Mudge v Hudson Timber & Hardware Limited

Background circumstances to sequestration order of Federal Magistrate 1 On 17 June 2003, Federal Magistrate Driver made a sequestration order against the estate of the appellant Ronald Anthony Mudge ('Mr Mudge'), upon the application of the respondent Hudson Timber & Hardware Limited ('the Company'). That order was based upon an act of bankruptcy committed by Mr Mudge on 24 October 2002, consisting of non-compliance by Mr Mudge with a bankruptcy notice found by his Honour to have been served on Mr Mudge on 3 October 2002. The Company's creditor's petition subsequently filed more than five moths later, that is on 6 March 2003, asserted that Mr Mudge owed the Company the sum of $53,451.35, pursuant to a final judgment obtained in the District Court of New South Wales on 30 August 2002, that sum being identical to the amount the subject of the bankruptcy notice. The creditor's petition was found by his Honour to have been served on 3 April 2003. The judgment debt related to the supply of timber and hardware. 2 The affidavit as to service of the bankruptcy notice was sworn on 3 October 2002 by Robert Joseph Donnelly ('Mr Donnelly'), a licensed commercial agent, which deposed as to the following: '1. On Thursday the 3 day of October 2002 at 7.30 o'clock in the fore noon I served Ronald Mudge with the Bankruptcy Notice herein by delivering a true copy thereof duly signed by the Official Receiver to him personally at 48 Tradewinds Avenue Paradise Point Q 4216. 2. I identified the person I served as the said Ronald Mudge by saying "Are you Ronald Mudge the person named in this Bankruptcy Notice" and he replied "Yes". 3. Annexed to this Affidavit and marked with the letter "A" is a true copy of the said Bankruptcy Notice signed by the Official Receiver. 4. I have attained the age of 16 years.' The attached Bankruptcy Notice had been issued by the Official Receiver on 20 September 2002. It will be observed that the affidavit of service was made on the same day as the recorded date of service. 3 The affidavit of service of the Company's creditor's petition was sworn on 9 April 2003, also by Mr Donnelly, which, omitting formal parts, reads as follows: '1. On the 3 day of April 2003, I served Ronald Mudge the debtor herein with an official copy of the Creditor's Petition by delivering the same to him personally at 48 Tradewinds Avenue Paradise Point in the State of Queensland. The said copy of the Creditor's Petition being duly sealed with the seal of the Court. 2. I identified the person I served as the said Ronald Mudge by asking him: "Hi Ron. I have the Creditors Petition from Hudson Timber". 3. Annexed to the Affidavit and marked with the letter "A" is an Official copy of the said Petition sealed by the Court. …' It may thus be observed that the affidavit of service was made on the sixth day next following the date of service of the creditor's petition. 4 It can be seen that Mr Donnelly deposed as to personal service upon Mr Mudge, both as to the bankruptcy notice and as to the bankruptcy petition. No application was made to set aside the judgment nor the bankruptcy notice. No moneys have ever been tendered in payment or part payment of the judgment debt. However Mr Mudge caused to be filed by his Toowoomba solicitors Alroe & O'Sullivans, on 9 April 2003, notice of intention to oppose the petition on the following grounds: '1. That the judgment debtor has not been served with a copy of the Bankruptcy Notice. 2. The judgment debtor has not been served with a copy of the Bankruptcy Petition.' Thus the hearing before Driver FM took place almost ninety days following service of the creditor's petition, being ample time for Mr Mudge to prepare for opposition to any sequestration order being made 5 Accompanying the notice of intention to oppose the bankruptcy petition were two affidavits, one by Mr Mudge and the other by Michele Therese Courtney ('Ms Courtney'), both sworn on 8 April 2003. Each affidavit disclosed as the respective deponent's address No 48 Tradewinds Avenue Runaway Bay. Runaway Bay is adjacent to Paradise Point, the town referred to in the bankruptcy notice and creditor's petition, and Tradewinds Avenue apparently bordered the two towns. It appears that Mr Mudge and Ms Courtney resided together at that address at all material times. 6 That affidavit sworn by Mr Mudge, omitting formal part, read as follows: '1. On Wednesday evening the 2nd of April 2003 Michele Therese Courtney handed to me documents which she said she had found under the front door of her home at 48 Tradewinds Avenue Paradise Point. The documents handed to me included a copy of the Bankruptcy Petition, an Affidavit of Service of a Bankruptcy Notice sworn by Robert Joseph Donnelly and a Bankruptcy Notice. I noticed that the copy of the Affidavit of Service of the Bankruptcy Notice alleged that on Thursday the 3rd of October 2002 at 7.30 am I had been personally served with the Notice at 48 Tradewinds Avenue Paradise Point and deny that I was served with a copy of the notice. 2. I was either on the 3rd of October 2002 or at a time subsequent to that date given a copy of the bankruptcy notice by my de-facto partner Michele Therese Courtney and I have subsequently had a number of discussions with representatives of Hudson's Timber and Hardware Limited regarding a debt incurred with them by my company Melbourne Construction & Management Co Pty Ltd which is now in liquidation. I continue to trade with the petitioning creditor and deal with their representatives on an almost daily basis. 3. After receiving the documents which my de-facto partner had found at her home last week I on forwarded the documents to my solicitor in Toowoomba for his attention.' 7 That affidavit sworn by Ms Courtney, omitting formal part, reads as follows: '1. I am the sole registered proprietor of the property situated at 48 Tradewinds Avenue Runaway Bay in the State of Queensland which property I occupy with my de-facto partner Ronald Anthony Mudge and our two children. 2. At approximately 4 pm on the afternoon of Wednesday, 2nd April I returned to my home and found slipped under the front door some papers held together with a glide on clip. On inspecting the papers I found them to include a Creditors' Petition directed to my partner Ronald Mudge and an Affidavit of Service of a Bankruptcy Notice sworn by Robert Joseph Donnelly to which was attached a copy of the Bankruptcy Notice. 3. Having read the Affidavit of Robert Joseph Donnelly dated the 3rd of October which I have not seen until last Wednesday I say that the Affidavit is not correct. I was at home at 48 Tradewinds Avenue on the 3rd of October 2002 at approximately 7.30 am when a gentleman whom I now believe to be Robert Joseph Donnelly came to my front door. When I opened the front door the person whom I now believe to be Robert Joseph Donnelly asked me if Ronald Mudge lived at this address as he had some papers to serve on him. I told this person that Ronald Mudge lived at this address and that I would take the papers for him and the papers were then handed to me. At no time did this person speak to Ronald Anthony Mudge. I have a clear recollection of this incident because I remember looking at the Bankruptcy Notice and being surprised that the Notice was being given on behalf of Hudson Timer (sic) and Hardware Limited, a company with whom my de-facto partner dealt with in his building business on an almost daily basis and with which he to my knowledge continues to deal. 4. Any papers which I did receive or collect I subsequently handed to my de-facto partner thought (sic) I am not able to say with certainty when I gave those papers to him. At his request I did speak to his solicitor by telephone on Friday, 4th April 2002 and gave him an account of the circumstances under which I had received the Bankruptcy Notice and Petition.' 8 Ms Courtney gave additional evidence by further affidavit, also sworn on 16 June 2003, to the effect that on 7 October 2002, she faxed a copy of the bankruptcy notice to a Toowoomba lawyer Mr Alroe, containing her handwritten note endorsed on the document to the effect that she received the same on 3 October 2002 at 7.35 am. 9 Mr Mudge made a further affidavit on 16 June 2003 to the effect that he was not at home on 2 April 2003 when the creditor's petition was said to have been found there by Ms Courtney; he exhibited to that affidavit certain diary entries purportedly relating to certain movements of his on 2-3 April 2003 (as above recorded, Mr Donnelly's evidence was that he served the creditor's petition on 3 April 2003). 10 Mr Alroe (of Alroe & O'Sullivans abovementioned) made an affidavit on 16 June 2003, being the day preceding the hearing of the proceedings below, as follows: '1. I am the Solicitor for Ronald Anthony Mudge. 2. On the 2nd April 2003 I received a telephone call from Michele Therese Courtney, my client's partner who told me that she had returned home to her address at 48 Tradewinds Avenue, Runaway Bay and had found bankruptcy papers stuck under her front door. I asked her to fax to me those papers. 3. Exhibited hereto and marked "DJA 1" is a copy of the Affidavit of Robert Hough verifying the Petition faxed to me at 4.44 pm on the 2nd of April 2003 as is noted on the top of the facsimile transmission which I received on that day.' Mr Alroe's affidavit thus addressed the service of the creditor's petition alone. It did not attach any diary note concerning his above telephone call said to have been made on 2 April 2003. The date 2 April 2003 was of course one day prior to what appeared in the affidavit of service of the petition made by Mr Donnelly (see [3] above). Mr Alroe did not provide any reason for the late provision of that affidavit, the content thereof having been obviously known to him for more than three months. Counsel for the Company objected to the reading of Mr Alroe's affidavit 'on the basis of late service and prejudice', indicating that if the material was to be read, he would have wanted to cross-examine Mr Alroe, and submitting to his Honour in any event as follows: 'That causes prejudice. It's a [section] 135 objection to that affidavit going in, if that is the case. He is not available. It is unacceptable in these circumstances. Then also, there is no application, I should say, for his evidence to be taken by telephone link.' 11 The following ruling of Driver FM appears from the transcript, following upon the objection: 'HIS HONOUR: Yes and I don't have the physical arrangements before me at the moment. I'm not sure how long it would take to get them, but that's another factor. Ms Simons, did you want to be heard? MS SIMONS: Just briefly. In relation to Mr Alroe's affidavit, we did accept that that may - is the most likely outcome but it was something that he chose to fax to us last night and… HIS HONOUR: All right. I'm not going to receive the affidavit of Mr Alroe and I accept the objections'. It is that ruling on his Honour's part which is the focus of the appeal. 12 The process server Mr Donnelly provided oral evidence in the proceedings below by way of confirmation of the contents of both of his affidavits of service. He spoke of having been a licensed commercial agent for six years. In the course of cross-examination upon his affidavit of service of the bankruptcy notice in particular, he said he had '… known Mr Mudge from previous matters', and that he had been to the home of Mr Mudge 'previously'. He further said that he had 'dealt with [Ms Courtney] on previous occasions'. He could not say 'categorically' whether he saw Ms Courtney on the occasion of service of the bankruptcy notice, in relation to which occasion he gave a description as to what then physically occurred. Nothing emerged in the cross-examination of Mr Donnelly provided any basis for casting doubt upon the truthfulness or accuracy of his affidavit of service of the bankruptcy notice. Mr Mudge subsequently entered the witness box and repeated his denial as to personal service of the bankruptcy notice upon him on 3 October 2002, asserting that he found the bankruptcy notice on the kitchen table or bench when he returned home from work on that day, being evidence, I would observe in passing, which did not at least entirely dovetail with par 1 of his affidavit of 8 April 2003, nor with par 3 of the affidavit of Ms Courtney of 8 April 2003, both of which spoke of Ms Courtney giving the bankruptcy notice to Mr Mudge on his return home on the day in question. 13 Mr Donnelly similarly confirmed in his evidence in chief the content of his affidavit of service of the creditor's petition, such service having been deposed in that affidavit to have occurred on 3 April 2003. Under cross-examination on behalf of Mr Mudge by his then legal representative, he purportedly explained the reason for the delay of six days in making that affidavit of service. He said moreover that it was not his practice to make contemporaneous notes as to the circumstances attending his service of court documents, and that instead he usually relied on his memory for the purpose of compiling his affidavits of service, and upon his six years of experience as a process server.