Re John Brian Cullen and Anor Ex Parte: the Official Trustee In Bankruptcy [1985] FCA 449 (3 December 1985)

FEDERAL COURT OF AUSTRALIA

Re: JOHN BRIAN CULLEN and ANOR.
Ex Parte: THE OFFICIAL TRUSTEE IN BANKRUPTCY
No. W13X of 1983
Bankruptcy

COURT

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

CATCHWORDS

Bankruptcy - deeds of assignment entered into within period of 14 days of signing of authorities under s. 188 of Bankruptcy Act 1966 - whether deeds void - in respect of further deed no distinction drawn (in voting at meeting at which resolution passed that debtor enter into deed) between joint creditors and separate creditors - whether deed void.

Bankruptcy Act 1966, ss. 188, 194.

Bankruptcy Rules, rules 100C, 100F.

HEARING

SYDNEY
3:12:1985

ORDER

Declarations be made that:

1. The deed of assignment entered into by John Brian Cullen, Annie Jean Cullen and John Ramsay Paul Partridge on 10 November 1982 pursuant to a resolution passed at a meeting of creditors of the debtors held on 10 November 1982 is invalid. 2. The deed of assignment entered into by John Brian Cullen on 10 November 1982 and John Ramsay Paul Partridge on 23 November 1982, pursuant to a resolution passed at the said meeting of creditors is invalid. 3. The deed of assignment signed by Annie Jean Cullen and John Ramsay Paul Partridge in November 1982 pursuant to a resolution passed at the said meeting is invalid.

NOTE: Settlement and entry of orders is dealt with in Rule 124
of the Bankruptcy Rules.

DECISION

The application in this matter raises for determination the question of whether or not certain deeds of assignment entered into by Mr. and Mrs. Cullen separately and Mr. and Mrs. Cullen jointly, with Mr. J.R.P. Partridge as trustee are valid. Authorities were executed by the debtors pursuant to s. 188 of the Bankruptcy Act 1966. The authority signed by Mr. J.B. Cullen was signed by him on 2 October 1982. The authority signed by Mrs. A.J. Cullen was signed by her on 28 October 1982. The authority signed by the two debtors in respect of their joint estate was signed by them on 10 November 1982.

2. A meeting of creditors was called on 29 October 1982. It was resolved that the meeting of creditors be adjourned until 10 November 1982 and that creditors be notified. A further meeting was held on 10 November 1982. At that meeting it was resolved that the debtors jointly and separately execute deeds of assignment under Part X of the Act.

3. Section 194 of the Act provides that the meeting of creditors to be called in pursuance of an authority under s. 188 shall be held not later than 28 days after the authority is signed by the debtor (except in the case of an authority signed in December, for which special provision is made) and not earlier than 14 days after the notices to creditors are delivered or sent by post under sub-sec. (2). Sub-section 194(4) provides that a failure to comply with sub-secs.(2) or (3) of the section shall not render a meeting incompetent to act for the purposes of the Part, that is to say Part X of the Act. Sub-sections (2) and (3) are not relevant for present purposes.

4. No provision is made in the section as to what is to be the consequence of failure to comply with sub-sec. (1), which is the relevant provision here. In those circumstances, particularly bearing in mind the important matters with which sub-sec. (1) deals, I am of the opinion that failure to comply with sub-sec. (1) renders any meeting called invalid.

5. There is no evidence, at least no direct evidence, of when notices were sent. But the authorities which were signed by Mrs. Cullen and by Mr. and Mrs. Cullen jointly were signed within a period of 14 days prior to the meeting held on 10 November 1982. Furthermore, at the time of the meeting, which was held on 29 October 1982, there was no authority from the debtors jointly and the authority from Mrs. Cullen was only one day old.

6. There was no authority to give notice to any creditor until an authority under s. 188 had been signed. It must follow, as a consequence, that the provisions of s. 194 were not complied with in relation to Mrs. Cullen and in relation to Mr. and Mrs. Cullen so far as their joint estate is concerned. In my opinion the deeds of assignment executed by them as a result of the resolutions passed at the meeting are invalid.

7. The same problem does not apply in relation to the deed executed by Mr. Cullen because the authority he signed was dated 2 October 1982. But it would appear from the minutes of the meeting of 10 November that there was no distinction drawn at the meeting between creditors of the separate estates of the two debtors and creditors of their joint estate.

8. My attention was drawn to rule 100C of the Bankruptcy Rules, which is in Part IXA thereof. The Part is divided into two Divisions, one entitled "Division 1 - Joint Bankruptcies" and the other "Division 2 - Joint Arrangements under Part X" (of the Act). Rule 100C is in Division 1. It provides that at a meeting of joint and separate creditors, separate creditors shall not vote on a resolution proposed for consideration by joint creditors and joint creditors shall not vote on a resolution proposed for consideration by separate creditors. Rule 100F is in Division 2. It provides that the provisions of Division 1 with respect to the holding and conduct of a meeting held pursuant to s. 64 of the Act apply, so far as they are applicable, to the holding and conduct of a meeting held pursuant to s. 188 of the Act. Rule 100C therefore applied to the circumstances of the present case.

9. There having been at the meeting no distinction drawn between which creditors were voting in respect of which of the three estates which the meeting had to deal with, it seems to me that the meeting acting in that way was not empowered to resolve that Mr. Cullen, qua his separate estate, enter into a deed of assignment. For that reason the deed of assignment which he entered into was ivalid.

10. For the reasons I have given I am of the view that the three deeds of assignment are invalid, and accordingly I declare that the deed of assignment entered into by John Brian Cullen, Annie Jean Cullen and John Ramsay Paul Partridge on 10 November 1982 pursuant to a resolution passed at a meeting of creditors of the debtors held on 10 November 1982 is invalid. I further declare that the deed of assignment entered into by John Brian Cullen on 10 November 1982 and John Ramsay Paul Partridge on 23 November 1982, pursuant to a resolution passed at the said meeting of creditors is invalid and I also declare that a deed of assignment signed by Annie Jean Cullen and John Ramsay Paul Partridge in November 1982, pursuant to a resolution passed at the said meeting is invalid.