Re Pruzanski; Ex parte Horne - [2000] FCA 151

FEDERAL COURT OF AUSTRALIA
Horne (Trustee), In the matter of Pruzanski [2000] FCA 151
BANKRUPTCY – Applicant sought removal of trustee in bankruptcy and orders restraining particular firm of solicitors from further acting on behalf of the trustee – whether conduct of trustee justifies his removal – whether conflict of interest in trustee retaining particular firm of solicitors – delay in conflict concern being raised.
Bankruptcy Act 1966 (Cth) s 81
Re Abrahams; Ex p Thomas (1985) 70 ALR 784, referred to
RE: LEON MARK PRUZANSKI (a Bankrupt) and EX PARTE: STIRLING LINDLEY HORNE (In his capacity as the Trustee of the Bankrupt Estate of Leon Mark Pruzanski).
V7731 OF 1999
MARSHALL J
MELBOURNE
8 FEBRUARY 2000

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V7731 OF 1999

RE:

LEON MARK PRUZANSKI
A BANKRUPT

EX PARTE:

STIRLING LINDLEY HORNE
(In his capacity as the Trustee of the Bankrupt Estate of Leon Mark Pruzanski)

JUDGE:

MARSHALL J

DATE OF ORDER:

8 FEBRUARY 2000

WHERE MADE:

MELBOURNE

THE COURT ORDERS:
1.That Freehill Hollingdale and Page solicitors be restrained from further acting on behalf of any trustee appointed by this Honourable Court to administer the joint and several bankrupt estates of Leon Mark Pruzanski, Karen Yvonne Pruzanski, Keila Pruzanski, and Tewel Pruzanski.

2.That par 1 of the amended Notice of Motion seeking the removal of Stirling Lindley Horne as trustee be adjourned to 10.15 am on 26 April 2000 or to such other date as one party seeks to have the Court deal with the matter pursuant to liberty to apply under the rules of Court.

3.That the examination scheduled for 10 February 2000 be converted to a mention date only before Registrar Wood with the Registrar being at liberty to schedule the examination as he sees fit subject to submissions of counsel or other parties, however so represented.

4. There be no order as to costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 7731 OF 1999

RE:

LEON MARK PRUZANSKI
A BANKRUPT

EX PARTE:

STIRLING LINDLEY HORNE
(In his capacity as the Trustee of the Bankrupt Estate of Leon Mark Pruzanski)

JUDGE:

MARSHALL J

DATE:

8 FEBRUARY 2000

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

On 20 December 1999, Stayglen Investments Pty Ltd (“Stayglen”) filed a Notice of Motion seeking certain relief in respect of Mr Stirling Horne in his capacity as trustee in bankruptcy for the bankrupt estate of Leon Mark Pruzanski and other members of the Pruzanski family who I shall refer to collectively as the “Pruzanskis”. The motion was listed for hearing on 21 December 1999, but on that day was adjourned to 7 February 2000 to enable Stayglen to file and serve its supporting affidavit material.
The Notice of Motion, as amended, sought the following orders:
“1. That the first respondent, Stirling Lindley Horne, be removed as the trustee of the joint and several bankrupt estates of Tewel…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Re Pruzanski; Ex parte Horne

Details

AGLC: Re Pruzanski; Ex parte Horne [2000] FCA 151
Case: [2000] FCA 151
Decision Date: 8 FEBRUARY 2000

CaseChat Overview and Summary

In the Federal Court of Australia, Stayglen Investments Pty Ltd applied for the removal of Stirling Lindley Horne as the trustee in bankruptcy for Leon Mark Pruzanski and other members of the Pruzanski family. The application also sought orders restraining Freehill Hollingdale and Page solicitors from acting on behalf of any trustee appointed by the court to administer the Pruzanskis' bankrupt estates. The primary issues before the court were whether Mr Horne's conduct justified his removal as trustee and whether there was a conflict of interest in Mr Horne retaining Freehill Hollingdale and Page as his solicitors.

The court found that there was no persuasive evidence that Mr Horne had engaged in conduct warranting his removal as trustee. However, the court did identify a conflict of interest in Mr Horne retaining Freehill Hollingdale and Page as his solicitors, given that the firm was also acting for the Australian and New Zealand Banking Group, a creditor of the Pruzanskis. This conflict arose because Freehill Hollingdale and Page had a duty to assist Mr Horne in impartially determining creditor claims while also advancing the interests of ANZ in its dispute with the Pruzanskis. The court was concerned about the delay in raising the conflict issue, but decided that the matter could be resolved by restraining Freehill Hollingdale and Page from acting for Mr Horne, while allowing the trustee to retain the same counsel who had been briefed by the firm.

The court made the following orders: (1) Freehill Hollingdale and Page solicitors were restrained from further acting on behalf of any trustee appointed by the court to administer the Pruzanskis' bankrupt estates; (2) the application to remove Mr Horne as trustee was adjourned to a later date; (3) the examination scheduled for 10 February 2000 was converted to a mention date before the registrar; and (4) there was no order as to costs.

Orders