After initial resistance unwanted trustee walks

O’Brien Palmer’s Liam Bailey.
Hall Chadwick’s John Shanahan.

When you’re on a bad thing abort is the message that one Sydney trustee didn’t get soon enough to prevent the unnecessary enrichment of lawyers.

The trustee, after refusing to accede to the wishes of the majority debt holder by resigning, marshalled his defences when the dominant creditor commenced proceedings to have him removed.

As valid as those defences might have been thought to be when the proceedings were commenced in February, the trustee has now ceded the battleground to rivals, as evidenced by orders made on Wednesday in the Federal Court by Justice Brigitte Markovic.

The effect of the orders sees O’Brien Palmer partner Liam Bailey resign as trustee of the bankrupt estate of builder Tony Saaib.

Replacing him will be the applicant creditor’s preferred trustees John Shanahan and Matthew Vines.

The Hall Chadwick pair’s installation now puts the ball firmly in the court of the bankrupt’s ex-wife, Ivonne Moussa Slaimen because in the wake of Bailey’s appointment Saaib had told Bailey that his former wife was a co-owner of a property Saaib occupied.

The property was described in the bankrupt’s statement of affairs as having a market value of approximately $4,500,000 and was subject to a mortgage with the Commonwealth Bank of Australia Limited (“CBA”), the balance of which was approximately $2,300,000.

While Bailey’s investigations didn’t identify Slaimen as a co-owner, that didn’t prevent her from engaging Pure Legal’s Chris Perry to press her claim.

At a December 23 creditors meeting Perry said that if her client’s offer to buy out Saaib’s share was refused and Bailey replaced, “her client would withdraw her offer to purchase the Property equity, and will instead use these funds to commence legal proceedings to enforce her claim on the Property in the Family Court”.

Well Bailey has now been replaced, albeit only after both sides have expended significant sums advancing the application towards a hearing.

In a response to our inquiries Bailey said that a figure of $30,000 for his fees and costs was “materially overstated”.

Further, he said the $50,000 indemnity put up by the bankrupt’s daughter had no conditions placed upon it and “was provided to me personally prior to my accepting appointment (sic) as Trustee”.

That’s just as well given one of the orders made be Justice Markovic requires that the ousted trustee not “claim against the Bankrupt Estate for any remuneration or expenses from 18 November 2022 to date”.

iNO sought comment from Gervase on whether the plaintiff Owners Corporation that had sought and obtained Bailey’s resignation was chipping in to cover some of his and Vine’s fees but no response was forthcoming before our deadline. If the ex acts on her threat to go nuclear in the Family Court they’ll need it.

Further reading:

Indemnity Conditional On Unlikely Recovery Finding

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