Nasr v International Air Transport Association

[2016] NSWDC 346

District Court

New South Wales

Medium Neutral Citation:	Nasr v International Air Transport Association [2016] NSWDC 346
Hearing dates:	25 November 2016
Date of orders:	25 November 2016
Decision date:	25 November 2016
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	(1) Plaintiff’s Notice of Motion filed 3 November 2016 dismissed. (2) Defendant’s Notice of Motion filed 21 November 2016 granted. (3) Statement of claim struck out and dismissed. (4) The plaintiff is to pay the defendant’s costs of the Notice of Motion filed 21 November 2016 and of these proceedings.
Catchwords:	BANKRUPTCY – difference between discharge and annulment of bankruptcy – plaintiff sought to lift a stay on litigation following his discharge from bankruptcy – defendant sought summary dismissal of proceedings on the basis that mere discharge was insufficient – terms of the stay ordered by the court provided for the lifting of the stay only if the bankruptcy was annulled, in accordance with ss 58, 116 and 153 Bankruptcy Act 1966 (Cth) – plaintiff not entitled to a lifting of the stay as the right to sue remained vested in the trustee, who declined to conduct the litigation – defendant’s application for summary dismissal granted.
Legislation Cited:	Bankruptcy Act 1966 (Cth), ss 43, 58, 116, 149 and 153 Uniform Civil Procedure Rules 2005 (NSW), r 42.2
Cases Cited:	Cox v Journeaux (no 2) (1935) 52 CLR 713 Kovarfi v BMT & Associates Pty Ltd (No 2) [2014] NSWSC 100 Moss v Eaglestone [2011] NSWCA 404
Category:	Principal judgment
Parties:	Plaintiff: Nabil Nasr Defendant: International Air Transport Association
Representation:	Counsel: Plaintiff: In person Defendant: Ms E Bathurst   Solicitors: Plaintiff: In person Defendant: Minter Ellison
File Number(s):	2014/947
Publication restriction:	None

Judgment

The applications before the court

1. The plaintiff, by Notice of Motion filed on 3 November 2014, seeks the lifting of a stay of proceedings made by Truss DCJ on 21 February 2014. He also seeks a transfer of these proceedings to the Criminal division of this court so that he may seek trial by jury.

2. The defendant, by Notice of Motion filed on 21 November 2016, seeks an order dismissing the proceedings on the basis that the plaintiff, who was an undischarged bankrupt at the time of commencement of the claim, whose bankruptcy has not been annulled, is not entitled to bring these proceedings (ss 58, 116 and 153 Bankruptcy Act 1966 (Cth) (hereafter “Bankruptcy Act” or “the Act”)).

Background

3. The plaintiff commenced proceedings for a cause of action which, although it refers to “duty of care”, related to an asserted contractual dispute between the plaintiff and defendant which the plaintiff pleaded caused $720,000 loss and well as the loss of $8 million dollars in sales, although the actual amount claimed was $700,000.

4. After the defendant was served, a search of the register revealed that on 31 October 2013 Registrar Morgan of the Federal Circuit Court of Australia had made a sequestration order against the estate of the plaintiff in proceedings SYG2030/2013. According to the National Personal Insolvency Index, details of these orders were entered on 1 November 2013. Under s 43(2) Bankruptcy Act, the plaintiff became a bankrupt and remained so until one of two events occurred, namely that he was discharged under s 149(1), or that his bankruptcy was annulled.

5. The plaintiff’s bankruptcy mean that his property was vested in the trustee in bankruptcy save for actions of a personal kind such as personal injury or defamation. This meant that, unless these proceedings fell within that exception, the plaintiff was not entitled to bring them: Cox v Journeaux (no 2) (1935) 52 CLR 713 at 721; Kovarfi v BMT & Associates Pty Ltd (No 2) [2014] NSWSC 100; Moss v Eaglestone [2011] NSWCA 404.

6. The plaintiff’s registered trustee (in whom any such cause of action had vested following the making of the orders on 31 October 2013) advised, in response to correspondence from the defendant’s solicitors, that he did not propose to continue the action. The plaintiff thus had no standing to continue these proceedings, and would not do so unless the bankruptcy was annulled (as discharge under s 149(1) means that the claim remains vested in the trustee, by reason of s 153 of the Act).

7. Accordingly, on 7 March 2014, Truss DCJ made the following orders:

1. These proceedings be stayed.

2. The plaintiff not be at liberty to lift the stay unless and until his bankruptcy is annulled.

3. The plaintiff is to pay the defendant’s costs of the proceedings to date.

8. The plaintiff’s bankruptcy was never annulled. By reason of effluxion of time, the plaintiff was discharged from bankruptcy on 30 October 2016 (see tab 2 of Exhibit PCB-1 to the affidavit of Ms Briggs). This means that the cause of action still vests in the trustee, Mr David Leigh.

9. On 14 November 2013 Mr Leigh replied to a letter from the solicitors to the defendant confirming that the bankruptcy was not annulled, that any claim remained vested in him as trustee, that the estate was unfunded and that he, as trustee, would not be participating in this (or any) action (see tab 6 of Exhibit PCB-1).

10. The solicitors for the defendant wrote to the plaintiff on 17 November 2016 enclosing their correspondence with Mr Leigh, explaining the difference between discharge and annulment and setting out the orders they would seek today in court, as well as the reasons for them. The plaintiff did not reply to this letter, but instead presses on with his Notice of Motion seeking a stay and for the court to permit him to continue this litigation, as well as orders for transfer of the claim and trial by jury.

11. The plaintiff is not entitled to the lifting of the stay because, contrary to the orders of Truss DCJ, the bankruptcy was not annulled. He has no standing to bring this action and the trustee in bankruptcy has confirmed that he will not be participating in this action. Accordingly the claim must be dismissed.

12. The defendant seeks an order for costs of these proceedings under r 42.2 Uniform Civil Procedure Rules 2005 (NSW).

13. Costs should follow the event. The solicitors for the defendant carefully explained to the plaintiff that he (as opposed to the trustee) could not seek a lifting of the stay because his bankruptcy had not been annulled. It cannot ever be annulled, because it has now been discharged. He could have sought to avoid the costs of this application by contacting the defendant’s solicitors to discuss this, as he was invited to contact them. He did not do so, and he should pay the costs of this application as well as of the proceedings (Truss DCJ’s previous orders being limited to the costs of the proceedings to that date).

14. The plaintiff’s application for transfer to the Criminal division and for trial by jury are also misconceived. These are civil proceedings for breach of contract and there is no entitlement to a jury at all, let alone to a jury of twelve persons.

Orders

1. Plaintiff’s Notice of Motion filed 3 November 2016 dismissed.

2. Defendant’s Notice of Motion filed 21 November 2016 granted.

3. Statement of claim struck out and dismissed.

4. The plaintiff is to pay the defendant’s costs of the Notice of Motion filed 21 November 2016 and of these proceedings.

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Decision last updated: 13 December 2016