Re Vowell, E.A. Ex parte Vince, P.R. v Lofthouse, D.J. [1994] FCA 919

JUDGMENT No, west! Dp FQ

CATCHWORDS BANKRUPTCY - Priority - remuneration and expenses of controlling trustee - controlling trustee terminated prior to

debtor entering into a deed of arrangement

Bankruptcy Act 1966 s 109(1)(b)

EILEEN ANN VOWELL EX PARTE: PETER ROBERT VINCE V DAVID JAMES

LOFTHOUSE (AS TRUSTEE OF THE PROPERTY OF EILEEN ANN VOWELL) NO VX 210 OF 1993

NORTHROP J MELBOURNE 28 NOVEMBER 1994

& A> RECNED -1 DEC 1994

FEDERAL COURT OF

AUSTRALIA PRINCIPAL J 57 REGISTRY "2

IN THE FEDERAL COURT OF AUSTRALIA

EXERCISING FEDERAL JURISDICTION No VX 210 of 1993 IN BANKRUPTCY

BANKRUPTCY DISTRICT OF THE STATE OF VICTORIA

RE: EILEEN ANN VOWELL Debtor

EX PARTE: PETER ROBERT VINCE Applicant

AND: DAVID JAMES LOFTHOUSE (AS TRUSTEE OF THE PROPERTY OF

EILEEN ANN VOWELL) Respondent

COURT: NORTHROP J

PLACE: MELBOURNE DATE: 28 NOVEMBER 1994

REASONS FOR JUDGMENT

On 12 October 1994, at the conclusion of the hearing of this application, the Court made orders and announced that the reasons for making the substantive order sought in the

application would be published later. These are those

reasons.

The application raises a narrow, but important, issue relating to the priority to be given to the payment of a debt owed by a debtor to a controlling trustee named in an authority signed by the debtor under section 188 of the Bankruptcy Act 1966 in circumstances where the meeting of

creditors does not pass any resolution dealing with those

costs.

The relevant facts can be stated shortly. On 20 December 1991, Eileen Ann Vowell, ("the debtor") signed an authority under section 188 of the Bankruptcy Act authorizing Peter Robert Vince ("the applicant"), a registered trustee, to call a meeting of her creditors and to take over control of her property. The applicant consented to exercise the powers conferred upon him. As a result, the applicant became the controlling trustee in relation to the debtor and her property. He was to continue to be the controlling trustee under section 188 until the happening of one of the events specified in subsection 189(1). This occurred on 14 July 1992. On 8 July 1992 a meeting of creditors, called by a solicitor pursuant to an authority under section 188, by special resolution, required the debtor to execute a Deed of Arrangement under Part X of the Bankruptcy Act and appointed the applicant as trustee of that Deed. The debtor executed the Deed on 14 July 1992. Thereupon, under paragraph 189(1)(b) of the Bankruptcy Act, the applicant ceased to be the controlling trustee under section 188 in relation to the debtor and her property. The present claim by the debtor relates to the remuneration of the trustee and the costs, changes and expenses properly and reasonably incurred by him during the period 20 December 1991 to 14 July 1992 including any debts incurred by him that are debts provable in bankruptcy. In those reasons ail these matters will be referred to as "the remuneration and expenses of the