Official Trustee in Bankruptcy v Ferrier
[1998] FCA 349
•31 MARCH 1998
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 8223 OF 1997
BETWEEN:
OFFICIAL TRUSTEE IN BANKRUPTCY
APPLICANTAND:
SPENCER LYONS FERRIER, JOHN FRANCIS GRIFFIN
AND GEOFFREY WILLS PULSFORD (TRADING AS
FERRIER AND ASSOCIATES)
FIRST RESPONDENTFRANCIS ALLAN CANNANE
SECOND RESPONDENTJUDGE(S):
HILL J
DATE OF ORDER:
31 MARCH 1998
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
Leave be granted to the applicant to file an amended application:
(i)joining Richard John Cannane and Andrew Vincent Cannane as third respondents;
(ii)seeking a declaration that the applicant is the legal and beneficial owner of the half interest in the property known as 6 Paragon Avenue, South West Rocks, currently registered in the name of the bankrupt.
The amended application be filed within 7 days.
Service of the amended application and the affidavit of Mark George Edgar Findlay be effected by:
(i)delivering same by prepaid mail addressed to Ferrier and Associates, Level 29, AMP Centre, 50 Bridge Street, Sydney; and
(ii)sending same by prepaid post addressed to the third respondents C/- John Vincent Cannane, 26 Burrawong Avenue, Clifton Gardens.
Service be deemed effective 21 days after compliance with order 3.
The question of costs be reserved pending a subsequent determination when the way the case develops may be much clearer.
The proceedings be stood over for directions on 4 May at 9.30 am.
The proposed third respondents be notified of the date and time of the directions hearing at the same time as the amended application and affidavit in support are sent to them.
The Court notes the undertaking of John Francis Griffin that he shall not, in any way, deal with or part with possession of the Certificate of Title relating to the property known as 6 Paragon Avenue, South West Rocks without first giving the applicant 14 days notice in writing.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 8223 OF 1997
BETWEEN:
OFFICIAL TRUSTEE IN BANKRUPTCY
APPLICANTAND:
SPENCER LYONS FERRIER, JOHN FRANCIS GRIFFIN
AND GEOFFREY WILLS PULSFORD (TRADING AS
FERRIER AND ASSOCIATES)
FIRST RESPONDENTFRANCIS ALLAN CANNANE
SECOND RESPONDENTJUDGE(S):
HILL J
DATE:
31 MARCH 1998
PLACE:
SYDNEY
EX TEMPORE REASONS FOR JUDGMENT
Before the Court is an application stated to be brought under sections 30, 77A and 265A of the Bankruptcy Act 1966 claiming orders, inter alia, for the delivery up to the applicant, the Official Trustee in Bankruptcy, a Certificate of Title together with a declaration that the first respondent, a solicitor and partner of a law firm, have without reasonable excuse failed to comply with a requirement under s 77A given by the Trustee in Bankruptcy.
No factual matters have as yet been explored in evidence although it seems to be common ground that an employee of the solicitor at least or, more accurately, an employee of the firm of which he is a partner, acted for the bankrupt in a transaction in which the bankrupt, shortly before the bankruptcy, transferred the property the subject of the Certificate of Title to two of his children. It seems that the bankrupt and the children reside at the moment overseas. The transaction occurred but a very short time before the bankrupt became a bankrupt.
The parties in anticipation of the hearing this morning filed written submissions. The solicitor in those written submissions submitted that s 77A was directed to obtaining information for the purposes of a relevant investigation but did not authorise or permit the getting of property by the Trustee. There is a submission that the section does not authorise “delivery up” but only “production” of “books” for the purpose of the investigation.
It is suggested that other evidence makes it clear that the Official Trustee sought possession of the Certificate of Title for a purpose other than investigation. It is indeed submitted that the notice given under s 77A was invalid. Despite a suggestion to me to the contrary it was submitted that a certificate of title was not a book (see paragraph 17). I emphasise at this stage that the facts have not been investigated. Some of the correspondence which seems to be unchallenged between the parties suggest a very lengthy delay in stamping the transfer. But what impact that, if any, has is not a matter upon which any comment need be at the moment made.
When the matter came on before me I raised with counsel for both parties what I saw really as a procedural problem if the matter was to be litigated. It seemed to me apart from arguments of construction on s 77A and maybe factual matters about investigations, that the real issue between the solicitor and the Trustee was whether the solicitor had a reasonable excuse for not giving up the Certificate of Title. That question depended upon whether the solicitor held that Certificate of Title for the bankrupt in which case, of course, he would be required to hand it to the Trustee or whether he held it for the children under a valid transaction in which case, of course, he would be required to hand it to the children.
The problem was that the children were not parties to the proceedings and in consequence the issue could not properly be determined, see the decision of the Full Court in News Limited v Australian Rugby Football League Ltd (1996) 64 FCR 410. After a lengthy discussion the Court adjourned for the parties to have further discussions and as a result they have agreed upon short minutes of order, the effect of which is to cause an amended application to be prepared and filed to cause service to be effected upon the children by way of substituted service.
An undertaking has also been given by the solicitor not to part with possession of, or otherwise deal with, the Certificate of Title without 14 days notice being given. There remain, however, two matters at issue between the parties. The first is the question of costs and the second is whether orders should be made dismissing the application against the solicitor. On behalf of the solicitor, Mr Parsons submitted that the proceedings, which he described as based on s 77A solely, ought to be brought to an end. He said, and it certainly cannot be disputed, that the real parties to the dispute are the Trustee and the two children.
He said further, that if ultimately the proceedings were determined against the children, his client would have an obligation ethically, and indeed no doubt legally, to deliver the Certificate of Title to the Trustee. No undertaking was given by the solicitor that he would deliver up the Certificate of Title to the Trustee if the Trustee was successful in the proceedings, nor did the solicitor indicate that he would submit to whatever order the Court might make in the proceedings and ask to be excused and take no further part in the matter.
Had these undertakings been given it might well have been appropriate once the application had been amended to dismiss the proceedings against the solicitor. They have not been given and as far as I see them at the moment, in these circumstances it is appropriate that the solicitor remain a party until one knows what attitude the solicitor is going to take.
The question of costs to some extent depends upon the earlier matter in that if the solicitor still remains a party the issue of costs could not be finally determined today. I raised with counsel for the solicitor the possibility that the claim made by the Trustee might be based on a number of different matters including the possibility that the transaction was a sham. In so saying, I do not wish to suggest that this is a course which the Trustee should take. It obviously would depend upon the facts.
I also would emphasise that the solicitor who is a respondent to these proceedings was not the solicitor, personally, who acted for the parties in the transaction which is to be impugned. From what I have said there seems little doubt that prima facie the proceedings should have been right from the outset proceedings to which the children are parties. That does not necessarily mean that it would not have been appropriate for the solicitor to be joined, at least for the purpose of obtaining an undertaking not to deal with the title, pending the ultimate determination.
The matter came before a Registrar of the Court. Neither the Trustee nor the solicitor raised the question of proper parties with the Registrar although counsel for the solicitor has indicated that that matter had been raised in correspondence. I accept that comment. Because at the moment the case is not complete against the solicitor and because much may ultimately turn upon the way the proceedings develop, it seems to me that it is inappropriate at the present stage to make an order disposing of costs of the solicitor.
In saying this I do not suggest that ultimately the appropriate order may not be in favour of the solicitor. I merely suggest that, while the proceedings continue, it is inappropriate to make what is an interlocutory order dealing with costs at a particular point of time. In the circumstances I would make orders 1 to 7 excluding 6 in the short minutes of order by consent. And would reserve costs (order 6 of the short minutes as suggested by the trustee's solicitors) pending a subsequent determination when the way the case develops may be much clearer.
I suppose I should also make this order that the proposed third respondents be notified the date and time of the directions hearing at the same time. That is, the amended application and affidavit in support, are to be sent to them.
I make orders in accordance with those short minutes that I have indicated which I have initialled and dated and which will be placed with the papers. Accordingly, I make the following orders:
Leave be granted to the applicant to file an amended application:
(i)joining Richard John Cannane and Andrew Vincent Cannane as third respondents;
(ii)seeking a declaration that the applicant is the legal and beneficial owner of the half interest in the property known as 6 Paragon Avenue, South West Rocks, currently registered in the name of the bankrupt.
The amended application be filed within 7 days.
Service of the amended application and the affidavit of Mark George Edgar Findlay be effected by:
(i)delivering same by prepaid mail addressed to Ferrier and Associates, Level 29, AMP Centre, 50 Bridge Street, Sydney; and
(ii)sending same by prepaid post addressed to the third respondents C/- John Vincent Cannane, 26 Burrawong Avenue, Clifton Gardens.
Service be deemed effective 21 days after compliance with order 3.
The question of costs be reserved pending a subsequent determination when the way the case develops may be much clearer.
The proceedings be stood over for directions on 4 May at 9.30 am.
The proposed third respondents be notified of the date and time of the directions hearing at the same time as the amended application and affidavit in support are sent to them.
The Court notes the undertaking of John Francis Griffin that he shall not, in any way, deal with or part with possession of the Certificate of Title relating to the property known as 6 Paragon Avenue, South West Rocks without first giving the applicant 14 days notice in writing.
I must say I think both of you have been sensible in the way in which the matter has been approached because it is obviously the much easier way in which the matter should proceed, at this stage, anyhow, whatever happens later we will see.
I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill
Associate:
Dated: 31 March 1998
Counsel for the Applicant: R. Newlinds Solicitor for the Applicant: Kemp Strang Counsel for the Respondent: R. Parsons Solicitor for the Respondent: Ferrier and Associates Date of Hearing: 31 March 1998 Date of Judgment: 31 March 1998
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