Re Schuppan, D.M. & Anor v Ex parte Daly, C.T

[1985] FCA 162

S CATCHWORDS

Bankruptcy - j o l n t Deed of Asslgnment under P a r t X - whether

deed vo ld - executed p u r s u a n t t o 3Olnt meeting Of l o l n t a n d

several creditors - w h e t h e r I n a c c o r d a n c e o r compllance w i t h

Part X - Deed n o t vold.

Bankruptcy A c t 1966

s s . 187A. 1 8 8 ( 1 ) , 2 2 2 ( 1 ) .

Acts I n t e r p r e t a t l o n Act 1 9 0 1

s . 2 3 ( b )

Case r e f e r r e d t o -

R e Fo rbes (1974) 24 F.L.R.

R e : D A V I D M . SCHUPPAN and BARBARA SCHUPPAN Ex parte CHRISTOPHER

THOMAS DALY

No. 4 of 1985 P a r t X

F o r s t e r , J.

24 Apr i l 1985

Ade la lde .

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIAN DISTRICT REGISTRY

GENERAL DIVISION

BANKRUPTCY DISTRICT	OF THE STATE	OF
SOUTH AUSTRALIA

NO. 4 Of 1985 PART X

RE : DAVID M. SCHUPPAN and BARBARA SCHUPPAN

EX PARTE: CHRISTOPHER THOMAS DALY

ORDER

Judge making order:	Forster , J .
Date order made:	2 4 Aprll, 1985
Where made:	Adelaide.

THE COURT ORDERS :

Declarlng that Deed of Asslgnment dated 19th February 1985

executed by the debtors is not vold.

..

I N THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIAN DISTRICT REGISTRY

GENERAL DIVISION

BANKRUPTCY DISTRICT OF THE STATE OF

SOUTH AUSTRALIA

No. 4 Of 1985 PART X

RE:	D A V I D M .	SCHUPPAN	and
-

BARBARA SCHUPPAN

Debtors

EX PARTE:

CHRISTOPHER THOMAS DALY

T r u s t e e

REASONS FOR JUDGMENT

CORAM: F o r s t e r , J .

DATED:	24	Apr i l ,	1985
T h l s	1s a n a p p l l c a t l o n b y t h e p u r p o r t e d t r u s t e e of

t h e es ta te of t h e d e b t o r s p u r s u a n t t o a Deed of Asslgnment made

on t h e 1 9 t h F e b r u a r y 1 9 8 5 . T h e a p p l l c a n t s e e k s an o r d e r t h a t

"The Deed of A s s l g n m e n t e x e c u t e d b y t h e d e b t o r s o n t h e 1 9 t h d a y

of February 1985 is void, or a l t e r n a t l v e l y , 1 s n o t v o l d , p u r s u a n t

t o s .222(1) o f The Bankruptcy A c t 1 9 6 6 (as amended) on the ground

t h a t t h e sald Deed w a s n o t e n t e r e d I n t o i n a c c o r d a n c e w l t h or

d o e s n o t c o m p l y w l t h t h e r e q u l r e m e n t s o f Par t X of t h e s a l d A c t " .

The d e b t o r s are husband and w l f e and were b u s m e s s

p a r t n e r s . A s t h e p a r t n e r s h l p w a s I n f m a n c i a l d i f f l c u l t l e s

t h e male d e b t o r on 26 J a n u a r y 1 9 8 5 c o n s u l t e d a M r Owen. an

employee of Coopers E, Lybrand, a l a r g e f i r m of a c c o u n t a n t s .

-2-

A s a r e s u l t on 28 J a n u a r y 1 9 8 5 t h e d e b t o r s e x e c u t e d a document

i n p u r p o r t e d p u r s u a n c e of s . 1 8 8 ( 1 ) of The Bankruptcy A c t . The

document w a s I n a c c o r d a n c e w i t h t h e p r e s c r l b e d f o r m e x c e p t t h a t

t h e p r e s c r l b e d form 1s approprlate f o r a d e b t o r , n o t a p p a r e n t l y

f o r l o l n t d e b t o r s . The form e x e c u t e d b y t h e d e b t o r s 1 s I n t h e

following form -

" I n p u r s u a n c e of s e c t l o n 188 of t h e B a n k r u p t c y A c t

1 9 6 6 , We, Davld Mark Schuppan and Barbara Schuppan,

P r o p r i e t o r s of 145 Lacey S t r e e t , W h y a l l a I n t h e

S t a t e of S o u t h A u s t r a l l a , h e r e b y a u t h o r l s e C h r i s t o p h e r

Thomas Daly, Char t e red Accoun tan t and Reg l s t e red

T r u s t e e of 385 Bourke S t r e e t , M e l b o u r n e I n t h e S t a t e

of V ic to r l a , t o c a l l a m e e t l n g of o u r l o l n t a n d

several credl tors for t h e p u r p o s e s of P a r t X of t h a t

A c t and t o t a k e o v e r c o n t r o l of o u r l o l n t a n d

several	p r o p e r t y i n a c c o r d a n c e w l t h t h a t	A c t .
S l g n e d b y	t h e s a l d D a v l d

Mark Schuppan and Barbara DAVID MARK SCHUPPAN

Schuppan t h l s 2 8 t h d a y of

J a n u a r y 1 9 8 5 I n t h e

presence of Rodney Gavln Owen BARBARA SCHUPPAN

R G OWEN

I , t h e s a i d C h r i s t o p h e r Thomas Daly, do h e r e b y

c o n s e n t t o exerclse t h e p o w e r s c o n f e r r e d on m e

by the abovenamed au tho r l ty .

S l g n e d b y t h e said C h r i s t o p h e r

Thomas Daly t h l s 2 8 t h d a y of CHRISTOPHER THOMAS DALY

January 1985 In t h e p r e s e n c e

of Rodney Gavin Owen

R G OWEN."

Mr Daly who 1 s a p a r t n e r i n C o o p e r s & Lybrand duly

c a l l e d a m e e t m g of c r e d l t o r s w h l c h w a s h e l d i n A d e l a l d e on 1 9 t h

February 1985. A t t h l s m e e t l n g t h e male d e b t o r t a b l e d Forms 11 -

Sta t emen t of A f f a l r s - o n e f o r h l m s e l f , o n e f o r t h e female d e b t o r

a n d o n e j o i n t s t a t e m e n t . I n d u e c o u r s e a r e s o l u t l o n w a s passed

-3-

"Tha t t h e d e b t o r s be and are h e r e b y r e q u l r e d t o e x e c u t e a J o l n t

a n d S e v e r a l Deed of Asslgnment wlthin t w e n t y o n e d a y s of t h e

d a t e of t h l s m e e t l n g I n p u r s u a n c e o f Part X of The Bankruptcy

- A c t 1966 , such Deed t o b e I n t h e form as prescrlbed by t h a t A c t . "

The d e b t o r s d u l y e x e c u t e d a Deed on t h e same d a y the

o p e r a t l v e p a r t s o f w h l c h were as f o l l o w s -

" ( a ) t h e d e b t o r s c o n v e y a n d ass lgn t o t h e T r u s t e e

a l l the l r ~ o l n t and several d l v l s l b l e p r o p e r t y

w l t h l n t h e m e a n l n g o f Par t X of the Bankruptcy

A c t 1966 UPON TRUST t o d e a l w i t h t h e same I n

a c c o r d a n c e w l t h P a r t X of t h a t A c t f o r the

b e n e f l t of t h e j o l n t and several c r e d l t o r s of

t h e d e b t o r s a n d as t o a n y s u r p l u s a f t e r p a y i n g

I n f u l l the -Joint and several debts and

l l a b i l i t l e s of t h e d e b t o r s p r o v e d u n d e r t h l s

Deed t o g e t h e r w l t h t h e c o s t s c h a r g e s a n d

e x p e n s e s of or i n c l d e n t a l t o the e x e c u t l o n o f

t h e t r u s t s o f t h i s Deed ( i n c l u d i n g t h e

r e m u n e r a t l o n a n d e x p e n s e s o f t h e T r u s t e e )

UPON TRUST fo r t h e d e b t o r s t he l r e x e c u t o r s

admmistrators or a s s i g n s ; a n d

( b ) the T r u s t e e accepts a p p o m t m e n t as t r u s t e e

of t h l s Deed and the conveyance and a s s lgnmen t

of t h e said p rope r ty upon the t r u s t s h e r e m b e f o r e

set o u t ."

The Deed of Assignment a n d the Forms 11 w e r e f l l e d

I n t h e r e g l s t r y on 25 February 1985. On 26 th Februa ry 1985 the

a c t l n g Reglstrar wrote t o Mr Daly s a y l n g t ha t m h l s o p l n l o n

b e c a u s e there w a s o n l y o n e m e e t l n g c a l l e d o f t he d e b t o r s ' j o i n t

and several c r e d l t o r s I n s t e a d o f separate meetlngs o f the

c r e d l t o r s of each d e b t o r t h e Deed of Asslgnment w a s v o l d . The

a c t i n g R e g i s t r a r r e f e r r e d t o the case of R e F o r b e s ( 1 9 7 4 ) 2 4

F.L.R. 87. The p r e s e n t p r o c e e d l n g s are t a k e n as a r e s u l t of

-4 -

t h e a c t l n g Reglstrar's e x p r e s s l o n o f o p i n i o n .

It s h o u l d b e n o t e d t ha t t h e t h r e e statements o f

a f fa i r s I h a v e m e n t l o n e d r e v e a l t h a t each o f t h e t w o d e b t o r s

has no separate p r o p e r t y o r assets a n d t h a t each has on ly one

separate unsecured credl tor and no separate s e c u r e d c r e d l t o r .

I n e a c h case Form 11 Part I1 s ta tes t h a t there is an unsecured

l l a b l l l t y of $ 2 , 5 0 0 t o t he Deputy Commlssloner of T a x a t l o n

b e l n g a n " e s t l m a t e o f l n c o m e tax owmg" . I t s h o u l d a l s o b e

n o t e d t h a t t h e D e p u t y C o m m i s s i o n e r of T a x a t l o n d l d n o t a t tend

t h e meet ing of c r e d l t o r s so t h a t a l l c r e d l t o r s who d i d a t t end

were j o i n t c r e d l t o r s a n d the r e s o l u t i o n whlch w a s passed w a s

t h a t o f c r e d l t o r s h a v l n g t h e	same	lnterest	a n d	I n n o c o n f l l c t
w l t h e a c h o t h e r .

I n R e Fo rbes Whlte J . o f t h e C o u r t o f I n s o l v e n c y

o f Sou th A u s t r a l i a d e c l d e d t h a t separate mee t ings of c r e d l t o r s

under P a r t X of the Bankruptcy A c t s h o u l d b e h e l d w i t h respect

t o -Joint d e b t o r s who are n o t p a r t n e r s a l t h o u g h t h o s e s e p a r a t e

m e e t m g s may b e h e l d c o n c u r r e n t l y .

R e Fo rbes w a s d e c l d e d I n 1 9 7 4 b e f o r e s . 1 8 7 A was

a d d e d t o The Bankruptcy A c t I n 1 9 8 0 . T h l s s e c t l o n 1 s as

f o l l o w s -

" 1 8 7 A ( 1 ) The p r o v l s l o n s o f th ls Pa r t a p p l y ,

s u b J e c t t o s u c h m o d l f l c a t l o n s a n d

a d a p t a t i o n s (If a n y ) as are p r e s c r i b e d

b y t h e r u l e s , I n re la t lon t o -joint

-5-

d e b t o r s , w h e t h e r p a r t n e r s o r n o t .

( 2 ) I n s u b - s e c t l o n ( l ) , ' m o d l f l c a t i o n '

l n c l u d e s t h e a d d i t l o n o r o m l s s l o n o f

a p r o v i s i o n o r t h e s u b s t l t u t l o n o f a

p r o v l s l o n f o r a n o t h e r p r o v l s i o n . "

Re Forbes 1 s i n a n y e v e n t d l s t l n g u l s h a b l e b e c a u s e t h e ] o m t

d e b t o r s i n t h a t case were n o t p a r t n e r s a n d t h e ~ u d g m e n t s u g g e s t s

tha t t h e r e s u l t m l g h t have b e e n d l f f e r e n t I f they had been.

S e c t l o n 1 8 8 g l v e s l e a v e t o "a d e b t o r " t o s l g n a n

a u t h o r l t y a u t h o r l s l n g a r e g i s t e r e d t ru s t ee t o c a l l a meet ing of

c r e d l t o r s . P u r s u a n t o s . 2 3 ( b ) o f t h e Acts I n t e r p r e t a t l o n A c t

1901-1984 "debtor" may be read as " d e b t o r s " u n l e s s t h e c o n t r a r y

l n t e n t i o n a p p e a r s . It seems t o m e t ha t r a t h e r t h a n a c o n t r a r y

l n t e n t l o n a p p e a r l n g t h e r e 1s a p o s l t i v e l n d l c a t l o n I n s . 1 8 7 A t h a t

" d e b t o r " I n S. 188 shou ld be read as " d e b t o r s " . If t h e

p r o v l s l o n s o f P a r t X are t o a p p l y t o ~ o l n t d e b t o r s whether

p a r t n e r s o r n o t t h e y mus t , I t h l n k , b e a b l e t o s l g n a ~ o l n t

a u t h o r l t y a u t h o r i s l n g a registered trustee t o c a l l a mee t ing

o f t h e l r j o l n t c r e d l t o r s (see Rule lOOE o f t h e B a n k r u p t c y R u l e s ) .

Where there are ~ o l n t and several deb t s o n e a u t h o r l t y is a d e q u a t e

t o p l a c e b o t h t he j o m t and separate estates of the d e b t o r s I n

t h e h a n d s of t h e t r u s t e e ( R e Davis ex parte Hammond (No. l ) ,

( 1 9 7 0 ) A.L.R. 8 3 8 ) .

I f , a t the mee t ing called b y t h e t r u s t e e , j o i n t a n d

separate c r e d i t o r s a t t e n d , a n d If t h e r e 1 s a c o m p o s l t l o n p r o p o s e d ,

t h e n it may be n e c e s s a r y f o r t h e c h a i r m a n of t h e m e e t i n g t o

o b t a l n the v iews of the v a r l o u s classes o f c r e d i t o r s b y sepatate

-6-

r e s o l u t i o n by e a c h class, t h u s a v o l d l n g t he d l f f i c u l t i e s a n d

p o t e n t l a l p r o b l e m s a d v e r t e d t o b y WhIte J . i n R e Forbes . I

d o n o t f i n d It necessary t o d e c i d e t h l s i n t h e p r e s e n t case.

The o n l y c r e d l t o r s p r e s e n t a t t h e m e e t m g w e r e ] o m t c r e d l t o r s

who p a s s e d u n a n m o u s l y t h e r e s o l u t i o n set o u t a b o v e . I n

r e s p o n s e t o t h e r e s o l u t i o n t h e d e b t o r s e n t e r e d I n t o t h e Deed

dated 1 9 February 1985.

I t seems t o me tha t the Deed Itself a n d t h e p r o c e d u r e s

a d o p t e d p r l o r t o I ts b e m g e x e c u t e d are i n a c c o r d a n c e w i t h t h e

p r o v l s l o n s of The Bankruptcy A c t and I t h e r e f o r e declare t h a t

t h e Deed o f Ass ignmen t execu ted by the deb to r s on the 1 9 t h d a y

of February 1985 1s n o t v o l d .