KHOO KWAT SIEW Vs. WOOI TAIK HWAT

JUDGEMENT

(1.) THE only question in this case is whether the mortgage deed of the 11th March 1889, either originally, or as modified in May 1889, is valid against the assignee in insolvency of the mortgagors. It is better not to use the term "fraudulent" in such a case, though that term has, by rather an unhappy use of language, been applied by Courts of equity to transactions which are not at all dishonest in their nature, but are only such as the law will not allow. In this case there is no suggestion from beginning to end of there being anything dishonest in the transaction. The sole question is as to its legal validity.

(2.) THE well-known rule of law is that if a trader assigns all his property, except on some substantial contemporaneous payment, or some substantial undertaking to make payment in futuro, that is an act of bankruptcy, and is void against the creditors and the assignee, simply because nothing is left with which to carry on his business, whereas if he receives substantial assistance something is left to carry on the business.

(3.) THAT being so, their Lordships consider that this deed must be held to be valid. They are not aware of any case in which a simultaneous advance of a large amount being made, and future support being promised of a large amount, the validity of such a deed has been seriously called in question. In this case the simultaneous advance was nearly as much as the pre-existing debt, and the undertaking to give future advances was considerably more.