Re Osborn, R.E. v Ex Parte Philips Telecommunications & Data Systems Ltd

[1989] FCA 714

3UDGMENT No. ........ ........ .. - 7 1 + ~ 2 2. <a

IN THE FEDERAL COURT OF AUSTRALIA	1	I
GENERAL DIVISION	1	QLD P623 of 1989
BANKRUPTCY DISTRICT OF THE SOUTHERN	)
DISTRICT OF THE STATE OF QUEENSLAND	)

RE: RUSSELL EDWARD OSBORN

Debtor

EX PARTE:  PHILIPS TELECOMMUNICATIONS AND DATA
SYSTEMS LIMITED

Creditor

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J.
DATE OF ORDER:	8 NOVEMBER 1989
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

1.    the application for annulment be dismissed;

2.   the applicant pay the trustee's costs of and incidental to the application, to be taxed;

REGISTRY

3 . the costs of resistance to the application have the priority mentioned in s.l09(l)(a) of the Bankruptcy Act 1966; ,

additionala$276 for his air Pay Mr the trustee Mr Worrell

Beaveson

fair.

NOTE :  Settlement and entry of orders is Rule 124 of the Bankruptcy Rules.

2 3 NOV 1989

FEDERAL COURT OF
AUSTRALIA
PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA i

GENERAL DIVISION	)	QLD P623 of 1989
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND )

RE: RUSSELL EDWARD OSBORN

Debtor

EX PARTE:  PHILIPS TELECOMMUNICATIONS AND DATA
SYSTEMS LIMITED

Creditor

PINCUS J . 8 NOVEMBER 1989

EX TEMPORE REASONS FOR JUDGMENT

In this matter the bankrupt applies for an order of annulment under s.154 of the Bankruptcy Act 1966, on the basis that the sequestration order, to use the words of that provision, "ought not to have been made". The sequestration order was made in July on a petition served in May this year. The bankruptcy notice was dated in October 1988 and is said to have been served

in November 1988. The point taken is that, instead of being given

to the debtor by the process server personally, the bankruptcy notice was left by the process server with the debtor's wife and was later given to him, or picked up by him.

The first question is whether or not that is personal service. In Re Ditford; Ex parte Deputy Commissioner of Taxation (NSW) (1988) 83 ALR 265 (a decision of Gummow J.) the authorities to which his Honour refers suggest that there 'should not be held to be personal service in circumstances of this sort, and I am content to follow his Honour's view. The same authority also shows that there is a discretion whether or not to annul; the decision of Einfeld J. in Re Ram; Ex parte Continental Seagram Pty Ltd (unreported, 23 September 1988) is to similar effect.

The question which has been argued by Mr Lilley for the applicant and Mr Zillman for the trustee is whether it is appropriate to exercise the discretion in favour of the debtor or, on the other hand, in favour of the trustee. l Lilley argues that the decision of Einfeld J. in the case of Re Ram is distinguishable because the facts were different there, and I agree that they were. It appears to me that the circumstances in neither of the cases to which I have referred are closely comparable with the present.

Here the facts are fairly simple. The bankruptcy notice came in due time to the knowledge of the debtor who owed the money mentoned in the notice. He did not resist the making of a sequestration order; it was duly made in July, and he applied in	September to set the sequestration order aside. Mr Lilley argues	that he perhaps was entitled to think that the sequestration order
would not trouble him, in view of the fact that he was never served with the notice. The debtor does not say that, and it seems to me unlikely that an intelligent man like him would think SO.
There was some delay which is relevant, in that the notice was supposedly served in November 1988. The petition was
served in May, and it must have been evident from May 1909 that the creditor was serious about the matter. There was a delay of some months before any challenge was made to the service of the notice and the challenge has been successful. This delay, while not a very important factor, does go somewhat against the application; it is desirable that this sort of point (which is, in essence, a technical one) be taken promptly.
The second factor is that the debtor has frankly admitted that he could not and cannot pay the money. Mr Lilley says that, given time, the debtor would no doubt be able to. The third factor is that, in my opinion, on the evidence, Mr Osborn was insolvent at all relevant times. It is true that his financial position has not been exhaustively analysed before me, but, prima facie, he was insolvent. It seems to me that his inability to pay this debt is evidence pointing in that direction, and I do so find.
The principal point which seems to me to go against Mr Zillmanrs case is that, as appears from my finding, service of the notice was not properly effected, and the affidavit of service
made by Mr Litchfield was, one can say at the least, erroneous. The fact that it was erroneous is hardly surprising, because Mr
Litchfield takes the precaution of keeping absolutely no record of his activities. One would be pardoned for thinking that when he made the affidavit he was not even sure in what month he served the documents, because he started to write "October" in the affidavit and crossed it out and put "November". For some reason which is not explained, the affidavit of service of the bankruptcy notice was not filed until five months after the events which it is supposed to record.
None of these circumstances is satisfactory, and the Court must be tempted to mark its disapproval of such loose practices by exercising the discretion against the petitioner. On the other hand, these matters are not the petitioner's fault. Plr Litchfield, no doubt, is a recognised bailiff and he did not do his job properly, as I have found.
The other matter which I take into account in favour of the trustee is that, as I mentioned, the point isr essentially, a technical one. It did not make any practical difference to the debtor whether he was served personally or not, because he got the documents, it appears, in plenty of time. He was not resisting the bankruptcy proceeding anyway. It would seem to me a slightly odd course to say after this time, that even though he did not take any point about it he can do so now at his leisure and the petitioner must start all over again. Although I do not obtain a great deal of assistance from the actual results in the two decisions to which I have been referred, namely those of Gummow J. and Einfeld J., their Honoursr discussions of the relevant factors and their approach is of some assistance to me, and I have
determined to refuse the debtor's application.
The application for annulment will be dismissed with costs, and I will order that the costs of resistance to the application have the priority mentioned in s.l09(l)(a) of the Act.

I will order that the trustee, Mri Worrell, pay the

additional $276 to Mr Beaveson for his air fare.

: c-cl-tily thaL : 1 7 i ~ a : ~ d t ! . ~ preceding

.-- -7 2.;- a trus copy of l l le reasons for

lud;r~ent hcrern of HIS Honour

Mr. Justice Pincus kk &isocTate

Dated F /!fi'vmlu /4&9