Hudson, C.P. v G.E. Crane & Sons Ltd

[1990] FCA 541

Re: CHRISTOPHER PAUL HUDSON
Ex Parte: G.E. CRANE AND SONS LIMITED
No. Qld P702 of 1990
FED No. 541
Bankruptcy
25 FCR 318

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
GENERAL DIVISION
Pincus J.(1)

CATCHWORDS

Bankruptcy - application to review dismissal of creditor's petition - what constitutes personal service - bankruptcy notice affixed to door.

Bankruptcy Act ss.16(5), 40(1)(g), 306

HEARING

BRISBANE

#DATE 3:9:1990

Solicitors for the applicant: Mr. J. Walker of James Walker

ORDER

1. The creditor's petition be amended by deleting the first date appearing in paragraph 4 and replacing it by "6 June 1989", and deleting the second date there appearing and replacing it by "23 May 1989".

2. Re-verification and re-service is not required.

3. The finding of the act of bankruptcy as asked in the petition as amended be made.

4. All other findings which the Act makes necessary to ground a sequestration order are made.

5. The sequestration order is made in respect of the estate of the judgment debtor, Mr. Hudson.

6. The petitioning creditor's costs of and incidental to the proceedings be taxed and paid in accordance with the Bankruptcy Act 1966.

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 a petitioning creditor under the Bankruptcy Act 1966 to review an order of the District Registrar of 17 July 1990. On that date, the District Registrar dismissed the petitioning creditor's bankruptcy petition, apparently on the ground that the bankruptcy notice had been served out of time.

1. The application, which is made by Mr Walker, the petitioning creditor's solicitor, relies upon a ground which seems not to have been taken before the District Registrar. In brief, the ground now relied on is that the service which was held to be too late is of no consequence because the bankruptcy notice was served on an earlier occasion, within time. I required notice of this application to be given to the debtor, but he has not appeared.

2. The notice was issued on 4 May 1989, and so the last day for service, under rule 9 which requires service within six months of issue, was 5 November 1989. There was an order for substituted service made on 13 October 1989 but service was not effected under that until after 5 November 1989, namely, on 19 December 1989. Rule 9 permits extension of the six month period for service, but an order for extension must be made, under that rule, before the expiration of that period or any previous extension, so it is not possible to extend the time for service now. The point taken is that the service was in any event properly effected, on 23 May 1989. It seems clear that this was not previously relied on, but there is nothing in s.16(5) which limits the Court's review power to grounds taken before the Registrar.

3. The evidence concerning 23 May 1989 is, in substance, that instead of handing the bankruptcy notice to the debtor, the process server attended at his address and when the debtor refused to admit the process server to the premises, the process server attached the bankruptcy notice to the front door. During this period, that is when the server was attaching the notice, he explained to the debtor (who was behind the closed door) what he was doing and finished by saying, "Are you sure you would not like to come out and accept service?" to which the debtor replied "no." There seems no doubt that the person who spoke to the process server was the debtor.

4. It should be added that under the order for substituted service, a copy of the notice was subsequently posted, and also it appears that when the petition first came on for hearing, no point was taken about service by the debtor, who came to Court on that occasion. In these circumstances, a question arises whether s.306 of the Bankruptcy Act could avail the creditor. It has been construed recently in the High Court: Kleinwort Benson Australia Limited v. Crowl (1988) 79 ALR 161. In view of the conclusion I have reached about Mr Walker's new argument, it is not necessary to decide the effect of s.306, in the circumstances of this case. I would merely say that if the proceedings come within the first part of the provision (that is, if there was an irregularity) then it would seem clear that no substantial injustice has been caused.

5. I should add that the difficulty in applying s.306 is the apparent intractability of rule 15; that is, the rule requires personal service, and if there is no personal service there may be a question whether s.306 has any room for operation. On the other hand, the rule is made under s.315(1) of the Act, which requires that rules and regulations not be inconsistent with the Act. So that if rule 15 purports expressly or implicitly to preclude the application of s.306 to service questions, its validity might be questionable. However, I find it unnecessary to pursue those points, because I have come to the conclusion, as I have mentioned, that Mr Walker is right about his main point.

6. Under s.40(1)(g) of the Act, the bankruptcy notice must be served on the debtor and the effect of rule 15, as I have mentioned, is that it must be served personally. The only relevant exception is that an order may be made under s.29(2) for service in some other fashion. The effect of the requirement of personal service was recently discussed by Gummow J. in Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 83 ALR 265.

7. After reviewing the authorities, His Honour said:
   

"I accept the submission by the respondent to the present application that there may be delivery

personally to the debtor of process within the

meaning of r.15 of the Bankruptcy Rules, even though the process has not been left in what Patteson J. described as the, 'actual corporal possession of the defendant'. If the debtor were refusing to take such actual corporal possession of the process, but the process server informed the debtor of the nature of the process and left it before or near the debtor so that the debtor had unimpeded and immediate

access to the documents, that in my view should in general be sufficient to comply with r.15.". (276-277)

1. In Graczyk v. Graczyk (1955) ALR (CN) 1077, personal service was held to have occurred in circumstances which are somewhat similar to the present, with the difference that instead of fixing the notice to the door, the process server pushed it under the closed door. What was done here seems to me about as effective, as a practical matter. In the Graczyk case, the person served had to go to slightly less trouble to obtain the document, namely stooping, whereas in this case the debtor, who was, it appears, behind the front door, would have had to open it to remove the document from the door. But it does not seem to me that that difference is sufficient to warrant the conclusion that the service here was other than personal. The document was left near the debtor and the debtor had access to it, which was impeded only by his own front door, which he could have opened, and for all one knows did open, to get the document. The conclusion at which I have arrived is that there was personal service, as Mr Walker submitted.

2. It is necessary to deal with two others matters. One of them is that the petition is defectively drawn, as the Registrar's certificate points out, in that the name of the petitioning creditor does not appear in the body of the document. It is clear who the petitioner is, because it is stated on the second page and it is also stated twice on the first page, but by a mistake, the document leaves out the name at another place where it should be. It seems to me that, consistently with the decision in Kleinwort Benson, it must be held to be a formal defect. A more serious defect is the fact that the date of the act of bankruptcy is incorrect. Even on the date of service previously relied on, it was incorrect.

3. The point which has troubled me is whether I should require the petition to be re-verified and re-served after amendment. I have decided, in the special circumstances of the case, particularly the circumstance that the debtor has had ample notice of the claim of the judgment creditor and has not met it, nor disputed it, that I should amend the petition without requiring re-verification and re-service.

4. The notice was served on 23 May and it required action within 14 days after notice. The last day for compliance with the notice was 6 June 1989 and that was the date upon which the bankruptcy notice was committed. Therefore I will amend the petition by deleting the first date appearing in paragraph 4 and replacing it by 6 June 1989, and deleting the second date there appearing and replacing it by 23 May 1989, and I dispense with re-verification and re-service.

5. I have not reached a conclusion adverse to that of the District Registrar on the point which was dealt with by him, viz. s.306. I have not found it necessary to determine whether the District Registrar was right about that. I have decided the case on a different point, which was not raised before the District Registrar.

6. Apart from the order for amendment and dispensing with re-verification and re-service, which I have made, the orders will be: (1) I find the act of bankruptcy alleged in the petition as amended. (2) I make all the other findings which the Act makes necessary to ground a sequestration order. (3) I make a sequestration order in respect of the estate of the judgment debtor, Mr Hudson, and (4) I order that the petitioning creditor's costs of and incidental to the proceedings be taxed and paid in accordance with the Act.