Case: Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 912
Outcome: discussed
Mr Wilson and Ms Lawton instituted proceedings in this Court against Manna Hill Mining Company Pty Ltd ('Manna Hill Mining Company'), the bankrupt and six other parties. The proceedings came on for hearing before Lander J in February and April 2004. It is not necessary to describe the nature of the proceedings in detail. The following description of the three issues in the proceedings taken from the reasons for judgment of Lander J ( Wilson v Manna Hill Mining Co Pty Ltd [2004] FCA 912 at [1] - [6] ) will suffice: 'The applicants were directors of the first respondent, Manna Hill Mining Company Pty Ltd (Manna Hill Mining). The first question in these proceedings is to determine whether they are still directors of Manna Hill Mining. The second respondent, Mr Moore, was, and is, a director of Manna Hill Mining and the seventh respondent, Hodgemore Pty Ltd. The third respondent, Mr Hagger, was appointed a director of Manna Hill Mining on 12 June 2003 and resigned as a director of that company on 7 July 2003. He is a director of, and effectively controls, the fourth respondent, East Adelaide Company Pty Ltd. The fifth respondent, Mr Spratt, and the sixth respondent, Mr Ewen, claim to be directors of Manna Hill Mining. They also claim to hold shares in Manna Hill Mining. The second question in this case is to determine whether those shares were validly issued and allotted on 12 June 2003 and 19 January 2004, and whether Mr Ewen and Mr Spratt were validly appointed as directors on 19 and 20 January 2004. Mr Hagger and East Adelaide Company Pty Ltd have advised the Court that they will abide by any decision of the Court. The applicants called Mr Hagger as a witness. Manna Hill Mining may or may not be in administration. That depends on the answers to the first two questions and is the third matter to be determined in these proceedings.' 7 The applicants in the proceedings were successful and a number of orders were made by Lander J on 16 July 2004 and 30 July 2004 respectively. The orders made on 30 July 2004 were orders as to the costs of the proceedings and included an order that the bankrupt pay the applicant's costs on an indemnity basis. His Honour delivered reasons for his costs orders: Wilson v Manna Hill Mining Company Pty Ltd [2004] FCA 1035. 8 The bankrupt represented himself at the hearing of the proceedings as he did before me. Lander J found that he was an unsatisfactory witness. In his judgment dealing with the substantive issues his Honour said (at [94]-[98]): 'I have had the opportunity of observing Mr Moore whilst he was giving his evidence, cross-examining witnesses and putting his arguments during the trial of these proceedings. Mr Moore is a very determined man. He is consumed by Manna Hill Mining's activities and the activities of two other mining companies, Manna Hill Resources Pty Ltd and Manna Hill Gold Pty Ltd. He is a shareholder and director of all three companies. He worked extremely hard to take Manna Hill Mining out of administration and to resume trading. He is so consumed by the groups' activities that he will allow nothing to stand in his way. He has a strong personality which he uses to dominate others. He is an aggressive and overbearing man. As I have said, he will allow nothing to stand in his way. I assess him as being ruthless and fearless. He is also, unfortunately, unprincipled. For reasons which follow, I am of the opinion that the breakdown of his working relationship with Ms Lawton led him to claim, untruthfully, that Ms Lawton had resigned as a director of Manna Hill Mining on 24 March 2003. Because of the events on 27 May 2003, which I shall address in some detail, he determined to strip Mr Wilson of his control of Manna Hill Mining which he purported to do on 12 June 2003 and 19 January 2004. He then, methodically and ruthlessly, took steps to remove Mr Wilson as a director of Manna Hill Mining culminating in an extraordinary general meeting on 20 January 2004. He then attempted, on 6 February 2004, to put Manna Hill Mining's assets beyond the reach of Mr Wilson, even if Mr Wilson was successful in these proceedings. Lastly, he purported to put Manna Hill Mining into administration on 11 February 2004 to frustrate Mr Wilson's claims. Mr Moore was a very poor witness. He prevaricated. He refused to address questions directly where a direct answer would embarrass his case. He was garrulous when it suited him. He was also untruthful when it suited him so to be. I am not prepared to act on any of his evidence, unless his evidence is corroborated or consistent with the evidence of the applicants and their witnesses. Wherever his evidence is in conflict with the evidence of any other witness, including the evidence of Mr Spratt, I prefer the evidence of those other witnesses. Wherever his evidence is contradicted by any document, I reject his evidence.' 9 I mention these findings of Lander J because the bankrupt told me that one of the reasons he wished to pursue the appeal and the application for leave to appeal was that it would give him an opportunity of restoring his reputation. 10 The bankrupt filed and served an appeal against the substantive orders made by Lander J and an application for leave to appeal against the costs order made against him. For convenience, I will refer to the appeal and the application for leave to appeal as 'the appeals'. The appeals were filed and served on 6 August 2004. 11 The creditor's petition presented by Mr Wilson and Ms Lawton and the sequestration order made on the petition were based on a judgment debt which in turn was based on costs orders made by Lander J in relation to interlocutory applications in the proceedings in March and April 2004. 12 The appeals are actions within s 60(2) and (3) of the Act and upon the making of the sequestration order on 21 January 2005 the prosecution or discontinuance of the appeals was in the hands of the trustee and not the bankrupt. Section 60(2), (3) and (4) of the Act provides as follows: '(2) An action commenced by a person who subsequently becomes a bankrupt is, upon his or her 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 or her by a defendant or other party to the action, he or she shall be deemed to have abandoned the action. (4) Notwithstanding anything contained in this section, a bankrupt may continue, in his or her own name, an action commenced by him or her before he or she became a bankrupt in respect of: (a) any personal injury or wrong done to the bankrupt, his or her spouse or a member of his or her family; or (b) the death of his or her spouse or of a member of his or her family.' 13 The appeals do not fall within the terms of s 60(4) of the Act. 38 One of the issues before Lander J was whether Ms Lawton had resigned as a director of Manna Hill Mining Company. His Honour found that she had not. The bankrupt asserted that Ms Lawton had completed Centrelink forms in a way which indicated (or would indicate) that she had resigned as a director of Manna Hill Mining Company. The forms were not produced. This issue appears to have been raised at the trial. The issue is not referred to in the reasons for judgment of Lander J. 39 It is difficult to make anything of this because it is not clear precisely what the bankrupt is asserting or what was or can be established by evidence. The trustee was advised that the prospects of success on the appeal were not good and he appears to have adopted that view. The legal advice provided to him dealt with the bankrupt's assertions about the Centrelink forms and their completion by Ms Lawton. Nothing was established before me to suggest that the trustee placed inappropriate weight on this matter. 40 The bankrupt asserted that he was ill during the trial and that in all the circumstances, including the fact that he was not represented, the Judge erred in not adjourning the trial. The legal advice provided to the trustee dealt with this assertion and again, as with the previous matter, nothing was established before me to suggest that the trustee placed inappropriate weight on this matter. 48 The bankrupt submitted that the respondents to the appeals had stolen certain ore samples belonging to Manna Hill Mining Company, that they and others had acted illegally in breaking into his office and that Mr Iles, solicitor for the respondents, had given incorrect evidence before Lander J and acted improperly and illegally in a number of ways. The bankrupt sought to characterise the conduct of certain persons involved in events as illegal and improper but there is no evidence which would substantiate that conclusion. I take by way of example the alleged theft of certain ore samples by Mr Wilson and Ms Lawton. This allegation was the subject of findings by Lander J. His Honour found that Mr Wilson and Ms Lawton did what they did in order to preserve the company's assets. Nothing has been put before me to suggest that that conclusion is wrong. In any event, I am satisfied on all the evidence that the trustee has been independent and has considered in an objective and appropriate fashion the question of whether he should prosecute the appeals. 49 The bankrupt submitted that the appeals should proceed because he should be given the opportunity to restore his reputation. He referred to the comments Lander J made about him when considering his credibility as a witness. Those comments were certainly adverse to the bankrupt. I am prepared to assume for the purposes of argument and without deciding that restoration of reputation includes reputation damaged as a result of findings as to the credibility of the bankrupt in the proceedings. There is no suggestion in this case of the trustee being asked to assign any rights in relation to the appeals or of an indemnity for the costs of the appeals being offered to the trustee. Even if there were moneys in the estate a court 'would be unlikely to permit the bankrupt to pursue his personal interests in so far as they are not coincident with the due administration of the estate by the trustee, at the expense of the creditors': Cummings v Claremont Petroleum NL (supra) at 139 per Brennan CJ, Gaudron and McHugh JJ. This case is even stronger because there are no undisputed funds to pay for the prosecution of the appeals.