Torrobass Pty Ltd v Bramley
[2016] FCCA 2097
•18 August 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| TORROBASS PTY LTD v BRAMLEY & ANOR | [2016] FCCA 2097 |
| Catchwords: BANKRUPTCY – Bankruptcy Act 1966 – trustees consent to act under s.156A one day late – a mere formal defect or irregularity under s.306 – appropriate relief granted regularising appointment of trustees. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.30, 33, 156A, 160, 306 Federal Circuit Court of Australia Act 1999 (Cth), s.16 |
| Cases cited: Forster v Jododex Aust Pty. Ltd. (1972) 127 CLR 421 Nilant v Macchia (2000) 104 FCR 238 O’Brien v Sheahan (2005) 143 FCR 496 |
| Applicant: | TORROBASS PTY LTD |
| First Respondent: | CARL EDWARD BRAMLEY |
| Second Respondent: | MARGARET ANNE BRAMLEY |
| File Number: | SYG 171 of 2016 |
| Judgment of: | Judge Dowdy |
| Hearing date: | 12 August 2016 |
| Date of last submission: | 15 August 2016 |
| Delivered at: | Sydney |
| Delivered on: | 18 August 2016 |
REPRESENTATION
| Counsel for the Applicant: | Ms Sally Nash. |
| Solicitors for the Applicant: | O'Neill Partners |
| Counsel for the Respondents: | Not Applicable. |
| Solicitors for the Respondents: | Not Applicable. |
ORDERS OF THE COURT
Order that Terry Grant Van Der Velde and Jason Shane Cronan be joined to this proceeding as applicants for the purpose of the Interim Application filed by them in this Court on 14 July 2016.
Order that the Trustees’ Consent to Act Declaration signed by the Applicants on 9 April 2015 in relation to the sequestration orders made against the estates of Carl Edward Bramley and Margaret Anne Bramley on 8 April 2015, be taken for the purposes of s.156A(3)(a) of the Bankruptcy Act 1966 (Cth) to have been signed by them on 8 April 2015.
Dispense nunc pro tunc with the requirements of reg.4.05(e) of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) in connection with the sequestration orders made against the said Carl Edward Bramley and Margaret Anne Bramley on 8 April 2015.
Declare that in the events and circumstances that the Applicants have been validly appointed as trustees of the bankrupt estates of Carl Edward Bramley and Margaret Anne Bramley since 8 April 2015.
Direct the Official Receiver to record on the National Personal Insolvency Index that the Applicants are the trustees of the bankrupt estates of Carl Edward Bramley and Margaret Anne Bramley as and from 8 April 2015.
Order that there be no order as to costs to the intent that the Applicants bear their own costs of the Interim Application.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 171 of 2016
| TORROBASS PTY LTD |
Applicant
And
| CARL EDWARD BRAMLEY |
First Respondent
| MARGARET ANNE BRAMLEY |
Second Respondent
REASONS FOR JUDGMENT
Introduction
By Interim Application filed in this Court on 14 July 2016 Messrs Terry Grant Van Der Velde and Jason Shane Cronan (the Applicants), who are both registered Trustees in Bankruptcy, seek orders regularising their position as trustees of the bankrupt estates of Mr Carl Edward Bramley and Ms Margaret Anne Bramley (respondent debtors), who were made bankrupt by sequestration orders against their respective estates by a Registrar of this Court on 8 April 2016.
Background Facts
The respondent debtors were made bankrupt upon the Creditor’s Petition of Torrobass Pty Ltd (Torrobass) on 8 April 2015 in relation to unpaid rent.
As of 8 April 2015 the Applicants had not signed an instrument, or filed such instrument with the Official Receiver, consenting to act as the trustees of the bankrupt estates of the respondent debtors in the event that they did in fact become bankrupts, pursuant to s.156A of the Bankruptcy Act 1966 (the Act). Section 156A of the Act relevantly provides as follows:
(1) A registered trustee may, by instrument signed by him or her and filed with the Official Receiver, 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
…
(2) An instrument under subsection (1) shall be in accordance with the approved form.
(3) Where:
(a) at the time when a debtor becomes a bankrupt, a registered trustee has, under subsection (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 subsection, the trustee of the estate of the bankrupt; and
…
As the Applicants had not signed any consent, Torrobass as petitioning creditor did not comply with r.4.05(e) of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) by serving a copy of any consent of the Applicants to act as trustees of the respondent debtors at least 5 days before the day fixed for the hearing of the Creditor’s Petition presented against them.
As stated above, the Registrar of this Court made sequestration orders against the estates of the respondent debtors on 8 April 2015.
On the following day, being 9 April 2015, the solicitors for Torrobass sent a copy of the sequestration orders made against the respondent debtors to the Applicants requesting that the Applicants consent to act as trustees of the respondent debtors’ bankrupt estates.
The Applicants acceded to this request and on 9 April 2015 jointly signed the prescribed form, being Trustee’s Consent to Act Declaration. It was then also on 9 April 2015 filed with the Official Receiver. On the same date, again being 9 April 2015, the Official Receiver issued a Certificate of Appointment of Trustees dated 9 April 2015 which stated that the Applicants had been appointed trustees of the bankrupt estates of the respondent debtors on 8 April 2015. By doing so the Applicants complied with reg.8.06(1) of the Bankruptcy Regulations 1996 (Cth) in that they filed their Trustee’s Consent to Act Declaration with the Official Receiver within two working days of the date of the sequestration orders.
Thereafter the Applicants have proceeded to administer the bankrupt estates of the respondent debtors, who were each notified of the Applicants’ appointment as their trustees, and who have submitted to the Applicants their Statements of Affairs. Mr Van Der Velde in his affidavit sworn 5 July 2016 has set out the considerable body of work that has been undertaken by the Applicants in the course of carrying out their administration of these bankrupt estates and there is no need for me to describe that body of work in this judgment.
However, in accordance with best practice, the firm of accountants to whom the Applicants belong conducts internal reviews from time to time and in early February 2015 it was discovered and realized that because as at 8 April 2015 when the sequestration orders were made the Applicants had not consented to act as trustees of the estates of Mr and Mrs Bramley by instrument signed by them, it was arguable that they had not in truth and reality become trustees of the respondent debtors, but rather by force of s.160 of the Act the Official Trustee had become trustee of their bankrupt estates.
Section 160 of the Act is as follows:
160Official Trustee to be trustee when no registered trustee is trustee
If at any time there is no registered trustee who is the trustee of the estate of a bankrupt, the Official Trustee shall, by force of this section, be the trustee of the estate.
Present Proceeding
It was in these circumstances that the Applicants filed their application in this Court to regularize their position. They have given appropriate notice of this application to the following:
a)The respondent debtors, Mr and Mrs Bramley;
b)Torrobass, the petitioning creditor;
c)The Official Receiver in Bankruptcy; and
d)The Official Trustee in Bankruptcy.
Both the Official Receiver and the Official Trustee have advised in writing that they do not propose to attend the hearing in respect of the Interim Application made by the Applicants and that they would abide by any orders made by the Court and the Official Receiver has very properly indicated that he would make any appropriate amendment to update the National Personal Insolvency Index. No-one else has opposed the Interim Application.
I consider that the problems associated with the appointment of the Applicants as trustees of the bankrupt estates of Mr and Mrs Bramley are in the nature of formal defects and irregularities and are not substantive or substantial. In this case Torrobass wanted the Applicants to be trustees of the bankrupt estates. The Applicants wanted to accept that role and purported to do so. The Official Receiver certified that they had been appointed to that role and the Applicants have been carrying out that role since 9 April 2015, being one day after the sequestration orders were made. Further, the Applicants would not have proceeded to administer the bankrupt estates but for the Official Receiver so certifying that they had been appointed trustees.
In my view the position of the Applicants should be regularized and be put on an unimpeachably firm legal foundation. There is no doubt that for the purpose of s.306 of the Act “Proceedings under this Act” include a defect in the appointment of a trustee in bankruptcy: see Hill J in Nilant v Macchia (2000) 104 FCR 238 at 244 ([27]). The term “Proceedings under this Act” is not confined to curial proceedings, but is to be given a wide meaning.
Section 306 is plainly a remedial or beneficial provision which avoids the consequences which might otherwise flow from a mere formal defect or irregularity associated with a step which must be taken in proceedings in bankruptcy. The word “Proceedings” in s.306 of the Act is apt to cover steps which are taken pursuant to, and in accordance with, the requirements of the Act: see Weinberg J in Nilant v Macchia (supra) at 247 ([39]).
I further consider that the decision of the Full Court of the Federal Court in O’Brien v Sheahan (2005) 143 FCR 496, where not dissimilar defects in the appointment of a trustee to a bankrupt estate were considered by the Full Court to be only formal defects or irregularities which s.306 of the Act would validate, supports a resort to s.306 in this case.
I have also had regard to the decision of the English Court of Appeal in Re a Debtor [1933] B&C.R. 53 where an affidavit verifying the statements contained in a creditor’s petition was sworn, and the petition signed, a day before the act of bankruptcy alleged in the petition was committed, and the Court held that this did not constitute “substantial injustice”, but was merely a formal defect or irregularity.
This Court is a Court of Bankruptcy and under s.30(1)(b) of the Act and s.16 of the Federal Circuit Court of Australia Act 1999 (Cth) has power to grant declaratory relief. Further, under s.33(1)(b) of the Act this Court may amend “any written process, proceeding or notice” under the Act. Further, orders under the Act can be made nunc pro tunc: Singh v Official Trustee in Bankruptcy [2007] FMCA 1367. Finally, as a general rule the law takes no account of fractions of a day which is regarded as indivisible so that any act done within it is no more referable to one part more than another but the act and the day are co-extensive: Forster v Jododex Aust Pty. Ltd. (1972) 127 CLR 421 at 446.
Accordingly, in the circumstances I will make the following orders:
(1)Order that Terry Grant Van Der Velde and Jason Shane Cronan be joined to this proceeding as applicants for the purpose of the Interim Application filed by them in this Court on 14 July 2016.
(2)Order that the Trustees’ Consent to Act Declaration signed by the Applicants on 9 April 2015 in relation to the sequestration orders made against the estates of Carl Edward Bramley and Margaret Anne Bramley on 8 April 2015, be taken for the purposes of s.156A(3)(a) of the Bankruptcy Act 1966 (Cth) to have been signed by them on 8 April 2015.
(3)Dispense nunc pro tunc with the requirements of reg.4.05(e) of the Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) in connection with the sequestration orders made against the said Carl Edward Bramley and Margaret Anne Bramley on 8 April 2015.
(4)Declare that in the events and circumstances that the Applicants have been validly appointed as trustees of the bankrupt estates of Carl Edward Bramley and Margaret Anne Bramley since 8 April 2015.
(5)Direct the Official Receiver to record on the National Personal Insolvency Index that the Applicants are the trustees of the bankrupt estates of Carl Edward Bramley and Margaret Anne Bramley as and from 8 April 2015.
(6)Order that there be no order as to costs to the intent that the Applicants bear their own costs of the Interim Application.
I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of Judge Dowdy
Date: 18 August 2016
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