Re O'Sullivan; ex parte O'Sullivan v Commonwealth Bank of Australia

REASONS FOR JUDGMENT 1 The Petition On 25 August 1998 the applicant's solicitors filed a creditors petition for an order for sequestration against the estate of the respondent. The petition asserts that á the respondent debtor owed the applicant creditor $519,649.86 being $483,406.31 under a final judgment in the Supreme Court of Victoria plus interest of $36,243.55 á the applicant held a registered mortgage over property owned jointly by the respondent and his estranged wife á the property was estimated to be valued at $420,000.00 but enforceability of the applicant's mortgage as against the estranged wife was (at the time of the petition) the subject of proceedings in the Supreme Court of Victoria á the act of bankruptcy was the failure of the respondent to comply with Bankruptcy Notice No VN 560 of 1997 served 23 June 1998 or to satisfy the Court of a counterclaim, set-off or cost demand equal to or exceeding the sum claimed and specified in the petition. 2 A directions hearing was originally set for 4 November 1998 but was extended to 1 December and later again to 10 February 1999. 3 The petition was served on 29 January and service is conceded. 4 On 5 February solicitors acting for the Commonwealth Bank of Australia filed a notice of intention to support the petition, stating that the bank was owed $21,594.67 pursuant to an order in the Magistrates Court. 5 On 10 February the petitioner and supporting creditor were represented before Registrar Wood and the respondent appeared in person. The registrar adjourned the further hearing to 15 March, reserved costs and ordered the respondent to file and serve an appearance, a notice of opposition and any affidavits in support. 6 The Opposition On 10 February the respondent filed an affidavit. The first five paragraphs read as follows: "1. I am the respondent. 2. The enforceability of the mortgage is no longer the subject of proceedings in the Supreme Court of Victoria. I believe that those proceedings have been settled and that the property is now or will shortly be sold by the applicant. 3. The judgment referred to is not a judgment enforceable by the Applicant because of the provisions of the Rules of the Supreme Court, and because it was appealed by me from a master to a judge. 4. No bankruptcy notice was served on me on 23 June 1998 or at all. 5. I am the plaintiff in Supreme Court proceedings against the applicant and Smith & Emmerton for damages which I believe would exceed the amount owing to me after the sale of the property." 7 On 19 February the respondent filed a notice of appearance and a notice of intention to oppose the petition. The latter reads as follows: "Take notice that David Anthony Perkins intends - 1. to dispute the statements in the petition of Westpac Banking Corporation. 2. to oppose the petition on the following grounds - (a) the bankruptcy notice referred to in the petition was not served or was not properly or appropriately served (b) the judgment relied on by the petitioner is not now and was not any material time available either as a basis for a bankruptcy notice or as a foundation of a creditor's petition. (c) the petitioner is at the date of hearing in possession of the security it claims, and has the intention to realise the same (d) the value of the security exceeds any debt due to the petitioner (e) the amounts claimed and sought by the petitioner as set forth in the bankruptcy notice and the petitioner are erroneous (f) the bankruptcy notice is and was invalid (g) any statutory penalty interest rate fixed and applied and included in any judgment is ultra vires or alternatively is an infringement of the independence of the judiciary and is void (h) the petitioner has dealt with the security held by it otherwise than in good faith and in a manner which has frustrated in whole or in part or rendered impossible compliance by it with the provisions of the Bankruptcy Act (i) the judgment relied on by the petitioner constituted and was obtained in circumstances which constituted a denial of justice according to law." 8 The Hearing Despite the broad sweep of the notice of opposition, the real issues in contest are of narrow compass and in most circumstances might not be expected to require a trial of any length or complexity. The opposition, in essence, can be confined to á challenges to the judgment and bankruptcy notice on which the petition is based á assertions that "the petitioner has dealt with the security held by it otherwise than in good faith" .... and that ..."the value of the security exceeds any debt due to the petitioner". 9 The respondent is a practising barrister who is recorded as admitted in 1971 and as having signed the bar roll in 1972. He appeared as a litigant in person and the course he took at trial resulted in a hearing which occupied 11 full sitting days and some part of another 7 days. The contested service of the bankruptcy notice was the primary issue. The respondent gave notice of his intention to cross-examine the five deponents of affidavits filed by the applicant. He was granted leave to cross-examine and did cross-examine each of the deponents and counsel for the applicant cross-examined the respondent. 10 The response á contested the admissibility of any and all of the applicant's affidavit material á failed to comply with a direction issued at the conclusion of the second day of trial that the parties file and serve (7 days prior to the 3rd day of trial) notice of any objections to any of the evidence in any of the affidavits á applied twice in the course of the trial for the Court as constituted to disqualify itself from continuation and determination of the hearing á objected on numerous occasions and renewed objections after rulings were made á called for production of material which was found to be irrelevant or privileged and material which could have been but was not the subject of pre-trial discovery. 11 Much of the first and second days of trial was taken up with objections by the respondent to evidence in Mr Birch's affidavit of attempted service. Indeed, so prolonged were these objections that counsel for the applicant applied on 16 March at the conclusion of the second day for an order that the parties file and serve seven days prior to the reconvened trial, ie. by 1 April 1999, notices of any objections to any of the evidence in any of the affidavits. 12 The trial continued on 8 April with counsel for the applicant informing the Court that á the applicant did not make or seek to make any objections to the respondent's affidavit material á the respondent had not served any notices of objection in accordance with the order of 16 March á on 7 April the applicant's solicitors had received by facsimile a letter from the respondent which contained the statement "my contention will be that none of the affidavit material relied upon by the applicant is admissible". 13 On 8 April counsel for the applicant submitted that á the respondent had had an opportunity given to him within a reasonable timeframe to file and serve notice of objection to any or all of the affidavits á there had been no explanation of the failure to do so á objection was taken to any further objections in respect of the material before the Court. 14 The respondent conceded that he had not complied with the order of 16 March in that no notice of objection was served or filed by 1 April, but he asserted that the facsimile letter of 7 April contending that the affidavit material relied upon by the applicant was inadmissible constituted substantial compliance with the spirit and intent of the order of 16 March and that he should be permitted to continue with and pursue and be heard on objections to all of the material in all of the remaining affidavits. 15 Counsel for the applicant submitted that the facsimile letter of 7 April á did not comply at all with the order of 16 March á was out of time á was not a notice of objection á was a statement in such generalised form as to be meaningless á had been prepared by a barrister who was not unfamiliar with legal practices or the effect of directions and orders given by the Court in the proceeding. 16 The Court á found that the respondent had not complied in any effective way with the order of 16 March á required the respondent to proceed with his cross-examination of the applicant's witnesses á indicated that the respondent would have an opportunity at the conclusion of the hearing to make submissions on the nature and admissibility of the evidence. 17 Early in the afternoon of the 8th day of hearing (12 May 1999) the applicant's primary witness was unwell and her cross-examination was adjourned and continued on the 11th day. On the 14th day, after hearing sworn evidence from the respondent, the Court determined that he was, on that day, unable to continue. On 11 June (the 15th day) counsel briefed on that day by solicitors (for that purpose representing the respondent) successfully sought an adjournment on the grounds of a medical certificate referring to "episodes of chest pain and shortness of breath .... (inability) to attend work, court or similar because of the risk this may aggravate his condition ... his condition is such that he cannot properly attend to his affairs". 18 The next day (the 16th day) amounted to an appearance by counsel for the applicant but with no appearance by or on behalf of the respondent despite notice given to the solicitors who had instructed counsel to appear for the respondent on the 15th day of hearing. 19 The Court found it necessary to place specific time limits on cross-examination of four of the five applicant witnesses and likewise placed time limits on final submissions and on the respondent's final address in reply. On several occasions the Court declined to allow or hear further submissions from the respondent when the Court perceived such attempts as likely to constitute a renewal or repetition of earlier submissions and a failure to accept rulings already made. 20 The service issue The applicant relies on the evidence of two process servers, Mr Birch and Ms Berry. Mr Birch was not directly involved or present when Ms Berry, the applicant asserts, served the bankruptcy notice on the respondent on 23 June 1998. However, Mr Birch was involved in earlier attempts at service and in surveillance of the respondent on 23 June. Furthermore, there is uncontested evidence that he identified the respondent and pointed him out to Ms Berry on 23 June. 21 Mr Birch's affidavit of 31 July 1998 had been substantially reduced as a result of the respondent's submissions on 15 and 16 March with ten paragraphs struck out and deletions made in another ten paragraphs. Some material was found irrelevant but at times deletions were made at the suggestion of the Court, and without any finding of inadmissibility. In these cases counsel for the applicant elected not to rely on the deleted material. The affidavit retained and included evidence which is relevant and is accepted as truthful and accurate despite constant, vigorous and repetitive cross-examination by the respondent over several hours on the third and fourth days of hearing. 22 The Court accepts that Mr Birch á was instructed in writing on 21 April 1998 to effect personal service of the bankruptcy notice upon the respondent as judgment debtor á attended the respondent's chambers on 24 and 28 April á contacted the respondent on a mobile telephone number on 5 May á advised the respondent that he was acting for the solicitors of the judgment creditor and had instructions to serve the respondent with the bankruptcy notice and sought to effect service by appointment á spoke to the respondent again by telephone on 6 May á attempted to contact the respondent by telephone on 8 May á attended the respondent's chambers on 12 May á left messages for the respondent on his mobile telephone number on 31 May á received advice that the respondent "would be in Court 13, Supreme Court of Victoria before Justice Harper at 10.30 am on 22 May" á at approximately 10.20 am on 22 June observed a male he believed to be the respondent approach the vicinity of Court 13 via a stairway. 23 Paragraph 15 of the affidavit of Mr Birch sets out a conversation which Mr Birch said he had with the respondent near Court 13 at approximately 10.40 am on 22 June. The respondent concedes that a conversation took place and the Court accepts the record of the conversation set out in paragraph 15 and reproduced below, is a reasonable and generally accurate record of the conversation. "Mr Birch: "Good morning Mr Perkins, Geoffrey Birch". Mr Perkins: "Are you here to commit an act of contempt of Court?" Mr Birch: "No, I am advising you of my presence." Mr Perkins: "Do you know the confines of the Court, where they start and end. I hope we are not going to have a disagreement about that?" Mr Birch: "Yes I do, will you step outside to see me?" Mr Perkins: "Leave now. You hear, leave now. It will be the first thing I raise with the Judge." Mr Birch: "I am going to wait and see you outside the Court"." 24 Paragraphs 16, 17, 19, 22 and 24 of the Birch affidavit, together with those parts of paragraphs 20, 26 and 28 which were admitted as evidence, are reproduced below: "16. On 22 June 1998 at approximately 1.16 pm I observed Mr Perkins exit Court 13 via the stairway with another male person. I approached Mr Perkins and told him that I needed to see him outside. Mr Perkins ignored me and proceeded to walk down a corridor. The other male person walked between myself and Mr Perkins. Mr Perkins told the man to keep a few steps behind him. Mr Perkins and the man then entered the Supreme Court library. 17. On 22 June 1998 at approximately 2.10 pm Mr Perkins left the library and returned to Court 13. 19. On 22 June 1998 at approximately 4.20 pm, in the company of the man and a female person, Mr Perkins exited Court 13 via the stairway. I walked with them to the front door of the Supreme Court library. They entered the library and sat at a table on the ground floor, southern section of the library. 22. On 23 June 1998 at approximately 10.58 am I met Sandra Berry from Australian Commercial and Mercantile Group in William Street. At 11.00 am I opened the door to Court 13 and pointed out Mr Perkins to her. At the time Mr Perkins was the only person standing in Court 13 and he was addressing the Judge. 24. On 23 June 1998 at approximately 1.18 pm I observed Mr Perkins exit Court 13 via the lift. The man and Mr Perkins' female companion which I had seen on 22 June 1998 exited via the stairway. I approached Mr Perkins and said: "Mr Perkins you know I have a bankruptcy notice to serve on you, the creditor is Westpac Banking Corporation, the amount of claim is in excess of $519,000.00. I am acting for JM Smith & Emmerton, will you step outside to accept the document, will you at least talk to me? Mr Perkins again ignored me and entered the library with the male and female persons. I contacted Sandra Berry and advised her that Mr Perkins was in the Supreme Court library. 26. On 23 June 1998 at approximately 2.03 pm Mr Perkins returned to Court 13. 28. On 23 June 1998 at approximately 4.29 pm Mr Perkins exited Court 13 and proceeded with his female and male companions to the Supreme Court library." 25 The evidence as to purported service of the bankruptcy notice was given and could only be given by Ms Berry and the respondent, Mr Perkins. There is considerable contest as to what occurred in the several minutes leading up to the purported service in Lt Lonsdale Street at about 4.45 pm on Tuesday 23 June 1998. In particular á Ms Berry swears she and the respondent were running almost all the time from the Supreme Court library until the alleged act of service á the respondent states that he did not run but was walking briskly á Ms Berry observed the respondent carrying an overcoat over his arm and one bag á the respondent claims that at the time of the "encounter" he was wearing an overcoat and carrying two heavy bags á the respondent asserts that Ms Berry is suggesting that almost nine minutes elapsed between when she ran after him and served him in the vicinity of 304 Lt Lonsdale Street and that this is patently inconsistent with her evidence that she was in pursuit for several minutes and that both of them were running all or almost all of the time á the respondent asserts that Ms Berry has given inconsistent and changing evidence as to what actually occurred at the moment of purported service á the respondent and Ms Berry disagree on what Ms Berry is alleged to have said at the moment of service. 26 Ms Berry's evidence is contained in three documents and her oral evidence given under cross-examination over many hours on several days. The respondent's evidence is contained in two documents and in his oral evidence in cross-examination over about ninety minutes and in a response to cross-examination of about twenty minutes. The respondent was in the witness box for one hour and fifty-five minutes on the afternoon of the second last day of the trial. 27 Paragraphs 2 to 9 of Ms Berry's affidavit of 5 August 1998 relevantly read as follows: "2. On Tuesday 23 June 1998 at approximately 10.58 am I met Mr Birch at the entrance to Court 13. Mr Birch opened the door to Court 13 and pointed out to me the judgment debtor, David Anthony Perkins ("Mr Perkins"). Mr Perkins was the only person standing in Court 13 and he was addressing the judge. 3. I then took up surveillance position in the foyer of Courts 11 and 12 of the Supreme Court of Victoria to watch the side exit to the Supreme Court library. 4. ..... at approximately 1.22 pm Mr Birch telephoned me to say that Mr Perkins had left Court 13 and had entered the Supreme Court library. 5. ..... at approximately 2.05 pm Mr Birch telephoned me to say that Mr Perkins had re-entered Court 13. 6. .....at approximately 4.14 pm Mr Birch telephoned me and confirmed that Mr Perkins was still in Court 13. 7. .....at approximately 4.31 pm Mr Birch again telephoned me to say that Mr Perkins had entered the Supreme Court library. 8. ..... at approximately 4.36 pm Mr Perkins left the Supreme Court library through the side exit talking on a mobile telephone. Mr Perkins then ran through the judge's car park into the lane way at the rear of the Supreme Court building and to the left, then right into Lonsdale Street across to the northern side of Lonsdale Street and left into Queen Street across to the eastern side and then right into Little Lonsdale Street. I called out his name. Mr Perkins looked at me and continued to run. I called out his name again, but Mr Perkins looked at me and continued to run. 9. ..... at approximately 4.45 pm I finally caught up with Mr Perkins on the footpath outside the building at 304 Little Lonsdale Street, Melbourne. I ran in front of Mr Perkins and stopped. Mr Perkins also stopped. I said the following: "I believe you to be David Anthony Perkins whose name appears on this bankruptcy notice. Consider yourself served." As I said these words I handed to Mr Perkins the sealed bankruptcy notice to which a true copy of the general form of judgment given of the Supreme Court of Victoria dated 18 September 1997 was attached. He would not take the documents from me. I then placed the sealed bankruptcy notice and attachment at Mr Perkins' feet. Mr Perkins did not pick up the document and ran off again into a lane way to the left of Little Lonsdale Street." 28 The Court has concluded that the other two documents which contain evidence from Ms Berry of the several minutes leading up to purported service were prepared the next day, Wednesday 24 June. Copies of the documents were tendered as Exhibit A1. The documents were a short handwritten report or coversheet entitled "Service of Process David Anthony Perkins 23/6/98, time 4.45 pm", and an investigation report headed "Surveillance and Process Serving on David Anthony Perkins Tuesday 23 June 1998". 29 The second document, the surveillance report, was sent under covering letter of 24 June 1998 to Mr Birch from Ms Berry's employer, Australian Commercial and Mercantile Group. The respondent challenges the probability that the second document, the surveillance report, was necessarily prepared in final form on 24 June. The challenge is based in part on an assertion of evidence of eighteen drafts or revisions of the report. In my view, this is of no consequence and it matters not how many drafts or revisions of the report are recorded or were actually made. I am satisfied that the report in the form tendered as part of Exhibit A1 and as part of Exhibit R2 was drafted by Ms Berry and was sent to Mr Birch by way of covering letter dated 24 June. I shall return to these two documents and to Ms Berry's oral evidence under cross-examination. 30 The respondent's evidence as to the circumstances surrounding what he asserts was a failure to serve the bankruptcy notice is primarily conveyed in cross-examination. Two documents which provide some evidence are his affidavit of 10 February 1999 and notice of opposition of 19 February. The latter simply states "the bankruptcy notice referred to in the petition was not served or was not properly or appropriately served". Paragraphs 4, 9 and 10 of his affidavit are as follows: "4. No bankruptcy notice was served on me on 23rd June 1998 or at all. ..... ..... ..... ..... 9. The contents of paragraph 8 of the affidavit of Sandra Berry are incorrect. I did not run at all. A female called out the name "David", and no other. The statement of belief referred to in paragraph 11 (sic) (probably paragraph 9) of the said affidavit did not occur. I was carrying two heavy large bags, one in each hand [my hands were full], and I had stopped in Little Lonsdale Street to put on an overcoat. 10. The statement by the said Berry that she mentioned a bankruptcy notice is false. I was not informed and I had no knowledge or reason to believe that she [assuming her to be the female person I saw] had or was purporting to serve a bankruptcy notice. I had no knowledge or reason to believe that if she had some document to serve on me that the document had anything to do with the Applicant. The female person was entirely unknown to me: in particular she was not introduced to me or referred to by Mr Birch. I had no reason to believe and did not believe that she was in any way connected with any service of process by Mr Birch or Westpac." 31 Counsel for the applicant has described the quite divergent evidence as to whether Mr Perkins ran or walked from the time he left the Supreme Court library until the encounter with Ms Berry in Lt Lonsdale Street as creating "a real dilemma for the Court in respect of two quite contradictory scenarios". Ms Berry is adamant that she was breathless at or immediately after what she asserts was the valid and effective service of the bankruptcy notice and that she was breathless because she had run and run quickly in pursuit of Mr Perkins. She said that Mr Perkins was running so fast that she doubted she would ever catch him. The respondent has, at least in part of his final submission, adopted Ms Berry's evidence that she was out of breath. He said (T991) "at the time she had the encounter with me ... she was still out of breath. I say that it is quite plain that at the time she says she said a string of words to me she was out of breath. I say that the objective likelihood, if you accept that she had been running, as to which I, I should point out, can say nothing, I didn't see her, but on the only evidence about her actions, she had been running and it made her out of breath. I have said that I did not have those words said to me. In my submission there is not only nothing inherently unlikely in that, when you take into account the real facts about her situation, the probability is that she wasn't in a position to speak and, in my submission, it would be wrong to find that she said those words in the circumstances of this case." 32 The respondent, in cross-examination and in final submissions suggested that such a state of breathlessness for several minutes after the encounter supports his proposition that Ms Berry never said the words "I believe you to be David Anthony Perkins whose name appears on this bankruptcy notice. Consider yourself served." Indeed, he suggests that, if a few minutes after the encounter Ms Berry was still so breathless that she could barely speak at all to Mr Birch when he arrived on the scene, this supports the respondent's proposition that she never uttered the words identifying him by name, referring to the bankruptcy notice and expressing the view that he was to consider himself served. In fact, the respondent suggests that Ms Berry's evidence of breathlessness suggests that she was incapable of expressing clearly the words she is so adamant she said. 33 The Court does not accept this hypothesis. The Court accepts Ms Berry's evidence that both she and Mr Perkins were running and running fast. It is quite plausible that Ms Berry, after such strenuous exertion, would be quite capable of uttering the specific words she steadfastly asserts were uttered and, thereafter, having ceased the strenuous exertion, found herself so breathless as to have considerable difficulty in speaking at all. 34 Examination of the distance between the Supreme Court library and the alleged location of the purported service, 304 Lt Lonsdale Street, bears out the respondent's assertion that the distance could be walked in something like 5 minutes and the distance could be run in a considerably shorter time. 35 The Court has assessed Ms Berry as a genuine and truthful witness. She maintained her position consistently throughout stressful and very lengthy cross-examination. The Court has no hesitation in accepting her version of events in preference to that of the respondent. The Court does not accept that at any time Ms Berry gave clear and unequivocal evidence that she was running for nine to ten minutes. She revealed herself in evidence as a poor judge of times and distances. Careful examination of the entirety of her evidence under prolonged cross-examination reveals that she recorded the respondent as leaving the Supreme Court library through a side exit at approximately 4.36 pm and she recorded service of the bankruptcy notice at approximately 4.45 pm. 36 However, the following extracts from her evidence in cross-examination, refer to or suggest an unspecified period of time after the respondent left the Supreme Court library and before he allegedly ran from the Supreme Court to Lt Lonsdale Street (T416) "From the time you walked out of the Supreme Court library, I said it was approximately 10 minutes before I met you back in Lt Lonsdale Street and served you.... I noted my watch time from the time of you walking out of the Supreme Court library to the time I had served you." (T436) "I never thought I would ever catch up to you, you were running so fast." (T437) "I didn't say it took you nine minutes to run. I said from the time you exited the library door to the time that I caught up with you in Lt Lonsdale Street, it was approximately 10 minutes ..... When you exited the library door I noted the time. You stood there for -I don't recall how long. You stood there talking on your mobile phone in your left hand for some time, and from the time I caught up with you that was the time that I served you, when I looked at my watch. ..... You were talking on the phone as you exited and you stood there ..... Respondent: "For how long did I make this phone call?" Berry: "I don't know for how long." Respondent: "How long did it appear to you?" Berry: "A minute". (T438) Respondent: "And I was there for perhaps a minute?" Berry: "Yes." Respondent: "Perhaps more?" Berry: "I don't know ..... I didn't say it took you 9 minutes to run. I said it took -from my notes -from the time you exited the library door to the time I got to serving you, it was approximately 10 minutes. 37 In my view, the general tenor of Ms Berry's evidence, genuine and truthful evidence, is to the effect that there was an unspecified delay between the time she recorded as 4.36 pm and when Mr Perkins left the precincts of the Supreme Court pursued by Ms Berry. Whether or not Ms Berry has accurately recalled and recorded the respondent leaving the Supreme Court library at 4.36 and service of the bankruptcy notice at about 4.45, it seems clear that the pursuit of the respondent would have taken at most 3 to 4 minutes if both parties were running. I have no reason to doubt Ms Berry's evidence that both of them were running and running pretty quickly. My assessment of probabilities is as follows: 38 Mr Perkins left the Supreme Court library somewhere between 4.36 and 4.40 pm. He had a mobile telephone conversation, perhaps for one minute or two minutes or even a little longer and then set out running across the Supreme Court courtyard into the lane between the Supreme Court and the Court of Appeal, down into Lonsdale Street, across Lonsdale Street into Queen Street and then down Lt Lonsdale Street. Ms Berry ran after him. She managed to get in front of him at about 4.45 pm. 39 The respondent cross-examined at length on inconsistencies between á Ms Berry's affidavit evidence that she "placed the sealed bankruptcy notice and attachment at Mr Perkin's feet" á the original handwritten "coversheet" comment "the male just let it fall to the ground and ran off" á the investigation (surveillance) report comment "he let the documents drop to the ground and ran off again ..." The responses in cross-examination included: (T376) "... it's still placed at your feet, whether it's let to fall or bend over and put it there, they are still placed at your feet" (T439) "the paperwork dropped. You ran off down further and ran into a little laneway ...." (T443) "the paperwork fell to your feet because you would not accept them" (T449) "(the paperwork dropped) .... to the ground, and then you ran off down to the laneway, to the carpark off Lt Lonsdale Street" (T481) "I was directly in front of you. I would've only been approximately 2 feet away, 3 feet maximum. ..... I was walking backwards..... I was serving you the legal document ..... I was serving you with a legal document saying to you "I believe you to be David Anthony Perkins whose name appears on this bankruptcy notice. Consider yourself served." I went to hand it to you. You totally ignored me. It hit the righthand side of your lapel on your suit jacket and then it dropped and fell down to the ground at your feet. You then ran off. .... It slid down the front of you to your feet. (T482) Respondent: "Ms Berry, you've done a number of documents, some of them many times, to try to get it right and you have never ever suggested before that a document touched my right lapel and then slid, as you suggest now, down to the ground, have you? Berry: "No, because you haven't asked me". "Placing at someone's feet" has several meanings. It can fall. You can be bent down to place it, which I did not bend down to place it at your feet. It was still placed at your feet, the legal documents." (T484) Respondent: "You did not place any document at or on my lapel?" Berry: "Yes, I did". (T500) Respondent: "Look at page 3 of the document, please. Nothing on page 3 suggests what you have said for the first time today, namely that you placed any document against me or my lapel?" Berry: "That's correct". Respondent: "Nothing in your affidavit of service suggests that you placed any document against me or my lapel?" Berry: "That's correct". Respondent: "Nominate if you can, any document in which you have said or written something to the effect that you place the document against me or my lapel?" Berry: "There is none". (T504) Respondent: "You have never, I suggest to you, in any document or at all, suggested either that you thought it was necessary to put them on me, or that you did so?" Berry: "I did so do it." (T507) Respondent: "I suggest that there was no mention of any such thing - and by that I mean placement of the document against me, or an attempt to place the document against me, when you had a conversation with a solicitor or member of the Gadens' staff on 10 July 1998?" Berry: "I made no mention of it. That's correct." (T668) "I remember saying to them at that meeting that I did touch you with the documents on your right side of your lapel of the suit because I was trying to get it to stay there just so it wouldn't drop, because you wouldn't accept them." (T669) Respondent: "You didn't say anything about a lapel when you were at that meeting?" Berry: "Yes, I did." Respondent: "Ms Berry, you didn't give an account that you touched my lapel with the document when you were at that meeting, did you?" Berry: "Yes, I did." Respondent: "I suppose - you can sit something on a shoulder because its got at least some horizontal surface to it, it will accept something and prevent it falling. Is that right?" Berry: "It's possible, yes." Respondent: "Whereas a lapel, it is plainly something which cannot have any effect on the downward movement of something?" Berry: "I went to stick it inside so it would stay there, inside the lapel. I never mentioned the word shoulder whatsoever, because I know I didn't -I never touched your shoulder." (T670) Respondent: "How is it that you now say that you attempted to stick something inside whereas previously you talked about lapels and shoulders and placing things on the ground.?" Berry: "Because when I was under examination you wouldn't allow me to finish what I had to say." (T670) Respondent: "Did you intend to do that, that is, to put documents inside my clothing or did you attempt to do that?" Berry: "I attempted and intended to do it." (T671) Respondent: "There is a difference, I suggest, between documents dropping and you placing them at my feet?" Berry: "That's the bit I wished to clarify in paragraph 9 when I first came in here. They are still placed at your feet. I didn't particularly bend down and place them at your feet." Respondent: "How could you ever have sworn that if the fact, as you now say it to be, was that you simply dropped the process and let it fall? Berry: "I'm not saying I just let it drop. That's someone else's interpretation." (T672) Respondent: "What do you say you said which brought up the need to clarify it?" Berry: "I brought it up to clarify the word "placed at his feet", that I did not bend down to place them at your feet. I would never do that in case we were ever kicked in the face, for a start. I did say to Mr Nolan I wanted to clarify "by placing them at your feet". I did not bend down and place them at your feet. That's what I wanted clarified." (T708) Counsel for the applicant in re-examination: "What did you do with the bankruptcy notice?" Berry: "I was in front of Mr Perkins holding them and I went to hand them -like hand them to him and it touched him here. I wanted to slip it inside his jacket, his suit jacket, but they actually sat here on his right side on his lapel, and then he just would not accept them and they slid down and they were at his feet the last time I saw him when he was running off." 40 The respondent has identified an apparent inconsistency between the affidavit statement that the bankruptcy notice was "placed ... at Mr Perkin's feet" and Ms Berry's firm, clear, repeated evidence in cross-examination that the notice "dropped to the ground ... hit the righthand lapel on ... suit jacket and then it dropped and fell to the ground". However, it is clear that Ms Berry was concerned that the phrase "placed at Mr Perkin's feet" did not give a complete picture of what she did in serving the notice. She discussed this concern with the applicant's solicitors and with counsel prior to trial. She attempted to raise the matter when asked whether she adopted her affidavit when called to give evidence. The respondent objected to Ms Berry giving such evidence, or to any examination-in-chief but her concerns emerged clearly in cross-examination. 41 Ms Berry's evidence in cross-examination is consistent with her description of service in the two documents prepared by her within twenty-four hours of the encounter. Counsel for the applicant submitted (T1007) "Ms Berry's reports, as she prepared them by herself, are totally consistent with all the evidence that she has consistently given during this proceeding. In my submission any vagaries or differences that appeared in affidavits or the affidavit subsequently drafted by someone else, in no way brings discredit upon her evidence or effects the probity of what she says." I agree. Ms Berry's evidence as to service was clear, firm, resolute, unwavering. I accept that evidence. I find that the bankruptcy notice was served on the respondent by Ms Berry at about 4.45 pm on Tuesday 23 June 1998 and that service was effected consistent with Re Ditford; ex parte Deputy Commissioner of Taxation (NSW) (1988) 83 ALR 265. In Re Ditford at 277 Gummow J held that: "There may be personal delivery to the debtor of process within the meaning of r 15 of the Bankruptcy Rules if the debtor refuses to take corporal possession of the process but the process server informs the debtor of the nature of the process and leaves it before or near the debtor so that the debtor has unimpeded and immediate access to the documents." 42 I have already indicated that Ms Berry's evidence and credit are preferred to those of the respondent. There are many reasons why this is so. Those reasons include á my observations and assessment of the conduct, demeanour and evidence of Ms Berry and Mr Perkins á the respondent's version of what he asserts was at best attempted service - this version is inherently improbable and involves accepting his evidence that an experienced process server, who had waited all day to attempt service, ran or walked after a man who was not running and was carrying two heavy bags and who allegedly stopped to put on an overcoat, was so breathless when encountering the respondent as to say no more than "I believe you are ...." or "I think you are ....", who failed to identify him or the bankruptcy notice relating to him and somehow threw or dropped unidentified papers on the ground á the respondent's indirect and unresponsive attitude under cross-examination exemplified by his vague, indirect and evasive response to the first question in cross-examination as to the parties in the Supreme Court proceeding in Court 13 on 22 June 1998 á the descriptions which the respondent gave as to his indirect route from the Supreme Court library "at approximately 4.30 pm" on 23 June, being first "pretty well east .... then north-east .... then north ....then in a direction which went around to the east and then ... north ... and by so proceeding I came to a corner of the lane which separates the old Federal Court and the Supreme Court ... the part that I was at was the part of the lane which separates the Court of Appeal and the Supreme Court" and a second description (accepted by the Court as referring to the same route) namely "across the courtyard ...under the verandah through a passageway ... with Court 5 on the left and some stairs and a lift on the right ... right and east into a passageway ... to the lane which divides the Supreme Court and the Court of Appeal" á the failure to put such a route to Ms Berry in cross-examination despite ample opportunity to do so albeit eventually the Court put a time limit on continued cross-examination á inconsistencies between matters put to the applicant witnesses in cross-examination and the evidence given by the respondent himself in cross-examination á the vague and inadequate content of the respondent's affidavit compared with the evidence he gave in cross-examination and the failure of the respondent to disclose in his affidavit the circumstances which he now asserts apply to the encounter with Ms Berry á the failure of the respondent to back-up certain assertions with evidence, for example, the busy state of Lt Lonsdale Street at 4.45 pm on 23 June and a seven unit development on the Alfred Avenue property in Burwood. 43 Jurisdiction On the fourteenth day (9 June) the hearing was adjourned on the basis that the respondent was unlikely to be fit to continue for seven days. The adjournment was to the next available day after seven days which was initially an adjournment to 21 June (in effect an eleven day adjournment). However, counsel for the applicant, in opposing an adjournment, questioned the bona fides of the respondent's application, an application made on behalf of the respondent by counsel instructed by solicitors. Counsel for the applicant noted that the respondent had earlier failed to obtain an adjournment to appear as counsel in the High Court on 15 and 16 June. He suggested that if the respondent, having obtained an adjournment on Friday 9 June, on the basis of his inability to attend to his affairs or to proceed in this Court, appeared as counsel in the High Court on Tuesday 15 June, such attendance would throw real doubt on the bona fides of the adjournment application. Counsel for the applicant sought liberty to apply so that an application could be made on 15 June for vacation of the adjournment order to 21 June in the event that the respondent appeared as counsel in the High Court on 15 June. The intention of the applicant to apply on notice to the solicitors then acting for the respondent to reconvene this hearing was foreshadowed by counsel for the applicant and was openly discussed and argued by both counsel during the adjournment application on 9 June. While opposed by counsel then appearing for the respondent, the Court granted liberty to apply to either party on two hours notice to the solicitors for the other party. 44 At 2.30 pm on Tuesday 15 June, the Court was advised of notice given earlier that day to the solicitors acting for the respondent (that is acting for the respondent on 9 June) and heard an application by counsel for the applicant for vacation of the adjournment order to 21 June and for the hearing of the opposed petition to be reconvened immediately. The application was based on affidavit evidence that the respondent was that day appearing in Canberra in the High Court and was scheduled to appear there again the next day, Wednesday 16 June. The respondent was not present or represented and I declined to proceed with the hearing that day or on Wednesday 16 June, but the matter was relisted on 17 June and proceeded to conclusion on 17 and 18 June. 45 The respondent asserts that the Court had no jurisdiction to consider a vacation of order on 15 June or to relist the matter on 17 June or to continue and conclude the hearing on 17 and 18 June. Those propositions are rejected. They were rejected when the respondent appeared as litigant in person on the two final days of trial, 17 and 18 June. They are rejected again. 46 The Court had power to vacate the order for adjournment to 21 June. Specific provision was made for liberty to apply so that either party on notice could move to vacate the order of 9 June (for adjournment to 21 June). The order granting liberty to apply took effect on the day it was made on 9 June. At that time the respondent was represented by counsel and counsel was instructed by solicitors. The order provided for notice to the solicitors at that time acting for the parties. 47 Viatorial privilege It is unclear how the respondent seeks to invoke what he described as "viatorial privilege". He seems to suggest that Mr Birch committed some contempt of Court by approaching him outside Court 13 on 22 June and that this approach somehow invalidated any later service of the bankruptcy notice. 48 The respondent also seems to imply that the applicant and/or the Court breached viatorial privilege by way of the notice of hearing and the hearing of an application in his absence on 15 June. He has stated that he did not have the ability to attend the court on 15 June. I do not accept that the hearing of the applicant's application on 15 June or notice of it to solicitors acting for the respondent on 9 June or the order of 9 June which provided liberty to apply to either party, constituted any breach of any viatorial privilege, or in any way invalidated these proceedings. These are matters covered above in paragraphs 43 to 46. 49 I do not accept that á any attempt was ever made or contemplated to serve the bankruptcy notice within the precincts of the Supreme Court á Mr Birch made any approach on 22 June which constituted contempt á any alleged extension of viatorial privilege somehow invalidated the service of the bankruptcy notice in Lt Lonsdale Street and rendered the act of service null and void as a contempt of court. 50 I would simply add that had service of the notice occurred within the precincts of the Supreme Court, and it did not, such service would not necessarily have constituted contempt and, even if such service had been so effected and were to be held a contempt, it would not follow that such service would be set aside. See Re O'Sullivan; ex parte O'Sullivan v Commonwealth Bank of Australia (1995) 129 ALR 295 at 305. 51 The Judgment Debt The respondent asserts that the applicant cannot rely on the bankruptcy notice because the judgment grounding the notice is not enforceable and is not available as a basis for a bankruptcy notice or as a foundation of a creditor's petition (paragraph 2(b) of notice of opposition). The order on which the notice is based is the order of a Master of the Supreme Court. The order creates a liability to pay the amount ordered. The order has not been stayed and there is no more recent order of a judge which varies or alters the Master's order. That order was and is enforceable. Byrne J by de novo hearing in effect considered an appeal from the Master's order. He dismissed the application before him. The Master's order stands. 52 Another assertion (in paragraph 3 of the affidavit of 10 February) is that the judgment, (the Master's order) "is not enforceable by the applicant because of the provisions of the rules of the Supreme Court". The argument was not developed in any detail in the course of the hearing. The respondent seems to be suggesting that a judgment against him but not against his wife was invalid and that the Supreme Court rules themselves are in some way invalid. I do not understand the proposition but reject the assertion that the judgment "is unenforceable ... because of ... the rules of the Supreme Court". 53 Ability to pay debt and/or other sufficient cause a sequestration order ought not be made. Paragraphs 2 and 5 of the respondent's affidavit of 10 February refer to separate Supreme Court proceedings. 54 In paragraph 2 the respondent refers to what was Supreme Court proceeding No 8214 of 1995 in which the applicant as plaintiff and mortgagee sought to enforce a mortgage on 13 Alfred Road Burwood. The respondent and his wife were mortgagors. They conducted with the applicant housing and investment property loan accounts, an unpaid bill account and an overdraft account. The accounts were secured by mortgage. The applicant sought possession of the Burwood property following default in repayment of debt. Mrs Perkins denied liability for debt under the mortgage and counterclaimed seeking, among other things, damages. The applicant obtained judgment against the respondent for possession of the property but by orders made in the Family Court on 26 March 1998 the interest of the respondent in the property was transferred to Mrs Perkins. 55 By deed dated 4 November 1998 Mrs Perkins as mortgagor agreed to pay the applicant $350,000 in settlement of the Supreme Court proceeding. The applicant agreed to discontinue the proceedings and covenanted not to commence fresh proceedings or otherwise sue Mrs Perkins as mortgagor in relation to the mortgage, the debt or the bank accounts. The covenant not to sue Mrs Perkins falls short of an absolute release. The respondent was not released: See O'Donovan and Phillips, The Modern Contract of Guarantee (3rd edition) at 381 and 382 where the learned authors cite Re Wolmershausen (1890) 62 C.T. 541 and Mercantile Bank of Sydney v Taylor (1891) 12 L.R. (NSW) 252 at 268 as authority for the proposition that other joint and several guarantors are not discharged if a creditor covenants not to sue a co-guarantor or effects a compromise with a co-guarantor falling short of an absolute release. 56 While paragraph 2 of the affidavit of 10 February states no opposition as such and merely makes a statement about the settlement of the Supreme Court proceedings and an allegation that the applicant was about to sell or had sold "the property" (the Burwood property) I have treated the statement and the allegation as an undeveloped claim that the involvement of the applicant and Mrs Perkins in the Supreme Court proceeding and in a settlement arising from it constitutes "other sufficient cause a sequestration order should not be made". The respondent in final address (T995-6) asserts that á "it was not open" for the applicant to settle with Mrs Perkins á "the bank has elected to give away property which it owned as trustee for sale for less than value" á "they (the applicant) did not squeeze juice out of the lemon, they simply gave it away" á "the bank didn't take proper steps in respect of security". There are also the assertions in sub-paragraphs (c), (d) and (h) of paragraph 2 of the notice of opposition that the petitioner á is in possession of the security which exceeds in value any debt due á has dealt with the security in bad faith and in a manner which does not comply with the Bankruptcy Act. 57 These assertions appear based on the respondent's perception that the applicant was a mortgagee in possession. The applicant was never in possession of the Burwood property although an order for possession against the respondent was obtained. The applicant had no order for possession against Mrs Perkins. She continued to live in the property and the order of the Family Court transferred it to her. The respondent tendered the Transfer in evidence. The applicant was never a mortgagee in possession of the property. The applicant never had a capacity to sell it although, as counsel asserts (T1015) "it had the capacity to take such action as was both reasonable and commercial to realise its security". 58 There is evidence that Mrs Perkins transferred the property to a company called Ecco Decor for a consideration stated to be $457,000. Again, as counsel for the applicant asserts, (T1016) "that is not evidence of valuation, that is evidence of the amount which Ecco Decor was prepared to pay to Mrs Perkins on whatever basis, on whatever terms, for the transfer of the property to that company". 59 The evidence of valuation before the Court is that of Mr Scott, a manager in the applicant's asset management department. He gave instructions for the issue of the creditors petition. He had a valuation of $420,000 and he relied upon it. 60 Even if evidence had been led that established the valuation of the property at $457,000, the best price which could be taken as payable by someone prepared to purchase the property, substantial costs would have been incurred if orders had been obtained which had allowed the applicant to take possession, evict and auction the property. The applicant obtained $350,000. The respondent still owes $169,649.86, being $519,649.86 as claimed in the creditor's petition less $350,000 received 4 November 1999. The respondent has not satisfied the Court that he has any cause of action against the applicant, but even if he did have a cause of action there is no possibility of an award which could come close to meeting the amount of the undisputed debt. 61 The applicant has a prima facie entitlement to a sequestration order once it has discharged the onus under s52(1): Cain v Whyte (1933) 48 CLR 639 at 646 and Rozenbes v Kronhill (1956) 95 CLR 407 at 414. The onus rests on the respondent to establish that his undeveloped claim under paragraph 2 of the notice of opposition and paragraph 2 of his affidavit of 10 February constitute sufficient cause under s52(2) that a sequestration order not be made. The claim is misconceived and the respondent has failed to discharge that onus. 62 The other Supreme Court proceeding is referred to in paragraph 5 of the respondent's affidavit of 10 February. The respondent seems to be making a claim that damages which he expected to flow to him as plaintiff in an action against the applicant's solicitors would "exceed the amount owing to me after the sale of the property". The Court assumes that the respondent really means the amount owing to the applicant rather than to himself and that paragraph 5 is some sort of claim that he is able to pay his debts or that his action against the applicant's solicitors constitutes other sufficient cause that a sequestration order ought not be made. 63 Again, the onus is on the respondent to demonstrate that he is able to pay the debt or that any action or potential cause of action constitutes sufficient cause that a sequestration order ought not be made. The respondent has not discharged the onus. He has not produced any evidence which might ground either assertion. Indeed, the Court agrees with counsel for the applicant that, in addition to a lack of evidence, a finding by this Court that the respondent is somehow entitled to damages against the applicant and/or the applicant's solicitors "would fly in the face of the decision of Beach J in the Supreme Court in which he struck out as an abuse of process the claim that was made by Mr Perkins against the bank and Smith & Emmerton in that regard." (T1021) 64 In the course of the hearing the respondent made other assertions which are outside the scope of his notice of opposition. The assertions included that á the bank took a fraudulent preference á the bank elected to accept settlement with Mrs Perkins as full discharge of the debt á the doctrine of feeding the estoppel applies and the bank cannot claim against the respondent. None of these arguments are developed. No evidence supports them. 65 Findings I have found that the bankruptcy notice was served on 23 June 1998. I am satisfied that the respondent as debtor committed the act of bankruptcy alleged in the petition and that the act of bankruptcy was committed on 14 July 1998 when the respondent failed to comply with the bankruptcy notice served on him on 23 June 1998. 66 I am satisfied with proof of á the matters stated in the petition á service of the petition á the fact that the debt on which the petitioning creditor relies is still owing. 67 The respondent as debtor has not satisfied this Court that á he is able to pay his debts á for other sufficient cause a sequestration order ought not to be made. ORDERS THE COURT ORDERS that: