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

In re Jones [1847] NSWSupC 36

insolvency, removal of assignee

Supreme Court of New South Wales

Stephens C.J., 12 May 1847

Source: Sydney Morning Herald, 14 May 1847, in Supreme Court Collection, Vol. 1, pp 112-114

Insolvency Jurisdiction.


Sir Alfred Stephen, C.J., delivered the following judgment:-

This was an application made, or purporting to be made, by Robert Smith and Thomas Woolley, creditors of the insolvent, for the removal of Mr. Walker from his assigneeship; and the rule calls on him to answer the affidavits of Gilbert Wright and Robert Protheroe, and to show cause why the sale of the insolvent's stations and stock, in December 1844, should not be set aside, and why he should not account for all profits made by him, from the purchase of that property.

The charges against Mr. Walker are of a very grave and serious character; and they are all preferred, and sought to be supported by the affidavit of Mr. Wright, who is the solicitor of he applicants. It is not merely a complaint, that the assignee has bought the property of the insolvent; because such a transaction, however illegal, and to be discountenanced on principles of the soundest policy and wisdom, might have involved no imputation on Mr. Walker's personal reputation. A trustee, it is admitted on all hands, ought not to traffic in any manner with the property under his care, in a fiduciary capacity. He cannot be at once buyer and seller; and were there no rule of law opposed to the assumption of both characters, the unseemliness of such a position is obvious. A trustee may, nevertheless, have become a purchaser with the best intentions and motives, and the transaction may have been beneficial to the persons interested in it. Here, however, the case is far different. The charges preferred by Mr. Wright, in his affidavit, are so serious, that were they established, Mr. Walker could not with propriety be suffered to hold office, as an assignee, in any case; and he would be disgraced, as the fraudulent contriver of a scheme, of the most deliberate and wilful dishonesty. The Judges have therefore given most anxious attention to the charges thus preferred, and have carefully gone through the voluminous affidavits and documents adduced on either side; and they have not arrived at a conclusion, without weighing and considering deliberately the whole.

The most satisfactory mode in such a case, of dealing with the complaint preferred, will be, to take seriatim the most prominent of the charges; and to determine how far, either from positive testimony or surrounding probable circumstances, they are satisfactorily established, or there has been a failure in the proof of them. We say the prominent points of accusation; for there are plainly some, on which it is quite unnecessary to pronounce any opinion. The removal of Mr. Smith, for instance, as an elected assignee, is a matter in itself of no moment. But there is founded on it a most grave charge, which will be found in page 9 of Mr. Wright's affidavit. He there states, that he verily believes the application to remove Mr. Smith to have been moved and stimulated by Mr. Walker, because the said Smith stood in his way; and that it was the first step in a plan concocted by Mr. Walker, in which he ultimately succeeded, for obtaining possession of the insolvent's property, at a nominal price, for his own personal profit and advantage, in fraud of the creditors. This is no trivial accusation-and it should not have been preferred on light or insufficient grounds. It was, however, on the argument, abandoned by the applicant's counsel, as untenable. But it is due to Mr. Walker to say, that he is in no degree indebted to the moving party, for forbearance in not pressing an accusation, which there is no evidence whatever to sustain. Mr. Walker himself denies, in most unequivocal terms, that he instigated any person to apply for the removal of Smith, or to oppose his confirmation. He adds, moreover, that his only interference with the election of Smith was, his stating to the creditors that if there were no good objections to Smith being assignee, he (Walker) would rather that he should be allowed to remain. The fact, however, that the application to remove Smith did not proceed from Mr. Walker, does not rest on the latter's own denial. It is supported by Mr. Smith's own deposition, annexed to Mr. Wright's affidavit; in which he designates the parties seeking to remove him, as Mr. McLaren, and the trustees of Gosling, Brown, and Company. It thus appears, that the application for Smith's non confirmation or removal, was one in which Walker had no share; and the serious imputation, founded on an assumption thus shown to be unwarranted, rests solely on the suspicion of Mr. Wright, unsupported by any evidence whatever.

The next charge preferred against Mr. Walker, is an alleged discrepancy between the description of the insolvent's property, in the advertisement of sale in the Sydney Herald and the one inserted in the Government Gazette . The discrepancy is, that in the Herald the insolvent's right to the stations was mentioned, and in the Gazette it was omitted. This discrepancy is stated in Mr. Wright's affidavit, to be one of a series of circumstances, which unduly depreciated the property at the sale; the discrepancy tending to mislead and perplex purchasers. We discover no ground for the imputation here cast upon Mr. Walker. Both he, and Mr. Lyons who in fact caused the advertisements to be published, assert that the order given to the latter for the advertisements, was given in the usual way; and that, whatever difference there may have been in the insertion of them, the omission or discrepancy did not arise from any direction of Mr. Walker. The latter swears that he gave no instructions, to omit the stations from the Gazette ; and that he did not notice the omission, until after the sale. The right of stations was advertised, in all the newspapers except the Gazette ; and a reason is suggested, for the omission in the latter; with which Mr. Walker himself is unconnected. The omission, however, may have been accidental. But whether so or not, it is sufficient for Mr. Walker's vindication, that he gave the usual instructions to advertise, and that the omission in the Gazette , whatever its importance, was by no direction emanating from him.

The main point in the case, however, is the sale itself. The facts are admitted, that Mr. Walker bid for the property at that sale, (under what circumstances we shall notice presently) but that the declared purchaser was a person, not then present, named Cornish; and who is now absent from the colony. As to this, Mr. Wright in his affidavit says that he verily believes Walker was himself the purchaser; and that Cornish was put forward by the said Walker, as the nominal purchaser. He believes that if Cornish was at all interested in the purchase, he was only partially interested; and Walker was the person principally interested. Mr. Wright further states, that the prices realized were far below the then real value of the property. He concludes by positively deposing to the fact, (as we read his affidavit,) unguarded by the declaration of belief only,-that Cornish and Walker were in fact joint purchasers; the said Walker contributing the greater part of the purchase money.

As to the prices for which the sheep and cattle were sold, we think that Mr. Lyons fully relieves Mr. Walker from the charge, of having permitted them to be sold below their market value. On reference to Mr. Lyons's sales about that time, we find that on the next day he sold a large lot of sheep at sixpence a-piece less; and he states positively, that there was considerable competition, and that the prices were extremely good. The gravamen of the charge is, however, that Cornish was put forward by Walker as the nominal purchaser only; and that Walker was the person principally interested, and who supplied the funds, or the principal portion thereof. In reply to this charge, it is impossible to convey a more emphatic and unequivocal denial than is conveyed in Mr. Walker's affidavit in answer. He wears that until the month of May, 1845, four months after the sale in question, "there was no stipulation or agreement whatever, either direct or indirect, expressed or implied, between the said Cornish and the deponent, that he (Walker) should have any share or interest whatsoever in the property bought by Cornish, or in any part thereof; nor, until such time as last aforesaid, did this deponent ever contemplate entering into any partnership, or having any share whatsoever in the said cattle, sheep, or property, or any part thereof." It is impossible, we say to convey in more distinct language an utter disclaimer of any interest in the sale, than the above extract expresses; and, unless in the absence of any satisfactory conflicting testimony, the Court is prepared to pronounce Mr. Walker a perjured person , it is bound to give credit to his statement. That statement is, that he had no interest, direct or indirect, either existing or contemplated, in the bidding on behalf of Cornish. The mere belief and suspicions of Mr. Wright, cannot be set up in opposition to the positive and unrefuted asseveration, upon oath, of a public Officer, hitherto, so far as we have heard, or has been suggested to us, of unquestioned integrity and uprightness.

On what, however, do those suspicions rest? Not upon any knowledge of Mr. Wright's own; for he pretends to none on the subject. Not on the knowledge of others; for there is no affidavit in support of this charge, nor any reference in his own affidavit, to any person from whom he derived his information. He does not even appear to have known the fact, now disclosed by Walker; that the latter was Cornish's surety for the purchase money. We will assume, however, that he did; and will proceed to consider, how far the fact sustains or excuses the charge founded on it. The circumstance so much dwelt on by the applicant's Counsel, may also here be conveniently considered; that fourteen days' notice only were given of the intended sale-the stock and stations being in the Wellington district, a very serious distance from Sydney, where the sale took place. The account given by Mr. Walker of the circumstances attending the sale, is in substance as follows. He had tried, in conjunction with the creditors, without success, to procure a purchaser; when, at length, Mr. Cornish (who was a settler in the neighbourhood) made an offer for the property-on condition that he should have credit, for a portion of the purchase money. That offer, Mr. Walker communicated to the two principal creditors; of whom one, representing the Union Bank, then agreed to discount Cornish's draft on Walker, if the latter would accept it. This the latter agreed to do; and it was arranged, that the offer should be taken, but conditionally only. The stipulations were, that the property should be put up to auction; and that Cornish's offer should stand, only, in case no higher bid were obtained. Moreover, it was to be subject to the approval of the creditors generally. Under these circumstances, Mr. Walker bid at the sale for Cornish. In so doing, he appears to us to have acted, in effect, not as the agent of Cornish, but of the creditors; for, as to the bid itself, it was neither conclusive, nor meant to be so. It was merely part of an arrangement; and the question of sale was still open. Accordingly, as Mr. Walker swears, he still tried to obtain a higher offer, and, as soon as he had arranged with Smith, (the now applicant, who was then mortgagee in possession of the property,) he called a meeting of the creditors, by public advertisement, to consider what should be done. That meeting, it has been observed, was a very thinly attended one. It matters not. The assignee can do no more than convene one; and the Insolvent Act, providing for these meetings, makes the decision of the majority; at any such meeting, binding on all the creditors, whether present or absent. At that meeting, the offer of Cornish was finally accepted subject to an advance on the price of the horned stock; and then it was, says Mr. Walker, carried into effect. The auction was in December; the advertisement calling the meeting in January; the meeting itself was in February, and possession of the property was given over, or directed so to be, on the next day. In all this we discover nothing that was irregular; but on the contrary, unless it be in the shortness of the time given for the auction, every thing that was proper. We are unable to say, under the circumstances, that more time would have benefitted the estate, or been desirable. We think, as no reason is suggested for his accepting Mr. Cornish's bills, that some suspicion does attach, not unreasonably, to that act. But, considered in connexion with all the other circumstances, and weighed against a positive oath, uncontradicted in one single particular, and supported as far as it can be, in the absence of Mr. Cornish and Mr. McLaren, it avails the complainants little or nothing.

We think it but just to Mr. Walker to say, that when Mr. Wright undertook to swear positively, as we consider he has done in p. 19 of his affidavit, that "Cornish and Walker were in fact joint purchasers, the said John Walker contributing the greater part of the purchase money," and again, that "Walker shortly after passed through Bathurst, on his way to take possession," he should have been prepared with some corroborative testimony, in support of these allegations; and that he has adduced none whatever. He knows not the facts himself; and he supplies no affidavit, of any person having such knowledge. He sees Mr. Walker in Bathurst; and thereupon he swears, that Mr. Walker was on his way to take possession of the stock. It would have been an easy matter for Mr. Wright, if the fact were so, to sustain his statement. But he adduces no evidence to sustain it; while Mr. Walker swears positively, that he never did take possession, and never went at any time to take possession; and that possession was delivered solely to Cornish; not by him, however, but by another person authorized for that purpose. It is our duty to declare, therefore, that on this important part of the case, the applicants have signally failed; and that they have preferred a charge, from which Mr. Walker is entitled to our full and honourable acquittal.

Much stress was laid in argument, upon the impropriety of proceeding with the sale, after Smith had given notice of his claim. This notice, however, was not served on Walker until two days previous to the sale. He had been, at the time, in communication with Smith, for the settlement of the claim. The notice was quite unnecessary; and to have then stopped the sale, would have been attended with great disappointment and expense. We incline to think, that in the unexpected embarrassment, in which this notice had placed him, the most judicious course for Mr. Walker to pursue was to proceed. But, in any event, we cannot say that he did wrong.

The next charge against Mr. Walker is, his having lodged a caveat against the granting of Mr. Jones's certificate. The exaggerated language, in which this is introduced in Mr. Wright's affidavit, is-that Mr. Walker "did, when the insolvent was in his power, and at his mercy, enforce and compel the insolvent to execute a release of the stations." This charge admits of a very simple solution, that at once clears Mr. Walker from all blame. And we think that he evinced only a proper anxiety, to obtain an effectual transfer of the stations to the party entitled to them. Mr. Walker's own account of the transaction is shortly this. He "was asked by an officer of the Insolvent Department, if he had any objection to Jones obtaining his certificate; when he replied that he had not; but that he had lately received a letter from the Colonial Secretary, which showed that official assignees could not rely on turning the insolvent's stations to the benefit of the estate, unless they could obtain a letter of transfer from the insolvent himself; and that it might be well that Jones should grant a letter, giving up all his rights of station. On this the Chief Commissioner said, he would delay the certificate till the insolvent had given such a letter." Walker heard nothing further in the matter, until the formal release prepared by Mr. Wright, was presented to him. All that was required of the insolvent was, a simple matter of transfer; and it was a requisition, with which in honesty he was bound to comply. On referring to our records, we find in fact that the certificate was granted by the Court, subject to the condition of his giving such a transfer.

It was contended by counsel in support of the motion, that supposing other parts of the case to be susceptible of explanation or excuse, yet there was one which admitted of no answer. It was that which relates to the admitted purchase by Mr.  Walker from Mr. Cornish; which, it was insisted, even if bona fide, must be set aside. The original purchase by the latter, it was maintained, was at least made through Walker ; and that alone was sufficient to avoid it. The consequence resulted, it was said, as a mere rule of law, from the incompatibility of the position of an assignee with that of purchaser. It was urged, that the transaction was void, independently of any objection to the auction, or the sale on that occasion; on the general principle that an assignee cannot purchase the bankrupt's property, either for himself or for another. The cases mainly relied on in support of this position were ex parte Bennett , 10 Vesey, 381; ex parte Grylls , 2 Deacon and Chitty 291; and ex parte Alexander , 1 Deacon 732. The general proposition, that assignees of a bankrupt, or other persons standing in a fiduciary relation towards another, cannot purchase the property of those whose interests they represent, is sufficiently well known. A trustee is not permitted to place his own interests, in competition with those of his cestui que trusts . And the cases cited show, that he may not even act, as agent for a third party purchasing. From that general rule, however, there are exceptions. Thus, the assignee of a bankrupt may purchase, with the authority of the creditors. (See cases in Lewin on Trustees, 3371.) It has been said, even, that he may do so with the consent of the majority. But here, according to the facts before us, the purchase at the auction, (if a purchase at all, which strictly it was not,) was made by Walker, as we have already observed, rather as agent for the creditors. It was virtually a transaction of bidding, in anticipation of a sale; and that sale was finally determined on, by a meeting of creditors, representing the whole body. If the transaction at the auction, however, be regarded as a sale, and the purchase as having been then made by Walker, on behalf of Cornish, it was afterwards at that meeting ratified and approved of. But, bearing in mind all the circumstances, and especially that the auction was consequent, only, on a previous arrangement, to which Walker was clearly a party on behalf of the creditors alone, the light in which we regard it, is the one already stated. In whichever point of view we regard it, we discover no rule or principle violated; and certainly no impropriety of conduct in the assignee, but wholly the reverse. It is clear, from the papers in the case, that there was here no concluded contract, until it was approved of by the creditors, at a meeting duly convened by the assignee, pursuant to the sixty-first section of the Insolvent Act. Until that meeting, Mr. Walker reserved a right to put up the stock for sale, if the creditors required it. From the minutes of that meeting, however, it appears that the creditors instructed the assignee to accept Cornish's offer, and deliver the stock to him. Mr. Walker swore that he intimated to the auctioneer, at the close of the sale, that it was subject to the creditors' approval; and it was, as we presume, from that circumstance, that Mr. Walker considered himself at liberty to offer the cattle, (as he states that he did,) to Mr. Smith, at an advance of two shillings a head, over the highest bid at the auction:- an advance which he eventually obtained from Cornish, on the close of the sale to him.

As to Mr. Walker's alleged interest in that sale, in any manner, we find his denial repeated, in the following terms. He says that after such sale, "the stock and stations were the actual, sole, and bona fide property of Cornish; and under and subject to his sole control; and that, if Cornish had been able and willing to have re-sold the said stock at a profit, such profit would have belonged entirely to Cornish, and he (Walker) would have had no interest therein whatever." At a subsequent period-but not until the sale had been finally settled, all expenses and charges against the estate paid, and the plan of distribution presented to the Court, and confirmed, and the estate finally would up-Mr. Walker admits that he did acquire an interest in the property. Mr. Cornish, he states, about four months after the sale, (that is to say, about the 1st day of May, rather more than two months from the concluded sale in February,) represented that he could not take up his bills, and that he required further purchases of stock to render the stations profitable; and then, Mr. Walker says, he agreed to enter into a partnership with him in the property. But he again repeats his assertion, that he up to that time had no interest or share in it, nor any agreement or understanding, in any sense, that he should have any. At such a time, as it appears to us, the estate having been wound up, he had no duty to perform, which should prevent him from purchasing. The property was no longer part of the insolvent's estate; and at such a time, there was no more reason for the assignee's abstaining from the purchase, than for a stranger's doing so.

It is impossible to read Mr. Wright's affidavit in this case, without being satisfied that it is framed in a very hostile feeling and spirit, towards the gentleman who is the object of his accusations. Circumstances scarcely affording grounds for suspicion, are adopted by him as materials for irresistible conviction. For instance, from the mere fact of Mr. Walker's bidding on behalf of Mr. Cornish, he deposes that the latter was put forward as a nominal purchaser, and at a nominal price; though the price was on an average equal to any sale of the season:-that it was for Walker's personal profit; though he could have no knowledge whether it was so or not:-and moreover that it was done in fraud of the creditors; though in truth, what was done was done with their concurrence, or that of at least the two principal creditors, and under their special authority. The introduction of Mr. Gilchrist's name, as a bidder at the sale on behalf of Walker, though it now appears that Mr. Gilchrist was not even present, shows on what imperfect information reliance has been placed by Mr. Wright, in preferring his charges. But the most remarkable and least excusable attack upon Mr. Walker, is that contained in the concluding part of Mr. Wright's affidavit; in which he would fain make that gentleman, in no slight degree, responsible for driving the insolvent into habits of intoxication, and thereby hastening his death. Unless this were the object, for which the following passage was introduced into his affidavit, we are at a loss to conceive for what purpose it found its way there. "This deponent saith, that the said insolvent shortly afterwards departed this life in a fit of apoplexy, caused by repeated intoxication; and this deponent saith, that as he verily believes, the said insolvent was driven to drink by the circumstances aforesaid preying upon his mind." Independently of any other remark, it may be sufficient to say, that it is morally impossible that the 'circumstances aforesaid' could have preyed upon the insolvent's mind; since not only are many of the circumstances untrue, but there is no ground for supposing, that his mind was at all imbued with the conjectures, suspicions, and imputations, which constitute those circumstances. The grounds of some of them, indeed, were not known to Mr. Wright himself, until after the insolvent's decease. He died soon after signing the release, in 1845; and it was not until after that date, that Mr. Walker acquired any interest in the property. It could scarcely be, therefore, as alleged in Mr. Wright's affidavit, that "the possession and enjoyment and realizing of large profits, by Mr. Walker, embittered the insolvent's existence, and accelerated his decease."

Upon review of all the circumstances of this application, in support of which there is filed only the affidavit of Mr. Wright, and Mr. Protheroe who appears to have acted as the former's agent, in Sydney, throughout the transactions of 1844 and 45, and which is so far from being an application by complaining creditors, that not only has no creditor filed an affidavit to support it, but the principal creditors, Mr. Gosling and Mr. McLaren, (the first by his affidavit, and the latter by his certificate of approval, attached to the minutes of the meeting of creditors,) testify in unequivocal terms their approval of Mr. Walker's conduct, we feel it to be our duty strongly to condemn the entire proceeding. We think the application itself not warranted, by any facts within the knowledge of the applicants, or which might justifiably have been suspected by them. Above all, we think the charges and imputations introduced by Mr. Wright, (in many instances most unnecessarily,) in support of it, and the strong and confident language in which he has preferred them, in every point of view inexcusable, and open to grave censure. On the evidence before us, Mr. Walker quits this Court without any stain whatever on his character; and we feel called on to mark our sense of the impropriety, as well as the injustice of the accusations which he has had to meet, by discharging the Rule obtained against him with costs; to be paid by Mr. Wright, the party who has preferred them.


During the delivery of this Judgment, Mr. Lowe made the following suggestions for the consideration of the Court-1st. That one of the insolvent's stations was beyond the Wellington district. 2nd. That one of the two persons, mentioned as principal creditors, had no interest in the matter; as his estate was in the hands of trustees. 3 rd. That Walker as not a mere ordinary surety for Cornish, but was primarily liable on the bills. 4th. That the proposition of purchase, or partnership, from Cornish to Walker , was two months only after the concluded or approved sale. 5th. That the prices obtained by Mr. Lyons for stock , only, afforded no criterion of prices; as here the stations formed part of the bargain. The Chief Justice replied, that all those points, the first excepted, had been fully considered. As to the first, whether the stations were in or beyond the Wellington district, the Judges were unable to decide that more time would have been desirable:-but that, they considered, was not the question. It was, whether there was fraud in not giving more. As to the second, the creditor referred to appeared to have been acting for his trustees; and, as he was not an insolvent, he had clearly a legal as well as a resulting beneficial interest. As to the third, the exact position of Walker , in respect of the suretyship, was plainly stated; and could not be mistaken. As to the fourth, the statement of four months, if applied to the concluded or approved sale, was certainly an error; but plainly a most immaterial one, as the dates were given:-and the sale spoken of was that by auction. As to the fifth, Mr. Lyons's affidavit, and returns of sales, showed the perfect accuracy of the statement; since, in several instances, sheep and stations were disposed of at the same or less prices.)

Published by the Division of Law, Macquarie University