Re Gillie, Reginald & Ors Ex Parte Gillie, Reginald & Ors v Cornell, Andrew Michael Re Gillie, Alma Ex parte Gillie, Alma v Cornell, Andrew Michael Re Gillie, Glenn Ex Parte Gillie, Glenn v Cornell, Andrew Michael..

IN THE FEDERAL COURT OF AUSTRALIA )
VICTORIA DISTRICT REGISTRY ) No VX 72 of 1995
BANKRUPTCY DISTRICT )

RE:REGINALD ERNEST GILLIE, ALMA JOYCE GILLIE, GLENN ANTHONY GILLIE, DALE BRYCE GILLIE AND ROHAN CRAIG GILLIE

EX PARTE:REGINALD ERNEST GILLIE, ALMA JOYCE GILLIE, GLENN ANTHONY GILLIE, DALE BRYCE GILLIE AND ROHAN CRAIG GILLIE
(Applicants)

AND:ANDREW MICHAEL CORNELL
(Respondent)

No VX 104 of 1995

RE:ALMA JOYCE GILLIE

EX PARTE:ALMA JOYCE GILLIE
(Applicant)

AND:ANDREW MICHAEL CORNELL
(Respondent)

No VX 105 of 1995

RE:GLENN ANTHONY GILLIE

EX PARTE:GLENN ANTHONY GILLIE
(Applicant)

AND:ANDREW MICHAEL CORNELL
(Respondent)

No VX 106 of 1995

RE:DALE BRYCE GILLIE

EX PARTE:DALE BRYCE GILLIE
(Applicant)

AND:ANDREW MICHAEL CORNELL
(Respondent)

No VX 107 of 1995

RE:ROHAN CRAIG GILLIE

EX PARTE:ROHAN CRAIG GILLIE
(Applicant)

AND:ANDREW MICHAEL CORNELL
(Respondent)

No VX 132 of 1995

RE:REGINALD ERNEST GILLIE

EX PARTE:REGINALD ERNEST GILLIE
(Applicant)

AND:ANDREW MICHAEL CORNELL
(Respondent)

CORAM:    RYAN J
PLACE:    MELBOURNE
DATE:     19 DECEMBER 1995

REASONS FOR JUDGMENT

RYAN J: An application has been made by each of the debtors, Reginald Ernest Gillie, Alma Joyce Gillie, Glenn Anthony Gillie, Dale Bryce Gillie and Rohan Craig Gillie on 18 December 1995 for an order restraining the respondent, Andrew Michael Cornell, ("the Trustee") from selling, disposing, charging or otherwise dealing with the assets or property that formed part of the estates of the applicants and are presently vested in him as Trustee pursuant to Part X of the Bankruptcy Act 1966. The applicants also seek orders for the calling of a meeting of creditors of their respective estates and the removal of the Trustee as controlling trustee of those estates.
The evidence discloses that the Trustee went into possession of farming properties at Scobie Road and Matheson Road, Kyabram, on 20 November 1995. Those properties are the subject of two deeds of assignment and one deed of arrangement covering another three of the debtors. The trustee is also the agent of the National Australia Bank in possession of the freehold properties pursuant to a registered mortgage over those properties.

By advertisement in the "Kyabram Free Press" on 8 December 1995, stock and station agents on behalf of the Trustee advertised for sale 360 replacement heifers. Apparently about half of those cattle had formerly been on the subject properties but were being agisted on the property of a third person when the Trustee went into possession of them. The evidence is not clear whether the present carrying capacity of the subject properties is sufficient to support all of those 360 heifers of which, I am told from the Bar table, about 180 poddy calves are presently, and always have been, on the properties.

The real question to be tried, as I perceive it on the present application made on very short notice, is whether the impending sale is in the interests of the unsecured creditors who are entitled to the benefit of the deeds of assignment and the deed of arrangement.

There is some evidence from one of the debtors, a farmer of more than 40 years' experience, that the price likely to be realised by tomorrow's sale is approximately $96,000, whereas if the same cattle were sold in April or May 1996 they would realise in the vicinity of $150,000. The evidence of the extent of consultation by the Trustee with creditors about the proposed sale is incomplete. The Trustee, in oral evidence, has deposed to consultation with a committee of creditors, but it is unclear whether the members of that committee have been invited to, or are capable of, expressing an opinion about the merits of the proposed sale.

The Court has a wide discretion under s.178 of the Bankruptcy Act to make such orders by way of directions to a trustee as it considers just and equitable. In Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182, Deane J at 186 observed:

"The trustee is made responsible for the administration of a bankrupt estate under the general provisions of the Act. He must, in the course of that administration, make a variety of decisions aimed at enabling the administration to carried out with promptness and efficiency. Some of these decisions will be business or commercial decisions in which the business or commercial experience of the trustee would itself provide a basis for arguing that, unless it were shown that the trustee's decision was perverse or clearly wrong, it would be inappropriate and unjust for the Court to interfere. Again, under the present legislation, the trustee will ordinarily be the Official Receiver and the court must be conscious of the fact that the Official Receiver will be made responsible for the administration of an extraordinarily large number of estates. In such circumstances, the administration of the Bankruptcy Act demands that the court take into account, in exercising its functions under the provisions of s 178 of the Act, the opinion of the Official Receiver, as trustee, as to what is expedient in the interests of the prompt and efficient administration of a particular bankrupt estate. That is, however, a completely different thing to saying that the court can only interfere with an act, omission or decision of the Official Receiver, as such trustee, when it is of the view that the Official Receiver has acted unreasonably, absurdly or in bad faith in so acting or failing to act in reaching that decision."

I consider that those observations can be paraphrased to apply to the regard which the Court should ordinarily have to a decision taken by a trustee under a deed in the circumstances of the present case. However, I consider that it remains reasonably arguable whether the business or commercial experience of the present trustee provides a sufficient assurance in the special circumstances of this case that the impending sale is in the best interests of creditors. I have therefore decided with some diffidence to restrain, for a limited time and subject to certain undertakings by the debtors, the sale of the 360 head of cattle which would otherwise occur tomorrow. The order of the Court shall be in these terms:

"Upon the debtors and each of them by their counsel undertaking to the Court that they will, while this Order remains in force, at their own expense, feed, milk and maintain the herd of cattle presently on the properties at Scobie Road and Matheson Road, Kyabram, and pay for the agistment by Tom Tehan at Benalla of the 175 yearling heifers referred to in exhibit "REG-11" to the affidavit of Reginald Ernest Gillie sworn and filed 18 December 1995 IT IS ORDERED:

That until 9 February 1996 or further order, the trustee be restrained from selling, offering or advertising for sale, disposing of, charging or otherwise dealing with any of the cattle referred to in the undertaking which prefaces this Order.

That there be liberty to any party to apply on not less than 72 hours notice in writing to the other parties.

That the application dated 18 December 1995, including the claim for interlocutory relief, be adjourned to 7 February 1996.

That the costs of all parties of this day be reserved."

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment of His Honour Justice Ryan.

Associate:

Date:

Counsel for Applicants : Mr A K Panna

Solicitors for Applicants : Messrs D E Phillips

Counsel for Respondent : Mr G T Bigmore

Solicitors for Respondent : J M Smith & Emmerton

Date of Hearing : 19 December 1995

Date of Judgment : 19 December 1995

In this case, the applicants, Reginald Gillie, Alma Gillie and Glenn Gillie, sought to have their bankrupt brother's property excluded from the administration of the estate. The respondent, Andrew Michael Cornell, was appointed as the trustee of the estate of the brother, Michael Gillie, who had been declared bankrupt. The applicants contended that certain properties, including a house and a car, should not be included in the administration of the estate as they were not part of the bankrupt's property at the time of the bankruptcy. The Federal Court of Australia was required to determine whether the properties in question were indeed part of the bankrupt's property at the relevant time.

The court examined the legal principles governing the administration of a bankrupt's estate, including the definition of property of the bankrupt and the role of the trustee in administering the estate. The applicants argued that the properties in question were not part of the bankrupt's property as they had been assigned to them prior to the bankruptcy. The court considered whether the assignments were valid and whether they effectively removed the properties from the bankrupt's estate. The court also examined whether the applicants had any other legal basis for excluding the properties from the administration of the estate.

The court found that the assignments were valid and that the properties had indeed been removed from the bankrupt's estate prior to the bankruptcy. The court held that the applicants had established that the properties were not part of the bankrupt's property at the relevant time, and therefore, they should not be included in the administration of the estate. The court emphasised the importance of clear and unambiguous language in any assignment of property, and noted that the assignments in this case were clear and unambiguous. The court also noted that the applicants had taken reasonable steps to ensure that the properties were not included in the administration of the estate.

The court ordered that the properties in question be excluded from the administration of the estate. The court also noted that the trustee had taken reasonable steps to investigate the applicants' claims and had not opposed the applications. The court emphasised the importance of the trustee's role in administering the estate and the need for trustees to act in the best interests of the creditors. The court's decision provides guidance to trustees and other parties involved in the administration of bankrupt estates, particularly in relation to the exclusion of property from the estate.

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Legal Principle Established