Roy Frederick Griffiths v Civil Aviation Authority [1996] FCA 1502

Roy Frederick Griffiths v Civil Aviation Authority [1996] FCA 1502 - FCA 1996 case summary — Zoe

[49]

Vesting of property upon bankruptcy

58.(1) Subject to this Act, where a debtor becomes a bankrupt -

(a) the property of the bankrupt, not being after-acquired

property, vests forthwith in the Official Trustee, or, if, at the

time when the debtor becomes a bankrupt, a registered trustee

becomes the trustee of the estate of the bankrupt by virtue of

section 156A, in that registered trustee; and

(b) after-acquired property of the bankrupt vests, as soon as it

is acquired by, or devolves on, the bankrupt, in the Official

Trustee or, if a registered trustee is the trustee of the estate

of the bankrupt, in that registered trustee.

....

(6) In this section, "after acquired property", in relation to a

bankrupt on or, means property that is acquired by, or devolves

on, the bankrupt on or after the date of bankruptcy, being

property that is divisible amongst the creditors."

Stay of legal proceedings

60.(1) The court may, at any time after the presentation of a

petition, upon such terms and conditions as it thinks fit -

....

(b) stay any legal process, whether civil or criminal and whether

instituted before or after the commencement of this sub-section,

against the person or property of the debtor -

(i) in respect of the non-payment of a provable debt or of a

pecuniary penalty payable in consequence of the non-payment of a

provable debt; or

(ii) in consequence of his refusal or failure to comply with an

order of a court, whether made in civil or criminal proceedings,

for the payment of a provable debt....

....

(2) An action commenced by a person who subsequently becomes a

bankrupt is, upon his becoming a bankrupt, stayed until the

trustee makes election in writing, to prosecute or discontinue the

action.

....

(4) Notwithstanding anything contained in this section, a bankrupt

may continue, in his own name, an action commenced by him before

he became a bankrupt in respect of -

(a) any personal injury or wrong done to the bankrupt, his spouse

or a member of his family; or

(b) the death of his spouse or of a member of his family.

(4A) ....

(5) In this section, 'action' means any civil proceeding, whether

at law or in equity."

Property divisible amongst creditors

116.(1) Subject to this Act -

(a) all property that belonged to, or was vested in, a bankrupt at

the commencement of the bankruptcy, or has been acquired or is

acquired by him, or has devolved or devolves on him, after the

commencement of the bankruptcy and before his discharge;

(b) the capacity to exercise, and to take proceedings for

exercising, all such powers in, over or in respect of property as

might have been exercised by the bankrupt for his own benefit at

the commencement of the bankruptcy or at any time after the

commencement of the bankruptcy and before his discharge;

.....

is property divisible amongst the creditors of the bankrupt.

(2) Subsection (1) does not extend to the following property:-

....

(g) any right of the bankrupt to recover damages or compensation -

(i) for personal injury or wrong done to the bankrupt, the spouse

of the bankrupt or a member of the family of the bankrupt;

....

and any damages or compensation recovered by the bankrupt (whether

before or after he became a bankrupt) in respect of such an injury

or wrong or the death of such a person...

[106]

Although bankruptcy is the creature of statute law, certain rules

have been formulated from time to time by the English courts

exercising bankruptcy jurisdiction which limit the literal

interpretation of vesting sections in bankruptcy legislation and

which have been called "the common law of bankruptcy: Williams on

Bankruptcy (18th ed.) p318.

Notwithstanding the language of section 38 of the Bankruptcy Act

1914 ..... which provides that the property of the bankrupt

divisible amongst his creditors shall comprise all such property

as may be acquired by or devolved on him before his discharge, it

has been established by decisions of the English courts that the

personal earnings of a bankrupt pass to the trustee except such

part of them as is necessary for the maintenance of the

bankrupt...

Also the English cases draw a distinction between personal

earnings of the bankrupt and the profits of a business carried on

by him ..... The rationale (of this distinction) underlies also

the distinction between rights of action that vest in the trustee

of a bankrupt's estate and those that do not. Although rights of

action generally pass to the trustee of a bankrupt's estate,

exceptions have been created by decisions of the courts, including

the following: a right of action for slander, Ex parte Vine; Re

Wilson ...; for seduction of a servant, Howard v Crowther ...; for

trespass to land or goods in the plaintiff's actual possession, at

least where the only substantial damage is for the annoyance and

personal inconvenience to him, Clark v Calvert ... and Rose v

Buckett ...; for breach after bankruptcy of a contract for

personal service made before bankruptcy, Bailey v Thurston and

Co.Ltd ...; for personal injuries arising out of certain breaches

of contract such as a contract of marriage, Drake v Beckham.

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: Wetherell v Julius (1850) 138

ER 108; Wage on Bankruptcy (1904 ed.) p201. Where the essential

cause of action is the personal injury done to the person or

feelings of a bankrupt the right to sue remains with the bankrupt

.....

At a glance

Court

Decision date

Before

Source

Judgment (169 paragraphs)

Roy Frederick Griffiths v Civil Aviation Authority [1996] FCA 1502 (24 May 1996)

Parties

Legislation Cited (13)

Cases Cited (19)