Dixon v Todd [1904] HCA 52; (1904) 1 CLR 320 (18 May 1904)

HIGH COURT OF AUSTRALIA

H C of A

On appeal from the Supreme Court of Queensland.

18 May 1904

Griffith, C.J., Barton and O'Connor, JJ.

O'Sullivan, for the appellant.

Shand, for respondent.

The judgment of the Court was delivered by

May 18

Griffith, C.J.

This was a motion by the appellant, as trustee of the insolvent estate of William Lovell, for a declaration that a bill of sale dated 30th May, 1903, and registered on 18th August, 1903, may be declared to be fraudulent and void as against the trustee in the insolvency, and for consequential relief. The appellant's case is founded on sec. 108 of the Insolvency Act of 1874, which provides: [His Honor read the section.] In this case the adjudication was on 2nd November, 1903, so that the transaction was within the period of six months. Now, it will be observed that under that section certain artificial rules are laid down for determining whether a transaction is fraudulent or not. Bonâ fides and honest intention do not decide the matter. The only question is whether the conditions prescribed by the Statute exist.

The first condition is that the maker of the assignment is a debtor unable to pay his debts as they became due from his own moneys. The second is that the assignment is in favour of a creditor. The third condition is that it is not for a reasonable and sufficient consideration, or?which may be regarded as an alternative condition?that the consideration, although reasonable and sufficient, is not given at the time of making or giving the instrument. The effect is that a person in insolvent circumstances cannot make away with his property except for a contemporaneous equivalent. If he receives such an equivalent, his creditors, of course, lose nothing by the assignment. It will be observed that time is important under that section from two points of view: first, with regard to the condition that the giving of the consideration must be contemporaneous with the assignmént; and, secondly, from the subsidiary point of view that if the debtor, although in insolvent circumstances, escapes for six months from having a petition presented against him, the transaction cannot be impeached.

The case opened by the appellant before the learned Judge of first instance was that the bill of sale in question was dated 30th May, but was not registered until 18th August; that by the bill of sale itself it appeared that the consideration was paid contemporaneously with the execution, and was, therefore, not contemporaneous with the registration; that, in the meantime, the assignee was an unsecured creditor of the debtor; and that, consequently, as under the Bills of Sale Act the date of the first registration is to be deemed to be the date of execution, this instrument, which under the Statute is to be deemed to have been executed on 18th August, was void as being given for a past consideration. On the case being opened, and before any evidence was given to show that the debtor was in insolvent circumstances, the learned Judge intimated that he thought that the appellant could not succeed. The point of law was then argued, and he came to the conclusion that the appellant was not entitled to succeed in any view of the facts, and dismissed the motion with costs. On appeal, the Full Court, by a majority, Chubb, J., dissenting, agreed with the learned Judge of first instance, and dismissed the appeal.

The question for our determination depends upon sec. 4 of the Bills of Sale Act of 1891, which provides: "Every bill of sale executed after the commencement of this Act shall be registered in the proper registry in the manner prescribed by this Act, and shall truly set forth the consideration for which it was given, and no such bill of sale shall have any effect as to any chattels comprised in it, whether as between the parties to it, or as against any other person, unless the consideration is truly set forth therein, nor until it has been so registered." That is to say, a bill of sale takes effect not by execution but by registration. Until it is registered it is nothing. It may contain the record of an agreement between the parties, but it has no operation whatever as an assignment until it is registered. The section goes on?"and for the purposes of any law avoiding assignments as against creditors, the date of the first registration of any such bill of sale shall be deemed to be the date of the execution of the bill of sale."

For the appellant it was contended before the Supreme Court, and before us, that, interpreting these words according to their plain language, the date of this bill of sale, if it comes in question in a proceeding seeking to avoid it as against creditors, is the date on which it was first registered; that that date was 18th August; and, that that fact being ascertained, the only inquiry that remains is, was the consideration contemporaneous? And, as the consideration was paid on 30th May, the only answer to that question is, of course, "No, it was not contemporaneous." Three of the learned Judges of the Supreme Court have refused to accept this view. We find some difficulty in formulating the argument on behalf of the respondent, having regard to the explicit language of sec. 4, which provides that the date of registration is to be deemed the date of execution, and further provides that until registration there is no assignment. If the date of the assignment is 18th August, how can it be said that the consideration, which was given on 30th May, was given at the time? It is not in controversy that, in this interval, the respondent was an unsecured creditor. Counsel for the respondent asked us to hold that the only effect of the section is that the time from which the period of six months is to be reckoned is the date of registration. Of course, it is quite clear that the six months must be reckoned from that date; but the words of the section are "for the purposes of any law avoiding assignments." As has been already pointed out, the main importance of the date under sec. 108 is for the purpose of the inquiry whether the consideration is contemporaneous with the assignment. If the consideration is paid in May, and the assignment takes place in August, it is impossible to say that the one is contemporaneous with the other. If the words were "for the purpose of computing the period within which a bill of sale may be impeached under any law avoiding assignments as against creditors," the construction contended for would, no doubt, be the correct one, but the words are general, and cover every case in which, under the Insolvency Law, the question of the date of a bill of sale is material. There is nothing in the section to suggest that a fictitious date is to be attributed to the giving of the consideration, but much to indicate a contrary intention.

The rules for the construction of Acts of Parliament have been many times laid down. A statement of the law very applicable to the present case is to be found in the opinion of the Judges in the Sussex Peerage Case (11 Clark & Finnelly, at p. 143), delivered by Lord Chief Justice Tindal: "My Lords, the only rule for the construction of Acts of Parliament is that they should be construed according to the intent of the Parliament which passed the Act. If the words of the Statute are in themselves precise and unambiguous, then no more can be necessary than to expound those words in their natural and ordinary sense. The words themselves alone do, in such case, best declare the intention of the law giver. But if any doubt arises from the terms employed by the legislature, it has always been held a safe means of collecting the intention, to call in aid the ground and cause of making the Statute, and to have recourse to the preamble, which, according to Chief Justice Dyer, is "a key to open the minds of the makers of the Act, and the mischief which they intended to redress." "

Now, to apply the first branch of the rule, and expound the words in their natural and ordinary sense: What is the natural and ordinary sense, first, of the words "no such bill of sale shall have any effect as to any of the chattels comprised in it ... until it has been so registered," and then of the words "for the purposes of any law avoiding assignments as against creditors the date of the first registration ... shall be deemed to be the date of the execution of the bill of sale?" When the Bills of Sale Act was passed the Insolvency Act of 1874, under which assignments to creditors for considerations not contemporaneous, were liable to be avoided, had been in force for 27 years. It may, therefore, be assumed to have been present to the minds of the legislature. There is no ambiguity in the words. When any such question arises, the date of first registration is to be deemed to be the date of execution. The date of first registration in this case is 18th August. That is, therefore, to be deemed to be the date of execution. Then comes the inquiry: "Was the consideration given at the time?" The answer is; the consideration was given in May, not in August. That is expounding the words in the natural and ordinary sense. Assuming, however, that the words are capable of a different construction, or, that, although the words are "for the purposes of any law avoiding assignments as against creditors," the expounding of these words in their natural and ordinary sense would lead to some manifest absurdity, which has not been suggested, then regard should be had to the second rule:?"If any doubt arises from the terms employed by the legislature, it has always been held a safe means of collecting the intention to call in aid the ground and cause of making the Statute." Now, if we consider the cause of the making of the Bills of Sale Act, it will certainly not lead us to a contrary conclusion. The original Bills of Sale Act was an Act to mitigate the evils arising from secret bills of sale. Provisions were made for registration, but they were not found to be effectual. By the Act of 1867 those provisions were repealed and others substituted, and the later provisions were again repealed in 1891, when the legislature laid down the new rule that there should be no effective bill of sale until registration. That is to say, it did not validate, but abolished, secret bills of sale. A secret bill of sale is impossible under the law of 1891, because it is not a bill of sale at all. That being the apparent intention of the legislature, and those being the means adopted to carry out their intention, is there anything inconsistent or absurd in holding that the date of the assignment is what it is said to be by the Statute, and that the date of giving the consideration is the date on which it was given in fact? The construction which found favour with the Supreme Court would make the Act an Act to facilitate and validate secret bills of sale. A man might carry on business for years after giving a secret bill of sale; all his property might be supposed by the world to belong to him and to be available in satisfaction of his debts, whereas in reality some other person would have in his pocket a document which, when registered, would take away the whole of that property from his creditors and give it to that other person; and this result, under the construction which has been put upon the Statute by the learned Judges who were a majority of the Supreme Court, would be in accordance with the law, although the plain and manifest object of the Act is to abolish secret bills of sale. For these reasons it appears to us quite clear that, since the effective date of the execution of the bill of sale is the date of registration, if the consideration is not contemporaneous with the registration, the transaction is obnoxious to sec. 109 of the Insolvency Act. It is said that the consequence will be that a man who lends money to a person in insolvent circumstances will be obliged to register the bill of sale as soon as it is given. Supposing that that is a necessary consequence, we can only say, looking at the Statute, that it appears to us to be the manifest intention of the legislature.

We think, therefore, that the decisions of the learned Judge of first instance, and of the Full Court, were erroneous, and should be reversed. The facts have not been investigated, the case having been treated as one to be decided upon a preliminary point of law. The only order, therefore, which we can make is that which is now made, namely, that the decisions appealed from be reversed, and the matter be remitted to the Supreme Court to be dealt with according to the law as now declared. The respondent must pay the costs of the appeal to the Full Court and of this appeal.

Appeal allowed. Decisions appealed from reversed. Respondent to pay costs of appeal to Full Court. Case remitted to the Supreme Court to do what is right in pursuance of this judgment. Respondent to pay costs of this appeal.

Solicitors for the appellant, O'Sullivan & Scott.

Solicitors for the respondent, Macpherson, Macdonald-Paterson & Co.