Crowther Multihulls Ltd v D & H Investments Pty Ltd & Ors

Crowther Multihulls Ltd (the applicant) sought leave to appeal to the High Court of Australia from a decision of the Full Federal Court. The dispute concerned the interpretation and application of section 58(3) of the *Bankruptcy Act 1966* (Cth) (the Act), which deals with the trustee's power to disclaim onerous property. The applicant, a company in liquidation, argued that the trustee in bankruptcy of Mr. and Mrs. Crowther had improperly disclaimed certain shares in the applicant company.

The primary legal issue before the High Court was whether the trustee's disclaimer of the shares, which were registered in the names of Mr. and Mrs. Crowther, constituted a disclaimer of the applicant company's property. This turned on the proper construction of section 58(3) of the Act, specifically whether the shares, as choses in action, were property of the bankrupts or property of the company. A further issue was whether the trustee's disclaimer was effective to divest the applicant of its proprietary rights in the shares.

The High Court held that the shares, being choses in action, were property of the bankrupts, not the applicant company. The Court reasoned that a share in a company represents a bundle of rights and obligations, and while these rights are exercised in relation to the company, the share itself is a distinct proprietary interest owned by the shareholder. Therefore, the trustee's disclaimer of the shares was a disclaimer of the bankrupts' property, not the applicant's. The Court further clarified that the effect of a disclaimer under section 58(3) is to determine the rights and liabilities of the bankrupt in respect of the disclaimed property, but it does not extinguish the property itself or affect the rights of third parties.

Leave to appeal was granted, but the appeal was dismissed. The High Court affirmed the decision of the Full Federal Court, finding that the trustee had acted within his powers in disclaiming the shares.