Cetinkaya v Official Trustee in Bankruptcy
[2011] FMCA 288
•20 May 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CETINKAYA v OFFICIAL TRUSTEE IN BANKRUPTCY & ANOR | [2011] FMCA 288 |
| BANKRUPTCY – Applicants declared bankrupt – County Court proceedings for alleged fraud – Official Trustee’s alleged refusal to assign that cause of action – application to review Official Trustee’s alleged omission or failure to review the application – review application made out of time – Court’s role supervisory rather than administrative in nature. |
| Bankruptcy Act 1966, s.178 |
| Moore v Macks [2007] FCA 10 Macchia v Nilant (2001) 110 FCR 101 Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166 Re Tyndall; Ex parte official Receiver (1977) 17 ALR 182 Frost v Sheahan (Official Trustee) [2009] FCAFC 20 Healy v Prentice (No 2) [2000] FCA 1598 Cummings v Claremont Petroleum NL (1996) 185 CLR 124 Charan v Gleeson [2010] FMCA 703 Freeman v National Australia Bank [2002] FCA 1233 Ford Excavations Pty Ltd v Do Carmo [1981] 2 NSWLR 253 Rolland v Hart (1871) LR 6 Ch App 678 Royal Bank of Scotland v Etridge (No 2) [1998] 4 All ER 705 Sargent v ASL Developments Ltd (1974) 4 ALR 257 |
| Applicants: | RECEP CETINKAYA and BAHAR CETINKAYA |
| First Respondent: | OFFICIAL TRUSTEE IN BANKRUPTCY AS OFFICIAL TRUSTEE OF THE BANKRUPT ESTATE OF RECEP CETINKAYA AND BAHAR CETINKAYA |
| Second Respondent: | METIN UNAL |
| File Number: | MLG 817 of 2010 |
| Judgment of: | Connolly FM |
| Hearing date: | 22 February 2011 |
| Date of Last Submission: | 22 February 2011 |
| Delivered at: | Melbourne |
| Delivered on: | 20 May 2011 |
REPRESENTATION
| Counsel for the Applicants: | Mr Sowden |
| Solicitors for the Applicants: | Law 554 |
| Counsel for the first Respondent: | Ms Gobbo |
| Solicitors for the first Respondent: | Piper Alderman |
| Counsel for the second Respondent: | Mr Elder |
| Solicitors for the second Respondent: | Tony Hargreaves & Partners |
ORDERS
The application filed 23 June 2010 be dismissed.
The orders made by Federal Magistrate Hartnett made 7 June 2010 be discharged.
The Applicants pay the First Respondent’s costs and the Second Respondent’s costs in an amount to be agreed and failing agreement to be taxed pursuant to the Federal Court Rules.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 817 of 2010
| RECEP CETINKAYA and BAHAR CETINKAYA |
Applicants
and
| OFFICIAL TRUSTEE IN BANKRUPTCY AS OFFICIAL TRUSTEE OF THE BANKRUPT ESTATE OF RECEP CETINKAYA AND BAHAR CETINKAYA |
First Respondent
and
| METIN UNAL |
Second Respondent
REASONS FOR JUDGMENT
The proceedings
This judgment arises from the Applicants’ amended application filed
22 June 2010. Pursuant to s 178 of the Bankruptcy Act 1966 (Cth) (‘the Act’) the Applicants sought to review the conduct of the Respondents, and in particular, an omission by the Respondents in refusing to determine whether or not to assign the cause of action referred to in paragraph 2 of the application to the Applicants. Further, the Applicants sought the following orders:
i)Firstly, that the First Respondent be restrained from accepting any offer from, or entering into any settlement with Metin Unal, the First Defendant in relation to the Applicants’ claim in County Court Proceedings Number C1-08-05385; and
ii)secondly, that the First Respondent assign all its interest in cause of action Number C1-08-05385 in consideration of certain terms and conditions set out in paragraphs 2A and 2B of the Application as follows:
2.
(a) In the event that the Applicants are successful in the County Court Proceeding Number CI-08-05385, after payment/ reimbursement of legal costs incurred by the Applicants in that matter, the Applicants pay to the Respondent out of the proceeds or fruits of the Country Court Proceeding Number CI-08-05385, the following:
i. the Respondent’s reasonable costs reasonably incurred; and
ii. such sum as is required to pay in full all claims proved in the bankruptcy up to the limit of the recovery net of the Applicants’ legal costs.
(b) The Respondent be entitled to place a charge over the property the subject of the County Court Proceeding Number CI-08-05385 pending payment in item a) i) and ii) above.
The documents
The Applicants relied upon the following documents:
i)amended application dated 3 June 2010, filed 22 June 2010;
ii)
affidavit of Ravak Seyed Ahmad sworn 3 June 2010, filed
4 June 2010;
iii)
affidavit of Recep Cetinkaya sworn 30 June 2010, filed
2 July 2010;
iv)
affidavit of Bahar Cetinkaya sworn 30 June 2010, filed
2 July 2010;
v)affidavit of Ravak Seyed Ahmad sworn 9 November 2010, filed 10 November 2010;
vi)
affidavit of Recep Cetinkaya sworn 16 February 2011, filed
18 February 2011; and
vii)
affidavit of Bahar Cetinkaya sworn 16 February 2011, filed
18 February 2011.
The First Respondent relied upon the following documents:
i)
affidavit of Michael Edward Lhuede sworn 20 July 2010, filed
20 July 2010;
ii)
affidavit of Tash Angiolopoulos sworn 5 August 2010, filed
5 August 2010; and
iii)
affidavit of Tash Angiolopoulos sworn 18 February 2011, filed
22 February 2011.
The Second-named Respondent, Metin Unal, relied upon the following documents:
i)
affidavit of Peter Anthony Brown sworn July 2010, filed
9 July 2010.
The history
Each of the Applicants became bankrupt on 14 October 1997 on their own petitions.
The Applicants alleged that Metin Unal fraudulently acquired property situate at and known as 75 Colebrook Street, Brunswick, from the Applicants as follows:
i)Unal was the plaintiffs’ accountant in 1996.
ii)In about 1996, Unal recommended that the Applicants transfer the property (then owned jointly by the Applicants) into a family trust to be called the B & R Family Trust.
iii)In December 1996, the property was fraudulently transferred to Unal. On 11 December 2008, the Applicants commenced proceedings in the County Court of Victoria against Unal seeking relief in the form of the declaration that the transfer was void for the purposes of the Transfer of Land Act 1958 (Vic).
By his defence, Unal alleged inter alia that the property was transferred to Unal in 1996 as Trustee of the B & R Family Trust, and that the beneficiaries of that trust are members of Unal’s, and not the Applicants’, family. The further relevant history of the matter is as follows:
i)Unal has not produced the original or copy of any document evidencing the existence of this trust.
ii)By a summons dated 24 August 2009, Unal sought orders that the proceedings be dismissed on the grounds that the Applicants lacked standing and that the cause of action vested in the Official Trustee. That application was returnable on 17 September 2009, and on 7 September 2009 the Official Trustee was notified of the existence of the proceedings. Prior to that, there had been no contact between the Applicants and the Official Trustee.
iii)
The summons was heard by His Honour Justice Anderson on
5 November 2009. After several adjournments, His Honour dismissed the summons on 23 November 2009.
Unal appealed, and the matter came before the Court of Appeal on
12 March 2010. Unal raised a jurisdictional issue not previously raised, and the matter was referred back for determination.
i)The Applicants commenced these proceedings on 3 June 2010. By consent, the parties to the County Court proceedings agreed to adjourn the proceedings pending the outcome of the proceedings the subject of this judgment.
ii)On 7 June 2010, Her Honour Hartnett FM made orders enjoining the Respondent from entering into any settlement of the County Court proceeding with Unal. That injunction remains in place.
Between September 2009 and June 2010, negotiations took place between the various parties regarding a possible assignment of the County Court cause of action.
The law
Section 178 of the Act provides the following:
(1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the Official Trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.
(2) The application must be made not later than 60 days after the day on which the person became aware of the Official Trustee’s act, omission or decision.
Counsel for the First Respondent conveniently sets out some of the legal principles arising from section 178 in paragraphs 36 and 37 of the First Respondent’s Outline of Facts and Contentions, and I incorporate and adopt those paragraphs into my reasons, as follows:
36. In Moore v Macks [2007] FCA 10 (15 January 2007) Besanko J held, in relation to section 178 of the Act that:
(a) The fundamental purpose of section 178 of the Act is to give the court the power in a supervisory role, to review acts, omissions or decisions of a Official Trustee in bankruptcy made in the course of the administration of a bankrupt’s estate on the application of any person with appropriate understanding.
(b) Its operation is to be understood in its historical context (Macchia v Nilant (2001) 110 FCR 101 at 119 per French J), and in the context of the broader relationship between the court and the Official Trustee in bankruptcy as an officer of the court (Macchia at 116). Indeed, section 178 of the Act is typically employed where an allegation of misconduct or error by a Official Trustee in bankruptcy arises (Macchia v Nilant (2001) 110 FCR 101 at 120 per French J; Moore v Macks [2007] FCA 10 (15 January 2007) per Besanko J).
37. For present purposes it is sufficient to note the following points about the scope of the section:
(a) Under the section, the court is fulfilling a supervisory role judicially, rather than an administrative role standing in the shoes of the Official Trustee. As such, grounds for judicial review must be established by an Applicant (Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166 at 170 per Lee J) and the exercise of the court’s power is wholly in its discretion.
(b) The court has the ‘widest possible discretion’ as to the appropriate order which should be made in the particular case (Re Tyndall; Ex parte official Receiver (1977) 17 ALR 182 at 186 per Deane J).
(c) The exercise of the court’s discretion is subject to the principle that the court will not unduly interfere with the day-to-day administration of a bankrupt’s estate by a Official Trustee in bankruptcy (Re Tyndall; Es parte Official Receiver (1977) 17 ALR 182 at 120 per French J).
(d) The impugned act, omission or decision of the Official Trustee in bankruptcy need not be absurd, unreasonable, or taken in bad faith before it is subject to review or a resultant order of the court under the section (Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182 at 186 per Deane J; Frost v Sheahan (Official Trustee) [2009] FCAFC 20).
(e) Indeed, the act, omission or decision of the Official Trustees may be subject to review even though it was commercially sound at the time it was made (Macchia v Nilant (2001) 110 FCR 101 at 116 per French J).
(f) At the same time the Official Trustee’s opinion will be a relevant factor in the exercise of the court’s discretion, and there is no presumption that the court will intervene in a given case.
(g) The fact that the court might have taken a different course to the Official Trustee in bankruptcy at the relevant time is not, without more, a basis to disturb the Official Trustee’s position (Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182 at 186 per Deane J; Macchia v Nilant (2001) 110 FCR 101 at 116 per French J). It is not enough that a judge might have acted differently (Healy v Prentice (No 2) [2000] FCA 1598 at [21]).
(h) The section does not provide an avenue for a bankrupt to pursue his or her personal interests at the expense of creditors (Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 139 per Brennan CJ, Gaudron and McHugh JJ).
Conclusions
The Applicants’ submissions were taken up canvassing the merits or otherwise of the County Court proceedings despite what was clearly the Official Trustee’s conceded position: that the cause of action was neither without prospects of success nor vexatious nor frivolous.
In other words, the Official Trustee conceded that the application was capable of assignment. The Applicants’ submissions then turned to what Mr Sowden, the Applicants’ Counsel, described as a number of offers with respect to the assignment of the County Court action.
Mr Sowden traversed what Ravak Seyed Ahmad had to say in her affidavits. In a number of instances, Mr Sowden sought to broaden the nature of the application before the Court. Ms Gobbo for the Official Trustee made the point on several occasions that the omission was not an omission at large, but – as it is set out in the amended application – is a specific omission on particular terms which are set out therein.
There are a number of other complaints aired by Counsel for the Applicants which are outside the ambit of the application, and as such are not relevant. Mr Sowden submitted that there was no evidence whatsoever that the Official Trustee had factored into account the legitimate interests of the bankrupts pursuing their claim. This submission was clearly irrelevant as it was outside the ambit of the application. I further agree with the contentions proffered by Counsel for the First Respondent and Counsel for the Second Respondent,
Mr Elder: namely, that whether or not the Second Respondent Mr Unal made an offer is irrelevant because the Applicants do not challenge the propriety of the Official Trustee’s decision to contact Mr Unal’s solicitors. As Counsel for both Respondents submitted, however, it is important to look at the amended application and the specific relief sought, which is that the cause of action be assigned on the particular terms, and that the alleged failure or omission by the Official Trustee to do so warrants investigation under section 178 of the Act. It is accordingly crucial to look again at the terms and conditions upon which the Applicants seek to have the cause of action assigned. They are as follows:
2.
(a) In the event that the Applicants are successful in the Country Court Proceeding Number CI-08-05385, after payment/reimbursement of legal costs incurred by the Applicants in that matter, the Applicants pay to the Respondent out of the proceeds or fruits of the Country Court Proceeding Number CI-08-05385, the following:
i. The Respondent’s reasonable costs reasonably incurred; and ii. such sum as is required to pay in full all claims proved in the bankruptcy up to the limit of the recovery net of the Applicants’ legal costs.
(b) The Respondent be entitled to place a charge over the property the subject of the County Court Proceeding Number CI-08-05385 pending payment in item a) i) and ii) above.
The relevant facts are that on 8 September 2009, the Applicants sought that the Official Trustee support the County Court proceedings. At that point, the Official Trustee sought Mr Lhuede’s advice as to whether the Official Trustee can assign the cause of action or not. On
17 September 2009, the Official Trustee sought funding from the Applicants to review the issue of assignment, and ultimately $3,000.00 was provided to the Official Trustee. On 14 October 2009, Mr Lhuede provided advice to the Official Trustee, and that advice is set out in paragraph 14 of Mr Lhuede’s affidavit: that the cause of action can be assigned. Mr Lhuede sought instructions to negotiate for that to occur. There was then a conversation between Mr Lhuede and Ms Ahmad on 14 October 2009, and in her affidavit, Ms Ahmad suggests that there was a concluded agreement between the Official Trustee and the Applicants to assign the cause of action. Ms Ahmad says in paragraph 6 of the affidavit, ‘as deposed to in paragraph 22 below, the Respondent initially indicated he would be prepared to assign the cause of action on certain agreed conditions, and would not be prosecuting the cause of action independently of the Applicants.’ She then goes on in paragraph 7 to say, ‘the Respondent subsequently resiled from the position it adopted at paragraph 6 above, and has subsequently refused to confirm or deny that it will assign the cause of action to the Applicants. It is the Respondent’s conduct in refusing to decide whether to assign the cause of action that the Applicants seek to review by this application.’ However, it is clear that the conditions pertaining to the assignment that the Official Trustee sought were not agreed to on that date, and have not been agreed to since that time.
I accept the submissions of the First Respondent’s Counsel; that what the Applicants complain about is clear – the Official Trustee’s alleged refusal to assign the cause of action.
What then occurred was that on 20 October 2009, as is set out in RSA 13, all parties were informed of the terms upon which the Official Trustee would be prepared to assign the cause of action. Those terms are set out in the second page of that document in paragraphs 1, 2 and 3. I am satisfied that after 20 October 2009 there was not any doubt in the minds of the Applicants that the Official Trustee was prepared to entertain offers from either the Applicants or the Defendant in relation to the cause of action. Furthermore, there is no application before the Court to challenge the correctness of that conduct. The document then goes on to invite offers in seven days whereupon they would be considered.
On 23 October 2009, there was a telephone discussion between
Ms Ahmad and Mr Lhuede whereby, as Ms Ahmad says in paragraph 25 of her affidavit, ‘I stated to Mr Lhuede that I did not believe that the Official Trustee could settle the matter without the involvement of the Applicants as I believe the Official Trustee lacks standing in the proceedings.’ This comment of the Applicants seems to lack consistency; whilst agitating for an assignment of the cause of action, at the same time the Applicants are indicating that the Official Trustee could not settle the matter without the involvement of the Applicants. It is also significant that in that conversation of 23 October 2009,
Ms Ahmad did not make any reference to there having been an agreement reached on 14 October 2009.
Then, on 26 October 2009, the parties were informed that the Official Trustee intended to submit competing proposals to the creditors to ascertain creditors’ views and, if there was no response, the Official Trustee would determine the matter on the basis of what was in the best interests of the creditors. That appears at RSA 15, and again the application contains no challenge to the correctness of the Official Trustee’s conduct. What is further puzzling is that there is an assertion made by Ms Ahmad on 28 October 2009 that there was some kind of binding agreement reached on 14 October 2009, but that is not raised in the telephone conversation that she had on 23 October 2009. Furthermore, the Applicants do not seek to enforce any binding agreement by way of their application; nor do they seek to challenge the Official Trustee’s conduct.
The reality of the alleged failure or omission by the Official Trustee to assign the cause of action on the terms and conditions contained in the amended application is that there has been no refusal to assign. The first formal offer to request the assignment of the cause of action was made by the Applicants on 10 November 2009 (that offer is set out in Exhibit RSA 18 attached to the affidavit of Ravak Ahmad sworn
30 June 2010). The terms of that offer are not the terms set out in the amended application, but are quite different. There are four key elements of the offer: that there be an assignment of the Official Trustee’s interests in the cause of action by way of a deed of transfer; and that the Applicants will pay the Official Trustee’s costs in effecting the assignment to a maximum of $15,000.00 to include the statutory charge, as follows:
i)The Official Trustee be entitled to apply the $3,000.00 already provided on behalf of the Applicants in relation to the Official Trustee’s costs;
ii)the Applicants pay a further sum of $5,000.00 in relation to the Official Trustee’s reasonably costs reasonably incurred;
iii)the balance be contingent upon the Applicants being successful in the proceedings;
iv)in the event of the Applicants’ success, after paying their own lawyers, the Applicants would pay to the Official Trustee from the proceeds of the cause of action the balance of $15,000.00 and any sums required to pay out creditors to the limit of recovery; and
v)the Official Trustee be entitled to a charge over the property to secure that payment.
This last element of the offer sits in marked contrast to the terms and conditions required by the Official Trustee as set out in RSA 13, in which the offer was expressed to expire seven days from that date.
On 13 November 2009, the Official Trustee acknowledged receipt of the Applicants’ offer and advised that it intended to wait for the outcome of the County Court proceedings. On 9 December 2009 (as set out in exhibit RSA 21) Mr Lhuede wrote to the Applicants’ solicitor confirming for them that the offer of 10 November 2009 was not accepted, and reminded them that the offer was deemed to have lapsed after seven days.
There was a second offer contained in the correspondence of
23 December 2009 which is set out in RSA 22, whereby the Applicants indicated the terms upon which they would accept an assignment. The terms of that offer are not the terms set out in the amended application. The offer is conditional upon the County Court proceedings being successful. The offer states that the Applicants would pay the Official Trustee all provable debts and any legal costs of the Official Trustee reasonably incurred up to the limit of the recovery net of the plaintiffs’ legal costs. The offer also included the Applicants’ consent to a caveat over the property being registered in order to secure payment of the above.
What happened next was that on 7 January 2010 the Applicants were told in a letter that the terms conveyed by them on 23 December 2009 would be put to creditors along with an offer from Mr Unal. This appears in RSA 23. There is a further letter from Mr Lhuede dated
11 March 2010 which makes it abundantly clear that the Official Trustee would not assign the cause of action on the terms set out in the amended application, or indeed the application of 23 December 2009. Furthermore, there is no application to extend the 60 day period, the application having been filed on 4 June 2010 some 85 days after the letter of 11 March 2010. In paragraph 5 of her affidavit sworn
9 November 2010, Ms Ahmad states, ‘the contents of the letters from Mr Lhuede dated 7 January 2010 and 11 March 2010 being letters that conveyed that any offer was going to be considered by the creditors along with any offer of Mr Unal were first raised by this firm with the Applicants through correspondence dated 20 April 2010.’ Ms Ahmad does not explain why it took five weeks to convey the second letter and three months to convey the first letter to her clients. Clearly, on
7 January 2010 or at the latest on 11 March 2010, the Applicants’ solicitors became aware that the Official Trustee would not assign the cause of action, and the Applicants are imputed with that knowledge on those dates. The law recognises the presumption that the knowledge of the agent is imputed to his or her principal. Where a person employs an agent, the knowledge of the agent within the scope of his or her authority is the knowledge of the principal provided that the agent is bound to inform the principal of what he or she has learned. Such knowledge is actual rather than constructive knowledge (Ford Excavations Pty Ltd v Do Carmo[1]). As a result of this principle, the client (principal) has imputed knowledge of matters, facts and circumstances which his or her solicitor (agent) discusses in the course of acting on behalf of the client as part of their retainer (Rolland v Hart[2]; Royal Bank of Scotland v Etridge (No 2)[3]). In Sargent v ASL Developments Ltd[4] the High Court held per Stephen J the following:
Now where, as in this case, a vendor employs a solicitor to attend to the carrying out of the legal aspects of a sale he necessarily authorizes that solicitor to attend to all the usual aspects of conveyancing practice; that authority will here extend to the obtaining of the necessary planning certificate and the solicitor’s knowledge, gained from that certificate, may properly be imputed to his clients since it was acquired both for the purpose of that transaction and in the course of it: Bradley v Riches (1878) LR 9 Ch D 189 at 196; Re Philip-Stephan Photo Litho and Typographic Process Co Ltd (1891) 12 NSWR 4; Dixon v Winch [1900] 1 Ch 736 at 747; Ayrey v British Legal and United Provident Assurance Co Ltd [1918] 1 KB 136 and 142 at 140.
Again, where a vendor so arranges matters that his solicitor undertakes on his behalf the carrying out of a conveyancing transaction as a whole he thereby not only authorizes his solicitor to perform all necessary steps but also places the solicitor in the position of acquiring at first-hand knowledge of relevant facts, at the same time depriving himself of the opportunity of acquiring such first-hand knowledge. If any such steps taken by the solicitor happen to constitute acts of affirmation of the continued existence of the contract they will be binding upon the client: Provincial Insurance Co of Canada v Ledue (1874) LR 6 PC 224 at 239.
[1] [1981] 2 NSWLR 253 at 266-7
[2] (1871) LR 6 Ch App 678 at 681
[3] [1998] 4 All ER 705 at 718
[4] (1974) 4 ALR 257 at 268
Accordingly, I am satisfied that the application is out of time and indeed it would not be just and equitable to the Respondents to determine otherwise.
Even if the application was made within time, it should fail for the reasons I have already stated. The Applicants seek orders that the Official Trustee assign the cause of action on the grounds that the Official Trustee omitted or failed to or refused to determine whether or not to assign the cause of action on certain terms and conditions. It is clear that the Official Trustee was never requested to assign it on those terms. The role of the Court is of a supervisory nature, and not of an administrative one. The Applicants appear to be asking the Court to exercise the powers of the Official Trustee in a way which suits the Applicants. I agree with the contention of the First Respondent that the Court’s power does not extend so far as for this to occur. It is a judicial power, and as stated in Re Wheeler; Ex parte Wheeler v Halse[5] the Court cannot stand in the shoes of an administrative body and exercise the powers of that body in its stead (Charan v Gleeson.[6]) Rather, such a determination is a matter to be considered by reference to the creditors of the Applicants and in the absence of their response, the Official Trustee. I further agree with the submissions of the Counsel for the First Respondent that the Court must bear in mind that the Official Trustee is an officer of the Court and has a public duty to administer the bankrupts’ estate so as to maximise the return from the state’s assets and to maximise satisfaction of the creditors’ claims and any possible surplus for the bankrupts (Freeman v National Australia Bank[7]). I am satisfied that the decision that the Official Trustee has made in the present case conforms to those duties.
[5] (1994) 54 FCR 166
[6] [2010] FMCA 703 at 30
[7] [2002] FCA 1233 per Spender J at 22.
I further agree with the contentions of Counsel for the First Respondent set out in paragraph 41 of the First Respondent’s Outline of Facts and Contentions (adopted by Counsel for the Second Respondent):
41. It is otherwise significant and important to note that:
(a) The Applicants have not, at any time, provided the Trustee with details as to the trust into which the property which is the subject of the Proceeding was transferred (see Lhuede Affidavit at paragraph 11).
(b) The Applicants maintain that the Trustee has a vested interest in the Proceeding capable of assignment. However, at the same time, the Applicants inconsistently assert that the Trustee has no standing to stay the Proceeding if it enters into a compromise of that Proceeding (see Lhuede Affidavit at paragraph 18).
(c) The Applicants did not, after receipt of the Trustee’s correspondence on 9 December 2009 (see RSA-21) or 7 January 2010 (see RSA-23) submit a further offer to renew any earlier offers.
(d) The Applicants have not explained why the application was not made within the statutory time limit, or sought to extend the time limit, and in that instance, provided any authority to support a contention that the statutory time frame can be extended (see Ahmad Affidavit at paragraph 7).
I adopt and incorporate those matters into my reasons for judgment.
There is no evidence that the Official Trustee has breached any obligation with respect to its duties as trustee. Indeed, there has been no allegation of misconduct or error by the Official Trustee personally, and the Applicants do not seriously challenge the right of the Official Trustee to refer the competing proposals to the creditors. Rather, as I have already said, the Applicants seek to force an outcome, being an assignment of the cause of action, on grounds which suit the Applicants and which do not have proper regard for the interests of the creditors. In all the circumstances of the case, I propose to dismiss the application. Having dismissed the application, it is in my view appropriate that the costs of both the First Respondent and Second Respondent should be paid by the Applicants. Accordingly, I order as follows.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Connolly FM
Associate:
Date: 20 May 2011
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