Re Ronald Kevin Cash Ex parte Ronald Kevin Cash and Ivor Worrell Re Ronald Kevin Cash Ex parte Tilemakers Australia Pty Ltd

[1995] FCA 750

CATCHWORDS

BANKRUPTCY - Creditors' meeting - appointment of chairman - who may be appointed - whether an observer may be appointed - "participation" in meeting - conduct of meeting - debtor's proposal - whether meeting should be reconvened - sequestration order made

Bankruptcy Act 1966 ss 30, 63A(1), 64P(2), 188(1), 196

Bunnings Forest Products Pty Limited v Bullen & Ors (1994) 53 FCR 438 Refd

Re  Ronald Kevin Cash Ex parte The Abovenamed and Ivor Worrell
No QX 88 of 1995
Re Ronald Kevin Cash Ex parte Tilemakers Australia Pty Ltd
No QP 381 of 1995

Kiefel J  Brisbane 7 September 1995

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND  No. QX 88 of 1995

RE:RONALD KEVIN CASH

EX PARTE:THE ABOVENAMED

Applicant

AND:IVOR WORRELL

Respondent

JUDGE MAKING ORDER:        Kiefel J.

DATE OF ORDER:  7 September 1995

WHERE MADE:  Brisbane

MINUTES OF ORDERS

THE COURT ORDERS THAT:

1. The application of the debtor be dismissed.

NOTE:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND  No. QP 381 of 1995

RE:RONALD KEVIN CASH

Applicant

EX PARTE:TILEMAKERS AUSTRALIA PTY LTD

Respondent

JUDGE MAKING ORDER:        Kiefel J.

DATE OF ORDER:  7 September 1995

WHERE MADE:  Brisbane

MINUTES OF ORDERS

THE COURT ORDERS THAT:

1. The estate of Ronald Kevin Cash be sequestrated.

1. The petitioning creditor's costs of and incidental to the hearing on the petition and including reserved costs be taxed and paid as petitioning creditor's costs.

NOTE:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND  No. QX 88 of 1995

RE:RONALD KEVIN CASH

EX PARTE:THE ABOVENAMED

Applicant

AND:IVOR WORRELL

Respondent

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT
OF THE STATE OF QUEENSLAND  No. QP 381 of 1995

RE:RONALD KEVIN CASH

Applicant

EX PARTE:TILEMAKERS AUSTRALIA PTY LTD

Respondent

CORAM:  Kiefel J.

DATE:  7 September 1995

PLACE:  Brisbane

REASONS FOR JUDGMENT
  EX TEMPORE

The debtor applies pursuant to s.30 of the Bankruptcy Act 1966 for declarations concerning a meeting of creditors held on 18 July 1995 and for orders
requiring that meeting to be reconvened.  The power to grant the relief sought was not put in issue, and in view of the conclusions I have reached, it is not necessary for me to further consider it.  There were two limbs to the application:  firstly that the chair appointed by the meeting, Mr I. Worrell, a registered trustee, was not eligible for election and secondly that Mr Worrell conducted himself with an apparent bias against acceptance of the debtor's proposal and in a manner which denied the debtor an opportunity to properly present his proposal.

The debtor had earlier signed an authority under s.188(1) Bankruptcy Act authorising his solicitor, Mr Lippiatt, to call a meeting of his creditors. He proposed that a deed of assignment of his property be executed. That proposal, his statement of affairs, a circular and agenda were forwarded to his creditors. At the commencement of the meeting, Mr Lippiatt had a minute secretary appointed, and ascertained that Mr Worrell was present as an observer on behalf of unnamed creditors. That position was confirmed to me during the hearing by Mr Worrell's counsel who made it clear that Mr Worrell at no time held a proxy. Over Mr Lippiatt's objections, the meeting resolved to appoint Mr Worrell as chairman. An election of a person to chair the meeting is required under s.196 which provides that:

"The majority in number of the creditors present at the meeting in person, by attorney or by proxy shall elect a chairman to preside at the meeting."

It was submitted, however, that the person entitled to be elected need not be one of that class and might simply be an observer who, it was said, could be said to participate in the meeting. In this respect, reliance was placed upon s.64P(2) which
applies by force of rule 85A to a meeting held under Division 2 Pt 10 of the Act.  That sub-section provides:

"(2)Anyone participating in person in the meeting, whether or not a creditor or a proxy or attorney of a creditor, and including the trustee but not including the bankrupt, is eligible to be nominated for appointment, and may be elected, to preside at the meeting."

Without being referred to any discussion on sub-s.(2) I would have thought that the participation there spoken of was referrable to those persons entitled to take part by voting and, it would follow, to address the meeting though the chair namely, a creditor or a creditor's proxy or attorney.  They are the same persons identified later in the sub-section after the words "whether or not".  And it seems to me that it was sought by that phrase to confine the persons who are said to participate and are therefore eligible for nomination to those then described. It seemed a strange notion that anyone who happened in to the meeting might be eligible and it would be straining the meaning of "participation" to extend it to an onlooker.  Counsel were unable to refer me to any authority on the point.
The definition section to Division 5, s.63A(1) provides relevantly that:

"creditors and their representatives, in relation to a meeting, means:

(a)the creditors who are entitled to vote at the meeting and are participating in person or by telephone in the meeting;  and

(b)the persons participating in person or by telephone in the meeting as proxies or attorneys of any other creditors who are entitled to vote at the meeting."

This definition does say something about what is meant by "participation" and about those who are taken to participate in the manner referred to and supports the view
that it relates to the exercise of voting and associated rights.  There is no other provision to which I was referred which suggests that participation in a meeting refers to something other than the exercise of the right of voting.  This would include associated rights with respect to motions enquiries and discussion, subject to regulation of the meeting.  Similarly I was not referred to a provision which suggested that persons other than creditors, their proxies or attorneys are to be taken to participate in meetings of creditors.

Although Mr Worrell's election was, in my view, invalid it does not follow that the meeting must be reconvened, since his appointment might amount only to an irregularity in the proceedings.  It is not proposed that a second meeting be called.  Rather it is suggested that the purpose of the meeting held, to consider the debtor's proposal, has not been fulfilled and it ought to be considered therefore that the meeting has not concluded.  The difficulty for the creditor here however, is that the will of the creditors with respect to the proposal, the ascertainment of which is the better description of the purpose of the meeting, has been expressed:  see Bunnings Forest Products Pty Limited v. Bullen & Ors (1994) 53 FCR 438, 450 and the cases there cited.  I shall refer however to the conduct of the meeting by Mr Worrell so far as it emerges from the material. 

Mr Worrell called for a motion to accept the debtor's proposal, and none was forthcoming.  A motion that the debtor present his own petition was put and lost.  Whilst Mr Worrell held a proxy in favour of the chair, and to vote in favour of the debtor's
proposal, this did not oblige him to advise the meeting of this fact, and certainly did not require such a motion to be put by him. 

Somewhat differing accounts of Mr Worrell's demeanour are presented in the affidavit material, and I understand there to be a background of discord between he and Mr Lippiatt.  The minutes of the meeting disclose an apparently regularly conducted meeting, with questions asked by creditors of the debtor and answers given.  Mr Worrell's expression of opinion that the creditors' interests would be better served in a bankruptcy could not prevent the creditors forming their own view on the material that they already been provided with, and forwarded by the debtor's solicitor. 

Mr Lippiatt was at two points refused an opportunity to speak on behalf of the debtor, but there is nothing to suggest the debtor could not answer the questions which were put to him with respect to his own affairs, and there is no absolute right to speak through an adviser to such a meeting.  In one respect, Mr Worrell sought to restrict the debtor obtaining advice with respect to his interest in his father's estate which may have involved a legal question but, in any event, a creditor pressed for Mr Lippiatt to be permitted to answer it, and the chair appears to have relented. 

There is, I consider, no basis for holding that the meeting did not consider and make its intention with respect to the debtor's proposal plain.  It may be, as a letter from one creditor preceding in the meeting shows, that a view had been generated and formed regarding the debtor by some creditors, but they are entitled to discuss matters prior to any meeting.  The debtor may yet explain his dealings with property, and his proposals to the meeting and to its satisfaction.  I could detect no request by the debtor that he needed to and desired to elaborate further.  It is unfortunate that the chair was not properly appointed, and it was perhaps not predicted by the debtor and his advisers that this would occur.  The consequence of it will, however, be reflected in my consideration as to the question of costs. 

I do not propose to grant either Mr Worrell or the debtor their costs of this application.  Both were in error, and this application should not have been brought.  I would be inclined to allow the petitioning creditors' costs of it if it was not one of the creditors for whom Mr Worrell acted at the meeting.  I shall, however, at the conclusion of my Reasons hear counsel further as to the question of costs.  There is no basis then for an adjournment of the petition of the creditor, Tilemakers Australia Proprietary Limited.  In these circumstances, the debtor does not offer submissions.  I am satisfied that a sequestration order ought to be made. 

I certify that this and the preceding five pages are a true copy of the reasons for judgment herein of the Honourable Justice Kiefel.

Associate

Date:20 September 1995

Counsel for the applicant:  Mr P Hack

Solicitors for the applicant:  Lippiatt & Co

Counsel for the petitioning creditor:                  Mr P McQuade
Solicitors for the petitioning creditor:                Thompson King Connolly

Counsel for the respondent:  Mr M Martin

Solicitors for the respondent:  Baker Johnson

Date of Hearing:  25 August 1995

Place of Hearing:  Brisbane

Date of Judgment:  7 September 1995