Trustee cops show cause over “torpid discharge”

Generally a torpid discharge is associated with a shameful ailment. But not this time. In this instance discharge relates to duties, and torpid to a lack of vigour in their fulfilment.

Deploying the ambiguous entendre this week was Federal Court judge Craig Colvin, who’d been asked by a trustee in bankruptcy for orders granting the applicant vacant possession of a residential property occupied by the bankrupt since 2019.

“Given the state of the evidence before the Court as to the very considerable unexplained delay in the conduct of the administration to date and the available evidence as to the absence of any complexity in that administration, I will order that the trustee show cause by affidavit and submissions as to why orders to the following effect should not be made.” Justice Craig Colvin.

A reading of his honour’s judgment in Field (Trustee) v Spencer [2025] FCA 122 suggests there was no material provided in the course of the application to explain why the primary asset in the estate had yet to be realised for the benefit of creditors six years after bankruptcy and that trustee torpor could therefore be inferred.

The object of the judge’s opprobrium however had his own slant on things when iNO sought comment.

“There are sound reasons for the pace of the administration and applicable costs,” SV Partners WA Director Malcolm Field said.

“After the matter is finalised, there may be scope for a public response in relation to this and similar matters.”

While Field obtained the desired outcome in respect of possession, it was a different story when he asked that his costs be paid in priority.

“I record the following matters that may bear upon the appropriate costs order,” there judge said.

“At the initial return of the application the matter was not ready to proceed because necessary parties had not been joined.

“Further, the very considerable unexplained delay in bringing the application was part of the reason why there were adjournments to afford the bankrupt time to consider his response in circumstances where he had been in possession of the Bassendean property for many years after his bankruptcy.

“In all the circumstances, my preliminary view is that any order as to legal costs incurred by Mr Field should be confined to the costs of the hearing on 20 February 2025. However, I will hear submissions as to the appropriate order.”

And the judge wasn’t finished, saying that the unexplained delay in the administration of the estate and the extent of the estimated costs that Field indicated he would seek to recover compelled the court to invoke its supervisory power.

“The Court may exercise the powers there conferred ‘on its own initiative, during proceedings before the Court’,” the judge said.

“Given the state of the evidence before the Court as to the very considerable unexplained delay in the conduct of the administration to date and the available evidence as to the absence of any complexity in that administration, I will order that the trustee show cause by affidavit and submissions as to why orders to the following effect should not be made:

“(1) On or before 31 May 2025 and thereafter at three monthly intervals, Mr Field do provide, at his own cost, brief reports verified by affidavit filed in these proceedings and served on Mr Spencer as to the progress of the administration of the estate with copies of the report to be provided to known claiming creditors of the estate.

“(2) No remuneration shall be paid to Mr Field in respect of the administration of the estate unless and until approval has been obtained from the Court by application in these proceedings, provided that reasonable disbursements may be incurred and reimbursed without approval first being obtained.”

With the matter scheduled to return to court on April 9 iNO predicts that the torpor inferred will succumb to vigour renewed.