Zhang v Ehrenfeld
[2015] FCCA 877
•17 April 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ZHANG v EHRENFELD | [2015] FCCA 877 |
| Catchwords: BANKRUPTCY – Creditor’s Petition – notice stating grounds of opposition filed – whether proper service of bankruptcy notice was effected on debtor in accordance with the Bankruptcy Act 1966 (Cth) – whether bankruptcy notice was served on debtor at his last known address – proper service of bankruptcy notice not effected – Creditor’s Petition dismissed. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.41, 52(1) Corporations Act 2001 (Cth), ss.205B, 205D Bankruptcy Regulations 1996 (Cth), rr.16.01, 16.01(1)(a), 16.01(1)(c) Uniform Civil Procedure Rules 2005 (NSW), r.12.17 |
| Civic Video Pty Ltd v Warburton (2013) 216 FCR 61 DM Developments v Driscoll & Anor (2011) 251 FLR 415 Fancourt & Anor v Mercantile Credits Ltd (1983) 154 CLR 87 Skalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107 |
| Applicant: | KENNY ZHANG |
| Respondent: | GABRIEL EHRENFELD |
| File Number: | SYG 364 of 2014 |
| Judgment of: | Judge Lloyd-Jones |
| Hearing date: | 12 December 2014 |
| Delivered at: | Sydney |
| Delivered on: | 17 April 2015 |
REPRESENTATION
| Solicitor for the Applicant: | Mr D Oliveri of Oliveri Attorneys |
| Counsel for the Respondent: | Mr B Dean |
| Solicitors for the Respondent: | Carrolls Lawyers |
ORDERS
The Creditor’s Petition filed on 18 February 2014 be dismissed.
The applicant pay the respondent’s costs and disbursements of and incidental to the Creditor’s Petition.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 364 of 2014
| KENNY ZHANG |
Applicant
And
| GABRIEL EHRENFELD |
Respondent
REASONS FOR JUDGMENT
Introduction
Before the Court is a creditor’s petition filed by the applicant, Kenny Zhang (“Zhang”), on 18 February 2014 (the “Petition”), seeking to have a sequestration order made against the estate of the respondent debtor, Gabriel Ehrenfeld (“Ehrenfeld”). The Petition is founded on a default judgment in favour of the applicant entered in the Local Court of NSW on 9 August 2013 in the amount of $88,308.50 (the “Judgment Debt”). It is not in dispute that the respondent entered into a residential tenancy agreement for a property located at Kings Road, Vaucluse, NSW (the “Vaucluse Property”) with the applicant through Brian McMillan of World Square Realty Pty Ltd. The basis of the Judgment Debt arises from claimed unpaid rent at the Property.
The basis of the debt founding the Petition is that Ehrenfeld owes Zhang the amount of $88,308.30 for a judgment entered in the Local Court of New South Wales on 9 August 2013 in matter number 2012/00387656, together with interest.
On 25 March 2014, solicitors representing Ehrenfeld filed a notice stating grounds of opposition to the Petition (the “Notice of Opposition”) indicating that they intended to oppose the Petition on the following grounds:
1. The respondent did not commit and act of bankruptcy as alleged in Paragraph 4 of the Petition;
Particulars
a) the respondent did not receive the bankruptcy notice; and further or alternatively,
b) the address in which the Notice was delivered was not the respondent’s last known address.
2. The respondent is able to pay his debts within the meaning of s.52(2)(a) of the Bankruptcy Act 1966.
3. There is otherwise sufficient cause for the sequestration order not to be made within the meaning of s.52(2)(b) of the Bankruptcy Act 1966;
Particulars
a) The debt alleged in Paragraph 1 of the Petition arose from a judgment in the Local Court which was entered ex parte and irregularly and is likely to be set aside on application to the Local Court.
The matter came before the Court on 25 March, 13 May and 23 June 2014, and on each occasion was adjourned. On 1 September 2014 the matter was referred to Judge Driver who made various procedural orders. The matter was finally set down for hearing before me on 12 December 2014, at which time, prior to hearing argument, the following order was made:
1. The period at the expiration of which the Petition will lapse be a period of 24 months from the date of presentation.
Evidence
The creditor, Zhang, relies on the following evidence in respect of the Notice of Opposition:
a)Affidavit of Joseph Khoury sworn 10 March 2014 (“Khoury Affidavit of Service”);
b)Affidavit of James Stephen Twigg, sworn 9 October 2013 (“Twigg Affidavit”) – Objections raised to this affidavit, which are addressed below;
c)Affidavit of Kenny Zhang, affirmed 10 December 2014;
d)Affidavit of Dominic Lawrence Oliveri, affirmed 12 May 2014 (“First Oliveri Affidavit”);
e)Affidavit of Dominic Lawrence Oliveri, affirmed 20 June 2014 (“Second Oliveri Affidavit”);
f)Affidavit of Dominic Lawrence Oliveri, affirmed 11 December 2014 (“Third Oliveri Affidavit”); and
g)Affidavit of Brian McMillan, affirmed 20 June 2014 (“Macmillan Affidavit”).
Ehrenfeld relies on the following evidence in respect of the Notice of Opposition:
a)Affidavit of Gabriel Ehrenfeld, affirmed 22 April 2014 (“First Ehrenfeld Affidavit”), together with exhibit “GE 1”
b)Affidavit of Gabriel Ehrenfeld affirmed 17 June 2014 (“Second Ehrenfeld Affidavit”), together with exhibit “GE 2”;
c)Affidavit of Gabriel Ehrenfeld affirmed 11 December 2014 (“Third Ehrenfeld Affidavit”) with attachments:
i)Letter dated 19 June 2013 from the Australian Electoral Commission (“AEC Letter”);
ii)ASIC Form, filed 10 May 2014 (“ASIC Form”); and
d)Affidavit of Gabriel Ehrenfeld affirmed 12 December 2014 (“Fourth Ehrenfeld Affidavit”) (objections were raised to the entirety of this Affidavit).
Background
In setting out the following background material I have quoted directly from the submissions prepared by the legal representatives of the parties. I will not make any further attribution in respect of this background material as this would make the summary unwieldy.
Ehrenfeld entered into a residential tenancy agreement with Zhang on 2 July 2012 in relation to the Vaucluse Property, whereby Ehrenfeld agreed to pay Zhang the amount of $3,000 in rent per week for a period of six months. As at 14 December 2012, the amount of $30,000 was outstanding to Zhang. Mr Oliveri, on behalf of Zhang, filed a statement of claim against Ehrenfeld in the General Division of the Local Court of New South Wales. On 5 February 2013, Ehrenfeld filed a defence to the statement of claim and a cross-claim. The defence and cross-claim were received by Mr Oliveri from the Local Court under cover of a notice of listing, which stated the matter was listed for defence call-over on 13 March 2013 at 9.30am.
On 13 March 2013, neither Ehrenfeld nor his representative attended the call-over. The Local Court ordered that the call-over be adjourned to 27 March 2013 at 9.30am and stated that the defendant needed to attend on the next occasion or the defence would be struck out. Further, the Court ordered that Ehrenfeld pay Zhang’s costs of $290. At the time of the current hearing, these costs have not been paid.
On 27 March 2013 the Local Court ordered that the matter be listed for pre-trial review on 9 April 2013 at 9.30am. On that date the Court ordered that the matter be listed for directions on 30 April 2013 to deal with the issue of expert evidence. Zhang’s representatives undertook to comply with the notice to produce served on 4 March 2013 and the Court granted Zhang leave to file an amended statement of claim.
On 30 April 2013 the Local Court made the following directions:
a)Ehrenfeld to file any defence to the amended statement of claim and any amended cross-claim on or before 14 May 2013;
b)Zhang file any defence to any amended cross-claim on or before 11 June 2013;
c)Leave was granted to Ehrenfeld to obtain expert reports from:
i)A real estate valuer; and
ii)A forensic accountant;
With such reports to be served on or before 25 June 2013;
d)Leave was granted to Zhang to obtain and to serve any expert reports in reply by 23 July 2013; and
e)The proceedings were listed for further directions and to set a date for hearing and review and to consider appointment of joint experts on 30 July 2013.
Between 30 April 2013 and 30 July 2013 Ehrenfeld did not serve Zhang (or Mr Oliveri) with any defence or cross-claim to the amended statement of claim. Further, no expert reports were served on Zhang (or Mr Oliveri).
On 30 July 2013 both Mr Ehrenfeld and his representative failed to appear at the directions hearing.
The Court struck out the defence and the cross-claim pursuant to r.12.17 of the Uniform Civil Procedure Rules 2005 (NSW) (the “UCPR”). On 9 August 2013 the Court made an order that Ehrenfeld pay Zhang the amount of $87,761.29.
I now turn to circumstances in relation to the disputed service of the Bankruptcy Notice.
On or about 15 or 18 April 2014, Ehrenfeld notified Zhang through Zhang’s real estate agent, Brian McMillan, that Ehrenfeld would leave the Vaucluse Property and would or was looking to move into a new residence (Second Ehrenfeld Affidavit at [20]; McMillan Affidavit at [3]). On 22 April 2014, Ehrenfeld notified Zhang through an email to Zhang’s agent, Mr McMillan, that his forwarding address for all communications was PO Box 212, Bondi, NSW, 2026 (the “Bondi PO Box”) (First Ehrenfeld Affidavit at [10]-[11]; “GE-1” at p.1; McMillan Affidavit at [4]). About this time Ehrenfeld moved to 53 Bulkara Road, Bellevue Hill (the “Bellevue Property”) (Second Ehrenfeld Affidavit at [24]).
On 10 May 2014 Ehrenfeld’s new residential address at the Bellevue Property was notified to and filed with ASIC on its public register (Second Ehrenfeld Affidavit at [24]; “GE-2”, Tab 2, p.2-14; Third Ehrenfeld Affidavit at [3]). On or about 5 June 20147, Ehrenfeld enrolled with the Australian Electoral Commission and listed his address on the Commonwealth Electoral Role as the Bellevue Property (Third Ehrenfeld Affidavit at [2]). In July 2013, the Steinbruck Capital Group ceased operating an office at level 23, Tower 1, 520 Oxford St, Bondi Junction (the “Bondi Junction Office”) (Second Ehrenfeld Affidavit at [14]).
On 26 September 2013, a copy of the Bankruptcy Notice was purportedly left in an envelope marked to Ehrenfeld’s attention at the Bondi Junction Office. In the case of the Petition, it was addressed to Ehrenfeld and was served at the Bellevue Residence (First Ehrenfeld Affidavit at [11]).
Current Proceedings
Applicant’s Submissions
The argument advanced on behalf of Zhang is that, pursuant to reg.16.01 of the Bankruptcy Regulations 1996 (Cth) (the “Bankruptcy Regulations”), service was properly effected by leaving at the Bondi Junction Office in an envelope bearing the recipient’s name at the last known address on 26 September 2013 (Twigg Affidavit) a sealed copy of the Bankruptcy Notice.
In response it is submitted on behalf of Ehrenfeld that the Bondi Junction Office (is not his residential address) and is not his last known address because he left the Bondi Junction Office in July 2013, before the Bankruptcy Notice was delivered there. Ehrenfeld claims that since 12 July 2013 he operated his business from his home address, being the Bellevue Property. Further he states that he advised the real estate agent, Brian McMillan (who disputes this), by telephone of his new residential address. However, it is noted that Ehrenfeld did not update his address for service in the Local Court proceedings relating to unpaid rent: Case Number 2012/00387656, which continued until 9 August 2013 (First Oliveri Affidavit) (this is addressed below).
Zhang maintains that there is evidence that the business address where the Bankruptcy Notice was delivered was the registered office of at least one of Ehrenfeld’s companies, Reel Time Media Ltd, until 13 November 2013.
It is argued on behalf of Zhang that the authority of Skalkos v T & S Recoveries Pty Ltd(2004) 141 FCR 107 per Sundberg, Finkelstein and Hely JJ, along with numerous other authorities demonstrate that the last known address need not be a residential address and can be a business address. Although it is argued on behalf of Ehrenfeld that he did not receive the bankruptcy notice, it is of no relevance as reg.16.01 of the Bankruptcy Regulations deems service upon delivery of a bankruptcy notice, not its receipt (Skalkos (supra)). Zhang maintains that it is very likely that Ehrenfeld did receive the Bankruptcy Notice, given that it was delivered to the registered office of at least one of his companies, namely Reel Time Media Ltd.
Respondent’s Submissions
The argument advanced on behalf of Ehrenfeld is that to succeed on this application, Zhang must prove on the balance of probabilities that the Bankruptcy Notice was lawfully served on Ehrenfeld in accordance with reg.16.01(1)(c) of the Bankruptcy Regulations 1996 (Cth). This Regulation provides that to serve a document, it may be left in an envelope or similar package marked with a person’s name at the last known address of the person.
The Court was referred to the decision of Civic Video Pty Ltd v Warburton (2013) 216 FCR 61 per Jacobson J at [74]-[78] where his Honour stated:
74. In my opinion, the effect of these authorities is that the last known address of the person is the address made known by the debtor. So much is clear because the purpose of the rule is that the bankruptcy notice should be brought to the attention of the debtor.
75. But that does not answer the question posed in Magafas, namely, who is to be the recipient of the intelligence made known by the debtor.
76. In my view that question is to be determined objectively on all of the facts of the case. In some instances it may be information that has been supplied to the world at large, as for example in QBE where the debtor conducted his practice as an accountant at premises on which there was a sign indicating it to be the office of the debtor’s firm. In others it may be the most recent address supplied to the creditor.
77. It would be wrong to confine the expression, in all instances, to the last address made known to the creditor. That is demonstrated in the present case. How can an address made known by Mr Warburton to Civic in 2005 be the last known address? What is required is a consideration of all the circumstances of the case.
78. In addition, since the purpose of the rule is that the bankruptcy notice should be brought to the debtor’s attention, it seems to me that ordinarily the creditor is under an obligation to take steps to ascertain the debtor’s most recent address as made known by him or her in readily accessible public records.
Ehrenfeld submits that Zhang has failed to prove on the balance of probabilities that the Bankruptcy Notice was served on Ehrenfeld at his “last known address’ in accordance with reg.16.01(1)(c) of the Bankruptcy Regulations on the following bases:
a)There is an absence of evidence from Zhang as to the last address Ehrenfeld made known to him, or as to reasonable searches performed to ascertain Ehrenfeld’s most recent address made known on publically available records, like the Electoral Role or the ASIC register, before the document was purportedly served: cf the quality of evidence and factual circumstances in Skalkos (supra) at [36];
b)Ehrenfeld had in fact put Zhang on notice, through his real estate agent for the Vaucluse Property, that he had moved to a new residential address and sent a further email indicating the address for further communications was the Bondi PO Box. A post office box address may be the “last known address”: DM Developments v Driscoll (2011) 251 FLR 415 at [16];
c)Ehrenfeld had made known his new address in registers available to the public and Zhang well before the date the Bankruptcy Notice was purportedly served: Civic Video (supra) at [79]; and
d)Zhang addressed and personally served the Petition on Ehrenfeld at the Bellevue Property. Ehrenfeld challenges the extent that Zhang relies upon the Twigg Affidavit as follows:
i)The evidence of Mr Twigg has no relevance to the objective test for “last known address” for service under reg.16 of the Bankruptcy Regulations, explained in Civic Video (supra). Mr Twigg does not give evidence about what Ehrenfeld has made known about his address;
ii)The phrases “served”, “at his last known address” and “under regulation 16” in para.1 are objected to for relevance (Evidence Act 1995 (Cth) (the “Evidence Act”) under ss.56, 57 and/or 135). It is submitted that Mr Twigg is unable to give evidence on these matters of law and, as such, his evidence has limited probative value, but may create unfair prejudice, mislead or confuse the Court, or cause or result in an undue waste of time;
iii)Paragraph three is objected to for relevance (Evidence Act s.56, Form (conclusion, impermissible opinion) (Evidence Act s.76, hearsay) (Evidence Act s.59) and in the alternative under s.135 of the Evidence Act, the paragraph has no date and time, and its probative value, if any, must also be considered in light of the facts that the address was a building office, not a residence: cf “resides” and “neighbours” and that such inquiries were made to so-called neighbours not Nicola. The paragraph present at its highest is irrelevant opinion of his inquiry. The enquiries are not described or the factual or evidentiary result of those enquiries disclosed to the Court. Any facts ascertained from the so-called neighbours are, in any event, hearsay. The Court cannot waive this evidence and Ehrenfeld is unfairly prejudiced from being able to test this evidence; and
iv)Further, or in the alternative, in these circumstances the evidence can have limited or no probative value.
Consideration
I note a substantial number of objections have been raised in respect of the Twigg Affidavit by counsel for Ehrenfeld and acknowledge that a number can be sustained. However, I have formed the view that the Twigg Affidavit does nothing more than establish that a sealed envelope, containing a copy of the Bankruptcy Notice, on which was affixed a duly authorised reproduction of the Official Receiver’s signature and that was bearing Ehrenfeld’s name, was handed to a receptionist identified as Nicola Dunbar at the Bondi Junction Office at 9:42 am on 26 September 2013. It is not in dispute that the office was a business location, and not a private residence.
I am satisfied that the Twigg Affidavit only goes to prove that an envelope, as described above, was left at that address on that day. I acknowledge that the Petition was addressed to Ehrenfeld at a different address namely, 53 Bulkara Road, identified as the Bellevue Property. The Khoury Affidavit of Service that has been read shows that Ehrenfeld was served with the Petition at the Bellevue Property, personally, on 27 February 2014. There is no suggestion that there was any difficulty in locating Ehrenfeld at that address or serving him at that address. The Court file indicates that Ehrenfeld responded to the Petition by appearing at the first return date.
The substantial ground of the Notice of Opposition is that the Bankruptcy Notice was not served on Ehrenfeld in accordance with the Bankruptcy Regulations. Accordingly, the claim is that there was no act of bankruptcy, as s.52(1) of the Bankruptcy Act was not satisfied, and the Petition should be dismissed. In this respect Ehrenfeld bears no onus on this issue as it is for Zhang to establish that an act of bankruptcy has occurred as alleged in the Petition. It is for Zhang to put sufficient evidence to establish an act of bankruptcy and if this requirement fails the Petition must be dismissed.
Both parties have referred the Court to the decision in Skalkos (supra) as the authority that the last known address need not be a residential address. The issue of “last-known address” is addressed at [32]-[37] of Skalkos (supra) where Sundberg, Finkelstein and Hely JJ stated:
Last-known address
32. In Robertson v Banham & Co [1997] 1 WLR 446 (“Robertson”) the Court of Appeal considered Order 10 r 1(2)(b) of the Rules of the Supreme Court, which permitted a writ to be served “if there is a letter box for that address, by inserting through the letter box a copy of the writ enclosed in a sealed envelope addressed to the defendant”. By r 1(2)(a) “that address” referred to the defendant’s “usual or last known address”. The question was whether service on a person at an address at which he was practising as a solicitor was service at his “usual or last known address”.
33. Roch LJ, with whom Connell J agreed, said at 453 that a person’s “usual or last known address” should be determined in the light of the fact that the purpose of the rule is that the originating process should be brought to that person’s attention. His Lordship gave a number of reasons for concluding that the phrase is not confined to residential addresses. Not all are applicable to the present case. However one that is applicable consists of authorities holding that a person’s business address can, in an appropriate case, be that person’s “residence” or “last abode”. In R v Braithwaite [1918] 2 KB 319 the issue was whether a summons for non-payment of rates had been delivered “to or at the residence of the person” to whom it was addressed when it was left, not at the ratepayer’s dwelling house, but at the house where he carried on business as a solicitor. The Court of Appeal held that it had been. Warrington LJ said at 328:
Such an expression as residence, which has no technical meaning, may properly be construed having regard to the objects of the Act in which it is found … The only possible object in the case of the statute in question is that the documents in question may be brought to the knowledge of the defaulter. For this purpose I can see no reason why a man’s private house or lodging should be selected as the place of service exclusively of his place of business.
The “last-known place of abode” cases are to the same effect. See Morecombe and Heysham Borough v Warwick (1958) 9 P&CR 307; Stylo Shoes Ltd v Prices Tailors Ltd [1960] Ch 396 and Price v West London Investment Building Society [1964] 1 WLR 616.
34. In Robertson Roch LJ pointed out at 456 that
Here the case is stronger because the phrase is ‘usual or last known address’. When a solicitor is being sued as a solicitor, his usual address as a solicitor must be the address at which he practises. That will probably be the only address known to the person who wishes to serve the writ. That will be the address at which he is most likely to receive the writ. That, in my judgment, is the ordinary and natural meaning of those words.
35. In Drake v Stanton [1999] FCA 1635 Tamberlin J considered the words in reg 16.01(1)(c) — “left, in an envelope or similar packaging marked with the person’s name, at the last-known address of the person”. A witness had given evidence that the usual place of abode of the debtor was 292 Grey St, Glen Innes. His Honour said at [5]:
The references to ‘usual place of abode’, of course, and to ‘ resides’, refer to the residential address of Mr Stanton. That is not the expression which is used in the relevant provision … The relevant expression is ‘the last-known address of the person’ and it does not matter whether the debtor currently lives or resides there or not.
His Honour referred to statements made by the debtor that his address was “J Stanton Enterprises Pty Ltd at 396 Grey St, Glen Innes”, and said at [8]:
In my view, … the reference to ‘last-known address of the person’ is to that address which has been made known by the applicant as at the time closest to the date in question. In the present case the evidence indicates clearly that the address which was last asserted by the applicant was the address at 396 Grey Street. The applicant has not been called to give any evidence to the contrary.
36. The evidence in the present case establishes that
• the appellant’s usual dwelling house (where he spent the night) was at 31A New South Head Rd, Vaucluse (“the Vaucluse address”)
• shortly before the date on which the bankruptcy notice was posted to the Alexandria address, the premises at the Vaucluse address were in the process of major renovation, with nobody living there
• before the date on which the notice was posted, the appellant’s wife told the respondent’s process server that she and the appellant were not then living at the Vaucluse address because it was still under construction, and that she was not prepared to disclose their current temporary address.
• the appellant was the sole director and the secretary of Foreign Language Publications Pty Ltd, the registered office of which was the Alexandria address.
• the appellant worked in the company’s office
• in proceedings in the High Court, the appellant’s solicitors had given the Alexandria address as his address for service
• in February 2003 the appellant’s solicitor advised the judgment creditors’ solicitors that he had ceased to act for the appellant, and that correspondence should be directed to “Theo Skalkos, Managing Director, Foreign Language Publications Pty Ltd” at the Alexandria address.
• in February 2003, in proceedings at the Supreme Court of New South Wales, the appellant gave his address for service as “Theo Skalkos, Director, Foreign Language Publications Pty Ltd” at the Alexandria address.
On that material it is clear that the appellant was not at the relevant time living at the Vaucluse address, though that was his usual dwelling house or residence; that his current residential address was not known to the respondent; that in various contexts he had given the Alexandria address as his address for service, and that the best prospect of getting a document to him was by sending it to that address.
37. The primary judge said that although the debtor did not reside at the Alexandria address, he was using it for business purposes, and that although the premises were occupied by the company rather than the debtor personally, “he had such a degree of connection with the premises that they may properly be described as his last-known address”. Drake v Stanton, Robertson v Banham & Co and the cases referred to in the latter establish, in our view correctly, that a business address can be a person’s “last-known address”. The primary judge’s conclusion that the Alexandria address was the debtor’s last-known address was amply open to him on the evidence summarized at [36].
Conflicting evidence has been given by the parties in respect of Ehrenfeld’s departure from the Vaucluse Property. Counsel for Zhang submits that on or about 15 April 2014, Ehrenfeld notified Zhang through his agent, Mr McMillan, that Ehrenfeld would leave the Vaucluse Property and would, or was looking to, move to a new residence. This is stated in the First Ehrenfeld Affidavit, set out below. I acknowledge that there is clear conflict of evidence in relation to the exit date and corresponding notification, however, I do not believe that it is necessary to resolve this discrepancy. There has not been a call for cross-examination on either side. The Court accepts that Ehrenfeld was leaving, then left the Vaucluse Property, and was moving into a new residence. It is argued on behalf of Ehrenfeld that Zhang was put on notice of this, which is significant in the context of this issue.
The unchallenged, affirmed evidence in the First Ehrenfeld Affidavit in respect of the vacation of the Vaucluse Property and in respect of the Bondi Junction Office address is as follows:
Non-Service of Bankruptcy Notice
5. I refer to the affidavit of James Stephen Twigg sworn on 9 October 2013 (Twigg Affidavit). In relation to paragraph 1 of the Twigg Affidavit, I say that the address set out therein is a serviced office business address, not a residential address, I ceased to occupy an office at that address in July 2013.
6. In 2013, there was a receptionist at that serviced office named Nicola. I have not been able to speak to Nicola in relation to the Twigg Affidavit, as she is no longer the receptionist at those offices and I have no other phone contact details. In relation to other instances where correspondence has been identified as not being forwarded to me, upon enquiry, Nicola has advised me that they do not forward mail, they simply return the same to the sender. She has said to me words to the effect of, “We cannot forward you mail to your PO Box, we just return it to sender.”
7. I did not receive the Bankruptcy Notice referred to in the Twigg Affidavit.
8. In relation to paragraph 3 of Twigg Affidavit, I dispute that Mr Twigg confirmed that I still resided at Level 23, Tower 1, 250 Oxford Street, Bondi Junction. Indeed, it is a business address, not a residential address and I never resided there. I ceased to keep an office there several months earlier and it seems completely improbable that he made enquiries of neighbours that confirmed that I still resided there.
Forwarding Address
9. The agent for the applicant is Brian McMillan of World Square Reality Pty Ltd.
10. On 22 April 2013, I forwarded to Brian McMillan an email providing my forwarding address for al communications. Exhibited to me at the time of affirming this affidavit behind Tab 1 of the exhibit marked “GE-1” is a true copy of that email.
Current Address
11. The first instance upon which I became aware of the Bankruptcy Notice was when I was served with a Creditor’s Petition after 18 February 2014. The Creditor’s Petition was served on me at my current address in Bellevue Hill.
In respect of Zhang’s reliance on the Bondi Junction Office address as being the last known address for Ehrenfeld (and where the Bankruptcy Notice was served), there are a number of issues relating thereto. As noted elsewhere in these reasons, on 22 April 2013 Ehrenfeld caused an email to be sent to Zhang’s property manager, Brian McMillan, informing him that his postal address for any future correspondence was the Bondi PO Box. It is not in dispute that the McMillan Affidavit identifies that he received and read this email. In my view, Zhang was then taken to have been notified that the only address at which Ehrenfeld could be contacted was the Bondi PO Box. Although there is reference to the Bondi Junction Office address in the signature section of the email, the submissions made are that this highlights that it was the Bondi PO Box, not the Bondi Junction Office address that was the last known address for Ehrenfeld. I am satisfied that other than any known residential address, the last known address must be made known as where Ehrenfeld is most likely to be contactable and, in these circumstances, Zhang was taken to have been notified that the Bondi PO Box was Ehrenfeld’s last known address, rather than the Bondi Junction Office.
The Court was referred to the decision in DM Developments (supra) per Burnett FM (as he was then) at [16] where his Honour stated:
16. It follows in my view that the authorities demonstrate that prima facie service may be effected at a post office box if the court can be satisfied that in fact the post office box represents the last known address.
The decision in DM Developments (supra) is consistent with that in Skalkos (supra). A business address can be the last known address, similarly, a post office box can the last known address, given the natures of a post office box and business addresses, there can be no distinction or preference between the two. It is purely a temporal question of which one was the last known address, and in this case the evidence is that the last communication of an address made known from Ehrenfeld to Zhang was the Bondi PO Box address.
Exhibit “GE-1” to the First Ehrenfeld Affidavit is a printed copy of an email message sent by Ehrenfeld to Brian McMillan on 22 April 2013. The body of the email states:
Brian
Please note my forwarding address for all correspondence is:
PO Box 212
BONDI NSW 2026.
Thank you.
However, on the footer of the above email contains the following details “Steinbruck Capital Group Gabriel Ehrenfeld Managing Director, Level 23, Tower 1, 520 Oxford Street, Bondi Junction, NSW, 2022, Australia.”
Regulation 16.01(1)(a) of the Bankruptcy Regulations permits service of a bankruptcy notice to be effected by having it sent by post or by a courier service to a person at his or her last known address. Service is deemed to have occurred, unless the person to whom it was sent can prove that it was not delivered. That is the effect of the authorities such as Fancourt & Anor v Mercantile Credits Ltd (1983) 154 CLR 87 and Skalkos (supra). The test is not receipt, rather posting and delivery.
The learned authors McDonald, Henry & Meek of Australian Bankruptcy Law and Practice, Thompson Law Book Company at 16.01.10 state:
…
The “last known address” of the person being served that is referred to in Reg 16.01(1)(c) need not be the person’s residential address; it is sufficient if the person being served has “such a degree of connection with the premises” so that a business address could satisfy the regulation: Skalkos (supra) at [35]-[37].
The authors then go on to address the issue of delivery of a bankruptcy notice which is left with a debtor’s secretary, and state:
Delivery by a person other than the creditor or creditor’s agent
It was in Lazar v Seccombe (2005) 3 ABC(NS) 727; [2005] FCA 1652 at [26]-[27] that Jacobson J doubted whether proof that a bankruptcy notice left with the debtor’s secretary was in fact passed on to him was sufficient to constitute personal service of the notice under reg 16.01(1)(d), “the proper construction of” which “is that the creditor must personally deliver the bankruptcy notice”. Nevertheless, service under reg 16.01(1)(d) could presumably be effected by someone acting on behalf of the creditor, such as a process server, and the notice being left with someone at the debtor’s address and passed on to them may well constitute service at their last known address under reg 16.01(1)(a) or (c), as discussed above, though in Hacker v The Owners – Strata Plan No 17572 [2005] FCA 1936 at [36]-[39] (Emmett J), a contention that a process server delivering bankruptcy notices to the debtors’ last known address constituted delivery “by a courier service” within the meaning of reg 16.01(1)(a).
The unchallenged evidence in the Second Ehrenfeld Affidavit at [13]-[17] in respect of the Bondi Junction Office address states:
Non-service of Bankruptcy Notice
13. I refer to paragraphs 5 to 8 of My First Affidavit.
14. I am a director of companies in the Steinbruck Capital Group that had a serviced office at Level 23, Tower 1, 520 Oxford Street, Bondi Junction. The serviced office was operated under a licence from Regus which terminated on 11 July 2013. There are approximately 30 licences on that floor using Regus serviced office facility. On a number of occasions, I had observed Nicola advising phone callers and people in reception that other former licensees were no longer at that address, and stating that she was unable to take messages or receive communications on their behalf.
15. On 2 June 2014, I was able to locate Nicola Dunbar, the “Nicola” referenced in the Twigg Affidavit, on LinkedIn. I sent her an email via LinkedIn and later that day, received a reply from her. Shown to me now and exhibited at Tab 1 is a true copy of my email to her via LinkedIn, and her reply thereto.
16. In addition to having long ceased using the serviced office address to which Mr Twigg deposes serving the Bankruptcy Notice, Mr Twigg would have no reason to believe that it was an address of min. There were no signs containing my name nor the name of any company or business in any way related to me, neither at the office, on that level or in any building directory listing.
53 Bulkara Road
17. From 12 July 2013, I operated Steinbruck Capital Group from my residence at 53 Bulkara Road, Bellevue Hill, and did so until November 2013.
Appearing at Tab 1 of the Exhibits to the Second Ehrenfeld Affidavit are copies of two messages exchanged via the LinkedIn social media website between Ehrenfeld and Nicola Dunbar. The initial message from Ehrenfeld to Nicola Dunbar on Monday 2 June 2014, states:
Nicola
Can you please do me a favour?
A gentleman named James Twigg has stated that on 9 October 2013, he attended the Regus offices at Level 23, Tower 1, 520 Oxford Street, Bondi Junction, and spoke to you. He states that he handed you a sealed envelope marked for my attention.
As this is important, can you please confirm for me:
(i) whether any such person did attend;
(ii) of they did attend, what did they say to you; and,
(iii) most importantly, did you tell him that I was no longer at those offices?
Your response would be really helpful, thanks.
Gabriel Ehrenfeld
The response sent by Ms Dunbar to Ehrenfeld was as follows:
Hi Gabriel
I vaguely remember having a man come in to serve document to you and had one for you specifically and another addressed to the company. Unfortunately I don’t know what date this was, or his name, though James does sound familiar. recall telling him that you no longer had an office there and we could not receive documents on your behalf, but if he insisted because he was on instruction to deliver to that address. I remember making it clear that anything given to me for your attention would not get to you because you had left. If he said anything else to me, I can’t remember what it was, and I don’t remember what it was, and I don’t remember what was done with the documents.
Anything attentioned (sic) to you to the company after you left was returned to sender, and if was hand delivered, and they spoke to me, they were definitely informed that it would not reach you and advised to find another address to deliver to. If James Twigg is suggesting that by providing the documents to me you must have received them, he is very wrong and was informed that they wouldn’t.
I hope that’s helped you out. Sorry I can’t give you exact dates or names. But it was quite a while ago. If you need anything more, I suggest you contact Regus to see if they have any more information for you. The manager at the time was Natalia, she’s no longer at Bondi Junction, but I don’t know if she’s still with Regus
Nicola
I agree with and accept the submissions made on behalf of Ehrenfeld that a business address can be a last-known address and, further, a PO Box address can also be a last-known address. Given the natures of a PO Box address and a business address, nothing has been advanced to suggest that there can be a distinction or preference between the two. It is purely a temporal question of which address was the last known address. On the material before the Court, the last communication of an address for service made known by Ehrenfeld to Zhang was the Bondi PO Box address.
For the further avoidance of doubt, I believe it is important to clearly establish the date sequence of the various actions in respect of the changes that occurred in relation to Ehrenfeld’s last known address. In the First Oliveri Affidavit, contained at Annexure “B”, is the defence in the Local Court proceedings (Case Number 2012/387656). Ehrenfeld has nominated the Bondi Junction Office address as his address for service in the Local Court proceedings. The important issue here is when this occurred. The Defence in the Local Court proceedings was executed on 14 January 2013, approximately 8 months before the date the Bankruptcy Notice was claimed to be served, being 26 September 2013 (Twigg Affidavit). The email noting the “forwarding address” was sent to Zhang’s real estate agent, Brian McMillan, on 22 April 2013 (See [34] above).
The First Oliveri Affidavit at [10] establishes that the last time Ehrenfeld appeared in the Local Court proceedings was on 30 April 2013. Ehrenfeld’s circumstances in the Local Court proceedings were that he was an unrepresented litigant and, being a non-lawyer, was unlikely to know the processes and obligations in terms of the requirements to update and notify the Court in respect of his address for service. The First Oliveri Affidavit at [11] indicates that there was no further service of any defence, cross-claim or amended statement of claim by Ehrenfeld on Oliveri thereafter.
I acknowledge and accept the submissions made by Mr Dean on behalf of Ehrenfeld that the email of 22 April 2013 notifying that all correspondence was required to be forwarded to the Bondi PO Box address does not meet the formalities that be expected of a party participating in litigation, but this can be understood as Ehrenfeld was not a lawyer and would be unlikely to be aware of his responsibilities in this respect. It is argued that if it is assumed that Ehrenfeld appeared in the Local Court proceedings on 30 April 2013, his appearance confirmed his address for service. This is just five months prior to the claimed service of the Bankruptcy Notice. Taking those issues into consideration the best evidence is that the last address that was communication was the Bondi PO Box address.
The written submissions prepared by Mr Dean on behalf of Ehrenfeld at [5] state that on 10 May 2014 notification of Ehrenfeld’s new residential address at the Bellevue Property was filed with ASIC on its public register (Second Ehrenfeld Affidavit at [24], “GE-2”, Tab 2,p.2-14, ASIC Forms, Third Ehrenfeld Affidavit at [3], Annexure “B”). On or about 5 June 2014 Ehrenfeld enrolled with the Australian Electoral Commission and listed on the Commonwealth Electoral Roll his address as the Bellevue Property (Third Ehrenfeld Affidavit at [2], Annexure “A”, AEC Form). In July 2013, the Steinbruck Capital Group ceased operating a service office at the Bondi Junction Office (Second Ehrenfeld Affidavit at [14]). The ASIC Register and the Commonwealth Electoral Role are both public registers and the supporting documents have been tendered in evidence. The cessation of operations at the serviced offices at Bondi Junction is not supported by documentation, however, the evidence in the affirmed affidavits of Ehrenfeld was unchallenged as cross-examination in respect of this material was not sought.
The Court was referred to Civic Video (supra), with the relevant passages reproduced at [24] above. The argument advanced on behalf of Ehrenfeld is that Civic Video (supra) addressed three specific issues. The first is that the last known address of the person is the address made known by the debtor. Relevantly in Civic Video, Jacobson J stated at [74]:
74. … So much is clear because the purpose of the rule is that the bankruptcy notice should be brought to the attention of the debtor.
His Honour then posed this question at [75] in Civic Video where he stated:
75. But that does not answer the question … namely, who is to be the recipient of the intelligence made known by the debtor.
Counsel for Ehrenfeld indicated that, importantly for the matter before the Court, Jacobson J continued at [76] of Civic Video:
76. In my view that question is to be determined objectively on all of the facts of the case. In some instances it may be information that has been supplied to the world at large.
At [77] of Civic Video Jacobson J stated:
77. It would be wrong to confine the expression, in all instances, to the last address made known to the creditor.
Of relevance to the current proceeding is his Honour’s statement at [78] where Jacobson J held:
78. …[S]ince the purpose of the rule is that the bankruptcy notice should be brought to the debtor’s attention, it seems to me that ordinarily the creditor is under an obligation to take steps to ascertain the debtor’s most recent address as made known by him or her in readily accessible public records.
From the material extracted above, the essential elements are that:
a)It is clear from the reasoning that just any address made known in the past, or connected to Ehrenfeld will not necessarily be the last known address. The phrase “last known (address)” means only one address, the address that is most proximate in time;
b)The only evidence about what the last address that Ehrenfeld made known to him was the Bondi PO Box address. However, the Bankruptcy Notice was not served there. Even if Ehrenfeld appeared in another proceeding where, at that time, he had nominated his address for service, that does not constitute making known in any relevant sense that is his current address; and
c)Zhang was put on constructive notice that Ehrenfeld was moving to a new address and temporarily over five months had passed. In those circumstances, especially having obtained a default judgment, it was necessary for Zhang to undertake reasonable searches in accordance with [78] of Civic Video (supra). This is a very relevant consideration which clearly took place before the Petition was served as the new address of the Bellevue Property was used.
Had Zhang made reasonable enquiries open for him to make, the Bondi PO Box address could reasonably have been ascertained. Further, evidence has been adduced in respect of the Commonwealth Electoral Role, a publicly available record which includes contact addresses. This method of search is used particularly when people do not want to be found. Similarly, ASIC maintains a public register (available at a fee) where the details of directors of companies can be ascertained. Sections 205B and 205D of the Corporations Act 2001 (Cth) require directors to keep their details, including their normal residential addresses, up to date with ASIC, except in exceptional circumstances. Such an exception did not apply in the case of Ehrenfeld and the evidence before the Court indicates Ehrenfeld complied with his various obligations in respect of updating his details.
I accept the submission that Ehrenfeld was not hiding and was not evading service, as he was easily served with the Petition on 27 February 2014. I accept that this matter falls within the circumstances discussed in Civic Video (supra) at [78] and that Zhang was under an obligation to make searches to determine the last known address.
The circumstances before the Court can be distinguished from those in the decision of Skalkos (supra). In Skalkos the ordinary residential address (in Vaucluse) had been vacated, was under renovations and the creditor was specifically told that Skalkos was not at that address at that time. Consequently, the creditor chose not to rely upon the residence in Vaucluse as the last known address, because in those circumstances Skalkos was known not to be there but could be contacted at his business address at Alexandria. Skalkos had moved into temporary accommodation and an enquiry had been made. There was a deliberate decision not to disclose his current address. Consequently, there was unlikely to be any publicly available records of the new temporary residential address for Skalkos. This is a very different set of circumstances to the circumstances of the matter before this Court, as Ehrenfeld had updated the Electoral Role and the ASIC registers, both of which were publically available records.
The matter before this Court falls within the circumstances set out at [78] of Civic Video (supra) and Zhang and/or his representatives were under an obligation to make searches which would have revealed that the Bondi PO Box or the Bellevue Property (depending on when the searches were performed) was the last known address. There is no evidence before the Court as to what happened to the document delivered to the Bondi Junction Office. The Twigg Affidavit states:
1. On 26th day of September 2013 at 9.42am I served Gabriel Ehrenfeld with a Bankruptcy Notice to which was affixed a duly authorised reproduction of the Official Receiver’s signature by leaving the same in a sealed envelope marked to his attention at his last known address and handed to Nicola, the receptionist at level 23, Tower 1, 520 Oxford Street, Bondi Junction under regulation 16.
…
3. I confirm that this is his address by making enquiries with the neighbours and ascertaining that he still resides at the address.
The evidence in the Twigg Affidavit reproduced above conflicts directly with the unchallenged evidence contained in the Second Ehrenfeld Affidavit (reproduced at [40]-[41] above). The unchallenged evidence of Ehrenfeld, which I prefer, is that Nicola Dunbar’s practice was to advise any person seeking to locate or contact licensees who were no longer at the Bondi Junction Office that was the case and that she was unable to take messages or receive communications on their behalf. This evidence remains unchallenged and no other evidence has been put before the Court to indicate the fate of the envelope containing the Bankruptcy Notice (as contained in the Twigg Affidavit) delivered to the Bondi Junction Office on 26 September 2013.
Accordingly, on the basis of the above findings, I am not satisfied the Bankruptcy Notice was served on Ehrenfeld at his last known address and Zhang has failed to satisfy reg.16.01 of the Bankruptcy Regulations. It follows that an act of bankruptcy cannot have been committed by Ehrenfeld as one of the required steps did not occur.
It is unnecessary to address the other grounds in the Notice of Opposition as a result of the above finding.
Consequently, the Petition should be dismissed with costs awarded to Ehrenfeld.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge Lloyd-Jones
Associate:
Date: 17 April 2015
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