Doyle, B.T. v Bank of New Zealand

[1991] FCA 780

Re: BRUCE THOMAS DOYLE (DESEASED) and DENNIS BRIAN DOYLE
And: BANK OF NEW ZEALAND and RICHARD CAMPBELL BRIEN
No. NB2775 of 1991
FED No. 780

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES
Hill J.(1)

HEARING

SYDNEY

#DATE 23:9:1991

Solicitors for applicants : Mr Hagan of Hagan and Co.

Counsel and Solicitors : M.R. Aldridge instructed by Kemp
for Respondent Strang and Chippindall

JUDGE1

Application is made by Mr Hagan on his own behalf as well as on behalf of Mr Dennis Bryan Doyle to review a decision of a registrar of this court not to adjourn or terminate an examination scheduled to be held today. The summons for the holding of the examination was issued under s.50(2) of the Bankruptcy Act 1966 ("the Act"). There has already been some litigation in respect of it before Gummow J. Ultimately a sequestration order was made in the estate of Bruce Thomas Doyle deceased, on 13 September 1991.

1. Notwithstanding the sequestration order having been made, the trustee has persisted with attempts to obtain or to carry out the examination under s.50. It seems that this morning Mr Hagan sought leave of Gummow J, before whom the matter was listed for directions, to file an application in court returnable instanter and for an order that the examination of Mr Hagan and Mr Doyle be stayed.

2. His Honour directed that the application be filed in the usual way and that has been done. The application has been set down for hearing before Gummow J on 14 October 1991. The application, so far as it seeks a stay of the examination, is based on two matters. The first, which involves a simple question of law, is whether once a sequestration order has been made, the power under s.50 for the holding of an examination is spent. It is said that following the sequestration order, the appropriate power to examine is confined to that contained in s.81. The second basis upon which the application is made is, as I understand it, that a meeting of creditors is to be held, that at present Mr Hagan has instructions to vote for certain creditors representing in value $885,000 out of a total of $1,201,233 in value of creditors not yet disputed, there being in number apparently 11 or 12 creditors.

3. It is said for the applicant that the creditors represented by Mr Hagan will vote in favour of a composition and will also vote in favour of resolutions directing the trustee to apply for an order of annulment, directing the trustee to issue certain summonses in respect of officers of the Bank of New Zealand and further, will also vote in favour of a resolution directing the trustee to refrain from causing the issue of further examination summonses.

4. The issue under s.50 is not a simple one. A related issue as to the effect of orders under s.50, once a sequestration order has been made, was dealt with by this court in Deputy Commissioner of Taxation v Clyne (1983) 50 ALR 118. Suffice it to say that the court was of the view that various orders made under s.50 did continue, notwithstanding the sequestration order. There is, nevertheless, scope for argument which can be dealt with in due course when the application is heard before Gummow J. However, there seems to me, at this stage, no prejudice to the applicants if the examination proceeds.

5. If it should turn out that the s.50 summons has been spent by virtue of the making of a sequestration order, the only prejudice that Mr Hagan could suggest was that the material obtained could be used in litigation which is apparently proceeding between the bank and, I assume, Mr Doyle. It seems difficult, however, to see how matters affecting that litigation are likely to arise before the registrar in proceedings directed at the matters referred to in s.50. Certainly matters going to security for costs that Mr Hagan and/or Mr Doyle may be able to give, seem to me quite remote from the matters that would be dealt with before the registrar.

6. For this reason I do not think that it would be appropriate to stay the examination when various prior attempts to conclude that examination have so far failed.

7. I think there is no substance at all in the second submission, namely that Mr Hagan represents certain creditors who have a present intention to vote. There are two problems. First, that intention may change before the meeting. Second, the resolution may not be passed because of the necessity for a majority in both number and value of creditors who vote. There is also, perhaps, another difficulty that even if directions were given to the trustee, the trustee is required under s.177 merely to take into account lawful directions. Nothing in s.177 necessitates the view that the trustee is bound to give effect to those directions. Indeed, this was conceded by Mr Hagan.

8. In these circumstances, I do not propose to grant a stay. The matter can be returned to the registrar to continue the examination.

9. I order Mr Doyle to bear the costs of the application for review.