Citicorp Australia Ltd & Ors v Official Trustee in Bankruptcy & Anor [1996] FCA 1115

Citicorp Australia Ltd & Ors v Official Trustee in Bankruptcy & Anor [1996] FCA 1115

The Court held that a trustee in bankruptcy is not obliged to precisely identify or positively ensure the prospects of success of causes of action before assignment under ss.134 or 135 of the Bankruptcy Act, unless it is clearly established that the action is frivolous or has no prospects of success. The presence of a cross-claim does not preclude assignment; the assignee takes subject to equities and set-offs. In practice, assignment may proceed for the benefit of the estate where investigation is prohibitively costly or impracticable, as long as no unwarranted prejudice or demonstrably hopeless claim is assigned.

Jurisdiction
Australia
Judgment Date
16 December 1996
Procedural Posture
Appeal / On Appeal From a Single Judge of the Federal Court of Australia
Outcome
appeal dismissed
Legal Topics
['assignment of Choses in Action' "trustee's Powers of Sale" 'procedural Requirements Under Bankruptcy Act' 'assignment to Bankrupt' 'standing and Cross Claims']
['bankruptcy'] ['assignment of Choses in Action' "trustee's Powers of Sale" 'procedural Requirements Under Bankruptcy Act' 'assignment to Bankrupt' 'standing and Cross Claims']

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Procedural Posture

Appeal / On Appeal From a Single Judge of the Federal Court of Australia

Legal Issues

  1. 1 ['Whether the Court may grant leave to assign causes of action without precise identification of those causes of action under the Bankruptcy Act 1966 (Cth)' 'Whether a trustee must be satisfied that a cause of action to be assigned has a reasonable prospect of success' 'Whether the presence of a cross-claim or set-off affects the power of assignment' 'Whether the trustee or court should refuse to authorise sale of a chose in action that plainly has no prospect of success' 'Whether assignment is proper where details of the claims are not fully known due to lack of estate resources']

Ratio Decidendi

The Court held that a trustee in bankruptcy is not obliged to precisely identify or positively ensure the prospects of success of causes of action before assignment under ss.134 or 135 of the Bankruptcy Act, unless it is clearly established that the action is frivolous or has no prospects of success. The presence of a cross-claim does not preclude assignment; the assignee takes subject to equities and set-offs. In practice, assignment may proceed for the benefit of the estate where investigation is prohibitively costly or impracticable, as long as no unwarranted prejudice or demonstrably hopeless claim is assigned.

Court Disposition

appeal dismissed

Orders

  • ['The appeal be dismissed.' 'The appellants pay the taxed costs of the appeal of the first and second respondents.']