FEDERAL COURT OF AUSTRALIA Birt Nominees Pty Ltd v Cronan [2016] FCA 41 File number: QUD 1015 of 2015 Judge: LOGAN J Date of judgment: 2 February 2016 Catchwords: BANKRUPTCY AND INSOLVENCY – pre-sequestration deed of assignment – application for declaratory relief that assignment void pursuant to s 30(1)(b), 58, 115, 116 and 120 of the Bankruptcy Act 1966 (Cth) – agreement as to application of Act to deed of assignment reached by parties following mediation – whether declaratory relief ought to be granted – declaration made – deed of assignment is void – no order as to costs Legislation: Bankruptcy Act 1966 (Cth) Date of hearing: 2 February 2016 Registry: Queensland Division: General Division National Practice Area: Commercial and Corporations Sub-area: General and Personal Insolvency Category: Catchwords Number of paragraphs: 8 Solicitor for the Applicant: Cranston McEachern Lawyers Solicitor for the Respondent: Bennett & Philp ORDERS QUD 1015 of 2015 BETWEEN: BIRT NOMINEES PTY LTD AS TRUSTEE FOR THE BIRT INVESTMENT TRUST Applicant AND: JASON SHANE CRONAN AS TRUSTEE OF THE BANKRUPT ESTATE OF DONALD GORDON OGLE Respondent JUDGE: LOGAN J DATE OF ORDER: 2 FEBRUARY 2016 THE COURT ORDERS THAT: 1. The application by the applicant be dismissed. 2. The interlocutory application by the respondent be dismissed. 3. There be no order as to costs. 4. The hearing presently listed for 30 and 31 March 2016 be vacated. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT (REVISED FROM TRANSCRIPT) LOGAN J: 1 Birt Nominees Pty Ltd, in its capacity as trustee for the Birt Investment Trust (Birt Nominees), has filed an application to review the decision of a registered trustee, a Mr Jason Cronan (Mr Cronan), who is the trustee of the bankrupt estate of Mr Donald Ogle (Mr Ogle), to take legal action against it. 2 For his part, Mr Cronan, in his capacity as trustee of Mr Ogle's bankrupt estate, has filed an application seeking to set aside a particular deed of assignment made by Mr Ogle dated 5 September 2008. Affidavits have been filed in respect of these applications, which are set down for hearing later this year. In the meantime, a mediation has occurred, the upshot of which is that the parties each wish the court to grant the following declaratory relief: Pursuant to sections 30(1)(b), 58, 115 and 116 of the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act"), the court declares that: (a) the assignment purported to have been made by Donald Gordon Ogle ("Ogle") to the Birt Investment Trust in clause 2.1 of the Deed of Assignment dated 5th September 2008 entered by Ogle, Birt & Associates Pty Ltd and the Applicant ("the Deed") is void; and (b) "the claims" as defined in the Deed, together with Ogle's right, title and interest to all debts, rights, claims or property therein or derived therefrom is property vested in the Respondent and forming part of the bankrupt estate of Ogle. 3 Also sought by agreement is that Birt Nominees' application be dismissed, that Mr Cronan's application be dismissed and that there be no order as to costs. The dismissal of Mr Cronan's application is, of course, subject to the agreed joint seeking of the declaratory relief mentioned. 4 The granting of declaratory relief involves the exercise of a discretion. I was not disposed to make the orders sought in chambers. 5 What emerges from the submissions made this morning by reference to the affidavit of Mr Cronan filed on 25 November 2015, in particular, is an agreed position that: (a) The Deed of Assignment was executed almost 2 months after Mr Ogle had committed the act of bankruptcy that was the subject of his sequestration order; (b) Ogle was hopelessly insolvent at the time this Deed of Assignment was executed; (c) Mr Birt has filed an affidavit in the Supreme Court proceedings where it is clear he was well aware of the financial problems of Ogle; (d) He stated in that affidavit that Ogle had owed one of his companies $450,000 in the year 2000 increasing to $750,000 by the time the Deed of Assignment was executed; (e) He specifically stated that the Deed of Assignment was entered into to protect his related entity from the financial losses it had suffered. 6 These facts, as agreed, provide a reasonable factual foundation upon which the declaratory relief sought might be granted. There is a further agreed position between the parties as a result of the mediation which occurred in late January. That agreement has a particular relevance to proceedings which are presently pending in the Supreme Court of Queensland. By that agreement, Birt Nominees has come to acknowledge that the claims, which are the subject of the Supreme Court proceedings, together with Mr Ogle's right, title and interest to all debts, rights, claims or property therein or derived therefrom are property vested in Mr Cronan as trustee and form part of Mr Ogle's bankrupt estate. The agreement extends to a further acknowledgment by Birt Nominees that in that trustee capacity Mr Cronan is the correct party to conduct the Supreme Court proceedings in relation to any interests of Mr Ogle. 7 Birt Nominees and Mr Cronan were advised on 27 November 2015 that the presently pending Queensland Supreme Court proceedings, which were the major cause of action assigned by the deed of assignment, have been set down for a trial of five days to commence in that court on 6 June 2016. The purpose of the proceedings in this Court was to determine before that date the appropriate party to the Supreme Court proceedings. The granting of declaratory relief would have the utility, not just of quelling the controversy which has hitherto existed between Birt Nominees and Mr Cronan as trustee, but also make it clear as to who is the correct party in the Supreme Court proceedings. 8 I am persuaded that there is a foundation for the granting of declaratory relief revealed and that there is utility in the granting of that relief. For these reasons, the orders sought will be made accordingly. I certify that the preceding eight (8) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate: Dated: 11 February 2016