Perpetual Trustee Company Limited v Sanna

[2013] FCCA 2107

FEDERAL CIRCUIT COURT OF AUSTRALIA

PERPETUAL TRUSTEE COMPANY LIMITED v SANNA [2013] FCCA 2107

Catchwords:
BANKRUPTCY – Creditor’s petition – notice of opposition – meaning of the phrase “last known address” – where debtor no longer resides at address – where debtor no longer registered owner of address – whether debtor connected to address – where no other “known” address – whether bankruptcy notice effectively served at debtor’s last known address – whether to make sequestration order.

Legislation:

Bankruptcy Act 1966 (Cth), s.52

Bankruptcy Regulations 1996 (Cth), reg.16.01

CSR Limited trading as CSR Construction Materials v Barrelaro (2001) 184 ALR 308
Civic Video Pty Ltd v Warburton [2013] FCA 934
Magafas v Carantinos (2008) 222 FLR 185
QBE Insurance (Aust) Ltd v Mahaffy (No 2) (2012) 271 FLR 1

Applicant: PERPETUAL TRUSTEE COMPANY LIMITED
ACN 000 001 007

Respondent: LEPA SANNA

File Number: SYG 1681 of 2013

Judgment of: Judge Raphael

Hearing date: 27 November 2013

Date of Last Submission: 27 November 2013

Delivered at: Sydney

Delivered on: 10 December 2013

REPRESENTATION

Solicitors for the Applicant: Gadens

Counsel for the Respondent: Mr D Allen

Solicitors for the Respondent:

Solicitors for the Supporting
Creditor:

Russo & Partners

HWL Ebsworth Lawyers

ORDERS

1. A Sequestration Order be made against the estate of Lepa Sanna.

2. The Applicant’s costs (including any reserved costs) be taxed and paid from the estate of the Respondent in accordance with the Act.

3. Under the Bankruptcy Regulations a copy of this sequestration order be given to the Official Receiver in Sydney within 2 days.

THE COURT NOTES

1. A consent to act as trustee has been signed by Jason Lloyd Porter and Paul Gerard Weston and lodged with the Official Receiver in Sydney.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYG 1681 of 2013

PERPETUAL TRUSTEE COMPANY LIMITED
ACN 000 001 007

Applicant

And

LEPA SANNA

Respondent

REASONS FOR JUDGMENT

1. Regulation 16.01 of the Bankruptcy Regulations 1996 (Cth) provides for the manner in which documents relevant to bankruptcy proceedings may be served. In CSR Limited trading as CSR Construction Materials v Barrelaro (2001) 184 ALR 308, the Federal Court held that Regulation 16.01 applied to bankruptcy notices. The Regulation is in the following form:

   “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:

   (a)  sent by post, or by a courier service, to the person at his or her last-known address; or

   (b)  left, in an envelope or similar packaging marked with the person's name and any relevant document exchange number, at a document exchange where the person maintains a document exchange facility; or

   (c)  left, in an envelope or similar packaging marked with the person's name, at the last-known address of the person; or

   (d)  personally delivered to the person; or

   (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.

   (2)  A document given or sent to, or served on, a person in accordance with subregulation (1) is taken, in the absence of proof to the contrary, to have been received by, or served on, the person:

   (a)  in the case of service in accordance with paragraph (1)(a) or (b)--when the document would, in the due course of post or business practice, as the case requires, be delivered to the person's address or document exchange facility; and

   (b)  in the case of service in accordance with paragraph (1)(c), (d) or (e)--when the document is left, delivered or transmitted, as the case requires.”

2. This proceeding, being the hearing of a bankruptcy petition and a notice of opposition filed by the debtor, requires for its determination consideration of whether the bankruptcy notice which was left in an envelope with the respondent’s name at 33-35 Circulo Drive, Copacabana, New South Wales on 18 June 2013, was left at the debtor’s last known address. 

3. In order to establish that the Copacabana premises was the last known address of the respondent, the applicant relied on two affidavits of Kris Sabatino both dated 15 November 2013 one of which annexed two further affidavits by Ms Sabatino dated 20 March 2013 and the other dated 24 March 2013, both filed in separate District Court proceedings.  The applicant also relied on two affidavits of Jennifer Andrea Brown, one dated 2 August 2013 and the other dated 18 November 2013.  Ms Sabatino also gave evidence.

4. The evidence from which the applicant sought to establish that the Copacabana address was the last known address of the debtor is found in these affidavits.  In her oral evidence Ms Sabatino told the court that she had been to the Copacabana address approximately 15 times.  The affidavits of 15 November 2013 reveal that on 16 June 2013, two days before the purported service, she attended the address. She deposes at [4]:

   “[…] I had a conversation with two men driving away from the Copacabana Address with words to the effect of:

   Me: I am looking for Lepa Sanna

   One of the males pointed to the house at the Copacabana Address.

   I then walked towards the Copacabana Address. An unidentified male came out of the house and we had a conversation with words to the effect of:

   Unidentified Male: She is not here

   Me: When will she be here?

   Unidentified Male: I don’t know

   Me: If I leave an envelope here for her, will you pass it on to her?

   Unidentified Male: Do what you like

   The Unidentified male then walked away.”

5. Ms Sabatino also deposed to other similar conversations. One was on 23 March 2013, when she attended the Copacabana address:

   “On 23 March,2013, during my attendance at the Copacabana Address I had a conversation with a man who identified himself as Lepa Sanna’s husband with words to the effect of:

   Me: I have spoken to Lepa Sanna on the telephone and she has said she would call me back but she hasn’t.

   I have documents for her in relation to DLD (NSW) Pty Limited.

   Mr Sanna: These documents should go to our accountant.

   Me: I have to give her a copy as well.

   Mr Sanna: I am waiting to hear from her too. She is staying in Sydney with her mother. I can pass on your contact details when she phones here and tell her she needs to see you.” (at [10])

6. Ms Sabatino also deposed to what occurred on 8 April 2013:

   “On 8 April, while in attendance at the Copacabana Address as I was sending the text message referred to in paragraph 15, Lepa Sanna’s father came out of the house. No one had come to the door when I had knocked to serve the documents. I pointed to the envelope containing the documents in the letterbox that I had served by leaving in the letterbox. Upon my pointing to the documents in the letterbox, Lepa Sanna’s father responded with words to the effect of “She can get it later”.” (at [16])

7. That Ms Sabatino attended the property at those times in the hope of serving Ms Sanna requires some explanation in view of the affidavit she swore on 20 March 2013 in District Court proceedings where she said at [1] :

   “On the twenty sixth day of February, 2013 I attended 33 Circulo Drive Copacabana in order to serve documents filed in these proceedings on Lepa Sanna. There was no one at home. I had previously served Lepa Sanna at this place and I saw nothing that I recalled as her identity at this place. I spoke to a neighbour who was walking her dog and she said, “They moved out before Christmas.””

   And at [4]:

   “I had been given a mobile number for Lena Sanna and I sent the following text message to [number]. “please call Kris [number] about dld. thanks”. A few minutes later I received a call from Lepa Sanna. We exchanged greetings and I explained why I needed to see her. She said, “I’m in Newcastle today. I’ll give you a call tomorrow and we’ll arrange a time and place to meet.” I said, “You no longer live at Copacabana?” She replied, “No.””

8. In her affidavit sworn on 24 March 2013 in the District Court proceedings she said at [2]:

   “On the twenty third day of March, 2013 I attended 33 Circulo Drive, Copacabana in order to serve documents filed in these proceedings on Lepa Sanna. A young male came out to meet me and I asked for Lepa Sanna. He said to me, “she doesn’t live her [sic]. I’ll get her husband.” I waited by the gate and a male came out of the house. I introduced myself and explained why I needed to see his wife. He said, “She’s not here. She’s staying with her Mother in Sydney. I speak to her tho [sic]. Give me your contact details and I’ll call her and get her to give you a call. I thought all that sort of stuff should go to our accountants.” I said, “She needs a copy too.” I then said, “I have spoken to her on 0418 254 299 before. Does she still have that number?” He replied, “Yes, that’s her number.” I left him my contact details. At the time of swearing this affidavit I have not heard from Lepa Sanna again.”

9. It is submitted by the creditor, notwithstanding these matters, the Copacabana address is still one with which the debtor had a connection.  The creditor points to the affidavits of Ms Brown which exhibit a number of public documents, in particular company extracts of three companies with which Ms Sanna was a director (two of which were under external administration at the relevant time) and a historical personal name extract for Ms Sanna, all of which indicate the 33 Circulo Drive Copacabana address as hers.  Ms Brown’s affidavits also exhibit two property search documents and an electoral roll search.  The electoral roll search was dated on 15 August 2013 and shows the address Copacabana as that of Ms Sanna.  The first property search was made on 21 March 2013, and shows her as being the proprietor of the Copacabana property; the second, which was made on 14 November 2013, shows that on 25 May 2013 her husband, Mr Curano Sanna, became the registered proprietor.

10. The affidavit of Ms Sabatino reveals that there was another address at which Ms Sanna was known.  That was Unit 1, 21 Kangoo Road Somersby, New South Wales, where one of the companies of which she was a director, DCL Constructions, had its offices.  In the affidavit of 20 March 2013, Ms Sabatino deposes at [2]-[6] to having found the telephone number of these premises and:

    “I telephoned the listed number and spoke to a female employee and she said, “Mrs Sanna is expected in after 12 today. I then drove to the address and arrived at about 2 p.m. I had a conversation with a female person whom I believe to be the same one I spoke to on the phone. She said to me, “Mrs Sanna has not arrived, but we are expecting her. I’ll pass on your details if you would like to leave them. I did and said, Please tell her it’s a private matter to do with DLD.”

    [please see [4] cited above at [8] of these reasons]

    She did not contact me again and all my calls to her mobile were not picked up and messages not responded.

    I continued my efforts at unit 1/21 Kangoo Road, Somersby, on March 4, 5, 8, 2013. On each occasion she was “expected”. On March 14, 2013 I attended the address and was told that she would be in later. I parked nearby with the office in sight for more than an hour and telephone the number for the business. I was told, You’ve just missed her.” I had seen no one come or go from the unit from the car-park while I was watching. I returned to the office a couple of hours later and again was told, “You’ve just missed her.”

11. In cross-examination Ms Sabatino stated that she had never met Ms Sanna notwithstanding all these attempts to serve her with process.  Ms Sabatino was questioned about how she knew that the gentleman that she referred to as Ms Sanna’s father, in her affidavit of 15 November 2013 at [16], was in fact her father.  She told that that the man she saw was over sixty years of age, so she believed.  She said that she had seen him before, but he did not have any accent.  She told that she had spoken to another young male at the premises, who was about 18 years of age, and who said that he was Ms Sanna’s son.  Unfortunately, Ms Sabatino was not asked whether the person who identified himself as Ms Sanna’s husband on 23 March 2013 was the same as the person she saw on 8 April 2013.  The evidence is that Ms Sanna was born in Vienna, and I am asked to draw an inference that her father was Viennese and that he would have an accent which the gentleman that she spoke to on 8 April 2013 did not have. 

12. Having seen Ms Sabatino in the witness box, I am quite satisfied that she is a witness of truth.  However, this does not answer the question.  All it tells me is that this is what the male she spoke to told her.  Given the other information which she had, from her earlier discussions as evidenced in the District Court affidavits, I am unable to be satisfied that the person that Ms Sabatino saw was in fact Ms Sanna’s father.  And in light of the evidence that Ms Sanna’s husband and son were living at the property at the time, I think it is more likely that it was her husband.  In any event, the court notes that these conversations took place in early April 2013 and the placing of the documents in the letterbox occurred on 18 June 2013.

13. There have been several reported decisions dealing with the meaning of the phrase “last known address”.  They have been conveniently summarised by Jacobson J in Civic Video Pty Ltd v Warburton [2013] FCA 934.[1]  I set out the relevant parts of his Honour’s judgment in extenso because it is the latest and most thorough such review and is clearly a decision that his court should follow.

    [1] ‘Civic Video’.

    As I have said, the issue which arises is whether the bankruptcy notice was left in an envelope marked with Mr Warburton’s name as “the last known address of the person” in accordance with reg.16.01(c) of the Bankruptcy Regulations.

    The meaning of that phrase was considered by Tamberlin J in Drake v Stanton [1999] FCA 1635. In that case, the evidence established that the bankruptcy notice was left in an envelope at 396 Grey Street, Glenn Innes and was marked with the debtor’s name.

    However, the bankruptcy notice showed the address of the debtor as 292 Grey Street, Glenn Innes and the creditor’s petition, which was verified by Mr Drake as the judgment creditor and applicant in the matter, stated that the judgment debtor, Mr Stanton resided at that address.

    Tamberlin J observed in Drake v Stanton at [5] that the expression “the last known address of the person” is difficult because the regulation does not indicate to whom the address must be known. His Honour continued:

    On one view of it, it could be taken to be the knowledge of the creditor. Alternatively, as advanced by Mr Skinner, the words could mean the last-known address of the person in an objective sense, namely that address at which the debtor could be said to be located.

    His Honour went on to say at [7] that the evidence which was relied upon by the judgment creditor was an affidavit sworn by Mr Stanton, the judgment debtor, in December 1998 in which he gave his address as 396 Grey Street. His Honour also said that other evidence had been adduced of a transcript of proceedings in May 1998 in which Mr Stanton stated his address to be 396 Grey Street.

    Tamberlin J then said (at [8]):

    In my view, on the language of reg.16.01(1)(c), the reference to “last-known address of the person” is to that address which has been made known by the applicant (sic) as at the time closest to the date in question. In the present case the evidence indicates clearly that the address which was last asserted by the applicant (sic) was the address at 396 Grey Street. The applicant (sic) has not been called to give any evidence to the contrary.

    It is plain in my view that the word “applicant” which I have marked with a “sic” where it appears in [8] is an error. It is clear from the previous paragraph of the judgment that his Honour meant to say the “debtor”.

    The meaning of the expression “last-known address” in reg.16.01 was considered by a Full Court in Skalkos v T & S Recoveries Pty Ltd[2004] FCAFC 321 (Sundberg, Finkelstein and Hely JJ).

    Their Honours referred at [32] ff to an English authority, Robertson v Banham & Co [1997] 1 WLR 446 which dealt with a similar phrase, “usual or last known address”. The proposition which follows from that case is that the phrase is to construed in light of the fact that the purpose of the rule is that the court process should be brought to the person’s attention.

    The Full Court in Skalkos also referred with apparent approval to the decision of Tamberlin J in Drake v Stanton. They set out a part of [5] of Drake v Stanton in which his Honour said the relevant expression in “the last-known address of the person” and it does not matter whether or not the debtor lives there.

    In addition, their Honours in Skalkos set out [8] of Tamberlin J’s judgment in full, but without drawing attention to the error which I have mentioned above. This may well have been because it was unnecessary to do so in the context of the case where the relevant issue was whether service at a business address was sufficient to satisfy the regulation.

    The issue of construction was also considered last year by Raphael FM (as his Honour then was) in QBE Insurance (Aust) Ltd v Mahaffy (No 2) (2012) 271 FLR 1. His Honour referred to Drake v Stanton, setting out [8] of Tamberlin J’s judgment, and to the Full Court in Skalkos. He also referred to an earlier decision which had been given on the question, Magafas v Carantinos (2008) 222 FLR 185 and set out a passage from [15] of that judgment which included the following:

    The phrase “last known” necessarily implies a temporal constituent. But who is to be the recipient of this intelligence? It is to be the world at large or the creditor? I cannot see that it should be the creditor.

    In my opinion, the effect of these authorities is that the last known address of the person is the address made known by the debtor. So much is clear because the purpose of the rule is that the bankruptcy notice should be brought to the attention of the debtor.

    But that does not answer the question posed in Magafas, namely, who is to be the recipient of the intelligence made known by the debtor.

    In my view that question is to be determined objectively on all of the facts of the case. In some instances it may be information that has been supplied to the world at large, as for example in QBE where the debtor conducted his practice as an accountant at premises on which there was a sign indicating it to be the office of the debtor’s firm. In others it may be the most recent address supplied to the creditor.

    It would be wrong to confine the expression, in all instances, to the last address made known to the creditor. That is demonstrated in the present case. How can an address made known by Mr Warburton to Civic in 2005 be the last known address? What is required is a consideration of all the circumstances of the case.

    In addition, since the purpose of the rule is that the bankruptcy notice should be brought to the debtor’s attention, it seems to me that ordinarily the creditor is under an obligation to take steps to ascertain the debtor’s most recent address as made known by him or her in readily accessible public records.

    Here, Mr Warburton made known his Glenmore Park address in the details supplied to ASIC with respect to his directorship of Kanone. That company is the principal debtor of Civic under the franchise agreement and Mr Warburton’s address was easily accessible to Civic if it had conducted a search. The change of address filed with ASIC in 2009 was still in effect as a public notification by Mr Warburton of his address at the time that was closest to the date of service.

    It is not to the point that Mr Warburton has given evidence that he was not living at the address stated in the ASIC notice when Mr Passanante endeavoured to effect service. As Tamberlin J pointed out in Drake v Stanton at [5], it does not matter where he debtor is living at the time because the relevant expression is “the last-known address of the person”. [61]-[80]

1. The applicant argues that, applying his Honour’s reasoning, I should be able to find that the last known address of Ms Sanna was the Copacabana property because that was the address used in the ASIC details in respect of companies which were the primary obligors in respect of the debts for which she was guarantor.  The applicant argues that it is also clear from the responses made to Ms Sabatino that Ms Sanna was known at the address at which the court accepts both her husband and her son were living.  If this was the extent of the evidence I would have no hesitation in finding that the Copacabana premises were the debtor’s last known address, but there is more.  There is the fact that if the applicant had conducted land and property information search prior to service of the bankruptcy notice it would have revealed that the property was no longer in the ownership of Ms Sanna.  There is the evidence of Ms Sabatino that when she attended the property in February 2013 she had been told that Ms Sanna had moved out before Christmas.  When she returned in March, she knew that Ms Sanna’s husband was there, but that Ms Sanna was not.  There is Ms Sabatino’s evidence that Ms Sanna might be found at the Somersby address of DCL Constructions, the company that is not in liquidation and was operating in March.  However, in Ms Sabatino’s shorter affidavit of 15 November 2013, she deposed to the fact that when she attended at those premises on 11 June to serve the bankruptcy notice, she  found it locked up and secure – although signs for DCL Construction Pty Ltd were outside the premises.  When she attended the Copacabana address on 16 June, the response from the unidentified male to her questions about the whereabouts of Ms Sanna did not reveal that a document left there for her would necessarily be passed on to her.

2. This case is different to that of Magafas v Carantinos (2008) 222 FLR 185[2] and QBE Insurance (Aust) Ltd v Mahaffy (No 2) (2012) 271 FLR 1[3].  Evidence was given about the debtor’s connection with the premises in both cases.  In Magafas (at [10]):

   “[Mr Hills] did, however, have evidence from contact with the “elderly lady” that Mr Carantinos was known at the Princes Highway property. Mr Carantinos gave evidence that he utilised the Princes Highway property as a business address and that he attended there from time to time. He said it was the place from which he ran the business of managing that property and the next door property and other properties in his portfolio. He said that his mother (the elderly lady) and his cousin, Ms Kritikos worked at the premises. Ms Kritikos was the bookkeeper and the debtor’s mother helped out generally.”

   [2] ‘Magafas’.

   [3] ‘Mahaffy’.

3. In Mahaffy, the debtor’s mother gave evidence that the address, apart from having a sign outside stating it was the business of JRM Accounting Solutions, which Mr Mahaffy was the principal of, was also the address used by Mr Mahaffy to receive correspondence. At [13] I opined:

   “I am of the view that as at 17 June 2011 Mr Mahaffy was announcing to the world that 99 Rose St was an address where correspondence addressed to him there would reach him. He was known to be the principal of JRM Accounting Services and on that day there was a sign outside the premises indicating that it was the office of JRM. The existence of an electoral role search that did not give the street number of the property at which he was said to reside does not have the effect of negating the fact that Mr Mahaffy “had such a degree of connection with the premises that they may be properly described as his last known address” Drake supra.”

4. In the instant case, the creditor cannot obtain such assistance from the actions of the debtor.  In the court’s view it is thus necessary to place emphasis on the word “known”.  Looked at objectively, Ms Sanna had made “known” her connection with the Copacabana premises to the creditor and the world at large through the public filings.  When the property ceased to be her residence she made no effort to inform the applicant, or those authorities, of a different address.  Reasonable searches would not have revealed any other address.    While she may not have been living at the premises anymore, persons who knew her, and who, in the case of the son at least, would objectively be considered to have communication with her, did live there.  Whilst a response to Ms Sabatino’s questions as to whether documentation left for her at the Copacabana property would reach her was neutral, it was not negative.  There was no other address “known”.  In these circumstances, the court is of the view that the Copacabana address was Ms Sanna’s last known address.

5. It follows from the above that I should be satisfied that the bankruptcy notice was served upon Ms Sanna.  In her notice of opposition she also claimed that she was not served with the statement of claim in the District Court.  The situation in that regard was very similar to the one that faced Jacobson J in Civic Video, but the matter was not argued before me as it was before his Honour.  Ms Sanna has taken out an application to set aside the judgment in the District Court.  The essential difference between the instant case and Civic Video is that Ms Sanna was served with the District Court proceedings by virtue of an order for substituted service, copies of which are found in the affidavit of Kris Sabatino, and it does not appear that there is some argument that Ms Sabatino did not do as she said she did in her affidavit of service of the District Court statement of claim.  If that was to be the argument then Ms Sabatino should have been cross-examined about it at the hearing but was not.  I also note the concession made by Mr Allan on behalf of Ms Sanna that at the time of the hearing before me no evidence was available as to why there was such a considerable delay in making the application, nor was there any evidence that the debt was not owed.

6. At the hearing the creditor provided the usual affidavits of debt and search. I am satisfied that the respondent committed the act of bankruptcy alleged in the petition. I am satisfied with the proof of the other matters required by s.52 of the Bankruptcy Act 1966 (Cth). I make a sequestration order against the estate of Lepa Sanna. I order that the applicant’s costs (including any reserved costs) be taxed and paid from the estate of the respondent in accordance with the Act. Under the Bankruptcy Regulations, a copy of this sequestration order be given to the Official Receiver in Sydney within 2 days. The court notes that the date of the act of bankruptcy is 9 July 2013. The court notes that a consent to act as trustee has been signed by Jason Lloyd Porter and Paul Gerard Weston and lodged with the Official Receiver in Sydney.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Raphael

Associate: 

Date: 10 December 2013