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De Simone v Pital Business Pty Ltd [2010] FMCA 689 (10 September 2010)

Last Updated: 13 September 2010

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DE SIMONE v PITAL BUSINESS PTY LTD

BANKRUPTCY – Review of Registrar's decision.

Bankruptcy Act 1966, ss.40(1)(g), 32
Bankruptcy Regulations

Re Shaddock; Ex parte Commonwealth Bank of Australia [1998] FCA 355
Cumins v Deputy Commissioner of Taxation [2008] FACFC 185
Re Wilcox: Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727
Spalla v St George Motor Finance Ltd (No 8) [2006] FCA 1537

Applicant:
GUISEPPE DE SIMONE

Respondent:
PITAL BUSINESS PTY LTD

File Number:
MLG704 of 2010

Judgment of:
Whelan FM

Hearing date:
17 August 2010

Date of Last Submission:
17 August 2010

Delivered at:
Melbourne

Delivered on:
10 September 2010

REPRESENTATION

Counsel for the Applicant:
In person

Counsel for the Respondent:
Mr Osborne

Solicitors for the Respondent:
Schetzer Brott & Appel

ORDERS

(1) The application dated 13 May 2010 is dismissed.
(2) Order 5 of the Orders of Registrar Allaway of 6 July 2010 is affirmed.
(3) Order 2 of the Orders of Registrar Allaway of 12 July 2010 is affirmed.
FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG704 of 2010

GUISEPPE DE SIMONE

Applicant


And


PITAL BUSINESS PTY LTD

Respondent


REASONS FOR JUDGMENT

Introduction

  1. This is an application to review Orders made by Registrar Allaway on 6 and 12 July 2010 in this matter. On 12 July 2010 the Registrar dismissed an application by Mr de Simone to set aside, in accordance with section 40(1)(g) of the Bankruptcy Act 1966 (“the Act”), a Bankruptcy Notice that he says, in his affidavit of 13 May 2010, was served on him “in late April 2010”. The Registrar also ordered that the Applicant pay the Respondent’s costs. On 6 July 2010 the Registrar had adjourned the hearing to 12 July 2010 and made certain procedural Orders. He also ordered that the Applicant pay the Respondent’s costs (of that day) on an indemnity basis. It is order 5 (the costs order) in particular, of the Orders of 6 July 2010, that the Applicant seeks to be reviewed.
  2. The review of a decision of a Registrar is a hearing de novo. It became apparent that there was a threshold issue which needed to be determined before consideration could properly be given to whether the application ought to be determined on merit. That issue concerned whether there was a valid application to set aside the Bankruptcy Notice before the Court.
  3. The affidavit of service of the Bankruptcy Notice stated that the Applicant was served with the notice on 6 April 2010. If this was the case, then an application to have the notice set aside was not made within 21 days after the service of the notice. While the Applicant did not accept that such a failure was “fatal to jurisdiction”[1] he also disputed that the Bankruptcy Notice has been served on him on 6 April 2010 and maintained that his application has been lodged within time.
  4. Evidence was called from Mr Preac, the deponent of the affidavit of service and Mr de Simone gave evidence on his own behalf.

Background

  1. The events which led to the matter coming before me can be summarised as follows
  2. Mr Preac is a licensed process server. He has been licensed since 1991. He gave evidence that on 29 March 2010 he received instructions from the creditor’s solicitors to serve the Bankruptcy Notice on the debtor. He was aware that all Bankruptcy Notices required personal service unless there was an order for substituted service. On 5 April 2010 he attended at the debtor’s address. The gates were locked and a sign advised to call a particular number to obtain entry. He rang the number and spoke to a young child. He asked for Giuseppe de Simone. He spoke to a male who admitted that he was Giuseppe de Simone and who said that he would not come outside to accept service because it was a public holiday. The debtor told Mr Preac to return the next day at 8.30 a.m.
  3. Mr Preac attended the same address on 6 April 2010 at 8.30 a.m. On this occasion the gates were open. The front door was opened by a middle aged woman and he asked for Giuseppe de Simone. The woman stated that he (the debtor) was in bed as he had been up all night with a sick child. She asked if she could accept the notice. Mr Preac advised her that he could not leave the document with her as it required personal service and that an arrangement had been made for him to attend at 8.30 a.m. The woman went back inside and returned to say, “He will be out in a minute”.
  4. After a few minutes a man, who Mr Preac identified as the debtor, came to the door wearing a robe. Mr Preac asked him if his name was Giuseppe de Simone and if he was the person referred to in the document (which Mr Preach showed him) as the debtor? The man answered “Yes” to both questions.
  5. Mr Preac produced a copy of his telephone bill which identified the call made on 5 April 2010; an affidavit of attempted service, sworn on 7 April 2010; the work sheet containing notes he took at the time; and an email sent to the creditor’s solicitors on 2 July 2010 after he was first requested to be available to give evidence in these proceedings. The affidavit of service attaching the copy of the Bankruptcy Notice was sworn on 12 April 2010.
  6. In cross-examination, Mr Preac stated that he might serve between two and five Bankruptcy Notices per week. He did not always prepare an affidavit of attempted service. This one was done for billing purposes. He recalled certain aspects of this matter because anything unusual you tend to remember, particularly with property that is locked. Mr Preac agreed that there had been a dispute about service in a previous matter involving the debtor where service was not effected on the debtor but on his brother. Mr Preac was also able to describe the woman who answered the door and his recollection that the debtor was wearing a dark-coloured robe.
  7. Mr Preac stated that the gate was open. He believed the woman was getting ready to leave and she may have left while he was there. Mr Preac denied that he only recognised the debtor because he had seen him in Court. He agreed that he had previously served a document on the debtor’s brother and that he looks similar to the debtor. He stated that he had put all the details of the service in an affidavit on that previous occasion. Mr Preac agreed that when he was told that there was a dispute about service of the notice, he went back to his original notes and emailed to the solicitors what he could recall at the time. He also gave them his worksheets.
  8. It was Mr de Simone’s evidence that he had no recollection of the conversation about which Mr Preac gave evidence on 5 April 2010 or of attending at his front door in a bathrobe on 6 April 2010. He only became aware that there was an issue about service in late June when it was raised in the proceedings before Registrar Allaway. According to his on-line calendar, he was in Ocean Grove on 6 April 2010. He has a business at Ocean Grove and when he goes there he usually leaves at about 7.00 a.m. in the morning. The manager of the business could not remember if he was there on 6 April 2010 but could recall that he was there that week. As he left to go interstate on 9 April 2010 and was at a conference on the Wednesday, it could only have been on Tuesday 6 April 2010 or Thursday 8 April 2010. He was interstate until the night of 20 April 2010.
  9. Mr de Simone stated that he has young children and they do get sick but he could not recall if one of them was sick on 5 April 2010. The description given by Mr Preac was his wife but she had no recollection of speaking to Mr Preac. Documents get dropped off at the house all the time. She normally accepts them on his behalf. She worked on 6 April 2010. She normally works Tuesday, Wednesday and Thursday. She normally leaves between 7.30 a.m. and 8.00 a.m. although that is not invariable. The gate is usually kept locked but his wife could have left it open.
  10. Mr de Simone stated that he lived in the house with his wife and two children. As it was school holidays there could have been someone else there to look after the children. It could have been his father who is 80 and who could not recall if he was there that day.
  11. Mr de Simone stated that his recollection was that he first saw the Bankruptcy Notice on Thursday 22 April 2010. There was a big pile of documents when he got home late on 20 April 2010. He did not look at them then or on the Wednesday when he was at a conference. It was probably on the Thursday that he saw it.
  12. In cross-examination, Mr de Simone stated that there were 30 or 40 envelopes and loose documents in the pile when he got home on 20 April 2010. He could not unequivocally state that he was in Ocean Grove on 6 April 2010. He was aware that he had to file an application with respect to the Bankruptcy Notice within 21 days. He agreed that when he filed the application he could not pinpoint the date on which he received the notice. He agreed that he lived at the address given with his wife and two children and that the phone number given was his number. He was not sure who was in his house on 6 April 2010. He could not recall speaking to Mr Preac on 5 April 2010 but it was possible that he did. Someone would have had to have been in the house with the children on 6 April 2010 because it was school holidays unless they had gone to the school holiday programme. He had no specific recollection of the day. He owned a white terry towelling bath robe and a red night gown. He did not challenge Mr Preac’s evidence about the robe. He could not say how Mr Preac would know that he had a dark robe.
  13. Mr de Simone stated that if he had been served on 6 April 2010 he would have had until 27 April 2010 to file his application which would have given him a week after he got back from interstate to do it. There is no reason why he would not have done it in that time frame. It is highly unlikely that he would not remember being served.

Contentions – service of the Bankruptcy Notice

  1. The Respondent submitted that the Court does not have the jurisdiction pursuant to s.33(1)(c) to extend the time provided in s.41(5) for giving notice after an act of bankruptcy has been committed by failure to comply with the notice. The Respondent referred to paragraph [41.5.13] of Australian Bankruptcy Law and Practice[2] to submit that the application to extend time must be given within the time allowed for payment. Paragraph [41.6A.10] confirms that failure to make the application before the expiry of the time fixed for compliance is fatal to jurisdiction.[3] If Mr Preac’s evidence that he served Mr de Simone on 6 April 2010 is accepted, then 21 days expired on 27 April 2010 and there is no jurisdiction for the Court to extend the time for compliance with the notice.
  2. The Respondent submits that Mr Preac’s evidence was credible and provided detail such as the dressing gown worn by the debtor and the appearance of the wife. He was right about the gates and the phone number. There is contemporaneous documentary evidence which is probative. Mr Osborne referred to the contents of the worksheet, the phone records and the affidavit of attempted service. The affidavit of service is consistent with usual practice. The email is a prior consistent statement. The affidavits were sworn at a time when there could have been no issue about the timing.
  3. The Respondent submits that the debtor’s affidavit is vague about the date of service. He has not been able to adduce any form of probative corroborative evidence. The highest his evidence gets is a notation in his calendar which suggests that he would have gone to Ocean Grove on 6 April. He has not given any explanation of anyone else who was present or who could have received the documents. He is unable to say who looked after his children that day. It is inherently likely that there was someone with the children and the debtor’s evidence is consistent with Mr Preac’s that the wife appeared to be on her way out, going to work.
  4. The Applicant contends that the wording of s.33(1)(c) is somewhat confused. Mr de Simone submitted that as a matter of construction, the prohibition on extending time only relates to time fixed by the Court or the Registrar under this Act. The Bankruptcy Notice is issued under the Bankruptcy Regulations 1996 (“the Regulations”) and the time is not fixed in the actual regulation itself. It is fixed in a notation to the form in Schedule 1. The time is therefore not fixed under the Act. The Notice itself is issued by the official receiver. An official receiver may issue a Bankruptcy Notice. It does not say shall or must so, theoretically, the official receiver has a discretion subject to judicial oversight. Subsection (2) of s.41 says the notice must be in accordance with the form prescribed by the Regulations. The only place the 21 days appears is in a note to the form. A form is not a legal mandate. The Act properly construed allows the Court to extend the time for issue of an application to set aside a Bankruptcy Notice.
  5. Mr de Simone submitted that in the past Mr Preac had effected service of documents, which were supposed to be served on him personally, on someone else. He has also given evidence that he fills out a lot of affidavits of service. While he did not know that there was going to be a dispute about service, he knew that last time no problem arose from the substituted service. There is no mention in the affidavit of service of bathrobes or other people seeking to take the documents. It could have been prepared straight off a template.
  6. The Applicant submitted that he had no recollection of having the document and what the Court was being asked to accept was that he got it on 6 April 2010 and then did not do anything for 40-odd days. Mr Preac’s recognition of him in Court does not really account for anything. Anything could have happened. Mr Preac could have left the document in the letter box. He could have left it with the Applicant’s wife or his father or the nanny or someone else. There are no detailed notes of what happened on 6 April 2010 except that service was effected. Last time, Mr Preac left a document requiring personal service with the Applicant’s brother. Therefore he does not take personal service as seriously as his job would require.

Contentions in relation to costs

  1. Mr de Simone submitted that there should not have been an Order for costs made against him by Registrar Allaway and, in particular, no Order for indemnity costs should have been made with respect to 6 July 2010. The Applicant stated that his reason for failing to appear on 6 July 2010 was that he was involved in a committal hearing in the Melbourne Magistrates Court and bailed to appear. He submitted that the hearing on 6 July 2010 was caused by the unreasonable refusal by the creditor to grant an adjournment. He wrote to the Registry and to the creditor and the creditor’s sole director was aware of the fact that the Applicant was required to attend the Melbourne Magistrates Court that day because he was involved in the proceedings. The matter in front of Registrar Allaway could not proceed without him.
  2. Mr de Simone submitted that he could not instruct someone else to act on his behalf as it required that he give evidence. What he was seeking was that the matter be set down for a date when he was not required in Court. The Registrar could have adjourned the issue of costs to the resumed hearing to give him an opportunity to present reasons why a costs order should not be made. The hearing was only occasioned by the unreasonableness of the creditor.
  3. The Applicant submitted that he could not comply with the timeline in relation to filing an affidavit because it takes a lot of time to check with people. Other commitments also obviated and prevented compliance. He was not in Court when the Orders were made in relation to indemnity costs and the new time line. He was not asked if those dates were suitable. He was unable to attend. He was a few minutes late on 12 July 2010 and was told he was “too late”.
  4. The Applicant submitted that orders should be complied with if people are able to do so. If they are unable to do so for a good reason there should be proper indulgence given. There is no way he could have attended on 6 July 2010. There was no prejudice to the creditor in an adjournment. The Registrar ordered indemnity costs and then required a justification for not being present. You should ask for the justification before you make a decision on costs.
  5. Mr Osbourne, in response, pointed to the email sent to the Applicant by the creditor’s solicitors on 2 July 2010 in relation to the failure by the Applicant to file and serve an affidavit on 30 June 2010. The email called for some evidence in relation to his unavailability on 6 July 2010 and indicated that an Order dismissing his application and for indemnity costs would be sought. On Tuesday 6 July 2010, the Applicant failed to appear. The Registrar declined to dismiss the application but adjourned it to 2.15 p.m. on 12 July 2010 and gave the Applicant until noon on 12 July 2010 to file his affidavit. Come 2.15 p.m. on 12 July 2010 there was no appearance so Registrar Allaway made the Orders dismissing the application.

Conclusions

  1. On 13 May 2010, the Applicant filed an application under s.40 (1)(g) to set aside the Bankruptcy Notice issued on 25 March 2010. The application was set down for hearing before a Registrar on 21 June 2010. At the hearing the Respondent raised the issue that, according to the affidavit of Mr Preac, the Applicant had been served with the Bankruptcy Notice on 6 April 2010. The Notice was in the form prescribed by the Regulations and required that the debtor take action “within twenty-one (21) days after service of the notice on him to comply with the notice”.
  2. While Mr de Simone argued that the provisions of s.33(1)(c) did not prevent the Court from extending the period, as the time limit set was not “fixed by the Court or the Registrar under this Act”, I was unable to find any decision which supported this contention.
  3. The Respondent referred the Court to paragraph [41.5.13] of Australian Bankruptcy Law and Practice and the cases cited therein.[4] It is only necessary to refer to the decision of Cumins v Deputy Commissioner of Taxation.[5]
  4. The Full Bench of the Federal Court in that case considered the relationship between s.41 and s.33(1)(c). In paragraph [25] the Bench states :
  5. After describing the scheme of s.40 and s.41 the Bench goes on to say:
  6. The question is therefore whether the Applicant was served with the Bankruptcy Notice on 6 April 2010 as sworn by Mr Preac or did not receive it until some time later and probably on 22 April 2010. I am satisfied that the evidence of Mr Preac should be accepted. He provided details of the circumstances under which the document was served which were supported by reference to contemporaneous notes. He clearly understood the necessity for the Notice to be personally served on the Applicant. While Mr de Simone attempted to suggest that as Mr Preac had failed to effect personal service on him in the past, when he served documents on the Applicant’s brother he was likely to have done something similar on this occasion, it is equally possible that because of that prior experience Mr Preac was keen not to make the same mistake again.
  7. In any event, there was no suggestion that there was or could have been someone at the house on 6 April 2010 who might have been mistaken for the Applicant.
  8. On the other hand, Mr de Simone was unable to provide any concrete evidence to establish that he was not at home at 8.30 a.m. on the day in question. He argued that had he received the documents on that day he would have lodged his application within the time specified. Equally, if the circumstances were as described by Mr Preac, he may have been tired at the time of service, distracted by the needs of a sick child or concentrating on the things he needed to get done before he left to go to Perth. On his return he may well have forgotten which day it was that he had been served.
  9. The Applicant’s initial affidavit of 13 May 2010 did not specify a date. The latter affidavit specifies a date, some two days after his return from Perth but precisely 21 days before his application was made.
  10. As the application was not made before the expiration of the time fixed for compliance with the requirements of the Bankruptcy Notice, the Court has no jurisdiction to entertain the application.
  11. I turn now to deal with the question of costs. The Registrar made two costs Orders against the Applicant on 6 July 2010 and 12 July 2010. The Order of 6 July 2010 is for indemnity costs. Those Orders were made in the following circumstances:
  12. Section 32 of the Bankruptcy Act 1966 provides that the Court may make such orders as to costs as it thinks fit. In Re Wilcox: Ex parte Venture Industries Pty Ltd,[7] Black CJ (with whom Cooper and Merkel JJ concurred) said of the powers of the Federal Court:
  13. In Spalla v St George Motor Finance Ltd (No 8),[9] Kenny J considered whether indemnity costs should be awarded against an unrepresented party. The litigant, in that case, had been put on notice that such an application would be made in circumstances where the conduct of the hearing by the litigant prolonged the hearing and wasted time. Her Honour noted at paragraph 20:
  14. Mr de Simone is no stranger to litigation. He was present in Court when the Orders of 21 June 2010 were made by Registrar Allaway yet he failed to comply with those Orders. He made no attempt to file and lodge the affidavit he was supposed to file by 30 June 2010. It was only after contact was made with him by the Respondent’s solicitors that he sought their agreement to an adjournment and notified the Registry less than one hour before the hearing that he was unable to appear.
  15. I accept that Mr de Simone was required to attend, as a condition of his bail, proceedings in the Melbourne Magistrates Court. He, however, made no attempt to comply with any of the Orders of 21 June 2010 or to seek an adjournment from the Registrar in the usual way.
  16. Further, Mr de Simone then made no attempt to comply with the Orders of 6 July 2010 in relation to the filing and serving of his affidavit until after the time specified in the Order and again failed to appear at the time set down for the hearing.
  17. It is perhaps understandable that the Applicant was paying greater attention at the time to other proceedings. That does not however, in my view, excuse him from complying with the Orders of the Registrar or taking appropriate steps to have the proceedings adjourned. He did neither. As a result the Respondent was subjected to the expenditure of costs.
  18. I am not satisfied that either the costs Orders of 6 July 2010 or of 12 July 2010 should be vacated.

I certify that the preceding 46Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !forty-sixforty-six (46) paragraphs are a true copy of the reasons for judgment of Whelan FM


Associate:


Date: 10 September 2010

[1] As per Goldberg J Re Shaddock; Ex parte: Commonwealth Bank of Australia [1998] FCA 355.
[2] Thomson Reuters, Australian Bankruptcy Law and Practice, Volume 1 (at 1 – 2680).
[3] Ibid (at 1- 2681).
[4] Ibid (at 1- 2680).
[5] Cumins v Deputy Commissioner of Taxation [2008] FACFC 185.
[6] Ibid at paras. 27-29.
[7] Re Wilcox: Ex parte Venture Industries Pty Ltd (1996) 141 ALR 727.
[8]Ibid.
[9] Spalla v St George Motor Finance Ltd (No 8) [2006] FCA 1537
[10]Ibid.

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