Moy v Briscoe & Co Ltd [1907] HCA 36; (1907) 5 CLR 56 (27 August 1907)

The Bankruptcy Act 1898 confers jurisdiction upon the Supreme Court. All the judicial acts necessary to be done to give effect to that Act are to be done by the Supreme Court, and they collectively make up the jurisdiction of the Supreme Court. Sec. 133 provides that the jurisdiction in insolvency under the earlier Act and the jurisdiction under this Act "shall ... be the bankruptcy jurisdiction of the Supreme Court." The section goes on to provide that "the bankruptcy jurisdiction of the Supreme Court shall, except as herein otherwise provided, be exercised by such Judge of the Supreme Court as may from time to time be duly appointed in that behalf by the Governor under the title of Judge in Bankruptcy."

For a few days in January last there was no titular Judge in Bankruptcy. Walker J. had resigned, and his successor had not been appointed. During that interval one of the other Judges of the Supreme Court, A. H. Simpson C.J. in Eq.—purporting to exercise the authority conferred by sec. 137 of the Bankruptcy Act, which provides that: "The Judge may delegate to the Registrar such of the powers vested in the Court as it may be expedient for the Judge to delegate to him"—made an order of delegation under which the Registrar acted in making the order of sequestration.

It is suggested that, as there was no titular Judge in Bankruptcy at that time, this power of delegation could not be exercised. Whether it could or could not depends upon the provisions of sec. 15 of the Supreme Court and Circuit Courts Act 1900, which enacts that:—"Where under any Act any jurisdiction, power, or authority is vested in the Chief Judge in Equity, the Judge exercising the Matrimonial Causes Jurisdiction of the Court, the Judge in Bankruptcy, or the Probate Judge, then"—in certain specified cases of which one is—"for any reasonable cause any other Judge may exercise such jurisdiction, power, or authority in all respects as such Judge in whom the same is so vested might have done, and shall while so acting have co-ordinate jurisdiction with and all the powers and authority of, such Judge, subject to the same right of appeal."

It is contended that that section only applies in cases where there is in existence a titular Judge of one of the classes mentioned. Strictly speaking, no doubt, sec. 15 is not quite accurate. The Bankruptcy Act does not vest the jurisdiction in the Judge, but in the Supreme Court, and directs that jurisdiction to be exercised by the Judge. Sec. 15, therefore, must be read as meaning that, where under any Act, any jurisdiction, power, or authority of the Court is to be exercised by a particular Judge, any other Judge may in the specified cases exercise that jurisdiction as fully as the Judge designated might have done.

In other words, any other Judge may exercise any jurisdiction, power, or authority which attaches to the office of the designated Judge. In this view it makes no difference whether the office of the Judge is for the moment vacant or not. The jurisdiction is the jurisdiction of the Court, and may be exercised by any Judge.

There is another argument which perhaps would be sufficient to dispose of the objection. The Bankruptcy Act provides by sec. 3 that the term "The Judge" means "the Judge having jurisdiction in bankruptcy under this Act"—that must mean the Judge by whom jurisdiction ought to be exercised—"or any Judge acting as such." I think it would be difficult to contend successfully that the word as so defined does not include any Judge of the Supreme Court acting de facto as Judge in Bankruptcy. It may be a case for the application of the maxim Quod fieri non debuit factum valet.

For these reasons I think that the objection to the authority of the Registrar fails.

As to the merits, I agree with the conclusions arrived at on the question of fact by the learned Judge from whose judgment the appeal is brought. All that can be said in the appellant's favour has been said by Mr. Bradburn. The question is really one of fact. There was a conflict in the oral evidence given before the Registrar, who believed the evidence of the agent for the petitioning creditor as to an interview between him and the debtor. The learned Judge was not prepared to dissent in this respect from the Registrar. He referred to that evidence and, accepting it as true, thought there was clear proof of the commission of the act of bankruptcy relied on, which was that the debtor had given notice to one of his creditors that he had suspended, or was about to suspend, payment of his debts.

The rule of law to be applied in construing that provision is stated in the passage from the judgment of Bowen L.J. in In re Lamb; Ex parte Gibson[1] cited by Street J.:—"We have in each case to ask ourselves, and in each case to answer the question, what is the reasonable construction which those who receive this statement of the debtor would have a right, under the circumstances of the debtor's case, to assume, and would assume, to be his meaning as to what he intends to do with respect to paying, or suspending payment of, his debts."

Street J. also referred to the speech of Lord Macnaghten in the case of Clough v. Samuel[2]. In that case Lord Macnaghten was the dissenting Lord, so that his opinion is not binding, but there can be no doubt of the accuracy of the passage quoted:—"The notice need not be in writing. It is enough if notice is given to any one of the creditors. No particular form is required. There is nothing said in the Act about the debtor's intention. The question is what effect would the communication have on the minds of the persons to whom it is addressed. That is the test laid down by this House. It is only a matter of common sense. ... All that is required is that a communication proceeding from the debtor, made seriously, should give the creditors or any of the creditors to understand from the state of circumstances as disclosed at the time that the debtor has suspended or that he is about to suspend payment."

For myself I do not think there is any substantial conflict in the evidence between the debtor's and the creditors' witnesses. The facts were that the debtor had a demand made upon him by the petitioning creditors for a debt amounting to £1,200. Demand had been made for payment, and an action at law was threatened. The agent of the petitioning creditors went to the debtor and had a conversation with him. The debtor told him that he had placed his affairs in the hands of Messrs. Starkey & Starkey, accountants, as he put it, "to prepare a statement of my accounts for me, and that in the meantime I had been advised not to pay any accounts."

Although, as Lord Macnaghten said, there is nothing in the Act about the intention of the debtor, yet, if you know what his intention is, you are in some way advanced on the inquiry. In this case, there is no doubt that the debtor formed the intention that he would not pay his creditors until he had ascertained the result of the examination into his affairs by a firm of accountants. That was his state of mind. He had made up his mind that he would not pay, that is to say, that he would suspend payment, for a certain time. When asked by the petitioning creditors' agent why he would not pay, he said, "I have been advised not to pay until I have ascertained certain facts." That, it seems to me, would convey to any ordinary person that the debtor did not intend to pay his debts in the meantime, in other words, that he had suspended or was about to suspend payment for a time. The term "suspension" implies that the stoppage is not intended to be permanent. It is suggested that, even so, that was not a notice of suspension. I agree that the notice must be a deliberate statement, but when a man is asked why he does not pay a debt and he replies, "Well, I won't pay you because I have made up my mind not to pay anybody at present," I think that is a deliberate communication of intention to the creditor. The notice need not be anything more than such a deliberate communication of intention. Therefore, all the elements involved in an act of bankruptcy were proved, and the learned Judge was right in his conclusion.

Knox K.C. asked for an order declaring that the costs of the appeal be petitioning creditors' costs. The Supreme Court could make such an order. There is no rule of Court giving him these costs. [He referred to In re Bright; Ex parte Wingfield and Blew[4].]

The costs of the appeal will be petitioning creditors' costs. We cannot order costs out of the estate unless the estate is before the Court.

[1] 4 Morr., 25, at p. 32.

[2] (1905) A.C., 442, at p. 446.

[3] Barton J. owing to illness was unable to be present during the second day of the hearing of the appeal.

[4] (1903) 1 K.B., 735.

High Court of Australia

Moy v Briscoe & Co Ltd [1907] HCA 36; (1907) 5 CLR 56 (27 August 1907)

HIGH COURT OF AUSTRALIA