Kawamata v Brett-Hall
[2014] FCCA 493
•14 March 2014
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KAWAMATA v BRETT-HALL | [2014] FCCA 493 |
| Catchwords: BANKRUPTCY – Application to dismiss creditor’s petition – service of Bankruptcy Notice – Order for substituted service – express Order deeming service – effective date of service – period of compliance – letter accompanying order for substituted service – Respondent argues potential confusion as to period for compliance – Application dismissed – Sequestration Order issued. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.50, 52(2)(b), 306(1), 31, 309, subsection 309(2) |
| Re Hanlin (1985) 62 ALR 241, at 242 Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71, at 79-80 Re Spurr; ex parte Werner (unreported) Re Sayers; ex parte Walpole (1948) QWN 43 Clyne v the Deputy Commissioner of Taxation (No.4) (1982) 66 FLR 301, 13 ATR 302, 42 ALR 703 Re a Judgment Debtor 530 of 1908 [1908] 2 KB 474 James v Federal Commission of Taxation [1955] HCA 75 Re H.B. [1904] a K.B.94 |
| Applicant: | MAMI KAWAMATA |
| Respondent: | HERBERT RATCLIFFE BRETT-HALL |
| File Number: | BRG 1187 of 2013 |
| Judgment of: | Judge Willis |
| Hearing date: | 28 February 2014 |
| Date of Last Submission: | 28 February 2014 |
| Delivered at: | Cairns |
| Delivered on: | 14 March 2014 |
REPRESENTATION
| Counsel for the Applicant: | Mr Morzone Q.C. |
| Solicitors for the Applicant: | Murray & Lyons Solicitors |
| Counsel for the Respondent: | Dr Jonsson |
| Solicitors for the Respondent: | Preston Law |
ORDERS
The Interim Application of the Respondent is dismissed.
The Interim Order made 28 February 2014 appointing John Joseph Goggin and Glenn Leslie Miller as controllers of the property of HERBERT RATCLIFFE BRETT- HALL be discharged upon the making of the sequestration order against the estate of HERBERT RATCLIFFE BRETT- HALL.
The controller’s costs of and incidental to the control of the property of HERBERT RATCLIFFE BRETT- HALL be assessed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
A sequestration order be made against the estate of HERBERT RATCLIFFE BRETT- HALL.
That John Joseph Goggin and Glenn Leslie Miller be appointed as joint and several trustees of the bankrupt estate of HERBERT RATCLIFFE BRETT- HALL.
The applicant creditor’s costs, including reserved costs, be fixed in the sum of $12,215.53 and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
NOTATION
THE COURT NOTES that the date of the act of bankruptcy for HERBERT RATCLIFFE BRETT- HALL is 6 December 2013.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CAIRNS |
BRG 1187 of 2013
| MAMI KAWAMATA |
Applicant
And
| HERBERT RATCLIFFE BRETT-HALL |
Respondent
EX-TEMPORE REASONS FOR JUDGMENT
This matter was set down for hearing on 28 January 2014 on the application of Mami Kawamata, the applicant, for the Court to issue a Sequestration Order against Herbert Ratcliffe Brett-Hall, the respondent, on that date. On that day, the respondent requested and the applicant agreed through their Counsel for the matter to be adjourned to allow the parties to have discussions in an attempt to resolve the matter. I made an order accordingly for the matter to be adjourned over until 28 February 2014.
Before the matter was to be heard again, an interim application was filed by the applicant seeking orders that: until the application for a Sequestration Order pursuant to the Creditor’s Petition filed on 20 December 2013 was heard, the Court appoint two persons as interim trustees of the estate of the respondent. That interim application was given a return date to the following day, 28 February at 9.30am which was the next date Court date allocated back on 28 January 2014.
I was not aware therefore when I allocated the next Court date a month earlier that time was required for an interim hearing. The matter took two hours on my otherwise heavily listed day. It resulted in other matters not being heard. Because of the pressing nature of the other matters waiting to be heard on that day, I was not able to deliver ex-tempore reasons. I therefore reserved the decision for two weeks, noting that the interim application was heard on a Friday and that the following week was a duty week in which about 70 or so matters were listed, including various contested interim hearings. I was not able therefore to deliver reasons until the end of the next week, which is today.
The application for the appointment of an interim trustee arises given the opposition by the respondent contained in a form 5 notice stating grounds of opposition to application, interim application or petition filed by leave on 28 February 2014. Since the first date for the hearing back on 28 January 2014, and following the adjourned period, the respondent now asks the Court to dismiss the Creditor’s Petition under section 52(2)(b) of the Bankruptcy Act for “other sufficient cause.” The respondent contends that the material served upon the respondent by the applicant, including, more particularly the applicant’s solicitor’s letter to the respondent accompanying the service of the Bankruptcy Notice, had the capacity to reasonably mislead the respondent as to the period available to him for compliance with the Bankruptcy Notice.
Ms Kawamata, the applicant for a Sequestration Order and the subsequent applicant for an interim trustee, asks the Court to dismiss the application opposing the petition. Mr Morzone Q.C. appeared for the applicant in the substantive application for a Sequestration Order and the interim application, and Dr Jonsson of Counsel appeared for the respondent in the substantive application and the interim application to dismiss the creditor’s petition. Each Counsel has helpfully provided the Court with written submissions and copies of the case law that they each rely upon, together with extracts from Acts relied upon them. I thank Counsel for their efforts to assist the Court.
The applicant’s request for the appointment of an interim trustee arises due to the possibility of the delay in Court proceedings with the Sequestration Order and for the reasons provided in the affidavit filed in support of that application. At the end of the interim hearing on 28 February 2014, I indicated the delay in not being able to deliver ex-tempore reasons as I have already referred to and that I did not wish the applicant’s overall position to suffer prejudice due to any delay in the Court in being able to deliver reasons. Given the contents of the affidavit in support of the interim appointment of a trustee, such delay might leave assets exposed that otherwise form part of the respondent’s estate which are required to satisfy the outstanding judgment of the Family Court. The non-payment of a Family Law judgment forms the basis of a Creditor’s Petition and subsequent Bankruptcy Notice and Sequestration Order.
Accordingly after indicating to Counsel my concern, orders were made appointing an interim trustee to take control of the property of the respondent pursuant to section 50 of the Bankruptcy Act, whilst the Court reserved its decision for two weeks. I note that one of those trustees is in court this morning.
Background
Turning to the interim application or the petition by form 5 Notice stating grounds of opposition to application filed by leave on 28 February 2014 of Mr Brett-Hall, it reads that the debtor intends to oppose the petition on the following grounds: that under section 52(2)(b) of the Bankruptcy Act, the Court should dismiss the Creditor’s Petition for other sufficient cause because the material served upon the respondent by the applicant, including, more particularly, the applicant solicitor’s letter to the respondent, accompanying service of the Bankruptcy Notice, had the capacity to reasonably mislead the respondent as to the period available to the respondent for compliance with the Bankruptcy Notice.
The background leading to the interim application is agreed between the parties and referred to in each of their submissions. In essence Ms Kawamata experienced difficulties in attempting personal service of the Bankruptcy Notice. The applicant thereafter sought orders for substituted service of the Bankruptcy Notice.
Substituted Service
Rule 6.14 of the Federal Circuit Rules provides for the Court to make an order dispensing with service or substituting another way of serving a document where it is impracticable to serve it in the prescribed method.
In such a case, the Court may specify that the document is to be taken to have been served on the happening of a specified event or at the end of a specified time.
Subsection 309(2) of the Bankruptcy Act provides:
(2) 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 documents is prescribed.
Rule 3.01 of each of the Federal Court (Bankruptcy) Rules and the Federal Circuit Court (Bankruptcy) Rules sets out the documents that must accompany an application for substituted service of a Bankruptcy Notice. Pursuant to Rule 2.02 of these rules, a Registrar may exercise the power to make an order for substituted service.
Another option for the applicant in this matter would have been to rely on the provisions of regulation 16.01 of the Bankruptcy Regulations.
Various methods of service of a Bankruptcy Notice or other documents are provided for in regulation 16.01 of the Bankruptcy Regulations. One of the permitted methods of service of a Bankruptcy Notice is by sending it by post to the relevant person at his or her last known address, (16.01(1)(a)). If a Bankruptcy Notice is sent by post to his last known address, it is taken, in the absence of proof to the contrary, to have been served on the person when it would in the due course of post be delivered to the person’s address.
The Bankruptcy Notice here, however, was not served pursuant to regulation 16.01, but it was served by an order for substituted service. The application seeking substituted service came on before Registrar Baldwin on 7 November 2013. Registrar Baldwin made orders that day providing for substituted service after reading of the efforts of attempted personal service upon the respondent, as deposed to in the material before the Registrar. The order of 7 November 2013 for substituted service provided as follows:
(1) Service of the bankruptcy notice may be effected by the following means occurring on or before 14 November 2013:
(a) By pre-paid post addressed to the respondent at his address at Port Douglas.
(b) By pre-paid ordinary post addressed to the respondent at his PO box in Port Douglas; and
(c) by sending an email to the respondent at his email address, attaching a copy of the bankruptcy notice and the order.
Order (2) says:
Service in accordance with this order shall be deemed good and sufficient service of the bankruptcy notice upon the respondent.
Order (3) says:
The bankruptcy notice shall be deemed to be served on the respondent seven days after the last method of service provided for in order (1).
The Bankruptcy Notice is in the usual form, relevantly stating:
You are required within 21 days after service on you of the Bankruptcy Notice to either (a) pay to the creditor or applicant the amount claimed; or (b)make arrangements to the creditor’s satisfaction for settlement of the debt.
The issue the respondent agitates centres on the date for service of the Bankruptcy Notice. Counsel for the Respondent asserts that, as per paragraph 13 of his written submissions, the effective date of service of the Bankruptcy Notice and the period for compliance, thus calculated from that date, must both be seen as of central significance to the functioning of the scheme. He refers me to Re Hanlin (1985) 62 ALR 241, at 242 and Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71, at 79-80. I have read those authorities.
Counsel’s submissions continue that if there is any potential for confusion in the mind of the debtor as to what he must do to satisfy the requirements of the Bankruptcy Notice, there is potential for injustice to the debtor, given the drastic consequences of the making of a Sequestration Order and the change of status engendered by such order. These submissions state the law applicable to a situation where a defect or irregularity is found in a Bankruptcy Notice rather than in a letter accompanying a Bankruptcy Notice.
I am referred to the case of Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 7 and that involved, as I note, a formal defect or irregularity in the Bankruptcy Notice, namely, an understatement of interest due on the debt in question. The notice understated the amount of interest by some $23,000. The High Court held that the understatement of the interest due was a formal defect or irregularity within section 306(1). Hence, the Notice was valid. Interest due on a Judgment Debt may be included in the Bankruptcy Notice, but it need not be. I notice at page 78 reference is made to In re: H. [1904] 1 K.B. 94. Reference is made to the Bankruptcy Notice itself, where Romer LJ stated the Bankruptcy Notice “must state the amount that is claimed as remaining unpaid on the Judgment Debt. Clearly, in a Bankruptcy Notice, the debtor is entitled to see from the Notice exactly what is claimed to be due on the judgment debt”.
Dr Jonsson takes me to the passage on page 79 of Kleinwort Benson Australia Ltd v Crowl that reads:
The authorities show that a Bankruptcy Notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice; James v Federal Commission of Taxation [1955] HCA 75. In such cases, the notice is a nullity whether or not the debtor is, in fact, misled. In Re a Judgment Debtor 530 of 1908 [1908] 2 KB 474. The passage continues:
If the amount specified in a Bankruptcy Notice is, in fact, due and payment is claimed in accordance with the Judgment, the essential requirements of section 41(2)(a)(a), the only requirements presently relevant, are met. Understatement of the amount due, whether it be an understatement of the Judgment Debt or of an interest payable thereon, will thus constitute a defect, which is substantive, rather than formal only, if the understatement is objectively capable of misleading the debtor as to what is necessary for compliance with the rules.
I was also referred to Re Spurr; ex parte Werner[1], another decision regarding the validity of the Bankruptcy Notice, and another case in which Kleinwort Benson Australia was referred to. This is a decision of Heerey J. Interestingly, also in the background of that matter was a Family Law judgment. The respondent in that matter submitted that the Bankruptcy Notice was fundamentally defective. There were three grounds, the first two of which were dispensed with quite quickly. They alleged obliteration of concluding words on the Bankruptcy Notice. The second to do with the actual calculation of interest, not being shown on the Bankruptcy Notice, but the amount that the interest was. The third ground was an inconsistency on the Notice, which had an error on the face of the document, which said in part:
Therefore, take notice that within 14 days (21 days) after service of this notice on you, excluding the day on which the notice is served, you are required to pay the amount –
[1] Unreported. Federal Court of Australia, 4 September 1991.
The inconsistency between periods of 14 days and 21 days was said to be a fundamental defect likely to mislead and confuse the debtor as to his obligation. Heerey J referred to the decision of the High Court in Kleinwort Benson Australia and quoted from Deane J (as he then was) even though Deane J dissented in the result, a statement that was helpful was referred to, and that is:
It has long been a fundamental precept of the law of bankruptcy that a Bankruptcy Notice, which is the foundation of a bankruptcy, attended as a bankruptcy is with penal consequences, is a matter in which great strictness is required.
The strictness of the rules was referred to by Heerey J, concluded with a reference to Riley J, who his Honour recorded was a noted Australian authority on bankruptcy law. His Honour noted that Riley J sometimes pointed out to those appearing before him, the least that the courts can do is to insist that a person who seeks to subject another to the law of bankruptcy himself strictly observed the requirements of that law.
Heerey J said that these comments were particularly apt as the petitioning creditor’s debt exceeds the statutory minimum for the invocation of the Court’s bankruptcy jurisdiction by just $1.61. Over the page, at page 4 of 5, which I was also taken to by Dr Jonsson, is a passage stating:
It has long been established that if a defect in a Bankruptcy Notice is such a kind as could reasonably mislead a debtor upon whom it is served, it invalidates the notice and cannot be validated by section 306. The question is not whether the debtor was, in fact, misled by the mistake in the notice but whether it could mislead him.
These cases as can be seen, refer to defects in the Bankruptcy Notice. In the present matter, there are no submissions of suggestions that the Bankruptcy Notice is defective. The Court’s attention is directed more to the accompanying letter. Dr Jonsson for the respondent contends as follows: firstly, that the date of service of the Bankruptcy Notice should be calculated in accordance with the statutory presumption created under section 160 of the Evidence Act.
He submits that section 160 requires the Court to presume that a postal article sent, as here, by pre-paid ordinary post addressed to a person in Australia was received at that address on the fourth working day after having been posted; secondly, an inconsequence of the first contention, that a covering letter, dated 7 November 2013 sent with the Bankruptcy Notice when effecting substituted service pursuant to the order, had the potential to reasonably and seriously mislead the respondent as to the time he had available to him to satisfy the Bankruptcy Notice.
How was the letter misleading?
Putting it simply, it is submitted that insofar as the letter said as follows:
Service will be deemed to have occurred seven days from today, as we have posted and emailed a copy of the Bankruptcy Notice to you as required by the order 1(a), 1(b) and 1(c) today. So according to the order, service would be deemed to be effected on Thursday, 14 November 2013. If you do not make payment to our client in full by close of business 6 December 2013, we will then be applying for a creditor’s petition to have you made bankrupt.
Why was that inaccurate?
The submission is that the dates referred to mislead the respondent as to the time in which he was required to comply with the Bankruptcy Notice and that in the additional time he should have had, five days more, he might have been able to make arrangements to fulfil his obligations and make payment as required in the Bankruptcy Notice or rearrange his affairs.
Where do the extra five days come from?
Dr Jonsson maintains that in order to determine the date of service of the Bankruptcy Notice, the Court is bound by the presumption that a postal article sent by pre-paid post to a person at a specified address in Australia was received at that address on the fourth working day after having been posted. If I apprehend Dr Jonsson’s argument correctly, his contention relies on an interpretation of the meaning of the phrase “last method of service” as it relates to fixing the date upon which the Bankruptcy Notice shall be deemed to have been served.
“Last method” in its context may be understood to refer to the last mentioned of the three methods listed in subparagraphs (a), (b) and (c) in paragraph 1 for the order of substituted service. Alternatively, the word “last” in “last method” may refer to the method that was utilised last in time, given that it was possible that the applicant may have chosen to employ each method of service on a different day, rather than on the same day as, in fact, occurred.
Dr Jonsson’s argument continues that if the articles were posted on 7 November 2013, a Thursday, they must be deemed to have been received at those addresses on the fourth working day after being posted, namely, on 13 November 2013, the following Wednesday. Adopting this line in his submissions, it is asserted that under the terms of the orders for substituted service, service must be deemed to have occurred seven days after the last method of service provided for. So service of the Bankruptcy Notice must be taken to have occurred not earlier than 20 November 2013. Adding seven days to 13 November 2013 results in service not being earlier than 20 November 2013.
That being so, it is contended that the 21-day period for the respondent to comply with the Bankruptcy Notice commenced on 21 November 2013 and concluded on 11 December 2013, and not 6 December 2013 as stated in the letter that the applicant’s solicitor’s covering letter sent with the Bankruptcy Notice. As I said, it is contended that this confusion and difference in dates had the potential to seriously mislead the respondent as to the time available to him, and it is submitted that it follows that the applicant’s own evidence demonstrates a very real potentiality for the respondent to have been reasonably and seriously misled as to what it was he was required to do to satisfy the Bankruptcy Notice.
On that reasoning, the potentiality constitutes “other sufficient cause” to dismiss the Creditor’s Petition and for the petition to be dismissed under section 52(2)(b) of the Bankruptcy Act and subsequently why a Sequestration Order should not be issued. Had service of the Bankruptcy Notice here been effected pursuant to the sub-regulation 16.01 of the Bankruptcy Regulations, then the provisions of sub-regulation (2) would have required the date of service to be calculated according to when, in the due course of the post, the Bankruptcy Notice would have been delivered to the respondent’s address.
However, the Bankruptcy Notice was served pursuant to a Court Order for substituted service, not the Bankruptcy Regulations. I repeat paragraph 3 of the order:
The Bankruptcy Notice shall be deemed to be served on the respondent seven days after the last method of service provided for in order (1).
It seems that Counsel for the respondent would have it that paragraph 3 of the order should be read as follows:
The Bankruptcy Notice shall be deemed to be served on the respondent seven days after the day that it is presumed, in accordance with section 160 of the Evidence Act, the postal article containing the Bankruptcy Notice was received at the address of the respondent.
In other words, Dr Jonsson suggests that the Court, after making a specific order deeming that that service shall have occurred in the circumstances it describes, is then required to apply a particular provision of the Evidence Act to determine the very date that has already been determined in the orders.
Mr Morzone for the applicant submits that the orders of Registrar Baldwin are crystal clear as to when service was effected. Order (3):
Service in accordance with this order shall be deemed good and sufficient service of the Bankruptcy Notice upon the respondent.
Mr Morzone says that orders are clear and the letter simply states the schedule provided for in the orders of substituted service and is not in any way inaccurate or misleading, nor has it caused confusion. His submissions refer to the Court’s power to authorise service other than as prescribed under section 28A of the Acts Interpretation Act, and that such a deeming order is made to ensure that an applicant does not have to strictly provide service.
He submits that unless otherwise shown, section 29 of the Interpretation Act and section 160 of the Evidence Act deal with service by post. Each of those provisions are set out in Mr Morzone’s submissions, and my attention is drawn to each provision. Section 29 of the Acts Interpretation Act and the inclusion of the words following the deeming provision “unless the contrary is proved”, being delivery being effected at the time at which the letter would be delivered in the ordinary course of post.
As to section 160 of the Evidence Act, the presumption making reference to four working days after having been posted applies unless evidence sufficient to raise doubt about the presumption is adduced. Mr Morzone points to the evidence of a phone call from the respondent to the office of the applicant’s solicitors, Murray & Lyons, on the morning of 13 November 2013. (I should note that the submissions of Mr Morzone refer to December, but the affidavit, in fact, refers to the email in November, and I assume that is just an error in submissions.)
It is submitted that the evidence proves the contrary effect as referred to in section 29 of the Acts Interpretation Act and raises or rebuts doubts about the presumption when referring to section 160 of the Evidence Act. Importantly, in my view, the submission is made that, in any event, the order of Registrar Baldwin expressly deems service contrary to the provisions, the order expressly stating when service is deemed to be effected on 14 December 2013.
Mr Morzone submits that in those circumstances, the Court should make the Sequestration Order unless some objection is sustained. Mr Morzone’s written submission states:
26. The respondent objects to the making of a sequestration order relying upon the general ground of “other sufficient cause” under s 52(2)(b) of the Act because, it is said, the letter accompanying the Bankruptcy Notice “had the capacity to reasonably mislead th respondent”.
27. The onus is on the respondent to make out the objection. In Cain v Whyte (1933) 48 CLR 639 the High Court approved the statement that:
“…..[p]rima facie, on proof of the matters mentioned in s 52(1), the court will proceed to make an order for sequestration, and that it is for the debtor to show some cause overriding the interest of the public in the stopping of unrenumerative trading, and the rights of individual creditors who are unable to get their debts paid to them as they become due. Something has to be put before the court to outweigh those considerations before it can be said that sufficient cause is shown against the making of a sequestration order.”
Mr Morzone submits that the onus is on the respondent to make out the objection; that no material has been filed in support of the grounds in the late objection; that the objection is baseless; the letter when read with the Bankruptcy Notice is simply not capable of misleading; there’s no evidence he was in fact misled; and, in fact, his conduct does not bear out the claim; and the respondent cannot show he was actually misled or that he relied upon the demand for payment by 6 December 2013. Essentially, he says, the respondent cannot demonstrate “other sufficient cause” to warrant interfering with the making of the Sequestration Order.
I consider there is some force in the submission of Mr Morzone. In this matter, I am not dealing with alleged confusion about service simply in a void. The issue of service in this matter is to be seen in the context of an order for substituted service having been issued. If there had been no order for substituted service, I consider the submissions of Dr Jonsson would have more force.
I note that neither Counsel referred to the Bankruptcy Regulations 16.01. Those regulations specify when service of documents is said to occur, unless the contrary appears. Earlier reference is made to documents being received in the ordinary course of events by persons. It refers to documents that would, in the due course of post or practice, be received. Without an order for substituted service, the wording of that regulation would cause reference, in my view, to the Evidence Act or the Acts Interpretation Act.
The section also, though, starts with the words “unless the contrary intention appears”. If there was no order for substituted service, that wording would cause the Court to go to those sections of the Evidence Act. However, in this case, there is an express order deeming when service is sufficient and good, and I note that it is longer than four days. Importantly, it is linked to actions of sending, not receipt of documents. The order made by Registrar Baldwin expressly provided for when service is deemed to occur.
It removes the uncertainty about when documents are received, as might occur in regulation 16.01 referring to modes of service. It places the obligation on the applicant for substituted service to comply with the means of service and prove when the method of service or the means of service were attended to. The Court has the affidavit evidence of Ms Lux, solicitor that on 7 November 2013, the same day that the order for substituted service was made (and I note that all of the methods were attended to on the same day) the applicant, through her solicitor, served the Bankruptcy Notice and a copy of the order for substituted service when both were sent by pre-paid post to both addresses and also emailed, as provided for in the order.
The substituted service order was made following unsuccessful attempts at personal service, where it was said in an affidavit of the process server that the respondent refused to come to the door. In the orders of Registrar Baldwin, order 3 provided that:
Service in accordance with this order shall be deemed good and sufficient service of the bankruptcy notice upon the respondent.
Order 3 expressly states that the Bankruptcy Notice shall be deemed to be served on the respondent seven days after the last method of service provided for in order 1. There were two methods of service provided for in order 1; pre-paid post to two addresses and email. Both methods were attended to on 7 November 2013. So it is academic whether the order meant last on the list or last in time.
Also important in my view is that the orders refer to the posting by pre-paid post being done on or before a specific date. The date in the order was 14 November 2013. The applicant had a week to do it. Upon those actions of the applicant in sending, not the receiving by the respondent, the deeming provisions apply. The respondent says the Court must turn to provisions of section 160 of the Evidence Act, which deem service to be four days after posting. As I said, if there had been no specific order issued, in my view, the regulations would apply and the Court would look to the meaning of “ordinary course of events” and any contrary intentions to the Evidence Act.
There is nothing in the orders about when the pre-paid post letters must be received or when the email must be received. Seven days is provided for after the last method of service has occurred as a deeming provision, that the Bankruptcy Notice shall be deemed served on the respondent, as provided for in order 1.
To the extent that it is submitted that the Evidence Act and the Acts Interpretation Act apply, I regard the Registrar’s express orders 2 and 3 providing for service in accordance with this order being deemed good and sufficient service of the Bankruptcy Notice and the Bankruptcy Notice shall be deemed to be served on the respondent seven days after the last method of service provided for in order 1, as prevailing over the suggestion that the court needs to import into its own orders the provisions of the Evidence Act or the postal rule about when an item is received.
These documents were not able to be served personally. The usual method of service was dispensed with by the order for substituted service. The express orders, in my view, remove any uncertainty that might have been the case had they been served pursuant to the regulations. As I said at the beginning, the applicant had two choices in terms of substituted service. Relying on section 16.01: that was not relied on, and instead the applicant’s solicitor’s sought an alternate method of securing specific orders for substituted service tailored to fit the circumstances as an alternative to the regulations of 16.01.
The order for substituted service was an exercise of the Court’s power contained in section 31 and section 309 of the Bankruptcy Act. The orders issued pursuant to the Court’s power to do so. The orders expressly provide for a deeming provision not centred around when the documents are received, rather, and importantly for the respondent in this matter, centred around when the documents are sent.
If I need to, I accept the submissions of the applicant that any presumption arising from the Evidence Act is rebutted or does not apply. I do this in relying on the evidence that the respondent had received the documents no later than the morning of 13 November 2013, as per the affidavit evidence before the court. That is the day before the last method, which, noting that an email is received almost instantly, likely refers to the pre-paid posting being seven days from the posting on 7 November 2013, pursuant to the terms of substituted service meant it was deemed to be received on 14 November 2013. The evidence shows it was received on 13 November 2013.
In my view, it must be remembered that in the orders for substituted service it was not necessary for the applicant to prove the respondent received the documents. The order for substituted service was made because of the difficulties in serving the documents personally. The accompanying solicitor’s letter of the applicant’s solicitors on 7 November 2013 restated the provisions of the order that “the service would be deemed to have occurred seven days from today as we have posted and emailed a copy of the bankruptcy notice as required by orders 1 (a), (b), (c) today and that service will be deemed to have been effected on 14 November”.
The letter is not, in my view, misleading, nor does it create confusion. In my view, the letter is an accurate reflection and commentary on what is in the orders of Registrar Baldwin of 7 November 2013. As I have said, in my view, given the framing of the substituted service, it is irrelevant as to whether or not for the purposes of service the letter was actually received. The orders refer to the means of sending the Bankruptcy Notice in the order, and each method referred to does not stipulate that time runs from when it was received.
In Re Sayers; ex parte Walpole (1948) QWN 43, an order for substituted service of a Bankruptcy Petition provided for service on the debtor by registered post. The order provided that the service should be effected at the expiration of seven days from the date of posting. Although the documents were returned by the post office unclaimed at a date later than seven days after posting, service was held to be effective.
In Clyne v the Deputy Commissioner of Taxation (No.4) (1982) 66 FLR 301, 13 ATR 302, 42 ALR 703, the order for substituted service provided that the Bankruptcy Notice be served by posting it and a copy of the order by airmail to an address in Vienna, Austria, and an address in Sydney. Under the order, service was deemed to be effective upon the expiration of 14 days from the date of posting of the documents. Lockhart J held that the debtor was entitled to know the date of posting of the documents, because otherwise he would not be able to calculate the date upon which service was deemed to be effective. Because the letter from the Deputy Crown Solicitor accompanying the documents failed to include any statement as to the date of posting, the Bankruptcy Notice was set aside. Clyne (No.4) emphasises the need, in cases such as the present, for the solicitor to include a statement of the date of posting in the letter accompanying the documents. This is precisely what happened here. The dates referred to in the letter comply with a timeframe provided for in the orders of Registrar Baldwin, that is, the Bankruptcy Notice shall be deemed to be served seven days from the last method provided for in order 1.
I note, also, in any event, there is evidence that the respondent had actually received the documents on 13 November 2013, as per exhibit E contained in the affidavit of Mr Treston, evidencing a phone call from the respondent to the solicitor for the applicant, saying he had received the documents on 13 November 2013 and the affidavit of Jessica Evans. The date deemed for service, according to the scheme of the orders of 7 November 2013 for substituted service and the posting dates as deposed to by Ms Lux, solicitor for the applicant, result in the documents being deemed to have been served by 14 November 2013.
The Bankruptcy Notice itself states clearly that the respondent is required, “within 21 days after service on you of the Bankruptcy Notice, to either pay to the creditor the amount of the debt claim or make arrangements to the creditor’s satisfaction for settlement of the debt.” It is submitted on behalf of the respondent that the accompanying letter caused confusion and was misleading and he would have concluded he had four more days after receipt of the pre-paid letters before the seven days started to run and before he was deemed to be served.
I do not accept the assumption or inference was open that he had further time, given the orders of the Registrar for substituted service stating expressly when service would be deemed, and that was seven days from posting, not receiving. It follows, therefore, I do not consider that the letter from the solicitors for the applicant, which was posted by her solicitors was misleading and caused him to have five days short of the time he ought to have. I accept the letter stated precisely what was in the orders.
The deadline for the respondent to comply with the Bankruptcy Notice was 21 days from 14 November 2013, which is 5 December 2013; the day after being 6 December 2013, that date is the date included in the letter of 7 November 2013. This is not a case where the amount of the debt was paid late, which I believe may be the subtext of the contention that he could have had more time to pay. The debt has never been paid.
In my view, the order for substituted service stands on its own, and I do not accept the applicant’s own evidence demonstrates a very real potentiality for the respondent, Mr Brett-Hall, to have been reasonably and seriously misled as to what it was that he was required to do to satisfy the Bankruptcy Notice. I have read the authorities provided to me concerning “confusion.” It has never been suggested that the Bankruptcy Notice is confusing or has any irregularities or errors on it.
I do not consider the letter accompanying the Bankruptcy Notice could be capable of being misleading or confusing. The respondent actually had two weeks beyond the date for payment set out in the letter as the applicant did not prepare and file a Creditor’s Petition until two weeks after the date the payment was due, that is, two weeks after 6 December 2013, being 20 December 2013.
Given what I have determined in terms of service being attended to pursuant to the orders for substituted service it follows that I am not satisfied that circumstances exist that would satisfy “an other sufficient cause” to warrant dismissal of the creditor’s petition. I am satisfied that the interim petition filed by Mr Brett-Hall seeking to dismiss the creditor’s petition should be dismissed.
I understand from Dr Jonsson that there are no further objections or any irregularities to be raised in regards to the proposed orders sought today for a Sequestration Order against Mr Brett-Hall and I shall now hear from Mr Treston in reference to the draft orders.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Judge Willis
Associate:
Date: 28 March 2014
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