Re Watt, Terry Brian; - [1998] FCA 213

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - authorisation of registered trustee to be controlling trustee - second notice - leave requirement - nature of discretion - interests of creditors - absence of collateral or improper purpose - leave granted.

Bankruptcy Act 1966 (Cth) s 188

Re de Kantzow; Ex parte de Kantzow (1992) 35 FCR 74 (cited)
Re Saheed; Saheed v Official Receiver (1993) 41 FCR 148 (cited)

Hooper v Ewins (Branson J, 21 November 1997, unreported) (discussed)

TERRY BRIAN WATT; EX PARTE TERRY BRIAN WATT
WAG 7022 OF 1998

FRENCH J
PERTH
13 MARCH 1998

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIAN DISTRICT REGISTRY

WAG 7022 of 1998

GENERAL DIVISION

IN THE MATTER OF TERRY BRIAN WATT, A DEBTOR

EX PARTE: TERRY BRIAN WATT

APPLICANT

JUDGE:

FRENCH J

DATE OF ORDER:

13 MARCH 1998

WHERE MADE:

PERTH

THE COURT ORDERS THAT:

The debtor has leave to give an authority under s 188(1) of the Bankruptcy Act 1966 (Cth) naming and authorising Graeme Trevor Lean to call a meeting of the debtor’s creditors and to take control of the debtor’s property.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIAN DISTRICT REGISTRY

WAG 7022 of 1998

GENERAL DIVISION

IN THE MATTER OF TERRY BRIAN WATT, A DEBTOR

EX PARTE TERRY BRIAN WATT

APPLICANT

JUDGE:

FRENCH J

DATE:

13 MARCH 1998

PLACE:

PERTH

REASONS FOR JUDGMENT

FRENCH J:
FACTUAL BACKGROUND
On 22 October 1997, Terry Watt signed an authority under s 188 of the Bankruptcy Act 1966 (Cth) authorising Graeme Trevor Lean, a Registered Trustee, to call a meeting of his creditors and take control of his property.

At the time he provided the Trustee with a statement of his affairs. That statement disclosed unsecured debts of $191,345 and secured debts of $71,000 making a total of $262,345. Assets amounted to $171,021.

One of the assets disclosed was a sum of $28,000 representing salary and holiday pay said to be owed to Mr Watt by Kangaroo Creek Gang Pty Ltd (KCG), a company of which he is a director and company secretary. He is also a 50 per cent shareholder in that company. Its main trading activities related to childrens’ educational publications, cartoons and connected products.

When he executed the authority Mr Watt intended to propose a composition to his creditors by which he would make sixty consecutive payments of $3,200 each month from 31 January 1998 thus paying a total of $192,000 to be distributed among his creditors in full and final satisfaction of his debts.

On 19 November 1997 an administrator was appointed to KCG under s 436A of the Corporations Law. On the same day, a meeting of Mr Watt’s creditors called by the Trustee was held. The Trustee told the creditors that Mr Watt’s capacity to meet his commitments under the proposed composition would depend upon what he could recover from KCG. It was suggested by the Trustee that the creditors…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Watt, Terry Brian;

Details

AGLC: Re Watt, Terry Brian; [1998] FCA 213
Case: [1998] FCA 213
Decision Date: 13 MARCH 1998

CaseChat Overview and Summary

The case of Re Watt, Terry Brian involved the application of a debtor for leave to appoint a controlling trustee under section 188(1) of the Bankruptcy Act 1966 (Cth). The debtor, Terry Brian Watt, sought to appoint Graeme Trevor Lean as the controlling trustee. The primary issue before the court was whether leave should be granted to the debtor to issue a second notice appointing a controlling trustee. This decision hinged on the court's interpretation of the statutory requirements and its discretion under the Act. The court had to consider the interests of creditors and whether the appointment served a collateral or improper purpose.

The legal question at the heart of the case was the nature and extent of the discretion afforded to the court in granting leave for the debtor to appoint a controlling trustee. The court analysed the statutory framework and relevant precedent to determine the circumstances under which leave should be granted. It was essential to assess whether the debtor's application was in the best interests of the creditors and whether there were any improper purposes behind the appointment. The debtor argued that the appointment of Graeme Trevor Lean was necessary for the effective administration of the estate and to protect the interests of the creditors.

The court found that the debtor had demonstrated that the appointment of Graeme Trevor Lean as the controlling trustee was in the best interests of the creditors. The debtor's application was not for a collateral or improper purpose, and there were no factors that would suggest the appointment would not serve the interests of the creditors. The court emphasised that its discretion should be exercised with regard to the statutory objectives and the need to protect the rights of creditors. Consequently, the court granted the debtor leave to appoint Graeme Trevor Lean as the controlling trustee, recognising the potential benefits of such an appointment for the administration of the estate.

Orders

Orders of the court

The debtor has leave to give an authority under s 188(1) of the Bankruptcy Act 1966 (Cth) naming and authorising Graeme Trevor Lean to call a meeting of the debtor’s creditors and to take control of the debtor’s property.

Note:

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIAN DISTRICT REGISTRY	WAG 7022 of 1998

JUDGE:	FRENCH J
DATE OF ORDER:	13 MARCH 1998
WHERE MADE:	PERTH

JUDGE:	FRENCH J
DATE:	13 MARCH 1998
PLACE:	PERTH