Rose v Piscopo
[2010] FMCA 948
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| ROSE & ORS v PISCOPO | [2010] FMCA 948 |
| BANKRUPTCY – Interim application filed in an application under s.81 of the Bankruptcy Act 1966 (Cth) for the Court to issue examination summons – interim application seeks discharge of the summons and pursuant to s.179 inquire into the conduct of the Trustee and have him removed from office. |
| Bankruptcy Act 1966 (Cth), ss.81, 134, 136,178, 179 McQuade & Gummow, Australian Bankruptcy Law & Practice 6th ed |
| Adsett v Perlousis (1992) 37 FCR 201 Alafaci; In re; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262 Apple Computer Australia Pty Ltd v Wiley [2003] NSWSC 719 Bartlett v Barclays Bank Trust Co. Ltd(No.1) [1980] Ch 515 BDT Holdings Pty Ltd v Piscopo (No.2) [2009] FCA 1126 Boensch v Pascoe [2007] FCA 1977 Bredner v Granville – Grossman [2001] Ch 523 Brignishaw v Briginshaw (1938) 66 CLR 336 Brooks v Law Society of NSW [2008] NSWCA 31 Brooks v Prothonotory of the Supreme Court of New South Wales [2008] NSWCA 31 Campbell’s Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 ALR 58 Commonwealth v Sheahan [2004] FCA 1301 Parry, RE, Dalton v Cooke [1969] 2 All ER 512 Daniels Corporations International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 Doolan v Dare [2004] FCA 682 Ex parte Tatton; re Thorp (1881) 17Chd512 Ex parte Newitt; re Mansel (1884) 14 QBD 177 Fuller v Wiley [1999] FCA 656 Goldsmith v Sperrings Ltd [1977] 1 WLR 478 Head v Gould [1898] 2Ch 250 at 268 Hill v James [2004] NSWSC 55 Hill v Piscopo [2008] FMCA 574 Hunter v Hunter [1938] NZLR 520 James v Hill [2004] NSWCA 301 Jones v Dunkel (1959) 101 CLR 298 Karounas v Official Trustee (1988) 19 FCR 330 King v Henderson [1898] AC 720 Macchia v Nilant [2000] FCA 7 Maxwell / Smith v Donnelly [2006] FCAFC 150 Piscopo v Hill [2008] FMCA 1266 Piscopo v Hill [2008] FMCA 1455 Piscopo v Hill [2009] FMCA 658 Piscopo v Hill & Ors (No.3) [2010] FMCA 153 Piscopo v NOT Lawyers [2008] FCA 1907 Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122 Quinton v Proctor [1998] 4 VR 469 Re Biboso Pty Ltd (1995) 17 ACSR 730 Re Cside; ex parte Andrews (1979( 39 FLR 387 Re Challen; Ex parte Brown v Bendeich (unreported, Fed Ct of Aust, Beaumont J, 23 April 2006) Re Eastern; Ex parte Davies (1891) 8Mor168 Re Excel Finance Corporation Ltd; Worthley v England (1994) 62 FCR 69 Re Hunt; Ex parte Hurt (1998) ADALR 236 Re Ladyman (1981) 55 FLR 383 Re Mulligan (deceased) [1998] 1 NZLR 481 Re North Australian Territory Co. (1890) LR 45Chd 87 Re Schrouder’s Wills Trust [2004] 1 NZLR 695 Re the bankrupt estate of Hudson (2004) 2ACB(NS)69 Re Weiss; Ex parte Official Trustee (1983) 74 FLR 259 Sims v Wran (1884) 1 NSWLR 317 Town & Country Sports Resorts (Holdings) Pty Ltd v Partnership Pacific Pty Ltd (1988) 97 ALR 315 Trkuljav Monton (2005) 3 ABC (NS) 110 Walker v Willis [1969] VR 778 Williams v Spautz (1992) 174 CLR 509 Wilson v Wilson (1950) 51 SR(NSW) 91 |
| First Applicant: | ELENA ROSE |
| Second Applicant: | MICHAEL O’NIELL |
| Third Applicant: | TERRY HILL |
| Respondent: | SAMUEL PISCOPO |
| File Number: | SYG 344 of 2008 |
| Judgment of: | Lloyd-Jones FM |
| Hearing dates: | 30 September, 1 & 8 October 2008 15 February, 12 March 2010 |
| Date of last submission | 17 June 2010 |
| Delivered at: | Sydney |
| Delivered on: | 14 December 2010 |
REPRESENTATION
| Counsel for the Applicant: | Mr R D Marshall (SC) with Ms R Francois |
| Solicitors for the Applicant: | Mr M. Stevens of NOT Laywers now O’Niell Partners |
| Counsel for the Respondent: | Mr R. Dubler (SC) with Mr D Allan |
| Solicitors for the Respondent: | Mr A. Foate of Catalyst Legal and on 29 September J. Kekatos of Proctor & Associates |
THE COURT NOTES:
After this judgment was completed and edited, the solicitors representing Mr Piscopo advised the Court, that as a result of a global settlement of all proceedings and claims involving Ms Rose and Mr Piscopo, consent orders disposing of these proceedings as far as the claims between Ms Rose and Mr Piscopo were forwarded to the Court. Consequently, I have removed from the final orders reference to Ms Rose.
ORDERS
The interim application seeks that the examination summons issued to Terry Donald Hill, Michael O’Niell and Nicholas Eddy be discharged, is dismissed.
The interim application pursuant to s.179(1) of the Bankruptcy Act 1966 (Cth) to inquire into the conduct of Samuel Piscopo in relation to the bankruptcy of Terry Donald Hill and remove Samuel Piscopo from the office, is dismissed.
Terry Donald Hill and Michael O’Niell pay Samuel Piscopo’s costs on a party-party basis, as agreed or assessed.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG 344 of 2008
| SAMUEL PISCOPO |
Applicant
And
| TERRY DONALD HILL |
Respondent
REASONS FOR JUDGMENT
Background
The original application filed on 13 February 2008 by Samuel Piscopo under s.81 of the Bankruptcy Act 1966 (Cth) (“Bankruptcy Act”) was for the Court to issue summons for four persons: Terry Donald Hill; Elena Rose; Michael Francis O’Niell and Nicholas Eddy to give evidence and produce documents. Mr Piscopo is the Trustee in Bankruptcy to the estate of Mr Hill. Ms Rose is the spouse of Mr Hill. Messrs O’Niell and Eddy were the solicitors for Mr Hill and Ms Rose during the relevant time.
Prior to February 2002 Mr Hill controlled and was the principle director of a number of companies known as the Hill Wine Group. The business had a turnover of approximately $50 million. Businesses in the Hill Wine Group included Vineyard Ownership in South Australia, ownership of a number of wine brands, ownership and conduct of a restaurant and cellar door in South Australia, ownership of a warehouse in Sydney, conduct of a broad range of liquor distribution businesses in Sydney, conduct of a fine wine distribution across Australia and a significant wine export business.
BDT Holdings Pty Ltd is a company that is controlled by Mr Hill’s wife, Elena Rose. BDT Holdings Pty Ltd claims to be a creditor of Mr Hill for an amount of approximately $5 million.
Hill International Wines NZ Ltd was controlled by Mr Hill who held in his own name 99 of 100 shares issued in that company. Hill International Wines NZ Ltd owned 20% of another New Zealand company, Vintage Wines and Spirits Ltd which formerly distributed Hill Wine Group’s products in New Zealand. At some time during 2003 or 2004, Hill International Wines NZ Ltd was liquidated with a Chartered Accountant, Helen Walker, appointed as liquidator. As part of the liquidation the shares held by Hill International Wines NZ Ltd were transferred to Nominee Shareholdings Ltd, a company controlled by Helen Walker who indicates that the shareholding is held in trust for Mr Hill.
Ms Rose, the wife of Mr Hill, controls two companies including Vintage Wine & Spirits Australia Pty Ltd and Rosehill Wine Corporation Pty Ltd. These companies carry out the businesses of buying and selling wines.
On about 11 February 2002, the Hill Wine Group appointed Peter Damian McClusky and Bruce James Carter as voluntary administrators. The liquidation followed the collapse of a working capital funding arrangement between the Hill Wine Group and National Australia Bank Ltd. A deed of company arrangement was presented to the creditors of the Hill Wine Group on 22 April 2002 offering about 35 cents in the dollar however the deed was rejected due to the National Australia Bank’s vote, as the major secured creditor, in favour of the Hill Wine Group’s liquidation.
Mr Hill first filed a Personal Insolvency Agreement on 25 August 2005 with Mr Peter Rodgers as administrator. An Application to set-aside the Personal Insolvency Agreement was filed in the Federal Court on 27 September 2005, by several individuals trading as Browns of Padthaway as the First Applicant and James Estate Wines Pty Ltd as the Second Applicant. A Further Amended Application to set-aside the Personal Insolvency Agreement was then filed on 5 April 2006 joining Liquor National Pty Ltd, Wine National Pty Ltd and Killara 9 Pty Ltd as the Third, Fourth and Fifth Applicants, respectively.
On 4 July 2006 His Honour Rares J, in proceeding NSD 1822 of 2006 relating to the aforementioned set-aside Applications, made the following orders:
The Court:
1. Notes the agreement of the applicants and the second respondent that the third, fourth and fifth applicants have standing to bring this application.
2. Orders that the Personal Insolvency Agreement between the respondents dated 9 September 2005 be set aside pursuant to s 222 of the Bankruptcy Act 1966 (Cth).
3. Orders that a sequestration order be made against the estate of Terry Donald Hill.
4. Orders that Samuel Piscopo of Lawler Partners Sydney be appointed as trustee in bankruptcy of the estate of Terry Donald Hill.
5. Notes the agreement of the parties that other than any costs the subject of the costs order made on 15 March 2006 in favour of the respondents no order for costs is sought against the first respondent in respect of the proceedings.
6. Orders that the exhibits from the hearing before me on 14 and 15 March 2006 may be returned within 28 days subject to any further order by a registrar of the court or a judge.
Interim Application
During the course of the matter, various interim applications were filed by the parties and ruled upon. On 9 October 2008, the Second Further Amended Interim Application was filed by Ms Rose and Mr O’Niell, and particulars of which were amended on 19 December 2008. On 20 March 2009, during the final hearing, the Third Further Amended Interim Application was filed which was in the following form:
Details of Interim Orders
On the grounds stated in the supporting affidavit, the First Applicant, ELENA ROSE and the Third Applicant, TERRY HILL, seeks the following interim orders:
1. The examination summons issued to:
- Terry Donald Hill dated 4 April 2008
- Elena Rose dated 4 April 2008
- Michael O’Niell dated 4 April 2008
- Nicholas Eddy dated 4 April 2008
be discharged.
2. The Subpoenas issued on 18 June 2008 to:
- the proper officer of Westpac Banking Corporation;
- the proper officer of Provident Capital Limited;
- the Secretary of R.L Kreminzer & Co;
- the proper officer of Bovis Lend Lease Limited;
- the Secretary of Wine-Ark Pty Ltd;
- the proper officer of GE Morttgage (sic) Solutions Ltd,
be set aside.
3. Pursuant to section 179(1) of the Bankruptcy Act 1966 the Court:
(a) inquire into the conduct of the Respondent in relation to the bankruptcy of Terry Donald Hill;
(b) remove the Respondent from that office; and
(c) make any such further order as it thinks proper.
4. The Respondent pay the Applicants’ costs of and incidental to this Interim Application on an indemnity basis.
5. Such further orders as the Court deems fit.
The Third Further Amended Interim Application is supported by the Applicant’s Amended Particulars of Respondent’s Abuse of Process filed in Court on 19 December 2008 which states:
A. The examination proceedings and the trusteeship generally are:
1. being used to oppress and harass Terry Hill (‘Mr Hill’) his wife, Elena Rose (‘Ms Rose’), his lawyer, Michael O’Niell (‘Mr O’Niell’) and his former lawyer, Nicholas Eddy (‘Mr Eddy’);
2. being used to further a vendetta by David James (‘Mr James’) and David Brooks (‘Mr Brooks’) against Mr Hill and Mr O’Niell;
3. being used to obtain documents and other information from Messrs Hill, O’Niell and Eddy and Ms Rose and under a subpoena from corporations related to Mr Hill and Ms Rose, financiers, accountants of and contractors to such corporations to supply same to Mr James and Mr Brooks, so as to enable Mr James and Mr Brooks or both of them to:
a. gain confidential information;
b. gain a commercial advantage;
c. commercially disadvantage Ms Rose’s interests;
4. in substance a delegation to Messrs James and Brooks of the conduct of litigation or steps in litigation involving the trustee and the bankrupt’s estate.
5. affected by material inroads on the trustees independence caused by Messrs James and Brooks.
B. The examinations proceedings and the trusteeship generally are:
1. a product of the trustee being overborne by his sponsors, Messrs James and Brooks.
C. As an officer of the Court, a bankruptcy trustee and an applicant for exparte orders, the trustee has, by relying on his affidavit sworn 4 December 2007 to found the issue of the 4 examination summons’ herein:
1. materially mislead the Court:
Further particulars
a. as to the facts and matters stated in paragraph 3(m) of that affidavit. The trustee failed to disclose that Helen Walker advised in writing that she had mistakenly written that the shareholding in Nominee Shareholdings Ltd was held in trust for the bankrupt and instead advised that shareholding was held for Ms Rose;
b. (withdrawn)
c. as to the facts and matters alleged in paragraph 4 of the affidavit by failing to disclose the written report made by the bankrupt’s solicitors to the trustee dated 3 May 2007.
2. included the allegation or suggestions that were either unfounded or only founded on assertions made to him by Mr Brooks, such allegations being made in:
a. paragraph 3(g), as to repayment;
b. paragraph 3(o), as to ‘significantly’ more value;
c. paragraph 3(u) as to BDT Holdings making loans “…through trust distributions.”
Litigation history
These proceedings were commenced by the filing of an Application for Summons to Examine Relevant Person or Examinable Person by Samuel Piscopo. The relevant person was Terry Donald Hill and the examinable persons were Elena Rose, Michael Frances O’Niell and Nicholas Eddy all of whom were required to produce documents and give evidence. An affidavit of Samuel Piscopo sworn 4 December 2007 in support of that application was filed on 13 February 2008.
On 23 April 2008, Mr Piscopo’s solicitors issued subpoenas to: The Partners, Ernst & Young; The Partners, Ferrier Hodgson; The Secretary, Wellington Bottle Shop Pty Ltd; The Secretary, Kennards Self Storage Pty Ltd; and Ms Helen Walker. On 23 April 2008, Justice Cowdroy of the Federal Court granted leave pursuant to s.9 of the Evidence and Procedure (New Zealand) Act 1994 to serve the subpoena on Ms Walker in Auckland, New Zealand. Subsequent to that date, the matter appeared in the Registrar’s list on a number of occasions before being transferred to this Court on 17 June 2008.
Prior to the filing of the Application for Summons to Examine there were two applications to this Court in respect of Mr Hill’s access to his passport to enable travel overseas. Although both applications were heard by other members of this Court, the proceedings are significant to the current proceedings. On two occasions, Mr Hill requested access to his passport to enable him to undertake overseas travel. Mr Piscopo refused access resulting in Mr Hill taking the following proceedings.
a)On 15 May 2007, Mr Hill filed an urgent application for the return of his passport to enable him to fly to London for a wine fair where his wife wished to do business for one of her companies. The couple wished to visit friends in the United Kingdom, to fly to New York to further pursue his wife’s business interests, then fly to Chicago “to visit personal family friends”, to have further business meetings in Los Angeles and Vancover and return to Sydney. His Honour, Federal Magistrate Smith in his judgment Hill v Piscopo [2007] FMCA 814 dismissed Mr Hill’s Application.
b)On 19 March 2008 Mr Hill filed an application seeking a review pursuant to s.178 of the Bankruptcy Act 1966 (Cth) at the decision of his trustee in bankruptcy refusing to return his passport to permit travel to attend a friend’s wedding. His Honour, Driver FM in his judgment Hill v Piscopo [2008] FMCA 574, ordered the trustee to return Mr Hill’s passport for the purpose of the proposed travel subject to the bankrupt’s undertaking not to depart from the travel itinerary exhibited in Court and not to participate in any business activities including shore dealings whilst in New Zealand.
On 4 June 2008 NOT Lawyers on behalf of Mr Hill filed subpoenas issued to Messrs Piscopo, Foate, James and Brooks. The subpoena issued to Mr Piscopo contains the following relevant paragraph:
3. All documents (as defined in the Evidence Act, 1995) recording any communications between you and:
(a) Mr David Anthony JAMES; and/or
(b) Mr David George BROOKS; for the period 1 May 2006 to the present in relation to:
(c) Mr Terry Donald HILL and/or any company of which he was a shareholder or officer; and/or
(d) Elena ROSE and/or any company of which she was or is a shareholder or officer.
The subpoenas issued to Messrs Foate, James and Brooks are in similar terms.
On 13 June 2008, Samuel Piscopo filed an Interim Application seeking to have paragraph 3 of the subpoenas issued to himself, Messrs Foate, James and Brooks set aside. The matter was returnable on 17 June 2008 before the Duty Registrar. After brief argument, Registrar Hedge transferred the matter to this Court for hearing Mr Allen appeared for Mr Piscopo while Ms Francois appeared for Mr Hill. Mr Allen moved on the Interim Application seeking relief to have paragraph 3 of the subpoenas struck out.
On 9 September 2008, I delivered the judgment Piscopo v Hill [2008] FMCA 1266. Within that judgment there is background material about the nature of the relationship and dispute between the various parties in these proceedings. I will refer to these circumstances in more detail below. I made the following orders:
1. The Interim Application filed by Samuel Piscopo on 13 June 2008 is dismissed.
2. The Respondent within 7 days is to provide the Applicant with particulars of the alleged abuse of process to have the examination summons discharged.
3. The Respondent’s costs to be costs in the cause.
On 24 September 2008, Registrar Segal made the following orders:
1. The Applicant has leave to immediately inspect, uplift and photocopy the documents produced by the Respondent on 17 September 2008 over which he does not assert a claim of privilege.
2. The Respondent is to file and serve an affidavit listing the documents he produced on 17 September 2008 over which he has asserted privilege and explain the basis on which that privilege is claimed by 4pm on 26 September 2008.
2(a) Grant leave to produce ….
3. The subpoenas addressed to the Respondent and Messrs James, Brooks and Foate at 10:15am on 30 September 2008 before Federal Magistrate Lloyd-Jones.
On 30 September 2008, the final hearing of Ms Rose’s Further Amended Interim Application to set aside the Examination Summons issued by Mr Piscopo commenced. Initially there was an application by Michael O’Niell to be joined as an applicant together with an application by both Rose and O’Niell to amend the proceedings to include a prayer under s.179. There were no substantial objections to these applications and leave was granted.
Four subpoenas to produce were issued to Messrs Piscopo, Foate, Brooks and James and filed on 4 June 2008, were called (see [12] above). Mr Marshall referred the Court to the Affidavit of Samuel Piscopo sworn 12 June and filed on 13 June 2008 (Exhibit A2), and formally tendered as admission on the application paragraphs 1, 2, 3, 4, 5, 10 and 11. Paragraph 11 provides evidence on oath as to how much material will be required to be produced if he complies with the subpoena and provides a total of 3550 pages in his estimation. A typed schedule paginated list describes the 503 documents and nominates which ones were the subject of the claim of privilege. Privilege was claimed over the vast bulk of these documents. The claim was challenged invoking o.27, r.4 of the Federal Court Rules which empowers a Registrar of the Court to inspect the documents to determine the claim of privilege. The bundle of documents were referred to Registrar Hannigan to determine the issue of privilege.
Mr Marshall referred to the affidavit of Samuel Piscopo sworn 12 June 2008 which contained details of the extent of the task to comply with the subpoena. The material produced was substantially less than referred to in this affidavit. Mr Piscopo was called to give evidence on this issue. He was provided with a copy of the Applicant’s Tender Bundle (Exhibit A1). This bundle contained copies of the documents produced on subpoena for which no claim for privilege was made. Mr Piscopo was then asked a series of questions as to which documents were provided by him to answer the subpoena. During the course of Mr Piscopo’s evidence an application was made and granted for the issue of a Section 128 Certificate under the provisions of the Evidence Act 1995 (Cth) excluding Mr Piscopo from any future criminal or civil proceeding in respect of certain evidence given during cross examination. The next witness called was Mr Brooks. It was Mr Brooks’ evidence that he had marshalled the material for the four subpoenas. He divided the documents into privilege and non-privilege groups and filed them in Court. As neither Mr Foate or Mr James were present at Court the following orders were made:
1. The documents produced in answer to the subpoenas issued at the request of Elena Rose on 4 June 2008 and served upon Anthony Foate, Samuel Piscopo, David Brooks and David James (together the ‘Subpoenaed Parties’) over which privilege has been claimed (the ‘Privileged Documents’) be examined by the Court to determine whether or not those documents or any of them are privileged from production.
2. The examination ordered in paragraph 1 be referred to a Registrar of the Court.
3. The parties are to file and serve any written submissions with reference to the list by no later than 10.15am, 1 October 2008.
4. The Registrar is to examine the ‘Privileged Documents’ with reference to the list and submissions filed in accordance with paragraph 3 of these orders and determine which of the ‘Privileged Documents’ are privileged from production.
5. A certificate under s.128 of the Evidence Act 1995 (Cth) be issued in relation to the evidence of Samuel Piscopo given in Court on 30 September 2008 concerning relevant parts of paragraph 11of his affidavit sworn on 12 June 2008.
6. That Mr David Anthony James and Mr Anthony Stuart Foate are required to attend Court at 10.15 on 1 October 2008.
On 1 October 2008, Mr Allen filed an affidavit of Anthony Stuart Foate explaining his absence from Court due to a prior commitment in other proceedings. Mr James was called to give evidence and be cross-examined in relation to the steps he had undertaken to comply with the subpoena issued to him. He was provided with a copy of the Applicant’s Tender Bundle (Exhibit A1).
At the end of the hearing I issued the following orders for the further progress of the matter:
1. Mr David George Brooks produce any further documents in answer to the subpoena dated 4 June 2008.
2. Mr David Anthony James produce any further documents in answer to the subpoena dated 4 June 2008.
3. Mr Anthony Stuart Foate to attend Court for examination on Wednesday 8 October 2008 at 9.30am.
4. Michael O’Niell be joined as the second applicant to the further amended interim application now identified as the second further amended interim application.
5. The further amended interim application be amended to include paragraph 3A and otherwise in accordance with the draft second further amended interim application annexed to the affidavit of Michael O’Niell sworn 16 September 2008.
6. Elena Rose, first applicant, and Michael O’Niell, second applicant, in the second further amended interim application file and serve particulars by 4pm, Tuesday 7 October 2008.
7. Costs of proceedings of 30 September 2008 and 1 October 2008 be reserved.
On 3 October 2008, Registrar Hannigan made the determination that some documents were privileged and that others were not. In making her decision the Registrar considered that communications between Mr Brooks and Mr Piscopo were only privileged when they satisfied the test set out in Pratt Holdings Pty Ltd v Commissioner of Taxation [2004] FCAFC 122. This states that they must have been created for the dominant purpose of obtaining legal advice for the purpose of litigation. The decision of Registrar Hannigan was challenged in respect of a number of documents which were referred to Federal Magistrate Scarlett for consideration at a hearing on 17 October 2008. A judgment was delivered by His Honour on 23 October 2008: Piscopo v Hill [2008] FMCA 1455.
On 8 October 2008, the hearing adjourned from 1 October 2008 was resumed. A schedule, prepared by Registrar Hannigan, identifying the page number of the privileged documents was before the Court. Argument in respect to access was heard and orders were made. In evidence given by Mr Brooks (30 September 2008) and Mr James (1 October 2008) indications were made that the further document might be produced. Mr Marshall called on the subpoenas to both Messrs Brooks and James. Mr James produced two further documents (Exhibit R4) and access was granted. Mr Brooks did not produce any further documents.
Mr Anthony Stewart Foate gave evidence and was cross-examined. Mr Foate confirmed that in order to answer the subpoena served on him, he extracted documents from his office files, photocopied them and forwarded the copies to Mr Brooks to produce to the Court (Trans 8/10/08, p5). The result of this approach was that the four subpoenaed parties (Piscopo, Brooks, James and Foate) sent all the documents to Mr Brooks who selected and placed documents into separate bundles (privileged and non-privileged) and delivered them to the Court without referenceas to who supplied them (Trans 8/10/08, p8). A bundle of documents which contained some of the non-privileged documents were tendered and marked as exhibits. The following consent orders were made:
1. Access be granted to Michael O’Niell and Elena Rose to the documents produced on subpoena by Samuel Piscopo, David George Brooks, David Anthony James and Anthony Stuart Foate in the bundle marked “privilege” save for the following pages in the bundle: 80, 81, 82, 83, 87, 91, 93, 97, 99, 100, 111-114, 116-127, 135-141, 142-149, 150-153, 154-157, 164, 165, 166, 167, 177-181, 242-243, 244, 251-254, 255-257, 286-288, 291-294, 303-305, 308-311, 318-322, 323 -339, 362-365, 366-368, 397, 475-478 (“the privileged pages”).
2. The Registrar is directed to separate the privileged pages from the other pages of the aforementioned bundle marked “privilege”.
3. Michael O’Niell and Elena Rose be granted access to the privileged pages.
Order 3 be stayed:
(a) provided an application for review if Registrar Hannigan’s decision of 3 October 2008 in regard to the privileged pages is filed and served by 4pm, 9 October 2008 and such application if filed be referred to a magistrate in chambers for determination;
(b) with the determination of that review.
4. The second further interim application be adjourned for directions before Lloyd-Jones FM on 23 October 2008 at 9.30am.
5. Access is granted to the further documents produced today by David Anthony James.
6. The subpoenas addressed to Anthony Stuart Foate and David Brooks be adjourned to 21 October 2008 at 9.30am.
7. Costs of today be reserved.
8. It is directed that none of the evidence given in this application by Samuel Piscopo, David George Brooks, David Anthony James and Anthony Stuart Foate is to be accepted as evidence in the proceedings on the second further amended interim application or in subsequent proceedings (if any), in which it is alleged that there has been a failure to comply with the subpoena.
At a directions hearing in this matter on 29 October 2008 I made the following orders:
1. There be an early return of subpoenas to produce at which time notices to produce may be called upon at 9.30am on 3 December 2008.
2. The applicants on the second further amended interim application file with Lloyd-Jones FM’s Associate and serve a paginated bundle of documents to be relied upon in chief by 4pm, 10 December 2008.
3. The hearing of the second further amended interim application be set down for 18 and 19 December 2008 before Lloyd-Jones FM.
4. Parties have liberty to apply on three days’ notice.
The adjourned hearing of the Second Further Amended Interim Application resumed on 18 December 2008 and continued on 19 December 2008. The parties at that stage of the proceedings were Elena Rose (First Applicant), Michael O’Niell (Second Applicant) and Samuel Piscopo (Respondent). At the reconvening of the hearing on 19 December 2008, Mr Marshall sought to file in Court the Applicant’s Amended Particulars document. There was no objection to this course. Section C of that document had been expanded to include some new allegations but evidence in admissible form was not available. An adjournment was sought to enable the preparation of this affidavit material. This was not opposed by Mr Piscopo. Consequently, the hearing was adjourned to 19 March 2009. The following orders were made by consent:
1. The applicants (Terry Donald Hill and Elena Rose) are to file and serve evidence in relation to Paragraph C of the Amended Particulars filed on 19 December 2008 by 2 February 2009.
2. The respondent is to file and serve his evidence by 2 March 2009.
The adjourned final hearing was recommenced on 19 March 2009 and continued on 20 and 26 of March 2009. Mr Terry Donald Hill was joined as the Third Applicant for the interim application. Mr Marshall moved on the Third Further Amended Interim Application (see [7] above). At the completion of the hearing of the second day, the following orders were made:
1. The transcript of Mr Hill’s cross examination is confidential and access is limited to the legal representatives of the parties.
2. The matter be adjourned until 26 March 2009 at 12pm.
At the completion of the hearing on 26 March 2009, the matter was reserved.
On 24 June 2009, an Interim Application was filed by NOT Lawyers, seeking to file and read an affidavit of Michael Stevens sworn 2 April 2009, claiming that NOT Lawyers lodged a proof of debt in the sum of $4,437.43 representing unpaid bills for legal services incurred on behalf of Terry Donald Hill prior to him entering a Personal Insolvency Agreement on 29 July 2005. The filing and reading of this affidavit was objected to by counsel for Samuel Piscopo, the Trustee. Judgment in Piscopo v Hill [2009] FMCA 658 was delivered on 22 July 2009 and the following orders were made:
1. The Affidavit of Michael Stevens sworn on 2 April 2009 is accepted into evidence subject to its relevance in the main proceedings.
2. There be no order as to costs.
On 15 February 2010, counsel for Mr Piscopo sought to read an affidavit of Jim Kekatos sworn 9 April 2009, together with Exhibit JK1. A judgment was delivered: Piscopo v Hill & Ors (No.3) [2010] FMCA 153, on 12 March 2010 where the following orders were made:
1. The Application in a Case to re-open the proceedings is granted.
Evidence
The following material was filed on behalf of the Applicants:
Exhibit A1; and
Exhibit A2.
The following material was filed on behalf of the Respondent:
Exhibit R1;
Exhibit R2;
Exhibit R3; and
Exhibit R4.
Applicants’ Case (the Applicants to the Third Interim Application)
Mr Marshall, appearing for the Applicants, informed the Court that his clients relied on the following evidence:
a)affidavit of Terry Donald Hill sworn 10 June 2008;
b)affidavit of Terry Donald Hill sworn 17 December 2008;
c)affidavit of Michael Stevens sworn 17 December 2008;
d)affidavit of Terry Donald Hill sworn 18 March 2009;
e)affidavit of Michael Stevens sworn 18 March 2009; and
f)ten volumes of documents comprising the Applicants’ court bundle.
Mr Marshall indicated that when access was gained by his clients to Mr Piscopo’s affidavit sworn 4 December 2007 (Vol.10, tab 74) the contents of the affidavit gave rise to additional particulars and was adjourned part heard on 19 December 2008 to 19 March 2009.
It is alleged that there was a material omission in Mr Piscopo’s affidavit. The allegation is that Mr Piscopo swore an affidavit (4 December 2007) in which he deposed to the existence of some shares in New Zealand that were formerly held for the benefit of Mr Hill, and that, he alleged, still were for the benefit of Mr Hill, as advised by the liquidator in New Zealand (Ms Helen Walker). Mr Marshall submits that what Mr Piscopo neglected to put before the Court was the information that he received in a letter from the same liquidator, advising that she had made a mistake and, in fact, the shares concerned were not held for Mr Hill but were held for his wife (Ms Rose). It is noted that these shares feature significantly in these proceedings as they appear to be the major asset that Mr Piscopo is trying to recover.
NOT Lawyers, acting for Mr Hill, wrote a report regarding the New Zealand share interests for Mr Hill. Included in the report is a copy of a letter dated 18 December 2006, written by the liquidator, Helen Walker, concerning the interests in the shares being held by Mr Hill’s wife, not Mr Hill. That letter from Helen Walker was written directly to Mr Piscopo. Mr Marshall submits that if that was not received by Mr Piscopo, the letter would have been brought to his attention because NOT Lawyers supplied a copy of the report to Mr Piscopo which contains a copy of the letter.
It is claimed that the Affidavit in Support of the Examination Summons, (4 December 2007) which was called in aid of each of these three elements of the examination summons, are symptomatic of Mr Piscopo’s trusteeship. Access, although originally withheld, was handed over to the applicant’s counsel and solicitors at the hearing on 18 December 2008, following an application for access. The document was handed over by consent and Mr Piscopo had no objection to it being utilised (T, 18/12/08 p.9-10)
Upon the resolution of the issue in respect to the access to Mr Piscopo’s affidavit of 4 December 2007, the Third Further Amended Interim Application was filed and the proceedings moved to the second stage which seeks three major forms of relief:
a)the discharge of the examination summons;
b)the setting aside of the subpoenas; and
c)the ordering of an enquiry of the Trustee under s.179 of the Bankruptcy Act.
Mr Piscopo, as a Trustee in Bankruptcy, has the usual common law duties of a remunerated trustee and responsibilities of a fiduciary nature to creditors and the bankrupt, Mr Hill. Consequently, Mr Piscopo has a duty:
a)to remain independent in the exercise of his role as a trustee;
b)not to delegate responsibility; and
c)as an Officer of the Court not to disclose matters which are unfavourable to his case in any Ex parte application to the Court.
Mr Marshall advised the Court that the Applicant is in a position to provide evidence to prove that all of these duties have been breached by Mr Piscopo.
It is submitted that the problem lies in the relationship between David James and David Brooks on the one hand, and Mr Piscopo on the other. Mr James and his employee, Mr Brooks, sponsor Mr Piscopo. Neither are creditors to Mr Hill, however there were proceedings taken by Mr Hill against Messrs Brooks and James. Mr Hill also joined some companies associated with Mr James to those proceedings, being Bearing Traders Pty Ltd (Second Defendant), Liquor National Pty Limited (Fourth Defendant) and Wine National Pty Ltd (Fifth Defendant). Those companies were not separately represented in the proceedings. As Mr Hill did not have any success against any of those companies, Her Honour Bergin J made costs orders against Mr Hill in favour of those companies. Those costs have not been assessed. Hill v James [2004] NSWSC 55 per Bergin J.
The relationship was affected by a Deed of Release, entered into by Mr James and Mr Rogers, a former trustee of Mr Hill, on 19 April 2006 (Vol.1, tab 14). The deed reports bind any trustee of Mr Hill’s estate by limiting the way the trustee can deal with any assets or any litigation. The deed was entered into after Her Honour Bergin J had delivered her judgment. In the midst of proceedings being taken by Mr Hill against Mr James, Mr Hill had difficulties with creditors of his own. in his failed business, and had appointed Mr Rogers as his Part X trustee. Mr Rogers then took over the conduct of the enforcement. Mr James purchased a debt of a liquidator of one of Mr Hill’s companies. Mr Hill was asserting creditor status for that reason. Mr James had also commenced three sets of proceedings against Mr Hill.
The Deed of Release granted a release for Mr James and Mr Hill. Mr James paid $350,000.00 for the release. The Deed was to provide a resolution of all the proceedings. A Creditor’s Petition against Mr James was to be settled. The significant clause of this deed stated:
6.1 In the event the Federal Court, in the personal insolvency agreement proceedings, orders that the P/A be set aside, then a Sequestration Order is made against the estate of Hill, Rogers will pay the trustee in bankruptcy the balance of any of the settlement sum, and James shall have a right to purchase from the trustee any asset in bankruptcy of Hill that the trustee decides to dispose of on the terms set out in this clause.
The Deed gives Mr James a right to acquire any asset recovered and in turn recoup costs that he might have expended in either sponsoring recovery or take the asset himself. In clause 6.3, Mr Rogers does not warrant that this clause is binding on any Trustee in Bankruptcy appointed to the estate of Mr Hill.
The applicant’s argument advanced is that the apparent aim of the sponsorship is to harass Mr Hill and his wife Elena Rose. Examples of this harassment are as follows:
a)Mr James’ application to upset Mr Hill’s Personal Insolvency Agreement (rightly or wrongly) following the circumstances where Mr James owed Mr Hill a judgment debt for fraud and costs which were subject to a Creditor’s Petition instigated by Mr Hill, and had launched a raft of proceedings, eg. defamation, injurious falsehood and set-aside (as a counter-attack) (Vol.1, tab 6). Mr James’ application to upset the Personal Insolvency Agreement was made more successful by the Deed of Release of 19 April 2006.
b)Evidence points to Mr Brooks having an early involvement in Mr Piscopo’s administration of the bankruptcy, being as early as only a fortnight after Mr Piscopo’s appointment. That collaboration between Messrs Brooks and Piscopo has been regular ever since.
c)In March 2008, Mr Hill made his third passport application to Mr Piscopo as Mr Hill wanted to travel to New Zealand for a week to attend a wedding. Mr Piscopo rejected the application. The application was granted by His Honour, Federal Magistrate Driver. At the hearing, Mr Piscopo was represented by senior and junior counsel being paid for by Mr James. It is submitted that this is an indicator of the extent of the inconvenience.
d)A Warrant for Search and Seizure was executed on 20 November 2008 by Mr Piscopo, an I.T. expert and six Federal Police at the residence of Mr Hill and his wife. Evidence shows that Mr Brooks was involved in the preparation for the Application for the Search and Seizure Warrant and Mr James’ in-house I.T. Manager was actually named in the warrant with Mr Piscopo in circumstances where there was a major overlap between the documents sought in other proceedings being pursued by Mr Piscopo and the documents sought in the warrant.
e)An unsuccessful attempt was made to remove NOT Lawyers from representing any party opposing Mr Piscopo in regard to Mr Hill’s estate. This was the Federal Court proceedings in Piscopo v NOT Lawyers [2008] FCA 1907 per Foster J where His Honour dismissed the application and ordered that Mr Piscopo pay the Respondent’s costs, of and incidental to the proceedings (as taxed or agreed) on a party-party basis up to an including 4 December 2008 and on an indemnity basis from 5 December 2008.
f)There was an attempt to suppress BDT Holdings’ right as the major creditor to convene a meeting of creditors. Mr Piscopo refused to hold a meeting of creditors and refused to acknowledge BDT Holdings’s proof of debt resulting in the BDT Holding Pty Ltd v Samuel Piscopo & Ors, Federal Court proceedings NSD 528 of 2008. It is submitted that the aim for the sponsors appear to cause Mr Hill to be “locked in” to his bankruptcy.
g)The scope of the documents required by the examination summons far exceeds those required for the examinable affairs. It would appear to include documents that would be of interest to the sponsors. It is submitted that the sponsors acquired Mr Hill’s old business and have intentions for expansion.
h)Subpoenas have been issued in various proceedings by Mr Piscopo in order to obtain documents, eg. Subpoenas to Theodore Rose Reich & Associates.
i)Mr Piscopo swore his 4 December 2007 affidavit to obtain ex parte orders without disclosing his knowledge of a letter from a New Zealand liquidator that contradicted the evidence he gave about the beneficial ownership of some New Zealand shares.
Mr Marshall contends that the motive of Messrs James and Brooks is revenge. The judgment of Her Honour Bergin J in Hill v James (supra) is damning of their conduct.
Mr James and his associates run a wine business, as does Ms Rose through her companies. It is submitted that Messrs James’ and Brooks’ actions are aimed at disrupting any wine business conducted by Ms Rose’s companies. It is claimed that the method employed involved:
a)Mr Brooks consulting on legal strategy;
b)Mr Brooks drafting court applications, affidavits and other documents for the use by Mr Piscopo;
c)Mr Foate of Catalyst Lawyers (the name Catalyst being associated with Mr Brooks when he was a practicing lawyer) was appointed the solicitor on the record but it is alleged that he was not preparing all of the documents for filing and service;
d)Mr Piscopo has thus launched several set of proceedings;
e)Even the most important tasks such as complying with the subpoenas issued by this Court, are delegated to Mr Brooks by Mr Piscopo.
The effect of this relationship has caused Mr Piscopo’s independence and his duties not to delegate to be affected in regard to the bankrupt estate of Terry Donald Hill.
Mr Marshall contends that there is some commercial advantage gained by Mr James in co-sponsoring Mr Piscopo that one only needs look at the Court proceedings to identify that Mr James is a sponsor and indemnifier to the value of $$73,847.00. Some indications of this are:
a)February 2008 – examination summons made in the Federal Magistrates Court, SYG344/2008;
b)March 2008 – passport application before Driver FM: Hill v Piscopo [2008] FMCA 574 in proceedings number SYG668/2008 (senior and junior counsel, no order as to costs);
c)June 2008 – Mr Piscopo’s application to set-aside subpoenas in these proceedings was lost with costs;
d)September 2008 – final hearing of BDT Holdings proceedings – vacated due to Mr Piscopo’s fault – cost ordered by Rares J against Piscopo (counsel on both sides);
e)December 2008 – hearing to restrain proceedings with costs included – indemnity costs ordered against Mr Piscopo: Piscopo v NOT Lawyers [2008] FCA 1907 per Foster J (counsel on both sides); and
f)December 2008 – hearing regarding warrants – matter referred to the Federal Magistrates Court per Jacobson J.
Mr Marshall indicated that his client would be relying on the following material which is contained in the ten volumes of documents comprising the Applicant’s Court Bundle and, particularly, referred the Court to the following documents in the table below.
| Volume | Tab | Description |
| 1 | 1 | Judgment of Her Honour Justice Bergin in the Supreme Court of New South Wales – Hill v James [2004] NSWSC 55 |
| 2 | Judgment of the Court of Appeal: James v Hill [2004] NSWCA 301 | |
| 3 | Bergin J Orders entered 3 March 2004; Court of Appeal Orders entered 15 November 2004 | |
| 4 | Certificate of Bankruptcy of David George Brooks dated 14 April 2005 with Sequestration Order dated 13 April 2005 | |
| 5 | Search of register of the office of Legal Services Commission of 2 January 2008 together with a copy of the judgment of Bell JA in Brooks v Prothonatory of the Supreme Court of New South Wales [2008] NSWCA 31 dated 14 March 2008 | |
| 6 | Statement of Claim served on Terry Hill, in defamation, falsehood and set-aside proceedings | |
| 7 | Personal Insolvency Agreement of Terry Hill dated 25 August 2005 | |
| 8 | Federal Court Application to Set-Aside Personal Insolvency Agreement filed 27 September 2005 | |
| 9 | Federal Court Further Amended Application to Set-Aside Personal Insolvency Agreement filed 15 April 2006 | |
| 10 | Orders of Rares J dated 4 July 2006 appointing Samuel Piscopo as Trustee in the Bankruptcy in the Estate of Terry Hill | |
| 11 | Creditors Petition filed 15 July 2005 in the Federal Magistrates Court Creditor’s Petition proceedings SYG1872/2005 | |
| 12 | Orders of Raphael FM dated 21 April 2006 | |
| 13 | Federal Court Application to appeal the Sequestration Order proceedings filed 5 April 2006 – Application for leave to Appeal | |
| 14 | Deed of release dated 19 April 2006 between David James and Peter Rogers as Trustee of the Personal Insolvency Agreement of Terry Hill | |
| 15 | Correspondence between the parties since 4 July 2006; chronological bundle of correspondence including background material to give context of particular correspondence | |
| Significant documents | p.181 - email from Mr Brooks re: strategy and related matters; p.182 - emails between Mr Piscopo and Mr Brooks – proposed meeting refunding and investigation; p.192 - NOT Lawyers information concerning what Mr Rogers did with $350,000 received from Mr James under the release; p.259 – Mr Hill’s application to go overseas, access to his passport; p.267 – report from NOT Lawyers about the New Zealand shareholding; p.268 – Mr Piscopo’s response. | |
| Vol.2 | p.333 – email S. Piscopo to Jacki Cole re: response to report on NZ Shares | |
| p.354 – reply from NOT Lawyers to S. Piscopo | ||
| p.345 – email from T. Hill to S. Piscopo re: transfer of funds enquiry | ||
| p.388 – letter dated 17 March 2008 from NOT Lawyers to S. Piscopo re: return of passport request | ||
| p.405 – Reply from S. Piscopo to Jacki Cole | ||
| p.410 – letter: NOT Lawyers to S. Piscopo requesting notification to authorities of New Zealand trip | ||
| p.440 – p.441 – letter: NOT Lawyers to Anthony Foate re: Elena Rose summons for examination | ||
| p.450 – letter: NOT Lawyers to S. Piscopo re: proposed trip to Europe | ||
| p.456 – letter: Catalyst Legal to NOT Lawyers re: discovery of documents | ||
| p.461 – letter: NOT Lawyers to Federal Magistrates Court re: erroneous access to privileged documents | ||
| p.464 – letter: NOT Lawyers to Mr Foate re: list of categories of documents for discovery | ||
| p.469 & p.470 – letter: Catalyst Legal to Ms Cole re: insufficient undertakings provided | ||
| p.499 – fax: NOT Lawyers to Michael Stevens re: undertakings of Ms Cole | ||
| p.502 – reply fax: Catalyst Legal to NOT Lawyers re: undertakings | ||
| Vol 3 | Tab 16 | Copy of Terry Hill’s Statement of Affairs dated 3 July 2006 |
| 17 | Passport application proceedings filed by Terry Hill filed on 15 March 2007 | |
| 24 | Orders and reasons for Judgment of Federal Magistrate Smith dated 18 May 2007 | |
| 25 | Second passport application filed by Terry Hill on 19 March 2008 in the Federal Magistrates Court | |
| 29 | Orders and reasons for judgment of Federal Magistrate Driver dated 20 March 2008 | |
| Vol 4 | Tab 33 | Federal Court proceedings between BDT Holdings Pty Ltd v Samuel Piscopo & Ors filed 17 April 2008 – Notice to Produce issued to Samuel Piscopo to BDT Holdings dated 14 May 2008 |
| 35 | Notice of Motion dated 4 August 2008 filed on behalf of Piscopo with consent orders dated 13 August 2008 | |
| 36 | Affidavit of Anthony Foate sworn 4 August 2008 | |
| Vol 5 | Tab 38 | Short Minute of Order dated 3 September 2008 made by Rares J, concerning transfer of subpoena material to the BDT proceedings |
| 41 | Orders of Rares J dated 15 September 2008 | |
| 46 | ASIC searches of James’ company: Liquor National Pty Ltd | |
| 47 | Subpoenas issued by Samuel Piscopo on 18 June 2003 Westpac Banking Corporation | |
| 48 | Affidavit of Samuel Piscopo sworn 12 June 2008 | |
| 49 | Affidavit of Melissa Anne Small sworn 26 September 2008 annexing a list of privileged documents prepared by Brooks/Piscopo in respect of the subpoena material produced by Brooks/James/Foate and Piscopo dated September/October 2008; and Privileged documents list with itemised numbering. | |
| Vol. 6 | Tab 50 | Documents tendered at Examination on 3 September 2008 and 8 October 2008 from Messrs James/Brooks/Piscopo and Foate – containing subpoenas to produce items to each and each document produced over which no privilege was claimed |
| Vol.7 | Tab 51 | Documents produced in answer to subpoena served on James/Brooks/Piscopo and Foate and over which privilege was claimed but which was found by the court not to attract privilege |
| 52 | Registrar Paddy Hannigan dated 3 October 2008 related to privileged documents | |
| 53 | Judgment of Federal Magistrate Scarlett dated 23 October 2008 reviewing decision of Registrar Paddy Hannigan dated 3 October 2008 | |
| 55 | Subpoena for production served on Mr Brooks served on 24 November 2008 | |
| 56 | Affidavit of Mr Piscopo sworn 4 December 2008 | |
| Vol.8 | Tab 57 | Warrant for seizure of property connected with the bankrupt – Mr Hill – dated 14 November 2008 |
| 58 | Affidavit of Samuel Piscopo sworn 6 November 2008 | |
| 62 | Court order of Justice Jagot dated 20 November 2008 in respect of documents obtained pursuant to warrant not being provided | |
| 64 | Orders entered by Justice Jacobson dated 12 December 2008 | |
| Vol.9 | 65 | Internet search made under the title “James Australia Group” |
| 66 | Federal Court Application made by Mr Piscopo against NOT Lawyers heard by Forster J | |
| 69 | Transcript of hearing in NSD1707/2008 dated 11 December 2008 | |
| 70 | Final orders and reasons for judgment made in NSD1707/2008 by Foster J on 11 December 2008 | |
| Vol.10 | Tab 72 | Letter from NOT Lawyers to Mr Piscopo, Lawler Partners dated 3 May 2007 with enclosures. |
Respondent’s case
Mr Dubler indicated that the Interim Application includes three parts: the discharge of the various examination summonses; the setting aside of the subpoenas; and the order for an inquiry. On 18 June 2008 Piscopo issued subpoenas to:
i)Westpac Banking Corporation;
ii)Provident Capital Limited;
iii)R.L Kreminer & Co.;
iv)Bovis Lend Lease Limited;
v)Wine-Ark Pty Ltd; and
vi)GE Mortgage Solutions Ltd.
These subpoenas were also relevant to the Federal Court proceeding NSD 528 of 2008, BDT Holdings Pty Ltd v Piscopo.
Mr Dubler expressed the view that the subpoena issue has been dealt with by the Federal Court as the documents have been produced and orders for access have been made. Consequently, the remaining issues concern the setting aside of the examination summons and the claim for an inquiry.
On various dates between 24 June 2008 and 10 July 2008 the subpoenaed material was delivered to the Federal Court. Subsequent to the delivery, their Honours Rares and Lindgren JJ made various access orders to that material. This has effectively removed this issue from the proceedings in this Court and requires no further reference.
Mr Dubler contends that the only way in which a trustee is able to deal with a well-resourced bankrupt with cynical attempts to hinder the administration of the estate is if they are funded and have the ability to actually deal with such well-resourced bankrupts who may be hiding their assets. The Courts have made it plain on a number of occasions that funding from a creditor is the only practical way that a trustee can proceed and investigate. The funding has been subject to judicial endorsement and encouragement by the courts expressing to trustees that it is appropriate they seek assistance from creditors. By obtaining funding, trustees can use that money to investigate the bankrupt’s affairs.
Mr Dubler invited the Court to have particular regard to the actual Application and Statement of Particulars. Mr Dubler requested his client’s right to natural justice in that the representatives of the Applicant should not be held to go beyond the statement of particulars and the outline of submissions. It is submitted that in respect of the pleadings, consideration has been given to particulars but there is an absence of evidence to support it. Clearly the onus is on the Applicant. The Court is invited not to go further. Although the Application to set-aside these subpoenas has not been dealt with in the final written submissions tendered by the Applicant, there is no need for this issue to be further dealt with by the Court. The documents in question have been produced, orders for access have been made and hence the issue has been spent and there is no further requirement to address this issue further. Mr Dubler also contends that there is no standing for the Applicants to complain about those subpoenas issued to third parties which have now been answered.
Mr Dubler acknowledges that the Application to set-aside a summons, as pleaded, is based essentially upon what can be categorised as two allegations. The first is whether or not there can be a finding by this Court that the examination summons were issued for ulterior collateral purposes to oppress, harass or further a vendetta. Alternatively, to obtain documents for an improper purpose for supplying the same to Messrs James and Brooks. Mr Dubler submits that there is no allegation that the respondent lacked a proper or reasonable basis for the issue of the summons for examination or that the Court, in its discretion on review, should decline to issue such a summons.
The Applicant’s case stands or falls on the allegation that there was a collateral purpose and that was the purpose for the issue of the summons. For this claim to be sustained, the Court must be satisfied to a Briginshaw (Brignishaw v Briginshaw (1938) 66 CLR 336) standard, that the trustee’s dominant purpose was not to have an examination summons proceed in order to obtain documents going to the examinable affairs, or answers going to the examinable affairs, but rather that the intention of the trustee was predominantly to simply harass and carry out a personal vendetta to obtain documents to give to Messrs James and Brooks, to allow them to use it for commercial purposes.
Submissions on trustee’s duties
It is not disputed that a Trustee in Bankruptcy is a remunerated trustee and has all of the usual duties, save for where the position of the trustee is modified by the provisions of the Bankruptcy Act: Re Ladyman (1981) 55 FLR 383 at 397.3 followed in Adsett v Perlousis (1992) 37 FCR 201 at 209.9. A Trustee in Bankruptcy:
a)has a fiduciary duty to the creditors and the bankrupt;
b)is an Officer of the Court: Re Hunt; Ex parte Hurt (1998) ADALR 236 per French J (as he was) at 240.1;
c)has a duty to act independently in the exercise of his role as trustee; and
d)has a duty not to delegate his responsibility.
In relation to the actions of a Trustee, the Court should have regard to not only the subjective intention of the trustee in carrying out his actions, but also to look at the matters objectively in determining whether a particular trustee’s conduct constitutes a breach of trust, or, in the absence of a breach, whether it nevertheless constitutes conduct that warrants these removals: Re Mulligan (deceased) [1998] 1 NZLR 481. A breach of trust that evidences the likelihood that a trust will not be executed in the interest of the beneficiaries will justify the removal of the trustee. Consequently, a trustee will not automatically be removed for any breach of trust.
If for example, a mistake is made during a bona fide attempt to carry out his duties, if the Court is satisfied that there is no reason in the future why the trustee should not be compliant with his duties: Quinton v Proctor [1998] 4 VR 469 at 475. Where the Court finds that there is evidence that the welfare of the beneficiaries is in danger, the Court may remove a trustee who has not actually committed a breach of trust: Hunter v Hunter [1938] NZLR 520 at 534. The duty to act independently is necessarily impacted upon by the circumstances which may place the trustee in a position of conflict. An obvious example is where extraneous interests coincide with the interests of the objects of the trust. In this regard, the trustee must not be a party to any act of a person which may involve a breach of trust or otherwise endanger trust property: Head v Gould [1898] 2Ch 250 at 268.
All trustees must act cautiously and just to be as a reasonably prudent business person would in managing his own property and affairs. A professional trustee (such as Mr Piscopo) must exercise a higher duty of care than a non-professional trustee: Bartlett v Barclays Bank Trust Co. Ltd(No.1) [1980] Ch 515 at 534. Akin to the duty to act independently is a duty to act personally. The trustee must not delegate his duties in that he must not allow others to exercise the judgment that he should bring: Dalton v Cooke [1969] 2 AllER 512.
Involved in the duty not to delegate and the duty to act independently is the requirement that the trustee must not permit others to dictate the manner in which his discretion ought to be exercised: Wilson v Wilson (1950) 51 SR(NSW) 91; Walker v Willis [1969] VR 778 at 782; Quinton v Proctor (supra) at 471; Bredner v Granville – Grossman [2001] Ch 523 at 544. Also implied in the duty to act independently is the trustee’s fiduciary duty to be impartial. He must remain neutral as between beneficiaries: Re Schrouder’s Wills Trust [2004] 1 NZLR 695 at [39] – [43].
Submissions on the operation of proceedings under s.179 of the Bankruptcy Act
It is agreed by the parties that this Court’s supervisory jurisdiction over Trustees in Bankruptcy, is broad. Section 179 has been interpreted to involve a two-stage decision making process. Firstly the Court should determine whether there should be an inquiry on the conduct of the trustee in relation to the bankruptcy and secondly conduct the enquiry to the point of making appropriate orders. Alafaci; In re; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262 per Riley J at 268:
I do not wish to be taken as presuming to lay down any rule as to the procedure to be followed in, or the approach to be made by the court to, a case of this sort; but it seems to me that in such a case there is a preliminary question to be decided by the court — namely on the grounds and facts before it, has a case been made for inquiry into the trustee's conduct? If the answer to that question is “yes”, the next question is — what is to be the scope of the inquiry? It may be that the material already before the court sufficiently defines the scope of the inquiry; on the other hand, the court may find it necessary to define the subjects for inquiry — eg in the form: “Did the trustee do (or fail to do) so and so?” — and to give directions before proceeding to inquire. In any event, the court will seek to inquire into specific matters, and to ensure that the trustee is given proper opportunity to prepare and present his case on those matters.
In Doolan v Dare [2004] FCA 682 per Spender J at [48]:
[48] Section 179 of the Act provides a two-step process, in that the Court must be satisfied that an inquiry into the conduct of a trustee is warranted and, after the inquiry, has jurisdiction to remove the trustee. It seems to me that in this particular circumstance, the question of the removal of the trustee has been a very live and real issue, and the conduct of the trustee has been at the centre of the application before Cooper J and this present one.
In the case of a fully litigated matter, the two-step process may take place in the one hearing and judgment. Justice Cooper decided in Doolan v Dare that an inquiry was warranted and decided to remove the trustee based on the evidence before him.
A wide-range of possible factual scenarios present themselves to the court in s.179 matters. Doolan v Dare (supra) is authority for the proposition that there is flexibility available to the Court in dealing with a wide-range of factual scenarios. A reading of the cases on s.179 discloses that many of those cases involved failed applications for inquiry and in those cases the hurdle of the first stage was not overcome. The Court in those instances did not need to consider whether or not to depart from the two-stage process.
Mr Dubler in his written submissions in respect to the general principles of the application of s.179 referred the Court to the decision in Boensch v Pascoe [2007] FCA 1977 per Buchannan J at [10]:
[10] Examination of this issue sheds light on the quality of the case necessary to order that an inquiry be held under s 179 of the Act. A Full Court said recently that ‘a clear case must be made out to warrant an inquiry’ (Maxwell-Smith v Donnelly [2006] FCAFC 150 at [53]; see also Moore v Macks [2007] FCA 10 at [30]. The necessity to establish some adequate foundation for removal of a trustee has been long established. In Miller v Cameron (1936) 54 CLR 572 Dixon J with whom Evatt and McTiernan JJ agreed) said (at 580–581):
The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee. In deciding to remove a trustee the Court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office. Such a judgment must be largely discretionary. A trustee is not to be removed unless circumstances exist which afford ground upon which the jurisdiction may be exercised.
[11] In this Court, when s 179 of the Act is invoked, the question is usually posed whether a trustee has erred in the administration of the estate or failed to act as required by the Act or the general law. Sometimes the issue is focussed or decided by reference to whether ‘misconduct’ has occurred.
[12] In Re Gault; ; Gault v Law (1981) 57 FLR 165 Ellicott J said (at 173):
the court should be loath to order an inquiry unless it considers that on the evidence before it there are substantial grounds for believing that the trustee erred in his administration. If the court considers that an inquiry is unlikely to reveal misconduct it should not make an order and put the respondent and possibly the creditors to the expense and trouble involved.
[13] In Adsett v Berlouis (1992) 109 ALR 100 a Full Court of this Court explored the general duty of a trustee under the Act as follows (at 107–108):
A trustee appointed in relation to a bankrupt becomes trustee of the bankrupt’s estate. The trustee is bound to administer that estate in accordance with the Bankruptcy Act and Bankruptcy Rules. The trustee has a dual function: first, to administer the estate in the interests of the creditors and the bankrupt; secondly, to exercise, as a public duty and for the public welfare, certain powers given, and duties imposed, under the Act: Re Campbell; Ex parte Official Trustee (1987) 13 FCR 326 at 329 ; 72 ALR 251 …
The discharge of a public duty imposed by the Act is to be performed conformably with the requirements of that duty, but also conformably with the trustee’s obligation to administer the estate in such a manner as to maximise the return from estate assets, and thereby to maximise the return from estate assets, and thereby to maximise satisfaction of the creditors’ claims and any possible surplus for the bankrupt. (Emphasis added)
[14] In Trkulja v Morton [2005] FCA 659 Gray J said (at [4]):
The Court should be reluctant to undertake an inquiry, unless there are substantial grounds for believing that the trustee erred in the administration. If an inquiry is unlikely to reveal misconduct, it should not be undertaken. The Court should not unduly interfere with the day-to-day administration of a bankrupt’s estate by the trustee. In order to remove a trustee in bankruptcy, it is necessary to find misconduct on the part of the trustee.’
[15] A matter of central importance is to assess, therefore, whether there is any real likelihood that the administration of the estate has miscarried so that creditors, and eventually perhaps Mr Boensch, have been denied the opportunity of an adequate return (or surplus) from the bankrupt estate after the necessary and reasonable costs of administration have been met.
For the removal of a trustee, whether this is in the interest of all creditors and the Court should be austere to parties that seek the removal of a trustee to thwart attempts to recover assets. In Re Biboso Pty Ltd (1995) 17 ACSR 730 per Young J (as he was then) at 734 stated:
The question is not whether in adversarial litigation there has been proof of a case according to the heads particularised…but rather whether in the interests of the public the removal of the liquidator would be for the general advantage of persons interested in the winding up?
Here, however, one must also be careful. There is a popular sport these days of challenging judges and arbitrators and endeavouring to put off the evil day by directing the attack at the judge rather than the wrongdoer. Great care must be taken that the same tactic is not used against liquidators to stop them doing their duty. Again, the situation will often occur that there will be little money in the winding up and the liquidator will have to cut corners that he might not otherwise cut, and the court must be very careful not to impose too strict a duty which would stop that happening. However, when all these matters are taken into account the end question still remains, would it be to the general advantage of persons interested in the winding up to remove the liquidators?
In Fuller v Wiley [1999] FCA 656 per Heerey, RD Nicholson and Finn JJ held that even if a trustee has not acted correctly, this does not mean he should be removed.
In Macchia v Nilant [2001] FCA 7 per French J (as he was then) dealt with the statutory construction of the section at para [49] – [50]
[49] As appears from the language of s179 it invites first a consideration, albeit upon application by a person with standing, of whether the Court should inquire into the conduct of the trustee. If inquiry is undertaken, the next question is whether the trustee should be removed from office and/or any other order made. The first question requires the Court to consider whether, on the grounds and facts before it, a case has been made for an inquiry - Re Alafaci at 268. The application of s179 to that first step involves a broad discretion as to whether or not there are sufficient grounds to make an inquiry appropriate - Turner v Official Trustee in Bankruptcy (Full Court, 27 November 1998, unreported). The Full Court there quoted with approval the observation of Ellicott J in Re Gault that:
"...the court should be loath to order an inquiry unless it considers that on the evidence before it there are substantial grounds for believing that the trustee erred in his administration. If the court considers that an inquiry is unlikely to reveal misconduct it should not make an order and put the respondent and possibly the creditors to the expense and trouble involved." (173)
The policy consideration referred to by Deane J in Re: Tyndall that "the court should not unduly interfere with the day-to-day administration of a bankrupt's estate by a trustee" applies also to the operation of s179 - Turner at p2-p3.
[50] S179 operates in aid of the Court's supervision of trustees who are its officers. That operation, however, is subject to restraint against undue interference and to discretionary considerations including the practical benefit likely to be derived from the conduct of any inquiry. Like s178, it may be invoked by a bankrupt after discharge and in part for the same reason, namely that the trustee's powers continue in the various ways referred to in Cheesman. It may also be the case that the trustee should be held to account for conduct in the administration of the estate which has affected the bankrupt in some way. As is the case with s178, it is not a vehicle for pressing claims for common law damages under the general law. That is a matter for a court of appropriate jurisdiction. In addition the court will also have in such cases the discretion to determine the utility of an inquiry and its likely outcomes. For "although the court is given a broad discretion under s179 of the Act, that discretion must be exercised in the interests of the orderly administration of the bankrupt's estate" - Re Challen (A Bankrupt); Ex parte Brown (Beaumont J, 23 April 1996, unreported) cited with approval by Merkel J in Cheesman at first instance, p114.
Submissions on the ‘two-stage’ approach
Mr Marshall submits that treating this matter as a two-stage process is inappropriate as the first stage has already been completed by way of affidavit. Mr Marshall acknowledged that some of the authorities deal with the matters under s.179 in order to ascertain whether there is enough evidence to order an inquiry and alternatively, in certain circumstances, the whole case can be heard as one depending on how well the case is developed. Mr Marshall’s submission is that the case for this court falls within the latter category.
Mr Dubler contends that the most convenient course to follow would be to decide the initial issue of whether or not there ought to be an inquiry and if so then secondly the scope of the inquiry is determined. Alternatively, if there are insufficient grounds to order such inquiry, the application fails. Mr Dubler referred the Court to the decision in Boench v Pasco [2007] FCA 1977 per Buchanan J at [7] where His Honour refers to the usual or appropriate approach, being the two-stage approach. Mr Dubler informed the Court that the difficulty facing his client is that there is a statement of particulars, but the statements are broad and inadequately particularise. This is supported by ten volumes of lever arch files. In December 2008, the Applicants were requested to identify to some precision, which documents would be relied upon to support the pleaded particulars. The only response received to this request was that this would be made available at the final hearing.
Mr Dubler indicated that he had recorded each page referred to in Mr Marshall’s opening, but that leaves a vast number of other documents. In those circumstances where the trustee is asked to answer what would appear to be a reasonably serious allegation, that being a lack of acting with bona fides intention and having an ulterior purpose to harass, a trustee must have a proper opportunity to prepare and present his case in respect to those matters. It is submitted that any inquiry, if ordered, has precise limitations and that the trustee has then a proper opportunity to respond to those allegations.
Approach adopted
After the luncheon adjournment on 19 March 2009, I indicated to the parties that I would proceed to hear the evidence without making a formal direction to split the hearing into two sections. At that stage, I had heard both parties opening addresses and required more detailed submissions and evidence to enable me to make the decision whether the claims against Mr Piscopo that he had failed in his administration, could be established. However, if the evidence did establish a failure on behalf of Mr Piscopo, I would formally split these proceedings into the two-stage approach and provide Mr Piscopo the opportunity to defend his position.
Evidence and cross-examination of Mr Hill
Mr Marshall called the only witness to appear in the hearing of the Third Further Amended Interim Application, Mr Hill. Mr Dubler commenced his cross-examination of Mr Hill by providing him with three bundles of documents identified as MFI-1, MFI-2 and MFI-3. After some preliminary questions, Mr Hill was referred to p. 134 of MFI-1 which is part of Hill International Wines (NZ) Ltd, Financial Statements for the year ending 30 June 2002 (p.128-137). On p. 134 which is the Statement of Financial Position as at 30 June 2002 there are two signatures at the bottom of the page, being T. Hill and R. Hill dated 17 December 2002. Mr Hill was asked the following question:
“Above the 17 December 2002 is the signature of you and your wife is that correct?”
This immediately resulted in an objection from Mr Marshall.
The objection is that this is the type of question that is particularly put in examination to give prominence and exactitude to documents that are tabled without proper reference and explanation. For the Respondent to have a witness proving formal documents only for the purpose of the inquiry, and answering questions that go to the examinable affairs, is a distortion of the process. Mr Marshall suggested that the approach was like a preliminary discovery application where a defendant goes into the witness box to dispute some point and ends up having to answer questions about the whole case. The objection was that this application is of limited scope, the questions should not be allowed.
Mr Dubler contends that because of the ruling not to formally split the proceedings into a two-stage process, together with the extent to which the proceedings are already embarking upon will place him in a position that he will not know what, if any, case his client must answer until the time of judgment. The matter that is being agitated against his client is that there is not a proper basis for the issue of the examination summonses that are an abuse of process and ought not to have been issued. Mr Dubler submits that he wishes to, and is entitled to, put before the Court some of the basic facts to show what are the examinable affairs and why there is a well-grounded, reasonable and justifiable basis for all of the examination summonses and how they will serve legitimate purposes for the administration of the trust. Mr Dubler submits that he wishes to go through the basic matters of the potential recovery actions to outline where the administration was currently at that time. He contends that he is entitled to explore with the only witness who is to be called, the background material in the correct light of the administration estate as it stands at this point.
Mr Marshall informed the Court that all of the examination summonses, on their face, are too broad. All of the examination summonses are challenged by Ms Rose, as Ms Rose cannot stand-by and watch Mr Hill be examined as to his examinable affairs whilst her application to set-aside the summons is undermined. Mr Marshall indicated that there was no formal objection to the affidavit of Samuel Piscopo sworn on 5 March 2009 and the annexures of three volumes of documents which have been marked as MFIs. There is no objection on the basis that the material is evidence of what Mr Piscopo believes to the situation and that he has seen certain documents that are contained in the bundle, many of which have unattributed sources. These are documents that he has had access to, to give him certain belief and he is seeking to explain why he does certain things, and answers in certain ways, to support the summonses that he has issued.
The hearing was adjourned at that point and I indicated to the parties that I would consider the matter overnight and formulate a ruling in order to give respective counsel some guidelines on the types of questions that would be allowed in the cross-examination of this witness. Particularly with respect to relevance of the current application before the Court before allowing the cross-examination to encroach into the area that goes to the examinable affairs of the witness. At the resumption, I indicated to Mr Dubler that I had no intention to deny him the opportunity to ask the question and inform Mr Marshall that I was conscious of the area encroaching on the examination and would uphold any objections which indicated that that course was being pursued. Mr Dubler indicated that he would not re-pose the question and would move to a new issue.
Mr Hill was asked to consider tender bundle MFI-1, p.235 (Statement of Affairs of Terry Donald Hill, p.213-235). This was a declaration page which is the last page of that document which contained a signature dated 22 July 2005. The following question was asked:
“…you realise, did you not, that upon Mr Piscopo becoming Trustee he would have access to the Statement of Affairs of your accounts, of your assets, correct?”
Mr Marshall objected to this question on the basis that it fell into the domain of examination because it took Mr Hill to old documents, presumably to build up some prior or consistent statement or argument, paving the way for some admission to be tendered in another case which was not the purpose of this cross-examination.
Mr Dubler acknowledged that it was an early stage of his cross-examination however he was attempting to show that there were more than reasonable grounds for the bona fide belief by the Trustee that the bankrupt had not been cooperative and has been untruthful. Mr Dubler indicated that he would demonstrate from this witness that his lack of cooperation with the trustee has made all of the actions by him not only reasonable, but in fact would have been negligent if he had failed to pursue them. Mr Marshall argued that this application is not about criticising Mr Piscopo for wanting to conduct examinations but rather the way in which he has approached it, particularly to the breadth of documents sought by the examination summons.
When the question was allowed, Mr Marshall sought a brief adjournment to obtain instructions. On resumption, Mr Marshall informed the Court that his instructions were to appeal my rulings to these two significant questions as they were watershed in these proceedings. Mr Marshall advised the Court that the tactic being employed was an attempt to keep Mr Piscopo out of the witness box in the circumstances where he has sworn and filed a 65 page affidavit together with a tender bundle of 1125 pages and deals with all of these matters. However, Mr Dubler has elected not to read the affidavit and that is the reason why he is proceeding in this manner rather than reading the affidavit and making Mr Piscopo available for cross-examination. Consequently, this line of questioning is being pursued. When I allowed the question reproduced above, Mr Marshall sought an adjournment to appeal against that ruling in the Full Federal Court. The matter was adjourned at this point.
On resumption of the hearing, Mr Dubler informed the Court that the application for leave to appeal was dismissed on the condition that he gave certain undertakings to His Honour Jacobson J. Mr Dubler informed the Court that he had undertaken not to conduct cross-examination so as to amount to a dress rehearsal of any examination of Mr Hill. Further, an application was made in this Court to have the transcript of the cross-examination of Mr Hill in these proceedings kept as transcript-in-confidence limited to the parties, omitting Mr Brooks and Mr James. Those orders were made (see [26] above). Mr Hill was recalled to continue his cross-examination.
Mr Dubler acknowledged that he would pursue a line of cross-examination which goes to the relationship between the bankrupt and the trustee, in an attempt to identify the level of cooperation and disclosure between the two so as to give the basis of an inference that the actions of the trustee were reasonable in those circumstances. Mr Dubler indicated that he had put to His Honour, Jacobson J and had given the undertaking that the cross-examination would not amount to a dress-rehearsal of the examination summons. In broad terms, the cross-examination proceeded on that basis with further objections directed to the form and relevance of the question without significant dispute that the questions were encroaching on the territory of the examination summons.
Consideration
Mr Marshall submits that the parties have had the benefit of proceedings during which the formation of these claims were subject to directions, including four days hearing on the subpoena issue. This was subject to an earlier judgment. In addition, the parties have had a ‘dress rehearsal’ at the hearing on 18th and 19th of December 2008. The Court records show that Mr Piscopo has filed a 65 page affidavit which refers to a three volume bundle of documents (MFI-1, MFI-2 & MFI-3). The parties have had every opportunity to put all available evidence before the Court.
The details of the claim were:
On the grounds stated in the accompanying affidavit, the applicant claims:
1. The firm NOT Lawyers, being a partnership conducted by Michael Frances O’Niell, Simon Gallant and David Evans be restrained from acting for any person in court proceedings to whom the applicant in his capacity as trustee of the Bankrupt Estate of Terry Donald Hill is a party.
2. The firm NOT Lawyers, being a partnership conducted by Michael Frances O’Niell, Simon Gallant and David Evans be restrained from acting for any person in examination summons issued on the application of the applicant in his capacity of as trustee of the bankrupt estate of Terry Donald Hill pursuant to s.81 of the Bankruptcy Act 1966 (Cth).
In support of the above application, Anthony Stuart Foate, solicitor and Director of Catalyst Legal Pty Ltd filed an affidavit which sets out the circumstances surrounding the application. The following paragraphs detail the circumstances behind the application.
8. From AF 4 are examination summons served on the bankrupt, Elena Rose, Michael O’Niell and Nicholas Eddy.
9. AF 18 is a true copy of a Second Further Amended Application to set aside the examination summons.
10. To prosecute the application NOT Lawyers served 4 subpoena true copies of which start at AF 21. The persons subpoenaed were David James, David Brooks, Samuel Piscopo and me. We jointly produced documents in response to paragraphs 1 and 2 of the schedule to each subpoena. Access was given to the legal representatives of Elena Rose, being NOT Lawyers. NOT Lawyers had those documents photocopied.
11. Mr Piscopo made an application to have paragraph 3 of the schedule to each subpoena set aside. He failed. AF 29 is a true copy of the judgment on the application.
12. On 17 September 2008 David James, David Brooks, Samuel Piscopo and I jointly produced documents in response to paragraph 3. The production was joint as the documents produced were chains of emails between us. The subpoena did not ask for communications between Mr. Piscopo and myself only.
13. The hearing of the application to set aside the examination summons was set down for hearing starting 30 September 2008. The hearing did not proceed. Instead the subpoenaed parties were examined. His Honour Federal Magistrate Lloyd-Jones referred the question of privilege of the documents produced in answer to schedule 3 to a Registrar.
14. To facilitate the determination of privilege Samuel Piscopo produced to the court a schedule a true copy of which is at AF 42. Samuel Piscopo also handed up a copy of the documents produced in response to paragraphs 1 and 2 of the subpoena and those in paragraph 3 of the subpoena over which privilege was not claimed.
15. On 3 October 2008 the Registrar made finding as to what pages attracted privilege. At AF 56 is a true copy of the Registrar’s judgment and at AF 58 is a true copy of a schedule produced by the Registrar.
16. On 14 October 2008 his Honour Federal Magistrate Lloyd-Jones made the orders at AF 68.
17. His Honour gave access to documents in accordance with the determination of the Registrar, but stayed the order provided an application for review was filed and served by 4pm on 9 October 2008.
18. At AF 70 is a copy of the email attaching the Application for Review.
19. At AF 73 is a true copy of the submission filed for Samuel Piscopo. Elena Rose did not file any further submissions.
20. On 13 October 2008 documents were given to NOT Lawyers. The only documents to which NOT Lawyers had been given were the documents returned in response to paragraph 3 of the subpoenas and over which privilege was found to exist for a significant number of the documents and the two additional documents produced by David James after his examination.
21. AF 76 is a true copy of a letter addressed to the Associate of Federal Magistrate Lloyd-Jones which was emailed to Catalyst Legal.
22. AF 78 is a true copy of a facsimile letter is sent to NOT Lawyers on 24 October 2008.
23. On 23 October 2008 Federal Magistrate Lloyd-Jones handed down the judgment of Federal Magistrate Scarlett, a true copy of which is at AF 80.
24. In regard to all of the documents found to be privileged in the Federal Magistrates Court, I considered all of the communications I had with David Brooks and Samuel Piscopo to be privileged and confidential for the purpose of dealing with litigation and investigations arising from the bankruptcy of Terry Hill. I never envisaged these communications being subpoenaed and then being provided to any third person. I did not have any conversation with Mr. Brooks or Mr Piscopo about the communications being confidential because I thought it obvious that the communications were as Mr Piscopo was the trustee and Mr Brooks works for Mr James. Mr James is funding Mr Piscopo. AF 87 are emails discussing funding. (Vol. 9, tab 67, p.2390 – 2393).
Paragraph 21 of Mr Foate’s affidavit refers to a letter from NOT Lawyers forwarded to my associate dated 24 October 2008.
Dear Associate
FEDERAL MAGISTRATES PROCEEDINGS NO SYG 344/2008
We refer to the documents produced by Messrs Piscopo, Foate, brooks and James pursuant to Subpoena issued on 4 June 2008, together with the Orders of the Court dated 8 October 2008 relating to access to those documents.
We confirm that on 13 October 2008 the Court provided us with an envelope of documents that we took to be the “non-privileged” documents to which we were granted access.
On that same day, two copies of the documents provided to us by the Court were made and a copy of each was provided to Counsel briefed in these proceedings, Mr Marshall and Ms Francois. A copy of the documents was also electronically scanned.
On 14 October 2008, the writer was contacted by His Honour’s Associate to advise that in fact the documents provided the previous day had been erroneously provided, in that they were in fact the “privileged” documents that Mr Piscopo et al were appealing the status of.
Although the writer had thoroughly reviewed each of the documents prior to receiving the telephone call from his Honour’s Associate, we confirm that we have now:
1. returned the original of the documents to the Court Registry;
2. retrieved from and destroyed both copies of the documents delivered to Counsel;
3. deleted the electronically scanned copy of the documents.
Should you have any questions, please do not hesitate to contact us.
Yours Faithfully,
NOT Lawyers
Jacki Cole
The Federal Court matter was heard by His Honour Foster J on 11 December 2008. In his reasons for judgment, His Honour states:
1] At the conclusion of argument, I indicated to Counsel for the applicant that I was minded to accept the undertakings now being offered by Ms Cole and by the respondents as constituting a satisfactory solution to the unfortunate sequence of events which led to the applicant instituting the current proceedings.
[2] Counsel for the applicant then informed me that he did not require any Reasons for Judgment if that was the course which I intended to adopt. Counsel for the respondents and Ms Cole took the same position.
[3] Undertakings to the Court were then offered by Ms Cole and by the respondents. These undertakings were accepted by me. I then ordered the proceedings otherwise be dismissed.
His Honour then addressed the following issue:
6] Counsel for the respondents submitted that the proceedings were always doomed to fail because there was no principle that required the clients for whom she appears, or indeed, Ms Cole, to go further than the undertakings which had been offered prior to the commencement of the proceedings. She also submitted that, in the result, the applicant had failed to obtain any relief in addition to the relief embodied in the undertakings which were offered before the proceedings were commenced.
[7] Counsel for the respondents also pointed to some evidence to the effect that related proceedings are being funded by two gentlemen, Mr Brooks and Mr James as material that suggests that the proceedings have been brought for an ulterior purpose. She submitted that, for this additional reason, indemnity costs based upon the principle in Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397 should be ordered and should be ordered in respect of the whole proceedings.
[8] It seems to me that more evidence would be required if I were to accept that these proceedings had been brought for an ulterior or extraneous purpose.
The undertakings were:
1. Upon Ms Jacki Lynn Cole giving to the Court the following undertakings:
(a) That she will not have any further involvement in any proceedings which concern Mr Samuel Piscopo as the trustee of the bankrupt estate of Mr Terry Donald Hill (hereinafter in this undertaking referred to as "the proceedings"), which proceedings shall encompass the extant examination summons involving the bankrupt estate of Mr Terry Donald Hill, except for the limited purpose of:
(i) settling invoices in relation to her previous work in relation to the proceedings;
(ii) preparing the files for the purpose of handing them over to another solicitor at NOT Lawyers, namely Mr Michael Stevens; and
(b) That she will not further discuss the proceedings with any other person at NOT Lawyers or with Counsel briefed in the proceedings, except for the limited purpose of settling invoices in relation to her previous work in and in connection with the proceedings, or otherwise with the express permission of Mr Piscopo ; and also
2. Upon the respondents’ undertaking to the Court to file and serve within seven days of today’s date an affidavit or affidavits verifying that all reproductions of the documents the subject of the Application in these proceedings have either been deleted from electronic records or otherwise destroyed.
There is no dispute that when the representative of NOT Lawyers collected the bundle of documents from the Court Registry on 13 October, the contents of the envelope which was marked “non – privileged” documents in fact contained the documents that had been granted “privilege”. This error was discovered when the Court files were being reviewed by chambers staff on 14 October 2008. NOT Lawyers were immediately notified.
In Australia, legal professional privilege is a rule of substantive law that reflects important common law immunity. In Daniels Corporations International Pty Ltd v Australian Competition and Consumer Commission [2002] HCA 49 Gleeson CJ, Gaudron, Gummow and Hayne JJ said at [9] – [11]:
[9] It is now settled that legal professional privilege is a rule of substantive law10 which may be availed of by a person to resist the giving of information or the production of documents which would reveal communications between a client and his or her lawyer made for the dominant purpose of giving or obtaining legal advice or the provision of legal services, including representation in legal proceedings. It may here be noted that the "dominant purpose" test for legal professional privilege was recently adopted by this Court in Esso Australia Resources Ltd v Federal Commissioner of Taxation11 in place of the "sole purpose" test which had been applied following the decision in Grant v Downs12.
[10] Being a rule of substantive law and not merely a rule of evidence, legal professional privilege is not confined to the processes of discovery and inspection13 and the giving of evidence in judicial proceedings14. Rather and in the absence of provision to the contrary, legal professional privilege may be availed of to resist the giving of information or the production of documents in accordance with investigatory procedures of the kind for which s155 of the Act provides. Thus, for example, it was held in Baker v Campbell, that documents to which legal professional privilege attaches could not be seized pursuant to a search warrant issued under s10 of the Crimes Act 1914 (Cth)15.
[11] Legal professional privilege is not merely a rule of substantive law. It is an important common law right or, perhaps, more accurately, an important common law immunity. It is now well settled that statutory provisions are not to be construed as abrogating important common law rights, privileges and immunities in the absence of clear words or a necessary implication to that effect. That rule, the expression of which in this Court can be traced to Potter v Minahan16, was the foundation for the decision in Baker v Campbell17. It is a rule which, subject to one possible exception, has been strictly applied by this Court since the decision in Re Bolton; Ex parte Beane18. Cases in which it has since been applied include Bropho v Western Australia19, Coco v The Queen20 and Commissioner of Australian Federal Police v Propend Finance Pty Ltd21. The possible exception to the strict application of that rule was the decision in Yuill22.
His Honour McHugh J said at [44]:
[44] Australian courts have classified legal professional privilege as a fundamental right or immunity70. Accordingly, they hold that a legislature will be taken to have abolished the privilege only when the legislative provision has done so expressly or by necessary implication71. Legal professional privilege describes a person's immunity from compulsion to produce documents that evidence confidential communications about legal matters made between a lawyer and client or between a lawyer and a third party for the benefit of a client72. The immunity also protects the disclosure of documents that record legal work carried out by the lawyer for the benefit of a client, such as research memoranda73. The immunity embodies a substantive legal right. Its operation is not limited to judicial or quasi-judicial proceedings74. Where it applies, it may be used to refuse to produce documents that are the subject of a search warrant authorised by statute75 or other extra-curial process as well as a subpoena issued under or discovery required by rules of court76.
The documents in question had been granted privilege in reviews carried out by Registrar Hannigan and His Honour Federal Magistrate Scarlett and there is no dispute in respect of those rulings. Unfortunately, some error has occurred in the handling of those documents resulting in the privileged documents being placed in an envelope bearing the label “non-privileged documents” and the non-privileged documents being incorrectly placed in the envelope carrying the label “privileged documents”. When the legal assistant from NOT Lawyers collected the envelope from the Registry, the envelope handed over carried the wrong documents. The subsequent sequence of events is explained above. Mr Piscopo with Mr Foate’s assistance, had every right to take whatever steps were required to protect the group of documents that had been granted privilege. Due to the passage of time before the error was identified, two copies of those documents had been made and the documents had been electronically scanned by NOT Lawyers.
In the circumstances it was quite appropriate that proceedings were commenced to prevent the further distribution and access to those documents and this was done by commencing proceedings in the Federal Court as described above. I note the comments of His Honour Foster J who indicated the matter could have been settled earlier in the proceedings and cost orders had been made to reflect that failure. In light of the acrimonious positions between the parties and the very apparent failure to concede any point it was inevitable that the proceedings be maintained until the hearing before His Honour Foster J.
I have formed the view that the proceedings were initiated to pursue a legitimate and appropriate course to maintain privilege over documents in a sequence of litigation between the parties. I am not satisfied that a claim that this step was initiated to either inconvenience or harass the bankrupt, his wife or his legal advisors.
Issue 8- warrants for search and seizure
Mr Marshall submits that Mr Piscopo conferred with Mr Brooks concerning the issue of a warrant for search and seizure (s.130 of the Bankruptcy Act). There is evidence that there was substantial email traffic between Messrs Brooks and Piscopo regarding the formation of the application for the warrant (Vol.7, tab 51).
The warrant seeks to appoint the Commissioner of Police, Mr Piscopo and Mr James’ IT expert to search and seize documents (Vol.8, tab 57). The documents are in essence a short-hand expression of the same documents that are the subject of six-pages of material applied for under the examination summons. They also include documents that are the subject of a Notice to Produce, not called upon in the BDT proceedings. Discovery in the BDT proceedings and subpoenas issued are the subject of the challenge in these proceedings. The warrant is executed by six Federal Police officers, Mr Piscopo, Mr James’ IT expert. Those eight men attended Mr Hill and Ms Rose’s apartment at St Leonards and searched and seized high and low. Mr Stevens, the solicitor for NOT Lawyers attended. His file note brings to life the harassment involved on the occasion. The search and seizure operation moved on to the office space occupied by Ms Rose’s company, also in St Leonards, save incarceration. It is submitted that it is hard to think of any action that could be taken by anyone in any form of litigation that could cause more oppression. However, it should be inferred that the inconvenience caused to Mr Hill and his wife satisfies the desires of Messrs Brooks and James.
Issue 8 - Observations re: warrants
Section 130 of the Bankruptcy Act provides for warrants for seizure of property connected with bankruptcy. The section sates:
(1) The trustee of a bankrupt's estate may apply to an eligible judge for the issue of a warrant under subsection (2) if the trustee has reasonable grounds for suspecting that there is on or in any premises property (in this section called relevant property ), being:
(a) any of the property of the bankrupt;
(b) property that may be connected with, or related to, the bankrupt's examinable affairs; or
(c) books (including books of an associated entity of the bankrupt) relevant to any of the bankrupt's examinable affairs.
(2) On an application under subsection (1), the judge may issue a warrant authorising a constable, together with any other person named in the warrant:
(a) to enter on or into the premises, using such force as is necessary for the purpose and is reasonable in the circumstances;
(b) to search the premises for relevant property;
(c) to break open, and search for relevant property, any cupboard, drawer, chest, trunk, box, package or other receptacle, whether a fixture or not, on or in the premises;
(d) to take possession of, or secure against interference, any relevant property found on or in the premises; and
(e) to deliver to the trustee, or to a person authorised in writing by the trustee for the purpose, any property of which possession is taken under the warrant.
(3) An eligible judge shall not issue a warrant under subsection (2) unless:
(a) an affidavit has been furnished to the judge setting out the grounds on which the issue of the warrant is sought;
(b) the applicant for the warrant (or some other person) has given to the judge, either orally or by affidavit, such further information (if any) as the judge requires concerning the grounds on which the issue of the warrant is sought; and
(c) the judge is satisfied that there are reasonable grounds for issuing the warrant.
(4) Where an eligible judge issues a warrant under subsection (2), he or she shall set out on the affidavit furnished in accordance with subsection (3):
(a) on which of the grounds specified in the affidavit; and
(b) on which other grounds (if any);
he or she has relied to justify the issue of the warrant.
(5) A warrant under this section shall:
(a) state whether entry is authorised to be made at any time of the day or night or during specified hours of the day or night; and
(b) specify a day, not later than 7 days after the day of issue of the warrant, on which the warrant ceases to have effect.
(6) Where, under this section, a person takes possession of property, or secures property against interference, a person is not entitled, as against the trustee, to claim a lien on the property, but such a lien is not otherwise prejudiced.
(7) Where, under this section, a person takes possession of books, or secures books against interference, that person or any other person to whom the books are delivered under paragraph (2)(e):
(a) may make copies of, or take extracts from, the books;
(b) may require a person who was a party to the compilation of the books to explain to the best of the person's knowledge and belief any matter about the compilation of the books or to which the books relate;
(c) may retain possession of the books for such period as is necessary to enable the books to be inspected, and copies of, or extracts from, the books to be made or taken, by or on behalf of the trustee; and
(d) during that period shall permit a person who would be entitled to inspect any one or more of those books if they were not in the possession of the first‑mentioned person or the other person to inspect at all reasonable times such of those books as that person would be so entitled to inspect.
(8) The powers conferred by this section are in addition to, and not in derogation of, any other powers conferred by law.
The requirement of sub-section (3) is that the affidavit is to be placed before an eligible judge, setting out the details of why the warrant is required. It is for the eligible judge to review that material which may be supplemented by oral examination by the party seeking the warrant to satisfy that judge that the issue of the relevant warrants satisfy the provisions of the Act. The affidavits placed before the eligible judge is in evidence (Vol 8, tab 58, p.2107 – 2117). A warrant for seizure of the property connected with the bankrupt – Mr Hill, was issued on 14 November 2008.
On 20 November 2008, an application was filed in the Federal Court of Australia, New South Wales District Registry, proceedings number NSD 1804/2008, pursuant to s.30 of the Bankruptcy Act, seeking to have the warrant for seizure of property set-aside. In support of that application there is an affidavit of Michael Frances O’Niell sworn 20 November 2008. On the same day, Her Honour Justice Jagot made an order in the following terms:
1. Pending further or other order, any books and records or materials obtained pursuant to the warrant for seizure of property issued to Michael Joseph Keelty and the respondent Samuel Piscopo of 14 November 2008 by an eligible judge in regard to the bankrupt estate of Terry Donald Hill be retained by Michael Joseph Keelty or a responsible officer under his command to the exclusion of the respondent or any other person.
2. The applicant’s solicitor be authorised to telephone the respondent and Michael Joseph Keelty or officers under his command to give urgent notice of order 1.
3. The matter be listed before the Duty Judge on 21 November 2008 at 2:15pm.
4. The applicant have leave to file the application in court and time for service is abridged to 2pm today and service may be effected by facsimile transmission upon the respondent’s solicitor Catalyst Legal.
On 12 December 2008, His Honour Jacobson J made the following orders:
A. The parties to jointly instruct, though at the respondent’s expense, a commercial copier on the Supreme Court of NSW list of approved copiers to attend to making two paginated copies of all of the documents obtained by the federal police in the execution of the warrant the subject of these proceedings, including electronic documents and to deposit one such copy of each such document with the registrar of the Federal Magistrates Court at Sydney to abide the outcome of the orders made below.
BY CONSENT, THE COURT ORDERS THAT:
1. The original documents referred to above are to be delivered by the Australian federal police to Michael O’Niell and Michael Stevens of NOT Lawyers immediately after being copied.
2. Michael O’Niell and Michael Stevens are at liberty to return the documents referred to in the previous order to the applicant.
3. Subject to any agreement being reached between any replacement trustee of the applicant and the applicant, the applicant is to, within 35 days after the final determination of the second further amended interim application filed in federal Magistrates Court proceedings numbered SYG 344 of 2008, provide a list of documents to the respondent setting out what documents do and do not relate to the examinable affairs of the applicant, and at the same time the applicant is to file and serve any evidence in support of the contention that specified documents do not relate to his examinable affairs. The list is to refer to the pagination inserted by the commercial copier.
4. The respondent shall have access to the documents in the aforementioned list which are stated to be within the examinable affairs of the bankrupt from the due date in Order 1, and in this regard the parties are to co-operate in separating the relevant documents for the purposes of such access being granted.
5. These proceedings be transferred to the Federal Magistrates Court of Australia at Sydney.
6. The matter be re-listed for directions in the Federal Magistrates Court on the earliest date convenient to that Court after 2 February 2009, at which time that Court may entertain submissions by the parties as to any regime for the inspection by any authorised representative of the respondent of the documents over which the applicant makes claim as to be not within his examinable affairs and for the making of relevant directions thereafter in regard to the respondents evidence.
7. The injunction ordered by Jagot J on 20 November 2008 be dissolved.
AND THE COURT NOTES:
8. That it is proposed by the parties to have the Court determine pursuant to s 30 of the Bankruptcy Act 1966 by way of declaration which documents that are in issue relate to the applicant’s examinable affairs, and that the Federal Magistrates Court may wish to make directions for such amended process as it deems fit to be filed in that regard. (Vol. 8, tab 64, p2371-2372)
Mr Marshall submits that a review of that email traffic between Mr Piscopo and Mr Brooks regarding the preparation of affidavits and application for a warrant reveals nothing more than an expected exchange of information that would be required in the preparation of that affidavit. Significantly, amongst this email traffic there is an email dated 7 May 2008 from Mr Piscopo to Messrs Brooks and Foate which emphasises the environment in which this application was being prepared (Vol.7, tab 51, p.1924). The relevant part of that email states:
1. I had no reason to convene a second meeting of creditors (other than ask for more fee approval). It would only have been a waste of money, given that I had limited funds (which have now just about run out). I have very significant costs which are unpaid.
2. I could have sent out a second report to creditors but it would not have been able to say much other than I have been frustrated in my investigations. I was waiting until I could go back to creditors with something more concrete.
3. I have made recoveries. I have recovered money from Peter Rogers, money what was hotly contested by Hill’s wife. Here you will also cover the costs orders issue as previously discussed.
4. As for insufficient experience, I refer you to an earlier email.
5. As for being uncooperative and hostile; the hostility is displayed to me. I am the one who has to be on his best professional behaviour under threat of being report to ITSA, the AFT and the courts. As for cooperation, I don’t consider BDT to be a creditor and so I don’t have to cooperate with BDT. I only have to cooperate with the bankrupt in very limited circumstances. It is his duty under section 77 to cooperate with me (and he can get his bankruptcy extended if he does not).
6. Whether it is in the interests of creditors to replace me, nobody else is asking for my removal. Can we get an affidavit from Browns to say that hey are not in favour of me being removed? I know their solicitor, Craig Higginbotham, very well.
7. I have concerns about the proposed trustees. NOTTS put a lot of pressure on my previous employers to have me replaced as trustee which is highly unethical. The proposed trustees have apparently contacted my previous employers asking when I would be removed, again highly unethical. If they had such an inquiry, they should have addressed it to me. To my mind it taints them.
8. As for not doing any work in relation to the bankrupt estate, I have investigated everything that was put to me although I, like any good trustee, prioritised my investigation. The only reason why I was writing so many letters to NOTs was that I was responding to theirs which invariably put words in my mouth and otherwise wasted my time. I was unaware that if I failed to reply, NOTs would use it as a basis for a court application.
9. I want the point made that Hill has said on many occasions, and NOTs have admitted as much, that Hill gives NOTs all the instructions, supposedly on behalf of his wife and her interests, including BDT. How is it that Hill knows about the NOT’s 21 November 2007 letter to me (refer to Hill’s affidavit)? And how does he know about my letter in reply of 3 December 2007? That letter was confidential as far as I am concerned. Nothing to do with Hill. And how does Hill know that I have issued only one report? Does that not say that Hill and BDT are one?
10. The final point I want to make is that Hill does not care about eh interests of creditors (other than BDT). He is looking after himself in supporting the application to remove me. He wants to be able to travel overseas without any interference from his trustee, etc.
The affidavit filed in support of that application for the warrant is also in evidence (Vol. 98, tab 58, p.2107-3117). After reviewing the contents of the email traffic and the affidavit, I am satisfied that the claim that the issue of the warrant was initiated to cause inconvenience to Mr Hill and his wife to satisfy the desires of Messrs Brooks and James, cannot be sustained. Rather the evidence strongly supports the view that the issue of the warrants were initiated by Mr Piscopo in order to pursue the recovery of assets or information leading to this objective.
Conclusion
Removal of Trustee
The authorities in respect to the removal of a trustee are canvassed above and the conduct of any such enquiry is usually conducted as a two stage process. Importantly the Court must be satisfied it is appropriate to order an enquiry. I indicated to the parties after their respective opening addresses that I required more detailed submissions supported by evidence before I could make a decision to formally split the hearing into a two stage hearing. Mr Marshall, on behalf of the applicant, advanced eight arguments in support of their claim that Mr Piscopo should be removed. On the material before the Court, I am not satisfied that the eight issues are sufficient to establish that an enquiry is required. It is also open to the Court to determine the matter without following the two stage process: Re Challen; Ex parte Brown v Bendeich (unreported, Fed Ct of Aust, Beaumont J, 23 April 1996) per Beaumont J; Doolan v Dare (supra) per Spender J at [47]-[48].
I particularly note the decision on Re Alafaci; Registrar of Bankruptcy v Hardwick (supra) per Riley J where His Honour stated:
…it seems to me that in such a case there is a preliminary question to be decided by the court – namely on the grounds and facts put before it, has a case been made for inquiry into the trustee’s conduct? If the answer is “yes” the next question is – what is the scope of the inquiry?
As I indicated above, I am not satisfied that an inquiry is warranted. In coming to that conclusion, on the evaluation of the eight arguments advanced, I was conscious of the decisions in Boensch v Pascoe (supra) together with Re Bibosos Pty Ltd (supra) per Young J at 734; Fuller v Wiley (supra) per Heerey, RD Nicholson and Finn JJ in determining whether an inquiry was warranted.
The other factor that influenced my decision was the authority of Boensch v Pascoe (supra) per Buchanan J at [92]-[95] where His Honour stated:
A bankrupt should not be allowed, by an assiduous pattern of resistance to the trustee of his estate, to guarantee and then rely upon a suggested reason for removal thereby created…It is clearly an insufficient ground for removal of a trustee that a bankrupt resists the proper administration of his estate, as set out to frustrate a trustee in the proper performance of his duties.
On the material before the Court, there is evidence of the lack of cooperation being demonstrated by Mr Hill and that the trustee in a number of situations has been forced to initiate procedures to force the bankrupt to provide material. This view is supported by the refusal to provide information in respect to the operation of the New Zealand companies associated with Mr Hill or Mr Rose. One incident of this is the delay of eight months to provide documentation that was agreed between the parties at the time of one of the passport applications.
A further consideration that has influenced my decision is the authority found in Trkuljav Monton (2005) 3 ABC (NS) 110 where His Honour states at [62]:
It is plain that there is considerable antagonism on the part of the applicant towards the respondent. I do not think that there is any ground for removing the respondent as trustee. I have little doubt that the applicant would be antagonistic towards anyone who pursued him vigorously in respect of possible undisclosed assets. On the evidence I have heard, the respondent has done nothing that a competent and willing trustee would not have done.
I note Mr Hill’s evidence under cross-examination that he was willing to cooperate with anyone as a trustee other than Mr Piscopo . However, I am not willing to accept that this statement alone would justify the removal of Mr Piscopo.
For these reasons I dismiss the application to undertake a full examination order under the provisions of s.179 of the Act.
I certify that the preceding two hundred and sixty-three (263) paragraphs are a true copy of the reasons for judgment of Lloyd-Jones FM
Date: 14 December 2010
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