George Wakim v HIH Casualty & General Insurance Ltd & Ors [2001] FCA 103

FEDERAL COURT OF AUSTRALIA

George Wakim v HIH Casualty & General Insurance Ltd & Ors [2001] FCA 103

BANKRUPTCY – trustee in bankruptcy – conduct of litigation for the benefit of the bankrupt estate – deed of indemnity for costs of such proceedings with principal creditor – effect of such a deed on the trustee's duty to the bankrupt estate – whether the trustee's duty to the bankrupt estate can be satisfied by reliance on the advice of legal representatives BANKRUPTCY – whether a debt proven in the bankrupt estate is a partnership debt – whether equitable and/or statutory rights to contribution and/or indemnity can be enforced by a trustee in bankruptcy against a bankrupt's business partner prior to payments being made in satisfaction of the debt BANKRUPTCY – proofs of debt – trustee's discretion to reject a proof of debt or initiate legal proceedings to have the transaction that is said to establish the debt declared void as against the trustee – trustee's discretion to terminate such proceedings on the basis of the evidence before it NEGLIGENCE – professional negligence – trustee in bankruptcy – conduct of litigation for the benefit of the bankrupt estate – deed of indemnity for costs of such proceedings with principal creditor – whether such a deed imposes a duty of care on the part of the trustee – nature of the trustee's duty of care when it is concurrent with the trustee's duty to the bankrupt estate – whether the duty of care can be satisfied by reliance on the advice of legal representatives – relevance of the indemnifying creditor's reluctance to give evidence NEGLIGENCE – professional negligence – solicitors and counsel for the trustee in bankruptcy – whether they owe the principal creditor a duty of care on the basis that proceedings in respect of which their advice is sought were initiated pursuant to a deed of indemnity provided by that creditor – whether the solicitor for the trustee can satisfy their duty of care by relying on the advice of counsel – whether counsel for the trustee is to be excused from a breach of duty on the basis of the existence of contrary advices WORDS & PHRASES – "breach of duty", "malfeasance, misfeasance, negligence, wilful default or breach of trust" Bankruptcy Act 1946 (Cth), s 148(c) Bankruptcy Act 1966 (Cth), ss 5, 19, 69, 81, 83, 104, 109(10), 134, 176, 178 Federal Court Rules, Order 11 rule 10 Partnership Act 1892 (NSW), s 24 Trustees Act 1925 (NSW), s 59(2) Law Reform (Miscellaneous Provisions) Act 1946(NSW), s 5 Trusts Act 1901 (Vic), s 3