CLGC Pty Ltd v Zhang
[2022] FedCFamC2G 152
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
CLGC Pty Ltd v Zhang [2022] FedCFamC2G 152
File number(s): SYG 2149 of 2021 Judgment of: JUDGE MANOUSARIDIS Date of judgment: 10 March 2022 Catchwords: BANKRUPTCY – creditor’s petition – whether sufficient proof of service of bankruptcy notice and of creditor’s petition – whether other conditions for the making of a sequestration order satisfied – sequestration order made. Legislation: Acts Interpretation Act 1901 (Cth) s 28A(1)
Bankruptcy Act 1966 (Cth) ss 40(1)(g), 43, 52(1), 156A
Bankruptcy Regulations 2021 (Cth) r 102(1)
Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) rr 4.04(1), 4.05, 4.06(4)
Cases cited: Cardinal Insurance Company v Maple Underwriters Ltd (1983) 46 BCLR 137
DM Developments v Driscoll & Anor [2011] FMCA 464
Re Pugliese; Ex parte The Chase Manhattan Bank of Australia Ltd [1993] FCA 454
Sarina v O'Shannassy (No 2) [2021] FCCA 338
Sommer v C Pty Ltd (No.2) [2020] FCCA 1898
Sunrise Auto Limited v Deputy Commissioner of Taxation [1995] FCA 1693
Zhang v Ehrenfeld [2015] FCCA 877
Division: General Number of paragraphs: 29 Date of last submission/s: 9 March 2022 Date of hearing: 7 March 2022 Place: Sydney Solicitor for the Applicant: Ms N Sanchez of Luminous Legal, by telephone The Respondent: No appearance by or on behalf of the respondent ORDERS
SYG 2149 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
IN THE MATTER OF RONGLAI ZHANG
BETWEEN: CLGC PTY LTD ACN 140 347 191
Applicant
AND: RONGLAI ZHANG
Respondent
ORDER MADE BY:
JUDGE MANOUSARIDIS
DATE OF ORDER:
10 MARCH 2022
THE COURT ORDERS THAT:
1.The estate of the respondent, Mr Ronglai Zhang, is sequestrated under the Bankruptcy Act 1966 (Cth).
2.The applicant creditor’s costs be paid from the estate of the respondent, Mr Ronglai Zhang, in accordance with the Bankruptcy Act 1966 (Cth).
3.The applicant creditor’s costs are set in the amount of $10,123.12
THE COURT NOTES THAT:
4.The date of the act of bankruptcy is 16 November 2021.
5.A consent to act as trustee signed by Mr Thyge Trafford-Jones has been filed under s 156A of the Bankruptcy Act 1966 (Cth).
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order 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
INTRODUCTION
On 7 March 2022 I heard an application for a sequestration order against the estate of Mr Ronglai Zhang. Mr Zhang did not appear.
The applicant, by its legal representative, read the affidavits on which the applicant relies, and I listed the matter for judgment at 9:30 am on 10 March 2022.
SERVICE OF BANKRUPTCY NOTICE
The act of bankruptcy on which the applicant relies is Mr Zhang’s failure to comply with the requirements of a bankruptcy notice issued on 20 May 2021 on the application of the applicant (Bankruptcy Notice).
The failure to comply with the requirements of a bankruptcy notice is an act of bankruptcy prescribed by s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (Act), which provides (emphasis added):[1]
[1] In this and the following two paragraphs repeat what I said in Sommer v C Pty Ltd (No.2) [2020] FCCA 1898, at [11]-[13]
A debtor commits an act of bankruptcy . . .
. . .
(g)if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not:
(i) where the notice was served in Australia--within the time fixed for compliance with the notice; or
(ii) where the notice was served elsewhere--within the time specified by the order giving leave to effect the service;
comply with the requirements of the notice or satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained . . . .
It is apparent from the text of s 40(1)(g) of the Act that a necessary element of the act of bankruptcy it prescribes is that the bankruptcy notice “has been served on the debtor”.
The Bankruptcy Notice demanded Mr Zhang pay to the applicant $3,522,328.77. That is the amount of a judgment that was entered against Mr Zhang in favour of the applicant in the Supreme Court of New South Wales on 8 April 2021.
On 18 October 2021 an employee of Mr Lu, the applicant’s solicitor, called the “Corrective Services inmate location line”, and was informed that Mr Zhang was an inmate of Shortland Correctional Centre. Mr Lu then exchanged a number of emails with Shortland Correctional Centre about the method by which Mr Lu might be able to serve the Bankruptcy Notice on Mr Zhang. Mr Lu was given the following address to which Mr Lu could post the Bankruptcy Notice to Mr Zhang:
Attn: ZHANG, Ronglai MIN . . . . Housing G4
PO Box 466 Cessnock 2325
Shortland Correctional Centre.
On 25 October 2021 Mr Lu posted the Bankruptcy Notice to this address by prepaid express post. The envelope containing the bankruptcy notice was delivered to the post office box at Cessnock at 7:15 am on 26 October 2021.[2]
[2] Affidavit of service of bankruptcy notice M H Lu 19.11.2021
At this point of preparing these reasons, the question occurred to me whether posting a letter to the post office box maintained by Shortland Correctional Centre constituted service of the Bankruptcy Notice on Mr Zhang. That led me to two provisions. The first is s 102(1) of the Bankruptcy Regulations 2021 (Cth) (Regulations), which provides:
(1) Unless the contrary intention appears, if a document is required or permitted by the Act or this instrument to be given or sent to, or served on, a person (other than the Inspector‑General, the Official Receiver or the Official Trustee), the document may be:
(a) sent by a courier service to the person at the address of the person last known to the person serving the document; or
(b) left, in an envelope or similar packaging marked with the person’s name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility.
(2)In the absence of proof to the contrary, the document is taken to have been received by, or served on, the person when the document would, in the due course of business practice, be delivered to that address or document exchange.
The second provision is s 28A(1) of the Acts Interpretation Act1901 (Cth) (Interpretation Act), which relevantly provides:
For the purposes of any Act that requires or permits a document to be served on a person, whether the expression “serve”, “give” or “send” or any other expression is used, then the document may be served:
(a) on a natural person:
(i) by delivering it to the person personally; or
(ii) by leaving it at, or by sending it by pre-paid post to, the address of the place of residence or business of the person last known to the person serving the document . . .
On the morning of 8 March 2022 my associate, at my direction, sent the following email to the applicant’s lawyer:
His Honour has requested that the following matters be brought to the applicant’s attention.
According to the affidavit of service of the bankruptcy notice, the bankruptcy notice was served by prepaid express post addressed to:
Attn: ZHANG, Ronglai MIN . . . . Housing G4
PO Box 466 Cessnock 2325
Shortland Correctional Centre
His Honour would appreciate submissions on whether this constitutes service of the bankruptcy notice for the purpose of s 40(1)(g) of the Bankruptcy Act 1966 (Cth), bearing in mind the following:
(a)s 102(1) of the Bankruptcy Regulations 2021 (Cth) deals with the service of documents, but does not provide for the service of documents by post; and
(b)although s 28A(1) of the Acts Interpretation Act 1901 (Cth) provides for service by prepaid post, it only does so to “to the address of the place of residence or business of the person last known to the person serving the document”, and not to a post box.
His Honour would appreciate receiving submissions on the matter raised in this email by 1:00 pm on 9 March [2022].
In apparent response to this email, on 8 March 2022 the applicant’s lawyers filed two affidavits. One is made by Mr Lu on 8 March 2022 which he says he made “to provide further detail about earlier steps taken to cause service of the Bankruptcy Notice”. (I will treat this affidavit as having been read.) Mr Lu deposes that on 20 September 2021 Mr Lu’s employee solicitor, Ms Sanchez, contacted Corrective Services NSW, and was informed Mr Zhang was remanded in custody at the Metropolitan Remand and Reception Centre (MRRC). Ms Sanchez contacted MRRC’s legal department, and she was informed that documents that were required to be served on an inmate were to be emailed to the MRRC at “[email protected]” (MRRC email address).
Mr Lu further deposes that on 20 September 2021 he sent an email to the MRRC email address to which he attached the Bankruptcy Notice. Mr Lu’s email is as follows:
We refer to our telephone call of even date, in which you advised that documents to be served on an inmate should be emailed to you at this email address.
We advise that we have been acting for the plaintiff for proceedings in which Mr Ronglai Zhang (MIN . . . .) was the defendant. We attach for personal service on Mr Zhang a bankruptcy notice and a number of statutory demands in respect of the judgment debts from those proceedings.
We would request your assistance in the personal service of those documents on Mr Zhang. We are aware of the provisions of r 10.25 of the Uniform Civil Procedure Rules (NSW), which provide for personal service of documents on an inmate being effected by leaving a copy of the document with the general manager of the correctional centre at the correctional centre at which the inmate is held in custody, and are in a position to have a staff member personally attend the MRRC to serve the documents if required.
Can you please advise your procedures for personal service of documents on an inmate, including whether you are able to assist with the service of the documents?
We look forward to hearing from you in relation to this matter.
Mr Lu sent a follow up email to the MRRC email address on 21 September 2021, an email on 18 October 2021 to the email address of Shortland Correctional Service, and, on 25 October 2021, an email to the “Services and Programs Officer Team Leader at the Shortland Correctional Service”. On 25 October 2021 the “Services and Programs Officer Team Leader” sent an email to Mr Lu stating that “[t]hese documents can be sent directly to the inmate” at “Zang [sic], Ronglai MIN . . . . Housing G4 PO Box 466 Cessnock 2325 Shortland Correctional Centre”.
The second affidavit the applicant’s lawyer filed in apparent response to my associate’s email of 8 March 2022 is an affidavit of Ms Sanchez. (I will also treat this affidavit as having been read.) She deposes to the conversations Mr Lu in his affidavit says Ms Sanchez had with officers of Corrective Services NSW.
The applicant’s lawyer also emailed to my associate submissions in response to the invitation made by my associate’s email of 8 March 2022.
I first consider the sending by express post the Bankruptcy Notice to “Zhang, Ronglai MIN . . . . Housing G4 PO Box 466 Cessnock 2325 Shortland Correctional Centre”. This does not fall within any of the methods of service provided for by s 102 of the Regulations. I am not prepared, in the absence of evidence, to assume that a service described as “express post” constitutes a “courier service”. Further, I do not accept the applicant’s submissions, at least without evidence, that maintaining a post office box at a particular location constitutes the maintaining of a document exchange. In any event, s 102(1) of the Regulations requires that the person who is served maintains the document exchange facility in question. Shortland Correctional Centre, not Mr Zhang, maintains the post office box at Cessnock.
That, then, leads me to s 28A(1) of the Interpretation Act. The question is whether a post office box maintained by a correctional facility of which a person is an inmate can properly be characterised as “the address of the place of residence . . . of the person” who is the inmate. The applicant submits that it can be so characterised; and it submits that, in the circumstances of this case, the post office box address of Shortland Correctional Centre was, at the time the Bankruptcy Notice was posted to that post office box address, “the address of the place of residence” of Mr Zhang “last known to the” applicant.
The applicant relies on a number of matters. I need only refer, however, to two judgments of this Court. In DM Developments v Driscoll & Anor Burnett FM (as his Honour then was) said “that the authorities demonstrate that prima facie service may be effected at a post office box if the court can be satisfied that in fact the post office box represents the last known address;[3] and in Zhang v Ehrenfeld, Judge Lloyd Jones said that “a PO Box address can also be a last-known address”.[4] These cases were decided under the (now) repealed Bankruptcy Regulations 1996 (Cth), but the substance of s 28A(1) of the Interpretation Act is not materially different from the equivalent provisions of those regulations.
[3] DM Developments v Driscoll & Anor [2011] FMCA 464, at [16]
[4] Zhang v Ehrenfeld [2015] FCCA 877, at [42]
These cases are in any event supported by the ordinary meaning of “address”. As I have noted elsewhere,[5] one of the definitions of “address” given by the Oxford English Dictionary is the “particulars of the place where a person lives or an organization is situated, typically consisting of a number, street name, the name of a town or district, and often a postal code; these particulars considered as a location where a person or organization can be contacted by post”.[6] In Re Pugliese; Ex parte The Chase Manhattan Bank of Australia Ltd, Heerey J said “‘address’ means, amongst other things, ‘a place where a person lives or may be reached’ (Macquarie Dictionary)”.[7] Further, in Sunrise Auto Limited v Deputy Commissioner of Taxation,[8] the Full Federal Court referred to the Canadian case of Cardinal Insurance Company v Maple Underwriters Ltd,[9] where Hinds J said that “Black’s Law Dictionary, revised 4th ed., defines ‘address’ as: ‘Place where mail or other communications will reach a person ... Generally a place of business or residence.’” Thus the ordinary meaning of “address” is not restricted to a place of residence or business. It is the place at which a person may be reached.
[5] Sarina v O'Shannassy (No 2) [2021] FCCA 338, at [12]
[6] Oxford English Dictionary
[7] Re Pugliese; Ex parte The Chase Manhattan Bank of Australia Ltd [1993] FCA 454, at [6]
[8] Sunrise Auto Limited v Deputy Commissioner of Taxation [1995] FCA 1693, at [38]
[9] Cardinal Insurance Company v Maple Underwriters Ltd (1983) 46 BCLR 137, at page 142
That “address” is not restricted to a place of residence or business, but means a place at which a person may be reached, is further supported by the prescribed form of bankruptcy notice. It provides for the creditor to include its “address” “including telephone, fax and email address if appropriate”. The word “including” suggests that each of a person’s telephone, fax and email address, if the person has a telephone, fax, or email address, is an address. An “address” would include a post office box address.
I am satisfied, therefore, that the post office box address of Shortland Correctional Centre was, at the time the Bankruptcy Notice was posted to that post office box address, “the address of the place of residence” of Mr Zhang “last known to the” applicant; and that, therefore, the Bankruptcy Notice was served on Mr Zhang when it was delivered to the post office box at Cessnock on 26 October 2021. Given this conclusion, I do not need to consider whether Mr Lu’s sending the Bankruptcy Notice to the MRRC email address on 20 September 2021 constituted service.
SERVICE OF CREDITOR’S PETITION
The applicant filed a creditor’s petition with this Court on 19 November 2021. The creditor’s petition is in the prescribed form,[10] and, as required by s 47 of the Act, an officer with authority has made an affidavit verifying it on behalf of the applicant.[11] The applicant also filed, at the time it filed the creditor’s petition, an affidavit required by r 4.04(1)(a) of the Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules),[12] and the affidavit of service of the Bankruptcy Notice, as required by r 4.04(1)(b).[13] Finally, the applicant also filed a trustee consent to act declaration signed by Mr Thyge Trafford-Jones.
[10] Federal Circuit and Family Court of Australia (Division 2) (Bankruptcy) Rules 2021 (Cth) (Bankruptcy Rules), r 4.02(1); Form B6
[11] Affidavit of W Lu 19.11.2021
[12] Affidavit of M H Lu 19.11.2021
[13] Affidavit of M H Lu 19.11.2021
The evidence on which the applicant relies for proving service of the creditor’s petition is contained in Mr Lu’s affidavit made on 4 February 2022. Mr Lu deposes that on 19 November 2021 his employee solicitor, Ms Chu, telephoned the Corrective Services inmate hotline in which she inquired of Mr Zhang’s location. Ms Chu was informed that Mr Zhang was located at Goulburn Correctional Centre. Ms Chu called the Goulburn Correctional Centre, and she was advised to send documents by email to “[email protected]” (MOSC email address). Mr Lu then sent an email to the MOSC email address attaching to it the creditor’s petition filed on 19 November 2021, the affidavit of service of the Bankruptcy Notice made by Mr Lu on 19 November 2021, the affidavit of search affirmed and filed on 19 November 2021, and a trustee’s consent filed on 19 November 2021. Mr Lu’s email is as follows:
We act for the applicant in Federal Circuit and Family Court of Australia proceedings against Mr Ronglai Zhang (MIN . . . .) as respondent. We understand that Mr Zhang is an inmate at Goulburn Correctional Centre.
As part of those proceedings, we are required to have the attached documents personally served on Mr Zhang, and provide the court with an affidavit of service confirming that this has occurred.
Can you please advise whether the correctional centre can facilitate this, by personally handing the documents to Mr Zhang and then providing us with an affidavit of service to confirm that this has occurred, or alternately by permitting a process server to personally visit Mr Zhang to personally hand the documents to him?
If this will not be possible, we would request that you advise us urgently so that we can make a substituted service application to the court and provide us with an email address and/or postal address for us to send the documents to Mr Zhang.
Thank you for your assistance in this matter.
On 25 November 2021 the “Senior Correctional Officer Legals [sic]” sent an email to Mr Lu attaching a “receipt for service of document”. The attachment is a form titled “Service of Documents on Incarcerated Person”, and it contains handwriting identifying Mr Zhang as the person on whom documents are to be served. Next to the printed words “Date Received” there is written “20.11.21”; next to the printed words “I confirm that I have been served the following documents” there appear in handwriting the words “Notice of Filing and associated documents”; and next to the printed words “Inmate Signature”, there is a signature. In an affidavit made on 22 February 2022 Mr Lu deposes that, based on his having viewed in other proceedings affidavits and other documents Mr Zhang has signed, he recognises the signature that appears on the “Service of Documents on Incarcerated Person” form to be Mr Zhang’s signature.
I am satisfied that the signature on the “Service of Documents on Incarcerated person” form is Mr Zhang’s signature. I am also satisfied that Mr Zhang understood the words “Notice of Filing and associated documents” to be a reference to the creditor’s petition and the other documents Mr Lu sent to the MOSC email address on 19 November 2021. I am therefore satisfied that, as required by r 4.05 of the Bankruptcy Rules, the creditor’s petition was served on Mr Zhang on 20 November 2021, being more than five days before the date fixed for the hearing of the creditor’s petition, together with the affidavit required by r 4.04(1)(a) of the Bankruptcy Rules, and the affidavit of service of the bankruptcy notice.[14]
[14] Affidavit of M H Lu 08.02.2022
OTHER MATTERS
At the hearing of the creditor’s petition the applicant relied on an affidavit of debt,[15] being an affidavit which, under r 4.06(4) of the Bankruptcy Rules, must be made as soon as practicable before the hearing of the creditor’s petition, and also an affidavit of search,[16] as required by r 4.06(3) of the Bankruptcy Rules.
[15] Affidavit of Debt made by W Lu 07.03.2022
[16] Affidavit of Search made by H T G Chu 07.03.2022
CONCLUSION
I am satisfied the applicant has proved the matters it is required to prove under s 43 and s 52(1) of the Act before a sequestration order may be made; and that a sequestration order should be made against the estate of Mr Zhang. I propose to so order.
The applicant has provided a short form bill of costs in which the applicant assesses its costs at $10,123.14. I am satisfied these costs are reasonable and I will, therefore, also order that the applicant’s costs fixed in the sum of $10,123.12 be paid from the estate of Mr Zhang in accordance with the Act.
I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Manousaridis. Associate:
Dated: 10 March 2022
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