Re Peter Belehris v Kevin Michael Pipkin [1985] FCA 20 (11 February 1985)

FEDERAL COURT OF AUSTRALIA

Re: PETER BELEHRIS
And: KEVIN MICHAEL PIPKIN
No. S.A. 578 of 1982
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA
Fisher J.

CATCHWORDS

Bankruptcy - Application for enquiry into conduct of trustee - whether administration of estate was unduly complicated and delayed by actions of trustee.

Bankruptcy Act 1966 - ss.179(1), 162(5)

HEARING

ADELAIDE
11:2:1985

ORDER

1. The application be dismissed.

2. The applicant pay the costs of the Trustee.

DECISION

This is an application by Peter Belehris ("the applicant") seeking certain orders against Kevin Michael Pipkin ("the trustee"), the registered trustee of the applicant's bankrupt estate. The application was taken out on 14 May 1984 by solicitors who were at the time acting on behalf of the applicant. Two of the orders sought were abandoned on instructions at the hearing by counsel who was then appearing for the applicant and who shortly thereafter sought to withdraw from the proceedings, his instructions having been terminated. Those orders were as follows, namely that the remuneration of the trustee which had been fixed by the creditors at $6,000 be disallowed or reduced and the excess repaid to the applicant and that the trustee be ordered to pay damages to the applicant for losses sustained by him as a consequence of the slow or ineffective administration of the estate. The applicant complained that the administration was unduly complicated and delayed by the actions of the trustee.

2. A further order sought was that the conduct of the trustee throughout the administration be reviewed and an enquiry be ordered into such conduct. With the consent of all parties the hearing proceeded on the basis that I should determine whether I should hold an enquiry into the conduct of the trustee pursuant to s.179(1) of the Bankruptcy Act 1966 ("the Act").

3. As previously mentioned, counsel for the applicant informed me at the commencement of the proceedings that his instructions to act during the hearing had been terminated as had the instructions of the applicant's solicitors. The applicant thereafter conducted his own case but unfortunately he required at almost all times the services of an interpreter as his knowledge of the English language was extremely limited. The hearing was in consequence unduly protracted and frequently the evidence adduced by the applicant had very little relevance to the issue before the Court. The applicant expressed himself throughout as being bitterly resentful of the trustee and the manner of his administration of the estate. Undoubtedly his resentment was prompted by the fact that he had little if any understanding of the duties which the trustee was required to perform or the requirements of the Act and the general law. He was particularly mystified by the complexities which arose in the administration of his estate by virtue of the fact that he and his wife were conducting a fruit growing business in partnership. In these circumstances the task of any trustee is made doubly difficult, requiring more patience and understanding than normally would be required. He was dealing with a bankrupt who had little chance of comprehending the complexities and intricacies of the Act which difficulties were compounded by his inadequate understanding of the English language.

4. In general, I find the evidence of the applicant unhelpful and unreliable. It was not that he was attempting deliberately to mislead the Court but his feelings of injustice and his lack of understanding were such that he was incapable of presenting objective evidence upon which I can, with any safety or confidence, rely to make any order. He was moreover given every opportunity to tell his story without the normal restrictions of relevance and admissability. Counsel for the trustee co-operated in this regard, merely making at the outset a formal objection and allowing the evidence to be taken subject to such objection. The circumstances were such that it was impossible to conduct the hearing otherwise, and any other course would have aggravated the applicant's resentment and sense of injustice. The difficult task remains of attempting to ascertain what relevant complaints, if any, the applicant has made out. He gave evidence on the topics which I now enumerate.

5. The sequestration order was made on 6 September 1982. Shortly thereafter the applicant ascertained from the trustee the amount he owed to the petitioning creditor. His complaint was that the trustee did not use the amount of cash he gave him on that day and monies available for collection in Melbourne and from Angoves Winery to pay the petitioning creditor and thereby terminate the bankruptcy. The administration in bankruptcy of his estate was, he said, in consequence needlessly delayed and his fruit growing operations prejudiced.

6. There was also trouble concerning the repossession by Esanda Ltd of a David Brown tractor which, it appeared, was subject to a charge in favour of that company securing an outstanding amount of $4,800. The applicant incorrectly stated that he did not owe any money on the vehicle and that the trustee had arranged for it to be repossessed. Neither of these contentions was established. After being held by Esanda for approximately a month, that company was paid out and the vehicle returned.

7. Misunderstandings also occurred in relation to a Volvo truck which was registered in the name of the applicant. The trustee required that it be delivered to him notwithstanding the fact that the applicant alleged that he told the trustee that it was owned by the partnership comprising himself and his wife. The applicant instructed a Mr. Niarchos to act as his solicitor. After agreement was reached that all proceeds of the partnership business would be paid into an account in the name of the trustee and Mrs. Belehris, the applicant was permitted to take the truck for use in the partnership business. The vehicle was held for some 4 days. It is to be noted that the vehicle was registered in the applicant's name and that the existence of the partnership was not disclosed in the applicant's statement of affairs.

8. Subsequently a receiver was appointed in March 1983 to the partnership business and this prompted further misunderstandings and complaints. The applicant resented the intrusion into his affairs of the partnership receiver and the restrictions that this imposed on the partnership activities. He was also concerned that the fact of bankruptcy and the appointment of the trustee were registered on the certificates of title to the Renmark property and not removed immediately he obtained his discharge which occurred of l6 April 1984.

9. The applicant called a number of witnesses to support his case. However their evidence, of which I have no criticism did not assist him to establish his complaints.

10. The trustee also voluntarily gave evidence notwithstanding the fact that his counsel contended, with some justification, that the applicant had not made out a case. He was asked questions by the applicant and gave acceptable answers and explanations in relation to the complaints. From his evidence, the exhibits and the papers on the court file findings can be made of the circumstances in which the complaints occurred. The sequestration order was made on 6 September 1982, the petitioning creditor being Goulburn Valley Containers Pty. Ltd. The trustee received a statement of affairs on 8 October 1982, supported by an affidavit sworn by the applicant on 6 October 1982. This statement of affairs disclosed assets which were said to total $294,150 and liabilities of $52,210. It did not disclose that the applicant and his wife were carrying on business in partnership or that most of the assets were either assets of that business or held in the joint names of the applicant and his wife. The same may be said of the liabilities most of which were found to be either joint or partnership liabilities and some of which were secured. In fact it ultimately transpired that the only liability for which the applicant was solely liable was a debt provisionally due to the Commissioner of Taxation. The debt was described as "provisionally" due because the applicant had not filed an income tax return.

11. The first complaint, in point of time, related to the seizure by Esanda Ltd. under their security of the David Brown tractor. The applicant contended that this seizure had been prompted by the trustee. However this allegation was denied by the trustee who had been alerted to the security held over this vehicle by the statement of affairs. As the tractor was subject to the claim of a secured creditor he had no reason or right to take any action. I do not accept the applicant's complaint or his allegation that the trustee prompted or played any significant part in the repossession. He was in no way responsible for any inconvenience or loss that the applicant suffered in the conduct of the business whilst it was without a tractor.

12. The applicant also criticised the conduct of the trustee in taking possession of a Volvo truck. This truck was on his insistence brought by the applicant to Adelaide on a Wednesday. It was not disputed that it was registered in the name of the applicant. Shortly thereafter the trustee was advised by a solicitor (Mr. Niarchos) that the truck was an asset of the partnership between the applicant and his wife. The trustee said that this was the first occasion upon which he became aware of the existence of the partnership and I accept his evidence in this regard. The truck was released to the applicant on the following Monday. In my opinion the applicant's complaints in respect of this incident are without foundation and should be dismissed.

13. In consequence of the disclosure of the existence of a partnership and that virtually all of the assets which the applicant enumerated in his statement of affairs were partnership or joint assets, the trustee took proceedings for the appointment of a receiver of the partnership. This action was taken after advice from his solicitor. However the action having been commenced, no steps were taken to press for the appointment as negotiations took place with Mr. Belehris' solicitor concerning payment of the bulk of the creditors, who were in truth creditors of the partnership. To this end a bank account was established in the named of Mrs. Belehris and the trustee into which all partnership receipts were to be paid. The trustee said, and I accept, that the proceedings were not resumed and a receiver appointed by the Supreme Court until Mrs. Belehris refused to borrow money on the jointly owned land to pay the partnership liabilities. A receiver was then appointed who thereafter dealt with the payment of partnership creditors. It was not until the month of September 1983 that the trustee was informed that all partnership creditors had been paid in full.

14. In November 1983 the trustee advised the applicant that if approximately $4,800 was paid by way of additional contributions to the credit of his bankrupt estate, he could seek either an annulment or a discharge from bankruptcy, 100 cents in the dollar and all expenses of bankruptcy having been paid. It is proper to note that contributions of $3,600 on 24 September 1982, $6,300 on 9 December 1982 had at this stage already been made by or on behalf of the applicant to his trustee. The only outstanding creditor at the time was the Commissioner of Taxation, for $8,303, or thereabouts, being an income tax liability of the applicant. An amount of $4,852.65 was released from the account in the name of Mrs. Belehris and the trustee to Mrs. Belehris who drew a cheque in favour of the trustee. However payment of the latter cheque was delayed by Mrs. Belehris, though subsequently released for payment.

15. It was in these circumstances that the applicant complains that the trustee unduly delayed his discharge from bankruptcy. He signed his application for a discharge on 1 December 1983 although this was not forwarded to the Court by his accountant until 23 December 1983. This application was, after all notices to creditors and other procedural steps completed, set for hearing on 27 February 1984. On that day the applicant disputed certain of the contents of the trustee's report filed on 16 February 1984. He then, in accordance with directions given by the Court, filed an affidavit specifying the disputed portions of the report. This application came before the Court again on 5 March 1984 on which date an order was made that the applicant be discharged. The operation of that order was suspended until the payment to the trustee of $300 or until the 16 April 1984 whichever was the later.

16. I can not see that the trustee can be said to be in any way to blame for any delay in the obtaining of a discharge by the applicant, if in fact there was any delay. In my opinion there is no substance in any complaint which the applicant may have in this regard.

17. As previously stated, the applicant did not pursue his complaint concerning the amount of the remuneration of the trustee. This amount was, in two instalments, approved by the creditors, and the Court has under s.162(5) of the Act no jurisdiction to intervene or supervise. There is no basis upon which I can or should review the trustee's remuneration.

18. In the ultimate I find that the applicant has not made out any of his complaints and there are no grounds upon which I would direct an enquiry under s.179(1) of the Act. The application is dismissed with costs of the trustee to be taxed and paid by the applicant.