Re; David Anthony McCarthy the Debtor (the applicant)

[1984] FCA 438

Re: DAVID ANTHONY McCARTHY; THE DEBTOR
No. W 879 of 1984
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE
AUSTRALIAN CAPITAL TERRITORY
Morling J.

CATCHWORDS

Bankruptcy - evidence of service of bankruptcy notice and petition - sequestration order - application to annul bankruptcy - neither bankruptcy notice nor petition served - bankruptcy annulled

Bankruptcy Act 1966, s. 154

HEARING

SYDNEY

#DATE 21:11:1984

ORDER

1. The bankruptcy of David Anthony McCarthy is annulled.

2. The respondent is to pay the applicant's costs.

JUDGE1

This is a most unusual case. The applicant is a solicitor against whom a judgment for the sum of $10,581.69 was recovered by the petitioning creditors on 16 March 1984. He did not satisfy that judgment. Thereupon the petitioning creditors caused a bankruptcy notice to be issued from this court, the act of bankruptcy relied upon being the failure to comply with the terms of the District Court judgment. The solicitors for the petitioning creditor apparently put the bankruptcy notice into the hands of process servers for service. According to Mr Lesley Thomas Hardy, an employee of the firm of process servers, on 11 June 1984 he went to premises at 98 Trevenar Street, Ashbury, and identified the debtor by asking his name and whether he was the person referred to in the bankruptcy notice which he produced.

1. According to him the debtor said that he was indeed the person referred to in the bankruptcy notice, whereupon the notice was given to him. Whether or not the bankruptcy notice was served, its terms were not complied with. Thereupon a petition was issued by the petitioning creditors and it was placed in the hands of process servers for service. According to Mr Hardy on 21 August he again went to the premises at 98 Trevenar Street, Ashbury, and identified the debtor and gave him the petition.

2. There is a complete collision between the debtor and Mr Hardy as to the accuracy and, indeed, truthfulness of Mr Hardy's evidence. According to the debtor he was not served with the bankruptcy notice or the petition. The address at 98 Trevenar Street was his mother's address so he says, and that seems to be the case. He says that although he went there from time to time, he was not there on either occasion when it is alleged that he was served.

3. Before I proceed to state my conclusion on the question of service I cannot but fail to observe that Mr McCarthy's actions in relation to the whole matter seem to me to be surprising to say the least. He said in evidence that it came to his knowledge on 3 September that the petition had been issued. The petition in fact came on for hearing before Beaumont J. on 17 September when he made an order sequestrating Mr McCarthy's estate. When asked why he did not bother to attend court on 17 September he said, in effect, that he was not interested. When asked why he did not bother to send a representative to the court to see what was happening, he again said, in effect, that he was not interested. I find these answers surprising and less than satisfactory, although in fairness to Mr McCarthy he did give an explanation of his answers. He said that he knew he was insolvent not merely because he could not meet the District Court judgment but also because he had made himself liable for very large sums of money on guarantees to persons other than the petitioning creditors. He said that it was not of much consequence to him that the bankruptcy petition was being heard on 17 September. I took him to mean that he was taking a rather fatalistic attitude to the whole proceedings. Nevertheless, it is most unfortunate that the costs of the present proceedings have been incurred when, had he chosen to bring his version of the facts to the attention of Mr Justice Beaumont, the question of service of the petition and of the bankruptcy notice could then have been investigated.

4. According to Mrs Calvetti, the debtor's mother, who lived at the premises at 98 Trevenar Street, the documents which Mr Hardy said were served on her son were in fact placed under the front door of her residence. Mrs Calvetti was called in evidence and although I think there is a degree of reconstruction in her evidence as to the actual date when the events occurred, I think that she was a truthful witness.

5. Mr McCarthy flatly denies having been served with the documents. He says he does not reside at Trevenar Street, Ashbury, and was not residing at that address either in June or August of this year.

6. There are two unsatisfactory aspects of Mr Hardy's evidence which caused me to prefer the evidence of the applicant and his mother. The first is that when Mr Hardy swore the affidavit upon which Beaumont J. relied in making the sequestration order he said that on 21 August he identified the person he served as David Anthony McCarthy. However, when the matter came on before me yesterday he swore another affidavit in which he admitted that the statements he made in that petition were not correct, or at least some of the statements he made in that petition were not correct. He said yesterday that when he served the petition he went to the premises at 98 Trevenar Street and rang the door bell. He said there was a glass door at the front of the premises and that the person whom he had served in June came to the door dressed in a dressing gown. According to Mr Hardy, the door remained closed. He said he identified him as the person whom he had previously served as Mr McCarthy. He further said he had a conversation with Mr McCarthy in which he said, "Good morning, sir. I have got some court documents to serve on you". Mr McCarthy allegedly did not respond, so he pushed the documents under the door, whereupon the debtor took the documents out of his hand. He then said, "thank you very much" and left the premises. This version of the facts is quite inconsistent with the version given in paragraph 3 of Mr Hardy's affidavit of 21 August.

7. Secondly, and equally as importantly, I have the gravest doubt whether Mr Hardy would have been able to recognize Mr McCarthy through the closed door. At the invitation of counsel for both parties, I inspected the premises this morning. My view was on the basis, as agreed by counsel, that I would use it not only to explain the evidence but also as evidence. Mrs Calvetti said that the glass in the door was opaque and that it was not possible to discern with any clarity the identity of the person on the other side of the door. I accept this evidence, particularly in the light of what I saw on the view. Indeed, I do not think counsel for the creditors seriously disputed it.

8. However, his point is that there is a clear glass panel beside the door through which one could see everything on the other side of the door, provided the blind was not down. This is certainly correct but Mr Hardy does not claim that he looked through any such clear glass panel. He claims he looked through the door and I cannot accept his evidence that the view he would have obtained through the door was sufficient to identify who was on the other side of it.

9. In my opinion the debtor carries the onus of proof in these proceedings. The position would have been otherwise on the hearing of the petition but the sequestration order having been made and this being an application to annul it, I think he carries the onus on the present application. However, I think he has discharged that onus. Therefore the decision I must come to in terms of s.154 of the Act is that I am satisfied that the sequestration order ought not to have been made. Accordingly, I make an order annulling the bankruptcy.

10. The respondents must pay the applicant's costs of this application.