Beckham v Drake

ced by him before he became a bankrupt in respect of: (a) any personal injury or wrong done to the bankrupt, his spouse or a member of his family; or (b) the death of his spouse or of a member of his family.' 'Action' for the purposes of s 60 is defined by subsection (5) as meaning: 'any civil proceeding, whether at law or in equity.' An appeal is an 'action' within the meaning of subsection (5) and therefore for the purposes of subsection (2): Cummings v Claremont Petroleum NL (1996) 185 CLR 124 per Brennan CJ, Gaudron and McHugh JJ at 130; and Dawson and Toohey JJ at 142. Mr Bryant may continue in his own name the appeal brought by him from the judgment of Sackville J if the appeal is in respect of a personal injury or wrong done to him, his spouse or a member of his family. If the appeal cannot be so described then he cannot continue the action; the right to do so being vested in his trustee who on the facts is deemed to have abandoned the appeal. In Faulkner v Bluett (1981) 52 FLR 115 I reviewed the authorities concerning the construction of subsection (4) of s 60 of the Act at 119-121, so there is no necessity to recite here what I said there, except the following passages. At 119 I said: 'The common thread running through these cases [exceptions to the rule that rights of actions generally pass to the trustee of a bankrupt's estate] is that where the primary and substantial right of action is direct pecuniary loss to the property or estate of the bankrupt, the right to sue passes to the trustee notwithstanding that it may have produced personal inconvenience to the bankrupt: Wetherell v Julius(1850) 10 CB 267, 138 ER 108; Wage on Bankruptcy (1904 ed.), p. 201. Where the essential cause of action is the personal injury done to the person or feelings of the bankrupt the right to sue remains with the bankrupt. As Erle J. said in an oft-cited passage in Beckham v Drake (1849) 2 HLC 579, at 604, 9 ER 1213, at 1222 : "The right of action does not pass where the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind, or character, and without immediate reference to his rights or property". There is still some doubt whether a right of action passes to the trustee where one and the same cause of action results in substantial damage to the property of the bankrupt as well as substantial injury to his person or annoyance to his feelings: Beckham v Drake; Hodgson v Sidney (1866) LR 1 Ex 313; Morgan v Steble (1872) LR 7 QB 611. In England the accepted view seems to be that such a cause of action passes to the trustee so far as it relates to the property of the bankrupt, and remains with the bankrupt so far as it relates to his person or feelings: Wilson v United Counties Bank Ltd [1920] AC 102. Some of the problems that arise from this notion of a "mixed action" appear from cases such as Wilson v United Counties Bank Ltd. and Beckham v Drake.' At 120 I referred to the well known passage from the judgment of Dixon J in Cox v Journeaux (No 2) (1935) 52 CLR 713. At 721 his Honour said: '... The plaintiff says that he himself is entitled to prosecute it under the proviso as an action for personal injury or wrong done to himself. The test appears to be whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property (Wilson v United Counties Bank Ltd.' These are cases which concern mixed causes of action in the sense of causes of action that vest in the trustee and others that do not. The cases include the following. In Millane v Shire of Heidelberg [1936] VR 8 the plaintiff alleged that the defendant trespassed upon the land and unlawfully removed materials. The plaintiff claimed damages not only for the loss of the materials, but also for the defendant's allegedly high-handed and arbitrary behaviour. The Full Court of the Victorian Supreme Court (Mann CJ, Gavan Duffy and Martin JJ) held that the plaintiff was entitled to prosecute the action so far as it related to the defendant's behaviour. In Bullock v Goodluck (1983) 48 ALR 217 the Supreme Court of Tasmania (Cox J) held that the proceedings may be severed where the causes of action were for negligence and also misfeasance of public office. The same approach was taken by the Supreme Court of Queensland (Shepherdson J) in Holmes v Goodyear Tyre & Rubber Co (Aust) Limited (1984) 55 ALR 594 where damages were claimed for passing off and for defamation. In Bullock the plaintiff claimed damages for alleged refusal to submit the plaintiff's applications to the Transport Commission of Tasmania for its consideration concerning certain variations to the plaintiff's motor vehicle cart licences. In the alternative, the plaintiff claimed damages for negligence and/or misfeasance of public office. Cox J held at 224 that the case was capable of severance into the claim for damages for personal injury or wrong which the plaintiff was entitled to prosecute; but otherwise the claim which related solely to the pecuniary loss to his estate vested in the trustee. In Holmes the bankrupt plaintiff claimed damage caused to his business by alleged defamation and passing off. Those causes of action were held to have passed to the trustees on the plaintiff's bankruptcy. But the plaintiff was held to be entitled to continue in his own name that part of the action in which he claimed damages for injury to his reputation, credit and character. See also Muir Hunter, Williams Law and Practice in Bankruptcy, 18th ed, 1968, 268-9, 319-322. In other cases courts have declined to sever the proceeding. In Re Dosanjh; Ex parte Duus (1995) 56 FCR 521 Kiefel J considered the question of mixed claims concerning both property and person in the context of an application by the trustee of the bankrupt for a declaration that money received by the bankrupt from the settlement of a claim for personal injury arising from a motor vehicle accident was property divisible amongst the bankrupt's creditors. Her Honour reviewed the authorities dealing with mixed claims; and held that the loss referable to hospitalization of the bankrupt for accident-related injury was a consequential loss flowing from a cause of action for injury to the person of the bankrupt; and that the amount received by the bankrupt was not property divisible amongst the bankrupt's creditors. In Daemar v The Industrial Commission of New South Wales (No 1) (1988) 12 NSWLR 45 the bankrupt sought prerogative writs against the Industrial Commission of New South Wales and claimed that he had suffered a personal wrong as a result of certain of the Commission judgments. Kirby P, with whom Samuels and Clarke JJA agreed, held that a 'wrong' of this kind did not attract exemption from the operation of s 60(2) of the Act. His Honour said at 56, after referring to the judgment of Dixon J in Cox v Journeaux: 'The exemption is limited to those cases where it has been considered appropriate to sever the personal interests of the person subsequently made bankrupt from his property, and to reserve to him the prosecution of and benefits derived from such litigation as not being legitimately entitlements of the creditors. In the present case the so-called "wrong" of which the claimant complains is the very source of the financial problems which have led to his bankruptcy. It is therefore to be classified not as a "wrong" which is exempted from the operation of s 60(2) and the statutory stay provided for but as of the very essence of the subject matter to which s 60(2) is addressed.' In Mannigel v Hewlett Phelps, New South Wales Court of Appeal, 12 June 1991, unreported, Handley JA, with whose reasons for judgment Kirby P and Meagher JA agreed, said at 4 and 5 that the plaintiffs' claim for damages for loss of credit, for mental distress, inconvenience and for injury to their physical and mental health were not claims 'without reference to their rights of property' within the principle stated by Dixon J in Cox v Journeaux. His Honour held that the claims were consequential to the plaintiff's financial and property interest as a result of alleged breaches of professional duty by their solicitors. Both plaintiffs became bankrupt. His Honour held that the plaintiffs sued on indivisible causes of action in tort and contract and that those causes of action formed part of their property which vested in the official receiver on their bankruptcy. Kirby P, whilst agreeing generally with Handley JA's reasons for judgment, noted that it was an agreed fact before the Court that damages claimed by the plaintiffs in the relevant paragraphs of the statement of claim for loss of their credit and reputation, for inconvenience, mental distress and strain and for injury to their physical and mental health were agreed to be the consequence of the other damages claimed by them essentially for professional negligence and damages for economic loss. His Honour said at 8 that the relevant claims for damages bore at first glance the character of personal wrong, but the agreed fact made it clear when read in the light of the pleadings that these damages related to the causes of action in contract and tort which vested in the official receiver. Hence the case turned on its facts. When an action has been brought by a person who subsequently becomes bankrupt the nature of the action is determined by examining the initiating process and pleadings and any other relevant documents in the case. How does one determine the nature of an appeal? To determine whether an appeal is in respect of a personal injury or wrong done to the bankrupt, his spouse or a member of his family one must look at the action itself which gave rise to the judgment and the subsequent appeal. If, for example, the bankrupt had claimed damages for personal injuries suffered by him in a motor car accident; but a verdict was entered in favour of the defendant and the bankrupt appealed from the judgment, it would be necessary to examine the nature of the action to determine the essential character of the appeal. In the present case the nature of the appeal must be determined, first by examining the proceeding which resulted in the judgment from which the appeal was brought. The proceeding was a motion brought by the Bank against Mr Bryant (a notice of motion dated 6 October 1994) seeking orders that Mr Bryant's application in that matter (G569 of 1994) be dismissed or, alternatively, stayed permanently. It was this motion that was heard by Sackville J and that led to the judgment of 3 March 1995 when his Honour dismissed the initial proceeding by Mr Bryant with costs. Does one determine the nature of the appeal by examining only the motion for dismissal of the initial proceeding (or for permanent stay thereof) or does one go back further and examine the nature of the proceeding itself brought by Mr Bryant which led to the Bank's motion to dismiss or stay it? In my opinion it is necessary to review the initial proceeding instituted by Mr Bryant and thus examine the statement of claim filed by him in the matter; and then turn to the Bank's motion. Sackville J's analysis of the proceeding brought by Mr Bryant in this Court conveniently summarises the allegations made in the statement of claim. That summary is as follows:- (i) At all material times Mr Bryant was the registered proprietor of ten lots of land in various parts of New South Wales, but mostly at Upper Turong, near Sofala (paragraphs 1-11). (ii) By a series of five mortgages, executed between 12 August 1983 and 30 September 1987, Mr Bryant mortgaged his interest in each of the lots, for the purpose of securing the payment of principal, interest and other moneys agreed to be paid by him to the Bank (paragraphs 12-22). (iii) By letters of demand dated 19 September 1991 the Bank alleged defaults under the mortgages that had not occurred in fact (paragraph 26). (iv) On or about 4 October 1991, by a notice pursuant to s.57(2)(b) of the Real Property Act 1900 (NSW), the Bank demanded that Mr Bryant pay within one month an amount of $2,095,660.77 plus costs (paragraph 23). (v) The notice did not comply with the strict requirements of the Real Property Act 1900, alleged a default that had not occurred, and was 'misleading, deceptive and unconscionable and caused the applicant to be [misled] and deceived and to suffer loss and damage' (paragraphs 27, 28). (vi) The notice also did not comply with the strict requirements of 'the relevant sections of the Conveyancing Act 1919' (paragraph 29). (vii) Mr Bryant relied on the formal demands in the letters of demand and notice and organized his affairs in accordance with the demands and notice (paragraph 24). The Bank negligently or maliciously delivered the demands and notice, knowing that Mr Bryant would rely on them as correct and lawful (paragraph 25). (viii) On about 25 February 1992 Colin Gregory Cavanagh swore an affidavit, which was read in proceedings commenced by the Bank in the Supreme Court. In that affidavit he swore falsely that the Bank had served demands and notice in accordance with the strict requirements of the Real Property Act (paragraph 30). The affidavit was misleading, deceptive and unconscionable and caused the applicant to be misled and to suffer loss and damage (paragraphs 31, 32). (ix) The Bank fraudulently intended to mislead, deceive and coerce Mr Bryant into leaving and losing the properties. Further, the Bank fraudulently obtained possession of Mr Bryant's real property and took action to sell the property (paragraphs 33, 35). (x) The Bank owed a fiduciary duty and duty of care to Mr Bryant and acted (in an unspecified way) contrary to its duties (paragraphs 36-39). Sackville J's summary of the relief sought by Mr Bryant in his application falls into the following classes: (i) declarations that the Bank did not have a power of sale pursuant to specified mortgages over ten identified properties (paragraphs 1-11); (ii) declarations that various letters of demand by the Bank, all of which were dated 19 September 1991 and addressed to Mr Bryant, were misleading, invalid and/or void and, in one case, constituted harassment and coercion of Mr Bryant (paragraphs 12-29, 36-37); (iii) declarations that a notice, dated 4 October 1991, served by the Bank purportedly pursuant to s.57(2)(b) of the Real Property Act 1900, was not issued according to law and was bad, misleading, deceptive, unconscionable, fraudulent and invalid, and also constituted harassment and coercion of Mr Bryant (paragraphs 30-32); (iv) declarations that the notice of 4 October 1991 did not comply with the requirements of s.111(2)(b) of the Conveyancing Act 1919 and was bad, misleading, deceptive, unconscionable, fraudulent and invalid and also constituted harassment and coercion of Mr Bryant (paragraphs 33-35); and (v) an order that the Bank be 'punished for its actions' and that it compensate Mr Bryant for loss and damage in respect of loss of businesses, professional reputation, standing, amenities, stress and suffering, as well as exemplary damages (paragraphs 38-39). Sackville J then described the proceedings commenced by the Bank against Mr Bryant in the Common Law Division of the Supreme Court on 4 March 1992, claiming possession of the ten properties previously mentioned. The Bank's claim to possession was based on Mr Bryant's alleged defaults under the five mortgages previously mentioned. The statement of claim in the possession proceedings pleaded that a notice under s 57(2)(b) of the Real Property Act had been sent to Mr Bryant on 4 October 1991; but that no moneys had been received by the Bank in relation to the indebtedness of $2,095,660.77 pursuant to the mortgages. Mr Bryant filed a defence and cross-claim in the possession proceedings. Sackville J described them; but I need not dwell on the details including the detail of Mr Bryant's cross-claim. Separate proceedings were commenced by the Bank against Mr Bryant in the Commercial Division of the Supreme Court claiming moneys based on three guarantees executed by Mr Bryant. The guarantee proceedings were subsequently transferred to the Common Law Division and were heard together with the possession proceedings. These proceedings were heard before Levine J who gave judgment adverse to Mr Bryant on 27 October 1993. It is necessary to refer also to a proceeding commenced by Mr Bryant in this Court before he commenced the proceeding which led to the Bank's motion in that later proceeding which was heard by Sackville J. The first proceeding was instituted in this Court on 11 October 1993 by Mr Bryant against the Bank (G785 of 1993) in which he claimed, inter alia, damages of $20 million for misleading and deceptive conduct under the Trade Practices Act 1974 ('the Trade Practices Act'). He later filed an amended application and an amended statement of claim. The amended application sought orders varying the guarantees given by Mr Bryant to the Bank, injunctions and orders that the Bank pay Mr Bryant for loss or damage in the sum of some $20 million and also unspecified damages in respect of loss of professional business reputation, stress and for suffering exemplary damages. The Bank filed a motion on 20 April 1994 seeking orders dismissing proceeding G785 of 1993 or permanently staying it, relying on the principle of re judicata, or cause of action estoppel: Port of Melbourne Authority v Anshun (1981) 147 CLR 589. Mr Bryant in turn filed a motion to dismiss the Bank's motion. Both motions were heard by Einfeld J. His Honour conveniently summarised the pleadings as containing nine broad allegations, seven of which were said by Einfeld J, despite being phrased as claims within s. 52 of the Trade Practices Act, to be essentially defences to the validity or enforceability of the guarantees and mortgages. Two of the matters were characterized by Einfeld J as cross-claims rather than defences. Einfeld J held that all the matters of defence pleaded by Mr Bryant could have been relied on by him in the Supreme Court proceedings, but he had chosen to pursue them in the Federal Court proceedings. His Honour said that all those matters should have been raised in the Supreme Court proceedings since they related to the guarantees and mortgages which had been the subject of those proceedings. Einfeld J held that judgment for Mr Bryant in the Federal Court proceedings would directly conflict with the judgment of the Supreme Court in the sense that the two judgments would declare inconsistent rights in respect of the same transactions. On 14 July 1994 Einfeld J dismissed Mr Bryant's motion, granted the Bank's motion, and dismissed the proceeding with costs. The judgment of Einfeld J is reported as Bryant v Commonwealth Bank of Australia (1994) 51 FCR 529. An appeal was lodged by Mr Bryant from Einfeld J's decision which was dismissed and an application for special leave to the High Court was refused. On 30 August 1994 Mr Bryant commenced another proceeding against the Bank in this Court challenging the validity of the Bank's s 57(2)(b) notices. The Bank then filed its notice of motion to dismiss or stay this proceeding. It is this motion which was heard by Sackville J. All these matters to which I have referred should be considered to determine the nature of the appeal which the Bank seeks to have dismissed on the ground alleged by it that only the trustee of Mr Bryant's estate is competent to prosecute the appeal and that he is deemed to have abandoned the appeal by the operation of subsection (3) of s 60 of the Act. In the motion before Sackville J the Bank relied on three grounds. First, it said that the issues of fact and law raised by Mr Bryant in this second Federal Court proceedings were determined adversely to him in the proceedings between himself and the Bank in the Supreme Court of New South Wales in October 1993. Accordingly, the doctrine commonly known as issue estoppel (see Blair v Curren(1939) 62 CLR 464) prevented Mr Bryant litigating those issues in proceedings between the same parties. Secondly, the Bank argued that, even if this be incorrect, the issues raised in the statement of claim in the proceeding brought by Mr Bryant should have been litigated in the Supreme Court proceedings. According to the Bank the failure by Mr Bryant to do so was unreasonable and he is prevented from raising those matters in fresh proceedings in this Court on the principles applied in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589. Thirdly, the Bank argued that the matters pleaded in this second Federal Court proceeding brought by Mr Bryant, if they were to be litigated at all, should have been pleaded and pressed in the earlier proceeding in this Court; but which were dismissed on 14 July 1994 by Einfeld J, although not after a final hearing. The failure to plead and pursue those matters was said by the Bank to provide a further ground for dismissing Mr Bryant's proceedings. Sackville J analysed the statement of claim filed by Mr Bryant and summarised the allegations made by him in that document and the relief sought by him. His Honour also analysed the other proceedings upon which reliance was placed by the Bank in support of its motion. His Honour found that Mr Bryant was precluded from alleging in the proceeding brought by him in the original jurisdiction of this Court that the Bank did not have the power of sale pursuant to each of the mortgages specified in the application and statement of claim. His Honour said that it also followed that Mr Bryant was precluded from alleging that the s 57(2)(b) notice was invalid, whether by reason of the failure to comply with the requirements of the Real Property Act 1900 (NSW) or any other reason. Thus, his Honour said, those portions of the application (paragraphs 1-11 and 30-33) and the statement of claim (paragraphs 23 - 25, 27, 28 and presumably 35) making those allegations could not be relied upon by Mr Bryant in the proceedings. His Honour said that a similar process of reasoning applied to the allegations of Mr Bryant in the proceeding that the letters of demand dated 19 September 1991 were invalid, void and misleading or that his alleged default had not occurred (application paragraphs 15-26 and 36-37; statement of claim paragraphs 24 and 26). His Honour said that they raised the issues determined in the proceedings before the Supreme Court (Levine J). Hence, his Honour came to the conclusion that the amended application and statement of claim of Mr Bryant in the proceeding before his Honour constituted an attempt to raise precisely the same issues as formed the groundwork of the Supreme Court's decision (Levine J) of 27 October 1993 which led to the entry of judgment in the Supreme Court in favour of the Bank in the sum of $2,427,329.34. Concerning the Anshun estoppel point his Honour said that Anshun applies to certain of the issues in the case so that Mr Bryant was prevented from raising in the initial proceeding the validity of the letters of demand concerning the two accounts not mentioned in the guarantee proceedings. His Honour said that, if Mr Bryant had wished to challenge the validity or effectiveness of the letters of demand concerning the debts included in the notice, he should have done so when the proceedings were before Levine J. That question was so intertwined with the issues litigated before Levine J that it was unreasonable for Mr Bryant not to have dealt with them in the same proceedings. Sackville J turned to other allegations in the statement of claim (non-compliance with s 111(2) of the Conveyancing Act 1919 (NSW); paragraph 29) and found that they too were governed by the Anshun estoppel and also were misconceived. His Honour turned to allegations in the statement of claim that the Bank owed Mr Bryant a fiduciary duty or duty of care 'as mortgagee of his real property' and that these were breached (paragraphs 36-39 of the statement of claim). His Honour held that it was not open to Mr Bryant to litigate these matters as Einfeld J had already held that the pleaded claims in the earlier set of proceedings before him based on breach of fiduciary and duty of care were not open to Mr Bryant. In the result Sackville J dismissed the proceeding with costs. I agree with Sackville J's description of the amended statement of claim as a 'lengthy and rather discursive document'. It is not easy to disentangle the various causes of action pleaded by Mr Bryant in the application from each other. Nor are the claims for relief easily severable. The causes of action described in the application and the statement of claim essentially concern the following: (a) the construction of the notices issued by the Bank under s 57(2)(b) of the Real Property Act; (b) the validity of such notices; (c) the validity of demands for payment of moneys issued by the Bank against various corporations with which Mr Bryant was associated; (d) the question whether notices issued under the Conveyancing Act were valid. Thus, the principal assertions made in the application and statement of claim centre upon Mr Bryant's alleged rights under the Real Property Act and the Conveyancing Act in resisting the Bank's enforcement of its securities guaranteed by him pursuant to various contracts. Paragraph 39 of the application is the paragraph which concerns me most. It claims: '39.Unspecified damages in respect of, 39.1Loss of businesses, 39.2loss of professional business reputation 39.3Loss of standing in the Community, 39.4loss of amenities of family life, 39.5stress and suffering, 39.6exemplary damages.' These claims for damages are not particularized in the application or the statement of claim. In my opinion when these claims for unspecified damages in paragraph 39 of the application are considered in the context of the application and pleadings as a whole and the absence of particulars with respect to them, the Court is unable to be satisfied that it is possible to sever allegations and claims for damages made by Mr Bryant into those that plainly concern causes of action which relate to the divisible property of the bankrupt and therefore are vested in the trustee of his estate, from claims which answer the description of claims for personal injury or wrong done to Mr Bryant, his spouse or members of his family. The claim for damages in paragraph 39 of the application is in any event, it seems to me, consequential upon the loss or damage which Mr Bryant asserts was sustained by him, and which is referable to the proprietary claims which I have described earlier and which would plainly pass to the trustee upon Mr Bryan's bankruptcy. It follows that the appeal from the judgment of Sackville J was a right that vested in Mr Bryant's trustee in bankruptcy upon Mr Bryant's becoming bankrupt. The letter from the trustee to the Bank dated 1 November 1996, the terms of which were set out earlier, constitutes in my opinion evidence that the trustee did not elect to prosecute the appeal. Accordingly, the trustee is deemed to have abandoned the appeal pursuant to s 60(3). In my opinion the appeal should be dismissed with costs.