The present application is an application by Equity Management Corporation Limited and Devaban Pty Limited, for leave to commence proceedings against Mr Alan Edward Rose ("Mr Rose"), a bankrupt, the application being brought under s.58(3)(b) of the Bankru~tcv Act 1966 (Cth) ("the Act"). The proceedings sought to be commenced are proceedings which began at the latest in June of this year, when an amended statement of claim and amended application were filed to which, inter alia, Mr Rose was joined as a party.

In those proceedings ( "the Devaban proceedings"), misconceived, it is alleged that Mr Rose owed a fiduciary duty

which to the extent of Mr Rose being made a party are clearly

to Equity Management Corporation Limited, and that that fiduciary duty was breached by the making of loans, or the payment of other benefits, to Grandstand Holdings Pty Limited, which company was trustee for the A Rose Family Trust, and which benefit is said to be a benefit which accrued to Mr Rose personally. The statement of claim also alleges breach of the Trade Practices Act (Cth) 1974, and a breach by Mr Rose of his

duties under the Cor~orations

Law.

On behalf of the applicants it is said that the Devaban proceedings cannot be prosecuted without the active participation of Mr Rose in person:

". . . by reason of the respondents
[presumably Mr Rose] past and or present retention of the abovementioned benefits, and it is just and equitable that the respondent be sued as to same."

In opposition, Mr Rose filed an affidavit in which he deposed that he had become a bankrupt on 10 March 1992 and	remains to thls date an undischarged bankrupt. Annexed to his	affidavit is a statement of affairs, filed in the bankruptcy
which discloses a deficiency of assets over liabilities; the unsecured creditors disclosed being approximately $143,800, the secured creditors showing a deficiency over and above the security of $165,000 with assets of $10,000 comprising basically household furniture and effects.
I have been told from the bar table that the applicants ln the Devaban proceedings, or at least some of them, have lodged a proof of debt in the bankruptcy estate but that proof of debt has not yet been dealt with. Notification of the present application was glven to the Trustee of Mr Rose's estate and the Trustee has not appeared nor indicated to the Court his support or otherwise of the present application. I must therefore assume that the Trustee…

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 Rose; Ex parte Devaban Pty Ltd

Details

AGLC: Re Rose; Ex parte Devaban Pty Ltd [1994] FCA 1082
Case: [1994] FCA 1082
Decision Date: 7 Oct 1994

CaseChat Overview and Summary

This case involved an application by Equity Management Corporation Limited and Devaban Pty Limited for leave to commence proceedings against Alan Edward Rose, a bankrupt, under s.58(3)(b) of the Bankruptcy Act 1966. The Devaban proceedings, which sought to be commenced, involved allegations of breach of fiduciary duty, breach of the Trade Practices Act 1974, and breach of duties under the Corporations Law by Mr Rose, who was alleged to have made loans or paid other benefits to Grandstand Holdings Pty Limited, a trustee company for the A Rose Family Trust, and that these benefits accrued to him personally. The applicants argued that the Devaban proceedings could not be prosecuted without Mr Rose's active participation in person, and that it was just and equitable for him to be sued in relation to the same benefits. Mr Rose, in opposition, filed an affidavit disclosing his bankruptcy status and the deficiency of his assets over liabilities.

The legal issues before the court were whether the Devaban proceedings could proceed against Mr Rose as a party, given his status as a bankrupt, and whether the court should grant leave for the proceedings to continue under s.58(3) of the Act. The court considered the policy behind the Act, which aimed to stay any proceedings in force at the time of bankruptcy and prevent further proceedings related to the period prior to bankruptcy unless the court gave leave. The court also noted the importance of protecting the Trustee in bankruptcy from unnecessary expenses in defending proceedings that the Trustee could not afford.

The court found that the claims made against Mr Rose were inseparable from the claims made against Grandstand Holdings Pty Limited, and that adding Mr Rose as a respondent would not significantly increase the burden on him in assisting Grandstand Holdings Pty Limited defend the claim. Therefore, the court decided to accede to the application and grant leave for the applicants to join Mr Rose as a respondent in the Devaban proceedings. The court also directed the costs of the application be costs in the proceedings numbered NG 809 of 1992, waived the requirement that the application and statement of claim be served upon Mr Rose, and set down directions for the proceedings to continue.

In conclusion, the court granted leave for the applicants to join Mr Rose as a respondent in the Devaban proceedings, considering the integral nature of the claims made against him. The court also directed the costs of the application, set down directions for the proceedings, and waived the requirement to serve the application and statement of claim upon Mr Rose.

Orders