Dingwall v Commonwealth of Australia

[1992] FCA 627

Re: ANTHONY GINNANE
Ex parte: DINER'S CLUB LIMITED
No. V P240 of 1992
FED No. 627
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA
Olney J.(1)

CATCHWORDS

Bankruptcy - service of creditor's petition - debtor not presently in Australia - solicitor acting for debtor in negotiations in relation to debt due to petitioning creditor - solicitor in frequent contact with debtor by telephone - no evidence of debtor attempting to evade service - order for substituted service.

Bankruptcy Act, s. 31A, 309(2)

Federal Court Rules, O. 1 r. 11

Bankruptcy Rules, Rules 15, 113(1), 119A

Re Trimbole; ex parte Deputy Commissioner of Taxation (1984) 4 FCR 586

Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256

HEARING

MELBOURNE

#DATE 31:8:1992

Mr H.W. Fraser (instructed by Peter Eggleston and Associates) appeared for the debtor.

Mr R. Mitchell (instructed by Kliger Katz) appeared for the judgment creditor.

ORDER

The Court orders that:

1. The order made by Deputy Registrar Agnew on 19 June 1992 be affirmed;

2. The application for review be dismissed;

3. The costs of the application for review be reserved pending the hearing of the creditor's petition.

Note: Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules.

JUDGE1

This is an application made on behalf of the debtor for the review of an order made by Deputy Registrar Agnew on 19 June 1992.

1. Section 31A of the Bankruptcy Act makes provision for certain powers of the Court to be exercised by a Registrar of the Court including the power to make orders or give directions in relation to the service of a notice or other document under the Act (s. 31A(1)(a)).

2. Pursuant to a delegation of power made under section 31A(1), on 19 June 1992, upon the ex parte application of the petitioning creditor, Deputy Registrar Agnew ordered that:
   

1. Personal service of the Creditor's Petition be dispensed with.

2. In lieu thereof the Creditor's Petition be served as follows:

By handing a letter addressed to the debtor containing an official copy of the Petition and a copy of each Affidavit verifying it and a copy of today's order to a person apparently over the age of 16 years and working at the offices of Messrs. Kliger Katz, Solicitors, 469 La Trobe Street, Melbourne in an envelope marked to the attention of Mr Roger Rothfield.

3. Service of the Creditor's Petition be deemed to be effective after the expiration of 7 days from the happening of the event referred to in paragraph 2.

4. Costs of and incidental to the application be reserved.

1. Subsection 31A(6) provides that a party to a proceeding in which a Registrar has exercised any of the powers of the Court under subsection (1), may within the time prescribed by the rules, or within any further time allowed in accordance with the rules, apply to the Court to review that exercise of power. The time prescribed by Rule 119A for the purpose of subsection 31A(6) is 21 days after the day on which the Registrar has exercised any of the powers of the Court pursuant to subsection 31A(1). On 13 July 1992 Deputy Registrar Agnew made an order pursuant to Rule 119A(2) extending to 27 July 1992 the time for the debtor to file and serve an application to review the order made on 19 July 1992. As it happens, the review application, albeit dated 27 July 1992, was not actually filed until 28 July 1992 but no issue has been taken on that point and if necessary a further extension could be sought.

2. The creditor's petition was presented on 6 March 1992 and was supported by the usual affidavits verifying its contents. It was originally returnable on 12 May 1992, but was adjourned to 22 June 1992 and later, first to 13 July 1992 and then to 26 August 1992. On 15 June 1992 the petitioning creditor filed an application for an order for substituted service of the affidavits verifying the petition. That application was supported by an affidavit which deposed to facts suggesting that in May 1992 one Roger Rothfield, a solicitor employed by Messrs Kliger Katz, was acting for the debtor in relation to his affairs, including the then pending bankruptcy petition, that the debtor was then overseas and that he was in frequent contact with the debtor by telephone. The order under review was made in response to the application. Precisely why the petitioning creditor sought substituted service of the affidavits only, and not the petition, does not appear from any material on the record, but no issue is taken on that point. On 25 June 1992 service of the petition and affidavits was duly effected in accordance with the terms of the order made on 19 June 1992.

3. On 9 July 1992 Messrs Kliger Katz as solicitors for the debtor filed a number of documents. First there was a "Notice of Appearance (Order 9 Rule 4)" whereby the debtor appeared conditionally. The reference to "Order 9 Rule 4" is obviously a reference to the Federal Court Rules which do not apply to proceedings under the Bankruptcy Act (see Federal Court Rules, Order 1 Rule 11). The second document filed is in the form of Form 8 under the Bankruptcy Rules and is a Notice of Intention to Appear at the hearing of the petition. In the body of the document there is a statement that:
   

The judgment creditor (sic) refers to the affidavit of Roger Elliot Rothfield sworn the 9th day of July (sic) as setting out his grounds of opposition to the petition.

1. The notice is signed by Kliger Katz as solicitors for the judgment debtor. An affidavit sworn by Roger Elliot Rothfield on 9 July 1992 was also filed on the same day.

2. The thrust of Rothfield's affidavit, and thus the grounds upon which the debtor will oppose the petition, is that the material put before the Deputy Registrar on 19 June 1992 did not disclose evidence that there existed a practical impossibility of personal service or that the petitioning creditor had made all reasonable efforts to effect personal service. The deponent also says that there is no evidence of the debtor attempting to evade service.

3. The Bankruptcy Act is silent as to matters such as service of process outside of Australia and substituted service but there can be no question that service of a petition outside of Australia is contemplated. Rule 15 provides:
   

Unless otherwise ordered by the Court under sub-section 309(2) of the Act -

(a) service of a bankruptcy notice shall be effected on the debtor by delivering to the debtor personally a copy of the bankruptcy notice signed and stamped by the Registrar; and

(b) service of a creditor's petition shall be effected on a debtor by delivering -

(i) an official copy of the petition;

(ii) a copy of the affidavit or of each affidavit verifying the petition; and

(iii) where a registered trustee has consented, as referred to in paragraph 12(3)(ba), to act as the trustee - a copy of the instrument of consent, to the debtor personally -

(iv) if service is effected in Australia - not less than 8 days before the hearing date for the petition; or

(v)

in any other case - not less than such reasonable time before the hearing date for the petition as is determined by the Registrar.

1. Unlike a bankruptcy notice, which by virtue of section 40(1)(g) may only be served on a debtor elsewhere than in Australia by leave, no leave is required to serve a petition out of Australia. In re Trimbole; ex parte Deputy Commissioner of Taxation (1984) 4 FCR 586, a case involving an application for leave to serve a bankruptcy petition on a debtor then in prison in Ireland, Sheppard J. said (at p 587):
   

In the course of that discussion there arose consideration of whether or not it was appropriate at all to serve a bankruptcy petition outside the jurisdiction. Counsel referred me to the decision of the present Chief Justice of the High Court, when Judge in Bankruptcy, in Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256 which is authority for the proposition that a bankruptcy petition may be served outside the jurisdiction. I mention, however, in passing that it is curious that there is no provision in the Act or Rules expressly authorising such a course. That is contrary to the position which prevails in England where the Rules of Court make provision for such service; rule 86 of the Bankruptcy Rules 1952, see Halsbury's Statutory Instruments (4th ed), Vol 3, p 233. The rules of the Federal Court in their application to matters other than bankruptcy matters made specific provision for service outside the jurisdiction (O8). Those rules are expressly made not to apply in bankruptcy (O1, r11). It seems to me that consideration should be given to the question of whether Bankruptcy rules should not be made dealing expressly with this matter.

I should add that I would myself even without the authority of the decision of Gibbs J. (as he then was) in Re Mendonca have reached the conclusion there were indications in the Bankruptcy Act 1966 (Cth) that petitions might be served out of the jurisdiction. Such an indication is provided in the very ground relied upon in the present petition. The act of bankruptcy which it alleges is that the debtor within six months of the presentation of the petition committed an act of bankruptcy, namely, that from 25 February 1984 and continuing the debtor with intent to defeat or delay his creditors has remained out of Australia. The petition was presented on 24 August 1984. As I have said, my major concern in having the matter looked at again was not the question of whether the court had jurisdiction to give leave for the petition to be served out of Australia but the precise terms of the order which was made. I am satisfied, having considered some authorities and texts overnight, that it was inappropriate to order that an official copy of the petition be sent even by post to the debtor in Ireland.

The recognised course, so it seems to me, is to send notice of the fact that the petition has been presented. The reason for this is that it is inappropriate, as a matter of international comity, to send to a place outside Australia (except perhaps another part of the British Commonwealth) unless there be a relevant convention - there is none affecting Ireland - an official copy of originating process which bears the seal of this Court and which may be thought to contain a command for the appearance of the person to whom the originating process is addressed in default of compliance with which he may suffer prejudice or disadvantage - in this case, prejudice or disadvantage to his status because he will not be heard.

1. Sheppard J.'s approach in re Trimbole differed from that followed by Gibbs J. in re Mendonca to the extent that in the latter case an order was made for the service by post of the petition (as distinct from mere notice of it) on an overseas resident. In both Trimbole and Mendonca there appears to be an underlying assumption that leave is required to effect service on a debtor overseas. In Mendonca Gibbs J. said at p 261:
   

Neither the Bankruptcy Act 1966-1968 nor any Rules made thereunder makes any express provision permitting service outside the jurisdiction. Rule 15(b)(ii) plainly shows that it was contemplated that service of a petition might be effected outside Australia but there is no rule, similar to r. 86 of the English Bankruptcy Rules 1952, expressly empowering the Court to order such service. However, by s. 309(2) it is provided: "Where a notice or other document is required by this Act to be served on or given to a person, the Court may, in a particular case, order that it be given or served in a manner specified by the Court, whether or not any other manner of giving or serving the notice or other document is prescribed." Moreover, r. 113(1) provides as follows:

"Where the Court is satisfied that -

(a) the provisions of the Act relating to practice and procedure and the rules made under the Act do not make provision with respect to the practice and procedure applicable in the circumstances of a particular case; or

(b) difficulty arises or doubt exists as to the practice or procedure applicable in the circumstances of a particular case; the Court may give such directions with respect to the practice and procedure to be followed in the case as the Court thinks necessary." These provisions give the Court ample power to order service outside the jurisdiction, and it seems to me that once the Court sees that a petition is presented in circumstances which bring the case within s. 43(1), but the debtor has absconded from Australia, the Court will normally order service on the debtor out of the jurisdiction. Clearly the present case is one in which the petitioning creditor should be permitted to serve the petition out of the jurisdiction.

1. No real assistance can be gained from dicta flowing from other jurisdictions where the statutory and regulatory regime is not the same as under the Bankruptcy Act and Rules. The provisions of section 309(2) are all embracing and are not hedged by conditions. The discretion to order service of a petition otherwise than as prescribed by Rule 15 must of course be exercised judicially and the underlying consideration must be to ensure as far as possible that the debtor will be notified of the proceedings. In Mendonca Gibbs J. said (at p 261):
   

The final question that remains is whether it is appropriate to order service by post in the manner sought by the Commissioner. It is a fundamental rule that a method of substituted service will not be allowed which will not in all reasonable probability be effective to bring knowledge of the proceedings to the debtor (Re Stewart; Ex parte Barrett (1967) 10 FLR 99.

With respect, this proposition is entirely consistent with the authorities and is so self evident that it hardly needs to be stated.

1. I turn now to consider the application which came before Deputy Registrar Agnew on 19 June 1992. The evidence established that the debtor was in all probability overseas but that his solicitor in Melbourne was in regular, indeed frequent contact with him, and was in receipt of instructions from him to negotiate with the petitioning creditor in relation to these very proceedings. Clearly, the fact of the debtor being overseas was no impediment to him being served with a petition and equally clearly, the method of service devised by the Deputy Registrar was one calculated to ensure that the debtor would have knowledge of the proceedings. The order made was both within the scope of the Deputy Registrar's authority and in accordance with relevant principles. In the circumstances, the order made on 19 June 1992 should be affirmed and the review application dismissed.