Badcock v State of South Australia - [2008] SADC 133

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil: Appeal Against a Master's Decision)
BADCOCK v STATE OF SOUTH AUSTRALIA & ORS
[2008] SADC 133
Judgment of Her Honour Judge McIntyre
17 October 2008
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS
Appeal against decision and orders of Master striking out plaintiff's statement of claim and granting liberty to lodge and serve a proposed draft further amended statement of claim - Appellant/plaintiff is an undischarged bankrupt asserting sequestration order made against his estate on 21 December 2001 of no effect - Held - Master correctly decided that as the appellant/plaintiff was an undischarged bankrupt he had no standing to institute or maintain the proceedings as pleaded - appeal dismissed
Bankrupty Act 1966 (Cwth) s58(1)(a); District Court Act 1991 s24, s43(2)(a); District Court Rules 1987 rr3.01, 3.04 and 46.18, referred to.
Daemar v Industrial Commission of NSW & Ors (1988) 12 NSWLR 45 ; Nguyen ex parte Official Trustee (1992) 32 FCR 320; Cox v Journeaux (No 2) (1935) 52 CLR 713, applied.
Official Trustee in Bankruptcy As Trustee of the Bankrupt Estate of Andrew Ley Jordan v Maria Lucia Jordan [2004] SADC 173; Badcock v PriceWaterhouseCoopers (Reg) & Anor [2006] SADC 101, considered.

BADCOCK v STATE OF SOUTH AUSTRALIA & ORS
[2008] SADC 133

This is an appeal from a judgment of a Master delivered on 5 August 2008. The appellant is the plaintiff in the action and the respondents are the defendants. This matter is subject to the 1987 District Court Rules. (“DCR”)
Preliminary matters
The reasons for decision of the Master were posted to the parties on 5 August 2008. Under DCR 12.06 they are deemed to have been received in the normal course of post.
The notice of appeal was filed in the District Court on 28 August 2008.
Under DCR 97.03 the appellant had fourteen days within which to appeal. Accordingly, the appeal was lodged out of time. It appears the reason for the delay in instituting the appeal was the appellant’s mistaken belief that his appeal should be lodged in the Supreme Court of South Australia. He filed the notice of appeal in that Court’s Registry on 20 August 2008. The respondents consented to an extension of time and accordingly, I extended the time for lodging the notice of appeal to 28 August 2008.
The notice of appeal did not comply with the DCR. In part this was because of the misconception about the Court in which the appeal should be lodged and in part it was a drafting issue. The respondents, however, took no point in relation to the form of the notice of appeal and accordingly, the matter proceeded to argument on the substantive appeal points.
Background
This action has a lengthy history. The self-represented appellant commenced these proceedings on 2 May 2003. He filed an amended statement of claim on 16 September 2004.
It is apparent from the amended statement of claim that the action relates to events which occurred between 1996 and 1998.
The appellant pleads that he was the managing director of Austfurn Pty Ltd (“the company”) which acted as trustee for the assets of the Rob Badcock Family Trust (“the trust”). The company conducted the businesses of Decorator Warehouse and Howell Leather for the trust.
The amended statement of claim comprises some 246 paragraphs. The precise basis of the claim is somewhat difficult to discern. It appears that the appellant is claiming damages in his personal capacity, and on behalf of the company and the trust. Neither the company nor the trust are listed as plaintiffs.
It is stated in the statement of claim that the company was placed into liquidation on 18 October 1998.
The decision of the Master that is the subject of appeal relates to an application of the respondents dated 29 January 2008 seeking an order that the action be dismissed or, in the alternative, that the amended statement of claim be struck out. The application relied on DCR 3.01, 3.04 and 46.18 and was supported by an affidavit of Mr Colin Ambrose, a certified practising accountant, sworn on 14 January 2008. The appellant filed an affidavit in response sworn by him on 31 March 2008, and issued a further application seeking dismissal of the respondent’s application and costs.
These applications were heard by the Master on 7 July 2008. The appellant appeared in person and Mr Keane appeared for the respondents. Both parties provided written submissions in addition to oral argument. The Master determined the matter on 5 August 2008. He declined the application by the respondents to strike out the claim but struck out the amended statement of claim. The Master’s conclusion can be summarised as follows:
·The appellant’s estate has been the subject of a sequestration order made on 21 December 2001 and he remains an undischarged bankrupt.
·In those circumstances the only legal claims that the appellant is entitled to pursue or continue are claims in which damages can be estimated only by immediate reference to the pain felt by the appellant in respect of his body, mind and character without reference to his property rights.
·The statement of claim is difficult to fully understand because of the manner in which it has been drafted but it appears the appellant’s claim is, in essence, a damages claim for negative financial consequences of the collapse of his business leading to his bankruptcy and allegedly leading to personal injuries pleaded.
·To the extent that he makes a claim for personal injury the claim arises as a result of the alleged interference of the respondents with the appellant’s property rights.
The Master struck out the appellant’s claim as pleaded.
The Master considered that the appellant might be:
able to plead a meaningful cause of action which are appropriate by reason of immediate reference to pain felt by him in respect of his body, mind and character and divorced from his property rights.[1]
[1] Judgment para 71
The Master considered he should be afforded the opportunity to do so. He therefore declined to enter judgment for the defendants but provided the appellant an opportunity to replead his case limited to causes of action which he is entitled to pursue. The orders he made were as follows:
Summary of orders
1. I strike out the plaintiff’s amended statement of claim.
2.The plaintiff is at liberty to lodge, and serve, but not formally file, a proposed draft further amended statement of claim which is limited to the claims which he has standing to pursue, namely damages which are estimated only by immediate reference to pain felt by him in respect of his body, mind and character and without reference to property rights.
3.The proposed draft amended statement of claim to be lodged and served by 26 September 2008.
4.I fix a further directions hearing on Monday 20 October 2008 at 10.15am when I will hear from the parties concerning any proposed amended statement of claim being accepted by the court.
5.On that occasion I will also hear from the parties as to the defendants’ costs of and incidental to this application and in relation to any relevant issues arising from the plaintiff’s own application FDN72.
The orders were designed to give the appellant a further opportunity to file a compliant statement of claim. The appellant has chosen not to do so but instead to bring this appeal.
The Appeal
The appellant provided written submissions and addressed these in oral argument. In summary the appellant contends that he is entitled to maintain his claim as outlined in the amended statement of claim on the following grounds:
·His claim is a representative action.
·He disputes that he is a bankrupt.
·The trustee in bankruptcy, Mr Ambrose, has chosen not to intervene in the proceedings.
·The nature and extent of his claim.
It is plain that this is not a representative action as defined in DCR 34.
The appellant, in his submissions before the Master, and before me, challenged the validity of the appointment of Mr Ambrose as trustee of his bankrupt estate. He appears also to challenge the validity of his bankruptcy. These are not matters for this court. As the Master indicated in his judgment the appellant has remedies elsewhere in relation to these issues. The appellant tendered the case of Official Trustee in Bankruptcy as Trustee of the Bankrupt Estate of Andrew Ley Jordan v Maria Lucia Jordan[2] apparently in support of his contention that State courts have jurisdiction to deal with bankruptcy matters. This case is irrelevant to the appellant’s case.
[2] [2004] SASC 173
It is my view that the Master properly found that, on the basis of the affidavit of Mr Ambrose sworn on 14 January 2008, the appellant’s estate has been the subject of a sequestration order made on 21 December 2001 and that he remains an undischarged bankrupt. This should not be a surprise to the appellant given the decision of Her Honour Judge Simpson in Badcock v PriceWaterhouseCoopers (Reg) & Anor.[3]
[3] [2006] SADC 101
As a bankrupt all property of the appellant vests in the trustee of his bankrupt estate pursuant to s58(1)(a) of the Bankruptcy Act 1966. “Property” includes the right to pursue or continue an action.[4] The exception to this, as noted by the Master, is a claim where it is possible to isolate the bankrupt’s personal interests which are not legitimately entitlements of his creditors from his property interests.[5]
[4] Nguyen ex parte Official Trustee (1992) 35 FCR 320 at 325
[5] Daemar v Industrial Commission of NSW & Ors (1988) 12 NSWLR 45 and Cox v Journeaux (No 2) (1935) 52 CLR 713
It is my view that the Master took a very generous approach to the appellant’s claim by accepting that it was possible he might be able to plead an action within these parameters. The Master made orders that provided the appellant with a further opportunity to prepare a statement of claim in accordance with the law. These were appropriate and reasonable orders. It is my view that the appellant’s appeal is without merit and accordingly it is dismissed.
The appellant also filed an interlocutory application on 5 September 2008 seeking similar orders to those sought in the notice of appeal, together with orders seeking referral of certain matters to the Supreme Court of South Australia. I will dismiss that part of the application relating to the appeal for the reasons outlined above. Neither the application nor the affidavit filed in support of the application[6] set out the grounds upon which the appellant says the matter should be transferred to the Supreme Court. I will hear the parties as to the manner in which I should deal with the balance of the application.
[6] Affidavit of Appellant sworn 21/8/08
I will hear the parties as to costs.