Davies v Kyogle Shire Council [2007] NSWIRComm 9 (12 February 2007)

Last Updated: 20 June 2007

NEW SOUTH WALES INDUSTRIAL RELATIONS COMMISSION

CITATION : Davies v Kyogle Shire Council [2007] NSWIRComm 9



FILE NUMBER(S): 1997

HEARING DATE(S): 14/12/06

DATE OF JUDGMENT: 12 February 2007
PARTIES:
KENNETH DAVIES
Applicant

KYOGLE SHIRE COUNCIL
Respondent


CORAM: Schmidt J


CATCHWORDS: Unfair Contract - Notices of Motion - orders sought by respondent to dismiss proceedings - orders sought by the applicant to amend summons - applicant undischarged bankrupt - provisions of Bankruptcy Act considered - applicant has no standing - applicant's motion refused - proceedings dismissed - costs

LEGAL REPRESENTATIVES

APPLICANT:
Mr P Moorhouse of counsel
SOLICITORS:
Kerin & Co Lawyers
and O'Reilly & Sochacki (as town agents)

RESPONDENT:
Mr A Britt of counsel

SHIRES ASSOCIATION OF NEW SOUTH WALES

CASES CITED: Australia & New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286
Behan v Bush Boake Allen Australia Ltd (1999) 93 IR 1
Burden v Walgett Shire Council [2006] NSWIRComm 169
Byers v Overton Investment Pty Ltd (2001) FCA 760
Cole v Challenge Bank Limited [2002] FCAFC 200
Colley v Futurebrand FHA Pty Ltd (2005) 142 IR 437
Cox v Jorneaux [No 2] (1935) 52 CLR 713
Crowe v UCS Developments Pty Ltd (2003) NSWIRComm 234
Cummings v Claremont Petroleum NL & Anor (1996) 185 CLR 124
Daemar v Industrial Commission of New South Wales & Ors (1988) 12 NSWLR 45
Francis v National Mutual Life Association of Australians Ltd [1999] 2 QdR 335
Fisher v Madden (2002) 114 IR 119
Geia v Palm Island Aboriginal Council (2001) 1 QR 245
Loxton v Moir (1914) 18 CLR 360
Origin Energy Limited v Smith (2001) 111 IR 476
Pelechowski v NSW Land & Housing Commission [2000] FCA 233
Perception Dairies v Finn [2006] NSWIRComm 137
Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146
Robyn Smith v Chevelle Developments Pty Ltd t/as Snowden Parkes Real Estate Agents and Another [2005] NSWIRComm 10
Robyn Smith v Chevelle Developments Pty Ltd t/as Snowden Parkes Real Estate Agents and Another [2005] NSWIRComm 109
Rose v Meriton Apartments Pty Ltd and Anor (2006) NSWIRComm 298
Thislethwaite v Gender Estates Pty Ltd (1976) 8 ALR 700

LEGISLATION CITED: Bankruptcy Act 1996 (Cth)
Industrial Relations Act 1996
Local Government Act 1993



JUDGMENT:

- 16 -

INDUSTRIAL COURT OF NEW SOUTH WALES

CORAM: Schmidt J

12 February 2007

Matter No IRC 1997 of 2006

KENNETH DAVIES v KYOGLE SHIRE COUNCIL

Application under s.106 of the Industrial Relations Act 1996

JUDGMENT

[2007] NSWIRComm 9

1 The applicant brought these proceedings under s 106 of the Industrial Relations Act 1996 ('the Act') in March 2006. In August 2006, the respondent filed a motion seeking that the summons be struck out. The applicant was an undischarged bankrupt at the time the proceedings were commenced and it was the respondent's case that he had no standing to commence the proceedings. In the alternative, an application for security for costs was pressed. In November 2006, the applicant sought leave to amend the summons.

2 By agreement, the matter was the subject of a conciliation conference in October. No agreement was reached between the parties. At the hearing, there was an issue as to which motion should be determined first.

3 The respondent's motion was supported by an affidavit sworn by Mr David Gibson, Director Workplace Solutions Division, Local Government & Shires Associations of NSW. He deposed that the estimated costs of the hearing were between $26,580 and $35,080, which the respondent would be unable to recover, if the claim was successfully resisted, given the bankruptcy. Mr Gibson referred to the circumstances in which the applicant's employment came to be terminated and the Report of the Department of Local Government under s 430 of the Local Government Act 1993 tabled in Parliament in May 2006, which concerned various aspects of the Council's operations, including matters concerning the applicant and the performance of his duties.

4 The applicant's motion sought leave to file an amended summons, 'with such amendment to take effect from the commencement of this proceeding' and the amended summons 'to be treated as filed at the time of making these orders'. It was the applicant's case that it was in the interests of justice to permit the amendment sought, so that the real questions in dispute between the parties, which the applicant was entitled to bring, were put before the Court. The motion was opposed.

5 The applicant had been employed by the Council as its general manager between May 1998 and December 2005, when his employment was terminated by the Council, with immediate effect. The termination resulted from allegations of poor performance and improper conduct. This advice was given to the applicant, it was claimed, at a time when it was known that he was ill and in a way which contributed to the applicant's 'further illness, distress and anxiety.'

6 The amended summons claimed declarations that the contract was unfair and sought its variation in a number of respects, as well as compensation for psychological injury, depression, stress and anxiety arising from the manner of the termination and the conduct of the Council and its officers, in a sum of $20,000 and compensation for damage to the applicant's personal and professional reputation, of $30,000.

7 The applicant's motion was supported by an affidavit sworn by Susan Lee Moriarty, the applicant's solicitor. She deposed that the originating proceedings were filed late on 24 March 2006, shortly prior to the enactment of federal legislation, which purported to 'extinguish the unfair contracts jurisdictions throughout Australia', in relation to constitutional corporations. The summons was not served until August 2006, when advice was given to the respondent, that it was proposed to amend the summons. Particulars were later sought and provided, but the respondent did not consent to the amendment, which was then pressed by way of motion.

8 The applicant's case was that until the proceedings were commenced, an applicant had no enforceable right under s 106 of the Act and no accrued or acquired right definable by reference to past facts: Colley v Futurebrand FHA Pty Ltd (2005) 142 IR 437 at [30] - [33]. There was a mere right to take advantage of the section, prior to commencement of the proceedings, but afterwards there was 'a legally enforceable right to have the [Court] hear and determine the application according to law.'

9 It followed that until commenced, a potential applicant had no enforceable right which constituted 'property' for the purposes of s 58 of the Bankruptcy Act 1996 (Cth): Burden v Walgett Shire Council [2006] NSWIRComm 169 cf Robyn Smith v Chevelle Developments Pty Ltd t/as Snowden Parkes Real Estate Agents and Another [2005] NSWIRComm 109.

10 Once the proceedings were commenced, the applicant acquired a right which became 'after acquired property', vested in his trustee in bankruptcy. The proposed amendment sought to have the result that from the commencement of the proceedings, the right which was acquired by the commencement of the proceedings was not one which constituted 'after acquired property'.

11 The claim in the amended summons was framed so as to fall within the exemption in s 116(2)(g) of the Bankruptcy Act, which concerns the right to recover damages or compensation for personal injury or wrong done to a bankrupt. Section 116 provides:

Property divisible among creditors [see Table B]

(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 her, or has devolved or devolves on him or her, after the commencement of the bankruptcy and before his or her discharge;

(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 or her own benefit at the commencement of the bankruptcy or at any time after the commencement of the bankruptcy and before his or her discharge;

(c) property that is vested in the trustee of the bankrupt's estate by or under an order under section 139D or 139DA; and

(d) money that is paid to the trustee of the bankrupt's estate under an order under section 139E or 139EA;

is property divisible amongst the creditors of the bankrupt.

(2) Subsection (1) does not extend to the following property:

...

(c) the bankrupt's property that is for use by the bankrupt in earning income by personal exertion and:

...

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

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

...

12 The respondent's case was that it accepted that in order for its strike out motion to succeed, it 'must demonstrate that no order could be made which would be within jurisdiction' (Behan v Bush Boake Allen Australia Ltd (1999) 93 IR 1 at 2.) It argued that as a bankrupt, the applicant had no standing to bring the proceedings (per Perception Dairies v Finn [2006] NSWIRComm 137 at [49] to [51]; Chevelle Developments at [8] to [25] and Rose v Meriton Apartments Pty Ltd and Anor (2006) NSWIRComm 298 at [13] to [22] and Daemar v Industrial Commission of New South Wales & Ors (1988) 12 NSWLR 45 at pp 50-51.)

13 The original summons sought orders varying the contract to provide for 12 months' notice of termination or payment in lieu; redundancy pay; a fair process prior to dismissal and fair remuneration for hours worked in the employment, together with consequential money orders. It was argued that by virtue of s 58(1)(b) of the Bankruptcy Act, the applicant's right to seek relief under s 106, vested in the trustee, prior to the commencement of the proceedings. Even adopting the approach of Haylen J in Burden, which was obiter, but which required that the nature of the claim be scrutinised, in order to determine whether or not the proceedings could be properly regarded as 'property' for the purposes of the trustee, the applicant had no standing to commence the proceedings.

14 The scheme of the Bankruptcy Act was to transfer property rights, including the right to sue in respect of claims to property, to the trustee. This included choses in action, other than those specifically exempted. It followed that the applicant had no standing to bring this application to amend the summons and that the proceedings should be dismissed.

15 It was argued that the application that the applicant's motion, filed after the respondent's motion seeking the dismissal of the proceedings should be heard first, would be dismissed, given the chronology of the proceedings. They demonstrated relevant delay on the applicant's part serving the summons and filing the motion seeking to amend the summons. The real purpose of the amendment sought was to pursue an entirely different case, so as to avoid the consequence of the Bankruptcy Act and any costs order in relation to the proceedings already commenced.

16 In any event, the proceedings could not be amended, as they were not validly on foot. The consequence was that the Court had no power to make the order sought by the applicant. (See Francis v National Mutual Life Association of Australians Ltd [1999] 2 QdR 335 at 257.) Nor did the applicant have standing to bring the motion. The summons was not validly before the Court and was brought for an improper purpose, namely to avoid the dismissal of the proceedings, and to avoid a costs order.

17 The true effect of the motion was to constitute new proceedings, rather than an amendment of existing proceedings. Entirely different relief was sought, both by way of variation to the contract and consequential money orders. The basis of unfairness pleaded was also entirely different. This was a case where 'the amendment to the original application was so substantial and its nature such as to warrant the conclusion that it was caught by a 108B'. (See Crowe v UCS Developments Pty Ltd (2003) NSWIRComm 234 at [56]).

18 Given that the applicant had no standing to bring the proceedings, they were in any event, a nullity. A person who is not competent to commence proceedings, but later becomes competent, does not thereby avoid the result that the proceedings, when commenced, were a nullity. (See Byers v Overton Investment Pty Ltd (2001) FCA 760.)

19 The amendment sought was futile, in any event. While reliance was placed on s 116(2)(g) of the Bankruptcy Act, the Court's powers under s 106(3) and (5) were consequential on an order declaring the contract void or varying it, under s 106(1). The relief granted must relate to the unfairness found in the contract. (See Origin Energy Limited v Smith (2001) 111 IR 476 at [19] to [20].) While the compensation claimed was for conduct complained about during the course of the employment, the compensation sought was not estimated by reference to pain felt in respect of the applicant's mind, body or character, without reference to his property rights under the contract. In any event, the Court would not award compensation on such a basis, if it were sought.

Consideration

20 The Court has been granted wide powers to permit the amendment of pleadings by s 170 of the Act. The discretion conferred is to be exercised in the way discussed by the High Court in Queensland v JL Holdings Pty Ltd (1997) 189 CLR 146 at 154. The interests of justice require that the real dispute between the parties be identified and ventilated in the proceedings.

21 In these proceedings, the originating summons was filed in March 2006, on the Friday before the enactment of federal legislation which might have precluded the Court from exercising its jurisdiction in these proceedings, had their commencement been delayed. The applicant described the document as a 'holding summons' in those circumstances and when it was eventually served on the respondent in August, he advised that he intended to amend the pleadings and sought the respondent's consent to that course. The consent was not forthcoming, the matter was not resolved by conciliation and so the parties pursued their respective motions.

22 It would usually be the case that if leave to amend an originating summons brought under s 106 was given, the amended summons would become the originating claim (see the discussion of Rogers J in Australia & New Zealand Banking Group Ltd v Larcos (1987) 13 NSWLR 286 at pp 295-6). In this case, indeed, the applicant expressly seeks that leave to amend the summons be given with effect from the commencement of the proceedings, so as to avail himself of the exemption provided by s 116(2)(g) of the Bankruptcy Act. The question of whether or not the applicant has standing to seek such an amendment, is therefore one of the issues which must here be considered.

23 While the proposed amended summons is concerned with the fairness of the applicant's former employment contract, in the circumstances of its operation and termination, the effect of the amendments proposed is to change the orders of avoidance and variation pressed. By the amendment, the applicant also seeks to relinquish all of the money orders claimed in the original summons; and to pursue new claims in respect of alleged psychological injury, depression, stress and anxiety arising from the manner of the termination and the conduct of the Council and its officers, as well as compensation for damage to the applicant's personal and professional reputation. No reference at all was made to such claims in the originating summons. If this was truly the subject of the real dispute between the parties there was no explanation given as to why no reference at all was made to those matters in the originating summons.

24 On the applicant's case, these amendments would permit him to press the proceedings, given the exemption in s 116(2)(g) of the Bankruptcy Act. His trustee would thereupon have no further interest in the proceedings. Indeed the trustee appears to have no interest in pursuing the proceedings currently on foot. There have been no steps taken by the trustee in the proceedings at any stage. Now the applicant effectively seeks to extinguish what was vested in the trustee, upon the commencement of proceedings in order to be able to pursue a different claim.

25 The respondent argues that as an undischarged bankrupt, the applicant had no standing to commence these proceedings, so that they are a nullity, which may not be cured by any amendment. Further, that the summons, even if the applicant had standing to pursue the amendment sought, would not fall within the exemption relied upon, because the proceedings would still be concerned with the fairness of the employment contract and not with compensation for injury to the body, mind or character of the applicant. This is disputed by the applicant.

26 It follows that if the applicant is correct, the result would be that the nature of the proceedings would be altered fundamentally by the amendment to the summons. Instead of proceedings in which his trustee had an undoubted interest under the Bankruptcy Act, they would become proceedings in which the trustee had no interest at all. It was argued that the applicant had standing to remove the trustee's interest in the proceedings; in effect to bring to an end proceedings in which only the trustee had an interest, given the provisions of the Bankruptcy Act. Thislethwaite v Gender Estates Pty Ltd (1976) 8 ALR 700 was relied upon. The view there taken was that until a trustee intervenes, a bankrupt has power to deal with after acquired property, notwithstanding that it is vested in the trustee.

27 It was candidly conceded for the applicant that he sought to have his application dealt with, without his trustee being given notice of the motion seeking leave to amend the summons and being given an opportunity to be heard. Clearly such notice should have been given, because even on the applicant's case, once the proceedings were commenced, the applicant acquired a right which became after acquired property, which vested in his trustee under s 58 of the Bankruptcy Act. It would be curious if a bankrupt could effectively circumvent the scheme of the Bankruptcy Act, as discussed by the Court of Appeal in Daemar, simply by taking steps in proceedings of which the trustee was given no notice. I am satisfied that it would not be in the interests of justice for the Court's processes to be used in such a way.

28 The application of the provisions of the Bankruptcy Act to proceedings brought under s 106 of the Act has been considered in a number of the authorities. In Chevelle Developments, I concluded (at [8]) that the summons there in question, which sought orders of variation in relation to a contract of employment, together with consequential money orders, 'was after acquired property which vested in the trustee, as s 58(2) of the Bankruptcy Act provides, being property divisible amongst the creditors of the bankrupt, (s 116(1)), which did not fall within the exemptions provided by s 116(2).' The orders sought were concerned with declarations avoiding or varying the contract and consequential money orders in relation to matters such as rates of pay, bonuses, time off, superannuation and holiday pay.

29 Marks J agreed with the reasoning and conclusions reached in Chevelle in Johan Emmanuel Rose v Meriton Apartments Pty Ltd and Anor [2006] NSWIRComm 298 at [14] to [18]. After referring to the decision of the Full Federal Court in Cole v Challenge Bank Limited [2002] FCAFC 200 at [19], his Honour observed at [21] that:

21 On the basis of all of the authorities to which I have been referred, the approach taken is to confine the provisions of s 116(2)(g)(i) and s 60(4) to claims strictly involving personal injury or personal wrong such as defamation. Once the claim may be characterised as being referable to some entitlement associated with property whether personal or real, or whether tangible or intangible, such claims will fall outside both provisions and will therefore become a part of the bankrupt estate.

30 In Burden, Haylen J, observed:

37 In relation to the application of the Bankruptcy Act 1966, a central plank in the respondent's argument is the wide meaning attributed to the word "property". Indeed, recently, a Full Bench of the Court acknowledged that the expression "property" and cognate expressions such as "the property of the bankrupt " and "after-acquired property" were to be construed in a very wide sense (see Perfection Dairies Pty Ltd v Finn [2006] NSWIRComm 137 at [38]). In that case, it was held that because of the special and peculiar nature of an application for reinstatement under s 84 of the Industrial Relations Act 1996, such an application made by a person who was bankrupt was not "property" in any relevant sense for the operation of the Bankruptcy Act 1966 and was therefore not to be considered property that vested in the Trustee but remained available to the bankrupt as a personal statutory remedy.
36 Precisely what comes within the term "property" in the Bankruptcy Act 1966 when considering litigation has frequently proved to be difficult: the High Court in Cummings divided three to two on the question of whether a right to appeal in an action brought to enforce a liability of the defendant was "property" within the meaning of that term in s 58(1) of Bankruptcy Act 1966. In Fuller v Beach Petroleum NL (1993) 43 FCR 60, the Full Court of the Federal Court divided two to one in determining that the appellant's right of appeal vested in the Trustee of the Estate of the appellant and that right of appeal was "property" within the meaning of s 5(1) of the Bankruptcy Act 1966 and therefore vested in the Trustee upon the appellant's bankruptcy pursuant to s 58(1) of the Act. In that case, a sequestration order had been made against the appellant who had been found liable for several claims in tort and for breach of his fiduciary duty as a director of a company and had filed a notice of appeal against the judgment. In Griffiths v Civil Aviation Authority (1995) 137 ALR 521, a differently constituted Full Federal Court distinguished the majority judgment in Fuller and held that an appeal against a decision that the appellant was not a fit and proper person to hold a commercial pilot's licence was of a personal nature and therefore was not "property" that vested in the bankrupt's Trustee and therefore the bankrupt had standing to prosecute the proceedings.
37 In Daemar, the Court of Appeal held that a proceeding by way of summons claiming orders in the nature of prerogative relief together with damages and declaratory relief directed to orders made in the Industrial Commission under s 88F of the Industrial Arbitration Act 1940 was an "action" of the kind that was stayed by the operation of the Bankruptcy Act 1966 on the subsequent bankruptcy of the claimant to that summons. In addition, such a summons was held not to fall within the exemptions provided in the Bankruptcy Act 1966 in respect of actions for any "wrong done to the bankrupt".
38 In Smith v Chevelle, Schmidt J held that an applicant had no standing to bring a s 106 claim because of the operation of ss 5, 58 and 116(2) of the Bankruptcy Act 1966 - the right to bring such proceedings being "property" as defined in ss 5 and 58 and not being exempted by s 116(2) of the Bankruptcy Act 1966. That case involved a mixture of claims, including claims of breach of contract, asserted award rights and statutory rights such as under the Annual Holidays Act as well as challenging the contract as being unfair. Having regard to the breadth of the claim, it is understandable why her Honour reached that decision, but all of the cases referred to above demonstrate the need to carefully analyse the nature of the claim being pursued by the bankrupt and to closely scrutinise the provisions of the Bankruptcy Act 1966 in order to determine whether or not the proceedings can properly be regarded as "property" vesting in the Trustee and leaving the bankrupt without standing to personally pursue the relief claimed. That is why in some cases an appeal may be "property" and in other cases will fall within the exemptions provided by the Bankruptcy Act 1966. Similarly, a claim such as that dealt with in Chevelle under s 106 may well be "property" but, as in Perfection Dairies Pty Ltd, a claim under s 84 of the Act may not be "property".
39 There is much to be said for the applicants' analysis that there is no relevant "right" to bring proceedings under s 106 and that there was no relevant "property" for the purposes of the Bankruptcy Act 1966 until such an application was filed. Proceedings under s 106 are not the same as a right to award wages or contract remuneration: generally, s 106 creates new rights. Accepting the first steps in the applicant's argument, however, leaves Mr Burden's position unclear once the application was filed in May 2005. In the course of discussion, Counsel for the applicant appeared to accept that, once the application under s 106 was filed, the "property" in that claim then passed to the Trustee as "after-acquired property". It seems that Mr Burden has taken no other steps in these proceedings after they were filed but attended for conciliation as required by s 109 of the Industrial Relations Act 1996, a listing taken at the initiative of the Court. In March 2006, both Mr Burden and the Trustee became applicants on the present Notice of Motion. It is arguable, nevertheless, that the "entitlement" rather than the "right" to commence proceedings under s 106 may have devolved to the Trustee, at least after Mr Burden was terminated.
40 The respondent's position is that the application filed is a nullity and therefore there is nothing before the Court to which the Trustee could be joined or substituted. The respondent dismisses the Trustee's retrospective authorisation of the commencement of the proceedings, simply arguing that the proceedings were already a nullity and there was nothing therefore to authorise. That approach fails to come to grips with the applicant's argument that the Trustee was entitled to give retrospective authority and that once given it was to be given full force and effect. Neither party has cited any authority for this proposition although it seems to have been contemplated by Master Newnes in Willoughby's case at [26]. The position is to be distinguished from that in Francis where Ambrose J held that a deed of assignment given by the official trustee assigning causes of action to the bankrupt could not have retrospective effect because of the terms of s 199 of the Property Law Act 1974: it seems however that no argument was put that retrospectively itself was not available. Clearly, in that case, it was the provisions of the Property Law Act 1974 that prevented a retrospective assignment but there has been no submission in the present proceedings of any statutory provision having a like effect on the Trustee's purported retrospective authorisation of the proceedings commenced by Mr Burden in May 2005. There remains, therefore, a real prospect that the applicants may succeed in this argument.

31 Here, the applicant argued that Chevelle was wrongly decided; that the mere right to take advantage of s 106, was not a chose in action, so as to constitute property and that the proceedings were accordingly not a nullity. Reliance was placed on Loxton v Moir (1914) 18 CLR 360 at 389 and Colley at [30] to [33], where it was observed:

30 Given that the only right expressly conferred by s 106 is a right to apply to the Commission for specific relief, a would be applicant, as Meagher JA said [para 12] “has the right to apply for an order, nothing more”. Even if the contract is unfair and an experienced practitioner could give some estimate of the likely order, there is, as Meagher JA said [para 12], no “right to a quantifiable order”. The claimant had no ascertainable right or entitlement defined by reference to past facts similar to the rights to compensation in Hamilton-Gell v White [para 22] and Resort Management [para 20 & foll], the right to the hardship allowance in Chief Adjudication Officer v Maguire [para 24 & foll], or the land rights claim in New South Wales Aboriginal Land Council v Minister (1988) 14 NSWLR 685.
31 The filing of an application under s 106 causes a right to accrue because the applicant acquires (Esber [para 13], Gerrard [para 14]) a legally enforceable right to have the Commission hear and determine the application according to law. This is a new right, different from a mere right to take advantage of the section.
32 There is no other act or event which can convert the general right to take advantage of s 106 into an accrued or acquired right. This is not a case where a right or entitlement automatically accrues or is acquired on an event such as an unfair dismissal, the injurious affection of land (Resort Management), the giving of a notice to quit (Hamilton Gell v White), or an illness causing a special disability (Maguire).
33 Until an application under s 106 is made the right under that section can fairly be characterised as a mere right to take advantage of the section, to use the language of Lord Herschell LC [para 17], and an abstract rather than a specific right to use the language of Atkin LJ [para 22].

32 The discussion of the High Court in Cummings v Claremont Petroleum NL & Anor (1996) 185 CLR 124, in relation to a right of appeal, was also relied upon, as was the approach of the Court of Appeal in Fisher v Madden (2002) 114 IR 119.

33 The question which the judgment in Colley raises, is whether the right to apply for an order under s 106, falls within the wide definition of 'property' in s 5 of the Bankruptcy Act, which provides:

"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 as to any such real or personal property.

34 For the applicant to be correct, it must be concluded that the right to commence s 106 proceedings does not even amount to an interest in property which is 'future, vested or contingent' as the definition of 'property' contemplates. I have some difficulty with reaching such a conclusion, given that the right which the applicant claims commencing of s 106 proceedings conferred upon him, was always contingent only upon his commencement of these proceedings, a matter entirely within his own hands.

35 In any event, the applicant conceded that once commenced in March 2006, these proceedings vested in his trustee as after acquired property pursuant to s 58 of the Bankruptcy Act. That being so, it follows that in the circumstances of this case, in November 2006 the applicant clearly could not exercise any rights which he would otherwise have had in the proceedings, to seek to amend the pleadings. Those rights then resided in his trustee, given his bankruptcy upon commencement of the proceedings and the effect of s 58, even on his own case. Unlike the circumstances in Burden, the trustee does not make nor support the application here brought by the applicant to amend the summons. I take the view that the matters discussed in Thislethwaite do not assist the applicant in these circumstances, particularly having in mind the Court of Appeal's approach in Daemar. The correctness of the decision in Thislethwaite was also doubted in Geia v Palm Island Aboriginal Council (2001) 1 QR 245. In any event that case was concerned with entirely different questions to those which here arise. Nor does the claim that leave to amend should be granted, to take effect from the commencement of the proceedings, assist the applicant. If the applicant has no standing to seek such an amendment, given the provisions of s 58 of the Bankruptcy Act, such relief may simply not be entertained.

36 The respondent also argued that the effect of the amendments proposed were such that the provisions of s 108B of the Act must be considered, because the claim was sought to be recast in such a way, that it amounted to an entirely new claim, brought outside the statutory limitation period.

37 In Crowe, the Full Bench observed at [56] that 'There may be circumstances in which an amendment to an original application may be so substantial or its nature such as to warrant the conclusion that it could be characterised as an application for an order caught by s 108B'.

38 It is ultimately unnecessary to decide the matter on that basis. Nevertheless, it must be observed that there was some force in the respondent's argument that this was an amendment of the kind contemplated in Crowe and that it therefore was brought beyond the time fixed by s 108B. The original summons claimed the contract was unfair and sought orders of variation and evidence in relation to matters such as notice of termination, redundancy, severance pay and rates of remuneration. The amended summons abandoned these claims and seeks to advance entirely new claims, in relation to treatment causing psychological injury, depression, distress and anxiety and conduct and representations likely to damage the applicant's reputation. This is such a fundamental alteration in the case, that it is difficult to see that it is not an entirely different claim, caught by s 108B.

39 Furthermore, that the claim, if amended as sought, would then fall within the exemption relied upon in s 116(2) of the Bankruptcy Act, is not apparent. A claim under s 106 is necessarily brought in respect of contractual rights. In Cox v Jorneaux [No 2] (1935) 52 CLR 713, Dixon J observed at 721:

The test appears to be 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 (Wilson v. United Counties Bank Ltd (1920) A.C. 102 at pp. 111 and 128-133).

40 As Madgwick J discussed in a different context in Pelechowski v NSW Land & Housing Commission [2000] FCA 233, proceedings brought under s 106 of the Act are concerned at their heart with property rights, in this case in connection with the applicant's employment contract. Unless there be a finding of unfairness made in relation to that contract pursuant to s 106(1), with consequential orders of evidence or variation made, no consequential money orders may be made under s 106(5), even in relation to matters concerning compensation for alleged 'personal injury or wrong' done to an applicant by or under the contract.

41 I am satisfied, in all of these circumstances, that the applicant's motion must be refused and the relief sought by the respondent granted.

Orders

42 For the reasons given, the applicant's motion is refused and the proceedings dismissed. The usual order as to costs would be costs as agreed or assessed in favour of the respondent. The parties have liberty to approach in that respect, if there is any issue as to the costs order.

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LAST UPDATED: 2 December 2007