Re Sergeant, John Muckersie & Anor Wheeler, Paulette Maree & Ors v Sergeant, John Muckersie

[1978] FCA 123

.

BANKRUPTCY DISTRICT OF THE STATE f .

O F V I C T O R I A

J O H N MUCKERSIE SERGEANT

ZENA J O Y SERGEANT a n d

J O H N CRAVEN BARNES t h e T r u s t e e

o f t h e p r o p e r t y of J o h n M u c k e r s i e

S e r g e a n t a n d Z e n a J o y S e r g e a n t

R e s p o n z e n t s .

REASONS FOR JUDGMENT

C . A. SWEENEY, J.

2 1 December, 1 9 7 8

T h e a p p l i c a n t s , P a u l e t t e Maree W h e e l e r , Jesse Arto

and Doreen Clare Arto, s e e k t h e f o l l o w i n g orders, amongst others :-

"1. T h a t t h e C o u r t declare t h e c o m p o s i t i o n m a d e b y t h e

abovenamed Debtors on t h e 8 t h d a y of A u g u s t 1 9 7 8

void on -the g r o u n d s :-

(i) t h a t t h e p r o c e e d i n g s l e a d i n g u p t o t h e r n a k i r g

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

a c c e p t a n c e t h e r e o f are void i n t h a t t h e r e was

o n l y o n e se t o f p r o c e e d i n g s i n r e s p e c t o f

b o t h Debtors;.

(ii) t h a t t h e p r o c e e d i n g s were i r r e g u l a r i n t h a t

t h e Meegipg of Creditors a t w h i c h t h e r e s o l u t i o n

a c c e p t i n g t h e c o m p o s i t i o n was p a s s e d , c o m p r i s e d

p e r s o n s who were Creditors of e i the r Debtor b u t

n o t of bo th of them;

(iii) t h a t t h e Cred i to r of t h e F i r s t n a m e d Debtor

P a u l e t t e Maree Wheeler was r e f u s e d t h e opportuni

t o v o t e a t t h e s a i d Meet ing of C r e d i t o r s ;

. . / 2

2 .

- .

( i v ) t h a t t h e Debtors o m i t t e d m a t e r i a l p a r t i c u l a r s

f r o m t h e S t a t e m e n t of t h e i r A f f a i r s a n d

i n c l u d e d incorrect a n d m a t e r i a l p a r t i c u l a r s

i n t h e S t a t e m e n t of A f f a i r s i n t h a t :-

t h e d e b t d u e t o t h e A p p l i c a n t P a u l e t t e

Maree Whee le r was shown a s a c o n t i n g e n t

d e b t a n d was shown a s a d e b t for t h e

sum of $ 3 3 , 0 0 0 o n l y w h e r e a s t h e a m o u n t

shou ld have been shown a t t h e sum

$ 3 3 , 6 0 6 . 9 7 ;

t h a t t h e d e b t o w i n g t o t h e Credi tor

A u . s p a i n T i l e s i s shown a t t h e sum of

$392.67 as t h e d e b t o w i n g by J o h n

M u c k e r s i e S e r g e a n t o n l y , w h e r e a s t h e

amount owing t o t h e s a id Credi tor i s

t h e sum of $ 6 7 2 . 0 0 o w i n g b y t h e said

J o h n M u c k e r s i e S e r g e a n t	a n d Z e n a	J o y
S e r g e a n t ;

t h a t t h e r e i s a n amount of $ 9 , 5 8 9 shown

as a n a m o a n t d u e u n d e r t h e g u a r a n t e e ,

w h e r e a s i n f a c t i t i s an amount owing

b y t h e D e b t o r s a s p r i n c i p a l s ;

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

o f t h e g o o d w i l l a n d w o r k i n p r o g r e s s of

t h e A c c o u n t a n c y p r a c t i c e owned by t h e

D e b t o r J o h n M u c k e r s i e S e r g e a n t ;

t h a t t h e v a l u e o f t h e s h a r e s o w n e d b y

J o h n M u c k e r s i e S e r g e a n t	i s	s u b s t a n t i a l l y
u n d e r - s t a t e d ;

t h a t t h e r e i s no r e f e r e n c e made i n t h e

S t a t e m e n t of A f f a i r s t o a n y r i g h t of

i n d e m n i t y o r s u b r o g a t i o n w h i c h t h e

D e b t o r s may h a v e a g a i n s t t h e p r i n c i p a l

D e b t o r s o r c o - g u a r a n t o r s i n r e s p e c t t o

any l i a b i l i t i e s u n d e r g u a r a n t e e s ;

( g ) - t h a t t h e n u m b e r of s h a r e s o w n e d b y t h e

D e b t o r s i n S o u t h e r n Dairies L i m i t e d i s

. n o t s t a t ed ;

( h ) t h a t n o S t a t e m e n t a s t o w h a t b o o k s of

a c c o u n t h a v e b e e n k e p t b y t h e Debtors i n

c o n n e c t i o n w i t h t h e i r b u s i n e s s h a s b e e n

set o u t ;

( i ) t h a t , t h e r e i s n o r e f e r e n c e t o t h e f a c t

t h & ' i h e Debtor Zena J o y S e r g e a n t h a d

carr ied o n b u s i n e s s as a B e u t i c i a n ;

( j ) t h a t t h e S t a t e m e n t of A f f a i r s f a i l s to

d i s c l o s e w h a t p r o p e r t y t h e r e i n s p e c i f i e d

r e l a t e s t o w h i c h D e b t o r . "

. . / 3

3 .

- .

I n i d e n t i c a l N o t i c e s of I n t e n t i o n t o oppose t h

a p p l i c a t i o n e a c h o f t h e r e s p o n d e n t s , J o h n M u c k e r s i e S e r g e a n t a

Z e n a J o y S e r g e a n t , se t o u t t h e f o l l o w i n g g r o u n d s :-

T h a t i t w o u l d n o t b e i n t h e i n t e r e s t o f

t h e credi tors	o f	t h e	a b o v e n a m e d d e b t o r
f o r s u c h o r d e r s	t o	be made,

T h a t i n t h e e v e n ' t t h a t a n y d e f e c t s o r

i r r . e g u l a r i t i e s c a n be shown t o h a v e

e x i s t e d a t t h e mater ia l time t h e same

were n o t w i l f u l o r ma te r i a l ,

t h a t t h e r e 'are no s u b s t a n t i a l g r o u n d s for

s e t t i n g t h e c o m p o s i t i o n a s i d e ,

T h a t t h e a p p l i c a t i o n i n so f a r a s i t i s

p r e s e n t e d u n d e r s e c t i o n 2 3 9 of t h e

'i B a n k r u p t c y A c t 1 9 6 6 i s o u t of t i m e . ' '

I n e a c h o f t h e s e n o t i c e s f u r t h e r o r d e r s were s o u s h t i n t k

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

b u t t h i s p o r t i o n o f e a c h n o t i c e was abandoned a t t h e h e a r i n g .

T h e r e s p o n d e n t , J o h n C r a v e n B a r n e s , d i d n o t

f i l e a Notice o f I n t e n t i o n t o o p p o s e t h e a p p l i c a t i o n b u t f i l e d

a n a f f i d a v i t , i n w h i c h h e g a v e a n a c c o u n t of t h e h i s t o r y of t h

matter.

T h e o r d e r t h a t t h e C o u r t declare t h a t t h e

c o m p o s i t i o n i s void i s s o u g h t p u r s u a n t t o s . 2 2 2 , t h e r e l e v a n t

p r o v i s i o n s of w h i c h are a s f o l l o w s :-

" 2 2 2 . (l) W h e r e t h e r e i s a d o u b t , o n a s p e c i f i c

g r o u n d , w h e t h e r a deed of a s s i g n m e n t or a d e e d

of a r r a n g e m e n t was e n t e r e d i n t o i n a c c o r d a n c e

w i t h t h i s P a r t or c o m p l i e s w i t h t h e r e q u i r e m e n t s

o f t h i s P a r t , . o r w h e t h e r a c o m p o s i t i o n h a s b e e n

accepted by a s p e c i a l r e s o l u t i o n o f a m e e t i n g o f

credi tors u n d e r s e c t i o n 2 0 4 of t h i s A c t , t h e

t r u s t e e , a c r e d i t o r or t h e d e b t o r may a p p l y t o

t h e C o u r t f o r a n o r d e Y u n d e r	t h e n e x t s u c c e e d i n g
s u b - s e c t i o n .

( 2 ) Upon t h e " h e a r i n g o f s u c h a n a p p l i c a t i o n ,

t h e C o u r t may, s u b j e c t t o t h i s s e c t i o n , make a n

order d e c l a r i n g t h a t ' t h e d e e d o r c o m p o s i t i o n i s

v o i d o r t h a t i t i s n o t void o n t h e g r o u n d

s p e c i f i e d i n t h e a p p l i c a t i o n .

( 3 ) The C o u r t s h a l l not m a k e a n o r d e r

d e c l a r i n g a d e e d t o be void on t h e g r o u n d t h a t

i t d o e s n o t c o m p l y w i t h t!ie r e q u i r e m e n t s of

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

w i t h t h o s e r e q u i r e m e n t s .

. . / 4

4 .

- .

(4) Fjhere t h e C o u r t , on t h e a p p l i c a t i o n of

t h e t r u s t e e or a c r e d i t o r , i s s a t i s f i e d t h a t t h e

d e b t o r -

( a ) h a s . g i v e n false or m i s l c a d i n g information

i n answer t o a q u e s t i o n p u t t o h i m w i t h

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

p r o p e r t y or a f f a i r s a t t h e m e e t i n g of

c red i tors a t which t h e r e s o l u t i o n r e q u i r i n g

him t o e x e c u t e t h e deed o r a c c e p t i n g t h e

c o m p o s i t i o n was p a s s e d ; or

(b) h a s omitted a material p a r t i c u l a r from t h e

s t a t e m e n t of h i s a f f a i r s u n d e r s e c t i o n 195

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

material p a r t i c u l a r i n t h a t s ta tement ,

the C o u r t may make a n order d e c l a r i n g t h e deed or .

c o m p o s i t i o n t o b e void.

( 5 ) The C o u r t s h a l l n o t make a n order

d e c l a r i n g a d e e d or c o m p o s i t i o n t o be v o i d On a

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

s e c t i o n u n l e s s i t i s s a t i s f i e d t h a t i t would be

i n t h e i n t e r e s t s of t h e c r e d i t o r s t o do SO.

( 6 ) T h e C o u r t s h a l l n o t make a n o r d e r u n d e r

s u b - s e c t i o n ( 2 ) or ( 4 ) o f t h i s sect ion u n l e s s t h e

a p p l i c a t i o n f o r t h e o r d e r i s made -

......

(c ) i n r e l a t i o n t o a c o m p o s i t i o n - before

t h e f i n a l p a y m e n t h a s b e e n made u n d e r

t h e c o m p o s i t i o n .

...... 11

T h e r e l e v a n t p r o v i s i o n s of s e c t i o n 2 0 4

provide a s f o l l o w s :-

" 2 0 4 . ( l ) T h e c r e d i t o r s m a y , a t a m e e t i n g ca l led

i n p u r s u a n c e of a n a u t h o r i t y u n d e r s e c t i o n 1 8 8 of

. t h i s A c t , b y S p e c i a l r e s o l u t i o n -

( a ) where t h e deb to r ' s p r o p e r t y i s s u b j e c t

t o c o n t r o l u n d e r t h i s D i v i s i o n , r e s o l v e

t h a t . t h e deb to r ' s p r o p e r t y be n o l o n g e r

s u b j e c t t o c o n t r o l u n d e r t h i s D i v i s i o n ;

'-I . .

( b ) r e q u i r e t h e debtor t o e x e c u t e a d e e d of

a s s i g n m e n t o r a d e e d of a r r a n g e m e n t

u n d e r t h i s P a r t :

( c ) a c c e p t a c o m p o s i t i o n ; o r

( d ) r e q u i r e the debtor t o p r e s e n t a d e b t o r ' s

p e t i t i o n w i t h i n s e v e n d a y s from t h e d a y

on w h i c h t h e r e s o l u t i o n was passed.

. . . . . . .

. . /5

( 7 ) A s p e c i a l r e s o l u t i o n a c c e p t i n g a

~ : L ~ : i ~ ~ ~ . ~ s i ~ i L : : : : ; i : . ~ l l : ;pec i fy the te rns of t h e

coi:li)<)><	i	t .i .?I:	.
.. ~ ~ ~ i ~ c : - e a s p e c i a l r e s o l u t i o n r e q u i r i n q

t h e d c b t o r t o c x c c u t e a deed of a s s i g n m n t o r a

~ l ~ ? c \ d of .-trr-anc~C~n-,cnt u n d e r t h i s P a r t o r accep t inc l

a c o m p o s i t i o n h a s been passed , t h e credi tors s h a l l ,

b y r e s o l u t i o n , n o m i n a t e a r e g i s t e r e d t r u s t e e o r

r e g i s t e r e d t r u s t e e s t o b e t r u s t e e or t rustees of

t h e deed or c o m p o s i t i o n .

I 1

. . . .

I t w i l l be c o n v e n i e n t t o c o n s i d e r f i r s t

p a r a g r a p h 1. (i) and ( i i) of t h e a ? p l i c a t i o n , i n w h i c h t h e

C o u r t i s a s k e d t o dec lare t h e c o m p o s i t i o n v o i d o n tlie g r o u n d s

t h e r e s p e c i f i e d .

On 20 J u l y 1 9 7 8 a d o c u m e n t i n t h e f o l l o w i n g f o r

was s i g n e d b y t h e r e s p o n d e n t s J . M . a n d 2 . J. S e r g e a n t a n d by

t h e r e s p o n d e n t J. C . B a r n e s :-

THIRD SCHEDULE . S e c t i o n 1 8 8

BANKRUPTCY ACT 1966

AUTHORITY TO REGISTERED TRUSTEE TO CALL PtETIfJGS OF

CREDITORS AND TAKE OVER COMTROL OF PiiOPERTY

I n p u r s u a n c e o f S e c t i o n 1 8 8 of t h e B a n k r u p t c y A c t , 1 9 6 6 ,

I, J o h n M u c k e r s i e S e r g e a n t

of 94 Noble S t A n g l e s e a

i n t h e	S t a t e of	Vic tor ia ,	C o n s u l t a n t	( o c c u p a t i o n ) ,
a n.d

I, Zena Joy S e r g e a n t

o f 94 Noble S t A n g l e s e a

i n t h e S t a t e of Vic tor ia , home d u t i e s ( o c c u p a t i o n ) ,

h e r e b y a u t h o r i s e JOHN CRAVEN BARNES of 4 7 0 Bourke

S t r e e t , Melbourng .$o c a l l m e e t i n g s of my a n d o u r

credi tors fo r t h e p u r p o s e s o f P a r t X o f t h e Act a n d

t o t a k e o v e r c o n t r o l of m y a n d o u r p r o p e r t y i n

a c c o r d a n c e w i t h t h a t P a r t . "

. . / 6

6 .

On 24 J u l y 197:3 khc f o l L o v i n g a d v e r t . i s c m e n t

a p p e a r e d i n "The Age" Newspaper :

BANKRUPTCY ACT 1966

FORM 3 4

NOTICE OF MEETING

J O H N MUCKERSIE SERGEANT AND ZENA J O Y SERGEANT

9 4 Ncble S t r e e t , A n g l e s e a , V i c . No.123/1978

P a r t X R u l e 77 TAKE NOTICE t h a t J o h n M u c k e r s i e

S e r g e a n t a n d Z e n a J o y S e r g e a n t e a c h o n t h e

2 0 t h d a y of J u l y 1 9 7 8 s i g n e d a n a u t h o r i t y u n d e r

s . 1 8 8 ( 1 ) o f t h e B a n k r u p t c y A c t 1 9 6 6 a u t h o r i s i n g

J o h n C r a v e n B a r n e s of 470 B o u r k e S t r e e t ,

Melbourne t o c a l l a m e e t i n g of t h e i r credi tors

and t o t a k e over c o n t r o l o f t h e i r p r o p e r t y a n d

t h a t i n p u r s u a n c e of s.194 a m e e t i n g o f

c red i tors o f t h e a b o v e n a m e d d e b t o r s w i l l be h e l d

a t t h e o f f i c e of J o h n C . B a r n e s & C o . 470 Bourke

S t r e e t ,	M e l b o u r n e	a t 11 a . m .	on	Tuesday	8	A u g u s t
1 9 7 8 .

DATED	this	2 4 t h d a y o f J u l y 1 9 7 8 .
J . C.	BARNES

CONTROLLING TRUSTEE

JOHN C . BARNES & CO.

4 7 0 B o u r k e S t r e e t ,

MELBOUEZiIE.	3000
6 7 8679. "

I t was common g r o u n d - t h a t a n i d e n t i c a l a d v e r t i s e m e n t a p p e a r e d

i n t h e G o v e r n m e n t G a z e t t e .

A n o t i c e i n t h e f o l l o w i n g f o r m was p o s t e d

t o a l l known s e p a r a t e c'f%??itors o f J . N. S e r g e a n t a n d Z . J .

S e r g e a n t a n d t o a l l known j o i n t c r ed i to r s :-

. . /7

7 .

BANKRUPTCY ACT 19 6 6

NOTICE OF NEETING

JOHN MUCKERSIE SERGEANT

and

ZENA JOY SERGEANT No.123/1978 P a r t X

M e 77

94 Noble S t r e e t , Anglesea. V i c .

TAKE NOTICE t h a t J o h n M u c k e r s i e S e r g e a n t a n d Z e n a J o y

S e r g e a n t e a c h o n t h e 2 0 t h d a y of J u l y 1 9 7 8 s i g n e d a n

a u t h o r i t y u n d e r s . 1 8 8 ( 1 ) of t h e B a n k r u p t c y A c t 1966

a u t h o r i s i n g J o h n C r a v e n B a r n e s of 470 Bourke S t r ee t ,

Melbourne t o c a l l a m e e t i n g of t h e i r credi tors and t o

t a k e over c o n t r o l of t h e i r p r o p e r t y a n d t h a t , i n

p u r s u a n c e of s .194 a m e e t i n g of c r e d i t o r s of t h e

abovenamed debtors w i l l b e h e l d a t t h e o f f i c e o f J o h n

C . B a r n e s & Co., 4 7 0 B o u r k e S t r e e t , M e l b o u r n e a t 11

a.m. o n Tuesday 8 Augus t 1978 .

DATED t h i s 2 4 t h d a y of J u l y 1 9 7 8 .

(Sgd) J . C . B a r n e s

J. C. BARNES

CONTROLLING TRUSTEE

P NOTE - T h e c r e d i t o r s may r e s o l v e t h a t :-

( a ) - t h e d e b t o r s ' p r o p e r t y be n o l o n g e r s u b j e c t

t o c o n t r o l u n d e r D i v i s i o n 2 .

(b) t he d e b t o r s e x e c u t e a deed of a s s i g n m e n t o r

a deed of a r r a n g e m e n t ,

(c ) t h e c red i tors a c c e p t a c o m p o s i t i o n ,

( d ) t h e d e b t o r s p r e s e n t a debtors p e t i t i o n

w i t h i n s e v e n d a y s from t h e d a y o n w h i c h

. t h e . - r e s o l u t i o n i s p a s s e d , o r

( e ) may a d j o u r n t h e m e e t i n g .

II

E n c l . Form of a p p o i n t m e n t of p r o x y .

T h e e n c l o s e d f o r m of a p p o i n t m e n t of p roxy

r e a d a s f o l l o w s :-

. ./8

No. 123/197€

. P a r t X

I,%'e . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

of . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

a cre t l i to t ' , apE>oir)t ( S ) ........ ........ ........ ........ ..

of	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
to	be : : ;~ / 'QLIL- p r o x y .IL tlw ::.CC> t L [ I , : of the creditors of t h e

11 2 . m .

abOvel\,li!lL'if ~ ! ~ ' b t - o ~ - L O LC h(':<! t . . . . . . . . . . . . . . . . . . . . . . . . . .

........ ........ ........ ........ ........ ........ ........ .. T ~ ~ c \ s c ? ; \ y 8 : 1 ~ 1 ~ . ~ 1 1 ~ t 0 7 2

(or a n y meeting of th t l c r e d i t , : S of t h e abovenamed d e b t o r )

to vote ( h c r : ~ s e t out ttlc !)w..'c'rs of tlle p r o x y ) .

........ ........ .......

Siqnatr l rc of Credi tor

, \ddrcss ........ ........ ....

........ ........ ........ ....

@ C L ' U ~ ~ , I C ion . . . . . . . . . . . . . . . . .

. .

9 .

T h c pro!loscll submitted t o the m e e t i n g of c r e d i t o r s was

i n t h e f o l l o w i n g form, s i g n e d by b o t h J . M . and Z . J . S e r g e a n t :-

BANKRUPTCY ACT 1 9 6 6 N o . o f 1 9 P a r t X

DEBTORS' PROPOSAL FOR COKPOSITION

I, ( a ) J o a n M u c k e r s i c S e r g e a n t

of 9 4 Noble A n g l e s e a S t V i c a d e b t o r , a n d

I , (a) Z e n a J o y S e r g e a n t

o f 9 4 Noble A n g l e s e a S t V i c a d e b t o r

DO HEREBY MAKE t h e f o l l o w i n g p r o p o s a l f o r a c o m p o s i t i o n

i n p u r s u a n c e o f B a n k r ' u p t c y A c t 1966 P a r t X i n f u l l

s a t i s f a c t i o n of	my	a n d our	d e b t s d u e	to my	a n d o u r
credi tors :

( a )	I	c o v e n a n t t o pay	t o t h e	t r u s t e e	of	t h e	c o m p o s i t i o n
t h e	f o l l o w i n g m o n e y s :

$ 2 0 , 0 0 0 b y i n s t a l m e n t s of $ 3 , 0 0 0 by

3 1 December 1 9 7 8 and $17 ,000 by 30

A p r i l 1 9 7 9

a n d

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

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

p a y m e n t s , a p p l y t h o s e m o n e y s i n t h e order p r e s c r i b e d

by S-109(1) ( b ) ( C ) ( f ) ( 9 ) ( h ) (k) I'

I n t h e words o f t h e r e s p o n d e n t J . C . Barnes i n h i s

a f f i d a v i t ' -

_ - " T h e m e e t i n g o f t h e credi tors of t h e s a id John

M u c k e r s i e S e r g e a n t a n d Z e n a J o y S e r g e a n t was

h e l d a t my o f f i c e s o n t h e 8 t h A u g u s t 1 9 7 8 ...

..When t h e m e e t i n g was o p e n e d I was a p p o i n t e d

t o a n d d i d a c t a s i t s Chai rman .... The

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

. was p u t t o t h e r i i e 3 t i n g .... A f t e r t h e p r o p o s e d

compromise ( s i c ) wa? a p p r o v e d by t h e r e q u i s i t e

n u m b e r a n d v a l u e o f votes I was n o m i n a t e d b y t h e

m e e t i n g t o be t h e t r u s t e e of t h e c o m p o s i t i o n . "

. ./1G

[ : l t-.t;c> r : i r : : l t . . ! . O ! + } I , . \ !J!- i si ,::[lL.l.l t 1 . i

. I

:.r. L3ilL-I)L!S ; l 5 L.'ii,.il t . , ; i ' l l l , I t '.dii:; I : I ~ c , . ~ : ~ , : < . ~ . ~ L:) , 2 5 : . ' - L : i ; l L i I c l f -

r e s o l u t i o n t h a t " e i g h t e e n c r e d i t o r s , v a l u e $ 1 5 , 8 9 7 v o t e d i n

f a v o u r , two c r e d i t o r s $ 4 , 6 9 4 voted a g a i n s t . T h e c h a i r m a n

declared t h e c o m p o s i t i o n a c c e p t e d by s p e c i a l r e s o l u t i c n . "

Th m a j o r i t y so v o t i n g i n c l u d e d j o i n t c red i tors of J . M . a n d

z . J . S e r g e a n t . a n d s e p a r a t e c red i tors o f e a c h o f t h e m . T h e

m i n o r i t y i n c l u d e d j o i n t c red i tors a n d a s e p a r a t e c r e d i t o r

of J . M. S e r g e a n t .

I n c r o s s - e x a m i n a t i o n o n h i s a f f i d a v i t ,

Mr. B a r n e s was a s k e d b y Mr'. I r l i c h t , f o r t h e a p p l i c a n t :-

I' And i n f a c t t h e r e was o n l y o n e vo te t a k e n , i s

t h a t r i g h t ?

t o w h i c h h e r e p l i e d :-

l' No, I a s k e d f o r t h e vo tes , f o r t h e p e o p l e t o

i n d i c a t e t o m e how t h e y were g o i n g t o vote and

I w e n t a r o u n d e a c h o n e i n t u r n . I c a r e f u l l y

recorded w h a t e a c h voted a n d recorded t h e o n e who

sa id t h a t h e d i d n o t w i s h t o vo te . I t h e n looked .

a t t h e a t t e n d a n c e s h e e t w h i c h h a s g o t se t out, as

h a d b e e n m e n t i o n e d e a r l i e r i n e v i d e n c e , u n d e r t h e

h e a d i n g s , w h e r e e a c h of t h e c r e d i t o r s s t o o d .

I h a d f o r t h e p r o x i e s i n my own f a v o u r , I had

a l i s t o f w h e r e t h e p r o x i e s stood i n r e l a t i o n t o

t h e t h r e e es ta tes u n d e r d i s c u s s i o n , t h e t h r e e

matters u n d e r d i s c u s s i o n . I o n l y h a d a t t h a t

s t a g e t o l o o k a t t h e o t h e r two credi tors who

voted a g a i n s t t o see w h e r e t h e i r vo te s f e l l . I t

was n o t v e r y d i f f i c u l t t o do t h a t , I j u s t had t o

look a t t h e a t t e n d a n c e s h e e t a n d t h a t i s d e t a i l e d

a s l i s t e d on t h e e x h i b i t o f t h e a c t u a l v o t i n g

t h a t h a p p e n e d .

* T h e r e was o n e c r ed i to r from memory, you can

c h e c k u p o n t h i s i f I am s p e a k i n g c o r r e c t l y ,

o n e credi tor I t h i n k was a g a i n s t t h e j o i n t a n d

t h e o t h e r a g a i n s t Mr. S e r g e a n t s e p a r a t e l y so I

k n e w f r o m t h e v o t e s t h a t t h e r e was a m a j o r i t y of

vo te s i n number , i n .,-* f a v o u r i n e a c h c lass a n d t h e n .

by simple m e n t a r a r i t h m e t i c I was ab le t o see

t h a t t h e r e was a 7 5 , p e r c e n t m a j o r i t y i n v a l u e

i n e a c h c lass . In t h a t way t h c votes were recorded

s e p a r a t e l y o n my n o t e s , s o m e w h a t scribbled n o t e s

w h i c h I h a d i n my own w r i t i n q a t t h e time. I

wrote J and S which are joint a n d s e v e r a l - i t

'means to me - i n d i c a t i n g t h a t my v i e w was t h a t

t h e r e s o l u t i o n had b e e n passed j o i n t l y a n d

s e v e r a l l y o r a r c i n o t h e r words by each of the

sepa ra t e c lasses of c r e d i t o r s . "

. ./l1

11.

I am s a t i s f i e d t h a t t h e a f f i d a v i t ;E Nr. Barncs and t h e m i n u t e s

f a i t h f u l l y recorded the f a c t s t h a t a s i n g l e m o t i o n was moved

a n d t h a t t h e m e e t i n g a s a whole discussed and passed a s i n g l e

r e s o l u t i o n . W h i t e v e r may h a v e p a s s e d t h r o u g h t h e m i n d o f t h e

c h a i r m a n a n d whatever n o t e s h e may have made, t h e r e i s no

g a i n s a y i n g t h e s e fac t s .

All p a r t i e s a g r e e d t h a t w h e r e t h e word " d e b t o r "

i s u s e d i n P a r t X of t h e B a n k r u p t c y Act 1966 i t i s t o be

c o n s t r u e d	i n	t h e	s i n g u l a r .
The	e v i d e n c e d i sc losed t h a t M r . B a r n e s adver t i sed

o n e m e e t i n g , t h a t h e g a v e ' n o t i c e o f o n e m e e t i n g t o t h e known

creditors of J. M . S e r g e a n t a n d t o t h e known c red i tors of

2. J. S e r g e a n t a n d t o - t h e i r known j o i n t creditors, t h a t t h e o n e

m e e t i n g was a t t e n d e d b y m e m b e r s of each of these classes of

creditors o r t h e i r proxies, t h a t Mr. B a r n e s was e l e c t e d as

c h a i r m a n o f t h e m e e t i n g , t h a t t h e r e was a s i n g l e m o t i o n

s u b m i t t e d t o t h a t o n e m e e t i n g t h a t t h e c o m p o s i t i o n be a c c e p t e d ,

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

t h e c o m p o s i t i o n .

I am s a t i s f i e d t h a t t h e r e i s a d o u b t , o n t h e

s p e c i f i c g r o u n d s se t o u t i n p a r a g r a p h I.(i) a n d (ii) o f t h e

a p p l i c a t i o n , w h e t h e r i n t h e w o r d s of t h a t p a r a g r a p h " t h e

compos i t ion made by t h e a b o v e n a m e d d e b t o r s o n t h e 8 t h d a y of

A u g u s t , 1 9 7 8 " h a s b e e n a c c e p t e d by a s p e c i a l r e s o l u t i o n of a

m e e t i n g of c r ed i to r s u n d e r 3 . 2 0 4 of t h e B a n k r u p t c y A c t 1966 .

I n d e e d , I am s a t i s f i e d t h a t t h e c o m p o s i t i o n h a s n o t b e e n so

a c c e p t e d . . I am s a t i s f i e d t h a t a n order s h o u l d be m a d e d e c l a r i n g

t h a t t h e c o m p o s i t i o n , t h e s u b j e c t of t h i s a p p l i c a t i o n , i s v o i d

o n t h e s p e c i f i c g r o u n d s s e t o u t i n p a r a g r a p h l . ( i ) a n d (ii) of

t h e	a p p l i c a t i o n .	.	.
r	.

T h i s c o n c l u s i o n i s , I b e l i e v e , c o n s i s t e n t w i t h

a u t h o r i t y (see Re P a t r i c k P a r t n e r s , e x p a r t e J a n i s o n v .

R e g i s t r a r i n B a n k r u p t c y ( 1 9 7 7 ) 18 A . L . R . 4 4 4 a t p . 4 5 0 ; - R e

F o r b e s ( 1 9 7 4 ) 2 4 F . L . R . 8 7 ) .

. ./l2

12.

I t i s n o t n e c e s s a r y t o consicier t h c o t h c r

g rounds on w h i c h t h e a p p l i c a n t s s o u g h t a n orcier d e c l a r i n g t h e

c o m p o s i t i o n void, or t h e i r a l t e r n a t i v e a p p l i c a t i o n t h a t t h e

c o m p o s i t i o n be s e t as ide "on t h e g r o u n d s t h a t t h e terms of same

are u n r e a s o n a b l e o r o n t h e g r o u n d t h a t t h e y are n o t c a l c u l a t e d

t o b e n e f i t t h e c red i tors g e n e r a l l y . " Had i t b e e n n e c e s s a r y t o

c o n s i d e r t h e a l t e r n a t i v e a p p l i c a t i o n , I w o u l d h a v e t h o u g h t i t

a p r o p e r case i n w h i c h t o e x t e n d t h e time for making t h e

a p p l i c a t i o n .

On t h e q u e s t i o n o f costs, i t was c o n t e n d e d

t h a t Mr. B a r n e s w a s n o t p r o p e r l y j o i n e d a s a r e s p o n d e n t t o t h e

a p p l i c a t i o n . I am s a t i s f i e d t h a t h e was p r o p e r l y j o i n e d , a n d

t h a t he s h o u l d b e o r d e r e d t o pay t h e c o s t s of t h e a p p l i c a n t s ,

i n view of t h e e x t e n t of h i s r e s p o n s i b i l i t y f o r t h e c o u r s e o f

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

a n d t h e c o n d u c t of i t . These costs s h o u l d i n c l u d e t h e cos t s

r e s e r v e d i n r e s p e c t of t h e h e a r i n g o f 1 4 Septernber 1 9 7 5 . I do

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

costs of t h e r e s p o n d e n t s J . M . a n d 2. J . S e r g e a n t .

The C o u r t t h e r e f o r e d e c l a r e s t h a t t h e

c o m p o s i t i o n made by J. M. a n d 2. J . S e r g e a n t o n 8 A u g u s t 1 9 7 8

i s void o n t h e g r o u n d s s p e c i f i e d i n p a r a g r a p h 1. (i) and ( i i) of

t h e . a p p l i c a t i o n , a n d o r d e r s t h a t ' t h e costs o f t h e a p p l i c a n t s ,

of a n d i n c i d e n t a l t o t h e a p p l i c a t i o n , i r c l u d i n g t h e reserved

costs o f t h e h e a r i n g of 14 S e p t e m b e r , 1 9 7 8 , be p a i d b y t h e

r e s p o n d e n t J . C . B a r n e s , s u c h c o s t s t o b e t a x e d i f n o t a g r e e d .