Wilson v Carmichael [1904] HCA 45

Solicitor for applicant, #. Pugh, by R. P. Hickson.

ON APPEAL FROM THE SUPREME COURT OF 4 NEW SOUTH WALES.

nding up - Stay of common law action - Appeal - Question 1904. ¢ fact - Power of High Court to make such order aa the Supreme Court ead ~ have made - Variation of decree by consent, Syoxey, Atk sill Dai6, Tnan appeal from the decision of a Judge of first instance on a questa

turns on the credibility of witnesses, who have beet

ae subjected to cross-examination, and the Judge, having had the opportunity CeriC2, Seeing and hearing the witnesses, has deliberately come to a conclusion as t# Oconee, which side

has given the correct version, the Court of Appeal will not disturb

'unless itis clearly satisfied that the finding was wrong. 7

ppeal consent, the High Court may Aecree appealed from so

seks, and make such an order as would, if the parties had consented, have 'aa ade by the Court whose judgment is appealed from,

'The appellant and respondent entered into a partnership for the purpose of cqning certain agencies and flonting @ company to take them over and faryonthe businesses. During the existence of the partnership the appellant 'Sejeadvances of money to the respondent for partnership purposes. The trap wes foated, and theappellant and respondent as vendors, transferred fait the varius agencies in return for « large number of shares in the com- puns. 'The appellant shortly afterwards brought an action at common law to Feover from the respondent certain sums which he alleged to be due to him

• 'ealalance on accounts stated between them, for money had and received by «the respondent to his use, the transactions out of which the claim arose Ieingprind facie in respect of matters within the partnership agreement,

'dd that the respondent was entitled to have the partnership wound up snd accounts taken, and to an injunction restraining the appéllant from pro-

ceeding with the common law action. Desree of A. H. Simpson, Chief Judge in Equity, 15th September, 1904, 'aried by consent, and affirmed as varied.

'Apeat from a decision of A. H. Simpson, Chief Judge in "The appellant and respondent had for some time been co- operating in an endeavour to float a company in Australia for the an American

~ purpose of acquiring and carrying on the ageney of " prpe-manufacturing company and other agencies. For the pur- pssof the undertaking the appellant from time to time advanced siderable sums of money to the respondent, who devoted the e of his time towards the work of securing the agencies and

rin the name of the respondent. Some differences arose meen the parties, and the appellant brought an action at com- law against the respondent claiming a considerable sum for had and received by the respondent to the use of the appellant. The respondent then instituted a suit in Equity to it declared that he and the appellant were in partnership,

aN injunction restraining the prosecution by the appellant of 'action atlaw. 'The appellant then brought a ross suit to have it

the company, and for a division. The suits were consolidated an} on 15th September, 1904, Simpson Chief Judge in Equity dismisy the appellant's suit with costs. By the decree it was declared that the appellant and respondent were partners in equal shana, and were equally liable to contribute to capital, and that the 6,69 shares were an asset of the partnership, and that respondent was entitled to receive out of the assets a salary at the rate of £8 per week between certain dates, and it was ordered that the matter de referred to the Master for the taking of an account, and that the appellant be restrained until further order from proceeding with the action at law, that a receiver of the dividends from the 6,660 shares in the company be appointed, the respondent under taking not to vote in respect of the shares until further order, the further costs being reserved, with liberty to all parties to apply. The facts are sufficiently stated in the judgment.

Dr. Cullen and Lorton, for the appellant. The Judge was wrong in finding that on the evidence there was a partnership.

[Gnirrrra C.J. - Was not it a question of fact depending almost wholly upon verbal evidence. Unless you can show that the finding is wholly inconsistent with the documentary evidence, this Court, sitting as a Court of Appeal, will not disturb it. 'The credibility of the witnesses was purely a question for the Judge] _

Assuming that the Judge was unable to rely on the verbal evi dence of the parties, and that they cancelled one another, His Honor drew wrong conclusions from certain letters. [They then ad- dressed themselves to the documentary evidence and referred to Pooley v. Driver (1); Lindley on Partnership, 6th ed., p. 18) Hamilton v. Smith (2); Wyld v. Hopkins (3); Southampton Dock Co.v. Southampton Harbour and Pier Bourd (4); Venning v. Leckie (5); French v. Styring (6); South-Eastern Railway (0. v. Brogden (7).]

Gordon K.©. (with him Rich) for the respondent, were not ealled upon to argue the point as to the existence of a partnership.

(1) 5h. Da, 4 (4) LR. 4, 2) 5Jur., Ns (5) 1awaete 2 (3) 15 Me W., 517 (6) 26 LJ., C.P., 181.

OLR] Ifthere was a partnership, dent was entitled to an account, and to have the common

ings restrained : Southampton Dock Oo. v. Southamp-

'pore convenient. : (He was stopped on that point.) (GrueriTH CJ. - A question arises on the evidence whether the

Iuiity of Carmichael was not taken over by the company, and 'ylether, therefore, an account taken in their absence would not futile) ~The evidence negatives that, and even if it did not, that was a "pin that should have been raised by the appellant in his plead- & Tt was assumed in the Court below that the taking of eonnts would result in a liability on the part of either the tppallmt or the respondent. 'The appellant should have asked to mend before judgment, if he wished to have the company joined ; ~ jwcanot take advantage of the point now: Borough of Randwick "s Ausralian Cities Investment Corporation (2). It would be sea of novation, and an answer to either a common law action orasuit in Equity: Pollock on Contracts, 7th ed., p. 204. There

• isnoevidence of the consent of the company to take over the
• Tinbility. As to the appellant's suit for division, the Judge was right in " onlering that the shares, as partnership property, should remain _ in statu quo until after the taking of accounts. The respondent _ isprepared to consent to an order by this Court that the shares _ bedivided for the purpose of enabling the appellant to vote, but

: 'ot so as to allow him to dispose of them, and defeat the respond- nts lien,

Dr. Cullen in reply. The point as to novation is open to the appellant now.

There are no facts alleged in the pleadings which show that the tepondent has any lien on the shares. 'The statement of claim 1egatives it,

Pal appellant will consent to a variation of the order so as to 4 itecta transfer of the serip to him, to be placed with a receiver subject to the declaration of a lien.

Gnirrita CJ. 'This is an appeal from the Chief Judge j Equity, turning almost entirely upon questions of fact. learned Judge below had the advantage of hearing the who gave their evidence orally, and the evidence of another wi ness who may be regarded as an independent witness, and whom the Judge regarded as an accurate witness and a witness of truth, Weighing the evidence of these parties, he arrived at the eondla: sion that there was in point of fact an actual partnership subsist ing between the appellant and the respondent during the period in question. An appeal is made to us on the ground that the finding is erroneous in point of fact. In a case where a Judge of first instance has had the opportunity of seeing the witnesse, where it turns on the matter of credibility, where they have been cross-examined, and where he has deliberately come to a conclusion as to which side has given the correct version, it is very difficult to induce a Court of Appeal to differ from the decision of the Judge of first instance. Apart from this rule, in the present ease I think it would be very hard to differ from him. If the leamnel Judge had come to any other conclusion T think we should have had great difficulty in agreeing with him.

The appellant contends that there never was a partnership between him and respondent. It has been well said that it is better to rely upon contemporary writings relating to any under- standing or agreement than upon the accuracy of memory of & person verbally recalling it, especially where the feelings of the persons have been heated by controversy. We find that in February, 1902, a company was incorporated expressly for the purpose of taking over the business alleged by the respondent to have been carried on by the appellant and the respondent. 'The appellant's case is that there never was a business, yet in February, 1902, a company was formed for the purpose of taking it over and of paying for it with 6,660 shares fully paid-up in a joint stock company. This is an agreement which is signed by both the parties, appellant and respondent being described in it as "vendors."

The agreement rans: - 'The vendors shall sell and the com pany after incorporation shall purchase -

Firstly, the benefits and advantages of the said agency (that

is the agency ©! which the vendors had acquired) ; eondly, all the plant, machinery and office furniture acquit

• 'Thirdly, all the book debts due and other debts due to the endors in connection with the said business, and the

fall benefit of all securities for such debts; Fourthly, the full benetit of all pending contracts and en- gagements to which the vendors are or may be entitled jn connection with the said business ; _ Fifthly, all eash in hand at the bank and all bills and notes of the vendors in connection with the said business ; Sixthly, all other property which the vendors are entitled to 4 in connection with the said business." "And, in face of that, we are asked to believe by one of the signatories to that document that there never was any business, andthat the whole transaction was illusory, that he had nothing to 'dowith the concern, but only lent money to the other party. That 'may be true, but in face of such a document it would be hard to sgept the story; and, after the learned Judge, having heard the 'evidence, has come to the conclusion that the facts set out in the document are substantially true, it is almost hopeless to ask a Court of Appeal to reverse it. If, then, there was a partnership, dither party is entitled to have the accounts of the partnership taken,and the right continues until an end is put to it by release, "irbysettled accounts, or by the lapse of such time as may induce od Court to refuse to interfere. I do not know of any other 'ansyer, and none of these things are shown in the present case. 'The deeree declaring a partnership and directing a partnership ount to be taken is clearly right. One of the incidental results

One matter may be referred to which the learned Judge has entioned particularly. One term of the partnership was the respondent should be entitled to be credited with a salary 'tt 88 per week between specified dates; and, at one part of

red by the vendors in connection with the said Onion.

the argument, we had some difficulty in understanding how agreement of that kind could be held to be continued after business of the partnership had been transferred to the com; and when the partnership no longer existed except for the

e of being wound up. But the circumstances under which; company was formed must be looked at, its object being really take over the business of a partnership. It had no assets, capital, no means of carrying on its business, and, in order to started, it had to get the assistance of Messrs. Dalton Bros, who stipulated that until it was a paying concern the remunerationgf the managing director, the respondent, should be arranged be tween him and the appellant. Under the circumstances there is nothing absurd in supposing that the appellant, who came into the business without contributing anything, should agree that his co-partner should be credited with a salary of similar amount to

that which he himself received. That difficulty is therefore re moved.

'The agreement for the formation of the company, provided that as part of the consideration for the transfer of the going concem 6,660 shares should be allotted to the vendors or their nominees, The provision was not that they should be allotted to the vendors severally, that is, 3,330 each. It is apparent, therefore, that under that agreement the shares were to be held by both sub ject to the terms of the old partnership, and not separately by the individual members of it. Therefore it seems difficult to come to any other conclusion than that they were partnership assets 'The respondent brought the first suit. It was the usual part nership suit claiming a stay of proceedings, and the appellant brought a cross suit claiming a division of the 6,660 shares.

'The two suits were heard together, and it appeared that the 6,660 shares are partnership assets, each partner accordingly being entitled to a lien on the partnership property for the balance due to him after the taking of the partnership accounts. It would be unnecessary, if that balance would in any event be a very small one, to make an order that the whole partnership property should be subject to the lien. The learned Judge below made 00

order on that point exeept by the appointment of a receiver of the shares.

'On theappeal before us it appears that the whole of the decision H.C. or A. othe learned Judge was quite right, and the appeal consequently 1

fails but, as the respondent's counsel has offered to consent to a wWisoy on of the deeree which will give the appellant something e wants, and the appellant is willing to accept it, and as elave jurisdiction to make any order which the Court below nist have made, and there can be no objection to our making it 'yconsent now, we therefore order, by consent, that the decree 'je varied by omitting the order for the appointment of a receiver lends and of the 6,660 shares, and substituting a direction the parties shall severally execute a proper transfer each of shares to the other party, with a declaration that the shares 'transferred shall be subject to a lien for the balanee, if any, foind on taking accounts to be due to the transferee by the ithe: party; the appointment of the receiver of the shares so 'eld in severalty and the dividend thereon to be in the same terms as declared in the decree.

With that variation in the Judge's order the appeal is dis- The appellant must pay the costs of the appeal.

tors for the appellant, Minter, Simpson & Co. Shlicitors for the respondent, Norton, Smith & Co.