Banfield, Gordon Douglas v The Official Receiver

[1981] FCA 236

BANKRUPTCY ACT 1966

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IN THE FEDERAL COURT OF AUSTRALIA )

1

VICTORIAN DISTRICT	REGISTRY	)	No.	1 5 1 of	1 9 7 6
1
GENERAL DIVISION	1

Re: GORDON DOUGLAS BANFIELD

Applicant

Ex P a r t e :	THE OFFICIAL TRUSTEE	I N
BANKRUPTCY

Respondent

c o w : FOX J

25 August 1 9 8 1

REASONS FOR JUDGMENT

This i s a n a p p l i c a t i o n t o r e v i e w t h e

d e c i s i o n o f t h e R e g i s t r a r on t h e a d m i s s i b i l i t y o f

ques t ions d i r ec t ed to the bankrup t by counse l fo r t he

t r u s t e e i n an examination under 5 . 6 9 of the Bankruptcy

Act. The trustee has sought review before the Court ,

and tha t appl ica t ion has been opposed by the bankrupt .

The ma t t e r arises i n a simple way. The bank-

r u p t was the guarantor o f a number of mortgages, the

mortgagors being i n some o r a l l cases incorporated. There

apparent ly was defaul t under one o r more of the mortgages

and the mor tgagees have proved in th i s bankruptcy for an

amount of approximately $ 1 , 7 0 0 , 0 0 0 aga ins t t he bankrup t

under the guarantees thus given. There are proceedings

pending in t h e Supreme C o u r t . o f V i c t o r i a by one of t h e

indebted companies, knom as 9owntoi-m Car Parks Pty.

Limited, against t3e mortgagee, camsly the Austral iaz and

New Zealand Banking Gronp Limited, it be ing a l l eged

zppzrent ly thz-t a sale by the Bank waq a t an under value.

There may b e o t h e r a l l e g a t i o n s a s well; t h a t i s the one

t o which a t ten t ion has been turned f o r present purposes .

The bankrup t i n t h e course of the examinat ion to

which I have r e fe r r ed wqs beinz asked about his

l i a b i l i t y u n d e r t h e z u a r a n t e e s o r s t l ea s t one o f them,

and i n t h a t c o n n e r t i n n wzs being asked a s t n h i s kncwl5dge

collcernizg asy szles a t m u-der value cr any o ther

co l lus ive a r rangements thz t might halre been made, o r l b o x t

t n be made,between the Cnmprny t o which I hsve referred

and t h e Bank t o w h i c h I have r e fe r r ed .

Severa! question5 along these l ine< were asked

and answered end then objection was taken Qn beha1 5 of

t he bankrup t by h i s so l i c i to r , b roa -d ly on the grovnds th2.t

the euaminat ioc was tr?vel. l ing olvtside the F o w r given by

s.69(1). I+_ was in cubc tacce po in t ed ou t t ha t t he

q u e s t i o n s r e l a t e d t o a s i t n a t i o n which pr imar i ly a rose

between the company and the mortgagee, and t h a t an.y

i c t e r e s t o f t h e h a n k r u r t wzs secondary. Two qr thre.? li2es

of r e a s m i n g t h e n seemed t o h=ve converged.

I t '*'as though t t hz t t he ma t t e r shou ld avait t h e

r e s o l u t i o n o f t he Supreme Cnurt prncepdings, which I

understand have been on foot f o r some time. T t was a l s o

thowght t h a t i f any qupstionc were t n be asked about these

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matters it was really a matter for the liquidator of

the Company or the liquidators of the Companies and

that, as I have already mentioned, the matter so far as

the bankrupt is concerned was at one stage remove.

It is always difficult to determine in advance

how far any line of questioning should extend, but it

does seem to me that the questions were stopped at a

premature stage. Put more directly, I think that

questions which affected the liability of the bankrupt

under the mortgages o r any of them or which might effect

the amount ultimately provable by the mortgagees in the

bankrupt estate were admissible.

I doubt whether this is disputed. What does

need to be emphasised is that the bankrupt estate and the

trustee as its administrator had a direct interest in the

state of account between the mortgagor and the mortgagee.

If there had been a sale at an under value this would in

one way o r another affect the amount that could properly

be proved by the mortgagee in the bankruptcy and

collusive conduct might have the same effect.

The pendency of the proceedings in the Supreme

Court does.not of itself provide a reason for stopping

the line of questioning, but a particular situation may

arise, or may appear, as a result of which it would be

prudent, if not legally necessary, to postpone that part

of the examination.

There i s ano the r a spec t . I f it be t he f ac t

t h a t o n l y one Company has taken proceedings and the

mat te r is now a number of years o l d , it may b e t h a t a s a

r e s u l t o f something now s a i d by the bankrupt some a c t i o n

should be taken by t h e t r u s t e e t o a c t i v a t e o r a t l e a s t

t o reso lve mat te rs . This would only be done with due

caut ion and wi th regard t o t h e i n t e r e s t s o f t h e c r e d i t o r s

a s a whole. I t d o e s n o t a t a l l f o l l o w t h a t b e c a u s e t h e

l iquidators of the companies were not taking act ion that

it would be c o r r e c t f o r t h e t r u s t e e p a s s i v e l y t o a c c e p t

t h a t s i t u a t i o n w i t h o u t h i m s e l f becoming as well informed

as he could and taking any consequential action which

seemed appropr i a t e .

I do n o t t h i n k i n t h e c i r c u m s t a n c e s i t i s

necessary f o r me t o add anything more. The order sought

i s one dec la r ing tha t t he Reg i s t r a r shou ld a l low

ques t ions a long the l i nes ou t l ined in pa rag raph	one of
t h e a p p l i c a t i o n .

I th ink I w i l l c e r t a i n l y r e t u r n t h e m a t t e r t o

the Reg i s t r a r w i th th i s i nd ica t ion o f my reasons , s o

t ha t he may proceed with the examinat ion in accordance

therewi th . _- i

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I c e r t i f y that thls and the

precedlng pages are a t rue COPY of the

Reasons f o r JudgmentherelnofhlSHonour i