Gargan, Peter Alexander v the Official Trustee in Bankruptcy

[1995] FCA 1123

C A T C H W O R D S

BANKRUPTCY - whether choses in action held by Trustee should be assigned to the bankrupt - no point of principle. 

Bankruptcy Act 1966 (Cth)

PETER ALEXANDER GARGAN v THE OFFICIAL TRUSTEE IN BANKRUPTCY

No QG 140 of 1995

Davies, Lockhart & Foster JJ
4 November 1995
Brisbane

IN THE FEDERAL COURT OF AUSTRALIA                   ) 
  )     
BANKRUPTCY DISTRICT OF THE  )  No QG 140 of 1995
  )     
STATE OF QUEENSLAND  )
  )
GENERAL DIVISION  )     

On appeal from a single judge of the Federal Court of Australia

BETWEEN:  PETER ALEXANDER GARGAN

Appellant

AND:  THE OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

Coram:   Davies, Lockhart & Foster JJ.
Date:     4 November 1995
Place:     Brisbane

MINUTES OF ORDER

THE COURT ORDERS THAT: 

1.  The appeal be dismissed.

2.The costs of the respondent and the costs of the parties on behalf of whom Mr W. Cochrane and Mr F.J. Toy appear, be taxed and paid out of the assets of the estate. 

NOTE:             Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA                   ) 
  )     
BANKRUPTCY DISTRICT OF THE  )  No QG 140 of 1995
  )     
STATE OF QUEENSLAND  )
  )
GENERAL DIVISION  )     

On appeal from a single judge of the

Federal Court of Australia

BETWEEN:  PETER ALEXANDER GARGAN

Appellant

AND:  THE OFFICIAL TRUSTEE IN BANKRUPTCY

Coram:  Davies, Lockhart & Foster JJ
Date:  4 November 1995
Place:  Brisbane

REASONS FOR JUDGMENT

THE COURT:  The Court has been concerned as to whether the appeal is properly constituted but, in the absence of argument on the point, it is prepared to proceed on the basis that leave is not required.

The matter arose in the first instance from an application lodged by the bankrupt, Mr Peter Gargan, on 29 March 1994.  That application was misconceived.  In it, Mr Gargan sought orders, inter alia, that SAM Industries Pty Ltd specifically perform an agreement made on 27 February 1987 between SAM Industries and
Gargan Brothers and that damages be assessed against tort-feasors who allegedly damaged the estate.  Mr Gargan did not have standing to seek those orders, as his former right to do so had been vested in his Trustee in Bankruptcy on the making of the sequestration order. 

Because of the difficulties with that application, a second application was lodged and this was the application which was before the trial judge, Drummond J.  The application sought the following orders:-

"(1)  That the court direct the Official Receiver to assign to the Bankrupt all choses in action presently vested in him, or in the alternative allow the Trustee to disclaim the Contract to administer the Bankrupts Estate to the extent of the Property in the Choses in Action, and make an order vesting them in the Bankrupt.

(2)  That the Court make an inquiry into the conduct of the Trustee in Bankruptcy to determine whether the allegations of negligence and breach of contract raised against The Official Trustee have merit.

(3)  That the Court examine evidence that the debt upon which the Sequestration Order was made as to whether the Debt is a personal Debt or rightfully a debt for which the Bankrupt is entitled to an indemnity and if so grant an annulment." 

In respect of paragraph (1), the matter was put to Drummond J with respect to three particular choses in action: one relating to a claim against the Queensland Water Resources Commission, another relating to disputes with Mr Gargan's brother, John Gargan, and another relating to disputes between Mr Gargan and SAM Industries Pty Ltd. 

The trial judge refused to make the orders sought in paragraph (1) on the ground that he was not satisfied that there was a sufficiently arguable case in respect of any of the choses in action to justify their assignment to Mr Gargan.  For our part, we think that paragraph (1) was misconceived.  Mr Gargan sought assignment to himself of the very things which it was the duty of the Trustee to consider, and, if he thought proper to do so, to prosecute in the interests of the creditors and in the interests of the efficient management of the bankruptcy.

The trial judge adjourned the application in respect of the orders sought in paragraphs (2) and (3).  Those orders, which sought, inter alia, an inquiry into the conduct of the Trustee, will be dealt with at some future time. 

The real complaint of Mr Gargan as presented to the Court in this appeal was that the Trustee had not fulfilled the duties which the Bankruptcy Act 1966 (Cth) imposed upon him. In the course of his submissions, Mr Gargan conceded that he could not expect that the choses in action would be assigned to him. We think that that was a proper concession, for these were matters for the Trustee's consideration.

We see no ground for allowing the appeal.  Mr Gargan made some criticism of the procedure adopted below.  The procedure adopted, however, was a fair procedure which had been entered into and explained to Mr Gargan and it was a procedure with which Mr Gargan had concurred.  We see no error in the procedure adopted and we are of the view that the trial judge was correct in refusing the orders sought in paragraph (1) of the application. 

For those reasons, we are of the view that the appeal should be dismissed. 

We have had regard to the submissions contained in the written submissions that the costs of the appeal be taxed and paid by Mr Gargan personally.  Having regard to the fact that this matter arose in relation to the administration of his estate, we think it preferable that the order with respect to costs should be that the costs of the respondent and the costs of the parties on behalf of whom Mr W. Cochrane and Mr F.J. Toy appear, be taxed and paid out of the assets of the estate and we shall so order.  There will be no order as to Mr Gargan's costs.  

I certify that this and the 3 preceding pages
are a true copy of the reasons for judgment herein
of the Court.

Associate:

Date:   4 November 1995

Appearing for the appellant:  In person

Counsel for the
Official Trustee in Bankruptcy:  D. Turnbull

instructed by the Australian Government Solicitor

Counsel for SAM Industries Pty Ltd,
Lance Lindsay Kippin,
Charles Anthony Marino  W. Cochrane

instructed by O'Shea, Corser & Wadley

Counsel for John Ernest Gargan,
Grace Elaine Gargan,
Gary John Gargan,
Simon Alexander Gargan,
Michael Ernest Gargan,
William Lindsay Jue Sue,
Barry Michael Johnson  F.J. Toy
  instructed by Barry Johnson

Date of hearing:  4 November 1995

Date of judgment:  4 November 1995