Case: Cox v Journeaux (No 2) [1935] HCA 48 ; (1935) 52 CLR 713
Outcome: applied
Subsection 60(5) provides that "action" means any civil proceedings whether at law or in equity. The test as to the meaning of the words "personal injury or wrong done to the bankrupt" is whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind, body or character and without reference to his rights of property: see Cox v Journeaux (No 2) [1935] HCA 48 ; (1935) 52 CLR 713 at 721 per Dixon J. 42 The respondents have in effect submitted that in determining whether s 60(4) applies to the proceedings, the proper approach is to regard the proceedings as stemming from the termination of the applicant's employment. The respondents rely upon Pelechowski v NSW Land and Housing Commission [2000] FCA 233 in support of the proposition that s 60(4) does not apply to such proceedings . In Pelechowski , a judicial registrar had dismissed an application by the applicant for relief, finding that there was no substance in the application and that the applicant had been guilty of serious misconduct. Madgwick J concluded that proceedings for unlawful termination of employment under the WRA did not fall within the Cox test and thus s 60(4) did not apply, because an essential element of the proceeding was that one's economic relations with one's former employer had been disrupted and property rights were at the heart of such proceedings. His Honour's reasons were delivered ex tempore. His Honour noted that the applicant had principally sought reinstatement, that the relief sought was essentially of an economic nature, and that the application did not appear to have made any claim for compensation in the way of damages for personal injury. I am bound to follow this judgment unless I conclude it is plainly wrong. I have not reached that view. 47 His Honour said (at 55 - 56): ... the words ["wrong done to the bankrupt"] cannot be taken in isolation. They must, in accordance with the ordinary canons of construction, be read in the context in which they appear. The meaning of the expression, taken from that context, has been explained in numerous cases. In Australia, the classic expression is that contained in the judgment of Dixon J in Cox v Journeaux ... Applying that test to the present case, the action brought by the claimant cannot be categorised as he submits. Although it is true that the claimant contends that a "wrong" has been done to him and that he has suffered hurt and even "defamation"... these contentions are irrelevant to the task of identifying, for the purpose of s 60(4)(a) of the Act, the nature of the action exempted from the stay. The exemption is limited to those cases where it has been considered appropriate to sever the personal interests of the person subsequently made bankrupt from his property, and to reserve to him the prosecution of and benefits derived from such litigation as not being legitimately entitlements of the creditors. ... 48 His Honour went on to take into account, in characterising the proceedings, the fact that the "wrong" was "the very source of the financial problems which have led to his bankruptcy" and that the proceedings involved "the very essence of the subject matter to which s 60(2) is addressed" (at 56). In the present proceedings, there is nothing to suggest that the applicant's bankruptcy was connected in any way with the "personal injury" or "wrongs" of which the applicant now complains. However, his Honour's preceding observations concerning the nature of cases in which the exemption in s 60(4) applies are of general application. 49 An issue which has arisen in a number of cases is whether it is possible to sever or separate certain causes of action which would fall within s 60(4) from other aspects of the proceedings. In Byrant , Lockhart J (at 548-549) discussed a number of cases where there were mixed causes of action, some of which were found to have vested in the trustee and others not. From the cases considered by Lockhart J, his Honour distilled the principle that a claim for damages for injury to personal and mental health will not fall within the exemption in s 60(4) where the claim cannot be made without reference to the bankrupt's rights of property. 54 The respondents submit that to the extent that the applicant has raised claims in negligence which may fall within the Cox test, the proceedings have no reasonable prospect of success. The respondents cited Tame v New South Wales; Annetts v Australian Stations Pty Ltd [2002] HCA 35 ; (2002) 211 CLR 317 in support of the proposition that an investigating officer does not owe a duty of care to a person whose conduct is under investigation because it is inconsistent with a police officer's duty. Investigators in internal disciplinary investigations also do not owe a duty of care to the employee being investigated: see State of New South Wales v Paige [2002] NSWCA 235 ; (2002) 60 NSWLR 371. The respondents also submit that there is no suggestion in the material filed by the applicant that the actions complained of occurred outside any officer's course of duty, and that the actions should therefore be dealt with in accordance with the authorities cited. The respondents also submit that to the extent that the applicant seeks damages for psychological injury, damages for negligence are not available for psychological injury falling short of a recognised psychiatric disorder: see Tame v State of New South Wales . The applicant has not pleaded any relevant psychiatric disorder.