Re Carmichael, J.G. Ex Parte Pegasus Leasing Ltd - [1992] FCA 857

JUDGMENT No. .x.cz ,.... 1 -2.&

IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION )
BANKRUPTCY DISTRICT OF )
THE STATE OF VICTORIA

) No. VX 193 of 1992

Re : JOHN GERARD CARMICHAEL

Debtor

Ex Parte: PEGASUS LEASING LIMITED
(A.C.N. 008 078 162)

Applicant

- and -
JOHN GERARD CARMICHAEL and
JOHN CRAVEN BARNES

Respondents

Coram: Olney J
Place: Melbourne
Date: 17 November 1992

MINUTE OF ORDERS

THE COURT ORDERS THAT:

The composition accepted by the creditors of the debtor at a meeting of creditors held on 5 June 1992 be set aside;

2. A sequestration order be made forthwith against the

NOTE: Settlement and entry of orders is dealt with in rule

124 of the Bankruptcy Rules.

estate of the debtor;
3. The costs of the proceeding including any reserved costs and including the costs incurred by Christopher Martin Harford and/or the applicant's solicitors in attempting to answer the subpoena issued to the said Christopher Martin Harford on 13 November 1992 be taxed and paid in accordance with the Act.

IN THE FEDERAL COURT OF AUSTRALIA )
GENERAL DIVISION )
BANKRUPTCY DISTRICT OF )
THE STATE OF VICTORIA

1 No. VX 193 of 1992

Re : JOHN GERARD CARMICHAEL

Debtor

EX Parte : PEGASUS LEASING LIMITED
(A.C.N. 008 078 162)

Applicant

- and -
JOHN GERARD CARMICHAEL and
JOHN CRAVEN BARNES

Respondents

Coram: Olney J
Place: Melbourne
Decision: 17 November 1992

Reasons ~ublished: 20 November 1992

REASONS FOR JUDGMENT

On 17 November 1992 I made an order pursuant to section 239(2)

of the Bankruptcy A c t (the Act) setting aside a composition accepted by the creditors of the debtor (the composition) at a

meeting of creditors called pursuant to Part X of the Act on 5 June 1992 (the meeting). At the time of making the order I did not give detailed reasons but undertook to prepare and publish same which I now do. I also indicated that I would when giving my reasons rule on an application for costs made on behalf of an employee of the applicant's solicitors (one Harford) to whom the debtor had caused a subpoena to produce documents to be issued.

By application filed on 26 June 1992 the applicant sought the following orders:

1.     A declaration that as at 5th June, 1992 when the meeting took place the debtor was indebted to the applicant in the sum of:
(a) $915,644.87; or alternatively (b) $301,875.14; or alternatively
2.    A declaration that at the meeting, the debtor's
indebtedness to the applicant for voting purposes should
have been admltted as:
(a) $915,644.87; or alternatively (b) $301,875.14; or alternatively (c) $136,989.50.
3.     A declaration that no or alternatively, no valld speclal resolution pursuant to section 204 of the Act was passed at the meeting.
4.     A declaration the composition is void and of no force or effect.
5.     An order, pursuant to section 239(2) of the Act, setting aside the composition.
6.     That a sequestration order be made against the estate of the debtor.

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.

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Details

Case: [1992] FCA 857
Decision Date: 17 Nov 1992

CaseChat Overview and Summary

The case of Re Carmichael, J.G. Ex Parte Pegasus Leasing Ltd involved an application by Pegasus Leasing Limited to set aside a composition that had been accepted by the creditors of John Gerard Carmichael, the debtor. Pegasus Leasing Limited sought the setting aside of the composition on the basis that it was not properly accepted, and that it was unreasonable. The application was brought pursuant to section 239 of the Bankruptcy Act, which allows for a creditor to apply to the Court to set aside a composition if they believe it should be voided. The Court was also asked to make a sequestration order against the debtor's estate. The debtor, John Gerard Carmichael, appeared in person and did not challenge the composition.

The Court found that the composition was not properly accepted as the debtor's solicitor, Dov Silberman, had incorrectly ruled that three claims made by Pegasus Leasing Limited were contingent and thus not eligible for voting. The Court held that the claims were not contingent, and that had Pegasus Leasing Limited been allowed to vote on all three claims, the composition would not have been passed as a special resolution. The Court also found that the meeting of creditors was incompetent as the debtor's solicitor had failed to provide the required statement of information to the creditors. However, this did not affect the outcome of the case.

The Court set aside the composition and made a sequestration order against the debtor's estate. The Court also ordered that the costs of the proceeding, including the costs incurred by an employee of the applicant's solicitors in attempting to answer a subpoena, be taxed and paid in accordance with the Act. The Court found that the subpoena was in reality directed to the opposite party, and that the costs incurred in attempting to answer it should be included in the costs of the proceedings.

Orders