Henry James Moore v Inspector General in Bankruptcy [1997] FCA 638 (17 July 1997)

FEDERAL COURT OF AUSTRALIA

BANKRUPTCY - Application for registration as a trustee of bankruptcy - professional and academic requirements prescribed in s 155(3A)(i), (ii) and (iii) - whether applicant's different academic and professional qualification constituted equivalence - application dismissed.

Bankruptcy Act 1966 (Cth). s 155

Re Walker; Ex parte Walker (1986) 69 ALR 512

Re Hurt; Ex parte Hurt (1988) 80 ALR 236

Adsett v Berlouis (1992) 37 FCR 201

Re Ladyman (1981) 55 FLR 383

Mannigel v Aitken [1983] FCA 183; (1983) 77 FLR 406

JEREMY JAMES MOORE v INSPECTOR GENERAL IN BANKRUPTCY

Matter No. ST 1 of 1996

O'LOUGHLIN J

ADELAIDE

17 JULY 1997

IN THE FEDERAL COURT OF AUSTRALIA	)
	)
SOUTH AUSTRALIA DISTRICT REGISTRY	) No ST 1 of 1996
	)
GENERAL DIVISION	)

BETWEEN:	JEREMY JAMES MOORE Applicant
AND:	INSPECTOR GENERAL IN BANKRUPTCY Respondent

JUDGE:	O'LOUGHLIN
PLACE:	ADELAIDE
DATED:	17 JULY 1997

MINUTES OF ORDER

THE COURT ORDERS THAT:

The application be dismissed with costs.

Note: Settlement and entry of orders are dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA	)
	)
SOUTH AUSTRALIA DISTRICT REGISTRY	) No ST 1 of 1996
	)
GENERAL DIVISION	)

BETWEEN:	JEREMY JAMES MOORE Applicant
AND:	INSPECTOR GENERAL IN BANKRUPTCY Respondent

JUDGE:	O'LOUGHLIN J
PLACE:	ADELAIDE
DATED:	17 JULY 1997

REASONS FOR JUDGMENT

This is an application to this Court by Jeremy James Moore ("Mr Moore") for registration as a trustee in bankruptcy. It has been opposed by the respondent, the Inspector General in Bankruptcy. It was also opposed by the Official Receiver. The application was made under the provisions of Part VIII of the Bankruptcy Act 1966 (Cth) ("the Act") as in force before the most recent amendments to the Act. At that stage the legislation enabled a natural person to make application to this Court for registration as a trustee: sub-s 155(2). Sub-section 155(3A) then provided:

"155(3A) Subject to this section, where an application is made to the Court under subsection (2) and:

(a) the applicant:

(i) is a member of a prescribed body;

(ii) holds a degree, diploma or certificate from a prescribed university or another prescribed institution in Australia and has passed examinations in such subjects, under whatever name, as the appropriate authority of the university or other institution certifies to the Court to represent a course of study in accountancy of not less than 3 years' duration and in commercial law (including company law) of not less than 2 years' duration; or

(iii) has other qualifications that, in the opinion of the Court, are equivalent to the qualifications mentioned in subparagraph (i) or (ii);

(b) the applicant is not an insolvent under administration;

(c) the applicant resides in Australia; and

(d) the Court, having had regard to the report mentioned in paragraph (3)(c), is satisfied that the applicant is capable of performing the duties of a trustee and is otherwise a fit and proper person to be registered as a trustee;

the Court may, by order, direct that the applicant be registered as a trustee upon the applicant's entering into a bond in the amount prescribed for the purposes of this subsection and in the prescribed manner with such surety or sureties as is or are approved by the Registrar."

Prescribed bodies for the purposes of sub-par 155(3A)(i) were; The Institute of Chartered Accountants in Australia, the Australian Society of Accountants and kindred accounting bodies in the United Kingdom, the United States of America and Canada: see sub-rule 61A(a) and Schedule 2 of the Bankruptcy Rules as then in force. The prescribed universities and institutions were sixteen universities and thirty other institutions specified in Schedule 2 of the Rules: see sub-rule 61A.

The structure of the legislation as it existed at the time of Mr Moore's application was considered by Toohey J in Re Walker; Ex parte Walker (1986) 69 ALR 512. I respectfully agree with his Honour's conclusion that sub-pars (i) and (ii) of par 155(3A)(a) are not cumulative requirements; they are alternatives. In my opinion it will be sufficient if an applicant is either a member of a prescribed body (sub-par (i)) or holds the appropriate academic qualification (sub-par (ii)) or has other qualifications that are in the opinion of the Court equivalent to one or other of the qualifications in sub-pars (i) or (ii).

There is then a second but independent exercise: the applicant must satisfy the cumulative requirements of pars (a), (b), (c) and (d). Not only must the applicant possess at least one of the three qualifications referred to in par (a), he or she must also satisfy the Court on the issues of solvency, residence, capability and suitability.

Mr Moore is a legal practitioner. He completed his Ordinary Degree in Law at the University of Adelaide in 1978 and after serving his articles of clerkship he was admitted to practice as a barrister and solicitor of the Supreme Court of South Australia on 4 February 1980. I am satisfied that Mr Moore is a very competent solicitor with substantial experience in insolvency work. He also enjoys impeccable character and professional references from the witnesses who gave either oral or affidavit evidence in support of his application. In addition, The Law Society of South Australia Inc. sought and obtained leave to be heard on the application. The Law Society informed the Court that Mr Moore was a legal practitioner of good standing within the profession. It also informed the Court that it supported Mr Moore's application for registration subject to him satisfying the Court that he had the ability to fulfil the functions of a trustee and subject to the Court being satisfied that he had also complied with the requirements of the legislation.

But notwithstanding his high qualifications, it is common ground that Mr Moore is not a member of a prescribed body nor does he hold a degree, diploma or certificate ("the appropriate academic qualification") of the type specified in sub-par 155(3A)(a) of the Act.

His application to the Court has been opposed on two fronts. The first issue that must be resolved can be simply stated. Can Mr Moore bring himself within the provisions of sub-par 155(3A)(a)(iii)? Does he have "other qualifications that, in the opinion of the Court, are equivalent to the qualifications mentioned in subparagraph (i) or (ii)?

The second challenge is based upon the first of the requirements of par 155(3A)(d). It is submitted that Mr Moore's academic and practical legal background are not sufficient. It is claimed that he has not satisfied the Court that he is capable of performing the duties of a trustee. (It was not suggested that he was not a fit and proper person to be registered as a trustee).

The concept of equivalence

Mr Clayton QC, counsel for Mr Moore did not suggest that Mr Moore's Law degree amounted to an equivalent appropriate academic qualification of the type referred to in sub-par (ii); but he did submit that Mr Moore's degree, coupled with his practical experience as a solicitor, did meet the test of equivalence set out in sub-par (iii). Indeed, he went so far as to submit that a person without membership of a prescribed body and without an appropriate academic qualification might qualify under sub-par (iii) by virtue of his experience and general knowledge. As Mr Clayton submitted, the ultimate requirement is the ability of the applicant to do the work of a trustee. I cannot agree. It seems to me that the legislature saw fit to place a heavy emphasis on accounting qualifications when it laid out the conditions for registration as a trustee. The only prescribed bodies are accounting bodies and the academic qualifications must include "a course of study in accountancy of not less than 3 years' duration". I think that I am safe in proceeding upon the premise that a law degree does not incorporate studies in accountancy of that duration. In any event, counsel did not suggest the contrary.

Counsel for Mr Moore claimed that the Court was obliged to have regard to Mr Moore's practical experience when considering whether he satisfied the test in sub-par (iii). He relied for his proposition on a passage from the judgment of Toohey J in Re Walker (supra) where his Honour said:

"I am satisfied, by reason of the applicant's evidence on affidavit, and orally, of his experience in connection with companies in liquidation and under receivership, his long experience as a chartered accountant during which he has been concerned with a number of activities relating to insolvent persons and generally from the evidence of his professional activities that Mr Walker is capable of performing the duties of a trustee and that he is otherwise a fit and proper person to be registered as a trustee." (p 514)

I do not consider that that passage can assist. It is obvious that his Honour was in the circumstances of that case, addressing the requirements of par (d). Earlier, he had noted that although the applicant was a member of a prescribed body, namely the Institute of Chartered Accountants in Australia, Mr Walker did not hold the appropriate academic qualification. His Honour's initial concern in Walker's case was to investigate whether the appropriate academic qualification was an additional or merely an alternative requirement. Having decided that it was an alternative, he then noted that Mr Walker was not an insolvent under administration and that he resided in Australia. It was at that stage in his reasons that his Honour then addressed the further issues of capability and suitability.

I do not suggest that an applicant's practical experience carries no weight at all but I am of the firm opinion that it cannot take the place of membership of a body that is "equivalent" to a prescribed body, nor can it be a substitute for an appropriate academic qualification. The ordinary meaning of the word "equivalent" is "equal in value": see the Shorter Oxford English Dictionary and The Macquarie Concise Dictionary. If an applicant, lacking membership of a prescribed body nevertheless is a member of another body that is, in the opinion of the Court "equivalent to" or "of equal value" to a prescribed body, in an appropriate case, that membership might constitute a sufficient compliance with the provisions of par (a). In another case, the applicant may not have an appropriate academic qualification from a university or institution of the type described in sub-par (ii). However, the applicant might be considered for registration if he or she possessed a sufficient tertiary qualification from a body that, in the opinion of the Court, was "equivalent to" or "of equal value" to a prescribed university or a prescribed institution. In such circumstances, however, I do not, consider that there is room to avoid the requirement that there be at least three years study in accountancy. The number of examinations and subjects may be left to the appropriate authority but the legislation is fixed in its requirement that there be "a course of study in accountancy of not less than 3 years' duration...". It is the "qualification", not the course of study, that might be the subject of alteration. Having regard to the structure of para (a) of s 155(3A) I regard the membership of a prescribed body as a "qualification" and the holding of an appropriate academic qualification from a prescribed university or another prescribed institution as the "qualification" to which sub-par 155(3A)(a)(iii) relates. If I am right in the conclusion that I have reached then there is no opportunity for Mr Moore to obtain registration. Neither his law degree nor his practical experience constitutes a course of study in accountancy of not less than 3 years' duration. (In setting out these reasons I have not addressed the further requirement that a successful applicant must also participate in a course of study in commercial law (including company law) of not less than 2 years' duration. I have been prepared to assume, without finding, that Mr Moore's legal studies might have achieved this goal.)

The conclusions that I have thus far reached mean that Mr Moore's application must be dismissed. However, should the matter proceed further, I set out hereunder, in summary form, my views on the respondent's submission that Mr Moore has not satisfied the Court that he is capable of performing the duties of a trustee: par 155 (3A)(d) of the Act.

A trustee in bankruptcy holds a position of great importance. He is an officer of the Court: Re Hurt; Ex parte Hurt (1988) 80 ALR 236 at 240; Adsett v Berlouis (1992) 37 FCR 201 at 208. He must, at all times maintain the high standard of conduct required of trustees: Re Ladyman (1981) 55 FLR 383 at 394-396; Mannigel v Aitken [1983] FCA 183; (1983) 77 FLR 406 at 408-409; and Adsett v Berlouis (supra) at 208-209.

These authorities, together with the report of the Official Receiver, were used by Ms Maharaj, counsel for the respondent, as a springboard for the proposition that as Mr Moore has no practical experience in the operation or running of insolvent estates, he cannot therefore satisfy the Court that he is capable of performing the duties of a trustee. Ms Maharaj expanded upon this submission by claiming that Mr Moore's perceived deficiencies could not be remedied by employing a suitably qualified accountant nor by personally acquiring skills and expertise subsequent to his registration.

The Official Receiver in her report to the Court (see ss 154A and 155) pointed to several matters which she considered were adverse to Mr Moore's application:

* he has had no practical experience in the administration of bankrupt estates and of administrations under Part X of the Bankruptcy Act

* during interview he displayed a "superficial knowledge" of personal insolvency law and practice and his responses to some questions were "laboured"

* he lacked "the depth of knowledge" in personal insolvency that one would expect to find in an aspiring trustee.

In par 6 of her report the Official Receiver concluded with two observations. First, the Official Receiver said, that in her opinion an applicant must have an understanding of the fiduciary character of the position of a trustee in bankruptcy. I agree. But it was not suggested in the report that Mr Moore lacked such an understanding. Secondly, the Official Receiver said that an applicant must have "an in-depth knowledge" of the provisions of the Act. This subjective statement was not defined and although the report claimed that Mr Moore lacked such knowledge, it did not establish this proposition with particularity. The report also omitted such detail as would reasonably be required to make good the proposition that Mr Moore only had a "superficial knowledge" and that some of his responses were "laboured". Furthermore, Mr Moore gave evidence on oath but was not tested under cross-examination. He impressed me when giving that evidence. As I have already said, Mr Moore is a very competent solicitor with substantial experience in insolvency work. He has also practised extensively in the administration of deceased estates which carries with it a substantial degree of work in the accounting field. Were it not for the strong emphasis on accounting qualifications that are to be found in sub-pars (i) and (ii) I would have concluded that notwithstanding his lack of practical exposure to the work of a trustee in bankruptcy, he would have been capable of performing the duties of a trustee.

But, for the reasons I have given, the application must be dismissed with costs.

I certify that this and the 7 preceding pages are a true copy of the Reasons for Judgment of Justice O'Loughlin

Associate:

Dated: 17 July 1997

Counsel for the applicant	:	Mr DE Clayton QC
Solicitor for the applicant	:	Barratt Lindquist
Counsel for the respondent	:	Ms SJ Maharaj
Solicitor for the respondent	:	Australian Government Solicitor
Date of hearing	:	2 April 1997