Lloyd, C.R.B. v Palmerston Hospitals P/L

[1994] FCA 258

ase ,9f

JUDGMENT No. .....,. , ,.., , ,

IN TIIE F E D E W COURT OF AUSTRALIA	)
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GENERAL DIVISION	l No. VN 2736 of 1993
BANKRUPTCY DISTRICT OF THE	1
STATE OF VICTORIA	1

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COLWYN ROBERT BARRY LLOYD

Judgment Debtor

EX PARTE:  PALMERSTON HOSPITALS

PTY. LTD.

(A.C.N. 005 862 297)

Judgment Creditor

JUDGE : Gray J.

PLACE :  Melbourne

DATE : 13th April 1994

REASONS FOR JUDGMENT

The judgment debtor has applied to set aside a bankruptcy notice, dated 1st November 1993. The bankruptcy notice is grounded on a judgment of the Family Court of Australia, whereby the judgment debtor was ordered to pay costs fixed at $7,300.00. The judgment debtor claims to have a counter-claim, set-off or cross demand against the judgment creditor. If he has, he could not have set up that counter- claim, set-off or cross demand in the proceeding in which the order for costs was obtained. He was not a party to that proceeding, but was a solicitor for a party and was ordered to pay costs personally because of the manner in which he had

conducted a portion of the proceeding.

I am not satisfied that the judgment debtor has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt. It is said that there is a debt of $i80,000 owed by the judgment creditor to a trust of which the judgment debtor is trustee. The judgment debtor says that, as trustee, he is entitled to be subrogated in some way to the right of the trust, and to be so subrogated in his personal capacity.

The authority on which he has relied for that proposition is In re Raybould. Raybould v. Turner [l9001 1 Ch. 199. The case simply does not stand for the proposition for which it was advanced. It is authority for the proposition that a creditor of a trustee, who was carrying on a business which was part of the trust estate, could stand in the shoes of the trustee for the purpose of satisfying his claim out of the trust estate. I know of no way in which it can be said that a trustee entitled to an indemnity from the trust estate is also entitled to be subrogated to the rights of the trust

directly, in a personal capacity, instead of by way of	against a third party and to take the fruits of that claim	indemnity from the trust estate.
The second way in which the judgment debtor seeks to set up a right against the judgment creditor is by a purported deed of assignment dated 12th April 1994, in which the judgment debtor, as trustee, purports to assign to the judgment debtor, in his personal capacity, and in consideration of the payment of $10, the debt of 180,000 alleged to be owing by the judgment creditor to the trust. It appears to me to be abundantly clear that that deed would be set aside instantly as an instance of the trustee profiting from the trust and therefore as in contravention of the rule known as the rule in Keech v. Sandford (1726) 2 Eq. Cas. Abr. 741. Even if it were the case that the judgment debtor had rights to be indemnified against the trust estate, it would not be the case that he was entitled simply to seize one of the trust assets by way of assignment of this kind, and thereby to give himself rights against the judgment creditor.
I leave aside other questions which have arisen, such as the question whether the debt of $180,000 is truly owed by the judgment creditor, or by one of its directors personally, and the question whether it would be open to the judgment debtor to rely upon a debt created by the assignment after the bankruptcy notice has been issued. It appears to me to be unnecessary to decide those issues.
It follows from what I have said that I must dismiss the application to set aside the bankruptcy notice and order the judgment debtor to pay the judgment creditor's costs of
the application. The orders that I make then are:

1.   the application to set aside the bankruptcy notice is dismissed.

2.    the judgment debtor pay the judgment creditor's costs of and incidental to the application, including reserved costs.

The judgment debtor appeared in person.

Solicitor for the judgment debtor:	Lloyd & Lloyd.
Counsel for the judgment creditor:	Mr. P. Searle
Solicitors for the judgment creditor:	Tiller & Co.
Date of Hearing:	13th April 1994
Date of Judgment:	13th April 1994

I certify that this and the preceding three (3) pages are a true copy of the reasons for judgment of his Honour Justice Gray.

Associate:  L a k e .

Date: 6th May 1994

JUDGES' CHAMBERS

FEDERAL COURT OF AUSRALIA
450 LITTLE BOURKE STREET

MELBOURNE. 3000

6 May 1994

Library Services
Principal Registry
Federal Court of Australia
Level 19
Law Courts Building
Queens Square

SYDNEY NSW 2000

Attention: Judgments Clerk
Dear Sir/Madam,

I now enclose the following Reasons for Judgment together with its disk to enable you to update the Computerised Legal Information Retrieval System:-

1.    C.R.B. Lloyd v. Palmerston Hospitals Pty. Ltd. No. VN 2736 of 1993.

I look forward to the return of the disk on completion.

Yours faithfully

CAROL DAVIES
Secretary to Gray J.