FEDERAL COURT OF AUSTRALIA Velissaris v Esanda Finance Corp Ltd [2000] FCA 189 Bankruptcy Act 1966 s 52 Ginnane v Diners Club Ltd (1993) 42 FCR 90 referred Bloch v Bloch (1981) 180 CLR 390 referred Sali v SPC Ltd (1993) 116 ALR 625 referred Abalos v Australian Postal Commission (1990) 171 CLR 167 referred CONSTANTINOS VELISSARIS v ESANDA FINANCE CORPORATION LIMITED V 592 OF 1999 TAMBERLIN, SUNDBERG and FINKELSTEIN JJ 25 FEBRUARY 2000 MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 592 OF 1999 BETWEEN: CONSTANTINOS VELISSARIS APPELLANT AND: ESANDA FINANCE CORPORATION LIMITED (ACN 004 346 043) RESPONDENT JUDGE: TAMBERLIN, SUNDBERG and FINKELSTEIN JJ DATE OF ORDER: 25 FEBRUARY 2000 WHERE MADE: MELBOURNE THE COURT ORDERS THAT: 1. The appeal be dismissed. 2. The respondent's costs be deemed to be its costs of the petition. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY V 592 OF 1999 BETWEEN: CONSTANTINOS VELISSARIS APPELLANT AND: ESANDA FINANCE CORPORATION LIMITED (ACN 004 346 043) RESPONDENT JUDGE: TAMBERLIN, SUNDBERG and FINKELSTEIN JJ DATE: 25 FEBRUARY 2000 PLACE: MELBOURNE EX‑TEMPORE REASONS FOR JUDGMENT THE COURT: 1 On 1 October 1999 Weinberg J dismissed the appellant's motion seeking review of a decision of a Registrar that substituted service of a bankruptcy notice directed to the appellant might be effected at premises at 19 Clarence Street, Brunswick, and made a sequestration order against the appellant on the respondent's petition. The act of bankruptcy relied on was the appellant's failure to comply with the bankruptcy notice which required him to pay the respondent the sum of $101,846.41, being the amount of a judgment obtained by the respondent in the County Court ($101,063.28) plus costs together with interest ($783.13). 2 The appellant contended before the primary judge that the order for substituted service should not have been made, and that the mode of substituted service did not in fact bring the bankruptcy notice to his attention. He claimed that he did not learn of its existence until mid‑July 1999. The primary judge instructed himself in accordance with the decision of the Full Court in Ginnane v Diners Club Ltd (1993) 42 FCR 90 at 92 that, as a general rule, before substituted service is ordered, the Court must be satisfied that abnormal difficulties exist in effecting personal service on the debtor and that there is a reasonable probability that the debtor will be informed of the document as a result of the substituted form of service. 3 His Honour summarized the evidence before him substantially as follows. There had been some fifteen separate attempts to serve the appellant at his last known address, 19 Clarence Street, Brunswick, prior to the application for substituted service. Each was unsuccessful. There was evidence linking the appellant to the Clarence Street address throughout the period of attempted service. The evidence included a statement by him in a court document filed in October 1998 in which he gave his address as 19 Clarence Street, Brunswick. There were also documents emanating from the appellant's former legal advisers ascribing that address to him. A process server, Allan Maxwell Tanner, gave evidence that he confronted the appellant personally at the Clarence Street address. Mr Tanner attempted to serve the bankruptcy notice on the appellant on 5 July 1998 at that address, but the appellant evaded service by denying his true identity and claiming to be merely a boarder. Another process server, Dominic Crupi, said that he served the creditor's petition (which had annexed to it the bankruptcy notice) on the appellant at the Clarence Street address on 10 July 1999, though again the appellant denied his true identity. Both witnesses identified the appellant in court, as well as having identified him previously from photographs. The appellant denied having been present at the address on either occasion. He claimed to have had no knowledge of the bankruptcy notice until mid‑July 1999 when its existence was, in some way, drawn to his attention by a person whom he did not call to give evidence. 4 The primary judge preferred the evidence of the process servers to that of the appellant. He said their testimony was supported by a body of circumstantial evidence linking the appellant with the premises throughout the whole of 1998 and 1999. His Honour found that the appellant was present at the address on 5 July 1998 when Mr Tanner sought to serve him with the bankruptcy notice. He was also satisfied that he was served personally with the creditor's petition and accompanying bankruptcy notice on 10 July 1999. On the basis of these findings the primary judge was satisfied that the respondent satisfied the requirements for an order for substituted service identified in Ginnane, and dismissed the motion. 5 There was no dispute before the primary judge that the amount owing to the respondent remained due and payable. The appellant conceded that he could not pay that sum at present or in the immediate future. However, he submitted that no sequestration order should be made because he had various claims available to him against the respondent and other entities including Westpac Banking Corporation. These claims were said to be related in various ways to the proceeding which gave rise to the judgment debt relied on in the bankruptcy notice. Westpac has sued the appellant for a very large sum. He asserts a counterclaim which exceeds the amount of the claim. The primary judge concluded that it was most unlikely that that proceeding would be heard in the very near future. His Honour said: "If the respondent wishes to rely upon material of this nature to demonstrate that he is, within the meaning of s 52(2)(a) of the Act, able to pay his debts, it is incumbent upon him to place before the Court evidence which is far stronger, and more tangible, than that which he has advanced before me. While it is clear that the Court has a discretion, pursuant to s 52 of the Act, to dismiss a petition if satisfied by the debtor that he is able to pay his debts, or that for other sufficient cause a sequestration order ought not to be made, the onus rests upon the debtor to satisfy the Court of one or other of these matters. I am not satisfied that the respondent is able to pay the debts which he owes within a reasonable time. I do not regard the vagaries arising out of the litigation involving Westpac as discharging that onus. His Honour was not satisfied that there was any other sufficient cause as to why a sequestration order ought not to be made. 6 The appellant appeals on three grounds: · The primary judge should have granted him an adjournment, because his solicitors had ceased to act for him at the last moment. · The primary judge was wrong in concluding that there were abnormal difficulties in serving him personally, since the respondent knew of an address at which he could be found, namely 335 Sydney Road, Brunswick, but never attempted to serve him there. · The primary judge erred in failing to find that the appellant's counterclaim against the respondent was a sufficient cause not to make a sequestration order. 7 The decision whether to grant or refuse an adjournment lies in the discretion of the trial judge. An appellate court is loath to review such a decision, and will only do so where the result of the order was to defeat the rights of the parties altogether, or cause one of the parties an injustice: Bloch v Bloch (1981) 180 CLR 390 at 395‑396. See also Sali v SPC Ltd (1993) 116 ALR 625 at 628‑629, where reference is made to the fact that the above propositions were established when court lists were not as congested as they are today and the concept of case management had not developed into the sophisticated art it has now become. 8 The motion and petition were heard on 28 and 29 September 1999. At the commencement of proceedings the appellant's solicitors, Lewis Hutchinson, sought leave to cease to act for him, essentially on the ground that he had not put them in funds with which to brief counsel. Mr Holdway, a partner of the firm, appeared. The primary judge seems to have thought that the appellant opposed the solicitors' application, and he allowed the appellant to cross‑examine Mr Holdway, which he did at some length. The primary judge gave the solicitors leave to withdraw. The appellant then sought an adjournment, which was refused. We were told by Mr Nolan, who appeared for the petitioning creditor here and below, that the adjournment was refused because there had been numerous earlier adjournments at the appellant's request, and because, having observed the cross‑examination of Mr Holdway, the judge thought the appellant had the capacity to conduct cross‑examination and make submissions. We accept what Mr Nolan has said. We have read the cross‑examination of Mr Holdway, and can understand the primary judge's view of the appellant's capacity to handle the case. The case proceeded with the appellant unrepresented. He cross‑examined the two process servers and was himself cross‑examined. 9 It is not surprising that an adjournment was refused. The petition had been listed for hearing on 21 July 1999. At the appellant's request it was adjourned to 6 September, then to 13 September, then to 21 September and finally to 28 September, when it came before Weinberg J. Even a case such as the present, where a party is unrepresented and not in good health, must eventually come on for hearing. The Appeal Book discloses several occasions on which various solicitors ceased to act for the appellant for the same reason that Lewis Hutchinson ceased to act. No law was involved in the case, and the transcript discloses that for a layman the appellant satisfactorily cross‑examined the two process servers. In all the circumstances this is not a case in which an injustice was caused to the appellant by the refusal of an adjournment, and there is no occasion to interfere with the primary judge's exercise of discretion. 10 There is no substance in the claim that the primary judge erred in finding that abnormal difficulties existed in affecting personal service of the bankruptcy notice. We have made our own examination of the material that was before the primary judge. It bears out his summary of it. Of particular importance in this connection is his Honour's acceptance of Mr Tanner's evidence and his rejection of the appellant's evidence as to what occurred on 5 July 1998. His Honour had the advantage of seeing and hearing the witnesses, an advantage we do not share. Nothing that has been put to us suggests that the primary judge failed to use or palpably misused that advantage. See Abalos v Australian Postal Commission (1990) 171 CLR 167 at 179. The appellant cannot rely on the fact that the respondent knew he could be found at the Sydney Road address. The evidence was that when Mr Crupi attended at the Sydney Road premises and asked the appellant if he was Constantinos Velissaris, the appellant denied that he was. 11 The third ground of appeal must fail for at least two reasons. The first is that, as the primary judge held, the material relied on by the appellant, namely his claims against Westpac and others, was insufficient to demonstrate solvency, and did not amount to a sufficient cause not to make a sequestration order. The second reason arises out of the way in which the appellant puts his case against the respondent. His complaint is that the respondent had security for its $90,000 loan to the appellant over plant and equipment used in the restaurant business carried on at the Sydney Road premises. The plant and equipment had been seized by a Receiver, and the respondent failed to protect its secured interest by demanding restoration by the Receiver. The loan agreement between the respondent and the appellant was secured solely by a mortgage over land in Sydney Road. The respondent had no secured interest in the plant and equipment. There is thus no basis for the claim against the respondent. 12 The appeal must be dismissed. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin, the Honourable Justice Sundberg and the Honourable Justice Finkelstein. Associate: Dated: 25 February 2000 The appellant appeared in person. Counsel for the Respondent: J Nolan Solicitors for the Respondent: Dunhill Madden Butler Date of Hearing: 25 February 2000 Date of Judgment: 25 February 2000