Satchithanantham v Multilink Investments Pty Ltd
[2002] FMCA 84
•7 May 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SATCHITHANANTHAM v MULTILINK INVESTMENTS PTY LTD | [2002] FMCA 84 |
| BANKRUPTCY – Review of registrar’s decision to make a sequestration order – service of bankruptcy notice – no personal service – whether, and if so, when, the bankruptcy notice came to the attention of the debtor – whether the hearing of the creditor’s petition should be adjourned pending a special leave application to the High Court. Bankruptcy Act 1966 (Cth), s.41(1)(g) |
Ahern v Deputy Commissioner of Taxation (1987) 76 ALR 137
Bryant v Commonwealth Bank of Australia (1996) 134 ALR 460
Deputy Commissioner of Taxation v Benjamin [2000] FMCA 12
| Applicant: | THAMBIAPPAH SATCHITHANANTHAM |
| Respondent: | MULTILINK INVESTMENTS PTY LTD |
| File No: | SZ63 of 2001 |
| Delivered on: | 7 May 2002 |
| Delivered at: | Sydney |
| Hearing Date: | 7 May 2002 |
| Judgment of: | Driver FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Mr I Griscti |
| Solicitors for the Applicant: | Allens Arthur Robinson |
| Counsel for the Respondent: | Mr D Ash |
| Solicitors for the Respondent: | Bush Burke & Co |
ORDERS
The application for review of the registrar’s decision to make a sequestration order is dismissed.
The applicant is to pay the respondent’s costs of an incidental to the application, in accordance with the Bankruptcy Act 1966 (Cth), as petitioner’s costs in the bankruptcy.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ63 of 2001
| THAMBIAPPAH SATCHITHANANTHAM |
Applicant
And
| MULTILINK INVESTMENTS PTY LTD |
Respondent
REASONS FOR JUDGMENT
Mr Thambiappah Satchithanantham, who is referred to in this Court as Mr Satchi, has filed in the Court an application for review of a sequestration order made by Registrar Hedge on 22 February 2002. The matter originally came before me on 27 March 2002 and at that time I adjourned the application for hearing today, primarily to give time for Mr Satchi to obtain legal advice and representation in pursuance of an order I made for referral under part 12 of the Federal Magistrates Court Rules 2001 (Cth). Mr Satchi has been able to obtain legal representation and he was ably represented today by Mr Ivan Griscti.
The application as pursued before me today was based on three propositions. The first was that that bankruptcy notice which was purportedly served by the respondent creditor on Mr Satchi by fax and by ordinary post on 10 January 2001 was not properly served or alternatively, did not come to the attention of Mr Satchi prior to the filing of the creditor's petition on 20 February 2001. The second proposition advanced was that that creditor's petition was not served properly on Mr Satchi because it was served in the precincts of a court.
As matters transpired today I ruled that the second proposition was not a relevant ground of attack on the sequestration order because there was incontrovertible proof that the creditor's petition had been subsequently served properly on Mr Satchi more than five days before the original hearing of the creditor's petition and (of course) well before the re-hearing of the matter today. As a result of that ruling that issue was not pursued.
The third ground of attack on the creditor's petition was that the registrar had erred in not adjourning the hearing of the creditor's petition pending the outcome of an application for special leave filed by Mr Satchi on 23 April 2002 in the High Court against a judgment of the Court of Appeal of New South Wales confirming a decision of the District Court of New South Wales on which the bankruptcy notice was based. I note that the sequestration order was in fact made prior to the filing of that High Court notice of appeal but I also note that the issue of the pending High Court appeal was before the registrar.
Turning to the first matter, whether the bankruptcy notice was properly served by post or fax, I was referred by Mr Griscti to several relevant decisions. The first was one of my own in the matter of Deputy Commissioner of Taxation v Benjamin [2000] FMCA 12. In that case I noted that while personal service of the bankruptcy notice was the most common or indeed the usual form of service, it was not the only form of service and it was not a requirement of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) or regulations that a bankruptcy notice be served personally.
I noted in that case that s. 40(1)(g) of the Act refers to the bankruptcy notice being served on the debtor and that regulation 16.01(1) provides relevantly that unless the contrary intention appears, where a document is required or permitted by the Bankruptcy Act or the Bankruptcy Regulations to be given or sent to or served on a person, that may be effected by the means set out in that regulation.
The regulation in fact authorises a document to be sent by post or by facsimile transmission, both of which means were used in this case, although primary weight, it seems to me, is placed on the service by fax for reasons that will become apparent. Difficulties arise where more than one form of non personal service is employed, and the matter was argued before me on the basis that the facsimile service was being relied upon.
Sub-regulation 16.01(2) provides that a document given or sent to or served on a person in accordance with sub-regulation (1) is taken in the absence of proof to the contrary to have been received by or served on the person, in the case of electronic transmission, when the document is transmitted to the person. As I have noted in the course of argument, I interpret that sub-regulation as meaning that a document purportedly served in accordance with sub-regulation (1) is presumed, in the absence of proof to the contrary, to have been in fact served in accordance with the regulation. The same provision is made in relation to service by post in the ordinary course of post.
In my view there is a rebuttable presumption created by sub-regulation 16.01(2) that proper service by fax or post was effected. The fax was sent on 10 January 2001 and that is the prima facie date of service. The onus, therefore, is on the applicant, Mr Satchi, to satisfy me that, in fact, service was not properly effected in accordance with the regulation or that even if the document was transmitted, it did not come to his attention prior to the filing of the creditor's petition, so that no act of bankruptcy would have been committed.
The evidence advanced by Mr Satchi in an attempt to discharge that onus is equivocal. There is no dispute on the evidence that the bankruptcy notice sent by fax was successfully transmitted. The respondent creditor has on affidavit proved that there was a conversation between the server and Mr Satchi's wife in which Mrs Satchi accepted that the document had been received. She stated that Mr Satchi was not there at that time and she undertook to bring the document to Mr Satchi's attention.
The evidence presented by Mr Satchi, as I have said, is equivocal but it was designed to establish, as asserted by Mr Satchi, that he was overseas at the time of the purported service. That evidence was limited to movement stamps on his Australian passport. That evidence does provide proof that Mr Satchi was outside Australia on certain dates. Those dates include 3 January 2001, 6 January 2001, 19 January 2001, 2 February 2001, 18 February 2001 and 20 February 2001. There are other dates when Mr Satchi was apparently overseas in March 2001. The implication is sought to be created by those movement stamps that Mr Satchi was out of Australia from at least 3 January 2001 until at least the end of January 2001. Mr Satchi has conceded that he returned to Australia on 31 January 2001. Mr Satchi was obliged to make that concession, contradicting earlier evidence he had presented to the Court, when it became apparent that he had been in Australia at a time when he had previously asserted that he was in fact outside Australia.
While the evidence contained in Mr Satchi’s passport is of some assistance to him it does not establish to my satisfaction that Mr Satchi was outside Australia on 10 January 2001 when the bankruptcy notice was purportedly served. Mr Ash has submitted, I think powerfully, that it would have been or should have been a relatively straightforward matter for Mr Satchi to satisfy the Court that he was in fact overseas on 10 January. He could, for example, have produced hotel receipts; he could have sought or subpoenaed from the Immigration Department movement records to more clearly establish his movements; he could have produced other evidence relating to things done or places visited overseas on a particular day. Mr Satchi has apparently been unable to produce that more cogent evidence.
Mr Satchi asserts that the bankruptcy notice did not come to his attention until 14 February 2002 when the creditor's petition, together with the bankruptcy notice, were served on him. Mr Ash has submitted, I think correctly, that that assertion lacks credibility and that the bankruptcy notice must have come to Mr Satchi's attention some considerable time before then. Precisely when that was, we are left to speculate about. Mr Satchi seeks to explain the alleged failure of anyone in his residence to tell him about the bankruptcy notice on the basis of an alleged dispute between himself and other members of the household leading to people vacating the household, in March 2001. Whether such a dispute occurred or did not occur, I do not think it necessary for me to find. It would have been a simple matter for Mr Satchi to call his wife to dispute the conversation she was alleged to have had with the process server on 10 January 2001. He did not do that. She could have also given evidence concerning any reasons why she failed to bring the bankruptcy notice to Mr Satchi's attention at that time or around that time. Again, that evidence was not brought.
I draw an adverse inference from the failure to call any evidence from Mrs Satchi. I conclude that the evidence of Mrs Satchi would not have assisted Mr Satchi. I find that the bankruptcy notice was served by facsimile on 10 January 2001 and was in all probability brought to Mr Satchi's attention, at or around that time. Mr Satchi has failed to satisfy me, as he is bound to do to be successful in this element of his application, that the bankruptcy notice did not come to his attention until a time when the bankruptcy period would not have expired before the filing of the creditor's petition.
Turning to the final element of the application, which is the proposition that the hearing of the creditor's petition should be adjourned pending the outcome of the application to the High Court for special leave, Mr Griscti has correctly drawn my attention to the decision of the Federal Court in Ahern v Deputy Commissioner of Taxation (1987) 76 ALR 137 and the decision of the High Court in Bryant v Commonwealth Bank of Australia (1996) 134 ALR 460. Ahern is certainly authority for the proposition that a court exercising jurisdiction in bankruptcy should not proceed to sequestrate the estate of a debtor when an appeal is pending against the judgment relied on as the foundation of the bankruptcy proceedings, provided that the appeal is based on genuine and arguable grounds.
A few things may be said about that proposition. The first is, as pointed out to me by Mr Johnson for the trustee, that in fact the appeal here is a special leave application seeking leave to appeal against the judgment of the Court of Appeal of New South Wales. The bankruptcy notice is based on a decision of the District Court of New South Wales. Nevertheless, if special leave were granted and the appeal was ultimately successful it would at the very least go a considerable way to undermine the decision of the District Court supporting the bankruptcy notice.
The more substantial question, in my view, is whether the appeal is based on genuine and arguable grounds. Mr Ash has submitted to me that the appeal is neither genuine, nor arguable. In effect, I understand Mr Ash to be submitting to me that Mr Satchi is simply seeking to buy time and that the appeal is bound to fail.
The draft notice of appeal relied upon by Mr Satchi does not point to any principle of general application or any important, unresolved, issue of law that might excite the interest of the High Court. The notice really boils down to an appeal to the High Court to find that there was a serious miscarriage of justice in the instant case.
This is not a case of a judgment supporting a bankruptcy notice being made in the absence of the debtor. The debtor was an active party in the original proceedings in the District Court and a considered judgment was made after a fairly extensive hearing. The Court of Appeal was somewhat dismissive of the appeal to it and delivered only short reasons for that Court's judgment. I have nevertheless considered whether it would be prudent to await the outcome of the special leave application. That need for prudence arguably arises because one can never be sure what the outcome of an appeal or a special leave application may be.
The creditor’s petition has been extended in its operation until February 2003. I am told that the special leave application is most likely to be heard in October or November of this year. So, the opportunity arises to adjourn the petition while awaiting the outcome of the special leave application. On reflection, however, I do not think I should await the outcome of this special leave application. I cannot be certain that the special leave application will actually be heard in either October or November this year. Secondly, even if special leave were to be granted, I would be left to speculate about the ultimate outcome of the appeal. In addition, it seems to me that on its face the special leave application appears to have poor prospects of success, given that it is simply an appeal to the High Court to find an injustice where, objectively, there is very little to suggest that any injustice has occurred, either in the Court of Appeal or in the District Court.
I have also taken into account the judgment of Kirby J in Bryant v Commonwealth Bank of Australia. I do not think, in the circumstances of this case, that that decision adds significantly to the authority established by the Federal Court in Ahern. I simply note that unless some substance can be found in the appeal supporting the proposal for an adjournment the creditor is entitled to a sequestration order, other elements necessary to satisfy the Court as to the entitlement to the sequestration order being established. I do note for the record that, apart from the grounds advanced in this application, it was conceded that all elements necessary to support the creditor’s petition had been made out.
I find that whether or not the application for special leave is genuine it does not have reasonable prospects of success and is almost certainly doomed to fail. Accordingly, I should not adjourn the petition to await the outcome of the special leave application.
The orders I will make therefore are first, to dismiss the application for review of the Registrar's decision, and secondly, to order that the applicant pay the respondent's costs of and incidental to the application, which are to be treated as petitioning creditor's costs in the bankruptcy.
Lest there be any doubt, I mention that the rules of this Court have recently been amended to establish that in the absence of a specific order the Federal Court Rules apply in relation to costs, both in terms of assessment and payment.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 16 May 2002
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