Hp2 CATCHWORDS Bankruptcy - fixation by Reaqistrar of trustee's remuneration - opportunity to be afforded debtor, whose Eankruptcyvy was annulled by the Court. am onportunitv to be heara - whether, Fearstrar having fixed remuneration without affording such opportunity, Reaqistrar empowered to re-fix remuneration - Court's qeneral rower te decide all questions coming within the coaqnzzance of the Court - whether Court should act pursuant to that power. Bankruptcy Act 1966, ss. 14, 30, 162 Bankruptcy Act 1914 (U.K.), ss. 82, 105 VE KYEE RUSSELL HOUSTON SMITH, EX PSPTE WILD ZAM JAMES JAMIZTON, APPLICANT, BRIAN THCMAS GFEGORY MUIR, RESPONDENT. No. WL3 of 1985 Coram: Sheppard J. Date : 24 April 1986 Place: Svdnev IN_THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTPICT REGISTRY GENERAL DIVISION No. P679 of 1985 OF THE STATE OF NEW SOUTH WALES ) ) ) ) ) ) BANKRUPTCY DISTRICT ) ) ) ) ) AND THE AUSTRALIAN CAPITAL TERRITORY RE: KYLE RUSSEL HOUSTON SMITH EX PARTE: WILLIAM JAMES HAMILTON Applicant BRIAN THOMAS GREGORY MUIR Respandent MINUTES OF ORDER TUDGE MAKING ORDER: Sheppard J. DATE OF ORDER: 1 May 1986 WHERE MADE: Sydney THE COURT ORDERS AND DIRECTS THAT: 1. The matter be referred to the Registrar so that the Registrar may review the remuneration of the trustee fixed by the Registrar on 31 October 1985, 2; fa) The Registrar notify the parties or their solicitors of the date and time when such review is set down to be heard (b) The Reaistrar afford each party the opportunity of being heard whether in writing or orally. There be no order as to costs. rd z Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules. IN THE FEDEPAL COURT OF ANSTPALTA NEW SOUTH WALES DISTPICT REGISTPY GENERAL DIVISTOMN BANKRUPTCY DISTRICT NF_THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERPRITOPY tri EYLE PUSSELL ROUSTON SMITH EX FAPTE: WiILLTAM JAMES HAMILTON plicant BFIAN THOMAS GPEGORY MITTP Besnondent CORAM: SHEPPARD J. MATE : 24 APFIL 1994 HIS HONOUR: This 1s an application made pursuant fo sud-sec. 14/5) of the Bankruptcy Act 1966 to review the decision of a Pectistrar in Bankruptcy. The decisicn was made or 9 December 1389 ard was to review the amount of the remuneraticn cf the applicant fixed pursuant to sub-sec. 1142/4) of the Act on 71 Netober 1985, The facts of the matter are shortlv as follows. By orter dated 29 April 1985 the Court ordered that the hankruptecv of the debtor. Mr. K.R.H. Smith. be annulled. The Trustee of Mr. Smith's estate was the applicant. Mr. W.J. Hamilton. The bankrupt was represented by a Melbourne firm of solicitors, Messrs. Pussell. Kennedy and Cook. Amongst the orders made when the bankruptcv was annulled was an order that the Trustee's "easts" he borne bv the estate. Mn 232. Mav 1985 Mr. Hamilton wrote to Mr. Smith's solicitor informing them that he had instructed his solicitors to "take out a» mn fy) fe for the hearing of the aporoval of mv remuneratior ir the sum of ¢€8,395.75". On the same dav Mr. Srith's solicitors wrote Fo Mr. Hamilton saving that they considered that ther were entitled ta some itemization of the claim. Thev suacested that Mr. Hamilton wrore ta the solicitors for Mr. Smith, seraine a computer print-out of his out-of-pocket expenses and savina, amonast other thanas, that thev were entitled to obiect "about the remuneration" to the Reqistrar. On 2 Julv 1985 Mr. Smith's eoliciters wrote to Mr. Hamilton referring to his latter c7F 223 Mav. They said thev were still awairtine notificatior of the 2 for hearing for the approval cf his remuneration. Thev said that thev would be pleased fc receive notificatien of the date fized, Qn 26 July 1985 Mr. Hamilton's sclicitors wrote to Mr, Snith's solicitors saving that Mr. Hamilton had sent them a copy of the debtor's solicitors' letter of 2 TJulv. Mr. Hamilton's so1 informed Mr. Smith's solicitors that an appiication under sub-sec. 162(4) of the Act that the Feagistrar fix a trustee's remuneration was dealt with by the Pegistrar in chambers without the attendance of parties. They added that the Pedistrar expected written submissions. Thev said that, for that reason. fhev did not know the date on which "the taxation" would te held by the Feagistrar., but mentioned that thev had been informed thac fhe matter had been delaved. On 2£ September 1985 Mr. Hamilton's selicitors wrote ta Mr. Smith's stlicitors informing them that the Feaistrar had fixed Mr. Hamilton's remuneration at $8,905.75. The aiunformaticn in Ehis letter does not accerd with that in the file which discloses Fhat 14 was not until 31 October 198F thar one of the Peagistrars f. un Barkruptey fixe Yr the remureration at tre figure menticred ir ch) S.7 mn Khe letter. $€,9 be "axtraordinarilvy hich", A number of matters were mentioned in "heir letter ain suprort of this statement and akcut the diffieultvy cf ascertaining from recordis which thev had «whether the charces were aporopriate or mot. It is mat necessary te aoa inte the detail of the halance cf the Letter, On 9 December 1985 the Reqistrar wrote to Mr. Hamziiton as follows:- found in s. 142. So far as it is material, the se "4, "I refer to the affidavits filed in support of vour claim for remuneration in this estate and to copies of correspondence recently made available to me concerning vour claim. It 1s apparent from this correspondence that Mr. Smith's solicitors were under a misapprehension that a formal date for hearing of the claim would be civen and vour letter of 23 Mav 1985 does suagest that this is the case. Our practice has been ta cansider such claims in chambers with the benefit of anv abiections in writing to the claim but without the parties being present. Obiections were in fact taken to vour claim fer remuneration, duirectiv to veu and to vour solicitors, but no communication was made hv either partv of this fact to me. Given this situation, a review of the amount of vour remuneration will be conducted and for this purpose, I have set a date and time ef 15 Januarv 198% at 10.00 a.m. ain mv office on Level 16, Law fourts Building to hear anv submissions on the matter. I will be asking Mr. Smith to file and serve details of his obiections by 2 Januarv 139a6". Tk is the Feaistrar's decision ta re-open the natte 'emal hearing which 1s ir muestien in this arpli The relevant provisions of wt he Act are princ w pa oO "(L) The remuneration of the trustee ef the astate of a bankrupt mav be fixed, fren time to fime, by resolution of the creditors or, if the creditors so resolve, by the committee of inspection. Ce (4) Where the remuneration of the trustee isn fixed bv the creditors or the committe " iu J is] ayy + r liv + Ba by iw BY ™ inspection, the Reaistrar mav fix the remuneration. 'S) The Reqistrar mav, on the application of a » creditor or the trustee or of his own motion. review the amount of the brustee's remuneration and may confirm, reduce or increase the remuneration. Cr Because of one of the submissions made bv the solicitor for a Mr, Smith. 1t 1s necessary to consider the form of s. 142 before "(4) Tf the creditors farl, or the committees of inspection fails, to fix the remuneration of Phe trustee in accordance with this section, rhe Pegistrar mav fix the remuneraticn iS) The Peaistrar mav, on the application of a creditor or trustee, review the amount of the "<rustee's remuneration and mav confirm reduce Or increase the remuneration". In the submission of counsel for Mr. Hamilton the Peaqistrar hac no power ta initiate the review of his own fixation of remuneration. In his submission sub-sec, 142/95) of the Act onlz apolies where the remuneration nas been fixed oursuant to sub-sec. 1692(1), not where 1t has been fixed pursuant te sub-sec, 152(4). In order to counter this suaqgestior the seliciters for Mr. Smith relied upon the earlier forms of sub-secs. (4) and 133 af os, 162 as an indication that sub-sec. (8) was intended te apply to all fixations, whether bv resolution of the creditors, the committee of aumspection or the Reaistrar. He further submitted that the fact that sub-sec. (5) followed immediatelv after sub-sec. (4), which empowered the Reaistrar in the circumstances there mentioned ta fix the remuneration, was an undication that the ocwer to review was a power to review, inter alia, fixations bv the Reqistrar himself. Tr 1s the insertior into sub-sec. 162(5) of a power in the Peagistrar to review a fixation of his om motion and the fact that that power follows immediatelv the provisions of sub-sec. 162(4¢) which empower the Recistrar to fix the remuneration in the circumstances there mentioned which lend support te the argument that the Reaqistrar had power in the present case to embark cn a further fixation. No support for the arcument is, I think, to ke foune in the changed form of sub-sec. 1€2/4), Havinag reflected on the matter, however, I do not think that fhe submission made on behalf of Mr. Smith should be accepted. Little turns on the order of the sub-sections. The 1920 amending Act did not change the former order. The fact that it did not is in my apinion equivocal. Its purpos? was to eémpewer 'the Peaistrar te act, not rust in circumstances where creditors or committees of inspection had farleé to fix the remuneratic o also in cases where thev had not in fact fixed it. The need for there to be an actual failure was removed. As a concomitant of this. the Reqistrar was qciven power to act on his cw motion. But does that mean that he can, once he himself has fixed the remuneration, whether on his own motion or otherwise, take steps to fix ait again. It seems to me that there is somethina intrinsically odd in conferring upon a Reaistrar power to review his own decisions. There seems to be no reason why the leaislature should have intended that to be the case. There 15 no authoritv which is 9%7F assistance on the matter. Io was referred ta Pe Molyneux Aluminium Prv Limited £19703 V.P. 454, mM wp- :J wT tT yr D f=} it) + + oO % but in mv opinion that case 1s not in point. 1s mot free from doubt but that the better view is that sub-sec. 142(5) was intended to provide for the review of fixaticns bv a D Pot 1D a) wr ir 11) iw oO mn nm Ht thank the matter is an unfortunate one. Although there 1s to be found some irdication in letters writter be made to the Reoaistrar. I thank that the solicitors were antitied to expect notice from the PFecistrar of his intertior to proceed to the fixation of Ehe remuneration and an invitation from him £0 make submissions or provide relevant evidence The auesticn 1s what can be done? Althoudh the course Proposed by the Registrar in his letter cf 9 December 1285 was A. not one open to him. I think that it is the course which ought to be followed. The question is how this can be achieved. One wav would be for Mr. Smith to applv. although out of time. for the review bv the Court of the decision of 31 October 1985. Sut that would necessitate a further application to the Court and cansequent expenditure in leaal costs. There would alsa be After I reserved mv decision. the decision of the Court of Appeal ain Endland un In__re Colgate, ex vcarte Trustee of the Proverty of the Bankrust £1986] 2 W.L.R. 137 came 2 mv notice. There creditcrs had repeatedlv refrained from attending meetinas which were called for the purpose of fixing a trustee's + oa D remuneration. The corresponding Enalish section is s. 82 cf Bankruntovy Act 19124 (iT. KL), The section provides that wheres r D inspection. There is no provision comparable to sut-sec. 1642/4) of the Australian Act empowering the Reaqistrar fo f1x remuneration in 2 cas¢ such as In re Colovate. However, the Enalish Court of Appeal solved the probiem sy the application of s. 105 of the Bankruptev far as relevant, provides that. subiect to the provisions cf the oa oO tt » verv court havine jurisdiction in bankruptcy, shail have full power te decide all questions whatsoever, whether cf law or i" fact. which mav arise in anv case of bankruptcy comina within the eroanizance of the court. or which the court mav deem it expedient or necessarv to decide for the purpose of doina complete justice. The comparable provision of the Australian Act is to be found in sub-sec. 30(1) which provides inter alia that the Court has full power to decide all questions, whether of law or of fact, in anv case of bankruptcv or anv matter under Part X or Part XI comind within the coanizance of the Court and that the Court mav make such orders as the Court considers necessarv for the purpose of carrving out or giving effect to the Act in anv such cas or matter. The first matter that the Court cansidered in In_re Coldate sas whether its powers under s. 195 were circumscrihed Fecausa cf Fre opening werds of the section, "Subiect toa the provisions of Frais Act" The Court held that those words were met restrictive of what at might do. It is unnecessary to consider tnis matter further because those words do not appear ins. 20 Raving disposed of that problem, Mav £.J., who wrote the principal yudoment. sare (p. 142):- "Tn my iudament the obiect cf section 105 is five this court or the bankruptcy court wi powers af doing justice in a particular case, 2 in tne particular circumstances of the insta appeal one must invoke thase powers to do justice because the machinery laid down bv section 82 of the Act ef 1914 has in the event. and after numerous attempts to make 1f work. broken down. With all respect te the registrar. in mv view the remedv does not lie in the hands of the creditors rhemselves. They have been offered s1x opportunities to deal with this question of ADI D a pdDerAmMo 10, remuneration of the trustee, and on each occasion none of them has seen fit to attend at the meetings called. In mv judament the remedy for that situation lies in the hands of the court pursuant to its aqeneral powers under section 105 of the Act". Mav L.Jd. then considered the question of whether the matter should qo back to the Reaistrar in order that he might fix the remuneration. In the circumstances of that case 1t was decided Fhat the remuneration could be fixed bv the Court and that was the course which was followed. That is not a course which can be followed in the present case. The question is whether I should take the view that s. 30 of the Australian Act enables me to cure the position which has arisen by orderinc that the matter go back to the Pedqistrar to be heard again, In mv opinion s, 30 daes erabie me to take that course. It seems a suitable wavy out of the prebiem. Tustice will be dore without the need for Mr. Smith himself ro make a further application. I propose therefore ta make an order that the matter be referred tc the Peqistrar so that he mav fix the remuneration of the Trustee. He should notifv both Mr. hamilton and Mr. Smith or their solicitors cf the date and time when he will proceed to fix 1¢ and he should afferd each an opportunity of being heard whether in writine or orallv. T have been asked to sav something about the procedur 'Db PH y Hn a should desirablv be fsllowed bv the Reqistrar in similar cases. 11. In mv opinion. it will alwavs be desirable for Reaistrars fix. remuneration to notifv parties. whether trustees. debtors or creditors, likelv to be affected bv the fixation, of the date, time and place when and where the fixation 1s to occur and invite Fhe persons notified to make submissions 1£ they so desire. I doa not say that the Reqistrar 1s obliged to afford an opportunity of makina oral submissions in all cases. Eacn case will depend on its own circumstances. But. as the Reazstrar's proposed procedure itself acknowledaes, it is important that notice of the date when the fixation is to take place be aiven and that Opportunity of makina submissions cr leadina avidence he clearlv afforded. There remains the question of casts. The parties have askea me to leave this question until thev have considered these reasons, I shall not therefore deal with costs act this staze When the leqal representatives and their clients have had an opportunitv of considering these reasons, I shall hear araqument on the form of the orders to be made and on the aquesticn of costs.. i certify that this andthe /O preceding pages are a true copy of tne reasons for judgment herein cf The Honourabie Mr Justice Sheppard. / / xz A Associate Dated 24 APA/A (PC