Macks v Ardalich - [1999] FCA 679

FEDERAL COURT OF AUSTRALIA
Macks as trustee of the Property of Balnaves v Ardalich [1998] FCA 679
BANKRUPTCY – removal of trustee by creditors under s 181 Bankruptcy Act 1966 (Cth) – whether seven days’ notice required of resolution.
BANKRUPTCY – application to set aside resolution of creditors’ meeting to remove trustee – scope of Court’s power under s 30 Bankruptcy Act 1966 (Cth) – test to be used whether to exercise power under s 30 – whether impropriety on the part of certain creditors.
Bankruptcy Act 1914 (UK) s 105
Bankruptcy Act 1966 (Cth) ss 30, 64(1), 64(2), 64B, 64G, 64T, 64W, 156A(4), 159(1), 160, 177(1), 178, 179 and 181
Myer Queenstown Garden Plaza Pty Ltd v Corporation of the City of Port Adelaide (1975) 11 SASR 504 considered
Re Burn; ex parte Dawson, McClellan and The Trustee [1932] 1 Ch 247 considered
Re Crawford (deceased); Ex parte The Trustee, The Official Receiver and Autoterms Ltd (1943) 13 ABC 201 applied
In the matter of PETER JOHN BALNAVES
PETER IVAN MACKS as trustee of the Property of PETER JOHN BALNAVES and
THE INSPECTOR GENERAL IN BANKRUPTCY v ALEXANDER ARDALICH, ALLAN THOMAS, JOHN PARSONS, JANE TERESA CUMMINGS as trustee for the BALNAVES FAMILY TRUST and JEAN MAVIS BALNAVES
S 7071 OF 1999
MANSFIELD J
ADELAIDE
21 MAY 1999

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

S 7071 OF 1999

In the matter of PETER JOHN BALNAVES

BETWEEN:

PETER IVAN MACKS
as trustee of the Property of
PETER JOHN BALNAVES A Bankrupt
First Applicant

THE INSPECTOR GENERAL IN BANKRUPTCY
Second Applicant

AND:

ALEXANDER ARDALICH
First Respondent

ALLAN THOMAS
Second Respondent

JOHN PARSONS
Third Respondent

JANE TERESA CUMMINGS
as trustee for the BALNAVES FAMILY TRUST
Fourth Respondent

JEAN MAVIS BALNAVES
Fifth Respondent

JUDGE:

MANSFIELD J

DATE OF ORDER:

21 MAY 1999

WHERE MADE:

ADELAIDE

THE COURT DECLARES THAT:
1.The resolution passed at the meeting of the creditors of the bankrupt Peter John Balnaves on 12 April 1999 to dismiss Peter Ivan Macks as trustee of the Property of Peter John Balnaves is invalid and of no effect.
2.Peter Ivan Macks is, and presently remains, trustee of the estate of the bankrupt Peter John Balnaves.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

S 7071 OF 1999

In the matter of PETER JOHN BALNAVES

BETWEEN:

PETER IVAN MACKS
As Trustee of the Property of
PETER JOHN BALNAVES A Bankrupt
First Applicant

THE INSPECTOR GENERAL IN BANKRUPTCY
Second Applicant

AND:

ALEXANDER ARDALICH
First Respondent

ALLAN THOMAS
Second Respondent

JOHN PARSONS
Third Respondent

JANE TERESA CUMMINGS
As Trustee for the BALNAVES FAMILY TRUST
Fourth Respondent

JEAN MAVIS BALNAVES
Fifth Respondent

JUDGE:

MANSFIELD J

DATE:

21 MAY 1999

PLACE:

ADELAIDE

REASONS FOR JUDGMENT

The first applicant Peter Ivan Macks (“the applicant”) was appointed trustee of the bankrupt estate of Peter John Balnaves (“the bankrupt”) on 30 October 1998.
On 24 March 1999, pursuant to…

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 Macks v Ardalich

Details

AGLC: Macks v Ardalich [1999] FCA 679
Case: [1999] FCA 679
Decision Date: 21 MAY 1999

CaseChat Overview and Summary

In the case of Macks v Ardalich, the applicant, Peter Ivan Macks, sought to challenge the validity of a resolution passed by creditors to remove him as trustee of the bankrupt estate of Peter John Balnaves. The respondents, creditors of the bankrupt, had moved to dismiss Macks as trustee at a meeting without providing the requisite seven days’ notice, as required by s 181 of the Bankruptcy Act 1966 (Cth). The central legal issues were whether the creditors' resolution was invalid due to the lack of notice and if the court had the discretion under s 30 of the Act to set aside the resolution and reinstate Macks as trustee.

The court found that s 181 required seven days' notice of the resolution to remove a trustee, not just the meeting itself. The resolution was therefore invalid for lack of proper notice. The court also examined whether, even if the resolution was valid, it should set it aside under s 30. The court concluded that the evidence did not demonstrate the requisite "strongest suspicion" of improper motives on the part of the respondents. Furthermore, the majority of creditors supported Macks remaining as trustee, and the court should not intervene in the creditors' decisions.

The court declared the resolution invalid and reinstated Macks as trustee of the bankrupt’s estate. The decision underscores the importance of procedural formalities in creditors' meetings and the limited circumstances under which the court will intervene in the creditors' decisions regarding the removal of a trustee.

Orders