Dobson v Beath Schiess and Co - [1905] HCA 4

GEORGE FRANK DOBSON

APPELLANT; RESPONDENT,

BEATH SCHIESS &CO.

RESPONDENT. PETITIONER,

ON APPEAL FROM THE SUPREME COURT OF Indivency Act 1890 (Vict.) (No. 1102), secs. 37, 106, 9-Insolvency Act 1897 (Vict.)

(No. 1513), secs. 79, 81, 82, 83, 106-Compulsory sequestration- - Act of Insol. vency-Assignment for benefit of "creditors generally"--Right of creditors by assenting to become parties to deed-Trust for scheduled creditors and all others of creditors who satisfy trustee that they are creditors-Power - to exclude-Deed of arrangement.

By a deed, to which the parties were a debtor, of the first part, a trustee, of the second part, and the creditors of the debtor whose names and seals appeared in a schedule to the deed, or who otherwise should assent to the deed, of the third part, the debtor assigned to the trustee all his property upon trust, after payment of charges and expenses, to apply the residue in payment of the debts owing to the creditors of the debtor whose names appeared in the schedule and 10 all others (if any) of the creditors of the debtor who should, by reasonable efforts in that behalf satisfy the trustee that they were entitled at the date of the deed to be included as creditors, without any priority or preference and in due course of administration. The deed also contained a proviso that the trustee should not be precluded from inquiring into, and insisting on such proof

he should deem reasonable of, the debts owing to creditors whose names appeared in the schedule, and should not be bound to pay any dividend on any amount inserted in the schedule beyond what should by reasonable efforts in that behalf be shown to have been owing at the date of the deed. Further it contained R clause whereby in consideration of the premises the parties of the third part released the debtor from any claims in respect of their debts, pro- vided that the release should be inoperative if the deed should not be registered in accordance with law, or if the deed should be set aside.

Held that the deed was a conveyance or assignment for the benefit of creditors generally " within the meaning of sec. 106 of the Insolvency Act

2 CLR 278

1897, and was therefore an act of insolvency within sec. 37 (1) of the Insolvency Act 1890, and also that it was a deed of arrangement within the meaning of Part VI. of the Insolvency Act 1897.

Judgment of Full Court (1905) V.L.R., 51; 26 A.L.T., 103, affirmed. In re Wiedeman, 5 V.L.R. (I.P. &M.), 32, considered.

APPEAL from the Supreme Court of Victoria.

On the 5th September, 1904, Beath, Schiess &Co. obtained an order nisi for the sequestration of the estate of George Frank Dobson, the act of insolvency alleged being That the said George Frank Dobson did, on the 7th day of July, 1904, make a convey- ance or assignment of his property for the benefit of his creditors generally." The…

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 Dobson v Beath Schiess and Co

Details

AGLC: Dobson v Beath Schiess and Co [1905] HCA 4
Case: [1905] HCA 4
Decision Date: 18 March 1905

CaseChat Overview and Summary

The case of *Dobson v Beath Schiess and Co* concerned a dispute arising from a deed of arrangement executed by a debtor. The debtor assigned their property to a trustee for the benefit of their creditors. The central issue was whether this assignment constituted an act of insolvency under the relevant Victorian Insolvency Acts, specifically the *Insolvency Act 1890* and the *Insolvency Act 1897*. The High Court of Australia was tasked with determining the validity and effect of this deed in the context of compulsory sequestration proceedings.

The legal issues before the court were whether the deed of assignment amounted to a fraudulent preference or an assignment for the benefit of creditors generally, thereby constituting an act of insolvency. The court had to consider the provisions of the Insolvency Acts relating to compulsory sequestration and the definition of an act of insolvency. Specifically, it needed to assess whether the deed's terms, which purported to create a trust for scheduled creditors and any other creditors who satisfied the trustee, and which potentially allowed for the exclusion of certain creditors, were consistent with the requirements for a valid assignment for the benefit of creditors generally under the insolvency legislation.

The High Court, comprising Griffith CJ, Barton and O'Connor JJ, reasoned that an assignment for the benefit of creditors generally, to be valid and not an act of insolvency, must be a genuine and unconditional assignment of the whole of the debtor's property for the benefit of all creditors without preference. The deed in question was found to be invalid because it contained provisions that gave the trustee a discretion to exclude certain creditors and did not operate as a complete and unconditional assignment of all the debtor's property for the benefit of all creditors alike. This discretionary power and the potential for exclusion meant the deed did not meet the criteria for a valid assignment for the benefit of creditors generally, and therefore constituted an act of insolvency.

Orders