Official Trustee in Bankruptcy v Kent (No 2) [2023] FCA 1396

FEDERAL COURT OF AUSTRALIA

Official Trustee in Bankruptcy v Kent (No 2) [2023] FCA 1396 File number: NSD 272 of 2022

Judgment of: RARES J

Date of judgment: 13 November 2023

Catchwords: PRACTICE AND PROCEDURE – where declarations made giving effect to principal reasons – where trustee applied for judicial advice together with binding declarations of right – whether settlement sum trustee received from person allegedly liable to bankrupt in respect of dealings before bankruptcy is property of bankrupt or vested in bankrupt estate or trustee under ss 58 and 116 of the Bankruptcy Act 1966 (Cth) – where declarations that settlement sum not part of bankrupt estate – whether judicial advice unnecessary, inappropriate or would repeat determinative effect of declarations COSTS – where trustee in bankruptcy unsuccessful in seeking declarations of right together with judicial advice – whether trustee liable for costs personally or only to extent of assets in bankrupt estate – where proceeding in nature of test case with general public importance for administration of bankrupt estates – where trustee applied for declarations that money paid to it by person to settle claim by bankrupt was property of bankrupt or vested in trustee or bankrupt estate – where trustee acted as protagonist and not as defender in proceeding – where trustee sought judicial advice and binding declarations of right to justify its conduct in entering into deed to settle claim by bankrupt – where applicant is official trustee in bankruptcy with statutory right to indemnity from Commonwealth for costs ordered against it under s 18A(2)(a) of Bankruptcy Act – where Court has discretion to order costs against official trustee personally in s 18A(1)(a) and s 90-15(3)(d) and (5) in Sch 2 of Bankruptcy Act where bankrupt estate without funds – whether official trustee personally liable to pay bankrupt's costs on indemnity basis – Held: judicial advice inappropriate; trustee ordered to pay costs personally on indemnity basis