High Court of Australia|1935-09-18|Before: McTiernan JJ

R v Adams [1935] HCA 62; (1935) 53 CLR 563 (18 September 1935)

The defendant was arraigned before the Supreme Court of South Australia upon an information containing two counts charging offences under the Bankruptcy Act 1924-1930.

The first count charged an offence under sec. 210 (1) (d), which provides that any bankrupt who makes any material omission in any statement relating to his affairs shall be guilty of an offence and that he shall be liable to one year's imprisonment.

The second count charged an offence under sec. 212 (1) (b), which provides that any person against whom a sequestration order is made, who has, with intent to defraud his creditors or any of them, made or caused to be made any gift, delivery or transfer of, or any charge on, his property, shall be guilty of an offence, and that he shall be liable to one year's imprisonment.

It was not alleged in either count that the defendant was a bankrupt, or that an order of sequestration had been made against him; but it was alleged that he had executed a deed of assignment pursuant to Part XI. of the Bankruptcy Act 1924-1930, and so was deemed to be a bankrupt and a person against whom a sequestration order had been made. Before the defendant pleaded his counsel moved to quash the information upon the ground that it disclosed no offence. The question of the validity of the counts was then reserved for the consideration of this Court by the presiding Judge, who, we think, had authority to do so under sec. 18 of the Judiciary Act 1903-1934, if not under sec. 72.

The provision upon which the Crown relies in support of the information is sec. 168 of the Bankruptcy Act 1924-1930. That section is as follows: - "As long as the deed remains in force, its execution by the debtor shall, so far as is consistent with the other provisions of this Part, be deemed for all purposes equivalent to - (a) an act of bankruptcy committed by the debtor on the date of the meeting of creditors at which the deed was resolved upon; (b) the filing of a bankruptcy petition against him; and (c) a sequestration order against him." Unless par. (c) operates to make the defendant a "bankrupt" within the meaning of sec. 210, or a "person against whom a sequestration order is made" within the meaning of sec. 212, it is plain that the information discloses no offence. In our opinion the section has not this operation.

Secs. 210 and 212 are quite explicit in limiting the class of persons to whom they apply. The word "bankrupt," which sec. 210 employs, is equivalent to the expression used in sec. 212, "any person against whom a sequestration order is made." Sec. 4 defines the word "bankrupt" to mean "any person in respect of whose estate a sequestration order has been made." Thus liability to the penal sanctions imposed by the sections is expressly made to depend upon the status of bankruptcy. If another provision of the statute is to be interpreted as extending the operation of the sections to persons who do not possess that status, its intention to do so must be clearly expressed. "The law of England does not allow of offences by construction, and no case shall be holden to be reached by penal laws, but such as are within both the spirit and the letter of such laws" (Blackstone's Commentaries, vol. i., Hargrave's ed., p. 88, n. 37), a principle which remains part of the law (cf., per Brett J., Dickenson v. Fletcher[1]) notwithstanding the modification in the ancient strictness of its application which has occurred in the course of the modern search after the true nature of some actual legislative intention. No doubt, in determining whether an offence has been created or enlarged, the Court must be guided, as in other questions of interpretation, by the fair meaning of the language of the enactment, but when that language is capable of more than one meaning, or is vague or cloudy so that its denotation is uncertain and no sure conclusion can be reached by a consideration of the provisions and subject matter of the legislation, then it ought not to be construed as extending any penal category.

In the present instance this rule of construction is reinforced by the circumstance that the provision relied upon as extending the ambit of the offence occurs in the very statute which creates the offence and places an express limitation upon its ambit. We do not think sec. 168 operates to give the debtor who executes a deed in pursuance of Part XI. the status of a bankrupt. The very object of the Part, as stated in its heading, is to provide for compositions and assignments without sequestration. When a debtor in compliance with a special resolution under sec. 162 (1) executes a deed which conforms to sec. 163, the liquidation of his affairs goes on according to the rules of bankruptcy, but, unless the Court declares the deed void, he avoids bankruptcy. The construction claimed by the Crown for sec. 168 would reduce this right of the debtor to nothing but a matter of nomenclature. While not a "bankrupt" in name, he would, if that construction were given to the section, be deemed to be a bankrupt for all purposes. His position would differ from that of a bankrupt to the extent only that Part XI. by express provision varied the rights and obligations arising from the bankruptcy. It is not possible to specify all the consequences which flow from sec. 168, but we do not think that this is one of them. The affairs of the debtor are to be administered as in bankruptcy, and, no doubt, the primary purpose of sec. 168 was to substitute, in the application of the provisions of the Act to that administration, the execution of the deed for the act of bankruptcy, the filing of the petition and the sequestration order, events upon which the operation of many of those provisions depends. Thus, under sec. 168 (a), relation back is to the meeting of creditors at which the deed was resolved upon. Whatever may be the full consequences of sec. 168, more than one section of Part XIV., which relates to offences, illustrates the inapplicability of those provisions of that Part which are confined expressly to bankrupts. For instance, sec. 211 refers to an "undischarged bankrupt"; secs. 209 (f) and 213 expressly distinguish between a person who has been made a bankrupt and one who has made a composition or arrangement with his creditors; secs. 214 and 215 obviously relate to actual bankruptcy; and sec. 217, which relates to the Court's powers of committal and of summary trial for offences, is restricted to the occasion of the bankrupt's applying for an order of discharge. Sec. 218, which was relied upon on behalf of the Crown, is a general precautionary provision relating to all offences under the Act and raises no presumption that the Legislature intended to include within the offences which are limited to bankrupts debtors executing deeds under Part XI.

For these reasons we think that neither count of the information discloses any offence.

In this view it is unnecessary for us to deal with the third question reserved, which relates to the Supreme Court's jurisdiction to try the defendant on the second count.

The first and second questions reserved should be answered: No.

Questions of law reserved for the consideration of this Court.

"Any bankrupt who ... makes any material omission in any statement relating to his affairs ... shall be guilty of an offence" (Bankruptcy Act 1924-1930, sec. 210 (1) (d)). And "any person against whom a sequestration order is made who ... has, with intent to defraud his creditors ... made ... any ... transfer of ... his property" is also guilty of an offence (sec. 212 (1) (b)).

Adams was charged upon information filed in the Supreme Court of South Australia with offences against these sections. The information does not allege any order for sequestration of his estate, or that he is a bankrupt in the technical sense of that word (sec. 4). But it is alleged that he executed a deed of assignment, pursuant to Part XI. of the Bankruptcy Act 1924-1930, and it is contended that, by force of the provisions of secs. 166 and 168, he is brought within the prohibition contained in secs. 210 (1) (d) and 212 (1) (b).

The 166th section provides that all parties to such a deed and all persons bound thereby shall, in all matters relating to the property conveyed and assigned by the deed, be subject to the jurisdiction of the Court, and shall have the benefit of and be liable to all the provisions of the Act as if a sequestration order had been made against the debtor and the creditors had proved and the trustee had been appointed trustee in the bankruptcy. This section only operates "in all matters relating to the property conveyed and assigned by the deed" and "subject to the jurisdiction of the" Bankruptcy "Court." But prosecutions for offences against sec. 210 and sec. 212 cannot, in my opinion, be described as matters relating to the property conveyed by the deed subject to the jurisdiction of the Bankruptcy Court. (See secs. 217 et seq.)

The 168th section provides: "As long as the deed remains in force, its execution by the debtor shall, so far as consistent with the other provisions of this Part, be deemed for all purposes equivalent to - (a) an act of bankruptcy committed by the debtor on the date of the meeting of creditors at which the deed was resolved upon; (b) the filing of a bankruptcy petition against him; and (c) a sequestration order against him." It should be observed that Part XI. of the Act, pursuant to which the deed of assignment in the present case was executed, refers to assignments without sequestration; it is a method whereby the property of the debtor is distributed amongst creditors without bankruptcy. Sec. 168 does not prescribe that the deed shall be deemed a sequestration order, for that would be in direct opposition to the scheme of distributing the debtor's property without bankruptcy: it is only equivalent to a sequestration order, and that, in my opinion, for the purpose of administering the trusts and provisions of the deed. The section does not convert the debtor into a bankrupt for the purposes of sec. 210, or make the deed a sequestration order for the purposes of sec. 212.

Questions 1 and 2 of the case should therefore be answered in the negative.

A third question is whether the Supreme Court of South Australia has jurisdiction to try the defendant upon the second count of such information. The question involves a consideration of the Constitution, sec. 77, and the provisions of the Bankruptcy Act, secs. 18 and 20, but it is unnecessary, in the view I have taken of the former questions, to decide this third question.

Questions 1 and 2 answered: No. Question 3 not answered. No order as to costs.

Solicitor for the Crown, W. H. Sharwood, Crown Solicitor for the Commonwealth, by Fisher, Powers, Jeffries & Brebner.

Solicitors for the accused, Browne, Rymill & Stevens.

[1] (1873) L.R. 9 C.P. 1, at p. 7.

R v Adams [1935] HCA 62;

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R v Adams [1935] HCA 62; (1935) 53 CLR 563 (18 September 1935)

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Cases Cited (1)