Joiner v Bailey [2004] FCA 1411

FEDERAL COURT OF AUSTRALIA

Joiner v Bailey [2004] FCA 1411 BANKRUPTCY – Deed of Assignment – construction of s 216 and s 222 of the Bankruptcy Act 1966 (Cth) – meaning of 'execute' – substantial compliance Bankruptcy Act 1966 (Cth) ss 222, 216, 33(1)(c), 222(3), 222(5)

MATHEW LESLIE JOINER AND GERALD THOMAS COLLINS AS TRUSTEES OF THE ESTATE OF IDA ELIZABETH BAILEY v IDA ELIZABETH BAILEY QUD96 OF 2004 KIEFEL J BRISBANE 29 OCTOBER 2004

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QUD96 OF 2004

BETWEEN: MATHEW LESLIE JOINER AND GERALD THOMAS COLLINS AS TRUSTEES OF THE ESTATE OF IDA ELIZABETH BAILEY

APPLICANTS

AND: IDA ELIZABETH BAILEY

RESPONDENT

JUDGE: KIEFEL J

DATE OF ORDER: 28 OCTOBER 2004

WHERE MADE: BRISBANE

THE COURT DECLARES THAT: 1. The Deed of Assignment dated 6 October 2003 signed by the first applicant and the respondent is not void and is effective at law. THE COURT ORDERS THAT: 2. The applicants' costs of and incidental to the application be costs of the administration of the respondent's estate. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY QUD96 OF 2004

BETWEEN: MATHEW LESLIE JOINER AND GERALD THOMAS COLLINS AS TRUSTEES OF THE ESTATE OF IDA ELIZABETH BAILEY

APPLICANTS

AND: IDA ELIZABETH BAILEY

RESPONDENT

JUDGE: KIEFEL J

DATE: 29 OCTOBER 2004

PLACE: BRISBANE

REASONS FOR JUDGMENT 1 On 28 October 2004 I made a declaration that a Deed of Assignment signed by the first applicant and the respondent and bearing the date 6 October 2003 was not void and was legally effective. At that time I proposed to provide short written reasons. These are those reasons. The respondent did not appear on the hearing of the application, which was filed in June 2004. A notice of motion seeking an adjournment had been foreshadowed by the respondent or someone acting for her on the morning of the hearing. Amongst the body of material lodged with the Court that day by the person assisting the respondent was a medical certificate which, however, was unclear as to whether the respondent was unable to attend a hearing and to understand what was being said at it. Further enquiries made by the applicants' solicitors did not reveal much more. There was no suggestion of whether the respondent might be able to attend and the matter appeared to require prompt resolution. In these circumstances the matter was not adjourned. 2 The question which had earlier been raised by the respondent and which involves s 222 of the Bankruptcy Act 1966 (Cth) ('the Act') concerns the time at which she applied her signature to the Deed of Assignment and had it witnessed. 3 The respondent attended at her then solicitor's office on 1 September 2003 and received some advice concerning a judgment debt, and the prospect of entering into an arrangement with her creditors. She was then more specifically advised as to the process of entering into a Deed of Assignment by the applicant Mr Joiner. At the conclusion of that advice she signed a Deed of Assignment and it was witnessed by her solicitor. Mr Joiner did not sign at that time. The meeting of her creditors did not take place until 6 October 2003. The resolution passed by the respondent's creditors was that she enter into a Deed of Assignment. At the conclusion of that meeting Mr Joiner said to her words to the effect that it was now appropriate for him to sign the deed and bring it into effect and she agreed that he should do so. 4 Section 216 of the Act provides: '(1) A deed of assignment or a deed of arrangement shall be executed by the debtor and the trustee within 21 days from the day on which the special resolution requiring the debtor to execute the deed was passed. (2) The execution of the deed by the debtor and by the trustee shall be attested by a witness.' 5 Section 33(1)(c) of the Act provides that the time for the doing of an act under the Act may be extended or abridged. 6 Section 222 of the Act empowers the Court to declare a deed void. Sub-sections (3) and (5) provide respectively that the Court shall not make an order declaring a deed to be void on the ground that it does not comply with the requirements of the Part if it substantially complies with those requirements; and an order shall not be made unless the Court is satisfied that it would be in the interests of the creditors to do so. In the present case the estate is not large and the trustees have proceeded with the administration of it to a significant extent. 7 The purpose of s 216 is to give effect to the creditors' resolution within the period specified and to ensure that the deed cannot later be denied as that of the debtor and trustee. 8 Although the word 'execution' in s 216(2) is clearly referrable to the signing of the deed, the meaning of the word 'executed' in subsection (1) may be wider. In its full sense 'execute' means 'to go through the formalities' necessary to the validity of (a legal act) - hence, to complete and give validity to (the instrument by which such an act is effected) by performing what the law requires to be done' (see BA Garner, A Dictionary of Modern Legal Usage, 2nd edn, Oxford University Press, New York, 1995, p 337). 9 In the present case it seems to me that until the meeting with Mr Joiner after the creditors meeting the respondent was not legally bound to the Deed of Assignment which she had earlier executed, in the sense that she could revoke her agreement to assign. Her agreement that Mr Joiner should then sign carried with it her own approval. She effectively ratified her agreement. The execution of the deed was then effective so far as concerned her. In these circumstances it may be said that the respondent executed the Deed of Assignment in the period referred to in s 216(1). Certainly such an approach would not seem to me to cut across the objects of the section. 10 In any event it seems to me that there has been substantial compliance with s 216 and the interests of creditors lie in the completion of the steps already taken with respect to the deed. I would not be prepared to make an order declaring the deed to be void. In these circumstances it seems to me appropriate that there be a declaration to the effect that the deed is legally effective. 11 At the hearing I expressed the view that, were it necessary, I would abridge time. On reflection, I am not sure that an abridgment would operate to bring the signature within the period. 12 Because the respondent has herself raised the question of compliance with s 216 and the trustee had to deal with it I considered it appropriate that the costs of the application be paid out of the administration of her estate. I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel.