Re Galea, A Ex parte Official Trustee in Bankruptcy

[1992] FCA 1048

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BANKRUPTCY DISTRICT OF THE	)	No. NB356 of 1991
STATE OF NEW SOUTH WALES	)

RE :	ALBERT GALEA
EX PARTE:	OFFICIAL TRUSTEE IN BANKRUPTCY

CORAM :	HILL J
PLACE	: SYDNEY
DATED	: 10 SEPTEMBER 1992

MINUTES OF ORDER

THE COURT ORDERS THAT:

(1) Application dismissed.	l ,
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Note:  Settlement and entry of orders is dealt with in
Rule 124 of the Bankruptcy Rules.

REOlSTRY

RECEIVED

3 0 MAR 1993

FEDERAL COURT OF

AUSTRALIA PRINCIPAL

IN THE FEDERAL COURT OF AUSTRALIA ) ?S:./-,. A , ,. . , ~ A L A , : : . ~.,x, . + 7 ' :ex ' ; ~ T ~ ~ ~ $ . " < : ~ : . ~ Y ; : ?

GENERAL DIVISION ) & ~ ~ . T M ~ ~ & ~ : c ~ ~ L @ ~ @ l J T . ~ ~ ~ ~ ~ ~ y:

BANKRUPTCY DISTRICT OF THE	)	No. NB356 of 1991
STATE OF NEW SOUTH WALES	)

RE :	ALBERT GALEA
EX PARTE:	OFFICIAL TRUSTEE IN BANKRUPTCY

CORAM :	HILL J
PLACE :	SYDNEY
DATED :	10 SEPTEMBER 1992

EX TEMPORE REASONS FOR JUDGMENT

Mrs Galea moves the Court to set aside a summons issued under s.81 of the Bankru~tcv Act 1966 ("the Act") and served upon her. She says that the issue of the summons or her examination under it would be oppressive and an abuse of process of the Court.

It appears that Mrs Galea's husband, the bankrupt,

at some stage transferred all or substantially all of his

were issued against both the bankrupt and his wife and these assets to his wife prior to becoming a bankrupt. Summonses	came before a registrar of the Court in November 1991. At
that stage the summons against Mrs Galea had not been served and only Mr Galea was examined. His examination was adjourned before a judge of the Court on 2 March 1992.

On that date Mrs Galea did not appear for she had

not been served. I was told from the bar table that, in the

course of his examination, the bankrupt indicated that he had not told his wife that the examination was on. Affidavit evidence was led from a Mr Theiss, a licensed commercial sub- agent and process server, indicating the difficulties there had been in serving Mrs Galea. Evidence was also produced by the trustee from the assistant official receiver to the effect that Mr Galea had disclosed virtually no assets in his statement of affairs, although he was a medical practitioner, and suggesting that Mrs Galea, who was a housewife and who had not been engaged in paid employment, did own significant property. This affidavit was apparently filed in connection with the obtaining of the summons under s.81 of the Act and supported a submission to the Court at that time that it was appropriate that a summons under s.81 be issued to enable there to be investigation into the bankrupt's involvement in the purchase and sale of various parcels of real property, companies and other business ventures and other assets of the bankrupt generally.

For Mrs Galea, it was submitted that the trustee had commenced proceedings to set aside the various transactions involving dispositions of property from the bankrupt to his wife and that in those proceedings the trustee had filed all the evidence which the trustee proposed to file and rely upon.

I was told from the bar table, if it be relevant, that the trustee commenced those proceedings against Mrs Galea, having regard to a need for urgent interim relief, to prevent her from disposing of the relevant assets. Apparently the matter came initially before Heerey J, who abridged the time for service, and ultimately before Wilcox J, who made orders granting interim relief to the trustee. It is said, on behalf of Mrs Galea, that because these proceedings have been commenced and against the background of the fact that the bankrupt has himself been examined for three days previously, the purpose of the examination under s.81 must be to advance the case of the trustee in the hearing of the proceedings against Mrs Galea, such as to be an abuse of process.

The law was said to be clear, established in the case of Re Franks: Ex ~arte Gittins (1892) 1 QB 646 at 648,

that proceedings by way of summons under s.81 or cognate proceedings should not be allowed to become a dress rehearsal for a cross-examination in an action which has been commenced. What was said by Vaughan J in Re Franks has been applied in & Castle New Homes Limited [l9791 2 All ER 775 and it was said	was applied also by Street J In Re Hugh J. Roberts Ptv Limited	(in lial (1970) 91 WN (NSW) 537 at 541.
There are a number of difficulties with the submissions put on behalf of Mrs Galea. First, no evidence was adduced on her behalf that she proposes to file evidence in the proceedings commenced by the trustees so as to become susceptible to cross-examination. Indeed, her representative
declined an invitation to give an undertaking about filing evidence. Secondly, at this early stage, it is not known what questions the trustee may seek to put to her in the examination. I t may well be that the questions proposed to be put have no relationship at all to the proceedings. Clearly enough, the Court would not in advance preclude the trustee from asking questions on other matters merely because there were existing proceedings pending by the trustee against Mrs Galea. This was conceded properly on behalf of Mrs Galea. It still leaves open, of course, what the situation would be if questions were asked in respect of the transactions the subject of the current proceedings.

In Karounos v Official Trustee (1988) 80 ALR 626 at

632-633, the Full Court of this Court set out a number of

principles relevant to the issue of summonses under s.81 of the Act, which principles derive to a large extent from decisions on parallel provisions concerning company

liquidations. Among the decisions referred to, as will be	seen, is the decision of Street J in Re Huah J. Roberts Pty	"If a person summoned believes that
compliance with the summons would be oppressive or vexatious, he can apply to the court to have the summons set aside or adjourned to a more convenient time. Such an application to the court W usually be determined on a broad view of the issues in the particular case and a weighlng of competing principles, ...
( 8 ) Discharge o r adjournment o f a summons may be appropr ia t e where there i s
l i t i g a t i o n pending o r l i k e l y t o b e
i n s t i t u t e d and it i s a l l e g e d t h a t :

Limited (in lial. The Court said (at 633):

( a ) the summons i s b e i n g improper l y

sought a s an a i d t o t h a t

l i t i g a t i o n . . .	w h e r e	o r d i n a r y
p r o c e d u r e s	o f	d i s c o v e r y ,

i n t e r r o g a t l o n	o r	subpoena	would	b e
f a i r e r	and	more	a p p r o p r i a t e ,	o r

(b ) it would b e more j u s t and

e q u i t a b l e t o d e f e r t h e examina t ion

under s.81 o f the A c t u n t l l t h e

p a r t i c u l a r p i e c e o f litigation h a s

been d l sposed o f .

( 9 ) I f such an a p p l i c a t i o n i s made t o the

c o u r t b y a person summoned, t h e c o u r t must

c o n s i d e r a f r e s h , on the m a t e r l a l b e f o r e

i t , whe ther	t h e summons	should	be	set
a s i d e	o r adjourned	t o a	more	conven i en t
time.. .

( 1 0 ) There i s n o d i f f e r e n c e i n p r i n c i p l e

between c a s e s where proceedings have

a c t u a l l y been instituted and where t h e y

a r e m e r e l y i n contemplation: s e e Re Huuh

J . Rober t s P t y L imi ted ( i n l i a l (1970) 91

W N ( N S W )	537	a t	541;	b u t ,	where	l i t i g a t i o n
i s	a f o o t	t h e	I s s u e s	w i l l	be	c l e a r e r ,

procedures o f d i s c o v e r y , I n s p e c t i o n and

subpoena	a v a i l a b l e ,	and	the	t i m e	o f
h e a r i n g	more	c e r t a i n .	Any	o f	t h e s e

f a c t o r s may a f f e c t the c o u r t ' s d e c i s i o n i n

a p a r t i c u l a r ca se .

( 11 ) Where l i t i g a t i o n i s pending o r

l i k e l y t o b e	brought	and	t h e	i n f o r m a t i o n
sought	under a	summons	could	a f f e c t t h a t
l i t i g a t i o n ,	t h e r e	i s n o	presumption	t h a t

the summons would be s e t a s l d e o r

adjourned. I t would normal ly o n l y be set

a s i d e i f the a p p l i c a t i o n were d e f e c t i v e i n

some way o r the c o u r t found some improper

m o t i v e beh lnd the a p p l i c a t i o n . I t would

be adjourned i f t h e ba lance o f j u s t i c e and

conven ience i n t h e p a r t i c u l a r c a s e s o

r e q u i r e d . I n some c a s e s it migh t b e

a p p r o p r i a t e	t o	d e f e r	examinat ion	on	a
p a r t i c u l a r	t o p i c .	I n	a l l	c a s e s	the

R e g i s t r a r o r t h e c o u r t w i l l be c a r e f u l t o

see t h a t i n j u s t i c e i s n o t occasioned i n

the course of exarninatlon by the

particular questions asked...

(12) Both the Registrar and the court

will give due weight to the fact that a summons is sought by the Official Trustee who will not be presumed to have acted unfairly or for an improper purpose except on convincing evidence.. . But an application by the Official Trustee will still be subject to proper scrutiny and will be refused if the Registrar or court is not satisfied that it should be granted.

There has been no evidence adduced before me that would in any way suggest that the Official Trustee has acted or will act unfairly or for an improper purpose. The present is not a case where the summons was issued only after litigation had been instituted. Rather, the summons had issued a considerable time ago but apparently there had been

considerable difficulty in serving Mrs Galea. The proceedings

against her were instituted in explicable circumstances and as a matter of urgency. In these circumstances it could hardly be said that the summons itself was improperly sought as an

aid to litigation. In the absence of any evidence there is no	reason to believe at this stage that it would be just and
equitable to defer the examination under s.81 until the litigation has been disposed of. In particular I would not find that there was any lmproper motive behind the desire today to ask questions of Mrs Galea. For this reason I would decline to set aside the summons or for that matter to adjourn it. In so saying, I emphasise what was said by the Full Court
in Karounos at para. (ll), namely, that in the course of the examination the Registrar will be careful to ensure that injustice is not occasioned to Mrs Galea.
I certify that this and the
preceding six (6) pages are a true copy of the Reasons for Judment herein of his Honour
Mr ~ustzce Hill.
Associate:

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Date: 30 March 1993

Counsel and Solicitors	Mr P. Brereton instructed by
for Applicant:	the Australian Government Solicitor
Counsel and Solicitors	Mr C. Harris instructed by
for Respondent:	Robert Harper & CO
Date of Hearing:	10 September 1992
Date Judgment Delivered:	10 September 1992