27 The question whether a bankrupt has standing to bring an application pursuant to s 84 of the Act has not been examined at Full Bench level by this Commission. A convenient starting point is reference to the following observation by Cooper J in Griffiths v Civil Aviation Authority at:
There is a unity of object and purpose in the operation of ss 58, 60 and 116 of the Act if it is recognised that the consistent focus of attention is upon rights which the trustee can turn to advantage for the benefit of creditors or upon rights the exercise of which will adversely affect or delay the administration of the estate. It is these rights which fall within the definition of "property" in s 5 and the enforcement of which by action are stayed by s 60(2) upon a person becoming bankrupt. To interpret "property" for the purposes of s 5 in this way avoids the injustice of denying to the bankrupt the power to exercise a right in which the trustee has no interest and the exercise of which cannot operate adversely on the property of the bankrupt or the administration of the bankrupt's estate.
28 The issue to be answered in these proceedings depends on the construction of the relevant provisions of the Bankruptcy Act, having regard to the case law, including what has been referred to as "the common law of bankruptcy". We are mindful however of the admonitions in a number of the authorities to pay close attention to the terms and width of the statutory scheme and to be cautious in the use of English cases and the so-called "common law of bankruptcy" derived from them. For example, in Daemar v Industrial Commission of New South Wales & Ors (1988) 12 NSWLR 45, the Court of Appeal dealt with an application for prerogative relief by a litigant in proceedings under s 88F of the Industrial Arbitration Act 1940, who subsequently became a bankrupt. The Court held that the proceedings were stayed by s 60 of the Bankruptcy Act because the s 88F proceeding was an "action" which did not fall within the exemption provided in s 60(4)(a) in respect of actions for any "wrong done to the bankrupt."
29 Kirby P, after setting out the relevant provisions of the Bankruptcy Act (s 58, s 60, s 116(1)(a), s 116(1)(b) and s 116(2)(g) said at 50 - 51:
These provisions make it clear that the scheme and purpose of the Act is, upon the debtor's becoming a bankrupt, to transfer property rights, including certainly the right to sue in respect of claims to property, from the bankrupt to his trustee. This is so, notwithstanding that it involves personal inconvenience to the bankrupt: see Faulkner v Bluett (1981) 52 FLR 115 at 119. Indeed, it is so notwithstanding the fact that it deprives the bankrupt of important civil rights which he or she would otherwise normally enjoy. It is of the essence of bankruptcy, as provided for by the Act, that property which belongs to the bankrupt, including choses in action (other than those which are specifically exempted) are vested upon bankruptcy in the bankrupt's trustee. The trustee has the charge of the estate of the bankrupt. It is then for the trustee to distribute that property as the Act provides, principally for the benefit of the creditors. To secure the benefits and protections which the Act provides to a debtor, the debtor's status is changed, rights are diminished and property is controlled. It could scarcely be otherwise for if it were, valuable interests which a bankrupt might have, in the form of choses in action would not be caught in the net cast by the very wide language of s 116(1). This would be so despite the specific and limited terms of the exemption in the case of rights to recover damages or compensation provided by s 116(2) and the very purposes of gathering in the bankrupt's property (our emphasis).
30 Similarly, in Fuller v Beach Petroleum NL (1993) 43 FCR 60, a sequestration order was made against Mr Fuller who was found liable for several claims in tort and for breach of his fiduciary duty as a director of Beach Petroleum. The appellant filed a notice of appeal against the judgment. The majority of the Full Court of the Federal Court (Gummow and Whitlam JJ, Hill J dissenting) dismissed the appeal as incompetent, determining that the appellant's right to appeal vested in the trustee of the estate of the appellant.. The appellant's right of appeal was held to be "property" within the meaning of s 5(1) of the Bankruptcy Act which therefore vested in the trustee upon the appellant's bankruptcy pursuant to s 58(1) of the Act.
31 The majority in Fuller said (at 66 - 67) as to the argument that Parliament had, in s 60(4) and s 116(2)(g), specifically provided "very limited exceptions":
[S]ection 116 contemplates that were it not for the express exclusion, what might be called bare rights of action to recover damages or compensation for personal injury, rights not ordinarily assignable would nevertheless be treated as property divisible amongst the creditors of the bankrupt and therefore as property which vested under section 58(1).
32 See also the judgment of the Queensland Court of Appeal in Geia v Palm Island Aboriginal Council (1999) 152 FLR 135 at 140, where Pincus and Thomas JJA and Jones J said:
[T]here appears to have been a collection of exceptions to the general proposition that the bankrupt's property vested in the trustee, developed in English cases to fill in what seemed to be gaps in, initially relatively simple, bankruptcy legislation. The Bankruptcy Act 1966 (Cth) has elaborate provisions on this subject, particularly in s 116 and, as to income received after bankruptcy, in Division 4B. Unless there is some pressing reason to do so, such as that it is evident that the Parliament must have intended an exception to be implied, courts should be slow to hold that the statutory scheme to which we have referred has, to some uncertain extent, to be read subject to unstated exceptions, because of doctrines worked out in the older cases, under English statutes.
33 Nevertheless, the way in which the Australian cases relate to relevant English authorities is usefully considered in the judgment of French J of the Federal Court of Australia in Re Heenan; Ex parte Collins (1993) 116 ALR 146. His Honour (at 150 - 152) considered the history of the predecessor section to s 116(2)(g) and held:
The protection afforded by the Bankruptcy Act 1966 to compensation recovered in respect of personal injury arises out of the long standing principle that a right of action in a bankrupt does not pass to the trustee "where the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind or character": Beckham v Drake (1849) 2 HL Cas 579 at 604.
34 His Honour also cited with approval the discussion of the policy explaining the general exceptions as outlined by the English Court of Appeal in Ex parte Vine; re Wilson (1878) 8 Ch D 364, at 166 - 167, where the Court said:
The general principle always has been that, until a bankrupt has obtained his discharge, all his property is divisible among his creditors. But an exception was absolutely necessary in order that the bankrupt might not be an outlaw, a mere slave to his trustee; he could not be prevented from earning his own living. On that principle the trustee could not sue for moneys due to the bankrupt in respect of his personal labour, and, if the bankrupt could sue for them only for the benefit of his trustee, he would really be without remedy. If he could not sue for damages in respect of a personal wrong, such as the seduction of his daughter, or anything like that, the courts of the realm would be closed to him for all practical purposes (our emphasis).
35 We have earlier referred to the fact that Hill J was in the minority in Fuller v Beach Petroleum NL. His Honour was of the opinion that "the subject matter of the action in question could not be regarded as 'property' and was not property divisible among creditors, and further that the bankruptcy legislation did not vest a 'bare right of action' in the trustee." Hill J considered that certain rights of action, beyond those referred to in s 116(2) of the Bankruptcy Act, remain with the bankrupt after bankruptcy, and that any issue of costs could be addressed on a motion for security for costs.
36 In Griffiths v Civil Aviation Authority (1995) 137 ALR 521, the Full Federal Court, (Spender, Einfeld and Cooper JJ) distinguished the majority judgment in Fuller. The issue in this case was a decision of the Civil Aviation Authority varying the appellant's commercial pilot licences following a finding that the appellant was not a "fit and proper person" to hold the licences. As a result of the variation, the appellant was no longer able to earn an income as a pilot and consequently his business failed and a sequestration order was made against the estate of the appellant. The respondent Civil Aviation Authority had filed a notice of motion seeking the dismissal of the appeal as incompetent because the appellant was a bankrupt and had no standing to prosecute the proceedings. Einfeld J, at 536, expressed his agreement with the reasoning of Hill J in Fuller concerning the interpretation of s 116(1)(a), observing that "the English cases are helpful in determining whether, in a particular case, a right of action can properly be described as "property". Einfeld J said:
Despite the fact that the decisions in Fuller and Daemar mean that two present justices of the High Court ( Gummow and Kirby JJ) have expressed different views, it is my respectful opinion the reasoning adopted in the cases preserving to the bankrupt actions personal to the bankrupt which have no implications for the estate should be applied to the present appeal. The variations made to the present appellant's commercial pilot's licences are sufficiently personal in their likely effect upon the appellant to retain for himself the right of appeal in respect of them. Given its completely personal nature and the fact that it holds no interest for the estate whatsoever, the right of appeal in this case is not in my view "property" vesting in the trustee upon the appellant's bankruptcy…
37 Cooper J held, at 540 (our emphasis):
The definition of "property" is s 5 of the act is expressed in the broadest of terms. However, the definition is to be construed in such a way as would promote the purpose or object underlying the act in preference to a construction that would not promote that purpose or object: Acts Interpretation Act 1901 (Cth) s 15AA. Additionally, the Act is to be interpreted against the background of what has been described as the "common law of bankruptcy": Faulkner v Bluett (1981) 52 FLR 115 at 118.
The statutory object of the Act is to vest the property of a bankrupt in a trustee in order that the same may be divisible among the bankrupt's creditors. The trustee is to get in the property and reduce it to a money sum and to disown, for example, the property which would be a drain on the estate. The statutory object is also to protect the person of the bankrupt and his property insofar as his creditors are concerned as at the date of the making of the sequestration order: see s 58(3) and (4) and s 60(1)(a) and (b) of the Act generally Storey v Lane (1981) 147 CLR 549 at 557; 36 ALR 129.
The Act is not concerned to protect the person of the bankrupt from legal proceedings brought by persons other than creditors or by persons seeking to enforce payment of an obligation imposed by a statute or in the exercise of a power authorised by statute: see, for example, the imposition of fines and statutory charges together with imprisonment for non-payment in Commissioner for Motor Transport v Train (1972) 127 CLR 396 and generally Re Lattouf (1994) 52 FCR 147 (FC). Nor is the Act concerned to prevent the bankrupt enforcing rights which are personal to the bankrupt and irrelevant to the attainment of the statutory objects of the Act. In consequence, a construction of the Act which denies to a bankrupt the enjoyment of rights which do not affect the value of the bankrupt's estate or the administration of the estate is to be avoided.
At common law, a right of action for a personal injury done to the bankrupt where "the damages are to be estimated by immediate reference to the pain felt by a bankrupt in respect of his body, mind or character, and without immediate reference to his rights of property" (per Erle J in Beckham v Drake (1849) 2 HLC 579 at 604; 9 ER 1213 at 1222) was not property which passed to the assignee. That exception has been acknowledged and given effect to in Australia in the various insolvency statutes, including the Act: see s 60(4) and s 116(2)(g). However, in my view, it was not the intention of parliament in passing s 60(4) and s 116(2)(g) nor the predecessors of these sections, to state exhaustively the exceptions to the property in the nature of rights of action which would not pass to the trustee and thereby to identify by omission all other rights as "property" within the meaning of s 5 of the Act.
38 Employment is not usually referred to, or known as, property. Whatever legal "interest" an employee has in his or her employment, it is not a property interest. In any event, it seems clear from reference to the relevant statutory provisions and the case law that, although the expression "property", and cognate expressions such as "the property of the bankrupt" and "after acquired property", are to be construed in a very wide sense, the bankrupt's employment is not considered "property" for the purposes of the Bankruptcy Act.
39 Indeed, all the pertinent indications in the statute and the case law are to the opposite effect. For example, there are a number of references in the Bankruptcy Act to "property divisible among the bankrupt's creditors" (see, for example, s 58(6) and the definition of "the property of the bankrupt" in s 5); it could not seriously be suggested that the bankrupt's employment, or the bankrupt's rights as to his or her employment could be divisible among the creditors. Indeed, the statute recognises that it is most desirable that the bankrupt be able to earn income during the course of the bankruptcy and also contemplates the likelihood that a bankrupt who was an employee prior to the bankruptcy would continue to be in employment. The references we have cited from division 4B of the statute, including the references to ss 139L and 139U are also in point. In particular, we do not detect in the scheme of the Australian statute any provision which would be at odds with the observation in the judgment of the English Court of Appeal in Ex part Vine; re Wilson, where reference was made to the necessary exception to the property of the bankrupt being divisible amongst his creditors, "in order that the bankrupt might not be an outlaw, a mere slave to his trustee; he could not be prevented from earning his living".
40 Also germane, in the present context, are the observations cited earlier from the judgments in the Full Federal Court in Griffiths v Civil Aviation Authority. In this respect, we refer to the passages emphasised in the extracts cited above from the judgment of Cooper J. In light of those analyses, a relevant question is, would a construction of the Bankruptcy Act which denied the bankrupt's right to take proceedings under s 84 of the Industrial Relations Act be one which denied to the bankrupt "the enjoyment of rights which did not affect the value of the bankrupt's estate or the administration of the estate"? Similarly, was it the intention of Parliament, in enacting provisions of the kind referred to earlier which, as Cooper J observed, did not "state exhaustively the exceptions to the property in the nature of rights of action which would not pass to the trustee", to exclude rights such as those under s 84?
Section 84 in the context of a bankruptcy
41 Section 84 of the Act enables an employee to apply for relief in respect of the termination of the employee's employment by the employer on the ground that the termination was harsh, unjust or unreasonable. It is not a civil proceeding at law or equity which relates to the property of the bankrupt. The right to commence proceedings under s 84 is a statutory right which only the employee (s 84(1)) or an industrial organisation of employees (s 84(2)) can exercise.
42 If the application is not resolved by conciliation, the employee may elect to have the matter determined by arbitration. In the event that the Commission determines that the termination was harsh, unjust or unreasonable, the available remedies are set out in s 89 of the Act. The primary remedy provided under s 89 is reinstatement. It is only where the Commission considers that reinstatement is not appropriate that compensation, in lieu of reinstatement, may be awarded. In our view, the fact that compensation is available in such circumstances, does not alter the nature of an application made under s 84. It is clear that the primary remedy under the Act is reinstatement in employment: see, for example, Burge v NSW BHP Steel Pty Ltd (2001) 105 IR 325 at 345; Little v Commissioner of Police (No 2) (2002) 112 IR 212; Plummer v Stannard Bros Launch Service Pty Limited (2005) 145 IR 111; and Public Service Association and Professional Officers' Association Amalgamated Union of New South Wales (on behalf of Peter Riley) v WorkCover Authority of New South Wales [2006] NSWIRComm 108.
43 The matter presently before the Commission is not a decision involving a "personal injury or wrong" done to the respondent, but a personal right of the respondent which the creditors could not turn into any advantage to themselves. However, the question whether the right to bring an action under s 84 is property vesting in the trustee is assisted by an examination of how the "personal injury and wrong" exception has developed in bankruptcy cases to exclude from the definition of "property", and preserve to the bankrupt, the right to bring actions which are purely personal to the bankrupt.
44 We consider that the right to make an application pursuant to s 84 is a personal right of the type envisaged in Griffith, where Cooper J observed, as we earlier noted:
[T]here is a unity of object and purpose in the operation of s 58, s 60 and s 116 of the Bankruptcy Act if it is recognised that the consistent focus of attention is upon rights which the trustee can turn to advantage for the benefit of creditors or upon rights the exercise of which will adversely affect or delay the administration of the estate.
45 It is these rights, as Cooper J observed in Griffiths, which fall within the definition of "property" in s 5 and the enforcement of which, by action, are stayed by s 60(2) upon a person becoming bankrupt. To interpret "property", for the purposes of s 5 in this way avoids the injustice of denying to the bankrupt the power to exercise a right in which the trustee has no interest and the exercise of which cannot operate adversely on the property of the bankrupt, or the administration of the bankrupt's estate.
46 The right to bring a s 84 application is a personal right in which the applicant is contending that he remains personally suitable to the position from which he has been dismissed, and should be reinstated. It follows that the two questions we posed earlier (in para [40]) should be answered respectively "Yes" and "No".
47 We acknowledge that any money amount which the Commission ordered be paid as compensation may, if the bankruptcy was continuing, be "income" for the purposes of the Bankruptcy Act: see s 139L and para [22] above. Nevertheless, that consideration would tend to support our conclusion, rather than contradict it.
48 We have earlier (in para [15]) set out the terms of s 116(1)(b) of the Bankruptcy Act which provides that also included in "property" divisible amongst the creditors is (broadly speaking) the capacity to exercise, and to take proceedings for exercising powers in, over in respect of property as might have been exercised by the bankrupt. We have also earlier observed that employment is not usually considered part of the employee's property. In that context, reference to s 116(1)(b) is useful because it shows the nature of the connection between the capacity to take proceedings and the bankrupt's property, which is necessary for the capacity to take proceedings to itself be considered property. Although there is the kind of connection between a bankrupt's employment and the capacity (under s 84) to take proceeding contemplated by s 116(1)(b), because the bankrupt's employment is not part of the bankrupt's property, so too any right or capacity the bankrupt might have to take proceedings under s 84 in respect of his employment cannot be part of the bankrupt's property.
49 Before concluding this aspect of the decision, we should refer to a number of other cases. The first is the judgment of Schmidt J, sitting in the Commission in Court Session, in Smith v Chevelle Developments Pty Ltd [2005] NSWIRComm 109, which counsel for the appellant submitted was equally applicable in respect of an application brought under s 84. Her Honour there held that an applicant had no standing to bring a s 106 claim because of the operation of s 5, s 58 and s 116(2) of the Bankruptcy Act. In particular, her Honour determined that the right to bring such proceedings is "property", as defined in s 5 and s 58, and such proceedings were not exempted by s 116(2) of the Bankruptcy Act.
50 That case, in which Ms Smith, pursuant to s 106 of the Industrial Relations Act, was seeking payments for days off, commission payments, payments of annual leave, compensation and statutory superannuation, is distinguishable from the present case. The applicant was seeking to either enforce a contract, or receive damages for its unfairness and her Honour was satisfied that Ms Smith's right to bring proceedings under s 106 of the Act was after-acquired property which vested in the trustee under s 58(2) of the Bankruptcy Act, being property divisible amongst the creditors of the bankrupt, (s 116(1)), which did not fall within the exceptions provided by s 116(2). Her Honour found the proceedings under s 106 was property.
51 Proceedings under s 84, as we have already observed, certainly where reinstatement is being sought, are clearly distinguishable from the s 106 application considered by her Honour in Smith. The relief obtained by the respondent in these proceedings, a reinstatement order, cannot be property which satisfies the definition of "property of the bankrupt" as found in the Bankruptcy Act, since such an order cannot be property divisible amongst the bankrupt's creditors, unlike the relief sought by Ms Smith.
52 We have therefore concluded that an action of the present kind may be brought by a bankrupt. In our opinion, the reasoning adopted in cases such as Griffiths v Civil Aviation Authority, preserving actions personal to the bankrupt, which have no implications for the estate, should be applied to the present appeal. The termination of the respondent's employment and the rights provided by s 84 of the Act are sufficiently personal in their likely effect upon the respondent to retain for himself the right to bring such an application. Given, as we have found, it is a proceeding of a completely personal nature and not an action claiming damages or other sums on the basis of wrongful dismissal under a contract for personal service, and the fact that it holds no interest for the estate whatsoever, the application brought by the respondent, is not, in our view, "property", vesting in the trustee upon the respondent's bankruptcy.
53 Finally, we should refer to two other cases. First, the judgment of Madgwick J in the Federal Court in Pelechowski v NSW Land and Housing Commission [2000] FCA 233 where his Honour came to a different conclusion to ours. We do not consider it is necessary to discuss his Honour's decision in detail which we note was a short extempore decision relating to an application for judicial review of a decision of a judicial registrar who had declined to grant relief against alleged unfair dismissal as had been claimed by Mr Pelechowski. We regret to say that to the extent that our conclusions differ with those of his Honour, we do not accept the conclusion reached by his Honour.
54 The second decision is that of Commissioner Macdonald in Roberts v Larload Pty Ltd [2005] NSWIRComm 1049 where he determined that a s 84 application did not fall within the definition of "property" for the purposes of s 5 of the Bankruptcy Act. We note that the conclusion we have reached is broadly the same as that reached by the Commissioner, although we have reached the conclusion by a somewhat different process of reasoning.
55 We would therefore dismiss this ground of the appeal.