Wandina Holdings Pty Ltd v Duncan and Wandina Holdings Pty Ltd v Cacho [2011] FMCA 49 (2 February 2011)

Federal Magistrates Court of Australia

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Wandina Holdings Pty Ltd v Duncan and Wandina Holdings Pty Ltd v Cacho [2011] FMCA 49 (2 February 2011)

Last Updated: 4 February 2011

FEDERAL MAGISTRATES COURT OF AUSTRALIA

WANDINA HOLDINGS PTY LTD v DUNCAN and WANDINA HOLDINGS PTY LTD v CACHO

[2011] FMCA 49

BANKRUPTCY – Applications for substituted service of Bankruptcy Notice outside Australia – whether steps taken to locate or contact debtors prior to making applications – requirement for making orders for substituted service – evidence insufficient to establish that abnormal difficulty exists in effecting personal service on the respondents. PRACTICE AND PROCEDURE – Requirements for making orders for substituted service – where evidence insufficient – adjournment to file further evidence rather than dismissal in consideration of cost and inconvenience of dismissal.

Bankruptcy Act 1966 (Cth), s.309(2) Federal Court (Bankruptcy) Rules 2005 (Cth), r.3.01 Federal Magistrates Act 1999 (Cth), ss.3, 42 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.3.01 Federal Magistrates Court Rules 2001 (Cth), r.1.03

Battenberg v Restrom (2006) 149 FCR 128; [2006] FCAFC 20 Deputy Commissioner of Taxation v Barnes (2008) 70 ATR 776; [2008] FMCA 7 Deputy Commissioner of Taxation v Cranswick (2010) 117 ALD 95; [2010] FCA 891 Equititrust Limited v Bosiljevac [2007] FCA 323 Ginnane v Diners Club Limited [1993] FCA 167; (1993) 42 FCR 90 Re Mendoca Ex parte Commissioner of Taxation (1969) 15 FLR 256

SC Kiel-Chisolm, “Catch Me if You Can: the effective service of bankruptcy documents in a changing world” (2010) 18 Insolv LJ 197

Applicant:

WANDINA HOLDINGS PTY LTD

Respondent:

ADRIAN STEWART DUNCAN

File Number:

PEG 3 of 2011

Applicant:

WANDINA HOLDINGS PTY LTD

Respondent:

RICARDO CACHO

File Number:

PEG 4 of 2011

Judgment of:

Lucev FM

Hearing date:

2 February 2011

Date of Last Submission:

2 February 2011

Delivered at:

Perth

Delivered on:

2 February 2011

REPRESENTATION

Counsel for the Applicant:

Mr John Panegyres

Solicitors for the Applicant:

John Panegyres, Diploma Group Limited

Counsel for the Respondent:

Not applicable

Solicitors for the Respondent:

Not applicable

ORDERS

(1) The hearing be adjourned to 10:15am on 17 March 2011.
(2) The applicant have leave to file further affidavits before 17 March 2011 in support of the application.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PERTH

PEG 3 of 2011

WANDINA HOLDINGS PTY LTD

Applicant

And

ADRIAN STUART DUNCAN

Respondent

PEG 4 of 2011

WANDINA HOLDINGS PTY LTD

Applicant

And

ADRIAN STEWART DUNCAN

Respondent

REASONS FOR JUDGMENT

(Ex tempore reasons revised and edited)

Applications

1. Before the Court and argued this morning are two ex parte applications for substituted service of a Bankruptcy Notice in each application and for leave of this Court to serve in the United Kingdom, and more properly in England, a Bankruptcy Notice on the respondent in each application.
2. In each of the applications, save for the identity of the respondent, the facts appear to be identical, or substantially so. The facts are as follows:
   1. on 3 March 2010 the applicant, Wandina Holdings Pty Ltd,[1] obtained judgment in the Magistrates Court of Western Australia against Adrian Stewart Duncan and Ricardo Cacho as Administrators of Precast Prestressed Buildings Perth Pty Ltd in the sum of $70,674.03, plus interest payable on the judgment sum, and costs of $436.55;
   2. Messrs Galic & Co. acted for Mr Duncan and Mr Cacho in the proceedings in the Magistrates Court of Western Australia;
   100. on 30 July 2010 the Official Receiver for the Bankruptcy District of Western Australia issued a Bankruptcy Notice for a total debt owing of $72,405.06 against:
        1. Mr Duncan, being Bankruptcy Notice WA 108 of 2010; and
        2. Mr Cacho, being Bankruptcy Notice WA 109 of 2010;
   4. on 3 November 2010 in respect of each of the Bankruptcy Notices the Official Receiver allowed the time in which each Bankruptcy Notice can be served to be extended to 30 July 2011;
   5. at the time of Mr Duncan’s Bankruptcy Notice issuing it gave an address for him as follows:
      • “c/o Galic & Co, Ground Floor, 64 Fitzgerald Street, Northbridge WA 6003.”
   6. at the time of Mr Cacho’s Bankruptcy Notice issuing it gave an address for him as follows:
      • “32 Tamar Street, Palmyra WA 6157.”
   7. in each application an affidavit has been sworn by Nicola Domenico Di Latte, a company director of Wandina Holdings; and
   8. Ms Di Latte’s two affidavits set out the facts relied upon as follows:
      9. the previous solicitors for Wandina Holdings attempted service of the Bankruptcy Notices against Mr Duncan and Mr Cacho by post;
      2. a review of Wandina Holdings’ previous solicitor’s file indicates that there may have been some doubt as to whether Mr Duncan and Mr Cacho resided in Western Australia at the time service was attempted by post;
      3. Wandina Holdings engaged a process server, Shane Shaw, to try and locate Mr Duncan and Mr Cacho;
      4. Mr Shaw reported back to Wandina Holdings that he had “located” Mr Duncan and Mr Cacho as being members of an accounting practice in the United Kingdom called “Jackal Advisory”;
      5. a true copy of an internet search of “Jackal Advisory” which has photographs of Mr Duncan and Mr Cacho is annexed;
      6. from the photographs on the Jackal Advisory internet site Mr Cacho is identified by Ms Di Latte as being the same Mr Cacho that was involved in the action the subject of the judgment debt in the Magistrates Court of Western Australia;
      7. Mr Duncan’s photograph is also said to appear on the internet search, but he is not identified in the same way as Mr Cacho is; and
      8. the judgment debt against Mr Duncan and Mr Cacho was in relation to their role as joint administrators of Precast Pre-Stressed Building Perth Pty Ltd.
3. A review of Ms Di Latte’s affidavit evidence raises many questions. For example:
   1. when was service by post on Mr Duncan and Mr Cacho attempted;
   2. where, in relation to Mr Duncan and Mr Cacho, was service attempted by post, that is, at what address;
   100. why, that is, what evidence exists, that “there may have been some doubt as to whether ... [Mr Duncan and Mr Cacho] resided in Western Australia at the time service was attempted by post”;
   4. is Mr Shaw’s “location” of Mr Duncan and Mr Cacho limited to “locating” them on the internet site for Jackal Advisory;
   5. what other steps have been taken to contact Mr Duncan and Mr Cacho in order to effect, or arrange, or discuss possible service, and in particular:
      1. what steps have been taken, if any, to contact them through Messrs Galic & Co, who were the solicitors on the record for each of them in the judgment debt action in the Magistrates Court of Western Australia;
      2. have they been telephoned on any particular available telephone number, including the land line and mobile telephone numbers given on the Jackal Advisory internet site;
      3. have they been written to at the address for Jackal Advisory in London (which address is now sought to be the address in England at which the substituted service is to be effected), or at any of the other addresses in England for that firm appearing on the Jackal Advisory internet site;
      4. has there been any attempt to contact them on any email address, including the email addresses given for each of them on the Jackal Advisory internet site;
      5. apart from what is said on the face of the internet site for Jackal Advisory, what other evidence is there that Mr Duncan and Mr Cacho are actually resident in England?; and
      6. has anyone in England, on behalf of Wandina Holdings, endeavoured to ascertain or confirm any residential or work address in England for Mr Duncan or Mr Cacho?; and
   6. how was judgment in the Magistrates Court of Western Australia obtained, and were Mr Duncan and Mr Cacho aware of the proceedings and any application for judgment to issue, and have they been made aware of the judgment? And in that regard, the Court notes that Counsel says the proceedings were hard fought but there is simply no evidence of that before the Court, insofar as that may be a relevant consideration for the Court.
4. The above questions are asked because both Mr Duncan and Mr Cacho are, on the face of the Jackal Advisory internet site, qualified chartered accountants in Australia, England and Wales, with the duties and obligations thereby entailed, and either licensed or registered insolvency practitioners in Australia or the United Kingdom, again with the duties and obligations thereby entailed, and with vast experience in accountancy and insolvency practice. Both qualified as chartered accountants with one of the Big Four chartered accountancy firms. On the face of it they do not appear to be persons who would, and there is certainly no evidence that they would, oppose an appropriate method of service upon them or oppose leave being granted for them to be served in the United Kingdom, if they were asked. Counsel, when the matter was raised with him today, indicated that his view was that the contrary was the case, but again there is no evidence to support Counsel’s contention which was put to the Court. Obviously, if there was consent to substituted service, the Court would still have to grant leave to serve outside the jurisdiction, but consent might be a powerful consideration in favour of leave being granted. Answers to some of the above questions raised might also have been of assistance to the Court in its present consideration of the matter.

Requirements for substituted service

5. The application for substituted service of the Bankruptcy Notices for each of Mr Duncan and Mr Cacho is said to be made pursuant to r.3.01 of the Federal Court (Bankruptcy) Rules 2005 (Cth),[2] which provides that an application for an order for substituted service of a Bankruptcy Notice must be accompanied by a copy of the Bankruptcy Notice and an affidavit stating the grounds in support of the application. Technically, the reference in the application ought to have been to r.3.01 of the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth),[3] but given that the bankruptcy rules of both of these federal courts have been harmonised since 2006, the technical difficulty is one of form only, and the Court will treat the reference to r.3.01 of the FC (Bankruptcy) Rules as a reference to r.3.01 of the FMC (Bankruptcy) Rules.
6. Rule 3.01 of the FMC (Bankruptcy) Rules does not in its terms provide power for the Court to make an order for substituted service. Rather, it simply prescribes what documents must accompany an application for an order for substituted service.
7. As this Court observed in Deputy Commissioner of Taxation v Barnes:[4]
   • There is no specific bankruptcy provision or rule dealing with service outside the jurisdiction.[5]
8. It is, however, well recognised that s.309(2) of the Bankruptcy Act 1966 (Cth)[6] confers a discretionary power on this Court to order service of a document in a manner specified by the Court.[7]
9. In Barnes this Court said that:
   • 71. Under s.309(2) of the Bankruptcy Act the discretion conferred is unfettered but not to be exercised lightly. The Court must be satisfied that:
     • (a) abnormal difficulty exists in effecting personal service of the creditors petition on the Respondents; and
     • (b) there is a reasonable probability that the Respondents will be informed of the petition as a result of the form of service identified.[8]

For present purposes the same considerations apply to service of the Bankruptcy Notices as applied to service of the creditors petition in Barnes.[9]

10. Simply because a debtor is overseas may not be sufficient for an order for substituted service, but it is a factor to be taken into account.[10]
11. On the basis of the evidence presently before the Court, the Court is not satisfied that abnormal difficulty exists in effecting personal service of the Bankruptcy Notice on the respondents. On the basis of the evidence:
    1. the Court is not satisfied that Mr Duncan and Mr Cacho are, or remain on a permanent or substantial basis, outside the jurisdiction, or that they have remained so since their departure, whenever that may have been and assuming that they have departed, which is not necessarily proven on the evidence;
    2. there is no evidence of attempts by Wandina Holdings to contact Mr Duncan and Mr Cacho outside of the jurisdiction by telephone, email or post, and no evidence that Mr Duncan and Mr Cacho have, or would, attempt to evade such contact, either in an attempt to evade the establishment of their whereabouts or evade substituted service if leave were to be granted by the Court; and
    100. there is no evidence that the solicitors who acted for Mr Duncan and Mr Cacho at the time of the judgment debt no longer continue to do so, or, if they do continue to act, that there has been any failure by Mr Duncan and Mr Cacho to authorise those solicitors to deal with Wandina Holdings in respect of the judgment debt.
12. The mere fact that Mr Duncan and Mr Cacho apparently appear on the internet site for an accountancy advisory firm based in England, and which seemingly give advice in England, and elsewhere, is not, without more, evidence that they are resident in England, or available to be served, as the application seeks, at Jackal Advisory’s London office. Given the apparently international character of the practises of Mr Duncan and Mr Cacho it is not evident to the Court that Mr Duncan and Mr Cacho are in England, or might not be in, or returning to, Australia, or that they intend to remain permanently outside the jurisdiction. Such evidence might have been gathered by the solicitors for Wandina Holdings by attempts to contact Mr Duncan and Mr Cacho by post, email or telephone at the postal and electronic addresses and landline and mobile telephone numbers given in the website. The position here is in marked contrast to that in Barnes and Cranswick where there was positive evidence that there was abnormal difficulty in effecting personal service by reason of the conduct of Mr and Mrs Barnes and Mr Cranswick.[11] That is not the case here, at least not yet, and merely being outside of the jurisdiction is not sufficient reason to order substituted service.
13. There is no evidence either of an English based solicitor, process server or investigator undertaking any investigations to establish that Mr Duncan or Mr Cacho were working in or out of one of the English offices of Jackal Advisory listed on the internet site, nor of any attempt to establish that they were living in, or that they owned, or had purchased or were purchasing, or were occupying by lease or rental, residential premises in England. Matters such as those might have assisted the Court to come to the view that Mr Duncan and Mr Cacho were outside of the jurisdiction, and permanently so, and thereby establishing some essential evidentiary elements of an abnormal difficulty in effecting personal service (assuming a lack of cooperation by Mr Duncan and Mr Cacho).
14. For the above reasons, the Court is not satisfied that abnormal difficulty exists in effecting personal service of the Bankruptcy Notice on Mr Duncan and Mr Cacho on the basis of the evidence lead in this matter.

Conclusion

15. On the evidence presently available the Court is not prepared to grant leave for service of the Bankruptcy Notices outside Australia. Counsel for the applicant, following exchanges with the Court in argument, moved for an adjournment of these proceedings to file further evidence if the Court was of the view that that was what was required in order for the Court to be satisfied to grant the applications. There is, as the Court has said, insufficient evidence at this time. Rather than dismiss the applications with the cost and inconvenience thereby caused, the Court, having regard to ss.3 and 42 of the Federal Magistrates Act 1999 (Cth) and r.1.03 of the Federal Magistrates Court Rules 2001 (Cth), will order that the proceedings be adjourned and that the applicant have leave to file further affidavit evidence in support of the application. As the applications were brought and argued ex parte, and as there are no costs involved other than the applicant’s costs, the Court will not make any order as to costs today.

I certify that the preceding 15Error! Style not defined.!Syntax Error, !Error! Style not defined.Error! Style not defined.!Syntax Error, !fifteenfifteen (15) paragraphs are a true copy of the reasons for judgment of Lucev FM

Date: 3 February 2011

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[1] “Wandina Holdings”.
[2] “FC (Bankruptcy) Rules”.
[3] “FMC (Bankruptcy) Rules”.
[4] (2008) 70 ATR 776; [2008] FMCA 7 (“Barnes”).
[5] Barnes ATR at 786 per Lucev FM; FMCA at para.68 per Lucev FM.
[6] “Bankruptcy Act”.
[7] Deputy Commissioner of Taxation v Cranswick [2010] FCA 891; (2010) 117 ALD 95 at 106 per McKerracher J; [2010] FCA 891 at para.70 per McKerracher J (“Cranswick”); Battenberg v Restrom [2006] FCAFC 20; (2006) 149 FCR 128 at 133-134 per Heerey, Dowsett and Conti JJ; [2006] FCAFC 20 at para.19 per Heerey, Dowsett and Conti JJ.
[8] Barnes ATR at 786 per Lucev FM; FMCA at para.71 per Lucev FM, citing Ginnane v Diners Club Limited [1993] FCA 167; (1993) 42 FCR 90 at 92 and 95 per Northrop, Sheppard and Einfeld JJ (“Ginnane”); Equititrust Limited v Bosiljevac [2007] FCA 323 at paras. 7-12 per Collier J; Re Mendoca Ex parte Commissioner of Taxation (1969) 15 FLR 256 at 261 per Gibbs J; and see also Cranswick ALD at 106 per McKerracher J; FCA at paras.70-71 per McKerracher J.
[9] Barnes ATR at 786 per Lucev FM; FMCA at para.72 per Lucev FM. As to the requirements generally for service of a Bankruptcy Notice outside Australia see SC Kiel-Chisolm, “Catch Me if You Can: the effective service of bankruptcy documents in a changing world” (2010) 18 Insolv LJ 197 at 203-205.
[10] Cranswick ALD at 106 per McKerracher J; FCA at para.72 per McKerracher J, there citing Ginnane FCR at 95 per Northrop, Sheppard and Einfeld JJ.
[11] Compare Cranswick ALD at 106-107 per McKerracher J; FCA at paras.73-76 per McKerracher J; and Barnes ATR at 778-781 and 786-787 per Lucev FM; FMCA at paras.6-41 and 72-73 per Lucev FM.