QG 7202  of   1998

QG 7147/98:

THE COURT ORDERS THAT:

The deed of arrangement entered into by the applicants on 8 August 1995 be terminated.

QG 7202/98:

THE COURT DirEcted THAT:

The Registrar accept a debtors’ petition presented by the applicants.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

QG 7202  of   1998

REASONS FOR JUDGMENT

On 16 April 1998, Dennis John Hawkins and Lynette Jean Hawkins made an application pursuant to s 236(1) of the Bankruptcy Act 1966 seeking an order terminating a deed of arrangement which had been entered into by them as debtors and Ivor Worrell as Trustee.  In an affidavit supporting that application, Mr Hawkins indicated that the applicants needed to have the deed of arrangement terminated so that they could file for bankruptcy.  The applicants’ Builders’ Registration number had been cancelled and the Queensland Building Services had made demand of moneys to repair a building which had been constructed by the applicants.

In that affidavit, it was said that the reason for seeking acceptance of a debtors' petition was so that the applicants could remain in possession of a 1978 Mazda utility valued at about $800, that being their only means of transport and necessary for Mr Hawkins to find work.

The deed of arrangement is dated 8 August 1995 and under it the debtors undertook to contribute the sum of $1000 per month until the Trustee had paid to the creditors 100 cents in the dollar.  The applicants have been unable to comply with the terms of the deed of arrangement.  Section 236 provides:

“(1)The Court may, upon application by the trustee, a creditor or the debtor, …if it is satisfied:

(a)     that the debtor…has failed to carry out or comply with a provision of the deed of arrangement;

make an order terminating the deed.

(2)     The Court shall not make an order terminating a deed on the ground specified in paragraph 1(a)…unless it is satisfied that it would be in the interests of the creditors to do so.

Sub-section (3) of s 236 provides that a sequestration order can be made on an application made under subsection (i) of s 236 if the application is made by a trustee or a creditor.”

It seems to me there is no power for me to make a sequestration order where the application under s 236(1) for the termination of the deed is made by a debtor.  In those circumstances it seems to me clear that, first, there has been non-compliance with the terms of the deed of arrangement and, second, it seems to me in the interests of creditors that the court should make an order terminating that deed.

I order that the deed of arrangement entered into by the applicants dated 8 August 1995 be terminated.  The applicants have filed an application seeking leave to present a debtors' petition against themselves.  Section 55(6) of the Bankruptcy Act provides:

“A debtor who has executed a deed of assignment or deed of arrangement under Part X or whose creditors have accepted a composition under that Part is not, except with the leave of the Court, entitled to present a petition against himself or herself unless:

…

(b)     the deed of arrangement ... has been terminated;

…”

The deed of arrangement having been terminated, it is now possible for the debtors to present a petition against themselves without the leave of the court.

In the circumstances, it seems to me that I should direct the Registrar to accept a debtors' petition presented by Mr and Mrs Hawkins.

Associate:

Dated:              11 August 1998