\ | JUDGMENT No. om 2S2uf tt. CATCHWORDS BANKRUPTCY ~- removal of the Official Trustee as trustee of Bankrupts' estate - whether s 179(1)(a) applies to Official Trustee. Bankruptcy Act 1966, ss 159, 160, 177, 178, 179, 179B. Cooper Brookes (Woollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297. Muir v Bradley (1984) 57 ALR 155. Re Humfrey & Anor; Ex parte Official Trustee in Bankruptcy No. VB 2925 of 1991 Judge: Heerey J Date: 8 December 1994 Place: Melbourne IN THE FEDERAL COUR' F_ AUSTRALIA VICTORIA DISTRICT ISTRY No. VB 2925 of 1991 eee GENERAL DIVISION RE: JACK PETER HUMFREY and VERNA ALISON HUMFREY Bankrupts EX PARTE: THE BANKRUPTS Applicants OFFICIAL TRUSTEE IN TCY Respondent JUDGE: Heerey J DATE: 8 December 1994 PLACE: Melbourne MINUTE OF ORDER THE COURT ORDERS : 1. Declare that s.179 of the Bankruptcy Act 1966 (Commonwealth) applies to the Official Trustee as trustee of a bankrupt estate. 2. The bankrupts have leave to amend generally the application dated 7 October 1994. 3. Adjourn hearing for directions to 14 December 1994. 4. The applicants' costs in the trial of the preliminary issue, including reserved costs, be paid by the respondent. and IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION No. VB 2925 of 1991 RE: JACK PETER HUMFREY and VERNA ALISON HUMFRE Bankrupts EX PARTE: THE BANKRUPTS Applicants OFFICIAL TRUSTEE IN BANKRUPTCY Respondent JUDGE : Heerey J DATE: 8 December 1994 PLACE: Melbourne ONS FOR JUDGMENT A sequestration order was made against the estate of the applicants on 2 October 1991. There was no appointment of a registered trustee as trustee of the estate and consequently the Official Trustee became trustee: Bankruptcy Act 1966 (Cth) (the Act), s.58(1)(a). By an application dated 7 October 1994 the applicants sought orders that the "Official Receiver" (sic) be removed as trustee of the estate, that one Clive Peter White be appointed trustee, and that a declaration be made that the debtors "be discharged as bankrupts as of 3 October 1994". Deputy Registrar Agnew has referred the application to the Court for the hearing of the threshold issue as to the applicability to the Official Trustee of s.179 of the Act, which provides for the removal of trustees. Section 179 provides: on " (1) The Court may, on the application of the Registrar, the Inspector-General a creditor or the bankrupt, inquire into the conduct of a trustee in relation to a bankruptcy and may do one or both of the following:- (a) remove the trustee from office; and (b) make such order as it thinks proper. (2) The Registrar, the Inspector~General or a creditor may at any time require a trustee to answer an inquiry in relation to the bankrupt's estate or affairs." In my opinion s.179 does apply to the Official Trustee. The starting point is the language of s.179(1) itself which refers to "the conduct of a trustee in relation to a bankruptcy". The natural meaning of that expression extends to any trustee of a bankrupt estate. In s.5 "the trustee" is defined to mean "(a) In relation to a bankruptcy - the trustee of the estate of the bankrupt". Since the Official Trustee can be such a trustee, and is the trustee of the present applicants' estate, the Official Trustee would seem to be subject to the power of removal conferred by s.179(1)(a). The contrary argument involves reading s.179(1) as though it included the words "(other than the Official Trustee)" after the expression "remove the trustee". Given that clear meaning, Counsel for the respondent had to argue that the ordinary meaning is "... so irrational that the Court is forced to the conclusion that the draftsman has made a mistake...". He faced the difficulty that «+. if the language of the statutory provision is clear and unambiguous, and is consistent and harmonious with the other provisions of the enactment, and can be intelligently applied to the subject matter with which it deals, it must be given its ordinary and grammatical meaning, even if it leads to a result that may seem inconvenient or unjust." Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of 3. Taxation (1981) 147 CLR 297 at 304-305 per Gibbs CJ, see also per Mason and Wilson JJ at 319-321. Other provisions of the Act support the applicants' contention. Section 179 is found in Division 4A of Part VIII which consists of ss.177, 178 and 179. Section 177 provides that the trustee is to "have regard to any lawful directions given by resolution of the creditors at a meeting of the creditors or by the committee of inspection". Section 178 provides that the bankrupt, a creditor or any other person affected by any act, omission or decision of the trustee May apply to the Court and the Court may make such order as it thinks just and equitable. There would be no rational reason for treating either ss.177 or 178 as only applying to trustees other than the Official Trustee. It is equally important that creditors of estates of which the Official Trustee is trustee (and also, in the case of s.178, the bankrupt, or other persons affected) should have the rights conferred by those sections. Accordingly, it is not easy to see why Parliament should have intended that s.179, above of the provisions in Division 4A, should not apply to the Official Trustee. Further, where the Act seeks to exclude the Official Trustee from a provision applying to trustees generally, such exclusion is specifically made. For example, s.169(4) requires trustees to pay moneys into a bank account opened and kept in the name of the estate, but sub-section (4) provides that the section does not =e 4. apply in relation to the Official Trustee. Likewise s.179B provides for examination on oath before the Registrar of certain persons about '"'examinable matters in relation to the relevant trustee". Those persons are specified by s.179B(1) to include: (a) in any case - the relevant trustee (b) if the relevant trustee is the Official Trustee - the Official Receiver. The principal contention of the respondent was based on s.160 which provides: "If at any time there is no registered trustee who is the trustee of the estate of the bankrupt, the Official Trustee shall, by force of this section, be the trustee of the estate." Accordingly it was said that it would be irrational if the Court were able to remove the respondent as trustee and then find that by virtue of s.160 the Official Trustee was immediately reinstated. But Counsel for the debtors argued that while s.179(1)(b) did not empower the Court to appoint another trustee (Muir v Bradley (1984) 57 ALR 155 at 157), there remained s.159 which enabled creditors at a meeting of creditors to fill any vacancy in the office of trustee. In particular s.159(3) provides: "For the purpose of this section, an office of trustee shall be deemed to be vacant notwithstanding that it is for the time being filled by the Official Trustee by reason of the operation of section 160." It is conceivable, although unlikely, that a meeting of creditors 5. might decline to appoint a registered trustee even though the Official Trustee had been removed by the Court. However, the possibility of this hypothetical impasse is not enough in my opinion to require the Court to give the words of s.179 other than their clear meaning. It was agreed that the application should be amended by substituting "Official Trustee" for "Official Receiver" and deleting ground 2, which seeks the appointment of Mr White. Counsel for the applicants agreed they should specify the grounds on which the removal is sought and the further orders sought. I shall simply make a declaration that s.179 applies to the Official Trustee as trustee of a bankrupt estate, grant leave to amend generally and adjourn the hearing for directions on 14 December 1994. Since this issue was resolved in favour of the debtors there will be an order that the costs of the trial of the preliminary issue be paid by the respondent. I certify that this and the preceding four (4) pages are a true copy of the reasons for judgment of his Honour Mr Justice Heerey Dated 8 December 1994 dw, , Associate atdr Counsel for the applicants: Solicitor for the applicants: Counsel for the respondent: Solicitor for the respondent: Date of hearing: R S§ Randall Swersky & Velos G T Bigmore QC Smith & Emmerton 25 November 1994 * JUDGES' CHAMBERS FEDERAL COURT OF AUSRALIA 450 LITTLE BOURKE STREET hy AUBTRALIA ut MELBOURNE, 3000 8 December 1994 Sonia Cornale Federal Court of Australia Principal Registry Law Courts Building Queens Square SYDNEY NSW 2000 Dear Sonia Re: Humf: rev ficial Trustee in Ba £C No. VB 2925 of 1991 I enclose a copy of the judgment delivered by his Honour Justice Heerey in the above matter today (8 December 1994). A diskette record of the catchwords, minutes and reasons for judgment is also enclosed. This judgment is for general distribution. Regards David Brennan Associate to Heerey J enc.