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Decisions of the Superior Courts of New South Wales, 1788-1899

Bank of Australia v. Bartlett (1843) NSW Sel Cas (Dowling) 838; [1843] NSWSupC 2

company law

Supreme Court of New South Wales

Dowling C.J., Burton and Stephen JJ, December 1843

Source: Dowling, Select Cases, New Series, Vol. 1, S.R.N.S.W. 2/3467, p. 137.

Where execution was sought by scire facias against the defendants, who were members of the Australian Auction Company now, but were not members of that company at the time of the cause of action on which the plaintiff obtained judgment; held that the plain intent of the local Act, 5 Vic. No. 10 (1841), was that members "for the time being" meant those members of the company at the time scire facias was sued out.*

Dowling C.J. This was a scire facias to obtain execution against certain alleged members of the Australian Auction Company, upon a judgment of this Court for £2,032.10.2 recovered by the plaintiff in an action on promises against R. Jones as chairman of the court of directors of the company, and sued as such according to the Act 5 Vic. No. 10, (1841) to facilitate proceedings by and against the company; averring that the defendants are now members of the said Australian Auction Company, whereupon the plaintiff prayed execution might be awarded on the judgment against the defendants and a day assigned for them to shew why the plaintiff should not have execution against them according to the form and effect of the said recovery.

The defendants (28 in number) pleaded severally, in various ways, denying their liability as members of the company, to which the plaintiff demurred on the ground generally that the matters of the pleas were issuable facts depending upon evidence to be produced at the trial. There was one objection, however, taken on behalf of all the defendants, that the scire facias did not disclose a sufficient cause of action against them, inasmuch as it did not shew that they were respectively partners in the company at the time of the accruing of the cause of action, whereon the plaintiff recovered judgment, nor did it shew any matter whereby the defendants could be made liable to satisfy the judgment.

If the scire facias as a new declaration be ill for not disclosing a sufficient prima facie liability in the defendants, their pleas need not require discussion, for they must have the benefit of the objection. The substantial question then is whether the scire facias brings the defendants within the operation of the act of Council by which they are sought to be made liable to have execution awarded against them. By 5 Vic. No. 10, " An act to facilitate proceedings by and against the proprietors of a certain joint stock company lately carrying on business in Sydney, under the style of the Australian Auction Company ", it is recited that "a certain joint stock company which lately carried on business as auctioneers in Sydney under the name &c have met with great difficulty in the prosecution of actions brought for the recovery of debts justly due to the said company; and whereas it would facilitate the settlement of the affairs of the company and be of public viability and advantage that all claims for and against the company existing before the passing of this Act, should be sued for by and prosecuted against the company in the name of some one members thereof - whose name and description should be recorded for the information of the public; but as these purposes cannot be obtained without the aid and authority of the legislature" and then after enacting that the chairman shall be the person whose name shall be used as the member for the purposes of the Act, it proceeds to make other provisions to enact the seventh clause upon which the present question arises.

By the seventh section it is enacted "that execution upon any decree or judgment, in any action, suit, or petition or other proceeding obtained against the court of directors for the time or other members of the said company as aforesaid, whether as plaintiff or defendant may be issued against and levied and satisfied upon and out of the goods, chattels, lands and tenements of any member or members whomsoever of the said company for the time being, as if such decree or judgment had been obtained against such a member or members personally".

This being an Act passed expressly for the purpose of winding up the concerns of a defunct company, which operation could not be effected without the aid of the legislature, the question is whether the liability to have execution upon a judgment recovered against the chairman in his name attaches upon persons described in the scire facias as persons who "are now members" of the company so as to satisfy the words of the Act "members whomsoever of the said company for the time being" even though such persons were not members at the time of the making of the contract upon which the judgment was founded.

It was contended on the part of the defendants that if they were not members of the company at the time the judgment was obtained, they could not have been personally sued. It was urged that the cases decided upon the Act 7 Geo. 4 c. 46 (1826), s. 1 had no bearing upon the construction of the local Act. The English Act was passed to facilitate proceedings by and against companies about to be established and to recover debts due or future contracts, but the local Act was passed to enable a defunct company to wind up its affairs and pay and receive debts due to and from the company as it then existed. There was nothing in this Act to give the company corporate perpetuity, but only to facilitate proceedings against the company as it then existed and to sue only for debts due from the company at that time. There was nothing in the Act to change the common law liabilities of the members so as to make them liable for debts which they were not answerable for before the passing of the Act. When the Act spoke of judgments against the chairman, it meant the chairman at the time the Act passed and only meant to fix the members then in existence. It was never contemplated by the legislature that new members of the company were to be fixed with debts contracted by the company existing at the time the Act passed. The legislation only intended to protect the public for contracts existing at the time of the passing of the Act, but to exclude the liability of new members who came into the company afterwards. There was no intention to fix with liability any members who were not liable at common law.

Now these defendants not being members at the time of the passing of the Act, they were not deprived of their common law protection as to personal liability. Therefore under the seventh section the plaintiff could not have judgment and execution against any member personally, unless he was a member liable under the twelfth section, which enacts "that nothing herein contained shall extend, or be deemed, taken or construed to incorporate the members of the said company, or to relieve or discharge them or any of them from any responsibility, duties, contracts or obligations whatsoever, which by law they now are, or at any time hereafter shall be subject or liable to, either between the said company and others, or between the individual members of the said company or any of them and others or among themselves or in any other manner whatsoever, except so far as the same is affected by the provisions of this Act and the true intent and meaning of the same". If these defendants were made liable because they were now members it would be in violation of their common law protection, which could not be taken away without express words, and not being so taken away, the seventh section could only be construed to charge with executions persons who were members at the time of the passing of the Act and upon contracts or debts existing at that time for which they would have been personally liable. To go against the new members would be contrary to the intention of the Act, which was only meant to affect the then existing company and to attach upon debts theretofore contracted.

Assuming the fact to be that these defendants are now members of the company, but were not so at the time of the cause of action on which the plaintiff obtained judgment, the question is whether they are to be considered "members for the time being" against whom execution may be had within the meaning of the seventh section. Looking at the title, the recitals and the enacting clauses of the Act of Council it is obvious that the object was to enable a company previously existing only under the obligations of a voluntary association, to wind up its affairs and pay and receive debts by enabling them to sue and be sued compendiously in the name of their chairman, instead of joining all the members by name either as plaintiffs or defendants according to the rules of the common law. In either case the chairman was to be the representative of the company, either in receiving additions to or in diminution of the funds of the company in the process of winding up the concern. As respected the dealing of the company with the public, the object was to make the funds of the company answerable for debts contracted by them collectively upon the credit of those funds previously to the Act. Contemplating that the company might be a fluctuating body, both as to names and numbers of proprietors, it would seem that the object of rendering the members "for the time being" answerable for the debts then existing, was to relieve the creditors from the embarrassment and difficulty of ascertaining who were the members at different stages of the legal proceedings, to be resorted to for recovery in actions against the chairman as representative of the company.

If the right of execution against the funds of the company were to depend upon the question whether the member against whom execution was taken out, happened to be a member at the time of the contract, the time of the action, the time of the judgment and the time of the execution respectively, the whole policy and object of the Act, in giving an effective remedy to the creditors of the company against the funds of the company, might be defeated. In order therefore to simplify the remedy, the legislature at once enacted that whoever happened to be the members for the time being, that is the existing body of the company should be liable to have execution against them upon judgment recovered for debts contracted by the company before the Act came into effect.

In the English Act of Parliament the legislature contemplated and provided remedies against four different classes of members, members for the time being in the first instance; next, persons who were members at the time the contracts were entered into; next, persons who were members at the time the contracts were executed and lastly persons who were members at the time judgment was obtained. If the members for "the time being" were not of sufficient ability to pay them the creditor might go against any of the other classes in succession. That Act being prospective as to new and continuing companies, such provisions were properly and justly introduced. But the local Act, expressly concerning this particular company which had existed but had become defunct, was passed for the temporary purpose of enabling it to wind up its affairs and contemplated its existence for no other purpose beyond two years enacted explicitly and without distinction that members "for the time being", i.e. members of the then existing company should be liable to have execution against them no matter whether they might have been members at the time of the contract being entered into or at the time the contract was executed or at the time when judgment was obtained. This declaration having averred that these defendants are "now members of the company" we think that we are bound to give effect to the plain intent of the Act and hold that if they were members at the time the scire facias was sued out, they are members "for the time being" within the meaning of the seventh section. It is however a question of fact to be determined by evidence, whether they were such members.

We think that the provision contained in the twelfth section fortifies this construction. By that section it is enacted that the Act shall not be construed to incorporate the company or to release any of the members from any responsibility, which by law they now are or at any time hereafter shall be liable, either between the company and others or between the individual members or any of them and others, or among themselves, except so far as the same is affected by the provisions of this and the true intent and meaning of the same. The object of this provision was to declare that the Act should not be deemed to take away common law remedies from parties, at the same time not to defeat the object of the seventh section which was to give a further remedy for the payment of debts due to the public, as far as the Act was applicable to members for the time being, i.e. the existing members when the Act came into operation; and therefore, that if these defendants were members at the time of suing out the scire facias they were liable to have execution against them upon the plaintiff's judgment.

Whether these defendants, all or any of them, are in fact members of the company according to our construction of the Act is matter of evidence to be determined by the company. We think the declaration is sufficient in averring that the defendants "are now members" and as the pleas which the defendants have pleaded are demurrable for putting in issue mere matters of evidence, we think the demurrers to them must be allowed, but with leave to such of them to amend upon payment of costs as are prepared to file an affidavit that they were not in fact members as alleged in the scire facias and in that case their pleas are in denial of that allegation and issue may be thereon taken.

This case is distinguishable from Duquid v. Hobler (1843), supra , p. 829, for there the declaration did not aver that the defendants were members "for the time being", although the judgment was obtained against the chairman for the time being. Here the declaration avers that the defendants "are now members", which makes all the difference.

Published by the Division of Law, Macquarie University