Vitzdamm-Jones v Vitzdamm-Jones

Federal Court of Australia|1987-10-29|Before: Fisher J, Adam P, Beaumont J, Gummow J

The applicant submits that the sequestration order ought not to have been made, both for failure to serve process upon him personally, as required by Rule 15 of the Bankruptcy

Rules, and by reason of the circumstances in which he was

extradited to Australia in 1985 and thereafter treated here.

Upon the making of a sequestration order against the estate of the debtor, the debtor becomes a bankrupt and, by force of sub-s. 43 (2) of the Bankruptcy Act, continues to be so until he is discharged by force of s. 149, he 15 discharged by order of the Court, or the bankruptcy is annulled under s. 154 or on approval of a composition or scheme of arrangement under s. 74. Where a sequeStration order ought not to have been made, for example, because the bankruptcy notice and petition had not been served, and the order has been entered, the appropriate remedy is to apply under s. 154: Re Anasis; Ex

parte Total Australia Ltd. (1985) 63 ALR 493 at 499-500 per

The nature of proceedings under sub-s. 154 (1) such as the present was described by Gibbs J. (as he then was) in Re

In determining the question whether the sequestration order ought not to have been made, the Court 1s entitled to consider not only the case as disclosed at the time the order was made, but as it would have been disclosed had all the true facts been before the Court on the making of the order (Re Cook (1946) 13 ABC 245 at p. 259). If the Court 1s satisfied that the order ought not to have been made, it 1s not bound as a matter of course to annul the order, but must consider in the light of all the circumstances of the case whether the order ought to be annulled (Delph Sing v Wood (1918) 25 CLR 497 at pp. 8-499; Re Lawson (1939) 11 ABC 137 at p. 139).

The "true facts" which are considered 1n deciding whether the sequestration order ought not to have been made include those now known then to have existed, but exclude those facts which have occurred since the order was made: Re Scott (1975) 6 ALR 558 at 559. An order refusing an application under sub-s. 154 (1) ais anterlocutory rather than final in character: Re

Hedrlin; Ex parte Donnelly (Full Court, 29 October 1987).

The applicant was born in New Zealand on 7 February 1951. He lived in Australia between 8 August 1979 and 5 July 1982. He did not return to Australia until 23 October 1985. On 11 or 12 March 1985, he was arrested at Ludwigsburg in the Federal Republic of Germany ("Germany"), apparently on a complaint following failure to pay certain hotel expenses incurred by him in that country. On 3 July 1985, the applicant was given a twelve months suspended sentence and

ordered to pay the hotel expenses plus court costs.

By requisition dated 8 July 1985, the Attorney-General

for the Commonwealth sought the extradition to Australia of the

applicant from Germany. In the requisition, the Attorney-

. conspiring to defraud the Commonwealth of Australia contrary to paragraph 86 (1) (e) of the Crimes Act 1914 (3 counts);

conspiring to prevent or defeat the execution or enforcement of a law of the Commonwealth, to wit, the Income Tax Assessment Act 1936 contrary to

paragraph 66 (1) (b) of the Crimes Act 1914 (3 counts);

. entered into a transaction for the purpose of securing that a company would be likely to be unable to pay future income tax payable by the company contrary to sub-sections 5 (2) and 13 (1) of the Crimes (Taxation Offences) Act 1980 (6 counts).

The twelve warrants for the apprehension of Mr. Ditfort on

The applicant was returned to Australia on 23 October 1985. The Assistant Director of Custodial Services at the Long Bay Correctional Centre has certified that the applicant was in custody at that institution from 23 October 1985 to 22 December 1986, when he was discharged on bail. The Assistant Director has also certified that the applicant was held on the twelve charges referred to in the Attorney-General's requisition. Mr. Ditfort gave evidence on the present application that on his arrival in Sydney on 23 October 1985, he was taken before a magistrate, charged on the twelve counts I have described, and remanded in custody for seven days. However, he says he was taken by police to the Metropolitan Remand Centre, Malabar, "to serve seven days for ... alleged

also indicates that there was an appearance on behalf of the

On 22 December 1986, Mr. Ditfort was admitted by the Supreme Court of New South Wales to bail on terms that he surrender his passport pending completion of the hearing of the

On 10 June 1987, the Supreme Court disposed of an application by Mr. Ditfort seeking a permanent stay of the Proceedings against him on six charges of entering into arrangements to avoid payment of income tax contrary to the provisions of the Crimes (Taxation Offences) Act 1980. The trial on these six charges had been fixed to commence on 27 July 1987. By this stage, 1t had been determined that the prosecution would not proceed on the remaining six charges,

In support of the application for permanent stay, reliance was placed upon allegedly false or misleading statements made by the Australian Government to the German Government, that, if the accused were extradited, the Australian Government would grant similar requests for extradition if sought by the German Government of the Australian Government. Finlay J. dismissed the application on the ground that any such statement made by the Australian Government to the German Government in support of its request for extradition of the accused, was a statement made in the

exercise of its prerogative powers as to the conduct of foreign

A warrant dated 23 October 1985, directed to the Keeper of the Prison at Metropolitan Remand Centre, Malabar, states that the applicant was on that day charged before Mr. Webb SM with "conspiracy to defraud" and commands the prison authorities to receive the applicant into custody at the prison and to keep him there until 30 October 1985. The applicant appears further to have been remanded on the same footing on 30 October and 14 November. The documentary evidence produced on subpoena to the prison authorities also indicates that on 23 October 1985 the applicant was arrested and lodged in the cells at the Central Police Station "en route to the Metropolitan Reception Prison, Malabar" on a number of warrants of commitment on convictions for parking offences under New South. Wales law. There were eight such warrants in respect of offences in 1980, 1981 and 1982; the warrants had been issued in November 1980, July 1981, May, July and December 1982, and in January and February 1983. The maximum period of

imprisonment specified in any of the warrants was seven days.

On 29 July 1982, that is to say more than three weeks after the applicant had left Australia, the Deputy Commissioner of Taxation recovered a default judgment in the District Court at Sydney against the applicant. The Deputy Commissioner recovered $12,319.03 on his claim and $23.00 for costs. On12 May 1988, in the course of his submissions in reply on the present application, Mr. Ditfort said that he conceded there probably was that debt. On 5 May 1986, that 1s to say after the return of the applicant to Austral1a and whilst he was in

custody awaiting trial, a bankruptcy notice issued out of this

Court on application of the Deputy Commissioner of Taxation. It was based on the District Court default judgment and claimed a debt which with interest up to 12 March 1986 totalled $16,815.58. The proceedings in this Court went forward on the footing that the bankruptcy notice had been duly served on Mr. Ditfort at the Remand Centre at Malabar on 30 September 1986. The events on that day are a matter of debate in the present

proceedings, and it will be necessary to return to them.

On the basis that the bankruptcy notice had been served on 30 September, a bankruptcy petition was presented on 29 October 1986. The Deputy Commissioner relied for the act of bankruptcy on the failure of the debtor on or before 14 October to comply with the bankruptcy notice served on 30 September 1986. The petitioner now claimed a debt for a much larger sum, viz. $709,559.78, than that represented by the judgment debt and interest. The increase was attributable to sums claimed for income tax for the years ended 30 June 1981 and 30 June 1982, together with additional tax for late payment. On the present application, Mr. Ditfort strongly protested the merits of the assessments on which this increase was based, but there was no evidence enabling me to express any concluded view on that subject. I would, however, refer to what appears below in dealing with the adjournment application

Paragraph 43 (1) (b) of the Bankruptcy Act empowers the Court on the petition presented by a creditor to make a

sequestration order against the estate of the debtor if, inter

proceedings, and it will be necessary to return to them.

Paragraph 43 (1) (b) of the Bankruptcy Act empowers the Court on the petition presented by a creditor to make a

sequestration order against the estate of the debtor if, inter

alia, at the time when the act of bankruptcy was committed, the

debtor "was personally present or ordinarily resident in Australia". The petition stated in paragraph 1 that at the date of the commission of the act of bankruptcy (1.e. 14 October 1986), the debtor was ordinarily resident in Australia. It was conceded in the course of addresses on the present application for annulment that on 14 October 1986 Mr. Ditfort was not ordinarily resident in Australia. It follows that the affidavit verifying the petition was incorrect. However, 1t was urged at the hearing of the application for annulment that Mr. Ditfort was personally present in Australia on 14 October 1986 and that pursuant to sub-s. 33 (1) of the Bankruptcy Act the Court might even at the present stage allow an amendment of the petition. It will be necessary to return to this aspect

On 20 November 1986, Mr. Nicholas Harmanis, an employee of the Australian Taxation Office, made an affidavit in which he deposed to the service of the petition and supporting documents on Mr. Ditfort on Monday 17 November 1986 at 11.35 o'clock in the forenoon. Service was stated to have taken place at the Long Bay Remand Centre, Malabar. Again, the events of 17 November were in controversy on the hearing of the

As I have stated, on 15 December 1986, a sequestration order was made in respect of the estate of Mr. Ditfort by Jackson J. The Court file bears the notation "No appearance

of or on behalf of Debtor on name being called". The file

also indicates that there was an appearance on behalf of the

On 22 December 1986, Mr. Ditfort was admitted by the Supreme Court of New South Wales to bail on terms that he surrender his passport pending completion of the hearing of the

On 10 June 1987, the Supreme Court disposed of an application by Mr. Ditfort seeking a permanent stay of the proceedings against him on six charges of entering into arrangements to avoid payment of income tax contrary to the

provisions of the Crimes (Taxation Offences) Act 1980. The

trial on these six charges had been fixed to commence on 27 July 1987. By this stage, it had been determined that the prosecution would not proceed on the remaining six charges,

exercise of its prerogative powers as to the conduct of foreign

affairs and for that reason would not be examined by the

On 27 February 1987, Mr. Ditfort (who had been on bail Since 22 December 1986) had completed a verified statement of affairs, pursuant to s. 54 of the Bankruptcy Act. Mr. Ditfort had not commenced any proceeding to have the sequestration order annulled. On the affidavit verifying the statement, Mr. Ditfort wrote, "I have no assets other than my personal clothing and unknown liabilities". In Part II of the statement, he wrote words to the effect that his unsecured creditors comprised the Commissioner of Taxation for a taxation debt of an unknown amount contracted 1980-1982. By notice dated 10 April 1987, Mr. Ditfort's examination under s. 69 of the Bankruptcy Act was fixed to commence before a Deputy

On 19 June, he appeared with the counsel who had appeared for him in the Supreme Court. Counsel sought an

adjournment, inter alia, on the basis that on his instructions

the debts that were the subject of the creditor's petition were substantially the sums of money that related to the transactions, the subject of the charges under the Crimes (Taxation Offences) Act 1980, to be heard at the trial set down to begin on 27 July 1987, so that matters would be canvassed in the s. 69 examination which would bear on the charges. The second ground seeking the adjournment was stated to be that Mr. Ditfort had applied for legal aid in relation to a proposed

application to annul the bankruptcy. Mr. Ditfort was examined

briefly and said he believed the last year he had lodged a tax return was for the year ended 1981. The examination was

The trial proceeded as fixed on 27 July 1987, and on 17 August 1987, Mr. Ditfort was found guilty on four of the six charges of offences against the Crimes (Taxation Offences) Act 1980. He was acquitted on the other two charges. He was subsequently sentenced. On 22 October 1987, the examination under s. 69 of the Bankruptcy Act resumed; Mr. Ditfort by then had been released from prison. The proceedings were adjourned until 20 November 1987, and on that day the examination was adjourned generally. The present application for annulment was, as I have indicated, filed on 19 November

It is necessary now to refer 1n some greater detail to certain of the events surrounding the extradition of Mr.

On 18 March 1985, (that is to say a week after Mr. Ditfort's arrest in Germany, and the day before the issue of the twelve warrants), the Australian Embassy in Bonn sent note verbale No. 13/85 to the German Ministry of Foreign Affairs. The note included the following:

The Government of Australia proposes to make a formal request for the extradition of Mr Grant Anthony Ditfort for an offence of conspiring to defraud the Commonwealth of

Australia. To permit the authorities of the Federal Republic of Germany to take the

necessary action pursuant to the law of the Federal Republic of Germany in connection with the proposed request for the extradition of Ditfort, the Government of Australian hereby undertakes to take the necessary legislative action to apply the Extradition (Foreign States) Act 1966 to the Federal Republic of Germany in the event that the Federal Republic of Germany requests the extradition of a fugitive from Australia prior to the coming into force of the Treaty between Australia and the Federal Republic of Germany concerning extradition signed at Canberra on 8 May 1984. The application of the Extradition (Foreign States) Act 1966 to the Federal Republic of Germany would enable Australia to deal with requests for extradition by the Federal Republic of Germany.

It is common ground that at this time the Extradition

(Foreign States) Act 1966 did not apply to Germany. The

necessary regulations pursuant to ss. 10 and 31 were not made until later in the year: see S.R. No. 321 of 1985, made 28 November 1985. Accordingly, the authority for the making of the request for extradition and acting upon acceptance of that request was to be found not in statutory authority, but in executive power of the Commonwealth of Australia, provided for

On 21 March 1985, the German Foreign Office replied by note verbale No. 511-531E-2016/85. This stated that the Foreign Office acknowledged receipt of the note verbale No. 13/85, and had made the appropriate German authorities familiar with the matter. Certain German court proceedings ensued leading to written decisions given on 13 May , 13 September and 8 October 1985. The result was that Mr. Ditfort remained in

The requisition for the extradition of Mr. Ditfort was signed by the Attorney-General for the Commonwealth, on behalf of the Government of Australia, at Canberra on 8 July 1985. As I have indicated, it listed twelve counts, all of them being

for offences against federal laws, viz. the Crimes (Taxation

Offences) Act 1980, sub-ss. 5 (2) and 13 (1), and the Crimes Act 1914, sub-paras. 86 (1) (e) and 86 (1) (b). In support of the formal requisition, the Government of Australia produced the affidavit of Anthony Peter Cook, sworn 19 July 1985. Mr. Cook was a solicitor and subject to the direction and control of the Director of Public Prosecutions who was charged with the conduct of the prosecution of Mr. Ditfort. Paragraphs 4, 5 and 6 of Mr. Cook's affidavit were in the following terms:

4- Grant Anthony Ditfort will not i1£ extradited to Australia, without German consent, upon any ground existing prior to his transfer other than the offence for which extradition has been granted, be subjected to any penal sanction, restricted in his personal freedom or prosecuted by means of measures which cannot also be undertaken in his absence.

5- Will not without German consent be re-extradited, transferred or deported to a third state.

6- May leave Australia after final completion of the proceedings on

With note verbale No. 32/85, dated 24 July 1985, the Australian Embassy at Bonn enclosed for the German Foreign Ministry the documents in support of the request for extradition of Mr. Ditfort. The note verbale also contained

The Embassy wishes to advise that Australia hereby gives assurances

that 1£ surrendered Grant Anthony Ditfort will not, unless the Federal Republic of Germany otherwise consents, be subjected to any penal sanction, restricted in his personal freedom or prosecuted by means of measures which cannot also be taken in his absence upon any ground existing prior to his surrender other than for the offence or offences for which his extradition is granted,

that Grant Anthony Ditfort will have an opportunity to leave Australia after final completion of the proceedings on account of which his extradition has been granted,

that Grant Anthony Ditfort will not be re-extradited, transferred or deported to a third State unless the Federal Republic of Germany so consents.

Australia notes that Anthony Peter Cook of the Office of the Director of Public Prosecutions, in his affidavit accompanying the documents in support of the request for extradition, has confirmed that the assurances given by Australia in this speciality undertaking can be adhered to.

The offences for which the extradition of Grant Anthony Ditfort 1s sought are not

offences consisting exclusively, or at all, of a breach of military duty.

The significance in international law and practice of speciality undertakings of the kind indicated in these documents 1s explained by Barwick CJ in Barton v_ The

By note verbale No. 511-531E-2016/85, dated 1 October 1985, the German Department of Foreign Affairs informed the

Australian Embassy, with reference to the note verbale No.

The Federal Government has agreed to the extradition of the New Zealand national Grant Anthony Ditfort, born on 7 February 1951 in Christchurch/New Zealand for the prosecution of the criminal acts mentioned in the 12 warrants of arrest by the District Court (Justice of the Peace) in Sydney of 19 March 1985 (File No's 0264 W/2, 4, 6, 8, 10, 12, 14, 16, 18, 20, 22, 24, resp. FIW 98- 109/785).

It is suggested that the person sought be handed over to the Australian Authorities at the airport in Frankfurt/Main for transfer to Australia and that any further particulars of the transfer be settled between the Public Prosecutor at Stuttgart and the competent Australia authorities via Interpol.

Mr. Ditfort was so handed over on 21 October 1985 and,

as I have said, arrived in Sydney on 23 October 1985.

On 5 August 1987, that 1s to say during the course of Mr. Ditfort's trial in the Supreme Court of New South Wales, the German Foreign Office sent to the Australian Embassy a further note verbale. On the present application, Mr. Ditfort relied upon this as an indication of complaint by the German Government of breach of the speciality undertaking. Omitting formal parts, the note verbale (in translation) reads as follows:

The person claimed, Grant Anthony Ditfort, whom the Federal Government had agreed to extradite from Germany to Australia with its note verbale of 1 October 1985 - 511-531E-2016/85 - at the request of the Australian Government, has maintained that after he had been handed over, the Australian authorities had violated the rule of specialty [sic] several times. He essentially maintained that he has been standing trial since the 27th of July 1987 for offences for which extradition had not

been granted, He has so far not given any further details about these offences. He also said that he had been imprisoned in Australia for seven days starting on 25 October 1985 for traffic offences which were not the object of the extradition proceedings. Finally, the Australian authorities had "bankrupted" him, which 1s why he is unable to leave the country. With regard to the last accusation, he explained that at the request of the Australian tax authorities, bankruptcy proceedings had been opened against him by the Australian Federal Court, and as a consequence of this decision, the Australian authorities had taken away his passport. Thus, regardless of the outcome of the criminal proceedings, he is no longer able to leave Australia owing to the provision in section 272 (c) of the Bankruptcy Act from 1966, [sic] namely, that leaving Australia without the consent of the administrator in brankruptcy [sic] proceedings is punishable with up to 3 years imprisonment.

The Federal Government would be grateful to the Australian Government if it would comment on the accusations made by the person concerned within a short period of time.

Paragraph 272 (c) of the Bankruptcy Act provides that:

(c) after he has become a bankrupt and before he is discharged from the bankruptcy, without the consent in writing of the trustee of his estate, leaves Australia, or does an act preparatory to leaving

Australia, is guilty of an offence and is punishable, on conviction, by imprisonment for a period not exceeding 3 years.

I should also refer to para. 77 (a). This provides:

A bankrupt shall, unless excused by the trustee or prevented by illness or

(a) forthwith after he becomes a bankrupt, deliver to the trustee all the books, documents, papers and writings in his possession relating to his trade dealings, property or affairs and, if he has a passport, his passport; ...

I should also note that s. 6A of the Passports Act 1938 makes it clear that an Australian passport always remains the

The Australian Embassy replied by note verbale No. 57/87, dated 26 August 1987. Omitting formal parts, the note verbale stated:

On 17 August 1987, Mr Ditfort was found guilty by the Central Criminal Court in Sydney of 4 of the 12 charges for which he was extradited from the Federal Republic of Germany. He was acquitted on 2 further charges, and it was decided not to prosecute the 6 conspiracy charges. Mr Ditfort has been remanded in custody to await sentencing for these offences.

The records of the Long Bay Correctional Centre, the prison in which Mr Ditfort was confined from 23 October 1985 to 22 December 1986 (when he was released on bail), indicate that Mr Ditfort was held in custody in relation to the charges for which he was extradited from the Federal Republic of Germany. There is no evidence that Mr Ditfort was at any relevant time held in custody in relation to traffic offences. With regard to the detention of Mr Ditfort's passport, when Mr Ditfort was released on bail on 22 December 1986 the Court that granted bail imposed a condition that Mr Ditfort surrender his passport pending the completion of hearing of the charges for which he was extradited. As noted above, this matter is not yet finalised, and Mr Ditfort's passport is in the custody of the Deputy Director of Public Prosecutions, Sydney pending finalisation.

In December 1986, the Australian Taxation office commenced bankruptcy proceeding [sic]

against Mr Ditfort. Bankruptcy 1s a civil, aS opposed to a criminal, matter and a petition for a person's bankruptcy can be lodged at any time, whether the bankrupt is in Australia or overseas. Finally, Mr Ditfort would be permitted to leave Australia after having served any sentence that the Court may impose in relation to the offences for which he was extradited and convicted, provided that he first obtained the consent in writing of the trustee of his estate.

This note verbale was inaccurate or incomplete in several respects. The Australian Taxation Office had commenced bankruptcy proceedings against Mr. Ditfort before December 1986; on its petition, an order for sequestration of his estate was made on 15 December 1986. Further, as I have explained, there was before me, from materials subpoenaed from the prison authorities, evidence indicating that Mr. Ditfort was taken to prison on 23 October 1985, not only on remand in respect of extradition offences, but also on warrants of commitment on convictions for traffic offences against State

Service of the Bankruptcy Notice and Creditor's Petition Mr. Ditfort submits that the sequestration order ought

not to have been made because of failures by the creditor in compliance with the requirements of the Act as to service of

I turn to the statutory provisions. Sub-section 52 (1) provides: 52. (1) At the hearing of a _ creditor's

(a) the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);

(b) service of the petition; and (c) the fact that the debt or debts on which the petitioning creditor relies 1S or are still owing, and, if it 1s satisfied with the proof of those matters, may make a

sequestration order against the estate of the debtor.

(2) If the Court is not satisfied with the proof of any of those matters, or is Satisfied by the debtor -

(b) that for other sufficient cause a sequestration order ought not to be made,

I have already set out, so far as is material, the substance of

Rule 15 of the Bankruptcy Rules is in the following

Unless otherwise ordered by the Court under sub~section 309 (2) of the Act -

(a) service of a bankruptcy notice shall be effected on the debtor by delivering to the debtor personally a copy of the bankruptcy notice signed and stamped by the Registrar; and

(b) service of a creditor's petition shall be effected on a debtor by delivering -

(11) a copy of the affidavit or of each affidavit verifying the petition; and

(111) where a registered trustee has consented, as referred to in paragraph 12 (3) (ba), to act as the trustee - a copy of the consent,

(iv) 1f service is effected in Australia - not less than 8 days before the hearing date for the petition; or

(v) in any other case - not less than such reasonable time hefore the hearing date for the

" gub-section 309 (2) provides that the Court may in a particular case order that service be effected in a manner specified by the Court, whether or not any other manner of service 1s prescribed. In the present case, no application was made for service under this provision. As will appear, on both 30 September and 17 November 1986, Mr. Ditfort acted as one anxious to avoid service of any process issued at the instance of the taxation authorities. However, the question of service turns upon the application of Rule 15, and upon the concept therein provided for of delivering documents to the

In In re Long; Ex parte Fraser Confirming Pty. Ltd.

(1975) 12 SASR 130, Walters J. reviewed the authorities which indicate the necessity for strictness of proof in observance of

the requirements for service of bankruptcy notices and

bankruptcy petitions. The applicant properly placed much relrance upon this decision; it was he who drew it to the attention of the Court. The dispute before Walters J. arose as an application to set aside for want of due service a bankruptcy notice on which a petition had been based. Although an affidavit of service by a process server deposed to personal service of a bankruptcy notice on the debtor, Walters 3. found, after hearing evidence, that the notice had not been served personally on the debtor. Rather, the notice had been handed to the wife of the debtor at his house, and the notice had not been brought to his attention until some eight or ten

Walters J. held (i) that the failure of the petitioner to prove personal service of the bankruptcy notice was not a formal defect or irregularity which might be corrected by bringing it within the umbrella of s. 306 of the Bankruptcy Act, and (ii) that the want of personal service of the bankruptcy notice rendered defective the petition founded on it, despite the debtor's subsequently acquired knowledge of the existence of the notice, and even though there was no proof of substantial injustice having been done to the debtor by the defect in service. In the result, Walters J. ordered that the bankruptcy notice be set aside, and it followed that the

Whilst not necessarily being of the view that s. 306 can never apply in such a case in any circumstances, I

respectfully agree with what was said by his Honour as to the

importance of proper proof in these cases, and as to the salutary consequences for creditors of failure to comply with the Rules; similar views were expressed by Fisher J. in Re

Williams; Ex parte Alberton Electrical Service Pty. Ltd. (1982)

43 ALR 552 at 558. These considerations have particular force where the petitioning creditor, as in this case, 18 a frequent

litigant before the Court and there may be a tendency to follow

routine procedures in the preparation of affidavits of service.

applying a Rule of the Supreme Court of Victoria which required but did not further define personal service, held that in the circumstances of the case it was sufficient that a writ of summons, although left with the wife of the defendant, had come into his possession on the same day. That decision did not

deal with the position under the Bankruptcy Rules and was not

relied on before Walters J. in In re Long; Ex parte Fraser

Confirming Pty. Ltd. (supra). I would prefer the decision of Walters J.

What then is meant by delivering documents to the debtor personally within the meaning of Rule 15 of the

Bankruptcy Rules? As the decision of Walters J. indicates,

delivery to the spouse of a debtor with a request to hand the documents on to the debtor will not suffice. In Pigeon v Bruce and Dobson (1818) 8 Taunt. 410; 129 ER 441, the question

concerned service of a writ of capias ad respondendum upon a

defendant who was in custody in the Fleet prison. It was held

that service had not heen effected where (a) the process server

attended the prison, showed the original writ to the defendant, and tendered him a copy of the writ but the defendant refused to take a copy and threatened the process server with violence if he persisted, and (b) the process server delivered a copy of the writ to a turnkey who in turn delivered the copy to the defendant. The foundation in both eighteenth century statutes and in the practice of the superior courts of record, upon which it became sufficient to show the original and serve a copy of process, rather than serve the original, was revealed

by Sholl J. in Davidson v McCarten [1953] VLR 697 at 701-702.

Further, the requirement for the process server to show the original of the process to the person who is served with a copy has been removed from modern rules of court. Rule 15 of the Bankruptcy Rules is an example. Another is Order 7 of the Federal Court Rules; see also the discussion of Order 65 Rule 1 of the English Rules of the Supreme Court in "The Supreme Court Practice", 1988, Vol. 1, pp. 1031-1032. The technicalities of personal service are also to some extent mitigated by modern provisions dealing with substituted service, exemplified in the present legislation by sub-s. 309 (2) of the Bankruptcy Act. This legislative development of substituted service has as its foundation s. 17 of the English

Common Law Procedure Act 1852 (15 and 16 Vict. c. 76); it was

traced by Holroyd J. in Rudd v John Griffiths Cycle Company

Ltd. (1897) 23 VLR 350 at 354-356. As I have indicated, there

was no order for substituted service in the present case.

In Thomson v Pheney (1832) 1 Dowling's Practice Cases

411, it was held by the Court of King's Bench, in the words of

I do not mean to say, that 1t 18 necessary to leave the process in the actual corporal possession of the defendant; for, whether the party touches him or puts it into his hand, is immaterial for the purpose of

personal service. Personal service may be, where you see a person and bring the process to his notice ... I am quite of opinion,

that in this case there are not sufficient facts to warrant any man in making an affidavit of personal service. If the deponent had informed the defendant of the nature of the process, and thrown it down, that would do.

I accept the submission by the respondent to the present application that there may be delivery personally to

the debtor of process within the meaning of Rule 15 of the

Bankruptcy Rules, even though the process has not been left in

what Patteson J. described as the "actual corporal possession of the defendant". If the debtor were refusing to take such actual corporal possession of the process, but the process server informed the debtor of the nature of the process and left it before or near the debtor so that the debtor had unimpeded and immediate access to the documents, that, in my

view, should, in general, be sufficient to comply with Rule 15.

I turn now to the present case, where, as I have indicated, there is acute disagreement as to what transpired on the dates of alleged service of both the bankruptcy notice and

I turn first to the disputed facts concerning service

of the bankruptcy notice. On 2 October 1986, Mr. Harmanis swore an affidavit, paragraphs 1 and 2 of which were in the

On Tuesday the 30th day of September 1986, at T1.40 o'clock in the foranson, I served GRANT A DITFORT with a true copy of the Bankruptcy Notice signed by the Deputy Registrar by delivering it to him/HHX [sic] personally at Long Bay Remand Centre, Malabar.

At the time of such service I asked the person served are you GRANT A DITFORT the person referred to in this Bankruptcy Notice and he/EMH [sic] replied "Yes I am".

The portions of paragraphs 1 and 2 which I have underlined are in the handwriting of the deponent, the name "GRANT A DITFORT" has been typed in, and the balance is part of what plainly is a printed form. As such, it gives opportunity for quite inaccurate representations of what takes place in

particular cases. The present 18 a striking example.

By his affidavit sworn and filed in the present application on 2 February 1988, Mr. Harmanis gives a much fuller account. Mr. Harmanis says that on the morning of Tuesday 30 September 1986, he attended at the Long Bay Remand Centre and completed a form of request to see Mr. Ditfort. He handed the request to the prison officer on duty who then made a telephone call. After some 45 minutes, the prison officer said to Mr. Harmanis that Mr. Ditfort would not come to see hin. Another prison officer then took Mr. Harmanis to the office of the superintendent who, in the presence of Mr.

Harmanis, rang through and said, over the telephone, "Take

Ditfort to the office in the prison yard". Mr. Harmanis says that he then walked across the yard to another office and about 5 minutes later another prison officer escorted a man into the office. Mr. Harmanis asked whether this man was Grant Anthony Ditfort and received an affirmative response. He then told Mr. Ditfort that he had a bankruptcy notice to serve on him from the Taxation Office regarding outstanding moneys owed by him. Mr. Ditfort said that he would not accept it, and that Mr. Harmanis should speak to his solicitor. Mr. Harmanis replied that he had to leave the bankruptcy notice with Mr. Ditfort and proffered the notice to him. Mr. Ditfort stepped back and Mr. Harmanis said to him that even if he didn't touch the document he still would be classified as having been legally served. Mr. Harmanis continues that to the best of his recollection, he then placed the bankruptcy notice on a side table or desk not far from Mr. Ditfort, and a Mr. Ritchie told Mr. Harmanis that he would hold the document for Mr. Ditfort until he spoke to his solicitor. Other evidence shows

that Mr. Ritchie was senior assistant superintendent at this

The bland and succinct statements in the affidavit of 2 October 1986 stand in high contrast to the above account in an affidavit prepared some fifteen months later. If accepted, that account would establish compliance with Rule 15, giving to the requirement of personal delivery the meaning I have drawn

On 7 October 1986, by letter showing as his address

Post Office Box 13, Matraville 2036 NSW, Mr. Ditfort wrote to the Registrar of the District Court with reference to Bankruptcy Notice 2495/86. The body of the letter reads as follows:

This will be a defended matter. I treat the reference in this letter to service of the notice as consistent with Mr. Ditfort's account of events leading to

By letter dated 27 October 1986, the Registrar of the District Court replied to Mr. Ditfort. He advised Mr. Ditfort that he did not have power to stay proceedings commenced in the Bankruptcy Court. The letter was annexed to an affidavit sworn by Mr. Ditfort in the present application. It was not accompanied by any evidence that he took or caused to be taken

any further steps to deal with the bankruptcy notice.

In his evidence, Mr. Ditfort agrees, consistently with this correspondence, that he obtained a copy of the bankruptcy notice from Mr. Ritchie. However, his version of events 1s that, on the day of what he says was only attempted service, he was called out from his lunch to go to Mr. Ritchie's office and

that lunch had commenced some time at or after 11.30. He was

told by Mr. Ritchie that there was an official from the Taxation Office to see him; he says he told Mr. Ritchie that he did not wish to see that person and that he (Mr. Ditfort) then left, apparently to return to his interrupted lunch. Mr. Ditfort says he obtained the document from Mr. Ritchie about two days later. Mr. Ditfort says that he acted in this way because he was facing a criminal prosecution he regarded as having been instituted by the Deputy Commissioner of Taxation; indeed, the charges related to what might compendiously he

Mr. Ritchie was served by Mr. Ditfort with a subpoena to give oral evidence and he attended Court in compliance with that subpoena on 17 March 1988. However, he was not called by either party. Evidence was led by Mr. Ditfort from another prison officer, Mr. M.B. Ferguson. During the years 1986 and 1987, Mr. Ferguson was in charge of the property of prisoners in the Remand Centre at Malabar. The property was kept in the reception room. Mr. Ferguson also was familiar with the procedures followed at the Centre for visits to prisoners, including those by lawyers or persons on legal business. He said that he had no experience of occasions on which a prisoner had been brought to the office where "legal visits" took place, even though the prisoner did not wish to see a prospective visitor. He confirmed that there was a muster of prisoners each day which started at about

Mr. Harmanis, as a clerk in the Australian Taxation

Office, has been serving process since approximately 1985. Mr. Ditfort's version of events was first related in these proceedings in an affidavit sworn 18 November 1987 and filed the next day. Mr. Harmanis swore that when preparing his affidavit of 2 February 1988, he had not seen Mr. Ditfort's affidavit. He said that he drafted both his affidavits of 2 October 1986 and 2 February 1988, and that he did not recollect why he had not included the account, given in the later affidavit, in the earlier affidavit. He had kept a diary in connection with the service of documents, and in 1t he had kept a record of conversations at the time of service of process. However, the diary was destroyed approximately in the middle of 1987. - There 1s now in force a system in the Australian Taxation Office where such diaries must be retained in the Office. He said that the diary had not been destroyed for any particular reason but that he had "Just thought that, you know, time had elapsed, to destroy it". Accordingly, in making his affidavit of 2 February, he relied, he said "on recollection of my memory". I do not suggest that Mr. Harmanis has set out consciously to deceive the Court. He gave evidence in a hesitant fashion and whilst I make considerable allowance for the nerve-wracking nature of the occasion, I was unimpressed by

the manner in which he gave his evidence and his demeanour in

I believe that, 1n all the circumstances, 1t would be quite unsafe to prefer his recollection of what happened on 30 September 1986, insofar as it conflicts with the account of Mr.

corroboration by Mr. Ferguson as to the system 1n operation at the relevant time for the reception of unwelcome visitors. Plainly, the bankruptcy notice was passed on by Mr. Ritchie to Mr. Ditfort in time for him to write the letter of 7 October. However, I do not accept Mr. Harmanis' recollection insofar as it involves a confrontation between him and Mr. Ditfort, the proffering of the bankruptcy notice and the rejection of it by

That brings me to the events of 17 November 1986. By his affidavit sworn 20 November 1986, Mr. Harmanis deposed that on that day he served Mr. Ditfort with copies of the creditor's petition and two affidavits in support. The matter is dealt with in paragraphs 1 and 2 of the affidavit in the following terms (the passages underlined are in the handwriting of the deponent and the balance of the affidavit 1s typed, there being on this occasion no printed form):

On Monday the i7th day of November 1986 at 11.35 o'clock In the forenoon, I served the abovenamed Grant A Ditfort with an official copy of the abovementioned petition together with a copy of the affidavit of Denis James Cortese sworn on the 29th day of October 1986 and a copy of the affidavit of Olga Krymsky sworn on the 30th day of October 1986 and all filed herein by delivering the

same to him personally at Long Bay Remand Centre, Malabar.

I identified the person I served as the said Grant A Ditfort by reason of the fact that I asked him "Are you Grant A Ditfort the debtor referred to in this Creditor's Petition?" and he replied:-

The statement reported in paragraph 2 of the affidavit

does not stand happily with the assertion in paragraph 1 that documents were delivered to Mr. Ditfort personally. Nevertheless, this affidavit was filed in the Court on 1 December 1986, and apparently was relied on when the

In his affidavit of 2 February 1988, Mr. Harmanis says that on the day in question, he again completed a form of request, handed it to a prison officer who made a telephone call and who reported to him that Mr. Ditfort wouldn't come to see him. He then succeeded in speaking to the deputy

superintendent who made a phone call and later told him that if

Mr. Ditfort did not want to come down to see him, he could not

force him to do so. However, the affidavit continues:

Shortly afterwards, Mr. Ditfort arrived and I spoke to him from where I stood inside an office through bars which separated him from me to where he stood outside that office. I said:-

At a glance

Court

Decision date

Before

Source

Judgment (467 paragraphs)

Parties

Cases Cited (38)

Cited By (1)