Application by Lane in the Matter of Bendixsen
[2009] FMCA 803
•20 August 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| APPLICATION BY LANE IN THE MATTER OF BENDIXSEN | [2009] FMCA 803 |
| BANKRUPTCY – Application to extend the time for execution and witnessing of signatures on a personal insolvency agreement and for lodgement of the agreement with the Official Receiver. |
| Bankruptcy Act 1966 (Cth), ss.33, 88, 188, 188A, 189, 194, 204, 212, 215, 216, 217, 218, 221, 225, 229, 306. Federal Magistrates Act 1999 (Cth), s.16 |
| Adams v Lambert (2006) 228 CLR 409 Ainsworth and Another v Criminal Justice Commission (1992) 175 CLR 564 Aussie Airlines Pty Ltd v Australian Airlines Ltd and Others (1996) 68 FCR 406 Bellin v Pattison (Trustee) [1999] FCA 51 Forshaw v Thompson and Another (1992) 35 FCR 329 In re the Judiciary Act 1903-1920 and In re the Navigation Act 1912-1920 (1921) 29 CLR 257 MYT Engineering Pty Limited and Others v Mulcon Pty Limited (1999) 195 CLR 363 News Ltd v Ormond (2001) 113 FCR 500 Re Cummings and Cummings; Ex Parte: Newman, Controlling Trustee of the Estates of Margaret Nancy Cummings and John Gerard Cummings [1991] FCA 4 Re Dart; Ex Parte: Registrar in Bankruptcy of the Southern District of Queensland and Dart [1986] FCA 410 Re Gagliardi; Ex parte Mount (1984) 5 FCR 52 Re Lawrence; Ex Parte: Burns and Another (1985) 9 FCR 9 Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591 Tyler v Thomas (2006) 150 FCR 357 |
| Applicant: | MORGAN LANE |
| In the matter of: | NIELS PETER BENDIXSEN |
| File Number: | SYG1080 of 2009 |
| Judgment of: | Barnes FM |
| Hearing date: | 21 July 2009 |
| Delivered at: | Sydney |
| Delivered on: | 20 August 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Johnson |
| Solicitors for the Applicant: | Sally Nash & Co |
ORDERS
The time within which the applicant Morgan Lane is required to execute the personal insolvency agreement approved by the creditors at the meeting of creditors on 5 November 2007 be extended up to and including 3 September 2009.
The time within which the signatures of the debtor Niels Peter Bendixsen and the applicant Morgan Lane as trustee are required to be witnessed pursuant to section 216(2) of the Bankruptcy Act 1966 (Cth) be extended up to and including 3 September 2009.
The time within which the applicant Morgan Lane as controlling trustee is required to lodge the personal insolvency agreement with the Official Receiver for the Bankruptcy Districts of Victoria and Tasmania pursuant to section 218(1)(b) of the Bankruptcy Act 1966 (Cth) be extended up to and including 10 September 2009.
The costs of this application be borne by the applicant Morgan Lane.
The applicant have liberty to apply on two (2) days notice to the Inspector General in Bankruptcy and the Official Receiver for the Bankruptcy Districts of Victoria and Tasmania.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG1080 of 2009
| MORGAN LANE |
Applicant
In the matter of
| NIELS PETER BENDIXSEN |
REASONS FOR JUDGMENT
This is an application made by Morgan Lane as trustee appointed for the purposes of a personal insolvency agreement signed by the debtor, Niels Peter Bendixsen. The application is brought to address certain defects in relation to the execution of the personal insolvency agreement and lodgement of the agreement in the office of the Official Receiver. Mr Lane is the only party to the proceedings.
The applicant relies on an amended application filed on 28 May 2009, an affidavit sworn by him on 22 April 2009 and filed on 4 May 2009 and four affidavits of service. The matter was originally listed for hearing on 27 May 2009. Copies of the original application and Mr Lane's affidavit were served on the Official Receiver in Sydney. The matter was adjourned to ensure that any interested party had the opportunity to attend or to seek to be heard. As the relevant branch of the Insolvency and Trustee Service of Australia was the Victoria and Tasmania branch, the solicitors for the applicant subsequently served a copy of the amended application and Mr Lane's affidavit on the Official Receiver for the Bankruptcy Districts of Tasmania and Victoria. In addition, copies were served on the Inspector-General in Bankruptcy in light of the fact that this application involves the interpretation of provisions of the Bankruptcy Act 1966 (Cth) and in the absence of any contradictor.
Each creditor who had lodged a proof of debt was served with a copy of the amended application, advised of the date to which the matter was adjourned and given the opportunity to obtain a copy of the affidavit in support and any further information.
There was no appearance by or on behalf of any person other than the applicant on the adjourned date. Accordingly the matter was then listed for hearing. The Inspector-General in Bankruptcy and the Official Receiver for the Bankruptcy Districts of Tasmania and Victoria were notified of the hearing date. There was no appearance by anyone other than counsel for Mr Lane on the date fixed for the hearing. I am satisfied that notice of the proceedings has been given to the persons described above.
Part X of the Bankruptcy Act regulates personal insolvency agreements under which arrangements may be reached between a debtor and his or her creditors outside bankruptcy. Mr Lane’s evidence is that on 1 October 2007 Mr Bendixsen signed an authority under s.188 of the Act authorising Mr Lane, a registered trustee in bankruptcy, to call a meeting of his creditors and to take control of his property and that Mr Lane gave a copy of the necessary documents to the Official Receiver for the district in which the debtor resided (the Official Receiver for Victoria and Tasmania).
Mr Lane's evidence is that at the time of his appointment, he regarded the authority as an effective authority under s.188 as he had received the requisite authority, a proposal for payment of creditors and a statement of affairs from the debtor (see s.188(2C)). A certificate of appointment of Mr Lane as controlling trustee of the property of Mr Bendixsen under Part X effective from 1 October 2007 was signed by the Deputy Official Receiver for Victoria and Tasmania on 15 October 2007.
On 26 October 2007 Mr Lane issued a report to the creditors of Mr Bendixsen for the purposes of the conduct of a meeting of creditors on 5 November 2007 to consider the proposal for dealing with Mr Bendixsen’s affairs. In that report Mr Lane recommended acceptance of the debtor's proposal.
As evidenced by minutes of the meeting held on 5 November 2007, Mr Bendixsen’s creditors voted in favour of the proposal, passed a resolution accepting his personal insolvency agreement and appointed Mr Lane as trustee of the personal insolvency agreement. Mr Lane advised Mr Bendixsen by letter of 16 November 2007 of the acceptance of his personal insolvency agreement. The letter attached a copy of a Notice of Acceptance of the Part X Arrangement under s.218(1)(a) and advised that a copy had been forwarded to the Insolvency and Trustee Service of Australia. Mr Lane informed Mr Bendixsen of his obligation under the personal insolvency agreement to make contributions from income.
On 16 November 2007 Mr Lane issued an advice to creditors in relation to acceptance of the personal insolvency agreement at the meeting of creditors, his appointment as trustee of the agreement, the terms of the agreement, creditors' rights and dividend prospects.
Mr Lane's evidence is that due to an “an administrative error in [his] office”, a copy of the personal insolvency agreement was not lodged with the Official Receiver in any State, although a copy of the Notice of Acceptance of the Part X arrangement was lodged by Mr Lane with the Official Receiver in Sydney on or about 16 November 2007. Neither document was lodged with the Official Receiver for Victoria and Tasmania. The administration for this matter was through Tasmania as the Pt X authority was given a Tasmanian number TAS 574/7/6 X.
On 22 November 2007 Mr Lane received a letter dated 16 November 2007 from Insolvency and Trustee Service Australia, Victoria and Tasmania Branch inquiring about the status of the matter, on the basis that as the s.188 authority was executed on 1 October 2007, a meeting of creditors should have been held not more than 25 working days after the consent was given. The letter advised that a Notice of Meeting and other statutory documents required to be filed ten days before the meeting had not been received. The copy of this letter annexed to Mr Lane's affidavit bears a file note of a telephone response by Mr Lane’s partner, indicating that documents had been sent to the Official Receiver in Sydney.
On 25 February 2008 Mr Lane received a further letter dated 20 February 2008 from Insolvency and Trustee Service Australia, Victoria and Tasmania Branch referring to the earlier letter and stating that as no meeting of creditors had been held there was no personal insolvency agreement and under s.189(1A)(d) of the Bankruptcy Act, control of the property of the debtor ended on 2 February 2008 (on the basis that four months had passed since the authority under s.188 became effective). Mr Lane's evidence is that his understanding was that the notice of meeting and report to creditors were lodged with ITSA, but in Sydney, and that his office was not aware that documents lodged in one registry were not notified to another registry of ITSA. However Mr Lane conceded that the personal insolvency agreement had not been lodged with the Official Receiver anywhere in Australia and that this was an administrative error.
The debtor, Mr Bendixsen, has complied with the terms of the personal insolvency agreement (having made a contribution of $40,000 on signing the agreement and monthly contributions totalling $30,000). Mr Lane commenced these proceedings to obtain an order of the Court extending the time for lodgement of the agreement. He also sought declarations in relation to the meeting of creditors and the effectiveness of the personal insolvency agreement.
After these proceedings were commenced it was discovered that the personal insolvency agreement had not been signed by Mr Lane and that Mr Bendixsen’s signature had not been witnessed. Hence in the amended application the applicant also sought orders extending the time for these things to be done. It was acknowledged that the costs of the application should be the trustee’s personal costs.
The issues in this case concern the operation of ss.216 and 218 of the Bankruptcy Act which are as follows:
SECT 216
Execution of personal insolvency agreements
(1) A personal insolvency agreement must be executed by the debtor and the trustee within 21 days from the day on which the special resolution requiring the debtor to execute the agreement was passed.
(2) The execution of the agreement by the debtor and by the trustee shall be attested by a witness.
SECT 218
Notice of execution of personal insolvency agreement
(1) The trustee of a personal insolvency agreement entered into in pursuance of this Part shall:
(a) notify each creditor of the debtor as soon as practicable after the debtor and the trustee have executed the agreement; and
(b) within 21 days after the execution of the agreement by the debtor and the trustee --file a copy of the agreement in the office of the Official Receiver.
(3) A trustee must notify creditors under paragraph (1)(a) in the way prescribed by the regulations.
Reliance is placed on s.33(1)(c) of the Bankruptcy Act under which the Court may:
… extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with the requirements of a bankruptcy notice), for doing an act or thing or abridge any such time.
In the alternative, an order is sought pursuant to s.306(1) of the Bankruptcy Act, on the basis that the trustee’s failure to execute the agreement and the absence of witnesses amount to formal defects or irregularities in respect of which there is no substantial injustice caused that could not be remedied by an order of the Court.
In essence, the applicant's contention is that time can be and should be extended under s.33 of the Act for proper execution and lodgement of the personal insolvent agreement and, if necessary, irregularities cured under s.306 of the Bankruptcy Act.
The time provided in s.216 for execution and attestation by witnesses is the period of 21 days from the day on which the special resolution requiring the debtor to execute the agreement was passed. The special resolution was passed on 5 November 2007. Hence the time has expired. There is no express provision in the Bankruptcy Act preventing an extension of time after the expiration of that period.
The obligation under s.218 to file a copy of the personal insolvency agreement in the office of the Official Receiver arises when a personal insolvency agreement is entered into in pursuance of Part X. The copy of the agreement must be filed within 21 days after execution by the debtor and the trustee. At this time the trustee has not executed the agreement. Again, there is no express provision in the Act preventing an extension of time after the expiration of the period in s.218.
While there have been amendments to Part X and in particular, to ss.216 and 218, there is some earlier authority relevant to whether it is open to the Court under s.33(1)(c) of the Act to extend the time provided for the doing of certain things under Part X of the Act. In particular, in Re Gagliardi; Ex parte Mount (1984) 5 FCR 52 the Full Court of the Federal Court expressed the view that an extension of time under s.33(1)(c) could be granted where the trustee had failed “forthwith” to sign a certificate that a resolution had been passed at a meeting of creditors and to “forthwith” cause the certificate to be filed as provided for under the Act at that time. Relevantly Fox J suggested (at 55) that:
It would … need the expression of a clear legislative intention before the failure of a trustee to do the specified acts in time would invalidate a solemn transaction between a debtor and his creditors.
Notably in this case the debtor has met his obligations under the personal insolvency agreement that was accepted by his creditors. He is in no way responsible for the trustee’s failure to sign or lodge the personal insolvency agreement.
In Re Gagliardi, Fox J saw no need to discuss s.306, which he described as “a saving and not an invalidating provision” (at 55). Woodward J agreed that an extension of time could be granted, observing (at 59) “[i]f the legislature had chosen to fix a period of some days for these acts to be performed, there could have been no doubt about the power of the Court to extend the time” and that normally an extension of time would be granted under s.33(1)(c). However his Honour suggested that in an appropriate case the Court may require notice to be given to other parties “if there is reason to believe that the irregularity may have led to an injustice within the meaning of s 306 of the Act” (at 61). Davies J agreed with Woodward J, save as to the operation of s.306. Both sections 216 and 218 fix a period of “some days” for the specified acts to be performed.
In Re Lawrence; Ex Parte: Burns and Another (1985) 9 FCR 9, Pincus J referred to Re Gagliardi in finding that there was jurisdiction under s.33(1)(c) to extend time for attestation of a deed under s.216(2) as it then was (relevantly in identical terms to the present provision save for a reference to a “deed” of assignment or arrangement instead of a personal insolvency agreement). His Honour had regard to the fact that the applicants (trustees) were presumably unaware that the deed was ineffective for some time, although there had also been an unexplained delay in filing the application. However, as neither the debtors or the creditors had appeared to oppose the application and having regard to the “wide limits” of the discretion to extend time, Pincus J exercised his discretion in favour of the applicants (at [17]). Similarly in this case, despite the notification described above there has been no appearance to oppose the application (also see Re Dart; Ex Parte: Registrar in Bankruptcy of the Southern District of Queensland and Dart [1986] FCA 410 at [26]). Moreover, in Re Cummings and Cummings; Ex Parte: Newman, Controlling Trustee of the Estates of Margaret Nancy Cummings and John Gerard Cummings [1991] FCA 4 at [7] French J (as he then was) found that the authority of the Court under s.33(1)(c) to extend the time limited by s.216(1) for execution of a deed was clear.
These cases support the view that the Court has jurisdiction to make the orders sought extending the time for the performance of acts under s.216 and that it should do so. Counsel for the applicant addressed a number of possible obstacles or statutory provisions of relevance to the extension of time sought. Under s.204(3) of the Act, if a special resolution requiring the debtor to execute a personal insolvency agreement has been passed, the creditors must, by resolution, nominate a trustee or trustees to be trustee or trustees of the agreement. It is apparent from the minutes of the creditors’ meeting that Morgan Lane (a registered trustee in accordance with s.215) was appointed as trustee of the personal insolvency agreement. Section 225(1) of the Bankruptcy Act provides:
A personal insolvency agreement that purports to have been executed by the debtor and by the trustee, and to have been attested in accordance with this Part, shall, unless and until the contrary is proved, be deemed to have been duly executed and attested.
This section has no application in this case as the agreement in question does not purport to have been executed by the trustee or to have been attested in accordance with Part X of the Act. Hence it cannot be said that s.225(1) obviates the need for an extension of time.
It was conceded that under s.189(1A)(d) of the Act, control of the property of the debtor under Division 2 of Part X would have ceased on 2 February 2008 on the basis that four months had passed since the debtor’s authority to Mr Lane to become controlling trustee under s.188 became effective (assuming it was effective). However as submitted, this would not preclude the making of the orders sought as s.189(1A)(d) relates only to "control" not to the carrying into effect of the resolution of creditors passed at the meeting on 5 November 2007 (see s.204(1)(b)). Indeed I note that under s.189(1A)(b) such control would also cease upon a debtor and a trustee executing a personal insolvency agreement following a special resolution of creditors and that this is not a case in which the operation of Part X is being relied upon by the debtor in opposition to proceedings commenced by a creditor against him (cf News Ltd v Ormond (2001) 113 FCR 500 at 506, [31]).
In this case, while the personal insolvency agreement was signed by the debtor, it was not executed by the trustee and was not witnessed. However if the time for proper execution can be extended, then the personal insolvency agreement can take effect in accordance with the creditors' resolution, given that the debtor has complied with the terms of the intended personal insolvency agreement. The debtor made an initial contribution upon the signing of that agreement and the monthly contributions required under that agreement. The trustee is not seeking to exercise control of the nature regulated by s.189 of the Act. In such circumstances s.189 should not prevent an order extending the time for execution of the agreement.
Nor is the trustee, the Inspector-General or any creditor seeking that a sequestration order be made under s.221 of the Act. The debtor has signed (and carried out his obligations under) the personal insolvency agreement (cf s.221(1)(b)) and none of the other grounds would appear relevant where the failure is that of the “trustee” of the personal insolvency agreement. There is no evidence of any creditor having sought to take action in respect of debts that would be provable under the agreement if operative, or to set aside the resolution of 5 November 2007 or the arrangement contemplated by the proposal accepted at the meeting of 5 November 2007.
Counsel for the applicant also addressed the possible relevance of s.188A, which specifies the requirements for a personal insolvency agreement, and states in sub-s.(1) that:
A personal insolvency agreement is a deed that:
(a) is expressed to be entered into under this Part; and
(b) complies with subsection (2).
Subsection 188A(2) provides that a personal insolvency agreement must specify certain designated matters. The content of the personal insolvency agreement was not addressed in these proceedings. While s.188A(1) describes a personal insolvency agreement as a “deed”, neither that section or s.216 states that a personal insolvency agreement must be executed as a deed in order for it to be valid. If that were the case it might mean that an extension of time could not or should not be granted under s.33 (but cf Re Cummings and see the approach taken by Gleeson CJ, Gaudron, Gummow and Hayne JJ in MYT Engineering Pty Limited and Others v Mulcon Pty Limited (1999) 195 CLR 363 at [9] – [14] in relation to a deed of company arrangement).
Rather, under s.188A(1) a personal insolvency agreement is a deed that is expressed to be entered into under Part X that complies with subs‑s.(2). It is not defined as a deed which provides for the arrangements of the affairs of a debtor or a deed by which a debtor assigns all of his or her divisible property (as was the case in relation to deeds of arrangement and deeds of assignment prior to the 2004 amendments to the Act). In my view, when Pt X of the Act is read as a whole, its provisions do not mean that a personal insolvency agreement is necessarily invalid unless it is executed as a deed. Section 217 is consistent with such an approach. It deals with situations where a personal insolvency agreement is not executed (as required by s.216), by the trustee of the agreement. In those circumstances a further meeting of creditors called “for the purpose” by any creditor or the debtor may, by resolution, nominate another registered trustee. Consistent with this provision, non-execution of itself would not make the personal insolvency agreement void.
In this instance the trustee is willing to execute the agreement and seeks an extension of time to do so to enable him to address his oversight. There is no suggestion that any creditors or the debtor has sought a meeting to nominate another trustee. Given the authorities referred to above in relation to the power of the Court to extend time under s.216, I am of the view that s.217 should not be taken to mean that the trustee’s oversight in relation to execution of the personal insolvency agreement could only be addressed by nomination of another registered trustee.
Section 229 of the Act provides for a personal insolvency agreement that is entered into in accordance with Part X and complies with the requirements of Part X upon being “duly executed by the debtor and the trustee” to be binding on all the creditors of the debtor. The applicant submitted that s.229 does not make witnessing of the signatures a prerequisite to its operation and that s.216 distinguishes between execution and witnessing of the execution of the agreement. It is not necessary to determine this issue (although I note that the notion of “duly executed” might well be said to require satisfaction of all the requirements of s.216), as the agreement has not, in any event, been executed by Mr Lane as trustee. Relevantly however, there is no suggestion that any creditor has sought to take any of the actions (such as presentation of a creditor’s petition) restrained under s.229.
I have borne in mind that, as pointed out in Bellin v Pattison (Trustee) [1999] FCA 51, a provision (such as s.216) which sets a time limit, involves a recognition that there is an interest in ensuring that an act is undertaken in a timely manner. I also bear in mind that it would be in accordance with the spirit of Part X of the Act that where creditors have accepted that there should be a personal insolvency agreement between a debtor and a trustee of the personal insolvency agreement, their wishes should not be frustrated by inadvertence, delay or even negligence of the trustee (see Re Gagliardi at 61 per Woodward J).
Section 216 expresses the requirements for execution and attestation in mandatory form, but I am not of the view that this means that the Court is precluded from exercising its discretion under s.33(1)(c) to give effect to the scheme of the legislation, in particular Part X, to permit a person who desires his affairs to be dealt with under Part X to do so without going bankrupt. In this sense the orders seek to remedy what can be described as a formal defect or an irregularity (see Adams v Lambert (2006) 228 CLR 409 at 419, [26]).
Insofar as it is necessary, it is clear that there is a designated temporal period in s.216. Importantly, as indicated, there does not appear to be any relevant ground for the making of a sequestration order under s.221 of the Act. The debtor signed the personal insolvency agreement (see s.221(1)(b), albeit his signature was not witnessed) and the substantive failure is that of the trustee of the personal insolvency agreement. The debtor has at all times complied with his substantive obligations under the personal insolvency agreement to which the creditors agreed at the meeting on 5 November 2007. It is of significance that there is no evidence of any creditor having sought to take any action in respect of the debts which would be provable under the personal insolvency agreement or to seek to set aside the resolution of 5 November 2007 or the arrangement contemplated by the proposal accepted at the meeting held on 5 November 2007. Pursuant to orders of this Court, the solicitors for the applicant notified Mr Bendixsen’s creditors, the Official Receivers both for New South Wales and for Victoria and Tasmania and the Inspector-General in Bankruptcy of these proceedings. However no creditor or official attended or sought to oppose the orders sought by Mr Lane. There is no evidence that injustice would be caused to any relevant affected person by an extension of the time for performance of the acts required under s.216. There is nothing in the material before the Court to suggest that these circumstances are within a class of cases that would preclude the Court from extending the time. Notwithstanding that there was some unexplained delay in the initiation of these proceedings, as in Re Lawrence, I am satisfied that this is a case in which I have a discretion that should be exercised under s.33(1)(c) to extend the times provided in s.216.
Counsel for the applicant contended that as an alternative to an order under s.33(1)(c), an order under s.306(1) could be made on the basis that proceedings would not be invalidated by formal defect or irregularity. Section 306(1) provides that:
Proceedings under this Act are not invalidated by a formal defect or an irregularity, unless the court before which the objection on that ground is made is of opinion that substantial injustice has been caused by the defect or irregularity and that the injustice cannot be remedied by an order of that court
Notwithstanding the width of the concept "proceedings" in s.306, there has been no "objection" on the ground of a formal defect or irregularity (and see Re Gagliardi). Rather than treating the irregularities in this case as defects which can be "waived", I consider that it is appropriate that the extension of time sought by the applicant be granted. In my view, it is appropriate to make the order sought for extension of time under s.33 of the Act. It may have been otherwise had any party appeared to oppose the orders sought by the applicant, but that has not occurred.
I note that as s.218(1)(b) only comes into operation after the execution of the agreement by the debtor and the trustee, it could be said that at this point that provision has not come into play, as the agreement has not yet been executed by the trustee. On this basis, if the extension of time to execute the agreement is granted, it should be open to the trustee within 21 days thereafter to file a copy of the agreement in the office of the Official Receiver. However to ensure that no doubt arises in this respect, I am of the view that an extension of time should also be granted in relation to the time to file a copy of the agreement under s.218. No extension of time is sought in relation to the trustee’s obligation in s.218(1)(a) to notify each creditor “as soon as practicable after the debtor and the trustee have executed the agreement”.
In order to carry these orders into effect, counsel for the applicant prepared draft short minutes of order seeking orders extending the time within which the trustee execute the personal insolvency agreement and the time within which the signatures of both parties be witnessed up to and including a specified date and that the time within which the applicant be required to lodge the personal insolvency agreement with the Official Receiver should, out of an abundance of caution, be similarly extended. I consider that it is appropriate to make orders of this nature, but on the basis that two weeks be allowed from the time of the judgment for execution and a further week after that for lodging the personal insolvency agreement.
In addition the applicant seeks declarations that the meeting of creditors convened and held on 5 November 2007 was a meeting within the terms of s.194 and that subject to compliance with the proposed orders extending time there has been an effective personal insolvency agreement entered into between Mr Bendixsen and Mr Lane. These matters were not addressed in any detail in submissions.
Where it has jurisdiction (see ss.27 and 33) the Court has power under s.30 of the Bankruptcy Act to decide all questions in any matter under Part X coming within its cognisance and to make such orders (including declaratory orders) “as the Court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter”. However s.30 is a facultative or “empowering provision and not one which confers jurisdiction upon the court” (see Forshaw v Thompson and Another (1992) 35 FCR 329 per Lockhart J with whom Black CJ, Sweeney J agreed and Tyler v Thomas (2006) 150 FCR 357).
While the Court has a wide discretion to make a declaration, there must be a controversy as to “some immediate right, duty or liability to be established by the determination of the Court” (In re the Judiciary Act 1903-1920 and In re the Navigation Act 1912-1920 (1921) 29 CLR 257 at 265 and Truth About Motorways Pty Limited v Macquarie Infrastructure Investment Management Limited (2000) 200 CLR 591 at [48]). As the majority of the High Court pointed out in Ainsworth and Another v Criminal Justice Commission (1992) 175 CLR 564 at 582 declaratory relief:
… must be directed to the determination of legal controversies and not to answering abstract or hypothetical questions. See In re Judiciary and Navigation Acts (1921), 29 CLR 257. The person seeking relief must have "a real interest" (Forster (1972), 127 CLR, at p 437, per Gibbs J; Russian Commercial and Industrial Bank v British Bank for Foreign Trade, Ltd, [1921] 2 AC 438, at p 448, per Lord Dunedin) and relief will not be granted if the question "is purely hypothetical", if relief is "claimed in relation to circumstances that [have] not occurred and might never happen" (University of New South Wales v Moorhouse (1975), 133 CLR 1 133 CLR 1, at p 10, per Gibbs J) or if "the Court's declaration will produce no foreseeable consequences for the parties" (Gardner v Dairy Industry Authority (NSW) (1977), 52 ALJR 180, at p 188, per Mason J; see also p 189, per Aickin J; 18 ALR 55, at pp 69, 71 respectively).
The affidavit evidence before the Court is that Mr Bendixsen signed a s.188 authority on 1 October 2007 and, as evidenced by a certificate of appointment, that Mr Lane was appointed as controlling trustee of his property as from 1 October 2007.
Mr Lane’s evidence is that he convened a meeting of creditors on 5 November 2007. The personal insolvency agreement was approved at the meeting held on 5 November 2007. There is evidence before the Court of the minutes of the meeting held on that date. Mr Lane issued a notice of acceptance of a Part X arrangement on 16 November 2007. The creditors were notified, but the notice of resolution was lodged at the Sydney office of ITSA.
The applicant seeks a declaration that the meeting of 5 November 2007 was a meeting within the terms of s.194 of the Act. Section 194(1) provides that the meeting to be called under an authority under s.188 must be held “not more than 25 working days after the relevant consent or approval was given”. However, s.194 does not refer to the time at which the authority was signed by the debtor or the date of the certificate of appointment of a controlling trustee. Section 194(2) provides that the relevant consent is the consent of the registered trustee to exercise the powers given by the debtor’s authority. Under s.188(2) such consent must be in writing.
As neither Mr Bendixsen’s signed authority or any consent from Mr Lane is in evidence before the Court, I am not persuaded that it is appropriate to make the declaration sought in relation to s.194. While it may be inferred that Mr Lane did give consent in some manner, s.188(2)(a) requires that such consent be “in writing”. There is no evidence before the Court of a “written” consent by Mr Lane to exercise the powers given by the debtor’s authority said to have been signed on 1 October 2007. In these circumstances, even if there could be said to be a legal controversy or matter requiring determination in these proceedings, notwithstanding the absence of evidence of any present challenge to the validity of the creditors’ meeting, I am not persuaded that the Court should exercise its discretion to grant the declaratory relief sought. It has not been established that such an order is necessary for the purposes of carrying out or giving effect to the Act.
Mr Lane also seeks a declaration that, subject to compliance with the orders sought extending time, there has been an effective personal insolvency agreement entered into by Mr Bendixsen and Mr Lane with respect to Mr Bendixsen’s affairs to be administered under Part X of the Act.
Again I am not persuaded that such a declaration should be made in these proceedings. It has not been established that it is necessary for the purposes of carrying out or giving effect to the Act to make such a declaration in the absence of circumstances in which the effectiveness of the agreement once duly executed is in dispute (cf Ainsworth). It has not been established that the agreement complies with all applicable requirements of Part X (see ss.188A(1)(b) and (2) and s.229). Such matters were not addressed in these proceedings. Moreover I am not satisfied that it is either appropriate or necessary to make a conditional declaration of the nature sought by the applicant.
Nor am I satisfied on the material before the Court that the declarations sought should be made pursuant to the power of the Court under s.16 of the Federal Magistrates Act 1999 (Cth) (see the principle outlined in Aussie Airlines Pty Ltd v Australian Airlines Ltd and Others (1996) 68 FCR 406). While I am not satisfied that either of the declarations sought should be made, if it emerges that there is a legal controversy in either respect the applicant would not be precluded at that time from seeking any declaration necessary for the purposes of carrying out or giving effect to the Act.
I certify that the preceding forty-eight (48) paragraphs are a true copy of the reasons for judgment of FM Barnes
Associate:
Date: 20 August 2009
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