Diners Club Pty Ltd v Wakim
[2006] FMCA 1038
•19 July 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DINERS CLUB PTY LTD v WAKIM | [2006] FMCA 1038 |
| BANKRUPTCY – Review of Registrar’s order dismissing creditor’s petition – whether petition should be dismissed – where service of petition found invalid due to failure to provide extended hearing date. |
| Bankruptcy Rules, r.18A |
| Applicant: | DINERS CLUB PTY LTD |
| Respondent: | NICHOLAS FAIRD WAKIM |
| File number: | MLG 1061 of 2005 |
| Judgment of: | McInnis FM |
| Hearing date: | 19 July 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 19 July 2006 |
REPRESENTATION
| Counsel for the Applicant Creditor: | Mr. R.G. Mitchell |
| Solicitors for the Applicant Creditor: | Eggleston Mitchell Lawyers |
| Counsel for the Respondent Debtor: | No Appearance |
| Solicitors for the Respondent Debtor: | Piper Alderman Solicitors |
ORDERS
The orders made by the Registrar on 7 June 2006 be set aside.
All times be abridged and so much of the rules be dispensed with that would otherwise prevent the petition as extended being heard on 1 August 2006 at 9.30 am and which would otherwise prevent an oral application being made this day for substituted service of the extended creditors' petition.
The personal service of the extended creditors' petition and associated documents be dispensed with and in lieu thereof the extended creditors' petition together with copies of affidavits verifying paragraphs of the petition together with a sealed copy of this order be served as follows:
(a)By posting a sealed copy of the extended creditors' petition and associated affidavits together with a sealed copy of the order by ordinary mail to the debtor at 4 Lalani Terrace, Templestowe, Victoria 3106; and
(b)By posting by ordinary mail a copy of the said documents to Piper Alderman Solicitors at GPO Box 2105, Melbourne, 3001.
Liberty to apply is granted to the parties in relation to any matters arising out of the orders.
There be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1061 of 2005
| DINERS CLUB PTY LTD |
Applicant Creditor
And
| NICHOLAS FAIRD WAKIM |
Respondent Debtor
REASONS FOR JUDGMENT
(Revised from Transcript)
This is an application by Diners Club Pty Ltd (“the Applicant Creditor”) seeking review of a decision of a Registrar of the Federal Magistrates Court dated 7 June 2006 when Orders were made as follows:
“(1) The Creditors' Petition be dismissed.
(2)The applicant pay the respondent's costs of today to be taxed pursuant to Order 62 of the Federal Court Rules in default of the agreement.”
The application before this Court relies upon an affidavit of Russell George Mitchell sworn on 20 June 2006, which relevantly sets out the chronology of events in this matter. The obvious starting point to this application is the Creditor’s Petition which had been filed on 29 August 2005. At that stage, the Petition had endorsed upon it a hearing date of 11 October 2005. It is clear from the affidavit material that difficulties were encountered in relation to service of the Petition upon Nicholas Faird Wakim the Respondent Debtor. As a result of those difficulties the application was made by the Petitioning Creditor for an Order for substituted service.
On 4 November 2005, Orders were made by a Registrar of the Court for substituted service. Although the matter had been effectively listed for 11 October 2005, it would appear that an administrative adjournment of that hearing occurred so that the Petition was then listed along with the application for substituted service before a Registrar on 4 November 2005. The solicitor for the Petitioning Creditor appeared before the Registrar on 4 November 2005 and as indicated earlier in this judgment appropriate Orders were made. Pursuant to that Order, the Creditors' Petition and associated documents were served upon the Respondent Debtor on or about 8 November 2005.
Thereafter, it appears that those acting for the Petitioning Creditor became aware that the Creditors' Petition and other documents having been served pursuant to the Order for substituted service on 8 November 2005, included service of a Petition which on its face referred to a return date of 11 October 2005 and to that extent could clearly not be relied upon. So much became evident after the solicitor for the Petitioning Creditor received a telephone call from an accountant purporting to act for and on behalf of the Respondent Debtor on 22 November 2005, asking for further details in circumstances where the date on the Petition appeared to be unclear. Correspondence was forwarded by the Petitioning Creditor's solicitors to the accountants which omitting formal parts stated:
“We advise that an error has occurred in the service of the Creditors' Petition document upon Mr. Wakim. On the 4th November 2005 Registrar Bardsley made an order for substituted service of the Creditors' Petition without first extending the date of the Creditors' Petition hearing. Our firm had not realised that the Hearing date had not been extended and proceeded to serve Mr. Wakim with the document. Nevertheless, we require the documents to be returned to our office as soon as possible so that the hearing date can be extended and that service can be effected upon Mr. Wakim.”
I perhaps should pause at that stage to note, that it is not unusual for documents to be sometimes served whether pursuant to an Order for substituted service or otherwise for it then to be realised by solicitors acting on behalf of a litigation that the documents are in some manner deficient. So much is clear from the present case, that it does not mean that the document itself has to necessarily be returned but rather it may mean that a Petition as in this case can be extended and the extended Petition and associated documents re-served. In any event, it appears from the affidavit of the solicitor for the Petitioning Creditor that the Petition was ultimately received and advice and guidance were sought from the Registry of the Court as to whether or not the Petition could be extended.
It is evident from the Creditor’s Petition on file, that the Registry had extended the hearing date from 11 October 2005 to 7 June 2006. This occurred on 21 April 2006. The matter was then listed before the Court for hearing on 7 June 2006. Further attempts were then made to serve the Petition upon the Respondent Debtor and on 6 June 2006 the solicitor for the Petitioning Creditor sought to make arrangements to file a further application to seek an Order for substituted service of what I would then regard as the extended Creditors' Petition. Clearly arrangements would need to be made to extend the hearing date of that Petition. It is clear from the Court file copy of the Petition that on
6 June 2006 Registry again extended the Petition time from 7 June 2006 until 1 August 2006 at 9.30 am.
As a result of a request to attend Court, the solicitor for the Petitioning Creditor appeared before a Registrar of the Federal Magistrates Court on 7 June 2006. On that date it is understood that Orders were made of the kind referred to earlier in this judgment. It is of some interest to note that on that date a solicitor from a firm Piper Alderman purported to appear on behalf of the Respondent Debtor. I indicate purported to appear on behalf of the Respondent Debtor as there is nothing on file to indicate that the solicitors ever placed themselves on the record in these proceedings pursuant to the Rules of the Court. Further, in the Order of the Registrar dated 7 June 2006 there is no reference made to appearances at all, let alone to any appearance from a firm of solicitors purporting to represent the Respondent Debtor.
According to the affidavit of Mr. Mitchell, submissions were made to the learned Registrar that the Petition had been extended clearly on the previous day and that the service of the original Petition was invalid because it did not comply with r.18A of the Bankruptcy Rules given the Petition contained an incorrect, or what might properly be described as an earlier date of hearing where a Respondent Debtor receiving that Petition could not possibly attend Court. The Registrar rejected those submissions and made an Order dismissing the Petition. No further application was made for any other Orders and nor does it appear any attempt was made to otherwise salvage what appears to be an unfortunate situation. No reasons are available from the learned Registrar as to why the Petition was dismissed, though clearly the Registrar may well have then formed the view that the Petition as served pursuant to the Order for substituted service was served erroneously or indeed that the Petition was perhaps then invalid.
Curiously, an Order was also made on 7 June 2006 that the Creditor pay the Respondent's costs. In circumstances where there is no solicitor on record and where there was no appearance for the Respondent properly recorded, it is difficult to see how a solicitor would then have an entitlement to costs save perhaps upon giving an undertaking to provide the appropriate notice of address for service or an indication that the solicitor was then acting for the Respondent Debtor. That has not occurred in this case and it is clear that that Order should be set aside.
In deciding whether to set aside the Orders that the Creditor’s Petition be dismissed, it is relevant to consider the status of the Petition which had been the subject of an extension of time on 6 June 2006 to
1 August 2006. If a Petitioning Creditor having obtained an extension of time of a Petition, albeit one which had previously and erroneously been served upon a Respondent Debtor in a form consistent with Orders for substituted service then chooses not to rely upon that service but rather extend the Petition to then provide a further opportunity for re-service of a Petition with a extended date, then it is not appropriate to simply dismiss the Petition. I do not see as a matter of law any requirement to do so. Accordingly, it is appropriate to set aside the Orders made by the Registrar on 7 June 2006.
An alternative approach then available to the Court and indeed now available to this Court bearing in mind that there is currently on file an extended Petition, namely a Petition extended to 1 August 2006 is to make further Orders for substituted service, to otherwise dispense with the Rules of the Court which would prevent an Order being made this day and to provide that the Petition be served within seven days of the date of this Order returnable at 9.30 am on 1 August 2006. Any issues concerning abridgement of times can be dealt with on 1 August 2006, though for present purposes it is appropriate, in my view, given the history of this matter to otherwise abridge all times so that the matter may at least be heard at first instance on 1 August 2006.
What I have endeavoured to do in this process, is to regularise the proceedings so that the Petition is effectively kept alive and the extension granted on 6 June 2006 be given effect. I do not think it is appropriate to make any Order for costs and I will indicate there will be no order as to costs.
I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 19 July 2006
2
0
1