MANNIGEL v HEWLETT PHELPS [1991] NSWCA 186

MANNIGEL v HEWLETT PHELPS SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

KIRBY P, MEAGHER and HANDLEY JJA 12 June 1991, 12 June 1991 [1991] NSWCA 186

BANKRUPTCY — plaintiffs commence proceedings against former solicitors for negligence and breach of contract — later become bankrupt — effect of Bankruptcy Act 1966 (Cth) s60(2) — trial judge (Newman J) determines effect as separate question under SCR Pt31 R2 — enters judgment for solicitors — appeal

held: (Handley JA; Kirby P and Meagher JA concurring): (1) By virtue of the sequestration orders made by the Federal Court and s60(2) of the Act, the plaintiffs ' proceedings were stayed; (2) The proceedings were not excluded from the stay by the operation of s60(4) dealing with "any personal injury or wrong to the bankrupt'; (3) Although the damages pleaded suggested a "personal in jury or wrong", both by the pleading and the agreed facts on the basis of which the trial was conducted, such damages were related to the causes of action in contract and tort sued upon which were not a "personal injury or wrong" within the section. Cox v Journeaux and Ors (No 2) (1935) 52 CLR 713, 721; Daemar v The Industrial Commission of New South Wales and Ors (No. 1) (1988) 90 FLR 469, 479 applied; (4) Although the plaintiffs were discharged from bankruptcy this did not revest the causes of action in them. Daemar v Industrial Commission of New South Wales and Ors (No 2), Court of Appeal, unreported, 14 December 1990; (1990) NSWJB 166 applied; (5) However, the proper order was the provision of a declaration that the proceedings remained stayed and not the entry of judgment; (6) Accordingly, appeal allowed, judgment set aside but with no order made as to costs. Bankruptcy Act 1966 (Cth), s60(2),s60(4).

Handley JA This is an appeal. brought by the plaintiffs from a verdict directed for the defendants by Mr Justice Newman and the judgment entered pursuant to that verdict.