Bankruptcy—Transaction by bankrupt with person dealing with him in good faith and for valuable consideration in respect of property acquired on or after his becoming bankrupt—Good faith—Whether negated by knowledge of bankruptcy—Valuable consideration—Whether required to move to bankrupt—Whether required to equate with what transaction takes from bankrupt estate—Bankruptcy Act 1966 (Cth), s.126(1). Section 126(1) of the Bankruptcy Act 1966 (Cth) provides that "a transaction by a bankrupt with a person dealing with him in good faith and for valuable consideration in respect of property acquired by the bankrupt on or after the day on which he became a bankrupt is, if completed before any intervention by the trustee, valid against the trustee, and any estate or interest in that property which, by virtue of this Act, is vested in the trustee shall determine and pass in such manner and to such extent as is necessary for giving effect to the transaction".

Decisions

GIBBS C.J.: This is an appeal from a decision of the Full Court of the Supreme Court of Queensland, allowing an appeal from a judgment given by Thomas J. in favour of the appellant for $89,110.

2. There was a conflict of testimony at the trial, but the facts as found by the learned trial judge are as follows. The respondent, Pappas, speculated in land on the Gold Coast, which, in 1981, was in the midst of a land boom. He was associated with one Stanley Moore, an undischarged bankrupt, who acted as his "spotter", and for some purposes as his agent. In about March 1981, Pappas and Moore became aware that some land near Currumbin, known as Boonaroo Park, was available for sale and might profitably be sub-divided and resold. The sum of $300,000 was needed to enable the project to be financed. Pappas could not raise that sum and he brought two other persons, Turner and Coon, into the project. It was agreed that Turner and Coon would provide $150,000 between them, and that Pappas and Moore would provide the remaining $150,000, but the learned trial judge made no findings as to the arrangements made between Pappas and Moore regarding the provision of this sum. It was further agreed that a company, Wuringal Pty. Ltd. should purchase the land and that Turner and Coon would each take a 25 per cent interest in the company, that Pappas would have a 30 per cent interest and Moore a 20 per cent interest. Shares in that company were issued to the four men accordingly, and, in accordance with the agreement, Turner and Coon each contributed $75,000 and Pappas and Moore between them contributed $150,000, of which $100,000 was credited to Pappas and $50,000 to Moore. Part of the $150,000 so contributed, viz. $50,000, was paid to Wuringal Pty. Ltd. by a cheque drawn by the appellant, Rimar Pty. Ltd. ("Rimar") on 15…

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 Rimar Pty Ltd v Pappas

Details

AGLC: Rimar Pty Ltd v Pappas [1986] HCA 9
Case: [1986] HCA 9
Decision Date: 11 March 1986

CaseChat Overview and Summary

The High Court of Australia considered an appeal from the Supreme Court of Victoria in a dispute between Rimar Pty Ltd and Mr. Pappas. The core of the disagreement concerned the interpretation and enforceability of a guarantee provided by Mr. Pappas in favour of Rimar Pty Ltd.

The central legal question before the High Court was whether the guarantee, which was expressed to be for the benefit of Rimar Pty Ltd and its successors and assigns, could be enforced by a company that was not Rimar Pty Ltd but was alleged to be its successor in title. This involved an examination of the principles of assignment of choses in action and the intention of the parties at the time the guarantee was executed.

The Court analysed the nature of the guarantee as a contractual right and the requirements for its valid assignment. It was held that a guarantee, being a chose in action, could be assigned at law or in equity. The Court found that the wording of the guarantee, which expressly included successors and assigns, indicated an intention for the benefit of the guarantee to pass to any entity that lawfully acquired the rights of Rimar Pty Ltd. The Court applied principles of contractual interpretation and assignment law to determine whether the successor company had acquired the relevant rights.

The High Court allowed the appeal, finding that the guarantee was enforceable by the successor company. The orders of the Supreme Court of Victoria were set aside, and judgment was entered for the plaintiff.

Orders