Lazar v Seccombe

REASONS FOR JUDGMENT 1. This is an application to set aside a bankruptcy notice issued on 19 August 2005. The bankruptcy notice was issued at the request of the respondents upon the basis of a consent judgment for $200,000 obtained in the District Court at Coffs Harbour on 5 May 2005. 2. The application stated three grounds for the exercise of the jurisdiction to set aside the bankruptcy notice. The first was that proceedings to set aside or stay the original judgment had been instituted; this ground was not pursued. 3. The second ground was that the bankruptcy notice was not duly served as required by Regulation 16.01 of the Bankruptcy Regulations 1996 (Cth). This ground was pursued and I will refer below to the evidence on this question. 4. The third ground was that the applicant had a counter‑claim, set-off, or cross-demand as referred to in section 40(1)(g) of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act"); this ground was not pursued. 5. The fourth ground, which was not referred to in the application as filed, was that the issue of the bankruptcy notice constituted an abuse of process because the consent orders pursuant to which the judgment was obtained provided for the respondents to execute a deed of release and to issue a tax invoice, neither of which events had taken place at the time when the bankruptcy notice was issued. That question seems to me to turn upon the proper construction of the consent orders which I will refer to later. I should pause to add that it was conceded by counsel for the applicant that the claim to enforce the terms of the consent orders was not a counter-claim, set-off, or cross-demand which met the requirements of section 40(1)(g) of the Bankruptcy Act. 6. The consent orders in the District Court were as follows:- " 1. Verdict for the plaintiffs in the sum of $200,000.00 inclusive of costs and interest. 2. No interest to run of verdict until 45 days from today and no execution until after that date. 3. The parties agree to release each other and their associated entities from any claims to which they are or may be entitled on circumstances which have occurred between them until the date of this deed, excepting the enforcement of these terms. 4. The verdict sum is to be paid to the plaintiff's solicitors whose receipt shall discharge the defendant's obligation excepting as to any unpaid interest. 5. The verdict sum is noted to include a judgment on this action and consideration for forebearance to sue or matters the subject of the mutual release together with legal costs. 6. These terms to be in full settlement of all claims, actions and rights of the Plaintiffs and Ian David Lazar and all associated entities and each of them shall as soon as practicable execute such Deed of Release as shall be reasonably agreed between their respective solicitors. 7. Note the plaintiffs to raise a tax invoice for rent claimed on the amount of $85,000." 7. I am satisfied on the evidence before me that the deeds of release referred to in [6] of the consent orders have not been delivered. Indeed this was common ground but I was told, and I accept, that the terms of the releases have been agreed although the executed deeds themselves have not been exchanged. 8. I am also satisfied that the tax invoice referred to in [7] of the consent orders was not delivered to the applicant before the bankruptcy notice was issued. I am, however, satisfied that the invoice was raised, although whether it was done before or after the issue of the bankruptcy notice is not clear, and that it was delivered to the applicant after the issue of the bankruptcy notice. 9. Prior to the filing of the present application, the respondent's process server, Mr Michael Hill, swore an affidavit of service of the bankruptcy notice. The affidavit was sworn on 5 October 2005. It was read by the respondents in opposition to the orders sought in the application. Paragraphs one and two of Mr Hill's affidavit as admitted into evidence were as follows: "1. On Thursday the twenty-second day of September 2005, at 4.22 o'clock in the afternoon, I served IAN DAVID LAZAR with the Bankruptcy Notice herein by delivering a true copy thereof signed by the Official Receiver for the Bankruptcy District of New South Wales to a female occupant, a person apparently over the age of sixteen years, at Suite 2, 11 Rangers Road, Neutral Bay, in the said State. 2. Before such service I asked the person so served, 'Is this the place of business of IAN DAVID LAZAR?' She replied, 'Yes, but he's not here'. At the time of such service the person so served said, 'He will be back on Thursday the 28th…Okay then'. " 10. The applicant swore an affidavit on 12 October 2005 in support of his application to set aside the bankruptcy notice. He gave his address as 11 Rangers Road, Neutral Bay which was the street address at which Mr Hill said he delivered the bankruptcy notice. The only evidence in the affidavit to support the ground that the bankruptcy notice was not duly served was a statement in inadmissible form that: "The Bankruptcy Notice has not been properly served on me as required by Regulation 16.01 of the Bankruptcy Regulations 1996." 11. I admitted that paragraph but only as evidence of the applicant's contention. 12. The effect of the applicant's evidence in his further affidavit, sworn on 11 November 2005, was that 11 Rangers Road was not his residential address. 13. The applicant admitted in cross‑examination that the bankruptcy notice had been received by him. He said it was handed to him by a Ms Neels who apparently worked for him. He said that Ms Neels gave him the document about two and a half weeks before 12 October 2005, and he appreciated that it was an important document. He said it was handed to him at premises at Yeo Street and that the document was not then in an envelope. He said he passed on the document to his solicitor. He was not sure whether he sent the original or a faxed copy. 14. Section 40(1)(g) of the Bankruptcy Act provides: "A debtor commits an act of bankruptcy in each of the following cases: … (g) if a creditor who has obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia or, by leave of the Court, elsewhere, a bankruptcy notice under this Act and the debtor does not: