Quinteros v Nash
[2002] FMCA 228
•23 September 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| QUINTEROS v NASH & ORS | [2002] FMCA 228 |
| BANKRUPTCY – Bankruptcy notice – whether a final judgment or order was in force at the time the bankruptcy notice was served – service otherwise than in person – when service of the bankruptcy notice was effected. |
Bankruptcy Act 1966 (Cth), ss.40, 61
Bankruptcy Regulations
Federal Court Rules
Federal Magistrates Court Rules 2001 (Cth)
Horman v Distribution Group Limited, trading as Repco Auto Parts [2002] FMCA 219
Jiminez v Welcome Homes Real Estate [2002] FCA 92
Re Di Giacomo; ex parte Boral Steel (1983) 68 FLR 106
Schekeloff; ex parte Schekeloff (1989) 22 FCR 407
Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337
| Applicant: | VICTOR QUINTEROS |
| First Respondent: Second Respondent: | GREG NASH JOHN TOMKO |
| File No: | SZ798 of 2002 |
| Delivered on: | 23 September 2002 |
| Delivered at: | Sydney |
| Hearing Date: | 23 September 2002 |
| Judgment of: | Driver FM |
REPRESENTATION
| Solicitors for the Applicant: | Mr Capsanis J P Capsanis & Co |
| Solicitors for the Respondent: | Mr Ferguson Nash O’Neill Tomko |
ORDERS
The application is dismissed.
The applicant is to pay the respondents’ costs of and incidental to the application, including any reserved costs, to be taxed and paid in accordance with the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ798 of 2002
| VICTOR QUINTEROS |
Applicant
And
| GREG NASH |
First Respondent
JOHN TOMKO
Second Respondent
MICHAEL O’NEILL
Third Respondent
REASONS FOR JUDGMENT
This ex tempore judgment relates to an application to set aside a bankruptcy notice alleged by the respondent creditor to have been served on the applicant debtor on 12 August 2002. The application by Mr Quinteros is supported by an affidavit made by him on 5 September 2002, and in addition he gave oral evidence today. The thrust of the application is that the bankruptcy notice should be set aside because at the time of service of the bankruptcy notice the creditor did not have a final judgment or order necessary to gain an act of bankruptcy for the purposes of s.40(1)(g) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”).
It is said that there was no final judgment or order at the time of service of the bankruptcy notice because at that time the debtor had obtained an instalment order for payment of the debt, the subject of the bankruptcy notice, by instalments. The facts are that the debtor sought an instalment order from the Local Court on 9 August 2002 and that order was granted on 13 August 2002. It follows that if the bankruptcy notice was served prior to that date the creditor would be able, upon the expiry of the bankruptcy notice, to take the benefit of s.40(1)(g). It would also follow that the date of the act of bankruptcy would be 21 days after the date of service of the bankruptcy notice, with the additional result that this present application filed on 5 September 2002 would have been filed out of time.
It would follow, in those circumstances, that the application would be dismissed. The critical issue of fact is when was the bankruptcy notice served? There is also an issue of law as to whether the material time for consideration of the bankruptcy notice is at the date of issue of the bankruptcy notice or the date of service. In Schekeloff; ex parte Schekeloff (1989) 22 FCR 407, his Honour Burchett J referred to the decision of the High Court in Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337 at 340 where the High Court stated:
Normally, … it would be expected that the validity of the notice should be tested as at the date of its issue… In form, the notice speaks as at the date which it bears, that is the date of its issue, and although service is essential to make non-compliance an act of bankruptcy, and although the time fixed for compliance runs from the date of service, the notice must be understood as speaking as at the date of its issue and the requirements of the notice, for the purposes of section 40(1)(g) of the Bankruptcy Act, must be ascertained in that context.
However, the High Court prefaced that statement with the word “normally”, and in Schekeloff, Burchett J referred with apparent approval to the decision of his Honour Evatt J in Re Di Giacomo; ex parte Boral Steel (1983) 68 FLR 106 where Evatt J held invalid a bankruptcy notice in circumstances where the bankruptcy notice had been issued before the making of a stay by the District Court but had been served after the issue of the stay. While the legal issue appears to be the subject of some doubt I have proceeded, for the purposes of these proceedings today, on the basis that I can set aside the bankruptcy notice if the debt relating to it was the subject of a stay order at the time the bankruptcy notice was served.
The respondents rely upon two affidavits by Mr James Stephen Twigg, the first made on 19 August 2002 and the second made on 20 September 2002 on the critical issue of the date of service of the bankruptcy notice. Mr Twigg also gave oral evidence. In addition, Mr Ferguson, for the respondents, tendered as an exhibit a letter and memorandum of professional fees apparently written by Mr Twigg on 13 August 2002 in which he refers to service of the bankruptcy notice upon Mr Quinteros on the previous day, that is, 12 August 2002.
It is Mr Twigg's evidence that the bankruptcy notice was served at 9.05am on 12 August 2002 pursuant to regulation 16.01(1)(c) of the Bankruptcy Regulations (“the Bankruptcy Regulations”) which provides as a method of service that the bankruptcy notice may be left in an envelope or similar packaging marked with the person’s name at the last known address of the person. Regulation 16.01(2)(b) provides that where a document is served in accordance with 16.01(1)(c) the time of service is taken to be when the document is left at that last known address.
Mr Twigg deposes that he attended the last known address of the debtor on a number of occasions and that finding nobody in attendance on the morning of 12 August 2002 he left the bankruptcy notice in the mail box at that address in accordance with the Bankruptcy Regulations. His oral evidence augmenting his affidavit evidence is that he placed the bankruptcy notice in a slightly larger than normal yellow envelope that he happened to have with him in his briefcase and wrote the name of Mr Quinteros on the envelope before placing it in the locked letter box at the residence.
Mr Quinteros' evidence is that he checked his mail box on 15 August 2002 and found nothing in it. He further says that he checked his mail box again on 19 August 2002 and found an unmarked, unsealed yellow envelope containing the bankruptcy notice. The issue of when he found the bankruptcy notice was dealt with by Mr Quinteros in his affidavit made on 5 September 2002. The issue of whether the envelope had anything written on it or not was dealt with in his oral evidence today.
That question of whether anything was written on the envelope is significant as regulation 16.01(1)(c) requires that the envelope containing the document must be marked with the recipient's name. There is clearly a contest of fact on the issue of whether the bankruptcy regulation has been complied with to effect service and if so, when service was effected in accordance with that regulation. I was referred by Mr Ferguson to the decision of Federal Magistrate Raphael in Jiminez v Welcome Homes Real Estate [2002] FMCA 92 at paragraph 25, where Federal Magistrate Raphael referred to observations by his Honour Emmett J in Horman Distribution Group Limited trading as Repco Auto Parts [2002] FCA 219.
I adopt with agreement that particular passage from the decision of Emmett J in dealing with a contest of evidence of this type. It is material to consider what interest the witnesses have in constructing their evidence to suit a particular outcome. It is also material to consider the time at which the evidence was given. Mr Twigg deposed as to the relevant facts initially on 19 August 2002. His first affidavit, in particular paragraph 2 of his first affidavit, did not disclose the numerous visits he made to the premises prior to 12 August 2002. That was elaborated on in his second affidavit. His first affidavit in paragraph 2 also contained an error by stating that Mr Quinteros lived with his mother at the residence where the document was served. In fact Mr Quinteros lives with his mother-in-law and his daughter and his ex-wife at that residence.
I do not regard that error as material. I do regard it as material that on 19 August 2002 Mr Twigg deposed clearly as to the date and time of service and the general circumstances. I also regard it as material and I accept that on or about 13 August 2002 Mr Twigg wrote a letter to the solicitors for the creditors making statements which reinforce what he says in his initial affidavit.
Mr Quinteros is not a complete stranger to matters under the Bankruptcy Act. This debt arose some four years ago and several years ago Mr Quinteros was the subject of an earlier bankruptcy notice. Mr Quinteros gave evidence today that he was concerned about the debt the subject of these proceedings because he wished to take employment as a supervising real estate agent. He said to me that an application form that he was required to complete contained a question in it whether he had been made a bankrupt or had been the subject of bankruptcy proceedings. The evidence of Mr Quinteros was that this was an influencing factor in his application for an instalment order on 9 August 2002.
Mr Ferguson suggested to me that I should conclude that Mr Quinteros was well aware at the time he made the application for an instalment order that efforts were being made to serve on him a new bankruptcy notice. I accept the evidence of Mr Twigg that there had been numerous efforts to effect personal service between 19 July 2002 and 12 August 2002. I also accept his evidence that he had spoken to one or more persons at the residence of Mr Quinteros between those dates. I think it is highly likely that Mr Quinteros was aware that efforts were being made to serve the present bankruptcy notice on him. I think it is highly likely that the application made by Mr Quinteros for an instalment order on 9 August 2002 was made in that knowledge.
Having regard to the obvious interest that Mr Quinteros has in avoiding the operation of the present bankruptcy notice and having regard to the timing of his evidence as to the state of the envelope which was left for him, and for that matter, his evidence as to the date on which he discovered the bankruptcy notice, I have a clear preference for the evidence of Mr Twigg. I find as matters of fact that Mr Twigg did attend at the premises of Mr Quinteros at approximately 9.00am on 12 August 2002, having been there on numerous earlier occasions to attempt to effect personal service and finding nobody in attendance at that time. He wrote the name of Mr Quinteros on an envelope and placed the bankruptcy notice the subject of these proceedings in the envelope before placing it in a locked letter box at the premises.
I do not regard it as presently material whether the envelope was sealed or not, but to the extent that that is a material issue, I prefer the evidence of Mr Twigg that the envelope was sealed. I find that service of the bankruptcy notice was effected in accordance with regulation 16.01(1)(c) on 12 August 2002, by reason of the operation of regulation 16.01(2)(b). It follows that the time for compliance with the bankruptcy notice expired on 3 September 2002 and that an act of bankruptcy was committed, at the latest, on 4 September 2002.
In the circumstances, there was no stay in operation at the time the bankruptcy notice was served. The present application to set aside the bankruptcy notice was made out of time. Accordingly, the Court had no jurisdiction to purport to extend time for compliance with the bankruptcy notice pursuant to s.41(6A) of the Bankruptcy Act. In the circumstances, I will dismiss the application.
Mr Ferguson has sought an order for costs. Mr Capsanis has conceded that in the ordinary course costs would follow the event. I will therefore make an order that the applicant pay the respondent's costs of and incidental to the present application, including any reserved costs. In accordance with the Federal Magistrates Court Rules 2001 (Cth), those costs will fall to be assessed and paid in accordance with the Federal Court Rules.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 10 October 2002
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