Campbell v Campbell

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.