Skalkos v T & S Recoveries Pty Ltd

Because par 4 of the petition (see [1]) did not accord with the position found by him, his Honour gave leave to the respondent to amend it so as to delete the words "deemed by the Federal Court in Proceedings Number 7092 of 2003 on 2 April 2003 to have been", and treated the petition as having been so amended. He was satisfied of all the matters requiring proof under s 52 of the Act, and made a sequestration order against the appellant's estate.

THE APPEAL 9 Of the five grounds appearing in the notice of appeal, only three are pursued. They are: "1. The Trial Judge erred in concluding that service by pre‑paid post to the last known address of a debtor in accordance with Regulation 16 was adequate service of a Bankruptcy Notice. … 4. The Trial Judge erred by declining an application by the debtor for an adjournment in the following circumstances: (a) The Trial Judge indicated a preliminary view during the course of the argument that a Bankruptcy Notice may be adequately and effectively served in accordance with Regulation 16. (b) The debtor's counsel then sought an adjournment in order to place before the Court evidence by the debtor as to the receipt of the Bankruptcy Notice. (c) The Trial Judge refused that adjournment on the basis that there was nothing the debtor could usefully say since the effect of Regulation 16 was to prove service regardless of the facts to which a debtor deposes. [5.] His Honour erred in not taking account of the confusion that may result to a debtor by receiving a bankruptcy notice accompanied by an order for substituted service which had not been complied with."

The last‑mentioned ground appears in the notice as ground 4(d). Because it is clearly an independent ground, we have, as an aid to comprehension, numbered it accordingly.

Ground 4 10 It is convenient to deal with ground 4 first. When the matter was called on before the primary judge, the appellant's counsel sought an adjournment until after the determination of an application to the Court of Appeal for leave to appeal against the costs judgment. His Honour refused that application. There is no appeal from that refusal. There was then discussion about the need to amend the bankruptcy petition in the event that it was held that service had not been effected pursuant to the substituted service order, but could be, and had been, effected pursuant to reg 16.01. The respondent's solicitor sought to amend par 4 of the petition by deleting the words "deemed by Order made by the Federal Court in Proceedings Number 7092 of 2003 on 2 April 2003 to have been". His Honour did not then rule on the application to amend. 11 There had earlier been discussion about the adequacy of an affidavit purporting to prove the posting of the bankruptcy notice to the Alexandria address. His Honour returned to that matter and gave the respondent the opportunity to file a more satisfactory affidavit on that topic. At that stage counsel for the appellant said: "The view was taken, rightly or wrongly, on behalf of the respondent that what our concern was to answer the allegation of an act of bankruptcy specified in the petition. Now, if the petition is to be amended to say, it was just nothing to do with the order for substituted service - and whether it was misleading or not we are seeing that there has been notice given - then we would have seen it as appropriate to file an affidavit by the respondent. But when we were faced with the position that the petition relied on an act of bankruptcy which plainly had not occurred - although Mr Spinks had been urging at various times before Registrar Hedge that he was able to rely on that as well. But once an amendment is made to the petition to rely simply on service by post, under regulation 16.1, then, at least, my client should have an opportunity to say what the position was as to the receipt of notice by him." 12 The primary judge expressed the view that there would be no point in the appellant filing an affidavit to the effect that he had not received the bankruptcy notice, because reg 16.01, if it was applicable and satisfied, deemed the notice to have been served on the appellant even if it had not been received by him. The following exchange then occurred: "MR BROUN: I must say, your Honour, that is what the regulation seems to say surprisingly. HIS HONOUR: That's right. If it was any other way you could never confidently rely on the regulation because it may be that the person in fact didn't get it, but whether or not they got it they could easily say they didn't, and the person posting it wouldn't be in a position to controvert that. … HIS HONOUR: I agree with you, there was a time when the significance of the bankruptcy notice was such that there had to be personal service or substituted service under which a court was pretty confident that it would reach the actual person, and they have changed the rules. MR BROUN: Yes. I must say, your Honour, that was my impression on reading the regulation …."

13 It is not entirely clear whether counsel was intending to apply for an adjournment to enable an affidavit to be sworn by the appellant. If that was the case, counsel did not persist with the application, but acceptedhis Honour's view that there was no point in filing an affidavit to the effect that the appellant had never received the notice. Indeed counsel said he read reg 16.01(2) in the same way as his Honour. 14 The appellant has applied by motion for leave to file fresh evidence on the appeal. The affidavit in support, sworn by his solicitor, states that the appellant did not give evidence at first instance, based on advice by counsel that there was no need to do so because it was for the respondent to prove the act of bankruptcy, and on its own contentions and submissions, service of the bankruptcy notice could not be proved. However, when it became clear in the course of argument that the primary judge was of the view that it was possible for the respondent to establish service even though the substituted service order had not been complied with, counsel sought an adjournment with a view to filing evidence by the appellant. His Honour is said to have refused the adjournment on the ground that "evidence from the debtor disputing receipt of the bankruptcy notice would not be adequate to disprove service". 15 The fresh evidence consists of an affidavit by the appellant in which he deposes that he did not receive the bankruptcy notice, and did not see a copy of it until he received the bankruptcy petition. Foreign Language Publications Pty Ltd, the company that carried on business at the Alexandria address, went into voluntary administration on 31 March 2003. In early April the administrators placed locks on the doors of the premises and took possession of records. Business at the premises ceased on that day. Accordingly, a bankruptcy notice posted to the Alexandria address on about 4 April 2003 would have arrived after the administrators had taken possession and the employees had been made redundant. 16 Putting proof to the contrary aside, reg 16.01(2)(a) can be rendered in simplified form as follows: "A document sent to a person in accordance with subregulation (1) is taken to have been received by or served on the person when the document would, in the due course of post, be delivered to the person's address."

What is permitted by the words "in the absence of proof to the contrary" is proof to the contrary of receipt by or service on the person when the document would, in the due course of post, be delivered to the person's address. Regulation 16.01(2) is concerned to provide a date certain from which periods of time commence to run. The act of bankruptcy in s 40(1)(g) consists of failing to comply with the requirements of a bankruptcy notice within the time specified in the notice. The form of notice prescribed by the Regulations requires the debtor

"within 21 days after service on you of this Bankruptcy Notice: (a) to pay to the creditor the amount of the debt; or (b) to make an arrangement to the creditor's satisfaction for settlement of the debt."

If there were no authority on the subject, there would be much to be said for the view that the words "in the absence of proof to the contrary" only enable a person to whom a document has been sent in accordance with reg 16.01(1)(a) to prove that it was delivered on a date other than that on which it would have been delivered in the due course of post. If, in the due course of post, a document posted on the first day of the month would be delivered on the third day of the month, so that, in the case of a bankruptcy notice, the 21 day period would run from the fourth day, the person is permitted to prove, for example, that the document was in fact delivered to his address on the fifth day of the month. On this construction of reg 16.01(2)(a), the words "in the absence of proof to the contrary" do not enable the person to prove that, although the document was dispatched in accordance with reg 16.01.(1)(a), it was either not received by him or was not delivered to his address.

17 There are however authorities that bear on these questions. In Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 the High Court considered s 39(1) of the Acts Interpretation Acts 1954 to 1962 (Q) ("the Queensland Act") which provided: "Where any Act authorises or requires any document to be given, sent, served, or delivered by post, then, unless the contrary intention appears, such giving, sending, serving, or delivery shall be deemed - (a) To be effected by properly addressing, prepaying, and posting a letter or packet containing such document; and (b) Unless the contrary is proved, to have been effected at the time when the letter or packet would be delivered in the ordinary course of post."

"In the present case, the notices were not returned undelivered and there was no other circumstance which suggested that they did not reach their destination. Hence under s 39(1)(b) service is deemed to have been effected at the time when the notices would have been delivered in the ordinary course of post." 18 The Court later referred to a line of English cases commencing with Reg v County of London Quarter Sessions Appeals Committee; Ex parte Rossi [1956] 1 QB 882 ("Rossi"), that arose under s 26 of the Interpretation Act 1889 (UK) ("the 1889 Act"), which is to the same effect as s 39(1) of the Queensland Act. They concerned the effect of proof of non‑delivery where service by post was permitted and used. In Fancourt at 96‑97 the Court said: "The effect of the cases appears to be that proof of non‑delivery means that service cannot be deemed to have taken place under the second limb of the section at the time of delivery in the ordinary course of the post and cannot be established as having taken place at any other time. The consequence is that where it is necessary to establish service at a particular time, proof of non‑delivery is as effective as proof of non‑service, notwithstanding that service by post is in the circumstances permitted and the requirements of the Interpretation Act are observed …. It may be thought that there is an anomaly in such a result because it means that, notwithstanding the adoption of a permitted means of service, the service is nevertheless ineffective if there is proof of non‑delivery. It is, however, unnecessary to pursue these decisions here save to remark that they are all cases in which delivery was disproved. Despite remarks in the judgments about non‑receipt, it was non‑delivery which was significant because the second limb of s 26 of the Interpretation Act refers to proof of the contrary of delivery. As the present case shows, delivery may be different from receipt by the intended recipient and, provided that delivery is not disproved, the fact of non‑receipt does not displace the result that delivery is deemed to have been effected at the time at which it would have taken place in the ordinary course of the post. There is here no evidence of non‑delivery." 19 In Re Rustic Homes Pty Ltd (1988) 13 ACLR 105 a summons for the winding up of a company was sent to its registered office, but was returned to the sender undelivered by the postal authorities. von Doussa J, in the Supreme Court of South Australia, held that evidence that a document that has been posted has been returned undelivered establishes that service has not occurred. After referring to Fancourt, his Honour said at 107‑108: "The second part of s 15 [of the Companies and Securities (Interpretation and Miscellaneous Provisions) (SA) Code] operates to establish a time at which the document is deemed to be served. That part of the section is of particular importance where a document must be served not later than a particular time …. Service is deemed to have been effected at the time when the letter would have been delivered in the ordinary course of post 'unless the contrary is proved'. In the circumstances of the present case the contrary was proved by evidence that the document had been returned by Australia Post undelivered. … Although the High Court did not expressly approve the line of cases commencing with R v County of London Quarter Sessions Appeals Committee; Ex parte Rossi , it did not disapprove those decisions. In Re Gasbourne, [(1984) 8 ACLR 618] Nicholson J followed those decisions, and in my view I should also follow them. In the present case there is evidence of non‑delivery of the summons. Section 15 does not therefore deem the mode of service adopted to be effective service." 20 In Re Ocean Distributors Pty Ltd (1990) 2 ACSR 486 a notice was sent by post to the registered office of a company. There was evidence that the notice had not been received by the company, but not that it had not been delivered. It was held by Mackenzie J in the Supreme Court of Queensland that the notice had been duly served. 21 In Deputy Commissioner of Taxation v Coco (2003) 52 ATR 700 the respondent expressed the belief that he had not received a document. Mullins J in the Supreme Court of Queensland held that in the absence of proof of non‑delivery, the propounded belief was not sufficient to displace the presumption of service in s 29 of the Acts Interpretation Act 1901 (Cth), which is to the same effect as s 39(1) of the Queensland Act and s 26 of the 1889 Act. See also Deputy Commissioner of Taxation v Gruber (1998) 43 NSWLR 271. 22 In Repatriation Commission v Gordon (1990) 100 ALR 255 the addressee of a letter sent by post gave evidence that he had never received it. Spender J said at 265: "In my opinion, in relation to the deeming provision in [s 29 of the Acts Interpretation Act] to the time at which service was effected, the qualification 'until the contrary is proved' is not restricted to proving a time of delivery different from the ordinary time at which the letter would be delivered, but encompasses proof that the letter was never delivered at all. Of course, any such claims would have to be very carefully scrutinised and the mere claim of non‑receipt would be likely to be insufficient. Non‑receipt is not the same as non‑delivery. In the view I take of s 29, there is a statutory presumption that what is proved to have been properly dispatched by post arrived at the usual time, but that non‑delivery at that time, or non‑delivery at all, might be proved by evidence." His Honour then set out the Fancourt passage quoted at [18]. 23 In Perpetual Nominees Ltd v Masri Apartments Pty Ltd (2004) 49 ACSR 714 at [23] Austin J said: "Section 29(1) would allow Masri to prove that a demand properly addressed to its registered office was not delivered in the ordinary course of post, but it has not done so. Its evidence only establishes non‑receipt, which is not sufficient to prove non‑delivery: Fancourt …."

See also Murphy v Minister for Immigration and Multicultural and Indigenous Affairs [2004] FCA 657 where Spender J collects these and other cases turning on the effect of service in accordance with provisions modelled on s 26 of the 1889 Act.

24 The anomaly said by the High Court in Fancourt to have been created by the Rossi line of cases would not exist if the proof to the contrary is restricted to proof that the document was delivered on a date other than that on which it would have been delivered in the due or ordinary course of post. 25 It is not necessary in the present case, any more than it was in Fancourt, to decide whether the Rossi line of cases should be followed. If, on the proper construction of reg 16.01(2), the words "proof to the contrary" permit proof that the document was not delivered, there is no such proof in the present case. It is clear from Fancourt that proof of non‑receipt as opposed to non‑delivery is not permitted. If on the other hand those words only permit proof that the document was delivered on a date other than that on which it would have been delivered in the due course of post, there is no such proof. 26 Thus on either view of reg 16.01(2), the primary judge correctly said there was no point in the appellant filing an affidavit of non‑receipt.

Ground 1 27 Two issues arise under this ground. The first is whether a bankruptcy notice that is required by s 40(1)(g) of the Act to be served on the debtor can be served under reg 16. If it can, the second question is whether the notice was sent by post to the appellant's last‑known address.

Availability of reg 16 28 The appellant submitted that reg 16 was not available because a "contrary intention appears" within the opening words of reg 16.01(1). The contrary intention is said to arise from a combination of the following factors:

(a) non‑compliance with a bankruptcy notice is an act of bankruptcy available to found a bankruptcy petition;

(b) a "last‑known address" is "something likely to be inaccurate" since people, especially those under considerable financial pressure, regularly change their addresses;

(c) a business address is even more likely to change by reason of financial stress;

(d) an alleged debtor who did not receive the notice would not become aware of it until served with a petition, at which stage it would frequently be too late to do anything;

(e) an act of bankruptcy must be specifically and clearly proved;

(f) there is no requirement in reg 16 that if the letter is returned marked "Not known at this address" or "Return to sender", that fact must be disclosed to the court;

(g) the regulation does not distinguish between a last‑known address that is relatively current and one that is long out of date;

(h) the effect of the regulation is that once the letter is posted the onus is on the debtor to prove that he did not receive it, an onus that may be difficult to discharge;

(i) the issue on a bankruptcy petition based on a bankruptcy notice is whether the debtor has failed to pay the debt notwithstanding having been given a last chance, and should not become a credit issue as to whether or not the notice ever came to the notice of the debtor.

29 These matters were not put to the primary judge in either the appellant's written submissions or in oral argument, and understandably his Honour does not mention them. A judge does not commit any error in failing to deal with a matter not before him or her. Cf Commissioner of Taxation v Glennon (1999) 90 FCR 538 at 556‑558. In any event, a contrary intention for the purposes of reg 16.01(1) must appear from the Act or the Regulations, or from some other legislation. It cannot appear from assertions such as those in factors (b) and (c). Nor does it appear from quite accurate statements such as those in factors (a), (e) (f) and (g). It is true that provisions such as reg 16.01 contemplate the possibility of something less than actual receipt by the person to be served. But as Tindal CJ said in Bishop v Helps (1845) 2 CB 45 at 57; 135 ER 857 at 862 (a passage quoted in Fancourt at 96): "It was probably considered that the public convenience would be promoted by the present provision, and that its advantages would greatly outweigh the inconvenience which, in some few cases, might possibly arise from it."

In our view, the fact that in some cases reg 16.01 can produce harsh results, which is what the combination of the factors relied on is directed to establishing, does not constitute a contrary intention for the purposes of reg 16.01(1). Factors (d), (h) and (i) assume that it is open to a debtor to prove non‑receipt of the notice. As we have said, this assumption is ill‑founded.

30 The appellant also contended that the order for substituted service itself constituted a contrary intention for the purposes of reg 16.01. Assuming the Court has power to preclude reliance on the modes of service prescribed by reg 16 (perhaps under s 309(2) of the Act), an order for substituted service will constitute a contrary intention only if it evinces an intention that it is to operate either to the exclusion of reg 16 or to the exclusion of any other mode of service. We agree with his Honour that the substituted service order is permissive in terms, prescribing a method "by which service may be effected". It is silent about service otherwise than in accordance with its terms. The order does not constitute a contrary intention for the purposes of reg 16.01(1). 31 The mode of service for which reg 16.01(1)(a) provides was available to the respondent. We agree with Tamberlin J's observation in Theodor Silvas (a bankrupt) v Maureen Silvas [1997] FCA 206 that a bankruptcy notice can be served under the regulation. We agree with the distinction between a petition and a notice drawn in CSR Limited v Antonio Barillaro (2001) 184 ALR 308. See also Drake v Stanton [1999] FCA 1635 where Tamberlin J proceeded on the basis that the regulation was available for the service of a bankruptcy notice. However, in that case the debtor does not appear to have contested the issue. The question then is whether the notice was sent by post to the appellant's last‑known address.

Last‑known address 32 In Robertson v Banham & Co [1997] 1 WLR 446 ("Robertson") the Court of Appeal considered Order 10 r 1(2)(b) of the Rules of the Supreme Court, which permitted a writ to be served "if there is a letter box for that address, by inserting through the letter box a copy of the writ enclosed in a sealed envelope addressed to the defendant". By r 1(2)(a) "that address" referred to the defendant's "usual or last known address". The question was whether service on a person at an address at which he was practising as a solicitor was service at his "usual or last known address". 33 Roch LJ, with whom Connell J agreed, said at 453 that a person's "usual or last known address" should be determined in the light of the fact that the purpose of the rule is that the originating process should be brought to that person's attention. His Lordship gave a number of reasons for concluding that the phrase is not confined to residential addresses. Not all are applicable to the present case. However one that is applicable consists of authorities holding that a person's business address can, in an appropriate case, be that person's "residence" or "last abode". In R v Braithwaite [1918] 2 KB 319 the issue was whether a summons for non‑payment of rates had been delivered "to or at the residence of the person" to whom it was addressed when it was left, not at the ratepayer's dwelling house, but at the house where he carried on business as a solicitor. The Court of Appeal held that it had been. Warrington LJ said at 328: "Such an expression as residence, which has no technical meaning, may properly be construed having regard to the objects of the Act in which it is found. … The only possible object in the case of the statute in question is that the documents in question may be brought to the knowledge of the defaulter. For this purpose I can see no reason why a man's private house or lodging should be selected as the place of service exclusively of his place of business."

The "last‑known place of abode" cases are to the same effect. See Morecombe and Heysham Borough v Warwick (1958) 9 P&CR 307, Stylo Shoes Ltd v Prices Tailors Ltd [1960] Ch 396 and Price v West London Investment Building Society [1964] 1 WLR 616.

34 In Robertson Roch LJ pointed out at 456 that "Here the case is stronger because the phrase is 'usual or last known address'. When a solicitor is being sued as a solicitor, his usual address as a solicitor must be the address at which he practises. That will probably be the only address known to the person who wishes to serve the writ. That will be the address at which he is most likely to receive the writ. That, in my judgment, is the ordinary and natural meaning of those words." 35 In Drake v Stanton [1999] FCA 1635 Tamberlin J considered the words in reg 16.01(1)(c) - "left, in an envelope or similar packaging marked with the person's name, at the last‑known address of the person". A witness had given evidence that the usual place of abode of the debtor was 292 Grey Street, Glen Innes. His Honour said at [5]: "The references to 'usual place of abode', of course, and to ' resides', refer to the residential address of Mr Stanton. That is not the expression which is used in the relevant provision …. The relevant expression is 'the last-known address of the person' and it does not matter whether the debtor currently lives or resides there or not."

His Honour referred to statements made by the debtor that his address was "J Stanton Enterprises Pty Ltd at 396 Grey Street, Glen Innes", and said at [8]:

"In my view, … the reference to 'last-known address of the person' is to that address which has been made known by the applicant as at the time closest to the date in question. In the present case the evidence indicates clearly that the address which was last asserted by the applicant was the address at 396 Grey Street. The applicant has not been called to give any evidence to the contrary." 36 The evidence in the present case establishes that

· the appellant's usual dwelling house (where he spent the night) was at 31A New South Head Road, Vaucluse ("the Vaucluse address")

· shortly before the date on which the bankruptcy notice was posted to the Alexandria address, the premises at the Vaucluse address were in the process of major renovation, with nobody living there

· before the date on which the notice was posted, the appellant's wife told the respondent's process server that she and the appellant were not then living at the Vaucluse address because it was still under construction, and that she was not prepared to disclose their current temporary address

· the appellant was the sole director and the secretary of Foreign Language Publications Pty Ltd, the registered office of which was the Alexandria address

· in proceedings in the High Court, the appellant's solicitors had given the Alexandria address as his address for service

· in February 2003 the appellant's solicitor advised the judgment creditors' solicitors that he had ceased to act for the appellant, and that correspondence should be directed to "Theo Skalkos, Managing Director, Foreign Language Publications Pty Ltd" at the Alexandria address

· in February 2003, in proceedings at the Supreme Court of New South Wales, the appellant gave his address for service as "Theo Skalkos, Director, Foreign Language Publications Pty Ltd" at the Alexandria address

On that material it is clear that the appellant was not at the relevant time living at the Vaucluse address, though that was his usual dwelling house or residence; that his current residential address was not known to the respondent; that in various contexts he had given the Alexandria address as his address for service, and that the best prospect of getting a document to him was by sending it to that address.

37 The primary judge said that although the debtor did not reside at the Alexandria address, he was using it for business purposes, and that although the premises were occupied by the company rather than the debtor personally, "he had such a degree of connection with the premises that they may properly be described as his last‑known address". Drake v Stanton, Robertson v Banham & Co and the cases referred to in the latter establish, in our view correctly, that a business address can be a person's "last‑known address". The primary judge's conclusion that the Alexandria address was the debtor's last‑known address was amply open to him on the evidence summarized at [36].

Ground 5 38 The final ground of appeal is that the primary judge erred in not taking account of the confusion that may result to a debtor by receiving a bankruptcy notice accompanied by an order for substituted service which had not been complied with. The primary judge recorded the appellant's submission that one of the reasons why reg 16.01 was of no assistance to the respondent is that the appellant would have been misled if he received both the bankruptcy notice and the order for substituted service. His Honour did not expressly deal with that submission. That was doubtless because he had earlier considered and rejected the same submission in another context. In connection with the availability of alternative methods of service, his Honour noted the appellant's submission that he "would have been misled if he in fact received a copy of the order for substituted service but knew that the requirements of that order had not been satisfied". The primary judge said: "Mr Broun's argument about the effect on the respondent assumes that the respondent in fact received both the bankruptcy notice and the order for substituted service but elected to disregard the requirements of the bankruptcy notice because the documents had not been personally served on a person over 16 years at the Alexandria address. The argument takes for granted that the respondent read the order for substituted service as prescribing an exclusive method of service. There is no evidence to that effect. The respondent did not present any evidence at the hearing."

Those observations, with which we agree, are applicable to the present ground of appeal. There is no evidence that the respondent read the order for substituted service, construed it in a cumulative fashion, discerned that it had not been complied with, and for that reason decided to disregard the bankruptcy notice.

THE MOTION 39 As we have said at [25] and [26], the evidence of non‑receipt of the notice sought to be introduced as fresh evidence is irrelevant. The motion is dismissed.

CONCLUSION 40 The appeal must be dismissed. It is accordingly unnecessary to deal with the respondent's amended notice of contention that the primary judge should have held that service of the bankruptcy notice had been effected in accordance with common law principles. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Sundberg, Finkelstein & Hely.

Solicitor for the Applicant: Broun Abrahams Burreket

Solicitor for the Respondent: B Spinks of Robinson Legal