Young v Thomson (Trustee), in the matter of Young (Bankrupt)

In the matter of Young (Bankrupt), the court was called upon to decide an application by the trustee, Ms Thomson, for a direction under sections 30 and 134(4) of the Bankruptcy Act 1966 (Cth) that she would be justified in adjourning a creditors' meeting convened under section 64. The dispute between the parties involved the trustee's decision to enter into a litigation funding agreement with Ironbark Funding Red Pty Ltd and the principal creditor, Ms Young, challenging this decision. Ms Young sought an order setting aside the funding agreement or, alternatively, an inquiry into Ms Thomson's conduct under section 179 with various potential orders.

The court considered the legal issues regarding whether Ms Thomson would be justified in adjourning the creditors' meeting. It was noted that while Ms Young argued there was no impropriety in calling for the creditors' meeting, Ms Thomson sought the adjournment to participate in the hearing scheduled for 2 December 2016. The court accepted that the principles set out in Dare v Doolan applied, which established that creditors could remove a trustee if they had lost confidence, and the court would not interfere unless there was a good cause. The court concluded that Ms Thomson would be justified in adjourning the creditors' meeting for a short time, but not beyond the necessary period following the hearing on 2 December 2016. It directed that the meeting could be adjourned to a date no later than 14 days after Ms Young’s application under section 178 was heard. The court reserved the costs of Ms Thomson's interlocutory application for directions.