ae 5 IN THE FEDERAL COURT OF: AUSTRALIA ) GENERAL DIVISTON ) PART X CRED oF ARRANGEMENT NO. 22 BANKRUPTCY DISTRICT OF THE SOUTHERN } OF 1975 DISTRICT OF THE STATE OF QUEENSLAND ) RE: JOHN EDWARD CARLYLE" - EX PARTE: PERMANENT TRUSTEE NOMINEES (CANBEPRA) LTD DATE OF HEARING: 3 MAY 1585 DATE JUDGMENT DELIVERED: 16 MAY 1985 COUNSEL: for the applicant Myr J.D. Muir instructed by c Peez Ruthning anc Co. . for the respondent My P.R. Dutney instructed py Gipplatt and Co. D.T. 0' BRIEN i6 MAY 1985 ASSOCIATE TO PINCUS J. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIViSTON } PART 4 DEED OF ARRANGEMENT NG. 32 BANKRUPTCY DISTRICT OF THE SOUTHERN ) OF 1975 DISTRICT OF THE STATE OF QOUEENSLAND } RE: JOHN EDWARD CARLYLE EX PARTE: PERMANENT TRUSTEE NOMINEES (CANBERRA) LTD MINUTES OF ORDER JUDGE MAKING ORDER: PINCUS J. DATE OF ORDER: 16 MAY 1985 WHERE MADE: BRISBANE THE COURT DECLARES THAT: 1. The deed of arrangement made between John Edward Carlyle as debtor and Lloyd George Rees and John Robert Rees as Registered Trustees on 6 January 1976, 18 binding on the respondent Permanent Trustee Nominees (Canberra) Ltd. 2. The release contained in Clause ll thereof operates to release John Edward Carlyle from the debt claimed in these proceedings to be due to Permanent Trustee Nominees (Canberra) Ltd. THE COURT ORDERS THAT: 1. The application by Permanent Trustee Nominees (Canberra) Ltd be dismissed. 2. Permanent Trustee Nominees (Canberra) Lta pay the costs of John Edward Carlyle of and incidental to each application. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) PART X DEED oF ARRANGEMENT NO 32 BANKRUPTCY DISTRICT OF THE SOUTHERN ) OF 1975 DISTRICT OF THE STATE OF QUEENSLAND } RE: JOHN EDWARD CARLYLE EX PARTE: PERMANENT TRUSTEE NOMINEES . LCANBERRA) LTD PINCUS J. 16 MAY 1985 REASONS _FOR JUDGMENT I have to determine an application under s.233(2) of the Bankruptcy Act 1966, by Permanent Trustee Nominees (Canberra) Ltd, which I shall call "the guarantee creditor", for leave to commence legal proceedings claiming a large sum against John Edward Carlyle, whom I shall call "the debtor". That appiication 1s resisted by the debtor, on the ground that such ledal oroceedings as the guarantee creditor desices to institute are prevented by a deed of arrangement executed by the debtor in 1976. The debtor makes a cross-appiication for a deciaration under $.30(1) of the Act that the deed is binding on tne guarantee creditor. 2. On 7 October 1975 the debtor executed, pursuant to s.188 of the Act, an authority in favour of Lloyd George Rees to caila meeting of his creditors for the purposes of Part X. On 3 November 1975 the debtor executed a statutory declaration verifying his statement of affairs. The guarantee creditor was not included in the list of unsecured creditors in Part II of the statement of affairs, but was mentioned in Part VII, Clause 4, which gives "particulars of my contingent liabilities and any other liabilities not specified in a previous part of this statement ...". A meeting of creditors, pursuant to the usual advertisement, was held on the same day, 3 November 1975, and the guarantee creditor was there rapresented. It was resolved that the debtor execute a deed of arrangement containing certain provisions mentioned in the resolution. There is a suggestion in the- material that there might have been difficulty in quantifying the precise amount due at the end of 1975, under the guarantee. However, there 1s no doubt that the guarantee creditor was at that time indeed a creditor. That is not, I think, disputed. The debtor relies upon Clause 11 of the deed as constituting a release of all obligations to creditors, including the guarantee creditor. Alternatively, the suggestion was advanced that for the purpose of granting declaratory relief, the Court may exercise equitable jurisdiction and treat tne deed as having been rectified as far as necessary. 3. It is not as clear to me as it should be precisely wnat background facts I am entitled to take unto account in construing the deed. However, one such fact is that when the deed was executed the guarantee creditor was, as I have said, clearly a creditor. Yet recital (d) of the deed dated 6 July 1976 says that "The names of the creditors of tne Debtor ani rhe several amounts wind to such creditors aré@ sez torth in che Second Schedule hereto" whicn Second Scheduie does not mention the guarantee creditor. It 1s clear that in tne sentence just quoted the expression "the creditors" prima facie means "all the creditors". The recital does not say that the names of the creditors who are to be bound are set forth but simpiy speaks of the creditors. _ Reinforcement of that construction, uf reinforcement is needed, is easily to be found. The preceding recital, (c), says "That a meeting of the creditors of the Dentor was held on the 3rd day of November, 1975 ...". That was, plainly, a meeting of the creditors generally, including the guarantee creditor. The argument of Mr Muir, for the guarantee creditor, was that the creditors bound were intended only to be chose ser aut in the Second Schedules. He pointed out chat under §.234 l' a deed need not release all debts. However, the fact trar the Second Schedule does not, apparently through iome mistake, properly set out che names of the creditors does nct seem to me to throw any real doubt upon the increnticn reveaied by the deea. It is possible, in view of exhibit "D" to tne affidavit of L.G. Rees, that the use of that document caused the errar. 4, Clause 11, om which'the deptor relies. says among other things, that "the creditors shall release the Debtor from all debts and liabilities due and owing by him to them...". The guarantee creditor would have me read tne expression "the creditors' in that clause as if it were "such of the creditors as are mentioned ain the Second Schedule hereto". Ide not think that construction 1S reasonably open. The deed ius, cr course, binding on all the creditors, under s.233(1'. It might also be argued" 'that the construction put forward by the debtor is improbable, as it would reach an unfair result, since the guarantee creditor would not be entitled tc any distribution. Although Clause 1 supports that view, the entitlement to a distribution is not really cleac; Clause 4(b) which provides for distribution refers in one placa to "tre creditors of the Debtor" and in the proviso to 'tne unsecured creditors set forth in schedule 2 hereto". In the event, there was no distribution to the unsecured creditors at ail, as the taxation authorities obtained all the money left after expenses. It may be that any unfairness could, had the matter oeen a live issue, have been overcome by interpreting Clause 6 as entitling the guarantee creditor to a distribution, or rectifying 1t. However that may be, there is nothing in the rather obscure provisions of Clause 6 to take away from the plain statement of the debtor's rights in Clause 11, which are exercisaple against "the crediters", meaning all the creditors. 5. Mr Dutney, counsel for the debtor, suggested 'that tne slip which seems to have been made in the drafting of the deed was caused by the failure of its draftsman to notice the reference to contingent ereditors in the Second Schedule, mentioned above. It 15 not necessary to reach a conclusion about that, nor do I think the evidence as to what was said at the meeting, presumably advanced as tnrewing light upon what people might reasonably nave understood the deed to provide for, is of any real assistance. The question is whether the incompleteness of the list of creditors in the deed produces "ne result, reading the document 415 a whole, that the expression "the creditors" in Clause 1l is to be taken to mean "such of the creditors as are listed herein". On that my opinion is in favour of the debtor and I propose to make the declaration he seeks, with the difference only that I think the declaration should be made in respect of the debt in question, and no others. I declare that the deed of arrangement made between John Edward Carlyle as debtor and Lloyd George Rees and John Rcbert Rees as Registered Trustees on 6 January 1976, is binding on the resvondent Permanent Trustee Nominees (Canberra) Ltd, and that the release contained in Clause 1l thereof operates to release John Euward Carlyle from the debt claimed in these eroceedings t- be due to Permanent Trustee Nominees (Canberra: Ltd. I dismiss tne application by Fermanent Trustee Nominees 'Canperra} Ltd and order chat it pay the costs of Jonn Edward Carlyle of and ancidental to sach application.