Abrahams v The King

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.