Veli and Sandra Sanije Veli, ("the bankrupts") are seeking
orders that the sequestration orders made against them
on 20
August 1985 be annulled pursuant to paragraph 155(l)(a) of the Bankruptcy Act 1966 and, alternatively, for an order of
rge under paragraph 150(l)(c)
of
the Bankruptcy Act.
that the sequestration order was made on 20 August 1985 and,
apparently, was founded upon an act of bankruptcy which had
occurred in December 1984
but the petition was not presented
until 12 July 1985 being
a date more than
6 months after that
act of bankruptcy had occurred.
Paragraph 44(l)(c) of the Bankruptcy Act provides:
" 4 4 ( 1 ) A
creditor's
petition
shall
not
be presented
against a debtor unless-
(a) ...
(c)
the act of bankruptcy on which the petition is founded was committed within 6 months before the presentation of the petition."
Therefore, having regard to the effect of paragraph
44(l)(c) a sequestration order ought not to have been made
based upon the act of bankruptcy which had occurred in December 1984.
It is alleged also that the sequestration order
should not have been made because of the effect of
s.238 of
the Bankruptcy Act.
That is a section within Part X of the
Act which provides for arrangements with creditors without
sequestration. Paragraph 238(2)(a) provides:
"238(2) Subject to sub-sections ( 3 ) and
( 4 ) , it is not
competent
for
a creditor, so long as a
composition under this Part remains valid-
(a)
to present a creditor's petition against
the debtor,
or
to proceed with such
a
petition presented before the composition
was accepted, in respect of
a
provable
debt. "
In this case
it is said that that provision applies
since at the time the sequestratlon order was made on 20
August 1985 there was
a composition under Part
X in relation
to
each of the bankrupts and therefore the sequestration
order ought not to have been
made.
In order to understand the problem, reference
is
made to s.154 of the Bankruptcy Act. This section confers
a
power upon the Court to annul
a
bankruptcy. The relevant
provisions are as follows:
"154(1) Where the Court is satisfied-
(a)
that a sequestration order ought not to have been made ...
the
Court
may
make
an
order
annulling
the
bankruptcy."
The first matter to note
is
the provision
of
paragraph (a) which provides
that the power arises where the
Court is satisfied that a sequestration order…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
Continue reading Pacific Dunlop Ltd v Hogan
Sign in free to access the full text
Details
AGLC
Pacific Dunlop Ltd v Hogan [1989] FCA 185
Case
[1989] FCA 185
Decision Date
CaseChat Overview and Summary
In the Federal Court of Australia, Boni John Veli and Sandra Sanije Veli, the bankrupts, applied to annul sequestration orders made against them on August 20, 1985, and to be discharged from bankruptcy. They argued that the sequestration orders should not have been made due to an act of bankruptcy occurring more than six months prior to the petition and the existence of a composition agreement with creditors under Part X of the Bankruptcy Act. The court was required to determine whether the sequestration order was validly made and, if not, whether the bankrupts should be discharged from bankruptcy.
The court examined the legal provisions concerning acts of bankruptcy and composition agreements. The court noted that there were subsequent acts of bankruptcy available that could have supported the petition, thus the sequestration order was valid despite the earlier act of bankruptcy. Regarding the composition agreement, the court found that the agreements were vague and did not comply with the statutory definition of a composition. The court also noted that the composition was terminated by a creditors' resolution. The court exercised its discretion not to annul the sequestration orders due to the delay in applying for annulment and the bankrupts' unsatisfactory conduct. The court considered the trustee's report, which highlighted the bankrupts' continued trading while insolvent and their failure to cooperate with the administration of their estates. Based on the report and the provisions of the Bankruptcy Act, the court refused to make an order of discharge for the bankrupts.
The final order of the court was to refuse the application to annul the sequestration orders and to discharge the bankrupts from bankruptcy.