Thompson v Turnbull
[2015] FCCA 1563
•4 June 2015
FEDERAL CIRCUIT COURT OF AUSTRALIA
| THOMPSON v TURNBULL | [2015] FCCA 1563 |
| Catchwords: PRACTICE AND PROCEDURE – Interlocutory injunctions – ex parte application. |
| Legislation: Bankruptcy Act 1966 ss.27, 30, 33, 64, 64A, 64N, 194 |
| Application by Benjamin Peter Piggott [2009] FMCA 1061 Peter Ian Parker and Phyllis Parker Ex Parte: Evan Robert Verge [1994] FCA 1048 Pretorius v Daltons Carpet Tiles Pty Ltd (1984) 1 FCR 346 |
| Applicant: | LOUISE ANN THOMPSON AS TRUSTEE OF THE PERSONAL INSOLVENCY AGREEMENT OF PETER JOHN TURNBULL |
| Respondent: | PETER JOHN TURNBULL |
| File Number: | SYG 1515 of 2015 |
| Judgment of: | Judge Street |
| Hearing date: | 4 June 2015 |
| Date of Last Submission: | 4 June 2015 |
| Delivered at: | Sydney |
| Delivered on: | 4 June 2015 |
REPRESENTATION
| Solicitors for the Applicant: | Mr B.N. Sewell Sewell & Kettle |
| No appearance by the Respondent. |
ORDERS
The time for holding of the meeting of creditors pursuant to s.194 of the Bankruptcy Act 1966 be extended to 24 April 2015.
The requirement to advertise the meeting of creditors held on 24 April 2015 as required by s.64A(2) the Bankruptcy Act1966 as specified in Schedule 6 Part 2 of the Bankruptcy Regulations1996 be disregarded for the purpose of the meeting on 24 April 2015.
The costs of the applicant in respect of this application be costs payable from the fund in the personal insolvency agreement on a trustee basis.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1515 of 2015
| LOUISE ANN THOMPSON AS TRUSTEE OF THE PERSONAL INSOLVENCY AGREEMENT OF PETER JOHN TURNBULL |
Applicant
And
| PETER JOHN TURNBULL |
Respondent
REASONS FOR JUDGMENT
This is an application within the Court’s jurisdiction under s.27 of the Bankruptcy Act 1966 in respect of an ex parte application for an extension of time for the holding of the meeting of creditors pursuant to s.194 of the Bankruptcy Act, so as to be extended to 24 April 2015, and for a requirement to advertise the meeting of creditors as required by s.64(2) of the Bankruptcy Act and Schedule 6 Part II of the Bankruptcy Regulations 1996 be disregarded.
The trustee has sworn a detailed affidavit identifying her extensive experience in the field of insolvency, and identifying her appointment as a controlling trustee, which was certified by the official receiver on 16 March 2015 in circumstances where the respondent executed an authority pursuant to Part X of the Bankruptcy Act on 10 March 2015, and in respect of which the applicant consented to accept the authority.
The respondent provided a statement of affairs on 12 March 2015, and between the date of appointment and 13 April 2015, the applicant conducted investigations into the respondent’s examinable affairs and prepared a report that was sent to creditors, which included a draft personal insolvency agreement.
The report to creditors of 13 April 2015 contained a notice of meeting of creditors, giving a date for meeting on 24 April 2015. This date was outside the 25 working day period which a meeting of creditors is required to be held under the act. The applicant identified that the selection of the date was a result of an error in calculation, being a human error at the time of the making of the calculation, in which the applicant mistakenly believed that there was a 30 working day timeframe allowed over Easter as there is in December. The applicant did not become aware of the error until 12 May 2015 and took prompt steps to rectify the situation and move the Court for appropriate relief.
The applicant recommended that the creditors vote in favour of the respondent’s proposal as it would result in a more favourable outcome for creditors than if the respondent became undischarged bankrupt. The applicant identified that an email was sent to the Australian Financial Security Authority requesting the advertising of the meeting on 13 April 2015. Unfortunately, the email was sent to an incorrect email address which was not notified at the time of sending of the email, and the error was not ascertained until the day the meeting of creditors was held, and until that date, the applicant was unaware the matter had not been listed on the AFSA website as required, pursuant to s.64A, and the power exercised by the inspector-general of Schedule 6 of the Regulations requiring notice on the AFSA website.
The applicant deposed to the fact that she believed that the requirement for advertising on the AFSA website or the daily newspapers had been complied with and did not become aware of the mistake until the date of the meeting, by which time it was too late to take any step to remedy the human error. The applicant correctly identified the public interest and objective of the advertising requirement to ensure that all creditors are made aware of the meeting, and the applicant noted that the respondent had maintained detailed records and that creditors as far as Queensland, and the United Kingdom, had in fact participated in the creditors meeting.
The applicant noted that in accordance with notice provided to the creditors in the report of 13 April 2015, the meeting was held on 24 April 2015 at 2.37 pm and that a register of creditors was kept of those who attended in person and who appeared by proxy. It is apparent from that schedule of attendance that a significant number of the identified creditors attended the meeting, and so far as value of the respective creditors, the substantial majority of the value of creditors attended and supported the resolution that was passed.
The Court notes that there were three proofs of debt, which, for the purpose of the meeting, were rejected and the applicant identified the procedure that occurred at the meeting in the taking of relevant notes, which dealt with the creditors present and their value in detail. It is apparent from the minutes that there was a quorum present, which s.64N of the Act the motion was passed relevantly, as a special resolution:
That the debtor be required to execute a personal insolvency agreement to provide third-party payments to the trustee total amount of 485,000, paid on or before 14 February 2015 to allow for a distribution to be on or about 31 May 2015, and on completion he be fully released from his provable debts.
Then it is recorded the motion was passed in numbers and value with 15 votes for and two against, and in value 92.14% for and 7.86% against. The meeting also dealt with other matters of remuneration.
After the creditors meeting, the PIA was executed with the applicant as trustee and by the respondent. On 27 April, the trustee consent to act declaration notice of special resolution and the statement by special resolution was lodged with the official receiver, as well as the respondent’s executed personal insolvency agreement. Also, on 27 April 2015 the applicant wrote to creditors regarding the passing of the resolution and identifying the intention to declare a dividend and providing a proof of debt form.
The applicant notes that there has been no contact from any creditor complaining in respect of the meeting being held too late or any complaint from any creditor in respect of the lack of advertisement on the AFSA website; that there has been no contact from any creditor complaining that they did not receive the opportunity to have their voice heard at the meeting of creditors and that there has been no contact from any creditor seeking to overturn the PIA after the meeting of creditors.
The applicant deposes to the fact that she believed that the creditors had not been prejudiced, either by the meeting for creditors being held outside the statutory timeframe or by the meeting not being advertised on the AFSA website. The applicant deposed to the fact that the entering into of the PIA was for the benefit of the creditors as a whole and that that belief was reinforced by the near unanimous vote in favour of the PIA at the creditors meeting.
The principles relating to the extension of time for the holding of a meeting have been discussed in Application by Benjamin Peter Piggott [2009] FMCA 1061 at [6]-[13]. I am satisfied that this is not a case where the timings were ignored but it is one where there was a human error. I am satisfied that the length of the delay was minimal and that proper steps were taken by the applicant to address the issue.
I am satisfied that the substantive merit in the matter is one where it is in the interests of creditors as a whole to make the orders for extension sought. I am satisfied that there is no identifiable prejudice to any party affected by the extension. There is no question of the Court’s power to grant the extension, as identified in Pretorius v Daltons Carpet Tiles Pty Ltd (1984) 1 FCR 346 at [352]-[353]. Section 33 provides appropriate power in respect of the first order sought concerning the extension of time.
In relation to disregarding the advertisement, the requirement imposed under s.64(a)(2) is one that identified notification in the manner specified in the regulations. The publication on the website pursuant to that provision arose as a result of an exercise of the power by the Inspector General approving the AFSA website. In my opinion, in these circumstances this falls within the failure by the trustee which can be remedied by the Court within s.30(5)(b). I take into account in that regard the Court’s power under s.30(1) which provides a broad discretion, in effect to avoid any invalidating consequence that may flow from noncompliance with s.64(a)(2).
Consistent with the approach adopted by French J, as he then was, in Peter Ian Parker and Phyllis Parker Ex Parte: Evan Robert Verge [1994] FCA 1048, the relevant considerations are whether the noncompliance is likely to have caused prejudice to any party whether the invalidity would result in a substantial inconvenience or injustice. I am satisfied on the evidence before this Court that the noncompliance is unlikely to have caused prejudice to any party. I am satisfied that the invalidity would cause substantial inconvenience and injustice. In those circumstances, it is appropriate to make an order that the requirement to advertise the meeting of creditors under s.64(a)(2) of the Bankruptcy Act as identified by Schedule 6(2) of the Bankruptcy Regulations be disregarded.
I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of Judge Street
Associate:
Date: 9 June 2015
0
2
3