Smith v Quintano - [1998] FCA 1801

JUDGMENT No. .d&2,l,.1

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - Part X composition - setting aside, terminating and avoiding a composition - whether sections 222, 239 and 242 overlap - incorrect material particular in statements of affairs - onus of proof - how an applicant can prove that a debt does not exist

Bankruptcy Act 1966 (Cth) ss 222, 236, 239, 242

Khera v National Australia Bank Limited [I9961 71 FCR 133 followed

Zantiotis v Andrew & Anor [I9881 80 ALR 299 considered

Re McLean; Exparte Friends' Provident Lfe Ofjce [I9921 108 ALR 360 considered

Re Dingle; Westpuc Banking Corporation v Worrell & Anor (19931 I19 ALR 265 considered

BRIAN SMITH v DEBORAH QUINTANO & ANOR

NX 78 OF 1996

BRIAN SMITH v MARTIN QUINTANO & ANOR

NX 79 OF 1996

EINFELD J

2 APRIL 1998

SYDNEY

GENERAL DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)	NX 78 of 1996
NEW SOUTH WALES DISTRICT REGISTRY )	NX 79 of 1996

In NX 78/96:

Between:

B U N SMITH

Applicant

And:

DEBORAH OUINTANO

First Respondent

And:

VANDA GOULD

Second Respondent

In NX 79/96:

Between:

BRIAN SMITH

Applicant

And:	MARTIN OUINTANO

First Respondent

And:	VANDA GOULD

Second Respondent

ORDER

The Court orders that:

1. The applications be dismissed.

2. The applicant pay the respondents' costs.

Note:

Settlement of entry of orders are dealt with in accordance with Order 36 of the

Federal Court Rules.

EINFELD J

2 APRIL 1998

SYDNEY

GENERAL DISTRIBUTION

IN THE FEDERAL COURT OF AUSTRALIA	)	NX 78 of 1996
NEW SOUTH WALES DISTRICT REGISTRY )	NX 79 of 1996

In NX 78/96:

Between:

B U N SMITH

Applicant

And:

DEBORAH QUINTANO

First Respondent

And:

VANDA GOULD

Second Respondent

In NX 79/96:

Between:

BRIAN SMITH

Applicant

And:	MARTIN OUINTANO

First Respondent

And:	VANDA GOULD

Second Respondent

REASONS FOR JUDGMENT

EINFELD J	SYDNEY	2 APRIL 1998
INTRODUCTION

By applications dated 16 August 1996, the applicant, Brim Smith, attacks a composition of the creditors of Martin Quintano and his wife Deborah Quintano (the debtors), entered into on 15 July 1996 pursuant to Part X of the Bankruptcy Act I966 (Cth) (the Act). Mr Smith was the only creditor to vote against the composition and he now seeks to have it either set aside or terminated, on the basis that the debt of the largest creditor did not actually exist and should not have been admitted. Without that creditor voting in favour of the composition, the special resolution would not have passed.

BACKGROUND

In late 1988 and early 1989, Brian Smith carried out some building work on a property owned by the debtors. When payment was not made for this work, Mr Smith issued proceedings in the District Court of New South Wales. In the course of negotiations between Mr Smith and the debtors to settle these proceedings, the debtors both swore statutory declarations on 2 March 1995 as to their respective debts. The matter was not settled and on 13 April 1995 Mr Smith obtained judgment in the District Court of New…

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 Smith v Quintano

Details

AGLC: Smith v Quintano [1998] FCA 1801
Case: [1998] FCA 1801
Decision Date: 2 Apr 1998

CaseChat Overview and Summary

In the Federal Court of Australia, Brian Smith brought applications to challenge a composition entered into by Martin and Deborah Quintano. Smith sought to have the composition set aside or terminated, arguing that a significant creditor, John Quintano, was not entitled to vote on the composition because the debt he claimed against the Quintanos did not exist. Smith was the only creditor to vote against the composition, which passed with the requisite majority. The court dismissed Smith's applications, finding that they were improperly constituted under sections 239 and 242 of the Bankruptcy Act 1966 (Cth), and should have been brought under section 222. Even if the applications had been correctly constituted, the court found there was insufficient evidence to prove that the debt in question did not exist. The court also noted that the composition had been finalised, and there was no evidence that avoiding it would benefit the creditors. The applications were dismissed, and Smith was ordered to pay the respondents' costs.

Orders