Contempt of Court - Summons to produce documents - allegation that summons not complied with - preliminary question whether summons served in accordance with Bankruptcy Rules.

Counsel and Solicitors The applicant appeared in person

Counsel and Solicitors Mrs. P. Sharpe instructed by the

for respondent: Australian Government Solicitor

Declare that service of the summons dated 22 December 1987 was effected in accordance with the provisions of the Bankruptcy Rules.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

In these proceedings, the applicant, Mr Ditford, seeks, inter alia, a declaration that the respondent, Mr Temby, "is in contempt of the Court in that he failed to comply with a summons to witness dated 22 December 1987." The summons was issued in certain bankruptcy proceedings in which the applicant was the debtor and the Deputy Commissioner of Taxation was the petitioning creditor and in which the applicant was seeking to annul his bankruptcy. The respondent having indicated that one of his defences was that he was not personally served with the summons as required by the relevant Rules of Court, it was ordered, by consent, that the following separate question now be determined:

"Was the service of the summons dated 22 December 1987

effected on Mr Temby in accordance with the Bankruptcy Rules?"

2. It is contended by the applicant, and correctly conceded, that there could be no contempt if the summons, in the nature of a subpoena, was not properly served on Mr Temby (see Borrie and Lowe's Law of Contempt, 2nd ed. at p 37).

3. The evidence tendered on the preliminary point was as follows.

(1) The applicant read paras. 2, 3 and 4 of his affidavit sworn 31 October 1989 as follows:

"2. I caused a Summons to Witness to be issued to Mr

Ian Temby, Director of Public Prosecutions,

American Express Tower, 388 George Street, Sydney

New South Wales 2000. A true copy of that Summons

is annexed hereto and marked with the letter 'A'.

3. I served the Summons on Mr Temby by handing the

Summons to Ms Gabrielle Drennan at 2.15 p.m. on 22

December 1987 at the office of the Director of

Public Prosecutions at 15th Floor, American Express

Tower, 388 George Street, Sydney, New South Wales.

At the time of handing her the Summons, I said

words to the effect of:

'Is there any problem with personal service on Mr Temby?'.

She said words to the effect of:

'There is no problem with personal service.'

4. On 2 February 1988 Ms Sigrid Martin appeared in

this Honourable Court on behalf of Mr Temby and

produced a small number of documents in answer to

the Summons. Ms Martin did not claim privilege in

relation to any documents nor did she otherwise

object to the Summons."

(Paragraph 4 was objected to, but was received subject to relevance.)

4. The summons referred to in para. 2 was issued at the request of Mr Ditfort and addressed: "To:- Mr Ian Temby, Director of Public Prosecutions..." The summons summoned Mr Temby to attend at the Court on 2 February 1988 "to give evidence in connexion with the application of Grant Anthony Ditfort to have his Bankruptcy annulled (and then and there to produce any documents in your custody or under your control that relate to the matter, and in particular, the following documents:- As described in the Schedule...". The Schedule was in the form of an annexure and, broadly speaking, described documents relating to the extradition of Mr Ditfort from Germany to Australia.

5. The applicant was not cross-examined on his affidavit.

(a) The affidavit of Gabrielle Ann Drennan sworn 23 February

1990 as follows:

"1. I am currently employed as a Principal Lawyer

by the Independent Commission Against Corruption.

I am an officer of the Commonwealth Public

Service and am presently on leave from the office

of the Commonwealth Director of Public

Prosecutions.

2. I was a Principal Legal Officer with the

Commonwealth Director of Public Prosecutions

when on about 22 December 1987 Mr Grant

Ditford called at the office. I do not recall

the specific terms of all my conversation with

Mr Ditford. To the best of my recollection Mr

Ditfort said words substantially to the effect:

'I have a subpoena here for Mr Temby. Can I give

it to you or does it have to be served personally?'.

I replied:

'No, you can leave it with me'.

Mr Ditfort then gave me a subpoena. Annexed

hereto and marked with the letter "A" is a true

copy of that subpoena. I took the subpoena and

forwarded it to Sigrid Martin who I knew to be

the officer reponsible for proceedings in

relation to Mr Ditfort.

3. I did not forward the subpoena to Mr

Ian Temby, the then Director of Public

Prosecutions, nor did I advise him as to the

existence of the subpoena."

6. Ms Drennan was not cross-examined on the affidavit.

(b) The affidavit of Ian Douglas Temby was sworn 2 March

1990 as follows:

"1. I am currently the Commissioner of the Independent

Commission Against Corruption. Until October 1988 I

was the Commonwealth Director of Public Prosecutions.

2. After receipt by me of a letter dated 8

February 1988 from Mr Grant Ditfort I became

aware for the first time that on or about 22

December 1987 the Federal Court of Australia

issued a summons to me which summons was answered

by Ms Sigrid Martyn of my office on about 2

February 1988. I became aware of the existence

of the summons upon my investigation of the

complaints set out in Mr Ditfort's letter. Prior

to that I had no knowledge of the summons or its answer.

3. The Office of Director of Public

Prosecution had a large number of lawyers

working for it - well in excess of 100 - and

as well as the head office in Canberra, out of

which I worked, there were five branch

offices, where the operational work was done.

I could not involve myself in more than a

small proportion of the matters handled by the

Office. It was consistent with general

practice that a branch office should have met

the requirements imposed by a subpoena

directed to me, whether in my institutional

capacity or personally."

7. Mr. Temby was not cross-examined on his affidavit.

8. The Office of the Director of Public Prosecutions was established by the Director of Public Prosecutions Act 1983 (s.5(1)) as an unincorporated body (cf. Renfree, The Executive Power of the Commonwealth of Australia at pp 222, 225). It is provided that there shall be a Director of Public Prosecutions (s.5(2)), and that the Office shall consist of the Director and the members of the staff of the Office (s.5(3)) and that the Director shall control the Office (s.5(4)). It appears that the Director is not a corporation sole. The staff of the Office shall be persons appointed or employed under the Public Service Act 1922 (s.27(1)). The Director has all the powers of, or exercisable by, a permanent head under the Public Service Act so far as those powers relate to the branch of the Australian Public Service comprising the staff referred to in s.27(1), as if that branch were a separate Department of the Australian Public Service (s.27(2)). The Director may, either generally or as otherwise provided by the instrument of delegation, by writing signed by him, delegate to a member of the staff of the Office all or any of his powers under the Act, other than his powers under s.9(2) (relating to prosecution on indictments) and this power of delegation (s.31(1)).

9. The relevant provisions of the Bankruptcy Rules are contained in Part XI of the Rules, dealing with "evidence", and in Division 1, dealing with "Witnesses". By r.125(1), it is provided that the Registrar may, at the request of a prescribed person, summon a person to attend before the Court on a day and at a time and place specified in the summons and there and then:

"(a) to give evidence or to give evidence and

produce any documents...

...in the person's custody or control that he or she is

required by the summons to produce."

10. By r.126(1), it is provided that service of a summons on a person named in the summons shall be effected by delivering the summons to the person personally. There is no definition in the Bankruptcy Rules of "personal service". In the Federal Court Rules, O.7 r.2(1)(a), it is provided that personal service of a document is effected on an individual by leaving a copy of the document with him. However r.122 of the Bankruptcy Rules deals with proof of personal service of a document as follows:

"122. (1) Where service of a document is effected on a

person by delivering the document or a copy of the

document to the person personally, the due service of

the document shall be deemed not to have been proved by

affidavit unless the person who delivered the document

to the person to be served states in an affidavit -

(a) the date on which and the place at which the

document was delivered; and

(b) the means by which he established that the person

to whom the document was delivered was the person

required to be served with the document.

(2) An affidavit of service of a document on a person

personally shall be in accordance with Form 47.

(3) Where -

(a) a document relating to a proceeding is, or is about

to be, delivered to a person for the purpose of

effecting service of the document on the person; and

(b) the person admits to the person who delivered, or

is about to deliver, the document to the first-mentioned

person that the first-mentioned person is -

(i) a specified person referred to in the document; or

(ii) a specified person to whom the proceeding

relates, the admission is evidence that the

first-mentioned person is that specified person."

11. Form 47, referred to in sub-rule (2) of r.122 speaks, in para.1 of the prescribed form of affidavit of service, of service of a document "by delivering it to him personally at (full address)".

12. It appears that sub-rule (3) of r.122 was introduced in order to overcome the difficulties raised by earlier cases where the only evidence that the person served with a bankruptcy petition was the debtor consisted of admissions by the person served, and the evidence of service was held to be insufficient (see McDonald, Henry and Meek, Australian Bankruptcy Law and Practice, Vol. 2 at p 21,078 and the cases there cited).

Was the respondent served with the summons in accordance with the Bankruptcy Rules?

13. On behalf of the respondent, it is submitted that the Bankruptcy Rules require personal service and that personal service of the summons was not effected on the respondent. Particular reliance is placed upon the decision of Pincus J. in Re Hanlin; Ex parte Southern Properties Development Pty. Ltd. (1985) 9 FCR 357. It was there held that where a bankruptcy notice was served upon the debtor's solicitors by post and the solicitors agreed, upon instructions, to accept service on the basis that service be deemed to have taken place on the day upon which they received their client's instructions, there had not been effective service of the notice. Pincus J. referred to the requirements of s.41(4) of the Bankruptcy Act 1966 and r.15 of the Bankruptcy Rules that service of a bankruptcy notice be effected on the debtor by delivering to the debtor personally a copy of the bankruptcy notice signed and stamped by the Registrar. Pincus J. rejected a submission that compliance with the statutory requirements had been waived, saying (at p 359):

"...one cannot deem an act of bankruptcy to have

occurred by waiver. It either has occurred or has not.

Plainly an act of bankruptcy could not be based upon an

agreement as to its date."

14. With respect, I agree that the question whether a statutory act of bankruptcy has occurred, going as it does, to matters of status and, potentially at least, to proprietary rights, cannot depend upon a merely private agreement between a debtor and one of his or her creditors as to the date of service.

15. Pincus J. also rejected the possibility of the Court's excusing the irregularity saying (at p 359):

"...it does not appear to me that any of the authorities

goes far enough to justify the court's waiving the

irregularity under s.306 or r.195. The case to which Mr

McKinnon referred me, Re Florance; Ex parte Turimetta

Properties Pty Ltd [1979] FCA 58; (1979) 36 FLR 256, was indeed one in

which an irregularity of a similar kind was treated by

Lockhart J as being capable of being overlooked.

However, the irregularity related to service of the

petition. There is authority, as Mr McKinnon concedes,

that service of a bankruptcy notice is a juristic act in

a special category. Such authority is to be found, for

example, in the decision of Hart J in the Supreme Court

of Queensland in Re Fairlie; Ex parte Armco Australia

Pty Ltd (1969) 14 FLR 65, especially at 67 and 68. I

refer also in this connection to the decision of Sweeney J

in Federal Court of Bankruptcy in Re John T Martin and

Co; Ex parte Australian Continental Resources Ltd

(1971) 18 FLR 450, especially at 455 and 456, and the

decision of Walters J in Re Long; Ex parte Fraser

Confirming Pty Ltd (1975) 24 FLR 392, especially at 395

and following.

The trend of the authorities is against treating defects

in the service of a bankruptcy notice under the

provisions on which Mr McKinnon relies. Here it is not

so much a matter of purported personal service at all,

nor indeed, any attempt at it. The court is, I think,

entitled to be influenced somewhat by the undesirability

of encouraging people to essay service of a bankruptcy

notice in such an informal fashion."

16. In Florance's Case, Lockhart J. held that the fact the debtor's secretary handed him the petition some three days after she had received it from the process server engaged by the petitioning creditor did not constitute personal service of the petition upon the debtor. The fact that the petition came to his notice and into his hands did not mean that he was served personally with the petition (cf. Re Woodley; Ex parte Bank of New South Wales (1971) ALR 155). However, because the petition did come to the attention of the debtor and appeared in the proceedings represented by counsel, there was no prejudice and the irregularity was excused.

17. In the proceedings out of which the present contempt proceedings arose (Re Ditfort; Ex parte Deputy Commissioner of Taxation (1988) 19 FCR 347), it was submitted by Mr Ditfort, inter alia, that the sequestration made in respect of his estate ought not to have been made because of the creditor's failure to comply with the requirements of the Bankruptcy Act as to service of the bankruptcy notice and creditor's petition. After reviewing the authorities, including the decision of Walters J. in Long's Case, above, and the decision of Patteson J. in Thomson v. Pheney (1832) 1 DPC 441, Gummow J. said (at p 360):

"I accept the submission by the respondent to the

present application that there may be delivery

personally to the debtor of process within the meaning

of r 15 of the Bankruptcy Rules, even though the process

has not been left in what Patteson J described as the

'actual corporal possession of the defendant'. If the

debtor were refusing to take such actual corporal

possession of the process, but the process server

informed the debtor of the nature of the process and

left it before or near the debtor so that the debtor had

unimpeded and immediate access to the documents, that,

in my view, should, in general, be sufficient to comply

with r 15."

18. A similar view was taken by Hill J. in Re Roberts; Ex parte Evans, 25 August 1989, unreported.

19. Thomson v. Pheney, above, was referred to by McInerney J. in Pino v. Prosser [1967] VicRp 107; (1967) VR 835 (at p 839) as follows:

"In Rudd v. John Griffiths Cycle Co. Ltd. (1897), 23

VLR 350, Holroyd, J., delivering the judgment of the

Full Court, referred to the history of personal service

and said, at p 354: 'Before the Common Law Procedure

Act 1852, 15 and 16 Vict., c.76, came into operation the

Courts in England were in general very strict in their

interpretation of what constituted personal service, but

still on several occasions they declined to set aside

the service where the copy of the writ had been

delivered at the party's residence to a servant or

relative of his and from the facts the Judges thought it

fair to infer that it came into his hands or to his

knowledge so that he did, or could, if he pleased,

become acquainted with its contents.' Holroyd J., then

cited Rhodes v. Innes, in the Court of Common Pleas

(1831), 1 DPC 215; Thomson v. Pheney (1832), 1

DPC 441 (a decision of the Court of King's Bench);

Phillips v. Ensell (1834), 2 DPC 684 (in the Court of

Exchequer), and Williams v. Pigott (1836), 5 DPC 320.

(Emphasis added)

I have looked at those cases: it is apparent that they

justify the comment of Holroyd, J., in Rudd's Case,

supra, and I refer in particular to Rhodes v. Innes

which was followed and approved in the Court of

Exchequer in Phillips v. Ensell and Williams v. Pigott,

notwithstanding some dicta laying down a strict formula

as to personal service in Thomson v. Pheney.

Applying the general principle enunciated in Hope v.

Hope and Rudd v. John Griffiths Cycle Co. Ltd., I am

satisfied that in this case the writ, although left with

the defendant's wife, came into the possession of the

defendant Hassan on the same day and this, I am

satisfied, constituted good personal service..."

20. Two recent decisions should be noticed. The first shows that service will never be valid if the real situation is that process is being abused. The second shows that if the relevant Rules of Court have been codified, there may be limits imposed upon the kinds of consensual arrangements which can be put in place.

21. In Deputy Commissioner of Taxation v. Abberwood Pty. Ltd. (1990) 90 ATC 4,255, Waddell C.J. in Eq. held that it was an abuse of process for the Deputy Commissioner to sign judgment in default of appearance when it was known in his office that the statement of claim had been left at the taxpayer's registered office but had been returned by the new occupants of the office, indicating that the taxpayer was no longer at that address. Waddell C.J. in Eq. relied, inter alia, upon observations of von Doussa J. in Re Rustic Homes Pty. Ltd. (1988) 6 ACLR 931 that where the information before the Court shows that the mode of service adopted probably did not bring the document to the attention of the company, the appropriate course is for the Court to insist on due service in some other way. There is a duty on the plaintiff to disclose the real situation concerning the company to the Court; and in a case where there is reason to suspect that the company probably has not received notice of documents, the plaintiff may, inter alia, obtain directions of the Court.

22. In Kenneth Allison Ltd. v. A.E. Limehouse and Co. (1990) 3 WLR 216, the plaintiff issued a writ against a partnership and sought to serve it at their principal place of business. A personal assistant, acting on the instruction of one of the partners who was in another part of the premises, agreed to accept service. It was held, by a majority (Russell and Farquharson L.JJ.), that the rules relating to service established a code of practice requiring strict compliance; that since only limited consensual arrangements as to the mode of service were permitted by the rules, any ad hoc agreement was in consequence excluded; and that, accordingly, the service purportedly effected was valid.

23. Lord Donaldson M.R., dissenting, held (at p 218) that the rules relating to service -

"...are necessary if the defendant is unwilling in the

event to accept service, but I really do not see why

they are needed if he is willing to do so and a fortiori

why they should be intended to prevent his giving effect

to that willingness in any way which appeals to him.

The sole purpose of service of proceedings is to bring

them to the attention of the defendant, to give him an

opportunity to respond and to fix a time by reference to

which time limits can be applied either under the

Limitation Acts or in the conduct of the litigation.

This purpose is equally well served by a consensual

service of proceedings as by service in one of the modes

described in the rules."

24. Lord Donaldson cited the following passage from the judgment of Chitty L.J. in Montgomery, Jones and Co. v. Liebenthal and Co. (1898) 1 QB 487 (at pp 493-4):

"I can find no rule which prohibits a person from

agreeing as to the mode in which service may be effected

on him, as, for instance, by the writ being left with

his wife or with some other person. If the contention

of the defendants is correct, a person who is ill cannot

make a request that the plaintiff should hand the writ

to his wife, but must endure the inconvenience of being

served personally, otherwise the service will be bad as

being in contravention of the rules. I cannot find that

in any of the rules. This case comes within the

principle of the decision of the Divisional Court in

Tharsis Sulphur Co. v. Societe Industrielle des Metaux

(1889) 58 LJ (QB) 435; 60 LT 924, and I see no

reason for differing from the judgment of Field J. in

that case. That learned judge thought it clear upon

principle that a person might appoint another as agent

to accept service for him, and might enter into a

contract that the agent should be the person to accept

service, and that service upon that agent should be good

service upon himself. That seems to me to be good sense.

This case falls within the principle there laid down,

and I can find no rule which avoids any such agreement."

(Emphasis added)

25. Russell and Farquharson L.JJ., on the other hand, were of the opinion that Montgomery's Case could be distinguished on the ground that the modern English Rules of Court "contain a code of practice with regard to service which should not be deviated from" (at p 225, per Farquarson L.J.). As a result, with exception of the limited provision for contracting out contained in R.S.C. Ord. 10 r.3, it was not permissible for the parties to contract for a different form of service inconsistent with that rule (at p 225). (cf. Manta Line Inc. v. Seraphim Sofianites and Midland Bank PLC (1984) 1 Lloyd's Rep 14.)

26. It will be recalled that r.126 of the Bankruptcy Rules requires service to be effected by delivering the summons to the person personally. There are thus two requirements (1) there must be a "delivery", that is to say, a physical delivery (cf. In Re A Debtor (1939) Ch 251 at p 257); and (2) the delivery must be to the person concerned "personally", that is to say, to that person and not to some other person, so that, in the absence of an order for substituted service, purported service on a person other than the person named in the summons is not valid service (see Neil J. Williams, Civil Procedure Victoria, Vol. 1 at p 2475 and the cases there cited).

27. In the present case, the summons was not delivered to the respondent. It was delivered to Ms Drennan. On the face of things at least, this was not personal service on the respondent. However, in my opinion, in the special circumstances of the present case, service on the respondent in accordance with the Bankruptcy Rules has been established for the following reasons.

28. Ms Drennan's unchallenged evidence was that, as a Principal Legal Officer in the Office of the Director of Public Prosecutions in Sydney, she informed the applicant that he did not have to serve the respondent personally but that he could leave the summons with her. There is no dispute about her authority to make this statement: the respondent's own evidence was that he himself arranged this procedure. Ms Drennan then gave the summons to Ms Martin who was the officer responsible for proceedings in relation to the applicant. Ms Martin later appeared before Gummow J. in answer to the call on the summons. The respondent's evidence was that, because of the size of the operations conducted by the Office of the Director of Public Prosecutions at its head office in Canberra, where he was located, and its five branch offices, he arranged that a branch office would meet the requirements of any subpoena directed to him. It is implicit in this evidence that these arrangements extended to acceptance, on behalf of the respondent, of service of any subpoena by an officer who was a member of the staff of the Office. There were obvious practical benefits accruing to the respondent as a consequence of having these arrangements in place. The reality of the situation was that the respondent had anticipated that, in the course of his activities, parties would wish, from time to time, to subpoena him to produce documents. To avoid any personal inconvenience as a consequence of his personal involvement in the subpoena process, the respondent elected to direct parties seeking to serve him with a subpoena to serve the document, not on himself personally, but, instead, on one of his officers. Thus, the substance of what happened was the acceptance, in advance, by the respondent that service on one of his officers would be treated by the respondent as if it were delivery to him personally. In a real sense, it may be said that the respondent refused to accept service personally on the grounds of personal inconvenience, but instead indicated to all concerned, by the arrangements he put in place, that delivery to another officer would not merely suffice but was indeed a course required by the respondent. In my opinion, such a situation should be regarded as if the document had been physically delivered to the respondent himself. What occurred should, in my view, thus be treated as service on the respondent in accordance with the Bankruptcy Rules.

29. Alternatively, in my view, the respondent would now be estopped from denying that the service was valid (see The Commonwealth v. Verwayen, High Court, 5 September 1990, unreported, per Mason C.J. at pp 9 and following; per Brennan J. at pp 28 and following; per Deane J. at pp 32 and following; per Dawson J. at pp 52 and following; per McHugh J. at pp 99 and following).

30. A further alternative view, if it were necessary, would be that it should be held that, by his conduct, the respondent waived his right under the Rules to personal service (see Verwayen's Case per Mason C.J. at pp 6 and following; per Brennan J. at pp 22 and following; per Toohey J. at pp 66 and following; per Gaudron J. at pp 80 and following; per McHugh J. at pp 90 and following).

31. In so holding, I have taken into account the circumstances that the present proceedings are contempt proceedings and that, accordingly, it is necessary to be satisfied, to an appropriate degree, of the relevant facts (see New South Wales Egg Corporation v. Peek (1989) 10 NSWLR 72 at pp 81-2). But, as has been noted, the relevant facts here are not in dispute: the respondent's own evidence established that service of the summons was effected in accordance with a system that he himself had put in place.

32. In the result, I propose to declare that service of the summons was in accordance with the Bankruptcy Rules.