Commonwealth Bank of Australia v Oswal

IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION WAD 142 of 2012

BETWEEN: COMMONWEALTH BANK OF AUSTRALIA (ABN 48 123 123 124)

JUDGE: SIOPIS J DATE: 12 JULY 2012 PLACE: PERTH

REASONS FOR JUDGMENT 1 This is an application which is brought by the applicant (the Bank) for leave to serve a bankruptcy notice out of the jurisdiction and, also, for substituted service of the bankruptcy notice. The Bank relies upon s 40(1)(g) and s 309(2) of the Bankruptcy Act 1966 (Cth) for the jurisdiction of the Court to make the orders sought. 2 At the commencement of the hearing, I dispensed with the need to serve the application upon the respondent, Mr Pankaj Oswal, as this is in the nature of an ex parte application. 3 The short background facts are as follows. On 11 May 2012, the Bank obtained judgment in the Supreme Court of Western Australia against Mr Oswal in the sum of approximately USD4.8 million. That proceeding was brought against Mr Oswal in his personal capacity and in his capacity as trustee of the Burrup Family Trust, and he was sued as a guarantor for debts of a company. 4 On 14 June 2012, the insolvency trustee issued a bankruptcy notice addressed to Mr Oswal based on the Supreme Court judgment. Mr Oswal is not resident in Australia. 5 The Bank seeks orders authorising the service of the bankruptcy notice on Mr Oswal by two means other than by personal service. First, by posting copies of the bankruptcy notice to two firms of solicitors, namely, Hotchkin Hanly, and Murcia Pestell Hillard, both of whom are located in Perth, and by personally serving the bankruptcy notice on a person at the premises of the two firms of solicitors. Secondly, by posting a copy of the bankruptcy notice by pre-paid airmail to two addresses, one in India and the other one in Dubai. 6 The Bank must satisfy the Court of two requirements in order for the Court to make the orders for the substituted service sought by the Bank. First, there must be abnormal difficulties for the Bank in effecting personal service. Secondly, there must be a reasonable probability of the debtor being informed of the bankruptcy notice as a result of the form of the substituted service identified (Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256; Ginnane v Diners Club Ltd (1993) 42 FCR 90). 7 In support of the contention that the Bank faces abnormal difficulties in effecting personal service on Mr Oswal, the Bank relied on the affidavit evidence of Ms Victoria MacMillan. This evidence shows that Mr Oswal is resident out of Australia, as was also the case at the commencement of the Supreme Court of Western Australia proceeding. Ms MacMillan deposed that it was not possible for the Bank to obtain details of Mr Oswal's address so as to effect personal service of the originating process in the Supreme Court proceeding. The Bank had to obtain an order for substituted service in that proceeding. 8 The evidence, also, shows that prior to making this application, solicitors for the Bank contacted the solicitors that represented Mr Oswal in the Supreme Court proceeding, namely, Hotchkin Hanly, in relation to the service of this bankruptcy notice. Hotchkin Hanly advised that they had no address for service for Mr Oswal and no instructions to accept service of a bankruptcy notice. 9 In my view, the Bank has satisfied the requirements that they have faced abnormal difficulties in being able to effect personal service on Mr Oswal in relation to this bankruptcy notice. 10 The next question is whether there is a reasonable probability of the debtor being notified of the bankruptcy notice by reason of the form of the substituted service identified. 11 As mentioned, the means of service which is identified is by posting a copy of the bankruptcy notice to solicitors, Hotchkin Hanly and Murcia Pestell Hillard, and effecting personal service of the bankruptcy notice on these firms. There is evidence that Hotchkin Hanly represented Mr Oswal in his personal capacity and in his capacity as trustee, in the Supreme Court proceeding. There is, also, evidence that Murcia Pestell Hillard represents Mr Oswal in his personal capacity in proceedings which are currently before this Court. I am satisfied that there is a reasonable probability of the debtor being notified of the bankruptcy notice as a result of the service of the bankruptcy notice on the two firms of solicitors. This is because I am satisfied that the solicitors, in the course of undertaking their professional duties, will bring the bankruptcy notice to Mr Oswal's attention. 12 As to the proposed means of service by posting by pre-paid airmail the bankruptcy notice to the two addresses, one in India and the other one in Dubai, the basis on which those two addresses are chosen is as follows. The conditional appearance which was entered by Mr Oswal in the Supreme Court proceeding recorded his address as the Indian address. The Dubai address is an address which Mr Oswal gave as his address in the notice of appearance filed in the proceeding (WAD 66 of 2011) in this Court. There is, therefore, evidence that Mr Oswal has, in recent times, claimed each of the two addresses, as being his address. 13 In my view, the Bank has satisfied the two requirements for the making of the orders for substituted service. 14 In Battenberg v Restrom (2006) 149 FCR 128 (Battenberg), the Full Court held that s 309(2) is sufficient jurisdictional foundation for the Court to authorise substituted service in respect of a debtor who was outside of the jurisdiction. The decision can, I think, be read as suggesting that if the means of such substituted service was to be effected within Australia, it was not necessary for leave to be given to serve the bankruptcy notice outside of Australia, under s 40(1)(g) of the Bankruptcy Act. However, out of an abundance of caution, in case I have misread the Battenberg decision, and, also, because one of the means of substituted service is by posting the bankruptcy notice by pre-paid airmail to addresses out of the jurisdiction, I will also grant leave to the Bank to serve the bankruptcy notice out of Australia, pursuant to s 40(1)(g) of the Bankruptcy Act. 15 The Bank has, also, asked that the service copies of the bankruptcy notice be amended. The bankruptcy notice, as issued, states: You are required, within 21 days after service on you of the Bankruptcy Notice, to either: (a) pay to the creditor the amount of the debt claimed; or (b) make arrangements to the creditor's satisfaction for settlement of the debt. 16 I will order that the service copies of the bankruptcy notice be amended so as to delete the words "service on you of the Bankruptcy Notice" and to replace those words with the word and numbers "30 July 2012". The choice of that date is related to the content of two orders which I propose to make, namely: that the substituted service is to be effected by no later than 16 July 2012; and that the bankruptcy notice shall be deemed to have been served on the debtor, 14 days after 16 July 2012. The effect is, therefore, that the debtor will have 21 days after the date upon which the bankruptcy notice will be deemed to have been served upon him, to satisfy the terms of the bankruptcy notice. 17 For these reasons, I will make the orders in terms of the minute as amended. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Siopis.