Elkateb, in the matter of Lawindi v Lawindi [2001] FCA 1273

FEDERAL COURT OF AUSTRALIA

Elkateb, in the matter of Lawindi v Lawindi [2001] FCA 1273

IN THE MATTER OF WASFY LAWINDI, GEOFFREY STUART TURNER, DAVID KERR and JOE ASSI

MOHAMED SAFWAT ELKATEB v WASFY LAWINDI, GEOFFREY STUART TURNER, DAVID KERR and JOE ASSI

N 7333 OF 2001

HILL J

31 JULY 2001

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 7333 OF 2001

BETWEEN: MOHAMED SAFWAT ELKATEB

APPLICANT

AND: WASFY LAWINDI

FIRST RESPONDENT

GEOFFREY STUART TURNER

SECOND RESPONDENT

DAVID KERR

THIRD RESPONDENT

JOE ASSI

FOURTH RESPONDENT

JUDGE: HILL J

DATE OF ORDER: 31 JULY 2001

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. The application be dismissed.

2. The applicant pay the respondents' costs.

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 7333 OF 2001

BETWEEN: MOHAMED SAFWAT ELKATEB

APPLICANT

AND: WASFY LAWINDI

FIRST RESPONDENT

GEOFFREY STUART TURNER

SECOND RESPONDENT

DAVID KERR

THIRD RESPONDENT

JOE ASSI

FOURTH RESPONDENT

JUDGE: HILL J

DATE: 31 JULY 2001

PLACE: SYDNEY

REASONS FOR JUDGMENT HILL J 1 Mr Mohamed Safwat Elkateb (the "bankrupt") became bankrupt by filing his own petition on 13 June 2001. In consequence Mr Turner, a private trustee, became his trustee in bankruptcy. Prior to that day, Wilcox J had made an order ex parte on 7 June 2001 under s 50 of the Bankruptcy Act 1966 (Cth) (the "Act") ordering that a Mr Kerr take control of Mr Elkateb's property pending the making of a sequestration order. 2 After the bankrupt became bankrupt, a meeting of creditors was called seeking the removal of Mr Turner and his replacement by Mr Kerr. The meeting of creditors was held and Mr Turner's appointment was terminated. There had previously been an attempt on behalf of the first respondent to the present application to have a sequestration order made on his petition but the petition was dismissed by Stone J on 14 June 2001. 3 The present application was filed on 17 July 2001, some eight days before Mr Turner was removed and Mr Kerr appointed trustee. It sought an order restraining the creditors from appointing Mr Kerr as trustee of the bankrupt's estate. 4 It is obvious enough that the matter as dealt with in the application is now moot given that Mr Kerr has been appointed trustee of the bankrupt's estate and in the ordinary course the application would no doubt be dismissed. 5 The bankrupt, however, now seeks to have the application amended to provide for an order that the Court remove Mr Kerr and appoint another person as trustee in his stead. The only evidence that was filed in support of the original application was a handwritten affidavit of the bankrupt which states that Mr Kerr was prejudiced against the bankrupt when giving evidence before Stone J regarding a passport. The bankrupt says that he apprehends that Mr Kerr will continue to be biased against him during the administration of his estate in bankruptcy. 6 So far as I was told from the bar table it seems that Mr Kerr suspected that the bankrupt had an Egyptian passport that he had failed to deliver to him. Ultimately the bankrupt says that this was demonstrated not to be so. The bankrupt also seeks, but subject to the amendment of the application, leave to issue subpoenas against the various parties to the present proceedings so that he can have access to correspondence between Mr Kerr on the one hand and Mr Lawindi on the other, between Mr Kerr and Mr Geoffrey Turner and, presumably, correspondence between other parties. 7 The subpoenas for which leave is sought are said to be required so as to adduce evidence to support his claim that Mr Kerr is biased against him in some way, or at least that there is evidence of ostensible bias. For Mr Kerr and Mr Lawindi, it is submitted that I should merely dismiss the application and not give leave to amend. It is said that when regard is had to the scheme of the Act and in particular ss 156A(4), 157(6) and 181 and the general power that a bankrupt would have to apply to the Court to review acts, omissions or decisions of a trustee under s 178, the Court has no power to remove a trustee in bankruptcy on the application of the bankrupt. 8 Further, it is said that the giving of leave to the bankrupt to amend the application would be futile. It is submitted that the Court's power under s 30, the source of power advanced on behalf of the bankrupt, can only be exercised in aid of the Act. Absent specific provision and indeed where, as it is said is the case here, there is a contrary intention evidenced in the Act that trustees may only be removed by creditors and not by bankrupts, it is submitted that there is no power in the Court to remove a trustee on the application of the bankrupt and accordingly the court should dismiss the application and not grant leave to amend it. It was submitted also that in any event the case had no chance of success and that all the bankrupt was doing was engaging in a "fishing expedition" in the hope of finding a case. 9 I think it inappropriate to decide, at least on a final basis, the issue whether the Court could, at the instance of a bankrupt, remove a trustee notwithstanding the absence of specific power to do so. The argument that it does have power to do so turns upon the proposition that essentially, and as a matter of history, bankruptcy is a proceeding under the supervision of the Court. If the facts of a case were such as to demonstrate that a trustee in bankruptcy was in some way acting contrary to the interests of creditors generally but, for example, for the benefit of some particular creditor and in a way which might be fraudulent or involve some other breach of duty, it would be strange that the Court would have no power to remove the trustee merely because the application so to do is filed on behalf of the bankrupt. Such a case would differ substantially from the cases dealt with in the specific provisions to which reference has already been made. These contemplate, essentially, that the matter of removal and appointment of new trustees is one for creditors, so that there is evidenced in the Act an obvious policy that a bankrupt should not ordinarily be able to have removed a trustee in bankruptcy merely because, for example, the bankrupt does not like the way the trustee in bankruptcy is operating. 10 I am prepared, however, for present purposes to assume that the Court does have power to remove, in an appropriate case, a trustee in bankruptcy on the application of the bankrupt. However, it is clear enough that before the Court would intervene so to do there must exist a substantial ground for the removal. 11 My concern in granting leave to amend the application is that there seems nothing in what the bankrupt can tell me to suggest that the trustee has in any way acted improperly or, for that matter, in a way which might demonstrate ostensible bias. Correspondence between the parties (attached to the affidavit of a Mr Cheney) reveals that by letter dated 19 July 2001 the solicitors for Mr Lawindi when faced with the present application suggested the appointment of Mr Melluish of Ferrier Hodgson in place of Mr Kerr indicating that both Mr Melluish and the firm in which he practices were such that the highest degree of professionalism could be expected. 12 The bankrupt saw fit to object to Mr Melluish just as he objected to Mr Kerr indicating that he would object to any trustee that Mr Lawindi would appoint on the ground of apprehended bias. He sought appointment of a trustee nominated by ITSA or, perhaps, jointly appointed by both Mr Lawindi and himself. 13 In these circumstances I think that it is not in the interests of justice to allow the application to be amended. The bankrupt should not be encouraged to prosecute proceedings based merely on the proposition that anybody appointed by Mr Lawindi would be biased in such a way that the Court would remove him. 14 As matters presently stand it seems to me that the application, if amendment was granted, would be bound to fail and would cause additional expense to all parties other than, perhaps, the bankrupt who presumably is not paying any Court fees. Although the procedure of the issue of subpoenas by its nature involves an element of "fishing", the Court would not ordinarily deny leave to issue a subpoena merely because the applicant for the subpoena wishes access to documents that may assist him or her to prove his or her case. The word "fishing" is emotive and impedes in many cases, rather than assists, legal analysis. 15 The present circumstances are rather different from the ordinary case. The material before me makes it clear that the case which the bankrupt wishes to bring is one which seeks to have the Court remove a trustee just because that trustee is appointed by a person who had been, anyhow, the petitioning creditor. As I have already sought to indicate, whilst the Court in a particular case might well have power to remove a trustee for real cause, the Court would not intervene in the exercise of any such power merely because the bankrupt was unhappy about a trustee being appointed by someone who had previously been a petitioning creditor and in respect of whom, apparently, considerable ill will has existed over a period of some five or so years. 16 In the present circumstances, I do not propose to grant leave to the applicant to amend the application but rather dismiss the application and, although perhaps of little practical significance, order the applicant to pay the respondents' costs of it. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hill.