Cleary Bros Pty Ltd v Ibrahim

[2009] FMCA 622

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CLEARY BROS PTY LTD v IBRAHIM [2009] FMCA 622

BANKRUPTCY – Substituted service of a bankruptcy notice – interim application to vary or dispense with substituted service order – doubts as to power of court to review – delay before making ex parte application – whether necessary or appropriate to vary order – alternative proof of service by post under Bankruptcy Regulations and Evidence Act – ex parte application refused.

Bankruptcy Act 1966 (Cth), s.309
Bankruptcy Regulations 1996 (Cth), r.16.01
Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.1.03
Federal Magistrates Court Rules 2001 (Cth), rr.6.14, 6.16

Applicant: CLEARY BROS (BOMBO) PTY LTD

Respondent: ROMEO ELIAS IBRAHIM

File Numbers: SYG 2478 of 2008 and SYG 1093 of 2009

Judgment of: Smith FM

Hearing date: 23 June 2009

Delivered at: Sydney

Delivered on: 23 June 2009

REPRESENTATION

Counsel for the Applicant: Mr J Lo Schiavo

ORDERS

1. The interim application to vacate or modify the substituted service order made on 3 October 2009 in SYG 2478 on 2008 is refused.

2. Direct that the application for a sequestration order in SYG 1093 of 2009 be listed before the Registrar on 17 July 2009 at 9.30 a.m.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYG 2478 of 2008 and SYG 1093 of 2009

CLEARY BROS (BOMBO) PTY LTD

Applicant

And

ROMEO ELIAS IBRAHIM

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. Two files were referred to me by the Registrar today, for the hearing of an interim application of the applicant creditor, which was made in the course of a preliminary hearing concerning the creditor’s petition.  The application is made ex parte and orally, and is not supported by any affidavit.  For reasons which I shall explain, there is no respondent debtor who has yet been served with the creditor’s petition and supporting documents. 

2. File number SYG 2478 of 2008 is an application to this Court for an order under s.309(2) of the Bankruptcy Act in relation to the service of a bankruptcy notice which was issued at the request of the creditor. That subsection provides:

   (2) Where a notice or other document is required by this Act to be served on or given to a person, the Court may, in a particular case, order that it be given or served in a manner specified by the Court, whether or not any other manner of giving or serving the notice or other document is prescribed. 

3. This power is available to make orders in relation to the service of bankruptcy notices, where a departure from the provisions of Bankruptcy Regulations 1996 (Cth), reg.16.01 is perceived to be necessary or desirable. Such an application is referred to in the Federal Magistrates Court (Bankruptcy) Rules 2006, r.3.01 as “an application for an order for substituted service of a bankruptcy notice”. It is not, however, an application which concerns the service of a court process in the course of a court proceeding, since bankruptcy notices are issued by the Official Receiver in a non-judicial process under s.41 of the Bankruptcy Act, and service of notices is provided for under the Bankruptcy Regulations 1996 (Cth), in particular reg.16.01, and not under rules of court.

4. Service of bankruptcy notices by hand or personally is no longer required under bankruptcy legislation, and an order under s.309(2) is therefore not necessarily required where personal service cannot be effected. Under reg.16.01(a) one mode of permitted service of a bankruptcy notice is that it be “sent by post … to the person at his or her last known address”. Under reg.16.01(2)(a) a bankruptcy notice which has been so served is “taken in the absence of proof to the contrary to have been received by, or served on, the person … when the document would, in due course of post … be delivered to the person's address”. This provision may be read with s.160(1) of the Evidence Act 1995 (Cth), which raises a rebuttable presumption that a postal article sent by prepaid post to a specified address in Australia was received at that address on the fourth working day after having been posted. In a subsequent application for a sequestration order, these combined provisions allow the identification of a presumptive last date for compliance with a bankruptcy notice which has been duly served by post.

5. The present bankruptcy notice was issued on 4 June 2008.  It was addressed to Mr Ibrahim at a street address in South Wentworthville, and relied upon a Local Court default judgment entered on 29 March 2007, insofar as a balance of $16,192.29 was claimed to be owing.

6. The application to the Court under s.309(2) was filed on 24 September 2008. It was supported by an affidavit deposing to unsuccessful efforts to effect personal service of the bankruptcy notice on Mr Ibrahim at two addresses, including the address at South Wentworthville. A process server made repeated attempts at service at this address, and he reported that on two occasions people said that it was Mr Ibrahim's address, and on four other occasions no person responded to his knocking.

7. The application for substituted service of the bankruptcy notice sought the following orders:

   1.Pursuant to Rule 3.01 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) that service of the Bankruptcy Notice (NN1949/08) be effected on the Respondent by sending a copy of that document together with sealed copies of these orders to the Respondent by ordinary prepaid post to [the address in] South Wentworthville NSW 2145;

   2.That the Bankruptcy notice be deemed to have been served on the Respondent 2 business days following posting.

   3.That these orders be made ex parte and in chambers.

   4.Costs of this application be reserved for the purposes of any creditors petition based on the Bankruptcy notice.

8. Orders were then made in Chambers by Registrar Tesoriero on 3 October 2008.  They plainly did not make the orders sought, but followed the usual terms adopted in the Sydney Registry.  They provided:

   1.Service of Bankruptcy Notice No. 1949 of 2008 addressed to R.E. Ibrahim of [the address in] South Wentworthville, NSW 2145 may be affected by serving the Bankruptcy Notice together with a sealed copy of this order (and any extension of Bankruptcy Notice) as follows:

   (a)By sending on or before 10 October 2008 by pre-paid ordinary post addressed to the judgment debtor at [the address in] South Wentworthville, NSW 2145; and

   (b)By personal service on or before 10 October 2008 on any person apparently over the age of sixteen years at [the address in] South Wentworthville, NSW 2145; but if this is not possible, by leaving it under the door at that address.

   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 17 October 2008.

   4.A copy of the Bankruptcy Notice to be served pursuant 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 this notice “after service on you of this Bankruptcy Notice” and substituting “after 17 October 2008”.

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

   7.Costs of this application be reserved for purposes of any petition based on this Bankruptcy Notice.

9. The Registrar’s order was entered on 3 October 2008, and presumably was immediately given to the creditor at that time. 

10. The creditor has now noticed that the Registrar’s order included a requirement for personal service on a person at the South Wentworthville address, as well as service by post, notwithstanding that this had not been sought.  It seems that such service did not occur before the presentation of a creditor’s petition, and it is now too late to effect service of the bankruptcy notice in accordance with the substituted service order. 

11. The creditor's petition was filed on 5 May 2009 in SYG 1093 of 2009.  It relies upon the same debt, and a purported service of the bankruptcy notice by post.  Service of the bankruptcy notice is shown by an affidavit of Ms Sullivan sworn 3 June 2009 which states in para.2:

    On or about 9 October 2008, I caused ROMEO ELIAS IBRAHIM to be served with a copy of Bankruptcy Notice No. NN1949/2008, signed by an Officer authorised by an Official Receiver, together with a copy of the judgment dated 30 May 2008 obtained by the Applicant against the Respondent Debtor in the Local Court of New South Wales, Port Kembla (Proceeding No. 9/07) by express posting them to ROMEO ELIAS IBRAHIM at [the address at] South Wentworthville, NSW pursuant to Order 1(a) made by Registrar Tesoriero of the Federal Magistrates Court on 3 October 2008.

12. Paragraph 3 of her affidavit incorrectly states:

    Pursuant to order 4 made by Registrar on 3 October 2008, this Bankruptcy Notice was deemed to be served on the Respondent Debtor on 17 October 2008.

13. The creditor has not yet moved on the petition for a sequestration order, but filed an interim application on 18 June 2009 seeking substituted service of the petition pursuant to “regulation 6.14 of the Federal Magistrates Court Rules 2001 (Cth)”.  I take this to be a reference to rule 6.14 of those Rules. 

14. Part 6 of the Rules contain the rules governing orders for substituted service of a court process to which they apply, which includes a creditor’s petition in the absence of any express provisions concerning service in the Federal Magistrates Court (Bankruptcy) Rules 2006 (see r.1.03(2)).  The interim application sought an order for substituted service of the petition, including by post and by personal service on any person apparently over the age of 16 at the address in South Wentworthville. 

15. According to the file, the interim application was listed before a Registrar with the petition on 22 June 2009. So far as I can detect from the listing report, the Registrar was informed that the creditor's petition had not yet been served. There is other handwriting that I cannot read. But there is also a notation that the file is referred to a Federal Magistrate to consider whether non-compliance with order 1(b) of the order made by Registrar Tesoriero on 3 October 2008 could be waived or vacated under r.6.16 of the Federal Magistrates Court Rules 2001 (Cth).

16. Although, as I have indicated, no interim application for any such order has been filed in either of the creditor’s proceedings, it is this direction which resulted in the matter reaching my list today.   The creditor now passes up short minutes, which disclose the orders which it seeks ex parte:

    1.That service of the Bankruptcy Notice in accordance with order 1(a) of 3 October 2009 is deemed effected pursuant to Reg 6.16.

    2.That order 1(b) of 3 October 2009 is vacated.

17. I have heard submissions in support of the making of these orders, but am not persuaded that it is within the Court's powers to make the orders sought, nor, if it has power, that the making of these orders are now necessary or appropriate. 

18. The general rule which is invoked, being Federal Magistrates Court Rules2001 (Cth), r.6.16, provides:

    Failure to comply with condition

    Failure to comply with a condition of an order for substituted service does not prevent the Court from finding that the document is taken to have been served on a date specified in the order.

19. It appears to me that this rule is clearly related to r.6.14, which provides:

    Substituted service

    (1)If, for any reason, it is impracticable to serve a document in a way required under this Part, the Court may make an order dispensing with service or substituting another way of serving the document.

    (2)The Court may specify the steps to be taken for bringing the document to the attention of the person to be served.

    (3)The Court may specify that the document is to be taken to have been served on the happening of a specified event or at the end of a specified time.

20. However, as I have explained above, the Court’s general powers of ordering substituted service under r.6.14 was not the power that the Court exercised when making an order concerning substituted service of a bankruptcy notice. I therefore do not consider that r.6.16 gives rise to any powers in the Court to give the orders now sought relating to the substituted service order made by Registrar Tesoriero under s.309(2) of the Bankruptcy Act concerning the bankruptcy notice.

21. I do not accept the creditor’s submission that the Bankruptcy Court Rules, r.1.03(2) incorporates r.6.16 into the Bankruptcy Rules, and makes it available in relation to orders under s.309(2) concerning service of a bankruptcy notice. The adoption rule only applies the general rules of the Court “to a proceeding to which the Bankruptcy Act applies”, and only to the extent that they are “not inconsistent with these Rules”. As I have indicated, I do not consider that the Court’s general rules about service and substituted service of Court documents are relevant to the Court's powers in relation to substituted service of a bankruptcy notice, since the issue and service of a bankruptcy notice is not a proceeding of the Court under the Bankruptcy Act.

22. The Court has general powers to dispense with the requirements of its rules (see r.1.06), and to vary or set aside its entered orders if they are interlocutory (see r.16(2)(c)).  In the absence of fuller submissions concerning its powers, it is possible that there may, somewhere in the confusing maze which is this Court's rules governing its bankruptcy jurisdiction, be found a power to make orders having the effect or in the terms now sought by the oral interim application. 

23. However, I am not persuaded that it is necessary or appropriate to make the orders sought at this point of time. As I have indicated, service of a bankruptcy notice by post was permitted under Bankruptcy reg.16.01(a), without any substituted service order. It has not been submitted to me that the creditor could not now avail itself of reg.16.01(2) and s.160 of the Evidence Act, to establish service of the bankruptcy notice and a presumptive date for non-compliance with it, based upon the present affidavit of service of the bankruptcy notice, and ignoring the substituted service order. No authority has been cited to me suggesting that a creditor is bound to establish compliance with such an order, if some alternative mode of proof of due service of the bankruptcy notice is available.

24. It is correct that the determination of an act of bankruptcy without reliance upon the substituted service order would not be assisted by a provision deeming “good and sufficient service of the bankruptcy notice” on a specified date, as is purported to be given by orders 2 and 3 made by Registrar Tesoriero on 3 October 2008. However, assuming that the making of these orders was within the powers of the Registrar under s.309(2), it does not appear to me that such orders are essential before a creditor can rely upon service of a bankruptcy notice by post under reg.16.01(a).

25. As well as doubting the necessity for the orders now sought, I an unpersuaded that it is appropriate now to review the orders of Registrar Tesoriero on 3 October 2008, and to vary or dispense with their effect.  The present application to do this was not made promptly, and the failure to comply with their provisions has not been explained satisfactorily.  The time for service of the notice under reg.4.02A has now passed.  In circumstances where the Court's powers are not clear, I am not persuaded that it is appropriate for the Court now to interfere with those orders and their effect.  Particularly, where the debtor has not been given an opportunity to address me on the legal issues, and where they were not fully addressed by the ex parte submissions made to me today by the creditor.

26. In my opinion, it would be open to the creditor now, if it chooses to proceed with the petition, to seek to persuade the Court that an act of bankruptcy can be established on the evidence currently on the file in relation to service of the bankruptcy notice, without relying upon the substituted service order.  I consider that this is reason enough for me to decline to make the order sought today. 

27. I note that the creditor does not ask me to address the interim application in relation to substituted service of the petition, nor the petition itself, and I shall not do so.  I shall merely refuse the present interim application for the above reasons, and make an order listing the petition on a convenient date in the Registrar's list. 

28. I note that no order as to the costs is sought by the creditor in relation to today’s listing.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Smith FM

Associate:  Michael Abood

Date:  13 July 2009