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Federal Court of Australia |
COURT
IN THE FEDERAL COURT OF AUSTRALIACATCHWORDS
Bankruptcy - Application for order restraining delivery up by Official Receiver to Official Trustee of title deeds of former bankrupt - application for relief, damages and compensation for alleged misfeasance, negligence, wilful default and conspiracy to defraud of Official Trustee or Official Receiver or his Deputy and persons named - dismissal of application for order restraining - order for delivery up of title deeds made pursuant to Bankruptcy Act 1966 ss. 30, 129 - dismissal of application for relief, damages etc. - hearing in absence of former bankrupt - application for rescission of orders. Application to have Full Court of Federal Court adjudicate - Bankruptcy Act 1966 ss. 18, 18A 19, 19A, 30, 133, 134, 135, 161, 178, 179. Federal Court of Australia Act 1976 s.26.Bankruptcy - Application for order restraining delivery up by official receiver to official trustee of title deeds of former bankrupt - Application for relief, damages and compensation for alleged misfeasance, negligence, wilful default, and conspiracy to defraud, of official trustee or official receiver or his deputy and other named persons - Dismissal of application for order restraining delivery up of title deeds pursuant to order made pursuant to ss. 30 and 129 of Bankruptcy Act - Dismissal of application for relief, damages, etc. - Hearing in absence of former bankrupt - Application for rescission of orders - Application to have Full Court adjudicate - Bankruptcy Act 1966 (Cth), ss. 18, 18A, 19, 19A, 30, 129, 133, 134, 135, 161, 176, 178, 179 - Federal Court of Australia Act 1976 (Cth), s. 26. A sequestration order was made against the estate of the bankrupt on 5th December, 1973. The bankrupt owned land at Port Albert which he did not disclose until early 1978, whereupon the official receiver, with the approval of the creditors, and pursuant to s. 135 of the Bankruptcy Act, sold the land. However the title deeds to the land remained in the possession of the bankrupt until June 1981 when the bankrupt was examined pursuant to s. 81 before the Deputy Registrar. By order of the Deputy Registrar the title deeds thereafter remained in the custody of the Registrar, to be delivered to the official trustee if no application was made for them to be otherwise dealt with.
The bankrupt filed an application seeking an order restraining the Registrar from delivering the title deeds to the official trustee, and seeking $2,000,000 damages and compensation for the misfeasance, negligence, and conspiracy of the official trustee and his several deputies. The official trustee also filed an application seeking an order that the Registrar deliver up to the official trustee the title deeds.
On the hearing of the two applications, after several adjournments, the bankrupt failed to appear, his application was dismissed, and the Registrar was ordered to deliver the title deeds to the official trustee. The operation of the orders was suspended to enable the bankrupt to apply further, and he later filed an application to rescind these orders, a further application for damages and compensation, and an application to have the entire matter referred to the Full Court.
Held: (1) No dereliction of duty, wilful default, fraud or conspiracy to defraud had been established, and the official receiver and the official trustee were entitled and obliged to take possession of the title deeds. (2) The applications of the bankrupt, including his application to have the matter referred to the Full Court, would be dismissed. (3) Scope of ss. 18, 18A, 19, 19A, 30, 129, 133, 134, 135, 161, 176, 178 and 179 of the Bankruptcy Act considered.
HEARING
Melbourne, 1982, March 1, 5, 19. 19:3:1982The applicant appeared in person.
B. Braun, for the respondent.
Cur. adv. vult.Solicitors for the respondent: Strongman & Crouch.
R. R. BOADEN
ORDER
1. The applications presently before me filed on 30 December 1981 which include the "NOTICE OF AMENDMENT" are dismissed.2. Orders 1 and 2 of the Court on 21 October 1981 are confirmed.
3. The orders as to costs made by Lockhart J. on 21 October 1981 are varied so that orders as to costs will be: In respect of the proceedings heard on 12 October 1981, each side is to pay its own costs and costs reserved of 14 July 1981, 14 August 1981 and on 8 February 1982.
4. In respect of the hearing before me on 1 and 5 March 1982, each side is to pay its costs of and incidental to the hearing on 1 March 1982; and Mr. Balhorn is to pay the Trustee's costs of and incidental to the hearing of 5 March 1982.
5. The application dated 25 February 1982 to have the Full Court of the Federal Court adjudicate on this matter is dismissed.
6. Each side is to pay its own costs of the application dated 25 February 1982 referred to in paragraph 5.
DECISION
These are applications by SYDNEY GORDON BALHORN in respect of Orders made by a Judge of this Court on 21 October 1981. There is also before me a NOTICE OF INTENTION TO OPPOSE APPLICATION filed by the Official Trustee in Bankruptcy (Official Trustee) dated 11 February 1982 stating three grounds upon which the Official Trustee opposes the application of Mr. Balhorn.There is a separate APPLICATION by Mr. Balhorn dated 25 February 1982 seeking to have the Full Court of the Federal Court adjudicate in this matter.
Events leading up to this hearing should be mentioned, including a more complete reference to the applications and affidavits.
On 5 December 1973, a Sequestration Order was made against Mr. Balhorn's estate upon a petition by K.M.M. Pty. Ltd. claiming a debt due to it of $2872.17 under a Judgment recovered against him on 6 April 1973.
He was discharged from bankruptcy on 5 December 1978, it is said, and apparently accepted, by force of s.149 of the then Bankruptcy Act 1966 (the Act) i.e. before amended by Act No. 12 of 1980.
From the Reasons for Decision given in respect of the Orders dated 21 October 1981, and from the evidence contained in an affidavit of Brian Roy Burzacott, Senior Assistant Official Receiver, Bankruptcy District of the State of Victoria (Senior Official Receiver) dated 26 February 1982 and filed herein, it appears that Mr. Balhorn was, at 5 December 1973, the owner of land at Port Albert in the State of Victoria (the land) opposite or adjoining a larger area on which there was conducted a poultry farm business. The title to the land is partly subject to the provisions of the Transfer of Land Act 1958 (Vic.) and partly subject to the general law, as referred to in his Honour's Reasons. There he noted that pursuant to s.58 of the Act the land vested in the Official Receiver as Trustee of the estate. This land, referred to as Lots 10, 11 and 12 and "8 sec.10" is shown on a copy plan annexed to the affidavit of the Senior Official Receiver. According to his affidavit earlier mentioned, the said Lots were not disclosed by Mr. Balhorn in his Statement of Affairs as forming part of his Estate or even as land in which he had any interest; they were disclosed in the early part of 1978 and before his discharge on 5 December 1978. Again, according to the said affidavit, as soon as the said lots were brought to the attention of the Official Receiver, and apparently without possession of these deeds, the necessary steps to sell the portions were undertaken. Their sale was approved by creditors of the Estate in compliance with s.135 of the Act. Copies of Valuations, Contract of Sale and a certification of the Resolution of the Creditors are annexed to the Affidavit.
From his Honour's Reasons, it emerges that the title deeds to the land were in the possession of Mr. Balhorn until 1 June 1981 when he was examined pursuant to s.81 of the Act before a Deputy Registrar in Bankruptcy, when the title deeds were produced by him. They were then marked for identification as "MFI 2" and remained, pursuant to the Order of the Deputy Registrar, in the custody of the Registrar in Bankruptcy, to be delivered to the Official Trustee in Bankruptcy if no application was made for them to be otherwise dealt with. Such an application was made on 19 June 1981, to which later I refer.
His Honour's Judgment of 21 October 1981 noted that by Contract of Sale dated 6 March 1980, the Official Receiver sold the land to Anna Erna Britta Balhorn who was, (see later), formerly the wife of Mr. Balhorn. Earlier I have referred to the Contract of Sale in respect of the land. According to a transcript of evidence, made 14 August 1981, to which reference was made during this hearing, Mr. Balhorn spoke of the land as "a few useless blocks of land", that he was "just trying to block the final act of fraud . . . " Before me he referred to the land as being " . . . just minor . . . just some housing blocks opposite the actual farm."
On 19 June 1981, Mr. Balhorn did file an application to this Court seeking, inter alia, an Order restraining the Registrar in Bankruptcy from delivering the title deeds to the Official Trustee. That application was headed -
"SYDNEY GORDON BALHORN -v- OFFICIAL TRUSTEE IN BANKRUPTCY AS TRUSTEE OF THE ESTATE OF S.G. BALHORN (THE OFFICIAL TRUSTEE AND DEPUTIES BEING VARIOUSLY KNOWN AS M.A. OGILVIE AND R.P. COLBY, A. BURZACOTT, J. WATSON, R. GAUCHI, AND C. LIAN)."
Omitting formal parts it reads -
"(1) ORDER restraining the Registrar in Bankruptcy or his Deputy from
delivering to the Official Trustee certain titles to property
at Port Albert
seized from the Applicant and Plaintiff in Melbourne on 1/6/81 in
contravention of an order of the Court that the
titles to the three properties
in question be only produced and not delivered pending the following action:
(2) ORDER for RELIEF, DAMAGES, and COMPENSATION from the persons named above
in the nominal sum of $2,000,000 over their MISFEASANCE,
NEGLIGENCE, WILFUL
DEFAULT, and CRIMINAL CONSPIRACY TO DEFRAUD THE PLAINTIFF with P. VODICKA, P.
RYAN, solicitors, and A.E.B. BALHORN,
occupier of the Plaintiff's stolen home
and farming business at Port Albert. The Plaintiff intends to rely on Sections
176(2), 178, 179, 133 and 134 (h) and (j) of the BANKRUPTCY ACT.
............................."
On 13 July 1981, the Official Trustee filed an application naming the Registrar in Bankruptcy as respondent (but not Mr. Balhorn) and in which he sought an Order that the Registrar in Bankruptcy deliver up to the Official Trustee the title deeds referred to as MFI 2 above.
On 7 August 1981 Mr. Balhorn filed a separate application seeking an adjournment for at least eight weeks. This came on for hearing on 14 August 1981. The learned Judge then presiding adjourned the two applications to 22 September 1981. He told Mr. Balhorn that he should act on the basis that there would be no further adjournments.
These two applications, i.e. of Mr. Balhorn (19/6/81) and of the Official Trustee, after further adjournments related to the state of business of the Court, were heard on 12 October 1981. At the hearing the Official Trustee was represented by Counsel. The Deputy Registrar in Bankruptcy, Mr. K. Wiltshire, appeared on behalf of the Registrar in Bankruptcy. Mr. Balhorn did not attend. His Honour had uncontradicted evidence before him which, with respect, he was entitled, perhaps bound, to accept (cf. Holman v. Holman (1964) 81 W.N.(N.S.W.) 374 at p.378 and cases collected there) that Mr. Balhorn both knew that the applications were to be heard on that day, and that date, when fixed, was acceptable to him.
For the reasons he gave on 21 October 1981, the learned Judge, in the paragraphs of his Order numbered hereafter, dismissed Mr. Balhorn's application (para. 1), ordered that the Official Trustee's application should succeed (para. 2) and that Mr. Balhorn pay the costs including certain reserved costs (para. 3).
He said, as to Mr. Balhorn -
" . . . notwithstanding that I am satisfied that he knew of the date of hearing, in all the circumstances I think the fair course for me to take is to give him a chance to come back to the Court if he wishes, within a short time, to rescind or set aside the orders I propose to make."
So his Honour included in the Orders, the following (para.5) -
"Orders 1, 2 and 3 shall not operate until the expiration of 21 days from the date of filing the said affidavit of service, and if, in the meantime Mr. Balhorn files an application in the Victorian District Registry of this Court to rescind or set aside orders 1, 2 and 3 or any of them the order which he seeks to set aside shall not operate until further order of the Court."
His Honour clearly intended to give Mr. Balhorn, not having been present, an opportunity to make submissions or have them made on his behalf or otherwise proceed, with evidence, if thought fit, to persuade the Court the Orders to which I have referred should not have been made and should be rescinded.
His Honour's Reasons deal in detail with the relevant entitlement to title deeds, first of the Registrar in Bankruptcy, then with the effect of discharge from bankruptcy of Mr. Balhorn and, further, with the obligation of the Official Trustee to take possession of them.
He considered that ss.129 and 30(1) of the Act were sufficient for the Official Trustee's purpose. In the result, he considered the Court should lend its aid to enforce the right and duty of the Official Trustee to take control of the title deeds. He came to the view that there was no material in the affidavits filed by Mr. Balhorn which would lead him to refuse the Official Trustee's application. He also said -
"As to Mr. Balhorn's request in his application of 19 June 1981 for an order for compensation from various persons for alleged misfeasance, negligence, wilful default, criminal conspiracy and other matters, I see nothing whatever in the evidence to support the making of such an order."
Mr. Balhorn stated in his submissions to me that he does not contest the right of the Official Receiver to hold the documents, nor, as I understand him, would he dispute the right of the Official Trustee in Bankruptcy to take over the documents except that he had made an allegation of fraud which he contends should be sufficient to require that the documents are not handed over until that matter is resolved.
On 30 December 1981, Mr. Balhorn filed -(i) an "APPLICATION....to RESCIND ORDERS 1, 2 and 3 . . . and to STRIKE OUT ALL EVIDENCE and ARGUMENT in these Proceedings in terms of the Judgement (sic) agreed to by the Counsel for the Official Trustee....and the Judge...." (reference to transcript followed) upon Grounds then stated.
(ii) an application headed "NOTICE OF AMENDMENT" applying to the Court for
leave to amend the Application of 19 June 1981, which,
omitting formal parts,
reads -
"TAKE NOTICE that the above Plaintiff and Applicant is applying to the Court
for leave to amend his Application of 19/6/81 as follows:
-
SYDNEY GORDON BALHORN of 52/3 Alfred Square, Upper Esplanade, St. Kilda,
applies to the FEDERAL COURT OF AUSTRALIA for the following
Orders:
(1) ORDER for maintaining in force the discretionary and judicious orders of
McGregor J of 14/7/81 and of Deane J of 14/8/81 which
restrain the Registrar
in Bankruptcy from delivering to the Official Trustee, pending his Prosecution
by the Plaintiff, title deeds
(marked MFI 2) to the minor remaining portions
of the Plaintiff's unlawfully seized and misappropriated lands and other
lawful and
rightful possessions - i.e. an estate wholly or partly subject to
legal and other actions seeking redress for the Plaintiff over
the alleged
fraud - see (2), professional and official infamy, wilful default,
imcompetence, ignorance, and indifference to natural
justice and human and
social rights of certain lawyers and judges of two Federal Jurisdictions as
well as the Official Trustee and
his Deputies. The legal actions are intended
in the High Court of Australia and the Supreme Court of Victoria as well as in
the Federal
Court of Australia.
(2) ORDER FOR DAMAGES AND COMPENSATION IN THE NOMINAL SUM OF $2,000,000 from
the persons known as Official Trustee or Official Receiver
or his Deputy and
variously identified for the purpose of this action as M.A. OGILVIE, R.P.
COLBY, B. BURZACOTT, J. WATSON, R, GAUCHI,
AND C, LIAN over their alleged
MISFEASANCE, NEGLIGENCE, WILFUL DEFAULT, AND CRIMINAL CONSPIRACY TO DEFRAUD
THE PLAINTIFF in collaboration
with the SOLICITORS P. VODICKA AND P. RYAN of
Melbourne and Yarram, and with BRITTA BALHORN of Melbourne, former Wife of the
Plaintiff
who, as a result of the Official Trustee's perverted sense of public
duty and lawful duty to the Plaintiff and his genuine creditors
(who do not
include the Corporation KMM-BARASTOC which maliciously and scandalously
obtained an easy if not automatic Sequestration
Order from Mr. Justice C.A.
Sweeney in the first of four frame-ups and flagrant miscarriages of justice)
misappropriated her husband's
properties and even personal belongings and now,
again thanks to the felonies of the Official Trustee, is letting his stolen
War
Service Home contrary to blatent perjury orchestrated and joined in by her
seducer Vodicka (the Plaintiff's former lawyer by circumstance
and not by
choice) who later attempted carnal knowledge of one of the adulteress's
daughters following a second frame-up consequent
upon the first in a kangaroo
Family Court controlled by what the late Morris Revelman accurately described
as Australia's legal mafia.
(3) ORDER requiring the Trustee to offer back to the Plaintiff all of his
stolen properties - about half of the area of the unique
and very valuable
TOPLAYER FARM at Port Albert, South Gippsland (near Yarram) - now subject to
the Trustee's fraudulent contracts
of sale and felonies which fetched the
Plaintiff an absurd $7,000 for assets of real or potential value of the order
of $1,000,000
in a $2,000,000,000 egg market the Trustee's fraud, misfeasance,
negligence, and wilful default has lost to the Plaintiff. (Footnote:
The
Plaintiff intends to rely on Sections 18, 19, 133, 134, 135, 161, 178, 179 and
any other appropriate Sections of the Bankruptcy Act to Prosecute the Official
Trustee in this action for damages. . . . "
There followed certain statements which it is unnecessary to set out.
From Mr. Balhorn's submission to me, I understand this application to be intended to be in substitution for that of 19 June 1981. The next application filed was on 25 February 1982 referred on on page 1 hereof. Mr. Balhorn sought to rely on a further application dated 5 March 1982. I refused to allow this. It is marked for identification 4.
Accordingly, I have before me -1. The APPLICATION of 19 June 1981 sought to be replaced.
2. Document headed "NOTICE OF AMENDMENT" filed 30 December 1981 purporting to
be an application for leave to amend the application
of 19 June 1981 which was
considered by the learned Judge on 12 October 1981. The "NOTICE OF AMENDMENT"
is in broader terms than
is that of 19 June 1981, and in an expanded form. It
seeks a continuation of the restraining order as to Official Receiver handing
over MFI 2, damages and compensation from persons mentioned and offering back
of certain property - about half of Toplayer farm.
3. APPLICATION filed 30 December 1981 to rescind Orders 1, 2 and 3 made by
Lockhart J. on 21 October 1981 and strike out evidence
and argument. He
referred to this as the substitute application.
4. An application of the Official Trustee filed on 11 February 1982 to oppose
the last mentioned application.
5. APPLICATION filed on 25 February 1982 seeking to have the Full Court of the Federal Court adjudicate "in this matter".
Mr. Balhorn filed the following -1. AFFIDAVIT SUPPORTING APPLICATION FILED 19/6/81. This was filed 7 August 1981.
2. AFFIDAVIT
SUPPORTING AN APPLICATION FILED ON 19/6/81 AND AMENDED on 30/12/81. This was
filed on 22 February 1982.
Mr. Balhorn told me he did not want to rely on it, that it was "....quite
invalid....submitted under duress and provocation....."
He sought to replace it by a document headed -3. "BALHORN v. OFFICIAL TRUSTEE
"SECTION IV
THE INHUMAN, CRIMINAL, FRAUDULENT, DISASTROUS, AND TRAGIC "ADMINISTRATION" BY
BRIAN BURZACOTT AND JOHN WATSON (DEPUTY OFFICIAL RECEIVERS
OR TRUSTEES) OF THE
WRONGFULLY SEQUESTRATED (BY MR. JUSTICE C.A. SWEENEY) AND LATER STOLEN PORT
ALBERT ESTATE (TOPLAYER FARM) OF
SYDNEY BALHORN "IN ACCORDANCE", ACCORDING TO
R.P. COLBY (OFFICIAL RECEIVER, 29/7/81) "WITH THE BANKRUPTCY ACT""
------------------------------------------------------------------------------
-- Against the objections of Counsel for the Official
Trustee I allowed this
to be filed in court on 1 March 1982. Mr. Balhorn swore to its truth then.
There is also -4. An Affidavit of BRIAN ROY BURZACOTT, Senior Assistant Official Receiver, Bankruptcy District of the State of Victoria dated and filed on 26 February 1982.
I have considered all affidavits filed. This matter was first before me on 1 March 1982. At the end of that day I reserved my decision. However, I sought from the parties and heard, on 5 March 1982, further submissions after which I reserved my decision. Mr. Balhorn appeared in person. Counsel appeared for the Official Trustee. Mr. Zaccharin presently Registrar in Bankruptcy, also appeared.
Before me, Mr. Zaccharin, presently the Registrar in Bankruptcy, has stated that, as he had given in evidence on 12 October 1981, he had notified Mr. Balhorn of that date for the hearing and Mr. Balhorn had agreed, in effect, that it would be suitable to him. In his letter dated 10 November 1981 to Mr. Balhorn, Mr. Zaccharin fixes the date of this telephone conversation as 14 September 1981. But he also agreed, in evidence before me, that when he discussed the date with Mr. Balhorn and it was accepted as being suitable, that it would be confirmed in writing, meaning, I gather from his evidence, by a letter; and, further, that through a misunderstanding, no letter was sent. There was evidence of a telegram having been dispatched between 12 and 28 September 1981 by a Mr. O'Keefe confirming this date. His evidence on 12 October 1981 was that it was sent by telephone to an address in St. Kilda and to a Mr. Balhorn. Its terms were not able to be stated and there is no other evidence or copy that would enable one to say what precisely it contained. It is correct to say that in his affidavits, Mr. Balhorn had not denied either the conversation with Mr. Zaccharin (in fact he agreed he was advised of and accepted the date the 12 October 1981) but he claims in argument he was expecting confirmation in writing and since none came, he was unaware the matter was proceeding to a hearing. He denied from the Bar table having received any telegram. Submissions upon the point have been put to me and it may be that the uncontradicted evidence of Mr. O'Keefe could be sufficient to allow me to accept prima facie, as one would with a letter properly addressed and posted, that there is evidence of the receipt of the telegram to Mr. Balhorn. But its wording is not recorded and I am mindful of Mr. Balhorn's denials. I assume, for present purposes, that no telegram was received by Mr. Balhorn.
I accept what is common ground that the parties knew the date was fixed as 12 October 1981. Any ordinary person, not having received a letter confirming it, would, I consider, have made some enquiry; but Mr. Balhorn did not. But I have preferred to consider the matter on the wider issues, i.e. as to whether submissions which are made and evidence by Mr. Balhorn should induce an order different from that of the learned trial Judge delivered on 21 October 1981; or entitle Mr. Balhorn to have rescinded the Orders 1, 2 and 3.
The Orders in respect of which rescission is sought, are as to three
different aspects thereof, viz. -
(a) that the Registrar in Bankruptcy deliver up to the Official Trustee in
Bankruptcy the documents marked MFI 2;
(b) dismissing Mr. Balhorn's claim for damages and compensation - i.e. as set
out originally in the application of 19 June 1981. (Mr.
Balhorn seeks to
expand this by documents Nos.2 and 3 mentioned on page 10 hereof);
(c) costs.
As to (a), as I have already noted, Mr. Balhorn would not contest the right of the Official Trustee to have the documents were it not for the alleged fraud upon which he relies.
As to (b), it will be convenient to refer to sections mentioned in the application dated 30 December 1982. Before Act No. 12 of 1980 these sections read -
"18. (1) The official receivers together constitute a body corporate which -
(a) shall be known as "The Official Receiver in Bankruptcy";
(b) shall have perpetual succession; and
(c) is capable, under its corporate name, of acquiring, holding or disposing
of real and personal property and of suing and being
sued.
(2) The Official Receiver in Bankruptcy shall have such seals as the
Attorney-General directs.
(3) All courts, judges and persons acting judicially shall take judicial
notice of such a seal affixed to any document and shall presume
that it was
duly affixed.
(4) Any official receiver may -
(a) do any act or thing on behalf of The Official Receiver in Bankruptcy; and
(b) affix a seal of The Official Receiver in Bankruptcy to any document.
(5) A reference in a law of the Commonwealth or of a Territory to the official
receiver of the estate of a bankrupt shall, in relation
to the vesting,
holding or disposal of property, be read as including a reference to The
Official Receiver in Bankruptcy.
19. (1) Where a person becomes a bankrupt, it is the duty of the official
receiver -
(a) to notify, as prescribed, the fact of the bankruptcy;
(b) to ascertain the assets and liabilities of the bankrupt;
(c) to investigate -
(i) the conduct, dealings and transactions of the bankrupt;
(ii) the cause of bankruptcy; and
(iii) the books, accounts and records kept by the bankrupt,
and to file with the Registrar, within sixty days after the making of the
sequestration order or, in the case of a debtor's petition,
after presentation
of the petition, or within such further time as the Registrar allows, a report
showing the result of his investigations;
(d) to summon the first meeting of creditors and to attend that meeting or
arrange for an officer to attend on his behalf;
(e) to advertise, as prescribed, the date, time and place on and at which the
public examination of the bankrupt is to be held;
(f) to take such part as he thinks fit in the public examination of the
bankrupt; and
(g) to file from time to time such supplementary reports in relation to the
matters specified in paragraph (c) of this sub-section
as he considers
necessary.
(2) Where a person who became a bankrupt on a creditor's petition is unable to
prepare a proper statement of affairs, the official
receiver may employ, at
the expense of the estate, a qualified person to assist in the preparation of
the statement.
In the Act, Division 4 headed "Realisation of Property" with marginal note
"Disclaimer of onerous property" there appears -
133. (1) Subject to this section, where any part of the property of the
bankrupt consists of -
(a) land of any tenure burdened with onerous covenants;
(b) property (including land) that is unsaleable or is not readily saleable;
or
(c) unprofitable contracts,
the trustee may, notwithstanding that he has endeavoured to sell or has taken
possession of the property or exercised any act of ownership
in relation to it
and notwithstanding, in the case of property the transfer of which is required
by a law of the Commonwealth or
of a State or Territory of the Commonwealth to
be registered, that he has not become the registered owner of that property,
by writing
signed by him, at any time disclaim the property.
(2) The disclaimer, when filed with the Registrar, operates to determine
forthwith the rights, interests and liabilities of the bankrupt
and his
property in or in respect of the property disclaimed, and discharges the
trustee from all personal liability in respect of
the property disclaimed as
from the date when the property vested in him, but does not, except so far as
is necessary for the purpose
of releasing the bankrupt and his property and
the trustee from liability, affect the rights or liabilities of any other
person.
(3) Where a disclaimer in respect of any property is filed with the Registrar,
being property the transmission of which is required
by a law of the
Commonwealth or of a State or Territory of the Commonwealth to be registered,
the Registrar shall, as soon as practicable,
give notice of the disclaimer to
the registrar or other officer who has the function under that law of
registering the transmission
of that property.
(4) A trustee is not entitled to disclaim a lease without the leave of the
Court unless -
(a) he has, in accordance with the rules, given to the lessor and, if the
bankrupt has sub-let the whole or any part of the leased
property or has
mortgaged the lease, to each sub-lessee or mortgagee, twenty-eight day's
notice in writing of his intention to disclaim
the lease; and
(b) no person to whom the trustee has given such notice has, within
twenty-eight days after it was given to him, required the trustee,
in
accoreance with the rules, to apply to the Court for leave to disclaim the
lease.
(5) The Court may, in relation to an application for leave to disclaim a lease
under this section -
(a) impose such terms as a condition of granting the leave; and
(b) make such orders with respect to fixtures, improvements and other matters
arising out of the lease,
as the Court considers just and equitable.
(6) Where -
(a) an application in writing has been made to the trustee by a person
interested in property requiring him to decide whether he will
disclaim the
property or not; and
(b) the trustee has, for a period of twenty-eight days after the receipt of
the application, or such extended period as is allowed
by the Court, declined
or neglected to disclaim the property,
the trustee is not entitled to disclaim the property under this section and,
in the case of a contract, he shall be deemed to have
adopted it.
(7) The Court may, on the application of a person who is, as against the
trustee, entitled to the benefit or subject to the burden
of a contract made
with the bankrupt, make an order rescinding the contract on such terms as to
payment by or to either party of
damages for the non-performance of the
contract, or otherwise, as the Court considers just and equitable.
(8) Damages so payable may be provided as a debt in the bankruptcy.
(9) The Court may, on application by a person either claiming an interest in,
or being under a liability not discharged by this Act
in respect of,
disclaimed property, and after hearing such persons as it thinks fit, make an
order, on such terms as the Court considers
just and equitable, for the
vesting of the property in, or delivery of the property to, a person entitled
to it or a person in whom,
or to whom, it seems to the Court to be just and
equitable that it should be vested or delivered, or a trustee for that
person.
(10) Subject to the next succeeding sub-section, where an order vesting
property in a person is made under the last preceding sub-section,
the
property to which it relates vests forthwith in the person named in the order
for that purpose without any conveyance, transfer
or assignment.
(11) Where -
(a) the property to which such an order relates is property the transfer of
which is required by a law of the Commonwealth or of a
State or Territory of
the Commonwealth to be registered; and
(b) that law enables the registration of such an order,
the property, notwithstanding that it vests in equity in the person named in
the order, does not vest in that person at law until
the requirements of that
law have been complied with.
(12) A person aggrieved by the operation of a disclaimer under this section
shall be deemed to be a creditor of the bankrupt to the
extent of any loss he
has suffered by reason of the disclaimer and may prove the loss as a debt in
the bankruptcy.
........ "
With the marginal note "Power of trustee to deal with property" there appears
-
"134. (1) Subject to this Act, the trustee may do all or any of the following
things -
(a) sell all or any part of the property of the bankrupt;
(b) carry on a business of the bankrupt so far as may be necessary for its
beneficial disposal or winding-up.
(c) postpone the winding-up of the estate;
(d) prove in respect of any debt due to the bankrupt;
(e) compromise any debt not exceeding Ten thousand dollars claimed to be due
to the bankrupt or any claim not exceeding Ten thousand
dollars by the
bankrupt;
(f) make a compromise with a creditor or a person claiming to be a creditor in
respect of a debt provable, or claimed to be provable,
in the bankruptcy and
not claimed to exceed Ten thousand dollars;
(g) make a compromise in respect of any claim not exceeding Ten thousand
dollars arising out of the administration of the estate of
the bankrupt,
whether the claim is made by or against the trustee;
(h) deal with property to which the bankrupt is beneficially entitled as
tenant in tail in the same manner as the bankrupt could deal
with it if he
were not a bankrupt;
(i) obtain such advice or assistance as he considers desirable relating to the
administration of the estate or to the conduct or affairs
of the bankrupt;
(j) bring, institute or defend any action or other legal proceeding relating
to the administration of the estate; and
(k) execute powers of attorney, deeds or other instruments for the purpose of
carrying the provisions of this Act into effect.
(2) Paragraph (a) of the last preceding sub-section does not authorize the
trustee to sell by private contract any property having
a value exceeding Ten
thousand dollars.
(3) Subject to this Act, the trustee may use his own discretion in the
administration of the estate.
(4) The trustee may at any time apply to the Court for directions in respect of a matter arising in connexion with the administration of the estate."
Powers exercisable by trustee with permission -
"135. (1) The trustee may, with the permission of the creditors granted by
resolution passed at a general meeting or of the committee
of inspection or
with the leave of the Court, do all or any of the following things -
(a) sell, by private contract, any property of the bankrupt having a value
exceeding Ten thousand dollars;
(b) accept, without terms or conditions, or subject to terms and conditions, a
sum of money payable at a future time as the consideration
or part of the
consideration for the sale of any property of the bankrupt;
(c) lease any property of the bankrupt;
(d) mortgage or charge all or any part of the property of the bankrupt for the
purpose of raising money for the payment of the debts
provable in the
bankruptcy;
(e) refer any dispute to arbitration;
(f) make a compromise in respect of any debt exceeding Ten thousand dollars
claimed to be due to the bankrupt, or any claim exceeding
Ten thousand dollars
by the bankrupt;
(g) make a compromise with a creditor or a person claiming to be a creditor in
respect of a debt provable, or claimed to be provable,
in the bankruptcy and
claimed to exceed Ten thousand dollars;
(h) make a compromise in respect of any claim exceeding Ten thousand dollars
arising out of the administration of the estate of the
bankrupt, whether the
claim is made by or against the trustee;
(i) divide amongst the creditors, in its existing form and according to its
estimated value, property that, by reason of its peculiar
nature or other
special circumstances, cannot readily or advantageously be sold;
(j) make such allowance out of the estate as he thinks just to the bankrupt,
the spouse of the bankrupt or the family of the bankrupt;
and
(k) employ the bankrupt himself -
(i) to superintend the management of his property or of part of his property;
(ii) to carry on his trade or business for the benefit of his creditors; or
(iii) to aid in any other respect in administering his property,
and make such allowance out of the estate to the bankrupt in consideration of
his services as the trustee thinks reasonable.
(2) An allowance made to the bankrupt in pursuance of paragraph (k) of the
last preceding sub-section may be reduced by the Court
upon the application of
an interested person.
(3) Permission or leave given for the purposes of sub-section (1.) of this
section shall not be general permission or leave to do
all or any of the
things referred to in that sub-section, but shall be permission or leave to do
only the particular things for which
permission or leave is sought in a
specified case.
(4) The failure by a trustee to obtain the permission or leave required by
sub-section (1.) trustee does not affect the validity of
the transaction if -
(a) the transaction was for valuable consideration; and
(b) the person with whom it took place acted in good faith and without notice
of the failure to obtain the permission or leave.
. . . . "
In the Act, Part VIII headed "Trustees" there appears (with marginal note
opposite s.161) "Trustee may act in official name":-
"161. (1) The trustee of the estate of a bankrupt may sue and be sued by the
prescribed official name and may, by that name, hold,
dispose of or acquire
property of every description, make contracts, enter into engagements binding
on the trustee and his successors
in office and do all other acts and things
necessary or expedient to be done in the execution of his office.
(2) For the purposes of the last preceding sub-section, the prescribed
official name is "The Trustee (or Trustees) of the Property
of (name of
bankrupt), a Bankrupt".
178. If the bankrupt, a creditor or any other person is affected by an act,
omission or decision of the trustee, he may apply to the
Court, and the Court
may make such order in the matter as it thinks just and equitable.
179. (1) The Court may, on the application of the Registrar, 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.
(2) The Registrar or a creditor may at any time require a trustee to answer an
inquiry in relation to the bankrupt's estate or affairs.
(3) The Registrar or a creditor may apply to the Court to examine a trustee or any other person in relation to the bankruptcy."
As to the claim for damages, there is an initial question whether the sections of the Act to which Mr. Balhorn has referred in his application of 19 June 1981, viz. ss.176(2), 178 and 179, 133 and 134(h) and (j) of the Act and in his application of 30 December 1981, viz. ss.18, 19, 133, 134, 135, 161, 178, 179, would allow him a right to sue for damages. Compensation may, perhaps, be recoverable by recourse to s.179(1); and s.30(1) gives a wide jurisdiction.
Before amended by Act No. 12 of 1980, Section 19 was, I suggest, primarily concerned with the duty an Official Receiver owed to creditors or the community. Section 18A and s.19A were the subject of the Bankruptcy Amendment Act No. 12 of 1980. Section 18A does accept that the Commonwealth will be liable to indemnify the Official Trustee against any personal liability for (relevant) acts done or omitted to be done; and s.19A provides for an indemnity by the Commonwealth for persons mentioned including (sub-s.(3)) a Registrar, Deputy Registrar, an Official Receiver or person performing his functions for acts done negligently or negligently omitted in the course of performing duties under the Act. Section 18A came into force by proclamation on 1 February 1981 Section 19A commenced on 8 April 1980. I refer to ss.18A and 19A because Mr. Balhorn, in his submissions, made a comment concerning their subject matter. The sections provide a source of payment rather than introducing a concept of liability not hitherto available. Mr. Balhorn did not specify s.30; but I refer to it later.
A disclaimer of onerous property purporting to be pursuant to s.133 of the Act, yet without justification, may cause loss to the bankrupt in determining his rights thereto. No disclaimer has been referred to in evidence. The powers of the Trustee to deal with property referred to in s.134 presumably would also carry or imply a duty. Section 161 refers to the liability of the trustee to be sued and hold property by the prescribed official name therein referred to. Some of the wording of paragraph 2 of the "NOTICE OF AMENDMENT" was, I gather, derived from s.176(2); but that section presupposes that there has been an application to the Court by the Registrar in Bankruptcy. Further, it appears that the Registrar in Bankruptcy who decided to make such an application may have done so because of what had been disclosed by the trustee, referred to in s.175. As the Registrar in Bankruptcy pointed out, that section did not apply in relation to a trustee who is an official receiver (s.175(7)). However, the words "for any other reason" in the present s.176 enlarge the Registrar in Bankruptcy's discretion. Maybe this insertion was prompted by the Alafaci case (see later). Presumably a Court acting under s.178 would have powers as wide as a Court acting under s.176(2). Section 179 is concerned with the control of a trustee by the Court. It does not itself in terms provide for an action for damages against a trustee. Sections 178 and 179 of the Act were, in a somewhat different form, to be found in the Bankruptcy Act 1924-1933 ss. 148 and 149. The latter was referred to by Lukin J. in Re Hill and Ellis; ex parte Law; Armstrong and Sherlock (Respondents) 13 A.B.C. 57. His Honour described that matter as a motion. . . .
". . . . to recover sums of money lost to the business. . . . by the alleged negligence of the said Armstrong and Sherlock. . . . . "
He made an order (page 69) for a sum of money referred to as a loss to be paid into Court. It does not appear that that sum was damages, but rather reimbursement.
Accordingly, it seems appropriate to consider whether Mr. Balhorn has provided evidence that, by reference to the sections of the Act quoted or to fraud, entitles him to a rescission of the order dismissing his application of 19 June 1981 (para. 1) (or that application read as amended or amplified), or of the order to the Registrar in Bankruptcy to deliver up to the Official Trustee in Bankruptcy the documents marked for identification as "MFI 2". I have considered authorities including the following - cf. In re A Debtor; Ex parte The Debtor v. Dodwell (the Trustee)(1949) Ch. 236 at e.g. 240: Leon v. York-O-Matic Ltd. and Others (1966) 1 W.L.R. 1450 at p.1454: Re Alafaci; Registrar in Bankruptcy v. Hardwick 9 ALR 262). See generally Williams and Muir Hunter, "The Law and Practice in Bankruptcy" 19th Ed. at p.426: "Jacobs' Law of Trusts in Australia" 4th Ed. at p.431. In Re Hawkesford 10 A.B.C. 26 I note that Lukin J. apparently by reference to s.25 of the Bankruptcy Act 1924-1933 (equivalent to the later s.30), upon the basis he referred to at p.36, did assess damages. I have treated s.30 as being available to Mr. Balhorn although not specifically mentioned by him.
On the material presented by Mr. Balhorn, I am not satisfied there has been any dereliction of duty (including misfeasance and nonfeasance), or wilful default or conspiracy to defraud by the persons mentioned in para. 2 of the NOTICE OF AMENDMENT nor am I satisfied that there is any entitlement to have rescinded or set aside Orders Nos. 1 and 2 of 21 October 1981. Nor am I satisfied that there has been any fraudulent conduct by any of the said persons. I am further satisfied that the Official Receiver was and the Official Trustee is entitled and obliged to take possession of the title deeds and for the reasons advanced in the Reasons for Decision of 21 October 1981.
In his NOTICE OF AMENDMENT, para. 3, Mr. Balhorn sought that there be offered back "....stolen properties.... about half of the area of ....TOPLAYER FARM...." I am not satisfied that any of his properties were stolen or that any right to such an order has been shown; or that such an order could be implemented anyway.
The reference to sections of the Bankruptcy Act are to them as they appeared before Act No. 12 of 1980, but my view would be the same if one considered the sections in their (later) amended form. The affidavit of Brian Roy Burzacott, apart from referring to earlier dispositions of property, provides further reason for rejecting the claims of Mr. Balhorn including allegations of fraud.
The agreed arrangements as to notification of Mr. Balhorn of the hearing of 12 October 1981 were not carried out. I therefore consider that the appropriate order in relation to costs of that day's hearing should be that each party pay its own costs and costs reserved up to that date. Since portion of two day's hearing before me was taken up with consideration of the reason for Mr. Balhorn's non-appearance on 12 October 1981, I consider that the order as to costs should be that each party pay its own costs of the first day's hearing (1 March 1982) and that Mr. Balhorn should pay the costs of the hearing before me on 5 March 1982.
There is power to reserve any question concerning a matter for the consideration of the Court. See Federal Court of Australia Act 1976 s.26(1). Under this section, leaving aside questions of terminology, there would be power to do what Mr. Balhorn seeks in his application of 25 February 1982. No grounds for so doing have been made out. I refuse this application.
In the result, the orders I make are as follows -1. The applications presently before me filed on 30 December 1981 which include the "NOTICE OF AMENDMENT" are dismissed.
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