Clyne v Andrew
[1984] FCA 50
•14 MARCH 1984
Re: PETER CLYNE
And: WILLIAM EDWARD ANDREW; JOHN WILLIAM O'BRIEN (1984) 1 FCR 169
Nos. 838, 929 of 1983
Bankruptcy
52 ALR 532
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.(1)
CATCHWORDS
Bankruptcy - Application by bankrupt to leave Australia - Application by creditor to be joined as a party to proceeding.
Bankruptcy Act, 1966 ss. 30, 178, 272
Re Barton (1980) 43 F.L.R. 245 - con.
Re Neville; Ex parts The Official Assignee, Gardiner & Anor. (1898) 19 N.S.W. L.R. B. & P. 22 - con.
Bankruptcy - Application by bankrupt to leave Australia - Application by creditor to be joined as a party to the application or given leave to intervene - Whether court has power to grant application by creditor - Considerations relevant to exercise of court's discretion - Bankruptcy Act 1966 (Cth), ss 30, 69(9), 74(3), 81(8), 150(4), 178, 272.
HEADNOTE
The bankrupt applied to the court for its consent to his departure from Australia on the undertaking that he would return to Australia on a specified date. The Deputy Commissioner of Taxation, being the major creditor in the estate, sought to be added as a party to the proceedings, or alternatively be granted leave to intervene. The bankrupt submitted that the court had no power to make either order sought by the Deputy Commissioner of Taxation, or alternatively, in its discretion the court should decline to make the orders.
Held: (1) Section 30(1)(b) of the Bankruptcy Act 1966 (Cth) gives the court the power, in an appropriate case, to grant leave to a creditor to intervene in any proceedings involving the bankrupt or his estate.
Re Barton (1980) 43 FLR 245; Re Neville; Ex parte Official Assignee (1898) 19 NSWLR B & P 22, referred to.
(2) Where a trustee can represent the interests of creditors in the application, special circumstances must exist before intervention of a creditor should be permitted.
(3) The Deputy Commissioner should be granted leave to intervene, but conditions should be attached to the grant of that leave to ensure that the primary responsibility for assisting the court in the substantive application concerning the bankrupt's departure from the jurisdiction remains with the trustee.
HEARING
Sydney, 1984, March 12, 13, 14. #DATE 14:3:1984
APPLICATION.
The applicant appeared in person.
P. Urquhart, for the first respondent.
B. Oslington, for the second respondent.
D. G. Hill, for the third respondent.
Cur. adv. vult.
Solicitors for the first respondent: B. M. Salmon Layton & Co.
Solicitors for the second respondent: Stephen Jacques Stone James.
Solicitor for the third respondent: B. J. O'Donovan, Commonwealth Crown Solicitor.
J. J. ISLES
ORDER
1. Grant leave to the Deputy Commissioner of Taxation to intervene in the application by the bankrupt filed in Court on 13 March, 1984.
2. Order that the Deputy Commissioner of Taxation be joined as a respondent to the said application.
3. Reserve liberty to any party to apply to the Court on such notice as a Judge shall allow for an order dismissing the Deputy Commissioner of Taxation as a party to the said application.
4. Direct that the Deputy Commissioner of Taxation file and serve on or before 4 p.m. on 23 March, 1984:
(a) any affidavit or affidavits to be relied on by him;
(b) a summary of the case, in outline form, sought to be made by him in opposition to the said application, including a reference to any points of law to be raised by him together with a list of cases, if any, to be cited.
5. Fix 29 and 30 March, 1984 for the final hearing of the application.
6. Costs reserved.
Orders accordingly.
JUDGE1
By application dated 13 March, 1984, the bankrupt applies to the Court for the following orders against the respondents as the trustees of his estate:
"1. That the Court, in the exercise of the powers vested in it by the provisions of Sections 30 and 178 of the Bankruptcy Act, should grant its consent to the applicant leaving Australia on or about the 2nd April 1984 (or alternatively should direct the first and second respondents to consent to the applicant doing so) subject to the applicant undertaking to the Court that he will return to Australia on or before the 30th June, 1984.
That in relation to the applicant's proposed departure from Australia the Court should make such further or other orders as it considers to be just and equitable."
The Deputy Commissioner of Taxation, the major, if not the sole, creditor in the estate, now seeks to be added as a party to the proceeding or, alternatively, seeks leave to intervene. The applicant submits that the Court has no power to make either order sought by the Deputy Commissioner. If this submission is rejected, he argues that, in its discretion, the Court should decline to make either order.
In support of his primary submission, the bankrupt refers to those provisions of the Bankruptcy Act which confer a specific right of audience upon a creditor: see ss.69(9); 74(3)(b); 81(8) and 150(4)(a)(ii). He then says that the fact that the Act confers no specific right of audience upon a creditor in any other provision is an indication that, on its true construction, the Act confers no such right except in the instances cited. In particular, he relies upon the circumstances that s.272 makes no mention of any right of a creditor to be heard; and that s.178 is to similar effect, save where the creditor is himself "affected" by an act, omission or decision of the trustee and the bankrupt denies any such affection in the present case (see Moser v. Marsden (1892) 1 Ch.487; Amon v. Raphael Tuck & Sons Ltd. (1956) 1 K.B. 357; Vandervell Trustees Ltd. v. White (1971) A.C. 912).
In my opinion, the construction of the Act contended for by the bankrupt should not be accepted. In my view, s.30(1)(b) gives the Court the power, in an appropriate case, to grant leave to a creditor to intervene in any proceedings involving the bankrupt or his estate. In Re Barton (1980) 43 F.L.R. 245, Lockhart J., in an application by a creditor, whose debt had not been proved, to intervene in a discharge application, held that s.30(1)(b) empowered the Court to grant the application for leave to intervene and, in so doing, rejected an "exclusive code" argument similar to that now advanced. Whilst the reasoning is not squarely in point, I propose to follow that decision and to adopt its reasoning as analogous for present purposes (see also Re Neville; Ex p. Official Assignee (1898) 19 N.S.W. L.R. B. & P. 22 at p.23).
Power having been established, I turn now to the question of discretion. In my opinion, where a trustee (or, in the peculiar circumstances of this case, two trustees) can represent the interests of creditors in the application, special circumstances must be shown to exist before intervention of a creditor should be permitted. In the present case, the Deputy Commissioner says that he has a special knowledge of the affairs of the bankrupt, having regard to the extensive litigation which has taken place between them. He says that, accepting fully the integrity and competence of the trustees and their advisers, he is seized of a deal of information about the bankrupt which is impossible to communicate properly to the trustees, at least in the short term.
There can be no doubt that the circumstances of the case are unusual and that the affairs of the bankrupt are complex. Prima facie, in my view, the Deputy Commissioner has established a case for intervention (cf. Barton at p.253). At the same time, I think that there is force in the submission put by the bankrupt (and to varying degrees) by the trustees, that the Deputy Commissioner should not be permitted to take over the functions of the trustees in the administration of the bankrupt's estate, even if he is the major creditor. It need hardly be said that this is not adversary litigation and that the questions which arise concern the administration of the bankrupt's estate by the trustees as officers of the Court.
On the whole, I have concluded that the Deputy Commissioner should be granted leave to intervene but that conditions should be attached to the grant of that leave to ensure, so far as possible, that the primary responsibility for assisting the Court in the substantive application remains with the trustees themselves. I propose to give directions to this end by requiring the Deputy Commissioner to file and serve promptly an outline of the matters sought to be relied on by him. I also propose to reserve to any party liberty to apply for an order dismissing the Deputy Commissioner as a party to the proceedings should it emerge that, having regard to the parts played by the trustees respectively in the proceeding, no useful purpose would be served by his remaining a party. It goes without saying that, in the circumstances, the Deputy Commissioner appears at his own risk as to costs.
I make the following orders:
1. Grant leave to the Deputy Commissioner of Taxation to intervene in the application by the bankrupt filed in Court on 13 March, 1984.
2. Order that the Deputy Commissioner of Taxation be joined as a respondent to the said application.
3. Reserve liberty to any party to apply to the Court on such notice as a Judge shall allow for an order dismissing the Deputy Commissioner of Taxation as a party to the said application.
4. Direct that the Deputy Commissioner of Taxation file and serve on or before 4 p.m. on 23 March, 1984:
(a) any affidavit or affidavits to be relied on by him;
(b) a summary of the case, in outline form, sought to be made by him in opposition to the said application; including a reference to any points of law to be raised by him together with a list of cases, if any, to be cited.
5. Fix 29 and 30 March, 1984 for the final hearing of the application.
6. Costs reserved.
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