Robert Reid Pty Ltd v Cassidy [1966] HCA 7

High Court of Australia Kitto, Taylor, Menzies, Windeyer and Owen JJ. Robert Reid Pty Ltd v Cassidy [1966] HCA 7

ORDER Appeal dismissed with costs.

Cur. adv. vult.

The following written judgments were delivered:—

1966, Feb. 25 Kitto J.

The question in this appeal is whether a debtor commits an act of bankruptcy by making a payment which would be void as a preference if he became bankrupt. It is a question as to the true interpretation of s. 52 (c) of the Bankruptcy Act 1924-1960 Cth, which provides that a debtor commits an act of bankruptcy if he "makes any conveyance or transfer of his property, or any part thereof, or creates any charge thereon which would, under this or any other Act be void as a preference or a fraudulent preference if he became bankrupt". In this case a debtor, the present respondent, made a payment which, if he became bankrupt, would be void as a preference by force of the provisions of s. 95 of the Act. Is such a payment a "conveyance or transfer" of a part of his property within the meaning of s. 52 (c)?

In a series of decisions Clyne J., as Federal Judge in Bankruptcy, has answered the question in the negative, and this appeal is from the latest of those decisions. His Honour's view is opposed to that of his predecessor, Lukin J., and of Paine J. in South Australia. Moreover it is opposed to dicta in two judgments delivered by members of this Court: Richardson v. The Commercial Banking Co. of Sydney Ltd. [3] and Rae v. Samuel Taylor Pty. Ltd. [4] ; but the considerations favouring the interpretation adopted by Clyne J. were not before the Court in either of those cases, and we must, I think, examine them now.

1. (1952) 85 C.L.R. 110, at p. 128. 2. (1963) 110 C.L.R. 517, at p. 523.

The most important of these considerations is to be found in the striking contrast between the language of s. 52 (c) and the language of s. 95. It is a contrast for which there does not seem to be anything to account in the legislative history of the provisions. It seems beyond doubt that in the drafting of s. 52 (c) a deliberate choice has been made of some of the matters which s. 95 renders void as preferences if certain conditions are satisfied, to the exclusion of the others of those matters. There are six such matters altogether: every conveyance of property, every transfer of property, every charge upon property, every payment made, every obligation incurred, every judicial proceeding taken or suffered. Plainly enough, the draftsman must have decided as a matter of policy not to make the incurring of an obligation or the taking or suffering of a judicial proceeding an act of bankruptcy, even where they would be void under s. 95 if the debtor became bankrupt. It is impossible to suppose that he omitted to mention them because they were comprehended by the expression "conveyance or transfer" in s. 52 (c): they simply could not be. Then what is the explanation of the other omission from s. 52 (c) of a matter specified in s. 95? Is it that the draftsman thought that for the purposes of s. 52 (c), though not for the purposes of s. 95, the words "conveyance or transfer of his property or any part thereof" were sufficient to make it clear that a payment of money was included? That seems hardly likely. The specification of acts of bankruptcy was at least as much a matter for meticulous care to place the meaning beyond doubt as was the specification of matters capable of being void as preferences. The only reasonable explanation, as it seems to me, is that it was decided as a matter of positive intention to exclude preferential payments from the classes of dealings which should be acts of bankruptcy.