Re Foster; Ex parte Foster v Duus - [1994] FCA 185

Re: JOHN LEWIS FOSTER
Ex parte: JOHN LEWIS FOSTER and ROSS ANDREW DUUS
No. QB368 of 1993
FED No. 185/94
Number of pages - 8
Bankruptcy - Costs

COURT

IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND
GENERAL DIVISION
EINFELD J

CATCHWORDS

Bankruptcy - meeting of creditors - validity of resolution of creditors if bankrupt not present due to request of creditors - whether for the purpose of a quorum a creditor who does not vote is counted.

Costs - order against non-party

Words and Phrases - meaning of "resolution"

Bankruptcy Act ss 5(1), 64N(2), 77(c)

Knight v FP Special Assets Limited (1992) 174 CLR 178

Bent v Gough (1992) 36 FCR 204

Ex parte Best (1881) 18 Ch D 488

HEARING

BRISBANE, 8 March 1994
#DATE 14:4:1994, SYDNEY

Counsel and Solicitors for Mr Dunning instructed by
the Respondents: Mr I.R. Beale of Minter

Ellison Morris and Fletcher

Counsel and Solicitors for Mr Eleftheriou instructed by
the Applicant: Baker Johnson and Partners

ORDER

The Court orders that:
1. The application for the invalidation of the resolution of the

meeting of creditors held on 18 March 1993 be dismissed.

The trustee is to place before the court any affidavit evidence on

the issue of an order for costs against Mrs Foster by 4 pm Friday 18 March, together with the full written submissions that he wishes to make on the subject.

Mrs Foster may place any evidence or affidavit she wishes to have

the Court consider in this regard by 4 pm Friday 29 March together with the full submissions which she wishes to make.

Any evidence in reply to be filed and served by 4 pm Wednesday 30

March.

The submissions by the parties shall also include submissions in

relation to the bankrupt's application that the costs of Mr Bax's attendance should be paid by the trustee.

Note: Settlement and entry of orders are dealt with in accordance with Order 36 of the Federal Court Rules.

JUDGE1

EINFELD J The bankrupt was bankrupted on his own petition on 23 February 1993. Pursuant to a consent to act as trustees, Phillip Jefferson and Jay Stevenson became the trustees in bankruptcy.

Subsequently the bankrupt wished to leave Australia on an overseas journey of approximately three weeks commencing on 2 April 1993. It was the intention of the trustees to return his passport to him for that purpose, the circumstances of which are set out in a judgment of Justice Cooper on 1 April 1993, which I shall not repeat. It will suffice to say, as his Honour's judgment makes clear, that in the period leading up to his departure a deal of dispute erupted about whether the passport should be returned to him for the purpose stated. The circumstances as attested to by the evidence do not bring great credit upon any of the parties involved in the matter. But in the end his Honour ordered that the passport be returned for the particular purpose required, on…

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: [1994] FCA 185
Decision Date: 14 APRIL 1994

CaseChat Overview and Summary

In this case, the bankrupt, Mrs Foster, sought to invalidate a resolution of creditors that was passed in their meeting on 18 March 1993, on the basis that she was not present due to the creditors' request. The dispute was heard in the Federal Court of Australia. The central issue before the court was whether the resolution of the creditors' meeting was valid when the bankrupt was not present, specifically if a creditor who did not vote could be counted for the purpose of establishing a quorum. Additionally, the court had to determine if the resolution could stand when the bankrupt was absent due to the creditors' request.

The court examined the circumstances surrounding the meeting and the role of the creditors in requesting the bankrupt's absence. It was held that the resolution of the creditors' meeting was valid as the creditors had the right to request the bankrupt's absence. Furthermore, the court found that the presence of the bankrupt was not a prerequisite to establishing a quorum, and that a creditor who did not vote could still be counted towards the quorum. Consequently, the court dismissed Mrs Foster's application for the invalidation of the resolution of the creditors' meeting.

The court ordered that the application for the invalidation of the resolution of the meeting of creditors held on 18 March 1993 be dismissed. The trustee was instructed to place any affidavit evidence on the issue of an order for costs against Mrs Foster by a specified date, together with the full written submissions. Mrs Foster was given the opportunity to place any evidence or affidavit she wished to have the Court consider in this regard by another specified date, together with the full submissions. Any evidence in reply was to be filed and served by a further specified date. The submissions by the parties shall also include submissions in relation to the bankrupt's application that the costs of Mr Bax's attendance should be paid by the trustee. Settlement and entry of orders are dealt with in accordance with Order 36 of the Federal Court Rules.

Orders

Orders of the court

The Court orders that:

1. The application for the invalidation of the resolution of the

meeting of creditors held on 18 March 1993 be dismissed.

The trustee is to place before the court any affidavit evidence on

the issue of an order for costs against Mrs Foster by 4 pm Friday 18 March, together with the full written submissions that he wishes to make on the subject.

Mrs Foster may place any evidence or affidavit she wishes to have

the Court consider in this regard by 4 pm Friday 29 March together with the full submissions which she wishes to make.

Any evidence in reply to be filed and served by 4 pm Wednesday 30

March.

The submissions by the parties shall also include submissions in

relation to the bankrupt's application that the costs of Mr Bax's attendance should be paid by the trustee.

Note: Settlement and entry of orders are dealt with in accordance with Order 36 of the Federal Court Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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