Coyne v Douglas-Brown - [2002] FCA 1324

FEDERAL COURT OF AUSTRALIA
Coyne v Douglas-Brown [2002] FCA 1324
BANKRUPTCY – trustee – small bankruptcy – administration of estate extended over nine years – ongoing disputes with bankrupt – whether misconduct by trustee – delay – remuneration level – alleged failure to finalise creditors – whether inquiry into trustee’s conduct warranted – Bankruptcy Act s 179 – no inquiry warranted – application dismissed – opportunity for bankrupt to seek taxation of trustee’s costs.
Bankruptcy Act 1966 (Cth) s 179
Re Coyne Ex parte Binningup (South) Pty Ltd (No P863 of 1992, unrep, Fed Court, French J 10/11/92) cited
Re Coyne Ex parte Binningup (South) Pty Ltd (No P863 of 1992, unrep, Fed Court, French J 10/3/93) cited
Official Receiver v Todd (1986) 14 FCR 177 cited
Re Cheesman; Cheesman v Waters (1997) 143 ALR 78 cited
Macchia v Nilant (2001) 110 FCR 101 cited
Watson v Healey (1996) 64 FCR 301 cited
Bellin v Pattison (Trustee) [1999] FCA 51 cited
Re Gault; Gault v Law (1981) 57 FLR 165 cited
PETER ANTHONY COYNE v ANTHONY HAYES DOUGLAS-BROWN
W7012 of 2002
FRENCH J
24 OCTOBER 2002
PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W7012 OF 2002

BETWEEN:                 PETER ANTHONY COYNE
   Applicant
AND:   ANTHONY HAYES DOUGLAS-BROWN
   Respondent

JUDGE:

FRENCH J

DATE OF ORDER:

24 OCTOBER 2002

WHERE MADE:

PERTH

THE COURT ORDERS THAT:
1.        The application is dismissed.
2.The trustee’s costs of the application including reserved costs are to be paid out of the bankrupt estate.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY

W7012 OF 2002

BETWEEN:

PETER ANTHONY COYNE
Applicant

AND:

ANTHONY HAYES DOUGLAS-BROWN
Respondent

JUDGE:

FRENCH J

DATE:

24 OCTOBER 2002

PLACE:

PERTH

REASONS FOR JUDGMENT
Introduction

Peter Anthony Coyne was made a bankrupt by order of this Court on 10 March 1993. The order was made on a creditor’s petition upon the application of Binningup (South) Pty Ltd. The act of bankruptcy relied upon was the return unsatisfied of a writ of fi fa in respect of costs awarded against Coyne in proceedings in the Supreme Court. The total indebtedness, including interest under the Supreme Court Act, was $3,426.06. The circumstances surrounding the making of the sequestration order are set out in two judgments on the petition: Re Coyne Ex parte Binningup (South) Pty Ltd (No P863 of 1992, unrep, Fed Court, French J, 10/11/92) and Re Coyne Ex parte Binningup (South) Pty Ltd (No P863 of 1992, unrep, Fed Court, French J, 10/3/93).
Anthony Hayes Douglas-Brown, the respondent in the present proceedings, was appointed as Coyne’s trustee in bankruptcy. The bankruptcy was extended on the basis of his objection to discharge lodged pursuant to s 149B of the Bankruptcy Act1966 (Cth) on or about 7 March 1996. The effect of that objection was to extend the bankruptcy until 14 July 2002 at which date Coyne was discharged by effluxion…

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 Coyne v Douglas-Brown

Details

AGLC: Coyne v Douglas-Brown [2002] FCA 1324
Case: [2002] FCA 1324
Decision Date: 24 OCTOBER 2002

CaseChat Overview and Summary

The case of Coyne v Douglas-Brown involved a dispute between the bankrupt, Coyne, and his trustee, Douglas-Brown. The crux of the matter was whether the trustee's conduct warranted an inquiry into his conduct, given the extensive delays and high costs incurred in the administration of the bankrupt's estate over a period of nine years. This case was heard by the Federal Court of Australia, which was tasked with determining the validity of the trustee’s actions and whether his remuneration was justified.

The primary legal issues revolved around the trustee’s alleged misconduct, the level of his claimed remuneration, and whether the ongoing delays in administering the estate were attributable to his actions. Specifically, the court had to decide whether the trustee's conduct, particularly the extensive delays and the remuneration level, warranted an inquiry under section 179 of the Bankruptcy Act. Douglas-Brown argued that the difficulties and costs were due to Coyne's uncooperative behaviour, while Coyne suggested that the trustee's actions contributed to the delays and excessive costs.

The court found that while the administration of the estate had indeed taken an unconscionably long time, this was largely due to Coyne’s difficult conduct rather than any failings on the part of the trustee. The court highlighted that the trustee had offered an opportunity for Coyne to seek taxation of his claimed remuneration, which indicated a willingness to address concerns about the costs. Despite the substantial costs and delays, the court concluded that there was insufficient evidence to warrant an inquiry into the trustee’s conduct. The judge noted that the trustee had not drawn any remuneration for his services and had even compromised on his fees in the past to facilitate a composition agreement.

The court dismissed the application for an inquiry into the trustee’s conduct, ruling that no such inquiry was warranted based on the evidence presented. The trustee’s costs, including those related to the application, were ordered to be paid out of the bankrupt estate. The court also noted that Coyne had the opportunity to seek taxation of the trustee's costs if he desired, within the time limits set by the Regulations. This decision underscored the importance of the trustee’s role and the difficulties encountered in managing an uncooperative bankrupt, while also reaffirming the necessity for careful consideration of the costs and delays involved in bankruptcy proceedings.

Orders

Orders of the court

1. The application is dismissed.

2. The trustee’s costs of the application including reserved costs are to be paid out of the bankrupt estate.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In my opinion, the estate is plainly one which has been extremely difficult from the point of view of the trustee. The costs seem substantial. However an opportunity has been offered to have them taxed. I am not prepared to institute an inquiry as to the conduct of the trustee based upon those costs. The evidence does not warrant it. Conclusion For the preceding reasons, I am not satisfied that this matter should proceed any further to an inquiry into the conduct of the trustee with a view to his removal. While the administration of the estate has taken an unconscionably long time, I am not prepared to say that this is generally attributable to failings on the part of the trustee. Coyne has been a particularly difficult bankrupt to deal with. And even if there are criticisms of the administration of the estate by the trustee, I do not consider that an inquiry at this stage would be of any use to anybody. The application will be dismissed with costs to be paid out of the bankrupt estate. Post Script The orders which I have indicated above were made on 24 October 2002. Parties were advised that the reasons would be available on 25 October and they are published as indicated. At the time of making the orders I indicated that I would be prepared to entertain an application to extend the time for taxing the trustee’s claimed remuneration. Counsel for the trustee indicated, however, that this would be academic as the trustee would submit to the creditors’ meeting, to take place on 25 October, a revised updated claim so that the time for seeking a taxation would run from 25 October. On the basis of that indication, it is unnecessary to make any order extending the time for taxation of costs. Coyne can proceed to seek taxation of the trustee’s costs if he desires within the time limited by the Regulations.I certify that the preceding sixtyeight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French: Acting Associate: Dated:Mr PA Coyne appeared on his own behalf.Counsel for the Respondent: Mr PB O’Neal and Mr J VaughanSolicitor for the Respondent: DeaconsDate of Hearing: 10 October 2002Date of Judgment: 24 October 2002

Ratio Decidendi

Legal Principle Established

Although obviously the question of the level of fees claimed by the trustee is a matter of concern, there is nothing in my opinion to indicate that his conduct in relation to the deceased estate warrants an inquiry. Mere assertion of necessarily hypothetical omissions is not evidence for that purpose.Level of Trustee’s Claimed Remuneration Douglas-Brown points out that he is yet to draw any remuneration for his services as Coyne’s trustee in bankruptcy, although a $750 recovery has been applied towards disbursements incurred. The costs for his services have been exacerbated, he says, to Coyne’s conduct in relation to the administration of the estate. He has had to take additional time over and above what he would consider to be normal in: 1. Seeking to identify assets.2. Seeking to identify income derived by Coyne.3. Realisation of assets (due to Coyne’s failure to deliver up).4. Determining creditors and the amounts of creditors’ claims.5. Litigation.6. Failed compositions (including negotiations as to proposals).7. Investigation of post-bankruptcy conduct of Coyne. 8. Section 77C examinations of Coyne.9. The objection to discharge of Coyne from bankruptcy.10.Creditor inquiries (both pre and post-bankruptcy creditors) including dealing with post-bankruptcy claims for debts incurred and remaining unpaid for the period subsequent to the bankruptcy.He asserts that had Coyne cooperated with him and provided proper assistance in the conduct of his administration of the estate, the costs of his services as trustee would have been greatly reduced. Before the present proceedings were commenced the costs for his services as trustee of the estate, calculated on a time basis, were $66,374.62. That amount covers the period from 10 March 1993 to 15 July 2002. It is based upon charging at a rate of 85% of the Insolvency Practitioners Association of Australia Guide to Hourly Rates in accordance with s 162(4) of the Bankruptcy Act and reg 8.08 of the Bankruptcy Regulations. Although, in order to facilitate Coyne making a composition he was prepared to compromise his entitlement to remuneration in 1998, any compromise was conditional upon a composition being approved and proceeding. In his report to creditors of 25 February 1998, he stated that as at the date of that report costs incurred in respect of the bankrupt’s estate were in excess of $34,600 but, in an effort to resolve the matter, he had agreed to fix fees at $15,000 in the event that the composition was approved. This did not involve any concession that his fees were not properly incurred. He said he has never intended to draw remuneration from Coyne’s estate based solely on a time basis. His usual preference is for creditors to assess and fix a remuneration resolution. Accordingly, he convened a meeting of creditors for 8 August 2002. As his report to that meeting indicates, the amount he sought by way of remuneration for services was not the $66,374.62 calculated on a time basis but a reduced sum of $55,000 plus any applicable GST, plus the additional costs of finalising the estate. Because the meeting has been adjourned by orders of the Court made on 7 August 2002, his creditors have not considered by resolution fixing his remuneration. No creditor has sought that his remuneration be taxed. Nor has Coyne sought that his remuneration be taxed. He says that he instructed his solicitors to write to Coyne’s solicitors on 4 September 2002 allowing him a further seven days in which to seek taxation of his claimed remuneration. This letter was exhibited. No request has been forthcoming for taxation.

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY	W7012 OF 2002

JUDGE:	FRENCH J
DATE OF ORDER:	24 OCTOBER 2002
WHERE MADE:	PERTH

BETWEEN:	PETER ANTHONY COYNE Applicant
AND:	ANTHONY HAYES DOUGLAS-BROWN Respondent
JUDGE:	FRENCH J
DATE:	24 OCTOBER 2002
PLACE:	PERTH