Hipworth v Mahar

Hipworth v Mahar - [1952] HCA 43 - HCA 1952 case summary — Zoe

[12]

There are three documents on which the respondents relied as acknowledgments. All are documents which the appellant signed in connection with an application which he made in 1936 for an "adjustment" of his debts under the Farmers Debts Adjustment Act 1935 Vict.. The first was the application itself, which is dated 10th October 1936. This contains a "statement of liabilities", in which the appellant included "Estate John Mahar, Kerang. Guarantee - £934 14.0.". This entry, however, is inserted under the printed heading, "Contingent Liabilities, Guarantees, etc.", and Smith J. rightly held that this document could not be regarded as containing such an unequivocal admission as would amount to an acknowledgment of a presently subsisting debt. The second and third documents were a "Proposal for Adjustment of Debts", which was signed by the appellant on 21st June 1937, and an accompanying "Comparison Statement", also signed by the appellant on 21st June 1937, the purpose of which is to compare debts as disclosed by the farmer with amounts claimed by creditors. The former document includes among the creditors "Estate J. Mahar deceased, Kerang, Amount paid under guarantee, £934.14.0." The latter document refers to the debt in question as owing to "Estate J. Mahar deceased, Kerang, Amount paid to E.S. & A. Bank under guarantee, £817.8.0., Interest £116.16.0.". Then follow, shown in separate columns, the words and figures "Amount shown in application, £934.14.0. - Amount claimed by creditor, £934.14.0 - Amount agreed to by farmer and creditor, £934.14.0.". It should be mentioned that on 12th October 1936 the respondents had put in a proof of debt in accordance with the Act, showing £817 8s. 0d. as owing for principal and £116 16s. 0d. for interest. (The trifling error in addition is of no importance.) All the documents mentioned were forwarded to the proper authority under the Farmers Debts Adjustment Act. That Act, by s. 19, requires a copy of the proposal for adjustment to be furnished by the proper authority to each creditor, and also requires a meeting of the farmer and his creditors to be called. Such a meeting was called and held, and one of the respondents attended the meeting. In the end no adjustment of the appellant's debts was made.

[14]

There appears to be no clearly decisive authority on the question in England or Australia or New Zealand. In Ireland a broad view of what fulfils the requirements of the statute seems to have been taken. In Millington v. Thompson [2] Lord Chancellor Blackburne held that an acknowledgment in a will must be regarded as given to the creditor, and this case was recently followed by the Supreme Court in Howard v. Hennessy [3] . It seems difficult to reconcile this view with the English cases of In re Beavan; Davies, Banks & Co. v. Beavan [4] and Lloyd v. Coote [5] , in which it was held that an executor's affidavit for probate, which included in the list of the testator's debts a statute-barred debt, was not an acknowledgment given to the creditor. In England a recital in a deed (Batchelor v. Middleton [1] ) and a record in the books of a building society (Wilson v. Walton [2] ) have been held not to be acknowledgments given to the creditor. We come perhaps a little nearer to the present case in Goode v. Job [3] . In that case an admission made in an answer in a Chancery suit was held in a later action at law between the same parties to be an acknowledgment given by the defendant to the plaintiff. Lord Campbell C.J. said: - "It is given in answer to the bill filed by the plaintiff. It is, in effect, as if he had written, "I acknowledge that I hold under you" " [4] . But the only English case directly in point appears to be Eicke v. Nokes [5] . This was a case of a simple contract debt: it was, therefore, necessary that a promise to pay should be implied, and, as Lord Herschell pointed out in Stamford, Spalding and Boston Banking Co. v. Smith [6] , such a promise could not be implied unless the acknowledgment were made "to" the creditor or his agent. The acknowledgment relied upon was an entry in a bankrupt's examination in which a sum of £594 was inserted as owing to the plaintiff. The bankruptcy had been annulled. Tindal C.J. held the entry a sufficient acknowledgment. It is to be noted that this case was after Tanner v. Smart [7] , in which Lord Tenterden, delivering the judgment of the King's Bench, had said that, though an acknowledgment "showed to demonstration" that the debt had never been paid and was still subsisting, yet unless it amounted to a promise, it had no effect. Tanner v. Smart [7] was cited to Tindal C.J. by counsel for the defendant in Eicke v. Nokes [5] . His Lordship said that the entry was "an admission of a debt, in the first instance, to be paid under the bankrupt laws, and, if not in that way, then according to the ordinary course of law" [8] . (As to the effect now to be given to the actual decision in Tanner v. Smart [7] see Spencer v. Hemmerde [9] .)

[22]

There is thus seen, we think, to be a substantial body of authority in favour of the view that an admission by a bankrupt in his statement of his affairs that a debt is owing to a particular creditor must, if there is no sequestration or the bankruptcy is annulled, be regarded as a sufficient acknowledgment "given to" the creditor concerned, and available as such in subsequent proceedings in which the debtor claims that his debt is barred by a statute which makes time run anew from the date of an acknowledgment given by him to the creditor. The admission has, of course, no effect in a bankruptcy itself, for statute-barred debts are not provable, and statutes of limitation cease to run on sequestration: see Lightwood, Time Limit on Actions, p. 154. But in other proceedings not barred by a bankruptcy the better view is that the admission is an effective acknowledgment "given to" the creditor. The reasons stated in the authorities are not very clear, but the reasons are not far to seek. The admission is not made directly to the creditor, but it is made with the intention that it shall be communicated to the creditor and for the purpose of enabling a compromise of rights as between all creditors. Having that intention and that purpose, it is fairly and properly regarded as a statement made to each and every creditor: "I admit to you that I owe you so much, and I inform you that I owe so much to so many other creditors". This view represents, as Sir Edward Sugden said, "a just and fair construction of the statute". No distinction can be drawn between an admission made in abortive insolvency or bankruptcy proceedings and an admission made in abortive proceedings under the Farmers Debts Adjustment Act. The official who receives the "Proposal for Adjustment" is directed by s. 19 of the Act to communicate it to all the creditors. Admissions contained in the proposal must be regarded as made with the intention that they shall be communicated to the creditors concerned. It seems correct, and in accord with authority, to regard them as acknowledgments given to the creditors. The case is different from that of a will or of an executor's affidavit for probate. Neither a will nor an executor's affidavit is made for the purpose, or with the intention, of its being communicated to creditors.

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