FEDERAL COURT OF AUSTRALIA

Szepesvary v Weston (Trustee), in the matter of Szepesvary (Bankrupt) (No 2) [2018] FCA 87

ORDERS

THE COURT ORDERS THAT:

1.    The applicant’s application filed 24 September 2016 be dismissed, with costs.

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

REASONS FOR JUDGMENT

O’CALLAGHAN J:

1    As long ago as 13 March 2013, ACM Group Ltd (ACM) issued a complaint in the Magistrates’ Court of Victoria (the Complaint) at Melbourne against Mr Aaron Szepesvary, the applicant in this proceeding (Mr Szepesvary), claiming that Mr Szepesvary was indebted to it in the sum of $13,478.67, plus interest and costs. That total sum was made up as follows: “outstanding amount”: $10,489.29; “interest and late fees”: $3,289.38; “less part payments”: $300. The statement of claim relevantly pleaded as follows:

2.    By an agreement made on or about 16 December 2005 between the Defendant [Mr Szepesvary] and Westpac Banking Corporation (“WESTPAC”), Westpac, at the request of the Defendant, agreed to loan monies to the Defendant by provision of a Credit Card facility in exchange for the Defendant’s undertaking to repay the monies loaned plus interest and any other charges (“the Agreement”).

3.    In accordance with the Agreement, Westpac provided credit by provision of a credit card facility in exchange to the Defendant.

4.    In breach of the Agreement, the Defendant has failed to repay all monies loaned by the Westpac to the Defendant in accordance with the Defendant’s request pursuant to the Agreement.

PARTICULARS OF THE DEFAULT

    The Defendant has failed to pay the Westpac $10,489.29 pursuant to the Agreement (“the Defendant’s Liability”).

5.    On or about 6 October 2011, by way of an assignment of debt, the Plaintiff purchased the Defendant’s Liability from Westpac (“the Assignment”).

6.    On or about 6 October 2011, Westpac advised the Defendant in writing of the Assignment of the Defendant’s Liability and advised the Defendant that the Defendant’s Liability previously owing to Westpac was now due and payable to the Plaintiff.

PARTICULARS OF THE ASSIGNMENT

The notice of assignment of debt is dated 6 October 2011 and can be inspected at the offices of the Plaintiff’s Solicitors by appointment.

7.    Between 1 December 2011 to 9 May 2012 the Defendant made various part payments to the Plaintiff in the aggregated sum of $300.00 (“the Part Payments”).

8.    The Defendant is indebted to the Plaintiff in the sum of $13,478.67 with respect to the Outstanding Amount interest, late fees and part payments (“the Claimed Amount”).

2    Mr Szepesvary did not appear at the hearing of the Complaint on 16 April 2013. On that day, judgment was entered against him in the sum of $14,768.96 plus interest (the Judgment Debt).

3    On 25 July 2013, ACM caused a bankruptcy notice, issued on 16 July 2013, to be served on Mr Szepesvary. The bankruptcy notice relied on the non-payment of the Judgment Debt, although it records that the sum of $450 was deducted from as a “payment made and/or credit allowed since judgment/s or order/s.” The total debt amount stated in the bankruptcy notice, including accrued interest, was $14,690.83.

4    On 23 September 2013, ACM petitioned in the Federal Circuit Court of Australia for Mr Szepesvary’s bankruptcy. The creditor’s petition alleged that Mr Szepesvary owed ACM the amount of $14,927.48, including interest up to and including September 2013, “less part payments of $450.”

5    On 4 February 2014, a sequestration order was made by a judge of the Federal Circuit Court of Australia in respect of Mr Szepesvary’s estate.

6    The respondent is the trustee of Mr Szepesvary's bankrupt estate. He did not appear at the hearing of this application, because there was no need for him to do so.

7    In this proceeding, which was commenced more than 2½ years after the sequestration order was made, Mr Szepesvary seeks, in substance, an annulment of his bankruptcy pursuant to s153B of the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) and the setting aside of the bankruptcy notice upon which the creditor’s petition was based, pursuant to s 30(1) of the Bankruptcy Act. ACM appeared by counsel at the hearing of the application to oppose the relief sought.

8    Section 153B(1) of the Bankruptcy Act relevantly provides:

(1) If the Court is satisfied that a sequestration order ought not to have been made … the Court may make an order annulling the bankruptcy.

9    At the hearing of the application, Mr Szepesvary, who appeared without a lawyer, but with the assistance of his partner, Ms Ozdil, contended that the principal basis upon which his bankruptcy should be annulled was that he did not receive notice of the assignment of debt pleaded in paragraph 5 and 6 of ACM’s statement of claim, set out at [1] above.

10    Mr Szepesvary also contends that his bankruptcy should be annulled because the assignment was “defective” for some unspecified reason; there was no “real debt” ever owed by him; the proceeding was “an abuse of process”; and that he was not given notice of the hearing on 4 February 2014 at which the sequestration was made.

11    Mr Szepesvary swore, in an affidavit dated 23 November 2017 at [7], for the first time, that he “did not receive any notice of assignment of debt (or a copy of any agreement) or any other information in respect of Westpac’s assignment of debt to ACM.” He says that the first time that he saw the relevant letter from Westpac Banking Corporation (Westpac) dated 6 October 2011 addressed to him at his residential address giving notice of the assignment (the Notice of Assignment) was many years later, after he had been made bankrupt.

12    Mr Szepesvary was cross-examined by counsel for ACM. He agreed that the Notice of Assignment was addressed to him at his residential address. He agreed that he could not recall all of the correspondence that he received from Westpac or ACM dating back to 2011. He also testified that the house in which he lived had three letterboxes. “One letterbox was a brick one, which was smashed and damaged. One letterbox was a Paul’s four-litre ice cream [container] with our address on it, and there was another letterbox built…”. He also swore that his mail was often mistakenly delivered to his neighbour and vice versa.

13    The Notice of Assignment read as follows:

Notice is hereby given to you that Westpac Banking Corporation ABN 33 007 457 141 trading under its own name and as Bank of Melbourne and/or Challenge Bank, including its subsidiaries and related bodies corporate (individually and collectively referred to as “Westpac Banking Group”) has assigned to ACM Group Ltd ABN 86 127 181 097 all its legal and beneficial right, title and interest in and to the Debt.

Accordingly, you are hereby directed to pay the Debt to ACM Group Ltd or as it may in writing direct. Please ensure all payments are made directly to ACM Group Ltd Level 3, 287 Elizabeth St, Sydney NSW, 2000, whose phone number for all enquiries is 02 9018 7693.

For the purposes of this Notice of Assignment, the Debt means any amount owing or to become owing by you to Westpac Banking Group in connection with the above account on or after the date hereof including all interest, credit and other charges payable by you to Westpac Banking Group and (where legal proceedings have been commenced against you and a Court Judgment has been obtained against you) includes the balance of any Judgment Debt also obtained.

…..

14    ACM relied upon an affidavit of Mr Desmond Curtis (Mr Curtis) affirmed on 13 December 2017. Mr Curtis swore that he had reviewed the computer records held by Westpac and that they record that Westpac sent the Notice of Assignment on the date that it bears, namely 6 October 2011. He also exhibited a copy of a screen shot taken on 12 December 2017 from Westpac’s internal host system verifying that the Notice of Assignment was sent by Westpac to Mr Szepesvary on 6 October 2011 to his residential address.

15    Whether the notice was served matters because s 134 of the Property Law Act 1958 (Vic), as with many other like provisions (for example, s 12 of the Conveyancing Act 1919 (NSW) and s 136 of the Law of Property Act 1925 (UK)), provides that an absolute assignment by writing of any debt will only be effective if express notice is given to the debtor.

16    “It is trite law that there is a prima facie presumption of fact that an envelope addressed and posted and not afterwards returned reached its destination in the ordinary course of post”: Leveraged Equities Ltd v Goodridge (2011) 191 FCR 71 at 119 [399], per Jacobson J (Finkelstein and Stone JJ agreeing). Although Mr Curtis did not expressly say that the Notice of Assignment was not returned undelivered, it is “implicit in the conduct of the case” that it was not so returned: cf Westpac Banking Corporation v Market Services International Pty Ltd BC9604615, Supreme Court of Victoria, at p 8 per Batt J. See also, in any event, s 160(1) of the Evidence Act 1995 (Cth), which provides that “[i]t is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the fourth working day after having been posted”.

17    The evidence presented in Mr Curtis’ affidavit supports a finding that the Notice of Assignment was indeed addressed and posted which, in turn, is sufficient to enliven the presumption set out in paragraph [16] above. Mr Szepesvary’s evidence that he had three letter boxes, including one fashioned from an ice cream container, and that mail was sometimes delivered to his neighbour in error, is not sufficient to displace the relevant presumption. As Lindgren J explained in Deputy Commissioner of Taxation v Trio Site Services Pty Ltd [2007] FCA 776 at [27], in the context of service of a statutory demand at the registered office of a corporation:

… There are strong policy reasons why any risk arising from the fact that there is no letter box or other facility for receipt of mail at the registered office or from such an arrangement should lie with the company. It is the company that chooses not to have such a facility, or to have as its registered office premises to which it is not practicable for mail to be delivered...

18    The same policy considerations mean that whatever risk of non-delivery of mail was created by Mr Szepesvary’s unorthodox mailbox arrangements could not have been known by Westpac and must be sheeted home to Mr Szepesvary, not to Westpac or to ACM.

19    There being no evidence adduced to raise any sufficient doubt about the presumption, I am therefore satisfied on the evidence of Mr Curtis that someone on Westpac’s behalf posted the Notice of Assignment to Mr Szepesvary at his residential address on 6 October 2011 and that it was delivered accordingly.

20    It follows that Mr Szepesvary’s contention that his bankruptcy should be annulled because he did not receive the Notice of Assignment must fail, because there is no basis to conclude that the sequestration order ought not to have been made within the meaning of s153B(1) of the Bankruptcy Act.

21    The evidence of Mr Curtis, and the resultant presumption it enlivens, distinguishes this case from Ozdil v Vrsecky (Trustee) [2016] FCA 881. In that case, Jessup J annulled the bankruptcy of Ms Ozdil under section 153B of the Bankruptcy Act because Ms Ozdil gave unchallenged evidence that she did not receive notice of the relevant assignment of debt.

22    Counsel for ACM submitted, as an aside, that even if the court concluded that there had been no assignment of the legal right in the debt in this case, ACM was entitled as the equitable assignee to bring an action in damages against Mr Szepesvary in any event. It is not necessary here to consider the merit of that proposition, save to say that in the absence of Westpac as a party to the proceeding, the weight of authority is against it. See Heydon JD, Leeming M, Turner PG, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, LexisNexis Butterworths, 2015) [6-520]; Smith M and Leslie N, The Law of Assignment (2nd ed, Oxford University Press, 2013), [11.19]-[11.47].

23    I will turn now to deal with the remaining grounds of the application.

24    First, Mr Szepesvary alleges that the Judgment Debt “is not founded on a real debt due or owing by me to ACM.” That contention asks the court to exercise its discretion to “go behind” the Judgment Debt. In circumstances where no facts are alleged that would permit a finding that the debt was not a real debt, there is no “sufficient reason” to question whether there is, in truth, really a debt due to the petitioning creditor (see Ramsay Health Care Australia Pty Ltd v Compton (2017) 91 ALJR 803 at [37] per Kiefel CJ, Keane and Nettle JJ)

25    Secondly, Mr Szepesvary says that he did not receive notice of the adjourned hearing at the Federal Circuit Court of Australia on 4 February 2014 at which the sequestration order was made. I do not accept that contention. Part of the evidence relied upon by ACM is an affidavit of service of a Ms Cindy Li deposing to the fact that she sent a letter to Mr Szepesvary at his residential address notifying him that the hearing had been adjourned from 3 December 2013 to 4 February 2014. I am bound to accept that unchallenged evidence.

26    Lastly, Mr Szepesvary alleges “an abuse of process.” No ground for such an allegation was ever put and I reject it. I also reject the contention that the assignment was “defective”’ for the same reason.

27    Accordingly, the application filed 24 September 2016 will be dismissed, with costs.

Associate:

Dated:    16 February 2018