Abrahams v The King - [1941] HCA 24

APPELLANT;

THE KING

RESPONDENT.

ON APPEAL FROM THE FEDERAL COURT OF

BANKRUPTCY. Bankruptcy-Offence-Liability incurredCredit-Goods supplied to third person-

Payment therefor guaranteed by bankrupt-FraudBankruptcy Act 1924-1933 (No. 37 of 1924-No. 66 of 1933), sec. 212 (1) (a).

Sec. 212 (1) (a) of the Bankruptcy Act 1924-1933, which provides that any person against whom a sequestration order is made who in incurring any debt or liability has obtained credit by means of fraud shall be guilty of an offence, refers to credit obtained by or given to the bankrupt himself. A bankrupt who, by giving a guarantee, has procured credit to be given to another person, has not "obtained credit" within the meaning of the sub-section.

Decision of the Federal Court of Bankruptcy reversed.

APPEAL from the Federal Court of Bankruptcy (District of New South Wales) and the Australian Capital Territory.

Benjamin Lewis Abrahams was tried summarily on a charge laid under sec. 212 (1) (a) of the Bankruptcy Act 1924-1933, that on or about 2nd April 1940 at Sydney he, being a person against whom, on 23rd July 1940, a sequestration order was made under the Act, did in incurring a liability to William Becker Pty. Ltd. obtain credit from the said William Becker Pty. Ltd. to the extent of £49 7s. 2d. by means of fraud.

At the trial before Judge Lukin the managing director of William Becker Pty. Ltd. said that on 1st April 1940 one Mrs. Speelman, whom he then met for the first time, attended at the company's ware- house and, at her request, was shown certain goods, which later were sold to her. While discussing the matter of payment for the

64 CLR 578

578

HIGH COURT goods SO bought by her she referred to Abrahams, and an appoint- ment was made for him to meet the managing director at the ware- house on the following day. Upon keeping the appointment Abrahams was informed by the managing director that Mrs. Speelman

THE KING.

had visited the warehouse on the previous day and had chosen certain goods to the value of £50, and that she had given to the managing director Abrahams' "telephone number as he would act as a guarantor being her future husband." Asked by the managing director what his guarantee was worth Abrahams replied that it was only that week he had taken sole control of the Merchandise Retailer, and had invested £2,000, for which he paid cash." Abrahams gave to the managing director a letter, signed by himself and addressed to the company, as follows :- In consideration of your company extending credit to Mdme. Speelman I hereby person- ally guarantee payment of account, subject to your allowing the usual trading terms. This guarantee to be a continued one, and my signature in completion is attached herewith to the amount of £50."

The managing director said that relying upon this guarantee he, on behalf of the company, later during that day allowed a chauffeur, who, apparently, had been engaged by…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Abrahams v The King

Details

AGLC: Abrahams v The King [1941] HCA 24
Case: [1941] HCA 24
Decision Date: 8 September 1941

CaseChat Overview and Summary

The case of *Abrahams v The King* concerned an appeal to the High Court of Australia from a decision of the Federal Court of Bankruptcy. The appellant, Benjamin Lewis Abrahams, had been convicted of an offence under section 212(1)(a) of the *Bankruptcy Act 1924-1933*. This section criminalised a bankrupt who, in incurring a debt or liability, obtained credit by means of fraud. The charge against Abrahams was that he had obtained credit from William Becker Pty. Ltd. by fraud, in relation to a debt incurred by one Mrs. Speelman.

The High Court was required to determine whether Abrahams had "obtained credit" within the meaning of section 212(1)(a) of the *Bankruptcy Act 1924-1933*. Specifically, the court had to consider whether a person who provides a fraudulent guarantee for credit extended to a third party could be considered to have obtained credit for themselves under the provision, or if the provision was limited to credit obtained directly by the bankrupt for their own benefit.

The Court reasoned that the offence under section 212(1)(a) required the bankrupt to have personally obtained credit. In this case, Abrahams had provided a guarantee for goods supplied to Mrs. Speelman. While Abrahams made fraudulent misrepresentations about his financial standing to induce the company to accept his guarantee, the credit itself was extended to Mrs. Speelman, who was the principal debtor. The liability incurred by Abrahams was a contingent one, secondary to Mrs. Speelman's primary obligation. The Court applied a strict interpretation to the penal provision, noting that the language of the section referred to credit obtained by or given to the bankrupt themselves. Therefore, Abrahams, as a guarantor, had not obtained credit within the meaning of the section.

Consequently, the High Court allowed the appeal, discharged the order of the Federal Court of Bankruptcy, and quashed the conviction against Abrahams.

Orders