Rees v Stubberfield - [2001] FMCA 72

FEDERAL MAGISTRATES COURT OF AUSTRALIA

REES v STUBBERFIELD [2001] FMCA 72

BANKRUPTCY – application by trustee for release – bankrupt had not filed statement of affairs for two years – excess funds refusal by Court to release to the bankrupt.

Bankruptcy Act 1966 (Cth) ss 54, 146,183

Applicant:

JOHN ROBERT REES

Respondent:

JOHN RICHARD STUBBERFIELD

File No:

BZ 190 of 2001

Delivered on:

28 August 2001

Delivered at:

Brisbane

Hearing Date:

28 August 2001

Judgment of:

Raphael FM

REPRESENTATION

Counsel for the Applicant:

Ms K Downes

Solicitors for the Applicant:

Mr F Lippiatt of Lippiatt & Co Solicitors

For the Respondent:

Mr J Stubberfield in person

Counsel for the Official Receiver:

Mr R Tom

ORDERS

That the applicant be released from the trusteeship of the state of JOHN RICHARD STUBBERFIELD pursuant to section 183 of the Bankruptcy Act.
The costs of the applicant of and incidental to this application be paid out of the estate of the bankrupt on the Federal Court’s scale of costs and on a solicitor and own client basis.

FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE

BZ 190 of 2001

JOHN ROBERT REES

Applicant

And

JOHN RICHARD STUBBERFIELD

Respondent

REASONS FOR JUDGMENT

There comes before me an application by JOHN ROBERT REES, a registered trustee, for release pursuant to section 183 of the Bankruptcy Act. The matter has a lengthy history. Mr Stubberfield, the debtor, was adjudicated bankrupt in or about 1999. Since then he has, for reasons of his own, which he has articulated on more than one occasion, declined to provide his trustee with a statement of affairs pursuant to section 54 of the Bankruptcy Act.
There was an application before Spender J of the Federal Court to allow the trustee to proceed to distribute the estate as if a statement of affairs had been filed and his Honour made an order pursuant to section 146 of the Bankruptcy Act on 17 December 1999. Although that order was made some two years ago the debtor remains bankrupt, his trustee remains his trustee, and affairs have not advanced. The state of the accounts of the estate reveal a surplus of approximately $20, 000 and as far as the trustee can ascertain the only possible outstanding creditor is the Redland Shire Council which, as Mr Robert Rees deposes to in paragraph 12 of his affidavit dated 24 August:
“… has a number of orders for costs awarded by different courts against the bankrupt arising out of litigation in which the council was involved with him.”
The failure of this creditor to properly prove its debt if such a debt exists is regrettable but it can be dealt with by the trustee in such a way as to prevent any further liability falling upon the debtor if no proof is filed. Mr Stubberfield makes a number of objections to the grant of this order. He says that papers relating to the application were filed out of time. He says an attempt was made to serve him with about 100 pages of affidavit this morning in the precincts of the Court. He says there is a perversion of justice. And he says, most importantly, that he was not present at the hearing of the petition and he requires a re-trial.
As a result of those failings he wishes certain orders to be made, some of which relate to the solicitor for the applicant and some are intended to protect his position under section 183 (4) of the Bankruptcy Act. The problem Mr Stubberfield faces is that he has not filed an application for annulment or any other form of application in respect to the relief that he seeks and he appears to use applications by the trustee as an opportunity to vent his concerns about matters which could themselves be the subject of proceedings. It is not appropriate for the Court to receive this type of application in this way. A properly filed, served and evidenced application has been made by the trustee. That is the application with which I should deal and it is the application with which I intend to deal.
Mr Tom appears on behalf of the Official Receiver. The Official Receiver consents to the transfer of the responsibility for this estate from the long-suffering Mr Rees to the Australian Insolvency and Trustee Service. Given that Mr Rees has handled the affairs of Mr Stubberfield for some two years, appears to have paid out all creditors of whom he has knowledge, appears to have collected in all assets of which he has knowledge save possibly some property in New South Wales which Mr Stubberfield now admits to owning and the existence of which has only just been revealed, I can see no reason why I should not grant the application.
The only concern I had was the one raised by Mr Stubberfield that the effect of section 183 (4)(a) is a discharge of the trustee from all liability in respect of which any act done or default made by him or her in the administration of the estate of the bankrupt. This is a wide ranging release that is given to a trustee. However, as Ms Downes says, the complaints made by Mr Stubberfield are not really complaints against his trustee, they are complaints against those who instigated the proceedings against him in the first place and a solicitor who acts now for the trustee. I would not propose to refuse to make the orders on that basis.
Mr Stubberfield appears to be accepting of Mr Rees’s position because one of the orders he suggested was that Mr Rees be allowed to go on giving an undertaking that he will comply with any order of the Court if he, Mr Stubberfield, brings an application. I do not see any obligation to require Mr Rees to give such an undertaking. Mr Rees, as a trustee in bankruptcy, is an officer of the Court and I have no doubt would comply with any order that was made. Mr Stubberfield also asks that Mr Lippiatt be prohibited from acting for Mr Rees or any other trustee. Well, if Mr Rees is no longer the trustee, then that is not a relevant question and it may well be that the Official Receiver will decide that in all the circumstances of this rather complex case it would be preferable if a new solicitor was instructed.
Mr Stubberfield asks for a restraining order against Mr Lippiatt. I have no intention of assisting him with that. He also asks that costs be reserved. He understands fully that as a litigant in person he is not entitled to costs himself but does not say or does not advise me of the event to which the reservation of costs is directed. I would be reluctant to make such an order. Finally, Mr Stubberfield asks that the unexpended funds be returned to him including any interest earned thereon. I will not make that order either but the reason that I will not make the order should be explained to Mr Stubberfield. He has an obligation under section 54 of the Act to file a statement of affairs. He has declined to do this. He could have been fined quite severely but he has not.
His bankruptcy is being extended solely by his wilful refusal to file the statement. Until such time as the trustee knows what the position is with regard to creditors he must protect those creditors by retaining any moneys that he has control over. It would be a simple matter for Mr Stubberfield to obtain the release of these moneys by filing a statement of affairs and verifying it so that the trustee can satisfy himself that there are no additional creditors or there are no additional creditors in excess of the amounts which he is holding. This all could have happened a long time ago.
In the circumstances, I propose to make the orders, a copy of which has been provided to me by counsel for the applicant, has been initialled by me and placed with the papers. Those orders are:
(1)That the applicant be released from the trusteeship of the state of John Richard Stubberfield pursuant to section 183 of the Bankruptcy Act; and
(2)The costs of the applicant of and incidental to this application be paid out of the estate of the bankrupt on the Federal Court’s scale of costs and on a solicitor and own client basis.
This application was made before the Federal Magistrates Court published its rules and its costs rules. The original bankruptcy proceeded in the Federal Court and so I think this is an appropriate order to be made.

I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: 28 August 2001