In the matter of The Bankruptcy Act and in the matter of an Application Pursuant to Section 109(6) re George Vasil Tollis ex parte Ronald Patrick Colby

[1978] FCA 125

---7

JUDGMENT No. .... L . ~ J ..&& - l/' c-f+

Copyright i n t h e Commonwealth Government

I N THE FEDEqAL COURT OF AUSTRALIA

General Div is ion

Bankrustcy D i s t r i c t o f t h e No. l 92 of 1975

S t a t e o f V i c t o r i a

I n t h e ma t t e r of -

THZ BARKRUPTCY ACT 1 a

And i n the mat te r of -

GEORGE VASIL TOLLIS

ex p a r t e Ronald P a t r i c k Colby

-

Coram: C.A. SWZZNEY J

TRANSCRIPT OF PROCEkDINGS

AT MELBOURNE ON MONDAY. 4 D E C m R m m . - AT 10.75 AoM,

MR 1.R. MILLEH appeared f o r t h e app l i can t .

MR MILLER: T h i s t h e Bankruptcy i s an a p p l i c a t i o n pursuant t o s e c t i o n 109(6) of

Act seeking d i r e c t i o n s in r e l a t i o n t o any

p r e f e r e n c e t o be given t o c e r t a i n indemnifying c r e d i t o r s ,

I r e l y on t h e a f f i d a v i t o f Bryan Roy Burzacott sworn

24 November, 1979. \

.HIS HONOUR: I have had t h e advantage of reading t h a t but do not l e t '

t h a t p revent you	from approaching t h e mat te r	i n any way
you wish,

MR MILLER: I w i l l no t go through t h e a f f i d a v i t aga in but I do

produce t h e e x h i b i t s t o t h e a f f i d a v i t , I t ende r those .

HIS HONOUR: Do you want them t o be rece ived i n evidence and s i a p l y

r e t a i n t h e i r markings a s exh ib i t s t o t h e a f f i d a v i t ?

MR MILLEFi: HIS HONOUR: Yes,

That may be done. I s t h e agreement being c a r r i e d ou t?

MR MILLER: It is , I am ins t ruc t ed t h a t e&ch ins ta lment has been

P a i d around t h e due d a t e an3 t h e i n i t i a l d e p o s i t of

1500 and t h e ins te lment of $3500 were duly paid.

HIS HONbUR: What do you s u b i t would be t h e a p p r o p r i a t e o rder?

MR MILLm: I have no submission t o make i n r e l a t i o n t o t h e exac t

amount t h a t should be given, t h a t i s a mat te r f o r your

Honourts d i sc re t ion . ; t h e 0 f f i c i . a l Receiver is not r e a l l y

i n a p o s i t i o n t o suggest what it should be,

HIS HONOUR: I a p p r e c i a t e t h a t t h e O f f i c i a l Receiver wants t o remain

detached but I would be glad of any a s s i s t z n c e you can

o f f e r me i n r e l a t i c n t o t h e ma t t e r , if you wi sh t o do so,

MRMILLIER: I am i n s t r u c t e d t h a t t he r i s k i n trlis mat te r is very

high and t h a t t h e mat ter came very c l o s e t o being t r i e d

in c o u r t , A s your Honour w i l l no te , t h e d e b t I n

r e s p e c t of which t h e a c t i o n was brought was a l i t t l e over

5 y e a r s p r i o r t o t h e d a t e of t h e s e q u e s t r a t i o n o rde r , I

am i n s t r u c t e d t h a t perhaps i f your Hopour would cons ider

g Wing t h e indemnifying c r e d i t o r s p re fe rence i n re l a t l o n

' L O t h e e n t i r e amount - - -

HIS HONOUR: S t a r t i n g a t t h e beginning, I am looking a t s e c t i o n 109(6),

Do you have t h a t before you?

MH MILLER: Yes, I do.

HIS HONOUR: The opening words a r e ll>!here proper ty has been recoverad

by means of an indemnity f a r c o s t s of l i t -&gat ion g iven by

any c r e d i t o r or-credi tors - -" I have omit ted t h e i r r e l e v a n t ' "

words, It does seem on t h e m a t e r i a l t o be a case on

b

F I~/HI/ 5a 2 4/12/78

T o l l i s % > -,",w",l7 .%?*S S A

-- W

'--_Ih'8- l

which it Is demonstrated t h a t p roper ty has been recovered

by means o f t h i s indemnity?

MR MILLER: Yes,

l HIS HONOUR: I am s a t i s f i e d a s t o t h a t . It is t h e n a ques t ion of

"making such o rde r a s t h e cou r t t h i n k s j u s t and e q u i t a b l e

w i t h r e s p e c t t o t h e d i s t r i b u t i o n of t h e proceeds o f t h a t

p r o p e r t y w i t h a view t o g iv ing t h e indemnifying c r e d i t o r

o r c r e d i t o r s an advantage over o t h e r c r e d i t o r s i n

c o n s i d e r a t i o n of t h e r i s k run by them i n g iv ing t h e

indemnity," It seems t o me, s u b j e c t t o anything you want

t o put t o me, t h a t one could loak a t t h e s i t u a t i o n wh ich

would have appl ied had t h e indemnity not been g iven on

t h e one hand and then look a t t h e eventual r e s u l t , and i n

t h a t way see t h e d i f f e r e n c e t h a t t h e indemnity made poss ib le .

There was an o f f e r of s e t t l emen t here , was t h e r e no t?

MR M I L m : Yes, t h e r e was,

HIS HONOUR: Was t h a t o f f e r g iven be fo re t h e indemnity? The o f f e r

d i d no t r e s u l t f r o n t h e indemnity, d i d I t ?

MB MILLER: No, I am i n s t r u c t e d t h z t I t d i d no t ,

HIS HONOUR: Then perhaps i f we go t o t h a t p o r t i o n o f M r B u r z a c o t t ' s

a f f i d a v i t which s e t s ou t t h e n a t u r e of t h e o f f e r , t h a t w i l l

be o u r s t a r t i n g p o i n t ,

MR MILLEIS: That o f f e r was $5,340 - paragraph 5.

HIS HONOUR: That i s our s t a r t i n g f i g u r e t h a t was a v a i l a b l e t o t h e

c r e d i t o r s by reason of t h a t o f f e r . Then we have t o

e v a l u a t e t h e p rope r ty recovered, have we not?

MR MILLER: H I S HONOUR: That i s so,

That i s s e t ou t i n paragraph 12?

MR MILLER: HIS HONOUR: Yes, t h e d e t a i l s a r e s e t o u t t h e r e ,

I Sub-clauses 1, 2 , 3 and 4, The o f f e r was f i r s t

t h a t Mrs Trakas would pay t h e e s t a t e $15,000 by a d e p o s i t

of $1500 and ins ta lment of $3500 on t h e execut ion of

w r i t t e n t e r n s of s e t t l emen t , w i t h t h e balance by 36 monthly

i n s t a l m e n t s o f $277,77. t h e balance of p r i n c i p a l

outs5anding from t ime t b t ime t o bear i n t e r e s t a t 11.56.

A s t o t h a t $1500 you could perhaps t r e a t $5000 o f L t as

W being cash I n e f f e c t , could you no t?

km MILLER: Trea t how much?

HIS HONOUR: $5000, being' t h e d e p o s i t and ins ta lment on t h e execut ion

o f w r i t t e n terms of s e t t l emen t ,

MR MILLER: That i s so ,

J

(Continued on page 3 A )

HIS HONOUR: So t h a t t h e remaining $10,000 was r e c e i v a b l e by

\

equa l monthly i n s t a l n a r k s with i n t e r e s t a t 11.55

on t h e ou ts tand ing p r i n c i p a l a t any time.

(Continued on page 4)

HIS HONOUiL: How should one value t h a t as a g a i n s t , presumably, a

ca sh o f f e r of $53601

MR MILLER: It is $9,660 more than t h e cash o f f e r .

HIS H O N O W : If t h e r e were no p rov i s ion f o r i n t e r e s t you would have

t o a s c e r t a i n t h e p r s sen t va lue of $10,000 r ece ivab le

o v e r t h e per iod of payment, would you not?

MILLER: Yes, your Honour, b u t of course t h e p rov i s ion would

a p p a r e n t l y mean t h e d i scount ing o f p r e v a i l i n g r a t e s

t o j u s t about i t s presen t value - $10,300 a t t h a t d a t e .

l

HIS HONOUR: Something may t u r n on d i s t r i b u t i o n , a s t o when you

a r e going t o d i s t r i b u t e it, P l a i n l y , t h e O f f i c i a l

Rece ive r cannot d i s t r i b u t e t h i s money, t h e las t

i n s t a l m e n t ,	u n t i l	t h r e e y e a r s	from	t h e	d a t e	of	t h e
agreement,

MR MILLm: Yes, your Honour,

HIS HONOUR: What do you want t o say t o me about t h a t s i t u a t i o n ; l

i t is not q u i t e cash , is i t ?

l

MR MILm3: No, it i s p l a i n l y not cash i n hand a t t h e moment.

O f course , no d i s t r i b u t i o n i n r e s p e c t of it could be

made a t t h e p r e s e n t moment.

HIS IiONOUR: One p o s s i b i l i t y m i g h t be - and I mention it only s o

t h a t you can cons ider it - t o s eg rega t e t h e sources

of d i s t r i b u t i o n , t o put t h i s sum of $10,900, o r

whatever o f it has not been r ece ived - we w i l l c a l l it

$10,000 f o r s i m p l i c i t y - t o one s i 5 e and t o provide t h a t ,

i n s o f a r a s any advantage were given t o t h e c r e d i t o r s

who gave t h e indemnity i n r e s p e c t of t h e $10,000 they

s.hould be e n t i t l e d t o r e c e i v e t h a t and t h e i n t e r e s t on

it a s it f e l l i n , s u b j e c t t o t h e convenience of t h e

t r u s t e e i n d i s t r i b u t i n g it.

MR MILLEH: Yes your Honour, t h a t would be a most app rop r i a t e o r d e r

i n my submissiono

HIS HONOUR: P u t t i n g t o one s i d e t h e ques t ion of how it might be

done, it seems t o me broadly t h a t we should a s c e r t a i n

t h e n e t t va lue of t h e o f f e r , t h a t was $5340; i t s n e t t

v a l u e would be l e s s something f o r c o s t s , I suppose, i f

it had been accepted. J u s t t a k e t h e n o t i o n a l view

t h a t t h e t r u s t e e and the c r e d i t o r s have decided t o

accep t L t . Then t h e e s t a t e would n o t have rece ived ,

I imagine, $5340 n e t t ; t h e r e would have been some

element o f c o s t s a t t h a t s tage .

Ml3 MILLER: Some smal l element.

HIS HONOUn: Some smal l element, you say. Then when we look a t t h e

$15,000, t r e a t i n g it a s a g l o b a l sum f o r t h e moment

and postponing t h e ques t ion o f de fe r r ed d i s t r i b u t i o n ,

we have t o a s c r t a i n t h e n e t t value of t h a t , have we not?

Out of t h e cash p o r t i o n of t h e , s ay , $5,000 cash , we have ,

t o p rov ide , do we n o t , f o r what I might c a l l t h e post-

o f f e r c o s t s ? I n o t h e r words, if you look a t t h e c o s t s

up t o t h e t ime o f t h e o f f e r and say t h a t amount is t t X t t ,

you s u b t r a c t t h a t "X" from the $5340 t o g e t t h e n e t t

va lue of t h e o f f e r , and l e t u s suppose then t h a t t h e

pos t -o f f e r c o s t s be "Y" . Then, aga in d e f e r r i n g t h e

i n s t a lmen t payments, i f we s u b t r a c t t h e sum of "Y"

d o l l a r s from t h e $15,000, we would have t h e n e t t va lue

of t h e s e t t l emen t f igurc , woul5 we n o t , t h e amount

a r r ived a t a s a r e s u l t of t h e g iv ing of t h e Indemnity?

MR MILLER: Yes, t h a t .is q u i t e so, l l

HIS HOMOUR: Always t h e n e t t value p u t t i n g t h e defer-red d i s t r i b u t i o n t o one s i d e ,

of t h e s e t t l e u e n t f i g u r e l e s s the n e t t

v3,lue of t h e o f f e r would r ep re sen t t h e adventage t o

t h e e s t a t e , would it not?

MR.KILLER: Yes, your Eonour.	1
I

HIS HONOUH: Now t h e r e may be ques t ions i n t h i s t h a t you woule I

l i k e t o cons ider , b u t broadly it seemed t o me if t hose

e m ~ u n t s were ascer ta ined - I do not suggest t a x a t i o n I

o r anything l i k e t h a t , but f you had t h e oppor tun i ty of

o b t a i n i n g i n s t r u c t i o n s s o t h a t you t o l d me what you l

thought would be z f a i r f i g u r e from t h e m a t e r i a l a v a i l a b l e ,

which might inclu.de t h e b i l l of c o s t s which h a s a l ready

been taxed g l o b a l l y f o r t h e purpose of a r r i v i n g a t t h e s e

n e t t v a l u e s , we would be a b l e t o have t h e terms of an

o r d e r , We would want an a d d i t i o n a l term, s u b j e c t t o , . I

a ny th ing you want t o pu t t o me, t h a t i n r e s p e c t of t h e

payment of t h e s e t t l emen t amount which has not y e t been

r ece ived , if t h a t has t o be d e f e r r e d then t h e indemnifying

c r e d i t o r s should wait f o r t h e b e n e f i t , which would

i r c l u d e t h e accrued i n t e r e s t , ! I

It may b e , f o r example you could o b t a i n some

i n s t r u c t i o n s as t o wtlcn d i s t r i b u i i o n is l i k e l y t o t a k e

p l h c e , and if f o r t h e sake of artument it was going t o be

i n another t h r e e o r f o u r months t hen t h e monies rece ived

S a. r e s u l t of t h e agreed se t t l emen t as a t t h e d a t e of

t h a t d i s t r i b u t i o n could flow out t o t h e indemnifying

c r e d i t o r s and it would only be t h e balance i n r e s p e c t o f which they would have t o w a i t , when they would g e t

t h e payment and t h e accrued i n t e r e s t .

l

MR MILIJER: Yes,

"* l

HIS EONOUB: But ques t ions of convenience i n edmin i s t r a t i on of t h e

e s t a t e might come i n t o it. I imagine t h e t r u s t e e would

n o t be wanting t o make a payment o u t every month of t h e

a p p r o p r i a t e number of c r e d i t o r s divided i n t o P77.77.

FIR MILLER: No,

HIS HONOUR8 Would you l i k e t o j u s t t ake a few minutes and speak t o

- t h o s e I n s t r u c t i n g you?

MR MILL?AR: Yes, if RUT Honour would permit ,

HIS HONOUR: Very we l l , you may l eave t h e bar t a b l e if you wish.

MR MILLER: Thank you your Honour,

HIS HONOUX: If it i s more convenient you may l e a v e t h e c o u r t , I

gentlemen, l

MR MILLE3: Thank you your Hobour,

HIS HONOUR: Yes Mr Mil le r? 1

MR MILLER: We a r e s t i l l i n t h e p- ocess of t r y i n g t o work o u t t h e s e

c o s t f igures , your Honour. Strongman & Crouch were

i n s t r u c t e d s h o r t l y p r i o r t o t h e o f f e r of £5340 being made

and some p a r t of t h e i r c o s t s of $775 would agpear t o be

a t r r i b u t a b l e t o ga in ing t h a t o f f e r , tJe a r e j u s t

about t o look a t t h e t a x b i l l of c o s t s a n d see if t h e r e

La any s e n s i b l e f i g u r e we could come up wi th .

HIS HONOUR: Yes, t h a t f i g u r e would n o t need t o be p r e c i s e ,

MR M I L L M : No your Honour,

HIS HONOUR: If it were a f a i r approximation it would be s u f f i c i e n t .

There i s another a s p e c t o f t h e mat ter t h a t deserves

cons ide ra t ion . Is M r Burzacot t s t i l l p re sen t?

MR MILLilR: He i s , your Honour,

HIS HONOUR: It might be h e l p f u l t o you, I t h i n k , if he were t o hear

what I am going t o say, I say t h a t on ly because it may involve consLderat ions In r e s p e c t of which you and your

s o l i c i t o r would need t o consu l t wi th him.

Mr M i l l e r , t h e d i s c u s s i o n we have had s o f a r

r e l a t e s t o a formula designed t o i n d i c a t e what advantage

should be confer red upon t h e indemnifying c r e d i t o r s a s

a c l a s s , i n r e l a t i o n t o t h e p a r t i c i p a t i o n There is a l s o a ques t ion a s t o t h e formula

by each member of t h a t

c l a s s i n t h e advantage g iven t o t h e c l a s s .

I have looked a t t h e documents which s e t o u t

t h e amount of t h e proof Ln each case ; I t h i n k I t is

E x h i b i t BRBS, Do you have a copy of t h a t ?

MR MILLER: No, your Honour, unfor tuna te ly I do no t ,

HIS HONOUR: Mr Eurzacot t may have one, I suspec t .

You see t h a t t h e f i v e indemnifying c r e d i t o r s

a r e shown there .and t h a t t h e i r proved d e b t s range from

$485 t o $1023.09 i n r e s p e c t of f o u r o f t h e f i v e , and

i n t h e c a s e of t h e f i f t h t h e amount is $28,129,

I have looked a t t h e indernnit ies t h a t were S ought, and

presumably given, and from t h e sma l l e s t c r e d i t o r t o t h e

l a r g e s t c r e d i t o r t h e indemnity seems t o be t h e same,

I n o t h e r words, t a k e t h e c r e d i t o r who is owed $473;

t h a t c r e d i t o r appa ren t ly bore equa l ly w i t h t h e c r e d i t o r

owed $28,129 t h e l i a b i l i t y f o r t h e c o s t s , Am I r i g h t i n

t h i n k i n g t h a t ?

MR MILLER:	Yes, your Honour,
HIS HONOUR:	The form of the documents sugges t s t h a t , If you would

l i k e t o t ake a moment o r two and perhaps c o n s u l t

t o g e t h e r and s a t i s f y yourselves t h a t t h a t i s t h e f a c t ;

t h a t i s t h e way the documents look. Exh ib i t BR&,

M r M i l l e r , i s t h e form of t h e indemnity.

MR MILLER: Yes your Honour, I have t h a t . I am i n s t r u c t e d they were

i n f a c t a l l i n t h a t p r e c i s e form,

HIS HONOUR: Take t h e s i t u a t i o n of t h e c r e d i t o r wi th a proof f o r

$473. You know t h e c o s t s were $700, one side's c o s t s

of' t h e ma t t e r were of the o r d e r of 8700, I f t h e ma t t e r

bad gone t o trial, even without an appea l which is

rncluded i n t h e indemnity, t h e t o t a l c o s t s could have

been a very s u b s t a n t i a l sum,

MR MILLER: Yes your Honour,

HIS HONOUR: O f t h e o rde r o f thousands of d o l l a r s .

MR MILLEFi:	Quite,
HIS HONOUR:	The c r e d i t o r Alexander Tanoff , who was owed t h e $473,

a p p a r e n t l y gave an indemnity i n t h e same terms a s t h e

o t h e r c r e d i t o r s , by which he could have been made l i a b l e

e q u a l l y wi th them, If it were done equa l ly , it would

have been conceivable f o r o n e - f i f t h o f t hose thousands

o f d o l l a r s he could have been r e spons ib l e , i n r e s p e c t of

t h e r i g h t t o r e c e i v e no t even $473 but t h e increased

d iv idend on t h e $473. He s tood t o recover a dividend of

something l i k e 33 c e n t s i n t h e $ anyhow, d i d he not?

MR MIUEFi: Yes your Honour,

(Continued on page 9 )

MR MILLER: That i s so.

HIS HONOUR: So the re fo re he was only standing t o ga in some two-

t h i r d s o r thereabouts of $473 and f o r t h a t he undertook

a l i a b i l i t y equal with the o the r people 's i n r e spec t of

c o s t s of thousands of d o l l a r s . I t leads me t o th ink t h a t

the indemnities having been given i n t h a t form while it

has o f t en been sa id t h a t e q u a l i t y i s equ i ty i t would not

be equi table t o give Alexander Tanoff the same advantage,

a s a r e s u l t of t h i s indemnity, as it would be t o

M r Stanley who w a s owed $28,129. What i s your r eac t ion

t o t h a t ?

MR MILLER: My i n i t i a l r eac t ion i s t o say t h a t t h i s w i l l probably

be a matter which would have t o be c l a r i f i e d i n the l i g h t

of the p r a c t i c e of the O f f i c i a l ~ e c e i v e r ' s o f f i c e .

I would have thought t h a t had it come t o the s t age where

i t was necessary t o enforce the indemnities it would have

been sought t o recover from the c r e d i t o r s , i n proport ion

t o t h e i r debts , what they stood t o gain.

HIS HONOUR:	The form of t h e indemnity would not have given you	1
l

much comfort i f you had the b r i e f t o t r y . Tale Dusan

Stanley, f o r example, who i s owed $28,129. Suppose you

had t o b r i e f indemnity, how would you have made the O f f i c i a l Receiver t o proceed on the

i t your case t h a t he

should have borne such proport ion of those cos t s as h i s I

proved debt bore t o the t o t a l proved debt of the t o t a l

indemnifying c r e d i t o r s ? Do not take me a s lay ing down

the l a w on the mat ter , it i s a simple quest ion. 1

MR MILLER: I would have thought t h a t i f it ha4 been necessary t o

enforce these matters one of the c r n ? i ~ o r s could have been

sued by the O f f i c i a l Receiver, presumably the l a r g e s t

c r e d i t o r , and the smaller c r e d i t o r s joined i n the a c t i o n ,

i n t u r n seeking indemnity from the p r i n c i p a l .

HIS HONOUR: Let us suppose f o r sake of argument t h a t t h e

O f f i c i a l Receiver had sought the whole of t h e c o s t s

because the indemnity given by each c r e d i t o r was 11 I w i l l pay you on demand a l l c o s t s , charges and expenses".

Suppose t h e O f f i c i a l Receiver, and I am not suggesting he

would have done it but j u s t t o i l l u s t r a t e the problem, had

proceeded s o l e l y agains t Dusan Stanley. You poin t out

c o r r e c t l y t h a t t h a t c r e d i t o r would have had the r i g h t t o

seek a contr ibl i t ion from the o the r c r ~ d i t r > r s who gave t h e

indemnity but would it have been a r i g h t t o rece ive an

equal share from each of them? I th ink WC have t o work

out the answer t o t h a t quest ion i n order t o he lp us t o

MR MILLER

decide what is fair to be done by way of dividing

the advantage between the members of the class.

MR MILLER: I take your on our's point and I will certainly - - -

HIS HONOUR: Take a moment or two. If you want to consider

this and discuss it with those instructing you and

with Mr Burzacott, do not hesitate to tell me.

MR MILLER: Would your Honour pardon me for one moment.

l	Perhaps at this stage if I could take a few minutes
I	to discuss the matter further?

HI$ HONOUR: Very well, you can take it. The question to

which I am ho;ing to obtain an answer is whether

on the documents before me the correct conclusion

to be drawn is that the liability that each

creditor undertook by reason of the giving of the

indemnities was to pay all of the costs - I will

just use the word "costs" to cover all the other

terms - with a right to receive an indemnity or a

contribi~tion, contribution more precisely, from the

other craditors who gave the indemnity but upon an

equal footing with them. If the answer to that

question should be "yes" then that would seem to be

.~

a material question to be considered in distributing the advantage between members of the " 1

class. It would seem to point in the direction,

say, taking the creditor Tanoff who stood to gain

~

something like two-thirds of $473 at the most,

that if he in fact bore equally in effect one-fifth

l

of a possible liability of thousands of dollars it

1

attention he displayed to the cause of the

creditors he should receive the whole of his $473.

might perhaps be appropriate to say that for the over-rewarded. It is a little like the labourers

in the vineyard in a sense. You have Mr Stanley

with his $28,129 having a great inducement whereas going to get anyhow, if he is to be treated as an economic man, then he has behaved with a high degree of public spirited interest in the correct aministration of bankrupt estates.

MR MILLER: Quite.

MR MILLER 4/12/78

HIS HONOUR: Can I leave it with you on that footing?

MR MILLER: Yes.

HIS HONOUR: Very well, feel free to leave the court if you

wish.

MR MILLER: It may take some minutes.

HIS HONOUR: Would you like to hwe until noon? Would that

help you?

MR MILLER: Yes, it would.

MR MILLER: On this matter of proportions between indemnifying

creditors it appears that the creditors probably, in

the event of it being necessary to recover against

them, would have been liable for one-fifth of the

amount each. I think that seems to be the situation.

that would have taken place but the amounts would

not have been payable ratably in proportion to the

amount of their debts between them. However, the

section refers only to the word "risk" and not to

the risk in relation to a potential share in the

benefits,

HIS HONOUR: I would be encouraged I think by the earlier

words "make such order as it thinks just m d

equitable". I think once you have "just and

equitableu you can look at all the relevant factors.

MR MILLER: Your Honour is certainly given a very wide

discretion in relation to this. I do not wish to

be seen to be arguing one point or the other.

HIS HONOUR: . T appreciate that, You and your client have

made your detachment abundantly clear.

MR MILLER: If I ,may refer to Chambers Dictionary, to the

definition of the word "risk" it states: "hazard,

danger, chance of loss or injury; degree of

probability of loss; perscrslal thing or factor

likely to cause loss or danger.

MR MILLER 4/12/78

HIS HONOUR: I do not think I need trouble you on that

because after all in the ordinary experience of

life if you are going to assess "risk" you assess

the favourable consequences and the unfavourable

consequences. Tf you make a mistake and somebody

is going to decapitate you that is a relevant factor

to know. In the case of our small creditor here,

while no-one is going to decapitate him it comes

pretty close to it in financial terms.

MR MILLER: That is so. When assessing whether to undertake

a particular risk or not one has to assess the

consequences but it could be, in the ordinary usage

of the language, that an old age pensioner who

chooses to put $10 on a horse is taking the s a m

chance as a millionaire but the consequences to

each are widely different.

HIS HONOuK: The widow who put in her mite got credit from a

very much higher authority than this court, did she

not?

F I R MILLER: She certainly did.

!IT? HOE\?OUP: \.!e (;-ill et Mr Tanoff stand by, I suppose you

would want an order in the first place, would you, that the applicant retain from the sum received by him from Mrs Niki Trakas the legal costs and

expenses incurred by him in connexion with certain proposed legal proceedin~s by him against the said Niki Trakas, such costs having been taxed, and to

be taxed because you will need to have the costs

of this application taxed in the course of the

administration of the estate, v ~ i l f you not?

MR MILLER: Yes.

(continued on page 14)

12/13 MR MILLER 4/12/78

HIS HONOUH: That would p r o t e c t t h e t r u s t e e i n r e s p e c t of h i s t o t a l

b i l l i n t h e previous t a x a t i o n , would it not?

MR MILLER: It would p r o t e c t him a g a i n s t everything previously .

I am T h i s a p p l i c a t i o n n o t s u r e about t h e a c t u a l wording of t h i s .

i s not - - -

HIS HONOUR: k'e w i l l make a s e p a r a t e clause: such c o a t s having been

t axed , f u l l s top. We w i l l make t h e f i rs t p a r t l ( a ) ;

t h e second p a r t , l ( b ) " H i s taxed c o s t s of and i n c i d e n t a l

t o t h i s a p p l i c a t iontr . That c l e a r s up t h i s a p p l i c a t i o n ,

does it not?

NR MILLER:	Yes.
HIS HONOUR:	What do you want t o s ay about t h e next? Now having

had t h e advantage of cons ider ing t h i s ma t t e r , if you

would t a k e me a s having a prima f a c i e view t h a t t h e

f o u r smal l c r e d i t o r s , t h a t i s , t h e c r e d i t o r s o t h e r

t h a n Dusan S t a n l e y , it seems t o me it would be j u s t

and e q u i t a b l e t h a t they should pa r t ake i n t h e advmtage ,

which w e w i l l come t c l a t e r , so t h a t t hey r e c e i v e

payment i n f u l l of t h e i r proved debts . That seems t o

be a f a i r arrzngemcnt t o me,

blR MILLER: A s your Honour p l ea ses ,

HIS HONOUH: They g e t r e l a t i v e l y small sums because t h e w d e b t s

a r e r e l s t i v e l y smsll, but t hey took a r e l a t i v e l y

enormous r i s k , If c o s t s i n t h i s c a se , wi th an appeal

inc luded , on both s i d e s had been orC.ered aga ins t t h e

t r u s t e e and they came, say , t o $5,000, M r Tanoff would

have been. l iable f o r $1,000 f o r a n e t t p o s s i b l e ga in of

something l i k e $360 i n rough approximation. That is my

prima f a c i e view about t hose f o u r smal l c r e d i t o r s . Do

you want t o put anything by wzy of a s s i s t a n c e t o me i n

r e l a t i o n t o t h a t ?

MR MILLI3: No your Honour, I do not be l i eve I have any f u r t h e r

submiss icns t o make on t h a t p o i c t ,

HIS HONOUR: We could then make perhaps an o r d e r i n t h e s e terms: 8- - \

t h e cou r t being s a t i s f i e d t h a t proper ty has been

recovered o r preserved by means of indemnit ies f o r

c o s t s o f l i t i g a t i o n given by t h e c r e d i t o r s s e t ou t i n

t h e scheiiule h e r e t o - and I i n t e r p o l z t e t h e r e , no t a s

a term of t h e o rde r but by way of guidance f o r whoever

i s drawing it f o r submission t o t h e r e g i s t r a r , t hose

would be t h e c r e d i t o r s named i n Exh ib i t BRB5. Then t h e

form of t h e o rde r would resume: t h e cou r t o r d e r s t h a t

t h e s a i d c r e d i t o r s be given an advantage over o t h e r

c r e d i t o r s i n cons ide ra t ion of t h e risk run by them i n

g i v i n g t h e indemnit ies t o t h e e x t e n t of - and t h a t i s

a blank sum, because t h a t involves t h e r e s u l t of ou r

c a l c u l a t i o n s o f t ak ing away t h e n e t t va lue of t h e o f f e r

from t h e n e t t value of	t h e suri now	recovered and t o be
pa id ,

MH MILLER:	Yes,
HIS HONOUR:	What progress have you made w i t h t h a t ca lcu la t ion?

l	MR MILLEXI:	It appears t h a t only an amount of $21 is able t o be
a l l o c a t e d t o be offered.

HIS HONOUR: I f t h a t i s t h e case I would not t rouble about i t ,

Mr M i l l e r ; it would cos t more t o put another paragraph

in t h e order than t o apportion t h a t . idhat a r e the

t o t a l cos t s then , put t ing t h i s app l i ca t ion t o one s ide?

MR MILLEH: The t o t a l c o s t s of t h e ac t ion were $775.10.

HIS HONOUR: That i s t o be subtracted from $15,000 t o ge t the n e t t

va lue , i s i t ?

MR MILLER: Yes.

1 HIS HONCUR: Have you done t h a t sum, o r w i l l we do it together now?

MR MILLER: Perhaps i f we do it together , your Ilonour. I make it

$14,224~90. 1 1

HIS HOIJOUR: We $14,224~90. Now w i l l add t h a t t o the paragr8zph - t o the extent of i

we need a clause t o provide f o r the

time of d i s t r i b u t i o n . Do you remember we discusse3. t h a t ?

MR MILLm: Yeso

HIS HONOUR: What do you have i n mind about t h a t ? l

MR MILLER: I remember discussing i t , b u t I am a f r z i d I d i 6 not t ake ,

t h e appropr i a t e i n s t r u c t ions. If your Honour would

excuse me f o r a moment?

HIS HONOUR: Certainly. Can I t e l l you a folm of words I have

been considering, so t h a t can comment on it i f you

wish: The court f u r t h e r orders t h a t t h e sa id cxleditors

s h a l l rece ive payment of t h e sa id advantage a t t h e time

o f any d i s t r i b u t i o n o r d i s t r i b u t i o n s by the t r u s t e e t o

t h e extent t o which the t r u s t e e s h a l l a t t h e time of any

such d i s t r i b u t i o n have received payment of t h e s a i d sum

of $15 ,0O and t h e i n t e r e s t payable thereon.

So he would be paygng out t h e advantage sum

a s he received it. Would t h a t cover t h e s i t u a t i o n ? ~

MH MILLER: Yes, t h a t would cover t h e s i t u a t i o n , Perhaps i f t h e r e

1'11

could be some provis ion f o r him t o do it, instead of

t h e monthly instalments - - -

HIS HONOUR: No, t h a t would allow t h e t r u s t e e t o exerc ise h i s own i

d i s c r e t i o n a s t r u s t e e a s t o when he made a d i s t r i b u t i o n ,

a	a d when he d id so he would be only expected t o
d i s t r i b u t e t h e advanta.ge out of t h e cash he had received
from t h e sum which is t h e source of the advantage, i

1lR MI~,LELL: Yes your Honour,

HIS HONOUH: I n p r s c t i c a l t e rms , it would, I imagine, produce t h e

r e s u l t when we come t o t h e striell c r e d i t o r s t h a t t hey

would g e t t h e whole of t h e i r admitted deb t s . They have

been admit ted?

MR MILLm: Yes,

HIS HONOUR: They would g e t tt:e vho1.e of t h e i r .admit ted d e b t s ,

s t r a i g h t a w a y , one would t h ink .

YIH MILLER: k ' e l l , a t t h e end of January.

HIS HOIJOUH: When I say s t r a igh t away , i n t h e f i r s t d i s t r i b u t i o n .

It ~ o u l d be t h e l a r g e c r e d i t o r , M r S t ~ . n l e y , who would

be r e c e i v i n g payment frcm t i r e t o t ime, t h e t ime of

t h e d i s t r i b u t i o n t o be i n t h e d i s c r e t i o n of t h e t r u s t e e .

I do no t knot$ what may happen in t h e e s t a t e and I would

n o t wsnt t o f e t t e r t h e d i s c r e t i o n of t h e t r u s t e e on

m a t t e r s such as t h e t iming of t h e d i s t r i b u t i o n . Then

we would needt a c lzuse: The s a i d c r e d i t o r s - t h a t i s ,

t h e s a i d indemnified c r e d i t o r s - s h a l l amongst

themselves sha re i n t h e advantage ordered by t h e c o u r t

h e r e i n a s fo l lows: - t hen we could perhaps say:

s o f a r a s t h e f o u r c r e d i t o r s , Atanas NawmovskL, Zivko

P e t r e v s k i , Alexender Tanoff . and R i s t o S t o j c e v s k i

a r e concerned, t o t h e ex t en t of t h e whole o f each

c r e d i t o r l s proved admitted deb t .

I n o t h e r words, what I am aiming t o do s o as

t o make t h e i n t e n t of my o rde r q u i t e c l e a r i s t o p rov ide

t h a t t hose f o u r c r e d i t o r s would r e c e i v e payment i n f u l l ;

perhaps i f I say: t o t h e f u l l e x t e n t ,

Then: a s t o t h e balance of t h e s a i d sum of

$15,000 and i n t e r e s t t hen remaining, t h a t balance t o 'K

be pa id t o Dusan S tan ley .

Would t h a t cover i t , Mr M i l l e r ; t h a t i s t h e

o b j e c t I have i n mind,

MR MILLE3: Yes, I t h i n k t h a t covers it p e r f e c t l y w e l l , your Honour.

HIS E-IOIJOUR: Do you want any o t h e r o rde r?

MR MILLIB: No, I t h i n k t h a t covers i t , you r~Honour .

\

HIS HONOUR: Th is has been an i n t e r e s t i n g case r e a l l y and I t h i n k it

,& i l l u s t r a t e s r a t h e r u s e f u l l y t h e k inds of c o n s i d e r a t i o n s

t h a t perhaps t h e cou r t should t a k e i n t o account i n making

an o r d e r of t h i s c h a r a c t e r . It might be u s e f u l f o r

f u t u r e purFoses if t h e r e were s e t o u t i n t h e body of t h e

suppor t i ng a f f i d a v i t t h e r e l e v m t f z c t s bear ing on t h e s e

k i n d s of ques t i ons , so t h a t we would not have t o go t o

t h e e x h i b i t s and make up t h e s t o r y from them, i

14Et MILLEX?.: Yes your Honour, I w i l l . convey that to.those i n s t r u c t i n g

me.	4
AT 12.20 P .M. THE MATTEH WAS ADJCURKEJ INDEZ'IIJITELY.