FEDERAL COURT OF AUSTRALIA Sampson (Trustee) v Taboada [2016] FCA 926 File number(s): NSD 650 of 2016 Judge(s): BURLEY J Date of judgment: 12 August 2016 Catchwords: BANKRUPTCY AND INSOLVENCY – failure to comply with notice issued pursuant to s 139ZQ of the Bankruptcy Act 1996 (Cth) PRACTICE AND PROCEDURE – interlocutory application for default judgment – whether service of interlocutory application effected Legislation: Bankruptcy Act 1996 (Cth) s 139ZQ Federal Court of Australia Act 1976 (Cth) ss 51A, 52 Federal Court Rules 2011 (Cth) rr 5.22, 5.23, 16.07, 16.32, 17.01 Cases cited: Sony Corporation v Costaneo [2012] FCA 153 Date of hearing: 8 August 2016 Registry: New South Wales Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 14 Solicitor for the Applicant: Ms S Heimanis of Grace Lawyers Counsel for the First and Second Respondents: The first and second respondents did not appear Table of Corrections 31 August 2016 In the medium neutral citation, "Taboda" has been replaced with "Taboada". 31 August 2016 On the orders page the First Respondent's surname has been changed from "Taboda" to "Taboada". 31 August 2016 On the orders page the Second Respondent's surname has been changed from "Taboda" to "Taboada". ORDERS NSD 650 of 2016 BETWEEN: DAVID SAMPSON AS TRUSTEE OF THE BANKRUPT ESTATES OF NATALIE JOANNE MAKISI & TUIPULOTU SIONE MAKISI Applicant AND: MONICA TABOADA First Respondent JULIO TABOADA Second Respondent JUDGE: BURLEY J DATE OF ORDER: 12 AUGUST 2016 THE COURT ORDERS THAT: 1. That the respondents pay the applicant $262,026.29. 2. That the respondents pay interest pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth) from 7 December 2015 until 21 June 2016 which I assess to be $8,527.86. 3. That the respondents pay the applicant's costs of the proceedings. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT BURLEY J: 1 By interlocutory application filed on 5 May 2016, the applicant seeks orders for default judgment pursuant to rule 5.23(2)(c) of the Federal Court Rules 2011 (Cth) (the Rules). 2 The proceedings concern the failure on the part of the respondents to comply with a notice issued by the Official Receiver pursuant to section 139ZQ of the Bankruptcy Act 1996 (Cth) demanding payment of the sum of $262,026.29. 3 An originating application and statement of claim were filed on 6 May 2016. On 18 May 2016 Gordon Jeffrey Bryant of F.C. Bryant Thomas & Co. (F.C. Bryant Thomas & Co) filed a notice of address for service on behalf of the respondents nominating that firm's postal, document exchange and email addresses as the addresses for service upon the respondents of documents in the proceedings. 4 In this interlocutory application the applicant relies upon two affidavits affirmed by Nicholas John Hensley affirmed on 27 May 2016 and 19 July 2016, an affidavit of Tyla Hamilton affirmed on 19 July 2016 and an affidavit of David Sampson sworn on 27 June 2016. 5 The 27 May 2016 affidavit of Mr Hensley establishes to my satisfaction that on 12 May 2016 the originating application and statement of claim were sent by post and email to F.C. Bryant Thomas & Co. That affidavit annexes a letter received from F.C. Bryant Thomas & Co dated 17 May 2016 which confirmed receipt of the 12 May 2016 correspondence and acknowledged that that firm was instructed to accept Court documents on behalf of the respondents in these proceedings. Accordingly, service within the Rules of the originating application and statement of claim has been established. 6 No defence has been filed. The respondents did not appear at the hearing of the interlocutory application. 7 The affidavit of Mr Hensley affirmed on 19 July 2016 records that on 6 July 2016, Mr Hensley sent an email to F.C. Bryant Thomas & Co, enclosing the current interlocutory application together with Mr Hensley's earlier affidavit and the affidavit of Mr Sampson. The affidavit of Ms Hamilton deposes to sending the same materials to the postal address of F.C. Bryant Thomas & Co. 8 Having reviewed these materials, I am satisfied that service of the interlocutory application and supporting documents was properly effected in accordance with rule 17.01(2) of the Rules. 9 As I have noted, the applicant seeks default judgment. The originating application seeks the following orders: (1) Judgment in the sum of $262,026.29 pursuant to section 139ZQ(8) of the Bankruptcy Act 1966 (Cth). (2) That the respondents pay interest on the sum of $262,026.29 from 7 December 2015 up to and including the date of judgment pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth). (3) That the respondents pay interest on the judgment sum pursuant to section 52 of the Federal Court of Australia Act 1976 (Cth). (4) That the respondents pay the applicant's costs of the proceedings. 10 The originating application is supported by a statement of claim which includes allegations; that Natalie Joanne Makisi and her husband, Tuipulotu Sione Makisi, became bankrupt on 22 October 2014 upon filing a debtors' petition with the Official Receiver; that on 11 February 2015 the applicant was appointed Trustee of the bankrupt estates of Natalie and Tuipulotu Makisi; that the respondents are Natalie Makisi's mother and father; that on 30 November 2015 the Official Receiver issued a notice pursuant to section 139ZQ of the Bankruptcy Act 1966 (Cth) to the respondents demanding payment of the sum of $262,026.29 within 28 days of receipt of the notice; that on 7 December 2015 and 7 February 2016 the first and second respondents respectively were served with the notice; that the respondents failed to comply with the notice. 11 No defence has been filed to the statement of claim as required by rule 16.32 of the Rules. Accordingly, these allegations are to be treated as admitted by the respondents pursuant to rule 16.07(2); Sony Corporation v Costaneo [2012] FCA 153 (Costaneo) at [15]. 12 I am satisfied that the respondents are in default under rule 5.22 in that the respondents have failed to file defences, have failed to attend a hearing in the proceeding, and have failed to defend the proceeding with due diligence; Costaneo at [17]. 13 The affidavit of Mr Sampson specifies that the amounts currently owing are as follows: Amount pursuant to the notice given under section 139QZ $ 262,026.29 Interest claimed at 6% for 198 days from $ 8,527.86 7 December 2015 until 21 June 2016 pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth) TOTAL $ 270,554.15 14 In view of the foregoing, I am satisfied that the applicant is entitled to default judgment and I make the following orders: (1) That the respondents pay the applicant $262,026.29. (2) That the respondents pay interest pursuant to section 51A of the Federal Court of Australia Act 1976 (Cth) from 7 December 2015 until 21 June 2016 which I assess to be $8,527.86. (3) That the respondents pay the applicant's costs of the proceedings. I certify that the preceding fourteen (14) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Burley. Associate: Dated: 12 August 2016