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McQuarrie v Jaques

McQuarrie v Jaques

Case [1954] HCA 76 15 December 1954

Insolvency

Commercial Law

Civil Procedure

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92 CLR 262

McQUARRIE AND ANOTHER

RESPONDENTS, JAQUES

RESPONDENT. APPLICANT, Bankruptcy-Judgment debtor-Execution levied-Goods held by sheriff seven days

before sale-Money paid to execution creditor-Withdrawal of sheriff-Act of bankruptcy-Petition issued by another creditor-Sequestration order made- SYDNEY,

Relation back-Benefit of execution-Right of execution creditor to retain Aug. 25, 26;

Bankruptcy Act 1924-1950, ss. 4, 52 (e), 55, 60, 90, 92.

Before an act of bankruptcy had occurred the debtor's goods were seized in execution at the suit of the appellants. The goods were held for more than seven days before being sold which under S. 52 (e) of the Bankruptcy Act 1924-1950 constituted an available act of bankruptcy to which a bankruptcy of the debtor must be deemed to have relation back and then commence if the petition be presented within six months S. 90 of the Bankruptcy Act 1924-1950. In fact within six months a petition was presented founded on another later act of bankruptcy and a sequestration order was made. But in the meantime the sale, the return of fieri feci to the writ and the payment of the money to the appellant all took place. Upon the trustee in bankruptcy seeking a declaration and order that, by virtue of S. 92 of the Bankruptcy Act 1924-1950 the appellants were not entitled to retain the benefit of the execution against the goods of the bankrupt, Clyne J. held that before the execution had been completed by seizure and sale the execution creditors had notice within the meaning of S. 92 (1) of the commission of an available act of bankruptcy by the debtor inasmuch as they must be taken to have known that the sheriff had held the goods for seven days after seizure SO that an act of bankruptcy was committed: S. 52 (e). The order which Clyne J. made under S. 92 declared that the appellants were not entitled to retain against the respondent the benefit of the execution and the order required the appellants to pay the respondent the amount of the benefit of the

Held, that although at common law the appellants as execution creditors would obtain a title to the proceeds of the execution that would be paramount

92 CLR 263

to that of the Official Receiver, the paramountcy of the appellants' title is destroyed by S. 92 which is substantially transcribed from the corresponding English provisions (now S. 40 of the Bankruptcy Act 1914 (Imp.) ) which under the English authorities have been held to mean that once the execution creditor was fixed with notice before the completion of the execution by sale that an act of bankruptcy had occurred, even when it was occasioned by the execution itself, that was the end of any claim on his part to retain or receive the proceeds of the execution.

Per Dixon C.J. and Fullagar J. that whatever view may be taken of the relation of the decided cases to the actual text embodied in our S. 92 and to one another it is clear that…

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.

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Details

AGLC: McQuarrie v Jaques [1954] HCA 76
Case: [1954] HCA 76
Decision Date: 15 December 1954

CaseChat Overview and Summary

This case concerned an appeal to the High Court of Australia from a decision of the Court of Bankruptcy. The appeal arose from a claim by the Official Receiver, as trustee of the estate of John William Noel Bender, against the appellants, Robert Keith McQuarrie and Douglas Beardmore. The trustee sought a declaration that the appellants were not entitled to retain the benefit of an execution issued against Bender's goods, and an order for the repayment of the sum levied under that execution. The appellants had obtained judgment against Bender, and a writ of execution was issued on 17 April 1950. Execution was levied on Bender's goods on 28 April 1950, and these goods were held by the sheriff until 28 June 1950, when they were sold. The sum of £189 1s. 3d. was realised from this sale and eventually paid to the appellants. Bender's estate was sequestrated on 17 August 1950.

The central legal issues before the High Court were whether Section 92 of the *Bankruptcy Act 1924-1950* operated to deprive the appellants of the benefit of their execution, and whether the appellants had notice of an available act of bankruptcy before the completion of their execution. Specifically, the court had to determine if the seizure and holding of Bender's goods by the sheriff for more than seven days, which constituted an act of bankruptcy under Section 52(e) of the Act, meant that the appellants, having received the proceeds of the sale, were disentitled to retain them. The court also considered the meaning of "benefit of the execution" within Section 92 and whether it encompassed the proceeds of a sale.

The High Court, affirming the decision of the Court of Bankruptcy, held that the appellants were not entitled to retain the benefit of the execution. The court reasoned that while at common law the appellants might have had a paramount title to the proceeds, Section 92 of the *Bankruptcy Act* destroyed this paramountcy. The court found that the appellants had notice of an available act of bankruptcy, namely the holding of the goods by the sheriff for seven days, which occurred before the completion of the execution by sale. This notice, received before the execution was completed, meant that the appellants could not retain the benefit of the execution against the trustee in bankruptcy. The court relied on established English authorities, such as *Figg v. Moore Bros.* and *Trustee of Burns-Burns v. Brown*, which held that once an execution creditor has notice of an act of bankruptcy before the completion of the execution, their claim to the proceeds is extinguished.

Consequently, the High Court dismissed the appeal and affirmed the order of the Court of Bankruptcy. The appellants were ordered to pay the sum of £189 1s. 3d. to the Official Receiver, representing the benefit of the execution which they were not entitled to retain.

Orders