Owners Corporation PS334337A v Hoiles - [2012] FMCA 218

FEDERAL MAGISTRATES COURT OF AUSTRALIA

OWNERS CORPORATION PS334337A v HOILES

[2012] FMCA 218

BANKRUPTCY – Application of trustees under s.146 of the Bankruptcy Act 1966 (Cth) for distribution of dividends – no statement of affairs received in relation to deceased’s estate – application acceded to – costs charges and expenses incurred by applicants including in period between initial bankruptcy and subsequent bankruptcy of a deceased estate be paid in priority by bankrupt deceased estate.

Bankruptcy Act 1966 (Cth) ss.109(1), 146, 246

Re Universal Distributing Company Ltd (in liq) (1933) 48 CLR 171

Applicant:

OWNERS CORPORATION PS334337A

Respondent:

GRAEME HOILES

File Number:

MLG 902 of 2010

Judgment of:

Hartnett FM

Hearing date:

19 March 2012

Delivered at:

Melbourne

Delivered on:

19 March 2012

REPRESENTATION

Counsel for the Applicant:

Mr Brown

Solicitors for the Applicant:

Gadens Lawyers

The Respondent:

No appearance

UPON APPLICATION MADE TO THE COURT by the trustees, Messrs Paul Andrew Burness and Andrew James Jess, Mr Brown of Counsel appearing for the applicants and there being no appearance by or on behalf of the respondent or any creditor

THE COURT ORDERS THAT:

The costs charges and expenses incurred by the applicants, including the remuneration and expenses of the applicants, between 25 November 2010 and 2 May 2011 in relation to the applicants’ appointment as joint and several trustees of the bankrupt estate of Graeme Hoiles be paid in priority by the bankrupt deceased estate of Graeme Hoiles pursuant to s.109(1) of the Bankruptcy Act 1966 (Cth) (‘the Act’).
The applicants proceed to distribute dividends amongst creditors who have proved their debts as if the bankrupt or the bankrupt’s legal representative had filed a statement of affairs and those creditors had been stated to be creditors in it, pursuant to s.146 of the Act.
The applicants’ costs of the application be paid in accordance with the Act with priority.

IT IS DIRECTED THAT:

The Proposed Form of Order dated 8 March 2012 and marked ‘Exhibit A’ be placed upon the Court file.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 902 of 2010

OWNERS CORPORATION PS334337A

Applicant

And

GRAEME HOILES

Respondent

REASONS FOR JUDGMENT

The application before the Court this day is one made by Mr Burness and Mr Jess in their capacity as joint and several trustees of the bankrupt estate of Graeme Hoiles, deceased. The application is necessitated primarily because of the need to prove the estate in the absence of a receipt by the trustees of any statement as to affairs in relation to the Hoiles estate. The application is supported by an affidavit of Paul Andrew Burness, sworn 10 February 2012, together with exhibits marked “PAB1” to “PAB14”, and a further affidavit of Paul Andrew Burness sworn 15 March 2012. The earlier affidavit of Mr Burness, together with the sealed application returnable at this Court in the first instance on 8 March 2012, was served on the various creditors as set out in the affidavit of service of Jeremy Forder, an office service clerk employed by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2012] FMCA 218
Decision Date: 19 March 2012

CaseChat Overview and Summary

The Owners Corporation PS334337A filed an application in the Federal Circuit Court of Australia against Graeme Hoiles, seeking the payment of costs and expenses incurred during the administration of Hoiles' bankruptcy estate. The legal representative of the Owners Corporation had been appointed as a joint and several trustee of the estate. The dispute centred on whether the costs and expenses incurred by the applicants should be paid by the deceased bankrupt's estate in priority over other claims, and whether the applicants should be permitted to proceed with distributing dividends to creditors as if a statement of affairs had been filed.

The court had to decide whether the applicants' costs and expenses were properly incurred and whether they were eligible for priority payment under section 109(1) of the Bankruptcy Act 1966. The court also needed to determine whether the applicants could proceed with the distribution of dividends to creditors as if a statement of affairs had been filed, in accordance with section 146 of the Act.

The court found that the applicants had incurred reasonable and necessary costs and expenses in their capacity as trustees. These expenses included remuneration and expenses for the period between 25 November 2010 and 2 May 2011. The court held that these costs were properly incurred and should be paid in priority over other claims pursuant to section 109(1) of the Act. The court also determined that the applicants could proceed with the distribution of dividends to creditors as if a statement of affairs had been filed, as permitted under section 146 of the Act.

Accordingly, the court ordered that the costs and expenses incurred by the applicants be paid in priority by the deceased bankrupt's estate, and that the applicants could proceed with the distribution of dividends to creditors. The court further ordered that the applicants' costs of the application be paid in accordance with the Act with priority. The proposed form of order was to be placed on the court file.

Orders

Orders of the court

The costs charges and expenses incurred by the applicants, including the remuneration and expenses of the applicants, between 25 November 2010 and 2 May 2011 in relation to the applicants’ appointment as joint and several trustees of the bankrupt estate of Graeme Hoiles be paid in priority by the bankrupt deceased estate of Graeme Hoiles pursuant to s.109(1) of the Bankruptcy Act 1966 (Cth) (‘the Act’).

The applicants proceed to distribute dividends amongst creditors who have proved their debts as if the bankrupt or the bankrupt’s legal representative had filed a statement of affairs and those creditors had been stated to be creditors in it, pursuant to s.146 of the Act.

The applicants’ costs of the application be paid in accordance with the Act with priority.

IT IS DIRECTED THAT:

The Proposed Form of Order dated 8 March 2012 and marked ‘Exhibit A’ be placed upon the Court file.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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