Re Winter, H.V. v Ex parte Deputy Official Receiver of the Estate of Winter, H.V

[1991] FCA 249

JUDGMENT NO. 5'49 1 % ........ , ....

IN THE FEDERAL COURT OF AUSTRALIA

GENERAL DIVISION

BANKRUPTCY DISTRICT OF THE	) No. W1451 of 1988
STATE OF NEW SOUTH WALES

RE :  HENRY VICTOR WINTER

EX PARTE: DEPUTY OFFICIAL RECEIVER OF THE ESTATE

OF HENRY VICTOR WINTER

m RECEIVED

CORAM:	HILL J
PLACE :	SYDNEY
DATED :	9 APRIL 1991

EX TEMPORE REASONS FOR 1- _. -

The applicant, the Deputy Official Receiver of the Estate of Henry Victor Winter, a bankrupt, applies to the court firstly under s.146 of the Bankru~tcv Act 1966 (Cth) ("the Act") for an order that he may distribute dividends among creditors who have proved their debts in that estate as if the bankrupt had filed a statement of his affairs and those creditors had been stated to be creditors in it.

That application has been served on all persons known to the trustee to be creditors, not all of whom have claimed in the estate. The evidence discloses not only the attempts to locate creditors, but also that the bankrupt had,	the provisions of the income tax law by the Commissioner of	in contravention of a departure prohibition order, made under
Taxation, left Australia. On 1 June 1988, the court issued a warrant for the arrest of the bankrupt. It is understood that the bankrupt is residing overseas and the warrant issued for his arrest is still pending. A statement of affairs has never been filed by the bankrupt.
The circumstances of the case make it appropriate for an order to be made in accordance with s.146 and accordingly I would make the following order:

That the distribution of dividends to the creditors who have proved their debts shall proceed in accordance with Division 5 of Part V1 of the Act, as if the bankrupt had filed a statement of his affairs in accordance with the prescribed form and those creditors had been stated to be creditors in it.

The second application by the Official Receiver

arises under s.109(10) of the Act.

It appears from the evidence that the official Receiver sought indemnities on two occasions from creditors. On both occasions indemnities were given by creditors in accordance with the requests. The following table sets out relevant details.

Indemnifvinq	% of Total debts	Amount of	Amount of
Creditor	of Indemnifvinq	1st Contri-	2nd Contr~-
Creditors as at 15/2/89

1. Austral~an 32.5
Taxation

Off ice

2. shorthaul 10.32

Aviation Services

3. southern 3.00

Air Jet Charter

4. AMA Jet 13.49

Charter

5. Wingway Jet 40.69
Charter

TOTAL 100.00 $15,000.00 $30,000.00

It follows that in total indemnities were given to
the extent of $45,000. The indemnities as will be seen, were

given by the creditors in pro rata proportion to their claims

as at 15 February 1989.

At that date the claim of the Australian Taxation Office was $2,189,568.76. It appears, however, that subsequent to the provision of indemnities, the claim of the Australian Taxation Office has risen to $9,980,404 from the original sum of $2,189,569.

Section 109(10) provides that where in the bankruptcy property is recovered for expenses paid under an indemnity to the trustee, the court may on the application of the trustee or creditor make such orders as it thinks just and equitable with respect to the distribution of that property and the amount of any expenses so recovered with a view to giving the indemnifying creditor or creditors, as the case may be, an advantage over others in consideration of the risk assumed by creditor or creditors.

The present is obviously an appropriate case for such an advantage to be given and it would not, in my view, be appropriate for a distribution of the estate to proceed on the basis that all creditors received a divided pro rata notwithstanding that some of them gave no indemnity to the trustee.

There are two possible ways in which the distribution of the estimated dividend may be calculated. The	first is on the basis of the pro rata proportion of
indemnities based upon claims for debts as at 15 February
1989. If that method is adopted and having regard to the fees of the trustee and fees payable to the registrar in bankruptcy, indemnifying creditors would receive an amount of
10.1 cents in the dollar. The alternative method is to make
the distribution but on the basis so far as the Australian Taxation Office is concerned, that its pro rata contribution is calculated by reference to the amount of its claim as at today's date, namely $9,980,404. In such event, the indemnifying creditors would receive an amount of 4.89 cents in the dollar.
However, it does not seem to me that it would be just and equitable for a distribution to proceed on this latter basis, such a distribution having the consequence that a greater amount of distribution would be available to the Australian Taxation Office than is consistent with the risk assumed by it when it gave its indemnity on the assumption that its claim was $2,189,569.
The appropriate order seems to me in these circumstances to be to treat the balance of the claim of the Australian Taxation Office not taken into account in the giving of its indemnity as if it were the claim of a creditor
who had not in respect of that amount given an indemnity at all. It follows on this basis that in my view the equitable
means of distribution in the circumstances is that after payment of petitioning creditors costs, administration expenses and statutory fees, a dividend be paid to the indemnifying creditors in pro rata proportion to their claims as at 15 February 1989; such a dividend would approximate 10.1 cents in the dollar. In the result, each indemnifying creditor should receive approximately the following dividends:
Australian Taxation Office $221,146.65, Shorthaul Aviation Services $93,372.58, Southern Air Jet Charter $27,131.63, AMA Jet Charter $121,993.76 and Wingway Jet Charter $276,825.24.
Accordingly, the order I would make would be as That the net sum of $846,164,93, being the balance recovered for the bankrupt estate of Henry Victor Winter by means of indemnities for costs given by the following: follows:

1.    Deputy Commission of Taxation,

2. Shorthaul Aviation Services,

3.    Southern Air Jet Charter,

4.        AMA Jet Charter,

5 .    Wingway Jet Charter,

after the deduction of taxed costs of recovery, be distributed

proved debts after payment thereout of:	dividend of approximately 10.1 cents in the dollar on their to the said indemnifying creditors to the extent of paying a	(a)	the remuneration and percentages and other necessary disbursements by the applicant as trustee of the estate herein of and incidental to the sum of $848,164.93, the gross amount of the said interest;
(b)	the fees and percentages payable to the Registrar in bankruptcy in so far as they relate to the said sum of $848,164.93.

I order that the costs of the indemnifying creditors who appeared and the costs of the trustee be paid out of the amount available for distribution.

I certify that this and the
preceding six (6) pages
are a true copy of the Reasons

for Judgment herein of his Honour

Mr ~ustice	Hill.
Associate:
Date: 9 ~ ~ d l	1961
Counsel and Solicitors	B. Skinner instructed by the
for Applicant:	Australian Government Solicitor
Solicitors for the	Mr Griffin of Ferrier &
Indemnifying Creditors	Associates
other than the Commissioner of Taxation
Date of Hearing:	9 April 1991

Date Judgment Delivered:  9 April 1991