Glover v Pilor Pty Ltd
[2004] FMCA 448
•16 March 2004
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| GLOVER & ORS v PILOR PTY LTD | [2004] FMCA 448 |
| BANKRUPTCY – Motion by trustee in bankruptcy and judgment creditors seeking to enforce rights of the creditors subsequent to the making of sequestration orders – whether such rights open to be pursued following the sequestration orders considered – consideration of appropriate relief to the trustee pending the possible institution of future proceedings under the Bankruptcy Act 1966 (Cth). |
13 Elizabeth I c5
Bankruptcy Act 1966 (Cth), ss.77A, 120, 121,122
Jurisdiction of Courts (Cross Vesting Act) 1993 (Cth), s.5
Chapman and Anor v Morton (1843) 152 ER 917
Williams v Lloyd (1934) 50 CLR 341
| First Applicant: Second Applicant: Third Applicant: | PETER RICHARD GLOVER PETER LENNOX SHIELS WILLIAM BALFOUR RANGOTT |
| Respondent: | PILOR PTY LTD ACN 084 983 139 |
| File No: | CZ31 of 2003 |
| Delivered on: | 16 March 2004 |
| Delivered at: | Sydney, via videolink to Canberra |
| Hearing date: | 16 March 2004 |
| Judgment of: | Driver FM |
REPRESENTATION
| The second applicant appeared in person |
| Counsel for the Third Applicant: | Dr O’Hair |
| Solicitors for the Third Applicant: | Gillespie-Jones & Co |
| Solicitors for the Respondent: | Mr Cowen Tucker & Cowen Solicitors |
ORDERS
The proceedings transferred from the ACT Supreme court to the Federal Court by order of Crispin J on 11 September 2003 and further transferred from the Federal Court to this Court by order of Stone J on 21 November 2003 be stood over generally with liberty to the parties to apply.
Pilor Pty Ltd give not less than 21 days notice in writing to the third applicant (the trustee) of any intended disposal or encumbrance of Lot 10 Registered Plan 91358, County of Stanley, Parish of Redland and Lot 53, Survey Plan 101748, County of Stanley, Parish of Redland in the State of Queensland (“the Springwood Properties”) or of any intended disposal or encumbrance of any shares held by Pilor Pty Ltd in Mayhem Games Centre Pty Ltd ACN 088 113 928.
Order 1 made by Stone J on 21 November 2003 as amended by this Court be discharged.
Pilor Pty Limited grant access to the Springwood properties so that the third applicant can by his servant or agent have the Springwood properties valued, such access being granted at such times and on such dates as the third applicant and the respondent agree or, in default of agreement, as the Court may direct.
The notice of motion filed on 9 March 2004 be otherwise dismissed.
There be no order as to costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CZ31 of 2003
| PETER RICHARD GLOVER |
First Applicant
PETER LENNOX SHEILS
Second Applicant
WILLIAM BALFOUR RANGOTT
Third Applicant
And
| PILOR PTY LTD ACN 084 983 139 |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
I have before me a notice of motion by William Balfour Rangott, the trustee in bankruptcy of two bankrupt estates. The notice of motion filed on 9 March 2004 seeks orders that certain property known as the “Springwood properties” be transferred to the trustee, that the respondent, Pilor Pty Ltd, be restrained from transferring the properties to anyone else, that Pilor be restrained from encumbering or further encumbering the properties, that Pilor grant the trustee access to the properties and give discovery of documents and, further, that the whole of the assets of the law firm, Watling Roche, be transferred to the applicant trustee, that another company, Mayhem Games Centre Pty Ltd, give discovery of documents and that the notice of motion be heard with the application and notice of motion originally taken out by Peter Richard Glover and Peter Lennox Shiels, petitioning creditors in bankruptcy proceedings dealt with earlier by the Court, those proceedings now being before this Court, and any other order the Court may think proper.
There is an initial issue of who the parties are to today's proceedings or who the parties should be. The present parties are Peter Richard Glover and Peter Lennox Shiels, the former petitioning creditors, and William Balfour Rangott, the trustee in bankruptcy, as applicants and Pilor Pty Ltd ACN 084983139 as the sole respondent. The notice of motion omits to name the first and second applicants and names two additional respondents, CRDT Pty Ltd ACN 080526478 and Mayhem Games Centre Pty Ltd ACN 088113928 as the first and third respondents, respectively.
I do not consider that CRDT and Mayhem Games are necessary parties. Neither was represented in the hearing before me today and neither has an interest which it is essential to deal with for the purposes of disposing of the motion. The only obvious reason for the joinder of Mayhem Games is the discovery order sought against it and for the reasons that follow I will not be making that order. Control at CRDT is disputed as between the petitioning creditors and another director and it is not necessary or appropriate for me to seek to resolve that dispute in these proceedings.
In order to bring the matter into some clearer focus it is desirable that I recount briefly the history of it. On 11 September 2003 Crispin J of the ACT Supreme Court made certain orders on the application of Messrs Glover and Shiels as judgment creditors, seeking to enforce their judgment against Christopher Roche and Barry Joseph Roche, the bankrupts. Those orders included an order that the proceedings, as far as they relate to Christopher Roche, be transferred in their entirety to the Federal Court of Australia pursuant to s.5(2) of the Jurisdiction of Courts (Cross Vesting Act) 1993 (Cth).
It is apparent from the documents available to me that the reason why that part of the proceedings was transferred from the ACT Supreme Court to the Federal Court was that at that stage Mr Christopher Roche had been made bankrupt on his own petition. That bankruptcy was subsequently annulled and both the Mr Roches were subsequently bankrupted on the petition of Messrs Shiels and Glover. The sequestration order was made by this Court in Brisbane. At the time Crispin J made his order it no doubt appeared to him that it was more appropriate, following the apparent bankruptcy of Christopher Roche at that time, that any further steps in the proceedings be taken by a federal court in bankruptcy.
Subsequently, on 20 November 2003 a notice of motion was filed in the Federal Court by the judgment creditors seeking further relief, including injunctive relief against Christopher Roche. On 21 November 2003, Stone J ordered that:
(1)The proceeds of any disposition whether by sale or otherwise of the property the subject of the CR Investment Trust dated 26 July 2000 between Michael James Patrick Hart and CRDT Pty Ltd, whether real estate, shares or any other property whatsoever, be remitted to the Public Trustee of the Australian Capital Territory, to be invested at interest and that any disposal of the aforesaid property to be restrained save where it is a disposal at or in excess of full market value until further order of [the Federal Court] or the Federal Magistrates Court.
(2)Costs in the cause in the discretion of the Federal Magistrates Court.
(3)This matter be transferred to the Federal Magistrates Court.
It is apparent, therefore, that the proceedings instituted by the petitioning creditors seeking to enforce their judgment in the ACT Supreme Court against Christopher Roche ended up being transferred to this Court subject to the injunction order made by Stone J. I note also that an undertaking as to damages was given on 24 November 2003 by the applicants.
I made orders on 2 December 2003 in order to clarify certain matters in relation to the bankruptcy of Christopher Roche and Barry Joseph Roche. Those orders were made in proceedings number CZ17 of 2003 heard in Canberra. On the same day in those proceedings, but more properly in these proceedings, there was filed in court a notice of motion on behalf of the bankrupts seeking to have set aside the order made by Stone J. In these proceedings on 2 December 2003 I granted a procedural order sought by the bankrupts. I joined the trustee to the proceedings and I amended the injunction order made by Stone J by adding the words:
…except where not less than seven days notice is given by the bankrupts of any such disposition to Mr Rangott, as trustee of their bankrupt estates.
My intention was to modify the order to turn it in effect into an order requiring notice of a disposition rather than an order restraining the disposition of property. I also ordered that the trustee have liberty to take such further steps as he considered appropriate in pursuance of proceedings instituted by Messrs Glover and Shiels but, in default of any further steps being taken by him within 14 days, the order made by Stone J would be discharged by force of the order. It transpired that sufficient was done by the trustee to forestall that self-executing order. A further notice of motion was filed on 16 December 2003 by the petitioning creditors and the trustee seeking to extend the order made by Stone J and seeking some ancillary relief.
The matter was considered by me on 2 March 2004, at which time I adjourned the issue of the continuation or discharge of the injunction granted by Stone J until today, and deleted the bankrupts as respondents, and substituted Pilor Pty Ltd. I invited any further application by the trustee in relation to the injunction to be filed and served on or before 9 March 2004. That brought us to the notice of motion filed in this Court on that date. The notice of motion is supported by two affidavits, one made on 9 March 2004 by Timothy Robert Gumbleton, the other made by Peter Lennox Shiels, also on 9 March 2004 and filed on the same day.
The motion is opposed by the respondent, Pilor, which relies upon three affidavits, the first by Marion Beckman made on 12 March 2004, the second by Christopher Roche made on 12 March 2004 and the third made by Janelle Roche also on 12 March 2004, all three filed in court today. I also have the benefit of the documents previously filed and read in the proceedings and exhibits A1 and A2 presented today, being the statement of affairs of Christopher Roche and a letter from the solicitors for Christopher Roche in respect of a notice issued by the trustee pursuant to s.77A of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”).
I also have the benefit of written submissions prepared and filed in court today by Mr Cowen for Pilor. A chronology presented by Dr O'Hair today is not evidence of the truth of the matters which are contained in it but I have used it as a general aide memoire. The orders made by the three courts that have been involved in this matter have been made generally in aid of actual or potential bankruptcy proceedings. It is apparent from the material that the trustee is concerned about the disposal of certain property, in particular, real estate described as the Springwood properties, prior to the sequestration orders ultimately made by this court and also by actions taken to change the trustee of the CR Trust in mid June 2003.
It also appears that a shareholding in Mayhem Games Centre Pty Ltd having some bearing upon the property of the legal practice formerly conducted by the bankrupts may have been transferred in mid June 2003 to Pilor. I make no factual finding on that issue. The material, while it is sufficient to give concern to the trustee is not presently sufficient to cause the trustee to institute proceedings under the Bankruptcy Act, for example, under ss.120, 121 or 122. I am told that such proceedings are in contemplation but the administration has not yet advanced to a point where the trustee is willing or able to commence those proceedings.
Reference was made to a notice issued under s.77A, certainly to Mr Christopher Roche and possibly also to Mr Barry Roche, I am not sure. The trustee is dissatisfied with the response made on behalf of Christopher Roche and some allegations were made from the bar table in relation to the response to that notice. I make no factual finding in relation to those allegations. However, I note that the trustee is currently dissatisfied with the response given to that notice.
The trustee, in effect, is seeking by the notice of motion to gain the advantage of proceedings instituted against the bankrupts prior to their bankruptcy to enforce a judgment debt. Dr O'Hair expended some effort in seeking to persuade me that it was open to the trustee to pursue that course of action and that I should facilitate it. He did so eloquently but ultimately, unsuccessfully. Dr O'Hair referred me to some old authority including Chapman and Anor v Morton (1843) 152 ER 917 and Williams v Lloyd (1934) 50 CLR 341, in particular, page 362. One should be wary about old authority, particularly authority which significantly pre-dates the Bankruptcy Act.
The contentions advanced by Dr O'Hair depended in part, but by no means wholly, on the proposition that the State equivalents of the Statute of Frauds of Queen Elizabeth I had some utility which could be taken advantage of by the trustee in pursuing rights formerly exercised by the petitioning creditors. There is some support for that proposition in Williams v Lloyd, however, as I have noted it pre-dates by several decades the Bankruptcy Act. It is also pertinent to bear in mind that when that case was decided the Bankruptcy Act as it then applied, dealt with a “settlement” as opposed to a transfer of property and different legal considerations may well have applied.
The learned editors of McDonald, Henry and Meek at page 4604 state that the State Statutes of Frauds deriving from the Statute of 13 Elizabeth I Chapter 5 are superseded by s.121 of the Bankruptcy Act. It is not apparent to me that the State statutes add anything to the remedies available to the trustee under the Bankruptcy Act. The other obstacle confronting the trustee is that if, hypothetically, he could avail himself of remedies formerly exercised by the creditors against the bankrupts in the enforcement of a judgment debt, following the sequestration orders made by the Court, the leave of the Court will be required for a continuation of those proceedings because of s.58(3) of the Bankruptcy Act which provides that:
Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) to enforce any remedy against the person or the property of the bankrupt in respect of a provable debt; or
(b)except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding.
I am not minded to grant such leave, even if I otherwise thought that it was open to the trustee to pursue further the proceedings commenced in the ACT Supreme Court, in the absence of a present willingness on the part of the trustee to institute proceedings under the Bankruptcy Act seeking to set aside the impugned transactions. At the same time, I do not wish to put any impediment in the way of the trustee from instituting action under the Bankruptcy Act in the future should he so wish.
To the extent that the notice of motion seeks injunctive relief or seeks to continue the orders made by Stone J, the issues of principle are well set out in the written submissions prepared by Mr Cowen. Those issues are whether a serious question exists to be tried and where the balance of convenience lies or, alternatively, what the interests of justice require. There is certainly the potential for action to be taken under s.121 of the Bankruptcy Act by the trustee against Pilor Pty Ltd. The available material indicates that transactions have taken place prior to the bankruptcy which reasonably cause concern to the trustee. However, that potential action under the Bankruptcy Act has not yet been commenced. The relief which has been granted to this point was relief in aid of actual or anticipated proceedings under the Bankruptcy Act. Any further relief should serve the same purpose and should go no further than the interests of justice reasonably require.
It seems to me that the mischief which may occur if no relief is continued or no additional relief granted is that there could be further dispositions of property seeking to put a greater distance between the property and the creditors. I do not have clear evidence that any further dispositions are threatened but the possibility exists. It is the fear of such dispositions which has brought the trustee to the Court today, having regard to the history of transactions to date. In my view, some limited relief should be granted to the trustee in order to ensure that the trustee has a real opportunity to institute proceedings in the future and, if necessary, on fairly short notice in order to protect the interests of creditors.
Having regard to those foregoing considerations I have decided to make the orders that appear at the beginning of this judgment.
I have considered whether in the circumstances, there should be any order as to costs. The outcome is that the applicant trustee has had some small measure of success but only some small measure. The respondent company, Pilor has also been partially successful in finally disposing of the order made by Stone J. Having reflected on the matter I have come to the view that most of the orders I am making today probably could have and should have been made some three months ago. I do not think that any of the parties currently before me bears any greater blame than the other for what has happened over the past three months. I have therefore decided to order that there be no order as to costs.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Driver FM
Associate:
Date: 27 July 2004
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