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Lavan Legal v Kenyon

Lavan Legal v Kenyon

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Case Copied 20 October 2017 51 min read

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FEDERAL CIRCUIT COURT OF AUSTRALIA

LAVAN LEGAL v KENYON

[2017] FCCA 2529

Catchwords:
BANKRUPTCY – Sequestration order made by Registrar – application to review decision made by Registrar – nature of review of Registrar’s decision – requirements for making a sequestration order – whether final judgment or final order for debt exceeding $5,000 – taxing officer’s certificate – whether proper service by post of bankruptcy notice – requirement for strict proof of service – whether proof of service – whether proof of posting – whether proof of time, date and manner of posting – whether issue of bankruptcy notice an abuse of process – whether proper service of creditors petition – whether substituted service orders complied with – whether power to vary substituted service orders – whether creditors petition accurate and correctly verified – whether debt still owing – whether debtor solvent.

WORDS AND PHRASES – “certify” – “writing” – “certify in writing”.

Legislation:

Acts Interpretation Act 1901 (Cth)

Bankruptcy Act 1966 (Cth), ss.40, 41, 43, 44, 52, 309

Bankruptcy Regulations 1996 (Cth), Schedule 1, reg.16.01
Court Procedures Rules 2006 (ACT), Form 2.46
Federal Circuit Court of Australia Act 1999 (Cth), s.104
Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), Part 4, rr.4.04, 4.06
Federal Court Rules 2011 (Cth), r.40.32, Form 132
High Court Rules 2004 (Cth), rr.57.04.1-57.04.3, Form 2
Interpretation Act 1984 (WA), ss.3, 19
Legal Practice Act 2003 (WA), s.240
Legal Practitioners Act 1893 (WA), s.70
Legal Profession Act 1987 (NSW), s.208J
Legal Profession Act 2004 (NSW), s.368
Legal Profession Act 2008 (WA), ss.169, 295, 304, 305, 307
Rules of the Supreme Court, 1971 (WA), O 43
Solicitors Act 1974 (UK), s.70(7)
Supreme Court (General Civil Procedure) Rules 2005 (Vic), r.63.11(1)
Supreme Court (General Civil Procedure) Rules 2015 (Vic), r.63.56
Supreme Court Rules (NT), r.63.54

Cases cited:

Bulic v Commonwealth Bank of Australia Ltd [2007] FCA 307; (2007) 5 ABC(NS) 122

C2C Investments Pty Ltd, in the matter of C2C Investments Pty Ltd v Leigh (No 3) [2012] FCA 680

Cassimatis & Anor v Australian Securities and Investments Commission [2016] FCA 131; (2016) 334 ALR 350

Cavill Business Solutions Pty Ltd v Jackson [2005] WASC 138

Civic Video Pty Ltd v Warburton [2013] FCA 934; (2013) 216 FCR 61; (2013) 11 ABC(NS) 568
Clyne v Deputy Commissioner of Taxation (NSW) (No 4) (1982) 13 ATR 302; (1982) 66 FLR 301; (1982) 42 ALR 703
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; (2000) 203 CLR 194; (2000) 74 ALJR 1348; (2000) 99 IR 309; (2000) 174 ALR 585

Commonwealth Bank of Australia v Jeans (No 3) [2006] FCA 693; (2006) 4 ABC(NS) 288
Communications, Electrical, Electronic, Information, Postal, Plumbing & Allied Service Union of Australia (Western Australia Division) v Fortescue Metals Group Ltd [2016] FCCA 1227; (2016) 310 FLR 1

Deputy Commissioner of Taxation v Barnes [2008] FMCA 7; (2008) 70 ATR 776

Deputy Commissioner of Taxation v Webb [2017] FCCA 1137

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] FCCA 2529
Decision Date: 20 October 2017

CaseChat Overview and Summary

Lavan Legal (as trustee for the bankruptcy of Mr. and Mrs. Kenyon) sought to review a decision by a Registrar to set aside a sequestration order made against Mr. and Mrs. Kenyon. The dispute concerned whether the requirements for making a sequestration order had been met, specifically regarding the existence of a final judgment or order for a debt exceeding $5,000, the proper service of a bankruptcy notice, and the validity of a creditors' petition.

The court was required to determine several key legal issues. These included the nature of a review of a Registrar's decision in bankruptcy proceedings, whether a taxing officer's certificate constituted a final judgment or order for the purposes of bankruptcy, whether the service of the bankruptcy notice by post was properly effected and proven, whether the issue of the bankruptcy notice constituted an abuse of process, whether the creditors' petition was properly served, including compliance with substituted service orders, and whether the creditors' petition was accurate and correctly verified, with a subsisting debt still owing and the debtors being insolvent.

In its reasoning, the court emphasised the strict requirements for proof of service, particularly when service is effected by post. It held that mere proof of posting was insufficient; proof of the time, date, and manner of posting was necessary to establish proper service. The court also considered the definition of "certify in writing" and found that a taxing officer's certificate, while a formal document, did not necessarily equate to a final judgment or order for the purposes of initiating bankruptcy proceedings. Furthermore, the court examined the principles of abuse of process and the requirements for valid substituted service orders, noting that such orders must be strictly complied with. The court ultimately found that the service of the bankruptcy notice was defective, and consequently, the creditors' petition was not properly founded.

Orders