FEDERAL COURT OF AUSTRALIA Civic Video Pty Ltd v Pullen [2014] FCA 319 Citation: Civic Video Pty Ltd v Pullen [2014] FCA 319 Parties: CIVIC VIDEO PTY LTD (ACN 003 851 152) v ANTHONY CHRISTOPHER PULLEN and AMANDA JANE WORTHINGTON File number(s): NSD 1312 of 2013 Judge(s): BUCHANAN J Date of judgment: 27 March 2014 Catchwords: BANKRUPTCY – substituted service – order to amend a bankruptcy notice – bankruptcy notice not amended – whether a formal defect – bankruptcy notice defective – creditor's petition dismissed Legislation: Bankruptcy Act 1966 (Cth), s 306 Cases cited: Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 Date of hearing: 27 March 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 16 Solicitor for the Applicant: N Mattock, Marque Lawyers Counsel for the Respondents: The respondents did not appear IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1312 of 2013 BETWEEN: CIVIC VIDEO PTY LTD (ACN 003 851 152) Applicant AND: ANTHONY CHRISTOPHER PULLEN First Respondent AMANDA JANE WORTHINGTON Second Respondent JUDGE: BUCHANAN J DATE OF ORDER: 27 March 2014 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The creditor's petition filed on 9 July 2013 is dismissed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1312 of 2013 BETWEEN: CIVIC VIDEO PTY LTD (ACN 003 851 152) Applicant AND: ANTHONY CHRISTOPHER PULLEN First Respondent AMANDA JANE WORTHINGTON Second Respondent JUDGE: BUCHANAN J DATE: 27 March 2014 PLACE: SYDNEY REASONS FOR JUDGMENT 1 Bankruptcy Notice 5040 of 2012 was addressed to the respondents. I am only concerned in the present matter with the circumstances of the second respondent. 2 By orders made on 15 May 2013, Registrar Hannigan ordered that the bankruptcy notice be served on the respondents by ordinary prepaid post to the office of Prokart Pty Limited ("Prokart") at an address in Kembla Grange, New South Wales, and also by handing "the documents" to a person over the age of 16 years at the same address, or, if that was not possible, by leaving them in an envelope addressed to the respondents placed in the letterbox or affixed to the front door at that address. 3 Evidence has been provided in the form of an affidavit sworn on 7 June 2013 by Steve Bosilkovski, a licensed process server, that on 4 June 2013 he left the documents in an envelope addressed to the second respondent with a female person apparently over the age of 16 years at the premises of Prokart. 4 It was not until 26 March 2014, that is yesterday, that evidence was provided to the Court about compliance with the first element of the orders for substituted service made by Registrar Hannigan on 15 May 2013. That evidence is contained in an affidavit of Rachel Kong, a lawyer at Marque Lawyers, the lawyers for the applicant, which Ms Kong affirmed on 26 March 2014. 5 In that affidavit, Ms Kong deposes to postage of the documents to the respondents on 27 May 2013 by express post. It may therefore be assumed that the documents arrived at the business address of Prokart, addressed to the second respondent, shortly thereafter and, in any event, not later than three days thereafter. 6 The orders made by Registrar Hannigan included the following: (3) The Bankruptcy Notice shall be deemed to have been served on the respondents on 13 June 2013; (4) Paragraph 1 on page 2 of the Bankruptcy Notice be amended by deleting the words "after service on you" and inserting the words "13 June 2013." 7 I note that order 4 says "be amended" and not "is amended." Paragraph 1 on page 2 of the bankruptcy notice reads: 1. You are required within 21* days after service on you of the Bankruptcy Notice, to either: (a) pay to the creditor the amount of the debt claimed; or (b) make arrangements to the creditor's satisfaction for settlement of the debt. 8 In both written and oral submissions, Mr Mattock, who appeared today for the creditor, pointed out that if order 4 made by Registrar Hannigan on 15 May 2013 was complied with literally, it would produce the odd result that the wording of the bankruptcy notice would become "You are required within 21 days 13 June 2013 of the Bankruptcy Notice, to either:". 9 I accept that this textual infelicity would exist if an amendment in precisely the terms ordered was made. On the other hand, reading the order together with the unamended bankruptcy notice produces no different result unless attention is given, as it should ordinarily be, to the substance and intent of the order rather than being diverted by any infelicity in the mode of expression. I would expect that any direct amendment of the bankruptcy notice would have been accomplished in a fashion which was faithful to the evident purpose of the order so that the bankruptcy notice was amended to say, "You are required within 21 days after 13 June 2013, to either:". 10 On 9 July 2013, the applicant filed in this Court a creditor's petition relying upon the fact that the bankruptcy notice was not complied with by 4 July 2013. I am satisfied that the creditor's petition and the bankruptcy notice were each properly served on the second respondent. I am prepared to assume that other requirements for the making of a sequestration order have also been attended to, subject to the question which I have already mentioned of whether the bankruptcy notice itself was in a proper form at the time it was served on the second respondent. 11 Mr Mattock's argument about that matter has two elements which require attention. The first is that it was not necessary to amend the bankruptcy notice, as service of the orders of Registrar Hannigan, at the same time, could leave the second respondent in no doubt about the obligations which arose under the bankruptcy notice, namely that she had 21 days after 13 June 2013 in which to comply with it. 12 The second element of his argument is that if it was necessary to amend the bankruptcy notice, the failure to do so is a formal defect or irregularity within the meaning of s 306 of the Bankruptcy Act 1966 (Cth) and does not invalidate the bankruptcy notice for the purpose of the creditor's petition. 13 In my view, neither element of this argument should be accepted. 14 It is of fundamental importance that an alleged debtor who receives a bankruptcy notice know the obligations which arise upon effective service of that notice. In the present case, in my view, there is a real possibility that if service was actually effected in accordance with one or both of the methods directed by Registrar Hannigan, the recipient of the bankruptcy notice would have been misled about the obligations which arose and the time available to comply with the bankruptcy notice. It should not be necessary to refer to an accompanying document, even if it is an order of the Court, to resolve any uncertainty. The possibility of confusion in the present case is heightened by the fact that ultimately there were three different forms of service in operation – service by post, service by hand and deemed service. 15 For the same reason, I am not prepared to accept that the failure to amend the bankruptcy notice as ordered was a formal defect or irregularity. In my view, the defect is one which was "objectively capable of misleading the debtor as to what is necessary for compliance with the notice" (see Kleinwort Benson Australia Ltd v Crowl (1988) 165 CLR 71 at 79-80). 16 The findings I have made have the consequence that the bankruptcy notice upon which the creditor's petition depends is defective. It follows that the creditor's petition must be dismissed. I so order. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Buchanan. Associate: Dated: 31 March 2014