Russells v Donoghue

[2019] FCCA 688

FEDERAL CIRCUIT COURT OF AUSTRALIA

RUSSELLS v DONOGHUE [2019] FCCA 688

Catchwords:
BANKRUPTCY – Application for substituted service – whether the Respondent has a dwelling or place of business – where the Respondent disputes residency – where the Respondent is appointer and beneficiary of Family Trust – where property is owned by Family Trust.

Legislation:

Bankruptcy Act 1966 (Cth), ss.309; 431(1)(b); 43(1)(b)(ii)

Applicant: RUSSELLS (A FIRM)

Respondent: GARRY JOHN DONOGHUE

File Number: BRG 1264 of 2018

Judgment of: Judge Vasta

Hearing date: 25 February 2019

Date of Last Submission: 25 February 2019

Delivered at: Brisbane

Delivered on: 25 February 2019

REPRESENTATION

Counsel for the Applicant: Mr P. Somers

Solicitors for the Applicant: Russells Law

Solicitors for the Respondent: Mr A. Evans

ORDERS

1. That personal service of the Creditor’s Petition be dispensed with.

2. That pursuant to section 309(2) of the Bankruptcy Act 1966 (Cth), leave is granted for service of an official copy of the Creditor’s Petition, and copies of the supporting affidavits, together with the consent of the registered trustee (the “Documents”) be served upon the Respondent by the following means:

   (a)By sending electronically scanned copies of the Documents by email to the Respondent at [email protected];

   (b)By sending by pre-paid ordinary post copies of the Documents to the Respondent’s last known:

   (i)residential address, within Australia, at 52-54 Langside Road Hamilton QLD 4007;

   (ii)business address, within Australia, at Cowley Partners, Level 6, 410 Queen Street, Brisbane, Queensland 4000;

   (iii)address, outside of Australia, at 13 King's Mews, London, WCIN 2HZ, United Kingdom; and

   (iv)address, outside of Australia, at 1750 W Camino Real, Boca Raton, Florida 33486-6422, United States of America.

   (c)Telephoning the Respondent's last known telephone number in the United Kingdom at 0011 44 7449 741 706 and advising him or alternatively leaving a message on a voicemail, that the Documents have been sent to him pursuant to paragraphs 2(a) and 2(b) above.

   (d)By hand delivering copies of the Documents to Ronan Fox Lawyers at Level 1, 145 Eagle Street, Brisbane, QLD 4000.

3. That service of the Documents in accordance with the above shall be deemed good and sufficient service of the Creditor’s Petition on the Respondent.

4. That in each instance referred to in paragraph 2(b) above, the Documents are to be in a sealed envelope addressed to Garry John Donoghue.

5. That the copies of the Documents and a copy of the order of this Court for substituted service to be served pursuant to paragraph 2 above are to be annexed to an affidavit proving that service.

6. That the costs of and incidental to this application be reserved.

7. That the Creditor’s Petition listed before Registrar Belcher at 9.30am on 28 February 2019 be vacated.

8. That the Creditor’s Petition be listed at the next available date before a Registrar no earlier than 28 March 2019.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRG 1264 of 2018

RUSSELLS (A FIRM)

Applicant

And

GARRY JOHN DONOGHUE

Respondent

REASONS FOR JUDGMENT

(Ex Tempore)

1. By order of Registrar Belcher on 18 April 2018, a notice of bankruptcy was served on the Respondent, Garry John Donoghue, by substituted way of substituted service.  The bankruptcy notice was not complied with and so, therefore, it is alleged that Garry John Donoghue committed an act of bankruptcy in June 2018. 

2. The Applicant now wishes to serve the creditor’s petition upon the Respondent.  The creditor has been unable to personally serve that creditor’s petition mainly because, as the evidence as shown to me, the Respondent is not in Australia and has not been since 2014.

3. This then is an application pursuant to s.309 of the Bankruptcy Act 1966 (Cth) (“the Act”) for me to allow substituted service. I am satisfied of those matters that are needed to be shown to my satisfaction in s.309.

4. However, when considering an application for substituted service of a creditor’s petition, I am required to reach a provisional or tentative conclusion that the petitioning creditor has an arguable case of satisfying s.43(1)(b) of the Act.

5. That part of the Act (most relevantly) provides that where a debtor, at the time when the act of bankruptcy was committed,:

   .... had a dwelling-house or place of business in Australia

   the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.

6. That means, that as at June 2018, I must come to a provisional or tentative conclusion that the debtor had a dwelling house or place of business in Australia. 

7. The evidence before me shows that the Respondent is an Australian citizen.  He left this country in July 2014 and has not come back to the country. 

8. The Respondent is also involved in a dispute about the payment of taxes with the Australian Taxation Office.  He has been given departure authorisation certificates on a number of occasions by the tax office that has allowed him to leave Australia on condition that he return.  The last known departure authorisation certificate was given on condition that the Respondent return to Australia by February 2017.  Obviously he has not done so.

9. The Respondent renewed his passport in 2015, on the material given to me, and did so for a period of 10 years, meaning that he is travelling on an Australian passport.  He is still an Australian citizen.  The submission was made to me that the Respondent was not a resident of this country, and had not been so for tax purposes.  Even though this is not part of the material, I have accepted that submission.

10. The outgoing and incoming passenger cards of the Respondent for a period of some two years before 2014, all have him describing himself as a person who is someone who is visiting Australia rather than a person residing in Australia who is either returning or leave. 

11. There is a residence at 52-54 Langside Road, Hamilton, in the State of Queensland.  That house is owned by the Donoghue Family Trust, of which the Respondent is a beneficiary and appointer under the trust deed.  There is a mortgage still over that property and the Respondent is responsible for maintaining the payment of that mortgage.  The daughter of the Respondent, Ms Alexandria Geokas has provided an affidavit that details that at paragraph 7:

    On the occasions my father would stay at the Property he would stay in the guest area which a sitting room, a bedroom and a bathroom.

12. She says at paragraph 8:

    There is a lock on the entry to the guest area but I have never known it to be locked and the same key that opens all internal doors in the house opens that lock.

13. She describes, as far as she is concerned, that the occasions that her father was in Australia, from 2012 to 2014, all had to do with litigation he was undertaking. 

14. The then solicitor for the Respondent, a Mr Ashley Tiplady, has given an affidavit which details that there were only two people who resided at the property; that being the estranged wife of the Respondent and the daughter of the Respondent. 

15. He also talks about a lockable room comprising of a study, a bed and the personal belongings of the Respondent and that the Respondent told him and showed him keys that he kept so that he could access the lockable room for his personal and business interests; that the Respondent also had access to the garage at the property where he stored other personal belongings; that there was a lockable wine cellar which had a wine collection which belonged to the Respondent, and there were other items of furniture, chattels and other personal effects; and that the Respondent said that he treated this as his home in Australia.

16. The incoming and outgoing passenger cards do also, at all times, speak of the residence whilst in Australia as being the Hamilton address.  The solicitor also said that, on his observations, the former partner of the Respondent and her child, who live in Sydney, had travelled from Sydney to stay with the Respondent in those rooms in the Hamilton home from time to time. 

17. The question for me is whether or not those facts would satisfy me that the Respondent had a dwelling house or place of business in Australia.  In a peculiar turn of events, the solicitor, Mr Evans, has made a conditional appearance here before me, and has provided three affidavits which I have looked at but which he will need to file properly in the proceedings. 

18. He has pointed out the non-disclosure of a relevant fact, and that is that the solicitor, Mr Tiplady, had been in a relationship with the daughter of the Respondent; that is the same daughter who has given me an affidavit.

19. The dates in all of these do not add up properly, in that the daughter says that her relationship with the solicitor occurred from 2010 to 2012.  The solicitor was a partner at another firm from 2007 to 2013.  In 2013, he became a partner of the firm that was representing the Respondent and so, therefore, it would seem that the solicitor became the solicitor for the Respondent at least the year after the relationship with the daughter had ended.

20. Whilst the daughter says that she very rarely saw the solicitor at their residence after the relationship ended, this cannot now be said to be determinative of any matters.  But, in any event, it seems to me when one looks at what it is that is described by both the solicitor and by the daughter, that there isn’t any true divergence in the description of what would occur when the Respondent was there at the property.

21. It has been submitted to me, by Mr Evans, that the Respondent cannot be said to have a dwelling house in Australia.  The evidence, he says, shows that the Respondent has not been in Australia for over four years, and that there is no evidence that he would ever seek to return to Australia. He submits that the situation is such that the Court could not be satisfied that the Applicants had met their evidentiary requirements before I could be satisfied that substituted service could be made.

22. I have pondered all of the circumstances a great deal, but these are the matters that I find to be quite relevant.  Notwithstanding that the Respondent left in 2014, there have been a number of departure authorisation certificates issued since that time. 

23. A departure authorisation certificate was dated 11 July 2014, and the Respondent was required to return to Australia by 20 December 2014.  Obviously he did not do that.  However, another departure authorisation certificate dated 16 December 2014 was issued which required him to return to Australia by 6 March 2015. An amendment to that departure authorisation certificate was made, and the Respondent was required to return to Australia by 6 September 2015.  Another amendment was made 27 August 2015 which required the Respondent to return by 6 March 2016.  There was another amendment on 29 February 2016 that required the Respondent to return to Australia by 6 September 2016, and then another amendment dated 6 September 2016 requiring the Respondent to return by 11 February 2017.

24. It seems that there is no other departure authorisation certificate that the Applicant knows of, and in all of the material given to me, again stressing there is no obligation on the Respondent to give me anything, there has been no evidence of any other departure authorisation certificates.  So either there have been other certificates, of which the Applicant is not aware, or the Respondent has, in effect, fled the jurisdiction.

25. The other matters that I take into account are that he is still an Australian citizen and that he has not sought to change his citizenship or to, in any way, travel on the good graces of any other country where he is residing.  Whilst it may be that he says that he is an Australian citizen who is living overseas and is not going to return, or at least that is the inference that he is asking, no one is exactly saying where it is that he is living and what his immigration status is in that particular country.

26. He is, according to the departure authorisation certificates, compelled to return to Australia.  He does have a house owned by a trust for which he is a beneficiary.  He is paying the mortgage payments on that property.  The room that he uses, whilst may be described as a guest room by the daughter, has also been described as a room that has the personal effects of the Respondent in it, and that address is the address that he has used when he has come to Australia.

27. It seems to me, then, on all of that evidence, that I can come to a provisional or tentative conclusion that the Respondent does have a dwelling house in Australia, notwithstanding the fact that he has not resided in Australia for the last four years. 

28. Having reached that provisional or tentative conclusion, that the petitioning creditor has an arguable case that s.43(1)(b)(ii) can be satisfied, I then have a sufficient nexus to look at s.309 in its entirety.

29. There is no argument that s.309 has been met once it has been established that there is a provisional case on the s.43 question.

30. That being the case, I will make the order that has been given to me in draft form.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Judge Vasta

Date:  13 May 2019