Re: Mrs Genness Helenea King

[1993] FCA 1072

1072, 9 3

JUDGMENT NQ. ........ .... ,..,., ...... -,

I N THE FEDERAL COURT OF AUSTRALIA )

GENERAL D I V I S I O N	1	No.	NW 3128 of 1992
BANKRUPTCY DISTRICT OF THE STATE ) OF NEW SOUTH W a E S 1

RE:	MRS	GENNESS	HELENEA
KING
Debtor

C O W :	WILCOX J
PLACE :	SYDNEY
DATE :	16 DECEMJ3ER 1993

EXTEMPOFfE REASONS FOR JUDGMENT

WILCOX J: I have reached the conclusion that I should approve

the deed. It is a decision that I wish I did not have to make, without the benefit of having the view of the creditors; and, in particular, the creditors who are not potential defendants in the proposed actions, the subject of the deed of assignment. Normally, I would adjourn an application such as this so that creditors' views could be canvassed, either formally or informally. I would then have the benefit of their view.

the critical witness in any proceedings instituted by Mr

really is quite a dominating matter, is that it is clear that

Cottrell pursuant to the deed of assignment will be the bankrupt, Mrs King. That seems to be common ground; indeed, Mr Williams hazards the speculation that she may be the only witness. I have a medical certificate, dated today and issued by Dr Shada Patel, which states that Mrs King had a full mastectomy in August of this year and that the hysto-pathology showed infiltrating ductal carcinoma with lymph nodes involvement. Mrs King has been undergoing chemotherapy. Dr Patel's view is as follows:

However, there are two factors which cause me to
think I should not take that course. The first factor, and it

"I feel any court action pending should be

expedited as a special case in view of the medical history. Mrs King has been under a lot of stress since the earlier diagnosis of cancer and any further delay in court hearing adds to the stress".

I take two things from that certificate: first, that in Dr Patel's view, the prognosis is not a favourable one; and, secondly, that stress is likely to exacerbate Mrs King's illness. Consequently, if there is any question of her giving evidence, the sooner that is over the better. It is,

of course, entirely a matter for Mxs King whether it is in her	interest to be involved in court proceedings in view of her
illness. That is a matter to which she has no doubt given thought. I do not presume to express any view about it. But I gather that she has made the decision that, despite her medical history, she does not wish to drop the claims that she believes she justifiably has against the National Bank of Australia and the Bank of Singapore. She is entitled to make that decision. Nonetheless, the fact is that her medical prognosis is unfavourable. Of course doctors can be wrong in these things. I very much hope that Dr Pate1 is being too gloomy, and that in fact there will turn out to be no problem; but I can only act on the material that I have. It seems to me that, if there is to be any prospect of an action against the two banks being pursued with the benefit of Mrs King's evidence, the sooner that action is instituted the better. The action cannot be instituted by Mr Cottrell until the deed of assignment is executed and that requires the prior approval of either the creditors or the court. It really is not possible, speaking practically, to have a meeting of creditors before about the end of January. Even then, if it was a formal meeting of creditors with the two potential defendants voting, it would seem a foregone conclusion that the proposal would be defeated. The two banks have the overwhelming weight of the debts, according to the statement of affairs provided by Mrs King to the Official Trustee.
The second matter that influences me is something I made by the bank, and which is the practical alternative to have discussed with counsel: that, in any event, the offer
approval of the deed of assignment, does not yield the creditors a very large dividend. It is impossible to be precise about this, because I really have no idea about the extent of any deficiency which may exist between the debts conceded by Mrs King to be owing to the two banks - and which come, in round terms, to about $4.5 million - and the value of the securities that they hold. However, it seems a reasonable supposition that there will be some deficiency. The creditors other than the banks, according to the statement of affairs (and once again I emphasise that this may or may not be correct), amount to about half a million dollars. So far as I can see, there are no assets of the estate other than whatever is realised on this assignment or on the settlement, as the case may be. If the offer of settlement was accepted, the sum paid ($54,000) would have to be applied first to the cost of administration, before any dividend was declared. I think it is obvious that in such a case any dividend would be a token one only, perhaps one or two cents in the dollar. It is true that, if the $54,000 offer is refused and it turns out that all that the estate recovers is the $10,000 paid by Mr Cottrell, the estate is worse off to the extent of $44,000. This may mean that, instead of a token dividend, there is no dividend whatever. But, on the other hand, there is at least a chance that the arrangement will yield a greater sum of money, because of the term of the deed for Mr Cottrell to pay 10 per cent of any proceeds to the estate. The claim runs
into some millions of dollars. I make no comment whatever
about realism of this figure. The only conclusion I am expressing is that there is really not much being lost by the creditors in not accepting the offer now made by the bank.
Under the circumstances pertaining to Mrs King's health, I think that, in the practical sense, I am forced to make the decision as to what is the most advantageous course

for the creditors to take. My feeling is that the better course is for them to accept the proposal of Mr Cottrell. I agree with Mr Williams that minds might differ on this. It may be that my assessment will not be shared by the creditors; if so, that is unfortunate, but I can only determine the matter as I see it. On the ;hole I think that the appropriate course is to approve the deed. Accordingly, I make an order in accordance with para 1 of the application filed on 3 December 1993.

I certify that this and the preceding four (4) pages
are a true copy of the Reasons for Judgment

of the Honourable Justice Wilcox.

Associate:  Q W

Dated:  16 December 1993

APPEARANCES

Solicitors for the Debtor:	Remington & CO
Counsel for the Trustee:	R Turnbull
Solicitors for the Trustee:	Abbott Tout
Counsel for the National
Bank of Australia:	D L Williams
Solicitors for the National
Bank of Australia:	Dibbs Crowther & Osborne
Date of hearing:	16 December 1993