Re Michael Reginald Pevsner Ex Parte: Official Trustee In Bankruptcy v Raymond Henry Griffiths As Administrator of the Estate of Cora Mahrea Pevsner, Deceased [1983] FCA 119; (1983) 68 FLR; 254 (23 June 1983)

FEDERAL COURT OF AUSTRALIA

Re: MICHAEL REGINALD PEVSNER
Ex parte: OFFICIAL TRUSTEE IN BANKRUPTCY
And: RAYMOND HENRY GRIFFITHS as Administrator of the Estate of Cora Mahrea
Pevsner, deceased [1983] FCA 119; (1983) 68 FLR 254
No. 529 of 1976
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY
Sheppard J.(1)

CATCHWORDS

Bankruptcy - After acquired property - Bankrupt entitled to interest in mother's estate - Mother dying after bankruptcy - Bankrupt discharged before estate fully administered - Entitlement of Trustee to chose in action for proper administration of estate and to the Bankrupt's interest in the estate on its being fully administered.

Bankruptcy Act 1966, ss.58 and 116.

Bankruptcy - After acquired property - Bankrupt entitled to interest in mother's estate - Mother dying after bankruptcy - Bankrupt discharged before estate fully administered - Entitlement of trustee to distribution from estate - Bankruptcy Act 1966 (Cth) ss 58, 116. Pevsner became a bankrupt in November 1976. In January 1979 his mother died leaving her estate to two children, of whom one was the bankrupt. In December 1979, letters of administration c.t.a. were granted to Griffiths. On 1 February 1981 the bankrupt was discharged from his bankruptcy. At that time, the estate of his mother had not been fully administered. On 6 September 1982, the bankrupt died. Probate of his will was granted to the executor Kennedy on 8 June 1983.

The bankrupt's trustee sought a declaration that the interest of the bankrupt in the gifts under the will of his mother be deemed to be included in the property of the bankrupt.

Held: (1) Although at the date of the discharge from his bankruptcy, the bankrupt had no beneficial interest in the property left by his mother, he had a chose in action against the administrator of her estate for the due administration of the estate.

Lord Sudeley v. Attorney-General (1897) AC 11; Commissioner of Stamp Duties (Qld) v. Livingston [1964] UKPC 2; (1965) AC 694, followed.

(2) The chose in action for the due administration of the estate vested in the trustee in bankruptcy upon the grant of letters of administration on 4 December 1979 as being after-acquired property of the bankrupt divisible amongst his creditors pursuant to ss 58(1)(b) and 116(1) of the Bankruptcy Act 1966 (Cth).

(3) The trustee in bankruptcy, being seized or possessed of the chose in action, is entitled to the moneys which will arise when the estate of the bankrupt's mother is distributed.

HEARING

Sydney, 1983, March 23; April 21; June 10, 23. 23:6:1983
APPLICATION.

Application by the trustee in bankruptcy of the estate of the bankrupt for a declaration that the right, title and interest of the bankrupt in the gifts made under the will of his mother be deemed to be included in the property of the bankrupt. The respondents to the application were the administrator of the bankrupt's mother's estate and the executor of the bankrupt's will.

The facts are set out in the judgment.

B.J. Skinner, for the Official Trustee.

V. Hartstein, for the administrator.

Cur. adv. vult.

Solicitors for the Official Trustee: Messrs Lobban, McNally & Harney.

Solicitors for the administrator: Marks & Griffiths.
D.L.
Orders accordingly.

DECISION

This is an application by the Trustee in Bankruptcy of the estate of one Michael Reginald Pevsner for a declaration that all the right title and interest of the bankrupt to the gifts made under the will of his mother, Cora Mahrea Pevsner, be deemed to be included in the property of the bankrupt.

The bankruptcy of the bankrupt commenced on 3 November, 1976. On 30 January, 1979, his mother died. By her will she gave the whole of her property to be divided amongst her children living at her death in equal shares as tenants in common. There were two such children, one being the bankrupt. His share is likely to yield an amount somewhat more than $50,000. On 4 December, 1979, letters of administration with the will annexed were granted to one Raymond Griffiths.

On 1 February, 1981, the bankrupt was discharged from his bankruptcy. At that time the estate of his mother had not been fully administered. On 6 September, 1982, the bankrupt died. Probate of his will was granted to the executor named therein, Peter David Kennedy, on 8 June last.

Both the administrator of the mother's estate and the executor of the bankrupt's will have been joined as respondents to the application. The matter was argued before the grant of probate to Mr. Kennedy. I informed the parties that it would be inappropriate for the Court to make any orders until after the grant had been obtained. On 10 June last the executor appeared personally and confirmed, what he had previously indicated, namely that he submitted to such order as the Court saw fit to make. The application was nevertheless opposed by Mr. Griffiths, the administrator of the mother's estate. Both he and Mr. Kennedy in their representative capacities seek orders that the costs of the two estates be paid out of the bankrupt's estate. Their application is not opposed by the trustee.

The claims of creditors of the bankrupt and the costs of the administration of his estate amount to something over $63,000. Thus, if the trustee is successful in the application he makes, there will still be a deficiency.

The directly relevant sections of the Bankruptcy Act 1966 are ss. 58 and 116. Section 58 provides for the vesting of property already vested in the bankrupt at the time of his bankruptcy and of after-acquired property in his trustee. Paragraph 58(1)(b) provides:

"58(1) Subject to this Act, where a debtor becomes a bankrupt -
. . . . . .
(b) after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee or, if a registered trustee is the trustee of the estate of the bankrupt, in that registered trustee."

Section 116 of the Act, so far as it is relevant, provides:

"s.116(1) Subject to this Act -
(a) all property that belonged to, or was vested in, a bankrupt at the commencement of the bankruptcy, or has been acquired or is acquired by him, or has devolved or devolves on him, after the commencement of the bankruptcy and before his discharge; and
(b) 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,
is property divisible amongst the creditors of the bankrupt."

The expressions "property" and "the property of the bankrupt" are defined in s.5 of the Act which commences with the usual words, "In this Act, unless the contrary intention appears -". "Property" means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property. "Property of the bankrupt" means the property divisible amongst the creditors of the bankrupt and includes any rights and powers in relation to that property that would have been exercisable by the bankrupt if he had not become a bankrupt.

Section 153 of the Act provides for the effect of an order of discharge. The discharge operates to release a bankrupt from all debts provable in the bankruptcy. The section does not affect any rights to the bankrupt's property which passed to the trustee by reason of the provisions of ss.58 and 116. And by s.152 a discharged bankrupt, notwithstanding his discharge, is obliged to give such assistance as the trustee reasonably requires in the realisation and distribution of such of his property as is vested in the trustee.

The authorities plainly establish that at the date of the bankrupt's discharge from bankruptcy he had no interest in the property left by his mother. The administration of her estate was not complete. He did, however, have a chose in action against the administrator for the due administration of her estate. That, of course, is subject to such operation as should be accorded ss.58 and 116 in the circumstances of this case.

The authorities to which I refer are Lord Sudeley v. Attorney-General (1897) A.C. 11 and Commissioner of Stamp Duties (Queensland) v. Livingston [1964] UKPC 2; (1965) A.C. 694. In the latter case Viscount Radcliffe who delivered the judgment of the Privy Council said of the beneficiary in that case that she was not entitled to any beneficial interest in any property in Queensland at the date of her death. He continued (p.717):

"What she was entitled of in respect of her rights under her deceased husband's will was a chose in action, capable of being invoked for any purpose connected with the proper administration of his estate".

Counsel for the administrator submitted, upon the basis of these authorities, that there was no property which had vested in the trustee prior to the bankrupt's discharge on 1 February, 1981. But, so it seems to me, the chose in action for the due administration of the estate itself was property for the purposes of the relevant provisions in s.58 and s.116. The word "property", as the definition earlier referred to shows, should be given a wide meaning. It must certainly include choses in action. In a more simple situation it would pick up a chose in action consisting of a debt due or falling due to the bankrupt.

Once this is understood it seems to me, particularly by reason of the provisions of paragraph (a) of sub-section 116(1) of the Act earlier set out, that the chose in action to which Lord Radcliffe referred became vested in the trustee upon the grant of letters of administration in the mother's estate on 4 December, 1979, that is more than twelve months prior to the bankrupt's discharge.

The trustee being seized or possessed of such chose in action, is the only person entitled to enforce it and becomes, because of it, entitled to the moneys which will arise when the estate is distributed. If this view were incorrect the chose in action, although vested in the trustee and still vested in the trustee at the time of the discharge, would be of no practical value. The position is no different from that which arises where a beneficiary in an estate has assigned his interest therein, whether by way of charge or otherwise. The assignee is entitled not only to the chose in action but to the beneficial interest in the property which the assignor would otherwise have been entitled to on the estate being fully administered. It is trite to say that a chose in action is "a right enforceable by action"; Loxton v. Moir [1914] HCA 89; (1914) 18 C.L.R. 360 per Rich J. at p.379. Where there is an assignment of a chose in action, it is the assignee who becomes entitled to the benefit of the enforceable right.

Accordingly it is the trustee in bankruptcy to whom the administrator of the mother's estate must account when he comes to distribute it.

I declare that all the right title and interest of Michael Reginald Pevsner who was made bankrupt on 3 November, 1976, to the gifts made under the will of Cora Mahrea Pevsner, deceased, who died on 30 January, 1979, formed part of the property of the bankrupt.

I order that the costs of the trustee and of the two respondents be paid out of the estate of the bankrupt.