Corrigan & Anor v Owens & Anor [2009] FMCA 1009 (26 October 2009)

Last Updated: 30 October 2009

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CORRIGAN & ANOR v OWENS & ANOR

[2009] FMCA 1009

BANKRUPTCY – Application for s.179 inquiry – preliminary hearing – consideration of utility of inquiry in any event.

Bankruptcy Act 1966, ss.19(1), 19(1)(k), 30, 104, 134, 153B, 179

Re; Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262 Re; Gault v Law [1981] FCA 167; (1981) 57 FLR 165 Registrar in Bankruptcy v Bradley [1983] FCA 304; (1983) 72 FLR 231 Maxwell-Smith v Donnelly [2006] FCAFC 150 Owens v Lofthouse [2007] FCA 1968

First Applicant:

MICHAEL CORRIGAN

Second Applicant:

JOHN WHITE CONSULTANCY PTY LTD

First Respondent:

SUE OWENS

Second Respondent:

DAVID LOFTHOUSE

File Number:

MLG 1436 of 2004

Judgment of:

Burchardt FM

Hearing date:

8 September 2009

Date of Last Submission:

8 September 2009

Delivered at:

Melbourne

Delivered on:

26 October 2009

REPRESENTATION

Counsel for Mr Lofthouse:

Mr S. Minahan

Solicitors for Mr Lofthouse:

Aitken Walker & Strachan

Counsel for Ms Owens:

Mr A. Swanwick

Solicitors for Ms Owens:

MW Law

ORDERS

(1) The application for an inquiry pursuant to s.179 of the Bankruptcy Act 1966 be dismissed.
(2) Ms Owens pay the Trustee’s costs, such costs to be paid out of the bankrupt estate.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE

MLG 1436 of 2004

MICHAEL CORRIGAN

First Applicant

JOHN WHITE CONSULTANCY PTY LTD

Second Applicant

And

SUE OWENS

First Respondent

DAVID LOFTHOUSE

Second Respondent

REASONS FOR JUDGMENT

1. The history of this matter is tortuous. Even to explain the history of the application presently before the Court would take some time.
2. It is sufficient for present purposes to say that Ms Owens’ position
   (I shall refer to her as the applicant and her trustee Mr Lofthouse as the respondent) has been refined by a further amended application, which was filed by leave on 7 September 2009.
3. What the applicant seeks is that the Court inquire into the conduct of the respondent trustee pursuant to s.179 of the Bankruptcy Act 1966 (“the Act”) in relation to various matters set out in the further amended application.
4. Additionally, the applicant seeks an extension of time to review the decisions of the trustee to admit the creditors, Philip Dunn QC, David Coleman, John White, Frances Holmes and Ross Plowman, pursuant to s.30 and s.104 of the Act with, in the ultimate, a review of those decisions and an order that they be set aside.
5. The applicant seeks various ancillary orders.
6. For the reasons that follow, I have determined that it is inappropriate to grant the applicant the relief she seeks and the application will be dismissed.

The Relevant Test

7. The Court was referred to authority as to the way in which the application for an inquiry under s.179 of the Act should be conducted.
8. It seems clear to me that while it is in the ultimate a matter for the Court, generally there should be a preliminary inquiry as to whether it is appropriate to hold an inquiry at all.
9. Counsel made reference to the observations of Riley J in Re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262 at [268], approved by Ellicott J in Gault v Law [1981] FCA 167; (1981) 57 FLR 165.
10. The approach indicated by those extracts of the judgments of Riley J and Ellicott J was accepted by Beaumont J in Registrar in Bankruptcy v Bradley [1983] FCA 304; (1983) 72 FLR 231.
11. More recently, the Full Court of the Federal Court in Maxwell-Smith v Donnelly [2006] FCAFC 150 observed at [52] that:
    • “The authorities concerning the exercise of the power to order an inquiry have recently been conveniently gathered together in Moore v Macks [2006] FMCA 594. The learned Federal Magistrate described what he called the threshold requirement before an inquiry could be ordered under s.179 (at [13] to [18]).”
12. The Full Court was plainly quoting Lindsay FM’s observations with approval, and added at [53]:
    • “The power to order an inquiry is a discretionary one. In addition, as just discussed, it is a discretionary power which is not ordinarily exercised. A clear case must be made out to warrant an inquiry.”
13. I have given some thought to seeking to paraphrase the observations of Lindsay FM in Moore v Marcs but, on consideration, feel it is preferable to set them out in full. The extract quoted with approval by the Full Court of the Federal Court in Maxwell-Smith is as follows:
    • “The threshold requirement
    • In Re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262 Riley J observed in relation to a request by the Registrar in Bankruptcy for an inquiry in relation to the conduct of a trustee at p 268:
    • Before the application is heard, therefore, the trustee will know the grounds on which the court will be asked, inter alia, to inquire into his conduct and the facts on which the Registrar proposes to rely in support of his application that the court do so inquire. I do not wish to be taken as presuming to lay down any rule as to the procedure to be followed in, or the approach to be made by the court to, a case of this sort; but it seems to me that in such a case there is a preliminary question to be decided by the court – namely on the grounds and facts before it, has a case been made for inquiry into the trustee’s conduct? If the answer to that question is ‘yes’, the next question is – what is to be the scope of the inquiry? It may be that the material already before the court sufficiently defines the subjects for inquiry – eg in the form: ‘Did the trustee do (or fail to do) so and so?’ – and to give directions before proceeding to inquire.
    • In Re Gault: Gault v Law [1981] FCA 167; (1981) 57 FLR 165 the Federal Court was asked to conduct an inquiry in relation to the trustee of the bankrupt’s estate. In fact, the case involves the second such request for an inquiry made many years after the first request had been made and refused. Ellicott J referred to Re Alafachi (above) at p 173 and said:
    • It was with his Honour’s comments in mind that I required the applicant to give particulars of the misconduct he relied on to found his application. The court has a broad discretion in deciding whether to order an inquiry. In my opinion it is not required to order an inquiry unless it is satisfied that sufficient grounds had been made out. For instance, the court should be loathe to order an inquiry unless it considers that on the evidence before it there are substantial grounds for believing that the trustee erred in his administration. If the court considers that an inquiry is unlikely to reveal misconduct it should not make an order and put the respondent and possibly the creditors to the expense and trouble involved. It should also be borne in mind that a debtor applicant may have other remedies to pursue, for example in an action for breach of trust.
    • In Registrar in Bankruptcy v Bradley [1983] FCA 304; (1983) 72 FLR 231 Beaumont J was considering an application by the Registrar in Bankruptcy for a s 179 inquiry. His Honour referred to the passages from Re Alafachi and Gault (above) and said at
      p233:
    • In my opinion, the balance of convenience is this case indicates that a preliminary inquiry of the type urged by the respondent was the appropriate course to be adopted provided that, in the event that the matter goes forward to an inquiry on a final hearing, the evidence taken and submissions made in the preliminary inquiry are to be regarded as evidence and submissions in the final inquiry: in other words, the preliminary inquiry should be treated as part of the final inquiry. It is as if the respondent were to move for the dismissal of the proceedings as an abuse of process and then to fail in that application, in which event the material before the court in the summary application is to be treated as part of the material before the court upon the final hearing of the proceeding.
    • Finally, in Wilson & Anor v The Commonwealth of Australia & Anor [1999] FCA 219 Branson J discusses the nature of proceedings pursuant to s 179 of the Act in addition to proceedings under s 178 of the Act. At [44] Her Honour summarises the law in relation to s 179 as follows:
    • Although it is not a rule of universal application, the court will not ordinarily initiate an inquiry under s 179 unless it is satisfied that a proper case for an inquiry has been demonstrated ... There will ordinarily be a proper case or an inquiry where there is a reasonable cause to believe that a trustee may have failed to act in relation to a bankruptcy in the manner required by the Act or the General law. However, as Ellicott J pointed out in Re Gault at 173:
    • The court has a broad discretion in deciding whether to order an inquiry. In my opinion it is not required to order an inquiry unless it is satisfied that sufficient grounds have been made out.
    • Section 178 of the Act provides:
      • (1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the court, and the court may make such order in the matter as it thinks just and equitable.
      • (2) The application must be made not later than 60 days after the date on which the person became aware of the trustee’s act, omission or decision.
    • There can be no doubt then that the court is not obliged to embark upon an inquiry pursuant to s 179 simply because it is asked to do so. I have to be satisfied before embarking upon the inquiry that sufficient grounds have been demonstrated for the inquiry to be conducted. I will only be able to determine that if the applicant has revealed the basis claimed for the inquiry and the trustee given the opportunity to respond.”
14. I respectfully adopt those observations and the additional observations of the Full Federal Court in Maxwell-Smith as being appropriate guidance as to how I should proceed in this instance.

Background

15. The inordinate complexity of these proceedings is not easily grasped. There has been, as I have said before, a tortuous history involving numerous applications by Ms Owens, almost all of them almost entirely unsuccessful.
16. Ms Owens has deposed in an affidavit filed on 20 August 2009 that she has been suffering from depression since 1999 and has had the very great further misfortune of suffering breast cancer diagnosed in August 2008.
17. These factors are important because in part they explain the very inadequate way in which, by and large, Ms Owens has endeavoured to maintain her interests, and the all too frequent and unfortunate lack of success that has attended her numerous applications.
18. I have made it clear, I hope, in various interlocutory rulings, and I repeat now, that Ms Owens’ misfortunes are wholly a matter for sympathy and not for criticism. Nonetheless, the application she makes cannot properly, in my view, be considered in terms that ignore some of the relevant prior history.
19. On 17 July 2004, a Bankruptcy Notice was issued against Ms Owens. It was served on her on 22 August 2004. A creditor’s petition followed on 15 November 2004.
20. On 10 May 2005, a sequestration order was made against Ms Owens. On 24 May 2005, Ms Owens filed an application to set aside the sequestration order and, in the alternative, to obtain annulment of bankruptcy under s.153B of the Act. The basis of that application was that she was solvent.
21. It should be noted that that application for annulment plainly did not reveal, as was subsequently revealed, that in December 2000
    Ms Owens had purported to make a declaration of trust. The net effect of that declaration was to transfer the beneficial ownership of a number of properties of which she was the registered proprietor to a family trust of which Ms Owens, her children and grandchildren were the beneficiaries.
22. On 17 June 2005, the annulment application came before the Court and was not opposed or supported by the trustee. The matter, however, did not resolve.
23. The annulment application continued until 26 October 2005 when
    Ms Owens discontinued it, and costs were ordered against her accordingly.
24. In September 2005, an offer to compose with creditors in 100 per cent of their debt was rejected by the creditors.
25. It is common cause that the trustee supported the composition.
26. After the rejection of the composition with creditors, Ms Owens changed her position and asserted that the properties were not wholly beneficially owned by her but were owned by the trust. That assertion gave rise to litigation both before the Federal Magistrates Court, before Weinberg J in the Federal Court of Australia and, indeed, ultimately a special leave application to the High Court of Australia which was unsuccessful.
27. The position contended for by Ms Owens in those proceedings was at odds with earlier sworn evidence given in the annulment proceedings by her. Weinberg J pointed this out in his decision in Owens v Lofthouse [2007] FCA 1968 at [11]–[17].
28. An examination of the Court’s file will show the many interlocutory and other applications made by Ms Owens. It is not unfair to say that none of her applications have been unequivocally successful, and that many have been dismissed with costs orders.

The Particular Matters Now Raised

29. The additional matters alleged in the further amended application are as follows:
    • “The trustee’s alleged failure to take reasonably available steps to bring the bankruptcy to an end after the rejection of a composition proposal in September 2005, where the trustee was aware:
      • i) That the bankrupt commanded sufficient funds to pay all her creditors, realisation charges and trustee’s fees and disbursements;
      • ii) That the bankrupt would suffer substantial detriment by the bankruptcy continuing;
      • iii) Of the likely prejudice to the creditors of the bankrupt estate by the bankruptcy continuing”
30. What was submitted here was that, by no later than about July 2005, the trustee was aware that Ms Owens owned or had access to properties worth more than the debts alleged against her including disputed debts. By mid-July about 2005 values of the properties were known.
31. It was submitted, correctly enough, that as early as 13 July 2005 the trustee was provided with a copy of an advice by Mr Galvin of counsel which threw doubt upon the efficacy of the transfer of the properties to the trust later pressed once the annulment proceedings were at an end.
32. When, in late July to early August 2005, the composition to creditors in the value of 100 per cent was being formulated, the trustee required the beneficiaries of the trust to provide waivers of any claims. Waivers were provided.
33. It was submitted that at the time the meeting of creditors rejected the 100 per cent composition, the facts were that:
    1. The applicant commanded funds either in her own right or by reason of the waivers of the beneficiaries to pay all her creditors and any ancillary costs.
    2. The applicant was likely to suffer loss if the bankruptcy continued because the costs would increase and she would also lose the benefit of actions she wished to pursue by way of cross-action against creditors (the trustee was aware of these actions and said so in his report).
    100. There was possible prejudice to the creditors because the beneficiaries had granted a waiver for the purposes of a composition earlier, and might thereafter have asserted their rights.
34. It was conceded by counsel for Ms Owens that it was not the trustee’s fault that the composition failed. The trustee supported it. Litigation was on foot and the applicant was challenging the sequestration order on the basis that she was solvent. It was submitted that the trustee could have, and should have, reported to the Court this state of affairs, which could have lead the trustee being able to take action to conclude the bankruptcy.
35. It was also put that the trustee was well aware that Ms Owens could not afford counsel at that time. Counsel pointed to s.19(1) of the Act which requires the trustee to avoid expense and act in a commercially sound way. It was submitted that the requirement for the trustee to seek directions of the Court and inform the Court of the then extant state of affairs was a duty in those circumstances.
36. It was put further that the trustee was required to seek directions pursuant to s.30 of the Act to impose the composition that the creditors had rejected. There were submissions that there were obvious problems if the bankruptcy continued, and it was clear that this would be the best way of ending the bankruptcy. This was not done.
37. Counsel for Ms Owens pointed to an alleged duty to exercise the power to seek these directions contained in s.134 of the Act, and submitted that the entire bankruptcy could have been finished by mid-2006.
38. In response, the respondent makes a number of submissions set out at paragraph 32 of his written outline of submissions.
39. In my opinion, there is considerable force in the trustee’s submissions. The trustee submits that, generally, it is for an applicant to bring an annulment or other proceeding under s.153B of the Act. No authority is cited for that proposition but it does appear to be consistent with the tenor of the commentary in McDonald, Henry and Meek Australian Bankruptcy Law and Practice. At paragraph 153B.0.08 the learned authors say:
    • “As s153B does not specify the persons who may apply for an annulment, s303 provides that the application may be made by a person aggrieved by or interested in the matter.”
40. It goes on to assert that:
    • “It has been established that the following have standing
      (to bring such an application)”

and the parties named include a trustee.

41. Paragraph 153B.0.12 of the commentary deals with the role of the trustee in terms that suggest strongly that the trustee would be unlikely ordinarily to be an applicant.
42. From the fact that the authorities quoted by the learned authors date back to 1945 and an unreported decision of 1929, one might reasonably infer that applications by trustees are indeed rare. I have not myself, whether on the bench or at the Bar, been made aware of a case in which a trustee has made an application under s.153B of the Act.
43. The fact is that the annulment application went on until 2005 when
    Ms Owens abandoned it. It is true, of course, that this may well have been affected by issues to do with funds (although lack of funds has not prevented Ms Owens from litigating very significantly since then). Nonetheless, the trustee had not opposed the annulment application. The trustee had sought to support the composition with creditors, albeit unsuccessfully.
44. I accept also that, at this time, the administration had only been going on for a few months and formal proofs of debt had not been taken.
45. The proposition that Ms Owens commanded sufficient funds to satisfy the claims on her estate was plainly clouded by the existence of the trust which was then known to all concerned.
46. Furthermore, and perhaps importantly, there is no suggestion that
    Ms Owens ever requested the trustee to take the action which is now asserted by her to have been a duty upon the trustee.
47. The respondent goes on to submit that the asserted duty (namely to bring an application for annulment) does not exist in law and that, even if it did, the evidence of the applicant would not be sufficient to reach the conclusion that there is a substantial likelihood of a finding of misconduct (paragraph 34 of the respondent’s submissions).
48. The respondent goes on to submit that there is no utility to the conducting of an inquiry into this allegation in view of the withdrawal of the application for annulment by the applicant.
49. No authority has been cited by counsel for Ms Owens to support the alleged duty said to exist to compel the trustee to have sought an annulment in the circumstances that obtained.
50. Although it is trite, it is worth remembering that it is necessarily the case that the primary focus of any trustee’s endeavours is not to protect the debtor (although this is, of course, in the ultimate a relevant consideration) but to ascertain the size of the debts, realise the assets of the bankrupt estate, pay out the debts and conclude the administration. In the context of this primary function, I accept the submissions of the respondent that there is no duty on the trustee to have made application to the Court for an annulment.
51. In one sense, that is sufficient to deal with the matter. Nonetheless,
    I would also accept the submissions of the respondent that there is no tangible benefit to the estate in an inquiry into this aspect of the matter.
52. Ms Owens has asserted that there would be prejudice to the creditors in a continuation of the bankruptcy after they had rejected the composition proposal. That submission made by the applicant ignores the fact that the creditors must be presumed to have voted on the composition according to what they perceived their interests to be. While at first blush it might seem bizarre that creditors would reject the composition of 100 per cent of their claims, one needs to remember that the creditors, some of whose claims had been admitted despite dispute, may well have had doubts in any event as to whether the composition would have been adhered to.
53. In all the circumstances, in my view Ms Owens’ position following the failed meeting and failed composition with creditors was by no means so clear that it is reasonable to suppose that either the trustee should have known that Ms Owens was fully solvent and capable of meeting the claims on her estate, or that there was a duty incumbent upon him in those circumstances to seek an annulment of his own motion of
    Ms Owens’ bankruptcy.
54. These considerations apply with similar force to the matters asserted at paragraph 29(ii) above, namely the fact that Ms Owens would suffer detriment if the bankruptcy continued. This was of course indeed the case, but such detriment is an inevitable consequence of being bankrupt.

Ground 1(b) – The Delay in Seeking Finally To Determine the Validity of the Declaration of Trust dated 20 October 2000

55. It was submitted by the applicant that it would have been clear by no later than September 2005 that the administration of the estate depended upon the validity of the trust. The trustee, it was submitted, was aware of Mr Galvin’s advice referred to earlier that the declaration of trust was ineffective. It was submitted that the trustee should have got advice and acted on it, or pressed for a waiver from the beneficiaries.
56. The applicant submitted that from September 2005 until June 2006, there was no reference to the trustee thinking or doing anything about it. It was not until mid-2006 that the beneficiaries asserted their rights, and not until September 2006 that the trustee started proceedings seeking declarations of trust. It was submitted that interest continued to accrue in relation to the debts of the estate and the mortgages on the properties previously beneficially owned by Ms Owens. It was submitted that the trustee was under a duty to act faster.
57. By way of reply, the respondent points to the fact that the annulment proceeding was on foot until October 2005 during the entirety of which Ms Owens was asserting that she owned the properties in dispute.
58. Thereafter, there was extensive discussion between Ms Owens, the ANZ Bank and the trustee, largely through a Mr Carrafa, about the reversal of a payment of $340,000 made to the applicant at the commencement of the bankruptcy by way of a drawdown loan facility provided by the ANZ Bank. This correspondence continued until
    14 November 2005 when the payment was reversed and put into an account in the trustee’s name.
59. I accept the submission for the respondent that the correspondence shows that at that time Ms Owens was adopting the position that the properties were hers, albeit that this was inconsistent with the subsequently articulated matters pressed before the Federal Magistrates Court, Weinberg J and the High Court.
60. I accept the submission of the respondent that it is for the person asserting the existence of a trust to prove it. One would have thought that either Ms Owens or her daughters (the beneficiaries) would have moved more promptly to assert their interest in what after all were millions of dollars worth of property.
61. Was it misconduct for the trustee to have failed to have embarked upon legal proceedings with the certainty of further expense merely to resolve what, between October 2005 and May 2006, was a possible claim, not supported by counsel’s advice, as to the ownership of the properties?
62. Put in these terms in my view the question is susceptible of a ready answer. It is to be noted that one does not look at the trustee’s actions with the benefit of hindsight. They must be evaluated against the circumstances that obtained.
63. The enormous plethora of affidavit and exhibit material makes it plain that this was never an easy estate to administer. The trustee was involved in constant endeavours both to ascertain and call in the assets of the estate, to deal with the numerous counter-availing assertions as to whether various creditors should be admitted, and simply to administer the matter. In my view, the trustee did not misconduct himself in this regard.

Grounds 1(c) and (d) – The Trustee’s Alleged Misconduct In Relation To The Investment Of Managed Moneys Drawn Down From The Applicant’s ANZ Bank Drawdown Facility

64. The applicant refers to her affidavit filed on 3 January 2008 at paragraphs 12 and 13, and her affidavit filed in June 2009 at paragraphs 25 and following. Those extracts, in substance, assert that the drawdown was approved by Ms Owens only to make mortgage repayments and possibly also rates and ancillary payments on the properties. It was submitted there was no authorisation for any other purpose.
65. Exhibit DJL89 to the affidavit of Mr Lofthouse sworn on 30 October 2006 shows Ms Owens writing to the trustee agreeing to only a limit of $20,000 being paid on mortgages, but by reply it was required that the entire amount be reversed. The applicant did not object.
66. The drawdown took place in November 2005, but it was not until
    27 April 2007 that the applicant received a document detailing the transactions, albeit not as to which exact bodies payments had been made. It eventually emerged that legal fees and other trustee’s fees had been paid. The applicant demanded repayment to the estate of such funds and made a claim to the Court. $62,000 appears to have been repaid, which is less than the trustee paid out in this regard.
67. It was submitted, putting the matter in the round, that the use of these funds was an abuse because they were put to expenses not authorised by the applicant (namely, mortgages and related payments). It was put there had been no explanation of the payments regarding a number of items.
68. The respondent submitted, correctly in my view, that the drawdown facility was fully withdrawn because the ANZ required that that be the case.
69. Although the trustee took the course of repaying funds to the estate when challenge was made, I accept the submissions from the respondent that it was open for the trustee not to have done so. The trustee is vested with full authority to deal with the funds of the bankrupt provided they are put to proper use.
70. The payments made by the trustee (and then largely repaid) involved unobjectionable matters such as trustee’s fees, legal expenses and the like.
71. It was put that the way in which the trustee had withdrawn funds by withdrawing all of it in one go meant that interest was payable on the entire sum when this was not necessary, but this ignores the fact that the ANZ had required all the funds to be withdrawn in one go.
72. I accept the submissions from the respondent that no detailed calculation has been provided to support a number of the more minute areas of criticism advanced by Ms Owens and I see no reason, at least for these purposes, not to accept the trustee’s explanation in his voluminous affidavit evidence filed on 30 October 2006, 27 September 2007, 18 April 2008, together with the affidavits filed in July and August 2009.

Ground 1(g) – The Complaint about the Sale of the Applicant’s Properties Including Negotiations and Arrangements with Managing Agents

73. Here the complaint is that the amount of two per cent provided for estate agents and also solicitor’s fees were excessive. It was submitted there was nothing to say that there had been negotiation about commission rates and legal costs, and that the trustee was under a duty to do so. It was said that this should have been 1.5 per cent which was a substantially lower figure than that in fact obtained. It was submitted that the advertising costs were too high, and that all of these actions, taken as a whole, were not commercially sound, and thus infracted s.19(1)(k) of the Act.
74. By way of response, the respondent denies any misconduct. I accept the submission that there is no evidence that the amounts engaged were excessive or other than commercially acceptable. I note, as counsel for the respondent submitted, that the initial complaint made by
    Ms Owens was that the properties were sold at an under-value. In the ultimate it is quite clear they were not. Although counsel dealt with this issue in some detail in respect of each of the alleged efforts, it is sufficient for me to say that on the materials as they stand, it appears that the decisions made by the trustee in each instance were open to him as a matter of sound commercial judgment.

Ground 1(h) – Failure to Recover Fees

75. It was submitted by counsel for Ms Owens that the trustee should have sought recovery of fees owed to her by Ann Garns, Ross Plowman, Frances Holmes and Shaun Mullen.
76. Although it would appear two advices were received by the trustee, exhibit DJL64 to the trustee’s 30 October 2006 affidavit suggests to me that the trustee made an informed and reasonable decision.
77. Likewise, the problems confronting the Plowman case were significant. The applicant herself concedes (affidavit 29 May 2005, paragraph 18) that she failed to obtain a taxable bill in timely fashion. This was a difficulty at the forefront of consideration of the litigation. Likewise, although Ms Owens seeks now to suggest that the failure by the trustee to litigate those matters, and the matters of Holmes and Mullen, to finality is a serious omission, I do not agree.
78. The affidavit material shows (see paragraphs 15 to 17 trustee’s affidavit 30 October 2006) the very significant effort the trustee made to ascertain the details of the creditors and debtors of the estate and the difficulties involved in doing so.
79. In the ultimate, the difficulty with Ms Owens’ submission is that litigation is just not that simple. It involves, almost invariably, contested issues as to fact, and involves a number of other uncertainties. I do not think that the trustee’s conduct in this regard can be said to amount to misconduct.

Ground 2

80. It is certainly the case, as counsel for Ms Owens submitted, that the debts alleged as against Messrs Dunn QC and Coleman were the subject of heated dispute. It was submitted that it was not for the trustee to decide. It was submitted that, in the light of Ms Owens’ medical condition, an extension of time is justified to enable these matters now to be litigated again.
81. Once again, I accept the submissions for counsel for the respondent that no sufficient reason has been stated as to why objections were not initially lodged within time and why no such application for extension for time has been prosecuted for more than three years. I accept that notwithstanding her health problems Ms Owens has been well able to litigate, at least to an extent, and has been able to commence two separate s.179 applications in that time.
82. The respondent’s position in respect of each proof is set forward in his affidavit of 30 October 2006 at paragraphs 15 to 28, and I accept that the explanations in each case are sound and should stand.
83. I further note that the application to extend time is sought without the affected creditors being given the opportunity to be heard on the issue.

General Issues

84. I have dealt, perhaps in a relatively summary way, with the various matters raised by Ms Owens. That is partly because any endeavour to traverse each and every item of evidence would be an enormously time-consuming effort. Of course, in the event that it was necessary to do so properly to determine the matter, then that time and effort would need to be expended.
85. But I have dealt with the matter in this way because there are a number of over-arching issues which, in my view, make it inappropriate to exercise the discretion I undoubtedly have as to ordering an inquiry or not.
86. The following general propositions, in my view, are relevant:
    1. the discretion to order an inquiry is not lightly exercised, and the Court is not lightly to interfere with the administration or the exercise of a trustee’s powers and discretions;
    2. a clear case must be made out to warrant an inquiry;
    100. there must be some real purpose to and value in the inquiry; and
    4. there must be a substantial likelihood that some wrongdoing would be found which would justify an inquiry.
87. Here, the applicant has not outlined what the ultimate purpose of the inquiry would be. She has not said whether she seeks the removal of the trustee or some other order. Section 179 is not, as the respondent indeed submits, an avenue for seeking compensation.
88. This has been a protracted and difficult administration. It has been characterised by very substantial curial resistance by Ms Owens. If an inquiry is granted, it is likely to involve a very detailed, very lengthy and very expensive reconsideration of enormous quantities of material. It would need to be referred to the Federal Court because of its sheer scope. This Court does not have the time resources available for an inquiry of that sort.
89. That means that, in all probability, any final resolution of the matter would be delayed for a very long period of yet further time.
90. Although there are aspects of the trustee’s conduct which, in hindsight, might be seen to be the subject of some dispute, it is important to remember that the trustee did not have the benefit of hindsight.
91. I note further that Ms Owens has open to her actions under the general law for breach of trust or negligence should she feel that the actions of the trustee have caused her loss, as indeed it is plain she does.
92. I do not think that the materials put forward by the parties and the submissions that they make go so far as to make it at all likely that misconduct would be established in the event that a full inquiry was heard.
93. Rather, on the materials as they stand, it seems to me what would emerge is a picture of a somewhat harassed trustee responding in difficult circumstances to an ever-shifting scenario.
94. In this regard it is not appropriate to ignore Ms Owen’s own conduct. Whatever the state of her health, the fact is that on oath she said that she was the owner of the properties which stand at the heart of the issues in dispute. Only when she lost that argument did she start to assert the completely contrary position that the properties were owned by the trust.
95. That course of action has been the subject of criticism by Weinberg J, and I pay proper regard to that criticism.
96. The Court is faced here, on the one hand, with the prospect of enormous and time-consuming litigation that is not likely to be of any benefit to the creditors, and is likely to subsume yet further substantial amounts of whatever funds may be available in the bankrupt’s estate.
97. On the other hand, the estate appears to have proceeded to the point where creditors have been paid out as to 56 cents in the dollar. It is plainly desirable that the administration of this estate, which after all commenced in 2005, be brought to an end.
98. This is even more clearly the case when it is remembered that Ms Owens is subject to a second bankruptcy in any event.
99. Counsel for Ms Owens sought to cross-examine the trustee. I reserved my ruling on that application and indicated that I would decide that issue in the course of preparing my judgment.
100. In the light of my conclusions it is clearly inappropriate to re-open the matter and permit cross-examination in these circumstances.
101. In all the circumstances, I am of the view that an inquiry ought not be ordered. The application will be dismissed with costs.

I certify that the preceding one hundred and one (101) paragraphs are a true copy of the reasons for judgment of Burchardt FM

Associate: Ms B Evans

Date: 26 October 2009