Szepesvary v Weston as trustee of the bankrupt estate of Aaron Szepesvary

ACM GROUP LIMITED (ACN 127 181 097) Second Respondent

1. The appeal be dismissed.
2. In the event an order for costs is sought by the second respondent, the second respondent file any submissions within seven days limited to two pages.
3. If submissions are filed in accordance with Order 2, the appellant file any submissions within a further seven days limited to two pages and the Court will thereafter determine the issue of costs on the papers.
4. If no order for costs is sought in accordance with Order 2, then there be no order as to costs. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

A Introduction 1 This is the latest component of a hotchpotch of litigation which traces back to a decision of Westpac Banking Corporation (Westpac) to assign debts owed to it by the appellant, Mr Aaron Szepesvary, to a debt collector (the second respondent, ACM Group Limited (ACM)). ACM obtained a default judgment against Mr Szepesvary in a sum of $14,768.96. 2 The appeal is brought against the primary judge's dismissal of an application seeking an annulment of Mr Szepesvary's bankruptcy from which he has since been discharged. For reasons we will explain, the appeal is misconceived, but one is left with a sense of real disquiet about this matter. A self-represented litigant was bankrupted in his absence. The evidence (although incomplete) suggests he may well have been solvent. It is probable, if Mr Szepesvary had been given timely and sensible legal advice to pay all his debts in full (and he had followed it), the consequence would have been either: (a) the timely annulment of his bankruptcy under s 153A of the Bankruptcy Act 1966 (Cth) (Act); or (b) an application for annulment in early 2014 under s 153B. If a prompt application had been made, with reliance placed upon Mr Szepesvary's solvency as the basis for arguing that the sequestration order ought not to have been made, it is fair to assume (albeit on the limited material we have seen as to the circumstances then existing), it would have stood every chance of being successful. 3 But this did not happen. Mr Szepesvary, unaided and unrestrained by legal advice, embarked upon a succession of quixotic and doomed litigious endeavours. The result was that the first respondent, the Trustee, incurred disproportionate legal and other fees with the consequent financial ruination of Mr Szepesvary, including the loss of his family home. It is not the Court's role to assign blame for why the system has failed, but it has failed, with a vast waste of public and private resources. We cannot help thinking that all parties (unlike insolvency practitioners and lawyers) would have been much better off if instead of putting into operation the grinding machinery of bankruptcy, this very small debt had been enforced by the debt collector, ACM, serving a Summons to Attend for Oral Examination or a Warrant to Seize Property in the Magistrates Court. That is, using debt collection mechanisms for the purposes for which they were designed. 4 Lee J observed recently in Alam v QBE Insurance (Australia) Ltd [2018] FCA 1560 at [1]-[2]: This highly unfortunate case is an exemplar of the problems that arise by the use of the law of bankruptcy (a legislative scheme which reflects a balance between private and public interests transcending the interests of the parties) as a debt-collecting mechanism for the recovery of small debts. The bankruptcy jurisdiction of the Federal Circuit Court of Australia and this Court is of fundamental importance in the social and commercial life of this country. The jurisdiction should not be viewed, in its essential character, as part of the execution of judgment debts. It involves changing the status of an insolvent person. Fundamental to the law of bankruptcy is that a sequestration order should not be made against the estate of a person who is solvent: see, generally, Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; (2017) 343 ALR 632 at 643-645 [40]-[44] discussing Re Sarina; Ex parte Council of the Shire of Wollondilly (1980) 43 FLR 163 (Deane J) and Sarina v Council of the Shire of Wollondilly (1980) 48 FLR 372 (Bowen CJ, Sweeney and Lockhart JJ). 5 No participant is immune from a measure of responsibility for this highly unfortunate series of events. Having expressed our concerns, we now turn to the nature of the application before the primary judge.

B The bankruptcy and the annulment application 6 In September 2013, relying upon the judgment debt and praying in aid the act of bankruptcy caused by non-compliance with a bankruptcy notice issued in July 2013, ACM petitioned in the Federal Circuit Court for a sequestration order. In February 2014, a sequestration order was made. 7 Two and a half years after the making of the sequestration order, and after engaging in distracting collateral battles with the Trustee, Mr Szepesvary belatedly decided to seek relief by way of annulment. Reflecting his lack of legal assistance, much of the accompanying relief sought was inapposite, including the setting aside of a bankruptcy notice long after the time for compliance had passed and an application, purportedly pursuant to FCR 39.05, that this Court should vary or set aside the sequestration order under its general power to vary orders of this Court after entry. Somewhat more pertinently, the application also sought orders that the creditor's petition "ought to be set aside" and finally, and more appropriately, an order that the bankruptcy should be annulled under s 153B(1) of the Act on the grounds that it ought not to have been made. 8 Shorn of distractions and read beneficially, what Mr Szepesvary sought before the primary judge was that the bankruptcy be annulled and in doing so relied on a range of factors that he asserts would have been disclosed had proper inquiry been undertaken at the time he was made a bankrupt. Understandably, given that Mr Szepesvary is self-represented, the distinction between annulling rather than setting aside a sequestration order might be thought to be a distinction without a difference - but it is not. There are important legal and conceptual differences, none of which are necessary to mention for present purposes. 9 Given what was before the primary judge, the relevant task involved two stages: first, the Court needed to consider whether it was satisfied that the sequestration order "ought not to have been made"; and, secondly, if so satisfied, the question would then arise as to whether a discretion should be exercised to grant the relief: Re Williams (1968) 13 FLR 10 at 23 per Gibbs J (as his Honour then was); Re Deriu (1970) 16 FLR 420 at 421 per Gibbs J. 10 Before the primary judge, Mr Szepesvary's miscellany of complaints were directed to this first question of whether a sequestration order "ought to have been made". There was no difficulty with this, because in making this assessment of what ought to have occurred, a court can consider not only those facts upon which the sequestration order was made, but also those facts that would have been disclosed had a proper inquiry then been undertaken: Heinrich v Commonwealth Bank of Australia [2003] FCAFC 315 at [20] (per Carr, Finn and Sundberg JJ) citing Re Williams at 23. 11 Given that the primary judge was not satisfied that the sequestration order ought not to have been made, the circumstances did not call for his Honour to consider whether to exercise the discretion to grant the relief. 12 Having identified the issues before the primary judge, it is appropriate to turn to why his Honour did not reach this level of satisfaction and then turn to how it is that Mr Szepesvary contends that his Honour fell into error.

C The primary judge's reasons 13 The primary judge commenced his consideration by noting that the principal bases upon which Mr Szepesvary asserted that his bankruptcy should be annulled was that: (a) he did not receive a document entitled "Notice of Assignment of Debt" dated 6 October 2011 and addressed to him at his then current address (Notice), being a notice pursuant to s 134 of the Property Law Act 1958 (Vic) (PLA); (b) there was no "real debt" ever owed by him to ACM; and (c) he was not given notice of the hearing at which the sequestration order was made: see [9]-[10]. 14 After reviewing the evidence, the primary judge found that someone within Westpac had posted the Notice to Mr Szepesvary at his residential address on 6 October 2011. His Honour then found at [20]: It follows that Mr Szepesvary's contention that his bankruptcy should be annulled because he did not receive the [Notice] must fail, because there is no basis to conclude that the sequestration order ought not to have been made within the meaning of s153B(1) of the [Act]. 15 The primary judge then dealt with the remaining grounds of the application and said at [24]-[26]: First, Mr Szepesvary alleges that the Judgment Debt "is not founded on a real debt due or owing by me to ACM." That contention asks the court to exercise its discretion to "go behind" the Judgment Debt. In circumstances where no facts are alleged that would permit a finding that the debt was not a real debt, there is no "sufficient reason" to question whether there is, in truth, really a debt due to the petitioning creditor (see Ramsay Health Care Australia Pty Ltd v Compton (2017) 91 ALJR 803 at [37] per Kiefel CJ, Keane and Nettle JJ) Secondly, Mr Szepesvary says that he did not receive notice of the adjourned hearing at the Federal Circuit Court of Australia on 4 February 2014 at which the sequestration order was made. I do not accept that contention. Part of the evidence relied upon by ACM is an affidavit of service of a Ms Cindy Li deposing to the fact that she sent a letter to Mr Szepesvary at his residential address notifying him that the hearing had been adjourned from 3 December 2013 to 4 February 2014. I am bound to accept that unchallenged evidence. Lastly, Mr Szepesvary alleges "an abuse of process." No ground for such an allegation was ever put and I reject it. I also reject the contention that the assignment was "defective"' for the same reason. 16 His Honour then dismissed the application filed by the appellant with costs.

D Grounds of appeal 17 Like the application before the primary judge, the grounds of appeal are difficult to follow. 18 Added to this is the difficulty that they overlap, and all interrelate because they are all directed to the ultimate submission that the primary judge ought to have reached a level of satisfaction that the sequestration order ought not to have been made. A further problem arises because Mr Szepesvary entreated the Court below "to exercise its discretion to 'go behind' the Judgment Debt" (see [24]), when in truth the Court should have been asked to perform a logically distinct task: to form a view as to whether, if proper inquiry had been made in February 2014 (which on Mr Szepesvary's argument should have involved the Court hearing the creditor's petition going behind the default judgment), a sequestration order should have been made. 19 Although parts of the primary judge's judgment suggest that his Honour dealt with the application partly on the basis that his Honour was determining whether he himself would exercise a discretion to go behind the judgment (as if the primary judge was hearing the petition) rather than considering whether the Court hearing the petition in 2014 ought to have done so, this difference did not feature in any argument advanced on appeal and was not material to the ultimate conclusion of the primary judge that he was not satisfied that the sequestration order ought not to have been made. 20 Doing the best we can, it appears that the grounds of appeal can be summarised into three very broad headings, the first of which was the primary focus of the written and oral submissions on appeal: (1) The primary judge erred in failing to conclude that it would have been necessary for the bankruptcy court to have gone behind the judgment to ascertain whether in truth and reality a debt was owing to ACM, because, as a matter of law, there was no valid or effective assignment of the debts which formed the foundation of ACM's judgment debt (Grounds 6, 10 and 12); connected to the assertion that there was no valid or effective assignment of the debts which were said to have merged into the judgment, the primary judge made errors in the process of fact finding by: (a) finding that the Notice had been posted to Mr Szepesvary (Ground 7); (b) making a finding inconsistent with a finding made during an interlocutory hearing (Ground 8); (c) failing to give adequate weight to the affidavits and submissions filed by the applicant on 26 October 2016 (Ground 13); (d) failing to take sufficient account of reliable evidence which went unchallenged and unanswered and which was relied upon by Mr Szepesvary (Ground 9); and (e) failing to consider evidence of a counter claim or setoff (Ground 4) (No Debt Owing Contentions). (2) The primary judge erred in adopting a procedure at the hearing which: (a) allowed ACM to appear (Ground 5); (b) allowed ACM to participate at the hearing without filing a notice of appearance (Ground 1); (c) delayed the hearing to allow notice to be given to creditors (Ground 3); and (d) allowed ACM to rely on affidavit material filed immediately prior to, or on the day of, the hearing (Ground 2) (Procedural Error Contentions). (3) The primary judge erred in accepting evidence of notification of an adjourned hearing before the Federal Circuit Court provided by way of an affidavit of Ms Cindy Li (Ground 11) (No Notice of Hearing Contention). 21 As will be evident from the above, what is missing from this list is the suggestion that the sequestration order ought not to have been made because the presumption of insolvency arising from the non-compliance with the bankruptcy notice would have been displaced by other evidence, available as at February 2014, that Mr Szepesvary was solvent. The problem with such a case is that even if it had been run before the primary judge and Mr Szepesvary had proven his solvency as at February 2014, the financial catastrophe that thereafter ensued had meant that by the time the Court would be required to exercise any discretion under s 153B of the Act, he had become insolvent. Although this is part of the reason why this case is troubling, there was no error in the primary judge not considering such a case and the evidence is, in any event, incomplete. 22 It is convenient then to deal with all grounds of appeal that were advanced by reference to the categories identified above.

E No debt owing contentions 23 The primary argument advanced by Mr Szepesvary (described in his outline of submissions as the "substantive controversy") was whether in truth or reality he was ever indebted to ACM. This argument, put into recognisable legal terms, is that the primary judge should have been satisfied that if proper inquiry had been made at the time of the hearing of the sequestration order, the bankruptcy court should have gone behind the judgment debt to ascertain whether in truth and reality a debt was owing to the petitioning creditor. 24 The argument has as its premise the notion that a proper inquiry would have reached the conclusion that the Notice was invalid as effecting the assignment and that a valid legal assignment failed. If there was no valid legal assignment, the argument goes, then there was no legal right on behalf of ACM to collect the debts the subject of the judgment debt. This argument has, in effect, two aspects: legal aspects concerning the form of the Notice; and factual contentions relating to its provision to Mr Szepesvary.

E.1 Legal Arguments as to Invalidity 25 The Notice, sent by Westpac, was in the following terms: 6th Oct 2011 MR AARON SZEPESVARY [then current address] Dear MR AARON SZEPESVARY Account Type: MCD Account Number: [redacted] Account Balance: $10,489.29 NOTICE OF ASSIGNMENT OF DEBT Notice is hereby given to you that Westpac Banking Corporation ABN 33 007 457 141 trading under its own name and as Bank of Melbourne and/or Challenge Bank, including its subsidiaries and related bodies corporate (individually and collectively referred to as "Westpac Banking Group") has assigned to ACM Group Ltd ABN 86 127 181 097 all its legal and beneficial right, title and interest in and to the Debt. Accordingly, you are hereby directed to pay the Debt to ACM Group Ltd or as it may in writing direct. Please ensure all payments are made directly to ACM Group Ltd Level 3, 287 Elizabeth St, Sydney NSW, 2000, whose phone number for all enquiries is [redacted]. For the purposes of this Notice of Assignment, the Debt means any amount owing or to become owing by you to Westpac Banking Group in connection with the above account on or after the date hereof including all interest, credit and other charges payable by you to Westpac Banking Group pursuant to the Agreement between you and Westpac Banking Group and (where legal proceedings have been commenced against you and a Court Judgment has been obtained against you) includes the balance of any Judgment Debt also obtained. [signed] Collections Team 26 In addition to the assertion that the Notice was not received (to which we will return below), a number of related assertions were advanced in the written submissions: (a) that the "Agreement" referred to in the Notice did not accompany the Notice nor has any document answering that description been filed in relation to his bankruptcy; (b) that the Notice without the accompanying Agreement does not demonstrate that the debt was transferrable and does not establish that the assignment was effective; (c) that the assignment was not "an absolute assignment but an assignment conditional to the Agreement"; and (d) that there was no evidence that the assignee consented "to the arrangement between the assignor … and the debtor". 27 These propositions are misconceived for a number of reasons but in order to explain why that is so, it is useful to commence by stating some basal but important principles relating to assignments: (1) at common law, a chose in action in debt (such as that referred to in the Notice) was not assignable at law because it involved maintenance: see Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 26-27; (2) a legal chose in action could be assigned in equity but before the passing of s 25(6) of the Judicature Act 1873 (UK) (the progenitor of s 134 of the PLA) the assignee was required to join the assignor to proceedings as either a plaintiff or a defendant to maintain a claim: Vandepitte v Preferred Accident Insurance Corp of New York [1933] AC 70; (3) it was against this legal and procedural background, that statutory assignment of choses in action arose, including the statutory assignment of legal choses in action such as debts at law (such as is said to be constituted by the Notice); (4) the giving of notice to a debtor is not, of course, essential to the validity of an assignment of a debt in equity, but is essential for a valid assignment at law: see s 134 PLA; (5) a purported assignment for value of a legal chose in action (such as a debt) which is ineffective at law, will nevertheless effect a valid equitable assignment when the consideration is paid or executed: Holroyd v Marshall (1862) 10 HLCas 191; this will include circumstances where the legal assignment fails by reason of a want of communication to the debtor in accordance with the statutory requirements; and (6) the equitable assignee of a legal chose in action such as a debt cannot, however, by an action at law, maintain a claim in debt because the legal estate remains with the legal owner and it would be necessary for the legal owner to be a party to the proceedings seeking recovery (and nothing about the procedural fusion of law and equity occasioned by the Judicature Act reforms affects this fundamental requirement): see J D Heydon, M Leeming and P G Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th ed, 2015) at [6-520]. 28 When these principles are understood, and as can be seen from the terms of the assignment, all the contentions of Mr Szepesvary are based on false premises including the misunderstanding, to which we will return, that if there had not been a valid assignment at law that this would mean there was no relevant debt owing by Mr Szepesvary. 29 The first misunderstanding (which appears in the written submissions but seemed not to be pressed orally) is that there was something more in the arrangements between Westpac and ACM that needed to be disclosed. To the extent it was still pressed, it can be dealt with shortly. Whatever the arrangements between Westpac and ACM, the debts being assigned were all debts owing at the date of the assignment which were payable by Mr Szepesvary to Westpac "pursuant to the Agreement between you and Westpac". The "Agreement" referred to in the Notice was not a reference to any underlying factoring arrangements between the assignor Westpac and the assignee ACM, but rather the agreement between the debtor Mr Szepesvary and the creditor Westpac which constituted the legal basis upon which it was said that the debt was owing and further obligations would accrue such as interest and other charges. 30 The assignment of Mr Szepesvary's debt constituted an assignment of a present legal chose in action including the entitlement to receive interest or other charges payable pursuant to the Agreement in the future. As explained above, this assignment was only valid at law if notice in accordance with s 134 of the PLA occurred; however, given it was never in dispute that the assignment was given for consideration, the assignment was nevertheless valid in equity irrespective of such notice being given. 31 It was not necessary, as Mr Szepesvary contends, for the Notice to be accompanied by the Agreement referred to in the Notice (which, as explained above, was the underlying contract between banker and customer); all that was required for a legal assignment was notice to be given in accordance with the PLA; and this is what occurred in the event that the Notice was sent and received (a fact the primary judge found and is addressed below). 32 Nor is there any substance in the contention that the assignment was in some sense conditional (which it was not in terms) or that there was some problem in a want of evidence that the assignee ACM consented "to the arrangement between the assignor … and the debtor". Apart from the fact that an assignment can occur either at law or in equity without communication to the assignee (Grey v Australian Motorists & General Insurance Co Pty Ltd [1976] 1 NSWLR 669), even if it mattered, which it does not, there is no suggestion that ACM was unaware of the assignment.

E.2 Alleged Factual Error Regarding Notification 33 It is then necessary to turn to the primary argument advanced to which several of these grounds (Grounds 7, 8 and (semble) 13) relate: that the primary judge erred in finding that the Notice had been sent and received. 34 The question of whether there had been a valid legal assignment turned on this finding of fact: that the Notice had been given to Mr Szepesvary at his residential address shortly after 6 October 2011. Although we agree that the evidence establishes that the Notice had been sent and received, that does not mean that there were not issues that arose in relation to how that fact was found by the primary judge. 35 As will be discussed further below in relation to the Procedural Fairness Ground, the affidavit material relied upon by ACM to prove that notice was given, being an affidavit of Mr Curtis, was served on the day of the hearing. His Honour noted that he had read this affidavit and reference was made by counsel appearing on behalf of ACM to the fact that they "relied" upon it. Despite this, it was not formally read and no occasion arose where the primary judge asked whether there were any objections to the affidavit or whether Mr Curtis was required for the purposes of cross-examination. Without seeking to be formalistic, this was perhaps less than ideal as it did not bring home to the litigant in person the occasion to raise objection to the late service and content of the evidence of Mr Curtis. 36 This might be thought to have some significance because the key part of the affidavit of Mr Curtis was, on its face, inadmissible. Mr Curtis, who had no personal knowledge of the asserted fact, deposed that: Westpac prepared a letter notifying the Applicant of the Assignment which was dated 6 October 2011 addressed to [the appellant's then address] ([Notice]). Now shown to me and marked 'DC-1' is a copy of the [Notice] notifying the Applicant of the Assignment dated 6 October 2011. 37 Mr Curtis was a manager of a section of the Bank that had access to the books and records of Westpac. He was not the person who was responsible for sending the Notice nor did he give conventional "usual practice" evidence that one would expect to be given in an attempt to prove posting if the person who sent the Notice could not be called. Despite this, the Notice was annexed and plainly was admissible as falling within the business record exception to the hearsay rule provided for by s 69 of the Evidence Act 1995 (Cth) (EA). Also admissible, pursuant to s 69, was a document said to be a "screen shot" taken the day before from Westpac's internal computer system which recorded a "Notice of Assignment" referable to the customer file of Mr Szepesvary. Again, however, this material was accompanied by the plainly inadmissible evidence of Mr Curtis that it "verif[ied] that the [Notice] was sent by Westpac to the Applicant on 6 October 2011". 38 One might think none of this mattered except for two things: first, the "screen shot" annexed showed Mr Szepesvary's current address in Essendon rather than the address to which the Notice was allegedly sent on 6 October 2011; and secondly, the applicant gave sworn evidence that he did not receive the Notice. 39 Accordingly, when it came to determining the fact in issue as to whether or not the Notice had been posted, the following admissible evidence was before the Court: (a) the Notice which was properly addressed; (b) a business record being the "screen shot" which in addition to showing the current address of Mr Szepesvary also noted that a "Notice of Assignment" had been recorded on the customer file on the relevant date; (c) a further business record (annexed to the affidavit of Mr Trent Vieira affirmed on 12 December 2017 which exhibited "TMV-5") being Westpac's "notes relating to the applicant's credit account which lists the date of 6/10/2011 with the reference 'Notice of Assignment of Debt' (L9990)"; (d) Mr Szepesvary's sworn evidence in chief that he did not receive the Notice, including evidence that Mr Szepesvary had three letter boxes, including one fashioned from an ice cream container and that mail was sometimes delivered to his neighbour in error; and (e) the cross-examination of Mr Szepesvary where the evidence in chief on this topic was challenged. 40 The way that his Honour resolved this factual controversy was to refer to the prima facie presumption of fact that "an envelope addressed and posted and not afterwards returned reached its destination in the ordinary course": Leveraged Equities Ltd v Goodridge [2011] FCAFC 3; (2011) 191 FCR 71 at 119 [399] per Jacobson J (Finkelstein and Stone JJ agreeing). His Honour also referred to the s 160(1) EA presumption which at the time of judgment provided that "it is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia … was received at that address on the fourth working day after having been posted". 41 At [17], the primary judge stated that the "evidence presented in Mr Curtis' affidavit supports a finding that the Notice of Assignment was indeed addressed and posted which, in turn, is sufficient to enliven the presumption". Having referred to the presumptions, his Honour at [19] said the following: There being no evidence adduced to raise any sufficient doubt about the presumption, I am therefore satisfied on the evidence of Mr Curtis that someone on Westpac's behalf posted the [Notice] to Mr Szepesvary at his residential address on 6 October 2011 and that it was delivered accordingly. 42 It is important to emphasise that there are two matters which need to be kept separate. The first is the finding of fact as to whether an article had been posted; the second factual enquiry is whether an item proven to have been posted, has, as a matter of fact, been received by the addressee. The presumptions to which his Honour referred related to the second of these matters, not the first. The question of whether the item was posted is not resolved by the application of a presumption and ascertaining whether there is evidence sufficient to displace the presumption, but rather, by an analysis of the matters in evidence which were adduced to prove posting. This included, naturally enough, the evidence given by Mr Szepesvary as to non-receipt which, through a process of inferential reasoning, could rationally indirectly affect the assessment of the probability of the anterior fact in issue as to posting: see s 55(1) EA. 43 Read in the context of [17], his Honour understood the distinction between these two matters. In any event, the evidence constituted by the two business records and the existence of the properly addressed Notice itself, establish that it was more likely than not that the Notice had been posted to Mr Szepesvary at his correct address on or about the date of the Notice. Having made that anterior finding, the presumptions then have work to do. As Holroyd J explained in Cushing v The Lady Barkly Gold Mining Company Registered (1883) 9 VLR (Eq) 108 at 122: The presumption that a letter properly addressed, stamped and posted, and which is not returned to the writer, arrived at its destination, is conclusive if not denied, and so strong that mere non-recollection would be insufficient to outweigh it. 44 The belated, unlikely and challenged evidence of Mr Szepesvary of non-receipt, is insufficient to displace the presumption of receipt. Accordingly, we agree with the ultimate conclusion of the primary judge that the Notice was sent and received. It follows the assignment was valid at law.

E.3 Any Invalid Legal Assignment May Not Matter in any Event 45 A difficulty with the argument of Mr Szepesvary is that, even if the primary judge had fallen into error when finding that receipt of the Notice occurred, on analysis, this probably does not go very far. 46 It will be recalled that the whole purpose of ascertaining whether there was a valid legal assignment was the suggestion that if there was no valid legal assignment, there was no debt owing to ACM in "truth or reality" and this would have been discovered had the bankruptcy court, at the time of the hearing of the sequestration order, gone behind the judgment. This argument, however, is based on a misunderstanding of how assignments of choses in action operate. It is necessary to explain this in a little detail. 47 As was noted at [27] above, an application of the maxim that equity regards as done that which ought to be done is that an ineffective legal assignment for value of a debt will constitute an equitable assignment. At [22] of the primary judge's reasons, his Honour noted it was unnecessary for him to consider the proposition that "ACM was entitled as the equitable assignee to bring an action in damages against Mr Szepesvary" in the event that there was no legal assignment. Although we agree that it was unnecessary for the primary judge to deal with such a proposition, if it had been necessary such a notion would be rejected as it would amount to a version of the fallacy that the procedural fusion of law and equity occasioned by the Judicature Act reforms somehow operates so as to allow an equitable assignee to sue at law for recovery of a debt when the legal owner of the debt remained the assignor: see J D Heydon, M Leeming and P G Turner, Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th ed, 2015) at [6-520]. 48 As a practical matter, the issue could easily be solved by completing the formalities of notice thus rendering the legal assignment effective. Alternatively, an assignee in equity, at least in theory, could have sought to recover the amount outstanding, but to do so the assignee would have been required to bring the proceedings in the name of the legal owner after providing the legal owner with an indemnity for costs or, failing that, otherwise joined the legal owner as a defendant (while again providing a costs indemnity). 49 When this is appreciated, it must follow that a court exercising its s 153B discretion to annul would need to take into account the reality that the debt exists and has been assigned in equity notwithstanding a failure to comply with the formalities of legal assignment. Depending upon the circumstances, this might be a decisive factor in the exercise of discretion given the fact that the amount is owing which is relevant to the issue of solvency. 50 In making these comments we are aware of the decision of Jessup J in Ozdil v Vrsecky (Trustee) [2016] FCA 881. In that case Ms Ozdil (who assisted Mr Szepesvary both below and in this appeal as his next friend) had her bankruptcy annulled after providing uncontested evidence that she was never served with a notice of assignment of a debt. The debt was purportedly assigned by Westpac to another debt collector, Baycorp Collections PDL (Australia) Pty Ltd (Baycorp) pursuant to a deed. After a default judgment was entered, Ms Ozdil was served with a bankruptcy notice which, following non-compliance, led to a sequestration order being made. After some delay, she relevantly sought an annulment of her bankruptcy pursuant to s 153B. Given her unchallenged evidence, Jessup J found that she had not been served with a notice of assignment from Westpac to Baycorp. His Honour also concluded that the sequestration order would not have been made had the Federal Circuit Court been aware that Ms Ozdil had not been provided notice of the assignment of debt. In granting the annulment, Jessup J concluded that proper legal notice of an assignment of debt struck "so fundamentally at the intrinsic merits of the case for the sequestration of her estate as to persuade" the Court to use its discretionary power to annul her bankruptcy: at [16]. 51 In exercising his statutory discretion, it appears his Honour was not assisted by any argument along the lines of there being a valid equitable assignment and his Honour appears to have taken into account a finding at [14] that the debt upon which Baycorp relied "was an alleged debt which did not exist". As the primary judge recognised, Ozdil v Vrsecky can be distinguished on the facts because of the finding as to a want of notice, but the apparent failure to draw to Jessup J's attention the continued existence of the debt and the fact of the valid equitable assignment of the relevant debt meant that these matters were evidently not considered by his Honour in the exercise of his discretion.

E.4 Further Miscellaneous Arguments 52 As noted above, there were three further miscellaneous arguments advanced as to why the No Debt Owing Contention had substance. 53 Ground 8 was a contention that the primary judge made a finding inconsistent with a finding made during an interlocutory hearing. This ground was undeveloped and appears to relate to the issue of service and has been dealt with above; if it does not, it is not readily comprehensible. Ground 9 was as follows: The transfer judge [sic] erred in drawing of inferences at [22] that ACM was entitled as the equitable assignee to bring an action in damages in circumstances where that credibility was undermined by other evidence unchallenged, unanswered and ostensibly reliable. 54 The ground fails at the outset. There was no such finding. 55 Finally, the assertion was made that his Honour erred by failing to consider evidence of a counter claim or set-off (Ground 4). This also rests upon the foundation that there was not a valid assignment leading to a judgment obtained "falsely or misleadingly". The only suggested counter claim or set-off was that referred to by Mr Szepesvary in his affidavit sworn on 21 October 2016 in which he indicated that the judgment debt should, in effect, be wiped out by a counter claim because the judgment was obtained on a false or misleading basis. Stating the proposition this way indicates why it has no substance. The real question was whether or not his Honour should have been persuaded on the annulment application that the sequestration order should not have been made because the bankruptcy court should have gone behind the judgment. That was an enquiry which had nothing to do with principles of counter claim and set-off.

F Procedural fairness contentions 56 First, Mr Szepesvary makes a complaint that ACM as the petitioning creditor became a respondent and was allowed to participate in the proceedings having not filed a notice of appearance. It is difficult to understand why this would matter but, in any event, it is misconceived on the facts, as on 28 November 2017 a notice of appearance was filed. 57 Secondly, the complaint is made that the primary judge failed to afford procedural fairness by accepting from ACM affidavits filed immediately prior to, and at, the final hearing contrary to a previous order made by the primary judge. This requires closer examination. 58 On 27 November 2017 the primary judge had made an order that by 4pm on 11 December 2017, ACM file and serve any affidavit, submissions or other material upon which it intended to rely at the final hearing which had been set to resume on 13 December 2017. As it happened, two affidavits (those of Ms Fahey and Mr Vieira) were filed a day late and the important affidavit of Mr Curtis was provided to Mr Szepesvary on the same day as the hearing. 59 It is important to note in this context that the application had previously been called on for hearing on 26 July 2017 and the hearing on that date was adjourned to a date to be fixed to allow Mr Szepesvary time to consider the submissions filed by ACM the afternoon before and to allow time for the finding of pro bono legal assistance. The matter next came before the primary judge on 27 November 2017. When the matter was called on, his Honour enquired whether anything had changed since the submissions that had been filed by ACM on 25 July 2017. His Honour asked Mr Szepesvary whether there was anything he wished to say in support of his application. It was at this time that the issue of the non-receipt of the Notice was first raised in such a way as to allow counsel for ACM to understand the point being taken and to reach the (understandable) conclusion that in the light of this argument he would need to cross-examine and lead evidence to address the point. This was drawn to the attention of the primary judge and the order that ACM file and serve any affidavit, submissions or other material on 11 December 2017 was accordingly made. 60 In oral submissions, Mr Szepesvary placed great emphasis on the fact that he had been denied procedural fairness by the late service of the affidavit of Mr Curtis in particular. We have already discussed the difficulties with the admissibility of the affidavit evidence of Mr Curtis. The primary judge faced a number of challenges in dealing with the disjointed and misdirected way that Mr Szepesvary presented his case. The transcript records the lengths that his Honour went to in order to try to understand Mr Szepesvary's case. Despite this, we consider it would have been preferable if his Honour had at least indicated to Mr Szepesvary that he had a right to object to the evidence of Mr Curtis and to also require Mr Curtis to appear for the purposes of cross-examination if Mr Szepesvary so wished. 61 Having said this, the point is of no real moment. As we have explained, the affidavit evidence of Mr Curtis was both inadmissible and unnecessary in reaching the conclusion that the Notice had been posted. Even though the business records were provided to Mr Szepesvary otherwise than in accordance with the court orders, there could have been no basis for Mr Szepesvary to challenge the provenance and authenticity of the business records. Accordingly, this point goes nowhere at the end of the day. 62 The two final Procedural Fairness Contentions were that the primary judge erred in allowing ACM to appear (Ground 5) and that his Honour delayed the hearing to allow notice to be given to creditors (Ground 3). Neither point was developed nor do they have any substance. ACM was a proper party, his Honour did not relevantly "delay" the hearing, and there is no issue as to notice being given to creditors.

G No notice of hearing contention 63 A final factual dispute arises in relation to Ground 11 and the finding that Mr Szepesvary was given notice of the adjourned hearing of the Federal Circuit Court on 4 February 2014 at which the sequestration order was made. Of course, the allegation that Mr Szepesvary did not receive notice of the hearing was a further matter relied upon to support the ultimate submission that the sequestration order should not have been made. 64 Mr Szepesvary had given evidence that he was unaware of that hearing. At least at first glance, such a contention might be thought to have some substance given the extraordinary circumstances in which the then solicitors for ACM served a document which purported to change the address for service of Mr Szepesvary to ACM's solicitors' office. Mr Szepesvary made much of this and attributed malign motives to the filing of the erroneous document, although there is no reason to think that this admittedly not insignificant error was caused other than by a mistake. Although this explains why Mr Szepesvary received no notice of the adjourned hearing date from the Court (it likely having been sent to ACM's solicitors' address), notification can occur in other ways, and his Honour rejected Mr Szepesvary's evidence that he was unaware and found at [25] as follows: … Part of the evidence relied upon by ACM is an affidavit of service of a Ms Cindy Li deposing to the fact that she sent a letter to Mr Szepesvary at his residential address notifying him that the hearing had been adjourned from 3 December 2013 to 4 February 2014. I am bound to accept that unchallenged evidence. (emphasis added) 65 It is correct that if a witness gives evidence that is not inherently incredible and it is unchallenged, then ordinarily a tribunal of fact will accept it: see Precision Plastics Pty Limited v Demir (1975) 132 CLR 362 at 370-371 (per Gibbs J, Stephen J agreeing and Murphy J generally agreeing). The difficulty was that Ms Li was not a witness. It was, with respect, incorrect for his Honour to conclude that he was bound to accept her unchallenged evidence. The difficulty arises this way: an affidavit by Rebecca Fahey dated 12 December 2017 had been served on Mr Szepesvary the day before the hearing. That affidavit relevantly deposed, again inadmissibly, that Ms Cindy Li, a junior legal administrator, had sworn an affidavit of service in which she had deposed that on 6 December 2013 she had sent a letter to Mr Szepesvary advising him that the hearing of the petition had been scheduled for 4 February 2014. 66 Instead of Ms Li's affidavit being read, ACM adopted the heterodox approach of seeking to adduce into evidence Ms Li's affidavit as an exhibit to the affidavit of Ms Fahey. 67 Exhibit 'RMF-4' did include, however (as an annexure to the affidavit of Ms Li), a copy of a letter from the then solicitors for ACM to Mr Szepesvary on 6 December 2013. Such a document was clearly a business record and was able to be tendered but it is not, with respect, accurate to proceed on the basis that Ms Li was a witness. Indeed, Ms Li was not even the author of the letter - it was signed by a paralegal Ms Callejan. The only apparent way of Mr Szepesvary "challenging" this evidence would have been for him, when served, to issue a request under s 167(a) of the EA for ACM to call Ms Callejan as a maker of representations contained in the business record being the letter of 6 December 2013 and then cross-examine her. It might be somewhat of an understatement to state that this unusual course was unlikely to have been one evident to a self-represented litigant. 68 Although, with respect, his Honour was in error in resolving this aspect of the controversy on the basis that he was bound to accept the unchallenged evidence of Ms Li, it was open to his Honour to reject the evidence of Mr Szepesvary and find that the copy of the letter in evidence from the solicitors' file was sufficient to justify the conclusion that it was more likely than not that the letter had been posted and, according to the presumption to which we have already referred, it was received by Mr Szepesvary. Moreover, even if we were wrong in this regard, Mr Szepesvary found out about his bankruptcy soon thereafter and his delay in seeking an annulment on this ground for well over two years creates insuperable difficulties in justifying the exercise of a discretion in his favour under s 153B of the Act in any event. 69 Before leaving this point we should, for completeness, deal with an argument raised by Counsel for ACM that it was open to the primary judge to act on the evidence because it was "on the file". It suffices to say that this submission is not the way affidavit evidence is adduced and this regrettable informality in approach adopted by ACM appears to have contributed to the evidentiary difficulties to which we have made mention.

H Orders 70 For these reasons, whatever the problems with the process which had originally resulted in a potentially solvent man being bankrupted, there is no substance in any of the grounds of appeal advanced and no error in the primary judge's orders which is sufficient to require the Court to intervene. The appeal must be dismissed. 71 Mr Szepesvary has now emerged from his bankruptcy. We have not been addressed on the issue of costs, nor are we aware whether in all the circumstances ACM presses for a costs order. In the event that ACM does make an application for costs, it should do so within seven days. Mr Szepesvary should have the opportunity of responding and the Court will thereafter determine the issue of costs on the papers. I certify that the preceding seventy-one (71) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Perry, Moshinsky and Lee.