Brown v CBA
[2005] FMCA 1470
•7 October 2005
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BROWN & ANOR v CBA | [2005] FMCA 1470 |
| BANKRUPTCY – Application to set aside sequestration order – bankrupt solvent – recoupment of Trustee’s costs for administration of bankrupt’s estate – sequestration order to be set aside. |
| Bankruptcy Act 1966 (Cth), ss.153B, 154 Federal Magistrates Court Act 1999 (Cth), s.103(1) Federal Magistrates Court Rules 2001 (Cth), rr.20.00A(1)(c), 20.01(1)(a), 20.01(2)(a), 20.03(a) |
| Capsalis v Ozdemir [2005] FMCA 1163 (19 August 2005) Ivanhoe Grammar School v Raschilla [2003] FMCA 30 Kyriackou v Shield Mercantile Pty Ltd (No 2)[2004] FCA 1338 |
| Applicants: | JEFFREY CHARLES BROWN & LOUISE ANNE ROBBINS |
| Respondent: | COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) |
| File Number: | MLG 897 of 2005 |
| Judgment of: | Connolly FM |
| Hearing date: | 3 October 2005 |
| Date of Last Submission: | 3 October 2005 |
| Delivered at: | Melbourne |
| Delivered on: | 7 October 2005 |
REPRESENTATION
| Counsel for the Applicant: | Self represented |
| Solicitors for the Applicant: | Not applicable |
| Counsel for the Respondent: | Mr Fijalski |
| Solicitors for the Respondent: | White Cleland Pty |
| Counsel for the Trustee | Ms Hensman |
| Solicitors for the Trustee | Pointon Partners |
ORDERS
That the Sequestration Order made on the 6 September 2005 be set aside.
That otherwise all extant applications be dismissed.
.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 897 of 2005
| JEFFREY CHARLES BROWN & LOUISE ANNE ROBBINS |
Applicants
And
| COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) |
Respondent
REASONS FOR JUDGMENT
The proceedings
Pursuant to the Application for Review dated 22 September 2005 the Applicant sought an order that the Sequestration Order made on
6 September 2005 be set aside. When the matter came on before me on 3 October 2005, the Respondent indicated that it was prepared to consent to an order to that effect. The Trustee in Bankruptcy indicated at the hearing that he neither opposed nor consented to an order setting aside the Sequestration Order but sought an order for the payment of his costs of administration.
The application was supported by affidavits sworn by both applicants. There was no material from the Respondent and the Trustee filed a short affidavit detailing the costs of administration when the matter came before me on the 3 October.
The law
If, on the re-hearing of a petition in which a Registrar has made a sequestration order, the sequestration order is set aside, without a further order annulling the bankruptcy, the Trustee has no means of recovering his costs and expenses (see Ivanhoe Grammar School v Raschilla [2003] FMCA 30). If, on the other hand, an order is made annulling the bankruptcy under section 153B of the Bankruptcy Act, section 154 of the Bankruptcy Act permits the Trustee to apply the property of the bankrupt in payment of the costs and expenses of the administration of the bankruptcy including the remuneration and expenses of the Trustee. The question is then raised as to when should the Court set aside the sequestration order and when should it annul the bankruptcy.
Section 103(1) of the Federal Magistrates Court Act 1999 (Cth) provides:
103 Delegation of powers to Registrars
(1) The Rules of Court may delegate to the Registrars any of the powers of the Federal Magistrates Court, including (but not limited to) all or any of the powers mentioned in subsection 102(2).
Rule 20.00A(1)(c) of the Federal Magistrates Court Rules 2001 (Cth) (“the FMC Rules”) states:
20.00A Delegation of powers to Registrars
(1) For subsection 103 (1) of the Act, the following powers are
delegated to each Registrar:
…
(c) a power of the Court under a provision of the Bankruptcy
Act mentioned in Schedule 4.
The review conducted under rule 20.01(1)(a) and (2)(a) of the FMC Rules must be made as follows:
20.01 Time for application for review
(1) For subsection 104 (2) of the Act, application for review of the exercise of a power by a Registrar must be made within:
(a) for the exercise of a power of the Court under a provision
of the Bankruptcy Act mentioned in Schedule 4 — 21 days
…
(2) A time prescribed under subrule (1) may be extended in a
proceeding:
(a) by the Court or a Registrar on any terms as the Court or
Registrar thinks fit; or
Pursuant to rule 20.03(a) of the FMC Rules:
20.03 Procedure for review
The review of an exercise of power by a Registrar:
(a) must proceed by way of a hearing de novo
Conclusions and findings
The brief affidavits filed by the Applicants stated that they were solvent and were able to pay all debts when they became due and payable. It also provided an appropriate explanation for their absence on
6 September 2005 when the sequestration orders were made. The Respondent indicated that it was seeking to consent to an order that the Sequestration Order be set aside and that money had been deposited into an account which satisfied the Respondent in full. The Trustee did not seek to have the bankruptcy annulled and did not oppose the order to set aside the Sequestration Order but sought an order for the payment of administration costs totalling $1139.83.
I am satisfied in the circumstances of this matter that an order should be made setting aside the Sequestration Order. The Applicants are solvent and have provided an appropriate explanation for their non attendance on 6 September 2005. No application was made for an annulment of the bankruptcy and I am satisfied that the Trustee has no basis for recovering his costs and expenses albeit that they are very modest. (see Capsalis v Ozdemir [2005] FMCA 1163 (19 August 2005) and Kyriackou v Shield Mercantile Pty Ltd (No 2) [2004] FCA 1338 (22 October 2004)).
Accordingly I order that the Sequestration Order made on the
6 September 2005 be set aside and that otherwise all extant applications be dismissed.
I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Connolly FM
Deputy Associate: Nadia Morales
Date: 6 October 2005
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