Simons, P.R. v Deputy Commissioner of Taxation

[1993] FCA 1019

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JUDGMENT No. ........ ........ .. ........ .... l b l ? , 9 3

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	) No. NX242 of 1992
BANKRUPTCY DISTRICT OF	) No. NB 843 of 1993
THE STATE OF NEW SOUTH WALES

PETER ROGER SlMONS

Debtor

EX PARTE: DEPUTY COMMISSIONER QF TAXATION

Creditor

Court:	Beazley, J. Sydney
Date:	30 March 1993

,RF.ASONS FOR EX TEMPORE JUDGMENT

In this matter the Deputy Commissioner of Taxation seeks orders that the Deed of

Arrangement No. NX 242 of 1992 be declared void or be terminated; that summary

sequestration order be made against the estate of the respondent debtor, Peter Roger Simons; and that the Deputy Commissioner's costs be taxed and paid out of the estate

be entered into. The resolution was passed upon a consideration of the debtor's

of the debtor.

The history of the matter is that on 26 October 1992 the debtor executed an authority

under the provisions of s188 of the Bankruptq Act 1966 and Richard Campbell Brien
was appointed his controlling trustee. There were thereafter two meetings of
creditors with the result that a resolution was passed that the Deed of Arrangement
affairs which, at that time in November of 1992, revealed assets of $38,000 and
unsecured liabilities m excess of $900,000. The Deputy Commissioner of Taxation

comprised at least 79 per cent of the total of the unsecured creditors.

The primary reason that the resolution that the debtor enter into a Deed of

Arrangement was passed was that at that tlme the debtor, who had been a partner in

a firm of solicitors, Grahame Goldberg Partners, (the partnership having been

determined between the meetings of 19 November 1992 and 27 November 1992) was,

according to advices given to the trustee by Grahame Goldberg, to remain employed

as a solicitor with hls firm earn~ng an income slightly in excess of $100,000 per year.

Subsequently, however, the debtor's employment with Grahame Goldberg Partners

was terminated, apparently as a result of deficiencies his employer found in the trust
account which he attributed to conduct of the debtor. The Deed of Arrangement was
executed on 15 January 1993 notwithstanding that termination of employment,

however shortly afterwards, the trustee was adv~sed that the debtor's practising

certificate as a solicitor had been cancelled by the Law Society. There is no direct

evidence from the Law Society of this, however, Mr Brien has deposed in his affidavit
of 30 March 1993 that that information was provided to him by a MS Prohert of the

Law Society and I am advised it was subsequently confirmed by Mr Goldberg of

Grahame Goldberg Partners. Sim~larly, I am advlsed by Mr Skinner, counsel for the

applicant, that the oft~ce of the Deputy Commiss~oner of Taxation has been advlsed

by the Law Society that the debtor's practising certificate has been cancelled.
Although the application before me today seeks an order in the alternative that the

Deed of Arrangement be declared void or be terminated, counsel has made it clear

that his primary application is that the Deed be terminated.

Pursuant to the provisions of s236(2) of the Barzhptcy Act the court shall not make an order terminating a Deed on any ground specified in s236(l)(a) or (c) unless it is satisfied that it would be in the interests of the creditors to do so. Those

subparagraphs of subs(1) provide that the court may, upon the application of a
creditor, make an order terminating the Deed if it is satisfied under subpar(a) that the
debtor has failed to carry out or comply with a provision of the Deed of

Arrangement, or under subpar(c) that for any other reason the Deed of Arrangement ought to be terminated.

In circumstance% where the underlying reason for the entry into the Deed of

Arrangement was to permit the debtor to make contributions to his estate out of his

employment and that employment has been terminated and cannot be reinstated

easily or alternative like employment found, I consider that provides an appropriate	reason for the Deed to be terminated and it is in the interests of creditors that this
occur.
Having regard to the circumstances which have occurred in relation to the debtor's
employment and his practising certificate, the fact that on 1 December 1992 a creditor's petition which had been presented by the Deputy Commissioner of Taxation was dismissed, and the resolution that the debtor enter into a Deed of Arrangement, I consider it is appropriate to make a sequestration order under the provisions of s236(3).
I should add that I have been adv~sed that contact has been made by the controlling
trustee, Mr Brien, with the debtor who advlsed that he did not wish to be represented today at the hearlng of this application and that he would simply await the outcome of the application to the court.
Accordingly, I order that the Deed of Arrangement No. NX 242 of 1992 be
terminated. I make a sequestration order against the estate of the debtor. I order that the costs of the application be taxed and paid out of the estate of the debtor, and
I direct that a draft of this order be delivered to the Registrar within seven days of
today's date.
I certify that this and the preceding 3 pages are a true copy of the Reasons for
Judgment herein of her Honour Justice Beazley.

Associate: /-eh Date: 21 January 1994

Counsel for the Applicant:	Mr B Skinner
Solicitors for the Applicant:	Australian Government Solicitor
Date of hearing:	30 March 1993