High Court of Australia|1981-05-14|Before: Cantor J, Mahoney JJ, Stephen J

Shapowloff v Dunn [1981] HCA 21; (1981) 148 CLR 72 (14 May 1981)

SHAPOWLOFF v. DUNN [1981] HCA 21; (1981) 148 CLR 72

Gibbs C.J.(1), Stephen(2), Murphy(3), Aickin(4) and Wilson(5) JJ.

Practice (N.S.W.) - Statutory prohibition of magistrates' decisions - Whether conviction cannot be supported - Sufficiency of evidence - Justices Act 1902 (N.S.W.),ss. 112, 115.

APPEAL from the Supreme Court of New South Wales. Between 2 January 1970 and 31 March 1970, the appellant who was an officer of a company known as Stirling Henry Ltd. ("the company") instructed a firm of stock and share brokers to buy shares on the company's behalf from time to time. The arrangement between the company and the broker was that the company would pay the broker for the shares upon delivery of scrip to the broker by the seller's broker. On 5 February 1970 the broker acted on a single order from the appellant to buy 5,000 Tasminex N.L. shares for the company. The shares were bought by twenty-nine separate purchases on 5 February 1970 for the sum of $131,315.50. The company was ordered to be wound up by the Supreme Court of New South Wales on 5 April 1971. Though some payments had been made to the broker the company's account was found to be in debit. The appellant was convicted on 20 February 1975 in the Court of Petty Sessions Sydney of an offence against s. 303 (3) Companies Act 1961 (N.S.W.) and was fined $250. He proceeded by summons in the Supreme Court for statutory prohibition pursuant to s. 112 of the Justices Act 1902 (N.S.W.). Cantor J. made the orders applied for. On appeal, the Court of Appeal Division (Reynolds, Glass and Mahoney JJ.A.) reversed the judgment of Cantor J. and restored the conviction but reduced the fine to $200 (1978) 2 NSWLR 235 . The convicted officer then appealed to the High Court, by special leave, from the decision of the Court of Appeal Division.

GIBBS C.J. I am in agreement with the reasons for judgment prepared by my accordingly dismiss the appeal. (at p75)

STEPHEN J. Central to this appeal is the question whether a company which goes into liquidation, having earlier employed a broker to buy shares for it on terms that it would pay for them only when the broker received the scrip, has contracted with the broker a "debt provable in the winding up" as soon as the broker buys the shares. (at p75)

2. The point arises because the appellant, who was an officer of such a company, has been convicted of an offence against the former s. 303 (3) of the Companies Act 1961 (N.S.W.). It is an element of that offence that there should have been a contracting by the company "of a debt provable in the winding up". The sole debt to which the charge related was one alleged to be owed by the company to the broker, consisting of the purchase price of the shares in question. (at p75)

3. Two provisions of the Companies Act are in point. Section 303 (3) is as follows:

"If in the course of the winding up of a company it appears that an officer of the company who was knowingly a party to the contracting of a debt provable in the winding up had, at the time the debt was contracted, no reasonable or probable ground of expectation, after taking into consideration the other liabilities, if any, of the company at the time, of the company being able to pay the debt, the officer shall be guilty of an offence against this Act.

Penalty: Imprisonment for three months or two hundred dollars".

"In every winding up, subject in the case of insolvent companies to the application in accordance with the provisions of this Act of the law of the Commonwealth relating to bankruptcy, all debts payable on a contingency and all claims against the company present or future certain or contingent ascertained or sounding only in damages shall be admissible to proof against the company, a just estimate being made so far as possible of the value of such debts or claims as are subject to any contingency or sound only in damages or for some other reason do not bear a certain value". (at p76)

4. To regard the amount of the purchase price of the shares as a "debt provable in the winding up" for the purposes of s. 303 (3) which was incurred by the company to the broker involves a series of steps in reasoning, some of which the appellant contests. He concedes that the company, as principal, was obliged to indemnify its agent, the broker, against any liabilities incurred or losses suffered by the broker. But he says that the company only had to indemnify the broker to the extent of the broker's quantified loss. That loss would only be quantified after the scrip had been delivered to the broker by the vendors' brokers and the shares had been re-sold by him following the company's failure to pay for them. So quantified, the company's liability would be confined to the cost of the shares less the proceeds of their realization. A liability of uncertain amount would not answer the description of a "debt provable in the winding up" contracted by the appellant. Moreover there was no evidence of the extent of that liability; it was certainly not represented by the purchase price of the shares, which was the only debt relied upon in the offence charged and of which there was evidence. (at p76)

5. The appellant adds that, because the parcel of shares was in fact bought by the broker in twenty-nine separate lots over the course of a day's trading on the exchange, the liability to indemnify was, in any event, in respect of twenty-nine distinct amounts, each ascertained only when the shares in that lot had been re-sold by the broker. He also submits that to be a debt "provable in the winding up" for the purposes of s. 303 (3) the debt in question must be one in fact provable in the particular company's winding up and not simply of such a kind as to be provable generally in a winding up. Since in the present case the company's liability to the broker would only be for the balance due after crediting the proceeds of re-sale, the debt alleged in the charge would never in fact be provable in the company's winding up. (at p77)

6. Finally, the appellant contends that s. 291 (1) only provides for the admission to proof of contingent debts so that, in distributing assets in the winding up, a just estimate of them may be made. It does not result in their being treated, despite their contingent nature, as debts presently payable in full. (at p77)

7. My analysis of the relationship between broker and company begins with recognition of the broker as the company's agent. Although, by agreement with the broker, the company was not obliged to pay the broker until delivery to him of the scrip, it became bound, as soon as the relationship between principal and agent was created, to indemnify the broker against any liabilities incurred by him on its behalf. One such liability would be the purchase price of the shares, for which the broker became liable to the vendor's broker in exchange for scrip. (at p77)

8. The quality of the company's liability to the broker developed in stages from an unquantified contingent liability to a present indebtedness. Initially there existed no more than a potential liability to indemnify the broker which arose as soon as the relationship of principal and agent was created. It was not confined to the purchase price of the shares but extended to any other liability to which the broker might become liable while acting as agent. Liability for the purchase price became specific and was quantified when the broker bought the shares on the company's order, but it remained contingent until the scrip was received by the broker. Once the broker paid for the shares and received the scrip the liability ceased to be merely contingent and became a present indebtedness, but subject to reduction by the amount realized by the broker on re-sale of the shares. (at p77)

9. It follows from this analysis that (a) if s. 291 (1) serves to extend the scope of s. 303 (3) to debts which are contingent only, and which, by reason of their contingent nature, as yet lack precise quantification, and (b) if s. 303 (3), when it refers to a "debt provable in the winding up", speaks in general terms descriptive of the type of debt and not of a debt actually provable in the particular winding up, the company will, in the present case, have contracted such a debt as is referred to in s. 303 (3). I leave aside for the moment the fact that the shares were purchased as a result of twenty-nine distinct transactions. (at p77)

10. Section 303 (3) is concerned with the contracting of indebtedness of a particular description; it must be such as is "provable in the winding up". Section 291 (1) operates so as to admit to proof in a winding up a variety of debts and claims, including those which are only contingent and which for that or "for some other reason do not bear a certain value". In making these provable in the winding up of a company s. 291 (1) operates upon s. 303 (3) so as to make it applicable to them, despite their contingent or unquantified nature. Accordingly (a) above is satisfied. (at p78)

11. Section 303 (3) cannot be understood, in relation to the contracting of a debt, as looking to the ultimate fate of that debt. It is not concerned with whether that debt is ultimately proved for by the creditor. It looks, rather, to the date when the debt is contracted. This is made clear by the requirement that "the other liabilities, if any, of the company at the time", that is, when the debt was contracted, should be taken into account and by the fact that it is at that time that possession by the officer of reasonable or probable grounds is to be judged. If the temporal criterion is the date when the debt is contracted the phrase "provable in the winding up" must be no more than descriptive of the character of the debt when contracted. It follows that (b) above is also satisfied. (at p78)

12. Accordingly I conclude that such a debt as s. 303 (3) speaks of was, in the circumstances of this case, contracted by the company on the date when the broker bought the shares here in question. On that day the broker began and completed the execution of the company's buying order and the company became liable to indemnify the broker for the purchase price of the shares. That liability was contingent, as was the broker's liability to the selling broker, the contingency in both cases being the delivery of the scrip by the selling broker. But such a contingent liability falls within s. 303 (3) and is enough to constitute a debt falling within that section. (at p78)

13. It is nothing to the point that the amount of the indebtedness may subsequently be reduced by the exercise by the broker of his right to resell the shares and appropriate the proceeds in part satisfaction of the debt. The re-sale value of the shares may, of course, be of considerable relevance in determining whether there existed "reasonable or probable ground of expectation . . . of the company being able to pay the debt". For example, any great increase in value of the shares between date of purchase and date of delivery of scrip would no doubt aid in establishing the existence on the part of a company's officer of reasonable grounds of expectation of the company being able to pay the debt, but it would not otherwise be relevant in the application of s. 303 (3). (at p78)

14. The fact that the broker satisfied the company's total buying order by entering into twenty-nine distinct buying transactions has, I think, no bearing on the debt arising between company and broker, although it determined the pattern of contractual relationships as between the company and the sellers to it. The basis of the debt between company and broker was the giving of the order by the company, involving a concomitant promise to pay. That there was only one order was accepted by the trial judge and has not been contested by the appellant on appeal. As the broker progressively filled that order, buying shares on the company's behalf, so the magnitude of the debt increased. By the end of the day's operations the company was contingently liable for the total purchase price, just as it would have been had all the shares been bought in one transaction. (at p79)

15. Apart from reliance upon there being no such contracting of a debt as s. 303 (3) contemplates, the appellant takes two other points. First he complains that a wholly objective test was applied in determining whether the appellant lacked "reasonable or probable ground of expectation" of the company being able to pay the debt. Secondly, he says that the magistrate erred in regarding it as proved that he did indeed lack such ground of expectation. I have had the advantage of reading what has been said by Wilson J. concerning each of these aspects. I am in full agreement with his Honour's views concerning them. (at p79)

MURPHY J. I agree in general with Stephen J.'s reasons (including those reasons of Wilson J. which he has adopted). The appeal should be dismissed. (at p79)

AICKIN J. In this appeal I have had the advantage of reading the reasons for judgment prepared by my brother Stephen. I agree with those reasons and the conclusion that the appeal must fail. (at p79)

WILSON J. On 20 February 1975 in the Court of Petty Sessions in Sydney the appellant was convicted of an offence under s. 303 (3) of the Companies Act 1961 (N.S.W.) ("the Act") as that provision stood in 1970. The information was laid by the respondent, in his capacity as an officer of the Corporate Affairs Department, in the following terms, namely,

"that between the 2nd day of January 1970 and the 31st day of March, 1970, in the course of the winding up of Stirling Henry Limited (hereinafter called "the Company") a company within the meaning of the Companies Act, 1961 which was ordered to be wound up by an order of the Supreme Court on 5th April, 1971, it appeared that one WALTER GEOFFREY JOHN SHAPOW- LOFF (hereinafter called "the Defendant"), being at all material times an officer of the company was knowingly a party to the contracting of a debt provable in the winding up of the company, to wit a debt contracted with Messrs. Donovan & Co. and the said Defendant had at the time the debt was contracted, no reasonable or probable ground of expectation, after taking into consideration the other liabilities of the company at that time, of the company being able to pay the debt". (at p80)

2. Thereafter the appellant instituted proceedings by summons in the Supreme Court of New South Wales seeking the relief provided by way of statutory prohibition pursuant to s. 112 of the Justices Act 1902. The application succeeded before Cantor J., but an appeal to the Court of Appeal (Reynolds, Glass and Mahoney JJ.A.) was allowed unanimously, and the conviction and orders restored. The appellant now appeals to this Court by special leave. (at p80)

3. The principles on which the Supreme Court is to act in the exercise of jurisdiction under s. 112 are well established. Section 115 provides, so far as relevant, that:

"If . . . in the opinion of the Court or Judge after inquiry and consideration of the evidence adduced before the Justice or Justices, the conviction or order cannot be supported, the Court or Judge may direct that the writ applied for be issued, and may make such further order as may be just and necessary . . . " (at p80)

4. The meaning of the phrase "the conviction cannot be supported" has been elucidated in decisions both of the Supreme Court of New South Wales and of this Court: Ex parte Wetherburn; re Mills (1935) 53 WN (NSW) 103 ; Ex parte Ross; re Pym (1953) 70 WN (NSW) 174 ; Hooper v. Gorman (1976) 2 NSWLR 43) ; Peck v. Adelaide Steamship Co. Ltd. [1914] HCA 31; (1914) 18 CLR 167 ; Williams v. Hobday [1954] HCA 40; (1954) 91 CLR 193 . These cases establish that a conviction will only be disturbed if there is no evidence within reason to support it or if there is such a fundamental error of law as leads to a failure to determine the relevant facts. (at p80)

5. Mr. McHugh, for the appellant, attacks the conviction on several grounds which I think may be considered conveniently under three heads. The first relates to the creation of the alleged debt and includes the question whether there was any evidence to show that it was a debt provable in the winding up. The second focuses on the construction of the element of the offence described by the words "no reasonable or probable expectation . . . of the company being able to pay the debt", and in particular whether the test of reasonable expectation is objective or subjective. The third involves a critical examination of the sufficiency of the evidence and of the magistrate's handling of it. (at p81)

Penalty: Imprisonment for three months or two hundred dollars." (at p81)

7. In relation to the first matter, Mr. McHugh argues that the whole basis of the charge is misconceived in that it alleges that the debt was contracted with Donovan, and that it came into existence on 5 February 1970 when Donovan acted on an order from Stirling Henry for 5,000 Tasminex shares. He argues that the only contract between Stirling Henry and Donovan was an agency contract, under which Stirling Henry was liable to pay commission and to indemnify Donovan against any losses it might suffer. As the principal, whether or not its identity was disclosed, Stirling Henry became liable to the vendors of the shares on the delivery of the share scrip to Donovan. The evidence shows, and it is not in dispute, that Donovan filled the order for 5,000 shares by making twenty-nine separate purchases of shares, all of them on 5 February. (at p81)

8. It will be noted that there is a degree of novelty about this submission. Hitherto, it has been argued that the fact that Donovan filled the order for 5,000 shares with twenty-nine separate purchases led to the conclusion that there were twenty-nine debts rather than one contracted between Stirling Henry and Donovan on 5 February. In the courts below, counsel for the appellant at no time invoked the general principles of agency law to challenge the basic proposition in this case concerning the contraction of a debt between Stirling Henry and Donovan. In my opinion, the reason is not far to seek. The obligation on Stirling Henry to pay the price of the shares to Donovan which forms the foundation of the alleged debt was the subject of express arrangement between the parties, and this has always been conceded by the appellant. This emerges from the evidence of Mr. J. N. Donovan, a principal of the firm. In the original Court of Appeal hearing, the occasion for which will be mentioned shortly, reference is made to certain agreed facts, including the fact "whereby it (Stirling Henry) agreed to pay Donovan & Co. the price of the shares upon delivery of the scrip to Donovan & Co.": Shapowloff v. Dunn (1973) 2 NSWLR 468, at p 471 . Cantor J. refers to such an agreement in this case as "a special arrangement". (at p82)

9. The meaning of the word "debt" in s. 303 in its application to the facts of this case has been the subject of prolonged controversy. Initially, the prosecution attempted to base the alleged offence on the contraction of a debt evidenced by the computation of a debit balance to an account. The facts were that between 2 January 1970 and 31 March 1970 Stirling Henry entered into a series of contracts with Donovan, stock and share brokers, for the purchase of shares from time to time. The arrangement was that Stirling Henry would pay Donovan the price of the shares upon delivery of the scrip to Donovan. On 5 April 1971 Stirling Henry was ordered to be wound up. Despite some payments by Stirling Henry to Donovan, the account was in debit, and it was this balance upon which the prosecution relied. The case for the prosecution having been opened before the magistrate, the appellant instituted proceedings in the Court of Appeal of the Supreme Court of New South Wales seeking, inter alia, a declaration as to the construction of s. 303 (3) of the Act. As already appears, the decision of the Court is reported. The Court concluded that the contracting of each debt and not the ultimate indebtedness is the essential element of any particular alleged offence, and made a declaration in the following terms: "that, for the purposes of s. 303 (3) of the Companies Act, where a series of contracts are made from time to time which result in a liability on behalf of the company to pay in respect of each of them then each such liability constitutes a debt; and the time when each such debt is contracted is the time when each respective liability arises, and not the time or times when the balance is declared or computed". (at p82)

10. As a result of this declaration the prosecution elected to proceed on the basis that the debt the subject of the information was a sum of $131,315.50 being the price of 5,000 Tasminex shares purchased by Donovan on 5 February 1970 to meet an order lodged by Stirling Henry on the same day. The appellant was represented in the proceedings before the magistrate by Mr. Murray Q.C. who argued that the information was still bad for duplicity, this time because there was not one debt but twenty-nine debts contracted on 5 February, being the number of distinct transactions entered into by Donovan in the course of filling the order. The magistrate found that the twenty-nine transactions required to fill the order were sufficiently integrated to establish the creation of a single debt based on the contract between Stirling Henry and Donovan. In the proceedings before Cantor J. the same argument for the appellant was propounded by Mr. Officer Q.C. but again it failed, this time after a careful and exhaustive consideration by his Honour, including a reference to Byrne v. Garrisson [1965] VicRp 70; (1965) VR 523 ; Jemmison v. Priddle (1972) 1 QB 489 ; Reg. v. Merriman (1973) AC 584 and Phillips v. Corporate Affairs Commission (1974) 2 NSWLR 489 . The point does not appear to have been canvassed in any detail in the Court of Appeal, where the appellant was not represented by counsel. (at p83)

11. With respect, I agree with the way in which Cantor J. dealt with the argument of duplicity, and I find it unnecessary to consider any argument based on general agency principles. (at p83)

12. It remains to consider, in connexion with the alleged debt, the objection that it was not one "provable in the winding up." Mr. McHugh argues that the prosecution failed to prove the delivery of any of the relevant scrip to Donovan, with the result that it has not been shown that Stirling Henry ever became liable to pay the purchase price of the shares. There is therefore no proof of the contraction of a debt provable in the winding up. (at p83)

13. Mr. Handley, for the respondent, makes two answers to this argument. The first is to canvas the evidence to show the proof by documentary evidence of the delivery of the scrip to Donovan; the second is to argue that in any event a contingent debt came into existence on 5 February 1970 and that such a debt satisfied the description of a debt provable in the winding up. In this latter regard, he relies upon s. 291 (1) of the Act, which reads as follows:

14. In my opinion, it is too late in the day for Mr. Handley to succeed in making his first point. The magistrate's reasons show that the question of the proof of the actual delivery of the scrip was put in issue by the defence, and the magistrate expressly upheld its contention. As I understand it, the finding was not challenged by the respondent either before Cantor J. or the Court of Appeal. It now appears that the critical exhibits have been mislaid and cannot be found. In any event, it would be a serious step for this Court to allow an informant to challenge, for the first time at this late stage, an adverse finding of the magistrate. (at p84)

15. Nevertheless, the second point is one that found favour with the Court of Appeal in 1973, and subsequently with the magistrate, Cantor J. and the Court of Appeal. In 1973 in the course of delivering the judgment of the Court, Jacobs P. referred to the phrase used in s. 303 (3), "a debt provable in the winding up" and said (1973) 2 NSWLR, at p 472 : "That refers to the quality of the debt, not to the amount of a proof in the winding up". Mr. McHugh argues that there was no debt until Donovan received some scrip; then, assuming default in payment by Stirling Henry, Donovan would be entitled to re-sell the shares in which case it would be entitled to prove in the winding up only for the amount of any shortfall. In my opinion, this argument fails to grapple with the liability which is incurred by Stirling Henry on 5 February when Donovan fulfils its order by buying 5,000 Tasminex shares. Undoubtedly that transaction gave rise to a liability of some sort. In the absence of proof of the delivery of the scrip to Donovan, the nature of the obligation contracted on 5 February remains that of a contingent debt. It is a debt which Stirling Henry is obliged to pay only if and when scrip is received by Donovan. Is such a debt provable in the winding up? Section 291 supplies the answer. It establishes that a contingent debt is a debt of a kind which is capable of being proved in a winding up. One is not required, for the purposes of s. 303 (3), to evaluate the contingency in order to arrive at a "just estimate" of the debt. All that s. 303 (3) is concerned with in this regard is the contraction on a particular day of a debt of a certain quality. It is not concerned with a just estimate of the amount of the debt when it comes to be proved in the winding up. In my opinion, therefore, the submission fails. (at p84)

16. Then Mr. McHugh argues that the conviction cannot stand because the magistrate misdirected himself as to the law applicable to the allegation that at the time of contracting the debt the appellant had "no reasonable or probable ground of expectation", after taking into consideration the other liabilities of the company at the time, of the company being able to pay the debt. He complains that the magistrate applied an objective test instead of a subjective one to the evidence tendered in proof of this element of the offence, and relies, inter alia, on the concluding passage of the magistrate's reasons, which reads as follows:

"I have come to the conclusion that a reasonable and prudent person, especially a director in the position of the defendant and being cognisant of the over-all financial position of Stirling Henry Ltd. would not have reasonable or probable grounds of expectation of that company being able to pay the debt of $131,315.50 which I have found the defendant contracted for on 5 February 1970."

The phrase in question has a long history in bankruptcy legislation, and has been the subject of judicial consideration both in the United Kingdom and here in Australia. In Ex parte Brundrit; In re Caldwell (1867) LR 3 Ch App 26 , Lord Cairns ruled that in order to subject a bankrupt to the penalties of s. 159 of the Bankruptcy Act 1861 (U.K.), as having contracted debts without reasonable expectation of being able to pay the same, it must be shown that there are particular subsisting debts which at the time when they were contracted he could not reasonably have expected to be able to pay, and that the court must apply its mind to all the circumstances under which they were contracted. (at p85)

17. In Ex parte Mortimore [1861] EngR 253; (1861) 3 De GF & J 599 (45 ER 1011) it was held by Lord Campbell L.C., and Knight Bruce L.J., that the phrase "without reasonable probability at the time of contract of being able to pay them" contained in s. 223 of the Bankrupt Act 1849 (U.K.) means "without a reasonable probability, reasonably supposed by the trader to exist at time of the contract, that he would be able to pay". The Lord Chancellor emphasized that the words in question refer you to "the state of the intentions, of the belief, of the conviction of the debtor". (at p85)

18. The Australian cases are wholly consistent with this approach: In re Hill (1870) 1 AJR 172 ; Re Todd(No.2) (1910) 10 SR (NSW) 490 ; Re London (1921) 39 WN (NSW) 29 . (at p85)

19. Against the background provided by the history of the phrase in the bankruptcy legislation, it seems to me that the meaning of the relevant words of s. 303 (3) is clear. The prosecution must prove beyond reasonable doubt that at the time of contracting the debt the defendant himself had no expectation, reasonably grounded in the whole of the circumstances then existent as he knew them, of being able to pay the debt. It will be seen that the test involves a blending of subjective and objective considerations. The test of reason imports an objective standard, but it is to be applied to the facts as known to the defendant. (at p86)

20. Given this construction of the provision, I am unable to accept the submission of the appellant. The defendant himself cannot be the arbiter of the reasonableness or otherwise of an expectation that he would be able to meet the debt. However, it is a question of his expectation, and whether that expectation is objectively reasonable. (at p86)

21. The question then is whether the magistrate erred in the manner in which he handled this aspect of the charge. I have already stated the magistrate's conclusion, and indicated the reliance placed by the appellant upon the manner of its expression as suggesting an erroneous approach to the question. Earlier in his reasons, the magistrate described the question for him as "whether or not I am satisfied that the defendant, at the time the debt was contracted, had no reasonable or probable ground of expectation, after taking into consideration the other liabilities, if any, of Stirling Henry Ltd. being able to pay the debt?". He then reviewed the circumstances as they were in the period leading up to and including 5 February 1970 when the relevant debt was contracted. These circumstances included the trading by Stirling Henry in Tasminex shares from 31 December 1969, the volatility of those shares, the postponement of liability for payment pending delivery of the scrip, and the position regarding the company's assets and liabilities as they were on 5 February. The consideration of this latter item was dominated by four items: the value to be attributed to the large parcel of speculative shares held by the company in Endurance Mining N.L., a liability approaching one million dollars in respect of Tasminex shares purchased prior to 5 February at prices well above the then market price, a contested debt due to the company in the sum of $173,913, and a disputed tax liability of $370,000. The magistrate devoted express and particular attention to the role played by the appellant in the management of the business of the company at material times, with a view to determining the state of his knowledge of the circumstances, and came to the conclusion that he was aware of all the relevant facts. The appellant acknowledges that he cannot challenge that finding. (at p86)

22. The appellant did not give evidence, with the result that in considering the question of any expectation by him of an ability to pay the relevant debt and the existence of any reasonable or probable ground for such expectation, the magistrate lacked direct evidence from him. However, evidence had been adduced of an examination of the appellant before the Master in Equity under the provisions of s. 249 of the Act. In the course of that examination, the appellant was asked: "Well, as a matter of fact you did not really look at the situation to see how you were going to pay for the Tasminex shares you were ordering?" His answer was: "No, I don't think so." As the examination proceeded, the appellant mentioned several factors as evidencing grounds for an expectation of the company's ability to pay for the shares. (at p87)

23. In my opinion, the course adopted by the magistrate clearly emerges from his reasons. He ascertained the relevant facts, satisfied himself that the appellant was in possession of that information on 5 February, and then assuming an expectation on the appellant's part of an ability in the company to pay the relevant debt proceeded to evaluate the contingencies to which the facts were subject in a search for any reasonable or probable ground for that expectation. As a result of that exercise, the magistrate came to the conclusion that has been cited. I am satisfied that he did not misdirect himself as to the task which the proof of this element of the charge imposed upon him. At all times he was guided by the consideration that it was the whole of the circumstances as they were known to the appellant at the time of the contraction of the debt which required to be examined with a view to deciding whether those circumstances supplied any reasonable or probable ground of expectation of an ability in the company to meet the debt when it would be required to do so. (at p87)

24. Mr. McHugh criticized the manner in which the magistrate carried out the evaluation to which I have referred, and the conclusions which he expressed in regard to some of them. These matters are discussed in detail in the judgments of the members of the Court of Appeal. I do not propose to pursue a similar course in these reasons. I refrain from doing so because such a task is not germane to a review pursuant to s. 112 of the Justices Act. It cannot be said, given the failure of the appeal on those issues that bear on the proper construction of s. 303 (3) and the magistrate's handling of them, that there was no evidence to support the conviction. (at p87)

25. For these reasons, I would dismiss the appeal. (at p87)

Shapowloff v Dunn [1981] HCA 21;

At a glance

Court

Decision date

Before

Source

Judgment (58 paragraphs)

Shapowloff v Dunn [1981] HCA 21; (1981) 148 CLR 72 (14 May 1981)

Parties

Legislation Cited (3)

Cases Cited (7)