Official Trustee (In the matter of Van)

[1999] FCA 1056

FEDERAL COURT OF AUSTRALIA

Official Trustee (In the matter of Van) [1999] FCA 1056

OFFICIAL TRUSTEE (IN THE MATTER OF FRANCIS EVERARD VAN)

N7696 OF 1999

EMMETT J

20 JULY 1999

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N7696 OF 1999

IN THE MATTER OF FRANCIS EVERARD VAN
BETWEEN:	OFFICIAL TRUSTEE Applicant
JUDGE:	EMMETT J
DATE OF ORDER:	20 JULY 1999
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The debt agreement entered into by Francis Everard Van be terminated pursuant to s185Q of the Bankruptcy Act 1966.

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	N7696 OF 1999

IN THE MATTER OF FRANCIS EVERARD VAN
BETWEEN:	OFFICIAL TRUSTEE Applicant

JUDGE:	EMMETT J
DATE:	20 JULY 1999
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

1. I have before me an application by the Official Trustee for an order terminating a debt agreement entered into by Francis Everard Van (“the Debtor”) pursuant to section 185Q of the Bankruptcy Act 1966 (Cth) (“the Act”). 

2. On 5 November 1998, the Debtor submitted a proposal for a debt agreement pursuant to Part IX of the Act. The proposal was generally as follows:

   ·By 30 June 2000, the Debtor was to pay an amount sufficient to pay creditors at the rate of $500 per month, the first payment to be made one month after acceptance of the proposal. 

   ·The Debtor indicated that, after payment to the Official Trustee of an amount of $260 as a fee for administering the debt agreement, payments would be made as follows:

   (a)$250 per month to National Bank, NRMA and Watson Stafford until sufficient funds were available to enable the trustee to pay a dividend of 50 cents in the dollar. 

   (b)thereafter, at least $250 per month for twelve months, and then $500 per month was to be paid in respect of the debt owing to the other unsecured creditor, Bateman Battersby, until sufficient funds were available to enable the trustee to pay a dividend of 100 cents in the dollar in respect of the amount owed as at the date of the proposal.

3. The proposal was accepted by a meeting of the creditors of the Debtor. By reason of acceptance of the debt agreement, the Official Trustee became the trustee of a debt agreement and processed it in accordance with section 185E of the Act.

4. The Debtor’s statement of affairs indicates total assets of $32,505 and liabilities of $48,000.  The Debtor's income is expected to be in the vicinity of $35,000.  On 15 March 1999, the Debtor wrote to the Official Trustee indicating that he was unable to proceed with the debt agreement as he was currently unable to make payments in accordance with the proposal.  He is presently in default under the debt agreement.

5. On 18 March 1999, the Official Trustee wrote to Bateman Battersby indicating that the Debtor had requested that his debt agreement be terminated, on the basis that he was unable to pay the payments as per his proposal. The Official Trustee indicated that he intended to terminate the debt agreement within 14 days, and asked Bateman Battersby whether they wished to oppose termination. The response of 1 April 1999 indicated that Bateman Battersby did not agree to the termination and contended that the Official Trustee had no power to terminate the debt agreement under section 185P of the Act without their agreement.

6. The Debtor has sought to file a debtor's petition. However, section 55(5A) of the Act provides that a debtor who is a party to a debt agreement must not present a debtor's petition, unless the court gives the debtor permission to do so. The application by the Official Trustee for an order terminating the debt agreement initially sought, also, an order pursuant to section 55(5A) that the Debtor have permission to lodge a debtor's petition. However, when the matter first came on for hearing, the solicitor for the Official Trustee indicated that she did not have instructions to act for the Debtor at that stage, and accordingly the Debtor was not joined as an applicant.

7. Section 185Q(1) provides as follows:

   “Any of the following persons may apply to the Court for an order terminating a debt agreement:

   (a)      the debtor […]

   (b)      a creditor of the debtor

   (c)       the Official Trustee.”

   Section 185Q(4) provides as follows:

   “The Court may make an order terminating a debt agreement if it is satisfied:

   (a) that the debtor […] has failed to carry out a term of the agreement and that it is in the creditors’ interest to terminate the agreement; or

   (b) that carrying out the agreement would cause injustice or undue delay to the creditors or the debtor […]; or

   (c) that for any other reason the agreement should be terminated and that it is in the creditors’ interest to do so.”

8. The evidence before me makes clear that the Debtor has failed to carry out terms of the debt agreement, in that he has failed to make payments in accordance with the terms proposed.  The only question is whether it is in the creditors’ interests to terminate the agreement.  So long as the debt agreement remains in place, the creditors are prevented from taking normal debt recovery procedures by way of writ of execution for the enforcement of any judgment and any garnishee order.  Similarly, the Debtor cannot lodge a debtor's petition.

9. Having regard to the state of affairs of the Debtor, it is clear that his estate should be administered in insolvency.  The Rules require notification to creditors of any application for an order terminating the debt agreement.  The creditors of the Debtor have been notified of this application and there has been no appearance for any of the creditors.  In the circumstances, I am satisfied that it is in the interests of the creditors that the debt agreement be terminated.  Accordingly, I propose to make an order in accordance with prayer 1 of the application filed on 24 June 1999.

I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.

Associate:

Dated:             20 July 1999

Solicitor for the Official Trustee:	Sally Nash
Date of Hearing:	29 June 1999; 20 July 1999
Date of Judgment:	20 July 1999