Murdaca v RAMS Mortgage Corporation Ltd [2007] NSWSC 512 | Case summary

6817/04 - MURDACA v RAMS MORTGAGE CORPORATION LTD JUDGMENT 1 HIS HONOUR: The plaintiff, who has appeared in person, sues the defendant for four matters which can be put under two heads. First, that in its conduct of proceedings in the Common Law division of this court relating to possession of property in which the plaintiff was the mortgagor and the defendant the mortgagee, the defendant acted negligently, carelessly and unskilfully, in particular (a) it did not properly serve him with process and (b) that it reneged on an agreement it made that it would allow him to market the properties. 2 Secondly, he sues in respect of the mortgagee's accounts over that property saying that the defendant (a) failed to consult him about the marketing of the property and (b) negligently and unskilfully and in breach of fiduciary duty marketed the property so that a considerable loss was made and the proper value was not obtained. 3 Mr Murdaca filed his statement of claim and it has been amended twice and I will refer to the further amended statement of claim filed on 21 April 2005. Directions were made by an Associate Justice as to getting that claim ready. Mr Murdaca complains that whilst he has put his affidavits on and complied with the directions the defendant has failed to do so. I understand from the way in which Mr Ashhurst of counsel, who appears for the defendant today, puts his submissions, that the plaintiff's allegations are denied. 4 The motion before me today is to stay the proceedings perpetually on the basis that Mr Murdaca is a bankrupt. The issue for decision today depends on the proper construction of s 60 of the Bankruptcy Act 1966 (Cth). 5 The scheme of ss 58 and following of the Bankruptcy Act is that on a sequestration order being made all the property of the bankrupt vests in his trustee and that includes choses in action such as actions which have been commenced by the bankrupt. 6 Section 60 says, in subs 2, that "An action commenced by a person who subsequently becomes a bankrupt is … stayed until the trustee makes election, in writing, to prosecute or discontinue the action". 7 In the present case, an application was made to the trustee who did not make an election within 28 days and, accordingly, unless subs 4 applies, under subs 3 of s 60 the trustee is deemed to have abandoned the action. 8 Authorities in Victoria, particularly King v Commercial Bank of Australia Ltd [1921] VLR 48; Millane v Shire of Heidelberg [1928] VLR 52 and Bendigo Bank Ltd v Demaria [2001] VSC 218, indicate that the proper consequence of s 60(3) is that the proceedings are not dismissed, but stayed indefinitely, because if the plaintiff comes out of bankruptcy he should be permitted to continue the action if there be no other bar to that at the relevant time. Mr Ashhurst concedes that if he succeeds on the motion, then that is the appropriate order. 9 Mr Murdaca, who appeared for himself and did so competently and courteously, relies on subs 4(a) of s 60 which says that a bankrupt may continue in his own name an action for personal injury or wrong done to the bankrupt. He says that the further amended statement of claim contains claims for damage to his health and well-being by the conduct of the defendant and that that plainly fits within subs 4(a). He points to the definition of personal injury in s 27 of the Civil Liability Act 2002. 10 Mr Ashhurst says that one is bound when looking at subs 4 to look at the decisions that have been made as to its proper construction by courts of high authority in the past. Mr Murdaca's riposte to that was that it is always important to look at the words of the statute and one must not treat utterances of courts in the past as if they were words of a statute; one must construe the statute itself. He submits that the plain wording of the statute is that s 60 does not prevent him from pursuing a claim for personal injury and that this is, at least in part, such a claim. 11 It is true that one does not treat previous decisions as if they were a statute, but it is also true that under the legal system in Australia courts are bound by the doctrine of precedent to follow and apply the decisions that have been made by higher courts as to the proper construction of a section and no matter what sympathy a single judge may have for a person who may have been oppressed by a large corporate lender, the court is still bound to follow what higher courts have said. 12 Unfortunately for Mr Murdaca, there have been a series of cases from very high tribunals all pointing in the one direction. These decide that, when one is considering subs 4(a), one must distinguish between on the one hand, cases where there is damage to the person or mind of the bankrupt which is connected with his property and those which are consequential to property claims, and personal injury claims that arise completely independently on the other hand. 13 The principal authority for this proposition is the statement of Dixon J in Cox v Journeaux (No 2) (1935) 52 CLR 713, 721, which was applied by the Court of Appeal in this State, a decision which is also binding on me, in Mannigel v Hewlett Phelps 12 June 1991, unreported, see BC9101907. 14 In Daemar v Industrial Commission of New South Wales (1988) 12 NSWLR 45, Kirby P at 55 made a statement which is useful to repeat in the present case. He said that in that case the claimant's principal contention was that his case fell within s 60(4). The claimant was in person as is the claimant in the present case. His Honour then went on to say: "It is understandable that a person unversed in the principles of statutory construction and unaware of legal authority on the meaning of s 60(4)(a) of the Act should have taken the words 'wrong done to the bankrupt' in isolation and concluded, as the claimant did about their meaning. However, the words cannot be taken in isolation. They must, in accordance with the ordinary canons of construction, be read in the context in which they appear." 15 His Honour then went on to refer to Cox v Journeaux and other cases of authority such as the judgment of Lord Atkinson in Wilson v United Counties Bank Ltd [1920] AC 102, 128-133 and the decision of Lockhart J in Faulkner v Bluett (1981) 52 FLR 115. 16 Both Mr Ashhurst and Mr Murdaca referred me to the decision of the full Federal Court in Bryant v Commonwealth Bank of Australia (1997) 75 FCR 545. In that case both Lockhart J and the other members of the court followed the line of authority to which I have referred and applied at 564 what Handley JA said in the New South Wales Court of Appeal in the Mannigel case. 17 Mr Murdaca says that the present case is distinguishable from Bryant because in Bryant it seems that Lockhart J paid particular attention to the fact that the bankruptcy had come about through the same problem as was the subject of the action, whereas in the present case that was not so. I take the point, but with respect it is not the only reason why the Federal Court decided the matter the way it did. 18 Mr Murdaca also said that when he was seeking a stay of a sequestration order before Stone J in the Federal Court her Honour made the comment that it would seem that this claim fell within s 60(4). I do not have the benefit of a transcript of what her Honour said, but with respect, it would seem that that comment must have been made without a full analysis of the decisions which may well not have been necessary for her Honour to consider at the time. 19 Mr Murdaca also says that he is willing to provide security for costs if the defendant wishes and the trustee in bankruptcy agrees and because he has more assets than debts, he is quite sure the trustee would agree. That may be a sensible solution, but, unfortunately, I think it is now too late because, the trustee not having made his election within 28 days, the Bankruptcy Act operates so that the action is deemed to have been abandoned. 20 Mr Murdaca also says it is the duty of the court to have these matters aired. The court is always concerned to see that small borrowers are protected against large lenders but there is no overriding duty to hear cases just because the court is concerned about matters. What is necessary is that a person with proper standing must seek relief that can be given and unfortunately, this case does not fit within that category at present. 21 Then it is said by Mr Murdaca that his trustee in bankruptcy has made many wrong decisions. That again is not a matter that I can take into account, assuming that it is the case. 22 Accordingly, I regret to say that the only order I can make is that the proceedings be stayed perpetually and that the plaintiff pay the defendant's costs of the proceedings to date.

Murdaca v RAMS Mortgage Corporation Ltd

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