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Serving a Bankrupt overseas? The first step towards making a person bankrupt (the Debtor) is serving the Debtor with a bankruptcy notice.
However, if in the event you find that your Debtor is no longer in Australia, you will face multiple challenges in serving the Debtor.
BANKRUPTCY NOTICE
Section 40(1)(g) of the Legge fallimentare 1966 (Cth) (Legge fallimentare) requires leave of the court for service of such documents outside of Australia.
While the court has the power to grant leave for service outside Australia, failure to obtain such leave will possibly jeopardise the validity of the service. There are provisions under Section 306(1) of the Bankruptcy Act which allows proceedings to continue despite formal defects or irregularities, unless in the case that substantial injustice against the Debtor occurs.
However, we would recommend seeking leave of the court prior to serving any bankruptcy notice on an overseas Debtor.
Furthermore, section 102 of the Bankruptcy Amendment (Service of Documents) Regulations 2022 permits the service of documents on a person to be sent electronically without the need for prior consent from the recipient. Which would be consistent with the orders sought from the court to effect service outside Australia.
CREDITORS PETITION
Once the bankruptcy notice has been served on the Debtor and the deadline for the compliance has passed (21 days), the creditor may file and serve a Creditor’s Petition, ensuring compliance with all conditions under Section 44 of Bankruptcy Act.
The Creditor’s Petition must be presented to the court within six months of the act of bankruptcy. To obtain a sequestration order, the creditor must prove that the Debtor committed an act of bankruptcy and that the court has jurisdiction.
Noting that section 43(1)(b) of the Bankruptcy Act stipulates that the court has jurisdiction, inter alia, if:
(b) at the time when the act of bankruptcy was committed, the debtor:
(i) was personally present or ordinarily resident in Australia;
(ii) had a dwelling – house or place of business in Australia;
(iii) was carrying on business in Australia, either personally or by means of an agent or manager; or
(iv) was a member of a firm or partnership carrying on business in Australia by means of a partner or partners or of an agent or manager;
the Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor.
To serve the Creditor’s Petition, it must be served personally on the Debtor. As personal service is not able to be affected and as the creditor will need to seek an order for substituted service from the courts, which is discretionary and requires evidence of its effectiveness. Difficulties may arise even after obtaining such orders, as demonstrated in cases like Bank of Western Australia Ltd v Salmon [2009], where procedural fairness required the debtor to respond before the sequestration order was made.
When serving the Creditor’s Petition outside Australia, a court order for substituted service is necessary. The court considers various factors, including, but not limited to:
- evidence of the difficulty in effecting personal service;
- and the likelihood of the Debtor being informed of the Creditor’s Petition.
Providing multiple modes of service increases the probability of effectiveness. As courts increasingly recognize electronic communication for valid service, as mentioned previously.
If the court insists of personal service on the Debtor residing overseas, the creditor can turn to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 (Hague Convention) of which Australia is party.
The Hague Convention allows for the service of judicial documents throughout member nations and the creditor will receive either a certificate or affidavit of service.
Once and if judgment is received, enforcing an Australian judgment in another international jurisdiction is another article.
Articolo scritto da Jeremy Roberts del nostro ufficio di Brisbane.
