Federal Court of Australia

Van Eps v Child Support Registrar [2023] FCA 1068

ORDERS

THE COURT DECLARES THAT:

The application lodged electronically by Peter Van Eps at 3.33pm on 25 April 2023 was not filed before the expiration of the time fixed for compliance with Bankruptcy Notice Number BN 259346 for the purposes of s 41(7) of the Bankruptcy Act 1966 (Cth).

THE COURT ORDERS THAT:

1.    The oral application made by the applicant for adjournment on 29 August 2023 be refused.

2.    The applicant pay the costs of the respondent of and incidental to the hearing of 29 August 2023, such costs to be taxed if not otherwise agreed.

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

REASONS FOR JUDGMENT

COLLIER J

introduction

1    At 3.33pm on 25 April 2023 the applicant, Mr Van Eps, electronically lodged an application (application) to set aside Bankruptcy Notice Number BN 259346 served on him by the respondent (Bankruptcy Notice). The ground on which the applicant relied was that he had a cross-demand exceeding the amount of the final judgment/orders specified in the Bankruptcy Notice which cross-demand could not have been set up in the proceeding in which the final judgment/orders were obtained.

2    The matter first came before Judicial Registrar Schmidt on 10 May 2023 when the orders were made (10 May Orders). On 22 May 2023 the Judicial Registrar made the following amended orders:

THE COURT NOTES THAT:

The matter is to be set down for a preliminary hearing as to whether the application was filed within the time required under section 41(7) of the Bankruptcy Act 1966 (Cth).

THE COURT ORDERS THAT:

1. The applicant respondent is to file and serve any further affidavits intended to be relied upon by 4.00pm on 19 May 2023.

2. The respondent applicant is to file and serve any affidavit in response by 4.00pm on 26 May 2023.

3. The parties are to file and serve submissions comprising of no more than 5 pages by 4.00pm on 31 May 2023.

4. The matter be referred to the National Operations Registrar for allocation of a date for hearing before a Judge of the Federal Court of Australia with an estimate of 2 hours.

5. Costs are reserved.

(Amended Orders)

(tracked changes in original)

3    It is the preliminary question of timing of the filing of the application and whether the application was filed in accordance with 41 (7) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) which is currently before me.

Background

4    On 29 March 2023, the Bankruptcy Notice was issued by the Official Receiver in relation to total debts of $87,343.74 owing by the applicant to the respondent, Child Support Registrar. The debts arose by way of orders of the Federal Circuit and Family Court of Australia made in favour of the respondent dated 18 October 2021.

5    The Bankruptcy Notice required compliance within 21 days after service of the Bankruptcy Notice.

6    At some time in early April 2023, a process server personally served the applicant with the Bankruptcy Notice at his place of business, Level 7/107 North Quay, Brisbane Qld 4000 (Level 7, Inns of Court). The date of service is currently in dispute.

7    At all times the respondent has been legally represented. The respondent filed and relied on the following material:

(a)    Affidavit of Christopher Allen Mayfield, filed on 19 May 2023;

(b)    Affidavit of Christopher Allen Mayfield, filed on 16 August 2023;

(c)    Affidavit of Adriana Cartier, filed on 17 August 2023; and

(d)    Written submissions, filed on 25 August 2023.

8    The applicant did not file any affidavits in accordance with the Amended Orders. The only affidavit of the applicant on the court file is the affidavit lodged for filing on 25 April 2023 in support of the application. Written submissions were filed by the applicant on 1 June 2023 and subsequently at the hearing.

9    At the hearing the applicant was self-represented, while the respondent was represented by Counsel. I note that the applicant is a barrister and is accordingly legally qualified.

APPLICATION FOR ADJOURNMENT

10    At the outset of the hearing on 29 August 2023, the applicant made an oral application for an adjournment of the hearing.

11    Submissions were made by the applicant to the following effect:

(a)    The respondent did not comply with the Amended Orders and deliberately filed their material, namely the affidavit of Christopher Allen Mayfield filed 16 August 2023 and the affidavit of Adriana Cartier filed 17 August 2023 (the Late Affidavits), approximately 3 months late; and

(b)    Due to the late filing of these affidavits, the applicant did not have the opportunity to:

(i)    file an affidavit in response; or

(ii)    test the evidence, including the mobile phone data, relied upon by the respondent as identified in the Late Affidavits; and

(c)    The late filing of such material prejudiced the applicant.

12    In summary, Mr Tooth, for the respondent, made the following oral submissions:

(a)    On 19 May 2023, a first affidavit of Christopher Allen Mayfield was filed in compliance with Order 1 of the Amended Orders;

(b)    The subsequent Late Affidavits addressed no new points, and merely provided further evidence of the date the Bankruptcy Notice was served;

(c)    The applicant has been aware of the issues since at least the 10 May Orders; and

(d)    Order 2 of the Amended Orders provided for the applicant to file any affidavit in response within 7 days of the respondent filing evidence. The Late Affidavits were filed more than 7 days before the hearing on 29 August 2023. Despite the lateness, the applicant had the opportunity to file an affidavit in response.

13    The applicant submitted in reply that the affidavit of the alleged process-server, Christopher Allen Mayfield, filed 16 August 2023, gave rise to new material that was not before the applicant in May 2023, namely Mr Mayfield’s phone data indicating his location on 5 April 2023. The applicant submitted that he wanted the opportunity to independently test the accuracy of this phone evidence.

14    After hearing both parties, I refused the application for adjournment for the following reasons:

    There was no reason for me to infer that the respondent had filed the Late Affidavits “deliberately late” to prejudice the ability of the applicant to address the issue before the Court. The applicant had more than a week to file evidence in reply should he have chosen to do so;

    The applicant did not file an application for adjournment until the hearing itself;

    Contrary to the submission of the applicant, I consider that there would be no utility in requiring the production of Mr Mayfield’s mobile phone or cross-examination of Mr Mayfield concerning the contents of that mobile phone. The material reproduced from the mobile phone spoke for itself at this interlocutory stage;

    Notwithstanding the submission of the applicant concerning the lateness of the filing of the Late Affidavits, no responsive evidence had been filed by the applicant in compliance the amended orders made by the Judicial Registrar, and notwithstanding the earlier filing of an affidavit of Mr Mayfield by the respondent in accordance with those orders;

    I was not persuaded that the applicant was prejudiced by the timing of the filing of the Late Affidavits, noting that they included limited new material; and

    The Court was in a position to consider and determine the limited issue before it on the basis of the filed evidence and the submissions of the parties.

15    In those circumstances, I consider that the Late Affidavits are material to which the Court can properly have regard. I take this view in accordance with the reasons for refusing the applicant’s adjournment application, but also noting the probative value of this material, in particular:

    Mr Mayfield’s affidavit filed 16 August 2023 annexed a clearer version of the photograph being Annexure CAM2 to his 19 May 2023 affidavit;

    Mr Mayfield’s affidavit filed 16 August 2023 included more detailed geolocation evidence of his movements on 3 April 2023 in Annexure CAM2 to his 16 August 2023 affidavit;

    Mr Mayfield’s affidavit filed 16 August 2023 included geolocation evidence concerning his movements on 5 April 2023 in Annexure CAM3 to his 16 August 2023 affidavit; and

    Ms Cartier gave evidence (including photographic evidence) of the receipt on 4 April 2023 at 6.03am of Mr Mayfield’s report regarding his successful service on the applicant of the Bankruptcy Notice on 3 April 2023.

16    I now turn to the substantive issue before me.

SUBSTANTIVE HEARING

17    At the hearing the parties agreed that, in substance, the moving party in respect of the issue before me was the respondent. Accordingly I heard the respondent first.

Respondent’s submissions

18    In summary, the respondent submitted:

(a)    Section 41(2A) of the Bankruptcy Act requires a bankruptcy notice to state the period for compliance with it, being the statutory period after the debtor is served with the notice. The statutory period is defined by s 5 of the Bankruptcy Act as 21 days;

(b)    As the application was lodged for filing on a public holiday, namely 25 April 2023, it was taken as filed on 26 April 2023 in accordance with rule 2.25(3) of the Federal Court Rules 2011 (Cth) (the Rules). This made the application two days late;

(c)    On 3 April 2023 the respondent’s process server, Mr Mayfield, personally served the applicant with the Bankruptcy Notice at the applicant’s place of business at Level 7, Inns of Court;

(d)    The evidence of Mr Mayfield in support of service occurring on 3 April 2023 should be preferred over the applicant’s evidence;

(e)    The date on which the application had to be filed by was to be calculated in accordance with s 36 of the Acts Interpretation Act 1901 (Cth);

(f)    In calculating the 21-day period, the date of service, being 3 April 2023, was to be excluded. The 1st day was 4 April 2023, and the 21st day was 24 April 2023;

(g)    The Court only has jurisdiction to hear applications filed within time. In the circumstances the Court had no discretion to hear the merits of the application;

(h)    The onus rested on the applicant to satisfy the Court that the application was filed within time. It followed that the onus also rested on the applicant to establish the date of service of the Bankruptcy Notice; and

(i)    The Court does not have jurisdiction set aside the Bankruptcy Notice as the application was filed out of time as required by s 41(7) of the Bankruptcy Act.

Applicant’s submissions

19    In summary, the applicant submitted:

(a)    Contrary to the submission of the respondent, he was served with the Bankruptcy Notice on 5 April 2023;

(b)    At best, the evidence of Mr Mayfield, namely the photo of the door of the applicant’s chambers, geolocation data and the report of service, could only prove that Mr Mayfield was on the floor of and stood outside of the applicant’s chambers on 3 April 2023. The evidence does not support a finding that the applicant was actually served with the Bankruptcy Notice on that day;

(c)    From memory, the applicant was not on the floor of his Chambers at the particular time on 3 April 2023 alleged by the respondent;

(d)    In any event, even if he was served on 3 April 2023, filing of the application on 25 April 2023 was within time for compliance. The time for compliance with the Bankruptcy Notice expired on 26 April 2023, being:

(i)    21 days from 4 April 2023, i.e. 25 April 2023 (because the day of service was not included); plus

(ii)    1 day because 25 April 2023 was a public holiday, namely ANZAC Day;

(e)    The application was taken to be filed on 25 April 2023 in accordance with r 2.25 of the Rules, and accordingly was filed before the expiration date of 26 April 2023;

(f)    There was no onus on the applicant to establish that the application was served in time. Rather, an application and supporting affidavit filed pursuant to s 41(7) of the Bankruptcy Act have the automatic effect of staying a Bankruptcy Notice until the Court determines whether it is satisfied that a debtor has a requisite cross-demand;

(g)    The applicant’s evidence in support of service occurring on 5 April 2023 should be preferred over the respondent’s evidence as:

(i)    The respondent has demonstrated by deliberate breaches of the Court’s orders that is has a “whatever it takes” approach to litigation;

(ii)    It did not follow that a barrister, cognisant of the relevant statutory timeframes, would file the application;

(iii)    The Commonwealth – of which the respondent is a part – has much to lose, considering the cross-demand value of $3,678,708.00; and

(iv)    The Court should adopt a benevolent construction to his affidavit filed with his application;

(h)    The application should not be heard and determined in a piecemeal way. It should be heard and determined within the full context of its merits. It was artificial, unnecessary and highly-prejudicial to the applicant to separate factual disputes over jurisdiction from those that were merit-based and potentially prevent a valid and significant cross-demand; and

(i)    The respondent, as a model litigant, should not rely on what was a technical defence, but rather ought contest the application on its merits, particularly in circumstances where the parties were arguing about a 1 day difference, and where an adverse finding would result in an act of bankruptcy.

ISSUE IN DISPUTE

20    In determining whether the application was filed within the time required under s 41(7) of the Bankruptcy Act, it is necessary to determine:

(a)    the date that the applicant was served with the Bankruptcy Notice;

(b)    the date the application was filed; and

(c)    whether the application was filed before the expiration of the time fixed for compliance with the Bankruptcy Notice.

When was the applicant served with the Bankruptcy Notice?

21    The respondent submitted that the Bankruptcy Notice was served on 3 April 2023, however the applicant submitted that the correct date was 5 April 2023.

22    Taking into account the submissions of the parties and the evidence before me, I am satisfied that the applicant was served with the Bankruptcy Notice on 3 April 2023 by Mr Mayfield as deposed by Mr Mayfield in his two affidavits.

23    I prefer the evidence of Mr Mayfield and Ms Cartier to that of the applicant for the following reasons:

    The evidence before me is that Mr Mayfield and Ms Cartier at all relevant times have been employed in a business which causes legal documents to be served. Mr Mayfield in particular gave evidence that he was a licensed process-server and served the Bankruptcy Notice on the applicant;

    Both Mr Mayfield and Ms Cartier gave detailed evidence supporting the respondent’s claim of the date and time at which the Bankruptcy Notice was served, namely 3 April 2023;

    The evidence of Mr Mayfield includes photographic evidence detailing the date, time and place of service of the Bankruptcy Notice on 3 April 2023. No reason has been advanced for me to doubt the veracity of that evidence. I do not accept the submission of the applicant that, to be credible, Mr Mayfield should have photographed the applicant personally, and not only the door to the applicant’s place of business. Further, I do not accept the submission of the applicant that the only inference the Court can draw from the annexures to Mr Mayfield’s second affidavit was that Mr Mayfield was (for some reason other than the actual service of the Bankruptcy Notice on the applicant) in the corridor outside the applicant’s office on 3 April 2023;

    Mr Mayfield’s second affidavit included evidence that he was not in the Brisbane central business district on 5 April 2023. I have no reason to doubt the veracity of Mr Mayfield’s evidence to that effect, which was supported by geolocation information;

    Mr Mayfield in his second affidavit gave evidence that he had previously served a bankruptcy notice (issued on 25 November 2022) on the applicant on 16 December 2022, and that Mr Mayfield subsequently recognised the applicant when Mr Mayfield served him with the Bankruptcy Notice on 3 April 2023. I have no reason to doubt the veracity of that evidence, which is supported by a copy of the earlier 25 November 2022 bankruptcy notice;

    Ms Cartier gave evidence of the date and time of the uploading of Mr Mayfield’s report concerning the service of the Bankruptcy Notice on the applicant on 3 April 2023. I have no reason to doubt the veracity of that evidence, or the accuracy of Mr Mayfield’s report the subject of that evidence;

    The only evidence of the applicant relevant to this proceeding was para 3 of his affidavit filed on 26 April 2023 in which deposed “The Notice was served on me personally by a process server on 5 April 2023.” Otherwise, no evidence rebutting the respondent’s evidence was filed by the applicant;

    I do not accept the inference the applicant asks me to draw that because he is a legal practitioner it follows that he would not err in recalling the date of service of the Bankruptcy Notice on him; and

    I do not accept the submission of the applicant that the evidence adduced by the respondent was not credible because the respondent had approached the proceedings with the attitude of “whatever it takes”.

24    I am satisfied that, on the evidence before me, the Bankruptcy Notice was served on the applicant on 3 April 2023.

The date the application was filed by the applicant

25    Rule 2.25 of the Rules provides:

When is a document filed

(1) A document is filed if:

(a) it is lodged with the Court in accordance with rule 2.21(1); and

(b) either:

(i)     for a document in an existing proceeding--it is accepted in the proper Registry by having the seal of the Court affixed to it; or

(ii)      in any other case--it is accepted in a Registry by having the seal of the Court affixed to it.

….

(3) If a document is faxed or sent by electronic communication to a Registry, the document is, if accepted by a Registry under subrule (1), taken to have been filed:

(a) if the whole document is received by 4.30 pm on a business day for the Registry--on that day; or

(b) in any other case--on the next business day for the Registry.

26    Schedule 1 of the Rules, defines a “business day” as:

"business day" , in a place, means any day other than:

(a) a Saturday or Sunday; or

(b) a day that is a public holiday in the place; or

(c) any other day on which the Registry in the place is closed.

27    The applicant electronically lodged the application on 25 April 2023 at 3:33pm. In Australia, 25 April 2023 was a national public holiday.

28    On 27 April 2023 at 1:28pm the application was accepted for filing by the Court.

29    I am satisfied that the applicant is taken to have filed the application on the next business day for the Registry after 25 April 2023, being Wednesday, 26 April 2023.

Whether the application was filed before the expiration of the time for compliance with the Bankruptcy Notice

30    Section 41(7) of the Bankruptcy Act provides as follows:

Bankruptcy notices

(7) Where, before the expiration of the time fixed for compliance with a bankruptcy notice, the debtor has applied to the Court for an order setting aside the bankruptcy notice on the ground that the debtor has such a counter-claim, set-off or cross demand as is referred to in paragraph 40(1)(g), and the Court has not, before the expiration of that time, determined whether it is satisfied that the debtor has such a counter-claim, set-off or cross demand, that time shall be deemed to have been extended, immediately before its expiration, until and including the day on which the Court determines whether it is so satisfied.

31    A failure to comply with s 41(7) of the Bankruptcy Act is not a procedural irregularity capable of cure, but rather is fatal to jurisdiction: see by analogy findings in respect of s 41(6A) of the Bankruptcy Act in Nugawela v Deputy Commissioner of Taxation [2016] FCA 578 at [39] and Re Shaddock; Shaddock v Commonwealth Bank of Australia (Federal Court of Australia, Goldberg J, 9 April 1998, unreported) at [39]. As the time for compliance with the bankruptcy notice is fixed under the Bankruptcy Act, the Court cannot dispense with compliance with the Rules pursuant to either r 1.34 or r 1.39: McKerracher J in Nugawela at [39]. The Court has power under s 41(7) of the Bankruptcy Act to extend the time for compliance with a bankruptcy notice only if an application to set aside the bankruptcy notice is made prior to the expiration of the time fixed for compliance with the bankruptcy notice. If such an application is not filed within that time, the Court’s power to extend time is not enlivened: see Di Gregorio v Lumi Financial Pty Ltd [2022] FCA 94 at [5].

32    It is not in dispute that, in accordance with p 2 of the Bankruptcy Notice, the time for the applicant to comply with, or serve an application to set aside the Bankruptcy Notice was “within 21 days after service”.

33    Section 36(1) of the Acts Interpretation Act 1901 (Cth) (Acts Interpretation Act) provides:

 (1)  A period of time referred to in an Act that is of a kind mentioned in column 1 of an item in the following table is to be calculated according to the rule mentioned in column 2 of that item:

34    As the time for compliance was “21 days after service”, Item 6 of s 36 of the Acts Interpretation Act is applicable. The day on which the Bankruptcy Notice was served, being 3 April 2023, is excluded from the calculation of the 21 days. Day 1 was 4 April 2023. It follows that any application to extend time for compliance was required to be filed by 11.59pm on 24 April 2023.

CONCLUSION

35     The application lodged electronically by Peter Van Eps at 3.33pm on 25 April 2023 was not filed before the expiration of the time fixed for compliance with Bankruptcy Notice Number BN 259346 for the purposes of s 41(7) of the Bankruptcy Act. The Court has no jurisdiction to extend time for compliance. The matter cannot simply proceed “on the merits” as contended by the applicant.

36    The respondent is entitled to its costs of and incidental to the hearing of 29 August 2023, such costs to be taxed if not otherwise agreed.

Associate:

Dated:    11 September 2023