Re Nolan, J.W.M. v Ex parte Seargeant D.L. [1995] FCA 120

CATCHWORDS BANKRUPTCY - application to set aside composition - whether creditors entitled to vote and in what amount - composition not approved by three-quarters in value of creditors - whether discretion should be exercised - composition declared void and sequestration order made. Bankruptcy Act 1966 (Cth) s 222(2), s 222(4), s 222(7) Musolino v Sidiropoulos (1991) 101 ALR 235 (FCA/FCt) Re Dingle; Westpac Banking Corporation v Worrell (1993) 47 FCR 478 (FCA/FCt) Augustyn v Putnin (1988) 83 ALR 514 (FCA/FCt) RE JEREMY WILLIAM MARDEN NOLAN; EX PARTE DAVID LLEWELLYN SEARGEANT NX 191 of 1993 Sackville J. 14 March, 1995 Sydney.

FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No. NX 191 of 1993 GENERAL DIVISION ) RE: JEREMY WILLIAM MARDEN NOLAN Debtor BETWEEN: DAVID LLEWELLYN SEARGEANT Applicant AND: JEREMY WILLIAM MARDEN NOLAN Respondent CORAM: SACKVILLE J. PLACE: SYDNEY DATE: 14 MARCH 1995 MINUTES OF ORDER THE COURT: 1. Declares, pursuant to s.222(2) of the Bankruptcy Act 1966 ("the Act") that the composition purportedly approved at the creditors' meeting of 7 December 1993 is void, on the ground that the proposed composition was not accepted by a special resolution of creditors as required by s.204 of the Act. 2. Orders, pursuant to s.222(7) of the Act, that a sequestration order be made against the estate of the respondent. 3. Declares that the act of bankruptcy occurred on 9 November 1993. 4. Orders that costs of this application be taxed and paid out of the estate of the debtor in accordance with the provisions of the Act. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

FEDERAL COURT OF AUSTRALIA ) NEW SOUTH WALES DISTRICT REGISTRY ) No. NX 191 of 1993 GENERAL DIVISION ) RE: JEREMY WILLIAM MARDEN NOLAN Debtor BETWEEN: DAVID LLEWELLYN SEARGEANT Applicant AND: JEREMY WILLIAM MARDEN NOLAN Respondent CORAM: SACKVILLE J. PLACE: SYDNEY DATE: 14 MARCH 1995 REASONS FOR JUDGMENT The Proceedings The applicant, David Llewellyn Seargeant ("the applicant"), is one of a number of unsecured creditors of Jeremy William Nolan ("the respondent"). On 7 December 1993, at an adjourned meeting of creditors of the respondent, a special resolution was passed in the following terms: "That the creditors of Jeremy William Nolan accept a composition of $30,000 under Part X of the Bankruptcy Act, 1966 to be paid by him in full satisfaction of all debts owed by Mr Nolan. The full amount to be paid immediately following the meeting. That the order of the distribution of the sum of $30,000 be in accordance with the provisions of Section 108 and 109 of the Bankruptcy Act, 1966." The applicant (who voted against the resolution) applies, under s.222(2) and s.222(4) of the Bankruptcy Act 1966 ("the Act"),for an order declaring the composition void. In the alternative, the applicant seeks an order under s.239(2) of the Act setting aside