Lane (Trustee), in the matter of Lee (Bankrupt) v Deputy Commissioner of Taxation [2017] FCA 953

FEDERAL COURT OF AUSTRALIA

Lane (Trustee), in the matter of Lee (Bankrupt) v Deputy Commissioner of Taxation [2017] FCA 953 File number(s): QUD 198 of 2017

Judge(s): DERRINGTON J

Date of judgment: 18 August 2017

Catchwords: BANKRUPTCY AND INSOLVENCY – trustee in bankruptcy's right to insolvent trustee's right of exoneration – discussion of the nature of the right of exoneration – whether the funds are to be distributed to all creditors or only to trust creditors – whether right of indemnity "property divisible among the bankrupt's creditors" or trust property BANKRUPTCY AND INSOLVENCY – trustee's right of indemnity – whether bankruptcy changed the nature of the right of exoneration – whether the priority regime in s 109 of the Bankruptcy Act 1966 (Cth) applies to the use of the right of exoneration – trust creditors paid pari passu – whether the right of exoneration ought to be exhausted before dividends are paid – "hotchpot" principle considered BANKRUPTCY AND INSOLVENCY – costs expenses and remuneration of trustee in bankruptcy – use of the right of indemnity to meet the costs expenses and remuneration of bankruptcy trustee – consideration of Berkeley Applegate principles – consideration of Universal Distributing principles – reasonableness of remuneration of trustee TRUSTS AND TRUSTEES – trustee's right of indemnity – nature of the trustee's right of indemnity – trustee's equitable lien supporting the right of exoneration – whether trustee's right of indemnity is trust property

Legislation: Bankruptcy Act 1966 (Cth), ss 5, 58, 108, 109, 116, 117, 122, 132, 133, 134, 140, 433 Bankruptcy Act 1966 (Cth) sch 2 Insolvency Practice Schedule (Bankruptcy)ss 5-15, 90-15(1), 90-20(1)(a) Corporations Act 2011 (Cth), ss 473, 555, 556, 562 Bankruptcy Regulations 1996 (Cth), r 6.02 Companies Act 1961 (Qld), s 293 Companies Act 1961 (Vic) Companies Act 1962 (SA), s 292 Trustee Act 1925 (NSW) Trusts Act 1973 (Qld), ss 72, 76, 101