Velos and Davis (A Firm) v Picone
[2007] FMCA 70
•2 February 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VELOS & DAVIS (A FIRM) v PICONE | [2007] FMCA 70 |
| BANKRUPTCY – Application for review decision of Registrar’s sequestration order – numerous grounds advanced by application – none held to have merit – application dismissed. |
| Bankruptcy Act 1966, ss.31, 51. 153, 153B Partnership Act 1958 (Cth), s.8 |
| McIntosh v Shashoua [1931] 46 CLR 494 Sandell v Porter & Anor [1966] 115 CLR 666 Barber v Bone Thorpe International Pty Ltd [2001] FMCA 4 Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321 |
| Applicant: | BILL VELOS & PETER DAVIS TRADING AS VELOS & DAVIS (A FIRM) |
| Respondent: | ALFIO PICONE |
| File number: | MLG601 of 2006 |
| Judgment of: | Burchardt FM |
| Hearing date: | 13 November 2006 |
| Date of last submission: | 16 November 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 2 February 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr T. Ellis |
| Solicitors for the Applicant: | Velos Lawyers |
| The Respondent: | In person |
| Counsel for the Trustee: | Mr M. Lhuede |
| Solicitors for the Trustee: | Piper Alderman |
ORDERS
The Respondent’s Interim Application filed on 28 August 2006 be dismissed.
The Respondent pay the Applicants’ costs of the Interim Application, including costs of the adjournment on 2 October 2006, such costs to be paid out of the Respondent’s bankrupt estate no Vic 3192/6/9 with priority under s.109 of the Bankruptcy Act 1966 as if a sequestration order had been made in the Interim Application.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG601 of 2006
| BILL VELOS & PETER DAVIS TRADING AS VELOS & DAVIS (A FIRM) |
Applicant
And
| ALFIO PICONE |
Respondent
REASONS FOR JUDGMENT
The history of this strongly contested matter, which has been conducted on a scale wholly disproportionate to the amount of money actually involved, is so convoluted that it is not easy to know quite where to start. The parties indeed are not in agreement as to what the original point of departure really is.
While it will be necessary to traverse back further into the past at some stage in these reasons, it is appropriate to commence with the filing of bankruptcy notice VN2050 of 2005 with the official receiver by what was then described in the bankruptcy notice as Velos & Davis (a firm) which was identified as the creditor.
The bankruptcy notice asserted a debt of $13,703.85 of which $13,400.01 was said to be an amount of judgment or order and $303.84 was said to be interest accrued since the date of judgment or order.
The address of the debtor (whom I shall refer to as the Respondent for convenience in these reasons) was given as 9 Athol Street, Moonee Ponds. On 31 October 2005 the Applicant filed an application with the Court seeking to dispense with personal service of the bankruptcy notice by posting the documents to the Respondent c/o his solicitor Richard Best of Professional Legal Group in Melbourne. An affidavit was sworn in support of that application by John Venizelakos sworn on 27 October 2005 in which Mr Venizelakos relevantly deposed that the address given on the bankruptcy notice was a vacant property currently under renovations and that the Respondent's address could not be discovered. The affidavit also deposed that Mr Best had acted for the Respondent in legal proceedings on 22 June 2005 (at which a debt alleged of $13,400.01 had arisen through a taxation of costs before the Supreme Court of Victoria).
By further affidavit sworn on 1 December 2005 Mr Venizelakos deposed that the Athol Street, Moonee Ponds address was the last known business address of the Respondent and that the Respondent had been previously served on many occasions. He went on to depose various reasons why it was proper that service be effected on the Respondent by service on Mr Best.
Registrar Agnew made an order for substituted service on 2 December 2005. The Court relevantly ordered that personal service be dispensed with and that in lieu thereof the bankruptcy notice be served:
“2(a)by posting a letter stating the date of posting and enclosing a copy of the bankruptcy notice signed and stamped by the official receiver and any authorisation of the official receiver extending the time for service of the bankruptcy notice, and a sealed copy of this order by ordinary mail addressed to the debtor c/o Richard Best (at Mr Best’s address) and;
(b)by handing a letter addressed to the debtor containing a copy of the bankruptcy notice signed and stamped by the official receiver and any authorisation of the official receiver extending the time for service of the bankruptcy notice and a sealed copy of this order to a person apparently under the age of 16 years, apparently working at the said address.
3.Service of the bankruptcy notice deemed to be effected on 30 December 2005 upon condition that the two events referred to in para.2 occurred by 16 December 2005.”
It should be noted at this stage, in the light of the way the matter has proceeded, that the orders of Registrar Agnew did not require that service be effected upon the Respondent by 16 December 2005 but rather that service would be deemed to have been effected on the Respondent if the two matters posited, namely service by post and service by personal service, were effected upon Mr Best at Professional Legal Group, Level 3, 321 Exhibition Street, Melbourne, Vic 3000.
Tara Trump-Kruger in an affidavit sworn on 10 January 2006 has deposed that she served on 10 January 2006 the bankruptcy notice filed and a copy of the sealed order made in the Federal Magistrates Court by Registrar Agnew on 2 December 2005 on the Respondent, by sending it by post to the Respondent at the address for service c/o
Mr Best's professional address.
Katherine Hay has deposed in an affidavit sworn on 10 January 2006 that on 9 January 2006 she attended Level 3, 321 Exhibition Street, Melbourne and discovered that the Professional Legal Group no longer operated from those premises. She was redirected to its new offices at Level 14, 150 Lonsdale Street, Melbourne, which she attended on the same day and at which she left a copy of the bankruptcy notice, a copy of a sealed notice of order and a copy of the covering letter addressed for the attention of Mr Best.
From an affidavit sworn by Mary Alison Nicholas on 30 June 2006, it is apparent that on 13 January 2006 the Applicant received a facsimile from the Professional Legal Group. That letter informed the Applicant that the Professional Legal Group had mailed the bankruptcy notice to
Mr Picone at his last known address of 41 Chaucer Street, Moonee Ponds 3090.
From an affidavit sworn on 19 January 2006 by the Respondent, which is annexed as Exhibit MAN-2 to the affidavit of Ms Nicholas sworn on 30 June 2006, it appears that the Respondent received the bankruptcy notice on 13 January 2006 and that he attended the Federal Magistrates Court to inquire of the matter on that date.
It is apparent from Ms Nicholas’ 30 June 2006 affidavit (and annexure) that on 24 January 2006 the Respondent filed an application to extend time for compliance with the bankruptcy notice and filed an affidavit in support of it.
It is no easy matter to establish from the voluminous material filed what the chronology of relevant events is. The relevant events are deposed to in a rather scattered way across a number of different affidavits and no deponent has set out in any comprehensible way in one document what has occurred.
Nonetheless, it seems fairly clear that on 28 September 2004 the Applicant ceased to act for the Respondent in a Victorian County Court matter, and it issued proceedings in the Magistrates Court of Victoria for outstanding fees arising out of Supreme Court proceedings on
20 October 2004.
A summary judgment application was made by the Applicant in the Magistrates Court of Victoria on 17 December 2004, which was adjourned on 21 January 2005. On 25 February 2005 the Respondent applied to tax the Applicant's bill of costs, which taxation took place on 28 June 2005.
It appears that Master Bruce allowed fees in a total of $27,741.41 but after taking into account set offs and monies already paid the sum of $13,400.01 was payable by the Respondent to the Applicant.
On 7 September 2005 the Applicant's proceeding in the Magistrates Court of Victoria was dismissed, with costs of the proceedings being awarded to the Applicant.
The Respondent was not present at that hearing and filed an application for a re-hearing of the matter which ultimately led to a slightly lower order for costs on 15 May 2006.
In the interim on or about 10 February 2006 the Respondent filed a complaint in the Magistrates Court of Victoria against the Applicant alleging breaches of duties owed to the Respondent.
In April 2006 the Respondent was given leave to amend his statement of claim by his Honour Magistrate Braun albeit that substantial sections of the statement of claim were struck out.
On 13 July 2006 the Magistrates Court complaint was struck out in its entirety by her Honour Magistrate Hawkins on the basis that the statement of claim as amended did not disclose a course of action.
Events giving rise to these proceedings had already been well underway. On 9 September 2005 the Applicant had filed with the official receiver a bankruptcy notice claiming the sum of $13,703.85. This was the amount outstanding pursuant to the orders of Master Bruce together with interest calculated from the time of those orders to the date of the issue of the notice.
As indicated earlier, and I recapitulate matters somewhat for convenience, on 31 October 2005 application was made by the Applicant to dispense with personal service of the bankruptcy notice. That application was supported by an affidavit sworn by John Venizelakos on 27 October 2005. Mr Venizelakos subsequently swore another affidavit on 1 December 2005 in which, in addition to other matters gave the last known address of the Respondent as 9 Athol Street, Moonee Ponds.
An order was made by Registrar Agnew on 2 December 2005 dispensing with personal service of the bankruptcy notice and ordering in effect that the notice be served both by post and by personal delivery to Mr Richard Best, Professional Legal Group, Level 3, 321 Exhibition Street, Melbourne Vic 3000.
Registrar Agnew's orders also provided that:
“Service of the bankruptcy notice be deemed to be effected on
30 December 2005 upon condition that the two events referred to in paragraph 2 are cleared by 16 December 2005.”
It is clear from affidavits filed by Katherine Hay sworn on
10 January 2006 and Tara Trump-Kruger sworn on 10 January 2006 that service by post and by personal delivery upon the Professional Legal Group took place on 9 January 2006 in respect of the personal delivery and by delivery following posting on 9 January 2006.
On 13 January 2006 the Applicant received a facsimile from the Professional Legal Group in response to the service of the bankruptcy notice on them for the Respondent. That facsimile inter alia informed the Applicant that the bankruptcy notice had been mailed by the Professional Legal Group to the Applicant at his last known address of 41 Chaucer Street, Moonee Ponds.
On 24 January 2006 the Applicant filed an application to extend time for compliance with the bankruptcy notice in the Federal Magistrates Court and filed an affidavit in support confirming:
“The respondent had received the bankruptcy notice on
13 January 2006.”
On 24 January 2006, Registrar Agnew extended the time of compliance with the bankruptcy notice to 13 February 2006 and on 13 February 2006, Registrar Agnew again extended the time for compliance to
6 March 2006.
On 6 March 2006, Registrar Mussett adjourned the hearing of the application to 10 April 2006 but did not extend the time for compliance with the bankruptcy notice.
On 10 April 2006, Federal Magistrate O'Dwyer dismissed the Respondent's application filed on 24 January 2006 for an extension of time for compliance with the bankruptcy notice. Federal Magistrate O'Dwyer also dismissed the Respondent's application filed on
10 February 2006 seeking to set aside the said bankruptcy notice.
It would appear from paragraph 6 of the Respondent's second affidavit sworn on 7 July 2006 that Federal Magistrate O'Dwyer expressed the view that the statement of claim in the Magistrates Court matter did not disclose any cause of action.
Thereafter on 9 May 2006 the Applicant filed a creditor's petition in which the debt asserted was said to be $13,401.00. Leaving aside two minor typographical matters in paragraph 2, neither of which in my opinion would have misled the Respondent, there were errors as to the date asserted in paragraph 4 of the failure to comply with the requirements of the bankruptcy notice and in the date of service. Those errors and the typographical errors already referred to were corrected when the matter returned before this Court on 29 June 2006. Further, a change was made to the description of the Applicant from Velos & Davis (a firm) to Bill Velos & Peter Davis trading as Velos & Davis (a firm).
There are a number of other pertinent steps that have been taken in this convoluted proceeding including the sequestration order made by Registrar Mussett on 10 August 2006 and the Respondent’s application to set aside that order filed on 28 August 2006. Copious affidavit material has been put on by both sides. The above however hopefully gives some sort of indication of the factual history which led to this proceeding. I have set it out in this way because it is of assistance in coming to grips with the submissions that the parties made.
Counsel for the Applicant addressed first. Counsel submitted that the materials filed by the Respondent raised 11 matters which he addressed individually. Given the scattergun approach of both sides in their affidavit material, I found the submissions of counsel to be of considerable assistance in seeking to bring some order into chaos and I will adopt counsel's methodology in this part of my judgment.
Tender of Debt
It is clear that on 16 June 2006 the Respondent attended the Applicant's offices and handed to Mary Nicholas a bank cheque in the sum of $13,400.00. This cheque was not accepted because Ms Nicholas, who is a law clerk, did not regard herself as having authority to accept it because a file note made by Mr Velos suggested that the sum of $15,000.00 had been agreed between the parties in settlement of the proceeding.
In light of the subsequent history of the matter one might well wonder whether all concerned would have been better served had that tender been accepted. Nowhere more so than in the law is the maxim that a bird in the hand is worth two in the bush exemplified.
Nonetheless, there is binding authority that a creditor, once a petition has been presented, need not accept tender of the sum owed. It is clear from McIntosh v Shashoua [1931] 46 CLR 494 that a petitioning creditor is entitled to refuse payment tendered by the debtor after the presentation of the petition, and to proceed with the petition. Each member of the High Court in that case (with the exception of Evatt J) expressly found that a creditor was not required to accept tender once the petition had been presented.
The Legal Identity of the Creditor
The Respondent's affidavit material made much of the alleged change in the title of the proceedings on 21 June 2006. As counsel for the Applicant correctly points out Order 17 of the Rules of the Supreme Court of Victoria require that proceedings be commenced in the name of a firm. Section 8 of the Partnership Act 1958 (VIC) also is relevant since it shows that a firm is entitled to carry on business under that style.
In my view, nothing whatsoever turns on the amendments made. The Applicant has at all times been a partnership and has sued as such. The fact that the partnership is constituted by two individuals is wholly irrelevant to its existence as what the Respondent described as
“a juristic person”.
Lest there be any doubt, I note that notwithstanding the de-registration of the business name of the partnership, the partnership has not been dissolved (see the affidavit of Mr Bill Velos sworn on 27 October 2006 paragraphs 2 – 4).
It is also clear, contrary to the Respondent's submissions, that Mr Velos has always had the requisite authority to sue on behalf of the firm and if it were necessary, which I doubt, Peter Bruce Davis on
10 November 2006 has relevantly deposed that the proceedings were commenced by agreement between himself and Mr Velos.
Solvency
The Respondent has deposed that he has at all material times been able to pay his bills. He has filed an affidavit sworn on 31 July 2006 in which he sets out what purports to be a table of his assets and liabilities.
The approach to this sort of issue was considered by the High Court in Sandell v Porter & Anor [1966] 115 CLR 666 (“Sandell”). The headnote (which in my respectful view sufficiently reflects the judgment of the Chief Justice who gave the only judgment in the case), shows that insolvency is an inability to pay debts as they fall due out of the debtor's own monies. Those monies are not however limited to cash resources immediately available. They extend to monies which the debtor can procure by realisation by sale or otherwise of assets within a relatively short time. The conclusion of insolvency should be clear from a consideration of the debtor's financial position in its entirety and generally ought not to be drawn simply from evidence of a temporary lack of liquidity. It is the debtor's inability utilising such cash resources as they have or can command to meet their debts as they fall due which indicates insolvency. Whether that state of affairs has arrived is a question for the Court and not one to which expert evidence may be given in terms.
In paragraph 28 of his affidavit sworn on 31 July 2006 the Respondent deposes to own a property at Olinda Street (not otherwise defined) worth $55,000.00, "plus or minus 4 year unencumbered title". He has other assets of which I note shares are said to be worth $1,000.00 plus cash of $15,000.00 and "family and friends dollars? a phone call away".
Doing the best one can with such material, and this was not amplified by the Respondent in his oral submissions, one would infer that the Olinda Street property is unencumbered. One would infer that it might be open to the Respondent to borrow funds or obtain funds from family and friends. It would not appear however that he has made any endeavours to do so.
I accept that there is evidence before the Court filed by the Applicant that shows that the Respondent does not own any registered land in Victoria. The Respondent nonetheless asserted that he does own such land and I will assume in the Respondent's favour for these purposes that in some prima facie inexplicable way he may have an interest in land of some sort.
The Court extended to Mr Picone leave to forward to the Court by Friday 17 November 2006 a note of any authorities he wished to draw to the Court’s attention.
Undercover of a letter dated 16 November 2006 to my Associate, the Respondent filed not only documentation detailing various authorities (although scarcely in a fashion as to be of any assistance to the Court) together with a substantial amount of documentation about the Olinda Street property, which appears to be at Beaufort. No explanation was advanced as to exactly what the Court should make of this documentation. It would appear however that the Respondent purchased some land at Olinda Street Beaufort for $6,000.00 in 2002, that he thereafter built a property on it and that he has placed the same for sale with real estate agents at an asking price of $75,000.00 but a likely realisable purchase price according to the REIV exclusive sale authority of between $65,000.00 and $70,000.00.
From the flyer prepared by Wes Davidson Real Estate it would appear that while plans and permits have all been approved, the construction of the property has reached only the point where foundations have been laid.
I have noted the Respondent’s submission that his wife Maria Picone has in an affidavit sworn on 16 October 2006 supported a value of the land when subdivided of $250,000.00.
Mrs Picone was not called to give evidence before me, and the style of her affidavit suggests very strongly that its author was in fact the Respondent himself. What Mrs Picone’s affidavit says however at paragraph 18 is “the land has a proposed plan of subdivision with a minimum completed value of $250,000.00, Mr Velos and Mr Davis seek to disentitle my husband Alfio Picone of a possible future profit of $50,000.00.”
There is nothing in the material put forward by the Respondent that enables the Court to form any view as to the true value of the Olinda Street property, whether subdivided or in its current state.
Exhibit R1 tendered by Mr Ellis in reply appears to show a valuation by the relevant Shire of $13,000.00 as to the capital improved value of the Olinda Street property and site value of $13,000.00. This probably suggests that the council values the property at $26,000.00. None of this goes to establish to the Court’s satisfaction what the true value of the property is.
The Respondent goes on at paragraph 37 of the 31 July 2006 affidavit to assert (in slightly different terms to his assertion as to his assets which was "I am of the belief that my assets are as follows"):
“I am of the belief that my liabilities may be as follows –
And deposes to be in excess of $40,000 worth of debt.
If one takes out the $55,000.00 asserted in respect of the Olinda Street property the assets are marginally less than the liabilities.
Further, a number of the assets are such that at first blush they might seem hard to realise such as furniture in the value of $5,000.00, building trade tools in the sum of $8,000.00 and office goods in the sum of $2,500.00.
On the other hand, the debts asserted all have the appearance of solidity. The Respondent has asserted that the $20,000.00 owed to Beringa Investments Pty Ltd is denied and subject to further litigation, but in truth any cause of action against Beringa Investments Pty Ltd has presently vested in the Trustee and in any event the debt arises pursuant to what the Respondent himself asserted was a mediated result.
There is no admissible evidence to justify the Applicant's assertion that the Olinda Street property is worth $55,000.00. The asking price appears to be over $70,000.00, but that does not prove the true value of the property.
Furthermore, the Respondent has not at any stage deposed that he proposes to realise any of the assets that he says he owns.
In all the circumstances and forming a view of the Applicant's position overall in the manner required by Sandell I think that the Respondent is not solvent. Specifically, I do not find on the basis of the evidence as it stands that the Applicant does indeed own property to the value of $55,000.00. He may well have some unregistered interest in land, his submissions from the bar table to this effect seem to be backed by some measure of conviction, and the materials filed on 16 November 2006 support his assertions, but I am not in a position to accept that that interest is worth any particular sum of money because the Applicant has completely failed to persuade me that this is the case.
The discretion to dismiss the petition pursuant to section 52(2)(b) of the Bankruptcy Act 1966
Counsel for the Applicant correctly submits that the onus in this regard lies with the debtor. In paragraph 33 of his 31 July 2006 affidavit the Respondent deposes that a sequestration order may adversely affect his “proposed studies at University”. In fact, all the Court has been told is (paragraph 1 – Respondent’s 28 August 2006 affidavit) that the Respondent is a student at the University of Tasmania. Insofar as it may be inferred that these studies are studies of law, the possible, and in my view unproved, detriment that bankruptcy might have on any legal career would not be enough to persuade me that the petition be set aside.
As was pointed out in Barber v Bone Thorpe International Pty Ltd [2001] FMCA 4 by Driver FM at paragraphs [15] – [17], in cases such as these where the Court is reviewing the decision of a Registrar to make a sequestration order, the Court may take into account considerations relevant to the making of an annulment order pursuant to s.153B of the Bankruptcy Act 1966 (“the Act”). The relevant discretionary consideration referred to by counsel for the Applicant was the failure or at best the very tardy provision of the statement of affairs by the Respondent to the Trustee appointed pursuant to the sequestration order made by Registrar Mussett. Indeed, an affidavit filed by the Trustee on the date of hearing attested that no statement of affairs had been given, although this was subsequently corrected by counsel for the Trustee. It would seem that a statement of affairs had been filed on the morning of the hearing.
In all the circumstances, I would not be minded to dismiss the petition on discretionary grounds, notwithstanding that I am aware that the Respondent tendered something that appears to have been fairly close to the full amount owed shortly after the presentation of the petition.
Valid service of the petition
In paragraph 10 of his affidavit sworn on 28 August 2006, the Respondent concedes that he was served with the bankruptcy notice. His complaint is that it was served in the precincts of the Court. The Respondent says that was improper and ineffective.
Whatever the force of his assertion, it is clear from the affidavit of
Bill Velos sworn on 24 May 2006 that the petition was served on the Respondent outside the Court. Service itself is admitted in terms. I do not think there is any force in the Respondent's criticism under this heading.
The appeal to the Supreme Court from the decision of the State Magistrates Court
It is clear from Exhibit BV-2 to the exhibit of Bill Velos sworn on
27 October 2006 that Senior Master Mahoney on 8 September 2006 dismissed the proceeding brought by the Respondent by way of appeal from the Magistrates Court because the same was not a final order. That appeal provides no assistance to the Respondent whatsoever.
The correctness of the decision of Federal Magistrate O'Dwyer
In his affidavit material the Respondent asserts that it is appropriate that there be an appeal out of time against the decision of O'Dwyer FM. No such application by way of leave to appeal out of time has been filed. The fact is that O'Dwyer FM dismissed the application made by the Respondent in April 2006 and this Court is not in a position to go behind his Honour's order.
The invalidity of the bankruptcy notice
This matter was not raised before O'Dwyer FM but I am not certain that much turns on this.
The criticisms advanced by the Respondent to the effect that interest was not validly calculated in the bankruptcy notice are in my view misconceived. While the orders of Master Bruce provided for a stay of 14 days, that stay does not operate to prevent the accrual of interest in the event that the debt is not discharged within the 14 days.
Even if that were wrong, the creditor's petition is for the sum of $13,400.01 and not for the additional amount claimed by way of interest in the bankruptcy notice.
The bankruptcy notice was served within six months of its registration on any view and the Applicant's criticisms in this regard are not correct.
Abuse by the Applicant of the bankruptcy process
The gravamen of this aspect of the Respondent's case is that the Applicant is improperly seeking to bankrupt him by using its superior legal skills and its superior resources generally. In particular the Respondent points to his tender of the $13,400.01 by bank cheque, and goes onto draw the inference that the proceeding is being pursued for ulterior purposes.
Mr Velos has deposed that this is not so. (See affidavit of Bill Velos sworn 9 August 2006).
I note that leaving aside interest on the original debt there were a number of Court orders for costs made in favour of the Applicant in 2005 and 2006, such that the monies owing to the Applicant were, by the time of the tender offered by the Respondent in June 2006 well in excess of $16,000.00, leaving aside the costs that were already incurred in the proceeding that led in the ultimate to the judgment of Magistrate Hawkins on 27 July 2006.
While it is clear from some of the material filed that the Applicant, or more accurately its constituent partners, have found the Respondent's conduct extremely irritating, there is nothing that causes me to believe that the Applicant's aim in this proceeding is not the perfectly proper one of obtaining payment of the monies owed to them by obtaining a sequestration order against the Respondent.
The inference that the Respondent seeks to draw to the effect that the Applicant is seeking to have him bankrupted in order to avoid further Court proceedings against itself flies in the face of the history of the litigation thus far including the decisions of O'Dwyer FM and of Magistrate Hawkins.
Ulterior motive
Insofar as the Respondent suggests that the Applicant have ulterior and improper motives in pursuing this matter (to the extent that this can be differentiated from abuse of process) I accept the proposition advanced by counsel for the Applicant that the refusal to accept funds from the Respondent when tender was offered, is justifiable on the footing that such acceptance could well in the circumstances have given rise to a preference.
Non authorisation by partner Davis
I accept the submissions of counsel for the Applicant that the signature by Mr Velos as an authorised agent would be sufficient for these purposes. Furthermore, Mr Davis has deposed that the decision to proceed was a decision jointly taken.
The submissions of the Trustee
Counsel for the Trustee made submissions that only had effect in the event that the sequestration order was in some way set aside. I have not decided to set aside the sequestration order so the submissions do not have any great significance. Where I am minded to set aside the sequestration order I would order that the oral application that the sequestration order be annulled under s.153 of the Act be granted. The conduct of the Trustee in seeking to make inquiries in the absence of a statement of affairs being filed by the Respondent was entirely reasonable.
Submissions made by the Respondent
The Respondent commenced with a wide ranging discussion of what was in effect the course of events leading up to the decision of the Applicant to cease to act for him in 2004.
The Respondent stressed the impropriety of the sending of documentation to his former address of 9 Athol Street, Moonee Ponds, when, as he correctly asserted, correspondence had in fact been sent prior to then to his address in Chaucer Street, Moonee Ponds.
I am not prepared to accept that Mr Venizelakos was perjuring himself when he deposed in 2005 as to his understanding of the Applicant's address. While it is clear that correspondence had been sent to the Respondent indicating the Chaucer Street address, I am not prepared without more to accept that Mr Venizelakos was perjuring himself.
It is more likely to my mind than otherwise that he simply was not appraised of that correspondence.
The Respondent laid particular stress on the failure, as he put it, of the Applicant to serve him properly in accordance with the orders of Registrar Agnew with the bankruptcy notice. It is plain that the documentation that Registrar Agnew required to be served by
16 December 2005 was not served until January 2006. The response to this, which was a matter dealt with initially in submissions by counsel for the Applicant, before he came onto the 11 matters I have dealt with, was that an order for substituted service does not prevent actual service from taking effect. In this regard, counsel referred to Skalkos v T & S Recoveries Pty Ltd [2004] FCAFC 321.
In my respectful view that authority does indeed relevantly enable service in a fashion such as that that occurred in this case.
It should be noted that it was at all times difficult to follow the Respondent's submissions as he would refer to documents without actually taking the Court to them or identifying precisely which documents he was referring to. For that reason, and the scattered approach that the Respondent took to the way in which he made his submissions, it is difficult to address them in the same ordered fashion as was practicable with submissions for the Applicant.
Doing the best I can to deal with the various matters raised the Respondent made inter alia the following points.
Creditor's petition
The Applicant conceded that he received the amended petition in the post on 29 June 2006. He said he was confused by this because it suggested he should go to Court on 21 June 2006 on which date he had in fact been in Tasmania.
He said that this had occasioned him confusion. I do not accept that the changes made to the petition by amendment on 21 June 2006 were likely to confuse to the Respondent.
Partnership
The Respondent pointed out that the partnership's name was
de-registered in 2005 and that in one affidavit Mr Velos has said:
“I was a partner in the relevant business …”
and referred to the fact that amendments to the title of the firm had been made in the petition. For the reasons discussed earlier I do not think that the partnership as an entity known to law was ever in danger of being misunderstood and I do not believe that the changes made were of any moment.
Solvency
The Respondent asserted from the bar table that the parcel of land (which was how he described it) at Olinda Street had a value which if subdivided would be worth $255,000.00. No evidence was put in support of this proposition nor was it asserted that he would be able to realise the same.
Non payment of fees to Mr Golvan QC
The Respondent asserted that Mr Golvan QC had not been paid his fees, but in this regard I note that Mr Velos has deposed in his affidavit sworn on 10 November 2006 that all disbursements including counsels' fees to Mr Golvan and Mr Dalton have been paid.
Paragraph 4 – Creditor’s Petition
Counsel for the Applicant conceded that the affidavit verifying paragraph 4 of the creditor's petition was not filed. He pointed out, however, that that had been remedied by a further affidavit of
Mary Nicholas sworn on 26 October 2006 which confirms service of the affidavit verifying paragraph 4 upon the Respondent on 30 June 2006 and rectified what appears to have been an omission in the Court's filing process.
Conclusion
In my opinion none of the criticisms advanced by the Respondent of the Applicant's position are valid. In my opinion the proper exercise of the Court's powers in a review of this sort require that I should not set aside the sequestration order which is the substantial remedy that the Respondent in truth seeks. The bankruptcy petition was not invalid. It was in fact served upon the Respondent and he has acted vigorously upon receipt of it. The creditor's petition should likewise not be set aside. The Court will order that the Respondent’s application be dismissed.
I note that the Applicant claims that it should receive its costs including the costs of this matter before Phipps FM on 2 October 2006 and counsel has correctly conceded the force and effect of s.51 but has referred me to s.32 of the Act, which he submitted gave the Court an overarching discretion to award costs to the Applicant.
While this case has been contested strongly between the parties, and some of the assertions made by both parties but more particularly the Respondent have been in my view inappropriate, this matter is not so extreme that it requires that I go beyond the ordinary orders that would obtain pursuant to s.51 of the Act. The costs of the creditor's petition up to and including the making of the sequestration order on the petition shall be at the expense of the creditor. Costs thereafter including the costs of this review should fall to be paid by the Respondent. I will hear the parties as to the form of order that should be made in this regard.
I certify that the preceding ninety-six (96) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Associate: Brooke Evans
Date: 2 February 2007
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