Re Constantinou; Ex parte Commonwealth Bank of Australia [1999] FCA 91 (3 February 1999)

Last Updated: 17 February 1999

FEDERAL COURT OF AUSTRALIA

Re: Constantinou; Ex parte Commonwealth Bank of Australia [1999] FCA 91

BANKRUPTCY - personal service of bankruptcy notice - creditor's petition - sequestration

Bankruptcy Act 1966 (Cth) ss 40, 43, 52

Bankruptcy Regulations reg 16.01

Re: Silvas; Ex parte Theodor Silvas & Official Trustee in Bankruptcy (Tamberlin J, unreported, 4 April 1997)

Re: Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347

COMMONWEALTH BANK OF AUSTRALIA v NICOLAOS CONSTANTINOU

VG 7474 OF 1998

RYAN JR

3 FEBRUARY 1999

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 7474 OF 1999

BETWEEN:	COMMONWEALTH BANK OF AUSTRALIA APPLICANT
AND:	NICOLAOS CONSTANTINOU RESPONDENT
JUDICIAL REGISTRAR:	RYAN
DATE OF ORDER:	3 FEBRUARY 1999
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. The estate of Nicolaos Constantinou be sequestrated.

2. David Lofthouse be appointed as trustee of the bankrupt's estate.

3. The petitioning creditor's costs of and incidental to the petition, including reserved costs, to be taxed and paid in accordance with the statute.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 7474 OF 1999

BETWEEN:	COMMONWEALTH BANK OF AUSTRALIA APPLICANT
AND:	NICOLAOS CONSTANTINOU RESPONDENT

JUDICIAL REGISTRAR:	RYAN
DATE:	3 FEBRUARY 1999
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1 By petition filed on 1 July 1998 the applicant has applied for sequestration against the estate of the respondent debtor. The applicant asserts an act of bankruptcy by the respondent debtor within six months before the presentation of the petition, in that the debtor failed on or before 21 May 1998 to comply with requirements of bankruptcy notice VN 1102 of 1997, served 30 April 1998, or to satisfy the court of a counterclaim, set-off or cross-demand equal or to or exceeding the sum specified in paragraph 1 of the bankruptcy notice. The bankruptcy notice is said to be founded on a final judgment obtained by the applicant in the Supreme Court of Victoria on 24 January 1996. On 7 December 1998 the respondent debtor filed notice of intention to oppose the creditor's petition, stating the grounds of opposition as follows:

1. the bankruptcy notice was not served on the debtor

2. the amount stipulated in the bankruptcy notice and paragraph 1 of the petition has been overstated.

2 The petition was referred for hearing yesterday and a hearing began then as to the validity of the first ground of opposition, the allegation that the bankruptcy notice was not served on the debtor.

3 Mr Scheid appeared for the respondent and called the debtor, Nicolaos Constantinou, and the debtor's son, Stefan Constantinou. Both father and son gave oral evidence in respect of the alleged non-service of the bankruptcy notice. Both were cross-examined as to that evidence and to their affidavit evidence on that issue.

4 Mr O'Meara appeared for the applicant, the petitioning creditor, and called Barry John Reaper, the process server, who had sworn affidavits on 30 April 1998 and 15 January 1999, in respect of what he attests was the service of the bankruptcy notice personally on the debtor, Nicolaos Constantinou, on 30 April 1998. Mr Reaper was cross-examined on his affidavit and oral evidence.

5 In terms of time, the order of the sworn contending evidence is as follows:

* 30 April 1998 - Mr Reaper swears affidavit of service alleging service of the bankruptcy notice on that day

* 7 December 1998 - debtor swears affidavit alleging non-service of bankruptcy notice

* 22 December 1998 - debtor's son swears affidavit alleging non-service of bankruptcy notice

* 15 January 1999 - Mr Reaper swears affidavit in response to the affidavits of 7 and 22 December, denies certain claims in the affidavits and states his "recollection of the events on that day in detail" (i.e. his recollection in detail of the alleged service of the bankruptcy notice on 30 April 1998).

* 2 February 1999 - (yesterday) oral evidence of debtor followed by oral evidence of debtor's son, Stefan, followed by oral evidence of Mr Reaper.

6 In the affidavit of service sworn on 30 April 1998, the date of the alleged service of the bankruptcy notice, Mr Reaper states that at 8.30 am on that day he served the debtor with a copy of the bankruptcy notice and certain accompanying documents mentioned in the affidavit of service. He said to the debtor "Is your name Nicolaos Constantinou?". The debtor replied "Yes". He then said "Are you the person referred to in the bankruptcy notice as the debtor?". The debtor replied "I'm not interested in any of these documents".

7 Paragraphs 2 to 4 of the debtor's affidavit of 7 December are as follows:

"2. I refer to the Bankruptcy Notice marked as exhibit "A" to the Affidavit of Barry John Reaper sworn 30 April 1998 ("The Reaper Affidavit"). I have read the Reaper Affidavit and deny that I was served with the Bankruptcy Notice as referred to by him. Furthermore, I dispute that he asked me that am I the person referred to in the Bankruptcy Notice and that I replied, `I am not interested in any of these documents'.

3. I recall that on 30 April 1998 my car was parked in Ocean Street, Hampton, approximately 60 meters from the corner of Thomas and Ocean Streets, Hampton. I was about to drive off with the intention of delivering my 12 year old son to school. As I reversed the car and was about to drive off, I observed a car approaching from the opposite side of Ocean Street. This vehicle stopped next to my car and the driver motioned me to wind down my window. I noted his threatening manner and I reversed my vehicle in an attempt to drive away. The other driver alighted from his vehicle and rushed towards my car throwing some documents on the bonnet of my car. He did not speak at all and I deny any conversation took place as stated by Reaper in his affidavit. I drove off noticing the documents blew off the bonnet. When I returned home, which was approximately 10 minutes later, I did not see and have never seen same until I was served with the Creditor's Petition.

4. I repeat that at no stage did the individual who threw the documents at my car explain to me or attempt to explain to me the nature of the documents."

8 Paragraphs 2 to 4 of the affidavit of Stefan Constantinou of 22 December are as follows:

"2. I am 12 years of age, having been born on 21 June 1986. I attend Grade 6 at Brighton Primary School.

3. I recall that on 30 April 1998 I was seated in the passenger side of my fathers vehicle which was parked in Ocean Street, Hampton. My father was about to drive me to school, as he usually does, when a vehicle from the opposite side of Ocean Street stopped next to my fathers car. I became frightened as to what was happening. I recall that my father did not unwind his window but the driver got out of his car and threw some documents on to the bonnet of my fathers car. My father at no stage got out of the vehicle in order to pick up the documents. Furthermore, at no stage did my father discuss anything with the driver of the other vehicle.

4. After the driver of the vehicle threw the documents at my father's car and drove off, my father drove me to school."

9 Paragraphs 3 to 7 of Mr Reaper's affidavit of 15 January 1999 are described in paragraph 2 of the affidavit as "my recollection of events in detail". In that paragraph the deponent describes his earlier affidavit of 30 April 1998 as "the substance of my communications with Mr Constantinou" (i.e. on 30 April 1998).

10 Paragraphs 3 to 7 of Mr Reaper's second affidavit of 15 January 1999 are as follows:

"3. On the morning of 30 April 1998 I drove to a house at 9 Thomas Street, Hampton. I had been instructed that the respondent resided at the house and I had made previous attempts to serve him there.

4. At approximately 7.45 am, I parked a few houses up from the premises at 9 Thomas Street, Hampton. I then commenced observing the premises. A car was parked in the street outside the house. It was a white station wagon and its registration number was NKO-090.

5. Shortly before 8.30 am, a child came out from a gate at the side of the premises, unlocked the white station wagon, removed something from it, then returned inside the premises. A few minutes later, two children came out from the house to the car and a male adult followed. At that moment, I drove my car slowly down the street to a point adjacent to the white station wagon. When the adult approached the white station wagon, I said to him from my car, `Nick' to which the adult looked over his shoulder and replied `Yeah'. I then got out of my car and said words to the effect `Are you Nicolaos Constantinou?' to which he then nodded and perhaps again said `yeah'. Whilst holding the bankruptcy notice, I said, `I have got a bankruptcy notice here for you from the Commonwealth Bank' to which he replied `I'm not interested in any of that sort of shit'. He then started to quickly get into his car and as his car door was open I dropped the bankruptcy notice on to his lap as he sat in the car. He then started his car and as he did so I backed away and walked towards my car. Mr Constantinou then drove off and I watched him drive up the street.

6. After Mr Constantinou drove off I got into my car and drove around the corner and again parked. I then made a short note of Mr Constantinou's description and his car. Now produced and shown to me and marked "C" is a copy of that note.

7. I have read the affidavits of Mr Constantinou sworn 7 December 1998 and that of his son Stefan Constantinou sworn 22 December 1998 with respect to the service of the bankruptcy notice in this proceeding by me. I deny:

(a) that Mr Constantinou or either of his two children were in his car when I first spoke with him;

(b) that I approached Mr Constantinou in a threatening manner;

(c) that I ran towards Mr Constantinou's car and threw documents on to the bonnet of or at his car;

(d) that Mr Constantinou and I had no discussion on the morning; and

(e) that I did not explain to him the nature of the bankruptcy notice served."

11 In oral evidence yesterday the three deponents adopted their affidavit evidence and gave evidence not included in their affidavits. Mr Reaper thinks but is not certain the child he saw go to and from the white station wagon shortly before 8.30 am was a boy. He thinks the two children who came out of the house to the car a few minutes later were both male but he is not certain. He states that he was concentrating on the debtor, not the children. While he cannot recall the children specifically entering the car, he recalls that two children were in the car as it drove off and that he thinks one was in the front passenger seat and the other in the rear of the vehicle.

12 Mr Constantinou gave oral evidence of reversing slightly and of then driving forward through a gap between Mr Reaper's car and a car parked at the kerb a little distance in front of him. He was cross-examined and also questioned from the Bench as to how he was able to drive between Mr Reaper's car and the parked car, given his affidavit evidence that Reaper's vehicle was stopped next to his car and his oral evidence that Reaper's car was close to and parallel to his car but facing in the opposite direction and with the driving side front windows of the two cars adjacent to each other. His response was in effect that there must have been sufficient space between his car and the parked car and between his car when reversed and Mr Reaper's car to allow him to complete that manoeuvre and that he estimates that gap to have been in the vicinity of two to three metres.

13 Mr Constantinou does not mention this manoeuvre in his affidavit evidence and neither his son or Mr Reaper gave any evidence of such a manoeuvre either in their affidavits or in their oral evidence. However, both gave evidence of Mr Reaper moving his car adjacent to the white station wagon and both gave evidence of Mr Reaper initially parked on the other side of the street, forward of Mr Constantinou's car and facing the opposite direction.

14 Mr Reaper puts the final distance between the vehicles as three paces and Stefan describes Reaper's car as being on the other side of the street, which may well be a distance accurately described as three paces. Mr Constantinou puts the two cars as about one metre apart, driving door to driving door.

15 The tenor of Stefan's oral evidence is that his father accelerated from a standing start and was travelling at between 20 and 40 kilometres per hour when Mr Reaper threw certain papers on to the bonnet of the car. Neither the debtor as driver or Reaper as a witness put the initial speed of Mr Constantinou's departing car as other than slow. I am inclined to the view that Stefan, a 12-year-old boy in a disturbing situation, has substantially over-estimated the initial speed at which his father departed, although it is quite likely that Mr Constantinou reached a speed of 40 kilometres per hour quite quickly after departure.

16 Mr Constantinou admitted in cross-examination that he had been served with documents in other, earlier litigation, but could not recall the circumstances. On those occasions he says that he may or may not have sought assistance and he was not sure what happened. His evidence included the following:

"I have not made service easy. I was not going to take documents from a person coming up to me in a threatening manner."

17 A threat may be objectively a threat. A threatening manner may be objectively a threatening manner. Then again, it may be perceived as threatening in the eye of the beholder. Mr Reaper does not concede that he came up to Mr Constantinou in a threatening manner, but he and Mr Constantinou and Stefan agree that he alighted from this car and approached Mr Constantinou's car.

18 There are several discrepancies between the evidence of the debtor and his young son. The debtor stated in oral evidence that he took his son to school about once a week. His son in his affidavit stated that his father "usually" drove him to school and in oral evidence estimated that his father drove him to school two or three times a week.

19 After analysis of the conflicting evidence and observation of the witnesses, I have concluded that an experienced process server is unlikely to have simply tossed the bankruptcy notice and accompanying documents onto the bonnet of a stationary car - the debtor's evidence - or on to the bonnet of a moving car - Stefan's oral evidence - or that he would have taken such action without ensuring the party being served was informed of the nature of the process.

20 Mr Constantinou is not inexperienced as a recipient of legal process served upon him and admitted he does not make service easy. Stefan also gave evidence of instructions from his father. The nature of that evidence is suggestive of a person giving instructions to his young son with a view to avoiding service of legal process.

21 On any balance of probability I prefer the evidence of Mr Reaper to that of Mr Constantinou in respect of the delivery of the documents. I accept that Mr Reaper confronted Mr Constantinou, identified him, informed him of the bankruptcy notice, received an indication from Mr Constantinou of his unwillingness to accept service, however expressed, and dropped the process in the debtor's lap.

22 Initially, given that yesterday I had immediately assessed Stefan Constantinou as a genuine, concerned witness, frightened by the process of service on 30 April 1998 and anxious to support his father, I considered the possibility that service was effected by the conveyance of adequate information of the process to the debtor, despite Stefan being unaware of that information conveyed to his father, and by the possible placement of the process on the bonnet of the stationary car. It was in this context that I invited counsel to address me as to Re: Silvas; Ex parte Theodor Silvas & Official Trustee in Bankruptcy (Tamberlin J, unreported, 4 April 1997) wherein His Honour expressed a view, albeit tentative, that regulation 16.01 of the Bankruptcy Regulations may have had the effect of abolishing the requirement of personal service of a creditor's petition and perhaps also of a bankruptcy notice. It is not necessary for me to address that matter further. I am satisfied that there was personal service of the bankruptcy notice in terms of Re: Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347 at 360 where Gummow J said:

"I accept the submission by the respondent to the present application that there may be delivery personally to the debtor of process within the meaning of rule 15 of the Bankruptcy Rules, even though the process has not been left in what Paterson J described as the `actual corporeal possession' of the defendant. If a debtor were refusing to take such actual corporeal possession of the process but the process server informed the debtor of the nature of the process and left it before or near the debtor so that the debtor had unimpeded and immediate access to the documents, that, in my view, should in general be sufficient to comply with rule 15."

23 I have concluded that the respondent debtor had unimpeded and immediate access to a copy of the bankruptcy notice and accompanying documents and that service was effected on 30 April 1998.

24 I note that the opposition to the petition based on an alleged overstatement of amount in the bankruptcy notice has been withdrawn and I have considered proof of the matters of which the court must be satisfied under s 52. I am satisfied of all matters which s 52 requires the court to be satisfied and I am not satisfied that there is any sufficient cause for a sequestration order in this case not to be made.

Orders

The orders of the court are as follows:

1. The estate of Nicolaos Constantinou be sequestrated

2. David Lofthouse be appointed as trustee of the bankrupt's estate

3. The petitioning creditor's costs of and incidental to the petition, including reserved costs, to be taxed and paid in accordance with the statute.

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of Judicial Registrar Ryan

Associate:

Dated: 16 February 1999

Counsel for the Applicant:	S. O'Meara
Solicitor for the Applicant:	Australian Government Solicitor
Counsel for the Respondent:	B. Scheid
Solicitor for the Respondent:	Higgins Teale
Dates of Hearing:	2, 3 February 1999
Date of Judgment:	3 February 1999