Cudgen Rutile (No 2) Pty Ltd v Chalk

Federal Court of Australia|1995-07-01|Before: Drummond J

various creditors and ultimately, in November 1994, a meeting of creditors was held at which Mr. Gargan's proposal was decisively rejected. The trustee ultimately withdrew his application for leave to assign these causes of action to Mr. Gargan. While it is common ground that I should deal with the application under s. 179 the Bankruptcy Act 1966 (Cth), Mr. Gargan's application can also be regarded as one seeking relief under s. 178 the Bankruptcy Act 1966 (Cth) in respect of the trustee's decision to withdraw his application of August 1994. I gave directions to ensure that Mr. Gargan and the trustee had full opportunity to put before me all the material upon which they wished to rely. The trustee has put material before me and is represented by counsel. He has not pressed a particular point of view on the Court: his position is that he will abide the order of the Court. Mr. Gargan has also put extensive material before me. He is not legally represented. The directions I gave required Mr. Gargan to give notice to persons who might be affected by the assignment of any of the causes of action in question. All the persons who were served with the trustee's own application of August 1994 were given this notice. Although they were not made parties to the application, a number of such persons have appeared by counsel and I have received material and submissions from them. In dealing with Mr. Gargan's application, I propose to consider, first, whether he has shown that he has an arguable case in relation to each cause of action which he wants to have assigned to him. Unless he can satisfy me of that, his application must fail. The first matter is the claim Mr. Gargan wishes to bring against the Queensland Water Resources Commission ("QWRC"). A version of this claim was the subject of action no. 128 of 1992 which Mr. Gargan instituted in the Queensland Supreme Court against the QWRC. In about May 1993, after obtaining legal advice from the Australian Government Solicitor that the action had no prospects of success, the trustee filed a notice of discontinuance. The background to this claim is that, in the early 1980s, Mr. Gargan and his brother, who were then in partnership, decided to freehold their Crown leasehold property "Springmount" with a view to carrying out the subdivisional development of part of this property. By late 1984, they had agreed that their partnership would be dissolved. They entered into a deed of dissolution of the partnership in September 1984. However, Mr. Gargan contended that notwithstanding the 1984 agreement, the partnership continued thereafter. It was this dispute that gave rise to the Queensland Supreme Court litigation action no. 101 of 1990, resolved by Thomas J against Mr. Gargan. Thomas J found that the deed only made provision for some of the arrangements necessary for the dissolution of the partnership. However, pursuant to the deed, it was agreed that Mr. Gargan would hold the portion of the "Springmount" property described as "the Tolga land" on trust for the two of them, to the intent that it would be subdivided in the future; that he would hold another part of that property called "the Walsh land" on trust for his brother; and that he would hold that part of the property described as "the Oaky land" for himself. "Springmount" was first converted to a grazing homestead perpetual lease and then application was made for deeds of grant in freehold covering the whole of the property. Two freehold grants ultimately issued in November 1989, one for Lot 491 and a second deed of grant for the balance of the property carved out of Lot 491 and described as Lot 35. It was land within Lot 35 that Mr. Gargan and his brother intended to develop as a rural subdivision.

Mr. Gargan needed QWRC approval, as well as the approval of the relevant planning authority, Mareeba Shire Council, before he could proceed with this plan to subdivide the land. He had discussions with QWRC officials, which resulted in receipt of a letter of 23 May, 1989 from the Commission's regional engineer relating to his proposed development which stated: "Water Resources Commission policy concerning farm size is that in order to ensure viability and flexibility into the future, a minimum sized farm should contain 32 ha. of soils suitable for agricultural use and have a total farm area of 40 ha. I therefore would not view this proposal as producing viable full-time farms. However, as this area is not commanded by our channel system and agricultural soils here are of limited extent, the Commission itself has never planned to develop this area. Consequently, I would anticipate that the Commission would be agreeable to development along the lines proposed by you provided such development was consistent with Council's requirements and the nature of the land here. With regard to water supply, we currently have sufficient reserve capacity in our channel at this point to provide a supply of the size you have requested. I would anticipate that our consideration for a supply of irrigation water to your proposed development would be along the lines of a metered bulk supply point adjacent to our channel. Such supply would be to a Body Corporate with pumping, reticulation and apportionment of water charges being that Body's responsibility. The following information would be required to enable further consideration of your subdivision and water supply requests:- 1. Details of proposed development including subdivision plan. 2. Details of required irrigation supply including flow rates, quantities and continuity of supply constraints.

Proposed method of administering irrigation scheme."

Mr. Gargan pursued the matter. It appears he had prepared a proposed plan of subdivision that provided for the carving out from Lot 35 of five lots, all part of what was called the "Oaky" land, i.e., land of which Mr. Gargan was sole beneficial owner. His engineering consultants held discussions with representatives of the Mareeba Shire Council in November 1989. The Council's requirements for subdivisional approval included the provision of proper access to each proposed lot. An additional Council requirement was compliance with any conditions imposed by QWRC where access to any of these lots passed through land controlled by that Commission, as was the "Oaky" land. Mr. Gargan's consultants also had a number of meetings with the QWRC officers to discuss the Commission's requirements. On 16 November, 1989, QWRC officers told Mr. Gargan's consultants that the access proposed for two of these five areas (described as Lots 1 and 2) was satisfactory, as was the access to proposed Lot 5, subject to what appears to have been a minor change to Mr. Gargan's proposal. They regarded as unsatisfactory, however, the proposals made on Mr. Gargan's behalf with respect to access to the other two proposed lots. It is this intimation by QWRC officers, with respect to the two proposed Lots 1 and 2, of 40 hectares and 581 hectares respectively, on which Mr. Gargan bases his claim that he (or now, his trustee) has a good cause of action against QWRC. He says that it was in reliance on this intimation that he went ahead and incurred certain costs of surveying the relevant areas and of submitting to the QWRC a plan of subdivision for sealing in January 1990. He also says that, in reliance on what the QWRC officers said and in the expectation that the subdivision would eventuate, he entered into a contract to sell part of the area intended to be subdivided to a Mr. Mohammed, i.e., proposed Lot 2. However, following the change in government in December 1989, there was, so Mr. Gargan says, a change in the QWRC's attitude to what Mr. Gargan had in mind. He says that in March 1990 the QWRC refused to approve his proposal for subdivision on the grounds that there was no water allocated to the areas in question and that there was no satisfactory access to that area. The subdivision did not proceed. Eventually, in July 1990, he says he was forced, for financial reasons, to sell the whole of Lot 35 in globo to SAM Industries Pty. Ltd. ("SAM Industries"). He reserved from this sale the land he had already contracted to sell to Mr. Mohammed, although the way in which he went about that has given rise to a dispute between him and SAM Industries, the subject of another of the causes of action which he wants assigned to him. Mr. Gargan's argument that there is a good cause of action against QWRC is based, firstly, on the proposition that he was entitled to rely on what the QWRC officers said to his consultants in November 1989 about the acceptability of his proposal, at least with respect to proposed Lots 1 and 2, and, secondly, on the later refusal of the QWRC to approve this particular subdivisional proposal. In support of his argument, Mr. Gargan referred me to a number of cases, including Shaddock & Associates Pty. Ltd. v Parramatta City Council (No. 1) (1981) 150 C.L.R. 225; San Sebastian Pty. Ltd. v The Minister (1986) 162 C.L.R. 340 and Sutherland Shire Council v Heyman (1985) 157 C.L.R. 424. It is not easy to identify exactly what losses Mr. Gargan contends he has suffered as a result of the QWRC conduct of which he complains, despite what he says in paragraphs 4, 5 and 6 of a document prepared by him and entitled "Details of claim" and in paragraphs 14 to 19 of his affidavit of 21 December, 1994, in which he asserts an entitlement to several million dollars against the QWRC. It might be thought, however, that these losses would be limited to the modest costs he incurred in reliance on the advice in question. There are a number of difficulties in the way of accepting that Mr. Gargan has any cause of action against QWRC. That Commission's authority to approve or reject subdivisional proposals was contained, at all relevant times, in s. 31A the Irrigation Acts 1922 (as amended) (Qld) ("the Irrigation Acts"), which provided: "(1) Freehold land within an Irrigation Area shall not be subdivided without the prior approval of the Commissioner. (2) Application for such approval shall be accompanied by a plan of the proposed subdivision signed by all persons who are parties to the transaction. (3) The Commissioner may approve, refuse to approve, or approve with modifications of any proposed subdivision. (4) Any person aggrieved by the refusal of the Commissioner to approve of a proposed subdivision, or by his approval thereof with modifications, may appeal to the Minister in writing not later than one month after he has been notified of the decision of the Commissioner. (5) Upon appeal as aforesaid the Minister may confirm, reverse, or modify as he deems fit the decision of the Commissioner who shall give to the determination of the Minister upon the appeal the same effect as if that determination were the decision of the Commissioner upon the matter. (6) The approval of the Commissioner to a plan of subdivision shall be evidenced by a notation of approval endorsed thereon under the seal of the Commissioner. (7) The provisions of `The Local Government Acts, 1936 to 1953,' relating to the subdivision of land shall be read subject to this clause, and accordingly a Local Authority shall not approve of a plan of subdivision of freehold land in an Irrigation Area unless that plan has been approved by the Commissioner, his approval is evidenced thereon as provided by subclause six of this clause, and the approval by the Local Authority of that plan is duly applied for not later than six months after the date of the notation thereon evidencing approval as aforesaid by the Commissioner."

The power to grant approval under s. 31A the Irrigation Acts is vested in the Commissioner. That is a statutory discretion which cannot be fettered by anyone, subordinate official or the Commissioner himself, by anticipatory action. See Cudgen Rutile (No. 2) Pty. Ltd. v Chalk [1975] A.C. 520 at 533-4. While that consideration may not necessarily mean that it will never be possible for the recipient of advice to the effect that what he proposes will result in him receiving the favourable exercise of a statutory discretion in the future, it is a consideration that will make it difficult to infer that any such advice was given in circumstances that entitled the recipient to proceed on the basis that the decision maker would, when the time came for him to exercise the statutory discretion, act in conformity with what his subordinate officials had earlier told the inquirer. Cf. San Sebastian Pty. Ltd. v The Minister, supra, at 359-360. But it is unnecessary to explore this consideration further since it is in my view clear that Mr. Gargan would fail on the material before me to make out a good cause of action against the QWRC for other reasons. On the material before me, there is nothing to show that the Commissioner ever considered Mr. Gargan's proposed subdivisional plan with respect to Lots 1 and 2 or that he ever rejected it. What the material does reveal is that Mr. Gargan partially went through what can be accepted as a commonly followed, informal process of discussion of his proposals with officers of the QWRC with a view to formulating a proposal that would be likely to receive the approval of the Commissioner, when it should ultimately be put before him for determination. The letter of 23 May, 1989 from the Commissioner's regional engineer shows that there were a number of requirements that Mr. Gargan would have to satisfy if his proposal was to conform to QWRC policy and so be likely to receive approval under s. 31A(3) the Irrigation Acts. The discussions between Mr. Gargan's consultants and the QWRC officers in November 1989, upon which he so heavily relies, only produced an expression of satisfaction by those officers with respect to one matter, proposed access to three of the lots. One of the other matters with respect to which the regional engineer advised Mr. Gargan in May 1989 that information would be required before further consideration could be given to his proposal comprised details of the required water supply to the new lots. The consultants' letter to Mr. Gargan following the November meeting records that there was inconclusive discussion with respect to this, a matter identified in the regional engineer's May letter as of central importance to the fate of any subdivisional proposal Mr. Gargan might submit to the Commissioner. Mr. Gargan was thus never given any advice by anyone on behalf of QWRC that he had devised a particular subdivisional proposal which would be likely to receive the Commissioner's approval under the Irrigation Acts. What Mr. Gargan relies on as the QWRC's rejection of his proposal is the letter of 23 March, 1990 from the QWRC's regional engineer. There is nothing to suggest that it was sent by or at the direction of the Commissioner, the only official with authority under the Irrigation Acts to approve or reject the proposed subdivision of land within declared Irrigation Areas. In this letter of March 1990, the QWRC's regional engineer advised he could not recommend to the Commissioner that he approve Mr. Gargan's plan under s. 31A(3) the Irrigation Acts because, among other things, no provision was contained in the plan for water supply to the proposed lots. This letter is not a rejection of Mr. Gargan's proposal. It appears to be merely another step in what I have referred to as the informal process of consultation between an applicant for approval and the subordinate officers who are responsible for ensuring the proposal meets the QWRC's policy and for making a recommendation to the Commissioner whether to approve or refuse the applicant's proposal. It is, in any event, not a final rejection of Mr. Gargan's proposal by the regional engineer: it is plainly an invitation to continue discussions with a view to arriving at a proposal which will receive the engineer's favourable recommendation to the Commissioner. Yet Mr. Gargan treats it as proof that the advice his consultants received in November 1989 about access being satisfactory was either negligently given or misrepresented the position. Even if this letter of 23 March, 1990 could be regarded as a decision by the Commissioner under s. 31A(3) the Irrigation Acts refusing to approve Mr. Gargan's proposed subdivision, Mr. Gargan could not hope to make out a good claim that he had received negligent advice by QWRC officers in November 1989 which caused him loss: he has not attempted to show how he could hope to succeed on such a claim in the face of his failure to deal with what was long identified to him by QWRC engineers as a matter of importance - satisfactory provision of water supply - if his subdivisional proposal were to be acceptable to the Commissioner. Even if he could show that the advice the QWRC officers gave in November 1989 about the adequacy of access to proposed Lots 1 and 2 was advice upon which he was entitled to rely, I do not think he has any prospect of establishing that those officials breached any duty of care they may have been under to him to give accurate advice and information. The advice he got in November 1989 about the adequacy of the proposed access, even if it is assumed for the sake of argument to have been negligently given, cannot provide him with a good claim against the QWRC of the kind he seeks to make out: the officials in November 1989 plainly dealt only with one of the issues that Mr. Gargan had long known needed to be resolved before he could expect approval under s. 31A(3) the Irrigation Acts. He appears to have decided to ignore the other issues of concern to the QWRC officers, including the need for the subdivisional lots to have a water supply. No doubt the provision of water to the lots would be a costly business and it may be that Mr. Gargan decided he would try to achieve approval of his proposal without that element. But he could never have hoped to get QWRC approval until he put a proposal to QWRC officials that met their requirements in that regard. Any advice QWRC officials may have given Mr. Gargan in November 1989, even if it is assumed for the purpose of the present argument to have been negligently given, could not have caused him any loss. That was caused by his failure to deal with the other issues he knew would have to be resolved and by his failure to follow up his proposal with QWRC officials, before lodging an application for approval by the Commissioner himself, once he got the regional engineer's letter of 23 March, 1990. After receipt of the letter of March 1990, Mr. Gargan did not pursue the matter further with QWRC officers. Instead, he made representations to the Minister through his local member of parliament. Mr. Gargan does not say what response he received from the Minister other than that his parliamentarian's representation "came to nothing". If the advice of November 1989 had never been given, he still would not have got approval unless and until he did what he never attempted to do with respect to meeting the QWRC's requirements with respect to the provision of water to the proposed lots. Mr. Gargan also relies upon s. 1.3(2)(b) the Water Resources Act 1989 (Qld), which repealed the Irrigation Acts. This provision declares that every agreement, arrangement or contract entered into by the Commissioner under the repealed Act in existence at that time is an agreement or arrangement or a contract entered into by the Commissioner under the new Act, which "may be performed and enforced as if this Act had not been passed". Given what I have had to say about what took place between QWRC officials and Mr. Gargan and his consultants up to March 1990, nothing that could be described as an agreement or arrangement with the Commissioner whereunder Mr. Gargan was entitled to expect the approval of the Commissioner was ever arrived at. It is unnecessary to consider the other issues that would need to be resolved in Mr. Gargan's favour before I could properly direct the trustee to assign this particular cause of action since I am satisfied that, on the material before me, Mr. Gargan has no prospect of making out a good claim for damages against QWRC. The trustee acted properly in discontinuing the action Mr. Gargan brought against the QWRC. The next matter of concern to Mr. Gargan arises out of the Queensland Supreme Court proceedings, action no. 101 of 1990, instituted against him by his brother, Mr. John Gargan, in which he counter-claimed. These proceedings were determined adversely to him by Thomas J in a decision delivered on 12 March, 1993, 10 days before the sequestration order bankrupting Mr. Gargan was made. In this decision, Thomas J, on the claims made by Mr. Gargan's brother as plaintiff, declared that the brother was beneficially entitled to Lot 491 and made orders for the vesting of that property in him; he awarded him $60,095.50 damages for loss occasioned by the failure by Mr. Gargan to transfer title to him when demand was made. Thomas J also ordered that Mr. Gargan's counter-claim be dismissed. By his counter-claim, Mr. Gargan set up a case that, despite the deed of dissolution entered into in September 1984, the partnership between himself and his brother had never been dissolved: he also contended that, by what he described as an agreement made in November 1990, he and his brother agreed to continue the partnership and to take certain steps towards its eventual dissolution. He sought a declaration that the partnership constituted by the deed of 20 April, 1966 continued and he also sought an account of the partnership dealings. Thomas J, however, found that the partnership was dissolved by agreement in September 1984 and that the so-called agreement of November 1990 amounted only to a proposal for compromising the brothers' dispute that was never consummated. His Honour dismissed Mr. Gargan's claim for an account of the partnership dealings. Mr. Gargan contends that Thomas J was wrong in dismissing this claim for an account. Although Mr. Gargan, in argument, said that his interest in wanting to overturn Thomas J's judgment was in having an account taken, there is nothing in the judgment or in Mr. Gargan's counter-claim to suggest that at the trial he sought, as an alternative to an account on the basis that the partnership continued up to judgment, an account in respect of the dealings of his brother and himself with the partnership assets and business following dissolution in September 1984. As I understand the way Mr. Gargan presented his case, he was not concerned to challenge the conclusions reached by Thomas J other than his decision to dismiss Mr. Gargan's claim for an account. At the hearing before me, Mr. Gargan did not claim an entitlement to an account against his brother on the basis that the partnership was dissolved in September 1984, as Thomas J found. It would, in any event, be difficult to see what entitlement he would have to such an account, given the range of issues that arose between the brothers after September 1984 on which Thomas J made findings in his judgment. Thomas J said, at the start of his judgment: "The principal relief claimed by John is a declaration (as between him and Peter) of a beneficial entitlement to a parcel of freehold land described as Lot 491 presently registered in Peter's name. Consequential relief is sought requiring Peter to transfer the land to John. Damages are also sought, in effect for breach of Peter's duty as trustee. Peter's defence and counter-claim asserts that he holds Lot 491 for the parties jointly, that is to say he asserts a one half beneficial ownership in the land. His claim is based firstly on the allegation that the 1966 partnership continues to the present day, that the land remains the property of the partnership, and that the 1984 deed and the events subsequent thereto have not had the effect of depriving him of a 50% interest in this parcel of land. In the alternative he sets up and relies upon an alleged agreement of 13th November, 1990 as justifying his claim to be a joint owner of the property. Other relief is sought as well in the pleadings, but, as I understand the final addresses of the parties, the above claims are the live issues in the litigation."

In the course of his reasons, his Honour twice expressly referred to the fact that neither party was, by the end of the case, seeking an account (even though in the course of the hearing considerable evidence was tendered in relation to that issue). The difficulties Mr. Gargan faces in attacking the conclusions reached by his Honour are formidable, based as they are very much on Thomas J's assessment of the relative credibilities of the two brothers. It was this very matter that caused the officer of the Australian Government Solicitor to advise the trustee, back in May 1993, that the prospects of a successful appeal were remote. Nothing that Mr. Gargan said suggested that Thomas J's judgment might be one of those rare judgments so based that is nevertheless open to reversal. The difficulties Mr. Gargan faces in overturning the order dismissing his counter-claim for an account face other formidable obstacles. In order to obtain the account sought in his pleading, Mr. Gargan would have to overturn the trial judge's conclusions of fact that the partnership was dissolved in September 1984 and he would have to show that he did not abandon his claim for an account on that basis. He simply never, at any stage, sought an account in the proceedings ultimately determined by Thomas J on the basis that the partnership was dissolved in September 1984. Mr. Gargan pointed to the written submissions he gave to Thomas J in his closing address in support of an argument that he did not abandon his claim for an account. But, as I read these submissions, insofar as it might be thought to justify the proposition that Mr. Gargan continued to press for an account, it was an account on the basis that the partnership continued to exist. Even if Mr. Gargan were to be free to conduct a challenge to Thomas J's judgment, his prospects of success would be minimal. That is a powerful reason for refusing to direct any assignment. But there are other problems for Mr. Gargan. The right of appeal has long since ceased to exist. It ceased to exist 28 days after the date on which Thomas J pronounced his judgment in March 1993. Mr. Gargan did not become bankrupt until about a week and a half after Thomas J pronounced his judgment. He is a prodigiously energetic litigant. He has brought many actions against a wide range of persons in the last few years in most of which he has brought a large number of interlocutory applications. He is familiar with court procedures. He did not, however, institute an appeal, as he could have done before the sequestration order was made. Given that the right of appeal that Mr. Gargan once had against Thomas J's judgment was extinguished upon the expiry of 28 days after 10 March, 1993 by force of O. 70, r. 4(1) the Rules of the Supreme Court of Queensland, the first question is whether the trustee is now in possession of anything that can be assigned to Mr. Gargan which would enable him to challenge Thomas J's judgment. All that is now open to the trustee is for him to make application to the Court under O. 70, r. 4 the Rules of the Supreme Court of Queensland for an extension of that 28 day period. The foundation of the trustee's power to make assignments to the bankrupt are ss. 134 and 135 the Bankruptcy Act 1966 (Cth). Each empowers the trustee, subject to the limitations set out, to sell any part of the property of the bankrupt. The power is only exercisable where it is in aid of the trustee's function of administering the bankrupt's estate. It can only authorise the trustee to sell any part of a bankrupt's property, including causes of action, that was vested in the trustee by the bankruptcy and which is divisible amongst the creditors pursuant to s. 116 the Bankruptcy Act 1966 (Cth). But it is well established that the trustee is empowered by these provisions to assign any part of the bankrupt's property vested in the trustee to the bankrupt himself and that that assignment need not be for a cash consideration. See Stein v Blake [1995] 2 W.L.R. 710 at 719 and Ramsey v Hartley [1977] 2 All E.R. 673. In Fuller v Beach Petroleum N.L. (1993) 43 F.C.R. 60, the question was whether an appeal against a money judgment against the bankrupt, together with orders for costs and other orders, instituted by a bankrupt after the bankruptcy had commenced was competent. The Full Court held the appeal incompetent on the ground that the statutory right of appeal given by s. 24 the Federal Court of Australia Act 1976 (Cth) to a party against whom judgment was entered fell within the meaning of the expression "personal property of every description" in the definition of "property" in s. 5(1) the Bankruptcy Act 1966 (Cth) and was thus property of the bankrupt which vested in his trustee. This case is authority for the proposition that the property of the bankrupt, which the trustee is empowered to sell by ss. 134 and 135 the Bankruptcy Act 1966 (Cth), includes a right of appeal against a judgment that imposes a burden on the estate because it is a money judgment against the bankrupt or even where the burden is limited to a costs order against the bankrupt, as well as a right of appeal against a judgment dismissing a money claim brought by the bankrupt. In my opinion, the entitlement given by the Rules of the Supreme Court of Queensland to apply for an extension of time within which to bring such an appeal is also property of the bankrupt within the meaning of that expression in ss. 134 and 135 the Bankruptcy Act 1966 (Cth) and so can be assigned by the trustee to the bankrupt. In Fuller, supra, Gummow and Whitlam JJ observed at 67: "The term `property' when used in modern statutes may, in its context, include rights and interests which are created by statute and which would not be identified as proprietary by traditional conveyancing law."

The expression in ss. 134 and 135 the Bankruptcy Act 1966 (Cth), "the property of the bankrupt", is defined in s. 5(1) of this Act to mean the property divisible among the bankrupt's creditors pursuant to s. 116 the Bankruptcy Act 1966 (Cth) and, in addition, "any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt". The entitlement created by the Rules of the Supreme Court of Queensland to apply to revive an extinguished right of appeal can, in my opinion, be regarded as falling within this extended definition. The policy of the Bankruptcy Act 1966 (Cth), identified by Gummow and Whitlam JJ in Fuller, supra, as being that, after sequestration of the estate of an unsuccessful litigant, the successful party should not be put at the risk of sustaining further costs of appellate litigation is met by such a construction. Once an unsuccessful litigant becomes bankrupt, only his trustee has standing to make application for an extension of time within which to bring an appeal against a judgment of the kind I have mentioned given against the bankrupt. That it conflicts with this policy to hold that the property of the bankrupt extends to such an entitlement, for the purposes of ss. 134 and 135 the Bankruptcy Act 1966 (Cth), cannot justify giving the expression "the property of the bankrupt" in those sections a different meaning from that which it bears in s. 58 the Bankruptcy Act 1966 (Cth).

But leave to appeal would not be granted unless Mr. Gargan could show, among other things, that he has a good prospect of overturning Thomas J's decision. For the reasons given, he has no such prospect. It would not be proper to direct the trustee to assign to the bankrupt a cause of action or a right of litigation associated with a cause of action which has no real prospect of success: it is inconsistent with the policy of the Bankruptcy Act 1966 (Cth) to allow a bankrupt, as an unsuccessful litigant, to pursue appellate litigation. In his written submissions, Mr. Gargan also referred to District Court action no. 363 of 1991 as involving another cause of action he wants the trustee to assign to him. He "contends that he is entitled to enter Judgment on the Facts as found by Thomas J". He did not make any oral submissions in relation to this matter. This action against him was instituted by Mr. Gargan's brother claiming damages for unlawful interference with the brother's horse riding business. Mr. Gargan counter-claimed in reliance on what he referred to as the "contract reduced to writing on or about the 13th day of November, 1990" whereby they agreed that the land whereat the horse riding business is conducted was to be assigned to Mr. Gargan. He claimed a declaration that he was the equitable owner of the land in question, possession and an account of the profits generated by the use of the land by his brother. The status of this alleged contract was an issue in the action determined by Thomas J. His Honour held that it amounted only to a proposal for settlement of the disputes between Mr. Gargan and his brother and that neither of them ever regarded it as a binding agreement. This conclusion formed one of the grounds upon which Thomas J made his declaration that the deed of dissolution of partnership of 7 September, 1994 should be specifically performed. Mr. Gargan is thus estopped from challenging this finding in any proceedings he might wish to bring against his brother, unless he can successfully appeal the decision of Thomas J. Any action he might wish to bring against his brother founded on the so-called contract of November 1990 is doomed to fail. It is unnecessary to consider further whether the trustee should be directed to assign that cause of action to Mr. Gargan. Mr. Gargan did not pursue his claim to have assigned to him the cause of action the subject of a Magistrates Court action that is also pending between himself and various members of his family. The third matter the subject of the application concerns claims Mr. Gargan says he has against SAM Industries Pty. Ltd. ("SAM Industries"). Pursuant to the deed of dissolution of 7 September, 1984, Mr. Gargan took legal title to the whole of the "Springmount" holding, although he was to hold parts of it on trust for his brother. In February 1987, Mr. Gargan and his brother entered into a joint venture agreement with SAM Industries. This related to the "Tolga" land which Mr. Gargan held on trust for himself and his brother and which they were in the process of freeholding with the intention of subdividing it. Under this joint venture agreement, the legal title remained in Mr. Gargan and the beneficial title in he and his brother; SAM Industries undertook to provide funding necessary to enable the land to be subdivided once it was freeholded. It also undertook to carry out the work of subdivisional redevelopment. The Gargans and SAM Industries were entitled to share equally in the net proceeds from the sale of any of the subdivided lots. As I have mentioned, in November 1989 a freehold title issued to Mr. Gargan for Lot 35 comprising part of the "Walsh" land and all of the "Oaky" and "Tolga" lands. By August 1990, SAM Industries had expended about $403,000 in connection with the freeholding of "Springmount" and in respect of the joint venture of February 1987. By that date, Mr. Gargan had incurred debts to the National Australia Bank of the order of $950,000 and the bank was threatening to sell the property to recoup this sum. In order to prevent this, an arrangement was made between Mr. Gargan and his brother, on the one side, and SAM Industries, on the other, which involved the sale by Mr. Gargan of the freehold title to Lot 35 to SAM Industries for $1,353,000 under a contract dated 23 July, 1990 and the entry into a substitute joint venture agreement dated 15 August, 1990 between Mr. Gargan and his brother and SAM Industries. The $1,353,000 was expended in clearing the indebtedness to SAM Industries and the bank. Thomas J found that Mr. Gargan entered into the contract of 23 July, 1990 with SAM Industries for the sale of Lot 35 (which included areas of land Mr. Gargan held on trust for his brother pursuant to the deed of dissolution of 7 September, 1984) without first telling his brother and in circumstances in which he was acting in breach of trust, since Thomas J found that most of the debts incurred by Mr. Gargan, including those to the National Australia Bank which compelled him to sell the land, were incurred by Mr. Gargan on his own behalf. Thomas J found that Mr. Gargan probably only disclosed what he had done to his brother shortly before both Mr. Gargan and his brother entered into the second joint venture agreement with SAM Industries relating to the use and development of Lot 35 which, as Thomas J said, "was now owned by SAM Industries". In March 1992 Mr. Gargan sued SAM Industries in the Queensland Supreme Court in proceedings no. 14 of 1992. Both complaints now made by him against SAM Industries are contained in his amended statement of claim delivered in those proceedings. So far as his complaints concerning the way SAM Industries dealt with the Mohammed land is concerned in this statement of claim, he alleged: "15. In breach of his obligations to transfer all the land contracted for between Gargan Bros and AA Mohammed on the 10th July 1989 the defendant proceeded to apply for a further subdivision and make a survey of the lands reserved in two parcels denying the equitable claim of the plaintiff and his joint venture partner [i.e., Mr. Mohammed]. 16. In the event the defendant has denied the use of the land appropriated for the Gargan Bros-Mohammed Joint venture to the plaintiff and his Joint venture partner [Mr. Mohammed] and caused damage in that the Plaintiff has been unable to proceed to sell or otherwise deal with the land."

As to the second matter of complaint, Mr. Gargan alleged: "19. The defendant has dealt with the land in a manner inconsistent with the presents in the deed. 20. The defendant has dealt separately with John Ernest Gargan and his sons to the detriment of the plaintiff by exercising the right of the firm Gargan Bros to manage the land. The Defendant has dealt with one Alex Battemburski without reference to the plaintiff to the detriment of the plaintiff by exercising the right of the firm Gargan Bros to manage the land. The defendant has offered to sell parts of the land in a form inconsistent with the Joint Venture agreement without reference to the plaintiff to the detriment of the plaintiff by attempting to sell the right of the firm Gargan Bros to manage the land. 21. The defendant has leased various parts of the land to parties not a party to the deed [i.e., the second joint venture agreement of 15 August, 1990] in breach of the deed thereby causing loss and distress to the plaintiff to the detriment of the plaintiff by exercising the right of the firm Gargan Bros to manage the land. The defendant has prepared plans for areas in excess of the sizes which were represented to the plaintiff as the intention of the developer without reference to the plaintiff with a view to sale in larger lots than planned to the detriment of the plaintiff land management rights. To protect his interest the plaintiff lodged a caveat on the 2nd Day of December 1991."

In this action the plaintiff claimed, among other things, specific performance of his contract with SAM Industries of 23 July, 1990 to compel SAM Industries to transfer, at the plaintiff's direction, both these parcels to Mr. Mohammed and unliquidated damages of $50,000 for breach of the land management rights and dealings inconsistent with the second joint venture agreement. On 4 October, 1993 Shepherdson J ordered that this action be dismissed in circumstances to be dealt with later. SAM Industries contends that both the claims Mr. Gargan wishes to make against it, even if well founded (which SAM Industries disputes), have been extinguished pursuant to s. 60(3) the Bankruptcy Act 1966 (Cth). The section relevantly provides: "60(2)An action commenced by a person who subsequently becomes a bankrupt is, upon his 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 by a defendant or other party to the action, he shall be deemed to have abandoned the action."

On 15 June, 1993, i.e., a few weeks after Mr. Gargan became bankrupt, SAM Industries, by its solicitor, gave the trustee a notice pursuant to the sub-section in relation to Mr. Gargan's Queensland Supreme Court action no. 14 of 1992 against SAM Industries. The trustee did not elect to prosecute or discontinue the action. It follows that, as from mid-July 1993, the trustee was deemed to have abandoned the action which was commenced by Mr. Gargan prior to his bankruptcy in February 1992. SAM Industries submitted, in reliance upon a dictum of Pincus JA and White J in Theissbacher v MacGregor Garrick & Co. [1993] 2 Qd.R. 223 at 230, that this deemed abandonment destroyed the trustee's right to pursue the action absolutely; consequently, he now has nothing to assign to Mr. Gargan in respect of any of the causes of action the subject of Mr. Gargan's Queensland Supreme Court proceedings against SAM Industries. I am, however, unable to accept this dictum as a correct statement of the law. While it is highly desirable that there be consistency in the decisions of Australian courts on legislation of general application such as the Bankruptcy Act 1966 (Cth), the dictum in question is obiter only and the decisions in Re Kwok; Ex parte Rummel (1981) 61 F.L.R. 336 and Re Summerhayes; Ex parte Official Assignee (1890) 1 B.C.(N.S.W.) 24, decisions cited in argument before the Court of Appeal but not referred to in the judgments in Theissbacher, supra, show that it has long been the law under s. 60(3) the Bankruptcy Act 1966 (Cth) and its statutory precursors that this deemed abandonment of an action by the trustee is no bar to him commencing a fresh action on the same cause of action the subject of the abandoned proceedings. Action no. 14 of 1992 was dismissed on application made by SAM Industries based solely upon the trustee's failure to elect to prosecute the action, notwithstanding receipt of SAM Industries' notice of action given pursuant to s. 60(2) the Bankruptcy Act 1966 (Cth). Dismissal of the action on this basis therefore does not give rise to any estoppel against the trustee bringing fresh proceedings on the causes of action the subject of the original proceedings against SAM Industries by Mr. Gargan. SAM Industries procured the release of the caveat referred to by Mr. Gargan by giving an undertaking to the court in an application it brought for the removal of the caveat, on the hearing of which Mr. Gargan did not appear, to transfer to Mr. Gargan or at his direction the land referred to in clause 29 of the contract between Mr. Gargan and SAM Industries containing an area of about 423.45 hectares. By the contract of sale of 23 July, 1990, SAM Industries acknowledged that Mr. Gargan had previously entered into contracts for the sale of portions of Lot 35 to three persons, including an area to Mr. Mohammed under a contract dated 10 July, 1989, which portions were to be excised from Lot 35 in the future. The contract of sale of 23 July, 1990 between Mr. Gargan and SAM Industries provided that: "For the purpose of convenience and to enable an early settlement of the within sale [Mr. Gargan] shall transfer to [SAM Industries] the whole of Lot 35 ... and [SAM Industries] shall at the cost and expense of [Mr. Gargan] attend to the preparation and registration of a Plan of Survey to excise the excised lands and upon registration thereof shall execute transfers in favour of the purchasers of the excised lands as and when produced to it and shall hand to [Mr. Gargan] or his solicitors the separate titles to the excised lands."

By the contract of 10 July, 1989 between Mr. Gargan and Mr. Mohammed, the former sold to the latter his one-half interest in an identified part of Lot 35 comprising about 423 hectares which it was intended that Mr. Gargan and Mr. Mohammed would jointly subdivide. Clause 35 of this contract provided, in part: "The parties hereto [Mr. Gargan and Mr. Mohammed] declare it to be their intention to amalgamate the land sold pursuant to this contract with the 150 hectare parcel of adjoining land referred to in the Deed of Agreement between the parties executed on even date ..."

There is no further identification of this 150 hectare parcel in the Gargan-Mohammed contract, although the plan incorporated in it shows an area adjoining another area marked off into 30 proposed lots and which appears to be the area of about 423 hectares the subject of this sale. The first-mentioned area is marked in a way to suggest it is to be divided into three lots; the notation "120 ha" appears in the largest of these three divisions. No other area markings are shown within this adjoining area. The deed of agreement of 10 July, 1989 between Mr. Gargan and Mr. Mohammed referred to in clause 35 of their contract of the same date records their agreement to enter into a joint venture for the development of the 150 hectare parcel of land adjoining the 423 hectares which Mr. Gargan sold to Mr. Mohammed under the contract of 10 July, 1989. A comparison of the plan attached to this deed of agreement with the plan attached to the Gargan-Mohammed contract of 10 July, 1989 indicates that the 150 hectare parcel the subject of the deed is that area shown on the plan attached to the contract as adjoining the area marked off into 30 proposed lots and itself marked to suggest that it is intended to be subdivided into three lots. In the plan attached to the deed, this same area is shown as comprising two, rather than three, proposed divisions and markings on this plan show that this area contains a total of 150 hectares. Mr. Gargan's first complaint against SAM Industries is that, while it is prepared to transfer to the trustee the 423 hectare area the subject of Mr. Gargan's contract with Mr. Mohammed of 10 July, 1989, it has refused to acknowledge any obligation to transfer this adjoining 150 hectare parcel either to Mr. Gargan or his trustee or to the trustee and Mr. Mohammed, but instead has dealt with this area as its own. On 21 May, 1991 Mr. Kippen, a director of SAM Industries, wrote to Mr. Gargan's then solicitors as follows: "On 23rd July 1990 we contracted to purchase from your client Lot 35 on Plan No. HG737 excluding three (3) parcels of land referred to in Clause 29 of the contract. Two (2) of these parcels have subsequently been excised by our company ... Remaining yet to be excised is the land an interest in which we note Mr. Gargan contracted to sell to A.A. Mohammed for $150,000. We note from Item H in the Gargan/Mohammed contract dated 10th July 1989 that the area of land to be sold was to contain an area of `about 423.45 ha (more or less)'. Please advise if you wish us to continue with the excision of the 423 ha (more or less) to enable transfer documentation to P. Gargan and A. Mohammed to eventually be registered so as to fully and completely satisfy Clause 29 of our contract of purchase dated 23rd July 1990. If you wish us to proceed we will prepare and forward to you an estimate of costs involved."

On 25 October, 1991 Mr. Kippen wrote to Mr. Gargan, referring to this letter of 21 May, 1991, saying: "As also advised in our letter of 21st May 1991 we now have to hand estimate of costs to your account of $6,142 to excise proposed Lot 14 of 427.7 ha. Please forward this amount to us to facilitate the excision and transfer in accordance with Clause 29 of the Contract of Sale dated 23rd July 1990."

On 5 November, 1991, Mr. Gargan wrote to Mr. Adam, a person associated with SAM Industries, concerning his dealings with Mr. Kippen and the latter's contention that SAM Industries had no obligation to excise anything more in relation to the sale Gargan to Mohammed than the 423 hectares I have referred to. Mr. Gargan said: "The deal with Mohammed involved 1500 acres [i.e., about 600 hectares] and was documented by a contract and joint venture agreement dated 10 July 1989. The land was surveyed pursuant to that agreement and the refusal of the QWRC to seal that plan led to your eventual involvement in the contract of 3 August 1990 in which the area was excluded.

Lance [Kippen] is relying on the front page area of 423 hectares where the true area is the area determined by reading both documents and the plan submitted to QWRC."

(The contract of 3 August, 1990 is the contract dated 23 July, 1990 between Mr. Gargan and SAM Industries which was completed on 3 August.) In his letter of 18 August, 1992 to Mr. Gargan, Mr. Kippen said: "We have to hand Certificate of Title Volume N1502 Folio 161 issued on the 10th August 1992 for Lot 14 on R.P. 838332 containing 427.7 hectares. Accordingly we are now able to fulfil our obligations in accordance with Clause 29 of the Contract dated 23 July, 1990 following the Supreme Court Order lifting your Caveat on the subject and other lands which had previously prevented us subdividing said lands. To facilitate registration of the land transfers referred to in clause 29, we have incurred costs to your account in accordance with Clause 29 of $15,928. This amount was requested from you by letter dated 25th October 1991 to which no reply has to date been received. We await your advices."

Mr. Gargan had, however, made clear his position in reply to Mr. Kippen's letter of 25 October, 1991 in the letter he sent to Mr. Adam of 5 November, 1991, to which I have already referred. (The caveat mentioned by Mr. Kippen in his letter was the subject of the application by SAM Industries to the Queensland Supreme Court, to which I have referred.) In early 1994, SAM Industries, having obtained a separate title to the 423 hectares, gave the trustee a notice to complete in respect of clause 29 of SAM Industries' contract with Mr. Gargan. It required the trustee to pay $19,785 in respect of the costs of excising the 423 hectare lot in return for a clear title deed to that land. When the trustee did not comply with this completion notice, SAM Industries, on 1 March, 1994, gave a notice purporting to terminate "the contract". It may be doubted whether SAM Industries had any right to forfeit to itself the 423 hectares merely because the trustee may have been in breach of an obligation to pay the excision costs referred to in clause 29 of the contract. However, it is unnecessary to pursue this matter since SAM Industries has now adopted the position that it will transfer title to the 423 hectares to the trustee upon payment of $16,285 in respect of excision costs. As to the first complaint against SAM Industries, the contract of 23 July, 1990 whereunder he sold Lot 35 to that company was probably void as a contract for the purchase by SAM Industries of Lot 35, less the excised lands, given that no plan for the subdivision of Lot 35 into a balance area and the excised lands then existed and so had not been sealed: see s. 8(1)(a) and (2) the Land Sales Act 1984 (Qld). SAM Industries, on application made on 28 December, 1990, obtained, on 3 January, 1991, what purported to be an exemption pursuant to s. 19 of that Act from compliance with, inter alia, s. 8. It is doubtful if s. 19 the Land Sales Act 1984 (Qld) permits of the grant of an exemption subsequent to the execution of a contract that will retrospectively validate an otherwise void contract. Cf. Travinto Nominees Pty. Limited v Vlattas (1973) 129 C.L.R. 1 at 32. However, even if the contract was void, SAM Industries would appear to have obtain an indefeasible title to the whole of Lot 35 upon registration of the transfer by Mr. Gargan to it: see Travinto Nominees, supra, at 34. And having obtained, by whatever procedure, a title deed to the excised Mohammed land, it also appears that SAM Industries now holds a valid title to that part of land that was once part of Lot 35. But that the contract between Mr. Gargan and SAM Industries is void by force of s. 8 the Land Sales Act 1984 (Qld) has consequences for any claims that Mr. Gargan might otherwise have been able to bring against SAM Industries based upon it. It is a question of construction whether the land SAM Industries agreed by clause 29 of this contract to excise with respect to the Mohammed contract was limited to the 423 hectares, the subject of the Mohammed contract of 10 July, 1989, or whether it included the additional 150 hectares referred to in clause 35 of that Mohammed contract and in the deed of grant of 10 July, 1989, which is also referred to in clause 35. The answer to this question would depend upon an examination of the contract in its factual matrix. It is not clear when SAM Industries obtained a copy of the Gargan-Mohammed contract. But it certainly had it when Mr. Kippen wrote his letter of 21 May, 1991 to Mr. Gargan. Depending upon the information that SAM Industries had concerning the arrangements between Mr. Gargan and Mr. Mohammed when SAM Industries entered into the contract of 23 July, 1990 to buy Lot 35 less the excised lands, it may be that, properly understood, what SAM Industries then bought was Lot 35 less both the 423 hectares and the further 150 hectares in which Mr. Mohammed was interested. However, even if this were to be the correct interpretation of SAM Industries' contract with Mr. Gargan, that contract, insofar as it otherwise may not have merged in the conveyance of Lot 35 to SAM Industries in August 1990, is made void for all purposes by s. 8 the Land Sales Act 1984 (Qld) and Mr. Gargan cannot base any claim against SAM Industries for relief, either at common law or in equity, upon that contract. See Travinto Nominees, supra. As to Mr. Gargan's second complaint against SAM Industries, in the second joint venture agreement of 15 August, 1990, SAM Industries was acknowledged to be the registered proprietor of Lot 35 and it was recited that all three parties proposed to enter into the business of primary production on part or parts of Lot 35 and also from time to time to subdivide part or parts of that land "as are required by [SAM Industries] for resale purposes". Clause 1 recorded that SAM Industries was to hold the land as to the landowner, "save and except as is provided for by this agreement". By clause 2 the Gargans were to be responsible for the management and funding of the business of primary production to be carried on pursuant to the joint venture agreement, while, by clause 3, SAM Industries was to be responsible for the management and funding of the subdivisional development of the land "which at the sole discretion of [SAM Industries] may then be offered for resale on terms and conditions as [SAM Industries] may from time to time agree." By clause 4, the net income from the business of primary production to be carried on by the Gargans was to be split each year as between SAM Industries and the Gargans in the proportions 20% to 80%. By clause 5, the net proceeds from the sale of any subdivided lots within Lot 35 by SAM Industries was to be split between SAM Industries and the Gargans in the proportions of 80% and 20%. So far as the sale of subdivided lots was concerned and before the "net proceeds" of each sale were calculated, SAM Industries was entitled to retain 20% of the gross sale proceeds of each subdivided lot until it had, by such retentions, recouped an amount equal to the price it had paid Mr. Gargan for Lot 35, plus certain outgoings. Recoupment by SAM Industries of the money it had paid Mr. Gargan for Lot 35 thus became a first charge, as between the Gargans and SAM Industries, on the gross sale proceeds of each subdivided lot to the extent of 20% of those sale proceeds. Mr. Gargan describes the sale of 23 July, 1990 of the whole of Lot 35 to SAM Industries as a "sham". It appears that, by this, he means that it was entered into only as a transfer to SAM Industries by way of security for recovery by SAM Industries of the $1,353,000 referred to in the contract as having been paid by SAM Industries to Mr. Gargan by way of purchase price and that it was not the intention of the parties that SAM Industries should acquire, pursuant to that contract of sale, the beneficial ownership of Lot 35. This comprises the nub of his second complaint against SAM Industries, which he says has dealt with the land in a way inconsistent with this arrangement. SAM Industries points out that, so far as Mr. Gargan's second complaint against it is concerned, in the statement of claim he delivered in Queensland Supreme Court action no. 14 of 1992, he alleged that the second joint venture agreement of 15 August, 1990 was entered into by SAM Industries with the Gargan Bros. partnership and that Thomas J held that the Gargan Bros. partnership had been dissolved as from September 1984. It is not suggested that this decision gives rise to any estoppel upon which SAM Industries, which was not a party to the action between Mr. Gargan and his brother, could rely if Mr. Gargan were now free to resurrect the action the subject of his second complaint against SAM Industries. But it was submitted that Thomas J's conclusion must throw doubt upon whether Mr. Gargan in fact has any real cause of action here against SAM Industries. Thomas J found that this second joint venture agreement constituted an arrangement with respect to Lot 35 involving the Gargan brothers that was quite separate from their partnership arrangements that terminated in 1984. It does not seem to me to matter, in assessing whether Mr. Gargan has a viable claim against SAM Industries here, whether the brothers were involved in that joint venture as partners inter se pursuant to the 1966 partnership arrangement or whether they were involved in it under an ad hoc partnership inter se limited to the ventures the subject of that 1990 agreement or whether their relationship with each other with respect to the joint venture agreement took some other form. The more fundamental problem for Mr. Gargan is to show that, notwithstanding the sale of Lot 35 to SAM Industries and the second joint venture agreement, there are grounds for thinking that SAM Industries' only interest in the land was in the nature of a mortgagee, albeit with certain rights to develop and sell off the land in order to recoup the $1,353,000 said in the contract to have been paid by way of purchase price for the freehold title to the land. On the face of the joint venture agreement, while it is framed so as to entitle SAM Industries to limited priority as between itself and the Gargans to subdivisional sale proceeds in order to recoup the $1,353,000 it paid over to Mr. Gargan pursuant to the contract of 23 July, 1990, there is nothing in the contractual arrangements between the parties and nothing in the material to which I was directed which would suggest that SAM Industries was not fully entitled to recoup not only the $1,353,000 and interest thereon, but also a substantial additional sum from the subdivisional project, depending upon how successful the subdivisional project turned out to be. That is quite inconsistent with the proposition that it had a security interest only in Lot 35. Mr. Gargan does not dispute that Sam Industries was to have this entitlement. This agreement does not envisage any circumstance in which SAM Industries would be obliged to reconvey the land to Mr. Gargan and his brother. That is not decisive. But it is significant that the agreement envisages the progressive subdivision and sale of Lot 35 by SAM Industries under its control and at its discretion, with the sale proceeds being dealt with in such a way as to entitle SAM Industries to recoup its costs of acquiring the land from Mr. Gargan while providing for SAM Industries and the Gargan brothers to share in the profits from any such land sales. Mr. Gargan does not suggest that it was never the parties' intention that the land would not be disposed of in this way, leaving nothing at the end of the day to be reconveyed to he and his brother. He told the trustee's agent in an interview on 21 April, 1993 that "[t]he rights of development however would be at SAM's discretion". There was no mention then of SAM Industries allegedly holding Lot 35 only as security for repayment of its loan. SAM Industries, claiming the right to do so pursuant to clause 9 of the second joint venture agreement, gave a notice on 12 October, 1992 to Mr. Gargan calling on him to remedy certain alleged breaches of that agreement and, upon Mr. Gargan's failure to remedy the breaches, SAM Industries on 17 November, 1992 gave him notice terminating the joint venture. However, it appears that Mr. Gargan's brother, the other party to this second joint venture agreement, has continued to exercise his rights of farming the land conferred by that agreement. He makes no complaint against SAM Industries. There is nothing that I have been pointed to which to my mind suggests that Mr. Gargan has any prospect of showing that the second joint venture agreement and the associated sale of Lot 35 by Mr. Gargan to SAM Industries were not intended by all parties to take effect according to their terms. I do not think that there is any basis upon which Mr. Gargan could, his bankruptcy apart, be said to have made out an arguable case that he has a good cause of action against SAM Industries. It follows that there is now no ground for giving the direction to the trustee he seeks here. His application, insofar as it seeks a direction to the Official Trustee to assign to him the causes of action in question, must be dismissed. While I will adjoin his application, insofar as it seeks an inquiry into the conduct of the trustee and an order that the court grant annulment of his bankruptcy on the ground that the sequestration order was wrongly made, it would follow, for the reasons I have given in dismissing the first part of Mr. Gargan's application, that his claim for an inquiry into the conduct of the trustee must also fail, at least insofar as it involves complaints by Mr. Gargan about the trustee's refusal to pursue any of these causes of action. It is desirable that the trustee proceed with the winding up of this estate expeditiously. While the trustee does not have control of any assets at the moment, total debts provable in the bankruptcy appear to be of the order of $271,000, excluding Mr. John Gargan's claim for the costs he obtained under Thomas J's judgment against Mr. Gargan which have not yet been taxed. The estimated costs of the trustee's administration to date is $43,000. The only asset of any value appears to be Mr. Gargan's one-half interest in the 423 hectares he agreed to sell to Mr. Mohammed. SAM Industries holds a clear title to this land and is prepared to transfer it to Mr. Gargan and Mr. Mohammed upon receipt of the excision costs. Realisation of Mr. Gargan's interest in this land should produce a substantial dividend for creditors. At the meeting of creditors held in November last, Mr. John Gargan put a proposal to creditors under which he offered to pay to the trustee, in return for the transfer to him of Mr. Gargan's one-half interest in the heavily encumbered home block, $20,000 in cash and to abandon all claim he had to prove in the estate in respect of the very large amount of costs recoverable by him under the order made by Thomas J in his favour when Thomas J gave judgment for him in action 101 of 1990. It was put to the creditors that the trustee had no funds available to him and that if Mr. John Gargan's proposal were accepted, the trustee would then be able to pay to SAM Industries the costs of excising the 423 hectares so that that area could be transferred to Mr. Mohammed and the trustee jointly in accordance with the contractual arrangements between Mr. Gargan and SAM Industries and Mr. Gargan and Mr. Mohammed. Relinquishment by Mr. John Gargan of his claim for costs, estimated to be of the order of $90,000, offers a substantial benefit to creditors. SAM Industries, in supporting Mr. John Gargan's proposal, indicated that they would be prepared to reduce their claim for excision costs to $16,285. The trustee will no doubt clarify with SAM Industries whether any of these costs relate to matters other than the excision of the Mohammed land from Lot 35: the account from Messrs. Merino & Smith, SAM Industries's solicitors, dated 7 September, 1992 forwarded to the trustee under cover of those same solicitors' letter of 1 March, 1994 appears to relate to work done by them in relation to a number of matters additional to this one excision. A motion accepting Mr. John Gargan's proposal was put and passed by all the creditors in number and value save only that one creditor with a debt of $6,000 abstained from voting. It was because of the pendency of Mr. Gargan's application to the court, which includes an attack on the trustee's administration of the estate, that the trustee informed the meeting that he would not implement the wishes of the creditors in this behalf without the leave of the court. I will therefore make the following orders: 1. The application insofar as it seeks the relief in paragraph 1 is dismissed. 2. The application insofar as it seeks the relief in paragraphs 2 and 3 is adjourned to the District Registrar. I expect the District Registrar to give directions for an expedited hearing of the applicant's claims for relief in paragraphs 2 and 3 of his application. If there is any application with respect to the costs of the proceedings before me by any person who appeared at the hearing, then concise written submissions in that regard must be delivered to my associate and to all other persons who appeared at the hearing by 25 August, 1995. If the recipient of any submission wishes to make a submission in reply, that recipient must forward to my associate any submissions in reply by 1 September, 1995. I certify that this and the preceding 44 pages are a true copy of the reasons for judgment herein of the Honourable Justice Drummond. Associate: Date: 18 August, 1995

The applicant appeared in person. Counsel for the respondent: Mr. D.G.H. Turnbull Solicitor for the respondent: Australian Government Solicitor Dates of Hearing: 1-2 August, 1995

Water Resources Act 1989(Qld)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (19 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (4)

Cited By (1)