FEDERAL COURT OF AUSTRALIA

Napiat Pty Ltd v Salfinger; In the Matter of Salfinger (No 7) [2011] FCA 1322

IN THE MATTER OF RODERICK NEIL SALFINGER

THE COURT ORDERS THAT:

1.    A Sequestration Order be made against the estate of Roderick Neil Salfinger.

2.    The applicant’s costs (including any reserved costs) be taxed and paid from the estate of the respondent in accordance with the Bankruptcy Act 1966 (Cth).

THE COURT NOTES THAT:

3.    The date of the act of bankruptcy is 11 April 2011.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE MATTER OF RODERICK NEIL SALFINGER

REASONS FOR JUDGMENT

1    The applicant is the petitioning creditor in a Creditor’s Petition filed in this Court on 15 April 2011 (the Petition). The Petition was amended on 8 November 2011 pursuant to leave to amend granted by me on the same day (as to which see Napiat Pty Ltd v Salfinger; In the Matter of Salfinger (No 3) [2011] FCA 1279).

2    The respondent is the judgment debtor referred to in the Petition.

3    The ultimate question to be determined by these Reasons for Judgment is whether the Court should make a sequestration order against the estate of the respondent.

4    The grounds of opposition relied upon by the respondent as reasons why the Court should not make that order are those set out in a Notice Stating Grounds of Opposition to Application, Interim Application or Petition dated 17 May 2011 and filed by the respondent on 18 May 2011 (the Notice of Opposition). A later Notice Stating Grounds of Opposition dated 18 May 2011 was not relied upon by the respondent, having been expressly abandoned at the hearing.

5    In the Notice of Opposition, the respondent stated that he intended to oppose the Petition on the following grounds:

1.    The bankruptcy notice was not served on the respondent:

(a)    the respondent was not present within the jurisdiction at the time of purported service of the bankruptcy notice;

(b)    the respondent did not receive the bankruptcy notice in accordance with reg 4.01 of the Bankruptcy Regulations or at all;

(c)    the address at which service of the bankruptcy notice is alleged is not the last known address to the applicant.

2.    The respondent has not committed an act of bankruptcy.

3.     The court does not have jurisdiction to make a sequestration order against the respondent because at the time of alleged service, was not carrying on business in Australia, either personally or by means of an agent or manager.

4.    Paragraph 3(a) of the creditor’s petition is not in accordance with the prescribed form and ought to be struck out – if the ground for invoking the court’s jurisdiction is that the respondent was ordinarily resident in Australia at the time of service of the bankruptcy notice then ought to be stated (in accordance with the prescribed form) and verified by affidavit sworn by a person who is able to say on oath that he believes that matter to be true.

5.    The creditor’s petition constitutes an abuse of process:

(a)    The applicant has issued proceedings in Israel in respect of the judgment the subject of these proceedings.

6.    For “some other reason” a sequestration order ought not to be made.

6    I have reproduced the respondent’s grounds of opposition exactly as they appear in the Notice of Opposition without correcting or noting any typographical errors or errors of expression made therein. I also note that the respondent did not seek to amend the Notice of Opposition in order to deal with the additional bases for jurisdiction introduced into the Petition by the amendment which I permitted at the hearing. Those additional bases were that, as at the time when the alleged act of bankruptcy was committed, the respondent was ordinarily resident in Australia, had a dwelling-house in Australia and had a place of business in Australia.

7    The respondent’s Notice of Opposition was accompanied by an affidavit affirmed by the respondent on 18 May 2011 in support of the grounds of opposition specified in the Notice of Opposition. This affidavit was no doubt filed in purported compliance with r 2.06(2)(b) and r 2.06(2)(c) of the Federal Court (Bankruptcy) Rules 2005 (the FCA Bankruptcy Rules).

8    At the hearing, Counsel for the respondent sought to read and to rely upon only paragraphs 1 to 6 of that affidavit and Exhibit “RNS#05” to that affidavit. I rejected paragraphs 1 to 6 of the respondent’s affidavit. Exhibit “RNS#05” was admitted into evidence and became Exhibit 1 (Napiat Pty Ltd v Salfinger; In the Matter of Salfinger (No 6) [2011] FCA 1298).

9    Ground 4 specified in the Notice of Opposition was completely answered by the amendment to the Petition which I allowed at the commencement of the hearing.

10    At the hearing, Counsel for the respondent explained that the “some other reason” (and only other reason) relied upon by the respondent under Ground 6 was the fact that the applicant had brought proceedings in Israel against the respondent seeking orders there that the judgment which underpins the Petition be enforced in Israel.

The Issues

11    Subject to being satisfied that the applicant has proven the matters specified in s 52(1) of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act), the Court may make a sequestration order against the estate of the respondent in the event that none of the grounds of opposition raised by the respondent are made good by him.

12    The issues that the Court must determine are:

(a)    Whether the bankruptcy notice relied upon by the applicant as the foundation for the act of bankruptcy alleged in the Petition was validly served upon the respondent. The applicant does not allege that that bankruptcy notice was served upon the respondent personally. Rather, it alleges that that bankruptcy notice was left in an envelope marked with the respondent’s name, at the last-known address of the respondent, with the consequence that it was validly served upon him pursuant to reg 16.01(1)(c) and reg 16.01(2)(b) of the Bankruptcy Regulations 1996 (the Bankruptcy Regulations). These allegations give rise to the following sub-issues:

(i)    What is the meaning of the expression “…last-known address of the person…” in reg 16.01(1)(c) of the Bankruptcy Regulations;

(ii)    In light of that meaning, was the address at which service was effected in the present case the last-known address of the respondent; and

(iii)    Whether, having regard to the conclusions reached by the Court in answer to sub-issues (i) and (ii), the respondent has committed an act of bankruptcy and, if so, when.

(b)    Whether, if the Court holds that the respondent has committed an act of bankruptcy, one or more of the jurisdictional facts specified in s 43(1)(b) of the Bankruptcy Act has been established.

(c)    Whether the Petition constitutes an abuse of process.

(d)    Whether for some other reason a sequestration order should not be made against the estate of the respondent.

(e)    Whether there is proof of the matters required to be proven pursuant to s 52(1) of the Bankruptcy Act.

13    The conditions specified in s 44(1) of the Bankruptcy Act are satisfied in the present case if I hold that the alleged act of bankruptcy was, in fact, committed. This is because the judgment debt relied upon by the applicant exceeds $5,000.00 and is a liquidated sum which has fallen due for payment and because the alleged act of bankruptcy was committed within six months before the presentation of the Petition.

The Petition and the Affidavits Verifying the Petition

14    In the Petition, the applicant alleges that:

(a)    The respondent owes the applicant the amount of $804,478.55 pursuant to an order made by Cowdroy J of this Court on 15 October 2010 (the judgment debt) (par 1).

(b)    The applicant does not hold security over the property of the respondent (par 2).

(c)    The act of bankruptcy relied upon by the applicant is the failure on the part of the respondent to comply on or before 11 April 2011 with the requirements of a bankruptcy notice served upon him on 21 March 2011 by paying the judgment debt to the applicant or by compounding the judgment debt to the satisfaction of the applicant or to satisfy the Court that he had a relevant counter-claim, set-off or cross demand (as described in s 40(1)(g) of the Bankruptcy Act) (par 4).

(d)    At the time when the alleged act of bankruptcy was committed, the respondent satisfied one or more of the following jurisdictional bases, namely that he:

(a)    was carrying on business in Australia either personally or by an agent or manager;

(b)    represented in Family Court Proceedings held in Perth on 9 February 2011 the he resided at 1 Davena Street, Daniella [sic], in the state of Western Australia.

(c)    was ordinarily resident in Australia;

(d)    had a dwelling house or place of business in Australia.

15    In the Petition, the applicant goes on to provide additional information about the respondent (par 5). Included within that information are assertions by the applicant that the business name of the respondent is “Bema Gold (Australia) Pty Ltd (ACN: 105-505-468)” (Bema Gold) and that the business address of the respondent is “29 Marlborough Street, Fawkner, Vic., 3060”.

16    Paragraphs 1 to 4 of the Petition (as filed) were verified by Francesco Romeo who is the sole director of the applicant (see Mr Romeo’s affidavit sworn on 12 April 2011 and filed on 15 April 2011). Mr Romeo also testified at the hearing that he was the only person within the applicant who managed its affairs.

17    Mr Romeo swore two further affidavits (that of 17 May 2011 filed in Court on 18 May 2011 and that of 7 November 2011 filed on the same day). In each of those additional affidavits, Mr Romeo swore that the full amount of the judgment debt remained owing to the applicant as at 17 May 2011 and 7 November 2011 respectively. 7 November 2011 was the day before the hearing before me.

18    The judgment debt is constituted by an order of this Court made by Cowdroy J on 15 October 2010 in proceeding NSD 829 of 2004 between the applicant in this proceeding as applicant and two corporations and the respondent in this proceeding as respondents. The respondent here was the third respondent in the proceeding determined by Cowdroy J. The relevant order made by Cowdroy J on 15 October 2010 is in the following terms:

THE COURT ORDERS THAT:

…

2.    The first, second and third respondents pay damages to the applicant in the amount of $804,478.55 being the sum of $170,000 in respect of capital monies and $450,000 in respect of loan monies and interest thereon [amounting] to $184,478.55.

19    That order was identical to an earlier order for payment made by Cowdroy J in the same proceeding on 24 April 2007.

20    The effect of the order made by Cowdroy J on 15 October 2010 was, amongst other things, that the respondent in the present proceeding was required to pay to the applicant in the present proceeding the amount of $804,478.55. The respondent’s liability, as found by Cowdroy J, was pursuant to s 75B of the Trade Practices Act 1974 (Cth) as a person involved in contraventions of that Act by the two corporate respondents. His Honour’s order took effect on 15 October 2010, the date upon which it was made (O 35 r 3 of the Federal Court Rules (now repealed)).

21    The respondents in the proceeding before Cowdroy J did not appear at the hearing before his Honour.

22    Nonetheless, those respondents appealed to the Full Court from the decision and orders made by Cowdroy J. Their appeal was dismissed with costs. An Application for Special Leave to Appeal to the High Court was deemed to be abandoned pursuant to r 41.13.2 of the High Court Rules because the applicants failed to comply with r 41 of the High Court Rules.

23    The respondent did not contend before me that he had paid any part of the judgment debt.

24    I am satisfied that, as at the date of the hearing before me (8 November 2011), the full amount of the judgment debt was still owing by the respondent to the applicant. Further, by the time that the Petition was filed, no avenue remained open to the respondent to challenge his liability to pay the judgment debt.

25    In the form in which it was filed, the Petition was verified in accordance with s 47(1) of the Bankruptcy Act. The Petition substantially complied with r 4.02 of the FCA Bankruptcy Rules and the prescribed form of Petition (Form 6 in Schedule 1 to the FCA Bankruptcy Rules).

26    Because the act of bankruptcy relied upon by the applicant was the respondent’s failure to comply with a bankruptcy notice, the applicant was also required to comply with r 4.04 and r 4.05 of the FCA Bankruptcy Rules (as to which see rr 4.02(3)(c), 4.04 and 4.05 of the FCA Bankruptcy Rules).

27    Rule 4.04 and r 4.05 of the FCA Bankruptcy Rules are in the following terms:

4.04    Creditor’s petition founded on failure to comply with bankruptcy notice etc (Bankruptcy Act s 40(1)(g))

(1)    If a creditor’s petition is founded on an act of bankruptcy mentioned in paragraph 40(1)(g) of the Bankruptcy Act, the petition must also be accompanied by:

(a)    an affidavit stating:

(i)    that the records of the Court and the records of the Federal Magistrates Court have been searched and no application in relation to the bankruptcy notice has been made; or

(ii)    that an application was made in the Court or in the Federal Magistrates Court, as applicable, for an order setting aside the relevant bankruptcy notice and the application has been finally decided; or

(iii)    that an application was made in the Court or in the Federal Magistrates Court, as applicable, for an order extending the time for compliance with the bankruptcy notice and the application has been finally decided; and

(b)    an affidavit of service of the relevant bankruptcy notice.

(2)    If an application mentioned in subparagraph (1)(a)(ii) or (iii) was made, a copy of the order finally deciding the application must be attached to the affidavit required by paragraph (1)(a).

4.05    Documents to be served

Unless the Court otherwise orders, at least 5 days before the date fixed for the hearing of a creditor’s petition, the applicant creditor must serve on the respondent debtor:

(a)    the creditor’s petition; and

(b)    a copy of the affidavit, or affidavits, verifying the petition required by subsection 47(1) of the Bankruptcy Act; and

(c)    if applicable, a copy of the affidavit required by paragraph 4.04(1)(a); and

(d)    if applicable, a copy of the affidavit of service of the bankruptcy notice required by paragraph 4.04(1)(b); and

(e)    a copy of any consent to act as trustee filed under section 156A of the Bankruptcy Act.

28    The affidavit of search required by r 4.04(1)(a) requires that the relevant searches be carried out in the records of both this Court and the Federal Magistrates Court. Unless the Court otherwise orders, that affidavit of search must be served upon the judgment debtor “…at least 5 days before the date fixed for the hearing of [the] creditor’s petition…” (r 4.05(c)).

29    In the present case, the applicant relies upon the affidavits of Clement Anthony Gye sworn on 13 April 2011 and on 15 April 2011, both of which were filed on 15 April 2011, as meeting the requirements of r 4.04(1)(a) of the FCA Bankruptcy Rules. I am satisfied that the two affidavits of Mr Gye to which I have referred establish that no application in relation to the bankruptcy notice relied upon by the applicant in the Petition as the foundation for the act of bankruptcy alleged in the Petition had been filed as at the date of the filing of the Petition (15 April 2011). I so find.

30    On 15 April 2011, the applicant also filed two affidavits of Shane Hedley Shaw, process server, sworn on 29 March 2011 and on 11 April 2011 respectively. The applicant relies upon those affidavits as proving service of the bankruptcy notice. The applicant also contends that those affidavits meet the requirements of r 4.04(1)(b) of the FCA Bankruptcy Rules.

31    The question of service of the bankruptcy notice is one of the issues to be determined by me in these Reasons for Judgment. I will deal with that question when I come to address the issues which I have listed at [12] above.

32    The Petition, the two affidavits of Mr Gye, the two affidavits of Mr Shaw and the affidavit of Mr Romeo sworn on 12 April 2011 were all personally served upon the respondent in Australia on 5 May 2011 (see the affidavit of Graham Vose sworn on 13 May 2011).

33    For the above reasons, and subject to my decision as to whether the relevant bankruptcy notice was validly served upon the respondent, I find that the applicant has complied with s 47(1) and s 47(1A) of the Bankruptcy Act and rr 4.02, 4.04 and 4.05 of the FCA Bankruptcy Rules. The respondent did not suggest otherwise at the hearing before me.

Issue 1—Service of the Bankruptcy Notice

34    The relevant bankruptcy notice is Bankruptcy Notice (No BN 531 of 2011) issued by the Official Receiver on 31 January 2011 (the bankruptcy notice). In the bankruptcy notice, the amount of the debt claimed by the applicant to be owing to it by the respondent is $804,478.55. In the bankruptcy notice, that debt was said to be due pursuant to the order of Cowdroy J made on 15 October 2010. No amount by way of post-judgment interest was claimed in the bankruptcy notice.

35    In his affidavit sworn on 29 March 2011, Mr Shaw said that, on 21 March 2011, he left at 1 Davena Street, Dianella, in the State of Western Australia, an envelope marked with the respondent’s name in which was enclosed a sealed copy of the bankruptcy notice. If that address was “the last-known address” of the respondent as at that date, leaving that envelope at that address would constitute good and effective service of the bankruptcy notice on the respondent pursuant to reg 16.01(1)(c) and reg 16.01(2)(b) of the Bankruptcy Regulations.

36    The critical issue concerning service of the bankruptcy notice is, therefore: Was 1 Davena Street, Dianella, WA, 6059 the “last-known address” of the respondent within the meaning of that expression in reg 16.01(1)(c) of the Bankruptcy Regulations?

37    In his affidavit sworn on 11 April 2011, Mr Shaw said:

3.     I received a bankruptcy notice number BN 531 of 31 January 2011 with instructions to serve to Roderick Neil Salfinger (“Mr Salfinger”) personally.

4.     My accompanying instructions advised me Mr Salfinger was scheduled to appear in the Family Court of Western Australia at 9.15 am on 9 February 2011.

5.    I attended the Family Court on the morning of 9 February 2011.

6.     Approximately 5 minutes prior to the Hearing I discovered Mr Salfinger was not going to appear, and that he was represented by a solicitor. I spoke to a female solicitor, who identified herself as Rahida Syed from Holden Barlow and we had a conversation to the following effect:

Me:    “Do you act for Rod Salfinger?”

Rashida Syed:     “We are only appearing to advise the court we are ceasing to act on behalf of him.”

7.     I then attended the Hearing in the Family Court and realised the proceedings were based upon an application by Mr Salfinger in Family Court proceedings against his wife to have the place of domicile determined as Australia.

8.     At the commencement of the proceedings a telephone hook up was established between the court and a gentleman who identified himself as Mr Salfinger. The Hearing lasted for approximately 20 minutes Mr Salfinger indicated to the court that he was currently in Israel. During the Hearing the words to the following effect were said:

Magistrate:    “As your solicitors have ceased to act, the court requires you to provide an address for service in Australia.”

Mr Salfinger:    “The address for all correspondence is 1 Davena Street, Dianella.”

9.     Annexed hereto and marked “A” is a historic company search of Bema Gold (Australia) Pty Ltd, provided to me by my instructing solicitors. The address given in this document, by Mr Salfinger, is 1 Davena Street, Dianella, Western Australia, 6059.

38    The ASIC Historical Company Extract in respect of Bema Gold which is Annexure “A” to Mr Shaw’s affidavit sworn on 11 April 2011 records the following matters:

(a)    That extract was obtained on 26 November 2010.

(b)    The address of the Registered Office of Bema Gold as at 26 November 2010 was:

Barry Moshel (Lawyers)

Merton Street

Caulfield North Vic 3161

(c)    The address of the principal place of business of Bema Gold as at that date was:

71 Northern Avenue

Mentone, Vic, 3194

(d)    The address shown for the respondent as at that date both in his capacity as the sole director and sole secretary of Bema Gold was:

1 Davena Street

Dianella, WA, 6059

(e)    All of the shares in Bema Gold were held as at that date by Frederick Roy Salfinger (the respondent’s father).

(f)    Frederick Salfinger did not hold those shares beneficially.

39    Given that the respondent was the sole director and sole secretary of Bema Gold as at 26 November 2010, having occupied those positions continuously since 11 July 2003, I infer that he was the person who personally informed ASIC that his residential address was 1 Davena Street, Dianella, WA or who instructed another person to do so on behalf of him and on behalf of Bema Gold. He must have informed ASIC of that fact or caused another person to inform ASIC of that fact at some time prior to 26 November 2010.

40    In his affidavit sworn on 7 November 2010, Mr Gye said that, in January 2011, he instructed Mr Shaw in the following terms:

6.    I then instructed Shane Shaw to serve it upon the Respondent. I provided him with the search annexed to his affidavit of 11 April 2011. I also instructed him in the following terms:

“Mr Salfinger is involved in family law proceedings in Perth against his wife and the matter is back before the Family Court on 9 February 2011. You should attend outside the Court and attempt to serve the Bankruptcy Notice on Mr Salfinger. Try and find out Mr Salfinger’s current address in Perth in the event that he does not attend the Court hearing.”

41    In the same affidavit, Mr Gye also said that, on or about 10 February 2011, he received another ASIC Historical Company Extract in respect of Bema Gold. That Extract showed that there had not been any change in the information held by ASIC in respect of Bema Gold since November 2010. In particular, the respondent’s residential address was still shown as 1 Davena Street, Dianella, WA.

42    On or about 24 May 2011, after the envelope with the bankruptcy notice inside had been left at 1 Davena Street, Dianella, WA by Mr Shaw, Mr Gye obtained certain documents from ASIC. These documents are the four documents referred to next to Document No. 026243437 on p 2 of the ASIC Extract in respect of Bema Gold. They were received by ASIC on 23 February 2010 and processed by ASIC on 26 February 2010. They are described as:

43    All of the documents referred to at [42] above were tendered in evidence before me. (They comprise Annexure “C” to Mr Gye’s affidavit sworn on 7 November 2011.)

44    Those documents establish the following facts and matters:

(a)    The four “documents” comprise four folios being pp 1–4 of a completed ASIC Form 484 dated 16 February 2010.

(b)    The Form 484 has been completed in handwriting and is signed by the respondent.

(c)    On both p 2 and p 4 of the Form 484, the respondent’s residential address is specified as 1 Davena Street, Dianella, WA, 6059. The Form contains statements to the effect that the respondent’s residential address changed on 16 February 2010 and that his new address was thereafter 1 Davena Street, Dianella, WA.

45    On 20 June 2011, Mr Gye obtained a search of the records maintained by ASIC in respect of Bema Gold. That search showed that, effective from 1 April 2011, according to documents lodged with ASIC, the respondent’s mother had become the sole director and sole secretary of Bema Gold. That search also showed that the respondent had apparently resigned his positions as sole director and sole secretary of Bema Gold, effective from 1 April 2011. It appeared from that search that the respondent had also informed ASIC that his current address was 157 Hertzl Street, Rehovot, 76287, Israel (the Israel address). All of these changes appeared to have been effected by documents lodged with ASIC on 18 May 2011 (the day when the Petition was first returned before the Court) and on 19 May 2011.

46    Mr Gye obtained the relevant ASIC Form 484A1 dated 18 May 2011. It was given Document No 7E3674263 by ASIC. It is completed in typescript. The information in it is said to be certified by the respondent, although he has not signed the form. By the form, the respondent notified ASIC of his asserted change of address to the Israel address.

47    The applicant tendered as Exhibit “A” the complete transcript of two occasions when the family law proceedings brought by the respondent against his former wife in the Family Court of Western Australia came before that Court. The first occasion was 9 February 2011. The second occasion was 14 April 2011. On both occasions, the proceedings came before Justice Crooks.

48    On 9 February 2011, Ms Syed of Holden Barlow, lawyers, informed the Court that her firm had ceased to act for the respondent. She completed the necessary formalities on that day and was excused from the hearing. The respondent was then permitted to represent himself. He attended the hearing on 9 February 2011 by telephone. He said he was in Israel. There was no appearance either by or on behalf of the respondent’s former wife on this occasion.

49    After some discussion about the circumstances in which the respondent had sought and been granted an adjournment of the hearing of his Family Court proceedings fixed for December 2010, Crooks J asked the respondent when he intended to return to Australia. The respondent said that he had intended to return to Australia the day before the hearing (ie on 8 February 2011) but had been unable to do so. His Honour then asked the respondent to specify an address where documents could be sent to him. At Transcript p 5 l 41 to Transcript p 6 l 22, the following exchange took place between his Honour and the respondent:

HIS HONOUR: Mr Salfinger, I’m not being critical of you for the events that have taken place. What I’m trying to do is just point out to you there is no solicitor in Perth that the court will send documents to. You are in Israel. Now, what address does the court send documents to you, given that we can’t send them to Holden Barlow?

SALFINGER, MR: Right. Well, I have an address in Perth, and that can be sent. It’s just that it’s not like a lawyer’s office. So, when I’m there, it’s easy for me to pick up papers. I rent a place out in Dianella.

HIS HONOUR: Well, Mr Salfinger, I don’t know how often you check your mail at that address, but clearly, if documents are sent and they’re not checked, well, I’m concerned to avoid a situation where mail sits there. It may contain significant dates. I don’t know how often you’re returning. Holden Barlow will no longer be receiving documents, unless you re-engage them. So, what is the address in Perth that the court can send documents to you?

SALFINGER, MR: Okay. It’s 1 Davena Street, Dianella.

HIS HONOUR: Sorry, 1 D-a-v-i-n-a?

SALFINGER, MR: E-n-a, Davena.

HIS HONOUR: Sorry, D-a-v-e-n-a, Davena Street?

SALFINGER, MR: Dianella.

HIS HONOUR: Now, what you’ll need to do is you will need to confirm with the court in writing an address where those documents can be sent, but it is 1 Davena Street, Dianella. Do you know the postcode?

SALFINGER, MR: Yes, 6059.

50    On 14 April 2011, the respondent attended in person at the hearing held on that day in the Family Court of Western Australia in Perth. He represented himself. His former wife was represented by a Canadian lawyer. Both the respondent’s former wife and her lawyer participated in the hearing on this occasion by telephone. They were both in Canada.

51    At the very beginning of the hearing on this occasion, the following exchange took place between Crooks J and the respondent (Transcript p 2 l 43–Transcript p 4 l 12):

HIS HONOUR: Mr Salfinger, are you now a resident in Western Australia or will you continue to travel as you have in the past?

SALFINGER, MR: Your Honour, my position is that I’m an ordinary resident here. I’ve been travelling extensively for my work, so my work takes me – well, I’ve been out of work since September last year, but I’ve been working up until then in Israel. I was trying to resurrect a position in Israel. But my income has been coming from Australia in the past and my accountants are here in Perth. And I’ve been based here in Perth.

HIS HONOUR: So you have been working in Israel - - -

SALFINGER, MR: Yes.

HIS HONOUR: - - - for the last 18 months. Is that right?

SALFINGER, MR: A bit longer, but it was – Israel since March of 2010, but I was being paid in Australia. So although I was working as a consultant in Israel, my employment was here in Australia and that’s why I’ve been filing my taxes in Australia.

HIS HONOUR: So even though your work is in Israel, you get paid - - -

SALFINGER, MR: Yes.

HIS HONOUR: - - - in Australia. It’s an international company, is it, or - - -

SALFINGER, MR: No, it’s just me as a consultant and I don’t have any immigration status in Israel, so technically I couldn’t work in Israel per se for an Israeli employer because I didn’t have any immigration status in Israel.

HIS HONOUR: So you have worked in Israel but effectively you have arranged with those that you do work for to pay you in Australia.

SALFINGER, MR: Yes. I have actually been working through an Australian company, but the actual supervision of what I was doing was in Israel. So that was fine - - -

HIS HONOUR: So an Australian company working in Israel. Is that correct?

SALFINGER, MR: Well, it was me personally as a consultant working for an Australian company, being paid in Australia, and that was quite okay as far as Israel immigration.

HIS HONOUR: So you have been working in Israel - - -

SALFINGER, MR: Yes.

HIS HONOUR: - - - as a consultant.

SALFINGER, MR: Yes. And also during that time I was backwards and forwards also to Canada because the work also required some work in Canada as well. And I was here in Australia as well. So I was in all three locations. But predominantly the biggest portion of the time was in Israel. And the company there provided - - -

HIS HONOUR: So working in Israel, in Canada, and in Australia - - -

SALFINGER, MR: Yes.

HIS HONOUR: - - - but predominantly in Israel since March 2010.

SALFINGER, MR: Yes. And then finally my taxes and income here and my GST returns here in Australia because my income was GST-able, so I was collecting and filing my returns here in Australia. My accountants are here in Perth, called Femia & Associates.

HIS HONOUR: Well, you are an Australian taxpayer.

SALFINGER, MR: Exactly, your Honour.

52    It is plain from that exchange and remarks made later during the course of the hearing on 14 April 2010 that the respondent’s former wife was challenging the jurisdiction of the Family Court of Western Australia to deal with her matrimonial dispute with the respondent. A fundamental plank in the respondent’s answer to that challenge was his assertion that he was ordinarily resident in Perth.

53    The respondent had ample opportunity to give evidence at the hearing before me to explain the facts and matters to which I have referred at [35]–[52] above if indeed he could explain any of them. He chose not to do so and did not do so. He did not give any evidence before me. He did not attend the hearing before me.

54    The evidence to which I have referred at [35]–[52] above establishes the following facts:

(a)    At all times from February 2010 until 18 May 2011, the records maintained by ASIC in respect of Bema Gold showed the residential address of the respondent as 1 Davena Street, Dianella, WA, 6059.

(b)    The respondent had personally notified that address to ASIC in February 2010 and did not notify any subsequent change of residential address until 18 May 2011.

(c)    The ASIC records in respect of Bema Gold are public records available for inspection by any member of the public upon payment of a fee. The respondent must be taken to have known these facts.

(d)    In 2009, the respondent commenced a matrimonial proceeding against his former wife in the Family Court of Western Australia. The jurisdiction of that Court to deal with that dispute was challenged by the respondent’s former wife. In that context, the respondent:

(i)    Told a judge of the Family Court of Western Australia on 9 February 2011 that he was then renting a place known as 1 Davena Street, Dianella, WA, 6059 and that important documents relating to his Family Court proceedings in Western Australia could be sent to that address because documents sent to 1 Davena Street, Dianella, WA, would come to his attention; and

(ii)    Told the same judge on 14 April 2011, when he attended in person at Court in Perth on that day that, as at 14 April 2011, he was an ordinary resident of Perth; that he personally carried on a consultancy business based in Australia; that his income came from Australia; that he was based in Perth; that he paid taxes in Australia; and that he and all his family are Australian citizens.

55    The ASIC Form 484A1 dated 18 May 2011 lodged with ASIC on 18 May 2011 in respect of Bema Gold does not assist the respondent nor do the other changes to various details in respect of Bema Gold made in the records of ASIC on 18 May 2011 and on 19 May 2011 assist the respondent. Although the documents lodged by him on 18 May 2011 and 19 May 2011 suggest that the various changes mentioned in those documents took effect from 1 April 2011, I do not accept that these changes were put in place at any time before 18 May 2011. In particular, I do not accept that the address 1 Davena Street, Dianella, WA, 6059, ceased to be the respondent’s residential address on 1 April 2011. The ASIC forms were dated the very day that the Petition was first returned before the Court (or, in one case, the next day) and by then the respondent was well aware that the act of bankruptcy relied upon by the applicant was alleged to have been committed on 11 April 2011 (he had been personally served with the Petition on 5 May 2011). The respondent had every incentive to falsify the ASIC forms which he lodged on 18 May 2011 and 19 May 2011 in order to attempt to represent that he had left the Dianella address on 1 April 2011. If he had truly left that address on 1 April 2011, he most likely would have prepared and lodged the forms much earlier than he did. The respondent did not come to Court to put his oath or affirmation to the facts asserted in the ASIC forms dated 18 May 2011 and 19 May 2011. Most significantly of all, the contents of those forms are inconsistent with the assertions which the respondent made to the Family Court of Western Australia on 9 February 2011 and, in particular, on 14 April 2011.

56    It is true that the respondent had a strong motive to lie to the Family Court of Western Australia about his place of residence and the details of his business activities during the first half of 2011. But there is no direct evidence that, in fact, he did so. Nor is there any reason not to accept the import of the ASIC records in respect of Bema Gold for the period from February 2010 up to 18 May 2011.

57    The address in Israel which surfaced in the ASIC records in respect of Bema Gold for the first time on 18 May 2011 appears as the address for the respondent shown on the initiating process of the enforcement proceedings commenced by the applicant in Israel on 22 March 2011 to which I shall refer later in these Reasons. Counsel for the respondent endeavoured to establish by suggesting to both Mr Romeo and to Mr Gye in cross-examination that, as at 22 March 2011, each of them knew of the Israel address and that, as at that date, each of them believed that that address was the respondent’s address as at that date. Neither witness agreed with either of these propositions. I accept their evidence. The Israel address is an office block occupied by a firm of lawyers and possibly others. It is not a residential building.

58    There are several possible explanations as to how the Israel address found its way onto the originating process of the enforcement proceedings instituted in Israel by the applicant which are consistent with neither Mr Romeo nor Mr Gye (or anyone else within or on behalf of the applicant) being aware of that address and also consistent with neither of them having given that address to the applicant’s lawyers in Israel. I do not need to speculate as to those possibilities. It is sufficient for me to observe, as I do, that the respondent has failed to establish that the only possible way, or even the most likely way, that the Israel address came to be included on the originating process in the enforcement proceedings in Israel was if an officer or agent of the applicant had instructed that it be so included.

59    In any event, without more, the mere fact that the Israel address was shown on that process does not overcome the weight of the evidence to which I have referred at [35]–[52] above which strongly supports the findings which I have made at [54] above.

60    I therefore also find that:

(a)    The address last made known to the public by the respondent as his residential address before 21 March 2011 was 1 Davena Street, Dianella, WA, 6059. Examples of this having been done are the documents lodged with ASIC in respect of Bema Gold on 26 February 2010 which were left unchanged until 18 May 2011. Those documents are clear in their import and were not undermined by any other evidence. The respondent also told Crooks J that 1 Davena Street, Dianella, WA, was his address in Western Australia. He made that statement on 9 February 2011 (one month before the bankruptcy notice was left at that address) and again on 14 April 2011 (one month after the bankruptcy notice was left at that address). I infer that that address continued to be his residential address throughout the period from February to April 2011.

(b)    The sole director and manager of the applicant, Mr Romeo, and the applicant’s solicitor, Mr Gye, both believed that the residential address of the respondent as at 21 March 2011 was 1 Davena Street, Dianella, WA, 6059. Mr Gye formed that belief by reading the ASIC Historical Company Extracts in respect of Bema Gold obtained by him on 26 November 2010 and 10 February 2011 and from what Mr Shaw had conveyed to him that the respondent had told Crooks J on 9 February 2011 at a public hearing of the Family Court of Western Australia at which Mr Shaw was present. The information which Mr Gye obtained from those two sources was consistent with other information which he had received by February 2011. He said that, by February 2011, he had been told that the respondent had left Victoria and moved to Western Australia in order to run his Family Court proceedings. In evidence, Mr Gye said “April” but, having regard to the context in which the answer was given, he clearly meant “February”.

61    Counsel for the respondent submitted that:

(a)    Upon the true interpretation of reg 16.01(1)(c) of the Bankruptcy Regulations, the meaning of the expression “…last-known address of the person…” is that address which has been made known by the person at the time closest to the date when service is said to have been effected. It is not necessary that that address be made known directly by the debtor to the creditor. It is sufficient if the address comes to the knowledge of the creditor as the last address of the debtor, however that knowledge is obtained. The debtor must be the source of the address, directly or indirectly. In this sense, it is the debtor who must make known the address.

(b)    In the present case, the last-known address of the respondent was the Israel address. It was made known by him prior to 21 March 2011 (the date when the envelope with the bankruptcy notice inside was left at the Dianella address for the respondent). The applicant was aware of the Israel address and was also aware that it had been put into the public domain by the respondent.

62    I agree with the submission made on behalf of the respondent as to the correct interpretation of reg 16.01(1)(c) which I have summarised at [61(a)] above. However, for the reasons which I have already explained, I reject the submission which I have summarised at [61(b)] above. In particular, the applicant was not aware of the Israel address as at 21 March 2011 and did not become aware of it until about 24 May 2011 when Mr Gye obtained further documents from ASIC in respect of Bema Gold.

63    In any event, there is no evidence of the nature and extent of the connection between the respondent and the Israel address (if any). If the respondent wished to have the Court accept that the Israel address was his last-known address, it was incumbent upon him to adduce such evidence but he did not do so.

64    In Drake v Stanton [1999] FCA 1635, Tamberlin J considered the meaning of the expression “last-known address of the person…” in reg 16.01(1)(c) of the Bankruptcy Regulations. His Honour observed (at [5]) that, upon the correct interpretation of that expression, it does not matter whether the debtor resides at the particular address or not. I agree. His Honour also said that the expression does not expressly refer to the debtor’s residence or place of abode. I also agree with that observation. At [8], his Honour held that the expression refers to that address which has been made known by the debtor as at the time closest to the date in question. I also agree with that observation although it must be said that it probably does not fully explain the meaning of the expression.

65    In Skalkos v T & S Recoveries Pty Ltd (2004) 141 FCR 107, the Full Court cited with apparent approval the observations made by Tamberlin J to which I have referred at [64] above. The Full Court also held that a business address can be a person’s last-known address.

66    In Skalkos, at [36] (p 119), the Full Court concluded that, on the evidence, the debtor was not at the relevant time living at a residential address in Vaucluse, although that was his usual dwelling-house or residence; that the debtor’s current residential address was not known to the creditor; that, in various contexts, the debtor had given the business address of a corporation in Alexandria as his address for service; and that the best prospect of getting a document to the debtor was by sending it to the Alexandria address. In light of those matters, the Full Court then said (at [37] (p 119)):

37.    The primary judge said that although the debtor did not reside at the Alexandria address, he was using it for business purposes, and that although the premises were occupied by the company rather than the debtor personally, “he had such a degree of connection with the premises that they may properly be described as his last-known address”. Drake v Stanton, Robertson and the cases referred to in the latter establish, in our view correctly, that a business address can be a person’s “last-known address”. The primary judge’s conclusion that the Alexandria address was the debtor’s last-known address was amply open to him on the evidence summarised at [36].

67    Skalkos is not authority for the proposition that a person may have two last-known addresses within the meaning of that expression in reg 16.01(1)(c) of the Bankruptcy Regulations. As presently advised, I do not think that a debtor can have two or more last-known addresses within the meaning of that regulation. Rather, Skalkos is authority for the proposition that the last-known address does not necessarily have to be a residential address but may be a business address, including a business address which is not occupied by the debtor personally pursuant to some legal or equitable entitlement. The question may well often be: Does the debtor have such a degree of connection with the premises that they may properly be described as his last-known address?

68    In the present case, the only real candidate that could sensibly meet the description “last-known address of the respondent” within the meaning of reg 16.01(1)(c) as at 21 March 2011 was the Dianella address.

69    I therefore find that the bankruptcy notice was validly served on 21 March 2011 at the last-known address of the respondent within the meaning of reg 16.01(1)(c) of the Bankruptcy Regulations (viz at the Dianella address).

70    The respondent has never taken any steps to set aside the bankruptcy notice or to obtain an order extending the time for compliance with the bankruptcy notice. Nor has he paid any part of the judgment debt or attempted to compound that debt to the satisfaction of the applicant. I therefore also find that the respondent committed an act of bankruptcy immediately after midnight on 11 April 2011. That is the act of bankruptcy relied upon by the applicant in the Petition.

Issue 2—Jurisdiction

71    The applicant contends that, as at the date of the commission of the act of bankruptcy (viz 11 April 2011), the respondent:

(a)    Was ordinarily resident in Australia;

(b)    Had a dwelling-house in Australia;

(c)    Was personally carrying on business in Australia; and

(d)    Had a place of business in Australia.

72    The evidence does not support a finding that the respondent had a place of business in Australia as at 11 April 2011. I am satisfied, however, that each of the other jurisdictional bases relied upon in the present case have been established. I shall briefly explain why.

73    The expressions “resident” and “ordinarily resident” are not technical terms and have their ordinary English meaning (Re Taylor; Ex parte Natwest Australia Bank Limited (1992) 37 FCR 194 at 197 per Lockhart J). Whether a debtor is ordinarily resident in Australia is a question of fact and degree (Re Taylor at 197). It is the debtor’s settled and usual place of abode (Re Taylor at 198)—the place where he or she regularly or customarily lives (Re Taylor at 198). As Lockhart J went on to say in Re Taylor (at 158):

There must be some element of permanence, to be contrasted with a place where he stays only casually or intermittently. The expression “ordinarily resident in” connotes some habit of life, and is to be contrasted with temporary or occasional residence: see Levene (supra) and Lysaght (supra). As Lord Warrington said in Levene (at 232): “‘Ordinarily resident’ means according to the way a man’s life is actually ordered.” The concept of ordinarily resident cannot be stated in definite terms; each case must be determined on its facts and after taking into account all relevant matters: see the Canadian case of Thomson v Minister of National Revenue [1946] SCR 209 per Estey J at 231.

74    Where the debtor views himself or herself as living at the relevant time is an important factor in assessing his or her “ordinary residency” (Restom v Battenberg 4 ABC(NS) 474 at [47] per Stone J).

75    Whether a temporary absence from Australia prevents a debtor from being “ordinarily resident” here is a question of fact and degree (Re Vassis; Ex parte Leung (1986) 9 FCR 518 at 525 per Burchett J). Whether, at the time of departure and during the temporary absence, the debtor intends to return to live in Australia after the temporary absence is relevant to determining whether he or she is “ordinarily resident” in Australia during the absence (Re Vassis at 525).

76    Whether the debtor “has” a dwelling-house or a place of business in Australia is a question of fact. The debtor must use the premises to live in or to conduct business from, but does not necessarily have to own the premises. These questions are also questions of fact and degree.

77    The Courts have taken a broad view of what constitutes “carrying on a business” but the business must be the debtor’s own business. He or she must be carrying on the relevant business on his or her own account (Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256 at 260–261 per Gibbs J).

78    Applying the above principles to the facts of the present case, I find:

(a)    In the period from mid to late February 2010 until at least mid May 2011, the respondent lived at 1 Davena Street, Dianella, WA, 6059. He did not spend some time there every day but that was his normal place of abode—his home. That property is a residential property. The fact that it is a residential property is asserted and thus admitted by the respondent in statements which he made in ASIC documents lodged by him in respect of Bema Gold and in statements which he made to the Family Court of Western Australia.

(b)    In the period referred to in subpar (a) above, the respondent travelled overseas from time to time to Israel and to Canada. Those trips were of finite duration and were made for work or business purposes. He did not relocate permanently either to Israel or to Canada.

(c)    The business conducted by the respondent in that period was on his own account as a consultant. As he told Crooks J on 14 April 2011: “…it was me personally as a consultant working for an Australian company, being paid in Australia…”. He also said on that occasion that he had an Australian Business Number in his own name (in effect) and that the income which he earned (presumably as consultant’s fees) was subject to GST. He said that he was an Australian taxpayer.

(d)    The respondent unequivocally asserted to Crooks J on 14 April 2011 that he was, as at that date, “ordinarily resident” in Western Australia (presumably upon the basis that he was, at that time, living at 1 Davena Street, Dianella). In the context in which that statement was made, the respondent must be taken to have understood the implications of the statement. On 14 April 2011, he was trying to persuade Crooks J that the Family Court of Western Australia had jurisdiction over the matrimonial dispute which he had brought to that Court. His former wife was in Canada. His children were not in Australia. He had disclosed no assets in Australia. As he understood matters on 14 April 2011, the only basis upon which the Family Court of Western Australia might conceivably have had jurisdiction over the matrimonial dispute between his former wife and him was if he was “ordinarily resident” in Western Australia. Indeed, he himself chose those words to describe his status as at 14 April 2011. In those circumstances, the respondent did not just say that he was “ordinarily resident” in Western Australia. He took steps to ensure that, in fact, he was “ordinarily resident” in Western Australia by moving there to the residence at 1 Davena Street, Dianella. He was present in Western Australia on 14 April 2011.

79    In light of the findings made at [78] above, I conclude that, as at 11 April 2011, when the relevant act of bankruptcy was committed by the respondent:

(a)    He was ordinarily resident in Australia living at 1 Davena Street, Dianella, WA, 6059. He was, at that time, living and working in Western Australia. His base was there.

(b)    He had a dwelling-house in Western Australia viz 1 Davena Street, Dianella, WA, 6059.

(c)    He was personally carrying on business on his own account in Australia viz in Western Australia.

80    Those findings necessarily mean that I am satisfied that the requirements of s 43(1)(a) and s 43(1)(b) of the Bankruptcy Act have been met in the present case and that therefore the Court has jurisdiction to make a sequestration order against the estate of the respondent.

81    I should add that, strictly speaking, the Notice of Opposition does not address the challenges to jurisdiction which were actually made by the respondent. This is because the respondent never denied or put in issue the additional bases for jurisdiction introduced into the case by the Amended Petition. However, I retain a discretion to allow those challenges to be advanced even though they are not within the grounds notified in the Notice of Opposition and I propose to do so. The applicant did not suggest that I should do otherwise. The case was run on the basis that the jurisdiction of the Court to make a sequestration order against the estate of the respondent was in issue.

82    However, for the reasons which I have given, the respondent’s challenges to jurisdiction all fail.

Issues 3 and 4—Abuse of Process and Discretion

83    Issue 3 (Abuse of Process) and Issue 4 (Some Other Reason) raised by the respondent essentially raise the same point, that is, that it is an abuse of process for the applicant to pursue bankruptcy proceedings in Australia based on the judgment debt while at the very same time taking steps to enforce the judgment debt in Israel.

84    The agreed facts set out in Exhibit “B” comprise the following:

1.    Exhibit RNS5 is a true copy of a request for registration of the Federal Court Judgment obtained by the applicant against the respondent upon which the bankruptcy notice herein is based.

2.    The document was stamped by the Merkatz District Court in Israel and dated 22 March 2011.

3.    The document records the applicant as the first party and the respondent as the second party with the address 157 Hertzl Street, Rehovot, 76287 underneath his name.

4.    On 8 September 2011, by consent the judgment was registered and a stay of 3 months for any execution of that judgment was ordered.

5.    The address 157 Hertzl Street, is the address of Doron Hess & Co., Lawyers.

85    It is quite clear from those facts that the proceedings in Israel are properly characterised as proceedings to register the judgment debt and then (presumably) to enforce payment of that debt. Such proceedings are quite different in character from bankruptcy proceedings.

86    In my judgment, in the circumstances, it is not an abuse of process for the applicant to proceed in Israel as it has done and at the same time to pursue the present proceeding. This is particularly so in light of the agreement reached between the parties which is recorded in par 4 of Exhibit “B”.

87    The case of Talacko v Talacko [2008] VSC 246, relied upon by the respondent, was a very different case. In that case, a plaintiff had commenced proceedings in both a foreign country and in Australia against the same defendant seeking the same relief. That is not the case here. The Israeli proceedings are for registration of the judgment debt. The present proceedings are bankruptcy proceedings, not enforcement proceedings.

88    There is no abuse of process. Nor does the existence of the Israeli proceedings constitute some other reason for not making a sequestration order.

Issue 5—Compliance with Section 52 of the Bankruptcy Act

89    The applicant has proven:

(a)    The existence of the judgment debt;

(b)    The fact that the whole of the judgment debt remains outstanding;

(c)    The fact that the respondent committed an act of bankruptcy as alleged in the Petition;

(d)    The fact that, as at the date of the commission of the alleged act of bankruptcy, the respondent:

(i)    Was personally carrying on business in Australia;

(ii)    Was ordinarily resident in Australia; and

(iii)    Had a dwelling-house in Australia; and

(e)    Service of the Petition.

90    Proof of the matters set out at [89] above is all that is required by s 52 of the Bankruptcy Act.

91    Rule 4.06 of the FCA Bankruptcy Rules imposes additional requirements. That rule is in the following terms:

4.06    Additional affidavits to be filed before hearing

(1)    Before the hearing of a creditor’s petition, the applicant creditor must file the affidavits required by this rule.

(2)    The applicant creditor must file an affidavit that:

(a)    states that the documents required to be served under rule 4.05 have been served and when and how they were served; and

(b)    has attached to it a copy of the documents that were served and proof of service in relation to the documents.

(3)    The applicant creditor must file an affidavit of a person who has searched, or caused a search to be made, in the National Personal Insolvency Index no earlier than the day before the hearing date for the petition that:

(a)    sets out the details of any references in the Index to the debtor; and

(b)    states that there were no details of a debt agreement, about the debt on which the applicant creditor relies, in the Index:

(i)    on the day when the petition was presented; and

(ii)    on the day when the search was made; and

(c)    has attached to it a copy of the relevant extract of the Index.

(4)    The applicant creditor must file an affidavit of a person who knows the relevant facts that:

(a)    was sworn as soon as practicable before the hearing date for the petition; and

(b)    states that each debt on which the applicant creditor relies is still owing.

(5)    The applicant creditor must file a search affidavit if the debt stated in the petition is an amount payable to the applicant creditor under a judgment of a court that ordered the amount to be paid into the court.

(6)    In subrule (5):

search affidavit, in relation to a petition stating a debt ordered to be paid into a court, means an affidavit of a person who has searched in the proper office of the court, not earlier than the day before the hearing date for the petition, stating whether the amount of the debt, or part of that amount, has been paid as ordered.

92    Sub-rules (2) and (4) of r 4.06 have been satisfied in the present case (see the affidavit of Mr Vose sworn on 13 May 2011 and the affidavit of Mr Romeo sworn on 7 November 2011). Sub-rules (5) and (6) of r 4.06 are irrelevant.

93    The affidavit of Mr Gye sworn on 7 November 2011 was read (inter alia) in order to satisfy sub-rule (3) of r 4.06.

94    In his affidavit, Mr Gye states that he caused a search to be made of the National Personal Insolvency Index on 7 November 2011. That search established that the only reference to the respondent in that Index was as respondent in this proceeding.

95    In his affidavit, Mr Gye also states that there were no details of a debt agreement, in relation to the debt on which the applicant relies, in the Index, on the day when the Petition was presented (viz 15 April 2011). However, he does not state in his affidavit that there were no details of a debt agreement, about the debt on which the applicant relies, in the Index, on the day when the search was made (viz 7 November 2011). In this respect, Mr Gye’s affidavit of 7 November 2011 does not satisfy r 4.06(3)(b)(ii) of the FCA Bankruptcy Rules. The applicant has no other affidavit that meets the requirements of that sub-rule. For this reason, the applicant has failed to comply with r 4.06(3)(b)(ii) of the FCA Bankruptcy Rules.

96    The requirement that there be an affidavit of search that satisfies r 4.06 is not sourced in the Bankruptcy Act itself. In particular, s 52 of the Bankruptcy Act does not lay down such a requirement. The requirement comes from the Rules of Court only. A judge may waive compliance with such a rule (as to which, see Martin v Commonwealth Bank of Australia (2001) 217 ALR 634 at [16] (p 637) per North, Mansfield and Katz JJ; and Totev v Sfar (2008) 167 FCR 193 at [15] (p 197) per Emmett J) or dispense with compliance with such a rule.

97    In the present case, it is quite clear from the extract from the Index annexed to Mr Gye’s affidavit that no debt agreement in relation to the debt was mentioned in the Index when the search of that Index was carried out at the request of Mr Gye on 7 November 2011.

98    The non-compliance described at [95] above is of no practical effect and causes no prejudice to the respondent.

99    I therefore waive compliance with r 4.06(3)(b)(ii) and, to the extent possible, dispense with compliance with that sub-rule in the present case.

Conclusions

100    I am satisfied that the Court has jurisdiction to make a sequestration order against the estate of the respondent. I am also satisfied that there is proof of the matters required to be proven by s 52(1) of the Bankruptcy Act. The respondent has failed to persuade me that there is any reason why a sequestration order should not be made. In those circumstances, I propose to make a sequestration order against the estate of the respondent as sought by the applicant. I will also provide for the payment of the applicant’s taxed costs.

101    There will be orders accordingly.

Associate:

Dated:    18 November 2011