Lofthouse (Trustee) v Stirling

FEDERAL COURT OF AUSTRALIA

Lofthouse (Trustee) v Stirling [2008] FCA 1936

BANKRUPTCY ­­­– breach of Personal Insolvency Agreement – meeting of creditors to consider termination of agreement – whether requisite declaration of trustee that debtor in default sufficiently formal – signature by agent – failure to use word “satisfied”

Bankruptcy Act 1966 (Cth) ss 63B(1), 134(4), 222A, 222B, 222D, 306(1)

Cordiant Communications (Australia) Pty Ltd v The Communications Group Holdings Pty Ltd (2005) 194 FLR 322 referred to
McRae v Coulton (1986) 7 NSWLR 644 at 663 applied
O’Reilly v Commissioners of the State Bank of Victoria (1983) 153 CLR 1 applied

Dal Pont GE, Law of Agency (2^nd ed, LexisNexis Butterworths, 2008)

DAVID JAMES LOFTHOUSE (TRUSTEE) v MATTHEW JAMES STIRLING

VID 880 of 2008

HEEREY J
19 DECEMBER 2008
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 880 of 2008

BETWEEN:	DAVID JAMES LOFTHOUSE (TRUSTEE) Applicant
AND:	MATTHEW JAMES STIRLING Respondent

JUDGE:	HEEREY J
DATE OF ORDER:	19 DECEMBER 2008
WHERE MADE:	MELBOURNE

THE COURT DIRECTS THAT:

1.The Personal Insolvency Agreement executed by the respondent on 2 May 2008 was terminated by a resolution of the respondent’s creditors on 30 September 2008.

THE COURT ORDERS THAT:

2.The parties file and serve written submissions as to costs within seven days.

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

The text of entered orders can be located using eSearch on the Court’s website.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VID 880 of 2008

BETWEEN:	DAVID JAMES LOFTHOUSE (TRUSTEE) Applicant
AND:	MATTHEW JAMES STIRLING Respondent

JUDGE:	HEEREY J
DATE:	19 DECEMBER 2008
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. On 2 May 2008 the respondent entered into a Personal Insolvency Agreement under Pt X of the Bankruptcy Act 1966 (Cth). The trustee of the PIA was the applicant.

2. At a meeting of the respondent’s creditors held on 30 September 2008 a resolution was passed purporting to terminate the PIA under s 222B(1) of the Act. That provision is as follows:

   The creditors may, by resolution at a meeting called for the purpose, terminate a personal insolvency agreement if:

   (a)the debtor is in default; and

   (b)before the passage of the resolution, the trustee of the agreement tabled at the meeting a written declaration to the effect that the trustee is satisfied that the debtor is in default.

3. A dispute having arisen as to whether the requirements of par (b) were met, the applicant seeks a direction under s 134(4) of the Act as to whether or not the PIA was validly terminated.

   The PIA

4. The PIA by cl 2.1 provided for the respondent to pay $728,000 to the applicant as follows:

   ·    $200,000 within 30 days of the execution of the PIA;

   ·    $12,000 per month for the 12 months beginning 1 July 2008;

   ·    $15,000 per month for the 12 months beginning 1 July 2009;

   ·    $17,000 per month for the 12 months beginning 1 July 2010.

5. The major…