Capital Finance Australia Ltd v Nathan - [2005] FMCA 1974

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CAPITAL FINANCE AUSTRALIA LTD v NATHAN

[2005] FMCA 1974

BANKRUPTCY – Service – findings of fact on service.

Bankruptcy Regulations 1966, reg16.01(1)(a)

Applicant:

CAPITAL FINANCE AUSTRALIA LTD

Respondent:

KAILAI NATHAN

File Number:

MLG 899 of 2005

Judgment of:

Riethmuller FM

Hearing date:

8 December 2005

Date of Last Submission:

8 December 2005

Delivered at:

Melbourne

Delivered on:

16 December 2005

REPRESENTATION

Counsel for the Applicant:

Mr Robinson

Solicitors for the Applicant:

Cyngler Kaye Levy

Counsel for the Respondent:

In person

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
MELBOURNE

MLG 899 of 2005

CAPITAL FINANCE AUSTRALIA PTY LTD

Applicant

And

KAILAI NATHAN

Respondent

REASONS FOR JUDGMENT

This is an application for a sequestration order by the applicant against the respondent. There are a number of issues that arise as between the parties. However, the first of those issues was whether or not the applicant had served the respondent with the bankruptcy notice. As that was an issue that could be dealt with discretely I have heard the evidence on that preliminary issue and at the request of the parties make findings on that issue before proceeding to hear the balance of the matter, if that be necessary, having regard to the terms of the judgment on the preliminary issue.
The substance of the dispute with respect to the service of the bankruptcy notice is that the respondent says that he received a bankruptcy notice served by post under regulation 16.01(1)(a) of the Bankruptcy Regulations under cover of a letter from the solicitors for the applicant. However, he says that the notice that he received was bankruptcy notice number VN1035 of 2005. That was not in fact the bankruptcy notice issued directed to the respondent, Mr Nathan. The bankruptcy notice issued and directed to him was bankruptcy notice number VN1034 of 2005.
The bankruptcy notice VN1035 of 2005 was not available to be tendered by either party on the first return date. The respondent said from the bar table that he had received it under cover of the letter from the applicant's solicitors but that he had provided it together with other documents to another solicitor who is unnamed and then the Law Institute of Victoria and had not received back the bankruptcy notice VN1035 of 2005 that he says was served upon him. However, from the bar table he indicated who he understood to be the parties to bankruptcy notice VN1035, or the persons named in it.
As a result my associate requested a copy of the notice from the Official Receiver so as to allow the matter to proceed expeditiously (and did so with the consent of the parties). That copy was tendered by consent and it appears from the face of the document that bankruptcy notice VN1035 of 2005 was a notice directed to a person, Glen Davis, with an address in Melbourne and issued by a creditor, namely the Macquarie Bank Ltd. The details of that notice match with the statements from the bar table by the respondent.
As a consequence witnesses were called.
There was evidence from the articled clerk to the solicitor for the applicant. She gave evidence that she was an articled clerk in the firm and undertook the filing work. It was this articled clerk who had prepared the bankruptcy notice VN1034 of 2005. She had attended upon the Official Receiver to have the notice formally issued and she had prepared the letter and affidavits: the letter for service and the affidavits of service. The letter and affidavits however were signed and sworn respectively by the solicitor handling the matter.
The articled clerk explained that on preparing the notice when attending at the official receiver she was allowed entry to the offices, it is a secure office, and attended at the counter. She said that at the time there was no-one else at the counter being served. She obtained the document back and it was, in her view, the document that was forwarded to the respondent.
She looked at the face of both VN1034 and a copy of VN1035 and said that they had a different appearance despite being the same form as they are clearly in different size and style of fonts on the page. It was apparent to me from viewing the two documents that whilst they may be similar to the untrained eye they are not clearly produced by the same person and are with different fonts and style such as to be noticeably different.
The articled clerk gave evidence that the bankruptcy notice number VN1035 of 2005 that appears in the affidavits was a typographical error on her part which was not noticed or altered by her principal before he swore the affidavit.
During cross‑examination she outlined that she had only worked on around three bankruptcy notices in her time working at the firm and that she was the person who puts mail in the red letter box, which included this letter, at the end of the day for sending out to the persons to whom it is addressed. She could not conceive of how it could be that bankruptcy notice VN1035 could have been sent to Mr Nathan as she did not obtain more than one notice at the counter and she was the only person at the counter being served at the relevant time. The articled clerk appeared to me to present as a forthright and honest witness and it is a matter about which I accept her evidence.
The solicitor for the applicant was also called to give evidence. His evidence was largely in accordance with that of the articled clerk. He stated that he had attempted to have arrangements in place for personal service which were unsuccessful and that service was arranged by ordinary post. He says that he placed the notice in the envelope and gave it to the articled clerk to post. There is a letter stating that the notice was enclosed, which is annexed to an affidavit in evidence, and a letter dated 29 June 2005 that clearly refers to the correct bankruptcy notice by number, namely VN1034 of 2005.
Importantly, he gave evidence that he does not act for either of the persons or entities named in bankruptcy notice VN1035 of 2005 and has never acted for those persons. He says that he had not seen the other notice until he saw it in court. Similarly, he is unable to conceive of how it could be that the respondent could receive bankruptcy notice VN1035 in the mail believing that the issue arises only from the typographical error in the affidavit. I found the solicitor to be an apparently honest and forthright witness. There was nothing about the nature of his evidence that would lead me to doubt his credibility.
The debtor gave evidence, stating that he had received the notice and that he saw the names on the face of it being Glen Davis and Macquarie Bank. He says however, that he did nothing about the fact that he received what he says was clearly the wrong notice because he says he had already been served with a previous notice and committed an act of bankruptcy. He says that the notice was included in a folder of documents given to the Law Institute and that when the folder was returned, this particular document was missing. As such, the notice that he says he received was not able to be produced by him or tendered for the court.
The debtor said that at the time he received the notice he did speak to his son about it but that he certainly did nothing about notifying either Mr Davis, whom had he received bankruptcy notice 1034, would also have been a debtor apparently sent a bankruptcy notice but not having received the same and therefore at risk of the same difficulty that Mr Nathan faces now; nor did he advise the official receiver who I am certain would have been concerned to become aware of the wrong notice being sent to a potential debtor.
In re-examination he said that the Official Receiver would not give access to the bankruptcy notice. At this stage I note that the articled clerk also gave evidence that when she attempted to obtain a copy of bankruptcy notice VN1035 of 2005 directly from the official receiver she was unable to do as she was not from the firm of solicitors who issued that particular notice.
Mr Nathan, the debtor's son, also gave evidence. He is a 17‑year‑old young man who says that he recalls the bankruptcy notice 1035 being enclosed in the letter and it referred to Glen Davis and Macquarie Bank Ltd. He also said that he recalled that it was Mendelsons solicitors who it appears are the solicitors named in that notice. In his cross‑examination or questioning he stated that he recalled the covering letter also referred to VN1035 of 2005.
Having observed Mr Nathan's son give evidence I have some doubts as to the credibility of his evidence. I note that the letters annexed only refer to 1034. Having regard to his demeanour in the witness box I do not find that his evidence assists me in the matter.
I have considered the potential conundrum of the factual versions of this case put forward, that is, that it seems there is no reasonable basis upon which it could be expected that the solicitors would have had possession of bankruptcy notice VN1035 to be able to forward it to Mr Nathan. Similarly, it seems odd that Mr Nathan would have done nothing about having received the wrong bankruptcy notice if he did in fact receive it under the cover of the letter from the solicitors.
It seems unlikely that Mr Nathan would have been aware of the names of the persons referred to in bankruptcy notice VN1035 of 2005 had he not earlier received the document as the only other way to ascertain the details of the parties would be to either know one of them, and there is no evidence of any connection, or to have undertaken some search either with one of the private search companies that deal with these types of searches or through the Official Receiver. The evidence of the articled clerk that she was unable to obtain a copy of the notice indicates that it is information that would not be apparently readily available.
However, it appears to me that it is possible that Mr Nathan could have found out either by way of a search or telephone call to an officer of the official receiver the details of the persons named in the other notice. I do not see how it could be that the solicitors could have received the other notice to send to Mr Nathan in the circumstances of this particular case. I also have some concerns as to the weight that I could place upon his evidence on this issue (having seen Mr Nathan in the witness box).
In the circumstances I find that bankruptcy notice VN1034 of 2005, which names Mr Nathan and Capital Finance as the relevant parties, was the notice that was in fact annexed to the letter of 29 June 2005 and posted by prepaid post to the debtor in this case. I therefore find that Mr Nathan was served with Bankruptcy Notice VN1034 of 2005 by post pursuant to reg 16.01.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of Riethmuller FM

Associate:

Date: