FEDERAL COURT OF AUSTRALIA Moore v Macks [2007] FCA 10 BANKRUPTCY – application by bankrupt for orders against trustee in bankruptcy under s 179 of the Bankruptcy Act 1966 (Cth) – where bankrupt was unsuccessful respondent in separate proceedings in Federal Court – where bankrupt appealed prior to bankruptcy against substantive orders and costs order made in separate Federal Court proceedings – where appeals deemed to be abandoned by trustee in bankruptcy by virtue of s 60(3) of Bankruptcy Act 1966 (Cth) – where trustee in bankruptcy has decided not in interests of bankrupt estate to prosecute the appeals – whether trustee in bankruptcy may apply under s 33(1) of the Bankruptcy Act 1966 (Cth) for extension of time within which to elect to prosecute appeals – where trustee in bankruptcy has decided not in interests of bankrupt estate to prosecute the appeals – whether trustee's decision a basis for orders under s 178 or s 179 of Bankruptcy Act 1966 (Cth) – relevant principles. Held – no basis in fact to impugn trustee's decision that not in interests of bankrupt estate to prosecute the appeals under s 178 or s 179 of Bankrupcy Act 1966 (Cth) – application dismissed. Bankruptcy Act 1966 (Cth) ss 33, 60, 178, 179 Federal Magistrates Act 1999 (Cth) s 39 Abeyratne v Trkulja (1998) 90 FCR 253 cited Cummings v Claremont Petroleum NL (1996) 185 CLR 124 applied Faulkner, Re; Ex parte Official Receiver (1981) 52 FLR 109 cited Gault, Re, Gault v Law (1981) 57 FLR 165 considered Gray v Clout (1990) 27 FCR 141 cited Macchia v Nilant (2001) 110 FCR 101 considered Moore v Macks [2006] FMCA 594 discussed Moore v Wilson [2006] FCA 79 referred to Moore v Wilson [2005] FMCA 870referred to Tyndall, Re; Ex parte Official Receiver (1977) 17 ALR 182 considered Wheeler, Re; Ex parte Wheeler v Halse (1994) 54 FCR 166 considered Wilson v Commonwealth of Australia [1999] FCA 219 considered Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 912 discussed Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 1035 discussed DAVID GERALD MOORE v PETER IVAN MACKS SAD 120 OF 2006 BESANKO J 15 JANUARY 2007 ADELAIDE IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SAD 120 OF 2006 BETWEEN: DAVID GERALD MOORE Applicant AND: PETER IVAN MACKS Respondent JUDGE: BESANKO J DATE OF ORDER: 15 JANUARY 2007 WHERE MADE: ADELAIDE THE COURT ORDERS THAT: 1. The proceedings transferred to this Court by order of a Federal Magistrate made on 13 June 2006 be dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY SAD 120 OF 2006 BETWEEN: DAVID GERALD MOORE Applicant AND: PETER IVAN MACKS Respondent JUDGE: BESANKO J DATE: 15 JANUARY 2007 PLACE: ADELAIDE REASONS FOR JUDGMENT 1 This is an application by a bankrupt for orders against his trustee in bankruptcy. The application is brought under s 179 of the Bankruptcy Act 1966 (Cth) ('the Act'). 2 The bankrupt is Mr David Gerald Moore. A sequestration order was made against his estate on 21 January 2005 and Mr Peter Macks was appointed his trustee in bankruptcy. The sequestration order was made on a creditor's petition presented by Mr Wayne Stephen Wilson and Ms Gayle Lawton. 3 The bankrupt challenged the sequestration order which had been made by a Registrar of the Federal Magistrates Court. On 1 July 2005 a Federal Magistrate dismissed the bankrupt's application for review (Moore v Wilson [2005] FMCA 870). The bankrupt appealed to this Court against the Federal Magistrate's order. On 10 February 2006 a Judge of this Court, exercising the appellate jurisdiction of the Court, dismissed the bankrupt's appeal (Moore v Wilson [2006] FCA 79). The bankrupt then applied to the High Court for special leave to appeal from the Judge's decision. It seems that the bankrupt did not comply with those rules of the High Court which require documents to be filed by a certain date and, as a result, his application was deemed to be abandoned. At a prior hearing before me, the bankrupt told me that there were good reasons why he did not file the necessary documents and that they related to his health. He told me that he would be applying for a reinstatement of his application for special leave to appeal. Whether he has done so, or will do so, is not relevant to the issues raised by the application before me. 4 On 16 March 2005 the bankrupt issued an application in the Federal Magistrates Court seeking an order that the trustee in bankruptcy be removed. There is power to make an order removing a trustee: s 179 of the Act. The bankrupt challenged the trustee's conduct on a number of grounds. A Federal Magistrate heard and determined part of the application. He did so adversely to the bankrupt. He transferred what was left of the proceeding to this Court and that is what is presently before me. The application before me concerns the trustee's decision in relation to an appeal and an application for leave to appeal filed and served by the bankrupt in August 2004. 5 It is necessary to say something about the appeal and the application for leave to appeal before proceeding further. The appeal and the application for leave to appeal 6 Mr Wilson and Ms Lawton instituted proceedings in this Court against Manna Hill Mining Company Pty Ltd ('Manna Hill Mining Company'), the bankrupt and six other parties. The proceedings came on for hearing before Lander J in February and April 2004. It is not necessary to describe the nature of the proceedings in detail. The following description of the three issues in the proceedings taken from the reasons for judgment of Lander J (Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 912 at [1]-[6]) will suffice: 'The applicants were directors of the first respondent, Manna Hill Mining Company Pty Ltd (Manna Hill Mining). The first question in these proceedings is to determine whether they are still directors of Manna Hill Mining. The second respondent, Mr Moore, was, and is, a director of Manna Hill Mining and the seventh respondent, Hodgemore Pty Ltd. The third respondent, Mr Hagger, was appointed a director of Manna Hill Mining on 12 June 2003 and resigned as a director of that company on 7 July 2003. He is a director of, and effectively controls, the fourth respondent, East Adelaide Company Pty Ltd. The fifth respondent, Mr Spratt, and the sixth respondent, Mr Ewen, claim to be directors of Manna Hill Mining. They also claim to hold shares in Manna Hill Mining. The second question in this case is to determine whether those shares were validly issued and allotted on 12 June 2003 and 19 January 2004, and whether Mr Ewen and Mr Spratt were validly appointed as directors on 19 and 20 January 2004. Mr Hagger and East Adelaide Company Pty Ltd have advised the Court that they will abide by any decision of the Court. The applicants called Mr Hagger as a witness. Manna Hill Mining may or may not be in administration. That depends on the answers to the first two questions and is the third matter to be determined in these proceedings.' 7 The applicants in the proceedings were successful and a number of orders were made by Lander J on 16 July 2004 and 30 July 2004 respectively. The orders made on 30 July 2004 were orders as to the costs of the proceedings and included an order that the bankrupt pay the applicant's costs on an indemnity basis. His Honour delivered reasons for his costs orders: Wilson v Manna Hill Mining Company Pty Ltd [2004] FCA 1035. 8 The bankrupt represented himself at the hearing of the proceedings as he did before me. Lander J found that he was an unsatisfactory witness. In his judgment dealing with the substantive issues his Honour said (at [94]-[98]): 'I have had the opportunity of observing Mr Moore whilst he was giving his evidence, cross-examining witnesses and putting his arguments during the trial of these proceedings. Mr Moore is a very determined man. He is consumed by Manna Hill Mining's activities and the activities of two other mining companies, Manna Hill Resources Pty Ltd and Manna Hill Gold Pty Ltd. He is a shareholder and director of all three companies. He worked extremely hard to take Manna Hill Mining out of administration and to resume trading. He is so consumed by the groups' activities that he will allow nothing to stand in his way. He has a strong personality which he uses to dominate others. He is an aggressive and overbearing man. As I have said, he will allow nothing to stand in his way. I assess him as being ruthless and fearless. He is also, unfortunately, unprincipled. For reasons which follow, I am of the opinion that the breakdown of his working relationship with Ms Lawton led him to claim, untruthfully, that Ms Lawton had resigned as a director of Manna Hill Mining on 24 March 2003. Because of the events on 27 May 2003, which I shall address in some detail, he determined to strip Mr Wilson of his control of Manna Hill Mining which he purported to do on 12 June 2003 and 19 January 2004. He then, methodically and ruthlessly, took steps to remove Mr Wilson as a director of Manna Hill Mining culminating in an extraordinary general meeting on 20 January 2004. He then attempted, on 6 February 2004, to put Manna Hill Mining's assets beyond the reach of Mr Wilson, even if Mr Wilson was successful in these proceedings. Lastly, he purported to put Manna Hill Mining into administration on 11 February 2004 to frustrate Mr Wilson's claims. Mr Moore was a very poor witness. He prevaricated. He refused to address questions directly where a direct answer would embarrass his case. He was garrulous when it suited him. He was also untruthful when it suited him so to be. I am not prepared to act on any of his evidence, unless his evidence is corroborated or consistent with the evidence of the applicants and their witnesses. Wherever his evidence is in conflict with the evidence of any other witness, including the evidence of Mr Spratt, I prefer the evidence of those other witnesses. Wherever his evidence is contradicted by any document, I reject his evidence.' 9 I mention these findings of Lander J because the bankrupt told me that one of the reasons he wished to pursue the appeal and the application for leave to appeal was that it would give him an opportunity of restoring his reputation. 10 The bankrupt filed and served an appeal against the substantive orders made by Lander J and an application for leave to appeal against the costs order made against him. For convenience, I will refer to the appeal and the application for leave to appeal as 'the appeals'. The appeals were filed and served on 6 August 2004. 11 The creditor's petition presented by Mr Wilson and Ms Lawton and the sequestration order made on the petition were based on a judgment debt which in turn was based on costs orders made by Lander J in relation to interlocutory applications in the proceedings in March and April 2004. 12 The appeals are actions within s 60(2) and (3) of the Act and upon the making of the sequestration order on 21 January 2005 the prosecution or discontinuance of the appeals was in the hands of the trustee and not the bankrupt. Section 60(2), (3) and (4) of the Act provides as follows: '(2) An action commenced by a person who subsequently becomes a bankrupt is, upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action. (3) If the trustee does not make such an election within 28 days after notice of the action is served upon him or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action. (4) Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of: (a) any personal injury or wrong done to the bankrupt, his or her spouse or a member of his or her family; or (b) the death of his or her spouse or of a member of his or her family.' 13 The appeals do not fall within the terms of s 60(4) of the Act. 14 On 21 March 2005 the respondents to the appeals (Mr Wilson and Ms Lawton) served notice of the action upon the trustee. By agreement with the solicitor for the trustee, the respondents agreed to an extension to 26 April 2005, but no further extension was or has been agreed since then. The effect of s 60(3) of the Act is that the appeals are deemed to have been abandoned because the trustee did not make an election within the period prescribed. 15 Section 33(1) of the Act provides as follows: 'The Court may: (a) upon such terms as it thinks fit, at any time adjourn any proceeding before it, either to a fixed date or generally; (b) at any time allow the amendment of any written process, proceeding or notice under this Act; or (c) extend before its expiration or, if this Act does not expressly provide to the contrary, after its expiration, any time limited by this Act, or any time fixed by the Court or the Registrar under this Act (other than the time fixed for compliance with the requirements of a bankruptcy notice), for doing an act or thing or abridge any such time.' 16 There are authorities of this Court to the effect that s 60(3) 'does not expressly provide to the contrary' within s 33(1)(c) of the Act and in those circumstances an application for an extension of time within which to elect under s 60(3) may be made by a trustee in bankruptcy even if the time limit of 28 days has expired: Re Faulkner; Ex parte Official Receiver (1981) 52 FLR 109; Abeyratne v Trkulja (1998) 90 FCR 253. For the purposes of this application, I will proceed on the assumption that the time can be extended even if the time for election has expired at the time the application is made. 17 To summarise to this point: the appeals are deemed abandoned by operation of law. The trustee may apply for an extension of time within which to elect to prosecute the appeals and, if successful, he may elect to prosecute the appeals. 18 The appeals have not been listed for hearing before the Full Court. The listing of the appeals has come before single Judges of this Court and the listing has been adjourned from time to time, particularly during the period when the bankrupt was pursuing his challenge to the making of the sequestration order. In more recent times, the following developments have occurred: 1. The respondents to the appeals (Mr Wilson and Ms Lawton) have applied to have the appeals dismissed on the ground that they have been abandoned (s 60(3) of the Act) or on the ground that there has been want of prosecution of the appeals; and 2. Although the trustee has decided that he does not wish to elect to prosecute the appeals, he has applied for an extension of the time within which to elect on the ground that this application of the bankrupt should be determined before orders dismissing the appeals are made. 19 I have heard submissions on both these applications, but I have not yet made a decision on either of them. After giving the matter anxious consideration I have decided that it is appropriate to make my decision on the present application first. The orders made by the Federal Magistrate 20 As I have said, the Federal Magistrate had before him an application issued by the bankrupt on 16 March 2005 and seeking an order removing the trustee. The Federal Magistrate made a decision on the application insofar as it raised matters not related to the trustee's conduct in relation to the appeals (Moore v Macks [2006] FMCA 594). On 27 April 2006 he made the following orders: '1. That the application filed on 16 March 2005 for orders pursuant to s 179(1)(a) of the Bankruptcy Act removing the respondent as trustee of the applicant's bankrupt estate and for orders relating to the trustee's conduct, other than his proposed abandonment of appeals instituted by the applicant in SAD175/04 and SAD176/04 in the Federal Court of Australia, be dismissed. 2. That further consideration of the application as it relates to orders sought arising out of the proposed abandonment of the said appeals be adjourned to Wednesday, 17 May 2006 at 9.30 am. 3. That the interim application filed on 10 April 2006 do stand dismissed.' 21 Those orders made by the Magistrate are the subject of an appeal to this Court which has not yet been heard and determined. 22 It seems that because the appeals had been called over before me, the Federal Magistrate considered that it may be appropriate for me to deal with what was then left of the application and on 13 June 2006 he made the following order: '1. Further hearing of these proceedings be transferred to the Federal Court of Australia before His Honour Justice Besanko on 22 June 2006 at 2.15 pm.' 23 The power to transfer a 'proceeding' to this Court is contained in s 39 of the Federal Magistrates Act 1999 (Cth). 24 The application before me relates to the trustee's decision that he will not seek to prosecute the appeals. More accurately, in view of the events which have occurred, the decision is the trustee's decision that he will not seek an extension of time to elect for the purpose of prosecuting the appeals. I have considered the application under both s 179 and s 178 of the Act and I have concluded that there are no grounds under either section to impugn the trustee's decision. 25 In the circumstances it is not necessary for me to consider if an order under either section can override the deemed abandonment under s 60(3) of the Act, whether an appropriate order can be made under either section and, assuming these difficulties can be overcome, the formulation of the order and the stage at which (if at all) it would be appropriate to hear from the respondents to the appeals. It is unfortunate that these important issues were not the subject of submissions but the bankrupt was unable to articulate the orders he sought beyond what is set out in his application and the trustee was content to argue the application on the basis that under either s 178 or s 179 of the Act there was simply no reason to interfere with the trustee's decision. As I have said, I think that the trustee's submission is correct and I am able to determine the application on that basis. 26 It seems that there was some debate before the Federal Magistrate as to whether the bankrupt's challenge was more appropriately considered as an application under s 178 rather than an application under s 179 of the Act. As I have said, I propose to consider the application under both sections. Sections 178 and 179 of the Bankruptcy Act 1966 (Cth) 27 Sections 178 and 179 of the Act Bankruptcy Act 1966 provide as follows: '178 (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 day on which the person became aware of the trustee's act, omission or decision. 179 (1) The Court may, on the application of the Inspector‑General, a creditor or the bankrupt, inquire into the conduct of a trustee in relation to a bankruptcy and may do one or both of the following: (a) remove the trustee from office; and (b) make such order as it thinks proper. (2) The Inspector‑General or a creditor may at any time require a trustee to answer an inquiry in relation to the bankrupt's estate or affairs.' 28 The fundamental purpose of s 178 of the Act is to give the court the power in a supervisory role, to review acts, omissions or decisions of a trustee in bankruptcy made in the course of the administration of a bankrupt's estate on the application of any person with appropriate standing. Its operation is to be understood in its historical context (Macchia v Nilant (2001) 110 FCR 101 ('Macchia') at 119 per French J), and in the context of the broader relationship between the court and the trustee in bankruptcy as an officer of the court (Macchia at 116). For present purposes it is sufficient to note the following points about the scope of the section: 1. Under the section, the court is fulfilling a supervisory role judicially, rather than an administrative role standing in the shoes of the trustee. As such, grounds for judicial review must be established by an applicant Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166 ('Wheeler') at 170 per Lee J, and the exercise of the court's power is wholly in its discretion. The court has the 'widest possible discretion as to the appropriate order which should be made in the particular case' (Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182 ('Re Tyndall') at 186 per Deane J). 2. The impugned act, omission or decision of the trustee in bankruptcy need not be absurd, unreasonable, or taken in bad faith before it is subject to review or a resultant order of the court under the section (Re Tyndall at 186 per Deane J). Indeed, the act, omission or decision of the trustee may be subject to review even though it was commercially sound at the time it was made: Macchia at 116 per French J. At the same time the trustee's opinion will be a relevant factor in the exercise of the court's discretion, and there is no presumption that the court will intervene in a given case. The fact that the court might have taken a different course to the trustee in bankruptcy at the relevant time is not, without more, a basis to disturb the trustee's decision: Re Tyndall at 186 per Deane J; Macchia at 116 per French J. 3. The court is able to take into account information which was not available to the trustee at the time of an impugned act, omission or decision (Gray v Clout (1990) 27 FCR 141, 144 per Pincus J). 4. The exercise of the discretion is subject to the principle that the court will not unduly interfere with the day-to-day administration of a bankrupt's estate by a trustee in bankruptcy: Re Tyndall at 186 per Deane J. 5. The section does not provide an avenue for a bankrupt to pursue his or her personal interests at the expense of creditors (Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 139 per Brennan CJ, Gaudron and McHugh JJ) nor does it 'create a cause of action which sounds in damages', either in tort or under the general law (Macchia at 119). Both of these propositions reflect the purpose of the section which is to give the court a supervisory role with respect to a trustee in bankruptcy in the administration of the bankrupt's estate. 6. Ultimately the question is what result would be 'just and equitable' in the circumstances of the case. 29 Section 179 is governed by similar, but not identical, considerations to those which are relevant to s 178. Unlike s 178, which relates to the review of specific acts, omissions or decisions of a trustee in bankruptcy in the administration of a bankrupt's estate, s 179 reflects the more general aspect of the court's supervisory role and allows it to carry out an inquiry into the 'conduct' of a trustee in relation to a bankrupt's estate or affairs (s 179(1)). As with s 178 the section is to be understood in the context of the role of the trustee in bankruptcy as an officer of the court. The section is typically employed where an allegation of misconduct or error by a trustee in bankruptcy arises (Macchia at 120 per French J). 30 Section 179 requires the court to engage in a process which may involve two stages. First, the court must consider whether there is a basis to inquire into the conduct of a trustee in bankruptcy. Secondly, if an inquiry is undertaken, the court must consider what, if any, order should be made as a result of the inquiry. I note the following salient points with respect to the operation of the section in the case of the first stage. It is not necessary for me to consider the second stage because I do not think that there is a basis to inquire into the conduct of the trustee in bankruptcy. 1. The question of whether to order an inquiry is in the broad discretion of the court, and the court should be reluctant to do so unless there are "substantial grounds for believing that the trustee erred in his administration" (Re Gault, Gault v Law (1981) 57 FLR 165 ('Re Gault') at 173 per Ellicott J, cited in Macchia at 120 per French J). This requirement has also been put in terms of 'sufficient grounds' (Re Gault at 173 per Ellicott J), and 'a proper 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' (Wilson v Commonwealth of Australia [1999] FCA 219 at [44] per Branson J). The onus is on the applicant to establish the grounds or case for an inquiry. 2. As with s 178, the exercise of the court's discretion to order an inquiry is subject to the principle that the court will not unduly interfere with the day-to-day administration of a bankrupt's estate by a trustee in bankruptcy: Re Tyndall at 120 per French J. 3. As with s 178, s 179 is not a vehicle for a bankrupt or other person to seek damages which go beyond the making good of any loss to the bankrupt's estate caused by improper administration by the trustee in bankruptcy: Re Tyndall at 121 per French J. The trustee's decision in relation to the appeals 31 The bankrupt's application proceeded by way of affidavit evidence from him and from the trustee. I received the bankrupt's affidavits subject to arguments as to relevance. A good deal of his affidavit evidence is irrelevant. The bankrupt was not cross-examined on his affidavits by counsel for the trustee. The trustee was cross-examined at some length by the bankrupt, who, as I said, represented himself. A number of his questions were of questionable relevance. 32 The trustee was an honest and straightforward witness and I accept his evidence. 33 The bankrupt's submissions were at times difficult to follow and he seemed quite prepared to make serious allegations about the conduct of other persons when there was no basis in the evidence for such allegations. 34 Late in the cross-examination of the trustee, the bankrupt made an oral application for an order that the trustee make discovery and production of three classes of documents. The first class of documents was all minutes of meetings of creditors of the bankrupt estate and all minutes of meetings of the committee of inspection of the bankrupt estate. I refused to make an order in relation to that class of documents. I accept the trustee's sworn evidence that there has been only one meeting of creditors and minutes of that meeting have been discovered and produced. In fact, the minutes are an exhibit before me. I accept the trustee's sworn evidence that there have been no meetings of the committee of inspection. The second class of documents was all documents relating to a transaction whereby a caveat lodged by the bankrupt to secure a claim by him for consulting fees was withdrawn and in lieu thereof a bank guarantee was given. This transaction is discussed in more detail below. I refused to make an order in relation to that class of documents because the relevance of the documents was not established. The third class of documents was all documents relating to the financial position of the bankrupt estate. On the material before me, that request, which was made in the course of the respondent's case, was no more than a fishing expedition by the bankrupt. Furthermore, the application was made at a very late stage in the hearing of the application. For those reasons, I refused to make an order in relation to that class of documents. 35 Before identifying the relevant evidence and issues raised by the bankrupt it is convenient to identify the trustee's reasons for deciding that the appeals should not be pursued. In his affidavit sworn on 9 May 2006, the trustee states that he had formed 'the view that it would not be prudent to prosecute the appeals and thereby incur costs and a possible liability for adverse costs for little prospect of a return to unsecured creditors'. In paragraph 46 of that affidavit he sets out the matters he took into account in forming that view. '46. I have taken the following matters into consideration when determining whether to prosecute the Manna Hill Mining Appeals: 46.1 the merits of the appeals and, in particular, the fact that much of the decision of Justice Lander turned on findings of credit; 46.2 the cost of prosecuting the appeals in relation to a trial which ran for approximately 10 days and a notice of appeal numbering 76 pages would be significant, especially given that as Mr Moore conducted the trial in person, I would need to instruct solicitors and counsel who were not present at the trial and who would need first to "read-in" to all of the transcript and exhibits; 46.3 the fact that no creditor has offered to fund the prosecution of the appeals; 46.4 the absence of undisputed funds available in the bankrupt administration to pay for the prosecution of the appeals; 46.5 the risk that if I elected to prosecute the appeals, I may be personally liable for the costs of the respondents if the appeals were unsuccessful and in circumstances where there is an absence of undisputed funds available; and 46.6 the lack of apparent benefit to the bankrupt estate should the appeals be successful. While the costs order made in the Costs Decision may be eliminated it is not clear whether any significant costs from the trial will be awarded in favour of the estate given that Mr Moore appeared without legal representation. Further, overturning the orders made by Justice Lander will result in certain directorships being altered (not leading to an inflow of money to the estate) and re-instatement of certain share allotments which might result in an increase in the bankrupt's assets but the amount is uncertain. Further, as mentioned earlier, the bankrupt asserts that he holds the shares held by him in Manna Hill Mining on trust pursuant to the Moore Family Trust. I do not concede that this is correct. However, it may be that even if the appeal was successful with the result that the shares held by the bankrupt increased, the bankrupt may assert that he held the increased shareholding on trust. As such, any increase would benefit the beneficial owners of the trust and not necessarily the bankrupt directly although I note from the decisions of both Federal Magistrate Lindsay and Justice Mansfield in relation to the Review Application and the Sequestration Appeal respectively that it appears that Mr Moore may be the sole beneficiary of the trust. As mentioned earlier in this my affidavit, I have not yet formed a view in relation to the ownership of the shareholding and I wish to reserve all rights in that regard for the benefit of the bankrupt estate of Mr Moore until I am able to consider the issues further.' 36 The trustee had sought legal advice from his solicitors as to the prospects of success of the appeals and whether, as trustee of the bankrupt's estate, he should proceed with the appeal. He received legal advice on those issues in April 2005. That advice is a confidential exhibit before me. 37 I now turn to consider the other matters advanced by the bankrupt in support of his application. Generally speaking, the matters relate to one or more of three topics, namely, the merits of the appeals, the assets and liabilities of the bankrupt's estate and general complaints about the trustee's conduct which, if relevant, are relevant to the bankrupt's assertion that the trustee had a conflict of interest and was determined to bring the appeals to an end. I include in this third topic the bankrupt's submission that the appeals should proceed because he should be given the opportunity to restore his reputation. 1. Merits of the appeal 38 One of the issues before Lander J was whether Ms Lawton had resigned as a director of Manna Hill Mining Company. His Honour found that she had not. The bankrupt asserted that Ms Lawton had completed Centrelink forms in a way which indicated (or would indicate) that she had resigned as a director of Manna Hill Mining Company. The forms were not produced. This issue appears to have been raised at the trial. The issue is not referred to in the reasons for judgment of Lander J. 39 It is difficult to make anything of this because it is not clear precisely what the bankrupt is asserting or what was or can be established by evidence. The trustee was advised that the prospects of success on the appeal were not good and he appears to have adopted that view. The legal advice provided to him dealt with the bankrupt's assertions about the Centrelink forms and their completion by Ms Lawton. Nothing was established before me to suggest that the trustee placed inappropriate weight on this matter. 40 The bankrupt asserted that he was ill during the trial and that in all the circumstances, including the fact that he was not represented, the Judge erred in not adjourning the trial. The legal advice provided to the trustee dealt with this assertion and again, as with the previous matter, nothing was established before me to suggest that the trustee placed inappropriate weight on this matter. 2. Assets and liabilities in the bankrupt estate 41 A good deal of time was spent on one particular transaction. The bankrupt claimed that Manna Hill Mining Company owed him certain consulting fees. He lodged a caveat over property owned by the company. That was done after the sequestration was made. The trustee negotiated an agreement whereby the caveat was removed and in its place a bank guarantee in favour of the trustee was given. The trustee said, and I have no reason to doubt his evidence, that the bank guarantee was given to him in his capacity as trustee and that the transaction was effected for good commercial reasons. The caveatee was threatening to have the caveat removed and the trustee was concerned about the bankrupt's right to lodge the caveat after a sequestration order had been made against his estate. 42 The bankrupt suggested that the trustee had in effect misappropriated property belonging to him or, in the alternative, the transaction showed bias on the part of the trustee. I reject those contentions. The transaction was not unusual and I accept the trustee's evidence that it was appropriate in the circumstances. The trustee's actions have not affected the claim or, should it be successful, the ability to recover on the claim. 43 A good deal of time was also spent on whether the bankrupt or a family trust owned a shareholding of about 20 per cent in Manna Hill Mining Company. The bankrupt seemed to suggest that the family trust owned the shares; the trustee was not prepared to concede that that was the case. It also seems to be the case that the bankrupt is the primary beneficiary under the family trust. The exact significance to the applicant's case on the ownership issue was never made clear. The issue of ownership might be important if there was evidence of the value of the shares. If the shares had been owned by the bankrupt and were valuable, they might be an asset which could be used to fund the appeals. However, there is no evidence as to the value of the shares and a relatively old valuation of mining interests of the company does not establish the value of the shares in the absence of evidence of the assets and liabilities of the company. 44 The bankrupt asserted that he was owed moneys by various persons. The details are as follows: 1. Mr Iles $19,834 2. Ms Lawton $20,683 3. Manna Hill Mining Company $68,000 45 The debt allegedly owed by Manna Hill Mining Company relates to the consulting fees previously discussed in the context of the caveat. I am satisfied based on all the evidence before me that each of these debts is in dispute and it is reasonable to infer that attempts to recover them will result in the trustee incurring further costs. Nothing was put to suggest that the trustee's present view that there is an absence of what he calls 'undisputed funds' available in the bankrupt administration to pay for the prosecution of the appeals is wrong or needs to be qualified in any way. 46 There was some attack by the bankrupt during his cross-examination of the trustee on the fees and charges incurred by the trustee since his administration commenced. The relevance of this topic is not entirely clear but, in any event, there is no evidence to suggest that the trustee acted in breach of duty in incurring the fees and charges which he has. 3. General conduct and conflict of interest 47 The bankrupt asserts that the trustee is biased against him and that he has and will do everything in his power to bring the appeals to an end. 48 The bankrupt submitted that the respondents to the appeals had stolen certain ore samples belonging to Manna Hill Mining Company, that they and others had acted illegally in breaking into his office and that Mr Iles, solicitor for the respondents, had given incorrect evidence before Lander J and acted improperly and illegally in a number of ways. The bankrupt sought to characterise the conduct of certain persons involved in events as illegal and improper but there is no evidence which would substantiate that conclusion. I take by way of example the alleged theft of certain ore samples by Mr Wilson and Ms Lawton. This allegation was the subject of findings by Lander J. His Honour found that Mr Wilson and Ms Lawton did what they did in order to preserve the company's assets. Nothing has been put before me to suggest that that conclusion is wrong. In any event, I am satisfied on all the evidence that the trustee has been independent and has considered in an objective and appropriate fashion the question of whether he should prosecute the appeals. 49 The bankrupt submitted that the appeals should proceed because he should be given the opportunity to restore his reputation. He referred to the comments Lander J made about him when considering his credibility as a witness. Those comments were certainly adverse to the bankrupt. I am prepared to assume for the purposes of argument and without deciding that restoration of reputation includes reputation damaged as a result of findings as to the credibility of the bankrupt in the proceedings. There is no suggestion in this case of the trustee being asked to assign any rights in relation to the appeals or of an indemnity for the costs of the appeals being offered to the trustee. Even if there were moneys in the estate a court 'would be unlikely to permit the bankrupt to pursue his personal interests in so far as they are not coincident with the due administration of the estate by the trustee, at the expense of the creditors': Cummings v Claremont Petroleum NL (supra) at 139 per Brennan CJ, Gaudron and McHugh JJ. This case is even stronger because there are no undisputed funds to pay for the prosecution of the appeals. 50 In my opinion, there is no reason to interfere with the trustee's decision and there is no basis for an order under s 178 and no ground to order an inquiry under s 179 of the Act. Conclusion 51 The proceedings transferred to this Court by order of a Federal Magistrate made on 13 June 2006 are dismissed. I will hear the parties on other orders. I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. Associate: Dated: 15 January 2007 Counsel for the Applicant: The applicant appeared in person. Counsel for the Respondent: J Madsen Solicitor for the Respondent: Madsen Rowley Dates of Hearing: 18 December 2006 21 December 2006 8 January 2007. Date of Judgment: 15 January 2007