Smeaton, K.R. v. Kingham Agencies Pty Ltd & Ors [1987] FCA 456

NOTE: Settlement and entry of orders 1s dealt with in Rule 124 of the Bankruptcy Rules.

BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND

RE: KEVIN ROY SMEATON Debtor EX PARTE: KINGHAM AGENCIES PTY. LTD. and ROBERT

JOHN BAILEY and EDWARD CHARLES ROACH, MAUREEN JOAN ROACH and AMANDA JANE BEAL

In this matter an application has been made by Mr. Dutney instanter for an extension of time to execute a deed. The

debtor was the subject of a meeting of creditors on 29 May i987 at

the office of a firm of accountants at which there was passed a resolution in these terms: "That pursuant to section 204(1)(b) of the Bankruptcy Act 1966, the creditors require Kevin Roy Smeaton to execute a Deed of Arrangement under Part X of the Bankruptcy Act." The resolution did not define the terms of the deed and the deed, exhibit 2, which was ultimately prepared, contains terms which are not inthe resolution, nor, as far as I can see, mentioned 1n the minutes. The terms of the intended 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 his creditors and make provision for the controlling trustee's fees, which were

advised to be an amount up to but not exceeding $1,200.

The voting 1n respect of the resolution was, so far as amount 1s concerned, heavily against its passage, except for the vote of a company which, 1t appears from the material, 1s associated with the debtor. The company in question, the name of which 1s Kablar Pty. Ltd., according to an affidavit before me, was said at the meeting not to intend to lodge a proof of debt if the resolution for the arrangement was passed. That, however,

does not appear from the deed, nor from the minutes.

The subsquent history of the matter was that a deed was Prepared which, as I have mentioned, has become exhibit 2 before

me and was given to the debtor within the period of 21 da

contemplated by s.216 of the Act. The evidence suggests, but by no means convinces me, that the debtor was given no warning as toa the necessity of executing the deed within the 21 days. What he did with 1t was obscure; he may or may not have taken advice about

The contention made by Mr. Dutney is that I should act under s.33(1)(c) of the Act and extend the time limited by s.216(1). The circumstances of most importance in considering that application seem to me to be the following. Firstly, the matter has been handled with complete carelessness. The

creditors, who are under this proposal to give up rights which

they would otherwise have, are in my view prima facile entitled to have the Act complied with. So far from any serious attempt being made to do that, the requirement as to execution was treated as a matter of no significance. Secondly, there 1s no adequate reason advanced for the delay which has occurred. The explanations given are not convincing and, even if they were true, would not be adequate. Thirdly, I take into account, as I think I am entitled to on this application, that the deed is not an especially advantageous one for the creditors. The amount in question will not produce a large dividend and the arrangement would not have been accepted were i1t not for the vote of the company which is

In the circumstances, the applicaticn for an extensicn

15, in my view, one that should fail and I dismiss it.

Pages ar2 a true copy of the reasons for judgment herein of His Honour