Re Maher, D. Ex Parte Maher, D.

[1992] FCA 356

JUDGMENT No. . . ~ w . l ~ ........ . G 9 2

IN THE FEDERAL COURT OF AUSTRALIA	)
GENERAL DIVISION	1
BANKRUPTCY DISTRICT OF	1
THE STATE OF VICTORIA	) NO. VB 1969 of 1991

Re:  DENIS MAHER

The Bankrupt

EX parte:  DENIS MAHER

Applicant

And :  THE OFFICIAL TRUSTEE IN BANKRUPTCY (as trustee of the bankrupt estate

of Denis Maher)

Respondent

Coram:	Olney J
Place :	Melbourne
Date:	1 June 1992

04 JUN1992

FEDEWL COURT OF

AUSTRALIA PRINCIPAL

MINUTE OF ORDERS REGISTRY

THE COURT ORDERS:

NOTE :	Settlement and entry of orders is dealt with in rule
124 of the Bankruptcy Rules.

1.   That the bankrupt's application filed 22 May 1992 be

dismissed;

2.   That the costs of the Official Trustee and of the petitioning creditor of and incidental to the application be taxed and paid by the bankrupt.

IN THE FEDERAL COURT OF AUSTRALIA )

GENERAL DIVISION	)
BANKRUPTCY DISTRICT OF	1
THE STATE OF VICTORIA	1 No. VB 1969 of 1991

DENIS MAHER

The Bankrupt

Ex parte:  DENIS MAHER

Applicant

And :  THE OFFICIAL TRUSTEE IN BANKRUPTCY (as trustee of the bankrupt estate

of Denis Maher)

Respondent

Coram:	Olney J
Place:	Melbourne
Date:	1 June 1992

REASONS FOR JUDGMENT

The matter presently before the Court for determination is an application brought by the bankrupt pursuant to subsection

of the bankrupt's trustee in relation to the bankruptcy and to	179(1) of the Bankruptcy Act 1966 to inquire into the conduct
remove the trustee from office.
It is not possible to properly consider the application in a vacuum and accordingly the following chronology of events is set out:
17.10.89 Petitioning creditor (Amex) issued proceedings in the County Court of Victoria claiming an amount said to be owing to it by the bankrupt on his Amex Gold Card.

Judgment entered against the bankrupt in default of defence for $54,801.32 (the judgment).

Bankruptcy notice issued by Amex.

Bankruptcy notice served.

Summons filed in the County Court by bankrupt seeking to set aside the judgment. (Return date 4 May 1991).

Act of bankruptcy committed by failure to

comply with bankruptcy notice.

Creditor's petition filed by Amex. (Return

date 18 June 1991).

Summons to set aside judgment adjourned to 11

June 1991.

Summons to set aside judgment adjourned to 14
June 1991.

Summons to set aside judgment adlourned to 21

June 1991.

18.6.91	Creditor's petition adjourned to 16 July 1991.
21.6.91	Summons to set aside judgment heard and dismissed.
16.7.91	Sequestration order made. Official Trustee (the trustee) appointed as trustee.
July 1991	(Subsequent to sequestration order) notice of appeal against decision of County Court filed by bankrupt.
Application by bankrupt for "an order that the order made 16 July 1991 be stayed until further order. Alternatively, that the said order be rescinded". (Return date 21 August 1991).
Application adjourned to 11 September 1991.
Application adjourned to 30 October 1991.
Bankrupt granted leave to amend application to seek annulment of sequestration order. Further hearing adjourned to 11 December 1991.
Amended application filed.
Amended application adjourned to 12 February
Amended application adjourned to 18 March 1992. Bankrupt granted leave to further amend application.
Further amended application filed seeking
orders :

(a)	That the Sequestration Order made 16 July 1991 be annulled.
(b)	A declaration that the Sequestration Order made 16 July 1991 was one that ought not to have been made as:
(l) the Judgment Debtor was not aware of the adjournment of the hearing of the appl~cation herein to the date on whrch the Sequestration Order was made and was deprlved of an opportunity to argue that an order should not be made;

(ii) the Judgment Debtor was not, at herein belng served upon h m nor at the date of Sequestration Order being made agalnst him, lndebted to the Judgment Creditor in any sum whatsoever. the time of the Bankruptcy Notlce

(c)	Alternatively the Judgment Debtor be granted a discharge from the Sequestration Order made 16 July 1991 pursuant to Section 150(1) of the Bankruptcy Act.
(d)	Such other or further relief as this Honourable Court deems meet in the circumstances.

(e) costs.

Orders made by Ryan J:

1. That t h e Amended Applicat ion be

adjourned t o 27 May 1992.

2.          That af by 27 May 1992 t h e judgment obtalned by t h e pe ta t ion lng c reda to r aga lns t t h e bankrupt i n t h e County Court of Victoraa has not been set as ide , t h e s a l d amended application

s t a n d d a s m i s s e d w i t h o u t a n y
adjudication on t h e merits and t h e
bankrupt pay t h e taxed c o s t s of and
mcaden ta l t o t h e s a i d applicataon, of
t h e p e t i t l o n i n g c r e d l t o r and t h e
O f f l c i a l Trustee.
3.	That t h e bankrupt pay t o t h e
pe t r t ion ing c r e d i t o r and t h e O f f i c i a l
Trustee t h e i r c o s t s of t h a s day such
c o s t s t o be taxed.
4.	That any pa r ty have l A e r t y t o apply on
not l e s s than 48 hours n o t i c e i n
wrl tang t o t h e o the r p a r t i e s .

Application filed by bankrupt seeking orders:

1. That t h e Of fac la l Trustee be removed a s

Trustee of t h e E s t a t e of Denis Maher

and Kenneth James Russel l o r such o t h e r

regas tered t r u s t e e a s t h e Court t h i n k s

f i t be appoanted i n i t s place.

2. Alternatavely, t h a t t h e O f f i c i a l

Trustee be d l rec ted t o make an

application t o t h e County Court of

Vactorra t o s e t a s l d e t h e d e f a u l t

judgment entered by t h e p e t i t l o n i n g

c r e d i t o r agaanst t h e bankrupt on terms

t h a t t h e s o l i c i t o r s makrng such

applrcataon on behalf of t h e O f f i c i a l

Trustee be funded d i r e c t l y by a t h l r d

pa r ty and t h a t a tha rd pa r ty indemnafy t h e Trustee i n t h e sum of $389 as a provision f o r par ty /par ty c o s t s t h a t may be awarded aga lns t t h e Trustee.

Orders made by Ryan J:

1.          That paragraphs 1 and 2 of t h e Order of Ryan J of 18 May 1992 be vacated.

2.    That the amended application be adlourned to 24 June 1992.

3 .     That rf:

(I) by 5.00p.m. on 12 June 1992, the bankrupt has not pard to the sol~crtors for the petrtionrng creditor the sum of $750 on account of lts costs of 18 March 1992 and thrs day, and:

(li) by 23 June 1992 the judgment obtalned by the petrtionlng credltor agarnst the bankrupt m the County Court of V~ctorra has not been set aside;

the sald amended applrcation stand dlsm~ssed without any adyadlcatlon on the rnerlts and the bankrupt pay the taxed costs of and ~ncidental to the said applrcation of the petitionang creditor and the Offrcial Trustee.

4.     That the bankrupt pay the petitroning creditor lts costs of this day, such costs to be taxed, and that as between the bankrupt and the Officral Trustee therr respectrve costs of thrs day and the costs of the petitlonmg creditor be reserved.

5.     That the applrcation by the bankrupt dated 22 May 1992 be adjourned to 29 May 1992 at 10.15a.m. and that the Officlal Trustee file and serve by 5.00p.m. on 27 May 1992 any affldavrt or affrdavlts on wh~ch he rntends to

rely in oppos~tron to that application.

The possibility of the bankrupt making an application under

bankrupt in the proceedings before Ryan J on 18 March 1992.	section 179 was canvassed by counsel then representing the
Counsel said (at Ts 10) that he anticipated such an application would be filed wlthin a week. In fact, the application was not filed until more than 9 weeks later, and then only on the eve of the self-executing order taking
effect.
Upon the hearing of the bankrupt's application for the removal of the trustee on 29 May 1992, the parties relied upon affidavits of the bankrupt's solicitor Alwyn Samuel (Samuel) sworn 22 May 1992, of a registered trustee Kenneth James Russell (Russell) sworn 27 May 1992 (both filed on behalf of the bankrupt) and of an assistant Official Receiver in Bankruptcy, Terrence David Clarke (Clarke) sworn 27 May 1992 (filed on behalf of the trustee). Clarke's affidavit makes reference to an affidavit sworn and filed by the bankrupt on 19 November 1991 and it is necessary to refer to that affidavit to fully comprehend some aspects of Clarke's evidence. At the hearing the bankrupt and the trustee were represented by counsel. The petitioning creditor appeared by its solicitor who made submissions in opposition to the application. None of the deponents were required for cross- examination.
Samuel's affidavit discloses that on 19 March 1992 the bankrupt's then solicitors Messrs J.M. Smith & Emmerton (JMS & E) wrote to the trustee on behalf of the bankrupt:

Dear Sir,

Bankrupt Estate of Denis naher No. VB 1969 of 1991

At the return of the Application for Annulment yesterday, 18 March 1992, Hls Honour Mr Just~ce Ryan granted a further ad~ournment of the Application to 27 May 1992 to allow steps to

be taken to set aslde the County Court judgment. ...

... the right to pursue an application to set aslde judgment is a right which vests m the Official Trustee by operation of Sectlon 116 of the Bankruptcy Act 1966 and that the trustee mlght elect to pursue such an action on behalf of the bankrupt.

We are instructed that M r Maher has offered to indemnafy the trustee's costs in prosecutang fresh proceedings to set aslde

t h e judgment. W e a r e f u r t h e r instructed t h a t a r e g r s t e r e d

t r u s t e e has indrca ted h r s preparedness t o t a k e such actaon on

behalf of Mr Maher. It is apparent t h a t H r s Honour Mr J u s t i c e

Ryan took t h e s e f a c t o r s i n t o account when he granted t h e

ad-~ournment of t h e appl ica t ron f o r annulment and it seems t h a t

he	gave	a	s t r o n g rndlca t ion	t h a t ,	i n t h e event	of	t h e O f f i c r a l
Trus tee ' s	r e f u s a l	t o promptly	pursue	an	app l i ca t ron	t o	set

a e l d e t h e judgment	i n t h e County Court,	an application under
Sect lon 179 of	t h e Bankruptcy	A c t t o r ep lace t h e t r u s t e e would
be d e a l t wrth promptly.	W e have	a l ready ind ica ted t o M r Maher

t h e p robab l l r ty of a c o n f l l c t of i n t e r e s t on our p a r t w e r e such

an app l l ca t lon required t o be made.

W e would be g r a t e f u l l f you would g ive t h r s matter your urgent

a t t e n t r o n and advrse us a s quickly a s poss ib le a s t o whether o r

not you are prepared t o commence t h e appropr la te ac t ron t o set

as rde t h e County Court	judgment.	W e await your e a r l y response.
Yours faithfully,
J. M. SMITH & EMMERTON

On 2 0 March 1 9 9 2 the A u s t r a l i a n Government S o l i c i t o r (AGS)

responded on behalf of t h e t ru s t ee :

Dear S i r

BANKRUPT ESTATE OF DENIS MAHER; NO. 1969 OF 1991

I r e f e r t o your letter dated 19 March 1992 with regard t o t h e above bankrupt.

I am rns t ruc ted t o advrse t h a t , i n pr rncaple , s u b ~ e c t t o

appropraate secur r ty of c o s t s , my c l i e n t would be w r l l l n g t o

apply t o set asrde t h e judgment r d e n t ~ f i e d prevrously. ...

A second po ln t t o note i s t h a t t h e bankrupt has apparent ly

o f fe red t o rndemnify t h e T r u s t e e ' s c o s t s m prosecuting t h e

County Court act ion. From t h l s I understand t h a t Mr Maher has

i n f a c t a t h r r d pa r ty who i s prepared t o provlde t h e r e l evan t

indemn~ty . I advlse t h a t i f such an rndemnity rs avar l ab le ,

t h e funds r n support of r t would have t o be made a v a r l a b l e t o

my c l i e n t p r r o r t o i n s t l t u t r n g any proceedings. An acceptable

alternative would	be a f l r s t charge over proper ty f o r t h e f u l l
cos t s .	An approprrate deed of indemnrty would need t o be drawn

up t o cover t h e appl lca t ron. It may be t o o e a r l y t o l n d r c a t e

t h e c o s t s involved but an e a r l y estmate might be i n t h e

v r c l n l t y of $50,000 on t h e bas r s of t h e Trustee losrng and

having pa r ty /pa r ty c o s t s awarded agarns t hlm.

Clear ly , t h e r e a r e mat ters whrch w r l l need t o be discussed wrth

regard t o t h e above a t an e a r l y s t age and t h e opt ions i n

r e spec t t o t h e County Court a c t i o n a r e not meant t o b e

exhaustive.	Accordingly, I look forward t o arrangang a
conference	a t a l l t h e p a r t l e s convenrence.

Yours faithfully
AUSTRALIAN GOVERNMENT SOLICITOR

On 31 March 1992 JMS & E, after taking instructions from the bankrupt, wrote to AGS:

Dear Madam,

Re:  Bankrupt Estate of Denis Maher No. VB 1969 of 1991

We refer to your facsimile transmission of 20th March 1992 and our subseauent tele~hone conversations with vour Mr Carroll and

MS Smith of 27th ~ a k h 1992 and 31st March 1592 respectively.

We conflnn our vlew that the sum of $50,000 estimated by you and referred to in the thud last paragraph of your facsmile transmlsslon rs exaggerated. We propose that the trustee be mdemnifled to the extent that he may be required to pay the costs of the respondent In the event that the application to set aside ludgment 1s unsuccessful. The party fundrng the proceedings could fund the sollcltors actlng for the Official Trustee in the appllcatlon directly. In thls way, the third party will retarn some control over its potential liability. We also polnt out that the proceedings contemplated at thls point are limlted to the settlng aside of ludgment and not the subseouent re-hearlng in the event that that applicatron is successful. We consider that proceedrngs subsequent to the

application to set aslde ~udgment ought not to be consrdered

untll the appllcatlon is dealt with.

Yours faithfully,

J.M. SMITH & EMMERTON

AGS replied on 1 April 1992 advising that a conference had

been arranged with the trustee for the following Tuesday, and

on 9 April 1992 wrote to JMS & E:

Dear Mr Galvln

RE:  BANKRUPT ESTATE OF DENIS PIAHER

NO: 1969 OF 1991

I refer to your letter of 31 March 1992.

My client has instructed me to advlse you that they wlsh you to act ln the County Court actlon to set aslde ~udgment. My cllent wrshes to have control of thls action and does not intend to asslgn hrs rlghts.

Could you please draft an indemnrty which wlll cover the

following asgects;

1.    The thrrd party is to andemnrfy the Official Trustee totally for any costs m commencing and runnlng the

actlon. The Officral Trustee wlll also be indemnlf~ed

for any costs that are lncurred by the Respondent in the
event that the applrcatron is unsuccessful.

2.     The indemn~ty is to lnclude that, in the event of the thlrd party faillng to pay your legal costs, your firm has no actaon for recovery of legal costs against the Offlcial Trustee.

3.     That there be full disclosure by your firm of how all moneys are being pald in settlement of your costs.

Yours faithfully

AUSTRALIAN GOVERNMENT SOLICITOR

And on 24 April 1992 AGS wrote again:

Dear Slr/Madam

RE: BANKRUPT ESTATE OF DENIS MAHER
NO: 1969 OF 1991

I refer to the above matter and to telephone conversation between Mr Galvln of your offlce and MS Flona Smith of my office on 23 Aprll 1992.

I confrrm that the Offrcral Trustee rs not prepared to accept an lndemnrty for only $20,000 as suggested. My client has instructed me that unless full and unlimrted rndemnitles are provlded to enable the appllcatron to the County Court to be run to completron, they will not proceed.

Yours faithfully

AUSTRALIAN GOVERNMENT SOLICITOR

Russell's affidavit discloses that he is a chartered

accountant and a registered trustee under the Bankruptcy Act.

In paragraph 2 he refers to what he says he has been told by Samuel concerning the application to set aside the judgment

and continues:

The Debtor's Solicitor has also informed me that, notwithstandrng the dasmrssal of the earlier applrcatlon to set aslde the Default Judgment, lt is open to a party agalnst whom a Default Judgment has been entered to make a further application to set aslde such judgment and that rn this case such an appl~cation is at least arguable and has more than a remote prospect of success.

In paragraph 3 he deposes to what at the best is opinion and most likely is mere heresay passed on from Samuel, but nevertheless what he says in effect reflects the case put on behalf of the bankrupt and I set it out in full:

In the crrcumstances outllned to me by the Debtor's solicitor as set out above I believe that ~t would be proper for the Trustee of a bankru~t estate to make such an a~~l~cation if reasonable terms protecting the trustee's posrtron were oroffered. If the solicltor makrna such an a~olicatron was :undid directly by a thlrd party aid acted on -<ems that he would not look to the trustee for payment of hrs fees in any event and a thrrd party offered an indemnity in the sum of $1,000 to the Trustee to prov~de agarnst any laability for the

Respondent's costs of such an appl~cation I would conslder such

terms more than reasonable. Such terms would provlde, as I am informed and verlly belleve, a "buffer" ln excess of $600 over the amount provrded by the County Court scale for the party/party costs of a successful Respondent to such an appl~catron

Russell has consented to act as trustee of the estate if so

appointed by the Court.

Clarke's affidavit deals wlth a number of matters relating to the administration of the estate whlch are not central to the issue presently before the Court. Reference is made below to only those parts of his affidavit that deal wlth the question of security for costs in relation to the proposal that a further application be made to set aside the judgment. The relevant paragraphs are numbered 10-12 (inclusive):

10.    Followrng hrs bankruptcy the bankrupt made an applrcation to the Federal Court for an annulment of the bankruptcy on the ground that the Sequestration Order ought never to have been made. On numerous occasrons ad~ournments have been granted to the applicant, the latest on 22 May 1992 ln whlch the Honourable M r Justlce Ryan adjourned the

application to 23 June 1992. At the return of the Application for Annulment on 18 March 1992 Hls Honour Mr. Justice Ryan granted a further adjournment to 27 May

1992. The adjournment was to allow steps to be taken to have the judgment obtalned by the petrtioning credrtor aga~nst the bankrupt in the County Court of Vlctorla to be set asrde. By letter dated 19 March 1992 the bankrupt's then sollcrtors J.M. Smith & Emmerton advrsed to the Officlal Trustee by facsrm~le transmrssron that the bankrupt has offered to indemnrfy the Trustee's costs rn prosecutrng fresh proceedings to set aslde the judgment. On my instruction and havlng regard to the oprnron of my solicitor I rnstructed my solrc~tor, the Australian Government Solicltor, to wrlte to the bankrupt's sol~cltor advrslng that, ln principle, subject to approprrate securrty of costs, the Offrcral Trustee would be wllllng to apply to set aside the judgment. Further, wlthin thrs advise to the bankrupt's solicltor costs were estrmated at $50,000 should the Trustee lose the action and have party/party costs awarded against hm.

11.    On 21 April 1992 I recerved a letter from my solrcitor advrsrng that followrng a conversation wlth the bankrupt's solicltor a thrrd party had placed a monetary llmrt on the Indemnity ln the amount of $20,000. The bankrupt's sol~cltor had also advlsed that it was intended that not only would the actlon be to set asrde the ludgment but also that there would be a complete rehearing of the matter. I am lnformed and believe that when it was put to the bankrupt's solacrtor that an amount of $50,000 would be more approprrate, he advrsed that Ln the event that the actron was commenced and rt became apparent that it would cost more than $20,000

they would withdraw.

12.   Upon further consrderlng the matter I rnstructed my solrcrtor that unless full and unlmrted indemnlt~es were provlded to enable the application to be run to completion the Offlclal Trustee would not be prepared to proceed. Coples of the correspondence between my sollcrtor and sollcItor for the bankrupt now exhlblted to

the affidav~t of Mr Alwyn Samuel deposed on 22 May 1992 and filed rn these proceedings and identlfred as exhibrts 82, 53, 5 6 , S7, S8 and S10.

Although the affidavits filed on behalf of the bankrupt in

support of the application do not specifically address the grounds upon which rellef is sought (as required by Rule

103(1) of the Bankruptcy Rules) the factual content of Samuel's affidavit and the paragraph from Russell's affidavit quoted above make it abundantly clear that the case sought to be made against the trustee is that it has acted unreasonably in not mak~ng application to the County Court to set aside the judgment, given that the bankrupt has indicated that a third party is willing to indemnify the trustee against any liability for costs that it may thereby incur to the extent of $20,000.

It is not in issue that a second application to set aside the judgment would be competent, and it is not necessary to refer to authority to support that proposition.

There is no evidence before me, apart from assertions from the bar table, upon which I can make a finding as to whether $20,000 is an adequate sum to cover the trustee's liability for costs in the event that the judgment is set aside and the trustee's defence of the claim on behalf of the bankrupt

mere assertion, that $50,000 is an exaggerated estimate of the	proves unsuccessful. Nor is there any evidence, apart from	trustee's potential liability in those circumstances. Some
idea of the complexity of the defence proposed to be mounted
by the bankrupt against Amex's claim can be gained from the

\

bankrupt's affidavit of 19 November 1991. It seems highly likely that if the action were to be litigated to a conclusion witnesses from interstate and from overseas would be required, and if that be the case, the costs involved could be quite substantial. Be that as it may, I do not understand the trustee to have insisted that any specific sum be made available. Whatever may have been the thinking earlier, the letter of the AGS to the bankrupt's then solicitors of 9 April

1992, proposed a quite different approach.

First, it is patent that the trustee was prepared to instruct the bankrupt's own solicitors to act on its behalf in an application to the County Court to set aside the judgment. Second, the trustee sought an indemnity agreement with the third party, and presumably the solicitors, against any costs incurred in "commencing and running the action". The reference to "the action" was obviously a reference to the proposed application to set aside the judgment. If there is any doubt, the use of the term "the application" in the following sentence makes the intention quite clear. Third, the trustee insisted that there be a full disclosure of the source of the funds paid in settlement of the solicitor's costs and nothing in the AGS letter of 24 April 1992

contradicted what was said in the letter of 9 April 1992. The

trustee reasserted the demand for a full and unlimited indemnity to enable the application (my emphasis) to be run to completion. The trustee maintained the same position at the hearing of the application. In the course of submissions counsel for the trustee referred to the letter of 24 April 1992 and said "the position is clearly set out here - full and

unlimited guarantees" (Ts 61).
Whilst it may be the fact that running the application to set
aside judgment to an unsuccessful completion would be unlikely
to involve the trustee in a liability in excess of $20,000,
there does not seem to be any sound reason why the trustee
should be required to accept any limit on the amount of the
indemnity, nor does there seem to be any reason why the
bankrupt should not regard the conditions expressed in the
letter of 9 April 1992 as being entirely acceptable. If the
bankrupt and the third party remain comfortable in the advice
they appear to have received concerning the potential cost of
an unsuccessful application to set aside the judgment, there
seems to be no reason to baulk at the proposal to provide an
unlimited indemnity to the trustee.

The bankrupt's response to the AGS letter of 24 April 1992 was to instruct another solicitor, who subsequently filed the application presently before the Court. It is true that JMS &

E had indicated to the bankrupt that they had a potential

conflict of interest and would be embarrassed if it were

decided to take action against the trustee, but what the	trustee proposed was quite the contrary, namely that the
bankrupt's own solicitors should act for the trustee.
There can be no doubt that the bankrupt was entitled to instruct whatever firm of solicitors he might choose to act for him and certainly once the decision to take action against the trustee was made it was obvious that JMS & E could no longer act. But the fact is that the trustee's offer to make application to set aside the judgment upon the terms of the AGS letter of 9 April 1991 has not been taken up, and indeed has been misrepresented as a requirement that $50,000 was being demanded as security for the trustee's costs. This is simply not the case and nothing in the correspondence supports such a proposition.
Nothing has been said in the material filed in support of the application nor in argument, as to why the proposal expressed in the AGS letter of 9 April 1992 should be regarded other than as an appropriate and prudent response by the trustee to the request that the trustee make an application to set aside the judgment. This is not a case in which a trustee has decided in his discretion not to take a step open to him in the administration of the estate. It may well be that on the information available, the trustee could have decided in the exercise of its discretion, that an application to set aside the judgment was not warranted in any circumstances. But that case is not this case. This is a case in which the trustee
but not without first putting in place an adequate safeguard has been prepared to act in a manner desired by the bankrupt,
against a potential liability in order to protect the assets of the estate and the interests of the creditors. Nothing in the trustee's response to the bankrupt's request can be regarded as unreasonable.
In the words of Riley J in re Alafaci (1976) 9 ALR 262 at p. 268, the preliminary question to be decided by the Court on this application is whether on the grounds and facts before it, a case has been made for inquiry into the trustee's conduct. In my view, no such case has been made and I would dismiss the application.
As indicated above, the case put by the bankrupt in support of the application has been based upon a misrepresentation of the position adopted by the trustee. The bankrupt must pay the costs of the trustee and of the petitioning creditor.

I certify that this and the preceding 16 pages are a true copy of the Reasons for Judgment of the Honourable Mr Justice Olney

Associate: 66-	f-(
Dated:	1 June 1992

Heard :	29 May 1992
Place:	Melbourne
Judqment :	1 June 1992
Counsel for the bankrupt:	G.A. Watkin
Solicitor for the bankrupt:	A. Samuel
Counsel for the Official Trustee:	R. Frazzetto
Solicitor for the Official Trustee:	Australian Government Solicitor
Solicitor for the petitioninq
creditor:	Jeffrey P. Sallinger & Associates