Newmarch v Atkinson [1918] HCA 53; (1918) 25 CLR 381 (26 September 1918)

HIGH COURT OF AUSTRALIA

Newmarch Appellant; and Atkinson Respondent.

H C of A

On appeal from the Supreme Court of Victoria.

26 September 1918

Barton, Isaacs and Rich JJ.

Starke and Eager, for the appellant.

J. R. Macfarlan, for the respondent.

Starke, in reply.

The judgment of the Court, which was read by Isaacs J., was as follows:—

Sept. 26

Barton, Isaacs and Rich JJ.

On careful consideration of the Imprisonment of Fraudulent Debtors Act 1915, and of the numerous decisions both in Victoria and in England that have been cited in argument or referred to in some of the judgments quoted, we are led to the conclusion that this appeal should be dismissed.

It is not necessary to enter upon a detailed examination of the authorities and enactments referred to in the recent case of R. v. Wallace; Ex parte O'Keefe[1]. We agree in the result with the opinions arrived at by the late Chief Justice (Sir John Madden) and Hood J., and, upon the authorities, concurred in by Cussen J. We read the Act in the following manner: Coercion of the body of a judgment debtor, by way of execution in order to obtain payment of a debt, is entirely and absolutely abolished; but where a debt is established by judgment, then for certain cases of dishonest or unjust conduct in relation to that debt, expressed in the Statute, punishment by imprisonment is provided. That the imprisonment is not intended as a means of execution for debt is shown by three circumstances. The first is that the period of imprisonment is limited to six months, whatever the amount unsatisfied at the end of that time may be. The old writ of ca. sa. was not so limited, and if the Act meant merely that dishonest non-payment was excluded from its benefits, such a case would in all probability have simply been left to the operation of the old law. In Tidd's Practice, 9th ed., vol. ii., p. 1028, it is said: "The defendant being taken upon a capias ad satisfaciendum, either satisfies the plaintiff's demand, or remains in custody." The second circumstance is that the period of six months as a maximum seems intended as a period within which the length of imprisonment ordered may be proportioned to the conduct which calls for its infliction. The third circumstance is that the imprisonment is not a satisfaction or discharge of the debt, even though it lasts the full maximum period. There again we see a departure from the common law effect of a capias ad satisfaciendum. The old law was that "the execution is considered, quoad him, as a satisfaction of the debt" (Tidd, p. 1029). If the law as to execution were merely mitigated by substituting six months for indefinite detention, there would be no fair reason for depriving the debtor entirely of the benefit of imprisonment he is compelled to endure.

It is true that by sec. 10 the debtor is entitled to be discharged on payment or satisfaction of the sum or sums mentioned in the order for commitment, but that does not alter the nature of the proceeding. If there be in any given case the particular reprehensible conduct in the Statute, the debtor may expiate it, either by undergoing his punishment in full or by purging his misconduct by at last acting justly in paying the debt which he either dishonestly incurred or dishonestly failed to pay or unjustly endeavours to escape paying. That is a gate of repentance and mercy open to him, enabling him to escape punishment or further punishment by making the necessary amends if in his power to do so.

The provisions for an ex parte order without notice, found in sec. 8, were relied on as indicating that the proceeding was rather in the nature of civil than of criminal process, because, as contended, it could not be supposed that punishment would be inflicted without giving an opportunity of being heard. But the answer is that the specified conduct which justifies imprisonment includes: (1) being about to leave Victoria without paying the debt, which would elude the jurisdiction of the Victorian Courts, and (2) being about to depart elsewhere within Victoria with intent to evade payment, an attempt probably to elude the jurisdiction of some local Court—the par. (c) of sec. 5 (2) being a relic of the Act No. 284, which included County Courts and justices. Unless some provision were made as in sec. 8 for prompt and preventive action, the provisions of sub-secs. 2 (b) and 2 (c) of sec. 5 might be rendered futile. That is met by sec. 8, and any possible injustice is guarded against by requiring proof by affidavit in the first instance, and by the discharge provisions of sec. 10.

The underlying principle of the enactment is that execution of the body for a judgment debt is no longer part of the law, being repugnant to the more humane spirit of the time. But lest the relaxation of the ancient severity should invite or encourage injustice or dishonesty on the part of the debtor, a deterrent against such reprehensible conduct in relation to that debt is provided within stated limits. And even within those limits encouragement is offered for amends by affording opportunity of payment whereupon the deterrent punishment terminates.

That being the general nature of the enactment, the next question is the nature of the duty imposed upon the Judge.

If specific facts are established, then says the Act "it shall be lawful" to make an order. Those words by themselves are primarily permissive only, but the nature of the subject matter and of the donee of the power shows that they are in this case mandatory. The extent of that mandate is the next consideration. The words quoted are followed by the further words "if he thinks fit," and effect must be given to them. Their proper effect in our opinion is that as soon as the necessary conditions specified in the Act are established the Judge has no discretion whatever as to exercising the jurisdiction of determining judicially whether the order should be made, but he still has a discretion to determine whether, upon the whole circumstances proved, the occasion is a proper one for exercising the power. That discretion must not be influenced by any extraneous or irrelevant consideration—as, for instance, that imprisonment for such reasons is objectionable.

On the other hand, it must be remembered that sec. 10 provides expressly that the Judge may direct, if "in the special circumstances of the case he thinks fit so to do," that any person imprisoned under an order shall be discharged. It is clear, therefore, that the Judge when asked to make the order need not act circuitously by first imprisoning and then discharging, but may, under the same words, "if he thinks fit," in sec. 5, take "the special circumstances of the case" into consideration, and either reduce the period to a minimum or refrain altogether from directing imprisonment.

The only circumstances which the appellant suggests should have been and were not taken into consideration are (1) the plaintiff's vindictive motive and (2) the defendant's actual inability to pay. As to the first, the plaintiff's motive is not in itself any ground for refusing the order. It is not unnatural that a defrauded man should be vindictive as a result of the fraud practised upon him, but in any event it is immaterial. His vindictiveness may, of course, inspire the tribunal with caution as to his evidence; but, once the facts are ascertained, the plaintiff's motive is no obstacle. See Dowling v. Colonial Mutual Life Assurance Society Ltd.[2].

As to the defendant's inability to pay the debt, where as here the fraud consists in a false representation of ability to pay, the inability is really part of the offence, and to regard it as an exculpation would be absurd. We do not say there may not be cases where it could well be taken into consideration—that is very possible; but in the present case the omission to do so cannot be regarded as unwarranted.

It was suggested that the debt or liability must be single, and the conduct charged must apply to the whole of it. Even if that were an accurate reading of the Act, the facts show that the fraud of the appellant covered the whole of the liability. But having considered the matter we shall state our conclusions. It is not necessary that the debt or liability on which the judgment is founded should be indivisible. The Legislature were well aware that an action was frequently brought for different causes of action, and did not seek to drive plaintiffs to a multiplicity of suits. Sec. 6 speaks of "any action in the Supreme Court in respect of any cause or causes of action." The words "the liability the subject of such judgment" mean to confine the consideration of the defendant's conduct to liability which has passed into the judgment, and not to imprison him with reference to a debt under a judgment because of reprehensible conduct in relation to some other liability. When the cause or causes of action have passed into a judgment, then it may be said the debt, now one of record, is indivisible from the date of judgment.

The judgment appealed against should therefore be affirmed, and the appeal dismissed.

Appeal dismissed with costs.

Solicitors for the appellant, McLaughlin, Eaves & Johnston.

Solicitors for the respondent, Rigby & Fielding.

[1] (1918) V.L.R., 285; 39 A.L.T., 199.

[2] [1915] HCA 56; 20 C.L.R., 509.