Pukim Investments Pty Ltd v Johnson

Introduction 1 The Court has before it a motion on notice whereby the second respondent, Mr Matthew Marinko Pavlinovich, seeks an order setting aside certain interlocutory orders in this bankruptcy matter which were made by the District Registrar on 21 December 1999. Those orders included orders that: 1. The applicant (petitioning creditor) have leave to amend its petition by 14 January 2000. 2. The applicant file and serve any further affidavits in support of the petition (including any further affidavit of service) by 21 January 2000. 3. The second respondent have leave to amend his notice of opposition by 25 January 2000. 4. The second respondent to file and serve any further affidavits by 31 January 2000. 2 Before I turn to the facts, I shall first make brief reference to some relevant procedural law. Rule 8 of the Bankruptcy Rules provides for review of decisions by Registrars. Rule 8(1) defines "decision" as meaning a decision, direction or act of a Registrar. I am satisfied that the orders made, which are in the nature of directions, fall within the definition of "decision". Order 77 rule 8 of the Federal Court Rules mirrors Rule 8 of the Bankruptcy Rules. Order 77 rule 6 requires an application for a review of a Registrar's decision to be made by filing an application in accordance with Form 5, being the standard form for originating an application in this Court. However, the parties have treated the second respondent's notice of motion as if it were such an application and I think that it is in the interests of justice to proceed in that manner. I now turn to the factual and procedural background of the matter. 3 On 16 February 1998 the applicant creditor recovered judgment against both respondents for the sum of $98,642.76 in the District Court of Western Australia. The respondents had entered an appearance in those proceedings, but the applicant creditor obtained summary judgment under Order 14. 4 On 30 March 1999 the applicant creditor obtained the issue of a bankruptcy notice addressed to each of the respondents based on the District Court judgment. On 22 July 1999 a process server, Mr Neil Robert Urquhart served the first respondent, Mr Gregory Charles Johnson with the bankruptcy notice. 5 For present purposes, there is nothing contentious about service of the bankruptcy notice on Mr Johnson. 6 The applicant creditor's case is that it served the bankruptcy notice on the second respondent, Mr Matthew Marinko Pavlinovich on two occasions. Initially, in its creditor's petition to which I refer below, the applicant creditor relied upon service of the bankruptcy notice on Mr Pavlinovich on 23 August 1999. 7 The petition, filed on 26 November 1999, so far as Mr Pavlinovich was concerned, relied upon non-compliance with the bankruptcy notice said to have been served on that date i.e. 23 August 1999. 8 In an affidavit of service of the bankruptcy notices, sworn on 10 November 1999, Mr Urquhart described such service in the following terms: "5. On 23 August 1999 early in the morning before sunrise, I attended a property situated at Edwards Street, West Swan which I knew to be the residence of Matthew Marinko Pavlinovich to serve Matthew Marinko Pavlinovich with a Bankruptcy Notice dated 30 March 1999 and issued by the Official receiver for the Bankruptcy District of Western Australia on the application of Pukim Investments Pty Ltd. 6. After knocking on the front door to the house situated at the property I observed Matthew Marinko Pavlinovich emerge from a room inside the house. I observed Mr Pavlinovich through a glass widow (sic) pane situated next to the front door. I identified the person I observed inside the house as Matthew Marinko Pavlinovich as I had served him with documents on previous occasions. 7. The front door was subsequently answered by a woman who had previously identified herself to me as Mr Pavlinovich's wife. 8. I informed the woman that I wanted to speak to Mr Pavlinovich so that I could serve him with the Bankruptcy Notice. The woman then informed me that Mr Pavlinovich was not home. 9. When I told the woman that I had just observed Mr Pavlinovich inside the house immediately prior to her answering the door the woman closed the door in my face. 10. I subsequently pushed the Bankruptcy Notice under the door and stated that it was for Mr Pavlinovich. 11. Annexed to this affidavit and marked with the letters "NRU1" is an official copy of the Bankruptcy Notice which was served upon Matthew Marinko Pavlinovich on 23 August 1999. 12. Prior to attending Mr Pavlinovich's residence on 23 August 1999, I attended at the residence on several other occasions in an attempt to serve the Bankruptcy Notice on him. On 12 July 1999 at approximately 6 am I personally delivered an official copy of the said Bankruptcy Notice to Matthew Marinko Pavlinovich while at his residence." 9 The petition was served on Mr Pavlinovich on 1 December 1999. On 21 December 1999 his solicitors filed a notice of intention to oppose the petition. The sole ground stated in that notice was that Mr Pavlinovich had not been served with a bankruptcy notice as required by the Bankruptcy Act. The petition came on for hearing before the District Registrar on 21 December 1999. 10 On that date Mr Pavlinovich's solicitors filed affidavits sworn by Mr and Mrs Pavlinovich. 11 In essence, those affidavits put in issue the facts deposed to in Mr Urquhart's affidavit of service of the bankruptcy notice on 23 August 1999. In their respective affidavits Mr and Mrs Pavlinovich swore that on 23 August 1999 at the time when Mr Urquhart attended at their home, Mr Pavlinovich was not home. He had, according to their affidavits, left home by taxi at about 5.40 am on his way to the Perth Domestic Airport to catch a flight to Melbourne. Exhibited to Mr Pavlinovich's affidavit were documents from Black and White Taxis and Qantas Airways Ltd confirming those journeys. 12 It would appear that when the matter came before the District Registrar on 21 December 1999, the applicant creditor told the District Registrar that there had been an earlier service of the Bankruptcy Notice on Mr Pavlinovich. 13 The Registrar made orders that the applicant have leave to amend its petition so as to rely upon that earlier service. He also made the orders described earlier in these reasons. 14 The District Registrar dismissed the application as against Mr Johnson. 15 The applicant creditor has amended its petition by substituting reference to the earlier date of service (12 July 1999) for the date formerly relied upon (23 August 1999) and changing the date by which Mr Pavlinovich was said to have failed to comply with the Bankruptcy Notice from 13 September 1999 to 2 August 1999. 16 Mr Urquhart has sworn a further affidavit of service deposing to personal service of the Bankruptcy Notice on Mr Pavlinovich on 12 July 1999. The jurat states that the affidavit was sworn on 18 September 1999 but that is obviously a mistake. I infer that it was sworn on 18 December 1999. It was filed on 20 January 2000. 17 In response, Mr Pavlinovich has filed four affidavits, two of which were sworn by him and two sworn by Mr Johnson. In the first such affidavit Mr Johnson deposed to the fact that on 22 July 1999 he attended Mr Urquhart's office, at his request, and was served with two bankruptcy notices. On that occasion, so Mr Johnson deposed, Mr Urquhart informed him that he had to serve fresh papers on Mr Pavlinovich as he had served Mr Pavlinovich with the incorrect papers. 18 Mr Johnson swore that on or about 23 July 1999 he informed Mr Pavlinovich that Mr Urquhart wished to serve him with fresh papers as he had served him (Mr Pavlinovich) with the wrong documents. 19 Mr Pavlinovich, (who in his earlier affidavit swore that he has severely impaired vision of less than 3/60 in each eye and can only read documents with very large print for limited periods of time and then only with special mechanical assistance) in his first further affidavit, swore that on Monday 12 July 1999 at approximately 8.20 am he was handed some documents by Mr Urquhart which all bore a red stamp stating "COPY" in capital letters. He said that on or about 23 July 1999 Mr Johnson informed him that Mr Urquhart wished to re-serve him with the same documents as served on Mr Johnson because he (Mr Urquhart) had served him (Mr Pavlinovich) with the wrong copies. 20 Mr Pavlinovich swore that after 12 July 1999 Mr Urquhart telephoned him on more than one occasion to tell him that he had given him the wrong copies and that he wished to re-serve him with the correct papers. This was both before and after 2 August 1999 (being 21 days after 12 July 1999). 21 Mr Pavlinovich swore that on 4 August 1999 he spoke to Mr Urquhart by telephone regarding arrangements to serve further papers on him. As a result of the foregoing, he swore that he took no steps in relation to the documents handed to him on 12 July 1999 as he understood that they were defective. He swore that he will suffer prejudice if the District Registrar's orders, made on 21 December 1999, are allowed to stand. 22 On 17 February 2000 the applicant filed another affidavit (sworn by Mr Urquhart on the previous day). In that affidavit Mr Urquhart referred to Mr Pavlinovich's first further affidavit (sworn on 28 January 2000) and identified the document which he served on Mr Pavlinovich on 12 July 1999 (he swore that the time was 6.00 am) as being a bankruptcy notice dated 30 March 1999 and issued by the Official Receiver on the application of the applicant. Mr Urquhart confirmed that the bankruptcy notice which he served was identical to the bankruptcy notice annexed to his affidavit of service sworn on 10 November 1999 and was not a photocopy. He swore that the bankruptcy notice served on 12 July 1999 bore a red stamp stating "COPY" in capital letters on each page and that at the time of service of the bankruptcy notice on Mr Pavlinovich, he showed him an original copy of the bankruptcy notice which did not bear a copy stamp on each page. Mr Urquhart denied that he telephoned Mr Pavlinovich on the dates alleged in Mr Pavlinovich's affidavit and said that Mr Pavlinovich telephoned him after he had left his business card at his home on a previous occasion when he (Mr Pavlinovich) was not there. Mr Urquhart confirmed that he spoke with Mr Pavlinovich at about 10.00 am on 4 August 1999 and said that Mr Pavlinovich told him that he was in Sydney for ten days but would make himself available for service of the original copy of the bankruptcy notice on his return to Perth. Mr Urquhart further swore that Mr Pavlinovich did not make himself available for service and that he (Mr Urquhart) was required to attend at Mr Pavlinovich's home on 16 August 1999 and again on 23 August 1999 in an attempt to serve the original bankruptcy notice on him. He confirmed that he served the original bankruptcy notice on Mr Pavlinovich on 23 August 1999 in the manner outlined in his affidavit of service sworn 10 November 1999. 23 Mr Pavlinovich swore a further affidavit on 13 March 2000 (filed on 14 March 2000) in which he took issue with some of the matters deposed to in Mr Urquhart's affidavit filed on 17 February 2000. Finally, Mr Johnson has sworn an affidavit on 13 March 2000 (also filed on 14 March 2000) in which he swore that on 22 July 1999 Mr Urquhart did not show him any other documents when he handed him two bankruptcy notices. 24 When the motion was called on this morning, Mr Odorisio, counsel for the applicant creditor, sought to tender an affidavit sworn by him this morning. Annexed to that affidavit was a circular to creditors including a notice of meeting and a report by a controlling trustee which, in turn, included a summary of Mr Pavlinovich's statement of affairs. It is apparent from those documents that on 3 March 2000 Mr Pavlinovich signed an authority under s 188(1) of the Bankruptcy Act, that on 7 March 2000, Mr C M Williamson consented to act as Controlling Trustee and that a meeting of creditors will be held on 20 March 2000 to consider a proposal being put forward by Mr Pavlinovich. In summary, the proposal is that Mr Pavlinovich will borrow $35,000 from a long-standing friend (and make that sum available to his creditors), that his real and personal property be assigned to his trustee and realised and that there be a composition on that basis. The statement of affairs indicates that as at 8 March 2000 Mr Pavlinovich had assets of $2178 and liabilities of $9.5 million. 25 Mr B P Wheatley, counsel for Mr Pavlinovich, opposed the admission of that affidavit into evidence on the grounds that it was not relevant to the matter before the Court. In summary, counsel contended that the events referred to in the tendered affidavit occurred long after the events on which the petition is sought to be based. 26 I decided, for short reasons which I delivered at the time, to admit the further affidavit into evidence. I considered that it was at least potentially relevant to the exercise of the discretion to allow the amendment to the petition. In particular I considered that the information to which I have just referred was potentially relevant to the question of prejudice to Mr Pavlinovich. 27 The parties have filed written outlines of their respective submissions and counsel for each party have addressed me this morning. I shall refer to some of their contentions, where appropriate, in the course of giving my reasons for decision.