Lloyd v Public Trustee (NSW) - [1930] HCA 40

PUBLIC TRUSTEE (NEW SOUTH WALES)

RESPONDENT,

ON APPEAL FROM THE COURT OF BANKRUPTCY, DISTRICT OF

NEW SOUTH WALES AND THE TERRITORY FOR THE SEAT

OF GOVERNMENT. Bankruptcy-Deceased debtor's estate administered in bankruptcy-" Property of the

bankrupt - Proceeds of life assurance policies - Not "divisible amongst creditors - Payable to personal representatives-Premiums unpaid for two years SYDNEY,

preceding death-Deducted by insurer from bonus additions-Not "premiums Nov. 12, 24.

paid on the policies `--Charge-Bankruplcy Act 1924-1930 (No. 37 of 1924 -No. 17 of 1930), secs. 91 (b), 105 (i), 155 (4), (5), 156.

A deceased debtor's estate was being administered in bankruptcy under secs. 155 and 156 of the Bankruptcy Act 1924-1930.

Held, that proceeds of policies of life assurance held by the deceased at the time of his death were, by the operation of secs. 91 (b) and 155 (4) of the Act, not divisible amongst the creditors but should be paid to the personal representatives of the deceased.

The premiums in respect of such policies of life assurance had not been paid by the debtor during the two years preceding his death, but had been deducted by the insurer from bonus additions to the policies.

Held, that such deductions did not constitute payment of premiums within the meaning of sec. 91 (b) of the Bankruptcy Act 1924-1930.

Decision of the Court of Bankruptcy (Judge Lukin) affirmed.

APPEAL from the Court of Bankruptcy, District of New South Wales and the Territory for the Seat of Government.

Alfred Gordon Thompson died on 28th September 1928 leaving a will, dated 11th November 1915, whereby he appointed his wife,

44 CLR 313

Nellie Vera Thompson, sole executrix and gave her all his property. The deceased left him surviving his widow and two infant children. The will contained no provision as to the payment of debts. In January 1912 the deceased, under a policy, assured his life with the Australian Mutual Provident Society in the sum of £500 and at the date of his death the bonus additions thereon, after deducting loans advanced by the Society and unpaid premiums, amounted to £39 11s. 3d., making in all £539 11s. 3d. In May 1923 the deceased further assured his life under a second policy with the same Society in the sum of £1,500, the bonus additions thereon at date of his death and after allowing for loans and unpaid premiums amounting to £55 4s. 3d., making in all £1,555 4s. 3d. The grand total under both policies thus amounted to £2,094 15s. 6d. The premiums for the two years immediately preceding his death were not paid by the deceased on either of the policies, but the premiums due thereon were deducted from the bonus additions on each policy. The widow renounced probate, and letters of administration with the will annexed were granted to the Public Trustee. The debts of the deceased amounted to £9,107 4s. 11d.; and the assets, including the policy moneys, amounted to £5,253 13s. 2d. On 10th March 1930,…

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.

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Details

Case: [1930] HCA 40
Decision Date: 24 November 1930

CaseChat Overview and Summary

The case of *Lloyd v Public Trustee (NSW)* concerned an appeal to the High Court of Australia from a decision of the Court of Bankruptcy. The dispute arose from the administration in bankruptcy of the insolvent estate of a deceased debtor, Alfred Gordon Thompson. The core issue was whether the proceeds of life assurance policies held by the deceased at his death were divisible amongst his creditors or payable to his personal representatives, and whether the trustee in bankruptcy was entitled to a charge over these proceeds for unpaid premiums.

The High Court was required to determine two principal legal questions. Firstly, whether the proceeds of the life assurance policies, amounting to £2,094 15s. 6d., were to be considered part of the deceased's property divisible amongst his creditors under the *Bankruptcy Act 1924-1930*, or if they should be paid to the deceased's personal representatives. Secondly, the Court had to consider whether the Official Receiver, as trustee in bankruptcy, was entitled to a charge over these policy moneys for the amount of premiums that had not been paid by the deceased in the two years preceding his death, but which had been deducted by the insurer from bonus additions to the policies.

The Court reasoned that the administration of a deceased debtor's estate in bankruptcy, as provided for by section 155 of the *Bankruptcy Act 1924-1930*, incorporated the general provisions of the Act relating to the administration of a bankrupt's property. Crucially, section 91(b) of the Act stipulated that certain life assurance policies were not divisible amongst creditors, except to the extent of a charge for premiums paid in the two years preceding sequestration. The Court held that section 91(b) was a provision relating to the administration of property, as it determined what was divisible amongst creditors. Therefore, the proceeds of the policies in question were not divisible amongst the creditors. Furthermore, the Court found that the deduction of unpaid premiums from bonus additions by the insurer did not constitute "payment of premiums" within the meaning of section 91(b). Consequently, there was no charge on the policy moneys for the unpaid premiums.

The High Court dismissed the appeal, affirming the decision of the Court of Bankruptcy. The Official Receiver, as the appellant trustee, was ordered to pay the costs of the respondent, the Public Trustee, and was granted liberty to indemnify himself for these costs from the portion of the deceased debtor's estate that was divisible amongst creditors.

Orders