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

Binns v. Brierly [1849] NSWSupC 1

fieri facias - foreign attachment - wool lien - judgment obtained by fraud - equitable restitution - costs

 

Supreme Court of New South Wales

Manning J., 18 April 1849

Source: Sydney Morning Herald, 19 April 1849, in Supreme Court Collection, Vol. 2, pp 161-163

SUPREME COURT.---IN EQUITY.

WEDNESDAY.

BINNS v. BRIERLY.

His Honor Mr. Justice MANNING delivered Judgment in this case as follows:---

This Bill was filed in April, 1847, for restitution of a station and 9200 sheep, purchased by the defendant in April, 1844, at a Sheriff's sale, under an execution issued at his own instance upon a judgment against the plaintiff, under the Foreign Attachment Act, and for the delivery of the increase and payment of the price of sheep sold or parted with ; and for an account of the proceeds of wool and expenses of management; and for an account of what, if anything, is due from the plaintiff to the defendant. For these purposes, the bill prayed that the judgment above mentioned might be declared to have been fraudulently obtained, and to be null and void, and that the same might be set aside; and that it should be referred to the Master to ascertain the amount of property, increase, sales, &c., and prices of sheep and wool, and expenses of management.

The main facts of the case are the following:

The plaintiff, a resident in England, was in 1843 possessed of two sheep stations and sheep in the Maneroo district, of which one was called "Arable," and held 9200 sheep, under the management of Mr. Buckley, and the other was called "Marranumbla," and held 3200 sheep; and conducted his affairs in this colony by his attorney, Mr. William Hirst, of the firm of W. Hirst and Co., merchants, of Sydney. The expenses of the stations were met by Hirst and Co., who were in funds for the same, on behalf of Mr. Binns. The accounts of the Marranumbla station were entered in their books in the names of "Binns and Blackburn," and at the time of the lien presently mentioned the station was in debt about £600; but the course was to transfer the debtor balance of that account at the close of the year to another in the name of Mr. Binns only.

The firm of W. Hirst and Co. (consisting of Messrs. William and George Hirst, both since deceased) being indebted to the defendant, also a merchant of Sydney, to the extent of about £1000 in bills which they were unable to meet at maturity, the defendant sued them on one for £300; and in September, 1843, obtained judgment and issued execution against them for £324 6s. 10d. The defendant threatened to put the execution in force, but Mr. William Hirst, on behalf of the firm, stated his inability to satisfy the execution, unless the defendant would await the arrival of the plaintiff's clip of wool, when, he asserted, he should receive about £600 owing to him by the plaintiff. This delay being refused, Mr. W. Hirst said he would endeavour to raise the money upon the plaintiff's sheep, and asked for and obtained from the defendant sufficient time for the purpose.

Subsequently Mr. Hirst informed the defendant that he should take a lien himself upon the wool of the "Marranumbla" sheep. This the defendant at first objected to, but upon Mr. Hirst's informing him that he had no other means of paying him, he agreed to do so upon Mr. Want (his solicitor) being satisfied that he (Hirst) had power to do so. Hirst then stated that Mr. Booth, the book-keeper of the firm, had been substituted by him as attorney of the plaintiff, and that he would bring him to satisfy Mr. Want that the debt w as due, and that he had the power to give the security. Subsequently Booth called on Mr. Want in company with the defendant and Mr. Hirst, and asserted that he was acquainted with the state of the accounts, and that the plaintiff was indebted to Hirst and Co. in upwards of £600; and he offered to give the lien upon the wool of the "Marranumbla" sheep; and to transfer to the defendant so much of the alleged debt due from the plaintiff to Hirst and Co., as was necessary to satisfy the defendant's execution.

The proposal being finally accepted, a preferable lien upon the said wool was, on he 29th November, 1843, executed by Booth, in the name of the plaintiff, to secure £326, " bona fide value for which," according to the terms of the lien, the plaintiff "admitted to have received in money from the defendant. A proposal was discussed that the defendant should pass his cheque for the £326 and receive the same back from Booth on account of the execution, but this was not done.

The substitution of Booth for W. Hirst under the power had been made on the 20th October; but Booth acted throughout under the directions of W. Hirst. It is stated by Booth, in his evidence, not only that upon the whole of the accounts a balance was at this time due to the plaintiff, but also that he distinctly informed the defendant of the fact when first made acquainted with the proposal to give a lien. The former statement, I rely upon, because he (Booth ) vouched the books of Hirst and Co., and the entries referred to by him were tendered in evidence by the plaintiff, and rejected upon the objection of the defendant; but the latter statement I cannot take to be satisfactorily proved by the mere oath of one who gave so different an account to Mr. Want, and altogether acted so prominent a part in the fraud upon the plaintiff.

The wool of the Marranumbla sheep was not delivered to the defendant, but seems to have been disposed of, together with the sheep, by Hirst and Co. In consequence of this, the defendant took proceedings against the plaintiff by foreign attachment, and on the 16th March, 1844, he obtained a judgment in the usual form, founded upon the admission of debt contained in the instrument of preferable lien. Upon this judgment, he caused execution to be issued on the 27th March, endorsed to levy £369 6s. 3d., and obtained a Judge's order appointing Mr. D. Duncombe, the Sheriff's bailiff at Goulburn, to be special bailiff for the execution of the writ at "Arable." On the 12th April, the bailiff made a levy at "Arable," distant about 250 miles from Sydney, and posted written notices at the station and some neighbouring places, stating that 9000 sheep, 10 bullocks, and three drays, together with the right of station, would be sold by the Sheriff at Kerwan's Inn, Coomer Creek, on the 16th then instant, unless the execution should be previously satisfied.

On the 16th, the bailiff proceeded to hold the sale. People to the number of about twenty were present, among whom were Buckley the superintendant at "Arable," and Mr. Ridgway, who was sent up by the defendant to purchase the property if the price should be suitable, and who was furnished with a letter from the defendant's solicitor authorising the bailiff to take his draft on the defendant. The terms of sale were declared to be "cash," in accordance with instructions to take "nothing but bank notes;" and there was no bidder except Ridgway, who bid "the mount of debt and costs," and to whom the bailiff knocked down in one lot 9200 sheep, 10 working bullocks, 3 drays, and the stations on which the sheep depastured. Such debt and costs, inclusive of the bailiff's charges, &c., amounted to £431 17s. 3d., which was sworn to be greatly under the then value of the property.

Before the sale a conversation took place between Buckley and Ridgway, in which the former proposed that the latter should take the property at the amount of levy and charges, on the understanding that the plaintiff should be restored to possession on payment of the amount due upon execution. Of this conversation, very contradictory reports are given by Buckley and Ridgway,---it being asserted by the former and denied by the latter, that the proposition was assented to; and much evidence of matters otherwise unimportant was given in support of each of these versions. Upon weighing the whole of the evidence, I am satisfied that all opposition to Ridgway was in fact silenced, and the purchase made almost as a matter of form, by reason of an impression, either created or permitted by Ridgway, that some arrangement of the sort had been come to between himself and Buckley as quasi agents for the execution creditor and debtor respectively. Although about twenty people had collected, only six or seven at most went into the room of sale; and of a number of such people examined in this case, not one reports having witnessed any proceedings bearing much resemblance to an ordinary bona fide sale. One of the defendant's own witnesses, I observe, stated that the bailiff said immediately after opening the business by reading the notice of sale, "You may arrange with the gentleman for the amount of the execution, but my expenses must be paid in cash," and that thereupon this witness and another stepped aside and heard no more of what passed.

Very shortly after the sale, Buckley proceeded to Sydney to negociate with the defendant as principal, an arrangement such as he had proposed at the sale, and Ridgway wrote to the defendant stating, inter alia, that he had not committed himself in any way with Buckley, but had told him that the arrangement proposed was beyond his instructions. In his answer to this letter the defendant says, "I am advised to keep the sheep, whatever the consequence is; Want says they can only claim the amount of the bond, viewing the matter in its worst light;" and the result of the business was, that he insisted, as he still does by his answer, upon holding the sheep as absolute owner, and has remained in possession ever since.

Mr. Thurlow, a solicitor, was instructed by Hirst and Booth to watch the proceedings, under the Foreign Attachment Act; but no opposition was made to the attachment in the first place, in consequence of an erroneous supposition, said to have been occasioned by Mr. Want as solicitor for the now defendant, that he would have to come to Court to assess his damages, instead of proving his alleged debt by affidavit merely. On the 17th May, an application in Chambers was made by Mr. Thurlow, under instructions from Hirst and Booth, to set aside the foreign attachment proceedings; but on the opposition of the now defendant, he was not allowed to support his application, for want of the security required by the 12th section of the Foreign Attachment Act. A motion before the full Court met with the same fate.

In 1845, the Court was moved in behalf of the now plaintiff, to cause the merits of his defence to the foreign attachment action to be inquired into and determined according to the provisions on the 13th section of the Act; but the motion was defeated by an objection taken for the now defendant, and allowed, to the affidavit of the now plaintiff, required by that section of the Act, and which had been sworn before the Mayor of Leeds, In England,---on the ground that the Mayor had affixed the seal of the Corporation, instead of his private seal.

The power of attorney to William Hurst was very ample. It empowered him to transact all affairs of the plaintiff in the colony; to make any sales, mortgages, or other dispositions that should be necessary or proper; to settle accounts between the plaintiff and any other person, and to pay or receive the balance; to enter into any arrangements, and give security for payment, with any person to whom the plaintiff might be indebted, to borrow on security of the real or personal estate any sum he should think proper; to being and defend actions, or suffer judgment by default; and generally to act in the entire management of all the plaintiff's affairs and concerns, and to do all such things as might be requisite and expedient, as fully and effectually as Binns himself. A power was also given to substitute any person to act under Hirst or in his place in all or any of the matters aforesaid, and such substitution to revoke. The substitution already noticed was revoked in May, 1848.

The cause was heard before me on the 6th, 8th, and 13th of March, in this year. The Solicitor-General, Mr. Donnelly, and Mr. Broadhurst, appeared for the plaintiff, and contended that as there had been no actual loan by the defendant to plaintiff, it lay upon the defendant to make out the whole chain of circumstance which would render the transaction equivalent to one: That Booth was substantially identical with Hirst, and that his admission of a debt from plaintiff to Hirst and Co. could not bind the plaintiff: That the absence of an actual debt, or proof of it, was of itself sufficient to invalidate the defendant's proceedings: That the whole original transaction was a fraud upon the plaintiff, and that the defendant by dealing with an agent in the way he had done was responsible in equity, if not morally implicated in that fraud: That the judgment on the foreign attachment was a fraud, because founded upon the false recital in the lien of a bona fide advance of money from defendant to plaintiff. It was further contended that the defendant's conduct in following up the original transaction by an affidavit founded upon such false recital,---in opposing the appearance of the plaintiff's agents for want of security---his sending a special bailiff to sell at Maneroo, under a short local notice, for cash only from all bidders but himself---and his highly technical opposition to all attempts made for the investigation of his claim---all evinced such an unscrupulous determination as a Court of Equity would not sanction, to abuse the processes of the law for the purpose of possessing himself of the property of an absent and unprotected person. It was also submitted that, having reference to all the circumstances, and particularly to the alleged arrangement at the sale, the defendant's position was, in Equity, at best that of a mortgagee for the amount of his execution and costs.

The learned counsel cited the following authorities:---Hill v. Simpson, 7 Ves. 152, 169; Lord Cranstoun v. Johnstone, 3 Ves. 171, 182; Fyler v. Fyler, 3 Beavan, 550; Wilson v. Moore, 1 M. and K. 126; Watkins v. Cheeke, 3 Sim. and S. 199, 205; Bateman v. Willoe, 1 Sch. and Lef. 204; Mitchell v. Harris, 2 Ves. 129; Barnsley v. Powell, 1 Ves. sen 289; Young v. White, White v. Young, 7 Beav. 506; Bowles v. Orr, 1 Y. and C. Exch. 464, 473; O'Connor v. Spaight, 1 Sch. and Lef. 305; Cupitt v. Jackson, 13 Price, 721, 731; Adamson v. Evett, 2 Russ. and M. 66; Clarke v. Manning, 7 Beav. 162; Fullager v. Clarke, 18 Ves. 411; Paley's Principal and Agent, 325; Jackman v. Mitchell, 13 Ves. 586; Crowe v. Ballard, 3 Bro. C.C. 117; Kent v. Bridgman, Pr. in Ch. 233; Watson on Awards, 318, Mad. Ch. Pr. 78; Blackwall v. Combs, 2. P. Wms. 69.

For the defendant, Mr. Michie, Mr. Fisher, and Mr. Lowe, contended that before the Court could deprive a party of the fruits of a judgment and execution at law, a clear case of fraud and collusion must be affirmatively made out against him, and that the evidence entirely failed to establish either actual or constructive fraud on the part of this defendant: That the representation of a debt being due from the plaintiff to Hirst and Co. was equivalent to an actual debt, if made by a duly constituted attorney; and that although Mr. Hirst could not make an admission in favour of his own firm, the substituted attorney was as competent as if originally appointed by the plaintiff: That the plaintiff was barred by his laches: That the proper remedy was by application within the prescribed period of three years, under section 13 of the Foreign Attachment Act: That it is not competent to this Court to annul the judgment at law: That the Court could not give the specific relief asked because the sheep are now for the most part different from those originally received, and are the progeny as well of rams purchased elsewhere as of the plaintiff's ewes: And that as regards the alleged agreement between Ridgway and Buckley, the evidence preponderated against it, and it was not such as Ridgway was authorised to enter into.

The learned counsel cited the following authorities, Nugent v. Gifford, 1 Atk. 462; Farr v. Newman, 4 T.R., 621; Sir R. Wayland's case, 3 Sak, 234; Protheroe v. Forman, 2 Swanst. 227, 234; Auriel v. Smith, Turn v. Russ, 121; Ferguson v. Carrington, 9 B. and C. 59; Wilkins v. Casey, 7 T. R. 711; Cannon v. Wood, 2 M. and W. 465-9; Story on Agency, 94 n.; Story, Eq. Jur., 160-1-2; 2 Madd. C.P. 396.

From the time of my first perusal of the pleadings and evidence in this case, I have entertained a very strong opinion in favour of the plaintiff's claim; and after having had the benefit of the great research and very able arguments of the counsel, followed by a further consideration of the facts and authorities, my original impression has received full confirmation.

Some of the points taken on either side will not require to be specially noticed, because I decide this case upon the ground of fraud, which it was admitted would justify the interference of this Court, notwithstanding the proceedings and the lapsed remedy at law, and the length of time since the execution. The foreign attachment judgment was founded upon the admission of a loan contained in the lien, and that lien was tainted with a fraud in which the defendant is equitable, if not morally, implicated.

In considering the case, I may at once observe that the substitution of Booth under the power, is in my opinion a contrivance so flimsy, that it would be a disgrace to this Court to allow it to affect the case otherwise than to the prejudice of the defendant, as being an act of irregular contrivance of which he had notice. The negociation which terminated in the lien, was conducted entirely by W. Hirst, who merely referred to Booth as his "Book-keeper" to vouch for the existence of a debt from the plaintiff, and made use of him as an instrument to perform, under his directions, and for his benefit, acts which he could not have done in his own person. The defendant has thought proper to take from his insolvent debtor, security upon the property of an absentee with the management of which the debtor was intrusted, and has relied upon the representation of the debtor and his clerk that money was owing from the absentee; and it turns out that no debt was in fact due. This alone, I am disposed to think, would be fatal to him; for if a man choose to tread upon such dangerous ground in pursuit of his personal interests, he may be considered as taking his chance of its proving or not proving sufficient to support him. But there are other unfavourable circumstances affecting the lien; others more immediately connected with the judgment; and others again attending the execution and sale.---which together make up such a case against the right of the defendant to retain these sheep and stations, that, to use the language of the Master of the Rolls in the case of Lord Cranstoun v. Johnstone, "I must forget the name of the Court in which I sit, if I refused to grant relief."

The defendant may be taken to have known that Mr. Hirst could not bind his principal by admission in that principal's name, of a debt as due to himself,---for the contrivance of substituting Booth under the power was calculated to bring this fact home to his mind. He could not help knowing that the lien was granted exclusively for the benefit of Hirst and himself;---for if there were no other circumstances, that alone of the lien being granted on the 29th November, when the plaintiff's wool clip would be on the point of repaying all advances (if any), would show that pressure upon Hirst personally could alone have been the cause of the lien. The substitution of Booth I also think a prejudicial contrivance, especially as I am not disposed to believe that it was really made with a view to any other arrangement than that with the defendant. Why a clerk should be substituted to negociate an actual loan to the plaintiff by third parties, in the ordinary course of business, as professed, I do not understand; but to effect this crooked arrangement with the defendant, the object is transparent.

I now come to the judgment. It might have been expected that when the defendant found that Hirst and Booth did not keep faith with him as to the lien, he would have had some misgivings as to the propriety of using their unsworn and interested statement and the positively untrue recital on the lien, for the purpose of attaching and selling off the property of an absentee, whom he must have known to be virtually unrepresented or nearly so; and if he desired to take no undue advantage of an unprotected person, he would have thrown no technical obstacles in the way of fair investigation, but would rather have made opportunities for it, before irreparable mischief was done to one whom, by this time, if not sooner, he had grounds for suspecting to be the victim of a fraud. Under all the circumstances, it appears to me that the power of which the defendant possessed himself to use the process of foreign attachment, has in this case been exerted in such a manner as should influence me considerably in determining whether or not it is against conscience for the defendant to retain the fruits of his judgment at law.

But the defendant's conduct with respect to the sale, operates still more strongly on my mind. The very peculiar circumstances under which the supposed relation of debtor and creditor arose between the plaintiff and himself, and the ex parte character of the proceedings to judgment, should at least have dictated moderation in the enforcement of the execution, so as to inflict as small an amount of injury upon the absent owner of the property as was compatible with the satisfaction of the defendant's claim. Yet we find that instead of a sale in Sydney, with advertisements calculated to invite competition, and terms of payment which might have secured a better price without risk, or have rendered unnecessary the sacrifice of the whole property, the sale is directed to be made at Maneroo, by a sheriff's bailiff as auctioneer (at an additional expense), without notice which could reach any but immediate neighbours, and upon terms which made it a moral certainty that the defendant would be the purchaser at his own price; added to which, there is the fact that all attempt at competition was prevented by the impression as to arrangement with the judgment creditor, of which the defendant has taken the benefit, if he did not actually or constructively sanction it. It is to my mind quite impossible to escape the conclusion that the course taken was adopted with a view to become master of the property of the plaintiff, upon the defendant's own terms, behind the plaintiff's back, and not for the simple purpose of obtaining satisfaction of the judgment.

Were there nothing else in the case to invalidate the transfer of the property, and were the debt bona fide due, as in Lord Cranstoun v. Johnstone, it would be unconscionable for the defendant to retain the property except as a security for such debt; and it is probable that I should decree a re-assignment and account upon payment of the execution debt and interest. But it is unnecessary to decide on any one part of a series of facts which, upon a question of this sort, have a united force; and therefore, I do not distinctly determine the last noticed point, but must be understood as founding my decision upon a comprehensive view of all the facts of this case.

As intimated in the course of the argument, the decree will not grant relief in the shape of a declaration that judgment and proceedings at law are null and void, and of a decree to set the same aside; but if the plaintiff desires it, he may have a direction for the entry of satisfaction upon the record at law. The substance of my decree, however, will be that the defendant make restitution of the stations and sheep with all their increase, and that the account prayed by the bill be taken and payments made according to the result.

And here I may note the arguments as to the difficulty and supposed impossibility of following the increase. In this there may be practical difficulties of greater or less weight when the matter comes before the Master, but I see none in principle. The rule, "Partus sequitur ventrem" may be applied to the objection arising from the introduction of rams foreign to the plaintiff's stock; as may also the rule that he who chooses to mix his own property with that of another, without the consent of the latter, and in such a way that the properties cannot be distinguished or separated, can, in general, claim no share, but must leave the whole to the other party.

A doubt may certainly be suggested, though I do not understand this exact point to have been argued, whether a Court of Equity will decree specific restitution of chattels not possessing a peculiar value (such as that of an heir-loom), incapable of appreciation in damages or compensation; but it appears to me that the Court being possessed of jurisdiction over the case in respect of the fraud, it follows that it has the power to order restitution as the only complete relief applicable, and that the decision I now arrive at is virtually that the property has not ceased, in equity, to belong to the plaintiff, and ought to be returned to his possession by the person who improperly deprived him of it.

Let the minutes of decree be settled in accordance with the intimation above given of its intended import.

Therry J., 5 February 1850

Source: Sydney Morning Herald, 6 February 1850, in Supreme Court Collection, vol. 3, pp 64-65

His Honor sat for a short time this morning, but the only business transacted was the delivering judgment in the two following matters:--

BINNS v. BRIERLY.

His Honor said, I have looked through the several schedules of costs, and propose now to dispose of them separately.

First, then, with respect to schedule A, I am of opinion that the plaintiff did not take the requisite steps to entitle him to the benefit of the 28 th order of 1828, which gives to the plaintiff obtaining a decree with costs, the costs occasioned to plaintiff by the insufficiency of defendant's answer. In order to entitle himself to these costs, plaintiff should have attended to do that which is required to be done by the 12 th order of 1828, and the 19 th order of 1833. By the 12 th order of 1828, if the party, i.e., the plaintiff in the present case obtaining the order, does not obtain a report within a fortnight, the order of reference must be considered as abandoned. In all cases, therefore, it appears that after an order of reference is granted, a report must be made, or the order must be considered as abandoned; and if abandoned, of course the costs of it cannot be costs to be paid to the plaintiff by the defendant. Besides, by the 19 th order off 1833, the Master, to whom any exceptions to an answer for insufficiency are referred, is at liberty in making a report upon such exceptions, if he shall think fit to certify by whom and in what proportion (if any) the costs of such exception and of the reference thereon ought to be borne, and upon the taxation of the general cost regard is to be had to such certificate, and the costs to be allowed to either party are to be taxed and apportioned accordingly. But here neither report nor certificate were obtained, and the Master had only to deal with the order as an abandoned order, and had no certificate to guide him as to whom and in what proportions the cost should be paid.

Schedule B appears to me to stand on different grounds, and not as stated in Mr. M'Culloch's affidavit, "in similar grounds to those mentioned for the disallowance of the items in Schedule A." In reference to the costs of Schedule B, there was no order of reference, and in that event neither the 12 th order of 1828 nor 19 th order if 1833, to which I have referred, operate, or interfere, to deprive the plaintiff of the benefit of the costs to which, under the 28 th order of 1828, he is entitled.

Then as to the costs of the motion. In order to bring this within any subsisting rule, it must be either successful or not. There is no rule to guide the Master where the motion is only partly successful. It is competent to the Court no doubt to order whatever it may think proper and just, when the matter is brought before it. But that is not the question with which the taxing officer had to deal. The question for him is, what costs in the absence of the Court's directions should be allowed, and he allows as costs in the cause or not, the costs of a motion according as it is successful or not.

It appears to me, however, that it is right and reasonable that the costs should be apportioned according to the real intrinsic merits of the case, and reference should be had to the grounds on which the motion was made. If, for instance, there were twelve grounds of motion, and the party making it should succeed on one---perhaps a technical one---and the opposing party on eleven; it is but right and just that the costs should be apportioned in favour of each party with reference to the grounds on which he was respectively successful. As there must be a reference back to the Master relative to the costs in Schedule B.; the costs as to the motion may at the same time be referred, and the principle I have laid down, in similar cases for the future, may be generally adopted. And this may the more readily be done, as the party who in any instance may consider himself aggrieved by the adoption of it, is at liberty to apply to the Court for its modification, in the event of a strict adherence to it operating unfairly or oppressively.

As to the other two points involved in the application, first---as to the allowance of fees for one consultation, although I am myself of opinion that in many cases, and especially in a long litigated case like the present, involving an appeal---more than one consultation may be requisite, yet as there is the rule limiting the costs for consultation to one consultation only, I think the Master was bound by it, and I cannot alter his decision. In like manner, with respect to the disallowance of costs to more than one counsel as charged in Schedule C, I have communicated with the Taxing Master. I find he has considered all the circumstances and exercised a sound discretion---and I cannot interfere.

Let the bill be referred back to the Master to review his taxation on the points on which I have directed it to be reviewed. As this reference is made on grounds not taken before the Master at the taxation, I think the principle of the 14 th Rule of 1848 applies, which directs that where exceptions are taken to a Master's report, unless the party shall make it appear he objected to the Report on the same grounds upon the settlement of the draft thereof, or that he could not then avail himself of those grounds,---he shall not be entitled to any costs. The reference may therefore take place, but I make no order as to costs.

Published by the Division of Law, Macquarie University