In the matter of an application by Bendeich, G.R
[1992] FCA 1046
•1 Dec 1992
JUDGMENT No ,.!.$.kk.,...\!.~
IN THE FEDERAL COURT OF AUSTRALIA ) NO. ART 1 of 1992 3 , > GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF OUEENSLAND 1 , I . ,
IN THE MATTER of an application by GRAHAM ROSS BENDEICH of 4 Candlebark Crescent, Chapel Hill, Brisbane in the State of Queensland to be registered as a Trustee under the
1 6 MAR 1993 Bankruptcy Act 1966 AUSTRALIA
MINUTES OF ORDERS
JUDGE MAKING ORDER: Drummond J DATE OF ORDER: 1 December, 1992 WHERE MADE: Brisbane THE COURT ORDERS THAT: l. All of the orders made by Deputy Registrar Allen on 6 November, 1992 be set aside.
2. The applicant file and serve on or before 8 December, 1992, an affidavit of documents, identifying the documents contained in Schedule one Part two of his affidavit of documents filed in this Court on 10 September, 1992, such identification being sufficient to allow the objectors to evaluate any claim for privilege asserted by the applicant.
4.
The application for an order that the applicant answer the interrogatories delivered by the objectors be dismissed upon the undertaking by counsel for the applicant that if the objectors seek identification of the portions of the documents which have multiple authorship, according to the affidavit of the applicant filed on 19 November, handwriting on each such document, that a response 1992, who is the author of particular portions of will be made providing that information within seven
days of the request.
3. The time for compliance by the applicant with the order made on 30 June, 1992 for delivery of an affidavit of documents to the Official Receiver is extended from 7 July, 1992 to 8 December, 1992.
5. In relation to the application for an order that the applicant answer the interrogatories delivered by the objectors, there is to be no order as to costs.
THE COURT ORDERS BY CONSENT THAT:
The summons to witness proceedings be adjourned to a date to be fixed.
2. The objectors pay Messrs. Feez Ruthning's costs of and incidental to the summons to witness, to be taxed, including reserved costs if any.
NOTE : - Settlement and entry of orders is dealt with in
Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) NO. ART 1 of 1992 GENERAL DIVISION 1 BANKRUPTCY DISTRTCT OF ) THE STATE OF OUEENSLAND 1
IN THE MATTER of an application by GRAHAM ROSS BENDEICH of 4 Candlebark Crescent. Cha~el Hill, Brisbane in the state of ~ueensland to be registered as a Trustee under the Bankruptcy Act 1966
Coram: Drummond J
Place: Brisbane
Date: 1 December, 1992
EX TEMPORE REASONS FOR JUDGMENT
I have before me an application by Mr. Bendeich for orders setting aside or rescinding or reviewing the consent orders made on 6 November, 1992 by the Deputy District Registrar. It is the first of those orders that alone is attacked. That consent order is as follows:
"l. That the Applicant file and serve an Affidavit of Discovery identifying the documents contained in Schedule One Part Two of his Affidavit filed in this Honourable Court on 10 September, 1992, such identification being sufficient to allow the Objectors to evaluate any claim for privilege asserted by the Applicant within seven days of the date of the hearing of this Application and that in default of which the Applicant's application for registration as a trustee be dismissed and that the Applicant pay the Objectors' costs of and incidental to his Application fox registration including all reserved costs, to be taxed."
In January of this year, Mr. Bendeich applied for registration as a trustee under S. 155 of the Bankruptcv Act 1966 (Cth) . A company, Braegrove Pty. Ltd., with whom a Mr. John Gray is connected, and Mr. Gray himself objected to Mr. Bendeich's registration. Braegrove and Mr. Gray were associated with Mr. Bendeich some years ago in the course of
1 . Bendeich's practice as an accountant. The allegations
that have emerged as this matter has proceeded, which are relied on by the objectors in support of their objection to
Mr. Bendeich's registration as a trustee, are to the effect
that Mr. Bendeich was guilty of very serious misconduct in the course of that earlier association and should not therefore be
registered as a trustee in bankruptcy.
Interlocutory proceedings have been protracted. Although on 7 April, Mr. Bendeich's former solicitor, Mr. Hewlett, put the objectors' solicitor on notice that they were in default of directions given by the court for the conduct of the application, the delay over the past six months or so has been due solely to Mr. Bendeich's side of the record. The
objectors' side has tried in this period to push thc matter on
as best it can.
Mr. Bendeich failed to comply or was late in complying with a series of directions given between 30 June and October 1992 by the District Registrar and his Deputies and designed to get the matter ready for trial.
The situation created by this delay on Mr. Bendeich's side came to a head on 6 November when, on the hearing of an application brought by the objectors, Deputy Registrar Allen made the order requiring Mr. Bendeich to file an affidavit of documents that identified in proper form the grounds of objection to the production of certain documents on the ground of privilege. The order was made by consent, a solicitor from Mr. Hewlett's firm appearing for Mr. Bendeich before the Deputy Registrar on that occasion. A consent order was also made that Mr. Bendeich pay the objectorsf costs of and incidental to that particular application. Mr. Bendeich did not comply with the order. It was not until 18 November
that he swore an affidavit that dealt with the matters that
were required to be dealt with by the order. In terms of the order, however, his application for registration as a trustee stood dismissed as from 13 November.
Mr. Bendeich's grounds for seeking relief in respect of the order of 6 November last are set out principally in his long affidavit filed on 30 November last. In essence, he says
that he was not kept informed of the course of the proceedings by his then solicitor, Mr. Hewlett. On Mr. Bendeich's evidence this was no small default on the part of Mr. Hewlett, but was instead due to a very serious failure on the part of the solicitor to keep his client, Mr. Bendeich, informed. Mr. Bendeich in paragraphs 71 to 73 of this affidavit deposes to not being aware of a number of earlier orders made prior to 6 November which were made by consent and with Mr. Hewlett acting for him, and which included orders that he pay the objectors' costs of those particular applications. He says that, specifically, he was unaware of the orders of 6 November. He says that he became very concerned as a result of a telephone call he received from a solicitor not connected with Mr. Hewlett's firm on 23 November, 1992, when he was told that the solicitors for the objectors had written to that particular solicitor in the course of which they said that Mr. Bendeich's application for registration as a trustee had been dismissed, as was indeed the case, given the operation of the self-executing order of 6 November. Mr. Bendeich says that he immediately sought to contact Mr. Hewlett but was advised that
Federal Court Registry. He says that:
he was out of town. He then went and searched the file in the
"Upon reading the Court file, I became aware of numerous matters which I had not previously been aware of. Further, it came to my attention that a number of consent orders had been made which I was unaware of and had not given instructions to consent to. I had not previously seen a copy of any of these orders."
IIe says that he immediately withdrew his
instructions from Mr. Hewlett and engaged a new solicitor, a
Mr. Pennicott of Messrs. Bowdens, to conduct these proceedings
henceforth for him.
A number of orders have been made. First, on 30
June, 1992, it was ordered that Mr. Bendeich file and serve certain affidavit material and an affidavit of documents by 7 July and it was also ordered that Mr. Bendeich pay the objectors' costs of that particular directions hearing. Those orders were by consent. On 27 July, 1992 further orders were made for the filing and serving of affidavits of documents by Mr. Bendeich, as well as other matters, and again an order was made that Mr. Bendeich pay the objectors' costs of and incidental to that particular application. Those orders were all made by consent too. On 14 September, 1992, Hr. Bendeich was ordered to file and serve an affidavit of documents, among other things, and was also ordered to pay the objectors' costs of and incidental to the application that led up to the making of that order. Again, all those orders were by consent.
As I have mentioned, the order of 6 November containing the guillotine order and another order that Mr. Bendeich pay further costs to the objectors was also by consent.
m. Hewlett attended under subpoena and was questioned by counsel for the objectors. His evidence
confirms, in essential details, Mr. Bendeich's own evidence 1 . l that he was not kept informed of what was happening in the I t l proceedings, in important and major respects. Mr. Hewlett's i recollection of his contacts with Mr. Bendeich is not 1 [ particularly good. Mr. Bendeich has deposed at very great L . : length and with great particularity, supported by much documentation, to all his communications with Mr. Hewlett . i I I Mr. Hewlett's poor recollection may possibly in part be '
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explained by the fact that he understood the subpoena that I. , , brought him here today directed his attention only to the
m . events of 6 November, 1992 when the guillotine order was made. I. , .
IBut it is clear from Mr. Hewlett's own oral evidence that he r did not seek instructions from Mr. Bendeich prior to consenting on Mr. Bendeich's behalf to the various orders,
; ,, 1, ! including orders for costs, that I have referred to. i He did speak in general terms with Mr. Bendeich about some of the orders, generally after they were made, but
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l I - not in such a fashion as would have conveyed to Mr. Bendeich the seriousness of the defaults which were mounting up, so far \ court was concerned. It may be that Mr. Hewlett became more as non-compliance by Mr. Bendeich with directions given by the and more embarrassed as time went on at the way he had let the
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m : , 8 matter get out of hand. In any event, he was, I think, very
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frank in the evidence he gave, and as I have said, it supports
very substantially the evidence of Mr. Bendeich. I should say t that the affidavit of Mr. Pennicott, the solicitor retained by I_ .I f - Mr. Bendeich on 23 November, 1992 to whom .Mr . Hewlett very . . l . !
promptly handed over his files when his instructions were withdrawn, also supports the evidence of Mr. Bendeich and confirms what Mr. Hewlett had to say. The picture that the lack of records on Mr. Hewlettls file presents is one of a matter which was not given anything like close attention.
Of the criticisms I have made of Mr. Hewlett, I should say this. I have only heard brief evidence from him. It has not been possible to make a full evaluation of his conduct of the retainer he had from Mr. Bendeich. I do not think it is desirable to attempt to do so in this present application. The views I have expressed which are critical of Mr. Hewlett must be understood against that background.
I generally accept Mr. Bendeich's account of his lack of proper awareness of the way his application was proceeding. I do not think he can reasonably be said to have personally been guilty of any repeated or deliberate breach of the orders of this court designed to get his application to a prompt hearing. Rather, the fault, in the circumstances of
this particular case, lies very much with his former solicitor.
It is common ground that I can grant relief against the self-executing order, notwithstanding the fact that it has operated to produce a dismissal of the proceedings. It is common ground that I can do that if, that is, the circumstances are sufficient to justify my doing so in the exercise of a discretion that I have in that regard.
I propose to grant such relief. The grounds upon which I do so are these. I have already referred to my acceptance of Mr. Bendeich's account and to the evidence of
Mr. Hewlett, which goes a long way to confirm its reliability.
It is not suggested on the part of the objectors that any particular prejudice would be suffered by the objectors by my granting the relief sought, other than prejudice which can be cured by an appropriate order for costs. Indeed, it would be difficult for the objectors to suggest that they are prejudiced when I was invited by counsel on behalf of the objectors to say that these proceedings should remain dismissed and that Mr. Bendeich can institute fresh proceedings.
It was also submitted, and this is I think a matter
of some moment, that Mr. Bendeich should be refused
discretionary relief because the material before me shows that
there have been at least two occasions on which Mr. Bendeich has given discovery of documents but has failed to disclose the fact that he once had in his possession or power an indemnity which he received from Mr. Gray's trustee for actions performed by him in his capacity as director of Braegrove Pty. Ltd. . These matters are related in time to the events on the basis of which the objectors rely to make their objection to Mr. Bendeich's registration as a trustee.
I must say thdt the material before me indicates that there is a degree of suspicion as to whether Mr. Bendeich deliberately failed to make proper disclosure of this indemnity. It seems to me to be quite a significant document, in the context of the objection that has been raised, and one that one might expect would have come to M r . Bendeich's mind and featured in one or other of the affidavits of documents that he has filed. I do not, however, put the matter any higher than to say that the material is sufficient to engender some suspicion in that regard. I would not regard it as sufficient by itself to deny Mr. Bendeich the relief that he seeks here.
It is also submitted on behalf of the objectors that, while there has been no submission of prejudice flowing to the objectors, if the relief were granted, the objectors have been innocent of any delay, at least over the past six months or so. That is plainly correct. They have tried, as I have said, to push matters through to finality, that is, to a hearing at which the validity of their objections can be
adjudicated upon. It was also submitted on behalf of the objectors that, even if it be accepted that Mr. Bendeich did not have a fully informed awareness of what was happening in the progress of his application, he should be taken to have had an awareness of some delay, for which he should be regarded as responsible in failing to act with more promptitude. There is
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some degree of force in that, but I do not think the cogency of that particular point amounts to a very great deal against
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the background of the matter, and in particular, to the lack
of communication between Mr. Bendeich and his solicitor, a
failure which rests, as I have already indicated, at the door, ! _ . very largely, of the solicitor. It was also submitted on behalf of the objectors that the matter should stand dismissed and that Mr. Bendeich can simply re-apply for registration and that this will stand as a salutary lesson to him to give prompt, close, and detailed personal attention to the matter. Mr. Bendeich says, however - and there is no reason to doubt this - that he initially instructed Mr. Hewlett, who he believed to be a senior insolvency practitioner in a major city legal firm, who was well experienced with this sort of application. I do not think there is a great deal of substance in that particular
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. , objection. I . l j
For those various reasons, I propose to grant the
relief sought.
I certify that this and the preceding
nine pages are a true copy of the
reasons for judgment herein of the
Honourable Mr. Justice Drummond.
Associate:
Date: 1 December, 1992
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