Re Close, Frederick trading as F.B. Close Transport Ex Parte Abbott, John Raymond

[1983] FCA 233

Re: FREDERICK CLOSE trading as F.B. CLOSE TRANSPORT
Ex parte: JOHN RAYMOND ABBOTT
No. 430 of 1983
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA
Fisher J.

CATCHWORDS

Bankruptcy - Sequestration Order - Registered Trustees - Two petitions each accompanied by consent to act as trustee - Whether one or more than one consenting trustee appointed by force of law.

BANKRUPTCY ACT 1966 ss.260(1)(c)(i), 260(2), 156A(3)

HEARING

ADELAIDE

#DATE 19:8:1983

ORDER

1. That John Raymond Abbott is the sole trustee of the estate of the bankrupt pursuant to Section 156A(3) of the Bankruptcy Act 1966-19

2. The question of costs of the application for this declaratory order be reserved.

JUDGE1

This is an application by John Raymond Abbott ("the applicant") a registered trustee in bankruptcy and the trustee or one of the trustees, depending on the outcome of these proceedings, of the sequestrated estate of the abovenamed Frederick Close ("the bankrupt") The applicant seeks in form an order that the Registrar issue a certificate of trusteeship pursuant to Section 260(1)(c)(i) of the Bankruptcy Act 1966 ("the Act") showing that the applicant is the sole trustee of the estate of the bankrupt. At the hearing the applicant was represented by counsel, as was the Registrar and another registered trustee, Kevin Michael Pipkin ("Mr. Pipkin") appeared in person. With the consent of all these persons I indicated that I would treat the application as seeking a declaration that the applicant was the sole trustee of the sequestrated estate of the bankrupt. At the conclusion of the hearing I said that it was my intention to make such a declaration and that I would subsequently publish my reasons and make the necessary orders.

The question for determination is whether the applicant is the sole trustee of the estate of the bankrupt, or whether by force of law he became, on the making of the sequestration order, trustee jointly with Mr. Pipkin. The matter arises in the following circumstances.

On 9 March 1983 a petition numbered 202 of 1983 was prepared seeking a sequestration order against the estate of the bankrupt. It was issued by the Shell Company of Australia Limited naming the bankrupt as "Frederick Brian Close trading as F.B. Close Transport" and was based upon a judgment debt in the sum of $16,938. The petition was accompanied by a consent to act as trustee in the prescribed form signed by Mr. Pipkin.

Subsequently on 10 May 1983 another petition numbered 405 of 1983 was presented by Golden Fleece Petroleum Limited wherein the bankrupt was named "Frederick Close". It was based on a judgment debt in the sum of $45,932.35 and was accompanied by a consent to act as trustee in the prescribed form signed by the applicant.

Section 156A(2) and Rule 62B of the Rules under the Act provide that the instrument of consent of a registered trustee under sub-section 156A(1) of the Act shall be in accordance with Form 30B or 30C. Form 30B was the relevant form in the present circumstances and it is as follows:

"Bankruptcy Act 1966 Consent to act as Trustee I, (full name of trustee) of (address of trustee) being a registered trustee within the meaning of section 5 of the Bankruptcy Act 1966 hereby consent to act as trustee of the estate of (full name of debtor) in the event that he becomes bankrupt Dated this day of 19 Signed in my presence Registered Trustee Signature address and occupation of witness." I have added the emphasis.

Each of them the applicant and Mr. Pipkin signed a consent in this form to act as trustee of the estate of the bankrupt, which consent was in each instance filed with the Registrar as provided by s.156A(1) of the Act and rule 12(3)(ba) at the time the particular petition was presented. Likewise a copy of the relevant consent was served on the bankrupt at the time of the service of each of the petitions as required by rule 15(b)(iii).

On 20 June 1983 a sequestration order was made upon the creditor's petition numbered 405 of 1983 presented by Golden Fleece Petroleum Limited. When making the sequestration order the court noted that the applicant had consented to act as trustee of the estate of the debtor.

Subsequently on the same day the petition presented by the Shell Company of Australia was, with an order for costs in favour of the petitioning creditor, dismissed by reason of the fact that a sequestration order had already been made and not for any defect in that petition.

On 24 June 1983 a certificate was issued pursuant to the provisions of s.260(1)(c)(i) of the Act certifying that the applicant and Mr. Pipkin were by force of s.156A(3) of the Act the trustees of the estate of the bankrupt. Section 260(2) provides that this certificate is in all legal proceedings prima facie evidence of the matters stated therein.

The applicant thereupon commenced these proceedings, contending that he was the sole trustee of the estate of the bankrupt. The provisions requiring petitioning creditors to obtain, if possible, the services of a registered trustee and for such trustee to become by force of law trustee of the estate of the bankrupt were inserted in the Act by amending Act No. 74 of 1981, in particular by s.136 thereof.

Section 136 added s.156A to the Act. This latter section is, to the extent relevant, in the following terms:

"156A(1) A registered trustee may, by instrument signed by him and filed with the Registrar, consent to act -

(a) as the trustee of the estate of the debtor specified in the instrument in the event that the debtor becomes a bankrupt; or

(b) as the trustee of the joint and separate estates of such of the debtors specified in the instrument, being members of a partnership or joint debtors who are not in partnership with one another, as may become bankrupts, or, if only one of those debtors becomes a bankrupt, as the trustee of the estate of that debtor. 156A(2) An instrument under sub-section (1) shall be in accordance with the prescribed form. 156A (3) Where -

(a) at the time when a debtor becomes a bankrupt, a registered trustee has, under sub-section (1), consented to act as the trustee of the estate of the debtor and the consent has not been revoked, the registered trustee becomes, at that time, by force of this sub-section, the trustee of the estate of the bankrupt; and

(b) at the time when 2 or more debtors, being members of a partnership or joint debtors who are not in partnership with one another, become bankrupts, a registered trustee has, under sub-section (1), consented to act as the trustee of the joint and separate estates of those debtors and the consent has not been revoked, the registered trustee becomes, at that time, by force of this sub-section, the trustee of the joint and separate estates of those bankrupts. 156A (4) . . . 156A (5) . . . 156A (6) . . . 156A (7) . . . "

Section 156A(3) is the crucial provision for the purposes of this matter in that it provides that when a debtor becomes bankrupt a registered trustee who has consented to act as trustee of his estate becomes, by force of the sub-section, trustee of the estate of the bankrupt. No order or direction of the Court is required nor is the Court expressly empowered to make any order or give any direction. Furthermore the sub-section does not in terms provide for the situation when two or more registered trustees have separately each consented to act as trustee of the estate. It follows that when a number of trustees have consented, on the invitation of different petitioning creditors, no assistance is given by this sub-section as to whether all or, if not all, which trustee, are or is by force of law appointed to the trusteeship.

It was in these circumstances that counsel for the Registrar contended that the wording of s.156A(3) of the Act is not restricted to any particular creditor's petition or any point of time. Thus he contended that upon the making of the sequestration order all registered trustees who have consented in other petitions against the debtor become by force of law trustees jointly with the trustee who has consented in the petition upon which the sequestration order was made. This construction is certainly open on a reading of s.156A(3).

Counsel for the applicant for his part drew attention to the fact that in s.156A and in fact in almost all other relevant sections of the Act the word "trustee" is used in the singular. He contended there was no justification for applying in the circumstances s.23(b) of the Acts Interpretation Act 1901 so that the word "trustee" in the singular would include the plural. Re Pepper (1968-69) 14 F.L.R. 282 a decision of Gibbs J. as he then was, was cited as illustrating circumstances in which, under the Act, a contrary intention appeared in the construction of the word "debtor". This case was cited with approval and applied in Re Forbes (1974-76) 24 F.L.R. 87.

In my opinion a contrary intention can be discerned both in the legislation and on consideration of the balance of convenience. There are many indications in the Act which can be seen as pointing the fact that s.156A(3) contemplates the appointment, by force of the sub-section, of only one trustee. Furthermore it contemplates that the appointed trustee was to be the trustee who had consented in the proceedings on which the sequestration order was ultimately made.

Section 156A, which was inserted to provide for a registered trustee being appointed by force of law the trustee of the estate of the bankrupt, uses at all times the word "trustee" in the singular. Likewise s.55(4A), which prohibits the Registrar accepting a debtor's petition unless a registered trustee consents or he (or the court) is satisfied on one or other of two alternative matters, contemplates the consent of one trustee. Section 158(1) deals quite specifically with the right of the creditors to appoint 2 or more registered trustees, to act jointly or jointly and severally, "to the office of trustee". The latter words indicate that the office of trustee is in the ordinary course and unless the creditors otherwise decide, an office held by one person. Whenever any question of removal of a trustee is under consideration, the Act provides for the appointment of another "in his place".

The tentative conclusion revealed by these provisions is that only one trustee is by force of law appointed trustee of the bankrupt estate. This accords with indications that this sole trustee is the trustee who consents in the proceedings in which the sequestration order is made. These indications are to be found in s.156A(1) and Rule 12(3) which provide that the registered trustee's consent is to be filed with the Registrar by the petitioning creditor at the time of filing the petition. Such filing can not be a general filing in the Registry but is a filing in the file of the proceedings initiated by the creditor who has obtained the trustee's consent. It is when these particular proceedings are before the court that the presence in the file of a trustee's consent is crucial. Unless certain other provisions apply (s.52(1A)(b)(i) or (ii)), s.52(1A) forbids the making of the sequestration order. The requirement that, when the petition is served, a copy of the consent of the registered trustee is also to be delivered to the debtor, has the effect of drawing to the attention of the debtor the name of the trustee who will act and, in my opinion, will act alone, if an order is made on that petition.

There are also indications in the legislation, that should more than one trustee be necessary, the remedy is in the hands of the creditors. The presence of some of the debtors' property in other parts of Australia may persuade the creditors to exercise their powers under s.158 to appoint additional trustees and to decide whether they should act jointly or jointly and severally. This is a far more appropriate procedure from the point of view of the creditors than the limited power to remove unwanted trustees bestowed by s.156A(4).

Considerable practical difficulties arise on the contention that by force of law all registered trustees who have consented and whose consents have been served are by force of law appointed trustees of the bankrupt's estate. A registered trustee may be prepared to consent at the request of a particular creditor but be otherwise disinclined to act. Any number of petitions additional to the one on which the sequestration order has been made may have been presented in registries in other parts of Australia. Some of these petitions may have been served, accompanied by a consent, and some may not have been served. The trustee whose consent has been noted by the court on the making of the sequestration order ("the noted trustee") may be quite unaware of the existence of other petitions containing the consents of other trustees. Yet if they are by force of law appointed trustees, they will hold jointly with the noted trustee the office of trustee. The noted trustee will doubtless be acting improperly if he acts alone and not jointly with the other consenting trustee or trustees of whose existence he may not necessarily be aware.

In my opinion all these difficulties are overcome if the proper construction of the Act is that the trustee whose consent has been filed in and served with the proceedings on which the sequestration order is made is appointed by virtue of s.156A(3) sole trustee of the estate of the bankrupt. Such a construction will not produce any problems to the creditors, who will not have to remove any unwanted trustees but who can appoint additional trustees if required. Moreover the registered trustee who has consented in the proceedings on which the sequestration order is made can attend to his duties as sole trustee without the obligation to search to see if any other trustees have consented. Such searches indeed would not necessarily disclose the presence of other filed consents, particularly as records of consents in lapsed or dismissed petitions would not be likely to be maintained. An additional difficulty will be to identify with certainty the bankrupt with the debtor named in other petitions.

It is therefore appropriate that I declare that the applicant is the sole trustee of the estate of the bankrupt. Counsel have brought in Minutes of the order sought and I order accordingly. The order will bear today's date.