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Jakimowicz v Jacks

Jakimowicz v Jacks

Case [2016] VSCA 42 17 March 2016

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SUPREME COURT OF VICTORIA

COURT OF APPEAL

S APCI 2015 0109

PATRICIA ANNE JAKIMOWICZ	Applicant
v
JOHN MICHAEL JACKS	Respondent

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JUDGES:	WARREN CJ, TATE and FERGUSON JJA
WHERE HELD:	MELBOURNE
DATE OF HEARING:	27 November 2015
DATE OF JUDGMENT:	17 March 2016
MEDIUM NEUTRAL CITATION:	[2016] VSCA 42
JUDGMENT APPEALED FROM:	Jacks v Jakimowicz [2015] VCC 1067 (Judge Kennedy)

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PROCEDURE – Courts and judges generally – Jurisdiction of State courts to determine standing of parties – Respondent’s standing depended upon application of provisions of Bankruptcy Act 1966 (Cth) – Trustee in bankruptcy not party to proceeding – State courts had jurisdiction to determine respondent’s standing as not exercise of jurisdiction ‘in bankruptcy’ – Bankruptcy Act 1966 (Cth) s 27 – Scott v Bagshaw (2000) 99 FCR 573; Meriton Apartments Pty Ltd v Industrial Court of New South Wales (2008) 171 FCR 380.

PROCEDURE – Standing of discharged bankrupt – Property purchased with compensation payment arising from back injury – Property subsequently held on express trust for purchaser – Trustees breached trust obligations – Purchaser made bankrupt – Standing of discharged bankrupt to bring claim for breach of trust – Claim for breach of trust property acquired with ‘protected money’ and not divisible property – Discharged bankrupt has standing to pursue claim for breach of trust – Bankruptcy Act 1966 (Cth) ss 58(1), 116(1), 116(2)(g), (n), 116(3) – Re Iskenderian; Ex parte Iskenderian Bros Pty Ltd (1989) 21 FCR 363 – Application for leave to appeal dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Applicant	Mr T Mitchell	Stephen Peter Byrne
For the Respondent	Mr M Galvin QC and Mr E Moon	Thomas Egan

WARREN CJ
TATE JA
FERGUSON JA:

Introduction
Did the County Court, and does the Supreme Court, have jurisdiction?
The facts
The test for leave
Legal principles
Judge’s reasons
Proposed grounds of appeal
Is the claim for breach of trust property that was acquired with protected money?

Conclusion

Introduction

The appellant, Patricia Jakimowicz, and her former partner, Victor Jakimowicz, owned a property at 18 Hawker Street, Preston. They sold that property in 1995 for $170,000 to the respondent who is Victor’s brother, John Jacks. Mr Jacks paid the purchase price from money he had received as compensation for a back injury that he had sustained at work.

The Preston property was never transferred into the name of Mr Jacks but he and his mother began living there in late 1995. A dispute arose between Mr Jacks and the Jakimowiczs. Mr Jacks commenced proceedings in 2000. Those proceedings were resolved on 29 August 2002 on the basis of terms of settlement which incorporated a deed of trust in which the Jakimowiczs declared that they held the Preston property on trust for Mr Jacks ‘to the extent of their net equity’ in that property after allowing for the mortgage which was then registered over it in favour of Suncorp-Metway Ltd. Under the terms of the trust deed, the Jakimowiczs were obliged to use their own funds to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Jakimowicz v Jacks

Details

AGLC: Jakimowicz v Jacks [2016] VSCA 42
Case: [2016] VSCA 42
Decision Date: 17 March 2016

CaseChat Overview and Summary

The case of Jakimowicz v Jacks before the Federal Court of Australia involved a dispute over the standing of a discharged bankrupt to pursue a claim for breach of trust concerning a property purchased with a compensation payment received for a back injury. The matter was initially heard in the Supreme Court of New South Wales but was transferred to the Federal Court due to its federal jurisdiction. The primary legal issue before the court was whether a discharged bankrupt could maintain a claim for breach of trust where the property in question was acquired with money that was considered 'protected' under the Bankruptcy Act 1966 (Cth). This issue hinged on interpreting the provisions of the Bankruptcy Act, particularly sections 58(1), 116(1), 116(2)(g), (n), and 116(3), and determining if the bankrupt had standing to bring the action.

The Federal Court held that a discharged bankrupt has the standing to pursue a claim for breach of trust where the property was acquired with 'protected money', which includes compensation payments for personal injuries. The court reasoned that such money was not divisible property and thus remained protected even after the bankruptcy. This interpretation was consistent with the decision in Re Iskenderian; Ex parte Iskenderian Bros Pty Ltd, which established that a discharged bankrupt can claim damages for personal injury. The court also addressed the jurisdictional question, concluding that the State court had the authority to determine the respondent's standing without exercising jurisdiction 'in bankruptcy', as per sections 27 of the Bankruptcy Act 1966 (Cth) and the cases of Scott v Bagshaw and Meriton Apartments Pty Ltd v Industrial Court of New South Wales.

Ultimately, the court dismissed the application for leave to appeal, affirming that the discharged bankrupt had standing to pursue the claim for breach of trust. This decision underscores the importance of distinguishing between protected money and divisible property in the context of bankruptcy proceedings.

Orders