Fawcett v Official Assignee
[2016] NZHC 1272
•14 June 2016
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
CIV-2010-419-000587 [2016] NZHC 1272
BETWEEN CHRISTOPHER LOUIS FAWCETT
Applicant
AND
THE OFFICIAL ASSIGNEE First Respondent
PETER MATTHEW GRANVILLE Second Respondent
Hearing: 4 May 2016 Appearances:
Applicant in person
Mr P Cornege for Official Assignee
Ms Scott and Mr Savage for Mr GranvilleJudgment:
14 June 2016
JUDGMENT OF ASSOCIATE JUDGE J P DOOGUE
This judgment was delivered by me on
14. 06.16 at 4 pm, pursuant to
Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
FAWCETT v THE OFFICIAL ASSIGNEE & ANOR [2016] NZHC 1272 [14 June 2016]
[1] Mr Fawcett is the applicant in this proceeding. He is a discharged bankrupt. He has made a number of criticisms of the way in which the Official Assignee administered his bankrupt estate. One of the complaints that he has is that a debt which was paid out of the estate to a proving creditor, Mr Granville, ought not to have been paid. He seeks an order reversing the decision of the Official Assignee.
[2] The debt which Mr Granville paid was in the amount of $42,508.59 which payment was made to solicitors acting for the Thames-Coromandel District Council on 13 July 2009. The circumstances in which Mr Granville came to make payment are set out below.
[3] Much of the factual background to the claim is not in dispute. While Mr Fawcett made a number of references to what the “evidence” in the case suggested was the appropriate outcome, the issue is more one of analysing the legal nature of the orders which were made in the District Court, the legal consequences of Mr Granville paying the judgment from the District Court and the rights that are recognised at law and equity to exist between a trustee and the trust estate out of which he/she is entitled to be indemnified. A further potential question that may need to be considered is what rights one trustee has to be indemnified by another.
The background to the claim
[4] Counsel for Mr Granville summarised the position as follows:
Peter Granville is a Chartered Accountant, practising in Hamilton, for over thirty years. During the course of his professional duties as Mr Fawcett’s accountant, Mr Granville was appointed as a trustee to the CL Fawcett Family Trust.1
Mr Granville’s claim in the bankrupt estate flowed from a single event. Thames District Council [sic] issued proceedings against the CL Fawcett Trust. In brief, the facts of the case were:2
1 Mr Granville was described as having a relatively passive role in the trust, an analysis that Mr
Fawcett did not disagree with.
2 Thames-Coromandel District Council v Fawcett DC Hamilton CIV-2008-019-655, 16 December
2008.
(a) The trust undertook property development at Tairua, obtaining a building consent to construct a pedestrian footbridge over Graeme’s [sic] Creek at Tairua, which was not constructed in accordance with the approved building consent and did not comply with the NZ Building Code relating to structure;
(b) Thames-Coromandel District Council could not issue a code of compliance certificate or certificate for public use;
(c) The plaintiff issued a dangerous building notice to the trustees and in March 2008 a Notice to Fix was also issued. Neither notice was complied with by the trust;
(d) The trust was held to be in breach of the various notices issued by the Council. Ultimately, the trust was ordered to demolish and remove the footbridge and to pay costs.
[5] It is these “costs” which are the basis for the claim which Mr Granville makes against the estate of Mr Fawcett.
[6] I should also add that while it was accepted that Mr Granville as a trustee of the trust agreed with his fellow trustee, Mr Fawcett, that the trust ought to proceed with the development, Mr Granville was not otherwise engaged in the process of carrying out the subdivision which was the responsibility of Mr Fawcett.
[7] After the Thames-Coromandel District Council issued proceedings in the District Court (on 8 August 2008) a judicial settlement conference was held. A settlement agreement was reached in the following terms:
The trustee of the CL Fawcett Family Trust shall remove the pedestrian footbridge… by 8 September 2008 … If the trustee of the CL Fawcett Family Trust fails to comply with 1 above, then the Thames-Coromandel District Council is at liberty to seal an order in the District Court in terms of the consent memorandum dated 8 August 2008.
[8] Mr Fawcett and Mr Granville gave their consent to this proposed arrangement but later Mr Fawcett resiled from the agreement for reasons which do not now need to be considered. As a result the matter went to a hearing.
[9] The upshot of the hearing was that on 16 December 2008 the District Court issued an order pursuant to s 381 of the Building Act 2004 requiring the footbridge to be demolished and ordering that the “costs of the removal of the footbridge will be met by the defendant”. The Judge expressed herself satisfied that there had been a
continued failure to comply with Notices to Fix and that there had been resulting continuing breaches of s 168 of the Act.
[10] A considerable part of the judgment was concerned with identifying who were the appropriate trustees at the relevant time. Mr Granville had been a trustee but he had attempted to retire. Subsequently, Mr Fawcett also attempted to retire and as part of the arrangements which Mr Fawcett put in place, a corporate trustee was set up. However the Judge found that the situation was very unclear and she was unable to conclude that there had been any effective change of trustees with the
result that Mr Fawcett and Mr Granville continued to be the trustees of the trust.3
[11] One of the passages in the judgment records that:4
[40] In late November/early December 2007 the Trust constructed the footbridge, which was intended for use by the public.
[12] The centrality of the idea of the trust being involved in the proceedings is confirmed in the judgment:5
… it is clear that the Trust continues to breach s 68[.]
[13] Consistent with her view of who the trustees were and her belief that it was the trustees who were the appropriate defendants, the Judge permitted an amendment to the proceedings which apparently she undertook of her own motion pursuant to r
103(1) of the District Court Rules 1992 as follows:6
[In] order to correctly reflect the position as I find it to be I add Mr Granville in his capacity as trustee of the Trust as a defendant along with Mr Fawcett. Accordingly the defendant will now be “Mr Fawcett and Mr Granville as trustees of the CL Fawcett Family Trust”.
[14] As part of the orders which the Judge made for removal of the structure, she also directed that the costs of removal were to be met “by the defendant”. Subsequently those costs were fixed at $42,508.59. It is clear from the tenor of the
judgment that the defendant to which the Judge was referring was the trust.
3 Thames-Coromandel District Council v Fawcett, above n 2, at [28].
4 (Emphasis added.)
5 At [57] (emphasis added).
6 At [30].
[15] When faced with a demand to pay the costs, Mr Granville, no doubt correctly, formed the view that he had no option but to pay them. I do not know whether Mr Granville gave any consideration to appealing against the judgment and, if so, whether he obtained legal advice and what that legal advice might have been. He did however take legal advice as to the possibility that a bankruptcy notice which had been issued might be successfully challenged by way of an application to set it aside but in the end the advice he received was against taking that course. He was practising as a chartered accountant and it could be foreseen that if he did not pay the costs of removal of the bridge in accordance with the court order the Council would pursue whatever remedies were available to it. That, in the opinion of Mr Granville, included possible bankruptcy which was not a matter that he was, understandably, prepared to risk. He paid the amount that he and Mr Fawcett had been ordered to pay. Further reference will be made to the nature of the liability that was imposed upon Mr Granville and Mr Fawcett later on in this judgment.
Jurisdictional point
[16] A jurisdictional point that was raised by Mr Cornege at the outset concerned whether, given that the claim which Mr Granville made was for an amount less than
$200,000, s 241 of the Insolvency Act 2006 required that the application be made in the District Court rather than the High Court.
[17] Having received submissions on the point from Mr Cornege and Ms Scott, I agree with the common position that those counsel have since taken, which is that the effect of the section is to permit applications to be made in the District Court but not to require that course to be followed when the amount of the debt in question is less than $200,000. Mr Fawcett did not present any argument which would persuade me to the contrary.
The review process
[18] The jurisdiction which the court is being asked to exercise in this case is conferred by s 238 of the Insolvency Act. That section reads as follows:
238 Court may cancel creditor's claim
(1) The court may make an order cancelling an admitted creditor's claim or reducing the amount claimed, if it considers that the claim was improperly admitted.
(2) The court may make the order on the application of the Assignee, the bankrupt, or any creditor.
(3) The court must not make an order under subsection (1) unless the creditor who submitted the claim has been served with the application.
[19] The jurisdiction has been described in the following terms in Brookers
Insolvency Law and Practice:7
The principles which the Court considered in an application under the equivalent section in the Insolvency Act 1967, s 89(5), were similar to those for an application to appeal the Official Assignee’s decisions under section
86 Insolvency Act 1967 (now section 226 Insolvency Act 2006): the Court should treat it as an application de novo and look at the reasonableness of the
Assignee’s decision and the process by which it was reached[.]
[20] This is consistent with High Court authority.8 I agree with that approach being applicable to an application under s 238.
[21] I also agree with the finding of the High Court in Holdgate v Bloccassa Ltd9 that the jurisdiction under s 238 is to be exercised as described in Austin, Nichols & Co v Stichting Lodestar:10
Those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment.
[22] It is therefore for the court to determine whether the Official Assignee ought to have admitted the claim to proof. In the context of this case, that requires consideration of the legal basis upon which Mr Granville seeks to recover the amount that he paid to the local authority. Either Mr Granville had a legal basis for
his claim or he did not.
7 Lindsay Hampton and others (eds) Brookers Insolvency Law and Practice (online looseleaf ed, Thomson Reuters) at [IN238.01].
8 Holdgate v Official Assignee HC Auckland B1545-96, 22 May 2001.
9 Holdgate v Blaccassa Ltd HC Auckland CIV-2005-404-2693, 4 July 2008 at [12].
10 Austin, Nichols & Co v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141 at [16].
[23] I consider that if it can be demonstrated that the Official Assignee accepted liability on the part of the estate for a debt on a legally or factually mistaken basis, then the court will generally be required to intervene under s 238.
Overview of approach to be taken
[24] The first step is to consider some procedural objections that Mr Fawcett has advanced which he says stand in the way of a review of the decision being carried out by this court.
[25] On the assumption that those procedural objections are able to be surmounted, the next step in consideration of the application to review will be to identify the appropriate legal criteria and principles to be applied to consider whether, on the basis of the factual grounds available to Mr Granville, he has a claim recognisable at law.
Procedural objections
[26] Mr Fawcett referred me to evidence filed on the review application which established that he sent an email to a case officer at the office of the Official Assignee on 11 June 2012 in which he objected to Mr Granville having his claim admitted to proof and setting out the grounds for that objection. Mr Fawcett noted that the reply which the Official Assignee sent the following day was in these terms:
Kit,
I advise the Official Assignee has noted your objections and advise the proof of debt submitted by Mr Granville will be re-examined to determine its validity.
[27] It would appear that that was the end of the exchange in which the parties explicitly addressed whether the Granville debt ought to be admitted to proof or not.
[28] Based upon these facts Mr Fawcett submitted to me that pursuant to s 237 of the Act, the court was required to make a determination that the debt ought not to be admitted to proof. The argument was that the email which Mr Fawcett sent on 11
June 2012 triggered the beginning of the 10 day period within which the Official
Assignee was required to accept or reject the claim and that if he did not within that
period accept the claim, then it was open to the court to reject it. This apparently, in the submission which Mr Fawcett put forward, was not a matter of discretion so that in essence the section required that in the circumstances that had occurred here the court ought to direct that the claim was to be rejected.
[29] I do not accept that submission. The purpose of this section is to start time running so that if the Official Assignee does not attend a period given explicit notice rejecting or accepting the proof, the way will be clear to an affected party to apply to the court to make a decision on the matter. The failure to give a response within that time does not mean that the Official Assignee cannot at a later date decide to admit or reject the proof of debt.
Discussion of grounds for review
[30] In the course of the hearing I asked counsel for Mr Granville what the basis was upon which it could be said that Mr Granville had a claim to reimbursement or indemnification for the payment that he made towards the remediation costs which the Council incurred and the costs of the legal proceedings. Counsel told me that the entitlement arose out of the conduct of Mr Fawcett both in the way that he had conducted himself in relation to the hearing in the District Court and to the circumstances in which he had altered the deed of retirement which Mr Granville had executed in order to have himself removed as a trustee of the trust. While an explanation was sought, none was forthcoming as to why the retirement or otherwise of Mr Granville from the position of trustee might affect the issues before the court. A further unexplained difficulty that the case for Mr Granville raised was that the indemnity which Mr Granville had actually received from the bankrupt estate of Mr Fawcett was for 100 per cent of the liability which he had incurred on the assumption that the judgment of the District Court imposed joint and several liability on each of the defendants for the amounts which the Court ordered were to be paid.
[31] Mr Fawcett, who represented himself, had understandable difficulties in grappling with some of the legal concepts that the case raised. Putting it at its simplest, he took the view that Mr Granville had an obligation to seek to indemnify himself out of the trust assets in regard to any costs that he might have incurred as
trustee before attempting to make any claim against Mr Fawcett personally, or the Official Assignee standing in his place. Mr Fawcett, though, then at least accurately isolated part of the issues which was that there was no demonstrated basis upon which Mr Granville could make a claim against his co-trustee, Mr Fawcett.
[32] Counsel for the Official Assignee, Mr Cornege, stated that his client would abide by the decision of the court and accordingly he did not put forward any submissions identifying a satisfactory basis upon which the estate of Mr Fawcett could be liable to meet Mr Granville’s costs. In order to attempt to answer some of these questions it seems necessary that some analysis be attempted of the basis upon which Mr Granville found himself liable for the costs of demolition of the bridge.
The basis for liability in the District Court
[33] I turn next to consider the factual background to the entry of judgment in the
District Court which is the basis for Mr Granville’s filing his proof of debt.
[34] Judge Harland in the District Court found that there was “no issue that the defendant in these proceedings should be the trustee of the Trust.”11 The precise legal basis for this statement is unclear; however it seems to be connected to the terms of the settlement agreement between the Council and the trust which referred to “the trustee of the CL Fawcett Family Trust”. The District Court Judge then spent much of the judgment occupied with the question of who were the trustees of the trust. As
noted above, Judge Harland subsequently amended the proceedings to add Mr
Granville as a defendant in his capacity as a trustee of the CL Fawcett Family Trust.
[35] It was at least the implicit reasoning of that decision that because Mr Granville had at one stage been a trustee associated with Mr Fawcett he should be jointly responsible with Mr Fawcett for the costs or compensation order which the Judge was entitled to make under the Building Act. There was apparently no enquiry into actions or omissions on the part of Mr Granville with regard to the construction which would implicate him in a breach of the Act. It is correct that the Building Act
makes provision for liability of principal parties for the acts of their agents by virtue
11 Thames-Coromandel District Council v Fawcett, above n 2, at [7].
of s 386 of the Act. However there is no extension of liability so as to implicate trustees in liability under the Act arising from steps taken by a co-trustee. There would not seem to have been any conventional basis for imposing liability on the ground that Mr Granville was vicariously responsible for the actions of Mr Fawcett.
[36] Despite this uncertainty, Mr Granville became liable for and paid all of the costs associated with the proceedings. He subsequently sought to recover those costs from Mr Fawcett’s estate.
What entitlement to reimbursement does Mr Granville have?
[37] I was not provided with any analysis of how Mr Fawcett could be determined to be liable to reimburse Mr Granville. It appeared to be assumed, by the Official Assignee at least, that a trustee or former trustee has a right to reimbursement arising out of the relationship of co-trustees that existed between them.
[38] It would seem reasonable however and fair that Mr Granville should in fact not have to bear the burden of the District Court penalties on his own. In order to determine whether there is actually some basis for reimbursement, the court has been left in the not altogether satisfactory position of having to reach its own conclusions without the benefit of supporting argument from either of the parties. While it could be suggested that the grounds proposed in this judgment ought to be subject at least to comment from the parties before they are adopted as part of the court’s reasons, I have decided against taking that course. That is because it would lead to further delays and expense in circumstances where the amount of money at stake is not great.
[39] Despite the doubts that I have expressed about the basis which the prosecuting agency, the Thames-Coromandel District Council, could have had for contending that Mr Granville was liable for the costs of removal of the bridge, I accept that Mr Granville was bound by the decision of the District Court, so long as it stood, to make the payment on the liability which had been determined. He made that payment.
[40] In deciding what rights Mr Granville has against the Official Assignee in right of the estate of Mr Fawcett, it is necessary to consider whether Mr Granville had a right of contribution or indemnity against Mr Fawcett.
Right to contribution from fellow trustee?
[41] The Official Assignee and the bankrupt estate of Mr Fawcett only become involved in cases where a claim against Mr Fawcett is under consideration, in distinction to a claim for indemnity out of the trust assets.
[42] One possible basis upon which such a claim might be made is that Mr Granville had a right of contribution to the payment to be made from Mr Fawcett personally.
[43] It is not clear whether a trustee is able to obtain a contribution toward a payment that he has made as trustee in the form of discharging an expense or liability of the trust. In Equity and Trusts in New Zealand the learned authors express the view that a contribution is available where the trustee has paid off the
trustees’ liability for a breach of trust.12 I will assume that in the present case there
has been no breach of trust leading up to the imposition of the penalty in the District
Court.
[44] Even if there was a right of reimbursement from the co-trustee, it would not have authorised the Official Assignee to reimburse Mr Granville for the entire amount of the penalty because that would represent an entire exoneration from the liability rather than a contribution towards it. If that is correct, then the position would be no different from the result that would follow from a restitutionary approach to the problem which in my view provides a clearer and more satisfactory
basis for analysing the rights of the parties in this situation.
12 Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington,
2009), at [5.3.3(3)].
A right of indemnity by way of restitution from party with concurrent liability for penalty?
[45] One instance of a case where the co-trustee will be liable concerns the situation where the parties are subject to common liability to a third party. The principle has been described by Lord Bingham in the following terms:13
2.The law has for many centuries recognised the existence of situations in which, if B is called upon to discharge a legal obligation owed to A, fairness demands that B should be entitled to claim a contribution from other parties subject with him to that obligation. Thus a rule first developed to cover parties to a common maritime adventure was over time extended to cover co-sureties, co-trustees, co-contractors, partners, co-insurers, co-mortgagors, co-directors and co-owners. The common link between all these situations was the obvious justice of requiring that a common liability should be shared between those liable.
[46] The principle is stated in the following terms in Halsbury’s Laws of
England:14
480. General rule.
A right to contribution arises whenever a person who owes with another a duty to a third party, and is liable with that other to a common demand, discharges more than his proportionate share of that duty. The essence of the right to a contribution lies in the liability to a common demand; and, where there is such a liability, the court will, subject to any contractual provision modifying or limiting any claim to a contribution, make an assessment of contribution.
[47] I shall consider whether the principle just described can be invoked in this case and subsequently consider the point that Mr Fawcett made that Mr Granville ought to have satisfied his liability out of the trust property – that is by invoking his right of indemnity as a trustee.
[48] In this case there is a common liability which takes the form of a judgment entered in the District Court against the defendants.
13 Royal Brompton Hospital NHS Trust v Hammond [2002] UKHL 14, [2002] 2 All ER 801 (citations omitted).
14 Halsbury’s Laws of England (5th ed, 2012, online ed) vol 88 Restitution (footnotes omitted).
[49] It is clear that the same basis for liability was relied upon for entering judgment in respect of each defendant, namely the construction of a bridge which was defective and which did not comply with the standards set in the Building Act. Neither Mr Fawcett nor Mr Granville is able to deny the liability. The judgment, which is now beyond the appeal period, is conclusive against them in that regard. Whether there may be some difficulties with the reasoning by which the District Court Judge came to the conclusion that they ought both to be liable does not need to be conclusively pronounced upon in the present context.
[50] Mr Granville has paid the entire amount of the statutory penalty. On conventional principles, he is entitled to a contribution from Mr Fawcett. What he has received from the Official Assignee, though, is recoupment of the entire amount paid rather than a contribution. It would only be if the debt was solely properly the debt of Mr Fawcett which Mr Granville was compelled to pay that such an approach would be justified.
Recovery from the trust?
[51] I have mentioned that Mr Fawcett asserted that Mr Granville ought to have exercised a right of indemnity over the trust assets. The basis upon which Mr Fawcett put forward his contention was that cl 17.1 of the trust deed provided as follows:
17. Limitation of Trustees Liability
17.1 Notwithstanding anything contained in this deed, the liability of the Trustees is limited at all times to the assets of the Trust and not personal to the intent that apart from any loss attributable to the fraud or dishonesty of any Trustee, the trustees have no personal liability in respect of any act or omission on their part or in any way as a result of their trusteeship under this deed.
[52] Consideration of this part of the trust deed gives rise to some difficult questions. There is no information before the court about whether Mr Granville as a trustee involved himself in the defective construction of the footbridge which led to the court imposing a penalty on him. The District Court judgment appears to proceed on the assumption that because Mr Granville as a trustee was an owner of the property which was to be developed and perhaps because he was an applicant for
resource and/or building consent, that he was responsible for the defective construction of the bridge. Whatever the conclusions of that court were about whether that is a proper basis for liability, they would not be binding on the trust so as to preclude it from arguing that in unnecessarily satisfying a judgment entered against him, Mr Granville was not serving any purpose of the trust and therefore his actions were not referable to his trusteeship.
[53] Assuming that Mr Granville did have a right to indemnification, Mr Fawcett would argue that any right of reimbursement which Mr Granville had required him, as a result of the clause quoted above, to first have resort to the assets of the trust. That is even assuming that the above provision regulates entitlement to an indemnity out of the trust assets. I do not agree with that contention. Rather, cl 17.1 would seem to be designed to restrict the liability of Mr Granville and the other trustees at the hands of the beneficiaries up to the point where the assets of the trust were exhausted and in any event to exclude liability on their part other than for fraud or dishonesty.
[54] Apart from provisions of the trust deed, there is little doubt that a trustee is entitled to an indemnity from the trust fund. The trustee is also entitled to reimbursement. The trustee’s indemnity can be lost by the trustee’s failure to properly incur the liability e.g. through imprudent dealing.15
[55] In this case it would seem that the right that Mr Granville invokes is more correctly to be regarded as a right of reimbursement of costs and expenses or charges incurred in the course of carrying out the business of the trust. For the purposes of considering whether he has a right of indemnity which he can enforce by lien over the trust assets, the difference is immaterial.
Is Mr Granville barred from reimbursement because he did not exercise other rights of indemnity against trust before seeking other types of indemnity?
[56] In any event, whatever rights of indemnity Mr Granville might have against the trust, no authority has been cited to me which would suggest that he must first
exercise any right of indemnity against the trust in priority to seeking indemnity
15 Andrew Butler, above n 12, at 143.
from other quarters. That is to say, there is nothing to prevent Mr Granville, as I see it, from seeking an indemnity arising out of the discharge of a joint liability owed by both him and Mr Fawcett. Of course, Mr Granville would not be entitled to enforce payment from either of these sources of indemnity in circumstances where he would obtain a double recovery.
[57] Further, there is no evidence that there would have been any payment forthcoming from the trust. Mr Fawcett made submissions to that effect but that is not the same thing as putting forward evidence. Mr Fawcett claims that the trust had an overdraft facility which could have been used to meet the cost. He did not produce any evidence of the extent of that overdraft facility whether it was current or had been withdrawn by the bank which, presumably, offered it. In these circumstances I am not prepared to accept contentions that are unsupported by evidence that Mr Granville would have received payment from the trust had he asked for it. There is therefore an additional practical reason why Mr Granville did not first have to make demand from the trust; namely, that he was excused from taking that step because in all the circumstances it is likely that no practical benefit would have followed from doing so.
[58] I should add, though, that in the context of discussions about what contribution Mr Granville can reasonably seek, the fact of whether he did or did not retire as a trustee would not seem to be relevant. Even if it were a claim based upon the trustee’s right of indemnity out of the trust assets, it would seem to endure whether or not he remained a trustee of the trust – provided the right was in all other respects enforceable by him.
A proportional right only
[59] It is in the nature of the functions of trustees that they must act unanimously.16 While Mr Fawcett may have been the active trustee and while Mr Granville may have adopted a more passive role, the decision to carry out the construction of the subdivision which necessarily involved erection of the footbridge
must be taken to be the joint purpose of both of the trustees. Given that the
16 Luke v South Kensington Hotel Company (1879) 11 Ch D 121 (CA).
construction which they carried out (no doubt through agents) was carried out in a way that breached the law, it would seem that both trustees must be regarded as equally responsible. Therefore one half of the penalties should fairly rest with each of them. Because Mr Granville has paid 100 per cent of the judgment debt he should be entitled to a contribution which in my view should be 50 per cent of what he paid. Therefore, my determination is that Mr Granville must repay to the Official Assignee one half of the amount that was paid to him out of the bankrupt estate of Mr Fawcett.
[60] The decision of the court in money terms is that Mr Granville ought to have been recognised as an unsecured creditor for only half of the total amount that he received. The decision of the Official Assignee to allow Mr Granville to prove to the extent of 100 per cent of the amount he paid was legally incorrect. That decision must be set aside. While he claimed $48,951.92 he did not of course receive this amount from the estate. As an unsecured creditor he received $32,047.26 which represented the total amount of his claim abated to the extent to which the estate was able to pay dividends to its unsecured creditors. It is therefore the amount of
$16,023 approximately which he will be required to repay to the estate. That amount will be divisible amongst the creditors of the estate. The only interest that Mr Fawcett might have in this fund is an indirect one in the sense that if an overall surplus resulted he would be entitled to receive it after paying interest and the claim
is described in s 280 of the Insolvency Act.17
Costs
[61] Because Mr Fawcett was self represented there is no entitlement to an order for legal costs on his behalf. He would be entitled to any disbursements that he incurred in bringing the application and I therefore direct that the Registrar is to approve an order for any disbursements which are reasonably connected with bringing the application.
Postscript
[62] Since this judgment was drafted I have received from the Registrar communications to the court which Mr Fawcett has made. I am not clear about what
17 Section 281 of the Act
exactly it is that Mr Fawcett requires but it appears to be related to the rights of Mr Cornege to appear before the court on behalf of the Official Assignee in regard to this proceeding. Having considered the documents I am not persuaded that the court ought to be deflected from issuing judgment. That course will only lead to further delays and expense in the proceeding. Had the matters that Mr Fawcett raised involved substantial points that the court ought to consider I would have of course further adjourned the matter even though there would be considerable disadvantages to that course. But as I say, I am not persuaded that there is any need for further deferment of this matter. If Mr Fawcett wishes to make an application he should file
the appropriate proceeding.
J.P. Doogue
Associate Judge
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