Khatri (Trustee) v McDonald
[2017] FCA 503
•2 May 2017
FEDERAL COURT OF AUSTRALIA
Khatri (Trustee) v McDonald [2017] FCA 503
File number: QUD 160 of 2017 Judge: LOGAN J Date of judgment: 2 May 2017 Catchwords: PRACTICE AND PROCEDURE – substantial service – whether service should be deemed under r 10.23 of the Federal Court Rules 2011 (Cth) – service by email – whether personal service is “not practicable” – whether attempts were reasonable – where no personal details about respondent’s residential or other address can be discovered despite exhaustive search – where respondent’s email address is known and evidence supported inference that originating process and statement of claim had come to respondent’s attention – order deeming service to have occurred made
BANKRUPTCY AND INSOLVENCY – substantial service – whether service should be deemed under r 10.23 of the Federal Court Rules 2011 (Cth) – service by email – whether personal service is “not practicable” – whether attempts were reasonable – where no personal details about respondent’s residential or other address can be discovered despite exhaustive search – where respondent’s email address is known and evidence supported inference that originating process and statement of claim had come to respondent’s attention – order deeming service to have occurred made
Legislation: Bankruptcy Act 1966 (Cth) s 120 Date of hearing: 2 May 2017 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 10 Counsel for the Applicant: Mr C Wilkins Solicitor for the Applicant: Australian Law Partners Counsel for the Respondent: The respondent did not appear ORDERS
QUD 160 of 2017 BETWEEN: RAJ KHATRI AND MORGAN LANE AS TRUSTEES OF THE BANKRUPT ESTATE OF THE LATE ANTHONY ALFRED WILKIE (A BANKRUPT)
Applicant
AND: ALISTAIR GARRY MCDONALD
Respondent
JUDGE:
LOGAN J
DATE OF ORDER:
2 MAY 2017
THE COURT ORDERS THAT:
1.The notification by the applicants’ solicitors to the Associate to Logan J of 28 April 2017 be deemed to be an application for an order under rule 10.23 of the Federal Court Rules, and the filing of a notice of motion in that regard be dispensed with.
2.The originating application and statement of claim be deemed to have been served on the respondent on 10 April 2017.
3.The respondent file and serve any defence not later than 16 May 2017.
4.The applicants file and serve such reply if any as they may be advised, together with affidavits of evidence in chief, not later than 30 May 2017.
5.The respondent file and serve any affidavits in response not later than 13 June 2017.
6.In default of the filing of a defence or any affidavits in response, the applicants have leave to apply for judgment in default on Monday, 19 June 2017, at 10.15am.
7.The proceedings be listed for trial for one day commencing on Monday, 19 June 2017, at 10.15am.
8.For the purposes of these proceedings, and until further notice, it shall be sufficient service on the respondent if copies of documents to be served by the applicants are sent to the respondent by email at [email protected].
9.A copy of this order is to be served on the respondent by the applicants by emailing it to [email protected].
10.Liberty to apply.
11.Costs reserved.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
(REVISED FROM TRANSCRIPT)LOGAN J:
Mr Raj Khatri and Mr Morgan Lane are the trustees of the bankrupt estate of the late Anthony Alfred Wilkie. The trustees allege that the bankrupt and Mr McDonald, who is the respondent to this proceeding, entered into a transaction on 5 May 2010 whereby, by an Acknowledgement of Debt Deed, it was stated that the bankrupt was indebted to Mr McDonald for three loans, that he had charged his interest in four properties with payment or repayment of those debts, and further, that Mr McDonald was entitled to lodge a caveat over the real properties concerned.
The date of commencement of Mr Wilkie’s bankruptcy is 11 June 2009. The trustees allege that the deed was made in the relation back period, that Mr McDonald gave no consideration or consideration less than market value and that the deed is void against them pursuant to s 120(1) of the Bankruptcy Act 1966 (Cth). They seek related declarations together with an order that Mr McDonald repay the amount received under the Deed of Acknowledgement of Debt, together with interest and costs.
The trustees have made very particular endeavours to serve Mr McDonald with a copy of the originating application and the related statement of claim. A letter of 3 March 2017 giving the nature of the bankruptcy trustees’ claim and a copy in draft of the statement of claim was sent by the trustees’ solicitors to Mr McDonald, care of a post office box address in Western Australia. That letter was authored by a Mr Duke Myrteza, a partner in the firm of solicitors acting for the trustees. In response, on 20 March 2017, an email addressed to Mr Myrteza was sent on 20 March 2017 by Mr McDonald. In that email Mr McDonald stated:
I have referred this matter to my Solicitor who is currently preparing a response. They will be in contact with your office at their earliest.
Two further emails, one of 24 March 2017, the other of 27 March 2017, were then sent by the solicitors for the trustees, on each occasion to the email address used by Mr McDonald for his email to Mr Myrteza of 20 March 2017. The second of those emails, that dated 27 March 2017, enclosed copies of the originating application, the statement of claim, a letter notifying the initial listing of the proceeding on 4 April 2017, and a notice of court contact. Inferentially in response to the initial email of 3 March 2017 from the solicitors for the trustees and its enclosed correspondence, together with the subsequent emails from that firm of 24 and 27 March 2017, an email and enclosed correspondence was sent on 29 March 2017 by WL & KJ Everett, barristers and solicitors of Western Australia (Everetts), to the solicitors for the trustees.
The author of that email was a Ms Vanessa Fuchsbichler, a legal secretary to apparently a solicitor in that firm who authorised the enclosed letter. In that letter it was stated:
We have not reviewed the merits of your client’s claim, as our client has no funds to pay for us to do so. He has, however, asked us to write to you to let you know that he has assets of little or nominal value only, and he is an aged pensioner. We attach a copy of his pensioner card, in verification.
Our client does not have the funds to pay for legal assistance and we are writing this letter on a pro bono basis. We trust that you will take no further action in this matter, and thus avoid the unnecessary wastage of creditors’ funds.
[emphasis removed]
Mr McDonald is elsewhere described in the letter as a “former client”. On its face, that letter is copied to Mr McDonald. The email address used for that purpose is different to that utilised by Mr McDonald for his initial correspondence on 20 March 2017. The pensioner card enclosed shows an address at Scarborough in Western Australia. The card is, on its face, expressed to have a start date of 1 July 2015 and an expiry date of 31 July 2017.
Since then, the solicitors for the trustees have endeavoured to correspond both with Everetts and also to serve Mr McDonald personally. As to the latter, it is apparent from an affidavit of a process server, Mr Lorenzo Ferullo, that Mr McDonald no longer resides at the Scarborough address shown on the pensioner concession card, and that he has no forwarding address.
It is also apparent from Mr Ferullo’s affidavit that an alternative work address for which there was good reason to believe that it had an association with Mr McDonald is no longer current.
The end result is that the trustees no longer have a current residential address for Mr McDonald, nor the ready likelihood of ascertaining a fresh one. It is, though, inherently likely, having regard to the course of events mentioned, that the proceedings have been drawn to Mr McDonald’s attention. Against this background, the trustees have applied, pursuant to r 10.23, for an order that the originating application and statement of claim be taken to have been served on Mr McDonald.
Initially, the trustees were disposed to promote 27 March 2017 as the date upon which service ought be deemed, but readily conceded in submissions that this date may be premature. On 6 April 2017 an email came back to the solicitors for the trustees from Everetts notifying that the legal secretary concerned would return to duty on 10 April 2017. In the circumstances, that date seems to me to be an apt date to select for the date upon which the originating application and statement of claim be taken to have been served on Mr McDonald.
In light of the circumstance related above, I am satisfied that it is not practicable to serve the originating application and statement of claim on Mr McDonald in a way required by the rules. It is necessary, therefore, to provide for the further conduct of the proceedings. I propose to make directions accordingly, based upon the premise that the proceedings have been deemed to have been served on 10 April 2017.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate:
Dated: 17 May 2017
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