Re Wolkowski, L. v Ex parte Pratt, D.J - [1991] FCA 288

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JUDGMENT NO. 11% / 9/

- RE : LESZEK WOLKOWSKI
Debtor

EX PARTE: DAVID JOHN PRATT
The Trustee

CORAM:

Jenkinson J.

PLACE :

Melbourne

DATE :

29 May, 1991

rEDERAL COURT OF

AUSTRALIA PRINCIPAL

REASONS FOR JUDGMENT

Application by the trustee of a deed of arrangement for an order under s.222(2) of the Bankruotcv Act 1966.

Relevant parts of s.222, which is in Part X of the

Act, are

" (1) Where there is a doubt, on a specific ground, whether a deed of assignment or a deed of arrangement was entered into in accordance with this Part or complies with the requirements of this Part, or whether a composition has been accepted by a special resolution of a meeting of creditors under section 204, the Inspector-General, a person authorised in writing by the Inspector-General, the Registrar, the trustee, a creditor or the debtor may apply to the Court for an order under subsection (2).

made under subsection (l), the Court may, (2) Upon the hearing of an application
subject to this section, make an order -

(a) declaring that the deed or
composition is void, or that it is not void, on the ground specified in the application; or

(b)

declaring that a provision of the deed is void, or is not void, on the ground specified in the application.

declaring a deed to be void on the ground that (3) The Court shall not make an order

it does not comply with the requirements of this Part if the deed complies substantially with those requirements.

before the Court (other than proceedings by way (10) Where in the course of proceedings

of an application under subsection ( l), the Court becomes of the opinion that there is a doubt, on a particular ground, whether a deed of assignment or deed of arrangement was entered into in accordance with this Part or complies with the requirements of this Part, or whether a composition has been accepted by a special resolution of a meeting of creditors under section 204, and that it is desirable that the doubt be resolved, the Court may direct the Registrar to apply to the Court under subsection (1) for an order under subsection (2) in relation to the matter."
A deed of arrangement executed by a debtor "is void

unless -

(a)

it is entered into in accordance with this Part; and

(b)

it complies with the requirements of this Part",

a provision of Part X declares : s.213(1).	Section 233(1)
provides :

"A deed of arrangement that is entered into in accordance with this Part and complies with the requirements of this Part is, upon being duly executed by the debtor and the trustee, binding on all the creditors of the debtor."

Section 204(1) authorizes creditors, by special resolution at a meeting called in pursuance of an authority conferred by their debtor in accordance with s.188, to require the debtor to execute a deed of arrangement under Part X and s .216…

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.

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Details

Case: [1991] FCA 288
Decision Date: 29 May 1991

CaseChat Overview and Summary

In the case of Re Wolkowski, L. v Ex parte Pratt, D.J, the court dealt with an application by the trustee of a deed of arrangement for an order under section 222(2) of the Bankruptcy Act 1966. The application was brought by David John Pratt, the trustee, and concerned Leszek Wolkowski, the debtor. The central issue was whether the deed of arrangement executed by the debtor complied with the requirements of the Act and was therefore valid.

The legal issue the court had to decide was whether the deed of arrangement was void due to procedural irregularities at a creditors' meeting, specifically whether there was a valid election of a chairman and whether a quorum was present. The court needed to determine if the irregularities were substantial enough to render the deed void or if they could be considered minor defects that did not invalidate the proceedings under section 306 of the Act.

The court found that there were indeed procedural irregularities at the creditors' meeting, such as the invalid voting of a proxy and the lack of a quorum during the election of a chairman. Despite these findings, the court concluded that these irregularities did not invalidate the deed of arrangement. The court exercised its discretion under section 222(2) not to declare the deed void, based on the good faith of the debtor and the absence of substantial injustice. The debtor had entered into the deed and made payments in good faith, without suspicion of its invalidity.

In light of these considerations, the court dismissed the application and chose not to declare the deed void, allowing the deed to proceed as valid. This decision was in line with previous unreported cases and legal precedents that supported the court's discretion in such matters.

Orders