Hungerford v Inspector-General in Bankruptcy

The appellants, Cyril Hungerford and Eric Sydney Spooner, sought to appeal a decision of the Court of Bankruptcy, District of New South Wales and Territory for the Seat of Government. The dispute concerned the remuneration claimed by the appellants as inspectors under a deed of inspectorship, which had been registered as a deed of arrangement under Part XII of the *Bankruptcy Act 1924-1930*. The Registrar in Bankruptcy, having audited the appellants' accounts, referred the matter to the Federal Judge in Bankruptcy due to doubts regarding the allowability of certain remuneration payments.

The primary legal issue before the High Court was whether Rule 356 of the *Bankruptcy Rules 1928*, which stipulates that a sum of money fixed by creditors for a trustee's remuneration must be in accordance with the scale in the Sixth Schedule, applied to the remuneration of inspectors under a deed of inspectorship or trustees under a deed of arrangement. A secondary issue concerned the interpretation of a clause within the deed of inspectorship that limited the inspectors' remuneration to sums authorized by creditors, not exceeding the rates provided by section 203 of the *Bankruptcy Act 1924-1930*.

The High Court held that Rule 356 of the *Bankruptcy Rules 1928* did not apply to the remuneration of inspectors under deeds of inspectorship or trustees under deeds of arrangement. This was because the rule was inconsistent with sections 184 and 203 of the *Bankruptcy Act 1924-1930*, which specifically address the remuneration in such cases and do not impose limitations on lump sums fixed by creditors, unlike section 133 which the rule was designed to support. The Court further reasoned that the clause in the deed of inspectorship meant that creditors could authorize remuneration subject to the restrictions in section 203, and that these restrictions applied only to commission-based remuneration, not to lump sums.

Consequently, the High Court allowed the appeal, discharged the order of Judge Lukin, and remitted the matter to the Court of Bankruptcy to be dealt with as just. No order was made as to costs.