Morris Finance Ltd v Hodges
[2016] FCCA 1402
•9 June 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MORRIS FINANCE LTD v HODGES & ANOR | [2016] FCCA 1402 |
| Catchwords: BANKRUPTCY – Bankrupt’s right to be heard – where lessor under a chattel lease seeks declaratory relief – where chattel lease creates no proprietary interest in goods leased – where no property has passed to bankrupt’s trustee in bankruptcy – bankrupt entitled to be heard. |
| Legislation: Bankruptcy Act 1966, ss.58(3), 116(1), 178, 301 Federal Circuit Court Act 1999 (Cth), s.44 Federal Circuit Court Rules 2001, r.11.02(1) |
| Cases cited: Cummings v Claremont Petroleum NL (1996) 185 CLR 124 Beckham v Drake (1849) 2 HLC 579; 9 ER 1213 |
| Applicant: | MORRIS FINANCE LTD |
| First Respondent: | DARRELL RAYMOND HODGES |
| Second Respondent: | NICK JIM COMBIS AS TRUSTEE OF THE BANKRUPT ESTATE OF DARRELL RAYMOND HODGES |
| File Number: | MLG 225 of 2016 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 27 April 2016 |
| Date of Last Submission: | 27 April 2016 |
| Delivered at: | Brisbane |
| Delivered on: | 9 June 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr Webster |
| Solicitors for the Applicant: | Smith Leonard Fahey Lawyers |
| Counsel for the First Respondent: | Mr West |
| Solicitors for the First Respondent: | Dale & Fallu |
| No appearance for the second respondent |
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
MLG 225 of 2016
| MORRIS FINANCE LTD |
Applicant
And
| DARRELL RAYMOND HODGES |
First Respondent
| NICK JIM COMBIS AS TRUSTEE OF THE BANKRUPT ESTATE OF DARRELL RAYMOND HODGES |
Second Respondent
REASONS FOR JUDGMENT
This is an interlocutory application, filed on 3 March, 2016 whereby the first respondent seeks an order pursuant to s.178 of the Bankruptcy Act 1966 that he be permitted, in his own name, to respond and do all things necessary and proper for him to effectually respond to the primary application between Morris Finance Ltd, Mr Hodges as first respondent and Nick Jim Combis, Mr Hodges’ trustee in bankruptcy, the second respondent.
These proceedings have their genesis in a lease agreement entered into between Morris Finance and Mr Hodges in respect of a prime mover motor vehicle. Mr Morris intended to use, and did use for a time, the prime mover in his occupation as a road transport operator.
There are some disputes about the circumstances in which the lease agreement was made on 25 September, 2015. In particular, Mr Hodges alleges that he told the agent of Morris Finance that he was likely to become bankrupt in the near future, but nonetheless, Morris Finance entered in to the lease agreement with him.
Mr Hodges became bankrupt on his own petition on 9 October, 2015. On 14 October, 2015 Morris Finance lodged a caveat over certain land owned by Mr Hodges and his wife as tenants-in-common, limited to Mr Hodges’ share.
On 15 October, 2015 Morris Finance repossessed the prime mover, the subject of the lease. Soon thereafter, on 28 October, 2015 Mr Hodges complained about the repossession to the Financial Ombudsman Service. The complaint has not yet been resolved but, on 20 January, 2016 Morris Finance notified the Financial Ombudsman Service that it wished the issues raised in Mr Hodges’ complaint to be dealt with as a “test case” because of the “important points of law” that were involved and specifically, the effect of s.301 of the Bankruptcy Act upon the goods lease and whether s.122 of the Land Title Act 1994 (Qld) entitled the applicant to lodge the caveat that it did over Mr Hodges’ interest in his jointly owned real estate. When it gave that notice to the Financial Ombudsman Service Morris Finance undertook to pay Mr Hodges’ costs of and incidental to the court proceedings on the “test case”.
Morris Finance commenced these proceedings on 5 February, 2016. Initially the proceedings were against Mr Morris only. His trustee in bankruptcy was not a party to the proceedings. In them, Morris Finance seeks leave to commence, nunc pro tunc certain proceedings in the District Court of Queensland to establish the interest that Morris Finance claimed in Mr Hodges’ real estate and which was notified in the caveat that it lodged over the title to that land. Morris Finance also seeks declarations that:
2. …pursuant to a Commercial Lease Agreement between the Applicant and the Respondent dated 24 September, 2015 Morris Finance has the right to repossess a used 2010 Kenworth T908 6x4 prime mover registration number 967 RGI (“Prime Mover”), the subject of the Lease Agreement, when the Respondent became bankrupt on 9 October, 2015;
3. … an event of default occurred under the Lease Agreement when the Respondent became bankrupt on 9 October, 2015;
4. … the Applicant is not prohibited by section 301 of the Bankruptcy Act 1966 (Cth) from exercising the right to repossess the Prime Mover when the Respondent became bankrupt on 9 October, 2015.
Despite joining Mr Morris to the proceedings, after they were commenced it quickly became apparent that Morris Finance did not consider that Mr Hodges had any right to appear at, or to be heard in respect of, the claims made by Morris Finance.
The primary application came before a judge of this court in Melbourne on 17 February, 2016 and then again on 18 February, 2016. On the latter occasion, leave to proceed with the District Court proceedings was granted and Mr Hodges’ trustee in bankruptcy was joined to the proceedings. The proceedings were then transferred to the Brisbane Registry of this court for further consideration of the balance of the relief sought by Morris Finance.
On 3 March, 2016 Mr Hodges filed the interlocutory application to which these reasons relate. He argues that he ought to be heard in the primary proceedings. Morris Finance opposes the application on the basis that:
a)Mr Hodges’ application pursuant to s.178 of the Bankruptcy Act is hopelessly flawed and bound to fail, leaving aside any questions the right that he might have to appear and be heard in the proceedings; and, perhaps more importantly
b)Mr Hodges has no entitlement to be heard in the primary proceedings because he has no interest in the property which is the subject of the declaratory relief in the application.
The second respondent has not participated in this application.
Right to be heard
Mr Hodges is a party to the proceedings because he has been joined as a party by the applicant. Morris Finance was able to join Mr Hodges to the proceedings by naming him as a respondent: see rule 11.02(1) of the Federal Circuit Court Rules 2001.
Ordinarily, a party to the proceedings has a right to appear. They may exercise that right by having another person who is a qualified legal practitioner (or with the leave of the Court a person who is not a qualified legal practitioner) appear on their behalf: s.44 of the Federal Circuit Court Act 1999 (Cth).
At face value, it would appear odd on the one hand to join Mr Hodges to the proceedings and on the other suggest that he has no right to be heard in them. However, the joinder of Mr Hodges to the proceedings was explained on the basis that because Morris Finance was seeking leave to proceed against property or in respect of property of which Mr Hodges was still the legal owner (albeit as bare trustee for his trustee in bankruptcy) it was appropriate to join him to the proceedings. It was also argued that in respect of discreet aspects of relief sought in proceedings, a respondent or defendant to those proceedings might be heard in respect of some of those claims for relief and not others because some will concern them and some will not. Those claims which will concern them are those in which they have an interest. The interest needs to be a legal interest. Any person who has an interest which will be affected by an order to be made by a Court has an entitlement to be heard. The submission continued that as Mr Hodges had an interest in the issue concerning the caveat lodged over his land, he might be affected by an order made in those proceedings and so was entitled to be heard in respect of them.
The gravamen of Morris Finance’s argument is that Mr Hodges has no interest in the lease agreement between he and Morris Finance that is separate to the interest that his trustee in bankruptcy has in it. That is because any property that might be represented by his interest in that lease has vested in his trustee in bankruptcy by reason of s.58(1) of the Bankruptcy Act.
Section 58(1)(a) of the Bankruptcy Act provides that where a debtor becomes a bankrupt the property of the bankrupt vests forthwith in the bankrupt’s trustee and s.58(1)(b) provides that any after-acquired property of the bankrupt vests, as soon as it is acquired, in the bankrupt’s trustee.
Property is defined in s.5 of the Bankruptcy Act to mean:
... real or personal property of every description, ... and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.
And the phrase the property of the bankrupt which is referred to in s.58(1) is relevantly defined in s.5 of the Bankruptcy Act to mean:
the property divisible among the bankrupt’s creditors; and
any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt; ...
Section 116 deals with property divisible among the bankrupt’s creditors. It relevantly provides:
(1) Subject to this Act:
(a) all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him or her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge; and
(b) the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge;
...
is property divisible amongst the creditors of the bankrupt.
Section 116(2) provides limitations on what otherwise would be property divisible among the creditors of the bankrupt. Section 116(2)(g) is relevant and it provides:
(2) Subsection (1) does not extend to the following property:
...
(g) any right of the bankrupt to recover damages or compensation:
(i) for personal injury or wrong done to the bankrupt, the spouse of the bankrupt or a member of the family of the bankrupt; or
(ii) in respect of the death of the spouse of the bankrupt or a member of the family of the bankrupt;
and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such an injury or wrong or the death of such a person.
Consideration
The interest of a lessee in a chattel lease is not, generally speaking, a proprietary interest. A lease of an interest in land should be distinguished from the lease of a chattel. The lessee of a chattel has no proprietary interest in the subject matter of the lease: Chelsea Investments Pty Ltd v FCT (1966) 115 CLR 1. In that case, Windeyer J said at 7:
The rights of a lessee under a lease of machinery are not I would think ordinarily an assignable proprietary interest in the machinery. A lease of machinery is not a demise. It is a hiring. The proprietary interest remains in the owner. The hirer gains a legal right of possession and during the period of the hiring the true owner is debarred from resuming possession against the hirer’s will. The word “reversion” seems to me inapt to describe the ownership of chattels let on hire.
Morris Finance’s contention that Mr Hodges as no proprietary interest in the property the subject of the declaratory relief is correct in the sense that Mr Hodges had, and has, no proprietary interest in the prime mover. He did, and subject to Morris Finances’ right to retake possession properly enlivened perhaps continues to have, a legal right to possession of the prime mover. Because Mr Hodges had no proprietary right in the prime mover, there was no property to vest in his trustee in bankruptcy upon him becoming bankrupt.
Further, because the right to be enforced by the lessee is a right to possession and not a proprietary interest in the leased chattel, it cannot be said that the right to possession, enforceable by action, is a right of action that would affect the quantum of the lessee’s estate in bankruptcy: Beckham v Drake (1849) 2 HLC 579 at 627 [9 ER 1213 at 1230]; Rose v Buckell [1901] 2 KB 449 at 454; Davies v English, Scottish & Australian Bank Ltd (1934) 7 ABC 210 al 214; Coffey v Bennett [1961] VR 264 at 266. It is a right personal to the bankrupt.
Actions which are personal to the bankrupt and which will lead to no impact upon the estate to be divided amongst his or her creditors will not vest in the bankrupt’s trustee. For example, the right to apply to a court or industrial tribunal for reinstatement is one such right: Perfection Dairies Pty Ltd v Finn (2006) 151 IR 197; Brown v Premier Pet T/As Bay Fish [2012] FMCA 830. So too, is the right to seek review of an administrative decision under s.44(1) of the Administrative Appeals Tribunal Act 1977 (Cth) relating to a decision of the Civil Aviation Authority varying the appellant’s commercial pilot licences following a finding that the appellant was not a “fit and proper person” to hold the licence: Griffiths v Civil Aviation Authority (1995) 137 ALR 521. In that case, Cooper J explained, at 540:
The definition of “property” in s 5 of the Act is expressed in the broadest of terms. However, the definition is to be construed in such a way as would promote the purpose or object underlying the Act in preference to a construction that would not promote that purpose or object: Acts Interpretation Act 1901 (Cth) s 15AA. Additionally, the Act is to be interpreted against the background of what has been described as the “common law of bankruptcy”: Faulkner v Bluett (1981) 52 FLR 115 at 118.
The statutory object of the Act is to vest the property of a bankrupt in a trustee in order that the same may be divisible among the bankrupt’s creditors. The trustee is to get in the property and reduce it to a money sum and to disown, for example, the property which would be a drain on the estate. The statutory object is also to protect the person of the bankrupt and his property insofar as his creditors are concerned as at the date of the making of the sequestration order: see s 58(3) and (4) and s 60(1)(a) and (b) of the Act generally Storey v Lane (1981) 147 CLR 549 at 557.
The Act is not concerned to protect the person of the bankrupt from legal proceedings brought by persons other than creditors or by persons seeking to enforce payment of an obligation imposed by a statute or in the exercise of a power authorised by statute: see, for example, the imposition of fines and statutory charges together with imprisonment for non-payment in Commissioner for Motor Transport v Train (1972) 127 CLR 396 and generally Re Lattouf (1994) 52 FCR 147 (FC). Nor is the Act concerned to prevent the bankrupt enforcing rights which are personal to the bankrupt and irrelevant to the attainment of the statutory objects of the Act. In consequence, a construction of the Act which denies to a bankrupt the enjoyment of rights which do not affect the value of the bankrupt’s estate or the administration of the estate is to be avoided.
At common law, a right of action for a personal injury done to the bankrupt where “the damages are to be estimated by immediate reference to the pain felt by a bankrupt in respect of his body, mind or character, and without immediate reference to his rights of property” (per Erle J in Beckham v Drake (1849) 2 HLC 579 at 604; 9 ER 1213 at 1222) was not property which passed to the assignee. That exception has been acknowledged and given effect to in Australia in the various insolvency statutes, including the Act: see s 60(4) and s 116(2)(g). However, in my view, it was not the intention of Parliament in passing s 60(4) and s 116(2)(g) nor the predecessors of these sections, to state exhaustively the exceptions to the property in the nature of rights of action which would not pass to the trustee and thereby to identify by omission all other rights as “property” within the meaning of s 5 of the Act.
Consistently with that rationale, an application seeking judicial review of a decision to terminate employment pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) and for the issue of the constitutional writs pursuant to the Judiciary Act 1903 (Cth) also remains with the bankrupt: Randall v Deputy Commissioner of Taxation (2008) 174 FCR 441. In that case the applicant was a bankrupt when he took up an offer of employment as an Australian Public Service employee pursuant to the Public Service Act 1999 (Cth) with the Australian Taxation Office. A few months after he commenced his employment, the ATO (by an appropriate officer) terminated the applicant’s employment pursuant to the Public Service Act. The applicant commenced proceedings seeking judicial review of the decision to terminate his employment pursuant to the ADJR Act and for relief pursuant to the Judiciary Act. Further, he sought a declaration that the decision to terminate his employment was void and of no effect and that he was an ongoing Australian Public Service employee. He also sought an order that the respondents pay damages for wrongful dismissal.
I summarised Randall and provided relevant extracts from the judgment in my decision in Brown v Premier Pet T/As Bay Fish (above) which are worth repeating. After noting the relevant sections of the Bankruptcy Act that bore on the issues before him, the trial judge, Lander J, set out the relevant contentions of each of the parties and the authorities relied upon by each of them. He recorded and discussed the authorities the respondent relied upon to make good its submission that the applicant had no standing to pursue his application then before the Court because he was bankrupt. His Honour said:
35 The purpose of the Bankruptcy Act is to ensure that all of the bankrupt’s property, both real and personal at the time of the sequestration order and any property acquired by the bankrupt after the sequestration order, vests in the bankrupt’s trustee in order that it is available to be divided among the bankrupt’s creditors. At the same time as the property vests the bankrupt’s creditors lose the right to recover their debts from the bankrupt in exchange for a right to prove their debts in the administration of the bankrupt’s estate: s 58(3); Clyne v Deputy Commissioner of Taxation [1984] HCA 44; (1984) 154 CLR 589 at 594. The scheme is that the bankrupt’s property will be distributed equally or rateably among the bankrupt’s creditors: Cummings [1996] HCA 19; 185 CLR 124.
36 The property of the bankrupt is the same whether it is property of the bankrupt at the time of the sequestration order or property acquired after the bankrupt’s estate is sequestrated. It is, because the provisions of s 5 (property of the bankrupt) and s 58(6) (after-acquired property), the same in the sense that it is property divisible among the creditors. “Property” is defined in s 5 and has the same meaning in relation to both property at the date of the sequestration order and after-acquired property.
37 In order therefore for property of the bankrupt (including after-acquired property) to vest in the bankrupt’s estate the property must be of a character which is divisible among the bankrupt’s creditors or be of a character or a right or power in relation to that property that would otherwise have been exercisable by the bankrupt but for the bankruptcy. Any other property does not vest.
(my emphasis)
His Honour then turned to those sections of the Bankruptcy Act which “excised” from the scheme set out in the Bankruptcy Act certain proceedings and causes of action to which the bankrupt was entitled which would otherwise vest in his trustee:
40 Section 60(4) and s 116(2)(g) must be understood as allowing the bankrupt to retain a right to bring action and a right to retain damages or property that would be otherwise property divisible among the bankrupt’s creditors. In other words, but for s 60(4) and s 116(2)(g), an action to recover damages for personal injury or wrong done to the bankrupt or his or her family and for damages or compensation recovered would be property divisible among the bankrupt’s creditors.
41 Section 116(2) also exempts other property from property divisible among the bankrupt’s creditors for different reasons. Only one exception is relevant. The bankrupt is entitled to retain household property and that property which is for use by the bankrupt in earning income by personal exertion: s 116(2)(b) and (c); the idea being that the bankrupt should be entitled to live modestly and earn an income for the purpose of maintaining the bankrupt and the bankrupt’s family.
His Honour referred to and cited a passage from Ex parte Vine; Re Wilson (1878) 8 ChD 364 at 366-367 which recognised that an exception to the general principle that until a bankrupt had obtained his discharge all his property is divisible among his creditors was absolutely necessary “in order that the bankrupt might not be an outlaw, a mere slave to his trustee; he could not be prevented from earning his own living”. His Honour went on to say:
43 In those circumstances, the kinds of action contemplated by s 60(4) and s 116(2)(g) do not assist in determining whether the right to bring this proceeding is property divisible among the bankrupt’s creditors. This is not a proceeding of the kind contemplated by s 60(4) or s 116(2)(g). The question must be answered by reference to whether a proceeding of the kind brought by the applicant is property divisible among the bankrupt’s creditors. That question must be addressed by reference to s 116(1).
(my emphasis)
Here, Mr Hodges brings no proceedings, but rather seeks to respond to the proceedings commenced by Morris Finance. For reasons that I will explain shortly, that is significant.
Morris Finance relied upon Cummings v Beach Petroleum NL (1996) 185 CLR 124 to argue that Mr Hodges had no interest in these proceedings and therefore, no right to be heard. In that case, the plurality (Brennan CJ, Gaudron and McHugh JJ) determined that a bankrupt’s right to appeal from a money judgment against them was not property for the purposes of s.58(1) of the Bankruptcy Act and so did not vest in the appellants’ trustee in bankruptcy. The plurality said (footnotes omitted):
Some rights created by statute can constitute property (33), but a right to appeal does not have the character of property merely because it is the creature of statute. A chose in action may be the property of the person entitled to enforce it (34), but a liability to satisfy a judgment enforcing a chose in action is not property of the person against whom the judgment is entered. A liability is not property of the person liable. Nor is a right to appeal against a money judgment property of the judgment debtor. Nor does such a right to appeal answer the description of property divisible among creditors defined by s 116(1)(b), namely, “the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his own benefit”. The powers referred to are powers “which are familiar to all conveyancers and are powers properly so called”, as Farwell J pointed out in In re Rose; Trustee of the Property of E T Rose v Rose. In other words, the powers referred to are authorities to dispose of property or interests in property for the benefit of the donee of the power or of some other person. In this case, there is no property “over or in respect of” which the bankrupt is or would have been capable of exercising a power. As a matter of ordinary language, a judgment debtor’s right to appeal against the judgment is not property.
Cummings supports the proposition that whatever be the interest held by an undischarged bankrupt as a respondent to an appeal against a money order, it is not property for the purposes of the Bankruptcy Act. But in Cummins the bankrupts nonetheless failed in their attempt to appeal the money judgments against them on the basis that they had no locus standi to institute the appeals. That was so because the estate against which the judgment creditor could enforce the judgment had vested in the bankrupt’s trustee in bankruptcy and the judgment creditor could do nothing more than prove in the bankruptcy for its judgment debt. The bankruptcy left the bankrupts without any interest in the judgment sufficient to support the institution of an appeal in their own names.
The reasoning of the plurality on this issue is instructive. At p.137 their Honours referred to Heath v Tang [1993] 1 WLR 1421; [1993] 4 All ER 694 where (footnotes omitted):
Hoffmann LJ, delivering the judgment of the Court, recalled the observation of Farwell LJ in Boaler v Power and pointed out that-
“In cases in which the bankrupt is defendant, there is of course usually no question of the cause of action having vested in the trustee. Unless the defence is set-off ... the bankrupt will not be asserting by way of defence any cause of action of his own. But in cases in which the plaintiff is claiming an interest in some property of the bankrupt, that property will have vested in the trustee. And in claims for debt or damages, the only assets out of which the claim can be satisfied will have likewise vested. It will therefore be equally true to say that the bankrupt has no interest in the proceedings. As we have seen, s 285(3) (60) deprives the plaintiff of any remedy against the bankrupt's person or property and confines him to his right to prove.”
Their Honours then said later at p.137 (footnotes omitted):
So far as a judgment entered in an action against a bankrupt creates or evidences a provable debt, we respectfully agree that the bankrupt has no financial interest which would confer locus standi to appeal in his own name against the judgment. That is because it is fundamental to the law of bankruptcy that the bankrupt is divested of both his interest in his property and liability for his provable debts.
Cummins is distinguishable from the present case for a number of reasons, namely:
a)Mr Hodges is not prosecuting an action or an appeal. He is a respondent or defendant in the proceedings and so to use the words from Heath v Tang “there is of course … no question of the cause of action having vested in the trustee”;
b)the proceedings do not concern a provable debt, or a money claim that might form part of a provable debt but rather, as the prayer for relief in the primary proceedings makes plain, it concerns the rights of Morris Finance to repossess the prime mover when Mr Hodges became bankrupt; and
c)the other undetermined relief sought in the application does not concern a provable debt, or a money claim that might form part of a provable debt.
Conclusions
The interest of a lessee under a goods lease is an interest in possession only. The lessee obtains no legal title to the goods the subject of the lease. The terms of the lease in this case are in evidence before me. The lease expressly reserves to Morris Finance ownership in the leased vehicle.
Mr Hodges entitlement under the lease is an entitlement to possess the vehicle and use it for so long as he complies with the terms and conditions of the lease. The evidence is that the only purported breach of the lease by Mr Hodges was the commission by him of an act of bankruptcy by the presentation of a debtor’s petition. Prima facie, s.301(1)(c) of the Bankruptcy Act means that the clause pursuant to which Morris Finance purported to repossess the prime mover is void. But that is a matter to be determined at a later date.
Mr Hodges seeks to be heard in response to the application for declaratory relief prosecuted by Morris Finance. He does not seek to prosecute an action for damages for interference with his right to possession of the prime mover. He is not seeking to promote a proprietary interest which, if successful, will lead to an increase in the quantum of his bankrupt estate. If he is unsuccessful, it will not lead to a reduction of the quantum of his bankrupt estate.
The right to possession of the prime mover did not vest in Mr Hodges’ trustee in bankruptcy because it was a mere right of possession, not a proprietary interest. The lease payments under the chattel lease had been made as and when they fell due. There were no arrears as at the date of Mr Hodges’ bankruptcy. Morris Finance was not a creditor with a provable debt as at the date of Mr Hodges’ bankruptcy. As each payment fell due under the chattel lease, a debt was created that was not provable in the bankruptcy, it having been incurred by Mr Hodges after the date of his bankruptcy.
Mr Hodges has an interest in the outcome of the proceedings because Morris Finance seeks relief in respect of Mr Hodges’ right to possession of the prime mover pursuant to the chattel lease. It seeks discretionary declaratory relief in respect of the right enjoyed by another pursuant to the chattel lease. There is a justiciable controversy between the parties in respect of which Mr Hodges has a legitimate interest. A successful outcome to the proceedings for Mr Hodges might mean that his possession of the prime mover (and hence his ability to earn an income from operating it) is reinstated.
In my view, Mr Hodges has a right to be heard in these proceedings. His right in that respect is unaffected by his bankruptcy.
In my view, no occasion arises in those circumstances for an order under s.178 of the Bankruptcy Act to review the decision of Mr Hodges’ trustee in bankruptcy to neither consent to nor oppose the relief sought by Morris Finance in this case. His trustee in bankruptcy has no interest in the proceedings as they are presently constituted.
In all of the circumstances it is unnecessary in my view to make an order for pursuant to s.178 of the Bankruptcy Act.
I will hear the parties as to the form of order and costs.
I certify that the preceding forty-two (42) paragraphs are a true copy of the reasons for judgment of Judge Jarrett.
Associate:
Date: 9 June 2016
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