Gee v Schmutter [1971] HCA 6

Gee v Schmutter [1971] HCA 6

The deed was not a deed of assignment merely because it assigned the debtor's divisible property to the trustee, and it was not a deed of composition because it did not contain an agreement to accept instalments or less than the full amount in satisfaction. It arranged the debtor's affairs so that he could avoid imprisonment and bankruptcy, carry on his business, pay amounts including road taxes and fines, and pay creditors in full. Nothing in Pt X precluded it from operating as a deed of arrangement, so the Federal Court of Bankruptcy erred in treating it as void and refusing directions.

Jurisdiction
Australia
Procedural Posture
Appeal From the Federal Court of Bankruptcy Concerning an Application for Directions Under S. 134 (4) of the Bankruptcy Act 1966 Cth / High Court Appeal
Outcome
Appeal allowed; order of the Federal Court of Bankruptcy set aside; directions given to the trustee.
Legal Topics
['pt X Arrangements With Creditors Without Sequestration' 'deed of Arrangement' 'deed of Assignment' 'deed of Composition' 'trustee Directions' 'road Tax and Road Traffic Fines']
['bankruptcy and Insolvency'] ['pt X Arrangements With Creditors Without Sequestration' 'deed of Arrangement' 'deed of Assignment' 'deed of Composition' 'trustee Directions' 'road Tax and Road Traffic Fines']

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Procedural Posture

Appeal From the Federal Court of Bankruptcy Concerning an Application for Directions Under S. 134 (4) of the Bankruptcy Act 1966 Cth / High Court Appeal

Legal Issues

  1. 1 ['Whether the deed executed by the debtor was a deed of assignment, a deed of composition, or a deed of arrangement within Pt X of the Bankruptcy Act 1966 Cth.' 'Whether inclusion of an assignment of all divisible property necessarily made the deed a deed of assignment and void for not conforming with the Fourth Schedule.' "Whether the trustee was empowered to continue receiving proceeds of the debtor's haulage business and to pay road traffic fines from moneys in hand."]

Ratio Decidendi

The deed was not a deed of assignment merely because it assigned the debtor's divisible property to the trustee, and it was not a deed of composition because it did not contain an agreement to accept instalments or less than the full amount in satisfaction. It arranged the debtor's affairs so that he could avoid imprisonment and bankruptcy, carry on his business, pay amounts including road taxes and fines, and pay creditors in full. Nothing in Pt X precluded it from operating as a deed of arrangement, so the Federal Court of Bankruptcy erred in treating it as void and refusing directions.

Court Disposition

Appeal allowed; order of the Federal Court of Bankruptcy set aside; directions given to the trustee.

Orders

  • ['The trustee is empowered under the deed of arrangement to continue to receive moneys from the debtor being the proceeds of the business carried on by the debtor as a haulage contractor until such time as he has in hand sufficient to pay the then remaining balance of the road taxes, road traffic fines, provable...