Re Webb, M.A. v. Ex parte Taylor, A.R. & Ors [1987] FCA 346

Re Webb, M.A. v. Ex parte Taylor, A.R. & Ors [1987] FCA 346

The property was recovered by reason of steps taken under an indemnity for costs of litigation, including preparation of court papers and a threatening letter, thereby satisfying s.109(10). Mercantile Credits Limited, having assumed the risk, should receive half the net amount recovered, with the other half to be distributed pro rata between creditors.

Parties
Applicant: Alan Richard Taylor; First Respondent: Mercantile Credits Limited; Second Respondent: Australian Guarantee Corporation Limited; Bankrupt: Marion Alice Webb
Jurisdiction
Australia
Judgment Date
07 July 1987
Procedural Posture
Bankruptcy Application / Application for Orders Under S.109(10) Bankruptcy Act 1966
Outcome
Orders to distribute half the net recovered amount to Mercantile Credits Limited and the other half pro rata; Australian Guarantee Corporation Limited's costs limited to one day's hearing are to come from the fund.
Legal Topics
Creditor Indemnity, Distribution of Recovered Property, Costs of Litigation
Bankruptcy Creditor Indemnity Distribution of Recovered Property Costs of Litigation

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Parties

Alan Richard Taylor

Applicant

Mercantile Credits Limited

First Respondent

Australian Guarantee Corporation Limited

Second Respondent

Marion Alice Webb

Bankrupt

Procedural Posture

Bankruptcy Application / Application for Orders Under S.109(10) Bankruptcy Act 1966

Legal Issues

  1. 1 Whether property was recovered under an indemnity for costs of litigation within s.109(10) Bankruptcy Act 1966
  2. 2 Whether the indemnifying creditor should be given an advantage in distribution over the other creditor
  3. 3 Extent of indemnity—investigation and litigation

Ratio Decidendi

The property was recovered by reason of steps taken under an indemnity for costs of litigation, including preparation of court papers and a threatening letter, thereby satisfying s.109(10). Mercantile Credits Limited, having assumed the risk, should receive half the net amount recovered, with the other half to be distributed pro rata between creditors.

Court Disposition

Orders to distribute half the net recovered amount to Mercantile Credits Limited and the other half pro rata; Australian Guarantee Corporation Limited's costs limited to one day's hearing are to come from the fund.

Orders

  • Mercantile Credits Limited to receive half the net amount recovered.
  • Remaining half to be distributed pro rata between creditors.