QBE Insurance (Aust) Ltd v Mahaffy (No.2) - [2012] FMCA 977

FEDERAL MAGISTRATES COURT OF AUSTRALIA

QBE INSURANCE (AUST) LTD v MAHAFFY (No.2)

[2012] FMCA 977

BANKRUPTCY – Bankruptcy notice – service – whether process server left bankruptcy notice at respondent’s address – whether last known address – whether process server served bankruptcy notice – whether Regulation 16.01(2) has effect of negating service upon proof to the contrary of receipt.

Bankruptcy Regulations 1996, r.16.01

Magafas v Carantinos [2008] FMCA 1654
Drake v Stanton [1999] FCA 1635
Skalkos v T S Recoveries Limited [2004] FCAFC 321
Troy & Company v Cameron [2002] FMCA 42
The Council Of The New South Wales Bar Association v Archer [2012] FMCA 81
De Robillard v Carver (2007) 240 ALR 675
Van der Munnik v Stewart [2010] FMCA 116

Applicant:

QBE INSURANCE (AUST) LIMITED (ACN 003 191 035)

Respondent:

JEFFREY MAHAFFY

Supporting Creditor:

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED

(ACN 005 357 522)

File Number:

SYG 2336 of 2011

Judgment of:

Raphael FM

Hearing date:

5 July 2012

Date of Last Submission:

2 August 2012

Delivered at:

Sydney

Delivered on:

25 October 2012

REPRESENTATION

Counsel for the Applicant:

Mr E Walker

Solicitors for the Applicant:

James Tuite & Associates

For the Respondent:

In Person

Solicitor for the Supporting Creditor:

Gadens

DECLARATION

The Court declares that the respondent was lawfully served with bankruptcy notice BN 3768 of 2011 on 17 June 2011.

ORDERS

Respondent to pay the applicant’s costs to be taxed if not agreed in accordance with the Federal Magistrates Court (Bankruptcy) Rules 2006.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT SYDNEY

SYG 2336 of 2011

QBE INSURANCE (AUST) LIMITED
(ACN 003 191 035)

Applicant

And

JEFFREY MAHAFFY

First Respondent

AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED

(ACN 005 357 522)

Supporting Creditor

REASONS FOR JUDGMENT

Was Mr Jeffrey Mahaffy served with a Bankruptcy Notice numbered BN3168 pursuant to Regulation 16.01 of the Bankruptcy Regulations 1996[1] on 17 June 2011? In the course of hearing a bankruptcy petition against Mr Mahaffy this question came to be determined as a preliminary issue pursuant to an order made by me on 5 July 2012. The applicant claimed that its process server, Mr Robert Lloyd, served the bankruptcy notice pursuant to Regulation 16.01(1)(c) of the Regulations by leaving it in an envelope at Mr Mahaffy’s last known address with his name marked upon the envelope. The last known address of Mr Mahaffy for the purposes of the Regulations is said to be premises at 99 Rose Street Wee Waa, New South Wales. It was said that the envelope was left under the front door of those premises at about 11.38a.m. on 17 June 2011.
[1] “Regulations”
Regulation 16.01(1)(c) 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:
(c) left, in an envelope or similar packaging marked with the person's name, at the last‑known address of the person; or”
It may also be necessary to consider the provisions of Regulation 16.01(2) which are:
“(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.”
There are three issues with which the court must deal in coming to a decision upon the matter. The first is whether Mr Lloyd left the envelope containing the bankruptcy notice under the front door of the premises at 99 Rose Street Wee Waa (or possibly under the screen door outside the front door). The second is whether 99 Rose Street Wee Waa was Mr Mahaffy’s last known address for the purposes of the Regulations. The third is whether Regulation 16.01(2) has the effect of negating service by this method if “proof to the contrary” that the document was received by Mr Mahaffy is established.
The hearing of this preliminary issue took up three days of court time. Evidence was given by Mr Lloyd, the process server, who was vigorously cross examined. On behalf of Mr Jeffrey Mahaffy he gave evidence, as did his mother Joy, and his brother Peter. Mr Lloyd’s evidence as contained in his affidavit and repeated in the transcript, was that he attended the premises at 11.38a.m. on 17 June 2011 and that the screen door that was usually locked was open. He placed the envelope under the wooden main door as far as he could push it in. This evidence is supported by contemporaneous written notes annexed to Mr Lloyd’s affidavit. Whilst Mr Lloyd could not recall if he slid the envelope all the way into the dwelling or if part of it was left exposed he remained firm that the screen door was open and that the envelope was left under the door.
The gravamen of the evidence from Joy and Peter Mahaffy was that the screen door would not have been left open but in any event there was a rubber draft excluder affixed to the main door which had the effect of preventing any document from being pushed under that door either wholly or partly. Mr Cooper, another licensed commercial agent, gave evidence that even with the security door closed and locked an A4 envelope containing a document the size of the bankruptcy notice could slide under both the screen door and the main wooden door and into the dwelling. Mr Mahaffy produced photographs and countered the evidence of Mr Cooper and Mr Lloyd. The photographs showed the apparent difficulty of an A4 envelope with a number of documents inside fitting under the door. The problem with Mr Mahaffy’s ex post facto evidence is that the number of documents and their thickness compared with the bankruptcy notice and the envelope used by Mr Lloyd to enclose are not defined. This makes the evidence of Peter Mahaffy who saw his brother attempt to slide the envelope under the door of little assistance to the court in coming to a conclusion that Mr Lloyd’s evidence cannot be accepted.
Mr Peter Mahaffy deposed that he was in Wee Waa on 17 June 2011 and he “would have attended the premises at 99 Rose Street Wee Waa at that time”. He said that he never sighted an envelope either under the front door or near it and that he believed it would be impossible to leave an envelope containing documents under the front door because the security screen door was always locked when the premises were unattended. Mrs Joy Mahaffy deposed that she attended 99 Rose Street on most days in 2011 to check and collect mail deliveries that were made there either for herself, for Mr Peter Mahaffy or for Mr Jeffrey Mahaffy, the respondent. She also said:
“Often the mailman delivered all mail that was attention to either myself, Jeffrey Mahaffy or Peter Mahaffy to the premises at 99 Rose Street Wee Waa regardless of whether it was actually addressed to 99 Rose Street or not. Most times my own personal mail was addressed to me at my home at 4 Nelson Street Wee Waa was being delivered by the postman at that time to 99 Rose Street Wee Waa even though I did not want it to be delivered there and it was not meant to go there.”
Mrs Joy Mahaffy kept a record of mail and anything coming in to the office at 99 Rose Street in a mail book. She wrote up the mail records either on the day she actually attended the office or at some later date. She produced to the court a copy of the mail book and the entries for 17 June 2011 which did not make any reference to the envelope containing the bankruptcy notice. She informed the court that in the ordinary course she would have opened such an envelope and noted its contents in the mail book before handing them to Mr Jeffrey Mahaffy when she next saw him.
Mr Jeffrey Mahaffy has another brother, Mr David Mahaffy, with whom he is in dispute. There was a considerable amount of evidence and cross examination devoted to the relationship between Mr Lloyd and Mr David Mahaffy. The suggestion was that Mr Lloyd would do the bidding of Mr David Mahaffy and would even be prepared to fabricate evidence against Mr Jeffrey Mahaffy if that would assist Mr David Mahaffy. I do not believe that it is necessary for the court to descend into the gutter of these allegations and counter allegations in order to resolve the current issue. The evidence reveals that there was a time during the course of the morning of 17 June 2011 when the premises were unattended. Thus neither Mr Mahaffy nor his witnesses can positively say that Mr Lloyd did not attend as he deposed. Mr Lloyd is a process server of some thirty-five years experience. Whatever his relationship may have been with Mr David Mahaffy it was not Mr David Mahaffy who asked him to serve the bankruptcy notice. No reason has been provided to the court that would satisfy it that Mr Lloyd did not attend the premises for the purposes of service as he deposed and I would find that on the balance of probabilities he did so. Mr Lloyd says that the screen door was open. Mrs Joy Mahaffy says it was closed. I am unable to make a finding upon this but I am prepared to find that on the balance of probabilities the envelope was not pushed so far under the door that it could not be seen and thus whilst I am prepared to accept Mrs Joy Mahaffy’s evidence that she did not find it and enter into her post book, it was left at the premises as required by the Regulation. What might have happened to it thereafter is a matter of speculation into which the court will not delve.
The finding that the envelope was left at the premises is only part of the equation. The premises at which it was left must be the last known address of Mr Mahaffy. The premises at Rose Street were the offices of JRM Accounting Solutions, a business run by Mr Mahaffy. Although at the time the notice was served he was not attending at the premises regularly for business purposes, he had done the following which leads the applicant to argue that the premises were his last known address. There is:
“(a)Correspondence from Mr Mahaffy to the solicitors for QBE dated 8 December 2009 from the Rose Street address.
(b)An unsworn affidavit dated 4 February 2009 purporting to be an affidavit from Mr Mahaffy stating that Rose Street was his address.
(c)Signage advertising Rose Street as JRM Accounting Solutions business premises was at the premises on 17 June 2011.
(d)The business name of JRM Accounting Solutions had been registered since 2005. Mr Mahaffy was registered as the proprietor of the business and the principal place of business was noted as Rose Street.
(e)There is correspondence from Mr Mahaffy to the solicitors for the ANZ Bank (a supporting creditor) dated 14 June 2011 and 27 September 2011 noting Rose Street as Mr Mahaffy’s address.”
The evidence of Mrs Joy Mahaffy also indicates that Rose Street was the address used by Mr Mahaffy to receive correspondence.
Mr Mahaffy’s response to the applicant’s assertion is that his last known address was at Nelson Street Wee Waa and that this was known to QBE because its solicitors had done an electoral role search on 17 June 2010. That search revealed Mr Mahaffy’s address for the purposes of the role as “Nelson St Wee Waa.” No street number is given. The applicant argues at [18]:
“In circumstances where all of the evidence (including documents prepared by Mahaffy himself) but for Exhibit 1 points to 99 Rose Street being Mahaffy’s known address at about 11.38a.m. on 17 June 2011, only Rose Street could have such a degree of connection with Mahaffy to sensibly meet the description of ‘last-known address’. Looked at in an alternative way, there is no sensible way that the bankruptcy notice could have been left at Mahaffy’s last-known address if it was ‘Nelson Street Wee Waa’ as there is no street number given with that address so that one could know what dwelling to leave it at.”
Mr Mahaffy gave evidence from the bar table that there is only one house in Nelson Street but he did not make this the subject of his own sworn evidence nor did he cross examine upon it. Mrs Joy Mahaffy, who claims to live in Nelson Street, also said that post was being delivered to her not at that address but at Rose Street. In Magafas v Carantinos [2008] FMCA 1654 I considered the matter of what constituted a last known address. After referring to Drake v Stanton [1999] FCA 1635[2], a decision of Tamberlin J, Skalkos v T S Recoveries Limited [2004] FCAFC 321[3] and Troy & Company v Cameron [2002] FMCA 42 and in particular to [8] of Drake where Tamberlin J said:
“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 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 was the address at 396 Grey Street. The applicant has not been called to give any evidence to the contrary.”
I said at [15] of Magafas:
“The phrase “last known” necessary 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. There is no time limit upon when a bankruptcy notice may be taken out based upon a judgment other than that the judgment itself must not be stale. A debtor who has not heard from his creditor for several years is under no obligation to keep him appraised of his current address. It would hardly be good service to place a bankruptcy notice in an envelope addressed to an individual at a house which not only he has left but even the tenants or owners who came after him had left just because that particular house was the one last known to the creditor who had taken no further steps to discover if his debtor had since moved. Using the phrase “the last known address” to the world at large would include the last known address that a debtor might reasonably discover.”
[2] “Drake”
[3] “Skalkos”
I am of the view that as at 17 June 2011 Mr Mahaffy was announcing to the world that 99 Rose Street 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.
The effect of this finding is that I am satisfied that service occurred in accordance with the Regulation. The only matter requiring further consideration is the effect of the words “In the absence of proof to the contrary” in sub-section 2 of the Regulations. Does this have the effect of negating service under the Regulations?
The wording of reg.16.01(2) is somewhat ambiguous in that it is not entirely clear whether “proof to the contrary” can be provided to show that a document was not actually received, even though it was delivered, or whether “proof to the contrary” goes to the delivery referred to in reg.16.01(1) itself. The explanatory statement to the introduction of the rule is also not entirely clear. It provides:
“Subregulation 16.01(j) (sic) lists the various means by which a document may be served on a person as required by the Act or the regulations. Subregulation 16.01(2) describes when a document, served in accordance with the means as listed in subregulation 16.01(1) is taken to have been received. In addition to the traditional modes of service personally or by post, documents will be able to be served at document exchange facilities and electronically where these facilities exist.” [Emphasis added]
The use of the word “when” does suggest to me that 16.01(2) imposes a timing element upon the receipt as opposed a provision allowing for an exception to actual receipt in the case where delivery is found to have occurred.
The authorities on reg.16.01(2) are scarce, however, it would seem to me that they establish that this understanding is correct. In Skalkos, the Full Court considered the delivered/received dichotomy and evident in that consideration is the finding that evidence going to a failure to deliver may be used to prove non-receipt (Skalkos at [18-22], see also The Council Of The New South Wales Bar Association v Archer [2012] FMCA 81 at [57]). However, their Honours concluded (at [25-26]) that:
“If, on the proper construction of reg 16.01(2), the words “proof to the contrary” permit proof that the document was not delivered, there is no such proof in the present case. It is clear from Fancourt that proof of non-receipt as opposed to non-delivery is not permitted. If on the other hand those words only permit proof that the document was delivered on a date other than that on which it would have been delivered in the due course of post, there is no such proof.
Thus on either view of reg 16.01(2), the primary judge correctly said there was no point in the appellant filing an affidavit of non-receipt.” [emphasis added]
See also: De Robillard v Carver (2007) 240 ALR 675 at [68]; Van der Munnik v Stewart [2010] FMCA 116.
In the present case, there is no proof that the document was not delivered, in fact I am satisfied that it was, and insofar as the second limb is concerned, as stated above, it would appear to only have the effect of altering the date upon which a document was deemed to have been received to that when it was actually received. As the evidence of the respondent in this case goes to non-receipt, as opposed to delayed receipt, this is of no assistance to him (Skalkos, supra). However unjust this may appear, where there exists doubt as to actual receipt of a deemed served document, I cannot depart from the authorities. In those circumstances reg.16.01(2) is of no assistance to Mr Mahaffy and I am left with the finding that service was effected in accordance with the Regulations.
Mr Mahaffy has other arguments as to whether I should make a sequestration order against him. They are not dependant upon this one. I will make directions for the further hearing and order that in the meantime the costs of the preliminary issue be taxed if not agreed and paid by Mr Mahaffy to the applicant pursuant to the Federal Magistrates Court (Bankruptcy) Rules 2006.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Raphael FM

Date: 25 October 2012