Muir, Brian, Registrar in Bankruptcy v Bradley, David Geoffrey

[1984] FCA 352

Re: BRIAN MUIR, REGISTRAR IN BANKRUPTCY
And: DAVID GEOFFREY BRADLEY
No. T886 of 1984
Bankruptcy
3 FCR 91

COURT

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Beaumont J.(1)

CATCHWORDS

Bankruptcy - cancellation of registration of person as trustee - removal and replacement of that person as trustee of bankrupt and other estates administered by that person.

Bankruptcy Act, 1966, ss. 30, 159, 160, 179, 212B, 220

Bankruptcy - Registered trustee - Inquiry into conduct - Circumstances in which court may order that another person be appointed in place of the trustee - Bankruptcy Act 1966 (Cth), ss 179, 212B, 220(2).

HEADNOTE

The provisions of ss 179(1) and 212B(1)(b) of the Bankruptcy Act 1966 (Cth) enabling the court, upon an inquiry into the conduct of a trustee, to make such order as it thinks proper and to enable orders only with respect to the trustee whose conduct is the subject of inquiry. They do not provide a source of power to make orders that another trustee be appointed. Such an order may however be made where the conditions of s. 220(2) are satisfied.

Sections 159 and 160 of the Act when read together constitute a code.

In re Lord Thurlow; Ex parte Official Receiver (1895) 1 QB 724; McIntosh v. Shashoua (1931) 46 CLR 494, referred to.

HEARING

Sydney, Canberra, 1984, October 31; November 5. #DATE 5:11:1984

APPLICATION.

Application for orders pursuant to ss 155, 179 and 212B of the Bankruptcy Act 1966 (Cth).

T. J. McNally, for the applicant.

B. Coles, for the respondent.

Cur. adv. vult.

Solicitors for the applicant: Loban McNally & Harney.

Solicitors for the respondent: H. N. Chippindall & Co.

G.F.V.

ORDER

That the existing stay of proceedings be removed.

That, pursuant to ss.179 and 212B of the Bankruptcy Act, 1966, the respondent be removed as trustee of the bankrupt and other estates being administered by him under Part X of the Act.

Declare that, pursuant to s.160 of the Act, the Official Trustee is trustee of the said bankrupt estates.

Appoint David Lewis Clout to the vacant office of trustee of these estates being administered by the respondent under Part X of the Act nominated in Exhibit "D.G.B.1" to the affidavit of the respondent sworn herein on 30 October 1984.

Orders accordingly.

JUDGE1

By his application dated 22 September 1983, the Registrar sought orders pursuant to ss.179 and 212B of the Bankruptcy Act, 1966 ("the Act") that the Court inquire into the conduct of the respondent as trustee of certain bankrupt estates and as trustee of certain estates being administered under Part X of the Act. An order pursuant to s.155(5) of the Act, cancelling the registration of the respondent as trustee, was also sought. On 6 July 1984, for reasons then given, I ordered that the registration of the respondent as a trustee be cancelled. I reserved liberty to the Registrar to apply for further relief.

The respondent appealed to the Full Court. Pending the hearing of the appeal, an order was made staying the order of cancellation made on 6 July 1984 until further order. On 22 October 1984, for reasons then given, the Full Court (St. John, Lockhart and Morling, JJ.) dismissed the appeal. At the conclusion of their reasons, their Honours said (at pp.10-11):

"Finally, it was assumed by both parties throughout these

proceedings that the effect of an order under sub-s.155(5)

cancelling the registration of the appellant as trustee would extend to disqualify him from continuing to act as trustee of bankrupt estates or Part X administrations to which he has already been appointed. His Honour appears to have acted on that basis when he stated:

'In the event that consequential relief in the form of delivery up of documents and the like is necessary, further application may be made pursuant to the liberty to apply which I propose to reserve.'

That assumption is probably correct (see ss. 160 and 215 of the Act); but the point is not entirely free from doubt and we do not find it necessary to decide it. As the application before his Honour was not only for cancellation of the appellant's

registration as a trustee pursuant to sub-s. 155(5) but also for an inquiry pursuant to ss. 179 and 212B, those sections confer ample power upon the court to make orders removing the appellant from his office as trustee of the estates concerned. His Honour's order reserving liberty to the respondent to apply for further relief is an adequate vehicle for that purpose."

By a fresh application dated 25 October 1984, the Registrar now seeks orders that the stay of the earlier order be lifted; that the respondent be removed as trustee of the deeds of assignment, deeds of arrangement and compositions then specified; and that the Official Trustee be appointed trustee in his stead. The respondent has also made application to the Court pursuant to an application dated 26 October 1984. He seeks an order that he be removed from office as trustee of all estates of which he is trustee. He further seeks orders that David Lewis Clout (a registered trustee) be appointed trustee in his stead in respect of certain estates; and that the Official Trustee be appointed trustee of the remaining estates of which the respondent is trustee.

A preliminary question arises as to the jurisdiction of the Court to make the order sought by the respondent that Mr. Clout be appointed trustee of certain estates in his stead.

I will deal with the bankrupt estates first. The relevant statutory scheme is as follows. By s.179(1) of the Act, the Court may, on the application of the Registrar, a creditor or the bankrupt, inquire into the conduct of a trustee in relation to a bankruptcy and may do one or both of:

(a) remove the trustee from office; and

(b) make such order as it thinks proper.

By s.159(1) of the Act, the creditors may, at a general meeting, fill any vacancy in the office of trustee. By s.160 it is provided that if, at any time, there is no registered trustee who is a trustee of the estates of the bankrupt, the Official Trustee shall by force of this section, be trustee of the estate.

It would appear that there is no specific provision in the Act enabling the appointment by the Court of a trustee in the place of another trustee in the circumstances which have now arisen. Although s.179(1)(b) enables the Court to make "such order as it thinks proper", the context of this provision would suggest that its scope is limited to orders made with respect to the trustee whose conduct is being inquired into. It follows, in my view, that s.179(1)(b) cannot provide a source of the power to make the order now sought by the respondent to appoint Mr. Clout in his stead.

By s.30(1)(a) of the Act, the Court has full power to decide all questions, whether of law or fact, in any case of bankruptcy or any matter under Part X or Part XI coming within the cognizance of the Court. By s.30(1)(b), the Court is empowered to make such orders (including declaratory orders and orders granting injunctions or other equitable remedies) "as the Court considers necessary for the purposes of carrying out or giving effect to (the) Act" in any such case or matter. Apart from these wide statutory provisions, a Court of bankruptcy has broad inherent powers to deal with matters arising in its jurisdiction of an administrative kind: it is said that administration in bankruptcy is under the control of the Court, except where it is limited by Act of Parliament (see re Lord Thurlow; Ex parte Official Receiver (1895) 1 Q.B. 724 at p.729; McIntosh v. Shashoua (1931) 46 C.L.R. 494 at p.520).

But, in my view, neither these provisions nor this principle can give the Court jurisdiction or power to place Mr. Clout in the shoes of the respondent as trustee of any of the bankrupt estates. In my opinion, ss.159 and 160, when read together, constitute a code in this area. These provisions were, I think, intended to govern exhaustively the point which has now arisen. Upon the office of trustee being vacated, unless the creditors at a general meeting otherwise resolve, the Official Trustee becomes the trustee, subject to the possible operation of s.159(3).

The position with respect to Part X is different. By s.212B(1)(a), the Court is empowered to remove the trustee from office upon enquiring into his conduct. By s.212B(1)(b), the Court may also make such order as it thinks proper. This provision is thus in the same terms as s.179(1). In my opinion, for the reasons previously given, s.212B(1)(b) is also not available here. However, s.220(2), which has no counterpart in the case of a bankrupt estate, may apply. It provides:

"Where, at any time, a vacancy exists in an office of trustee of such a deed of assignment or deed of arrangement or of such a composition, the Court may, on the report of the Registrar or on the application of the debtor, a creditor or an Official Receiver-

(a) appoint to the vacant office a registered trustee who is willing to accept the appointment; or

(b) appoint the Official Trustee or a registered trustee, being a registered trustee who is willing so to act, to act as trustee until the vacant office is filled by a meeting of creditors."

It would seem then that s.220(2)(a) is available. However, it would appear that this power could not be exercised here at this stage because the Court is only empowered to act upon the report of the Registrar or an application of the debtor, a creditor or an Official Receiver. The present application is made by the respondent and he, as the existing trustee, is not a party at whose instance the Court is empowered to act under s.220(2). It is possible that the Court could act of its own motion pursuant to s.30 of the Act or perhaps in accordance with the principle stated in Lord Thurlow's Case. But, as I understand the position, either the Registrar or the Official Receiver will now move for an order appointing Mr. Clout to the vacant office pursuant to s.220(2)(a). On that assumption, I would propose to make the following orders:

1. That the existing stay of proceedings be removed.

2. That, pursuant to ss.179 and 212B of the Bankruptcy Act, 1966, the respondent be removed as trustee of the bankrupt and other estates being administered by him under Part X of the Act.

3. Declare that, pursuant to s.160 of the Act, the Official Trustee is trustee of the said bankrupt estates.

4. Appoint David Lewis Clout to the vacant office of trustee of these estates being administered by the respondent under Part X of the Act nominated in Exhibit "D.G.B.1" to the affidavit of the respondent sworn herein on 30 October 1984.