Mango Boulevard Pty Ltd v Whitton

Mango Boulevard Pty Ltd and another (Applicants) sought directions from the Court in relation to a composition meeting that the trustee of the bankrupt estates of the second and third respondents (Respondents) proposed to call. The meeting was intended to consider proposals for a composition of creditors. The trustee had not completed the requisite composition reports. The Applicants sought directions to ensure that the meeting would not be held until the Applicants' substantive proceeding had been heard and determined. The substantive proceeding involved a challenge to the removal of a former trustee and a challenge to an extension of the bankruptcy period. These challenges were raised by the new trustee, who was the first respondent in this application.

The Court had to determine whether it had the discretion to order that the composition meeting not occur until after the hearing of the substantive proceeding. The Applicants argued that if the outcome of the substantive proceeding was unfavourable, the composition meeting and any resolution for annulment would be rendered futile. The Court examined the relevant statutory provisions and case law and found that it did indeed have the discretion to order that the composition meeting not occur until after the substantive proceeding was heard and determined. The Court concluded that the outcome of the substantive proceeding could indeed affect the composition meeting and any resolution for annulment.

Accordingly, the Court ordered that the First Respondent, in his present capacity as trustee, was directed not to hold a meeting of the creditors until not earlier than the hearing and determination of the Applicants' application, subject to such further order as the Court may make in respect of that application. The Applicants were to pay the Respondents costs of and incidental to the application for the transfer of the proceeding. The costs of and incidental to the First Respondent’s application for directions were reserved. Liberty to apply was reserved.