Case: Faulkner v Bluett (1981) 52 FLR 115
Outcome: applied
As Greenwood J noted in his judgment ([2006] FCA 434 at [4]) with respect to the claims of the applicant against the respondents, the most immediate difficulty confronting the applicant is the question of whether he has standing in connection with this litigation, on the basis that a sequestration order in respect of the applicant's estate was made on 23 February 2005. His Honour explained: &#8226; the effect of s 58 Bankruptcy Act , which vests the property of the bankrupt in the registered trustee (at [36]) &#8226; the meaning of 'property of the bankrupt' for the purposes of s 58 , which is defined as 'the property divisible among the bankrupt's creditors; and any rights and powers in relation to that property that would have been exercisable by the bankrupt if he or she had not become a bankrupt' (at [36]) &#8226; the fact that property divisible amongst the creditors for the purposes in s 116 includes 'the capacity to exercise, and to take proceedings for exercising all such powers in, over or in respect of property as might have been exercised by the bankrupt for his own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his discharge' (at [37]) &#8226; that only the trustee in bankruptcy is entitled to seek remedial orders in respect of property, contractual rights, security interests, and related entitlements (at [43]) &#8226; that the exemption in s 116(2)(g) with respect to wrongs done to the bankrupt is limited to those cases where the essential cause of action is the personal injury done to the person or feelings of the bankrupt, as distinct from where the damages or part of them are to be estimated by reference to the bankrupt's rights of property (at [45]-[47]; cf Daemar v Industrial Commission of New South Wales (1988) 79 ALR 591 at 601, Cox v Journeaux (No 2) [1935] HCA 48 ; (1935) 52 CLR 713 at 721, Faulkner v Bluett (1981) 52 FLR 115 at 119) &#8226; that a claim with respect to a wrong done to the applicant characterised by reference to the anxiety, stress and pain felt by the bankrupt in respect of a recognised cause of action remains with the applicant under s 116(2)(g) Bankruptcy Act (at [46]) and &#8226; that in the case before his Honour the claims were not claims for damages founded upon immediate reference to the distress and anxiety caused to the bankrupt without reference to his rights of property (at [49]); further the applicant's claim for final relief was a consequential claim necessarily connected with the applicant's interests in property (at [50]). 38 In my view, to the extent that this is a cause of action under ss 51AA and 52 (and in my view the relevance of s 51AA is dubious) it is not one in respect of which the applicant has suffered personal injury within the meaning of s 116(2)(g) Bankruptcy Act . This is because, notwithstanding the claim that the applicant has suffered personal injury: a. Other than a statement that the applicant suffered personal injury, no injury is particularised or connection drawn between how a failure to warn and advise the applicant caused the applicant to suffer personal injury. A bare allegation that the applicant has suffered personal injury or wrong, without particularising the injury or wrong, or without stating the connection between the conduct complained of and the claimed personal injury or wrong, is not adequate to provide the applicant with standing to pursue litigation in the very limited circumstances of his bankruptcy. Particularising the damage and establishing the nexus would be necessary in any event. As explained in well-known comments of Bowen LJ in Ratcliffe v Evans (1892) 2 QB 524 at 532: 'The necessity of alleging and proving actual temporal loss with certainty and precision in all cases of the sort has been insisted upon for centuries... In all actions accordingly on the case where the damage actually done is the gist of the action, the character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry.' (note similar comments by Dillon LJ in Lonrho plc v Fayed (No 5) [1994] 1 All ER 188 at 194, Branson J in Kirela Pty Ltd v Westfield Holdings Ltd [2002] FCA 1223 at [15] , Ryan J in PFD Food Services Pty Ltd v NAFDA Pty Ltd [2003] FCA 682 at [18] - [19] , and Smart AJ in Markisic v Dept of Community Services of New South Wales &amp; Ors [2005] NSWSC 1373 at [115] ) b. The respondents are entitled to know the case they are to meet ( Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (in liq) [1916] HCA 81 ; (1916) 22 CLR 490 at 517; Bare v Pulham [1982] 148 CLR 568; Banque Commerciale SA (en liquidation) v Akhil Holdings Ltd [1990] HCA 11 ; (1990) 169 CLR 279 at 286, Barclays Bank v Boulter [1999] UKHL 39 ; [1999] 1 WLR 1919 at 1923; and note O 12 r 1(1) Federal Court Rules ) and the pleadings must be sufficiently clear, so that the case against the respondents is clear. c. If the claim is to be categorised as a claim in negligence which has resulted in financial loss, it properly lies with the trustee in bankruptcy: Faulkner v Bluett . d. If the claim is to be categorised as a breach of fiduciary duty or trust it properly lies with the trustee in bankruptcy. As pointed out by RD Nicholson J in Pridmore v Magenta Nominees Pty Ltd (1999) 161 ALR 458 at 468: 'In relation to s 58(1)(a) 'the property of the bankrupt' as defined in par 116(1)(a) would include any choses in action which the applicants had to enforce equitable rights. Such rights, being property being divisible among the creditors of the bankrupt, would vest in the official trustee. If the equitable rights arose after the sequestration order it would for the same reasons be 'property that is divisible amongst the creditors of the bankrupt' within s 58(6) and thus property to which s 58(1)(b) applies so that again the exercise of the rights would vest in the official trustee...' (note also Wily (as Trustee of the Bankrupt Estate of Fuller) v Fuller [2000] FCA 1512 ; Pascoe, in the matter of Hudson [2006] FCA 785) e. If the claim is categorised as a breach of ss 51AA or 52 , it is claim with respect to a commercial transaction which has now vested in the trustee in bankruptcy. 50 The Court of Appeal therefore permitted the bankrupt to maintain the action. This decision was noted in Faulkner v Bluett at 119. 51 To the extent that the applicant has an action in respect of trespass to land and goods (and I make no comment as to this), in the absence of a Trade Practices Act claim or any other matter which enlivens the Court's jurisdiction, the only place it could be pursued would be the State courts.