Avoidance of preferences.Avoidance of preferences.

### Avoidance of preferences. E.B.A., s. 44. N.S.W., s. 56. Vic., s. 151. S.A., s. 161. W.A., s. 46. Q., ss. 107–9. Tas., s. 85. 95.—(1.) Every conveyance or transfer of property, or charge thereon made, every payment made, every obligation incurred and every judicial proceeding taken or suffered, by any person unable to pay his debts as they become due from his own money, in favour of any creditor or of any person in trust for any creditor, having the effect of giving that creditor, or any surety or guarantor for the debt due to that creditor, a preference over the other creditors, shall, if the debtor becomes bankrupt on a bankruptcy petition presented within six months thereafter be void as against the trustee in bankruptcy. Q. 1874, s. 9. (2.) Nothing in this section shall affect— (a) the rights of any person making title in good faith and for valuable consideration through or under a creditor of the bankrupt; or (b) the rights of a purchaser, payee or encumbrancer in good faith and for valuable consideration and in the ordinary course of business. (3.) The burden of proving that the provisions of the last preceding sub-section have been complied with shall lie upon the person who relies upon their having been complied with. (4.) For the purposes of this section a creditor shall not be deemed to be a purchaser, payee or encumbrancer in good faith if the conveyance, transfer, charge, payment or obligation were made or incurred under such circumstances as to lead to the inference that the creditor knew or had reason to suspect that the debtor was unable to pay his debts as they became due, and that the effect of the conveyance, transfer, charge, payment or obligation would be to give him a preference over the other creditors.