Rafaraci v Pearce & Heers

Case [2003] FCA 1307

FEDERAL COURT OF AUSTRALIA

Rafaraci v Pearce & Heers [2003] FCA 1307

BANKRUPTCY - Creditor's Petition - Bankruptcy Notice - application under s 153B of the Bankruptcy Act 1966 (Cth) to have Sequestration Order annulled - improper service of District Court Statement of Claim giving rise to judgment debt - improper service of Bankruptcy Notice and Creditor's Petition - s 153B of the Bankruptcy Act 1966 (Cth) not limited to circumstances where there has been an abuse of process - broad discretion - Sequestration Order set aside due to non-receipt of originating process.

Bankruptcy Act 1996 (Cth) s 153B
Bankruptcy Rules
Federal Court Rules

Willshire-Smith Re; Ex parte Randle & Taylor Services Pty Ltd (1994) 48 FCR 371 at 374-5 followed
Craig v Kanssen [1943] KB 256 followed
Re Marsh; Ex parte Marsh v Paramount Leisure Products Pty Ltd (1991) 32 FCR 482 followed
Hill v BP Australia Ltd [1998] FCA 1303 followed
William v Spautz (1992) 174 CLR 509 followed

Zodiac Investment Pty Ltd v Brelsford (A Bankrupt) [1999] FCA 1582 followed
Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589 followed
Edelsten v Deputy Commissioner of Taxation (NSW) (1989) 86 ALR 257 followed
Henrich v Commonwealth Bank of Australia [2003] FCA 539 followed
Cottrell v Wilcox [2002] FCA 1115 followed

VINCENZO RAFARACI v PEARCE & HEERS, INSOLVENCY ACCOUNTANTS AND SHOP-A-DOCKET PTY LTD

N 7310 OF 2003

TAMBERLIN J
SYDNEY
14 NOVEMBER 2003


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7310 OF 2003

IN THE MATTER OF VINCENZO RAFARACI

BETWEEN:

VINCENZO RAFARACI
APPLICANT

AND:

PEARCE & HEERS
INSOLVENCY ACCOUNTANTS
FIRST RESPONDENT

SHOP-A-DOCKET PTY LTD
SECOND RESPONDENT

JUDGE:

TAMBERLIN J

DATE OF ORDER:

14 NOVEMBER 2003

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.        The application for annulment under s 513B is granted.

2.Compliance with the requirements of O 77 rr 42, 43 and 44 of the FCR is dispensed with.

3.The second respondent pay the applicant’s costs and those of the first respondent in this application and of the stay application.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7310 OF 2003

IN THE MATTER OF VINCENZO RAFARACI

BETWEEN:

VINCENZO RAFARACI
APPLICANT

AND:

PEARCE & HEERS
INSOLVENCY ACCOUNTANTS
FIRST RESPONDENT

SHOP-A-DOCKET PTY LTD
SECOND RESPONDENT

JUDGE:

TAMBERLIN J

DATE:

14 NOVEMBER 2003

PLACE:

SYDNEY

REASONS FOR JUDGMENT

  1. This is an application for annulment of a Sequestration Order made against the applicant, (“Rafaraci”) on 1 October 2003. The application is brought pursuant to s 153B of the Bankruptcy Act 1996 (Cth) (“the Act”).

  2. The principal issue is whether service was properly made in relation to the District Court Statement of Claim giving rise to a judgment debt, and also in relation to the service of the Bankruptcy Notice and the Creditor’s Petition in the bankruptcy proceedings.

  3. Rafaraci was made bankrupt pursuant to a Creditor’s Petition issued on 6 August 2003.  The debt relied…

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Details
AGLC
Rafaraci v Pearce & Heers [2003] FCA 1307
Case
[2003] FCA 1307
Decision Date

CaseChat Overview and Summary

In the matter of Rafaraci v Pearce & Heers, the respondent, Rafaraci, sought annulment of a sequestration order made against him by the Federal Circuit Court. The petitioner, Shop-A-Docket, had obtained a default judgment against Rafaraci in the Queensland Magistrates Court for an alleged debt of advertising services. Following the default judgment, Shop-A-Docket issued a bankruptcy notice and subsequently a creditor's petition, leading to the sequestration order. Rafaraci challenged the validity of the sequestration order, arguing that he was not properly served with the necessary documents, which was a requirement under the relevant legislation.

The court was required to determine whether the sequestration order should be annulled based on the alleged improper service of the Statement of Claim, Bankruptcy Notice, and Creditor's Petition. The court also needed to consider whether the requirements of the Federal Circuit Court Rules regarding the filing of certain documents could be dispensed with in the circumstances of this case.

The court found that the affidavits of service were not sufficient to prove that Rafaraci was properly served with the necessary documents. The court also considered that the Creditor's Petition should have been accompanied by an affidavit verifying the last paragraph, which was not the case here. The court concluded that the sequestration order should be annulled as Rafaraci was not properly served with the required documents, and therefore, the order was void. The court further found that the requirements of the Federal Circuit Court Rules could be dispensed with in the circumstances of this case.

The court granted the application for annulment under s 153B of the Bankruptcy Act and dispensed with the requirements of O 77 rr 42, 43, and 44 of the Federal Circuit Court Rules. The second respondent, Shop-A-Docket, was ordered to pay the costs of the applicant and the first respondent in this application and of the stay application.

Orders

Orders of the court

1. The application for annulment under s 513B is granted.

2. Compliance with the requirements of O 77 rr 42, 43 and 44 of the FCR is dispensed with.

3. The second respondent pay the applicant’s costs and those of the first respondent in this application and of the stay application.

Background

Background to the litigation

Rafaraci says that none of the above documents were properly served on him as required by the relevant legislation, prior to the making of the Sequestration Order.BACKGROUND In February 1999, an Italian restaurant business, known as “Vee Jaes” was commenced by a Mr Marturano in partnership with a third party who left the business. In August 2000, Rafaraci entered into partnership in the business with Mr Marturano. In March 2001, Mr Marturano left the business and it was continued by Rafaraci after a failed attempt to sell the business. During early 2002, Rafaraci received a telephone call from Mr Edwards of Independent Recovery Services (“IRS”) regarding monies claimed to be owed to its client, the second respondent (“Shop-A-Docket”). Mr Edwards was seeking payment of a debt said to have been incurred for advertising services provided to the business in the amount of $6,000. Rafaraci denied that it was his debt but in the interests of settling the matter later made an offer of $4,000 and was told that it was likely it would be accepted. On 13 May 2002, a Statement of Claim was filed by Shop-A-Docket in the Queensland Magistrates Court against Rafaraci and Mr Marturano. This was claimed to have been served on 1 June 2002, but Rafaraci denies this. An affidavit of service of the Statement of Claim was made by Mr Davidson, a licensed commercial agent, on 5 June 2002. He deposed that the Statement of Claim had been served on 1 June 2002, by speaking at the relevant address to a person and asking if Rafaraci was at home. He said that the person he spoke with said he was Rafaraci and was handed the document. On 10 July 2002, a default judgment was issued in the Queensland Magistrates Court, requiring Rafaraci and Mr Marturano to pay $7,003.90 plus interest of $477.16 and costs of $858. On 3 March 2003, Rafaraci registered the business name of the restaurant under his sole name. A Bankruptcy Notice addressed to Rafaraci was issued on 30 June 2003. It is alleged that this Bankruptcy Notice was served at Rafaraci’s home on 3 July 2003. On 8 July 2003, Mr Davidson deposed to an affidavit of service of the Bankruptcy Notice. On 25 July 2003, the alleged act of bankruptcy was committed. On 6 August 2003 a Creditor’s Petition was issued, verified by a credit controller at Shop-A-Docket, Ms Simmonds. An affidavit said that paragraphs 1, 2 and 3 of the Petition were within her knowledge true. Those paragraphs relate to the amount of the debt and the decision of the Magistrates Court, together with a statement that there was no security held and that the respondent debtor was personally present in Australia. The Creditor’s Petition as issued was noted with a court stamp affixing the return date for 3 September 2003. This date was subsequently altered by an officer of the court to 1 October 2003. The affidavit verifying paragraph 4 of the Creditor’s Petition, together with affidavits and the Creditor’s Petition were filed on 8 August, 2003.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

TAMBERLIN J
In relation to the costs of the application for annulment and the proceeding for a stay, I consider that the costs of Pearce & Heers and of Rafaraci should be paid by Shop-A-Docket who appeared and unsuccessfully opposed the granting of the application.CONCLUSION My conclusion is that the application for annulment under s 153B should be granted. Compliance with the requirements of O 77 rr 42, 43 and 44 of the FCR is dispensed with. The second respondent is to pay the costs of the applicant and the first respondent of this application and of the application for a stay.

Ratio Decidendi

Legal Principle Established

Established by: TAMBERLIN J

Full text does not contain this section.