ING Bank (Australia) Ltd v Shortland
[2012] FMCA 868
•21 September 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ING BANK (AUSTRALIA) LTD v SHORTLAND | [2012] FMCA 868 |
| BANKRUPTCY – Creditor’s Petition – Notice Stating Grounds of Opposition to the Petition filed raising both objections the Bankruptcy Notice and Creditor’s Petition – opposition not made out – Notice dismissed – Sequestration order made. |
| Bankruptcy Act 1966 (Cth), ss.42, 43, 44, 47, 52, 309(2) Cash Transaction Reports Act 1988 (Cth) Federal Court Rules 2011 (Cth) O. 7 rr. 1(1), 2, 9 Federal Magistrates Court Rules 2001 (Cth) rr 6.04, 6.06, 6.07, 15.26(2), 31.05 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) rr. 4.02, 4.04 |
| Avery v Registrar of Births, Deaths and Marriages; Avery v State of New South Wales (Attorney-General’s Department) (2010) 79 NSWLR 354 Carver v De Robillard [2006] FCA 1041 De Robillard v Carver (2007) 159 FCR 38 Deputy Commissioner of Taxation v Benjamin [2000] FMCA 12 Mineo v Etna (2000) 176 FCR 74 Re Hanlin; Ex parte South Properties Development Pty Ltd (1985) 9 FCR 357 Re Sarina; Ex parte Wollondilly Shire Council (1980) 30 ALR 266 Richmond v Bay Bon Investments Pty Ltd [2007] FCA 1060 Skalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107 Sogelease Australia Ltd v Griffin (2003) 128 FCR 399 |
| Applicant: | ING BANK (AUSTRALIA) LTD (ACN 000 893 292) |
| Respondent: | JOAN SHORTLAND |
| File Number: | SYG 1531 of 2012 |
| Judgment of: | Lloyd-Jones FM |
| Hearing date: | 29 August 2012 |
| Date of Last Submission: | 29 August 2012 |
| Delivered at: | Sydney |
| Delivered on: | 21 September 2012 |
REPRESENTATION
| Solicitors for the Applicant: | M. Rossi of Gadens Lawyers |
| Appearing for the Respondent: | Mr K. Shortland appeared as lay advocate for the Respondent |
ORDERS
The Notice Stating Grounds of Opposition to the Petition filed 13 August 2012 be dismissed.
A sequestration order be made against the estate of the Respondent Debtor, Joan Shortland.
The Applicant Creditor’s costs, including reserved costs if any, be taxed and paid from the estate of the Respondent Debtor in accordance with the Bankruptcy Act 1966 (Cth).
A copy of this sequestration order be given to the Official Receiver within 2 days.
THE COURT NOTES THAT:
The date of the act of bankruptcy is 1 May 2012.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1531 of 2012
| ING BANK (AUSTRALIA) LTD ACN 000 893 292 |
Applicant
And
| JOAN SHORTLAND |
Respondent
REASONS FOR JUDGMENT
Introduction
On 13 July 2012 the applicant creditor, ING Bank (Australia) Ltd ACN 000 893 292 (“ING”), filed a creditor’s petition in this Court against the respondent debtor, Joan Shortland, pursuant to a judgment of the Supreme Court of New South Wales in proceedings 2010/00140818 entered on 24 November 2010, of which the balance due is $173,756.13. This matter first came before a registrar of the Court on 17 August 2012 where it was adjourned to 27 August 2012. On 13 August 2012 the respondent filed a Notice Stating Grounds of Opposition to the Petition, supported by affidavit. The Registrar, before whom the matter came on 27 August 2012, referred the matter to this Court to be heard on the same day.
Evidence
ING sought to rely on the following evidence at the hearing of the petition:
a)Affidavit of Mariana Zhang sworn on 20 June 2012 (as Part 2 of the Creditor’s Petition);
b)Affidavit of Paul Higgins sworn 13 July 2012;
c)Affidavit of Patrick White sworn 11 April 2012;
d)Affidavit of Patrick White sworn 3 August 2012;
e)Affidavit of Marc Rossi sworn 24 August 2012; and
f)Affidavit of Matthew Barker sworn 24 August 2012.
The respondent sought to rely on the following evidence:
a)Affidavit of Joan Shortland sworn 13 August 2012;
b)Affidavit of Joan Shortland sworn 17 August 2012; and
c)Affidavit of Kurt Shortland sworn 27 August 2012.
Notice Stating Grounds of Opposition to Petition
The respondent’s Notice Stating Grounds of Opposition to Petition states the following grounds:
1. Oppose Creditor’s Petition.
2. Oppose to Bankruptcy Notice.
3. Refer details in affidavit.
Formal Requirements for Issuance of a Sequestration Order
The Court may make a sequestration order upon proof of the matters set out in s.52(1) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”), and subject to the jurisdiction to make sequestration orders under s.43 of the Bankruptcy Act and the conditions on which the creditor may petition under s.44 of the Bankruptcy Act being met.
Section 52(1) of the Bankruptcy Act provides as follows:
(1)At the hearing of a creditor’s petition, the Court shall require proof of:
(a) The matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient),
(b) service of the petition; verified by an affidavit of service,
(c) the fact that the debt or debts on which the petitioning creditor relies or is still owing;
And, if it is satisfied with the proof of these matters, may make a sequestration order against the estate of the debtor.
Section 43 of the Bankruptcy Act provides that the Court may make a sequestration order when:
(a)A debtor has committed an act of bankruptcy (Bankruptcy Act s.43(1)(a)); and
(b)Relevantly, at the time when the act of bankruptcy was committed, the debtor was personally present and an ordinarily resident in Australia (Bankruptcy Act s.43(1)(b)(i)).
Section 44 of the Bankruptcy Act provides that the creditor’s petition is not to be presented, unless:
(a) The debt is more that $5,000;
(b)The debt is a liquidated sum due at law and payable immediately (Bankruptcy Act s.44(1)(b)); and
(c)The act of bankruptcy in which the petition is founded was committed within 6 months before the presentation of the petition (Bankruptcy Act s.44(1)(c)).
The applicant creditor is also obliged by the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) (“the FMC (Bankruptcy) Rules”) to put before the Court affidavits:
a)Verifying the petition (Bankruptcy Act s.47(1), FMC (Bankruptcy) Rules r.4.02);
b)As to search of records of the Court and of the Federal Court as to any application in relation to the Bankruptcy Notice (FMC (Bankruptcy) Rules rr.4.04(1)(a) and 4.04(2));
c)Of service of the Bankruptcy Notice (FMC (Bankruptcy) Rules r4.04(1)(b));
d)Of service of the documents required to be served under the FMC (Bankruptcy) Rules r.4.05, (FMC (Bankruptcy) Rules r.4.06(2));
e)A search of the National Personal Insolvency Index no earlier that the day before the hearing date of the petition (FMC (Bankruptcy) Rules r.4.06(4)); and
f)Of debt which the creditor still relies as owing (FMC (Bankruptcy) Rules r.4.06(4)).
Some of the requirements under the FMC (Bankruptcy) Rules overlap with those under the Bankruptcy Act.
In relation to the matters requiring formal proof the Court finds as follows:
a)The matters stated in the petition are supported by the:
i)Affidavit of Patrick White sworn 11 April 2012 accompanying the petition (Bankruptcy Act ss. 47 and 52(1)(a), FMC (Bankruptcy) Rules r.4.02). The bankruptcy notice was served on the respondent on 10 April 2012 at 4:50pm;
ii)Affidavit of Mariana Zhang sworn 20 June 2012 attached to the Creditor’s Petition verifying paragraphs 1, 2, 3 and 4 of the Creditor’s Petition; and
iii)Affidavit of Paul Higgins sworn 13 July 2012 verifying paragraph 4 of the Creditor’s Petition;
b)The debt upon which ING relies is still owing (Bankruptcy Act s.52(1)(c));
c)The respondent has committed an act of bankruptcy (Bankruptcy Act s.42(1)(a)) committed on 1 May 2012 pursuant to s.40(1)(g) of the Bankruptcy Act;
d)At the time of the act of bankruptcy was committed was committed the respondent:
i)Was ordinarily present in Australia; and
ii)Ordinarily resided in Australia (Bankruptcy Act s.43(1)(b));
e)The debt owed by the respondent is $173,756.13, being a sum more that $5,000.00 (Bankruptcy Act s.44(1)(a));
f)The debt of $173,756.13 is a liquidated sum, payable immediately (Bankruptcy Act s.44(1)(b));
g)The respondent, Joan Shortland, failed to comply on or before 1 May 2012 with the requirements of a bankruptcy notice served on her on 10 April 2012;
h)Searches of the records of this Court and the Federal Court have been made and no application has been made in either Court in relation to the Bankruptcy Notice;
i)The Bankruptcy Notice No. 1615 of 2012 was served on the respondent, Joan Shortland, by personally serving it on her;
j)That at least five days before the date fixed for the hearing of the petition the:
i)Petition (FMC (Bankruptcy) Rules r.4.05(a));
ii)A copy of the affidavit verifying the petition (FMC (Bankruptcy) Rules r.4.05(b));
iii)A copy of the affidavit of search of court records (FMC (Bankruptcy) Rules r.4.05(c)); and
iv)A copy of the affidavit of service of the Bankruptcy Notice (FMC (Bankruptcy) Rules r.4.05(d)).
Were served on the respondent, Joan Shortland, personally; Affidavit of Patrick White sworn 3 August 2012;
k)The National Personal Solvency Index was searched on 24 August 2012 (the last business day before the petition was heard) (FMC (Bankruptcy) Rules r.4.06(3)) and that details of references in that index to the respondents are before the Court (FMC (Bankruptcy) Rules r.4.06(3)(a));
l)A copy of the relevant extract of the Index is attached to the affidavit of search of Marc Rossi sworn 24 August 2012 (FMC (Bankruptcy) Rules r.4.06(3)(b)(i)). As the matter was reserved on 27 August 2012 a new affidavit of search will be required to be filed at the next court date;
m)There is an affidavit of final debt of Matthew Barker sworn 24 August 2012, being a person with knowledge of the facts sworn the day before the hearing of the petition that the debt on which the applicant creditor relies is still owing (FMC (Bankruptcy) Rules r.4.06(3)(c)). However, as the matter was reserved on 27 August 2012 a new affidavit of final debt will be required to be filed at the next court date.
A consent to act as trustee declaration has been signed by Daniel Ivan Cvitanovic.
Hearing 27 August 2012
The matter came before the Court on 27 August 2012 for hearing of the Creditor’s Petition, as well as the respondent’s Notice Stating Grounds of Opposition to the Petition. Mr M. Rossi, solicitor of Gadens Lawyers, appeared for ING. Mr K. Shortland, the estranged husband of the respondent debtor, appeared on her behalf as a lay advocate.
Respondent’s Submissions
The respondent submits that she was served with a bankruptcy notice on 10 April 2012. Over the period of the following days and weeks, with the assistance of her daughter and her daughter’s partner, the respondent engaged a lawyer to assist in negotiations with the creditor, ING. Mark Lacy of Hickey Lawyers assisted the respondent in attempting to organise a debt agreement that would enable the respondent to stave off bankruptcy and repay the debt. Mr Lacy began engaging in discussions with the representatives of ING in order to facilitate an agreement to repay the respondent’s debt to ING. The respondent submits that the last correspondence between the parties was an email from Mr Lacy to the applicant’s representatives sent on 5 June 2012 that contained a statement of the respondent’s financial position.
The respondent contends that no correspondence was received in reply, and the next event that occurred was the service on her by, a “Mr White”, of the Creditor’s Petition, two affidavits and a consent to act as trustee. She submits that on the day she was served with the Creditor’s Petition she had received a phone call from a Joe White who said he had instructions to deliver a document to her by hand and wanted to organise a time to do so. The deponent of one of the affidavits is Patrick White, and the respondent feels that she has been misled in that the person who had telephoned her earlier had identified himself as Joe White. The respondent submits that ING has engaged in conduct that has adversely affected her, and potentially could have a life-threatening impact of the children in her care. It is submitted that she has been misled in this respect.
The respondent submits that if a sequestration order is made against her there will be no financial gain for ING. There are a number of other creditors who hold caveats over the properties owned by the respondent. The secured mortgagee of the house the respondent is currently living in is the National Australia Bank and if that house is sold, ING will not recover any of that money.
Mr Shortland submits that he maintains payments on the home where the respondent lives with their haemophiliac child and can’t allow for the stable home environment to be affected. The child relies on intravenous injections for his health. If the respondent’s mental state and health are affected as a result of these proceedings she may never recover and Mr Shortland will have two people to take care of. This may force Mr Shortland to retire, as he has made a promise to look after their child. Mr Shortland has also maintained payments on the house in which the respondent and her child live as part of that promise.
Mr Shortland also raises the way in which the loan from ING (the shortfall on which ultimately became the judgment debt which is the basis of the Creditor’s Petition) was obtained. Mr Shortland submits that it was he who sought the loan in the first place and, after much argument with the respondent, he convinced her to sign the loan documents with a broker who processed the loan. Mr Shortland was responsible for the rest of the process of acquiring the loan from ING. The purpose of the loan from ING was to refinance their investment property, which ultimately failed, and the equity in which did not sufficiently satisfy the amounts owing. Mr Shortland submits that the respondent feels the personal right and obligation to fight for her home to have security over her son and to make sure they aren’t homeless, which is what will happen if a sequestration order is made.
Mr Shortland also raises the issue that the respondent engaged a lawyer to act for her and that lawyer engaged in correspondence with ING’s legal representatives, but unknowingly to either her or her lawyer, the settlement offer they put forward was refused. The respondent submits that she was then served with a creditor’s petition, and asked her representative to ask why this had occurred when negotiations were still on foot. Her representative was advised that ING had refused the settlement offer and were seeking to proceed with the Creditor’s Petition. The respondent began feeling overwhelmed and, shortly afterwards, on 29 July 2012, terminated the services of her legal representative. The respondent then had a telephone conversation with a Mr Foley of Gadens Lawyers, acting for ING, where he confirmed that ING had rejected her settlement offer. Neither the respondent nor her legal representative at the time of service of the Creditor’s Petition had received a written rejection of the offer, despite previously engaging in both written and telephone correspondence with Gadens, and the respondent submits that there are serious issues with the conduct of Gadens in this respect. Mr Shortland submits that there are certain levels of policies for those who carry out services in corporations and the people working for these corporations need to display a level of care.
Applicant Creditor’s Submissions
Mr Rossi, appearing for ING, submits that an act of bankruptcy by the respondent occurred. He submits that the conversations referred to in the respondent’s evidence do not show that there was ever an agreement entered into to settle the debt. The proposals put forward by the respondent and her legal representative at the time were not satisfactory to ING. An act of bankruptcy has occurred, that debt remains outstanding and there is nothing in the applicant’s evidence that shows solvency, therefore, ING should be allowed to proceed against the respondent to make a sequestration order.
Mr Rossi empathises with the circumstances of the respondent, but there is no evidence to show solvency and Mr Shortland’s submissions reinforce that. There was a shortfall from the sale of one of the respondent’s properties, from which ING obtained a judgment for debt, pursuant to which ING subsequently filed a bankruptcy notice. The Bankruptcy Notice was personally served on the respondent of which there is evidence, and the respondent committed an act of bankruptcy on 1 May 2012. In respect of the letter from Mr Lacy, the solicitor then acting for the respondent, the settlement offer was refused and, on the basis that the respondent had failed to come to an arrangement satisfactory to the creditor to pay the judgment debt in full, ING proceeded with the Creditor’s Petition. As there is no evidence of solvency ING should be allowed to proceed and have a sequestration order made against the respondent.
Consideration
The Court acknowledges the difficult position that the respondent debtor, Joan Shortland, finds herself in from a number of perspectives. At the hearing she was represented by her estranged husband who has no legal training. Mr Shortland did not bring to the Court’s attention the fact that he is currently bankrupt which is revealed in Mrs Shortland’s affidavit, Annexure “H”. Mr Shortland stated he believes that he has a deep moral obligation to assist his wife. That obligation arises as they are the parents of a child who has haemophilia and requires constant care including the administering of intravenous injections to maintain their son’ stable medical condition. Mrs Shortland who acts as a full-time carer has an intellectual disability and has suffered considerable personal stress with the advent of the bankruptcy proceedings. Mr Shortland indicated that his wife fears that anything that may threaten the stability of the home environment could compromise the provision of clinical care of her son that could ultimately lead to severe injury or even death. This fear is apparently reinforced by Mrs Shortland’s own prior experience with another child of a previous marriage who also had haemophilia and due to a period of less that satisfactory clinical care suffered a badly damaged and deformed leg. Joan believes that this injury was her responsibility. Mr Shortland informed the Court that although he and Joan were estranged in 2005 he has undertaken to assist Joan in the maintenance of The Oaks property in order to provide a stable home environment for their son and Joan as their son’s carer. Mr Shortland stated that he continues to pay the mortgage instalments.
The financial problems now faced by the Shortlands appear to have arisen in respect of a loan from ING at some time in August or September 2004 for the purchase of an investment property identified as Gravel Avenue. In the affidavit of Joan Shortland sworn 13 August 2012 at [51]-[53] it sets out the circumstances in respect to the arranging of the loan:
51. I also need to tell the court that at the time when the ING Bank loan was being sourced by Kurt for his own purposes around August-September 2004, I informed Kurt I disagreed with his intentions. This issue led to a series of engaged arguments between Kurt and I. I was not aware we had been given the loan until I located a letter addressed to Kurt from Makhoul Symond around Oct 2004. Annexed and marked ‘I’ is a copy of these documents.
52. At the time when Kurt required my signature for documents relating to the ING Bank loan we had argued constantly and on one occasion I was providing medical care and treatment to our son who had suffered internal injuries from trying to learn how to ride a bike. Though I repeatedly disagreed with Kurt, I felt vulnerable I did not know what the documents meant as I had little education and started English school at aged 12 yrs and always relied on Kurt’s advice. However all I wanted to do was move on and treat our son. Under these stressful conditions I had no choice and signed the documents he (Kurt) wanted. Then, I recall Kurt advised he had to meet the broker at a railway station to hand him the loan documents. After the loan was finalised I recall the steps it was processed to obtain the ING Bank loan which was not conducted with a legal representative in my presence of which I was normally use too (sic) in previous matters I was involved with as Joint Applicant. Kurt had found some loan broker who helped set this loan up. The loan was processed via the broker, who engaged a 3rd party named Makhoul Symond Solicitors of Parramatta who the acquired the ING Bank as I understood.
53. I advise the court I did not receive monthly statements or letters from ING Bank regard (sic) the loan as these were all delivered to Kurt’s Postal address P.O. Box [address] Narellan 2567.
Mr Shortland advised the Court that the investment property had been repossessed and sold. Mr Rossi appearing for ING informed the Court that after the sale of the Gravel Avenue property there was a shortfall in the amount owed to ING. Consequently, ING obtained judgment in the Supreme Court of New South Wales in proceedings number 2010/00140818 in the amount of $605,641.64 together with possession of the whole land known as Gravel Avenue, Sanctuary Point, in the state of New South Wales. The Statement of Financial Position which is Annexure “H” to Mrs Shortland’s Affidavit of 13 August 2012 indicates that there was another investment at Brighton-Le-Sands which appears to have left a further substantial debt together with a further amount owed to Permanent Custodians. A considerable amount of that judgment debt has been paid however a figure of $173,756.13 remains outstanding and is the amount being pursued. ING filed a Bankruptcy Notice No. BN 1615 issued 19 March 2012. The affidavit of service by Patrick White sworn 11 April 2012 indicates that the Bankruptcy Notice was personally served on Mrs Shortland on 10 April 2012. The notice clearly states that within 21 days after service that either the creditor must be paid the amount of the debt or an arrangement be made to the creditor’s satisfaction for the settlement of the debt. Joan Shortland failed to comply with the requirement of the notice on or before 1 May 2012. Consequently, Mrs Shortland committed an act of bankruptcy on 1 May 2012 with the result that a Creditor’s Petition was filed in this Court on 13 July 2012.
The Notice Stating Grounds of Opposition to the petition filed in the Registry on 13 August 2012 lists three brief grounds:
1. oppose creditors petition
2. oppose the bankruptcy notice
3. refer details in affidavit
The affidavit filed in support by Mrs Shortland contains a considerable amount of material which principally addresses the details of the background regarding their marriage, the birth of their son who suffers from haemophilia, taking on a full time carer’s role and the details of obtaining finance for the purchase of an investment property. The affidavit then addresses details surrounding their loss of the investment property and the subsequent flow-on effect involving the identification and retention of lawyer to handle the initial bankruptcy proceedings. Both the affidavit and Notice Stating Grounds of Opposition indicate that those documents were prepared by Mrs Shortland. Significantly there is very little correlation between the two. The Grounds which are set out above are not identified nor developed in the affidavit. Some of the material is relevant but it is not marshalled in anyway that addresses the grounds of opposition.
Mr Shortland indicated that he has been instructed by Joan to raise a number of issues that are contained in her affidavit. The first issue concerned the identity of the licensed process server who swore an affidavit of service in relation to Bankruptcy Notice on 10 April 2012. The circumstances are set out in [2]-[5] of Mrs Shortland’s affidavit. Essentially Mrs Shortland states that a person identifying himself as “Joe White” phoned to make arrangement to hand deliver documents however when she subsequently obtained a copy of the Affidavit of Service (Affidavit Mrs Shortland, Annexure “C”, p.15) the deponent of the affidavit is identified as “Patrick White”. Mr Shortland, in oral submissions, stated:
There was a phone call with Joe White, who actually said that he had instructions to hand deliver a document, which was fine… the hand delivered documents that Joan received actually contained the four documents… Joan feels that she has been mislead, because the document that was actually served and the affidavit that was actually signed… conflicts the person who was Joe White, who actually delivered the document.
The person who actually signed the affidavit was… Patrick White… not Joe White.
(Transcript 27.8.2012, p.5)
Mr Shortland continued:
…the argument that Joan has actually provided me, that because of her incapacity to be able to comprehend that, she expected a level of service that had been provided by the applicant, to be transparent and not mislead her…
I pointed out to Mr Shortland that it was not uncommon for individuals to use a name other than the one that appears on their formal identification such as a birth certificate. There are numerous reasons for people to do this, for example, a sibling or other relative having the same name. Other people prefer to use an abbreviated or simpler name for their own convenience or liking. The common law allows a person to use any name they may wish provided the use of this name is not calculated to deceive or for fraudulent purposes. There are some exceptions such as the Cash Transaction Reports Act 1988 (Cth) where it is an offence, punishable by fine and/or imprisonment for someone to open or operate an account for cash purposes in a name other than that by which they are commonly known.
I acknowledge that Mrs Shortland may have been confused by the difference in the name used by Mr White, as described in Mr Shortland’s submission of this issue:
…the argument that Joan has actually provided me that because of her incapacity to be able to comprehend that, she expected a level of service that had been provided by the applicant, to transparent and not mislead her.
In the Affidavit of Service sworn by Patrick White, the deponent describes himself as licensed process service and presumably only retained by ING on an intermittent basis to service documents on the ING’s behalf. It is extremely unlikely that Mr White was aware of Mrs Shortland’s incapacity due to her intellectual disability. In the circumstances described before the Court it is not apparent that Mr White was attempting to deceive the respondent or doing so for any fraudulent purpose. If anything Mr White was extending Mrs Shortland a courtesy by telephoning her to indicate that he was intending to hand deliver documents to her. This is an approach that is seldom seen in affidavits of service in this jurisdiction.
The Federal Magistrates Court Rules 2001 (Cth) on the issue of making an affidavit in r. 15.26(2) requires:
(2) The affidavit must”
(a) contain a jurat including:
(i) the full name of the person making the affidavit.
The term full name is widely used in legislation, regulations and commonly used forms with out that term being defined within that particular instrument.
In the decision in Avery v Registrar of Births, Deaths and Marriages; Avery v State of New South Wales (Attorney-General’s Department) (2010) 79 NSWLR 354 per Toohey, Campbell and Young JJA, his Honour Campbell JA (with Tobias JA agreeing) considered the issue of “Names in Ordinary Usage” at [52]-[55]:
Names in Ordinary Usage
[51] There is no definition of “name”, “former name”, or “any other former name” in the BDMR Act. Thus, the consideration of the meaning of those expressions should start with a consideration of ordinary English usage, and then proceed to considering whether the language of the Act as a whole, and its purpose, shows that the meaning in the particular context is in some way different to the ordinary English usage.
[52] In the ordinary course of English usage, a “name” is a word that refers to a person, thing, or type of people or things that is seen as being sufficiently important to justify individual singling out. It is in having this function that names — those words which grammarians call proper nouns — are distinguished from other nouns. Thus there can be names for individual people, animals, countries, cities, streets, natural geographical features like mountains oceans and rivers, buildings, companies and associations, to mention just a few of the sorts of things that can have individual names. Sometimes a name is applied to a type of thing, rather than an individual thing — eg a particular breed of sheep or dog, or the name is a “trademark” that indicates a particular make of car or other species of goods or services — but that is not the focus of our present concern.
[53] In the ordinary usage of the term, it is not necessary for the name of a person to be used by all the people who wish to refer to a particular person, before that name is indeed the name of that person. Thus someone who is known at his workplace as Alexander Smith, or Alex Smith, might be called Sandy by family and close friends — all of those are his names.
[54] In the ordinary usage of the term, it is not uncommon for the one person to have more than one name. William Shakespeare is sometimes called The Bard, but that does not mean that his name is not still William Shakespeare. Vladimir Ilyich Ulyanov is better known as Vladimir Lenin — but they are both his names.
[55] In particular, there is nothing unusual about one person having two names at the one time. It is quite common for a woman who is known by a particular name in her business or profession, and who subsequently marries, to retain the name she has always had for business or professional purposes, even if (as frequently happens, particularly if she has children) she is also known by her husband’s surname in connection with family matters. The use of pen-names and stage names is widely understood — there can be no real doubt that if someone in nineteenth century England had left a legacy to Lewis Carroll, or to George Eliot, then Charles Dodgson and Mary Anne Evans respectively would have been entitled to receive those legacies, or that Boy George is better known by that name than by the name of George Alan O’Dowd. The use of nicknames or shortened names, at the same time as someone also uses their full name for certain business or formal purposes, is common. The difference in the names that a person can have at the one time can range from the comparatively small difference involved in a person being known as both Jim Smith and James Smith, to the large difference that occurs when one of a person’s names has no linguistic element in common with the other. (Nor is having more than one name at the one time confined to humans. TS Eliot has asserted that, “… a cat must have THREE DIFFERENT NAMES”: The Naming of Cats, Old Possum’s Book of Practical Cats, Faber & Faber London 1939).
I am satisfied that Patrick White has complied with the requirement for making an affidavit and the causal use of a nickname in his daily life was not intended to deceive anyone nor was it adopted for a fraudulent purpose that has been identified in the evidence before the Court. This ground cannot be sustained and should be dismissed.
Another issue raised by Mr Shortland that is not referred to in the Notice of Opposition concerns the retention of a legal representative and whether all correspondence including the Creditor’s Petition should have been forwarded and served on Mark Lacy who had been retained by Mrs Shortland to handle the Bankruptcy matter. In the affidavit of Mrs Shortland sworn 13 August 2012 at [5]-[7] she states:
5. Prior to the 23 July 2012 and on around 10 April 2012 I received the first hand delivered letter from a person who identified himself as “Joe White”. The document deliver (sic) were called a “Bankruptcy Notice”. Refer Annexed and marked “E” is a copy of these documents.
6. During the course of the next week or two after 10 April 2012, my daughter Francine offered to try and organise a debt agreement to be presented to ING to try and avoid bankruptcy. Francine’s partner, John James offered the use of his lawyer Mark Lacy of Hickey Lawyers to enable the proposed to be presented professionally, on a complementary basis.
7. On 23 April 2012, I was advised that Mark Lacy had spoken to Gadens Lawyers (acting for ING Bank) with Gadens Lawyers now recognising that Hickey Lawyers had instructions to present a debt agreement proposed…
Mr Shortland indicated that he had received instructions from his wife Joan to seek from the Court clarification that as a consequence of her appointing Mark Lacy as her legal representative to protect her interests if that establishes a legally binding arrangement that means neither lawyer can actually contact each other’s client directly. Mr Shortland indicated that Mark Lacy forwarded a letter on 11 May 2012 to Mrs Jarman of Gadens. On 30 May 2012 a reply from ING by James Foley to Mark Lacy was received. Mrs Shortland was under the impression that this sequence of correspondence established the communication that meant that neither lawyer could actually contact each other’s client directly. Mr Shortland claimed that ING had pre-knowledge that Joan was a carer for a haemophiliac child. The family had arranged for a lawyer to try and help Joan and assist in the process. She wants to clarify that once a relationship has been established does it give the right of a lawyer to contact the clients of either side. Despite these arrangements on 23 July 2012 she was served a hand-delivered document directly to her without her lawyer being notified and that has resulted in Joan being affected by that unexpected action.
The regime to which Mrs Shortland appears to be referring to comes into effect where a solicitor representing one of the parties formally notifies the legal representative of the other side of a dispute that they have received instructions from their client to accept service of any notice or initiating process. This usually occurs when a dispute has developed between two parties and despite efforts to resolve the matter these fail and the intention is apparent or express that litigation may be pursued to solve the dispute. At that stage the legal representatives may exchange correspondence indicating that they hold instructions to accept the service of any initiating process.
The sequence of correspondence that Mrs Shortland appears to be relying upon is contained in her affidavit of 13 August 2012 in the following paragraphs:
7. On 23 April, I was advised that Mark Lacy had spoken to Gadens Lawyers (acting for ING Bank) with Gadens Lawyers now recognising that Hickey Lawyers had instructions to present a debt agreement proposal. As such, the 1 May 2012 return date on the Bankruptcy Notice was no longer a critical date.
8. I was further advised in the same discussions that occurred on 23 April 2012, Mark Lacy was advised that ING Bank’s position is that they will generally try and accommodate any sensible resolution of the debt. I also noted this was 13 days after receiving the first documents relating to Bankruptcy Notice.
9. On 11 May 2012, Mark Lacy forwarded the debt agreement proposal to Gadens Lawyers which indicated I was trying to accommodate sensible resolution of the debt. Refer letter from Hickey Lawyers to Gadens Lawyers as Annexed and marked ‘F’ is a copy of these documents.
10. Gadens Lawyers responded by way of letter dated 30 May 2012, with a query as to whether the debt agreement was intended to proceed by way of formal Personal Insolvency Agreement or by informal settlement with ING Bank alone, and a request for completion of a Statement of Financial Position. Annexed copies and marked ‘G’ is a copy of these documents.
11. Mark Lacy forwarded Gadens Lawyers an email response providing the information as requested by ING Bank on 5 June 2012. Annexed and marked “H” is a copy of these documents which relate to an email accompanied by the attachment of my Statement of financial position.
12. Gadens Lawyers never provided any response to the debt agreement proposal.
A letter dated 11 May 2012 sent by Mark Lacy of Hickey Lawyers to Gadens Lawyers for ING (Annexure “F” of Mrs Shortland’s Affidavit sworn 13 August 2012) was forwarded after the service of the Bankruptcy Notice which occurred on 10 Aril 2012 (Affidavit of Service, sworn by Patrick White, 11 April 2012). In that letter it indicates that Hickey Lawyers “have instructions to act for Joan Shortland”. At the end of the letter it states “[i]n the interim, we presume you will take no further steps in relation to the Notice of Bankruptcy without providing us with reasonable notice.” Putting to one side for the moment the requirement of the Bankruptcy Act this letter makes no reference to having instructions for their client Joan Shortland to accept service on her behalf. Despite not knowing the precise instructions that were obtained by Hickey Lawyers it would be extremely unlikely that the letter would contain such a statement because the matter involved the Bankruptcy Act.
In McQuade, Bankruptcy in Australia – A Guidebook, Thomson Lawbook Co at [5.850] it states:
The bankruptcy notice is a statutory demand addressed to the debtor and therefore care must be taken in serving a debtor, which is a juristic act in a special category” Re Hanlin; Ex Parte South Properties Development Pty Ltd (1985) 9 FCR 357; 62 ALR 241. Service provisions will generally be construed strictly: Deputy Commissioner of Taxation v Benjamin [2000] FMCA 12.
In respect to service of a Bankruptcy Notice on a debtor is referred to in s.40(1)(g). The manner of service is prescribed by regulation 16.01: Skalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107at [31]. The regulation provides for five different methods to effect service. The one relevant one in this matter was:
Personally delivered to the person.
The learned authors also make the following observations:
It is recommended that a bankruptcy notice be personally served on the debtor. In Mineo v Etna (2000) 176 FCR 74; 7ABC (NS) 115; [2009] FCA 337 at [27], Gordon J summarised the position that in light of technological developments and reg 16.01, the legislative scheme did not prescribe service of an original bankruptcy notice on the debtor, but it remained prudent to do so.
Do not attempt to effect service by serving the bankruptcy notice on the debtor’s solicitors, even if they have instructions to accept service on behalf of the debtor: Re Hanlin; Ex Parte South Properties Development Pty Ltd (1985) 9 FCR 357; 62 ALR 241; Feiersinger; Ex Parte Intersuisse Ltd (unreported, Fed Ct, Beaumont J, 29 May 1992).
The complaint raised by Mrs Shortland does not apply to the Bankruptcy Notice, because at that stage she had not retained a legal representative and may not have been aware that bankruptcy proceedings were likely to be initiated. However, it does demonstrate that even though personal service is not mandatory it is the preferred and prudent approach. Further, that despite issuing instructions to serve any document on their legal representative this is inappropriate.
Moving to the service if the Creditor’s Petition, which I understand is the focus of Mrs Shortland’s complaint, a significantly different statutory regime exists. A creditor’s petition and supporting affidavits must be served personally on the debtor unless an order of substituted service is obtained: ss. 52(1)(b), 309(2) of the Bankruptcy Act; Federal Court Rules 2011 (Cth), O 7, rr 1(1), 2(1)-(3), 9; Federal Magistrates Court Rules2001(Cth); rr 6.04, 6.06, 6.07, 31.05; Carver v De Robillard [2006] FCA 1041 per Lindgren J at [28]-[31]; on appeal De Robillard v Carver (2007) 159 FCR 38 per Moore, Conti and Buchanan JJ at [75]-[78] (where the primary decision was overturned on different grounds); Sogelease Australia Ltd v Griffin (2003) 128 FCR 399; Richmond v Bay Bon Investments Pty Ltd [2007] FCA 1060 per Graham J at [15]-[16]. The service provisions are strictly construed.
There is no evidence before the Court that a substituted service order was required or was sought and needs no further consideration. The Affidavit of Service of Creditor’s Petition sworn on 3 August 2012 by Patrick White satisfied the requirement of the Bankruptcy Act and no objections were raised in respect of this evidence in either the Notice of Objection or Mr Shortland’s oral submissions. This ground of objection can only be due to a misunderstanding of the Bankruptcy Act and its application cannot be sustained.
As I indicated above I acknowledge the unenviable position that both Joan and Kurt Shortland find themselves in and their attempts to seek relief to maintain the domestic arrangements that currently exist to protect their haemophilic son, however, it has been established in a series of cases that the proper purpose of seeking a sequestration order against the estate of a debtor is so that a debtor who is unable to pay their debts as and when they fall due, should have their affairs controlled for the benefit of all the creditors and not just specific ones. Also, there is the prevention of the debtor incurring further obligations which they will not be able to meet. This is a public purpose: Re Sarina; Ex parte Wollondilly Shire Council (1980) 30 ALR 266. Mr Shortland’s oral submission that ING is only one of the four caveat holders over the Montpellier Drive property with the Commonwealth Bank holding the first mortgage indicated that the Shortlands’ financial position and, in particular, Mrs Shortland’s may be worse than submissions indicate.
Other than the issues raised above the Notice Stating Grounds of Opposition and the supporting affidavit do not address specific complaints in respect of the Bankruptcy Notice or Creditor’s Petition. The main thrust of the affidavit in support and Mr Shortland’s oral submissions are directed to the impact that sequestration will have on the family but does not address any defect in the process that has occurred. The material that is available to the Court and is set out at [2], [5], and [10] above satisfies the requirements of the Bankruptcy Act and a sequestration order should be made.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM
Date: 21 September 2012
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