FEDERAL COURT OF AUSTRALIA
Weeden v Rambaldi [2013] FCAFC 12
Citation: Weeden v Rambaldi [2013] FCAFC 12 Appeal from: Weeden v Rambaldi [2012] FCA 552 Parties: PHILIP CHARLES WEEDEN v GESS MICHELE RAMBALDI, ANDREW REGINALD YEO (AS JOINT TRUSTEES OF THE PROPERTY OF PHILIP CHARLES WEEDEN, A BANKRUPT), INSPECTOR-GENERAL IN BANKRUPTCY and OFFICIAL RECEIVER IN BANKRUPTCY File number: VID 418 of 2012 Judges: GRAY, MIDDLETON AND DODDS-STREETON JJ Date of judgment: 12 February 2013 Catchwords: BANKRUPTCY – trustee – appointment – meeting of creditors to replace trustee – whether meeting appointed single trustee or two joint trustees – prima facie effect of minutes – whether rebutted – whether trial judge made errors in admission of, and allocation of weight to, evidence Legislation: Bankruptcy Act 1966 (Cth) ss 64Z(4), 64Z(5), 64Z(10), 149, 257
Corporations Act 2001 (Cth) s 251A(6)Cases cited: Australian Securities and Investments Commission v Hellicar (2012) 286 ALR 501; [2012] HCA 17 discussed
CSR Ltd v Della Maddalena (2006) 224 ALR 1; [2006] HCA 1 cited
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 cited
Kelso v Tatiara Meat Co Pty Ltd (2007) 17 VR 592; [2007] VSCA 267 cited
Morley v Australian Securities and Investments Commission (2010) 274 ALR 205; [2010] NSWCA 331 cited
Optical 88 Ltd v Optical 88 Pty Ltd (2011) 197 FCR 67; [2011] FCAFC 130 cited
Warren v Coombes (1979) 142 CLR 531 citedDate of hearing: 23 November 2012 Date of last submissions: 23 November 2012 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 97 Counsel for the Appellant: Mr G Bigmore QC with Ms C Rome-Sievers Solicitor for the Appellant: Tisher Liner & Co Counsel for the First and Second Respondents: Mr P Collinson SC with Mr B Gibson Solicitor for the First and Second Respondents: SBA Law Counsel for the Third and Fourth Respondents: Ms C Gobbo Solicitor for the Third and Fourth Respondents: Australian Government Solicitor
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 418 of 2012
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA
BETWEEN: PHILIP CHARLES WEEDEN
AppellantAND: GESS MICHELE RAMBALDI
First RespondentANDREW REGINALD YEO (AS JOINT TRUSTEES OF THE PROPERTY OF PHILIP CHARLES WEEDEN, A BANKRUPT)
Second RespondentINSPECTOR-GENERAL IN BANKRUPTCY
Third RespondentOFFICIAL RECEIVER IN BANKRUPTCY
Fourth Respondent
JUDGES:
GRAY, MIDDLETON AND DODDS-STREETON JJ
DATE OF ORDER:
12 FEBRUARY 2013
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The parties confer, and in the event of agreement, file and serve within 14 days joint proposed minutes of orders (including as to costs) reflecting these reasons.
2.In the event that the parties cannot agree as to the appropriate minutes of orders, each party is to file and serve within 14 days proposed minutes of orders and short written submissions in support of such proposed orders.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL…
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CaseChat Overview and Summary
In the case of Weeden v Rambaldi, the High Court considered whether the minutes of a creditors' meeting were sufficient to appoint a trustee in bankruptcy. The appellant, Weeden, argued that the meeting had appointed two joint trustees, whereas the respondent, Rambaldi, argued that only one trustee was appointed. The High Court was required to determine the legal issues concerning the admissibility of the minutes, the allocation of weight to evidence, and whether there were any errors in the trial judge's handling of the evidence. The Court found that the trial judge's approach was consistent with the statutory provisions and the evidence, and that the minutes, despite their deficiencies, constituted prima facie evidence of the proceedings. The combined effect of the contrary evidence led the Court to conclude that the prima facie evidence provided by the minutes was rebutted.
The Court concluded that the trial judge did not err in his approach to the evidence, nor in the weight he allocated to it. The minutes, as prima facie evidence, served as the starting point for the analysis, but the weight of the contrary evidence led to the conclusion that a resolution for the appointment of two joint trustees was not passed. The High Court found that the primary judgment was correct and that the trial judge's approach was consistent with the statutory provisions and the evidence. The Court's decision ensures that the proper procedures for the appointment of a trustee in bankruptcy are upheld and that the evidence is considered fairly and comprehensively.
The Court concluded that the trial judge did not err in his approach to the evidence, nor in the weight he allocated to it. The minutes, as prima facie evidence, served as the starting point for the analysis, but the weight of the contrary evidence led to the conclusion that a resolution for the appointment of two joint trustees was not passed. The High Court found that the primary judgment was correct and that the trial judge's approach was consistent with the statutory provisions and the evidence. The Court's decision ensures that the proper procedures for the appointment of a trustee in bankruptcy are upheld and that the evidence is considered fairly and comprehensively.
Orders
Orders of the court
1. The parties confer, and in the event of agreement, file and serve within 14 days joint proposed minutes of orders (including as to costs) reflecting these reasons.
2. In the event that the parties cannot agree as to the appropriate minutes of orders, each party is to file and serve within 14 days proposed minutes of orders and short written submissions in support of such proposed orders.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011 (Cth).
Background
Background to the litigation
If his Honour erred as the appellant alleged, and Messrs Rambaldi and Yeo were appointed joint trustees at the meeting, there would be no valid objections to the appellant’s automatic discharge pursuant to s 149 of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”), as the objections lodged on 30 June 2008 and 24 March 2010 were signed only by Mr Andrew Yeo and (as was common ground) were not the acts of Messrs Yeo and Rambaldi acting jointly. In the absence of any valid objection, the appellant’s discharge from bankruptcy would have occurred on 7 February 2010. Similarly, the Notices of Contribution and Assessment issued to the appellant by Mr Yeo between 11 December 2007 and 27 May 2011 would be of no legal effect, as they were not issued by Messrs Yeo and Rambaldi acting jointly.FACTS AND EVIDENCE The appellant was made bankrupt on his own petition on 7 February 2007 and Dennis Turner was appointed his trustee in bankruptcy. Around mid‑February 2007, Samuel (“Sam”) Bond, the solicitor for Playcorp Pty Ltd and Playgro Pty Ltd (“the Playcorp entities”) (which together constituted the majority creditors of the appellant’s bankrupt estate) telephoned Mr Yeo, a partner of Pitcher Partners, and asked if he would consent to be appointed trustee in place of Mr Turner. Between 24 February and 26 February 2007 both Mr Yeo and Mr Rambaldi (another partner of Pitcher Partners) signed a Consent to Act and Trustee Declaration. By a letter dated 1 March 2007 to the Playcorp entities, Mr Bond advised them of the procedure for removing and replacing a trustee, by, among other things, calling a meeting of creditors to pass a resolution to appoint a preferred trustee “such as Mr Andrew Yeo of Pitcher Partners”. The letter stated that Mr Bond had requested Mr Yeo’s consent to act as the new trustee. By a facsimile to Mr Turner dated 2 March 2007, Mr Bond advised that the Playcorp entities intended to remove Mr Turner as trustee and to appoint Mr Yeo in his place. The facsimile noted the requirement that all creditors receive notice of the proposed agenda for the meeting and sought inclusion of the following two items:1.that Mr Dennis Turner be removed as trustee in bankruptcy;2.that Mr Andrew Yeo be appointed as trustee in bankruptcy. Mr Bond’s facsimile stated that it enclosed, for circulation and tabling, a copy of Mr Yeo’s Consent to Act as trustee. The enclosed document was in fact the Consent to Act form signed by both Mr Rambaldi and Mr Yeo. By a letter dated 7 March 2007 to Mr Weeden’s creditors, Mr Turner advised of the proposal to replace him with Mr Yeo and of the forthcoming meeting and proposed resolutions. It attached an agenda for the meeting and a statement of claim and proxy form in relation to proposed motions. Item (l) on the agenda stated:Resolution removing Mr Dennis Turner as the Trustee of the Bankrupt Estate of Philip Charles Weeden and appointment of Mr Andrew Yeo as Trustee of the Bankrupt Estate of Philip Charles Weeden.
Evidence
Evidence Before The Court
Section 257 of the Bankruptcy Act provides:257 Evidence of proceedings at meetings of creditors or committee of inspection The minutes of proceedings at a meeting of creditors or of a committee of inspection under this Act, signed by a person describing himself or herself as, or appearing to have been, chair of the meeting is prima facie evidence of those proceedings. At several points in his reasons, his Honour expressly recognised that s 257 of the Bankruptcy Act had “the effect of designating the minutes as prima facie evidence of the proceedings at the creditors’ meeting” (at [14]) and hence, established a presumption that they should, “on a prima facie basis, be regarded as a reliable and accurate record of the proceedings at the meeting, including the resolutions there made” (at [16]). His Honour set out the events leading up to the meeting on 19 March 2007. His Honour observed that the three attendees, although unable to remember the meeting, gave evidence of their standard practices in conducting and recording a creditors’ meeting. His Honour stated at [18]:Each of the three persons who attended the creditors’ meeting — Turner, Bond and Lester — gave evidence that, unassisted by documents relating to the creditors’ meeting, they had not retained any recollection of the resolution passed by the meeting replacing Turner as the trustee. Each has little or no recollection of the creditors’ meeting at all. It is completely unsurprising that should be the case. The meeting occurred a long time ago. Turner is a registered trustee. Lester is his assistant. Bond is an experienced insolvency solicitor. Each will have attended numerous meetings of creditors. There is no suggestion in the evidence that this particular creditors’ meeting was other than a routine meeting of no particular significance to any of its attendees. I have no reason to think that each of these witnesses did not do the best that each could to fairly and properly enlighten the court as to what occurred at the creditors’ meeting and as to relevant events surrounding that meeting. His Honour observed that, in his view, all three witnesses had attempted to assist the Court and the evidence of their standard practices was, in the absence of any indication to the contrary, a good guide to their actual practice on the occasion in question (at [20]). In the course of his reasons, his Honour considered a number of documents. His Honour described two documents as contemporaneous records of the creditors’ meeting, namely:1.Ms Lester’s handwritten notes made during the creditors’ meeting. The notes comprised approximately ten short lines, which relevantly included: Andrew Yeo DAT to make available doc to him – DAT to cooperateVoting in favour – via proxies 6% to Andrew Yeo Both parties will advise ITSAAndrew to write to creditors. Yeo – realisation submit to you to action in due course.2.Mr Bond’s notes made on a copy of the agenda page distributed at the creditors’ meeting (which set out the resolution at paragraph 20). Mr Bond’s handwritten notes stated, among other things, “Copies of all to AY. – Co-operate”, “Voted in favour of removal and replaced” and “both to advise ITSA”.
Decision
Reasons for decision
The High Court concluded at [216]:Finally, the probative weight of the minutes is supported by the circumstances leading up to the meeting. That meeting may have been the most significant in the company’s history. The company in question was one of the largest and most important in the country. The directors knew that hostile critics would closely scrutinise the decision and company statements associated with it. They were acting in circumstances of extreme urgency. There was no legal capacity to resolve that there should be separation without announcing that fact to the ASX. There was no commercial point in resolving on separation without announcing that fact. And there was no commercial point in any announcement unless an assurance of sufficient funding for asbestos claims was given. To resolve that there should be separation without announcing any such assurance would create only damaging controversy from “hostile and emotional stakeholders” and “asbestos-related spoilers”. The draft announcements in the hands of management on 14 and 15 February 2001, the last of which was taken into the meeting as the 7.24 am Draft Announcement, spoke of sufficient or full funding for all legitimate claims. Taken together, these circumstances comprised immensely powerful evidentiary support for ASIC’s case.THE PRIMARY JUDGMENT IS CORRECT In our opinion, contrary to the appellant’s submissions, the conclusions his Honour reached were not only open to him on the evidence but, in our view, were strongly supported by it. Far from treating the minutes as merely one of a number of circumstances which might support an inference, his Honour (at [16]) expressly regarded the minutes as the starting point and acknowledged their special status as prima facie evidence. Nor did his Honour in substance depart from or misapply the principles he correctly articulated. To the contrary, his analysis was consistently informed by them. The minutes were signed by Mr Turner, the chairman of the meeting, as required by s 64Z(10) of the Bankruptcy Act. They did not, however, comply with other requirements of s 64Z, as they were not signed by Ms Lester (the minutes secretary) in accordance with s 64Z(10), and did not record the precise words of each motion proposed or of any amendment, as required by s 64Z(4). Further, the date on which the Chairman signed the minutes (which, under s 64Z(10), must be no later than 14 days after the meeting) was unknown. His Honour accepted that, as was common ground, s 257 of the Bankruptcy Act applied to the minutes, and consequently, despite the non‑compliance with s 64Z of the Bankruptcy Act, treated them as prima facie evidence of the proceedings at the meeting. As that approach was unchallenged on appeal, it is unnecessary to consider whether any non‑compliance potentially excluded the application of s 257 of the Bankruptcy Act. His Honour carefully, scrupulously and fairly considered the minutes and the other items of evidence. In Hellicar, the High Court designated the minutes “the starting point” because they constituted an admissible business record, the accuracy of which was challenged only by inference. In this case, in accordance with s 257 of the Bankruptcy Act, his Honour treated the minutes as the starting point of his analysis and as prima facie evidence which, if standing alone, would be conclusive. The nature, quality and combined effect of the contrary evidence, however, entitled his Honour to conclude, as he did, that it rebutted the prima facie evidence constituted by the minutes that a resolution was passed for the appointment of Messrs Rambaldi and Yeo as joint trustees.
Ratio Decidendi
Legal Principle Established
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