Maxwell-Smith v Donnelly

Maxwell-Smith v Donnelly - [2010] FCA 474 - FCA 2010 case summary — Zoe

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Introduction 1 This is the latest instalment in a long running dispute involving Mr Eugene and Mrs Inge Maxwell-Smith, their former bankruptcy trustee, Mr Max Donnelly, and S & E Hall Pty Ltd (S & E Hall). I will come to the detail of the applications before me shortly. Briefly stated, Mr Donnelly seeks to enforce his claim for taxed costs and expenses associated with his administration of the estates of Mr and Mrs Maxwell-Smith. This is opposed by Mr and Mrs Maxwell-Smith who also seek damages from S & E Hall. 2 Sequestration orders were made against Mr and Mrs Maxwell-Smith on 15 September 2003 following their non-compliance with bankruptcy notices issued at the request of S & E Hall. The bankruptcy notices were based upon a judgment for $11,288.12 plus costs and interest. That judgment represented the amount of costs Mr and Mrs Maxwell-Smith were ordered to pay to S & E Hall after they applied to quash a determination of the Consumer Claims Tribunal (the Tribunal) requiring them to pay an amount of $6,745.55 to S & E Hall for building work which it carried out at Mr and Mrs Maxwell-Smith's home at Tura Beach in New South Wales during 1995 and 1996. Mr and Mrs Maxwell-Smith were unhappy with the Tribunal's determination. Their attempts to have it set aside took them to the Supreme Court, the Court of Appeal and finally the High Court where, in November 1999, their application for special leave was refused. 3 On 2 July 2004 Moore J ordered that the bankruptcies resulting from the sequestration orders made against Mr and Mrs Maxwell-Smith be annulled: Maxwell-Smith v S & E Hall, in the matter of Maxwell-Smith [2004] FCA 840. It is unnecessary to explore his Honour's reasons for doing so except to say that his Honour found that Mr and Mrs Maxwell-Smith were denied procedural fairness and that the sequestration orders should not have been made. 4 Thereafter, Mr and Mrs Maxwell-Smith made various complaints about the conduct of their former trustee, Mr Donnelly. Between 2005 and 2009, Mr and Mrs Maxwell-Smith initiated various applications, inquiries and appeals relating to the conduct of Mr Donnelly. It will be necessary for me to consider a number of the judgments delivered during that period which are directly relevant to many of the complaints that Mr and Mrs Maxwell-Smith have raised before me. 5 On 8 June 2007 Moore J made the following consent order: The costs, charges and expenses of the administration of the former bankrupt estate of Eugene and Inge Maxwell-Smith, including the remuneration and expenses of the trustee, be taxed by a Registrar of the Court in accordance with Part 8 Division 4 of the Bankruptcy Regulations.

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S & E Hall Pty Ltd 10 I was told by Mrs Maxwell-Smith that her amended notice of motion was filed with the permission of Foster J. While I accept that is so, I do not read into this any more than that his Honour gave leave to Mr and Mrs Maxwell-Smith to file the amended notice of motion. I certainly do not take his Honour to have provided them with any indication as to the appropriateness of the amended notice of motion, particularly in so far as it raises allegations of misconduct against S & E Hall. The directions made by Foster J on 27 August 2009 indicate that his Honour intended to confine the issues arising out of the notices of motion filed by the parties within reasonable bounds and that his Honour was especially concerned to ensure that there be no evidence filed by Mr and Mrs Maxwell-Smith "going to whether or not they should have been made bankrupt in the first place." Regrettably, a substantial portion of the material Mrs Maxwell-Smith has directed me to concerns that issue. 11 At the commencement of the hearing the solicitor appearing for S & E Hall applied to have paragraphs 1 and 2 of the amended notice of motion struck out. He informed me that he was not in a position to deal with the motion should I proceed to hear it. That is understandable given the nature of the allegations underlying the orders sought against S & E Hall and the fact that they were not the subject of any claim for relief when directions where made by Foster J on 27 August 2009. 12 It is not appropriate, in my view, for Mr and Mrs Maxwell-Smith to claim relief of the kind specified in paragraphs 1 or 2 of their amended notice of motion against S & E Hall by motion filed in the bankruptcy proceeding. The present hearing is concerned with the taxation that occurred pursuant to the order of Moore J. If Mr and Mrs Maxwell-Smith have a maintainable cause of action against S & E Hall for abuse of process then they can commence a separate proceeding. It is certainly not for me to advise them about that and I say nothing more about it. But I will not allow them to make the claim by notice of motion filed in the bankruptcy proceeding. I propose to order that paragraphs 1 and 2 of the amended notice of motion be struck out.

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Application to Wilcox J 13 It is now necessary to say something more about the facts. After the annulment of their bankruptcies in July 2004 Mr and Mrs Maxwell-Smith made an application to Wilcox J for relief under s 179(1) of the Bankruptcy Act 1966 (Cth) (the Act) though the application as filed did not specify what relief was actually sought: Maxwell-Smith v Donnelly [2005] FCA 332. The application appears to have been prompted by a number of things, including a claim by Mr Donnelly for remuneration and expenses (including amounts paid or payable by way of legal costs) in an amount exceeding $92,000. 14 Mrs Maxwell-Smith appeared for herself and her husband at the hearing before Wilcox J. His Honour identified six separate criticisms of Mr Donnelly articulated by Mrs Maxwell-Smith. These were: · First, the trustee unnecessarily performed work and incurred expenses after he became aware that Mr and Mrs Maxwell-Smith had applied for annulment of the bankruptcies; · Secondly, the trustee unnecessarily performed work and incurred expenses in relation to a property at Jindabyne which was jointly owned by Mr and Mrs Maxwell-Smith and two of their adult children; · Thirdly, the trustee unnecessarily issued warrants for the arrest of Mr and Mrs Maxwell-Smith because of their failure to attend public examinations in February 2004 in circumstances where there was a good explanation for their failure to attend; · Fourthly, the trustee unnecessarily took out an insurance policy over both the Jindabyne property and the Tura Beach property in spite of the fact that they were already insured in the names of their respective owners; · Fifthly, the trustee paid a rate assessment in relation to the Tura Beach property which was excessive in that it did not allow for rebates to which Mr and Mrs Maxwell-Smith were entitled to claim; · Sixthly, the trustee wrongly failed to give Mrs Maxwell-Smith permission to travel on an overseas cruise with her grandson in May 2004 with the consequence that Mrs Maxwell-Smith was excluded from the vessel because she was on a Portwatch list maintained by the Australian Federal Police. 15 His Honour rejected each of Mrs Maxwell-Smith's criticisms. As to the overseas cruise, it seemed to his Honour that while the matter might have been better handled by Mr Donnelly, the fault lay at least as much on the side of Mrs Maxwell-Smith as the trustee. As to the other matters, his Honour said that he was not persuaded that unnecessary expenses were incurred. He also declined to order any fuller inquiry in relation to them. However, his Honour added at para [22]: The situation confronting Mr and Mrs Maxwell-Smith is most unfortunate. In saying that, I have in mind both the unsatisfactory Tribunal decision and the circumstances that led Moore J to annul the bankruptcy orders made against the applicants. Nonetheless, unless Mr Donnelly can be shown to have acted improperly in some way, or to have incurred unnecessary expense, or to be charging an unnecessary or excessive amount, he is entitled to his remuneration and to reimbursement of his expenses.

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Appeal against Wilcox J's orders 17 Mr and Mrs Maxwell-Smith appealed Wilcox J's decision. The Full Court (Moore, Nicholson and Conti JJ) gave its decision on 27 October 2006 allowing the appeal in part: Maxwell-Smith v Donnelly [2006] FCAFC 150. Their Honours disagreed with Wilcox J's conclusion in relation to the matter of the overseas cruise. This was an issue that their Honours considered warranted further investigation. Their Honours said at para [63]-[66]: 63. In our opinion, Wilcox J gave insufficient consideration to the matters raised by Mrs Maxwell-Smith in support of an inquiry at least as it related to this question of travel. To use the language of the High Court in House v King … his Honour did not take into account a material consideration, namely that the trustee may have misconceived his powers in refusing Mrs Maxwell-Smith permission to travel. The trustee's refusal is a matter, in our opinion, which warrants further investigation and it is appropriate that an inquiry be ordered to investigate that specific matter. It is, with respect, not enough to say, as Wilcox J did, that there was no financial aspect to this complaint. It was characterised by the appellants as an abuse of power. Whether that characterisation is apt or even relevant is a matter that should not be addressed at this stage. It is a matter for the judge who conducts the inquiry. 64. An inquiry can be conducted on a particular matter: Re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262. In our opinion, there should be an inquiry into whether the trustee refused Mrs Maxwell-Smith permission to travel on or about 20 May 2005 and, if so, was that refusal appropriate in all circumstances. 65. Because we have not expressed disagreement with the conclusions of Wilcox J on matters other than the appellants' contention relating to Mrs Maxwell-Smith's travel, it should not be assumed that we accept every comment his Honour made about the trustee's conduct or that, by implication, the fees, costs and disbursements presently charged by the trustee should be accepted in any taxation without careful consideration. We doubt, for example, that the trustee is entitled to payment for convening and attending a creditors' meeting after the bankruptcies were annulled. However these are matters for consideration during any taxation. 66. As the appellants have partially succeeded in this appeal and partially not, there should be no costs order in the appeal and none in the proceedings below.

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Jurisdictional Issues 21 It is necessary to say something more about the order made by Moore J pursuant to which the taxation took place. The order required that the trustee's costs be taxed "in accordance with Part 8 Division 4 of the Bankruptcy Regulations." 22 The remuneration of a trustee may be fixed by a resolution of creditors or, if the creditors so resolve, by the committee of inspection: s 162(1) of the Act. Where it is not so fixed, the trustee is to be remunerated as prescribed by the regulations: s 164(2) of the Act. The Bankruptcy Regulations 1996 (Cth) (Regulations) provide that the remuneration of the trustee is to be fixed by reference to a formula based upon the IPAA Guide to Hourly Rates published by the Insolvency Practitioners Association of Australia applicable to the work to be remunerated: reg. 8.08. 23 The Regulations also provide a mechanism by which the bankrupt or a creditor dissatisfied with the amount claimed by the trustee by way of remuneration may have the claim taxed: reg. 8.09. In addition, s 167(1) of the Act provides that a trustee of a bankrupt's estate may (on his or her own initiative or at the request of the bankrupt or a creditor) require a bill of costs for services provided by a person in relation to the administration of an estate to be taxed by a taxing officer. 24 The mechanism by which taxations pursuant to either reg. 8.09 or s 167 are to proceed is laid out in reg. 8.10-8.11. In each case a detailed bill of costs must be prepared that, among others things, show separately and on an itemised basis, the trustee's professional fees and his or her costs and disbursements. The hearing of the taxation occurs before a taxing officer who is a person appointed by the Inspector General of Bankruptcy: reg. 1.03 and s 167(9). 25 There are two sources of the power in the taxing officer to allow or disallow items appearing in a bill of costs prepared in accordance with the Regulations. The first is reg. 8.11 which relevantly provides: (1) The trustee and the person requesting a taxation may attend, or be represented at, the hearing of the taxation.

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Curiously, reg. 8.11 does not refer directly to the trustee's professional fees. However, it appears that the taxing officer's power to allow or disallow extends to the trustee's professional fees. This is clear from the relevant regulations as a whole, especially reg. 8.11A, which expressly contemplates that the trustee's claim for remuneration might be disallowed in a taxation under reg. 8.09. 26 The second source of power is s 167(5) which requires the taxing officer to be satisfied, before passing a bill, that "the employment of the person in respect of the particular matters out of which the costs arise was duly authorized and was reasonable and necessary." This provision requires that the taxing officer be positively satisfied that the employment of the person was reasonable and necessary. It has previously been held of a like provision (s 27 of the Insolvency Act 1897 (Vic)) that it applies not only to the engagement of the person concerned but also to each particular item in the bill: In Re Cameron (1899) 25 VLR 59. 27 The Regulations do not contain any express right of appeal from a decision of the taxing officer except in one quite specific and immaterial situation: see reg. 8.09(5). However, s 167(8) enables a "person interested" to appeal to the Court from a decision of the taxing officer allowing or disallowing a bill of costs or an item in a bill of costs. 28 Hence, s 167(8) and the relevant Regulations appear to provide for a right of appeal against a decision of the taxing officer but only insofar as that decision is given in respect of a bill of costs required to be given pursuant to s 167(1). Prima facie, this would appear to exclude a decision given in respect of a trustee's remuneration. 29 It has been held, following amendments made to s 162 in 1996, that it is no longer open to the Court to fix or determine the remuneration of a trustee under that section of the Act: Pattison v Bellin (2000) 103 FCR 590 (Goldberg J). But while it may no longer be the function of the Court to fix or determine the remuneration of the trustee, it does not follow that the Court lacks the power to disallow improper, unnecessary or unreasonable charges under ss 30, 178 or 179 of the Act. 30 The Registrar who conducted the taxation in the present case was not appointed by the Inspector General of Bankruptcy. So the taxation conducted by the Registrar was not, strictly speaking, in accordance with the Regulations. I infer this was something that was, or should have been, known to the parties at the time they invited Moore J to make the consent order. 31 Sections 30(1) and (2) of the Act provide: (1) The Court:

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Nature of the Review 33 This leads me to the issue of the nature of my review of the Registrar's decision. In Wenkart v Panzter (2005) 223 ALR 384 Branson J heard an appeal under s 167(8) against the decision of a taxing officer appointed by the Inspector General in Bankruptcy. Her Honour said at paras [34]-[35]: 34. In my view, the principles to be applied when an appeal is brought to the court under s 167(8) of the Act are analogous to those identified by Jordan CJ, with the concurrence of Harvey CJ in Eq and Street J, in Schweppes' Ltd v Archer (1934) 34 SR (NSW) 178. These principles were approved by Kitto J in Australian Coal and Shale Employees' Federation v Commonwealth (1953) 94 CLR 621 at 628 (Australian Coal and Shale). Jordan CJ in Schweppes' Ltd v Archer stated: In appeals as to costs, the principles to be applied are these. The Court will always review a decision of a Taxing Officer where it is contended that he has proceeded upon a wrong principle, for the purpose of determining the principle which should be applied; and an error in principle may occur both in determining whether an item should be allowed and in determining how much should be allowed. Where no principle is involved, and the question is, whether the Taxing Officer has correctly exercised a discretion which he possesses and is purporting to exercise, the Court is reluctant to interfere. It has undoubted jurisdiction to review the Taxing Officer's decision even where an exercise of discretion only is involved, and will do so freely on a proper case, using its own knowledge of the circumstances … but it will in general interfere only where the discretion appears not to have been exercised at all, or to have been exercised in a manner which is manifestly wrong; and where the question is one of amount only, will do so only in an extreme case. [Citations omitted] 35. I note that in Ide v Ide (2004) 184 FLR 44; 50 ACSR 324; [2004] NSWSC 751 at [39] Young CJ in Eq observed with respect to receivers' remuneration: … the court constituted by a judge, never considers a review of quantum, but only matters of principle. One of the two authorities cited by his Honour in support of his above observation was Australian Coal and Shale. It is not necessary for me to reach a view on whether his Honour expressed the position too strongly. It is sufficient to note that it will rarely, if ever, be appropriate for the court to review a decision of a taxing officer on a line by line basis.

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The general objections to the Registrar's decision 52 There is no evidence at all from which I could infer that the Registrar was biased or that she acted unfairly toward Mr and Mrs Maxwell-Smith. I am not satisfied that the Registrar's decision was affected by procedural unfairness of any kind. 53 I am prepared to accept that the Registrar may have "cut off" Mrs Maxwell-Smith from time to time. But I do not think that is enough to establish procedural unfairness. The Registrar was under a duty to progress the taxation in an efficient and orderly way. I can understand why it may have been necessary for the Registrar to intervene from time to time so as to keep the taxation on track. 54 Nor am I satisfied that the Registrar ignored important evidence. I do not think the Registrar was required to refer in her reasons for decision to every fact or circumstance relied upon by Mrs Maxwell-Smith. Nor does it follow that any particular matter which was not referred to by the Registrar in her reasons for decision was ignored or overlooked by her. 55 So far as the allegations made against the trustee and his manager are concerned, I have no doubt that Mrs Maxwell-Smith is convinced that the trustee has acted recklessly and irresponsibly and that he has performed work that was unnecessary for him to perform. But the Registrar was not persuaded that the trustee had acted recklessly or irresponsibly or that most of the work he performed was unnecessary. I am not satisfied, as a general proposition, that the Registrar's decision was wrong. 56 Many of the complaints made by Mrs Maxwell-Smith before the Registrar and again before me were rejected by Wilcox J when the same matters were raised before his Honour. They were also rejected by the Full Court. The Full Court disagreed with his Honour's conclusion in relation to the overseas cruise. However, the complaints made by Mrs Maxwell-Smith in relation to that matter were then rejected by Allsop J and Mrs Maxwell-Smith's attempts to set aside his Honour's orders were wholly unsuccessful. 57 Mr and Mrs Maxwell-Smith were entitled to challenge Mr Donnelly's conduct before Wilcox J and Allsop J. They were also entitled to challenge their Honour's orders in the Full Court and the High Court. But it is hardly a surprise that a substantial proportion of the costs and expenses which were allowed by the Registrar related to those proceedings. They were all proceedings which Mr and Mrs Maxwell-Smith took against Mr Donnelly and which he had no choice but to defend. 58 The judgment of the Full Court which heard the appeal from Wilcox J made it clear that the fees, costs and disbursements of the trustee would need to be carefully considered. I am satisfied that the trustee's claims were carefully considered by the Registrar. 59 I am also satisfied that, as a matter of principle, the trustee was entitled to his costs of the proceeding before Allsop J, the appeal against his Honour's orders and the application for special leave to appeal against the Full Court's dismissal of the appeal. Allsop J's order explicitly recognised and provided that the trustee's remuneration, costs, charges and expenses were payable in accordance with the relevant principles. I think the Full Court's reasons for dismissing the appeal (including the appeal against his Honour's costs order) did so implicitly. 60 In Pantzer v Wenkart (2006) 153 FCR 466 the question that arose was whether a former trustee could recover from the estate of a former bankrupt remuneration, costs and expenses arising out of litigation between them which occurred after the annulment of the bankruptcy. The Full Court held that the former trustee was entitled to recover from the estate of the former bankrupt such remuneration, costs and expenses where "… the trustee (or former trustee) had been properly involved in the litigation as an incident of having acted as a trustee charged with the responsibility of administering the bankrupt's estate" (153 FCR 466 at para [44]). The proceedings before Allsop J and the Full Court which heard the appeal against his Honour's orders was litigation of that character. So too was the proceeding in the High Court in which Mr and Mrs Maxwell-Smith sought special leave to appeal against the Full Court's orders dismissing the appeal. 61 The proceedings before Wilcox J and the Full Court which heard the appeal against his Honour's orders raise slightly different considerations to which I shall return. However, overall, I am satisfied that the Registrar's decision was not affected by any error of principle except in relation to three particular matters. The first matter is that which I have just mentioned namely, the costs of the proceedings before Wilcox J and the appeal to the Full Court against his Honour's orders. The second is concerned with the trustee's solicitors' entitlement to a 25% premium or "uplift fee". The third concerns the public examinations.

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Costs of the hearing before Wilcox J and the Full Court 62 Mrs Maxwell-Smith referred the Registrar to the Full Court's "no costs" order in support of a submission that the trustee was not entitled to his costs of the hearing before Wilcox J or the Full Court. The Registrar rejected Mrs Maxwell-Smith's submission. In doing so she referred to the Full Court decision in Pantzer v Wenkart (2006) 153 FCR 466 in support of the proposition that "… where a former bankruptcy trustee was drawn into litigation as a result of his role as trustee, he is entitled to claim remuneration and expenses, which include his legal costs on a solicitor client basis." 63 I have already mentioned that the costs order made in the Full Court was rather generous to Mr and Mrs Maxwell-Smith. I say this because all but one of the findings made by Wilcox J was upheld on appeal. Although the Full Court differed from his Honour in holding that there should be an inquiry pursuant to s 179 into the matter of permission to travel, this issue appears to have occupied only a small part of the appeal. Moreover, in the inquiry that followed, Allsop J found that there was no basis for criticising the conduct of the trustee or his manager. 64 However, I think it significant that Wilcox J made the costs order that he did. Had it not been set aside, that order would have entitled the trustee to his solicitor client costs of defending the application made by the former bankrupts and the question of the trustee's entitlement to those costs would not have been an issue before the Registrar. I do not think the trustee can get away from the fact that the Full Court set aside that order and substituted a fundamentally different order which must be given effect. It is necessary to look at the context in which the orders were made for the purpose of deciding what they mean. It seems to me to be unlikely that the Full Court would have set aside Wilcox J's costs order and substituted the "no costs" order if it intended that the trustee should be able to recover his solicitor client costs as part of his costs and expenses of the administration irrespective of whether or not the costs order made by his Honour was set aside. 65 The decision of the Court of Appeal in Re Hodgkinson [1895] 2 Ch 190 provides some support for holding that the trustee is not entitled to his costs. In that case the appellant was a trustee of a testator's estate and questions arose concerning the manner in which he had dealt with income of the trust estate. An action was commenced against him by the testamentary guardian on behalf of an infant beneficiary. After answering the question posed in favour of the testamentary guardian, Kekewich J declined to make any order as to the costs of the action. Thereafter, the trustee claimed a right to retain out of the trust estate the costs, charges and expenses incurred by him in the action. The matter went back to Kekewich J who declared that the trustee had no right to retain and pay the costs of the previous action out of the trust estate. The Court of Appeal (Lindley, Lopes and Kay LJJ) upheld the order. Lindley LJ said at 193-194: Kekewich J. settled the point in controversy in favour of the infant, and declared that the expenses of the repairs were to come out of capital, and directed the trustee so to pay them, and the order concluded with these words: "And the judge doth not think fit to make any order as to the costs of the action." What does that mean? The appellant's counsel says it means nothing, and that the order means neither more nor less than if that passage had been left out of it. I cannot take that view. It seems to me that this is a common form of order perfectly familiar to all of us, and it means that the judge, having had his attention called to the matter, and being asked to make an order for payment of the costs, declines to do so. It is not the same as if he said nothing: the effect is that each party must pay his own costs. If so, how is that consistent with the retainer by the trustee of his costs out of the estate? I cannot think it is. We must remember that this was an action between a trustee and his cestui que trust, and if the judge says, "I make no order as to costs," that negatives the prima facie right of the trustee to take his costs out of the estate.

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89 It seems to me that the Registrar has assumed, incorrectly, that the whole of this part of the trustee's claim resulted from Mr and Mrs Maxwell-Smith's failure to lodge a statement of affairs when first required. Significantly, in my view, her reasons do not distinguish between costs arising before the lodgement of the statement of affairs and those arising after it was lodged. It is clear enough that there was a lengthy delay on the part of Mr and Mrs Maxwell-Smith in lodging the statement of affairs. The reasons for the delay were never explained to me by Mrs Maxwell-Smith and I have no reason to believe they were anything but unsatisfactory. But it appears that Mrs Maxwell-Smith met with Mr Donnelly on 27 February 2004 and that Mr and Mrs Maxwell-Smith signed the statement of affairs either before or after that meeting. The trustee's bill of costs reveals that a member of his staff collected the statement of affairs on 1 March 2004. 90 I have previously referred to a submission by counsel for the trustee to the effect that Mr and Mrs Maxwell-Smith assigned a value of $2.00 to their property at Tura Beach in their statement of affairs. The implication of this was that Mr and Mrs Maxwell-Smith had misrepresented the state of their financial affairs to the trustee and that this provided a justification for the further work which was performed in relation to the public examinations following lodgement of the statement of affairs. 91 The document tendered in support of that submission was an extract from the statement of affairs which is handwritten. For the purpose of considering the trustee's submission I have reviewed a copy of the whole document which is on the Court file and which was before the Registrar. Having looked at the whole document, I am satisfied that Mr and Mrs Maxwell-Smith did not assign a value of $2.00 to the Tura Beach property as was suggested by counsel for the trustee. The relevant entry is in fact a question mark ("?") rather than a number ("2") which implies that Mr and Mrs Maxwell-Smith did not know what the current value of the property was. The house was described in the statement of affairs as being 8 years old, made of brick, with 2 bedrooms, a study, a rumpus room and in good condition. I do not accept that the trustee would have understood Mr and Mrs Maxwell-Smith to have been representing that their property was worth $2.00. 92 I think the statement of affairs would have indicated to Mr Donnelly that Mr and Mrs Maxwell-Smith were most likely solvent. Yet the relevant bill of costs (Bill 1) show that the trustee and his solicitors incurred substantial costs in relation to public examinations after the statement of affairs was received by him. 93 It is also significant that Mr and Mrs Maxwell-Smith had by this time filed their application to have their bankruptcies annulled. That application was filed on 10 February 2004 though not heard until 11 June 2004. The decision to annul the bankruptcies was based upon a denial of procedural fairness found to have occurred at the time the sequestration orders were made. In his reasons for judgment Moore J noted at [24] that "… counsel for the Trustee acknowledged in submissions that probably the applicants were solvent when the sequestration orders were made." This concession owed nothing to information acquired by the trustee in the public examinations which, as I have already mentioned, were never held. 94 In my view, all further work concerning the public examinations should have been put on hold from 1 March 2004, if not permanently, then at least until the outcome of Mr and Mrs Maxwell-Smith's application for annulment of their bankruptcies was known. Instead the trustee and his solicitor continued to incur costs as though there was a continuing need for the public examinations to occur. I am satisfied that the claim for remuneration, costs and expenses associated with the public examinations should have been disallowed by the Registrar in so far as it relates to the period beyond 1 March 2004.

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