In equity, Dowling C.J., 26 October 1837

Source: Dowling, Proceedings of the Supreme Court, Vol. 143, State Records of New South Wales, 2/3328, p. 1

[p. 1]

Supreme Court

T.B Humphrey

v

Stephen Atkin Bryant

&

Edwin Bryant

This was a Bill for an injunction to restrain the Defts from proceeding at law upon an agreement entered into between the parties, & for a discovery.  The agreement had been entered into in Sydney upon a transaction wholly colonial between the Plf & Deft S.A. Bryant alone, but it was admitted that the Defts were both jointly interested under it as partners in trade, carrying on business in Sydney & London respectively, the latter under the firm of Bryant Brothers, & the former under the firm of Stephen Bryant & Company.  The [p. 2] Bill charged amongst other things that on or about the 10th day of January 1837 a fiat in Bankruptcy was awarded & issued against Edwin Bryant, and an official assignee approved under the same, & that shortly after the issuing of the same Edwin Bryant left London for Sydney where he hath since arrived.  The discovery sought upon this charge, was whether on or about the 10th January last, a fiat in Bankruptcy was not awarded & issued agt. E Bryant & an official assignee appointed under the same.  And whether the s.d E. Bryant did not shortly after the issuing of such fiat leave London for Sydney or when, [p. 3] if at all, was such fiat issued & such assignee appointed, & what other proceedings, if any, have been had under the said fiat, & has the same been superseded or how otherwise.  To this part of the Bill the Defts demurred, & assigned for causes, 1 That by the rules of Equity Courts no person ought to be compelled to set forth or discover any matter or thing which may subject him to any pains, penalties, forfeitures or disabilities whatsoever, or to discover & set forth any matter whereby he may impeach or accuse himself of any offence or crime for which he may subject himself to fine or imprisonment, or to discover whether he be or be not a bankrupt.  2 That the complainant may have complete & effectual protection in a Court of law in the matters [p. 4] in the bill mentioned & 3 That the affidavit verifying the Bill, does not state, as required by the practice of the Court, upon whose information the complainant was made acquainted with the alleged Bankruptcy of E. Bryant. 

In support of the demurrer the main point rested upon by the Atty General & Windeyer in argument was, that the defts were not bound to discover whether a fiat of Bankruptcy had issued against E. Bryant, & whether shortly after the issuing of the fiat he did not leave London, inasmuch his answers to such interrogatories might subject him to criminal [p. 5] punishment.  Though the English Bankrupt laws do not extend to this colony, yet in all the books, a bankrupt is regarded in the light of a culprit & if it were true, as alleged in the Bill that E. Bryant had immediately after the fiat in Bankruptcy left England, his answer thereto in the affirmative would go to criminate him, & therefore according to all the authorities he was not bound to make the discovery.  (Eutfords 194. &c.  At all events the object of the discovery is to establish a disability in one of the Defts, such he is not bound to discover.)  There was however no necessity for such a discovery, for if E. Bryant were really a Bankrupt the complainant might plead it to the action at law, & then the question would be fairly raised whether the English Bankrupt laws extended to this colony.  If at law, he could make out this defence, then he might come to the Court for [p. 6] an injunction to stay execution at the suit of E. Bryant.  He could have no defence against the other defendant Stephen Atkin Bryant, the undoubtly [sic] solvent partner, who has a right to sue for his moiety of the demand.  Clearly both these defts have a better title than the plf, & assuming that E. Bryant were a bankrupt still he might sue through his title might not he a perfect legal one, & therefore it would be improper to compel him to make any discovery which might hazard his title.  This appears clearly on the face of the bill.  No instance is to be found where a Court of Equity compelled a deft to say whether he has been made a [p. 7] Bankrupt.  The case of Chambers v Hudson (4 Bro. C. C. 434) is not authority in support of the demurrer.  There a person against whom a commission of bankrupt had issued, had brought actions agt the assignees under the commission, disputing its validity, and particularly insisting that he had not been a trader within the meaning of the Bankrupt laws, & in those actions the validity of the commission had been established, and the assignees filed a bill against him stating these facts, and that being harrassed [sic] by their actions, & threatened with these actions, they were not able to distribute the effects under the commission & therefore praying a perpetual injunction to restrain further actions; & requiring a discovery amongst other things of acts trading a demurrer to that discovery was over-ruled.  This was a very different thing [p. 8] from discovering whether he was not in fact a bankrupt.

a'Beckett & Foster contra.  The object of this bill is not to make such a discovery as will render him liable to any pains or penalties, but to shew that some other person has a right sue & relieve the complainant from liability to the payment of the debt twice over.  The demurrer does not aver that answer to the interrogatory will subject him to pains & penalties.  The discovery sought is simply whether a fiat in Bankruptcy was not awarded.  Now the affirmative answer to this does not necessarily involve penal consequences.  The deft Edwin Bryant was not asked whether he had been declared bankrupt.  This bill is filed for the [p. 9] necessary protection of the plf, for it he has had knowledge either [?] his [?] in bankruptcy having been awarded against the Deft E. Bryant, he may be liable over again to the assignees.  By the English Bankrupt law G. 4. c. 16. s. 63. "all debts due or taken due to the bankrupt wheresoever the same may be found or known", become vested in the assignees by the assignment, so that if one of these Defts has become bankrupt the plf is compelled for his own protection to come before the Court for the discovery of the fact whether a fiat of bankruptcy has issued.  He is not asked whether he has committed a fraud, but simply whether as a fact a fiat in bankruptcy has not issued against him in pursuance of 1 & 2. W. 4. c. 56, which authorizes the issuing of a fiat in lien of a commission of Bankruptcy.

[p. 10] Dowling ACJ.  We are of opinion that this demurrer must be allowed.  We do not allow it so much on the ground that the answer to the interrogatories, whether a fiat in bankruptcy has been issued against E. Bryant, has a tendency to subject him to pains & penalties, as that it might impose upon him a disability to sue upon a meritorious cause of action upon a transaction arising wholly in this colony.  Even if we were satisfied that the answer would not render E. Bryant liable to penal consequences as a Bankrupt, still we find no case which has gone the length of holding that to a bill of discovery a Deft is found to answer whether he has become bankrupt.  The only case cited upon this point is Chambers v Thompson 4 Bro. c. c. 434. which as far [p. 11] as it goes, seems to be an authority against the position.  In that case the validity of the Commission had been established on several actions brought, after notice to dispute its validity, and the only point of discovery sought, was whether the Deft had not done certain acts of trading, & the Court overruled a demurrer to this part of the bill; but, it does not follow that the Court would have compelled the Deft to admit that he was a Bankrupt.  The general question whether the Bankrupt laws of England as a whole extend to this colony does not arise in the present form of proceeding.  There is no doubt that by the stat. 6. G. 4. c. 16. s. 63. "all debts due or to be due to the bankrupt whatsoever the same may be found or known" and by force of the 25 sec. of 1 & 2. W. 4. c. 56 become absolutely vested in the assignees of the Bankrupt by virtue of their appointment, without any deed of assignment; and by the 26th. sec. of the same statute the like consequences of laws with respect to the real estate of the bankrupt whether situate in the United Kingdom of Great Britain and England, or in any way of the dominions, plantations or colonies belonging to His Majesty.  It is not to be disputed therefore, that assignees of a Bankrupt might [p. 12] sue in this court for a debt due to a trader in this country who had been duly declared a bankrupt in England; but it may be doubtful, whether a [?] debtor in this country would be liable over again for a debt paid upon a colonial transaction unless he had one notice of the adjudication of bankruptcy before the prior payment.  In England there may be various modes of affecting parties with notice of an act of bankruptcy, but it is enacted by the 6. G. 4. c. 16. s. 83. that the issuing of a commission shall be deemed notice of a prior act of bankruptcy (if an act of bankruptcy had been actually committed) before the issuing the commission if the adjudication of the person or persons against whom such commission has issued shall have been verified in the London Gazette, or the persons or persons to be affected by such notice may reasonably be presumed to have seen the same.

[p. 13]  The present complainant alleges that notice on the 10th January last a fiat in Bankruptcy was in tail awarded & issued agt. E. Bryant and an official assignee appointed under the same.  This is stated affirmatively, and if he knows & can prove the fact, that will be an adequate defence by a plea at law, & then the validity of the fiat awarded may be put in issue.  It does not however follow that the charge in this bill may hereafter be taken against him as notice of the alleged bankruptcy.  Doubtless it would still be open to him to dispute the validity of the Bankruptcy, & that would cast upon the assignees a burthen very difficult to overcome in a Court of law in this colony, in the event of their endeavouring to make him liable over again.  Assuming that one of the Defts has become Bankrupt non constat [p. 14] that his asignees, if there had been any appointed will claim any interest in the present demand.  They may have waived their right on grounds of public policy, however, we think that as this is a transaction existing wholly in this colony between a local debtor & local creditors we ought not to interpose the restraining authority of an injunction which shall have the effect of tying up for an indefinate time, the hands of creditors from securing at law, where there is no prima facie Equity on the part of the complainant.  The contract on which the action is brought is not denied, & cites only the amount of liability which is depicted.  It was very forcibly put in argument that to [p.15] overrule this demurrer might be productive of the greatest hardship in the defts, who, if their hands were then tied up, the demand in dispute might be wholly lost.  Suppose numerous company of traders in this colony dealing with a Colonial traders & one of the company should happen to become bankrupt in England, they could do nothing to recover a joint debt, until the validity of the commission of their bankrupt partners were determined in a place 16 000 miles from where the debt was contracted.  The object of this bill if it be not to compel the other defts to disclose matter which may render him liable to pains and penalties, seeks to create a disability not of his own worth in a case where the right to sue is prima facie indisputable & without apparent Equities on the part of the complainant. 

[p. 16]  In short, if the charge in the bill, that E. Bryant had a fiat in Bankruptcy awarded against him is to be taken as an admission that the complainant had notice thereof, he has no equity, and may plead the Bankruptcy to the action.  If he has not had notice, then he is protected from liability over to the assignees.  So that in either view of the case he is not in a condition to call upon the defts to answer whether one of them had not become bankrupt, even if there were any express authority to warrant such an interrogatory. 

If we were to allow the demurrer it would become a precedent, for every local debtor to whom it might be inconsistent to pay his debt, merely to suggest that his debtor had become bankrupt in England, & to postpone payment to an indefinite time, and perhaps drive the party into actual Bankruptcy from his inability to recover debts in this colony.  On the whole, therefore, the demurrer to this part of the bill must be allowed.

In banco, Dowling C.J., Burton and Willis JJ, 3 March 1838

Bryant v. Humphreys. - Mr. a'Becket moved for a Commission to proceed to England, to examine witnesses, and that in the mean time proceedings be stayed until the third term of 1839.  Rule nisi granted.

In banco, Dowling C.J., Burton and Willis JJ, 10 March 1838

Bryant v. Humphrey. - In this case a rule nisi had been obtained by Mr. a'Beckett, calling on the plaintiff to show cause why a commission should not be sent to England to examine certain witnesses who would shew that the plaintiff's partner has been declared a bankrupt, and why the trial of the case should not be postponed until the third term of 1839.  The main ground on which the application was grounded was, that the defendant had heard that the plaintiff's partner had been declared to be a bankrupt in England, and that the defendant, if he had paid the money claimed by the plaintiff might afterwards be called on to pay it to the official assignee.  Mr. Attorney-General and Mr. Windeyer appeared in opposition to the rule, and Mr. a'Beckett in support of it.  The Court granted the commission, but refused to postpone the trial.  Mr. Justice Burton and Mr. Justice Willis expressed themselves to be decidedly of opinion that the bankrupt laws of England do not apply to this colony, upon which the Chief Justice remarked that he always made it a rule not to give an opinion on any point which does not strictly arise before him, and, therefore he had not given any opinion respecting the applicability of the bankrupt laws, but should keep his mind open until the question came before him.  Mr. Justice Burton said, that he considered the point did arise, and Mr. Justice Willis said, he did not see on what other grounds the question could be decided.

Notes