The risk of service by post: Court finds bankrupt at fault for not receiving mail
Last month the Federal Court handed down their decision in the case of Szepesvary v Weston (Trustee), in the matter of Szepesvary (Bankrupt) (No 2) [2018] FCA 87. The case considered an application by Szepesvary to annul bankruptcy pursuant to s153B of the Bankruptcy Act 1966 and to set aside the bankruptcy notice upon which the creditor’s petition was based, pursuant to s 30(1) of the Bankruptcy Act.
The debt associated with the bankruptcy notice had been assigned to ACM Group Ltd by Westpac Banking Corporation. Westpac contended they subsequently provided Szepesvary with a written notice that his liability previously owing to Westpac was due and payable to ACM. At trial, ACM relied on Westpac's computer records which indicated the notice had been sent to Szepesvary's residence on 6 October 2011.
Szepesvary claimed he did not receive the Notice until many years later, at which point he was already bankrupt. Despite this, Szepesvary acknowledged he could not recall all of the correspondence he received from Westpac and ACM dating back to 2011. He also testified that the house in which he lived had multiple letterboxes and that it was not uncommon for his mail to be mistakenly delivered to his neighbour.
In determining whether the notice had been served to Szepesvary, O'Callaghan J considered s134 of the Property Law Act 1958 (Vic), which specifies that an absolute assignment of writing will only be effective if express notice is given to the debtor.
Moreover, his Honour referred to s160(1) Evidence Act 1995 (Cth), which states:
- "It is presumed (unless evidence sufficient to raise doubt about the presumption is adduced) that a postal article sent by prepaid post addressed to a person at a specified address in Australia or in an external Territory was received at that address on the fourth working day after having been posted."
Lastly, O'Callaghan J referred to the judgement of Jacobson J in Leveraged Equities Limited v Goodridge:
- "It is trite law that there is a prima facie presumption of fact that an envelope addressed and posted and not afterwards returned reached its destination in the ordinary course of post."
Accordingly, his Honour concluded ACM had presented sufficient evidence to support a finding that the Notice had been adequately addressed and posted, and that Szepesvary's evidence was not sufficient to negate the presumption.
O'Callaghan J emphasized the role of a recipient in the correct service of a document, drawing upon the finding of Lindgren J in Deputy Commissioner of Taxation v Trio to conclude that the risk of non-delivery created by Szepesvary could not have been known by Westpac:
- "There are strong policy reasons why any risk arising from the fact that there is no letter box or any other facility for receipt of mail at the registered office or from such an arrangement should lie with the company. It is the company that chooses not to have such a facility or to have as its registered office premises to which it is not practicable for mail to be delivered."
Ultimately the case was dismissed with costs. It serves as a timely reminder to all parties of the importance of ensuring documents are served correctly when delivered by post.
