Federal Court of Australia

Field (Trustee) v Spencer (No 2) [2026] FCA 801

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to the orders made on 9 April 2025, remuneration in the amount of $57,500 plus GST and disbursements in the amount of $470.51 is approved for payment to the applicant as trustee of the estate of the first respondent

2.    The application is otherwise dismissed.

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

REASONS FOR JUDGMENT

COLVIN J:

1    In January 2019, Mr Doby Darrel Spencer was made bankrupt and Mr Malcolm Field was appointed as the trustee in bankruptcy of his estate. It was not a complex estate to administer. Mr Spencer's only significant assets were his home in Bassendean (a suburb of Perth) and two motor vehicles. His home was mortgaged to a major bank. The petitioner creditor had lodged caveats over the property. There were a handful of other creditors.

2    Two matters would have been obvious from the outset. First, there was significant equity in the home and the equity exceeded the claims of known creditors. Second, the main administrative task was to sell the home and get in the equity. That remained the position throughout the administration. Consequently, at all times, it was evident that creditors would be paid, there would be sufficient surplus to meet the reasonable costs of the administration and there would be a significant amount to be distributed to Mr Spencer.

3    Yet, it was not until 19 September 2024, coming on to six years from the start of the bankruptcy, that Mr Field applied to this Court for orders to facilitate the sale of Mr Spencer's home. The evidence in support of the application as to the reasons for the delay in administration was scant. In reasons for making orders substantially in terms of those sought by Mr Field to enable him to take possession and effect the sale of the home, I observed (Field (Trustee) v Spencer [2025] FCA 122 at [11]-[15]):

It appears that Mr Spencer and one of his daughters have resided in the Bassendean property since 2019 and still do so, although the evidence as to the daughter doing so is quite scant. On the evidence, Mr Spencer 's daughter is an independent adult. There has been no arrangement between Mr Spencer and the trustee concerning his ongoing occupation of the property. It appears that Mr Spencer has continued to make mortgage repayments to the ANZ Bank.

As to the steps taken by Mr Field to secure possession of the property, by letters sent in September and October 2019, Mr Field demanded possession. As to what occurred after that, Mr Field has deposed as follows:

My staff and I have further engaged with the Bankrupt by telephone and in meetings, in 2019, 2020, 2021 and 2022, in which the Bankrupt was advised that he would need to either propose a solution to pay the debts of the Bankrupt estate, or vacate the Property so it could be sold for the benefit of the Bankrupt's estate's creditors.

I have not been able to reach any agreement with Bankrupt and he remains in occupation of the Property.

A further formal notice demanding possession was sent before the present application was filed and served.

Steps have not been taken to call for proofs of debt.

Mr Field's torpid discharge of his duties is unexplained.

4    Given what I considered to be the unexplained delay in the administration of the estate and the extent of the estimated costs that Mr Field had indicated that he would seek to recover from the estate I made orders for Mr Field to show cause by affidavit and submissions as to why orders should not be made to the effect that:

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

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

5    In the result, Mr Field did not oppose the making of those orders. They were made on 9 April 2025.

6    The home has now been sold and proceeds of sale received. Distributions have been made to creditors and a partial distribution of surplus has been made to Mr Spencer. Mr Field now applies for orders to the following effect:

(1)    The Court approves the remuneration of Mr Field in the administration of the estate of Mr Spencer for the period 15 January 2019 to the conclusion of the bankruptcy in the sum of $95,000 plus GST;

(2)    The orders made on 9 April 2025 are vacated;

(3)    The proceedings are dismissed.

Relevant principles as to administration of a bankrupt estate

7    A trustee has a duty to take 'appropriate steps to recover property for the benefit of the estate': s 19(1)(f) of the Bankruptcy Act 1966 (Cth). The trustee also has a duty to exercise the trustee's powers and perform the trustee's functions 'in a commercially sound way': s 19(1)(k). The trustee must also take whatever action is practicable to 'ensure that the bankrupt discharges all of the bankrupt's duties under the Act': s 19(1)(g). The trustee must administer the estate in the interest of the creditors and the bankrupt: Adsett v Berlouis (1992) 37 FCR 201 at 208 (Northrop, Wilcox and Cooper JJ). These duties must be discharged with due dispatch. I use that expression because it is not the case that expedition is required without regard to other concerns. Unnecessary cost is to be avoided and time may be required to reach an appropriately informed view as to the steps to be taken.

8    Unless modified by the Act, a trustee in bankruptcy is subject to the general law relating to trustees: Shaw v Official Trustee in Bankruptcy of the Australian Financial Security Authority (No 3) [2021] FCA 1569 at [27] (Wigney J).

9    As to the property of the bankrupt, there is a statutory obligation for the trustee to forthwith take possession of the property: s 129(1). As to income earned during the bankruptcy, it may be kept by the bankrupt subject to the provisions of the Act concerned with income: Re Gillies; Ex parte Official Receiver in Bankruptcy v Gillies (1993) 42 FCR 571. A bankrupt who derives income during the period of a bankruptcy over a threshold amount (as specified in the Act) may be required to pay contributions towards the bankrupt's estate. The threshold amount depends upon the number of the bankrupt's dependents. If the trustee makes an assessment that the income that a bankrupt is likely to derive during a contribution assessment period exceeds the threshold amount then the bankrupt is liable to make a contribution: s 139P. The contribution to be made is half the income (as defined) that is earned in the assessment period that is above the threshold amount: s 139S. The trustee must make an assessment of (a) the income that is likely to be derived: (b) the threshold amount: and (c) the contribution (if any) that the bankrupt is liable to pay: s 139W(1). The assessment must be made as soon as practicable after the start of each contribution assessment period. Particulars of the assessment must be given by the trustee: s 139W(4). The trustee is not relieved of that obligation by any failure to provide information by the bankrupt, or deficiency in the information provided by the bankrupt, to the trustee. However, notwithstanding the express requirement for the assessment to be made 'as soon as practicable' (see s 139W(1)), the assessment may be made 'at any time', including after the bankrupt has been discharged: s 139WA.

10    To facilitate the trustee determining whether a contribution is required, the bankrupt must provide statements setting out the income derived by the bankrupt and the bankrupt's dependents during each 'contribution assessment period' and the expected income for the forthcoming period; s 139U. The first contribution assessment period is the first year of bankruptcy. There are provisions that facilitate making of an assessment by the trustee in the absence of information being provided by the bankrupt: see ss 139X, 139Y and 139Z. Assessments, when made, can be reviewed by the bankrupt: s 139ZA.

11    Therefore, it is the making of the assessment by the trustee that gives rise to the liability on the part of the bankrupt to make the contribution from income earned during the bankruptcy period. The Trustee must make an assessment. However, in the absence of an assessment, there is no requirement for the bankrupt to make a contribution.

Principles concerning Court approval of trustee remuneration

12    Division 90 of Schedule 2 to the Act (being the Insolvency Practice Schedule (Bankruptcy)) provides for the review of the administration of bankrupt estates. The Division confers various forms of review powers upon the Court, upon the Inspector-General and upon the creditors. Section 90-15 is expressed in very broad terms, namely: 'The Court may make such orders as it thinks fit in relation to the administration of a regulated debtor's estate'. The term 'regulated debtor' includes a bankrupt: see s 5-15. The power so conferred may be exercised by the Court on its own initiative or on application by any of those specified in s 90-20: see s 90-15(2). Section 90-15 provides examples of the kinds of orders that may be made (without limiting s 90-15(1)): see s 90-15(3). They include: 'an order in relation to remuneration' s 90-15(3)(f).

13    In the present case, as I have explained, the supervision of the trustee's remuneration arises on the Court's own initiative.

14    The power 'conferred by [s 90-15] is wide and obviously intended to facilitate the resolution of contentious matters as they arise in the course of the administration of a bankrupt's estate': Lane (Trustee), in the matter of Lee (Bankrupt) v Deputy Commissioner of Taxation [2017] FCA 953 at [19] (Derrington J). The section confers a supervisory role on the Court with respect to the conduct of a bankruptcy trustee in the administration of a bankrupt estate: Moore v Macks [2007] FCA 10 at [28] (Besanko J). Nevertheless, the 'well-established policy under bankruptcy legislation that the court should not unduly interfere with the day-to-day administration of a bankrupt's estate by a trustee' applies to the exercise of power under s 90-15: Shaw v Official Trustee in Bankruptcy (No 3) at [28], see also [10]-[11].

A brief historical detour

15    Before 1996, the remuneration of a trustee fixed by creditors could be reviewed by a Registrar of this Court: Re Clunies-Ross; Ex parte Totterdell (1991) 31 FCR 143 at 151 (French J).

16    The Bankruptcy Legislation Amendment Act 1996 (Cth) removed this power. The explanatory memorandum to that Act stated at [122.4]:

Item 302 also proposes the omission of subsection 162(5) which enables the Registrar to review the remuneration of the trustee. Section 178 of the Act enables a person who is affected by any act, omission or decision of a trustee to appeal to the Court. It is considered that a person who considered that the remuneration taken by a trustee was excessive could make an application under section 178 for an order relating to the remuneration.

17    This suggests it was parliament's intention for the Court's supervisory jurisdiction to remain. While not referring to the explanatory memorandum, Nicholas J indicated that the Court retained this jurisdiction: Maxwell-Smith v Donnelly [2010] FCA 474 at [29]. See also Doolan v Dare [2005] FCAFC 69; (2005) 142 FCR 287 at [21] (Lee, Merkel and Hely JJ).

18    The regime was amended again in 2010 by the Bankruptcy Legislation Amendment Act 2010 (Cth). The amendments made at that time provided for an option for a creditor or the bankrupt to apply to the Inspector-General to review the trustee's remuneration, which was then reviewable by the Court as then provided for by s 167 of the Act. The amendment established a new regime for reviewing the remuneration and costs of the administration of a bankrupt estate. The purpose of these changes was explained in the relevant explanatory memorandum at [34]-[36]:

Item 13 will repeal section 167 which currently provides for taxation of costs of a person other than the trustee who provides services in relation to the administration of an estate. The process for taxing remuneration of a trustee is currently set out in regulations. The amendments made by item 13 will provide for a single process for reviewing remuneration and costs which will replace the current taxation regime for both.

To support the new process, item 13 will also introduce new section 166 which will require the trustee, in relation to the payment for services provided by another person in relation to the administration of an estate, to give such notices to the bankrupt and creditors as are required by the regulations. This is consistent with the current requirements for notices relating to the remuneration of the trustee.

The process for reviewing remuneration and costs will be established in new section 167. However, this section will set out principles and a broad framework with details of the process to be prescribed in regulations…

19    The regime was finally amended in 2015 when the Insolvency Practice Schedule (Bankruptcy) was inserted into the Act (though not coming into force until 1 September 2017). At that time, the provisions in the Act concerning the control of creditors over trustees (s 177) and the bringing of appeals to the Court in respect of trustee's decisions (s 178) were repealed. At the same time, s 90-15 (to which reference has been made) was enacted as part of the Insolvency Practice Schedule (Bankruptcy). Section 167 of the Act was also repealed and a provision for review by the Inspector-General of remuneration was included in the Insolvency Practice Schedule (Bankruptcy). It provided for review on the Inspector-General's own initiative or by the regulated debtor or a creditor: s 90-21(2). Significantly for present purposes, s 90-21(3) also enacted at the time provided for an application to the Court 'for an order in relation to a decision of the Inspector-General in relation to the review'. On any such application the Court was required to have regard to whether the remuneration received by the trustee was reasonable taking into account any or all of the matters listed in s 90-21(4).

20    In considering the relationship between s 90-15 (insofar as it expressly refers to an order in relation to remuneration) and the power now conferred upon the Inspector-General by s 90-21, it is important to distinguish between instances where there is an issue about the reasonableness of the amount of remuneration for a trustee and instances where the continuing supervisory jurisdiction of the Court is to be exercised in a way that may have consequences for the trustee's remuneration.

21    In my view, the express reference in s 90-15 to the example of an order being made 'in relation to remuneration' means that the reasoning in Bertram v Naudi [2026] FCAFC 40; (2026) 315 FCR 238 (concerning the review of a trustee's income contribution assessment) does not apply by analogy. Having regard to the express language in s 90-15, it is not the case that the whole of the responsibility for considering any issue in relation to the remuneration to be paid to a trustee is entrusted to the Inspector-General. Consequently, the Court's supervisory jurisdiction in relation to remuneration remains. It is not necessary to consider whether the Court retains a jurisdiction to review the remuneration of a trustee simply on the basis of reasonableness, as to which see the views expressed by Barrett J in Andersen v Lennon [2017] FCCA 2452 at [12]-[16]. In the present case, the supervision of Mr Field's remuneration is being undertaken by reason of concerns raised by the Court as to manner in which the administration was conducted, particularly the delay and the extent to which the remuneration claimed is consistent with the relatively simple nature of the administration.

22    Separately, I observe that it remains relatively common practice for this Court to approve the remuneration of an external administrator of a company. In that regard, the Insolvency Practice Schedule (Corporations) explicitly provides for the review of an external administrator's remuneration by the Court: s 60-11 (and see the principles to be applied on such applications as explained by Black J in Re Aberdeen All Farm Pty Ltd (in liq) [2020] NSWSC 770 at [33]-[36]).

23    I note that no issue was raised by Mr Field as to these matters. I deal with them only because they concern the Court's jurisdiction.

Evidence from the trustee

24    In support of his remuneration approval application, Mr Field relied upon an affidavit that he deposed in support of his application for orders as to possession of Mr Spencer's home and a short further affidavit which addressed the events that had occurred in relation to the sale and the matters that he relied upon to support the remuneration orders. In his further affidavit, Mr Field deposed to the following matters that are relevant for present purposes:

(1)    the creditors of the estate had approved the amount of remuneration for which he sought approval from the Court;

(2)    Mr Field has not drawn any remuneration since the start of the administration; and

(3)    Mr Field did not claim the costs of providing reports to the Court as to the progress of the administration (as required by orders made on 9 April 2025).

25    Mr Field produced what he described as an 'updated remuneration report'. It was a printout of time recording details with general task codes, the name of the person said to have undertaken the work recorded, an amount to be 'billed' and a 'comment'. The comments were in shorthand form. Some were comprehensible. Some were extremely general. Some were somewhat cryptic. There was no narrative explanation provided by Mr Field on affidavit as to the general course of the administration. There was no coherent account given of the reason for the delay in the administration. There was no attempt to develop an explanation of that kind by way of submissions based upon the notations in the remuneration report.

26    Reliance was also placed upon the affidavits deposed by Mr Field in support of the application for orders for possession and sale of Mr Spencer's home as an explanation for why the property was not sold very quickly. In that regard, the initial affidavit (dated 19 September 2024) deposed to the following matters:

(1)    Mr Field had requested Mr Spencer to vacate the property by letters sent in September and October 2019;

(2)    'My staff and I have further engaged with the Bankrupt by telephone and in meetings, in 2019, 2020, 2021 and 2022, in which the Bankrupt was advised that he would need to either propose a solution to pay the debts of the Bankrupt estate, or vacate the Property so it could be sold for the benefit of the Bankrupt's estate's creditors';

(3)    A solicitor's letter had been sent to Mr Spencer on 26 June 2024 advising that Mr Field would be seeking court orders for vacant possession;

(4)    On 13 August 2024, Mr Field's staff had sent an email regarding the amount required to be paid to fully pay out creditors (it included an estimate for trustee's remuneration of $66,000 incl GST).

27    In a further affidavit (dated 12 November 2024), Mr Field deposed to the following further matters (after the Court raised concerns as to whether there were persons other than Mr Spencer who may reside at the premises who should be given notice of the application for possession):

I am aware of one other person who may be residing at the Property, being one of the first respondent's two daughters. I believe the other daughter does not reside at the Property and, as at February 2020, resided with her mother in Fremantle.

28    In a further affidavit (dated 31 March 2025 and provided after the Court asked Mr Field to show cause why order should not be made requiring his remuneration in the administration to be approved by the Court), Mr Field deposed to the following matters that are of relevance for present purposes:

(1)    In 'about the first two years of the bankruptcy', Mr Spencer's daughter lived with Mr Spencer and he had 'pleaded' with Mr Field to defer realisation until his daughter could finish school; and

(2)    The circumstances concerning Mr Spencer's daughter caused Mr Field to identify Mr Spencer and his daughter as having 'a vulnerability that I ought to take into account in exercising my powers as trustee';

(3)    '…time entries relating to the sale of the Property were prominent in 2019 and 2020, but were less prominent until 2024 when [Mr Field] decided to instruct lawyers to commence the current proceedings. In the meantime, a large part of the time billed has related to income assessment';

(4)    An objection to discharge from bankruptcy was lodged because Mr Spencer 'failed or refused to provide fulsome information about his income' and 'continued to operate a company structure for his business' when he had been told by Mr Field's office that he was prohibited from doing so;

(5)    Mr Field has dealt with hundreds of estates involving bankrupt's homes and has always done his utmost to resolve the claim to the home on an amicable basis;

(6)    Mr Field can recall only three occasions in his work as a trustee when it was necessary to apply for an order for possession; and

(7)    Mr Spencer 'has generally been aggressive and abusive in his manner of communicating' with Mr Field.

29    Mr Field also deposed as follows:

Further, initial economic forecasts were that the SARS-Cov-2 pandemic would cause residential property prices to decline sharply…A significant fall in residential property prices would have reduced the realisable equity in the Property to little or nil. As it turned out, residential property prices ended up increasing substantially during the pandemic.

Since the borders of Western Australia were re-opened, the State has experienced a severe housing crisis with vacancy rates below 1%. While this issue is continuing, as trustee I am conscious that the equity in the Property has grown, with property prices in Perth increasing more markedly since March 2024.

As I have a duty to optimise the dividends payable to creditors of the bankruptcy, believe it is in the interests of creditors to receive a greater dividend based on the Property's equity position.

30    In oral submissions in support of his application for orders approving remuneration in the amount of $95,000 plus GST, Mr Field advanced the following matters in support of a claim that the proposed remuneration was reasonable:

(1)    The intervention of COVID-19, being a reference to the global pandemic associated with that disease that occurred in 2020 and 2021;

(2)    Mr Spencer's eldest daughter residing at the house which led the trustee, in the exercise of his discretion not to immediately exercise his power of sale;

(3)    There was a long standing issue with income reporting by the bankrupt;

(4)    Efforts were made to sell the property; and

(5)    Mr Field had 'already taken something of a haircut'.

31    When pressed as to the evidentiary basis for these submissions, counsel for the trustee referred to the totality of the time entries in the document described by the trustee as the updated remuneration report. There was no attempt to analyse or present any form of summary based on those entries.

The remuneration report

32    There were two versions of the remuneration report before the Court. The first was an exhibit to Mr Field's affidavit of 31 March 2025. The remuneration report was for the period from January 2019 to March 2025. It was divided into 4 parts, namely 'Assets', 'Creditors', 'Investigation' and 'Administration'. There was also a section for disbursements. The total recorded for each of those sections (applying rates and time spent by each staff member and Mr Field as recorded in each section) were as follows:

Assets            $30,518.50

Creditors        $3,857.00

Investigation        $4,875.00

Administration    $10,168.00

Disbursements        $464.78

Total            $49,883.28

33    The second version of the remuneration report contains the same information as the first but also includes entries for 31 March 2025 to January 2026. As to the parts referred to above (and an additional part for 'Dividend') the totals are:

Assets            $58,225.00

Creditors        $13,943.00

Investigation        $5,076.00

Dividend         $2,145.50

Administration    $15,692.50

Disbursements        $470.51

Total            $95,552.51    

34    Accordingly, for the period from the time of the application to this Court until the time of the application to approve remuneration, Mr Field claims over $45,000.

35    It is appropriate to draw a distinction between the period before the application to this Court for an order for possession and the period after that application. From the time that an application was required, the nature of the administration changed. Greater costs were incurred than might otherwise be expected if Mr Spencer had cooperated in the sale of his home. There were some additional costs associated with Mr Field seeking to explain to the Court in his affidavit of 31 March 2025 why the administration had been delayed. For reasons given below, I do not accept that explanation. There were also some additional costs associated with providing reports as to the progress of the administration. After allowing for these amounts, no issue arises as to the approach to the administration after 31 March 2025. After making allowance for those costs, I consider Mr Field to have established a proper basis for a claim to $42,500 plus GST for the period after 31 March 2025.

36    Accordingly, in what follows, I focus on the remuneration for the earlier period. In that regard, as to 'Assets', the remuneration reports show entries for two main categories, 'Sale of Real Property' and 'Income Assessments'. The Assets entries showed that after some initial work in January to March 2019, there were a few calls and emails in July 2019 and then a period of work in September and October 2019 (including discussions with real estate agents). There is a note for 30 October 2019 that says 'discuss MPeriera re extension of time given High School exams for bkpt daughter'. The reference to MPeriera is to a member of Mr Field's staff.

37    There are entries dated 30 December 2019 relating to 'CAP' which I infer is a reference to the first income contribution assessment period for Mr Spencer's bankruptcy. They include 'Send and file ICQ letter'. This appears to be a reference to the sending of an income contribution questionnaire to Mr Spencer.

38    There are entries in February 2020 which indicate communications with Mr Spencer about arranging the 'sale of property' and preparing an email reviewing sale information.

39    There are entries in June 2020 for communications with ANZ as to its position concerning sale of the property. There are also two entries concerning review of tax returns and preparing 'email to Bankrupt re tax returns and request income info'.

40    The next entries concerning income assessments are in December 2020 where there is a reference to 'prepare ICQ ltr'. Then in February 2021 there is an entry: 'discuss M Pereira re deeming income at $120k but get bnk statements too and further assess if appropr'. There is a further entry in early March 2021: 'consider lack of income info with MPereira; deeming required; position with bnk and basis for corro with bank; income tax return vs co represents his personal income - only daughters as shareholders to spread income it appears and no corro to indicate otherwise'. There is also a reference to preparing deemed income assessment and discussion with 'MF' (who I take to be Mr Field).

41    There is an entry in August 2021 that refers to preparing a letter to Mr Spencer 'with final proposal'. That entry is on 6 August. There are subsequent entries on 16 August. There is then nothing more until December 2021 when there is an entry 'prepare ICQ ltr and send'.

42    In 2022, there is a single entry in August: 'Telephone call from Bill Meredith - needing update on sale of proeprty [sic] - send follow up email to MP to return call next week'. I assume the reference to MP is to Ms Pereira who, as has been mentioned, was a member of Mr Field's staff.

43    In January 2023 there is a reference to a letter being sent seeking completion of information relating to income assessment. There is an entry for 8 February 2023: 'dis FRyding re status of market and access to assets, consider further in another 6 mths re whether merits/equity improved sufficient to justify court applicaion [sic]'. Ms Ryding is also a member of Mr Field's staff. Then there are entries for March 2023 which refer to 'Performing income assessment' and 'Performing income assessment for CAP 1'. These are the first entries that appear to relate to undertaking a detailed assessment of a contribution that might be sought from the bankrupt. They occur more than four years after the commencement of the bankruptcy. They are followed by many entries for March and April 2023 that relate to income assessments. There are entries later in the year concerning reviewing income tax returns and financials and bank statements that all relate to 'income assessments'. There are earlier entries referring to 'CAP' and 'ICQ' but they do not indicate any detailed consideration as to the making of an assessment as to an income contribution.

44    It is not until May 2024 that entries appear that relate to any serious effort to arrange the sale of the property. They begin with an entry for 1 May 2024: 'Telephone calls, letter, emails re property appraisals and mortgage balance'. On 7 May 2024 there is an entry 'Emails re property value and mortgage'. There are then references in May 2024 to communications with lawyers concerning 'property' and considering the terms of engagement of lawyers. On 26 June 2024 there is an entry: 'attend email queries from Roe Legal and draft letter to bnkpt and initial attachments'.

45    Then on 23 August 2024 there is an entry: 'discuss Will at Roe Legal re how to move forward with this file…'. A week later there is an entry 'review tax lodgement info and forward to colleague'. The next entries relate to the application made to this Court for an order for possession.

46    There are various entries for arranging insurance and other matters.

47    As to the other parts of the remuneration reports, there are entries for Administration that reflect the fact that the continuation of the administration meant that there were ongoing entries of a similar kind that would not have been incurred if the administration had been undertaken with due dispatch.

The position of Mr Spencer

48    Mr Spencer appeared on his own behalf at the hearing of Mr Field's application. He advanced submissions but did not seek to present evidence. It is fair to say that he disagreed with the basis for the application. He raised broad concerns about the way the administration had been conducted. Aspects of those submissions were directed to complaints about the nature of the bankruptcy process itself and whether there was a basis for any concern as to whether he would pay his debts. They also exposed, to some extent, that there had been efforts by Mr Spencer since the bringing of the application to obtain finance to bring the administration to an end and there had been some communications with the trustee about those matters.

49    Mr Spencer also objected to the fact that a request that he had made to travel overseas to attend a funeral received an unfavourable response from the trustee. From the records before the Court it appears that request was denied by letter from Mr Field dated 16 April 2025. It does not appear that the time recorded in relation to considering that request was considerable.

50    In the circumstances, beyond registering his opposition, I do not regard any of the matters referred to by Mr Spencer as opening up any further basis that might properly bear upon the trustee's application in relation to remuneration. What they did confirm is that there had been additional costs associated with the fact that Mr Field had been required to bring the application to the Court and with attempts by Mr Spencer to seek to reach some form of conclusion that allowed him to keep his home.

The extent to which remuneration claimed by Mr Field should be allowed

51    In my assessment, the following matters bear upon whether there should be an order allowing remuneration of the level sought by Mr Field as trustee.

52    The administration was not complex. The initial approval sought by Mr Field on 19 March 2019 was for his remuneration to be capped at $30,000 plus GST up to the conclusion of the bankruptcy. I infer that at the time that Mr Field sought that approval he considered that remuneration in the amount of $30,000 would be the most that the conduct of the administration was likely to involve.

53    Ultimately, the failure by Mr Spencer to cooperate in arranging a sale of his home meant that there were additional costs in applying to this court to arrange for possession and sale. Even after those orders were obtained it was necessary for the trustee to apply for further orders by way of enforcement. These were additional costs of the administration that were unexpected at the time of Mr Field's initial estimate. To the extent that the failure by Mr Field to cooperate resulted in additional time being spent in arranging the sale of his home, for reasons I have given those additional costs are properly claimed as part of a figure of $42,500 to be allowed as remuneration for the period from 31 March 2025.

54    I do not accept the submission to the effect that efforts were made to sell the property before the bringing of the application for an order for possession (and, implicitly, that part of the costs incurred before 31 March 2025 related to those costs). On the evidence, real efforts to obtain possession did not really commence until shortly before the application to this Court for possession. At best, the remuneration report indicates that there were inquiries from time to time with real estate agents and appraisals were obtained as to value. That is to say, work was done for which remuneration is claimed but the administration was not progressed.

55    Examination of the remuneration report also shows that there were considerable periods of time when little or nothing of substance was done in relation to the administration when it came to realising assets and considering income contributions. In the absence of any narrative explanation from Mr Field, my examination of the remuneration reports leads me to conclude that for a considerable period the administration was in a kind of holding pattern where costs were being incurred but the administration was not being advanced. Further, the delay resulted in extra work because there were repeat inquires of real estate agents and there was, from time to time, consideration of what to do with nothing of substance then being done. There were also reviews as to what should be done from time to time which would not have been required if the administration had been undertaken with due dispatch. I conclude that, as a result, there was duplication.

56    On Mr Field's own account, efforts to sell the property were deferred for more than five years. I do not accept the validity of the explanations he has advanced for that delay. Nor do I accept that those matters might justify the considerable additional costs that are now claimed (over and above original expectations). My reasons for those conclusions follow.

57    On the evidence, any delay to accommodate the High School studies of Mr Spencer's daughter occurred early in the period of administration and did not explain the extent of the delay.

58    As to income contributions, the records show that for the first few years, beyond sending annual questionnaires and from time to time reviewing tax returns and bank account information, little was done in relation to undertaking assessments as to income contributions. After the first year, notice was given of an extension to the bankruptcy based upon an alleged failure by Mr Spencer to provide income information. However, it appears that it was not until a later stage that effort went into considering the making of assessments that required contributions from Mr Spencer. There is no evidence as to what happened ultimately. There is no suggestion that any such assessments were made or that there was a proper basis for making them.

59    The submissions made were to the effect that there had been failures by Mr Spencer to provide the information that he was required to provide. Apart from the evidence as to alleged failure for the first year there is no other evidence. As has been explained, the remuneration records indicate that taxation returns and bank statements were available to Mr Field in subsequent years and that time was spent by Mr Field and his staff considering them. These are not reasons to justify delay in the administration.

60    Nor do I accept the implication that there was justification, in the circumstances, for the trustee to direct substantial efforts towards considering whether there was a basis for making something other than a nil assessment for an income contribution. As I have explained, in respect of each assessment period (being each year of the bankruptcy) the trustee was required to make an assessment of the income contribution (if any) that the bankrupt was liable to pay. The trustee also had a duty to take whatever action was practicable to require Mr Spencer to perform his responsibilities when it came to providing information about his income. However, in undertaking those statutory responsibilities the trustee was also required to act in a commercially sound way and to administer the estate in the interests of creditors and the bankrupt.

61    By 2024, when it appears Mr Field was spending time contemplating whether there was a basis to make an assessment for an income contribution other than a nil assessment, there was no indication that there would be a shortfall in the estate after meeting the claim of creditors and Mr Field's remuneration. It was not the case that Mr Field was required to take steps to consider recovering income from Mr Spencer irrespective of the circumstances. Rather, Mr Field's obligation was to perform his responsibilities in relation to the making of contribution assessments. In circumstances where work was required to be done as part of an administration in order to provide a basis upon which to make an assessment requiring a contribution, the trustee was required to act in accordance with his wider duties in deciding whether to undertake that further work. It was not suggested that there was a clear basis to issue an assessment requiring a contribution. In considering whether to investigate matters concerning Mr Spencer's sources of income the trustee was required to act commercially and in the interests of creditors and the bankrupt. In the present case, undertaking work to determine whether there might be a basis for issuing an assessment that required a contribution by Mr Spencer would serve no purpose. There was sufficient equity to pay creditors and the costs of administration. Any further income collected would simply be distributed back to Mr Spencer (less the associated costs of administration in collecting that income). There was also the potential for Mr Spencer to challenge any assessment with associated costs to the administration.

62    For those reasons, I do not accept that issues with income reporting explain the manner in which the administration was conducted and the time that it took to arrange the sale of Mr Field's home.

63    To the extent that reliance is placed upon the conduct of Mr Spencer in his dealings with Mr Field, beyond the general claim that he was aggressive and abusive, there is no explanation as to what happened and why it contributed to delay in the administration. The Court would not condone aggressive or abusive communications by a bankrupt. There is a duty to cooperate in the conduct of the administration of the bankruptcy. However, given the state of the evidence it is impossible to conclude that there was conduct by Mr Spencer of a kind that might explain the order of the delay by the trustee or the extent of the costs claimed.

64    The vague appeal to the consequences of COVID-19 pandemic is no explanation, particularly in respect of commercial dealings in Western Australia where remoteness and border controls insulated the State. In any event, on Mr Field's own evidence, the concerns as to the effect that COVID-19 may have on house prices were proved incorrect and house prices rose sharply. The suggestion that COVID-19 might explain why steps were not taken until 2025 to arrange the sale of the home should not be accepted. The evidence does not establish that there were commercial uncertainties in Western Australia that might justify the significant deferral of steps to arrange the sale of Mr Spencer's home that actually occurred.

65    The submission to the effect that Mr Field had already taken something of a haircut in seeking remuneration of $95,000 plus GST because the Court had ordered that the reports to be provided as to the progress of the bankruptcy (after the application for an order for possession had been allowed) were to be born by the trustee was a bold one. The basis for the order was the need to supervise the further conduct of the administration to ensure there was no further unnecessary delay in the administration. That was the direct result of Mr Field's own conduct. The same may be said of the further submission that Mr Field would have to bear his own legal costs of the application. The fact that those costs were to be born by the trustee was no basis for suggesting that the trustee had reduced in some way his overall claim to remuneration for the conduct of the administration. Save for a very modest exclusion of a few hundred dollars, the figure of $95,000 reflected the full extent of time recorded.

66    Taking account of the above matters, I am not persuaded that Mr Field's remuneration for the period prior to 31 March 2025 should be approved in the amount claimed. Taking account of Mr Field's own estimate and the matters to which I have referred, I would reduce that amount to $15,000 plus GST. To that figure I would add the amount of $42,500 plus GST to which I have already referred. I would allow the disbursements in full, being $470.51.

Conclusion and orders

67    Accordingly, I approve remuneration in the amount of $57,500 plus GST and disbursements in the amount of $470.51. I see no reason why the orders made on 9 April 2025 should be discharged. The approval is made pursuant to those orders. It is appropriate for an order to be made that the application is otherwise dismissed.

Associate:

Dated:    24 June 2026