Lasovase Pty Ltd v Byrne

FEDERAL COURT OF AUSTRALIA

Lasovase Pty Ltd v Byrne [1999] FCA 223

BANKRUPTCY –Bankruptcy Act 1966 (Cth), s 242 – whether debtor failed to comply with terms of composition – whether terminating the composition would be in the interests of creditors – whether sequestration order should be made.

COSTS – creditor seeking costs order against trustee – whether trustee was responsible for recommending a composition that was doomed to failure – effect of trustee’s delay in filing a submitting appearance – form of costs order made in favour of the creditor against the debtor – direction made pursuant to Federal Court Rules, O 62 r 36(1)(b) – disallowance of costs improperly, unreasonably or negligently incurred.

WORDS AND PHRASES – “in the interests of the creditors”.

Bankruptcy Act 1966 (Cth), ss 40(1), 109(1), 188, 188A, 189A, 189B, 204(3), 222, 242.

Federal Court Rules, O 62, r 36(1).

Augustyn v Putnin (1988) 83 ALR 514, followed.
Re Morris; Ex parte Adams (1980) 48 FCR 341, followed.
Corney v Brien (1951) 84 CLR 343, cited.
Wren v Mahony (1972) 126 CLR 212, cited.
Kennedy v Australian Mutual Provident Society, 12 November 1996, Federal Court of Australia (Full Court), unreported, distinguished.

LASOVASE PTY LIMITED v MICHAEL FRANCIS BYRNE & ANOR
NG 7466 OF 1998

SACKVILLE J
SYDNEY

15 MARCH 1999

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7466 OF 1998

BETWEEN:

LASOVASE PTY LIMITED
Applicant

AND:

MICHAEL FRANCIS BYRNE
First Respondent

JOHN DUNCAN GREEN
Second Respondent

JUDGE:

SACKVILLE J

DATE OF ORDER:

15 MARCH 1999

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.Pursuant to s 242(1) of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”), the composition of the first respondent (“the debtor”), accepted at a meeting of creditors on 2 March 1998, be terminated.

2.Pursuant to s 242(3) of the Bankruptcy Act, the estate of the debtor be sequestrated.

3.Subject to Order 4, the debtor pay the costs of and incidental to the application, such costs to be taxed and paid out of the debtor’s estate.

4.Pursuant to Federal Court Rules, O 62, r 36(1)(b), the taxing officer examine the costs incurred by the applicant and disallow such costs as he or she shall find to have been improperly, unreasonably or negligently incurred.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	NG 7466 OF 1998

BETWEEN:

LASOVASE PTY LIMITED
Applicant

AND:

MICHAEL FRANCIS BYRNE
First Respondent

JOHN DUNCAN GREEN
Second Respondent

JUDGE:	SACKVILLE J
DATE:	15 MARCH 1999
PLACE:	SYDNEY

REASONS FOR JUDGMENT

The Proceedings

1. The applicant (“the creditor”) is a judgment creditor of the first respondent (“the debtor”).  At a meeting of the debtor’s creditors held on 2 March 1998, a special resolution was passed in the following form:

   “That a composition be accepted.”

   The meeting also resolved that the second respondent (“the Trustee”) be appointed…