Mokhtar v Piscopo

Ahmad Shaib Mokhtar, the bankrupt, filed an application under section 90-15 of the Insolvency Practice Schedule (Bankruptcy), Schedule 2 of the Bankruptcy Act 1966 (Cth) to remove his trustee, Piscopo. The dispute centred on whether the relationship between Mokhtar and Piscopo had irretrievably broken down, whether Piscopo had lost the objectivity required of a trustee, and whether his removal was in the best interests of the bankrupt estate. The court needed to decide if Mokhtar's failure to cooperate and Piscopo's filing of 17 objection notices within a 10-month period indicated an improper purpose or if Piscopo's lack of objectivity had exacerbated the breakdown. Additionally, the court had to determine if the trustee's actions warranted his removal.

The court found that Mokhtar had failed to cooperate in multiple respects, which, combined with Piscopo's lack of objectivity, led to the irretrievable breakdown of their relationship. The trustee's filing of 17 objection notices within a 10-month period raised concerns, but the court did not find evidence that the notices were filed for an improper purpose. However, Piscopo's lack of objectivity exacerbated the breakdown, and the court concluded that replacing the trustee was in the best interests of the bankrupt estate. The court emphasised that the outcome was not a vindication of Mokhtar's conduct.

The court considered the quality of evidence, noting the undesirability of direct speech in affidavits despite the passage of time and the witness not recalling the precise words used in the conversations. The court also considered whether there was a failure to comply with the rule in Browne v Dunn regarding the failure to cross-examine Piscopo on certain topics. Ultimately, the court concluded that the evidence was sufficient to satisfy the balance of probabilities standard, given the seriousness of the allegations against Mokhtar.

In its decision, the court ordered Piscopo to cease being the trustee of Mokhtar's bankrupt estate. The parties were given the opportunity to be heard separately on costs, with a deadline to indicate their wishes by 3 June 2024. If the parties could not agree on costs, they were to agree on a timetable for short submissions and evidence on costs, with the final determination subject to the court's order. The court also granted liberty to apply for further orders.