Re Athanassopoulos, Constantinos
[1982] FCA 104
•19 MAY 1982
Bankruptcy
FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
Lockhart J.(1)
Bankruptcy - Fees of official receiver - Scale of fees - Amendment - Whether fees payable under old scale, new scale or some combination of scales - Distinction between repeal, re-enactment and amendment discussed - Entitlement to payment of fees of official receiver - Bankruptcy Act 1966 (Cth), ss. 50, 109, 140, 145, 163, 315 (4) - Bnakruptcy Rules, r. 182 - Statutory Rules 1981 No. 304.
On 5th September, 1980, a sequestration order was made against the estate of the bankrupt. Before 1st November, 1981, the sum of sixty-seven dollars had been realized in the administration of the estate. On 1st November, 1981, Statutory Rules 1981 No. 304 came into operation which, inter alia, increased the fees payable to the official trustee as trustee of the estate of a bankrupt. On and after 1st November, 1981, a further sum of $2,700 was realized in the administration.
On an application by the official trustee for directions as to the appropriate scale of fees and percentages payable to him under the rules,
Held, that the official trustee had no right to a fee in his administration of the estate of the bankrupt until he completed that administration which took place after 1st November, 1981. He was therefore entitled to payment of his fees for the whole of his work according to the scale prescribed by r. 182 of the Bankruptcy Rules as amended by Statutory Rules 1981 No. 304.
Re Marc; Ex parte Stapleton (1968) 12 FLR 48, referred to.
SYDNEY, 1982, April 21; May 19. #DATE 19:5:1982
APPLICATION.
Ex parte application by the official trustee for directions.
The facts are set out in the judgment below.
D.N. Angel Q.C. and M. Barrett, for the applicant.
Cur. adv. vult.Solicitors for the applicant: Kelly & Co. D. LEVIN
May 19.
The following judgment was delivered.
LOCKHART J. A question has arisen in the administration of the bankrupt estate of Constantinos Athanassopoulos which is of general importance to the Official Trustee in Bankruptcy (the official trustee), creditors and bankrupts throughout Australia. The question concerns the scale of fees payable to the official trustee in relation to the administration of the estate. (at p79)
2. 1980-1981 saw many and substantial amendments made to the Bankruptcy Act 1966 (Cth) (the Act); sometimes I will, for convenience, refer to it as "the 1966 Act", and the Bankruptcy Rules. The problem has arisen in the present case because one of the amending statutory rules which dealt with fees payable to the official trustee did not contain transitional or saving provisions. (at p295)
3. The remuneration of the official trustee is governed by s. 163 (1) of the Act which provides: "(1) Where the Official Trustee is the trustee of the estate of a bankrupt, the Official Trustee shall be remunerated as prescribed." (at p295)
4. Rule 182 of the Bankruptcy Rules prescribes the fees payable to the official trustee. It was amended by Statutory Rules 1981 No. 305 which came into operation on Friday 30th October, 1981; but that amendment is not relevant to the question before me. I mention it because it has been the source of some confusion in relation to the question which arises here principally due to its close proximity to the relevant amendment, namely, the amendment made by Statutory Rules 1981 No. 304 which came into operation on Sunday 1st November, 1981. Before this last-mentioned amendment, r. 182, so far as relevant, read as follows:
(2) Where the Official Trustee -5. Amending Statutory Rules 1981 No. 304 increased the fees payable to the official trustee by providing, so far as relevant, as follows:
(a) acts as trustee of the estate of a bankrupt or a deceased person in respect of whose estate an order for administration has been made under Part XI of the Act;
(b) takes control of the property of a debtor by virtue of a direction of the Court under section 50 of the Act; or
(c) acts as controlling trustee, or as trustee as the result of a deed of assignment or deed of arrangement, under Part X of the Act, the Official Trustee is entitled to receive -
(d) if the prescribed amount in respect of the estate or the debtor does not exceed $1,000 - a fee of $150;
(e) if the prescribed amount in respect of the estate or the debtor exceeds $1,000 but does not exceed $20,000 - a fee equal to the sum of $150 and an amount equal to 10 per centum of the amount by which the prescribed amount exceeds $1,000;
(f) if the prescribed amount exceeds $20,000 but does not exceed $40,000 - a fee equal to the sum of $2,050 and an amount equal to 7 1/2 per centum of the amount by which the prescribed amount exceeds $20,000; or
(g) if the prescribed amount exceeds $40,000 - a fee equal to the sum of $3,550 and an amount equal to 5 per centum of the amount by which the prescribed amount exceeds $40,000.
(3) Where the Official Trustee carries on the business of a bankrupt or deceased person or, having been directed to take control of the property of a debtor under section 50 of the Act, carries on the business of the debtor, the Official Trustee is entitled to receive a fee calculated at the rate of 2 1/2 per centum of the amount received by him in the course of carrying on the business of the bankrupt, deceased person or debtor.
(4) For the purpose of sub-rule (2), the prescribed amount in respect of an estate or of a debtor is an amount ascertained by deducting from the amount realised or brought to credit by the Official Trustee in the estate or in relation to the debtor any amounts paid to secured creditors in respect of their securities and any amounts paid by the Official Trustee in carrying on the business of the bankrupt, deceased person or debtor." (at p296)
"3. Rule 182 of the Bankruptcy Rules is amended -
(a) by omitting from paragraphs (2) (d) and (e) '$150' (wherever occuring) and substituting '$1,000';
(b) by inserting in paragraphs (2) (f) and (g) 'in respect of the estate or the debtor' after 'if the prescribed amount' (wherever occurring);
(c) by omitting from paragraph (2) (f) '$2,050' and substituting '$2,900'; and
(d) by omitting from paragraph (2) (g) '$3550' and substituting '$4,400'." (at p296)
6. Sub-rules (3) and (4) of r. 182 remain unaffected by the amendment. (at p296)22. Clearly enough in the case of Roberts the realization date had not been reached by 4th March, 1968, and the liability to pay fees had not then accrued. In the case of Marc, on the other hand, the material before me suggests that by 4th March, 1968, the realization of the estate was complete and the liability to pay fees had accrued." (at p299)7. I shall refer to the fees payable to the official trustee pursuant to r. 182 (2) before the amendment which became operative on 1st November, 1981, as "the old scale" and to those payable after that date as "the new scale". (at p296)
8. A sequestration order was made in Adelaide on 5th September, 1980, against the estate of Constantinos Athanassopoulos. Before 1st November, 1981, the sum of sixty-seven dollars (I have for reasons of convenience stated figures in terms of the nearest dollar) was realized in the administration of the estate and thereafter there were further realizations totalling $2,700 making a grand total of $2,767. (at p296)
9. On 29th March, 1982, Fisher J. made an order discharging Constantinos Athanassopoulos from bankruptcy but suspended the operation of the order until 1st April, 1982, and payment of the sum of $950 to the official trustee as trustee of the estate. The sum of $950 was paid to the official trustee on 29th March, 1982. (at p296)
10. The sum of $950 was the amount which the official receiver, on behalf of the official trustee, estimated as being required by the estate, in addition to moneys already realized, to pay the one proved creditor in the estate 100 cents in the dollar, the petitioning creditor's taxed costs, certain incidental expenses and the fees of the official trustee calculated on the assumption that the new scale applied to the whole realization in the estate. As the validity of this assumption was by no means clear and as Constantinos Athanassopoulos was able to contribute the sum of $950, Fisher J. decided not to delay the making of the order of discharge until the question of the official trustee's fees had been decided which would necessarily have involved an adjournment of the application for discharge; but to make the order of discharge in the terms mentioned earlier so that Constantinos Athanassopoulos would be discharged from bankruptcy upon payment of $950 and the question relating to fees could be dealt with later. It is this question that comes before me. (at p297)
11. It is difficult to formulate the question in precise terms for reasons which will become apparent later in my reasons; but the question may be stated in general terms as whether the fees payable to the official trustee in respect of the estate of Constantinos Athanassopoulos are payable under the old scale or the new scale or by some combination of the two; for example, under the old scale in respect of work done up to 1st November, 1981, and under the new scale in respect of work done after that date. (at p297)
12. As Statutory Rules 1981 No. 304 contained no transitional or saving provisions it is necessary to determine whether it repealed the old scale or merely amended it. (at p297)
13. Although Statutory Rules 1981 No. 304 are rules, not regulations, they are deemed to be "Regulations" within the meaning of that word in s. 50: see s. 315 (4) of the Act. (at p297)
14. Statutory Rules 1981 No. 304 in terms amended r. 182 and other bankruptcy rules; but they said nothing about repeal. The distinction between the repeal and re-enactment of a statute and the amendment of a statute is long-established: see Beaumont v. Yeomans (1934) 34 S.R. (N.S.W.) 562; Mathieson v. Burton (1971) 124 C.L.R. 1; Attorney-General for New South Wales (at the relation of McKellar) v. Commonwealth (1977) 139 C.L.R. 527. (at p297)
15. In Beaumont v. Yeomans Jordan C.J. said, at pp.569-570: "Whether an Act has been repealed or amended is a matter of substance and not one of form only. One Act may purport to amend another by repealing part of it. On the other hand, an amendment may be effected either by the addition to a section of a particular phrase, or by the repeal of the section and the substitution of the same words with the phrase added . . . . And where a provision of an Act is repealed and re-enacted in a form which enlarges its scope, this has been construed as amounting in substance to an amendment, because the new provision has been regarded as intended to be retrospective so far as it is merely repetition, and prospective so far as it is new: Ex parte Todd (1887) 19 Q.B.D. 186." (at p298)
16. There is a conflict of opinion as to whether the omission of a statutory provision and its re-enactment in altered form may amount in substance to an amendment rather than a repeal. The divergence of opinion is referred to and discussed by Gibbs J. in Mathieson v. Burton, at pp.20-21. There is also a conflict of opinion as to whether a later statute which provides for the addition of particular words to an earlier statute, but which otherwise remains unaffected, amends or repeals the earlier section: see the judgment of Windeyer J. at pp.9-12 and of Gibbs J. at p.21 in Mathieson v. Burton. (at p298)
17. The amendments made by Statutory Rules 1981 No. 304 do not enter this area of controversy. In substance Statutory Rules 1981 No. 304 repealed part of r. 1982 by omitting the old scale and substituting the new scale. (at p298)
18. The old scale will continue to apply to work done by the official trustee in the administration of the estate before 1st November, 1981, if he was entitled then to payment of fees calculated on the old scale which answers the description of a "right . . . acquired (or) accrued . . ." under the Act or the Bankruptcy Rules (Acts Interpretation Act 1901 (Cth), s.50). (at p298)
19. The only reported case which appears to bear directly on the question is a decision of the Federal Court of Bankruptcy (Gibbs J.) in Re Marc; Ex parte Stapleton (1968) 12 F.L.R. 48. In that case, the official reciever applied to the court for directions on fees and percentages payable to the Registrar and the official receiver in respect of two bankrupt estates the administration of which was incomplete on 4th March, 1968, being the date when the 1966 Act came into operation and the 1924 Act was repealed. In one case, all assets in the estate were realized before 4th March, 1968, although no dividend had been declared. In the second case a sum of money had been realized in the estate before March 1968 but it was expected that the bankrupt would bring in a further sum of money in an endeavour to pay his creditors in full. (at p298)
20. The sequestratrian orders were made under the Bankruptcy Act 1924 and the relevant rule which fell for consideration by his Honour was r.66 of the rules made under that Act (the equivalent of r.182 under the 1966 Act). (at p298)
21. There is no provision in the repealed Act or rules thereunder that expressly prescribed the time at which the fees or percentages became payable. His Honour said, at p.50, that the relevant provisions of r.66 which included the Third Schedule to the rules: ". . . required the fees or percentages to be calculated on the amount realized or brought to credit after deducting sums paid to secured creditors in respect of their securities and sums spent in carrying on the business of the bankrupt. . . " His Honour said, at pp. 50-51, that in those circumstances: " . . . it is clear that the fees or percentages could not become payable, at earliest, until the time at which realization of the estate had been completed, and no amount remained to be brought to credit in the estate, which I shall call 'the realization date'. In the absence of any other indication either in the Act or in the rules it ought to be inferred that the liability to pay fees and expenses . . . accrued on the date on which it became possible to assess the amount of those fees and percentages which would be the realization date, if the amounts to be deducted were then known. (at p299)
23. His Honour referred to rr.181(1) and 182(2) of the Bankruptcy Rules 1968 which took the place of the former r.66 and item 14(b) of table A and item 5 of table B of the Third Schedule to those rules and then went on to say, at pp.52-53:
"Under r.181 it appears clear that the liability to pay the fee accrues upon the declaration of a dividend by the official receiver or upon his ceasing to act as trustee of the estate. Under r.182(2) it is not provided when the official receiver becomes entitled to receive the fee or percentage but for reasons similar to those given in connexion with item 14(b) of Table A and item 5 of Table B it should be inferred that he is not entitled to receive this sum before the realization date. Of couse the official receiver in effect pays himself or retains the amount of this fee or percentage out of the estate, but the burden of the fee or percentage is borne by the bankrupt or by the creditors, depending on whether or not the estate yeilds 100 cents in the dollar. "The questions that now arise are whether the fees and percentages are payable in accordance with the repealed scale, or in accordance with the new scale, or in accordance with both scales, in the first case, if the realization date had arrived before 4th March, 1968, and, in the second case, if that date had not then arrived although much of the realization of the estate had been completed before that date. "If at the time of the repeal of the Bankruptcy Act 1924-1965 there had accrued a liability to pay fees or percentages in accordance with the repealed scale this liability will not have been affected by the repeal unless the Bankruptcy Act 1966 revealed a contrary intention (see ss.8 and 50 of the Acts Interpretation Act 1901-1966). If on the other hand no liability to pay fees or percentages had then accrued, no such liability could thereafter arise under the repealed regulations unless the Bankruptcy Act 1966 so provided. The decision of the present application therefore depends on the effect of the Bankruptcy Act 1966 and in particular on the effect of the transitional provisions contained in Pt XV." (at p300)24. His Honour then referred to s.299 (in Pt XV) of the 1966 Act whereby costs and fees applicable to proceedings and matters under the repealed Act of 1924 that took place after the commencement of the repealing Act by virtue of Pt XV were those applicable to like proceedings under the repealing Act. (at p300)
25. His Honour, at p.54, said of this section: "The intention revealed by s.299 is that in respect of anything done by virtue of the transitional provisions after 4th March, 1968, the costs and fees in accordance with the new scale should be applicable and this implies that in respect of things done before 4th March, 1968, the costs and fees under the repealed scale should be payable." (at p300)
26. His Honour held that, in the case of the estate in which, prior to the commencement of the 1966 Act all assets had been realized but no dividend had been declared, fees and percentages must be calculated in accordance with the rules made under the Bankruptcy Act 1924. He held that in the case of the estate in which, prior to the commencement of the 1966 Act, the realization had been only partly completed, in respect of assets realized before the commencement of the 1966 Act, fees and percentages must be calculated in accordance with the rules made under the Bankruptcy Act 1924, and in respect of assets realized after that date, rr.181 and 182 of the rules made under the 1966 Act should be applied. (at p300)
27. His Honour then referred to s.300 of the 1966 Act which provides:
"300. (1) Where any difficulty arises in the application to a particular matter of the provisions of this Act or of the repealed Act by reason of the operation of this Part, the Court may, on the application of an interested person, make such order as it thinks proper to resolve the difficulty.28. His Honour said, at p.55: "When the realization of an estate has proceeded under the repealed Act, and then is continued by virtue of the transitional provisions of the new Act, it would be a very unjust result if the fees under the new scale, which is substantially higher than the repealed scale, were payable in respect of the whole realization. This would in substance amount to the application, retrospectively, of a heavier financial burden either on the bankrupt or the creditors, depending on whether or not the estate realized 100 cents in the dollar, and it is not to be presumed, in the absence of clear words, that the legislature intended to bring about such a result." (at p301)
(2) An order so made has effect notwithstanding anything contained in the repealed Act or in this Act." (at p300)
29. His Honour then made an order under s.300 of the 1966 Act that, for the purposes of the application of r.182, assets realized before and after the commencement of the 1966 Act should be aggregated. (at p301)
30. There are two essential differences between Marc's case and the present case. First, it was s.299 which enabled Gibbs J. to hold that the official receiver should be paid for work done in the administration of the estates in question according to the scale of fees in force at the time the work was done. In the case before me there is no equivalent of s.299 in Statutory Rules 1981 No. 304 or in any other rules or section of the Act which can be relied on. The consequence of Gibbs J.'s view that the official receiver (the official trustee for present purposes) is not entitled to payment of fees before the realization of the estate has been completed and no amount remains to be brought to credit in the estate, if applied in the present case, is that the official trustee had no right to a fee until all assets were realized and this was after 1st November, 1981. In the result the official trustee would be entitled to payment of the higher fees assessed in accordance with the new scale as to work done both before and after 1st November, 1981. (at p301)
31. The second difference between Marc's case and the present case is that there is no equivalent of s.300 in Statutory Rules 1981 No. 304 or any other rules or any section of the Act which is available in the present case. (at p301)
32. The Bankruptcy Amendment Act 1980 contained a provision similar to s.300 of the Act (see s.176) but it applies only in the case of difficulties arising in the application to an estate of the provisions of the Act by reason of the operation of the amending Act. Plainly this is of no assistance here. (at p301)
33. The absence of a provision equivalent to s.300 is important because, even if the official trustee were entitled, by operation of s.50 of the Acts Interpretation Act 1901 (Cth), to payment of fees calculated under the old scale for work done before 1st November, 1981, and under the new scale for work done after that date, there would still remain the problem of determining how the new scale is to be applied. The problem is best explained by giving some examples of the difficulties that arise depending on the manner in which the fees are assessed. (at p301)
34. If the new scale only were applied to the whole realization, the official trustee's fees would be $1,177 (that is, the whole of the first $1,000, and ten per cent of the remaining $1,767-$177). (at p301)
35. If the old scale were applied to the amount realized before 1st November, 1981, and the new scale to the amount realized after that date, and the amount realized after that date is part only (as it is here) of the amount realized in the estate, justice would seem to require that recognition be given to this fact, and that some allowance be made for the fact that the new scale imposes fees on the first $1,000 realized at a rate considerably higher than that applicable to the balance of the amount realized (see per Gibbs J. in Marc's case, at p.57). However, as sixty-seven dollars was realized before 1st November, 1981, and $2,700 after that date, one method of calculation would be to apply the new scale to the $2,700 without aggregating that sum and the sixty-seven dollars realized before 1st November, 1981. In the result the fees payable would be sixty-seven dollars (the old scale) plus $1,000 (the whole of the first $1,000 realized under the new scale) plus $170 (ten per cent of the remaining $1,700), a total of $1,237. (at p302)
36. Another method of calculation would be to apply the old scale as to sixty-seven dollars realized before 1st November, 1981, and the new scale to the $2,700 realized after that date; but on the basis that the sixty-seven dollars and $2,700 should be aggregated; so that the sixty-seven dollars, being less than $1,000, is assumed to be all the fees payable to the official trustee for the first $1,000 realized whether before or after 1st November, 1981; and the new scale only operates on the balance of $1,700, giving a further fee of ten per cent of $1,700 namely $170, a grand total of $237. (at p302)
37. Yet another approach would be to apply the old scale to the sixty-seven dollars realized before 1st November, 1981, and the new scale seven dollars realized before 1st November, 1981, and the new scale to the $2,700 realized after that date; also on the basis that the two sums be aggregated but so that the new scale should apply to entitle the official trustee to the first $1,000 plus ten per cent of the $1,700 which remains less sixty-seven dollars namely ten per cent of $1,633 that is $163, a grand total of $1,230. (at p302)
38. No doubt human ingenuity can conceive of other possible applications of the old and new scales where, as in the present case, a great deal less than $1,000 was realized before 1st November, 1981, and most of the realization (in this case $2,700) was made after that date. (at p302)
39. The critical matter is that there is nothing in the amending Statutory Rules 1981 No. 304 or in the Act itself or the Bankruptcy Rules which indicates how the new scale is to be applied, and, in a case such as the present, considerable difficulties arise. (at p302)
40. Thus, even if I were to differ from Gibbs J. as to when the official trustee becomes entitled to fees, the difficulty surrounding the application of the new scale would remain and there is no way that I can solve them in the absence of express power to do so. Gibbs J. had the benefit of s.300; but I have no equivalent power. (at p303)
41. It is true that when the language of a statute admits of two possible constructions one of which would lead to obvious injustice or absurdity the courts act upon the view that such a result could not have been intended unless the intention had been manifested in express and plain words: Hill v. East and West India Dock Co. (1884) 9 App. Cas. 448; Railton v. Wood (1890) 15 App. Cas. 363; Coutts & Co. v. Inland Revenue Commissioners (1953) A.C. 267, at p.281 per Lord Reid. But this rule of statutory interpretation would not, in my view, enable me to fill in the gaps left in the Bankruptcy Rules by the amending Rules No.304 as to how the new scale is to be applied in the multifarious situations that may arise merely because I think that one approach may be more just than another. It is for the Government to remedy both difficulties which have been created. (at p303)
42. In my opinion it is desirable, where a single judge of the Federal Court or of a State Supreme Court has construed a statute, regulation or rule in a particular way that another single judge should adopt that construction unless he is convinced that it is plainly untenable. This is particularly so in the case of bankruptcy legislation and bankruptcy rules where it is desirable that there be uniformity between judges and courts throughout Australia, especially where they relate to practical matters of administration of estates: see Leary v. Federal Commissioner of Taxation (1980) 41 F.L.R. 80 per Wickham J.; Marbutt Gunnerson Industries Pty. Ltd. v. Federal Commissioner of Taxation (1981) 55 F.L.R. 49; Camden Park Estate Pty. Ltd. v. O'Toole (1969) 72 S.R. (N.S.W.) 188, at p.190; Zibillari v. The Queen (1980) 50 FLR 274 (at p303)
43. Accordingly I propose to follow the decision of Gibbs J.; but I should say that I see some force in the contrary view, namely, that the official trustee has a right to a fee which accrues as he performs the work of administration of a bankrupt's estate, and the right matures into a right to receive payment either once the realization of the estate has been completed or once the prescribed amount (the amount realized less appropriate deducations) can be calculated and that this accruing right falls within s.50 of the Acts Interpretation Act. When r.182 is considered together with ss.109, 140 and 145 of the Act this view gains additional support. Section 109 provides that the trustee shall, before applying the proceeds of the property of the bankrupt in making any other payments, apply those proceeds in the order of priority there prescribed, the first of which is: "(a) first, in the order prescribed by the rules, in payment of the taxed costs of the petitioning creditor and the costs, charges and expenses of the administation of the bankruptcy, including the remuneration and expenses of the trustee." Section 140 requires the trustee to declare and distribute dividends amongst creditors who have proved their debts "with all convenient speed". Section 145 is directed to the declaration and distribution of a final dividend. (at p304)
44. When r.182 is read in the light of these sections it lends some support to the view that the official trustee has a right to fees from time to time during the course of the administration of the estate of the bankrupt provided the prescribed amount (the amount realized less appropriate deductions) can be ascertained at that time. (at p304)
45. It follows that the official trustee had no right to a fee in his administration of the estate in the present case until he completed that administration which was after 1st November, 1981, so that he is entitled to payment of his fees for the whole of his work in the estate according to the new scale. (at p304)
46. The result is unjust. I reach the conclustion with regret. It is wrong that the official trustee be paid for work done by him otherwise than on the basis of the scale of fees in force at the time he did the work. The two difficulties to which I have referred seem to me to be insurmountable. They call for urgent corrective action by the Australian Government. (at p304)
47. In view of the form the proceedings took before me there is no need for any formal order or declaration. I assume that the official trustee will act in accordance with my findings. If the Government passes appropriate amending rules and does so with retrospective operation, the official trustee doubtless will hold the sum of $950 in the meantime and be in a position if necessary to make any appropriate repayment to Constantinos Athanassopoulos. No order for costs was sought by the official trustee in the matter before me and there was no appearance by or on behalf of Constantinos Athanassopoulos or any other person. (at p304)
I make no orders.
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