Re Sheila Ann Levy; Gerald Jacob Levy; Barbara Ann Tollitt; Peter Isaac Tollitt Ex Parte: Scholefield Goodman & Sons Limited v Scholefield Goodman (Australia) Pty Limited v Sheila Ann Levy and Barry Norman Askew; Gerald Jacob Levy and Barry Norman [1980] FCA 119 (22 October 1980)

FEDERAL COURT OF AUSTRALIA

Re: SHEILA ANN LEVY; GERALD JACOB LEVY; BARBARA ANN TOLLITT; PETER ISAAC
TOLLITT Ex parte: SCHOLEFIELD GOODMAN & SONS LIMITED
And: SCHOLEFIELD GOODMAN (AUSTRALIA) PTY. LIMITED
And: SHEILA ANN LEVY and BARRY NORMAN ASKEW; GERALD JACOB LEVY and BARRY
NORMAN ASKEW; BARBARA ANN TOLLITT and BARRY NORMAN ASKEW; PETER ISAAC TOLLITT
and BARRY NORMAN ASKEW
Nos. 106-109 of 1980
Bankruptcy Act
50 FLR 101

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Bowen C.J.

CATCHWORDS

Bankruptcy Act - Meeting under Part X - Whether debts unliquidated, contingent or unascertained - Chairman's decision rejecting creditor's right to vote - Whether examinable by Court - Whether certificate of Chairman as to passing of special resolution was signed and filed forthwith - Effect of certificate - Whether statement of affairs omitted material particular or included any incorrect and material particular - Whether in interests of creditors to declare deed of assignment void.

Bankruptcy Act 1966, ss.30, 201, 204, 222 and 225.

HEARING

SYDNEY
22:10:1980

ORDER

1. The deed of assignment executed by Sheila Ann Levy on 20 June 1980 be declared void.

2. Sheila Ann Levy do pay to Scholefield Goodman and Sons Limited and Scholefield Goodman (Australia) Pty. Limited their costs of these proceedings including reserved costs.

3. Barry Norman Askew do forthwith give notice in writing of this order to each creditor of Sheila Ann Levy other than Scholefield Goodman and Sons Limited and Scholefield Goodman (Australia) Pty. Limited.

Attention of the taxing officer is drawn to the fact that although the four matters, 106-109 of 1980 were not consolidated, they were heard together.

THE COURT DIRECTS that the taxing officer seek to ensure that no costs are allowed for items which constitute unnecessary duplication.

1. The deed of assignment executed by Gerald Jacob Levy on 20 June 1980 be declared void.

2. Gerald Jacob Levy do pay to Scholefield Goodman and Sons Limited and Scholefield Goodman (Australia) Pty. Limited their costs of these proceedings including reserved costs.

3. Barry Norman Askew do forthwith give notice in writing of this order to each creditor of Gerald Jacob Levy other than Scholefield Goodman and Sons Limited and Scholefield Goodman (Australia) Pty. Limited.

Attention of the taxing officer is drawn to the fact that although the four matters, 106-109 of 1980 were not consolidated, they were heard together.

THE COURT DIRECTS that the taxing officer seek to ensure that no costs are allowed for items which constitute unnecessary duplication.

1. The deed of assignment executed by Barbara Ann Tollitt on 20 June 1980 be declared void.

2. Barbara Ann Tollitt do pay to Scholefield Goodman and Sons Limited and Scholefield Goodman (Australia) Pty. Limited their costs of these proceedings including reserved costs.

3. Barry Norman Askew do forthwith give notice in writing of this order to each creditor of Barbara Ann Tollitt other than Scholefield Goodman and Sons Limited and Scholefield Goodman (Australia) Pty. Limited.

Attention of the taxing officer is drawn to the fact that although the four matters, 106-109 of 1980 were not consolidated, they were heard together.

THE COURT DIRECTS that the taxing officer seek to ensure that no costs are allowed for items which constitute unnecessary duplication.

1. The deed of assignment executed by Peter Isaac Tollitt on 20 June 1980 be declared void.

2. Peter Isaac Tollitt do pay to Scholefield Goodman and Sons Limited and Scholefield Goodman (Australia) Pty. Limited their costs of these proceedings including reserved costs.

3. Barry Norman Askew do forthwith give notice in writing of this order to each creditor of Peter Isaac Tollitt other than Scholefield Goodman and Sons Limited and Scholefield Goodman (Australia) Pty. Limited.

Attention of the taxing officer is drawn to the fact that although the four matters, 106-109 of 1980 were not consolidated, they were heard together.

THE COURT DIRECTS that the taxing officer seek to ensure that no costs are allowed for items which constitute unnecessary duplication.

DECISION

Scholefield Goodman & Sons Limited (Scholefield Goodman) and Scholefield Goodman (Australia) Pty. Limited (Scholefield Goodman (Aust)), by their application in Matter No. 106 of 1980 sought declarations and orders against Sheila Ann Levy as follows:

"1. A declaration that on the 20th June 1980, each of the applicants was a creditor entitled to vote at a meeting held on that day under Part X of the Bankruptcy Act 1966 following the signing by the debtor of an authority under Section 188 of the Bankruptcy Act 1966.

2. A declaration that at a meeting of creditors of the debtor called under Part X of the Act on 20th June 1980 no special resolution requiring the debtor to execute a Deed of Assignment was passed pursuant to Section 204 of the Bankruptcy Act 1966.

3. An Order that the Deed of Assignment executed by the debtor on 20th June 1980 is void.

4. An order that the estate of the debtor be sequestrated."

Both companies by their applications in Matters Nos. 107, 108 and 109 sought similar declarations and orders against Gerald Jacob Levy, Barbara Ann Tollitt and Peter Isaac Tollitt respectively.

Each respondent filed a notice of appearance and notice of opposition which in summary sought a declaration that the deed of assignment of 20 June 1980 was valid and effective and an order dismissing the relevant application with costs.

Separate documents and affidavits were filed in each of the four matters, but when the matter came on for hearing some evidence was presented, which may have been regarded as primarily applicable to one or other of the proceedings. While it was not agreed that an order consolidating the matters be made, it was agreed that evidence tendered by any party should be treated as evidence in all four matters. The matters were argued together. For convenience, in these reasons for judgment I deal with all four matters.

At the outset Counsel for the applicants sought the orders and declarations in paragraphs 1 to 4 set forth above. The orders of sequestration were sought on the ground that the respondents had signed authorities under s.188 of the Bankruptcy Act 1966 ("the Act") and also on the ground that a meeting of creditors had been called in pursuance of such authority (the Act, paras.40(1)(i) and (j). Part way through the hearing counsel for the applicants announced that they no longer wished to have the respondents made bankrupt and sought only the declarations and orders in paragraphs 1 to 3.

The main case for the applicants was that a meeting of creditors of each respondent under Part X of the Act was held on 20 June 1980 pursuant to an authority given by each respondent pursuant to s.188; that the Chairman of the meeting improperly refused to permit Scholefield Goodman (Aust) to vote; that Scholefield Goodman was given no notice of the meeting and that when it learned of the meeting and attended by its representative it was not allowed to vote; that in consequence the special resolution purporting to be passed at each meeting pursuant to s.204 requiring the respondent to execute a deed of assignment was ineffectual and invalid; and that the deed of assignment thereafter executed by each respondent ought in accordance with sub-s.222(2) to be declared to be void. It was also claimed that each respondent had omitted a material particular from his or her statement of affairs in that he or she had failed to show Scholefield Goodman or Scholefield Goodman (Aust) as being creditors and had included an incorrect and material particular in the statement of affairs in that Scholefield Goodman (Aust) had been described as being a contingent creditor in the sum of $188,431.85, this being incorrect in that Scholefield Goodman (Aust) was not at the time of the meeting a contingent creditor in the sum alleged or any sum and that the deed ought in accordance with sub-s.222(4) be declared void.

The statement of affairs in the case of each respondent disclosed the indebtedness in the following way:

"4. Particulars of any contingent and any other liabilities not specified in a previous Part of this statement are:

Scholefield Goodman (Australia) Pty. Limited $188,431.85."

For the respondents it was contended that the debt was contingent or at all events unascertained within the meaning of sub-s.198(2); that in any event the Chairman had the task under s.201 of deciding the right of the applicants to vote at each meeting; that he had performed this task and determined the applicants had no right to vote; and that his determination was unappealable. It was also contended no notice was given to Scholefield Goodman because it was not included as a creditor in the statement of affairs and, indeed was not a creditor, and in any event it had become aware of the meeting and had sent a representative to attend. It was further contended that the statement of affairs was not incorrect in any particular and did not omit any particular, but that if it did nevertheless the Court should not make an order declaring the deed void but should hold in terms of sub-s.222(5) that it was not satisfied that it would be in the interests of creditors to do so.

It was further contended that the Chairman of the meeting had signed a certificate in accordance with sub-s.204(7) and this should lead me to conclude that the meeting was duly convened and held and that the special resolution was duly passed at the meeting. Reference was made to sub-s.225(2).

The questions arising for determination in each case are:
1. Whether the applicants were at the time of the meeting on 20 June 1980 creditors.

2. If so, whether their debts were unliquidated, contingent or unascertained.

3. In any event, whether the decision of the Chairman rejecting the applicants' claim to vote at the meeting is, in the circumstances of this case, examinable.

4. Whether the certificate of the Chairman should in itself lead me to conclude that the meeting was duly convened and held and that the special resolution was duly passed.

5. If not, whether each of the meetings was duly called and held and the special resolution duly passed.

6. Whether the statement of affairs in terms of sub-s.222(4) :
(a) omitted any material particular; or
(b) included any incorrect and material particular.

7. If so, whether in terms of sub-s.222(5) it would be in the interests of creditors to make an order declaring the deed of assignment void.

Before attempting to give my answers to these questions it will be convenient to set forth the facts disclosed by the evidence.

Scholefield Goodman is a company incorporated in England having its registered office at 135 Edmund Street, Birmingham, England. It is registered as a foreign company in the State of New South Wales, 39-41 York Street, Sydney.

Scholefield Goodman (Aust) is a company incorporated in the State of New South Wales having its registered office at 39-41 York Street, Sydney. It is a wholly owned subsidiary of Scholefield Goodman.

Colmore Credits Pty. Limited is a company incorporated in New South Wales. It is also a wholly owned subsidiary of Scholefield Goodman.

Jewel Fashions Pty. Limited ("Jewel Fashions") is a company incorporated in New South Wales having its registered office at Suite 150, Strand Arcade, George Street, Sydney. It carried on business in ladies' fashion goods and junk jewellery.

On 29 May 1975 Jewel Fashions executed in favour of Scholefield Goodman and Scholefield Goodman (Aust) an equitable charge over all its undertaking and assets both present and future including its uncalled capital. This was to secure the payment of moneys then owing or payable or as should thereafter become owing and payable. It was executed by the three companies, Scholefield Goodman executing by its attorney Scholefield Goodman (Aust). Power of attorney dated 13 August 1965 and supplementary power of attorney dated 13 November 1973 were in evidence. Also parties to the equitable charge, described as guarantors, were Gerald Jacob Levy, Sheila Ann Levy, Peter Tollitt and Barbara Ann Tollitt. The occupation of each was stated to be company director. The last clause of the equitable charge set forth the terms of their guarantee. The equitable charge was on 12 June 1975 registered No. 7270 in the register of charges kept by the Corporate Affairs Commission.

Prior to the giving of the equitable charge written guarantees had been given. On 30 April 1975 the four respondents executed a guarantee in favour of Scholefield Goodman (Aust). It was to be a continuing guarantee for all the debts and liabilities of Jewel Fashions and to be independent of and additional to any other guarantee which Scholefield Goodman (Aust) then held or might thereafter obtain. On 5 May 1975 the four respondents executed a guarantee in favour of Scholefield Goodman in similar terms.

According to the documents in evidence Jewel Fashions, over the signature of Mr. Tollitt, would sign a document headed "Request for Documentary Credit". This was a printed form with the name and address in England of Scholefield Goodman on the left side at the top and the name and address in New South Wales of Scholefield Goodman (Aust). It commenced "Dear Sir, Will you please open on our behalf an irrevocable documentary credit in accordance with the following particulars." Then followed the particulars of a purchase of goods by Jewel Fashions, giving the name and address of the supplier, the details of the goods, and the price. It then requested that "you draw on us at 120 days after fixed date in accordance with our arrangements." It went on to promise acceptance and payment of bills of exchange drawn by Scholefield Goodman/Scholefield Goodman (Aust) on them in connection with this credit. Bills of exchange in evidence showed that some bills were drawn by Scholefield Goodman and some by Scholefield Goodman (Aust). All were accepted by Jewel Fashions with the signature of Mr. Tollitt though apparently many were not paid. There is a suggestion in the evidence that Scholefield Goodman provided the credit and drew the bill in those cases where the goods were to be shipped to Australia from overseas.

I have stated this procedure at some length because Mr. Tollitt swore in an affidavit read in the proceedings "that Jewel Fashions Pty. Limited had no dealings with Scholefield Goodman & Sons Limited of the United Kingdom". He was cross-examined upon this statement. It is sufficient here to say I do not accept his statement in his affidavit. It is simply not true. However, it is fair to say that Scholefield Goodman adopted a low profile in Australia. They had no place of business and no bank account. If moneys were required to be paid here, they were paid for Scholefield Goodman by a wholly owned subsidiary, Colmore Credits Pty. Limited out of a bank account which it maintained. If moneys were to be received here they were received for Scholefield Goodman by Colmore Credits Pty. Limited and went into the bank account maintained by that company. The reason why Scholefield Goodman proceeded in this fashion, whether it was due to the provisions of the Double Tax Convention between Australia and Great Britain or to some other reason, did not appear from the evidence. But it did lead to some confusion not only in the minds of some who dealt with Scholefield Goodman but, on occasion, in the minds of officers of Scholefield Goodman (Aust), which held its power of attorney in Australia. Thus, when Receivers were appointed of the property and undertaking of Jewel Fashions they wrote for details of indebtedness. Mr. Hagarty, Corporate Finance Manager of Scholefield Goodman (Aust), wrote in reply on 29 November 1979 enclosing a schedule of indebtedness showing details of amounts due to Scholefield Goodman (Aust) and to Colmore Credits Pty. Limited respectively. When Mr. Hagarty discovered his error he wrote on 4 December 1979 enclosing a schedule of indebtedness which showed the same amounts due to Scholefield Goodman (Aust) and Scholefield Goodman and asked that these be used to replace those previously forwarded. In spite of this element of confusion there does not appear to me on the evidence to be any doubt that Jewel Fashions had dealings with and were at material times indebted both to Scholefield Goodman and to Scholefield Goodman (Aust).

On 24 September 1979 moneys were due and payable by Jewel Fashions to each of the applicants and were unpaid. Each of the applicants made demand in writing upon Jewel Fashions pursuant to the Deed of Equitable Charge dated 29 May 1975. Payment was not made in response to the demand. Notice of appointment of Ian Douglas Ferrier and Stephen Gower Baker as Receivers and Managers of the property charged by the Deed was then served upon Jewel Fashions and Messrs. Ferrier and Baker thereupon entered and took possession of that property.

A statement of affairs of Jewel Fashions dated 10 October 1979 which was in evidence set forth that company's assets and liabilities as at 24 September 1979. It showed a total estimated realisable value of assets of $101,682, various liabilities and an estimated deficiency (subject to costs of administration) of $174,552.

The liabilities disclosed included the following:

"The amount owing to Scholefield Goodman (Australia) Pty. Limited is subject to clarification. The Directors believe that the actual amount owed may be up to $20,000 less than claimed."

The statement of affairs was prepared by the Receivers. Both Mr. Tollitt and Mr. Levy were questioned in the witness box about the figures disclosed. Their evidence on this matter was somewhat evasive. My conclusion is that the figures disclosed represented the view of the respondents as directors of Jewel Fashions, which they conveyed to the Receivers, as to the amount of indebtedness due at that time by Jewel Fashions.

Each of the guarantees signed on 30 April 1975 and 5 May 1975 contained a clause which provided (inter alia) for the giving of notice of demand in writing signed by solicitor and sent through the post postage prepaid addressed to the guarantor at the address set out therein and, where given by post, should be deemed to have been given on the day following that on which it was posted.

Notice of demand in respect of the amount due and payable by Jewel Fashions was given to each of the respondents on 1 November 1979 by the posting on 31 October 1979 in a prepaid envelope addressed to each debtor at the specified address of a notice of demand requiring payment within fourteen days.

At the hearing it was submitted on behalf of Mr. and Mrs. Tollitt that any debt due by them as guarantors was still contingent because no notice of demand had been properly given, on the ground that their address set out in the guarantee document was "2/5 Hampton Avenue, Darling Point N.S.W." whereas each prepaid envelope was addressed to them at "2/5 Hampden Avenue, Darling Point. 2027". Evidence was given that there was a Hampden Avenue in the area but no Hampton Avenue. It may be mentioned that the notation of the address in the guarantees of 30 April 1975 and 5 May 1975 appears to have been an error, which was corrected in the Deed of Equitable Charge of 29 May 1975 which was signed by Mr. and Mrs. Tollitt as guarantors. In this Deed their address was stated as "2/5 Hampden Avenue, Darling Point", which is where they were then living.

The submission involves the proposition that the notice of demand to be effective should have been sent to a non-existent address. I cannot accept the submission. It is not a matter of real substance having regard to the visual and phonetic similarity of the two addresses. In my opinion the notice of demand did in this respect fulfil the requirements of the form of guarantee. It was sent to the address set forth in the guarantee with the misspelling corrected. The debts due by the guarantors became due and payable on 15 November 1979 when the fourteen days expired.

Mr. Tollitt gave evidence that his address was now Unit 3, No. 2 Ocean Street, North Bondi and that he had been residing there some four or five years. He claimed he had not received the demand posted on 31 October 1979. Mr. Levy gave evidence but did not say that he had not received the demand. Mrs. Tollitt and Mrs. Levy did not give evidence. If it be material, I would say I am not satisfied Mr. Tollitt did not receive the demand. But it appears to me that the applicants duly made demand in the manner agreed and that even if Mr. Tollitt did not receive it, this would not affect the matter.

It was further submitted for the applicants that demand was made when the statement of claim was served upon each respondent. But it is unnecessary to deal with this submission.

It may also be noted that under the terms of the Deed of Equitable Charge the respondents were guarantors of the indebtedness of Jewel Fashions without the need for any demand. Their liability under the provisions of the Deed arose upon default being made by Jewel Fashions.

The respondents did not pay the applicants. On 13 February 1980 each of the applicants filed a statement of claim in the Supreme Court of New South Wales against the four respondents. The statement of claim filed by Scholefield Goodman set forth the principal sum due under each of the guarantees as $69,994.08. That filed by Scholefield Goodman (Aust) set forth the principal sum due as $118,437.77. In each action an appearance was entered by all defendants on 19 March 1980. On 18 April a defence was entered by all defendants in each action which put in issue all the facts alleged in the statement of claim including the giving of the guarantees. In addition it was pleaded that the debt was due to a moneylender and the Moneylender's Act had not been complied with. It was also alleged that the "plaintiff is not entitled to institute these proceedings because the debt alleged is not now due and payable". No grounds appeared as to the basis of this last allegation. On 8 May 1980 the applicants filed in each action an application returnable on 9 June 1980 to strike out the defence of each respondent. One of the affidavits filed in support of each application verified a proclamation published in Government Gazette No. 165 of 31 December 1970 exempting the plaintiff from licensing under the Money Lender's and Infants Loans Act.

The applications came on for hearing before Master Sharpe and after successive adjournments were on 26 June 1980 stood over generally because of the execution by the respondents of deeds of assignment under Part X of the Act on 20 June 1980 and the operation of s.233.

On 27 May 1980 each of the respondents signed an authority in accordance with s.188 of the Act to Barry Norman Askew to call a meeting of creditors for the purposes of Part X and to take over control of his or her property.

On 19 June 1980 each of the respondents made and verified a statement of affairs. In summary they showed :

Mr. Tollitt
Assets $530
(Cash $30, clothing etc. $500)

Liabilities $19,035
(including $15,250 due
to Mr. Sandow)

Deficiency $18,505

Mrs. Tollitt

Assets $320
(Cash $20, clothing etc. $300)

Liabilities $16,329
(including $15,250 due
to Mr. Sandow)

Deficiency $16,009

Mr. Levy

Assets $530
(Cash $30, clothing etc. $500)

Liabilities $13,669
(including $12,600 due
to Mr. Sandow)

Deficiency $13,139

Mrs. Levy

Assets $320
(Cash $20, clothing etc. $300)

Liabilities $13,124
(including $12,600 due
to Mr. Sandow)

Deficiency $12,804

It appears that Mr. Sandow is the father of Mrs. Tollitt and Mrs. Levy, who are sisters. In each statement of affairs as well as being shown as the major unsecured creditor, he is also shown as a secured creditor holding a registered bill of sale, which some evidence suggested was over furniture.

In each statement of affairs the following appears:

"Particulars of my contingent liabilities and any other liabilities not specified in a previous Part of this Statement are : Scholefield Goodman (Australia) Pty. Limited $188,431.85."

Four meetings were called by Mr. Askew of the creditors of the four respondents respectively to be held on 20 June 1980. Each meeting was attended by Mr. McCoy, Managing Director of Scholefield Goodman (Aust) and agent in Australia for Scholefield Goodman and Mr. Kemp, Solicitor for the two companies. Proxies dated 19 June 1980 executed under seal by Scholefield Goodman (Aust) for itself and as attorney for Scholefield Goodman were presented prior to the meetings. The attendance register in respect of the meeting of Mr. Tollitt's creditors was in evidence. It was signed by Mr. McCoy as proxy for each of the applicants. It had written in the following:

"Scholefield Goodman 69,994.08 As at 31/10/79
& Sons Ltd. plus interest

accruing and

Scholefield Goodman 94,314.12 drafts maturing
(Australia) Pty. Ltd. subsequently."

The meeting of Mr. Tollitt's creditors began and Mr. Askew was elected Chairman. A special resolution was put and seconded that Mr. Tollitt enter into a deed of assignment pursuant to para.204(1)(b) of the Act. As to what then occurred I quote from the minutes of the meeting, which were in evidence. These were prepared and signed by Mr. Askew (see sub-s.225(4) and ss.257 and 258).

"Before putting the motion, Mr. Askew pointed out that he had given careful consideration to the fact, that Scholefield Goodman and Sons Ltd., Scholefield Goodman (Australia) Ltd., were sworn in the Statement of Affairs by mr. Tollitt as one debt of $188,431.00, and this was shown in Part 7 as Item 4 as a Contingent Liability. Mr. Askew then read Section 198(2) of the Act, pointing out that a Creditor is not entitled to vote in respect of an Unliquidated or Contingent Debt, or a Debt, the value of which is not ascertained. He pointed out that he had consulted the Legal Representative of Mr. Tollitt, and had been made aware of the fact that the Scholefield Goodman Companies had commenced litigation against Mr. Tollitt for recovery of the Debt, by way of guarantee which he had given in respect of a debt due by Jewel Fashions Pty. Ltd. (Receiver and Manager Appointed)(In Liquidation), and that this action had been contested. Mr. Askew further stated that he had been advised by the Solicitors, that the Receivers of Jewel Fashions Pty. Ltd., had written to Scholefield Goodman Companies on the 4th March, 1980, pointing out that the overall deficiency after finalisation of the Receivership and Liquidation may be in the vicinity of $83,000.00. The Legal Advisors for Mr. Tollitt further stated to Mr. Askew, that in their opinion, the claim against Mr. Tollitt may not succeed at Law. Mr. Askew further advised that he had then taken Counsels advice in relation to this debt, and in view of the position of the debt of the Scholefield Goodman Companies, as advised to him, by the Debtors, and as sworn in the Statement of Affairs, he did not propose to allow Scholefield Goodman (Australia) Ltd., or Scholefield Goodman and Sons Pty. Ltd., to vote at this meeting. Mr. Kemp, acting as advisor to Mr. McCoy, stated that his client was circularised on the list of Creditors as an Unsecured Creditor, and this had been attested in another place by the Debtor. Mr. Askew replied that the circularised list was prepared by his staff and not by the Debtor, and was not a sworn list. The sworn Statement of Affairs showed Mr. Kemp's client as a Contingent Creditor. Mr. Kemp stated that this was not a matter on which the Chairman of this meeting should rule, and Mr. Kemp foreshadowed that if the Chairman insisted on this ruling, then his client would make an application to the Federal Court in Bankruptcy forthwith to have the Deed set aside."

Mr. Kemp protested without avail. Mr. McCoy sought to vote on behalf of the applicants against the motion but the Chairman Mr. Askew ruled the Applicants were not entitled to vote. It is clear that the vote of the applicants, if allowed to be cast, would have been decisive of any question put to the meeting. In the result the motion was carried. When that meeting closed Mr. Askew was asked if he proposed to exclude the applicants from the other three meetings in the same way as he had done for the first meeting. Mr. Askew said "yes". Mr. Kemp said in that event there seemed little point in remaining. He and Mr. McCoy then left.

Similar special resolutions for the execution of deeds of assignment were passed at each of the other three meetings. On 20 June 1980 each respondent executed a deed of assignment to Mr. Askew as trustee.

On 23 June 1980 Mr. Askew signed a certificate in respect of each respondent that at a meeting of creditors duly called and held on 20 June 1980 the following special resolution was passed as a special resolution.

"THAT the Debtor be required to enter into a Deed of Assignment, pursuant to Section 204(1)(b) of the Bankruptcy Act, 1966.

THAT Mr. Barry Norman Askew be appointed Trustee pursuant to that Deed of Assignment."

On 23 July 1980 applications were made to this Court by Scholefield Goodman and Scholefield Goodman (Aust) against each of the debtors and Mr. Askew which have already been mentioned. It is these applications and the notices of opposition filed, which are before the Court. At first each debtor and Mr. Askew briefed the same counsel to oppose the applications. When it was pointed out that there was conflict between the position of Mr. Askew and the other respondents, Mr. Askew filed an affidavit submitting to such order as the Court might make save an order that he pay any costs of the proceedings personally. Thereafter, Mr. Askew took no active part as a party in the proceedings.

I turn now to the questions which arise.

1. Whether the applicants were at the time of the meeting on 20 June 1980 creditors of each of the respondents

Each of the respondents was liable to Scholefield Goodman and to Scholefield Goodman (Aust) under his or her guarantee for the indebtedness of Jewel Fashions. Having regard to the up to date figures given in evidence, which make allowance for amounts received between 31 October 1979 and 20 June 1980 from the Receivers and Managers of Jewel Fashions and also include interest and charges, I conclude that on 20 June 1980 the indebtedness of the respondents to the applicants was as follows :

Scholefield Goodman $66,086.53
Scholefield Goodman (Aust) $115,024.70

It is true that the claims of the applicants against the respondents were the subject of proceedings in the Supreme Court of New South Wales. It is perhaps unfortunate that those proceedings, due to the course of events, have not been brought to finality. As it is the question of liability has been litigated before me, and for the purpose of these proceedings I am obliged to reach a conclusion upon the question of liability. I feel bound to say that neither in the material contained in the Supreme Court proceedings, which is before me, nor in the other material presented on the hearing of these applications am I able to discern any defence to the claims.

2. If so, whether their debts were unliquidated contingent or unascertained

In my opinion the debts claimed by the applicants are liquidated demands. They are not unliquidated.

I am further of opinion that the debts are not contingent. Notice of demand was given in pursuance of each guarantee on 1 November 1979 by posting on 31 October 1979 requiring payment within fourteen days. By 15 November 1979 each of the debts had become due and payable by the guarantor. They were no longer contingent.

Some suggestion was made that because the claims were the subject of proceedings in the Supreme Court, which had not been finalised, they were both contingent and unascertained. This seems to me to misconceive the position. On the view I take of the facts the debts were due before the commencement of the proceedings in the Supreme Court. The proceedings in that Court were only a method provided by law for the enforcement of the debts. To bring those proceedings did not change the debts into contingent debts.

It is true, that if a substantial defence on the merits had been disclosed, this might have led to a different conclusion. However, this would be because a substantial defence was disclosed. It has been said that a debt is "contingent" where there is doubt if there will be any debt at all (Ex parte Ruffle; In re Dummelow (1873) 8 Ch.App. 997 at p.1001). However, I can discern no defence on the merits in those proceedings or in the material before me.

Are the debts unascertained? It was argued for the respondents that the amounts actually stated by the applicants to be the amounts due varied from time to time. Thus, in the register of attendance at the meeting on 20 June 1980 the debts were recorded by the applicants as being Scholefield Goodman $69,994.08, Scholefield Goodman (Aust) $94,314.12.

In evidence, giving credit for amounts received from the Receivers and Managers of Jewel Fashions between 31 October 1979 and 20 June 1980, which had been overlooked, the figures were given as: Scholefield Goodman $66,086.53; Scholefield Goodman (Aust) $115,024.70. However, I do not consider that the making of a mistake by a creditor in stating the amount due in respect of recorded commercial transactions which have closed, necessarily leads to the conclusion that there is a debt but it is unascertained. The fact that the amount of a debt may not be agreed does not mean it is unascertained. Indeed, I consider that it is certain if it is capable of being rendered certain, and being certain, in this sense, is not "unascertained" within the meaning of sub-s.198(2) of the Act.

3. In any event, whether the decision of the Chairman rejecting the applicants' claim to vote at the meeting is, in the circumstances of this case, examinable

Under Part X of the Act a debtor, who desires to be dealt with under that Part without his estate being sequestrated, may sign an authority for a registered trustee or a solicitor to call a meeting of his creditors (s.188).

The consenting registered trustee or solicitor is obliged to call a meeting of creditors (s.190). He must give notice of the meeting to each person who is stated by the debtor to be a creditor (sub-s.194(2)) and must advertise the meeting in a newspaper circulating when the meeting is to be held (sub-s.194(3)). The majority in number of creditors attending elect a chairman (sub-s.196(1)). Every creditor is entitled to vote unless his debt is unliquidated contingent or unascertained (sub-ss.198(1) and (2)).

Section 201 deals with admission and rejection of claims to vote. It states:

"Any question as to the right of a person to vote at a meeting under this Division, or as to the amount of the debt in respect of which a person is entitled to vote at such a meeting, shall be determined by the chairman, who may, if he thinks it necessary to do so, adjourn the meeting for a period, not exceeding fourteen days, to enable him to investigate the matter."

Section 201 is designed to empower the Chairman not to make a final ruling on a debt - that is for the trustee who will decide whether it is provable - but to rule for the purposes of the meeting in a summary way avoiding technicalities and delays (Re Spanney; Ex parte Holtzmann (1935) 38 W.A.L.R. 13). His decision is not made appealable by the Act (Re Amadio (1978) 24 A.L.R. 455). This position may be contrasted with the position under the Bankruptcy Act 1924 as amended (see para.160(f) and s.169 of that Act).

The policy revealed by s.201, particularly when read with sub-s.225(2), appears to be to facilitate the efficient and final despatch of business in relation to a meeting of creditors under Part X.

On the other hand, s.201 does not expressly make the Chairman's decision final and conclusive. No doubt if the Court was seized of another matter in the course of which it was material to determine whether or not a person was a creditor entitled to vote at the meeting, the Court would be able, indeed would be obliged, to determine the question, in order to exercise its jurisdiction effectively and would not be bound by the Chairman's decision (see sub-s.30(1)). Thus, in the present case, while the application sought an order of sequestration it would have been necessary to determine whether the applicants were creditors and the Court would not be bound by the Chairman's decision. Since that relief is no longer sought the question is narrower. The orders sought in each case are that the applicants were creditors entitled to vote at the meeting on 20 June 1980, a declaration that no special resolution was passed pursuant to s.204, and, an order that the deed of assignment is void. Each application in this respect appears to be based on s.222. Does it amount to anything more than a challenge to the Chairman's decision? Is an application based on s.222 something "coming within the cognizance of the Court" so that the Court has express power under sub-s.30(1) to decide all questions? In asking for an order that the deed is void, the applications do, in my opinion, involve something more than a review of the Chairman's decision. Furthermore, it appears to me that ss.222 and 30 do empower the Court to deal with the matter.

The question then arises whether the Court's function is to determine whether the Chairman's decision was correct having regard to the material before him or whether it was correct having regard to the facts in evidence in the proceedings before the Court.

It is unnecessary to express a concluded view on this because on either basis I would conclude the Chairman was in error. Dealing first with the material before the Chairman, it appears to me his exercise of the power conferred upon him miscarried. There are various indications in the evidence that Mr. Askew regarded his function to be to act in the interests of the debtors, Mr. Sandow, an unsecured creditor who was the father of the two female respondents and fatherin-law of the others, having placed him in funds. He did obtain legal advice but there is no evidence as to what facts were placed before the advisers and no detailed or reliable evidence of what was the basis of the advice given, which seems to have been to the effect that the debts were contingent. If a creditor wishes to vote he must make known to the Chairman particulars of his debt (sub-s.198(4); Re Venetoulis; Ex parte Calsil Limited (1976) 13 A.L.R. 625). In the present case, Mr. Askew was given particulars. Once particulars were supplied to him, because the size of the indebtedness involved made it crucial, he should in my view have made further inquiry beyond what he did in relation to the question whether the debts were contingent, exercising his power of adjourning the meeting if necessary.

If the matter should be determined on the basis of facts in evidence in the proceedings before the Court, then I am of opinion that on that basis the Chairman's decision to reject the votes of the applicants was wrong.

4. Whether the certificate of the Chairman should in itself lead me to conclude that the meeting was duly convened and held and that the special resolution was duly passed

Sub-section 225(2) is in the following terms:

"A certificate of the passing of a special resolution under section 204 of this Act signed in accordance with that section is evidence that prima facie the meeting was duly convened and held and that the special resolution specified in the certificate was duly passed at the meeting."

Under sub-s.204(7) where the creditors pass a special resolution under that section the Chairman of the meeting must forthwith sign a certificate to that effect in the prescribed form (rr.79 and 98; form 36) and forthwith cause it to be filed in the Office of the Registrar. The Shorter Oxford Dictionary 3rd Edn. Re-Set and with Revised Agenda gives the meaning of "forthwith" as "immediately, at once, without delay or interval". The certificates in the present case were neither signed nor filed immediately. However, the word "forthwith" when used in a statute may be affected by the context in which it appears (see the examples in Stroud's Judicial Dictionary 4th Edn. pp.1086 et seq). I am content to adopt the view expressed by Riley J. in Re Venetoulis; Ex parte Calsil Limited (supra, at p.627) that in sub-s.204(7) it means "as soon as possible in the circumstances, the nature of the act to be done being taken into account". In that case his Honour held that a certificate signed on 30 September in respect of a meeting held on 8 September was not signed forthwith. This may be compared with In re Muscovitch; Ex parte Muscovitch (1939) Ch. 694 where it was held by the Court of Appeal that an appellant who had entered his appeal on 25 October did not comply with English Bankruptcy Rule 132 which provided "a copy of the notice of appeal shall forthwith be sent by the appellant to the Registrar of the Court appealed from" when he sent a copy on 28 October.

In the present case the meetings were held on 20 June; the certificates were signed on 23 June; and they were filed with the Registrar on 25 June. The 20 June was a Friday and 23 June a Monday. I consider each certificate signed on 23 June was, in the circumstances, signed "forthwith". I have more difficulty with the question of registration. No reason was given for the delay in filing. Can it be said the Chairman caused each certificate to be filed "forthwith"? The purpose of filing seems to be to place the certificate officially on record in the Bankruptcy Registry. It is important that this should be done as quickly as possible. Nevertheless, with some hesitation, I conclude also that each certificate was caused to be filed "forthwith" within the meaning of sub-s.204(7).

What then is the effect of the certificate? Prior to the amendment of s.225 by Act No. 12 of 1980, which came into force on 8 April 1980, sub-s.225(2) provided that such a certificate would be "conclusive evidence". This suggested the legislature intended the certificate to be evidence which could not be controverted, even when the Court was exercising the powers conferred by s.222 supplemented by the powers conferred by s.30 (see Re Venetoulis; Ex parte Calsil Limited supra; cf. Re Davis; Ex parte Hammond (No. 1) (1970) A.L.R. 838). As far back as 1936 Lukin J. commenting on the corresponding provision in the Bankruptcy Act 1924 suggested the use of the term "prima facie" would be preferable. This problem has been removed by the amendment of sub-s.225(2). This substituted the words "prima facie" for the words "in the absence of fraud, conclusive".

The certificates in the present case were given after the amendment of sub-s.225(2) came into force. The result is that I am bound to consider the whole of the evidence, including in each case the certificate, which is to be treated as prima facie evidence. The certificate is not in itself determinative of the matter.

5. If not, whether each of the meetings was duly called and held and the special resolution duly passed

On the view which I take of the facts, notice of meeting should have been given to Scholefield Goodman, and both Scholefield Goodman and Scholefield Goodman (Aust) should have been allowed to vote. It appears to me that none of the meetings was duly convened and held and none of the special resolutions was duly passed. I do not consider that the effect of each certificate as prima facie evidence of the contrary should, in the result, lead me to a contrary conclusion.

6. Whether the statement of affairs in terms of sub-s.222(4):
(a) omitted any material particular; or
(b) included any incorrect and material particular

By sub-s.195(2) it is provided that a debtor's statement of affairs "shall specify his assets and liabilities" and shall include "(b) in respect of each liability - particulars of the liability, including whether it is secured or not". This is not unimportant. By sub-s.194(2) the obligation is imposed upon the trustee calling a meeting of creditors to give notice "to each person who is stated by the debtor to be a creditor".

Having regard to the evidence before me, there were two errors in each statement of affairs. Each wrongly omitted any mention of the liability due to Scholefield Goodman. Each was incorrect in placing the liability to Scholefield Goodman (Aust) under the heading "my contingent liabilities and any other liabilities not specified in a previous Part of this Statement".

Each particular was material. The omission of Scholefield Goodman meant that notice of the meeting was not sent to that company. It was argued that notwithstanding this Scholefield Goodman learned of each meeting and sought to attend. However, the omission of Scholefield Goodman and the placing of the liability shown as owing to Scholefield Goodman (Aust) under contingent liabilities led to the course of events which resulted in the Chairman of the Tollitt meeting rejecting the right of either company to vote and stating the same exclusion would follow at the other meetings.

7. If so, whether in terms of sub-s.222(5) it would be in the interests of creditors to make an order declaring the deed of assignment void

On the one hand it may be argued that it is in the interests of creditors that the deeds of assignment should stand, that the adverse decision of the chairman regarding the position of the applicants does not shut them out from proving their debts under the deeds; and that s.231 applies the general provisions of the Act.

On the other hand, it may be said that although a deed of assignment may be a useful procedure where there are some assets to be administered, in the present case it is of no use to creditors because the debtors' assets are said to consist of cash $90 (in total) and clothing etc. $1,600 (in total); that it is evident no benefit can come to creditors yet they will be barred by the deed if it be not set aside (s.228) and the debts will be released (s.230). There is no money in the hands of the trustee by virtue of the deed to enable him to act in any way for the benefit of the creditors. Some funds appear to have been provided to the trustee by Mr. Sandow, the father of Mrs. Tollitt and Mrs. Levy, but this may well have been done mainly to enable him to act in the interests of the debtors.

If the deed be set aside creditors will not, as a result, lose access to any assets, but at least their claims will not be barred and the debts will not be released.

In the result I conclude it would be in the interests of creditors to declare the deeds void.

The orders I will make in each application are an order that the deed of assignment dated 20 June 1980 be declared void; an order that the debtor respondent in each application pay to the applicants their costs of the proceedings including reserved costs; and, an order that the respondent Barry Norman Askew forthwith give notice in writing of this order to each creditor other than the applicants.