Holbrook v Muntz

[2010] FMCA 105

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HOLBROOK v MUNTZ [2010] FMCA 105

BANKRUPTCY – Sequestration order – application by controlling trustee – whether special resolution not passed – exercise of discretion to make sequestration order.

BANKRUPTCY – Appointment of trustee in bankruptcy – whether controlling trustee ought to be trustee in bankruptcy – controlling trustee’s fees fixed at creditors meeting – whether conflict between trustee roles.

Bankruptcy Act 1966 (Cth), ss.40(1)(i), 109(1)(b), 128B, 162(1), 188, 189A, 204(1), 210, 221(1) and (4)
Federal Magistrates Court Rules 2001 (Cth), Schedule 1

Bunnings Forest Products Pty Limited v Bullen & Ors (1994) 53 FCR 438
Deputy Commissioner of Taxation v Barroleg Pty Ltd (1997) 37 ATR 190
Re Palmer; Ex parte Taylor (1988) 18 FCR 271

Applicant: KIM DAVID HOLBROOK

Respondent: JOHN WILLEM MUNTZ

File Number: PEG 170 of 2009

Judgment of: Lucev FM

Hearing date: 9 February 2010

Date of Last Submission: 9 February 2010

Delivered at: Perth

Delivered on: 19 February 2010

REPRESENTATION

Counsel for the Applicant: Mr AF Carles

Solicitors for the Applicant: Carles Solicitors

Respondent: In person

ORDERS

1. The estate of John Willem Muntz (“the Respondent Debtor”) be sequestrated pursuant to s.221(1) of the Bankruptcy Act 1966 (Cth).

2. Kim David Holbrook be appointed as trustee of the bankrupt estate of the Respondent Debtor.

The Court notes that the date of the act of bankruptcy is 21 May 2009.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
PERTH

PEG 170 of 2009

KIM DAVID HOLBROOK

Applicant

And

JOHN WILLEM MUNTZ

Respondent

REASONS FOR JUDGMENT

Introduction

1. By application to this Court on 29 September 2009 the applicant applied to this Court for the following orders:

   1.The estate of the Respondent Debtor be sequestrated pursuant to section 221(1)(c) of the Bankruptcy Act.

   2.The Applicant’s costs of this application be fixed, or alternatively taxed, and paid out of the bankrupt estate of the Respondent Debtor.

   3.An order that Kim David Holbrook be appointed as trustee of the bankrupt estate of the Respondent Debtor.

2. Kim David Holbrook, the applicant, was the controlling trustee,[1] appointed under s.188 of the Bankruptcy Act 1966 (Cth)[2] for the purposes of Part X of the Bankruptcy Act, of the respondent, John Willem Muntz.

   [1] “Controlling Trustee”.

   [2] “Bankruptcy Act”.

3. The final orders were said to be sought on the grounds appearing in an affidavit filed with the application, being the Controlling Trustee’s Affidavit sworn 17 September 2009.[3]

   [3] “Controlling Trustee’s First Affidavit”.

Grounds of opposition to application

1. Mr Muntz filed a notice stating the grounds of opposition to the application, as follows:

   1.The applicant has not stated on what grounds he has brought the application.

   2.On the grounds appearing in the attached affidavit the respondent opposes to Kim David Holbrook being appointed trustee of the respondent debtor.

2. The affidavit referred to in ground 2 of Mr Muntz’s notice is Mr Muntz’s affidavit sworn 20 October 2009.[4]

   [4] “Mr Muntz’s First Affidavit”.

Evidence

1. The Controlling Trustee relied upon the Controlling Trustee’s First Affidavit and a further affidavit sworn 9 November 2009.[5]

   [5] “Controlling Trustee’s Second Affidavit”.

2. Mr Muntz also filed a second affidavit, sworn 23 October 2009.[6] Mr Muntz’s Second Affidavit was the affidavit that he relied upon at hearing.

   [6] “Mr Muntz’s Second Affidavit”.

Issues

1. There are two issues in the proceedings:

   a)whether the sequestration order ought to be made; and

   b)if the sequestration order is made, who the trustee in bankruptcy should be.

Sequestration Order

Legislation

1. Section 221(1) of the Bankruptcy Act provides as follows:

   (1)  Where:

   …

   (c)  a meeting of creditors called in pursuance of such an authority has not, within 4 months from the date for which the meeting was called, passed one of the special resolutions referred to in subsection 204(1);

   the Court may, if it thinks fit, on the application of the Inspector‑General, a creditor or the controlling trustee, forthwith make a sequestration order against the estate of the debtor.

2. Section 204(1) of the Bankruptcy Act provides as follows:

   (1)  The creditors may, at a meeting called in pursuance of an authority under section 188, by special resolution:

   (a)  where the debtor's property is subject to control under this Division, resolve that the debtor's property be no longer subject to control under this Division;

   (b) require the debtor to execute a personal insolvency agreement; or

   (d) require the debtor to present a debtor's petition within 7 days from the day on which the resolution was passed.

3. Section 221(4) of the Bankruptcy Act requires “proof (which may be given by affidavit) of the matters stated in the application and … of service of the application on the debtor.”

Service

1. Service is not an issue: Mr Muntz appeared at the hearing, having previously filed a notice of appearance.

Meeting of creditors

1. The applicant must therefore prove that a meeting of creditors called in pursuance of an authority by a Controlling Trustee has not, within four months from the date for which the meeting was called, passed one of the special resolutions referred to in s.204(1) of the Bankruptcy Act.

2. The evidence with respect to the meeting of creditors is as follows:

   a)that on 29 May 2009 notice was given of a meeting of creditors to be held on 3 July 2009;

   b)the meeting of creditors held on 3 July 2009 was adjourned, by resolution passed by the Australian Taxation Office[7] as sole creditor, for a period of four weeks;

   [7] “ATO”.

   c)on 23 July 2009 notice was given of the adjourned meeting of creditors to be held on 31 July 2009;

   d)the adjourned meeting of creditors held on 31 July 2009 was, by resolution passed by the ATO as the sole creditor, further adjourned to a time and date to be determined by the Controlling Trustee;

   e)on 26 August 2009 notice was given that the further adjourned meeting of creditors would be held on 3 September 2009;

   f)at the creditors meeting on 3 September 2009, the ATO, as sole creditor voted against:

   i)Mr Muntz’s proposal for a personal insolvency agreement; and

   ii)Mr Muntz’s amended proposal for a personal insolvency agreement; and

   iii)Mr Muntz presenting his own petition in bankruptcy within seven days;

   g)that as the resolutions for both a personal insolvency agreement and for the filing of a debtors petition have been put to a meeting of creditors and not passed, the Controlling Trustee is of the view that they cannot again be put to the creditors;

   h)the Controlling Trustee has no intention of calling any further meetings of creditors; and

   i)none of the resolutions provided for under s.204(1) of the Bankruptcy Act have been passed and no such resolutions will be passed.[8]

   [8] Controlling Trustee’s First Affidavit, paras.5-13 and 17.

3. A creditors meeting considering resolutions under s.204 of the Bankruptcy Act may be adjourned from time to time,[9] as has happened here, but an adjournment will not be in order once a resolution under s.204(1) has failed to pass as a special resolution.[10]

   [9] Re Palmer; Ex parte Taylor (1988) 18 FCR 271 at 284 per Spender J; Bunnings Forest Products Pty Limited v Bullen & Ors (1994) 53 FCR 438 at 450 per Gummow, Lee and Carr JJ (“Bunnings”).

   [10] Bunnings at 450-451 per Gummow, Lee and Carr JJ.

4. In the circumstances, the Court finds that the prerequisites for issuance of a sequestration order under s.221(1)(c) have been met, namely that none of the special resolutions referred to in s.204(1) of the Bankruptcy Act have been passed within four months from the date for which a meeting of creditors was called. The Court is therefore in a position, if it thinks fit, to forthwith make a sequestration order against the estate of Mr Muntz.

Exercise of the discretion

1. There is no dispute that:

   a)Mr Holbrook is properly appointed as the Controlling Trustee;[11]

   b)Mr Muntz committed an act of bankruptcy by signing the authority for Mr Holbrook to act as Controlling Trustee;[12] and

   c)the amount owed to the ATO by Mr Muntz is $683,324, with the debt having been incurred in 2001.[13]

   [11] Controlling Trustee’s First Affidavit, paras.2-3 and Annexure A; Mr Muntz’s Second Affidavit, para.1.

   [12] Bankruptcy Act, s.40(1)(i).

   [13] Controlling Trustee’s First Affidavit, Annexure C, page 25.

2. Mr Muntz’s Second Affidavit, upon which he relied for the purposes of opposing the application, contains no factual material relevant to the issue of whether or not a sequestration order ought to be made, as opposed to whether or not Mr Holbrook ought to be the trustee in bankruptcy. At hearing, Mr Muntz confirmed that no legal action seeking to challenge the debt owed to the ATO was pending.[14]

   [14] Transcript at 8-9.

3. Mr Muntz, however, sought to argue that a sequestration order ought not issue because:

   a)the ATO has not taken any legal action to enforce the recovery of the debt and no summons or judgments have been issued;

   b)he has not had any correspondence with the ATO since 5 February 2009 when he completed a proposal to compromise his tax debts;

   c)the ATO did not resolve to approve Mr Muntz’s amended proposal for a personal insolvency agreement or the filing of his own debtors petition;

   d)the ATO has not indicated support for the sequestration order application, but rather that it has “no objection” to the Controlling Trustee making that application;

   e)there is the possibility of further settlement negotiations with the ATO and that not all avenues for settlement have been exhausted, and at hearing he said that he had lodged a complaint with the ATO concerning the fairness of his treatment by the ATO, and that his next step was to lodge a complaint with the Ombudsman;[15]

   f)there is no public morality issue and there is only one creditor and no real threat to unsuspecting creditors;

   g)as a bankrupt he would lose his taxation registration and public practising certificate as an accountant which would impact on:

   i)his ability to earn income in his profession; and

   ii)clients who rely on his services.

   [15] Transcript at 9.

4. The actions of the ATO are, in the Court’s view, explainable by reference to its approach throughout the currency of this matter. The ATO have consistently refused to settle with Mr Muntz, and, as noted in the Controlling Trustee’s 23 June 2009 report:

   a)after issuing a demand letter in the first quarter of 2006 “the debtor attempted to settle the claim with the ATO, but the ATO advised him that his ability to settle was limited as he was a tax agent and had received commissions for investor participation in the scheme arrangements”;[16] and

   b)“during 2008 and early 2009 the debtor and the ATO continued to have communications about a possible settlement, concluding with the ATO advising that it was unable to accept a compromise and that the compromise offered was not supported by supporting documentation.”[17]

   [16] Controlling Trustee’s First Affidavit, Annexure E, Report by Controlling Trustee pursuant to s.189A, dated 23 June 2009, page 58.

   [17] Controlling Trustee’s First Affidavit, Annexure E, Report by Controlling Trustee pursuant to s.189A, dated 23 June 2009, page 58.

5. Between the settlement negotiations or discussions in 2006 and 2008 and early 2009 there had been proceedings in the Administrative Appeals Tribunal[18] concerning scheme arrangements for Satcom Financial Services and Satcom Electronic Commerce, being schemes for which Mr Muntz had apparently claimed tax deductions which were subsequently disallowed by the ATO, giving rise to the amount owing to the ATO of $683,324.[19]

   [18] “AAT”.

   [19] Controlling Trustee’s First Affidavit, Annexure E, Report by Controlling Trustee pursuant to s.189A, dated 23 June 2009, page 58, and Annexure C, Mr Muntz’s Statement of Affairs, dated 21 May 2009, page 25.

6. After the failure of the settlement negotiations in early 2009 the Controlling Trustee was appointed on 21 May 2009, with his consent to act as a Controlling Trustee signed on 28 May 2009.[20] Thereafter, there were creditors meetings at which no form of compromise or arrangement was agreed to by the ATO. Moreover, the ATO has not opposed the making of this application.

   [20] Controlling Trustee’s First Affidavit, para.2.

7. There is no other evidence, other than mere assertion by Mr Muntz, that there is a possibility of further settlement negotiations with the ATO or that all avenues for settlement have not been exhausted. Mr Muntz has already proposed, and the ATO has rejected, personal insolvency agreements which sought to resolve this matter on the basis of a payment of initially $100,000, which was subsequently revised to $150,000.[21] There is no evidence of Mr Muntz’s ability to make an offer to resolve the matter on any different basis. There is evidence that Mr Muntz does not have the means to settle the matter on terms acceptable to the ATO. In a letter to the Controlling Trustee on 19 August 2009 Mr Muntz said that he did not have the means to settle for an undisclosed amount suggested by the ATO with respect to the Satcom Financial Services scheme.[22] Complaints to the ATO and the Ombudsman are not likely to alter Mr Muntz’s financial circumstances.

   [21] Controlling Trustee’s First Affidavit, para.14 and Annexures E, page 58, and J, page 107.

   [22] Controlling Trustee’s First Affidavit, Annexure J (“19 August 2009 Letter”).

8. In June 2007 Mr Muntz borrowed $500,000 by mortgaging his interest in the family home in the northern Perth beach suburb of Marmion. Of the $500,000 he contributed $490,000 into his superannuation fund by lump sum contribution on 28 June 2007.[23] It is arguable that the superannuation payment of $490,000 might be voidable as a superannuation contribution made to defeat creditors, and therefore be recoverable for benefit of creditors, once a sequestration order issues.[24] In that regard, it should be noted that at the time the mortgage was taken out, and the superannuation contribution made, Mr Muntz had been aware of the ATO claim against him from at least August 2004, and was also aware that the matter was the subject of an AAT test case which had been set down for hearing in February 2007. [25] The test case was heard and determined by the AAT in August and September, 2007.[26] It is evident that by making the superannuation contribution when he did Mr Muntz, with full knowledge of the facts, put himself in a position where he no longer had the means to settle with the ATO for the amount owing. As submitted by the Controlling Trustee, Mr Muntz must, by reason of his profession and the nature of the financial activities undertaken by him and referred to in the report by the Controlling Trustee dated 23 June 2009, be regarded as a well-informed and sophisticated debtor in relation to financial matters. In the exercise of a discretion as to whether to issue a sequestration order Mr Muntz’s conduct, insofar as it diminished his ability to pay the amount owing to the ATO by reason of the payment made for his own benefit, is conduct which weighs heavily against him, and in favour of the issuance of the sequestration order. That is particularly so where the issuance of the sequestration order might result in the recovery of some of those monies for the benefit of a creditor.

   [23] Controlling Trustee’s First Affidavit, Annexure E, Report by Controlling Trustee pursuant to s.189A dated 23 June 2009, page 50.

   [24] Bankruptcy Act, s.128B. At the time of completing his Statement of Affairs Mr Muntz held $1,189.829 in his superannuation fund. Controlling Trustee’s First Affidavit, Annexure C, Mr Muntz’s Statement of Affairs, page 20.

   [25] 19 August 2009 Letter.

   [26] Controlling Trustee’s First Affidavit, Annexure E, Report by Controlling Trustee pursuant to s.189A, dated 23 June 2009, page 51.

9. In the circumstances, there is nothing in relation to the ATO’s actions in this matter which caused the Court to think that it is not fit to issue a sequestration order.

10. Mr Muntz asserts that there is no public morality issue and that there is only one creditor affected. There is only one creditor, but it is a creditor charged with the collection of taxation revenue for the Commonwealth. Furthermore, the amount owed ($683,324) is not insubstantial for an individual taxpayer. Given that an act of bankruptcy has been committed, and that the processes under s.204 of the Bankruptcy Act have not yielded an outcome, the filing of an application for a sequestration order is one possible outcome.[27] Another possible outcome is the signing of a further authority, and a further round of creditors meetings with the ATO.[28] The fact that there is nothing to indicate that such a process would result in a resolution of the matter different to that which has occurred as a result of the creditors meetings already held is a factor which weighs in favour of the issuance of a sequestration order.

    [27] Bankruptcy Act, s.221(1).

    [28] Bunnings at 450 per Gummow, Lee and Carr JJ.

11. Mr Muntz asserts that he would lose his registration as a tax agent and his public practising certificate as an accountant if made bankrupt, with consequential loss of income. There is no evidence that this would occur, but assuming it to be correct, it can be characterised as a normal consequence of such a person being made bankrupt. There is no current evidence of what impact there would be on Mr Muntz’s income, or his ability to obtain other employment, and what remuneration might be afforded him in such other employment as he might subsequently obtain.[29] In the circumstances, it is not possible to draw a conclusion, in his favour, that his income would be severely impacted. Likewise, there is no evidence of the impact on his clients, or their purported reliance on his services. No doubt there would be some inconvenience and attendant expense in clients instructing new accountants and tax agents, but there is no evidence of any client or clients who wish to continue to rely on Mr Muntz’s services (assuming that they are aware of the current proceedings) or perhaps more pertinently, who must, for some reason, rely upon his services. Furthermore, the fact that Mr Muntz borrowed money on a mortgage against the family home and contributed that money to his superannuation fund for his own benefit, thereby leaving himself without the means of paying the amount owed to the ATO, or a substantial portion of it, is a further reason that regard ought not be had to the impact on Mr Muntz’s professional standing, income and on his clients, when assessing whether to issue a sequestration order or not. Mr Muntz’s inability to pay the amount owing to the ATO can be attributed to a deliberate act, for his own benefit, at a time when he was well aware of the nature of the claim against him by the ATO and that a decision of the AAT on the issue was pending. In those circumstances any likely impact on Mr Muntz’s professional standing, income and clients is not a reason not to grant a sequestration order.

    [29] There is some speculation about the matter in the 19 August 2009 Letter.

12. Mr Muntz also asserts that the Controlling Trustee has made the application for no other reason than to secure the payment of his fees as a preferred creditor. The assertion is unsupported by any evidence and was not sought to be put in cross-examination of the Controlling Trustee (who was not called to be cross-examined). In the circumstances the assertion has not been proven. In fact, it is an assertion so lacking in foundation that it ought never to have been made.

13. Critically, there is no evidence that Mr Muntz has any capacity to pay the debt owing to the ATO.

1. In the Court’s view, there are no circumstances which make it necessary not to make a sequestration order. Accordingly, a sequestration order pursuant to s.221(1) of the Bankruptcy Act will issue in respect of Mr Muntz’s estate.

Appointment of trustee in bankruptcy

1. An issue arises as to whether the Controlling Trustee ought to be appointed as the trustee in bankruptcy.

2. On 10 September 2009 the ATO indicated it had no objection to the Controlling Trustee being appointed as the trustee in bankruptcy.[30] On 15 September 2009 the Controlling Trustee filed a consent to his acting as the trustee in bankruptcy.[31]

   [30] Controlling Trustee’s First Affidavit, para.15 and Annexure L.

   [31] Controlling Trustee’s First Affidavit, para.16 and Annexure M.

3. The Controlling Trustee seeks an order that he be appointed as the trustee in bankruptcy. In support of that order he argues that:

   a)there would be a costs saving by reason of the trustee in bankruptcy not having to repeat, or become familiar with, work done by the Controlling Trustee;[32] and

   b)no conflict arises because the fees of the Controlling Trustee have already been fixed by the creditors under s.162(1) of the Bankruptcy Act[33] and will have priority under s.109(1)(b) of the Bankruptcy Act, and there is therefore no decision to be made by the Controlling Trustee as to his fees as Controlling Trustee if he were to be appointed the trustee in bankruptcy.

   [32] Controlling Trustee’s Second Affidavit, para.9.

   [33] Which applies by reason of s.210 of the Bankruptcy Act.

4. The Controlling Trustee’s evidence is as follows:

   a)no further payment of Controlling Trustee’s fees is required to be made personally by Mr Muntz, who has already paid $11,000 in fees to the Controlling Trustee;[34]

   b)the application for a sequestration order is made in the capacity of Controlling Trustee and not as a creditor;[35]

   c)the decision as to the quantum of the Controlling Trustee’s fees had been made at creditors meetings in July and September 2009,[36] and therefore there is no decision to be made as to the Controlling Trustee’s fees if he were to be appointed trustee of the bankrupt estate;[37]

   d)there is no conflict because:

   i)there is no decision to be made as to the Controlling Trustee’s fees by the trustee in bankruptcy; and

   ii)there is no objection to the Controlling Trustee’s appointment as trustee in bankruptcy by the ATO, which is the sole creditor;[38] and

   e)there would be a costs saving in having the Controlling Trustee as the trustee in bankruptcy because the Controlling Trustee is “already familiar with the financial affairs of the debtor and ha[s] addressed the issues which would arise in a bankruptcy” in the Controlling Trustee’s reports.[39]

   [34] Controlling Trustee’s Second Affidavit, paras.2, 3, 4 and 7.

   [35] Controlling Trustee’s Second Affidavit, para.6.

   [36] Controlling Trustee’s First Affidavit, Annexures G, I and K.

   [37] Controlling Trustee’s Second Affidavit, para.8.

   [38] Controlling Trustee’s Second Affidavit, paras.8 and 9.

   [39] Controlling Trustee’s Second Affidavit, para.9. The reports referred to are Annexures E and F to the Controlling Trustee’s First Affidavit.

5. Mr Muntz argues that:

   a)only $11,000, which he has already paid, is payable to the Controlling Trustee for his fees,[40] and that this is confirmed by a letter dated 3 September 2009 from the Controlling Trustee, the pre-penultimate paragraph of which reads as follows:

   “You have informed me that you have no divisible assets. For me to consent to the appointment [as Controlling Trustee] and given the extent of the work required, I therefore require a non-refundable, prepaid sum of $11,000 ($10,000 plus $1,000 GST) to be applied toward my Controlling Trustee’s fees and costs including search and investigation costs and the costs of any independent inspection and valuation of your assets. If you had sufficient equity in your divisible assets then payment of such a sum may not have [to] be required.”[41]

   b)in summary:

   “11.I am concerned that if Kim Holbrook is appointed trustee of my bankrupt estate the decision as to whether he is a creditor of mine is a decision which he must make. He is therefore the decision-maker and the beneficiary of that decision.

   12.From the contents of my previous paragraph I consider that Kim Holbrook is placed in a position of potential and real conflict and that he should therefore not be appointed as trustee of my bankrupt estate.”[42]

   [40] Mr Muntz’s First Affidavit, paras.1-6.

   [41] Mr Muntz’s First Affidavit, Annexure A (“3 September 2009 Letter”).

   [42] Mr Muntz’s Second Affidavit, paras.11 and 12.

6. Mr Muntz’s assertion that the Controlling Trustee’s fees are fixed at $11,000 is wrong. It is not confirmed by the 3 September 2009 Letter from the Controlling Trustee which merely indicates that the sum of $11,000 is “to be applied towards” the Controlling Trustee’s fees and costs. That letter is not an indication that $11,000 is the maximum to be charged. In any event, it is immaterial because the remuneration of the Controlling Trustee is set by the creditors,[43] not the debtor. Thus, no conflict arises on the basis of the issue of fees as dealt with in the 3 September 2009 Letter.

   [43] Bankruptcy Act, s.162(1).

7. In the Court’s view there is, in any event, no conflict because:

   a)the application for a sequestration order is made by the applicant in his capacity as Controlling Trustee, not as a creditor;

   b)the Controlling Trustee’s fees have been fixed at creditors meetings, and are not susceptible to further increase because the Controlling Trustee’s authority ended on 21 September 2009, and there will be no further creditors meetings;

   c)the Controlling Trustee’s fees will be afforded the priority dictated by s.109(1)(b) of the Bankruptcy Act, and are not susceptible to amendment by the trustee in bankruptcy;

   d)the sole creditor, the ATO, does not object to the appointment of the Controlling Trustee as trustee in bankruptcy; and

   e)no further payment of Controlling Trustee’s fees is required personally from Mr Muntz.

8. Even if there were a conflict, the advantages of appointing the same person as Controlling Trustee outweigh any detriment caused by any possible conflict, because “…there will be a general saving to creditors by appointing a person who has already spent hours in investigating the affairs…” [44] of Mr Muntz.

   [44] Deputy Commissioner of Taxation v Barroleg Pty Ltd (1997) 37 ATR 190 at 196 per Young J (“Barroleg”). Albeit that Barroleg is a case about a liquidator’s appointment the observation applies equally in this case.

9. In the circumstances, there is no impediment to the appointment of the Controlling Trustee as the trustee in bankruptcy. Indeed, that appointment is, in the Court’s view, an entirely sensible one from both a:

   a)practical viewpoint, given the Controlling Trustee’s knowledge of Mr Muntz’s affairs; and

   b)costs viewpoint, given that there will inevitably be costs savings by reason of the Controlling Trustee’s appointment as trustee in bankruptcy because of his knowledge of the affairs of Mr Muntz and the reports already having been prepared in his capacity as Controlling Trustee in relation to Mr Muntz’s affairs. Part of the purpose or intent of Part X of the Bankruptcy Act is to reduce costs and fees.[45]

   [45] Bunnings at 449-450 per Gummow, Lee and Carr JJ.

10. There will therefore be an order that the Controlling Trustee be appointed the trustee in bankruptcy of Mr Muntz’s estate.

Costs

1. Success in the application means that the Controlling Trustee is entitled to the costs of the application, to be fixed in accordance with Schedule 1 of the Federal Magistrates Court Rules 2001 (Cth), and paid from Mr Muntz’s bankrupt estate.

Conclusion and Orders

1. For the reasons set out above the Court has concluded that:

   a)a sequestration order will issue in respect of Mr Muntz’s estate;

   b)the Controlling Trustee will be appointed as trustee in bankruptcy of Mr Muntz’s estate; and

   c)the Controlling Trustee’s costs of this application will be fixed, and paid from Mr Muntz’s bankrupt estate.

   The Court notes that the date of the act of bankruptcy is 21 May 2009.

2. The Court will hear the parties as to the quantum of costs.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Lucev FM

Associate:  S. Gough

Date:  19 February 2010