Doman v Bazos
[2006] FMCA 230
•7 February 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DOMAN v BAZOS | [2006] FMCA 230 |
| BANKRUPTCY – Application to adjourn hearing of creditor’s petition pending an adjourned s.189 scheme meeting – where court is not satisfied about the benefit of such an adjournment – where evidence about the s.189 proposal is lacking. |
| Applicant: | ELSPETH MARY DOMAN AS EXECUTOR OF THE ESTATE OF THE LATE FREDRICK SPENCER HOWE DOMAN, ALASTAIR DOMAN, ELSPETH MARY DOMAN, T/A DOMAN & CO PTY LIMITED, VIMREACH PTY LIMITED AND MARGARET CAMPBELL DOMAN T/AS YADLAMALKA PROPRIETORS |
| Respondents: | PETER BAZOS SUSAN BAZOS |
| File Numbers: | SYG3378 of 2005 SYG3379 of 2005 |
| Judgment of: | Raphael FM |
| Hearing date: | 7 February 2006 |
| Date of Last Submission: | 7 February 2006 |
| Delivered at: | Sydney |
| Delivered on: | 7 February 2006 |
REPRESENTATION
| Solicitors for the Applicant: | Lane & Lane |
| For the Respondents: | Mr Peter Bazos |
| Solicitors for the Trustee: | P H Legal |
ORDERS
Application for adjournment refused. Matter referred back to Registrar.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG3378 of 2005
SYG 3379 of 2005
| ELSPETH MARY DOMAN AS EXECUTOR OF THE ESTATE OF THE LATE FREDRICK SPENCER HOWE DOMAN, ALASTAIR DOMAN, ELSPETH MARY DOMAN, T/A DOMAN & CO PTY LIMITED, VIMREACH PTY LIMITED AND MARGARET CAMPBELL DOMAN T/AS YADLAMALKA PROPRIETORS |
Applicant
And
| PETER BAZOS SUSAN BAZOS |
Respondents
REASONS FOR JUDGMENT
There comes before me an application by the respondent debtor, in person, assisted by the solicitor for the controlling trustee to adjourn the hearing of a bankruptcy petition for a period of two weeks so that a s.189 personal insolvency agreement can be voted on. Although I have no affidavit evidence before me I have heard from the bar table, and I do not believe it is disputed, that a meeting of creditors was held yesterday.
It would appear that a decision was made to adjourn the hearing because of opposition to the right of certain parties to vote being made by the applicant creditor. The applicant creditor alleged that the parties could not vote because they were companies that had been deregistered. It would appear that if a vote had been taken at that time, which it could have been and those companies were excluded, the applicant creditor would have had the majority and would have voted against the proposals.
The creditor has a debt against the debtor of $750,000 by way of a judgment in the District Court of New South Wales, recovered on 29 June 2005. It is a substantial amount of money and I assume there is no outstanding appeal against that figure. Certain information is provided in the creditor’s petition concerning the financial situation of the debtor which, if correct, would seem to indicate that an investigation of the debtors’ affairs by an independent trustee would be a benefit to all creditors.
The s.189 scheme is intended to provide an opportunity for debtors to avoid a sequestration order by putting up a proposal which is acceptable to all its creditors. Mr Rollason tells me, and it is not disputed by Mr Cuter for the trustee's solicitor, that those persons who were going to vote, if they had been permitted to do so, were not going to take part in the deed. In other words, their interests in going to vote was purely for the passing of the deed and not for any personal benefit to themselves.
I have not seen the deed, but from what Mr Rollason tells me it seems therefore that a small (by comparison to the judgment) amount of money has been put up which will, if the deed is passed, satisfy the debt to Mr Rollason's client. Nothing further will be available for these other creditors. It must raise suspicion in the mind of the court that the sole purpose of inducing these creditors to vote is to put up a scheme which may redound to the disadvantage of the one substantial creditor who seeks a sequestration order. Again, there has been no denial of these facts as provided to me by Mr Rollason.
It is important for the legitimacy of s.189 proposals that they are not abused nor that there is any suggestion of possible abuse. It seems to me that there is such a suggestion in this case and I think that in all the circumstances the appropriate step to take would be to deny the application to adjourn and to refer this matter back to the Registrar for the hearing of a sequestration order. The Registrar will be asked, if he grants the sequestration order or even if he does not, to make the appropriate order as to costs in relation to these proceedings.
I certify that the preceding six (6) paragraphs are a true copy of the reasons for judgment of Raphael FM
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