O'Neill v Piscopo

REASONS FOR JUDGMENT 1 On 27 January 2011, Mr Michael O'Neill filed a form of notice of appeal to the Court, joining as respondents Mr Samuel Piscopo and Mr Terry Hill. By the notice of appeal, Mr O'Neill purported to appeal from, or, to the extent necessary, to seek leave to appeal from, orders made by the Federal Magistrates Court on 14 December 2010. The first respondent, Mr Piscopo, filed a notice of motion on 24 February 2011 seeking orders that the appeal be struck out or summarily dismissed as incompetent, or that it be struck out or summarily dismissed on the basis that the grounds relied upon in support of the appeal are not adequately stated. 2 The proceeding in which the orders were made by the Federal Magistrates Court was commenced by an application for a summons to examine persons under the Bankruptcy Act 1966 (Cth) (the Bankruptcy Act) filed on 13 February 2008. To put that application in context, it is necessary to say something briefly about the parties. Mr Hill is a bankrupt. Mr Piscopo is his trustee in bankruptcy. Mr O'Neill is a solicitor who at various times has acted for Mr Hill. He is a creditor of Mr Hill. By the application to the Federal Magistrates Court of 13 February 2008, Mr Piscopo requested the Court to issue summonses under s 81 of the Bankruptcy Act to Mr Hill, his wife, Ms Elena Rose, and Mr O'Neill, as well as to a Mr Nicholas Eddy. 3 Various parties, including Mr O'Neill, then moved for discharge of the summonses that were issued by the Federal Magistrates Court pursuant to the application. In addition, in a further amended interim application filed in that proceeding, orders were sought, under s 179 of the Bankruptcy Act, that the Federal Magistrates Court inquire into the conduct of Mr Piscopo in relation to the bankruptcy of Mr Hill, that the Federal Magistrates Court remove Mr Piscopo from the office of trustee, and that the Federal Magistrates Court make such further order as it thought proper. The inclusion of such an application in the interim application to discharge the examination summonses was highly irregular. However, the parties are apparently prepared to overlook that irregularity. 4 The proceeding for the discharge of the summonses and the inquiry under s 179 was heard by Lloyd-Jones FM (the primary judge) over a number of days commencing on 30 September 2008. There were further hearings on 1 and 8 October 2008, 18 and 19 December 2008, 19, 20 and 26 March 2009, 12 December 2009, 15 February 2010 and 12 March 2010. The last submissions were recorded as having been made on 17 June 2010. On 14 December 2010, the Federal Magistrates Court ordered that the interim applications for the discharge of examination summonses and for an inquiry into the conduct of Mr Piscopo be dismissed. 5 The grounds stated in the notice of appeal of 27 January 2011 are singularly uninformative. They are as follows: 1. The primary judge erred in finding that there was no sufficient basis to inquire into the conduct of Mr Piscopo. 2. The primary judge erred in finding that there was no sufficient basis to order that Mr Piscopo be removed as the trustee in bankruptcy of Mr Hill. 3. The primary judge erred in failing to order that the examination summonses issued by the Federal Magistrates Court be discharged. 6 Mr O'Neill, through his counsel, was mindful of the argument that the orders made by the primary judge were interlocutory. Hence his notice of appeal seeks leave to appeal to the extent that leave is necessary. Mr Piscopo contends that all of the orders made on 14 December 2010 are interlocutory. He says that the consequence of the orders is not to determine the rights of the parties in a principal cause pending between them, and that Mr O'Neill could make a further application for the same relief, whether or not such an application might have little prospect of success. 7 I consider that the order dismissing the application to discharge the examination summons addressed to Mr O'Neill is interlocutory. In any event, it is difficult to see why the Court would intervene in relation to the summons. Counsel for Mr O'Neill accepts that it would not be inappropriate for an examination of Mr O'Neill to proceed, so long as Mr Piscopo does not conduct the examination in his capacity as trustee. I do not consider that there would be any injustice if the examination were to proceed. Leave to appeal from that order should be refused. 8 The question of the refusal to inquire into the conduct of Mr Piscopo is not quite so straightforward. It is important that a trustee in bankruptcy conduct himself, in relation to the bankrupt estate, properly and objectively. It appears that there is some apprehension on the part of Mr O'Neill that Mr Piscopo has not acted objectively in relation to the affairs of Mr Hill. The reasons of the primary judge record that Mr O'Neill contended that there were eight factors that should be taken into account in determining whether or not an inquiry into the conduct of Mr Piscopo was warranted. 9 First, it was said that Mr Piscopo failed to make candid disclosure when applying for the issue of the examination summonses. One of the matters into which inquiry was to be made concerned ownership of shares in a New Zealand company. It is said that Mr Piscopo failed to disclose communications from the liquidator of that company concerning ownership of shares in the company. That is the principal basis upon which the order discharging the examination summons is sought. Another of the factors that is said to be relevant to the question of conducting an inquiry concerns the role of a Mr Brooks, a former solicitor, and a Mr James, in relation to the affairs of Mr Hill. In general terms it is said that Mr James, who is a creditor of Mr Hill, has funded the activities of Mr Piscopo in relation to the proposed examination, and that Mr Piscopo has exhibited a complete lack of independence, in the sense that he has permitted himself to take up the cudgels on behalf of Mr Brooks and Mr James to advance what is alleged to be a personal grudge of theirs against Mr O'Neill. 10 Mr O'Neill's written submissions assert that the primary judge did not deal with the arguments advanced on behalf of Mr O'Neill concerning Mr Piscopo's lack of independence. He says that, while his Honour identified that an argument had been advanced on behalf of Mr O'Neill that Mr James had sponsored Mr Piscopo for ulterior purposes, his Honour failed to make findings in relation to those contentions. The written submissions assert that the primary judge failed to determine a critical argument in circumstances where, if the argument were decided in favour of Mr O'Neill, that decision would have led to a finding that an inquiry was warranted and that Mr Piscopo had breached his duty to act independently, not to delegate and not to allow others to exercise judgments that should be exercised by him. 11 The written submissions are by no means clear, and, significantly, they do not, in terms, assert that the primary judge either applied a wrong principle in the exercise of the discretion conferred by s 179 or adopted an incorrect approach. In all of the circumstances, I would be disposed, if leave is required, to refuse leave, or, if leave is not required, to dismiss the appeal summarily on the basis that there is no adequate ground presently disclosed. However, counsel for Mr O'Neill has sought the opportunity of reformulating the grounds of appeal before the matter is disposed of, and I am inclined to grant one further indulgence. 12 I should observe that, when the matter first came before me, callover directions were given for submissions to be filed indicating precisely the argument to be relied upon by Mr O'Neill in the appeal. While some submissions have been prepared, as I have said, they do not disclose arguable grounds at this stage. 13 In the circumstances, I propose to stand over the hearing of the motion to next Thursday. I will direct Mr O'Neill to file a draft notice of appeal setting out supplementary grounds of appeal. Mr O'Neill should pay the costs of the motion to date, on the basis that the efforts of Mr Piscopo in relation to the purported notice of appeal have so far been thrown away. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Emmett.