The new financial year brings with it the introduction of a revised form of consent to act as trustee. Much to the relief of bankruptcy trustees who have previously taken joint appointments two or more trustees can now consent to act jointly or jointly and severally.
This administrative change is a result of the decision of the Federal Court in Condon v Watson [2009] FCA 11 (14 January 2009).
The facts
Condon and Watson are both registered trustees in bankruptcy. Condon employed Watson and during the period of employment, Condon and Watson were appointed as bankruptcy trustees in respect of thirty-three bankrupt estates. Watson subsequently ceased to be employed by Condon and agreed to resign as co-trustee, leaving Condon as sole trustee.
The issues
The form of consent (prior to 1 July 2009) expressly allowed for two or more registered trustees to complete and sign the form; however, it did not ask trustees signing the form to indicate whether they were consenting jointly, or jointly and severally.Although it was clear what Condon and Watson wished to achieve, there were procedural complexities to overcome.
The Court queried whether:
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the Bankruptcy Act 1966 (Cth) in fact permits joint consents;
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it was open to multiple registered trustees to vary the consent form to indicate the nature of their appointment;
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the resignation of one of the registered trustees affected the appointment of the other.
The decision
The Court found that:
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although section 156A of the Bankruptcy Act 1966 does not expressly permit the appointment of two or more registered trustees, the form of consent expressly allows it.
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as the nature of the appointment on the certificates of appointment issued by the Official Receiver were not specified, Condon and Watson were appointed jointly, and not jointly and severally.
The Court relied on Ex parte Griffin; Re Dixon (1826) 2 GL&J 114 which held that two or more trustees in bankruptcy have only a joint and not a separate authority, although particular circumstances may make it proper for one to leave certain tasks to the other without being liable for the other’s default.
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on the basis that multiple trustees are permissible, section 180 of the Bankruptcy Act 1966 allows the Court to accept the resignation of one of them and give a direction pursuant to section 134(4) of the Bankruptcy Act 1966 that from the time of the Court’s acceptance of Watson’s resignation, Condon would be the sole trustee of each estate and would be entitled and obliged to act as such.
Pre 1 July 2009 joint appointments
This case is a reminder to all bankruptcy trustees who have, prior to 1 July 2009, taken joint appointments - all trustees of the bankrupt estate must execute all documents and otherwise act jointly.
The consent form is on the Insolvency & Trustee Service Australia’s website – http://www.itsa.gov.au/.
Katie McCaul, Lawyer
