Wicks v Bennett [1921] HCA 57

[1921] HCA 57

High Court of Australia|1921-07-01|Before: Rich JJ, Rich J, Higgins J, Per Higgins J, Harvey J, John Erridge J

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Source facts

Court

High Court of Australia

Decision date

1921-07-01

Before

Rich JJ, Rich J, Higgins J, Per Higgins J, Harvey J

Source

Original judgment source is linked above.

Judgment (108 paragraphs)

[1]

Rinance Cov L1g1999) 1 80 HIGH COURT (HIGH COURT OF AUSTRALIA.] WICKS AND ANOTHER . . . ._ . APPELLANTS; PLAINTIFFS, AND BENNETT AND OTHERS 3 2 ¥ . ResponpEnts DEFENDANTS, ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES. Vendor and Purchaser - Sale of land - Transfer from registered proprietor - Trans. H.C.or A. __ feree becoming registered proprietor - Fraud - Knowledge of unregistered i 1921. - Remedy of person having unregistered interest - Remedy against Sw Partnership - Accounts of profits of partner - Secret profits - No claim for rel ief SypNey, - Real Property Act 1900 (N.S.W.) (No. 25), secs. 42, 43. Nov. 14-17; a aa Sec. 42 of the Real Property Act 1900 (N.S.W.) provides that "Notwith- ae standing the existence in any other person of any estate or interest, whether nox c, derived by grant from the Crown or otherwise, which but for this Act mi Rich JJ. be held to be paramount or to have priority, the registered proprietor of la

[2]

in case of fraud, hold the same, subject to such encumbrances, liens, estates, or interests as may be notified on the folium of the register book constiti by the grant or certificate of title of such land, but absolutely free from all other encumbrances, liens, estates or interests whatsoever" &c. Sec. provides that ' Exceptin the case of fraud no person contracting or dealing w or taking or proposing to take a transfer from the registered proprietor of an} registered estate or interest shall . . . be affected by notice direct o constructive of any trust or unregistered interest, any rule of law or equit to the contrary notwithstanding; and the knowledge that any such tru or unregistered interest is in existence shall not of itself be imputed as fraud.

[59]

Rich J. 42 and 43 of the Real Property Act 1900 and that the defendant Nellie Diplock, as executrix of Diplock, held the land subject to the right of the partnership to a lease in accordance with the agreement with Moore. In our opinion, the plaintiffs have failed to establish that the transaction between Bennett and Diplock was merely colourable or a sham. Bennett not having been called as a witness and Diplock being dead, the facts relating to this transaction can - only be gathered from the documents and from the scanty evidence given on behalf of the plaintiffs. From the documents it appears - (1) that the transfer purported to be in consideration of the payment of £1,100 by Diplock to Bennett, (2) that £1,100 was actually paid by Diplock to Bennett in connection with the transaction, and (3) that Diplock by demanding rent for the land and by taking proceed- ings to eject the plaintiffs asserted his title to the land. This evidence going to show that Diplock was a real purchaser is corroborated by the conversation between Wicks and Diplock deposed to by the former. Wicks says that in this conversation, which took place shortly before the date of the transfer, Diplock volunteered the statement that he was thinking about negotiating for this piece of land. Mr. Lozton relied on the letter dated 14th March 1919, from Cameron, as agent for Bennett, to the plaintiff Nicholls, as incon- sistent with a genuine sale of the land by Bennett to Diplock in 1918. We do not see how this letter could be used as evidence against Diplock, but, if it were, we do not think it necessarily supports the case made by the plaintiffs. Another circumstance relied on for the plaintiffs is that the price given by Diplock (£1,100) was grossly inadequate in view of the fact that the sale to him of this land placed the partnership, in which Bennett had a substantial interest, at his mercy. It is difficult to understand why Bennett was willing to sell at this price, and the fact that he did so affords ground for suspicion as to the genuine nature of the transaction, but the fact of the sale being at a price likely to be unprofitable to Bennett is not

[88]

Moore had sub-let to the partnership, and by the double transaction _ Bennett put himself in a position to turn his partners out of the picture show, which they had erected at much expense, unless they submitted to his exorbitant demands for rent. In my opinion, there are sufficient allegations in the statement of claim, and sufficient facts proved in the evidence, to justify an order directing Bennett to account to the partnership for the profits which he made by the transaction, on the principle of Keech v. Sandford (1) and its allied cases. ; This aspect of the case was not put by plaintiffs' counsel to Harvey J. Even the prayer in the statement of claim is unsatis- factory. It is true that there is a prayer, in the alternative (par. 4), for a declaration that Bennett purchased the land as trustee for the plaintiffs and himself, and this declaration seems to have been sought merely as a basis for a declaration that Diplock "now" holds the land as trustee for Bennett and the plaintiffs. But under the prayer for "such further or other relief as the nature of the case may require," it is, in my opinion, the duty of the Court to grant such relief against Bennett as the position justifies secundum allegata & probata. q The statement of claim is very lengthy ; but there may be extracted : from it the allegations that Bennett purchased gradually all the interest of Johnson, one of the partners in the partnership ; that, knowing of the agreement of Moore to lease the land to the partner- ship for twelve years from 1914, he purchased the fee simple of the land and procured the surrender of Moore's lease from the brewing company ; that this double transaction was kept secret by Bennett from his co-partners; that when the plaintiffs (his co-partners) learned of it they offered to pay to Bennett their proportionate shares of the purchase-money if he would treat them as co-proprietors ; that he refused ; that Bennett and Johnson got the brewing company to sell by falsely representing to the brewing company that he was buying the land on behalf of the partnership ; and that Bennett and Johnson wrongfully conspired to get the land into Bennett's name, and to get Moore's lease surrendered in order to deprive the plain- tiffs of their rights under the lease from Moore. So far as to the (1) 2 Wh. & Tad. L.C., 7th ed., 693.

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first to approach the Broken Hill manager for the brewing company, Bryant, with an inquiry whether the company would sell the fee simple ; that Bryant asked Wicks was it not for the syndicate, and Wicks said yes; that Bryant favoured the idea, and talked of the price, insisting on Moore's concurrence ;_ that Wicks told Johnson and Cameron (Bennett's agent) of this conversation with Bryant ; that the company, through Bryant, consented to sell to Johnson, who was one of the partners at the time, and actually carrying on the picture show as sub-lessee from the partners, and that it was by Johnson's direction the transfer was made to Bennett who (as Johnson said) was finding the money. The company did not sell or mean to sell to Bennett at all - either independently of the partner- ship or otherwise. Then, when Bennett had secured the fee simple and got rid of Moore's lease, and when the time was ripe, on 30th April 1918, he sent a letter to the plaintiffs notifying them that he would require £12 per week from the other three partners, instead of the £2 which they had been paying. It appears also that, on receiving this notice, the plaintiffs spoke to Bennett and to Cameron, bis agent, of the unfairness of the transaction, and offered to pay their proportionate shares of the purchase-money if Bennett would make them co-proprietors. All these statements are emphasized by the fact that Bennett and Johnson were actually present in Court at the trial, and that they did not appear in the witness-box to deny or qualify the evidence given by the plaintiffs as to their conduct - cenduct which was, at the least, clearly inconsistent with that uberrima fides which the law requires as between partners. Under these circumstances, I am of opinion that on the pleadings and on the proofs as they stand the plaintiffs are entitled to have Bennett treated as a constructive trustee for the partnership of the fee simple estate purchased by him from the brewing company, and now, as the fee simple estate has been sold to a stranger, that the plaintiffs are entitled to share in their due proportions as partners in the net profits made by Bennett. This is in pursuance of the equitable principle laid down in Keech v. Sandford (1) - a principle which has often been applied as between partners (see Clegg v. (1) 2 Wh. & Tud. L.C., 7th ed., 693.