mypoees tT No. TI) 1Be. CATCHWORODS BANKRUPTCY - alleged wrongful conduct by Trustee of creditors' meeting - penalty - Deputy Registrar purporting to reduce Trustee's remuneration to nil -— function of Deputy Registrar — function of Court in disciplinary action concerning trustees. CONSTITUTIONAL LAW - fixing of Trustee's remuneration by Registrar — whether power under s.162(4) and 162(5) amounts to exercise of judicial power contra ss.71 and 72 of The Constitution - not a grant of judicial power of The Commonwealth. BANKRUPTCY ~ Part X deed of assignment - application to have it declared void -— whether insufficiency of divisible property relevant - primacy of creditors' decision. Bankruptcy Act 1966 ss.14(5), 162(4), 162(5), 212. The Constitution 1901 ss.71, 72. RE ALAN ROY PALMER; EX PARTE ALAN RICHARD TAYLOR QLD. NO.X63 of 1986 SPENDER J. BRISBANE 4 MARCH, 1988. IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) QLD. No.x63 of 1986 BANKRUPTCY DISTRICT OF THE SOUTHERN) DISTRICT OF THE STATE OF QUEENSLAND) RE: ALAN ROY PALMER EX PARTE: ALAN RICHARD TAYLOR as Controlling Trustee under Part X of the Bankruptcy Act 1966 (Commonwealth) as amended Applicant MINUTE OF ORDER JUDGE MAKING ORDER: SPENDER J. DATE OF ORDER: 4 MARCH 1988 WHERE MADE: BRISBANE THE COURT ORDERS THAT: 1. The remuneration of the Controlling Trustee, Mr. Alan Richard Taylor, be fixed in the sum of $2,085.70. 2. No order as to costs. NOTE: Settlement and entry of orders is dealt with by Rule 124 of the Bankruptcy Rules. IN THE FEDERAL COURT OF AUSTRALIA ) GENBRAL DIVISION ) QLD. No.X63 of 1986 BANKRUPTCY DISTRICT OF THE SOUTHERN) DISTRICT OF THE STATE OF QUEENSLAND) RE: ALAN ROY PALMER EX PARTE: ALAN RICHARD TAYLOR as Controlling Trustee under Part X of the Bankruptcy Act 1966 (Commonwealth) as amended Applicant CORAM: SPENDER J. PLACE: BRISBANE DATE: 4 MARCH 1988 REASONS FOR JUDGMENT This 218 an application by Alan Richard Taylor, the Controlling Trustee under Part xX of the Bankruptcy Act of the estate of Alan Roy Palmer, made pursuant to s.14(5) of the Bankruptcy Act 1966, seeking to review a decision of a Deputy Registrar in Bankruptcy whereby the remuneration sought by him, to be approved in the sum of $2,085.70, was 'reduced to nil', and that an order be made that the controlling trustee's remuneration be approved at that sum, and that the costs of the application be the costs in the administration of the estate of Alan Roy Palmer under the deed of assignment pursuant to Part X of the Bankruptcy Act 1966. Mr. Taylor of Messrs. Horwath & Horwath, chartered accountants, has been registered as trustee in bankruptcy since 1974. Alan Roy Palmer executed a document in the form of an authority pursuant to s.188 of the Bankruptcy Act on 7 March 1986. The name of the person so authorised was left blank, but the consent to exercise the powers included in the form referred to the "said" Alan Richard Taylor, and was signed by him, this signature being witnessed by Mr. Bruce Milner, who is a qualified solicitor of the Supreme Court of Queensland employed by Messrs. Horwath & Horwath. Mr. Milner also witnessed Mr. Palmer's signature on that form. It may be noted that s.306(2) provides:- "A defect or irregularity in the appointment of any person exercising, or purporting to exercise, a power or function under this Act or under a deed entered into under this Act does not invalidate an act done by him in good faith." Mr. Palmer, who is a bookmaker, on 7 March 1986, handed to Mr. Taylor his available cash in the sum of $1,580.00, which was deposited to Mr. Taylor's trust account and a receipt issued. On 12 March 1986, the Deputy Registrar wrote to Mr. Taylor and acknowledged receipt of a s.188 authority and, by letter of 20 March, drew attention to the absence of the nomination of a registered trustee authorised to call a meeting of creditors. On 25 March, Mr. Taylor replied to that letter, indicating that Mr. Palmer had on that same day signed an authority and the letter ended with the statement, "I apologise for the oversight." Section 194 deals with the calling of meetings, and pursuant to this section, a meeting of creditors was convened on Thursday, 27 March 1986, at the office of Messrs. Horwath & Horwath. According to the amended minutes of this meeting, four creditors with debts totalling $911,076.00 in value attended for voting purposes. The statement of affairs of the debtor was tabled and the debtor was questioned by the meeting. A special resolution was put before that meeting in these terms:~ "That the debtor, Alan Roy Palmer, enter into a Deed of Assignment with his creditors under Part X of the Bankruptcy Act." In respect of that resolution, Baymer Pty.Ltd., a creditor in the sum of $5,106.00, by 1ts proxy Mr. Milner, voted in favour of the resolution, as did a Mr. Malcolm Craig, who had a proxy on behalf of the Palmer Family Trust, which was a creditor in the sum of $1,200.00. The proxy for the Deputy Commissioner of Taxation, whose proof was for $669,532.33, voted against the debtor entering into a deed of assignment and the major creditor, Citicorp Australia Limited, who was a creditor in an amount of $734,596.92, abstained from voting on the resolution. The minutes record that the chairman advised that the proposal had not been passed by the necessary majority in number or value. A resolution, moved by the proxy for the Deputy Commissioner of Taxation and seconded by the major creditor, Citicorp Australia Limited, was then put:- "That this meeting of creditors be adjourned to 2.30 p.m. on Thursday 10th April, 1986 at 2.30 p.m." This resolution was carried unanimously. On 1 April 1986, Mr. Taylor caused to be posted to the creditors of Mr. Palmer notice of the adjournment of the meeting of creditors, requesting that creditors lodge fresh proxies with Mr. Taylor prior to the adjourned meeting. Mr. Taylor says that on 10 April 1986, he received a proxy form from Citicorp Australia Limited, under a covering letter by a Mr. Jones, Manager of the Corporate Finance Division, and the proxy gave a direction to vote in respect of a motion to agree to a Part X arrangement. Mr. Taylor then spoke by telephone with Mr. Jones and, as a consequence, a telex was received at midday, the effect of which was to confirm that the reference to a Part X arrangement in the proxy was to reflect the intention of Citicorp Australia Limited to direct the debtor to enter unto a deed of assignment. The minutes of that adjourned meeting indicate that Mr. Taylor was present, as were Mr. Palmer and Mr. Milner, who held a proxy for Baymer Pty.Ltd.. Mr. Taylor held proxies for Citicorp and for the Palmer Family Trust. The Deputy Commissioner of Taxation did not submit a further proxy, and the original proxy was not permitted to vote. At this adjourned meeting, a special resolution was moved and seconded:- "That the Debtor, Alan Roy Palmer, execute a Deed of Assignment under Part X of the Bankruptcy Act 1966." The minutes record that that was carried unanimously. A deed of assignment was signed by Mr. Palmer and Mr. Taylor on 10 April 1986. Mr. Taylor says that to give effect to the deed of assignment it was necessary that the creditors by ordinary resolution appoint a trustee to administer the debtor's estate. None of the proxies contained directions as to the appointment of a trustee, and he says that as a consequence, he caused a telephone call to be made to Citicorp Australia Limited during the course of the meeting in the presence of all creditors and observers, and a telex was received shortly thereafter from Citicorp Australia Limited, the text of which read:- "We agree and vote in favour of Alan Richard R. Taylor to be the trustee of the deed of assignment." The minutes record that the motion calling for the appointment of Mr. Taylor as trustee of the deed was carried as an ordinary resolution. It further records in respect of remuneration:— "The Chairman advised the Meeting that as there were no independent Creditors present and voting at the Meeting, he was not willing to put to this meeting of creditors a resolution for approval of the Controlling Trustee's remuneration. The Controlling Trustee would apply to _ the Registrar in Bankruptcy for approval of his remuneration." On 23 April, 1986, Mr. Taylor wrote to the Registrar in Bankruptcy enclosing a copy of his memorandum of fees for professional services provided as controlling trustee in the administration of the estate of Mr. Palmer, for the purpose of having him approve those fees. Section 193 applies the provisions of ss.162-167 (inclusive) in relation to _ the controlling trustee, as if the debtor who gave the authority under s.188 were a bankrupt and the controlling trustee were his trustee in bankruptcy. Section 162(4) provides:- "Where the remuneration of the trustee is not fixed by the creditors or the committee of inspection, the Registrar may f1x the remuneration." And sub-section 162(5) provides:- "The Registrar may, on the application of a creditor or the trustee or of his own motion, review the amount of the trustee's remuneration and may confirm, reduce or increase the remuneration." The letter accompanying the memorandum of fees included the following:- "My staff and I held proxies from several creditors with specific directions to vote in favour of a Deed of Assignment but the proxies did not specifically authorise me to draw my fees. In these circumstances, my policy is to have my fees assessed by an independent Arbitor (sic)." The memorandum of fees listed fourteen items of work attended to by Mc. Taylor or his staff and gave a breakdown of the time expended and the rate claimed as follows:- " HOURS RATE TOTAL Controlling Trustee 6.5 98.00 637.00 Insolvency Manager 10.3 65.00 669.50 Senior Typist -8 38.00 30.40 Intermediate Typist 1.6 31.00 49.60 Senior Computer Operator 6.4 39.00 50.70 Intermediate Insolvency Clerk 1.3 39.00 50.70 Insolvency clerk 11.7 33.00 386.10 $2,085,70 On 23 May 1986, Mr. R.A. Allen, a Deputy Registrar, wrote to Mr. Taylor and listed a number of points of criticism. The first concerned the defect in the s.188 authority. The second related to the exclusion of the representative of the Australian Taxation Office from voting at the adjourned meeting of 10 April 1986 because she was without a fresh proxy. Mc. Allen further stated that the proxy executed by the Deputy Commissioner of Taxation on 16 March 1986 authorised the person to be a proxy at the meeting of creditors on "27 March 1986 or at any meeting of the creditors of the abovementioned debtors (sic)." Mr. Allen said that the representative should not have been prohibited from participating in the adjourned meeting. The third matter of criticism was that Mr. Taylor resumed the chair at the adjourned meeting "as it was an adyournment of the original meeting", and said "I fail to perceive what authority there was for that." The next matter concerned the approach by Mr. Milner to Citicorp Australia Limited seeking authorisation of a vote in favour of Mr. Taylor becoming trustee, Referring to the fiduciary obligation owed by a trustee to act in accordance with what is morally right and honest, Mr. Allen stated:- "My present view is that the sequence of events outlined above are solicitous and should not have been engaged in." The letter continued:- "Of more moment than all the above irregularities is the fact that once a motion for a deed of assignment is put and lost, it cannot validly be put at an adjourned meeting. Re Appleton ex parte A.R.C. Engineering Pty Ltd (26.4.85) per Pincus J. The aim of this rule is to prevent the wearing down of creditors by behaviour which would be regarded by the Court as oppressive." Later he said:- "For immediate purposes, you have applied for approval of controlling trustee's remuneration in the sum of $2085.70. In Re RM (1931) 3 ABC 114, the remuneration of a trustee suffered substantial reduction through demonstrable defaults. Subject to whatever written submission you may wish to put to the contrary I regretably presently propose reducing the controlling trustee's remuneration herein to nil." On 4 June 1986, Mr. Taylor gave a very detailed, six page reply. In respect of the absence of the nomination of a trustee in that authority, he drew attention to the requisition by the Registry of 20 March and his reply of 25 March and said:- "I regard this matter as a clerical oversight on my part and adequately explained by correspondence from and to your Registry." He acknowledged:- "The representative from the Australian Taxation Office was excluded by me from voting at the Adjourned Meeting of Creditors on 10th April 1986. In hindsight that was a mistake on my part." He said that, when that matter was discussed at the meeting, he told her that, unless she wished to object to his decision, he intended to exclude her from voting and no objection was raised by her or any other person present at the meeting. He noted that the Director of Public Prosecutions was represented at the adjourned meeting of creditors, and said:- "Had an objection been raised, even by an observer, I would have given due and detailed consideration to it. That is my practice as Chairman." I note the possible application of s.201 to this aspect of complaint. As to his resuming the chair at the adjourned meeting, he referred to Horsley's Meetings Procedure Law and Practice a passage at p.91 reading:- "An Adjourned Meeting when it 1s resumed, is a continuation of the original Meeting. For practical purposes, it is generally beneficial and preferable for the same chairman to preside at an Adjourned Meeting." In this respect, Mr. Taylor said:- ",..no objection was raised by any person present to my resuming the Chair. If you know of authorities to demonstrate that my actions were in any way defective or questionable I would be pleased to receive your advices." 10. As to the resolution that Mr. Taylor be appointed trustee, he referred in some detail to the circumstances and to the fact that the meeting was still under way while that procedure was followed in the presence of all persons present at the meeting, and after the special resolution concerning the deed had been properly passed. Mr. Taylor said:- "Neither Mr. Milner nor myself solicited the vote of Citicorp Australia Limited. That Creditor was left entirely to exercise its own discretion. I respectfully suggest you obtain the advices of Citicorp Australia Limited in this matter." It 1s not irrelevant to note the provisions of ss.204(4) and 214(1)(b) 1n this respect. As to putting the resolution forward on two occasions, strenuous objection was taken to any suggestion that the creditors were "worn down" as a result of the adjournment of the meeting. Attention was drawn to the fact that the largest creditor was a party to the adjournment of the first meeting. Mr. Taylor said that, in respect of the suggestion of a failure to exercise the necessary degree of neutrality in the administration:-— "I was appointed a Registered Trustee in Bankruptcy in 1974. Mr. Milner is a Solicitor of the Supreme Court of Queensland. We both resent the implied criticism that we failed to exercise the necessary degree of neutrality in this adminvstration." Any complaints by any creditor of failure of professionalism or neutrality were sought and Mr. Taylor stated:- 11. "Mr. Palmer was not known to me nor to Mr. Milner prior to his approaching me and requesting that I convene a Meeting of his Creditors. My firm has had no professional relationship with Mr. Palmer in the past." Other detailed matters were referred to, including:- "All persons present at both meetings, including observers from the offices of the Australian Government Solicitor, the Director of Public Prosecutions and the Commissioner of Taxation, were given an opportunity by me to question the Debtor about his financial affairs. The debtor was closely questioned, particularly by the representatives from Government instrumentalities. I suggest you seek independent verification of this by speaking with the people at the meetings." And later:~ "It 1S not my role to preempt a decision of a Meeting of Creditors as to how those Creditors wish a Debtor's financial affairs to be administered. Mr. Palmer approached me in my Capacity aS an experienced impartial Insolvency Practitioner for advice on his financial position as at March 1986. On the basis of those discussions I accepted Mr. Palmer's instructions to convene a Meeting of his Creditors. I object to the implied accusations that my intention was to mislead or jeopardize the position of unsecured Creditors." The letter contained the statement:- "Your decision to reduce my remuneration to nil is arbitrary, and unjustifiable. I will instruct my Solicitors to have your decision overturned." On 12 June 1986, Mr. Allen, Deputy District Registrar, wrote simply:- 12. ",..the decision upon remuneration stand(s)." The present application was filed on 25 June 1986. On 14 July 1986, a notice of antention to oppose the motion of Mr. Taylor was filed on behalf of the Deputy Registrar in Bankruptcy of the Southern District of Queensland indicating that the Deputy Registrar intended to oppose the making of the orders sought by Mr. Taylor, on the grounds:-— "(1) that the conduct of the Controlling Trustee at a meeting of creditors held on 10th April, 1986 and earlier was such that he should be denied his remuneration either in whole or alternatively in such part as this Honourable Court thinks fit Particulars of conduct a. wrongfully rejecting a proxy signed by the Deputy Commissioner of Taxation b. wrongfully permitting the meeting to entertain a motion that the debtor enter into a Deed of Assisgnment (sic) when such a motion had, by special resolution, been defeated at a meeting of creditors held on 27th March 1986. c. appending to a Notice of Adjourned Meeting dated lst April, 1986 an Instrument of Appointment of Proxy bearing the words "tf you are unable to attend this Meeting and if you are desirous of being represented at the Meeting by the Trustee or a member of his staff it 1s suggested that you appoint the "CHAIRMAN" to be your proxy" d. contacting a creditor namely CITICORP Australia Limited, during the creditors meeting in relation to your being appointed trustee under the proposed Deed of Assignment." I have referred to this so as to indicate that there is no dispute as to the nature of the tasks performed or as to the hours taken or rates of remuneration claimed, and further, so as 13. to indicate the basis of the Deputy Registrar's action, namely that it was thought right to reduce the trustee's remuneration for misconduct. When this matter was first before me, a number of Matters were raised. The first was the standing or desirability of the Registrar in respect of the s.14(5) review. It was also suggested on behalf of Mr. Taylor that the constitutional validity of s.162(4) and (5) would be put at issue in these proceedings, yet notices pursuant to s.78B of the Judiciary Act had not at that time been sent. The matter was adjourned, and on the hearing of the application by Mr. Taylor, the Registrar in Bankruptcy appeared by counsel to indicate that the Registrar was no longer opposing the application but would abide by the order of the Court. The Attorney-General for the Commonwealth of Australia appeared by senior and junior counsel to make submissions on_ the constitutional point that had been raised on behalf of Mr. Taylor and counsel appearing for the applicant trustee. Because of his particularised criticism of the trustee's conduct, it is important, in my opinion, to note the Deputy Registrar's reference to Re R.M. [1931] 3 A.B.C. 114, saying:- "the remuneration of the trustee suffered substantial reduction through demonstrable defaults." 14. I will later indicate that this suggests to me a misconception of that case on the Deputy Registrar's part, and of in what circumstances and under what powers it was decided, and shows the misplaced confidence in it by him as demonstrating an available power to reduce the trustee's remuneration to nil. As to the claimed constitutional point, it was submitted that s.162(4), which was set out earlier, does not empower the Registrar or Deputy Registrar to penalise the applicant for any default on his part. It was said that the function of a Registrar in this situation has been likened to that of a Taxation Officer on taxation of a bill of costs and his function, (which was referred to 1n In re Shirley, Ex parte The Board of Trade (1892) 9 Morrell's Bankruptcy Reports 147), was that in determining remuneration the Registrar "should do that which is just and right". It was submitted that the conduct of the applicant and the imposition of any penalty in respect therefore was a judicial matter for consideration by the Court only under the provisions of the Bankruptcy Act 1966 and in particular ss.155(5B), 155(5C), 179, 212, 212A and 212B. It was submitted that the entitlement of the Registrar in respect of any misconduct which in his view may have arisen is to apply to the Court so that it may take such action as those sections entitle it to take against the trustee. I think it relevant, at this stage, to set out s.212 in full:- 15. "212(1) Where the Registrar is of the opinion, whether as a result of an account furnished to him in pursuance of section 211 or of an audit under that section or for any other reason, that a trustee who is or has been a controlling trustee may have been guilty of malfeasance, misfeasance, negligence, wilful default or breach of trust in relation to the property or affairs of the debtor, the Registrar may apply to the Court for an order under sub-section (2). 212(2) The Court may order that the trustee make good any loss that has been sustained by reason of the malfeasance, misfeasance, negligence or wilful default of, or a breach of trust by, the trustee or may make such other order as the Court thinks just and equitable in the circumstances." Implicit in the claim of constitutional invalidity is that the Deputy Registrar is not entitled, pursuant to either s.162(4) or 162(5) to penalise the applicant for misconduct by reducing his remuneration to nil, and that any such imposition of a penalty is within the judicial power of the Commonwealth and it is competent for Parliament to repose such judicial power only on Courts under ss.71 and 72 of The Constitution. In the letter of 23 May 1986, the Deputy Registrar andicated that he proposed, subject to whatever written submission he received, "reducing the Controlling Trustee's remuneration herein to nil." It was submitted, and in my opinion correctly, that the function of the Deputy Registrar in the circumstances here was to "fix the remuneration" of the trustee. The reference to reducing the trustee's remuneration to nil seems to be a reference to the powers contained in s.162(5). I respectfully agree with the observation of Sheppard J. in Re Smith, Ex Parte Hamilton, (unreported judgment of the Federal Court of Australia sitting in Sydney on 24.4.1986), where His Honour said:- 16. "I think the matter is not free from doubt but that the better view is that sub-sec.162(5) was intended to provide for the review of fixations by resolutions of creditors or committees of 1nspection but not of fixations by the Registrar himself." It was submitted that, pursuant to s.162(4), the Deputy Registrar was only empowered to carry out the administrative task of assessing a reasonable commercial fee payable to the applicant for the actual services carried out by him, in that he could only have regard to the amount of the work done by the applicant, and determine that the work carried out was not excessive and therefore reasonable in the circumstances. That sub-section did not entitle him to penalise the applicant for any default on his part. If the Deputy Registrar was of the view that the applicant was guilty of some misconduct, he was entitled only to apply to the Court for redress against the applicant. It seems to me that the constitutional point sought to be argued on behalf of the trustee is misconceived and confuses the question of the constitutional validity of a statutory power with the validity of the exercise of that power. A well known definition of "judicial power" is that given by Griffith C.J. in Huddart, Parker & Co. Pty. Ltd. v. Moorehead [1908] 8 C.L.R. 330 at p.357, where he said:- "Apart from these considerations, I am of opinion that the words 'judicial power' as used in sec. 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects, or between itself and its subjects, whether the rights relate to life, liberty or property. The 17. exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action." This passage was referred to with approval by the Privy Council in The Shell Company of Australia Ltd. v. The Federal Commissioner of Taxation (1930) 44 C.L.R. 530 at pp.542-3. The High Court also considered the question of what constituted judicial power of the Commonwealth in The Queen v. Davison (1954) 90 C.L.R. 353. In the joint judgment of Dixon C.J. and McTiernan J., (with whom Fullagar J. at p.375 generally concurred) their Honours said at p.366:- "Many attempts have been made to define judicial power, but it has never been found possible to frame a definition that 1s at once exclusive and exhaustive." Reference was then made, in the following page, to the well known definition given by Palles C.B. in The Queen v. Local Government Board (1902) 2 I.R. 349 at p.373. I am of the clear view that the power conferred on the Registrar to fix the remuneration of a trustee under s.162(4), on consideration of the various criteria referred to in the cases above, does not constitute the grant of judicial power to a body other than as provided by Chapter III of The Constitution. The nature of the power conferred on the Registrar under s.162(4) is akin to that of a taxing officer on a taxation of costs. In my view the function of the Registrar 1n undertaking this type of task is not such as may properly be called 18. 'judicial'. In Silk Bros.Pty.Ltd. v.State Electricity Commission of Victoria (1943) 67 C.L.R. 1, the High Court considered that certain regulations in the National Security (Landlord and Tenant) Regulations purporting to vest in Fair Rents Boards power to determine applications by landlords for the recovery of premises and providing for the enforcement of the Boards' orders, were invalid, inasmuch as their effect would be to confer judicial power contrary to ss.71 and 72 of The Constitution. However, the power to fix a fair rent was held not to be judicial: Latham C.J. at p.13, with whom Rich and McTiernan JJ. agreed, concluded that provisions relating to the fixing of fair rents were quite independent of the provisions relating to the recovery of possession and ejectment, and he expressed the view that if the regulations conferring powers of possession and ejectment on the Boards were found to be invalid, this did not affect the validity of the rest of the Landlord and Tenant Regulations. In Re Moss; Ex parte Tour Finance Ltd. (1969) 13 F.L.R. 101, Gibbs J., as he was then, considered that in fixing the time for compliance with a bankruptcy notice under s.40(1)(g)(i) of the Act, the Registrar was not acting judicially. At p.106, he said:—- "In 1ssuing a bankruptcy notice, and in fixing the time for compliance with its requirements, the Registrar does not decide any controversy between parties; he does not determine any issue of fact or law or ascertain any existing rights or liabilities; and his decision (if it can be called that) cannot itself be enforced by execution or in any other way. The function which he exercises seems to me to exhibit none of those features which, generally speaking, belong to judicial power (see R. v. Davison (1954) 90 C.L.R. at pp.367-8)." 19. He later said (at p.107):- "KR function which in itself does not possess any of the elements normally characteristic of judicial power may, however, involve the exercise of judicial power, either because the legislature has committed its exercise to a court, or because the function has invariably or consistently been regarded as one that is appropriate for discharge by the courts (see R. v. Davison (1954) 90 C.L.R., at pp. 369, 382, 388). In the present case, the legislature has committed to the Registrar, and not to the Court, the exercise of the power to fix the time for compliance with a bankruptcy notice served in Australia. There is nothing in the Bankruptcy Act 1966 to suggest that the act of the Registrar in fixing the time is intended to be regarded as the act of the Court." Gibbs J. noted that the power was conferred directly on the Registrar and that:- -..there is nothing in the manner in which it is conferred to suggest that the legislature has treated 1t as a judicial power." He also considered the question "...whether the prescription of the time for compliance with a bankruptcy notice has traditionally been regarded as the function of a court, so that 1t must be regarded as within the concept of judicial power." It seems to me that the fixing of remuneration is not a matter which traditionally or historically bears the hallmark of the exercise of judicial power. The position seems to be quite the reverse. It is to be noted that in The Queen v. Quinn; Ex Parte Consolidated Foods Corporation (1977) 138 C.L.R. 1, Barwick C.J. said, at p.5, of the power to remove trade marks from the Register:- 20. "Such powers of entering and removing are not of their nature essentially judicial. Indeed, in my opinion, they are essentially administrative. The intention of the Parliament in giving the power to the Registrar is not, in my opinion, a determinant in deciding the nature of the power, though the mature of the body or person to whom it is entrusted is an element in making such a decision. It does not follow that if a like power exercised by a court or by the Appeal Tribunal would be part of the judicial power of the Commonwealth the same power exercisable by the Registrar would be of a like nature." Jacobs J., with whom Mason, Steven, and Murphy JJ. agreed, at p.10 said:- "There is no doubt that the determination of these Matters can be the subject matter of judicial power if Parliament chooses to make them so (Farbenfabriken Bayer A.G. v. Bayer Pharma Pty. Ltd. (1959) LOI C.u.R. 652, as it has done in the nomination of the Appeal Tribunal. But are they necessarily the subject of judicial power, so that they fall within the first class of case in the classification made by Isaacs J.? I do not think so. The rights involved spring from the statute which governs their creation and continuance. The Registrar 1s given the administration of the statute. It 1s his administrative duty to keep the register in the state which the legislature has prescribed. In so doing he must make decisions not only upon what should or should not be placed but also upon what should remain on the register in accordance with the = statutory prescriptions." And later:- ",..the answer 1s that none of the features is exclusively related to judicial power and they are therefore not inconsistent with administrative power." Mayne v. Jagues (1959) 101 cC.L.R. 169, concerned s.133(7) of the Bankruptcy Act 1924-58, which provided "If the 2i. creditors fail to fix the remuneration, the Court may on the application of the trustee fix the remuneration". The High Court (Fullagar, Kitto, Taylor, and Windeyer JJ., with Menzies J. dissenting) concluded that a trustee in bankruptcy other than a salaried Official Receiver or trustee undertaking the administration of a bankrupt estate gratuitously, has a right to remuneration out of the assets of such estate for work done by him in the course of its administration. The High Court concluded that where a trustee died without his remuneration having been fixed e1ther by the creditors or the Court, his right to remuneration devolves as a right of property upon his legal personal representative for the benefit of his estate. The fixing of the remuneration was by s.133(7) of that Act expressly and directly conferred on the Court, and there 1s no doubt that, when the Court exercised that power, it was exercising the judicial power of the Commonwealth. That consideration does not, for the reasons already referred to, determine, or even indicate, that where Parliament has conferred a power of fixing remuneration on a Registrar, he, in the exercise of that task, is exercising the judicial power of the Commonwealth. In my opinion, for the above reasons, neither ss.162(4) or 162(5) is ultra vires the constitutional power of the Commonwealth. Turning then to the review of the decision of the Deputy Registrar to "reduce the remuneration to nil", I have already 22. indicated that 1t seems implicit in this expression that he held the view that the power he was exercising was that conferred by s.162(5). In my opinion, in the circumstances of this case, the only power exercisable by the Registrar is that under s.162(4). As is indicated by the correspondence and other material, there seems to be no dispute that the work done and the hours claimed were in fact expended, nor is there anything to suggest that the rates of remuneration used as the basis of the quantification of the claim were excessive. It seems to me that there was a view involved, truly held by the Deputy Registrar, that it was within his power to punish by way of reduction in remuneration for the various errors that were perceived to be associated with the administration of this particular estate. Mayne v. Jaques (supra) was decided under the Bankruptcy Act 1924. Recognising that, in my opinion the words of Fullagar J. at p.171 have to be borne in mind in approaching s.162(4) of the 1966 Act. He said that s.133(7) of the former Act:- "...presupposes and contemplates throughout that the trustee is entitled to remuneration for work and labour done by him - unless, no doubt, there is some specific reason why he should not receive remuneration, such as that he has had no work to do, or that he has misconducted himself in some way. The words '1f any' in sub-s. (1) do not mean that the creditors may give or withhold remuneration at their absolute discretion. Nor is the court ain any different position if an application is made to it under sub-s. (7). The court could, no doubt, as could the creditors, refuse to fix any remuneration for such good reason as is suggested above. But, if work has been done and remuneration earned, the court is bound to fix 'the remuneration' at such sum as it considers reasonable." 23. A Divisional Court was concerned with the quantum of a trustee's remuneration in In Re Shirley; Ex parte The Board of Trade (supra). Here, the Committee of Inspection of a bankrupt had fixed the remuneration of the trustee at certain percentages. Some creditors objected to the Board of Trade so 1t fixed lower rates of remuneration pursuant to powers given to it under the Bankruptcy Act 1883. The trustee appealed to a County Court judge, who declared that the Board of Trade's fixing was inoperative, and that the remuneration as fixed by the Committee of Inspection was binding and ought to be allowed. The Divisional Court held that the order of the County Court was wrong. Pollock B. in the course of his judgment said at p.154:- "IL only wish to say that I am clear that the Board of Trade in doing this are not exercising the judicial function, but merely one which is committed to them, in which their officers must exercise their best judgment, obtaining their information fairly from all sources." Vaughan Williams, J. seems to reflect a different view. He said at p.155:- "I am very far from suggesting - and do not wish to suggest —- that the Board of Trade in the present instance have really done anything but what was just and right and proper. But the Board of Trade ought to be very careful to recognise in each case the gravity of the duty they have to perform, which, although not in form, is, in substance, really a judicial duty. They ought not I think, for example, to refer a matter of the amount of remuneration to a committee of creditors, but to make up their own minds as to whether or not the remuneration is so unnecessarily large as to justify the interference of a public department. In this case it is said personal attention was 24. given to the matter, and I am glad to hear that. But I may perhaps add that if the Board of Trade wish to carry out their very important functions in such a manner as to command the respect of the professional men who have to be engaged in these matters, it does seem to me of the highest importance that they should not only be careful in each case to do what is right, but careful also to seem to do what is right." Reference has been made earlier to Re R.M. (1931) 3 A.B.C. 114. This case has significant relevance to the present case. A registered trustee had failed to make returns in connection with a number of estates, and the Registrar had so reported this fact to the Court. The trustee was called upon to show cause why his registration should not be cancelled. Lukin J. at p. 116 said:- "I reprimand him for his neglect. I direct that he forthwith comply with the requirements of the Statute in all the estates in which the failure to perform any statutory duty continues. I further direct that his remuneration as such trustee, throughout his administration of each of the estates in which there has been default, be reduced to one half thereof, and that if any amount in excess of half the authorised fees has been already paid to him he shall forthwith repay that excess to the account of the estate; and that half of future fees that become payable remain in the estate." It 1s to be recognised that these orders were imposed by way of penalty by the Court, and as a consequence of the urging by the trustee's counsel that his registration should not be cancelled but rather that some other penalty be imposed, the suggested penalty being a deprivation of part of the remuneration payable to him for his services. That was the course that Lukin J. adopted. He had earlier noted:- 25. "The trustees are a privileged class under the Statute - No one but a person registered as such can act as a trustee in a bankruptcy proceeding under the Act. For their services they get a prescribed remuneration. Before registration each applicant must satisfy the Court of his competency and integrity. He must be a person in whom the Court, creditors, debtors and the community can have complete confidence that his duties will be honestly, properly and promptly carried out." It seems to me that in the discharge of the Deputy Registrar's functions, he has proceeded upon an erroneous basis. It is not part of his function to discipline trustees by the imposition of any penalty, but it is to fix the remuneration to which a trustee is entitled by the Act at a figure that is reasonable in all the circumstances. It is of course not correct that a person is entitled to be paid only if his work manifests no error or 1s without fault. Such a standard of perfection would be unworkable. It remains then to consider what I ought properly to do in the circumstances of this case. One option, of course, is to remit the matter to the Deputy Registrar for further consideration. It is accepted that criticism can properly be levelled at aspects of the trustee's conduct of this estate. So much has been frankly admitted by him in some respects. What has been strenuously challenged 1s the suggestion of lack of independence or integrity or of professional competence in the discharge of those tasks. 26. When one considers the various aspects which were the subject of the correspondence between the Deputy Registrar and the trustee and, in particular, the estimate by the Deputy Registrar that in the ordinary uncomplicated administration the trustee's remuneration would be expected to be of the order of $3,000.00 to $4,000.00, 1t seems to me that in all the circumstances of this case thus far, it would be not unreasonable to fix the remuneration of the trustee in the amount claimed by him, namely $2,085.70. There is no suggestion that the work was not done or that the rates were not appropriate, and I do not think it right to discount that figure by way of a disguised penalty for the manner in which the duties of the trustee have been performed. I do not accept that the adjourned meeting was unnecessary. The meeting was adjourned unanimously and 1t was competent for the adjourned meeting to consider the alternative options available to the creditors under s.204 of the Act. It must be recognised that the decisions under Part X are not conferred on the putative trustee or on the chairman of a creditors' meeting but on the creditors themselves, subject to the intervention of the Court in appropriate circumstances. I fix the remuneration of the trustee of the estate of Mr. Palmer in the sum of $2,085.70. I certify that this and the qwerty — Fave (25°) preceding pages are a true copy of the reasons for judgment herein of His Honour Justice Spender. CAFE: AC phony Associate Date: LetA "phen ih, P68 | uw ery Fost me 9 Counsel for applicant: instructed by: Solicitor for Deputy Registrar 27. in Bankruptcy: Counsel for Commonwealth Attorney-General: instructed by: Date of Judgment: Mr. W.J. Roberts Mr. D. Spence of Thynne & Macartney Mr. S. Johnson of Australian Government Solicitor's Office Mr. R. I. J.A. Logan Hanger Q.C. and Mr. Australian Government Solicitor 4 March 1988