The Owners Strata Plan No 54026 v Foong
[2013] FCCA 1234
•30 August 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| THE OWNERS - STRATA PLAN NO 54026 v FOONG | [2013] FCCA 1234 |
| Catchwords: BANKRUPTCY – Creditor’s Petition – notice stating grounds of opposition to petition filed – no sustainable grounds raised to support the setting aside of the Creditor’s Petition – notice dismissed. |
| Legislation: Acts Interpretation Act 1901 (Cth), s.36(2) Bankruptcy Act 1966 (Cth), ss.40(1)(g), 44(1)(a), 52(1)(b), 309(2) Civil Procedure Act 2005 (NSW), s.101 |
| Deputy Commission of Taxation v Catanese (1999) 42 ATR 247 Emerson & Anor v Wreckair Pty Ltd (1992) 33 FCR 581 Farrington v Deputy Commissioner of Taxation (2002) 50 ATR 429 Ginnane v Diners Club Ltd (1993) 42 FCR 90 King v Henderson (1896) 7 BC (NSW) 35 O’Farrell v Palicave Pty Ltd (2009) 176 FCR 134 Re Child; Ex parte Child [1892] 2 QB 77 Re Frank; Ex parte Piliszky (1987) 16 FCR 396 Re Miller; Ex parte Furniture and Fine Arts Depositories Ltd [1912] 3 KB 1 Re Raymond (1892) 66 LT 400 at 402 Re Sacker; Ex parte Sacker (1888) 22 QBD 179 Richmond and Bay Bon Investments Pty Ltd [2007] FCA 1060 Sogelease Australia Ltd v Griffin (2003) 128 FCR 399 Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337 |
| Applicant: | THE OWNERS - STRATA PLAN NO 54026 |
| Respondent: | CHAO JOI FOONG |
| File Number: | SYG 679 of 2013 |
| Judgment of: | Judge Lloyd-Jones |
| Hearing date: | 27 May 2013 |
| Delivered at: | Sydney |
| Delivered on: | 30 August 2013 |
REPRESENTATION
| Solicitors for the Applicant: | Mr Holt of Grace Lawyers |
| The Respondent: | The Respondent appeared in person with the assistance of his mother Yena Foong. |
ORDERS
The Notice Stating Grounds of Opposition to the Creditor’s Petition filed by the respondent debtor on 11 April 2013 be dismissed.
The Creditor’s Petition be set down for hearing before a registrar of this Court at 10.00am on Monday 2 September 2013 in Court 6D, John Maddison Tower, 88 Goulburn Street, Sydney.
The Respondent Debtor pay the Applicant Creditor’s costs of and incidental to the Notice Stating Grounds of Opposition to the Creditor’s Petition filed on 11 April 2013.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 679 of 2013
| THE OWNERS - STRATA PLAN NO 54026 |
Applicant
And
| CHAO JOI FOONG |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant creditor in these proceedings, The Owners – Strata Plan No 54026 (the “Creditor”), filed a creditor’s petition in this Court on 4 April 2013 (the “Petition”). The Petition is based on the failure of the respondent debtor, Chao Joi Foong (“Mr Foong”), to comply within 21 days with the requirements of a bankruptcy notice served on him on 15 December 2012 (the “Bankruptcy Notice”). It should be noted that the 21st day after service of the Bankruptcy Notice was 5 January 2013, however, this day fell on a Saturday and, accordingly, the act of bankruptcy was deemed to have been committed by Mr Foong on Monday 7 January 2013 pursuant to s.36(2) of the Acts Interpretation Act 1901 (Cth).
The Petition first came before Registrar Ng on 15 May where Mr Foong’s mother, Yena Foong (“Ms Foong”), sought leave to appear on his behalf. On that occasion Registrar Ng noted that the Petition had not yet been served on Mr Foong. Notwithstanding, a notice of opposition to the Petition had been filed on 11 April 2013 (the “Notice of Opposition”) by Mr Foong with a supporting affidavit and notice of appearance. Registrar Ng made orders for substituted service of the Petition on Ms Foong in Court on that occasion and the Petition was adjourned to 27 May 2013 for the hearing of the Notice of Opposition. On 27 May 2013 Registrar Segal referred the Notice of Opposition to this Court to be heard.
I note that for the purposes of these reasons, Ms Foong has been acting on behalf of her son, Mr Foong, in relation to all aspects of these proceedings, the proceedings in the Local Court of NSW and in correspondence and dealings with the Creditor and its authorised representatives. Accordingly, any reference to Ms Foong in these reasons is made solely in her capacity as her son’s representative and should be treated as such.
Background
The Creditor seeks in the Petition the following amounts from Mr Foong, which it claims are owed to it by him:
a)$5,309.34 being the balance for unpaid strata levies, recovery expenses and interest for which default judgment was obtained in the Local Court of New South Wales in proceedings number 2011/00297462 (the “Local Court Proceedings”) on 25 June 2012 for the amount of $9,809.34 (it should be noted that a total of $4,500.00 in payments were made to the Creditor by Mr Foong between September 2012 and April 2013 which is reflected in the total amount sought);
b)$599.44 for post-judgment interest for the period 26 June 2012 to 3 April 2013 on the Judgment referred to above in [3](a) pursuant to s.101 of the Civil Procedure Act 2005 (NSW);
c)$10,879.39 for unpaid strata levies and interest pursuant to ss.76, 78, 79 and 80 of the Strata Schemes Management Act 1996 (NSW) for the periods not claimed in the Statement of Claim issued in Local Court Proceedings and up to but before Mr Foong’s act of bankruptcy on 7 January 2013; and
d)$2,455.50 for expenses incurred in the recovery of unpaid levy contributions pursuant to s.80 of the Strata Schemes Management Act 1996 (NSW) for the period not claimed in the Statement of Claim issued in the Local Court Proceedings on 15 September 2011 and up to but before Mr Foong’s act of bankruptcy on 7 January 2013.
The total sum payable by the respondent debtor to the applicant creditor is $19,243.67. It should be noted that it is not in dispute between the parties that additional payments, totalling approximately $2,336.14 have been made by Mr Foong to the Creditor since the filing in this Court of the Petition.
The Creditor does not hold security over the property of the Mr Foong.
At the time when the act of bankruptcy was committed, Mr Foong:
a)Was ordinarily resident in Australia;
b)Had a dwelling, house or place of business in Australia.
The following act of bankruptcy was committed by Mr Foong within six months before the presentation of the Petition. Mr Foong failed on or before 7 January 2013, to comply with the requirements of the Bankruptcy Notice issued on 1 August 2012 pursuant to Judgment obtained in the Local Court Proceedings on 25 June 2012 and which was duly served on Mr Foong on 15 December 2012 by leaving the Bankruptcy Notice and the certificate of judgment in the Local Court Proceedings in the letter box at unit 4132, 185-211 Broadway, Ultimo in New South Wales, or to satisfy the Court that he had a counter claim, set-off or cross demand equal to or exceeding the sum specified in the said bankruptcy notice, being a counter-claim, set-off or cross demand that Mr Foong could not have set up in the action in which the Judgment referred to in the Bankruptcy Notice was obtained.
Notice of Opposition
The Notice of Opposition sets out three grounds in which the Petition is opposed. These are:
1. $500 per month payment plan has been accepted.
2. The Debts owing on the Bankruptcy notice less than $5000 now.
3. We have not received the creditors petition.
The evidence before the Court, which was relied upon by Mr Foong is:
a)The Affidavit of Chao Joi Foong, sworn 11 April 2013 and filed 11 April 2013 (“the 11 April 2013 Affidavit”); and
b)The Affidavit of Chao Joi Foong, sworn 20 May 2013 and filed 21 May 2013 (“the 21 May 2013 Affidavit”).
It should be noted the 11 April 2013 Affidavit, despite naming the deponent as Mr Foong appears to have, in fact, been sworn by Ms Foong. Further, Mr Holt, who appeared for the Creditor at the hearing, objected to the reading of the 21 May 2013 Affidavit. I noted the objections made and indicated to the parties I would hear the proceedings and give the Affidavits the appropriate weight, if any weight at all.
Debtor’s Submissions
Ms Foong, appearing on behalf of her son, Mr Foong, with the leave of the Court, submitted a $500 per month payment plan had been accepted by the Creditor. It is her submission that Annexure “1” of the 21 May 2013 Affidavit shows that the Creditor was agreeable to her proposed payment plan. Ms Foong made mention of the second and third grounds of the Notice of Opposition, however, did not in any great detail expand her submissions in respect of them before the Court.
Ms Foong argued that the actions of the Creditor were unreasonable, dishonest, unfair and unprofessional. Ms Foong stated that the Creditor engaged in “high pressure tactics” and “unconscionable conduct”. She quoted the Property, Stock and Business Agents Regulation 2003 (NSW) where it states at Schedule 1:
Schedule 1: General rules of conduct applying to all licensees and registered persons
…
5 High pressure tactics, harassment or unconscionable conduct
An agent must not engage in high pressure tactics, harassment or harsh or unconscionable conduct.
…
Ms Foong next referred the Court to [3] of the 21 May 2013 Affidavit where it states:
BCS Strata Management Trust statements are very confusing…
Ms Foong directed the Court to p.5 of Annexure “3” which contains a document titled “Owners Statement of Account for Sydney Campus Apartments Strata Plan 54026” that shows the history of payments for unit 4132. Ms Foong submits that the property was settled later than 1 May 2010.
Ms Foong then took the Court to [4] of the 21 May 2013 Affidavit, where it states:
BCS Strata Management have not been issuing any invoice for cost/ charges…
Ms Foong argued that there was a number of defects in the material relied upon by the applicant. These submissions do not need to be set out now and will be addressed in detail below.
Creditor’s Submissions
In reply to Ms Foong’s submissions, Mr Holt indicated, in respect of the third ground in the Notice of Opposition, it was true that the Petition had not been served personally upon Mr Foong. However, an order was made by Registrar Ng on 15 May 2013 that personal service of the Petition be dispensed with and the Petition be served on Ms Foong in court.
The second issue Mr Holt wished to deal with was the issue of purported acceptance by the Creditor of Mr Foong’s proposed payment plan, as pleaded in the first ground of the Notice of Opposition. Mr Holt argued that the only evidence produced was an email correspondence chain (at Annexure “1” to the 21 May 2013 Affidavit). The specific email relied upon by Ms Foong is found at page two of the Annexure and was sent by G. Corigliano to Ms Foong stating:
…
So far one EC member is okay with the payment plan.
…
Mr Holt submitted that no reasonable person reading that could take that to mean that there is an acceptance by the strata owners of that payment plan or arrangement. Mr Holt submits that subsequent correspondence made it clear that the offer was not accepted.
The next issue Mr Holt wished to deal with was in respect of the statutory minimum amount upon which a creditor may petition to the Court as prescribed by s.44(1)(a) of the Bankruptcy Act 1966 (Cth) (the “Bankruptcy Act”) and Ms Foong’s submission that the amount owed by Mr Foong to the Creditor was now below that threshold. Mr Holt took the Court to the first page of Annexure “1” of the 21 May 2013 Affidavit, which shows a payment plan proposed by Ms Foong on Mr Foong’s behalf. Mr Holt does not take issue with any of the payments Mr Foong has made, however, the figure of $8,336.14 is the amount of the debt founding the Bankruptcy Notice which itself is founded on a judgment in the Local Court Proceedings (noted at [4](a) above). It is the Creditor’s submission that the correct liquidated debt that existed at the time of the act of bankruptcy by Mr Foong was the amount set out in the Petition, being $19,243.67. Even if the Court were to have regard to the payments made by Mr Foong to the Creditor the amount owed would still be well in excess of the $5,000.00 minimum as required by the Bankruptcy Act.
Mr Holt indicated the 21 May 2013 Affidavit was mistakenly sent to Kemps Petersons, which is the debt collection agency that originally acted on behalf of the Creditor, and did not come to his attention until 24 May 2013. Mr Holt submits that the 21 May 2013 Affidavit raised various issues about negotiations being unreasonable and statements being confusing which were matters that were not addressed in the Notice of Opposition. Consequently, the Creditor is at a disadvantage in running the proceedings after receiving evidence at such late notice. Mr Holt submitted that, notwithstanding, it is apparent that the issues raised in the 21 May 2013 Affidavit are neither particularised nor made out.
Mr Holt referred the Court to Ms Foong’s broad references to the Property, Stock and Business Agents Regulation 2003 and to the references to the Legal Profession Act 2004 (NSW) and argued that they are misconceived. Mr Holt submitted the Notice of Opposition, therefore, should fail and the matter should proceed to the hearing of the Petition.
Consideration
Though never formally read into evidence, Mr Holt referred the Court to the Affidavit of Service of the Bankruptcy Notice sworn by James Stephen Twigg on 19 December 2012 that was filed with the Petition on 4 April 2013. The amount owed to the Creditor by Mr Foong as stated on the Bankruptcy Notice was $8,336.14. The Affidavit further indicates on 15 December 2012 the Bankruptcy Notice was served on Mr Foong by leaving a document in a sealed envelope marked to Mr Foong’s attention at his last known address. The Affidavit states that at the time of service of the Bankruptcy Notice the licensed commercial agent confirmed the residency with the concierge and that the concierge rang the apartment and the licensed commercial agent spoke to a woman who confirmed that Mr Foong resided at that address.
The primary issue raised by Mr Foong in the Notice of Opposition concerns the claimed acceptance of a proposed payment plan by instalment to satisfy the debt identified in the Bankruptcy Notice.
The Bankruptcy Notice founding the Petition, being BN 4735 of 2012 issued 1 August 2012, is in the standard form issued by the Insolvency and Trustee Service of Australia and contains the statement:
1. You are required, within [21] days after service on you of the Bankruptcy Notice, to either:
a) Pay to the creditor the amount of the debt claimed; or
b) Make arrangements to the creditor’s satisfaction for settlement of the debt
Appearing at page eight of Annexure “1” of the 21 May 2013 Affidavit is an email from Ms Foong to H. Lam sent Monday 24 December 2012 at 9:18am which states:
Dear Mr Lam,
The bankcruptcy notice is received today on 24th December 2012.
I have been appointed to act on behalf of Chao Foong.
Chao does not want to be bankcrupt, he would like to work with you to resolve this problem. At the moment, he can manage to make $500 monthly repayment for $8,336.14 start 07/01/13.
Look forward to your help to get the problem resolved and your confirmation for $500 monthly repayment.
Regards,
Yena Foong
…
Appearing at page seven of Annexure “1” to the 21 May 2013 Affidavit is an email sent by Ms Foong to G. Corigliano at 9:31am on 24 December 2012 stating:
Out of Office: Bankcruptcy(sic) notice received 24Dec12
Dear [G.],
I have emailed Mr. [H.] Lam regarding the bankcruptcy matter.
The bankcruptcy notice is received today, is sais that we have to contact you within 21 days.
Chao Foong has appointed me to handle this matter.
Therefore, I negotiate on behalf of him.
Currently, he can manage $500 per month repayment of the amount of $8,336.14
Please attend it urgently.
Looking forward to your help to resolve this problem and receive your confirmation.
Regards,
Yena Foong
Appearing at page 5 of Annexure “1” to the 21 May 2013 Affidavit is part of an email chain of correspondence between Ms Foong and Ms G. Corigliano of Body Corporate Services:
On Thu, Jan 3, 2013 at 11:32AM, [G. Corigliano] wrote:
Dear Yena,
I have forwarded your email onto the executive committee.
I will await the response of the EC and get back to you.
Thank you and Happy New Year!
Kind Regards
[G.] Corigliano
Portfolio Assistant
Appearing at page two of Annexure “1” to the 21 May 2013 Affidavit is an email sent from Ms G. Corigliano to Ms Foong at 10:42am on 9 January 2013 in the following terms:
Subject: FW: FW Bankruptcy Notice received 24 December 2012 to “Yena Foong…
CC: Levy arrears…
Hello,
So far one EC member is ok with the payment plan.
Kind Regards
[G.]
Appearing at page 1 of Annexure “2” to the 11 April 2013 Affidavit is a letter dated 24 January 2013 addressed to Mr Foong from Kemps Peterson Receivables in the following terms:
…
RE: THE OWNERS – STRATA PLAN NO 54026 v. CHAO JOI FOONG
We confirm that we are the mercantile agents for the Owners Strata Plan above.
We confirm that a Bankruptcy Notice was issued and served on you on 15 December 2012 in the amount of $8,336.14.
In response to the service of the Bankruptcy Notice, a payment proposal was put forward to pay the amount of $8,336.14 by way of monthly instalments of $500.00 commencing on 7 January 2013.
Given the size and longevity of the debt, our client has rejected your payment proposal and have instructed to proceed with the preparation of a Creditor’s Petition forthwith, which in turn may result in a sequestration order being made against you or your estate.
There are a number of hand-written notations contained on the document, which were presumably written by Ms Foong after receiving it, indicating it had been both sent to the wrong email address and put in the wrong mailbox. I do not intend to address these as these contentions were not raised in Ms Foong’s submissions to the Court.
Appearing at page 1 of Annexure “2” to the 21 May 2013 Affidavit is a letter dated 3 April 2013 addressed to Ms Foong from Kemps Petersons Receivables that is in the following terms:
…
RE: THE OWNERS – STRATA PLAN NO 54026 v. CHAO JOI FOONG
We confirm that we act as debt recovery agents for the Owners Strata Plan No 54026.
We refer to the above matter and your recent payment proposal to pay the debt to our client by way of monthly instalments of $1,000.00 each.
We advise that at the Executive Meeting held on 28 March 2013, our client rejected your proposal.
We also advise that our solicitors are instructed to file the Creditors Petition (which was being held on the file) in the Federal Magistrates Court and seek a Hearing date.
…
I note that the affidavits filed by Mr Foong on 11 April 2013 and 21 May 2013 contain substantially the same chain of email correspondence between Ms Foong and the various authorised representatives of the Creditor. On a fair reading of all the material contained in those affidavits there is no email or document exchange between Ms Foong and the Creditor’s representatives to suggest that the payment by instalment plan put forward by Mr Foong, or his mother Ms Foong, was accepted by the Executive Committee of the Owners - Strata Plan 54026 or BCS Strata Management Pty Ltd. The argument advanced by Ms Foong indicates that she is relying upon the email sent to her by G. Corigliano dated 9 January 2013 reproduced at [26] above.
Compliance with a Bankruptcy Notice is covered by s.40(1)(g) of the Bankruptcy Act. Her Honour Kenny J, in Deputy Commission of Taxation v Catanese (1999) 42 ATR 247, stated at [12] – [13]:
12. I accept that, if a creditor and a judgment debtor enter into an arrangement to the creditor's satisfaction for the settlement of a debt prior to the time limited for compliance by a bankruptcy notice, the creditor cannot rely on the bankruptcy notice to found an act of bankruptcy: see para 3(b) of the form prescribed, under subs 41(2) of the Act, by Bankruptcy Regulations, reg 4.02. See also Re Deane; Ex parte Van Reesema (1961) 20 ABC 259 at 261 per Virtue J and the cases cited therein. That is so whether or not the judgment debtor subsequently honours the arrangement. The availability of the bankruptcy notice must be judged as at the date when compliance with it was required: seeEx parte Van Reesemaat p 262. As already noted, the date for compliance with the bankruptcy notice in question in the present case was 27 July 1998.
13. Am I to be satisfied that the Deputy Commissioner and Ms Catanese entered into a relevant arrangement prior to that date? The word "arrangement" has been judicially considered on a number of occasions, frequently in the context of income tax legislation. In Newton v Federal Commission of Taxation [1958] UKPCHCA 1; (1958) 98 CLR 1 at 7, their Lordships expressed the opinion that:
The word "arrangement" is apt to describe something less than a binding contract or agreement, something in the nature of an understanding between two or more persons - a plan arranged between them which may not be enforceable at law.
In the Petition, the following act of bankruptcy was stated to have been committed by Mr Foong:
The respondent debtor failed, on or before 7 January 2013, to comply with requirements of the Bankruptcy Notice issued on 1 August 2012 pursuant to judgment obtained in the Local Court in the proceedings on 25 June 2012 and which were duly served on the respondent debtor on 15 December 2012.
The email message between G. Corigliano and Yena Foong relied on by Mr Foong in the first ground of the Notice of Opposition was sent on 9 January 2013 and the contents of that message state “So far one EC member is ok with the payment plan”. On any reasonable view, this could not be characterised as an arrangement between the parties to the Creditor’s satisfaction for settlement of the debt. Further, the email was sent on 9 January 2013, two days after the act of bankruptcy had been committed by Mr Foong. What is being stated is that the payment plan put forward by Ms Foong was in the process of being considered by the Creditor and, at that stage, one member of the Executive Committee was satisfied with the proposed arrangement. Having regard to the further correspondence noted at [27] and [28] above, it is clear the proposed payment by instalment plan was rejected by the Creditor on 24 January 2013 and again on 3 April 2013. Accordingly, this ground cannot be sustained and should be dismissed.
The second ground of the Notice of Opposition, claiming that the amount stated in the Bankruptcy Notice is invalid because it has been in part paid, also falls within the provisions of s.40(1)(g) of the Bankruptcy Act. In long established authorities such as Re Raymond (1892) 66 LT 400 at 402; Re Child; Ex parte Child [1892] 2 QB 77; Re Miller; Ex parte Furniture and Fine Arts Depositories Ltd [1912] 3 KB 1 it was held where part of a judgment debt had been paid the creditor could only issue a bankruptcy notice for the balance, as such was the amount for which the creditor could issue execution. Mr Foong’s argument cannot be sustained as the Bankruptcy Notice was issued on 1 August 2012 and the first recorded payment of money from Mr Foong to the Creditor (noted at Annexure “1” to the 21 May 2013 Affidavit) was made on 7 January 2013. In the interests of completeness I note that, where a bankruptcy notice is issued in respect of a certain sum and between the date of service of the bankruptcy notice and expiry of the time limit prescribed by the Bankruptcy Notice in which to comply with its requirements, if part of such sum is paid to and accepted by the person issuing the bankruptcy notice it has been held that the bankruptcy notice is not invalidated on the grounds of such payment being made: King v Henderson (1896) 7 BC (NSW) 35; Walsh v Deputy Commissioner of Taxation (1984) 156 CLR 337 at 340. Even if Mr Foong was granted an indulgence and the Creditor recognised the payment of $500.00 to it on 7 January 2013 the argument that this payment was the commencement of an arrangement to satisfy the debt cannot be sustained, as there had been no acceptance of the proposed payment plan. Any argument in respect of a payment by instalment plan cannot be sustained and has been addressed above and, notwithstanding, the balance owed was still $7,836.14, over the $5,000 threshold required by s.44(1)(a) of the Bankruptcy Act.
The other substantial issue raised by the respondent debtor is in respect of the total payments made by Mr Foong to the Creditor between 7 January 2013 and 20 May 2013, being $4,536.14. Mr Foong’s contention is that the balance owed to the Creditor is now below the $5,000.00 statutory minimum as prescribed in s.44(1)(a) of the Bankruptcy Act. Annexure “1” to the 21 May 2013 Affidavit sets out a payment schedule, made up of ten payments totalling $4,536.14 made by Mr Foong to the Creditor in the period from 7 January 2013 to 20 May 2013. Mr Holt, appearing for the Creditor, acknowledges that those payments have been made by Mr Foong. He informed the Court the amount of $8,336.14 is the figure given on the Bankruptcy Notice, which is based on the judgment and orders of the Local Court Proceedings entered on 25 June 2012 in the sum of $9,809.34, plus interest thereupon. An amount of $1,500.00 was deducted from that figure for payments made and/or credits allowed since judgment leaving a total debt on the Bankruptcy Notice of $8,336.14.
Mr Holt submitted that the correct liquidated debt that existed at the time of the Bankruptcy Notice was set out in the Creditor’s Petition. There is no requirement that debt relied on to support a creditor’s petition be a judgment debt, or even the same debt as to the one used to create an act of bankruptcy: Emerson & Anor v Wreckair Pty Ltd (1992) 33 FCR 581 per Morling, Neaves and Spender JJ; Re Frank; Ex parte Piliszky (1987) 16 FCR 396; Farrington v Deputy Commissioner of Taxation (2002) 50 ATR 429 per Kenny J at [46]; O’Farrell v Palicave Pty Ltd (2009) 176 FCR 134 per Jacobson, Edmonds and Barker JJ at [23]. The Creditor’s Petition was issued in the sum of $19,243.67. Taking into account the amount of $4,536.14, being payments made by Mr Foong to the Creditor, the amount claimed by the Creditor in the Petition is still well in excess of the statutory minimum of $5,000.00 required to proceed with the Petition. On review of the Petition, the amounts claimed under 1(c) and (d) therein all accrued before the act of bankruptcy relied upon committed on 7 January 2013. Further, to constitute a good petitioning creditor’s debt, the alleged debt must be certain and payable to the party who presents the petition: Re Sacker; Ex parte Sacker (1888) 22 QBD 179 at 186 (CA). No error is apparent on the face of the Petition before this Court.
As stated in the Petition the debt accrued under item 1(c) is for unpaid strata levies and interest pursuant to ss.76, 78, 79 and 80 of the Strata Schemes Management Act 1996 (NSW) for the periods not claimed in the statement of claim, issued in the Local Court Proceedings on 15 September 2011 and up to and before the act of bankruptcy on 7 January 2013. Similarly, the accrued debt identified in 1(d) was for expenses incurred in the recovery of unpaid levy contributions pursuant to s.80 of the Strata Schemes Management Act 1996 (NSW) for the period not claimed in the statement of claim issued in the Local Court Proceedings on 15 September 2011 and up to, but before the act of bankruptcy on 7 January 2013. The amount claimed at paragraph 1(b) of the Petition falls into a different category, being post judgment interest for the period 26 June 2012 to 3 April 2013 on the judgment amount in the proceedings pursuant to s.101 of the Civil Procedure Act 2005 (NSW). Consequently, taking into account these various amounts, the Creditor is still owed well in excess of the statutory minimum required by s.44(1)(a) of the Bankruptcy Act to proceed with the Petition.
The third ground of the Notice of Opposition relates to the service of the Petition. A creditor’s petition and supporting affidavits must be served personally on a debtor, unless an order for substituted service is obtained: ss.52(1)(b), 309(2) of the Bankruptcy Act (and this Court’s associated Rules): Sogelease Australia Ltd v Griffin (2003) 128 FCR 399; Richmond and Bay Bon Investments Pty Ltd [2007] FCA 1060 per Graham J at [15]-[16]. In this matter an order for substituted service of the Petition was made by Registrar Ng on 15 May 2013. The order made was that the Petition be served on Ms Foong, who was appearing on Mr Foong’s behalf on that date. The circumstances and the arguments presented to Registrar Ng are not before this Court other than the order made. However, it is well established that where a debtor cannot practically be served with a creditor’s petition and supporting affidavit personally, the Court has a discretion to order substituted service by other means: s.309(2) of the Bankruptcy Act. That discretion to order substituted service is unfettered: Ginnane v Diners Club Ltd (1993) 42 FCR 90 per Northrop, Sheppard and Einfeld JJ. Further, despite Ms Foong’s submission that the Petition had not been served on her, a notice of appearance, as well as the 11 April 2013 Affidavit and the Notice of Opposition, were filed before the first return date of the Petition. On the material before this Court I am satisfied that this objection cannot be sustained.
Ms Foong also alleged breaches of the Legal Profession Act2004 (NSW) by the Creditor. This complaint is based on the levy notice and trust receipt for Strata Plan – 54026 which are located at Annexure “5” to the 21 May 2013 Affidavit. Part of the complaint advanced by Ms Foong was that the levy notices appearing on page 1 and 2 of Annexure “5” were both issued on 16 April 2013, but contained different entries. On close examination, and although not expressly stated, the levy notice appearing on page 1 appears to be a continuation of the levy notice appearing at page 2. The last entry on page 2 reads “balance carried forward (includes GST)” and this amount appears as the first entry on the levy notice appearing on page 1. Going to the individual entries, nothing is repeated, but taking the two levy notices together, it covers a period from 3 January 2013 to 1 May 2013 and none of those entries are repeated or duplicated. The examination of the cash receipts shows that they all have different receipt numbers. It may appear confusing at first glance, however, a closer examination of the individual entries clearly indicates that it is the one levy notice covering two pages. Notwithstanding, it is unclear what, if any, relevance this contention has to the Notice of Opposition and accordingly, it should be dismissed.
Ms Foong further contends that the preparation and presentation of these levy notices breaches s.255 of the Legal Profession Act 2004 (NSW). I believe this is a misunderstanding and misinterpretation of that provision, which appears in Chapter 3 - Conduct of Legal Practice, Part 3.1- Trust Money and Trust Accounts, Division 2 – Trust Accounts and Trust Monies. The document being referred to by Ms Foong is a levy notice issued by BCS Strata Management Pty Ltd as managing agents for the body corporate. BSC Strata Management is not a legal practice, but a management company that issues levy notices on behalf of body corporates, collects dues and pursues outstanding debts. The money collected would be held in the trust account until transferred to the body corporate accounts. This is not a trust account of the nature operated by a legal practitioner and, accordingly, does not fall within the provisions of the Legal Profession Act 2004 (NSW). Accordingly, this contention cannot be sustained and should be dismissed.
Ms Foong also claims a breach of s.331 of the Legal Profession Act2004 (NSW) which is also found in Chapter 3 – Conduct of Legal Practice, Part 3.2 – Cost Disclosure and Assessments, Division 7- Billing. Section 331 relates to legal costs that cannot be recovered unless a bill has been served. This again is a misunderstanding and misinterpretation of the provision, as the amounts sought in the levy notices are not legal costs in relation to a legal proceeding. This argument cannot be sustained and should be dismissed.
Ms Foong referred the Court to the Property, Stock and Business Agents Regulation 2003 (NSW), reg.26 which relates to the payment of trust money by cheque or electronic funds transfer and, in particular, at subsection 1 that “trust money must not be drawn from a licensees trust account otherwise than by cheque or electronic transfer in accordance with this clause”.It is difficult to see what relevance this regulation has to the operation of the issue of levy notices by a body corporate and I form the view that this is a misunderstanding as to the nature of the levy notice and various provisions of the acts and regulations referred to. I am satisfied that this claim cannot be sustained.
The final claim advanced by Ms Foong is noted at [12] above. This allegation cannot be sustained as the Regulation to which she refers as well as the Property, Stock and Business Agents Act 2002 (NSW) provide for the regulation of the conduct of property, stock and business agents in respect of their various trades. It cannot be said that this has any relevance to a body corporate endeavouring to recover liquidated debts due and owing to it. Consequently, this submission must also fail.
Conclusion
I am satisfied the Notice of Opposition cannot be sustained and should be dismissed with costs. Further, I am satisfied that the other oral submissions made to the Court by Ms Foong on behalf of Mr Foong also cannot be sustained and should be dismissed. Accordingly, the Petition should be referred back to a registrar of this Court for hearing.
I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones
Associate:
Date: 30 August 2013
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