Palmer v Carey - [1926] UKPCHCA 1

37 CLR 545

payment into Court to the credit of this cause." Save as aforesaid decree affirmed and appeal dismissed with costs. Solicitors for the appellant, Throsby, Young &Stellway, Wagga Wagga, by Dowling, Tayler &Macdonald.

Solicitors for the respondent Goode, Walsh &Blair, Wagga Wagga, by McDonell &Moffitt.

[PRIVY COUNCIL.] PALMER CAREY

RESPONDENT.

ON APPEAL FROM THE HIGH COURT. Contract-Construction-Agreement to lend money to trader-Repayment out of

proceeds of goods-Security, lien or charge of lender over goods-Equitable assignment.

By an agreement in writing made in New South Wales between the respondent and a person carrying on business as an indentor, which recited that the latter required additional capital to enable him to extend his business and that the respondent had agreed to advance various sums of money, it was agreed that the borrower should from time to time purchase goods for the purpose of the business and the respondent should advance the purchase-money therefor, which would be applied exclusively to such purchase. In consideration therefor the borrower agreed (inter alia) to sell the goods as soon as possible after the purchase thereof and to pay the proceeds of sale forthwith into the credit of the respondent at a certain bank; to attend diligently to the business and to the sale of the goods; and to keep proper books of account

Present-Viscount Cave L.C., Lord Parmoor, Lord Wrenbury, Lord Blanes- burgh and Lord Darling.

37 CLR 546

and permit the respondent to have free access to and to inspect such books. It was further agreed that during the continuance of the agreement a monthly account should be taken by the borrower and furnished to the respondent of the purchases and sales and showing the net gross profits derived therefrom, and that the respondent, after deducting the amount SO advanced by him together with one-third of the gross profits, should pay to the borrower the remaining two-thirds of the gross profits for his own use and benefit absolutely and that the agreement should not in any way constitute or be deemed to constitute a partnership between the parties, and should be terminable at any time at the option of the respondent.

Held, that the respondent had not a security, lien or charge over or on goods purchased by the borrower pursuant to the agreement or over or on moneys the proceeds of the sale of such goods.

Decision of the High Court: Carey v. Palmer, (1924) 34 C.L.R. 380, reversed.

APPEAL from the High Court to the Privy Council.

This was an appeal by William Harrington Palmer from the decision of the High Court: Carey v. Palmer 1.

The judgment of their Lordships, which was delivered by Lord

WRENBURY, was as follows :-

The appellant is assignee in bankruptcy of the estate of one Alfred Edwin Johnstone, a trader. He was SO appointed on 21st June 1921. The question on the appeal is whether an agreement, dated 30th April 1917, made between Johnstone of the one part and the respondent of the…

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 Palmer v Carey

Details

AGLC: Palmer v Carey [1926] UKPCHCA 1
Case: [1926] UKPCHCA 1
Decision Date: 19 April 1926

CaseChat Overview and Summary

The case of Palmer v. Carey was an appeal brought before the Privy Council from the High Court of Australia. The primary issue in this case was whether an agreement between Alfred Edwin Johnstone (the borrower) and the respondent (the lender) constituted an equitable assignment. If it did, then the further question arose whether the agreement was valid under the Bills of Sale Acts, given it was not registered. The High Court had held that it was an equitable assignment, but the borrower's assignee in bankruptcy appealed this decision.

The agreement in question, dated April 30, 1917, outlined the terms under which the lender would advance money to the borrower for purchasing goods. The borrower was to sell the goods as soon as possible and pay the proceeds into the lender's bank account. The lender, in turn, was to pay two-thirds of the gross profits to the borrower after deducting the amount advanced and one-third of the gross profits. The agreement explicitly stated that it would not constitute a partnership. The central legal question was whether this agreement created a security, lien, or charge over the goods or the proceeds of their sale.

The Privy Council held that the agreement did not create a security, lien, or charge over the goods or the proceeds of their sale. They reasoned that the borrower remained the owner of the goods, and the lender's right to have the proceeds of sale paid into their account did not amount to an equitable assignment. The agreement was simply an obligation on the borrower to use the proceeds in a particular way, which did not transfer any property interest to the lender. Therefore, the decision of the High Court was reversed, and the appeal was allowed. The Privy Council's decision restored the order of the trial judge, dismissing the appeal with costs.

Orders