Federal Court of Australia

Robson as former trustee of the estate of Samsakopoulos v Body Corporate for Sanderling at Kings Beach CTS 2942 [2021] FCAFC 143

ORDERS

THE COURT ORDERS THAT:

1.    There be leave to the applicant to appeal.

2.    The appeal is allowed.

3.    The orders of the Federal Circuit Court made on 11 December 2019 are set aside and in lieu thereof it is ordered pursuant to s 104(3) of the Federal Circuit Court of Australia Act 1999 (Cth) that the following orders be made consequent upon the order made by the Federal Circuit Court on 17 July 2019 that the creditor's petition filed on 30 July 2018 be dismissed (Dismissal Order):

(a)    the petitioning creditor do pay the reasonable remuneration of Mr William Roland Robson in administering the estate of Ms Victoria Samsakopoulos pursuant to the orders made by a registrar of the Federal Circuit Court exercising delegated judicial power (Administration) which orders ceased to have effect on 17 July 2019, such remuneration to be capped in the amount of $30,000 plus GST;

(b)    the petitioning creditor do pay the costs and expenses reasonably and properly incurred by Mr Robson in the Administration prior to 17 July 2019;

(c)    there be no order as to the remuneration, costs and expenses incurred by Mr Robson in respect of the Administration on or after 17 July 2019;

(d)    to the extent necessary, all acts done prior to 17 July 2019 by Mr Robson when acting as trustee pursuant to the sequestration order made on 1 November 2018 or any person acting under the authority of Mr Robson when acting pursuant to the order are taken to have been validly done;

(e)    to the extent necessary and to the extent possible without further order, all property that vested in Mr Robson when acting as trustee pursuant to the sequestration order made on 1 November 2018 that has not been returned to Ms Samsakopoulos shall vest immediately in Ms Samsakopoulos;

(f)    there be liberty to Mr Robson to apply for such further orders as may be reasonably necessary to ensure that all property that vested in Mr Robson when acting as trustee pursuant to the sequestration order made on 1 November 2018 is vested in Ms Samsakopoulos and as soon as reasonably possible Mr Robson do apply pursuant to such liberty for such orders as may be reasonably necessary to vest the property in Ms Samsakopoulos;

(g)    Mr Robson shall do all things as may be reasonably necessary to give effect to order (e) and any orders made pursuant to order (f);

(h)    the petitioning creditor shall not by any means seek to recover any contribution from Ms Samsakopoulos in respect of any amount that the petitioning creditor is liable or becomes liable to pay pursuant to these orders;

(i)    it is declared that Ms Samsakopoulos shall not have the status of a former bankrupt;

(j)    there be no orders as to the costs of the application filed on 11 December 2019; and

(k)    there be liberty to apply for any further consequential orders.

4.    The appellant and first respondent shall each bear their own costs of the appeal.

5.    On or before 2 September 2021, the appellant do file and serve an affidavit providing any explanation as to why the appellant failed to promptly give effect to the Dismissal Order and do show cause by affidavit and any submissions as to any reason why the Court should not appoint a registrar as a referee to inquire into the extent to which the failure by Mr Robson to promptly give effect to the Dismissal Order has caused loss or damage to Ms Samsakopoulos for the purpose of the Court formulating such further consequential orders pursuant to s 104(3) of the Federal Circuit Court of Australia Act as may be appropriate in the circumstances which have occurred.

6.    On or before 16 September 2021, Ms Samsakopoulos do file and serve any submissions in response to any submissions filed by the appellant pursuant to order 5.

7.    The question whether there should be any further orders in the appeal be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ALLSOP CJ:

1    The Court sat a bench of five judges in this and a related appeal raising similar issues because the arguments involved a reconsideration of the correctness of two previous decisions of the Full Court: Pattison v Hadjimouratis [2006] FCAFC 153; 155 FCR 226 and Flint v Richard Busuttil & Company Pty Ltd [2013] FCAFC 131; 216 FCR 375. Further, the issues raised important questions as to the power of the Court to make orders that were convenient and just in the administration of the bankruptcy jurisdiction.

2    I have read the careful and comprehensive reasons of Colvin J. As would be expected, in the light of our joint reasons (with Markovic J) in Bechara v Bates [2021] FCAFC 34; 388 ALR 414, there is much in the reasons with which I concur; indeed, I agree fully with almost all of what his Honour has so clearly expressed. We disagree, however, in one respect only: as to the nature of the orders that can be made upon the dismissal of the creditor’s petition by the judge upon de novo review of the earlier making of a sequestration order by a registrar. The disagreement may only be a different way of expressing the same or very similar ideas and conceptions about the nature of the exercise of judicial power in the sui generis process of the one application being dealt with first by a registrar and later by a judge in the one exercise of judicial power by the Court. I otherwise agree in the orders his Honour proposes.

3    My view, shortly put, is that whilst it may be that the order of the registrar was not attended by any error, if a judge on review dismisses the creditor’s petition, the setting aside of the sequestration order made by the registrar is the appropriate consequential order in that proceeding. The existence on the record of an order that the estate of the debtor be sequestrated, even one speaking up to, but no further than, the time at which the judge’s order dismissing the petition is made or takes effect, is fundamentally inconsistent with the (one) exercise of judicial power by the Court in respect of the (one) creditor’s petition. That is not to say that the order made by the registrar did not have effect with consequences in statute, vesting of property, or status of the debtor and office of the trustee upon being made. But once the underlying creditor’s petition is dismissed those intervening events and statutory consequences are to be dealt with by consequential orders authorised by statutory provision (here s 104(3) of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act) and in another case s 35A(6) of the Federal Court of Australia Act 1976 (Cth) (FCA Act)). The amplitude and width of such powers is to be recognised as apt to accommodate and deal with the foreseeable consequences of the operation of the exercise by delegation of judicial power and its review de novo in the way conforming with the Constitutional imperative derived from Harris v Caladine [1991] HCA 9; 172 CLR 84.

4    The second and third complexities to which the Court referred in Bechara v Bates 388 ALR at 423 [30] are raised here, together with the additional complexity as to whether it is open for the Court upon dismissing the creditor’s petition to set aside the sequestration order made by the registrar, at least when it has not been demonstrated to have been made erroneously. It is important to recognise the nature of that order in this context: It is not a setting aside for some vitiating flaw as substantive relief; rather, it is a consequential order recognising that the one petition can only have one outcome if it be dismissed by the judge as the Court on review. That is not to undermine the character of the power exercised by the registrar. The power exercised by the registrar was judicial power. Rather, it is to accommodate the reality that the one whole exercise of delegated judicial power (including the review) cannot have two contradictory orders by way of outcome on the court record. Thus the issues which call for resolution in this appeal are, perhaps, better expressed as follows:

(1)    If the creditor’s petition is dismissed on the rehearing, what is the proper order, if any, to deal with the sequestration order made by the registrar?

(2)    As part of (1), whether in addition, or in the alternative, to any other order consequent upon the dismissal of the creditor’s petition, is it open to the Court to annul the bankruptcy?

(3)    What orders are authorised by s 104(3) of the FCCA Act (and s 35A(6) of the FCA Act) upon the dismissal of the petition, and in particular, can orders be made (in the absence of any annulment) for the division of responsibility for the trustee’s remuneration, costs and expenses in connection with the administration carried on under authority of the registrar’s order?

5    As the reasons of Colvin J make clear, it is necessary to identify and distinguish the nature of the application or process invoked and the precise statutory framework in any discussion of the source, content and any limits on the power of a court to deal with an order for the sequestration of the estate of a debtor under relevant bankruptcy legislation. The applications or processes include at least the following: an appeal against the making of such an order; an application under rules of Court to vary or set aside such an order made in the absence of the debtor; an application to set aside such an order made not only in the absence of the debtor, but without the debtor being aware of the hearing whether because of lack of service or other reason; an application to set aside such an order made in excess of authority or involving jurisdictional error such as a denial of procedural fairness (even if the debtor was not absent); an application for review of such an order made by a registrar; and an application for an annulment.

6    The nature of such applications or processes and what needs to be proved may depend in part on whether what is impugned is an order made by a judge of a superior or inferior court or by a registrar under delegated judicial power.

7    It is right to begin, as Colvin J does, with the recognition of the importance of the jurisdiction being exercised. As Lord Esher MR said in Ex parte Lennox; In re Lennox (1885) 16 QBD 315 at 321 it is a “great power” that is being exercised: one that alters the rights of all creditors and that alters the status of the debtor. There is, and always has been in the history of bankruptcy, a human reality to the jurisdiction. The sequestration order can affect the lives of ordinary people very deeply, as lucidly explained by Deane J in Kleinwort Benson Australia Ltd v Crowl [1988] HCA 34; 165 CLR 71 at 82. Whilst the process of bankruptcy administration may alleviate the position of the insolvent debtor allowing a return to normal life without the burden and oppression of creditors beyond his or her capacity to pay, if a solvent person is made bankrupt the costs and expenses of the administration may turn a solvent debtor into a financially diminished, if not penniless, person. The jurisdiction of bankruptcy is concerned with insolvency and its consequences, not mere debt collection: Culleton v Balwyn Nominees Pty Ltd [2017] FCAFC 8; 343 ALR 632 at 644–645 [44]. The importance of the status of being a bankrupt, or having been a bankrupt is, for many, if not most, people, not possible to overstate. It may be the price for the future freedom from oppression of past creditors which circumstances, ill fortune or naivety brought about, but it nevertheless remains to many, as Deane J said in Kleinwort Benson 165 CLR at 82, “a pronouncement of failure and humiliation attended by the fear of unknown consequences and the susceptibility to criminal punishment from what would otherwise be innocent conduct”. For the future, it can mark, if not necessarily to all, a social stain, certainly it marks a commercial stain on the credit history of the person. To call becoming a bankrupt an “ignominy” as Madgwick J did in Udowenko v Rasevi Pty Limited [2006] FCA 1217 at [3] is to many no exaggeration. These are not merely passing considerations that the profession and trustees should bear in mind in how they invoke and administer the jurisdiction, they can be taken as implicit in Parliament’s understanding of the jurisdiction and as matters relevant to the amplitude of provisions enacted to empower a court to correct or adjust the position of parties (in particular the debtor) affected by a sequestration order that for some reason should not be seen as operative.

Section 37 of the Bankruptcy Act

8    Section 37 of the Bankruptcy Act 1966 (Cth) is in the following form:

(1)    Subject to subsection (2), the Court may rescind, vary or discharge an order made by it under this Act or may suspend the operation of such an order.

(2)    The Court does not have power to rescind or discharge, or to suspend the operation of:

(a) a sequestration order; or

(b) an order for the administration of the estate of a deceased person under Part XI.

9    The original terms of s 37 in the Bankruptcy Act 1966 (until 1980) were as follows:

The Court may rescind, vary or discharge an order made by it under this Act or suspend the operation of such an order.

10    In 1980 by s 22 of the Bankruptcy Amendment Act 1980 (Cth) a restriction on the width of s 37 was introduced such that the provision read as follows:

(1)    Subject to subsections (2) and (3), the Court may rescind, vary or discharge an order made by it under this Act or suspend the operation of such an order.

(2)    The Court shall not, after a sequestration order has been signed and sealed as provided by the rules, rescind or suspend the operation of the order.

(3)    The Court shall not, after an order for the administration of the estate of a deceased person under Part XI has been signed and sealed as provided by the rules, rescind or suspend the operation of the order.

11    Section 37 before the 1980 amendment was in the same form as s 26(1) of the Bankruptcy Act 1924 (Cth) (the 1924 Act). The change to bring about the current form of s 37 was made in 1992 by s 8 of the Bankruptcy Amendment Act 1991 (Cth).

12    The object of the rescission contemplated by s 37 in its original form and by s 37(1) in its later form was for orders correctly made in the first instance in respect of which reconsideration was sought from circumstances that had subsequently occurred making rescission appropriate. But, if the order had been wrongly made in the first instance the course of institution of an appeal should be followed: In Re Tobias and Co; Ex parte Tobias [1891] 1 QB 463 at 465 (Cave J), cited by Riley J in Re Edgar; Ex parte Davidson & Michael Hunt’s Health Club Pty Ltd (1973) 2 ALR 649 at 656; Simon v Vincent J O’Gorman Pty Ltd [1979] FCA 75; 41 FLR 95 at 108–109 (Lockhart J); though cf Balhorn v Colby [1982] FCAFC 226; 45 ALR 174. The purpose of s 26(1) under the 1924 Act was also, as Rich J said in Cameron v Cole [1944] HCA 5; 68 CLR 571 at 591, to exempt bankruptcy courts from the usual rule that a valid decision after a hearing determinative of rights cannot be recalled. The power was described by Cave J in the passage cited by Riley J in Re Edgar as providing a power of re-consideration and was:

a discretion of the widest and most far-reaching character; and, when properly exercised, it is so beneficial in its operation and so calculated to advance the ends of justice, that I think it ought not to be restrained by construing it in any niggardly spirit.

13    An understanding of the nature of the power under s 37 to reconsider orders made (including until 1992 sequestration orders) as a wide beneficial power, together with the terms of s 43(2) of the Bankruptcy Act, assists in understanding the view of Gibbs J in Re Deriu (1970) 16 FLR 420 at 422 (citing Williams J in Cameron v Cole 68 CLR at 610) that rescission of the sequestration order under s 37 would not put an end to the bankruptcy; a view reiterated by J B Sweeney J in Re Bond [1978] FCA 42; 36 FLR 131 at 133.

14    That the power in s 37 cannot now be used to reconsider sequestration orders does not constrain nor speak to the amplitude of power on appeal under s 28 of the FCA Act, just as it did not when it did extend to sequestration orders: Simon v Vincent J O’Gorman 41 FLR at 102 and 109; Wren v Mahony [1972] HCA 5; 126 CLR 212; Re Schierholter; Ex parte Geis [1978] FCA 6; 32 FLR 22; De Robillard v Carver [2007] FCAFC 73; 159 FCR 38 at 66–68 [142]–[150].

15    Nor did the existence of the power in 1944 under s 26(1) of the 1924 Act constrain or speak to the amplitude of the inherent power of a court, even of an inferior court, to set aside an order against a person who did not have a reasonable opportunity to appear at the hearing: Cameron v Cole 68 CLR at 584 (Latham CJ), 589 (Rich J) and 607 (Williams J); Taylor v Taylor [1979] HCA 38; 143 CLR 1 at 6–8 (Gibbs J); 10 (Stephen J), 16 (Mason J) and 22 (Aickin J); and see the discussion in Re Anasis; Ex parte Total Australia Ltd [1985] FCA 615; 11 FCR 127 at 129–134, where Burchett J made not only an order that the sequestration order be set aside, but also orders that the bankruptcy be annulled and that the petition be reheard. It is apparent that Burchett J considered there was a risk (based on Re Deriu and s 37) that an order setting aside the sequestration order would not put an end to the bankruptcy.

16    Nor should the current form of s 37(2) be seen as somehow constraining the proper exercise of authority and discretion which is contained within s 104(3) of the FCCA Act or s 35A(6) of the FCA Act. Such was the view (with which I agree) of Edmonds J in Strata Plan 23007 v Cross [2006] FCA 900; 153 FCR 398 at 424 [110] and of Madgwick J in Udowenko [2006] FCA 1217 at [3]. Such, implicitly, was also the view of each of the three judges in Pattison 155 FCR at 232 [14] (Nicholson J), 236 [51]–[53] (Jacobson J) and 255–257 [176]–[182].

17    Thus, I do not consider that s 37 impinges upon or constrains the authority and discretion of the Court under s 104(3) (or s 35A(6)) to grant appropriate relief consequent upon dismissal of the petition.

Can one set aside the sequestration order made by the registrar in an exercise of power under s 104(3) of the FCCA Act (or s 35A(6) of the FCA Act)?

18    Before turning to matters of principle, as a matter of precedent, Pattison 155 FCR 226 stands as authority for an affirmative answer. The debate in the three sets of reasons was whether an annulment order could also be made, and if so, on what foundation. All agreed that the subsisting sequestration order be set aside. Further, that conclusion was not founded upon any flawed conception of the nature of the review. That said, as Colvin J says, there was an assumption, and no argument to the contrary, in Pattison as to the availability of an order to set aside the sequestration order. As the Court said in Bechara v Bates and as Colvin J says, the analysis of the nature of the review by Lander J (from which there was no dissent by Nicholson J or Jacobson J) accords with the views expressed in Bechara v Bates and the unbroken line of authority to which reference was made in Bechara v Bates. On that correct foundation, I would prefer not to see the approach in Pattison as to the availability of an order to set aside the sequestration order as wrongly founded on vitiation of the registrar’s decision, but rather as an exercise of power to make consequential orders.

19    As a matter of practice and practicality an application for review under s 104(2) of the FCCA Act (or s 35A(5) of the FCA Act) may be made without any other application; it may be accompanied (as it was here by Ms Samsakopoulos) by an application for an annulment; it may be accompanied by an application under the rules (such as r 16.05(2)(a) or (b) of the Federal Circuit Court Rules 2001 or r 39.05(a) or (b) of the Federal Court Rules 2011), or under the inherent or implied power (Cameron v Cole) to set aside the sequestration order if no opportunity to be present was afforded, or perhaps for some other vitiating reason, perhaps jurisdictional error. Not infrequently given the nature of the jurisdiction, litigants are self-represented and their documents, claims and the jurisprudential bases therefor may be confused or wanting in expression.

20    It is correct to say, as Colvin J does, as the Court did in Bechara v Bates and as Lander J did in Pattison that the demonstration of error on the part of the registrar is not a necessary part of the review. Rather, the review is the rehearing of the creditor’s petition and the earlier exercise of jurisdiction is not the subject of debate. Nevertheless, in the often confused or multiple applications, what happened before the registrar may be part of the whole controversy. Also, what happened at the hearing before the registrar may be relevant to the choice of consequential orders should the petition be dismissed on review.

21    In any event, if one focuses on the application for review, as the Court has stated and as, correctly with respect, was stated by Lander J in Pattison 155 FCR at 251–252 [155]–[156] an application for review (under s 104(2) of the FCCA Act or s 35A(5) of the FCA Act) is an entirely different procedure to an application to set aside the existing order made in the absence of the party or for some other reason or to an application for an annulment. The review application is the rehearing of the petition to determine whether or not a sequestration order should be made by the Court (through the judge) on the evidence then available. If the answer be ‘no’, the first order to be made is to dismiss the petition. It would be fundamentally inconsistent with the dismissal of the petition to annul the bankruptcy. I agree with Colvin J that within the framework of the Bankruptcy Act and the validity of the delegation of power, the order made by the registrar can have no continuing effect. At one level of abstraction the registrar’s order (unless set aside for some reason, such as absence of the debtor or non-service or some other vitiating reason) spoke as an order of the Court. The validity of the delegation in the statute means that the registrar’s order was, and took effect as, an exercise of judicial power. Upon dismissal of the creditor’s petition on review the bankruptcy that the making of the sequestration order by the registrar created and the statutory consequences that flowed therefrom, such as vesting of property and the trustee taking up office, are brought to an end by the superseding dismissal of the petition: There is no bankruptcy to be annulled. That superseding can be seen as the merging or substitution of the order made by the registrar and of its continuing effect in or by the order made by the judge. Neither the bankruptcy nor the sequestration order can continue to have any effect.

22    What of the interim period between registrar’s order and judge’s order? An otherwise valid order of the Court burdened by an inhering right of the party to seek review and rehearing engaged the operation of the Bankruptcy Act, including the change of status of the debtor to bankrupt. Rights in and to property changed: s 58(1). The trustee took up office and began to act.

23    For the reasons expressed by Colvin J, the terms of s 104(3) (and s 35A(6)) should be construed as ample and sufficient to untangle and unravel as far as possible, and to the extent that it is just, the rights and positions of the parties involved. The “matter with respect to which the power was exercised” is the width of the controversy which by the time of the rehearing involves not merely the parties to the creditor’s petition but also potentially others, in particular the trustee, who have a proper interest in the consequences of the rehearing.

24    The immediate actors in the controversy, at the point of dismissal of the petition, are (here) the debtor, the creditor, and the trustee. The public represented by the creditors are also affected. The proper analysis of the superseding or overtaking of the registrar’s order by the order of the judge cannot simply mark the end of the existence of a temporary bankruptcy in which the debtor was, for a limited time, a bankrupt. The creditor’s petition on which the registrar acted has been dismissed. There can be but one outcome of the one overall exercise of judicial power by the Court. If the Constitutional imperative of a rehearing by a judge of the creditor’s petition is to have meaning, the consequence of the dismissal of the petition must include the eradication of the status of the debtor as a bankrupt. For any other position to obtain would permit the delegated exercise of power to have not only temporary, but lasting, if limited, effect notwithstanding that the same power has now been exercised in a contrary way. The order would remain on the Court record, potentially causing confusion. The procedure is sui generis; it is framed and given content by the Constitutional imperative. The appropriate way to vindicate the protection of the debtor is to set aside the sequestration order as a consequential order to ensure that the Court record has one result of the exercise of judicial power in respect of the one petition, not two diametrically opposed orders of the Court potentially affecting the status of the debtor. This ensures the elimination of the status, and the record of the status, of the debtor as a bankrupt. That does not mean that other orders cannot be made consequentially under s 104(3) of the FCCA Act (or s 35A(6) of the FCA Act) which protect the position of the trustee and third parties. Those consequential orders can proceed on the basis, as was the case, that there was a valid order of the Court in place such that those who acted upon the order are protected in what they did. Such not only accords with long-standing authority: Dimes v Proprietors of Grand Junction Canal (1852) 3 HLC 759 at 786; Phillips v Eyre (1870) LR 6 QB 1 at 22, but also with the statutory and Constitutional structure of hearing and rehearing de novo and the non-provisional nature of the order of the Court when made by the registrar.

25    Thus, the content of s 104(3) of the FCCA Act (and s 35A(6) of the FCA Act) and the nature and contours of, and limits upon, the consequential orders that can be made are set or framed by the Constitutional imperative that facilitates the delegation.

26    A consequence of that is that a debtor, in respect of whom a creditor’s petition has been dismissed by a judge on de novo rehearing, should not be burdened in status, nor (unless other considerations as to the conduct of the debtor independently justify it) with financial liability, by the earlier making of a sequestration order. To leave someone with the apparent temporary, but unremoved, status of a bankrupt, or to burden him or her with some share of the costs and expenses of the bankruptcy, let alone remuneration of a trustee, would substantially diminish the necessary protection of the de novo hearing and call into question the “guarantee” that a litigant may have recourse to a hearing and a determination by a judge: Harris v Caladine 172 CLR at 95 (Mason CJ and Deane J).

27    There can now be no doubt that on appeal the sequestration order can be set aside. The consequences of such an order on appeal were stated by the court in Simon v Vincent J O’Gorman 41 FLR 95, De Robillard 159 FCR 38, Rangott v Marshall [2004] FCA 961; 139 FCR 14 (approved in De Robillard) and by the High Court in Wren v Mahony 126 CLR 212. Such an order is made to correct error. It is a necessary substantive order on appeal, clearing the way to dismiss the petition as the order that should have been made by the court below. On a review, the petition is reheard and if dismissed (as the substantive order) a consequential order is made to set aside the inconsistent order that has been overtaken by, or merged in, or substituted by, the substantive order of the Court dismissing the petition.

28    There would be no common sense in relief consequent upon a de novo rehearing being less adequate (even if the orders be differently conceptualised) to protect the debtor than an appeal where error had to be demonstrated in the registrar’s decision. To leave on the record of the Court a sequestration order against the debtor’s estate after the petition has been dismissed on review would leave a legacy of a financial stain that would be as unjust as it would be confusing, given the order of the Court on rehearing.

29    Thus, in my view, s 104(3) is wide enough upon dismissal of the creditor’s petition to found an order setting aside the sequestration order made by the registrar as a necessary consequential order to perfect the overtaking or superseding of the registrar’s order by the order made on review by the judge as the Court. This ensures the debtor is taken not to have, or henceforth ever to have had, the status of a bankrupt.

The other consequential orders on review under s 104(3) or s 35A(6)

30    I agree with Colvin J and for the additional reasons that I have given that there is ample content to s 104(3) of the FCCA Act (and s 35A(6) of the FCA Act) to make all appropriate orders to deal with the remuneration, costs and expenses of the trustee and the other consequential matters to which Colvin J refers. For the reasons that I have given, this burden should not fall to be shared by the debtor merely because the sequestration order has been set aside. There may in any given case be circumstances that make it just for the debtor to pay some money for what, or in respect of what, has occurred. Such an order would need to be conformable with the Constitutional imperative. The debtor may have contributed to the making of the first sequestration order by his or her conduct, such as by failing, after being told clearly of the necessity, to bring forward evidence of solvency; the debtor may have asked the trustee to take steps that the trustee was not obliged to take and which have benefitted the debtor. There may be other circumstances. Thus, the circumstances surrounding the making of the order by the registrar may be relevant to consider in the making of the consequential orders. No such circumstances were demonstrated here.

31    It is strictly unnecessary to deal with Flint 216 FCR 375, nevertheless it is appropriate to deal with the position on appeal because it assists in understanding the scope and amplitude of s 104(3) of the FCCA Act and s 35A(6) of the FCA Act.

32    The powers given by s 28 to the Court hearing appeals by way of rehearing should be given amplitude in order to resolve and quell the controversy on appeal. Matters may come on appeal to this Court from a single judge of this Court or from a judge of the Circuit Court. In either case, that judge at first instance might be exercising the judicial power by way of review of a registrar’s decision or directly. The power of the Court to make just consequential orders should not be different in these different contexts.

33    If the Court allows an appeal against the making of a sequestration order it may set aside that order. There is no reason in principle or from the text of s 28 of the FCA Act for the Court to refrain from making orders that are just, necessary or convenient consequential upon or ancillary to the setting aside of a hitherto valid order.

34    Some such orders may be seen as restitutionary, some compensatory, some adjectival, some dealing with property that has vested or been dealt with. It may be that in a given case the dispute as to consequences is so substantial as to warrant remitter for trial. That possibility is no reason not to make orders that are just, that can be made conveniently, and that accord with principle for the dealing with the consequences of the setting aside of a hitherto valid and effective order: See Mason K, Carter J and Tolhurst G, Mason and Carter’s Restitution Law in Australia (2nd ed, Butterworths, 2008) Ch 7; Commissioner for Railways (NSW) v Cavanough [1935] HCA 45; 53 CLR 220 at 225; Wilde v Australian Trade Equipment Co Pty Ltd [1981] HCA 13; 145 CLR 590 at 602; Gordon DM, “Effect of the Reversal of Judgment on Acts Done Between Pronouncement and Reversal: Parts I and II” (1958) 74 LQR 517 and Part III (1959) 75 LQR 85.

35    The approach to the remuneration and costs of the trustee under s 28 of the FCA Act should not differ from that under s 104(3) of the FCCA Act or s 35A(6) of the FCA Act. If a sequestration order is set aside on appeal and consequential or ancillary orders about the trustee’s position need to be made under s 28 from the direct exercise of judicial power (as opposed to s 104(3) or s 35A(6)) there will be no governing or moulding effect of the Constitutional imperative underpinning delegation. Nevertheless, good cause would need to be shown as to why a debtor (erstwhile bankrupt) should fund an administration sought unsuccessfully ultimately by the creditor after a successful appeal. This approach brings into focus in a practical and concrete way the significance of the nature of the jurisdiction being insolvency and not debt collection. In that context, the stringency of approach of Riley J (mentioned by Deane J in Kleinwort Benson 165 CLR at 82) should not be seen as a call for pedantry, but as a feature of the seriousness of the invocation of the jurisdiction.

36    Also, I wish to emphasise what Colvin J has said in his reasons about the need for despatch in the dealing with matters in bankruptcy, in particular applications concerned with the invocation of the jurisdiction, including applications for review of registrars’ decisions concerned with such. The need for that despatch is part of the recognition of the public importance of a jurisdiction that affects all creditors and the status of the debtor and of the fact that the foundation of the jurisdiction is insolvency, not debt collection.

37    It is unnecessary to make a consequential order setting aside the sequestration order made by the registrar. The Circuit Court judge did so on 12 July 2019. Order (i) proposed by Colvin J may not be strictly necessary given the setting aside of the sequestration order, but I agree that it should be made for clarity and full protection of the debtor. Thus, my disagreement with Colvin J does not affect the proper orders to dispose of the appeal.

Associate:

Dated:    12 August 2021

REASONS FOR JUDGMENT

MARKOVIC J:

38    I have had the advantage of reading the draft reasons for judgment of each of the Chief Justice and Colvin J. Like the Chief Justice I agree with almost all of the detailed and comprehensive reasons given by Colvin J and with the orders proposed by his Honour for the disposition of the appeal. Like the Chief Justice I disagree with the reasons of Colvin J to the extent that his Honour expresses the view that the consequential orders that can be made upon the dismissal of a creditor’s petition by a judge following a de novo review of a sequestration order made by a registrar do not extend to an order setting aside the sequestration order.

39    Like the Chief Justice and for the reasons expressed by his Honour I take a different view and am of the opinion that it is open to do so. The making of a consequential order setting aside the sequestration order in those circumstances is, as the Chief Justice observes, the appropriate way to vindicate the protection of the debtor and ensures the eradication of the status of the debtor as a bankrupt as well as removing any confusion as to the status of the debtor for the purpose of, among other things, his or her future dealings.

Associate:

Dated:    12 August 2021

REASONS FOR JUDGMENT

DERRINGTON J:

40    I agree with the reasons of the Chief Justice and the orders proposed by Colvin J.

Associate:

Dated:    12 August 2021

REASONS FOR JUDGMENT

COLVIN J:

41    On 1 November 2018, a sequestration order was made against the estate of Ms Victoria Samsakopoulos. The orders were made by a registrar of the Federal Circuit Court of Australia on the hearing of a creditor's petition brought by the Body Corporate for Sanderling at Kings Beach CTS 2942 (Body Corporate). In making the sequestration order, the registrar exercised delegated judicial power of the Circuit Court. Mr William Roland Robson (Trustee) assumed the conduct of the administration of the estate pursuant to the sequestration order.

42    After the administration had been underway for about five months, Ms Samsakopoulos brought an application to review the registrar's decision. In that application she also claimed an order annulling her bankruptcy. On hearing the review application, orders were made by a Circuit Court judge setting aside the sequestration order and dismissing the creditor's petition. The Trustee appeared in person at the hearing of the review application but did not seek any orders.

43    Some months thereafter, the Trustee brought an interim application in the bankruptcy proceedings for orders that Ms Samsakopoulos and the Body Corporate pay the remuneration, costs and expenses of the Trustee in administering the former bankrupt estate in such proportions as the Court thinks appropriate. The Circuit Court judge determined that the Circuit Court had no power to make such an order and the interim application was dismissed.

44    The Trustee now seeks leave to appeal against the decision dismissing the interim application. If leave is given, the Trustee seeks orders as to payment of his remuneration, costs and expenses in conducting the administration pursuant to the sequestration order made by the registrar.

The basis for the application by the Trustee

45    The Trustee says that the Circuit Court had power pursuant to s 104(3) of the Federal Circuit Court of Australia Act 1999 (Cth) (FCCA Act) to make the order sought on the interim application. Section 104(3) provides, amongst other things, that on review of the exercise by a registrar of a delegated judicial power the Circuit Court 'may make any order or orders it thinks fit in relation to the matter in respect of which the power was exercised'. If there is no such power, the Trustee submits, in the alternative, that the Circuit Court had a discretion to order that the bankruptcy of Ms Samsakopoulos be annulled instead of or in addition to dismissing the creditor's petition and there was error in failing to consider the exercise of that discretion. The Trustee says that if the exercise of the discretion had been considered then it should have been exercised in favour of making an order annulling the bankruptcy. On that basis, the Trustee says that the orders sought on the interim application should now be made on appeal. The significance of an order for annulment is that it would enable the Trustee to rely upon provisions of the Bankruptcy Act 1966 (Cth) that allow for the remuneration of the Trustee consequent upon an annulment by Court order.

46    In the course of submissions to this Court, the Trustee also sought an order that would enable him to re-convey the Kings Beach unit to Ms Samsakopoulos. It is to be noted that the Trustee sought no such consequential order before the Circuit Court on the hearing of the interim application. The order was said to be necessary and appropriate consequential relief because, during the course of the administration conducted by the Trustee, a transmission application had been granted and the unit had become registered in the name of the Trustee. No other consequential order was sought by the Trustee on the interim application or in the appeal.

47    As a result of the issue of the transmission of the Kings Beach unit being raised by the Trustee in the proceedings in this Court (and submissions made by Ms Samsakopoulos appearing on her own behalf) it emerged that, notwithstanding the order made by the Circuit Court dismissing the creditor's petition and setting aside the sequestration order, the Trustee had retained control of all of the property comprising the estate of Ms Samsakopoulos.

The position of the Body Corporate

48    On the hearing of the interim application in the Circuit Court, the Body Corporate did not submit that the Circuit Court lacked jurisdiction to make the orders sought. In this Court, the Body Corporate adopted the same position. However, if leave was given to appeal it advanced two submissions. First, it said that Ms Samsakopoulos should bear the burden of any order for payment of the Trustee's remuneration, costs and expenses up until her application to review the registrar's order was filed and that thereafter there should be no order (with the consequence that the Trustee would bear the costs and expenses thereafter). Second, it said that any consequential orders that may be required should be made on appeal and the matter should not be remitted to the Circuit Court.

The position of Ms Samsakopoulos

49    Before this Court, Ms Samsakopoulos maintained that she should not have been made bankrupt, that she owed no debt to the Body Corporate and she should not have to bear any of the costs of the administration conducted by the Trustee.

The assistance of amicus curiae

50    Ms Samsakopoulos is not legally represented. The Court requested and was afforded the assistance of amicus curiae. The Court is grateful for the willingness of Ms Whittaker SC and Mr Pulsford to assist the Court and for their helpful submissions. Four issues were raised by counsel for consideration. First, whether the determination of the review application by the Circuit Court dismissing the creditor's petition finally determined the question of the orders that could be made on review such that, in the absence of an appeal against those orders, the Circuit Court was correct to dismiss the subsequent interim application for remuneration (and for that reason leave to appeal should be refused). Second, whether there was power on review of the order made by the registrar to both set aside the sequestration order and annul the bankruptcy. Third, whether there was power to set aside the sequestration order and then allocate as between the Body Corporate and Ms Samsakopoulos the costs associated with the administration of the estate prior to the set aside order and, more generally, whether the Court on appeal had power to make the orders sought by the Trustee. Fourth, whether there was an alternative statutory basis on which the Circuit Court could have made orders as to the costs of the administration of the estate which the Court could exercise on appeal.

Issues of importance

51    Practice in the bankruptcy jurisdiction is informed by due and proper understanding of the nature of the 'great power' that is being exercised: Ex parte Lennox; In re Lennox (1885) 16 QBD 315 at 321 (Lord Esher MR). It is a power that alters the rights of all creditors who must thereafter participate in an administration with its attendant costs in order to pursue their debts and, in due course, must share rateably in realisable property of the debtor. It is also a power the exercise of which brings about a significant change in status on the part of the debtor. As a result, there is a recognition that formal requirements must be duly observed.

52    Nevertheless, once formal requirements have been met and the bankrupt is unable to demonstrate solvency, in many cases there is no real basis to oppose the making of a sequestration order. In the interests of efficiency in judicial administration, it is common and established practice for delegated judicial power to be exercised in making orders on creditor's petitions in cases of that kind.

53    The issues that arise on the Trustee's application in the present case concern the proper approach to be adopted where a sequestration order has been made in the exercise of delegated judicial power but on hearing the matter de novo on review the Court is persuaded that a sequestration order should not be made. Different approaches are evident in the reasoning in previous Full Court decisions relied upon by the Circuit Court judge, particularly Pattison v Hadjimouratis [2006] FCAFC 153; (2006) 155 FCR 226 and Flint v Richard Busuttil & Company Pty Ltd [2013] FCAFC 131; (2013) 216 FCR 375.

54    Uncertainties for trustees in bankruptcy as to the manner in which they may be remunerated and the approach that they should adopt on a review application when a sequestration order in respect of the estate they are administering might be brought to an end are matters of wider significance than the particular issues in the present case. If, as was found by the primary judge, there is indeed some form of lacuna in the power of the Court to make orders for remuneration, costs and expenses of trustees in cases like the present then that is a matter that should be clearly identified as an issue that may invite consideration by the legislature.

55    If there is no lacuna and there is power to make an order then important issues arise as to the nature and extent of the orders that may be made, particularly the circumstances in which an alleged debtor may be made liable for the costs of an administration even though a judge has determined that a sequestration order should not be made on a creditor's petition.

56    For all those reasons, the application gives rise to important issues for the administration of bankruptcy law. Further, the correctness of Flint and the resolution of the disagreements in Pattison are important matters of precedent and practice in the bankruptcy jurisdiction. For these reasons it was thought appropriate to constitute a bench of five judges to address those issues.

57    Before stating in precise terms the issues that arise, it is appropriate to first address the conceptual issue at the heart of the appeal, namely the nature of delegated judicial power and the manner in which it may be exercised. It is important to direct attention to this at the outset because it assists in understanding why the authority and power of the Court on review is different to that which it has on appeal or pursuant to other applications or in different statutory contexts. These differences are important also in understanding the correct form of order to be made upon a review of the making of a sequestration order by a registrar in the exercise of delegated judicial power if the judge decides that the creditor's petition should be dismissed.

Delegated federal judicial power

58    One characteristic of judicial power is that it is entrusted to courts, not individual judges: Kotsis v Kotsis (1970) 122 CLR 69 at 91 (Windeyer J). Therefore, 'when any court is authorized to exercise the judicial power of the Commonwealth the power of adjudication thus committed to it must be exercised by the whole court or by a judge of the court, not by a subordinate officer': Kotsis at 91-92. Further, there is a 'constitutional imperative' that the judicial power of the Commonwealth be exercised by judges of federal courts or other courts entrusted with the exercise of federal jurisdiction: Tran v Pu [2015] FCA 97; (2015) 228 FCR 562 at [19] (Beach J, adopting the language of McHugh J in Harris v Caladine (1991) 172 CLR 84 at 164).

59    Nevertheless, judicial power can be delegated, but only in a manner that is consistent with its character as a power entrusted to a court. In the case of federal judicial power, there are limits upon the extent to which notions derived from the character of the common law courts may be deployed when reasoning as to the jurisdictional limits of federal courts: though see Re Macks; Ex parte Saint [2000] HCA 62; (2000) 204 CLR 158. Irrespective of the extent to which, at common law, courts of record may delegate judicial power, all federal courts are statutory courts and are subject to constitutional limits. In the case of delegated judicial power, for the delegation of judicial power to be consistent with the constitutional character of federal courts, the review provided for must be a de novo review by a judge: Harris v Caladine at 95, 123, 164.

60    The nature of delegated judicial power was recently considered in this Court in Bechara v Bates [2021] FCAFC 34 where it was observed at [2]:

It is now an accepted incident of judicial power that it may be exercised … by an order being made pursuant to a delegation, but only if the order may be reversed or otherwise corrected by a judge on review. In such cases, however, it is important to recognise that the review … is not concerned with correcting error and in that respect is to be differentiated from the statutory rights of appeal that have gradually become an established part of the judicial system. Nor is it a review de novo as a further stage in a tiered process. Rather, the review is an attribute of a recognised mechanism by which the exercise of judicial power may be delegated to an officer of the Court who is not a judge, such as a registrar. The right to seek review attaches to the delegation and is an attribute of the nature of the delegated authority.

61    It appears also that the delegation must not be of a kind that would prevent the Court, by its judges, exercising judicial power unless a party had first resorted to the delegated decision-maker. In other words, the delegation must not deprive the Court of its authority to determine the matter even though there has been no decision in exercise of the delegated authority. Therefore, in all cases where delegated judicial authority may be exercised there must be the prospect for a judge of the Court to determine the application if the judge considers it appropriate for that course to be followed in a particular case.

62    It follows that where a registrar (or other court officer) exercises delegated judicial authority, it is wrong to view that exercise of power as being separated from the prospect of review by a judge or judges of the Court in a manner that will involve a fresh (that is, de novo) exercise of the judicial power as to the making of the order. Any order made by a registrar in the exercise of delegated judicial power has a particular character or quality that is an incident of the nature of the delegation. The prospect of review by a judge inheres in the order made by the registrar as an incident of the extent of the delegated authority. Put another way, the registrar's order speaks as an order of the Court but only on the basis that it is subject to the prospect of subsequent review de novo by a judge.

63    Further, the de novo review is not to be seen as directed to a consideration of the correctness of the delegate's decision or redressing error by the delegate. On review, the Court hears the case again unaffected by what has gone before. However, the Court does not act as if there is a new appellate proceeding. The review task it undertakes is a determination again of an application that has already been listed for hearing and proceeds in the same manner that would be the case if the power had not been delegated. In consequence, on review, the Court can entertain new arguments, receive new evidence or adjourn the proceeding but only to the extent, and in the circumstances where, it would do so in a matter that had already been set down for determination. Further, the applicant on review is the applicant on the application irrespective of whether the applicant was successful before the delegate. The same onus arises as if the application was being heard for the first time. This has particular significance for the review of a sequestration order. The review is initiated by the debtor (now bankrupt by the order to be reviewed), but proceeds as an application by the creditor on its petition.

64    The ability to delegate the exercise of judicial power in the manner described is consistent with the nature of judicial power. Therefore, it is consistent with the constitutional character of a federal court for such delegation to be authorised by statute. For present purposes it is not necessary to grapple with the extent to which the legislature might prevent such delegation. The issues were joined in the present case on the basis that the authority for the delegation of the judicial power of the Federal Circuit Court was statutory and was conferred by the FCCA Act. However, the statutory source of the authority could not alter the nature of the judicial power being exercised. It also could not exceed the statutory limit of the extent to which judicial power might be delegated.

65    Particular consequences arise from the character of the review which was described by Lander J in Pattison, correctly with respect, as a 'procedure sui generis': at [156]. As was observed in Bechara v Bates an order made by a registrar in the exercise of delegated judicial power takes effect without reservation when pronounced. It does so as an exercise of judicial power and (save for the prospect of review) operates with the same effect as if it had been made by a judge making the decision of the Court. Its past validity is not undone if a judge, on review, decides on the review that the order should not be made on the application. Rather, a review in which the judge reaches a different decision to the delegate results in the operation of the earlier, valid and operative, exercise of delegated judicial power coming to an end. At least from the point in time of the decision on review, the delegation which authorised the exercise of judicial power comes to an end. The act of the delegate is replaced by an exercise of judicial power by the judge. For that reason, even where, on review, the Court determines that the same order should be made as was made by the delegate it is usual for the Court on review to affirm the orders made by the delegate.

66    It is to be expected, consistently with the nature of the reservation of the right of review as a condition of the delegation, that the earlier order would be overtaken on review. That is to say, the nature of the delegation (with attendant right of review) is such that the authority of the delegate to exercise judicial power may be withdrawn because any such order always spoke in a manner that was subject to the exercise of the review power.

67    Therefore, if and when the review power is exercised then consistently with the conceptual character of the delegation with a right of review, the decision on review overtakes the delegation. Whether it speaks with a consequence that affects the past operation of the order of the delegate is a matter considered below. As will emerge, in the present case it is a question of statutory construction as to what may be done upon undertaking the review because the delegation and the powers that may be exercised on review are expressed in the particular terms of s 103(4) of the FCCA Act. Further, in the case of a sequestration order it is necessary to consider the terms of s 37(2) of the Bankruptcy Act which provides that the Court 'does not have power to rescind or discharge, or to suspend the operation of … a sequestration order'.

68    The appropriateness of the practice that has developed, with the blessing of authority, of making an order on review setting aside the delegated decision is considered below. The issue arises because the Court on review of the exercise of delegated judicial power does not decide that the delegate's exercise of power was made in error and therefore should be set aside. Rather, the Court on review of the exercise of delegated judicial power makes its own determination unaffected by the delegate's decision. The Court then makes its order. The consequence of that order is that it overtakes the order of the delegate. It brings to an end the delegated authority by giving effect to the condition of review to which the exercise of the delegated authority was always subject. The way in which the past operation of a valid exercise of delegated judicial power is to be addressed when a judge makes an overtaking order on review is a matter of some importance especially when it comes to the bankruptcy that has commenced pursuant to that order and the status of a person as a bankrupt by reason of the making and operation of the sequestration order as an exercise of judicial power. As has been indicated, consideration will be given to the appropriate form of consequential relief that might be expressed where the Court on review dismisses an application where the order of the delegate had been to allow the application.

69    There may be particular instances where the complaint to be made about a delegate is that the delegate's decision exceeded the extent of delegated judicial authority and in that sense was beyond the jurisdiction as delegated. In such a case, it may be that the decision of the delegate is a nullity (at least in a case like the present where the delegated judicial power is not the power of a superior court). Different relief may be available in such a case. However, even in such a case if the application comes before a judge on a purported application for review, conduct by the delegate in excess of the delegation would not deprive a judge of the Court of authority to determine the application for review. The limits on the delegated authority could not confine the Court's jurisdiction being exercised by a judge. Therefore, if the issue was only as to whether the delegate exceeded the extent of delegated authority, the judge could make the appropriate order without considering whether there has been action taken in excess of the delegation. It would only be in those cases where it was said that the Court had no jurisdiction that the appropriate course may be to seek some form of prerogative relief in respect of the registrar's decision.

70    For completeness, it may be noted that a registrar of the Court may exercise administrative power and in such cases different considerations apply: Nyoni v Murphy [2018] FCAFC 75; (2018) 261 FCR 164 at [30]-[39]. Further, the administrative power of a registrar is exercised under the direction of the judges of the Court. As to the limits of the exercise of that administrative supervision and the circumstances in which a direction by a judge to a registrar will involve an exercise of judicial power, see AMB19 v Minister for Home Affairs [2020] FCA 439 at [61]-[64].

The utility of delegated judicial power

71    The delegation of the exercise of judicial power subject to a right of review de novo has obvious utility where applications must be granted in circumstances where particular criteria are met which are of a character that can be objectively assessed and where those applications are sufficiently significant in number that they may (if not delegated) consume limited judicial resources better applied to determining more complex cases.

72    However, the nature of delegated judicial power confines its utility. As has been explained, any such exercise of power must be burdened with the prospect of an application for review by the party adversely affected. More significantly, the review must be of a kind that involves, in effect, a complete re-exercise of the power as if the delegate had not made a decision. The obvious consequence is that the decision of the delegate may be overtaken (in effect reversed) even though that decision may have been acted upon in the interim.

73    In the case of the exercise of the power to make a sequestration order on a creditor's petition the need for a delegate to be conscious of these aspects of the exercise of delegated judicial power is heightened, as the circumstances of the present case illustrate. The nature of the power being exercised in such cases also heightens the need for any review to be conducted expeditiously and for there to be careful consideration on review as to whether it is appropriate to extend any time limit appropriately imposed in the interests of finality upon the bringing of any application for review of the exercise of the delegated judicial power. As to such time limits, at least where they are expressed by the judges of the Court in the exercise of their rule-making power and not by the exercise of a power conferred upon the Executive, they are consistent with the constitutional imperative for the provision of an opportunity for review: see Harrington v Lowe (1996) 190 CLR 311 at 321.

74    Having noted these matters, the delegation of judicial power is an important way in which to promote efficiency. It provides ready access for applicants to an exercise of delegated authority to determine an application more quickly than may be the case if the matter was required to be considered by a judge. It also frees up limited judicial resources.

75    However, in all cases, the parties (particularly the applicant) and the delegate must be conscious of the character of the delegation. If for some reason known to the applicant or the delegate it is not appropriate for the application to be determined by the exercise of delegated judicial power then that is a matter that should result in the application being referred to a judge for determination (without any prior exercise of delegated judicial power).

A metaphysical question

76    As has been noted, by reason of the form in which federal judicial power may be delegated, there is the possibility that an affirmative decision may be made by the delegate in the exercise of the power which is subsequently reversed by a judge if a review application is brought. There is also the potential for delay between the exercise of delegated judicial power and the bringing of a review. This may be occasioned by a vast array of circumstances not all of which may be visited upon the party who seeks a different order on review. Any review cannot be conducted instantly. Therefore, inherent in the delegation is the possibility that a valid judicial order which has been carried into effect may be affected by a decision on the review to which the exercise of the delegated judicial power was always subject.

77    If there is a reversal on review, an issue arises as to what is to occur in relation to steps that have been taken in the interim in reliance upon any order made in the exercise of delegated judicial power.

78    It may be observed that it would be strange if there could be delegation of judicial power but only if there could be a review by the Court, yet on review the Court lacked any authority to make consequential orders addressing what has occurred between the exercise of the delegated judicial power and the completion of a review. This is especially so when the exercise of delegated judicial power may result in an order that speaks with the authority of the Court and must be obeyed accordingly at least until it is replaced by a different order on review.

79    In the bankruptcy context, the metaphysical question that arises when delegated judicial power is exercised to make a sequestration order but, on review in accordance with the nature of the delegation, the Court determines that a sequestration order should not be made is one that troubled this Court in Pattison (considered below).

80    The answer to the question is further complicated by the conferral upon a Court exercising bankruptcy jurisdiction of the power to make an order annulling the bankruptcy if the Court is satisfied that a sequestration order ought not to have been made, a power that is now to be found in s 153B of the Bankruptcy Act. In order to understand the significance of that aspect it is necessary to bear in mind the difference between an annulment and a decision on review not to make a sequestration order.

The difference between annulment and a decision on review not to make a sequestration order

81    There is express statutory power to annul a bankruptcy. It arises in different circumstances. If a composition or arrangement is accepted by creditors then the bankruptcy is annulled: s 74. In such a case, the Bankruptcy Act makes express provision as to the validity of acts done by the trustee and as to the vesting of property: s 74(6).

82    The annulment of a bankruptcy can also take effect upon payment of all debts (s 153A) or by order of the Court (s 153B). In either case, there is express provision as to the validity of acts done by the trustee, as to the application of property to meet the costs of administration of the estate including the remuneration of the trustee and as to the vesting of property: s 154. These matters flow by statute as a consequence of the annulment. There are equivalent provisions for the annulment of the bankruptcy of a deceased estate: s 252A, s 252B and s 252C. If there is an annulment then the statutory provisions deal with the consequences for the vesting of property and remuneration of the trustee.

83    Although these provisions allow for remuneration of the trustee to be paid from the assets that were the subject of the bankruptcy that is to be annulled, they do not mean that remuneration will be paid to the trustee. The Court has long supervised the appropriateness of trustees' remuneration, costs and expenses. Therefore, the extent of any payment that may be made pursuant to the statutory provision allowing for payment from the assets of the debtor whose bankruptcy is annulled will be subject to approval in accordance with those requirements.

84    A decision made by a judge in order to give effect to a condition attaching to the delegation of judicial power to the effect that the creditor's petition be dismissed is of a different character to an annulment. The judge on review does not treat the earlier exercise of delegated judicial power as if it never existed. On review, the Court gives effect to a condition that attached to the delegation and its exercise. When the decision is made by the judge on review it speaks as a judicial decision made with operative effect at that point in time. Speaking generally as to the review of the exercise of delegated judicial power, it may be that the nature of the judicial power being exercised is such that an order can be made which speaks now for then by changing the effect of what has gone before. In such cases, the Court may be able to make an order that takes effect from a date that is earlier than the date on which the order is made by the judge on review (especially where the decision concerns procedural orders).

85    It is generally recognised that common law courts may make orders nunc pro tunc: Hartley Poynton Ltd v Ali [2005] VSCA 53; (2005) 11 VR 568 at [25]-[80] (Ormiston JA) as approved in Esso Australia Pty Ltd v Australian Workers' Union [2017] HCA 54; (2017) 263 CLR 551 at [49] (Kiefel CJ, Keane, Nettle and Edelman JJ). That is to say an order may be expressed as taking effect from a date that is earlier than the date on which it was pronounced. Therefore, it is not the case that a court of record lacks the authority 'to deem something to exist which does not exist and cannot deem something to have remained in existence which no longer remains in existence': Australian Rail, Tram and Bus Industry Union v Metro Trains Melbourne Pty Ltd [2020] FCAFC 81; (2020) 276 FCR 172 at [20] (Flick J). It can be accepted that 'courts should eschew the exercise of inherent power to vary an order nunc pro tunc where the variation would have the effect of altering the substantive rights of the parties': Esso Australia v Australian Workers' Union at [49] and cases there cited at fn 75 (recognising that statutory authority may be different: Esso Australia v Australian Workers' Union at [49]). It is also generally recognised that nunc pro tunc orders should not be made where they would affect vested rights of third parties: Guss v Veenhuizen (No 2) (1976) 136 CLR 47 at 53 (Gibbs ACJ, Jacobs and Aickin JJ).

86    A defect which is a mere irregularity may be cured by a nunc pro tunc order: Emanuele v Australian Securities Commission (1997) 188 CLR 114 at 124-125. Such orders have been made 'to prevent unjust prejudice to a party claiming relief occasioned by delay which unavoidably arises without fault on that party's part and simply because of the exigencies of court lists': Hartley Poynton v Ali at [69]. All these authorities suggest that, absent some express statutory power, the making of an order affecting substantive rights that takes effect from an earlier date could not be supported on the basis of an inherent jurisdiction to make such an order nunc pro tunc.

87    As has been indicated, the extent to which orders might be made with past effect upon the review of an exercise of delegated judicial power to make a sequestration order is a matter to which it will be necessary to return. At this point, it need only be observed that uncertainties as to the existence of a power of that kind has led to consideration in the decided cases as to whether the express statutory provision as to a trustee's remuneration, costs and expenses consequent upon annulment might justify an order for an annulment in preference to (or perhaps in addition to) the making of an order dismissing a creditor's petition where, on review of a decision by a registrar making a sequestration order, the view is formed that a sequestration order should not be made.

88    Also, as has been noted, the general power of the Court under the Bankruptcy Act to rescind, vary or discharge an order or suspend the operation of an order does not extend to a sequestration order: s 37(2) of the Bankruptcy Act; and Re Gollan; Ex parte Gollan (1992) 40 FCR 38. A sequestration order once made could not be undone by an order of that character. It is an exception to a power that is otherwise recognised as being very broad in its operation and as being conferred by reason of the nature of the 'great power' that is exercised by bankruptcy courts. It too must be borne in mind.

89    Finally, it is necessary to note that the position is different where there is an appeal against the making of a sequestration order. The appellate powers of this Court enable the Court to set aside a judgment appealed from and that power extends to a judgment in which a sequestration order is made: De Robillard v Carver [2007] FCAFC 73; (2007) 159 FCR 38 at [141]-[151] (Buchanan J, Moore and Conti JJ agreeing). Therefore, on appeal against a decision by a judge making a sequestration order, there is appellate power to order that the sequestration order be set aside and substitute an order for the creditor's petition to be dismissed with such order taking effect in a way that results in the person the subject of the order that has been set aside never having the status of a bankrupt.

90    It may be observed that in De Robillard v Carver, although an order was made setting aside the sequestration order on appeal, no order was made as to the costs of the administration in the meantime. However, in the earlier case of Re Schierholter; Ex parte Geis (1978) 32 FLR 22 where a sequestration order was set aside by consent on appeal in circumstances where the making of the order had been brought about by the 'extraordinary approach' by the lawyer for the debtor of appearing at the hearing of the creditor's petition without undertaking any preparation, the order setting aside the sequestration order was only made after an undertaking had been given to pay to the official receiver any outgoings that had been incurred: at 30.

The issues now before the Court

91    With that introductory explanation, it is now possible to state the issues that arise for determination in the present case as a result of the submissions advanced. They are:

(1)    Should leave to appeal be granted?

(2)    On review of a decision made by a registrar in the exercise of delegated judicial power to make a sequestration order, what is the nature and extent of the power to 'make any order or orders it thinks fit' that is conferred upon the Circuit Court by s 104(3)?

(3)    On review of a decision made by a registrar in the exercise of delegated judicial power to make a sequestration order, does the Circuit Court have a discretionary power to annul the bankruptcy?

(4)    On review of a decision made by a registrar in the exercise of delegated judicial power to make a sequestration order, if the Circuit Court determines that the petition should be dismissed, does the Court have another source of power to order payment of remuneration, costs and expenses to a trustee incurred in administering the estate up until the petition is dismissed?

(5)    In the present case, once the creditor's petition was dismissed by the primary judge on review, did the Circuit Court have jurisdiction thereafter to entertain the subsequent interim application by the Trustee for remuneration orders?

(6)    If yes to Issue (5), did the primary judge err in finding that there was no power to make the remuneration order sought by the Trustee?

(7)    If yes to Issue (6) and taking account of the answers to Issues (2), (3) and (4), what, if any, orders should be made on appeal concerning the remuneration of the Trustee? In particular, should the matter be remitted to the Circuit Court?

(8)    In the circumstances which have occurred should there be any further order on the appeal? In particular, should there be orders dealing with the vesting of property in Ms Samsakopoulos and the delay that has occurred by the Trustee in delivering the property to Ms Samsakopoulos?

Summary of outcome

92    For the following reasons, there should be leave to appeal and the appeal should be allowed. The Trustee should be allowed reasonable remuneration, costs and expenses until the hearing of the review application with the remuneration to be capped at $30,000 plus GST. The remuneration, costs and expenses should be paid by the Body Corporate. Thereafter, the Trustee should not be entitled to remuneration, costs and expenses. Further, the Body Corporate should not be allowed to recover a contribution from Ms Samsakopoulos of any of its legal or other costs of and incidental to the creditor's petition or the administration by the Trustee.

93    There should be orders to ensure that the property of Ms Samsakopoulos is re-vested. The Trustee should be given an opportunity to provide any explanation to the Court for the delay in re-vesting the property in Ms Samsakopoulos. The Trustee should be invited to show cause as to why there should not be a consequential order requiring the Trustee to pay to Ms Samsakopoulos the amount of any loss or damage caused by being held out from her property after the dismissal of the creditor's petition and why there should not be an inquiry undertaken by a registrar of the Court acting as a referee to determine that amount.

94    There should also be orders directed towards ensuring that in all future respects Ms Samsakopoulos does not have the status of a former bankrupt.

95    The Trustee and the Body Corporate should each bear their own costs of the proceedings.

Structure of these reasons

96    These reasons will first consider the chronology of relevant events. They will then consider the precise nature of the two applications that came before the primary judge in the Circuit Court; the review application brought by Ms Samsakopoulos and the subsequent interim application brought by the Trustee. They will then review the previous decisions of this Court in which similar issues have arisen. As leave to appeal is a matter that is affected by views as to the merits, the reasons will then address each of Issues (2) to (8). Then the reasons for giving leave to appeal (Issue (1)) and for the orders as to costs will be expressed. Finally, the terms of the appropriate orders will be expressed.

Chronology of relevant events

97    On 10 June 2018, Ms Samsakopoulos was served with a bankruptcy notice. It referred to a debt of $5,079.01. The debt was the subject of a judgment in the Magistrates Court of Queensland which included costs of $1,168.44.

98    On the hearing of the creditor's petition before the registrar, the Body Corporate relied upon an affidavit of debt provided by Mr Collie, the body corporate manager of the Body Corporate. The affidavit stated that Ms Samsakopoulos was indebted to the Body Corporate in an amount of $5,001.76. The significance of the amount is that the Bankruptcy Act provides that a creditor's petition shall not be presented against a debtor unless the debt or debts owing are greater than $5,000: s 44(1). The affidavit of Mr Collie was in the following terms:

I am the body corporate manager of the applicant creditor and as such have access to the books and records of the applicant creditor. I am duly authorised to swear this affidavit on behalf of the applicant.

Since the 12 September 2018 first return date of this matter, the applicant creditor has received a payment of $77.25 and no more.

The balance of the debt on which the applicant creditor relies is $5001.76 and is still owing.

99    The reference to the payment of $77.25 assumes significance in the sequence of events. As will emerge, Ms Samsakopoulos says that she paid $80.00 not an amount of $77.25. The amount assumes significance because Ms Samsakopoulos made the payment after being told by a registrar of the Circuit Court at an earlier hearing that if the amount claimed was less than $5,000 then the creditor's petition could not proceed.

100    After commencing the conduct of the administration, the Trustee soon became aware that there was a substantial surplus in the estate and there were assets that were readily available for sale to meet the claims of creditors. In addition to the unit in Kings Beach (Queensland) there was another residential unit in Mooney Ponds (Victoria) and shares in Qantas Limited. The claims of creditors were found to total about $70,000. Of those, two claims account for about half the amount claimed. Both those claims are disputed by Ms Samsakopoulos. One is a claim by the Body Corporate and the other a claim by the owner of an adjoining unit (which is the subject of an order by the Victorian Civil and Administrative Tribunal).

101    Upon appointment, the Trustee discovered that the Kings Beach unit was an investment property that was rented and the Trustee contacted the agent and caused rental income to be redirected to the Trustee. The Trustee also assumed control of the bank account of Ms Samsakopoulos and the Qantas shares.

102    Within a few weeks of appointment, kerbside valuations for the two residential units were obtained and they indicated combined values for the two properties of between $720,000 and $850,000.

103    On 3 December 2018, the Trustee provided an initial report to creditors. It noted that the claim by the Body Corporate continued to be disputed and that 'preliminary investigations have not revealed any other reason for the Bankrupt's financial circumstances'. As to the Body Corporate claim, the report stated:

Enquiries reveal the Bankrupt failed to satisfy ongoing Body Corporates fees for the QLD Property which ultimately resulted in a creditors petition being filed against her. Correspondence received by the petition creditor, indicates an amount of $17,465.39 is outstanding with respect to the body corporate fees over the QLD Property. I note the Court has granted the petitioning creditor priority taxed costs against the Estate in the amount of $4,461.00. It appears the amount of $17,465.39 already takes into account the taxed costs.

104    As to a dividend, the report stated: 'There are several avenues being considered at the moment with respect to the satisfaction of the Bankrupt's liabilities'.

105    The report sought approval for remuneration of the Trustee in an amount not exceeding $30,000 (plus GST). The estimate was said to be based on matters as then known to the Trustee. Remuneration as at the date of the report was said to total $9,889.20.

106    On 12 December 2018, the Kings Beach unit was transmitted to the Trustee.

107    An amount of $933.26 was paid to the Body Corporate by Ms Samsakopoulos on 21 December 2018.

108    Ms Samsakopoulos provided a statement of affairs to the Trustee on 28 January 2019 (noting that an initial statement of affairs had been lodged on 26 November 2018 but was returned to Ms Samsakopoulos on the basis that it was incomplete).

109    From early on in the administration by the Trustee, the prospect of sale of one of the residential units and an application for annulment was raised. Ms Samsakopoulos was opposed to the sale and also communicated with the Trustee about the basis upon which she disputed the two claims. Those communications were interrupted for a period of time when Ms Samsakopoulos was hospitalised. In February 2019, the Trustee's employee was contacted by a social worker who explained that Ms Samsakopoulos was not able to deal with the Trustee in relation to her affairs and requested an extension of time of a month for Ms Samsakopoulos to respond to the Trustee.

110    Thereafter, Ms Samsakopoulos was engaged with dealings with the Trustee concerning the basis upon which she disputed the two claims. The Trustee concluded that the two claims were due.

111    On 11 April 2019, an application for review of the registrar's decision dated 31 March 2019 was accepted for filing by the Circuit Court. It was completed in Ms Samsakopoulos' own hand. In the details of orders sought it said:

I'm seeking review of sequestration order. I didn't claim for bankruptcy …

I can afford to pay my body corp. I'm disputing the big gap between owing $4,000 to them claiming $17,000, when I already made a payment by 2018 off $7,500 … with only $427.00 owing in May 2017. Now they want $17,000. I have evidence to support this …

I request an extension of time please.

Wish to annul the bankruptcy as I can afford to pay my debts … I have evidence to support this

112    The Trustee says that he became aware of the application on 15 April 2019.

113    On 15 April 2019, Ms Samsakopoulos provided an affidavit in support of her review application which said:

The sequestration order should be dropped as I was below the bankruptcy line.

In Jan 18, Strata Body Corporate QLD wanted a payment of $4,165 and we paid $5,100 but Penelope Leech their lawyer continued to charge legal fees total $17,000 + I contest this.

114    On 20 June 2019, Ms Samsakopoulos provided a further affidavit:

I have sent two notices to my trustee Roland Robson advising him of a reviewed Court case … and he has pressured me to make a decision of selling off my home, before the court case. I [would] like the court to take action to not to pressure me before court case and to not sell my home before court case as this sequestration order and bankruptcy should never have gone ahead.

115    No finding about whether there was pressure of the kind referred to is suggested. That aspect was not in issue in the proceeding. However, the affidavit makes clear the position of Ms Samsakopoulos that the bankruptcy should never have been ordered, a position which has relevance for the orders that might have been considered as being appropriate if the creditor's petition was to be dismissed and the Circuit Court had power to make consequential orders under s 104(3).

116    On 3 July 2019, Ms Samsakopoulos provided a further affidavit setting out her frustrations and concerns with the administration and disputing the amount of the fees charged by the Body Corporate as being $17,000 when the annual body corporate fees were only $2,600. The affidavit included the following statement:

The sequestration order and bankruptcy, should never hav [sic] gone ahead. I was only $80, over for Bankruptcy, I was told this by Registrar Belcher on Sept 4th 2018, and I paid, that instantly and a further $1500 in December towards Strata body Cooperate [sic].

117    The Trustee prepared a detailed affidavit on the application by Ms Samsakopoulos to review the sequestration order (Trustee's Affidavit). The affidavit stated that it was sworn in response to the application for review and the affidavits of Ms Samsakopoulos.

118    The Trustee's Affidavit deposed to a summary of known creditors in an amount of about $70,000. The amount included for the Body Corporate was $17,465.39. It stated that rental income from the Kings Beach unit of $10,800 had been collected.

119    Also set out in the Trustee's Affidavit were details of what were described as 'numerous dealings' with Ms Samsakopoulos in which she indicated that she disputed the quantum of the claim by the Body Corporate and maintained that some payments that had been made were omitted from the records of the Body Corporate. It recorded the 'findings' of the Trustee that there was a balance owing which comprised:

the minimal balance owing when the last payment was made in December 2017 by Mr [sic] Samsakopoulous and the subsequent accrual of unpaid contributions and allocated recovery costs from December 2017 to November 2018.

120    In effect, the Trustee's Affidavit said that after numerous dealings, the Trustee had found that the debt of $17,465.39 was owing by Ms Samsakopoulos to the Body Corporate.

121    The affidavit set out the inquiries that had been undertaken and responses from the manager of the Body Corporate explaining that amounts identified by Ms Samsakopoulos had been credited to her account (see in particular an email from Mr Collie dated 21 March 2019). The running account provided by the Body Corporate showed numerous legal costs charged to the account for Strata Legal. The charges for legal costs commence on 10 April 2017 and total $15,128.62. They include a charge of $5,487.70 to draft and file the creditor's petition. If the description is accurate, the reasonableness of that charge must be questioned. Possibly, it includes the then expected costs to be incurred in appearing on the petition.

122    The outstanding balance shown on the running account (including interest) is $16,152.64. However, after allowing for the legal costs and interest, the amount due for strata title fees was $5,459.59. Of that amount, $1,489.44 was added to the running account on 1 November 2018 (the day of the registrar's sequestration order) and related to the period 1 November 2018 to 30 April 2019. A further amount of $1,449.44, included in the total, was shown with the date 1 May 2019 which was said to relate to the period 1 May 2019 to 31 October 2019 which, on the face of the running account was an amount not yet due. There was also the payment of $933.26 included which was shown as having been made on 21 December 2018.

123    For the purposes of the review application, Mr Collie affirmed a further affidavit in which he said that an account statement for the body corporate fees due by Ms Samsakopoulos for the Kings Beach unit that had been provided with an earlier affidavit 'unfortunately [did] not contain the appropriate entries' for payments that had been made by Ms Samsakopoulos totalling $2,439.00. The error was attributed to 'a software issue which has now been resolved'. It was not explained how that amount related to the amount of $5,0001.76 which he had sworn was the balance of the debt on which the creditor relied for the purposes of the creditor's petition as at 3 October 2018.

124    Mr Collie produced as an exhibit to the affidavit his communication with the Trustee's employee by email dated 21 March 2019 and the running account. A further running account statement printed on 8 July 2019 was also produced. Mr Collie deposed that the further running account 'clearly shows that the current indebtedness of [Ms Samsakopoulos] is in the sum of $17,791.90'. However, the statement continued to include the amounts for legal costs that have already been described, including substantial legal costs relating to the very creditor's petition that was before the primary judge.

125    As to the statement by Ms Samsakopoulos that she had made a payment of $80.00 before the hearing of the creditor's petition by the registrar, the running account showed a payment on 24 September 2018 of $77.25. There was no payment of $80.00 shown on the running account.

126    The primary judge heard the review application brought by Ms Samsakopoulos on 12 July 2019 and dismissed the creditor's petition on 17 July 2019: Body Corporate for Sanderling at Kings Beach v Samsakopoulos [2019] FCCA 2133.

127    In doing so, the primary judge reasoned as follows concerning the evidence of the debt claimed by the Body Corporate at [7]-[10]:

… There was an affidavit filed by [Jody] Collie on 10 July, 2019 (so within two days of the hearing before me on 12 July, 2019) but for reasons which I will explore shortly it does not depose to the existence of the relevant debt. The failure by the petitioning creditor to comply with rule 4.06 is fatal to the application …

Beyond those matters which some might describe as technical, there is a matter of more substance which also mean means that this creditor's petition must be dismissed. To secure the making of a sequestration order, there must be a debt in existence as at the date of the making of the sequestration order which is more than the statutory required minimum, that is, $5000: see s.44(1) of the Bankruptcy Act 1966 (Cth). On the day the sequestration order was made by the Registrar here, it was said that there was a debt in the order of a little over $5001.

The affidavits of debt of [Jody] Collie filed on 3 October, 2018 and 29 October, 2018 and then again on 31 October, 2018 indicate some real reason to be circumspect about just how much it is that the applicant is owed by the respondent, if anything. In the affidavit that was sworn on 3 October, 2018 [Mr] Collie said that since 12 September 2018, the applicant creditor had received payment of $77.25 and no more. There is a positive deposition that the balance of the debt on which the applicant creditor then relied was $5001.76 and was then still owing. There was then another affidavit sworn by the same deponent on 31 October 2018. It is to the same effect.

There is an affidavit by [Jody] Collie sworn on 10 July, 2019. It refers to a supplementary affidavit affirmed by [him] on 29 October 2018. That affidavit talks about credits that should be allowed in the applicant's favour to take account of payments that the petitioning creditor concedes were made by her on her account but which did not appear in the document which was described in [Mr] Collie's affidavit as a 'current account' for the respondent. By [his] latest affidavit, [Mr] Collie suggests that the only amount received by the petitioning creditor from the debtor since [his] earlier affidavits was $77.25.

128    The reasons then deal with the running sheet produced by Mr Collie. As to that evidence, the primary judge said at [15]-[17]:

Moreover, there is no evidence at all about the basis upon which any of the amounts set out in the current account accrue. There is no evidence about when they are due to be paid or when they are payable. And that is important because, for example, when one looks at the affidavit of 29 October, 2018 and the current account document annexed there, the very last entry includes an entry which is dated 1 May, 2019 for a period 1 May, 2019 to 31 October, 2019 but yet the affidavit was sworn on 29 October, 2018. It seems somewhat anomalous that as at 29 October, 2018 an amount which appears in that current account as having an entry date of 1 May, 2019 for a period commencing then and ending in October, 2019 would appear in the statement which purportedly is dated 29 October, 2018 that is to say, the date of swearing of the affidavit. None of that was explained.

… The Court must be satisfied that there is a debt owed by the debtor to the petitioning creditor which is more than the statutory minimum. Here, I cannot be so satisfied. There are two reasons for that. The first is the applicant swears that she paid $80 off what she says was owed and what the petitioning creditor says was owed before the sequestration order was made. That would have reduced any amount owing by her to less than the statutory minimum.

For reasons that again are not explained, the petitioning creditor only credits the applicant before me with $77.25. There was some suggestion from those at the Bar table that there might be bank fees and things involved to explain the difference but guessing is not good enough. Bankruptcy affects the status of people and it is for that reason that the casebooks are replete with a very careful approach to the making of a sequestration order.

129    The primary judge found that the Body Corporate had not discharged its onus to demonstrate that Ms Samsakopoulos owed more than $5,000. It may be noted that the reasoning of the primary judge may be further supported by the fact that between the hearing before the registrar and the hearing on review, the undisputed evidence was that a further amount of $933.26 had been paid.

130    On 17 July 2019, the creditor's petition was dismissed.

131    Between appointment and 17 July 2019, the Trustee incurred professional fees in the sum of $47,610.64. Of that amount some $10,280.40 plus GST related to work done in relation to the hearing on 12 July 2019 (for which the Trustee prepared the Trustee's Affidavit and at which the Trustee appeared in person).

132    Between 17 July 2019 and 2 December 2019 (when the Trustee deposed to an affidavit in support of orders concerning his remuneration and costs and disbursements) the Trustee incurred further professional fees of $4,655.75. The Trustee also received payments into the estate and incurred disbursements.

133    On 11 December 2019, the Trustee brought what was described as an interim application. It sought orders for payment of the Trustee's remuneration in the sum of $53,104.98 (including GST), an order for an indemnity out of the assets of Ms Samsakopoulos to the extent that she was ordered to be liable for a proportion of the remuneration and subject to the indemnity an order that the Trustee 'forthwith cause the legal title in the assets of the former bankrupt estate … held by [the Trustee] to be transferred to [Ms Samsakopoulos]'.

134    Written submissions were filed for the Body Corporate opposing the application by the Trustee. In part, they relied upon submissions to the effect that there was a debt owing to the Body Corporate of more than $16,000. The submissions for the Body Corporate were expressed in the following way:

Pages 157 and 158 of the exhibits to [the Trustee's Affidavit] outline that:

'the amount due and payable to the Body Corporate is $16,152.64'

The affidavit of [Jody] Collie confirms that as at 10 July 2019:

'the current indebtedness of the [Ms Samsakopoulos] is in the sum of $17,791.90.'

There seems to be some confusion as to the amount owed and whilst the affidavits of the [Body Corporate] sworn are not greatly helpful, they do assist.

Both the [Body Corporate] and the [Trustee] have provided material that states the debt owed to the [Body Corporate] by [Ms Samsakopoulos] is more than $16,000.

The [Trustee] conducted his own investigations in this regard and was comfortable in providing this figure.

Based on this, the [Body Corporate] should not be liable for the [Trustee]'s remuneration up to 17 July 2019.

(original emphasis)

135    In short, for the Body Corporate, a submission was made to the effect that notwithstanding the dismissal of the creditor's petition on the basis that it had not been proved that a debt of more than $5,000 was owed, Ms Samsakopoulos should bear the costs of the administration by the Trustee because material had been provided that stated that the debt was more than $16,000. The submission at least had the grace to acknowledge that the affidavits of the Body Corporate were 'not greatly helpful' in that regard.

136    Significantly, no submission was made concerning the finding by the primary judge in dismissing the petition that $80 had been paid by Ms Samsakopoulos. The absence of any such submission assumes significance for a most unpersuasive submission advanced by counsel for the Body Corporate on the appeal. The submission is addressed below in the course of dealing with Issue (7).

137    On 15 July 2020, the Trustee's application was dismissed. The primary judge reasoned as follows:

The Bankruptcy Act is silent as to the recovery of remuneration and costs, charges and expenses incurred by a trustee of a bankrupt estate when a sequestration order is set aside. The absence of such provision has led courts exercising jurisdiction under that Act to determine that the trustee has no entitlement to the recovery of remuneration and costs, charges and expenses incurred by trustee in such circumstances: Rangott v Marshall (2004) 139 FCR 14; Kyriackou v Shield Mercantile Pty Ltd (No 2) [2004] FCA 1338; de Robillard v Carver (2007) 159 FCR 38; Pattison v Hadjimouratis (2006) 155 FCR 266. In the event that a sequestration order is set aside, the former trustee in bankruptcy is left to his right of recovery at general law: Pattison at [238] citing Adsett v Berlouis (1992) 37 FCR 201 at 209-10; Flint v Richard Busuttil & Co Pty Ltd (2013) 216 FCR 375 at [49]-[52].

138    A submission that there was power conferred by s 104(3) of the FCCA Act was not accepted.

139    It appears that thereafter no order was sought or made concerning the return of property to Ms Samsakopoulos.

140    Remarkably, in the 23 months between when the creditor's petition was dismissed and the hearing of the appeal, the Trustee continued to hold the property of Ms Samsakopoulos including the two residential units, the Qantas shares and the bank accounts. The Trustee only took steps to return the keys to the residential units after the hearing in this Court on 16 June 2021. The Trustee retained control of the property of Ms Samsakopoulos even though (a) the creditor's petition had been dismissed without any consequential order justifying the Trustee continuing to hold and administer the property; and (b) the Trustee had been unsuccessful in his application for an order that he be allowed an indemnity to be met out of the property of Ms Samsakopoulos to the extent of a proportionate liability for the Trustee's costs that the Trustee sought to secure. In that significant respect, the necessary consequence of the orders made by the Circuit Court was disregarded by the Trustee.

The two applications before the primary judge in the Circuit Court

141    As has been noted, two applications were considered by the primary judge. First, the review application brought by Ms Samsakopoulos. Second, the interim application brought by the Trustee concerning his remuneration, costs and expenses.

The review application

142    The application for review named the Trustee (or at least the accounting firm of the Trustee, being 'Robson Cotter Insolvency Group') as a respondent. The form used was the form for an application for review. As has been explained, although a review will be commenced by the party adversely affected by the exercise of delegated judicial power (in this case the registrar), once commenced the review proceeds as an original hearing of the creditor's petition in which the creditor (in this case the Body Corporate) must prove all of the formal matters required (even though the debtor, in this case Ms Samsakopoulos, may be the applicant for review).

143    Ordinarily, a trustee would not be a party to the creditor's petition. It will be sufficient for the trustee to have provided a consent to appointment as trustee of the debtor's estate if a sequestration order is made. The same pertains on a review. However, as the present proceedings expose, the trustee does have an interest in the consequential orders that might be made if, on review of a sequestration order made by a registrar, the creditor's petition is dismissed. Therefore, on a review brought in circumstances like the present case, the trustee is a disinterested party when it comes to the question whether the petition should be dismissed, but is an interested party in the event that a decision is made to dismiss the petition.

144    Therefore, it is appropriate that the trustee be given notice of the review application so that the trustee can seek appropriate orders if the petition is dismissed on review. If the trustee is not given notice of the review, then the appropriate course to be followed if the petition is to be dismissed will be to require notice to then be given to the trustee and to reserve liberty to the trustee to apply for any consequential orders. To the extent that there is power, those orders may be expected to deal with matters of remuneration, costs and expenses and any steps to be taken to restore the property to the debtor.

145    There is no dispute that the Trustee was given notice of the review application and that he appeared in person in response. Significantly, he sought no orders.

146    The position is somewhat complicated by the fact that in many cases where a review is sought of a decision by a registrar making a sequestration order, there is an application in the alternative for an annulment. Indeed, that is what occurred in the present case.

147    Importantly, an application for an annulment is not an application for review of the decision by the registrar. It takes as its foundation the valid exercise of delegated judicial power by the registrar in making the sequestration order and then seeks an order annulling the bankruptcy. On application to the Court for an order annulling the bankruptcy, the Court ascertains whether the sequestration order ought to have been made and whether, in its discretion, an order should be pronounced annulling the bankruptcy. The annulment does not seek to undo the course of historical events by which the bankruptcy was administered or set aside the sequestration order. Rather, it makes an order after the event that gives those events a different legal significance.

148    As has been noted, the Bankruptcy Act has express provisions that state the consequences that flow from an annulment that takes effect by way of order of the Court. Those provisions deal with the validity of acts undertaken in the course of the administration that is annulled, the vesting of property and the remuneration, costs and expenses of the trustee. No order is required as to these matters.

149    By r 7.02 of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) an application for annulment must be served on the trustee at least seven days before the date fixed for hearing. The purpose of the notification appears to be to ensure that the Court is informed as to what is known to the trustee as to the solvency of the estate in administration and the amount that may be required to pay out creditors and meet the costs of the administration. Otherwise, the trustee is afforded the protection of the statutory provisions and need not seek consequential orders if there is an annulment. The extent to which the trustee should be allowed to recover remuneration pursuant to the statutory provision will be a matter for later consideration by the Court when the trustee seeks approval in accordance with the procedures by which the Court supervises the remuneration charged by trustees.

150    It can be seen that there is the potential for some conceptual confusion to arise where an application for an annulment is made in the alternative on an application for review, especially if an extension of time in which to file an application for review is required. For that reason, it may well be preferable for any annulment to be sought by separate application on which the bankrupt will move if the application for review or the application to extend time is unsuccessful. In any event, even if the claim for annulment is brought in the alternative on the review application, that does not alter the fact that the two applications are fundamentally different in their legal character.

151    On the one hand, the review application invokes a condition that attaches to the delegation of judicial power. Once the condition requiring a review of the exercise of delegated judicial power is invoked, the Court must undertake a new hearing of the application. In that hearing the petitioning creditor has all of the burdens of an applicant for a sequestration order, burdens that cannot be discharged by reliance upon anything that took place before the registrar, including the making of the sequestration order itself. This is the case even though the sequestration order speaks as a valid exercise of delegated judicial power unless and until a decision is made on review to the effect that the creditor's petition must be dismissed.

152    On the other hand, in the present context the application to annul the bankruptcy is brought by the bankrupt. It seeks the exercise of a statutory discretion in favour of the bankrupt. It depends upon the existence of the sequestration order. The bankrupt must prove what is required and must persuade the Court to exercise its discretion to annul the bankruptcy.

The interim application for remuneration

153    The interim application was brought by the Trustee, purportedly in the bankruptcy proceedings which, by then, had been dismissed. It was addressed to the Body Corporate and to Ms Samsakopoulos. It did not, in terms, invoke s 104(3) of the FCCA Act and the power of the Circuit Court to make any order it thinks fit on review of a decision by a registrar in the exercise of delegated judicial power.

154    Rather, it sought the following:

1.    Orders pursuant to section 90-15 of Schedule 2 of the Bankruptcy Act 1966 (Cth), or in the alternative section 30(1)(b) of the Bankruptcy Act 1966 (Cth), and section 15(a) of the Federal Circuit Court Act 1999 (Cth) that:

(a)    the Applicant and the Respondent pay, in such proportions as this Honourable Court thinks appropriate, the remuneration, costs and expenses of the Interim Applicant of administering the former bankrupt estate of the Respondent in the sum of $53,104.98 (including GST);

(b)    to the extent that this Court orders by paragraph (a) above that the Respondent pay any proportion of the sum stated therein, the Interim Applicant be entitled in the first instance to indemnify himself for that proportion from the assets of the former bankrupt estate of the Respondent held by him pursuant to the orders of 1 November 2018; and further, that all such assets be charged with the payment of that proportion; and

(c)    subject to paragraph (b) above, the Interim Applicant forthwith cause the legal title in the assets of the former bankrupt estate of the Respondent held by the Interim Applicant to be transferred to the Respondent.

2.    The Applicant and the Respondent pay, in such proportions as this Honourable Court thinks appropriate, the Interim Applicant's costs of this interim application to be taxed or otherwise as agreed.

3.    Such further or other orders that this Court thinks appropriate.

155    It is to be noted that no reliance was sought to be placed on s 15(a) of the FCCA Act on appeal. Therefore, the reference to that provision may be put to one side.

156    Despite the form of the application, as has been observed, it was understood by the primary judge as raising an issue as to whether the Circuit Court had power pursuant to s 104(3) of the FCCA Act to allow the Trustee to recover his remuneration, costs and charges of the administration. It appears that understanding reflects the way the matter was argued for the Trustee.

The state of the existing authorities

157    In considering the authorities concerned with the orders to be made when there has been some form of successful challenge to the making of a sequestration order, care must be taken to differentiate those cases dealing with the orders to be made where there is a successful appeal against the making of a sequestration order. As has been noted, cases of that kind raise different considerations. The difference arises because of the nature and extent of powers that may be exercised by an appellate court consequent upon a successful appeal.

158    Nevertheless, in some respects the cases concerned with the consequences of an appeal order setting aside a sequestration order consequent upon a successful appeal give rise to issues of a related kind to those which arise in the present proceedings. Also, one such case, Flint, was relied upon by the primary judge. Therefore, for both those reasons, it is appropriate to consider them when reviewing the state of the existing authorities.

159    Contrary to the present position, for a considerable period of time, the Bankruptcy Court had a general power to review, rescind or vary any order made by it in its bankruptcy jurisdiction, a power that extended to the making of a sequestration order: see s 26 of the Bankruptcy Act 1924 (Cth); and s 37 of the Bankruptcy Act 1966. Prior to 1966, the Court also had power to order the annulment of a sequestration order (as distinct from annulment of the bankruptcy): see the reference to the authorities and the former statutory provision in Cameron v Cole (1944) 68 CLR 571 at 581-584 (Latham CJ), 600 (McTiernan J), 608, 610 (Williams J). This power continued until 1992, although it was not available after 1980 if the sequestration order had been entered.

160    Therefore, care must be taken in transposing observations expressed in this former legislative context which is quite different to the present context and which did not take account of the possibility that a sequestration order might be made in the exercise of delegated judicial power.

161    There are a number of cases under the former provisions of the Bankruptcy Act where the view was expressed that rescission did not operate to bring the bankruptcy to an end. Rather, what was needed was annulment or discharge. Examples of the view that rescission of the sequestration order did not bring the bankruptcy to an end are: Cameron v Cole at 610 (Williams J); Re Deriu (1970) 16 FLR 420 at 422; Re Bond; Ex parte A Bankrupt (1978) 36 FLR 131 at 133; Simon v Vincent J O'Gorman Pty Ltd (1979) 41 FLR 95 at 108; and Re Anasis; Ex parte Total Australia Ltd (1985) 11 FCR 127 at 133-134.

162    These cases were given passing reference in Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589. In that case, a sequestration order was made on a debtor's petition. Subsequently a sequestration order was made on a creditor's petition which was sought to be expressed to operate before the earlier sequestration order. The issue was whether the later sequestration order could be made at a time when the debt that was said to give rise to the act of bankruptcy was a debt that arose at a time that was the subject of the bankruptcy that was brought into existence by the earlier sequestration order. The significance of the point lay in the consequences for the relation back period of the bankruptcy.

163    The High Court found that there could be no sequestration order on the creditor's petition because by the time the petition was heard the debt on which the creditor's petition was based had merged in the bankrupt estate brought into existence by the earlier sequestration order made on the debtor's petition. In the course of the reasons, the following obiter view (cf Gibbs CJ, Murphy, Brennan and Dawson JJ) was expressed as to the form of order that ought to have been made:

The proper course was, in our opinion, to annul rather than to rescind the second order (see Re Deriu … and Re Bond …) but that does not affect the present case.

164    This appears to be a reference to the possibility of an order annulling the sequestration order (albeit expressed at a time when the legislation referred to annulling the bankruptcy). As has been indicated, no such possibility exists under the Bankruptcy Act as now expressed. Annulment is an order that now pertains to the bankruptcy itself.

165    It was also observed in Clyne that a bankruptcy that comes into effect upon the making of a sequestration order continues in effect until discharged or annulled referring to s 43(2) and s 55(8) of the Bankruptcy Act 1966: at 598. Significantly that view was expressed in the context of an appeal not a review of the exercise of delegated judicial power.

166    It is convenient to say something at this point about Simon v Vincent J O'Gorman. This was an appeal against the making of a sequestration order on a creditor's petition by a judge of the Court. No question of delegated power arose. The Court on appeal went behind the judgment and found that there was no real debt, applying Wren v Mahony (1972) 126 CLR 212. It was put to the Court that on the authority of Re Deriu that if a sequestration order ought not to have been made the proper order was to annul the order under s 154 (of the Bankruptcy Act 1966). This was rejected. The Court made clear (at 102 (Franki J), 107-109 (Lockhart J)) that the Court's powers on appeal enabled it to set aside the sequestration order. Reliance was placed on the order made by the High Court in Wren v Mahony. Franki J made clear that the order was designed to 'avoid the consequences and stigma of bankruptcy' attaching to the debtors: at 102.

167    In The Austral Brick Company Pty Ltd v Daskalovski [1998] FCA 782, Emmett J made an order under s 153B annulling a bankruptcy of the debtor. The sequestration order was made by a registrar in circumstances where the debtor had not been served and had not appeared. The debtor applied under what was then O 35 r 7, a provision in the Federal Court Rules, which allowed for orders to be set aside for irregularity. His Honour was satisfied that the sequestration order ought not to have been made but instead of setting aside the order under the rule made an order annulling the bankruptcy because the estate had already been administered. His Honour found that the power under the rule 'would normally be exercised in circumstances where the matter comes before the Court very soon after the order has been made and before there has been any administration in bankruptcy pursuant to a sequestration order'.

168    In Symons v Bateman [1999] FCA 658, sequestration orders had been made by a registrar in the absence of the debtors who had believed that there was an agreement not to proceed with the petition on the day. The application made to the Court (French J) was to set aside the sequestration orders on the grounds that they were made in the absence of the parties, that they were obtained by fraud and that the petition was an abuse of process. Prior to the hearing agreement was reached to set aside the orders under the same rule considered by Emmett J in Austral Brick with no order as to costs and that the creditor's petition be adjourned. A trustee had been appointed and he wanted his remuneration and costs secured and suggested an annulment under s 153B or, in the alternative, if an order was made under the rule, ancillary orders modelled on those which would apply in the event of an annulment. French J expressed serious reservations as to whether orders could be made for the remuneration of the trustee for administration up until setting aside orders under the same rule. His Honour also agreed with the observations of Emmett J in Austral Brick. In the result, French J refused to make the consent orders (consensual that is as between the parties, though not the trustee) under the rule concerned with setting aside orders for irregularity and adjourned the application for the parties to confer as to whether some other form of order such as under s 153B could be agreed.

169    It is to be noted that even though the sequestration orders in Austral Brick and Symons were made by registrars, these cases were not concerned with the review of the exercise of delegated judicial power.

170    Re Gollan was a case that did concern an application to review a sequestration order made by a registrar. The debtor did not appear before the registrar but on review demonstrated that his assets exceeded his liabilities by a very large sum. There was an undertaking by the debtor to pay the costs of the Official Trustee reasonably incurred. Spender J determined that the review power (referring to the then s 14(5) of the Bankruptcy Act 1966) should be exercised and the decision of the registrar set aside and in lieu thereof the petition dismissed. Notwithstanding the undertaking, an order was made that Mr Gollan as the debtor seeking the review pay the reasonable costs of the administration undertaken by the Official Trustee. His Honour also indicated that if not minded to make those orders, then an order for annulment would have been made. The basis for doing so was not the subject of any reasons in the decision.

171    In Rangott v Marshall [2004] FCA 961; (2004) 139 FCR 14, the trustee as applicant brought a proceeding to determine whether he was still a trustee and the bankrupt still a bankrupt and orders concerning the administration costs. The matter came before Gyles J on remitter from the Full Court which had overturned his orders and had set aside the sequestration order that Gyles J had earlier made a year before the appeal judgment. The Full Court made no consequential orders to deal with the costs of the administration. Gyles J referred to the bankrupt estate having been 'actively administered' from the date of the sequestration order, but that the administration had 'effectively been on hold' since the appeal decision: at [5]. His Honour referred to Re Deriu as having determined that an order for rescission of a sequestration order (then available but, as has been observed, since made the subject of a statutory bar) would not put an end to the bankruptcy, at least not without consequential orders concerning the re-vesting of the property. His Honour also referred to Clyne.

172    The argument advanced to Gyles J was to the effect that if a sequestration order is set aside on appeal, it is as if it were never made and thus it is taken that there never was any valid triggering of the statutory consequence of bankruptcy: at [17]. Accepting the authority of Simon v Vincent J O'Gorman and relying upon the ample power that the Court has on appeal, Gyles J accepted that submission by concluding as follows at [29]:

It would follow from the Full Court decision [Simon v Vincent J O'Gorman] that the sequestration order made on 13 August 2002 and the consequent appointment of the applicant as trustee are set aside. If full effect is given to these provisions it is as if the sequestration order had never been made and the respondent had never been a bankrupt. On that basis the applicant is no longer trustee of the estate of the respondent and was not trustee at the date this proceeding was commenced.

173    In reaching that conclusion, Gyles J relied upon Guss v Johnstone [2000] HCA 26. In that case, a debtor served with a bankruptcy notice sought to persuade the Court that he had a counter-claim, set-off or cross-demand. A declaration was made to the contrary. An unsuccessful appeal was brought. The matter was pursued in the High Court. By effluxion of time there was an act of bankruptcy in failing to satisfy the bankruptcy notice. It was suggested that the Court lacked power to do anything about the act of bankruptcy. As to that submission, the High Court reasoned at [62] as follows:

It is true that there is no statutory grant of power to annul an act of bankruptcy, or to extend the time for compliance with a bankruptcy notice other than in a case where the conditions of s 41(6A) have been satisfied. Suppose, however, that it had been demonstrated to the Full Court that the decision at first instance was based upon an error of law, perhaps involving a misapprehension as to the test to be applied in considering whether the judge was satisfied within the terms of the statute. In such a case, the Full Court may well have set aside the declaration.

(footnotes omitted)

174    The effect of the decision in Rangott v Marshall is that even though the bankruptcy had not been annulled, the decision of the Full Court had the consequence that there was not and never had been a sequestration order and the respondent was not and never had been a bankrupt. Significantly, however, it appears that his Honour was of the view that a different result as to the availability of consequential orders may have been able to have been achieved if the Full Court had exercised its ample powers on appeal in a different manner: see the reference to Shephard v Chiquita Brands South Pacific Limited [2004] FCAFC 76 and the comments at [30] that 'the problem has emanated from the form of order made by the Full Court'. The observation appears to contemplate the possibility that on appeal an order may have been made which would have enabled the trustee to have recovered some or all of the costs of the administration carried out under the authority of the order under appeal, even though the decision on appeal was to the effect that there was no bankruptcy.

175    Rangott v Marshall and Simon v Vincent J O'Gorman were approved and followed in De Robillard v Carver (to which reference has already been made) at [149]-[150] in the following terms:

We, of course, are not strictly bound by Simon v Vincent J O'Gorman Pty Ltd 41 FLR 95; 27 ALR 619 except by considerations of comity. However, with respect, any other approach would accept an implicit fetter upon the appellate powers clearly granted by s 28 of the Federal Court of Australia Act 1976 (Cth). In my respectful opinion the course followed by Gyles J was not only correct as a matter of precedent but was correct in law. The power of this Court on appeal to set aside a sequestration order with the result that 'it is as if no valid sequestration order was ever made' was also referred to, and not doubted, in Pattison v Hadjimouratis (2006) 155 FCR 226 (per Nicholson J at [14]; see also per Jacobson J at [51]-[53] and per Lander J at [177]-[181]).

The consequence, for the present appeal, is that an order upholding the appeal and setting aside the sequestration order made by the primary judge will have the consequence that the appellant is not to be treated as bankrupt from the pronouncement of the sequestration order, notwithstanding the effect of s 43(2) of the Bankruptcy Act (see Commissioner for Railways (NSW) v Cavanough (1935) 53 CLR 220 at 224-225).

176    In De Robillard v Carver, Buchanan J referred to [29] of the reasons of Gyles J in Rangott v Marshall and the reference there to Sackville J's comments in Shephard v Chiquita Brands.

177    In Kyriackou v Shield Mercantile Pty Ltd (No 2) [2004] FCA 1338, on appeal from a decision of a federal magistrate, a bankruptcy notice that had been the foundation for making a sequestration order was found to be invalid. The sequestration order had been made by a federal magistrate, so no exercise of delegated judicial power was involved. The bankrupt then sought an order in the appeal to the effect that the sequestration order be set aside and 'strenuously resisted' any order for annulment of the bankruptcy: at [7]. The bankrupt submitted that the Court had power to order the petitioning creditor to pay the expenses of the Official Trustee in administering the bankrupt estate, alternatively that the Official Trustee ought to bear those costs because of the obligation to proceed with caution when there was an issue raised as to the bankruptcy notice.

178    The Official Trustee submitted that there should be an order for annulment because (at [15]):

… the failure to annul the bankruptcy would deprive the Official Trustee of any opportunity to recoup the costs expended in administering the appellant's estate after the sequestration order had been made, apart from any rights that he might have to bring separate proceedings to recover those costs.

179    It was further submitted that if an order were made setting aside the sequestration order there would be no basis for the Official Receiver to recoup expenses, apart from a possible equitable lien. It was submitted that annulment was the appropriate order even though as a matter of fairness the petitioning creditor should bear the costs because the Court did not have power to make an order requiring the petitioning creditor to bear the costs.

180    Weinberg J dealt with the matter on the basis that the Court was faced with a choice between two alternatives: (a) annulment which would mean that the Official Receiver could recover costs from the property of the estate in accordance with the statutory provisions dealing with the consequences of annulment; or (b) set aside the sequestration order which would lead to the consequence that the Official Trustee would have no avenue for summary recovery of the costs of administration of an estate where the sequestration order had been set aside. His Honour approached the matter on the basis that it was for the Court to determine whether the appropriate order was an annulment or an order to set aside the sequestration order. Referring to Austral Brick and Symons, his Honour said at [41]:

There may be some cases, in which it will be appropriate to annul a bankruptcy under s 153B, thereby triggering the operation of s 154, rather than setting aside a sequestration order. Certainly, Emmett J took that approach in Austral. French J, in Symons, was prepared to contemplate a similar course, though not without reservations. In my opinion, this is not such a case.

181    However, as has been noted, those two cases were not concerned with the orders to be made consequent upon a successful appeal against a sequestration order. Rather, they were concerned with an application under a provision in the Federal Court Rules that allowed for an order to be set aside for irregularity in certain circumstances. For reasons already given, it is clear that the Court can set aside a sequestration order on appeal. Therefore, with due respect, the reasons appear to proceed upon a misunderstanding of the nature of the power being exercised.

182    Later his Honour referred to circumstances that tilt the balance in favour of the bankrupt and concluded at [43] that the Official Trustee must bear his own costs and expenses of the administration. The case is often cited for the proposition that caution is to be exercised by a trustee in bankruptcy in incurring expenses where the validity of the sequestration order is in issue: see, as examples, Flint at [58]; and Boensch v Somerville Legal [2021] FCAFC 79 at [165]. To that extent, the reasoning may be accepted. However, with respect to his Honour, the proper course given the fact that the case was determined on appeal was to consider the orders that might have been made in an appropriate exercise of the powers available to the Court on appeal.

183    In Flint the issue was whether what is commonly known as the slip rule enabled the Court to extend a creditor's petition after the petition had lapsed by operation of provisions of the Bankruptcy Act. A sequestration order had been made by a judge of this Court after the purported extension of the petition. The Full Court found that the slip rule did not apply with the consequence that there had been no power to make the sequestration order. For that reason, the appeal was allowed and the sequestration order was set aside. In lieu of the order of the primary judge, it was ordered that the petition be dismissed. This left an issue as to what should occur concerning the costs of the administration pursuant to the sequestration order which operated as a valid order of the Court until the determination on appeal that it was beyond power.

184    The trustee intervened in the appeal to make submissions as to costs and remuneration incurred in administering the bankruptcy. He sought an order that the bankruptcy be annulled (with the consequence that the statutory provisions would apply which would allow remuneration from the administered assets, subject to the supervision by the Court of the reasonableness of that remuneration). As to the justification for that submission, the Court observed at [49]:

If the sequestration order were set aside, the creditor's petition dismissed and no order annulling the bankruptcy made, the authorities reveal that the trustee would have no statutory basis for any remuneration and his action (and the consequences thereof) would be left to the general law: see the discussions in Austral Brick Company Pty Ltd v Daskalovski [1998] FCA 782; Symons v Bateman [1999] FCA 658; Kyriackou … and Pattison … The exposure of the trustee to that position in this case would be a gross injustice, as we later explain.

185    As to Pattison, to be considered below, the Court said at [51]:

… in Pattison the Full Court (by majority) held that it was open to the court to make orders both setting aside a sequestration order and annulling the bankruptcy. No party in this appeal contended that Pattison was wrongly decided and the course it sanctioned appears to be within the terms of s 153B.

186    In short, the Court in Flint found that annulment was an order that might be made in such a case. The Court then provided reasons as to why that would be an unjust outcome in the case at hand.

187    The Court went on to exercise its powers on appeal to require each of the appellant (debtor) and respondent (creditor) to bear a specified proportion of the reasonable costs of the trustee and made an order as to the extent of a right of indemnity against the assets that had been administered. In doing so, the Court said at [55] (by reference to the particular circumstances of the case):

In these circumstances, the preferable course is to set aside the sequestration order and dismiss the petition, but to make consequential orders dealing with the costs and remuneration of the trustee. No party submitted that such orders were either inappropriate or beyond power. Irrespective of the position under the Bankruptcy Act, all the parties accepted that the Court had power to make them under s 28 of the Federal Court of Australia Act 1976 (Cth).

188    Therefore, Flint is another case that involves the exercise of the broad appellate powers of the Court to deal with the consequences of an order made, on appeal, setting aside a sequestration order. By reason of the position adopted by the parties, the question whether an annulment might be ordered upon an application to review a sequestration order and in the exercise of delegated judicial power was treated as determined by Pattison.

189    Which brings us to Pattison. It was a case concerned with the exercise of delegated judicial power to make a sequestration order. A registrar of what was then the Federal Magistrates Court made a sequestration order in respect of the estate of a debtor. The order was made in the absence of the debtor. The trustee began to administer the estate. Within a few weeks, solicitors acting for the debtor informed the trustee that he wished to take urgent steps to pay his debts and discharge himself from bankruptcy. The trustee advised a figure that would be required for an annulment of the bankruptcy. It included trustee's fees and petitioning creditor's costs and an estimate of future fees and disbursements of the trustee. Together those amounts were more than half the amount to be paid. A dispute as to the amount of the estimate was not resolved and the debtor applied for a review of the sequestration order and an order setting aside the sequestration order, alternatively an order annulling the bankruptcy.

190    On the review, the debtor submitted that the sequestration order should not have been made and therefore should be set aside. The trustee argued that the appropriate order was for annulment. The magistrate ordered that the sequestration order be set aside and that the debtor pay the costs of the trustee and the petitioning creditor 'of and with respect to the proceedings'. The magistrate declined to order an annulment, giving the following reasons (quoted at [102]):

While it is clear that the Trustee has certain obligations, the Trustee in this instance had knowledge very early on that the bankrupt was challenging the validity of the sequestration order and was required to exercise some caution when incurring expenses while the status of the bankruptcy remained uncertain. It would be quite unfair in my view to burden the applicant who is the successful applicant in this proceeding with the costs of administering the estate. For these reasons, I am satisfied it is appropriate to set aside the sequestration order but that it is not appropriate to make the order annulling the bankruptcy. This leaves the Trustee to pursue whatever remedies that he might have by virtue of the general law.

191    The trustee appealed seeking the substitution of an order that the bankruptcy be annulled for the order setting aside the sequestration order. The debtor filed a notice of contention to the effect that it was not open to annul the bankruptcy on the rehearing of the petition by way of review. Annulment should only have been ordered if the application for an extension of time to review was refused or upon review the magistrate did not determine that the petition should be dismissed.

192    The issues were joined on the question whether there could be an order by way of annulment. However, the question whether, in the event that there could be no order by way of annulment, the appropriate order on the review was to set aside the sequestration order was not addressed. In other words, there was no issue raised as to whether it was appropriate on the review de novo to make an order that had the effect of bringing to an end all legal authority of the sequestration order even though it was a valid judicial order at the time it was made (and it was not sought to establish on review that there was no authority on the part of the registrar to make the sequestration order in the exercise of delegated judicial power).

193    Both the appeal and the cross-appeal were dismissed. All judges agreed as to the result, but their reasons diverged. Lander J delivered the principal judgment with which the judgments of Nicholson and Jacobson JJ engaged.

194    Lander J reasoned by reference to the decision in Harris v Caladine as to the nature of the review that was required to be conducted by the magistrate: at [122]-[127], [148]-[153]. His Honour examined with some care the course of the proceedings before the magistrate. In particular at [139], his Honour observed:

On the hearing of the review of the Registrar's decision, the respondent sought an order that the Registrar's order be set aside. The petitioning creditor neither opposed nor consented to that order. The appellant did not seek to be heard on the application for a review because the trustee accepted that was a matter between the petitioning creditor and the respondent.

195    The position of the trustee was that he should be protected in respect of his remuneration and expenses and a submission was made that there should also be an order annulling the bankruptcy: at [140]. The submission had an obvious eye to the statutory provision that allowed for the trustee to be paid remuneration, costs and expenses out of the property of the estate of such an order was made. In the alternative an order was sought in terms providing for the payment of remuneration and expenses of the administration out of the estate: at [141].

196    His Honour then, correctly with respect, stated at [152] that:

A party seeking a review of an order made by a Registrar must bring the application in the time prescribed … Indeed, a hearing of this kind requires the party seeking the sequestration order to establish all of the matters upon which the order is based. In a case such as this the onus remains upon the petitioning creditor to show an entitlement to a sequestration order …

197    His Honour went on, also correctly, to observe that an application to review the decision of the registrar (being a delegated exercise of judicial power) was not an application to be discharged from bankruptcy, nor an application for an annulment, nor in the nature of an appeal, even an appeal de novo: at [156]. It should be noted that the magistrate did not make an order dismissing the creditor's petition. His Honour then described succinctly and accurately the nature of the review by the federal magistrate of the exercise by the registrar of delegated judicial power in the following terms:

The Federal Magistrate who is hearing an application for review of a sequestration order made by a Registrar must approach the task as if the application for the sequestration order was being heard for the first time. It is procedure sui generis.

198    His Honour dealt with the manner in which a bankruptcy may be brought to an end, namely by discharge or annulment: at [166]-[173]. Then his Honour observed that the possibility of rescission of a sequestration order was one that no longer existed under the Bankruptcy Act: at [174].

199    Lander J then turned his attention to the precise character of the procedure for review of the registrar's decision stating correctly at [176] that it 'is not an application which, if granted, will bring the bankruptcy to an end either by way of discharge or annulment or in any other way'. Rather, it is an application that will lead, if successful, to the dismissal of the creditor's petition. Then his Honour referred to the equivalent provision to s 104(3) of the FCCA Act which allowed the federal magistrate to make any order he or she thinks fit in relation to the matter in respect of which the power was exercised.

200    It may be observed that as to the reasoning up until this point there is nothing in the reasoning of the other members of the Court that disagrees in any substantial respect with the analysis of Lander J which accords with the views expressed in Bechara v Bates. The issue on which the members of the Court diverged concerned what could be done given the sui generis nature of the review.

201    As to the orders that should be made, Lander J stated that 'ordinarily' the federal magistrate who was allowing an application for review in respect of a decision seeking review of a decision by a registrar making a sequestration order would reason in the same way as a Court sitting on appeal. His Honour then reviewed the appellate decisions and concluded at [181]-[182] that:

These cases demonstrate that the Court not only makes its own order to allow the appeal but discharges or sets aside the order made below.

On a review it might be prudent for the Magistrate, out of an abundance of caution, to set aside the Registrar's order as well as dismissing the petitioning creditor's petition. However, the effect of dismissing the petitioning creditor's petition on review is that no valid sequestration order was ever made.

202    It is the reasoning by analogy to the power that a Court may exercise on appeal that may be questioned. As has been noted, the Court has an ample power on appeal to make orders dealing with the consequences of an order setting aside a decision under appeal. Flint is a clear example. The question whether power exists to set aside a determinative order on a review of the exercise of delegated judicial power depends upon the terms of the statute (and the limits of the constitutional authority to effect such a delegation). In such a case, the starting point is that a sequestration order made in the exercise of delegated judicial power is valid and effective. It is burdened from the outset by the prospect of a review by a judge. However, a successful review does not, of itself, undo with retrospective effect the operation of the sequestration order.

203    Rather, the question to be considered on the review of the exercise of delegated judicial power is whether the power under the relevant statutory provision concerning the review enables an order to be made that affects the sequestration order prior to the decision on the review and if so in what manner. The power that was under consideration in Pattison was in like terms to that under consideration in the present appeal. It was a power to make any order the federal magistrate thinks fit in relation to the matter in respect of which the delegated judicial power was exercised. That issue is a question of construction (assuming the provision is within constitutional limits). It is the issue raised by Issue (2) and is addressed in detail below.

204    However, it may be observed at this point that there is much to be said for the view of Lander J that no question of annulment arises when it comes to the power to be exercised on the review de novo. When a debtor faces the prospect of a creditor's petition, there is no prospect that the Court may dismiss the creditor's petition but nevertheless bankrupt the debtor. Annulment only arises where there has been a bankruptcy. If the Court on review determines that the creditor's petition must be dismissed, it is difficult to see how an order annulling the bankruptcy sits consistently with that decision.

205    To burden a review with the possibility that, even though a judge on review may be persuaded that the creditor's petition should be dismissed, nevertheless the bankruptcy may remain in place and then be annulled is to offer something that is not a review of the delegated exercise of power. Rather, it gives an ongoing consequence to the delegated exercise of judicial power even though, on review, a different decision is made by the judge. It assumes that despite the order dismissing the creditor's petition there remains a bankruptcy to be annulled (as distinct from a past administration under the registrar's sequestration order, being an order that comes to an end when the decision is made on review to dismiss the creditor's petition).

206    Therefore, for those reasons, the view of Lander J that an annulment could not be ordered as the outcome of a successful review has much to commend it.

207    Jacobson J reached a different view. His Honour summarised that view at [27]-[30] in the following terms:

[The views of Lander J] turn upon [his Honour's] approach to the question of the constitutional conditions for the valid delegation of a judicial power to a Registrar and the requirement that there be a hearing de novo on an application for review.

In my view these conditions do not give rise to the constraints upon the Federal Magistrate's powers which follow from His Honour's views.

It seems to me clear upon the proper construction of the relevant statutory provisions, the Federal Magistrates Court has a discretion, upon a review of the order of the Registrar, to annul the bankruptcy, if the Federal Magistrate is of the view that the sequestration order should not have been made.

The Federal Magistrate proceeded on the basis that he had a discretion whether or not to make an annulment order. He declined to exercise his discretion. I can see no error in this.

208    His Honour, correctly with respect, then posed the question for consideration in the following terms (at [39]):

The question of whether the federal magistrate had power to dismiss the petition and, at the same time annul the sequestration order, is one of statutory construction.

209    It may be noted that the question was not posed in terms that considered whether it was appropriate to set aside the sequestration order made by the federal magistrate if the petition was dismissed on review.

210    His Honour then reasoned that the scope and effect of the review must be governed by the terms of the enactment creating it: at [44]. So too, the effect of the registrar's order pending the review (and perhaps also by the status of the Federal Magistrates Court as an inferior court of record): at [45].

211    Then, again by analogy to what might be done on an appeal, Jacobson J reasoned that the Court has power to uphold the review, set aside the sequestration order and dismiss the petition: at [51]-[57] relying on Re Gollan. On that basis the power conferred by the equivalent to s 104(3) of the FCCA Act included a power to annul.

212    Some support was sought to be found from Austral Brick, Symons, Kyriackou and Rangott v Marshall although the different context in which those decisions were reached was properly acknowledged. For reasons already given, all those cases must be distinguished. With respect to his Honour, what is absent is any reasoning as to why, on a proper construction of the provision and having regard to the nature of the review, a power to annul might be available. This is especially so given that the statutory power to order an annulment is premised on the existence of an ongoing bankruptcy (as distinct from a past administration under the order made by the registrar) which cannot be the case once the order is made on review for the creditor's petition to be dismissed.

213    Nicholson J emphasised the need for the review conducted by the federal magistrate to be by way of de novo hearing: at [6]-[7]. His Honour observed, correctly, that an application for review is not an application for annulment: at [8]. His Honour then stated at [9]:

It is apparent from these requirements that it is correct to conclude that the application to set aside a sequestration order is a different application to one seeking to annul a bankruptcy. However, that conclusion does not itself determine that, on an application for a review of the making of a sequestration order giving rise to an existing bankruptcy, it is not open for an accompanying application to be brought for annulment of the bankruptcy in the event of the review succeeding or for a federal magistrate to consider the possibility of annulment.

214    The difference in reasoning as between Lander J and Jacobson J was then noted by Nicholson J. His Honour then stated that he was influenced to agree with Jacobson J 'by the strength of the statutory provision vesting power in a federal magistrate on review considered in its context': at [11]. The powers in the equivalent to s 104(3) of the FCCA Act were said to 'admit of the making of an order of annulment'.

215    Nicholson J reasoned at [11]:

At the point when the federal magistrate comes to consider the making of an order he or she will be faced by the existence of a sequestration order and a trustee appointed in the administration of what at that point is still a bankrupt estate. Section 43(2) provides that a bankrupt continues until discharge or annulment. Until the federal magistrate makes an order on the review the status of a bankrupt continues. The finding that the sequestration order ought not to have been made does not itself operate to change that status.

216    Then at [12] after characterising the language used in the statutory provision as giving the federal magistrate 'the widest possible choice of powers', his Honour said:

Given the breadth of the powers vested by statute, I do not consider that the making of such an order of annulment would be a recognition of the validity of the sequestration order: rather it would be an order to resolve the circumstances found to be in appropriate as the result of a finding to the contrary.

217    Reliance was also placed by Nicholson J upon the terminology used to condition the annulment power to instances where 'the Court is satisfied that a sequestration order ought not to have been made or, in the case of a debtor's petition, that the petition ought not to have been present or ought not to have been accepted by the Official Receiver … ': at [13].

218    His Honour found that the outcome of a successful review may be that a Court makes orders setting aside the sequestration order and dismissing the petition in which case, 'it is as if no valid sequestration order was ever made': at [14]. With respect, to put the position so absolutely would seem to be incorrect. To set aside a decision would deprive it of its legal effect, not its existence as an historical fact. Further, in a different case where the delegated judicial power was conferred upon a registrar of a superior court of record, the order would speak until set aside: see the recent consideration of the principles in Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs v Moorcroft [2021] HCA 19 at [19]-[20].

219    His Honour then reasoned that each of Re Gollan, Austral Brick, Symons and Kyriackou provided some support for a view that an order for an annulment could be made on review rather than an order setting aside the sequestration order. His Honour's reasoning was to the effect that an annulment may be ordered under the statutory power to make orders as the Court thinks fit on review, not in the exercise of the express statutory power to annul. For reasons already given, those authorities do not provide a foundation for that conclusion.

220    In Zdrilic v Hickie [2016] FCAFC 101; (2016) 246 FCR 532, an application for review of a sequestration order made by a registrar exercising delegated judicial power was summarily dismissed by a judge. The Court (Katzmann, Farrell and Markovic JJ) found that an application of that kind was misconceived given the nature of a review application in which the party bringing the creditor's petition is the applicant for review. At [89] their Honours reasoned:

Whether or not the appellants' opposition to the sequestration proceedings had merit or any reasonable prospect of success, the appellants had a statutory right based on a 'constitutional imperative' to a review of the registrar's exercise of power conducted by a judge. It is extremely difficult to contemplate any circumstance where the exercise of that right would constitute an abuse of process. An application for review of a registrar's decision filed pursuant to s 104 of the Federal Circuit Court Act is not an application which is prosecuted by a debtor/applicant for the review; it is a demand that a claim for relief (a sequestration order) brought by the creditor be heard by a judge as if no sequestration order had been made. The 'prosecutor' of an application for a sequestration order based on a creditor's petition is the creditor; the only onus a debtor bears is the one (s)he assumes if (s)he seeks to resist the grant of an order based on proof of solvency or 'any other sufficient cause' under s 52(2) of the Bankruptcy Act. In our opinion, the respondents should not have filed their application for summary dismissal and the primary judge should not have entertained it.

221    In Bechara v Bates, the authorities concerning the nature of the review of a delegated exercise of judicial power in the context of the hearing of a creditor's petition were reviewed: at [17]-[30]. That analysis concluded with the following summary at [27]-[30]:

Thus, relevant to the matter before us, the following is, and has been since the mid-1990s, clear about the nature of a de novo hearing by way of review of a sequestration order in bankruptcy made by a registrar:

(a)    The application for review leads to a hearing de novo of the creditor's petition.

(b)    The hearing (or rehearing) of the creditor's petition is not prosecuted by the debtor (applicant for review) but by the creditor in the proceeding in which the registrar's order was made.

(c)    The application for review is a demand that the claim for relief (the sequestration order) be heard by a judge.

(d)    The onus is upon the creditor to prosecute its petition. The only onus of the debtor/bankrupt against whose estate a sequestration order has been made is to prove either solvency or any other sufficient cause under s 52(2) of the Bankruptcy Act 1966 (Cth).

(e)    An appreciation of the above considerations makes it evident that summary or default judgment terminating an application for review is highly likely to be misconceived and founded upon a misconception that the applicant for review has an onus to prosecute an application or to show error in the approach of the registrar.

There are some complexities and difficulties yet to be fully and certainly resolved, but the approach of the Court conformable with the Constitutional requirements laid down by Harris v Caladine has been clear and consistent.

The complexities are brought about by the intersection of the above nature of the de novo hearing, the orders that can or should be made upon the success or failure of the prosecution of the creditor's petition before the judge on review, and the status of the extant sequestration order as an order of the Court (see s 103(2) of the Circuit Court Act).

The complexities are: first, the issue that divided the Court in Totev v Sfar concerned with proper construction of s 52(4) and (5) of the Bankruptcy Act; secondly, the issue that divided the Court in Pattison: if a creditor's petition is dismissed on the rehearing whether in the alternative to setting aside the sequestration order an order for an annulment can be made; and, thirdly, whether there is power to be found in s 104(3) of the Circuit Court Act or s 35A(6) of the Federal Court Act, as an incident of making orders on the review and in particular setting aside the sequestration order, to order some division of responsibility for the trustee's costs between the trustee, the debtor and the creditor …

222    Now that the particular characteristics of an application for review of a decision made in the exercise of delegated judicial power has been properly exposed, the issues raised on the present application (which include the second and third issues foreshadowed in Bechara v Bates) now fall for determination.

Issue (2): On review of a decision by a registrar in the exercise of delegated judicial power to make a sequestration order, what is the nature and extent of the power to 'make any order or orders it thinks fit' that is conferred upon the Circuit Court by s 104(3)?

223    Under the Bankruptcy Act both this Court and the Circuit Court are entrusted with jurisdiction in bankruptcy matters.

224    Under s 103(1) of the FCCA Act, the Federal Circuit Court Rules 2001 (Cth) may delegate to the registrars of the Court any of the powers of the Circuit Court mentioned in s 102(2). The matters mentioned include a power prescribed by the Rules of Court: s 102(2)(i). By r 2.02 and Schedule 1, Item 9 of the Federal Circuit Court (Bankruptcy) Rules, the power of the Circuit Court to make a sequestration order has been prescribed as a power that may be exercised by a registrar of the Circuit Court.

225    By r 2.02(3), the following provision is made as to the time for filing any review of the exercise of such a delegated judicial power by a registrar:

Subject to any direction by the Court or a Judge to the contrary, an application under subsection 104(2) of the Act for review of the exercise of a power of the Court by a Registrar must be made by filing an application in accordance with Form B3A within 21 days after the day on which the power was exercised.

226    A delegated power, when exercised, is taken to have been exercised by the Circuit Court: s 103(2). The delegation of judicial power does not prevent the exercise of the power by the Court or a judge: s 103(3).

227    As to the review of decisions by a registrar, s 104 of the FCCA Act then provides:

(2)    A party to proceedings in which a Registrar has exercised any of the powers of the Federal Circuit Court of Australia under subsection 102(2) or under a delegation under subsection 103(1) may:

(a)    within the time prescribed by the Rules of Court; or

(b)    within any further time allowed in accordance with the Rules of Court;

apply to the Federal Circuit Court of Australia for review of that exercise of power.

(3)    The Federal Circuit Court of Australia may, on application under subsection (2) or on its own initiative, review an exercise of power by a Registrar under subsection 102(2) or under a delegation under subsection 103(1), and may make any order or orders it thinks fit in relation to the matter in respect of which the power was exercised.

228    As has been indicated, the issue that arises concerns the nature and extent of the power conferred by s 104(3). It is a question of statutory construction.

229    The principles to be applied are well established. As stated by Kiefel CJ, Nettle and Gordon JJ in SZTAL v Minister for Immigration and Border Protection [2017] HCA 34; (2017) 262 CLR 362 at [14]:

The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense. This is not to deny the importance of the natural and ordinary meaning of a word, namely how it is ordinarily understood in discourse, to the process of construction. Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.

(footnotes omitted)

230    It is also to be noted that s 104(3) confers jurisdiction on bankruptcy courts. Therefore, it is 'quite inappropriate' to read the provision 'by making implications or imposing limitations which are not found in the express words': Owners of the Ship, Shin Kobe Maru v Empire Shipping Company Inc (1994) 181 CLR 404 at 421. Powers conferred on courts are not to be construed as subject to limitations which their terms do not require: Commonwealth of Australia v SCI Operations Pty Ltd (1998) 192 CLR 285 at [26] (Gaudron J).

231    It is significant that s 104(3) takes the form of conferring jurisdiction on the Court that is in addition to the power to exercise for itself, on review, the judicial power that has been exercised by the registrar as delegate. There would be no need for the additional language if the intention was to say that the Court on review could do no more than exercise the same power as was exercised by the registrar as delegate, in the present case determine whether to make a sequestration order on the creditor's petition by the Body Corporate. That is especially so given the express terms of s 103(3) to the effect that the delegation does not deprive the Court of the authority to exercise the power (a provision which also expresses a constitutional imperative for validity of the delegation of judicial power).

232    Therefore, it may be concluded that the additional words in s 104(3) confer a wider authority than would otherwise exist if the matter came before the Court without any order having been made by a delegate. In context, that wider authority is conferred for the purpose of dealing with any aspect of the matter that arises because there is a review of an exercise of delegated judicial power. Its terms confer such power as may be needed to do justice having regard to the fact that the Court will consider the matter in circumstances where the parties may have acted on the basis of an order made in the exercise of delegated power. As a jurisdictional provision, there is no warrant to read down or limit the extent of that power.

233    The use of the term 'matter', is also significant. It also indicates that the scope of the jurisdiction that is conferred is not confined to determining whether the orders sought on the application should be made. The word 'matter' is a term of wide conception: McHugh v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2020] FCAFC 223 at [10] (Allsop CJ). Used to describe the extent of jurisdiction of a federal court on review of a provision conferring delegated judicial power it may be expected to have been chosen for its constitutional significance. It may be taken to be deployed in its constitutional sense. Therefore, it refers to the whole of the underlying controversy to which the issues raised upon a particular court application relate or from which the issues agitated in a particular proceeding arise.

234    The ambit of the authority exercised on review by the Circuit Court under s 104(3) is not to be informed by the false notion that there was a complete and final exercise of judicial power by the registrar that is then upset or overturned or corrected on the de novo review. For reasons given by Lander J in Pattison and by the Court in Bechara v Bates a review of delegated judicial power is not of that character. Rather, what occurs on review (if required) is the completion of the exercise of the judicial power in the particular matter (in the present case, the whole controversy as to whether the estate of Ms Samsakopoulos should be sequestrated and administered in bankruptcy).

235    The Circuit Court on review deals with the same matter (that is the same controversy) that gave rise to the application that was dealt with by the registrar but does so in circumstances where the exercise of the judicial power has been extended over a period of time. In consequence, there is the possibility that steps might have been taken by one or other of the parties on the basis that the decision is to one effect, only to find on review that it is actually to the opposite effect. By the time of the de novo decision by the Court on review the matter now has that additional character or dimension. Dealing with that aspect (being the consequence of the fact that the exercise of the delegated power and the conduct of the review cannot occur in the same moment in time) is part of the overall controversy between the parties by the time it comes before the Circuit Court judge on review. Therefore, the Court may deal with that aspect of the matter by making any order that it thinks fit, including an order to deal in a just way with the consequences of the intervening period between the decision of the registrar and the de novo decision on review.

236    The phenomena by which there may be an exercise of judicial power which is subsequently corrected is well known. Courts often grant interim or interlocutory orders on a particular basis only to determine at a later hearing, after considering the matter in more detail, that those orders should not continue or, perhaps, would not have been made had the full position been known. As has been observed, it is common for orders to be corrected on appeal and appeal courts have ample powers to address what has occurred since the making of an order that is to be overturned on appeal. In all such instances, the Court has power to deal with any injustice arising from the intervening period which has elapsed simply because of the inability to undertake judicial determinations at the instant when an application is made. Usually, a significant factor in making such orders is a determination as to who was ultimately unsuccessful in obtaining relief. In most cases, justice is achieved by requiring the party who has maintained the position that is ultimately shown to be unjustified to bear the burden of orders made to restore the position retrospectively.

237    For reasons that have been given, the conceptual character of an exercise of delegated judicial power that is subsequently reversed when considered by a judge on de novo review is distinct. However, the distinction in legal character is not such as to undermine the fundamental nature of the orders that may be required to ensure justice where there is a reversal of the position on the de novo review.

238    The above analysis is reflected in the language used in s 104(3) of the FCCA Act. As that provision recognises, the Circuit Court could on review of the exercise of the delegated judicial power 'make any order or orders it thinks fit in relation to the matter in respect of which the [delegated] power was exercised'. The matter in respect of which 'the [delegated] power was exercised' in any particular case, is not brought to an end when the delegated decision is made. The matter continues in existence and is considered by the Circuit Court judge on review. At that point in time, the controversy includes the events that occurred by reason of the split character of the exercise of the delegated judicial authority. An order that addresses that aspect is an order 'in relation to the matter' for the purposes of s 104(3).

239    Therefore, in the particular case where the order made by the registrar is a sequestration order and the order on review is a dismissal of the creditor's petition, the Court is not confined to making the dismissal order. It can make such consequential orders as it thinks fit in relation to the matter of which it is seized at the time of the review. By providing that the Court may make orders as it thinks fit, s 104(3) confers a broad power to ensure a just outcome having regard to the determination made on the review. An issue then arises as to whether there is some constraint upon the scope of the power so conferred. Two possibilities arise for consideration. First, the subject matter of the power, namely a valid exercise of delegated judicial power. Second, the terms of the power conferred by s 37 of the Bankruptcy Act.

The valid exercise of judicial power

240    It is fundamental to judicial determinations that they speak finally. Further, save for procedural orders which may speak now for then, judicial decisions quell controversies by applying the law as it exists to events which have happened. They do not make unlawful that which was lawful at the time or bring into existence new rights and liabilities. Judicial power is limited to providing remedies to give effect to existing rights and liabilities or that recognise the limits of public or private power. Judicial power does not create rights, liabilities or powers or undo their existence at the relevant time.

241    The development of statutory rights of appeal with attendant authority to overturn judicial decisions that would otherwise speak finally does not detract from this fundamental characteristic of judicial power. Indeed, appeals are an exception made necessary by the finality with which judicial determinations otherwise speak. Many of the modern authorities are concerned with understanding the extent to which appellate or review powers confer authority to interfere with what would otherwise be the finality of judicial determinations.

242    So, 'the principal qualification to the general principle of finality is provided by the appellate system' and finality is a tenet that 'finds reflection in the restrictions upon reopening of final orders after they have been formally recorded': Burrell v The Queen [2008] HCA 34; (2008) 238 CLR 218 at [15]. Where the exception is said to be conferred by statute, attention must be given to the text of the statute and 'clarity of thought and the isolation of the true issues' is required: DJL v Central Authority [2000] HCA 17; (2000) 201 CLR 226 at [43]. As appellate rights are statutory, the extent of the power to set aside an order on appeal and the circumstances in which it may be exercised are to be determined upon the proper construction of the statutory provision conferring the right of appeal: DJL at [24]-[44].

243    Consequently, as Barwick CJ observed in Bailey v Marinoff (1971) 125 CLR 529 at 530:

Once an order disposing of a proceeding has been perfected by being drawn up as the record of a court, that proceeding apart from any specific and relevant statutory provision is at an end in that court and is in its substance … beyond recall by that court.

244    There is no inherent power to reopen a substantive exercise of judicial power after an order has been regularly entered. It may be impeached by separate claim on the ground of fraud, but the order itself cannot be set aside: Gamser v Nominal Defendant (1977) 136 CLR 145 at 154 (Aickin J).

245    As to the ability to recall final orders, the High Court stands in a different position. It has an entrenched jurisdiction as a court of final appeal: DJL at [43]; and Elliott v The Queen [2007] HCA 51; (2007) 234 CLR 38 at [7]. The decision in Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 is to be understood in that context.

246    Therefore, the recognition of exceptional instances where the finality of judicial orders may be questioned outside an appeal is a field to be approached with some care. The Court may adopt by its own rules a procedure whereby, in limited circumstances, a perfected judgment may be re-opened for irregularity: see, for example the recent consideration of an application under such a rule in Viscariello v Legal Practitioners Disciplinary Tribunal [2021] SASCFC 18. The rule considered in the decisions in Austral Brick and Symons is a further example. Rules of that character allow for a procedure whereby the Court may set aside a judgment or order that has been given, entered or made irregularly, such as where the order is made without notice or without hearing from a party. The power exercised in such cases is of a limited character and is not concerned with instances where the complaint concerns the merits of any decision: Perpetual Trustees Australia Ltd v Heperu Pty Ltd (No 2) [2009] NSWCA 387; (2009) 78 NSWLR 190 at [16], but compare the observations in Consolidated Lawyers Ltd v Abu-Mahmoud [2016] NSWCA 4 at [39]-[41].

247    The terms of s 104(3) speak in a context where there has been an exercise of judicial power. True it is that the power has been delegated but, save for the prospect of a review of the character that has been described, an order made in the exercise of delegated judicial authority must have the same character as any other order made by the Court. It speaks as a judicial order that is not to be recalled or set aside outside the exceptional instances that have been described.

248    In that context, the review provided for by s 104(3) to fulfil the constitutional imperative must not be of a kind that would deprive the order made by the delegate of its judicial character. The review is not an appeal. It is undertaken to fulfil a condition of the delegation and no more. Therefore, the consequential orders that may be made under s 104(3) cannot take the form of setting aside or recalling the valid exercise of judicial power by the delegate.

249    Of course, there remain circumstances by which the order of the Court made by the delegate may be set aside. They include the exceptional case where there is a procedural reason for setting aside the order of the delegate on the basis that it has been irregularly entered, any instance where there is true excess of jurisdiction by the delegate and the jurisdiction to set aside the order if it was obtained by fraud. But these are instances where there is a recognised power to make such orders that does not depend upon the terms of s 104(3). They apply to any exercise of judicial power by the making of a final judgment or order.

250    Significantly, to set aside the sequestration order would be to deprive it of any legal effect or legal consequences. It would treat a valid exercise of judicial power as if it had not occurred. It would denude the exercise of the judicial power of its fundamental incident of finality and burden it with the prospect of being set aside by a process other than appeal in which error in the making of the order was required to be demonstrated. It would do so irrespective of the effects upon third parties who have had dealings with the trustee.

251    Section 104(3) contains no express conferral of power to set aside an order made in the exercise of delegated judicial power.

252    Nor can it be said that the effect of a review of the exercise of delegated judicial power is to render the registrar's sequestration order void ab initio. To do so would be to visit a consequence that would be more far reaching than a review by a fresh exercise of the judicial power to fulfil the constitutional imperative as to what must attach to a delegation of judicial power. It would remove the existence of any authority for acts undertaken in the administration of the estate pursuant to the judicial order. It would do so even though there was unquestioned authority to make the judicial order at the time it was made by the registrar.

253    Strictly speaking, no issue arises on the appeal as to whether the primary judge could set aside the order of the registrar of the Circuit Court because there is no appeal in respect of that order. However, conceptual understanding aids and informs the nature and extent of the power to make consequential orders under s 104(3). In my view, on its proper construction, s 104(3) does not confer authority to set aside the order of the registrar. To confer a power of that kind would be fundamentally inconsistent with the nature of judicial power. It would denude the order made by the delegate of its fundamental character as a judicial order. To the extent that the reasoning in Pattison assumes that such a power exists, that assumption is not correct.

254    The point is of limited significance when it comes to the orders to be made in the present case. That is because the power to make such orders that the Court thinks fit is a broad power. It enables the Court to make orders that reverse the effect of the sequestration order and thereby give effect to the decision on review that the creditor's petition is dismissed (with the consequence that there is no longer a sequestration order). Indeed, consequential orders of that kind are necessary to do justice in circumstances where the Court in undertaking the review to which the exercise of delegated judicial power to make the sequestration order was always subject has determined that the petition should be dismissed.

255    Orders which may be considered include orders as to the remuneration, costs and expenses of the trustee, orders validating for future purposes actions of the trustee undertaken pursuant to the sequestration order and orders to effect the re-vesting of property in the debtor. An order may also be made to the effect that the debtor does not have the status of a former bankrupt. Such orders speak prospectively and operate now to undo the consequences of what has gone before. They require things to be done in the future in order to do justice as between the parties. It is orders of that kind that are authorised by the terms of s 104(3).

256    Those orders will engage with the consequences of the sequestration order validly made in the exercise of delegated judicial power. However, the orders that may be made must recognise the character of the registrar's order. Even where the Court on review comes to a different conclusion on the facts and law which, if applied by the registrar at the time of the exercise of the delegated judicial power would have meant that the petition must be dismissed, it does not follow that the registrar's decision was beyond jurisdiction in some way. Like the Court itself when exercising judicial power, the delegated judicial authority is 'ample and considerable': CZA19 v Federal Circuit Court of Australia [2021] FCAFC 57 at [15]. It includes authority to identify the issues to be determined and to decide the facts and the law to be applied in reaching a decision. Therefore, for the Court to determine on review that the creditor's petition should be refused does not mean that there was any defect in the making of the sequestration order under review. Indeed, in many cases where a different decision is made on review there will have been no such defect by reason that the decision by the delegate involves an exercise of judicial power.

257    Therefore, the sequestration order made by the registrar remains both an historical fact and an exercise of judicial power, the validity of which is not undone by the order dismissing the petition on the review. The administration undertaken in the meantime remains an administration undertaken pursuant to the sequestration order. It is necessary to make appropriate consequential orders to deal with those past events, but those orders do not extend to setting aside what has gone before. The precise scope of the orders that are appropriate in the present case is a matter addressed in dealing with Issues (7) and (8) below.

The terms of s 37 of the Bankruptcy Act

258    Section 37 of the Bankruptcy Act is expressed in the following terms:

(1)    Subject to subsection (2), the Court may rescind, vary or discharge an order made by it under this Act or may suspend the operation of such an order.

(2)    The Court does not have power to rescind or discharge, or to suspend the operation of:

(a)    a sequestration order; or

(b)    an order for the administration of the estate of a deceased person under Part XI.

259    The question is whether s 37 confines the extent of the power to make consequential orders under s 104(3) where the matter the subject of the review concerns whether there should be the sequestration of the estate of a debtor. If so, a further question arises as to the extent to which the language in s 37(2) limits the extent of those consequential orders.

260    When a sequestration order is made in the exercise of delegated judicial power then the constitutional imperative requires that there may be a review de novo. It was not argued that the delegation may not be in respect of the exercise of the power to make a sequestration order. There is no suggestion of any such qualification in the terms in which s 104(3) is expressed. In those circumstances, s 37 should be construed in a manner that contemplates the possibility that a sequestration order may be made in the exercise of delegated judicial power.

261    A consequential order made under s 104(3) which gives effect to a determination on review that a creditor's petition should be dismissed is not directed to rescinding or discharging or suspending the operation of an earlier sequestration order made in the exercise of delegated judicial power. It proceeds on the basis of the historical fact that there was a sequestration order and makes orders to give effect to the determination on review. Therefore, s 37 of the Bankruptcy Act is no barrier to the making of such an order.

Issue (3): On review of a decision made by a registrar in the exercise of delegated judicial power to make a sequestration order, does the Circuit Court have a discretionary power to annul the bankruptcy?

262    If on a review of the making of a sequestration order in the exercise of delegated judicial power, the debtor applicant demonstrates that a creditor's petition should be dismissed then that is the order that must then be made on the application. It would be fundamentally inconsistent with the making of an order on review to treat the bankruptcy that has been administered pursuant to the delegate's sequestration order up until that point as if it were a bankruptcy that should be annulled by order made under the provisions of the Bankruptcy Act. On review, the first order to be made is a dismissal of the creditor's petition. From that point on there is no sequestration order that continues to speak with operative effect. The order made by the registrar in the exercise of delegated judicial authority no longer has any force. There is therefore no ongoing bankruptcy and no annulment to operate as to that bankruptcy.

263    It follows, with respect, that the reasoning of the majority in Pattison to the effect that there is power to annul the bankruptcy that arises when the creditor's petition is dismissed on review in accordance with s 104(3) (or an equivalent review to give effect to the constitutional imperative where there is a delegation of judicial power to hear and determine a creditor's petition) is plainly wrong in the relevant sense (as to which see Gett v Tabet [2009] NSWCA 76 at [283]). On proper analysis, for the reasons that have been given, there is no power to annul or set aside the sequestration order made by the registrar. Rather, the bankruptcy itself is brought to an end by the dismissal of the creditor's petition on review.

264    Further, the bankruptcy that was commenced pursuant to the registrar's order is not to be continued to completion. It is not a bankruptcy from which a bankrupt need be discharged or annulled. Rather, it is a bankruptcy that must cease to be administered. It is the powers attendant to the nature of the delegation of judicial power that fall to be exercised. For reasons that have been given in dealing with Issue (2) those powers are broad and extend to making orders that speak to the ongoing consequences of the events that have already occurred.

Issue (4): On review of a decision made by a registrar in the exercise of delegated judicial power to make a sequestration order, if the Circuit Court determines that the petition should be dismissed, does the Court have another source of power to order payment of remuneration, costs and expenses to a trustee incurred in administering the estate up until the petition is dismissed?

265    There being a clear power under s 104(3) to order the payment of remuneration, costs and expenses, it is not necessary to consider the alternative arguments. However, if there was no order made pursuant to s 104(3) concerning the sequestration order that operated prior to the review then as a matter of historical fact there will have been an administration in bankruptcy up until the time of the order on the review and the trustee would be entitled to be remunerated for the period of the administration. In the present case, for reasons expressed below in dealing with Issue (7), there should be consequential orders under s 104(3) dealing with the remuneration of the trustee during the period up until 17 July 2019 when the creditor's petition was dismissed.

266    Further, in a case like the present where there is an appeal in respect of the decision made on review of the delegated judicial power then the Court on appeal does not gain some power to make a substantive order of a kind that could not be made in undertaking the review under s 104(3) and the argument advanced to the contrary by the Trustee should not be accepted. To the extent that the statutory powers of appeal provide a source of authority to make orders, it allows this Court to deal with consequences that flow from any identified error in the decision of the primary judge and the actions that have been taken since that decision.

Issue (5): In the present case, once the creditor's petition was dismissed by the primary judge on review, did the Circuit Court have jurisdiction thereafter to entertain the subsequent interim application by the Trustee for remuneration orders?

267    The Trustee was named as a party to the review application brought by Ms Samsakopoulos. The Trustee was also required by the Federal Circuit Court (Bankruptcy) Rules to be given notice of the alternative claim for an annulment. The Trustee filed an affidavit in response to the application and appeared in person at the hearing on 12 July 2019.

268    At the beginning of the hearing on 12 July 2019, the primary judge made clear that the hearing was proceeding 'in the first instance' as 'an application for review of the registrar's decision to make a sequestration order and to embark on a hearing again of the creditor's petition'. The Trustee made some submissions to the effect that Ms Samsakopoulos was solvent on a balance sheet basis but not on a cash flow basis. In response to questions from the primary judge, the Trustee said:

I've, obviously, withheld doing anything, obviously, given today's proceedings, but it would be my recommendation would be we move on sale of the Queensland property, probably. Payable liabilities, there would be an annulment of the bankruptcy by virtue of [section] 153 and the debtor can move on with life, hopefully.

269    The Trustee made no submissions concerning remuneration and sought no consequential orders at the hearing. The application for an annulment brought in the alternative did not fall for consideration. The Trustee did not claim that there should be an order for an annulment. In any event, for reasons that have been given, there was no discretion on the part of the Circuit Court to make an order annulling the bankruptcy as a consequential order to the order dismissing the creditor's petition. Once the petition was dismissed there was no ongoing bankruptcy to annul.

270    In those circumstances, it is apparent that the hearing proceeded on the basis that the only matter being considered by the primary judge was whether there should be a sequestration order made on the creditor's petition. The reasons for decision of the primary judge consider only that issue.

271    In those circumstances, there was no determination made on 17 July 2019 of a kind that foreclosed an application by the Trustee for orders consequential upon the decision to dismiss the petition. That is, in substance, what occurred when the interim application was brought on 11 December 2019. Certainly the hearing of the interim application proceeded on the basis that the Trustee sought orders for remuneration, costs and expenses based upon the terms of s 104(3) of the Federal Circuit Court of Australia Act. For reasons that have been given, it was appropriate for the Trustee to do so.

272    Therefore, the issue raised by counsel appearing as amicus curiae should be determined on the basis that the nature of the hearing on 17 July 2019 (and the fact that there is no appeal against the order made on that date) are not matters that stand in the way of the relief sought on appeal.

Issue (6): If yes to Issue (5), did the primary judge err in finding that there was no power to make the remuneration order sought by the Trustee?

273    As to the claim of error by the primary judge, whilst the decision reached was understandable given the decision in Pattison, now that the matter has reached this Court by way of appeal, it should be determined that there is power under s 104(3) of the Federal Circuit Court of Australia Act to make a consequential order dealing with the remuneration of the Trustee. Therefore, this is a case where constructive error has been demonstrated by reason of the conclusions reached by this Court. No criticism is intended of the primary judge who dealt with an issue by reference to the state of the legal authorities and directed attention to the correct questions in an area of the law that is not without its complexities.

Issue (7): If yes to Issue (6) and taking account of the answers to Issues (2), (3) and (4), what, if any, orders should be made on appeal concerning the remuneration of the Trustee? In particular, should the matter be remitted to the Circuit Court?

274    All parties invited the Court to deal with all issues rather than remit the matter to the Circuit Court. It is possible and appropriate to do so, recognising that the approval of any remuneration, costs and expenses ordered to be paid will require approval of the quantum.

275    The Body Corporate sought orders that would make Ms Samsakopoulos liable for the costs up until the commencement of her review application and would make the Trustee liable thereafter.

276    The submissions advanced as to the basis upon which Ms Samsakopoulos should be made liable were to the following effect:

(1)    On the facts as known to the Body Corporate at the time of proceeding with the petition only a payment of $77.25 had been received and it was proper for the Body Corporate to proceed with the creditor's petition in those circumstances.

(2)    On the evidence, Ms Samsakopoulos had paid $80.00 at Australia Post where a fee had been applied which accounted for the difference between the $80.00 amount paid and the amount of $77.25 shown on the running account as received by the Body Corporate.

(3)    On the evidence, Ms Samsakopoulos was indebted to the Body Corporate in respect of other amounts that supported the bringing of the creditor's petition.

277    The submissions advanced were unmeritorious for the following reasons:

(1)    The order dismissing the creditor's petition was based upon an express finding that the amount of $80 had been paid by Ms Samsakopoulos.

(2)    There was no appeal brought by the Body Corporate against the order dismissing the creditor's petition.

(3)    Neither at the hearing of the review application nor the hearing of the interim application did the Body Corporate submit by reference to evidence that a fee charged by Australia Post accounted for the difference between the amount of $80 and $77.25.

(4)    Even assuming that the Body Corporate may be permitted to rely upon evidence that was not relied upon before the primary judge, there was no attempt on appeal to establish that the fee charged by Australia Post was a charge to Ms Samsakopoulos by her agent in making the payment rather than a charge to the Body Corporate as its agent for receiving the payment.

(5)    For reasons that have been given, the interim application is properly viewed as part of the application for review of the sequestration order by Ms Samsakopoulos. It deals with the making of orders pursuant to s 104(3) of the FCCA Act consequential upon the dismissal of the creditor's petition. Therefore, factual findings made in dismissing the creditor's petition are binding upon the Body Corporate for the purposes of determining those consequential orders.

(6)    In any event, by the time of the review hearing it was not in dispute that Ms Samsakopoulos had made a further payment of $933.26 in late December 2018 and therefore the debt claimed in the affidavit of Mr Collie (being the debt the subject of the bankruptcy notice) had been reduced to below the statutory minimum.

(7)    On the review application, the primary judge also rejected the evidence of Mr Collie in the form of the running account.

(8)    The rejection of that evidence also formed part of the factual findings made in dismissing the petition.

(9)    As was accepted by the Body Corporate on the interim application, the evidence of the Body Corporate as to the amount due by Ms Samsakopoulos was confused and 'not greatly helpful'.

(10)    Most of the amounts claimed to be due were for legal fees. The legal fees claimed included an amount of $5,487.70 charged to draft and file the creditor's petition which could hardly be an amount that Ms Samsakopoulos could be said to be liable to pay when the creditor's petition was dismissed. There was no attempt before the primary judge or on appeal to justify the legal fees or the basis upon which they were charged to Ms Samsakopoulos. Even if there was a right to claim them it may be that they were not due unless and until the Body Corporate had informed Ms Samsakopoulos of her right to present the relevant accounts for taxation if she was to be the person liable to pay the amounts. Also, it appears that orders were made by the Magistrates Court in entering judgment on the claim by the Body Corporate that included a determination of the costs to which the Body Corporate was entitled. It may be that the making of that order addressed costs the subject of the running account. The Court simply does not know the position because, even though Ms Samsakopoulos claimed there was no basis to claim legal fees, there was no attempt by the Body Corporate at any point in time to demonstrate the basis upon which the amounts in the running sheet might be claimed to be due and payable.

(11)    Proceeding with the creditor's petition when the amount claimed (and deposed by affidavit to be the debt relied upon for the petition) was only $1.76 over the statutory minimum for bankruptcy proceedings and where a payment was received from Ms Samsakopoulos after she had been informed by a registrar of the statutory minimum was redolent of sharp practice.

(12)    There was no evidence pointed to by the Body Corporate other than its claim to the outstanding amount that suggested a basis for any belief that Ms Samsakopoulos was insolvent.

(13)    By the time of the hearing of the creditor's petition on the review application, the Body Corporate knew from the terms of the report to creditors that Ms Samsakopoulos was solvent on a balance sheet basis because there was a substantial excess in her assets over her liabilities, but chose to pursue the creditor's petition.

278    In circumstances where the debt relied upon was only barely above the statutory minimum and it was not demonstrated that there were other reasons to suspect insolvency, there was always the prospect that a miscalculation or error in recording a payment would mean that the creditor was not entitled to present the petition. In substance, that is what occurred. The sharp practice of the Body Corporate was exposed by the decision on the review application. In a different case where a solvent debtor did nothing until the review application, there may be reasons to adopt a different course. Even so, the fact that it is the creditor who has initiated proceedings in which ultimately the creditor has been unsuccessful will be a significant factor which supports the making of a consequential order requiring the creditor to bear the costs of the intervening bankruptcy administration. Usually there will need to be some affirmative basis upon which the debtor may be said to have been substantially at fault for the events that have happened before it will be appropriate to make a consequential order that attributed some or all liability for the costs of the administration to the debtor.

279    The Trustee did not point to any evidence to the effect that Ms Samsakopoulos had been unreasonable in her dealings with the Trustee or that she had received a particular lasting benefit that should be brought to account in making orders consequential upon the dismissal of the creditor's petition in the circumstances which have occurred.

280    In the circumstances of the present case, the appropriate order is for the Body Corporate to bear the reasonable costs of the administration.

281    After the decision was made to dismiss the creditor's petition, there was no basis upon which the Trustee could continue the administration. The Trustee sought no consequential order as to provision for remuneration, costs and expenses or for re-vesting assets. In circumstances where the Trustee has, without authority, retained control of the assets of Ms Samsakopoulos for some 23 months since the dismissal of the creditor's petition, there is no reasonable basis upon which such an order may now be considered. In a different case, it may be appropriate for a trustee, in circumstances where a sequestration order is made by a registrar and then overturned on review to seek and obtain orders that would allow for an orderly return of property and for provision to be made for the costs of doing so to be met by the creditor or the debtor or in proportions as between them. However, in the present case, principally by reason of the conduct of the Trustee, no such order should be made. The result is that after the dismissal of the creditor's petition the Trustee had no authority to continue with the administration. The sequestration order of the registrar was overtaken by the order dismissing the petition. Thereafter, the lawfulness of the Trustee's possession of the property of Ms Samsakopoulos came to an end and the Trustee was obliged to immediately return that property.

282    For the Body Corporate, it was submitted that remuneration, costs and expenses should be limited to those which the Trustee had reported as having been incurred up until the commencement of the review application. However, unless and until there was an order made bringing the administration pursuant to the registrar's order to an end, the Trustee was obliged to continue with the administration. As has been noted, the Trustee was obliged to act with due care once the review application was underway but that is not to say that it was inappropriate for the trustee to incur any costs thereafter.

283    On the evidence the Trustee's own estimate of the likely reasonable remuneration for the administration was $30,000 plus GST. That estimate was provided in the report to creditors at a time when the Trustee was aware of the likely extent of what was involved in the administration. There is no suggestion in the evidence that thereafter the Trustee became aware of some new or different matter concerning the nature or extent of the creditors and property to be administered. On the evidence, the nature of the administration did not change in any material respect.

284    Therefore, it is appropriate to make an order for reasonable remuneration, costs and expenses to be paid by the Body Corporate to the trustee for administration of estate up to and including 17 July 2019 with remuneration to be capped at the amount of $30,000 plus GST.

Issue (8): In the circumstances which have occurred should there any further order on the appeal? In particular, should there be orders dealing with the vesting of property in Ms Samsakopoulos and the delay that has occurred by the Trustee in delivering the property to Ms Samsakopoulos?

285    In the events which have occurred, in order to ensure the unqualified return to Ms Samsakopoulos of her property, there should be consequential orders under s 104(3) to that effect. In cases such as the present case, it is to be expected that the Trustee will seek such consequential orders as may be necessary to effect the return of property and, to the extent necessary and appropriate, to validate or authorise the acts of the Trustee in conducting and completing the administration. The Trustee has not followed that course in the present case. Therefore, Ms Samsakopoulos has been held out of her property for a very considerable period.

286    In those circumstances, it is appropriate for this Court to consider the making of orders that will redress Ms Samsakopoulos for her loss and damage in not having access to her property since the dismissal of the creditor's petition. There are perhaps three sources of power for the making of such orders. First, this Court on appeal can make consequential orders of a kind that might have been made by the primary judge under s 104(3). As the primary judge was of the view that there was no power to make any orders, the form of those orders was not considered. In those circumstances, it appears to be open to this Court to make such orders by reference to the circumstances as they now pertain.

287    Second, the Court has power upon the reversal or setting aside of a judgment on appeal to order restitution.

288    Third, the Trustee was appointed and acted as an officer of the Court whose conduct may be supervised by the Court.

289    The issue of the return to Ms Samsakopoulos of her property was one that arose in the course of oral argument and is one on which the Trustee has since reported briefly and informally to the Court. It is an issue upon which Ms Samsakopoulos may wish to be heard. In those circumstances, it is appropriate for orders to be made which would afford the Trustee and Ms Samsakopoulos a further opportunity to provide affidavit evidence and submissions as to whether further orders should be made concerning the loss and damage to Ms Samsakopoulos.

290    The effect of the decision by the primary judge was to determine that Ms Samsakopoulos was not to be made bankrupt. For reasons that have been given, the order on review to the effect that the creditor's petition be dismissed overtakes the order made by the registrar in the exercise of delegated judicial power. From that point in time there is no operative judicial order sequestrating the estate of Ms Samsakopoulos. The historical fact of the registrar's order (and its past legal effect as a valid exercise of judicial power up until the order on review) are matters that are unaffected by the dismissal of the creditor's petition on review. However, going forward there is no longer any legal foundation for Ms Samsakopoulos being considered to have the status of a former bankrupt. The order that may have conferred that status is overtaken. The ongoing delegated authority in respect of that order has been brought to an end. In those circumstances, it was appropriate to make consequential orders to ensure that Ms Samsakopoulos, from the time of the review, does not have the status of a former bankrupt.

291    As to the appropriate terms of consequential orders, s 315(2) of the Bankruptcy Act provides that regulations made under the Act may 'provide for the establishment, maintenance, correction and inspection of the National Personal Insolvency Index' and 'specify matters that must be, or may be, entered in the Index'. The Index has been established by the Bankruptcy Regulations 2021 (Cth). Those regulations do not deal, in terms, with a case like the present case where a sequestration order is made in the exercise of delegated judicial power but the creditor's petition is dismissed on review. However, they do allow a person who is a debtor or bankrupt to apply to the Official Receiver for information about the person in the Index 'to be corrected on the ground that it is inaccurate or misleading': reg 80. Therefore, it appears that correction of the Index may be obtained by application. It is sufficient for present purposes to make clear by way of consequential declaratory order that the effect of the dismissal of the creditor's petition on review is that Ms Samsakopoulos does not have the status of a former bankrupt. The existence of that order may found an application to the Official Receiver.

Issue (1): Leave to appeal

292    Leave to appeal will only be granted where an applicant can demonstrate that the orders in question are attended by sufficient doubt that reconsideration on appeal is warranted and that substantial injustice would result if the orders were left uncorrected: Décor Corp Pty Ltd v Dart Industries Inc (1993) 33 FCR 397 at 398. For reasons that have been given the orders are attended with sufficient doubt. As has been noted, the appeal raises matters of importance as a matter of bankruptcy law and more generally as to the nature of the exercise of delegated judicial power. The determination of the issues raised are a matter of importance to the Trustee and other trustees in the administration of bankrupt estates pursuant to sequestration orders made in the exercise of delegated judicial power where there is a review by a judge. The decision by the primary judge would deprive the appellant of any remuneration in the administration carried out pursuant to a valid order of the Court. There is sufficient injustice to the Trustee when considered with the importance of the issues raised to justify leave to appeal. There should be an order for leave to appeal.

Costs

293    As to the costs of the appeal, the Body Corporate has failed on the contentions that it raised and there is no reason why it should have a costs order made in its favour. The Trustee has had a measure of success but that occurs in a circumstance where it is evident that the Trustee has failed to give effect to the order dismissing the creditor's petition and return to Ms Samsakopoulos her property for a considerable period. Irrespective of any explanation that might be advanced, the fact that Ms Samsakopoulos has not had access to her property for 23 months despite the creditor's petition being dismissed is a reason, of itself, why no costs order should be made in favour of the Trustee. In all the circumstances, the appropriate order is that the Trustee and the Body Corporate should each bear their own costs of the appeal and there be no order as to the costs of the application before the primary judge.

294    It is also appropriate that the Body Corporate not be entitled by indirect means to cause Ms Samsakopoulos to have to bear any of the costs associated with the steps taken in respect of the creditor's petition. An order of that kind should be made to protect the integrity of the Court's orders as to costs to ensure that they are not undermined by steps being taken to recover some part of those costs from Ms Samsakopoulos by way of body corporate fees or other indirect means.

Orders

295    For the reasons that have been given, there should be leave to appeal and the appeal should be allowed. There should be orders made under s 104(3) consequential upon the dismissal of the creditor's petition filed on 30 July 2018. Those orders should be in the following terms:

(a)    the Body Corporate do pay the reasonable remuneration of Mr William Roland Robson in administering the estate of Ms Victoria Samsakopoulos pursuant to the orders made by a registrar of the Federal Circuit Court exercising delegated judicial power (Administration) which orders ceased to have effect on 17 July 2019, such remuneration to be capped in the amount of $30,000 plus GST;

(b)    the Body Corporate do pay the costs and expenses reasonably and properly incurred by Mr Robson in the Administration prior to 17 July 2019;

(c)    there be no order as to the remuneration, costs and expenses incurred by Mr Robson in respect of the Administration on or after 17 July 2019;

(d)    all acts done prior to 17 July 2019 by Mr Robson when acting as trustee pursuant to the sequestration order made on 1 November 2018 or any person acting under the authority of Mr Robson when acting pursuant to the order are taken to have been validly done;

(e)    to the extent necessary and to the extent possible without further order, all property that vested in Mr Robson when acting as trustee pursuant to the sequestration order made on 1 November 2018 that has not been returned to Ms Samsakopoulos shall vest immediately in Ms Samsakopoulos;

(f)    there be liberty to Mr Robson to apply for such further orders as may be reasonably necessary to ensure that all property that vested in Mr Robson when acting as trustee pursuant to the sequestration order made on 1 November 2018 is vested in Ms Samsakopoulos and as soon as reasonably possible Mr Robson do apply pursuant to such liberty for such orders as may be reasonably necessary to vest the property in Ms Samsakopoulos;

(g)    Mr Robson shall do all things as may be reasonably necessary to give effect to order (e) and any orders made pursuant to order (f);

(h)    the Body Corporate shall not by any means seek to recover any contribution from Ms Samsakopoulos in respect of any amount that the petitioning creditor is liable or becomes liable to pay pursuant to these orders;

(i)    it is declared that Ms Samsakopoulos does not have the status of a former bankrupt;

(j)    there be no orders as to the costs of the application filed on 11 December 2019; and

(k)    there be liberty to apply for any further consequential orders.

296    As to the costs of the appeal, there should be no order as to costs.

297    As to whether there should be further consequential orders by reason of the delay in the return to Ms Samsakopoulos of her property, there should be orders requiring the Trustee to file and serve an affidavit providing any explanation as to why the Trustee failed to promptly give effect to the order dismissing the creditor's petition and to show cause by affidavit and any submissions as to any reason why the Court should not appoint a registrar as a referee to inquire into the extent to which the failure by Mr Robson to promptly give effect to the order has caused loss or damage to Ms Samsakopoulos for the purpose of the Court formulating such further consequential orders pursuant to s 104(3) of the Federal Circuit Court of Australia Act as may be appropriate in the circumstances which have occurred. There should be provision for Ms Samsakopoulos to make submissions in response to any submissions filed by the Trustee.

Associate:

Dated:    12 August 2021

REASONS FOR JUDGMENT

ANASTASSIOU J:

298    I have had the advantage of reading the draft reasons of the Chief Justice and Colvin J. There is only one issue about which the Chief Justice and Colvin J disagree. As the Chief Justice has said: “The disagreement may only be a different way of expressing the same or very similar ideas and conceptions about the nature of the exercise of judicial power in the sui generis process of the one application being dealt with first by a registrar and later by a judge in the one exercise of judicial power by the Court.” Be that as it may, on this single point of difference, I respectfully agree with the reasons given by Colvin J. In all other respects I agree with the reasons given by the Chief Justice and with the orders proposed by Colvin J.

299    Having regard to the thorough and careful analysis of the Chief Justice and of Colvin J, it would be otiose for me to endeavour to summarise those aspects of Colvin J’s reasons which have compelled me to agree with his Honour’s reasons. Further, any explanation of my reasons for respectfully preferring the reasons of Colvin J could provide fodder for unintended points of distinction between any reasons I might otherwise have expressed in relation to the one point of contention. For these reasons, it is unnecessary for me to say anything further, other than to gratefully adopt the reasons given by Colvin J and to agree with the orders his Honour proposes.

Associate:    

Dated:    12 August 2021