Re Dodd, N. v Ex Parte Prudential Finance Ltd

[1990] FCA 776

Re: NEIL DODD
Ex Parte: PRUDENTIAL FINANCE LIMITED
No. NX 2 of 1990
FED No. 776

COURT

IN THE FEDERAL COURT OF AUSTRALIA

BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
GENERAL DIVISION
Einfeld J.(1)

HEARING

SYDNEY

#DATE 11:12:1990

JUDGE1

This is an application by Prudential Finance Limited for an order said to be under section 222(1) and (2) declaring a deed of composition presented to a meeting of creditors of the respondent on 25 January 1990 to be void. Subsection (2) of section 222 requires that the ground on which the invalidity is sought is to be specified in the application. This application does not specify any such ground but indicates that an affidavit of the solicitor for the applicant is to be used in the proceedings. In fact two affidavits of the solicitor for the applicant (Mr Quilter) were read together with an affidavit of a Mr Nielson.

1. The majority of the evidence set out in Mr Quilter's first affidavit of 28 August 1990 was inadmissible, as a solicitor should have known. In addition, virtually all of the second affidavit of 24 October 1990 was irrelevant as it related to a meeting which took place on a different occasion. Further, all except the formal parts of the affidavit of Mr Nielson was also struck out or not read on the grounds that it was not relevant. The remaining part of Mr Quilter's affidavit of 28 August which was read and admitted without objection contains an assertion of some events which are said to have taken place at the creditors' meeting on the relevant date, although the affidavit sets its date as 26 January in contradistinction to the application.

2. It is clear that Mr Quilter was not present at the creditors' meeting, and therefore, I must view the evidence admitted in the light of its hearsay character, apparently having been obtained from a Mr Peterson. Because of the fate of so much of the written evidence, Mr Peterson was permitted to give oral evidence. This established that he was present at the meeting for a short time but in other respects conflicts starkly with the affidavit material of Mr Quilter. For example, Mr Peterson says that the meeting was chaired by an accountant, Mr Kettlestring, whereas Mr Quilter's affidavit says that the chairman was a Mr Licardy. Mr Peterson says that he sought to participate on behalf of Prudential Finance but when the list of creditors was circulated and he saw that his company's name was not on the list, he left the meeting. Mr Quilter says that Mr Licardy ruled that Prudential Finance was not eligible to vote as its debt was unliquidated and contingent. Mr Peterson gives no such evidence.

3. Mr Quilter's affidavit annexes a statement of liquidated claim No 8843 of 1989 in the District Court at Sydney between this applicant and this respondent although there is a difference in the spelling of the first name of the respondent, and involves a company as a second defendant to those proceedings. In cross-examination Mr Peterson agreed that a defence has been filed to this statement of liquidated claim although I am not provided with a copy of that defence by the respondent who has produced no evidence to the court and has not given evidence. Mr Peterson was cross-examined to establish that a motion to strike out the defence was brought in the District Court and failed but he was not aware of what has happened to the proceedings except that it has possibly been transferred to the District Court at Queanbeyan.

4. Section 198 (2) of the Bankruptcy Act provides that a creditor is not entitled to vote at a meeting of creditors considering a composition inter alia in respect of an unliquidated or contingent debt or a debt the value of which is not ascertained.

5. There is no evidence as to what, if any, debt is owing to the applicant. There is also no evidence before the court of the amounts claimed by the other creditors present at the meeting. What evidence there was brought to establish these matters was inadmissible and rejected and Mr Peterson was unable to recall any significant details in his oral evidence. There is also no evidence that Prudential Finance Limited would have voted against the resolution for a composition. Nevertheless, it claims that it should have been allowed to vote at the meeting, and that if it had been allowed to vote, the amount owing to the applicant would have been such a large proportion of the total debts that Prudential's vote against the acceptance of the composition would have decided the matter against acceptance.

6. It is perfectly obvious that if the amount contained in the statement of liquidated claim in the District Court was admitted as the debt and the amount of the other debts were as alleged in the material which was inadmissible and struck out, Prudential would have had enough power to defeat the resolution. However, in view of the absence of evidence that Prudential would have voted against it and as Prudential's debt is also tainted by lack of proof, none of the required matters have been established by the party who carries the onus of establishing them.

7. Overall this matter has been left in a grossly unsatisfactory evidentiary state on both sides of the record, but I must confess to some specific dismay at the inadequate way in which this matter has been presented to the court by the applicant for relief. It has completely wasted everyone's time and both public and private funds, and has left me with no option in the circumstances but to dismiss the application on the grounds that no evidence has been brought to establish the matters required to support it.

8. The applicant will pay the respondent's costs of the application.