Silvia v Thomson

[1989] FCA 394

JUDGMENT No. 3.7.k.Yj.L

CATCHWORDS

BANKRUPTCY - Beneficlary under wlll - grant of probate made after discharge from bankruptcy pursuant to S. 149 of Bankruptcy Act 1966 - whether chose in actlon to due administration of estate accrulng durlng bankruptcy constitutes after acqulred property of the bankrupt.

BRIAN RAYMOND SILVIA v GEOFFREY DAVID THOMSON

W708 of 1984

LOCKHART J.
30 JUNE 1989

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA	)
1
NEW SOUTH WALES DISTRICT REGISTRY	NO. W708 of 1984

GENERAL DIVISION 1

BETWEEN:  BRIAN RAYMOND SILVIA

Applicant

AND :  GEOFFREY DAVID THOMSON

Respondent

JUDGE MAKING ORDER:	LOCKHART J.
DATE ORDER MADE:	18 JULY 1989
WHERE ORDER MADE:	SYDNEY

MINUTES OF ORDER

THE COURT ORDERS:

1.    A declaration that all the rrght, tltle and interest of Florence Mary Thomson, whose estate was sequestrated on 31 July 1984, to the estate of Evan Elizabeth Klrkness deceased, who died on 6 June 1986, is and is deemed to be included in the property of the discharged bankrupt

Florence Mary Thomson, and is dlvlslble amongst her creditors in her bankrupt estate;

1. That the costs of the applicant and of the respondent of and incidental to this application be paid out of the estate of the discharged bankrupt to the Intent that they constitute a prlorlty payment withln the meaning of para. 109(l)(a) of the Bankruptcy Act 1966, as costs, charges and expenses of the administration of the bankruptcy;

3 .         That any documents t h a t have been produced i n response t o subpoenas may be returned.

NOTE:  S e t t l e m e n t and e n t r y o f orders i s d e a l t w i t h i n Order

3 6 o f t h e Federal Court Rules .

IN THE FEDERAL COURT OF AUSTRALIA	)
)
NEW SOUTH WALES DISTRICT REGISTRY )	NO. W708 of 1984

1

GENERAL DIVISION 1

BETWEEN :  BRIAN RAYMOND SILVIA

Applicant

AND :  GEOFFREY DAVID THOMSON

Respondent

30 JUNE 1989

REASONS FOR JUDGMENT

LOCKHART J.

The Court is hearing today an appllcatlon by Brlan Raymond Silvia, as trustee of the bankrupt estate of Florence Mary Thomson ("Mrs. Thomson") for a declaration that all the right title and interest of the bankrupt to the property of the late EVa Elizabeth Kirkness ("the testatrix") is and is

deemed to be included in the property of Mrs. Thomson

divisible amongst her creditors in her estate. The

sequestration order was made on 31 July 1984.

The testatrix made her last wlll and testament dated 7 August 1985 in whlch she appointed the respondent, Geoffrey David Thomson, executor and trustee. The respondent is the husband of Mrs. Thomson. The testatrix left the whole of her property to Mrs. Thomson.

The testatrix dred on 6 June 1986 which was before Mrs. Thomson was discharged from her bankruptcy by operation of S. 149 of the Bankruptcy Act 1966 ("the Act") on 1 August 1987.

It was not until 7 September 1988 that probate of the wlll of the testatrix was granted to the respondent. The respondent submits that since the grant of probate followed the drscharge of Mrs. Thomson from bankruptcy there is no relevant property of Mrs. Thomson which could answer the

description of after acqulred property. If this submission

is correct the assets of the estate of the testatrix, which consist primarily of a dwelllng in Gosford, New South Wales, will be the property of Mrs. Thomson free from claims of her creditors in her bankruptcy.

It is well established that a beneficiary under a wlll
has a right to the due administration of the estate. That

right is a chose in action "capable of being invoked for any

estate: Commissioner of Stamp Duties (Queensland) v	purpose connected with the proper administration" of the
Livingston [l9651 AC 694 at 717; Lord Sudeley v ~ttorney-General [l8971 AC 11.
Upon the death of the testatrlx on 5 June 1986 Mrs. Thomson became entltled to the chose for due administration of the estate of the testatrlx. That chose vested at the moment of the testatrix's death in the trustee of Mrs. Thomson's estate. The trustee is the applicant in these proceedings. That consequence flows from the operation of sub-ss. 58(1) and 116(1) of the Bankruptcy Act 1966 and the definltlon of "property" in S. 5.
In my opinion the chose in action to the due administration of the estate of the testatrlx constituted after acquired property of Mrs. Thomson, a view adopted by Sheppard J. in Re Pevsner; Ex parte Trustee In Bankruptcy (1983) 68 FLR 254, especially p. 256. The questlon which falls for determination in this case concerns the nature of that chose. It is a right to have the estate of the testatrix properly or duly administered. It is not of course, a proprietary right in any specific asset of the estate of the testatrix. During the period from the death of the testatrix to 7 September 1988 the real and personal property of the testatrix vested in the Public Trustee of New South Wales by virtue of S. 61 of the Wills, Probate and Administration Act 1898 (N.S.W.). Upon the grant of probate to the respondent by the Supreme Court of New South Wales on
testatrix vested in the respondent as the executor of the 7 September 1988 the real and personal estate of the
will of the testatrix from the date of her death: see S. 44 of the Wllls Probate and Admlnistratlon Act 1898. The tltle of an executor in this State derlves from the wlll, but confirmation of the title is given by the subsequent grant of probate; and without that grant the title can have no operation: See Ryan v Davies Bros. Llmited v White (1946) 63 WN(NSW) 262 at 263.
In Re Pevsner the relevant facts are the same as in this case save for one Important difference, namely, that the grant of letters of admlnistratlon of the deceased person was made prior to the bankrupt's discharge from bankruptcy. In the present case the grant of probate was made after the discharge of Mrs. Thomson. I do not however regard that difference as material. In my vlew the rlght to have the estate of the testatrlx properly administered is a right that arose on the death of the testatrlx (6 June 1986). It was a right enforceable against the Publlc Trustee to the extent that such rights are enforceable against that statutory repository of a deceased person's estate. The right was transmuted into a rlght against the respondent upon the grant of probate. Although the Identity of the person against whom the right was exercisable changed after the date of discharge of Mrs. Thomson from her bankruptcy, the critical point to my mind is that the right arose or accrued before the date of discharge, namely, upon the death of the testatrix and the elements which constituted that right crystallized at that time.
The effect of a discharge from bankruptcy is to release the bankrupt from all debts provable in the bakruptcy: see S. 153 of the Act; but the trustee remalns trustee of the former bankrupt's property which remalns available for reallzatlon and distribution among the creditors. Nor does the discharge release the bankrupt from the obligation to give all due assistance to the trustee of the estate; indeed, S. 152 expressly provides that a discharged bankrupt shall, notwithstandlng his discharge, give such assistance as the trustee reasonably requires in the realization and distribution of such of his property as is vested in the trustee.
Accordlngly, in my oplnion, the chose in action for the due administration of the estate of the testatrix constituted property of Mrs. Thomson which is divisible amongst the creditors in her estate.
The questlon of costs has been debated. Counsel for the respondent seeks an order that the respondent's costs should be paid out of the estate of Mrs. Thomson. The Trustee does not consent to this order. The trustee's costs should, of course, come out of the estate of Mrs. Thomson. In my opinion the stand taken by the respondent in the matter could not be said to be unreasonable in all the circumstances. The question that has been decided is in one sense a further step than that taken by Sheppard J. in Re: Pevsner and for the
exposed him to a claim by Mrs. Thomson as the sole respondent not to have opposed the application could have
beneficiary of the testatrix's estate. I thlnk it reasonable that the costs of the respondent also be paid out of the estate of the discharged bankrupt, Mrs. Thomson. The intent of the order for costs is that both costs should be prlorlty payments under para. 109(i)(a) of the Bankruptcy Act.

The Court makes the following declarations and orders:

1. A declaration that all the right, title and interest of Florence Mary Thomson, whose estate was sequestrated on 31 July 1984, to the estate of Evan Elizabeth Kirkness deceased, who died on 6 June 1986, is and is deemed to be included in the property of the discharged bankrupt Florence Mary Thomson, and is divisible amongst her creditors in her bankrupt estate;

2. That the costs of the applicant and of the respondent of and incidental to this application be paid out of the estate of the discharged bankrupt to the intent that they constitute a priority payment within the meaning of para. 109(l)(a) of the Bankruptcy Act 1966, as costs, charges and expenses of the administration of the bankruptcy;

3. That any documents that have been produced in response to subpoenas may be returned.

I certify for counsel for both the applicant and the

respondent.

I certify that this and the preceding five (5) pages are a true copy of the reasons for judgment herein of the Honourable Mr. Justice Lockhart.

Associate
Date: 30 June 1989

Counsel for the Applicant:	Mr. B. Skinner
Solicitors for the Applicant:	Kemp Strang & Chippendall
Counsel for the Respondent:	Mr. B. Coles
Solicitors for the Respondent:
Date of Hearing:	30 June 1989
Date of Judgment:	30 June 1989