Re Robinson, M.J. & Anor Ex parte Geroff, P.I.F. v Turner

[1993] FCA 106

IDL , l q t . ,

JUDGMENT No. .,........ ...,.... .., .... ,..:

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION

STATE OF OUEENSWJD

l

QB No. 2760 of 1991

i

RE: MICHAEL JOHN ROBINSON and SHARON ROBINSON	i'
I

Bankru~ts

EX PARTE:

PETER IVAN FELIX GEROFF	!
I-
I

Reaistered Trustee

AND:	I: I
\.

R -

I
First Res~ondent

m:

PERMANENT CUSTODIANS LIMITED	1: I (	:
!

Second Respondent	,
l r
-

MINUTES OP ORDER

JUDGE MAKING ORDER:	Cooper J.
WHERE WADE:	Brisbane
DATE OF ORDER:	8 February, 1993

THE COURT RULED that the report be admitted into evidence.

l

Note:	Settlement and entry of orders is dealt with in Rule
124 of the Bankruptcy Rules.  . i

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE

STATE OF OUEENSLAND

QB No. 2760 of 1991

RE:  MICHAEL JOHN ROBINSON and SHARON ROBINSON

Bankrupts

EX PARTE:

PETER IVAN FELIX GEROFF

Reaistered Trustee

RONmD HERBERT FRANCIS TURNER

First Respondent

PERMANENT CUSTODIANS LIMITED

Second Respondent

CORM:  Cooper J.

PLACE : Brisbane

m:  8 February, 1993

EXTEMPORE REASONS FOR JUDGMENT

The applicant Peter Geroff, the trustee and a

qualified accountant, has sought to tender a report of the

result of an investigation by him of the assets and	liabilities of the bankrupts as at 5 June, 1991, 5 September,
1991, and 5 December, 1991.
The trustee has identified in his report the sources of his information and the basis upon which he has arrived at some of the figures he has assessed as the relevant assets and liabilities at particular points in time. He has expressed the opinion, on the basis of the information obtained and of his assessment of the assets and liabilities, that the bankrupts were insolvent on 5 September, 1991.
He has arrived at this conclusion on the basis of there being, on his calculations, a substantial excess of liabilities over assets at the relevant date. He has available for inspection in court copies of the documentation he relies upon, and where the information was oral, copies of the minute or file note which recorded the oral advice.
The respondent has objected to the tender of the report on the basis that it is hearsay and that no expert opinion can be expressed until there is direct evidence to prove all of the matters upon which the opinion is based. It was further objected that the report does not link any particular source of information to any particular fact or conclusion stated in the report.

The information relied upon by the trustee falls

into three categories :-
(a)	Information obtained by the trustee in the course of administering the bankrupt's estate;
(b)	Information provided by creditors on request;
( c )	Information gathered by the solicitors for the petitioning creditor in the conduct of the proceedings on the petition.

The information in the first category comes from the bankrupts and creditors in the ordinary course of the administration of the estate. As appears from the report, the bankruptcy petition was contested and the bankrupts filed material by affidavit in support of a contention that they were not insolvent.

The trustee has relied upon information disclosed by the bankrupts in affidavits filed on 26 August, 1991, 26 September, 1991 and 31 October 1991. He has also relied upon a sworn valuation of 28 October, 1991 from Herron Todd Valuers. Additionally, the trustee has relied upon the bankrupts statement of affairs, proofs of debt, interviews with the bankrupts and the proceedings of a meeting of creditors held on 23 March, 1992.

Information in the second category is self- explanatory, and was information or documentation provided by creditors at the request of the trustee.

Information in the third category principally creditor by its solicitors from other creditors evidencing	relates to copies of documentation obtained by the petitioning	obligations to pay money to those other creditors by the bankrupts.
Evidence of the type sought to be tendered has been received by the courts in the administration of bankrupt estates where that evidence has been obtained by trustees in
t h e d i s c h a r g e o f their d u t i e s . I n R o b e r t s v . Doxon ( 1 7 9 1 )
Peake 116; 170 ER 9 9 , Lord Kenyon a l l o w e d s u c h e v i d e n c e . T h e
r e p o r t s t a t e s :-

"One o f the a s s i g n e e s u n d e r the c o m m i s s i o n

a g a i n s t Wilkinson and Cooke was c a l l e d a s

a w i t n e s s , t o p r o v e t h a t Wilkinson and

Cooke's debts, a l i t t l e t i m e before their

b a n k r u p t c y , amounted t o a much l a r g e r sum

o f money t h a n their c r e d i t s . H e produced

no p a p e r s , b u t s a i d he c o l l e c t e d h is

i n f o r m a t i o n	from	h a v i n g	i n s p e c t e d	the ir
a c c o u n t s . "

Lord Kenyon t h o u g h t t h a t t h o u g h he c o u l d not s t a t e

the p a r t i c u l a r s o f the b o o k s w i t h o u t p roduc ing t h e m , y e t he

m i g h t s p e a k t o the g e n e r a l amoun t , n o t b y s a y i n g t h a t one page

was so much and a n o t h e r s o much, but w h a t , f rom h i s g e n e r a l

o b s e r v a t i o n ,	he	p e r c e i v e d	t o	be	the	g e n e r a l	s t a t e	o f	their
a c c o u n t s .

S i m i l a r l y , , i n A - ( 1 8 1 7 ) 2

S t a r k 2 7 4 , 171 ER 6 4 4 Holroyd J. a l l o w e d s u c h e v i d e n c e . I n

p a r t i c u l a r h i s Honour t r e a t e d a s r e l e v a n t t h a t the e v i d e n c e

was prov ided o n o a t h b y t h e b a n k r u p t s . T h e r e p o r t s t a t e s ( a t

" E v i d e n c e was a f t e r w a r d s adduced , t o ~ h e w

the v a l u e o f the p r o p e r t y ; and a w i t n e s s

was produced on the p a r t o f the

p l a i n t i f f s ,	who	examined	the	a c c o u n t s	and
b o o k s	o f	the b a n k r u p t ,	and	it	was proposed

t o examine h i m a s t o the r e s u l t , a s a

means	for	a s c e r t a i n i n g	what	the	v a l u e	o f
the	p r o p e r t y	i n	q u e s t i o n	was .	T h i s	was

o b j e c t e d t o on the p a r t o f the d e f e n d a n t s .

Ho l royd J . , was o f o p i n i o n t h a t the

e v i d e n c e	was	a d m i s s i b l e ;	s u c h	e v i d e n c e
had	been	a d m i t t e d	i n a	c a s e before Lord

Kenyon, a f t e r i t had been o b j e c t e d to ,

where the question was as to the solvency of a party at a particular time. From the very nature of the case, such an inquiry could not be made in court, and therefore evidence on such point must be given by someone who had had the means of inquiry, and who can state the result. With respect to the source from which the knowledge of the witness was drawn, in the present instance, a commission of bankrupt had issued, and the documents from which the result was obtained, had been rendered by the bankrupt. He had been obliged to render up his accounts, with a view to the state of his affairs, under the severest penalties; and therefore the result was

admissible. "

Both of these cases were cited with approval by Dixon J. in Potts v. Miller (1940) 64 CLR 282 at 302, 303.

Where steps are taken to independently verify information received from one source, eg. the bankrupts, that evidence is, in my opinion, admissible as evidence of the steps taken by the giver of expert evidence to validate the material used and thus to validate the opinion expzessed. It is relevant to the question of what weight ought in the circumstances to be attached to the opinion. It was the	course adopted by the accountants in Montecatini's Patent	(1973) 47 ALJR 161 at 169 and attracted no critical comment
from Gibbs J. in his determination as to the admissibility of the accountant's opinion.
In my view the trustee, having regard to the duties he has discharged in the administration of the estate, the nature of the information and documentation received in that
capacity, the sources of the information and his qualifications as an accountant, can express an opinion as to the general financial situation of the bankrupt at the relevant dates and can express an opinion as to their solvency at that time.
Such opinion evidence is admissible. The report of Mr. Geroff falls into that category. The source of the infonation and the nature of the documentation disclosed in the report provides a sufficient foundation to enable the opinions to be expressed without formal proof of every fact contained in the information or documentation or without formal proof of the documentation. The fact that the report is admissible does not mean that it is not open to the
respondent to submit that no weight ought to be given to it or that it does not suffice to establish insolvency as a matter of law or fact.
There is no doubt that the respondent is entitled to require that the material be produced for inspection.
THE COURT RULED that the report be admitted into evidence.

I certify that this and the five ( 5 )

preceding pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Cooper.

Date: 9 March, 1993

l /'l( LL LccJ..<> , 6 % ,

Associate

Counsel for the Applicant:	Mr. Freeburn
Solicitors for the Applicant:	C o r r s  C h a m b e r s
Westgarth
Counsel for the Respondent:	Mr. Lyons
Solicitors for the Respondent:	J.F. Connor & Assoc.
Date of Hearing:	8 February, 1993
Place of Hearing:	Brisbane