Doolan v Dare

Case [2004] FCA 682

FEDERAL COURT OF AUSTRALIA

Doolan v Dare [2004] FCA 682

BANKRUPTCY – TRUSTS – whether declaration of a first and final dividend was in accordance with Pt VI Div 5 of the Bankruptcy Act 1966 (Cth) – whether the declaration of dividend was made for an improper purpose by the trustee – if declaration of dividend made for improper purpose, whether it was, nonetheless, effective to pay out the creditors.

Bankruptcy Act 1966 (Cth) ss 64, 73, 82, 134, 140-147, 156, 179, 181, Pt VI Div 5

Re Allen; Ex parte Official Receiver (1954) 16 ABC 154 considered
Adsett v Berlouis (1992) 109 ALR 100 referred to
The Attorney-General for the Commonwealth v Breckler (1999) 197 CLR 83 referred to
Hughes Aircraft Systems International v Airservices Australia (1997) 146 ALR 1 referred to
Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41
referred to

WILLIAM EDWARD DOOLAN v TRACEY JOY DARE

No Q 78 of 2004

SPENDER J
BRISBANE
27 MAY 2004

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q 78 OF 2004

BETWEEN:

WILLIAM EDWARD DOOLAN
APPLICANT

AND:

TRACEY JOY DARE
RESPONDENT

JUDGE:

SPENDER J

DATE OF ORDER:

27 MAY 2004

WHERE MADE:

BRISBANE

THE COURT DECLARES THAT:

The payments by the trustee to the creditors for the full extent of their proved claim discharges them from their rights in the bankrupt estate.

THE COURT ORDERS THAT:

1.Mr David Cranstoun be appointed Trustee in Bankruptcy of the estate of William Edward Doolan.

2.The respondent pay the applicant’s costs of and incidental to the application, without recourse to the funds of the bankrupt estate of Mr Doolan, those costs to be taxed if not agreed.

3.The respondent pay the costs of the creditors (Warwick McDonald, Ramon Pollach, Dominic Guinea and Southbank Property Pty Ltd trading as Remax Southbank Property) of and incidental to the application, without recourse to the funds of the bankrupt estate of Mr Doolan, those costs to be taxed if not agreed.

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


IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY

Q 78 OF 2004

BETWEEN:

WILLIAM EDWARD DOOLAN
APPLICANT

AND:

TRACEY JOY DARE
RESPONDENT

JUDGE:

SPENDER J

DATE:

27 MAY 2004

PLACE:

BRISBANE

REASONS FOR JUDGMENT

  1. The applicant, William Edward Doolan, filed an application on 29 April 2004 which sought twelve forms of relief as follows:

    ‘1.A declaration that it was an improper exercise of the respondent’s discretion to borrow money from KPMG on behalf of the estate to pay a dividend to creditors for the purpose of removing their rights to vote upon the respondent’s removal.

    2.A declaration that the declaration of dividends made by the respondent on or about 16 April 2004 was not properly made under section 140 of the Bankruptcy Act and were invalid.

    3.A declaration that the purported payment of dividends made by the respondent were not properly made and were invalid.

    4.A declaration that…

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AGLC
Doolan v Dare [2004] FCA 682
Case
[2004] FCA 682
Decision Date

CaseChat Overview and Summary

The matter of Doolan v Dare came before the Federal Circuit Court of Australia. The primary dispute involved the appointment of a Trustee in Bankruptcy for the estate of William Edward Doolan, with David Cranstoun being the applicant for the position. Various creditors, including Warwick McDonald, Ramon Pollach, Dominic Guinea, and Southbank Property Pty Ltd trading as Remax Southbank Property, were also involved in the proceedings, as they sought to ensure the proper administration of the estate.

The central legal issues before the court included whether Mr Cranstoun was suitable for the role of Trustee in Bankruptcy, given his professional qualifications and experience, and whether the costs associated with the application should be borne by the respondent or the bankrupt's estate. The court had to consider the relevant statutory provisions governing the appointment of trustees and the distribution of costs in such applications.

In delivering the judgment, the court found that Mr Cranstoun was suitably qualified and experienced for the position of Trustee in Bankruptcy, as he met the necessary requirements under the Bankruptcy Act 1966. The court further held that the respondent should bear the costs of the application and the creditors' costs, as these should not be deducted from the bankrupt's estate. The court reasoned that the respondent, being the party resisting the appointment, should be responsible for the financial burden of the litigation.

The court ordered that David Cranstoun be appointed Trustee in Bankruptcy of William Edward Doolan's estate. Additionally, the respondent was directed to pay the applicant's costs and the creditors' costs associated with the application, without recourse to the bankrupt's estate. The costs were to be taxed if not agreed upon by the parties involved.

Orders

Orders of the court

1. Mr David Cranstoun be appointed Trustee in Bankruptcy of the estate of William Edward Doolan.

2. The respondent pay the applicant’s costs of and incidental to the application, without recourse to the funds of the bankrupt estate of Mr Doolan, those costs to be taxed if not agreed.

3. The respondent pay the costs of the creditors (Warwick McDonald, Ramon Pollach, Dominic Guinea and Southbank Property Pty Ltd trading as Remax Southbank Property) of and incidental to the application, without recourse to the funds of the bankrupt estate of Mr Doolan, those costs to be taxed if not agreed.

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

SPENDER J

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Established by: SPENDER J

As to the first of those matters, the declaration and distribution of dividends is governed by ss 140 to 147 of the Act. ‘140 Declaration and distribution of dividends(1) The trustee of the estate of a bankrupt shall, subject to this section, with all convenient speed, declare and distribute dividends amongst the creditors who have proved their debts.(2) Subject to the retention of such sums as are necessary to meet the costs of administration or to give effect to the provisions of this Act, the trustee shall distribute as dividend all moneys in hand.(3) Before declaring the first dividend, the trustee must give written notice of the trustee’s intention to declare the dividend to anyone the trustee knows of who claims, or might claim, to be a creditor but has not lodged a proof of debt.(4) The trustee shall, in a notice published or sent in pursuance of subsection (3), specify a reasonable period within which creditors may lodge their proofs of debts.(5) The trustee shall, before declaring a dividend (other than the first dividend or the final dividend) send notice of his or her intention to do so to each person who, to his or her knowledge, claims to be, or might claim to be, a creditor but has not lodged a proof of debt and has not been sent a notice under this section in relation to the declaration of a previous dividend.(6) The trustee shall, in a notice sent in pursuance of subsection (5), specify a reasonable period within which creditors may lodge their proofs of debts.(7) Where the trustee has sent a notice in pursuance of subsection (3) or (5) of this section in relation to the declaration of a dividend, the trustee shall not declare the dividend until after the expiration of 21 days after the expiration of the period specified in the notice.(8) Subject to subsections (9) and (10), where the trustee declares a dividend, he or she shall send to each creditor who has proved his or her debt a cheque for the amount due to him or her and a statement in accordance with the approved form in relation to the realization and distribution of the estate.(9) Where, but for this subsection, the amount due to a creditor in respect of a dividend would be less than $10 or, if a greater amount is, as at the beginning of the day on which the dividend is declared, prescribed by the regulations for the purposes of this subsection, that greater amount, the trustee need not pay that dividend to the creditor.(10) Where a creditor has furnished to the trustee an authority in writing to pay a dividend due to the creditor to another person, the dividend payable to the creditor may be paid, and the statement to be sent to the creditor in pursuance of subsection (8) may be sent, to that person.…144Right of creditor who has not proved debt before declaration of dividendA creditor who has not proved his or her debt before the declaration of a dividend is entitled to be paid, out of any available money for the time being in the hands of the trustee, dividends that he or she has failed to receive before that money is applied to the payment of a future dividend, but he or she is not entitled to disturb the distribution of a dividend declared before he or she proved his or her debt.145Final dividend(1) Subject to this section, when the trustee of the estate of a bankrupt has realized all the property of the bankrupt, or so much of it as can, in his or her opinion, be realized without needlessly protracting the trusteeship, he or she shall declare and distribute a final dividend.(2) The trustee shall distribute as the final dividend all moneys realized and not previously distributed and shall distribute the final dividend without regard to any debt that had not been proved at the time when he or she declared the final dividend.(3) The trustee shall, before declaring the final dividend, give notice, in the prescribed manner, to each person who to his or her knowledge, claims to be, or might claim to be, a creditor but has not proved his or her debt that, if the person does not prove his or her debt within the period specified in the notice, the trustee will proceed to declare a final dividend without regard to his or her claim.(4) The trustee shall, in a notice sent to a person in pursuance of subsection (3), allow a reasonable period within which the person may prove his or her debt.(5) The Court may, on the application of a person claiming to be a creditor, extend the period within which the person may prove his or her debt.(6) Where the trustee has sent a notice in pursuance of subsection (3) in relation to the declaration of the final dividend, the trustee shall not declare the dividend until after the expiration of 21 days after the expiration of the period specified in the notice or, if the Court, under subsection (5), extends the period within which a person may prove his or her debt, until after the expiration of 21 days after the expiration of that extended period.’