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1. Overview
The Bankruptcy Act 1966 as amended (in this section called the Act) is a Commonwealth Act that (inter alia) provides for the appointment of Government officials to the statutory position of Official Trustee in Bankruptcy. The Act also authorises the appointment of suitably qualified persons in private practice as registered trustees to deal with bankrupt estates (Trustees in Bankruptcy).
Every person who, as trustee, assignee, or by any other name is the representative of a bankrupt or insolvent estate is entitled to be registered as proprietor of any land under the Transfer of Land Act 1893 (TLA), in the place of the bankrupt or insolvent proprietor. Under the Act the trustees of a particular estate may be appointed or removed in a variety of circumstances, so the Registrar of Titles has an interest in ensuring that a bankrupt registered proprietor is only displaced by a trustee whose appointment is current.
Although the interest of the bankrupt person is taken from him or her at the instance of bankruptcy, the legal interest in the land does not vest in the trustee until lodgement of the application. Bona fide dealings (dealings not intended to defeat creditors) by a bankrupt proprietor registered before an application (or caveat) by a trustee in bankruptcy is lodged, are valid.
The application is made on an Application Form, describing the land involved, the name of the Trustee, and showing on the operative part of the form the words:
"to be registered as the proprietor of the above land as the Trustee in Bankruptcy/Official Trustee in Bankruptcy (whichever is appropriate) of (name of the registered proprietor) and pursuant to section 234 of the Transfer of Land Act 1893."
A computer register of insolvent or bankrupt persons, and the trustees appointed to administer those estates is maintained by the Commonwealth Government, in the offices named the Insolvency and Trustee Service Australia. The computer register is called the National Personal Insolvency Index (NPII).
The application must be lodged and the trustee registered on the certificate of title before the trustee can dispose of the land. Once registered the land vests into the name of the trustee.
1.1. Execution of the Application
Where the Trustee in Bankruptcy is the Official Trustee in Bankruptcy the Trustee should affix the Official Seal and execution clause and sign, there is no witness required.
Where private or individual Trustee/s are appointed, the Trustee/s will need to sign and have their signature witnessed.
1.2. Effect of Application on the Title1
Upon the registration of the Application, the tenancy will be severed if the land was held as joint tenants, see DOC-05 Tenancy. The Trustee in Bankruptcy will be recorded in the first schedule of the title in said capacity as registered proprietor.
The Trustee in Bankruptcy can then proceed to sell the land as the transferor in a Transfer of Land.
1Section added 27/10/2022
2. Evidence supporting an Application by the Official Trustee or Trustee in Bankruptcy
2.1. Mortgagee Consent
Where the title is encumbered by a Mortgage, the Mortgagee should provide consent for the registration of the Application. Consent should be retained by the subscriber for electronically lodged documents and is not required to be uploaded as an attachment to the lodged document. For paper lodged documents, the mortgagee consent should be provided as supporting evidence to the Application to enable the vesting of the land into the Trustee.
2.2. Statutory declaration
The application must be supported by a statutory declaration by the trustee who identifies:
- the applicant as the trustee
- the land the subject of the application by reference to the full legal land description (Lot on Plan and Volume/Folio)
- state who the current registered proprietor or proprietors of the subject land is (or at least one of them, if more than one) and identify the proprietor as the bankrupt person,
- state at the time of signing the application bankruptcy still existed
- state that the appointment of the trustee is still current and has not been varied or terminated; and
- address are any discrepancies in the name of the bankrupt person as shown on the title to the certificate of appointment as one and the same
2.3. Certificate of Appointment
An application by a Trustee in Bankruptcy must also be supported by an extract of the National Personal Insolvency Index (NPII).
3. Appointment of a Trustee under Part X of the Bankruptcy Act 1966
If the Trustee has been appointed under Part X of the Act, evidence that the proprietor is entered in the National Personal Insolvency Index (NPII) must be filed with the application, together with a statutory declaration that the appointment is still current, and if necessary, identifying the registered proprietor as one and the same person as the bankrupt.
4. Execution of documents by a Trustee
Once registered, the trustee may deal with the property as the registered proprietor and must sign the document as such proprietor using the normal clause. It is not necessary to show in the attestation clause the trustee as (Name) the trustee in bankruptcy of the bankrupt estate of (Name of Bankrupt).
5. Transfer of Assets back to Discharged Bankrupt2
The assets of a Bankrupt person vest into the Trustee. Where the bankrupt person(s) has satisfied/discharged the debt the Trustee should transfer the remaining asset(s) back to the bankrupt person.
This document is subject to the Verification of Identity Practice issued jointly by the Western Australian Registrar of Titles and Commissioner of Titles. Please refer to the VOI webpage.
NOTE: Where the Application severed tenancy, if the parties seek to hold a joint tenancy again then then all persons should be a party to the Transfer. Otherwise, a tenants in common in equal shares will be created.
5.1. Sample
Transfers of this nature may be prepared in the following way:
Estate: fee simple
Transferor: A as Trustee in Bankruptcy for B
Consideration: monetary amount or Deed
Transferee: B of etc.
Or
Estate: fee simple
Transferor: A as Trustee in Bankruptcy for B and
Consideration: monetary amount or Deed AND a desire to be joint tenants
Transferee: B and D of etc as joint tenants.
5.2. Evidence to support the Transfer
The evidence specified in 2.2 above should accompany the Transfer.
2Section updated 29/05/2023
6. Caveats by the Trustee in Bankruptcy
Where the Trustee in Bankruptcy has lodged an absolute caveat to indicate a proprietor was or has been declared Bankrupt, the Trustee must lodge a withdrawal of caveat at the same time as the Application.3
3"Absolute" added 06/09/2023