O'Brien v Sheahan

REASONS FOR JUDGMENT 1 The application in this matter was heard simultaneously with a similar application in action number S7005 of 2003, Birdseye v Sheahan [2004] FCA 609. 2 The resolution of this matter will largely resolve the matters in dispute in the matter of Birdseye v Sheahan. 3 The applicant seeks: '1. A declaration that as at 3 December 1999 the Respondent was not the Trustee of the Applicant's estate. 2. A declaration that as at 6 December 1999 the Respondent was not the Trustee of the Applicant's estate. 3. A declaration that no valid Notice of Objection was served on the Applicant. 4. A declaration that no valid Notice of Objection was filed by the Official Receiver. 5. A declaration that as at 3 December 1999 there was not in existence a valid Certificate of Appointment in favour of the Respondent in relation to the Applicant's estate. 6. A declaration that the Certificate of Appointment in favour of John Sheahan dated 6 December 1999 is void and/or of no effect. 7. A declaration that the Respondent is not the Trustee in Bankruptcy of the Applicant's bankrupt estate. 8. A permanent injunction restraining the Respondent from further acting or purporting to act as the Trustee in Bankruptcy of the Applicant's bankrupt estate. 9. A declaration from Mr John Sheahan is deemed to have declined the appointment as the Trustee in Bankruptcy of the Respondent's bankrupt estate.' 4 The applicant filed a debtor's petition dated 25 October 1996. On 5 November 1996, on the petition of the Deputy Commissioner of Taxation, Mansfield J made a sequestration order in relation to the estate of the applicant. On the same day, again on the petition of the Deputy Commissioner of Taxation, a sequestration order was made in relation to the estate of the applicant's wife, Deborah Anne O'Brien. The Official Trustee was appointed trustee of both the applicant's estate and that of his wife. 5 On 6 December 1996 the applicant and his wife provided a Statement of Affairs to the Official Trustee. 6 In the ordinary course of events, in the absence of a valid notice of objection, both the applicant and his wife would have been discharged from bankruptcy at the end of a period of three years from the date on which they filed their Statement of Affairs: s 149(4) of the Bankruptcy Act 1966 (Cth) (the Act). The parties agreed that, in the absence of any objection, the applicant and his wife would have been discharged from bankruptcy at 12 midnight on 6 December 1999. 7 On 16 November 1999 the Deputy Official Receiver wrote to the respondent, Mr John Sheahan, a registered trustee in bankruptcy, in relation to the applicant's and his wife's estates. The letter makes it clear that there had been a telephone conversation between the Official Receiver's office and Mr Sheahan's office concerning the administration of the estates of the applicant and his wife, and that Mr Sheahan had indicated through his office that he was prepared to take over the administration of the estates. The Deputy Official Receiver wrote: 'I confirm instructions for you to call a meeting of creditors as agent for the Official Trustee and until the meeting of creditors is held appoint you as my agent to assist in the investigations of the affairs of the bankrupt, identify assets and in consultation with me, safeguard same.' 8 The Deputy Official Receiver advised Mr Sheahan that the bankrupts had lodged their Statements of Affairs on 6 December 1996 and 'would be due for discharge on 7 December 1999 unless an objection to discharge was lodged'. The Deputy Official Receiver advised Mr Sheahan that he believed that grounds existed to lodge an objection to discharge of the applicant and he enclosed a proforma for Mr Sheahan's assistance. 9 The Deputy Official Receiver suggested that a meeting of creditors should be held to consider the transfer of the administration to Mr Sheahan. The Deputy Official Receiver wrote: 'Unless you feel that in this instance I should attend the meeting I am content for you or a member of your staff to chair the meeting which can be held in your office. Please advise who you intend to chair the meeting so that I can issue a separate authority to represent the Official Trustee. As I don't intend to attend the meeting I am content for the notice to creditors to include a statement that I recommend your appointment as trustee.' 10 In a letter dated 12 November, the respondent confirmed that he wished to take over administration of the estates of both the applicant and the applicant's wife. He accepted the terms of the agency detailed in the earlier letter. 11 On 25 November 1999 Sheahan Coope, a firm of which the respondent is a partner, circulated a notice to creditors of the bankrupt estates of the applicant and his wife calling a meeting of creditors in their estates for 11.00 am on 2 December 1999. The purpose of the meeting was to enable the relevant creditors to consider appointing Mr Sheahan as trustee of the estates of the applicant and his wife. 12 In that notice, Mr Sheahan drew to the creditors' attention that the bankrupts had filed their Statements of Affairs on 6 December 1996. He detailed the liabilities of each of the bankrupts as at that date. The creditors were advised that, unless an objection was entered, both bankrupts would be due for discharge on 7 December 1999. 13 On 1 December 1999 the Deputy Official Receiver appointed Mr Lock, one of Mr Sheahan's partners, to represent the Official Trustee at the meeting to be held on 2 December 1999. 14 On 1 December 1999 Mr Sheahan executed a Consent to Act as Trustee of the joint and separate estates of Christopher John O'Brien and Deborah Anne O'Brien. The consent appears to contemplate that his appointment was made pursuant to s 156A of the Act whereas, in fact, the impugned appointment was purportedly made under s 157. 15 The creditors meeting was held on 2 December 1999 and a resolution was carried that 'John Sheahan be appointed as trustee of the bankruptcy of Christopher John O'Brien and Deborah Anne O'Brien in place of the Official Trustee'. 16 On 3 December 1999 the respondent wrote to the applicant advising him that, at the meeting held on 2 December 1999, it was resolved that the respondent be appointed trustee of the applicant's estate in place of the Official Trustee. 17 The respondent wrote: 'As you are probably aware, you are due to be automatically discharged from bankruptcy on 7 December 1999. I have formally objected to your discharge on this date and have enclosed a copy of the "Notice of Objection to Discharge" that I filed with the Official Receiver.' 18 I set out the notice in its entirety: 'Bankruptcy Act 1966 NOTICE OF OBJECTION TO DISCHARGE Bankrupt District of the ) No: A11/2167/96/7 State of South Australia ) I, John Sheahan, trustee of the bankrupt estate of Christopher John and Deborah Anne O'Brien, object to the discharge of Christopher John O'Brien of 54 Dutton Terrace, Medindie, South Australia from bankruptcy pursuant to Section 149B of the Bankruptcy Act, 1966.