Coshott v Coshott

Case [2010] FCA 300

FEDERAL COURT OF AUSTRALIA

Coshott v Coshott [2010] FCA 300

Citation: Coshott v Coshott [2010] FCA 300
Parties:

JAMES COSHOTT and LJILJANA COSHOTT v ROBERT GILBERT COSHOTT, JOHN CHRISTOPHER BURKE;  JOHN CHRISTOPHER BURKE v JAMES COSHOTT, LJILJANA COSHOTT and ROBERT COSHOTT

IN THE MATTER OF ROBERT GILBERT COSHOTT, A BANKRUPT;  ROBERT GILBERT COSHOTT v JOHN CHRISTOPHER BURKE and THE OFFICIAL TRUSTEE IN BANKRUPTCY
File numbers: NSD 1412 of 2009, NSD 1208 of 2009
Judge: RARES J
Date of judgment: 17 February 2010
Catchwords:

BANKRUPTCY – TRUSTEE – whether new trustee validly appointed pursuant to s 181A of the Bankruptcy Act 1966 (Cth) – whether notice of nomination of new trustee given by current trustee in accordance with ss 181A and 64A of the Act – whether current trustee can give notice prior to receiving statement of affairs from bankrupt – whether ss 64A and 181A require notice to be given to a creditor not known to current trustee but identifiable had he or she made enquiries from other court proceedings brought by the bankrupt – whether current trustee must make exhaustive enquiries as to the existence of all creditors before giving notice under ss 64A and 181A

BANKRUPTCY – OFFICIAL TRUSTEE – AGENT – whether a person not a delegate of the Official Trustee or Official Receiver acting for the purposes of ss 15 and 18 of the Act can give notice under s 64A and 181A of nomination of new trustee – distinction between agent and delegate of Official Trustee under ss 15, 18 and 308(d) – necessity for signature on notice – what is a signature – no particular formality required by s 181A of the Act for the making of a nomination of new trustee

BANKRUPTCY – FORMAL  DEFECT – whether the appointment of new trustee would be validated under s 306 of the Bankruptcy Act 1966 (Cth) – formal defect not to invalidate proceedings

Held:  Appointment valid – agent of current trustee can give notice of current trustee’s nomination of new trustee pursuant to ss 181A and 308(d) – printed signature of current trustee sufficient if agent authorised by him or her to print it – no injustice arising in the circumstances from holding trustee’s appointment as valid

Legislation: Federal Court Rules O 29 r 2
Bankruptcy Act 1966 (Cth) s 15(4), s 18, s 64A, s 134(1)(i), s 155H(5), s 160, s 181A, s 308(d)
Bankruptcy Regulations 1966 reg 8.34A,  cl 2.6(v) of Sch 4A 
Cases cited:

Adams v Lambert (2006) 228 CLR 409 applied
Deputy Commissioner of Taxation v Vauxhall (1988) 19 FCR 435 applied

Nilant v Macchia (2000) 104 FCR 238 applied

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 applied
R. v Justices of Kent (1873) LR 8 QB 305 applied
Schneider v Norris (1814) 2 M & S 286 applied
Trustees of the Franciscan Missionaries of Mary v Weir (2000) 98 FCR 447 applied
Williams v Silver Peak Mines Limited (1915) 21 CLR 40 applied

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Coshott v Coshott [2010] FCA 300
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[2010] FCA 300
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CaseChat Overview and Summary

In the matter of Coshott v Coshott, the court was tasked with determining the validity of the appointment of a new trustee in a bankruptcy proceeding. The bankrupt, Coshott, challenged the appointment of Mr Burke as his trustee, arguing that the necessary procedures under the Bankruptcy Act 1966 (Cth) were not followed. Specifically, Coshott contended that the Official Trustee, who was responsible for the initial administration of his estate, failed to adequately notify all creditors of the proposed change in trusteeship, and that the nomination of Mr Burke was not validly executed. The court had to decide whether the Official Trustee's actions met the statutory requirements for the nomination and appointment of a new trustee.

The court examined the statutory framework provided by section 181A of the Bankruptcy Act, which governs the nomination and appointment of a trustee by the Official Trustee. The key legal issues revolved around whether the Official Trustee was aware of all creditors at the time of the nomination, whether the nomination was properly made in accordance with the Act, and whether the notification to creditors was adequate. The court considered the evidence provided by the Official Trustee, including the written consent from Mr Burke, the instructions given by Mr Karolyi, and the notices sent to creditors. The court also had to address the timing of the evidence presented by Mr Karolyi, which was provided after the bankrupt's submissions had been made.

After reviewing the evidence, the court concluded that the Official Trustee's actions, including the instruction given by Mr Karolyi to Ms Chau and the subsequent notice sent to creditors, were sufficient to constitute a valid nomination under section 181A of the Act. The court found that while there was no evidence that the Official Trustee was aware of all creditors, including Voits, at the time of the nomination, this did not render the nomination invalid. The court further held that the form of the nomination, whether by Mr Karolyi's instruction or the content of the notice itself, was adequate. The court was satisfied that any potential deficiencies in the notification process could be remedied by a validating order from the court. Consequently, the court declared that Mr Burke was duly appointed as the trustee of the bankrupt’s estate on 18 December 2008.

In summary, the court determined that the Official Trustee's actions met the statutory requirements for the nomination and appointment of a new trustee, despite some procedural shortcomings. The court's decision upheld the validity of Mr Burke's appointment and rejected the bankrupt's challenge.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

Here, the only creditor alleged not to have received notice, namely Voits, has, in fact written to Mr Burke on being informed by him of the challenge to his appointment. Voits, through its solicitor, as recently as 3 December 2009 has said that it did not support the bankrupt’s application to have Mr Burke removed as his trustee, and agreed to his continuing to hold that office. Thus, I would not have been satisfied that any conceivable injustice, that could not be remedied by an order of the court validating Mr Burke’s appointment, would have been done, had I had any doubt his nomination and the appointment was other than valid.CONCLUSION For these reasons, I am of opinion that the separate question in each matter should be answered by a declaration that Mr Burke replaced the Official Trustee as trustee of the bankrupt’s estate on 18 December 2008 pursuant to s 181A of the Act.

Ratio Decidendi

Legal Principle Established

Ms Chau sent notices to all the creditors of whom she was aware. There was no evidence that she was aware of the contents of the reasons for judgment of the Federal Magistrates Court at the time the notices were sent. There was no evidence that any other officer of the Official Trustee, or the Official Trustee herself, was so aware. A I explain later (at [31]-[33]) it is not necessary for the Official Trustee to make exhaustive enquiries as to the existence of all creditors. In those circumstances, I am not satisfied that the Official Trustee or any officer acting on the Official Trustee’s behalf was aware of the existence of Voits as a creditor of the bankrupt’s estate at the time of dispatch of the notice on 4 December 2008.CONSIDERATION When Mr Karolyi became aware on 2 December 2008 that Mr Burke’s written consent to act as trustee had been received in ITSA’s office, he determined, as a delegate of the Official Trustee for the purposes of s 181A, that the administration of Mr Coshott’s bankruptcy should be transferred to a registered trustee. He instructed Ms Chau to take steps to transfer the matter to Mr Burke. The bankrupt argued that this instruction and decision of Mr Karolyi was insufficient to amount to a nomination for the purposes of s 181A. He also contended that I should not make the finding I have just made because Mr Karolyi only gave evidence of his instruction after the bankrupt’s written submissions in reply had been served. Those submissions identified deficiencies in the proof offered of the nomination and the absence of any evidence in Mr Karolyi’s earlier affidavit to that effect. I am comfortably satisfied that such an instruction was, in fact, given by Mr Karolyi having regard to, among other things, the documentary evidence showing that the nomination was received from Mr Burke as a result of discussions with different officers of ITSA, and by the terms of the notice prepared and sent by Ms Chau. I accept Mr Karolyi’s evidence. Nonetheless, the bankrupt contended that the instruction did not amount to a nomination. Rather, he relied on a statement Mr Karolyi made in his oral evidence, to the effect that he had delegated the matter to Ms Chau. The bankrupt argued that this statement should be taken at face value and that Ms Chau had herself made the nomination purporting to act as a delegate. I reject that argument, and find that, for the purposes of the Act, Mr Karolyi, by giving the instruction to Ms Chau to take steps to transfer the matter to Mr Burke, made a nomination. No particular formality is required by s 181A for the making of a nomination. The section does not require the nomination to be made in writing; it merely requires a written consent of the other (incoming) trustee, and the giving of notice of the nomination to the creditors. I am of opinion that Mr Karolyi’s decision, which he then conveyed to Ms Chau as an instruction, was a sufficient nomination for the purposes of the Act. In any event, I am satisfied that the notice contained the statement that the Official Trustee nominated Mr Burke to be the new trustee and that this was also sufficient to amount to a nomination. The notice was issued on behalf of the Official Trustee in Bankruptcy. In my opinion, the form of the signature of the notice was sufficient in that regard to amount to a nomination in the name of, and on behalf of, the Official Trustee for the purposes of the Act.