Leaman v The Salvation Army (Victoria) Property Trust as trustee for the Salvation Army (Vic) Social Work

[2011] FMCA 1037

FEDERAL MAGISTRATES COURT OF AUSTRALIA

LEAMAN v THE SALVATION ARMY (VICTORIA) PROPERTY TRUST AS TRUSTEE FOR THE SALVATION ARMY (VIC) SOCIAL WORK [2011] FMCA 1037

INDUSTRIAL LAW – Claim applicant dismissed in contravention of a general protection – applicant bankrupt – claim for pecuniary penalty – whether bankrupt had standing to bring or proceed with application.

Bankruptcy Act1966 s.116(2)(g)
Fair Work Act2009

Applicant: MARK ANDREW LEAMAN

Respondent: THE SALVATION ARMY (VICTORIA) PROPERTY TRUST AS TRUSTEE FOR THE SALVATION ARMY (VIC) SOCIAL WORK (ABN: 18730 899 453)

File Number: MLG 530 of 2011

Judgment of: Riley FM

Hearing date: 21 December 2011

Date of Last Submission: 21 December 2011

Delivered at: Melbourne

Delivered on: 21 December 2011

REPRESENTATION

Counsel for the Applicant: The applicant appeared in person

Counsel for the Respondent: Mr Galbraith

Solicitors for the Respondent: Nevett Ford Lawyers

Advocate for the applicant’s trustee in bankruptcy: Ms Smith

Solicitors for the applicant’s trustee in bankruptcy: Kahns Lawyers

ORDERS

1. The application filed on 11 November 2010 be dismissed.

2. Liberty to apply is granted to the parties in relation to costs.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT MELBOURNE

MLG 530 of 2011

MARK ANDREW LEAMAN

Applicant

And

THE SALVATION ARMY (VICTORIA) PROPERTY TRUST AS TRUSTEE FOR THE SALVATION ARMY (VIC) SOCIAL WORK (ABN: 18730 899 453)

Respondent

REASONS FOR JUDGMENT

(revised from transcript)

1. This is an application that was filed by the applicant on 11 November 2010.  At that time the applicant was a bankrupt, a sequestration order having been made against his estate on 5 November 2009.  That circumstance was not known to the court until after the trial of the proceeding, but before the judgment was delivered.

2. It is said today by the respondent that the consequence of the applicant’s bankruptcy is that the applicant had lost his right to commence and prosecute these proceedings.  The respondent argued that the proceedings should be dismissed.  The applicant’s trustee in bankruptcy was represented before the court today.  After the matter was stood down for some hours, the trustee advised the court that he did not wish to make any submissions in opposition to the respondent’s submissions.  The applicant, who was represented at the trial commencing on 5 December 2011, is now unrepresented.  He opposed his application being dismissed, but did not advance any arguments in support of that position. 

3. The Bankruptcy Act1966 provides that all of the property of a bankrupt vests in the trustee immediately upon the bankruptcy. Property includes a chose in action, such as a right to commence legal proceedings. There are exceptions to the rule that all of a bankrupt’s property vests in the trustee. Relevantly, s.116(2)(g) of the Bankruptcy Act 1966 excludes from the general rule:

   (g)any right of the bankrupt to recover damages or compensation:

   (i)for personal injury or wrong done to the bankrupt, the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt; or

   (ii)in respect of the death of the spouse or de facto partner of the bankrupt or a member of the family of the bankrupt;

   and any damages or compensation recovered by the bankrupt (whether before or after he or she becomes a bankrupt) in respect of such an injury or wrong or the death of such a person[.]

4. In this case, the bankrupt initially sought compensation and a pecuniary penalty for allegedly being dismissed in July or August 2010 in contravention of a general protection under the Fair Work Act2009.  However, on the first day of the trial of the proceeding, the bankrupt withdrew his claim for compensation.  The result is that the only presently outstanding claim is for a pecuniary penalty to be paid by the respondent.  The bankrupt asked for that penalty to be paid to him.  The legislation permits such a penalty to be paid to a person or to an organisation.

5. It seems to me that a pecuniary penalty does not fall within the notion of damages or compensation in s.116(2)(g) of the Bankruptcy Act 1966. That is so even if the person is seeking that the pecuniary penalty be paid to him or her.  A pecuniary penalty is of a different nature.  It is not intended to compensate an applicant.  It is intended to punish a wrongdoer.

6. Consequently, the bankrupt had no standing to bring the claim for a pecuniary penalty.  The right to bring that claim vested in the bankrupt’s trustee.

7. I note the written submissions of the respondent to the effect that the type of wrong that s.116(2)(g) of the Bankruptcy Act1966 contemplates is a personal wrong, such as a defamation action or suchlike.  I also note the various cases that the respondent has referred to in its written submissions.  I do not canvass those submissions in detail as it seems to me that the reasons that I have already given cover the situation in this case. 

8. For those reasons, the application must be dismissed.

9. I note that the respondent has indicated that there may be a desire to seek costs from one or the other of the solicitors who has assisted the bankrupt in his case.  It seems to me that it is appropriate to reserve liberty to apply in relation to costs for that purpose.

I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of Riley FM

Date:  11 January 2012