FEDERAL COURT OF AUSTRALIA Mudge v Hudson Timber & Hardware Limited [2003] FCA 1306 PRACTICE AND PROCEDURE – application of extension of time to file and serve Notice of Appeal – application sought on ground that important evidence rejected by Magistrate – extent of delay minor – no prejudice claimed – application granted BANKRUPTCY – bankruptcy notice – creditor's petition – inconsistent evidence of service Bankruptcy Act 1966 (Cth) RONALD ANTHONY MUDGE v HUDSON TIMBER & HARDWARE LIMITED N 869 of 2003 TAMBERLIN J SYDNEY 14 NOVEMBER 2003 IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 869 OF 2003 BETWEEN: RONALD ANTHONY MUDGE APPLICANT AND: HUDSON TIMBER & HARDWARE LIMITED RESPONDENT JUDGE: TAMBERLIN J DATE OF ORDER: 14 NOVEMBER 2003 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The applicant be granted an extension of time for filing the proposed Notice of Appeal until the expiry of seven days from this Order. 2. The respondent pay the costs of the applicant on the application for the extension of time to appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 869 OF 2003 BETWEEN: RONALD ANTHONY MUDGE APPLICANT AND: HUDSON TIMBER & HARDWARE LIMITED RESPONDENT JUDGE: TAMBERLIN J DATE: 14 NOVEMBER 2003 PLACE: SYDNEY REASONS FOR JUDGMENT 1 This application, filed on 21 July 2003, seeks an extension of time to file and serve a Notice of Appeal from a decision of a Federal Magistrate given on 17 June 2003. The extension of time is sought because a Notice of Appeal was not filed and served within the time limit, and exceeded the time limit by three days. The learned Magistrate decided in favour of the respondent that the Bankruptcy Notice and Creditor's Petition had been duly served on the applicant. The extension is sought on the ground that the Magistrate rejected important evidence in the form of a solicitor's affidavit, which is said to corroborate his case that the bankruptcy had not been properly served. 2 On 17 June 2003, the Magistrate made a Sequestration Order against the estate of the applicant and ordered the applicant's creditor's costs be paid in accordance with the Bankruptcy Act 1966 (Cth) ("the Act"). background 3 On 24 June 2003, Mr Alroe, solicitor for the applicant, received a letter from his city agents regarding what had occurred during the hearing before the Magistrate. This information was passed on to the applicant. On 1 July 2003, Mr Alroe had a telephone conversation with the applicant in relation to whether the decision could be appealed. On 2 July 2003, Mr Alroe rang the Federal Court in Sydney to obtain a copy of the decision and was referred to Auscript, the transcript contractors to the Court. They advised that an application had to be made. On 4 July 2003, Mr Alroe made further inquiries into what had occurred during the hearing before the Magistrate. On 8 July 2003, Mr Alroe told his city agents that the applicant wished to appeal, and that he would send a draft Notice of Appeal, although he did not have a copy of the transcript of the reasons. On 9 July 2003, Mr Alroe learned that Auscript could not obtain a copy of the reasons without the permission of the Magistrate, and it transpired that the reasons for judgment were not certified by the Magistrate until 19 July 2003. In the meantime, on advice, Mr Alroe sent an application and draft Notice of Appeal on 15 July to his city agents, who refused to act on his behalf. The grounds of appeal, in this draft, were formulated before the reasons were available. Subsequently, Mr Alroe arranged for new city agents to act, and the Application and Notice of Appeal now sought to be filed were filed on 21 July 2003, which was three days out of time. 4 The respondent does not claim any prejudice as a result of the three day period. The case in opposition to the ground of extension is that the grounds for the appeal are so weak as not to warrant an extension of time. application for extension of time 5 The question is whether the Magistrate should have admitted an affidavit of Mr Alroe sworn on 16 June 2003, which is said to corroborate the evidence of the applicant concerning the way in which service of the Creditor's Petition was effected. This is said to reflect adversely on the credit of the process server in such a way that it could have led the Magistrate to form the view that the Bankruptcy Notice had not been served. 6 The transcript before the learned Magistrate records the following exchange: "MR JOHNSON: Might I just borrow my friend's copies of all of the other affidavits? The affidavit of Damien John Alroe, sworn 16 June 2003, firstly, that is objected to on the basis of late service and prejudice. As I understand the position, it only goes to the question of service of the Creditor's Petition. If served at an appropriate time, it would have been possible, in relation to my friend making reference to a facsimile date, to obtain evidence as to the correct date appearing on a transmitting party, Ramcorp and Associates Pty Limited, whoever they might be. HIS HONOUR: Yes. MR JOHNSON: That causes prejudice. It's a 135 objection to that affidavit going in, if that is the case. He is not available. It is unacceptable in these circumstances. Then also, there is no application, I should say, for his evidence to be taken by telephone link. HIS HONOUR: Yes and I don't have the physical arrangements before me at the moment. I'm not sure how long it would take to get them, but that's another factor. Ms Simmons, do you want to be heard? MS SIMONS: Just briefly. In relation to Mr Alroe's affidavit, we did accept that that may – is the likely outcome but it was something that he chose to fax to us last night and --- HIS HONOUR: All right, I'm not going to receive the affidavit of Mr Alroe and I accept the objections." 7 It is apparent from the reasons for decision of the Magistrate on making the Sequestration Order, that service of the Bankruptcy Notice was central to his decision, and that the comparative credit of the process server and the witnesses for the applicant was a deciding factor. The relevant part of the judgment of 17 June 2003 is in these terms: "9. In this matter, however, personal service pursuant to regulation 16.01(d) is the form of service relied on by the petitioning creditor. The affidavit of Mr Donnelly specifically asserts that personal service was effected. While, in my view, there is much to be said for the view that sufficient service of a bankruptcy notice could be proved on the evidence of Mr Mudge and Ms Courtney, in the circumstances of this matter, if I had been persuaded that Mr Donnelly's affidavit was false, I would not have permitted a sequestration order to be made on the basis of that false evidence. 10. However, I have accepted Mr Donnelley's affidavit. Accordingly, I find that service of the bankruptcy notice was effected in accordance with regulation 16.01(d) of the Bankruptcy Regulations, as asserted by the petitioning creditor. As I have already noted, there is no other opposition to the creditor's petition. I am satisfied that the petitioning creditor is entitled to a sequestration order. I am satisfied that the debtor committed the act of bankruptcy alleged in the petition and I am satisfied with the proof of the other matters of which s 52(1) of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act") requires proof." 8 The rejected evidence of Mr Alroe was to the effect that, on 2 April 2003, the day before Mr Donnelly swore that he served the Petition, Mr Alroe had received a telephone call from the partner of the applicant, Ms Courtney, who informed him that she had returned home to her address and found "bankruptcy papers" stuck under her front door, whereupon Mr Alroe asked her to fax those papers. Mr Alroe annexes to his affidavit a copy of the Creditor's Petition dated 4 March 2003, an affidavit of Robert Hough, verifying the Petition, and a Statement of Liquidated Claim in the District Court of New South Wales. The fax notation on those papers is 2 April 2003, indicating that a fax was sent from a body known as Ramcorp & Assoc. Pty Limited on 2 April 2003 at 16.44. 9 This affidavit is supported by the evidence of Ms Courtney and Mr Mudge, and is, on its face, quite inconsistent with the affidavit of the process server, Mr Donnelly, which is to the effect that, on 3 April 2003, Mr Donnelly served Ronald Mudge by delivering the Petition personally on him at the premises, 48 Tradewinds Avenue, Runaway Bay, Queensland. 10 Mr Alroe has annexed to his affidavit of 15 July 2003 a copy of a draft Notice of Appeal in respect of which the extension of time is sought. The grounds in that Notice are that the Magistrate erred in preferring the evidence of the respondent's witness, Mr Donnelly, to the effect that he had personally served the appellant with copies of the Bankruptcy Notice and Creditor's Petition, as against the appellant's evidence, and, in particular, that he erred in refusing to admit the affidavit of Mr Alroe of 16 June 2003 into evidence, in the circumstances outlined earlier. 11 Counsel for the applicant points out that the extent of the delay was relatively minor, and refers to the fact that the certified reasons for judgment were not available until 18 July 2003. Accordingly, the draft Notice of Appeal of 15 July 2003 was prepared without the benefit of these reasons. It is important that there was no prejudice claimed as a result of the delay in filing the Notice of Appeal. 12 It is also important, in my view, that the affidavit of Mr Alroe could reasonably be regarded as significant for the Magistrate to take into account, when forming a view as to whether the service of the Bankruptcy Notice had been effected. 13 The preference for the evidence of Mr Donnelly as to the service of the Bankruptcy Notice was of critical importance to the decision of the Magistrate. So much is expressly indicated in his decision. 14 The claimed prejudice to the respondent was that the affidavit was served at a very late stage, and that it would be essential for the applicant to carry out investigations in order to challenge in cross-examination, or by counter evidence, the matters testified to by Mr Alroe. Mr Alroe was available for cross-examination by telephone on that date. However, in my view, it would have been quite unsatisfactory to force on the judgment creditor a requirement to cross-examine on that date. The appropriate available course would have been to accept the affidavit and to adjourn the hearing of the Petition for a reasonable time, in order to enable the judgment creditor to properly test and meet the statements in Mr Alroe's affidavit. Any prejudice could have been remedied by an appropriate order as to costs thrown away as a result of the late filing of the affidavit. 15 In my opinion, this is a case where an extension of time for leave to file the Notice of Appeal should be granted. I am persuaded that the case sought to be made by the applicant is sufficiently substantial to warrant the grant of the extension. 16 Accordingly, my conclusion is that the applicant should be granted an extension of time for the filing of the proposed Notice of Appeal until the expiry of seven days from the making of this Order, and that the respondent should pay the costs of the applicant occasioned by the application for an extension of time to appeal. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin. Associate: Dated: 14 November 2003 Counsel for the Applicant: P A Skennar Solicitor for the Applicant: Alroe & O'Sullivans Counsel for the Respondent: J T Johnson Solicitor for the Respondent: Peter Winters & Co Date of Hearing: 6 November 2003 Date of Judgment: 14 November 2003