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

In re Campbell (1828) Sel Cas (Dowling) 600; [1828] NSWSupC 57

insolvency

Supreme Court of New South Wales

Forbes C.J., Stephen and Dowling JJ, 15 August 1828

Source: Dowling, Select Cases, Vol. 1, Archives Office of N.S.W., 2/3461

[p. 318]

[The primary object of the insolvent clause S.23 in 4 G. 4. C.96.[1 ] is for the benefit of creditors and not for Insolvents except where he has effects to distribute amongst his creditors.]

In Re Robert Campbell

An order had been obtained by Unwin to bring up this person to be examined under the 4G4.C.96.s.22 touching his estate and effects, and public notice having been given in the newspapers, he was now brought up accordingly for the purpose of being declared insolvent. Unwin appeared on behalf of Mr Paul and he now entered into the present inquiry at the instance of a creditor named Pendry, who had a claim against the insolvent to the extent of 20£.

Robert Campbell was then examined.  He stated that he had been in this Colony for four years, and had brought with him, property to the amount of 1500£.  Having got into [p. 329 sic] debt he had assigned the whole of his effects to three or four of the Creditors for the purpose of having it rateably distributed amongst them all.  These creditors had paid their own debts which absorbed the whole of his property and left him to the mercy of those other creditors who had not participated in the distribution.  In order therefore to relieve himself from this difficulty, a friendly creditor named Pendry, with whom he had since contracted a small debt of 20£ had adopted this proceeding for the purpose of having him declared insolvent with a view to the certificate made on the 23rd Section of the New South Wales Act.  He was now indebted in the sum of 1500£ and had nothing whatever to pay his creditors or distribute among them as a dividend.

Allen appeared on behalf of Rapsey and Mitchell and Polack creditors who were adverse to this proceeding, which was obviously taken with a view to the sole benefit of the [p. 320] insolvent, for no good could be gained by it to the creditors in as much as the insolvent had no effects to distribute.

After some discussion

Forbes CJ said (with the concurrence of Stephen J and myself[2 ])  Looking at the scope of the 23 Section of the Statute, it obviously was intended to protect the general creditors of the insolvent, by stepping in and taking care that his effects, shall be rateably and equally distributed and as a consequence to give the insolvent the benefit of an insolvent [sic] who comes before the Court to state the hardship of his case and thus relieve himself from liability, when he had no funds to distribute amongst his creditors   At the same time it is impossible not to see that there was something contemplated in relief of the insolvent; but that is where he has estate to distribute, and in the event of his appearing to have acted honestly, he his [sic] entitled to a certificate with the consent of a majority of his creditors.  The Court would gladly lend its assistance for the purpose of [p. 322 sic] enabling those creditors who have been excluded from the arrangement entered into by the insolvent, to gain some advantage by an equal distribution of his effects.  This proceeding may be the formation of some claim upon those creditors who have acquired to themselves those effects which the insolvent intended to have been distributed amongst all his creditors   the better course will therefore be for Mr Allen to speak to the creditors and see if they cannot come to some arrangement amongst themselves for their own benefit and relief of the insolvent, who appear to have acted with an honest intention.

adjourned.[3 ]

Notes

[1 ] The insolvency provision on which this case was based was enacted in the colony's constitution, the New South Wales Act (4 Geo. 4 c. 96, ss 22-23).  It was not repeated in the succeeding imperial legislation, (1828) 9 Geo. 4 c. 83.  The British government decided that insolvency, like foreign attachment, was better delegated to the New South Wales Legislative Council: the policy of the new legislation was discussed in Murray to Darling, 31 July 1828,Historical Records of Australia, Series 1, Vol. 14, pp 260f.

[2 ] This refers to Dowling J., on whose notes the Select Cases were based.

[3 ] In another insolvency action, In re Day, decided on 1 November 1828, Robert Campbell, a merchant, complained that the insolvency law in force in the colony caused hardship to creditors.  Some people incurred debts of £100 or £200 one week, and were declared insolvent the next.  Forbes C.J. agreed that this happened, but said that the facts ought to be laid before the Court.  He said he understood that the new constitution Bill had no insolvency provisions, unlike the first one, 4 Geo. 4 c. 96.  See Sydney Gazette, 3 November 1828.  His information was accurate: there were no insolvency laws in the succeeding imperial legislation, (1828) 9 Geo. 4 c. 83.  The British government decided that insolvency was better delegated to the New South Wales Legislative Council: the policy of the new legislation was discussed in Murray to Darling, 31 July 1828, Historical Records of Australia, Series 1, Vol. 14, pp 260f.

The Sydney Gazette, 28 November 1828, agreed with the view Campbell expressed in Day's Case, calling the insolvency provision the "plundering clause".

Published by the Division of Law, Macquarie University