Stewart and Walker v White(Trustee of Springall, an Insolvent)

Stewart and Walker (appellants) appealed from a judgment of the Supreme Court of Queensland, which declared certain payments made by an insolvent debtor, Springall, to the appellants to be fraudulent preferences under section 107 of the *Insolvency Act 1874* (Qld). The dispute concerned whether payments made by an insolvent debtor to creditors, who had previously applied pressure for repayment, constituted a fraudulent preference.

The court was required to determine the meaning and application of section 107 of the *Insolvency Act 1874* (Qld), particularly the phrase "with a view to prefer" and the effect of pressure from a creditor on the validity of a transaction. Specifically, the court had to consider whether the Queensland Act, by adding a proviso that "pressure by a creditor shall not be sufficient to exempt any transaction from the operation of this section," altered the common law position regarding pressure and fraudulent preferences.

The court reasoned that section 107 of the Queensland Act, which was a transcript of section 92 of the English Bankruptcy Act 1869 with an added proviso, required an examination of the debtor's intention or purpose in making the payment. The court held that the phrase "with a view to prefer" referred to the intention to give a preference, not merely the motive behind the act. The proviso regarding pressure was interpreted to mean that pressure alone was insufficient to validate a transaction that would otherwise be a fraudulent preference, and it did not, as suggested by a previous Queensland Full Court decision, automatically render a payment a fraudulent preference. Instead, pressure was considered as a piece of evidence relevant to the question of good faith. The court found that the payments in this case were not made in the ordinary course of business and that the creditors had reason to suspect they were receiving a preference from an insolvent debtor, thus failing the good faith requirement.

The appeal was dismissed. The court concluded that the payments were fraudulent and void as against the trustee in insolvency, as they were made by a debtor unable to pay his debts as they fell due, and the creditors had not acted in good faith.