Bagshaw v Scott [2002] FCAFC 362 (6 December 2002)

Last Updated: 6 December 2002

FEDERAL COURT OF AUSTRALIA

Bagshaw v Scott [2002] FCAFC 362

BANKRUPTCY - Appeal by bankrupts concerning the decision of the primary judge that property which vested in the bankrupts' trustees was charged to secure borrowing made by bankrupts - Appeal dismissed as incompetent under O 52 r 18 Federal Court Rules.

Bankruptcy Act 1966 (Cth) ss 5(1), 58(1), 58(2), 149, 149B

Federal Court Rules O 52 rr14(2), 18

McMahon v Livingstone [2001] NSWSC 55 referred to

Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124 discussed and applied

Boaler v Power [1910] 2 KB 229 referred to and discussed

W R Henry & Son v Hodge [1963] VR 111 referred to

Motion v Moojen (1872) LR 14 Eq 202 referred to

Rochfort v Battersby (1849) 2 HLC 388; 9 ER 1139 referred to

Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210 referred to

McCallum v Commissioner of Taxation (1997) 75 FCR 458 at 474 discussed

Guirguis v Guirguis (1997) 137 FLR 130 discussed

LEITH GORDON BAGSHAW & ANOR v JOHN JOSEPH SCOTT & ORS

N 244 of 2002

MANSFIELD, CONTI & ALLSOP JJ

6 DECEMBER 2002

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 244 of 2002

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	LEITH GORDON BAGSHAW & JUDITH HAMPTON BAGSHAW APPELLANTS
AND:	JOHN JOSEPH SCOTT FIRST RESPONDENT PHILLIP GREGORY JEFFERSON & JAY ARSCOTT STEVENSON AS TRUSTEES OF THE BANKRUPT ESTATE OF LEITH GORDON BAGSHAW SECOND RESPONDENTS
JUDGE:	MANSFIELD, CONTI & ALLSOP JJ
DATE OF ORDER:	6 DECEMBER 2002
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal of Leith Gordon Bagshaw and Judith Hampton Bagshaw be dismissed as incompetent.

2. The appellants pay the costs of the respondent John Joseph Scott.

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

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 244 of 2002

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN:	LEITH GORDON BAGSHAW & JUDITH HAMPTON BAGSHAW APPELLANTS
AND:	JOHN JOSEPH SCOTT FIRST RESPONDENT PHILLIP GREGORY JEFFERSON & JAY ARSCOTT STEVENSON AS TRUSTEES OF THE BANKRUPT ESTATE OF LEITH GORDON BAGSHAW SECOND RESPONDENTS

JUDGE:	MANSFIELD, CONTI & ALLSOP JJ
DATE:	6 DECEMBER 2002
PLACE:	SYDNEY

REASONS FOR JUDGMENT

THE COURT:

1 Before the Court are an amended notice of appeal filed by Leith Gordon Bagshaw and his wife, Judith Hampton Bagshaw, and two notices of motion dated 25 June 2002 and 21 August 2002, filed on 2 July 2002 and 21 August 2002, respectively, by John Joseph Scott, a respondent to the amended notice of appeal. The motions of Mr Scott seek to have the appeal dismissed as incompetent under O 52 r 18 of the Federal Court rules. Mr Scott has sometimes appeared on process as the first respondent and sometimes as the second respondent. To avoid confusion we will refer to him as Mr Scott. The other respondents to the appeal are the bankruptcy trustees of Mr Bagshaw. They were the appellants in a separate appeal to which Mr Scott was a respondent, which appeal has been discontinued.

2 The short point raised by the notices of motion is whether either Mr or Mrs Bagshaw has any capacity or standing to bring the appeal in the light of the subject matter of the appeal and in the light of the fact that Mrs Bagshaw is, and Mr Bagshaw has been, until recently, bankrupt.

3 The matter has a somewhat tangled history. It is unnecessary to deal with all aspects of that history. We will refer only to matters which are essential.

4 The background events involve the affairs of various lenders or depositors who apparently entrusted a Mr Livingstone with funds. He appears to have availed himself of the use of a bank account in the names of Mr Scott and a Mr Slattery. Mr Livingstone appears to have dealt with borrowers, such as the Bagshaws, who were advanced funds. The issues before the primary judge included whether Mr Scott was the lender, whether there was a charge in favour of Mr Scott in respect of the moneys advanced and the capacity in which Mr Livingstone acted when dealing with the Bagshaws. These matters were eventually resolved by the primary judge.

5 Mr Bagshaw was made bankrupt by an order of this Court in 1993.

6 In 1994 Mr Scott commenced proceedings against Mr Bagshaw, Mrs Bagshaw and the trustees of Mr Bagshaw's estate. The nature of the claims was that Mr Scott was entitled to a declaration that certain land was charged in favour of Mr Scott with repayment of moneys borrowed by Mr and Mr Bagshaw in 1985. The orders sought in the further amended application filed on 16 August 1995 were in the following terms:

1. A declaration that each of the properties described in schedule 2 to the amended statement of claim filed in these proceedings is charged in favour of the applicant with the payment of all those monies due under the loan agreement described in the amended statement of claim filed in these proceedings.

2. An order that this Honourable Court appoint a receiver to each of the properties described in schedule 2 to the amended statement of claim to cause the said properties to be sold and after payment of all costs and expenses of the receivership to pay to the applicant all monies outstanding under the said loan agreement and thereafter to pay the balance to the second and third respondents according to their entitlements.

3. Costs.

4. Further or other orders.

5. An order that the second respondent pay to the applicant the sum of $2,389,890.67 with interest thereon at the rate of 21% from 8 August 1995 to the date of judgment.

7 Mrs Bagshaw was the second respondent against whom a money judgment was claimed in order 5, above.

8 Schedule 2 to the amended statement of claim filed on 9 December 1994 contained reference to three parcels of land: land at Terrigal, New South Wales, the registered proprietors of which were Mr and Mrs Bagshaw, as joint tenants; land at Mildura, Victoria, the registered proprietors of which were Mr and Mrs Bagshaw, as joint tenants; and land at Para Wirra, South Australia, the registered proprietor of which was Mr Bagshaw. By the time the matter came on for hearing before the primary judge, the Para Wirra land had been sold and the charge was asserted over the proceeds of sale of that land.

9 In the amended statement of claim Mr Scott claimed that, pursuant to agreement, Mr and Mrs Bagshaw agreed to borrow, and did borrow, sums of money secured by charges over the land in question. It was alleged that the sums lent had not been repaid and that Mr Scott was entitled to the appointment of a receiver to each property for the sale thereof.

10 It can be immediately seen that, insofar as Mr Bagshaw was concerned, the claim was directed to assets (land) which plainly vested in his trustees in bankruptcy under subs 58(1) of the Bankruptcy Act 1966 (Cth) (the Act). Subsection 58(2) of the Act meant that his ownership interest in each parcel of land (each being Torrens title) vested in equity in the trustees, but in law remained in Mr Bagshaw, until transmission of title, under the relevant land title legislation, took effect. The trustees became registered proprietors of the Mildura land on 6 March 1996 and of the Terrigal land on 22 October 2002.

11 On 21 September 1998, the primary judge dismissed the application. Mr Scott appealed. On 21 May 1999, the Full Court allowed the appeal. The orders of the primary judge were set aside and the matter was remitted to the primary judge "to determine such issues between the parties as may be necessary, in the light of the reasons of the Full Court". A further hearing took place on 29 November 2000.

12 While the matter was reserved, on 21 March 2001 Mrs Bagshaw was made bankrupt by an order of this Court. No application was made to join the trustee of her estate to the proceedings before the primary judge.

13 Also, on 19 February 2001 Windeyer J, in the Equity Division of the Supreme Court of New South Wales, delivered judgment in McMahon v Livingstone [2001] NSWSC 55 in which one of the former clients of Mr Livingstone sued in respect of moneys advanced. The proceedings dealt with the relationship between Mr Livingstone and Mr Scott to a degree relevant to Mr Scott's proceedings against the Bagshaws. Mr Livingstone had taken money from depositors, placed it into an account in the name of Mr Scott and Mr Slattery and thereafter had dealt with it. One of the ways the funds were dealt with by Mr Livingstone was the lending of money to people such as the Bagshaws, using Mr Scott's name.

14 In August 2001 Mr Bagshaw, by notice of motion, sought to re-open his case before the primary judge by tendering the reasons for judgment of Windeyer J, the evidence of Mr Scott in the matter of McMahon v Livingstone, supra, and the evidence of Mr Livingstone in another case. He also sought to re-open his cross-examination of Mr Scott and Mr Livingstone. The primary judge dismissed this application on 7 November 2001.

15 On 12 April 2002 the primary judge made orders, reasons for which were given on 20 March 2002. The orders of 12 April 2002 were in the following terms:

THE COURT DECLARES THAT:

1. Each of the properties described in the schedule to these orders is charged in favour of the applicant with repayment of so much of the monies lent to the first respondent as shall be ascertained by inquiry to be still owing.

THE COURT ORDERS THAT:

2. There be a taking of accounts to ascertain the sum secured by the charges referred to in Order 1.

3. Upon completion of the taking of accounts referred to in Order 2 and the ascertainment of the sum due to the applicant and secured by the said charges, Ronald John Dean-Willcocks, official liquidator, and Nicholas Craig Malanos, registered liquidator, each of Star Dean-Willcocks, level 1, 32 Martin Place, Sydney be appointed as joint receivers of each of the Terrigal and Mildura properties referred to in the schedule to these orders and they be authorised to sell the said properties, (subject to compliance with the statutory conditions to the exercise of a power of sale regarding the giving of notice prior to the exercise of the power of sale) and to account to the applicant from the proceeds of sale of those properties for the sum ascertained to be due to the applicant and secured by the charges and that all such proceeds of sale otherwise be disbursed to those entitled to receive such sum.

4. Further, upon completion for the taking of the accounts referred to in Order 2 and the ascertainment of the sum due to the applicant and secured by the said charges the proceeds of sale of the Parra [sic] Wirra property described in paragraph 3 of the schedule be paid by the third respondents to the applicant in satisfaction of the said charge or such lesser amount of the net proceeds as may be necessary to satisfy the charge and if the whole of the charge as ascertained by [sic: be] satisfied from the said proceeds of sale of the Parra [sic] Wirra land then the appointment of the receiver in paragraph 3 hereof is dispensed with.

5. The respondents pay the applicant's costs of these proceedings but this order shall not affect or disturb any other costs orders already made in these proceedings.

SCHEDULE

1. Property comprised in Certificate of Title volume 15281 folio 226 known as 1/39 Beaufort Road Terrigal

2. Property comprised in Certificate of Title volume 8366 folio 640 known as 1110-1112 Benetook Avenue Mildura.

3. The net proceeds of sale of the property contained in the Certificates of Title volume 2505 folio 116 and volume 4099 folio 253 and situated at Para Wirra South Australia, presently held in an 11 am Treasury Account in name of "Franco Camatta as trustee for the third respondents as trustee of the bankrupt Estate of Leigh [sic] Gordon Bagshaw" at Bendigo Bank Limited.

[2003] FCAFC 210; 16 On 28 March 2002, a notice of appeal was filed by Mr Bagshaw. On 9 April 2002, a notice of appeal was filed by Mr Bagshaw's trustees. No orders had yet been made by the primary judge at the time of the filing of these notices of appeal. On 24 May 2002, Mr Bagshaw amended his notice of appeal. One aspect of the amendment was that Mrs Bagshaw was added to the appeal. Mrs Bagshaw's trustee has not authorised her or anyone on her behalf to lodge an appeal in respect of the orders made by the primary judge on 12 April 2002.

17 On 14 April 2002, Mr Bagshaw was discharged from his bankruptcy by operation of s 149 of the Act. (There had been an earlier objection to his discharge under s 149B of the Act.)

18 On 24 September 2002, Jacobson J dealt with the procedural irregularity of Mrs Bagshaw being joined out of time to the appeal. His Honour exercised a discretion under O 52 r 14(2) "to validate ex post facto the joinder of Mrs Bagshaw as a party to the appeal." His Honour left the motions filed on 2 July 2002 and 21 August 2002 concerning the competency of the appeal by Mr and Mrs Bagshaw to this Court.

19 The amended notice of appeal identifies the following matters under the heading "Grounds":

His Honour erred in not admitting into evidence the transcript of the evidence of Kenneth Robert Livingstone given to the Supreme Court of New South Wales in the matter of Hunt v Barlow (2977 of 1997).

His Honour erred in not admitting into evidence the transcript of the evidence of John Joseph Scott in the matter of McMahon v Scott (2000/1998)

His Honour erred in finding that John Joseph Scott was nominated as the lender to Leith Gordon Bagshaw.

The Appellants support the Appeal by the Trustees of Leith Gordon Bagshaw.

20 The declaration appealed from (see [15] above) relates to the property that became vested in Mr and Mrs Bagshaw's trustees on the bankruptcy of each. The orders appealed from concern the taking of accounts in which there will be calculated the indebtedness, if any, of the Bagshaws to Mr Scott. The calculation of those amounts serves not merely to quantify the in personam liability (if any) of the Bagshaws as chargors, but also to fix the amount to which the chargee is entitled out of the proceeds of sale of the property when sold by the receivers appointed by the orders. Thus, at least the declaration, but also, in one sense, all the orders relates and relate to the property that became vested in Mr and Mrs Bagshaw's trustees on the bankruptcy of each.

21 Since they were each made bankrupt, neither Mr or Mrs Bagshaw has had any equitable interest in the land in question. If there were no charge over the land in question, the trustees of each estate were entitled to realise the land for the benefit of the creditors of each estate generally, including, if he be a creditor, Mr Scott. Whether or not Mr Scott was an unpaid creditor of each bankrupt pursuant to moneys lent and not repaid was also a matter for each trustee to determine in the conduct of the administration of each estate, subject to the taking of accounts ordered by the primary judge.

22 Mr Bagshaw, who appeared for himself and who, with leave, appeared for Mrs Bagshaw (who was in Court), asserted on a number of occasions that he and Mrs Bagshaw had repaid all borrowed moneys. That may be. If it be correct, that will be a matter determined in the taking of accounts (if that proceeds) and, subject to that, is a matter for their trustees to determine in the administration of the respective bankruptcies.

23 There was evidence that the trustees of Mr Bagshaw's estate and Mr Scott have settled the appeal. A notice of discontinuance of the trustees' appeal was filed on 5 November 2002. It may be that that settlement has dealt with the question as to whether the taking of accounts needs to take place. The trustee of Mrs Bagshaw's estate knows of this appeal and has not taken any step to prosecute any appeal or otherwise participate. Thus, there is no appeal from the orders of the primary judge by the only parties who have any beneficial interest in the land affected by the orders under appeal and by the parties charged with the ultimate responsibility of administering the estates of the bankrupts.

24 The only "interest" which the Bagshaws have in the proceedings is the contingency that, should there be no charge on the land and should they have an opportunity to be able to show that they have repaid all moneys borrowed, they may receive some surplus distribution from the remainder of their estate, after all creditors are paid.

25 In Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124 the High Court dealt with the entitlement of a bankrupt to appeal against a judgment creating or evidencing a provable debt. A majority of the Full Court of the Federal Court (Gummow and Whitlam JJ ) held that the right to appeal fell within the phrase "personal property of every description" within the meaning of "property" in subs 5(1) of the Act, and so for the purposes of subs 58(1) of the Act. In the High Court, Dawson and Toohey JJ were of the same view: Cummings, supra at 146. Brennan CJ, Gaudron J and McHugh J disagreed with the proposition that the right to appeal in respect of the judgment was "property" for the purposes of subs 58(1).

26 Important to that disagreement was the identification of the subject matter of the appeal. Their Honours drew a clear distinction between an appeal relating to property that became vested in the trustee and an appeal relating to a claim by the bankrupt for money or property that would, on recovery, vest in the trustee, on the one hand, and an appeal against a money judgment entered in an action against the bankrupt, on the other hand: see Cummings, supra at 134. The distinction was relevant in the analysis as to whether the right of appeal of the bankrupt vested in the trustee as property envisaged by subs 58(1). Their Honours were of the view that a right to appeal against a judgment merely creating a liability in the bankrupt was not "property", nor did it answer the description of property divisible among creditors defined by par 116(1)(b): Cummings, supra at 133.

27 However, their Honours seemed to accept that rights of appeal of the former kind did vest in the trustee. In this context their Honours examined the Court of Appeal decision of Boaler v Power [1910] 2 KB 229 which had been used by Adam J in W R Henry & Son v Hodge [1963] VR 111 at 112 as authority for a general proposition that any right to appeal a judgment was property divested from the bankrupt and vested in the trustee. In Boaler v Power, supra at 252-53, Farwell LJ (with whom Kennedy LJ agreed) said:

It is open to the Court in Bankruptcy, if it thinks fit, to allow the debtor to contest in the Bankruptcy Court the validity of the petitioning creditor's judgment on the ground of fraud, collusion, or for any other sufficient reason: In re Flatau (1888) 22 QBD 83. But this is the only way in which the bankrupt can contest it: the adjudication, while it stands, is conclusively binding on him: he cannot contest it in any other Court on the ground of fraud or on any other ground. The right to continue these three actions is a chose in action vested in the trustee, and the bankrupt has no locus standi: see Motion v Moojen (1872) LR 14 Eq 202; Rochfort v Battersby (1849) 2 HLC 388 [9 ER 1139]; Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210.

28 An examination of the cases referred to by Farwell LJ: Motion v Moojen (1872) LR 14 Eq 202, Rochfort v Battersby (1849) 2 HLC 388; 9 ER 1139, and Metropolitan Bank Ltd v Pooley (1885) 10 App Cas 210, reveals that none had been concerned with an appeal against a judgment in personam, simply creating a liability in the bankrupt. Their Honours examined these cases in the following way. Motion, supra, concerned a bankrupt who filed a bill of Chancery impugning an order approving a sale of part of the bankrupt's interest in a partnership. Rochfort, supra, involved a dispute between the mortgagees of certain property and the assignees in bankruptcy as to priority in respect of the mortgaged assets. Thus each of these two cases dealt with the right to bring proceedings which, if successful, would enhance the property which had formerly belonged to the bankrupt, but was then vested in the trustee. In Metropolitan Bank, supra, the bankrupt instituted proceedings claiming damages against a defendant who, the bankrupt claimed, had tortiously maintained the proceedings which led to his bankruptcy. The damages, if awarded, would have fallen into his estate. Boaler, supra, was itself a case in which the bankrupt was seeking to impeach judgments in actions brought to enforce proprietary rights which, if they existed, vested in the trustee. In this context their Honours said at 134:

If the postulated appeal relates to property that became vested in the trustee on the bankruptcy, or if the postulated appeal relates to a claim by the bankrupt for money or property that would be vested on recovery in the trustee, the right to appeal is vested in the trustee, as the cases cited by Farwell LJ illustrate. But it does not follow that a right to appeal against a money judgment entered in an action against a bankrupt is property of the bankrupt and, on that account, vested in the trustee.

[emphasis added]

29 After discussing the four cases to which we have just referred in the terms we have used, their Honours said the following, at 135-36:

None of the three cases cited in Boaler v Power related to litigation in which judgment has been sought or entered against a bankrupt. Boaler v Power itself was a case in which the bankrupt was seeking to impeach judgments in actions brought to enforce proprietary rights which, if they existed, were vested in the trustee. Neither Boaler v Power nor the cases cited establish the affirmative proposition that a right to appeal is property. They do establish the negative proposition that a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he has been divested on bankruptcy (see Rochfort v Battersby (1849) 2 HLC 388 at 406, 409 [9 ER 1139 at 1146, 1147] and Heath v Tang [1993] 1 WLR 1421; [1993] 4 All ER 694, referred to below). W R Henry & Son v Hodge was wrongly decided. If Boaler v Power were taken as authority for the proposition that a right to appeal in an action brought to enforce a liability of the defendant is property of the defendant, it too would be wrongly decided. But Boaler v Power is explicable as a case relating to proceedings brought by a bankrupt to protect or enforce rights in or to property vested in his trustee. But that is not the present case.

The appellants, believing that they had to escape from the proposition that the right to appeal in the present case was property, contended that that "property" was not vested in their trustee but was analogous to those rights of action which do not pass to a trustee on bankruptcy because they are personal to the bankrupt and do not affect the quantum of the bankrupt estate (Beckham v Drake (1849) 2 HLC 579 at 627 [9 ER 1213 at 1230]; Rose v Buckett [1901] 2 KB 449 at 454; Davies v English, Scottish & Australian Bank Ltd (1934) 7 ABC 210 at 214; Coffey v Bennett [1961] VR 264 at 266). As the right to appeal in this case was not "property" within the meaning of that term in s 58(1), the appellants' submissions miss the point.

[emphasis added]

30 It is unnecessary to discuss what might be seen to be the tension between what their Honours said at 134 (emphasised in the extract at [28] above) and at 135 (emphasised in the extract at [29] above). The former may be seen as approval of the proposition that, in the case of the rights to appeal there postulated, the right to appeal is vested (as property) in the trustee. The latter may be seen as a drawing back from the proposition that even such postulated rights to appeal are property. Even so, the passages at 135-36 make clear that Boaler v Power, supra, and the other cases referred to establish the negative proposition that a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he or she was divested on bankruptcy.

31 Their Honours went on to decide the case, reaching the same result as Dawson and Toohey JJ and the majority of the Full Court, but on the basis that so far as the appeal concerned a judgment which creates a provable debt, the bankrupt has no financial interest which would confer locus standi to appeal in his own name. Their Honours said at 137-38:

So far as a judgment entered in an action against a bankrupt creates or evidences a provable debt, we respectfully agree that the bankrupt has no financial interest which would confer locus standi to appeal in his own name against the judgment. That is because it is fundamental to the law of bankruptcy that the bankrupt is divested of both his interest in his property and liability for his provable debts (Heath v Tang [1993] 1 WLR 1421 at 1427; [1993] 4 All ER 694 at 701. It was not suggested in argument that, pursuant to s 153, the discharge of the appellants from bankruptcy would not release them from liability for the judgment debt, albeit there has been a finding of fraud. On that footing, the appellants have no financial interest in the judgment entered against them).

Of course, a money judgment entered against a bankrupt has the effect of increasing the amount of the debts provable in his estate. But it is immaterial that, if an appeal against the judgment were successful, there would or might be a surplus in the estate after the remaining creditors are paid. A bankrupt's contingent interest in a surplus does not give him an interest which would allow him to sue to enforce proprietary rights (Rochfort v Battersby (1849) 2 HLC 388 at 408, 409 [9 ER 1139 at 1147]) and, that being so, it cannot give him an interest to appeal to minimise liabilities.

32 In the light of their Honour's consideration of the authorities referred to earlier in their reasons (see [28] and [29] above) such a conclusion applies a fortiori to an appeal concerning the status of property vested in the trustee, as charged or not. To the extent that the appeal is from an order which directs the taking of accounts to assess the liability of the bankrupt to be satisfied out of the property the subject of the charge, the order bears some characteristics of relating to the property and some characteristics of creating a debt. Thus, this part of the orders of the primary judge is also covered by the reasoning in Cummings, supra.

33 In McCallum v Commissioner of Taxation (1997) 75 FCR 458 at 474, Lehane J (with whom Whitlam J agreed) in speaking of a right to challenge in the Administrative Appeals Tribunal (AAT) a decision of the Commissioner of Taxation to disallow an objection said:

The majority decision in Cummings makes it clear that the trustee in bankruptcy does not become entitled to a right of appeal which the bankrupt has, as property of the bankrupt. Nor does the Bankruptcy Act confer on the trustee a general, or any relevant special, agency for the bankrupt. The trustee was held to have the right, which (but for the Bankruptcy Act) was a right of the bankrupt only, to appeal against a judgment for debt because the appeal was a proceeding relating to the administration of the estate and para 134(1)(j) authorised the trustee to bring or institute it. Once that is seen, it is evident, in my view, that the way in which the Assessment Act and the Administration Act limit the rights of objection, review and appeal are not to be regarded as precluding the exercise of those rights by the trustee in bankruptcy of a bankrupt taxpayer. That being so, in my opinion it should be held, consistently with Cummings, that in this case the Official Trustee has standing to apply for a review of the objection decision.

34 The right to "appeal" to the AAT in McCallum, supra, was closely analogous to the right to appeal in Cummings, supra. Each was in respect of something (a decision and a judgment, respectively) which created a liability in the bankrupt in the nature of a provable debt. We do not read McCallum, supra, as stating any principle concerning appeals which concern judgments or orders relating to property which had vested in the trustee.

35 In Guirguis v Guirguis (1997) 137 FLR 130 the Full Court of the Family Court of Australia dealt with the question of the right of a husband to appeal against property orders made by a Judge of the Family Court of Australia. The Court dealt with the matter on the basis of the absence of locus standi. As we read the decision, the Court concluded that the reasons of Brennan CJ, Gaudron J and McHugh J are authority for the proposition that no right to appeal is property vested in the trustee, and that even where the appeal concerns property vested in the trustee, the only basis for the decision that the appeal cannot be brought is a lack of locus standi. With respect, it is not clear to us that Brennan CJ, Gaudron J and McHugh J went that far, except in relation to appeals in respect of orders merely creating provable debts in the estate. While their Honours may have drawn back from stating that appeals concerning orders affecting property, or dealing with money claims by the bankrupt, were "property", their Honours did state (at 135) with some clarity "the negative proposition" referred to at [29] and [30] above.

36 In any event, whichever is the correct analytical foundation, the Bagshaws are not entitled to bring the appeal.

37 The recent discharge of Mr Bagshaw from bankruptcy does not change the position. His trustee is still vested with the property. His indebtedness, if there is a charge, will still be satisfied from the land. If there is no charge or if the debt exceeds the charge, any indebtedness will be provable having a claim on the assets of the estate, which, if there is no charge, will include the land. Of course, the primary judge found there to be a charge. The trustees appealed and have withdrawn that appeal.

38 If there is any injustice in the appeals not proceeding, Mr and Mrs Bagshaw had open to them the right to approach the Court under s 178 of the Act for an order that the trustee lend their names to the appeal or for some other order under the wide terms of s 178: cf Cummings, supra at 138-39. Some action under s 178 may still be open. The reasons for judgment of Jacobson J make clear that this was made known to the Bagshaws on 24 September 2002: see [2002] FCA 1216 at [29]. The Bagshaws have known since service of these notices of motion that Mr Scott would argue that their appeals are and were incompetent.

39 In our view, on any basis referred to in the reasons for judgment of Brennan CJ, Gaudron J and McHugh J (whichever is the correct basis upon which to analyse an appeal of this character) neither Mr or Mrs Bagshaw is or was entitled to appeal from the orders of the primary judge. The only competent appeal was that of Mr Bagshaw's trustees and, if he had desired to bring it, Mrs Bagshaw's trustee.

40 This result may seem strange in the light of Mr Bagshaw having been joined by Mr Scott to the original proceedings. However, in the light of the orders sought for the appointment of receivers and the operation of subs 58(2) of the Act, it was appropriate for Mr Bagshaw to be a party, at least until the transmission applications by his trustees were complete. It may be that Mr Bagshaw's participation in the hearing could have been limited to a role reflected by the formal need to have him a party until his trustee got in the legal estate to the lands in question. In any event, these appeals by Mr Bagshaw and Mrs Bagshaw can only be brought by their trustees. Mr Bagshaw's trustees have discontinued their appeal. Mrs Bagshaw's trustee is apparently not interested in appealing. That is the end of the matter. The Bagshaws themselves have no right to appeal.

41 We record in conclusion that Mr Bagshaw's essential contention on appeal was that the indebtedness to Mr Scott the subject of his bankruptcy had been paid out in full, and that there should be a surplus available to himself and his wife. Obviously in his own interests and those of his wife, he should present to his former trustee in bankruptcy, and his wife's present trustee in bankruptcy, detailed calculations which might establish that contention. Whether in fact such a surplus exists, bearing in mind that a very high interest rate was originally charged, is for the trustee in bankruptcy to consider and deal with, as may also be the question of the justification in law for maintaining that level of interest rate, given that loan was made about 13 years ago.

42 The appeal of Mr and Mrs Bagshaw will be dismissed as incompetent. There is no reason why Mr and Mrs Bagshaw should not pay Mr Scott's costs of the appeal.

I certify that the preceding forty-two (42) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Mansfield, Conti and Allsop.

Associate:

Dated: 6 December 2002

Mr Bagshaw appeared in person for both Appellants.
Counsel for the Respondent (Mr Scott):	Dr C J Birch SC
Solicitor for the Respondent (Mr Scott):	Church & Grace Solicitors
Date of Hearing:	18 November 2002
Date of Judgment:	6 December 2002