In Berryman v Zurich Australia Ltd  WASC 196, the Supreme Court of Western Australia held a bankrupt, Berryman, was able to maintain legal action in his own name, claiming TPD insurance benefits from Zurich.
The Bankruptcy Act 1966 (Cth) relevantly provides:
- an action commenced by a person, who subsequently becomes a bankrupt, is stayed until the trustee makes an election to prosecute or discontinue the action (ss 60(1)(2) & (3)); however
- a bankrupt may continue in his or her own name, an action commenced in respect of any personal injury or wrong done to the bankrupt (ss 60(4) & 116(2)(g)) .
Primarily, Zurich argued Berryman’s action arose from an alleged breach of the relevant insurance contract and was therefore an action in respect of a proprietary right, not personal injury. However, the Court considered there was a sufficient relationship between the compensation sought and the injury, and the fact Berryman’s claim was contractual in nature did not negate the essential character of the payment sought – being compensation for personal injury. The Court therefore held, despite his bankruptcy, Berryman’s entitlement to TPD benefits did not vest in the Official Trustee.