Cropley's Ltd v Vickery [1920] HCA 19; (1920) 27 CLR 321 (29 March 1920)

HIGH COURT OF AUSTRALIA

Cropley's Limited Appellant; and Vickery and Others Respondents.

H C of A

On appeal from the Supreme Court of New South Wales.

29 March 1920

Knox C.J., Isaacs, Gavan Duffy, Rich and Starke JJ.

Loxton K.C. (with him Davidson), for the appellant.

Maughan K.C. (with him D. S. Edwards), for the respondents.

Knox C.J.

In this case I am of opinion that the appeal should be allowed. Without going into the cases at length, it is perfectly clear that to constitute this act of bankruptcy two things are requisite: first, an intention residing in the mind of the debtor that he will, in a sense voluntarily, that is, as his own act, refuse to pay his debts as they become due, and, secondly, a communication of that intention to one of his creditors. It is not necessary to go through every word of the evidence because the facts of one case will never, or very rarely, be the same as those of any other case. It is sufficient to say that the impression left on my mind after reading the evidence and hearing the arguments, is that not only did Chapman not communicate such an intention but he did not have it. I think that on the evidence the proper inference to draw as to Chapman's intention is that he realized that the settlement to which he had come with Cropley's Ltd. under compulsion rendered it extremely probable that he would be unable to carry on his business or to pay his other creditors, but that he meant to attempt to do so. That view is borne out by the fact that after the settlement was made with Cropley's Ltd. Chapman took another shop, and transferred to it the goods that were left after he had satisfied the demands of Cropley's Ltd. If he had been intending to suspend payment of his debts, I cannot conceive why on Monday 19th August he did not at once inform his other creditors that he was going to suspend payment of the whole of his debts, and I cannot see why, if he had intended to suspend payment of his debts, he should even under compulsion do such a gratuitously dishonest thing as to hand over to Cropley's Ltd. goods which he had got from other persons, and for which he had never paid. That transaction seems to be absolutely inconsistent with any intention to suspend payment of his debts. For these reasons I think that the debtor did not have or communicate the intention of suspending payment of his debts, and consequently that the act of bankruptcy alleged had not been committed.

The appeal should be allowed, and the sequestration order should be set aside.

Isaacs J.

I agree that the appeal should be allowed. As to the law, I think it is impossible to state it more clearly than it is stated in Crook v. Morley[1]; Clough v. Samuel[2], and by Bowen L.J. in In re Lamb[3]. Applying that law to the facts of the present case, including in the relevant facts for this purpose all the statements made to Cropley's Ltd. by whomsoever represented, the debtor's statements, in my opinion, fall short of being a notice of suspension of payment of his debts. I look at all the words he is said to have used, and I read them by the light of the circumstances known both to the creditor and to himself, and, so reading them, I cannot find that they amount to a statement which would be understood by the representative of Cropley's Ltd. as a notice that the debtor was about to suspend payment of his debts.

I would only add one thing: it is unnecessary in this case, but it may at some future time be necessary to consider whether the statement of the alleged act of bankruptcy as it appears in par. 4 of the petition is a sufficient compliance with the requirements of Form No. 46 of the Forms under the Bankruptcy Act 1898 N.S.W., and whether in the subsequent proceedings the affidavit verifying the petition may be entirely disregarded and a totally different act of bankruptcy be relied on. If ever that comes up for decision, consideration must be given to the cases of In re Dunhill; Ex parte Dunhill[4]; In re Lorrimar; Ex parte Constable[5], and Ex parte Coates; In re Skelton[6].

Gavan Duffy J.

I agree that the appeal should be allowed.

Rich J.

I agree that the appeal should be allowed. It is not immaterial to notice that the debtor was not dealing with his creditors collectively: he was trying to come to terms with an individual creditor. A statement to a single creditor is not so readily construed as a notice of suspension as if it had been made to the creditors generally (Lord Hill's Trustee v. Rowlands[7]).

The facts show, I think, that the debtor stated that the terms imposed by Cropley's Ltd. would make his position precarious. He did not give his creditor to understand that he did not intend to pay his creditors in the course of his trade.

Starke J.

I agree that the appeal should be allowed.

Appeal allowed. Sequestration order discharged. Respondents to pay costs of appellant in the Supreme Court and this Court.

Solicitors for the appellant, Dawson, Waldron & Glover.

Solicitors for the respondents. Sly & Russell.

[1] (1891) A.C., 316.

[2] (1905) A.C., 442.

[3] 4 Morrell, at p. 32.

[4] (1894) 2 Q.B., 234.

[5] 7 Morrell, 235.

[6] 5 Ch. D., 979.

[7] 3 Mans., 136, at p. 138.