Napiat Pty Ltd v Salfinger; In the Matter of Salfinger

REASONS FOR JUDGMENT 1 The applicant applies to amend the Creditor's Petition in this matter. The amendment is sought to be made to paragraph 3 of that Creditor's Petition. By the amendment, the applicant seeks to add additional sub paragraphs (c) and (d) in the following terms: (c) was ordinarily resident in Australia; (d) had a dwelling house or place of business in Australia. 2 Until that proposed amendment was propounded, paragraph 3 of the Creditor's Petition was in the following terms: At the time when the act of bankruptcy was committed, the respondent debtor: (a) was carrying on business in Australia either personally or by an agent or manager; and (b) represented in Family Court Proceedings held in Perth on 9 February 2011 that he resided at 1 Davena Street, Daniella in the state of Western Australia. 3 The applicant must explain why it had not sought to amend the Creditor's Petition long before now and must also persuade the Court that there will be no irremediable prejudice caused to the respondent if the amendment is allowed. 4 The relevant provision of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) is s 47 which is in the following terms: 47 Requirements as to creditor's petition (1) A creditor's petition must be verified by an affidavit of a person who knows the relevant facts. (1A) If the rules of court prescribe a form for the purposes of this subsection, the petition must be in the form prescribed. (2) Except with the leave of the Court, a creditor's petition shall not be withdrawn after presentation. 5 The relevant rules of Court are the Federal Court (Bankruptcy) Rules 2005. Part 4 - Creditors' Petitions deals with creditors' petitions. Rule 4.02 provides: 4.02 Requirements for creditor's petition and supporting affidavit (Bankruptcy Act s 47) (1) A creditor's petition must be in accordance with Form 6. (2) The affidavit verifying the petition required by subsection 47(1) of the Bankruptcy Act may be in accordance with the affidavit set out in Part 2 of Form 6. (3) The petition must be accompanied by: (a) sufficient copies of the petition for service and proof of service; and (b) if the affidavit verifying the petition is not included in the petition in accordance with Part 2 of Form 6 - an affidavit of a person who knows the relevant facts verifying the petition; and (c) if appropriate, the affidavits required by rule 4.04. (4) If the petition is accompanied by an affidavit of a person who knows the relevant facts verifying the petition in accordance with paragraph (3)(b), a copy of the petition must be attached to the affidavit. 6 Rule 4.04 of the Federal Court (Bankruptcy) Rules deals with the requirements of a creditor's petition when it is founded upon the failure by the alleged debtor to comply with a bankruptcy notice. 7 Form 6 of Schedule 1 to the Federal Court (Bankruptcy) Rules provides that, in paragraph 3 of a proposed creditor's petition, there should be an assertion as to which of the jurisdictional bases specified in s 43(1) of the Bankruptcy Act are to be relied upon by the judgment creditor as the foundation for the Court's jurisdiction in respect of the particular creditor's petition. The form contains various possibilities which reflect, in substance, the terms of s 43(1) of the Bankruptcy Act. The affidavit verifying the creditor's petition, according to the form, is intended to operate as verification of the assertions made in paragraph 3 of the creditor's petition. 8 In the present case, the allegations made by the applicant in paragraphs 1, 2, and 3 of the Creditor's Petition were verified by an affidavit of Francesco Romeo, sworn on 12 April 2011. In particular, in paragraph 2 of that affidavit, the deponent said: The statements made in paragraph's 1, 2 and 3 of the Creditor's Petition, annexed hereto and marked "A", are within my own knowledge true. 9 Counsel for the applicant has submitted that I should allow the amendment because the Creditor's Petition in its original form made clear to the respondent that the jurisdictional bases upon which the judgment creditor intended to proceed were that, at the time of the commission of the act of bankruptcy relied upon, the judgment debtor was ordinarily resident in Australia and/or had a dwelling house in Australia, or was carrying on business in Australia either personally or by means of an agent or manager and/or had a place of business in Australia. He submitted that the amendment which he now seeks does no more than bring the existing assertions into line with the particular language employed in s 43(1). 10 Recognising, as he must, that he needs to explain why an amendment is being sought at this late stage in the course of the proceeding, Counsel for the applicant drew my attention to the Notice Stating Grounds of Opposition to Application, Interim Application or Petition, dated 18 May 2011 which was received in the Registry of the Court on 20 May 2011 (the second Notice of Opposition). That document is in the following terms: NOTICE STATING GROUNDS OF OPPOSITION TO APPLICATION, INTERIM APPLICATION OR PETITION The respondent intends to oppose the petition on the following grounds: 1. The bankruptcy notice was not served on the respondent: (a) the respondent was not present within the jurisdiction at the time of purported service of the bankruptcy notice; (b) the respondent did not receive the bankruptcy notice in accordance with reg 4.01 of the Bankruptcy Regulations or at all: (c) the applicant was aware at the time of alleged service that the address of alleged service was not the respondent's address. 2. The respondent has not committed an act of bankruptcy. 3. The court does not have jurisdiction to make a sequestration order against the respondent because at the time of alleged service and act of bankruptcy, he: (a) was not personally present or ordinarily resident in Australia; (b) did not have a dwelling-house or place of business in Australia; (c) was not carrying on business in Australia, either personally or by means of an agent or manager; or (d) was not a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager; 4. The creditor's petition constitutes an abuse of process: (a) The applicant has issued proceedings in Israel in respect of the judgment the subject of these proceedings. 5. For "some other reason" a sequestration order ought not to be made. 6. The Respondent is solvent. An affidavit supporting the grounds of opposition is filed with this notice. This notice is filed by Barry B Moshel for the respondent. The opponent's address For service is: c/- Barry B Moshel, 39 Merton Street, Caulfield. Date: 18 May 2011 11 Paragraph 3 of the second Notice of Opposition contains assertions made on behalf of the respondent that he was not personally present or ordinarily resident in Australia, did not have a dwelling house or place of business in Australia, was not carrying on business in Australia, either personally or by means of an agent or manager, and was not a member of a firm or partnership carrying on business in Australia by means of a partner or partners or by means of an agent or manager. The respondent also filed an affidavit affirmed by him on 18 May 2011 in which he attempted to deny that he was ordinarily resident in Australia or had a dwelling house in Australia as at the date upon which he allegedly committed the relevant act of bankruptcy (viz 11 April 2011). In that affidavit, he also attempted to deny that he carried on business in Australia or had a place of business in Australia at that time. 12 Counsel for the applicant submitted that the terms of the second Notice of Opposition make very clear that the respondent well appreciated that the applicant intended to rely upon all of the jurisdictional bases referred to in paragraph 3 of the second Notice of Opposition at the hearing of the Creditor's Petition. Why else, so he submitted, did the respondent take the trouble to traverse each of the specific matters covered by paragraph 3? 13 When these submissions were made by Counsel for the applicant, it became clear that Counsel for the respondent did not have in his brief the second Notice of Opposition. In his brief was a Notice Stating Grounds of Opposition to Application, Interim Application or Petition dated 17 May 2011 and filed in the Registry of the Court on 18 May 2011 (the first Notice of Opposition). That document is in the following terms: NOTICE STATING GROUNDS OF OPPOSITION TO APPLICATION, INTERIM APPLICATION OR PETITION The respondent intends to oppose the petition on the following grounds: 1. The bankruptcy notice was not served on the respondent: (a) the respondent was not present within the jurisdiction at the time of purported service of the bankruptcy notice; (b) the respondent did not receive the bankruptcy notice in accordance with reg 4.01 of the Bankruptcy Regulations or at all; (c) the address at which service of the bankruptcy notice is alleged is not the last known address to the applicant. 2. The respondent has not committed an act of bankruptcy. 3. The court does not have jurisdiction to make a sequestration order against the respondent because at the time of alleged service, was not carrying on business in Australia, either personally or by means of an agent or manager. 4. Paragraph 3(a) of the creditor's petition is not in accordance with the prescribed form and ought to be struck out - if the ground for invoking the court's jurisdiction is that the respondent was ordinarily resident in Australia at the time of service of the bankruptcy notice then ought to be stated (in accordance with the prescribed form) and verified by affidavit sworn by a person who is able to say on oath that he believes that matter to be true. 5. The creditor's petition constitutes an abuse of process: (a) The applicant has issued proceedings in Israel in respect of the judgment the subject of these proceedings. 6. For "some other reason" a sequestration order ought not to be made. An affidavit supporting the grounds of opposition is filed with this notice. This notice is filed by Barry B Moshel for the respondent. The opponent's address for service is: c/- Barry B Moshel, 39 Merton Street, Caulfield. Date: 17 May 2011 14 Paragraph 4 of the first Notice of Opposition raises a point that paragraph 3(a) of the Creditor's Petition is not in accordance with the prescribed form. That point was not mentioned in the second Notice of Opposition. 15 It seems, therefore, that Counsel for the applicant was working off the second Notice of Opposition whereas Counsel for the respondent was working off the first Notice of Opposition. 16 I accept the statements of both Counsel made from the Bar table to that effect. However, it must be noted that each of the documents described as "Notice Stating Grounds of Opposition to Application, Interim Application or Petition" was signed by the solicitor for the respondent and I conclude that he, at least, was aware that there were two documents that had been filed and that they were not in the same terms. 17 I should also note at this point that the point raised in paragraph 4 of the first Notice of Opposition was said to be a point referable to paragraph 3(a) of the Creditor's Petition although, when one reads the text, it seems tolerably clear that the point being sought to be made was a point in relation to paragraph 3(b) of the Creditor's Petition. 18 I have taken some time to deal with the differences between the two Notices of Opposition and the unfortunate circumstance that each Counsel was working off a different version because it seems to me that that circumstance is a very powerful explanation as to why the amendment now being sought was not sought earlier. The fact that the point specified in paragraph 4 of the first Notice of Opposition was to be taken was only revealed to the applicant's lawyers last Friday (4 November 2011) when Counsel for the respondent made available his Written Outline of Submissions. 19 It is not desirable that amendments of this nature be made so late in the piece but it is clear, I think, that, at least since May 2011, the respondent has well understood that included amongst the jurisdictional bases to be relied upon by the applicant were the concepts of ordinary residence in Australia, having a dwelling house in Australia, carrying on business in Australia and having a place of business in Australia. I think that it is obvious that the respondent appreciated that all of these bases would be relied upon at the hearing even if no amendment, as is presently sought, had been sought or allowed. 20 Rule 1.06 of the Federal Court (Bankruptcy) Rules provides that it is sufficient compliance with those Rules in relation to a document that is required to be in accordance with a form in Schedule 1 to those Rules if the document is substantially in accordance with that form and has only such variations as the nature of the case requires. 21 Counsel for the respondent submitted that: (a) Jurisdiction is a critical issue in this case and always has been. (b) Paragraph 3 of the prescribed form (referring to Form 6) serves a purpose, ie, to identify the basis upon which the jurisdiction of the Court is to be invoked. (c) In the present case, the basis notified in the Creditor's Petition as originally filed did not fairly alert the respondent to the fact that ordinary residence in Australia, having a dwelling house in Australia, and having a place of business in Australia, would be relied upon as jurisdictional bases for the present proceeding. 22 Counsel correctly submitted that the need to verify assertions relating to jurisdiction for the purposes of a creditor's petition is designed to put a brake on insubstantial petitions (Bryant v Commonwealth Bank of Australia (unreported, Beaumont, Whitlam, Moore JJ, 24 November 1995). He submitted, also correctly, that the Creditor's Petition in the present case had been drawn deliberately in a particular way and that no explanation had been given as to why paragraph 3 had been expressed as it was. Counsel also relied upon the fact that the amendment now being sought was being made very late in the piece. He submitted that there was substantial prejudice being caused to the respondent because the case was a new case and not one of which fair notice had been given based upon the existing Creditor's Petition. 23 I think that the existing language of paragraph 3, whilst unfortunate and not strictly in accordance with Form 6, nonetheless fairly notified to the respondent the basis upon which the jurisdiction of the Court would be invoked and fairly notified the fact that that basis included the concepts of ordinary residence in Australia, having a dwelling house in Australia, carrying on business in Australia and having a place of business in Australia. It is, as I have mentioned above, tolerably clear from the second Notice of Opposition and the respondent's affidavit that the respondent and those advising him appreciated that all of these jurisdictional bases would be relied upon. 24 For those reasons, I propose to allow the amendment. 25 I grant leave to the applicant to amend the Creditor's Petition in the terms of the proposed Amended Creditor's Petition which I shall initial and place with the Court file. I grant leave to the applicant to file that Amended Creditor's Petition in Court. I dispense with service of the Amended Creditor's Petition. I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.