Re Lill, L.J. v Ex parte Gillis, J.M.

[1989] FCA 285

JUDGMENT NO.. . & ! . S s

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IN THE FEDERAL COURT OF AUSTRALIA	) )
NEW SOUTH WALES DISTRICT REGISTRY )	NO. P2632 of 1988

1

BANKRUPTCY DIVISION )

RE:  LESTER JOSEPH LILL

EX PARTE:  JOHN MAXWELL GILLIS &
ORS .

15 March 1989

REASONS FOR JUDGMENT

LOCKHART J.

The bankruptcy proceedings which are before the Court concern a petition seeking sequestration of the debtor's estate. The petitioning creditor is a firm of solicitors who seek to recover their costs with respect to Family Court proceedings between the debtor, Lester Joseph Lill, and his former wife.

application failed. The debtor's subsequent appeal to the	District Court to set aside that judgment but that
Court of Appeal of New South Wales also failed. The debt claimed by the petitronlng creditor is the sum of their costs in these three proceedings. If there were to be a bankruptcy, these costs would form part of the provable debt of the estate of the bankrupt. However, due to certaln events which resulted in an agreement between the parties, there will be no bankruptcy; there will be a dismissal of the petition by consent.
A brief statement of the hlstory of the current bankruptcy proceedings is necessary. The petitioning creditors caused a bankruptcy notice to be issued on 19 October 1987 seeklng to recover the debt then due to them arising from the default judgment and accrued interest. That was served on 23 October 1987. The petition was presented on 2 December 1988.
In the meantime, there was the litigation between the parties with respect to the setting aside of the District Court default judgment and the appeal before the Court of
Appeal. From the file it appears that there were at least two extensions of time to the debtor to comply with the
requirements of the bankruptcy notice, the last of whlch appears to have been made in terms which extended the time for compliance up to and Including 20 October 1988. Hence, the bankruptcy petitlon was presented within the statutory period of six months. No point has been taken, nor could it succeed if it had been taken, in relation to the lapse of time between the service of the bankruptcy notice and the presentation of the petition, a period of approximately 14 months. In effect, the petrtioning creditor agreed not to present the petition whilst the Court of Appeal proceedings weere stlll pending. That appeal concluded in favour of the petitioning creditors who then continued with the bankruptcy
proceedings which led to the presentation of the petition.
On 28 February thrs year the Court was handed short minutes of order signed by or on behalf of the petitioning creditors, the debtor and the interim receiver, Mr. Brien, who had been appointed by this Court as Interim receiver on 6 December 1988. The short minutes embody an agreement between the petitioning creditors, the debtor and Mr. Brien, as interim receiver, for the payment of moneys into an account from which they should be applied, first, as to the costs and expenses of the interlm receiver In excess of $7,920.80, that amount having previously been paid by the debtor on account of the interim receiver's costs and expenses, secondly, in payment of legal costs found due from the debtor to the petitioning creditor and third, the balance to be repaid to
the debtor.
The dispute this morning concerns the question of the petitioning creditors' entitlement to their costs of the bankruptcy petition and the question of the entitlement of the interim recelver to the costs and expenses of hls interlm receivership.
In my opinlon the petltloning creditors, when they presented the petition, dld so in circumstances for which they cannot be criticised. They acted in conformity with the Bankruptcy Act 1966 and the Bankruptcy Rules and, although it has been argued that the presentation of the petition was unreasonable, in all the circumstances I reject that proposition. Indeed, it seems to me that the conduct of the petrtioning creditors was reasonable. Accordingly, I propose to allow the petitioning creditors their costs of the petition including any reserved costs.
The costs of the interim receiver raise some complex matters. It is not for this Court to act as taxing officer of the costs and expenses of the lnterim receiver; nor is it suggested by any party that it should. Broadly speaking, what the interim receiver did was to make enqulries in this country to ascertain the whereabouts and identity of assets of the debtor which led him to make enquiries in New Zealand as to like matters concerning New Zealand assets of the
debtor. As part of these enqulries the lnterlm recelver engaged solicitors, for the purpose, amongst other things, of
obtaining letters of request to be rssued to the High Court
of New Zealand. The solicitors engaged were the petltlonlng creditors although nothlng turns on thls fact. The letters of request were deslgned to aid in the recovery of New Zealand assets by the freezlng of a substantial sum held in a deposit account with a New Zealand bank at its Blenheim branch.
Those efforts led the lnterim recelver to appolnt New Zealand solicitors, and it seems counsel, to act in relation to that matter. It 1s not in dispute that the interim receiver should be paid hls proper costs and expenses of acting as interim recelver, indeed, the fact that he should be so paid is inherent in and expressed in the short minutes of order to which I have referred.
Accordingly the Court orders that the petition be dismissed by consent, that the debtor pay the costs of the petitioning creditors including any reserved costs and that the costs and expenses of the lnterim receiver in acting in that capacity in this matter be allowed.

It appears from the evidence that the costs to which the petitioning creditors were entitled became the sublect of a default ludgment in the District Court in a substantial sum of money. An application was made by the debtor to the

I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate

Date: 15 March 1989