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Decisions of the Superior Courts of New South Wales, 1788-1899

Belcher v. Brown [1828] NSWSupC 75

insolvency - foreign attachment

Supreme Court of New South Wales

Forbes C.J., Stephen and Dowling JJ., 13 September 1828

Source: Dowling, Select Cases, Vol. 2, Archives Office of N.S.W., 2/3462

[pp 24-25]

[Where a trader had contracted debts, and one of his creditors having become surety for the payment of his debts, he assigned his Estate and  effects to a trustee for the repayment of the debts so secured held that another creditor could not attach the effects in the hands of the Trustee under the Foreign Attachments clause in 4 G 4 C.96.[1 ] for the words "Properly Belonging" must be understood "as legally" belonging to the Debtor.]

[p. 24]

Saturday 13th September 1828

Present

Forbes CJ.

Stephen J.

Dowling J.

 

Belcher v Brown

In this case an attachment had issued against the effects of the Defendant who had left the Colony in the hands of Messrs Raine and Scott, trustees of Brown, under the following circumstances:- Brown a merchant of Sydney had become indebted to several persons, and being desirous of leaving the Colony he had called the bulk of his Creditors together, and then Raine agreed to give his promissory notes for the payment of Browns debts at the end of the year Brown then conveyed his effects to Raine & Scott in trust to pay Raine and discharge all his debts.  The Plaintiff Belcher to whom Brown was indebted in the sum of £40,,10,,2. not having any notice of this arrangement commenced an action to recover [p. 25] his money and attested to the property of Brown in the hands of Raine and Scott; and the question was whether the effects conveyed to Raine and Scott were attachable as property belonging to Brown, under the circumstances stated:-  The Court thought there was difficulty in the case and Raine & Scott the garnisher not being in attendance the case was ordered to stand over until the Saturday next.

===

On the motion of Keith, Mr Ellis Scott one of the garnishers in this case was examined touching the Estate and effects of the Defendant Brown.

Mr Scott stated as follows:-

I am acquainted with the Defendant Gordon David Brown.  He left this Colony about six weeks ago, in the Java Packet for New Zealand, I hold goods of his in trust for Mr Thomas Raine.  I have a variety of goods, but I am not prepared to give in an account of them.  I certainly hold goods to the amount of 100£ which I consider under my contract the two sums of £40 & £30 belonging to Mr Browne.  I hold goods belonging to [p. 26] to him to the amount of £100 which I consider under my control.  The Sydney Packet Schooner belongs to Mr Browne.  It is under my control, though not in my possession she is just returned from a long voyage.  There is a cargo on board not belonging to Mr Brown.  The profits of the voyage outwards and homewards belong to him.

[Exd by Mr Unwin for Messrs Scott & Raine] I am a Creditor of Mr Brown to a large amount, I cannot tell whether I have property of his in possession more than sufficient to cover my debt.  I scarcely know the nature of the property it is of various descriptions.  I believe it is not sufficient to pay the whole of my demands.  I have been put to very considerable expense respecting Mr Brown's affair, I suppose the Estate is indebted to me [2 ] or 300£ over and above the property of his that I have in my hands.  The property would fall short by 200£ of covering my expenses.  It would short more than that.  I am under advances to him I have no property at this moment in my [p. 27] hands, which is sufficient to pay myself.  As trustee I have other property belonging to Mr Brown, but it is impossible to say what it will realize.  It consists of land and Shipping, but the whole of it is mortgaged, I allude to property at Bateman's Bay, It is mortgaged for a large sum.  It is not sufficient to pay the mortgage.  The Sydney Packet is also mortgaged.  No part of this property is disposable until the mortgages are discharged.  There is also property of his at Cooks River which is also mortgaged.  I have no funds of his to discharge that Mortgage  Mr Raine has made considerable advances to Mr Brown.  He has assigned the whole of his property over to Mr Raine to secure the payment of this debt, subject to the mortgages I have already mentioned.  Mr Brown has no property that is not assigned.  There is therefore no property in my possession unshakled.  There are some small effects in my possession insufficient to cover my own debt.  I have got bills of his now outstanding but it is uncertain whether they will be paid or not Except these Bills there is no property belonging to Mr Brown under my control but what is mortgaged beyond the amount of the debts.  There is a [p. 28] Timber yard in Sydney once the property of Brown, but he has disposed of it to Mr Thomas Raine.

[Rexd-By Mr Keith] The assignment I have mentioned was made to secure Mr Raine, who had come under arrangements to the amount of £5000 and upwards for Mr Brown.  Mr Raine has given his acceptances to that amount.  It was intended to have included Belcher and the other creditors for 13£ in the average event, I pledged myself to get the same terms for these claimants before proceedings were taken, and they appeared to be satisfied after having paid Mr Browns debts.  I think it will be very doubtful whether the property will pay the engagements Mr Raine has come under.  Mr Brown is gone to New Zealand to realize some effects he has there and I expect him back to Sydney in about two months.  His object is to collect his property there and realize what he can for his Creditors. 

[Forbes CJ. left the Court indisposed]

Under these circumstances [p. 29] Stephen J. and Dowling J. thought the attachment ought to be discharged without Costs.

I thought[2] that the words "properly belonging" must be understood to mean goods &c legally belonging to the Defendant.  Here the whole of the Defendants property was assigned to the Trustees.  In them the legal property was vested, and therefore there was no property in the hands of Mr Scott, liable to a foreign attachment.

Attachment dissolved without costs.

Keith then applied for proceedings against Mr Browne to declare him insolvent but as he had no affidavit of circumstances the motion was postponed.

===

Keith renewed an application made on a former day to cause the creditors of the Defendant to be assembled on a future day in order to a declaration of insolvency.

Postponed in consequence of the absence of the Chief Justice.

[p. 30] Keith moved that the Defendant and his creditors be summoned for a future day in order to declare him Insolvent, on an affidavit by the Plaintiff that he verily believed that the Defendant was unable to pay 20/s in the pound.

Dowling J read his notes of the examination of Mr Scott on a former day.

After attending to this Evidence and hearing Unwin contra.

Forbes CJ said that under all the circumstances of the case, The Court ought not to take this summary step against the Defendant who was expected very soon to return to return [sic] to the Colony,  The Statute was not absolute and peremptory in requiring that a party shall be declared insolvent upon the belief of one creditor that he is unable to pay 20/s in the pound.

The declaration of insolvency is an act of the Court resulting from an Investigation [p. 31] of the affairs of the party for anything that appears to the contrary the affairs of this person may be only in a Temporary state of embarrassment, and it is highly probable from the evidence of Mr Scott that he shall be able to pay all his creditors.  We therefore think that the mere swearing of  Plaintiff to his belief that the Defendant is not able to pay 20/s in the pound, is not sufficient to warrant the Court in sanctioning a step which may be extremely prejudicial to the great body of the Creditors.

Stephen J.  It is an indispensable requisite to this proceeding that the party should clearly appear to be unable to pay 20/s here we have only the belief of one or two small creditors, and the bulk of the creditors do not join in the proceeding.

Dowling J.  In the exercise of a sound discretion I think we ought not under all the circumstances of the case, to grant this application.

Application refused

==

[p.84]

Belcher v Brown

Insolvency

10 October 1828

The Court will exercise its discretion in causing a Defendant and his creditors to be summoned in order to a declaration of insolvency, if there is reason to think that the defendant will ultimately pay all his debts.

Notes

[1 ] The applications for foreign attachment and subsequently to have the debtor declared insolvent were both made under (1823) 4 Geo. 4 c. 96, the New South Wales Act itself (ss 11, 22-23).  The succeeding constitution Act for New South Wales, the Australian Courts Act, (1828) 9 Geo. 4, c. 83, did not have foreign attachment or insolvency provisions in the legislation, but instead delegated the power to make them to the New South Wales Legislative Council.  On the policy behind this change of legislative approach, see Murray to Darling, 31 July 1828, Historical Records of Australia, Series 1, Vol. 14, pp 260f.

Under s. 11, foreign attachment was a writ which operated to attach the property of debtors in the hands of other people where an earlier writ had been returned either concessit solvere or non est inventus (that the defendant could not be found).  Earlier in the colony's history, it meant attachment of the effects of a debtor in a third party's hands where the debtor was out of the colony, but had left property within it: see B. Kercher, Debt, Seduction and Other Disasters: the Birth of Civil Law in Convict New South Wales, Federation Press, Sydney, 1996, p. 191. Attachment of debtors' money in the hands of third parties was not generally available to judgment creditors in England until 1854 (17 & 18 Vic. C. 125, s. 61); foreign attachment was an exception to this common law rule.

On foreign attachment, see also Levey v. Shields, 1828.

[2 ] These are the notes of Dowling J.

Published by the Division of Law, Macquarie University