FEDERAL COURT OF AUSTRALIA Lahood v Ernst & Young; In the Matter of Dave Lahood Pty Ltd (In Liq) [2015] FCA 89 Citation: Lahood v Ernst & Young; In the Matter of Dave Lahood Pty Ltd (In Liq) [2015] FCA 89 Parties: IN THE MATTER OF DAVE LAHOOD PTY LTD (IN LIQUIDATION) (ACN 079 981 838); DAVID LAHOOD v ERNST & YOUNG (ABN 75 288 172 749), SIMON JOHN CATHRO, MATT GOODRICK, PHILIP CAMPBELL-WILSON and DEMETRIA KANAGASABAI IN THE MATTER OF THE BANKRUPT ESTATE OF DAVID LAHOOD; DAVID LAHOOD v HALL CHADWICK (ABN 83 316 261 431), PAUL ANDREW LEROY, JOHN JOLLY and GIRIJA SHIVANNA File numbers: NSD 999 of 2014 NSD 1211 of 2014 Judge: FOSTER J Date of judgment: 17 February 2015 Catchwords: BANKRUPTCY – whether a bankrupt is entitled to an order for inquiry into the conduct of the trustee in the administration of his bankrupt estate pursuant to s 179 of the Bankruptcy Act 1966 (Cth) CORPORATIONS – whether a contributory of a corporation in liquidation is entitled to an order for inquiry into the conduct of liquidators appointed to wind up that corporation pursuant to s 536 of the Corporations Act 2001 (Cth) Legislation: Bankruptcy Act 1966 (Cth), ss 19, 130, 134 and 179 Bankruptcy Regulations 1996 (Cth) Corporations Act 2001 (Cth), ss 488, 536 and 1072C(4) Cases cited: Lahood v Bank of Western Australia Ltd (No 3) (2013) 8 BFRA 721; [2013] FCA 861 Lahood v Bank of Western Australia [2013] FCA 137 Lahood v Bank of Western Australia (No 2) [2013] FCA 150 Re Dave Lahood Pty Ltd [2013] NSWSC 785 Re David Lahood Pty Ltd [2013] NSWSC 1244 Ferella v Official Trustee in Bankruptcy (2010) 188 FCR 68 Hall v Poolman (2009) 75 NSWLR 99 Leslie v Hennessy [2001] FCA 371 Date of hearing: 19 November 2014 Place: Sydney Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 66 Counsel for the Plaintiff/Applicant in NSD 999 of 2014 and NSD 1211 of 2014: The plaintiff/applicant (David Lahood) appeared in person Solicitor for the Defendants in NSD 999 of 2014: Mr D Anderson of ERA Legal Counsel for the Respondents in NSD 1211 of 2014: Mr RD Marshall Solicitor for the Respondents in NSD 1211 of 2014: Bartier Perry IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 999 of 2014 in the matter of dave lahood PTY LTD (IN LIQUIDATION) (ACN 079 981 838) BETWEEN: DAVID LAHOOD Plaintiff AND: ERNST & YOUNG (ABN 75 288 172 749) First Defendant SIMON JOHN CATHRO Second Defendant MATT GOODRICK Third Defendant PHILIP CAMPBELL-WILSON Fourth Defendant DEMETRIA KANAGASABAI Fifth Defendant JUDGE: FOSTER J DATE OF ORDER: 17 FEBRUARY 2015 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The first, third and fifth defendants be removed as parties to this proceeding. 2. The Application be dismissed. 3. The costs of the defendants of and incidental to the said Application be costs in the winding up of Dave Lahood Pty Ltd (In Liquidation) (ACN 079 981 838). Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1211 of 2014 in the matter of THE BANKRUPT ESTATE OF david lahood BETWEEN: DAVID LAHOOD Applicant AND: HALL CHADWICK (ABN 83 316 261 431) First Respondent PAUL ANDREW LEROY Second Respondent JOHN JOLLY Third Respondent GIRIJA SHIVANNA Fourth Respondent JUDGE: FOSTER J DATE OF ORDER: 17 FEBRUARY 2015 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The first, third and fourth respondents be removed as parties to this proceeding. 2. The Application be dismissed. 3. The costs of the respondents of and incidental to the said Application be taxed and paid out of the bankrupt estate of David Lahood. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION nsd 999 of 2014 in the matter of DAVE lahood PTY LTD (iN LIQUIDATION) (ACN 079 981 838) BETWEEN: DAVID LAHOOD Plaintiff AND: ERNST & YOUNG (ABN 75 288 172 749) First Defendant SIMON JOHN CATHRO Second Defendant MATT GOODRICK Third Defendant PHILIP CAMPBELL-WILSON Fourth Defendant DEMETRIA KANAGASABAI Fifth Defendant IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY GENERAL DIVISION NSD 1211 of 2014 in the matter of THE BANKRUPT ESTATE OF david lahood BETWEEN: DAVID LAHOOD Applicant AND: HALL CHADWICK (ABN 83 316 261 431) First Respondent PAUL ANDREW LEROY Second Respondent JOHN JOLLY Third Respondent GIRIJA SHIVANNA Fourth Respondent JUDGE: FOSTER J DATE: 17 FEBRUARY 2015 PLACE: SYDNEY REASONS FOR JUDGMENT 1 On 14 February 2013, a Federal Magistrate made a sequestration order against the estate of David Lahood. Mr Lahood had run a business of buying and selling motor vehicles from premises at 131A Parramatta Road, Homebush, NSW (the property). The property was owned by a company which, in turn, was owned and controlled by Mr Lahood, namely Dave Lahood Pty Ltd (In Liquidation) (ACN 079 981 838) (the corporation). As a consequence of the making of the sequestration order against the estate of Mr Lahood, Paul Andrew Leroy was appointed as Mr Lahood's trustee in bankruptcy. 2 The petitioning creditor was originally Bank of Western Australia Limited (Bankwest). Subsequently, Commonwealth Bank of Australia was substituted as the petitioning creditor. 3 The relevant act of bankruptcy occurred on 3 January 2012. It was constituted by Mr Lahood's failure to comply with a Bankruptcy Notice issued at the request of Bankwest. The Bankruptcy Notice was served upon Mr Lahood on 13 December 2011. The Bankruptcy Notice was founded upon the balance due to Bankwest from Mr Lahood under a judgment entered against him in the Supreme Court of New South Wales on 8 February 2010. The amount of that judgment was $2,806,192.56. The net amount due to Bankwest as at the date when the Bankruptcy Notice was issued was $855,346.86. As at the date when the sequestration order was made, the judgment debt was a little over three years old. Although the amount of the judgment debt had been reduced by the amount of $2,212,409.29 by payments made or credits allowed over that three year period, no attempt was made by Mr Lahood to seek to set aside the judgment or to stay the judgment. No appeal from the judgment was ever instituted. No attempt has ever been made to attack the Bankruptcy Notice itself. 4 An appeal to this Court was lodged against the Federal Magistrate's orders. That appeal was dismissed on 26 August 2013 (Lahood v Bank of Western Australia Ltd (No 3) (2013) 8 BFRA 721; [2013] FCA 861). 5 Simon John Cathro and Philip Campbell-Wilson (the liquidators) were appointed as provisional liquidators of the corporation by order of the Supreme Court of New South Wales made on 10 May 2013. On 2 September 2013, the liquidators were appointed as the official liquidators of the corporation by order of the same Court. Those appointments were made at the instigation of Mr Leroy in his capacity as the trustee of Mr Lahood's bankrupt estate. 6 Since the commencement of his bankruptcy, Mr Lahood has brought a number of proceedings. In this Court, he brought two applications to stay the sequestration order (Lahood v Bank of Western Australia [2013] FCA 137; and Lahood v Bank of Western Australia (No 2) [2013] FCA 150) and, as I have said, appealed from the orders of the Federal Magistrate by which his estate was sequestrated. All of these applications were unsuccessful. In addition, Mr Lahood sought to set aside the appointment of the liquidators as provisional liquidators (Re Dave Lahood Pty Ltd [2013] NSWSC 785) and raised a number of other matters concerning Mr Leroy's entitlement to be registered as the owner of Mr Lahood's share in the corporation (Re David Lahood Pty Ltd [2013] NSWSC 1244). 7 There are presently two applications before the Court. 8 The first is an application which was originally instituted on 2 October 2014 in the Federal Circuit Court of Australia (proceeding SYG 2749 of 2014) by which Mr Lahood seeks to litigate various complaints against Mr Leroy arising out of Mr Leroy's administration of Mr Lahood's bankruptcy. By order made by a District Registrar on 19 November 2014, the whole of that proceeding was transferred into this Court. Upon transfer, that proceeding was allocated plaint number NSD 1211 of 2014. 9 The second application is an application by Mr Lahood against the liquidators in which he seeks to litigate complaints made against them concerning their administration of the liquidation of the corporation. That proceeding was also commenced on 2 October 2014 and is proceeding NSD 999 of 2014 in this Court. 10 Because of the close connections between the two sets of proceedings, I heard both proceedings together with evidence in each proceeding being evidence in the other. The Precise Claims for Relief 11 In proceeding NSD 1211 of 2014, Mr Lahood articulated his claims against Mr Leroy in an Amended Originating Process filed on 14 November 2014 in the following terms: This application is made under s 19 of the Bankruptcy Act 1966 and is a complaint that the trustee has not faithfully performed their duties. On the facts stated in the supporting affidavit(s), the plaintiff claims: l. The trustees, being the First, Second, Third and Fourth Defendants, are dishonest, acted secretly and illegally transferred all of the Plaintiff's shares into PAUL LEROY's name and are now blackmailing the Plaintiff to give him $450,000-00 stating it is for remuneration charges and creditors' charges when all that is owed to the creditors is $9,077-00. 2. The trustees, being the First, Second, Third and Fourth Defendants should not be in charge of the Plaintiff's estate because of the enormous charges that HALL CHADWICK has already taken out of the Plaintiff's estate while has agreed and said in writing his charges from the start of David Lahood's bankruptcy until finalization of the bankruptcy to be annulled $100,000-00 capped while he has now proposed to my creditors to have a further remuneration charge of another maximum amount of $95,000-00 while they have sold all my vehicles for under-valuation amount of $103,322-00 and took trustees' fees and agents' commissions and costs and legal fees. AND 3. The trustees, being the First, Second, Third and Fourth Defendants, are to re-emburse the Plaintiff for all monies misappropriated. 4. The trustees, being the First Second, Third and Fourth Defendants, pay costs and damages to the plaintiff as the Court sees fit. 12 The reference in Mr Lahood's claims for relief to s 19 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) is misconceived. Counsel for Mr Leroy submitted that, in truth, Mr Lahood intended to seek relief pursuant to s 179 of the Bankruptcy Act which is in the following terms: 179 Control of trustees by the Court (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. 13 It does seem to me that Mr Lahood wishes to invoke s 179 in order to have Mr Leroy removed as his trustee and also in order to have the Court order an inquiry into certain actions carried out by Mr Leroy in the administration of Mr Lahood's bankrupt estate. In addition, he wishes to have his estate reimbursed such moneys as the Court might consider were wrongfully expended in the course of the administration of his bankrupt estate. 14 I propose to address the claims made by Mr Lahood in proceeding NSD 1211 of 2014 upon the basis which I have outlined at [13] above. 15 In proceeding NSD 999 of 2014, Mr Lahood has made clear that he makes his claims for relief in that proceeding pursuant to s 536 of the Corporations Act 2001 (Cth) (Corporations Act). In an Amended Originating Process filed by him on 14 November 2014, Mr Lahood set out his claims in the following terms: This application is made under s 536 of the Corporations Act 2001 and is a complaint that the liquidator has not faithfully performed their duties. On the facts stated in the supporting affidavit(s), the plaintiff claims: 1. The liquidators, being the First, Second, Third, Fourth and Fifth Defendants, are dishonest, deceiving and secretly and illegally working out to empty the estate of David Lahood PTY LTD. 2. The liquidators, being the First Second, Third, Fourth and Fifth Defendants, should not be in charge of the money from the Plaintiff's estate. AND 3. The liquidators, being the First Second, Third, Fourth and Fifth Defendants, are to re-emburse the Plaintiff for all monies misappropriated and secretly worked out between the creditors and trustees to burden all the plaintiffs estate through illegal charges and professional and legal fees. 4. The liquidators, being the First Second, Third, Fourth and Fifth Defendants, pay costs and damages to the plaintiff as the Court sees fit. 16 Mr Lahood's claims against the liquidators raise similar considerations as are raised by his claims against Mr Leroy. 17 In proceeding NSD 1211 of 2014, Mr Lahood has named as additional respondents Hall Chadwick, John Jolly and Girija Shivanna. Hall Chadwick is the firm of which Mr Leroy is a member. The other two persons are (or were) employees of Hall Chadwick acting under the direction of Mr Leroy in respect of the administration of Mr Lahood's bankrupt estate. As I have already made clear, Mr Lahood's complaints in proceeding NSD 1211 of 2014 are complaints against Mr Leroy. Mr Leroy is the sole trustee of Mr Lahood's bankrupt estate. It is Mr Leroy alone who has statutory and other duties and responsibilities in respect of the administration of that estate. None of Hall Chadwick, Mr Jolly or Ms Shivanna is a proper party to proceeding NSD 1211 of 2014 and I propose to order that they all be removed as parties to that proceeding. 18 In proceeding NSD 999 of 2014, Mr Lahood has named as additional defendants Ernst & Young, Matt Goodrick and Demetria Kanagasabai. He has done so for reasons which are similar to the reasons for his joinder of Hall Chadwick and the other individuals in proceeding NSD 1211 of 2014. The liquidators are members of the accounting firm Ernst & Young. The other two persons are employees of that firm. None of Ernst & Young, Mr Goodrick or Ms Kanagasabai is a proper party to this proceeding and, for reasons which are substantially the same as those given in respect of proceeding NSD 1211 of 2014, I propose to make an order removing them as parties. 19 By a document styled "Application in a Case" filed in the Federal Circuit Court on 31 October 2014 in proceeding SYG 2749 of 2014 in that Court, Mr Leroy sought the following orders: 1. A direction pursuant to section 134(4) of the Bankruptcy Act 1966 that the respondent, Paul Leroy, would be justified in bringing proceedings by Interlocutory Process in Supreme Court of New South Wales, Equity Division, Corporations List proceedings numbered 2013/145558 to claim an order that the Official Liquidators of Dave Lahood Pty Limited (in Liquidation) have special leave under s.488(2) of the Corporations Act 2001 to distribute the amount of $450,000 to Paul Leroy as an interim payment of surplus. 2. The substantive application in these proceedings brought by the applicant, David Lahood, be dismissed with costs. 20 Counsel for Mr Leroy explained to me at the hearing that the second prayer for relief in his client's Application in a Case was intended to be an application that the whole of Mr Lahood's proceeding be summarily dismissed. Given that I have now heard Mr Lahood's claims on a final basis, Mr Leroy's claim for an order summarily dismissing Mr Lahood's case is otiose. In any event, it was abandoned at the hearing. In addition, Mr Leroy did not press his claim for a direction pursuant to s 134(4) of the Bankruptcy Act at the hearing before me. He wished to reserve his position in respect of that application. I indicated to Counsel for Mr Leroy at the hearing that, were I to dismiss Mr Lahood's proceeding, his client's Interlocutory Application would also stand dismissed. Although Counsel did not necessarily agree with that proposition, I nonetheless think that it must be right. Of course, any dismissal of Mr Leroy's Application for a direction at this stage would not prevent Mr Leroy from making a further application for a direction to the same effect at some appropriate time in the future. The Relevant Evidence 21 In support of his applications, Mr Lahood read the following affidavits sworn by him: (i) Affidavit dated 2 October 2014 and filed in the Federal Circuit Court on 2 October 2014 in proceeding SYG 2749 of 2014; (ii) Affidavit dated 14 November 2014 and filed in the Federal Circuit Court on 14 November 2014 in proceeding SYG 2749 of 2014; and (iii) Affidavit dated 14 November 2014 and filed on 14 November 2014 in this Court in proceeding NSD 999 of 2014. 22 Mr Lahood did not read nor rely upon an affidavit sworn by him on 2 October 2014 and filed in proceeding NSD 999 of 2014. 23 Mr Leroy read and relied upon an affidavit sworn by him on 27 October 2014 and filed in the Federal Circuit Court on 31 October 2014 in proceeding SYG 2749 of 2014. 24 The liquidators' advocate sought to tender and rely upon two reports to creditors respectively dated 10 January 2014 and 17 March 2014. Mr Lahood objected to the tender of those reports. In the face of that objection, the liquidators' advocate withdrew the tender. 25 The affidavits relied upon by Mr Lahood are handwritten. In those affidavits, here and there, there are typed pages interleaved between the handwritten pages which are obviously extracts from other documents. For the most part, the document or documents from which the typescript folios have been extracted are not identified in any helpful way. The effect of this method of adducing evidence is that a reader of the affidavit is left with a puzzle which has to be solved if real meaning is to be given to the contents of the affidavit. Notwithstanding these difficulties, I have endeavoured to adopt what I consider to be a sensible approach to Mr Lahood's affidavits in order to develop an understanding of the points that he wished to make and an appreciation of the admissible evidence led by him by which he sought to support those points. I propose to set out a narrative in as brief a fashion as is possible of the facts relevant to the present applications and, where appropriate and necessary, to indicate whether the fact in question is in dispute. Many of the relevant facts in the narrative are not capable of dispute. 26 At all material times up to the date when the sequestration order was made against his estate, Mr Lahood was the only shareholder in the corporation. Mr Lahood held the only share which had been issued in the capital of the corporation. 27 When the sequestration order was made against Mr Lahood's estate, the corporation had made substantial borrowings from ING Bank (Australia) Ltd (ING). Those borrowings were secured by a registered first mortgage over the property and by a personal guarantee from Mr Lahood. 28 According to Mr Lahood, he borrowed $2.5 million from Bankwest in 2005. He said that, while he was unwell in hospital in 2008, he signed a document which he believed was a document converting what was then an interest only loan from Bankwest into a principal and interest loan from the same bank. At that time, he had requested an additional loan of $40,000 which Bankwest agreed to provide. He claims that, contrary to his understanding, the document which he actually signed was a second mortgage in favour of Bankwest over the property. He claims that he was deceived by officers of Bankwest at the time he signed these documents. 29 It was Bankwest which initially took steps to bankrupt Mr Lahood. 30 As I have already mentioned, Mr Lahood did not take any steps to attack the Bankruptcy Notice which Bankwest caused to be issued against him. His challenges on appeal to the Federal Magistrate's decision to sequestrate his estate were substantially directed to the proposition that the Federal Magistrate had erred by failing to grant him an adjournment of the hearing of the Creditor's Petition in order to enable him to adduce additional evidence. Mr Lahood never sought to set aside the judgment which Bankwest had obtained against him. 31 On or about 19 January 2014, the property was sold for an amount of $3,250,000 plus GST. The property was sold by ING in its capacity as mortgagee in possession. It was not sold by the liquidators. 32 Upon the sale of the property, after ING was paid out in full and other appropriate expenses were discharged, an amount of $2,781,624.98 was paid to the liquidator. 33 At one point, it appeared that Mr Lahood was claiming that he had made a loan of $5 million to the corporation. He makes no such contention now. He has never lodged a proof of debt claiming a debt in that amount. 34 Bankwest held a fixed and floating charge over the assets and undertaking of the corporation in respect of its debt. The total amount of that debt (viz $1,329,995.30) was paid by the liquidators to Bankwest shortly after 29 January 2014. As a result, both ING and Bankwest have been paid in full. Neither of those banks now has any claims against the corporation nor against Mr Lahood. The corporation has two unsecured creditors: The Cross Accountancy Services to whom a debt of $8,200 is owed and the Australian Taxation Office. 35 In light of all of the above matters, the liquidators anticipate that, after payment of all creditors, there will be a surplus available for distribution in accordance with s 488(2) of the Corporations Act. Immediately prior to the commencement of the present proceedings, the surplus was estimated to be $890,072. 36 On 2 March 2013, a search and seizure warrant in respect of Mr Lahood's moveable assets (principally motor vehicles owned by him) issued pursuant to s 130 of the Bankruptcy Act was executed at the property with the assistance of the NSW Police from Auburn Police Station. All of the motor vehicles then located at the property were seized and subsequently sold. 37 Mr Lahood claims that 25 cars were sold as a result of Mr Leroy taking possession of those motor vehicles. Mr Lahood claims that the vehicles were worth $330,000 but were sold by Mr Leroy at figures which were well below their market value. Mr Lahood said that the gross proceeds of sale of those 25 motor vehicles was $103,195.02. That figure appears to be correct. 38 As I have noted at [32] and [34] above, the creditors of the corporation and of Mr Lahood who were owed substantial sums (ING and Bankwest) have been paid in full by the liquidators. It appears that the remaining unsecured creditors of Mr Lahood are owed the relatively small sum of $9,077. 39 It is certain that there will be a surplus in Mr Lahood's estate. In light of that circumstance, it is highly likely that Mr Lahood's bankruptcy will be annulled. Consideration The Relevant Principles 40 As submitted by Mr Leroy, there is a two-step process involved in applications brought under s 179 of the Bankruptcy Act. The Court will not ordinarily initiate an inquiry under s 179 unless the Court is satisfied that a proper case for inquiry has been demonstrated (Ferella v Official Trustee in Bankruptcy (2010) 188 FCR 68 at 83 [73]–[74]). In particular, I accept and will apply the summary of the relevant principles set out by Yates J in Ferella at 83 [74] in the following terms: In Wilson, Branson J (at [44]) identified the following principles that are relevant to this issue: (a) The Court will not ordinarily initiate an inquiry under s 179 unless satisfied that a proper case for an inquiry has been demonstrated: Alafaci at 28; Re Gault; Gault v Law (1981) 57 FLR 165 at 173; Registrar in Bankruptcy v Bradley (1983) 72 FLR 231 at 233. (b) There will ordinarily be a proper case for inquiry where there is reasonable cause to believe that a trustee may have failed to act in relation to a bankruptcy in the manner required by the Bankruptcy Act or the general law. (c) However, the Court has a broad discretion in deciding whether to order an inquiry unless satisfied that sufficient grounds have been made out: Gault at 173. (d) 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: Gault at 173; see also Macchia at [49]. (e) In considering whether an inquiry should be ordered it is to be borne in mind that that applicant may have other remedies to pursue, for example, for breach of trust. 41 In the present case, of course, if an inquiry is unlikely to reveal misconduct, the costs of the inquiry will be borne by Mr Lahood's bankrupt estate. Given that there will be a substantial surplus in that estate, the costs will, in truth, be borne by Mr Lahood. I think that I should be wary of taking steps which encourage or allow Mr Lahood to waste his own money having regard to the history of the litigation amongst the various parties involved in the present applications since the sequestration order was made in February 2013. 42 Similar considerations apply to Mr Lahood's application for an inquiry pursuant to s 536 of the Corporations Act. 43 As submitted by the liquidators, in order for the Court to order that an inquiry be conducted into the liquidators' administration of the liquidation of the corporation, Mr Lahood must show a sufficient basis for making such an order and establish that there is something in the liquidators' conduct that requires inquiry. Mr Lahood is not entitled to an inquiry merely upon asking for one. 44 The liquidators submitted that there was no systematic course of conduct on their part which warranted a general inquiry. 45 In order to justify an order for inquiry under s 536, there must be a lack of faithful performance of duties or observance of requirements or justifiable complaints about incompetence, lack of diligence or a failure to perform duties faithfully (see Hall v Poolman (2009) 75 NSWLR 99 at 121 [59] and at 127 [90]). 46 In Leslie v Hennessy [2001] FCA 371, at [6], Ryan, Dowsett and Hely JJ said: Drummond J found that there was no basis for ordering an inquiry or granting other relief pursuant to s 536. In so doing, his Honour adopted the approach taken by Young J in Burns Philp Investment Pty Ltd v Dickens (No 2). The appellant disputes the correctness of that approach, saying that the requirement that there be a "prima facie case" places an unjustifiable gloss upon the section. If the expression "prima facie case for investigation" used by Drummond J in par 12 of his reasons be taken to have some technical meaning, then there might be some merit in this criticism. The appellant's written submissions conceded that, on current authority, the applicants must show a "prima facie case". See eg the cases referred to in McPherson The Law of Company Liquidation 4th Edition at p 388. However, we believe that both Young J and Drummond J were describing something less formal than a prima facie case according to some evidential burden of proof. Their Honours both meant only that an applicant must show a sufficient basis for making an order, that there is something which requires inquiry. The Court then has a discretion which it must exercise. Many factors will be relevant to that exercise. They include the strength and nature of the allegations, any answers offered by the liquidator, other available remedies, the stage to which the liquidation has progressed, the likely amounts of money involved, the availability of funds to pay for any inquiry, the likely benefit to be derived from it and the legitimate "interest" of the applicant in the outcome. 47 I intend to apply these observations in the present case. The Present Case 48 Mr Lahood alleges that Mr Leroy has acted secretly, dishonestly and illegally in taking steps to procure the transfer into Mr Leroy's name of the share in the corporation previously held by Mr Lahood. In addition, Mr Lahood has accused Mr Leroy of overcharging fees and disbursements against his bankrupt estate. Finally, Mr Lahood criticises Mr Leroy in selling the 25 motor vehicles seized by him for $103,195.02. 49 Mr Lahood accuses the liquidators of dishonest conduct by secretly and illegally working to empty the estate of the corporation. As is the case with Mr Leroy, he also accuses the liquidators of overcharging fees and expenses in the liquidation. Mr Lahood suggests that Mr Leroy and the liquidators have colluded and conspired to pillage his estate. 50 At various points in his evidence, Mr Lahood also accuses Bankwest of fraud in connection with the taking of its second mortgage over the property. He also complains that certain charges in respect of water and sewerage services to the property ought not to have been paid when settlement of the sale of the property took place. Further, at times he goes so far as to suggest the property was sold at an undervalue. 51 None of the complaints and accusations which I have summarised at [50] above is supported by any admissible evidence. In any event, it cannot avail Mr Lahood at all in the applications which he is currently making to attack the transaction with Bankwest into which he entered in 2008. The simple fact is that he has never taken any steps to challenge that transaction. He has never applied to set aside the judgment which Bankwest obtained against him. He has never attacked the Bankruptcy Notice which was founded upon that judgment. Even if I were satisfied that there was some basis for these serious allegations to be made against Bankwest (which I am not), such allegations cannot be taken into account in support of the relief which Mr Lahood now seeks in the current applications. The alleged fraud of Bankwest cannot be attributed to Mr Leroy or to the liquidators. Second, the property was sold by ING as mortgagee in possession. It was not sold by the liquidators. That sale has never been challenged by Mr Lahood. Neither Mr Leroy nor the liquidators were in control of that sale. Third, all expenses paid out at the time of settlement of that sale were supported by appropriate invoices. In particular, the amount of $3,059 (approx) paid to Sydney Water in respect of water and sewerage charges was amply supported by appropriate documentation. 52 For the reasons which I have given at [51] above, I do not consider that any of the matters to which I have referred at [50]–[51] above (whether considered individually or cumulatively) justify granting to Mr Lahood the relief which he now seeks. 53 There is no evidence to support the very serious allegations of collusion and impropriety made by Mr Lahood against Mr Leroy and the liquidators. I reject those allegations. 54 In a judgment delivered on 2 September 2013 (Re David Lahood Pty Ltd [2013] NSWSC 1244), Brereton J not only ordered that the corporation be wound up but also made a declaration that Mr Leroy was entitled to be registered as the owner of all shares in the corporation held in the name of Mr Lahood. His Honour made that declaration in order to give effect to a transfer signed by Mr Leroy both as transferor and transferee pursuant to s 1072C(4) of the Corporations Act. His Honour held that that transfer gave effect to the sequestration order previously made against Mr Lahood's estate by causing the legal title in the one share previously held by Mr Lahood to be vested in Mr Lahood's trustee in bankruptcy, Mr Leroy. Mr Lahood appeared at the hearing of the proceeding before Brereton J to which I have referred. There was no appeal from the orders made by his Honour. In those circumstances, there is no basis upon which Mr Lahood can now seek to challenge the processes by which Mr Leroy came to be registered as the holder of Mr Lahood's share in the corporation. The investigation of the circumstances in which Mr Leroy came to be so registered would not properly be a matter of inquiry either under the Bankruptcy Act or under the Corporations Act. 55 Mr Lahood challenges the sale of the motor vehicles seized by the trustee in early March 2013. He asserted that the value of the motor vehicles seized on that occasion was of the order of $330,000 whereas the gross proceeds of sale achieved when the vehicles were sold was only $103,195.02. 56 The only evidence on this point comprised a list of vehicles with their VINs and Mr Lahood's assertion that the vehicles were worth as much as $330,000. The list of vehicles in evidence is very general and does not contain any detail as to the model, type and year of manufacture of each of the motor vehicles in question. Nor has Mr Lahood provided any real detail as to the reasoning process by which he arrived at the figure of $330,000. No attempt was made by him to attribute a market value to any individual motor vehicle in the list. 57 In the circumstances, I do not think that the evidence is sufficient to justify an order under s 179 of the Bankruptcy Act that there be an inquiry into the sale of these motor vehicles. Although I accept that Mr Lahood may well be qualified by experience to attribute market values to these vehicles, I am not satisfied that his assertion of a global market value of $330,000 is a sufficient basis for ordering an inquiry. For those reasons, I am not prepared to accede to his application insofar as it concerns these motor vehicles. 58 There remains for consideration Mr Lahood's allegations that both Mr Leroy and the liquidators have overcharged fees and disbursements. 59 There is no doubt that Mr Lahood has been the real cause for the incurring of fees and expenses by Mr Leroy and by the liquidators by unsuccessfully prosecuting various pieces of litigation. It is apparent that a substantial part of the disbursements incurred by Mr Leroy and by the liquidators comprised fees paid to barristers and solicitors in connection with that litigation. 60 As at 1 March 2014, it appears that the liquidators had incurred fees and disbursements totalling $136,000 (approx). It would appear from some materials in evidence that Mr Leroy has incurred substantially more. However, the evidence is not at all clear as to the total fees and disbursements incurred by Mr Leroy. 61 According to the evidence filed on behalf of Mr Lahood, at least some (if not all) of the fees and expenses claimed by the liquidators have been approved by the Supreme Court of New South Wales which, of course, is the Court which made the winding up order against the corporation. The precise position was not made clear in the evidence. In those circumstances, I am not satisfied that I should order an inquiry into the fees and expenses charged and sought to be charged in the liquidation of the corporation. 62 As far as the fees and expenses rendered and sought to be rendered by Mr Leroy against Mr Lahood's bankrupt estate are concerned, there are mechanisms under the Bankruptcy Act and the Bankruptcy Regulations 1996 (Cth) for Mr Lahood to apply to the Inspector-General in Bankruptcy for a review of Mr Leroy's decision to withdraw funds in payment of such fees and expenses and, after review by the Inspector-General, for an appeal to this Court. 63 The evidence does not disclose whether Mr Lahood has sought to involve the Inspector-General in a review of Mr Leroy's fees and expenses. 64 While the evidence tends to suggest that Mr Leroy's fees and expenses are rather high, I do not think that the evidence justifies the making of an order for inquiry in respect of those matters pursuant to s 179 of the Bankruptcy Act at the moment. In any event, it would be more appropriate for Mr Lahood to seek to challenge those fees and expenses by referring them and the decisions to charge them made by Mr Leroy to the Inspector-General. Accordingly, I am not prepared to make an order for inquiry into Mr Leroy's fees and expenses. 65 For all of the above reasons, I am not prepared to remove Mr Leroy from his position as the trustee of Mr Lahood's bankrupt estate nor am I prepared to remove the liquidators from office. Similarly, I am not prepared to order those persons to cease work, as suggested by Mr Lahood. Conclusions 66 The two administrations with which the present applications are concerned have progressed to the point where they should be finalised in the near future. I am not satisfied that the evidence before me justifies any order for inquiry in either matter. The applications will both be dismissed. I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster. Associate: Dated: 17 February 2015