Trkulja v Morton

Case [2005] FCA 659

FEDERAL COURT OF AUSTRALIA

Trkulja v Morton [2005] FCA 659

BANKRUPTCY – trustee in bankruptcy – application to remove – role of Court – circumstances in which order for removal may be made – alleged threats amounting to blackmail – whether threats made

Bankruptcy Act 1966 (Cth) ss 179(1), 178, 73, 149J

Macchia v Nilant [2001] FCA 7 (2001) 110 FCR 101 followed
Doolan v Dare [2004] FCA 682 cited

MICHAEL TRKULJA v ROBERT MORTON
V 614 of 2004

GRAY J
30 MAY 2005
MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 614 of 2004

BETWEEN:

MICHAEL TRKULJA
APPLICANT

AND:

ROBERT MORTON
RESPONDENT

JUDGE:

GRAY J

DATE OF ORDER:

30 MAY 2005

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:

1.        The application be dismissed.

2.        The respondent’s costs be taxed and paid out of the bankrupt estate of the applicant in
accordance with the Bankruptcy Act 1966 (Cth).


           

Paragraph 2 of the order pronounced this day is recalled.  There be substituted for that paragraph the following orders:

2.        The respondent file and serve any written submissions on the question of costs on or
before 6 June 2005.


           

3.        The applicant file and serve any answering written submissions on that question on or
before 14 June 2005.


           

4.        The question of costs be reserved.

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

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

V 614 of 2004

BETWEEN:

MICHAEL TRKULJA
APPLICANT

AND:

ROBERT MORTON
RESPONDENT

JUDGE:

GRAY J

DATE:

30 MAY 2005

PLACE:

MELBOURNE

REASONS FOR JUDGMENT

The nature of the proceeding

  1. These reasons for judgment concern an application by a bankrupt to remove his trustee in bankruptcy from office on the ground of alleged misconduct.  The applicant alleged that, at two separate meetings, one on 18 November 2003 and the other on 25 February 2004, the trustee made to the applicant improper threats, amounting to blackmail. 

  2. The applicant is Michael Trkulja, who was made bankrupt on 4 September 2000, in consequence of his presentation of a debtor’s petition.  The respondent, Robert William Morton, was appointed trustee of the applicant’s bankrupt estate.  As a result of two objections made by the respondent to the applicant’s discharge from bankruptcy, the bankruptcy has been extended until 5 September 2008. 

  3. I have approached the application on the basis that the power invoked by the applicant is that conferred on the Court by s 179(1) of the Bankruptcy Act 1966 (Cth) (‘the Bankruptcy Act’). Section 179(1) provides as follows:

    ‘The Court may, on the application of the Inspector-General, a creditor or the bankrupt, inquire into the conduct of a trustee in relation to a bankruptcy and may do one or both of the following:—

    (a)      remove the trustee from office; and

    (b)      make such order as it thinks proper.’

  4. In its terms, this power is plainly concerned with ‘the conduct’ of the trustee ‘in relation to a bankruptcy’.  As Macchia v Nilant [2001] FCA 7

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AGLC
Trkulja v Morton [2005] FCA 659
Case
[2005] FCA 659
Decision Date

CaseChat Overview and Summary

The case of Trkulja v Morton involved the applicant, Trkulja, seeking to have the respondent, Morton, removed as his trustee in bankruptcy. The primary dispute was over Morton's conduct during a meeting held on 25 February 2004, where Trkulja alleged that Morton made an unlawful threat and behaved in a manner warranting his removal as trustee. The case was heard and determined by a court, whose decision was recorded in the provided text.

The central legal issues the court had to decide were whether Morton's conduct at the meeting amounted to an unlawful threat and if his actions warranted his removal as trustee. The court evaluated the evidence presented to determine if there were any grounds for the removal of Morton based on the allegations made by Trkulja. The court needed to consider if Morton's actions were within the scope of his duties as a trustee and whether they justified the applicant's request for his dismissal.

In reaching its decision, the court found that Trkulja failed to establish the grounds for Morton's removal. The judge concluded that there was no unlawful threat made by Morton and that his conduct at the meeting was consistent with what a competent and diligent trustee would do. The court noted the antagonism between the parties but did not consider it a valid reason for removing Morton. The judge dismissed the application, holding that Morton had acted appropriately in his role as trustee. The court also ruled that the respondent's costs should be paid from the bankrupt's estate and set a timeline for the submission of written arguments on the costs before reserving the final decision on that matter.

Orders

Orders of the court

1. The application be dismissed.

2. The respondent’s costs be taxed and paid out of the bankrupt estate of the applicant in

accordance with the Bankruptcy Act 1966 (Cth).

Paragraph 2 of the order pronounced this day is recalled. There be substituted for that paragraph the following orders:

2. The respondent file and serve any written submissions on the question of costs on or

before 6 June 2005.

3. The applicant file and serve any answering written submissions on that question on or

before 14 June 2005.

4. The question of costs be reserved.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

GRAY J
For these reasons, therefore, I am unable to accept that the respondent made any unlawful threat to the applicant at the meeting of 25 February 2004. I am also of the view that the evidence does not disclose any conduct of the respondent at that meeting that would cause me to consider that he should no longer be the applicant’s trustee in bankruptcy.Conclusion The applicant has failed to establish the grounds on which he sought an order that the respondent be removed as his trustee in bankruptcy. It is plain that there is considerable antagonism on the part of the applicant towards the respondent. I do not think that that 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. It is therefore necessary to dismiss the application. The appropriate order as to costs would be to have them paid out of the bankrupt’s estate. The respondent should certainly not be out of pocket as to costs, at least so far as he can be indemnified on a party-party basis.

Ratio Decidendi

Legal Principle Established

Established by: GRAY J

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