Case: Cummings v Claremont Petroleum NL [1996] HCA 19 ; (1996) 185 CLR 124
Outcome: applied
The fundamental purpose of s 178 of the Act is to give the court the power in a supervisory role, to review acts, omissions or decisions of a trustee in bankruptcy made in the course of the administration of a bankrupt's estate on the application of any person with appropriate standing. Its operation is to be understood in its historical context ( Macchia v Nilant [2001] FCA 7 ; (2001) 110 FCR 101 ('Macchia') at 119 per French J), and in the context of the broader relationship between the court and the trustee in bankruptcy as an officer of the court ( Macchia at 116). For present purposes it is sufficient to note the following points about the scope of the section: 1. Under the section, the court is fulfilling a supervisory role judicially, rather than an administrative role standing in the shoes of the trustee. As such, grounds for judicial review must be established by an applicant Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166 (' Wheeler' ) at 170 per Lee J, and the exercise of the court's power is wholly in its discretion. The court has the 'widest possible discretion as to the appropriate order which should be made in the particular case' ( Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182 (' Re Tyndall ') at 186 per Deane J). 2. The impugned act, omission or decision of the trustee in bankruptcy need not be absurd, unreasonable, or taken in bad faith before it is subject to review or a resultant order of the court under the section ( Re Tyndall at 186 per Deane J). Indeed, the act, omission or decision of the trustee may be subject to review even though it was commercially sound at the time it was made: Macchia at 116 per French J. At the same time the trustee's opinion will be a relevant factor in the exercise of the court's discretion, and there is no presumption that the court will intervene in a given case. The fact that the court might have taken a different course to the trustee in bankruptcy at the relevant time is not, without more, a basis to disturb the trustee's decision: Re Tyndall at 186 per Deane J; Macchia at 116 per French J. 3. The court is able to take into account information which was not available to the trustee at the time of an impugned act, omission or decision ( Gray v Clout (1990) 27 FCR 141, 144 per Pincus J). 4. The exercise of the discretion is subject to the principle that the court will not unduly interfere with the day-to-day administration of a bankrupt's estate by a trustee in bankruptcy: Re Tyndall at 186 per Deane J. 5. The section does not provide an avenue for a bankrupt to pursue his or her personal interests at the expense of creditors ( Cummings v Claremont Petroleum NL [1996] HCA 19 ; (1996) 185 CLR 124 at 139 per Brennan CJ, Gaudron and McHugh JJ) nor does it 'create a cause of action which sounds in damages', either in tort or under the general law ( Macchia at 119). Both of these propositions reflect the purpose of the section which is to give the court a supervisory role with respect to a trustee in bankruptcy in the administration of the bankrupt's estate. 6. Ultimately the question is what result would be 'just and equitable' in the circumstances of the case. 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.