D.C.T. v Clout & Anor
[2004] FMCA 195
•31 March 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| D.C.T. v CLOUT & ANOR | [2004] FMCA 195 |
| BANKRUPTCY – Where second respondent was a non-executive director of company which went into liquidation – where second respondent owed applicant debt for unpaid group tax – where first respondent trustee of second respondent’s estate – Part X proposal – whether a provable debt was owed by the second respondent to the liquidator entitling him to voting rights – where trustee had relied on assurances from second respondent that the company was trading while insolvent and thus accepted that the liquidator had a provable debt – where trustee did not utilise alternative of postponing the vote – whether the vote should be set aside and declared void – where applicant seeking sequestration order under s.222(7) Bankruptcy Act. |
Bankruptcy Act 1966 (Cth), ss.64ZA, 222, Part X
Income Tax Assessment Act 1936, s.222AOC
Corporations Act2001 (Cth), ss.588G, 588H, 588M
Telstra Corp Ltd v First Netcom Pty Ltd [2000] FCA 309
Re: McLean; Ex parte Friends Provident Life Office (1992) 108 ALR 360
Forshaw v Thompson (1992) 106 ALR 633
Re Levy & Beard (Beard v Prestige Baking Industry Pty Ltd (1991) 36 ALR 307
Official Trustee In Bankruptcy v C S & G J Handby Pty Ltd (1989) 87 ALR 734
| Applicant: | DEPUTY COMMISSIONER OF TAXATION |
| First Respondent: | DAVID LEWIS CLOUT |
| Second Respondent: | IAN DOUGLASS GEORGE |
| File No: | SZ 1762 of 2003 |
| Delivered on: | 31 March 2004 |
| Delivered at: | Sydney |
| Hearing date: | 24 March 2004 |
| Judgment of: | Raphael FM |
REPRESENTATION
| Counsel for the Applicant: | Mr M Aldridge SC |
| Solicitors for the Applicant: | Australian Government Solicitor |
| Solicitors for the First Respondent: | PMF Legal |
| Counsel for the Second Respondent: | Ms J Richards |
| Solicitors for the Second Respondent: | Russo & Russo |
ORDERS
The Court declares, pursuant to s.222(2) Bankruptcy Act 1966, that the deed of assignment executed on 25 July 2003 relating to Ian Douglass George is void and of no effect.
The Court, orders pursuant to s.222(7) Bankruptcy Act 1966, that the estate of Ian Douglass George be sequestrated.
The second respondent to pay the costs of the applicant and the first respondent to be taxed, if not agreed, pursuant to the Federal Court Act and Rules and to be paid in priority out of the estate of the bankrupt.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SZ 1762 of 2003
| DEPUTY COMMISSIONER OF TAXATION |
Applicant
And
| DAVID LEWIS CLOUT |
First Respondent
| IAN DOUGLASS GEORGE |
Second Respondent
REASONS FOR JUDGMENT
These proceedings are brought by the Deputy Commissioner of Taxation a creditor in the estate of Ian Douglass George who seeks a declaration pursuant to s.222(2) or s.222(4) of the Bankruptcy Act 1966 (“the Act”) that a deed of assignment executed on 25 July 2003 relating to Mr George is void. The application also seeks an order under s.222(7) that if an order declaring the deed of composition to be void is made that a sequestration order should be made forthwith. The application also seeks an order under s.224(7) but there is no such section in the Bankruptcy Act. This would appear to be an error and s.222(7) is the section being referred to.
History
Mr George is a barrister admitted to practice in New South Wales. In about June 1995 he was appointed a non-executive director of a company known as First Netcom Pty Ltd. This company was a Telstra reseller. In proceedings between himself and the Deputy Commissioner of Taxation under District Court No. 9129 of 2000, Mr George swore an affidavit on 14 November 2001. That affidavit was admitted as exhibit ‘A’ to these proceedings. This affidavit states inter alia:
“4. In or about June 1995 I was appointed a non-executive director of First Netcom. There were a number of other persons already appointed or were appointed at or about that time as directors of First Netcom Pty Ltd including: [8 names are set out]
5. I met with some of these folk prior to accepting an appointment as a director of First Netcom and I carried out some investigation as to the Company’s profits and losses, assets and liabilities and the like prior to formally agreeing to become a non-executive director of First Netcom.”
The affidavit goes on to state that Mr George was appointed an acting Judge of the District Court on 18 December 1996 and his commissions were continued until 30 June 1999. He then states:
“10. At all material times I was one of two (2) directors of First Netcom and I was a non-executive director. The sole executive director, and managing director, chief executive officer, of First Netcom was Neil Allan MacDonald, a person in whom I had a high level of trust and confidence and who assured me on a number of occasions that he would protect my interests as a non-executive director.
11. The company effectively ceased trading in or about September 1997, consequent upon Telstra ceasing services to First Netcom. There after I was of the belief that First Netcom’s sole business was collection of outstanding debts and management of litigation the company had commenced against Telstra. I am informed and verily believe that administrators were appointed to the affairs of First Netcom on 12 October 2000 at which time First Netcom had debts exceeding $3,000,000. I am further informed and verily believe that First Netcom was placed into liquidation on or about November 2000.”
The proceedings in the District Court in respect of which that affidavit had been sworn were proceedings which had been brought by the Deputy Commissioner of Taxation to recover group tax unpaid by the company for which it was claimed Mr George was liable under s.222AOC of the Income Tax Assessment Act 1936. Judgment was entered for the Commissioner, following an unsuccessful appeal, in the sum of $327,007.01 on 1 February 2002.
On 6 June 2003 Mr George appointed David Lewis Clout controlling trustee of his estate pursuant to an authority executed under s.188 of Part X of the Act. On 24 June 2003 the controlling trustee signed a report to creditors in which he advised that Mr George proposed that his affairs be dealt with under the provisions of Part X of the Act by way of a deed of assignment pursuant to which some $86,200 would be distributed amongst his creditors. These creditors were estimated in the sum of $15,909,750 from amounts shown in Mr George’s statement of affairs. By far the largest creditor was the liquidator of First Netcom which was described as “claim for breach insolve $15,000,000.” In the report to creditors the Trustee says:
“The debtor has disclosed that the liquidator of First Netcom Pty Ltd has indicated that he may pursue him for insolvent trading to the value of $15,000, 000 the validity of this claim has not yet been ascertained.”
Under the heading “Outcome for Creditors” in the report the trustee says:
“A distribution to creditors is largely dependent on the recovery of the legal fees [these being fees owed to Mr George by solicitors] and the validity of an insolvent trading claim expected to be submitted by the liquidator of First Netcom Pty Ltd. … The comparison has been compiled on the assumption that the debtor retains his practicing certificate and the insolvent trading is a provable claim."
The trustee recommended that creditors should vote for the debtor to present his own debtors petition within 7 days.
The meeting to consider the proposal under Part X was held on 9 July 2003. The meeting was attended inter alia by a Bruce Dunne who is employed by the applicant. He had been asked to attend the meeting in place of another officer of the Commissioner who had carriage of the Receivables Management file and who had instructions to oppose the deed of assignment. As Mr Dunne was not the case officer he was not “fully up to speed” with all the background to Mr George’s proposed assignment.
At the meeting the Trustee admitted the proof of First Netcom which then proceeded to vote in favour of the assignment together with certain other creditors valued at approximately $80,000 (four creditors). The votes against were $810, 750 (two creditors). By the time of the meeting the Netcom debt had risen to $17,722,543.35.
The Deputy Commissioner wishes to set aside the vote and have the deed declared void on the basis that the trustee should not have admitted the proof of First Netcom and if that had happened the vote would have been in favour of Mr George presenting his own petition within 7 days.
The evidence
The applicant provided affidavits from Mr Dunne and Ms Whan of the Australian Government Solicitor. Mr Chubb the trustee swore an affidavit on 11 September 2003 in which he stated that on or about
1 July 2003 he had received a facsimile transmission from Armstrong Wily & Co, the liquidator of First Netcom, which contained documents pertaining to the claim by Telstra Corporation against First Netcom. The documents consisted of a judgment of Einfeld J in Telstra Corp Ltd v First Netcom Pty Ltd [2000] FCA 309 and the liquidator’s report to creditors dated 30 October 2000 as well as a listing of the creditors of that company and a copy of Telstra’s proof of debt in the sum of $14,217,214. In the report to creditors which was made by the Administrator, he states at page 16 (page 76 of the Affidavit of Morgan Chubb):
“My preliminary investigation reveals that there is evidence that suggests that the directors may have engaged in insolvent trading however, I have not been able to estimate any likely success or the financial position of the directors.”
In his affidavit Mr Chubb says that he read the papers provided to him by Armstrong Wily and the proof of debt submitted by the liquidator:
“12. At that stage, based on the materials in hand provided by the liquidator, it appeared to me that the insolvent trading claim against the second respondent was credible and of substance. Provided the second respondent had reason to expect that First Netcom was insolvent or likely to be insolvent at the material time (from 1995 to 1997).
13. On 9 July 2003, before the creditor’s meeting I had the following conversation with the second respondent (Mr George) in which words to the following effect we (sic) spoken:
Second Respondent: “What have you decided to do about First Netcom’s debt?”
I said: “ The only problem I have is that I can’t prove that you have knowledge of insolvency. That was the only thing that Galler from Armstrong Wily was not able to establish.”
Second Respondent: “Look, I warned the other directors back in 1995 at a meeting that the company was likely to be insolvent and was likely trading insolvently.”
14. Attached and marked ‘F’ is a copy of my contemporaneous file note dated 9 July 2003 recording my conversation with the second respondent.
15. Upon confirmation by the second respondent that he had actual knowledge since 1995 that First Netcom was insolvent or likely to be insolvent when it was trading, together with all supporting materials provided to me by the liquidator, I formed the view that First Netcom’s proof of debt should be admitted for voting purposes only.”
Under cross-examination Mr Chubb admitted that the Einfeld J judgment indicated that First Netcom was insolvent on 14 March 2000 but nowhere in that judgment was it suggested that it was insolvent on 26 June 1997. Mr Chubb pointed out that his Honour had commented on the way that the business was being run but agreed that any insolvency that might have occurred after 1997 was irrelevant to the Telstra debt which had been incurred between 1995 and 1997. Mr Chubb stated that when he considered the situation of the First Netcom debt he had looked at it from the point of view of voting and had given the matter less rigorous consideration than he would have done if he had been looking at it from the point of view of a dividend. He explained that he felt satisfied that First Netcom had become insolvent because the company only turned over approximately $15,000,000 a year and it owed its sole supplier $14,000,000. He did agree that a company should be admitted to vote in the sum which was as proximate as possible to the real amount that it was owed. He agreed that he could not determine on what date First Netcom became insolvent and therefore what amount was really owed by any director against whom an insolvent trading claim could be made. Mr Chubb admitted that he was aware that First Netcom had been in liquidation for three years and that in that time no steps had been taken to commence proceedings for insolvent trading against Mr George. Mr Chubb told the Court that he has told Mr Galler of Armstrong Wily that he needed to establish knowledge on the part of the director in order to admit the proof for voting.
Mr Dunne also gave evidence and was cross-examined by Ms Richards on behalf of Mr George. He agreed that he did not ask any questions about the First Netcom debt at the meeting but said that he wasn’t in a position to argue that the claim was invalid at that time.
Mr George did not give evidence.
Discussion
The Court’s function under s.222(1) was considered by Heerey J in Re: McLean; Ex parte Friends Provident Life Office (1992) 108 ALR 360 at 367 – 370. His Honour commenced by referring to s.201 of the Act which gives the decision as to the right of a person to vote at a meeting or the amount of debt in respect of which he is entitled to vote to the Chairman and provides for a period of adjournment not exceeding 14 days to enable him to investigate the mater if required. This provision is now found at s.64ZA(8). But this provision does not exclude the Court’s jurisdiction to determine questions concerning the rights of persons to vote at meetings of creditors under Part X: Forshaw v Thompson (1992) 106 ALR 633. His Honour then considered whether the proceedings were a review or a rehearing and said at 368:
“However, I think that the weight of authority is now in favour of the view that the Court looks at the evidence presented to it at the time of the application under s.222(1). This was the approach of FitzGerald J in Re: Tregonning (1983) 74 FLR 327 and Beaumont J in Zantiotis v Andrew (No.2) (1988) 88 ALR 299.
…
In terms of s.30(1)(a) of the Act the question in the matter under Part X which the Court has the power to decide is therefore whether the creditor is entitled under s.198 to vote at the meeting in respect of the debt claimed, or some other amount.”
Heerey J then considered whether an arguable case was sufficient to allow a creditor a vote. At 369 he stated:
“In my respectful opinion it will usually be appropriate for a court to make a finding as to the existence and extent of the alleged debt and not merely whether there is an arguable case…”
His Honour cited Re Levy & Beard (Beard v Prestige Baking Industry Pty Ltd (1991) 36 ALR 307.) Likewise in Zantiotis v Andrew(No.2) at 300, Beaumont J defined the substantive issue before him as “whether the debts claimed by the second respondent on 9 September [the date of the meeting] were admissible for the purposes of voting at the Part X meeting”. His Honour then proceeded to deal with the various issues as on a final hearing and not in terms of whether a triable issue was raised.
“I would respectfully suggest that this approach is correct in principle. The issue of entitlement to vote at the meeting has to be decided once and for all. There is no later occasion on which the issue may fall to be decided. “
And at [370]:
“It was accepted, correctly in my view, that the onus lies on FBL to establish that it was a creditor of Mr McLean in the alleged amount. This is simply an application of the ordinary principle that he who alleges must prove. In the converse case, where the applicant under s.221(1) contends that the Chairman wrongly admitted a creditor to vote (as in Zantiotis) the onus would lie the other way.”
It follows from the above that the Commissioner must satisfy me that no provable debt was owed by Mr George to First Netcom Pty Ltd (In liquidation) at the time of the meeting upon evidence which is presently before me. I do not believe that any finding which I may make in this regard would go any further than that. First Netcom was not a party to these proceedings, a matter brought up by the respondent after the applicant had made its closing submissions in reply, so I cannot see how it could be bound by such a finding. When I say “bound” I mean that any finding made by me here would not prevent the liquidator from commencing proceedings against Mr George or submitting a proof of debt in his bankruptcy if that should follow. The Trustee will then adjudicate on that proof with the knowledge of the matters debated in these proceedings but will come to his own independent judgment. The creditor is not estopped from establishing the elements of a debt at a later date which he was unable to establish for the purposes of voting at the meeting.
Had First Netcom established the elements of insolvent trading as at
9 July 2003? The relevant section in the Corporations Law (now Corporations Act 2001) is s.588G(1) which is in the following form:
s.588G (1) This section applies if:
(a) a person is a director of a company at the time when the company incurs a debt; and
(b) the company is insolvent at that time, or becomes insolvent by incurring that debt, or by incurring at that time debts including that debt; and
(c) at that time, there are reasonable grounds for suspecting that the company is insolvent, or would so become insolvent, as the case may be; and
(d) that time is at or after the commencement of this Act.
Under s.588H a number of defences are set out. Shortly put these are that the director involved had reasonable grounds to expect that the company was solvent, that the director involved received information as to solvency from another person, that the director did not take part in the management of the company for good reason and that the director took all reasonable steps to prevent the company from incurring the debt. Section 588M(2) gives the liquidator power to recover from the director as a debt due to the company an amount equal to the amount of the loss or damage incurred by reason of the insolvent trading. The claim under s.588 can provide the basis for a valid proof of debt: Official Trustee In Bankruptcy v C S & G J Handby Pty Ltd (1989) 87 ALR 734; Re Kavich; Kavich v Official Trustee In Bankruptcy & Anor (1995) 136 ALR 678.
The first constituent of the breach of duty is that the person is a director of the company at a time when the company incurs a debt. Mr George became a director of the company in June 1995 and the Telstra debt was incurred between about that time and 1997. He was still a director when Telstra ceased trading with First Netcom. I am satisfied that this constituent has been made out. The second constituent is that the company is insolvent at the time or becomes insolvent by incurring that debt or other debts at that time. The first question that this requirement throws up is “what time?” The time does not have to be one day. It can be a period of time, but there will be a point in time at which the company becomes insolvent. A competent forensic accountant considering the books of a company will be able to pinpoint the day or a short period of time after which the company was no longer able to pay its debts as and when they fell due from its own monies or monies reasonably obtainable. That is the point of insolvency. It is only when that point is known that a calculation can be made of the loss or damage sustained by a director having allowed the company to continue to trade. In a practical sense this is dealt with by liquidators and if necessary courts saying “we do not know on exactly what day the company became insolvent but we can say that by all accounts it was insolvent on a particular day”. Any liability can safely be said to arise from that date onwards. In this case no such date has been pointed to other than the date in 1997 when Telstra stopped supplying the company. It is interesting that in the judgment of Einfeld J, His Honour made a number of remarks concerning the financial probity of First Netcom but did not attempt to make a finding as requested by Telstra that the company had been insolvent from the time it commenced its business with that organisation. His Honour also pointed out that expected receipts from the cross-claim against Telstra were recorded as an asset in its 1996 and 1997 annual returns although not afterwards. The existence of this asset would tend to militate against a finding of insolvency until after the final debt to Telstra had been incurred in 1997. If that was the case then the liquidator could not sue Mr George for insolvent trading.
The need to be clear about a date upon which it can be said the company was insolvent impacts upon the calculation of the alleged debt itself. If, as I have suggested, it is strongly arguable that the company did not become insolvent until after Telstra ceased trading with it (because any ability the company might have had to trade out of its difficulties, raise additional capital, renegotiate the Telstra terms of trade etc have then effectively vanished) the Telstra debt could not form part of the total amount of any claim against the directors. If it was considered that insolvency occurred on or around a particular date before trading ceased then it would be necessary to calculate the amount of the Telstra debt from that date for the purposes of such a claim. The actual claim against Mr George was for the whole of the Telstra debt plus every other debt that the company had incurred which remained outstanding as at the date it went into administration. There is no explanation in the trustee’s affidavit as to whether he turned his mind to this matter at all.
The one matter that the Trustee did turn his mind to was the requirement under s.588M that the director had contravened subsection 588G(2) or (3) in relation to the incurring of the debt by the company. Subsection 588G(2)(a) requires the director to be aware at the time that there are such grounds for so suspecting and s.588G(3)(c) requires that the person actually suspected at the time when the company incurred the debt that the company was insolvent or would become insolvent and his failure to prevent the company incurring the debt is to be found dishonest. The trustee made it clear to the liquidator of First Netcom and to Mr George that he could not permit First Netcom to vote on the arrangement unless he was satisfied as to at least one of these matters. It is a reasonable inference to draw that he only felt he needed to be satisfied as to the requirements under subsection 588G(2) rather than the criminal responsibility set out in s.588G(3).
The liquidator did not provide the trustee with any further information than Mr George did. Mr George told the trustee that he had warned the other directors in 1995 that the company was insolvent and was continuing to trade whilst insolvent. Mr Aldridge challenges the veracity of this statement and argues that if I find on the balance of probabilities it was not made then one of the essential elements of the claim has not been made out and the company should never have been admitted to vote on the deed.
Mr Aldridge attacks the veracity of the statement on a number of grounds. First, he says that it is inconsistent with other statements made by Mr George in his affidavit in the District Court proceedings. I have already referred to the statement in that affidavit that Mr George had carried out some investigations upon the company’s profits and losses, assets and liabilities prior to formally agreeing to become a non-executive director. It is most unlikely that if he had done that before he took office he would have continued to sit on the board when, within a very few months, he had found that it was insolvent and continuing to trade. He remained on the Board until 2000. If he had made the statement it meant that he had understood the responsibilities directors had for insolvent trading. It must be assumed that he also understood the possible criminal implications of dishonest insolvent trading. To sit on the Board of a company that continued to trade for over 4 years after he believed it was insolvent must raise the possibility of a criminal offence having been committed. It seems to me most unlikely that a barrister of Mr George’s experience would have done such a thing.
At [11] of the affidavit Mr George says:
“… I am informed and verily believe that the administrators were appointed to the affairs of First Netcom on 12 October 2000 at which time First Netcom had debts exceeding $3,000,000. I am further informed and verily believe that First Netcom was placed into liquidation in or about November 2000.”
This statement is inconsistent with knowledge of insolvency and a debt of over $14,000,000 to Telstra. At [20] of the affidavit he says:
“I realised the seriousness of this situation which had taken me completely by surprise and in or about March 2000 I commenced making payments to ATO in the sum of $1,250 in reduction of First Netcom Pty Ltd’s indebtedness to ATO for unpaid group tax.”
This statement is also inconsistent with having told directors in 1995 that the company was insolvent. If that was the case why would Mr George be completely taken by surprise that it had not paid its group tax?
In the transcript of evidence of the hearing in the District Court Mr George was cross-examined. My impression from reading the transcript and the affidavit of Mr George is that his evidence was aimed at avoiding responsibility under the Income Tax Assessment Act for the liabilities of the company for group tax on the basis that he was not involved in the running of the company which was being handled by a Mr MacDonald and that this lack of awareness included a lack of awareness of the company’s financial position. At [T 41] which is part of exhibit 2 in these proceedings the following discussion takes place:
“Q: And apart from the group tax information, we are looking again from the period from 1 July 1999 through to when you resigned as a director. Apart from asking about group tax information did you ask about the general financial position of the company?
A: No. Not in detail. I was aware that it was surviving by collecting the outstanding debtors and that most of that money, as I understood it, was going either to tax or to the various firms of lawyers that had been employed in the Telstra litigation.”
I accept that these statements are inconsistent with an admission that Mr George warned his fellow directors that the company was insolvent in 1995.
Mr Aldrigde points out that one of the other bases upon which Mr George was seeking to avoid responsibility for the ATO debt was that he had been appointed an acting District Court Judge and remained such from 1996 to 1999. During that period he believed that he was not able to take any part in the affairs of the company. It seems to me incomprehensible that a barrister who would take his position as an acting District Court Judge so seriously would take no active part in the management of the company whilst he held the commission would not have resigned from that company when he knew, as he said he did, that it was insolvent. I am afraid that I must accept Mr Aldridge’s submission that the statement made by Mr George to his trustee just prior to the voting on the deed was incorrect and that he had not warned the directors of insolvency nor was it likely that he knew that the company was insolvent in 1995.
There was considerable argument before me by counsel concerning what was required in order for me to make a finding in this case. Mr George’s submission is that the complaining creditor must prove that there was no debt. He argues that it is not for him to prove that there was one. Mr Aldridge argues that he believes that he has proved that there was no debt because the essential elements of that debt could not be established, but that in any event he has provided a prima facie case as to that situation and the evidentiary onus then shifts to Mr George. Mr George has provided no evidence to counter the prima facie case, he has not gone into the witness box himself and therefore I must accept that the prima facie case becomes an established one.
The authorities are clear that an arguable case is not sufficient and that Mr Aldridge must prove that the liquidator was not a creditor at that time. I believe that he has succeeded in doing this. I do not believe that the liquidator had, as at the date of the meeting, made out the constituents of the claim as required by s.588G(1) and s.588G(2). The liquidator had never made a determination of the date of insolvency and therefore it was impossible to work out exactly how much of the debt may have been incurred whilst the company was trading insolvently to the knowledge of Mr George or a reasonable person in his position. Most importantly the liquidator had not established that second element of the claim. He had not established it because I have found on the evidence before me today that Mr George’s warning to his fellow directors that the company was trading whilst insolvent in 1995 had, on the balance of probabilities, not been given. The trustee had made it clear in his evidence that he required proof of Mr George’s knowledge and that he was not satisfied from the documents that were before him without it. In the events that have occurred it must be taken that such evidence does not exist. The trustee gave evidence before me that with the exception of what is known as the “Zip files” all the material pertaining to the claims that he had received either then or since was before me. The zip files may have provided some particulars of the dates upon which debts to Telstra were incurred. They would not have given any assistance in assessing a date upon which the company could be said to have been insolvent. On the status of the evidence I could not be satisfied that a claim against Mr George for insolvent trading could be made out. In those circumstances the trustee should not have admitted First Netcom to vote. The trustee had an alternative. He could have put the matter off for a period of 14 days for further investigations but he did not take that alternative. He decided the matter there and then and I believe he decided it wrongly. I do not blame him for this. He acted on assurances from Mr George which I have found not to be correct. Based upon those assurances an amount of many millions of dollars would have been incurred in debts whilst the company was insolvent.
I will make a declaration in the form of paragraph 1 of the particulars of claim and an order under s.222(7) of the Act that the estate of Ian Douglass George be sequestrated. I am satisfied that the majority of creditors by value – $800,000 to $80,000 – wished this to have occurred and the trustee recommended it. I am unable to understand the motivation of the other creditors, including the liquidator for accepting such a low offer as the one made in the deed. I will order that the second respondent pay the costs of the applicant and the first respondent to be taxed if not agreed according to the Federal Court Act and Rules and to be paid in priority out of the estate of the bankrupt.
I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of Raphael FM
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