PT Garuda Indonesia Ltd v Grellman

Re: P.T. GARUDA INDONESIA LIMITED
And: RICHARD JOHN GRELLMAN
No. G215 of 1991
FED No. 232
Bankruptcy
(1992) 107 ALR 199

COURT

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
Wilcox(1), Gummow(1) and Von Doussa(1) JJ.

CATCHWORDS

Bankruptcy - Application by trustee to declare transactions void - repayment by bankrupt to his employer of $100,000 previously stolen by him - transfer to employer of bankrupt's house - effect of notice to employer of claims against bankrupt by other persons - nature of required proof of bankrupt's fraudulent intent - significance of fact that transactions favoured a person who was already a creditor of the bankrupt - whether transaction is void if made to defeat future creditors - burden of proof that disponee took in good faith and for valuable consideration - nature of "good faith" - significance of agreement by employer not to prosecute bankrupt if restitution made

Bankruptcy Act 1966, s.121

HEARING

#DATE 4:5:1992

Counsel for the appellant: Mr C Darvall QC with Mr B Skinner

Solicitor for the appellant: Alderice and Clarke

Counsel for the respondent: Mr P M Biscoe QC with Ms H Coonan

Solicitor for the respondent: Abbott Tout Russell Kennedy

ORDER

Time for filing the cross-appeal be extended to 2 October 1991.

The appeal be dismissed.

The cross-appeal be dismissed.

The appellant pay to the respondent:

(a) the whole of the costs incurred by him which were thrown away by the adjournment of the hearing of the appeal on 2 October 1991; and

(b) one half of his other costs of the appeal.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

JUDGE1

The respondent is trustee of the bankrupt estate of the Paul Anthony Simpson ("Mr Simpson"). A sequestration order was made against the estate of Mr Simpson on 9 August 1986. The act of bankruptcy relied upon was a failure to comply with a bankruptcy notice in respect of a judgment of the Supreme Court of New South Wales for loss and damage to certain premises and chattels from a fire which had been deliberately caused by Mr Simpson on or about 13 October 1985. Judgment was entered against Mr Simpson on 29 April 1986 for a sum which, together with costs, was $496,529.18. In his statement of affairs completed on 1 September 1986, Mr Simpson recorded assets of $3,500. At the time of the institution of the present proceedings, no funds had been received in his estate.

Between 1976 and 1983, Mr Simpson had been employed as an accountant by the appellant ("Garuda"). The respondent's case at trial was that during his period of employment Mr Simpson misappropriated some $250,000 from Garuda. In October 1985, during police inquiries into the fire, Mr Simpson and his wife contacted Garuda, admitted the misappropriation, and agreed with Garuda that if the money were repaid Garuda would not report the misappropriation to the police. Then followed two transactions which the respondent contended were void as against the trustee in bankruptcy pursuant to ss.120 and 121 of the Bankruptcy Act 1966 ("the Act"). On about 1 November 1985 Mr Simpson by bank cheque paid Garuda $100,000. On about 10 December 1985 Mr Simpson transferred a house property comprised in vol.9696 fol.250 and known as 347 Livingstone Road, Marrickville in the State of New South Wales ("the Marrickville property") for a consideration stated in the transfer to be $150,000.
By his application to this Court the trustee sought declarations and consequential relief in respect of the two transactions. The primary Judge (Hill J.) granted a declaration that the transfer of the Marrickville property was void as against the trustee pursuant to s.121. However, Hill J. also granted in favour of Garuda a declaration that the payment of $100,000 was not a transaction void as against the trustee pursuant to s.121.
Hill J. also held that the payment of $100,000 was not a transaction void as against the trustee under s.120.
On the appeal, Garuda challenged the declaration in respect of the Marrickville property, and, in response, the trustee, by a cross-appeal filed out of time, sought a declaration that the payment on 1 November 1985 was void as against him, pursuant to ss.120 and 121.
The notice of appeal by Garuda was filed on 3 May 1991. The appeal came on for hearing before a Full Court on 2 October 1991. At that time no cross-appeal had been filed. Counsel for the appellant sought leave to withdraw a concession made at trial on Garuda's behalf that on the evidence, so far as it concerned Mr Simpson, both transactions made by him were dispositions made with intent to defraud creditors within the meaning of s.121. Leave to do so was granted; the respondent was also given leave to withdraw a concession made at trial that both transactions were for valuable consideration; Garuda was given leave to amend the notice of appeal to contend that the evidence did not establish that the transfer of the Marrickville property was made by Mr Simpson with intent to defraud creditors; the respondent was given leave to file a Notice of Contention; and the hearing was stood over. The amended notice of appeal was filed on 25 October 1991, but in the meantime the respondent filed his notice of cross-appeal on 16 October 1991. Order 52, r.22(1) of the Federal Court Rules requires a notice of cross-appeal to be filed within 21 days after service of the notice of appeal or within such further time as the Court or a Judge fixes. On the footing that the original notice of appeal was filed in May 1991 the cross-appeal was filed well out of time, and leave is necessary for the prosecution of the cross-appeal. We heard full argument to be in a better position to determine whether leave should be given.
The primary purpose of procedural time limits is to prevent litigation running on interminably, and to bring disputation between citizens to an end. In the present case, the notice of cross-appeal was filed before the amended cross-appeal. The late filing, if time is extended, will not delay the determination of the appeal process. The notice of cross-appeal was filed at a time which allowed full opportunity for the respondent to the cross-appeal to prepare argument on the issues raised by it. Counsel for the respondent concedes that the cross-appeal was filed after a reconsideration of the case in the light of leave being given to withdraw the concessions made at trial. The grounds of the cross-appeal assert that the impugned transactions were not made for valuable consideration. These grounds were not available until the concession that the transactions were made for valuable consideration was withdrawn. This is not therefore a case where the party seeking to file the cross-appeal out of time could reasonably have been expected to have complied with the time limit. Furthermore, the issues raised by the cross-appeal are interrelated with the issues raised by the appeal. We consider leave should be granted to file the notice of cross-appeal out of time.
It is necessary to say more about the facts. After Mr Simpson left his employment with Garuda, a corporation of which he and his wife were shareholders, Coroba Pty Limited, entered into a contract in approximately June 1985 with Matra Travel Service Pty Limited to purchase its travel agency business. Disputes arose between the parties to the contract before completion. Mr Simpson believed that certain details of the business had been misrepresented to him and he did not wish to proceed with the purchase. He took matters into his own hands, and on 13 October 1985 he set fire to the premises at 765 Anzac Parade, Maroubra, a suburb of Sydney, on part of which the travel agency business was conducted. Mr Simpson was charged with malicious damage to the building and pleaded guilty. The contract was later terminated by the vendor, and the deposit of $14,000 forfeited to the vendor. Jalma Investments Pty Limited was the registered proprietor of the premises at 765 Anzac Parade, Matra Travel Service Pty Limited was lessee of one part thereof, and YNCA Investments Pty Limited lessee of another part. Later in 1985, these three corporations commenced proceedings in the Supreme Court of New South Wales seeking recovery of damages from Mr Simpson in respect of (as regards Jalma Investments) damage to the building and loss of rent from the two lessees, and (as regards YNCA Investments Pty Limited and Matra Travel Service Pty Limited) damage or destruction of office equipment, furniture and other chattels. As we have indicated, on 29 April 1986, judgment was entered against Mr Simpson for $496,529.18.
On or about 22 October 1985 Mrs Simpson telephoned Mr Woerjanto who at the time was district manager for Garuda in Sydney. Mrs Simpson informed him of the misappropriation. Mr Woerjanto agreed that if the money were returned he would not report the matter to the police, although he would report it to his head office.
The following day a Detective Luff contacted Mr Santangelo, the accounts manager at Garuda. Detective Luff said that he was investigating Mr Simpson's arson (although he gave no details of the extent of the fire) and that during his investigations he had noted there were substantial funds in Mr Simpson's bank account; he sought details of the moneys received by Mr Simpson on the termination of his employment with Garuda. Later that day, or on the next day, Mr Santangelo reported his discussion with Detective Luff to Mr Woerjanto. Hill J. found that Mr Santangelo mentioned the arson to Mr Woerjanto (who was previously unaware of it) although it was not regarded at that stage by either man as of great significance.
The next event was that Mr Simpson telephoned Mr Woerjanto. He said that he had taken the money from Garuda, and that he would return it so that Garuda would not report the matter to the police. He said he did not have the whole money, but he had money in the bank which he would mail by bank cheque. About one week later Garuda received the payment of $100,000.
Later, on about 8 November 1985, Mr Simpson met with Mr Woerjanto. He said again he had misappropriated about $250,000. He said he had a property he had just bought in Marrickville for $150,000, which he would transfer to Garuda. Mr Woerjanto did not suggest that Mr Simpson sell the property. Rather, he said it should be transferred to Garuda as soon as possible. He had to report to Jakarta and it would be better if the story were "complete". Mr Woerjanto made no independent check on the value of the Marrickville property. He just contacted Garuda's solicitors to process the transfer. In fact it seems Mr Simpson had paid only $134,425 for the property.
On about 4 December 1985 solicitors acting for the three corporations which suffered loss in the fire wrote a letter to Mr Simpson, and a copy of the letter was sent to Mr Simpson's solicitor. The letter concluded:

"Our clients are concerned that you may attempt to dispose of your assets prior to the completion of their claims. In these circumstances you are requested to provide us with your undertaking that you will not dispose of or encumber in any way any of your assets. In the event of you not being prepare (sic) to provide this undertaking by 12 midday on Monday, 9th December, 1985 an application will be made to the Supreme Court for appropriate orders."

On 9 December 1985 Mr Simpson's solicitor (Mr Clapin) contacted the solicitor acting for Garuda whose file note reads:

"9.12.85 Phone from Bill Clapin. 2324311. Paul Simpson took $250,000 from Garuda. He has repaid $100,000. He will transfer another property to Garuda worth $150,000. He is in more trouble as he burnt a building down and the solicitors want an undertaking that he won't transfer any property."

On the same day Garuda's solicitor telephoned Mr Woerjanta. Hill J. found that Mr Woerjanta was told the substance of his solicitor's conversation with Mr Clapin, and in particular that the solicitors for the vendors of the travel agency business had sought an undertaking that the Marrickville property would not be transferred.
At least three more telephone conversations occurred that day between Mr Clapin and Garuda's solicitor. It was agreed that Mr Clapin would prepare a contract; Mr Simpson would pay the stamp duty on the contract; and the form of a receipt which Garuda would give was discussed. The contract prepared by Mr Clapin, which was executed later that day, or on the following day, provided for the adjustment in the usual way of rates, taxes and outgoings at completion, but this did not take place. The solicitor for Garuda made no enquiries of statutory authorities, and it appears that whatever rates and taxes were outstanding were met by Garuda.
After the contract was executed, a transfer executed by Mr Simpson as the sole registered proprietor, and the certificate of title, were handed over to the solicitor for Garuda in exchange for a receipt dated 9 December 1985 in the following terms:

"Received from Paul Anthony Simpson Certificate of Title Volume 9696 Folio 250 in respect of property No. 347 Livingstone Road, Marrickville together with executed form of Transfer in favour of Garuda Indonesian Airways with respect to such property in full satisfaction and discharge of debt to the extent of $150,000.00 outstanding from Paul Anthony Simpson to Garuda Indonesian Airways. It is acknowledged that a sum of $100,000 has previously been paid by Paul Anthony Simpson to Garuda Indonesian Airways."

The primary Judge considered first the application of s.121 of the Act to those facts. We adopt the same course. Section 121 reads:

"121 (1) Subject to this section, a disposition of property, whether made before or after the commencement of this Act, with intent to defraud creditors, not being disposition for valuable consideration in favour of a person who acted in good faith, is, if the person making the disposition subsequently becomes a bankrupt, void as against the trustee in the bankruptcy.

(2) Nothing in this section shall be taken to affect or prejudice the title or interest of a person who has, in good faith and for valuable consideration, purchased or acquired the property the subject of the disposition or any interest in that property.

(3) In this section, 'disposition of property' includes a mortgage of property or a charge on or in respect of property."

The expression in sub-s.121(1) "with intent to defraud creditors" must be read with s.6. This states:

"6. A reference in this Act to an intent to defraud the creditors of a person or to defeat or delay the creditors of a person shall be read as including an intent to defraud, or to defeat or delay, any one or more of those creditors."

The making of a disposition to which s.121 would apply may also amount to commission of an act of bankruptcy. This follows from para40(1)(b) which states:

"40 (1) A debtor commits an act of bankruptcy in each of the following cases:-

(a) ...;

(b) if in Australia or elsewhere -

(i) he makes a conveyance, transfer, settlement or other disposition of his property or of any part of his property;

(ii) he creates a charge on his property or on any part of his property;

(iii) he makes a payment; or

(iv) he incurs an obligation, that would, if he became a bankrupt, be void as against the trustee; ..."

In the Bankruptcy Act 1924 ("the 1924 Act"), there was no provision corresponding to s.121. However, sub-s.52(b) of this Act classified as an act of bankruptcy the making in Australia or elsewhere of a fraudulent conveyance, gift, delivery or transfer of the property of the debtor or of any part thereof.
Provision in respect of fraudulent dispositions is now directly made by s.121 of the Act. The enactment of the Act followed the Report in 1962 of a committee appointed by the Commonwealth Attorney-General to review the bankruptcy law ("the Clyne Committee"). Paragraph 173 of the Clyne Committee's Report was as follows:

"Fraudulent Dispositions.

173. Under the Statute 13 Eliz.c.5, enacted in 1570 but now to be found in various Property Law Acts passed in England and in the several States, fraudulent dispositions were liable to be set aside at the instance of any person thereby prejudiced. The Committee considers that, where a fraudulent dispositions has been made by a debtor who subsequently becomes bankrupt, the trustee of the estate should have the power, at any time, subject to exceptions in favour of persons who have dealt with the bankrupt in good faith, to have it set aside for the benefit of the estate of the bankrupt."

The statute of 13 Elizabeth I, c.5 (the Elizabethan statute) provided that transfers of property for the purpose of delaying, hindering or defrauding creditors or others of their lawful debts were "to be clearly and utterly void, frustrate, and of none Effect..." provided that the statute did not extend to transfers of property "upon good Consideration and bona fide lawfully conveyed or assured to any Person or Persons...not having at the Time of such Conveyance or Assurance to them made, any Manner of Notice or Knowledge of such Covin, Fraud, or Collusion as is aforesaid".
Provisions akin to para40(1)(b) of the Act and sub-s.52(b) of the 1924 Act appeared in a long line of British statutes. They included the Bankrupt Law Consolidation Act 1849 (Imp.) s.67, the Bankruptcy Act 1861 (Imp.) s.70, the Bankruptcy Act 1883 (Imp.), para4(1)(b) and the Bankruptcy Act 1914 (Imp.) para1(1)(b). In In re Colemere (1865) LR 1 Ch App 128 at 132, Lord Cranworth L.C. described s.67 of the 1849 statute as "a very old enactment, repeated from time to time in the successive Acts".
The result was that fraudulent dispositions within the Elizabethan statute might also be acts of bankruptcy, and, that, in any event (as Stephen J. noted in Barton v Deputy Commissioner of Taxation (1974) 131 CLR 370 at 374), the similarity in language between the bankruptcy legislation and the Elizabethan statute meant the decisions construing each were used in dealing with the other. But the activities which would suffice for commission of the act of bankruptcy were not limited to those which fell within the terms of the Elizabethan statute: Young and Others v Waud (1852) 8 Ex 221 at 234; 155 ER 1328 at 1333 per Parke B.; Allen v Bonnett (1870) LR 5 Ch App 577; Middleton v Pollock (1876) 2 Ch D 104, at 108; Ex parte Games; in re Bamford (1879) 12 Ch D 314: Halsbury's "The Laws of England", 1st Ed., Vol.2, pp 15-16.
The Elizabethan statute has been replaced in England by the Law of Property Act 1925 (UK) s.172. This has been said not to relevantly alter the law as established by the decisions upon the earlier statute: Re Kelly; Ex parte Young (1932) 4 ABC 258 at 261.
In Australia, the various States and Territories adopted legislation reproducing the substance of the Elizabethan statute; see, for example, Conveyancing Act 1919 (N.S.W.) s.37A, Property Law Act 1958 (Vic.) s.172, Law of Property Act 1936 (SA) s.86, Property Law Act 1969 (WA) s.89, Mercantile Acts 1867-1896 (Q) s.46, Conveyancing and Law of Property Act 1884 (Tas) s.40.
Starke J. pointed out in Williams and Others v Lloyd and Anor (1934) 50 CLR 341 at 362-3, that dispositions void under these statutes against creditors were void also against trustees in bankruptcy or receivers lawfully appointed, and there was nothing in the 1924 Act which superseded or was inconsistent with those provisions. Thus, many Australian decisions interpreting the State representatives of the Elizabethan statute are decisions of the Federal Court of Bankruptcy in applications by trustees in bankruptcy; see, for example, Williams and Others v Lloyd and Anor, (supra); Re Kelly; Ex parte Young, (supra); Re Trautwein; Richardson v Trautwein (1944) 14 ABC 61.
In reading the authorities, it is necessary to keep in mind the distinct statutory contexts in which they appear, and also the observation of Parker J. in Glegg v Bromley (1912) 3 KB 474 at 492 that in the authorities on the Elizabethan statute, it is not always clear whether judges are dealing with the operative part of the statute or with the proviso.

Whilst the terms in which s.121 is expressed are strongly reminiscent of those of the earlier statutes, and whilst guidance may be obtained from the earlier law, the present statute must, in the end, be given effect according to its terms. In particular, effect must be given to s.6, a provision which was not contained in the recommendations of the Clyne Committee.
At trial, as we have said, it was not disputed that the two transactions in question were dispositions made by Mr Simpson with the intent to defraud creditors. It was also conceded by the respondent before the primary Judge that the transactions were for valuable consideration. In light of these concessions, the primary Judge's approach to the case was that the central issue concerned whether Garuda had acted in good faith.
Before this Court, counsel for Garuda sought to support the attack upon his Honour's declaration in respect of the transfer of the Marrickville property, and to resist the cross-appeal attacking the earlier payment of $100,000, by reliance upon propositions (said to be supported by decisions upon the earlier bankruptcy law and upon the Elizabethan statute and its modern representatives, which were then said to apply also to s.121 of the Act) as to the correct construction of the phrase "a disposition of property...with intent to defraud creditors".
Before turning to those submissions, it may first be noted that when discussing sub-s.52(b) of the 1924 statute, the following appears in "Lewis' Australian Bankruptcy Law", 4th ed., 1955, pp 45-6:

"The general principle may be stated that any dealing with property (other than by sale for a reasonable price) made with the object of putting it beyond the reach of present or future creditors comes within the definition of a fraudulent conveyance if the person concerned cannot immediately pay his debts or anticipates some event which may render him unable to pay his debts in future; such a dealing will be treated as fraudulent irrespective of the presence or absence of a conscious fraudulent intent on the part of the debtor if the necessary result of the dealing is to put the property beyond the reach of his creditors. Typical examples are transfers of property to the debtor's wife, transfers to a trustee to hold for the debtor, and transfers to one or a group of creditors to stave off threatened action. The word 'fraudulent' indeed has received an interpretation in bankruptcy matters somewhat wider than its ordinary use, and it may be defined as equivalent to 'with an intention to deprive creditors of recourse against all or any of his assets'."

(Emphasis supplied).

The first submission for Garuda was that "fraudulent intent on the part of the bankrupt must be expressly proved". Counsel referred to the statement of Dixon J. (made with reference to s.37A of the Conveyancing Act 1919 (NSW)) that there must exist "a real intent to defeat or delay creditors": Williams and Others v Lloyd and Anor, (supra), at 372. He referred also to the statement by Gibbs J., made with reference to the Queensland legislation, that there must be established actual fraud "that is an actual intention to defeat or defraud creditors": Re Barnes; Ex parte Stapleton (1962) Qd R 231 at 237. However, in both of these passages, their Honours also referred to the necessity to have regard to all the circumstances of the transaction, and Gibbs J. said it was a question of fact whether the existence of such an intention should be inferred from the circumstances.
There is a substantial body of authority in decisions upon the Elizabethan statute and its modern representatives which supports the statement by Clyne J. in Re Trautwein, (supra), at 75:

"With regard to the applicant's claim under s. 37A of the Conveyancing Act, it is, I think, clearly established that in determining whether or not an alienation has been made with intent to defraud creditors, a court must look at all the circumstances surrounding the alienation to ascertain if there were any such intent. It is not necessary to bring actual proof that the alienor had in his mind an intention to defraud creditors: for if it appears from the evidence that the effect might be expected to be and has in fact been to do so, the court will attribute the fraudulent intention to the alienor."

We refer to Freeman v Pope (1870) LR 5 Ch App 538 at 541 (a case upon the Elizabethan statute); Mackay v Douglas (1872) LR 14 Eq 106 at 120 (another such case); In re Simms (1930) 2 Ch 22 at 31-34 (an act of bankruptcy case under the 1914 British Act). Further, in this Court, the matter was discussed in detail in the course of an appeal from the Supreme Court of Norfolk Island where the Elizabethan statute was in force. The case in question is Noakes v Harvy Holmes and Son (1979) 26 ALR 297. In the course of his judgment, with which Deane J. and Fisher J. agreed, Brennan J. said, at 303:

"We were pressed with some observations in Williams v Lloyd; Re Williams (1934) 50 CLR 341, where the court affirmed that the burden of proof that a transfer was made with a real intent to defeat or delay creditors is upon the party who so alleges. But that was a case where, at the time of the challenged disposition of property by a husband to his wife, he was in a sound financial position, and it was held that subsequent conduct and events were insufficient to show that the husband had at that time an intent to defraud creditors (see the judgment of Dixon J. at 372). In the present case, the inevitable result of the transfer of shares on 13 December 1976 was to defeat or delay any attempt to execute the judgment in Norfolk Island. The case falls squarely within the line of authorities of which Freeman v Pope (1870) 5 Ch App 538 is the leading example, where Lord Hatherley L.C. said (at 541): 'But it is established by the authorities that in the absence of any such direct proof of intention, if a person owing debts makes a settlement which subtracts from the property which is the proper fund for the payment of those debts, an amount without which the debts cannot be paid, then, since it is the necessary consequence of the settlement (supposing it effectual) that some creditors must remain unpaid, it would be the duty of the judge to direct the jury that they must infer the intent of the settlor to have been to defeat or delay his creditors, and that the case is within the statute.' That proposition does not trespass upon the rule as to onus of proof; it is a particular illustration of the discharge of the onus by inference from the known facts (cf. Re Holland; Gregg v Holland (1902) 2 Ch 360 at 381). In this case, the inference is strengthened by the proximity in time of the failure to have the judgment set aside and the execution of the transfer of the shares. The challenge to his Honour's finding that the transfer fell within the Statute of Elizabeth therefore fails."

This passage was applied by Fisher J. as indicative of the correct interpretation of s.121 of the 1966 bankruptcy statute: The Official Trustee v Marchiori (1983) 69 FLR 290 at 296. We should do likewise.
It therefore is a matter only for observation that in the United Kingdom there has been a difference of opinion in the interpretation of s. 172 of the Law of Property Act 1925 (UK). In Lloyds Bank Ltd v Marcan and Others (1973) 1 WLR 339 at 344, Pennycuick V.C. treated s.172 in a manner consistent with the authorities we have discussed. On the other hand, in the Court of Appeal, Cairns L.J., without full reference to those authorities, said that "at any rate when the conveyance is for consideration" intention involving "actual deceit or dishonesty" is a necessary element: (1973) 1 WLR 1387 at 1392. That interpretation has been criticised; see Langstaff, "The Cheat's Charter?" (1975) 91 LQR 86 at 92-6.
Notwithstanding the concession at trial, Hill J. went on to express his conclusion that the evidence left him in no doubt that Mr Simpson had entered into both transactions with the intent of defeating or defrauding his other creditors, including in particular the vendor of the travel agency business in order to obtain an advantage for himself, namely the extraction of a promise by Garuda that the company would not, if the transactions took place, report his misappropriation to the police. On the evidence it is clear that the transactions in fact would have the consequence of defeating or delaying his creditors other than Garuda or some of them: that was the necessary consequence of the transactions. Further, the haste with which the transfer of the Marrickville property occurred after the letter of 4 December 1985 from the solicitors acting for the victims of the fire presents an overwhelming case of intent to defraud those creditors by that transaction: see s.6 of the Act.
The second proposition contended for by counsel for Garuda was that at all relevant times there had been a relationship of debtor and creditor between Mr Simpson and Garuda, by reason of his defalcations, and whilst the payment of the $100,000 and the transfer of the property might have been liable to attack as preferences under s.122 of the Act, if they had been made within 6 months before the presentation of the petition on which Mr Simpson became bankrupt, they were in fact made outside that period. Counsel then submitted that no question of fraudulent disposition could arise under s.121 where what was done was to prefer one creditor over another, so as to stave off action by that creditor, even if there was an intention to defeat other creditors.
The effect of the decisions upon the Elizabethan statute was that a transaction could not be impeached on the ground merely that it constituted a preference of a particular creditor by his debtor: May "The Law of Fraudulent and Voluntary Conveyances", 3rd ed., 1908, pp 76 - 8, 139. The mere preference of one creditor over another does not bring the case within the Elizabethan statute, and apart from the provisions of the bankruptcy law, such as the preference provisions, the law tolerated dispositions giving one creditor a preference over others: Re Kelly; Ex parte Young (1932) 4 ABC 258 at 261-2; Middleton v Pollock (1876) 2 Ch D 104 at 108.
However, s.6 of the Act, in its application to s.121, has the effect that a disposition of property will be void as against the trustee in bankruptcy if made with an intent to defraud or to defeat or delay any one or more of the creditors of the disponor; there is no need for an intent to defraud creditors as a class.
Further, the decisions interpreting the precursors of para40(1)(b), which dealt with acts of bankruptcy not transactions attacked under the Elizabethan statute, impeached transfers to one creditor or a group of creditors to stave off threatened action by them because the necessary consequence, whether intended or not, was to delay the other creditors: see the authorities discussed by Clauson J. in In re Simms, (supra), at 31-2. Further, the Elizabethan statute itself applied to transactions, the object of which was to put the property of the disponor out of the reach of his or her future creditors, so that it was sufficient to show an intent to defeat future creditors even though there existed no creditors at the date of the disposition: Barton v Deputy Commissioner of Taxation (1974) 131 CLR 370 at 374, Mackay v Douglas, (supra); and Ex parte Russell. In re Butterworth (1882) 19 ChD 588.
The authorities referred to by Clauson J. in In re Simms, (supra), dealing with acts of bankruptcy, afford guidance to the interpretation of what is now s.121 of the Act. The basis for the wider approach to be taken to these provisions of the bankruptcy law appears in the following passage form "Kerr on Fraud and Mistake", 6th Ed., pp 220-1:

"The one great object of the statute 13 Eliz. c. 5, is to prevent debtors from dealing with their property in any way to the prejudice of their creditors; it, in fact, considers a man deeply indebted as no longer the true owner of his property, but, as it were, a trustee of it for the benefit of his creditors. As it was an old rule that, where a man devised land for the payment of debts and legacies, the debts should first be satisfied, so the statute 13 Eliz. c. 5 gives a priority to debts over voluntary and fraudulent conveyances, and attempts to prevent a man in his lifetime from sinning against his just creditors. The meaning of this statute, said Jessel, M.R., in Middleton v. Pollock 'is, that the debtor must not retain a benefit for himself. It has no regard whatever to the question of preference of priority among the creditors of the debtor.' A settlement, therefore, which preferred certain creditors, and tended to defeat the others, might be good under this statute of Elizabeth. The primary aim of all the successive Bankruptcy Acts, however, is to obtain an equal distribution of the debtor's assets among his creditors. The assumption, when a man is made bankrupt, is that his debts are in excess of his available assets; and the ruling object of the statutes on the subject is to take, and divide amongst the creditors in proportion to their debts, whatever assets there may be; and then, in consideration of the debtor giving up the whole of his property, to discharge him from any future liability with respect to his then debts. It follows that a disposition of property, which is void in bankruptcy, whether as being an act of bankruptcy, or under an express provision of a statute of bankruptcy, or as being opposed to the policy of the bankrupt law, is not necessarily void against creditors, under 13 Eliz. c. 5.

On the other hand, any conveyance which is void against creditors under 13 Eliz. c. 5, is also an act of bankruptcy, and, as such, is void, under the bankrupt law, against the trustee in the grantor's bankruptcy."

Accordingly, in our view, upon the true construction of s.121:

(i) the intent referred to in sub-s.(1) may be inferred in

the manner described by Brennan J. in Noakes v Harvy Holmes and Son, (supra), and by Fisher J. in The Official Trustee v Marchiori, (supra), and

(ii) an intention to defraud or defeat or delay some one or more of the creditors of the disponor may be inferred where this is the necessary consequence of a disposition to stave off action by another creditor or creditors, and

(iii) an intention to defeat future creditors may be sufficient in the particular circumstances.

We should add that, despite the submissions by Garuda, we do not accept that the class of creditors referred to in s.121 is limited to those who at the time of the dispositions had claims which were susceptible of proof under s.82 of the Act. Nor is it necessary that an intent to defraud creditors be the sole intent of the debtor: see Barton v Deputy Commissioner of Taxation, (supra), at 375.
Finally, counsel for the appellant challenged the finding of the primary Judge that in accepting the contract and transfer of the Marrickville property, Garuda was not acting in good faith. On the facts, Hill J. held that a distinction was to be drawn between Garuda's acceptance of the $100,000 and its acceptance of the contract and transfer of the Marrickville property. On the one hand, when Garuda accepted the payment of money it had no actual notice of the claim by the vendor of the travel agency business. His Honour said:

"It is true, as was submitted by the applicant, that having notice of the fact that Mr Simpson had set fire to the premises, it was aware of facts which were likely to give rise to a claim by the vendor for damages against Mr Simpson. However, I accept the evidence of Mr Woerjanto, that this was not a matter which he took into account in accepting the payment of $100,000. He had no notice then of circumstances which might suggest that Mr Simpson was insolvent or indeed was likely to become insolvent. Rather, faced with a confession by Mr Simpson that the latter had misappropriated funds of Garuda, his concern was to ensure that those funds be repaid. He was making a commercial decision which may have had the result of giving Garuda a preference if it were to turn out that Mr Simpson was insolvent, but at that stage it could not be inferred from his conduct that he was a party to the fraud which Mr Simpson was perpetrating."

On the other hand, by the time Garuda accepted the transfer of the Marrickville property Mr Woerjanto was aware that a claim was being made by the vendor of the travel agency business, that undertakings had been sought from Mr Simpson that his property would not be transferred, that despite that request Mr Simpson was keen to ensure that the transaction was completed as quickly as possible, and that as a result of the transaction being completed Mr Simpson would obtain a benefit for himself arising from Mr Woerjanto's undertaking not to inform the police about the misappropriation. Hill J. observed that the transaction was a strange one because of the absence of the usual searches, the haste with which it was carried out, and the absence of adjustment of rates, taxes and other outgoings. These matters more readily allowed the inference that Garuda was a party to the fraudulent disposition.

Counsel for Garuda contended that it was for the respondent to prove that the appellant knew of the fraudulent intent of Mr Simpson, and adopted it, that is, that Garuda had accepted the conveyance of the Marrickville property with full knowledge of the intent of Mr Simpson to defeat or delay his creditors. It was submitted that the evidence did not support such a finding.
The notion of good faith is common to the protective provisions of both ss.120 and 121. In each section it is the good faith of the settlee or disponee respectively that must be considered. This is clear from the language of s.121, and well established by authority in the case of s.120: Mackintosh v Pogose (1895) 1 Ch 505 at 509-510; Re Hyams; Official Receiver v Hyams (1970) 19 FLR 232 at 256.
The appellant's submission that the burden of proof is on the party seeking to avoid the transaction was not disputed by the respondent, and in our opinion is correct. In Michael v Thompson (1894) 20 VLR 548 the Full Court of the Supreme Court of Victoria placed the ultimate burden of proof on the creditors seeking to set aside a settlement under the Elizabethan statute, although the Court held that where the settlement is fraudulent and all the facts concerning the settlement are within the knowledge of the settlor and the settlee, and not within the knowledge of the creditors, "a very slight degree of proof should be sufficient to shift that burden" (at 553). In Re Trautwein; Richardson v Trautwein, (supra), (at 75) and in Re Hyams; Official Receiver v Hyams, (supra), (at 256) on applications under s.94 of the Bankruptcy Act 1924 (the precursor to s.120) it was said that the onus of proof was on the party seeking to impeach the settlement to establish a want of good faith in the settlee. In The Official Trustee v Marchiori, (supra), at p 297, Fisher J. accepted that the onus of proof on an application based on both ss.120 and 121 by the Official Trustee to have a transaction declared void was on the applicant, and his Honour followed Michael v Thompson, (supra). A similar position prevails under the United Kingdom legislation: Re T (A bankrupt) (1966) 110 Sol Jo 387; and see also Official Assignee of the Estate of Cheah Soo Tuan v Khoo Saw Cheow (1931) AC 67. This position stands in contrast to that under s.122 of the Act where the burden of proving that a payment having the effect of giving a preference was received by the creditor in good faith and for valuable consideration and in the ordinary course of business is expressly placed on the person who claims that the transaction ought not be upset: sub-s.122(3).
In Butcher v Stead (1875) LR 7 HL 839 the Lord Chancellor (Lord Cairns) said at p 847 in relation to s.92 of the Bankruptcy Act 1869 (UK):

"I think there can be no doubt that the words 'in good faith' mean without notice that any fraud or fraudulent preference is intended."

In Re Hyams; Official Receiver v Hyams, (supra), at p 256 Gibbs J., in relation to the meaning accorded to good faith by the Lord Chancellor in Butcher v Stead, (supra), said:

"...In the context of the Australian statute this exposition may be modified to read 'without notice that any fraud or preference contrary to the statute is intended'".

This formulation of the meaning of "in good faith" in sub-s.120(1) was applied by the Full Court of the Supreme Court of Queensland in Re Pacific Projects Pty Ltd (1990) 2 QdR. 541 at 545. Gibbs J., when sitting as a judge of the Supreme Court of Queensland, had earlier posed the relevant question in a case under s.46 of the Mercantile Acts 1867-1896 (Q) as whether the disponee of a disposition made by the disponer with intention to defraud creditors was "privy to the fraud": Re Barnes, ex parte Stapleton, (supra), at 240.

In Mogridge v Clapp (1892) 3 Ch 382 at 401 Kay L.J. in considering a provision under the Settled Land Act 1882 which required a dealing with a tenant for life to be one in good faith said that good faith "must mean or involve a belief that all is being regularly and properly done". That statement was applied to ss.120 and 121 by Fisher J. in The Official Trustee v Marchiori, (supra), at p 298.
In substance the notion of good faith expressed by these authorities is the same, and should be followed. In the present case the primary Judge correctly posed the question to be determined as whether the evidence showed that Garuda had been privy to or party to the fraud of Mr Simpson. In resolving that question against the appellant in respect of the Marrickville property, his Honour took into account those factual matters already mentioned which showed the transaction to be a strange one - matters from which it could be inferred that Garuda knew that all was not being regularly and properly done. In our opinion the primary Judge did not fall into error in his approach or in his conclusion. The evidence amply supports the finding of fact in relation to the Marrickville property that Garuda was privy to the intention of Mr Simpson to defraud his creditors, and in particular the vendor of the travel agency. It follows that the appeal must fail.
The cross-appeal of the respondent contends that the primary Judge should have held that the payment of $100,000 was void as against the respondent under both ss.120 and 121. The contention includes the submission that the payment of $100,000 was not accepted by Garuda "in good faith"; and it is convenient to consider that submission next.$
It was submitted, as it had been before the primary Judge, that before Garuda received the payment of $100,000 it was aware that Mr Simpson had set fire to the travel agency premises, and it should have realised that a claim against Mr Simpson would result. But this submission does not give due weight to the primary Judge's findings that Garuda, through Mr Woerjanto and Mr Santangelo, did not at the time regard the information which they had been given about the fire as of much significance, and that Mr Woerjanto did not take the happening of the fire into account when he accepted the payment of $100,000. There is no evidence that Garuda at that time had any knowledge of the extent of the loss caused by the fire, or that a claim was contemplated by a victim of the fire. Nor is there any evidence that Garuda had received information to suggest that Mr Simpson was unable to pay his creditors. The finding of fact that Garuda was not privy to the intent of Mr Simpson to defraud his creditors when the payment of $100,000 was received is supported by the evidence, and we agree with it.
Counsel for the respondent submitted that a want of good faith was established by the knowledge of Garuda that Mr Simpson was intending to defraud his creditors by requiring in exchange from the transactions, a benefit which was not available to other creditors, namely a promise not to report his misappropriation to the police. It was submitted that as Garuda knew Mr Simpson would obtain this benefit from the impugned transactions, Garuda knew, or should be taken to know, that his intention was to defraud his creditors, and moreover Garuda facilitated the fraud by concealing from the police Mr Simpson's admission of the misappropriation.
For the purpose of the submission it may be accepted that Garuda knew that Mr Simpson was making the payment to obtain the benefit alleged, but it does not follow that Garuda had notice that the payment was being made by Mr Simpson to defraud his creditors. The discovery by the police of facts pointing to the misappropriation provided solid reason for Mr Simpson to seek to repay the money as soon as possible. This is not a case where the fact of payment is itself a circumstance which should have put the recipient on notice that the payment would have the necessary effect of preferring the recipient to other creditors. The fact that Garuda agreed not to disclose the misappropriation does not give rise to an inference of knowledge that Mr Simpson was by the payment intending to prefer Garuda over other creditors. The conduct of Garuda was a cause for suspicion, and therefore ground for rigid enquiry, but the payment will be held good unless it is shown that Garuda was privy to Mr Simpson's intention to defraud his creditors. This is a question of fact, and, as we have indicated, we agree with the finding of the primary Judge that the payment was received by Garuda in good faith within the meaning of ss.120 and 121.
A further contention of the respondent in support of the cross-appeal was that the payment of $100,000 was not made for valuable consideration. By the notice of contention it is also contended that the primary Judge should have held that the transfer of the Marrickville property was not made for valuable consideration. It was submitted that this is not simply a case of payment of a pre-existing debt. It was submitted that Mr Simpson would never have entered into the transactions except for Garuda's promise not to inform the police. It was submitted that it was that quid pro quo from Garuda which was the basis of the transaction; that it was not "valuable" consideration, but was illegal consideration.
The appellant countered this submission by arguing that there was at all relevant times a relationship of debtor and creditor between Garuda and Mr Simpson, and that the transactions were the repayment of the indebtedness.
The proposition that the relationship of creditor and debtor came into existence between Garuda and Mr Simpson when the misappropriation occurred was not disputed by the respondent. It is therefore convenient to first consider whether an antecedent debt may constitute "valuable consideration" within the meaning of ss.120 and 121 for a payment or transfer of property made in discharge of that indebtedness.
Our researches have not disclosed any case decided directly under ss.120 and 121 of the Act where this question has been determined. However, as early as Twynes Case (1601) 3 Co Rep 80b; 76 ER 809 it was held, by the Court of Star Chamber, that a transfer of property to the value of 300L in satisfaction of a antecedent debt of 400L was a transfer made for good and valuable consideration under the Elizabethan statute. The decision of the Court of Appeal of New Zealand in In re McGrath; ex parte The Official Assignee (1897) 17 NZLR 646 at 656-7 is to the same effect. There are a number of decisions under provisions of bankruptcy statutes for the avoidance of preferences which provide guidance. Under s.92 of the Bankruptcy Act 1869 (UK) transactions made by a person unable to pay his debts as they became due from his own money in favour of any creditor with a view of giving such creditor a preference over other creditors within three months of bankruptcy were deemed fraudulent and void, but the section did not affect "the rights of a purchaser, payee or encumbrancer in good faith and for valuable consideration". In Ex parte Butcher; In re Meldrum (1874) LR 9 ChApp 595 it was held that a payment made in satisfaction of an outstanding trading debt was one made for valuable consideration within the proviso to the section. The Court of Appeal in Chancery expressed its approval of an earlier decision of the Court in Ex parte Tempest; In re Craven and Marshall (1870) LR 6 Ch App 70 where it had been said that a conveyance of property in consideration of a sum of money which was to be set off against a debt could be protected under the proviso, even if the transfer had on the part of the debtor been made with a view to giving a preference. Under the Australian counterpart, in s.95 of the Bankruptcy Act 1924, Kitto J. in Taylor and Anor v White and Anor (1964) 110 CLR 129 at 139 applied Ex Parte Butcher; in re Meldrum, (supra), and said that consideration consisting of the making of a loan was enough for the purposes of the proviso in sub-s.95(2) to constitute valuable consideration for repayment of the loan: see also Dixon C.J., at p 136 and Menzies J, at p .155. Although Kitto J. referred to the consideration constituted by the making of the loan as "past" consideration, in the technical language of today it would more accurately be described as executed consideration: see Cheshire and Fifoot's Law of Contract, 5th Aust Ed at para 208, and Re Osborne; ex parte Trustee of property of Osborne v Osborne and Anor (1989) 91 ALR 135 at 138.
In our opinion the same meaning should be accorded to "valuable consideration" wherever that expression appears in the avoidance provisions of Division 3 of Part VI of the Act. On ordinary rules of statutory construction an expression wherever used in a statute should be accorded a consistent meaning unless the context clearly indicates a contrary intention. Sections 120, 121, 122 and 123 are concerned with avoidance of particular transactions in the determination of the property of the bankrupt available for distribution amongst creditors. There is no reason arising from the purpose or the language of these sections to suggest that "valuable consideration" has other than the same meaning throughout. The authorities to which reference has been made point strongly to the conclusion that consideration consisting of an antecedent debt constitutes valuable consideration for a payment or transfer of property in discharge of that debt.
A further consideration in support of this conclusion is that otherwise a payment by a debtor in satisfaction of an outstanding account due to the creditor received by the creditor in good faith and in the ordinary course of business could not come within the protective provisions of para122(2)(a) except in rare cases where the payment is accompanied by some new contemporaneous consideration. On a fair reading of s.122 we do not consider Parliament intended such a narrow meaning, and one which would cause great inconvenience in commerce as a trader could not rely on payments, regularly made in the ordinary course of business, by a customer to whom credit on normal trading terms had been extended, being protected from the preference provisions of the Act.
Payments or transfers of property made in discharge of an antecedent debt are to be distinguished from transactions where a debtor conveys property by way of assignment or mortgage as security for an existing indebtedness. A long line of authority holds that transactions of the latter kind will be held to be made for valuable consideration for the purpose of the avoiding provisions of the Act only where there is new valuable consideration moving from the party receiving the benefit of the security at the time of the transaction to the debtor. The position was summarised by Gibbs J. in Re Hyams; Official Receiver v Hyams, (supra), at p 254:

"It is clear that the mere existence of an antecedent debt is not consideration for the giving of a security in respect of that debt; 'in order to have consideration for a further security there must be an agreement, express or implied, to give time or some further consideration, or else there must be an actual forbearance which ex post facto may become the consideration to support the deed': Wigan v. English and Scottish Law Life Assurance Association (1909) 1 Ch 291, at p 303."

See also Glegg v Bromley, (supra); and N.A. Kratzmann Pty Ltd (in liquidation) and Anor v Tucker and Others (No.1) (1965-1966) 123 CLR 257, at 278, 289.

The ground for distinction between the two types of transaction is that in the former the payment or transfer of property is made in performance of an obligation incurred by the payer or transferor at the time of, and as part of, the original transaction which created the debt. The payment or transfer is made in discharge of an obligation which has been subsisting since that time. In the latter case there is a new and additional transaction which must be accompanied by new valuable consideration in exchange for the new obligation incurred by the person giving security. Tomkins and Anor v Saffery (1877) 3 App Cas 213 provides an illustration of the principle which governs the former type of transaction. In that case it was held that a payment of 5,000L assigned to trustees to be distributed to a class of creditors in satisfaction of debts incurred by the assignor as a member of the Stock Exchange was made for valuable consideration for the purpose of the proviso to the preference provisions in s.92 of the Bankruptcy Act 1869 (UK). The assignment was made in discharge of a pre-existing obligation entered into by the assignor, well outside the preference period, when he became a member of the Stock Exchange. The assignment was not made pursuant to a new transaction such as those under consideration in Re Hyams; Official Receiver v Hyams, (supra); In re Dundas; Moss (Official Receiver and Trustee) v Dundas (1933) 6 ABC 265, and N.A. Kratzman Pty Ltd (in liquidation) and Anor v Tucker and Others, (supra), where new valuable consideration was required.
In either class of case there will only be valuable consideration sufficient to bring a transaction within the protective provisions of the Act if the consideration is adequate in the sense that its relationship to the value of the payment or transfer is real and substantial and not one which is merely normal or trivial or colourable: cf. Barton v Official Receiver (1986) 161 CLR 75 at 86.
No question of adequacy of the consideration arises in the present case. The payment of $100,000 discharged the antecedent obligation of Mr Simpson to the extent of the payment, and the transfer of the property discharged the balance of the obligation which was close to, or exceeded, the value of the Marrickville property.
In our opinion, apart from any qualification that may be necessary because of the promise by Garuda not to report the misappropriation to the police, the payment of $100,000 and the contract and transfer of the Marrickville property were made for valuable consideration.
Where a statute gives rise to both civil and criminal liability, the question of whether a promise not to prosecute in consideration for the payment of compensation is unenforceable as contrary to public policy, depends upon whether the relevant offence is of a "public" or "private" nature. Defamation and common assault are clear examples of "private" offences: Kerridge v Simmonds (1906) 4 CLR 253. That case involved a promise not to prosecute a slander and Griffith C.J. said at 260:

"Where a person is entitled to recover pecuniary damages, the suggestion that there is a social duty incumbent upon him to prosecute is untenable."

At 263, Barton J. stated the appropriate test as:

"Can it be said that any wrong was done to society by the abandonment of this prosecution, or that any good would have been done to society by persisting in it?"

Where embezzlement is involved, courts in England and Scotland have divided on the answer to this question; see Professor Hudson's article "Contractual Compromisers of Criminal Liability" (1980) 43 MLR 532 at 535-7. In Jones v Merionethshire Permanent Benefit Building Society (1892) 1 Ch 173 at 184-5, Bowen L.J. said:

"It is not possible to deny that embezzlement, like false pretences, is a crime committed against the public as well as against the individual, and, in deciding what steps should be taken to punish it, the person who has to deal with the case must, if he is to discharge his moral duty, conscientiously consider the public as well as himself."

In contrast, in The Lamson Paragon Supply Company Limited v MacPhail 1914 SC 73 at 77, Lord Salvesen said that an employer who, if compensated, does not prosecute, "acts humanely; and is not acting wrongly, far less criminally. The crime that has been committed has injured the employer only, and there is no duty laid upon him in the public interest to give information to the police". Lord Maxwell attributed this divergence of views to the different prosecution methods in England and Scotland: Hislop v Dickson Motors (Forres) Limited (1978) SLT (Notes) 73 at 75.

We need not resolve this issue in the present case because Garuda's promise not to report the misappropriation did not in a relevant sense constitute the consideration for the payment or transfer of the property. The consideration for those transactions was the antecedent obligation arising from the misappropriation. The transactions were to discharge that obligation. Garuda's promise formed no part of the original "transaction" which created that obligation. Garuda was an entirely innocent party to the misappropriation. The later promise not to report the misappropriation to the police should in our opinion be viewed as a separate event. That promise does not invalidate the valuable consideration already present, but was a matter highly relevant to the question whether the payment and transfer of property were received in good faith by Garuda. As we have already noted the promise by Garuda was a cause for suspicion on this topic, and therefore a ground for rigid enquiry. But that enquiry was held at trial, and the question of good faith in relation to the receipt of the $100,000 payment resolved in favour of Garuda.
The final contention of the respondent on the cross-appeal was that the payment of $100,000 was a settlement void as against the Trustee under s.120. In our opinion this contention must fail as, for reasons already given, the payment was one made in good faith and for valuable consideration. It is therefore unnecessary to decide whether the payment of $100,000 was a settlement within s.120. In Re Ward; Official Trustee v Dabnas Pty Ltd (1984) 3 FCR 112 at 117 Wilcox J. said:

"The substitution in s.120(8) of a new and wider definition of 'settlement' offers to Australian courts the opportunity to re-think the desirability of adhering to the traditional tests. No longer does the definition have the connotation of permanent benefit suggested by 'conveyance or transfer' of property. Rather it refers to 'disposition' of property. It ought to be enough that the relevant transaction is a deliberate disposition of a capital fund. It ought to be immaterial whether the settlor contemplates that the capital fund will be held indefinitely in specie, converted to some other form of capital or spent by the settlee."

This approach was adopted by the Law Reform Commission in Report No.45 on its General Insolvency Inquiry at para663 as the desirable policy for the area of bankruptcy law dealing with settlements. Nonetheless, this Court may be bound by authority to hold that a settlement within s.120 is a disposition of property made with the intention that the property be retained or preserved in one form or another and enjoyed by the recipient, not intended for immediate disposal or consumption: Williams and Others v Lloyd and Anor, (supra) at 364, 375 and Barton v Official Receiver, (supra), at 78; and see also Re La Rosa and Anor; Ex parte Norgard v Rocom Pty Ltd (1990) 21 FCR 270 where French J. reviewed the authorities. Whilst there is evidence in the present case from which it might be inferred that the Marrickville property was transferred with the intention that it be retained for a time by Garuda, there is no evidence that the payment of $100,000 was intended other than for immediate appropriation in partial discharge of a debt to the extent of the payment, and for immediate use.

For these reasons we consider the appeal and the cross-appeal should be dismissed. The orders of the Court will be that the time for filing the cross-appeal be extended to 2 October 1991; that the appeal be dismissed; that the cross-appeal be dismissed; that the appellant pay the respondent's costs thrown away by reason of the adjournment of the hearing of the appeal on 2 October 1991; and that the appellant pay one half of the respondent's other costs of the appeal.

[1992] FCA 232

04 MAY 1992