Re Fowler, Dennis Anthony Ex Parte A.G.C. (Advances) Ltd
[1982] FCA 219
•12 OCTOBER 1982
EX PARTE: A.G.C. (ADVANCES) LIMITED
No. P412 of 1982
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
EXERCISING FEDERAL JURISDICTION IN BANKRUPTCY
NORTHROP J.
MELBOURNE
#DATE 12:10:1982
On 27 October l982 the Court announced that it was satisfied that Dennis Anthony Fowler, 'the Debtor', had committed the act of bankruptcy alleged in the petition, that it was satisfied with the proof of the other matters of which s.52(l) of the Bankruptcy Act l966, 'the Act', requires proof, noted that Edward Peter Taylor, a registered trustee, had consented to act as the trustee of the estate of the Debtor and made a sequestration order against the estate of the Debtor. At the same time the Court announced that at a later date it would publish its reasons for being satisfied that the Debtor had committed the act of bankruptcy alleged in the petition. The Court now publishes those reasons.
The act of bankruptcy alleged in the petition is as follows:
'The debtor Dennis Anthony Fowler within six months before the presentation of this petition committed the following act of bankruptcy namely, that he failed either to comply on or before the 27th day of October, l98l with the requirements of a bankruptcy notice duly served on him on the l3th day of October, l98l or to satisfy the Court that he had a counter-claim set-off or cross demand equal to or exceeding the sum specified in paragraph (a) of the Bankruptcy Notice.'
The bankruptcy notice referred to in the petition was in the form prescribed by the Bankruptcy Rules, 'the Rules'. On 23 June l98l it was stamped and signed by a Deputy Registrar under the Act. It was a fourteen days' notice and the relevant part of the notice is set out:
'THEREFORE TAKE NOTICE that within fourteen days after service of this notice on you, excluding the day on which this notice is served on you, you are required _
(a) to pay the sum of $l2,693.72 so claimed by the judgment creditor to the judgment creditor; or
(b) to secure the payment of the sum referred to in the last preceding paragraph to the satisfaction of the Federal Court of Australia or the judgment creditor or compound the sum so specified to the satisfaction of the judgment creditor.
AND FURTHER TAKE NOTICE that if, within the period set out above, you fail either to comply with either of the abovementioned requirements of this notice or to satisfy the Federal Court of Australia that you have a counter-claim, set-off or cross demand equal to or exceeding the sum specified in paragraph (a), being a counter-claim, set-off or cross demand that you could not have set up in the action in which the judgment was obtained, you will have committed an act of bankruptcy on which bankruptcy proceedings may be taken against you.'
In the notice the Debtor's address was given as l0 Dowling Grove, Doncaster, a suburb of Melbourne. The judgment debtor had difficulty in effecting personal service of the bankruptcy notice upon the Debtor. On 2l September l98l the Federal Court of Australia made an order allowing substituted service of the bankruptcy notice. The relevant parts of the order are set out:
'THE COURT ORDERS THAT:
l. Personal Service of the Bankruptcy Notice be dispensed with.
2. In lieu thereof the Bankruptcy Notice may be served by posting a copy of the Bankruptcy Notice signed by the Deputy Registrar and sealed by the Court together with a copy of today's Order in an envelope addressed to the Judgment Debtor at l0 Dowling Grove, Doncaster.
3. Service of the Bankruptcy Notice be deemed to have been effected seven days after the completion of the procedures for substituted service directed by this Order."
It should be noted that the Order states that the bankruptcy notice may be served by posting a copy signed by the Deputy Registrar and sealed by the Court. This obviously is a mistake. The bankruptcy notice is not a court document.
It is a document which is issued by the Registrar, or a Deputy Registrar, in Bankruptcy, and is signed and stamped by the officer issuing the notice. In doing that the officer is not exercising the powers of an officer of the Court. Subject to that qualification, the order for substituted service is in a form commonly made and is a form which has been in use for many years.
The procedures for substituted service were completed on 6 October l98l, being the day upon which the relevant documents were posted at Melbourne in an envelope addressed to the Debtor at l0 Dowling Grove, Doncaster. The Debtor did not comply with the requirements of the notice. He did not apply to have the notice set aside. In due course the petition was presented and on the hearing of the petition, proof of service of the notice in accordance with the Court order was given.
Normally no problem would have arisen, but on the hearing of the petition, which was unopposed, counsel for the Petitioner, very properly, referred to the decision of Lockhart J. given in Clyne v. Deputy Commissioner of Taxation on l3 August l982. In that matter his Honour set aside a bankruptcy notice which had been issued on 4 May l982 on the application of the Deputy Commissioner of Taxation. As the result of orders made by the Court the notice had become a twenty-eight days' notice and leave had been granted to effect service of the notice on Clyne outside of Australia even though one of the addresses to which the notice was to be posted was an address within Australia. In addition, by the same order, which was made on 25 May l982, the Court dispensed with personal service and ordered that:
'3. true copies of the said Bankruptcy Notice stamped and signed by the Deputy Registrar together with sealed copies of todays orders be sent, as follows _
(i) by pre-paid air mail addressed to the said Respondent Judgment Debtor at C/- HOTEL SACHER A-l0l5 Vienna PHILHARMONIKERSTRASSE 4 REPUBLIC OF AUSTRIA and
(ii)by pre-paid mail addressed to the office of Z. Weiss Solicitor, the said Respondent Judgment Debtor's Solicitor in Australia, C/-Messrs Weiss & Co., Solicitors, 8th floor, 64 Castlereagh Street, Sydney in the State of New South Wales;
4. upon the expiration of fourteen (l4) days from the date of posting the said documents pursuant to these orders, due service of the said Bankruptcy Notice be deemed to have been effected upon the said Respondent Judgment Debtor;'
In compliance with the orders the documents referred to, together with covering letters, were posted on 27 May l982 to the addresses specified in the order. Clyne received a copy of the bankruptcy notice stamped and signed by the Deputy Registrar, together with a copy of the Court order and covering letter dated 27 May l982, on l June l982, i.e. within fourteen days from the date of the posting of the letters. Clyne then made application to the Court seeking an order setting aside the bankruptcy notice. His Honour held that the bankruptcy notice itself was not defective and that it complied with the requirements of the Act and the Rules. He held further, however, that Clyne could not know, with any certainty, the date on which the notice and Court order had been posted to him, and therefore, upon reading the notice and the order, he could not know when the twenty-eight days' period for compliance with the notice commenced. The notice required compliance 'within 28 days after service of this notice on you'. In fact, the notice was received by Clyne on l June l982 and if that was the date of service the twenty-eight days' period expired on 29 June l982. However, under the order of the Court the notice was 'deemed to have been effected' upon the expiration of fourteen days of the date of posting the documents. In fact, the documents were posted on 27 May l982 and thus under the order were deemed to have been served on l0 June l982. Clyne did not know when the documents were posted and in those circumstances, under the deeming provisions of the order of the Court, he did not know when the twenty-eight days' period commenced. On this basis his Honour set aside the bankruptcy notice on the ground that Clyne was entitled to know clearly and unambiguously the period of time required for compliance with the notice. His Honour refused an application by the Deputy Commissioner to vary the orders made on 25 May l982 by making the time of service of the notice the date on which it was received.
At this stage, brief reference must be made to some of the provisions of the Act and the Rules. Under s.40(l)(g) of the Act, a debtor commits an act of bankruptcy if a creditor, within the meaning of that paragraph:
'... has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not-
(i) where the notice was served in Australia _ within the time fixed by the Registrar by whom the notice was issued; or
(ii) where the notice was served elsewhere _ within the time fixed for the purpose by the order giving leave to effect the service,
comply with the requirements of the notice or satisfy the Court that he has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he could not have set up in the action or proceeding in which the judgment or order was obtained;'
Section 4l contains provisions relating to a bankruptcy notice. The notice must be in accordance with the prescribed form and is issued by the Registrar or a Deputy Registrar in Bankruptcy, sub-section (l). Service of the notice is to be effected as prescribed, sub-section (4). Rule 7 of the Rules contains provision relating to applications for the issue of bankruptcy notices and r.8 prescribes the form of the notice. Service of a notice must be effected within six months after the date it is issued or within any extended time as may be ordered, r.9. Rule l0 contains provisions relating to procedures to be followed where a debtor files an affidavit that he is relying upon the latter provisions of s.40(l)(g). The relevant part of r.l5 is set out:
'l5. Unless otherwise ordered by the Court under sub-section 309(2) of the Act _
(a) service of a bankruptcy notice shall be effected on the debtor by delivering to the debtor personally a copy of the bankruptcy notice signed and stamped by the Registrar; ...'
Rule l6 contains provisions relating to the proof of service of a bankruptcy notice. Rule 202 contains provisions relating to the computation of time.
Division 4 of Part X, rules l20-l23 of the Rules, contains provisions relating to service of process. Particular reference is made to Rules l2l and l22. Under r.l2l a document, including a bankruptcy notice:
'... shall be deemed not to have been duly served on a person in Australia for the purposes of the Act or of these Rules if the document is delivered to the person in Australia by a person who has not attained the age of l6 years.'
This rule may prevent a valid service of a bankruptcy notice even though the debtor admits receipt of the document on a specified date but there is no evidence that the document was delivered to him by a person who has attained the age of sixteen years or where there is no evidence of who delivered the notice, for example where a notice is sent by post, the debtor admits receipt of the notice but does not know who delivered it.
In the present matter the order for substituted service was made under s.309(2) of the Act. Sub-sections (l) and (2) of s.309 are set out in full:
'309(1) A notice or other document in relation to which no special manner of service is prescribed may be sent by post as a prepaid letter to the last-known address of the person to be served with the notice or other document and shall, unless the contrary is proved, be deemed to have been served at the time at which the letter would be delivered in the ordinary course of post.
... 309(2) Where a notice or other document is required by this Act to be served on or given to a person, the Court may, in a particular case, order that it be given or served in a manner specified by the Court, whether or not any other manner of giving or serving the notice or other document is prescribed.'
Presumably r.l2l has no application with respect to the person who posts the documents pursuant to the Order for substituted service since that person does not deliver the notice to the debtor.
Service of a bankruptcy notice is to be effected by 'delivering to the debtor personally' a copy of the notice signed and stamped by the registry, r.l5. Because the copy served is so signed and stamped, the Rules do not require an original notice to be shown to the debtor at the time of delivery of the copy, cf. the practice in State Supreme Courts relating to personal service of writs of summons. In this regard, the judgment of McInerney J. in Pino v. Prosser (1967) V.R. 835 is most informative. It is interesting also to note that at p.837, after referring to a number of authorities, his Honour said:
'If that passage correctly states the law, the conclusion is, on the facts of this case, remarkable to the point of seeming absurdity, in that the defendant who, on his own affidavit admits that he received the writ on 28 March from his wife and instructed his solicitors on l0 April, should be held not to have been served.'
The only limitation on service of a bankruptcy notice relates to the age of the person delivering the notice to the debtor, r.l2l.
Personal service of a bankruptcy notice on a debtor is of the utmost importance. The date of service determines the time at which the period for compliance with the notice commences and non-compliance with the notice, and in the absence of other action taken by the debtor, results in the debtor committing an act of bankruptcy with all that that involves.
Despite these consequences, the Court has power to dispense with personal service of a bankruptcy notice. Normally this is done where, from any cause, the creditor is unable to effect prompt personal service. In these circumstances the Court has power to order that the notice be given or served in a manner specified by the Court, s.309(2) of the Act. The facts which justify the Court in making an order for substituted service are many and varied and need not be referred to in these reasons. It is sufficient to say that normally, the method of service permitted by such an order must be one which is likely to bring the bankruptcy notice to the attention of the debtor. The fact that the bankruptcy notice is not brought to the attention of the debtor or that at no stage is a bankruptcy notice delivered to the debtor, does not of themselves and without more, make the order for substituted service ineffective. The deeming provisions of the order enable the creditor to prove service of the bankruptcy notice by proving compliance with the terms of the order. In these reasons nothing need be said about what might occur if subsequently the debtor takes proceedings to annul any sequestration order made on the basis of an act of bankruptcy based on s.40(l)(g) of the Act in circumstances where the bankruptcy notice had never come to the attention of the debtor.
A debtor who has delivered to him a bankruptcy notice and a copy of a court order for substituted service of the notice, of necessity must face a degree of confusion. The notice states that he must do certain things 'within (fourteen) days after service of this notice'. Normally a debtor would understand that to mean the day on which the notice was delivered to him. The copy order, however, states that service shall 'be deemed to have been effected' within (seven) days after other acts have been done. The debtor, presumably, knows the law and in particular the provisions of the Act and of the Rules relating to service of bankruptcy notices and computation of times. Nevertheless there can be no doubt that a debtor receiving a bankruptcy notice in circumstances similar to those in this case would be likely to be confused. To some extent, the confusion may be lessened if a letter had been posted with the notice and the copy order stating that the documents were posted on a specified day. Even then there is room for confusion. The deemed time of service may have passed before the notice is delivered to the debtor or his attention is drawn to it, but nevertheless the documents specify the commencing time, albeit ficticious and unreal, for the period within which the debtor must do certain things. All these factors merely illustrate the unsatisfactory nature of the procedural requirements, but at the same time the importance of there being a clear and unambiguous bankruptcy notice is emphasised. Nevertheless the Court must ensure that justice is done according to law and the Court must have regard to the legal rights of the creditor as well as of the debtor.
The facts of the present case are very different from those in Clyne's case. Here the debtor has not made application to have the bankruptcy notice set aside. He has not claimed that he has been mislead or been confused by the form of the bankruptcy notice and the order for substituted service. The order permits service to be effected by posting the relevant documents to an adddress in a suburb of Melbourne. The documents were posted in Melbourne on Tuesday, 6 October l98l at 5 p.m. In the ordinary course of post, the documents would have been delivered at the address of the debtor on Wednesday, 7 October l98l. In these circumstances a debtor, presumably having knowledge of s.309(l) of the Act, would conclude that the documents had been posted on the previous day. In all the circumstances of this case I am satisfied that the Debtor would have known clearly and unambiguously the period of time required for compliance with the bankruptcy notice.
For these reasons, the Court is satisfied that the Debtor had committed the act of bankruptcy alleged in the petition.
0
0
0