[2005] HCA 67
Doman & Anor v Leadenhall Australia Pty Ltd [2023] SASC 97
Foots v Southern Cross Mine Management (2007) 234 CLR 52
Source
Original judgment source is linked above.
Catchwords
[2005] HCA 67
Doman & Anor v Leadenhall Australia Pty Ltd [2023] SASC 97
Foots v Southern Cross Mine Management (2007) 234 CLR 52
Judgment (2 paragraphs)
[1]
JUDGMENT
The plaintiff was born in 2001. She alleges that when she was six and seven years of age she was sexually abused by the defendant. He was her babysitter. The plaintiff says that she suffered significant psychological injury as a result of the abuse.
In order to obtain compensation for her injury the plaintiff commenced proceedings against the defendant by the filing of a statement of claim on 9 November 2023.
The defendant has not responded to the commencement of the proceedings. He is in prison. Despite having been served with all appropriate documents, he has taken no interest in the case.
On 25 January 2024 the plaintiff filed a notice of motion seeking default judgment for unliquidated damages: r 16.7 Uniform Civil Procedure Rules 2005 (NSW) (UCPR). On 6 March 2024 the Court ordered, inter alia, that the motion be set down for hearing on 10 April 2023 and that if default judgment was entered, that the matter proceed to an assessment of damages.
One of the orders sought in the notice of motion is:
"Assessment hearing fixed on an expedited basis due to the defendant being declared bankrupt."
The defendant was declared bankrupt on 8 December 2023. A trustee in bankruptcy, Mr Stephen Dixon, was appointed to the defendant's bankrupt estate.
My initial reaction to the application was that it could not proceed because consent had not been obtained from the Federal Court. This requirement arises from s 58(3)(b) of the Bankruptcy Act 1966 (Cth) which states:
"Except as provided by this Act, after a debtor has become a bankrupt, it is not competent for a creditor:
(a) …
(b) except with the leave of the Court and on such terms as the Court thinks fit, to commence any legal proceeding in respect of a provable debt or take any fresh step in such a proceeding."
The notice of motion is clearly a fresh step in the proceedings. I could not have granted the leave required by s 58(3). In Yan v Spyrakis as trustee in bankruptcy for Liu [2022] FCA 872 Katzmann J, at [9] said:
"An application for leave to bring or continue legal proceedings cannot be made in the Supreme Court. Section 27 of the Bankruptcy Act confers concurrent jurisdiction on this Court and the Federal Circuit and Family Court of Australia (FCFCoA) (Div 2), to the exclusion of all other courts except for the High Court under s 75 of the Constitution and the FCFCoA (Div 1) under s 35 or 35A of the Bankruptcy Act. See also Truthful Endeavour Pty Ltd v Condon (2015) 233 FCR 174 at [32]-[61] (Allsop CJ, Katzmann and Gleeson JJ)."
The plaintiff submitted however that leave from the Federal Court was not necessary because the claim was for unliquidated damages falling within the scope of s 82(2) of the Bankruptcy Act:
"Demands in the nature of unliquidated damages arising otherwise than by reason of a contract, promise or breach of trust are not provable in bankruptcy"
The plaintiff submitted that her claim was for unliquidated damages, and they did not arise from a "contract, promise or breach of trust". It was submitted that her damages arose from sexual assault and/or a battery, an intentional tort or, alternatively, negligence.
In Doman & Anor v Leadenhall Australia Pty Ltd [2023] SASC 97, McDonald J analysed a number of authorities arising from s 82(2), but in particular Foots v Southern Cross Mine Management (2007) 234 CLR 52; [2007] HCA 56 and Coventry v Charter Pacific Corporation Ltd (2005) 227 CLR 234; [2005] HCA 67. His Honour said at [107]-[110]:
"107. Foots was concerned with a claim for costs arising on pre-bankruptcy proceedings, in circumstance in which the order for costs had not been made as at the date of bankruptcy. The order for costs was only made some months after the bankruptcy. In that matter the bankrupt debtor, Mr Foots attempted to bring his liability for costs into the statutory definition of a provable debt. As such the costs order would be absorbed into the bankruptcy proceedings and he would be free from his liability upon his discharge from bankruptcy. The appellant argued that the costs order was provable in the bankruptcy on two bases. The first was that the 'obligation' was said to arise from the monetary sum awarded against him which had occurred prior to bankruptcy. Alternatively, it was submitted that the phrase 'all debts and liabilities' in s 82 is broad enough to encompass an obligation that is incidental to a provable debt, even if the incidental obligation was not a necessary concomitant in law of the provable debt.
108. As in Coventry the majority made the observation that not all debtors debts and liabilities are provable in bankruptcy. Further that there is no express or implied textual support for the notion of a debt being provable if it is incidental to, or consequent upon, a debt which itself is provable.
109. Central to the determination of the issue in Foots was consideration of when the obligation to pay costs arose. The majority held that the costs order had not been a liability at the date of the bankruptcy, that whilst the respondent had a judgment against the appellant for damages, no determination as to costs had been made. No costs obligation arose until the cost order was made. Further that the risk was not a contingent liability within the sense of s 82(1) on the basis that…the order for costs itself is the source of the legal liability and there is no certainty that the court in question will decide to make an order.
110. Because the order was made after bankruptcy, and was thus not a liability 'to which bankruptcy was subject at the date of the bankruptcy' and it was not a contingent liability, and was determined that the costs order was not provable in the bankruptcy."
An assessment of damages for personal injury is obviously very different to a costs order, as existed in Foots, but they nevertheless share the characteristics of not having been assessed when the bankrupt person entered bankruptcy and there was then no obligation to pay any amount.
Although not expressly dealing with the issue I note the following passage from Ryu v Karadjian [2006] NSWCA 144, which was a personal injury case, at [17]:
"The respondent was represented in the proceedings in the District Court, including representation at the trial, but did not appear in the Court of Appeal or take any significant steps to resist the appeal. The Court of Appeal was satisfied that she had been served with Notice of Appeal and was aware of the pendency of the appeal, including the appointment for a hearing on 28 April 2006; she did not appear at the hearing. The Court of Appeal made a procedural direction which overcame irregularity in service of the Notice of Appeal upon her. In correspondence to the Registry she maintained that since the decision of the District Court she has become a bankrupt; this is not our concern, as no provision of the Bankruptcy Act 1966 (Cth) provides for an automatic stay, no-one has applied for a stay of proceedings, and it appears that the appellant's claim is not provable in the bankruptcy; see Bankruptcy Act s 82(2)."
Returning to the notice of motion, the plaintiff relied on two affidavits, her own sworn on 24 January 2024 and the affidavit of Mr El-Jradi, sworn on 7 March 2024. Mr El-Jradi is the plaintiff's solicitor.
The contents of the affidavits encompass the requirements of r 16.7(2), with the exception that they do not state that the proceedings have not settled. Although there is an overwhelming inference to that effect, I allowed the plaintiff to give oral evidence of the fact. To the extent necessary I rely on s 14 of the Civil Procedure Act 2005 (NSW) to dispense with the necessity for the statement that the matter had not settled to be included in an affidavit.
Based on the affidavit material, and on the plaintiff's oral evidence, I am satisfied that the plaintiff is entitled, pursuant to r 16.7, to judgment against the defendant for damages to be assessed and for costs. I make the following orders:
1. Judgment is given, pursuant to UCPR rule 16.7, for the plaintiff against the defendant for damages to be assessed and for costs.
2. The matter is listed for directions on 7 May 2024 to set a date for the assessment of damages.
3. The defendant and the trustee in bankruptcy are to be informed, within 14 days, of the orders made today.
[2]
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Decision last updated: 11 April 2024