Luyt v State Bank of New South Wales

[1999] NSWSC 173

CITATION:	Luyt v State Bank of New South Wales [1999] NSWSC 173
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	2034 of 1997
HEARING DATE(S):	04/03/99
JUDGMENT DATE:	4 March 1999
PARTIES :	Elizabeth Luyt (Plaintiff) State Bank of New South Wales (Defendant)
JUDGMENT OF:	Windeyer J at 1

COUNSEL :	Mr. N.L. McCaffrey (Plaintiff) Mr. L.J.W. Aitken (Defendant)
SOLICITORS:	Rodney Shields & Co (Plaintiff) Abbott Tout (Defendant)
CATCHWORDS:	BANKRUPTCY - Appeal from Master's decision - question of whether property became divisible amongst creditors under s116 of the Bankruptcy Act or whether it was excluded from the operation of that section by s116(2)(g) as a right to damages for personal injury
CASES CITED:	Beckham v. Drake 2 HLC 579 at 604 Bryant v. Commonwealth Bank 1977 75 FCR 544 Cox v Journeaux No 2 (1935) 52 CLR 713 at 721 Mannigel v Hewlett-Phelps unreported 12 June 1991 Wilson v United Counties Bank [1920] AC 102
DECISION:

THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

THURSDAY 4 MARCH 1999

NO 2034/97 ELIZABETH LUYT v STATE BANK OF NEW SOUTH WALES

JUDGMENT:

1 HIS HONOUR: This is an appeal from a decision of Master McLaughlin given on 23 October 1998 pursuant to which he ordered that the plaintiff's claim be dismissed pursuant to Pt 13 r 5 on the basis that it was doomed to fail as the cause of action sued upon vested in the plaintiff's trustee in bankruptcy consequent upon her having become bankrupt pursuant to a sequestration order made 18 September 1991.
2 The only question which arises on the appeal is whether or not the action sued upon did vest in the trustee in bankruptcy and thereby became property divisible amongst creditors under s 116 of the Bankruptcy Act or whether it was property excluded from the operation of that section by s 116(2)(g) being a right of the bankrupt to recover damages or compensation for personal injury or wrong done to the bankrupt.
3 The Master held that the whole of the pleaded claim was such that the cause of action vested in the trustee in bankruptcy.
4 It is not necessary to set out in detail the facts which were set out in the judgment of the Master; suffice it to say that the claim of the plaintiff in the statement of claim is based, first, on a claim in estoppel or a claim for breach of contract on the basis that the defendant bank represented to Mrs Luyt that it would provide certain funds and failed to do so and as a result of that failure the plaintiff suffered loss or damage.
5 In respect of that claim in paragraph 14 the particulars of the loss and damage claimed to have arisen as a result of this misleading conduct are set out as follows.

Arising from the refusal Mrs Luyt was treated by the bank as being in default of all facilities operated by her or her husband or both of them in connection with the five properties leading to her bankruptcy and the loss of all the properties including her home at 21 William St together with associated stress, infliction of mental and emotional distress.
6 The next claim was based not on the representation but on the claim that the plaintiff was not responsible to the bank for repayment of funds which the bank had claimed from her and that pursuant to its claim the bank took possession of certain properties which were hers or in which she had an interest. It was alleged that the taking of possession was wrongful so that the proceeds of sale of those properties were held by the bank on trust for the plaintiff and that by reason of the bank's failure to account for those proceeds the plaintiff suffered loss and damage.
7 Particulars of that claim for loss and damage are set out as follows:

"Loss of all the properties including her home at 21 William St together with associated stress, infliction of mental and emotional distress".
8 The third claim in the statement of claim is a claim based in negligence but no claim for damages for personal injuries is made in respect of the negligence count.
9 There is also a claim made that to the extent to which a co guarantor was released by the bank that release operated to release the plaintiff from her liability. There is no claim for personal loss or damage of the type set out in paragraphs 14 and 19 in respect of that claim.
10 Counsel for the appellant states that the guiding principle in these matters is that originally set out in Beckham v. Drake 2 HLC 579 at 604 in the passage of the judgment of Earle J as follows:

The right of action does not pass where the damages are to be estimated by a immediate reference to pain felt by the bankrupt in respect of his body, mind or character and without immediate reference to his rights of property.
11 Counsel places emphasis on the fact that the word "immediate" occurs in two places in that passage whereas he says it appears to have been omitted the second time by Sir Owen Dixon in his decision in Cox v JourneauxNo 2 (1935) 52 CLR 713 at 721 where the passage is repeated without the second "immediate".
12 I do not think that too much attention should be given to the question of whether or not that word appeared once or twice in the decision in Cox v Journeaux and I am prepared to accept that the test is that which I have just set out from Beckham v Drake which was accepted as correct in Wilson v United Counties Bank [1920] AC 102.
13 Relating that to the present claims which arise under paragraphs 14 and 19 of the statement of claim it seems to me clear that in both cases the claim arises directly or is immediately associated with the claim for loss of property which it is undisputed are claims which became part of the property divisible among creditors.
14 The claim based on representation is that the bank having represented to Mrs Luyt that it would provide certain funds to her is estopped from denying that it was obliged to provide such funds. I should say that there is no pleaded claim that the plaintiff relied upon that representation and acted in some way to her detriment as a result of that but, leaving that aside, the claim is that the bank by its conduct in not making certain funds available caused her to be in default under certain facilities leading to her bankruptcy and the loss of all the properties the subject of this claim together with associated stress. I do not think that it could be said that this latter claim is not immediately referable to the rights of property or that it could be said to have arisen irrespective of those rights or loss of them.
15 The claim in paragraph 19 which relies on the bank taking action to obtain possession which it was not contractually entitled to do seems to me to fall within precisely the same compass. What is claimed as a result of the wrongful action is that the plaintiff lost all the properties including her home and together with that suffered associated stress and infliction of mental and emotional distress. That claim could only arise as a result of the claimed interference with the rights of the plaintiff to the property which she says should not have been taken from her and could not be thought to have arisen independently of that.
16 Cox v Journeaux has been followed in the Court of Appeal in this State in Mannigel v Hewlett-Phelps unreported 12 June 1991, although it is proper to say that there was in that case an admitted fact as to the connection of the causes of action: it has also been followed by the Full Court of the Federal Court of Australia in Bryant v. Commonwealth Bank 1977 75 FCR 544 where the principles are clearly set out and no different decision come to; in other words the question is whether the damages are consequential UPON and immediately consequential or connected with the major claim for loss of property.
17 In my view it is clear that they are immediately connected and this claim could not arise without reference to the claimed loss of the property.
18 In those circumstances the decision of the learned Master was correct and the appeal should be dismissed with costs. The orders are that the appeal from the Master be dismissed with costs.

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