Plaintiff trustees preferred if no difference discerned

When rival parties propose their own trustees to sell property and there’s not even daylight between the contenders, how’s a judge to decide?

The answer lies within Yat Kit Jong and Man Chun So – the Trustees of the Property of Ho Wah Au, a Bankrupt v Chow [2022] NSWSC 1595 which reveals that all things being equal, the plaintiff’s nominee generally gets the gig, even if they work for the same firm.

“Mr Blackman stated, “there is no conflict” but nevertheless indicated that I ought somehow take the matter into account. I do not accept there is any conflict impacting on the plaintiff’s trustees carrying out their duties.” Justice Elisabeth Peden.

In this particularly case the applicants are Hong Kong-based partners of PwC China, acting in their capacities as trustees in bankruptcy of a Mr Ho Was Au.

The bankrupt owns a half share in a residential property in Killara. Ms Pui Ling Chow owns the other half as tenant in common with equal shares.

Ms Chow doesn’t object to the property being sold. She does however object to the trustees’ nominees, Andy Scott and Bill Honner of PwC Australia.

She preferred Alan Hayes and Wayne Marshall of Hayes Advisory and you might think that Scott and Honner’s connection to their Hong Kong colleagues could raise doubts.

Certainly Chow and her counsel Sam Blackman tried to make something of the connection, with NSW Supreme Court judge Elisabeth Peden saying in her judgment: “Ms Chow submitted in writing that there was a conflict of interest between the plaintiff, being trustees in bankruptcy who work for PWC in China, as that is the same international firm as the proposed trustees for sale. However, that submission was withdrawn at the hearing.”

Barrister Sam Blackman, who acted for Chow also had a crack at insinuating concerns about conflict into her honour’s deliberations, albeit in a manner curious and contradictory.

“Mr Blackman stated, “there is no conflict”, the judge said, “but nevertheless indicated that I ought somehow take the matter into account. I do not accept there is any conflict impacting on the plaintiff’s trustees carrying out their duties” the judge concluded.

At this stage her honour had already assessed the relative experience of the contenders and found nothing that would differentiate the prospective appointees.

She had also assessed the respective fees the rival trustees would charge and calculated that while Scott and Honner levied the higher rate, they’d complete the task more quickly than Hayes and Marshall, whose lower fees were favoured by Chow.

Then, backed by the reasons of former chief judge in equity Peter Young in Crocombe v Pine Forests of Australia Pty Ltd [2005] NSWSC 151; (2005) 219 ALR 692 at [88] her honour explained that: “Ordinarily the plaintiff’s trustees will be appointed” and confirmed Scott and Honner would be appointed given it is the plaintiff “who has been put to the cost and trouble of bringing the proceedings”.