Cummings v Macks

Case [2000] FCA 55

FEDERAL  COURT  OF  AUSTRALIA
Principal Registry

MEMORANDUM

To:  Recipients of judgment [2000] FCA 55
From:                Information Officer
Subject:            Amendment in paragraph number in FCR copy

Date:                 15 September 2000

In Cummings v Macks [2000] FCA 55 (and now reported in 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.


FEDERAL COURT OF AUSTRALIA
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) 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) 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…

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AGLC
Cummings v Macks [2000] FCA 55
Case
[2000] FCA 55
Decision Date

CaseChat Overview and Summary

Cummings v Macks is an appeal against a decision of the Court that a resolution passed by creditors to remove the first respondent as trustee of the bankrupt estate of Peter John Balnaves was void. The appellant, Cummings, is a creditor of the bankrupt estate, and the first respondent, Macks, was appointed as the trustee in bankruptcy of the estate on 30 October 1998. A meeting of creditors was convened on 12 April 1999, where a motion to dismiss Macks as trustee was moved and subsequently carried. The primary judge held that the resolution to dismiss the trustee was void because the motion was not given the requisite seven days' notice, as required by the common law.

The legal issues before the Court were whether the common law requirement for reasonable notice applied to the dismissal of a trustee at a creditors' meeting and, if so, what the content and duration of that notice should be. The primary judge held that the common law requirement of reasonable notice did apply and that seven days' notice was required. The primary judge also considered the relevant provisions of the Bankruptcy Act 1966 (Cth) and concluded that the Act did not unambiguously state that seven days' notice must be given of the meeting as well as any proposed resolution to dismiss a trustee. The Court considered the legislative context and held that the common law requirement of reasonable notice applied to the dismissal of a trustee at a creditors' meeting.

The Court held that the primary judge was correct in his decision that the resolution to dismiss the trustee was void because the motion was not given the requisite seven days' notice. The Court noted that the Bankruptcy Act 1966 (Cth) does not provide specific time requirements for notice of a creditors' meeting, and that the common law would imply that reasonable notice be given. The Court also considered the purpose of the meeting and held that the section of the Act contemplated 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. The Court held that the section required notice of a motion to remove a trustee at a creditors' meeting to be given seven days before that meeting.

The Court dismissed the appeal and ordered that the appeal be dismissed with costs.

Orders

Orders of the court

1. The appeal be dismissed with costs.

Background

Background to the litigation

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 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” 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 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

Evidence

Evidence Before The Court

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Decision

Reasons for decision

DRUMMOND, SUNDBERG AND MARSHALL JJ

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Ratio Decidendi

Legal Principle Established

Established by: DRUMMOND, SUNDBERG AND MARSHALL JJ

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