Huynh v Pascoe - [2001] FCA 1187

FEDERAL COURT OF AUSTRALIA
Huynh v Pascoe [2001] FCA 1187
BANKRUPTCY – application by creditor for removal of trustee – whether quorum present at meeting of creditors – whether applicant a “creditor who is entitled to vote” within meaning of subs 64N(2) of Bankruptcy Act1966 (Cth) – whether applicant had given respondent a proof of debt in the bankrupt’s estate
Bankruptcy Act 1966 (Cth) ss 64, 64A, 64B, 64D, 64J, 64K, 64N, 64P, 64ZA, 156A(3), 178, 181
Jones v Dunkel (1959) 101 CLR 298, cited
Wilson v The Commonwealth [1999] FCA 219, cited
Re Burton; Burton & Ors v Wily [1994] 122 ALR 399, cited
VAN TRI HUYNH v SCOTT DARREN PASCOE
N 7092 of 2001
BRANSON J
SYDNEY
28 AUGUST 2001

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

N 7092 of 2001

BETWEEN:

VAN TRI HUYNH
APPLICANT

AND:

SCOTT DARREN PASCOE
RESPONDENT

JUDGE:

BRANSON J

DATE OF ORDER:

28 AUGUST 2001

WHERE MADE:

SYDNEY

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

NEW SOUTH WALES DISTRICT REGISTRY

N 7092 of 2001

BETWEEN:

VAN TRI HUYNH
APPLICANT

AND:

SCOTT DARREN PASCOE
RESPONDENT

JUDGE:

BRANSON J

DATE:

28 AUGUST 2001

PLACE:

SYDNEY

REASONS FOR JUDGMENT
INTRODUCTION

The applicant has applied under s 178 of the Bankruptcy Act 1966 (Cth) (“the Act”) for an order that the respondent be removed as trustee of the estate of the bankrupt Le Dinh Thi Than (“the bankrupt”).
The respondent became the trustee of the bankrupt’s estate, by virtue of subs 156A(3) of the Act, on 5 June 2000. The applicant is a creditor of the bankrupt’s estate. By letter dated 24 October 2000 the solicitors for the applicant requested the respondent to call a meeting of creditors of the bankrupt’s estate and of the bankrupt’s bankrupt husband’s estate for the purpose of removing the respondent as trustee of both estates. The letter advised that the applicant did not wish to appoint a private trustee.
The respondent gave notice of meeting of creditors of the bankrupt’s estate to be held on 17 November 2000 at “12pm”. The applicant was the only creditor to attend the meeting. The respondent, apparently taking the view that there was no quorum, declined to proceed with the meeting. He adjourned the meeting until 30 November 2000. At the commencement of the adjourned meeting on 30 November 2000 the applicant was again the only creditor present. Again the respondent declined to proceed with the meeting.
The applicant contends that the respondent ought to have allowed one or other of the meetings to proceed. If either of the meetings had proceeded, the applicant would have voted in favour of removing the respondent as trustee of the bankrupt’s estate. The applicant has argued that in the circumstances it would be an appropriate exercise of the discretion of the Court under s 178…

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.

Keep reading for free

Create a free CaseChat account to read Huynh v Pascoe and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2001] FCA 1187
Decision Date: 28 AUGUST 2001

CaseChat Overview and Summary

In the case of Huynh v Pascoe, the applicant, Huynh, sought the removal of Pascoe, the respondent, as the trustee of a bankrupt's estate. Huynh's application was based on various allegations of mismanagement and irregularities in the administration of the estate. The court was tasked with determining whether there were valid grounds for Pascoe's removal under the relevant provisions of the Bankruptcy Act.

The central legal issues before the court involved interpreting the requirements for a quorum at a meeting of creditors and the process for voting on the removal of a trustee. Specifically, the court had to decide whether the respondent's determination that a quorum was not present at certain meetings was correct, and whether Huynh had established sufficient grounds for Pascoe's removal. Additionally, the court examined whether there were any irregularities in Pascoe's management that warranted his removal.

The court concluded that there were no valid grounds for Pascoe's removal. While the court acknowledged some irregularities in Pascoe's management, it found that these did not reflect a failure to adhere to the law or any improper conduct. Notably, the court found that Huynh had not established that a quorum was present at the meetings in question, a necessary condition for considering a motion to remove Pascoe. The court also highlighted that an additional creditor had since lodged a proof of debt, which would entitle them to vote at future meetings. Consequently, the court dismissed Huynh's application, finding no basis for Pascoe's removal.

The court further addressed the integrity of legal practitioners, expressing concern over the circumstances surrounding the swearing of an affidavit. It emphasized the importance of legal practitioners maintaining the truth in their dealings with the courts, underscoring the responsibility they bear as officers of the court. The court also concluded that the evidence suggested Huynh did not submit a proof of debt on the relevant date, reinforcing its decision on the lack of a quorum.

In summary, the application to remove Pascoe as trustee was dismissed, and the court directed that further consideration be given to the issue of costs. The case underscores the stringent requirements for establishing mismanagement or irregularities that would warrant the removal of a trustee and the importance of procedural compliance in meetings of creditors.

Orders

Orders of the court

1. The application be dismissed.

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

BRANSON J

The above conclusion means that the question of whether “there is only one creditor who is entitled to vote” within the meaning of subs 64N(2) is to be determined by reference to the total body of creditors of the relevant estate, and not by reference only to those present at the meeting. However, only a creditor of the estate who satisfies the criteria (a) and (b) above is a “creditor who is entitled to vote” within the meaning of the subsection. It is for this reason, in my view, that s 64D of the Act mandates that the notice of the meeting of creditors is to state that each creditor must give to the trustee at or before the meeting a written statement setting out the matters identified in that section. The matters identified in the section are such that, if the creditor does give to the trustee such a written statement, he or she will be entitled to vote at the meeting of creditors.CONCLUSION In the circumstances which I am required to consider, I do not consider that it would be just and equitable for the Court to order the removal of the respondent as trustee of the bankrupt’s estate. I am satisfied that there have been some irregularities in the respondent’s management of the bankrupt’s estate. However, I see no reason to conclude that these irregularities reflect more than a failure on the part of the respondent to pay careful attention to the requirements of Part IV of the Act. Indeed it was not suggested to the respondent in cross examination that his conduct was motivated by self interest or any other improper factor. Further, I understand that since 30 November 2000 a further creditor of the bankrupt’s estate has lodged a proof of debt with the respondent. It would seem that that creditor would now be “a creditor who is entitled to vote” within the meaning of subs 64N(2) of the Act, and thus a creditor who would now be entitled to participate in a meeting of creditors and cast a vote on any motion that might be proposed for the removal of the respondent as the trustee of the bankrupt’s estate. Perhaps most significantly, the applicant has failed to establish a matter of fact at the heart of his complaint against the respondent. Namely, that at one or other or both of the meetings of 17 November and 30 November 2000 a quorum was present. That is, he has failed to establish that had these meetings, or one of them, been conducted as required by the Act, a motion would have been carried for the removal of trustee as trustee of the bankrupt’s estate. The application will be dismissed. I will hear counsel on the question of costs.ANCILLARY MATTER The evidence given in the proceeding as to the circumstances surrounding the swearing and filing in the Court of the affidavit referred to in [12] above give rise to concern. Solicitors, like barristers, are officers of the courts in which they appear. In all of their dealings with the courts they carry a serious responsibility not to mislead whether deliberately or through carelessness. It could never be appropriate for any person, but even more emphatically it could never be appropriate for a legal practitioner, to swear to the truth of a matter without holding a positive belief as to its truth. Should a legal practitioner discover that in a document filed in a court he or she has inadvertently sworn to the truth of a matter which is not true, or which he or she does not know to be true, the legal practitioner comes under a duty immediately to correct the position. This is more than just an issue of appropriate frankness and honesty. Any loss of confidence by the courts in the integrity of legal practitioners will tend to undermine both the efficacy and the efficiency of the administration of justice.

Ratio Decidendi

Legal Principle Established

Established by: BRANSON J

The evidence which was called in this case was sufficient to give rise to an inference that the proof of debt signed by the applicant was completed and signed by him on a date between 17 May 2001 (when his solicitors, presumably acting on his instructions, advised the respondent’s solicitors that the applicant accepted that no proof of debt was lodged by him in the bankrupt’s estate) and 21 May 2001 when the applicant swore the affidavit to which was annexed the completed and signed proof of debt. In the circumstances I am entitled to conclude, and I do conclude, that if the applicant’s solicitor or solicitors (as the case may be) with knowledge of the matters referred to above had given evidence, his or their evidence would not have assisted the applicant by throwing doubt on the correctness of the above inference (Jones v Dunkel (1959) 101 CLR 298 per Kitto J at 308, Menzies J at 312 and Windeyer J at 319). I conclude on the balance of probabilities that the applicant did not hand a proof of debt in the bankrupt’s estate to a member of the respondent’s staff on 30 November 2000 or at any relevant time.CONSIDERATION It was not suggested by the respondent that the present application was not properly brought pursuant to s 178 of the Act. In Wilson v The Commonwealth [1999] FCA 219 I reviewed the authorities on the proper scope and purpose of s 178 of the Act. I do not consider it necessary to do so again. The present application is, in my view, appropriately brought under the section. I therefore turn first to consider whether the respondent was correct in his determinations on 17 November and 30 November 2000 that no quorum was present at the meeting of creditors of the bankrupt’s estate. Subsection 64N(2) of the Act, the terms of which are set out in [8] above, governs this issue. Ultimately the applicant by his counsel accepted, as I understand it, that there was no quorum present at the meeting of 17 November 2000. There was at least one other creditor of the bankrupt’s estate. The applicant did not suggest that at or before the meeting of 17 November 2000 he had provided to the trustee a proof of debt in the bankrupt’s estate or otherwise given to him a statement in accordance with s 64D of the Act. The applicant argued, with some legitimacy as it seems to me, that the respondent must carry some responsibility for this as the notice of meeting dated 2 November 2000 did not contain the statement required by s 64D of the Act (see [8] above); nor did the respondent seek to overcome the deficiency in the notice by asking the applicant as the only creditor present at the meeting if he wished to give to the respondent a proof of debt. It was accepted by both parties before me that a completed proof of debt will constitute a written statement of the kind envisaged by s 64D of the Act (Re Burton; Burton & Ors v Wily [1994] 122 ALR 399). Incidentally, I note that the respondent has deposed to the fact that the meeting of creditors of the bankrupt’s husband’s estate held on 17 November 2000 commenced at 12.10pm and lasted for approximately eight minutes and that the meeting of creditors of the bankrupt’s estate commenced immediately thereafter. The respondent gave oral evidence that the first of the two meetings was the longer. From this I conclude that the meeting of creditors of the bankrupt’s estate probably lasted less than eight minutes so that the meeting probably came to an end before 12.30pm. The significance in such circumstances of subs 64N(3) of the Act (see [8] above) was not debated before me and it is thus inappropriate for me to express a final view on it. However, it seems to me to be open to be argued that subs 64N(3) has the effect that a trustee may not determine earlier than thirty minutes after the time fixed for the meeting that a quorum is not present. Rather, the subsection has the effect that, if a quorum is not present within thirty minutes after the time fixed for the meeting, the meeting is adjourned at the expiration of the thirty minute period by operation of the subsection (as opposed to adjourned by the trustee) and the trustee is required to fix the time, date and place to which the meeting is adjourned.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 7092 of 2001

BETWEEN:	VAN TRI HUYNH APPLICANT
AND:	SCOTT DARREN PASCOE RESPONDENT
JUDGE:	BRANSON J
DATE OF ORDER:	28 AUGUST 2001
WHERE MADE:	SYDNEY

JUDGE:	BRANSON J
DATE:	28 AUGUST 2001
PLACE:	SYDNEY