This is an appeal by the Official Assignee of the Estate of Cheah Soo Tuan, a bankrupt, from an order of the Court of Appeal of the Straits Settlements (Sattlemant of Penang) dated 8th April 1929.
By the order of which the appellant complains the Court of appeal set aside a judgment dated 17th July 1928, of Sproule, J. and ordered a new trial. Sproule, J., had declared that a conveyance dated 2nd June 1926, by the bankrupt to his secondary wife, the respondent, of No. 121, Beach Street, Penang, was void as against the appellant and ought to be set aside, and ordered delivery up of such conveyance.
By S. 50, Ordinance 44 relating to bankruptcy, it is provided that "any settlement of property not being . . . . a settlement made in favour of a purchaser . . . . in good faith and for valuable consideration . . . . shall if the settlor becomes bankrupt within two years after the date of this settlement be absolutely void as against the Official Assignee."
And also that
"settlement for the purposes of this section includes any conveyance or transfer of property. . . ."
The bankrupt was the sole proprietor of a shop or business called Guan Hup Hin.
On 10th June 1927 the bankrupt was adjudicated bankrupt upon an act of bankruptcy dated 18th May 1927.
Less than a year before the act of bankruptcy, namely on 2nd June 1926, the bankrupt had conveyed a property belonging to him to his secondary wife, the respondent.
The property in question with an adjoining piece of land had been purchased by the
bankrupt in November 1919, from Yap Chor Ee for $35,000, of which $30,000 was left on mortgage to Yap Chor Ee.
Later the bankrupt sold the adjoining land for $10,000, which he paid to Yap Chor Ee, thus reducing the latter's mortgage to $20,000.
By the conveyance of 2nd June 1926 the property in question was conveyed to the respondent, subject to Yap Chor Ee's mortgage for $20,000. The consideration expressed to be paid was $5,000, and the conveyance contained a covenant by the respondent to pay all principal moneys secured by the mortgage and to keep the bankrupt indemnified against the same.
On 24th August 1927 the appellant moved the Supreme Court for an order setting aside the conveyance under S.50, Ordinance 44.
At the trial certain facts were agreed and the learned Judge then called on the respondent's counsel to begin, ruling that the onus of proof lay on the respondent.
In the course of the trial the depositions of the bankrupt on his public examination, and of the respondent upon her examination under S. 31 of the Ordinance were "formally put in by consent."
The learned Judge reserved his judgment and delivered it on 26th April 1928. He stated that the respondent's counsel at the hearing accepted the burden of proof upon admitted facts. He outlined those admitted facts, which were in substance the facts to which reference has already been made. Upon the construction of S. 50 of the Ordinance ho held that the burden of proof was thrown upon the respondent. He further held that $25,000 was under-value, but he added that he could not find it was gross under value.
At the end of his judgment the learned Judge said:
"Upon the whole I could not find that she" (i. e, the respondent) " had proved that the conveyance to her of the property was genuine-I thought indeed that it was tainted with fraud intrinsically and apart from any question of the onus of proof."
He then declared the conveyance absolutely void.
Upon appeal by the respondent the Court of appeal directed a new trial, holding that the trial Judge had adopted a wrong construction of S. 50 of the Ordinance with regard to the onus of proof, and had accordingly misdirected himself. Deane, J., who delivered the leading judgment concluded his judgment in the following words:
"For these reasons I have come to the conclusion that the learned Judge misdirected himself as to the onus and that the result of the misdirection was very serious, since it coloured his whole outlook as to the facts and substantially prejudiced the appellant's" (meaning thereby the present respondent's)" chances.
It is true that the learned Judge, after stating that he could not find that she (the appellant) had proved that the conveyance of the property to her was genuine proceeded: "I thought, indeed, that it was tainted with fraud intrinsically, and apart from the question of the onus of proof," but putting aside the difficulty of understanding what is meant by laying that a conveyance is tainted with fraud "intrinsically" when on the face of it there is nothing suspicious except that it is a conveyance by a husband to a wife, I do not think that a mere casual expression of this kind with nothing to support it can cure so serious a defect as there was in this trial. In my opinion the judgment of the lower Court should be set aside and a new hearing of the motion ordered. In view of the fact that appellant's counsel in the Court below made no demur to the ruling that the onus was upon him I think there should be no order as to the costs of this appeal; the costs of the first hearing of the Court below should abide the result of the new hearing."
Their Lordships are of opinion:(1) that the trial Judge was wrong in his construction of S. 50 of the Ordinance; (2) that there, was nothing in the admitted facts to shift the onus of proof to the respondent; and (3) that the respondent ought not to be precluded from objecting to the judgment, as the Judge's note shows that the respondent's counsel was called upon to begin as the result of the ruling given as to onus.
The fact that the wrong party was called upon to begin, taken alone, might not be sufficient ground for a new trial. Here, however, there was more. The trial Judge had taken an erroneous view as to the law in regard to onus. His mind was colored by that view, and he was thereby disabled from weighing evenly the evidence. Thus the respondent was placed at a disadvantage as the direct result of the trial Judge's error.
In their Lordships' judgment the order of the Court of appeal was correct and the language of Deane, J., which has been already quoted, adequately and accurately expressed the position and the conclusions which should follow from it.
Their Lordships will accordingly humbly advise His Majesty that this appeal should be dismissed.