Asher v Seabrook & Anor
[2008] FMCA 140
•8 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ASHER v SEABROOK & ANOR | [2008] FMCA 140 |
| BANKRUPTCY – Setting aside composition with creditors – review of trustee’s decision to admit and reject creditors for voting at creditors’ meeting. BANKRUPTCY – Meeting of creditors – entitlement to vote. BANKRUPTCY – Composition with creditors – whether sequestration order can and should be made if composition set aside. |
| Bankruptcy Act1966; ss.5, 30, 40, 44, 52, 64, 73, 178, 222, 222C, 308 Electronic Transactions Act 1999; ss.10 |
| McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547 Re Dingle (1993) 47 FCR 478 Re Tregonning; Ex parte Friends’ Provident Life Office (1983) 74 FLR 327 Re McLean; Ex parte Friends’ Provident Life Office (1992) 36 FCR 502 Palazzolo v Palazzolo (unreported, FCA, 19.7.1991) Chase v Donnelly [2002] FCA 1565 |
| Applicant: | BRIAN ERNEST ASHER |
| First Respondent: | MARK LEONARD SEABROOK |
| Second Respondent: | BEVAN ROBERT SHAFFERIUS AS TRUSTEE OF THE COMPOSITION MADE IN THE BANKRUPT ESTATE OF MARK LEONARD SEABROOK |
| File Number: | BRG 888 of 2007 |
| Judgment of: | Wilson FM |
| Hearing date: | 1 February 2008 |
| Date of Last Submission: | 1 February 2008 |
| Delivered at: | Brisbane |
| Delivered on: | 8 February 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Beacham |
| Solicitors for the Applicant: | Thynne & Macartney |
| Counsel for the First Respondent: | Mr Coulson |
| Solicitors for the First Respondent: | Q5 Law |
| Counsel for the Second Respondent: | N/A |
| Solicitors for the Second Respondent: | Patane Lawyers |
ORDERS
The Court declares that:
(a)The decision of the second respondent to reject the proxy submitted by the applicant’s solicitor at the creditor’s meeting on 22 August 2007 was in error;
(b)The decision of the second respondent to refuse the applicant the right to vote at the creditor’s meeting on 22 August 2007 was in error;
(c)The decision of the second respondent to allow Currency Card Trade Exchange to vote at the creditor’s meeting on 22 August 2007 was in error;
(d)The decision of the second respondent to allow Talavera Investments Ltd to vote at the creditor’s meeting on 22 August 2007 for a debt accepted to be $360,000 was in error;
(e)Had the second respondent not erred, the proposal of the first respondent pursuant to s.73 Bankruptcy Act 1966 was not accepted by the requisite majority at the creditor’s meeting on 22 August 2007.
That the composition purportedly accepted at the creditor’s meeting on 22 August 2007 be set aside.
That a sequestration order be made against the estate of MARK LEONARD SEABROOK.
William John Fletcher shall be appointed to act as trustee of the estate of MARK LEONARD SEABROOK.
That the date of the act of bankruptcy is 22 March 2007.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRG 888 of 2007
| BRIAN ERNEST ASHER |
Applicant
And
| MARK LEONARD SEABROOK |
First Respondent
And
| BEVAN ROBERT SHAFFERIUS AS TRUSTEE OF THE COMPOSITION MADE IN THE BANKRUPT ESTATE OF MARK LEONARD SEABROOK |
Second Respondent
REASONS FOR JUDGMENT
On 22 March 2007 the first respondent (“Seabrook”) filed a debtor’s petition pursuant to the Bankruptcy Act1966 (“the Act”). The second respondent (“the trustee”) became his trustee in bankruptcy. On 24 July 2007 Seabrook presented to the trustee a written composition proposal purportedly pursuant to s.73 of the Act. At a meeting of Seabrook’s creditors held on 22 August 2007 Seabrook’s proposal was purportedly accepted.
The applicant, who claims to be a creditor of Seabrook, seeks the following orders, pursuant to ss.30, 178, 222 and 222C of the Act:
(1)A review of the second respondent’s decision to allow Tucker & Cowen, Talavera Investments, Hemming & Hart, Chelsea Rocks Pty Ltd Currency Card Pty Ltd and Big C Investments Pty Ltd to vote at the meeting of the first respondent’s creditors held on 22 August 2007.
(2)A review of the second respondent’s decision not to allow the applicant to vote at the meeting of the first respondent’s creditors held on 22 August 2007.
(3)An order that the first respondent’s composition pursuant to section 73 of the Act which was accepted by the first respondent’s creditors at the meeting held on 22 August 2007 be set aside.
(4)A sequestration order be made against the estate of the first respondent.
Section 73 of the Act provides:
(1) Where a bankrupt desires to make a proposal to his or her creditors for:
(a) a composition in satisfaction of his or her debts; or
(b) a scheme of arrangement of his or her affairs;
he or she may lodge with the trustee a proposal in writing signed by him or her setting out the terms of the proposed composition or scheme of arrangement and particulars of any sureties or securities forming part of the proposal.
(1A) The trustee must, within 2 working days after receiving the proposal, give a copy of the proposal to the Official Receiver for the District in which the bankrupt resides.
(1B) For the purposes of subsection (1A), a working day is a day that is not a Saturday, Sunday or public holiday in the District in which the bankrupt resides.
(2) The trustee shall call a meeting of creditors and shall send to each creditor before the meeting a copy of the proposal accompanied by a report on it.
(2A) The report must indicate whether the proposal would benefit the bankrupt’s creditors generally.
(2AA) The report must name each creditor who was identified as a related entity of the bankrupt in the bankrupt’s statement of affairs.
(2B) The trustee may refuse to call the meeting if the proposal does not make adequate provision for payment to the trustee of accrued fees that:
(a) are owing to the trustee (at the time the proposal is lodged) in respect of the administration of the bankrupt’s estate, but are not able to be taken out of the bankrupt’s estate; and
(b) have been approved by the creditors before the proposal is considered.
(3) The bankrupt may, at the meeting, amend the terms of his or her proposal, but not in a way that reduces any provision for payment to the trustee of fees referred to in subsection (2B).
(4) The creditors may, by special resolution, accept the proposal.
(5) A creditor who has proved his or her debt may assent to or dissent from the proposal by written notice to that effect delivered to the trustee before the meeting or sent by post to the trustee and received by him or her before the meeting, and in that case the creditor shall, for the purposes of this Division, be deemed to have been present at the meeting and to have voted according to his or her assent or dissent.
Counsel for the applicant based a number of his submissions on ss.222 and 222C of the Act. However, ss.222 and 222C requires that there be a “personal insolvency agreement in force”. “Personal insolvency agreement” is defined in s.5 of the Act to mean a personal insolvency agreement executed under Part X of the Act (see also s.188A of the Act). Seabrook did not execute a personal insolvency agreement pursuant to Part X of the Act. He proposed a composition under Part IV Division 6 of the Act. There is a difference between a composition proposed after bankruptcy (in which case s.73 applies) and a proposed composition to avoid bankruptcy (in which case Part X of the Act applies). In my view, ss.222 and 222C are therefore inapplicable on the present application.
Section 178 of the Act provides:
(1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.
(2) The application must be made not later than 60 days after the day on which the person became aware of the trustee’s act, omission or decision.
The present application was made within the time specified in s. 178(2) of the Act. It has been held that s. 178 gives the court a general power of review of a decision of a trustee: McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547 at 552.
In Re Dingle (1993) 47 FCR 478 the Full Federal Court dealt with a challenge to a composition under ss.30 and 178 of the Act. The Full Court endorsed the judgment of Drummond J at first instance in the following terms:
“Drummond J cited two cases in which it was held that the Court had power, in the exercise of its bankruptcy jurisdiction, to review a voting entitlement determination made under s 198 of the Act by a chairman of a meeting of creditors called to consider a Pt X proposal: Zantiotis v Andrew (No 2) (1988) 80 ALR 299 and Forshaw v Thompson (1992) 35 FCR 329. (And see now Farrow Mortgage Services Pty Ltd (In liq) v Abeyratne (1993) 47 FCR 208.) Drummond J thought that Forshaw v Thompson (a Full Court decision) provided particular support for the proposition that, notwithstanding s 64ZA(8) and the absence of an explicit power in the Court to determine the right of a person to vote at a creditor’s meeting called under s 73:
“the Court can declare void a composition as not having been accepted in accordance with Div 6 of Pt IV on the ground that a person who was in fact a creditor of the bankrupt within s 73(2) was denied a vote by the trustee at the meeting called under that provision.”
He said:
“Whether a composition has not been accepted in accordance with Div 6 of Pt IV, as is required by s 75(1) if the composition is to be effective, because a creditor has been wrongly denied a vote at the creditor’s meeting is a question that arises in the bankruptcy of the bankrupt who proposed the composition: ss 27(1) and 30(1) therefore give the Court the necessary jurisdiction and power to determine that question. For similar reasons, I think the Court would be able to decide the question of a person’s entitlement to vote if its intervention was sought before the vote on the bankrupt’s proposal was taken in circumstances in which it was apparent that the trustee intended to exclude a person from voting.
The Court’s power to intervene when a question arises as to a person’s entitlement to vote at a meeting called under s 73(2), being conferred by s 30(1), is discretionary. It would I think be rare for that power to be exercised, either before or after the vote is taken, unless the vote of the person said to be wrongly excluded would be likely to result or would have resulted in rejection of the proposal for the composition: otherwise, the trustee’s error in denying that person the right to vote would very likely be a non-prejudicial irregularity within s 306(1).”
Drummond J suggested that, in an appropriate case, the Court might deal with the matter by making a declaration under s 30. Consistently with his emphasis upon the discretionary nature of the Court’s jurisdiction to interfere with a trustee’s determination, or likely determination, about voting entitlement, Drummond J thought that the power should not be exercised –
“unless that person is able to satisfy the Court that he is in fact a creditor owed a provable debt and that his vote would have produced a different result with respect to the bankrupt’s proposal”.
He held that the Court should determine that question by reference to the evidence before it; the Court was not limited to the material before the trustee at the time of the determination.”
The Full Court continued, at page 485:
“We emphasise, however, that the powers conferred by s 30(1) and s 178 are discretionary. It should not be thought that the Court will always intervene. We adopt, and apply to s 64ZA, what Lockhart J said in Forshaw v Thompson at 342 about a Pt X meeting:
“I respectfully agree with his Honour that it is generally undesirable that there be undue delay in the convening and holding of meetings of creditors under Pt X; and that, if there is to be a composition or arrangement or assignment of the debtor’s property under Pt X, the necessary steps must be taken to bring that result about as quickly as possible. Hence it is a fairly rare case, in my opinion, in which the court would exercise the power which it has under s 30 and intervene to determine whether a creditor is in truth a creditor or whether his debt is contingent or otherwise with respect to his entitlement to vote at meetings under Pt X.”
We think that the Court should be equally reluctant to intervene in cases where the vote has already been taken. Section 64ZA(8) commits to the trustee the question whether a person is entitled to vote. Finality is important. Where the complaint is that a person has been erroneously excluded from voting, we agree with Drummond J that the Court should at least insist upon proof that the excluded person is in fact a creditor and that his or her vote would have affected the fate of the proposal.”
In my view the reasoning of Drummond J, and of the Full Court, also enables the court to review the decision of a trustee to allow a creditor to vote at the meeting. In this case, it is necessary for the applicant to establish cumulatively, or alternatively, first, that he was wrongly excluded from voting, and, secondly, that sufficient creditors were wrongly admitted to vote as affected the passing of the special resolution required for Seabrook’s composition to be accepted.
The Full Court also agreed that, when the court is called upon to determine whether a person is entitled to vote as a creditor, it must act on the material before it; it is not limited to the material before the trustee or chairman, relying on Re Tregonning; Ex parte Friends’ Provident Life Office (1983) 74 FLR 327 at 330 and Re McLean; Ex parte Friends’ Provident Life Office (1992) 36 FCR 502 at 510. It held that the creditor seeking to overturn what has occurred need show more than a prima facie or arguable case. At page 488 the Full Court said:
“We think Drummond J was correct when he said that the issue that he had to determine, in order to grant the relief sought, was whether Westpac was in fact a creditor of the debtors in the amount claimed. The trustee’s determination at the meeting gives rise to the case; but it is irrelevant to its resolution. The Court must decide, for itself, the question of Westpac’s entitlement to vote; and it must do so on the material before it. Westpac must prove that the composition was void because the statutory requirements of the Bankruptcy Act have not been complied with; the necessary statutory majority having not been achieved because it was improperly denied a vote. In short, proof that Westpac was a creditor is an essential element to establish both its standing to bring the application and its entitlement to the relief sought.”
The first question to determine is whether, on the evidence now before the court, the applicant is a creditor of Seabrook. He plainly is. The applicant is a judgment creditor to the value of $125,470.86 by reason of four costs orders obtained by him in Supreme Court of Queensland on 17 February 2004, 3 November 2004, 28 November 2005 and 23 June 2006. Those orders for costs remain unsatisfied. Quite properly, counsel for Seabrook did not make any substantive submission that I ought to find that the applicant is not a creditor of Seabrook.
A question arose at the creditors’ meeting as to whether the proxy held by Ms Selina Hunt for the applicant was valid. From the minutes of meeting, the trustee seems to have accepted that the applicant was a creditor, but held that Ms Hunt was not entitled to vote at the meeting because the form of proxy appointing her was signed by the applicant’s solicitor. The trustee ruled that only a creditor or their power of attorney could sign a proxy form, and as such disallowed the proxy, thereby depriving the applicant of the opportunity of voting at the meeting.
Meetings of creditors are dealt with in Part IV Division 5 of the Act. Section 64E provides:
(1) The notice must have attached to it a form for use in appointing a proxy.
(2) The notice must tell the creditors that, where a creditor wishes to appoint a person to represent the creditor at the meeting as the creditor’s proxy, the creditor must complete the form of appointment of proxy and either:
(a) arrange for the proxy to give the completed form to the trustee at the meeting; or
(b) send the completed form with the statement given by the creditor to the trustee in accordance with section 64D.
There is nothing in s.64E of the Act that requires an appointment of a proxy to be signed by the creditor personally. Counsel for Seabrook argued that because the Act allows creditors to act by power of attorney, and requires the power of attorney to be produced at the meeting, it should follow that if a creditor wishes to appoint a proxy he or she must do so either personally or by a power of attorney. Otherwise no proof of authority to execute the proxy is before the meeting.
In my view, this submission should be rejected. Section 308(d) of the Act provides:
Subject to this Act, for the purposes of this Act:
(d) any person may act by his or her agent duly authorized in that behalf.
There is nothing in the Act, nor in Form 7, to preclude this section applying to the execution of a proxy. At law, unless expressly provided to the contrary, any act of a natural person can be performed by an agent. The form of proxy does not require the personal signature of the creditor appointing a proxy. In this case, the solicitor, Mr Moore, acted on instructions from the applicant’s insurer. The insurer had exercised its right of subrogation and was acting in the name of the applicant in proceedings against Seabrook. An insurer exercising its right of subrogation has the right to do acts in the name of its insured. The insurer authorised Mr Moore to take all steps necessary to protect its interests. In my view, the authority of Mr Moore extended to signing a proxy on behalf of the applicant as his client’s insured. Mr Moore spoke to the trustee at the time of the meeting and his authority to execute the proxy was not challenged.
It follows that the trustee erred in disallowing the applicant’s proxy. Ms Hunt ought to have been allowed to vote at the meeting.
The applicant has now sworn an affidavit in which he has ratified the appointment of Ms Hunt as his proxy. On the evidence now before the Court, Mr Moore plainly had authority to execute the proxy on behalf of the applicant.
There are further difficulties confronting the trustee and Seabrook. On the evidence before the court, the applicant is a creditor of Seabrook. He was entitled to be given notice of the meeting of creditors: s.64A of the Act. No notice of the meeting was given to the applicant. A copy of the trustee’s report to creditors, annexures F and G to which were the notice of meeting, agenda and forms of proof of debt and proxy, was sent to the solicitors who had acted for the applicant in the proceedings in which the costs orders were obtained. The solicitors were the firm of which Mr Moore is a partner.
It is ironic that the trustee purported to give notice of the meeting to the applicant by way of his solicitors, yet denied those same solicitors the authority to execute a proxy on behalf of the applicant.
If the submission that Mr Moore could not execute a proxy on behalf of the applicant were to be accepted (contrary to my conclusion above) it should in my opinion follow that service on the solicitors for the applicant was not proper giving of the notice of meeting to the applicant as required by s.64A of the Act. This would be a further basis on which to review the conduct of the trustee.
The notice of meeting was itself defective in that it did not comply with ss.64B(1) and 64D of the Act.
The applicant complains that the proposal of Seabrook was deficient in two respects. First, it was sent by email and was not signed by Seabrook. Counsel for the applicant properly referred me to s.10 Electronic Transactions Act1999. In my view, the application of that section probably saves the proposal in this case, although that argument is best left for another day. The learned authors of McDonald, Henry & Meek Australian Bankruptcy Law & Practice at [73.1.05] say the requirement for personal signature is explicit (citing Re Blucher (Prince); Ex parte Debtor [1931] 2 Ch 70). However, no regard has been given to the statute to which I have been referred.
It is strictly unnecessary for me to decide that issue, because even if I assume the proposal was signed by Seabrook, it was in my opinion still defective on the second basis identified by the applicant. This was that the proposal lacked sufficient particularity.
Seabrook’s written proposal consisted of an email dated 24 July 2007 headed “offer to settle under Part 73 for my bankruptcy” and stated, in part:
“I have spoken to all the major creditors and advised them I was offering 5 cents in the dollar for there [sic] release on the debts and I have reached agreements with about 70% of the money owed under my bankruptcy.
. . .
The major creditors have agreed to vote in favour of this proposal and we only need one or two not to vote or accept and we can have this resolved.”
The trustee has sworn that between 25 July and 1 August he held ongoing discussions with Seabrook regarding the terms of the proposal. By the time the creditors’ report was compiled and despatched, all that was said of the proposal was:
“The proposal includes that certain creditors have in writing stated that they defer entitlement to any dividend and that the balance of creditors will be paid 5 cents in the dollar on acceptance of the offer. . . Funds are to be provided for from a third party”
The creditors with whom Seabrook had been having discussions, as referred to in his email, and the creditors that had stated in writing that they would defer their entitlement were identified. Under the heading “Bankrupt’s Proposal” the trustee stated:
“I have on file signed undertakings from Creditors which have agreed to support the proposal but will not participate in any dividend under the composition should it be accepted by the Creditors at the forthcoming meeting”
Five creditors were specified together with the amount allegedly owed to each of them. The third party funder was not identified.
The learned authors of McDonald Henry & Meek at [73.1.05] state:
“It would seem that, where the proposal is the result of negotiations with creditors, it should on its face contain a full disclosure of all the facts and all the negotiations for the scheme (citing Re Flew [1905] 1 KB 278 at 284 and Re Pilling; Ex parte Board of Trade [1903] 2 KB 50 and Re Cromie (1894) 16 ALT 24”
Plainly, that has not been done. No details of the negotiations with the named creditors were disclosed.
At the meeting of creditors, the minutes of meeting held on 22 August 2007 record, relevantly:
a)The trustee admitted Big C Investments Pty Ltd to vote for $235,000. The trustee apparently accepted on the basis of the documents produced that Seabrook had guaranteed a loan made to F.T.T.D Money Enterprises Pty Ltd (formerly Compass Services Pty Ltd);
b)The trustee admitted Currency Card Trade Exchange to vote for $1.00. The trustee accepted that a debt existed but “as there was no evidence to support the quantum” only admitted the creditor for a nominal amount;
c)The trustee admitted Talavera Investments Ltd to vote for $360,000. The trustee apparently accepted, on the basis of loan and guarantee documents tabled that Seabrook had guaranteed loans made to Compass Services (Aust) Pty Ltd and Compass Services (Thailand) Ltd;
d)The trustee admitted Chelsea Rocks Pty Ltd to vote for $126,000. The trustee accepted a loan agreement as sufficient proof of a loan to Seabrook;
e)That the bankrupt’s proposal was accepted by a majority in number of creditors present and entitled to vote, and by more than 75% in value.
The minutes record that the proposal was accepted 6 votes to 4. The 4 creditors referred to above voted in favour of accepting the proposal. The applicant was not entitled to vote.
The composition proposed by Seabrook required a special resolution of creditors to be accepted. The term “special resolution” is defined in s.5 of the Act to mean a resolution passed by a majority in number and at least three fourths in value of the creditors present personally, by telephone, by attorney or by proxy at a meeting of creditors and voting on the resolution.
If the applicant was admitted to vote, as he should have been, it requires the disallowance of only one of the four creditors identified above who voted in favour of the proposal for the motion to be defeated because the vote would then be locked 5 – 5.
Currency Card Trade Exchange apparently submitted a Statement of Claim and Proxy Form. It was unsigned. No documents were submitted in support of the alleged debt. The trustee acknowledged that there was no evidence to support the quantum of the debt. He should therefore not have allowed this alleged creditor to vote.
If the applicant was entitled to vote, and Currency Card Trade Exchange was not allowed to vote the motion could not have been passed by special resolution.
That is sufficient to decide against Seabrook the validity of the acceptance of his proposed composition. However, in case a different view is taken of the entitlement to vote of Currency Card Trade Exchange or the applicant I should look at the position of another creditor. I have selected the largest creditor that voted in favour of the proposal, Talavera Investments Ltd.
Talavera Investments Pty Ltd claimed to be owed $360,000. It produced a document described as a guarantee and indemnity between Seabrook and Talavera Investments Ltd stated to be in consideration of a loan to Compass Services Pty (Thailand) Co Ltd. No deed of loan was produced evidencing the loan by Talavera Investments Ltd to Compass Services Pty (Thailand) Co Ltd. Rather it produced an unsigned loan agreement between Compass Services Pty Ltd as lender, Compass Services Pty (Thailand) Co Ltd as borrower and Seabrook as one of two guarantors. The alleged creditor also produced a deed of loan between Talavera Investments Ltd and Seabrook with a stated advance of $100,000. However, there was no evidence that any money was owing under this loan agreement. The creditor’s letter seemed to link the claim that monies were owing with the collapse of Compass Services Pty (Thailand) Co Ltd.
The material submitted was inadequate to establish the claim of Talavera Investments Ltd as a creditor for $360,000, or indeed for any amount. In my view, the trustee erred in admitting Talavera to vote at the creditor’s meeting.
There are also significant problems with the alleged debts of the other two creditors identified by the applicant. It is not necessary for me to decide the validity of their claims, given that the findings I have made overwhelmingly establish that the proposal submitted by Seabrook ought not to have been accepted by the meeting.
The applicant has also pointed to a number of deficiencies in Seabrook’s Statement of Affairs, and in the trustee’s report to creditors. Whilst many of those complaints are legitimate, it is not necessary for me to decide whether they individually or cumulatively impugn the acceptance of the composition proposal. It is sufficient for me to observe that there are numerous matters that raise suspicion, and ought to be investigated. That leads me to conclude that it is in the interests of creditors generally that the composition be set aside and Seabrook’s affairs properly investigated.
As I have said, Seabrook’s major creditors agreed not to participate in any dividend from the composition. Yet their votes were used to have the proposal accepted. In that regard, the observations of Neaves J in Palazzolo v Palazzolo (unreported, FCA, 19.7.1991) are apt:
“…the resolution accepting the composition was carried on the votes of five creditors of whom four intended not to prove or to take any other part in the composition. They intended not to do so because they were parties to a private arrangement with a company, Barroale Pty Ltd, in which the debtor had a substantial interest, and under that arrangement, the precise details of which were not made known to the general body of creditors, they were to receive a benefit which was not to be available to other creditors. To have the wishes of the creditors (other than Tungsten Investments Pty Ltd) who were present and voting at the meeting overborne in such circumstances cannot be countenanced and provides, in itself, ample justification for setting aside the composition.”
Because the trustee erred in the respects that I have identified, and because of the serious concerns as to the circumstances in which the creditor’s meeting was required to consider the proposal, in my view the composition must be set aside.
Counsel for the applicant submitted that a sequestration order should be made as permitted by s.222(10) of the Act. However, as I have already concluded that provision does not apply, some other basis must be found for the making of such an order. No creditor’s petition has been presented so ss.44 and 52 do not assist.
I think the answer lies in s.178 itself. It permits the court to make such order as it thinks just and equitable. It has been held that this phrase is wide and flexible: Chase v Donnelly [2002] FCA 1565 at [39]. Here Seabrook has committed an act of bankruptcy: s.40(1)(daa) of the Act. On the information he has supplied to date he is hopelessly insolvent. On the evidence put before the court sufficient concerns are raised that ought to be investigated in the interests of Seabrook’s creditors. A trustee in bankruptcy is equipped with powers to enable that to occur.
Accordingly, orders will be made as set out at the commencement of these reasons. I will hear the parties as to costs.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Wilson FM
Associate: Lynnette Chin
Date: 13 February 2008
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