Tesselaar Flowers Pty Ltd v Velthuis - [2007] FMCA 1932

FEDERAL MAGISTRATES COURT OF AUSTRALIA

TESSELAAR FLOWERS PTY LTD v VELTHUIS

[2007] FMCA 1932

BANKRUPTCY – Annulment – contention that the order ought not to have been made because the applicant was not served with either of the Bankruptcy Notice of the Creditor’s Petition.

Bankruptcy Act 1966

Applicant:

TESSELAAR FLOWERS PTY LTD

Respondent:

MARGIT CHRISTINE VELTHUIS

File number:

BRG 352 of 2007

Judgment of:

Burnett FM

Hearing date:

23 October 2007

Date of last submission:

23 October 2007

Delivered at:

Brisbane

Delivered on:

21 November 2007

REPRESENTATION

Counsel for the Applicant:

Mr K.F. Boulton

Solicitors for the Applicant:

Ellison Moschella & Co Solicitors

Counsel for the Respondent:

Mr D. Quayle

Solicitors for the Respondent:

Bennett & Philip Solicitors

ORDERS

That the application be dismissed.
That the Applicant pay the Respondent’s costs of and incidental to the application to be assessed such costs to be taxed and paid from the Bankrupt estate with the priority afforded costs pursuant to section 109(1)(a) of the Bankruptcy Act1966.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BRG 352 of 2007

TESSELAAR FLOWERS PTY LTD

Applicant

And

MARGIT CHRISTINE VELTHUIS

Respondent

REASONS FOR JUDGMENT

Introduction

The Applicant, Margit Christine Velthuis (Ms Velthuis) makes application under section 153B of the Bankruptcy Act for an annulment of a sequestration order made against her on 29 November 2006. She contends that the order ought not to have been made because she was not served with either of the Bankruptcy Notice or the Creditor’s Petition. The Trustee denies that assertion and contends that Ms Velthuis was duly served with both process and accordingly her application should be dismissed.

Background facts

An order sequestrating Ms Velthuis’ estate was made on 29 November 2006 by Registrar Ramsey. The order was made in default of her appearance. The material before the Registrar included affidavits of Wayne Colin Heydt deposing to service of both the Bankruptcy Notice and the Creditor’s Petition. Those affidavits would clearly have satisfied the Registrar that there had been service of both the Bankruptcy Notice and the Creditor’s Petition. The balance of the material before the Registrar satisfied the other matters required under section 52(1) of the Bankruptcy Act and accordingly he made the sequestration order.
Following the making of the sequestration order Ms Velthuis’ instructed solicitors to act on her behalf. Their initial response was to enter an appearance in the sequestration proceedings which notice was given and filed on 15 December 2006. They subsequently filed an application pursuant to s.153N Bankruptcy Act for an annulment. The grounds upon which the annulment is sought are that the order was improperly made because there had been no service of either the Bankruptcy Notice or the Creditor’s Petition. In her evidence Ms Velthuis denies that she was served with either a bankruptcy notice at her residence on 2 October or a creditor’s petition at her business on 8 November.
The question is ultimately one of fact. If I accept there has not been proper service then the application should succeed. If I accept service was effected in the manner deposed to by Mr Heydt the application must fail.

Service on 2 October

In support of her evidence of service not being effected on 2 October Ms Velthuis called a number of witnesses. Ms Doyle is employed by Ms Velthuis as a junior florist. She swore an affidavit filed 9 May purportedly supporting her evidence that on 2 October Ms Velthuis was with her at the shop.
Ms Doyle’s recollection of these events was so vague as to be meaningless. Ms Doyle readily acknowledged she had no express recollection of these matters given that the affidavit was sworn some six months after the event and she had no particular reason to recall the events in question. In any event on its face the affidavit is not useful. The evidence of Mr Johnson is that service was effected at about 3.00pm on 2 October. Ms Doyle’s affidavit is equivocal so far as events at 3.00pm on that day are concerned. She does not depose to anything beyond 1.30pm. Ms Doyle’s evidence is of no assistance on this point at all.
Rebecca Mallard was a florist employed by the Applicant. In her affidavit she swore that on 2 October 2006 she worked at the shop between 8.30am and 5.30pm taking a break between 11.30am and 12.00pm. She said that she was with the Applicant at the shop during the afternoon between 12.30pm and 4.30pm. She said she saw the Applicant leave the shop with some monies and cheques at 3.00pm and return at about 3.20pm. She said that no time did she see anyone serve the Applicant with any papers.
Some observations need to be made about her affidavit. First her affidavit was prepared by the Applicant’s solicitor prior to him attending at the shop to have the affidavit sworn up. The affidavit is very basic in its terms. In many respects the particulars that might have been regarded as important in the context of this proceeding, such as time, were left blank for completion when the Applicant’s solicitor interviewed Ms Mallard. The circumstances of its execution suggest there was little care taken in either its preparation or completion.
For instance the affidavit is identified as having been sworn before Ross Moschella, solicitor. Ms Mallard however has no recollection of the affidavit being sworn before him saying only that she recalled receiving the affidavit at work and signing it there. She was clearly mistaken in this matter. Given that the swearing of an affidavit for a person in the position of Ms Mallard would have been a significant event her failure to recall such an event gave me no confidence that her memory of less significant events was reliable.
One such matter were the events of 2 October. When she was cross examined about events on 2 October it was suggested to her that she did not see the Applicant go to the bank. In response to that question she said that she did and that she could remember that day. The day itself was not exceptional aside from its relevance to these proceedings. Given Ms Mallard’s inability to recall the circumstances surrounding an unusual and significant event such as signing an affidavit I am not confident that she has any basis to recall specifically an event that would have happened in the ordinary course. I do not accept her evidence on that point.
Ms Mallard also gave evidence that she was the person who made the entry in the diary of 2 October. The diary entry is significant because it was relied upon by the Applicant as a note refreshing her memory in respect of an event which is said to have occurred at 3.00pm on that day at the shop. Given this was at about the same time as the process server says he was serving the Applicant with process at her residence it is clear this matter is of some importance.
The diary entry contains an asterisk at the 3.00pm mark. The written words note “Mardi see Aaron – Com Florist Supplies at 3.00pm”. Broadly the evidence was that a commercial florist supplier Aaron Johnson attended at the shop on 2 October at about 3.00pm and that the Applicant met with him at that time. It was said that the entry was inserted some time prior to 2 October. Ms Mallard said probably on 1 October. The curious matter about the entry is that it is written vertically along the page rather than horizontally. Significantly the page has attached to it the cash register tape for the day’s takings. That cash register tape is sticky taped to the page in such a way that it would not be possible to write horizontally across the page. Given the positioning of the cash register tape its situation suggests that the notation was made after the placing of the tape. An examination of the cash register tape shows that it was printed at 17:22 on 2 October. Accepting it was printed at that time it could not have been affixed to the page before about 5.22pm on 2 October. It follows that the notation in its present form would have been made after that time. That time of course post dates the time of service. Given that there is an issue in respect of service the entry of the diary note, if indeed it was a false entry, was clearly made with an intention to support allegations of the Applicant’s false denials.
Alternatively the explanation is entirely innocent. In other words it is purely serendipitous that the note appears in the position that it does and the manner that it does.
Ms Mallard’s evidence on the matter was not particularly persuasive. Ultimately her position was that she did not remember writing it. That was particularly puzzling in light of her earlier evidence that she denied writing it after 2 October. If she did not remember writing it, it is difficult to understand how she could assert a position as to when it was written.
Other matters about the evidence of Ms Mallard also concern me. For instance she deposed that Mr Johnson attended at the shop at about 3.00pm on 2 October. She said that on that day Mr Johnson arrived while the Applicant was doing the banking. She said she spoken to him and that he waited for the Applicant to return. In particular she said that she recalled the Applicant arrive at the shop at about 12.30pm and leaving at about 4.30pm.
I simply do not accept her recollection of these matters as being reliable. Earlier I have identified instances where I regard her memory as being deficient and unreliable and in the absence of objective supporting material I will not act on the evidence of Ms Mallard.
Mr Johnson is a supplier of florist supplies. He gave evidence that he recalls attending Ms Velthuis’ florist on 2 October 2007. His memory is assisted by reference to his diary which records his visits for 2 October. His diary notes were made after the event. He stated that at the end of each day he noted in his diary the visits he had conducted that day. Otherwise he visits his various florists on a regular monthly cycle which he operates.
Relevantly for 2 October his diary indicates that he visited 3 florists in the morning and 3 in the afternoon. Between the hours of about 12.00pm and 1.30pm he visited a florist at Aspley. The florists he visited in the morning (including Ms Velthuis’ florist shops) were geographically located in the Beenleigh/ Loganholme area. The florists he visited in the afternoon were geographically located in the Inala/Richlands area. He does not have any specific recall of his visit to Hyperflowers or of him seeing Ms Velthuis. However he did say that ordinarily he would see Ms Velthuis and that he would generally call before his arrival in order to ensure that she was there to greet him. He said he did not believe he would have visited her that afternoon given its location relative to the three florist shops noted for the afternoon visit.
I am satisfied that in accordance with his usual practice he did indeed meet with Ms Velthuis on 2 October. However I do not accept that he met with Ms Velthuis at or about 3 o’clock in the afternoon as contended by Ms Velthuis. In fact I accept he called upon the applicant at Hyper Florists at about 10:00am to 11:00am in the morning. He was clearly not at the florist at or about the time that Ms Velthuis says that he was.
Ms Velthuis’ attention was particularly drawn to a number of paragraphs in her affidavit. Mrs Velthuis’ affidavit of 30 August 2007 in many respects reflected an earlier draft of her affidavit dated 13 June 2007. The affidavit of 13 June 2007 was not read in the application nor relied upon by Mrs Velthuis. However it had been prepared in anticipation of the application proceeding to trial on or about that earlier date. For reasons which were unrelated to the hearing of the application the matter did not proceed on that earlier date.
Significantly however the affidavits varied in a number of particulars. Paragraph 27 of the June affidavit attached a copy of Ms Velthuis’ diary. She noted that it was a “copy extract from my diary of 2 October 2006 which shows my record of that appointment”. The clear impression to be conveyed by reference to the exhibit was that Ms Velthuis had a meeting organised with her supplier for 3.30pm that afternoon.
The later affidavit at paragraph 28 however varied that matter. It too purported to exhibit “an original of a copy extract of my diary of 2 October 2006 which shows my record of appointment”. However it proceeded then to explain that the document was a photocopy taken from her diary which her solicitor had asked her to fax to him. She noted that just before faxing the document to her solicitor she had noticed the time of the meeting noted in the diary was not consistent with the time which she actually recalled the meeting taking place. She said that accordingly she changed the note from 3.00 to 3.30pm thereby bringing the record in line with her recollection.
I found her answers to questions under cross examination on this point quite unconvincing. While I accept that she may have sought to explain an apparent discrepancy between an event and the record of it, the manner in which she went about correcting the alleged discrepancy was in my assessment with a view to mislead. As Mr Quayle put to her in cross examination the simplest way this process could have been undertaken could have been by merely making a statement to that effect rather than undertaking the somewhat elaborate process of altering a document in such a way that in the absence of close investigation, in particular by comparison between the photocopied document and the original, the truth would not have been readily apparent.
The second matter raised in cross examination concerned a variation between the June affidavit and the later affidavit concerning deposits made at the bank. In her first affidavit filed 9 May 2007 Ms Velthuis deposed at paragraph 16 to attending the bank to deposit funds at the Commonwealth Bank branch at Logan Hyperdome. She annexed a copy of her bank statement at annexure MV1 noting that it was a “copy statement showing the deposits being made at the Commonwealth Bank.”
In her subsequent affidavit that matter was explained. Whilst two deposits are apparent on the face of the bank statement one was in fact not a deposit made on 2 October but rather an account entry following a deposit physically made by her at a post office over the weekend preceding 2 October. In fact the only deposit made was a deposit for a sum noted at $502.00. It is Ms Velthuis’ evidence that that deposit was made at about 3.00pm on 2 October. There is no objective material supporting this assertion. In the context of the applicant seeking to demonstrate that she was not at the place where she is alleged to have been at the time the process was served upon her I do not accept inaccuracies in relation to matters advanced by way of alibi as satisfactory. Her evidence on this matter did not impress me.
The third matter concerns the manner of the diary entry in the diary itself. The evidence concerning the diary entry is suspicious. The manner in which the entry in the diary is made would suggest it was made after the pasting into the diary of the day’s tally sheet takings. It can be seen from an examination of the exhibit that a ticker-tape sheet has been pasted to the diary on the relevant date (as appears to have occurred on every other trading date). It is pasted down the page. Other diary entires on the diary sheet on that date clearly suggest they were made in the ordinary course. However the relevant entry is written along the vertical plane of the diary sheet rather than in the usual horizontal plane. I am not satisfied that the diary entry was indeed a diary entry made prior to 2 October in anticipation of a visit by Mr Johnson.
On the balance of probabilities I am not satisfied that the diary entry was in fact a genuine entry and accurately reflects a prearranged meeting between Ms Velthuis and Mr Johnson for 3.00pm on 2 October. While that does not dispose of the issue of whether or not a meeting with Mr Johnson occurred I am certainly of the view that such a meeting did not occur at 3.00pm. As I have earlier determined the evidence of Mr Johnson is such a meeting occurred in the morning.
Another inaccuracy identified in Ms Velthuis’ affidavit concerns her description of her involvement in the collection of flowers from the markets on 2 October. In her affidavit filed 30 August Ms Velthuis sought to convey the impression by reference to paragraphs 20 and 21 that on 2 October she attended the markets and was delayed until 12 midday because of the late arrival of the supply truck. She then sent some flowers purchased that day, to the shop by courier and the balance in a station wagon she had.
Her later affidavit filed in August however was subtlety amended from paragraph 21 of her June affidavit to provide that she “currently” had a station wagon and any flowers which were not taken by courier she would have taken herself to the shop. The introduction of the word “currently” sought to correct the impression which was misleadingly conveyed in the June affidavit. In my view the omission was more than mere clumsiness in drafting and I accept the respondent’s submissions that the August affidavit sought to clarify what was clearly a factual inaccuracy which should have been identified by Ms Velthuis at the time of swearing her first affidavit.
Another troubling passage of evidence from Ms Velthuis concerned the arrangement she says that she had reached with the creditor. In her evidence she swore that she did not receive a copy of the process giving rise to the original judgment in the Magistrates Court. She said the first knowledge that she had of any difficulty was on or about 22 August 2006 when she was informed of the judgment. She says she contacted the creditor and arranged to pay the debt by instalments by $500.00 per week. Her evidence concerning this matter was extremely vague. She was unable to provide particulars of the express terms of the agreement, with whom it was struck and indeed their response to it. Nothing was recorded in writing and despite the fact that two payments of $500.00 each were made she then summarily ceased making payments. I do not accept that there was ever any compromise reached between her and the creditor although I accept that by reason of those matters she clearly had notice that the creditor had a judgment against her. In that context I found her evidence that she was surprised by the subsequent appointment of a trustee to be completely disingenuous.
In addition to the evidence of Ms Doyle, Ms Mallard and Mr Johnson concerning her whereabouts on 2 October at 3.00pm, Ms Velthuis also relies upon the evidence of her mother-in-law. In her affidavit Ms Velthuis’ mother-in-law, Hendrica Velthuis, says that she was at the applicant’s home address for most of the day including 3.00pm on 2 October. She said that on that day the applicant was not at the house and in particular not at the house at around 3.00pm but that during the day a man had come to the house asking for her but that she told him that she was not there. She said that he did not leave any details or state why he was there nor did he leave any papers or documents.
Under cross examination Mrs Velthuis referred to at least two people coming in search of the applicant. She was unable to provide any specific recollection about dates on which those attendances occurred. She was unable to provide any detail as to what information she provided those persons although she said that she may have provided them with details of Ms Velthuis’ business address. She too noted that it had been many months between the date of the material events and the time when she was called upon to prepare an affidavit and that in that regard her memory on these matters was not entirely reliable.

I am satisfied that Mrs Velthuis has no clear recollection of these events either. I accept that she may have spoken on at least one or two occasions with process servers but beyond that she has no clear recollection of any of those matters and is unable to assist the court. I do not accept that she has a clear recollection of events on 2 October or a recollection that she was at the house for most of that day or that the applicant was not in the house for most of that day.
Mr Heydt is a commercial agent. He has been engaged in that business for 30 years. Although he concedes that between the time of the service of the bankruptcy notice and creditors petition in this application and the date of his evidence he has possibly served up to 2,000 items of process he does have a recall of service of the process in this instance. To commence with it is clear that he had identified the correct address for the service of process. His field notes indicated when he ultimately was successful in raising someone at the noted address that person informed him that the applicant was not home but at her place of business being Hyperflowers. It seems unlikely that in that event he had selected the wrong house for the purposes of effecting later service.
In his affidavit of 1 November 2006 he swore that on 2 October 2006 at about 3.00pm he served Ms Velthuis with a copy of the bankruptcy notice at her residence. His field notes indicate that that service was affected at her residence. By reason of my earlier findings I am satisfied that Ms Velthuis could have been home to receive service at the time that Mr Heydt says that he effected service at her residence. The only real issue for consideration then is whether or not he indeed served the correct person and not some other person for instance masquerading as the applicant.
In his affidavit filed in November 2007 he identified Ms Velthuis as being a person approximately of medium build about 5’3” tall and had fair shoulder length hair. Ms Velthuis was present in court for the last two days of the proceedings. She was a person of medium build with shoulder length hair. Her hair was darkened although clearly it had been fairer prior to the application of hair darkener which the applicant herself conceded she uses. In her evidence she says she was 5’7”. While there may be a four inch differential between Mr Heydt’s estimate of her height and her actual height the matter in my view requires consideration from the perspective of Mr Heydt who is a gentleman of approximately 5’10” in height.
Although Mr Boulton attacked the reliability of Mr Heydt’s memory of these matters by reference to the length of time that had elapsed between the effecting of service and the swearing of his affidavit and also because of the number of processes that have been served by him I do not accept that criticism. Mr Heydt impressed me as a witness who had a clear recollection of these matters despite the time that had passed. He was quite clear in his statement of evidence that the applicant readily identified herself when he approached her to effect service. Further despite he knowing that he was required at court to give evidence concerning her identification for service, he stated had no difficulty identifying the applicant outside the precincts of the court before he was called to court to give his evidence where he affirmed her identity she being present in court. In his affidavit filed in the proceedings he confirmed that the person who he served on the second occasion at the shop was the same person he served on the first occasion at the house.
In the premises I am satisfied that on the balance of probabilities that the applicant was served with both the bankruptcy notice in the manner sworn to by Mr Heydt.

Service on 8 November

Ms Velthuis also denies being served with a creditor’s petition on 8 November at about 2.30pm at her shop. Ms Doyle was also called to give evidence in respect of this matter. As I have earlier indicated I do not accept Ms Doyle as having any accurate recollection of these events and accordingly her evidence is of no assistance on this matter. The equivocal nature of her evidence is further illustrated by reference to paragraph 6 of her affidavit which only deals with the prospect of the applicant being present at the shop until 1.30pm. The material time in question for the purposes the issue in this instance is 2.30pm. Ms Mallard says that on 8 November 2006 she worked at the shop between 8.30am and 5.30pm again with a break between 11.30am and 12.00pm. She said that the Applicant was not at the shop at any time whilst she was there on 8 November 2006. I do not accept Ms Mallard as a reliable witness in respect of this matter for reasons I have detailed earlier.
Ms Velthuis said she was at home at the time service is said to have been effected. In support of her evidence she says that at that time she was doing bookwork. Computer records demonstrate that a bank transfer for wages occurred at about the time she is said to have been served.
There was also evidence that Ms Velthuis had a computer with online access at the shop. Clearly the subject transfers could have been executed from the shop. I have earlier expressed the view that I do not accept Ms Velthuis as an honest witness. I do not accept her evidence in preference to that of Mr Heydt.
The service of the Creditor’s petition was the second document served by Mr Heydt on Ms Velthuis in a short space of time. I have no doubt that he had correctly identified her on the first occasion and knew her when he served with the Bankruptcy Notice on the second occasion.

Conclusion

In conclusion I do not accept the evidence of Ms Velthuis as a reliable and honest witness. Nor do I accept as reliable the evidence of Ms Mallard. Ms Doyle’s evidence was of no assistance and the evidence of Mr Johnson demonstrates in my view that he was not at the premises at the time alleged on 2 October. I do not accept the evidence of Ms Velthuis that she was at her residence on the afternoon of 8 October because it was from there that she undertook the banking transactions recorded. There was a computer link to the internet present at her shop and it is not inconceivable that those transactions could have been effected from this computer. Finally I accept Wayne Colin Heydt as a witness of truth and reliability. His evidence was not only plausible but internally consistent. There was no question in his mind as to the identity of Ms Velthuis. Additionally there was no scope for mistake as to the identity of the person whom he served because he was clearly at the correct address on the occasion of his first attendance when he was informed by the person then present that Ms Velthuis was on that occasion at her shop.
I am more than satisfied on the balance of probabilities that Ms Velthuis was served with both the Bankruptcy Notice and the Creditor’s Petition in the manner deposed to in the affidavits of Mr Heydt. The sequestration order was properly made and any application for annulment must fail.

Order

Application dismissed.
That the Applicant pay the Respondent’s costs of and incidental to the application to be assessed such costs to be taxed and paid from the Bankrupt estate with the priority afforded costs pursuant to section 109(1)(a) of the Bankruptcy Act1966.

I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Burnett FM

Associate: Beverley Schmidt

Date: 21 November 2007