Re Taylor, Ross Ian Ex Parte Mirzaian, Armen

[1989] FCA 858

F+

NOT FOR DISTRIBUTION

858       84

JUDGMENT No. ........ ........ .. I .. ........ ..

IN THE FEDERAL COURT OF AUSTRALIA	)
I No NX 107 of 1989

9~	j	NO NP 654 of 1989
1
GENERAL DIVISION	1

RE :  ROSS IAN TAYLOR

EX PARTE:  ARMEN MIRZAIAN and
SAC0 MIRZAIAN

11 JULY 1989

REASONS FOR JUDGMENT

LOCKHART J.:

This is an application by two persons trading as Allambie Forest Automotive of Allambie, creditors of Ross Ian Taylor, for orders setting aside a composition accepted at a meeting of creditors of the respondent debtor under Part 10 of the Bankruwtcv Act 1966, on 9 June 1989.

The debtor has liabilities of approximately $30,000 and appears to have no assets, although there is some suggestion on the evidence that he has $500 worth of assets. Whichever it be, it is plain that there is little if anything by way of assets or funds available to creditors. It is not a case

involving large sums of money but they are nevertheless
matters of importance to the parties concerned. FEDERAL COURT OF

A meeting of creditors was held on 9 June 1989 and attended by three creditors personally and two by proxy. Proxies had been received from two of the creditors who in fact attended personally and it seems to be consistent with the minutes of the meeting that the proxy was therefore necessarily subsumed in the personal attendance of the creditors concerned.

The voting at the meeting was, save for the dissent of the applicants, in favour of the adoption of the composition. The composition is that the creditors accept in full satisfaction of their debts from the debtor $250 a month for three years, the first payment to be made within 30 days after the date on which the resolution was passed, namely 9 June 1989. I mention at this stage that the first payment has been duly made.

Mr G.S. Turner, who was the chairman of the meeting, was

nominated the trustee of the composition. Provision was made

of his partners and staff, in terms which suggest that a total	by resolution of the creditors for his remuneration and that
of some $2000 was to constitute the remuneration. Presumably that will come out of the moneys that are paid by the debtor over the three year period.
The composition means that creditors will receive very little money indeed. The applicant's solicitor calculates that all that will happen under the composition is that some
$9000 will be paid by the debtor, of which the applicant will
receive less than $497, or less than $13.82 a month, over three years. And no doubt the position is the same with the other creditors pro rata.
There was a plain majority in number and a distinct majority in value of creditors who voted for the composition at the meeting of 9 June 1989 and nothing has been said to suggest that the resolutions were not duly passed.
The application for the setting aside of the composition which is made pursuant to S. 239 of the Bankru~tcv Act is based on a number of grounds. I need not refer to them in detail as they have been fully covered in argument and are referred to in evidence, but in essence they may be summarized as follows.
The history of the debtor in his dealings with the applicant in relation to the debt and applications by the debtor to pay the judgment debt of the applicant by instalments is said to be most unsatisfactory and to lead to a position where the Court would have no confidence that the debtor will honour his commitments under the composition. Reliance is placed also upon a statement by the debtor to the solicitor for the applicant to the effect that the applicant would get nothing from the debtor.
There is also evidence which suggests that the debtor may have been, at least in the past, elusive so far as the service of process upon him by the applicant is concerned.
It is said in short, that when one looks at the background of the matter one sees no real evidence of an intention by the debtor, or any ability of the debtor, to honour the commitment which he has undertaken as expressed in the composition.
The composition is expressed in terms that are not entirely clear. It does raise the question whether a single default in the payment of a monthly sum by the debtor would automatically terminate the composition or invalidate it or not. I expressed the view that the composition, on its proper construction, meant that it would terminate upon any one default being made and that is a construction which is assented to by solicitors for both parties.
has not been made out. The creditors by a distinct majority In my view the application to set aside the composition have approved it. It is plain that there will be nothing for
creditors if bankruptcy ensues. It is also plain that there is very little for them if the composition proceeds. But the creditors have obviously taken the view that a little is better than nothing.
Although it was submitted that this is a case for public examination of the debtor, that is an argument that is of course easily put and often has a great deal of substance in it. In the present case although the past conduct of the debtor in his relations with the applicant has certainly been far from satisfactory, experience suggests that even if a public examination were held in this case it would not reveal anything that would swell the assets available for the creditors. However, that is only a matter that I say in passing, it is not fundamental to the decision.
I am of the view that the application should fail but that the petition which is also before the Court today and was presented by the applicant for the sequestration of the debtor's estate should remain alive, by being stood over generally with liberty to the petitioning creditor, any creditor or the debtor to restore to the list on 7 days notice. I am also of the view that the costs of that petition should, up to today's date, be paid by the debtor and that the cost of the application to set aside the composition should be
paid by the applicants.
Accordingly, the order of the Court is that the application to set aside the composition is dismissed and the applicants are ordered to pay the costs of the respondent.
The petition, number P654 of 1989, is adjourned generally with liberty to the petitioning creditor, the debtor
o r any c r e d i t o r t o r e s t o r e t o t h e l i s t on 7 days n o t i c e and I
o r d e r t h e d e b t o r t o pay t h e c o s t s of t h e p e t i t i o n i n g c r e d i t o r s
of t h e p e t i t i o n , inc luding any reserved c o s t s , up t o and
inc lud ing today.

I f u r t h e r o r d e r a s t o c o s t s t h a t t h e c o s t s payable by

t h e a p p l i c a n t s of t h e a p p l i c a t i o n and by t h e debtor of t h e

p e t i t i o n may be set o f f one a g a i n s t t h e o t h e r , t o t h e i n t e n t

t h a t t h e excess is t h e amount payable and upon which execut ion

may be l e v i e d by t h e p a r t y having t h e b e n e f i t of t h e excess

a g a i n s t t h e p a r t y having t h e burden of it.

I c e r t i f y t h a t t h i s and t h e proceeding

f i v e ( 5 ) pages a r e a t r u e copy of t h e

reasons f o r judgment he re in of t h e

Honourable M r .	J u s t i c e Lockhart
Associa te

Dated 11 J u l y 1989