Re Vassis, B.W.

[1989] FCA 130

A Jankrupc

Aspl rcant

and

J o u n l a s ( " t h e A p p l i c a n t " ) wno clarms to be a c r - d i t o r o f

Wr l l i am 3as i l Vass l s , a bankrugt . The a p p l r e a t i o n 1s d a t t d

1 4 Decemne:  1988 and seeks an order tha: t h e Applrcant have

l t a v e t o c o m e n c e l e S a l groceedrngs a g a i n s t :'C= s a n k x s z

pursuan t t o he p rov r s lgns o f Saragraph 53(3)(5) of t n t

aankruptcv Act 1 9 6 6 . That paragraph provides:

" 5 8 ( 3 ) Zxcept as provaded by t h r s A c t , a f t e r a deb to r

has become a bankrupt , 1:  IS not competent f o r

The f a c t s g l v l n g r i s e t o t h e = r e d - : c l a - m e d b y t a e

. \ pp l~can t	a r e	: a the r	obscu re	bu t	l t	appea r s	t na t	:he
Aspl lcant	gave	moneys	to	the bankrup t ,	who	was	a	s o i l c l t o r ,

f 3 r the pur2ose of investment t o enable the Appl lcanz to

r e c e i v e t h e I n t e r e s t p a z d on the rnvestments, and l n due

cou:se t a Se r epa ld t he cap l t a l amoun t . ? a r t o f t he money

was ia f a c t :spai;, buc an amount o f some 5 3 0 , 0 0 0 has no t

c

. ' . X Seen repaid. The bankrupt has ceased t3 p r a c t i c e a s a

-

s o l L c i t o r . 3:s practising c e r t r f l c a r e h a s n o t b e e n renewed-

and he has become a bankrugt .

The creda:or i s making a c la .9 agarns t the

SoLlc i tors Guaranter Tund o f t he L a w I n s t - t u t e of Victorza

and presumably t h a t m a t t e r has ground t 3 a h a l t and Chece is

some doubt as to whether the guarantee fund 1s t h e r i g h t f u n d

from whach t h l s a s t o be pa id . I.? a d d l t l o n , t h e c r e d l t o : l o w

s e e k s t o make a c l a im aga ins t t he bankrup t a s a f i r s : s t e p :n

seeklng gayment through the Brofesslonal I>domnity Insuranzs
provlslons	in re la tzon to whrch the L a w I n s t l t u t t c o n d u c t s

I n s u r a n c e o f s o l i c r t o r s p : s u a n t t o ? a r t VA o f tke beqa l

I r o f e s s i o n Dract ice Act 1958, commencing a t s . 8 8 A . Sav:;lg

r e g a r d t o t h e s t a t u t o r y : d e s made unde: t h a t A c t , t h e r e 1s

some doub t a s t o whe the r t ha t ansu:ance 1s l i a b l e t o s a y :he

c r e d a t o r f o r t h e c l a i m b e i n g made.

I n my op in ion , i n t he absence o f a proof o f deb t

lodged by a c r e d r t o r and proof that the t r u s t e e i n b a n k r u p t c y

1 s n o t pursulng the d e b t c la imed by the c redr ta r , tner? 1s no

b a s r s f o r e x e r c l s i n g t h e d l s c r e t r o n c o n f e r r e d by paragraph

c c

..'	58(3)(5) of :ne	Act l n favou:	o f tne Aspl rcant .
-

Under s.117 o f t he Ac t , t he re 1s a r o v i s i o n to t!?e

e f f e c t that where a bankrust 1 s o r was insured under a

c o n t r a c t of r n s u r a n c e a g a i n s t l l a b i l i t r e s t o t h i r d partlzs -

i n t h i s case the Appl icant - and a l i a b r l r t y a g a r n s t u h l c h h e

i s o r was s o insured has be?n incurred, whether be_'z:e c:

a f t e r he	became	a	bankrup t ,	t he	r i gh t	of	a	bankrupt	to
indemni ty	under	the	Dol lcy	ves t s	In	t h e	t r u s t e e	and	any

amount recerved by t h e t r u s t e e f r o m t h e Insurer under the

p o l i c y i n r e s p e c t o f t he 1 : ab r l i t . s sha l l , r f t he irazrl::?

h a s n o t a l r e a d y b e e n s a t i s f r e d , be pard 1;1 f u l l f o r t h w l t n t o

t h e thi:d p a r t y - i n :h:s case the Xspl lcant - t3 m o m L: a a s

been Incurred. Thrs grves a r i g h t o t h e t r u s t e e t a taks

act;on on any pal-cy o f insurance, a r i g h t m:cn 1 s t a?=n

away from t h e c r e d l t o r by reason o f t h e p r o v i s r o n s o f t a e

Ac t , wh ick ves t s a l l p rovab le deb t s in t h e t z u s t e e upon trle

bankruptcy order being sade.

in f a c t , i t has been andacated the:* a c e r e a l

t coubles and daf facul taes involved i n pursuing a success fu l

c l a m , including a d i f f i c u l t q u e s t i o n a s t a w h e t h e r t k e

p o l i c y wou ld cove r the f ac t s o f t h i s ca se so as to grve t3e

.andemnzty.

There i s no valad reason given at' a l l a s t o why

leave should be granted under s . 5 8 of t h e Act. I t may we:l

Se tha t t he App l i can t shou ld lodge h i s p roof 3f deb t , consu l t

wi th the t rus tee and see what ac t ion should be t aken then .

I: as always open t o t h e A p p l i c a n t a t a l a t s r s t a g e t o make

an app l r ca t ion aga in unde r s.58 of the Ac t bu t a t t h i s s t age

theca as no s u f f i c a e n t g r o u n d s f o r makang the order sought .

The app laca t ion as re fused .