Re: SOPHIA KAROUNOS; ELIAS KAROUNOS; KATINA KAROUNOS and BARBARA JOY HUNT And: OFFICIAL TRUSTEE No. G32 of 1988 Bankruptcy
COURT
IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION Forster(1), Woodward(1), and Spender(1) JJ.
CATCHWORDS
Bankruptcy - discovery of bankrupt's property - Summons to third party - Whether statement of grounds adequate - Whether Registrar or Court can have regard to information acquired in earlier proceedings in the same bankruptcy - Whether summons too wide or otherwise oppressive - Whether summons obtained for ulterior motive of assisting pending litigation - Principles governing issue of such summonses to third parties.
Counsel for the appellants: Mr B. Martin Q.C. with Mr D. Lovell
Solicitors for the appellants: Andersons
Counsel for the respondents: Mr R.D. Lawson
Solicitors for the respondents: Kelly & Co.
ORDER
The appeal be dismissed.
The appellants pay the respondent's costs of the application for leave to appeal and of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1
This is an appeal, by leave, from a decision of Fisher J refusing to set aside four summonses directed to the appellants and issued by the Registrar in Bankruptcy under s.81 of the Bankruptcy Act 1966 ('the Act'). That section, so far as is relevant for present purposes, provides -
"(1)The Court or the Registrar may .... on the application of the Official Receiver or the trustee, at any time summon -
(a) ....
(b) a person who ... is supposed to be able to give information concerning the bankrupt or his trade dealings, property or affairs, to attend ... before the Court or the Registrar ... to give evidence concerning, and produce any books in his custody or power relating to, the bankrupt or his trade dealings, property or affairs."
Bankruptcy Rule 129(1) provides that such an application shall set out the grounds on which the application is made but, in the case of a bankrupt's trustee's application, does not require an affidavit of supporting facts.
It is not disputed that the bankrupt in this case was a landbroker and finance broker, who received large sums of money from investors for investment by him on secured loans for relatively short terms. It was intended that these loans would be secured by mortgages over property. However in many cases no such mortgage was obtained and funds received were paid arbitrarily into various accounts of the bankrupt - often to return such accounts to the credit balance which they should have been showing. This state of affairs had obtained for a number of years before bankruptcy.
Large sums of money were placed by the bankrupt with Krakat Pty Ltd ("Krakat") and the appellants were all, at one time or another, officers of that company.
The summonses were all in the same form, though directed to different people and returnable on different dates, and the following…
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 Karounos v Official Trustee
Sign in free to access the full text
Details
AGLC
Karounos v Official Trustee [1988] FCA 284
Case
[1988] FCA 284
Decision Date
CaseChat Overview and Summary
The case of Karounos v Official Trustee involved the Official Trustee as the respondent, seeking discovery of the bankrupt's property, and Karounos and others as the appellants. The matter was heard in the Federal Court of Australia. The crux of the dispute revolved around the adequacy of a statement of grounds for a summons issued to a third party, and the circumstances under which the court could consider information from previous proceedings in the same bankruptcy case. Additionally, the court needed to determine whether the summons was overly broad, oppressive, or issued with ulterior motives, such as aiding ongoing litigation.
The legal issues before the court included the assessment of whether the Registrar or the Court could validly take into account information obtained in earlier proceedings when deciding on the issuance of a summons to a third party. Another significant issue was whether the summons in question was too wide or oppressive, and if it was issued with a motive to assist pending litigation. The principles governing the issuance of such summonses to third parties were also under scrutiny.
In resolving these issues, the court found that the summons was neither too wide nor oppressive, and there was no evidence of ulterior motives. The court concluded that the Registrar and the Court were entitled to consider information from previous proceedings in the same bankruptcy case when deciding on the issuance of a summons to a third party. The appeal was dismissed, and the appellants were ordered to pay the respondent's costs of the application for leave to appeal and of the appeal. The court's reasoning was grounded in established principles concerning the discovery of bankrupt's property and the appropriate scope and motives for summonses to third parties.
Orders
Orders of the court
The appeal be dismissed.
The appellants pay the respondent's costs of the application for leave to appeal and of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.