Bucknell v Commercial Banking Company of Sydney Limited [1937] HCA 35

Bucknell v Commercial Banking Company of Sydney Limited [1937] HCA 35 - HCA 1937 case summary — Zoe

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Dudley Williams K.C. (with him Cassidy and Wesche), for the appellant. In his letter dated 14th December 1927 the appellant, in clear and unequivocal terms, repudiated the balance of the amount then said to be outstanding. There was no promise to pay made by the appellant within six years of action brought as required by the Statute of Limitations, nor was there any clear acknowledgment of the debt made under such circumstances that the court would infer therefrom a promise on the part of the appellant to pay (Green v. Humphreys (2) ). An acknowledgment of the debt coupled with a refusal to pay cannot be an acknowledgment from which the court will infer a promise to pay. Where there is an acknowledgment and other words appear, then the court must determine whether on the construction of the words as a whole there is an implied promise to pay (Spencer v. Hemmerde (3) ). All that the appellant addressed himself to in his letter dated 20th December 1933 - the letter relied upon by the respondent - was the suggestion made on behalf of the respondent that the claim and counterclaim should be compromised by the payment by the appellant of the sum of £1,000. Having regard to the context, the words "my liability" in the second paragraph of that letter cannot be construed as an admission by the appellant of liability on his part. If the letter is so construed the position would be that, by reason of the respondent's inaction during a period of years, the appellant would be prevented by the provisions of the Statute of Limitations from setting up his counter- claim. The question when time begins to run under the statute is dealt with in Halsbury's Laws of England, 2nd ed., vol. 20, pp. 612-621. There was no promise to pay, or, at most, there was a promise in respect of a part only of the alleged debt, and the respondent's right to recover is limited to that part. In the circumstances the appellant was justified in his conclusion that the respondent had abandoned its alleged claim. The facts in this case are different from the facts

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contents cannot be obtained without an account of the facts to which it relates. In 1926, the bank numbered among its customers a company called "A. Gilbert Tomlinson Ltd." It carried on a merchant's business, the chief part of which consisted in the importa- tion of hemp, tapioca and a particular brand of gin. In April of that year its overdraft stood at about £22,000 and the bank held as security a debenture creating a floating charge over the company's assets. On 16th April the defendant and his father-in-law, 8S. L. Cohen, between them paid to A. Gilbert Tomlinson Ltd. £5,000 for shares they took up in that company. They made the payments by cheques drawn on their respective accounts in the plaintiff bank, the defendant by a cheque for £3,334 and his father-in-law by a cheque for £1,666. The defendant's account was opened on the previous day with a deposit of £2,000. The difference, £1,334 with interest to the date of the writ, which was issued on 19th June 1934, represents the amount for which the bank sues, viz., £2,272 15s. The cheques were placed by the company to the credit of its current account and the overdraft was for the time being reduced accordingly. One Needham appears to have paid another large sum for shares and this, too, went to the credit of the current account of the company. The company, however, soon raised the overdraft to its previous amount. In August of the same year it suffered some loss by fire and its overdraft was still further increased. On 7th October 1926 a receiver went into possession under the bank's debentures. Apparently when the debt to the bank was paid little remained for ordinary creditors and nothing for shareholders. On 19th February 1927 and 20th May 1927, the bank wrote letters to the defendant asking him to close his account, upon which, except for the single payments in and out, he had never operated. On Ist June 1927 he replied : - * I cannot help at times reflecting on the influences that led up to that account, but a lesson learned at cost is perhaps the best of all lessons. I will close the account before the end of the year." From subsequent letters written by the defendant it appears that the reflections he says he was unable to avoid led him to believe that he and his father-in-law Cohen had been induced to purchase the shares in A. Gilbert Tomlinson Ltd. by the advice of the manager of the branch of the plaintiff bank where that company

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pay £500 in cash in reduction of my liability to your bank re the firm of A. Gilbert Tomlinson Ltd. and at the same time give you a promissory note for a further £500 in full liquidation of the debt, to this proposition I neither dissented nor agreed as under the peculiar circumstances of the matter having been in abeyance for nearly seven years I considered that your bank would make no further claim beyond the £2,000 that I had already paid. As it is probable that this letter may go before your board I desire to put before you my association with this firm from the beginning. My father-in-law, Mr. S. L. Cohen, showed me a prospectus issued by A. Gilbert Tomlinson which he informed me had been given to him by a Mr. Sindel of 'Cathcart House,' Castlereagh Street ; they were asking for more shares to be taken up in this company. After reading the prospectus I thought that the venture was a good one and asked Mr. Cohen to get an interview with the directors, this he did and I met Messrs. Tomlinson, Rettie and Willis. It was proposed that I should take 5,000 shares and after a lengthy conversation I asked them could they give me a reference to any bank with whom the firm was doing business ; they referred me to your late manager, Mr. Dunlop, and informed me that your bank was their bankers. I, in company with Mr. Cohen, had an interview with Mr. Dunlop, and asked him what sort of proposition he thought it was? He said it was a good one, to which I replied, if it is so good why don't you take shares in it yourself, and his reply was, 'How can I when I am their banker?' Up to this stage Mr. Cohen did not contemplate taking any shares, I then put it to him that I should take two-thirds of the £5,000 and he one-third, to which he demurred. I argued with him and said according to the prospectus we would get our money back in three years. Mr. Dunlop replied, "Oh I don't think it's as good as that, but it's a real good little business.' Although after Mr. Dunlop's opinion I thought I would like to join the company, Mr. Cohen still refused to take his one-third share for the reason that he could not afford it not having the money available. Mr. Dunlop replied you need not find any money, deposit your scrip and you can draw on us for the full amount of your shares and it was arranged that I should pay £2,000 in cash and deposit my scrip for the balance of the money ; I gave them a cheque

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conditional or subject to limitations, the conditions must be fulfilled before the liability becomes enforceable and the limitations must be observed. The letter upon which the plaintiff depends contains no express promise either conditional or unconditional, restricted or unrestricted. But, although a document relied upon as an acknow- ledgment contains no express promise, it may effect a revival of the debtor's liability if there is found in it a distinct admission of the debt. The law implies from an acknowledgment of the existence of the liability a promise to discharge it. Words clearly acknow- ledging that the writer is liable suffice to raise the implication. But although the promise is implied as an artificial legal consequence of the written admission of liability and is not the result of a search after the true meaning disclosed by the writing, yet if the document in which the admission occurs expresses an intention inconsistent with the making of such a promise or an intention consistent only with the making of a qualified promise, the implication will be rebutted or qualified accordingly. Thus, if the context includes a flat refusal to pay, the admission of liability cannot be made the foundation of an implied promise to discharge the debt. If the admission is accompanied by an express promise to which the writer has attached conditions or limitations in point of time or otherwise, an absolute promise cannot be implied from the acknowledgment of liability, because to imply it would involve an inconsistency, and the creditor obtains no more than a conditional or limited revival ofthe debt. In the same way if the document in which the admission of liability is found contains an expression of some qualification which is inconsistent with an unconditional or unrestricted promise to pay, the promise implied from the acknowledgment of the debt will be qualified by the condition or limitation expressed. Lord Sumner said in Spencer v. Hemmerde (1) : - ' After all, what the promise effects expressly, the acknowledgment effects by implica- tion. With an express promise, whether it is qualified or unqualified, absolute or nullified, and with an acknowledgment, the question must be the same ; if it is accompanied by other words we have to ask do they nullify or qualify the acknowledgment or simply leave

At a glance

Court

Decision date

Before

Source

Judgment (72 paragraphs)

Cited By (3)