Payne, Re N.R. & Ors Hurst, Ex Parte K.B. & Anor [1986] FCA 439

Federal Court of Australia|1986-09-23|Before: Toohey J

L - Bankruptcy - application ©o review crustee's decision to retect proor or debt - review by wav of rehearing - debt arising out of

workers compensation claim - evidence of a compensable accident. tompensation pavments and continuing partial incapacity for work - whether suffFicrent to establish an entitlement under Workers'

RE: NEVILLE ROSS PAYNE, STUART DAVID PAYNE, MICHAEL ROSS PAYNE and ALAN JOHN PAYNE - Debtors

GENERAL DIVISTON HANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA

MAURICE ALEXANDER LEVI the Trustee of the property of NEVILLE ROSS PAYNE, STUART DAVID PAYNE, MICHAEL ROSS

MINUTE OF ORDER JUDGE MAKING ORDER: TOOHEY J. DATE OF ORDER: 23 September 1986

The respondent admit to proof the debt due by Neville Ross Payne, Stuart David Payne, Michael Ross Payne and Alan John Payne, or any of them by reason of their liability to pay compensation to the applicant under the provisions of the Workers' Compensation and

Note: Settlement and entry of orders is dealt with in Rule 124 of the Bankruptcy Rules.

IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF WESTERN AUSTRALIA

RE: NEVILLE ROSS PAYNE, STUART DAVID PAYNE, MICHAEL ROSS PAYNE and ALAN JOHN PAYNE Debtors

MAURICE ALEXANDER LFVI the Trustee of the property of NEVILLE ROSS PAYNE, STUART DAVID PAYNE, MICHAEL ROSS

REASONS FOR JUDGMENT This is an application under s.104 of the Bankruptcy Act 1966 ("the Act") to review a decision by the trustee under an arrangement made pursuant to Pt X of the Act, rejecting a proof of

The matter has a number of complications, some of which arise from the way in which the proof of debt was formulated and the response made by Mr. Hurst's solicitors to enquiries by the

So tar as the proof of debt 18 concerned, the storv beqins with a letter dated 7 October 1985 from the trustee

to Mr. Hurst. The letter included the followina paraqraph:

"T am aware that prior to the llth October 1983 (Cthe date of decds of assignment executed pursuant to Pt X of the Act] there exists a claim by you that you were

iniured whilst being emploved by the Debtors. The records of the business indicate that you were injured as a result of an accident on 29 February 1982. The

The letter continued by informing Mr. Hurst that any claim he might have against the debtors must be proved before the deeds were finalised otherwise that claim would be extinguished. The trustee sought a number of details relating to the accident,

medical treatment, subsequent employment and any residual

In response Mr. Hurst submitted a proof of debt on form 15 1n Schedule 1to the Act. The contents were not overly informative. Under "Date of Transaction", Mr. Hurst noted "work injury". Under "Consideration or Nature of Debt", he noted "Common law claim for damages negligence. Breach of implied terms of contract to provide safe system of work and claim under Workers Compensation & Assistance Act 1981 as amended". Under "Amount",

he noted "Damages to be assessed depending upon the outcome of

However the proof of debt was accompanied by a_ letter from Mr. Hurst's solicitors, also dated 4 December 1985. The solicitors said that thev had only recently been consulted by Mr. Hurst and had not had an opportunitv to examine all the information he had provided to them. They referred to the fact that a claim by Mr. Hurst for workers' compensation had been admitted but that his condition had not stabilised nor did he appear to have improved greatly since his accident. The solicitors mentioned the possibility of a common law claim and referred in general terms to the strain placed on Mr. Hurst by

carrving beef "on slippery floors, on different levels and down

On 19 December 1985 the trustee wrote to Mr. Hurst care of his solicitors and sought evidence and particulars in support of his claim. The evidence and particulars required were detailed over some two pages. No reply having been received to this request, the trustee wrote again on 12 February 1986 setting a

deadline of 5.00 p.m. on 14 February for the evidence and

Before the deadline Mr. Hurst's solicitors wrote to the trustee. They provided a considerable amount of information, but

in relation toa question as to the date on which Mr. Hurst

"Our client is not able to usolate any particular incident or accident which resulted in his back

iniuries but 2t aus an accumulation of a number of incidents and accidents during the course of his employment which included lifting and carrying heavy bodies of beef. boxes of meat and meat products, working between levels of different heiqht on slippery floors and up and down steps".

By notice dated 27 June 1986 the trustee rejected Mr. Hurst's proof of debt. In summary, the grounds were that Mr. Hurst had no current or existing claim against the debtors, that he was not entitled to any lump sum payments in lieu of weekly entitlements, that he had failed to provide evidence substantiating any incapacitv, that he had no claim by reason of any breach of duty or default on the part of the debtors, that he had failed to provide any evidence to substantiate such a claim and finally, that if he did have any such claim it was contributed to by reason of his own negligence. The last of these grounds

In support of his application to review the trustee's decision, Mr. Hurst swore an affidavit to which he annexed a

number of medical reports. Counsel for the trustee objected to the use of the medical reports as being hearsay evidence but withdrew the objection. No move was made to cross-examine

Mr. Hurst on his affidavit nor did the trustee adduce any evidence

In Re Hanifin; Ex parte Britcher (1955) 17 A.B.C. 24

Townley J. treated an application to reverse or vary a_ trustee's

decision rejecting a proof of debt, made under the provisions of

the Bankruptcy Act 1924, as an appeal bv way of rehearing and allowed the applicant to adduce evidence. Section 104 of the present Bankruptcy Act empowers the Court to "review" a trustee's decision and, in mv view, that term carries with it the notion that the parties mav place before the Court such material as thev wish, provided of course that it 1s relevant and otherwise

admissible. Re Masters; Ex parte Gerovich (unreported decision of

Toohey J. delivered 30 July 1985); Re Kerr; Ex parte Bannon

(unreported decision of Forster J. delivered 24 July 1986). The function of the Court is not to consider the correctness or otherwise of the trustee's decision in the light of the material before him but to determine, in the light of the material before it, whether the applicant has a debt that should be admitted to proof. Of course, inconsistencies in the material provided to the trustee and that offered to the Court may properly be taken into

In his affidavit Mr. Hurst deposed to an injury sustained to his lower back on 23 February 1982 in the course of his employment by the debtors trading as Ross Payne & Co. The accident occurred while he was getting out of his employer's delivery van. He described the accident in this way "I suffered a sharp pain in the lower part of my back such that I can only describe as that my back 'went'". He was off work from 23 February until about 17 Mav 1982, during which time he was seen by Dr. McKenna, a general practitioner in Bunbury, and Mr. Nunn, an

orthopaedic surgeon in Perth. Mr. Nunn recommended traction and

Mr. Hurst was in hospital for some twelve days. On his") return to work, he was qiven duties of a clerical nature but continued to suffer pain and duiscomforl in the lower part of his back, as a result of which he received physiotherapv and chiropractic treatment. The medical reports annexed to his affidavit are from

Mr. Nunn and from Mr. Venervs, another orthopaedic surqgeon.

Mr. Hurst's account of his accident, medical treatment and time off work was clear and was not contested by the trustee. During the time Mr. Hurst was off work, he was paid his wages. He has not been called upon to pay any of the costs of medical treatment, so it must be assumed that these were borne by his employer. In his affidavit Mr. Hurst referred to his employer as a "self insurer", presumably a reference to the exempt employer

provision in s.164 of the Workers' Compensation and Assistance Act

1981 (W.A.). There is ample evidence of acknowledgement that Mr.

Hurst suffered a compensable injury on 23 February 1982. In those circumstances it is surprising that, in their letter of 14 February 1986, Mr. Hurst's solicitors spoke of an inability to identify any particular accident. It is not surprising that the trustee was not prepared to accept the proof of debt, particularly as no claim was made for any continuing incapacity for work. In his affidavit Mr. Hurst explained the absence of any reference in correspondence with the trustee to a specific date of accident by

"... the said disability sustained by me was as a result of the stresses and strains that were placed on my back

over a period of time by the verv nature of mv work duties".

Mr. Hurst does not appear to have heen seen by anv Medical practitioner since 1984. He descr abe s hbhimoclf as "unemploved Delivery Van Driver and Abattoirs Labourer" in his affidavit but there is no evidence as to when and in what circumstances he became unemploved. Counsel for the trustee did Mention that Mr. Hurst ceased to be employed when the debtors ceased to carry on business. Counsel for Mr. Hurst did not challenge this assertion. Nevertheless there was no direct

evidence of any present incapacity for work or an entitlement to

compensation under Schedule 2 to the Workers' Compensation and

It was not in issue that an entitlement to compensation

under the Workers' Compensation and Assistance Act is a provable

debt. By reason of sub-s.231(2), sub-s.82(1) of the Bankruptcy

Act which deals with debts provable in bankruptcy must be read as

modified by r.82. Here the Court is concerned with an arrangement

under Pt X of the Act. Notwithstanding, an entitlement to compensation (though not a claim for damages in neqligence - see sub-s.82(2)) 18 a provable debt. Sub-section 82(4) requires a

trustee to "make an estimate of the value of a debt or liability provable in the bankruptcy which, by reason of its being subject to a contingency, or for any other reason, does not bear a certain

value". A person aggrieved by such an estimate may appeal to the

The Workers' Compensation and Assistance Act provides a

statutory scheme whereby a worker may be paid compensation from the General Fund in the event of the emplover being uninsured and not paving compensation due. It was sugdested during the hearing that Mr. Hurst might be able to by-pass the provisions of the

Bankruptcy Act. Certainly if any action he took could properly be

described as enforcing a remedy against the property of the debtors in respect of a provable debt or commencing a legal proceeding in respect of the debt, sub-s.228(2) of the Act would render such a step incompetent. But these are not matters that

arise directly in the present application and I say no more about

The real question before the Court is this ~ is there sufficient evidence that the personal injury by accident suffered by Mr. Hurst on 23 February 1982 has produced an incapacity for work, total or partial, or otherwise an entitlement to workers' compensation? The question of a common law claim can be ignored for there was no evidence of such a claim before the trustee or

Sub-section 102(4) of the Act empowers a trustee, who considers that a proof of debt has been wrongly rejected in whole, to revoke his decision and admit the proof of debt in whole or in

part. In practical terms, that might be the most appropriate way

of dealing with this matter if Mr. Hurst furnished more adequate

material to the trustee, But the Court cannot speak for the trustee or anticipate what might happen hereafter. It must deal

Notwithstanding the paucity of evidence (and there must be medical and other evidence relating to Mr. Hurst's disability

that could be placed before the Court), I am satisfied that the debtors were, on the date on which they executed deeds of assiqnment, subject to a liability to Mr. Hurst. There was evidence of a compensable accident, of weekly payments made, of an ability to manage only "light duties" and of continuing pain and discomfort. Together they constitute a provable debt i.e. a liability in the debtors to pay compensation for total or partial incapacity for work. It will be for the trustee to make an estimate of the value of that liability and, no doubt to that end, he will require more information from Mr. Hurst. If the information is not forthcoming, Mr. Hurst runs the risk that the

trustee will estimate the value of the liability at some nominal

But I am of opinion that it is proper to reverse the decision of the trustee and direct him to admit to proof the debt due by the debtors by reason of their liability to pay

compensation to Mr. Hurst under the provisions of the Workers'

I certify that this and the preceding eight pages are a true copy of the reasons for judgment herein of his Honour Mr. Justice Toohey Associate

At a glance

Court

Decision date

Before

Source

Judgment (78 paragraphs)

Cited By (2)