Moore v Macks

Case [2007] FCA 10

FEDERAL COURT OF AUSTRALIA

Moore v Macks [2007] FCA 10

BANKRUPTCY – application by bankrupt for orders against trustee in bankruptcy under s 179 of the Bankruptcy Act 1966 (Cth) – where bankrupt was unsuccessful respondent in separate proceedings in Federal Court – where bankrupt appealed prior to bankruptcy against substantive orders and costs order made in separate Federal Court proceedings – where appeals deemed to be abandoned by trustee in bankruptcy by virtue of s 60(3) of Bankruptcy Act 1966 (Cth) – where trustee in bankruptcy has decided not in interests of bankrupt estate to prosecute the appeals – whether trustee in bankruptcy may apply under s 33(1) of the Bankruptcy Act 1966 (Cth) for extension of time within which to elect to prosecute appeals – where trustee in bankruptcy has decided not in interests of bankrupt estate to prosecute the appeals – whether trustee’s decision a basis for orders under s 178 or s 179 of Bankruptcy Act 1966 (Cth) – relevant principles.

Held – no basis in fact to impugn trustee’s decision that not in interests of bankrupt estate to prosecute the appeals under s 178 or s 179 of Bankrupcy Act 1966 (Cth) – application dismissed.  

Bankruptcy Act 1966 (Cth) ss 33, 60, 178, 179
Federal Magistrates Act 1999 (Cth) s 39

Abeyratne v Trkulja (1998) 90 FCR 253 cited
Cummings v Claremont Petroleum NL (1996) 185 CLR 124 applied
Faulkner, Re; Ex parte Official Receiver (1981) 52 FLR 109 cited
Gault, Re, Gault v Law (1981) 57 FLR 165 considered
Gray v Clout (1990) 27 FCR 141 cited
Macchia v Nilant (2001) 110 FCR 101 considered
Moore v Macks [2006] FMCA 594 discussed
Moore v Wilson [2006] FCA 79 referred to
Moore v Wilson [2005] FMCA 870 referred to
Tyndall, Re; Ex parte Official Receiver (1977) 17 ALR 182 considered
Wheeler, Re; Ex parte Wheeler v Halse (1994) 54 FCR 166 considered
Wilson v Commonwealth of Australia [1999] FCA 219 considered
Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 912 discussed
Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 1035 discussed

DAVID GERALD MOORE v PETER IVAN MACKS
SAD 120 OF 2006

BESANKO J
15 JANUARY 2007
ADELAIDE   


IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY

SAD 120 OF 2006

BETWEEN:

DAVID GERALD MOORE
Applicant

AND:

PETER IVAN MACKS
Respondent

JUDGE:

BESANKO J

DATE OF ORDER:

15 JANUARY 2007

WHERE MADE:

ADELAIDE

THE COURT ORDERS THAT:

1.The proceedings transferred to this Court by order of a Federal Magistrate made on 13 June 2006 be dismissed.

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

SAD 120 OF 2006

BETWEEN:

DAVID GERALD MOORE
Applicant

AND:

PETER IVAN MACKS
Respondent

JUDGE:

BESANKO J

DATE:

15 JANUARY 2007

PLACE:

ADELAIDE

REASONS FOR JUDGMENT

  1. This is an application by a bankrupt for orders against his trustee in bankruptcy. The application is brought under s…

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AGLC
Moore v Macks [2007] FCA 10
Case
[2007] FCA 10
Decision Date

CaseChat Overview and Summary

In Moore v Macks, the court was tasked with determining whether there were sufficient grounds to order an inquiry into the conduct of a trustee in bankruptcy under section 179 of the Bankruptcy Act 1966 (Cth). The applicant, Moore, sought the inquiry, alleging improper administration of his bankruptcy estate by the trustee, Macks. The court was required to weigh the discretionary factors relevant to determining whether an inquiry was warranted, including the necessity of substantial grounds for believing that the trustee erred in their administration, and the principle that the court should not unduly interfere with the day-to-day administration of a bankrupt's estate.

The court assessed the evidence presented by both parties, focusing on the relevance and credibility of the affidavits and witness testimonies. It was noted that the applicant, who represented himself, made several serious allegations without sufficient evidentiary basis. The court found the trustee's evidence to be honest and straightforward, accepting it as credible. The application for discovery and production of certain documents was dismissed due to lack of relevance or as a fishing expedition made at a late stage in the proceedings. Given these findings, the court concluded that there were no substantial grounds for believing that the trustee had erred in their administration.

Consequently, the court decided not to order an inquiry into the conduct of the trustee in bankruptcy. The proceedings initiated by Moore were dismissed, and no inquiry was deemed necessary. The court emphasised that section 179 is not a means for seeking damages beyond compensating any loss to the bankrupt's estate due to improper administration. The court's decision underscored the discretionary nature of the inquiry process and the high threshold required for such an inquiry to be ordered.

Orders

Orders of the court

1. The proceedings transferred to this Court by order of a Federal Magistrate made on 13 June 2006 be dismissed.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

BESANKO J
Section 179 requires the court to engage in a process which may involve two stages. First, the court must consider whether there is a basis to inquire into the conduct of a trustee in bankruptcy. Secondly, if an inquiry is undertaken, the court must consider what, if any, order should be made as a result of the inquiry. I note the following salient points with respect to the operation of the section in the case of the first stage. It is not necessary for me to consider the second stage because I do not think that there is a basis to inquire into the conduct of the trustee in bankruptcy.1.The question of whether to order an inquiry is in the broad discretion of the court, and the court should be reluctant to do so unless there are “substantial grounds for believing that the trustee erred in his administration” (Re Gault, Gault v Law (1981) 57 FLR 165 (‘Re Gault’) at 173 per Ellicott J, cited in Macchia at 120 per French J). This requirement has also been put in terms of ‘sufficient grounds’ (Re Gault at 173 per Ellicott J), and ‘a proper cause to believe that a trustee may have failed to act in relation to a bankruptcy in the manner required by the Act or the general law’ (Wilson v Commonwealth of Australia [1999] FCA 219 at [44] per Branson J). The onus is on the applicant to establish the grounds or case for an inquiry.2.As with s 178, the exercise of the court’s discretion to order an inquiry is subject to the principle that the court will not unduly interfere with the day-to-day administration of a bankrupt’s estate by a trustee in bankruptcy: Re Tyndall at 120 per French J.3.As with s 178, s 179 is not a vehicle for a bankrupt or other person to seek damages which go beyond the making good of any loss to the bankrupt’s estate caused by improper administration by the trustee in bankruptcy: Re Tyndall at 121 per French J.The trustee’s decision in relation to the appeals The bankrupt’s application proceeded by way of affidavit evidence from him and from the trustee. I received the bankrupt’s affidavits subject to arguments as to relevance. A good deal of his affidavit evidence is irrelevant. The bankrupt was not cross-examined on his affidavits by counsel for the trustee. The trustee was cross-examined at some length by the bankrupt, who, as I said, represented himself. A number of his questions were of questionable relevance. The trustee was an honest and straightforward witness and I accept his evidence. The bankrupt’s submissions were at times difficult to follow and he seemed quite prepared to make serious allegations about the conduct of other persons when there was no basis in the evidence for such allegations. Late in the cross-examination of the trustee, the bankrupt made an oral application for an order that the trustee make discovery and production of three classes of documents. The first class of documents was all minutes of meetings of creditors of the bankrupt estate and all minutes of meetings of the committee of inspection of the bankrupt estate. I refused to make an order in relation to that class of documents. I accept the trustee’s sworn evidence that there has been only one meeting of creditors and minutes of that meeting have been discovered and produced. In fact, the minutes are an exhibit before me. I accept the trustee’s sworn evidence that there have been no meetings of the committee of inspection. The second class of documents was all documents relating to a transaction whereby a caveat lodged by the bankrupt to secure a claim by him for consulting fees was withdrawn and in lieu thereof a bank guarantee was given. This transaction is discussed in more detail below. I refused to make an order in relation to that class of documents because the relevance of the documents was not established. The third class of documents was all documents relating to the financial position of the bankrupt estate. On the material before me, that request, which was made in the course of the respondent’s case, was no more than a fishing expedition by the bankrupt. Furthermore, the application was made at a very late stage in the hearing of the application. For those reasons, I refused to make an order in relation to that class of documents.

Ratio Decidendi

Legal Principle Established

Established by: BESANKO J

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