Sellers, in the matter of Sellers [2023] FCA 370

Federal Court of Australia|2023-04-21|Before: O'Sullivan J

Pursuant to r 1.34 of the Federal Court Rules 2011 (Cth) and r 1.04(1) of the Federal Court (Bankruptcy) Rules 2016 (Cth), compliance with the requirements of rr 8.02(4)(b) and (c) of the Bankruptcy Rules be dispensed with.
Pursuant to ss 180 and 183 of the Bankruptcy Act 1966 (Cth) and s 90-15 of Schedule 2 to the Bankruptcy Act: (a) In relation to the Bankrupt Estates set out in Schedule 1 to the Court's reasons: (i) The resignation of the first applicant as one of the two Trustees of the Bankrupt Estates is accepted; and (ii) Upon the first applicant's resignation from these Bankrupt Estates, the second applicant is to remain the sole Trustee of the Bankrupt Estates. (b) In relation to the Bankrupt Estates set out in Schedule 2 to the Court's reasons: (i) The resignation of the first applicant as sole Trustee of the Bankrupt Estates is accepted; and (ii) As a condition of the first applicant's resignation from the Bankrupt Estates: A. The second applicant must immediately file a Consent to Act as Trustee with the Official Receiver; and B. From lodgement of the said Consent to Act, the second applicant is appointed sole Trustee of the Bankrupt Estates.
Pursuant to s 90-15 of Schedule 2 of the Bankruptcy Act, the second applicant is not required to perform tasks that are required to be performed by s 70-30 of the Insolvency Practice Rules (Bankruptcy) 2016 (Cth) and which have already been performed by the first applicant in the Bankrupt Estates set out in Schedule 2 to the Court's reasons.
Pursuant to s 90-15 of Schedule 2 of the Bankruptcy Act, the second applicant is to notify the bankrupts and creditors of each of the Bankrupt Estates in Schedules 1 and 2 of the Court's reasons of her appointment to the Bankrupt Estates by circular letter sent to their last known address.
The applicants pay their own costs of this proceeding. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

O'SULLIVAN J: 1 The first and second applicants (Mr Sellers and Ms Ruhe respectively) are Registered Trustees in Bankruptcy. Mr Sellers and Ms Ruhe are joint Trustees in Bankruptcy of the Bankrupt Estates in Schedule 1 to these reasons and Mr Sellers is the sole Trustee of the Bankrupt Estates in Schedule 2 to these reasons. 2 Mr Sellers is approaching retirement and asks the Court to accept his resignation as Registered Trustee from the Office of Trustee of the Bankrupt Estates in Schedules 1 and 2. 3 Ms Ruhe applies to remain as Trustee of the Bankrupt Estates in Schedule 1 but as sole Trustee and as from Mr Seller's resignation, as Trustee of the Bankrupt Estates in Schedule 2 and for her to be appointed as the sole trustee of those Bankrupt Estates. The applicants also apply for ancillary orders.

The application and supporting affidavits 4 Mr Sellers deposes in an affidavit sworn 12 December 2022 and filed 14 December 2022 that he is a consultant employed by Sellers Muldoon Benton Pty Ltd trading as SMB Advisory. His decision to retire as a Registered Trustee in Bankruptcy is personal with no external factors relating to him acting as a Registered Trustee that have influenced that decision. 5 Ms Ruhe deposes in an affidavit sworn 13 December 2022 and filed 14 December 2022 that she is a partner in SMB Advisory since 2014, has practised in insolvency and corporate recovery for over 15 years, and is a Registered Liquidator and a Registered Trustee in Bankruptcy. Ms Ruhe also deposes that she is not aware of any circumstances where Mr Sellers' resignation as Trustee and her continuation as a sole Trustee of the Bankrupt Estates in Schedule 1 would prejudice the administration of estates.

Consent to acting 6 Mr Sellers deposes that Ms Ruhe is prepared to continue as sole Trustee in Bankruptcy for those Bankrupt Estates in Schedule 1 and is prepared to assume the role of Trustee in the Bankrupt Estates in Schedule 2. 7 Ms Ruhe deposes that she has no objection to being the sole Trustee of the joint Bankrupt Estates in Schedule 1 and consents to that course. Ms Ruhe consents to being appointed as sole Trustee of the Bankrupt Estates in Schedule 2.

Dispensations sought 8 Mr Sellers identifies 49 Bankrupt Estates in Schedule 1 and 24 Bankrupt Estates in Schedule 2. In order to save, what he describes as an inconvenient and unnecessary expense for all of the administrations, he seeks dispensation from the obligation in rr 8.02(4)(b) and (c) of the Federal Court (Bankruptcy) Rules 2016 (Cth) to serve the application and supporting affidavits on the various bankrupts and any other person. He deposes to his intention to provide notice of the application to the Official Receiver, including by serving it with a copy of the documents filed in the proceedings. 9 Mr Sellers and Ms Ruhe also seek an order that there be no requirement for Ms Ruhe to provide information to the creditors of the Bankrupt Estates of which Mr Sellers is the sole Trustee and to whom Mr Sellers has already provided information as required by r 70-30 of the Insolvency Practice Rules (Bankruptcy) 2016 (Cth) or in accordance with requirements that existed before the introduction of the Insolvency Rules. Both estimate that it would cost at least $5,000 per estate to provide a further report with the information required by r 70-30 of the Insolvency Rules to all of the sole Bankrupt Estates at a cost estimated at $120,000. 10 Mr Sellers identifies in his affidavit seven Bankrupt Estates to which he was appointed as sole Trustee prior to the introduction of the requirements in r 70-30 of the Insolvency Rules. He deposes that he provided initial information to the creditors of those seven estates including details about the debtor, the statement of affairs, information about potential investigations, information on remuneration, and a declaration of relevant relationships.

Cost implications 11 Mr Sellers deposes that what he describes as the SMB Advisory team is familiar with the Bankrupt Estates from which he seeks to resign and that the appointment of Ms Ruhe upon his resignation will ensure continuity in the conduct of the various administrations so as to avoid incurring the costs required if a new practitioner from a different insolvency firm was appointed. He confirms that SMB Advisory will meet the costs associated with this application, including preparation and all necessary steps to procure a replacement trustee on his resignation. 12 Ms Ruhe deposes that she has undertaken work on all of the Joint Bankrupt Estates in Schedule 1 and has had the day-to-day carriage of those Bankrupt Estates in her role as Joint Trustee, in consultation with Mr Sellers. Accordingly, the administration of those Bankrupt Estates would continue without interruption. 13 As to the Bankrupt Estates in Schedule 2, Ms Ruhe is familiar with all of them, and to her knowledge Mr Sellers has been assisted by staff at SMB Advisory on those Bankrupt Estates. Those staff will remain working on the Bankrupt Estates after Mr Sellers' resignation. 14 If the orders sought are made, Ms Ruhe deposes she intends to: (a) Apply the same rates of remuneration in the Bankrupt Estates as applied by Mr Sellers; and (b) As soon as practicable after the orders are granted, issue a circular letter to the creditors of each of the joint Bankrupt Estates and sole Bankrupt Estates to notify them of the change in trustee and to confirm that the rates of remuneration will remain the same.

Consideration 15 Section 180 of the Bankruptcy Act 1966 (Cth) permits the Court, subject to such terms and conditions as it thinks just, to accept the resignation of a Registered Trustee from the Office of Trustee of a Bankruptcy Estate. Rules 8.02(4)(b) and (c) of the Bankruptcy Rules requires the application and supporting affidavit to be served on the Official Receiver, the Bankrupt and anyone else (including a creditor) as ordered by the Court. Rule 1.34 of the Federal Court Rules 2011 (Cth) provides that the Court may dispense with compliance with any of the Federal Court Rules either before or after the occasion for compliance arises. That rule is applicable to this matter by operation of r 1.04 of the Bankruptcy Rules. 16 The applicants have filed an affidavit of Brian John McKerr sworn 10 February 2023 deposing to service of the application and affidavits on the Official Receiver. The Court has been informed that the Official Receiver does not consider there is any impediment to the Court making the orders sought by the applicants. 17 I note that in Allen, In the matter of Allen [2020] FCA 376, Murphy J was dealing with an application for the removal of trustees appointed to various Bankrupt Estates and in one case, the replacement by another of the applicants. In that matter, there were 25 Bankrupt Estates involved. His Honour considered it appropriate in that case that the petitioning creditors be notified of the application so they could be heard if they wished. His Honour noted that in Nixon, In the matter of Nixon, [2015] FCA 976 at [19]-[25] and Nixon, In the matter of Nixon, [2015] FCA 1047, Edelman J took the same view. 18 In this matter, I consider that the obligation to serve the application and supporting affidavits in relation to the Bankrupt Estates of which the applicants are joint trustees in circumstances where one of the joint trustees is continuing but as a sole trustee, is an unnecessary cost and inconvenience. Whilst not dealing with the same factual scenario, in Nixon, In the matter of Nixon, [2022] FCA 211 Derrington J adopted the same approach. 19 So too, I consider that in the circumstances where Ms Ruhe is a partner in SMB Advisory, Mr Sellers is a consultant to that firm and Ms Ruhe is familiar with the administration of all of the Bankrupt Estates of which Mr Sellers is the sole Trustee, the obligation to serve the Bankrupts and others is an unnecessary cost and inconvenience. 20 In all those circumstances, it is appropriate to dispense with the requirement for service on the Bankrupts and any other person, including creditors. 21 As to the requirements of r 70-30 of the Insolvency Rules, it is for the same reasons that I consider that the provision of information to the creditors of the Bankrupts in circumstances where information has already been provided to them is an unnecessary cost and inconvenience. 22 Accordingly, I will dispense with the requirement in r 70-30 of the Insolvency Rules to provide information to the creditors upon the appointment of a new Trustee. 23 Given Mr Sellers intends to retire and it is for that reason that he wishes to resign, it is appropriate that his resignation as Trustee of the Bankrupt Estates in Schedules 1 and 2 be accepted and that Ms Ruhe be appointed sole trustee of the Bankrupt Estates in Schedules 1 and 2. 24 In all the circumstances, there will be orders accepting Mr Sellers' resignation, appointing Ms Ruhe as Trustee of the Bankrupt Estates in question, and making the ancillary orders sought. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice O'Sullivan.

Associate: Dated: 21 April 2023 Schedule 1 Schedule 2

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