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

Salting v. Smith [1848] NSWSupC 75

insolvency - partnership - set-off

Supreme Court of New South Wales

Full Court, 20 October 1848

Source: Sydney Morning Herald, 21 October 1848, in Supreme Court Collection, Vol. 2, pp 121-122 [1]

BEFORE the full Court.



The plaintiffs (the now respondents) in this suit are the trustees of the estate of John Hosking, and which was instituted for the purpose of taking an account of certain transactions between him and the defendants, and between his trustees and the defendants (the now appellants) who are merchants in this city, and for the payment of an alleged balance due to the plaintiffs. This is the subject matter of the bill; the defendants by their answer, filed in May, 1845, pleaded a plea of set off, stating that Hosking was indebted to them, on a joint and separate covenant (jointly with his partner Hughes) in the sum of £10,000; which covenant was contained in a mortgage deed, dated in May, 1843. A struggle took place at the hearing before the then primary judge, Mr. Justice Therry, whether the defendants could so set off the sum alleged to be due in respect of the joint and separate covenant.

His HONOR decided the defendants were so entitled, and he decreed (which decree, upon appeal, was afterwards affirmed) that in taking the accounts thereby directed to be made, that credit ought to be allowed to the defendants for all sums of money due in respect of the covenant; and the Master was directed to take an account of all matters set forth in the Bill, including an account of what is due to the defendants under and by virtue of the covenant; and that the defendants should have credit for all sums which may be due to them under the covenant. The accounts have been proceeded with in the proper office; but upon its being there contended by the defendants, that if they could show by a partial enquiry into the accounts of the joint and separate covenant, resting at the date of the decree (June, 1846), that an amount was due, and show more than sufficient to cover the alleged balance due to the plaintiffs, then the plea was established, and a further enquiry into the covenant accounts was not necessary. This position was denied by the plaintiffs, they contending that the taking the accounts ought not to be limited to the date of the decree, but ought to be carried on up to the date of the Master's report, as it would turn out, that the defendants' claim on the joint and separate covenant had been satisfied since the decree to an amount leaving a large balance due to Hosking's trustees. With a view to have the matter settled the Master issued his order to proceed in the accounts subsequent to the date of the decree.

In August last a motion was made before Mr. Justice Manning, the Primary Judge, to set aside this order. His Honor in delivering judgment admitted the question involved was a very important one; in the one case, he said, it might happen that the plaintiffs' claim would be entirely defeated, and the assets of the separate estate of Hosking would be carried to the credit of Hughes and Hosking, or might, in the event of the securities in the mortgage being sufficient to satisfy the £10,000, become a balance receivable to the trustees of Hughes and Hosking, instead of those of Hosking. In the other view, the defendants' defence might be defeated by matter ex post facto , and by going into the account since the date of the decree, the same trouble might have to be gone over again in another suit by other parties. His Honor said, however, that the question was to be determined according to the wording of the decree (which was not now to be questioned), and as it contained words of the present tense, &c., which clearly proved, as in the ordinary case, that the accounts were to be proceeded with up to the date of the Master's report; the motion was therefore dismissed with costs. The defendants, now the appellants, appealed against this decision of his Honor.

The SOLICITOR-GENERAL, with whom were Messrs. DONELLY and FISHER, appeared in support of the appeal. It was said the appellants made this stand against the accounts being taken generally upon the joint and separate covenant, because of the great expense in proving those accounts, involving the expenditure of many hundred pounds, as many witnesses must be summoned from various parts of the colony, and it may so happen that the defendants may be found indebted not to the plaintiffs in the suit below, but to the trustees of Hughes and Hosking, and therefore all the labour and expense would lead to no good, and the present plaintiffs would not be entitled to the balance; but the defendants would be vexed and harassed by another suit at the hands of the trustees of Hughes and Hosking, when the same expense would be incurred in going over the same accounts. The appellants say, that at a particular day their transactions, all of which are mentioned in their answer, with Hosking and his trustees ceased; and up to that time they are willing to give credit for every sum of money received on his or their account; but subsequent to that date decline, for the reasons already stated, going into the accounts. The judgment of the Court below proceeded upon the wording of the decree; but the learned counsel contended that the construction put upon its language was rather forced, and it did not expressly warrant the decision arrived at on it. But supposing it might bear such a construction, that Court could, upon seeing how fatal such a construction would be, have varied the order so as to meet the equities of the case.

Messrs. BROADHURST and LOWE, for the respondents, submitted that beyond a doubt the decision of the Court below was correct, and must be affirmed. The case was this: the plaintiffs below claimed a balance of money due to them on certain transactions; the defendants below admit that sum to be due, but plead, by way of set-off, and not as payment, as has been argued on the other side, that Hosking, whom the plaintiffs represent, is indebted to them in the sum of £10,000, on a joint and several covenant, which sum would be found due "upon proper accounts being had between the parties." This was not a plea, stating boldly that a particular sum was due, and which could have been ascertained at the hearing of the cause, and if proved, would have caused the bill to be dismissed with costs as against them---the plea was not of this character, but it sought to make a joint and separate covenant---a separate covenant for the purpose of defending the plaintiff's claim, and moreover sought that the accounts in respect of it should be taken before the Master. And because the defendants have exercised their election to treat the covenant in question as a separate one, and that the accounts they have caused to be commenced are doing something mote than was anticipated by them, the defendants now appear to oppose the further taking the accounts---alleging that it might so happen that by so taking the accounts a sum of money might be found due to Hughes and Hosking, who are not parties to the record.

But it was argued that as the defendant had thought proper to treat the covenant as a separate covenant, the accounts ought to be taken as if no such party as "Hughes" existed, and the plaintiffs would have the same benefits and advantages under it as if Hughes did not exist; and therefore there was an end to the argument that it might turn out proper parties were not before the Court to receive the balance that may be found due on the taking the accounts in the way proposed. If the arguments of the appellants were to succeed, they would be twice paid, and the affidavits already filed in the cause show that the defendants have realised under the covenant £16,000. But after all, the whole question now involved in the appeal is one of construction of the decree; the decree has not been impeached, and there is now no getting over the plain words to be found there, which direct in language as plain as language can direct, that the accounts are to be taken in the way ordered by the Court below.

On the course of the SOLICITOR-GENERAL's reply, a point of practice arose and was decided, which is worth reporting. The Solicitor-General was proceeding to cite a new case, that is a case that he had not alluded to in his first address. Mr. BROADHURST objected to this course, and their HONORS severally delivered their opinion upon the point. His Honor the CHIEF JUSTICE said, that he had unfortunately not very great English experience on this point of practice, but he was of opinion that a counsel in reply had an undoubted right to cite a new case, did the counsel think it was proper to do so for the proper determination of the case before the Court; because the Court listened to the arguments in every case, for the purpose of assisting them in their decision. Then, as the counsel in reply had this right, and thought proper to exercise it, it was equally open to, and proper for, the counsel on the other side to rejoin on the new case, in order top prevent any undue or unfair impression being made on the mind of the Court.

His Honor Mr. Justice DICKINSON disagreed in part of the above decision; agreeing in this, that a counsel in reply may cite new cases, but that the opposite counsel shall not be at liberty to rejoin, because it was meet that arguments should end somewhere, and the rule was wisely laid down that the counsel first stating the case shall be heard twice, and the opposite counsel but once.

His Honor Mr. Justice MANNING concurred with the decision of the Chief Justice, and intimated that not only might a counsel in reply cite new cases, but even advance new arguments --- because the arguments of counsel are allowed simply to assist the minds of the Court in arriving at a safe and sound conclusion upon the case before the Court; but the counsel on the other side are to have liberty to rejoin upon the new cases or arguments; such rejoinder, however, is of course to be limited to the new case and new arguments. Courts, both legal and equity, have ordered cases to be argued twice and thrice over, for the purpose of dissolving doubts in the minds of the Judges composing that Court, and this shows the principle on which new cases and new arguments in reply are permitted.

The Court reserved judgment.


[1] See also Smith v. Salting, 1847.

Published by the Division of Law, Macquarie University