Haskins v Official Trustee in Bankruptcy

[2000] FCA 691

FEDERAL COURT OF AUSTRALIA

Haskins v Official Trustee in Bankruptcy
[2000] FCA 691

BANKRUPTCY – bankrupt requiring information concerning dealings with estate – whether trustee should be compelled to provide information

Bankruptcy Act 1966 (Cth), s 170(2)

DAVID HASKINS and CONNIE CASSAR v THE OFFICIAL TRUSTEE IN BANKRUPTCY (as trustee of the bankrupt estates of David Haskins and Connie Cassar)

V 7132 of 2000

JUDGE:         FINKELSTEIN J

DATE:           29 MAY 2000
PLACE:         MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 7231 of 2000

BETWEEN:	DAVID HASKINS and CONNIE CASSAR Applicants
AND:	THE OFFICIAL TRUSTEE IN BANKRUPTCY (as the trustee of the bankrupt estates of David Haskins and Connie Cassar) Respondent
JUDGE:	FINKELSTEIN J
DATE OF ORDER:	29 MAY 2000
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1.   The application be dismissed.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	V 7231 of 2000

BETWEEN:	DAVID HASKINS and CONNIE CASSAR Applicants
AND:	THE OFFICIAL TRUSTEE IN BANKRUPTCY (as the trustee of the bankrupt estates of David Haskins and Connie Cassar) Respondent

JUDGE:	FINKELSTEIN J
DATE:	29 MAY 2000
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

1. The applicants are former bankrupts.  On 8 January 1996 they became bankrupt upon their own petition.  They were discharged from bankruptcy on 9 January 1999. 

2. The applicants move against the respondent, their former trustee in bankruptcy, for the following orders:            (a) that the trustee make available to them the whole of the file concerning their respective estates; and (b) that the trustee inform them of the property of the estate that has been disposed of, how the proceeds of sale were dealt with, including an explanation as regards whether there was a surplus after payment of all expenses and debts and, if there was no surplus, why there was none.

3. During the course of the application the trustee offered to make his file available for inspection so the first order is not pressed.  The trustee acknowledged that the applicants would be entitled to inspect the file by making a request under the Freedom of Information Act1982 (Cth), so no purpose would be served in resisting inspection.

4. However, in relation to the other order sought, the trustee says that he ought not be compelled to provide any explanation to the applicants concerning the dealings with the property of the joint estates.  That property comprised a block of land situated at 62 St Bernard Drive, Tawonga South, Victoria and a removable house which had been located on that land.  No other property passed into the hands of the trustee for division amongst the creditors of the applicants.

5. I do not propose to make the order compelling the trustee to provide information on the property dealings, although there seems to be a discretionary power to make such order under s 170(2) of the Bankruptcy Act 1966 (Cth).  There are a number of reasons why I decline to make the order sought.  To better understand those reasons it is necessary to mention briefly the history of the applicants’ bankruptcy.

6. The principal asset of the joint estates was the Tawonga South property.  At the time of bankruptcy there was a partly constructed removable home on the property.  The home is the subject of litigation between the applicants and the builder arising out of an arbitral award in favour of the builder.  The builder claimed a charge over the land and had lodged a caveat.  The applicants had sought leave of the Supreme Court of Victoria to appeal against the interim award.  Leave was not granted.  The applicants then requested the trustee to appeal the decision of the Supreme Court.  The trustee obtained advice not to pursue such an application on behalf of the estates and declined the request. 

7. The applicants then made an application under s 178 of the Bankruptcy Act for an order reversing the decision of the trustee.  That application was rejected:  Haskins v The Official Trustee in Bankruptcy (unreported, Federal Court, Sundberg J, 10 April 1996).

8. On the same day that judgment was delivered by Sundberg J, the applicants sought an order removing the trustee. Two days after judgment was delivered they filed an appeal against the rejection of their application under s 178. The attempt to remove the trustee failed. The appeal against the decision of Sundberg J was dismissed.

9. There were other proceedings instituted by the applicants against the trustee which I need not mention save to indicate that they included applications in the High Court.  None of the proceedings were met with any success. 

10. I mention these proceedings not because they bear directly on the present application but to show that from the commencement of their bankruptcy the applicants had been dissatisfied with the conduct of their trustee.  Nevertheless, this Court has found that the applicants’ complaints have been without foundation.  I suspect this current application is but another step in the war that has been waged by the applicants against their former trustee.

11. The builder of the removable home claimed to be a creditor of the joint estate for an amount in excess of $100,000.  The trustee obtained the approval of the court to enter into a compromise with the builder, the result of which was the grant of permission to the builder to remove the home in exchange for a release of his claim and the removal of his caveat.  This enabled the trustee to sell the land and to apply the proceeds for the benefit of the creditors of the joint estates.

12. The property was sold for $15,000 and after payment of charges and other costs a net amount of $7,491.66 was realised. This sum was paid to the Commonwealth to reimburse it for money paid to the trustee for legal costs: see s 18A(4) of the Bankruptcy Act. 

13. There are still a number of creditors of the joint estate.  They are owed amounts which, in total, exceed $47,000.  There is no prospect of the trustee realising property that will produce such a sum so as to satisfy all claims.  Accordingly, there is no possibility of there ever being a surplus in the joint estate which would be available to the applicants. 

14. I now return to my reasons for refusing the relief sought.  First, the applicants have sufficient information about the manner in which the trustee dealt with the two items of property in the joint estate so that they cannot really require further information.  The applicants know precisely what occurred with the removable home as they were heard to oppose the approval for the compromise.  The applicants are aware that the land was sold and they have been provided with an accounting for the proceeds.  The applicants know that there is not and never will be any surplus money available to them. 

15. In these circumstances it is not appropriate to compel the trustee to give an explanation as to the dealings with the property.  In any event, when the applicants inspect the file, if there are any details regarding the dealings with the property of which they are unaware, a most unlikely possibility, they will soon discover them. 

16. The application will be dismissed.  However, I will not make any order for costs against the applicants.  This is not because I think their application had some merit.  The trustee did agree that the file would be made available for their inspection and in the circumstances, I think it is reasonable that each party bear their own costs.

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.

Associate:

Dated:             29 May 2000

Applicants in person.
Counsel for the Respondent:	Mr G Carroll
Solicitor for the Respondent:	Australian Government Solicitor
Date of Hearing:	17 April 2000
Date of Judgment:	29 May 2000