Re: Hutton

JUDGMENT No. L%$?.&,..,./

IN THE FEDERAL COURT OF AUSTRALIA	)	No. QP 425 of 1995
BANKRUPTCY DISTRICT REGISTRY	1	No. QP 766 of 1995
OF THE STATE OF QUEENSLAND	1	No, QP 200 of 1996

PETER HUTTON

Debtor

Ex parte:

BORAL MONTORO PTY LTD

Creditor

And :	METAL LINE INDUSTRIES
PTY LTD

Substituted creditor

REASONS FOR JUDGMENT

EINFELD J

BR1 SBANE

15 APRIL 1996

I am satisfied the debtor committed the act of bankruptcy alleged in the petition and with the proof of the other matters of which section 52(1) of the Act requires proof. I make a sequestration order against the estate to the debtor. Costs are to be taxed and paid according to the Act including reserved costs. I direct that a draft of this order be delivered to the

Registrar within seven days in accordance with Rule 1 2 4 ( 2 ) .

Ivor Worrell, a registered trustee, having filed a consent to act as trustee on 26 October 1995, would ordinarily become the trustee automatically by the operation of section 156A(3).

However, that consent appears to have taken place before the

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substitution of the present petitioning creditor and there may therefore be a requirement that the trustee file a further consent to act when the petition has been obtained by some party other than the creditor who on the record when some earlier comment was filed. The debtor has applied through counsel for the appointment of the Official Trustee or a registered trustee named David Clout to be the trustee and has relied upon an

affidavit of the debtor and of Mr Worrell. .,As

...

far as I 'read

. l ,

section 156A, the debtor does not seem to be kble' tb'be'heard

,on

the issue of who may be appointed as trustee of the estate, at

,. . .

any rate not after the time when the seque$tration' kkder is

ll'..:l__._* .*

made.

In addition, , the debtor has relied upon, as the basis for the application for an appointment of a trustee other than Mr Worrell, a suggested conflict of interest or some other undefined impropriety. Neither the conflict of interest nor the alleged impropriety have been particularised and, for my part, I can see no conflict and no impropriety, on the evidence before me, for the appointment of Mr Worrell. If the present consent of 26 October may be taken as a consent to act in the event that the bankruptcy has been obtained by a creditor other than the one who was on the record at the time when the consent was made, Mr Worrell would automatically become the trustee.

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In the circumstances, to avoid further costs, I think I should deem the consent to be a consent given in the current proceedings unless Mr Worrell files a withdrawal of his consent within seven days hereof. In that event, the Registrar may appoint the Official Trustee or any registered trustee as the Registrar deems appropriate.

CaseChat Overview and Summary

In the case of Peter Hutton, the debtor, against whom a sequestration order was sought by Boral Montoro Pty Ltd, the creditor, the Federal Court of Australia was tasked with determining the validity of the act of bankruptcy alleged in the petition and the subsequent appointment of a trustee for the debtor's estate. The court was also required to consider the substitution of the creditor and its impact on the automatic appointment of the trustee. The debtor, Peter Hutton, contested the act of bankruptcy and the appointment of Ivor Worrell as the trustee, citing potential conflicts of interest and other improprieties without specific details. The court was required to decide whether the debtor had grounds to challenge the trustee's appointment and whether the consent of the trustee was valid under the circumstances.

The court found that the debtor had indeed committed the act of bankruptcy as alleged and that the proof of the other matters required by section 52(1) of the Act was sufficient. The court also determined that the consent given by Ivor Worrell to act as trustee was valid and should be deemed to apply to the current proceedings, unless withdrawn within seven days. The court rejected the debtor's claims of conflict of interest or impropriety, finding no evidence to support such claims. The decision emphasised that the debtor's ability to contest the trustee's appointment was limited once a sequestration order was made. The court concluded that to avoid unnecessary costs, the consent of Ivor Worrell should be deemed valid unless explicitly withdrawn.

In conclusion, the court made a sequestration order against Peter Hutton and deemed the consent of Ivor Worrell as the trustee to be valid. The court also directed that the draft of the order be delivered to the Registrar within seven days. If Ivor Worrell withdraws his consent within this period, the Registrar may appoint the Official Trustee or any registered trustee deemed appropriate. The court further directed that costs be taxed and paid according to the Act, including any reserved costs.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established