Quirk v Hampshire
[2009] FMCA 545
•2 June 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| QUIRK v HAMPSHIRE | [2009] FMCA 545 |
| BANKRUPTCY – Application to set aside sequestration order made by Registrar – petitioning creditor consents – agreement for payment of debt – no opposition from other creditors – trustee put on notice promptly – trustee entitled to some remuneration, expenses and legal costs – conditional orders made. |
| Federal Magistrates Act 1999 (Cth), s.104 Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth), r.7.06(6) |
| Pattison v Hadjimouratis (2006) 155 FCR 226 |
| Applicant creditor: | WAYNE QUIRK |
| Respondent debtor: | ROBERT HAMPSHIRE |
| File Number: | SYG3110 of 2008 |
| Judgment of: | Smith FM |
| Hearing date: | 2 June 2009 |
| Delivered at: | Sydney |
| Delivered on: | 2 June 2009 |
REPRESENTATION
| Counsel for the Applicant: | Ms E Glover |
| Solicitors for the Applicant: | Yates Beaggi Lawyers |
| Counsel for the Respondent: | Ms S Nash |
| Solicitors for the Respondent: | Sally Nash & Co |
| Counsel for the Trustee: | Mr J Baird |
| Solicitors for the Trustee: | Clinch Long Letherbarrow |
ORDERS
The application for review is allowed.
The sequestration order made on 20 February 2009 is set aside.
The petition is dismissed.
The respondent debtor must pay the applicant’s costs in the petition and in the application to set aside, including reserved costs, as agreed or taxed under the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
The Court notes that the parties have agreed that, in consideration of orders 1, 2 and 3, the Respondent:
(a)Agrees to pay the applicant the following sums:-
$10,000.00 by 2 June 2009 receipt of which is acknowledged
$5,000.00 by 4 June 2009
$10,000.00 by 30 June 2009
$10,000.00 by 30 July 2009
$7,528.45 by 30 August 2009
(b)To cause Callbank International Pty Limited to sign a mortgage to the applicant securing the payments in paragraphs 5(a) and 4 over the property in folio identifier 85/786964 the mortgage to provide that if any of the payments are not made in accordance with these orders then the applicant will be able to immediately enforce the mortgage.
(c)To cause a company resolution to be passed by Callbank International Pty Limited adopting the above mortgage to be passed by 3 June 2009.
(d)To give to the applicant’s solicitor the Certificate of Title for folio identifier 85/786964 which will be returned upon payment of the sums in paragraphs 4 and 5(a).
The respondent debtor must pay the trustee’s remuneration and expenses incurred under the sequestration order up to and including 13 March 2009.
The respondent debtor must pay the trustee’s legal costs in the proceedings, including reserved costs, as agreed or taxed under the Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth).
The applicant must provide a copy of this order to the Official Receiver within 2 days.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG3110 of 2008
| WAYNE QUIRK |
Applicant
And
| ROBERT HAMPSHIRE |
Respondent
REASONS FOR JUDGMENT
(revised from transcript)
This is an application to set aside a sequestration order made by the Registrar in the absence of an appearance by the debtor on 20 February 2009. The application to set aside that order was filed within the times required by the Rules, and was served on the trustee on or before 13 March 2009. The application to set aside was then adjourned several times in the Registrar’s list.
The application was referred to me today, on the basis that the creditor has arrived at consent orders with the debtor, which provide for the payment of the debt and the setting aside of the sequestration order. There were, however, outstanding issues in relation to the trustee’s remuneration and expenses of administration.
I am satisfied that all other creditors known to the debtor and to the trustee were made aware of the application, and no creditor has sought to appear to oppose the making of the consent orders. There is some correspondence suggesting that one, or maybe two, of the other creditors has expressed lack of support for the annulment or setting aside of the sequestration order. However, it is not clear to me that they were properly informed about the nature of what has been happening in the Court. More importantly, they have not sought to appear to oppose the application, nor to be substituted as petitioner.
The ground of the application to set aside the sequestration order is, in effect, that if the debtor had been given more opportunity to discuss his debt with the petitioning creditor before the making of the order, an agreement would have been arrived at for the payment of the debt. That in fact has now occurred, and the petitioner today no longer presses for the making of a sequestration order, and consents to the setting aside of the previous order.
As is abundantly clear from many cases, the Court on review of a Registrar’s sequestration order sits de novo in its consideration of the petition, although it has an amplitude of powers under s.104 of the Federal Magistrates Act 1999 (Cth), including at times the power to prefer to annul rather than to set aside a sequestration order (see Pattison v Hadjimouratis (2006) 155 FCR 226).
In the present case, I am satisfied that it is appropriate to set aside the sequestration order, on the basis that the application was brought promptly, an agreement has been arrived at with the petitioner, there are no other creditors of major substance, and there is no creditor wishing to be substituted as petitioner or to establish insolvency on the part of the debtor.
An appearance was made today on behalf of the trustee appointed pursuant to the sequestration order, wishing to be heard in relation to his remuneration, costs and expenses. He has filed an affidavit sworn on 11 May 2009, which attaches correspondence sent to the debtor and some creditors, with some unnecessary duplication of photocopying, and an extract from the trustee’s accounting system to itemise the work done in relation to the matter.
A trustee needs to exercise caution in incurring expenses of administering an estate where he has knowledge of an application to set aside a default sequestration order (cf. Pattison v Hadjimourtis (supra) at [76]). In the present case, it is not clear to me that the expenses of the trustee’s administrative activities after 13 March 2009 should be reasonably met by the debtor. However, I do not need to form any opinion about this. Ultimately, in their submissions before me, the debtor did not oppose the making of an order by the Court for the payment of the trustee’s remuneration and expenses of administration up until that date, and the trustee did not press for an order for their payment by the debtor in relation to the subsequent period. I accept that it is appropriate to order the payment of that remuneration and expenses as a condition of setting aside the sequestration order, in the circumstances of the matter.
The remaining dispute between the trustee and the debtor concerned payment of the trustee’s legal expenses incurred in relation to the instructing of a solicitor and counsel, the preparation of the trustee’s affidavit, and their appearances in the application to set aside. Particular objection was taken, that the filing of the affidavit was unreasonable in circumstances where the Court did not make a direction under Federal Magistrates Court (Bankruptcy) Rules 2006 (Cth) r.7.06(6). That rule places an obligation on a trustee to prepare a report if so directed, but it does not necessarily imply that it would be inappropriate in all cases for a trustee to file an affidavit reporting on his administration, if not directed. The rule suggests that this should not be done as a matter of course, but allows that this might be appropriate in special circumstances. In particular, it might become appropriate if it is reasonable for a trustee to seek the Court’s assistance to recover remuneration and expenses, and if this is not the subject of an agreement with the debtor or creditor. It is possible that the present case also presents justification for an affidavit, arising from the period of adjournments before the Registrar in circumstances that are not clear to me from the file but may be better understood by a Registrar.
In all the circumstances shown in the material before me, I have decided that it was appropriate for the trustee to be legally represented in the proceeding, including in relation to today’s appearance. As to other aspects of the legal expenses of the trustee, including the reasonableness of all or some of his expenses in filing the affidavit, I consider that they would be most appropriately addressed, if agreement cannot be reached, by a Registrar on taxation unguided by any particular opinions that I would express in this judgment. If a further dispute arises from the Registrar’s decisions on taxation, the matter can be referred back to me for review.
For the above reasons, I propose to make orders in terms of the short minutes which I shall initial and place with the papers. They shall incorporate the parties’ agreement recorded in the minute of consent orders which is Exhibit “A”.
I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Smith FM
Associate: Lilian Khaw
Date: 12 June 2009
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