Warning to lawyers and creditors serving Bankruptcy Notices: No direct evidence of posting? No effective service.

This is a warning to creditors (and lawyers acting for them) who don’t have direct evidence that their bankruptcy notice was taken to the post office or post box and mailed. You will probably not have effectively served your bankruptcy notice.

Where direct evidence is lacking, the Court will not infer a bankruptcy notice was actually posted just because you had a system where mail placed in an out tray was usually or even always taken to the post office or post box.  There has to be direct evidence of posting.

That is the effect of a decision of Justice Collier of the Federal Court delivered last week in Mbuzi v Favell (No 2) [2012] FCA 311 (link).

Readers will be familiar with reg 16.01(e) of the Bankruptcy Regulations (link) from my earlier post on service by email (link).  That regulation allows a creditor to serve a bankruptcy notice by post.

Justice Collier’s decision is based on three simple points:

  1. Although personal service is no longer required, strict proof of compliance with reg 16.01(e) is necessary;
  2. The onus is on the creditor;
  3. The Court will not infer that a mail item was posted just because it reached an in-tray:  given the penal nature of the bankruptcy system, there must be direct evidence of posting.

In Mbuzi the only evidence that the bankruptcy notice had been posted was oral evidence of the creditor as to his recollection of leaving the envelope containing the bankruptcy notice to be put in the mail by an unnamed secretary/receptionist in the ordinary course of business of his practice.

So what is sufficient direct evidence?

Notably, her Honour remarked that:

  • there was no evidence of a record of the notice being sent by post, as might be expected if there was a system of postage pursuant to which the bankruptcy notice was posted;
  • no evidence was tendered supporting the existence of any register of outgoing mail;
  • no evidence, either oral or in affidavit form, was given by any third party who might have physically posted the bankruptcy notice that the notice had been posted.

These remarks suggest that a system for registering outgoing mail, evidence that the notice was on the register and affidavit evidence from the person who posted the mail on the day in question, may be sufficient.

Regards

Mark

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