Panteli J. v Geelong Building Society (In Liquidation)

[1992] FCA 740

740 ,'?L

JUDGMENT NO. . -W.- .a -

IN THE FEDERAL COURT OF AUSTRALIA	)	!
)	.-
VICTORIA DISTRICT REGISTRY	)	No. VB 2117 of 1992

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GENERAL DIVISION	1
B E T W E E N :

RE: JORN PANTELI and MARILYN THERESA PANTELI

EX PARTE: GEELONG BUILDING SOCIETY (IN

JUDGE :  Heerey J

RECEIVED

m:	19 August 1992	-7 oCT 1992
PLACE :	Melbourne

EX TEMPORE REASONS FOR JUDGMENT

This is the return of an application for the annulment of a

sequestration order which was made on 27 July 1992. The	l.
. ,
debtors seek an order that the sequestration order be set
t~
aside and that the petition be reheard at some relatively	I I
early date. There is no doubt that there is jurisdiction to	;

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make such an order; see Cameron v Cole (1944) 68 CLR 571,	l ;
Anasis: Ex Darte Total Australia Ltd (1985) 63 ALR 493. More
specifically, the debtors seek the annulment of the
sequestration order and the rehearing of the petition so as to	I
enable a meeting of creditors which has been adjourned until	i -
tomorrow to consider a proposed deed of arrangement under Part	!

first put to a meeting of creditors on 23 April 1992. The l

X Division 5 of the Bankru~tcv	Act 1966 (the Act).
I propose to grant the application and I shall briefly state	, .
I
my reasons for doing so. The proposed deed of arrangement was

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bankruptcy notice on which the petition was founded was only issued the day before. The meeting was adjourned on a number of occasions; one reason, if not the only reason, apparently which led to the adjournment of the meetings was the sale of a property over whlch the petitioning creditor had security.

Finally, at an adjourned meeting on 9 July 1992, it appeared that the representative of the petitioning creditor advised the chairman that the property had not yet been sold but that contract would be signed shortly and settlement would be 30 days thereafter. The chairman told the meeting that he had been requested by a representative of the petitioning creditor to seek an adjournment of six weeks. The meeting unanimously passed the resolution that the meeting be adjourned until 10.30 am on 20 August 1992.

In the meantime however, the petitioning creditor, for reasons which are not disclosed, had a change of mind and proceeded

with the petition which had been filed on 25 May. The	petition came on for hearing on the first return date on 27
July, but due to some inadvertence in the office of the debtors' solicitor the debtors were not aware of this and there was no appearance. The Court it seems was not informed of the meetings that had been held under Part X, and in particular was not told that the petitioning creditor itself had sought an adjournment of the last meeting some two weeks earlier to 20 August.
The test imposed by s.l53(B) of the Act is whether the sequestration order ought not to have been made, and I accept the submission that in exercising that jurisdiction the Court looks at the state of affairs which existed as at the date of the sequestration order. However, it seems equally plain that the Court is not confined to material which happened to be put before the Court which made the sequestration order. I think there is obviously a degree of speculation in, as it were, conducting a hypothetical application for an adjournment before the Registrar on 27 July in the light of information about the Part X meetings that had already been held.
I accept also that there is no general practice in this Court that a creditor's petition will of necessity be adjourned simply because it is said a Part X meeting will be held; see generally Field v Commercial Bankina Companv of Svdnev Ltd (1978) 22 ALR 403. However, the particular history of this case shows that a Part X meeting was not raised as a last gasp
exercise to stave off a sequestration order. In fact, it seems the Part X meetings in substance pre-dated the
commencement of bankruptcy proceedings.
Also it seems the petitioning creditor had participated in the meetings and, as I have noted, it was on the initiative of the petitioning creditor that the meeting had been adjourned to a date after the hearing of the petition and also of course the petitioning creditor did not disclose that fact to the Court.
I think doing the best I can in those circumstances, I come to
the conclusion that had the full situation been disclosed the Court probably would have at least adjourned the hearing of the petition and not made the sequestration order.
It was pressed upon me that the orders sought today would be futile because the deed of arrangement would not be approved at the meeting anyway. There was some debate as to the
significance of the fact that one particular creditor, in
respect of whom there is some affidavit evidence that it will vote for the deed of arrangement, is not a joint creditor but only a separate creditor of each of the debtors.
I think it is unnecessary for me to resolve these issues. I think the overriding consideration is that there has been a bona fide exercise of the procedures provided by Part X. There is a clear policy of the Act that creditors ought to have the opportunity at a properly informed meeting to decide whether a debtor's affairs should be managed under Part X
rather than through the formal procedures of bankruptcy. I
think the creditors ought to be given that opportunity, as of
course should the debtors to whom equally this is a beneficial procedure.
There is some danger of course in head counting before a meeting because it ignores the possibility that reasoned argument at the meeting itself may persuade those present to change their views. I think that opportunity ought to occur. I should also add that the official trustee opposes the application on the grounds that the debtors failed to file a statement of affairs as required by the Act within 14 days of the sequestration order. I do not of course want to minimlse the importance of complying with the Act in this and all other respects, but the practical consequences do not seem to welgh against making the order sought. The debtors have provided statements of affairs in affidavit form in relation to the present application and it was not suggested that those did not comply with the Act. I do not see that any permanent prejudice has been suffered by their non-compliance with the requirement to file those statements of affairs.
I will order the sequestration order made on 27 July 1992 be set aside and the bankruptcies of John Panteli and Marilyn Theresa Panteli thereunder be annulled. Secondly, I order that the petition be re-heard and for that purpose be listed in the bankruptcy list on 2 September 1992.

I certify that this and the

preceding (4) four pages are true copy of the reasons for judgment of his Honour Mr Justice Heerey.

Appearances

Counsel for the debtors:	M r P M Bornstein
Solicitors for the debtors :	MacMillan Segal and Lenton
Counsel for the petitioning
creditor:	MS E Williamson
Solicitors for the petitioning
creditor :	Phillips Fox