Sogelease Australia Ltd v Griffin, in the matter of D J Griffin

REASONS FOR JUDGMENT 1 I have before me an application under O 9 r 7 of the Federal Court Rules for a declaration that a bankruptcy petition has not been duly served on the respondent debtor to the proceeding. The petition in question ('the Petition') was filed by Sogelease Australia Limited and SG Australia Limited (together 'the Creditors') on 2 April 2003. By the Petition, the Creditors apply for a sequestration order under the Bankruptcy Act 1966 (Cth) ('the Act') against the estate of David James Griffin ('the Debtor'). The Debtor has filed a conditional appearance for the purpose of seeking the declaration and has filed notice of grounds of opposition relying solely on the ground that the Petition has not been served on him.

2 It is common ground that, in so far as it is relevant, the Petition is 'originating process' within the meaning of O 7 r 1(1) and that it has not been 'served personally on' the Debtor within the meaning of that phrase as used in O 7 r 1(1). The Creditors claim, however, that it is not necessary for a bankruptcy petition to be served personally on a debtor. Alternatively, the Creditors say that, if a petition must be served personally on a debtor, compliance with that requirement should be dispensed with pursuant to O 1 r 8 or, in the circumstances of the case, the Court should make an order under O 7 r 10 that the Petition be taken to have been served on the Debtor. 3 The Creditors propose to move for orders under O 1 r 8 or O 7 r10. The Creditors will also apply, in the alternative, if necessary, for an order under s 309(2) of the Act, which provides, relevantly, that, where a document is required by the Act to be served on a person, the Court may, in a particular case, order that it be served in a manner specified by the Court, whether or not any other manner of serving the document is prescribed. I have deferred consideration of any such application until I have disposed of the Debtor's application under O 9 r 7 for a declaration that the Petition 'has not been duly served on' the Debtor. 4 On the hearing of the Debtor's application under O 9 r 7, the Creditors have sought to rely on all of the evidence upon which they would rely in any application under O 1 r 8 or O 7 r 10 as a basis for declining, in the exercise of discretion, to make a declaration under O 9 r 7. I propose to approach the matter on the basis that there is a discretion under O 9 r 7 to decline to make a declaration even though there has been no due service of originating process, at least in circumstances where to do so would be of no utility. The Creditors say that it would be futile to make such a declaration if the Court would, in any event, make an order under O 1 r 8 or O 7 r 10. 5 Order 7 r 1(1) provides that, subject to the provisions of O 7, originating process shall be served personally on each respondent. Rule 2(1)(a) provides that personal service of a document is effected on an individual by leaving a copy of the document with him or her. Rule 2(2) provides that if a person refuses to accept service of the document, personal service may be effected on him or her by putting the document down in his presence and telling him or her the nature of it. 6 However, O 7 r 10 provides that, where for any reason it is impractical to serve a document in the manner set out in the Rules, but steps have been taken to bring the document to the notice of the person to be served, the Court may order that the document be taken to have been served on that person on a date specified in the Order. Order 1 r 8 also provides that the Court may dispense with compliance with any of the requirements of the Rules, either before or after the occasion for compliance arises. 7 Order 7 r 1(3) provides that, if a respondent to an originating process enters an appearance or appears before the Court in response to the process, the originating process is taken to have been served on the respondent personally. Order 9 r 6(1) provides that a respondent may enter a conditional appearance. A conditional appearance does not have the consequences contemplated by O 7 r 1(3). However, O 9 r 6(2) provides that a conditional appearance is to have effect for all purposes as an unconditional appearance, unless the Court otherwise orders or the respondent applies under and in accordance with O 9 r 7 and the Court makes an order under that rule. 8 Order 9 r 7 relevantly provides that the Court may, on application made by a respondent to any originating process, declare that 'the originating process has not been duly served on the respondent'. By his notice of motion filed on 22 April 2003, the Debtor seeks, inter alia, an order: 'declaring that the original process has not been duly served on the respondent.' That motion has been filed in the Petition proceeding and that is the only relief pressed. 9 The Creditors contend that a bankruptcy petition does not need to be served personally on a debtor by reason of the operation of reg 16.01 made under the Bankruptcy Regulations 1996 (Cth) ('the Regulations'). Regulation 16.01(1) relevantly provides that, unless the contrary intention appears, where a document is required or permitted by the Act or the Regulations to be served on a person, the document may be left, in an envelope or similar packaging marked with the person's name, at the last-known address of the person. Regulation 16.01(2) relevantly provides that a document served on a person in accordance with reg 16.01(1) is taken, in the absence of proof to the contrary, to have been served on the person when the document is so left. 10 Regulation 16.01 was made pursuant to the power conferred by s 315 of the Act. Section 315(1) in its present form authorises the making of regulations prescribing matters as necessary or convenient to be prescribed for carrying out or giving effect to the Act. Section 315(2)(g) provides that, in particular, the Regulations may provide for the means of service of documents. No contention has been advanced to cast doubt on the validity of reg 16.01. All of the argument has been directed to the proper construction of the Regulations. 11 The Creditors also rely on the effect of s 306 of the Act and s 51 of the Federal Court of Australia Act 1976 (Cth), which are in similar terms. Their effect is that proceedings either under the Act or the Federal Court of Australia Act are not to be invalidated by a formal defect or an irregularity unless the Court is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of the Court. 12 On one view, a declaration made under O 9 r 7 would not necessarily dispose of the question of service of the Petition. That is to say, if reg 16.01 brought into existence a regime for service of bankruptcy petitions, subject to the operation of s 306 and s 309 of the Act, that regime may apply irrespective of the Federal Court Rules. A declaration under O 9 r 7 that originating process had not been 'duly served' on the Debtor would be limited to the operation of the Federal Court Rules. Order 9 r 7(1)(c) should be construed by reference to provisions such as O 7 r 9 and r 10, which speak in terms of service 'in the manner set out in the Rules'. That is to say, O 9 r 7 is concerned only with service of originating process under the Rules. 13 On that view of O 9 r 7, the true construction of reg 16.01 would have no bearing on the question of whether the Petition has been 'duly served' on the Debtor. In that case, even if it were concluded that the petition has not been served personally on the Debtor and, accordingly, has not been 'duly served' on the Debtor, there would be no utility in making a declaration that the Petition has not been duly served if reg 16.01 regulated that question. I consider that the Petition has not been duly served on the Debtor as that term is used in O 9 r 7(1)(c). That, of course, is not an end of the matter, so far as effective service of the Petition is concerned, because of the possible operation of reg 16.01(1). 14 Regulation 16.01 was enacted with effect from 16 December 1996, the date of commencement of the Bankruptcy Legislation Amendment Act 1996 (Cth) ('the Amendment Act') which effected a number of amendments to the Act, including the amendment of s 315. On the same day, O 77 was introduced into the Federal Court Rules in a form different from its current form. In that earlier form, O 77, in effect, adopted, as rules of the Federal Court, the Bankruptcy Rules made under s 315 of the Act prior to its amendment. In that earlier form, s 315 authorised the making of 'rules'. Before 16 December 1996, O 1 r 11 provided that, in relation to proceedings under the Act, the practice and procedure of the Court was to be in accordance with the Bankruptcy Rules. 15 The current form of O 77 came into force on 31 July 1997. There appears to have been no formal repeal of the Bankruptcy Rules made under s 315 in its earlier form. Nevertheless, the Bankruptcy Rules as made under s 315 should probably be taken to be of no force or effect from 16 December 1996 following the repeal of the power to make rules. 16 Rule 15 of the Bankruptcy Rules provided that, unless otherwise ordered by the Court under s 309(2) of the Act, service of a bankruptcy notice was to be effected on a debtor by delivering a copy of the bankruptcy notice to the debtor personally. Under that rule service of a creditor's petition was to be effected on a debtor by delivering, inter alia, an official copy of a petition to the debtor personally. As I have indicated, that provision continued in force after 16 December 1996 as a rule of the Federal Court with effect from that time. Thus, if reg 16.01 applies in relation to bankruptcy notices and petitions under the Act, there may have been some inconsistency between reg 16.01, on the one hand, and the Federal Court Rules, on the other. However, any such apparent inconsistency may be non-existent by reason of the proviso to the Federal Court Rules which preserved the Bankruptcy Rules (as O 77) only in so far as they were not inconsistent with the Act and the Regulations.