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Tuesday, 25 November 1986
Page: 2728

(Question No. 1091)

Senator Brownhill asked the Minister representing the Attorney-General, upon notice, on 28 May 1986:

(1) Has the Attorney-General's Department appointed any officer to supervise trustees appointed to administer the financial affairs of Mr Gordon Anthony Miller, of Henty Street, Culcairn, NSW, in the light of the long standing difficulties between various Federal Government Departments and Mr Miller; if not, will the Department do so.

(2) If the answer to (1) is no, on what grounds is the refusal made.

(3) Has an independent evaluation of the property holdings of Mr Miller determined that the property has substantially decreased in value since administration of the said property was taken over by the trustees appointed under Federal Government legislation.

(4) What compensation is the Department liable to pay, under s.221 of the Bankruptcy Act, under these circumstances.

(5) What steps can someone in Mr Miller's position take to ensure trustees appointed under Federal Government legislation to administer a property are doing their job in the most efficient manner, bearing in mind the extremely desperate financial position Mr Miller has been forced into through actions of the Federal Government.

Senator Gareth Evans —The Attorney-General has supplied the following answer to the honourable senator's question:

(1) There is no power, either in the Bankruptcy Act 1966 (the Act) or elsewhere, enabling the Attorney-General or his Department to appoint an officer to supervise trustees in bankruptcy in the performance of their statutory functions. Control over trustees is vested in courts exercising jurisdiction in bankruptcy. However, in Mr Miller's case, the Inspector-General in Bankruptcy has exercised his statutory discretion under section 12 of the Act to inquire into the conduct of the trustee of Mr Miller's bankrupt estate, The Inspector-General's inquiry did not disclose evidence of any misconduct by the trustee.

(2) Not applicable.

(3) The Inspector-General's inquiries have disclosed that:

(i) Mr Miller's Statement of Affairs, sworn on 17 February 1984 and filed with the Registrar in Bankruptcy on 5 March 1984, estimated the value of the property at Beard Street, Culcairn at $30,000. There is no evidence that this estimate was based on an objective professional valuation. There is also no evidence available of the value of the property at the date of the bankruptcy, viz 20 August 1982.

(ii) on 9 March 1983 the first mortgagee, the Minister for Industrial Development and Decentralisation, (NSW), informed the trustee that because Mr Miller had ceased to use the factory on the property he was arranging for the locks to be changed and for the property to be offered for sale by auction. There is no evidence to suggest that the property deteriorated in value between 20 August 1982 and 9 March 1983.

(iii) between 4 June 1984 and 16 April 1985 three separate real estate agents valued the property at values ranging between $6,000 and $25,000. One agent, who valued the property at a figure not exceeding $20,000, qualified this by saying that ``the building has been constructed with secondary materials and the standard of workmanship is below par.'' On 7 February 1986, a fourth agent reported that the property was in a ``very run down and neglected state'' but did not give an estimate of its value.

It is therefore apparent that the mortgagee, not the trustee, had been in possession of the property since 9 March 1983.

The Inspector-General has received a copy of a letter from the Department of Industrial Development and Decentralisation which states that after an extensive advertising campaign the property was sold on 21 August 1986 by public auction for $5,000. It appears that the proceeds of sale will be insufficient to pay the balance owing under the mortgage. At common law, the mortgagee is entitled to realise its security as and when the mortgagee chooses provided that the power of sale is exercised in good faith.

(4) Sec. 221 of the Bankruptcy Act contains the power which was exercised to make Mr Miller bankrupt. It is a general power enabling the Court to make a sequestration order where a debtor whose affairs are being administered, under Part X of the Act i.e., outside formal bankruptcy, fails to attend a meeting of creditors or to execute a deed of assignment or deed of arrangement and so on. The section makes no reference to the payment of compensation.

There is no provision in the Bankruptcy Act of which I am aware which would impose a liability upon the Commonwealth in respect of any actions or omissions by a registered trustee in bankruptcy.

(5) No actions have been taken by the Federal Government that have affected Mr Miller's financial position. In relation to trustees, Mr Miller may examine whether action under section 178 of the Act, or other action, is open to him. Under sec. 178 of the Act any act, omission or decision of a trustee is subject to review by the Court on the application of the bankrupt, a creditor, or any other person affected by the Act, omission or decision.