Insolvency avoidance of transfer turns on receiver's burden, good faith, and valuable consideration, not res judicata.

In insolvency proceedings to avoid a transfer, the receiver bears the burden of proving absence of good faith or lack of valuable consideration, rather than the transferee. Prior adjudication of insolvency does not create res judicata on distinct questions of the transferee's good faith or consideration, because those matters are determined only in the annulment proceedings. Good faith is assessed by honesty in the transaction, not by a rigid due-care-and-attention test. On the evidence described, the mortgage was supported by consideration and made in good faith, so it remained binding on the insolvent estate.

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Issues: (i) Whether the transferee or the Official Receiver bore the burden of proving that the impugned transfer was not made in good faith and for valuable consideration; (ii) Whether the prior adjudication of insolvency operated as res judicata to preclude challenge to the transfer; (iii) Whether the usufructuary mortgage was unsupported by valuable consideration or was lacking in bona fides so as to be voidable under the insolvency law.

Issue (i): Whether the transferee or the Official Receiver bore the burden of proving that the impugned transfer was not made in good faith and for valuable consideration.

Analysis: The applicable insolvency provision placed the burden on the party seeking annulment. The rule settled by prior authority was that, in proceedings to set aside a transfer, it is for the receiver to establish absence of good faith or absence of valuable consideration. The courts below had wrongly thrown the onus on the transferee.

Conclusion: The burden lay on the Official Receiver, not on the transferee.

Issue (ii): Whether the prior adjudication of insolvency operated as res judicata to preclude challenge to the transfer.

Analysis: The adjudication order recorded acts of insolvency and intent to defeat or delay creditors, but it did not determine that the transferee was privy to any dishonest intention, nor did it decide the distinct questions whether the transfer lacked consideration or whether the transferee acted in bad faith. Those matters arose only in the annulment proceedings.

Conclusion: The challenge was not barred by res judicata.

Issue (iii): Whether the usufructuary mortgage was unsupported by valuable consideration or was lacking in bona fides so as to be voidable under the insolvency law.

Analysis: The evidence showed payment of the full mortgage consideration through contemporaneous receipts, endorsements, account entries, and testimony of third parties. The Receiver failed to prove want of consideration. On bona fides, the proper test in insolvency is honesty, not the abstract civil-law notion of due care and attention derived from the general clauses definition. The lender had dealt at arm's length, made enquiries through his sons, found the borrowers to be respectable traders with unencumbered properties, and there was no evidence that he knew of any dishonest scheme to defeat creditors. The transaction therefore could not be impeached on the footing of bad faith.

Conclusion: The mortgage was supported by valuable consideration and was made in good faith.

Final Conclusion: The annulment of the mortgage could not be sustained, and the transfer remained binding on the insolvent estate.

Ratio Decidendi: In insolvency proceedings to avoid a transfer, the receiver must prove want of good faith or absence of valuable consideration, and good faith is judged by honesty in the transaction rather than by a rigid due-care-and-attention test.

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