Nette v Howarth
53 CLR 55(Judgment by: Starke J)
Between: Nette
And: Howarth
Judges:
Rich J
Starke JDixon J
Evatt J
McTiernan J
Subject References:
BANKRUPTCY
Superannuation fund
Contributions by bankrupt
Refund in lump sum
Capital receipt
Property divisible amongst creditors
Protection by State statute
Legislative References:
Superannuation Act 1916 (NSW) No 28 - ss 38, 88
Bankruptcy Act 1924 (Cth) No 37 - s 4; s 6; sub-s 60(1); sub-s 91(1); s 101
Judgment date: 30 April 1935
Melbourne (heard in Sydney)
Judgment by:
Starke J
Under the Superannuation Act 1916 of New South Wales (1916, No. 28) provision is made for contribution by persons employed by the Government of New South Wales, and various other State authorities, to a State Provident Fund, and for pensions or benefits out of that fund to contributors. But it is provided by s. 38 of the Act that where a contributor resigns or is dismissed or discharged from his service, there shall be paid to such contributor a lump sum equal to the contributions paid by him under the Act (but without interest) irrespective of the cause of such resignation, dismissal or discharge. And s. 88 enacts that pensions and other benefits under the Act shall not be in any way assigned or charged or passed by operation of law to any person other than the pensioner or beneficiary.
Walter Thomas Howarth entered the public service of New South Wales in February 1914, and became a contributor to the State Provident Fund already mentioned. In August 1934 he resigned from the service, and there became payable to him under s. 38 of the Superannuation Act a lump sum of PD256 17s. 1d., equal to his contribution to the fund. On 10th July 1934 a sequestration order had been made against Howarth pursuant to the provisions of the Federal Bankruptcy Act 1924-1933, and he thereby became bankrupt. The Official Receiver of the property of the bankrupt applied to the Court of Bankruptcy for an order that the sum of PD256 17s. 1d. already mentioned be paid to him for distribution in accordance with the Bankruptcy Act or for such other order as the Court deemed fit. The application was dismissed, and from that decision an appeal is now brought to this Court.
Prima facie, the sum mentioned passes to the Official Receiver by force of the Bankruptcy Act (ss. 4, 60, 91). It does not represent the personal earnings of the bankrupt or any return of those earningsto him. (Cf. In re Roberts; [F5] Shoolbred v Roberts.) [F6] It is a sum payable to him under and by virtue of the provision contained in s. 38 of the Superannuation Act. The Federal Bankruptcy Act prevails over the provisions of s. 38 of the Superannuation Act (Constitution, s. 109). But the provisions of s. 101 of the Bankruptcy Act itself are relied upon:
"Subject to this Act, where a bankrupt is in receipt of pay, pension, salary, emoluments, profits, wages, earnings, or income, the trustee shall receive for distribution amongst the creditors so much thereof as the Court, on the application of the trustee, directs: Provided that this section shall not apply to any pay, pension, salary, or wages which by any Act or State Act is made exempt from attachment or incapable of being assigned or charged."
The proviso points to payments for services rendered, present or past In re Shine; Ex parte Shine; [F7] Stuart-Robertson v Lloyd). [F8] The moneys payable to the bankrupt under s. 38 of the Superannuation Act do not correspond to this test, and consequently fall outside the proviso. The positive enactment of s. 101 is, however, wider than the proviso; it includes pay, pension, salary, emoluments, profits, wages, earnings or income. But wide as are these words, they relate only to emoluments, earnings or income in the nature of personal earnings of the bankrupt-the results of his personal and daily labour-and cannot be extended, e.g., to the profits of a trade or business carried on by him In re Dowling; Ex parte Banks; [F9] Emden v Carte; [F10] In re Rogers; Ex parte Collins; [F11] In re Graydon; Ex parte Official Receiver; [F12] In re Garrett). [F13] The moneys claimed in this case are not in any sense personal earnings of the bankrupt, and do not, therefore, fall within the positive enactment of s. 101.
The appeal should be allowed, and an order made declaring the right of the Official Receiver of the bankrupt to the moneys claimed.