17 I am unable to accept those submissions. There is no definition of 'chose in action' in the Bankruptcy Act. It is defined, for example, in Butterworths Concise Australian Legal Dictionary, Second Edition, as:
An intangibly personal property right recognised and protected by the law, which has no existence apart from the recognition given by the law, or which confers no present possession of a tangible object, such as the right to payment under a loan contract or the promise to pay on a bill of exchange.
18 It is difficult to see that the right to commence proceedings under s106, given by s108, is not a chose in action, so defined. Nevertheless, it is the definition of 'property' in s5 of the Bankruptcy Act which is crucial to the question here arising. Nor is the fact that a right is statutory, or unassignable, itself a basis for excluding it from the statutory definition of property. (See Fuller v Beach Petroleum NL and Another (1993) 117 ALR 235 at 241 - 242.)
19 For the reasons given, I am satisfied that the right given to Ms Smith by s108 to pursue a claim under s106, arose only when the employment contract sought to be attacked in these proceedings came into existence. Once it came into existence, it was a right which fell squarely within s58(1)(b), as after acquired property, and accordingly vested in the trustee.
20 That right became part of the property divisible amongst the applicant's creditors, pursuant to s116(1). The exemption relating to the right to recover damages or compensation for personal injury or wrong done to a bankrupt, provided by s116(2)(g), does not apply to these proceedings. The summons does not assert any claim for compensation for injury to the body, mind or character of the applicant. It is concerned, as I noted, with the alleged unfairness of Ms Smith's employment contract.
21 This conclusion is consistent with the observations of the Court of Appeal as to the nature of the scheme established by the Bankruptcy Act in Daemar v Industrial Commission of New South Wales and Ors (1988) 12 NSWLR 45, at 50-51:
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.
22 The Bankruptcy Act evinces the same intention in respect of after acquired property, subject to limitations which do not here apply. This conclusion is also consistent, I note, with the approach of the Queensland Court of Appeal in Geia v Palm Aboriginal Council [1999] QCA 389, where the claim pursued was for damages for breach of contract, arising, it was alleged, from a failure to give adequate notice of termination. The bankruptcy also occurred prior to the termination of the employment in question. It was held that the proceedings did not fall within the exemption in s116(2) and at [17], it was concluded that the action could not be brought by the bankrupt, it could only be brought by the trustee, because it did not concern a claim for personal services actually rendered before termination of the contract.
23 The same conclusion follows here, where, in accordance with the statutory scheme, the claim concerns the fairness of the contract of employment, in the respects identified in Ms Smith's summons.
24 Similar conclusions were reached by Madgwick J in the matter of Pelechowski v NSW Land & Housing Commission [2000] FCA 233, in the context of proceedings to which s60 of the Bankruptcy Act, were relevant. Section 60 gives a trustee a right of election as to the further prosecution of proceedings brought prior to a bankruptcy. The proceedings in question were brought under the illegal termination of employment provisions of the Workplace Relations Act 1966 (Cth). Madgwick J concluded at [5]:
There is in reality no claim for anything in the nature of damages which would be "estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property": see Cox v Journeaux (1935) 52 CLR 713 at 721. The essential element of proceedings for illegal termination of employment under the Workplace Relations Act 1996 (Cth), is that one's economic relations with one's former employer have been disrupted. Those economic relations depend upon contract, or perhaps in the case of a public servant, a statutory relationship, but nevertheless of a contractual or quasi-contractual kind, that is to say, property rights are at the heart of the proceedings.
25 The same conclusions flow here in relation to the proceedings brought by Ms Smith under s106 of the Act. It is property rights which are at the heart of this litigation. For these reasons, I am satisfied that under the scheme established by the Bankruptcy Act, Ms Smith had no right to bring these proceedings. The fact that in February 2002, the bankruptcy was discharged, has no impact on this conclusion - see Daemar v Industrial Commission of New South Wales and Anor [No 2] (1990) 22 NSWLR 178 at p185. The application must accordingly be dismissed.
26 It is necessary to consider the question of costs. The usual order would be that Ms Smith bear the respondents' costs, as agreed or assessed. The motion sought such costs and in the alternative, an order that Ms Smith's solicitor bear the costs of and incidental to the motion. At the hearing it was explained that the order pressed against the solicitor was in respect of delays at two mentions, when the respondents had sought on numerous occasions, that confirmation be provided that Ms Smith was a bankrupt.
27 In resisting such an order, Mr Capsanis submitted that it was relevant that the respondents had first sought that confirmation by letter of 2 February, it was not an issue raised in the respondents' pleadings. No reasons were there given for the information sought, information 'that may in all probability have been received in confidence into the course of instruction from his client'. While the fact of bankruptcy was a public matter, any discussion with a solicitor as to 'bankruptcy status is a status between the solicitor and client and is confidential between solicitor and client, reinforced by the fact it was not a matter of particulars further to pleadings'. It was further submitted that '[t]here is a protocol and a procedure under the rules for the proper way for the respondent to approach the matter by way of notice to admit' and that the information would only have to be provided if 'a proper request for particulars' was made 'pursuant to pleadings'. The way in which the request was made was neither 'appropriate and the responses were not unreasonable', especially given that it appeared that the respondents had information about the bankruptcy for some five months, but had not raised the issue until February.
28 The relevant circumstances were that the proceedings were commenced by summons on 30 July 2004; the respondents filed their reply on 22 September 2004 and the applicant's response was filed on 22 October 2004. Annexed to an affidavit sworn by Craig John Byrnes on 11 March 2005, was a an extract from the National Personal Insolvency Index as at 17 September 2004, indicating that Ms Robyn Yvonne Smith was an undischarged bankrupt. Mr Byrnes is a Senior Employee Relations Adviser employed by the Real Estate Employers' Federation of NSW, at one stage the respondents' agent in the proceedings. He was not required for cross examination as to the circumstances in which the bankruptcy came to the respondents' attention.
29 By letter of 2 February 2005, Mr Byrnes sought confirmation that it was Ms Smith, who appeared on the register as an undischarged bankrupt and how, in those circumstances, she could maintain these proceedings in the absence of the trustee. A response was sought by 11 February, but none was received.
30 On 14 February, there was a discussion between Mr Capsanis and Mr Byrnes. There was an issue between them as to what was said, which it is unnecessary to resolve. It is sufficient to note that the information sought was not provided and that it was common ground that reference was made by Mr Capsanis to his need to obtain instructions from Ms Smith. On 23 February, Mr Byrnes wrote again, seeking a response by 25 February and advising that otherwise, an application would be made to the Court to have the matter relisted and the conciliation date, fixed for 21 March, vacated.
31 There was no response and on 3 March, a relisting was sought. At a mention on 8 March, the parties were encouraged to confer as to what effect that had on the proceedings, given the provisions of the Bankruptcy Act. A further mention was fixed for 16 March. Mr Byrnes wrote again to Mr Capsanis on 8 March, seeking confirmation of the bankruptcy. There was no response. On 10 March a further letter seeking a response was sent.
32 On 11 March, a reply was sent by Mr Capsanis. Confirmation that Ms Smith was a bankrupt was still not given, but questions were asked as to the provisions of the Bankruptcy Act relied upon and an explanation for the delay in raising the question of bankruptcy. On 14 March, Mr Byrnes advised that given the refusal to confirm that Ms Smith was a bankrupt, a motion would be filed. seeking that the originating summons be set aside. A copy of the motion and supporting affidavit were attached and advice was given that reliance would be placed upon the provisions of ss5, 58 and 116 of the Bankruptcy Act. These documents were also formally served.
33 On 15 March, Mr Capsanis replied, advising that 'As you have now provided a form of relevance for making your enquiry' it was confirmed that Ms Smith was the bankrupt person 'referred to' in the search, but that the 'bankruptcy was discharged on 14th February 2005'. At the mention on 16 March, the conciliation conference on 21 March was vacated and the motion listed for hearing instead.
34 Mr Capsanis swore an affidavit on which he relied in resisting the costs orders sought. No evidence was put on by Ms Smith. No suggestion was there made by Mr Capsanis that there was any difficulty in him being provided with instructions by his client. The only explanation given as to the failure to respond to the repeated requests for confirmation that Ms Smith was a bankrupt, was his policy to preserve client confidentiality; that his discussions with his client as to her bankruptcy status were in confidence and that until 8 March he 'held no basis from the Respondents as to relevancy of their enquiry. Consequently, until then, I was of the view I was under obligation not to discuss the matter of my clients bankruptcy status'.
35 There is obvious difficulty with such an approach. The fact of bankruptcy is a public, rather than a private matter. An applicant's status as a bankrupt, is relevant to the question of whether or not proceedings may be instituted, or pursued by the applicant, or whether such rights are vested in a trustee by the provisions of the Bankruptcy Act. There is obvious discourtesy in a legal practitioner simply ignoring enquiries of the kind here made on behalf of the respondents, as to the applicant's bankruptcy. The approach adopted also led to unnecessary costs being incurred, which I am satisfied Ms Smith ought not, in fairness to be called upon to bear. That such an issue is raised by the respondents in correspondence, rather than through a notice to admit facts, or some other formal Court process, does not provide a proper basis for an applicant's solicitor refusing to respond to the question raised, or indeed failing to seek instructions in relation to it. To the contrary, such an enquiry is entirely likely to be a more cost effective way of raising the issue, of considerable importance to an applicant such as Ms Smith, who is facing an adverse costs order, if the proceedings are likely to be dismissed, given the bankruptcy.
36 In the circumstances, I am unable to see why these unnecessary costs ought to be borne by Ms Smith, resulting as they apparently did, from Mr Capsanis' failure to obtain necessary instructions. It is appropriate that an order that he bear the costs connected with the correspondence between 23 February and 12 March 2005, and the mention on 8 March 2005, be made.
37 What those costs might properly be is another matter. The respondents elected to be represented in the proceedings, at least for a time, by an agent which is not a legal practitioner and which may therefore not engage in legal practice for fee, gain or reward (see s14 of the Legal Practitioners Act 2004). The Act permits representation by an agent. It does not regulate the costs which they may charge, if any. That, however, is not a matter which must be here determined.
Orders