Rivwest Finance Ltd v Baun
[2005] FMCA 595
•23 May 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RIVWEST FINANCE LTD v BAUN & ORS | [2005] FMCA 595 |
| BANKRUPTCY – Deceased estate – order for administration in bankruptcy – grounds for – disputes concerning assets and solvency – unpaid judgment debt owing to finance company – no sufficient cause for refusing order. |
| Bankruptcy Act 1966 (Cth), ss.40(1)(d)(ii), 51, 109(1)(a), 155, 156A, 244, 244(9), 244(11), 244(13), 247A(1), 247A(1)(a), 248(1), 248(1), Part XI Wills, Probate and Administration Act 1898 (NSW), ss.46C,46C(2), 63, 75, 85, 87 Insolvency Act 1986 (UK), s.271(1) |
| Gonzales v Marmentini [1998] 911 FCA (7 July 1998) Re Estate of Hancock (Deceased): Hancock Prospecting Pty Ltd v Estate of Hancock [1999] FCA 295 Re Allchurch (deceased) (1944) 13 ABC 235 |
| Applicant: | RIVWEST FINANCE LTD |
| Opponents: | FAY CATRINA BAUN |
| ROBERT WILLIAM RIDDING & ELAINE GLORIA RIDDING |
| File Number: | SYG 3789 of 2004 |
| Judgment of: | Smith FM |
| Hearing date: | 19 April 2005 |
| Delivered at: | Sydney |
| Delivered on: | 23 May 2005 |
REPRESENTATION
| Counsel for the Applicant: | Ms J Soars |
| Solicitors for the Applicant: | Farrell Lusher |
| Counsel for the first opponent: | Mr Bellemy |
| Counsel for the second opponents: | Mr Jamieson |
| Solicitors for the first opponent: | Howard Robilliard |
| Solicitors for the second opponents: | Zerrin Jamieson |
ORDERS
The estate of the late Daphne Rose Robbins (the “estate”) who died on 16 December 2002 be administered under Part XI of the Bankruptcy Act 1966 (Cth) (“the Act”).
The applicant creditor’s costs, including any reserved costs, be taxed and paid in accordance with the Act.
Note that a consent to act as trustee of the estate has been signed by Alan Richard Nicholls of Nicholls & Co and will be lodged with the Official Receiver in Sydney.
Direct that a copy of this order be provided to the trustee and to the Official Receiver in Sydney within 2 days after the order is entered.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 3789 of 2004
| RIVWEST FINANCE LTD |
Applicant
And
| FAY CATRINA BAUN, ROBERT WILLIAM RIDDING & ELAINE GLORIA RIDDING |
Opponents
REASONS FOR JUDGMENT
This is a petition under s.244 of the Bankruptcy Act 1966 (Cth) (“the Act”) seeking an order that the estate of the late Daphne Rose Robbins who died on 16 December 2002 be administered in bankruptcy under Part XI of the Act.
The petition was filed on 17 December 2004. It claimed that the estate owes the applicant the amount of $16,886.77 pursuant to a judgment entered in the Local Court at Wagga Wagga together with further expenses and interest. It claimed that the judgment debt related to a guarantee given by the deceased dated 24 April 1998, and that the debt is a liquidated sum payable immediately. It claimed that the applicant creditor did not hold security over the property of the deceased, and that at the time of her death she was personally present, ordinarily resident and had a dwelling house in Australia.
At the time when the petition was filed, no application had been made for administration of the estate under a law of a State or Territory (c.f. s.244(13) and Gonzales v Marmentini [1998] 911 FCA (7 July 1998)). At that time no legal representative had been appointed under a grant of probate or letters of administration, and the petitioner sought the directions of the court as to service of the petition pursuant to s.244(9) of the Act. On 11 January 2005 a Registrar ordered that the petition and supporting affidavits be served on Mr Andrew Robbins, Mrs Elaine Ridding and Mr Robert Ridding, these being the next of kin of the deceased and persons apparently interested in the estate in circumstances I shall set out below. I am satisfied that service was duly effected on these people.
Mrs and Mr Ridding filed a notice of objection on 8 March 2005 and were represented at the hearing. Mr Robbins did neither. Their notice opposed the petition on the ground “that the estate of the late Daphne Rose Robbins is not bankrupt.”
The applicant subsequently became aware that a grant of probate of the last will of the deceased had been granted to Mr Robbins’ partner, Ms Fay Baun, on 15 February 2005. She is also the sole beneficiary under the will. She filed a notice of objection on 19 April 2005 and was also (separately) represented at the hearing. As amended at the hearing, her notice opposed the petition on two grounds:
1. That the estate of the late Daphne Rose Robbins is solvent.
2. The sufficient cause that the executrix has elected to commence and prosecute litigation to have the mortgage and loan agreement set aside, and otherwise to be declared to be void and of no effect.
It was not contested at the hearing, and I am satisfied, that all formalities required by s.244 have been complied with, and in particular as to proof of the matters listed in s.244(11). That subsection, and the following subsection, provide:
244(11) At the hearing of the petition, the Court shall require proof of:
(a)the matters stated in the petition (for which purpose the Court may accept the affidavit verifying the petition as sufficient);
(b)service of the petition, unless service of the petition has been dispensed with; and
(c)the fact that the debt or debts to which the petition relates is or are still owing:
and if it is satisfied with the proof of those matters, may make an order that the estate be administered under this Part.
(12) If the Court is not satisfied with the proof of any of those matters or is of the opinion that for other sufficient cause the order sought ought not to be made, it may dismiss the petition.
In relation to the issue of solvency and other discretionary considerations, I was referred to the following paragraphs in the judgment of Tamberlin J in Re Estate of Hancock (Deceased): Hancock Prospecting Pty Ltd v Estate of Hancock [1999] FCA 295:
[3] Where the Court is not satisfied with the proof of any of the matters set out in s.244(11) or is of the opinion that for other sufficient cause the order sought ought not be made, it may dismiss the petition (s.244(12)). The reference to ‘this Part’ is to Pt.XI of the Act which governs the administration of estates of deceased persons in bankruptcy. The above provisos do not require it to be established that the estate is insolvent. However, the order is discretionary, and solvency is clearly a matter which should generally be taken into account in exercising the discretion.
…
[59]… There is no contest between the parties as to the existence of a broad discretion in the Court to make the order or dismiss the petition. This is evidence from s.244(11) and (12) of the Act. There are three specific matters which are required to be proven and upon such proof the Court has power to make the orders. It is not necessary to prove either insolvency or any other specific conduct, but the Court is not precluded from considering the solvency of the estate in an appropriate case. Indeed, it will often be a most important matter to take into account in an appropriate case.
…
[62] As to the issue of solvency, the fact is that no reliable approximate estimate can presently be made as to the outcome of the complex network of litigation which is currently on foot in relation to the estate, involving the parties to this proceeding, which is relied on to support a submission that the estate is potentially solvent or is likely to become solvent. On the evidence before me and having regard to the stage of those proceedings, any conclusion as to the likely or prospective outcome is pure speculation. The litigation is complex in the extreme and there is little doubt that every appellate avenue will be explored with further consequential uncertainty and flux. No result is likely for an indeterminate time. I note that White J in Porteous v Rinehart (supra) was invited to form a view as to the prospects of success in the main action. His Honour declined to embark on that exercise and so do I. Again, I cannot assign any significant weight to this consideration and I do not accept that the estate is solvent.
[63] As to the suggestion of election or waiver, I am not persuaded that the company has evinced any intention to abandon its rights to payment of the unpaid calls or has made any choice between inconsistent courses of conduct in pursuing the petition: see The Commonwealth v Verwayen (1990) 170 CLR 394 at 407-9 and cases there cited. Nothing in the material suggests that the company has elected to do anything other than insist on payment of the debt arising from the unpaid calls. This is obvious from the conduct and pursuit of the hearing before me.
[64] Against the discretionary considerations advanced for Mrs Porteous, counsel for the company and the estate point out that because of the continuous history of division and apparent lack of compatibility between the parties it is appropriate and desirable to appoint a neutral independent party as trustee who can take such action as is considered necessary without interference and ensure the effective and impartial administration of the estate. There is considerable force in this submission, and in the submission that the administration of the estate has, on the evidence, languished under those presently in control. Given these considerations I am led to the conclusion that it is in the best interest of the proper administration of this estate that an independent trustee should be appointed to gather in the assets and pay the debts of the estate who will be unfettered by the hostility and division which for whatever reason has surrounded the administration of this estate in the past.
As his Honour points out, the present Act does not expressly require the Court to address the solvency of the estate, but confers a broad discretion upon proof of an unsatisfied debt. This has significance, since the previous legislation expressly raised solvency as an issue, and required the Court to dismiss a petition if it was “satisfied that there is a reasonable probability that the estate will be sufficient for the payment of the debts owing by the deceased” (see s.155 of the Bankruptcy Act 1924 (Cth), and Re Allchurch (deceased) (1944) 13 ABC 235). Under current United Kingdom law, the court is positively required to be satisfied “that there is a reasonable probability that the estate will be insolvent” before making an insolvency administration order (see s.271(1) of the Insolvency Act 1986 (UK) as modified by Sch.1 Part II cl.5 of the Administration of Insolvent Estates of Deceased Persons Order 1986, and Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 18th ed, at 50-41 and ff.) Plainly, under s.244 of the present Commonwealth Act, I am not required to form either of these opinions, and may order that the estate should be administered under Part XI even if I am unable to form an opinion on the solvency of the estate.
I respectfully accept, however, Tamberlin J’s opinion that solvency is generally a matter which should be taken into account. Moreover, in the present case, the opponents have expressly submitted that I should do this.
In the context of deceased estates, “insolvent” can have the meaning of “insufficient for the payment in full of the debts and liabilities of the deceased” as revealed upon the final accounting in the administration of the estate (c.f. s.46C(3) of the Wills, Probate and Administration Act 1898 (NSW). However, a prediction as to this before the estate’s administration is finalised may be difficult, and may require assessment of an uncertain future course of administration. As the previous legislation indicated, it should not normally be expected that a court of bankruptcy can do more than assess the future possibilities in relation to solvency upon final administration.
In some situations it may appear that administration of the estate under the Bankruptcy Act is a desirable procedure to enable the best administration of the estate to achieve solvency. Such administration brings the benefits of a professional and independent administrator armed with extensive powers of investigation and with access to the Act’s provisions for setting aside improvident or improper property transfers. Plainly, in a case where this course appears appropriate, the court should not hold back until it can reach a judgment that the estate will be found to be insolvent upon a final accounting.
In the context of a judicial discretion to order that administration of the estate proceed under Part XI, a consideration of the estate’s “solvency” may also invite consideration of the ability of the estate to meet the deceased’s debts as they fall due or, for debts already due at the death of the deceased, within a reasonable time after the death of the deceased. In my opinion, the general interests of creditors may be given greater attention when exercising a discretion under bankruptcy law than it is given under State laws governing estate administration.
I accept that the court should usually give a legal personal representative a reasonable opportunity to be appointed and to embark upon the responsibilities of that office, bearing in mind the particular circumstances of the estate, before expecting the estate creditors to be paid. Where an estate is clearly solvent, it may be reasonable for the Court to expect a creditor to explore procedures under probate rules for the citation of an executor who has neglected to prove a will and for the procuring of an administrator under, for example, ss.63 and 75 of the Wills Probate & Administration Act 1898 (NSW). Once an executor or administrator has been appointed, it may be relevant to consider his or her compliance with rules requiring finalisation of the estate and the filing of accounts (c.f. ss.46C, 85, 87 of the Wills Probate & Administration Act 1898 (NSW) and Supreme Court Rules Pt 78 r.71). As is pointed out in Williams, Mortimer & Sunnucks (supra), administration out of court and out of bankruptcy “will usually be the simplest and cheapest method of administration”. Professor Woodman, however, advised creditors “not to overlook the right to seek an order for the administration of an insolvent estate in bankruptcy” (R A Woodman, Administration of Assets, 2nd Ed. p.136).
It is difficult to generalise further, particularly where these general issues were not explored before me in argument nor in the cases cited to me. I have had limited time to explore them in my own researches. I have taken the above matters into account when reaching my decision in this case, but have decided to exercise my discretion principally by focusing on the submissions made to me. The parties’ submissions addressed the particular circumstances of the present estate as shown in the evidence led by the parties.
The opponents sought to identify “sufficient cause” for declining to make the order sought by the applicant creditor notwithstanding that it has established the statutory preconditions. As I have indicated above, the opponents sought to do this by positively establishing “solvency” and, in the case of Ms Baun, also by arguing that she, rather than an independent trustee, would be better suited to administer the estate. For reasons I shall give below, I have not been persuaded in relation to either of these matters. Moreover, I have reached a positive opinion that it would be in the best interests of the unsecured creditors of the estate for it to be administered by an independent trustee under Part XI of the Act. I am not persuaded that the contrary wishes of the other persons interested in the estate should prevail.
Before explaining my reasons, I shall summarise the evidence led by each party. None of this evidence was subject to cross-examination, and much of it was uncontroversial. There were, however, other areas in which the opponents raised controversies between themselves, but deliberately avoided exploring and resolving them. They invited me to exercise my discretion upon the basis that these controversies existed and would need to be addressed, if necessary by further litigation, in the course of administration of the estate.
On all the evidence before me, I make the following findings:
a)The deceased died on 16 December 2002, aged 75 years. Her death certificate shows the cause of death as metastatic pancreatic carcinoma, 2 months. According to Ms Baun, the deceased was diagnosed with the fatal illness “on or about October 2002”, and received palliative care from then until her death.
b)Her death certificate shows one child, Andrew aged 51, who is said to live at Temora. Andrew’s current partner is Ms Braun. Mr and Mrs Ridding live in Old Guildford, NSW. Mrs Ridding is described by Ms Braun as “the step daughter of the deceased.” The deceased refers in her will to having “grandchildren”, but the evidence does not reveal their number or descent. As I shall indicate below, the deceased was also survived for some months by her very elderly mother.
c)The petitioner had obtained a default judgment against the deceased on 3 June 2002, in the sum of $16,886.77. A certificate of judgment dated 3 December 2002 (two weeks’ prior to her death) shows no amount had been paid, and recoverable enforcement costs of $184. The debt arises from a liability of the deceased to the petitioner as sole guarantor under a financing agreement between the applicant and Puroil Pty Ltd dated 24 April 1998 in relation to vehicles and various items of office and farm equipment located on “Kathville” near Dubbo.
d)Little of the correspondence which must have preceded the present petition is in evidence before me, but it seems that prior to 7 March 2005, Messrs Warren F Ball & Co acted as solicitors for the deceased, and then for Mr Robbins and Ms Baun. In a letter to the applicant’s solicitors dated 28 May 2002, they said that “we are instructed that our client is making application to pay by instalments on the assumption that judgment will be entered today.” There is no evidence that such an application was ever made. Warren F Ball & Co seems also to have assisted the deceased to make her will shortly before her death (since it is witnessed by a solicitor and secretary from their office), and also prepared and presented Ms Baun’s application for probate in January 2005 (this is shown on the executor’s affidavit). However, on 7 March 2005, they told the applicant that “we are terminating our instructions in the estate as we have a conflict of interest.”
e)On 8 November 2002, before the death of the deceased, the NSW Sheriff reported on a writ of execution in relation to the petitioner’s judgment debt with a “notice of non-levy”. Execution had been attempted at the deceased’s residence at Unit 3, 23 St Annes St, Merrylands, on 7 November 2002, but no levy had been made. The sheriff’s notice said “the debtor owns no goods on the premises upon which to make a seizure. All goods are owned by the debtor’s mother (age 105). Informed that the unit is owned by the debtor.”
f)I accept that this evidences an act of bankruptcy by the deceased prior to her death under s.40(1)(d)(ii) of the Act: that “execution has been issued against him or her under process of a court and has been returned unsatisfied”. This may have the consequence under s.247A(1)(a) of the Act that, if I make the order sought, the administration in bankruptcy shall be deemed to have relation back to, and have commenced, at “the time of the commission of that act (of bankruptcy)”. I say “may” because, although these provisions were referred to by counsel for the petitioner, I was not asked to make a determination on this point, and evidence as to the deceased’s solvency at that time may be incomplete.
g)At the time of her death, the deceased was the sole registered proprietor of strata lots attaching to the home unit in Sydney, being 3/23 St Ann St, Merrylands (“the home unit”) where she resided.
h)The only encumbrance on the home unit is a registered mortgage dated 29 October 2002 in which Mr and Mrs Ridding appear as joint mortgagees. It incorporates an attached document headed “agreement for settlement of claim”. This document is dated 24 October 2002 and is executed by the deceased as “Debtor” and Mr and Mrs Ridding as “Claimant”. It purports to settle a claim made by demand dated 12 October 2002 on the deceased under a guarantee of loans by REID Management Pty Ltd to Yarrabar Pty Ltd and to John Ison totalling $179,178 with interest. The deceased is described as “the debtor” and agrees that “as security for the debt the Debtor shall grant to the Claimant a registered mortgage in the value of Two Hundred and Twenty Thousand Dollars (AUD220,000.00) over the real property of the Debtor being the premises described as 3/23 St.Anne Street Merrylands NSW.” There are many aspects of the agreement and demand which are obscure on the evidence before me, and no attempt has been made on the part of Mr and Mrs Riddings to explain the transactions to which they relate.
i)On 15 February 2005 a grant of probate was made in the Supreme Court of NSW to Ms Baun in relation to the deceased’s will made on 6 December 2002, i.e. nine days before her death. Under this will the deceased appointed Ms Baun, described as “my daughter in law”, as executrix and trustee and as sole beneficiary. There is no explanation in the material before me as to why she passed over her son, although one possibility is that it was because he was bankrupt at the time. She expressly gave her executrix power “to postpone the sale of any part or parts of my estate for so long as my trustee shall think fit without being responsible for any loss occasioned thereby.”
j)In support of her application for probate, Ms Braun on 31 January 2005 swore the affidavit of executor. In it she verifies “a statement of all the assets of the deceased of which I am presently aware”. This refers to only one item, the home unit, and values it at $225,000. She also says: “the undisputed liabilities of the deceased of which I am presently aware” are an unsecured Credit Card debt owed to David Jones Ltd in the amount of $2,625.43, and a secured debt for funeral expenses owed to White Lady Funerals in the amount of $6,038.78. She swears that “the estate has a gross value of $225,000 and a net value of $216,335.79”.
k)Ms Baun says in an affidavit sworn on 18 April 2005 and filed in this Court that she did not disclose the debt owed by the deceased to the applicant because “I was not aware that the deceased was bound by a guarantee at her death”. Her affidavit says nothing as to her awareness of the judgment debt owed to the applicant, and no evidence has been led from her or anyone else to explain why she did not disclose its existence more than 2 years after the deceased’s death, notwithstanding that she employed the same solicitor who had assisted the deceased in relation to the debt, and notwithstanding a visit by the Sheriff to the deceased’s home which may have been notorious in the family.
l)Also of concern to me is her explanation for not disclosing the $220,000 secured debt claimed by Mr and Mrs Ridding. She says her affidavit: “I thought that the mortgage was a device invented by Mr Ridding to avoid the debt claimed by Rivwest and to secure an interest in the estate for Mr and Mrs Ridding at a time when the deceased did not know what was going on as a consequence of her medication.” This raises a concern that she was aware of, and for two years acquiesced in, a scheme to defraud the petitioning creditor.
m)Evidence of such a scheme also appears in conversations which Mr Robbins in his affidavit sworn on 18 April 2005 swears to having had with Mr Ridding in “mid October 2002” after the deceased’s terminal cancer was diagnosed, and again in June 2003 after the death of his grandmother. It is difficult to accept that Ms Baun would not have become aware of these conversations (if they occurred) soon after they occurred. These are not matters upon which I need to make definite findings upon, but in my opinion the evidence of Ms Baun and Mr Robbins concerning them points clearly to the desirability of appointing an independent and professional administrator, equipped with powers under the Act, to inquire into the transactions giving rise to the mortgage.
n)Ms Baun, now accepts that her executor’s affidavit incorrectly identified the quantum of a net surplus of assets over liabilities, due to its failure to refer to the applicant’s judgment debt. She also accepts that the estate will only be solvent if the claims of Mr and Mrs Riddings can be set aside. Plainly, on her evidence, the estate is insolvent on any test if the debt claimed by Mr and Mrs Riddings as well as the petitioner’s debt should be brought into account, even ignoring the need to make provision also for estate and litigation expenses which she proposes to incur.
o)This proposal is made in her affidavit sworn on 18 April 2005:
10.I do not believe that any money was owed to the Riddings by the deceased. I say that the mortgage is a sham and a device invented by the Riddings to avoid the debt to Rivwest.
11I was very close to the deceased and spoke to her at least a couple of times a week during her life. Notwithstanding this; at no stage did the deceased discuss with me that she had guaranteed any advances made by the Riddings or by companies associated with the Riddings to any other person.
12.I have instructed my solicitor, in the event that the creditor’s petition is dismissed, to initiate proceedings in the NSW Supreme Court, Equity division, seeking inter alia, declaratory relief that the putative mortgage relied upon by the Riddings is uncertain and is of no force and effect.
p)Mr and Mrs Ridding’s objection and affidavits were filed before those of Ms Baun. Their claim that the estate was solvent was on the basis that the home unit was worth $230,000 and was subject to their secured claim for $220,000. They did not put any evidence before the court to explain the transactions under which this debt arose, and have filed no evidence in reply to the evidence of Ms Baun and Mr Robbins which I have described above. That evidence was filed on the eve of the hearing, but no adjournment was sought to allow evidence in reply. Instead, it was suggested from the bar table that they denied the allegations and would defend any proceedings brought by Ms Baun to set aside the transactions.
q)Mr and Mrs Ridding admitted that, upon the assets disclosed by Ms Baun in her executor’s affidavit, the estate was insolvent once the petitioner’s debt was taken into account. However, they sought to establish that Ms Baun had failed to account for “chattels, works of art, antiques and objet d’art and other personality belonging to the deceased at the time of her death.” Mrs Ridding claimed to have observed the deceased packing antique furniture, porcelain items and original paintings, of which the deceased claimed ownership. Mr Ridding claimed that the deceased had owned porcelain figurines worth $12,000, and a Royal Doulton dinner service worth $2,200. Mr Ian Poyitt claimed to have seen in March 2004 “a large collection of fine quality porcelain figurines”, and items of antique furniture “probably in excess of $100,000 worth”, which Ms Baun admitted were “part of my mother’s possessions”. Mr Ridding suggested that these had been auctioned by Ms Baun on 14 August 2004 at Temora Town Hall.
r)In response to these allegations Ms Baun claimed in her affidavit:
6.5Prior to her death the deceased had only a small amount of personal items as she had previously disposed of them to me in 1996. This came about because the deceased had shortly prior given guarantees to the ANZ Bank and she did not want her personal property at risk if anything went wrong with the guarantee to ANZ. The remainder she gave away in the 12 months prior to he death.
6.6The paintings were given to me in 1996.
7.10The deceased disposed of most of her personal property in the years prior to her death.
7.14None of the property auctioned belonged to the estate.
7.15Andrew Robbins does not hold any property belonging to the estate.
The above evidence leads me to reach the following conclusions:
i)I am far from satisfied that the estate is solvent on any meaning of that term.
ii)Ms Baun has not, and has not attempted in this court, to disprove the debt secured by mortgage. She has pointed to aspects of the transaction which suggest that it is may be open to being set aside as a sham or on grounds of undue influence or unconscionable dealing. However, I am unable to draw any conclusion on when the litigation she proposes in this respect might be commenced and concluded, nor as to its prospects of success.
iii)As to Ms Baun’s projected equity proceedings to set aside the mortgage, I am doubtful that she has the motivation or means to pursue these with any real prospects of bringing the estate to a position of solvency where the petitioning creditor will be paid. Over two years have passed since the deceased’s death without any step being taken other than the recent obtaining of a grant of probate. I can see no prospect that the projected litigation, left in the hands of Ms Baun, will result in the estate’s creditor being paid within a reasonable time.
iv)For their part, Mr and Mrs Ridding have not persuaded me that, without an order for administration in bankruptcy, there are real prospects that additional estate assets will be found and brought into account so as to leave the estate solvent. Indeed, Ms Baun’s evidence suggests that if she is left in charge of the administration they will not be found. Mr and Mrs Ridding do not have any interest in commencing administration proceedings in equity to force her to do this.
v)I am concerned by suggestions in the material before me that both Ms Baun and Mr and Mrs Ridding have sought in the past to conduct themselves in relation to property of the deceased with the object of preventing the petitioning creditor from ever being paid. On Ms Baun’s part she has not satisfactorily explained to me why it took her two years to seek probate, why she misrepresented to the Supreme Court the liabilities of the estate, and why she has taken no significant step to set aside the October 2002 transactions between the deceased and Mr and Mrs Ridding. I am left unpersuaded that she will administer this estate with the object of seeking to ensure payment of its creditors.
vi)I consider that in the circumstances identified above there would be a better prospect of creditors being paid, and being paid without significant further delay, if the estate were administered in bankruptcy. A trustee in bankruptcy would have extensive powers to investigate whether Ms Baun has failed to account for assets, and whether Mr and Mrs Ridding’s transactions with the deceased can be set aside either in equity or under the Bankruptcy Act. If the parties act sensibly, the trustee may be able to resolve all claims on the estate without having to resort to further litigation. If further litigation is appropriate, then I consider that it would be better conducted by a trustee in bankruptcy on behalf of the estate.
For the above reasons, I am not satisfied that there is sufficient cause for not making the order sought by the applicant, whether for reasons argued by the opponents or any other reasons. In all the circumstances, I consider it a proper exercise of the Court’s discretion to order that the estate be administered in bankruptcy.
The petitioner sought an order that I should appoint the trustee whose consent was shown to me. However, as I understand the effect of s.156A as applied by s.248(1), this should be effected by filing the consent with the Official Receiver and not in this Court. I shall note the intention to do this.
For reasons indicated above at paragraph 17(f), the parties or the trustee will need to approach the Court again if a determination becomes necessary as to the date of commencement of the administration under s.247A(1).
The applicant has sought a costs order personally against the opponents, rather than out of the estate. I have considered the submissions made in this respect by its counsel. I accept that I would have power to do this, but have concluded that the normal order in bankruptcy should be made. The evidence before me has not explored the conduct of the parties leading up to the presentation of the petition, so as to allow me to conclude that the opponents have conducted themselves in a manner deserving a personal costs liability. I note that ss.51 and 109(1)(a) are made by s.248(1) applicable to proceedings under Part XI.
I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Iliya Marovich-Old
Date: 23 May 2005
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