In Berryman v Zurich Australia Ltd, the Supreme Court of Western Australia considered the claim of a bankrupt who had brought an action against his insurance company for breach of contract following its denial of his total disability claim (the bankrupt had claimed under the policy for A$2m).
Under the Bankruptcy Act 1966 (Cth), the right to recover damages in respect of a personal injury does not pass to the estate in bankruptcy; nor is a bankrupt disentitled from continuing a proceeding in respect of a personal injury. The insurer sought to have the claim struck out on the basis that the insurance claim was a contractual dispute rather than one in respect of a personal injury.
After considering numerous authorities, Tottle J found that the legal basis for the claim was not determinative as to whether the claim was in respect of a personal injury and that the interposition of the insurance claim did not alter the essential character of the claim as being one for compensation of a personal injury.
While the decision was made with particular reference to the relevant Australian statutory provisions (which do not have equivalents in New Zealand), it should be noted that Tottle J's reasoning encompassed a thorough review of common law authority.
See Court decision here.