Commonwealth Bank of Australia v Kourtis,Constantinos

[1998] FCA 507

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - application for sequestration order - whether petition presented in accordance with ss 43(1) and 47 Bankruptcy Act (Cth) 1966 (“the Act”)- creditor’s petition stapled to applicant’s “Affidavit of Truth of Statements in Paragraphs 1, 2, 3 of Creditor’s Petition” - whether petition correctly served on respondents - s 52(1)(b) of the Act

PRACTICE AND PROCEDURE - filing and presentation of creditor’s petition - O 77 r16(2) of Federal Court Rules - whether “accompanied” includes petition physically attached or annexed to affidavit

Bankruptcy Act (Cth) 1966:  s 43, s 47, s 52(1)(b)

Federal Court Rules:  O 77 r16(1), O 77 r16(2)

Purden Pty Ltd v Registrar in Bankruptcy (1982) 64 FLR 306 - applied
In Re A Debtor [1939] Ch 251 - distinguished

COMMONWEALTH BANK OF AUSTRALIA v CONSTANTINOS KOURTIS & ANOR
VG 7629 of 1997

GOLDBERG J
MELBOURNE
4 MAY 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 7629 of 1997

BETWEEN:

COMMONWEALTH BANK OF AUSTRALIA
(ACN 123 123 124)
Applicant

AND:

CONSTANTINOS KOURTIS
First Respondent

FILIA KOURTIS
Second Respondent

JUDGE:

GOLDBERG J

DATE OF ORDER:

4 MAY 1998

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1. A sequestration order be made against the estate of Constantinos Kourtis and Filia Kourtis.

1. The applicant’s costs and incidental to the petition, including reserved costs, be taxed and paid in accordance with the statute.

Note:The date of bankruptcy is 18 August 1997

Note:Settlement and entry of orders is dealt with in O 36 of the Federal Court Rules

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 7629 of 1997

BETWEEN:

COMMONWEALTH BANK OF AUSTRALIA
(ACN 123 123 124)
Applicant

AND:

CONSTANTINOS KOURTIS
First Respondent

FILIA KOURTIS
Second Respondent

JUDGE:	GOLDBERG J
DATE:	4 MAY 1998
PLACE:	MELBOURNE

EX TEMPORE REASONS FOR JUDGMENT

HIS HONOUR: 

In this matter the applicant seeks a sequestration order against the respondents.  There are two issues before the Court.  First, has a petition been presented in accordance with the provisions of the Bankruptcy Act (Cth) 1966 (“the Act”) and secondly, has the petition been served upon the respondents.  Otherwise the substantive issues required to be satisfied before a sequestration order can be made are not in issue between the parties. 

The manner in which those questions arises is as a result of what occurred on 30 September 1997.  On that day the applicant filed in Court, and there was accepted, an affidavit sworn on 30 September 1997 by Peter Groves Crawford, a senior manager of the applicant bank, headed “Affidavit of Truth of Statements in Paragraphs 1, 2 and 3 of Creditor’s Petition”.  In paragraph 1 of that affidavit Mr Crawford said:

“I am a Senior Manager, Lending Services of Commonwealth Bank of Australia ACN 123 123 124, the applicant creditor named in the creditor’s petition exhibited to this affidavit and shown to me at the time of swearing this my affidavit and marked ’A’, and am duly authorised to make this affidavit on its behalf.”

Thereafter there was a verification of the statements contained in paragraphs 1, 2 and 3 of the petition.  There were then references to a power of attorney with which I need not be concerned.  There was physically attached to the affidavit - and by physically attached I mean stapled - a creditor’s petition so headed and marked “A” which was otherwise in the form of a petition required by the rules.

It appears from the evidence before me that the affidavit and attached creditor’s petition were accepted by the registry of the court.  A “filed” stamp showing that the affidavit was filed on 30 September 1997 appears on the front of the affidavit.  The “filed” stamp also appears on the front sheet of the creditor’s petition which is exhibit A to the affidavit.  On the last page of the creditor’s petition, below the place at which the time and date of the hearing for the court was set out and above the provision for the filing of the petition by the Australian Government Solicitor, there was a space provided for authentication by the registrar.  In this space the seal of the Federal Court of Australia has been stamped and there is an original signature of an officer of the court for the registrar across the seal.  It was a document in that precise form, save for the filing stamp, which was served on the respondents and I will come to service shortly. 

Mr Woodhouse, who appears for the respondents, submits that in those circumstances no petition has been presented as required by the relevant legislative provisions and no petition has been served on the respondents, in the sense that they have not been served with a presented petition.  I turn to the relevant legislative provisions which bear upon the issues before me. 

Section 43(1) of the Act provides that:

“Subject to this Act, where:

(a)      a debtor has committed an act of bankruptcy
...

the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.”

It can be seen therefore that the jurisdiction to make the sequestration order is conditioned upon the presentation of the petition and I emphasise the word presentation.

Section 47 of the Act provides that:

“(1)A creditor’s petition must be verified by an affidavit of the person who knows the relevant facts.

(1A)If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed.” 

Order 77 r16(1) of the Federal Court Rules provides that:

“The petition must be in accordance with Form 150”.

The division within which that rule appears, according to r15, applies to a creditor’s petition seeking a sequestration order against the estate of a debtor.  On the facts before me the creditor’s petition, subject to the issues which concern the Court, is otherwise in accordance with form 150. 

Order 77 r16(2) provides that:

“The petition must be accompanied by:

(a)sufficient copies of the petition for service and for annexure to any affidavits of service; and

(b)an affidavit of a person who knows the relevant facts verifying the petition.”

Section 52(1) of the Act provides that:

“At the hearing of a creditor’s petition, the Court shall require proof of:

(a)the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient) ;

(b)      service of the petition; and

(c)the fact that the debt or debts on which the petition creditor relies is or are still owing;

and, if it is satisfied with proof of those matters, may make a sequestration order against the estate of the debtor.”

Mr Woodhouse submits that the reference in O 77 r16(2) to “accompanied” - that is to say, the petition must be accompanied by the verifying affidavit - shows or leads to the conclusion that there must be two separate documents.  That is to say, there must be a separate document, filed as a creditor’s petition and also a separate document filed constituting the verifying affidavit. 

Mr Nolan, who appears for the applicant, submits that a petition which is created and executed as a petition does not lose that character simply by being annexed to, or referred to as an exhibit in, an affidavit.  He submits that the statutory provisions and the rules to which I have referred do not provide for the creditor’s petition to be exhibited as such, albeit in terms which require the petition to be verified.  But he says the Act and the rules do not preclude such a situation. 

In construing the Act and the rules in this context it must be remembered that the provisions relating to compliance with procedural and indeed substantive provisions in relation to bankruptcy matters are important given the potentially penal consequences which flow from the consequences of a making of a sequestration order:  Re Ferrarese; Ex parte Aloisio (1995) 60 FCR 586 at 588, Re Leppard; Ex parte Fortune (Aust) Pty Ltd (1975) Qd R 71 at 74.

The concept of presentation was considered in Purden Pty Ltd v Registrar in Bankruptcy (1982) 64 FLR 306 at 310 where the Full Court of the Federal Court said:

“In our opinion the words ‘presented’ or ‘presentation’ are used in the Act, not in the sense of the unilateral act of the creditor of showing the petition to the appropriate court officer; but in the sense of handing or delivering the petition to and acceptance by that officer.  The showing of the document to the court’s officer and its receipt by him are both necessary elements in the notion of presentation of a petition.  However, what the officer does with the document thereafter is nothing to the point as by then it has been presented.

(See also Re Taylor; Ex parte Ryan (1986) 14 FCR 472 at 473; Re Ousley; Ex parte Commissioner of Taxation (1994) 48 FCR 131 at 139).

In my opinion, presentation in that context is what has occurred in this case.  The petition physically attached to and exhibited to the affidavit has been stamped and sealed as has the petition served on the respondents.  The petition, albeit physically annexed to and exhibited to the affidavit, has been accepted by the court officer as a creditor’s petition and independently sealed and signed.  As I noted earlier, not only does the file stamp appear on the affidavit it also appears on the creditor’s petition which is the exhibit.  But more importantly the court seal and the court officer’s signature appear on that particular document. 

In my opinion, the fact of the physical annexure of the petition to the affidavit does not negate or detract from the conclusion that the petition has been presented.  It is true that it must be accompanied by an affidavit of a person who knows the relevant facts, as required by r 16(2)(b).  Although “accompanied” in that rule suggests separate documents, as submitted by Mr Woodhouse, it does not preclude what was done in the circumstances of this case and in my view does not require separate documents so long as the petition which is exhibited is in fact presented.  That is to say, it is accepted by the relevant court officer and independently sealed and signed.  The position would be different if the petition had not been separately accepted as and for what it was.  In my opinion therefore, the first ground of attack on the petition fails.  The petition was presented as required by the relevant sections and rules. 

When I turn to the issue of service I note that there are two affidavits of service of Malcolm Hadji sworn on 13 October, one affidavit of service for each respondent.  Each of those affidavits of service shows that there was service of the petition in the form in which it was presented.  That is to say, it was served as being physically attached to the affidavit of Mr Crawford and referred to as an exhibit in that affidavit.  Each affidavit of service exhibits a copy of what was served and the exhibit to that affidavit shows that what was served was a copy of the affidavit of Mr Crawford to which a copy of the creditor’s petition was physically annexed which creditor’s petition bore the court’s seal on it and the signature of the court officer for the registrar across the seal.

In my opinion, this is proof of service as required by s 52(1)(b) of the Act.  That is to say, there was service of the petition as presented.  In my opinion, the facts are different from the circumstances of In Re A Debtor [1939] Ch 251. In that case documents were delivered in a sealed envelope with no indication as to what was contained inside the envelope. At 256 the Master of the Rolls, Sir Wilfred Greene said:

“the essential thing in service cannot have been complied with, the essential thing being that the documents served shall be brought to the personal knowledge of the person whose concern it is.”

His Lordship opined that mere proof of delivery of a sealed envelope containing a copy of a writ or notice of a writ would not be sufficient service.  He saw no reason to draw a different conclusion in relation to a bankruptcy proceeding and therefore concluded at 257 that mere proof of delivery of the documents in a sealed envelope without more would not be sufficient service.

In the proceeding before me the process server in each affidavit has sworn that he identified the person served in each case as Constantinos Kourtis and Filia Kourtis and first he asked them their name and then he said, “Are you the person referred to in this creditor’s petition as the respondent?”  In each case the person addressed answered “yes”.  I infer from that recitation that the documents were physically shown to each respondent.  In any event the front sheet of each document handed to each respondent was the first page of Mr Crawford’s affidavit, in paragraph 1 of which he referred to the creditor’s petition exhibited and marked “A”.

In those circumstances in my opinion the facts are quite different from the circumstances considered In Re A Debtor (supra) and I find that the petition as presented was served as required by s 52 of the Act.  On that basis the two attacks which are the live issues in this proceeding have failed and subject to anything further that may be said I propose to make a sequestration order.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg

Associate:

Dated:             8 May 1998

Counsel for the Applicant:	Mr J Nolan
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	Mr P C Woodhouse
Solicitor for the Respondent:	Jonathan Wong
Date of Hearing:	4 May 1998
Date of Judgment:	4 May 1998