Williams v The Official Assignee of the Estate of William Dunn

The case of *Williams v. The Official Assignee of the Estate of William Dunn* concerned an appeal to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute involved two payments made by a bankrupt, William Dunn, to the appellant, Williams, after the bankrupt had committed an act of bankruptcy but before the sequestration order. The Official Assignee sought to have these payments declared void.

The central legal issues before the High Court were the proper construction of sections 57 and 58 of the *Bankruptcy Act 1898* (NSW), and specifically whether a payment by a bankrupt to a creditor, which constituted an act of bankruptcy, was protected by section 57, or if it was rendered void by section 58. The court was also required to consider the meaning of "distribution of property" within section 58 and the applicability of previous judicial interpretations of similar statutory provisions.

A majority of the High Court, comprising Griffith C.J., Barton, O'Connor, and Higgins JJ., held that the words "distribution of property" in section 58 did not encompass an isolated payment of money by a debtor to a single creditor. They reasoned that the natural meaning of "distribution" implies a division of property amongst several recipients. Consequently, they found that section 57, which protects certain payments to creditors, was not limited by section 58 in this context. Therefore, a payment that met the conditions of section 57 remained protected, even if it also constituted an act of bankruptcy. Isaacs J., dissenting, argued that "distribution of property" should be interpreted more broadly to include a single payment, thereby giving section 58 independent invalidating effect as a qualification of section 57.

The High Court reversed the decision of the Supreme Court. The payments made to the appellant were found to be protected by section 57 of the *Bankruptcy Act 1898* (NSW), as they were payments for just debts and the appellant had no notice of any available act of bankruptcy at the time of payment. Accordingly, the appeal was allowed, and the order declaring the payments void was set aside.