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

Collins v. Hart [1847] NSWSupC 15

partnership, equity procedure

Supreme Court of New South Wales

Therry J., December 1847

Source: Sydney Morning Herald, 29 December 1847, in Supreme Court Collection, Vol. 2, pp 46-47

His Honor Mr. Justice THERRY delivered the following judgment on the exceptions taken and argued in this case on a former day:---

The present exceptions which we argued before me have been occasioned by the defendant availing himself of the 38th order of 1841, which directs that "a defendant shall be at liberty to decline answering any interrogatory, or part of an interrogatory from answering which he might have protected himself by demurrer; and that he shall be at liberty so to decline, notwithstanding he shall answer other parts of the bill from which he might have protected himself by demurrer." The refusal then to answer is in effect a demurrer to so much of the bill as contains the interrogatories to which the defendant declines to answer. The main object of the present bill is, as it is stated in the prayer, that a general account may be taken of all the partnership transactions between the plaintiff and defendant. In the stating part of the bill the plaintiff goes into a very detailed account of the co-partnership business carried on by himself and the defendant from its commencement to its dissolution, in 1842. By the deed of dissolution the property was assigned to the defendant Hart; but on the faith, as the plaintiff alleges, of a substantial adjustment of accounts. Substantially, the plaintiff's complaint is that the dissolution was not final, and not only did not preclude an examination into former accounts, but was made expressly subject to an account being taken of the plaintiff's advances, with liberty to show the amount of such advances, and with the reservation of a right to be allowed and paid for them. The plaintiff then proceeds to anticipate the pretences which the defendant will set up. These pretences, which are stated with great diffuseness in the bill, are mainly and succinctly reducible to these two heads,--- 1st , the pretence that by certain statements of account, dated the 16th and 23rd of December, 1836, the plaintiff Collins, as the defendant alleges, admitted a balance against himself of £6251 on the joint account, and £378 on his private account; and, 2ndly, that the plaintiff is thereby debarred from opening any account of a date previous to these admissions. The plaintiff charges the contrary of these pretences, and contends that these admissions are not binding and conclusive, and which reasons are in a subsequent part of the bill shaped into interrogatories, the declining to answer which has occasioned the present exceptions. It is contended on behalf of the defendants, that the bill goes beyond the mere suggestion of a pretence, and the charging to the contrary --- but though this may be conceded, it does not follow that it goes beyond the legitimate limits to which the anticipation of the defendant's defence, according to the modern mode of Equity pleading, may be carried. That mode is thus described by Story in his treatise on Equity Pleading, second edition, p. 642, s. 678, in treating of the mode of defence rendered requisite "when a change of the frame of pleadings took place, and special replications, rejoinders, and sur-rejoinders, fell into disuse; and the bill, instead of relying solely on the matter constituting the plaintiff's original case, proceeded to anticipate the defence; and charged facts to avoid that defence (thus performing the double functions of a bill and of a replication under the old practice) and required a discovery as to the matter charged." Now the facts here charged in anticipation of the defence, and to which the defendant is interrogated, are that certain advances made by the plaintiff ought to be included in the pretended settlement of 1836 --- that sums have been paid by him for which he did not obtain credit --- that the plaintiff is entitled to bring sums into the account of a date prior to the 20th of December, 1836 --- that the statement of account of that date is not conclusive upon or against the plaintiff --- that the pretended settlement has been opened by the subsequent dealings of the defendant himself, and he has made admissions to that effect --- that the settlement was made in ignorance by the plaintiff, and in confusion and haste --- that errors are pointed out by the bill in the accounts, which show that they should be set aside, and assurances were given by Hart inconsistent with the settlement of 1836 being regarded as a conclusive arrangement at the time it was entered into. In all these inquiries the plaintiff appears to me to seek only such a discovery as that to which he has a right, although he has not set out the stated accounts, such accounts being part of the defendant's case, the plaintiff only asking for a general account. If the authority of precedent were required to support this right, it seems to me to be furnished by the case cited by Mr. Donelly, Parker v. Alcock, 1st Young and Jervis, p.123. The bill there stated various transactions and money dealings between the plaintiff and defendant, imputing to him in a series of transactions unfair dealing, fraud, and oppression, and that he had eventually, by misrepresentation, obtained a general release, of the purport of which the plaintiff was at the time he executed it perfectly ignorant, and praying a discovery and general account. To the relief and discovery there prayed, the defendant pleaded a release, averring that it was freely executed, and answered circumstantially such parts of the interrogatories as were referred to by the averments in the plea. But it was then successfully contended for, that the validity of the release depended on the circumstances of which a discovery was sought, and that as everything alleged by the bill and not denied by the answer in support of the plea, must be taken to be true, the facts impeaching the release and its consideration stood admitted, and Lord Abinger in his judgment observed, "that as the release was founded on a previous statement of accounts which are charged to have been fraudulent, this strikes at the consideration of the release, and not being met by the plea and answer, is sufficient to avoid the plea." In this case it is true there is no plea; but in principle it does not appear to me distinguishable from the present, in which it is no less requisite that the facts impeaching the conclusiveness of the settlement should be disclosed --- and to the discovery of which the plaintiff is entitled.

To the argument that as the plaintiff stated the error of the accounts, he should set forth the account himself, --- it is in my opinion a satisfactory answer to say that he need not set it forth, as the stating part of his bill discloses a case for relief, independent of this alleged settlement altogether. It is not a part of the plaintiff's, but of the defendant's case, to rely upon it: for if it be a conclusive settlement, it constitutes the defendant's defence. Neither can it be contended, in my opinion, reasonably, that the defendant can experience any difficulty or embarrassment from the errors being stated in the bill without the account to which they refer; for either the defendant has a knowledge of the account or he has not. If he has not such a knowledge, it is an easy matter for him to say so, by his answer. If he has that knowledge, however, it will be no less an easy matter for him to deal with the alleged errors, and it is unnecessary for him to derive a knowledge from a statement in the bill, of which, independent of such a statement, he is already in possession. It is plain that it is in the interest of the defendant and not of the plaintiff to establish the settlement of accounts as final and conclusive on the plaintiff. The defendant's case is the finality of the settlement, --- the plaintiff's that the circumstances attendant on the settlement deprive it of a conclusive character. The relative position of the parties is illustrated by a supposititious case put by Mr. Wigram in the 103rd section of his Work on Discovery --- "Suppose the bill to state the anticipated defence (say a deed) only as a pretence of the defendant without admitting its truth, and to avoid it by stating that if any such deed exist, it was obtained by fraud, &c.," in this case the fraud, &c., imputed, would be the plaintiff's case, and the plaintiff in such a case would be entitled to discovery." On the whole, I am of opinion the defendant should answer the interrogatories which he has declined to answer, and, therefore, the exceptions taken to the Master's report overruled. I have not gone into the consideration of the exceptions, not depending on the arguments applicable to this quasi demurrer, for they were not argued before me, or so slightly touched upon, that they scarcely seemed to be disputed, although the exceptions to his report includes the whole. I have, however, looked through them, and do not see any sufficient grounds for differing from him.

Published by the Division of Law, Macquarie University