Challenge to banktruptcy trustees’ remuneration – continued

A challenge by the Inspector-General in Bankruptcy to trustees’ remuneration in an estate is before Justice Jennifer Davies of the Federal Court in Melbourne. The matter had been listed for hearing this week 14-15 December – but , in what may be some attempt at settlement, the matter has now been referred for a ‘case management hearing’ on Friday 22 December 2017.

Justice Davies had directed that any mediation be conducted by 30 November, with the mediator to then report to the court within a week as to whether the proceeding has been resolved.    

The presence of the Inspector-General should mean that any issues of public interest associated with the case are addressed; that is, it is not a mere commercial dispute over money.  Trustees also have their own fiduciary and public interest responsibilities, and the lawyers have their dispute resolution obligations.

The case may yet give insights as to the way that the Inspector-General in Bankruptcy determines a trustee’s disputed remuneration. At the moment, this is not evident since the IG’s reasons for decision are not published. A Federal Court review and decision may offer the transparency and guidance that the law and the IG does not presently offer.

The matter is being decided under the old law. A major change introduced by the Insolvency Law Reform Act is that the IG is now required to apply the same remuneration factors that the Courts have been applying in determining liquidators’ remuneration under s 473(10) of the Corporations Act – whether the work was necessary and properly performed; the time taken; the quality of the work and its complexity; whether there were any extraordinary issues, or higher levels of risk or responsibility; the value and nature of the assets; the number and nature of the creditors; the time taken; and any other relevant matters. See s 60-15 Bankruptcy Rules, and also s 60-12 Corporations Schedule.

The extensive case law in bankruptcy on proportionality will no doubt come under consideration. These issues were raised with AFSA at the Traill Bankruptcy Conference on 6 December 2017.

See VID516/2017 Yeo & Rambaldi (as trustees of the estate of Groll) v Inspector-General in Bankruptcy and Samuel Linton Groll (In His Capacity As Guardian And Administrator Of Harry Samuel Groll). 

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