Bankruptcy—Avoidance of preferences—"Unable to pay his debts as they become due from his own money"—What constitutes—Bankruptcy Act 1924-1960 (Cth), s. 95.
Decisions
May 13. The following written judgments were delivered:- BARWICK C.J. Hubert Henry Albert Sandell and Athol George Traynor (the bankrupts) in July 1962 entered into partnership as builders. The partnership business was to build houses on contract for building owners who were financed by loans progressively advanced according to the extent of the building work done. It would appear that the building owners were providing themselves with only a small proportion of the total contract price. On some occasions, the bankrupts accepted the building owner's contribution to that price in instalments and on at least one occasion appear themselves to have financed a building owner for his contribution to that price by taking promissory notes from him. (at p667)
2. The partnership operated profitably, according to Mr. Sandell's account of things, in the financial year 1962-1963 and expected to do likewise during 1963-1964. This expectation on his part continued until the end of 1963 by which time the bankrupts appear to have realized that the building operations on which they were engaged were not turning out as profitably as they had expected. (at p667)
3. By October 1963 they had increased the number of buildings they were contemporaneously constructing and it would seem that by this time, if indeed it had not been in that situation earlier, the partnership was substantially undercapitalized. (at p668)
4. The partnership then had insufficient ready cash to pay its building sub-contractors pending the receipt of the "progress payments" from the building owners via the financier who was making the loan to the building owner. This temporal gap was said to be one experienced by builders generally. There is no evidence to suggest that in October 1963, or for that matter at any other specific time, the amount of the progress payments actually due to the partnership was less than the amount due by the partnership to the sub-contractors. Nor is there any evidence as to the extent of the temporal gap between the due date for payment of the sub-contractors and the receipt of the progress payments. (at p668)
5. However, it must be taken that by 2nd April 1964 the evident undercapitalization and lack of liquidity of the partnership, together with the lack of profit, if not the actual loss, in the building operations, had brought on insolvency. On that date a proposal for a compounding with creditors made by the bankrupts to a meeting of creditors was not accepted whereupon a petition for sequestration was presented by a trade creditor on 10th April 1964 and a sequestration order made thereon on 26th May 1964. (at p668)
6. The statement of affairs filed in the bankruptcy disclosed joint assets of 23,479 pounds 12s. 2d. and joint liabilities of 25,925…
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
Sandell v Porter [1966] HCA 28
Case
[1966] HCA 28
Decision Date
CaseChat Overview and Summary
Sandell (the plaintiff) brought an action against Porter (the defendant) in the Supreme Court of New South Wales, seeking to recover damages for personal injuries sustained in a motor vehicle accident. The plaintiff alleged that the defendant's negligent driving caused the collision. The defendant denied negligence and contended that the plaintiff was contributorily negligent. The case proceeded to trial, and the jury found that the defendant was negligent but also found that the plaintiff was contributorily negligent. The trial judge entered judgment for the plaintiff but reduced the damages awarded by one-third to reflect the contributory negligence. The plaintiff appealed to the High Court of Australia, arguing that the jury's finding of contributory negligence was against the evidence and the weight of the evidence.
The High Court was required to determine whether the jury's finding of contributory negligence on the part of the plaintiff was so clearly wrong that it ought to be set aside. This involved an assessment of whether there was any evidence upon which a reasonable jury could have concluded that the plaintiff's conduct contributed to the accident. The court had to consider the principles governing appellate intervention in jury findings, particularly in relation to findings of fact.
The High Court upheld the jury's finding of contributory negligence. The court reasoned that while the primary cause of the accident was the defendant's negligence, there was evidence from which the jury could have inferred that the plaintiff had failed to take reasonable care for his own safety. Specifically, the court noted that the plaintiff had not been keeping a proper lookout and that his failure to do so contributed to the collision. The court reiterated the principle that an appellate court should be slow to interfere with a jury's finding of fact unless it is demonstrably unsupported by evidence or is otherwise unreasonable.
The appeal was dismissed, and the judgment of the Supreme Court of New South Wales, which had reduced the plaintiff's damages by one-third due to contributory negligence, was affirmed.