Jensen v Queensland Law Society Inc [2004] FCA 655

FEDERAL COURT OF AUSTRALIA

Jensen v Queensland Law Society Inc [2004] FCA 655 BANKRUPTCY – appeal from sequestration order – service of bankruptcy notice – whether sufficient evidence that original bankruptcy notice was served with judgment attached PETER JENSEN v QUEENSLAND LAW SOCIETY INCORPORATED Q 189 OF 2003 DOWSETT J 26 MAY 2004 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 189 OF 2003

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN: PETER JENSEN

APPELLANT

AND: QUEENSLAND LAW SOCIETY

RESPONDENT

JUDGE: DOWSETT J

DATE OF ORDER: 26 MAY 2004

WHERE MADE: BRISBANE

THE COURT ORDERS THAT: 1. The orders made on 13 November 2003 be set aside; and 2. The matter be remitted to the magistrate for further consideration. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 189 OF 2003

ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN: PETER JENSEN

APPELLANT

AND: QUEENSLAND LAW SOCIETY

RESPONDENT

JUDGE: DOWSETT J

DATE: 26 MAY 2004

PLACE: BRISBANE

REASONS FOR JUDGMENT 1 The appellant previously practised as a solicitor. In the course of his practice he defrauded clients to a substantial extent. As a result, certain clients were indemnified from the Legal Practitioners' Fidelity Guarantee Fund. The respondent then sought indemnity from him, on behalf of the fund, recovering judgment in the amount $589 772.88 including interest, and costs on an indemnity basis. On 26 March 2003 the respondent's solicitors caused a bankruptcy notice to be issued. The case has been conducted on the basis that the draft notice was presented in triplicate to the Insolvency and Trustee Service Australia ("ITSA") and that two sealed original notices were returned to the solicitors. It was common ground that each notice had a copy of the relevant judgment attached to it. On 2 May 2003, the respondent obtained an order for substituted service of the bankruptcy notice on the appellant. The order provided that: '1. Personal service upon the [appellant] of Bankruptcy Notice QN281/03 be dispensed with; 2. In lieu of personal service, a copy of the bankruptcy notice, together with a sealed copy of this order be served upon the [appellant] as follows: (a) by handing to and leaving with a principal of the firm of Baxters Solicitors, 1740 Gold Coast Highway, Burleigh Heads in the State Queensland, 4220. 3. In the instance referred to in paragraph 2, the documents be contained in a sealed envelope addressed to the [appellant] at the address stated, and be accompanied by a letter that states the date of handing to and leaving with a principal of the firm of Baxters, Solicitors. 4. Service in accordance with this order shall be deemed good and sufficient service of the bankruptcy notice upon the [appellant]; 5. The bankruptcy notice shall be deemed to be served on 16 May 2003 upon the condition that the method of service referred to in paragraph 2 hereof occur before the expiration of 10 days from the date of this order; 6. ... ' 2 The respondent's solicitors retained an organization described as "International Detection Services" to effect service in accordance with the order. A process server, Ross Thomas Williams, delivered an envelope, purportedly containing the relevant documents, to the named solicitors. The envelope was delivered by the solicitors to the appellant. He did not comply with the bankruptcy notice. The respondent's solicitors filed a petition in bankruptcy. At the hearing of the petition before a federal magistrate, the appellant disputed service, swearing that the documents in the envelope delivered to his solicitors: · included a photocopy of the bankruptcy notice rather than an original bankruptcy notice; and · did not include, as part of the bankruptcy notice, a copy of the relevant judgment. 3 The appellant's affidavit was by no means conclusive of the question. There were good reasons for treating him as a witness worthy of little credit. The magistrate reached that conclusion. Nonetheless, the matter having been raised, the respondent bore the onus of satisfying the magistrate, on the balance of probabilities, that the envelope had contained an original bankruptcy notice, with a copy of the judgment attached to it. 4 Apart from the appellant, four persons were involved in the process by which service was effected pursuant to the order. Elizabeth Janet Lawson was the solicitor responsible for arranging service. She gave evidence that the practice was to send three original notices to ITSA. It would return two sealed notices. Ms Lawson assembled the documents which were sent to International Detection Services. She recalled checking to ensure that the bankruptcy notice and the order for substituted service were included in the envelope. However she did not check each page of the bankruptcy notice. I take this to mean that she did not ensure that a copy of the judgment was attached. Ms Lawson said that she had no reason to separate the judgment from the bankruptcy notice. However she conceded in cross-examination that the condition of certain photocopies of the bankruptcy notice which were before the magistrate showed that the copy of the judgment attached to each of the two sealed bankruptcy notices had been detached, probably for the purpose of photocopying. The magistrate accepted that the notice served on the appellant had been taken apart at some time after ITSA issued it. There is no evidence as to who took the notice apart, nor that it was correctly re-assembled. Ms Lawson's evidence offered a basis for inferring that the bankruptcy notice was a sealed original rather than a photocopy but did not demonstrate that a copy of the judgment was attached to the notice at the time at which it was enclosed in the envelope. 5 Ms Lawson sent the envelope to International Detection Services where it was dealt with by Charmaine Keir. Ms Keir claimed that her practice was to check the documents contained in such an envelope sent for service. She said that had there been anything other than an original bankruptcy notice in the envelope, she would have taken action to remedy the situation. Although her evidence offers a basis for inferring that an original sealed bankruptcy notice was included in the envelope, it does not establish that a copy of the judgment was attached to it. Ms Keir sent the documents to Mr Williams for service. His evidence is equivocal and perhaps contradictory. It does nothing to establish either that the bankruptcy notice was an original or that the judgment was attached to it. He delivered the documents to the appellant's solicitor, Mr Baxter. Mr Baxter's evidence also establishes nothing about the contents of the envelope at that time. 6 As I have said, the magistrate rejected the evidence of the appellant. He was entitled to do so. However that did nothing to establish that service had been effected in accordance with the order. This is not a case in which any relevant adverse inference can be drawn from such rejection. It is reasonable to infer that each of the two sealed bankruptcy notices, when issued by ITSA, included a copy of the judgment. As much was conceded in argument by the appellant. If the evidence were that Ms Lawson had simply forwarded one of the sealed notices to the process servers, one might infer that it was forwarded intact, that is with the judgment attached. However the magistrate accepted that the copies of the judgments had been detached from the sealed bankruptcy notices. Although, as a matter of common sense, one might expect that a person who separates documents for photocopying will re-assemble them, that expectation falls short of proof. There is no evidence in the present case concerning such re-assembly. Ms Lawson should have checked the bankruptcy notice to ensure that it was complete. I do not mean to be unduly critical of her. One can well understand how this situation could arise. Nonetheless, a practitioner who knows that he or she will have to swear an affidavit concerning service should ensure that he or she is able to do so. 7 Notwithstanding the rejection of the appellant's evidence, the respondent has not established, on the balance probabilities, that a copy of the judgment was attached to the bankruptcy notice which was included in the envelope delivered to the appellant's solicitors. The orders made by the magistrate on 13 November 2003 must be set aside. Although I suspect that the matter has proceeded to date upon the basis that in those circumstances, the petition must fail, no formal submission or concession to that effect has been made before me. The matter should be referred back to the magistrate for further consideration. I therefore order that: · the orders made on 13 November 2003 be set aside; and · the matter be remitted to the magistrate for further consideration. 8 As the appellant has appeared for himself, there can be no question of costs. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Dowsett.