Legal practitioners, credit managers, liquidators and finance and credit professionals alike are familiar with the precise details with which a Bankruptcy Notice must be prepared and served on a debtor, where even the tiniest mistake may have the potential to have the Bankruptcy Notice set aside.
A common way for a Bankruptcy Notice to be set aside is for the Bankruptcy Notice to be incorrectly served on the debtor.
The Bankruptcy Act 1966 (Cth) and accompanying Regulations 1996 and Rules 2006 are the governing bodies of legislation which regulate bankruptcy laws in Australia.[1]
The regulations provide that a Bankruptcy Notice must be served on the debtor within 6 months of the date of the issue of the Bankruptcy Notice.
It can be done by post or courier to the debtor’s last known address, left in an envelope at a document exchange where the debtor maintains an exchange facility, left in an envelope at the debtor’s last known address, personally delivered to the debtor’s last known address or by electronic transmission such as facsimile or electronic mail.[2]
However, creditor’s must be careful when serving Bankruptcy Notices on the debtor’s last known address as the Courts have determined “last known address” has a particular meaning.
Foster J in Napiat Pty Ltd v. Salfinger; Re Salfinger (No. 7) [2011] FCA 1322 dealt extensively with the issue of the meaning of “last known address”.
In that case in particular his honour focused on the issue of whether a bankruptcy notice, sealed in an envelope, marked with the respondent’s name and left at 1 Davena Street Dianella in Perth was validly served on the respondent pursuant to regulation 16.01(2)(b).
Foster J considered evidence from the applicant that showed that the Davena Address was the respondent’s last known address, including an ASIC company extract listing the respondent’s address as the Davena Address and the respondent’s testimony in an earlier Federal Court matter whereby he confirmed he rented that particular address.
In considering the meaning of “last known address” Foster J treated the question of whether the debtor has such a degree of connection with the premises that they may properly be described as his last known address which was an address made known to the creditor at the closest time possible to the date in question.
His honour held that the address does not have to be the debtor’s residence and can be a business address and can even be an address which the debtor does not occupy but has a legal or equitable entitlement.
In determining that the Davena address was the debtor’s last known address in the Salfinger case his honour considered a number of factors such as the address listed with ASIC, the address told to the Court on the earlier occasion and the fact the respondent had his mail redirected there.
What the case of Salfinger means is that a Bankruptcy Notice may be effectively served (by the methods described in r 16.01 of the Regulations) on a debtor at the debtor’s last known address if:
- there is a degree of closeness between the debtor and the address in question; and
- it is the address made known by the debtor at the closest time possible to the date of service in question.
The Court will not set aside the notice on the grounds that the address was a business address or is an address the debtor did not reside in or occupy.
This leaves flexibility as to service of Bankruptcy Notices and its compliance with the Regulations. Notwithstanding this flexibility, any future creditor’s petition must be accompanied by an affidavit deposing to the service of the Bankruptcy Notice.
It may therefore be necessary to seek professional help in preparing and finessing this affidavit in order to make it clear to the Court that the Regulations have been complied with. The team at Boss Lawyers have a great amount of experience in Bankruptcy proceedings and are uniquely placed to assist you in your Bankruptcy matter. Contact our team today.
[1] Bankruptcy Act 1966 (Cth); Bankruptcy Regulation 1996 (Cth); Federal Court (Bankruptcy) Rules 2006 (Cth).
[2] Bankruptcy Regulation 1996 (Cth) r 16.01.