DCT v Benjamin
[2000] FMCA 12
•18 December 2000
FEDERAL MAGISTRATES COURT OF AUSTRALIA
Deputy Commissioner of Taxation v David Charles Benjamin
[2000] FMCA 12
BANKRUPTCY – Service of bankruptcy notice and creditor’s petition – proof of service – identity of the person served – alleged compromise of judgment debt – Bankruptcy Act 1966, ss 40(1)(g), 43, 52(1)(b), 306 – Bankruptcy Regulations, reg 16.01(1) – Federal Court Rules, Order 1 Rule 8 – Re Goldberger; ex parte JJ Williams (Murwillumbah) Pty Ltd [1958] QWN 41 cited – Re Woodley; ex parte Bank of New South Wales [1971] ALR 155 cited
Applicant: Deputy Commissioner of Taxation
Respondent: David Charles Benjamin
File No: BZ136/00
Delivered on: 18 December 2000
Delivered at: Sydney
Hearing dates: 7 and 18 December 2000
Judgment of: Driver FM
REPRESENTATION:
Solicitors for the Applicant: Mr E Howell
Australian Government Solicitor
Respondent: Respondent in person
FINDINGS AND ORDERS:
I am satisfied that the debtor committed the act of bankruptcy alleged in the petition.
I am satisfied with the proof of the other matters of which sub section 52(1) of the Act requires proof.
I therefore make a sequestration order against the estate of David Benjamin and order that the petitioning creditor’s costs including reserved costs, if any, be taxed and paid in accordance with the Act.
IN THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
SYDNEY REGISTRY
No BZ136 of 2000
BETWEEN:
DEPUTY COMMISSIONER OF TAXATION
Applicant
And
DAVID CHARLES BENJAMIN
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
This matter is a contested creditor’s petition under the Bankruptcy Act 1966 (Cth) (“the Act”). The issues in dispute are first, whether the bankruptcy notice was served on the debtor, secondly whether the creditors petition was served on the debtor, and thirdly, whether the debt has been paid or compromised by the acceptance of $26,000. Mr Benjamin is an unrepresented litigant in person. He alleges in his material that the creditor’s petition and bankruptcy notice were not served on him but on his twin brother. He alleges that at the time of service of the bankruptcy notice and service of the creditor’s petition he was in New South Wales and the ACT. Mr Benjamin also alleges that another brother has been involved in negotiations with the Australian Taxation Office on his behalf and that as a result of those negotiations the ATO has agreed to accept the sum of $26,000 in full settlement of the debt.
RELEVANT FACTS
The following facts are undisputed. On 11 December 1998 the applicant obtained judgment against the respondent in the Queensland Magistrates Court for the sum of $30,645.32. On the strength of that judgment debt the bankruptcy notice was issued on 3 June 1999. The bankruptcy notice was purportedly served on 15 November 1999. The creditors petition was presented on 15 February 2000 for $30,645.32, being the amount of the judgment debt. The creditor’s petition was purportedly served on 20 March 2000.
The applicant has filed an affidavit on 15 February 2000 by Sheryl Elizabeth Greenwood, verifying the creditor’s petition. In addition, the applicant has filed an affidavit verifying paragraph 4 of the petition by Ngete Luna Upham on 15 February 2000; an affidavit of personal service relating to the bankruptcy notice and a certified copy of the judgment by John Nicholas Phillips on 15 February 2000; an affidavit of debt by Sheryl Elizabeth Greenwood on 29 March 2000; an affidavit of search by Tracey Lewis relating to a further debt of $133,973.15 claimed by the applicant filed on 29 March 2000; an affidavit of John Kyte Collet Foster filed on 24 May 2000 relating to dealings between the solicitors for the applicant and the respondent concerning the conduct of the proceedings relating to the creditors petition; an affidavit of Kylie Leanne Anderson filed on 21 July 2000 relating to an adjournment request earlier in the proceedings; an affidavit of service filed on 29 August 2000 relating to the creditors petition by John Nicholas Phillips; an affidavit of John Phillips filed on 29 August 2000 relating to the identity of the person served with the bankruptcy notice; an affidavit by Kevin Gyles Springwell filed on 29 August 2000 relating to investigations conducted by Mr Springwell in order to determine the identity of the respondent; and a further three affidavits filed in court today, being the affidavit of Kelly Kathleen Allen, sworn on 18 December 2000, an affidavit of debt of Edith Mary Novac sworn on 18 December 2000, and an affidavit of Sheryl Greenwood sworn on 5 December 2000.
As I have already noted, the respondent opposes the petition and has on 27 July 2000 filed a notice of intention to oppose the petition in accordance with the Federal Court rules. The grounds of opposition to the petition are: first, the bankruptcy notice and creditor’s petition were not served on the respondent but were instead served on his twin brother. In addition, the respondent opposes the petition on the ground that the judgment debt was or has been paid or compromised by acceptance in full of the payment made on behalf of the respondent. In support of these grounds of opposition the respondent has filed an affidavit on 27 July 2000. The respondent's evidence includes a photocopy of what purports to be a handwritten letter from his cousin concerning his whereabouts at the time of service of the bankruptcy notice. The photocopy of the handwritten letter is extremely poor quality and is mostly illegible. That was explained by the respondent on the basis that a fire in his premises had largely destroyed the original document.
The respondent has also annexed to his affidavit what purports to be a typewritten letter from a brother in New Zealand to the effect that the respondent's other brother (a twin of the respondent) had contacted him and advised him that the bankruptcy notice had been served on the twin and that he, that is the brother in New Zealand, had arranged with the Taxation Office for the debt to be settled by agreement by payment of the sum of $26,000. The respondent deposes that the bankruptcy notice was not served on him, that the debt was compromised by the petitioning creditor, that the amount tendered was to be accepted by the creditor in full and final settlement of the matter, that the creditor’s petition was not served on him and that at the date of service of the petition the respondent was in Dubbo and Canberra. Also annexed to the affidavit is what purports to be a copy of the credit card statement, relating among other things to payment of accommodation at Dubbo on or about 20 March, although the year was unspecified.
CONSIDERATION OF THE ISSUES
Section 40(1)(g) of the Act refers to the bankruptcy notice being served on the debtor. There is no regulation or rule prescribing how specifically the method of service of the bankruptcy notice must be effected. Regulation 16.01(1) provides that, unless the contrary intention appears, where a document is required or permitted by the Act or the Bankruptcy Regulations to be given or sent, or served on a person, that may be effected by the means set out in that regulation. A method of service includes personal service. Personal service is the usual option, considering the ramifications of an expired bankruptcy notice. In cases where the debtor is refusing to take actual corporal possession of the process to be served, it is sufficient that the process server, after explaining the nature of the contents of the documents, places the documents in front of or near the debtor so that he has immediate and unimpeded access to them. It is not necessary for the process server to touch the debtor with the documents. There is some authority for the proposition that is not essential that personal service be effected on the debtor if the bankruptcy notice is served on some other person who brings it to the attention of the debtor promptly and no injustice results: Re Goldberger; ex parte JJ Williams (Murwillumbah) Pty Ltd [1958] QWN 41.
A creditor’s petition and supporting affidavits must be served personally on the debtor unless an order for substituted service is obtained: s.52(1)(b) and s309(2) of the Act, read in conjunction with the Federal Court Rules.
Generally speaking, the service provisions are construed strictly. They require the handing to the debtor of a copy of the petition and copies of the supporting affidavits and any consent by a trustee to act and ensuring that they have been handed to the right person, commonly by asking the person whether he or she is the debtor named in the petition. However, a failure to prove all of the elements of service can be a technical defect which the court can cure in the exercise of its discretion, if satisfied the petition and supporting affidavits actually come to the debtor's attention: s.306 of the Act; Federal Court Rules order 1 rule 8; Re Woodley; ex parte Bank of New Sourth Wales [1971] ALR 155. That decision by the Supreme Court of Queensland was referred to in argument on behalf of the applicant. The Court can presume that the petition came to debtor's attention from the fact that he or she appeared at the hearing and is represented.
In the present case it is unnecessary to have resort to those expedients. There is in my view compelling evidence filed on behalf of the applicant that the bankruptcy notice and the creditor’s petition were in fact served personally on the debtor. The evidence put forward by the respondent in support of the proposition that service was effected on his twin brother is frankly unconvincing. It was open to the respondent to bring forward more persuasive evidence. The respondent could have called his twin brother as a witness or at least filed an affidavit by him. He has not done so. He could also have called the cousin with whom he allegedly stayed at the time of service of the bankruptcy notice and again he has not done so. I draw an inference from that failure that evidence from the twin brother and the cousin would not have assisted the respondent. I conclude that the bankruptcy notice and the creditors petition were served personally on the debtor as asserted by the applicant.
10. Section 43 of the Act provides that, subject to the Act, where a debtor has committed an act of bankruptcy and at the time when the act of bankruptcy was committed the debtor was personally presented or ordinarily resident in Australia, or had a dwelling house or place of business in Australia, or was carrying on a business in Australia, either personally or by means of an agent or manager, or was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager, the Court may on a petition presented by the creditor, make a sequestration order against the estate of a debtor.
11. In the present case the applicant asserts that the debtor has committed an act of bankruptcy by failing to respond to the bankruptcy notice within the required time. It is conceded that the judgment debt was paid in part but that occurred after the time for compliance with the bankruptcy notice had expired. The respondent, however, seeks to avoid a sequestration order by asserting that the creditor had agreed to accept the amount tendered in complete satisfaction of the judgment debt. The only evidence in support of the respondent's position is his own affidavit and the annexed typewritten letter purporting to come from a brother in New Zealand. I am troubled by that evidence. In the first place there is no affidavit from the brother in New Zealand who allegedly arranged the payment. Secondly, what purports to be the letter from the brother in New Zealand appears to have been printed on the same printer which produced the respondent's affidavit, presumably in Australia. In the circumstances I do have a concern about the authenticity of the letter. I put this concern to the respondent at hearing but he was not able to offer any explanation.
12. I am not persuaded by the respondent's evidence. There is no evidence before the Court of which it would be safe to conclude that the applicant accepted the amount tendered in satisfaction of the debt. In the circumstances I conclude that the respondent committed an act of bankruptcy by failing to respond to the bankruptcy notice within the required time. There is no dispute that the respondent was personally present or ordinarily resident in Australia at the time when the act of bankruptcy was committed.
CONCLUSIONS AND ORDERS
13. It is accordingly open to the Court to make the sequestration order as sought by the applicant. I am satisfied that in the circumstances of this case the sequestration order should be made. In addition to the remaining payment of the judgment debt which is unsatisfied the applicant claims an amount of $133,973.15 is owing by the respondent to the applicant. I am satisfied that it would be in the interests of creditors for the sequestration order to be made. The respondent has not advanced any other reasons why a sequestration order should not be made, apart from his desire to negotiate an outcome with creditors or with the tax office if that were possible in the immediate future. In all the circumstances I make the following sequestration findings and orders:
(1)I am satisfied that the debtor committed the act of bankruptcy alleged in the petition.
(2)I am satisfied with the proof of the other matters of which sub section 52(1) of the Act requires proof.
(3)I therefore make a sequestration order against the estate of David Benjamin and I order that the petitioning creditor's costs including reserved costs, if any, be taxed and paid in accordance with the Act.
14. Under the Bankruptcy Rules a copy of this order is to be given to the official receiver in Brisbane within two days after the order is entered. Finally, the Court notes that the date of the act of bankruptcy is 6 December 1999.
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