Smeaton, K.R. v Kingham Agencies Pty Ltd Summary

IN THE FEDERAL COURT OF AUSTRALIA

)

GENERAL

DIVISION

)

QLD Part X 87 of 1987

BANKRUPTCY DISTRICT OF THE SOUTHERN	)
DISTRICT OF THE STATE OF OUEENSLAND	)

RE:

KEVIN ROY SMEATON

Debtor

EX PARTE:

KINGHAM AGENCIES PTY. LTD. and ROBERT

JOHN BAILEY and EDWARD CHARLES ROACH,

MAUREEN JOAN RAOCH and AMANDA

JANE BEAL

Appllcants

MINUTES OF ORDER

JUDGE MAKING ORDER:	PINCUS J .
DATE C)F OPDER:	17 AUGUST 1987
WHERE MADE:	BRISBANE
THE COURT ORDERS THAT:

The applicatlon for an extension

of tlme

In whlch to

execute a deed of arrangement be dlsmlssed.

NOTE:

Settlement and entry

of orders is dealt with In

Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COTJRT OF AUSTRALIA

)

GENERAL DIVISION

)	QLD Part X 87 of 19R7

BANKRUPTCY DISTRICT OF THE SOUTHERN ) DISTRICT OF THE STATE OF QUEENSLAND )

RE: KEVIN ROY SMEATON

Debtor

M PARTE:

KINGHAM AGENCIES PTY. LTD. and ROBERT

JOHN BAILEY and EDWARD CHARLES ROACH,

MAUREEN JOAN ROACH and AMANDA

JANE BEAL

Appllcants

PINCUS J .

17 AUGUST 1987

In thls matter

an appllcatlon

ha5

been made

M r .

Dutney Instanter f o r an extenslon of tlme to exec-Ate a deed.

The

debtor was the sub~ect

of a meetlng of credltors on 29 May i 9R7 at

the offlce of a flrm of accountants at

whlch there was passed

resolutlon In these terms:

"That pursuant to sectlon

204(l)(b) of

the Bankruptcy Act 1966,

the credltors requlre Kevln Roy Smeaton

to execute a

Deed of Arrangement under Part X of the Bankruptcy

Act."

The resolutlon did not define the terms

of the deed and the

deed, exhibit

2, which

was ultimately prepared, contalns terms

which are not in the resolution, nor, as far as I can see, mentioned in the minutes. The terms of the lntended deed, insofar

as they are matters of critical substance,

may be derived from p.2

of the minutes,

from which it appears that

the proposal was the

debtor pay a sum

of $4,500 for the benefit of hls CKedltOKS and

make provlslon for the controlling trustee's	fees,	whlch	were
advlsed to be an amount up to but not exceeding	$1,200.

The voting In respect of the resolutlon was, so far as

amount 1 s concerned, heavlly agalnst its passage, except for the

vote of a company which, It appears from the material, 1s

assoclated with the debtor.

The company in questlon, the name of

whlch 1 s Kablar Pty. Ltd., according to an affldavlt before

me,

was said at the meetlng not

to Intend to lodge a proof of

debt If

the resolutlon for the arrangement was passed.

That,

however,

does not appear from

the deed, nor from the minutes.

The subsquent hlstory of the matter was that

a deed was

prepared whlch, as I

have mentloned, has hecome exhlklt 7,

before

me and was glven to

the

debtor wlthln the perlod

21 day:

contemplated by s.216 of the Act.

The evldence suqqests, but

-hy

no means convinces me, that the debtor was

qlven no warnlnq 3 s

the necesslty of execcctlng the deed wlthln the

21 days. Nhat

dld wlth It was obscure; he may or may not

have taken advlce about

It, but In any event, he did not execute

It.

The contentlon made by Mr. Dutney is that I should act

under

s.33(l)(c) of the

Act

and

extend

the

time

llmlted

s.216(1).

The circumstances

of most importance in conslderlnq

that application seem to me to

be the followlng.

Firstly, the

matter has been

handled

with complete

carelessness.

The

creditors, who are under this proposal

to give up rlghts whlch

3 .

they would otherwise

have, are In my view prima facle entltled to

have the Act complied wlth.

So far from any serious attempt belng

made to do that, the requirement as to execution was treated as a

matter of no slgniflcance.

Secondly, there 1s no adequate reason

advanced for the delay which has occurred.

The explanations glven

are not convlnclng

and,

even if

they were true, would not

adequate.

Thlrdly, I take into account, as I think I am entltled

thls

applicatlon, that

the

deed

not

especlally

advantageous one for the credltors. The amount In questlon

will

not produce a large dlvldend and the arrangement would not have

been accepted were

It not for the vote

of the company

wh1ch

1 s

sald to be

associated wlth the debtor.

In the clrcumstances, the appllcatlcn

f g r an extenslcn

1 s . In m y vlew, one that should fall and

I dlsmlcs It.

Mr. Justice Pmcus

In the case of Smeaton, K.R. v Kingham Agencies Pty Ltd, the matter before the Federal Court of Australia involved an application for an extension of time for the debtor, Kevin Roy Smeaton, to execute a deed of arrangement. The applicants, Kingham Agencies Pty Ltd and others, sought an extension of the time limit under the Bankruptcy Act 1966 for the debtor to execute the deed of arrangement. The primary legal issue before the court was whether the judge should exercise his discretion under section 33(1)(c) of the Bankruptcy Act to extend the time limit for the execution of the deed of arrangement. The court had to consider whether the circumstances warranted an extension of time and if the applicants had provided sufficient reasons for the delay in executing the deed.

The court examined the handling of the matter by the parties involved, noting that the creditors, who were to give up certain rights under the proposal, were prima facie entitled to compliance with the Act. The court found that the requirement for executing the deed had been treated with little regard, indicating a lack of seriousness in adhering to the statutory requirements. Additionally, the explanations provided for the delay were not convincing and, even if accepted as true, would not have been adequate grounds for an extension. The court also considered that the terms of the deed were not particularly advantageous to the creditors, with the arrangement likely to produce only a small dividend, and the approval of the deed was largely due to the vote of a company associated with the debtor. Given these circumstances, the court dismissed the application for an extension of time.

In conclusion, the court found that the application for an extension of time should be dismissed. The court held that the handling of the matter had been careless, there was no adequate reason for the delay, and the terms of the deed were not particularly favourable to the creditors. As a result, the court did not see fit to extend the time limit for the execution of the deed of arrangement.

Smeaton, K.R. v Kingham Agencies Pty Ltd

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established