Claim for remuneration determination “misconceived”

You’d think that engineering 100 cents in the dollar for creditors plus a surplus might get you a little leeway when it comes to a remuneration determination for an extra $10k but as Brett Harrison recently discovered, that’d be no.

The Hobart-based trustee in bankruptcy, having completed all relevant tasks in respect of the estate of one Marianne Rose Beck, went to the Federal Circuit Court in July seeking various reliefs ahead of paying a surplus to AFSA and annulling the bankruptcy.

“…. although under the general law a trustee has the right to be reimbursed or indemnified in respect of costs and expenses properly incurred in administering the trust, the trustee has no general law right to remuneration.” Justice Robert Cameron.

At the same time Harrison, who is a director at Paul Cook & Associates, sought a remuneration determination in respect of an additional $10,000, on top of the $83,714.47c already approved by either creditors or the Inspector-General in Bankruptcy.

As is revealed in Harrison in his capacity as Trustee of the property of Beck, a Bankrupt v Beck [2021] FedCFamC2G 59 Federal Circuit Court judge Robert Cameron did accept the reasons Harrison put forward in support of the application for a remuneration determination.

These included the bankrupt’s lack of cooperation; the complexity of creditor claims; dealing with the bankrupt’s application for annulment and her unsubstantiated complaints in respect of his handling of the administration.

Time, the court heard, was also devoted to dealing with the administrator of the bankrupt’s mother’s deceased estate and with Ms Beck’s family law practitioner, Nikolovski Lawyers.

Finally, Harrison deposed to issues in respect of a deed of release negotiated and agreed with the bankrupt, dealing with complaints to AFSA made by the bankrupt about the deed of release and after all of that, discovering that he could no longer locate the bankrupt.

But the judge said whilst Harrison had identified the tasks involved, and the bases on which his further fees would be raised, he didn’t provide adequate detail in terms of what work remained to be done, whom from his office would perform it, or why $10k was a reasonable and appropriate estimate.

Not that this lack of specifics was the reason led the judge to describe the application for both a remuneration determination and for the costs of the remuneration application to be drawn from the estate as “misconceived”.

“…. although under the general law a trustee has the right to be reimbursed or indemnified in respect of costs and expenses properly incurred in administering the trust, the trustee has no general law right to remuneration,” the judge said.

The Insolvency Practice Schedule (Bankruptcy) he said makes no provision for a trustee to seek “an order in relation to remuneration”.

“Although s.90-15 of the Schedule, to which the Trustee has referred, does empower the Court to make for “an order in relation to remuneration”, other than on its own motion it may only do so upon application under s.90-20 of the Schedule,” Justice Cameron said.

90 – 20 he said allowed for an application by a person with a financial interest in the administration of the regulated debtor’s estate; a committee of inspection (if any) so resolves or a creditor, on behalf of the committee or the Inspector General.

“The Trustee is not, therefore, a person who may apply to the Court for “an order in relation to [his] remuneration” under s.90-15 of the Schedule,” the judge said.

“Consequently, the Trustee’s application to the Court for a remuneration determination was misconceived and should have been made to the Inspector-General instead. It will be refused on that basis.”