Vista Capital Developments Pty Ltd v Duncombe
[2010] FMCA 793
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VISTA CAPITAL DEVELOPMENTS PTY LTD v DUNCOMBE | [2010] FMCA 793 |
| BANKRUPTCY – Creditor’s petition – service of bankruptcy notice by facsimile to debtor’s solicitors – whether in ‘writing’ – whether agreement to accept such service – whether service in accordance with Bankruptcy Regulations – affidavits verifying indebtedness – whether in accordance with Form of petition and Rules – whether Court should accept as sufficient – debtor failing to file grounds of opposition and affidavits as directed – adjournment refused – sequestration order made. |
| Bankruptcy Act 1966 (Cth), ss.51, 52 Bankruptcy Regulations 1996 (Cth), r.16.01(1)(e) Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), rr.4.02, 4.06 |
| De Robillard v Carver (2007) 159 FCR 38 Macquarie Leasing Pty Ltd v Phrakhoungheaung [2009] FMCA 167 |
| Applicant: | VISTA CAPITAL DEVELOPMENTS PTY LTD (ACN 077 585 534) |
| Respondent: | MARIA DUNCOMBE |
| File Number: | SYG 1660 of 2010 |
| Judgment of: | Smith FM |
| Hearing date: | 12 October 2010 |
| Delivered at: | Sydney |
| Delivered on: | 12 October 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr Crossland |
| Solicitors for the Applicant: | Low Doherty & Stratford Lawyers |
| Counsel for the Respondent: | Mr McDonald |
ORDERS
A sequestration order be made against the estate of Maria Duncombe.
The applicant creditor’s costs, including all reserved costs, be taxed and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966 (Cth).
Note that the date of the act of bankruptcy is 14 June 2010.
The applicant must give a copy of this order to the Official Receiver within 2 working days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 1660 of 2010
| VISTA CAPITAL DEVELOPMENTS PTY LTD (ACN 077 585 534) |
Applicant
And
| MARIA DUNCOMBE |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
Vista Capital Developments Pty Ltd moves on a petition for a sequestration order against Ms Duncombe. The petition was filed on 30 July 2010, and was returnable for hearing on 27 August 2010, before being adjourned to today.
Ms Duncombe was represented on that occasion by counsel, who signed short minutes of order which provided:
The Court Orders, by consent of the parties, without prejudice to the Respondent’s defence on the grounds of alleged failure by the Respondent [sic: Applicant] to serve the petition;
1.The Respondent to file and serve a Notice of Appearance (form 4) and a notice containing grounds of opposition to petition (form 5) within one week by 3 September 2010.
2.The Respondent to file and serve any affidavit upon which she relies within two weeks thereafter by 17 September 2010.
3.The Applicant to file and serve any Affidavits in reply within two weeks thereafter by 1 October 2010.
4.Proceedings adjourned for further directions one week thereafter to 12 October 2010.
There has been no compliance by Ms Duncombe with any of the terms of the short minutes, but counsel has again appeared today to represent her. No explanation for the failure to comply with the Registrar’s directions has been provided, even by statements from the bar table.
Counsel for Ms Duncombe sought a further adjournment of the petition, and that application was opposed. The ground of the adjournment, as it developed in the course of the hearing, was that Ms Duncombe should be allowed a further opportunity to take legal advice and formulate her grounds of opposition. It was suggested that these might include not only a challenge to the service of the petition and supporting documents, but also a challenge to the amount of the current indebtedness asserted in the petition.
Ms Duncombe’s counsel informed the Court that his instructions were that the debt asserted in the petition had been reduced by the amount of $20,000. The petition asserted an indebtedness of $1,035,291.60 pursuant to a judgment against several defendants entered in New South Wales Supreme Court proceedings on 29 August 2008.
Counsel for Ms Duncombe was unable to present any admissible evidence to give substance to such a contention. He tendered a photocopy of a bank cheque. In my opinion, this was not probative of anything relevant, in the absence of evidence to show that this cheque had been paid and received by the creditor in reduction of the specific indebtedness relied upon in the petition. There is, therefore, no admissible evidence before me to lend support to the suggested ground, and I am not satisfied that there is a real prospect of such evidence emerging if another adjournment were allowed.
Moreover, the suggested ground appears to hold out merely a possibility of a relatively small reduction in the amount of a substantial indebtedness which is conceded. This would not result in the dismissal of the petition, although it might require amendment of the petition.
There is no foreshadowed ground of opposition challenging the conceded indebtedness, nor any assertion that there is a prospect of it being paid by Ms Duncombe or one of the other debtors under the judgment within a reasonable time. There is no contention that Ms Duncombe is able generally to pay all her unsecured creditors within a reasonable time.
In my opinion, Ms Duncombe has been given sufficient time to present to the Court formulated grounds of opposition, with sworn evidence in support, and I am not persuaded that she should be given more time to do that.
The other ground for the adjournment application was that Ms Duncombe hopes that further discussions with the creditor will lead to the creditor accepting less than the total amount of the debt owing. However, the prospect of this, so far as the Court is concerned, cannot be regarded as realistic, in circumstances where the creditor is pressing for the immediate making of a sequestration order based on the indebtedness alleged. I do not consider that the hope of further negotiations provides sufficient grounds for adjournment where that adjournment is opposed by the creditor.
After my refusing to adjourn, the hearing of the petition proceeded based entirely on the evidence filed in support by the creditor. Counsel for Ms Duncombe endeavoured to find technical points in favour of Ms Duncombe, notwithstanding the absence of any formulated and foreshadowed grounds of opposition. I shall address several points that were discussed with counsel.
The first point concerns the verification of the indebtedness relied upon in the petition. Under s.52(1)(a), the Court is entitled to “accept the affidavit verifying the petition as sufficient” to prove the indebtedness relied upon.
In the present case, paragraph 1 of the petition alleges an indebtedness in the amount I have set out above, and that paragraph is verified in paragraph 2 of an affidavit found in Part 2 of the petition. This is found at page 4 of the petition, and is clearly seeking to follow Form 6 prescribed under the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), pursuant to r.4.02(1) and (2). In my opinion, the affidavit verifying the petition is in terms of the prescribed form. It purports to have been made on oath before a duly authorised witness.
Counsel for Ms Duncombe takes the point, however, that the actual name and qualification of the witness to take an oath for the purposes of an affidavit in the Federal Magistrates Court is not set out in the body of the affidavit under the signature of the purported witness. However, the form does not require this. Moreover, I am prepared to draw inferences of regularity in respect of the authority of the witness, upon the basis that Ms Duncombe did not foreshadow any objection to the affidavit nor seek to cross-examine the deponent to the affidavit, and has not led any admissible evidence challenging the due making of the affidavit. I therefore am prepared to accept the affidavit verifying petition, as providing evidence of the indebtedness asserted in its paragraph 1.
I am confirmed in the above by reason of the rule 4.06(4) affidavit. This is not perfectly expressed, due to the absence of a verb in paragraph 3. It purports to be made by a director of the creditor, and states:
3.The amount of $1,035,291.60, being the total of the amount of the debt specified in the Bankruptcy Notice, served on the Respondent, Maria Duncombe, on 24 May 2010.
4.I have access to the records of the Applicant in respect of the debt due to the Applicant.
5.I believe that there is no genuine dispute about the existence or amount of debt (or debts) referred to in paragraph 3.
It is correct that paragraph 3 does not in terms state that the identified amount of the debt “is still owing” by Ms Duncombe. However, in my opinion, when read with paragraph 5, the affidavit sufficiently deposes to that fact. The debt referred to in paragraph 3 is deposed in paragraph 5 to be in “existence” as a debt, and in the same amount. Implicitly, in my opinion, the deponent is deposing to the current indebtedness in that amount of Ms Duncombe, as well as all the other joint debtors under the judgment debt. I am therefore satisfied that this affidavit of debt sufficiently complies with r.4.06(4), and may also be relied on for the purposes of s.51(1)(a). I arrive at that conclusion in a situation where Ms Duncombe has had the opportunity to file evidence challenging the amount of the asserted indebtedness, and has not done so.
The creditor’s petition relies on an act of bankruptcy, being the failure to comply within the time provided with the terms of a bankruptcy notice. No challenge to the form or contents of the bankruptcy notice is made before me. It relied upon the same judgment debt, with added interest, as is relied upon in the petition.
The service of the bankruptcy notice was effected by facsimile machines. An affidavit of service by the creditor’s solicitor, Mr Doherty, deposes to serving the bankruptcy notice “by facsimile copy on her solicitor, Sean Wilkins & Company”, on 24 May 2010. The affidavit attaches a copy of a covering letter said to have been sent by facsimile machine to these solicitors with its enclosures. The affidavit includes a transmission report printed out by Mr Doherty’s facsimile machine, which suggests that 23 pages were transmitted to Ms Duncombe’s solicitor correctly, on 24 May 2010. No evidence has been led by Ms Duncombe that those documents were not so transmitted, including by way of reproduction in hard copy form by a facsimile machine in the office of Ms Duncombe’s solicitors. I would infer from the transmission report that in fact hard copy reproduction did occur, in the absence of any evidence to the contrary.
Service in that mode occurred as a result of the creditor’s solicitor, suggesting to Ms Duncombe’s solicitors:
Our client is prepared to provide a withdrawal of caveat on condition that your office is instructed to accept service (in writing) of the following document/originating processes.
(1) Bankruptcy Notice NN 978/10, in the matter of Visa Capital Developments Pty Ltd v Maria Duncombe; and …
The solicitors, who I find were acting for Ms Duncombe at the time, Sean Wilkins & Company, responded as follows:
We are instructed to accept service of the documents.
The facsimile transmission which I have recounted then occurred.
It was submitted by counsel for Ms Duncombe that the agreement by Sean Wilkins & Company to accept that service was confined to service “in writing”, and that this had not occurred by the medium of the facsimile transaction.
It was also obliquely disputed that service had occurred in accordance with Bankruptcy Regulation 16.01. In that respect, the creditor relied on r.16.01(1)(e), which provides:
16.01 Service of documents
(1) Unless the contrary intention appears, where a document is required or permitted by the Act or these Regulations to be given or sent to, or served on, a person (other than a person mentioned in regulation 16.02), the document may be:
……
(e)sent by facsimile transmission or another mode of electronic transmission:
(i) to a facility maintained by the person for receipt of electronically transmitted documents; or
(ii) in such a manner (for example, by electronic mail) that the document should, in the ordinary course of events, be received by the person.
(2)A document given or sent to, or served on, a person in accordance with subregulation (1) is taken, in the absence of proof to the contrary, to have been received by, or served on, the person:
….
(b)in the case of service in accordance with paragraph (1) (c), (d) or (e) — when the document is left, delivered or transmitted, as the case requires.
The contention that Ms Duncombe’s solicitors did not agree to accept service in the mode of facsimile service, in my opinion, should not be accepted. In the circumstances, the agreement to accept service “in writing” encompassed the receipt of hard copy documents in their office delivered in any manner, including by way of their facsimile machine. I therefore am satisfied that the bankruptcy notice was served in accordance with an agreement entered into prima facie upon full instructions by Ms Duncombe’s solicitors, to accept service of the bankruptcy notice on her behalf.
The question then arises whether such service complies with the terms of regulation 16.01(e). In my opinion, it does.
These regulations have been construed as encompassing service on a person by way of personal service on a solicitor with instructions to accept service (see Macquarie Leasing Pty Ltd v Phrakhoungheaung [2009] FMCA 167 at [14] – [19]). In circumstances where a solicitor has been so instructed, then the Court accepted that service on the solicitors can amount to service on the debtor “at his or her last known address”. In the same manner, in my opinion, service by facsimile in the present circumstances meets the intent and language of paragraph (e), providing service on the debtor “in such a manner … that the document should, in the ordinary course of events, be received by the person”. I am therefore satisfied that the due service of the bankruptcy notice in accordance with the bankruptcy regulations has been established.
There is no dispute by Ms Duncombe that there was non-compliance with that bankruptcy notice, and that no application was made to the Court to set it aside. I am therefore satisfied as to the act of bankruptcy alleged in the petition occurring on 14 June 2010.
The issue as to service of the petition and the verifying documents, which appears to have led to the reservation expressed in the preamble to the short minutes of order signed by counsel which were given effect on 27 August 2010, has not been developed by Ms Duncombe in a notice of grounds of opposition nor in any evidence filed in the Court. The creditor has filed an affidavit of service of the petition suggesting personal service on 9 August 2010. I am informed from the bar table that Ms Duncombe had foreshadowed a challenge that such service actually occurred. But, as I have noted, she has filed no evidence to deny this.
However, in my opinion, it is immaterial whether service of the petition was effected personally in accordance with the Federal Magistrates Court Rules. There is no doubt in my mind that actual notice had occurred in time for her to instruct counsel to appear on
27 August 2010, and to enter into the short minutes which were signed by him. There is also no doubt that, in fact, she has again appeared today by counsel, who has represented her at the hearing of the petition, including to make an adjournment application.
In those circumstances, in my opinion, the situation is covered by
De Robillard v Carver(2007) 159 FCR 38 at [81] – [86]. In Buchanan J’s opinions, which had the agreement of the other justices, the provisions of O.7 r.1 of the Federal Court Rules (Cth) were applicable in this Court so as to deem an originating process to have been served personally if the party “appears before the court in response to the process”. His Honour was also of the opinion that the bankruptcy rules excluded the possibility of a conditional appearance.
In the present case, in my opinion, Ms Duncombe has “appeared before the court in response to the process”. I do not regard the reservations expressed in the short minute of 27 August 2010, nor in a ‘notice of address for service’ filed in Court today by Ms Duncombe’s counsel, as being effective to exclude the application of the Federal Court rule.
For both reasons, I am therefore satisfied that she has been duly served with the petition and supporting documents. No consideration of procedural fairness has been shown to my satisfaction in relation to her lacking a reasonable opportunity to present grounds of opposition to the Court.
For the above reasons, I am satisfied that the matters required to be established by a creditor under s.52(1) have been established, as have the other requirements of the Bankruptcy Act and Regulations before the making of a sequestration order. I am not satisfied that any discretionary ground for declining to make a sequestration order has been established by Ms Duncombe under s.52(2)(a) or (b).
For the reasons I have given above, I am not satisfied that the hearing of the petition should be further adjourned, and I am satisfied that a sequestration order should be made today.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Smith FM.
Associate:
Date: 26 October 2010
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