Re Scrivener, B.J. & Ors v Ex parte Scrivener, J.Y

[1987] FCA 660

I N THE FEDERAL COURT NOT INTENDED FOR GENERAL DISTRIBUTION

A U S T R A L I A	O F	1
D I V I S I O N	G E N E R A L	1

B A N K R U P T C Y D I S T R I C T 1

OF	S T A T E	O F	T H E	1
WESTERN	AUSTRALIA	)	NO.	327 OF 1 9 8 7

R E :  B R I A N J O H N S C R I V E N E R and

J E A N E T T E	YVONNE	SCr7fVENER
f o r m e r l y	k n o w n	a s FLANNERY

B a n k r u p t s

EX P A R T E : J E A N E T T E YVONNE S C R I V E N E R

formerly k n o w n a s FLANNERY

A p p l i c a n t

MINUTE OF ORDER

J U D G E M AKING ORDER: F ENCH J .

DATE OF ORDER:  23 NOVEMBER 1987

WHERE MADE: PERTH

THE	COURT	ORDERS	THAT:
1.	The compositlon	i n t e r m s of	t h e r e so lu t ion passed a t t h e

c red i tors ' m e e t i n g h e l d o n 7 O c t o b e r 1987 is approved.

2 . The bankrup tcy is a n n u l l e d .

N o t e :  Se t t lement and e n t r y of orders is d e a l t w i t h i n

R u l e 124 of t h e B a n k r u p t c y R u l e s .

L .

The b a c k g r o u n d h i s t o r y a s o u t l i n e d i n t h e O f C l c i a l

T r u s t e e ‘ s report , i n d i c a t e s t h a t when they became bankrup t Mr and

Mrs S c r l v e n e r were aged 3 3 a n d 27 y e a r s r e s p e c t i v e l y a n d h a d two

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d e p e n d e n t children, aged 5 and 2.

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I n J u l y 1 9 8 2 Mr S c r i v e n e r h a d b e e n d i s c h a r g e d f r o m t h e

RAAF and galned employment wlth Greyhound Coaches a s a n i n t e r s t a t e

c o a c h d r i v e r . From t h e n u n t i l N o v e m b e r 1 9 8 4 h e h e l d v a r i o u s

p o s i t i o n s a s a n employee. Mrs S c r l v e n e r was employed a s a d e n t a l

n u r s e u n t i l J u l y 1 9 8 3 .

I n December 1984 t he Sc r lvene r s pu rchased a h o u s e i n

M e r r e d i n f o r $ 3 0 , 0 0 0 secu red by mor tgage i n f a v o u r of t he Defence

S e r v i c e	Homes	C o r p o r a t i o n .	I n	1 9 8 5	t h e y	o b t a i n e d	a	p e r s o n a l	o a n
o f	$ 1 1 , 2 8 0	t o	consol ida te	e x i s t i n g d e b t s	a n d	t o	p u r c h a s e	a	Sunuki

motor b i k e . W i t h a v i e w t o commencing a b u s i n e s s a s c a r t a g e

c o n t r a c t o r s t h e y b o u g h t a 1 9 7 9 K e n w o r t h K124 prime mover i n

F e b r u a r y	1 9 8 6	u n d e r	a	l e a s e	a g r e e m e n t	w i t h	Esanda	F inance
C o r p o r a t i o n	L i m i t e d	f o r	t o t a l	r e p a y m e n t s	o f	$ 9 5 , 1 2 8 .	T h e s e	were

t o be made by i n s t a l m e n t s of $1 ,606 .83 pe r m o n t h o v e r a p e r i o d of

f o u r y e a r s w i t h a r e s l d u a l v a l u e of $18,000. They were s e c u r e d by

a s e c o n d m o r t g a g e o v e r t h e l r h o u s e .

T h e S c r i v e n e r s b e g a n o p e r a t i n g t h e i r new b u s i n e s s i n

p a r t n e r s h i p	t o g e t h e r .	However,	t h e	pr ime	mover	which	t ey	had
p u r c h a s e d	b r o k e	down	o n	n u m e r o u s	o c c a s i o n s	a n d	t h e	r e p a i r s

r e q u i r e d r e s u l t e d i n l o s s of e a r n i n g s w h i c h l e f t i n s u f f i c i e n t

income to meet t h e lease repayments .

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I	1
!	3 .

'The problem w i t h t h e prlme mover is the p r l n ~ i i p a l c d u s e

j t o w h i c h Mrs S c r l v e n e r a t t r i b u t e s t h e b a n k r u p t c y . I t i s a l s o

a c c e p t e d a s s u c h b y t h e O f f i c i a l R e c e i v e r .

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I	I n	Augus t	1986	the	Scr lveners	a l l o w e d	a n o t h e r	p e r s o n	t o
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o p e r a t e t h e t r u c k o n t h e u n d e r s t a n d l n g t h a t h e w o u l d meet t h e

c o s t s a n d lease repaymen t s . M r S c r i v e n e r o b t a l n e d e m p l o y m e n t as a

t r u c k d r i v e r w i t h a f i r m i n Merredin . However the , payments were

n o t kep t up and i n September 1986 the t r u c k was reposses sed and

sold for $ 4 5 , 0 0 0 , l e a v i n g a n a f t e r - s a l e d e f i c l e n c y u n d e r t h e terms

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o f t h e lease o f $ 3 5 , 6 6 4 .

I n F e b r u a r y 1 9 8 7 t h e y m o v e d o u t o f t h e i r Merredin

p r o p e r t y a n d r e n t e d l t , u s i n g t h e r e n t a l i n c o m e t o p a y f o r

accommodat ion I n B u s s e l t o n . M r Scr lvener was employed i n v a r i o u s

pos i t i ons be tween Augus t 1986 and Nay 1 9 8 7 b u t t h e y were u n a b l e t o

:  meet t h e i r c o m m i t m e n t s a n d d e c i d e d t o f i l e t h e i r p e t i t i o n i n

b a n k r u p t c y .

O n 21 June Mr S c r i v e n e r d i e d a n d h l s widow h a s c o n t i n u e d

I l o o k i n g a f t e r t h e l r c h i l d r e n .

O n 7 O c t o b e r 1 9 8 7 , a g e n e r a l m e e t i n g o f creditors was

c o n v e n e d t o c o n s i d e r a p r o p o s a l f o r a compos i t ion wh ich , a s p u t a t

t h e m e e t i n g , was 1 n t h e f o l l o w i n g terms:-

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I .
1 .

4 .

" ' r h e	b a n k r u p t	w u u l d	p a y	s u f E i c i e n t	f u n d s	t o	c o v e r	a
d i v i d e n d	o f	50	c e n t s	i n t h e	d o l l a r	i n	f u l l	s a t i s f a c t i o n

o f h e r p r o v a b l e d e b t s a f t e r p a y m e n t E i r s t l y oE a l l t h e

p r o p e r	costs ,	c h a r g e s	a n d	e x p e n s e s	o f	a n d	i n c i d e n t a l	t o
t h e	p r o c e e d i n g s	and	a l l	f e e s	p a y a b l e	to	t h e	O f f l c i a l

T r u s t e e i n B a n k r u p t c y a n d s e c o n d l y a l l p r i o r i t y d e b t s

d i rected t o be s o p a i d u n d e r t h e A c t . "

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T h o s e p r e s e n t a t t h e m e e t i n g a s s e n t e d u n a n i l m u s l y t o t h e

p r o p o s a l a n d a s p e c i a l r e s o l u t i o n was c a r r i e d a c c o r d i n g l y . T h e

b a n k r u p t h a d a l r e a d y made a payment of $20,000 t o t h e O f f i c l a l

T r u s t e e a n d t h i s is h e l d i n t h e Common Inves tment Fund.

I am I n f o r m e d b y t h e T r u s t e e t h a t t h i s p a y m e n t , t o g e t h e r

w i t h p a y m e n t s a l r e a d y m a d e , w i l l a l l o w f o r a d i v l d e n d o f 5 0 c e n t s

I .

i n t h e d o l l a r to c r e d i t o r s a f t e r payment of f e e s a n d e x p e n s e s .

A p p r o v e d c r e d i t o r s t o t a l $ 1 5 , 5 0 0 .

Having regard t o t h e o v e r a l l p o s i t l o n of MKS S c r i v e n e r ' s

e s t a t e a n d t h e ~ o i n t e s t a t e d i s c l o s e d a s i n t h e O f f l c i a l

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T r u s t e e ' s r e p o r t , I h a v e n o d o u b t t h a t t h e p r o p o s a l is, a s h e

s a y s , f o r t h e b e n e f i t of t h e general body of credi tors a n d t h a t I t

s h o u l d be approved .

So f a r as a n n u l m e n t o f t h e b a n k r u p t c y is c o n c e r n e d , s u c h

an o r d e r is n o t made	as a m a t t e r	o f	c o u r s e	f o l l o w l n g	t h e	a p p r o v a l	. -
of	a	c o m p o s i t i o n .	C o n s i d e r a t i o n s	p u b l i c	f	i n t e r e s t	a n d

c o m m e r c l a l m o r a l i t y h a v e t o b e t a k e n i n t o a c c o u n t i n e x e r c i s i n g

t h e	C o u r t ' s	d i s c r e t i o n .	I n	t h i s	case	t h e r e is no reason	of	t h a t
c h a r a c t e r	i n t h e way	o f	annu lmen t .	The	c i r cums tances	wh ich	l e d	t o

the findrlcial ditflcultles experlenccd by thc Scrlveners appear to

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I have been due to events largely beyond thelr control.

I have regard also to the Offlclal Trustee's

characterlsation of the offer of composition as a generous and beneflcial one In the clrcumstances, using as it does the proceeds of llfe Insurance whlch became available aEter the death of Mr Scrivener.

In my oplnion, there is, therefore, no reason at all why

I should not make an order annulllng the bankruptcy and it is the appropriate order in these circumstances.

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I will therefore order:-

1.    The compositlon in terms of the resolution passed at the creditors' meeting held on 7 October 1987 is approved.

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2.     The bankruptcy is annulled.

1- , .

I certify that thls and the preceding	i
four ( 4 ) pages are a true copy of the
Reasons for Judgment	of His Honour

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Counsel for the Applicant: Mr M.	Sollcitors for the Applicant: Kott Gunnlng
Mr F . D. O'Driscoll appeared for the Officlal Trustee.
Date of Hearing: 23 November 1987 Date of Judgment: 23 November 1987

de Kelcoy

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