An incorrect postcode on an envelope containing a bankruptcy notice has led to the setting aside of a sequestration order, in the Federal Circuit and Family Court of Australia (FCFCOA) Division 2.
In July 2021, Melbourne businessman David William Vlahos was ordered by the Victorian Court of Appeal to pay Roderick Group almost $1.3 million, which led to the issuing of the bankruptcy notice a month later.
In a review application to the FCFCOA, Mr Vlahos argued that the ensuing creditor’s petition issued by Roderick Group ought to be set aside on the basis that he did not commit an act of bankruptcy because he was not served with the relevant notice as required by the Bankruptcy Act 1966 (Cth) and the Bankruptcy Regulations 2021 (Cth).
He contended that the address to which the bankruptcy notice was sent via pre-paid post was incorrect because it used the postcode 3205 (the postcode for South Melbourne, Victoria) instead of the postcode 3207 (the postcode for Port Melbourne, Victoria), and he did not receive it.
Roderick Group argued there was and remained a proper basis for the order to be made, because Mr Vlahos was properly served with the notice when it was sent to him at “the address of the place of residence or business of the person last known to the person serving the document”, under s 28A of the Acts Interpretation Act 1901 (Cth) (AI Act).
The incorrect address had been obtained from documents filed by Mr Vlahos with the Court of Appeal.
In her judgment published last Wednesday, Judge Symons found there was no proof of service, dismissing the creditor’s petition filed in September 2021, and setting aside the sequestration order made in April 2022.
Relying on ss 28A(1)(a)(ii) and 29(1) of the AI Act, Roderick Group submitted that a two-part test applied to determining whether a notice had been properly served by post:
“(a) the bankruptcy notice must be sent by prepaid post to the address of the place of residence or business of the person (here, Mr Vlahos) last known to the person serving the document (here, the applicant creditor) at that time (section 28A), with service by post effected by properly addressing, prepaying and posting the document as a letter (section 29); and
(b) service is then deemed to be effected at the time at which the letter would be delivered in the ordinary course of post, unless the contrary is proven (section 29).”
“The applicant submitted that the point of the service provisions was that a creditor need not be troubled by going beyond or behind a document that had been recently filed by a debtor for the purpose of making enquiries as to the last known address of that person,” Judge Symons said.
“The applicant submitted that to suggest otherwise would create extraordinary consequences. By way of example, it was contended that a creditor ought not be required to go behind a recently notified address for the purpose of ascertaining whether it was innocently but incorrectly given, or falsely provided in circumstances where a creditor was already encumbered with onerous obligations in relation to service.”
Roderick Group also pointed out that the notice had been sent in an envelope clearly marked with a return address, and given that the mail had not been returned, the creditor could assume it had been successfully delivered.
Mr Vlahos submitted that the act of posting the notice to an address which did not exist (by virtue of the attribution of the incorrect postcode) meant the notice had not been served.
He also challenged the contention that the address used by the creditor could be characterised as his “last known address” under the bankruptcy regulations, saying a search of the ASIC register would have disclosed an address with the 3207 postcode.
Judge Symons said she was satisfied Roderick Group had sent the notice to the most recent address as made known by Mr Vlahos, notwithstanding that it contained an incorrect postcode.
However, she considered the creditor had not satisfied the requirement for the document to be “properly addressed” under s 29(1).
She pointed to Australia Post Terms and Conditions which state that the “customer must comply with the correct addressing standards”, including the use of a postcode in the address.
“This step was necessary to ensure that the envelope had been ‘properly addressed’,” she said.
“Beyond that however, I consider that the applicant was also obliged to record a postcode that corresponded with the suburb identified in the envelope before it could take advantage of the deemed service provision in s 29(1) of the AI Act.
“The word ‘properly’ is defined in the Macquarie online dictionary to mean, relevantly, as an adverb, 1. in a proper manner; 2. correctly; 3. appropriately; 5. accurately. These meanings import a need for some precision in the task to be performed.
“The applicant submits that it would be productive of extraordinary results if a creditor wishing to serve a bankruptcy notice was required to go behind the last known address provided by the debtor to determine its currency and accuracy and I largely accept this submission.
“However, the question of whether once seized of the last known address, a creditor is relieved of checking its accuracy for the purpose of using it in connection with the postal service it has chosen as the means by which to effect service, is a different matter.
“Here, it would have been a straightforward step for the applicant to check, prior to posting the bankruptcy notice, that the postcode recorded for the street address and suburb for Mr Vlahos was accurate.”
Judge Symons said Roderick Group’s “return to sender” inference was unreliable because of evidence that in some cases, Australia Post staff may correct a problem in an address and try to deliver that corrected mail.
This uncertainty also led to a critical problem in determining when notice was in fact served, she said.
“Here, I have found that the applicant has not proved service of the bankruptcy notice. It follows that the creditor’s petition must be dismissed,” she said.
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