Da Vesi Construction Group Pty Ltd v De Andrade

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FEDERAL COURT OF AUSTRALIA

Da Vesi Construction Group Pty Ltd v De Andrade [2019] FCA 553

File number: ACD 22 of 2018
Judge: ROBERTSON J
Date of judgment: 23 April 2019
Catchwords: BANKRUPTCY AND INSOLVENCY – application for an extension of time to review decision of Registrar making a sequestration order – whether sufficient explanation for the delay – whether an arguable case that the sequestration order should not have been made – applicant’s ability to pay her debts – prejudice to other parties
Legislation:

Bankruptcy Act 1966 (Cth)

Evidence Act 1995 (Cth) s 131

Federal Court of Australia Act 1976 (Cth) s 35A
Federal Court (Bankruptcy) Rules 2016 (Cth) r 2.02(3)

Federal Court Rules 2011 (Cth) r 3.11

Cases cited: Bright v Femcare Ltd [1999] FCA 1377; 166 ALR 743
Date of hearing: 1 April 2019
Registry: Australian Capital Territory
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 65
Solicitor for the Applicant: Mr R Markham of Adero Law
Counsel for the Respondent Mr P Christensen
Solicitor for the Respondent: Mr J O’Keefe
Solicitor for the Trustee in Bankruptcy Mr S Vuleta of Chamberlains Law Firm

ORDERS

ACD 22 of 2018
BETWEEN:

DA VESI CONSTRUCTION GROUP PTY LIMITED (ACN 122278 735)

Applicant
AND:

ROUBI DE ANDRADE

Respondent

JUDGE:

ROBERTSON J

DATE OF ORDER:

23 APRIL 2019

THE COURT ORDERS THAT:

1.The interlocutory application for an extension of time for applying for a review under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) of the Registrar’s exercise of power on 26 October 2018, making orders that the estate of Ms Ruby De Andrade be sequestrated under the Bankruptcy Act 1966 (Cth) with costs (the sequestration order), is dismissed.

2.The application for review of the Registrar’s exercise of power to make the sequestration order is dismissed.

3.The Court will hear the parties as to the precise form of orders, and in relation to costs.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

ROBERTSON J:

Introduction

  1. On 26 October 2018, a Registrar made orders that the estate of Ms Roubi De Andrade be sequestrated under the Bankruptcy Act 1966 (Cth) and that the applicant creditor’s costs, fixed in the sum of $4,483.50, be paid from the estate of the respondent debtor in accordance with the Bankruptcy Act.  The Registrar noted that the date of the act of bankruptcy was 8 December 2017 and that a consent to act as trustee signed by Mr Nick Jim Combis had been served on Ms De Andrade.

  2. Earlier, on 31 August 2018, the Registrar had made orders as follows:

    4.        Personal service of the Creditor’s Petition be dispensed with.

    5. A sealed copy of the Creditor’s Petition and this order, and a copy of each affidavit verifying the Creditor’s Petition, and a copy of any affidavit of service of the bankruptcy notice, and a copy of any…

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Details
Case
[2019] FCA 553
Decision Date

CaseChat Overview and Summary

Da Vesi Construction Group Pty Ltd applied for an extension of time to review a sequestration order made by the Registrar. The applicant, Ms De Andrade, claimed that she had not been properly notified of the bankruptcy proceedings, and as such, she did not learn of the bankruptcy until 14 January 2019, well after the sequestration order was made on 26 October 2018. Ms De Andrade's application for review was filed on 8 February 2019. The trustee in bankruptcy argued that Ms De Andrade was aware of the proceedings and that there was prejudice to the creditors, including Da Vesi. The court was required to decide whether Ms De Andrade had provided a sufficient explanation for the delay in making the application, whether she had an arguable case that the sequestration order should not have been made, and whether there was any prejudice to other parties.

The court found that Ms De Andrade had an opportunity to be aware of the proceedings but failed to take steps to ascertain the status of the matter. The affidavits showed that efforts were made to serve her with a bankruptcy notice, but she claimed she did not receive notification of any court dates or the creditor's petition. However, the court found that the service of the creditor's petition was valid as it was delivered to Hello Café, where Ms De Andrade worked. Additionally, the court found that Ms De Andrade had an old email address and phone number listed for service, which she had not updated. The court also found that there was prejudice to Ms De Andrade's creditors, including Da Vesi, as they were left unaware of the bankruptcy proceedings. For these reasons, the court dismissed the application for an extension of time and the application for review of the sequestration order. The court will hear the parties as to the precise form of orders and in relation to costs.

Orders

Orders of the court

1. The interlocutory application for an extension of time for applying for a review under s 35A(5) of the Federal Court of Australia Act 1976 (Cth) of the Registrar’s exercise of power on 26 October 2018, making orders that the estate of Ms Ruby De Andrade be sequestrated under the Bankruptcy Act 1966 (Cth) with costs (the sequestration order), is dismissed.

2. The application for review of the Registrar’s exercise of power to make the sequestration order is dismissed.

3. The Court will hear the parties as to the precise form of orders, and in relation to costs.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The interlocutory application for an extension of time and application to set aside the sequestration order were set down, by orders made on 1 March 2019, to be heard together.The evidence The evidence relied on by Ms De Andrade is as follows:a.the affidavit of Roubi De Andrade sworn 8 February 2019; b.the affidavit of Roubi De Andrade sworn 11 March 2019; c.the affidavit of Roubi De Andrade sworn 20 March 2019; andd.the affidavit of Benjamin Wicks sworn 28 September 2018. The trustee in bankruptcy, Mr Combis, notified certain objections to paragraphs of those affidavits and I ruled on those objections in the course of the hearing. The evidence relied on by the trustee in bankruptcy is as follows:a.the affidavit of Anthony Graeme Lane sworn 28 February 2019;b.the affidavit of Anthony Graeme Lane sworn 8 March 2019;c.the affidavit of Geoff Robert Grimshaw affirmed 21 March 2019; andd.the affidavit of Anthony Graeme Lane sworn 1 April 2019. Ms De Andrade objected to [22]-[24] of the affidavit of Mr Lane sworn 28 February 2019 on the basis that those paragraphs contained records of negotiations regarding settlement of a dispute and were inadmissible under s 131 of the Evidence Act 1995 (Cth). I admitted those paragraphs as I was not persuaded that the communications were in connection with an attempt to negotiate a settlement of the dispute. The evidence relied on by Da Vesi is as follows:a.the affidavit of Tom Häkkinen affirmed 28 February 2019; b.the affidavit of Benjamin Wicks sworn 26 March 2019;c.the affidavit of Anthony Steve affirmed 27 March 2019;d.the affidavit of Tom Häkkinen affirmed 28 March 2019; ande.the affidavit of Rory Markham sworn 28 March 2019. Ms De Andrade gave oral evidence and was cross-examined. Mr Häkkinen and Mr Lane were also cross-examined.The parties’ submissions Ms De Andrade submitted that she did not learn of her bankruptcy until around 14 January 2019 and that her application for review was filed on 8 February 2019. There was no prejudice to the parties caused by the late application. Additionally, it was submitted she had an arguable case for the Registrar’s decision to be reviewed. The ground of review was that Ms De Andrade was not properly notified of the bankruptcy proceedings. While she conceded that efforts were made to serve her with a bankruptcy notice, her submission was that she never received notification of any court dates and, in particular, was not effectively served with the creditor’s petition. She made enquiries to establish whether a bankruptcy was proceeding, but this was made difficult by Da Vesi changing lawyers, she submitted. As to service of the creditor’s petition, Ms De Andrade submitted that the email address in the orders for substituted service was an old email address that she was no longer using. She submitted the two addresses for prepaid post were in Narrabundah and Griffith, but she was living in Farrer at that time. The phone number for the SMS was not her phone number, Ms De Andrade submitted, but was for a phone that belonged to her estranged husband’s business.

Decision

Reasons for decision

I also take into account the prejudice to Ms De Andrade’s creditors, including Da Vesi.Conclusion and orders For these reasons I refuse the application for an extension of time. The application for review of the Registrar’s sequestration order also fails. Ms De Andrade’s applications are dismissed. In relation to costs, in my opinion Ms De Andrade’s applications are without merit and she has not acted reasonably. The trustee acted reasonably. I will hear the parties as to the precise form of orders, and as to costs.

Ratio Decidendi

Legal Principle Established

He submitted that trustees in proceedings generally remain silent in relation to the Court’s determination as to the “validity” of the sequestration order but have sought to be heard in relation to any determination as to costs. The balance of the submissions of the trustee in bankruptcy concerned costs.Findings and consideration The first issue is the service of the creditor’s petition. The affidavits of Benjamin Wicks, licensed process server, show that on 13 September 2018 the creditor’s petition was delivered to Hello Café by placing it on a table near the counter and that Mr Wicks spoke to a male employee at the Café. The male said he was going to throw out the envelope with the creditor’s petition in it and did so by putting the envelope in the rubbish bin outside the Café. The affidavit of Rory Markham shows that prior to Adero Law being retained as solicitors for Da Vesi, Da Vesi had retained the law firm John Nicholl & Co Pty Ltd trading as Canberra Legal Group. Mr Markham deposes that since Canberra Legal Group went into liquidation on 10 May 2018, all emails and phone numbers of former Canberra Legal Group staff have remained the same as they were. All such emails are redirected to a “catch-all” inbox which is reviewed by a current director of Canberra Legal Group, Peter Romano. Where appropriate, such emails may be forwarded to staff at Adero Law for actioning. Similarly, Mr Markham deposed, to the best of his knowledge, phone numbers associated with Canberra Legal Group and its former staff are subject to the same “catch all” policy. Mr Markham said he had caused a search to be conducted of all emails and calls made to Canberra Legal Group and found no contact made by Ms De Andrade, or any person claiming to act for Ms De Andrade, to any of the normal emails and phone numbers of Canberra Legal Group. In the affidavit of Ms De Andrade dated 13 March 2019 she alleged that she called the ACT Law Society and was told that Canberra Legal Group had gone out of business. In “May of 2010 (sic)”, Mr Markham deposed, he notified the Law Society that Canberra Legal Group had taken over a number of the files of John Nicholl & Co and that they could refer any queries regarding Canberra Legal Group matters to Kim Quade who assists with the administration of both Canberra Legal Group and Adero Law. Mr Markham deposed that “[s]ince May 2010 (sic)” he had received a number of referrals from the Law Society for people enquiring about matters formerly in the carriage of John Nicholl & Co. Mr Steve deposed that Ms De Andrade resides in and frequently attends the residence at 28 Lefroy Street Griffith. He is a co-owner of a property neighbouring 28 Lefroy Street Griffith. He said he had known of Ms De Andrade for a period of nearly two years and had known of her husband dating back approximately 20 years. He deposed that since 22 March 2018 he had been able to recognise Ms De Andrade by sight. While he was unable to remember exact dates when he had seen Ms De Andrade, he deposed that in the period since 22 March 2018 he had seen her on the property at 28 Lefroy Street Griffith, including looking out from one of the windows in the building at that address. He had also seen her around the neighbourhood, including walking to and from the Griffith shops. He had also seen her entering or exiting a dark van at the property at 28 Lefroy Street Griffith.