Official Trustee has no standing to set aside binding financial agreement

Official Trustee has no standing to set aside binding financial agreement

Official Trustee in Bankruptcy & Galanis and Anor

The construction of definition (eab)

59. As we have identified earlier, the appellant submits that the Official Trustee in Bankruptcy is a “government body acting in the interest of a creditor” within the meaning of s 4A(1)(b)(iii) of the Family Law Act, thus engaging definition (eab) of “matrimonial cause”.
60. A government body is defined by s 4A(2) as the Commonwealth, a State or a Territory or an official or authority of the Commonwealth, a State or a Territory.
61. The Official Trustee submits that it is an official of the Commonwealth because the office is created by Commonwealth legislation, and that the purpose of the office is to recover the bankrupt’s property for distribution to its creditors.
62. The Official Trustee is a body corporate (s 18(1) Bankruptcy Act). When appointed, the trustee of a bankrupt estate has the same rights, powers and obligations arising from that appointment as registered trustees, who are individuals. Either may be appointed as a trustee, and creditors may replace one with the other (ss 157, 159 and 160 Bankruptcy Act).
63. Each fulfils the role of a statutory trustee. Given that, and the designation of the Official Trustee as a body corporate, it is difficult to describe the Official Trustee as an official or body of the Commonwealth. Further, it would be an extremely odd outcome if the substantive rights of the parties depended upon whether the trustee of an estate was a registered trustee or the Official Trustee, particularly when one may replace the other.
64. A contrast may be drawn between the Australian Securities and Investments Commission (“ASIC”) and the Official Trustee. ASIC is a Commonwealth entity for the purposes of the Public Governance, Performance and Accountability Act 2013 (Cth) (see s 9 Australian Securities and Investments Commission Act 2001 (Cth) (“the ASIC Act”)). Section 18AA of the Bankruptcy Act provides that the Official Trustee is not a Commonwealth entity.
65. Any liabilities of ASIC are liabilities of the Commonwealth (s 8 ASIC Act). On the other hand, the Official Trustee is personally liable for acts done or omitted to be done as a trustee. The Commonwealth is obliged to indemnify the Official Trustee against that liability (s 18A Bankruptcy Act).
66. These differences are sufficient to indicate that ASIC may well be a government authority, but that the Official Trustee and the Commonwealth are quite distinct entities.
67. We are satisfied that the Official Trustee is not an official of the Commonwealth and this aspect of the appeal does not succeed.
68. It follows that the appeal will be dismissed.

COSTS

69. The Official Trustee properly accepted that, in the circumstances of this matter, if the appeal was unsuccessful it should pay the wife’s costs. That is an appropriate order.
70. The wife sought an order that those costs be paid on an indemnity basis. In doing so she relied upon a letter dated 11 November 2013 in which she asked:
    (a) Is the application brought pursuant to the

    Bankruptcy Act 1966

    , or the

    Family Law Act 1975

    , or both? On which provisions (of either Act) do you rely?
71. The reply to that letter did not answer those questions.
72. Indemnity costs are awarded only in exceptional cases: see Kohan and Kohan (1993) FLC 92-340 at 79,614; cited with approval in Limousin & Limousin (Costs) [2007] FamCA 1178; (2007) 38 Fam LR 478 at 485 and D & D (Costs) (No. 2) (2010) FLC 93-435 at 84,767. This is not such a case. Whilst the failure to answer the wife’s letter was regrettable, it does not justify an order for indemnity costs.
73. There will be an order that the appellant pay the first respondent’s costs, to be assessed on a party and party basis if they cannot be agreed.