Mulherin v Quinn Villages Pty Ltd
[2012] FMCA 1063
•19 October 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MULHERIN v QUINN VILLAGES PTY LTD | [2012] FMCA 1063 |
| BANKRUPTCY – Bankruptcy notice – service of bankruptcy notice – notice served upon solicitor – invalidly served – application adjourned. PRACTICE & PROCEDURE – Service – bankruptcy notice – notice served upon solicitor – notice sent via facsimile – no instructions to accept service – service not effected – bankruptcy notice invalidly served – application adjourned. |
| Bankruptcy Act 1966 (Cth), ss., 40, 41, 306 Bankruptcy Regulations 1996 (Cth), rr.4.02, 16.01 |
| Bishop v Helps (1845) 135 ER 857 Macquarie Dictionary (Macquarie, 3rd ed, 2005) |
| Applicant: | HENRY MULHERIN |
| Respondent: | QUINN VILLAGES PTY LTD |
| File Number: | BRG 755 of 2012 |
| Judgment of: | Burnett FM |
| Hearing date: | 17 October 2012 |
| Date of Last Submission: | 17 October 2012 |
| Delivered at: | Brisbane |
| Delivered on: | 19 October 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr I. Erskine |
| Solicitors for the Applicant: | Irish Bentley Lawyers |
| Counsel for the Respondent: | Mr P. Hastie |
| Solicitors for the Respondent: | Plastiras Lawyers |
ORDERS
Declare that service has not been effected by the facsimile sent on 26 July 2012.
That the matter be listed for mention at 9:30am on 6 February 2013.
That costs be reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 755 of 2012
| HENRY MULHERIN |
Applicant
And
| QUINN VILLAGES PTY LTD |
Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
On 21 April 2009, Chesterman J of the Supreme Court of Queensland ordered that the applicant debtor pay the respondent creditor a sum of $564,816.56 plus interest of $286,431.63 and costs of $129,565.09, giving a total of $980,830.28. A bankruptcy notice was issued on 7 August 2009 and for reasons not relevant to this application it ultimately lapsed. What is relevant however is that following its issue the debtor made an unsuccessful application to have it set aside and subsequently prosecuted an unsuccessful appeal from the orders made by Jarrett FM to dismiss the application.
The appeal from his Honour’s order was disposed of on the basis of a failure by the debtor to pay security for costs, which had been ordered in the appeal. A formal order dismissing the appeal for failure to pay security for costs was made by Registrar Baldwin on 23 April 2012.
Subsequently, the creditor caused a fresh bankruptcy notice to issue. That occurred on 8 January 2012 and is the subject of this application. For reasons which are relevant to the context of the current application, it is significant that at all times since about the time of the hearing of the first bankruptcy notice, which was in August 2010, the debtor has been represented by the solicitors who presently appear for him.
The debtor’s current solicitors acted in the proceedings regarding the first bankruptcy notice as well as in this application. The first bankruptcy notice lapsed and the creditor caused the second bankruptcy notice to issue. The creditor purported to serve that notice by facsimile. That is of itself not the problem, as service by facsimile is permissible under the Bankruptcy Regulations 1996 (Cth). However it purported to effect service by faxing the bankruptcy notice to the solicitors who now appear for the debtor.
In their letter dated 25 July 2012 which was both faxed and emailed, the debtor’s solicitors, Plastiras Lawyers, wrote:
“We refer to your letter of 26 June 2012 and note that you continue to act for Mr. Mulherin and have advised that you intend on applying to Court to vary the judgment handed down against him.
We enclose, by way of service pursuant to regulation 16.01(1)(e)(ii) of the Bankruptcy Regulations 1996, a Bankruptcy Notice issued against your client Henry Mulherin.”
Attached to that letter was a copy of the bankruptcy notice which issued on 8 June 2012 which I earlier referred to as the second bankruptcy notice. That notice included the orders made by Chesterman J, to which I have earlier referred.
Mr Zeke Bentley, a principal with Irish Bentley Lawyers, responded to the creditor’s solicitor’s letter by his letter of 10 August 2012. In his letter, he stated:
“1. Purpose of Letter
We write in reference to your letter dated 25 July 2012 attaching a bankruptcy notice (“the Bankruptcy Notice”), which purports to effect service of the Bankruptcy Notice upon Henry Mulherin.
The purpose of this letter is to seek clarity on why you sent us this letter on 25 July 2012.
We query whether your client claims it has served Dr. Mulherin and it seems 2 options are possible:
Option 1. Your client claims it has served Dr. Mulherin (either by facsimile or other means); or
Option 2. Your client does not claim it has effected service.
If the latter option is the case (option 2) then we simply seek that you confirm same by Midday Monday 13 August 2012.
…”
The letter continued as follows:
“If however, your client contends that service has been effected, then please consider the rest of this letter and provide your response by Midday Monday 13 August 2012, so that we can determine whether a conditional appearance needs to be filed.
2. Service has not been effected
We are firmly of the view that service has not been effected and in this regard and in this regard we refer to the attached letter of 26 June 2012, which put your client on clear notice:
1. That we do not hold instructions to accept service; and
2. That our client does not reside at 99 Herron Road, Pullenvale and has not done so for 6 years.
Your client has been repeatedly told that our client does not reside at 99 Herron Road, Pullenvale (in open correspondence and in submissions made in open court).
One (1) month after your client received notice that we do not hold instructions to accept service, we received your facsimile of 25 July 2012, which enclosed certain documents. Obviously your client cannot rely upon this facsimile of 25 July 2012 to establish service.
We note that in the past your client has asserted that it has “served” court proceedings by dropping the documents off at 99 Herron Road, Pullenvale. We note that your client also did this at a time when your client was aware that Dr. Mulherin had not resided at the property since 2006.
We would be surprised if your client persevered with such an assertion again, but for the sake of completeness we feel compelled to again put your client on clear written notice that:
1. Henry Mulherin does not reside at 99 Herron Rd, Pullenvale (and has not done so for since 2006); and
2. If your client has posted or delivered documents to 99 Herron Rd, Pullenvale then obviously those steps do not constitute service.
In regard to point 2 above we draw your attention to the case of Drake trading as Drake and Associates v Stanton [1999] FCA 1635.
Obviously your client cannot rely upon any of the above as constituting service.
If you have attempted service by any other way, shape or form, then please provide these details.
Your client should be well aware that it needs to effect service personally upon our client so we will not labour the point further.
…”
The debtor rejects that he has been served in accordance with the Bankruptcy Regulations. His solicitors purport to conditionally appear, and in that regard they now make application for the following orders:
“…
1. The Bankruptcy Notice BN 3413 issued 8 June 2012 (“the Bankruptcy Notice”), be set aside for want of service in compliance with regulation 16.01 of the Bankruptcy Regulations 1996 (Cth).
2. The Bankruptcy notice be set aside as it does not comply with s.41(2) Bankruptcy Act 1966 (Cth) or the form prescribed pursuant to reg 4.02 Bankruptcy Regulations 1996 (Cth).
3. In the alternative to orders 1 or 2, the time for compliance with the Bankruptcy Notice be extended up to and including 21 days after a determination of the validity of the Bankruptcy Notice.
…”
In this instance, the debtor’s solicitor’s submissions have particular significance because of their earlier letter of 25 July 2009, which expressly informed the creditor’s solicitors that they did not hold instructions to accept service. At the outset, the debtor accepts that, aside from the issue concerning service of the bankruptcy notice, the notice itself otherwise suffers no formal defect. It is accepted, however, that the issue of non-service of a bankruptcy notice may invite the exercise of the court’s discretion to set it aside: see Lazar v Seccombe.[1]
[1] [2005] FCA 1652.
The service relied upon was service by fax. I accept the debtor’s submission that, in the circumstances of this case, the only real mode of service available to be relied upon is service pursuant to regulation 16.01(e). None of the other modes of service provided for in regulation 16.01(1)(a) to 16.01(1)(d) are made out on the facts. Relevantly, regulation 16.01(1)(e) provides as follows:
“Service of documents
(1) Unless the contrary intention appears, where a document is required or permitted by the Act or these Regulations to be given or sent to, or served on, a person (other than a person mentioned in regulation 16.02) , the document may be:
…
(e) sent by facsimile transmission or another mode of electronic transmission:
(i) to a facility maintained by the person for receipt of electronically transmitted documents; or
(ii) in such a manner (for example, by electronic mail) that the document should, in the ordinary course of events, be received by the person.
…”
For the debtor it was contended that, as a matter of proper constructionof regulation 16.01(1)(e), service has not been effected. Counsel contended firstly that the meaning of sub-regulation (e), paragraphs (i) and (ii), requires specific consideration. Paragraphs (i) and (ii) are expressed disjunctively. He submitted that on the creditor’s case, to satisfy paragraph (i), the facsimile must have been sent to:
“…a facility maintained by the person for receipt of electronically transmitted documents…”
Here, the fax was forwarded to the debtor’s solicitor, so this requirement was not met. He further contended that because paragraph (ii) included the expression “electronic mail,” service of the kind contemplated by that paragraph was email service only. Again, the evidence did not show any email forwarded to the applicant that would be received by him in the ordinary course.
In summary, he contended that upon its proper construction the regulation means fax transmissions are dealt with by paragraph (i) and emails or other like electronic transmissions are dealt with by paragraph (ii).
The language of sub-regulation (e), paragraphs (i) and (ii), is difficult. The disjunctive “or” appears at two important parts of the regulation. The opening sentence of sub-regulation (e) is split by the insertion of the disjunctive “or” as are paragraphs (i) and (ii) of the sub-regulation. Arguably, the first part of the sentence could apply expressly to paragraph (i) and the second part of the sentence to the disjunctive paragraph (ii). Construing the regulation this way would in practical terms address the mischief of ensuring that when electronic means of service are used the mode of such transmission which most closely relates to the physical means by which such transmission will be received is engaged to infer service might come to the attention of the recipient.
For instance, commonly with a fax transmission the recipient will have a dedicated machine at the receiving end. That machine would constitute a “facility.” Undoubtedly if the facility was maintained by the debtor for the receipt of electronically transmitted documents (in this instance the bankruptcy notice), the forwarding by fax would in the ordinary course be brought to the debtor’s attention.
Likewise, if the manner of service in the second part of sub-regulation (e) is regulated by paragraph (ii), then in practical terms the forwarding of the bankruptcy notice by email need not be tied to a specific facility or machine for such transmission to be received by the debtor in the ordinary course of events. This mode acknowledges a more flexible capacity for emails to come to the attention of an intended recipient. For instance, it has long been the case that internet service providers may facilitate access to personal email accounts that are not tied to any particular piece of equipment or device. There is a general capacity to receive emails from any machine or device which has the capability to logon to the internet.
The creditor contended that a much more fluid approach should be afforded to the construction of sub-regulation (e), with the first sentence of sub-regulation (e) being applied with equal force to paragraphs (i) or (ii) as the case requires. Respectfully, however, I do not agree.
If such an approach were to be taken, then either paragraph (i) or paragraph (ii) would be rendered otiose. For instance, if a digitalised bankruptcy notice is forwarded by a creditor, it would arguably have to be forwarded to a “facility.” The Macquarie Dictionary defines a “facility” in relation to electronic devices as follows: “a specific capacity or function.”[2] A facility would include a machine such as a fax machine which has the capacity to electronically transform a facsimile copy of an original document into data, transmit it, then reconstruct that data into a facsimile of the original document at the point of receipt.
[2] Macquarie Dictionary (Macquarie, 3rd ed, 2005).
Email performs a similar function. A facsimile of an original document is digitally created by scanning the original document. The digitalised data is then transmitted and subsequently reconstructed into the original form at the receiving end by opening the email and the scanned attachment. If that is the process (as my layman’s understanding suggests), then the requirement that such occur in circumstances required by paragraph (i) or paragraph (ii) appear to have satisfied its terms because the process of transmission will generally satisfy either criterion. If so, why list both as disjunctive possibilities? It is difficult to conceive a situation where transmission by fax to a dedicated fax machine maintained by the debtor would not also give rise to a conclusion that, in the ordinary course of events, it would also be received by him. The same applies to email. If a bankruptcy notice was forwarded by email, arguably the relevant facility required to access the email would be access to a “capacity” provided by the internet account maintained by the debtor, which is accessible by any computer or any device loaded with the requisite computer software. Plainly, on that basis, a document forwarded to a debtor’s email account would also be one that would be received by the debtor in the ordinary course of events.
As a matter of general principle, a purposeful approach ought to be adopted to the construction of legislation and in particular, all words employed in a statute must be given some meaning and effect.[3] In Minister of State for Resources and Another v Dover Fisheries Pty Ltd,[4] Gummow J, then of the Federal Court, concerning the apparent conflict or difficulty arising with apparently superfluous words, observed that:
“… [it is] improbable that the framers of legislation could have intended to insert a provision which has virtually no practical effect, one should look to see whether any other meaning produces a more reasonable result…”[5]
[3] See generally Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355.
[4] (1993) 43 FCR 565.
[5] Ibid., at 574.
It follows, in my view, that the proposed construction which gives both paragraphs (i) and (ii) of sub-regulation (e) meaning and work, provides the interpretation which is to be preferred. That is the construction contended for by the debtor. Namely that the application of each part of the first sentence of sub-regulation (e) split by the disjunctive expressly applies to paragraph (i) and/or paragraph (ii) respectively, having regard to the disjunctive.
In this case, there is no contest concerning the facts. The facsimile was sent to a facility maintained by person other than the debtor, and it follows that service was not effected as required by regulation 16.01 (e) (i).
As the mode of transmission was by facsimile and not by another mode of electronic transmission, paragraph (ii) is not engaged.
If I am wrong in my construction of sub-regulation (e), then what of the case upon the alternative construction. Plainly, paragraph (i) still has no application and service would not be effected in the circumstances provided for in that paragraph.
However, a question would arise as to whether service is effected in terms of paragraph (ii). That requires an examination of whether sending the bankruptcy notice by fax to the debtor’s solicitors would see the bankruptcy notice in the ordinary course of events being received by the debtor. Contrary to the debtor’s submissions, I do not necessarily accept that service in terms of paragraph (ii) may not be affected upon a debtor’s solicitor. The authority relied upon by the debtor, Re Hanlin; Ex parte South Properties Development Pty Ltd,[6] is, in my view, entirely distinguishable.
[6] (1985) 9 FCR 357.
In that case, the bankruptcy notice was sent by the creditors to the debtor’s solicitors. After the notice was sent it was agreed between the debtor’s solicitors and the creditor’s solicitors, ex post facto, that the debtor’s solicitors would accept service. At the time of those events, the relevant rule was expressed in terms entirely different to those which presently exist. Rule 15 of the then extant Bankruptcy Rules 1968 (Cth) required personal service. As Pincus J noted in that case, some of the difficulties that arose by adopting a process of service which was agreed to between the solicitors and departed from the rules included the obvious difficulty of expressly identifying the date of service and thus a date for computation of the relevant time for calculating the act of bankruptcy.
As his Honour noted at page 359:
“… Here it is not so much a matter of purported personal service at all, nor indeed, any attempt at it. The court is, I think, entitled to be influenced somewhat by the undesirability of encouraging people to essay service of a bankruptcy notice in such an informal fashion.
…”
His Honour proceeded then to set aside the notice on the basis that service had not been established as required by rule 15. The other decision referred to, Re Fritz Feiersinger; Ex parte Intersuisse Limited,[7] does not add to the observations of Pincus J in Hanlin.
[7] (unreported, Federal Court of Australia, Beaumont J, 29 May 1992).
It is accepted that in the context of the present regulations, it is not necessary that the bankruptcy notice is required by the Act to be given, sent or served on the debtor personally: see Sogelease Australia Ltd v Griffin,[8] particularly at [34]. In Skalkos v T & S Recoveries Pty Ltd,[9] the Full Court also considered and affirmed the point in passing. In that case, an order for substituted service had been made. However, service had not been effected in accordance with the order for substituted service, but it was purportedly effected in accordance with regulation 16.01. The court at first instance ultimately made that finding. The issue on appeal was whether the substituted service order produced a “contrary intention” as provided for in regulation 16.01(1).
[8] (2003) 128 FCR 399.
[9] (2004) 141 FCR 107.
In rejecting that argument, the court examined service under regulation 16 and, relevantly to this case, observed at [29]:
“It is true that provisions such as reg 16.01 contemplate the possibility of something less than actual receipt by the person to be served. But as Tindal CJ said in Bishop v Helps (1845) 2 CB 45 at 57 …:
“It was probably considered that the public convenience would be promoted by the present provision, and that its advantages would greatly outweigh the inconvenience which, in some few cases, might possibly arise from it.”
In our view, the fact that in some cases reg 16.01 can produce harsh results, which is what the combination of the factors relied on is directed to establishing, does not constitute a contrary intention for the purposes of reg 16.01(1) …”
The “harsh” result being considered by the Full Court on that occasion, was the prospect of a non-receipt by the debtor, a matter which does not enliven any right under regulation 16.01(2). That provision is directed to the delivery.
Here, the evidence is plain. The debtor’s solicitor had had a long history of acting for the debtor in this litigation. The litigation included litigation concerning the first bankruptcy notice, both at first instance and on appeal. It was a solicitor on the record at all times. The letter of 25 July 2012 itself, advising the creditor that they held no instructions to accept service, could only have been directed to the matter of the prospective service of the bankruptcy notice, and was plainly sent in anticipation of that matter. In reaching that view, I note that aside from the acting in the earlier proceeding concerning the bankruptcy notice at first instance and on appeal (which was dismissed), the debtor’s solicitors did not instruct that they were seeking to withdraw.
Given that the appeal had been dismissed and the bankruptcy notice that had been the subject of the appeal had lapsed, but that otherwise the order of the Supreme Court remained efficacious and that the sums due under it outstanding, it seems plain that the debtor could only have reasonably anticipated that the creditor’s response to those matters would have been the delivery of a fresh bankruptcy notice. Plainly, the solicitor’s letter of 25 July was directed to that anticipated response.
In that regard then, the circumstances appear to me to be analogous to service in the sense provided for in sub-regulations (a) (b) or (c) of regulation 16.01, which do not require personal service, but service at a place or address with which the debtor has an established connection. Given a long and established connection between the debtor and the solicitor, it seems to me that the facts support that conclusion. Upon that basis, I would be prepared to find that the faxing of a bankruptcy notice to the debtor’s solicitor would here satisfy the requirement of being sent in such a manner that it should, in the ordinary course, be received by the debtor.
However, given my earlier view on the proper construction of the regulation, I consider that service in terms of sub-regulation (e) paragraph (ii) has not been effected and, accordingly, the bankruptcy notice has not been served.
While non-service of a bankruptcy notice may enliven a discretion to set it aside an order doing so need not necessarily follow. In that regard, I am mindful of the observations in Lazar v Seccombe (supra), particularly at [17], where the court, noting its power to set aside a bankruptcy notice on the basis of non-service, otherwise has a discretion in wide terms where there is a real question of whether service has been effected. Any discretion must be exercised judicially.
In that regard, I am mindful that, despite my ruling in relation to the purported service of the notice, the judgment remains outstanding and no further steps have been taken by the creditor to rely upon the purported failure to comply with the notice, which was purportedly served. That is to say that the creditor does not, at this stage, assert any particular act of bankruptcy in terms of s.40(1)(g). It follows that there is no utility in setting aside a notice which is not alleged to have enlivened any rights, only to have another notice issue at cost to the creditors and perhaps ultimately to the estate. On that basis, I see no reason to exercise the discretion to set aside the bankruptcy notice.
One other matter was addressed in the submissions which I will touch upon. It concerns form, and although I note the debtor’s concession that no point is taken with form, I will address it for completeness.
It was noted that there was an issue in relation to the address on the bankruptcy notice itself. It was contended that the address in the notice was not the last known address of the debtor and that matter gave rise to a defect which was fundamental to the efficacy of the notice.
The statutory presumption is that the notice will comply with the form. The information within the form is, however, not the subject of the statutory prescription except insofar as the information is directed to include that which a creditor is required to provide in completion of the form. The form simply requires the insertion of an address.
While commonly the address of a debtor will also be his or her last known address, that address is not expressly required by reference to the form. Indeed, the address or the last known address only has specific relevance to establish jurisdiction. The last known address only has relevance for the purpose of service, if service is purported to be effected in terms of regulation 16.01(a).
My reasoning on this point is as follows. It is not inconceivable that a debtor could, for example, change address between the date of the issue of a bankruptcy notice and the date of service. There appears to be no reason why such an event would render the form irregular. In any event, if I am wrong in my conclusion on that matter, I do not consider the error of address to be a defect or irregularity which is incapable of remedy pursuant to s.306 of the Bankruptcy Act on the basis that it would not cause substantial injustice to the debtor that could not be remedied by order.
In the result, however, my orders at this stage are simply to declare that service has not been effected by the facsimile or the purported service by facsimile on 26 July 2012. I propose to adjourn the application and the matter of costs for three months, to see what happens next.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 23 November 2012
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