JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
TITLE OF COURT : THE COURT OF APPEAL (WA)
CITATION: LEE -v- LAWFIRST PTY LTD [2023] WASCA 59
CORAM: MURPHY JA
VAUGHAN JA
HEARD: 24 MARCH 2023
DELIVERED : 18 APRIL 2023
FILE NO/S: CACV 54 of 2022
BETWEEN: JEFFREY STEWART LEE
Second Appellant
AND
LAWFIRST PTY LTD
Respondent
ON APPEAL FROM:
Jurisdiction : SUPREME COURT OF WESTERN AUSTRALIA
Coram: MASTER SANDERSON
Citation: KINGSFIELD HOLDINGS PTY LTD -v- LAWFIRST PTY LTD [2022] WASC 161
File Number : CIV 2167 of 2021
Catchwords:
Practice and procedure - Appeal against interlocutory orders to strike out statement of claim - Claim for breach of contract, negligence and breach of fiduciary duty against former solicitors - Claim for loss or damage for personal injury to credit or reputation - Supervening bankruptcy - Bankruptcy Act 1966 (Cth) s 60(2), s 60(3), s 60(4), s 116(2)(g) - No election by trustee in bankruptcy - Whether appeal an action in respect of personal injury or wrong done to appellant within meaning of s 60(4) of Bankruptcy Act - Whether leave to appeal should be granted - Turns on own facts
Legislation:
Bankruptcy Act 1996 (Cth), s 58, s 60, s 116
Result:
Leave to appeal allowed in part
Category: B
Representation:
Counsel:
| Second Appellant | : | J S Lee |
| Respondent | : | S F Popperwell |
Solicitors:
| Second Appellant | : | Bayview Legal |
| Respondent | : | Popperwell & Co |
Case(s) referred to in decision(s):
Allmark v Mossensons (a firm) [2006] WASCA 127
Baltic Shipping Co v Dillon [1993] HCA 4; (1993) 176 CLR 344
Berryman v Zurich Australia Ltd [2016] WASC 196; (2016) 310 FLR 108
Bryant v Commonwealth Bank of Australia [1997] FCA 582; (1997) 75 FCR 545
Cook v Swinfen [1967] 1 WLR 457
Cox v Journeaux (No 2) [1935] HCA 48; (1935) 52 CLR 713
Cummings v Claremont Petroleum NL [1996] HCA 19; (1996) 185 CLR 124
Dey v Victorian Railways Commissioners [1949] HCA 1; (1949) 78 CLR 62
Dodds v Kennedy [2011] WASCA 32
D'Orta‑Ekenaike v Victoria Legal Aid [2005] HCA 12; (2005) 223 CLR 1
Duckworth v Water Corporation [2012] WASC 30; (2012) 261 FLR 185
Duvall v Godfrey Virtue & Co (a firm) [2001] WASCA 105
General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125
Groom v Crocker [1939] 1 KB 194
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
Kelbush Pty Ltd v Australia and New Zealand Banking Group Ltd [2016] WASCA 14; (2016) 49 WAR 374
Kingsfield Holdings Pty Ltd v Lawfirst Pty Ltd [2022] WASC 161
Kingsfield Holdings Pty Ltd v Rutherford [2016] WASC 117
Kingsfield Holdings Pty Ltd v Sullivan Commercial Pty Ltd [2021] WASC 289
Luck v Secretary of Services Australia [2022] FCAFC 195; (2022) 406 ALR 567
Manningel v Hewlett Phelps [1991] NSWCA 186
Moore v Scenic Tours Pty Ltd [2020] HCA 17; (2020) 286 CLR 326
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- AGLC
- Lee v Lawfirst Pty Ltd [2023] WASCA 59
- Case
- [2023] WASCA 59
- Decision Date
CaseChat Overview and Summary
The central legal issue the court had to address was whether the proceedings initiated by the plaintiff against the defendants were "in respect of any personal injury or wrong done to the bankrupt" within the meaning of section 60(4) of the Bankruptcy Act. The court needed to determine if the actions taken by the plaintiff were sufficient to invoke the exception provided by section 60(4) which, if applicable, would exclude the proceedings from the stay of actions imposed by section 60(2).
The court examined the legislative intent behind section 60(4) and the historical context of the distinction between personal injuries and property rights. It was noted that the exception in section 60(4) applies to actions that are fundamentally related to personal injury or wrong, as opposed to those concerning property. The court relied on several precedents to clarify this distinction, emphasizing that actions concerning personal injury or wrong to the person, their character, or feelings are those that would fall outside the scope of section 60(2). The court concluded that the plaintiff's proceedings did not meet the criteria for the exception in section 60(4) as they did not pertain to a personal injury or wrong done to the bankrupt in the required sense.
As a result, the court found that the proceedings were not excluded from the stay of actions under section 60(2) and thus remained stayed. The plaintiff's application to have the proceedings excluded was dismissed.
Orders
Orders of the court
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
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Ratio Decidendi
Legal Principle Established
In s 60(4), the words 'personal injury' and 'wrong' have the same connotation and derivation.[28] [28] Duckworth v Water Corporation [2012] WASC 30; (2012) 261 FLR 185 [85]. The Full Court in Luck, with reference to s 60(4) of the Bankruptcy Act also observed:[29][29] Luck [48] - [49].[48]Proceedings that have been held to be 'in respect of any personal injury or wrong done to the bankrupt' include:(a)[Moss v Eaglestone [2011] NSWCA 404; (2011) 83 NSWLR 476], in which an action for professional negligence against a solicitor in relation to a failure to plead a case of defamation in earlier litigation was excluded from s 60(2) by the operation of s 60(4). Allsop P reviewed the legislative history and authorities relating to s 60(4), and concluded that it reflects a distinction of long standing between actions relating to rights to the person and rights concerning property. Only if the personal hurt or wrong is inseverable from a claim relating to property will it fall outside the scope of s 60(4);(b)Sheehan v Brett-Young (No 3) [2016] VSC 39, where the Supreme Court of Victoria held that claims based on malicious prosecution and misfeasance in public office against the applicant were excluded from the operation of s 60(2) by s 60(4); and(c)Fisher v Transport for NSW [2016] NSWSC 1888, where the Supreme Court of NSW concluded that an appeal on a question of law from an administrative tribunal was a proceeding in respect of a wrong done to a bankrupt under s 60(4), where the tribunal had affirmed a decision to cancel a licence on the ground that the applicant was not a fit and proper person on the basis of their character and behaviour. Justice McCallum reasoned, at [37]:'If this was an action for damages for defamation arising from the publication of an imputation that Mr Fisher is not a fit and proper person to engage in his chosen occupation of a bus driver, the decision in Moss … would hold that the action fell within the exception in s 60(4) … It seems to me that, for coherence, the law should similarly regard an action seeking to impugn an administrative finding that Mr Fisher is not a fit and proper person to engage in the occupation of a bus driver to be an action "in respect of" a personal injury or wrong.'[49]These authorities reveal that the exception applies to that narrow class of action where it relates to the 'personal' - the injury is one to the person, their character, or feelings. Moss concerned a claim by a former client of a solicitor against the solicitor for negligence in failing to commence a defamation action. The former client sought damages from the solicitor for the loss of chance of succeeding in a claim for defamation against a publisher (Nationwide News Pty Ltd) in proceedings which had been conducted by the solicitor.[30] Allsop P (as his Honour then was) said:[31][64]Thus, when one comes to the words of s 60(4) and s 116(2)(g) it is to be recognised that the background and context are, through various Colonial and State, and later Commonwealth provisions, reflective of, and embodying, the notions within the common law of bankruptcy. That assists in appreciating that the distinction (in s 60(4) and s 116(2)(g)) between person and property is a substantive one. It was a distinction made by courts and judges of the highest authority who declared it to be unjust and harsh that the estate of the bankrupt and the participating creditors should be swelled and advantaged by a wrong to the person or reputation of the bankrupt.[65]The terms of s 60(4) (and s 116(2)(g)) reflect that distinction of substance. The words 'action commenced by him or her … in respect of any personal injury or wrong done to [him or her]' require the substance of the matter to be examined. Assuming the underlying facts in the appellant's favour, if the solicitor had commenced the action for defamation against News, it would not have been stayed under s 60(2) and it would have enured for the appellant's benefit under s 116(2)(g). It was a wrong to his reputation. The product of an action to vindicate such a personal wrong did not under the common law, or s 116(2)(g), swell the bankrupt's estate divisible among creditors. It was personal vindication. What is different on the hypothesis that the direct claim has now been lost is that the bankrupt now has a claim for the loss of that chose in action (that would not have fallen into his estate). There is the interposition of a claim (in contract, or tort, or both) for negligence, separating the appellant from the underlying claim for defamation (which has been lost). There is no sound reason in logic or policy why that claim should now enure for the benefit of creditors, when the primary claim did not.[30] Moss [1], [18].[31] Moss [64] - [65].