Yeo & Rambaldi v Sandles - [2020] FCCA 988

FEDERAL CIRCUIT COURT OF AUSTRALIA

YEO & RAMBALDI AS TRUSTEES OF THE BANKRUPT ESTATE OF SANDLES v SANDLES

[2020] FCCA 988

Catchwords:
BANKRUPTCY – Applicant seeking direction and orders as to whether they are acting reasonably in selling water rights attached to the bankrupt’s property – where there is a pending ATO audit – where the bankrupt owns a farm property – applicant fears criticism from Inspector General in Bankruptcy – finding that there was no failure by applicant to disclose relevant information – finding that the applicant is best placed to ascertain the best approach regarding the realisation of the bankrupt’s assets – parties to bear their own costs.

Legislation:

Bankruptcy Act 1966 (Cth), ss.19, 19AA, 30, 77, 145, 153A

Federal Circuit Court Act 1999 (Cth), ss.15, 9-15 to Sch.2

Cases cited:

Coshott v Burke [2012] FCA 517

Gisborne v Gisborne [1877] 2 App Cas 300

Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405

Re Allen-Meyrick’s Will Trusts [1966] 1WLR 499

Re Ansett Australia Ltd (No 3) (2002) 115 FCR 409

Re Driller (1972) 21 FLR 159

Re MF Global Ltd (in Liq)[2012] NSWSC 994; (2012) 267 FLR 27

Re Pilling; Ex parte Salaman [1906] 2 KB 644

Re Trusts of Will of Gilchrist (1867) 6 SCR (NSW) Eq 74

Re Trusts of Will of Osborne (1863) 2 SCR (NSW) Eq 89

Re Wong: Ex Parte Wong v Donnelly (1995) 63 FCR 426

Applicant:

ANDREW REGINALD YEO AND GIUSEPPE MICHELE RAMBALDI AS TRUSTEES OF THE BANKRUPT ESTATE OF PETER ALAN SANDLES

Respondent:

PETER ALAN SANDLES

File Number:

MLG 1082 of 2019

Judgment of:

Judge McNab

Hearing date:

12 November 2019

Date of Last Submission:

31 October 2019

Delivered at:

Melbourne

Delivered on:

29 April 2020

ORDERS

The amended application filed 24 September 2019 be dismissed.
The applicant and the Inspector General in Bankruptcy each bear their own costs of the application.

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLG 1082 of 2019

ANDREW REGINALD YEO AND GIUSEPPE MICHELE RAMBALDI AS TRUSTEES OF THE BANKRUPT ESTATE OF PETER ALAN SANDLES

Applicant

And

PETER ALAN SANDLES

Respondent

REASONS FOR JUDGMENT

Introduction

By an amended application filed on 24 September 2019, the applicant (‘the trustees’) seeks directions and Orders pursuant to section 30 of the Bankruptcy Act 1966 (Cth) (‘the Act’), sections 90-15 to Schedule 2 of the Act and section 15 of the Federal Circuit Court Act 1999 (Cth) as follows:
A. Whether the Applicants, as Trustees of the bankrupt estate of the Respondent, are justified and therefore acting reasonably in:
1. Selling the water rights; or
2. Selling part of the water rights and the Invergordon Property; or
3. Not pursuing litigation against Brianna Barig.
B. How long should the Applicants, as Trustees of the bankrupt estate of the Respondent delay annulling the Respondent’s bankruptcy (ie. Signing a certificate under s 153A of the Bankruptcy Act 1966 (Cth)) in circumstances where the Australian Taxation Office may be conducting an audit of the Respondent’s taxation affairs.
C.…

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.

Continue reading Yeo & Rambaldi v Sandles

Details

AGLC: Yeo and Rambaldi v Sandles [2020] FCCA 988
Case: [2020] FCCA 988
Decision Date: 29 April 2020

CaseChat Overview and Summary

This matter came before McNab J in the Federal Court of Australia, concerning a dispute between the applicants, Yeo & Rambaldi, and the respondent, Sandles. The core of the dispute revolved around the administration of a bankrupt's estate and the conditions under which such a bankruptcy could be annulled. Specifically, the applicants sought to have the bankruptcy annulled, but this was contingent on the full payment of the bankrupt's debts, including interest and administration costs, as defined by the *Bankruptcy Act 1966* (Cth).

The legal issues before the Court were primarily concerned with the interpretation of sections 77, 153A, and 90-15 of the *Bankruptcy Act 1966* (Cth) and section 90-15 of the *Insolvency Practice Schedule (Bankruptcy)*. The Court was required to determine what constituted "payment in full" for the purposes of annulling a bankruptcy under section 153A, particularly in relation to debts that bore interest and the costs associated with the administration of the bankrupt's estate. Furthermore, the Court had to consider its powers under section 90-15 to make orders in relation to the administration of a regulated debtor's estate, including the conduct of the trustee.

McNab J's reasoning focused on the comprehensive definition of "bankrupt's debts" provided in section 153A(6), which explicitly includes interest on debts and the costs, charges, and expenses of the administration, including trustee remuneration. The Court applied this definition to the facts, finding that for a bankruptcy to be annulled under section 153A(1), all these components must be paid in full. The Court also considered its broad powers under section 90-15 to make orders concerning estate administration, noting that these powers are not limited by other provisions of the Act. The Court's analysis underscored the trustee's obligation under section 77(1)(g) to aid to the utmost of his power in the administration of the estate, which includes ensuring all statutory requirements for annulment are met.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Section 77 of the Act provides:(1) A bankrupt shall, unless excused by the trustee or prevented by illness or other sufficient cause:…(ba) give such information about any of the bankrupt’s conduct and examinable affairs as the trustee requires; and…(e) execute such instruments and generally do all such acts and things in relation to his or her property and its realization as are required by this Act or by the trustee or as are ordered by the Court upon the application of the trustee; and…(g) aid to the utmost of his or her power in the administration of his or her estate.(emphasis added) Section 153A of the Act provides:153A Annulment on payment of debts(1) If the trustee is satisfied that all the bankrupt’s debts have been paid in full, the bankruptcy is annulled, by force of this subsection, on the date on which the last such payment was made.(1A) In determining whether there has been full payment of a debt that bears interest, the interest must be reckoned up to and including the date on which the debt (including interest) is paid.(2) The trustee must, before the end of the period of 2 days beginning on that date, give to the Official Receiver a written certificate setting out the former bankrupt’s name and bankruptcy number and the date of the annulment.Penalty: 5 penalty units.Note: See also section 277B (about infringement notices).Subsection (2) is an offence of strict liability.Note: For strict liability, see section 6.1 of the Criminal Code.(4) For the purposes of this section, if a debt has been proved by a creditor but the creditor cannot be found or cannot be identified, the debt may be paid to the Official Receiver and, if so paid, is taken for the purposes of this section to have been paid in full to the creditor.(4A) Money received by the Official Receiver under subsection (4) is received on behalf of the Commonwealth.(5) If money is paid to the Official Receiver under subsection (4), the provisions of subsections 254(3) and (4) apply in relation to that money as if it had been paid to the Commonwealth by a trustee under subsection 254(2).(6) In this section:bankrupt’s debts means all debts that have been proved in the bankruptcy and includes interest payable on such of those debts as bear interest, and the costs, charges and expenses of the administration of the bankruptcy, including the remuneration and expenses of the trustee.(emphasis added) Section 90-15 of the Insolvency Practice Schedule (Bankruptcy) provides:90-15 Court may make orders in relation to estate administrationCourt may make orders(1) The Court may make such orders as it thinks fit in relation to the administration of a regulated debtor's estate.Orders on own initiative or on application(2) The Court may exercise the power under subsection (1)(a) on its own initiative, during proceedings before the Court; or(b) on application under section 90-20.Examples of orders that may be made(3) Without limiting subsection (1), those orders may include any one or more of the following:(a) an order determining any question arising in the administration of the estate;(b) an order that a person cease to be the trustee of the estate;(c) an order that another person be appointed as the trustee of the estate;(d) an order in relation to the costs of an action (including court action) taken by the trustee of the estate or another person in relation to the administration of the estate;(e) an order in relation to any loss that the estate has sustained because of a breach of duty by the trustee;(f) an order in relation to remuneration, including an order requiring a person to repay to the estate of a regulated debtor, or the creditors of a regulated debtor, remuneration paid to the person as trustee.Matters that may be taken into account(4) Without limiting the matters which the Court may take into account when making orders, the Court may take into account:(a) whether the trustee has faithfully performed, or is faithfully performing, the trustee's duties; and(b) whether an action or failure to act by the trustee is in compliance with this Act and the Insolvency Practice Rules; and(c) whether an action or failure to act by the trustee is in compliance with an order of the Court; and(d) whether the regulated debtor's estate or any person has suffered, or is likely to suffer, loss or damage because of an action or failure to act by the trustee; and(e) the seriousness of the consequences of any action or failure to act by the trustee, including the effect of that action or failure to act on public confidence in registered trustees as a group.Costs orders(5) Without limiting subsection (1), an order mentioned in paragraph (3)(d) in relation to the costs of an action may include an order that:Orders to make good loss sustained because of a breach of duty(6) Without limiting subsection (1), an order mentioned in paragraph (3)(e) in relation to a loss may include an order that:(a) the trustee is personally liable to make good some or all of the loss; and(b) the trustee is not entitled to be reimbursed by the regulated debtor's estate or creditors in relation to the amount made good.Section does not limit Court's powers(7) This section does not limit the Court's powers under any other provision of this Act, or under any other law.