Partnership - Property of partnership - Insurance policy effected by one partner in own name - Premiums paid with partnership moneys - Ownership of policy - The Partnership Act of 1891 (Q.), s. 23 (1).

Life Insurance - High Court - Jurisdiction - Questions affecting title to proceeds of life insurance policy - Determination - Persons beneficially entitled to proceeds of policy - Payment into court - Life Insurance Act 1945-1959 (Cth), ss. 89, 105.

Life Insurance - Contract - Person for whose benefit policy made not named therein - Effect as between competing claims to proceeds of policy - Life Assurance Act, 1794 (Imp.), s. 2.

DIXON C.J. This matter which comprised three summonses issued under O. 67, r. 5, of the Rules of this Court and s. 89 and s. 105 of the Life Insurance Act 1945-1959 (Cth) or one or other of those sections was heard by Fullagar J. who made an order under one summons and otherwise reserved his judgment. Before his death on 9th July 1961 his Honour had completed the preparation of his written judgment and had given notice to the parties that he would deliver it in Sydney on 25th July 1961. (at p142)

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)

3. I have left two matters untouched, viz. the disposal of the original exhibits and the correction of the transcript but I suppose the parties can clear these up. (at p143)

4. (The CHIEF JUSTICE then delivered as his own the following reasons for judgment prepared by Fullagar J.) (at p143)

5. I have before me three summonses issued in pursuance of O. 67, r.5, of the High Court Rules. Two of those summonses seem to me to raise questions of considerable complexity and difficulty, with some of which, for reasons which will appear, I do not think that I can deal. I will begin by stating, as briefly as I can, the relevant facts. (at p144)

6. In 1959 and 1960 a firm known as Carter Bros. was carrying on at Bundaberg and other places in Queensland a business of earthmovers, excavators and general contractors. The partners in this firm were Raymond John (commonly known as Jack) Carter and his brother, Max Ellis Carter. There appears to have been no deed or other instrument of partnership, but it sufficiently appears, I think, that the two brothers were partners in equal shares. The active or managing partner in fact was R. J. Carter, and I would gather that the business was entirely in his hands and entirely dependent on his efforts. There was a third brother, Colin Henry Carter, who was interested with R. J. and M. E. Carter in certain other enterprises, but C.H. Carter had no interest in the firm of Carter Bros. (at p144)

7. By the middle of 1959 Carter Bros. were in serious financial difficulties, and it appeared to R. J. Carter that these difficulties could only be surmounted if the firm could obtain a loan of a large sum repayable over a relatively long period. Discussions took place with one of certain companies known as the HastingsDeering group. In these discussions it appears to have been contemplated - naturally enough - that one of the conditions of any loan of a large sum would be the assurance for a large sum of the life of R. J. Carter. Nothing came of the discussions with Hastings-Deering (to which the firm was already largely indebted for goods supplied), but early in 1960 arrangements were made with Carapark and General Finance Ltd., a company incorporated in New South Wales, for a loan by that company to the firm of 175,000 pounds. (I will refer to the company as "Carapark"). This sum was in fact advanced, its repayment being secured by certain documents which were executed on 2nd March 1960. In what has been described as the principal security document all three of the brothers were named as parties and described as "borrowers", but the loan was a loan to the firm of Carter Bros., C. H. Carter being made a party only because he was part-owner of some of the assets over which Carapark required security to be given. (at p144)

8. Among the documents executed on 2nd March 1960 was an assignment, subject to a proviso for redemption, of a policy on his own life issued to R. J. Carter on 29th February 1960 by Legal and General Assurance Society Ltd. This policy was issued on a proposal made by R. J. Carter on 17th February 1960. By its terms the Society bound itself to pay "to the proposer or persons deriving title under him the sum assured and other benefits specified in the Schedule". The Schedule provides for two alternative events, one of which must happen. The one is the death of the assured on or after 25th February 1970 (which is called the "fixed date"). In this event the "sum assured" (which is 169,722 pounds) becomes payable. The other is the death of the assured before the fixed date. In this event the Society becomes bound to pay (a) an "income benefit" of 3,093 pounds 12s. 1d. on the first day of each calendar month until the arrival of the fixed date, and (b) on the fixed date the sum assured. There is a provision that the Society will, "at the request of the proposer or persons deriving title under him", pay, in lieu of the "income benefit" mentioned above, an amount calculated by the Society to be the "equivalent cash value" of the "income benefit" as at the date of death. There is an alternative provision for payment of a cash sum calculated in a different manner, but, in the events which have happened, this does not become relevant. (at p145)

9. On 2nd March 1960, in pursuance of s. 87 (1) of the Life Insurance Act 1945-1959 (Cth), a memorandum of transfer of the policy from R. J. Carter to Carapark was indorsed on the policy. The policy was sent to the Society for registration of the transfer under s. 87 (2), but the Society had taken the view that the memorandum was not in registrable form, and the transfer had not been registered at the date of the death of R. J. Carter. (at p145)

10. R. J. Carter died on 26th October 1960. There is no evidence before me as to the manner of his death, but much of what took place before me would be unintelligible except on the tacit assumption that he died at the hands of his brother and partner, M. E. Carter, and there is an affidavit on the file from which it appears that M. E. Carter was indicted for the murder of his brother. He was tried on that charge in January 1961 before Stable J. and a jury. On 20th January the jury returned a verdict of "not guilty on the ground of unsoundness of mind", and he has since been detained in a prison at Brisbane. The acquittal does not, of course, prevent any interested person from maintaining in civil proceedings that M. E. Carter did murder his brother, and in such proceedings the civil, and not the criminal, standard of proof is applicable: Helton v. Allen [1940] HCA 20; (1940) 63 CLR 691 . As will be seen, however, I do not propose in the present proceedings to pronounce upon any claim which involves as an issue the guilt or innocence of M. E. Carter. (at p145)

11. R. J. Carter left a will dated 23rd April 1956, probate of which was on 9th March 1961 granted by the Supreme Court of Queensland to the executors therein named, Messrs. C. W. B. Renouf and R. J. L. Kerr. By this will the testator gave a legacy of 1,000 pounds to his mother. He then directed his executors to hold the sum of 12,000 pounds out of the proceeds of policies on his life upon trust as to one-third for his wife and as to two-thirds for such of his children as should survive him and attain the age of twenty-one years. The residue of his estate he directed to be held in trust as to one-fourth for his brother M. E. Carter, as to one-fourth for his brother C. H. Carter, as to one-sixth for his wife, and as to one-third for such of his children as should survive him and attain the age of twenty-one years. The residue of his estate he directed to be held in trust as to one-fourth for his brother M. E. Carter, as to one-fourth for his brother C. H. Carter, as to one-sixth for his wife, and as to one-third for such of his children as should survive him and attain the age of twenty-one years. (at p146)

12. Since the death of R. J. Carter the business of Carter Bros. has been carried on (presumably with a view to winding up) by Mr. J. P. Cullen, who was general manager in R. J. Carter's lifetime. Mr. Cullen prepared a statement of the assets and liabilities of the firm as at 1st February 1961. This statement shows an excess of liabilities over assets of 259,807 pounds. It would appear from an affidavit of Mr. W. R. Killin, which is on the file, that as at 29th April 1961 the deficiency was approximately 350,000 pounds. (at p146)

13. After the death of R. J. Carter claims to the whole or part of the proceeds of policy No. 919,279 were made to the Society by or on behalf of (1) the executors of the will of R. J. Carter, (2) Carapark, and (3) Carter Bros. In view of these claims the Society on 11th April 1961 paid into this Court a sum of 23,421 pounds 12s. 6d., which sum was the total of the six monthly payments which had up to that date fallen due under the policy. On or shortly after 1st May 1961 the Society paid in a further sum of 3,903 pounds 12s. 1d. Shortly after this the three claimants issued the three summonses mentioned above, and a day was fixed for the hearing of the claims together or in succession at Brisbane. Before that day arrived two things happened. First, all the claimants gave notice of an election under the terms of the policy that the Society should pay a lump sum in lieu of the monthly "income benefit". Secondly, the Society gave notice that it would in certain circumstances claim that a rule of public policy relieved it partially of its obligation to pay under the policy, with the consequence that some part of the sum which it has paid into Court should be paid out to it. (at p146)

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)

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)

16. When the matter came on for hearing before me, Mr. Lucas Q.C. appeared for the executors of the will of R. J. Carter, Mr. Hoare Q.C. for Carapark, and Mr. Mylne for the firm of Carter Bros. I saw no difficulty in Mr. Mylne's appearing for the firm, although the partnership was dissolved by the death of R. J. Carter. The right asserted is a right said to have been vested in the firm before dissolution, and it could, if it exists, be enforced by action in the firm name: cf. In re Wenham; Ex parte Battams (1900) 2 QB 698 . Mr. Riley Q.C. appeared for the Society, and Mr. Pincus for Lionel John Hastings Carter, the eldest son of R. J. Carter and a beneficiary under his will. (at p148)

17. It appeared at a very early stage that the only reason why the Society had not been willing to register the memorandum of transfer of the policy to Carapark was that there appeared over the indorsed memorandum the words "Collateral to the A/c. of R. J., M. E. and C. H. Carter to the extent of 175,000 pounds." The presence of these words had been thought to be contrary to s. 88 of the Act. In fact it would seem that those words were placed on the document in the office of the Commissioner of Stamp Duties and for some purpose of that office. Probably they ought not to be regarded as part of the document at all, but the matter seemed to me to be of no practical importance because, on the one hand, Carapark did not claim to be entitled to be paid out of any fund in Court more than the amount owing to it in respect of its loan to Carter Bros., and, on the other hand, no one denied that Carapark had a first charge on the policy moneys, and no one saw any reason why that amount should not be paid to it forthwith, especially as interest was running at the rate of about 88 pounds per day. Accordingly I made an order (a) that the balance of the whole of the lump sum payable under the policy should be paid into Court by the Society, (b) that there should be paid out to Carapark the amount owing to it with interest to date of payment, and (c) that the costs of Carapark of these proceedings as between solicitor and client should also be paid to it out of the fund in Court. That order has been drawn up and entered, and, so far as (a) and (b) are concerned, acted upon. The total amount paid into Court by the Society, including the seven monthly payments, is 454,734 pounds 15s. 5d., and the amount paid out to Carapark, including interest to date of payment, is 192,186 pounds 18s. 3d. (at p149)

18. On the making of this order Carapark disappeared from the proceedings. I dealt next with the submissions made by Mr. Riley, and, at the end of the argument on these, I said that I would reject them. I made no order, however, at that stage, and it seems clear to me now that it is both more logical and more convenient to deal first with the case made by Mr. Mylne for the firm of Carter Bros. (at p149)

19. What Mr. Mylne sets out to establish is that R. J. Carter had before his death made an effective declaration of trust of the policy (subject, of course, to the rights of Carapark) in favour of the firm, so that his equitable interest therein became partnership property within the meaning of ss. 23 and 42 of The Partnership Act of Queensland and an asset of the partnership within the meaning of s. 48. This claim is contested by Mr. Lucas for the executors. The question thus raised I propose to decide, but I do not propose to decide anything as to what consequences follow from either an affirmative or a negative answer to the question. The matter was argued before me on the assumptions (1) that, if no trust were created by R. J. Carter in his lifetime, the policy moneys were protected from creditors by s. 92 of the Life Insurance Act, but (2) if a trust was created, the section which bears that ill-omened number has no application. I say nothing as to the correctness of either of these assumptions, but I observe that, if it were not for s. 92 of the Life Insurance Act, it would not seem to matter whether R. J. Carter declared a trust or not, for in the absence of that section his interest in the policy would be available to creditors of the firm: see Kendall v. Hamilton (1879) 4 App Cas 504, at pp 516, 517, 538, 539 , and s. 12 of The Partnership Act. In the background lie other questions. These will or may arise because M. E. Carter is both the surviving partner and a beneficiary under R. J. Carter's will, and because of his alleged killing of his brother. But with these questions again I have nothing to do. (at p150)

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)

21. The securities given to Carapark on 2nd March 1960 for the loan of 175,000 pounds included an indenture (Exhibit B1) which has been described as the "principal security". The assets over which security was to be given were variously owned - some by one, some by two, some by all three, of the brothers. The first schedule to the instrument lists the securities in three columns, which are headed respectively "Nature of Document", "Grantee" (which seems clearly to be a mistake for "Grantor") and "Asset over which security is given". The first document listed is a mortgage of life policy issued by Legal and General Assurance Society Ltd., and R. J. Carter is named in the second column as sole grantor. On the same day a separate document described as a "mortgage of life policy" (Exhibit B2) was executed. This document takes the form of a transfer subject to a proviso for redemption. R. J. Carter alone is made a party and described as "the transferor", and R. J. Carter alone executed the document. (at p151)

22. These considerations make it clear, I think, not only that the contract of assurance was a contract between the Society and R. J. Carter alone, but that nothing had been said or done before 2nd March 1960 which could have the effect of giving to any person or persons other than R. J. Carter (apart, of course, from Carapark) any legal or equitable interest in that contract. Evidence was given by Mr. Cullen, subject to objection, that in June 1959, when negotiations for a large loan were on foot between R. J. Carter and Hastings Deering, a letter (Exhibit C8) was sent by Carter Bros. to Hastings Deering with a memorandum prepared at R. J. Carter's direction. This memorandum was headed "Insurance", and it read : - "It is proposed to put in force the following life insurance policies to cover death of key personnel - R. J. Carter 425,000 pounds, M. E. Carter 150,000 pounds, J. P. Cullen 50,000 pounds - Paid for by Carter Bros. and assigned to Carter Bros. Existing life policies to cover family needs to be distinct from Carter Bros." I am not satisfied that this "memorandum" was enclosed with the letter. In any case I do not think that it goes to prove anything that is relevant, and I regard it as inadmissible. Mr. Mylne's real case rests on a number of statements made by R. J. Carter after the policy in question had come into existence, and these it is now necessary to consider. (at p151)

23. Mr. R. L. George deposed to a conversation with R. J. Carter early in March 1960. He remarked that, if "anything happened" to R. J. Carter, the partnership would be in trouble, because he was the strong man in it. To this R. J. Carter replied that he had provided for that event by taking out a large insurance policy, which would be there to protect the interests of the partnership if anything happened to him. Mr. George said that "about four" later conversations took place which were "on similar lines". (at p151)

24. Mr. J. P. Cullen, the manager of the business, said that in February 1960 R. J. Carter told him that he intended to make a proposal for assurance for an amount much larger than the loan he hoped to obtain, so that, in the event of anything happening to him, the business could be carried on and creditors paid. A statement to the same effect was made to Mr. Cullen early in March 1960 and on other occasions, and in August 1960 he told Mr. Cullen to tell the manager of the Bank of New South Wales, who was being pressed to increase the firm's overdraft limit, that "he had a large insurance policy to cover the firm". (at p152)

25. Mr. Cullen also gave evidence with regard to the payment of premiums, and instructions given by R. J. Carter in connexion therewith. As I understand the matter, what happened was this. The first premium was paid on 17th February 1960 by a cheque drawn by R. J. Carter on a bank account in the Bank of New South Wales known as the "Carter Bros. Manager's expense account". This was a partnership account, but on the same day R. J. Carter signed a bank order (Exhibit C10) relating to the payment of the premiums due in March and subsequent months. The order directs the Bank of New South Wales at Bundaberg to "please debit my account" with the amounts of the monthly premiums, and pay those amounts to the credit of the Society in a branch of the Australia and New Zealand Bank. Mr. Cullen says that he noticed the butt of the cheque drawn by R. J. Carter for payment of the first premium in February, and asked him how the premiums were to be charged. He replied : " Oh, they are the firm's responsibility : the policy is for the business." Mr. Cullen then instructed the bank accordingly, and a clerk in the bank wrote over the signature of R. J. Carter in block letters the words "Carter Bros. main A/c." After that the premiums were paid by the bank on the bank order, and were debited to a bank account of the firm known as the main account. (at p152)

26. It is a legitimate comment on Mr. Cullen's evidence to observe that, when after R. J. Carter's death he drew up the statement of assets and liabilities, to which reference has been made, he did not list the policy as an asset of Carter Bros. (at p152)

27. A number of other witnesses gave evidence of statements made by R. J. Carter at various times with regard to the policy. Mr. I. M. Grant said that, in response to a reference to the risks he ran in travelling by air, R. J. Carter said : - "I would be the richest dead man in Queensland. I am insured for over half a million, and that would take care of you and all the other creditors." Mr. C. B. Solomon said that in March 1960, in the course of a conversation in the bar of a hotel, R. J. Carter said that he was not paying the premiums, but his partnership was, and that they were for the purposes of the partnership. He also said that on several occasions R. J. Carter remarked that his family were already well taken care of, and he had a policy of half a million pounds, which would cover any business liabilities he might have. Mr. S. A. Wood, a creditor of Carter Bros., said that R. J. Carter had told him that he had taken out a policy for half a million pounds for Carter Bros. to ensure that his (Wood's) money would be paid if anything happened to him. Mr. S. N. Whittaker, manager of the Bundaberg branch of the Bank of New South Wales, said that in August 1960 R. J. Carter told him that the bank need have no fears, because he had a policy of 500,000 pounds, which would satisfy all creditors. Mr. J. C. Mogg gave evidence of a similar statement. Mr. C. H. Carter said that on one occasion his brother, referring to the policy, had said to him : - "I've more or less got to take it out, borrowing this 175,000 pounds from Carapark. If anything happens to me, the money will go to pay Carapark out, and the balance will go to square things up with Carter Bros." A Mr. E. J. Byrne also gave evidence, but it amounted, I think, to nothing. (at p153)

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)

29. It would be very natural that R. J. Carter should think, the policy having been issued to him and being his property, that the proceeds would on his death be available, after discharging the debt due to Carapark, to pay in whole or in part the debts of the partnership of which he was a member. This would indeed have been the position if it had not been for s. 92 of the Life Insurance Act, and it is by no means improbable that he was not aware of the provisions of that section. At least it cannot be assumed that he knew of it. Nothing that he is reported to have said refers to, or suggests, any definite act on his part which would have the effect of vesting the equity in the policy in any person other than himself. Everything that he is reported to have said is consistent with a mistaken belief on his part that he has done everything necessary to provide a fund out of which the debts of the partnership may be paid. It seems to me impossible to hold that any disposition by R. J. Carter of his interest in the policy is established by the evidence. (at p154)

30. Two points made must be specifically mentioned. First, there is some evidence that R. J. Carter drew a distinction between the policy in question, which it cannot be denied that he intended for the benefit of the firm or the firm's creditors, and some much smaller life policies, which he intended for the benefit of his family. But I do not think that this evidence, assuming it to be admissible, carries the matter any further. It is to be noted that he had by his will disposed specifically in favour of members of his family of the proceeds of life policies amounting to 12,000 pounds. Secondly, much reliance was placed on the fact that the premiums on the policy in question were paid out of partnership moneys. But this fact is, I think, neutral in all the circumstances. There is no doubt that R. J. Carter intended the policy for the benefit of the firm, and it was thus natural enough that the premiums should be paid by the firm. The whole point of the matter, as I see it, is that an intention to benefit is one thing and the creation of a beneficial interest is another thing. Intention to benefit is not enough to create a trust : cf. Jones v. Lock (1865) LR 1 Ch App 25 . (at p154)

31. It only remains to refer briefly to the submissions made by Mr. Riley on behalf of the Society. As I have already mentioned, I ruled on these during the hearing, though I refrained from making any order in relation thereto. (at p155)

32. I felt then, as I feel now, a good deal of difficulty as to whether it is open to the Society, having paid into Court the full amount of the policy moneys, to maintain that it was not liable under the policy to pay that full amount to anybody. It is true that the greater part of that amount was paid into Court not of the Society's own motion but in pursuance of an order made by me, but that order was made with the consent of the Society, and both under s. 89 and under s. 105 payment into Court operates as a discharge of the Society's liability. Can the Society maintain that it is entitled to have paid out to it a part of the sum which it has paid in - unless perhaps in circumstances which would have supported an action for money had and received if the money had been paid not into Court but to some claimant under the policy ? However, I need not pursue the matter further, because I am of opinion that the Society, if it had not made the payment into Court, could not have escaped liability to pay the full amount for which R. J. Carter's life was insured by it. (at p155)

33. Mr. Riley's argument may, I think, be shortly stated thus. If the partnership of Carter Bros. is beneficially entitled to the balance of the policy moneys, that means that M. E. Carter has a beneficial interest therein. But it can be established that M. E. Carter feloniously killed R. J. Carter. It is a rule of law, founded on public policy, that a person cannot derive a benefit from the commission of a crime by him. Therefore, to the extent of M. E. Carter's beneficial interest in the policy moneys, the Society is not liable under the policy. Mr. Riley submitted that, if it were proved that M. E. Carter killed R. J. Carter, there would be a presumption that the killing was felonious, but this is, of course, for present purposes a side issue. (at p155)

34. It is seen that the argument (which seems to involve difficulties in the matter of quantification) depends on the establishment of a trust of the policy for Carter Bros. Since I have held that no such trust is established, the whole foundation of the argument is taken away. But, even if a trust were established, I should still be of opinion that the argument could not succeed, and I will, for convenience, repeat here the reasons which I gave for this view at the hearing. (at p155)

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)

36. From this decision the firm of "Carter Bros." appealed to the Full Court of the High Court. Prior to the appeal coming on for hearing a sequestration order was made against the surviving member of the firm Max Ellis Carter, and an order was made for the administration in bankruptcy of the deceased partner Raymond John Carter. Subsequently a trustee was appointed of the joint and separate property of the bankrupt partner and of the deceased's estate. When the appeal came on for hearing an application was made for an amendment of the proceedings by substituting Max Ellis Carter and his trustees in bankruptcy as appellants in place of "Carter Bros." (at p156)

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)

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)

THE COURT delivered the following written judgment:-

On 29th February 1960 the Legal and General Assurance Society Limited (which on life insurance business in Australia, issued upon a proposal made to it by one Raymond John Carter a policy of life assurance in respect of the life of the proposer. The Society undertook by the policy to pay to the proposer or persons deriving title under him, in the event of the proposer's dying before 25th February 1970, an income benefit of 3,093 pounds 12s. 1d. a month until the arrival of that date and 169,722 pounds on that date or, at the request of the persons deriving title under the proposal, a lump sum calculated in a specified manner. The proposer died on 26th October 1960. The Society thereafter received three claims in respect of the policy moneys. One claim was by a company called Carapark and General Finance Limited (herein referred to as Carapark) which claimed to be entitled to be paid out of the moneys a sum owing to it as mortgagee of the policy. Another was by the executors of the will of the deceased, alleging that the policy belonged beneficially to the deceased at his death. The third, which was in the name of "Carter Bros.", the firm name of a partnership of which the members up to the death of the deceased were the deceased himself and a brother of his named Max Ellis Carter, was that the policy had been an asset of the partnership. With these competing claims before it, the Society paid into this Court amounts totalling 454,734 pounds 15s. 5d. The proposer's executors had exercised the right under the policy to request payment of a lump sum, and no one denies either that their exercise of it was effective or that the total sum paid into Court was the full amount payable according to the terms of the policy. (at p159)

2. The payment into Court was made by reference to the provisions of s. 105 of the Life Insurance Act 1945-1959 (Cth), a section which enables a company to pay into Court policy moneys for which, in its opinion, no sufficient discharge can otherwise be obtained, and provides that the moneys shall, subject to the Rules of Court, be dealt with according to the order of the Court. The payment in may perhaps be more appropriately regarded as authorized by s. 89, which enables policy moneys to be paid into Court where a company has received express notice in writing of any trust, right, equity or interest of any person, and provides that the moneys shall be paid out to such person as the Court or any Justice of the Court orders. But we need not here dwell upon the difference between the sections. Under each the Court has, in our opinion, a clear jurisdiction to order that the moneys in question in this case be paid out to such person or persons and upon such terms as it considers appropriate in the circumstances, and to decide between competing claims in so far as to do so may be incidental to a due exercise of that jurisdiction. (at p160)

3. The jurisdiction of the Court was invoked by three summonses. One was issued by Carapark, and was disposed of by two orders entitling Carapark to be paid its mortgage debt, together with interest and costs, out of the moneys in Court. From neither order is there any appeal. Another summons was issued by the present respondents, as executors of the will of the deceased proposer Raymond John Carter, and the third was issued in the name of "Carter Bros.". These two summonses came on to be heard before Fullagar J., who reserved judgment. He prepared reasons for judgment, but he died without having given his decision. Subsequently the Chief Justice, by agreement of the parties and without a further hearing, made an order giving effect to the judgment which Fullagar J. had intended to deliver, doing so on the footing that the parties should have the same rights of appeal as if Fullagar J. had made the order himself. The order declared that the respondents, the executors of R. J. Carter's will, were entitled to be paid the policy moneys, subject to the prior operation or effect of the orders which had been made in favour of Carapark and subject to certain orders as to costs. No order for payment out was made, but the respondents' summons was adjourned and the summons of Carter Bros. was dismissed. (at p160)

4. From that order the present appeal is brought. It was begun in the name of "Carter Bros." Before it came to a hearing two events occurred. A sequestration order was made against the surviving member of the firm, Max Ellis Carter, and an order was made for the administration in bankruptcy of the estate of the deceased partner R. J. Carter. Subsequently a trustee was appointed of the joint and separate property of the bankrupt and of the deceased's estate. When the appeal came on for hearing an application was made for an amendment of the proceedings by substituting Max Ellis Carter and his trustee in bankruptcy as appellants in place of "Carter Bros.", and an order to that effect will be made. Thus the appeal has proceeded between, on the one hand, parties claiming to be interested to contend that (subject to Carapark's mortgage) the policy was an asset of the partnership and, on the other hand, parties to whose interest it is to contend that the policy was the beneficial property of the deceased proposer only. Both sides agree that it is desirable to order payment out of the moneys in Court into the hands of the respondent executors, but whether to be treated as assets of the estate of the deceased partner or to be treated as assets of the former partnership is the question now to be decided. In whichever way we decide it, there will remain for determination consequential questions upon which the ultimate destination of the moneys will depend ; but the resolution of those questions is not within the jurisdiction of the Court under the Life Insurance Act. (at p161)

5. There were three Carter brothers, but one, whose name was Colin Henry Carter, was not a member of the partnership. R. J. Carter and M. E. Carter were the only partners. They were partners in equal shares. No partnership deed or instrument existed, and there is nothing to suggest that any special terms had ever been agreed upon between the partners which could affect the present question in any way. (at p161)

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)

7. It appears that before Fullagar J. the case was put as if it depended entirely upon the question whether R. J. Carter in his lifetime ever declared himself a trustee of the policy for the partnership. The contention that he did so was supported by reference to the documents above referred to and by reference also to certain statements which, according to witnesses, he made in his lifetime and to the fact that the premiums in respect of the policy were paid out of partnership moneys. On this material the learned Judge was satisfied that R. J. Carter intended the policy to be for the benefit of the partnership, but nevertheless held that no trust was ever declared. "The whole point of the matter, as I see it," his Honour said, "is that an intention to benefit is one thing and the creation of a beneficial interest is another thing. Intention to benefit is not enough to create a trust : cf. Jones v. Lock (1865) LR 1 Ch App 25 " (1961) 111 CLR, at p 154 . That this is correct as far as it goes there can be no doubt. But it answers only the contention that the beneficial title to the policy passed at some point of time from R. J. Carter to the partnership. On the appeal, a different contention was advanced. It was submitted for the appellants that in view of the payment of the premiums out of partnership moneys a decision that there was never any declaration of trust by R. J. Carter is not enough to dispose of the partnership's claim to the proceeds of the policy : there remains a question whether the policy was not impressed with a trust for the partnership from the beginning, so that the beneficial interest in it did not vest even momentarily in R. J. Carter and that accordingly its character as partnership property does not depend on proof of any dispositive act by him. (at p163)

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)

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)

10. In the light of these facts it is beyond question that the premiums must be regarded as having been paid out of moneys of the partnership ; and it is equally clear that the employment of partnership moneys for the purpose was not pursuant to any intention of the partners to confer any benefit upon R. J. Carter otherwise than as a member of the firm. The prima facie inference therefore is that R. J. Carter acquired his rights under the policy on account of the firm and always held them for its benefit. Consideration of the evidence as to the manner in which he conducted himself in relation to the policy, far from weakening the inference, substantially strengthens it. The main points may be mentioned briefly. (at p165)

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)

12. On a number of other occasions R. J. Carter made observations which have been relied upon as relevant admissions but upon which no great weight can fairly be placed. They went no further than conceding that moneys becoming payable by the Society under the policy would enable the firm's creditors to be paid ; and standing by themselves they might be considered of a kind which might have been made even if the policy had not been regarded as partnership property. Perhaps the most important point that emerges from them when they are considered in the light of the whole course of events is that R. J. Carter, having held the policy out as partnership property in the statements to his co-partner, to Cullen and to others which have been mentioned above, at no time referred to the policy as if it were his rather than the partnership's property. (at p167)

13. Two matters should be mentioned as having been stressed for the respondents. One is that Cullen, in a statement of the firm's assets and liabilities which he prepared in February 1961, omitted the policy altogether. Naturally this omission was used as throwing doubt upon his evidence, the whole tenor of which was that the policy was partnership property. His explanation, however, was that the statement was prepared for presentation to the committee of creditors, that they were aware of the existence of the policy, and that he omitted to show it because he knew it would probably be the subject of litigation. "I felt", he said, "that was outside my jurisdiction." Although, as Fullagar J. said, the comment that is made upon Cullen's evidence is legitimate, there is not enough in it to detract from the weight of the other considerations that have been referred to. (at p167)

14. The final matter to be mentioned is a submission based upon the Life Assurance Act, 1774, 14 Geo. III c. 48. It is provided in s. 2 of that Act that it shall not be lawful to make any policy on the life of any person without inserting in the policy the person's name for whose use, benefit, or on whose account, such policy is so made. The policy in the present case made no mention of the partnership ; therefore, it is said, to hold that it was taken out for the partnership is to hold that the transaction was illegal and void, and for that reason there should not be attributed to the partners any intention other than that the policy should belong beneficially to R. J. Carter alone. A short answer is that the Act, where it applies, does no more than make a policy void as between the insurance company and the insured, and that if a company, choosing not to avail itself of the defence, pays under the policy, the question who is entitled to the money must be determined as if the statute did not exist : see Worthington v. Curtis (1875) 1 Ch D 419, at p 424 ; Attorney-General v. Murray (1904) 1 KB 165, at p 172 . (at p167)

15. It seems to us the proper conclusion from all these considerations that the money now in Court has come from an employment by R. J. Carter of moneys of the partnership, made by him for the purposes of the partnership and in exercise of the authority that he had as "Governing Director", and made by him with the knowledge of his co-partner and upon the understanding between them that the policy was a partnership asset. We are, therefore, of opinion that the money to be paid out in accordance with the consent of the parties to the respondents will be in their hands impressed with a trust for application as partnership property, and will not be an asset of the testator's estate. A declaration to that effect should be made, and to that end the appeal must be allowed. (at p168)

Order that the proceedings be amended by substituting Max Ellis Carter and the Trustee of the property of Max Ellis Carter a bankrupt as the appellants in lieu of Carter Bros.

Appeal allowed. Order appealed from set aside, except as regards costs. In lieu thereof, order as follows : 1. Declare that subject to the prior operation and effect of the orders of 22nd and 23rd May 1961 made at Brisbane upon the summons dated 2nd May 1961 and issued on behalf of Carapark and General Finance Limited and subject to the orders for costs contained respectively in the order appealed from and in this order the moneys paid into this Court by Legal and General Assurance Society Limited under Policy No. 919,279 on the life of Raymond John Carter are assets of the former partnership of the said Raymond John Carter and the said Max Ellis Carter.

2. Order that subject as aforesaid the said moneys be paid out to the respondents, to be held and applied in accordance with law as being assets of the said former partnership.

3. Order that the costs of all parties of this appeal taxed as between solicitor and client be paid out of the said moneys.