Re Maher, D. & Anor v Ex parte Official Trustee in Bankruptcy

[1993] FCA 1032

I 0 32 93

JUDGMENT No. ........ ........ .. ........ ....

IN THE FEDERAL COURT OF AUSTRALIA

EXERCISING FEDERAL JURISDICTION

IN BANKRUPTCY

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE:  DENIS MAHER

Bankrupt

EX PARTE : ELIZABETH JOANNE MARIE MAHER

Applicant

AND :  OFFICIAL TRUSTEE IN BANKRUPTCY

Respondent

COURT :	NORTHROP J
PLACE :	MELBOURNE
m:	16 DECEMBER 1993  16 FEB 1994

FEDERAL COURT OF
AUSTRALIA

EX TEMPORE REASONS FOR JUDGMENT

This is an application brought by Elizabeth

Maher, as applicant, seeking an order that the summons dated 27 May 1993 for the examination of the applicant pursuant to s81 of the Bankru~tcv Act 1966 be set aside on the grounds that the said summons is an abuse of the process of the Court. It transpires that, in reality, what is being sought is a review of the decision of the Registrar in Bankruptcy to issue the summons under s81. That sumions was issued on 27 May 1993. Under subsection 14(5) of the Bankru~tcv Act that decision is capable of being reviewed by the Federal Court exercising jurisdiction in bankruptcy.	The provisions of s81 enable a trustee, among other person who may be able to give evidence as to the affairs of a	things, to apply for the issue of a summons directed to a
bankrupt to attend at a time and place specified for the purposes of being examined as to the affairs of the bankrupt. This is all part of the processes of bankruptcy flowing from a sequestration order having been made or a person having become a bankrupt. Bankruptcy Rule 129 contains procedural provisions as to how the matter is to ,be brought before the Registrar for the granting of the summons. There must be an application in writing identifying the person sought to be examined. There must be an affidavit setting out the inquiries that have been made concerning the subject matter of the proposed examination, details of the requests made to the person to provide the required information, and the circumstances of any refusal or failure of that person to co- operate in complying with the request.
In the present case, this procedure was followed. An affidavit was sworn by Tash Angelopoulos on 24 May 1993 whlch set out all the required information prescribed by Rule 129. I do not propose to go through it in detail, but reference is
made in paragraphs 4, 5, 6, 7, 8 and 9 of that affidavit which disclose the reason why the trustee considered it necessary to
have a summons directed to Mrs Maher to be examined as to the affairs of the bznkrupt. It also sets out a long history of letters where notices had been given under s77 of the Bankru~tcv Act and discloses a complete refusal by Mrs Maher to co-operate in relation to those requests. The affidavit was in support of an application -dated 25 May 1993 in which the trustee sought the issue of the summons under subsection

S

81(1), the examination being for the purpose of ascertaining:

(a) what interest the bankrupt has in the following

companies -

Kitoria Pty Limited
Monash Tyre Services
Clayton.Tyre Services
Sierra Quest;

(b) the source of the bankrupt's income;

(c) the nature of the bankrupt's interest in the

following properties -

1356-1358 Centre Road Clayton
Lot 312 Davld Lowe Way Point Arkwright
1-3 Andrew Street Point Arkwright

(apparently the latter two properties being land in
Queensland).

The summons was issued on 27 May 1993 requiring 14rs Maher to attend for the examination. What has been challenged is the decision to issue the summons. The review under subsection 14(5) is by way of re-hearing on the material

was before the Registrar, further affidavits have been relied	brought before the Court. In addition to the affidavit that	upon by the applicant, including the affidavit of her instructing solicitor, M r Samuel, sworn 14 December 1993, plus other affidavits which had been filed earlier in these proceedings.
The substance of the grounds for the application are that there are in existence in the County Court in Victoria a
number of actions involving some of the land described in the affidavit in support of the appl~cation for the issue of the summons under s81. In addltion there is litigation in the County Court in relation to one of the companies referred to in the same affidavit. It is said that the existence of those proceedings in the County Court are of importance and that proceedings in the nature of an examination under s81 of the Bankruptcv Act would constitute a contempt of Court or an abuse of process of the Court, or in some way would be contrary to law and that therefore the examination should not be allowed to continue.
The affidavit of Mr Samuel setting out the various existing proceedings in the County Court contained ce~tain deficiencies as to the proof of those proceedings, the parties to them and the nature of them. During the course of submissions on behalf of Mrs Maher, it became apparent that these deficiencies could have an adverse eftect on the application. In those circumstances counsel for Mrs Maher
before the Court. In opposing the application for the applied for an adjournment to enable proper material to be put
adjournment, counsel for the Official Trustee in Bankruptcy submitted that it did not really matter because, even if they had been proved properly, in his submission this was not a case where the summons should not have been issued. In those circumstances, the Court refused to grant the adjournment and proceeded on the assumption, for the purposes of this application, that the actions set out in the affidavit of Mr Samuel are in existence and those actions concern some of the properties and one of the companies mentioned in that affidavit and that those actions affect the interests of the Official Trustee in Bankruptcy as trustee of the bankrupt estate of Denis Maher.
In the circumstances, the question is whether, on all the material presently before the Court, Mrs Maher has made out a case that the summons should not have been issued under s81 of the Bankruotcv Act. In my opinion that argument must fail. In coming to this conclusion I rely upon the opinions expressed in two cases, the first being Barton v Official Receiver (1977) 13 ALR 263, a judgment of Sweeney J sitting in the Federal Court. That was a case involving s69 of the Bankruotcv Act, which was a section similar to s81 but which applied with respect to the examination of a bankrupt. There, criminal proceedings were in existence against the bankrupt and the trustee sought an examination of the bankrupt under s69. The substance of the decision of Sweeney J appears in
report. That was a case where the issue was whether the the headnote and is taken from a passage at page 290 of the
Registrar should proceed with the examination of the bankrupt, and the Court held that the examination should be allowed to continue to proceed, leaving it to the Registrar to exercise his discretion in respect of any question invoking possible prejudice to a fair trial of the bankrupt and also that the Court should not seek to fetter the discretion of the Registrar or attempt to state any hard and fast rules to be followed in the exercise of that discretion.

The other decision is that of Ryan J in the matter of

Joiner; Ex Parte Oficiia Trustee in Bankruptcv and Joan Elizabeth Joiner and Others, proceeding No VB 787 of 1990, the judgment of which is unreported, but was given on 29 June 1992. In that case, there were proceedings in the Federal Court in relation to whether certain property was in fact the property of the trustee, having regard to its disposition some time prior to the bankruptcy. The questicn arose whether, in those circumstances, there could be an examination under s81 of the Act. His Honour referred to the general principles epplicable in relation to the discretion of the Court in relation to a deferral of examination under s81 and as discussed in the case of Karounos v Official Trustee (1988) 19 FCR 330, and then at page 7 his Honour said, and I quote:

"I consider that it is reasonable for the trustee to seek the examination of three persons who have directly benefited from a substantial voluntary disposition of property before deciding whether to persevere with the

declarations in respect of that property and the	substantive application he has instituted for
subsequent transactions into which it can be traced. That is not to say that the s81 examination should be used for collateral purposes such as an attack on the credit of the first, second and third respondents with a view to undermining the utility of his or her evidence in the substantive proceeding."

The basis of both those decisions is that the exami~ations under what was s69 of the Bankruptcy Act, as well as s81 as it then was and s81 as it now is, are for different purposes altogether. They are designed to enable a trustee to seek information as to the affairs of the bankrupt. The mere existence of other proceedings, whether in this Court or in another court, is not a bar to the granting of a summons for such examinations. During the examinations questions might arise as to whether the questions are appropriate or not, particularly havlng regard to other proceedings, but that is a discretion which must be exercised by the person conducting the examination under s81.

It follows therefore, that even assuming the existence of the County Court proceedings referred to in these proceedings, this is a case where, on all the material presently before the Court, the Court is of opinion that the issuing of the smqons was appropriate. The decision to issue it should not be set

aside. It follows that the summons is a valid summons.

In coming to this conclusion, it is noted that the time
within which a review should be brought, as provlded for by

Bankruptcy Rule 158, has not been complied with. The Court

does not, in the circumstances, need tc decide whether to

grant an extension of time within which to brlng this

application. It is noted that the applicant, Mrs Maher, knew of the existence of the summons a long time ago, the actual date being 24 June 1993. There had been an earlier application to have the summons set aside, but no evidence was led on that application. There are strong grounds why leave to review outside the prescribed time should not be granted. I have dealt with the substantive issue without deciding the preliminary point. On the substantive issue the application must fail. Accordingly the application is refused.

In the circumstances, the Court makes the following two

orders :

1. That the application be refused;

2.   That the applicant pay the respondent's costs of the application.

In the events which have happened, counsel for the respondent has sought a further order that the applicant pay the respondent's costs aborted as a result of the applicant not appearing on 14 December 1993 ln answer to the summons to attend for examination under s81 of the Bankru~tcv Act. In making that submission for costs, counsel relied upon s32 of

the Bankru~tcv Act which provides:

proceeding dismissed for want of jurisdiction, make such	"The Court may, in any proceeding before it, including a
orders as to costs as it thinks fit."

It was submitted that the power of the Court to make orders for costs in a proceeding is very wide and extends to making an order for costs against a solicitor for a party and even against a non-party in appropriate cases. There is authority for those propositions. But any argument would be fairly lengthy and may need to be supported by further affidavit material as to what occurred on 14 December.

Counsel for the applicant has opposed the making of such an order for costs saying that the normal rule should apply, that in an examination under s81 the Registrar normally does not order costs, the costs of the trustee being costs in the administration of the estate of the bankrupt. He argued further that the filing of further affidavits would add to the costs and in all the circumstances there should be no order for costs at all in relation to what occurred on 14 December.

In all the circumstances it seems to me, the matter having been ralsed, that the Court is required to look into it. The parties are not ready to argue that matter here today. Accordingly the Court makes an order that the further hearing of the application be adjourned to the directions list at 9.30 am on Wednesday 9 February 1994. The purpose of that adjournment is to allow the trustee, if so advised, to file

any further affidavits on or before 19 Janilary 1994, and the	applicant to file any affidavits in answer thereto on or
before Friday 4 February 1994. If the matter is to proceed further, a direction can be given on the hearing on 9 February to fix a date for that hearing before the Court as presently constituted to hear submissions on the question of costs.
I certify that this and the preceding nine (9) pages are a
true copy of the Ex Tempore Reasons for Judgmenr, of The Honourable M r Justice R.M. Northrop.
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