• A further writ names three defendants, MBA Finance, Steve Tsiakis and Master Builders Association. Although the endorsement of the writ refers to negligence, the facts contained in the endorsement seem to assert that the defendants were the persons from whom the loan was sought and that they fraudulently altered documents which the applicant had signed in respect of the proposed loan.

• The final writ names the respondent, together with the company Prime Capital Securities Pty Ltd and Paul Scanlon, a director of that company, as defendants. The facts contained in the endorsement assert what amounts to a conspiracy to falsify the loan documents and then pursue the sequestration order. Without going through the allegations in detail, the specific allegation against the respondent asserts that he has become a party to the dishonesty perpetrated by the second and third defendants, that this has affected the discharge of his duties as the trustee in bankruptcy, and that he has done so "to make a financial advantage to himself".

1. In each case, the writ seeks damages for financial loss and for personal injuries. It is clear that the personal injury alleged is psychological injury resulting from the financial consequences of the bankruptcy and the wrongs which it is alleged have been perpetrated by each of the defendants.
2. The application to the associate judge for leave named Mr Tenbensel as the sole respondent. However, it sought leave in respect of the three writs. His Honour's decision dealt with all three writs notwithstanding that it is only the respondent who has, through counsel, made submissions opposing the applicant's position. That situation continues before me.

1. Rule 680A of the Supreme Court Rules 2000 provides for an appeal from a "judgment of the associate judge". In the case of a final judgment, the appeal is to the Full Court. A "final judgment" is defined to include a judgment "by which the rights of the parties are finally concluded in respect of any matter in question in a proceeding". I agree with Mr Groves that the judgment in question falls within this definition.
2. By r 680A(3), the time to appeal from the final judgment is within 21 days after the judgment was pronounced. By r 52, the Court or a judge may extend that period. Rule 52(2) provides that such an extension may be ordered "although the application is made after the expiration of the period originally allowed or limited".
3. In this case, the judgment was pronounced on 17 August 2023. The 21 day period expired on 7 September 2023. The application for an extension of time was filed on 15 September 2023.
4. In Burnett v Fitzgerald and Browne [2017] TASSC 31, I set out in some detail the principles applicable in respect of such an application. In summary, a decision to extend time involves the exercise of a discretion, which is unfettered except in the sense that it must be exercised judicially and accord with the interests of justice. The factors which are usually taken into account in making that determination are the length of the delay, the reason for the delay, whether the appellant has a fairly arguable case and the extent of any prejudice to the respondent if the application is granted. I also pointed out that the weight to be attributed to each of these factors depends on the circumstances of the case.
5. The respondent submits that the applicant has not provided any explanation for his failure to file the appeal within the specified time. However, as I commented to Mr Groves during the course of submissions, in my view, the primary consideration in the circumstances of this matter is whether the applicant can establish a fairly arguable case. If it seems that the appeal has reasonable prospects of success, then in the case of a delay of only eight days, where no real prejudice is asserted by the respondent, it is unlikely that I would exercise the discretion against the extension of time. In any event, I would take into account and draw inferences from the fact that the applicant is unrepresented when considering the question of delay. Accordingly, the critical question in this case, in my view, is whether the appellant has "a fairly arguable case" in respect of the proposed appeal.

1. Holt AsJ's decision depended on the application of the provisions of ss 58 and 116 of the Bankruptcy Act 1966 (Cth) ("the Act"). The combined effect of those provisions is to vest the property of the bankrupt, including that acquired after the commencement of the bankruptcy, in the trustee in bankruptcy. The broad definition of "property" contained in s 5 of the Act includes the right to recover damages or compensation by action. It is well established that the right to bring an action to recover damages, unless it is exempted under the provisions of s 116(2), vests in the trustee and, accordingly, the capacity to commence proceedings claiming such damages is the right of the trustee, and not the bankrupt. In effect, the bankrupt has no standing to bring such an action. Accordingly, unless exempted, the proposed actions, if brought by the applicant, are futile and thereby frivolous and vexatious.
2. The issue considered by Holt AsJ, and which forms the basis of the applicant's argument on the proposed appeal, is that the right to bring each action is exempted from the operation of s 116(1) by virtue of s 116(2)(g). That subsection includes in the exempted property "any right of the bankrupt to recover damages or compensation ... for personal injury or wrong done to the bankrupt ...". The applicant argues that his claim for damages for personal injuries falls under this exemption. However, the associate judge relied upon and applied a line of authority which establishes that where a claim for personal injuries flows from and is dependent upon a claim in property, the whole action passes to the trustee. This principle was succinctly summarised by Lockhart J in Faulkner v Bluett [1981] FCA 3, (1981) 52 FLR 115 at 119.

"The common thread running through these cases 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: Wetherall v. Julius [1850] EngR 698; 10 CB 267; 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."

1. In Mannigel v Hewlett Phelps & Ors [1991] NSWCA 186, Handley JA (with whom Meagher JA and Kirby P agreed "generally") explained that a claim for damages for personal injury which was "consequent" upon a claim in respect of property would not fall under the exemption, and would pass to the trustee:

"The plaintiff's claims for damages for loss of credit, for mental distress, inconvenience and for injury to their physical and mental health therefore were not claims 'without reference to their rights of property' within the principle stated by Dixon J. On the contrary those claims were consequential on damages to the plaintiff's financial and property interests as a result of alleged breaches of professional duty by the solicitors."

1. Further, where an action claims both forms of loss, the action will be regarded as indivisible and the causes of action will not be bifurcated for the purpose of the application of the section. This was confirmed by the South Australian Full Court in Sands v State of South Australia [2015] SASCFC 36. In that case, it was held that an action in defamation is exempted under s 116(2)(g) on the basis that it seeks to recover damages for a "wrong done to the bankrupt". However, the claim also sought to recover damages for consequential financial loss. An attempt to bifurcate the action on account of the two types of damages was rejected, and it was held that the right to take the action remained with the bankrupt. In the case before me, the converse situation applies but the principle that the action is indivisible remains applicable.
2. In my view, the associate judge correctly applied these principles in the case of each proposed action. It is obvious from the nature of the allegations contained in each endorsement that the personal injuries claim is for psychological injury consequential upon the claims concerning the loan, the alleged debt and the administration of the bankruptcy. The applicant has not argued to the contrary. The claims therefore are not caught by the exemption. It follows that in each case, the right of action vests in the trustee, and the applicant lacks standing to bring the action.
3. However, the action against the respondent requires further consideration. The right of action which vests in him as trustee is an action against himself for misfeasance in the discharge of his obligations in that office. This clearly has potential to create an unacceptable conflict of interest. Under the Bankruptcy Act, (ss 90-10, 90-15 and 90-20 of Schedule 2 - the Insolvency Practice Schedule (Bankruptcy) ("the Schedule"), a court with jurisdiction under the Act, which does not include this Court, has power to supervise and inquire into the conduct of the trustee. The power includes that of removal and replacement. There is also limited power to order compensation. However, cases in respect of the Schedule and the provisions which it replaced, ss 178 and 179 as they then were, have reinforced the limitations of these provisions in respect of claims by a bankrupt or former bankrupt against the trustee arising from the latter's conduct of the bankruptcy. In fact, the cases endorse the position that claims by a bankrupt against a trustee for damages "for malfeasance in public office or for negligence or for tortious breach of statutory duties" are not available under these provisions_,_ and should be pursued under the general law outside the bankruptcy system: Macchia v Nilant [2001] FCA 7 per French J at [44]. His Honour's views have been endorsed by other Federal Court judges in a number of cases. However, some care needs to be taken in respect of the authoritative value of these comments. In each case, the views expressed about the availability of action under the general law in courts applying the common law must be regarded as obiter, because the question before the Federal Court was not that, but rather the limits its power under the bankruptcy legislation, in respect of claimed misconduct by a trustee.
4. At the very least, however, these judicial comments support the proposition that claims by a bankrupt against the trustee under the general law are not precluded by the existence of remedies available under the Act. This would support the availability in this Court of relief of the nature claimed by the applicant against the respondent. However, none of this changes the effect of s 116, which vests such an action in the trustee himself, notwithstanding the obvious conflict of interest.
5. This situation confronted RD Nicholson J in Pridmore v Magenta Nominees Pty Ltd [2001] FCA 815. His Honour was considering whether proceedings, which included a claim by bankrupts against the trustee for damages for the breach of his duty of care in respect of the administration of their bankrupt estates, should be dismissed as disclosing no reasonable cause of action. The trustee argued that the cause of action vested in him by virtue of s 116(1), and, accordingly the applicants were not entitled to enforce their claims. The bankrupts argued that the claims could not so vest when the alleged misconduct was that of the trustee himself, presumably because of the conflict of interest. However, the trustee submitted that if there was any true merit in the claims, the appropriate remedy was to seek his removal as trustee under the relevant supervisory provisions of the Bankruptcy Act, and if successful to request the new trustee to investigate and pursue the claims. His Honour agreed with this submission, and rejected the bankrupts' argument that the action did not so vest.
6. In my view, his Honour's decision is clearly correct. The effect of s 116 is beyond argument. The resulting disquiet arising from the conflict of interest, and the potential for any resulting injustice, can be appropriately mitigated by the suggested course of action. Of course, the remedy under the Schedule cannot be pursued in this Court. By s 27 of the Act, the Federal Court and the Federal Circuit and Family Court of Australia (division 2) have concurrent and exclusive jurisdiction in respect of bankruptcy. "Bankruptcy" is defined by s 5 to mean "any jurisdiction or proceedings under or by virtue of this Act". It follows that jurisdiction under the Act to supervise the trustee falls exclusively within the jurisdiction of those federal courts. This Court is excluded from that jurisdiction.
7. Finally, Mr Groves has referred me to a number of authorities which, although they deal with court-appointed receivers, support by analogy the proposition that an action against a trustee in bankruptcy can only be commenced in a court other than the court which appointed the trustee, with the leave of the latter. See for example Re Siromath Pty Ltd [1991] 9 ACLC 1580. In Searle v Kearns and Ors [2001] NSWSC 679, Kirby J considered in a case dealing with such an issue that the absence of leave of the court which had originally appointed the receiver, rendered the proceedings defective.
8. However, it is not clear, in my view, that a trustee in bankruptcy is directly appointed by the court which made the sequestration order. The provisions of s 156A of the Act suggest that the appointment arises from the execution of the appropriate consent by a registered trustee, and that person takes office automatically upon the making of the sequestration order. Having regard to my view concerning the effect of s 116, it is unnecessary to determine this question, and I decline to do so.
9. It follows from the above that the applicant does not have an arguable case in respect of each action. The claims sought to be enforced by him in each writ are vested in the trustee in bankruptcy, and he has no standing to bring those actions. The associate judge was clearly correct about this and the proposed appeal is bound to fail.
10. Accordingly, I refuse the extension of time in respect of the appeal. The application is dismissed.