Re Gosden, M.S. Ex parte Department of Taxation

[1992] FCA 940

JUDGMENT No. ... ?..g ... 1 ..... 32-

IN THE FEDERAL COURT OF AUSTRFiLIA )

GENERAL DIVISION	1
STATE OF NEW SOUTH WXES	1 NB 468 of 1975

Re:  MAXWELL SYDNEY GOSDEN

EX parte:  DEPARTMENT OF TAXATION

EX TEMPORE JUDGMENT

EINFELD J SYDNEY 20 OCTOBER 1992

This is an application by a former bankrupt under section 31(f) of the Bankruptcy Act to declare that the Official Trustee should no longer be the registered proprietor of a property at Riverstone which was at the time of his bankruptcy owned by the applicant.

The applicant became bankrupt on 26 November 1975 and was discharged on 2 February 1986. The property concerned was

registered in the name of the bankrupt from and after 3 -- -

October 1946 and has since been and still is his home. On 24 July 1986, some five and a half months after discharge from bankruptcy, the Official Trustee applied pursuant to section 90 of the New South Wales Real Property Act to be registered as proprietor of this land and in due course was so registered. At the present time the Official Trustee is still its registered proprietor.

the Commonwealth Bank but I am informed that the mortgage has	now been paid out. The title deeds, however, remain in the
custody of the bank. Mr Gosden makes effectively two submissions in support of his application. He argues that the

At relevant times the property was subject to a mortgage to

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trustee had no right to be registered as the proprietor of the property involved in the present case aftesk the ban$ruptcy,' in .: ' l . I. 1

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particular not when there was an undisch&ed mortgage on ' e h :

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property as was the case at the time. 'In these zegards

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reliance is placed upon sections 5, 9(3) a&-'.9(3) 6) of the

Trustee Act and sections 8, 9, 58(2), 58(5), 132, 136 and 153 and of the Bankruptcy Act.

Both of these submissions must fail. It is well established that the trustee of a bankrupt's estate is still bound to collect and gather in, after bankruptcy, all of the bankrupt's property that was vested in the trustee before discharge. The property involved in the present case is an example of such property. Discharge releases the bankrupt from debts and permits the obtaining and retention, free of any claim by the trustee, of property subsequently obtained. Discharge does not release the bankrupt from the obligation to assist in the

process of bringing and applying previously owned property to	the benefit of creditors and does not release the trustee from
the responsibilities which this process embodies.
An almost identical matter came before Justice McLelland in the Supreme Court of New South Wales on 24 March this year: Gosden & Anor v Dickson & Anor [l9921 107 ALR 329. One of the plaintiffs was the present applicant, the other was his wife. The case involved an application to extend a caveat entered in favour of the applicant's son as the representative of his mother who was the half owner of the property concerned. As his Honour pointed out, if property owned at and during bankruptcy was not available to the trustee, bankruptcy law would be frustrated almost entirely where the bankrupt's property included ownership of land.
The same may be said for the submission that a trustee has no entitlement to have his name registered as proprietor where there is an undischarged mortgage. That submission, which I have not heard before, would revolutionise bankruptcy law beyond recognition. It would probably be fair to say that mortgages of property are not particularly rare in our society. If the submission were correct, a bankrupt would only need to have property mortgaged to a very small degree to exclude the trustee in bankruptcy from any right to gather it in in the interests of creditors. This would have the effect of denying to creditors what might be substantial equity in real esta+e..owned by the bankrupt and allow the bankrupt to keep that equity, untrammelled by responsibilities to his
creditors.
The application fails and will be dismissed.

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