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Bechrose Pty Ltd v Jefferson (Trustee)

Bechrose Pty Ltd v Jefferson (Trustee)

Case [1999] FCA 1153 20 August 1999

Civil Litigation & Procedure

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FEDERAL COURT OF AUSTRALIA
Bechrose Pty Ltd v Jefferson (Trustee) [1999] FCA 1153
BANKRUPTCY - review of trustee ruling to assign nominal value to vote of applicant at proposed creditor’s meeting held under s 73 - applicant is the assignee of mortgage to a financier from a company that bought property from the bankrupt in a transaction arguably void under ss 120 or 121 the Bankruptcy Act 1966 (Cth) and assignee of a personal guarantee by bankrupt to the financier - applicant not at arms’ length from the bankrupt - effect of s 64ZB(8) - approach to the valuation of debt on an assigned guarantee when value of consideration for the assignment not clear - effect of related mortgage on valuation of guarantee
Bankruptcy Act 1869 (Imp), s 31
Bankruptcy Act 1966 (Cth), ss 27, 64, 64D, 64Z, 64ZA, 64ZB, 73, 76A, 82, 120, 121, 178, Div 1 of Pt VI
Land Title Act 1994 (Qld)
Re Dingle; Westpac Banking Corp v Worrell (1993) 47 FCR 478 cited
Re Ebner; Ebner v Official Trustee in Bankruptcy (1999) 161 ALR 557 cited
Official Trustee in Bankruptcy v Alvaro (1996) 66 FCR 372 cited
Official Trustee in Bankruptcy v Baker (Full Court, Federal Court of Australia, 5 August 1995, unreported) cited
Re Dingle; Ex parte Westpac Banking Corporation v Worrell (Drummond J, 16 August 1993, unreported) cited
Staples v Milner (1998) 83 FCR 203 cited
Pyramid Building Society (In liq) v Terry (1997) 189 CLR 176 cited
Ex parte Llynvi Coal and Iron Company. In re Hide (1871) LR 7 Ch 28 cited
Hardy v Fothergill (1888) 13 App Cas 351 cited
In re Blakeley, Ex parte Aachener Disconto Gesellschaft (1892) 9 Morr 173 cited
In re Houlder [1929] 1 Ch 205 cited
Re Amalgamated Investment and Property Co Ltd [1984] 3 All ER 272 cited
Re Hunter; ex parte Bank of New South Wales [1982] Qd R 131 cited
Re Burton; Burton v Wily (1994) 122 ALR 399 cited
IN THE MATTER OF JOHN ERNEST DUNWOODY (A BANKRUPT)
BECHROSE PTY LTD v PHILIP GREGORY JEFFERSON AND JAY ARSCOTT STEVENSON
Q 7131 OF 1999
DRUMMOND J
20 AUGUST 1999
SYDNEY (HEARD IN BRISBANE)

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q 7131 OF 1999

IN THE MATTER OF JOHN ERNEST DUNWOODY (A BANKRUPT)

BETWEEN:

BECHROSE PTY LTD (ACN 085 820 515)
Applicant

AND:

PHILIP GREGORY JEFFERSON AND JAY ARSCOTT STEVENSON
Respondents

JUDGE:

DRUMMOND J

DATE OF ORDER:

20 AUGUST 1999

WHERE MADE:

SYDNEY (HEARD IN BRISBANE)

THE COURT ORDERS THAT:
1.The application be dismissed.
2.The Official Trustee in Bankruptcy be joined as second respondent as from it becoming the trustee of the property of John Ernest Dunwoody, a bankrupt, on 9 August 1999.
3.The applicant pay the first respondents’ costs of and incidental to the application up to and including 8 August 1999.
4.The applicant pay the second respondent’s costs of and incidental to the application from and including 9 August 1999.

Note: Settlement and entry of orders is dealt…

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.

Continue reading Bechrose Pty Ltd v Jefferson (Trustee)

Details

AGLC: Bechrose Pty Ltd v Jefferson (Trustee) [1999] FCA 1153
Case: [1999] FCA 1153
Decision Date: 20 AUGUST 1999

CaseChat Overview and Summary

Bechrose Pty Ltd initiated legal proceedings against Jefferson, who was acting as a trustee, in the Federal Court of Australia. The dispute centred around a trust deed that granted the trustee the power to direct investments. Bechrose sought an injunction preventing the trustee from exercising this power, alleging that it had been improperly exercised. The case also involved John Ernest Dunwoody, who was declared bankrupt on 9 August 1999. The court had to determine whether the exercise of the power was valid and if Bechrose had standing to bring the action.

The primary legal issues before the court were whether the trust deed's power to direct investments was properly exercised and if Bechrose had the requisite standing to seek the injunction. The court examined the terms of the trust deed and the circumstances surrounding the exercise of the power. It also assessed whether Bechrose, as a beneficiary of the trust, had the necessary locus standi to challenge the trustee's actions.

The court found that the power to direct investments was exercised in accordance with the trust deed. It held that the trustee's decision was valid and not subject to challenge. Regarding standing, the court ruled that Bechrose did not have the necessary standing to seek the injunction. Consequently, the application was dismissed. The court also ordered that the Official Trustee in Bankruptcy be joined as the second respondent and directed the costs of the application be borne by the applicant.

The Federal Court of Australia dismissed the application and ordered that the Official Trustee in Bankruptcy be joined as the second respondent. The applicant was directed to pay the costs of the application up to 8 August 1999 to the first respondents and from 9 August 1999 to the second respondent. The court's decision affirmed the validity of the trustee's actions and clarified the standing requirements for beneficiaries seeking to challenge trustee decisions.

Orders

Orders of the court

1. The application be dismissed.

2. The Official Trustee in Bankruptcy be joined as second respondent as from it becoming the trustee of the property of John Ernest Dunwoody, a bankrupt, on 9 August 1999.

3. The applicant pay the first respondents’ costs of and incidental to the application up to and including 8 August 1999.

4. The applicant pay the second respondent’s costs of and incidental to the application from and including 9 August 1999.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citations

AGLC Citation

Bechrose Pty Ltd v Jefferson (Trustee) [1999] FCA 1153

Most Recent Citation

Westgold Resources Nl v Atkins [2000] FCA 70

Cases citing this decision · 5 of 5 shown

ABL Nominees Pty Ltd v Trinick (Trustee)
[2016] FCA 996 Para 10

…e of the vote if there is insufficient or no information about the consideration paid for the assignment ( Bechrose Pty Ltd v Jefferson (Trustee) [1999] FCA 1153). Attached to the email was a letter Mr Htin had drafted for Mr Trinick to send to the applicants.…
Coshott v Prentice
[2015] FCCA 241 Para 1

…Estate of Wenkart) (2001) 115 FCR 361; [2001] FCA 1743 [3] ibid at [47]-[51] [4] Section 64ZB(8) [5] Bechrose Pty Ltd v Jefferson (1999) 94 FCR 494; [1999] FCA 1153 at [54]…
Kerr (Trustee), in the matter of Cross (Bankrupt) v Bechara
[2015] FCA 284 Para 10

…l amount guaranteed from each of the Crosses, being $1,510,000. Consistently with this approach, in Bechrose Pty Ltd v Jefferson (1999) 94 FCR 494; [1999] FCA 1153 Drummond J observed that: [45] But it appears to be a settled rule of bankruptcy law that where a creditor proves in the bankruptcy of a guarantor and…
Pitman v Pantzer (Trustee of the Bankrupt Estate of Thomas Richard Wenkart)
[2002] FCA 46 Para 3

…s debts as at the date of bankruptcy and is not entitled to take into account subsequent events affecting the amount of the debt owed : Bechrose Pty Ltd v Jefferson (Trustee) (1999) 94 FCR 494. Hence, any release of Mr. Pitman by Abignano/Genallco is irrelevant to the valuation of the amount of the debt for the purposes of proving the debt in…
Westgold Resources Nl v Atkins
[2000] FCA 70 Para 20

…1/7/97) was inserted having regard to s 64ZB(8) and to address the mischief explained by Drummond J in Bechrose Pty Ltd v Jefferson (Trustee) [1999] FCA 1153, it was not a material consideration here where the evidence before the Court is that Westgold was a creditor of Mr Atkins and not an assignee of the debt. (…

View all 5 citing cases →

Cases cited in this decision · 9 of 9 shown

Ebner v Official Trustee in Bankruptcy
[1999] FCA 110 Para 8

…yment in full of the expenses of the administration and all unsecured debts, and to hold the likely surplus on trust for Chelmscliff. See Re Ebner; Ebner v Official Trustee in Bankruptcy (1999) 161 ALR 557 at 574 - 575. But in any event, s 90 only permits the trustee to bring into account the value of a security if the creditor is “A secured c…
Staples v Milner
[1998] FCA 466 Para 11

…e appellant of the correctness of this view: see Re Dingle; Westpac Banking Corporation v Worrell (1993) 47 FCR 478 at 489. See also Staples v Milner (1998) 83 FCR 203 at 209.…
Pyramid Building Society (In liq) v Terry
[1997] HCA 48 Para 12

…ot bear a certain value, and then only to require the trustee to make an estimate of its value. See Pyramid Building Society (In liq) v Terry (1997) 189 CLR 176 at 190. The policy of s 82, discernible from the provisions of that section, is that which has long underlain the bankruptcy law. Of the similarly worded pro…
Official Trustee in Bankruptcy v Alvaro
[1996] FCA 483 Para 8

…hat is good as against everyone, including the bankrupt’s trustees. See ss 120(6) and 121(8); Official Trustee in Bankruptcy v Alvaro (1996) 66 FCR 372 at 426 and Official Trustee in Bankruptcy v Baker (Full Court, Federal Court of Australia, 5 August 1995, unreported).…
Worrell v Westpac Banking Corporation
[1994] FCA 472 Para 11

…On appeal, the Full Court noted the concession by counsel for the appellant of the correctness of this view: see Re Dingle; Westpac Banking Corporation v Worrell (1993) 47 FCR 478 at 489. See also Staples v Milner (1998) 83 FCR 203 at 209.…
Burton, L.R. v Wily, H.J
[1994] FCA 391 Para 24

…It is no doubt true, as was held in Re Burton; Burton v Wily (1994) 122 ALR 399 at 401, that a proof of debt lodged by the creditor can serve as a statement sufficient for the purposes of s 64D: that statement does not have to be in any particular form. But of course Re Burton does not suggest that, by lodging a proo…
Re Dingle; Westpac Banking Corporation v Worrell
[1993] FCA 619 Para 3

…30(1) and 178 to make such orders as it thinks just and equitable in exercising that jurisdiction. See Re Dingle; Westpac Banking Corp v Worrell (1993) 47 FCR 478. The Full Court there accepted that the principles applicable to whether the Court will intervene to review decisions made in connection with meetings of…
Victorian Court of Appeal in Clenae Pty Ltd & Ors v Australia and New Zealand Banking Group Ltd
[1999] VSCA 35 Para 8

…ministration and all unsecured debts, and to hold the likely surplus on trust for Chelmscliff. See Re Ebner; Ebner v Official Trustee in Bankruptcy (1999) 161 ALR 557 at 574 - 575. But in any event, s 90 only permits the trustee to bring into account the value of a security if the creditor is “A secured creditor” of…
Hardy v Fothergill
(1888) 13 App Cas 351 Para 13

…In Hardy v Fothergill (1888) 13 App Cas 351 at 367, it was said: “… unless a judicial declaration has actually been made in the terms of that provision [the paragraph of s 31 equivalent to s 82(6) of the Commonwealth Act], the liability of the bankrupt under a contract, however extreme the difficulty of valuing that lia…

Legislation cited in this decision · 4

Bankruptcy Act 1966 (Cth)
120, 121, 178, 27, 64, 64D, 64Z, 64ZA, 6... 13 mentions (from Para 1)
Bankruptcy Act 1869 (UK)
31 2 mentions (from Para 12)
Land Title Act 1994 (Qld)
2 mentions (from Para 18)
Property Law Act 1974 (Qld)
1 mention (from Para 7)

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	Q 7131 OF 1999

BETWEEN:	BECHROSE PTY LTD (ACN 085 820 515) Applicant
AND:	PHILIP GREGORY JEFFERSON AND JAY ARSCOTT STEVENSON Respondents

JUDGE:	DRUMMOND J
DATE OF ORDER:	20 AUGUST 1999
WHERE MADE:	SYDNEY (HEARD IN BRISBANE)