In the Matter of Roberts, Harley Warren; Roberts, Harley Warren [1998] FCA 216

HIS HONOUR: This is an application brought under section 188(4) of the Bankruptcy Act 1966 (Cth) by Harley Warren Roberts. Section 188(1) provides that a debtor may sign an authority in accordance with the approved form naming and authorising a registered trustee to call a meeting of the debtor's creditors and to take control of the debtor's property. Section 188(4) provides, however, that subject to section 192(1), which has no present relevance, a debtor cannot give an authority within six months of giving another authority unless the Court grants leave to do so. On 5 November 1997, the applicant signed an authority in favour of Richard Campbell Brien who convened a meeting of the creditors of the applicant on 8 December 1997. On that day a special resolution was proposed that the debtor be required to execute a deed of assignment. Seventy-one per cent of the creditors present voted for the resolution and 29 per cent voted against. Under section 189(1A)(b), the control of the debtor's property under section 189(1), which vests in the trustee, continues until the debtor and trustee make a deed of assignment or deed of arrangement following the special resolution of creditors. Since only 71 per cent of the creditors voted in favour, the resolution failed. Following that business, a further resolution was proposed that the debtor become a bankrupt. That resolution also failed. Mr Roach, the representative of AGC one of the creditors, voted against the resolution for the execution of a deed of assignment and in favour of the resolution that the applicant become a bankrupt. The meeting was then adjourned with the unanimous agreement of creditors while the applicant consulted an accountant adviser and Mr Roach. The minutes of the meeting record that it was apparent from the discussion that Mr Roach did not really understand what had transpired and that it was apparent that, if Mr Roach was to achieve his desired aim of having the financial affairs of the applicant brought to a conclusion quickly, he was now prepared to vote in favour of a deed of assignment. The applicant then requested Mr Brien to re-put the special resolution for the execution of a deed of assignment. Mr Brien indicated, however, that he was unable to re-put the resolution as it had been put and failed and could not be put again. In an affidavit read in these proceedings Mr Roach said that he voted against the special resolution because he was concerned that legal advice of a potential claim against one of the creditors had not been made available at the meeting. He was therefore not minded to vote in favour of any proposal put forward. He says, however, that he is in agreement for a further meeting of the debtor's creditors to take place although he has not decided whether to vote in favour of the resolution that the applicant be required to execute a deed of assignment. There is evidence before me that all but one of the creditors disclosed in the applicant's statement of affairs have been notified of the proposed application to the Court for leave for a further authority to be signed. There has been no opposition from any of those creditors. The only creditor who does not appear to have been notified is Advance Bank, a creditor in the sum of $28,464 out of a total of $865,055. As I perceive the matter, section 188(4) is designed to prevent a debtor from frustrating the enforcement of debts by creditors by continually renewing authority under section 188 so as to place control of his or her property in the hands of a trustee. I am satisfied, in the light of the evidence to which I have referred, that that is not the motivation of the applicant in seeking to give a further authority to Mr Brien. Accordingly I am satisfied this is an appropriate case for leave to be granted under section 188(4). Therefore, I make an order in terms of paragraph 1 of the amended application dated 3 March 1998. I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett