Andrew O’Brien KC appeared for the first respondent, instructed by JCL Law Partners.
The appellants are debtors for whom compositions were accepted pursuant to s 73 of the Bankruptcy Act 1966 (Cth). The appellants failed to make required payments to their creditors (the respondents) under the compositions.
The issue on this appeal is whether the primary judge was correct to conclude that the compositions terminated upon the debtors’ default in making the contributions that were payable.
This appeal involved two issues. First, the proper construction of s 222D of the Bankruptcy Act. Second, the proper construction of a clause in the compositions proposed by the appellants, Ms Perovich and Mr Spencer (the debtors) and accepted by their respective creditors (Compositions).
Regarding the first issue, the Court held that s 222D meant a personal insolvency agreement is terminated automatically, by the occurrence of any circumstance or event, without limitation upon the circumstances or events which will cause the termination. Concerning the second issue, the Court held that the relevant clause in the compositions has the effect that a default in the contributions payable terminates the compositions automatically. The appeal was dismissed.
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