Re: NOEL ADSETT And: HARRY BERLOUIS; RAYMOND LOUIS BERLOUIS; ARMANDE CELISCA BERLOUIS; LIONEL JEAN BERLOUIS; KATHLEEN ROSEMARY BERLOUIS; JOSEPH LOUIS BERLOUIS; WILSON JOSEPH WILDE and ERNEST GEORGE HARRIS No. Q G183 of 1991 FED No. 549 Bankruptcy (1992) 109 ALR 100 (1992) 37 FCR 201
COURT
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION Northrop(1), Wilcox(1) and Cooper(1) JJ.
CATCHWORDS
Bankruptcy - Annulment pursuant to composition agreed by creditors - Costs of applications relating to administration of bankrupt estates - Order by primary judge that trustee pay costs of bankrupts of contempt proceedings - Order by primary judge that trustee pay his own costs of applications for his removal as trustee and for annulment of the bankruptcies and that no part of such costs be recoverable by him from composition fund - Circumstances in which a trustee may be deprived of indemnity from trust estate - Whether the making of the orders constituted a breach of the duty to provide natural justice to trustee - Whether the orders were within the proper discretion of the Court.
HEARING
BRISBANE
#DATE 31:7:1992
Counsel for the Appellant: D.F. Jackson QC and R. Douglas
Solicitors for the Appellant: Lynch and Co
Counsel for the Respondents: P.R. Dutney QC and T. Matthews
Solicitors for the Respondents: Lippiatt and Co
ORDER
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay to the respondents their costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. (See also Order 37 rule 2(3)).
JUDGE1
This appeal challenges orders for costs made by a Judge of the Court (Pincus J) following the disposal of three applications concerning the administration of the bankrupt estates of the respondents, Harry Berlouis, Raymond Louis Berlouis, Armande Celisca Berlouis and Lionel Jean Berlouis. The appellant, Noel Adsett, is the former trustee of the estates. The respondents comprise the four former bankrupts, two partners of the bankrupts ("the solvent partners"), Kathleen Rosemary Berlouis and Joseph Louis Berlouis, and two accountants who were appointed trustees of a composition made between the bankrupts and their creditors on 25 June 1991, Wilson Joseph Wilde and Ernest George Harris.
On 4 April 1991 a sequestration order was made against the estates of the four bankrupts. Mr Adsett was appointed trustee. At that time the four bankrupts and the two solvent partners were carrying on two partnership businesses at Hervey Bay, near Maryborough. Within a short time after the sequestration orders Mr Adsett became involved in discussions and actions concerning those businesses, including an application to the Supreme Court of Queensland which was eventually dismissed by Thomas J. It is not necessary for present purposes to detail those steps.
Also fairly shortly after the making of the sequestration orders, a proposal was mooted for a composition with creditors, using funds substantially provided by the National Bank of Australia, and a consequential application for annulment of the sequestration orders. Once again, it is not…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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Details
AGLC
Adsett, N. v Berlouis, H. & ors [1992] FCA 549 ((1992) 109 ALR 100; (1992) 37 FCR 201)
Case
[1992] FCA 549
Decision Date
CaseChat Overview and Summary
Adsett, N. v Berlouis, H. was a case heard in the Federal Court of Australia concerning the annulment of two bankruptcy proceedings and the associated costs. The appellant, Nicholas Adsett, was a bankrupt, while the respondents included the trustee of the bankrupt estates, Helen Berlouis, and other creditors. The dispute centred on the orders made by the primary judge regarding the costs associated with the administration of the bankrupt estates. The primary judge had ordered that the trustee pay the costs of the bankrupts' contempt proceedings and also ordered that the trustee pay her own costs in relation to applications for her removal as trustee and for the annulment of the bankruptcies. Furthermore, the primary judge ruled that no part of these costs could be recovered by the trustee from the composition fund. Adsett challenged these orders, arguing that they constituted a breach of the duty to provide natural justice to the trustee and that they were outside the proper discretion of the Court.
The legal issues before the Court were whether the orders made by the primary judge constituted a breach of the duty to provide natural justice to the trustee and whether the orders were within the proper discretion of the Court. The Court considered the relevant statutory provisions and case law in relation to the powers of the Court to order costs and the circumstances in which a trustee may be deprived of indemnity from the trust estate. The Court also examined whether the orders made by the primary judge were procedurally fair and whether they were an appropriate exercise of the Court's discretion.
In dismissing the appeal, the Court found that the orders made by the primary judge were within the proper discretion of the Court and did not constitute a breach of the duty to provide natural justice to the trustee. The Court held that the primary judge had appropriately exercised her discretion in making the orders and that the orders were procedurally fair. The Court also found that the orders were consistent with the statutory provisions and relevant case law. As a result, the appeal was dismissed, and the appellant was ordered to pay the respondents' costs of the appeal.
Orders
Orders of the court
THE COURT ORDERS THAT:
1. The appeal be dismissed.
2. The appellant pay to the respondents their costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. (See also Order 37 rule 2(3)).