This is an application made by the applicant pursuant to section 208(a) or (b) of the Bankruptcv Act for release of his property from the control of his existing trustee, Mr Philip Arthur Hennessy. A meeting was convened to consider a proposed deed of assignment for the benefit of the

meeting was adjourned to 15 November 1992. No special creditors of the applicant on 17 October 1991, and that

resolution as provided for in section 204 of the Act has been passed. The property of the applicant has since that time remained under the control of Mr. Hennessy.

Mr. Hennessy appears by his solicitor and does not oppose the relief sought by the applicant on this application.

At the time of the meeting the major creditor of the applicant was the National Australia Bank which bank claimed an indebtedness of approximately $3.5 million. A judgment in favour of the bank was set aside by Master White, as she then Wa6, in the Supreme Court of Queensland on 19 March 1992. So far as the claim underlying the original judgment is concerned

'that is disputed and the applicant indicates that the Supreme

Court proceedings, if they are continued, will be defended.

So far as the applicant is concerned he has other creditors totalling $368,340.00. He proposes to convene a meeting to place before his creditors a further arrangement in accordance with the provisions of the Bankru~tcv Act. The applicant has obtained from Mr. Ivor Worrell his consent to act as trustee if the property is released by the court.

I am satisfied that I have a discretion under section 208, notwithstanding the fact that no resolution has been passed. So far as that discretion is concerned, the court should, in my view, be conscious that there is a risk

trustee either by way of disposition or encumbrance to the that property may be dealt with once it is released from a
detriment of other existing creditors.

In the instant case the applicant offers by his solicitor an undertaking to the court that he will not further encumber his assets and to sign forthwith an authority under section 188 of the Bankru~tcv Act in favour of M x Ivor Worrell in the event of my releasing his property as sought on the
application.

That undertaking being given, I order that the property of Robert Eugene Murphy be released from the control of Philip Arthur Hennessy, his trustee.

I certify that this and the two (2) preceding pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Cooper.

Date: d 4 h 22 'q92.

jAmm M. l h / w r s -
Associate

Details

AGLC: Searle Australia Pty Ltd v PIAC [1992] FCA 241
Case: [1992] FCA 241
Decision Date: 24 Apr 1992

CaseChat Overview and Summary

This case involved Robert Eugene Murphy, who applied for the release of his property from the control of his trustee, Philip Arthur Hennessy, under section 208(a) or (b) of the Bankruptcy Act. The application was heard in the Federal Court of Australia, General Division, Bankruptcy District of Queensland, and was presided over by Cooper J. The case was decided on 24 April 1992, and the court ordered the release of Murphy's property from Hennessy's control on 7 May 1992.

The primary legal issue before the court was whether it had the discretion to release the applicant's property from the control of the trustee, despite the fact that no resolution had been passed as required by section 204 of the Bankruptcy Act. The court had to consider the potential risk of detriment to other creditors if the property was released from the trustee's control and if there was any possibility of the applicant further encumbering his assets. Additionally, the court needed to assess whether the applicant had provided adequate assurances to prevent any potential detriment to creditors.

Cooper J determined that the court had the discretion to release the applicant's property from the control of the trustee, even though no resolution had been passed. The judge considered it essential for the court to be conscious of the risk that the property might be dealt with to the detriment of other existing creditors once it was released from the trustee's control. However, the court was satisfied with the applicant's undertaking to not further encumber his assets and to sign an authority in favour of the proposed new trustee, Mr. Ivor Worrell, if the court released his property as sought in the application. Therefore, Cooper J ordered the release of Robert Eugene Murphy's property from the control of Philip Arthur Hennessy, his trustee.

Orders