Campbell v Campbell - [1916] HCA 20

CAMPBELL AND OTHERS

RESPONDENTS. DEFENDANTS,

ON APPEAL FROM THE SUPREME COURT OF Mortgage-Interest in partnership--Bankruptcy of mortgagor-Sale under mortgage

--Sale of interest by official assignee-Suit - to set aside sale under mortgage-

-Laches-Lapse of time-Acquiescence by official assignee. SYDNEY, March 30,

A, one of the members of a partnership of five persons who owned a pastoral 31;

property, had mortgaged his interest in the partnership to B, another April 3.

member of the partnership. In 1893 A was adjudged bankrupt and an official assignee of his estate was appointed. In 1894 A's interest in the partnership was sold under the mortgage and was acquired by B, who there- after held it and dealt with it as owner. In 1904 A obtained releases from all his creditors including B. The partnership was subsequently reconstituted on the basis of B being the owner of two of the five shares. No claim was ever made by the official assignee in respect of A's share. In 1911 the plain- tiff purchased from the official assignee A's interest in the partnership.

In a suit brought by the plaintiff against B claiming to have the sale by

B of A's interest in the partnership set aside as having been at a gross undervalue,

Held, that the official assignee, whose rights the plaintiff had acquired, was only entitled, if at all, to impeach that sale as a preliminary to a suit against the other members of the original partnership, which had been dissolved by the bankruptcy of A, for an account of the partnership assets as in 1893, and that, as it was now too late to bring such a suit, an order setting aside that sale would be futile.

21 CLR 309

Held, also, on the facts, that the official assignee had not only not elected to impeach the sale but had actually affirmed it.

Decision of the Supreme Court of New South Wales (Harrey J.) affirmed.

APPEAL from the Supreme Court of New South Wales.

A suit was brought in the Supreme Court of New South Wales in its Equity Jurisdiction, in 1911, by Percy Campbell against James Campbell senior, George Malcolm Campbell; Alexander Campbell junior, James Campbell junior, George Francis Cobb and the Bank of Australasia, in which the statement of claim was as follows :-

1. On 24th August 1888 one Alexander Campbell, hereinafter called Alexander Campbell senior, the defendant James Campbell, hereinafter called the defendant James Campbell senior, John Campbell, Donald Campbell and Mary Simpson were carrying on the business of graziers in partnership in the New England District of New South Wales under the name and style of Campbell, Simpson &Company and the said Alexander Campbell senior was entitled as a member of such partnership to one-fifth part share and interest in the business and property thereof.

2. The property of the said partnership comprised a certain grazing property or run known as Tumulla holding and about 3,000 acres more or less of freehold land in the District…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Campbell v Campbell

Details

AGLC: Campbell v Campbell [1916] HCA 20
Case: [1916] HCA 20
Decision Date: 3 April 1916

CaseChat Overview and Summary

This case involved a dispute over the sale of a bankrupt's interest in a pastoral partnership. The plaintiff, Percy Campbell, had purchased the interest from the official assignee of Alexander Campbell senior, who had been declared bankrupt in 1893. Alexander Campbell senior had previously mortgaged his one-fifth share in the partnership to his brother, James Campbell senior. In 1894, this mortgaged interest was sold by auction under the mortgage and acquired by George Malcolm Campbell, the son of James Campbell senior, for £600. Subsequently, the interest was conveyed to James Campbell senior. The plaintiff sought to set aside this sale, alleging it was at a gross undervalue and that James Campbell senior had improperly influenced the auction.

The High Court was required to determine whether the sale of Alexander Campbell senior's partnership interest by the mortgagee was valid, and if not, what relief the plaintiff, as assignee of the official assignee, was entitled to. Specifically, the court had to consider whether the official assignee had elected to affirm or impeach the sale, and whether the plaintiff's claim was barred by laches or the Statute of Limitations. The court also considered the practical effect of setting aside the sale, given the passage of time and subsequent dealings with the partnership.

The High Court, affirming the decision of the Supreme Court of New South Wales, held that the official assignee's right was primarily to an account of the partnership assets as they stood at the time of the bankruptcy. While the sale under the mortgage was voidable if at a gross undervalue, setting it aside would be futile. This was because the official assignee's right to an account against the other partners was now time-barred by the Statute of Limitations. Furthermore, the court found that the official assignee had affirmed the sale. This was evidenced by the bankrupt obtaining releases from his creditors, including James Campbell senior, in 1904, with the knowledge of the sale and James Campbell senior's claim to the property. The release of the mortgage debt by James Campbell senior, in reliance on his acquisition of the bankrupt's interest, indicated an affirmation of the transaction by the official assignee. The court concluded that this affirmation, coupled with the eight-year period of inaction, constituted laches, preventing the impeachment of the sale.

Consequently, the appeal was dismissed. The court found that the plaintiff's claim wholly failed, as any order setting aside the sale would be futile due to the time elapsed and the Statute of Limitations, and the official assignee had affirmed the transaction, thereby barring its subsequent impeachment.

Orders