Federal Court of Australia

Thompson v Lane [2024] FCA 1234

ORDERS

THE COURT ORDERS THAT:

1.    The interim order sought by the applicant in the originating application filed on 17 October 2023 be refused.

2.    The interim application filed on 13 December 2023 be dismissed.

3.    The further relief sought by the applicant pursuant to submissions filed on 6 February 2024 be refused.

4.    The applicant pay the costs of the respondent of and incidental to these interlocutory proceedings on a party-party basis.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

COLLIER J:

1    Before the Court are two interim applications filed by Ms Emma Thompson in which she sought orders for removal of the trustee of her bankrupt estate, Mr Morgan Lane of Worrells insolvency firm (the trustee). She also sought payment of funds allegedly held by the trustee.

2    The first application was filed by Ms Thompson as part an Originating Application on 17 October 2023 and was accompanied by an affidavit of Ms Thompson dated 16 October 2023. The second interim application was filed by Ms Thompson on 13 December 2023 and was accompanied by an affidavit of Ms Thompson dated 13 December 2023.

3    The two interim applications substantively called for the same relief, except for a discrepancy in the amount claimed in relation to funds allegedly held by the trustee.

4    In her submissions filed on 6 February 2024 Ms Thompson also sought further relief, namely full and frank disclosure by the trustee in relation to a number of issues.

5    In my view the interim relief sought by Ms Thompson should be refused for the following reasons.

Background

6    There has previously been litigation between Ms Thompson and the trustee. In particular I note a summary of events which led to Ms Thompson’s bankruptcy explained by Logan J in Thompson v Lane (Trustee) (No 3) [2022] FCA 128:

1.    Pursuant to s 55(4A) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), Ms Emma Narelle Cathryn Thompson became a bankrupt on 1 July 2020 upon the acceptance (and endorsement accordingly) by the Official Receiver of a debtor’s petition presented by her on 26 June 2020. She has applied, pursuant to s 153B(1) and (2) of the Bankruptcy Act, for an order that her bankruptcy be annulled.

2.    …

3.    The grounds of Ms Thompson’s application are that her “Debtor’s Petition ought not to have been presented and ought not to have been accepted by the Official Receiver, and that the Sequestration Order made on 1 July 2020 should not have been made”

4.    The last mentioned of these grounds may be disposed of shortly. Ms Thompson became a bankrupt not by virtue of the making of a sequestration order but rather, as mentioned, pursuant to statute upon the acceptance (and related endorsement) of her debtor’s petition. At the time when this occurred, a creditor’s petition presented by the Body Corporate Arila Lodge CTS 14237 (BCAL) was then pending hearing in the then Federal Circuit Court of Australia. Section 153B of the Bankruptcy Act does permit the annulment of a bankruptcy in circumstances where a sequestration order ought not to have been made. However, no such order was made in her case on the creditor’s petition. Rather, what occurred was that, on 2 (not 1) July 2020, the Federal Circuit ordered that BCAL’s petition be dismissed and that its costs of those proceedings (including reserved costs) as agreed or taxed be paid from Ms Thompson’s by then bankrupt estate in accordance with the Bankruptcy Act with the same priority as if a sequestration order had been made pursuant to its petition. The fate of BCAL’s creditor’s petition was dictated by Ms Thompson’s prior presentation and the related acceptance of her debtor’s petition.

5.    The trustee of Ms Thompson’s bankrupt estate is Mr Morgan Lane of the insolvency firm Worrells. Mr Lane has not opposed the making of an annulment order but rather adopted the stance of abiding such order as the Court may make. He has furnished a report to the Court concerning his administration of Ms Thompson’s estate and expressed an opinion as to her solvency (of which more below). Two creditors, BCAL and Mahoneys, a law firm, have opposed the making of an annulment order. Mahoneys adopted the submissions made on behalf of BCAL.

Justice Logan dismissed that application for annulment by Ms Thompson.

7    Ms Thompson appealed Logan J’s decision. The appeal was dismissed by the Full Court on 10 March 2023 in Thompson v Lane (Trustee) [2023] FCAFC 32.

8    Ms Thompson was discharged from bankruptcy on 2 July 2023, pursuant to s 149 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act). She was informed of this by letter dated 3 July 2023 sent on behalf of the trustee in bankruptcy. Materially, that letter read:

…

As you are aware you were declared bankrupt on 1 July 2020.

A bankrupt is automatically discharged from bankruptcy three years after the filing of their Statement of Affairs with the Australian Financial Security Authority (AFSA). Your three years has now expired and consequently you have been discharged from bankruptcy, with the effective date of discharge being 2 July 2023.

It is important to note that whilst you no longer need to refer to yourself as a bankrupt, the administration of your bankrupt estate is ongoing.

There are several reasons why the bankrupt estate can continue after discharge, for example:

•    Where your final income contribution assessment is yet to be made (Schedule A)

•    Where there are assets to be dealt with by your trustee (Schedule B)

•    Assets that vested in your trustee in bankruptcy remain vested in your trustee (section 129AA)

•    Where a request for information is required still to finalise outstanding matters (Schedule C)

In those circumstances, whilst you are a discharged bankrupt some residual obligations to assist your trustee still exist. If you need clarity on what you can and can't do, please feel free to contact my office.

This letter should be sufficient to evidence that you have been discharged from bankruptcy, but if you would like a certificate of your discharge, please conduct a search of the bankruptcy register at www.afsa.gov.au.

The Present proceedings

9    On 17 October 2023 Ms Thompson filed an originating application pursuant to ss 19 and 149 of the Bankruptcy Act, and sch 2 ss 42-60, 65-25 and 70-56 of the Bankruptcy Act. Ms Thompson sought the following orders:

The Applicant seeks an Order that the respondent cease to act as trustee of the bankrupt Estate of Emma Narelle Cathryn Thompson.

Additionally, the Applicant seeks an Interim Order that forthwith and until this Application is determined, the respondent cease to act as trustee of the Applicant’s bankrupt Estate; and that forthwith, the respondent pay to Emma Narelle Cathryn Thompson the amount of $334,213.99 being the funds, in the Worrells File Account on 13 October 2023.

(emphasis added)

10    On 13 December 2023 Ms Thompson filed an interim application seeking the following interlocutory orders:

1.     Forthwith and until this Application is determined, the respondent cease to act as trustee of the bankrupt estate of Emma Narelle Cathryn THOMPSON.

2.     The respondent pay to the Applicant the amount of $523528.37 being the amount of funds received into the Applicant’s File Account.

11    On the morning of the hearing before me on 6 February 2024, Ms Thompson filed submissions which sought relief alternative to that claimed in her interim application filed 13 December 2023 (further relief). Ms Thompson claimed, materially:

…

2.     If it is that the Court does not make the Orders sought on the Interim Application, then the Applicant asks the Court to make the following Orders, in reliance upon s.42-60, s.65-25 and s.70-56 of Schedule 2 of the Bankruptcy Act 1966;

a)     An Order that Morgan Lane provide full and frank details and all documents to evidence the basis he relies upon to purportedly continue "the administration of your bankrupt estate"; and to continue to act as bankruptcy trustee since 2 July 2023; and

b)     An Order that Morgan Lane provide full and frank details of what event and/or action will indicate that "the administration of your estate is completed"; and

c)     An Order that Morgan Lane provide full and frank details and all documents to evidence the assertion "it is unlikely that any surplus will be available" to be paid to the Applicant; and

d)     An Order that Morgan Lane provide full and frank details and all documents to evidence the making of all payments made from the Applicant’s Estate, including after 2 July 2023, and including all payments made to Shand Taylor Lawyers, Body Corporate for Arila Lodge CTS 14237, and Grace Lawyers; and

e)     An Order that Morgan Lane provide to the Applicant the full and frank details and all documents to evidence all his communications with others (and all communications made with others on his behalf) including;

i.     communications with the Official Receiver, AFSA, Charles Londy and all others that resulted in Morgan Lane being appointed as bankruptcy trustee; and

ii.     communications with Australian Taxation Officer (ATO) employees and officers; including confirmation of legal basis for the amount of $523,528.37 to be transferred from the ATO to the Worrells Trust account; and

iii.     communications with all parties that provided Proof of Debt Claims and their purported legal representatives, including Body Corporate for Arila Lodge CTS 14237, Grace Lawyers and Julene Frances Cyati; and

iv.    communications with all other parties and all evidence in support of all assertions in Morgan Lane’s affidavits and Submissions to the Court made in proceedings QUD113 of 2021 and QUD86 of 2022, including that the Applicant had not provided all books and records pertaining to a business she operated; and

v.    communications with all other persons about the Applicant’s bankruptcy and personal life.

f)     An Order that Morgan Lane provide to the Applicant the full and frank details and all documents to evidence that all costs, charges and expenses that Morgan Lane seeks to be paid for the administration of the bankrupt estate are necessary, reasonable in amount, and reasonably incurred; and

g)     An Order that Morgan Lane answers all questions in all communications from the Applicant and provide full and frank details and all documents pertaining to such answers, including the email sent by the Applicant at 1:33pm on 2 February 2024; and

h)     An Order that Morgan Lane;

i.     provide full and frank details and all documents to evidence all his assertions and representations relied upon by the Court to make the Decisions in proceedings QUD113 of 2021 and QUD86 of 2022; and/or

ii.     inform the Court of the errors of fact and law in the Decisions made in proceedings QUD113 of 2021 and QUD86 of 2022, including that there was not $1,332,934 of valid Proof of Debt Claims, noting that;

Lord Herschell LC defined “fraud” in Derry v Peek (1889) 14 AC 33 (at p 374) as;

“a false statement of fact which is made by one party to a transaction to the other knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false, with the intent that it should be acted upon by the other party and which was in fact so acted upon”.

and

Jeeves & Jeeves (No 3) [2010] FamCA 488 identifies “fraud” as encompassing;

“knowledge and intention relating to financial matters that, if known, would create a different picture to that portrayed on the surface. …. conduct that was in all the circumstances unconscionable.”

12    Ms Thompson was self-represented at the hearing before me on 6 February 2024. Ms Thompson relied on two affidavits: the first filed on 17 October 2023 with the originating application and the second filed on 13 December 2023 with the interim application.

13    The trustee relied on two affidavits, one filed on 29 January 2024 and a further affidavit filed on 20 February 2024 pursuant to orders I made at the hearing of 6 February 2024. The trustee was represented by Mr O’Sullivan of Shand Taylor Lawyers. Although overall the trustee was prepared to abide the orders of the Court, the trustee nonetheless opposed the application for further relief on basis that no notice of the further relief sought by Ms Thompson was given to him by Ms Thompson.

14    I made orders allowing the trustee to file written submissions in relation to the further relief sought by Ms Thompson, and providing Ms Thompson with the opportunity to reply.

Submissions of the Parties

15    In summary, Ms Thompson submitted as follows:

    On 2 July 2023, Ms Thompson was discharged from bankruptcy. The trustee did not make any application objecting to that discharge. This was not contested.

    Prior to 2 July 2023, the trustee had not approved payment of any monies pertaining to the Proof of Debt Claims in the amount of $1,356,534.00.

    The trustee had not responded to any emails sent by Ms Thompson asking on what legal basis he purported to continue to act as the trustee in bankruptcy.

    There was no legal basis for the trustee to purport to continue to act as trustee in bankruptcy or to withhold the $523,528.37 held by Worrells.

    There was no legal basis for the trustee to have paid monies to the Body Corporate for Arila Lodge CTS 14237 (the Body Corporate).

    There was no evidence to indicate that Ms Thompson was ever insolvent.

    The trustee failed to act in accordance with the duties of a bankruptcy trustee largely in relation to a failure to inform Ms Thompson of relevant information.

    The trustee never provided full and frank disclosure of communications with the Official Receiver that caused Ms Thompson’s Debtor’s Petition to be accepted.

    The communications annexed to the trustee’s affidavit of 25 January 2024 identified multiple breaches of the Bankruptcy Act and other requirements of a Trustee in Bankruptcy.

    The trustee failed to inform the Court that Ms Thompson was always able to pay the invalidly claimed debts and that the trustee had not determined that any of the Proof of Debt claims were valid. The decision of Logan J should be set aside on that basis.

    The trustee did not disclose correspondence to confirm how the $523,528.37 was transferred from the Australian Taxation Office to the trustee’s insolvency firm trust account.

    The costs agreement exhibited in pages 48 to 51 of the trustee’s affidavit was invalid as it was not signed by the trustee personally.

    The trustee invalidly paid amounts to Shand Taylor Lawyers and the Body Corporate whilst related proceedings remained on foot in the Federal Court of Australia.

    There were no existing debts which fell within the category of “Debts Not Extinguished” upon automatic discharge of a bankruptcy under sub 2.19 of Official Trustee Practice Statement 4.

    The trustee had committed fraud upon the Court in previous proceedings by misleading the Court.

    The trustee abandoned or failed to continue multiple legal proceedings which were on foot on 1 July 2020 and would have resulted in additional funds being paid to the bankrupt estate or would have caused various Proof of Debt claims to be set aside.

    There was no legal basis for the trustee to withhold property from Ms Thompson in circumstances where there was no valid Proof of Debt Claim to be satisfied.

    Ms Thompson was at all times able to pay both valid and invalid debts and was able to obtain a loan of $95,000.00 if required.

    The trustee had not identified how costs incurred since 2 July 2023 were necessary and reasonable in conducting the administration of the bankrupt estate.

    Ms Thompson should be permitted the opportunity to cross-examine the trustee and the solicitors for the trustee.

    There should be no costs orders made requiring Ms Thompson to pay the legal costs of the trustee.

    The trustee was not a fit and proper person to act as a bankruptcy trustee.

    The “opinion” referred to in para 37 of the reasons for judgment of Logan J was false.

    The bankruptcy notice was brought by the Body Corporate as an invalid means of attempting to force Ms Thompson into paying an invalid debt.

    Ms Thompson relied upon legal advice to appoint a trustee on assurances that the trustee would “go behind” the invalid debts claimed by the Body Corporate. To Ms Thompson’s knowledge, the trustee has not done so.

16    The trustee submitted in summary as follows:

    Although Ms Thompson has been discharged from bankruptcy, the administration of her bankrupt estate was ongoing. The trustee intended to complete the administration of Ms Thompson’s bankrupt estate.

    Delays in administration of Ms Thompson’s bankrupt estate had been largely due to the conduct of Ms Thompson.

    The $523,528.37 referred to by Ms Thompson appeared to be the funds recovered by the trustee to date from the administration of the bankrupt estate. It was very unlikely that there would be any surplus funds to be returned to Ms Thompson but an accurate assessment could not be made at that stage.

    Those funds represented property vested in the trustee pursuant to s 58 of the Bankruptcy Act. Accordingly, Ms Thompson did not have any right to those funds.

    Ms Thompson had filed no proper application seeking the further relief.

    There was no evidence before the Court which justified the making of the orders sought in the further relief, and no evidence that the trustee had acted unreasonably in responding to Ms Thompson’s requests for information.

    It was not reasonable for the trustee to provide the details and documents identified because:

•    The information sought was not identified with sufficient precision;

•    Where it could be ascertained, the information sought had already been provided or was otherwise evidence in these proceedings or in QUD113/2021.

•    Ms Thompson had refused a request for contributions to the cost of providing further information in accordance with s 70-17(5) of the Insolvency Practice Rules (Bankruptcy) 2016 (Cth) (Insolvency Practice Rules).

    Ms Thompson had been provided with extensive information about the administration of her estate and the trustee could not identify any further relevant information that could be provided.

    Payments made as part of the administration of the estate had been made for the purposes of that administration, in accordance with the Bankruptcy Act.

    The relevant section which provided that a trustee had an obligation to incur costs that were necessary and reasonable (s 42-60 Insolvency Practice Rules) did not contemplate the granting of orders in the terms sought by Ms Thompson and there was no evidence that the trustee had not complied with that section.

    It was appropriate that the trustee obtain payment of his costs of and incidental to this proceeding on a solicitor-client basis out of the applicant’s bankrupt estate.

    Should the application be dismissed, the respondent sought an order that the applicant pay the respondent’s costs on a party and party basis to be fixed by a Registrar on a lump-sum basis.

    A costs order against the applicant was appropriate in circumstances where she had now been discharged from bankruptcy.

COnsideration

17    The interim relief sought by Ms Thompson for the removal of Mr Lane as trustee was materially identical to the final relief she sought. Ms Thompson had however also sought additional interim relief referable to return of monies held by Worrells and the provision of information to her by the trustee. Interestingly, the interim relief sought by Ms Thompson was broader than the substantive relief she sought.

18    In Australian Broadcasting Corporation v O'Neill [2006] HCA 46; 80 ALJR 1672; 229 ALR 457 at [19] Gleeson CJ and Crennan J observed that, in circumstances where a plaintiff seeks interlocutory relief, in summary it is necessary for the plaintiff to demonstrate that:

    There is a serious question to be tried as to the plaintiff’s entitlement to relief; and

    The plaintiff is likely to suffer injury for which damages will not be an adequate remedy; and

    The balance of convenience favours the granting of interlocutory relief.

19    Ms Thompson’s arguments did not go to these issues. Rather, Ms Thompson’s submissions focussed on the merits of her case that Mr Lane should be removed as the trustee.

20    As is clear from the material filed by Ms Thompson in this proceeding, Ms Thompson appears to harbour an on-going conviction that she should not have been declared bankrupt in the first place (notwithstanding that her bankruptcy stemmed from a Debtor’s Petition presented by her on 26 June 2020).

21    The substance of Ms Thompson’s complaint before me appears to be that:

    there is no legal basis on which the trustee can continue to administer her estate, given that Ms Thompson has been discharged from bankruptcy and she purportedly should not have been declared bankrupt in the first place, and

    her dissatisfaction with the manner in which the trustee administered her bankrupt estate.

Discharge from Bankruptcy

22    It appears that Ms Thompson’s discharge from bankruptcy to some extent informed the various forms of relief sought by Ms Thompson, including that the trustee had no legal basis on which to continue to administer her estate, that the trustee should provide full and frank details regarding the basis on which he continued to administer Ms Thompson’s bankrupt estate (pursuant to para 2(a) of her further relief), and that monies held by Worrells be paid to her on the basis that those monies should re-vest in her as her bankruptcy has now been discharged.

23    Section 149 of the Bankruptcy Act provides for automatic discharge from bankruptcy as follows:

Automatic discharge

(1)     A bankrupt is discharged from bankruptcy, by force of this subsection, at the end of the period of 3 years from whichever of the following dates is applicable:

(a)     for a bankruptcy because of a sequestration order -- the date the statement of the bankrupt's affairs accepted under subsection 57B(1) was filed;

(b)     for a bankruptcy because of a debtor's petition (other than a bankruptcy to which paragraph (c) of this subsection applies) -- the date the Official Receiver accepted the debtor's petition;

(c)     for a bankruptcy, because of a debtor's petition against a partnership, of a member of the partnership who did not join in presenting the petition--the date the statement of the bankrupt's affairs accepted under subsection 57B(1) was filed.

(2)     Subsection (1) applies subject to section 149A (objection to discharge of bankruptcy).

Note: See Part 2 of Schedule 1 to the Bankruptcy Amendment (Discharge from Bankruptcy) Act 2023 for provisions relating to the discharge from bankruptcy of persons that became bankrupt before the commencement of that Part.

24    It is uncontroversial that Ms Thompson has been discharged from bankruptcy and that no objection to that discharge was filed by the trustee.

25    As noted by Kirby J in Daemar v Industrial Commission of New South Wales and Anor (No 2)(1990) 22 NSWLR 178, following Pegler v Dale [1975] 1 NSWLR 265, property vested in a trustee during a bankruptcy continues to be vested in the trustee after discharge of the bankruptcy. The property does not re-vest in the former bankrupt. Similarly, a discharge from bankruptcy “does not put an end to the bankruptcy regarded as a series of judicial and administrative acts and rights and powers” (Re Balhorn; Ex parte Balhorn and Official Trustee (1981) 39 ALR 223 at 226). This notion is supported by the ongoing duties of a bankrupt to assist a trustee even after discharge from bankruptcy: s 152 Bankruptcy Act. Further although generally discharge from bankruptcy means that “the bankrupt [is] freed from indebtedness and able to start afresh” (Hudson Jnr v Whalan and Anor [1998] FCA 1064 at 7), discharge from bankruptcy does not mean that ongoing and incomplete administration of the bankruptcy is halted.

26    It is clear that Ms Thompson has misunderstood the nature of a discharge from her bankruptcy. The respondent is well within his rights to continue to administer the bankrupt estate pursuant to the Bankruptcy Act to the extent that the administration of the bankruptcy is incomplete, and is not required to return monies held by Worrells vested in the trustee during the period of bankruptcy.

27    At this interlocutory level, there is no serious question to be tried concerning the entitlement of the trustee to continue to administer the estate, or hold property, of Ms Thompson notwithstanding her discharge from bankruptcy.

Removal of a Trustee

28    Ms Thompson seeks interim (as well as final) orders for the removal of Mr Lane as trustee. Consequently, Ms Thompson also seeks the return of funds held by Worrells received by the trustee.

29    Until 2016, the Bankruptcy Act included s 178 which read as follows:

178 Appeal to Court against trustee’s decision etc.

(1)     If the bankruptcy, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.

(2)     The application must be made not later than 60 days after the day on which the person became aware of the trustee’s act, omission or decision.

(see such cases as McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547, and more recently Trkulja v Morton (No 2) [2005] FCA 1044).

30    Section 178 was repealed in 2016. No direct equivalent section has been inserted into the Bankruptcy Act. Rather, the Court’s power to remove a trustee, either final or interim, is sourced in sch 2 div 45-1 of the Bankruptcy Act, which provides:

Division 45 -- Court oversight of registered trustees

45-1 Court may make orders in relation to registered trustees

(1)     The Court may make such orders as it thinks fit in relation to a registered trustee.

(2)     The Court may exercise the power under subsection (1):

(a)     on its own initiative, during proceedings before the Court; or

(b)     on application under subsection (3).

(3)     Each of the following persons may apply for an order under subsection (1):

(a)     the registered trustee;

(b)     the Inspector-General.

(4)     Without limiting the matters which the Court may take into account when making orders, the Court may take into account:

(a)     whether the registered trustee has faithfully performed, or is faithfully performing, the registered trustee's duties; and

(b)     whether an action or failure to act by the registered trustee is in compliance with this Act and the Insolvency Practice Rules; and

(c)     whether an action or failure to act by the registered trustee is in compliance with an order of the Court; and

(d)     whether any person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the registered trustee; and

(e)     the seriousness of the consequences of any action or failure to act by the registered trustee, including the effect of that action or failure to act on public confidence in registered trustees as a group.

(5)     This section does not limit the Court's powers under any other provision of this Act, or under any other law.

31    Helpfully, CCH Australian Bankruptcy Law and Practice states as follows:

SCH 2 45-1.1.101 Examples of decisions under s 45-1

In Pekar v Holden (Trustee) (No 2) [2019] FCA 1212 at (17) Moshinsky J said about 45-1:

This provision replaces former s 178 of the Bankruptcy Act. The principles developed in relation to s 178, in cases such as McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547, Re Tyndall (1977) and Macchia v Nilant (2001) 100 FCR 101, remain relevant in relation to the new provision. As indicated by the cases in relation to the former provision, the section confers on the Court a very wide discretion: McGoldrick v Official Trustee in Bankruptcy (1993) 47 FCR 547, at 552; Re Tyndall (1977) 30 FLR 6 at 9-10.

In the case before him, Moshinsky J considered that he could, and “if it were necessary to do so… would make an order pursuant to s 45-1 requiring” a trustee to repay to the bankrupt the funds remaining of a sum paid to the trustee by the bankrupt pursuant to an agreement to resolve the bankruptcy which had not been abided by: Pekar v Holden (Trustee) (No 2) [2019] FCA 1212 at (18)(Moshinsky J).

32    Turning to the present case and the operation of s 45-1(3), plainly Ms Thompson is neither a registered trustee nor the Inspector-General. To that extent, it appears that Ms Thompson does not have standing to bring an application for removal of the trustee pursuant to div 45-1. The Court however has wide powers to remove a trustee on its own initiative, and Ms Thompson is at liberty to ask the Court to do so.

33    Relevantly, Ms Thompson alleges failures on the part of the trustee to faithfully perform the duties of a registered trustee and to comply with the Bankruptcy Act and Insolvency Practice Rules. These alleged failures arose, in Ms Thompson’s submission, from contraventions of:

    s 19 of the Bankruptcy Act;

    sch 2 div 65-25 of the Bankruptcy Act; and

    sch 2 div 70-56 of the Bankruptcy Act.

34    I understand that in both her interlocutory application and her originating application Ms Thompson seeks removal of the trustee, allegedly because of:

(1)    Failure by the trustee to provide information in response to Ms Thompson’s requests;

(2)    Improper payment by the trustee of monies out of an administration account; and

(3)    General issues in relation to the appointment and alleged breaches by the trustee of his duties under s 19 of the Bankruptcy Act.

35    In order to address Ms Thompson’s interlocutory applications, it is appropriate to consider each of these issues in turn, noting however that consideration by the Court at this stage is only at an interlocutory level.

Is there a serious question to be tried that the trustee has failed to answer Ms Thompson’s requests for information?

36    Schedule 2, div 70-56 of the Bankruptcy Act reads as follows:

70 - 56 Right of regulated debtor to request information etc. from trustee

(1)     A regulated debtor may request the trustee of the regulated debtor's estate to:

(a)     give information; or

(b)     provide a report; or

(c)     produce a document;

to the regulated debtor.

(2)     The trustee must comply with the request unless:

(a)     the information, report or document is not relevant to the administration of the regulated debtor's estate; or

(b)     the trustee would breach his or her duties in relation to the administration of the regulated debtor's estate if the trustee complied with the request; or

(c)     it is otherwise not reasonable for the trustee to comply with the request.

(3)     The Insolvency Practice Rules may prescribe circumstances in which it is, or is not, reasonable for a trustee of a regulated debtor's estate to comply with a request of a kind mentioned in subsection (1).

37    I also note that Ms Thompson, in the alternative, sought further orders for full and frank details and documents to be provided to her in relation to the administration of her bankrupt estate (paras 2(b), (c), (d), (e)(v), and (g)).

38    A bankrupt is entitled to request information regarding the administration of their estate, and a trustee has duties to reasonably comply with those requests. However, the evidence currently before the Court does not suggest that there is a serious question to be tried concerning the compliance by the trustee with information requests by Ms Thompson.

39    The information which Ms Thompson claims she has sought, and which she further contends the trustee has failed to provide, is set out across numerous documents including submissions and affidavits. In summary, however, I understand her primary concern is that the trustee has failed to provide the following information:

    The reason for and documents illustrating the basis for the payment of legal fees by the trustee;

    The reason for and documents illustrating the basis for payment of property management expenses;

    The reason for payments for petitioning creditor’s costs;

    The basis for the continued administration of the bankrupt estate;

    All documents supporting the trustee’s intention to continue to administer the bankrupt estate;

    All documents pertaining to the appointment of Mr Lane as trustee;

    The event or action which will indicate that the administration of the estate is complete; and

    Evidence supporting the assertion that it is unlikely that any surplus will be available at the completion of the administration of the bankrupt estate.

40    An example of a request for information made by Ms Thompson can be seen in the following emails sent by Ms Thompson to the trustee, annexed to her affidavit dated 16 October 2023, which read:

14 September 2023 at 08:45

Hello

In multiple emails you sent to me you stated that my bankrupt estate was without funds to enable you to engage legal representation, including pertaining to the false claims made by the Body Corporate for Arila Lodge CTS 14237.

As the Worrells File Information (attached) shows a payment of $108,745.46 has been made for "legal fees", please provide full and frank disclosure of all documents to substantiate/pertaining to the payment by 5pm on 15 September 2023.

Additionally, as the Worrells File Information (attached) shows a payment of $43,017.65 has been made for "property management expenses". please provide full and frank disclosure of all documents to substantiate/pertaining to the payment by 5pm on 15 September 2023.

kind regards,

Emma

41    Another example is the following:

17 September 2023 at 11:21

Hello

I am emailing to confirm I did not receive a response from you (or on your behalf) to the email I sent on 14 September 2023 (attached).

I again ask that you provide full and frank disclosure (including all documents and communications) pertaining to;

•    a payment of $108,745.46 made for "legal fees": and

•    a payment of $43,017.65 made for "property management expenses''

kind regards,

Emma

42    A further example can be seen in the following email sent by Ms Thompson to the trustee on an unidentified date, annexed to her affidavit dated 12 December 2023 which read:

Hello

Again you have failed to respond to my questions, and again you have failed to act in accordance with the legal requirements of a bankruptcy trustee.

So I ask again;

•    what "authority" or "duty of a Trustee" did you rely upon pertaining to the payment of the $193,100.20 legal costs from my Worrells File account, in either "section 109 of the Bankruptcy Act” or any other legislation, noting that you are aware of the ongoing proceedings QUD286 of 2023, QUD419 of 2023, QUD420 of 2023 and QUD447 of 2023 (and I have additional Appeal rights that I will exercise if required), and additionally, you are aware that there is no legal basis for any payment to be made for legal costs in absence of a valid Costs Agreement with either Shand Taylor or Grace Lawyers (either with you and/or BCAL), rather the amount of $193,100.20 legal costs have been falsely/ fraudulently claimed.

•    to which account(s) and where did you transfer the payment of the $193,100.20 legal costs shown on my Worrells File account; and

•    in absence of me ever being insolvent. on what basis do you falsely assert "the administration of your bankrupt estate continues" and/ or on what basis do you falsely purport to continue to act as bankruptcy trustee; and

•    what event/action will indicate that "the administration of your estate is completed"; and

•    in absence of me ever being insolvent, and there being no valid evidence that I was ever insolvent, why would do you state, and what evidence supports the false assertion that 'it is unlikely that any surplus will be available" if Morgan Lane has acted in accordance with the legal requirements of a bankruptcy trustee; and

•    in absence of me ever being insolvent, what valid basis is there for the repeated references to "delivery of vacant possession of that property" and the false allegation "Your ongoing refusal to cooperate in relation to these matters (in breach of your obligations under section 77 of the Bankruptcy Act) is increasing both the cost of the administration of your bankrupt estate, and the time it is taking to finalise that administration"; and

•    in absence of me ever being insolvent, please transfer the amount of $523,528.37 to my personal bank account by 4pm on 24 November 2023.

If this matter proceeds to Trial, I will be;

•    exhibiting evidence, including statements of persons and other documents, evidencing the many occasions that Morgan Lane has failed to act as a bankruptcy trustee must legally act; and

•    cross-examining Morgan Lane about all questions he failed to answer, or failed to fully answer, and all the false answers he provided at the QUD113 of 2021 Hearing.

kind regards,

Emma

43    In relation to this aspect of Ms Thompson’s case the trustee submitted, in summary, that he had extensively engaged with Ms Thompson and her requests for information. In particular the trustee submitted:

14.     While the respondent acknowledges that the applicant is entitled to request information and that the respondent has duties under section 70 – 56 of Schedule 2 of the Act in that regard, the respondent opposes the relief apparently being sought by the applicant in paragraph 2 of the submissions dated 6 February 2024 on the basis that:

(a)     the applicant has filed no application which seeks those orders;

(b)     no evidence has been produced justifying the making of the orders sought, and there is no evidence the respondent has acted unreasonably in responding to the applicant’s numerous previous requests for information; and

(c)     it is not reasonable for the trustee to provide the details and documents identified in any event because:

i.     in many instances the submissions do not identify with sufficient precision the actual information being sought – the repeated use of the phrase “full and frank details and all documents” does not sufficiently identify what information is being sought;

ii.     to the extent it can be ascertained, the information sought:

i.     has already been provided by the respondent to the applicant in response to numerous previous requests by way of communications directly with the applicant; or

ii.    is otherwise in evidence in these proceedings and/or proceedings QUD113/2021 (and in some instances has been the subject of findings in proceedings QUD113/2021); and

iii.     the applicant has refused the respondents request to contribute to the cost of providing further information as contemplated by section 70–17(5) of the Insolvency Practice Rules (Bankruptcy) 2016 (Cth).

15.     In addition to the affidavits filed in these proceedings, the respondent filed three affidavits in proceedings QUD113/2021 and was cross examined by the applicant in those proceedings. The respondent has also responded to multiple requests made by the applicant for information about the administration of her bankrupt estate, and he has provided his entire file (except for privileged and internal documents) to the applicant. The applicant has already received extensive information about the administration of her estate and the respondent cannot identify any further relevant information that can be provided.

44    Further, in his affidavit sworn 15 February 2024, the trustee deposed that:

12.    Having regard to the information that is available on the website of my firm Worrells (as described below), the information that has already been provided directly to the applicant (via the USB sticks identified above and through other communications with her) and the information I have included in this affidavit and the affidavits identified in paragraph 2 above, I consider I have been acting in good faith and that it is unreasonable for the applicant to make ongoing requests for information in circumstances where

(a)    The requests are often broad and vague in nature, making it difficult and costly to respond;

(b)     The requests seek information that has previously been provided (or is otherwise readily available) to the applicant; and

(c)     The applicant is refusing to contribute to the cost of providing the information requested.

13.    I consider that the applicant already has access to all information relevant to the administration of her bankrupt estate (save for privileged communications and my internal documents) and I cannot identify any further relevant information currently available that I can provide. I remain prepared to comply with any reasonable requests for information the applicant may make in the future provided she agrees to meet the costs of doing so and provide appropriate security in that regard.

45    The trustee also directed my attention to further evidence filed in this proceeding evincing responses to Ms Thompson’s requests for information, including in the affidavit of Morgan Lane dated 25 January 2024 and the affidavit of Morgan Lane dated 15 February 2024.

46    I note that the present interim applications are the latest in a series of applications brought by Ms Thompson referable to her dissatisfaction with her erstwhile state of bankruptcy and the ongoing effects of that bankruptcy. In my view the evidence of the trustee concerning the history of his provision of all relevant information to Ms Thompson is credible, and should be accepted. At this interlocutory level, based on the evidence before the Court, I am not satisfied that there is a question to be tried regarding the alleged failure of the trustee pursuant to sch 2, div 70-56 of the Bankruptcy Act to provide information to Ms Thompson, or alleged breach of duty by the trustee in this regard.

Is there a serious question to be tried that monies have been improperly paid by the trustee out of the administration account?

47    Ms Thompson further referred to sch 2, div 65-25 of the Bankruptcy Act which reads as follows:

65 - 25 Paying money out of administration account

Money only to be paid out of administration account in accordance with this Act etc.

(1)    The trustee of a regulated debtor's estate must not pay any money out of the administration account for the estate otherwise than:

(a)     for purposes related to the administration of the estate; or

(b)     in accordance with this Act; or

(c)     in accordance with a direction of the Court.

…

48    Ms Thompson also referred in her originating application to “sch 2 div 42-60 of the Bankruptcy Act”. This section does not exist. I accept the submission of the respondent that Ms Thompson intended to refer to s 42-60 of the Insolvency Practice Rules. That section reads as follows:

42-60 Costs incurred to be necessary and reasonable

In conducting an administration, a registered trustee must:

(a)     incur only those costs that are necessary and reasonable; and

(b)     before deciding whether it is appropriate to incur a cost, compare the amount of the cost likely to be incurred with the value and complexity of the administration.

49    Ms Thompson further sought in para 2(f) of her further relief that, in the alternative, the trustee provide full and frank details and all documents to evidence that all costs, charges and expenses that the trustee sought to be paid for the administration of the bankrupt estate were necessary, reasonable in amount, and reasonably incurred.

50    Relevantly in his submissions the trustee stated:

16.    To the extent the applicant purports to seek orders under section 65–25 of Schedule 2 of the Act, the alternative orders sought are not contemplated by that section which is concerned with the payment of money. To the extent the respondent has made payments as part of the administration of the applicant’s bankrupt estate, those payments have been made for purposes related to the administration of the estate and in accordance with the Act.

17.     To the extent the applicant has referred to section 42–60 of Schedule 2 of the Act, no such section exists. The respondent believes the applicant is intending to refer to section 42–60 of the Insolvency Practice Rules (Bankruptcy) 2016 which relate to a Trustees obligation to incur costs that are necessary and reasonable. This section does not contemplate the granting of the orders sought by the applicant and there is no evidence the respondent has not complied with that section in all respects in any event.

51    Ms Thompson’s complaint relating to “charges by the trustee” against the bankrupt estate for costs is expanded at paras 4(j) and (k) of her Concise Statement filed 5 December 2023:

j)     acted in breach of s.65-25 of the Bankruptcy Act 1966, including paying $237,103.81 for legal costs from the Applicant’s bankrupt estate, being;

$151,821.04 to Shand Taylor Lawyers; noting that the respondent has not responded to the Applicant’s request for identification of what account the amount of $151,821.04 was paid, and the legal basis the $85,282.77 was paid.

and

$85,282.77 to Arila Lodge CTS 14237; noting that the amount of $85,282.77 does not appear on the Applicant’s Lot 3 Statement dated 18 November 2023, and the respondent has not responded to the Applicant’s request for identification of to whom the $85,282.77 was paid.

despite there being no legal basis for such payments, including;

i.     no exhibited evidence of a valid written Costs Agreement between Morgan Lane and Shand Taylor Lawyers; and

ii.     no valid costs Agreement between Grace Lawyers and “BCAL”; and

iii.     no exhibited evidence of “BCAL” making any payment for legal costs to Grace Lawyers; and

iv.     no exhibited evidence of compliance by “BCAL” with the requisite conditions of the Body Corporate and Community Management Act 1997 and Body Corporate and Community Management (Standard Module) Regulations 2008; and

v.     no exhibited evidence of compliance by Shand Taylor Lawyers or Grace Lawyers with legislation, including Legal Practice Act and Australian Solicitor’s Code; and

vi.     that in addition to this proceeding, the proceedings QUD286 of 2023, QUD419 of 2023 and QUD420 of 2023 pertaining to legal costs all remain afoot)

k)     incurred costs, charges and expenses that are not necessary, reasonable in amount, nor reasonably incurred, and are absent valid legal basis (s.42-60 of Schedule 2 of the Bankruptcy Act 1966); and

52    In addressing these complaints, in his affidavit dated 25 January 2024, the trustee annexed an email from his lawyer Mr O’Sullivan of Shand Taylor as follows:

Sent: Thursday, November 30, 2023 3:35 PM

Subject: RE: QUD447/23 - ET v MORGAN LANE [STL-MATTER.FID300826]

Dear Ms Thompson,

I refer to your recent email (below).

Our client has reviewed and updated his records in relation to the payment of legal fees.

The total amount paid from your Estate in relation to legal fees is set out below. Payments have been made either pursuant to Court orders or in accordance with section 109(1)(a) of the Bankruptcy Act 1966.

Amounts paid to our firm have been paid in accordance with the costs agreement previously provided to you.

We note you continue to refuse the request for cooperation in correcting the title to and delivering vacant possession of 3/40 Glen Road Toowong. It remains our client’s intention to continue with the administration of your estate in that regard.

For the reasons identified in our email to you of 23 November 2023, we otherwise do not intend engaging in any debates by correspondence about the appropriateness of the actions taken by us in administering your Estate.

Regards

Rod O’Sullivan

Director | Dispute Resolution

SHAND TAYLOR LAWYERS

53    Further, in his affidavit dated 15 February 2024 Mr Lane deposed:

Costs and expenses of the administration

14.     My July 2021 and August 2021 affidavits provide detail of the costs incurred in administering the applicant's bankrupt estate to that time.

15.     The website of my firm Worrells Solvency and Forensic Accountants also includes a "File Information" section accessible by the applicant and creditors. This section includes real-time reporting of time, costs and outlays incurred by me in the administration of the bankrupt estate. I am aware from the applicant's affidavit filed 18 October 2023 in these proceedings and from communications I have had with the applicant that the applicant has accessed this information.

16.     In an email from my lawyers to the applicant sent 30 November 2023 (a copy of which is annexed to my January 2024 affidavit at pages 99-109 of the annexures) details were provided to the applicant of the legal fees that had been incurred in the administration of her estate. Further payments in respect of legal fees and other administration expenses have been made since 30 November 2023 as follows,

17.     By resolution of creditors made 21 August 2020, my fees were approved up to an amount of $26,617.01. A copy of the Certificate of Resolution dated 26 August 2020 is annexure ML-E to this affidavit. In reliance upon that resolution, I have to date drawn the amount of $691.24. I have not otherwise drawn any amounts in payment of my fees. It is my intention to continue to comply with my obligations under the Bankruptcy Act, the Bankruptcy Regulations and all applicable guidelines in relation to the recovery of my remuneration.

54    As is clear from both the present proceedings, and previous litigation between Ms Thompson and the trustee, law firm Shand Taylor has represented the trustee, and continues to represent the trustee, in his ongoing disputes with Ms Thompson. I further note that monies paid to Arila Lodge CTS 14237 plainly relate to payment of costs to the Body Corporate as ordered in previous litigation. Such costs orders have been the subject of earlier consideration by this Court.

55    There is no material before the Court to suggest, even at a prima facie level, that there has been wrongdoing by the trustee in respect of payment of monies by the trustee referable to the bankrupt estate of Ms Thompson. In the circumstances on the material before me I am not satisfied that there is a serious question concerning the payment of monies by the trustee as alleged by Ms Thompson.

Is there a serious question to be tried that the trustee has contravened s 19 of the Bankruptcy Act?

56    In addition to the discrete issues concerning provision of information and payment of monies, Ms Thompson also claimed that the trustee should be removed for broad ranging breaches of s 19 of the Bankruptcy Act. That provision reads as follows:

Duties etc. of trustee

(1)     The duties of the trustee of the estate of a bankrupt include the following:

(a)     notifying the bankrupt's creditors of the bankruptcy;

(b)     determining whether the estate includes property that can be realised to pay a dividend to creditors;

(c)     reporting to creditors within 3 months of the date of the bankruptcy on the likelihood of creditors receiving a dividend before the end of the bankruptcy;

(e)     determining whether the bankrupt has made a transfer of property that is void against the trustee;

(f)     taking appropriate steps to recover property for the benefit of the estate;

(g)     taking whatever action is practicable to try to ensure that the bankrupt discharges all of the bankrupt's duties under this Act;

(h)     considering whether the bankrupt has committed an offence against this Act;

(i)     referring to the Inspector-General or to relevant law enforcement authorities any evidence of an offence by the bankrupt against this Act;

(j)     administering the estate as efficiently as possible by avoiding unnecessary expense;

(k)     exercising powers and performing functions in a commercially sound way;

(l)     the duties imposed on the trustee under Schedule 2.

(2)     Where a person who became a bankrupt on a creditor's petition is unable to prepare a proper statement of affairs, the trustee may employ, at the expense of the estate, a qualified person to assist in the preparation of the statement.

57    Ms Thompson’s case in respect of this aspect of her claim is summarised in her concise statement filed on 5 December 2023 as follows:

4.     Morgan Lane has failed to act in accordance with duties of bankruptcy trustee including;

a)     failed to inform Applicant of alternatives to filing Debtor’s Petition; and

b)     failed to provide to the Applicant (after multiple requests made in reliance upon s.70-56 of Schedule 2 of the Bankruptcy Act 1966) the full and frank details of his communications with the Official Receiver, AFSA and/or others (including Charles Londy solicitor and other solicitors) that led to Morgan Lane being appointed as bankruptcy trustee; and

c)     failed to provide full and frank disclosure in response to requests for documents and information made by the Applicant in accordance with s.70-56 of Schedule 2 of the Bankruptcy Act 1966; and

d)     failed to inform the Applicant (after multiple requests made in reliance upon s.70-56 of Schedule 2 of the Bankruptcy Act 1966) the basis he relies upon to purportedly continue "the administration of your bankrupt estate"; and to continue to act as bankruptcy trustee since 2 July 2023; and

e)     failed to inform the Applicant (after multiple requests made in reliance upon s.70-56 of Schedule 2 of the Bankruptcy Act 1966) what event and/or action will indicate that "the administration of your estate is completed"; and

f)     falsely informed the Applicant that after being appointed as bankruptcy trustee he would “go behind” Decisions made in proceedings invalidly commenced by Body Corporate for Arila Lodge CTS 14237 (“BCAL”) and Costs Orders made in reliance upon false allegations included in affidavits sworn by Jason Alexander CARLSON apparently intended to force the Applicant “to sell her lot to an unrelated third party and vacate Arila Lodge permanently”; and

g)     failed to inform the Applicant of the details of the $1,356,534 Proof of Debt Claims shown on the Worrell’s File Info (beyond the $1,332,934 identified in par[37] of the QUD113 of 2021 Decision dated 18 February 2022 that includes the $820,479.50 Proof of Debt Claim invalidly made by “BCAL”, the second respondent in proceeding QUD113 of 2021 and QUD86 of 2022; and

h)     failed to pay to the Applicant the $523,528.37 he received into the Applicant’s bankrupt estate; and

i)     failed to inform the Applicant (after multiple requests made in reliance upon s.70-56 of Schedule 2 of the Bankruptcy Act 1966) why he asserts "it is unlikely that any surplus will be available" to be paid to the Applicant; and

j)     acted in breach of s.65-25 of the Bankruptcy Act 1966, including paying $237,103.81 for legal costs from the Applicant’s bankrupt estate, being;

$151,821.04 to Shand Taylor Lawyers; noting that the respondent has not responded to the Applicant’s request for identification of what account the amount of $151,821.04 was paid, and the legal basis the $85,282.77 was paid.

and

$ 85,282.77 to Arila Lodge CTS 14237; noting that the amount of $85,282.77 does not appear on the Applicant’s Lot 3 Statement dated 18 November 2023, and the respondent has not responded to the Applicant’s request for identification of to whom the $85,282.77 was paid.

despite there being no legal basis for such payments, including;

i.     no exhibited evidence of a valid written Costs Agreement between Morgan Lane and Shand Taylor Lawyers; and

ii.     no valid costs Agreement between Grace Lawyers and “BCAL”; and

iii.     no exhibited evidence of “BCAL” making any payment for legal costs to Grace Lawyers; and

iv.     no exhibited evidence of compliance by “BCAL” with the requisite conditions of the Body Corporate and Community Management Act 1997 and Body Corporate and Community Management (Standard Module) Regulations 2008; and

v.     no exhibited evidence of compliance by Shand Taylor Lawyers or Grace Lawyers with legislation, including Legal Practice Act and Australian Solicitor’s Code; and

vi.     that in addition to this proceeding, the proceedings QUD286 of 2023, QUD419 of 2023 and QUD420 of 2023 pertaining to legal costs all remain afoot)

k)     incurred costs, charges and expenses that are not necessary, reasonable in amount, nor reasonably incurred, and are absent valid legal basis (s.42-60 of Schedule 2 of the Bankruptcy Act 1966); and

l)     failed to inform the Court of errors of fact and law, resulting from his affidavit and Submissions made on his behalf, that were relied upon in proceeding QUD113 of 2021 and QUD86 of 2022, including that there was $1,332,934 of valid Proof of Debt Claims, noting that;

i.     Lord Herschell LC defined “fraud” in Derry v Peek (1889) 14 AC 33 (at p 374) as;

“a false statement of fact which is made by one party to a transaction to the other knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false, with the intent that it should be acted upon by the other party and which was in fact so acted upon”.

and

ii.     Jeeves & Jeeves (No 3) [2010] FamCA 488 identifies “fraud” as encompassing;

“knowledge and intention relating to financial matters that, if known, would create a different picture to that portrayed on the surface. …. conduct that was in all the circumstances unconscionable.”

58    A number of these claims have already been dealt with by me in relation to the alleged failure of the trustee to provide information to Ms Thompson, and allegedly improper payments by the trustee, and I have found there is no material before me to support such claims even at an interlocutory level.

59    I am also satisfied on the material before me that there is no serious question to be tried concerning alleged breaches by the trustee of other duties under s 19 of the Bankruptcy Act. I have formed this view for the following reasons.

60    In respect of Ms Thompson’s claims concerning historical events referable to the commencement of her bankruptcy (including for example whether or not her Debtor’s Petition should have been accepted, whether the debt the subject of the bankruptcy notice was valid, and whether Ms Thompson was ever actually insolvent), these issues have been considered and resolved in previous proceedings before this Court (including the decisions of Logan J in Thompson v Lane (Trustee) (No 3) [2022] FCA 128 and the Full Court on appeal in Thompson v Lane (Trustee) [2023] FCAFC 32). It is entirely inappropriate for such issues to be revisited in the applications currently before me.

61    Further orders sought by Ms Thompson by way of further relief, pursuant to paras 2(e) and (h), seek particulars or go to an issue reminiscent of discovery, and largely appear to reflect an intention by Ms Thompson to relitigate issues which were the subject of the proceedings before Logan J and the Full Court. As I noted in the hearing, that is “water which has long ago passed under the bridge” (transcript ll 21-22 p 5).

62    Ms Thompson made several submissions that the decisions of Logan J, and the Full Court on appeal, were based on false assertions made by the respondent, that the respondent had misled the Court in those proceedings and that the judgment of Logan J was obtained by fraud.

63    The High Court of Australia expressed the principles surrounding re-litigation in D’orta-Ekenaike v Victoria Legal Aid & Anor (2005) 214 ALR 92 as follows:

Finality

[34]     A central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances. That tenet finds reflection in the restriction upon the reopening of final orders after entry and in the rules concerning the bringing of an action to set aside a final judgment on the ground that it was procured by fraud. The tenet also finds reflection in the doctrines of res judicata and issue estoppel. Those doctrines prevent a party to a proceeding raising, in a new proceeding against a party to the original proceeding, a cause of action or issue that was finally decided in the original proceeding. It is a tenet that underpins the extension of principles of preclusion to some circumstances where the issues raised in the later proceeding could have been raised in an earlier proceeding.

[35]    The principal qualification to the general principle that controversies, once quelled, may not be reopened is provided by the appellate system. But even there, the importance of finality pervades the law. Restraints on the nature and availability of appeals, rules about what points may be taken on appeal and rules about when further evidence may be called in an appeal (in particular, the so-called “fresh evidence rule”) are all rules based on the need for finality. As was said in the joint reasons in Coulton v Holcombe: “[i]t is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial”.

[36]     The rules based on the need for finality of judicial determination are not confined to rules like those mentioned above. Those are rules which operate between the parties to a proceeding that has been determined. Other rules of law, which affect persons other than the parties to the original proceeding, also find their justification in considerations of the need for finality in judicial decisions. And some of those rules are rules of immunity from suit.

64    As noted by Thomas J in Storry v Weir (No 2)[2022] FCA 1360, the threshold for a judgement to be challenged on the basis of fraud is very high. As his Honour observed in that case:

15.     Allegations of fraud are “extremely serious” and the fraud must be “directly material” to the judgment challenged: Wu Avin Operations Pty Ltd (No 2) [2006] FCA 792 at [24] (per Kenny J).

65    The present proceedings are not a means through which Ms Thompson can relitigate her loss before Logan J. That judgment was appealed, and upheld by the Full Court. It is not for this Court to entertain an attempt to relitigate, or to order particulars or discovery on issues which have long since been decided by both the Federal Court at first instance and the Full Court on appeal.

CONCLUSION

66    I am not satisfied that Ms Thompson is entitled to the interim relief she has sought, in the form of the interim removal of the trustee, the payment by the trustee of the varying sums Ms Thompson has claimed, or the alternative relief sought by Ms Thompson in the submissions filed 6 February 2024.

67    The trustee has sought orders for costs in the following terms:

(a)    The respondent obtain payment of his costs of an incidental to this application on a solicitor-client basis, out of the bankrupt estate of the applicant; and

(b)    (If the application is dismissed) The applicant pay the respondents’ costs of and incidental to this application on a party-party basis, to be fixed by a Registrar on a lump-sum basis.

(errors in original)

68    Ms Thompson opposes any costs order being made against her.

69    As a general proposition costs follow the event: Oshlack v Richmond River Council [1998] HCA 11; (1997) 152 ALR 83. As the trustee has pointed out, the interim applications concerned the administration of Ms Thompson’s bankrupt estate; the trustee has a right to full indemnity out of the trust estate against all costs, charges and expenses incurred; and Ms Thompson’s bankrupt estate has been put to further expense in responding to the present proceedings. Contrary to submissions of Ms Thompson, there is nothing unethical about costs being claimed against her in these proceedings. I further note that Ms Thompson is no longer a bankrupt. There is no issue in my view in respect of ordering costs against her as appropriate.

Associate:

Dated:    24 October 2024