Section 120(1) of the Bankruptcy Act provides:
A transfer of property by a person who later becomes a bankrupt to another person is void against the trustee in bankruptcy if:
- the transfer took place in the period beginning 5 years before the commencement of the bankruptcy; and
- the transferee gave consideration of less value than the market value of the property
In this case Bryson AJ determined that for the purposes of this section the giving of a mortgage constituted a transfer. Thus creditors cannot be defeated by mortgaging property.