Re: ALEXANDER GEORGE COYLE and SIDNEY MERLE COYLE Debtors Petition No. 783 of 1991 FED No. 244 Number of pages - 13 Bankruptcy - Practice and Procedure (1993) 42 FCR 72 (1993) 120 ALR 527
COURT
IN THE FEDERAL COURT OF AUSTRALIA
BANKRUPTCY DISTRICT OF THE STATE OF QUEENSLAND GENERAL DIVISION Drummond J (1)
CATCHWORDS
Bankruptcy - Application for annulment of debtor's petition to enable bankrupt to pursue cause of action for benefit of creditors - support by creditors for annulment application - order for annulment discretionary - approval of creditors not decisive - no satisfactory proposal before court by debtor to apply proceeds of action for benefit of creditors - when debtor remains insolvent, discretion to grant annulment should in general only be exercised where there is evidence before the court which shows that debtor would be able to obtain annulment under s. 74 of the Bankruptcy Act.
Practice and Procedure - Cause of action vested in trustee in bankruptcy - action commenced by bankrupt after date of bankruptcy - action properly constituted if annulment granted.
Words and Phrases - s. 153B of the Bankruptcy Act - "ought not to have been presented" - "ought not to have been accepted by the Registrar".
Re Story; Ex parte Boulton (Drummond J, unreported, 4 June, 1992)
Story v Boulton (Full Federal Court, unreported, 18 September, 1992)
Re Alexander George Coyle and Sidney Merle Coyle
HEARING
BRISBANE, 28 August 1992
#DATE 16:4:1993
Counsel for the applicant: A.J.P. Collins
Solicitors for the applicant: Wellner Poole and Gray
Solicitors for the trustee: Lynch and Co.
Counsel for the intervener: P.D. McMurdo
Solicitors for the intervener: Clayton Utz
ORDER
The Court orders that:
1. The application for annulment is dismissed.
Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.
JUDGE1
DRUMMOND J This is an application to annul a bankruptcy which commenced on 15 April, 1991, upon acceptance by the Registrar of the debtors' petition.
The annulment application is brought to enable the debtors to prosecute an action which they commenced in the Supreme Court on 5 July, 1991 against their former solicitor. According to…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
In the matter of Re Coyle, the respondent, a bankrupt, applied to the court for the annulment of his bankruptcy petition. The primary reason behind the application was to allow the bankrupt to pursue a cause of action on behalf of the creditors, with the support of the creditors for the annulment application. The court was tasked with determining whether the discretion to grant annulment should be exercised and whether the approval of creditors was a decisive factor. Furthermore, the court needed to assess whether there was a satisfactory proposal before it by the debtor to apply the proceeds of the action for the benefit of the creditors, and if the bankrupt remained insolvent, whether the court should generally only exercise its discretion to grant annulment when there was evidence showing that the debtor would be able to obtain annulment under section 74 of the Bankruptcy Act.
The court examined the relevant legal principles and concluded that the approval of creditors was not decisive in determining whether to grant the annulment. Additionally, the court found that no satisfactory proposal had been presented by the debtor to apply the proceeds of the action for the benefit of creditors. The court emphasised that when the debtor remained insolvent, the discretion to grant annulment should generally only be exercised where there was evidence before the court showing that the debtor would be able to obtain annulment under section 74 of the Bankruptcy Act. In this instance, the court found that such evidence was not present.
Consequently, the court dismissed the application for annulment. The court's decision was based on the lack of a satisfactory proposal by the debtor to apply the proceeds of the action for the benefit of creditors and the absence of evidence showing that the debtor would be able to obtain annulment under section 74 of the Bankruptcy Act. The court's reasoning and decision were in line with the legal principles governing annulment applications in bankruptcy cases.
Orders
Orders of the court
The Court orders that:
1. The application for annulment is dismissed.
Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.