Re Abrahams; ex parte Thomas

Case

[1985] FCA 266

23 Apr 1985

No judgment structure available for this case.

CATCHWORDS

Bankruptcy - public examination - appllcation to set aside summons to

attend for public examination - practice in relation to statements

of

reasons grounding the issue

of summons under

s s . 69

and 81

of the

Bankruptcv Act 1966 - nature of

the power conferred by S. 81 of the

Act - costs.

Bankruptcv Act 1966:

ss. 69, 81.

Companies (New South Wales) Code:

S. 364.

RE:

STEPHEN ABRAHAMS EX PARTE: HUGH CHARLES THOMAS

W290 of 1982

Lockhart J.

23 Aprll 1985

Sydney

IN THE FEDERAL COURT OF AUSTRALIA

)

)

BANKRUPTCY DISTRICT OF THE STATE

)

NO. W290 of 1982

)

OF NEW SOUTH

WALES AND THE

) )

AUSTRALIAN

CAPITAL

TERRITORY

)

-

RE

:

STWHEN ABRAHAMS

EX PARTE:

HUGH CHARLES THOMAS

MINUTE OF ORDER

Upon John Arthur Bush personally undertaking to the Court that neither

he nor hls firm, Messrs. Bush Burke and Co., will hereafter act for the trustee in the bankruptcy of Stephen Abrahams:

THE COURT ORDERS THAT:

-

1.

The relief

sought

in

paragraph

(1) of

the

application.

namely, that the summons under

S .

81 of the BankruDtcv Act

1966 be set aslde, be refused.

2.

The

s a d

summons be otherwlse stood over generally with

liberty to any party to restore to the llst

on

two days

notlce.

3.

The trustee pay one-third

of the costs of the appllcant.

George Ivan Fuzi, of this appllcatlon.

NOTE: Settlement and entry of orders is dealt

with in Order

36 of the Federal Court Rules.

IN THE FEDERAL

COURT OF AUSTRALIA )

)

BANKRUPTCY DISTRICT OF THE STATE

)

NO. W290 of 1982

- ..

)

OF NEM SOUTH WALES .W THE

) )

AUSTRALIAN CAPITAL TERRITORY

1

-

RE

:

STEPHEN

ABRAHAMS

M PARE:

HUGH CHARLES THOMAS

23 APRIL 1985

REASONS FOR JUDGMENT

LOCKHART J.

I propose to qlve judgment now

as I have reached a firm view

as to the result of this matter.

I realise that in takinq thls course

In a-rather complicated matter I may do less than lustice to the final and careful arguments of counsel.

This is an application by Georqe Ivan Fuzi to set aside a

summons dlrected to hlm to attend for public examlnatlon pursuant to

S.

81 of the Bankruptcy Act

1966 ( "the Act") In relation to the

property and affairs of Stephen Abrahams, the bankrupt.

A

sequestration order was made against the estate of the

bankrupt on

10 May

1982 upon the petition of

APD Snack Foods Pty.

Limited, a creditor claiming to be owed

$95,751.23.

Hugh Charles

Thomas, a reqlstered trustee, was appolnted trustee

of the bankrupt's

.

L .

estate. Summonses were issued on behalf of the trustee for the public

examination of the bankrupt pursuant to S. 69 of the Act and for the

public examination of various persons lncludlng Mr. Fuzi pursuant to

S. 81 of the Act.

The

public examination of the bankrupt commenced before

a

Deputy Reglstrar in Bankruptcy on

6 February 1985 when It was stood

over generally.

The examination of Mr. Fuzi was also stood over

generally to abide the result of this appllcatlon which was then

foreshadowed by counsel for Mr. Fuzi.

The relevant facts are rather complicated and do not emerge very clearly from the evidence at this stage, but the princlpal

matters appear sufficiently clearly and may

be stated briefly.

The bankrupt was a confectionery wholesaler and the managing

director

of

two

companies,

Quality

Confectlons

Pty.

Limited

("Confections") and

Quality

Confections

Imports

(Australia)

Pty.

Limited ( "Imports"

) .

Confections manufactured and sold confectionery. It is not

entirely clear what Imports

did, but I assume Its

busmess had

something

to do with

the

manufacture,

sale

or

importation

of

confectlonery.

In 1979

a

company,

Balfour

Willlamson

(Australia)

Pty.

Limited ("Balfour") agreed to provide confirming finance facilities to

Confections. By agreement dated 30 June 1979, Mr.

Fuzi agreed with

Balfour that, in consideration of Balfour acting and continuing

to act

as a confirming house for Confections, Mr. Fuzi would pay on demand all sums including interest, costs and expenses

whlch may at any time

become due by Confectlons to Balfour.

In 1980 Balfour agreed to provide slmllar facllitles to

Imports.

By

agreement dated 28 April 1980 Mr.

Fuzi agreed with

Balfour

to pay on demand all

sums

lncludlng Interest, costs and

expenses which may at any tune become due by Imports to Balfour. In

addltion to Mr.

Fuzi, other persons and companies guaranteed the

payment of the same obligations of Confections and Imports. One of

these was

a company, Pronto Trading Co. Pty. Llmited

("Pronto"),

a

company

controlled

by

Mr.

Fuzi.

Balfour

made

confirmlng

finance

facilities available to Confectlons and Imports pursuant to the sald

arrangements.

Both

Confections

and

Imports

experienced

financlal

difficulties. On 3 June 1981 Balfour appolnted

a recelver and manager

of Confectlons and Imports pursuant to Deeds of Charge taken by

Balfour over the assets of those companies.

On 17

Jtlrle

1981 Balfour demanded payment from Mr. Fuzi as

guarantor, of the sum of

$569,101.51 which it claimed was due and

payable to it following the failure by Confections to pay that debt.

In 1983 Balfour commenced proceedings

In the Supreme Court

of

4.

New South Wales, Common

Law Division, Commerclal List, Number 15554

of

1983

seeking

to

recover

payment

from

Mr. Fuzi of

the

sum

of

$569,101.51 together with interest.

In

November 1984

the solicitors for Balfour wrote to the

solicitors for Mr.

Fuzi stating that Balfour proposed to discontinue

those proceedlngs.

The solicitors for Mr. Fuzl replled early In 1985

suggesting that it would be more appropriate for judgment to be

entered for Mr. Fuzl.

There the matter stands.

However,

it seems plaln from the evidence before me that

Balfour does not intend to prosecute action 15554 of 1983 further;

probably because It was held by the Supreme Court of New South Wales,

in litigation to which

I shall refer in

a moment, that

as the

liabillty of the

prmcipal debtor had not arisen at the relevant

times, the secondary liability

of Mr. Fuzl as guarantor could not have

arisen.

A notice pursuant to

S. 364 of the Companies

(New South

Wales) Code

("the Code") was served on Pronto on

11 January 1'984

requlring payment to Balfour of $569,101.51 and stating that

If, at

the expiration of 21 days from the dace of service of the notlce, Pronto falled to comply with the terms of the notice, Pronto would,

pursuant to

S . 364(2)(a) of the

Code, be deemed to be unable to pay

its debts as and when they fell due and that proceedings might

thereafter be commenced to

wmd-up Pronto pursuant to the Code.

5.

Pronto then instituted proceedings in the Supreme Court

of

New South Wales Equity Division (No. 1167

of 1984) to restrain Balfour

presenting a

petition for the wlnding-up of Pronto.

The proceedlngs

were heard by Helsham J., Chief Judge in Equity, who,

on 3 February

1984, found in favour

of Pronto and restrained Balfour from presenting

the threatened petition.

I have already briefly summarised what seems to me to be the

primary ground relied upon by His Honour

f r the making of that

order,

namely, that the liability of

the princlpal debtor did not arise at

the relevant tlme. There were, of course, other grounds.

.

A further notice under S. 364 of the Code dated 16 February

1984 was served by Balfour on Pronto again requiring Pronto to pay $569,101.51 and alleging that Pronto was indebted to Balfour In that

sum

as guarantor of the obligations of Confections pursuant to the

guarantee of 30 June 1979.

Pronto then commenced fresh proceedings

in the Supreme Court

of New South Wales Equity Divislon against Balfour

(No. 1449 of 1984)

to restrain It from presenting the petition.

The

proceedings came

before Powell J.,

who, on 8 March 1984, noted that Pronto had that day

pald to Balfour th- sum of $255,459.55 and ordered, amongst other

things, that Balfour be restrained from presenting

a petition to

wind-up Pronto upon the notice

of 16 February 1984 to which

I have

referred. His Honour noted that Balfour would commence proceedlngs

against Pronto in the Commerclal List

of the Supreme Court of New

6.

South Wales for the balance of the amount of $569,101.51 unpald,

namely, $419,101.51, together with other sums. His Honour also noted

that It was agreed between Balfour and

Pronto

that until those

proceedings in the Commercial List to which

I have referred were

resolved by judgment

or settlement Balfour would not serve on Pronto

any further notice of demand pursuant

to s.364(2)(a) of the Code

or

present any summons to wind It up.

On 8 May 1984 notices dated 3 May

1984 were served by Balfour

upon Mr. Fuzi and Pronto demanding payment

of the sums of $419.101.51

and $309,900.80 belng the amounts of the alleged indebtedness of

Confections to Balfour and $61,860.02 interest due by Imports on

an

alleged principal debt of Imports to Balfour of $116,459.55.

On 11

May 1984 the solicitors for Mr. Fuzi and Pronto wrote

to Balfour disputing

thew indebtedness to it, but in 1980 Confections

entered into a factorinq agreement with AGC Factors Pty. Limited

("Factors") pursuant to which Confectlons assigned lts debts to

it.

It appears, although the evidence is by no means clear

or

complete on the pomt, that by June l981

Factors was concerned about

the amount of the factored debts still outstanding and whether they were collectable. The bankrupt had guaranteed Factors repayment n* the assigned debts. Factors threatened to sue the bankrupt under his

guarantee.

The bankrupt lodged a statement of affalrs dated 9 June 1983

.

. r

7.

in hls bankruptcy in which he declared that he owed

debts

of

$2,149,912 and that he had assets

of $1,000

and therefore, had

an

excess of liabilitles over assets of $2,148,912.

- .

He disclosed two unsecured creditors

- namely Balfour, In the

sum of $908,041, and the petltloning creditor, In the

sum of $95,192.

He also referred In his statement of affalrs to three companles In the

AGC group, including Factors, whose debts were said

to be secured over

two parcels of real estate in

which the bankrupt apparently has

an

Interest at Rose Bay and Fairfield; but after estimatlng the value of

their securities, the bankrupt stated that there was

an estlmated

deficiency to those secured creditors of $113,179. There is some

internal lnconsistency

In the statement of affairs because elsewhere

m

that document the bankrupt showed the deflciency to the secured

credltors as $143,179

- but nothlnq turns on this for the purposes of

the matter before me.

Factors has lodged

a proof of debt

In tne bankruptcy clalming

to be a creditor in the

sum of $626,956.99; and Balfour claims to

be a

credltor In the sum of $908,041. Neither proof has yet been admltted by the trustee. The principal assets In the bankrupt's estate appear

to be his lnterest In the two propertles at Rose Bay and Fairfield; but they are subject

+g various mortgages.

The bankrupt was the admlnlstrator of the estate of hls late

wife, Claire Abrahams. The late Mrs. Abrahams was formerly marrled to

Alexander Fuzi. Mr. Fuzi is

a son of

a former marriage

of

Mr.

8.

Alexander Fuzi. It seems, therefore, that he

was

the stepson of the

late Mrs. Claire Abrahams.

The late Mrs.

Claire Abrahams was the

daughter of Ilona Vertes.

The applicant appears to assert some claim

- -

of entitlement

to an Interest in the estate of the late Mrs. Clair

Abrahams.

The

nature and extent of that interest is not known to me

wlth any degree of clarity.

June 1981 a deed of family arrangement was executed by the bankrupt as administrator of his late wife's estate. Mrs. Vertes

On 2

was described as beneficiary and Mr. Fuzl was described

as

~oint

tenant.

The deed purports to deal with certain assets

of

the late

Mrs. Clair Abrahams In favour of Mr.

Fuzi or his chlldren. It is not

necessary for me to refer in any detail to the contents

of the deed.

On the day following the execution

of the deed a receiver

and manager

was appointed

of both Confections and Imports.

The trustee applied to the Registrar in Bankruptcy for the

examination of varlous persons, including Mr.

Fuzi, pursuant to S .

81

of the Act.

I

propose to state

In brief the grounds given in that

application by the trustee for seeking to examine Mr. Fuzl. Normally

I would not take this course; but, in fact, the form of appllcation

made by the trustee under

S. 81 to examine Mr. Fuzi and, Indeed, other

applications to

examine other persons under

S. 81 and the bankrupt

under S. 69,

appear in the file of the bankrupt openly, in the sense

that they have

not been placed in a sealed envelope and are open for

inspection by any person who

lo ks at the flle.

9.

It is,

I thmk, timely to comment that whether the document

be called an application for the issue

of a summons under S. 69 or S.

81 or a statement of reasons to ground the issue

of such a summons or

otherwise, It should

be sealed In an envelope by the Registrar

with a

notation that it is not to be opened wlthout the order of a Judge, the

Reglstrar or a Deputy Reglstrar. This is the practice that

has been

followed in courts accustomed to deal wlth matters

of insolvency for

as long as I can remember, and it is

a practlce approved by authority:

see, for example, Re Stlrlinq Henrv Ltd.

(in Liq.) and The ComDanles

&

A

(1972) 1 N.S.W.L.R.

497 per Street J. at p. 498.

Although

many

of

the

reported

cases

that

touched

thls

question

were

deallng

with

what

are

generally

called

private

examinations

under

the

Companies

Code

or

its

predecessors,

the

Companies Acts of the various states of Australia and of

the Unlted

Kingdom, it seems to me that the rationale which underlies the

requirement of secrecy is as true now as it ever was; and whether It

be a private examination

under

the

Companles

leglslation

or

an

examination

of

bankrupt

a

or

other

person

under

Bankruptcy

practice, but it is sufflclent to state one of them. namely, that

prima facie those who are to be examlned should not have access to the

statement of the liquidstor or the trustee given to the Court or the

legislatlon. There are varlous reasons supporting the wlsdom of thls on what matters it is proposed to examme them.

The grounds

mentioned

in

the

trustee's

applicatlon

for

.

"

.

. .

10.

examlnatlon of Mr. Fuzi under

S .

81 in this case

are, amongst others,

(i) that it is said

he entered into the deed

of family arrangement of

2 June 1981 to

whlch I have

referred

affecting

the

bankrupt's

entitlements in the intestate estate of

h15 late wife Mrs. Clair

Abrahams; (ii)

that the bankrupt caused two caveats

to be reglstered

against the real estate, one parcel of which

1 s the Rose Bay property

m whlch the bankrupt may have

an Interest; and (iii) that by vlrtue

of Mr. Fuzi's relatlonship to the bankrupt he would be expected

to

have knowledge

of the bankrupt's property and affalrs. Reference is

also made to a deed of

facllity and guarantee

of

1 May 1980 between

Pronto, Mr.

Fuzi and others to which the bankrupt was also

a party.

The summons that was subsequently issued under

S .

81 reflects those

grounds.

Counsel for

Mr. Fuzi argued that the summons should be set

aside.

I wlll briefly summarise counsel's arguments.

1.

The solicitor

who has at

all

relevant

tunes

acted

for

the

trustee and Balfour

In the bankruptcy of the bankrupt is a Mr. Bush

and his firm Bush, Burke and Company. It was submitted that Mr. Bush

and his firm have a conflict of inte5est; that they cannot act for the

largest creditor in the estate, Balfour, whose debt

1s the subject of

dispute, at least by Mr. Fuzl

and Pronto, especially in

a case like

the present where the affairs of the bankrupt and varlous companies are Inextricably Interwoven. The confllct 1 s said to be hlghliqhted by the fact that Mr. Bush earlier this year was appointed to the board

of dlrectors of Balfour.

2 .

The

proceedings in the Commercial List of the Supreme Court

between Pronto and Balfour are still on foot, hence any attempt to

examine Mr. Fuzi or Pronto under S. 81 is a fishing expedltion for

an

improper purpose. Section 81, it was said,

may be resorted to for the

purpose of obtaining information

to enable the trustee to decide

whether to sue

or not, but it cannot be used where the trustees

or the

principal credltor In the bankruptcy who is underwrlting the trustee's

costs has already decided to sue and, therefore, proposes to use the

public examination procedure for

an impermissible purpose.

3 . It is plain that Balfour proposes to enforce its guarantees

against

Mr.

Fuzi and Pronto and that matters relevant

to

their

llabllity as guarantors should not be the

sub~ect

of exammatlon under

the compulsory processes of

S .

81.

The prlnciples governlnq applications

of this nature are well

established, and I

do not propose to refer to them in any detail.

I

considered this questlon

in

an earlier case of Re Csidel; ex parte

Andrew (1980) 39 F.L.R. 387, and there

renewed the authorities

bearing

on the relevant questions.

They establish, amongst other

things, that extraordlnary power, that it must

the

power

prescrlbed

by

S. 81 of the

Act

is

an

be

carefully exerclsed, that the

power given to the Court

0'

a Reglstrar to Issue

a summons under

S .

81

is a dlscretionary one, and that no rlgid rules should be laid down for the proper exercise of the dlscretion by the Court

or

the

Registrar. but that it must be borne in mind at all times that In the exercise of that discretion the Court or the Reglstrar must not lend

aid to an unfair or oppresslve

use of this compulsory process.

It is clear that Balfour intends to sue

Mr. Fuzi pursuant to

the guarantees given by him in respect

of the indebtedness of

Confections and Imports. It

IS also clear that the affairs of the

bankrupt,

Mr.

Fuzl, Pronto, Confections, Imports and Balfour are

inextricably intertwined through various transactions including those

mentloned by me earlier.

As I

said earlier, in all relevant matters Mr. Bush and hls

flrm have acted

as solicitors for both Balfour and the trustee.

Also,

Mr. Bush has been a director of Balfour since

25

February 1985.

It

seems likely that any examination of Mr. Fuzl under

S .

81 will touch

matters relating to the various inter-related company transactions, some of which I have mentloned, as well as the deed of famlly settlement.

The principle that justlce must not only

be done but must

appear to be done is still very

much allve.

I think that Mr. Fuzl and

Pronto or

any outside observer would at this stage be lustifled in

thinking that the trustee could not conduct the examlnatlon of Mr.

Fuzi or Pronto Impartially if he retams the same solicitor who acts for the major creditor, Balfour, especially 15

that solicitor 1 5 , In

addition, a member of its board of directors.

On the other hand, I am conscious of the practical problems which concern the trustee in his administration of the estate of the

13

bankrupt.

The only creditor interested in spending money to recover

anything

in

the bankruptcy is Balfour, and it appears from the

evidence that Balfour is funding the Trustee in this appllcation and

In

the investlgation of various persons, including Mr.

Fuzi, under

S . 81 of the Act, and of the bankrupt under

S . 69 of the Act. Indeed,

it seems there

1s no other source of funds available to the Trustee.

In an estate where there is a very large deficiency, it is in

the public interest

as well as the interests

of the creditors that

persons are examined under the Act to ascertain available

funds,

whether settlements are void or voldable, whether preferences have

been glven, why such

a large deficiency exists, and whether any

offences have been commltted.

I thlnk it would be regrettable if

Balfour was to be dissuaded from pursuing the course

on which It has

already embarked.

On balance, however, I have come to the conclusion that the summons should not be set aside provlded Mr. Bush undertakes to the

Court that he

and hls firm shall cease to act for the Trustee in the

bankruptcy of the bankrupt, including the examlnation of Mr.

Fuzi, the

bankrupt, Pronto or other persons, whether under S . 69 or S. 81 or otherwise. This wlll enable the summons to stay on foot and obviate the necesslty for applications by the trustee for the issue of fresh

summonses

wlth the necessary attendant delay and expense. If the

Undertaking is not forthcoming then

I shall set aside the summons, but

I

have been informed by counsel for the trustee that Mr. Bush

1s

prepared to give an undertaking along the lines to

whlch I

have

14.

referred.

I should add that nothing

I have said is intended In any way

as a criticism of Mr. Bush

or his firm.

I have the impresslon that

the feeling on both sides In this application has been a llttle

h gh,

but that the solicitors for

the trustee have acted in good

faith

throughout.

If the trustee retains a different solicitor for the purpose

of this bankruptcy I do not thlnk that the trustee should be prevented

by the Court from examining

Mr. Fuzi or others under

S. 81 in relation

to the deed of family arrangement, or the guarantees to which I have referred, or the arrangements and deallngs between the bankrupt

Mr.

Fuzi or any other guarantors or any other persons or companles whose affairs are interwoven In the matrix

of

facts which I

have already

summarised.

It particularlty the matters which may be the subject of legitimate

is

not

desirable

that

I seek

to defme wlth

any

.

- -

exammation by the trustee. To do so may be oppresslve to the trustee

and hamper him in the legltimate use of

s s .

69 and 81.

However, I

must sound a cautionary note.

The guarantees glven by Mr. Fuzi and

others have been the subject of litlgatlon

In the Supreme Court in

Equity, and they still are, though dormant, in the Commercial List of the Supreme Court. Those guarantees will be the sublect of further

demand and, no doubt, litigatlon.

The Trustee must remember when

interrogating any wltness under S . 81 that:

15.

-

the

power

conferred

by

S .

81 1 s "an extraordinary

power of

Inquisitorial nature": see In re North Australian Territorv Company

(1890) 45 Ch.-87 per Bowen

L.J. at p.

93 - the examlnee 1 s not a

witness in the ordinary sense,

-

the

ordinary

ules

p ocedures

or

do not

govern

the

examination, and

-

that

lust

as the

Court

or

the

Registrar

must

"be astute to

prevent any oppresslve, vexatious or unfair use of this extraordinary

process", so

must the Trustee and his advisers bear that cautionary

note in mind when examining witnesses under

S . 81: Re: Csidel (supra)

at pp. 391 and 392.

A

fine

llne exlsts between legitimate and

mpermissible

examination of persons under

the compulsory process

of S . 81.

It

would be

examinatlon In this case, but it must be remembered that "the purpose

of the section is to ellcit information that may be relevant for the

wrong

for me

to seek

to

specify

the

limits

of

that

proper conduct

of

the bankruptcy and that may aid the process

of

flndlng and recoverlng assets available for dlstribution": Re Csldei

(supra) 390.

I

certalnly do

not think that the subject of Mr.

Fuzl's

guarantees

or

the guarantees given by Pronto and the circumstances

surrounding them execution or the existence of liablllty

wlth respect

thereto

or the liabllity of the principal debtor or debtors fall

16.

outside the legitimate ambit of that inquiry. Much depends

on the

particular questions put to the witness

at the tune during the conduct

of the examination. The trustee should remember that the legitimate

areas of inquiry are not only Mr. Fuzi's liability to Balfour and the

liabillty of others to Balfour but whether Balfour's proof of debt

itself should be admitted

in whole

or in part.

It would be regrettable, I think, if future examinatlon of

any witness under S . 81

or S . 69

in this matter were to be studded

wlth the taking of constant

ob~ections

which may have the effect of

hampering

or, indeed, rendering the examination nugatory, but of

course If

such a course should occur then it is always open for the

Reqlstrar to refer the matter to the Court for it to conduct the

examination pursuant to the powers under

S. 81(4).

It was submitted by counsel for Mr. Fuzi that in this case

the summons should be set aside; and that it was a proper case for

matters to be

first submltted by the trustee to Mr. Fuzi

n the form

of written interrogatories.

I

did refer to the posslbility of thls

course being followed

In

certain cases (in Re Csidei (supra) at p .

394) but I

emphasised there that each case must be

determmed on its

merits. That, of course,

was

a

special

case

involvlng,

as the

prospectlve

wltness, an officlal

llquidator

who

had

been

duly

appointed llquldator of the company in question by the Supreme Court

of New South Wales. It is a very dlfferent case from the present one.

As at present advised,

I do

not think that such a course would be

desirable or necessary.

It was also submitted to the Court as a ground for setting

aside the

S.

81

summons that, in the light of what was put to the

bankrupt in

his

S . 69

examination, thls Court should hold that it

would be lmpermissible to put questlons

of a llke nature to Mr. Fuzi

during h1s

exammation under

S. 81.

Although I do not wish to be

taken as

approving or

disapproving any particular question

or the

form which it took directed to the bankrupt, I see nothing

in those

questions that went beyond the field

of permissible inquiry. It

1 s

essentially for the Reglstrar, when hearlng the

exammation

of Mr.

Fuzl, to determlne the questions to be allowed

or rejected.

On the assumption that the undertaking referred to by me and

by counsel for the trustee wlll be

given, I am of the oplnion that the

summons should not be set aside. However,

I am also

of the opmion

that the summons

to

set aside the

S.

81

summons should not be

dismissed but should stand over generally with leave to either party

to restore it

on two days notice.

There remains the questlon

of costs.

Counsel for Mr. Fuzi

submitted that in substance his client has succeeded and that

in those

circumstances the trustee should pay hls costs. Counsel for the

trustee submitted that In all the circumstances

Mr.

Fuzi should pay

the trustee S costs of the application. Although the suggestlon arose

In the course of argument

that it would be desirable for the trustee's

sollcltor to step down, the assertion of conflict was raised

a

conslderable tlme ago by the sollcitor

for Mr. Fuzl In correspondence

with the sollcitors for the trustee

so that the problem has been

present

in the trustee's mind

for some time and, indeed, at all

relevant tlmes.

I think the proper order for costs is that the trustee should

pay one-third of the costs of Mr. Fuzi of this application.

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