Re Levy; Ex Parte Scholefield Goodman & Sons Ltd [1980] FCA 129; (1980) 50 FLR 99 (6 November 1980)

FEDERAL COURT OF AUSTRALIA

Re LEVY; Ex Parte SCHOLEFIELD GOODMAN & SONS LTD. [1980] FCA 129; (1980) 50 FLR 99
Bankruptcy

COURT

FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
Bowen C.J.(1)

CATCHWORDS

Bankruptcy - Part X - Meeting of creditors - Creditors entitled to vote - Chairman's decision rejecting creditors' right to vote - Whether chairman's decision subject to review by court - Certificate of chairman as to passing of special resolution - Effect of certificate - Statement of affairs - Omission of material particular or inclusion of incorrect and material particular - Meaning of "unliquidated or contingent debt or the debt the value of which is not ascertained" - Declaration that deed of assignment void - Bankruptcy Act 1966 (Cth), ss. 30, 201, 204, 222, 225. In April 1975 the debtors had each executed a guarantee in favour of Scholefield Goodman (Australia) Pty. Ltd. (S. G. (Aust.). In May 1975 t he debtors executed a further and continuing guarantee in favour of Scholefield Goodman & Son Ltd. (S.G.). The guarantees guaranteed the payment of moneys then or therafter owing and payable by Jewel Fashions Pty. Ltd. On 24th September, 1979, moneys were due and payable by Jewel Fashions Pty. Ltd. to both S.G. and S.G. (Aust). A demand in writing pursuant to an equitable charge over the assets and undertakings of Jewel Fashions Pty. Ltd. evoked no response. Receivers and managers were then appointed over the assets of Jewel Fashions Pty. Ltd. pursuant to the equitable charge. On 1st November, 1975, notice was given to each of the debtors in accordance with the terms of the guarantees of April and May 1975 demanding payment within fourteen days. By 15th November, 1979, the money due from the guarantors became payable.

In February 1980 each of the applicants, S.G. and S.G. (Aust.), filed a Supreme Court writ against the debtors: S.G. claimed the sum of $69,994.08; S.G. (Aust.) claimed the sum of $118,437.77. Defences were filed by each debtor in each action putting all facts in issue and pleading noncompliance by the applicants with the Money-lender's and Infants Loans Act.

On 27th May, 1980, each debtor signed an authority pursuant to s. 188 of the Bankruptcy Act 1966. On 19th June, 1980, each debtor made and verified a statement of affairs in each of which an indebtedness of $188,431.85 to S.G. (Aust.) was alleged to be a contingent liability. At a meeting of creditors on 20th June, 1980, the chairman ruled that neither of the applicants had a right to vote. The remaining creditors then passed special resolutions requiring each debtor to execute a deed of assignment which in due course they did. On 23rd June, 1980, the chairman of the meeting signed a certificate pursuant to s. 204 (7) of the Act and filed the same on 25th June, 1980.

In proceedings brought by the applicants against each of the debtors and the trustee of the respective deeds (which applications were heard together) the applicants sought: (a) a declaration that each was a creditor entitled to vote at the meeting of creditors held on 20th June, 1980; (b) a declaration that no special resolution pursuant to s. 204 of the Act was passed at the meeting of creditors; (c) an order that the deed of assignment executed in each case was void.

Held: (1) In the absence of a substantial defence, the mere fact that litigation is proceeding to enforce a debt does not make such a debt a contingent liability.

Ex parte Ruffle; Re Dummelow (1873), 8 Ch App 997, referred to with approval.
(2) Variations in the calculations of an alleged debt do not cause such a debt to be unascertained within the meaning of s. 198 (2) of the Act. A debt is certain if it is capable of being made certain, notwithstanding that it might not be agreed to by the debtor.
(3) The fact that a decision of a chairman made pursuant to s. 201 of the Act is not subject to appeal does not mean that the court is barred from examining whether such decision was or was not properly made. Thus a declaration can be obtained as to whether the applicants were entitled to vote at the meeting.
(4) In the circumstances, whether the court considered the facts before the chairman at the meeting or the facts established before the court, the decision of the chairman was wrong in refusing to allow the applicants to vote thereat.
(5) Since the amendment of s. 225 by Act No. 12 of 1980 the certificate of the chairman is prima facie evidence only that the meeting was duly convened and the special resolution duly passed. It has to be considered with the whole of the evidence. On the evidence none of the meetings was duly convened and none of the special resolutions was duly passed.
(6) Each statement of affairs contained two errors: each wrongly omitted any mention of the liability to S.G.; each alleged that the liability to S.G. (Aust.) was a contingent liability. Each of these particulars was material in the circumstances, because the assets to be administered were in each case so small and also because if the deed of assignment in each case were allowed to stand the claims of the creditors would be forever barred. It was therefore in the interests of the creditors that the deed of assignment in each case be declared void.

HEARING

Sydney, 1980, May 22; September 1, 24-25; October 22; November 6.
6:11:1980
APPLICATION.

Four applications heard together by the applicants against each of the debtors and the trustee of a deed of assignment executed by each of the debtors on 20th June, 1980.

M. Finnane, for the applicants.

P. Deakin, for the respondents.
Cur. adv. vult.

Solicitors for the applicants: Barraket, Kemp & Strang.

Solicitors for the respondents: H. N. Chippindall & Co.
D. LEVIN

DECISION

November 6.

The following judgment was delivered.
BOWEN C.J. Scholefield Goodman & Sons Ltd. (Scholefield Goodman) and

Scholefield Goodman (Australia) Pty. Ltd. (Scholefield Goodman (Aust.)), by their application in matter 106 of 1980 sought declarations and orders against Sheila Ann Levy as follows: "1. A declaration that on 20th June, 1980, each of the applicants was a creditor entitled to vote at a meeting held on that day under Pt X of the Bankruptcy Act 1966 following the signing by the debtor of an authority under s. 188 of the Bankruptcy Act 1966. 2. A declaration that at a meeting of creditors of the debtor called under Pt X of the Act on 20th June, 1980, no special resolution requiring the debtor to execute a deed of assignment was passed pursuant to s. 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."

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

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

4. 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.

5. At the outset counsel for the applicants sought the orders and declarations in pars. 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 (Cth) (the Act) and also on the ground that a meeting of creditors had been called in pursuance of such authority (the Act, s. 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 pars. 1 to 3.

6. The main case for the applicants was that a meeting of creditors of each respondent under Pt X of the Act was held on 20th 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 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 s. 222 (4) be declared void.

7. 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. Ltd., $188,431.85."

8. For the respondents it was contended that the debt was contingent or at all events unascertained within the meaning of 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 s. 222 (5) that it was not satisfied that it would be in the interests of creditors to do so.

9. It was further contended that the chairman of the meeting had signed a certificate in accordance with s. 204 (7) and this should tend 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 s. 225 (2).

10. The questions arising for determination in each case are: 1. Whether the applicants were at the time of the meeting on 20th 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 that 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 s. 222 (4): (a) omitted any material particular; or (b) included any incorrect and material particular. 7. If so, whether in terms of s. 222 (5) it would be in the interests of creditors to make an order declaring the deed of assignment void.

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

12. 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.

13. 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.

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

15. Jewel Fashions Pty. Ltd. (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.

16. On 29th 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 13th August, 1965, and supplementary power of attorney dated 13th 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 12th June, 1975, registered No. 7270 in the register of charges kept by the Corporate Affairs Commission.

17. Prior to the giving of the equitable charge written guarantees had been given. On 30th 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 5th May, 1975, the four respondents executed a guarantee in favour of Scholefield Goodman in similar terms.

18. 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 connexion 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.

19. I have stated this procedure at some length because Mr Tollitt swore in an affidavit read in the proceedings "that Jewel Fashions Pty. Ltd. had no dealings with Scholefield Goodman & Sons Ltd. 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. Ltd. 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. Ltd. 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 29th November, 1979, enclosing a schedule of indebtedness showing details of amounts due to Scholefield Goodman (Aust.) and to Colmore Credits Pty. Ltd. respectively. When Mr Hagarty discovered his error he wrote on 4th 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.).

20. On 24th 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 29th 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.

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

22. The liabilities disclosed included the following: "Amounts owing and secured by debenture or floating charge over the company's assets to Scholefield Goodman (Australia) Pty. Ltd. (see also note 1) $171,265." Note 1 contained the following: "The amount owing to Scholefield Goodman (Australia) Pty. Ltd. is subject to clarification. The directors believe that the actual amount owed may be up to $20,000 less than claimed."

23. 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.

24. Each of the guarantees signed on 30th April, 1975, and 5th 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.

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

26. 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, New South Wales" 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 30th April, 1975, and 5th May, 1975, appears to have been an error, which was corrected in the deed of equitable charge of 29th 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.

27. 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 15th November, 1979, when the fourteen days expired.

28. 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 31st 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.

29. 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.

30. 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.

31. The respondents did not pay the applicants. On 13th 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 19th March, 1980. On 18th 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 money lender and the Money-lender's and Infants Loans 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 8th May, 1980, the applicants filed in each action an application returnable on 9th 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 31st December, 1970, exempting the plaintiff from licensing under the Money-lender's and Infants Loans Act, 1941 (N.S.W.).

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

33. On 27th 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 Pt X and to take over control of his or her property.

34. On 19th 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".

35. 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.

36. 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. Ltd., $188,431.85."

37. Four meetings were called by Mr Askew of the creditors of the four respondents respectively to be held on 20th 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 19th 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 & Sons Ltd. 69,994.08; Scholefield Goodman (Australia) Pty. Ltd. 94,314.12 - As at 31st October, 1979, plus interest accruing and drafts maturing subsequently."

38. 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 s. 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 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 $ Sons Ltd., Scholefield Goodman (Australia) Ltd., were sworn in the statement of affairs by Mr Tollitt as one debt of $188,431, and this was shown in Pt 7 of item 4 as a contingent liability. Mr Askew then read s. 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 4th March, 1980, pointing out that the overall deficiency after finalization of the receivership and liquidation may be in the vicinity of $83,000. The legal advisers 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 counsel's 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 & Sons Pty. Ltd., to vote at this meeting. Mr Kemp, acting as adviser to Mr McCoy, stated that his client was circularized 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 circularized 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."

39. 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.

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

41. On 23rd June, 1980, Mr Askew signed a certificate in respect of each respondent that at a meeting of creditors duly called and held on 20th 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 s. 204 (1) (b) of the Bankruptcy Act 1966. THAT Mr Barry Norman Askew be appointed trustee pursuant to that deed of assignment."

42. On 23rd 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.

43. I turn now to the questions which arise.

1. Whether the applicants were at the time of the meeting on

20th June, 1980, creditors of each of the respondents

44. 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 31st October, 1979, and 20th June, 1980, from the receivers and managers of Jewel Fashions and also include interest and charges, I conclude that on 20th June, 1980, the indebtedness of the respondents to the applicants was as follows: Scholefield Goodman $66,086.53; Scholefield Goodman (Aust.) $115,024.70.

45. 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

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

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

48. Some suggestion was made that because the claims were the subject of proceedings in the Supreme Court, which had not been finalized, they were both contingent and unascertained. This seems to me 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.

49. 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; 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.

50. 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 20th June, 1980, the debts were recorded by the applicants as being Scholefield Goodman $69,994.08; Scholefield Goodman (Aust.) $94,314.12.

51. In evidence, giving credit for amounts received from the receivers and managers of Jewel Fashions between 31st October, 1979, and 20th 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 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

52. Under Pt 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).

53. 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 (s. 194(2)) and must advertise the meeting in a newspaper circulating when the meeting is to be held (s. 194(3)). The majority in number of creditors attending elect a chairman (s. 196(1)). Every creditor is entitled to vote unless his debt is unliquidated, contingent or unascertained (s. 198(1) and (2).

54. 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."

55. 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 (1936) 38 WALR 13. His decision is not made appealable by the Act (Re Amadio (1978) 46 FLR 147. This position may be contrasted with the position under the Bankruptcy Act 1924, as amended (see s. 160 (f) and s. 169 of that Act).

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

57. 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 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 20th 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 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.

58. 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.

59. 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 father-in-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 (s. 198(4); Re Venetoulis; Ex parte Calsil Ltd. (1976) 13 ALR 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.

60. 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 passed

61. 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."

62. Under 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 ed.), reset 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 ed.), p 1086 et seq). I am content to adopt the view expressed by Riley J. in Re Venetoulis; Ex parte Calsil Ltd. (1976) 13 ALR, at p 627. that in 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 30th September in respect of a meeting held on 8th September was not signed forthwith. This may be compared with Re Muscovitch; Ex parte Muscovitch (1939) 1 Ch 694. where it was held by the Court of Appeal that an appellant who had entered his appeal on 25th October did not comply with English bankruptcy r. 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 28th October.

63. In the present case the meetings were held on 20th June; the certificates were signed on 23rd June; and they were filed with the Registrar on 25th June. The 20th June was a Friday and 23rd June a Monday. I consider each certificate signed on 23rd 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 s. 204 (7).

64. 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 8th April, 1980, 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 Ltd. (1976) 13 ALR 625. cf. Re Davis; Ex parte Hammond (No. 1) (1970) ALR 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 s. 225 (2). This substituted the words "prima facie" for the words "in the absence of fraud, conclusive".

65. The certificates in the present case were given after the amendment of 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

66. 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 s. 222 (4): (a)
omitted any material particular; or (b) included any incorrect
and material particular

67. By 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 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".

68. 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".

69. 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 s. 222 (5) it would be in the interests
of creditors to make an order declaring the deed of assignment
void

70. 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.

71. 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 ninety dollars (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 benfit 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.

72. 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.

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

74. The orders I will make in each application are an order that the deed of assignment dated 20th 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.

ORDER

Orders accordingly.