondent.
During the course of the evidence of Mr Murali he further confirmed that there was a procedure which was followed at the premises whereby the door was locked, and that if persons entering the premises wanted to attract the attention of the occupants to the point where entry was permitted then they would have to ring a bell and then the door, which was locked, would be opened by a staff member. That evidence is not referred to in any of the affidavit material filed with the court.
The Creditor has further relied upon the usual affidavits in support of a creditor's petition but further, in relation to the issue of the denial of service of the bankruptcy notice, has relied upon two further affidavits, the deponent to which has not been required for the purpose of cross-examination. The two affidavits that I refer to are affidavits of Ece Mustafa-Ay, sworn 6 May 2003 and a further affidavit sworn by the same deponent on 9 May 2003.
In the first of those affidavits the deponent refers to the fact that she is a solicitor employed by the Creditor's solicitors, Jones King Lawyers. Reference is made in the affidavit to “solicitors for the plaintiff” which I take to be solicitors for the Creditor. Further, in her affidavit the deponent, after referring to the usual matters concerning the bankruptcy notice and judgment, makes reference to other matters.
I should add for the sake of completeness that in this matter, there was a dispute concerning the admissibility of parts of the first affidavit of the deponent. During the course of argument I heard objections from counsel for the Respondent to paragraphs 4, 5, 6, 7, 8 and 10 of the first affidavit. I upheld substantially the objections to those parts of the affidavit, save that certain sentences in those paragraphs were permitted to remain as being both relevant and not in my view subject to any objection as to admissibility. Those parts which remained included the following. The first part in paragraph 4 is that:
4.On 13 February 2003 at approximately 9:20am the Respondent telephoned Jones King Lawyers.”
In the same paragraph the following passage appears:
“At no stage did the Respondent dispute the service of the Bankruptcy Notice.”
Paragraph 5 reference is made to:
“On 13 February 2003 at approximately 15:55pm I forwarded a facsimile to the Respondent.”
The rest of that paragraph is deleted. In paragraph 6 I permitted the deponent to rely upon the following:
“On 18 February 2003 at approximately 12:36pm I telephoned the Respondent regarding the facsimile.”
In the same paragraph the deponents states in the remaining sentence that was allowed:
“At no stage was there any dispute raised regarding the service of the Bankruptcy Notice.”
In relation to the issue of when the dispute was to be raised concerning the service or otherwise of the bankruptcy notice the Respondent indicated that when this matter was first listed before the court and he attended an adjournment was requested. It seems that the adjournment was requested at least on two grounds: first to endeavour to negotiate resolution, and secondly, in order for the Respondent to seek and obtain legal advice. As I understand it that first hearing occurred on 25 February 2003.
It seems clear that on earlier dates when there had been conversations the issue of a challenge to service of the bankruptcy notice was not raised. For the present purposes, given that the Respondent was not necessarily familiar with due process and perhaps not familiar with the requirement of service of a bankruptcy notice that issue of service having not been raised at the first opportunity with the court is not a matter upon which I should place in my view a great deal of weight.

A further affidavit, as I indicated, by Ms Mustafa-Ay sworn 9 May 2003 relevantly exhibits two business name extracts. The first is a business name extract for Orbvision-Online. The second is a business extract for Eyewatch Professional Security. During the course of his evidence the Respondent had indicated that he had in fact conducted business under the business name of Orbvision-Online. It would appear that during the course of his evidence the reality of business ownership appears to be that it was conducted in the corporate name of SMA Australia Pty Ltd.
As I understand the evidence of the Respondent that company operated two businesses, effectively, one relating to cameras and the other in relation to installation of security equipment. The first, relating to the cameras is the business name of Orbvision-Online. The second business name is Online-Protek which undertakes installation work. It may be that the role of each of those business names is not clear, but for the present purposes not a great deal turns upon that, save to say that the business name extract referred to in the affidavit of the deponent, Ms Mustafa-Ay, clearly indicates that Orbvision-Online, at least as at 9 May 2003 when the business name search was conducted or generated it appears to be a business name which was then registered in the name of the Respondent and shows as the place of business the premises.
The other business name search to which reference is made relates to Eyewatch Professional Security. As at the date of that search, namely 9 May 2003 that business had, as its principle place of business, an address other than the premises. It was clear, therefore, that there was some dispute about the chronology and some dispute about whether or not the court could rely upon the evidence per se of the Respondent and his witness as to whether or not the Respondent did cease trading at that business address as sworn in the affidavits.
In support of the Respondent's contention that he had not traded at those premises from the date he referred to, that is, since March 2002, he relied upon the lease to which I have referred. He further relied upon the affidavit evidence of his friend and business associate,

Mr Murali, and Mr Murali also relied upon and tendered a lease showing the lease arrangement for his business. For the present purposes, it is not necessary for me to resolve that issue with a great deal of precision, other than to say that notwithstanding the extracts from the business name searches I am satisfied on the basis of the lease documents and the tax invoices that the Respondent sometime from March 2002 ceased to conduct business at the premises.
The matter, however, does not end there because it is clear to me that at the very least, having regard to the ongoing arrangement between

Mr Murali and the Respondent that there are occasions since that date in March 2002 when the Respondent would attend the premises.

It does not seem to be contradicted that at the very least he would attend those premises for the purpose of collecting correspondence.

I also conclude and find that from time to time the Respondent, in accordance with his evidence, would attend the premises for the purpose of collecting equipment. I do not accept the evidence of

Mr Murali in that regard. In my view, it is more likely than not that having regard to the ongoing nature of the installation business performed by the Respondent on behalf of Mr Murali, whether it be a high volume or low volume business that the Respondent's evidence is correct when he states from time to time he would attend the to collect equipment.
Hence I am satisfied and find that on occasions the Respondent would attend the premises for the purpose of either collecting correspondence or items of equipment. That leaves then the issue of whether or not he was in attendance on the day where Mr McDonald says in his affidavit he served the bankruptcy notice. That requires me to make some assessment of the evidence of all witnesses, but particularly the evidence of Mr McDonald.
In my view Mr McDonald presented as a straightforward and honest witness. He gave an account of serving the appropriate document in a manner which appeared to me to be subject to challenge, but a challenge which he withstood. Accordingly it seems to me that on the affidavit evidence and the oral evidence of that witness it is difficult to draw a conclusion other than a conclusion that he in fact served the bankruptcy notice upon the Respondent, who he identified in the manner described in the affidavits and in court as being the Respondent.
Whilst I note that the evidence given by the Respondent denies service of the bankruptcy notice and to some extent is corroborated by the evidence of Mr Murali, I am prepared to find in the circumstances that whilst Mr Murali may not have a recollection of a bankruptcy notice being served he was not able to eliminate the possibility that a person may have attended seeking the Respondent and that a person other than Mr Murali may have indicated to the process server that the Respondent was present and the Respondent attended in the manner described by the process server.
I do not accept that the evidence of Mr Murali necessarily leads one to the conclusion that service did not occur in the manner described at 5.15 pm on 2 September 2002. Further it should be noted that if indeed the Respondent was in Bunyip and not in Springvale at or about the time of service then that matter could have been and should have been the subject of corroborative evidence from the person in Bunyip identified by both name and address in the material tendered and relied upon in this court. Further records could have been produced, indeed, to support Mr Murali's view of the chronology of events which he only recalls some two days prior to swearing his affidavit. He deposed to keeping a diary. The diary was not produced, nor was evidence given as to its whereabouts.
To that extent, I am less inclined to rely upon the evidence of either

Mr Murali or the Respondent to the extent that it contradicts the evidence of Mr McDonald. I should further add that even on the evidence of the Respondent in relation to the Bunyip attendance it would be possible that he would have been able to attend Bunyip on the day that he is alleged to have attended and still be able to attend and be present at Springvale on the day and time when it is said that the bankruptcy notice was served.
Weighing up all the evidence as I am required to do it is my view that in the present case the preferred evidence, for the reasons I have given, is the evidence of the process server. Accordingly I find that the bankruptcy notice in question was served upon the Respondent on

2 September 2002 at 5.15 pm. That being so the creditor's petition founded upon an act of bankruptcy, namely the non compliance with the bankruptcy notice so served, in the absence of there being any other objections to the formalities otherwise required by the Bankruptcy Act and in particular s.52, and the Creditor relying upon the further updated affidavits of searches and indebtedness which I granted leave for the Creditor to rely upon when this matter commenced this day and the Creditor otherwise relying upon the affidavits filed earlier,

I am satisfied as to service and otherwise satisfied as to those other matters I am required to be satisfied about in relation to a creditor's petition. As I indicated, particularly those matters required of a Creditor pursuant to s.52.
It follows therefore that I should, for the reasons stated, make a sequestration order based upon the creditor's petition. I will hear counsel in relation to the precise form of the orders sought.

I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of McInnis FM

Associate:

Date: 12 May 2003