Dowling v Fairfax Media Publications Pty Ltd

1. As a condition of paragraph 3 above, the second applicant is appointed as joint and several trustee of the bankrupt estate of each of:

(a) Bradley Patrick Lacey;

(b) Nicola Ierino;

(c) Laurenda Athena Jawan; and

(d) Bradley Michael John Saunders.

1. As a condition of paragraph 3 above, the third applicant is appointed as joint and several trustee of the bankrupt estate of each of:

(a) Antony Solin;

(b) Christopher John Grame;

(c) Neil Grant Caporn;

(d) Peter Hans Otto

(e) Nicole Kirsten Ria Shortland; and

(f) Behzad Kaknabi Silwanagh.

1. As a condition of paragraph 3 above, the fourth applicant is appointed as joint and several trustee of the bankrupt estate of Nicola Ierino.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

1. The first applicant, Gary John Anderson, is a business director of WA Insolvency Solutions and the registered trustee of 10 bankrupt estates. He intends to retire from professional practice and from his role as a business director of the firm. The applicants thus seek orders pursuant to the Bankruptcy Act 1966 (Cth) for the acceptance of Mr Anderson's resignation as trustee of the various bankrupt estates and for his replacement with different individuals.
2. The identity of the persons proposed to replace Mr Anderson differs from estate to estate. For some estates, Mr Anderson already has co-trustees. Depending on the estate, it is proposed that he is replaced by one or more of the second applicant, Gregory Mathew Prout, the third applicant, Jimmy Trpcevski, and the fourth applicant, David Ashley Norman Hurt. Each of those individuals (replacement trustees) are registered trustees in bankruptcy and partners in WA Insolvency Solutions.
3. The fifth applicants are listed as the 10 bankrupted individuals. No evidence has been adduced to show that the bankrupted individuals have been served or otherwise notified of this application. In fact, the applicants have instead sought leave to dispense with the requirement to serve the bankrupted individuals. There is no suggestion in the evidence that any of the bankrupt individuals seek to have the Court accept Mr Anderson's resignation or the appointment of the replacement trustees to their respective estates or have consented to be applicants. In those circumstances, it is not appropriate that they be listed as applicants. Pursuant to r 9.08 of the Federal Court Rules 2011 (Cth) I will make orders for the removal of the fifth applicants as a party to these proceedings.
4. The applicants also seek orders dispensing with requirements to give notices of nomination of the replacement trustees to the creditors of each estate. And, while they do not seek it in their originating application, they also evidently seek dispensation from r 8.02(4) of the Federal Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules), which requires that the application be served on the Official Receiver, the bankrupt and anyone else (including a creditor) as ordered by the Court.
5. For the following reasons I have decided to make orders that are, in substance, in the terms sought. But in the case of the appointment of replacement trustees, I will not do so pursuant to the statutory provision invoked by the applicants, but pursuant to a different provision. I will explain in the next section of this judgment.

1. Section 180 of the Bankruptcy Act provides that the Court 'may, subject to such terms and conditions as it thinks just, accept the resignation of a registered trustee from the office of trustee of an estate'. The applicants thus seek the Court's acceptance of Mr Anderson's resignation from the various estates pursuant to this provision.
2. The applicants also seek orders pursuant to s 181A(5) of the Bankruptcy Act for the appointment of the replacement trustees to the various estates. With respect, their reliance on this section is misconceived. The section provides, in the words of its heading for a '[s]treamlined method for replacing [a] trustee'. In broad terms, the method in question requires the current trustee to nominate a new trustee (with the consent of the new trustee) and for the current trustee to give notice of the nomination to all the creditors of the estate including notice of the opportunity to object by a specified date. Under s 181A(5), if there is no objection by that date, then for the purposes of the Bankruptcy Act 'the new trustee is treated as having been appointed by the creditors'.
3. Absent from s 181A(5) is any mention of or role for the Court. The provision is evidently intended to permit the replacement of a trustee with a new one, without a resolution of creditors. The Explanatory Memorandum, Bankruptcy Legislation Amendment Bill 2002 (Cth), which concerned the amendments that introduced the section, explained that this is intended to permit replacement trustees to be appointed without the need to convene a meeting of creditors to appoint them under s 157 of the Act. It achieves this by introducing a procedure for creditors to object to a person nominated by the current trustee where, if there is no objection, the appointment of the new trustee then takes effect by operation of the section itself. To seek to use this provision as a basis for the intervention of the Court, and to seek in the process to have the Court to exclude any opportunity for creditors to object, is to turn the section on its head. I will not make any order pursuant to s 181A(5).
4. Instead, the section that gives the Court the power to make an order appointing new trustees is s 180 itself. This empowers the Court to accept the resignation of a trustee subject to such terms and conditions as it thinks just. It has been held on several occasions that this authorises the Court to appoint a new trustee as a condition of the acceptance of the resignation of the outgoing one: see de Vries; Re the bankrupt estate of Cunningham [2021] FCA 188 at [9] (Nicholas J) and the cases referred to there. That is the power that I will exercise.
5. As for dispensation from r 8.02(4) of the Bankruptcy Rules, r 1.34 of the Federal Court Rules empowers the Court to dispense with any requirement of those latter rules. While acknowledging the doubts expressed by Nicholas J in de Vries at [10]-[17] as to whether that applies to the Bankruptcy Rules, I respectfully take the same approach as his Honour by recognising that it has been applied that way in the past and it cannot be said that to do so is plainly wrong. I proceed on the basis that the Court has power to dispense with the requirements of r 8.02(4) and that it may do so if justice appears to require it: see Dowling v Fairfax Media Publications Pty Ltd (No 2) [2010] FCAFC 28 at [61] (Logan and Flick JJ).

1. The various estates from which Mr Anderson wishes to retire, and those of his colleagues who will replace him in respect of each estate, appear from the orders at the commencement of this judgment and there is no need to set them out in these reasons.
2. The applicants submit that accepting Mr Anderson's resignation and appointing the various replacement trustees will minimise costs and facilitate an efficient handover of the bankrupt estates. The replacement trustees have each affirmed affidavits stating that they have undertaken a significant amount of work in relation to the bankrupt estates over which they seek to be appointed. They also say that they have had ongoing personal involvement in administering those bankrupt estates, and have developed a detailed understanding of the history and status of each estate. They have each given their written consent to act in the relevant capacities in the appropriate form.
3. I accept those submissions. There is obvious benefit in appointing replacement trustees that are partners in WA Insolvency Solutions. The transfer will essentially constitute an internal reallocation of responsibility over the bankrupt estates. The same staff and systems will be in place, and the requirement to transfer any physical or electronic files will be limited. The pre-existing knowledge of the replacement trustees as well as the staff at WA Insolvency Solutions will promote continuity in the administration of the bankrupt estates: see White; Re Australia Phoenix Pty Ltd [2018] FCA 913 at [15].
4. The applicants submit that any handover work required will be confined to internal administrative tasks, including the reallocation of files within WA Insolvency Services, updating internal records and any familiarisation with files as is reasonably necessary for the replacement trustees to assume responsibility over the estates. The applicants will not charge the estates for any such handover costs. This is obviously advantageous to the estates and is one tangible benefit of the continuity of administration mentioned above.
5. I am therefore satisfied that Mr Anderson's resignation should be accepted and that Mr Prout, Mr Trpcevski and Mr Hurt be appointed as replacement trustees over the various bankrupt estates in the manner outlined in the orders.
6. The form of orders sought by the applicants specified that the replacement trustees were seeking to be appointed variously as 'lead' and 'second' trustees of the bankrupt estates. These are not concepts referred to in the Bankruptcy Act and, as far as I am aware, they have no established meaning under the law of bankruptcy. I have therefore not considered it necessary or appropriate to label the role of each replacement trustee. No doubt if there is to be a division of labour between the trustees after the orders are made, that can be worked out between them.

1. The applicants seek dispensation from r 8.02(4) of the Bankruptcy Rules in order to avoid the costs and delay which would result from the obligation to effect service on the bankrupts and the Official Receiver. In support of this, they contend that:

(1) the application only concerns an internal handover to partners within WA Insolvency Solutions, which is intended to ensure continuity and limit interruption to the administration of the estates;

(2) it would be uneconomical to effect formal service on the bankrupts and the Official Receiver in respect of each of the ten bankrupt estates, particularly in light of the nature of the relief sought;

(3) there is no evidence of prejudice to any stakeholders if dispensation is granted; and

(4) the Official Receiver will receive the Court's orders by operation of r 8.02(6) of the Bankruptcy Rules, which requires the trustee to provide a copy of the Court's orders to the Official Receiver within two days of entry.

1. I accept these submissions too. In particular, in light of the continuity that will be the result of appointing replacement trustees from the same firm, who already have experience in the estates, and who will not charge handover costs, it would be an unnecessary imposition on the assets of the estate for personal service of the applications to be effected on the Official Receiver and each of the bankrupts. The trustees submit that there has been no allegation of misconduct, loss of confidence or controversy about the replacement trustees.
2. While each case depends on its own particular facts, a similar approach to dispensation has been taken in Re Shanahan [2014] FCA 1080 at [7], de Vries at [18], and Re Sellers [2023] FCA 370 at [18]. While the issue is sometimes framed in terms of the number of bankrupt estates and thus cost involved, of course proportionate to each estate the costs are likely to be comparable. I therefore do not consider that the relatively small number of estates involved here is an impediment to providing the dispensation sought.
3. I am satisfied that dispensation from r 8.02(4) should be ordered in the circumstances of this case.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackson.