Case: Duncan v McVeigh &amp; Anor FMCA 759
Outcome: cited
His Honour reached these conclusions: (a) his Honour was not satisfied that a declaration could be made that the trustee had deliberately contributed to the imposition of excessive charges [8]; (b) his Honour was of the view that 'there is certainly in my view, power to fix a sum in relation to costs in respect of the administration of the estate' [8]; (c) it is not possible to make an order pursuant to s 153A or direct the trustee to issue a certificate [10] [12]; (d) had the financial circumstances of the respondent been properly considered at the time of hearing the creditor's petition, there would have been some consideration given to adjourning the petition [16]; (e) the contention that the value of Ms Townsend's assets exceeded her identified liabilities makes it 'clear that the applicant was in a position of solvency'. His Honour relies upon the decisions of Reithmuller FM in Duncan v McVeigh &amp; Anor FMCA 759 and Spender J in Re McDonald; ex parte The Deputy Commissioner of Taxation (1996) 33 ATR 1. Those decisions, of course, both recognise the importance of an undertaking to pay the costs of the trustee's administration and the need for the court to be satisfied that by reason of any asset surplus, the bankrupt is able to pay his or her debts [17] [22]; (f) within a short period of time, the debts due to creditors had been paid by the bankrupt and some clarification of the position with regard to securing an annulment was sought [22]; (g) during the administration, a fundamental breakdown in the relationship between the trustee and Ms Townsend occurred; (h) at [23], [24] and [25], his Honour quotes extensive passages from the trustee's letter dated 10 February 2004 to Ms Townsend and in reliance upon, at least in part, those passages, his Honour concludes that: 'it is most disturbing that a certificate has not issued pursuant to s 153A notwithstanding that the creditors have been paid [26] ; the trustee's position is that it is impossible to issue a certificate whilst the possibility of a private prosecution or complaint remains outstanding [26] ; the actions of the trustee are unprofessional [27] '; and as an apparent explanation of that conclusion, his Honour says the proper course on the part of the trustee 'would have been to bring the matter to a prompt finalisation' [27] and that result was not reached because the approaches by the applicant 'to a serious extent were unable to be dealt with as a result of the trustee's very determined efforts to ensure that no complaint could be brought in relation to the conduct by him of the administration' [27] ; (i) the trustee by reason of the letter of 10 February 2004 'quite obviously' attempted to 'force any consideration by the applicant of the proceedings now before the court, not to be brought because of the financial influence and effect of those proceedings' [28]. (j) 'extremely excessive costs have been incurred as a result of the failure to bring this matter to a successful conclusion' [29]; and (k) At [29] and [30], these observations: '[29] I am concerned as to further costs being incurred in relation to these proceedings and to what I consider to have been extremely excessive charges incurred, as a result of the failure to bring this matter to a successful conclusion. I am mindful of the terms of the letter of 10 February 2004 and, in particular, the indications as to costs expended and expectations in relation to future to costs. In my view, that was the appropriate time to bring this matter to an end. To suggest that the bankruptcy could never be annulled whilst there was some possibility of a disgruntled client complaining as to the administration of the estate, is bullying in the extreme and is inappropriate. [30] I intend to fix the trustee's costs in relation to the administration of the estate at $15,000.00 taking into consideration the amounts already paid and the estimates contained within the correspondence of 10 February 2004.' 73 His Honour concluded that the respondent was then and at all times solvent and the proper course was to annul the bankruptcy pursuant to s 153B of the Act. 74 The immediate difficulty with his Honour's conclusions and findings is that they do not arise out of an exposed analysis of the evidence no doubt because his Honour was seeking to expeditiously dispose of a controversy with a long history. 75 However, there are two reasons on the evidence why the trustee had refused to reach a state of satisfaction required by s 153A of the Act. The first was that notwithstanding the payment of $10,000.00 by Ms Townsend (or those assisting her) having regard to the letters of 25 November 2003 (see [33], [34] and [35]), 27 November 2003 [36], 28 November 2003 [37] and 10 February 2004 [41], a further amount as at 10 February 2004 of $2,300.00 would be required to meet the cost of work undertaken from 13 December 2003 to that date and the additional tasks necessary to finalise the administration. The second consideration involved the question of whether further costs would be incurred by the trustee in responding to complaints and allegations and a threatened private prosecution or other proceedings. 76 As to the first reason, the trustee on 10 February 2004 said that remuneration for work done from 13 December 2003 (having regard to the fact that the report to creditors was dated 12 December 2003 and the completion of the earlier billing period was 11 December 2003) was approximately $1,300.00 (plus GST), plus $580.00 for expenses (plus GST); that is, approximately $2,068.00. The trustee suggested a further amount of $2,200.00 would fairly represent the value of that work. 77 In addition, further identified steps to complete the administration would be necessary (see paragraph 3 of the letter of 10 February 2004 [41]). The trustee said in the letter of 10 February 2004 that he held $1,100.90 (being the $10,000.00 received, less remuneration of $8,099.10 and less the 8% ITSA realisation fee of $800.00) and upon receipt of a further $2,300.00 (including GST, the Government charges on re-transmitting Ms Townsend's land and the 8% ITSA charge) the trustee 'could draw down all or the major part of the cost to complete, prepare or lodge any land transfer forms and issue an annulment certificate under s 153A of the Bankruptcy Act )' . In other words, a total amount of $3,400.90 would complete the administration, satisfy all relevant costs, charges, expenses and remuneration and result in an annulment certificate. Having regard to the $10,000.00 already paid and its application, the additional $2,300.00 would result in an annulment certificate based upon costs, charges, expenses and remuneration (including GST, Government charges and ITSA charges) of $12,300.00, in all. 78 Ms Townsend refused to pay any further contribution and on 24 February 2004 filed the application the subject of these proceedings.