Re Smith, Gregory Douglas - [1996] FCA 1076

IN THE FEDERAL COURT OF AUSTRALIA No QB 1273 of 1988
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE
STATE OF QUEENSLAND

RE:GREGORY DOUGLAS SMITH and
CHRISTINE ANNE SMITH

Bankrupts

EX PARTE:INSPECTOR-GENERAL IN BANKRUPTCY

Applicant

AND:EDWARD JOHN BROWN

Respondent

MINUTES OF ORDERS

JUDGE MAKING ORDER:  Drummond J
DATE OF ORDER:  5 December 1996
WHERE MADE:  Brisbane

THE COURT DECLARES THAT:

The condition of the respondent’s bond entered into by him under s 155 the Bankruptcy Act 1966 (Cth) has been contravened.

THE COURT ORDERS THAT:

1. The respondent pay to the Official Trustee the sum of $53,524.78 to be disbursed by the Official Trustee for the benefit of the estates listed in schedule A to Mr Carrick's affidavit filed 11 September 1996 and to be disbursed in accordance with that schedule, save that $9,087.50 only is to be disbursed for the benefit of the Flynn estate.

2. The respondent pay to the Commonwealth of Australia the sum of $100,000, being the amount of the bond entered into by him under s 155 the Bankruptcy Act 1966 (Cth).
3. The costs of and incidental to this application be paid by the respondent.
NOTE:Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA No QB 1273 of 1988
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE
STATE OF QUEENSLAND

RE:GREGORY DOUGLAS SMITH and
CHRISTINE ANNE SMITH

Bankrupts

EX PARTE:INSPECTOR-GENERAL IN BANKRUPTCY

Applicant

AND:EDWARD JOHN BROWN

Respondent

CORAM:Drummond J
DATE:5 December 1996
PLACE:Brisbane

REASONS FOR JUDGMENT

This is an application by the Inspector-General in Bankruptcy for orders against the respondent, who was formerly a registered trustee in bankruptcy. The orders are sought on the grounds that the respondent committed various breaches of duty as trustee. The respondent did not seek to renew his registration as a trustee in bankruptcy once it expired in September 1991. No material has been filed by the respondent, although he is represented today by his solicitor, who has made submissions on his behalf. There are, however, in the affidavit material filed on behalf of the applicant, reports of certain self-serving statements made to the
applicant's representative by the respondent.
The proceedings were commenced as long ago as 22 October 1991. On 8 April 1992, Spender J made three orders, the first of which required the respondent to deliver to the Official Receiver all books, documents, papers and accounts in his possession, in connection with his administration of certain identified estates. The second was an order that the Official Receiver conduct an audit of all such records received from the respondent for the purpose of identifying payments of money in respect of the said estates from his trust account without proper authority or contrary to the provisions of the Bankruptcy Act 1966 (Cth). Thirdly, an order was made that, where it appears to the Official Receiver that fees have been taken without authority in the administration of any such estate, the matter be referred to the Registrar in Bankruptcy…

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.

Keep reading for free

Create a free CaseChat account to read Re Smith, Gregory Douglas and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [1996] FCA 1076
Decision Date: 5 Dec 1996

CaseChat Overview and Summary

This case involved an application by the Inspector-General in Bankruptcy against Edward John Brown, a former registered trustee in bankruptcy, for orders based on alleged breaches of duty. The application was heard by Drummond J in the Federal Court of Australia. The central issue before the court was whether the respondent had breached his duties as a trustee in bankruptcy and, if so, what orders should be made against him.

The respondent had failed to renew his registration as a trustee in bankruptcy, which expired in September 1991. The court found that the respondent had committed various breaches of duty, including maintaining only one bank account for all bankruptcy, Part X, and company liquidation administrations, rather than separate trust accounts as required by the Bankruptcy Act. This failure allowed the respondent to overdraw accounts in respect of individual administrations, which should never occur under proper compliance with the Act. The court also found that the respondent had drawn fees in excess of what was fixed by the Registrar and had charged for work done prior to bankruptcy when there was a priority claim by the Deputy Commissioner of Taxation.

The court accepted that the respondent had relied on a statement from the CCH Australian Insolvency Management Practice, but this was inconsistent with the Australian Taxation Office's practice at the relevant time. Additionally, the respondent had withdrawn cash from a debtor's business for services performed before he became the controlling trustee and had charged fees for assisting with the creditors' voluntary winding up of a company without proper approval. The court found these actions to be breaches of duty under section 176(1) of the Bankruptcy Act.

Given these findings, the court ruled that the respondent had breached the conditions of the bond he entered into under section 155 of the Bankruptcy Act. The court ordered that the respondent pay to the Official Trustee $53,524.78 to be disbursed for the benefit of the estates listed in the schedule to Mr Carrick's affidavit. The court also ordered the respondent to pay the Commonwealth of Australia $100,000, the amount of the bond. The respondent was further ordered to pay the costs of and incidental to this application.

Orders