Rutherfurd v Offermans - [2023] FedCFamC2G 60

Federal Circuit and Family Court of Australia
(DIVISION 2)
Rutherfurd v Offermans [2023] FedCFamC2G 60

File number(s): BRG 577 of 2021

Judgment of: JUDGE EGAN

Date of judgment: 6 February 2023

Catchwords: BANKRUPTCY – Application by bankrupt for an order requiring his trustees in bankruptcy to provide to him a copy of a notice for production of documents given by the trustees to the Commissioner of the Queensland Police Service pursuant to s. 77A of the Bankruptcy Act 1966 – where trustees refused to comply with notice on the ground that production would prejudice the interests of creditors and third parties and was unreasonable – whether the reasons of the trustees for their non-compliance with the notice were lacking in precision and inadequate – whether trustees had adduced persuasive evidence supporting the proposition that the disclosure of the notice would be unreasonable – where reasons found to be inadequate – application for production of notice granted

Legislation: Bankruptcy Act 1966 (Cth) ss. 19AA, 77A and 70-56 and 70-90 of Insolvency Practice, Schedule 2 to the Act. Insolvency Practice Rules (Bankruptcy) 2016 (Cth) Rule 70-17(1)-(2).

Cases cited:
Adsteam Building Industries Pty Ltd v The Queensland Cement and Lime Co Ltd (No 4) (1984) 9 ACLR 62 Secatore, in the matter of Last Lap Pty Ltd (in liq) [2020] FCA 627

Zarro & Ors v Australian Securities Commission (1992) 36 FCR 40

Division: Division 2 General Federal Law

Number of paragraphs: 29

Date of last submission/s: 2 February 2023

Date of hearing: 2 February 2023

Place: Brisbane

Counsel for the Applicant: Mr A Collins

Solicitor for the Applicant: Conrad Business & Succession Law

Counsel for the Respondents: Mr M Goldsworthy

Solicitor for the Respondents: Miller Harris Lawyers
ORDERS

BRG 577 of 2021

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)

BETWEEN:
DANIEL IVAN RUTHERFURD (A BANKRUPT)

Applicant

AND:
DENNIS OFFERMANS

First Respondent

MICHAEL BRENNAN

Second Respondent

order made by:

JUDGE EGAN

DATE OF ORDER:

6 FEBRUARY 2023

THE COURT ORDERS THAT:
1.The First Respondent and the Second Respondent provide to the Applicant’s lawyers, by 4.00pm AEST on 7 February 2023, a copy of the Notice dated 14 July 2021 given by them to the Commissioner of the Queensland Police Service pursuant to the provisions of s. 77A of the Bankruptcy Act 1966 (Cth).
2.The Respondent pay the Applicant’s costs to be agreed, or failing agreement, to be taxed pursuant to r. 22.10 of the Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth).

Note: The form of the order is subject to the entry in the Court’s records.
Note: The form of the order is subject to the entry in the Court’s records.
Note: The Court may vary or set aside a judgment or order to remedy minor typographical or grammatical errors (r 17.05(2)(g) Federal Circuit and Family Court of Australia (Division 2) (General Federal Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 17.05 Federal Circuit and…

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2023] FedCFamC2G 60
Decision Date

CaseChat Overview and Summary

The applicant, Daniel Ivan Rutherfurd, a bankrupt, brought an application against the respondents, Dennis Offermans and Michael Brennan, who were the Trustees in Bankruptcy, seeking an order for them to provide a copy of a notice given to the Commissioner of the Queensland Police Service (QPS) under section 77A of the Bankruptcy Act 1966 (Cth) (the Act). The Trustees had refused to provide the notice to the applicant on the basis that it would prejudice the interests of creditors and third parties. The applicant argued that the Trustees' reasons for non-compliance were inadequate and sought the court's intervention to compel the Trustees to provide the notice.

The central legal issue was whether the Trustees had adduced persuasive evidence to support their claim that the disclosure of the notice would be unreasonable. The court examined the criteria under Rule 70-17(2)(a) of the Insolvency Practice Rules (Bankruptcy) 2016 (Cth), which required the Trustees to show that complying with the request would substantially prejudice the interests of one or more creditors or third parties, and that such prejudice outweighed the benefits of complying with the request. The Trustees' refusal was based on general and non-specific grounds, without addressing the substantial prejudice criterion or explaining precisely how the prejudice would occur.

The court found that the Trustees' reasons for non-compliance were lacking in precision and did not satisfy the criteria set out in the Insolvency Rules. The Trustees failed to demonstrate that the prejudice to creditors or third parties was substantial or that the refusal outweighed the benefits of compliance. The court concluded that the Trustees had not provided persuasive evidence to justify their non-compliance. Therefore, the application for the production of the notice was granted, and the Trustees were ordered to provide a copy of the notice to the applicant’s lawyers by a specified time.

In summary, the court held that the Trustees' reasons for refusing to provide the notice were inadequate and did not meet the legal criteria required to justify non-compliance. The Trustees' failure to address the substantial prejudice criterion and provide specific details of the potential prejudice resulted in the court ordering the Trustees to produce the notice to the applicant.

Orders