Lloyd v Public Trustee (NSW)

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.