FEDERAL COURT OF AUSTRALIA
Frost v Bovaird [2012] FCAFC 60
Citation: Frost v Bovaird [2012] FCAFC 60 Appeal from: Bovaird v The Trustee of the Bankrupt Estate of Frost [2010] FCA 1159,
Bovaird v The Trustee of the Bankrupt Estate of Frost (No 2) [2011] FCA 465Parties: ALAN MAXWELL FROST AND DIANA CATHERINE FALLON v LEON LEWIS MACGILLIVRAY BOVAIRD, ALAN MAXWELL FROST AND DIANA CATHERINE FALLON v MONICA CATHERINE BOVAIRD, ALAN MAXWELL FROST AND DIANA CATHERINE FALLON v THE TRUSTEE OF THE BANKRUPT ESTATE OF MAXWELL WALTER ALLEN FROST, ALAN MAXWELL FROST AND DIANA CATHERINE FALLON v MONICA CATHERINE BOVAIRD AND LEON LEWIS MACGILLIVRAY BOVAIRD File numbers: NSD 714 of 2011
NSD 725 of 2011
NSD 727 of 2011
NSD 728 of 2011Judges: JACOBSON, SIOPIS AND NICHOLAS JJ Date of judgment: 30 April 2012 Catchwords: BANKRUPTCY – application by trustee in bankruptcy for directions under s 134(4) of the Bankruptcy Act 1966 (Cth) – deceased estate – judgment given in New South Wales Supreme Court against executors of deceased estate in favour of relatives of the deceased for the payment of monies and that costs be paid out of the deceased estate – deceased estate placed into bankruptcy administration – relatives appealed against the costs orders made by the New South Wales Supreme Court – whether trustee in bankruptcy should indemnify executors in respect of the costs of the appeal from the assets of the bankrupt estate – relatives commenced devastavit proceeding in New South Wales Supreme Court alleging misuse of office by the executors – whether trustee in bankruptcy should indemnify executors in respect of their legal costs in the devastavit proceeding. Legislation: Bankruptcy Act 1966 (Cth) ss 134(4), 249(3)
Trustee Act 1925 (NSW) s 63Cases cited: Bovaird v Frost [2009] NSWSC 337
Bovaird v Frost [2009] NSWSC 917
National Trustees, Executors and Agency Co of Australasia Limited v Barnes (1941) 64 CLR 268
Alsop Wilkinson (a firm) v Neary [1996] 1 WLR 1220
Jennings v Mather [1902] 1 KB 1
Global Funds Management (NSW) Ltd v Burns Philp Trustee Co Ltd (in prov liq) (1990) 3 ACSR 183
Miller v Cameron (1936) 54 CLR 572
Armitage v Nurse [1998] Ch 241
Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66
Re Grimthorpe (decd) [1958] Ch 615Date of hearing: 4 November 2011 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 105 Counsel for the Executors: Mr NA Cotman SC with Mr RJ Carruthers Solicitor for the Executors: MBP Legal-McCrohon Bergseng Partners Counsel for the Bovairds: Mr R Harper SC with Mr M Condon Solicitor for the Bovairds: Garland Hawthorn Brahe Counsel for the Trustee in Bankruptcy: Mr M Aldridge SC
Solicitor for the Trustee in Bankruptcy: Carneys Lawyers
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 714 of 2011
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN:
Continue reading Frost v Bovaird
Sign in free to access the full text
Details
- AGLC
- Frost v Bovaird [2012] FCAFC 60
- Case
- [2012] FCAFC 60
- Decision Date
CaseChat Overview and Summary
The case of Frost v Bovaird involved a dispute concerning the bankruptcy estate of the late Mr Frost. The parties in the case included the executors of Mr Frost's estate, relatives of the deceased, and the trustee in bankruptcy. The executors sought directions under section 134(4) of the Bankruptcy Act 1966 (Cth) to determine whether they should be indemnified by the trustee for costs incurred in relation to an appeal against costs orders made in a New South Wales Supreme Court proceeding. The relatives had alleged misuse of office by the executors, leading to a devastavit proceeding. The primary legal issues before the court were whether the trustee in bankruptcy should indemnify the executors for the costs of the appeal and the devastavit proceeding.
The primary judge addressed these issues by declining to grant leave for the relatives to appeal the quantum of damages awarded by Brereton J in the New South Wales Supreme Court, considering the futility of the appeal due to the limited assets of the estate. However, the judge allowed the relatives to proceed with their appeals against the costs orders and orders in relation to assets frozen by the Australian Federal Police (AFM). The primary judge ruled against the executors' request for the trustee to indemnify them for legal costs in the Court of Appeal proceedings, devastavit proceeding, and Federal Court proceedings. The judge determined that there were sufficient assets in the estate to prevent the need for resolution of priority issues between the executors' and the trustee's rights of indemnity at that stage.
The court allowed the appeal in part, dismissing the cross-appeals. The primary judge's decision clarified that the trustee in bankruptcy would not be justified in paying the executors' legal costs in the specified proceedings. The parties were directed to bring in a minute of orders within seven days of the decision, and each party had to file written submissions on the question of costs, not exceeding four pages, within the same timeframe.
The primary judge addressed these issues by declining to grant leave for the relatives to appeal the quantum of damages awarded by Brereton J in the New South Wales Supreme Court, considering the futility of the appeal due to the limited assets of the estate. However, the judge allowed the relatives to proceed with their appeals against the costs orders and orders in relation to assets frozen by the Australian Federal Police (AFM). The primary judge ruled against the executors' request for the trustee to indemnify them for legal costs in the Court of Appeal proceedings, devastavit proceeding, and Federal Court proceedings. The judge determined that there were sufficient assets in the estate to prevent the need for resolution of priority issues between the executors' and the trustee's rights of indemnity at that stage.
The court allowed the appeal in part, dismissing the cross-appeals. The primary judge's decision clarified that the trustee in bankruptcy would not be justified in paying the executors' legal costs in the specified proceedings. The parties were directed to bring in a minute of orders within seven days of the decision, and each party had to file written submissions on the question of costs, not exceeding four pages, within the same timeframe.
Orders
Orders of the court
1. The appeal is allowed in part.
2. The cross-appeals are dismissed.
3. The parties are within seven days to bring in a minute of orders which reflects these reasons.
4. Each party is within seven days to file written submissions not exceeding four pages on the question of costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
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
On 4 May 2010, the executors filed a further application (No NSD 470/2010) in this Court. In that proceeding, the executors, also, sought an order staying the devastavit proceeding until further order. The executors, also, sought orders that the devastavit proceeding was for the benefit of the bankrupt estate of the late Mr Frost, and that the trustee in bankruptcy of the estate was the proper plaintiff in the proceedings.THE DECISION OF THE PRIMARY JUDGE The primary judge heard all of the Federal Court proceedings at the same time. The primary judge first considered the applications by the late Mrs Bovaird and Mr Bovaird for leave to proceed with their respective appeals against the orders made by Brereton J in the New South Wales Supreme Court proceedings. Each of the late Mrs Bovaird and Mr Bovaird had appealed against the quantum of damages awarded to each of them by Brereton J, the orders in relation to AFM, and the costs orders made by Brereton J. The costs orders appealed against were the order that the executors pay the costs of each of the late Mrs Bovaird and Mr Bovaird out of the deceased estate, and the order dismissing their application that costs be paid on an indemnity basis. The primary judge declined to give the Bovairds leave to proceed in respect of the appeal against the quantum of damages awarded to each of them. The primary judge held that continuing with the appeal in respect of the quantum of damages would be futile, bearing in mind that the amount of damages awarded in favour of the late Mrs Bovaird exceeded the amount of the deceased estate, and the late Mrs Bovaird and Mr Bovaird were the only substantial creditors. However, the primary judge granted each of the late Mrs Bovaird and Mr Bovaird leave to proceed with the grounds of appeal before the New South Wales Court of Appeal, which impugned the costs orders made by Brereton J and the orders in relation to AFM. In respect of proceeding No NSD 283/2010, the primary judge declined to make the order sought by the executors, that the trustee in bankruptcy pay, on the written direction of the executors, from the property of the estate, such sums as may be required to meet their legal expenses and costs on an indemnity basis in the Court of Appeal proceedings, the devastavit proceeding and the Federal Court proceedings. Instead, on the trustee in bankruptcy’s application for directions, the primary judge made directions that the trustee in bankruptcy would not be justified in paying the legal costs of the executors as and when they were incurred, in respect of the Court of Appeal proceedings, the devastavit proceeding and the Federal Court proceedings. The primary judge, also, dismissed the executors’ application insofar as it sought declarations concerning the priority between claims on the assets of the estate by the trustee in bankruptcy and the executors pursuant to their respective rights of indemnity. The primary judge went on to say:Although there is an interesting question of priorities between the executors’ right of indemnity and the trustee’s right of indemnity there are sufficient assets in the estate at this stage that that question does not presently – and may never – require resolution.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.