CATCHWORDS Bankruptcy ~ Calculation of fee payable to Registrar under 1.179 on the furnishing by trustee of an account of receipts and payments - whether fee calculated on basis of total realisation of assets of bankrupt or where there is a surplus on an amount sufficient to pay creditors one hundred cents in the dollar only. Bankruptcy Act s.175(1), s.148 - Rules 179(2), (4) & (5) Delaney ex parte Delaney (1932) 4 A.B.C. 255 Matter No. 257 of 1984 LAWRENCE JOHN HUGHES and BETTY DAWN HUGHES ex parte Richard George Freer, Registered Trustee FORSTER, J. ADELAIDE 12 JUNE, 1987 IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. 257 of 1984 BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA Re: LAWRENCE JOHN HUGHES -and- Re: BETTY DAWN HUGHES Ex Parte Richard George Freer Registered Trustee, of 210 Greenhill Road, Eastwood. JUDGE MAKING ORDER 3 FORSTER J. WHERE MADE H ADELAIDE DATE OF ORDER $ 12 JUNE, 1987 THE COURT ORDERS THAT: 1. The trustee pay to the Registrar a fee pursuant to r.179 on the basis of the total amount received by him of the estate or in relation to the debtors. Note: Settlement and entry of order is dealt with in Bankruptcy Rule 124. IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIA DISTRICT REGISTRY GENERAL DIVISION No. 257 of 1984 BANKRUPTCY DISTRICT OF THE STATE ee SS ee OF SOUTH AUSTRALIA Re: LAWRENCE JOHN HUGHES -and- Re: BETTY DAWN HUGHES Ex Parte Richard George Freer Registered Trustee, of 210 Greenhill Road, Eastwood. REASONS FOR JUDGMENT FORSTER J. : This is an application by the trustee of the bankrupt estates of the above persons. The trustee seeks directions as to the amount of fees he should pay pursuant tor. 179 of the Bankruptcy Rules. The estates of the bankrupts have been to an extent realised and one hundred cents in the dollar has been paid to creditors with respect to proved debts. There is a fairly considerable surplus in the hands of the trustee. The Registrar has said that he will assess the fee payable on the furnishing of an account pursuant to 8.175(1)(a) of the Bankruptcy Act on the basis of the total amount got in by the trustee and the trustee 2. contends that the fee should be assessed upon the basis of only s0 much as was got in as was necessary to pay one hundred cents in the dollar of proved debts. Section 175(1) of the Act is as follows - "The trustee of the estate of a bankrupt shall furnish to the Registrar, at the prescribed times and forthwith after the final dividend has been distributed in respect of the estate - (a) an account in accordance with the prescribed form, signed by the trustee, of his receipts and payments in respect of the estate; and (b) (omitted by No. 74 of 1981, 5.142.) (c) if any asset has not been realized, an explanation as to the non-realization." Rule 179(2) of the Bankruptcy Rules is as follows - "A fee is payable upon furnishing an account (not being an account in respect of which a fee is payable under sub0rule (3)) to the Registrar in accordance with paragraph 175(1) (a) of the Act or sub-section 211(1) of the Act." Rules 179(4) and (5) are as follows - "(4) The fee payable under sub-rule (2) or sub-rule (3) upon furnishing an account in respect of the estate of a bankrupt or deceased person or in respect of a debtor is - (a) if the prescribed amount in respect of the estate or debtor is less than $20,000 - a fee equal to 3 per centum of that prescribed amount; (b) if the prescribed amount in respect of the estate or debtor exceeds $20,000 but does not exceed $40,000 - a fee equal to the sum of $600 and an amount equal to 2 3. & 1/2 per centum of the amount by which the prescribed amount exceeds $20,000; or (ec) in any other case - a fee equal to the sum of $1,100 and an amount equal tol & 1/4 per centum of the amount by which the prescribed amount exceeds $40,000, less the fee or the sum of the fees paid upon furnishing a previous account or previous accounts in respect of the estate or the debtor and less any fee paid by the Official Trustee in respect of the estate under rule 181. (5) Where a fee is payable under sub-rule (2) upon furnishing an account in respect of the estate of a bankrupt or deceased person or in respect of a debtor, the prescribed amount for the purpose of sub-rule (4) is an amount equal to the total amount received by the trustee, or the sum of the total amounts received by each trustee, of the estate or in relation to the debtor, as the case may be, up to the end of the period to which the account relates less any amounts paid to secured creditors in respect of their securities up to that date and any amounts paid by any trustee in carrying on the business of the bankrupt, deceased person or debtor." Section 148 of the Act is as follows - "A bankrupt is entitled to any surplus remaining after payment in full of - (a) the costs, charges and expenses of the administration of the bankruptcy; (b) all debts that have been proved in the bankruptcy; and (c) interest on interest-bearing debts that have been proved in the bankruptcy." The trustee's argument as I understood it was that once the creditors were paid and the costs, charges and expenses of the administration were paid, the surplus was held by him in 4. trust for the debtors. The argument is that this is inconsistent with a fee having to be paid based on total realisation of assets because a fee is then being calculated in part on the basis of assets which belong to the debtors. If r.179(5) is inconsistent with s.148 then it is said that the rule must give way to the section and fees should be calculated on the basis of the amount received by the trustee necessary to pay out the creditors and the costs, charges and expenses. The second argument that is put is based on re_ Delaney ex parte Delaney (1932) 4 A.B.C. 255. This case concerns the fixing of a trustee's remuneration under the then Bankruptcy Act and Macrossan S.P.J. of the Supreme Court of Queensland, without publishing any reasons, allowed commission to a trustee based on the amount necessary to pay proved debts at twenty shillings in the pound. This case is really irrelevant to the case in hand as there is a distinction between trustee's remuneration and the fees required to be exacted by the Registrar on the filing of accounts. It seems to me with respect to the trustee that the words of r.179(5) are perfectly clear. The amount which the trustee has received in this case including the surplus is "the total amount received by the trustee ... of the estate or in relation to the debtor". There is, in my view, no suggestion in this rule or elsewhere that the total amount received by the trustee means something less than the total amount. There is, in my view, no inconsistency with 5.148. Pursuant to that section the bankrupts are entitled to the surplus after paying, 5. amongst other things, the Registrar's fees which must be included in "costs, charges and expenses of the administration". I direct the trustee that he should pay to the Registrar a fee calculated pursuant to r.179 on the basis of the total amount received by him of the estate or in relation to the debtors including the surplus after paying one hundred cents in the dollar and other costs, charges and expenses. I certify that this and the preceding pages are a true copy of the Reasons for Judgment of Mr Justice Forster. mie al 5 Dated: \2 Vget ? Mr Freer appeared as trustee (applicant) Mr Casey appeared as Official Receiver Mr Owen of Ian Low and Associates appeared as counsel for District Registrar Date of hearing ~- 26th May 1987 FEDERAL COURT OF AUSTRALIA ... Peet... 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