CATCHWORDS Bankruptcy - power conferred on Reaistrar to direct that interest on certain moneys "at the rate prescribed" form part of an estate - no rate prescribed until after commencement of period for which Registrar would otherwise have been prepared to direct payment cf her Registrar emoowered to direct payment of cr interest - whe interest for iT ntirety of period or onlv for a period commencing on the date of the prescription of the interest rate. Bankruptev Rules, 195A and 119 Acts Interpretation Act 1991, s. 48 RE: ESTATE OF LATE ANTHONY ALAN DAVIS Coram: fheppard J. Date : 21 November 1385 IN THE FEDERAL COURT OF AUSTRALIA ) BANKRUPTCY DISTRICT OF THE STATE ' QF NEW SOUTH WALES AND THE ) AUSTRALIAN CAFITAL TERRITORY y No. W691 of 1983 EE: ESTATE OF LATE ANTHONY ALAN DAVIS CORAM: Sheppard J, DATE : 721 November 1985 MINUTES OF GRDEF THE COURT ORDERS THAT: lL. The question asked in the special case dated 18 September 1985 referred to the Court by the Reatstrar in Bankruptcy pursuant to rule 119 of the Bankruptcy Rules be answered in the affirmative. 2. There be no order as to casts. NOTE: Settlement and entrv of orders ais provided for in Rula 124 of the Bankruptcy Rules, BANKRUFTCY ACT 1966 IN THE FEDERAL COURT OF AUSTRALIA BANKRUPTCY DISTPICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY No. W691 of 1983 EE: ESTATE OF LATE ANTHONY ALAN DAVIS CORAM: Sheppard J. DATE : 21 November 1985 REASONS FOR JUDGMENT HTS HONOUR: This 15 a special case stated pursuant to rule 119 of the Bankruptcv Rules. The case raises for consideration a question of the construction of sub-sec, 20J3(2) of the Bankruptcy ek 1986. That secrion 1s found in Division 2 of Fart II of the Ded Act. Division 2 15 entitled, "Common Investment Fund" defined in 8s. 20A as "the Commor Fund", The fund is provided fer in 2OB Ut) which provides that the Official Trustee shall open and maintain an account to be known as the Common Investment Fund. With che exception or certain monevs, to which it 15 unnecessarv to refer, all monevs received by the N€fieial Trustees after the commencement of the section are toa be vaid unto the Common Fund. Sectlron 20J was inserted into the Act bv the Bankruptcy Amendment Act 1980, s. 1A. Its provisions commenced cn 1 February 1981. Subsectrons (1), (2) and (4) of 5. 207 are as follows:- "C(L) Where the Official Trustee is the trustee of the estate of a bankrupt or of a deceased debtor, the ectate 15 not entitled, except as provided by sub-sections (2) and (3), to anterest con monevs held by the Official Truste2 as the trustee of the estate. (2 Where monevs have been held. or are likely to be held, for a prescribed reason, or for one prescribed reason and then for another prescribed reason, by the Official Trustee as the trustee of fhe estate of a bankrupt or of a deceased debtor for not less than one vear longer than those moneys would have been held, or would be likely to be held, by the Official Trustee but for that reason or those reasons, the kReaistrar mav direct, by writing under his hand. that interest on those monevs, at the rate prescribed for the purposes of this section and in respect of such period as he determines. shall form part of that estate, (4) Where it is #stablished that monevs held bv the Official Trustee as the trustee of the estate of a bankrupt or of a deceased debtor do not form part of the estate, interest on those monevs is payable to the perscn to whom those monevs are payable, out of the Common Fund, at the rate prescribed for the purposes of this section and in respect of the period durina which those monevs are held bv the Official Trustee." Sub-section (3) is not of relevance. The facts recounted ain the case disclose that one Anthony slan Davis died on 23) Movember 1991. Frobpate of bis will was ned granted on 4 August 1982 by the Supreme Court of New South Wales, the executor being Neville James Eldrid. On 25 Julv 1287 an administration order was made bv the Court on the application of the said Neville James Eldrid pursuant to 5s, 7247 of the Act whereby the Official Trustee was made trustee of the estate. On De § m ptember 1984 the Official keceiver oan behalf of the m agffieial Trustee applied 9 the Reaistrar in Bankruptcy pursuant ub-s feyui b ie) » oO7(2) of the Act for a direction that interest on id pp mon m vs held in the fund be paid to the estate for the period 16 August 1983 to 16 Auqust 1984 and that such interest should form part of the estate. A Deputy Reqistrar advised the Official Receiver of her intended response to his application. She said in part:- "I consider that s. 2315 Bankruptcy Act 1966 and s. 48°1)(D) Acts Interpretation Act 1901 make it clear that anv Fules to the Bankruptcy Act take effect from the date of notification in the Gazette, On rhat basis rule 195A takes effect from 72 July 1984 and the interest rate of 10% would apply from chat date. Wo interest rate was prescribed prior to that date." The Offic1al Receiver amended his application to one seeking interest from 23 Juiv 1984. On 18 February 1385 the Deputy Reqistrar made the foallowind direction pursuant to 5. 207 of za Dp acti- "Pursuant to 3. 207 «f the Bankruptcy Act 1966 IT, Margare Ann Leérnan, a Deputv Registrar in Bankruptcy for the Bankruvtcy District of New 4, South Wales and the Australian Capital Territorv OTRECT THAT anterest, calculated at the rate of 10 per centum per annum tor the period 23 July 1984 to 31 January 1985, on monevs held bv the Off1c1al Trustee as trustee of the estate of the late Anthony Alan Davis by reason that a person has, or has had, under consideration in aood Faith the institution of leqal proceedinas, SHALL form part of the aforementioned estate." The Deputy Registrar based her decision to allow interest from 23 July 1984 and not from 16 Auaqust 1983 on the fact that the prescription of the rate of interest for the purposes of sub-s. 203(2) was notified in the Gazette on 23 July 1984; see Statutory Rule No. 155 of 1984 which inserted rule 195A into the Bankruptcy Rules, The rule 1s as follows:- "For the purposes of secticn 2067 of the Act the vate of 10 per cent per annum is prescribed." No date of effect was specified in the rule or elsewhere. Paragraph 48(1)(b) of the Acts Interpretation Act 19061 provides that redqulations take effect, in the apnsence of a specified date, from the date of notification in the Commonwealth of Australia Gazette. Section 315 of the Bankruptcy Act provides that 5. 48 of the Acts Interrretati ) a) Act applies in relation ta Bankruptcy Rules as if references in 5s. 48 ta reaulations were references to rules. Section 315 1s otherwise 4a provision in usual form empowerilna the making ofr rules, onter alia, 5. prescribing all matters which are required or permitted to be prescribed by the Act. The question then is whether, because the rate of interest was not prescribed until 723 July 1984, the Deputy Reqistrar was prevented from directina the payment of interest from a aate earlier than the date of the prescription. T agree with ccunsocl for the Reaistrar that the rule had no effect prior to its coming anto forces. One would not have needed s. 48 of the Acts Interpretation Act to support that proposition. But in mv opinion that is not, as he submitted it was, conclusive of the outcome. In my opinion one has to consider the provisions of the relevant subsection. sub-sec. 203(2), in order to determine what the position 1s. The relevant part of the subsection is:- ",,. Ehe Reaistrar mav direct, by writing under his hand, that interest on those moneys, at the rate prescribed for the purposes of this section and in respect of such period as he determines, shall form part of that astate." at the time af the direction the rate had been prescribed. Did the Legislature intend that the Reaistrar should not be cmpowered toa direct the payment of interest an respect of anv period prior ta the date of a prescription? Gr was it intended that. proviaed phere was a prescription, the Registrar could direct wavmenc for any period whether commencing prior to or after the date of th ny ja prescription? Counsel for the Official Trustee drew mv attenrion cra the contrast which there 15 between sub-s. (2) and sgub-7. (4) of 3, tod, The Latter provision 15 one which requires ¢ayment of interest to persons whose monevs have been held by the Official Trustee and have been found not to form part of an estate. In that event interest on those monevs is pavable to the persons to whom the moneys are pavable at the rate prescribed for the purposes of the section and in respect of the period during which those monevs are held by the Official Trustee. As counsel said, there could scarcely be any doubt. in cases to which that provision applies, that, if the moneys were found to be payable after the prescription, the interest would run from a date, if it were otherwise appropriate that it should, pricr to the prescription. That is because the period is plainly specified in the subsection. In mv opinion the provisions of sub-s. (2) are not aifferent in their effect. In cases to which 1t applies the Reqistrar has a discretion. The Official Trustee is not entitled to interest as of right. The Recistrar must decide whether to direct that interest be paid. That is why the subsection is expressed as it 1s, and why 1t differs in form from the provisions of sub-s. (4). But the Registrar 1s not. in my opinion, fettered in the exercise of his discretion bv the fact that the date of the prescription of the rate of interest happens to be later than the commencement 7, of the period which the Registrar would otherwise think a in in?)mh appropriate for the payment of interest. I aaqree that s. the Acts Interpretation Act and s. 315 of the Bankruptcy Act operate to make 1t clear that rule 195A did not come into force and had no effect until 23 July 1984. But once 1t came into effect the prescribed rate was there to be applied in all cas 1h S Where the Reqistrar was called upon to exercise his discretion under the subsection. Tt follows, therefore, that the Deputv Reaistrar's discretion was not fettered in anv way by the fact that there was no rate prescribed for part of the period for which the Official Trustee claimed anterest. The important thing was that the rate had been prescribed at the time she came to exercise her discretion. The question which 15 raised for determination by the swecial case 1s as follows:- "Whether, having regard to the provisions of sub-s. 207(2) of the Bankruptcv Act 1966 and of Bankruptcy Rule 1953, 1t is open to 8 6the Registrar, in the exercise of his discretion when directing the payment of interest on monevs under the subsection. to direct that interest at the prescribed rate mav be paid from a date 2arlier than 23 July 1984," In mv opinion rhe answer tao that question 13, vs. and [ so answer the qu2stion asked in the special case. Lo} Before I conclude, I would add that the fact that the rate xf interest had been prescribed when the Deputy Reqistrar came to exercise her dascretion saves any consideration of the problem wh ch there would have been if an entitlement to ainterszr nai BH i) arisen in the absénce of there being any prescription at ali. Tf reler 1n passing, however, to the cases of Cameran -. The Den yty Pederal Commissioner of Taxation for Tasmania (1924) 24 CLR, Ss and Doewnev oo. Pryor (1960) 1n3 CLF, 752, Accordingly, the question is answered as I have indicated, There will be no order as to costs.