The Official Trustee in Bankruptcy v Wells, Geoffrey John

[1998] FCA 360

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - extension period for the making of an election by Official Trustee to prosecute appeal in Supreme Court of Queensland - merits of appeal

Bankruptcy Act 1966 (Cth) s 33(1), 60(3)

Faulkner v Bluett (1981) 52 FLR 115 Appl

The Official Trustee in Bankruptcy v Geoffrey John Wells and Concut Pty Ltd
QG 7632 of 1997

Kiefel J
Brisbane
6 February 1998

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY	QG7632 of 1997

BETWEEN:	THE OFFICIAL TRUSTEE IN BANKRUPTCY APPLICANT
AND:	GEOFFREY JOHN WELLS FIRST RESPONDENT
AND:	CONCUT PTY LTD SECOND RESPONDENT
JUDGE(S):		KIEFEL J
DATE OF ORDER:		6 FEBRUARY 1998
WHERE MADE:		BRISBANE

THE COURT ORDERS THAT:

1. Pursuant to s 33(1) of the Bankruptcy Act 1966, the time for an election by the Official Trustee under s 60(3) of the Act to prosecute appeal number 4023 of 1997 in the Court of Appeal in Queensland be extended to a day being seven days after the date of the hearing of this application.

1. The applicant Trustee pay the second respondent’s costs of and incidental to this application on the usual party and party basis.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY		QG7632 of 1997
BETWEEN:	THE OFFICIAL TRUSTEE IN BANKRUPTCY APPLICANT
AND:	GEOFFREY JOHN WELLS FIRST RESPONDENT
AND:	CONCUT PTY LTD SECOND RESPONDENT

JUDGE(S):	KIEFEL J
DATE:	6 FEBRUARY 1998
PLACE:	BRISBANE

REASONS FOR JUDGMENT
(Ex Tempore)

This is an application pursuant to section 33(1) of the Bankruptcy Act 1966 (Cth) to extend the period of 28 days for the making of an election by the Official Trustee in writing to prosecute an appeal in the Queensland Court of Appeal. Section 60(3) provides that if a Trustee does not make such an election within 28 days after notice of the action being served upon him or her by a defendant or other party he or she shall be deemed to have abandoned the action.

In this matter, the date for election passed on 16 September 1997 and a decision to pursue the appeal was not given until 8 October 1997. It is of considerable relevance in my reasoning that the period is a very short one, much shorter than is usually encountered in these applications. Pursuant to s 33(1)(c) of the Bankruptcy Act, the Court may extend the time after the expiration with respect to any time fixed by the Act for the doing of an act or thing. It is not disputed that that power may be exercised to extend the period in question under s 60(3); see Faulkner v Bluett (1981) 52 FLR 115.

Reasons have been given by the trustee for what amounts to an oversight.  Prejudice is pointed to in a number of respects, the first of which appear to be that some financial statements were signed for the preceding financial year, but I note that without going into this issue that this was undertaken after notification of the trustee’s desire to pursue the appeal was given.  An earlier suggestion, that the outcome of an appeal might itself amount to prejudice, I do not understand to be pursued.

The question which has troubled me is the question of the merits of the appeal itself.  The decision sought to be appealed from is a decision of the District Court concerning the defendant’s right to have terminated the employment of the bankrupt, Mr Wells, for what amounts to misconduct.  The essential point in the case appears to be whether or not misconduct which was not known of by the employer could be used as a ground for dismissal at a time after an employment agreement which had been conducted under terms which might be implied or which were oral had passed and where the parties had entered into a written agreement which however provided for grounds of dismissal on more limited bases.

There is a further aspect of the appeal involving a small sum of money but that does not seem to me to be to the point here.  The principal sum claimed on the action which would be the subject of the appeal is in the order of some $383,000, and so it must be conceded that if there is some prospect of such a sum being made available to the debtors, the trustee’s actions would be well warranted.  I have said that I encountered some difficulty in considering the merits.  That is because I found the argument presented by Mr Hack of counsel for the second respondent persuasive.

Without considering the matter in great depth, it would seem to me that there are considerable difficulties likely in the path of the trustee pursuing this appeal given decisions which provide that breaches of agreement not previously known of may later be utilised to bring an agreement to an end.  However, I have not myself determined the legal questions involved and there is, as Mr O’Grady submits, at least a point concerning the later terms of the written agreement which might be different from the oral agreement and there may be questions as to which agreement was being exercised for the purpose of the termination.  The rationale of the Court having regard to the question of merits is, I assume, that a party should not be troubled and put to the expense of a wholly untenable case.  But having said that, where a delay is only in the order of some three weeks, it is difficult to see that the normal course of an appeal being conducted ought not to be permitted at least where the point in the appeal is not so wholly untenable that the Court could not countenance that litigation.  As I have said, whilst I incline to the view that the trustee may have difficulty in this appeal, I do not think that it could be said to be completely lacking substance, and I therefore propose to grant the orders sought.  I should add that the indemnity offered by the bankrupt’s former solicitors in relation to the costs of the appeal has influenced me in relation to this. 

The costs of today then come into question.  I would have been inclined to grant an order for solicitor and client costs in favour of the second respondent had the position been that the respondent was brought to Court unnecessarily and was put to expense which could not have been mitigated in some way.  The second respondent, however, has determined to argue the case and that seems to me to put the matter in a different category.  It is not in dispute that there was an offer made on 18 December 1997 for the payments of costs on the basis that an order might be granted by the Court, and so it seems to me that it could not be said that any additional costs have been brought about only by the applicant trustee’s actions or inactions.  In those circumstances, I propose to order today that the applicant trustee pay the second respondent’s costs of and incidental to this application on the usual party and party basis.

The further order will be that pursuant to s 33(1) of the Bankruptcy Act 1966 the time for an election by the Official Trustee under s 60(3) of the Act to prosecute appeal number 4023 of 1997 in the Court of Appeal in Queensland be extended to the day being seven days after the date of the hearing of this application.

I certify that this and the preceding two (2) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Kiefel

Associate:

Dated:            6 February 1998

Counsel for the Applicant:	Mr G O’Grady
Solicitor for the Applicant:	Bennett & Philp
Counsel for the Second Respondent:	Mr P Hack
Solicitor for the Second Respondent:	Hopgood & Ganim
Date of Hearing:	6 February 1998
Date of Judgment:	6 February 1998