Bradley, David Geoffrey v Muir, Brian, Registrar in Bankruptcy

[1984] FCA 115

Re: BRIAN MUIR, REGISTRAR IN BANKRUPTCY
And: DAVID GEOFFREY BRADLEY
No. T886
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Beaumont J.

CATCHWORDS

Bankruptcy - Application for inquiry into conduct of trustee - Application for order cancelling respondent's registration as trustee - whether it is appropriate for matter to go to final hearing - Whether Court confined to looking at one particular estate only - Relevance of rectification of past defaults

Bankruptcy Act, 1966 ss. 155, 179 and 212B

HEARING

SYDNEY

#DATE 27:4:1984

ORDER

1. I order that the application now proceed to a final hearing on a date to be fixed.

2. I direct that the respondent file and serve any affidavit to be relied on by him on or before 14 May 1984.

3. Costs reserved.

JUDGE1

By his application filed on 22 September 1983, the Registrar in Bankruptcy seeks first, an order that the Court inquire into the conduct of the respondent as trustee of certain estates; and secondly, an order that the respondent's registration as a person qualified to act as trustee be cancelled. The application is made pursuant to ss. 179 and/or 212B of the Bankruptcy Act, 1966 ("the Act") in the former case, and pursuant to s. 155 of the Act in the latter case.

At the commencement of the proceedings, the respondent took a preliminary point that the matter should not proceed further unless and until the Court determines whether it is appropriate to hold an inquiry at all. I upheld that preliminary point, subject to certain conditions, for reasons I gave on 16 November 1983. I have now taken evidence and heard argument on the preliminary inquiry foreshadowed in those reasons.

In support of his application, the Registrar swore an affidavit on 22 September 1983 which describes the history of some forty two of the seventy six estates of which the respondent was appointed trustee. The Registrar's case, broadly stated, is that the respondent has failed to act with due diligence in the administration of the forty two estates. No allegations of dishonest conduct are made.

There is no dispute that, in many cases at least, the respondent was guilty of default in the preparation and filing of documents required by the Act and Rules, especially accounts, notwithstanding that, since the commencement of proceedings, steps have been taken to rectify the position. Details of the respondent's default in this respect are contained in the schedule annexed to these reasons.

In the first instance, the respondent attempted to secure an adjournment of the application on the ground of ill-health. He succeeded in this application. However, later at the hearing of the preliminary inquiry, the respondent objected when the Registrar sought to rely on affidavit evidence from the respondent's solicitor sworn in aid of the earlier adjournment application and deposing to the respondent's ill-health. Significantly, in my view, the respondent was not called to give evidence and he has not sworn any affidavit in these proceedings. Instead, the respondent elected to establish his case through the affidavit evidence of Mr. D. A. Thomas, a chartered accountant recently employed by the respondent to rectify the serious problems which had arisen in the administration of the respondent's office. During the cross-examination of Mr. Thomas, it emerged that during 1983 at least the respondent had experienced difficulties in coping with his work load and showed signs of being seriously distressed. Mr. Thomas said that in about March 1983 he was contacted by the respondent who was already known to him, and asked if he could assist the respondent. Mr. Thomas agreed to do so and has been employed by the respondent since that time.

Upon commencing his employment, Mr. Thomas observed that the respondent:

". . . was under a great deal of strain and that there were many matters that required his attention, and the multiplicity of the matters caused him to get very tired and to need a lot of sleep and to not be able to pursue as many of the matters as would otherwise be available.

HIS HONOUR: Available?--What I was meaning to say, your Honour, was that at that stage he was under a great deal of pressure and that required him to have more time to rest and sleep and thereby the time available to attend to the matters was reduced."

Later in his evidence, Mr. Thomas further explained the problems being experienced by the respondent:

". . . when you say Mr. Bradley needed a lot of sleep, what hours did he usually work?--He would usually come into the office at half past 11 or 12 and leave probably, sometimes after a few hours of work and other times he would work late into the night. It was variable.

So it would be erratic, would it, the hours that he would work?--Yes. He would work until he started to have chest pains and become sort of distressed, and then he would go for a walk, walk for an hour or so, and do some more and then just go home and sleep."

Although objection has been taken by the respondent to the Registrar's seeking to establish his medical fitness by use of the affidavit evidence sworn by the respondent's solicitor, the evidence given by Mr. Thomas of the respondent's behaviour patterns is admissible, in my view, as primary evidence of a non-expert nature of the respondent's capacity to perform the professional work involved in the trusteeships in question.

In my view, Mr. Thomas' evidence establishes, prima facie at least, that the respondent lacks the capacity to discharge with professional competence the obligations inherent in the assumption of the office of trustee under the Act.

It is true, as the respondent argues, that largely through the efforts of Mr. Thomas, steps have been taken to rectify past defaults in many cases. Nonetheless, even in those cases, the fact that serious delays occurred in the past is, in my view, symptomatic of the respondent's lack of capacity to hold a position of such professional responsibility as that of trustee under the Act. In my view, the Registrar has established a sufficient case at this stage for the matter now to go forward to a final hearing of the application itself.

Before making formal orders, I should mention that, in my view, there is no substance in the submissions put on behalf of the respondent that the application should now be dismissed because the Court is confined to looking at one particular estate only at a time and must therefore ignore any default by the trustee occurring in other estates; and that, because in some cases at least, past defaults have now been rectified, no further inquiry should be made by the Court. In my opinion, the Court is not deprived of its control over trustees under the Act merely because a past breach has been remedied: clearly, such default may throw light on the general question of the fitness of a trustee to continue to act. Further, in my view, the Court's vision of the matter cannot be confined to the trustee's conduct in one particular estate since a pattern of behaviour or a course of conduct may well afford a useful guide in the evaluation of the fitness or otherwise of a trustee to continue to act.

I make the following orders:

1. I order that the application now proceed to a final hearing on a date to be fixed.

2. I direct that the respondent file and serve any affidavit to be relied on by him on or before 14 May 1984.

3. Costs reserved.