Re Denning, W.F.J

[1985] FCA 683

Re: WILLIAM FREDERICK JOHN DENNING
Ex Parte: THE OFFICIAL TRUSTEE IN BANKRUPTCY
No. W252X of 1982
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Bankruptcy
Sheppard J.

CATCHWORDS

Bankruptcy - whether deed of composition validly terminated by resolution of creditors - whether competent for same meeting to resolve that debtor enter into a deed of arrangement.

Bankruptcy Act 1966, ss. 188, 241.

HEARING

SYDNEY
#DATE 3:12:1985

ORDER

THE COURT ORDERS THAT declarations be made in terms of paragraphs 1(a), 2(a) and 3(b) of the application.

NOTE: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

JUDGE1

In this matter, the Official Trustee in Bankruptcy seeks the determination of questions concerning the validity of a deed of composition, a resolution terminating that deed and a deed of arrangement.

1. On 10 October 1982, the debtor, Mr. W.F.J. Denning, signed an authority pursuant to s. 188 of the Bankruptcy Act 1966. In consequence, a meeting of his creditors was called and was held on 5 November 1982. At that meeting there was a resolution that the creditors accept a deed of composition by Mr. Denning to pay his trustee $300.00 per week and that this deed of composition should be reviewed on 30 June 1983. It was resolved that Mr. J.R.P. Partridge be appointed trustee of the deed. There appear to have been some proxies available at the meeting but the minutes do not record that these were used. The deed was eventually entered into on 5 November 1982. On 19 October 1983, over a year after the authority was signed, a further meeting of creditors was held. At that meeting, it was resolved that the deed of composition executed by Mr. Denning on 5 November 1983 be terminated as of the date of the meeting, as Mr. Denning was unable to comply with the provisions contained therein. A further resolution was that the debtor execute a deed of arrangement pursuant to Part X of the Bankruptcy Act; such deed to be reviewed on 29 February 1984. The detail of what the deed was to contain was specified. Pursuant to that resolution, a deed of arrangement dated 29 November 1983 was entered into by Mr. Denning.

2. In my opinion, there is no ground on which the validity of the deed of composition entered into on 5 November 1982 could be challenged. It is, accordingly, valid. Nor, in my opinion, can there be any challenge to the validity of the resolution passed at the meeting on 19 October 1983, that the deed of composition be terminated. That was something which the creditors plainly had power to do; I refer to s. 241 of the Bankruptcy Act.

3. The question arises, however, as to whether the deed of arrangement entered into on 29 November 1983 is valid. No further authority pursuant to s. 188 was given by Mr. Denning; over a year elapsed between the giving of the original authority and the holding of the second creditors' meeting. In my opinion, Part X does not authorise the entry by a debtor into a further deed of arrangement or composition after he has entered into one; nor does it authorize his entry into such a deed after the expiration of one month from the date of the giving of the authority. This is established by the decision of this Court in Pretorius v. Daltons Carpet Tiles Pty Limited (1984) 54 ALR 743. Accordingly, the deed of arrangement entered into on 29 November 1983, is invalid.

4. It follows that I should make declarations 1(a), 2(a) and 3(b) as asked in the application. I make those declarations accordingly. It is unnecessary to make any declaration in relation to paragraph 4 of the application.