Re Ringuet, R.F. v Ex parte Knight, D.W
[1986] FCA 236
•10 JUNE 1986
Re: RONALD FRANCIS RINGUET and JEANETTE MARY RINGUET
Ex Parte: DESMOND WILLIAM KNIGHT
No. QLD Part X No.26 of 1986 and QLD Part X No.92 of 1986
Bankruptcy
COURT
IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Spender J.
CATCHWORDS
Bankruptcy - part X arrangement - Meeting of creditors held before time prescribed by s.194(1)(a) - Whether Court has power to abridge time.
Bankruptcy - Meeting of creditors - Purported Special Resolution in respect of two debtors - Desirability of having separate resolutions proposed in respect of each debtor - Appropriate procedure for Chairman to determine whether special resolution passed.
Bankruptcy Act, 1966.
Re Gowing (1985) 61 ALR 186
Re Segal (1976) 9 ALR 154.
HEARING
BRISBANE
#DATE 10:6:1986
Applicants: Mr. G.J. Robinson instructed by Justin F. O'Sullivan & Edgar.
Respondent: Mr. G.J. Gibson instructed by Wonderley & Hall.
ORDER
1. that the time provided under s.194(1)(b) be abridged to five days in respect of the debtor JEANETTE MARY RINGUET.
THE COURT DECLARES:
2. that the Deed of Assignment executed by RONALD FRANCIS RINGUET on 26 March 1986 is not void;
3. that the Deed of Assignment executed by JEANETTE MARY RINGUET on 5 April 1986 is not void.
4. that the costs of the Trustee be his costs in the respective administrations; otherwise there be no order as to costs.
Note: Settlement and entry of orders is dealt with by Order 36 of the Federal Court Rules
JUDGE1
These are applications by a trustee pursuant to s.222 of the Bankruptcy Act 1966 seeking the determination of whether a Deed of Assignment entered into by Ronald Francis Ringuet on 26 March 1986 is void and whether a Deed of Assignment executed by Jeanette Mary Ringuet on 5 April 1986 is void.
In Mrs. Ringuet's case, the application to the Court sought an abridgment to 5 days of the time provided in s.194(1)(b), which provides that the meeting of creditors called pursuant to a s.188 authority be held not earlier than 14 days after the notices to creditors are delivered or posted.
In respect of each debtor, the trustee sought declarations that the deeds were not void on the grounds:-
(i) that the Chairman of the meeting of the creditors held 26 March 1986 was entitled to conduct a poll of all creditors present of the motion 'that deeds of assignment be required to be executed by Mr and Mrs Ringuet' notwithstanding that previously only some such creditors had responded to the said motion by a show of hands.
(ii) that the said Chairman was entitled to put the said motion in respect of both debtors RONALD FRANCIS RINGUET AND JEANETTE MARY RINGUET.
(iii) that Mr. Schirmer was absent from the meeting for part of the period over which the vote in respect of the said motion was being taken.
(iv) that the proxy from Olsen & Co. was not attested.
On 9 January 1986, Ronald Francis Ringuet authorised Mr. Knight, who was registered as a trustee under the provisions of the Bankruptcy Act, to take control of his property pursuant to s.188(1) of the Act. Mr. Knight caused a meeting of creditors of Mr. Ringuet to be held on 6 February 1986, as well as a meeting of creditors of Norman Ceamon Patch and June Lesley Patch, whose position was substantially the same as that of Mr. Ringuet. The meeting was on that day adjourned to 26 March 1986.
Prior to the meeting of creditors on 26 March 1986, Mr. Knight sought instructions and received advice as to the prospects of having a registered mortgage granted by Mr. & Mrs. Ringuet in favour of the owners of a business, T.F.D. Joinery, set aside. He was advised that there were strong prospects of having the security set aside in the event of Mr. Ringuet and Mrs. Ringuet executing Deeds of Assignment prior to the expiration of the six months relation back period, which relation back period expired on 11 April 1986. On 14 March 1986, Mrs. Ringuet signed an authority appointing Mr. Knight controlling trustee of her estate and authorising him to call a meeting of creditors and he caused a meeting of Mrs. Ringuet's creditors to be held at 2 p.m. on 26 March 1986, the time and place of that meeting being selected to coincide with the meeting of the creditors of Mr. Ringuet.
The desire to have the meeting of the creditors of Mrs. Ringuet at the same time as the meeting of creditors of Mr. Ringuet, in the light of the advice Mr. Knight had received, is the explanation for the facts that her meeting was held earlier than the 14 days specified in s.194(1)(b).
At the contemporaneous meetings on 26 March, Mr. Knight was first elected chairman of the meeting for Jeanette Mary Ringuet. A resolution -
"that the time and place for the meeting of Jeanette Mary Ringuet was convenient to the majority in number of creditors present in person, by proxy or by attorney"
was carried unanimously.
There were sensible and practical reasons for the creditors of Mrs. Ringuet to wish to consider her position at the same time as her husband's was being considered and, if it is possible pursuant to s.33(1)(c) of the Act to abridge the time limited under s.194(1)(b), the Court should so abridge the time. Counsel for the respondent to this application, T.F.D. Joinery Works, did not suggest any prejudice to his client would be caused by following that course and, in fact, the motion previously referred to was carried unanimously.
In Re Gowing (1985) 61 ALR 186, Beaumont J. held that there was power to extend the time by which the meeting of creditors should be held pursuant to s.194 of the Act, after that time had expired. His Honour reached that view on a consideration of s.33(1)(c) of the Act, which provides:-
"The Court may -
...
(c) extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with the requirements of a bankruptcy notice), for doing an act or thing or abridge any such time."
No basis exists, in my opinion, for distinguishing the requirement under s.194 that that meeting of creditors be held not later than 28 days after the signing of a s.188 authority, from the requirement that the meeting be held not earlier than 14 days after the notices to creditors are delivered or sent by post.
Following the judgment of Beaumont J., I conclude that there is power under s.33(1)(c) for the Court to make an order abridging the time between when notice to creditors is delivered or posted and the holding of the creditor's meeting. In the circumstance of this case adverted to above, I so order.
At the contemporaneous meetings on 26 March 1986, Mr. Knight tabled the proxies for all debtors and advised the meeting that they were available for inspection. No inspection took place. The minutes later record that -
"The Chairman advised the meetings that each creditor present, in person, by proxy or by attorney had supplied particulars of his debt, and these particulars would be admitted for the purposes of voting at the meetings."
While I will later deal with the resolution passed at the meeting covering Mr. and Mrs. Ringuet, Mr. Michael Clinch, who had attended the meeting as legal advisor to T.F.D. Joinery Works, says in an affidavit:-
"After the resolution was passed concerning Mr. & Mrs. Ringuet I had the opportunity of perusing the proxies which were lodged and I noticed that the proxie (sic) lodged by Olsen & Co. of Dalby although executed under seal was not witnessed. I understand that the amount of debt owed to Olsen & Co. is approximately $28,000.00."
The question of the validity of the proxy from Olsen and Co. was not raised at the meeting and, indeed as far as I can see, appears in the material for the first time in Mr. Clinch's affidavit which was filed in court at the hearing of the application by leave.
Section 201 of the Act provides, inter alia, that any question of the right of a person to vote shall be determined by the chairman. This is no suggestion that Olsen and Co. were not creditors of Mr. and Mrs. Ringuet in the sum of $28,000. Section 200(1) provides that "A creditor may vote either in person or by his attorney or by a proxy appointed in writing by the creditor or his attorney", and by s.200(3), "A person claiming to be the proxy of a creditor is not entitled to vote as a proxy ... unless the instrument by which he is appointed has been lodged with the chairman".
Rule 100 of the Bankruptcy Rules provides that a person may appoint another to vote as his proxy at a meeting for the purposes of the Act by signing and delivering to that other person an instrument in Form 43, or by causing a telegram in accordance with Form 44 to be transmitted to the chairman.
Form 43 makes provision for the form to be signed by a witness; no such requirement of course applies in a telegram to the chairman.
There can be no doubting the intention of the parties. Even if it be competent to raise the want of attestation at this time, a point which is not necessary to determine, any such omission was clearly by inadvertence, and has caused no prejudice and I would, in any event, regard the matter as a formal defect or irregularity under s.306(1) of the Act.
It is noted that, if any question of the entitlement of a person to vote as proxy for Olsen and Co. had been raised at the meeting, the chairman would have had power to determine the matter under s.201 and, if necessary, to adjourn the meeting for up to 14 days to investigate the matter.
Concerning the two principal grounds on which it is said that the deeds should be declared void, those numbered (i) and (ii), I accept that what occurred at the meeting is fairly reflected in the minutes. A resolution was proposed and seconded that Mr. and Mrs. Patch enter Deeds of Arrangement. The minutes then record:-
"Chairman then asks meeting if they require secret ballot or show of hands for voting purposes.
Mr. Stewart: Show of hands sufficient.
Chairman: I'll put the motion to a vote.
Hands are raised to gain an indication of voting intention.
Chairman: I cannot determine on this show of hands whether or not a special resolution has been carried. Therefore your name will be called and you will tell me of your vote either for or against and I will record the dollar value of your vote.
Voting counted by the Chairman and Mr. Looney was as follows:"
and a schedule is there set out showing a total of $124,870.94 for the motion and $55,129.50 against the motion. The minutes continue:
"Chairman: Declares motion passed in number lost on value 69% for motion not 75%."
Then, dealing with the position of Mr. and Mrs. Ringuet, the minutes continue:
"Chairman: Is there a motion in respect of Deeds of Assignment for R.F. Ringuet & J.M. Ringuet please? Moved: Mr. Huggett 'That Deeds of Assignment be required to be executed by Mr. & Mrs. Ringuet.' Seconded: Mr. McKay.
Chairman asks meeting if they require secret ballot or show of hands.
Mr. Huggett: As before will do.
Chairman asks for those in favour to raise their hands.
At this point 4 raise hands.
Chairman asks for those against. At this point 1 person raises hand.
Since the chairman could not determine whether or not a special resolution was carried, he asked Mr. Looney to conduct the ballot in the same manner as previously."
Later, the Chairman said, after an indication by one person, Mr. Robinson, that he was confused:
"Chairman: The proposal you are being asked to vote on is for Deeds of Assignment for Ronald Francis Ringuet and Jeanette Mary Ringuet.
Does everyone understand this proposal.
Mr. Smith objected to another vote being taken. The meeting has already voted you cannot vote again.
Chairman ruled that the vote had not been completed and directed to count votes by calling out a creditor's name and asking how that creditor votes on the motion. The chairman asked all of those who wanted to vote to raise their hand and not lower until vote taken because of the apparent confusion."
And the minutes record that twenty creditors in number and $146,349.28 = 82% in value voted for the motion and 1 person, of value $32,510.88 against the motion. The minutes then record:
"Chairman declares a special resolution on Deeds of Assignment for Ronald Francis Ringuet & Jeanette Mary Ringuet carried 82% in value and in number."
The submission for T.J.D. Joinery Works is that the vote on the resolution was concluded by a show of hands and it is not competent to have a second vote on the same motion. I accept that, if a resolution on any of the options given to a meeting of creditors under s.204 of the Act is determined either favourably or unfavourably, it is not competent to put that resolution again, either at that meeting or any adjournment of that meeting. I also accept that when the sense of the meeting has been ascertained in respect of a resolution, it is not possible to adjourn the meeting. These conclusions accord with Re Henry Ratcliffe; Ex parte Till 1875 LR 10 ChApp 631, and with the approach of the Full Court in Pretorius v. Daltons Carpet Tiles Pty.Ltd. (1984) 54 ALR 743, and with the view of Pincus J. in Appleton v. A.R.C. Engineering Pty.Ltd. (unreported, 26 April 1985).
Whether there was a concluded vote on the resolution concerning the Ringuets by the show of hands is a matter of fact. The question here is simply whether, in the circumstances that occurred at the meeting, the motion had been determined.
In my opinion, this is not a case where the proposal for Deeds of Arrangement was dealt with piecemeal, first by way of numbers of creditors and then by way of value. That was the situation in Re Segal (1976) 9 ALR 154, where Riley J. held at 159:-
"In my opinion a special resolution means a resolution passed, on a single motion, by a majority which constitutes simultaneously not only the requisite majority in number but also the requisite majority in value. I think it wrong to do as was done here and put the proposed resolution twice - for the first time to see whether there is the necessary majority in number and (if there is) for the second time to see whether there is the necessary majority in value - and at the end to declare that it was passed by the requisite majority both in number and in value."
A unanimous show of hands one way or the other would have concluded the matter, in that the sense of the meeting at that time would have been established. While it is quite arguable that what ought to have occurred was the determination of the value of those showing their hands in favour of the resolution, and the determination of the value of the creditor whose hand was raised against the motion, that did not occur. As the minutes reveal, there was a deal of confusion, at least so far as some of the creditors were concerned, as to what precisely was going on.
Of the duty of a chairman of a meeting, Uthwatt J. in The Second Consolidated Trust, Ltd. v. Ceylon Amalgamated Tea & Rubber Estates, Ltd. (1943) 2 All ER 567 said at p 569:-
"The duty of a chairman of a meeting is to ascertain the sense of the meeting upon any resolution properly coming before the meeting. Then comes the question as to his position in regard to his right to demand a poll. Upon a fair construction of this deed, I do not regard that as a personal right to be exercised according to the fancy of the chairman; in other words, I do not think he has an unlimited discretion as to the manner in which he may exercise that power. It appears to me that the power to demand a poll is a power possessed by the chairman which is to be exercised or not to be exercised according to his decision whether it is necessary to exercise the power in order to ascertain the sense of the meeting upon the matter before them; in other words, it is a power directed towards enabling him to carry on the meeting for the purpose for which it is convened."
And later on the same page:-
"In those circumstances, it seems to me that the chairman in this particular case in deciding not to demand a poll never had his mind directed to the real point which he should have considered before coming to a decision. That point was how best to ascertain the sense of the meeting."
While I concede that, on the show of hands, it might have been possible to determine the sense of the meeting, in fact the sense of the meeting was not determined in that way. After the show of hands, without further enquiry, no one could know whether that indication was sufficient or insufficient to carry the resolution. I am of the opinion that it was open to the chairman to proceed as he did, and the vote formally recorded in the minutes, both as to value and number, is properly to be regarded as the determination of the resolution concerning the Ringuets.
The holding of contemporaneous meetings, while no doubt convenient, should not camouflage the fact that options given to a meeting of creditors of a particular debtor are by s.204 for the creditors of that particular debtor to determine. Even in the case of debtors whose only debts are joint debts (which was not the case here), there may be creditors who, for one reason or another, may be in favour of one course in respect of one of the joint debtors and in favour of a different course in respect of the other joint debtor. In my opinion, a resolution in terms similar to that moved concerning Mr. and Mrs. Ringuet should not be entertained where the meetings of creditors of different debtors are held contemporaneously.
Mr. Knight swears that, in fact, the creditors who voted on the resolution were each creditors of both Mrs. Ringuet and Mr. Ringuet and that the debt owed to each creditor by Mr. Ringuet was equal to the debt owed by Mrs. Ringuet. It follows that each person was entitled to vote, and that vote had the same value in respect of whether Mr. Ringuet should execute a deed of assignment, and in respect of whether Mrs. Ringuet should execute a deed of assignment. Mr. Knight certified in Form 36 that a special resolution in respect of Ronald Francis Ringuet and Jeanette Mary Ringuet had been duly passed.
I am of the opinion that, in these circumstances, the deeds should not on this ground be declared void.
As to the allegation that Mr. Schirmer, who held proxies from four creditors totalling approximately $30,000, it must be said that it also was raised for the first time at the hearing of this application by Mr. Clinch's affidavit. While this aspect was not rigorously pursued by evidence, probably for that very reason, the case for the trustee was that Mr. Schirmer had voted on the motion concerning the Ringuets prior to leaving the room to go to the telephone, and minutes detail that Mr. Schirmer, in respect of each of the four creditors for whom he was proxy, voted for the motion. On the material, I am not prepared to find that the ground based on Mr. Schirmer's alleged absence is made out.
Accordingly I order:-
1. that the time provided under s.194(1)(b) be abridged to
five days in respect of the debtor JEANETTE MARY RINGUET;
that the Deed of Assignment executed by RONALD FRANCIS
RINGUET on 26 March 1986 is not void;
that the Deed of Assignment executed by JEANETTE MARY
RINGUET on 5 April 1986 is not void.
I shall hear the parties in relation to costs.
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