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Worrell v Westpac Banking Corporation

Worrell v Westpac Banking Corporation

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Case Copied 14 July 1994 7 min read

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No. QG 29 of 1991

) -

1
1

BETWEEN: J m L
Applicant

AND : C BANKING CORPORATION
Respondent

MINUTES OF ORDEG

Drummond J
14 July, 1994
Brisbane

1. The applicants be substituted for Mr. Ivor Worrell as applicants in the proceedings commenced by him by amended statement of claim dated 11 November, 1991 and filed 12 November, 1991.

The costs of and incidental to the application be costs in the caLse.

nQ.a!E: Settlement and entry of orders is dealt with in

Order 36 of the Federal Court _Bules.

S) No. QG 29 of 1991

1

- 1

BETNEENS
Applicant

AND : hlESTPAC BANKING CORK!lWW!N
Respondent

Q2LWll: Drurmnond J
-8 14 July, 1994

ELUSa: Brisbane

REASONS FOR JUDGMENT

This is an application by three former bankrupts, whose bankruptciee were annulled on 7 October, 1992 pursuant to 8. 74(5) the m ~ t c v Act 1966 ICthL ("the Act*), to be mubetituted for their former trustee in bankruptcy, Mt. Worrell, as applicants in proceedings effectively commenced by

W. Worrell against the respondent by amended statement of claim dated 11 November, 1991. If substitution is ordered,
the result will be the same as if the applicants had

themeelves validly commenced proceedings by that amended etatement of claim: see 0. 6, r. ll(2) the U r a 1 Court
Bulaa.
The respondent submits that that order should not be
made. It says instead that an order adding the present
applicants as applicants in the proceedings commenced by Mr.
Worrell and removing Mr. Worrell from those proceedings should
be made. The result of this would be that the applicants
would be treated as having commenced proceedings against the
respondent on the date of the filing of amended process
reflecting the order, adding them as parties: see 0. 6, r.

ll(3) the - .

The respondent would, in such case, have the benefit of much more extensive time bars to the action against it than it would have if substitution were ordered. The respondent ~ubmits that addition is appropriate because an annulment of a bankruptcy under S. 74(5) of the Act only operates to remove the applicant's lack of capacity to sue on the cause of action from the date of a special resolution of creditors that accepted the applicant's proposal for a composition under S. 73 of the Act.
The applicants submit that annulment under S. 74(5)
of the Act operates retrospectively, that is to remove their

the date of a sequestration order in October 1990, and for incapacity as bankrupts to sue on the cause of action, from
that reason substitution rather than addition is appropriate.
In v Caseiraatie (unreported, 1 Novher, 1993, Court of

Appeal (Qld)), the President, Fitzgerald J, held that an annulment under S. 74(5) of the Act operated retrospectively to set aside the bankruptcy from the date of a sequestration order and to remove from that same date the former bankrupt's

incapacity to sue on a cause of action that had vested in his trustee upon the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [1994] FCA 472
Decision Date: 14 Jul 1994

CaseChat Overview and Summary

In the case of Worrell v Westpac Banking Corporation, three former bankrupts sought to be substituted for their former trustee in bankruptcy, Mr. Ivor Worrell, in proceedings against Westpac Banking Corporation. The dispute arose after the applicants' bankruptcies were annulled on 7 October 1992 under Section 74(5) of the Bankruptcy Act 1966 (Cth). The applicants sought to be substituted for Mr. Worrell as applicants in the proceedings, while the respondent argued for adding the applicants as parties rather than substitution, which would result in the applicants being treated as having commenced proceedings on the date of the filing of amended process.

The legal issues before the court were whether the annulment of the applicants' bankruptcies under Section 74(5) of the Bankruptcy Act 1966 (Cth) operated retrospectively, thereby removing their incapacity to sue from the date of their sequestration order, or prospectively, from the date of the special resolution of creditors. The court considered the decision in V Caseiraatie, where the Queensland Court of Appeal held that an annulment under Section 74(5) operated retrospectively to set aside the bankruptcy from the date of the sequestration order and remove the former bankrupt's incapacity to sue from that same date.

The court found that the decision in V Caseiraatie was correct and that there was no ground for differentiating between the consequences of annulment in situations where the propriety of the making of the sequestration order is attacked and where annulment is justified by reason of an event occurring after sequestration. The court emphasised the importance of consistency in the decisions of Australian courts on legislation of general application such as the Bankruptcy Act 1966 (Cth).

The court ordered that the applicants be substituted for Mr. Worrell as applicants in the proceedings, effectively treating them as having commenced proceedings against Westpac Banking Corporation on the date of the filing of the amended statement of claim. The costs of and incidental to the application were ordered to be costs in the case.

Orders