Lloyd v Public Trustee (NSW) [1930] HCA 40; (1930) 44 CLR 312 (24 November 1930)

HIGH COURT OF AUSTRALIA

Lloyd Applicant, Appellant; and Public Trustee (New South Wales) Respondent, Respondent.

H C of A

On appeal from the Court of Bankruptcy, District of New South Wales and the Territory for the Seat of Government.

24 November 1930

Isaacs C.J., Gavan Duffy, Rich, Starke and Dixon JJ.

Teece K.C. (with him Lloyd), for the appellant.

E. F. McDonald, for the respondent,

The Court delivered the following written judgment:—

Nov. 24

Isaacs C.J.,

Gavan Duffy, Rich, Starke and Dixon JJ.

On 28th September 1928 Alfred Gordon Thompson died. His widow and two children survived him. He left a will giving all his property to his widow, and appointing her sole executrix. She renounced probate, and the Supreme Court of New South Wales granted to the Public Trustee letters of administration with the will annexed.

It was found that the estate was insolvent, the debts amounting to £9,107 4s. 11d. and the assets only to £5,253 13s. 2d. The Public Trustee, in these circumstances, presented a bankruptcy petition to the Bankruptcy Court under sec. 156 of the Bankruptcy Act 1924-1928 for the administration in bankruptcy of the deceased's estate. This was granted, and the Public Trustee accordingly forwarded to the present appellant as Official Receiver the assets in his hands. Included in those assets was the sum of £2,094 15s. 6d., which represented the proceeds of two policies of life assurance held by the deceased at the time of his death. The deceased had not paid any premiums during two years before his death, and the insurers deducted from the sums otherwise payable by them the amounts of all premiums payable but unpaid. The sum of £2,094 15s. 6d. was, therefore, the net amount which, had all premiums been paid and if the deceased had become a bankrupt immediately before his death, would have been excluded from his property divisible amongst his creditors.

The appellant as Official Receiver, and therefore trustee, applied under sec. 105 (i) for directions as to whether (1) the sum of £2,094 15s. 6d. was divisible among creditors or was payable to the deceased's personal representatives, and (2) there was a charge on that sum for the amount of two years' premiums. The Official Receiver was not a neutral trustee. He appeared by counsel and contended that the creditors were entitled to the full sum, and alternatively to the amount of the premiums. The Public Trustee, on behalf of the family, disputed both contentions. His Honor Judge Lukin decided in favour of the family. The present appellant appealed to this Court on behalf of the creditors, and his appearance is representative of them alone. The whole matter rests on the operation of sec. 155 (4) in relation to sec. 91 (b). Sec. 156 incorporates for its own purposes all the operative provisions of sec. 155. Of these, all that need to be mentioned are sub-secs. 4 and 5. It is convenient to take the latter sub-section first. It says: "(5) Upon an order being made for the administration of a deceased debtor's estate the property of the debtor shall vest in the official receiver as trustee thereof, and he shall proceed forthwith to realize and distribute the same in accordance with the provisions of this Act." What vests in the Official Receiver in such a case is "the property of the debtor," that is to say, in the words of Chitty L.J. (with whom Lord Halsbury L.C. agreed) in Hasluck v. Clark[1]), "the estate of the deceased debtor in the sense in which that term is invariably used, namely, the property to which he was entitled at the time of his death so far as it has not been lawfully dealt with since his death, before the order for administration is made." "The estate of the debtor" in this case included the policies of assurance, and the fact that they had been honoured by the insurers and transmuted into cash imports a mere substitution of money paid for money payable. Now, what is the statutory duty of the Official Receiver in respect of the £2,094 15s. 6d.? That is defined by sub-sec. 4 of sec. 155, which says: "(4) With the modifications mentioned in this section, all the provisions of this Act relating to the administration of the property of a bankrupt and to trustees shall, so far as they are applicable, apply to the case of an order for administration under this section in like manner as to a sequestration order."

We think that one of "the provisions of this Act relating to the administration of the property of the bankrupt," and applicable to an administrative order under sec. 155, is, sec. 91 (b). That section provides that the property of a bankrupt divisible amongst his creditors shall not include policies of life assurance except to the extent of a charge in respect of the premiums paid on the policies during the two years next preceding the date of the sequestration. It is said in opposition to this view that the judicial interpretation of the British provisions upon which those of the Commonwealth Act are modelled has established a distinction between "the provisions of the Act relating to the administration of the property of a bankrupt" and those provisions which define and determine what shall be the property of a bankrupt so to be administered, and that sec. 91 belongs to the latter and not to the former class, because it prescribes what shall and what shall not be included in that description. It is no doubt true that sec. 91 does define and determine the property of a bankrupt, and further, that it does so for purposes which at least include the vesting of that property in the Official Receiver under sec. 60, a thing which in the case of a deceased debtor's estate is done by sec. 155 (5). But we think that it does not follow that sec. 91 does not also fall within the description of "provisions relating to the administration of the property." On the contrary, we think the words "divisible among the creditors" contain an expression of legislative intention that in administering assets those enumerated shall or shall not be so divisible, as the case may be. The inevitable consequence of this view is that for the purpose of divisibility among creditors the sum of £2,094 15s. 6d. is excluded, and the Official Receiver should pay it to the Public Trustee as administrator with the will annexed of the testator.

The contention that the deduction of premiums was in respect of an advance from which the last two years' premiums were paid, fails upon the facts proved in evidence. No circumstances which would support a plea of payment were deposed to, and the conclusion is clear that there was no payment of premiums for the relevant period, and certainly no such premiums are included in the amount paid in respect of the policies.

The appeal should be dismissed. The appellant, an entirely adverse trustee, and representing creditors only, should pay the costs of the respondent of this appeal, and be at liberty to indemnify himself out of such portion of the deceased debtor's estate as is divisible amongst creditors.

Appeal dismissed. Appellant to pay respondent's costs of this appeal, with liberty to indemnify himself out of such portion of the deceased debtor's estate as is divisible among creditors.

Solicitors for the appellant, Perkins, Stevenson & Co.

Solicitors for the respondent, McIntosh, Browning & Stephen, Bathurst, by Barry, Norris & Wildes.

[1] (1899) 1 Q.B., at p. 707.