Godfrey v Weriton Finance Pty Limited

1.1 Preliminary 8 The trial proceeded on affidavits, being comprised of a brief affidavit sworn by the applicant purportedly deposing as to the grounds of the application to set aside the Bankruptcy Notice and, for the respondent, affidavits of the respondent's solicitor and various persons who had endeavoured to effect service of the Notice on the applicant. Neither party challenged the evidence of the other by cross-examination. However, issue was taken with respect to certain inferences that I was invited to draw from the evidence, albeit that those that the respondent ultimately submitted were necessary to its case were more limited than those set out in the respondent's written submissions. 9 It is necessary to commence with an explanation of the circumstances in which the Bankruptcy Notice came to be served twice.

1.2 Service of the Bankruptcy Notice on 5 July 2014 10 Mr Godfrey co-founded Veritas Advisory in 2013 with David Iannuzzi and is a principal of the firm. According to the website for Veritas Advisory, the practice provides a full corporate and personal insolvency service together with forensic accounting. 11 The solicitor for the respondent, Mr David Farrar of Farrar Lawyers, was instructed on or about 21 June 2013 by the respondent to serve the Bankruptcy Notice upon Mr Godfrey. 12 By a letter dated 24 June 2013, Farrar Lawyers advised the solicitors for the applicant, Carlos Toda & Co, that they were instructed that the respondent had agreed to withdraw an earlier bankruptcy notice for an alleged failure to comply with the formal statutory requirements. Farrar Lawyers also put the applicant on notice that if they did not hear from him by 4.15pm that day as to any other claims that the applicant contends operate as a defence, cross-claim or set off, they would immediately cause a bankruptcy notice to issue and be served. Receipt of that letter was acknowledged by the applicant's solicitors by letter dated 25 June 2013 which also advised that "We are currently considering our client's position and we expect to be in a position to advise our client within the next seven (7) days." 13 Subsequently, on 2 July 2013 the applicant's solicitors wrote to the respondent's solicitors advising that they were instructed that their client was not insolvent and was "in the process of formulating a proposal to purchase certain causes of action from the liquidator of DTC No. 1 Pty. Limited (In Liquidation) which, inter alia, will ground cross claims against your client and Mr Werry personally." Following receipt of that letter, the solicitor for the respondent telephoned the liquidator of DTC on 3 July 2013 and was advised by the liquidator that he had not received any such proposal. That advice was confirmed by email sent on the same day by the liquidator to the applicant's solicitors. 14 On 4 July 2013, the solicitor for the respondent caused a further bankruptcy notice to issue against the applicant. It is this notice which is in issue in the present proceedings. The amount that the Notice states is owed is $160,000 with interest, being the amount owing under final orders made by consent in proceedings by DTC No. 1 Pty Ltd ("DTC") in the District Court of New South Wales No. 6180 of 2008. The Notice also stated that the respondent is the creditor pursuant to a written deed of assignment between the respondent and DTC No. 1 Pty Limited (in liquidation) dated 26 March 2009 of which notice was given to the applicant on 25 January 2013. No issue was raised as to the capacity of the respondent to enforce the judgment debt. 15 Ms Pavlovic, who is a legal secretary/paralegal with the respondent's solicitors, was instructed to personally serve the applicant with the Notice. She attempted to do so on 4 and 5 July 2013 without success. It was her evidence that she was initially told on 4 July 2013 by the applicant's receptionist that the applicant was out but would be back after 2pm. Ms Pavlovic attended the applicant's office again at 2.40pm that day at which time she was informed by the receptionist that the applicant was not back and the receptionist did not know when he would return. On this occasion, Ms Pavlovic also observed a man sitting in the reception area. Upon returning to her office and describing the man to Mr Farrar, Mr Farrar suggested that it was the applicant and that Ms Pavlovic should check the Veritas Advisory website to see whether the person in reception is the same person who appears on that website under the name Murray Godfrey. Ms Pavlovic did so and identified the person in that picture as the same person that she saw in the reception area earlier that day. 16 Ms Pavlovic attended the applicant's offices again on 4 July at approximately 3.35pm where the following conversation took place with the receptionist: "I said: 'Is he back yet?' She said: 'He is not in the office again.' I said: 'Was the person sitting in reception before Mr Godfrey?' She said: 'Yes, it was, but he's gone out again.' I said: 'Well, when will he be back?' She said: 'Mr Godfrey will not accept any documents unless he knows what it is in relation to.' I said: 'All I can say is that the documents need to be served personally on him.' She said: 'Well, I cannot help you there.' The conversation finished and I left." 17 Ms Pavlovic attended the applicant's offices the next day at 10.15am. The applicant's receptionist again advised that Mr Godfrey was not in but, upon being advised that the document was a bankruptcy notice, stated that "You can leave it with me and I can get it to Mr Godfrey." 18 On 5 July 2013, Mr Farrar also attended the offices of Veritas Advisory which is in the same building as his firm's offices and attempted unsuccessfully to personally serve the applicant with the Notice. It would appear from Mr Farrar's evidence that this visit also occurred in the morning on 5 July, but after Ms Pavlovic's attendance at 10.15am that day. Despite being initially told by the applicant's receptionist that the applicant was in his office and she would get him, the receptionist returned to advise Mr Farrar that Mr Godfrey had gone out. When Mr Farrar queried this saying that "You told me only a moment ago that he was in", the receptionist responded "Well, he is not here now." Mr Farrar then deposes that the conversation continued to the following effect: "I said: 'You know my office has been attempting to serve a bankruptcy notice on him and he has been avoiding service.' She said: 'Look, he is not in.' I said: 'Mr Godfrey cannot continue to play these games with service.' She said: 'He is not in.' I said: 'I find that very hard to believe, here is the bankruptcy notice, please tell Mr Godfrey that he cannot evade personal service forever.'" 19 While Mr Farrar then left the Notice on the receptionist's desk, she returned it to Mr Farrar approximately 15 minutes later saying that "I have to give this back to you… as I did not have his authority to accept it." Mr Farrar responded that "Mr Godfrey has been served, there is no point in giving the document back to me" whereupon the receptionist replied that she did not have authority to accept the document. Mr Farrar ended the conversation saying that "This conduct is very poor." 20 Mr Farrar deposes that later that day he placed the Notice in the mailbox for Veritas Advisory. Furthermore, upon Mr Farrar's instructions, Ms Pavlovic sent a letter on 5 July 2013 from Mr Farrar to the applicant by email and facsimile, as well as placing a copy in the post box for Veritas Advisory located with the other post boxes for occupants of the building. In the letter, Mr Farrar stated that: "We have attempted to personally serve you with a bankruptcy notice on three occasions on 4 July 2013 and you have refused to attend the reception area to accept service of the bankruptcy notice. This morning the writer attended your office and asked to speak with you. Your receptionist … stated that you were in and she would retrieve you but you refused to attend the reception area. I handed the bankruptcy notice to [the receptionist] which she accepted. We have also placed a copy of the bankruptcy in your Post box on Level 1 and observed that your motor vehicle Subaru was in the usual parking spot. We have placed a copy of the bankruptcy notice on your motor vehicle for your attention. We also enclose by way of service the bankruptcy notice. In accordance with Regulation 16.01 of the Bankruptcy Regulations 1996 (Cth) you have now been served with the bankruptcy notice. Given that you are a Registered and an Official Liquidator we are appalled at your attempts to avoid personal service." 21 The applicant admits at [2] of his affidavit that he "received by facsimile transmission a letter from the respondent's solicitor dated 5 July 2013 (the 'Letter') together with a copy of a Bankruptcy Notice dated 4 July 2013."

1.3 Service of the Bankruptcy Notice on 24 July 2013 22 Notwithstanding that service was effected on 5 July 2013, Mr Farrar gave evidence that he instructed external process servers to serve the applicant personally with the bankruptcy notice. He explained his reasons for doing so in his affidavit in the following terms: "I had concerns given that the applicant had brought an application to set aside the First Notice on the technical basis that a post office box had been specified in the notice, the refusal to personally accept the Second Notice on five occasions on 4 and 5 July 2013 and the fact that Regulation 16.01(2) provides that service in accordance with sub (1) is subject to 'proof to the contrary', that a conservative approach would be adopted by seeking to personally [sic] the applicant through an external process server." 23 Subsequently a process server, Ms Oeding, on instructions from Rapid Process Service ("RPS"), attempted unsuccessfully to serve the applicant on 12 July 2013. She was advised by the receptionist at Veritas Advisory that Mr Godfrey was out for an eye exam but should be back at 2pm. Ms Oeding apparently did not return later that day. 24 Mr Slater, a process server also on instructions from RPS, attempted to serve the Bankruptcy Notice and consent orders on the applicant at Veritas Advisory on 15 July 2013 but was advised by the receptionist that Mr Godfrey was chairing a meeting which could not be interrupted and that Mr Godfrey could not be disturbed. Mr Slater attempted again unsuccessfully to serve the applicant at his home on 17 July 2013, there being no response when he pressed the security intercom on a number of occasions. 25 On 17 or 18 July 2013, Mr Slater rang Mr Godfrey on his mobile telephone and had a conversation to the following effect: "He said: 'Hello'. I said: 'Is that Murray Godfrey?' He said: 'Yes it is. Who is calling?' I said: 'My name is Mark. I have a Bankruptcy Notice that I have been asked to serve you with Mr Godfrey. Can I make a time and place when it is convenient to deliver it to you? I can meet you anywhere either at your home or office. Anywhere you like.' He said: 'You'll have to let me check my diary and I'll call you back for a convenient time and place.'" 26 Subsequently on 19 July 2013, Mr Slater again rang Mr Godfrey and had a conversation with him along the following lines: "I said: 'It's Mark here, Mr. Godfrey. I am still waiting for a time and place to serve that Bankruptcy Notice on you.' He said: 'Well I won't be making myself available to accept service. I've been advised by the police and my solicitors not to accept service in any way.' I said: 'Why is that?' He said: 'Mr Farrar threatened me on 5 July 2013.' The conversation ended shortly thereafter and I did not initiate contact with Mr Godfrey again." 27 Mr Farrar was advised by Ms Pavlovic on 19 July that she had been in contact with the process servers who had advised her of Mr Godfrey's refusal to accept service and the reasons that he gave for his position. He instructed her that "Given the baseless comments, and the fact that he will not accept service of any documents anyway, please ask them to hold off any further efforts to serve the bankruptcy notice until we have sorted this out." It was Mr Farrar's evidence that he was informed shortly thereafter by Ms Pavlovic that she had called RPS "and asked them to hold off attempting to serve Mr Godfrey". 28 Subsequently on 24 July 2013, Mr Slater received a telephone call from Mr Godfrey "…at which time he said 'I'll be available in my office for service of that Bankruptcy Notice at 3.15p.m. today. I'll only be available for ten minutes and you should affect service upon me within that time frame'. I said: 'I will arrange for a colleague to come and serve that on you.' He said 'Okay, I will see them then.'" Ms Oeding gave evidence that she served the applicant personally on 24 July 2013 at approximately 3.15pm. The applicant did not dispute that personal service occurred on 24 July 2013, deposing that he was handed the Bankruptcy Notice by a woman who came to his office. Further in oral submissions, counsel for the applicant accepted that there was no doubt on the evidence that the applicant knew, at least on service of the Bankruptcy Notice on 24 July 2013, that he had been served with the same notice as that sent to him by facsimile on 5 July 2013. 29 On or about 27 July 2013, Mr Farrar received two letters from RPS. The first letter dated 24 July 2013 set out the earlier unsuccessful attempts to effect service on the applicant between 12-19 July 2013, and confirmed that they would await further instructions before undertaking any further service attempts upon Mr Godfrey as advised by Ms Pavlovic. The second letter dated 26 July 2013 advised that in the circumstances, RPS "took the initiative to send Ms Oeding to Veritas Adviory [sic] … to attend to service upon Godfrey" and that personal service had been effected by her on 24 July 2013. Mr Farrar gave evidence that he was "extremely surprised to receive the letters… given my discussion with Ms Pavlovic on 19 July 2013… in which I requested no further attempts be made to personally serve the applicant." 30 The application to set aside the Bankruptcy Notice together with the supporting affidavit of the applicant was filed on 26 July 2013 and served the following day. The parties were agreed that the time for compliance with the Bankruptcy Notice ended at midnight on 26 July 2013, being 21 days after service of the Bankruptcy Notice on 5 July 2013. I leave aside for present purposes the question of whether a new and concurrent period within which the applicant could comply with the Bankruptcy Notice commenced on 24 July 2013 when the applicant was served personally, as the applicant contended.

2.1 The first threshold issue: had the time for compliance with the Bankruptcy Notice expired before the hearing? 31 Power to extend time for compliance with a bankruptcy notice is conferred by s 41(6A) of the Act. Orders were made initially by the Registrar on 26 July 2013 extending the time for compliance with the requirements of the Bankruptcy Notice up to and including 7 August 2013. Subsequently on 7 August 2013, the Registrar further extended the time for compliance under s 41(6A) of the Act "until 3 September 2013 or further order, whichever is the later". At the time that this order was made, it was envisaged that the hearing of the application to set aside the Bankruptcy Notice would be set down on 3 September 2013. 32 In the event, no further order was made notwithstanding that the hearing of the application ultimately did not proceed on 3 September 2013 but instead on 1 October 2013. Accordingly, the respondent submitted that the time for compliance with the Bankruptcy Notice had already expired on 3 September 2013 when the matter came on for trial and it followed from s 40(1)(g) that an act of bankruptcy had been committed: Re Prow; Ex parte Dalgety Farmers Ltd (1985) 5 FCR 233. 33 However, the applicant contended that he had not been on notice before the hearing that the issue would be raised and that, if the point was pressed, he would wish to seek an adjournment in order to consider whether evidence should be led on the interpretation of the order. Ultimately no adjournment was sought on the basis that the parties had a common understanding that this Court had power to grant an extension of time for compliance with the Bankruptcy Notice nunc pro tunc and should, in the event that the applicant's application was upheld, exercise that discretion in favour of the applicant. That understanding is borne out by the authorities: Guss v Johnstone (2000) 171 ALR 598 at 610; Streimer v Tamas (1981) 37 ALR 211 at 214-215. 34 In the end result, however, I have formed the view that the question does not arise. For the reasons set out below, I have reached the view that the application to set aside the Bankruptcy Notice should be dismissed.

2.2 The second threshold issue: does the affidavit identify the 'grounds' 35 The respondent challenged the competency of the application to set aside the Bankruptcy Notice on the basis that the applicant failed to identify any grounds as required by rule 3.02(1)(b)(i) of the Federal Court (Bankruptcy) Rules 2005 ('Rules'). Specifically, it was contended that the allegations did not constitute 'grounds' for the purposes of the rule because the grounds identified for setting aside the Bankruptcy Notice were not reasonably arguable. In support of its submission that the matter went to the competency of the application, the respondent relied upon O'Meara v Deputy Commissioner of Taxation [2009] FCA 1575. In that case, the Court found that, where no affidavit is filed which satisfies the requirements of rule 3.02(1) or (2) before the expiration of the time fixed for compliance with a bankruptcy notice, the application is not competent and "[i]t is as if no application to set aside the Bankruptcy Notice was ever filed.": O'Meara op cit at [10]. 36 The applicant contended in his written reply that there has been no failure to comply with the rule on the basis that affidavits are properly confined to statements of fact and it is sufficient to set out the factual basis on which any legal argument might be based. The respondent did not take issue with the proposition as a matter of principle that it would suffice if the facts on the basis of which a bankruptcy notice was challenged were set out in the affidavit in support of the application to set aside the notice. However, the respondent contended that the allegations did not constitute 'grounds' for the purposes of the rule because the grounds identified for setting aside the Bankruptcy Notice were not reasonably arguable. The applicant accepted that the grounds identified had to be capable of establishing the relief claimed in the application. 37 The issues raised by the application in this matter were complex, as will be apparent from these reasons, and I consider that the applicant's case was reasonably arguable. It follows that I reject the respondent's challenge to the competency of the application on these grounds. Furthermore, while the grounds on which the application to set aside the Bankruptcy Notice could have been stated in a more fulsome way, I do not consider that there has been a failure to comply with rule 3.02(1)(b)(i). As earlier mentioned, in his affidavit sworn on 26 July 2013 the applicant accepted that he received a copy of the Bankruptcy Notice dated 4 July 2013 by facsimile on 5 July 2013 and was personally served at his office on 24 July 2013. The basis on which the applicant sought to set aside the Notice was that it was capable of misleading the applicant by reason of having been served twice. As such I consider that the affidavit sufficiently set out the grounds on which the application to set aside the Bankruptcy Notice was made so as to comply with the requirements of rule 3.02(1)(b)(i).

3. CONSIDERATION: VALIDITY OF THE BANKRUPTCY NOTICE

3.1 Relevant principles 38 Subject to one important caveat explained below, the principles to be applied in determining the validity of a bankruptcy notice were common ground between the parties. 39 First, the courts have required strict compliance with the legislative requirements for a bankruptcy notice. That approach has been upheld having regard in particular to the seriousness of the consequences of non-compliance for the debtor and potentially for the rights and obligations of others: Australian Steel Company (Operations) Pty Ltd v Lewis (2000) 109 FCR 33 at 41 [22] (Black CJ, Heerey and Sundberg JJ). As Deane J stated in an oft-cited passage in Kleinwort Benson Australia v Crowl (1988) 165 CLR 71 ('Kleinwort') at 81-82: "It has long been a fundamental precept of the law of bankruptcy that "a bankruptcy notice, which is the foundation of a bankruptcy, attended as a bankruptcy is with penal consequences, is a matter in which great strictness is required": per Cozens-Hardy M.R., In re A Judgment Debtor, 530 of 1908 (50); see also James v Federal Commissioner of Taxation (51). A defect in a bankruptcy notice will invalidate it "except in the case of a merely formal defect": per Vaughan Williams L.J., In re OCS (A Debtor); Ex part The Debtor (52), see also In Re a Debtor No. 21 of 1950; Ex part the Debtor v Bowmaker Ltd (53). If a defect in a bankruptcy notice is other than a formal one, the notice itself is defective and failure to comply with it does not constitute an act of bankruptcy. It is true that the strictness of the above rules leaves open the possibility of abuse by unscrupulous debtors. That is, however, an unavoidable concomitant of the protection of ordinary people faced with the threat of being made bankrupt." 40 Secondly, as Mason CJ, Wilson, Brennan and Gaudron JJ held in Klienwort at 79, "a bankruptcy notice is a nullity if it fails to meet a requirement made essential by the Act, or if it could reasonably mislead a debtor as to what is necessary to comply with the notice". The present case is said to be one that falls in the latter category. 41 Alternatively, if a defect or irregularity in a notice is formal only, s 306 of the Act provides that proceedings under the Act will not be invalid unless the Court considers that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court. A "formal defect or an irregularity" is one that could not reasonably mislead the debtor. No contention is made in the present case that s 306 may apply. 42 Thirdly, where a bankruptcy notice is invalid, the Court has no discretion. The notice must be set aside. Thus, after explaining that, while not express, the power to set aside a bankruptcy notice derives from s 30 of the Act, Emmett J pointed out in Australian Securities and Investments Commission v Forge (2003) 133 FCR 487 at 492-493 that: " …the Act gives no general discretion to set aside bankruptcy notices that are valid in form and not an abuse of process. The Act permits the issue of a bankruptcy notice and, if the notice is valid, prescribes the consequences to the bankrupt of non-compliance. The grounds upon which a bankruptcy notice may be set aside must relate to the form or content of the notice, service of the notice or the existence of the debt upon which the judgment, and, in turn, the notice, is founded." 43 Fourthly, in cases where the notice could reasonably mislead the debtor as to what is required, "the notice is a nullity whether or not the debtor is in fact misled": Klienwort at 80. Thus, for example, in James v Federal Commissioner of Taxation (1955) 93 CLR 631 at 644 the Court (Williams, Kitto and Taylor JJ) held the bankruptcy notice invalid on the ground that it was "capable of misleading the debtor" (emphasis added) stating further that: "The court cannot inquire whether the debtor has in fact been misled or not. In this case it is probable that he was not misled. It is sufficient that he could be misled." 44 In that case, the notice was found to be misleading in its terms on the basis that the notice did not accord with the terms of the judgment in favour of the three creditors and was capable of misleading the debtor as to the manner in which he might secure or compound the debt to the creditors' satisfaction. 45 In the fifth place, notwithstanding that the test for determining whether a bankruptcy notice is misleading is an objective one, the question of whether the notice is misleading is not determined in a vacuum. Rather, the parties were in agreement in principle that the Court may have regard to facts extraneous to the notice itself. Thus, for example, in Cosenza v Secretary, Department of Families, Housing, Community Services and Indigenous Affairs [2012] FCA 85 at [33] Mansfield J, citing Weinberg J in Northam v Commonwealth Bank of Australia [1999] FCA 544 at [22] said that "a bankruptcy notice must, while being read strictly, also be read sensibly, and not perversely. It must also be read as a whole, and be read in light of facts extraneous to the notice itself". 46 The parties were not, however, in agreement as to whether the fact that the applicant was an experienced corporate insolvency practitioner was a matter to which the Court could have regard in determining if the Bankruptcy Notice was capable of misleading the debtor. I deal with this submission later in my reasons. 47 Finally, the applicant relied upon the decision of Lander J in Genovese v BGC Constructions Pty Ltd (2005) 215 ALR 440 in support of his contention that a notice may become capable of misleading a debtor by reason of circumstances arising after it was first issued and served. In that case, multiple bankruptcy notices had been issued and served by the same creditor in relation to the same debt. Lander J held, in line with longstanding authority, that a creditor is entitled to issue a second bankruptcy notice to cure a defect in a previous bankruptcy notice provided that the creditor elects as to the bankruptcy notice upon which the creditor intends to rely in order to "avoid creating confusion in the debtor's mind which might lead the debtor to either pay an incorrect amount or a correct amount to an incorrect party." (at 455, [106]). However, that aspect of the decision was concerned with the question of whether the issue and service of multiple bankruptcy notices constituted an abuse of process, as were the authorities relevantly cited by Lander J, namely, Abignano v Wenkart [1998] FCA 1468 and Re Fredericke and Whitworth; Ex parte Hibbard [1927] 1 Ch 253. No allegation is made in the present case that the multiple acts of serving the Bankruptcy Notice constituted an abuse of process. As such, these decisions are not directly on point. A similar argument to that sought to be put by the applicant here was, however, considered by Dowsett J in Romano v Peldan [2003] FCA 767. In that case, in addition to alleging that the issuance of two bankruptcy notices constituted an abuse of process, it was alleged that their dual existence was misleading. That argument was rejected by Dowsett J at [16] simply on the facts of the case. 48 In short, there does not appear to be any real consideration in the authorities of the applicant's contention that a bankruptcy notice may be invalid on the ground that it has become misleading as to the time within which compliance is required by reason of events postdating the valid issue and service of the notice, namely service on a second and later day. However, given that the time within which the Bankruptcy Notice must be complied with is defined by reference to the external event of service, the fact that no issue was taken by the respondent regarding the point and the fact that the applicant's contention arguably receives some support from the authorities, I proceed on the basis that the applicant's contention is capable of success as a matter of principle.

3.2 The applicant's case 49 The Bankruptcy Notice states at paragraph 1 that it was issued by the Official Receiver on 4 July 2013 and provides that "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." The notice also explains that bankruptcy proceeding may be taken against the recipient if, within the time stated in paragraph 1, he did not comply with either paragraph 1(a) or (b), but that the recipient may apply to the Court within that 21 day period to extend the time for compliance and to set aside the notice. In short, as the applicant contended, the date of service of the Bankruptcy Notice constituted the critical starting point. 50 The applicant accepted that at the time that the notice was served on 5 July 2013, the notice was perfectly regular and not misleading. 51 However, the applicant contended that following service of the Notice on 24 July 2013, the Notice was misleading because: "…if a creditor serves the same bankruptcy notice for a second time, more than two weeks later and whilst time remains for compliance with it as a result of the first service and does not communicate whether it intends to rely on the earlier service, the debtor cannot know from when the time for compliance with that bankruptcy notice begins to run and cannot know when the time for compliance comes to an end." 52 The applicant then contended at [21] of his submissions that: "In this case, the bankruptcy notice was first served on 5 July 2013. So much is admitted by Mr Godfrey in his affidavit. There is no doubt that service was effective. It was served again on 24 July 2013, without further explanation and without any election as to whether the creditor would nevertheless rely on the earlier service. Again, service is admitted. Mr Godfrey has therefore been served twice almost three weeks apart. A debtor in the position of Mr Godfrey cannot therefore know the final date for compliance with what appears to be the one bankruptcy notice." 53 In short, it is the applicant's case, as further elucidated by him at [4] of his reply, that "by serving the same Bankruptcy Notice twice the debtor has become subject to inconsistent obligations or, at least, two simultaneous obligations the separate contents of which are ambiguous…" 54 The applicant says that, in order for service not to have been misleading, it would have been necessary for the respondent to elect which service it relied upon and to give the applicant notice of that election, or to have made it clear that service on 24 July 2013 was merely "confirmatory" of the earlier service.

3.3 The respondent's case 55 The respondent contends that there is no ambiguity in the notice. It requires compliance within 21 days after service. To the extent that it is necessary to look at extraneous facts, they all support the view that the applicant was fully aware at the time of making the application that the time for compliance was 21 days after service on 5 July 2013. Nor is this a case where successive bankruptcy notices had issued and been served with respect to the same debt. 56 Initially the respondent's written submissions also invited the Court to draw the inference that the applicant had effectively engineered the extraneous circumstances that were said to result in the Notice becoming misleading, namely the second act of service. This was put in support of the submission that the application constituted an abuse of process. However, it was not the respondent's case that it was necessary for the Court to make this finding in order to dismiss the application to set aside the Bankruptcy Notice. For the reasons that I set out below, I do not accept that the evidence was sufficient to enable me to draw the alleged inference. 57 Finally, the respondent accepted that no election was made by it as to which service was relied upon. However it was explained in line with the evidence that service was undertaken on 24 July 2013 contrary to Mr Farrar's instructions to RPS and that the respondent was unaware that service had been undertaken on that date until it received the correspondence earlier referred to from RPS on 27 July 2013. As such, the respondent made no election before the commencement of these proceedings because it became aware that service had been effected personally only after these proceedings had been instituted. However, the respondent also accepted in oral argument that these matters were contextual only and did not provide an answer to the question of whether or not the Notice was capable of misleading the applicant.

3.4 To what extent, if any, can the Court have regard to the applicant's expertise in corporate insolvency? 58 The respondent contended that in considering whether the Bankruptcy Notice is misleading, it is necessary to have regard to the capacity of the Notice to mislead this particular applicant as opposed to a hypothetical debtor, in addition to having regard to the terms of the Notice itself and the events of service. In this regard, the respondent sought to rely upon evidence of information downloaded from the website for Veritas Advisory of which the applicant is a principal, that the applicant is a corporate insolvency practitioner who holds himself out as having considerable experience in the field of insolvency. 59 The website represents the firm, Veritas Advisory, as providing "a full Corporate and Personal Insolvency service along with Forensic Accounting…". The website identifies another practitioner as the person within the practice who provides services in the personal insolvency area. 60 In relation to the applicant, the website states that: "Murray's [Mr Godfrey's] expertise in dealing with all aspects of corporate insolvency and business recovery follows a career spanning more than 30 years. Including 10 years with large firms Arthur Andersen and Coopers & Lybrand (now PricewaterhouseCoopers); Murray has become highly regarded for his ability to provide practical advice and cost-effective, innovative solutions to clients' often highly complex business issues." 61 In addition, the website states that: "Complementing his strong insolvency background, Murray has held senior finance roles in private enterprise and been an account manager with a leading factoring firm. This experience gives him a unique business perspective and an ability to empathise with his clients. At Veritas, Murray plays a strong mentoring role and is passionate about finding and developing talented people who share his commitment to delivering exceptional service to our valued clients. Prior to co-founding Veritas Advisory with David Iannuzzi in 2013, Murray was a principal in another accounting firm." 62 The website also lists the applicant's professional registrations, memberships and associations as follows: "Registered Company Liquidator Official Liquidator of the Supreme Court of New South Wales and the Federal Court of Australia Institute of Chartered Accountants Insolvency Practitioners Association of Australia Australian Institute of Credit Management" 63 In support of the respondent's submission that it was relevant for the Court to consider the applicant's expertise in corporate insolvency in determining whether service twice of the same notice was capable of misleading the applicant, the respondent sought to rely upon the reasons of Lockhart J in Re Wimborne, Ex parte the Debtor (1979) 24 ALR 494. Specifically, at 500 his Honour stated that: "…although the courts draw a definite distinction between the possibility of the debtor being misled and the question whether he was misled in fact, the latter being an impermissible field of inquiry, it is the capacity of the bankruptcy notice to mislead the debtor to whom the notice is directed that matters, not some hypothetical debtor." 64 Both parties relied upon the decision of Lockhart J and accepted it as correct, although the applicant in oral submissions later appeared to distance himself from this aspect of the decision. However the reasoning of Lockhart J in this passage has been applied in a number of subsequent decisions including by the Full Court of the Federal Court: see, eg, Thorpe v Bristile Ltd (1997) 80 FCR 330 at 348-349 (Carr J, Burchett J relevantly agreeing); and Walker v Nobel Einsiedel Pty Ltd (Unreported, Federal Court of Australia, Sweeney, Burchett and Einfeld JJ, 15 October 1992) (Burchett and Einfeld JJ); see also Lee Chin Lien Yang v Mead [2009] FCA 1202 at [12] (Flick J); and Re Walsh (1982) 65 FLR 87 at 90 (Lockhart J). 65 The applicant responded to the respondent's contention at a number of different levels. 66 First, the applicant contended that to have regard to the applicant's expertise in corporate insolvency practice would be to make the error of inquiring as to whether the applicant was in fact misled. As earlier explained, it is clear (as both parties accepted) that the test is not whether the applicant was in fact misled but rather whether the Notice was capable of misleading the applicant and that, in answering that question, it may be relevant to have regard to extraneous circumstances such as (relevantly here) the fact that the Notice was served upon the applicant on two different days. I do not, however, consider that the test is transformed into a subjective one because regard is had to such matters as Mr Godfrey's experience in corporate insolvency. There is still no inquiry into the question of whether he was in fact misled. The question remains whether the Notice was capable of misleading this debtor in all of the circumstances. 67 Thus in Re Wimborne, Lockhart J considered that the judgment debtors in that case could not have been misled by the description of the final order in the bankruptcy order being that of the High Court and must have known that the order of the Supreme Court of NSW was varied by the High Court. His Honour's findings in this regard were based upon the involvement of the judgment debtors in the earlier litigation which upheld the liability and the fact that they were legally represented in those proceedings (at 499-500, Lockhart J). As such, the question of whether the judgment debtors in that case could reasonably have been misled was determined having regard to their particular state of knowledge from the earlier proceedings. 68 Other examples of cases where regard has been had to the knowledge or expertise of the debtor in this context include Re Walsh op cit where the debtor set out to engineer events designed to produce defects in the notice, and Walker v Nobel Einsiedel Pty Ltd op cit where at least one member of the Full Court considered that the fact that the debtor was a solicitor was relevant to determining whether a bankruptcy notice was capable of misleading him, notwithstanding that the debtor was not skilled at bankruptcy law. 69 Secondly, the applicant contended that his knowledge and experience in insolvency practice were not relevant to whether the Notice was capable of misleading him as to the time for compliance with the Notice because the appropriate test was whether the Bankruptcy Notice was capable of misleading the ordinary reasonable person on the Bondi bus. Applying that test, it was said by counsel for the applicant that such a person might well consider on receiving the same notice twice "Thank goodness, I've now got an extra 21 days because what I've now been told is that I've got 21 days from the date, today that I've been served'? Because there has been no election or announcement or statement that the second event of service is of no moment." 70 In my view, in some cases, it may be that the appropriate standard for determining whether a bankruptcy notice is misleading is to ask whether it would be capable of misleading the reasonable person on the Bondi bus. I also consider that where that standard is applied, it may be that such a person might interpret service on a second and later day in the manner suggested by the applicant depending upon the circumstances. However, if the knowledge or experience of the particular debtor were ruled out a priori, the question would become whether the Notice is capable of misleading a hypothetical debtor contrary to the approach adopted by Lockhart J in Re Wimborne and subsequently followed in other decisions. 71 Thirdly, it was said by the applicant that the evidence was not relevant in any event because it did not establish that the applicant was a lawyer experienced in the Bankruptcy Act or that he had ever had experience in a bankruptcy matter. Nor was he cross-examined on his familiarity with the Bankruptcy Act and practice. To infer, it was said, from his expertise in corporate insolvency that he would not have been misled upon receiving service of the Notice for a second time would impermissibly involve speculation about subjective aspects of the particular debtor's expertise or experience. 72 I do not accept that the applicant's submissions that his extensive experience in insolvency is irrelevant because the evidence went only so far as to establish the applicant's expertise in corporate insolvency. On the one hand, it can readily be acknowledged that there are differences between personal bankruptcy and corporate insolvency law and procedure. For example, a failure by an individual debtor to comply with a bankruptcy notice will result in that debtor committing an act of bankruptcy by operation of s 40(1)(g) Bankruptcy Act 1966 (Cth), whereas a company's failure to comply with a statutory demand will trigger a presumption of insolvency under the Corporations Act 2001 (Cth) upon which a winding-up application may be based: s 459C(2)(a). 73 On the other hand, it may legitimately be observed that the statutory demand resembles a bankruptcy notice and achieves essentially the same purpose: Michael Murray, Keay's Insolvency: Personal and Corporate Law and Practice (Thomson, 5th ed, 2005) 254. The practical legal similarities were effectively recognised during oral submissions by the applicant's counsel when he described statutory demands as being a "closely analogous field" which is the "equivalent in the corporate context of a bankruptcy notice". Importantly for present purposes, a statutory demand must require the company to pay the amount of the debt, or the total of the amounts of the debts, or to secure or compound for that amount or total to the creditor's reasonable satisfaction, within 21 days after the demand is served on the company: Corporations Act 2001 (Cth) s 459E(2)(c). In short, it stretches credibility, in my view, to suggest that a person with over thirty years experience in corporate insolvency would not have at least a basic understanding of personal insolvency issues sufficient to appreciate the basic obligations imposed upon him on being served with a bankruptcy notice and that service of a notice for a second time would not, without more, absolve him from compliance with the notice when first served. It follows in my view that in answering the key question of whether the notice could reasonably have misled Mr Godfrey, his considerable professional experience as a corporate insolvency practitioner is potentially relevant.

CONCLUSIONS 74 In the circumstances of this case, I have reached the conclusion that the Bankruptcy Notice was not capable of misleading the applicant. Rather, I consider that a debtor in the applicant's circumstances served again with the Notice on 24 July 2013 would have understood that the act of second service would not absolve him from the responsibility to comply with the Notice within the period of 21 days from the date of first service on 5 July 2013. 75 In reaching this view, I have had regard to the following matters. 76 First, as matter of law, the obligation to comply with the Notice was engaged upon effective service on 5 July 2013. The later service of the same notice without more could not, in my view, relieve the applicant of that duty. The applicant asserted that in the absence of an election or statement identifying which act of service was relied upon, a second and concurrent obligation would arise upon the same notice being served again by reason of the fact that the notice stated that the recipient had 21 days within which to comply from the date of service. However, the applicant did not refer me to any statutory provision or authority suggesting that to be the case. Furthermore, it does not follow from the fact that service on both dates was undertaken by a means authorised by the regulations (namely, regulation 16.01 of the Bankruptcy Regulations 1996 (Cth)) that service on both occasions had the same legal consequences. In my opinion, once the Bankruptcy Notice was validly served on 5 July 2013, an act of bankruptcy would be committed upon the failure to comply with the Bankruptcy Notice within 21 days of service by virtue of s 40(1)(g) of the Act, unless the debtor satisfied the Court that he had a counter-claim, set-off or cross-demand satisfying the criteria in s 40(1)(g). That consequence denies the possibility in law, in my opinion, of a second inconsistent obligation arising if the Notice should be served again, whether the next day or otherwise, before the expiry of the time for compliance with the Bankruptcy Notice. 77 Secondly, it was accepted by the applicant's counsel that the applicant knew, at least when he was served on 24 July 2013, that the Notice served on that day was the same notice as that served on him by facsimile on 5 July 2013. As the applicant accepted that the notice was not defective and had been validly served on 5 July 2013, he would therefore have known when served on 24 July 2013 that time had already commenced to run on the earlier date. I do not consider that a debtor would need to be an expert in bankruptcy law to appreciate that fact. It is expressly stated in the Bankruptcy Notice itself in accordance with the statutory requirements applicable to such notices. 78 Thirdly, appreciating that time had already commenced to run, there is nothing in my view that might have suggested to a reasonable person in the applicant's position that personal service was sought to be effected after 5 July 2013 in order to 'restart the clock' and thereby extend the period within which to comply with the Bankruptcy Notice. Rather, I consider that a reasonable debtor in the circumstances of the applicant would have regarded the attempts at personal service as intended by the respondent merely to protect itself against the possibility that the document had not in fact been received by the debtor and against the possibility that the debtor might seek to set aside the (second) Bankruptcy Notice by challenging the validity of the remote forms of service employed on 5 July 2013. In reaching that view, I would rely in particular upon the following matters. The applicant had not sought any extension of time for compliance with the Bankruptcy Notice prior to service on 24 July 2013; nor had the respondent volunteered to afford the applicant any such extension. Unlike the position with respect to the preceding bankruptcy notice which had been set aside by consent, the applicant had not raised any difficulties with the Bankruptcy Notice served on 5 July 2013. To the contrary, the applicant accepted that the Bankruptcy Notice would have been "perfectly regular" and effective save for the second act of service on 24 July. The Bankruptcy Notice was served a second time on 24 July 2013 at the applicant's request in circumstances where the applicant had become aware of the respondent's frustration as to its inability to serve him personally with the notice at the time that he was served by facsimile on 5 July 2013, if not before, and was aware of the respondent's continuing efforts to do so after service by facsimile on 5 July. This is apparent from the letter from Mr Farrar which was sent by facsimile together with the Bankruptcy Notice on 5 July 2013 (quoted at [20] above), the applicant's admission that he received that facsimile, and the telephone conversations between the applicant and Mr Slater on 17 or 18, 19 and 24 July 2013. There is no evidence that the applicant in any way acknowledged service of the Bankruptcy Notice by facsimile on 5 July 2013 (or for that matter by the other remote means of service employed on that day). As such, the respondent was left in the dark about whether the Bankruptcy Notice served on 5 July 2013 had in fact been received, and the applicant would have been aware that this was the case. Irrespective, therefore, of whether or not the applicant was in fact seeking to avoid service, it was completely understandable in the circumstances that the respondent might reasonably suspect that the applicant was seeking to do so and that the respondent should continue to endeavour to effect personal service through its agents after 5 July 2013, as a reasonable person would appreciate. 79 By way of elaboration, I find that the applicant was aware when he requested service on 24 July 2013 that the request related to the same Bankruptcy Notice as had been served on him by facsimile on 5 July 2013. In his evidence of his telephone call with the applicant on 17 or 18 July 2013, Mr Slater stated that he told the applicant only that "I have a Bankruptcy Notice that I have been asked to serve you with…". This evidence standing alone does not suggest that it would necessarily have been apparent to the applicant that Mr Slater was referring to the Bankruptcy Notice served on 5 July 2013. However, when Mr Slater rang the applicant on 19 July 2013, it is clear that the applicant understood that he was referring to the Bankruptcy Notice served by facsimile on 5 July 2013 because the applicant explained that he had been advised not to make himself available to accept service because "Mr Farrar threatened me on 5 July 2013." The call from the applicant on 24 July 2013 to Mr Slater requesting service, in turn, plainly referred to the Bankruptcy Notice that had been the subject of the call on 19 July 2013. 80 In this regard, I should make it clear that I do not accept that Mr Farrar in fact threatened the applicant on 5 July 2013. However, on the evidence before me, the only inference that I can draw is that the reference to Mr Farrar threatening the applicant is a reference to the conversations between Mr Farrar and the applicant's receptionist which she had reported to the applicant. In particular, as I have set out earlier in my reasons, Mr Farrar had asked the receptionist to tell the applicant that he could not evade personal service forever and had described the conduct in returning the Bankruptcy Notice as "very poor". 81 Furthermore, while by no means the only inference available, I should also make it clear that I accept the applicant's contention that it is not possible to exclude the possibility that he requested service on 24 July 2013 for an innocent reason such as to bring an end to the attempts to serve him personally with the Bankruptcy Notice, bearing in mind in particular the telephone calls from the process server, Mr Slater on 17 or 18 July and again on 19 July asking him to give a time and place when it was convenient to serve him personally. Nor was there any evidence to suggest that the applicant was aware that Mr Farrar through his employee Ms Pavlovic had instructed the process servers to cease their attempts to serve the applicant personally pending further instructions. As such, I do not accept that the evidence before me is sufficient to establish that the applicant sought deliberately to engineer a situation whereby he could challenge the Bankruptcy Notice by requesting service on 24 July 2013. Accordingly, to the extent that a contention to that effect was maintained at trial by the respondent, I do not consider that it was established on the evidence. I also note that the applicant was not cross-examined on the issue which, in my view, would have been necessary if such a contention was to be put. 82 Finally, in reply, the applicant sought to make something of the fact that the document with which he was served was not the same physical piece of paper with which he had been served by facsimile. However, I fail to see how that in itself could lead to any confusion in a reasonable debtor's mind, given that the facsimile received on 5 July 2013 was a printout from the applicant's facsimile machine of the Bankruptcy Notice subsequently served on the applicant on 24 July 2013. 83 In short, in all of the circumstances, even leaving aside Mr Godfrey's professional experience in corporate insolvency, I consider that a reasonable debtor on the Bondi bus (to apply the test as formulated by the applicant) would not have been misled by the Bankruptcy Notice as to what was necessary to comply with the Notice as a result of the Notice being served a second time on 24 July 2013. 84 Even if I were wrong in that conclusion, I consider that the balance would be tipped in any event when Mr Godfrey's considerable professional experience as a corporate insolvency practitioner is taken into account. I have already set out my reasons as to why I consider that this experience is relevant and constitutes a matter to which I can legitimately have regard. I do not consider that a reasonable person with such experience would be likely to be confused as to the time for compliance with the Bankruptcy Notice upon being served personally with the same Notice on 24 July 2013. 85 For these reasons I dismiss the application to set aside the Bankruptcy Notice served on 5 July 2013 with costs. I certify that the preceding eighty-five (85) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Perry.