Re Hedrlin, J

[1991] FCA 470

HOT SUITABLE FOR DISTRIBUTION

IN FEDERAL COURT OF AUSTRALIA 1

mNERAL DIVISION )

BANKRUPTCY DISTRICT OF	THE STATE	)	NB 448 of 1983
9F NEW SOUTH WALES	)

RE :  JOSEPH HEDRLIN

CORAMa Burchett J.
PLACE: Sydney

DATE : 18 July 1991

EX TEMPORE REASONS FOR JUDGMENT

BURCHETT J.:

This is an application brought by Mr Hedrlin, a statutorily discharged bankrupt discharged after five years, seeking the removal of the trustee of his estate, Mr Donnelly, and also seeking, under section 212 (a) of the Bankru~tcv Act 1966, an order requiring the trustee to divest himself of certain properties held by him as assets in the bankruptcy. Such an application is made on affidavit evidence, and affidavits were filed, and notice was given by Mr Hedrlin that it was not intended to adduce oral evidence.

permitted Mr Hedrlin to inspect others of the documents. No	further affidavit appears to have been filed seeking to make
any use of the material so obtained by inspection of documents. Mr Hedrlin sought, at the hearing of the present application, to raise again the question of legal professional privilege decided by Ryan J. I did not permit that matter, in the circumstances, to be re-opened. After the evidence had closed, and after I had reserved my decision for a few hours in order to prepare to deliver these reasons, Mr Hedrlin sent to my chambers a further document, and I will have that document marked for identification "1". It is not an affidavit, and does not constitute admissible evidence.
Much of the contents of the affidavits on which Mr Hedrlin relies is irrelevant or inadmissible, and I have read the affidavits subject to objection. The most significant matter raised by the evidence is the matter of delay. Other matters, including allegations of gross misconduct and fraud, raised by Mr Hedrlin have no substance. There are also allegations regarding the circumstances in which the petitioning creditor's debt was incurred, which have been the
possibly now found the relief sought in the present subject of a great deal of prior litigation and cannot
application.
As to the question of delay which, as I have said, is the most significant matter raised in the evidence before me, this must be seen against the entire background of this greatly over-litigated bankruptcy. Mr Hedrlin became bankrupt on 18 May 1983. An appeal against the sequestration order was dismissed on 29 June 1983. An application to remove the trustee was dismissed on 4 October 1983, and at the same time an application by the trustee for the committal of Mr Hedrlin for contempt, in that he had failed to file a statement of affairs, was also dismissed on his then and there filing the statement of affairs in court. A creditors' meeting was held on 25 October 1983, and on 25 November 1983 the Inspector- general in Bankruptcy approved of funding for section 69 and section 81 examinations.
There were several examinations, and they were, it appears, completed in May 1984, after which counsel's advice, as is usual in matters of some complexity, was obtained by the trustee as to whether applications, with a view to the getting in of assets, would be justified. Funds were refused by the Inspector-general in Bankruptcy, in relation to some proposed applications, on 3 October 1984. Over the period from then until 30 April 1986, the trustee had to meet a further application for his removal, four separate applications for
became preoccupied by all this litigation, he may have been in annulment, and an application for leave to appeal. If he
error, but the error must have been understandable.
Funding for an application for a declaration as to the bankrupt's beneficial interest in a property at Woolgoolga was granted by the Inspector-general in Bankruptcy on 24 June 1986, and an application was filed in August. There were difficulties regarding service of the application, and an
order for substituted service became necessary. Later, it became necessary for that order to be made the subject of a further order varying it. The application was first fixed for hearing on 30 July 1987, and I infer that the delay between its institution and the fixing of it for hearing must have been due, in part at least, to the problems in connection with service. The respondents to that application thereafter, on three occasions, obtained adjournments of it. Finally, it came before the court on 12 November 1987, when consent orders were made with a view to the sale of the property the subject of the application, and the division of the proceeds. However, agreement was never reached on a price at which the property might actually be sold, and a request made by the trustee, in an attempt to obtain agreement upon a reduced price in order to enable the sale to proceed, was not ultimately answered. The property has not in fact been sold. On the evidence, it appears that its value was not more than $10,000, of which the estate would, of course, after payment of expenses, have been entitled only to a proportion.
In the meantime, funding was approved on 5 January 1988 for a further application, which was filed on 28 July 1988 - that is, a further application aimed at the getting in of what was alleged to be an asset of the estate. There was, again, a problem in relation to service of that application. Finally, its hearing was fixed for 21 December 1988, but, on that occasion, the hearing was adjourned on the application of the respondent to it (the wife of the bankrupt) and the matter was
fixed for hearing at a later date, being 1 June 1989. At that stage, a preliminary issue was raised as to whether the application could proceed, following the statutory discharge of the bankrupt. Einfeld J gave judgment, on that issue, in favour of the trustee on 5 April 1990. The matter was then fixed for final hearing on 17 September 1990, but that hearing date was vacated, again on the respondent's application. The matter is now listed for hearing shortly.
The application before me was filed on 31 July 1990, so its progress towards a hearing has also been slow. It would be an understatement to say that Mr Hedrlin's bankruptcy has been far more difficult than the average. Quite possibly, it would have posed fewer problems if it had been proceeded with more quickly in its early stages. However, what I have recited is sufficient to show that, plainly, there were many obstacles impeding the trustee. It is extremely unfortunate that a quite small debt should have produced such a disproportionate flood of litigation, and have aroused so much
bitter feeling. However, the court can only deal with the situation which confronts it, and the fact is that this is the
case.
There is no doubt that Mr Hedrlin and his family were suspicious, from the beginning, of any action taken by the trustee, and are now quite obsessive about all the proceedings in the bankruptcy. But no ground has been made out, despite a quite voluminous quantity of evidence, for the removal of the
trustee, or for any order divesting him of property vested in him as trustee. In particular, the fact that the Woolgoolga property has not been sold provides no such ground. The application made before me today fails, and I am quite satisfied that it should be dismissed. The best thing that could happen in this estate is that the trustee's application, presently due to be heard, should proceed to finality, one way or the other, without further delay. M r Hedrlin's application is therefore dismissed with costs.

A subpoena was issued, more than six months ago, and a ruling was given by Ryan J on 12 November 1990, which involved that he upheld a claim to legal professional privilege in respect of some of the documents covered by the subpoena, but

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Burchett.

Associate:

Date: 18 July 1991