Carter Bros v Renouf [1962] HCA 67;

Carter Bros v Renouf [1962] HCA 67; - HCA 1962 case summary — Zoe

[9]

2. After his Honour's sudden death the papers, including his completed judgment, came into my hands and I caused a communication to be sent to the respective parties of which the following is a copy: - "In this matter his Honour Mr Justice Fullagar had completed a written judgment before his death. It was ready for delivery and his Honour had caused the parties to be notified that he would give judgment at 10 a.m. on Tuesday, 25th July 1961, in Sydney. This cannot now be delivered as a judgment of the Court or of a justice unless some other justice takes the responsibility of delivering it as if it were his. If all parties agreed that another judge might dispose of the matter upon the materials which were before Fullagar J. and without further hearing or argument the Chief Justice would be prepared to go into the case and study the judgment prepared by Fullagar J. and if on doing so he did not find some objection which he had not foreseen, he would at the time appointed deliver the judgment as upon his responsibility. It is apprehended that the parties would have the same rights of appeal and be in the same position as if Fullagar J. had lived to deliver the judgment himself at the time appointed or, to put it in another way, as if the case had been heard and determined by the Chief Justice himself." Each of the parties has agreed to the course proposed. That means that I take the full responsibility for the order that is made but the parties waive any rehearing or further hearing or re-argument or further argument. I have in fact studied the judgment which his Honour had prepared and left in final form ready for delivery and I have gone through what seem the more material papers. I shall as a result deliver the judgment his Honour prepared just as it stands. The formal minutes for the order I have prepared myself and I shall give the parties an opportunity to speak to the order before it is finally pronounced. It would be convenient, I think, if they did so either at the adjournment of the Full Court today or else at 9.30 tomorrow morning. The order I propose is as follows: - It will recite that the three summonses (identifying them) came before Fullagar J. and were adjourned into court. It will further contain the usual recitals as to the appearance of counsel and the hearing, including the consolidation of the hearing of the summonses, the affidavits read and the exhibits and the like. It will then recite the reservation of judgment, the death of Fullagar J., the communication I caused to be made to the parties, their consent to the course therein proposed and further that I treat the parties as waiving a fresh or a further hearing or argument and as intending that otherwise the order should be made as an exercise of the court's jurisdiction and that having considered the matter I adopt the reasons prepared in final form by Fullagar J. and make the following declaration and order, viz. (1) that subject to the prior operation and effect of the order of the Court bearing the date 22nd and 23rd May 1961 and made at Brisbane upon the summons dated 2nd May 1961 and issued on behalf of Carapark and General Finance Limited and, subject to the order for costs hereinafter appearing, a declaration and order should be made in terms of the relief sought by the summons dated 12th April 1961 issued by Renouf & Kerr, the executors of Raymond John Carter: (2) that the summons dated 3rd May 1961 and issued on behalf of Carter Bros. be dismissed and (3) that the costs of all parties including the Legal and General Assurance Society Ltd., and including Lionel John Hastings Carter, except costs disposed of by a previous order, be paid out of the moneys in court or hereafter paid into court, the costs of the executors and of Legal and General Assurance Society Ltd. as between solicitor and client and that the summons dated 12th April 1961 issued by the executors otherwise be adjourned for twenty-one days. Liberty to apply. Certify for the attendance of counsel at Chambers. (at p143)

[21]

14. I must pause at this point to refer to the statutory provisions authorizing payment into Court in such a case, and to consider the jurisdiction of this Court. Section 105 of the Life Insurance Act provides: - "(1) A company may, subject to any Rules of Court in that behalf, pay into the Court any moneys payable by the company in respect of a policy for which, in the opinion of the company, no sufficient discharge can otherwise be obtained. (2) The receipt of the Principal Registrar, a Deputy Registrar or a District Registrar of the Court for the moneys shall be a good and valid discharge to the company for the moneys so paid in, and the moneys shall, subject to the Rules of Court, be dealt with according to the order of the Court." It was evidently in intended pursuance of this section that the Society made the payment into Court in this case, for the payment in was accompanied by an affidavit which stated that, in the opinion of the directors of the company, no sufficient discharge could otherwise be obtained. But I think that the Society is entitled to invoke a jurisdiction given by any other provision in the Act, and payment into this Court is also authorized by s. 89. This section applies to cases where the company has received "express notice in writing of any trust, right, equity or interest", in which event it is not protected by the provisions of ss. 87 and 88. Both under s. 89 and under s. 105 the payment into Court operates as a discharge of the company's liability under the policy, and in both cases a jurisdiction is, by necessary implication, given to this Court. But I think that the jurisdiction given by s. 89 is a different jurisdiction from that given by s. 105. I think that the jurisdiction given by s. 105 is a jurisdiction to determine what person or persons, if any, would, if the money had not been paid into Court, have been entitled to receive payment of the policy moneys from the company. I think, on the other hand, that the jurisdiction given by s. 89 is, or includes, a jurisdiction to determine whether the trust of which the company had had express notice in writing exists and, if it exists, whether the company should pay the policy moneys to the trustee or to some person beneficially entitled. A person absolutely entitled in equity could, in a properly constituted proceeding, sue the company for the amount due on the policy. (at p147)

[22]

15. The jurisdiction under either section is, as I have stated it, a strictly limited jurisdiction, but it seems to me that the conferring of a wider jurisdiction would not be authorized by the Constitution. The only relevant provision of the Constitution is s. 76 (ii), which enables the Parliament to make laws conferring original jurisdiction on the High Court in matters arising under any law made by the Parliament: see Hooper v. Hooper [1955] HCA 15; (1955) 91 CLR 529 . The payment into Court, which is authorized by the Commonwealth Act cannot, I think, be regarded as itself creating a "matter arising under" the Act. It is merely part of the machinery for the determination of a matter. What gives rise to a matter is the existence of conflicting claims, and I do not think that this Court can be given jurisdiction to decide on claims to policy moneys other than claims which are either made directly against the insuring company or may affect the liability of the insuring company. The Life Insurance Act is an Act of the Commonwealth Parliament, which is concerned with, and makes elaborate provision with relation to, assignments, mortgages and trusts of policies, and equitable interests in policies. But it deals with all these matters from the point of view of the insuring company. To some interests the company is bound to give effect, some it may ignore with impunity, some it ignores at its peril. When a question arises as to whether the company is bound, or may be compelled, to give effect to some legal or equitable dealing with a policy, it seems to me right to say that a matter arises under the Act, and that jurisdiction may be validly conferred upon this Court under s. 76 (ii.) of the Constitution. But, when once what was initially the company's problem has been solved, the rights and duties of the payee with respect to the policy moneys in his hands are not - or normally will not be - the concern of Commonwealth law. They will fall to be determined in accordance with the laws of a State, and are not, therefore, capable of being submitted to the jurisdiction of this Court under s. 76 (ii.). (at p148)

[27]

20. In considering the case made by Mr. Mylne it is right, I think, as Mr. Lucas suggested, to look first at the position as it existed on 2nd March 1960 (the date when Carapark securities were executed), and then at the period between that date and 26th October 1960 (the date of R. J. Carter's death). So far as the position as at 2nd March is concerned, there is nothing to suggest that, apart from Carapark, any person other than R. J. Carter himself had, or was intended to have, any interest of any kind in the policy. The facts and documents indeed indicate the contrary. From the point of view of Carapark it was, of course, quite immaterial whether the policy were taken out by R. J. Carter or by Carter Bros.: all that that company was concerned with was that there should be a policy on R. J. Carter's life, and that that policy should be assigned to it. From the point of view of the partnership it was, unless the parties adverted to s. 92 of the Act, equally immaterial whether the policy were taken out by R. J. Carter or by Carter Bros.: apart from that section all R. J. Carter's assets would, as I have said, be available to satisfy the debts of the partnership. The policy was issued on, and expressly refers to, a proposal dated 17th February 1960. That proposal was signed by R. J. Carter only. The form on which it was made contained a space in which were to be given "Details of Proposer (who is to be the owner of the policy) if other than the life assured". This space was left blank. There is no reference in the policy to any person other than R. J. Carter as having any interest in it. The promise is to pay to "the proposer or persons deriving title under him". This clearly, I think, has reference to possible future dispositions of the policy by R. J. Carter. So far as I can ascertain, s. 2 of the English Act of 1774 (14 Geo. III, c. 48) is in force both in New South Wales and in Queensland. This section makes it unlawful inter alia to issue a policy on the life of any person without inserting therein the names of all persons interested therein or for whose use of benefit the policy is issued. But, apart altogether from this statute, it is, in my opinion, quite clear that the policy, when it issued, was R. J. Carter's policy and nobody else's. (at p150)

[35]

28. I see no reason to doubt the bona fides of these witnesses. Whether their evidence should be accepted as entirely accurate and reliable is another matter. But, even if one gives it its full face value, it falls, in my opinion, far short of establishing a declaration of trust by R. J. Carter. It relates, for the most part, to casual conversations, and the statements said to have been made by R. J. Carter indicate rather a belief as to an existing position than an intention to alter that position in any way. It is well settled that formal words are not required for the creation of a trust of personalty. Such a trust may be brought into existence by any words which sufficiently indicate an intention to bring it into existence. But the words must express an unequivocal intention thereby to create a trust. Actually I think Mr. Mylne did not put the case as one in which the statements made were operative to create a trust, but rather put it that R. J. Carter's statement amounted to acknowledgments or admissions (admissible because against interest) that he had created a trust. But, having regard to their context and to the circumstances, I do not think that they can be so understood. The whole position is, I think, well put by Sir John Romilly in Grant v. Grant [1865] EngR 662; (1865) 34 Beav 623, at pp 625, 626 [1865] EngR 662; (55 ER 776, at p 777) . The Master of the Rolls said : - "It is not necessary to say, 'I hold the property in trust for you,' nor is it necessary to say, 'I hold the same for your separate use.' Any words that show that the donor means, at the time he speaks, to divest himself of all beneficial interest in the property are, in my opinion, sufficient for the purpose of creating the trust. I think it is also sufficient for the purpose of showing that the trust has been created, if he afterwards states that he has so created the trust, though there was no witness except the donee present at the time the trust was created" (1865) 34 Beav, at p 625 (55 ER, at p 777) . On the following page he said : - "It will not do to speak of the property as 'belonging to' another person, because that is ambiguous." (1865) 34 Beav, at p 626 (55 ER, at p 777) . (at p154)

[42]

35. The rule of public policy on which the Society relies has, as I see the matter, no application as between the Society and the legal owners of the policy. The legal owners were, at all material times, the executors of Raymond John Carter. Payment of the policy moneys to those legal owners cannot involve any violation of any rule of public policy. It cannot be said that they have done anything criminal or in any way unlawful. When they have received the policy moneys, a question may be raised as to whether the execution of the trusts, on which they hold those moneys, would confer a benefit on some person as a result of a criminal act on his part, but this would be a question which I think is of no concern to the Society. The relationship between insurer and insured under a life policy is simply a relation of debtor and creditor. If there is a legal assigning of the policy, which can only be effected by assignment followed by registration, there is in effect a novation and the relation of debtor and creditor comes into existence between insurer and assignee. But neither declaration of trust nor a merely equitable assignment can either create a relation of debtor and creditor as between insurer and cestui que trust or affect in any way the relation of debtor and creditor as between insurer and legal owner. These considerations seem to me to lead inevitably to the conclusion that the fact of a felonious killing of Raymond John Carter could not have afforded a defence to a claim against the Society by Raymond John Carter's executors. The matters with which I have now dealth are, I think, the only matters with which I can deal. The questions which seem to arise out of the killing of R. J. Carter by M. E. Carter must, I think, be dealth with in proceedings in the Supreme Court of Queensland. In any such proceedings it may be (I express no opinion on the point) that the Crown should be made a party : cf. In re Callaway ; Callaway v. Treasury Solicitor (1956) Ch 559 . (at p156)

[44]

37. D. L. Mahoney Q.C. (with him V. M. Mylne), for the appellants. The moneys used to acquire the policy on the life of the deceased were partnership moneys. (He referred to s. 24 of The Partnership Act of 1891 (Q.).) The policy thus became partnership property, there being no evidence of a contrary intention within s. 24. (He referred to the Bank of England Case (1861) 3 De G F & J 645, at pp 658, 659 [1861] EngR 776; (45 ER 1029, at p 1034) ; Forrester v. Robson's Trustees (1875) 2 SC 755, at p 759 ; Helmore v. Smith (No. 1) (1887) 35 ChD 436, at pp 446, 447 ; Butler v. Madden (1941) 41 SR (NSW) 245, at p 246 ; 58 WN 187, at p 188 ; Lindley on Partnership 11th ed. (1950) pp. 409, 410 ; MacGillivray on Insurance Law 5th ed. (1961) vol. 1, p. 215, par. 438.) On the evidence the presumption is very strong in favour of this policy having been held legally by the deceased but beneficially on behalf of the partnership. Alternatively, when the deceased took out the policy, he did so as a trustee for the partnership. A person, in taking out a policy, may do so as trustee for a third party. Whether he does so depends upon his intention manifested at the time. What was said by the deceased both before and after he took out the policy shows that he did do as trustee for the partnership. (He referred to Royal Exchange Assurance v. Hope (1928) Ch 179, at pp 184, 185, 195, 198 ; In re Webb ; Barclays Bank Ltd. v. Webb (1941) Ch 225 ; Walker v. Walker (1940) NZGLR 450 .) These cases establish that from what the proposer said and did before and after taking out the policy there may be inferred an intention to hold the policy from the outset as trustee for another. (He referred to Vandepitte v. Preferred Accident Insurance Corporation of New York (1933) AC 70, at p 79 ). Alternatively to the foregoing submissions, on the evidence it should have been held that the deceased after taking out the policy constituted himself a trustee thereof for the partnership. That occurred when he spoke to Cullen shortly aiter the assignment by way of mortgage of the policy. Even informal statements to the effect that an asset is to be held for the benefit of another are sufficient to establish a trust in favour of that other. (He referred to Vandenberg v. Palmer [1858] EngR 493; (1858) 4 K & J 204 (70 ER 85) ; Roberts v. Roberts (1865) 13 LT 492 ; (1866) 15 LT 260 ; New, Prance & Garrard's Trustee v. Hunting (1897) 2 QB 19 ; Morgan v. Higginson (1897) 14 WN (NSW) 68 ). (at p157)

[45]

38. G. A. G. Lucas Q.C. (with him B. M. McLoughlin), for the respondents. Whether it is put that the policy was always partnership property or that a trust was declared in respect of it, the only fact leading to the inference that the policy was intended to be partnership property is the fact that the premiums were provided, after some initial confusion, out of the partnership bank account and dealt with in the books of the partnership in a way which showed that for the time being at least the burden of them would fall not on one but on both partners. The furthest this fact goes is to raise a presumption that the policy was for the partnership. But other relevant facts rebut the presumption. A most relevant fact is that neither in the proposal nor in the policy is there mention of anyone but the deceased. (He referred to the Life Assurance Act, 1774, s. 2.) To hold that the policy here was taken out for the partnership would be to hold that the transaction contravened s. 2 and was illegal and void. For this reason the Court should not hold that the policy was taken out for the partnership but for the benefit of the deceased alone. (He referred to MacGillivray on Insurance Law 5th ed. (1961) vol. 1, p. 213, par. 435.) Quite apart from the provisions of the statute, had it been intended that the policy was to be for the benefit of the partnership it would have been simple to state the fact, yet this was not done. Another significant fact is that the policy was effected in relation to a transaction to which the partnership as such was not a party. The transaction was one of loan in which the three Carter brothers, not merely the two in partnership, are shown as borrowers in the documents. Again, it is significant that in the mortgage of the life policy the deceased describes himself as the beneficial owner of the policy. Apart from Carapark there is nothing to suggest that any person other than the deceased was intended to have any interest in the policy. Other important factors tending to establish that the policy belonged only to the deceased are that he is described in the deed as being "entitled" to the policy and he alone covenanted to pay the premiums. (On the question of the consideration which should be given to evidence led to rebut a presumption he referred to Fowkes v. Pascoe (1875) 10 Ch App 343, at p 352 and Shephard v. Cartwright [1954] UKHL 2; (1955) AC 431, at p 450 ; Snell on Equity 25th ed. (1960) p. 168.) The casual statements of the deceased cannot constitute a declaration of trust in relation to the policy. We rely upon the reasons for judgment prepared by Fullagar J. (at p158)

[52]

6. The partnership carried on at certain places in Queensland a business of earthmovers, excavators and general contractors. For some time before the policy was taken out the business had been in financial difficulties, and by the end of 1959 there was urgent need of a substantial loan. Negotiations in other directions having failed, an application was made to Carapark for a loan of 175,000 pounds in February 1960, to be followed by others in April and June. The deceased, R. J. Carter, always took the leading part in matters of management - indeed he assumed the title of Governing Director - and it was he who conducted the discussions and correspondence with Carapark over the loan. Agreement was reached, one of the terms being that a life assurance policy for 175,000 pounds should be taken out on the life of R. J. Carter and assigned to Carapark. On 17th February 1960 a proposal was made to the Society on a printed form which was adaptable either to the case where the proposer was the life to be assured or the case where he was not. R. J. Carter signed it as the person whose life was to be assured, and there was nothing in it to suggest that the policy was to belong to the partnership. The policy was issued, as has already been said, on 29th February 1960, and it contained no clue as to beneficial ownership. The sums to become payable by the Society under it were expressed to be payable to "the proposer or persons deriving title under him". Then, on 2nd March 1960, a deed of acknowledgment was executed in which the terms of the transaction with Carapark were recorded. The parties to the deed were the three Carters (therein called the borrowers) and Carapark. Colin Henry Carter, not being a member of the partnership, was not really a borrower, and it is to be inferred that the reason for his being included in the deed as if he were a borrower was simply that Carapark required security over certain assets in one of which, a parcel of land, he had an interest. The deed recited that Carapark had agreed to lend "the borrowers" 175,000 pounds on inter alia the securities set out in the first schedule, and those securities included a "mortgage of life policy", the policy being described only by the naming of the Society as having issued it and of R. J. Carter as being the "grantee" (an obvious mistake for grantor) of the mortgage. As to the other securities mentioned, some were over partnership assets, one was over land in the names of the three Carters as tenants in common, and one was over land in the name of R. J. Carter which may have been, but was not clearly proved to be, a partnership asset. The mortgage of the policy was effected by a separate deed of the same date as the deed of acknowledgment. Three features of the mortgage deed are relied upon by the executors. One is that in a recital R. J. Carter was described as "entitled" to the policy. A second is that R. J. Carter purported to transfer and assign the policy to Carapark "as beneficial owner", a form of words not to be explained away in Queensland, as it might be in other jurisdictions, by reference to a statutory provision giving it a special meaning as implying covenants for title. And the third is that R. J. Carter alone covenanted to pay the premiums. (at p162)

[54]

8. Section 23 (1) of The Partnership Act of 1891 (Q.), speaking of course in terms of beneficial ownership, states the general principle that not only all property and rights and interests in property that were originally brought into the partnership stock but also all that are acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business (called in the Act partnership property) must be held and applied by the partners exclusively for the purposes of the partnership and in accordance with the partnership agreement. Accordingly the question whether or not property acquired during the partnership in the name of one only of the partners was acquired as partnership property, and therefore upon trust for the partnership, is simply a question whether or not the acquisition was in fact an acquisition on account of the firm or for the purposes and in the course of the partnership business. In most cases the answer depends upon the proper inference to be drawn from the manner and circumstances of the acquisition. A common case is that in which property is bought with partnership money. The fact that it is so bought is of course not conclusive. The partners may have agreed to withdraw the money from the partnership and employ it in a separate joint investment, as happened, according to the findings, in Butler v. Madden (1941) 41 SR (NSW) 245 ; 58 WN 187 ; or they may have agreed to the one partner's applying it for his own purposes either as a loan or a gift from the partnership or on account of his share of profits ; and in such a case the property bought would not be partnership property. But where there is no proof that the partners had any common intention inconsistent with that which the unexplained employment of partnership moneys suggests, the conclusion must be that the purchase was on account of the firm (see s. 24), and that therefore the purchasing partner is a trustee of the property for the firm : Lindley on Partnership 12th ed. (1962) p. 361 ; Underhill on Trusts 11th ed. (1959) p. 216. It could not be otherwise, for the general principle of equity applies between partners that a person in a fiduciary relation to another is not permitted to keep for himself a gain which he has made by the use of his fiduciary position : Keith Henry & Co. Pty. Ltd. v. Stuart Walker & Co. Pty. Ltd. [1958] HCA 33; (1958) 100 CLR 342, at p 350 ; Hugh Stevenson & Sons v. Aktiengesellschaft fur Carton-Nagen-Industrie (1918) AC 239, at pp 250, 251 ; and accordingly every partner must account to the firm for any benefit derived by him without the consent of the other partners from any use by him of the partnership property : see s. 32 of the Act. (at p164)

[55]

9. In this case a study of the evidence reveals much to support the prima facie inference arising from the use of partnership moneys in the acquisition of the policy, and very little indeed of a contrary tendency. The balance of considerations is overwhelmingly in favour of the conclusion that notwithstanding the three features of the policy that have been mentioned above, his rights under it from first to last belonged beneficially to the firm. First in importance is the conduct of R. J. Carter with respect to the payment of the premiums. They were monthly premiums, each of 475 pounds 12s. Od., and apparently eight of them were paid. The first was paid by means of a cheque drawn by R. J. Carter on 17th February 1960 on a partnership bank account in respect of which he had authority to sign cheques on behalf of the partnership. On the same day, he signed an order addressed to the Manager of the Bundaberg branch of the Bank of New South Wales, requesting that the sum of 475 pounds 12s. Od. be debited to "my account" on 25th day of each month until further notice and be credited to the Society. The bank, not unnaturally, debited the March premium against R. J. Carter's personal current account ; but he, upon learning of this, told the firm's accountant, one J. P. Cullen, that he "had better fix it up" ; and Cullen thereupon instructed the bank to debit the amount against Carter Brothers' account and to change the order accordingly. An officer of the bank complied by writing on the order form, above R. J. Carter's signature, "Carter Bros. Main A/c", and adjusting the bank's books in respect of the March premium by means of a credit entry in R. J. Carter's personal account and a corresponding debit entry in Carter Brothers' account. Subsequent premiums, as they were paid, were debited against the firm in the bank's books. In the partnership's own books there was a number of columns for the dissection and proper attribution of payments, including a column for drawings and debits of R. J. Carter personally, and a column headed "Sundries" for general business payments of the partnership not shown in other columns. The first four premiums were entered by a clerk in R. J. Carter's column ; but in June 1960 Cullen asked R. J. Carter how the premiums should be charged, and, receiving the reply that they were the firm's responsibility as the policy was for the business, he caused adjustment to be made by crediting in R. J. Carter's column the total amount that had been paid for premiums up to that time and debiting a similar amount in the "Sundries" column. Each of the subsequent premiums, except the last, was paid by the bank under the order and was entered directly in the "Sundries" column. When the last premium fell due, there was insufficient in the firm's bank account to meet it, but it was paid in October by the firm's cheque, the amount being debited to "Sundries" in the books. (at p165)

[57]

11. The first suggestion of an insurance on the life of R. J. Carter was made as early as February 1959, when a man named Byrne, a consultant for the Society, recommended in the course of a discussion with the two partners and the firm's accountant J. P. Cullen, that R. J. Carter should take out with the Society a "keyman" policy on his life. Carter said that if ever that were done the firm would have to pay the premiums because the amount of money they required (scil. by means of a loan for which the policy would be security) would be large, and he would not be able to afford the premiums. In June 1959 R. J. Carter as "Governing Director" of the firm conducted negotiations for a loan from a company called Hastings Deering (Queensland) Pty. Ltd., on the footing that policies could be taken out on the respective lives of M. E. Carter and Cullen as well as himself, the policies to be "paid for by Carter Bros. and assigned to Carter Bros.". These negotiations having fallen through, the suggestion for a policy on R. J. Carter's life was made in the proposals that were placed before Carapark ; and when that company agreed to make the desired loan R. J. Carter increased the amount of the insurance to the high figure for which the policy was in fact issued - a much larger figure than was necessary for Carapark's purposes - in order, as he told Cullen, that in the event of anything happening to him the proceeds of the policy should be available for the protection of other creditors of the firm and to enable the business to be carried on. Moreover it is clear, not only from the documents that were executed in relation to the loan but also from Cullen's evidence, that before the policy was actually issued M. E. Carter was aware of and consenting to the taking out of the policy as a step in what both the partners and their staff recognized as a partnership transaction. In M. E. Carter's presence, for instance, R. J. Carter told Cullen that the insurance company wished to televise the presentation of the policy, and that he had declined on the ground that some creditors (scil. of the firm) might consider the amount of the insurance as unnecessarily large and the premiums too expensive "for the business". A week later, Cullen mentioned in the presence of both partners that someone had said that "the premiums would be so large on the amount of the policy that they would be too great for the firm to manage", and R. J. Carter, in the presence of M. E. Carter, told Cullen that his reply should be "that I have taken out this policy on behalf of the business to protect the creditors so (that) in the event of anything happening to me the business can be carried on and they will be paid". When later the question arose between Cullen and himself as to how the premiums should be charged, he drew a distinction between the subject policy and four others for 10,000 pounds. "They are mine", he said to Cullen, referring to the four policies ; and he added : "The reason why I took four separate policies was that when I had arranged other insurance to cover the business I would assign each of these four policies to each of my four children". On another occasion, in March 1960, according to evidence given by a Mr. Solomon, who was the assistant manager of Hastings Deering (Queensland) Pty. Ltd., someone in a conversation at which M. E. Carter was present questioned how a man could afford the premiums on a policy for half a million pounds, and R. J. Carter replied "that he was not paying the premiums, his partnership was, and that they were for the purposes of the partnership". Another witness, a Mr. Wood, who was a creditor of the firm in 1960 gave evidence of "discussions with R. J. Carter in which the latter mentioned the policy, describing it as having been taken out "for Carter Brothers". (at p166)

At a glance

Court

Decision date

Before

Source

Judgment (65 paragraphs)

Carter Bros v Renouf [1962] HCA 67; (1962) 111 CLR 140 (20 July 1962)

Parties

Legislation Cited (1)

Cases Cited (4)