Parsons v GIO Workers Compensation

[2003] FMCA 187

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PARSONS v GIO WORKERS COMPENSATION & ANOR [2003] FMCA 187

BANKRUPTCY – Application to set aside sequestration order and dismiss creditor’s bankruptcy petition – where applicant was not present at the first hearing of the petition – where the applicant denies having being served – where applicant ignored the statement of claim issued by the Local Court and all demands for payment of debt – whether there was evidence to prove that the applicant had been served with the bankruptcy petition before he went on holidays.

Jimenez v Welcome Homes Real Estate Pty Ltd [2002] FMCA 92
Horman v Distribution Group Limited t/as Repco Auto Parts [2002] FCA 219

Applicant: ROBERT MASONS PARSONS

First Respondent:	GIO WORKERS COMPENSATION (NSW) LIMITED ACN 054 523 698
Second Respondent:	SCOTT DARREN PASCOE AS TRUSTEE OF THE PROPERTY OF ROBERT PARSONS, A BANKRUPT

File No: SZ 107 of 2003

Delivered on: 3 July 2003

Delivered at: Sydney

Hearing date: 13 May 2003

Judgment of: Raphael FM

REPRESENTATION

Counsel for the Applicant: Mr B Skinner

Solicitors for the Applicant: T H Drake & Associates

Counsel for the First Respondent: Mr D R Pritchard

Solicitors for the First Respondent: Turks Legal

Solicitors for the Second Respondent: Turnbull Bowles

ORDERS

1. The sequestration order made on 13 March 2003 be set aside.

2. The creditor’s petition of the GIO presented on 13 March 2003 be dismissed.

3. The applicant Robert Parsons pay the costs of the first respondent, GIO of the proceedings, including, of the application of Robert Parsons filed on 2 April 2003, to be taxed, if not agreed, pursuant to the Federal Court Act and Rules.

4. The first respondent GIO pay any costs of Robert Parsons thrown away by reason of the adjournment of the hearing of the application on
   13 May 2003 to be taxed, if not agreed, pursuant to the Federal Court Act and Rules.

5. The orders for costs in paragraphs 3 and 4 may be offset against one another.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 107 of 2003

ROBERT MASON PARSONS

Applicant

And

GIO WORKERS COMPENSATION (NSW) LIMITED
ACN 054 523 698

First Respondent

SCOTT DARREN PASCOE AS TRUSTEE OF THE PROPERTY OF ROBERT PARSONS, A BANKRUPT

Second Respondent

REASONS FOR JUDGMENT

1. The applicant debtor in this matter seeks review of the decision of Registrar Kavallaris who, on 13 March 2003, made a sequestration order against his estate.  The sequestration order was based upon a creditor’s petition dated 20 January 2003.  According to the affidavit of service of Steven Wheatland of 3 March 2003 the petition was served on the debtor on 27 February 2003 at his home in the Tuggerah Village.  Tuggerah Village is a mobile home/caravan park on which the debtor has a mobile home at site numbered 57.

2. It is common ground that the applicant was not present when the petition was first heard on 6 March 2003.  On that occasion the petition was adjourned until 13 March 2003 upon the usual terms that the debtor be advised of the adjourned hearing date by letter.  This was done. 

3. On 13 March 2003 the applicant returned from holiday.  He claims that he was then made aware for the first time of the existence of the petition and of the adjourned hearing date.  Within about five days he had contacted the solicitors for the petitioning creditor and informed them that he had not been served with the petition.  He then made his application for review. 

4. The amount of the judgment debt was $4,387.64 representing the cost of a workers compensation premium taken out by the debtor.  This debt was paid by the debtor’s sister prior to the hearing of the application for review. 

The case for the applicant

1. Mr Parsons gave evidence based upon an affidavit sworn by him on 1 April 2003 and a further affidavit sworn by him on 1 May 2003.  He was cross-examined by Mr Pritchard.  Mr Parsons stated that on 27 February 2003, the day of alleged service, he left home with his wife at about 9.00a.m. and did not return until approximately 8.00p.m.  On 28 February 2003 he left home at 8.30a.m. with his wife.  They proceeded by a friend’s home to Sydney where they spent the night and then flew to Bali on 1 March, returning on 12 March.  He stated that on 13 March at approximately 6.00p.m a neighbour, Mr Kelly, provided him with some documents which Mr Kelly had found on his doorstep.  The documents consisted of the bankruptcy petition.  The next day he read the letter from the petitioning creditor’s solicitors informing him of the adjournment of the matter until 13 March.  The applicant denied having been served.

2. Under cross-examination the applicant agreed that he had told his trustee that he had an outstanding judgment to AVCO Finance.  However, he stated that this was not his debt but was an old debt of his wife’s.  He told Mr Pritchard that he had felt a moral obligation to pay the debt but he did not have any legal obligation as he had not incurred it.  The applicant agreed that he knew that he had incurred the petitioning creditor’s debt, that he was unable to pay it, that he had ignored the statement of claim issued out of the Local Court and all demands for payment.  He stated that he did not recall being served with the bankruptcy notice although he agreed under cross-examination that this was the first time that he had mentioned that.  He stated that he had had no money to pay the debt, although he would have liked to have done so, until shortly before the time he went on holiday.  He agreed that he had taken the decision to go on holiday rather than pay the debt and indicated that he thought that he would be able to attend to payment of the debt upon his return.  He had apparently telephoned the petitioning creditors at some stage and offered to pay by instalments but had been unable to make the first instalment as his own debtors had not paid him. 

3. Mrs Parsons was cross-examined as to the AVCO debt.  Although she had admitted some knowledge of AVCO, which she said was a long time ago, she denied that AVCO had obtained a judgment against her and did not believe that her husband had obtained finance from that company or was indebted to them.

4. The applicant’s evidence was supported by that of Mr Jonathan King, the manager of Tuggerah Village.  He gave evidence that he was employed from 8.30a.m. to 5.00p.m. on Monday to Friday, that the office hours of the Village are from 12.00p.m. to 1.00p.m. and 4.00p.m. to 5.00p.m. and that access to the office outside these hours is extremely difficult.  He did say that the owners of the Village were usually in attendance on a daily basis between 8.30a.m. and 9.00a.m. but that on 27 February 2003 one of the owners was later than normal because of his son’s birthday and the other owner arrived between 8.45a.m. and 9.00a.m.  The purpose of this evidence was to establish that the process server, Mr Wheatland, could not have had certain conversations to which he deposed in an affidavit.  However, the most important point raised by King in his evidence was that the Village was controlled through a boom gate that he claimed could only be opened or closed by the use of a swipe card.  Each resident had a swipe card and if a visitor wished to enter the village by car the resident that was being visited would have to bring the visitor in himself.  Mr King denied that the boom gate was ever left open.

5. Mr Glynn Kelly, a neighbour of the applicant was also called.  He gave evidence from his affidavit of 1 April, that at approximately 8.00p.m on 28 February 2003 he saw some documents on the doorstep of site 57 which he claimed he had not seen earlier in the day.  He left them there although in a previous paragraph he had stated that he was aware that Mr and Mrs Parsons had departed on a holiday that day.  At about midnight on 28 February he picked up the papers and kept them for safekeeping.  He gave them to Mr Parsons when Mr Parsons returned from holiday on 13 March.  Under cross-examination Mr Kelly admitted that he had been away on the two previous days so he was unable to say whether or not the papers had been left on 27 February. 

6. Mrs Parsons denied that anyone had served the papers on her husband on 27 February and otherwise confirmed his movements.

The evidence for the respondent

1. Mr Wheatland, the process server, gave evidence.  He had sworn the original affidavit of service and a further affidavit dated 1 May 2003.  In that latter affidavit he stated that he had been driven to the site, Lot 57, on a number of occasions by a friend, a Mr Darren Dunn.  On each occasion he had driven through the gate to the lot and had knocked on the door of the caravan but had no response.  He gave evidence of conversations with persons in the camping ground when he enquired after Mr Parsons.  One conversation took place at approximately 11.15a.m. on 11 February 2003 and another at approximately 1.50p.m. on 24 February 2003.  He stated that on 27 February 2003 at approximately 7.50a.m. he was driven by his friend into the premises, he spoke to a male person attending the desk in the caravan park’s office.  He had a conversation with that person during which words to the following effect were said:

   “Me:  Hi, is Robert Parsons around?

   Male: As far as I know he is here now

   Me:  Thanks.”

   He stated that he then returned to the car and was driven to Mr Parson’s caravan where he knocked on the door.  The door was answered by a male person who identified himself as Mr Parsons and who was handed the documents.

2. Mr Wheatland was cross-examined at considerable length by Mr Skinner.  He stated that he had driven through the boom gates which were at all times open.  There was considerable cross- examination about a document which was tendered as Mr Wheatland’s working sheet.  It gave the dates upon which service had been attempted and in relation to the day of service indicated that the person served had said “Me Here.”  Those are not the precise words used by Mr Wheatland in his affidavit of service where he said that the person served had stated in response to the question whether he was Robert Parsons “Yes I am.”

3. Mr Wheatland was adamant that he had served Mr Parsons.  He identified Mr Parsons in court as a person that he had seen on the day in question. 

4. In the cross examination of Mr Wheatland it was put to him that he had tailored his affidavit of 1 May to the times which had been stated in Mr Parsons’ affidavit.  In other words he had made sure that the time when he said that he had served Mr Parsons was a time that Mr Parsons was in the premises on that particular day.  Mr Wheatland said that he had not seen Mr Parson’s affidavit before he made his own.

5. The respondents called Mr David McCrostie, a solicitor and partner in the firm of Turks Legal, who had the conduct of the matter on behalf of the creditor.  He gave evidence that he had spoken to Mr Wheatland about the service.  Because he wanted to be sure that he could advise his client properly about his prospects of success in the claim he deliberately did not give Mr Wheatland the details contained in Mr Parson’s affidavit about his movements on the day in question.  Mr McCrostie was cross-examined and agreed that another person in his firm had telephoned Mr Wheatland before he had spoken to him.  He thought that was to line up the discussion between himself and Mr Wheatland and that the conversation had been made either by his secretary or by a junior solicitor in the office. 

6. The situation described above was that which pertained as at the completion of hearing on the first day of this matter. When it proceeded after adjournment the respondent’s sought to call Mr Dunn and three further witnesses. The matter had been adjourned in order to hear the evidence of Mr Dunn. As regard to the other witnesses, their affidavits were not read on the basis of a concession by the applicant that if they were called their evidence would be that they did not tell Mr Wheatland the time that Mr Parsons claimed that he had left the caravan park on 27 February 2003.

7. Mr Dunn had sworn an affidavit which comprehensively corroborated the evidence of Mr Wheatland. Mr Dunn did not claim to have seen Mr Wheatland serve Mr Parsons but he confirmed that he had driven Mr Wheatland to the premises on several occasions including on the day of alleged service. Under cross-examination Mr Dunn revealed that his memory was somewhat less acute than appeared from the affidavit. Although he did recall driving Mr Wheatland to the caravan park, and importantly, driving through an open boom gate, he was vague about the time or the days upon which this occurred. In relation to the day of service his recollection was that he drove Mr Wheatland to the caravan park and outside the trailer owned by Mr Parsons. He stopped there and allowed Mr Wheatland to get out. He watched Mr Wheatland move towards the glass door. He and Mr Wheatland had a prearranged signal. If Mr Wheatland tipped his glasses then Mr Dunn would drive off. Mr Dunn recalled seeing Mr Wheatland approach the trailer, heard voices and saw Mr Wheatland tip his glasses. He then drove about 20 meters away. He did not see who Mr Wheatland was speaking to nor did he see what Mr Wheatland was doing. They drove out of the caravan park. Mr Dunn did not recall speaking to anybody at the site himself nor did he recall Mr Wheatland speaking to anyone.

8. Mr Wheatland was then recalled to the box. The purpose of this was for him to give evidence concerning some recent observations of the boom gate. A video was shown. Mr Wheatland’s evidence was that when he attended the site on 30 May 2003 for about 5 minutes the boom gate was up. He then attended the site again on 10 June 2003 between 10.a.m. and 1p.m. when the boom gate was, he says, up for approximately three hours. The video appeared to confirm this although the amount of time shown in the video was only about

   
   

   1 minute.

9. Mr King was then recalled. He said that he was unable to recall the situation in which both boom gates would be up although possibly one would be up and one would be down. He gave reasons why it was possible that Mr Wheatland had found the boom gate up when he had visited it at the end of May and in June. Under cross-examination he conceded that it was possible that the boom gates might have been open for up to five minutes during the dates mentioned by Mr Wheatland as those upon which he had visited the premises previously.

10. Finally Mr Parsons was recalled in reply to produce as exhibit 5 the documents which he says which were given to him by his neighbour on 13 March.

11. In their submissions both parties agreed that the appropriate orders to make in this case were for the sequestration order made on 13 March 2003 to be set aside and the creditors petition presented on 13 March 2003 to be dismissed. It was conceded that the applicant should pay the costs of the first respondent thrown away by reason of adjournment of the hearing of the application on 13 May. The only issue between the parties was who should pay the costs from the time of service of the bankruptcy notice including the costs of these proceedings.

Findings

1. I would note that even if I find that the applicant was served with the bankruptcy petition by Mr Wheatland on 27 February 2003 this service was not in sufficient time for the hearing of the petition to take place as originally scheduled on 6 March 2003. It is also not in dispute that the applicant would not have received the letter advising him that the hearing had been adjourned until 13 March 2003 until that day, when he returned home from his holiday.

2. In Jimenez v Welcome Homes Real Estate Pty Ltd [2002] FMCA 92

   
   

   I referred to Horman v Distribution Group Limited t/as Repco Auto Parts [2002] FCA 219 where Emmett J approved the following statement relating to the consideration of evidence made by me when that case was at first instance:

   “Tribunals and courts of law are frequently asked to decide which of two varying versions of a series of facts they accept.  It is often a very difficult task, particularly where both witnesses are credible.  The decisions are made with the benefit of a number of factors.  Perhaps the most important is each witness’ demeanour in the witness box, his or her method of giving the evidence, the way questions are answered in cross-examination, the willingness to acknowledge the possibility of error and changes in recollection due to the passage of time.  Other matters that would be looked at would be the interests that the witness might have in the outcome of the proceedings and the inherent likeliness or unlikeliness of the evidence when considered with the background of the known facts.

   Finally most tribunals or courts seek to find some form or corroboration from other evidence of whatever nature.  The decision which is made is not always one between believing on witness and not believing another or holding that one witness is telling the truth and the other is lying.  More often than not the decision comes down to the preference of one recollection over another.  Recollection is notoriously unreliable.”

   I have adopted these principles in relation to this case.

3. I prefer the evidence produced on behalf of the respondent. I found Mr Wheatland to be a convincing witness in the witness box. He is an experienced process server. It is his profession. It was not disputed that he had made a number of previous attempts to serve Mr Parsons.

   
   

   I cannot see why he would, on this occasion, leave papers outside a house. Contrary to the submissions of the applicant I find that the notes which he made about service on this and the previous occasions to be convincing. I can quite understand how the words used might be a shorthand for what eventually appeared in the affidavit. I accept that Mr Dunn’s evidence did not come up to proof. However, in the essential elements it did corroborate Mr Wheatland. It confirmed that he had driven Mr Wheatland to the premises, that he had gone through the boom gate, and that he had attended at the applicant’s mobile home. The applicant’s counsel did not cross-examine Mr Dunn out of a statement that he had seen service take place. He’d never said that.

   
   

   I was also impressed by the evidence called from Mr McCrostie that he wished to test the veracity of the evidence of Mr Wheatland and therefore deliberately did not tell him when Mr Parsons was alleging he had left the premises.

4. On the other hand, I was not so impressed with the evidence of Mr Parsons. He had taken a “head in the sand” approach to the debt and its consequences all along. It is not difficult to imagine a situation in which, after a period of financial difficulty, he has at last seen some light at the end of the tunnel. He decides to take his wife away on holiday to Bali. Just as he is about to leave he is served with a bankruptcy petition. He notices that the date of the hearing will be in the middle of his holiday. He does not wish to tell his wife. He has not told her about any of the other problems associated with this debt. He accepts service and simply leaves the documents outside.

5. I was equally unimpressed by the evidence of Mr King. He has known the applicant for some considerable time. He did appear, as suggested by the respondent’s counsel, to be enjoying the forensic battle. The story about the boom gates came out only in evidence elicited on the day of the hearing. This evidence was put under strain by the evidence of Mr Wheatland and eventually Mr King had to concede that it was possible that the boom gates were open from time to time. I do not think that any of the other witnesses who gave evidence added anything much to the case or to my ability to come to a clear conclusion as to whose evidence to prefer. I do note that Mr Kelly was not at his caravan on the day that service was alleged to have taken place. It is possible that Mr Parsons left the papers outside just before he left for his holiday on 28 February 2003.

1. In these circumstances I propose to make the orders to which I have previously referred [21] together with appropriate orders concerning the costs of the proceedings. At the commencement of the proceedings the trustee was represented. There was, I recall, general agreement that the trustee was not making a serious claim for his costs in all the circumstances. The one thing Mr Parsons did do, was to make this application promptly and arrange for payment of the debt. No other creditors have come to the attention of the trustee. I do not propose to make any orders as to the trustee’s costs.

2. I order that:

   (1)The sequestration order made on 13 March 2003 be set aside.

   (2)The creditor’s petition of the GIO presented on 13 March 2003 be dismissed.

   (3)The applicant Robert Parsons pay the costs of the first respondent, GIO of the proceedings, including, of the application of Robert Parsons filed on 2 April 2003, to be taxed, if not agreed, pursuant to the Federal Court Act and Rules.

   (4)The first respondent GIO pay any costs of Robert Parsons thrown away by reason of the adjournment of the hearing of the application on 13 May 2003 to be taxed, if not agreed, pursuant to the Federal Court Act and Rules.

   (5)The orders for costs in sub-paragraphs 3 and 4 may be offset against one another.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate: 

Date: