Dyason v Pascoe
[2012] FMCA 146
•27 February 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DYASON v PASCOE | [2012] FMCA 146 |
| BANKRUPTCY – Removal of trustee – failure to provide particulars of complaints – application summarily dismissed for default. |
| Bankruptcy Act 1966 (Cth), ss.153A, 179 Federal Magistrates Act 1999 (Cth), s.17A Federal Magistrates Court Rules 2001 (Cth), rr.13.03A(1)(a), 13.03B, 13.03B(1)(a), 13.10(a) |
| Ferella v Official Trustee in Bankruptcy (No.2) [2011] FCA 619 |
| Applicant: | ARTHUR DYASON |
| Respondent: | SCOTT DARREN PASCOE |
| File Number: | SYG 2322 of 2011 |
| Judgment of: | Smith FM |
| Hearing date: | 27 February 2012 |
| Delivered at: | Sydney |
| Delivered on: | 27 February 2012 |
REPRESENTATION
| Counsel for the Applicant: | Ms K Kennedy |
| Solicitors for the Applicant: | Malouf Solicitors |
| Counsel for the Respondent: | Mr B Skinner |
| Solicitors for the Respondent: | Goldrick Farrell Mullan |
ORDERS
The application is dismissed under Federal Magistrates Court Rules 2001 (Cth) r.13.03A(1)(a) and 13.03B(1)(a) on the ground of the applicant’s failure to comply with order 2 made on 1 November 2012 as extended by order 1 on 27 January 2012.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 2322 of 2011
| ARTHUR DYASON |
Applicant
And
| SCOTT DARREN PASCOE |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
Mr Dyason was made bankrupt on 3 May 2007, and Mr Pascoe and one of his colleagues were made trustees of his bankrupt estate. Mr Pascoe is now the sole trustee. The administration of the estate has become protracted by litigation in the Supreme Court concerning Mr Pascoe’s sale of a half share in a property owned by the bankrupt and his wife. Further complications have arisen in relation to notations on the title. Otherwise, the Court is not informed as to the current circumstances of the administration.
On 13 October 2011, Mr Dyason, acting for himself, filed an application seeking the following orders:
A.FINAL ORDERS SOUGHT BY APPLICANT
1.That the respondent be removed as the trustee of the bankrupt estate of Arthur Dyason Bankruptcy No – 3489/7/9.
2.That the Court appoint a replacement trustee.
3.That the respondent be found to have received $44,500 to pay the creditors and annul the bankruptcy and used such money for his own purpose and did not pay the creditors.
B.INTERIM ORDERS SOUGHT BY APPLICANT
1.That the respondent disclose and make available to the applicant all documents, correspondence, file notes and other relevant documents relating to the applicant, his creditors and debtors or other parties to the applicant within reasonable time period.
2.That the trustee does not act in any way relating to the applicants affairs and any court proceedings in relation to the applicant be adjourned until final order made.
The affidavit in support did not assert a complaint upon which the principal relief could be based, nor even a claim upon which an inquiry into the removal of a trustee could be ordered.
The power to remove a trustee is found in s.179 of the Bankruptcy Act 1966 (Cth). The authorities on its application indicate that “substantial grounds” are required to be established “for believing that the trustee erred in the administration” or has “engaged in ‘misconduct’” before an inquiry will be ordered (see the authorities recently reviewed by Yates J in Ferella v Official Trustee in Bankruptcy (No 2) [2011] FCA 619).
In his affidavit, Mr Dyason referred only to some correspondence in 2007, in which it appears that he was hoping to achieve an early release from bankruptcy by payments to those creditors whom he had identified. The trustee had indicated that this could occur under s.153A of the Bankruptcy Act, but subject to other creditors becoming known. The correspondence then suggests that other creditors did lodge proofs of debt, requiring the trustee to raise further funds from Mr Dyason’s estate. This evidence as to events in 2007 does not appear to me to raise any case for the removal of trustee.
The application was returnable before a Registrar on 1 November 2011, and was referred to me on that date. Mr Dyason attended in person, and I gave detailed directions appointing a timetable leading to a hearing appointed for today, at which I anticipated that there would at least be an inquiry into complaints identified by Mr Dyason after he had inspected Mr Pascoe’s records.
I made it clear to Mr Dyason that the purpose of fixing the hearing date and timetable was to enable and require him to show details of his complaints. In order 2, I specifically ordered:
2.The applicant must file and serve a detailed list of Particulars of his complaints concerning the actions of the trustee, and all additional affidavits no later than 13 December 2011.
Mr Dyason showed no lack of understanding of the purpose of that order, nor of the need for it to be complied with on his part.
Mr Dyason did file and serve a notice to produce, which was returnable before a Registrar on 15 November 2011. Mr Pascoe then produced a folder containing his records, and the Registrar made orders allowing Mr Dyason leave to inspect it.
Mr Dyason was not present on that occasion, and it is unclear how soon he discovered the Registrar’s orders. He has written an unsworn statement claiming not to have been aware of them until he spoke to a Registry clerk on or before 9 December 2011. Assuming that this was true, he has at least been aware since 9 December 2011 that Mr Pascoe’s records have been available for inspection in the Registry to allow him to identify a basis for seeking relief. However, he has neither inspected the records, nor pointed to any complaint warranting his application.
In view of his default, a directions listing was appointed for 27 January 2012 at the request of Mr Pascoe’s solicitors. Mr Dyason was not present, but shortly before the listing he engaged a solicitor, Mr Noonan of Brown & Partners, who appeared on his behalf. Mr Noonan indicated to me that he had recently taken instructions and was unaware of what complaints, if any, Mr Dyason wished to present in support of his principal application. I drew to his attention the need for his client promptly to inspect the documents, and to comply with my previous order for the giving of particulars. I made it clear that by extending the time to do that, I was giving his client a substantial indulgence, and that I had not accepted that his client had shown a good explanation for failing to comply prior to that date.
I vacated the hearing set down for today, only because it appeared to me likely that Mr Pascoe would not be in a position to answer properly particularised complaints if they were given by the further date which I extended to Mr Dyason, being 10 February 2012. I gave leave to Mr Pascoe to file an application for summary dismissal returnable for hearing today, in the event of any default.
Such an application was filed, and I am now giving reasons for upholding it.
There is no evidence whether or not Mr Noonan inspected the documents, nor as to how he communicated to his client the events of the directions hearing on 27 January 2012. But I assume that he did convey an accurate report of the proceedings to his client and, in particular, informed him of the orders I had made and the reasons I had given for making them. Mr Noonan informed the solicitors for Mr Pascoe on around 6 February 2012 that he had ceased to act.
Mr Dyason did not comply with the further date for filing particulars of his claims, and the Court still lacks any indication of any claims from Mr Dyason or from a legal representative acting on his behalf.
There is a record in the file that Mr Dyason himself personally attended at the Registry to inspect the documents on 13 February 2012. There is also a record indicating that a new solicitor instructed on his behalf did so on 15 February 2012.
An affidavit by Ms Kennedy of the firm, Malouf Solicitors, sworn today confirms that on or around that date, she accepted instructions to act for Mr Dyason, and that she procured copies of the documents held in the Registry about two weeks ago. However, she says: “at the time of swearing this Affidavit, I have not inspected the photocopied documents”. I can only assume that Ms Kennedy was not properly instructed by her client as to the circumstances of urgency for an examination of the documents and the formulation of Mr Dyason’s complaints. Today, she was unable to point to anything which might identify an arguable basis for bringing the proceedings.
I am not satisfied, viewed from the perspective of the obligations of Mr Dyason to comply with the Court’s directions, that any adequate explanation for his default in providing particulars has been shown. I am satisfied that now on two occasions, he has been in default of orders requiring him to give particulars of complaints upon which he seeks the principal relief for the removal of Mr Pascoe.
I am satisfied that he is “in default” for the purposes of r.13.03A(1)(a) of the Federal Magistrates Court Rules 2001 (Cth), and that I have the powers to make orders on default under r.13.03B. One such power is to dismiss the application in relation to the whole of the relief sought.
Although less drastic options are available under that rule, in my opinion it would be most consistent with the interests of justice for me to dismiss the present application. Not only has the default continued now for several months, but there has been a repetition of the default in the face of an order extending time as an indulgence.
More significantly, it appears to me looking at the material that has been filed on behalf of Mr Dyason, including his solicitor’s most recent affidavit filed today, and taking into account the submissions of his solicitor today, that Mr Dyason is unable to show to the Court that he has any reasonable prospect of successfully prosecuting the present proceedings. It appears to me that in the circumstances, his application is liable to be dismissed under s.17A of the Federal Magistrates Act 1999 (Cth) and r.13.10(a) on that ground also.
Given the lapse of time between the commencement of the proceedings and today, I consider that Mr Dyason has had more than enough time to locate and show to the respondent and the Court that he has a claim which might have a prospect of success, at least, of justifying an inquiry into some aspect of the trustee’s administration.
In bankruptcy proceedings such as this, it is important that the present type of proceedings should be brought on promptly, and that the Court should actively supervise a proceeding seeking the removal of an officer of the Court appointed as trustee of a bankrupt estate. The Court treats such applications seriously, and requires arguable substance to be shown within a reasonable period of time, if not at the commencement of such proceedings.
No substance has been shown to support Mr Dyason’s application, and in my opinion all the interests of justice, as well as the interests of unimpeded continuance of Mr Pascoe’s trusteeship of the bankrupt estate, point to dismissal of the present application on the ground of Mr Dyason’s default in providing particulars.
The dismissal will not prevent Mr Dyason from commencing a new proceeding if, indeed, his new solicitors can find a basis for it. However, as with the costs of the present proceedings, Mr Dyason should be aware that bringing unmeritorious proceedings, or proceedings which are not pursued with the expedition that the Court expects, is likely to increase the costs which will be recoverable by Mr Pascoe from his bankrupt estate and perhaps to delay that administration.
I note in this respect, that Mr Pascoe relies upon his right of indemnity for his costs in relation to the present proceedings, and that it is unnecessary for me to make any order as to costs.
I certify that the preceding twenty‑four (24) paragraphs are a true copy of the reasons for judgment of Smith FM
Date: 5 March 2012
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