Bendeich v Andresen - [2000] FCA 61

FEDERAL COURT OF AUSTRALIA
Bendeich v Andresen [2000] FCA 61
BANKRUPTCY -- validity of deed of arrangement committing debtor to present own petition or pay outstanding monies if certain conditions not met -- effect of s 188 authority empowering Trustee to call a meeting of creditors -- circumstances surrounding signing of deed and Trustee’s authority -- where authority defective because procedures requiring the Trustee’s consent to be witnessed not met -- deed following meeting called without valid authority also ineffective -- act of bankruptcy committed when ineffective authority signed -- whether act of bankruptcy avoided on basis that debtor did not comprehend consequences of signing authority and subsequent arrangements -- consequences of act of bankruptcy.
Re Donovan; Ex parte ANZ Banking Group Ltd (1972) 20 FLR 50 approved
Re Curry; Ex parte Goldsea Pty Ltd (1992) 40 FCR 32 considered
Petelin v Cullen (1975) 132 CLR 355 cited
Saunders v Anglia Building Society [1971] AC 1004 cited
Re Moss; Ex parte Tyaraf Pty Ltd [1985] FCA 403 cited
Bankruptcy Act 1966 (Cth) - ss 40(1), 188, 222, 236
GRAHAM ROSS BENDEICH v CAROLYN DOROTHY ANDRESEN
Q7283 of 1999
KIEFEL J
BRISBANE
7 FEBRUARY 2000

IN THE FEDERAL Court OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q 7283 OF 1999

BETWEEN:

GRAHAM ROSS BENDEICH
Applicant / Trustee

AND:

CAROLYN DOROTHY ANDRESEN
Respondent / Debtor

JUDGE:

KIEFEL J

DATE OF ORDER:

7 FEBRUARY 2000

WHERE MADE:

BRISBANE

THE COURT ORDERS THAT:
1. The trustee’s application is dismissed.
2.It is declared that the authority signed by the debtor on 27 November 1997 was not effective for the purposes of Part X of the Bankruptcy Act 1966 (Cth).

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q7283 OF 1999

BETWEEN:

GRAHAM ROSS BENDEICH
Applicant / Trustee

AND:

CAROLYN DOROTHY ANDRESEN
Respondent / Debtor

JUDGE:

KIEFEL J

DATE:

7 FEBRUARY 2000

PLACE:

BRISBANE

REASONS FOR JUDGMENT

The trustee of Mrs Andresen’s bankrupt estate applies to the Court for an order terminating a Deed of Arrangement made on 6 January 1998, pursuant to s 236 Bankruptcy Act 1966 (Cth).
Pursuant to the terms of the Deed, Mrs Andresen’s husband was to transfer ownership of a motor vessel to the trustee within seven days of the date of acceptance of her proposal by her creditors. The trustee was then to sell the motor vessel within six months from the date of execution of the Deed for an amount not less than was necessary to pay the creditors in full and to enable the trustee’s costs and remuneration to be met. It was further provided:
“(c)If the sale is not effected within 6 months from the date of the execution of this Deed, the Trustee shall convene a further meeting which can pass a resolution requiring the debtor to present her own petition in Bankruptcy.”
In the event that insufficient funds were realised from the sale, the debtor was to make up the balance.
Mrs Andresen’s husband did not transfer the title in the motor vessel to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2000] FCA 61
Decision Date: 7 FEBRUARY 2000

CaseChat Overview and Summary

In the matter of Bendeich v Andresen, the central issue before the court was whether the Deed of Company Arrangement, signed by the debtor, was effective and bound the parties involved. The case revolved around the compliance with statutory requirements concerning the witnessing of signatures and the subsequent effect on the validity of the Deed. The dispute required the court to determine whether the statutory requirements for witnessing signatures had been met, which in turn affected the ability of the trustee to seek the termination of the Deed and the sequestration of the debtor's estate.

The primary legal issue was whether the statutory requirements of section 188(2)(b) of the Bankruptcy Act 1966 (Cth) were fulfilled, specifically concerning the witnessing of signatures. The court examined the evidence presented regarding the timing of the signatures and whether the usual practice of observing the signing of the debtor was followed. The court found that the evidence indicated a gap between the debtor's signing and the witness's signing, which did not align with the usual and proper practice of observing the signatures. Consequently, the court concluded that the statutory requirements had not been met, rendering the Deed ineffective.

Given the court's finding that the statutory requirements were not met, the court held that the Deed of Company Arrangement was not effective. As a result, the orders sought by the trustee to terminate the Deed and to sequestrate the debtor's estate were dismissed. The court declared that the authority signed by the debtor was not effective for the purposes of Part X of the Bankruptcy Act 1966 (Cth), thereby nullifying any consequential orders that depended on the effectiveness of the Deed.

ORDERS:
1. The trustee’s application is dismissed.
2. It is declared that the authority signed by the debtor on 27 November 1997 was not effective for the purposes of Part X of the Bankruptcy Act 1966 (Cth).

Orders

Orders of the court

1. The trustee’s application is dismissed.

2. It is declared that the authority signed by the debtor on 27 November 1997 was not effective for the purposes of Part X of the Bankruptcy Act 1966 (Cth).

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

KIEFEL J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: KIEFEL J

Section 188(2)(b) requires that the signature of each of the debtor and the trustee or solicitor be witnessed. There is no issue about Mrs Andresen’s signature having been witnessed. It was submitted for the trustee in the application that it could not be inferred that the secretary failed to observe Mr Bax signing simply because her signature was not appended on one copy. What the evidence shows, however, is that there was some gap between Mr Bax signing and the witness signing. This would not ordinarily occur in a circumstance where a signature was being witnessed, as the secretary’s own evidence suggests. I am unable to conclude, in the face of an unexplained sequence of events, that the secretary’s usual and proper practice of observing signatures prior to signing herself as a witness was followed. In so saying, I do not intend to imply lack of creditworthiness on the part of either witnesses to these events. Rather, I consider that the process undertaken has been shown to be unreliable. The likelihood is that the requirements of s 188(2) were not met.Whether termination of deed and sequestration Section 236 provides, in relevant parts: “(1)The Court may, upon application by the trustee, a creditor or the debtor, or, if the debtor has died, the person administering the estate of the debtor, if it is satisfied: (a)that the debtor, or, if the debtor has died, the debtor or the person administering the estate of the debtor, has failed to carry out or comply with the provision of the deed of arrangement; (b)that the deed of arrangement cannot be proceeded with without injustice or undue delay to the creditors, the debtor or, if the debtor has died, the estate of the debtor; or (c)that for any other reason the deed of arrangement ought to be terminated; make an order terminating the deed. (2)The Court shall not make an order terminating a deed on the ground specified in paragraph (1)(a) or (c) unless it is satisfied that it would be in the interests of the creditors to do so. (3)The trustee or a creditor may include in an application under subsection (1) an application for a sequestration order against the estate of the debtor and, if the Court makes an order on the first-mentioned application terminating the deed of arrangement, it may, if it thinks fit, forthwith make the sequestration order sought. (4). . .(5)The making of an application by the trustee or a creditor for a sequestration order under this section shall, for the purposes of this Act, be deemed to be equivalent to the presentation of a creditor’s petition against the debtor, but the provisions of subsection 43(1), sections 44 and 47, sub-sections 52(1) and (2) and Part XIA do not apply in relation to such an application.” The order sought by the trustee, terminating the Deed, is said to be based upon par (c) (“any other reason”). A further order, for sequestration of Mrs Andresen’s estate, is also sought under s 236(3) and (5). Such an order, however, depends upon the Court first terminating the Deed. Given my finding, that the requirements of s 188(2) were not met, what followed after the signing of the authority was not effective to bring about the consequences which Part X provides for and the parties to the Deed are not bound to it. Orders under s 236 terminating a deed, require that there be an effective deed. An order under subsection (1) cannot be made in this case. It follows also that the sequestration order sought cannot be made, since subsection (3) provides that the Court may do so only if a Deed is brought to an end by an order made under the subsection. The Deed here was simply ineffective.

IN THE FEDERAL Court OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 7283 OF 1999

BETWEEN:	GRAHAM ROSS BENDEICH Applicant / Trustee
AND:	CAROLYN DOROTHY ANDRESEN Respondent / Debtor
JUDGE:	KIEFEL J
DATE OF ORDER:	7 FEBRUARY 2000
WHERE MADE:	BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q7283 OF 1999

JUDGE:	KIEFEL J
DATE:	7 FEBRUARY 2000
PLACE:	BRISBANE