Re Parker, P.I. & Anor v Ex parte Verge, E.R

[1994] FCA 267

PETER IAN PARKER and PHYLLIS PARKER
EX PARTE: EVAN ROBERT VERGE
No. 118 of 1990 X
FED No 267/94
Number of pages - 3
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA
GENERAL DIVISION
FRENCH J

CATCHWORDS

Bankruptcy - meeting of creditors under Part X of Bankruptcy Act 1966 - notices sent to creditors - Deed of Arrangement entered into - terms of Deed complied with - failure to advertise initial meeting of creditors - contravention of s.194(3) of the Bankruptcy Act 1966 - no complaints by creditors as to the non advertisement - creditors or debtors not disadvantaged by failure - contravention disregarded.

Bankruptcy Act 1966 s.140(3), s.188, s.194(3), s.194(4)

HEARING

PERTH, 27 April 1994
#DATE 28:4:1994

Mr E.R. Verge appeared on his own behalf.

ORDER

THE COURT ORDERS THAT:

It is hereby declared that the failure by the Registered Trustee to advertise the meeting of creditors held on 10 December 1990 as required by s.194(3) is to be disregarded for the purposes of s.194(4) of the Act.

NOTE: Settlement and Entry of Orders is dealt with in Rule 124 of the Bankruptcy Rules

JUDGE1

FRENCH J On 7 November 1990, Peter Ian Parker and Phyllis Parker signed an authority under s.188 of the Bankruptcy Act 1966 authorising Evan Robert Verge, a Registered Trustee in Bankruptcy, to call a meeting f their creditors for the purposes of Part X of that Act and to take control of their property in accordance with that Part. On 22 November 1990, Mr Verge caused a notice of a meeting of creditors to be sent by post to each person stated by the Parkers to be creditors. The meeting was fixed for 10 December 1990. On 10 December 1990, a meeting was held at the offices of Byfield Beavis and Co., South Perth and at the meeting it was resolved that the debtors execute a Deed of Arrangement. Minutes were prepared and lodged with the Registrar in Bankruptcy. On 19 December 1990, Mr Verge caused a notice inviting formal proof of debt or claim to be sent to creditors together with a form of proof of debt. On 27 December 1990, he caused a notice of execution of the Deed to be published in the West Australian newspaper. Under the terms of the Deed the Parkers were to contribute a minimum sum of $330 per month to their estate. Their creditors were to grant them an extension of time for the payment of their debts for a period of 30 months and such further or lesser period as the creditors might from time to time resolve. Any assets or properties acquired by them during the term of the agreement was to vest in the trustee and in the event of a default under the terms of the Deed, such assets or property was to be assigned for the benefit of the creditors. Upon payment of a minimum dividend distribution of 10 cents in the dollar on all provable debts both joint and separate or $12,000, whichever were the greater, the Deed would terminate. Upon the happening of that event, the Parkers were to be released from their provable debts and the trustee to reassign such property as remained then vested in him to the Parkers. At the meeting it was resolved that Mr Verge be appointed as trustee of the Deed of Arrangement for the purposes of administration as prescribed by the Bankruptcy Act 1966.

1. On 20 July 1993, Mr Verge advertised a notice to creditors of intention to declare a first and final dividend in the Business Gazette of the Australian Government Publishing Service in accordance with s.140(3) of the Bankruptcy Act. On 13 August 1993, he caused a Notice of Final Meeting for 2 September 1993 to be posted to all known creditors together with a report to creditors. On 2 September 1993, a first and final dividend of 10 cents in the dollar was declared and distributed to the creditors. On the same day a final meeting of creditors was held at which it was advised that the terms of the Deed of Arrangement had been complied with.

2. It appears that in calling the initial meeting of creditors in November 1990, Mr Verge failed to comply with the requirement of s.194(3) of the Bankruptcy Act 1966 that the meeting be advertised. Subsequently a dispute has arisen between himself and the Parkers as to the remuneration to which he is entitled. He now applies for an order pursuant to s.194(4) of the Bankruptcy Act that the contravention be disregarded. He indicates in his affidavit in support of the application that no creditor has made any complaint with regard to the non advertisement of the meeting held in December 1990, nor have any creditors other than those recorded in the Parkers' statements of affairs sought to prove their debts in the estate notwithstanding that the notice of execution of the deed was published in the West Australian newspaper on 27 December 1990. Mr Verge did not consider that any creditors or debtors have been disadvantaged by the failure to advertise the initial meeting. Copies of the application were served on the Parkers on 23 April 1994 at Mandurah. They did not appear on the hearing of this application.

3. Section 194 of the Bankruptcy Act 1966 provides that the controlling trustee calling a meeting of creditors in pursuance of an authority under s.188 shall give to each person who is stated by the debtor to be a creditor, and whose business or residential address is known to the trustee, notice of the meeting by delivering or sending by post to that person a notice in accordance with the prescribed form (s.194(2)). Section 194(3) provides:
   

"194(3) The controlling trustee or solicitor shall also cause notice of the calling of the meeting to be published, not less than 7 days before the meeting is held, in a newspaper circulating in the locality in which the meeting is to be held and in such other manner (if any) as is prescribed."

Section 194(4) provides for the consequences of contravention of the preceding provisions in the following terms:

"194(4) If subsection (2), (2A) or (3) is contravened, the meeting is incompetent to act for the purposes of this Part unless the Court, on the application of a creditor or of the controlling trustee or solicitor who called the meeting, declares that the contravention is to be disregarded."

1. The primary question of construction is whether an order can be made under s.194(4) after the holding of the meeting in issue. A second question is whether such an order may be made after the termination of the relevant deed of arrangement. In my opinion both questions can be answered in the affirmative. That construction is open, although not mandated by the language of the sub-section. However, it is a construction which serves the purpose of the sub-section. The Court is given a broad discretion to, in effect, avoid the invalidating operation of a contravention of s.194. Where such a contravention is unlikely to have caused prejudice to any party and where the invalidation of the meeting would result in substantial inconvenience to persons involved, a case can be made for the exercise of that discretion.

2. I am satisfied in the circumstances of this case that it is appropriate to make the declaration that the contravention is to be disregarded. The fact of the execution of the Deed was published in the newspaper on 27 December 1990 and subsequent notice to creditors of intention to declare dividend was also published in the Gazette in 1993. The fact of the advertisement in the West Australian on 27 December 1990, and the absence of complaint from any creditor subsequently about the matter, suggests that those with an interest in the execution of the Deed were adequately notified by the process of direct notification to creditors identified by the debtors. It would plainly be most inconvenient at this time to, as it were, unravel the settlement that was achieved as a result of the meeting and I am prepared to make the orders sought.