Official Receiver in Bankruptcy v Schultz

HIGH COURT OF AUSTRALIA

Mason C.J., Brennan, Deane, Dawson and Gaudron JJ.

OFFICIAL RECEIVER IN BANKRUPTCY v. SCHULTZ

(1990) 170 CLR 306

8 November 1990

Bankruptcy—Administration of Assets—Testator's Family Maintenance (Q.)

Bankruptcy—Property of bankrupt—Property divisible amongst creditors—Devise of land to bankrupt—Family provision order giving entire interest in land to applicant—Subsequent discharge of bankrupt—Order on appeal varying provision order—Reduction of applicant's provision to life interest—Whether remainder vested in Official Receiver—Bankruptcy Act 1966 (Cth),ss. 5(1) "property", 58(1). Administration of Assets—Deceased estate—Land held on trust for devisee—Unadministered estate—Nature of devisee's interest—Family provision order—Effect on devisee's interest—Succession Act 1981 (Q.), s.41. Testator's Family Maintenance (Q.)—Order for provision—Effect—Succession Act 1981 (Q.), s.41.

Decision

MASON C.J., BRENNAN, DEANE, DAWSON AND GAUDRON JJ. Elaine Ethel Pereira died on 18 June 1987. By her will, she provided:

"3. I GIVE DEVISE AND BEQUEATH the whole of my real and personal estate whatsoever and wheresoever situate UNTO AND TO THE USE of my Trustees UPON the following trusts that is to say:- (a) As to my personal belongings and effects and my jewellery or clothing of which I may die possessed ... for ... MERLE HEATHER SCHULTZ;

... (g) As to the house and contents at 43 Renton Street, Camp Hill, Brisbane ... to the said MERLE HEATHER SCHULTZ."

Merle Heather Schultz and her husband were the executors of Mrs Pereira's estate and are the respondents to this appeal. On 11 March 1985, Mrs Schultz had been declared bankrupt under the Bankruptcy Act 1966 (Cth) and a sequestration order had been made against her estate.

2. After Mrs Pereira's death, her husband made an application for provision out of her estate pursuant to s.41 of the Succession Act 1981 (Q.). That application was successful. On 26 July 1988, Moynihan J. directed that the will "be read and construed as though the name SHELTON CLEMENT PEREIRA appeared in Clause 3(g) thereof instead of the name MERLE HEATHER SCHULTZ".

3. On 20 September 1988, Mrs Schultz was discharged from bankruptcy. Shortly afterwards, on 8 December 1988, the Full Court of the Supreme Court of Queensland allowed an appeal by the executors against the order of Moynihan J. and varied that order by deleting its operative words and directing instead that the will "be read and construed as though clause 3(g) thereof read: 'As to the house and contents at 43 Renton Street ... for Shelton Clement Pereira for his life and after his death for Merle Heather Schultz absolutely'".

4. The question which arises for determination in this appeal, brought by the Official Receiver in Bankruptcy, is whether the interest of Mrs Schultz described in the order of the Full Court formed part of her bankrupt estate.

5. At first instance, Cooper J. held that Mrs Schultz had no beneficial interest at any time in any of the assets of the estate, simply a chose in action entitling her to enforce the administration of the estate. That chose in action had been vested in the Official Receiver. His…