Huynh v Pascoe - [2002] FCA 309

FEDERAL COURT OF AUSTRALIA
Huynh v Pascoe [2002] FCA 309
BANKRUPTCY – application to remove trustee of bankrupt estate by single creditor – existence of two or more creditors – meeting of creditors convened by applicant creditor for purpose of removal of trustee – meeting attended by only the applicant creditor notwithstanding existence of other creditors – whether quorum nevertheless present and if so whether trustee should be removed by reason of unreasonable failure to recognise existence of quorum or unreasonable failure otherwise to remedy the situation confronting the applicant – absence of quorum because two or more creditors required for a quorum where there are two or more creditors.
Bankruptcy Act 1966 (Cth), ss 63, 63A, 64, 64A, 64D, 64L, 64M, 64N(2)(7), 64P, 64ZA(1)(2)(3)(6)(8)(9), 156A(3), 178, 181
Bankruptcy Act 1924, s 160
Companies Act 1948
Bankruptcy Rules, r 96 sub-r (1), (2) and (3)
McDonald et al Australian Bankruptcy Law and Practice, 4^th ed. 1968 at p.437
Explanatory Memorandum, Bankruptcy Amendment Bill 1991
Re Burton; Burton & Ors v Wily (1994) 122 ALR 399 considered
Jones v Dunkel (1959) 101 CLR 298 referred to
The London Flats Ltd [1969] 2 All ER 744 approved
Re Nelson (1963) 19 ABC 172 approved
Re Foster; Ex parte Foster v Duus (1994) 49 FCR 309 considered
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 cited
House v The King (1936) 55 CLR 499 referred to
VAN TRI HUYNH v SCOTT DARREN PASCOE
N1317 of 2001
RYAN, CARR & CONTI JJ
20 MARCH 2002
SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N1317 of 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

VAN TRI HUYNH
Appellant

AND:

SCOTT DARREN PASCOE
Respondent

JUDGES:

RYAN, CARR & CONTI JJ

DATE OF ORDER:

20 MARCH 2002

WHERE MADE:

SYDNEY

THE COURT ORDERS:
1. THAT the appeal be dismissed.
2.THAT the appellant pay the respondent’s costs of the appeal, such costs to be taxed in default of agreement.

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

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N1317 of 2001

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:

VAN TRI HUYNH
Appellant

AND:

SCOTT DARREN PASCOE
Respondent

JUDGES:

RYAN, CARR & CONTI JJ

DATE:

20 MARCH 2002

PLACE:

SYDNEY

REASONS FOR JUDGMENT
RYAN and CONTI JJ:
Introduction

This is an appeal from a judgment of a Judge of this Court, given on 28 August 2001, dismissing the appellant’s application, under s 178 of the Bankruptcy Act 1966 (Cth) (“the Act”), for an order that the respondent (“the Trustee”) be removed as trustee of the estate of the bankrupt Le Dinh Thi Than (“the Bankrupt”).
Factual and Procedural Background
On 5 June 2000 this Court made a sequestration order in respect of the estate of the Bankrupt. The Trustee became the trustee of that estate by virtue of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Huynh v Pascoe

Details

AGLC: Huynh v Pascoe [2002] FCA 309
Case: [2002] FCA 309
Decision Date

CaseChat Overview and Summary

The appeal concerns a matter between Huynh, the appellant, and Pascoe, the respondent, who is the trustee of the estate of the bankrupt Le Dinh Thi Than. The dispute revolves around the appellant's application to the Court for the removal of the Trustee under Section 178 of the Bankruptcy Act 1966 (Cth), which was dismissed by the primary Judge on 28 August 2001. The appellant argued that the Trustee should have allowed a meeting of creditors to proceed, which would have enabled the appellant to vote in favour of removing the Trustee. The Court was tasked with deciding whether the Trustee's refusal to proceed with the meeting of creditors was justified, and whether the dismissal of the appellant's application was appropriate.

The Court considered whether the Trustee's decision to adjourn the meeting due to the lack of a quorum was justified under the relevant provisions of the Act. The Court examined the definition of 'meeting' in Section 63A of the Act, which requires creditors to be physically present to constitute a meeting. The appellant contended that the Trustee should have allowed the meeting to proceed with the sole present creditor, but the Court found that the Trustee's decision was consistent with the requirements of the Act. The Court also noted that the appellant had not demonstrated any prejudice arising from the Trustee's actions. The Court concluded that the Trustee's decision to adjourn the meeting was reasonable and in accordance with the Act.

The Court upheld the decision of the primary Judge, dismissing the appellant's application for the removal of the Trustee. The Court found that the Trustee's actions were justified and did not warrant the exercise of the Court's discretion under Section 178 of the Act. The Court determined that the dismissal of the appellant's application was appropriate given the circumstances. The Court did not make any further orders as the dismissal of the application was the primary issue resolved.

Orders

Orders of the court

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Background

Background to the litigation

This is an appeal from a judgment of a Judge of this Court, given on 28 August 2001, dismissing the appellant’s application, under s 178 of the Bankruptcy Act 1966 (Cth) (“the Act”), for an order that the respondent (“the Trustee”) be removed as trustee of the estate of the bankrupt Le Dinh Thi Than (“the Bankrupt”). Factual and Procedural Background On 5 June 2000 this Court made a sequestration order in respect of the estate of the Bankrupt. The Trustee became the trustee of that estate by virtue of s 156A(3) of the Act. In the Trustee’s report to creditors, dated 1 August 2000, total assets of the Bankrupt were shown as $224 and total liabilities as $365,400. The Bankrupt had disclosed to the Trustee that her liabilities included an unsecured debt to the appellant in the sum of $149,000. By letter dated 24 October 2000 the appellant’s solicitors requested the Trustee to call a meeting of creditors of the Bankrupt’s estate (and that of the Bankrupt’s husband’s bankrupt estate) for the purpose of removing the Trustee as trustee of both estates. The Trustee gave notice of a meeting of creditors of the Bankrupt’s estate to be held on 17 November 2000 at “12.00 pm”. The appellant was the only creditor to attend the meeting. The Trustee, apparently taking the view that there was no quorum, declined to proceed with the meeting which he adjourned until 30 November 2000. At the start of the adjourned meeting on 30 November 2000 the appellant was again the only creditor present. Again the Trustee declined to proceed with the meeting. The applicant then filed an application in this Court seeking an order removing the Trustee as trustee of the Bankrupt’s estate. He contended that the Trustee ought to have allowed one or other of the meetings to proceed. If either of those meetings had proceeded, the appellant would have voted in favour of removing the Trustee as trustee of the Bankrupt’s estate. In those circumstances he contended that it would be an appropriate exercise of the discretion of the Court under s 178 of the Act to make an order removing the Trustee as trustee of the Bankrupt’s estate. Section 178 of the Act, under which the application at first instance was brought, provides:“If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such orders in the matter as it thinks just and equitable.” The following summary of the other relevant provisions of the Act is taken largely from the reasons of the learned primary Judge. Division 5 of Pt IV of the Act, comprising ss 63A-64ZF, is concerned with meetings of creditors. By way of preface to Div 5 s 63A contains, amongst others, the following definitional provisions;“creditors and their representatives, in relation to a meeting, means: (a)the creditors who are entitled to vote at the meeting and are participating in person or by telephone in the meeting; and (b)the persons participating in person or by telephone in the meeting as proxies or attorneys of any other creditors who are entitled to vote at the meeting.… … … … … meeting means a meeting of the creditors of a bankrupt or a meeting of the creditors of any one or more of the bankrupts who were made bankrupt in a joint bankruptcy.… … … … …(2)A reference in this Division to a person participating in person in a meeting is a reference to a person being physically present at the meeting.”

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N1317 of 2001

BETWEEN:	VAN TRI HUYNH Appellant
AND:	SCOTT DARREN PASCOE Respondent
JUDGES:	RYAN, CARR & CONTI JJ
DATE OF ORDER:	20 MARCH 2002
WHERE MADE:	SYDNEY

JUDGES:	RYAN, CARR & CONTI JJ
DATE:	20 MARCH 2002
PLACE:	SYDNEY