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Federal Court of Australia |
Last Updated: 15 September 2000
Principal Registry
TO: Recipients of judgment [2000] FCA 55
SUBJECT: Amendment in paragraph number in FCR copy
In Cummings v Macks [2000] FCA 55 (and now reported in [2000] FCA 55; 96 FCR 345) the following changes were made in the format of this judgment for inclusion in the FCR reports:
The paragraph after para 35 was originally unnumbered.
This is the paragraph beginning with the judgment of Sundberg J.
This paragraph has now been allocated number 36, the judgment of Marshal J
begins on para number 37 and subsequent paragraphs are renumbered.
This means the case now has a total of 46 numbered paragraphs rather than
the original 45.
Regards,
Information Officer.
PLEASE NOTE: The memorandum does not form part of the judgment.
Cummings v Macks [2000] FCA 55
BANKRUPTCY - power to remove a trustee - whether notice of motion to remove a trustee at creditor's meeting must be given
MEETINGS - where prior notice required of business to be dealt with at a meeting of members of an organisation
Bankruptcy Act 1966 (Cth) ss 64, 64B, 64G, 64R, 64S, 64T, 64W, 64ZD, 179, 181, Div 5 Pt IV
Bankruptcy Amendment Act 1991 (Cth) (No 9 of 1992)
Acts Interpretation Act 1901 (Cth) s 15AB(1)(a)
Companies Act 1862 (UK)
Local Government Act (SA)
The King v Hill (1825) 4 B & C 426; 107 ER at 1118 discussed
The King v Harris (1831) 1 B & Ad 936; 109 ER 1034 discussed
The King v Pulsford (1828) 8 B & C 350; 108 ER 1073 referred to
La Compagnie de Mayville v Whitley [1896] 1 Ch 788 referred to
Toole v Flexihire Pty Ltd (1991) 6 ACSR 455 referred to
Campbell v Crawford (1985) 12 FCR 317 cited
Dobson v Fussy (1831) 7 Bing 305; 131 ER 117 referred to
Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1989) 95 ALR 211 cited
Myer Queenstown Garden Plaza Pty Ltd v Corporation of the City of Port Adelaide (1975) 11 SASR 504 distinguished
Symes v Weedow (1892) 14 ALT 197 referred to
McLure v Mitchell (1974) 6 ALR 471 referred to
Saraswati v R [1991] HCA 21; (1991) 172 CLR 1 referred to
Gardner Smith Pty Ltd v Collector of Customs, Victoria (1986) 66 ALR 377 referred to
Houssein v Under Secretary of Industrial Relations and Technology (NSW) [1982] HCA 2; (1982) 148 CLR 88 cited
9(2) Halsbury's Laws of England, 4th ed, par 1097
Gore-Browne on Companies 44th ed par 21.4
Pearce et al Statutory Interpretation in Australia 4th ed at p 106
Clyne Report - "Report of the Committee Appointed by the Attorney-General of the Commonwealth to Review the Bankruptcy Law of the Commonweal
JANE TERESA CUMMINGS AS TRUSTEE FOR THE BALNAVES FAMILY TRUST v PETER IVAN MACKS AS TRUSTEE OF THE PROPERTY OF PETER JOHN BALNAVES (A BANKRUPT) AND THE INSPECTOR-GENERAL IN BANKRUPTCY
S 43 OF 1999
DRUMMOND, SUNDBERG AND MARSHALL JJ
4 FEBRUARY 2000
BRISBANE (HEARD IN ADELAIDE) (VIA VIDEO LINK TO ADELAIDE)
IN THE FEDERAL COURT OF AUSTRALIA |
|
SOUTH AUSTRALIA DISTRICT REGISTRY |
JUDGES: |
DRUMMOND, SUNDBERG AND MARSHALL JJ |
DATE OF ORDER: |
4 FEBRUARY 2000 |
WHERE MADE: |
BRISBANE (HEARD IN ADELAIDE) (VIA VIDEO LINK TO ADELAIDE) |
1. The appeal be dismissed with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
SOUTH AUSTRALIA DISTRICT REGISTRY |
S 43 OF 1999 |
JUDGES: |
DRUMMOND, SUNDBERG AND MARSHALL JJ |
DATE: |
4 FEBRUARY 2000 |
PLACE: |
BRISBANE (HEARD IN ADELAIDE) (VIA VIDEO LINK TO ADELAIDE) |
DRUMMOND J:
1 The issue in this appeal is whether the learned primary judge was correct in holding that s 181 the Bankruptcy Act 1966 (Cth) requires notice of a motion to remove a trustee at a creditors' meeting. The appellant contends that is not required and that the power conferred by s 181 on a meeting of creditors to remove the trustee can be exercised at any such meeting, without prior warning, so long as the meeting itself happens to be one that has been called on at least seven days' notice. Section 181 provides:
"The creditors may, by resolution, at a meeting of which not less than 7 days' notice has been given, remove a registered trustee appointed by them, or a registered trustee who is, by virtue of subsection 156A(3), the trustee of the estate of the bankrupt concerned, and may at the same or a subsequent meeting appoint another registered trustee to be trustee in his or her place."
2 The trustee was a party to the proceedings at first instance. He had been in office for five months before the meeting at which it was resolved, without any prior notice to him or to the general body of creditors, that he be removed. Only seven creditors attended: the five respondents, two by proxy, (with proofs totalling $304,276) who all supported removal of the trustee and two public offices (with proofs totalling $67,451) which opposed removal. At the time of the hearing at first instance, proofs totalling $1,055,834 had been lodged. Eight other creditors claiming debts of $623,186, in all, gave evidence that if they had known that the respondents might propose removal of the trustee, they would have attended the meeting, opposed the proposal and defeated it. The five respondents are each associated with the bankrupt. The learned primary judge, however, rejected the trustee's case that they had arranged his removal to assist the bankrupt. He took the view that the respondents had not gone to the meeting planning to remove the trustee but that, during the meeting, they developed an animosity towards him which resulted in the motion for removal being proposed and carried. Nor did his Honour criticise the trustee's conduct at the meeting or, more generally, in the way he had gone about administering the estate up to that time.
3 Removal of the trustee was therefore not an orchestrated exercise designed to achieve any improper purpose. But what happened demonstrates how unsatisfactory an operation s 181 can have, if the appellant's reading of the section is correct.
4 The first reason the appellant gives for her construction of s 181 is that the wording of the section is clear: it was said that the notice requirement attaches only to the meeting, not to the removal resolution. In my opinion, this begs the question as to what is meant by the word "notice" in the expression "at a meeting of which not less than 7 days' notice has been given" in s 181.
5 The common law rules relating to the convening of meetings developed in relation to municipal corporations. One strand of authority deals with the requirements for a valid notice of a meeting of all the members of such a body, while another strand deals with the requirements for notice of meetings of the governing council of the body.
6 As to meetings of the members of the body, the rule was stated in The King v Hill (1825) 4 B & C 426, by Littledale J at 444; 107 ER 1118 at 1126:
"Where a meeting is holden on a charter-day, it is not necessary to give notice of it; but at any other time notice of a meeting, and of the purposes for which it is holden, must be given."
and by Bayley J at 441; 107 ER at 1124:
"Where the election of burgesses is fixed, either by charter or custom, to take place on any specific day, there it is the duty of every person, entitled to vote, to take notice, that there is to be an election on that day. But when no specific day is fixed, and the election may take place at a meeting holden at any time, it is essential, that notice of the meeting and of the business to be transacted there should be given to all persons resident within the limits of the borough who are entitled to vote, and that should be a reasonable notice, and at a reasonable time before the election actually takes place."
7 The issue in Hill was the invalidity, for want of adequate notice convening the meeting, of the election of the defendant to the borough's governing council at a meeting held on a non-charter day.
8 The absence of need for notice of a charter day meeting referred to in the judgments in this case is explained by the fact that the charter establishing a municipal corporation often provided for an annual meeting of all members of the corporation to be held on a fixed day, "the charter day". Any business could be transacted on a charter day without prior notice to members because "every member is then supposed to be present": per Tenterden CJ in The King v Harris (1831) 1 B & Ad 936 at 943; 109 ER 1034 at 1037; 9(2) Halsbury's Laws of England, 4th ed, par 1097. (In Harris, removal of a town clerk without prior notice was held valid because it took place at a charter day meeting of the members of a municipality.) Some charters, however, did not fix an annual charter day and the governing council itself could summon meetings of the members of the corporation for the council election and for other purposes, whenever it saw fit. Subject only to the special case of the meeting held on a date fixed by the charter, of which notice to members was unnecessary because they were deemed to know both that a meeting would be held on that day and were presumed to be in attendance, notice fixing the time and place of all other meetings of the members of the corporation and containing an intimation of the business to be transacted was required. An informative notice convening a meeting of all the members of a body was required, as a general rule, so that the members could make an informed decision on whether each would exercise their right to attend.
9 In the absence of an express requirement in the charter for an informative notice, notices convening meetings of members of the governing council of a corporation did not have to identify the business to be transacted for a reason similar to that which explains why notice to all members of a charter day meeting was not required as a condition precedent to the transaction of any business at such a meeting: members of the governing council of a municipal corporation were not entitled to an opportunity to consider whether they would attend such meetings because they were duty bound to attend all of them. See The King v Pulsford (1828) 8 B & C 350 at 354 - 355; 108 ER 1073 at 1074. This rule has been applied to meetings of directors of companies incorporated under the modern companies acts and to governing bodies of other organisations such as trade unions: see, in relation to companies, La Compagnie de Mayville v Whitley [1896] 1 Ch 788 and Toole v Flexihire Pty Ltd (1991) 6 ACSR 455 at 461 and in relation to trade unions, Campbell v Crawford (1985) 12 FCR 317 at 340.
10 The distinction referred to in The King v Hill between a charter day meeting of the members of a corporation held on a fixed day known to all, at which business generally could be transacted without any prior notice, and all other meetings of those members, at which only business of which prior notice had been given could be dealt with was applied to meetings of a parish body, charged with the administration of the poor laws in the parish area, in Dobson v Fussy (1831) 7 Bing 305 at 310 and 311; 131 ER 117 at 119 and 120. It is also reflected in the distinction drawn in the cases between general and special meetings of trade unions and their different notice requirements. In Ansett Transport Industries (Operations) Pty Ltd v Australian Federation of Air Pilots (1989) 95 ALR 211. Brooking J, at 240, said:
"It has been laid down by the Commonwealth Industrial Court that, where the rules of an organisation make no provision for the giving of notice of a meeting, notice should be given in such a manner as may reasonably be expected to come to the attention of members and in such time as to give them a reasonable opportunity of attending the meeting; in addition, it has been said that the terms of the notice of a special meeting should contain sufficient information about the business to be conducted at it: Campbell v Higgins (1957) 3 FLR 317 at 327; Winter v McAdam (1957) 1 FLR 210 at 211; Higgins v Nicol (1971) 18 FLR 343 at 351, 356 - 7; and compare Young v Ladies' Imperial Club Ltd [1920] 2 KB 523 at 531, 533 - 4."
11 In Campbell v Crawford, another case concerning meetings of a trade union, Wilcox J at 340, identified the reason for this rule as being "to enable any member receiving [the notice] to determine in his own interest whether or not he ought attend the meeting".
12 The common law distinction between charter day and other meetings of a municipal corporation and their respective notice requirements was also made between ordinary (or general) and extraordinary (or special) meetings of the members of companies in the series of statutes governing such associations that commence with the Companies Act 1862 (UK). In the standard regulations for the management of a company limited by shares contained in Table A to the Companies Act 1862, whose provisions were carried into later companies legislation in both the United Kingdom and Australia, articles 29 to 31 provided for certain meetings of all members to be held at fixed times - called ordinary general meetings - and for other meetings of all the members - called extraordinary general meetings. Clauses 35 and 36 of Table A dealt with the notice requirements for all meetings, ordinary and extraordinary, of the entire body of members of a company. Their effect was to require at least seven days' notice specifying the place, the day and the hour of the meeting. Only when "special business" was to be dealt with did the notice have to state "the general nature of such business". However, these clauses also provided that all business transacted at any meeting of members, ordinary or extraordinary, was deemed to be "special" (save only for a limited class of business, defined in cl 36, which members could expect would regularly arise, such as the presentation of financial reports and the ordinary report of the directors). Where no notice of special business was given, members could decide whether to attend in the knowledge that only those defined matters would be dealt with at the meeting.
13 The English and the Australian cases, which have arisen under Table A and its more recent variants that expressly require informative notice of meetings at which special business is to be dealt with, are concerned with whether the notice convening a meeting of members to deal with special business sufficiently stated "the general nature of such business", as required by the terms of the relevant article: they are therefore of little relevance to the question whether informative notice need be given under a regime that does not expressly stipulate for such a notice. But in the current, 44th ed of Gore-Browne on Companies, it is suggested at par 21.4 that, in the absence of provisions in a company's articles like those in cll 35 and 36 of the original Table A, the common law rule stated in The King v Hill would apply to require an informative notice before any business could be validly transacted at a meeting of the members of a company.
14 The provisions of the Local Government Act (SA), the subject of the decision in Myer Queenstown Garden Plaza Pty Ltd v Corporation of the City of Port Adelaide (1975) 11 SASR 504 distinguish between ordinary meetings of council, to be held at fixed times (s 144) and other meetings, called special meetings, capable of being convened at any time (s 145). Section 146 draws a similar distinction to that in Table A, in so far as it requires notice convening a meeting to include a statement of the business to be transacted thereat only in the case of special meetings. See p 524. What was in issue there was the validity of certain resolutions passed by the council at a special meeting which could only be called by an informative notice. The notice of the meeting was said to be deficient. The statements by Wells J relied on by the learned primary judge comprised part of Wells J's summary of the effect of "[t]he rules thus established at common law, in so far as they bear on special meetings and on the subject matter and construction of ss 146 and 147 ...". I do not think that this decision is of much assistance in seeking the meaning of s 181 since Wells J was describing the common law rules governing the content of notices of special meetings, ie, what such notices had to contain to meet the common law requirement of an informative notice.
15 But, for the reasons given, where something can be done only at a meeting of all the members of a body called on notice, in the absence of indication in the regulatory regime of the particular body showing that prior intimation of the business to be dealt with at the meeting is not necessary, the requirement of notice, in my opinion, of itself connotes an informative notice, ie, one which tells those entitled to attend not just the time and place of the meeting, but also what business is intended to be transacted. The whole object of notice of such a meeting is to give those entitled to attend the opportunity of considering whether it is in their own interests to attend.
16 The appellant's first argument, based on the wording of s 181, also ignores the fact that the power to remove a trustee, which the creditors do not have apart from s 181, is expressly conditioned on being exercisable only at a meeting of which at least seven days' notice has been given. The notice requirement is clearly linked to the exercise of the power. But unless the notice condition which must be satisfied before the power can be exercised involves an intimation to the general body of creditors, as the persons with an interest in whether the power is to be exercised, that the power of removal will be invoked at the meeting called by the notice, it would appear to serve no purpose: if the power can be exercised at a meeting without any prior intimation that removal will be proposed, the persons interested in the exercise of the power and who must be given notice of the meeting are no better served by seven days' uninformative notice than by any lesser (or greater) number of days' uninformative notice.
17 It is true that, if the power conferred by s 181 is of removal at a meeting without prior intimation that removal will be considered, the section would enable those creditors who happen to have attended a meeting to remove a trustee on the spot, if they considered that circumstances emerging at the meeting required urgent action. But that consideration cannot provide a reason for reading s 181 as not requiring prior notice of a proposal to remove the trustee: circumstances warranting immediate removal of the trustee may emerge with as much sharpness at meetings called on short notice as at meetings called after seven days' notice. In an emergency situation, a creditor is, in any event, not impotent: under s 179(1), (and also under s 156A(4), in relation to a trustee appointed under s 156A(3)), the Court, on the application of an individual creditor, has power to remove a trustee from office. If an emergency sufficient to justify the immediate removal of the trustee by creditors arises, those circumstances are likely to enable a creditor to obtain the urgent intervention of the Court, at least on an interlocutory basis.
18 If s 181 were to be read in isolation from the rest of the Act, I would therefore construe it as permitting creditors to dismiss a trustee only at a meeting of which the requisite period of notice had been given and then only if what was relied on by way of notice contained an intimation that the removal of the trustee was to be considered at the meeting.
19 The appellant does not, however, rely only on the wording of s 181 read in isolation.
20 Section 181 must be read in its statutory context. This includes both the detailed provisions in Div 5 of Pt IV, which are of general application to creditors' meetings, and the legislative history of s 181. Reference to these considerations, so the appellant said, shows that the term "notice" in s 181 has a different meaning from that which it would, in my opinion, ordinarily be expected to bear, in the context of a provision that conditions the exercise of a power vested in a meeting of creditors upon notice being given of that meeting.
21 So far as the legislative history of s 181 of the 1966 Act is concerned, its precursor, s 153(1) in the 1924 Act, permitted a meeting of creditors to remove a trustee, provided the meeting was on seven days' notice and was "specially called for that purpose". The words quoted from s 153 did not find their way into s 181. There is nothing in the Clyne Report, in response to which the 1966 Act was enacted, to explain this change in wording. I do not, however, think that this change justifies the interpretation of s 181 proposed by the appellant. A meeting of creditors convened in accordance with s 153(1) could not transact any business other than removal of the trustee (unless all creditors happened to be present and all consented to dealing with other business): see Symes v Weedow (1892) 14 ALT 197 at 201 and McLure v Mitchell (1974) 6 ALR 471 at 494. The change in the two provisions can be explained by the legislature considering that the creditors should be able to remove a trustee at any meeting, rather than one dedicated solely to the issue of removal, but always provided that, as part of the necessary notice of that meeting, prior intimation was given that removal was to be considered.
22 Section 181 was amended by the Bankruptcy Amendment Act 1991 (Cth) (No 9 of 1992) which substituted an ordinary resolution for the original requirement of a special resolution, on its face suggesting a relaxation of the requirements to be met before creditors could exercise the power of removal of the trustee conferred by the section. This same Amendment Act introduced into Pt IV the new Div 5, which contains extensive provisions regulating meetings of creditors. It is the provisions of Div 5, in particular ss 64G(n) and 64W, that provide the strongest argument for the interpretation of s 181 proposed by the appellant, in so far as they authorise the transaction at creditors' meetings of business of which no prior notice has been given.
23 Section 64B(4) obliges the trustee to set out "the agenda for the meeting" in the notice which he gives convening any meeting of creditors and to state therein "that additional matters may be added to the agenda with the leave of the meeting". Section 64G prescribes the contents of the agenda for the meeting, which must be set out in the notice convening it. One of these items is "proposal of other motions (if any)" - s 64G(k); another is "any other business" - s 64G(n).
24 A reading of ss 64K to 64X shows that the course of the meeting must follow the order of the items that are listed in the agenda in accordance with s 64G. After various matters, including the appointment of the minutes secretary, have been dealt with, ss 64R and 64S require the president to move through the agenda items in s 64G(g), (h), (i) and (j). Immediately following the provision to the meeting of the information required by s 64R and the discussion provided for by s 64S, s 64T states: "The President must then invite the creditors and their representatives to propose any relevant motions", ie, s 64T requires the president at that point in the meeting to move to the agenda item in s 64G(k). The motions envisaged by ss 64T and 64G(k) which the creditors must then be invited to move are limited, in my opinion, to motions concerning matters arising out of what has occurred at the meeting in the discussion required by ss 64R and 64S of the agenda items in s 64G(g) to (j). Since there is no requirement in the Act that the statements the trustee and the creditors are entitled to make under s 64S must be on notice, so long as a motion is put pursuant to s 64T in respect of a matter arising out of those statements (and related questioning), it can be moved and dealt with by the creditors then present, without prior notice to the general body of creditors. If these provisions are looked at in isolation from the rest of the Act, s 64T would appear to permit the creditors to resolve on removal of the trustee without any prior notice, but only if such a motion arose out of the statement and questioning episode of the meeting provided for by s 64S and s 64G(g) to (j).
25 After any motions proposed under s 64T have been dealt with, the meeting must move on to deal with the trustee's remuneration (ss 64U(4) and 64G(l)) and the appointment of a committee of inspection (ss 64V and 64G(m)). After those matters have been dealt with, s 64W requires the president to invite the creditors to raise "any other matters relevant to the bankruptcy" (the agenda item provided for by s 64G(n)). If this provision is looked at in isolation, s 64W (with s 64ZD) would appear to give a creditor unqualified permission to move, without any prior notice, that the trustee be dismissed.
26 I do not, however, consider that these provisions require s 181 to be read so as to produce the result for which the appellant contends.
27 The provisions of Div 5 of Pt IV are general ones intended to regulate the conduct of all creditors' meetings. Section 181 is in Div 5 of Pt VIII which is concerned with vacation of office of trustees. It is a special provision vesting in the creditors power to remove a trustee; it is a power exercisable, however, only after a particular procedure has been followed. Provisions of general application to the conduct of meetings of creditors cannot, in my opinion, justify depriving of any sensible effect the condition upon which this special power of removal is exercisable. That, for the reasons already given, would be the consequence of adopting the appellant's reading of the section.
28 Further, the stated purpose of the amending legislation that introduced Div 5 into Pt IV of the Act was to arm creditors with the knowledge necessary to make informed decisions at their meetings. The Explanatory Memorandum to the Bankruptcy Amendment Bill 1991 contains the following:
"Introduction and outline...
3. ... The key features of this Bill are:
* clarification and codification of procedures at meetings of creditors to ensure that creditors can make fully informed decisions about the course of administration of a bankruptcy;
...
5. The amendments in the Bill fall into the following main categories:
...
(g) clarification and codification of meeting procedures to ensure that creditors are fully informed before making decisions relating to the future course of a bankruptcy administration, and enabling the removal of a trustee of an estate by majority in value, rather than by majority in number and at least three-fourths in value of creditors voting on a proposal for removal of a trustee;
...
(g) Clarification and codification of meeting procedures
24. The Act contains only limited provisions to deal with the manner in which the business at meetings of creditors should be conducted, and in complex bankruptcies, where there are many creditors, sometimes difficult questions of procedure at meetings can arise. The Bill proposes the insertion of provisions to spell out clearly the procedure which ought to be followed at meetings of creditors, so that trustees are aware of their responsibilities, and creditors are aware of their rights. The Bill also includes provision to enable creditors to remove a trustee by resolution, rather than by special resolution as at present. A resolution is passed when a majority in value of creditors vote for the proposal, and a special resolution is passed where a majority in number and at least three fourths in value of the creditors vote in favour of the proposal. It is considered that with respect to the important question as to who is to occupy the office of trustee, the creditors with the most significant financial stake in the administration should not be outvoted by more numerous small creditors, as can happen under a special resolution."
29 The Memorandum identifies the main purpose of Div 5 of Pt IV to be to ensure that the general body of creditors will be fully informed before making decisions relating to the future course of a bankruptcy administration. This includes what the Memorandum describes as "the important question as to who is to occupy the office of trustee" in charge of the particular administration. The importance of that question is emphasised where the bankruptcy is a complex one and the trustee has acquired, over time, detailed knowledge of the bankrupt's affairs. It would be odd if s 181, which otherwise requires an informed meeting, were prevented from having that operation only by two provisions in a Division inserted in the Act to ensure creditors are in a position to make fully informed decisions at meetings.
30 I have already referred to the apparent relaxation made by Act No 9 of 1992 of the requirement for removal of the trustee. The Memorandum, however, shows that the change made to s 181 by the 1992 Amendment Act from a special to an ordinary resolution was made to give decisive power to the creditors with the greatest financial interest in the bankrupt's estate, not to make it easier for creditors to remove a trustee. As this case shows, both this object and the main purpose of Div 5 can be frustrated if an informative notice convening the meeting at which the power of removal is sought to be exercised is not given, but both purposes are likely to be advanced if such a notice is given: here, a minority in value of creditors will have been able to remove a trustee acceptable to the majority in value only because the majority were not given any prior warning that the minority might so act.
31 The provisions of Div 5 - ss 64G(n) and 64W (and perhaps also ss 64G(k) and 64T) - which in terms permit the transaction at meetings of creditors of business without prior notice, conflict with the main object of the Division. Effect must nevertheless be given to them. But where there are good grounds for reading a particular provision of the Act, such as s 181, as conferring a special power on a meeting of creditors on condition that prior notice of a proposal to invoke the power is given to all the creditors, that conflict between the stated purpose of Div 5 and those sections of the Division provides good reason for not allowing the latter to override indications that prior informative notice is necessary in a particular case.
32 It is, in my opinion, permissible to have regard to the Explanatory Memorandum in interpreting s 181 to confirm what I consider is the ordinary meaning conveyed by the text of that provision: see s 15AB(1)(a) the Acts Interpretation Act 1901 (Cth); Saraswati v R [1991] HCA 21; (1991) 172 CLR 1 at 20 - 23 and Gardner Smith Pty Ltd v Collector of Customs, Victoria (1986) 66 ALR 377 at 383 - 384.
33 Finally, reference should be made to the argument based on the fact that there are other provisions in the Act that expressly require notice of a proposal to exercise a particular power that is vested in creditors to be referred to in the notice convening the meeting at which the power can be exercised: see ss 71(3) and 109(7). These provisions, it was said, show that when the legislature requires an informative notice of meeting, it says so. Though no Latin was used, it is the maxim expressio unius est exclusio alterius that is here invoked. The cases are full of warnings about the limits on its use. It "applies only when the intention it expresses is discoverable upon the face of the instrument": Houssein v Under Secretary of Industrial Relations and Technology (NSW) [1982] HCA 2; (1982) 148 CLR 88 at 94. The carefully discriminating intention necessary to justify the application of the maxim to s 181 that the appellant would here attribute to the legislature cannot be said to be apparent in the statute. For example, s 71(3) empowers a meeting of creditors to remove one of their number from the committee of creditors, but only after notice intimating that that is proposed. Unlike the trustee, the committee of creditors has no executive functions; there is no reason discernible why an informative notice of meeting should be necessary in that case, but not in the case of removal of the trustee. Whether removal of a trustee should occur might be thought to be of at least as much importance to all the creditors as whether one member of the creditors' committee should be removed. The Act has been amended on numerous occasions on a piecemeal basis as opposed to by recodification. Too much weight cannot be given to provisions which were inserted at different times as justification for applying this maxim: cf Pearce and Geddes, Statutory Interpretation in Australia, 4th ed, at p 106.
34 In my opinion, the learned primary judge was right in holding that the power to remove a trustee vested in a meeting of creditors by s 181 can only be exercised on prior notice to the general body of creditors.
35 I would dismiss the appeal with costs.
I certify that the preceding thirty-five (35) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Drummond. |
Associate:
Dated: 4 February 2000
IN THE FEDERAL COURT OF AUSTRALIA |
|
SOUTH AUSTRALIA DISTRICT REGISTRY |
S 43 OF 1999 |
BETWEEN: |
JANE TERESA CUMMINGS AS TRUSTEE FOR THE BALNAVES FAMILY TRUST Appellant |
AND: |
PETER IVAN MACKS AS TRUSTEE OF THE PROPERTY OF PETER JOHN BALNAVES (A BANKRUPT) First Respondent THE INSPECTOR-GENERAL IN BANKRUPTCY Second Respondent |
JUDGES: |
DRUMMOND, SUNDBERG AND MARSHALL JJ |
DATE: |
4 FEBRUARY 2000 |
PLACE: |
BRISBANE (HEARD IN ADELAIDE) (VIA VIDEO LINK TO ADELAIDE) |
SUNDBERG J:
For the reasons given by Drummond J, with which I agree, the appeal should be dismissed with costs.
I certify that this page is a true copy of the Reasons for Judgment herein of the Honourable Justice Sundberg. |
Associate:
Dated: 4 February 2000
IN THE FEDERAL COURT OF AUSTRALIA |
|
SOUTH AUSTRALIA DISTRICT REGISTRY |
S 43 OF 1999 |
BETWEEN: |
JANE TERESA CUMMINGS AS TRUSTEE FOR THE BALNAVES FAMILY TRUST Appellant |
AND: |
PETER IVAN MACKS AS TRUSTEE OF THE PROPERTY OF PETER JOHN BALNAVES (A BANKRUPT) First Respondent THE INSPECTOR-GENERAL IN BANKRUPTCY Second Respondent |
JUDGES: |
DRUMMOND, SUNDBERG AND MARSHALL JJ |
DATE: |
4 FEBRUARY 2000 |
PLACE: |
BRISBANE (HEARD IN ADELAIDE) (VIA VIDEO LINK TO ADELAIDE) |
36 This is an appeal from that part of the judgment of a single judge of the Court ("the primary judge") in which the primary judge held that a resolution passed at a meeting of creditors of the bankrupt estate of Peter John Balnaves to remove the first respondent as trustee of the estate was void.
Factual background
37 On 30 October 1998 the first respondent, Peter Ivan Macks, was appointed as the registered trustee in bankruptcy of the bankrupt estate of Mr Balnaves. On 24 March 1999 the trustee issued, to the then known creditors of the bankrupt estate, a notice of a meeting of creditors to be held on 12 April 1999. The meeting was called pursuant to s64(2) of the Bankruptcy Act 1966 (Cth) ("the Act") which provides that:
"The trustee may convene at any time a meeting of the creditors of a bankrupt."
The notice of the meeting was accompanied by an agenda which included an item as follows, "Additional matters may be dealt with should the meeting agree to consider them".
This part of the agenda was consistent with s 64G(k) and (n) of the Act which respectively provide for:
* "proposal of other motions (if any)", and
* "any other business"
38 The meeting was held at the offices of Prentice Parbery Barilla at 26 Flinders Street, Adelaide at 10.30 am on 12 April 1999. Some seven creditors were represented at the meeting, including the appellant. A creditor, Mr Thomas moved a motion in the following terms:
"That Mr Macks be dismissed."
That motion was seconded by another creditor, Mr Parsons. The motion to dismiss the trustee was carried with only two creditors opposing it. The motion thus became a resolution of the meeting.
Reasoning of the primary judge
39 The learned primary judge observed that no notice had been given of the motion to dismiss the first respondent as trustee. He did however note that ss 64T and 64W of the Act contemplate that the creditors may raise matters at a meeting without notice. His Honour then made reference to other provisions in the Act which require notice to be given in advance of particular matters being raised at meetings. The primary judge then referred to s 156A(4) of the Act which gives an individual creditor the right to apply to the Court to have a trustee removed, albeit on limited grounds relevant to the suitability of the trustee to hold office as such. His Honour next referred to the lack of any specific time in the Act being provided for notice of a creditors meeting but observed that the common law would imply that reasonable notice be given. The primary judge considered the terms of s 181 of the Act and held that the section did not unambiguously state that seven days notice must be given of the meeting as well as any proposed resolution to dismiss a trustee. He held that s 181,
"...contemplates that a meeting has been called for the purpose, or having as one of its purposes, the considering of a motion to remove a trustee."
and that the section
"...requires notice of a motion to remove a trustee at a creditors' meeting to be given seven days before that meeting."
The legislative context
40 Section 181 of the Act provides as follows:
"The creditors may, by resolution, at a meeting of which not less than 7 days' notice has been given, remove a registered trustee appointed by them, or a registered trustee who is, by virtue of subsection 156A(3), the trustee of the estate of the bankrupt concerned, and may at the same or a subsequent meeting appoint another registered trustee to be trustee in his or her place."
Prior to the enactment of the Act, s 153(1) of the Bankruptcy Act 1924 ("the 1924 Act") provided as follows:
"The creditors may, by resolution, at a meeting specially called for that purpose, of which seven days' notice has been given in the prescribed manner, remove a trustee (other than the official receiver) appointed by them, and may at the same or any subsequent meeting appoint another person to fill the vacancy as provided in section one hundred and thirty of this Act in case of a vacancy in the office of trustee."
The words "specially called for that purpose" did not find their way into the Act from the 1924 Act. It may be reasonably inferred that Parliament intended to alter the effect of the legislation by that deletion.
41 The 1924 Act contained s 153(1) in the form set out above until it was amended by the Act in 1966. The Act was enacted in 1966 as a consequence of Parliament's acceptance of the recommendations contained in the Clyne Report - "Report of the Committee Appointed by the Attorney-General of the Commonwealth to Review the Bankruptcy Law of the Commonwealth". The Clyne Report was delivered in 1962.
Section 181 of the Act in its original form after the words "the creditors may" had the following words in common within its text:
"by special resolution."
"Special resolution" was defined to mean:
"a resolution passed by a majority in number and at least three-fourths in value of the creditors present personally, by attorney or by proxy at a meeting of creditors and voting on the resolution."
The current definition of special resolution recognises voting "by telephone" but otherwise is in materially identical form to the 1966 definition. In 1992 the Act was amended to delete from s 181 the word "special". See s 34 of the Bankruptcy Amendment Act No 9, 1992.
Interpretation of s 181
42 On a plain reading of the text of s 181 of the Act I am unable to share the view of the primary judge that the 7 days notice provision applies not only to notice of the meeting but notice of any proposed resolution to remove a trustee. The words "of which not less than 7 days' notice has been given" qualify only the word "meeting" as is apparent from the proximity of those words to the word "meeting" and from the way the section is punctuated. Such an interpretation of the section is reinforced when one considers that the predecessor provision clearly provided that notice be given of any resolution to dismiss the trustee and in effect provided for a special meeting to consider any such proposal.
43 In my view the agenda for a creditors meeting, subject to s 64B of the Act, is within the province of the trustee. Similarly, the timing of a creditor's meeting is a matter for the trustee provided reasonable notice has been given. There is a limited basis for an application to the Court under s 156A(4) of the Act for an individual creditor to move for the removal of a trustee. Otherwise a creditor will practically only be able to do so by moving that way at a creditors meeting. It may be considered to be preferable, on what no doubt is an important matter, that all creditors have notice of an intention of any creditor to seek to remove a trustee but in my view Parliament has not so provided. It may be, as counsel for the appellant contends, that Parliament intended that creditors have a right to put to a meeting of creditors a motion for the removal of a trustee in circumstances where a creditor may not be able to persuade a trustee to place such an item on the agenda. The ability of a creditor to successfully move for the removal of a trustee was enhanced by the 1992 amendment which required a resolution as distinct from a "special resolution".
44 I agree with counsel for the appellant that the primary judge's interpretation of s 181 does not sit comfortably with a literal reading of the section. I do not believe that a literal reading of the section produces an absurd result having regard to the matters raised in the preceding paragraph.
45 I would allow the appeal.
I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Marshall. |
Associate:
Dated: 4 February 2000
Counsel for the Appellant: |
C Kourakis QC with M Selley |
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Solicitor for the Appellant: |
Piper Alderman |
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Counsel for the Second Respondent: |
S Maharaj with G Gretsas |
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Solicitor for the Second Respondent: |
Gretsas Chrzaszcz |
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Date of Hearing: |
1 December 1999 |
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Date of Judgment: |
4 February 2000 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2000/55.html