DAVID HASKINS and CONNIE CASSAR v THE OFFICIAL TRUSTEE IN BANKRUPTCY

On 15 January 1996 the applicants attended upon Mr. Willoughby for an initial interview, and told him they were parties to a number of proceedings involving Brae Villa Homes Pty Ltd. Mr. Willoughby informed them that the right to continue with the litigation vested in the Official Trustee. The applicants asked that the litigation be pursued, and were told that the Official Trustee would have to examine the documents relating to the proceedings before making a decision. The applicants subsequently provided relevant documents to Mr. Willoughby. He then instructed the Australian Government Solicitor ("AGS") to advise the Trustee on the merits of the various proceedings. After receiving AGS's advice, on 14 February Mr. Willoughby wrote to the applicants advising them that, on the basis of the advice, the Trustee would not be continuing with the litigation. The proceeding The applicants applied to this Court under s.178 of the Bankruptcy Act 1966 to review the Trustee's decision. In their affidavit in support they contend that they were denied natural justice by Byrne J. in proceeding No. 6942 of 1994 in the Supreme Court of Victoria. In that matter the applicants sought leave to appeal to the Supreme Court against an interim award handed down by an arbitrator in favour of Brae Villa. Byrne J. dismissed the application. In the present proceeding the applicants claim that, having heard their submissions, his Honour did not call upon counsel for Brae Villa because he was going to decide the case against the applicants. They also complain that they do not have a copy of his Honour's reasons for decision. They do not actually assert that his Honour did not give reasons. Rather they say that "even upon searching the file in the Supreme Court of Victoria. His Honour Justice Byrne gave no reasons for his decision". They say they have a right to reasons so they can read and understand the decision. They claim that the absence of reasons denies them "reasons for Appeal". Mr. Willoughby filed an affidavit in which he gave the Trustee's reasons for deciding not to continue with the proceedings. AGS's advice that the proceedings should not be continued was a "strong factor". AGS's letter described seven Supreme Court proceedings in which the applicants were involved, and examined three in particular. In the first, No. 8203 of 1995, the applicants sued Brae Villa in relation to a fire on their property which seriously damaged the house thereon. They claim that Brae Villa failed to maintain insurance on the property, and was liable to them in damages. AGS advised that the Trustee should neither adopt nor assign this proceeding. AGS noted that the first applicant had signed a letter stating that he had set the property alight, presumably in order to spite Brae Villa. AGS concluded that the merits of the proceeding were "highly dubious". I have already described proceeding No. 6942 of 1994. Byrne J.'s reasons for dismissing the application for leave to appeal are not available. The applicants want the Trustee to appeal to the Court of Appeal from his Honour's refusal of leave. To do this the Trustee will need leave to appeal. AGS's advice included this passage: As the bankrupts were represented by counsel at the hearing one must assume that they received adequate legal advice and that their case was put competently. Accordingly, I have assessed the prospects of leave to appeal being granted on the basis of the merits of the claim against the arbitrator. His Honour Justice Nathan gives a fairly comprehensive analysis of the merits, or lack thereof, of the claims against the arbitrator in proceeding number 7031 of 1995. After reading Nathan J's decision one cannot but form the view that the bankrupts will not accept that they are on the losing side of the dispute with Brae Villa. ... In the writer's view it is unlikely that leave to appeal would be granted by the Court on the basis that no sufficient ground of appeal has been established. More importantly, even if the Court indulged the bankrupts (or at least the Trustee as trustee of their estate) with leave to appeal one would still be faced with an appeal which appears to be based, at the end of the day, on unmeritorious claims previously dismissed by [Mr. Justice] Nathan. The Trustee is advised not to pursue this application on behalf of the bankrupts .... In the third action, No. 7031 of 1995, the applicants sought to remove the arbitrator for misconduct. After a five day hearing, the application was dismissed. Nathan J.'s reasons for judgment were before me. In addition to AGS's advice that the Trustee should not continue with the proceedings, the Trustee, in coming to his decision, took into account that there is no money in the estate to fund any legal action. Section 178 Section 178 enables a bankrupt who is affected by any act, omission or decision of the trustee to apply to the Court, which may make such order as it thinks just and equitable. The section confers the widest possible discretion, and the jurisdiction is not limited to cases where the trustee has acted absurdly, unreasonably or in bad faith: Re Tyndall (1977) 30 FLR 6; Re Stelnicki (1982) 62 FLR 430; Re Wheeler (1994) 54 FCR 166. The Court can interfere even though the trustee's decision was correct on the material before him, if the material before the Court shows some ground for review: Gray v. Clout (1990) 27 FCR 141, at p.144. Leave to appeal from Byrne J. Section 38(2) of the Commercial Arbitration Act 1984 (Vict.) provides that subject to sub-s.(4) an appeal lies to the Supreme Court on any question of law arising out of an award. Sub-section (4) provides that an appeal under sub-s.(2) may be brought with the consent of all other parties to the arbitration agreement, or with the leave of the Supreme Court. Sub-section (5)(a) provides that the Court shall not grant leave under sub-s.(4) unless it considers that, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement. Unless the Supreme Court gives leave, an appeal does not lie to the Full Court from the grant or refusal of leave: sub-s.(6). A draft Notice of Appeal was part of the material before Byrne J. It identifies the questions of law said to arise out of the Award. So far as material to this Application they are: