Re Paterson, Ex parte Official Trustee [2000] FCA 116 (14 February 2000)

Last Updated: 1 March 2000

FEDERAL COURT OF AUSTRALIA

Re Paterson, Ex parte Official Trustee [2000] FCA 116

OFFICIAL TRUSTEE IN BANKRUPTCY IN THE MATTER OF

THE ESTATE OF DAVID COLIN PATERSON

N 8284 of 1999

HILL J

14 FEBRUARY 2000

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N 8284 OF 1999

APPLICANT:	OFFICIAL TRUSTEE IN BANKRUPTCY AS TRUSTEE OF THE ESTATE OF DAVID COLIN PATERSON
JUDGE:	HILL J
DATE:	14 FEBRUARY 2000
PLACE:	SYDNEY

EX TEMPORE REASONS FOR JUDGMENT

1 Before the Court is an application by the Official Trustee in Bankruptcy as trustee of the estate of David Colin Paterson ("the bankrupt") for the time within which the Official Trustee is to make an election pursuant to s 60(3) of the Bankruptcy Act 1966 ("the Act") to be extended to seven days after orders are made in the application. The application also seeks an order that the Official Trustee be permitted to accept an offer, which has been made by Glenn Robert Jarrett, to sell and assign to Mr Jarrett any chose in action which the Official Trustee may have against Australian Guarantee Corporation Limited ("AGC") and a Mr Peter Head. The Official Trustee has indicated that he does intend to accept that offer.

2 The order for extension of time is made pursuant to s 33(1) of the Act. It seems now to be accepted that the Court has power under that section to extend the time for electing whether or not to continue proceedings under s 60 of the Act notwithstanding that the time for making that election has expired: Re Faulkner, Ex parte Official Receiver (1981) 52 FCR at 109, Abeyratne v Milorad Trkulja (unreported, North J 18 December 1998) and Brien v P & E Phontos Pty Limited (1999) FCA 1072.

3 The bankrupt is party to litigation in this Court, numbered G 3244 of 1995, the principal applicant of which is Endormer Pty Limited ("Endormer"). The proceedings allege deceptive conduct, inter alia, on the part of AGC and breaches of the Corporations Law by that company as well as claims in negligence. Endormer brings the proceedings in its capacity as trustee of a unit trust. It does not seem that Mr Paterson directly is a beneficiary of that trust although he is a shareholder in a company called Alinbow Pty Limited which company owns shares in Endormer, the trustee.

4 Mr Paterson, however, claims to have a personal claim in damages against AGC, which he maintains as the fourth applicant in those proceedings. There is also a cross-claim in the proceedings brought by AGC against, inter alia, Mr Paterson.

5 Mr Paterson disclosed in his statement of affairs his claim against, inter alia, AGC. Inquiries were made by the Official Trustee. It might be noted there were no assets in the estate from which the proceedings could be funded and a report was forwarded to creditors seeking their advice as to whether they were prepared to contribute. They were not.

6 On 30 July 1999 the solicitors for AGC wrote to the Official Trustee requiring the Trustee to elect to either prosecute or discontinue the legal proceedings so far as Mr Paterson's part in them is concerned pursuant to s 60(2) of the Act. On receiving that letter the Trustee wrote to Mr Paterson, inter alia, advising him that the Trustee would be interested in selling or assigning the chose in action, should that be of interest, but would otherwise discontinue the proceedings. No election was made by the Trustee within the time, limited by s 60. However, an offer was made shortly afterwards by Mr Jarrett, one of the parties to the litigation, to purchase the chose in action in consideration of payment of an amount of $2,000 together with 10 per cent of net proceeds obtained within seven days of receipt by him of an appropriate verdict and an amount for costs.

7 The Trustee desires to accept that offer. The matter came before Ryan J who ordered that notification of the application be given to AGC, a company which is a creditor in the bankrupt's estate and also the party most interested in the outcome of this litigation. There has been correspondence passed between the Official Trustee and the solicitors for AGC which I will mark exhibit "A" for the purposes of these proceedings. It is unnecessary for present purposes to detail the substance of that correspondence. It suffices to say that as a result of the attitude which the Official Trustee took to the correspondence, the solicitors for AGC do not oppose the application.

8 In saying this I do not in any way seek to approve the giving of the undertaking referred to in that correspondence on the part of the Trustee. It seems to me that the matter the subject of it is a matter of law. It does not affect the exercise of the discretion I am called upon to make. In exercising that discretion I note that the offer to acquire the chose in action was made a short time after the expiry of the period within which an election ought to have been made, that no creditors, or any other person, are disadvantaged and that the consequence of accepting the assignment will be that a benefit, albeit a rather small one, may go to the creditors of the estate.

9 It is also relevant, of course, that the creditor most affected does not oppose the application.

10 I would accordingly order that the time within which the Official Trustee may make an election pursuant to s 60(3) of the Act in respect of proceedings commenced by the bankrupt in this Court and numbered G 3244 of 1995, be extended to seven days after the date of this order.

11 It would be inappropriate for the Court to make a conditional order of the kind in order 2. Whether or not the Trustee decides to accept the offer, is a matter for the Trustee to determine.

12 There will be no order as to costs.

I certify that the preceding eleven (11) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill.

Associate:

Dated: 14 February 2000

Solicitor for the Applicant:	The Argyle Partnership
Solicitor for Australian Guarantee Corporation:	Clayton Utz
Date of Hearing:	14 February 2000
Date of Judgment:	14 February 2000