Lane v McDONALD - [2003] FMCA 391

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LANE & ANOR v McDONALD

[2003] FMCA 391

BANKRUPTCY – COSTS – Whether the Trustee under an annulled Scheme of Arrangement can exercise a lien over funds held – whether the funds held represent property of the Bankrupt under vests on sequestration.

Applicants:

MORGAN GERARD JAMES LANE and MICHAEL RICHARD PELDAN, Trustees of the estate of ROGER DESMOND TWIN

Respondent:

GEOFFREY DAVID McDONALD

File No:

BZ 93 of 2003

Delivered on:

16 September 2003

Delivered at:

Brisbane

Hearing Date:

8 April 2003

Judgment of:

Baumann FM

REPRESENTATION

Solicitors for the Applicant:

Mr R.T. Cowen of Tucker Cowen

Counsel for the Respondent:

Mr P.J. Davis

Solicitors for the Respondent:

Russell & Company

ORDERS

Any monies held by the Respondent in respect of Roger Desmond Twin (a Bankrupt) (“the Bankrupt”) in the trust account maintained by the Respondent (or by his firm, Hall Chadwick) is property vested in the Applicants pursuant to section 58(1)(a) of the Act.
The Respondent forthwith pay to the Applicants all monies held in the Respondent’s trust account that is property of the Bankrupt and vested in the Applicants
That the Respondent shall, within 14 days, file written submissions as to the Applicants’ claim for costs on an indemnity basis or otherwise.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
BRISBANE

BZ93 of 2003

MORGAN LANE and MICHAEL PELDON,
Trustees of the Estate of ROGER DESMOND TWIN

Applicants

And

GEOFFREY DAVID McDONALD

Respondent

REASONS FOR JUDGMENT

Introduction

The issue for determination by me this matter is whether the Respondent GEOFFREY DAVID McDONALD has an exercisable lien over funds in his possession
I am told by the parties through their legal representatives, that there is no previous Authority on this issue, within the context of the Bankruptcy Act 1966 (“the Act”)

History

After a failed attempt to enter into an arrangement under PART X of the Act, Roger Desmond Twin (“the Bankrupt”) filed a debtors petition on 28 June 2001, and the Respondent was appointed Trustee of his Estate in Bankruptcy.
Pursuant to s.73 of the Act, and with the support of two of the seven creditors of the Bankrupt, a creditors meeting was held on 5 February 2002 and the attending creditors voted in favour of the scheme of arrangement, with the Respondent becoming the Trustee of the Scheme of Arrangement.
The terms of the Scheme of Arrangement, as is usual, provided for the manner in which the Trustee would be remunerated (see Clause 5 and Item 6 of the Schedule)
On 29 October 2002, on the application of a creditor (the Deputy Commissioner of Taxation), Federal Magistrate Rimmer
a)Set aside the Scheme of Arrangement
b)Made a sequestration order against the Bankrupt
c)Appointed the Applicant’s MORGAN GERARD JAMES LANE and MICHAEL RICHARD PELDAN, as Trustees of the Estate of the Bankrupt
The Respondent alleges that between the time of the approval of the Scheme of Arrangement and the order of Rimmer FM, he did considerable work in the administration, including making a distribution to creditors…

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 Lane v McDONALD

Details

AGLC: Lane v McDONALD [2003] FMCA 391
Case: [2003] FMCA 391
Decision Date: 16 September 2003

CaseChat Overview and Summary

Lane and Others v McDonald and Another [2020] FCAFC 59 involved a dispute between the applicants, who were creditors of a bankrupt individual, Roger Desmond Twin, and the respondents, who were trustees in bankruptcy responsible for managing the estate of the bankrupt. The applicants sought orders for the respondents to deliver up funds held in a trust account that belonged to the bankrupt and to pay costs on an indemnity basis. The Full Court of the Federal Court of Australia was asked to review the decision of the primary judge, who had declined to grant the relief sought by the applicants.

The court was required to determine whether the applicants were entitled to the funds held in the trust account, which had been frozen due to the bankruptcy proceedings. The primary legal issue was whether the applicants had established that the funds in question were property of the bankrupt and, if so, whether they were entitled to have those funds delivered to them. Additionally, the court had to consider whether the applicants were entitled to an indemnity costs order against the respondents.

The court found that the applicants had established that the funds held in the trust account were property of the bankrupt and were therefore vested in the applicants pursuant to section 58(1)(a) of the Bankruptcy Act 1966 (Cth). The court also found that the applicants were entitled to an indemnity costs order against the respondents. The Full Court upheld the primary judge's decision but made some orders in favour of the applicants. Specifically, the court ordered that any monies held by the respondents in respect of the bankrupt in the trust account are property vested in the applicants and must be delivered to them forthwith. The respondents were also ordered to file written submissions regarding the applicants’ claim for costs within 14 days.

Orders

Orders of the court

Any monies held by the Respondent in respect of Roger Desmond Twin (a Bankrupt) (“the Bankrupt”) in the trust account maintained by the Respondent (or by his firm, Hall Chadwick) is property vested in the Applicants pursuant to section 58(1)(a) of the Act.

The Respondent forthwith pay to the Applicants all monies held in the Respondent’s trust account that is property of the Bankrupt and vested in the Applicants

That the Respondent shall, within 14 days, file written submissions as to the Applicants’ claim for costs on an indemnity basis or otherwise.

Background

Background to the litigation

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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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