Re Porter, R.G.; Ex Parte Official Trustee in Bankruptcy v Reef International Pty Ltd

[1992] FCA 345

JUDGMENT No. ..3%,-..,.~ ..,..,,,., S 92

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION

BANKRUPTCY DISTRICT OF THE STATE OF OUEENSLAND

Estate No. 2830 of 1991

RE:  ROBERT GEORGE PORTER

EX PARTE: OFFICIAL TRUSTEE IN BANKRUPTCY

Applicant

AND :  REEF INTERNATIONAL PTY. LTD.

JUDGE MAKING ORDER:

DATE OF ORDER:	25 May, 1992
WHERE MADE:	Brisbane
THE COURT ORDERS THAT:
NOTE :	Settlement and entry of orders is dealt with in Rule
124 of the Bankruptcy Rules.

1. The application filed 27 April, 1992 is dismissed.

   The applicant pay the respondent's costs of the application.

IN THE FEDERAL COURT OF AUSTRALIA ,
GENERAL DIVISION

BANKRUPTCY DISTRICT OF THE STATE OF OUEENSLAND

Estate No. 2830 of 1991

RE:  ROBERT GEORGE PORTER

EX PARTE: OFFICIAL TRUSTEE IN BANKRUPTCY

Applicant

AND:  REEF INTERNATIONAL PTY. LTD.

,

Respondent

-:  Drummond J

PLACE: Brisbane

DATE: 25 May, 1992

EX TEbPORE REASONS FOR JUDGMENT

This is an application by the Official Trustee for a review of the decision of Deputy District Registrar Allen delivered on 3 April, 1992 refusing an application by the Official Trustee to extend time to allow the Official Trustee

to elect, pursuant to S. 60(3) of the Bankru~tcv Act 1966

(Cth), whether to prosecute proceedings in the Supreme Court

of Queensland bearing writ No. 522 of 1989 between the
bankrupt, Mr. Porter, and Reef International Pty. Ltd..

A chronology of the events leading up to the making

of the application for the extension of time was handed up by
counsel for the respondent and has been marked exhibit "Aw.
Counsel for the respondent also handed up a chronology
covering relevant events up to the prcscnt time. This second
chronology which, to some extent, overlaps with the first
chronology, has been marked exhibit "B". Counsel for the
applicant does not dispute the accuracy of either chronology.

The chronologies summarise the progress of the Supreme Court action which the material before me to which I have been taken by counsel indicates is a very complicated action involving, among other things, a claim for specific performance in respect of an agreement initially entered into in 1977 and which it is alleged underwent a number of amendments, the last occurring in April 1987. The Official Trustee has still not obtained a detailed advice from counsel on prospects of the action succeeding.

On 8 April, 1992, following the Deputy District Registrar's decision dismissing the Official Trustee's application for an extension of time in which to make the election decision, the respondent to these proceedings brought the matter back on in the Supreme Court. On that date White J

ordered that, unless the Official Trustee filed an application

for review of the Deputy District Registrar's decision by 27
April, 1992, the Supreme Court action would stand dismissed.

The material I have been taken to, particularly the two affidavits of Mr. Smith and the chronologies that have been tendered, shows the actions undertaken on behalf of the Official Trustee in connection with the matter of the election here in question. While I can understand that the Official Trustee would not, as is deposed to in paragraph 29 of Mr. Smith's first affidavit, move to take over the Supreme Court action unless he was protected in costs by creditors, the position is that there is room for criticising the speed with which the Official Trustee and his advisers have moved. Considerable time has passed in that regard.

Deputy District Registrar Allen gave his decision, as I have mentioned, on 3 April, 1992 and there has been, on the material before me, little progress in the Official Trustee's camp so far as bringing to a head the question of whether he will obtain the costs indemnity which is essential if he is to make the election to carry on with the action.

The position that now emerges, and I have had regard to the oral evidence given by l+k. Smith, is that there is little prospect at all in my judgment of an indemnity ever being offered to the Official Trustee, which he would require

if he were to elect to carry on with the action.

The material indicates that bills of costs in taxable form (but not yet taxed) have been delivered by the defendant in the Supreme Court action (the respondent in these proceedings) in respect of interlocutory orders made against Mr. Porter. The bills of costs total approximately $63,000.00. Any indemnity that the Official Trustee would require would, in all probability, have to include an indemnity covering any liability he may come under in respect of the costs of those interlocutory proceedings, as well as covering him in respect of the future costs of the action, which would include counsel's advice.

The affidavit material filed on behalf of the Official Trustee is silent on the question whether there is any prospect of an indemnity being forthcoming from any creditor or creditors. Leave was given to the applicant for Mr. Smith to give oral evidence. The effect of his oral evidence is that a Mr. Quinn, who claims to be a creditor of the bankrupt for an amount of about $4,000.00, has given an indication of some degree of interest - to put it at its highest - in providing the indemnity the Official Trustee would require to continue with the action. The prospects of

. Quinn providing such an indemnity are, as I have already said, extremely remote when one considers the amount of the indemnity required and balances that against the amount of the debt that Mr. Quinn is claiming.

So far as the question of prejudice is concerned, I

think that, while there is some force in what counsel for the applicant has to say about a considerable amount of the prejudice suffered by the respondent having occurred prior to the sequestration order being made, the evidence before me (and I have had regard to 1 . Anthon's affidavit filed by leave today) is that the respondent's principal is keen to sell the property. He is elderly and in poor health. The property is tied up by virtue of an undertaking given by the

respondent in the Supreme Court action, which undertaking will remain for so long as that action remains on foot. In view of Mr. Porter's bankruptcy, his own undertaking as to damages is now of little worth. That, in itself, against the background of the course of the Supreme Court action and the action taken by the Official Trustee in the course of deciding whether or not to make the election decision is such as to provide clear evidence of prejudice additional to the prejudice that the respondent to this application quite clearly on the material before me suffered prior to the sequestration order being made.

I am therefore not prepared to grant the application

which I now dismiss.

I certify that this and the preceding

four pages are a true copy of the

reasons for judgment herein of the

Honourable Mr. Justice Drummond.

Associate:

Date :  25 May, 1992