Shirreff v Lofthouse
[2012] FMCA 480
•11 April 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SHIRREFF v LOFTHOUSE & ANOR | [2012] FMCA 480 |
| BANKRUPTCY – Ruling on application for injunctive relief. |
| Bankruptcy Act 1966, ss.178, 179 Federal Magistrates Act 1999, s.17A |
| Australian Broadcasting Corp v O'Neill (2006) 227 CLR 57 Foyster v Prentice [2008] FMCA 757 Healey v Prentice (No.2) [2000] FCA 1598 |
| Applicant: | AUSTIN SHIRREFF |
| First Respondent: | DAVID J LOFTHOUSE (AS TRUSTEE FOR THE BANKRUPT ESTATE OF AUSTIN SHIRREFF) |
| Second Respondent: | AUSTRALIAN SECURITIES LIMITED |
| File Number: | MLG 226 of 2012 |
| Judgment of: | Burchardt FM |
| Hearing date: | 11 April 2012 |
| Date of Last Submission: | 11 April 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 11 April 2012 |
REPRESENTATION
| Counsel for the Applicant: | Mr Gordon |
| Solicitors for the Applicant: | Ronald Gordon |
| Counsel for the First Respondent: | Mr O’Brien |
| Solicitors for the First Respondent: | Aitken Partners Lawyers |
ORDERS
The application be dismissed.
The Applicant pay the First Respondent’s costs including any reserved costs.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 226 of 2012
| AUSTIN SHIRREFF |
Applicant
And
| DAVID J LOFTHOUSE (AS TRUSTEE FOR THE BANKRUPT ESTATE OF AUSTIN SHIRREFF) |
First Respondent
| AUSTRALIAN SECURITIES LIMITED |
Second Respondent
REASONS FOR JUDGMENT
(Revised from transcript)
This application started on 2 March 2012. The applicant sought to overturn an order restraining him from entering on a property in Seymour. They were the final orders sought. He also sought to remove the Trustee. The interim orders sought various restraints which I will read out:
“Restrain ASL its servants and agents from entering premises at 58 - 64 Parer Road, Airport West and removing goods belonging to the plaintiff and his bankrupt estate.”
And then:
“(2) stop trustee from incurring more costs.”
The affidavit in support filed on the same day reads relevantly as follows:
“My trustee has not taken due care of some assets of my estate. Has not consented to action taken in the Supreme Court by the bankrupt.”
The affidavit also appends a series of orders made by O'Dwyer FM on 25 July 2011 whereby the applicant was restrained from entering onto the property in Seymour, and various other ancillary matters.
On 6 March 2012, the matter came before me and the applicant was represented by counsel. He was given leave to rely upon an affidavit filed at Court. The affidavit makes general complaints against the Trustee's conduct, including in relation to the Supreme Court proceedings to which I have referred and, the conduct of the matter insofar as it related to the property at Airport West, another property at Coolaroo and stock sold at Seymour. The end result was that I adjourned the matter for one day to ensure that the proposed second respondent was brought to Court.
The second respondent filed an affidavit of Mr Chai, its solicitor, at Court on the day, which gave a recitation of Mr Shirreff's endeavours to restrain various parties in the Supreme Court in relation to the Airport West property proceedings, all of which had been, it is not unfair to say, hopelessly unsuccessful. On 7 March 2012, I dismissed the application against the second respondent as it appeared to me then, and still does, that there was no cause of action maintainable against that respondent in this Court. Mr Shirreff's complaints against the second respondent were complaints against that body as a mortgagee at Common Law in my view. I directed the applicant to file and serve any amended application and affidavits by 21 March 2012.
On 21 March 2012, the applicant filed a further affidavit in which he sought to remove the Trustee and made complaints against the mortgagee in possession and asserted, inter alia, that the losses caused to him by the conduct of the Trustee and the administration of his estate amounted to over $1.25 million. Further hearing took place on
22 March 2012. The applicant was represented by counsel and foreshadowed a possible claim for an inquiry pursuant to s.179 of the Bankruptcy Act 1966 (“the Act”).
I gave the applicant what, so far as I can recall, I described as one last chance to get his applications and affidavit material in order and required the applicant, amongst other things, to provide an aide memoire setting out exactly what it was that was complained of and the paragraphs of which affidavits supported such complaints. The matter was adjourned until today. On 10 April 2012, in other words yesterday, an amended application was filed in which reliance is placed on s.178 of the Act, not 179. I will read it out.
The orders sought are as follows:
“1. Pursuant to Section 178 of the Bankruptcy Act 1966 the respondent David J Lofthouse in his capacity as the trustee of the bankrupt estate of Austin Douglas Shirreff be restrained from:
a. Accepting or in any form or manner whatsoever finalising any tender(s) received or to be received by him in respect of any property or items stored on or in or in any way connected with 117 Wimble Street, Seymour, Victoria until further order of the Court;
b. Advertising or further advertising or calling for any tender(s) in respect of any property or item stored on or in or in any way connected with 117 Wimble Street, Seymour, Victoria until further order of the Court.
2. Pursuant to section 178 of the Bankruptcy Act 1966 the respondent David J Lofthouse in his capacity as the Trustee of the Bankrupt Estate of Austin Douglas Shirreff be restrained from selling or disposing off (sic) in any form or manner whatsoever any property or item stored on or in or in any way connected with 117 Wimble Street, Seymour, Victoria until further order of the Court.
3. Pursuant to Section 178 of the Bankruptcy Act 1966 the respondent David J Lofthouse in his capacity as the Trustee of the Bankrupt Estate of Austin Douglas Shirreff permit and grant permission to Austin Douglas Shirreff to enter upon the premises and property situated at 17 (sic) Wimble Street, Seymour, Victoria to allow Austin Douglas Shirreff;”
and there is nothing actually said as to what it was to allow. It should be noted that that last part of the application would require an express setting aside of the earlier orders made by O'Dwyer FM.
The affidavit in support I will paraphrase. It asserts that there will be a surplus when the Airport West property is sold shortly. I may say it seems likely that there will be such a surplus but no figures have been proved. The Airport West property is to be sold on 19 April 2012, and Mr Shirreff says there is likely - indeed more than likely - to be enough to pay all creditors and the Trustee for the administration of the estate. He asserts that the stock and other materials at Seymour have been collected over ten years and would be very hard to replace, although I note the affidavit does not assert any actual value as to any of these unidentified items.
The affidavit concedes that there are extant orders of both the Mitchell Shire and/or the Environmental Protection Authority to clear the property but asserts that this has been done in a fashion that is to his detriment. The affidavit asserts that there is simply no need for the property to be cleared and that it is appropriate to wait until the Airport West property is settled. There are various other matters in the affidavit that in my opinion are of minor moment.
The respondent filed written submissions. These submissions set out the history of the numerous proceedings in which, as it happens,
Mr Shirreff has been unsuccessful in every instance. There has been, as the submissions point out, no aide memoire setting out the defaults alleged in the paragraphs of the affidavits relied upon as the Court has ordered. The written submissions also raised the question of the 60 day time limit for review of trustees’ decisions that is contained in s.178 of the Act. The written submissions point to the lack of formal proof of any of the figures asserted by the applicant, Mr Shirreff, in his affidavit.
The written submissions also refer to a judgment of Dodds-Streeton J in the Federal Court proceeding in which the matter was raised, and at paragraph 33 of the written submissions there is an extract, which I am convinced is sufficiently accurate, of her Honour's judgment and which I will read as follows:
“The subject matter of the scheduled auction is not the Seymour property (which, contrary to Mr Shirreff's assertions, is not his current home). Rather, material stored on the property will be sold and removed pursuant to the Council's Enforcement Order. There is no evidence that the material is unique or rare. The circumstances do not justify an exercise of discretion which would halt the sale and removal of the material on the site in compliance with the Enforcement Order. So to order would occasion further delay and wastage of costs to the prejudice of creditors and contrary to the public interest in achieving timely compliance with the Enforcement Order. While the Applicant, whose estate has an estimated surplus of assets, contends that the material can simply be removed to another site, the evidence indicates that the trustee's invitations to provide feasible alternative proposals for the clearance of the site and realisation of the properties have proved unproductive.”
It should be noted that that judgment was handed down on
15 December 2010. I note that there is no evidence that the problems identified by Dodds-Streeton J would be readily or easily overcome. The respondent seeks the dismissal of the application pursuant to s.17A of the Federal Magistrates Act 1999. So far as the proper approach to these matters is concerned, the respondent commenced by pointing to the decision of the High Court in Australian Broadcasting Corp v O'Neill (2006) 227 CLR 57, which of course guides the Court, or probably more accurately governs the Court, in approaches towards interlocutory injunctions. I agree there is a measure of an analogy in the sense that s.178, which gives the Court power to make orders, allows the Court to make such order in the matter as it thinks just and equitable. Those last words point to some of the matters which commonly arise in injunction applications.
But I have been referred, very helpfully if I may say so by counsel for the applicant, to the case of Foyster v Prentice [2008] FMCA 757, a decision of Wilson FM given on 11 June 2008, and the relevant extracts of that judgement (see at [83] – [84]) are from judgments of Deane and Madgwick JJ.
“In Re Tyndall (1977) 30 FLR 6 at 9 - 10 Deane J said:
In my view, the wording of section 178 of the Act is such as to confer upon the court the widest possible discretion as to the appropriate order which should be made in the particular case and is quite inconsistent with the approach that, upon an application made pursuant to the section by a bankrupt, creditor or other person affected by an act, omission or decision of the trustee, the court is only empowered to interfere with the trustee’s act, omission or decision if it is of the view that the trustee has acted absurdly or unreasonably or in bad faith. Once the matter is properly before the court, the court is, by the express words of s 178, empowered (and, as I have said, obliged), to make such order in the matter as it thinks just and equitable.
This is not, of course, to say that the court should either disregard the relevant decision of the trustee or ignore the well-established policy under bankruptcy legislation that the court should not unduly interfere with the day-to-day administration of a bankrupt’s estate by a trustee. The trustee is made responsible for the administration of the bankrupt estate under the general provisions of the Act. He must, in the due course of that administration, make a variety of decisions aimed at enabling the administration to be carried out with promptness and efficiency. Some of these decisions will be business or commercial decisions in which the business or commercial experience of the trustee would itself provide a basis for arguing that, unless it was shown that the trustee’s decision was perverse or clearly wrong, it would be inappropriate and unjust for the court to interfere. Again, under the present legislation, the trustee will ordinarily be the official receiver and the court must be conscious of the fact that the official receiver will be made responsible for the administration of an extraordinarily large number of estates. In such circumstances, the administration of the Bankruptcy Act demands that the court take into account, in exercising its functions under the provisions of s 178 of the Act, the opinion of the official receiver, as trustee, as to what is expedient in the interests of the prompt and efficient administration of a particular bankrupt estate. That is, however, a completely different thing to saying that the court can only interfere with an act, omission or decision of the official receiver, as such trustee, when it is of the view that the official receiver has acted unreasonably, absurdly or in bad faith in so acting or failing to act or in reaching that decision.”
That is the end of the extract. I point out that one of the matters to which Deane J referred was the interests of the prompt and efficient administration of bankrupt estates. In Healey v Prentice (No 2) [2000] FCA 1598, Madgwick J said at [20] – [22]:
“The Court is given a very broad supervisory role. The only constraint is that it must be made to appear to the Court that it is just and equitable to make some proposed order. While, for historical reasons, it is well settled that such a broad review jurisdiction in insolvency matters falls within the judicial power of the Commonwealth, in truth, the Court’s role has aspects not unlike those more commonly found in administrative reviews. The Court is, after all, reviewing administrative actions of a trustee.
It would be enough to excite the Court to intervene if it be shown that the impugned conduct of the trustee was incorrect or that other conduct was, or on the material before the Court would be, preferable and that justice and equity require the Court’s intervention. An applicant no doubt carries the onus of establishing this. It is plain that the Court should not be too ready to intervene for fear of making the role and work of a trustee unmanageable. That the judge who hears a review application might have acted differently from the way a trustee did is not to the point. The question is whether it is just and equitable that the Court should afterwards intervene in some fashion.”
I accept, furthermore, the submission of the respondent made additional to those remarks that the Court should be slow to intervene in the Trustee’s administration. It is plainly not enough that I might see the matter differently from the Trustee. Turning to the submissions made by the parties, counsel for the applicant made it clear that the s.179 application previously foreshadowed was expressly abandoned. Other submissions advanced can be described in short terms. The applicant says that to delay the tenders until after the sale of Airport West is entirely desirable.
It is submitted that the sale of Airport West will produce a surplus from which everybody, including the Trustee, can be paid. It would be unfair to the applicant to, therefore, proceed with the tender process which will have the effect of dissipating assets which are important to the applicant to get on with his life when his bankruptcy is over. It was submitted that the applicant is not in breach of the orders made as they were made in contemplation with the now abandoned s.179 application.
The applicant says that if it were necessary to do so, to comply with the Shire Council order, as I will describe it, the items concerned can be stored elsewhere. It is submitted that the course of action is not hopeless or destined to fail and submitted in the alternative that the applicant should be permitted to remove such materials as he desires from the property. The respondent submits that it will take six months to clear the Seymour property at least. This assertion is not on affidavit but bearing in mind that the applicant’s materials were served yesterday, that is scarcely surprising and I note that in any event, there has been no disagreement by counsel for the applicant with that assertion.
It is submitted that there are no direct proposals for storage and indeed, that submission is clearly correct. It is submitted that the Trustee is required to clear the property. He is at risk personally of prosecution if he does not comply with the Shire Council order; also the sale, as best one understands it, will produce a surplus for the estate and when I say sale, I mean the results of the tender process. It is also submitted that Dodds-Streeton J has already disposed of this aspect of the dispute.
In reply, it is submitted by the applicant that there has been a change in circumstances since Dodds-Streeton J’s decision. Now the sale of the Airport West property is proximate. I make two introductory points. First, although the applicant has plainly not complied with the orders of the Court – and I note this is not the first time that this has occurred – that of itself is not, in my view, decisive. Secondly, although the 60 day time limit has some work to do in a sense, likewise, I do not regard it as decisive in the sense of leading to a peremptory dismissal of the application.
Nonetheless, it is clear that the applicant has known about the proposed course of action for a very considerable time. He was in Court about it in 2010. That brings me to the competing merits and the question of whether it is just and equitable, as the authorities say, to make the orders sought. First, it is clear that there is a superficial attraction in the applicant’s submission. It is to the effect that with only a short delay, everything can be sorted out, but against this it must be noted that first the auction is likely, in my view, to take at least three months, even if successful.
The sums involved in the sale make it improbable that there will be a settlement period of less than that period. Secondly, the conclusion of the administration of the estate is likely to take time. Given its history, it seems very probable that there will be issues, if nothing else, by way of challenge to the Trustee’s expenses and costs. These matters are already the subject of complaint in the applicant’s affidavit material. Third, the net result of all this is that the creditors are not getting paid the money to which they are entitled.
Fourth, the Trustee is under lawful compulsion as a result of the Shire Council order to clear the property, and the property must be something of a mess if it is going to take six months to clear. Fifth, if the applicant were to succeed, the tender process will be aborted and there will be further time delay. Sixth, the decision of Dodds-Streeton J already dealt, at the very least, in large part with the matters now sought to be agitated, and the findings her Honour made appear to be contrary to the assertions now advanced by Mr Shirreff and in particular, for example, as regard to the value of the materials and so on.
Seventh, although I have placed less weight on it, unfortunately and for whatever reason, there has been something of a history of last minute applications of this sort by the applicant, all of which have been unsuccessful and some of which – and I refer here particularly to the applications in the Supreme Court – were in some respects manifestly unsatisfactory. Next, there is no evidence beyond the applicant’s assertions as to the value of the materials at Seymour. The applicant has had at least since 15 December 2010 to put questions of the value both to him personally in a kind of particular way and in a more objective way about the materials that he now asserts are at the core of his application on affidavit and before the Court. Next, again, although as I have said, I have not regarded the 60 day time limit as decisive in the sense of leading to a peremptory dismissal of the application, it is clear that the applicant has known for a very long time that the Trustee will clear the property. The tender process is merely an ancillary aspect to that decision which he has already challenged unsuccessfully.
It is clear on the materials that the Trustee’s decision to clear the property by tender is not one that should be interfered with, even assuming in the applicant’s favour that the Airport West property is sold very rapidly and produces a surplus, although I note – and I think I have already made it clear – that such rapid sale and surplus is not likely. It is clear that the Trustee’s decision to proceed with the tenders is both commercially prudent and moreover required by lawful order. The Trustee submits I should dismiss this application pursuant to s.17A of the Magistrates Court Act 1999.
In fact, the applicant’s application seeks in effect the same interlocutory and final relief. In my view, it has no reasonable prospects of success. This is because, as I have said, even if one were to accept that the applicant makes out all of the facts he asserts, the decision of the Trustee to proceed to clear the property would not, in my view, be one susceptible of challenge under s.178 for the reasons I have made out. In all these circumstances, it is not just and equitable to make the orders that the applicant seeks. The application will be dismissed with costs.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of Burchardt FM
Date: 11 April 2012
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