Conrad & Anor v The Owners of Strata Plan No.2795 [2011] FMCA 389 (27 May 2011)

Last Updated: 31 May 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CONRAD & ANOR v THE OWNERS OF STRATA PLAN NO.2795

[2011] FMCA 389

BANKRUPTCY – Opposition to Creditor’s Petition on the basis that the Bankruptcy Notice was not served – Bankruptcy Notice left in letter box at Debtor’s last known address – conflicting evidence on access to mailbox located within a secured premises – application to set-aside dismissed.

Bankruptcy Act 1966, s.40(1)(g) Bankruptcy Regulations 1996, r.16.01 McQuade and Gronow, Thompson Reuters Australian Bankruptcy Law and Practice

De Robillard v Carver [2007] FCAFC 73 Lazar v Seccombe [2005] FCA 1652 Lombard Australia Ltd v Mohrwinkel (1973) 1 ACTR 57; (1973) 21 FLR 277 Moore v Wilson [2006] FCA 79 Re Silvas; Ex parte Official Trustee of Bankruptcy v Silvas [1997] FCA 206 Skalkos v T&S Recoveries Pty Ltd (2004) 141 FCR 107; [2004] FCAFC 321 University of New South Wales v Sheikholeslami [2008] FMCA 1323

First Applicant:

LUKE CONRAD

Second Applicant:

NATASHA GRACE

Respondent:

THE OWNERS OF STRATA PLAN NO.2795

File Number:

SYG 521 of 2011

Judgment of:

Lloyd-Jones FM

Hearing date:

10 May 2011

Delivered at:

Sydney

Delivered on:

27 May 2011

REPRESENTATION

Counsel for the Applicant:

Mr J. Darvall

Solicitors for the Applicant:

Milne Berry Berger & Freedman

Counsel for the Respondent:

Mr D. Radman (solicitor)

Solicitors for the Respondent:

Grace Lawyers

ORDERS

(1) The Application to set aside the Bankruptcy Notice NN 125 of 2011 be dismissed.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY

SYG 521 of 2011

LUKE CONRAD

First Applicant

NATASHA GRACE

Second Applicant

And

THE OWNERS OF STRATA PLAN NO.2795

Respondent

REASONS FOR JUDGMENT

The proceedings

1. By a Notice Stating Grounds of Opposition the Applicant debtors, Luke Conrad and Natasha Grace, C/o Milne Berry Berger & Freedman, located at 201 Elizabeth Street, Sydney, New South Wales 2000, oppose the Creditor’s Petition on the following ground:
   • That the Bankruptcy Notice No. 125/2011 was never served on the Respondents and accordingly, the Respondents did not get an opportunity to file the relevant Application within the 21 day time period.

In support of the Application, Luke Conrad and Natasha Grace both filed affidavits.

Background

2. I initially rely upon the affidavit of Luke Conrad, sworn 9 May 2011 which sets out background material in these proceedings. Mr Conrad indicates that on or about 23 March 2011, he instructed Milne Berry Berger & Freedman to act on behalf of Ms Natasha Grace and himself, in relation to Local Court proceedings commenced on behalf of the Owners of Strata Plan No. 2795. He instructed those solicitors to file an instalment application with regard to a judgment entered against them in the Local Court Sydney on 26 November 2010. He states that although they were legally represented in relation to those proceedings, their previous solicitors, Russo and Partners, have provided them with incorrect legal advice and they were unable to lodge an appeal within the 28 day time period in relation to the judgment entered in favour of the Owners of Strata Plan No.2795. On 23 March 2011, Milne Berry Berger & Freedman filed in the Local Court an instalment application and provided solicitors representing the Owners of Strata Plan 2795 with a copy of the Application and a copy of a letter of the same date.
3. An instalment order was made by the Local Court on 26 March 2011 ordering Mr Conrad and Ms Grace to pay monthly instalments of $600.00 toward a repayment of the judgment amount of $23,090.27 commencing 1 April 2011. Mr Conrad states that he made the first instalment payment of $600.00 to the solicitors representing the Owners of the Strata Plan on 1 April 2011and the second instalment payment for the month of May 2011. The solicitors for the Owners of Strata Plan 2795 filed an objection to the instalment order made by the Local Court. The matter was listed in Court for an instalment objection hearing at the Local Court on 5 May 2011.
4. On 23 March 2011, Milne Berry Berger & Freedman received a facsimile questioning whether they had instructions to receive service of documents on behalf of Mr Conrad and Ms Grace. On 25 March 2011, Milne Berry Berger & Freedman forwarded a letter to Mr Daniel Radman of Grace Lawyers advising them that they did not have instructions to accept documents on behalf of Mr Conrad and Ms Grace. On 13 April 2011, Milne Berry Berger & Freedman received a letter enclosing a sealed copy of the Creditor’s Petition, Affidavit Verifying Paras. 1, 2, 3 and 4 and a sealed copy of the Bankruptcy Notice from the Creditor’s solicitors. Mr Conrad’s evidence was that this was the first occasion that he and Ms Grace became aware of the Bankruptcy Notice and the other documents issued against them.
5. On 13 April 2011, the solicitor representing Mr Conrad and Ms Grace wrote to Grace Lawyers advising them that at no stage did they have instructions to accept documents on Mr Conrad and Ms Grace’s behalf. Also at that stage, Milne Berry Berger and Freedman had not received orders for substituted service of the Creditor’s Petition that had been made in the Federal Magistrates Court. Similarly, the affidavit sworn by Natasha Grace on 9 May 2011 confirms that she had never received a copy of the Bankruptcy Notice issued by the Owners – Strata Plan No.2795 until a copy of the Affidavit of Service of Mr Andrew Ng-Saad sworn 10 February 2011 was received by her solicitors on 13 April 2011.

Mr Conrad’s evidence

6. The main evidence on which Mr Conrad relies in the Notice Stating Grounds of Opposition to the Petition is contained in paras.9-11 of his affidavit which states:
   • The affidavit of service of the Bankruptcy Notice states that Mr Andrew Ng-Saad left the Bankruptcy Notice in our letter box at the address of Unit 6A, 45 Ocean Avenue, Double Bay 2011.
   • I am surprised at that statement. Number 45 Ocean Avenue Double Bay has a street frontage single mail box in which all correspondence is deposited and which is later sorted by the building caretaker. From street frontage, there is a lengthy driveway to the front of the unit building. The unit building has secured access and once entry is obtained through the locked front doors of the unit building, the individual mail box for each of the forty or so units are located off to the right.
   • From time to time I have found other people’s mail in our mail box and I have complained to the caretaker. I have also experienced many incidents of lost mail where I have later contacted the sender where I have confirmed the mail was sent and forwarded another copy. I have also complained to Rose Bay Police concerning tampered and/or missing mail. The police event number is E28324427. However, I do not presently have a copy of the event report.
   • 11. I regularly check our mail box on a daily basis, however have never received a Bankruptcy Notice allegedly left in the mail box.
7. Then at [15] Mr Conrad states:
   • 15. At no stage was I ever served with a sealed copy of the Bankruptcy Notice so that I could have filed an objection within 21 days time period. Until a Creditor’s Petition was filed and served upon my solicitors on 13 April 2011, I was never aware that a Bankruptcy Notice was issued against me.
8. The Affidavits of Luke Conrad and Natasha Grace were both read and were unchallenged. Neither were called to give evidence and were cross-examined.

Evidence of Andrew Ng-Saad

9. The Affidavit of Personal Service was sworn by Mr Andrew Ng-Saad of 7-9 President Avenue Caringbah in the State of New South Wales, licensed process server on 10 February 2011 which contains the following sworn statement:
   • 1. On 8 February 2011 at 11:00am I served MR LUKE CONRAD with a true copy of the said Bankruptcy Notice signed and dated by the Official Reciever in the above matter on the application of the Owners – Strata Plan No.2795 on 11 January 2011 to which was annexed details of the interest claimed in the Bankruptcy Notice together with a true copy of the judgment obtained in the Local Court of New South Wales at Sydney Downing Centre on 26 November 2010 by leaving them in the letterbox under regulation 16 at Unit 6A, 45 Ocean Avenue, Double Bay in the said state.
   • 2. Annexed hereto and marked with the letter “A” is a true copy of the Bankruptcy Notice signed and dated by the Official Receiver to which was annexed details of the interest claimed in the Bankruptcy Notice and a true copy of the said judgment.
   • 3. I have obtained the age of 16 years.
10. An Affidavit of Personal Service on Ms Natasha Grace is in identical form at the same date and time as that served on Mr Conrad set out above.
11. Mr Ng-Saad was called to give evidence under oath. Mr Ng-Saad confirms the content of the two affidavits which I refer to above, were true and that he did not wish to make any changes to that evidence. Mr Darvall cross-examined Mr Ng-Saad on the details of service of the Bankruptcy Notices. Mr Ng-Saad gave his evidence in a forthright manner.
    • Mr Darvall: Now, Mr Ng-Saad, as at February 2011 how long had you been a licensed processor
    • Mr Ng-Saad: Six years.
    • Mr Darvall: Six years. With this firm?

Mr Ng-Saad: Yes.

Mr Darvall: And as at February 2011 how many processes were you involved in serving a day?
Mr Ng-Saad: A day, about 30, 40. It varies.
Mr Darvall: And is that sort of on an average sort of basis?
Mr Ng-Saad: Average, yes.
Mr Darvall: Five days a week?
Mr Ng-Saad: 6 days of the week, sometimes 7.
Mr Darvall: Okay. And does that continue through until today, at that sort of rate of ­ ­ ­?
Mr Ng-Saad: Yes.
Mr Darvall ­ ­ ­ service? And you have sworn two affidavits here. Can I just follow the process with you firstly? You’re on a contract basis with the company, are you?
Mr Ng-Saad: That’s correct.
Mr Darvall: And someone lets you know that there is something available for service, do they, someone from the company, that is, the process?
Mr Ng-Saad: Well, it depends on what – jobs have to be allocated to you, for instance.
Mr Darvall: All right. Well, in respect of the subject jobs, how did you become aware that there were some documents to be served?
Mr Ng-Saad: It was received by mail for other jobs.
Mr Darvall: And how was it notified to you?
Mr Ng-Saad: By mail.
Mr Darvall: You received a letter from the ­ ­ ­?
Mr Ng-Saad: It’s a work sheet. Every job is allocated to you by a different company. You go and pick it up or they mail it to you, and there’s a work sheet in the front with the ..... details and address on it.
Mr Darvall: I see. So you subcontract for a number of different process servers? Thank you. And you say you received a sheet indicating that there were some documents to be served?
Mr Ng-Saad: That’s correct.
Mr Darvall: And you attended the office, did you to collect the documents?
Mr Ng-Saad: No, this was posted to me.
Mr Darvall: I see. And what was it that was posted to you?
Mr Ng-Saad: Two bankruptcy notices to the defendants, Mr Luke Conrad and Ms Natasha Grace.
Mr Darvall: Is that all?
Mr Ng-Saad: Yes.
Mr Darvall: And so you then attended to service?
Mr Ng-Saad: That’s right.
Mr Darvall: And that involved you travelling to Double Bay; is that correct?
Mr Ng-Saad: That’s correct.
Mr Darvall: And when you got to Double Bay, could you describe the premises?
Mr Ng-Saad: It’s a block of units, inter-complex access, there’s a glass door in the front, and intercoms actually marked with all unit numbers.
Mr Darvall: And is there a post box at the front of the premises?
Mr Ng-Saad: No. It was inside the building.
Mr Darvall: I see. And you entered the building, did you?
Mr Ng-Saad: No. I did, I was given access to it by a tenant who was on the ground floor.
Mr Darvall: Do you know who the tenant was?
Mr Ng-Saad: I have no idea.
Mr Darvall: How did you contact the tenant?
Mr Ng-Saad: She was in the foyer. I just waved my arm, and she let me in. I just said I had to drop off a couple of documents off to one of the units letterboxes.
Mr Darvall: You have heard this morning that there has been an affidavit put on, have you, indicating that it’s a security block?
Mr Ng-Saad: I presume so. Yes.
Mr Darvall: And you see – did you keep any note as to what happened when you effected service?
Mr Ng-Saad: Yes. I would have.
Mr Darvall: And do you have them with you?
Mr Ng-Saad: No. I don’t.
Mr Darvall: Did you use them in preparing the affidavit of service?
Mr Ng-Saad: I would have contacted the office, and they generally prepared that affidavit of service.
Mr Darvall: From your notes?
Mr Ng-Saad: Yes.
Mr Darvall: And so what appears in the affidavit would correspond with what’s in your notes; is that correct?
Mr Ng-Saad: I presume so.
Mr Darvall: Thank you. And Yvonne Thurston, she’s a secretary at the process server’s office, is she?
Mr Ng-Saad: Yes. That’s correct.
Mr Darvall: And she types up these affidavits of service?
Mr Ng-Saad: I presume so.
Mr Darvall: Well, you signed the affidavit of service, didn’t you?
Mr Ng-Saad: Mm.
Mr Darvall: And did you sign that in the presence of a justice of the peace?
Mr Ng-Saad: Yes. I did.
Mr Darvall: And who was the justice of the peace?
Mr Ng-Saad: Yvonne Thurston.
Mr Darvall: Well – and you did that in both cases?
Mr Ng-Saad: Yes.
Mr Darvall: And did you make a note about what had transpired at the time you effected service on both matters?
Mr Ng-Saad: It would be on the worksheet, so whatever they put – type up on the affidavit of service, it relates to whatever – corresponds to whatever the worksheet has said, but it depends on whether they type it in or not.
Mr Darvall: You see your affidavit doesn’t say anything about you obtaining access to the building, does it?
Mr Ng-Saad: I didn’t think that was that important.
Mr Darvall: It’s a secure ­ ­ ­?
Mr Ng-Saad: It’s a secure – it’s regulation 16, it doesn’t – I don’t know whether it states that you do need to state how you get into the building.
Mr Darvall: You see, is it possible that you inserted the – I will go back a step. What did you put in the mail box?
Mr Ng-Saad: The bankruptcy notice in sealed envelope, separately to both the defendants – separately.
Mr Darvall: And you put the bankruptcy notice in the envelopes, did you?
Mr Ng-Saad: Yes.
Mr Darvall: When?
Mr Ng-Saad: Before I served it, before I got into the building.
Mr Darvall: Right. And you put one into each individual envelope, did you?
Mr Ng-Saad: That’s right. Yes.
Mr Darvall: What size envelope did you use?
Mr Ng-Saad: The normal letter-size envelope.
Mr Darvall: The normal letter-size envelope; did it have a window seal on it?
Mr Ng-Saad: No.
Mr Darvall: No. And you handwrote the name and address on the front of it, did you?
Mr Ng-Saad: That’s correct.
Mr Darvall: You see, you haven’t indicated in your affidavit that you included the notices in an envelope, firstly, have you?
Mr Ng-Saad: Doesn’t appear to be, but I don’t know whether that needs to be stated.
Mr Darvall: And secondly, you haven’t indicated that you obtained access to the premises by using the intercom service, have you?
Mr Ng-Saad: No, but as I said, I didn’t think that needed to be stated .....
Mr Darvall: You haven’t indicated, have you, in your affidavit that you prevailed upon some woman, apparently a ground-floor tenant to be able to permit you entry into the premises?
Mr Ng-Saad: She’s a tenant. Otherwise she wouldn’t be in there.
Mr Darvall: Well, you see, that would have admitted an opportunity for an inquiry to be made of this woman, wouldn’t it?
Mr Ng-Saad: I presume so, but she is in there; she said she was a tenant.
Mr Darvall: Right. You see, none of this appears in your affidavit. Now, you say that you – what did you do with the envelopes then?
Mr Ng-Saad: I put it in the letter box which is next to the lift, the letterbox marked 6A.
Mr Darvall: 6A?
Mr Ng-Saad: Yes.
Mr Darvall: You see it’s put by the respondents that that envelope was not received by them; what do you say about that?
Mr Radman: Objection.
HIS HONOUR: Yes.
Mr Radman: I’ve been allowing my friends some latitude, but there are questions of this kind, he can’t possibly know the answer of what was in the mind, or what was performed by the respondents; all he can identify what he did, how he did it, and what he observed and performed on the day in respect of his service, not in relation to the intentions or mindset or mindset of other people.
Mr Darvall: I’m not inviting intentions or mindsets. I’m inviting him to provide some explanation as to why it is that these documents weren’t received.
HIS HONOUR: Well, he can offer an explanation what he believes, but I don’t believe that gets you very far, because ­ ­ ­
Mr Darvall: Thank you, your Honour.
HIS HONOUR: ­ ­ ­ he has indicated what he has done with it.
Mr Darvall: Thank you, your Honour. Now, you might describe the actual letter box; what sort of letter box was it?
Mr Ng-Saad: A steel letterbox, and the units numbers are marked on. There are a number of letter boxes there.
Mr Darvall: How many?
Mr Ng-Saad: I don’t know. I didn’t bother to stand there to count each one of the letter boxes.
Mr Darvall: Well, when you entered the stairwell, when you entered the premises, whereabouts were the letter boxes in relation to your entry?
Mr Ng-Saad: On the right-hand side of the entry.
Mr Darvall: And whereabouts in relation to the letterboxes was the letter box for unit 6A?
Mr Ng-Saad: 6A, I vaguely remember, but it’s very well marked. It’s about in the middle on the right-hand side.
Mr Darvall: Right. And in terms of the shape of the letter box, is it a letter box with a – can you describe the shape of the opening to the letter box?
Mr Ng-Saad: It’s a square letter box with a lid on the top.
Mr Darvall: A square letter box?
Mr Ng-Saad: Yes.
Mr Darvall: And how wide was the aperture to the letter box?
Mr Ng-Saad: It’s about this big.
Mr Darvall: What, it would fit the size envelope you were referring to?
Mr Ng-Saad: Yes.
Mr Darvall: It wouldn’t fit an A4-type envelope?
Mr Ng-Saad: Yes. It would.
Mr Darvall: So you extend – so you intended to indicate that that would fit an A4-size envelope?
Mr Ng-Saad: Yes.
Mr Darvall: And when you got to the letter box, where there any other documents in the letter box that you could see?
Mr Ng-Saad: No. I couldn’t. And by law you shouldn’t be looking.
Mr Darvall: Well, I’m asking to you was the aperture accessible to you?
Mr Ng-Saad: No.
Mr Darvall: It wasn’t accessible to you?
Mr Ng-Saad: The aperture as in the letter box, or the letters inside the letter box?
Mr Darvall: So that you understand what I’m asking you, the aperture to the letter box is what you would insert the letter through?
Mr Ng-Saad: Yes. It’s accessible.
Mr Darvall: It was accessible to you? So there was nothing obstructing your passage to that. You’ve not put any of this in your affidavit, have you?
Mr Ng-Saad: I guess not.
Mr Darvall: Is an explanation for that that it didn’t occur as you’ve just indicated?
Mr Ng-Saad: Well, I’ve sworn an affidavit that I’ve done it, so ­ ­ ­
Mr Darvall: Did you insert the envelopes into the common mail box at the front of the property?
Mr Ng-Saad: No. There was no common mail box at the front of the property.
Mr Darvall: Did you see the building caretaker?
Mr Ng-Saad: No.

Submissions – Mr Darvall for Applicants

12. The affidavits of Mr Conrad and Ms Grace indicate that they did not receive service of the Bankruptcy Notices. They proffer in their affidavits, which have been served and made accessible to the process server, that the unit building is a secure block, requiring entry to the premises in order to effect service at the numbered letter boxes. Mr Ng-Saad under cross-examination indicated that he had obtained access to the premises, although this is a matter that he did not think to put in his affidavit. Mr Darvall contends that access to the building is an important matter for him to have addressed in his affidavit, given the difficulties that flow from the requirement merely for service in accordance with the Rules. In their affidavits, which are uncontested, Mr Conrad and Ms Grace state that they did not receive the documents. It is submitted that Mr Ng-Saad provides an affidavit which does not cover matters that are quite material to what he ought to have included in the affidavit. Mr Darvall submits that the Court would be entitled to be satisfied that there is proof to the contrary of service having not been affected. Consequently, it is submitted that it must follow that there has been no act of Bankruptcy in accordance with s.40(1)(g) of the Bankruptcy Act 1966 (Cth).

Submissions – Mr Radman for the Owners of Strata Plan No. 2795

13. Mr Radman submits that issues in relation to the service of Bankruptcy Notices usually require simple affidavits about how those documents were served. In this instance, both affidavits of service identify that it was served pursuant to reg.16 by leaving it in the letter box and specifies the address of Unit 6A, 45 Ocean Avenue, Double Bay. Mr Radman submits that it is not for the process server, Mr Ng-Saad, to identify all of the issues that may or may not present themselves in respect of a Notice of Grounds of Opposition. His affidavit would then have to include everything from when he first left his house to when he eventually served those documents and what happened in between. If that was the case, we would have a very lengthy affidavit of service in relation to matters which are irrelevant.
14. Mr Radman supports this contention that they are irrelevant and he notes that pursuant to reg.16.01 of the Bankruptcy Regulations 1996 the manner in which documents are to be served is identified and service of documents under reg.16.01(1)(c) stipulates that the document be:
    • left, in an envelope or similar packaging marked with a persons name at the last known address of the person.
15. Pursuant to reg.16.01(2)(b) documents are deemed served on the day in which service is actually performed. Mr Radman submits that the affidavit of service in the form that was filed on 22 March 2011, complies with the requirements in respect of identifying the service of the document pursuant to that regulation. Mr Ng-Saad is an independent third person, has no relationship to any of the parties and performs a contract in respect to Grace Lawyers’ process serving works. He is has been involved in the industry for a number of years, based on the evidence provided during cross-examination, and performs numerous services each day some times on a seven day per week basis.
16. Mr Radman argues that there was absolutely no aspect of Mr Ng-Saad’s testimony which was controversial or disputed. At no point did Mr Ng-Saad come across as being uncertain, unaware of the building or of what he did and how he did it, what he served, the manner in which he served it and at no point was there any hesitation or confusion in respect to any of those matters. Mr Ng-Saad was clear, concise and very able to recollect everything in respect of his service of the documents in this matter and there is nothing in the questioning which would go to contradict anything that he provided
17. Mr Radman drew the Court’s attention to the contents of Mr Conrad’s affidavit sworn 9 May 2011, at para.10, where Mr Conrad provides an explanation as to how things can go missing from his letterbox. He identifies a number of issues in respect of tampering in relation to his mailbox and he states:
    • I have also complained to Rose Bay Police concerning tampering or missing mail. The Police event number is E283324427 however I do not presently have a copy of the event report.
18. Mr Radman submits that the requirement is not the receipt of the Bankruptcy Notice but rather its service pursuant to reg.16.01. It is submitted that reg.16.01 and the deeming provision of 16.01(2)(b) have been complied with.

Consideration

19. The Notice Stating Grounds of Opposition to the Creditor’s Petition claims that the Bankruptcy Notice was not served on the Respondent debtors. The Court has before it conflicting evidence contained in the affidavits of Luke Conrad and Natasha Grace and the licensed process server, Mr Andrew Ng-Saad,.
20. The learned authors of Australian Bankruptcy Law and Practice, McQuade and Gronow, Thompson Reuters at Re.16.01.15 states that it has been held pursuant to reg.16.01 service can take place upon performance on one or more of the described methods. Evidence that the debtor was served under reg.16.01 to the effect that he or she did not receive the document does not negate service. In the absence of the document being returned undelivered or other evidence of non delivery: Skalkos v T&S Recoveries Pty Ltd (2004) 141 FCR 107; [2004] FCAFC 321 per Sundberg, Finklestein and Healey JJ at [25] – [26], [39].
    • [25] It is not necessary in the present case, any more than it was in Fancourt, to decide whether the Rossi line of cases should be followed. If, on the proper construction of reg 16.01(2), the words “proof to the contrary” permit proof that the document was not delivered, there is no such proof in the present case. It is clear from Fancourt that proof of non-receipt as opposed to non-delivery is not permitted. If on the other hand those words only permit proof that the document was delivered on a date other than that on which it would have been delivered in the due course of post, there is no such proof.
    • [26] Thus on either view of reg 16.01(2), the primary judge correctly said there was no point in the appellant filing an affidavit of non-receipt.
    • ...
    • [39] As we have said at [25] and [26], the evidence of non-receipt of the notice sought to be introduced as fresh evidence is irrelevant. The motion is dismissed.
21. Their Honours did not consider it necessary to determine whether the words “in the absence of proof to the contrary” in reg.16.01(2) are “restricted to proof that the document was delivered on the date other than that which it would have been delivered in the due or ordinary course of post”, or whether they “permit proof that the document was not delivered” at all because in that case there was no evidence of either late or non-delivery. The authors note that under the previous Australian provisions, it was held that service of a Bankruptcy Notice is not proved by proof of posting if the notice is shown to have been returned unclaimed: Lombard Australia Ltd v Mohrwinkel (1973) 1 ACTR 57; (1973) 21 FLR 277.
22. In this matter there is no issue about the return of documents to either the postal authorities being unable to locate the postal address provided, or some third party receiving the document and receiving it. Consequently, the issue of non-delivery does not arise.
23. In De Robillard v Carver [2007] FCAFC 73 per Buchanan J (with Moore and Conti JJ agreeing) at [67] – [68], His Honour addresses the strict requirements in respect of service. His Honour states:
    • [67] First, it is appropriate in principle to require strict proof. Before the introduction of reg 16.01 bankruptcy notices were required to be served personally unless an order for substituted service was made. The requirements for service were strictly enforced (Re Ditfort; Ex parte Deputy Commissioner of Taxation (NSW) (1988) 19 FCR 347 per Gummow J at 358). For example, in Clyne v Deputy Commissioner of Taxation (No.4) [1982] FCA 162; (1982) 42 ALR 703, Lockhart J set aside a bankruptcy notice served by post because, although by order of the Court service was deemed effective 14 days after posting and compliance was required 28 days after due service, the alleged debtor could not know when posting had in fact occurred and therefore could not reliably calculate the time for compliance. Although the introduction of reg 16.01 has removed the need for personal or substituted service, a strict approach to satisfaction of the elements of service remains appropriate.
    • [68] Secondly, although reg 16.01(2) casts upon the appellant the burden of displacing a presumption as to time of service, as I earlier pointed out that onus does not arise until, first, proof of delivery in the due course of business practice is available. If there is no proof of that fact then proof of the chain of delivery simply breaks down inconclusively.
24. The sworn affidavit and oral evidence of Andrew Ng-Saad indicates that he strictly complied with reg.16.01(c) in that he “left, in an envelope...marked with the person’s name, at the last-known address of the person”. The only criticism of Mr Andrew Ng-Saad raised by Mr Darvall in cross-examination was with regard to the amount of detail that was contained in the affidavit of service. I will return to this issue below.
25. The issue of “the last known-address of the person” [being served] has not been raised as an issue as the evidence clearly indicates Unit 6A, 45 Ocean Avenue, Double Bay is the residential address of Mr Luke Conrad and Ms Natasha Grace, and the registered business address of Visy Insulation Pty Ltd (ACN 140 360 676 and ABN 1614 0360 676) of which Luke Conrad is the director and sole shareholder which also lists its principle place of business as Unit 6A, 45 Ocean Avenue, Double Bay. I also accept the evidence of Mr Andrew Ng-Saad that he clearly marked two separate envelopes, one for each of the debtors, which were clearly named on the outside of a standard size “DL” envelope: see Lazar v Seccombe (2005) 3ABC (NS) 727; [2005] FCA 1652 per Jacobson J at 21- 26; Moore v Wilson [2006] FCA 79 per Mansfield J at [22] – [24].
26. The significant issue in this matter relates to the adequacy of the affidavit of service sworn by Mr Andrew Ng-Saad. Mr Darvall submits that there were details of the service that were not contained in the affidavit of service. The Court was not referred to authorities as to the contents of an affidavit of service. The method of service effected by Mr Ng-Saad was by leaving the relevant document at the person’s last known address. There was no requirement such as personal service, which would require the manner of identification of the person being served. In the circumstances of personal service, the process server is required to state in the affidavit in respect to the service of a Bankruptcy Notice that the person served is a person of the name ‘XXX’ and that is the person named as the debtor in the Bankruptcy Notice. When the Bankruptcy Notice is delivered to an identified mailbox at the last known address of the debtor, the requirement to identify the person named does not arise.
27. If there is an allegation of defective service, the Court must decide if the service was valid before the matter can proceed. Since the introduction of reg.16.01 there is no requirement that a Bankruptcy Notice is to be served personally, consequently service can be effected by ordinary service. Ordinary service can be effected by leaving the document at the party’s address for service, being the last known place of residence.
28. The relevant clause of the affidavit of service states:
    • On 8 February 2011 at 11:00 I served MR LUKE CONRAD with a true copy of the Bankruptcy Notice signed and dated by the Official Receiver on the Application of the Owners – Strata Plan No. 2795 on 11 January 2011 which was annexed details of the interest claimed in the Bankruptcy Notice together with a true copy of the judgment obtained in the Local Court of New South Wales at Sydney Downing Centre on 26 November 2010 by leaving them in the letter box under Regulation 16 at UNIT 6A, 45 OCEAN AVENUE DOUBLE BAY, in the said state.
29. The uncontested affidavit of Mr Conrad was that:
    • Number 45 Ocean Avenue Double Bay has a street frontage, single mailbox in which all correspondence is deposited which is later sorted by the building caretaker.
    • ...
    • The unit building has secured access and once entry is obtained through the locked front doors of the unit building, the individual mailboxes for each of the 40 or so Units are located off to the right.
30. The sworn testimony of Mr Ng-Saad under cross-examination is set out in full at [11] above. This evidence was given in a confident and straight forward manner. He demonstrated a clear understanding of the requirements of the service of bankruptcy notices under the provisions of the regulations. A knowledge gained through experience as a process server working at that task for a period of six years with a heavy daily work demand. His experience was demonstrated by seeking access to a secured building to place the documents in the tenants’ mailbox as an extra precaution where he could have placed the documents in the common mailbox and satisfied the requirement of the regulation. He acknowledged that he did not see the common letter box at the street front so proceeded to the building glass front doors and sought entry by attracting the attention of a tenant who was present in the foyer. This explanation is consistent with the affidavit evidence of Mr Conrad who states that the common letter box at street front was a distance from the actual building that was set back from the street. I have no reservations in accepting Mr Ng-Saad’s account of how he served the documents.
31. The argument advanced is that these details of how Mr Ng-Saad gained access to the unit block together with the identity of the lady facilitating his access should have been contained within the affidavit. There does not appear to be any authorities suggesting that the detail of gaining access to the individual mailbox should be included in an affidavit of service. The affidavit of service contains the elements contained within the regulations and there is no instruction indicating that the details relating to the access to particular buildings are required to be included in the affidavit.
32. With the growing trend of secure residential buildings which do not provide access to the individual mailbox facility of the residents but instead provide a single delivery point for all mail services subsequently distributed by a concierge or caretaker to the individual tenants’ mailboxes, the formal postal service would be to a “street frontage, single mailbox to which all correspondence is deposited” (Mr Conrad’s affidavit) satisfies the requirements of service listed in regulation 16.01(a)(c). In University of New South Wales v Sheikholeslami [2008] FMCA 1323, the debtor tendered evidence of the procedures to be followed by the concierge at her residential address being the Observatory Tower. That instruction sheet (available to all tenants and the concierge) set out procedures that should be observed in respect of all mail items by the concierge service or to the single street front mailbox and the subsequent distribution to the individual tenant’s mailbox by the concierge. Evidence of this nature has not been tendered in respect to the premises at 45 Ocean Avenue, Double Bay.
33. I note the chronology of events.
    1. 26 November 2010 - Judgment/Order entered in Local Court of New South Wales, Downing Centre.
    2. 11 January 2011 – Bankruptcy Notice 125/2011 issued by Official Receiver.
    100. 8 February 2011 – Service of Bankruptcy Notice.
    4. 3 March 2011 - Failure to comply with Bankruptcy Notice – act of Bankruptcy.
    5. 28 March 2011 - Debtors instruct Milne Berry Berger & Freedman to:
       1. Act on behalf of debtors;
       2. File an instalment application with regards to Judgment entered in Local Court on 26 November 2010;
       3. Solicitors receive request to accept service of Creditor’s Petition; and
       4. Instructions issued not to accept documentation on debtor’s behalf.
    6. 25 March 2011 – instalment order made in the Local Court to pay monthly instalments of $600.00:
       1. 1 April 2011 – first instalment; and
       2. May 2011 – second instalment.
    7. 5 May 2011 – Notice of Motion objecting to instalment order listed for hearing.
34. The actions of Mr Conrad and Ms Grace to instruct their new solicitors, Milne Berry Berger & Freedman, appear unusual. Particularly, the specific instructions not to accept documents on their behalf while claiming to have no knowledge of the existence of the Bankruptcy Notice, coupled with long delays between the entering of judgment/order and the filing of an Application for instalment order.
35. I note the observations of his Honour Tamberlin J in Re Silvas; Ex parte Official Trustee of Bankruptcy v Silvas [1997] FCA 206 where he states:
    • However, prima facie, it did not seem to me that the effect of reg.16.01 of the Bankruptcy Regulations enables non personal service of a Bankruptcy Notice to be effected. However, this is prima facie evidence of service, it is open to the debtor in due course to adduce evidence to the contrary (reg.16.01(2)).
36. I have formed the view that Mr Conrad’s evidence should not override Mr Ng-Saad’s evidence of delivery of the Bankruptcy Notice to the Unit 6A, 45 Ocean Street, Double Bay address, I also note that Mr Conrad did not advance any evidence that the envelope containing the Bankruptcy Notice had been taken by another person. I note that his mailbox could have been subject to some form of interference from unknown third parties resulting in him placing a complaint with the local police. Mr Conrad had the opportunity to put on further evidence about the issue of service, but did not. I acknowledge that there is conflicting evidence in respect to the service of the Bankruptcy Notice, however I have formed the view that the affidavit and oral evidence of Mr Ng-Saad should be accepted over that of Mr Conrad who has claimed non-receipt.
37. Significantly, the issue of non-delivery has not been established and the discretionary provision of reg. 16.02 must prevail. The actions of Mr Conrad and Ms Grace in respect of their instructions to their solicitors on 23 March 2011 are inconsistent with a claim of no knowledge of the existence of the Bankruptcy Notices. In these circumstances, the Application to have the Bankruptcy Notice set-aside should be dismissed.

I certify that the preceding 37Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !thirty-seventhirty-seven (37) paragraphs are a true copy of the reasons for judgment of Lloyd- Jones FM

Date: 27 May 2011