//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2003] FCA 1352
Federal Court of Australia
1991-06-12
Bennett J
Original judgment source is linked above.
REASONS FOR JUDGMENT 1 The applicant in these proceedings ('Mr Jambrecina') is also currently an applicant for special leave in the High Court. The applicant became a bankrupt on 1 April 2003. The application for special leave was filed on 22 April 2003. The respondent, the Official Trustee in Bankruptcy ('the Official Trustee'), does not wish to continue those proceedings nor assign the cause of action to Mr Jambrecina. Mr Jambrecina applies to this Court under s 178 of the Bankruptcy Act 1966 (Cth) ('the Act') for orders directing the respondent to continue with the proceedings in the High Court or directing the respondent to assign the cause of action to him. Mr Jambrecina appeared in person. Mr Murray appeared for the Official Trustee.
The history of Mr Jambrecina's litigation in the Supreme Court of New South Wales 2 Mr Jambrecina gave extensive details of his litigation, although it was not easy from his evidence to determine the salient features. In summary, it would seem that he commenced proceedings against Pyramid Building Society Limited (in liquidation) ('Pyramid') and Farrow Mortgage Services Pty Ltd ('Farrow'), formerly named Combined Mortgage Services Pty Ltd ('Combined'). 3 Mr Jambrecina's evidence is as follows. In 1987, on advice, Mr Jambrecina consolidated all his debts into one loan from Combined. On 21 September 1988, his solicitor requested the 'discharge' of a certain property in Queanbeyan. In early 1990, his solicitor requested the 'discharge' of another property in Queanbeyan. In each case, Farrow acceded to the request upon payment of money. On 22 June 1990, the 'administrator of Pyramid Building Society (Pyramid) was appointed under control of Farrow'. 4 On 31 July 1990 Farrow transferred Mr Jambrecina's mortgage to Pyramid. Mr Jambrecina alleges that his mortgage was then transferred to another entity before being transferred back to Pyramid. Pyramid (in liquidation) commenced proceedings against Mr Jambrecina in the Common Law Division of the Supreme Court of New South Wales. I do not have the pleadings or all of the evidence in that case but it would seem that the liquidator of Pyramid denied that there was any obligation on the part of Pyramid to grant a partial discharge of its mortgage. It would also seem that payments due to Pyramid from Mr Jambrecina under the loan agreement were not made. 5 There also seems to have been proceedings commenced by Mr Jambrecina in the Common Law Division of the Supreme Court of New South Wales against Pyramid (in liquidation) and Farrow (in liquidation) ([2001] NSWSC 175). Taking the facts from the judgment of Master Harrison in those proceedings, it would seem that Mr Jambrecina complained about the outcome of earlier proceedings whereby consent orders for possession of various properties in Queanbeyan were made. In 1992, Mr Jambrecina was declared bankrupt and the period of bankruptcy expired in September 1995. In 2000, the Official Trustee in Bankruptcy assigned the legal right to the causes of action being considered by Master Harrison to Mr Jambrecina. Master Harrison dismissed the statement of claim with costs. Previously, Master Malpass ([1999] NSWSC 760 and [1999] NSWSC 1234) had ordered the statement of claim and an amended statement of claim before him to be struck out. It appears that the statement of claim before Master Harrison dealt with essentially the same matters that were before Master Malpas. 6 Apparently, following the decision of Master Harrison, Mr Jambrecina repleaded the statement of claim another time, which statement of claim was struck out by Levine J. On the application of Pyramid and Farrow, Levine J also declared Mr Jambrecina a vexatious litigant within the meaning of s 84(2) of the Supreme Court Act 1970 (NSW) ('the Supreme Court Act') (Jambrecina v Pyramid Building Society & Anor; Pyramid Building Society & Anor v Jambrecina [2002] NSWSC 1076). An application for leave to appeal to the Court of Appeal (Meagher and Stein JJA) was dismissed on 18 March 2003. The Court observed: 'We are unable to see any error in the judgment of His Honour Judge Levine'. The application for special leave to the High Court, the subject matter of this application, makes assertions as to the conduct of counsel for the defendants, the two Masters and Levine J. 7 A sequestration order was made against Mr Jambrecina's estate on 1 April 2003 and the respondent is the trustee. The petitioning creditors were Pyramid and Farrow. 8 The evidence was clarified somewhat by Ms Field, an Assistant Official Receiver, who swore an affidavit setting out her understanding of the history, based upon her investigations into the affairs of Mr Jambrecina. That history is as follows: '4. In 1987, the Applicant and his wife owned several properties in Queanbeyan. They refinanced all the debts owing on the properties into one interest only facility with Combined Mortgaged Services Pty Ltd which later became Farrow Mortgage Services Pty Limited ("Farrow") which later assigned the benefit of the mortgage to Pyramid Building Society ("Pyramid"). 5. In 1990, Pyramid went into liquidation and because of default in payments by the Applicant and his wife, action was taken in 1992 by the liquidator of Pyramid to gain possession and sell the properties. These proceedings were commenced in the Supreme Court of New South Wales in proceedings number 10647/92. The Applicant and his wife contested Pyramid's actions. By judgment of 2 March 1993, Pyramid was successful and the properties were sold. 6. On 7 August 1992, the Applicant alleged that there were irregularities in respect of the actions by Pyramid and he commenced an action against Pyramid ("the action against Pyramid"). 7. On 21 August 1992, the Applicant was made bankrupt on a sequestration order on the petition of Westpac Banking Corporation. Mr Barry Taylor, a registered trustee in bankruptcy, was appointed trustee but he resigned as trustee and on 31 August 1994 the Office Trustee was appointed pursuant to s.160 of the Bankruptcy Act … 8. The Official Trustee did not prosecute the action against Pyramid and no election was made under s.60(2) of the Bankruptcy Act. 9. On 8 September 1995, the applicant was discharged from bankruptcy. 10. On 8 March 1999, the Official Trustee assigned to the Applicant the action against Pyramid and Farrow … 11. There were various other proceedings between the Applicant and Pyramid and Farrow in the Supreme Court of New South Wales. 12. In proceedings 20019 of 2002 the Applicant commenced further proceedings against Pyramid and Farrow. On 15 November 2002, the Supreme Court of New South Wales made various orders striking out the Applicant's proceedings. The Court also made declarations that the Applicant was a vexatious litigant under section 84 of the Supreme Court Act 1970; … 13. On 18 March 2003, the Applicant lodged an appeal against the orders made by the Supreme Court which was heard by the New South Wales Court of Appeal, which dismissed the appeal… 14. On 1 April 2003, a sequestration order was made against the estate of the Applicant. 15. On 22 April 2003, the Applicant filed in the Sydney office of the High Court of Australia, an application for special leave to appeal dated 22 April 2003…' 9 Mr Jambrecina filed written submissions in this Court which annexed a statement of claim as filed in the Supreme Court of New South Wales. That statement of claim was, apparently, the one before Master Harrison. The respondent subsequently provided the amended statement of claim the subject of consideration by Levine J, together with the summons for leave to appeal and notice of appeal from that decision. As they were necessary to understand Mr Jambrecina's material and are formal documents and have not been subject to objection or adverse comment from Mr Jambrecina, I admitted them. Mr Jambrecina's submissions refer to the statement of claim he annexed and numerous transcript references of the hearings and evidence in the Supreme Court, as well as contentions of factual inaccuracies in the judgments of Master Malpass and Levine J. Mr Jambrecina also asserts that, despite the 1992 proceedings, neither res judicata nor the principle in Port Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 apply and that the claims are not statute barred. These are matters that were determined adversely to Mr Jambrecina in the judgment of Master Harrison. Levine J considered the limitation point as part of his consideration of the pleading before him and said (at [13]) with respect to the statement of claim: 'It is a hopeless pleading and as far as it can be understood at all, points to an outcome that is hopeless in terms of what the plaintiff might be seeking to achieve'. 10 The statement of claim that was before Levine J and therefore the subject of the High Court application, claims as follows: 'PARTICULARS OF LOSSES AND DAMAGES i. Loss of commercial property known as 220 Crawford street, Queanbeyan. ii. Loss of residential property known as 79 Crawford street, Queanbeyan. iii. Loss of residential property known as 16 Pindari crescent, Queanbeyan. iv. Loss of residential property known as 49 Derima road, Queanbeyan. v. Loss of residential property known as 35 Booth street, Queanbeyan. vi. Loss of residential property known as 5 Yarrow street, Queanbeyan. vii. Loss of residential property known as 11 Yarrow street, Queanbeyan. viii. Loss of residential property known as 86 Atkinson street, Queanbeyan. ix. Loss of business known as Queanbeyan Concrete Pumping. x. Loss of opportunity to complete further development on properties, 35 Booth street, 5 and 11 Yarrow street, 86 Atkinson street and 49 Derima road, Queanbeyan, NSW. xi. Economic and opportunity losses. xii. Plaintiff became bankrupt on 21.08.1992.' The Plaintiff claims compensation for damages, losses, pain, suffering exemplary damages and interest under section 94 of the Supreme Court Act.'
The Trustee's election under section 60(2) of the Act 11 The respondent wrote to Mr Jambrecina on 6 June 2003 with respect to his election to prosecute or discontinue the High Court action pursuant to s 60(2) of the Act. In that letter, which apparently followed a discussion between the writer and Mr Jambrecina, it was noted that Mr Jambrecina had stated that he did not have access to funds to enable the Official Trustee to seek legal advice or to prosecute the action. The letter notified Mr Jambrecina that the Official Trustee would not be in a position to prosecute the action and did not agree to consider assigning that right to him. The Official Trustee did not agree to the filing of an application for special leave, which was filed without his knowledge or consent. The Official Trustee is of the view, as stated in a letter to the Deputy Registrar of the High Court, that as the application was filed after Mr Jambrecina was made bankrupt, s 60(2) of the Act, does not apply. That would seem to me to be the case. This would mean that Mr Jambrecina did not have the right to make the application after the sequestration order was made against his estate on 1 April 2003. 12 Ms Field says that she would recommend that the matter not be pursued and that there are insufficient prospects of success for the Official Trustee to continue with the High Court proceedings. She also states that there are not assets or funds in the estate by which the proceedings could be continued and that the only creditors in the bankrupt estate are Pyramid and Farrow, the respondents to the special leave application. 13 Section 60(2) refers to the stay of an action commenced by a person who subsequently becomes a bankrupt, until the trustee makes an election to prosecute or discontinue the action. That is not the case here because, while the trustee has made an election in writing not to prosecute or discontinue the action, which election is challenged by Mr Jambrecina by reason of s 178, the proceedings were commenced in the High Court after he became a bankrupt. Section 60(4) excludes from the operation of s 60(2) and provides that the bankrupt may continue, in his own name, an action commenced by him before he became a bankrupt in respect of a personal injury or wrong done to him and such a right to recover damages or compensation is not part of the property of the bankrupt to be divisible amongst his creditors (s 116(2)(g)). Again, this section may have no application as it does not apply where the bankruptcy preceded the commencement of the action. If s 60(2) and s 60(4) of the Act do not apply, the cause of action would then vest in the respondent by reason of s 58(1). 14 The respondent concedes that the proceedings described in the exemptions in s 60(4) of the Act are of a nature that a bankrupt is permitted to initiate during bankruptcy. However, the respondent submits that Mr Jambrecina's claim does not come within the general exemptions of s 60(4) and s 116(2)(g) of the Act on the basis that it remains a monetary claim. 15 The test for whether a claim is for personal injuries under s 60(4) was said in Cox v Journeaux (No 2) (1935) 52 CLR 713 ('Cox') at 721 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'. 16 The statement of claim represents an indivisible cause of action in tort and contract. There is no separate cause of action pleaded to recover damages for personal injury or wrong. The claims for non-economic loss arise out of the economic loss being sued for; they are not claims 'without reference to his rights of property' and, as such, would not be within s 60(4)(a) (Daemar v Industrial Commission of New South Wales (1988) 12 NSWLR 45; Mannigel v Phelps (unreported, New South Wales Court of Appeal, 12 June 1991); Morton v Vouris [1998] FCA 394; Arnoya Holdings Pty Ltd v Metway Leasing Ltd [1999] NSWCA 120). 17 Thus the rights to the action vest in the respondent pursuant to s 58(1) and are not excluded by reason of s 60(4) and s 116(2) of the Act. The respondent has elected not to prosecute or discontinue the action and not to assign the action to Mr Jambrecina.
Application under section 178 of the Act 18 Mr Jambrecina applies to this court under s 178 of the Act which provides: 'If the bankrupt, a creditor or any other person is affected by any act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.' 19 Section 178 confers upon the Court 'the widest possible discretion as to the appropriate order which should be made in the particular case … the court is … empowered … to make such order in the matter as it thinks just and equitable' (Re Tyndall (1977) 30 FLR 6 ('Tyndall') at 9-10 per Deane J). A decision can be made under s 178 even though the trustee has not acted unreasonably or incorrectly (Tyndall; Gray v Clout (1990) 27 FCR 141 at 144) or even if subsequent information comes to light to cause the trustee's decision to be reviewed (Bethune v Newman (1996) 19 ACSR 99 ('Bethune') at 102). 20 However, the applicant carries an onus to demonstrate a ground on which the trustee's administration of his affairs is to be reviewed (Re Wheeler; Ex parte Wheeler v Halse (1994) 54 FCR 166 at 170; Bethune at 103). 21 On bankruptcy, all rights to pursue appeals notionally pass to the trustee in bankruptcy, who has power to institute appeals (Cummings v Claremont Petroleum NL (1995) 185 CLR 124 ('Cummings') per Brennan CJ and Gaudron and McHugh JJ at 138-9; per Dawson and Toohey JJ at 145-6). It is a matter for the trustee, in the proper exercise of discretion and having regard to all the circumstances, to decide whether to pursue an appeal. It may be unjust to leave the institution of an appeal against a judgment which reflects upon the bankrupt's personal or professional character to the discretion of a trustee whose interests do not necessarily extend to this question (Cummings at 138). However, while the Court's discretion under s 178 is at large, a Court would be unlikely to permit the bankrupt to pursue his personal interests, in so far as they are not coincident with the due administration of the estate by the trustee, at the expense of the creditors (Cummings at 139). 22 Mr Murray submits that, on the evidence, the proper decision of the Official Trustee would be not to pursue any application for special leave. He points to the decision of Levine J and the fact of the dismissal of the application for leave to appeal from that decision. He submits that there appears to be no matter of principle and no error disclosed in the Court of Appeal judgment to indicate that special leave would be granted, nor is there any such basis apparent from the summaries of argument in the High Court. 23 In circumstances where the only creditors in the bankruptcy are the respondents to the special leave application and where there are no funds in the estate, Mr Murray contends that it would be a proper exercise of the discretion of the Official Trustee and an obvious commercial decision to refuse to pursue any rights of the bankrupt in respect of seeking special leave. 24 For all of the reasons advanced by Mr Murray and the matters referred to in Cummings, I am of the view that it is not appropriate to order the trustee to continue with the proceedings at the expense of the creditors. 25 A trustee can assign a cause of action against a third party or parties to the bankrupt. The question is whether such an assignment is justified (Re Cirillo; Ex parte Official Trustee in Bankruptcy (1996) 65 FCR 576 ('Cirillo') at 584-5). In Cirillo, Branson J considered a number of cases which, in turn, discussed factors which might be relevant to the advisability of such an assignment, such as prospects of success, the interests of the creditors as a whole and the legitimate interests of the bankrupt. Her Honour concluded (at 585): 'that it is not the law that a trustee can only assign a cause of action if he or she is satisfied that it has a realistic chance of success. In circumstances in which insufficient funds are available to the trustee to allow a proper consideration of the likelihood of success of a cause of action asserted by the bankrupt to form part of his or her property, the appropriate course for the trustee to follow may well be to assign such causes of action to the bankrupt for a consideration which the trustee regards as appropriate in the light of such information as is available'. 26 Her Honour affirmed (at 585) that the principal duty of the trustee is to consider the interests of the creditors of the bankrupt estate as a whole and that consideration should also be given to the legitimate interests of the bankrupt and of other parties likely to be affected by the trustee's decision. Branson J also expressed the view (at 585-586) that: 'it would not be proper for a trustee in bankruptcy to assign to any person a cause of action which demonstrably had no prospects of success. This would be even more strongly the case should he or she be alert to the possibility that such cause of action might be utilised to cause embarrassment to a third party'. 27 A further consideration against granting leave was referred to, namely if litigation were instituted vexatiously (at 591). 28 On appeal from Cirillo, in Citicorp Australia Ltd v Official Trustee in Bankruptcy (1996) 71 FCR 550 ('Citicorp'), the Full Court (at 562-563) pointed out that neither a trustee nor the Court is able to resolve conflicts in the evidence in respect of proposed proceedings in a way that binds the parties and that it may be difficult in complex cases to ascertain the prospects of success. A practical approach may well be, as it was in that case, to permit the assignment, which would then enable the court with jurisdiction in the matter to make a determination of the claims. The Full Court did note (at 565), however, that: 'in a case where it is clear that the claim sought to be pursued by the bankrupt or other proposed assignee is frivolous or vexatious, the trustee or the court should not allow the assignment to occur. A claim with no reasonable prospect of success would be a frivolous one, and the prosecution of such a claim would be vexatious. As earlier noted, in most cases it will not be clear that an alleged claim has no reasonable prospect of success. However when a clear case arises, the trustee as an officer of the Court, and the Court itself, in the public interest, should not allow the assignment to occur, even where an immediate sum of money is offered as consideration that would benefit the estate of the bankrupt'. 29 As was pointed out by Spender J in Freeman v National Australia Bank Limited [2003] FCA 1233 at [11], the position of a trustee in bankruptcy is one of considerable responsibility, involving the administration of the estate in the interests of the creditors and the bankrupt and as a public duty and for the public welfare. If the decision to decline to make an election to prosecute proceedings was wrong, 'justice and equity requires [the Court] to compel the trustees to prosecute those actions, or to commence similar actions' (at [13]). 30 Further, while it is apparent that a right of action may be sold to the bankrupt (Cirillo at 585; Citicorp at 558) a question arises as to whether that assignment may take place during the period of the bankruptcy. Mr Jambrecina is presently bankrupt. In Cirillo and also in Re Nguyen; Ex parte Official Trustee in Bankruptcy, Re Luu; Ex parte Official Trustee in Bankruptcy (1992) 35 FCR 320, the offer by the bankrupt to purchase the rights in the chose in action was made after discharge from bankruptcy by force of law. 31 In Temsign Pty Ltd v Biscen Pty Ltd (1998) 20 WAR 47, Wheeler J considered whether there was power in the trustee to assign a chose in action to a bankrupt during the term of the bankruptcy and concluded (at 54) that there was no such power, noting that the scheme and purpose of the Act is directed at absolute control of the bankrupt's property to the benefit of creditors. Her Honour observed (at 52) that there would appear to be difficulties with such an assignment as the chose in action could well fall into the category of 'after acquired property' (s 58(1)(b)) and immediately revest in the trustee and (at 54) that the Act seeks to protect other parties from litigation commenced by a bankrupt who will neither be personally at risk as to costs, nor able to meet an order for costs.
The vexatious litigant claim 32 The notice of appeal to the Court of Appeal confirms that the applicant was seeking leave to appeal, inter alia, from the decision of Levine J declaring him a vexatious litigant. That issue then appears to remain part of the application for special leave to the High Court, although not specifically stated in that application. 33 Under s 101(2)(g) of the Supreme Court Act, leave of the Court of Appeal is required in respect of any appeal from 'an order refusing leave for the institution or continuance of legal proceedings by a person who is the subject of an order for the time being in forced under section 84'. Hence, the leave of the Court of Appeal was required for the applicant to appeal from the orders declaring him a vexatious litigant. In addition, leave to appeal was also required under s 101(2) of the Supreme Court Act(concerning interlocutory judgments) in that an order striking out a statement of claim as disclosing no reasonable cause of action is interlocutory (Jones v Insole (1891) 64 LT 703), as is an order dismissing an action as frivolous and vexatious (Re Page; Hill v Fladgate [1910] 1 Ch 489, both cases cited in Hall v Nominal Defendant (1966) 117 CLR 423 at 440. As noted, that leave was refused to Mr Jambrecina by the Court of Appeal. 34 A question then arises whether a person who is a bankrupt can continue with or initiate an application for leave to appeal from a declaration that he or she be declared vexatious. The prior question for consideration is whether the right of a bankrupt to appeal against such an order is a right that comes within the exemption contained in s 60(4)(a) or s 116(2)(g) of the Act, as being an action in respect of 'any personal injury or wrong done to the bankrupt'. 35 A declaration that a person is a vexatious litigant could be said to be a reference to character. However, it should be considered in context. A declaration under s 84(2) of the Supreme Court Actis made in respect of 'any legal proceedings against the person aggrieved'. I have concluded that those legal proceedings are in respect of property and non-economic loss arising out of the economic loss sued for. Further, there is no evidence suggesting that the legal proceedings or the declaration are referable to 'pain felt by [Mr Jambrecina] in respect of his mind, body or character and without reference to his rights of property'(Cox at 721). 36 The application for special leave to appeal makes no specific reference to the s 84(2) declaration. It seems to me that the declaration is intimately bound up with the claims concerning the losses of the various properties. The claims are not exempted under s 60(4) of the Act. 37 It is not necessary for me to consider whether the s 84(2) declaration, which specifies proceedings in the Supreme Court of New South Wales, applies to an application for special leave to the High Court from a decision of the New South Wales Court of Appeal. The trustee's decision relates to the property vested in him. The application to this Court is in respect of the trustee's decision and I propose to deal with that. 38 Levine J (at [17]) pointed out that all of the proceedings instituted by Mr Jambrecina point to relief sought in relation to the mortgages the default of which led to the consent orders for possession in 1992. It was an examination of the history of those proceedings that led his Honour to make the declaration within s 84(2) of the Supreme Court Act. 39 I am not satisfied that the trustee's decision is perverse or wrong or that the proposed litigation has prospects of success. The estate is without assets or funds and the proposed action is against the only creditors in the bankruptcy. There are no funds from which to indemnify the trustees for any costs. Mr Jambrecina has not offered to pay anything for the assignment of the chose in action and there is no suggestion that he has any means to finance the proceedings. I assume that he would conduct them personally but there is no evidence that he could meet an order for costs. The material before me does not persuade me that the Official Trustee's decision not to continue the proceedings or to assign them to Mr Jambrecina was other than just and equitable or in any way contrary to his obligation to discharge the public duty imposed by the Act conformably with his obligation properly to administer the estate. 40 It is not appropriate to make an order that the respondent continue the proceedings in the High Court nor to direct the respondent to assign the rights to that action to Mr Jambrecina. 41 The application is dismissed. I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett.
Dated: 24 November 2003 Applicant appeared in person
Solicitor for the Respondent: Australian Government Solicitor
Date of Hearing: 23 September, 7 October and 19 November 2003
Date of Judgment: 24 November 2003
Jambrecina
Official Trustee in Bankruptcy
(1996) 71 FCR 550
(1935) 52 CLR 713
(1995) 185 CLR 124
(1988) 12 NSWLR 45
(1990) 27 FCR 141
(1966) 117 CLR 423
(1981) 147 CLR 589
(1996) 65 FCR 576
(1992) 35 FCR 320
(1977) 30 FLR 6
(1994) 54 FCR 166
(1998) 20 WAR 47