Pitman v Pantzer (Trustee of the Bankrupt Estate of Thomas Richard Wenkart)

[2001] FCA 1742

FEDERAL COURT OF AUSTRALIA

Pitman v Pantzer (Trustee of the Bankrupt Estate of Thomas Richard Wenkart) [2001] FCA 1742

BANKRUPTCY – assignment of debt – leave to substitute proof.

Bankruptcy Act 1966 (Cth)

Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589
Re Frost;  Ex parte Official Receiver [1899] 2 QB 50 at 52
Re Gill;  Ex parte Official Receiver (1964) 6 FLR 273

ALAN PITMAN V WARREN PANTZER (TRUSTEE OF THE BANKRUPT ESTATE OF THOMAS RICHARD WENKART)

N7752 OF 2000

JUDGE:         BEAUMONT J
DATE:           7 DECEMBER 2001
PLACE:         SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N7752 OF 2000

BETWEEN:

ALAN PITMAN
APPLICANT

AND:

WARREN PANTZER (TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART)
FIRST RESPONDENT

THROVENA PTY LIMITED, HAPDAY HOLDINGS PTY LIMITED AND MACQUARIE HEALTH CORPORATION LIMITED
SECOND RESPONDENTS

AND BETWEEN:

THROVENA PTY LIMITED, HAPDAY HOLDINGS PTY LIMITED AND MACQUARIE HEALTH CORPORATION LIMITED
CROSS-APPLICANTS

AND

ALAN PITMAN
FIRST CROSS RESPONDENT

WARREN PANTZER (TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART)
SECOND CROSS RESPONDENT

JUDGE:

BEAUMONT J

DATE OF ORDER:

7 DECEMBER 2001

WHERE MADE:

SYDNEY

THE COURT DIRECTS THAT:

1.Direct that any further submission by any party on the question raised in these reasons be made in writing filed and served by 5 pm on Monday, 10 December 2001

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N7752 OF 2000

BETWEEN:

ALAN PITMAN
APPLICANT

AND:

WARREN PANTZER (TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART)
FIRST RESPONDENT

THROVENA PTY LIMITED, HAPDAY HOLDINGS PTY LIMITED AND MACQUARIE HEALTH CORPORATION LIMITED
SECOND RESPONDENTS

AND BETWEEN:

THROVENA PTY LIMITED, HAPDAY HOLDINGS PTY LIMITED AND MACQUARIE HEALTH CORPORATION LIMITED
CROSS-APPLICANTS

AND

ALAN PITMAN
FIRST CROSS RESPONDENT

WARREN PANTZER (TRUSTEE OF THE ESTATE OF THOMAS RICHARD WENKART)
SECOND CROSS RESPONDENT

JUDGE:	BEAUMONT J
DATE:	7 DECEMBER 2001
PLACE:	SYDNEY

REASONS FOR DIRECTION

BEAUMONT J:

1. A procedural issue has now arisen as follows.

2. Upon the final hearing of the cross-claim, a preliminary question has been argued as to the efficacy of a purported assignment of a debt owed by a bankrupt.  On behalf of Mr Pitman it is submitted that by application of the reasoning in Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589, the debt is gone and it must follow that nothing is capable of assignment. In response, the Intervenors have relied upon the Frost case [1899] 2 QB 50 for the proposition that a creditor may assign its debts after bankruptcy. However, an examination of the Frost case whilst preparing my reasons for judgment suggests that that position is more complicated than the argument of either side would admit.

3. The position, according to McDonald, Henry and Meek (at 82.1.50), is as follows:

   “The assignee of a proved debt should obtain an order for leave to prove and to have the proof substituted for that of the assignor, unless he or she can get the assignor to sign an authority to the trustee to pay:  Re Frost;  Ex parte Official Receiver [1899] 2 QB 50 at 52; Re Iliff (1902) 51 WR 80;  Re Blake;  Ex parte Trustee (1933) 6 ABC 85;  Howden v Cock (1915) 20 CLR 201; cf  Re Barry (1930) 2 ABC 85. The position is the same with regard to an equitable assignee.”

4. To the list of authorities cited, I would add also Re Gill;  Ex parte Official Receiver (1964) 6 FLR 273.

5. Although at this stage at least, no question arises of an assignee’s entitlement to a dividend, it seems that implicit in Frost and the line of subsequent authority is a general requirement that, if an assignment is to be recognised by a court of bankruptcy, a fresh proof  (by the assignee) be substituted with the leave of the Court.

6. To this point although, as mentioned, the Intervenors rely upon Frost, they have not sought to substitute a proof, or to seek the leave of the Court in this connection.

7. On the other hand, Mr Pitman has not, to this point, sought to contend that substitution was necessary, or that leave was required, or if required, that it ought to be refused.  Rather, as noted, Mr Pitman relies upon the doctrine of merger so as to eliminate, he says, the debt itself.

8. I am thus concerned to ensure that I have a correct understanding that the parties’ respective positions are as follows:

   (1)I take it to be implicit in the Intervenors’ reliance upon Frost that they accept the need for the Court’s leave to substitute their proof for that of their assignors.

   (2)For his part, Mr Pitman relies solely upon the merger doctrine.  As I followed his argument, although aware that Frost was relied upon, he took no point that the Intervenors had not formerly sought the leave of the Court to substitute their proof.

9. In the circumstances, I will now hear any party if necessary, to correct my present understanding;  and, if necessary, hear any application to amend any pleading.

10. I give the following direction:

    1.Direct that any further submission by any party on the question raised in these reasons be made in writing filed and served by 5 pm on Monday, 10 December 2001.

    2.Stand the matter over to Tuesday, 11 December 2001 at 11.30 a.m.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Beaumont.

Associate:

Dated:             7   December 2001

Counsel for the Applicant:	Mr A Ogborne
Solicitor for the Applicant:	The Bruce & Stewart Commercial Practice
Counsel for the Intervening Creditors:	Mr J K Chippindall
Solicitor for the Intervening Creditors:	Hunt & Hunt
Date of Hearing:	21 and 23 November 2001
Date of Judgment:	7 December 2001