1914-02-21 — Page 13

SHEWAN TOMES & CO.

(Continual from first Extra.)

which

THE

levant to the argument?

HONGKONG TELEGRAPH.

EXTRA

HONGKONG,

Mr. Sharp:It is relevant to show that there was no pistol held to the hoad.

The President: The only object

SATURDAY,

FEBRUARY

21. 1914.

The President: I do not" think of that remark of mine was that from his own affidavit and from the outsider would dream of giving to be the result of the case of case and appears on the construc

put` that' question.

Mr. Sharp: I thought you did." The President: No, I do not think

!!

Mr. Potter: You, taking it on partner the option of purchasing reason for this collection of be to the partners if either of them which your Lordship' desoribed' tako inadvertently made and it has

property and goodwill' can absolutely disregard it and take as a fancy price, as the good crept into the newspapers and I that basis that because it is a taking what it says he may purchase words will was overladen. Then a must remove. It was a balance over clause it must include goodwill, the property, business and good is "Oh it must be done because advantage of circumstances and gos counter proposal was made by shoot given in the ordinary course and I don't think it matters whewill. There is absolutely no nec if you don't give that you would hold of the business in an entirely essity to distinguish between pro- not get the sale of the good will differant away. My friend, Mr. Mr. Shewan that Mr. Tomes of the proceedings, in these proceed ther the stranger can come in or

perty and goodwill in clauses 11, at all, the only clause under Particularly, we say that your should sell for $300,000, payable Lordships cannot fix an upset price half in cash and half secured, ings it has not been accepted by not. That is my friend's contention. 13 and 14, in order to fix the price which it would be necessary Jenkin says "Oh, it the goodwill is

Showan and at that time he was Clauses 11,13 and 14 my Lords put

We will does that, so let us assume that 11 be specifically clause 12 under bay it under clause 11.” No doubt not only not solvent, but he was very the position in this way, Brice at which the business would tion,

Counsel came back shortly largely solvent. Mr.. Alabaster did give the continuing partner this read partnership, business and which we actually put the fixed they would, but that is not our interpretation of the agreement. be sold because we admit we could after and stated there was pro- not take the figures from the affida advantage, he may purchase if he property only, 12 fixing the value value on it no other clause must. But Now my Lords I ask you to go not put it. Then the President ask-spect of a settlement, and then vit, he quoted the balance sheet and chooses to pay a certain fixed price, of the goodwill, and assets, ed me what would the result if your there was a further adjournment. Mr. Shewan bas disputed that band coming down to practical poliit cannot be argued the continuing through the oases and from what Apparently, it is "Heads I win, tails Lordships did not fix one at ali.

The President:-Is this relance sheet, and I expect that st{ ties, my Lord, even if you did order partner purchase goodwill, be- fell from the learned President the you lose." I, in fact, it is worth cause it is fixed by Clause 12. What devoted oases dealt with it, I need more than $150,000 so much the The two cases mentioned better for us, if we can got it at It could be worna than is suggested

the moment they have no other, the sale as a going concern under 15, suggests, my Lords, is to give the not.

learned leader, Jonkin, woul be less than nothing who

Wo know them to be correct in many no one would be a purchaser except partner, taking over the goodwill by other particulars.

a partner. That is the reason taken without putting in 12, is absolute- in which it was mentioned less, and we will go to another it would be less than nothing-whs

you need not put in goodwill clauss," would be liable for the debta.

Mr. Alabaster: I took the figures ap by the other side becaues no ly without foundation in law.

The President: That appears in order to have it. It is in each

I did not think the Court could balance sheet.

thing like the value of the goodwill David and Matthews.

tion of the documente. Now my consider that when the two part-

of the basiness as a partner bearing

Mr. Potter-In my favour. My Lords as a matter of draughtsman- ners were going to enter into an

ship, my friend's contention is agreement for ten years they

I have travelled titled to carry on business in Hong-case, which would be a taking these words must be put in. would put in a clause simply in order to allow them to put pressure over much ground my Lords and kong where both were known, over case, and if you will look at The next point I wish to deal with Mr. Sharp; Then I need not aus on the other side. That is an there are many reasons if you subject to the restrictions of the these cases, you will find every is on this I have submitted that power sale as a going concern, and this is one of them turned on the con- the whole spirit and intention of wer it.

argument the Court would not

consider you hayo

material struction of a particular document this agreement is that the good- The President: No. The case listen to, I think. quate clear. If the Court comes to Mr. Sharp. I do not put why you should not direct under a matter which has

case effort laid down by the authorities, soncerning the case. Yes, every will should be purchased (1) at a one of them. And, my Lords, I price fixed by the partners them. I think a

aircumstances of this the to the conclusion that you will as it high as that.

prudent solicitor will provide, this particular mode of sale. It has on the value of the goodwill to the say this with confidence. Your selves, or (2) by virtue of an agree Coming to the facts of Lordships may go through the mant between the fixing of another 'order a sale as a going concern, for all éventualities. in an necessarily taken a considerable stranger.

Now, my Lords, you: Mr. Potter: They said they did it will be the duty of the Court to agreement of this kind and there time to consider these reasons which this case the only bidders at the so case from beginning to end, as price.

valued. the goodwill will take it at $100,000. I submit see that such directions were given is no suggestion of any improper I had to do as the point was raised called suction are the partnera, if we have done, and no doubt must assume that the partners not think it worth $130,000, and

our client can bid at all, we say which my friends have done and have

business (as they sa would ensure as far as possible, pressure being brought to bear.

you cannot as a Court of Equity, mean anything inconsistent with by the other side, but you are

whole of the cases in Law, so far did on three separate if it is possible, the rise of the two the mutual confidence between { aware of our substantial admission, he cannot I am assuming he could. You have not yet one case in the of this

Your Lordships these matters will so you have in effect clause 15 work-as we can find, in which arrange- sions), you must assume until the put that construction upon Clauso not I think arise for your Lordshipsg in just the same way as 11,13 ments were made in this definite contrary is shown, that the va-15, anabling a man to totally dis.

this exception! way.

luation is a fair one and one on regard all the provisions already. decision at all because we submit on only, the price obtained under 18

which they mutually agreed. I is not fixed and under the other it is. the proper construction of this deed, as a whole. These words property and affects occurring under claasc

partners.

Mr. Sharp: And that would in- roye an upset price.

The Chief Justice: An upset price could not be less than Mr. Shewan kaï already' offered.

the partners.

?

Mr. Sharp: Well we know them to be incorrect.

the

15

in mind the fact that both are on-learned leader mentioned that his

and 14, with

OCOL-

It my friend's contention in re-

My Lords: The partners must be presumed to have fixed. fair valus when they set it at $150,000 That must be presumed to be the trus value, and there is no jot of evi- dence in this case until we come into Chambers of any dispute between the partners as to whether this sum should be reduced.

The President: Was that dong in Chambarat

The Chief Justice-What are you putting this alternative pro- posal forward as? What do you

The Chief Justice: I cannot do not for a moment suggest that made in Clauses 11, 13 and 14, ar- ask us to infer from "this

Mr. SharpThat any such

The President: "The goodwill: find any cases where there is it should not be otherwise, but ranging that this goodwill should be the real value is presumably what bought at either a fixed price or a expression as that one partner is

Mr. Potter: Tod, I am taking specific references to goodwill.

Mr. Potter: No, I don't think the partners have fixed it at. To price to be come to. It might be Ke Sharp: I suggest your Lord-holding a pistol at the other do not comprise good will and if my learned friend's argument now

an absolute

you find as we submit you should on which is different from my point of 50 can, my Lord. You cannot, come down to the facts of the said that supposing by chance skups cannot enter into these spec- partner's hoad is

and this has been done for the case, presumably that is so, be- $150,000 does not represent the true: iations at all, and certainly that burlesque of the action on that view with regard to the con-view, and being in fact the same purpose, I think I will show your cause we are prepared to pay that value of the goodwill, I can con

drawn up by Mr. Victor Deacon.

ceive that that is possible. Well, it cannot be less than Mr. Bhewan I suggest that that is absolutely straction, it would not be necessary affect can be obtained under all these Lordships very shortly. There value for it.,

take that position. Let ni assume, offars. --I say if it is to be done at inconsistent with the proper for your Lordships to proceed on the clauses except in the sense the may be such a case but we can consideration of any other grounds whole of the property can be pur say that we could not find it, and

as suggested in Chambers for the aff, it must be on an upset price relations between the partners:

The President: I am prepared I have argued. On this ground we chased, because he argues under 15 we have gone over the cases that which would be dissastrous, He

have relevance to this cass in the would not only get nothing," but to understand that they have ask your Lorships not to make the ho could buy lock, stock and barre Law, and this is my answer to gurd to this deed is correct, what first time, that it is only worth drawn this clause which pro- order and ask you to dismiss this If this is so than the only distinc- his first argument, and an import is the result The plaintiff or the $100,000. Then the partners can would remain' liable for the debts vides for the making of an arran-

tion under my friend's argument is ant answer. We must get over defendant, I am not drawing any agree that it shall be sold at that and would be then in's worse posi-gement and they add to that some

under clause 15; there is a fixed price the difficulty why the draughts- distinction between either gentle sum. Now it is suggested that we tion than before. Now, my Lords, scheme which is to be followed

of the arrangement. Mr. Potter: There are only one or under this, under the others there is man draws a distinction between there is only one other point I want in default

Mr. Sharp: I don't put it any two points upon which I wish to not. And with all due respect to the property and the goodwill be-man, either party could go under can bring pressure to bear on us cause no man can say 11, 13 and Clause 15 and they might purchase and compel us to give $150,000 when thist is on a misconception of our/higher than that. Other words were deal and I will deal with them as the particulars of the assets, all 14 include goodwill, because the that goodwill at any pricà although it is only worth $100,000. Look at polition, at any rate, our position put into our mouth. We put it, that shartly as I possibly can. The first other property is fixed. There is a draughtman draws a distinction the partners had eboson to agree to it from either side. If one man says

put by the attorneys with ra. /it is merely to the interests of both point is one made by Mr. Alabaster definite mathematical calculation. property and goodwill. You must a fair value by virtue of another, to himself, "My partner say the documents and from the corres. Presented in this clauso-the coming/he chose to call the auction clause/You must pay the market price, sub-put in good will, and he must get clause of the Agreement. In short, only worth $100,000." Perhaps he is

to present to your Lordships and

appeal.

I

gard to the purposes derived from parties to take the other alternative as to a dividing line between what

pondence na to the purposes of

clause 18. It has been put I do not blame my friend for misconstruing our position, but it becomes our dity to practically take

to

tract the liabilities of the firm and over this argument; you must

and the taking over olause in the the net result is the price of the put in goodwill because it is a would submit what in the world right. Don't you think that as a sa amicable arrangement. I

partnership dead. It is quite easy assets. There is then, my, Lord, the case of law, and against this case is the good of all the elaborate sane man they would agree to itself. Now, my Lord, under 14 machinery of clauses 11, 13 and 14 accept that price rather than to to understand why he wishes to draw this dividing line, because he understanding that they have to you will find it is emphasized that faither partner can, at his mars have the whole business sold and whim, say "I am not going to liquidated, the net result being that is in this dilemma. He must give pay the market price of the day. it enables the continuing partner your Lordships a good reason why (Articles quoted). Now, my Lords; to take over in case of absence of

more than two years from the purchase this goodwill at what he would get nothing for the good- will That is why we say this if that is so- the draughtsman of this document

The Chief Justice: I don't think Colony, he will be at liberty to might be a fair price. I am going

have used no stronger words than that it is to ensure an amicable ar rangement being some to instead of a liquidation. I was arguing to show how the negotiations procced-

It. It has boon" put by our learned ed. We absolutely accepted the should distinguish between properit ia material, but look at Article Purchase the share of the absent to take my chance in the market clause 15 bears our construction, as

friond Mr. Alabaster that our con- struction of clause 15 means that

F

utoly against him.

18

not.

•

partner. Therefore, the whole of in which I may be the only bidder. I don't like to me the word weapons

the 'clauses until you get to the

use,

forent m de buy the partnership! can see no possible advantage at all. Take the caso undor Clause 14, where the partner is absent for two:

offer. That is made clear. But and good will in every clanse that a pistol should be hold at the head they withdrew it; they reoaded from the word property occurs until you And the only

last says they are to be ascertain and if I can get it for 820,000,It is a clause put in with the in- of the other to compel him to the offer after making it.

come to clause 15.

Mr. Potter: I am coming to that: ed in the same manner as it was instead of $150,000 so much the tention of inducing fairminded come to an amicable arrangement. That is, I think, the way of Then we made an offer of $30,000 way my friend has been able or

The Chief Justice: There is only given before, and provided as in better for me." I think I will partners to cocas, to an agreement putting it and it is certainly mora. There is a difference in the rather the only reason he was able

the price to be paid, etc. Doss that share of the retiring partner. He the spirit of the agreement. If the words, it was put in this way in not the position as we put it. last offer between the two sides of to give to your Lordships for this word, and that is concerning the case of the purchase of the satisfy your Lordship that is not and so avoid this sale. In other

distinction to be made is that under We did submit yesterday going $60,000, in favour of Mr. Showan-

mean the value of the said shares, cut out that word and said the construction put forward, is correct, order that the spirit and intention taking over clauses you must men and it covers goodwill as well?

shares must include goodwill. Of through the various olauses that is to say, Mr. Shewan offered

that must be the position. That is the partnership deed should be course, it would 'not, because you that the manifest intention of

Hon goodwill, and in other clauses

Mr. Potter: We believe it does can go back and find it specific- one of their arguments. Your Lord- effected, If it is not sold, what Clause 15 was to make it strongly $60,000 more than they, and it is you need not. Now my Lorda thore

ally dealt with by virtue ships must also bear in mind that the use of clauses 11, 13 and 141 to the interest of the two parties to be seen that the offer at that time is no law in support of that proposi

The President: Then there is no of clause 12-the valuation the only real bidder for the good-fail to see any. What is the to come to an arrangement was absolutely accepted and then tion, in fact the law is the other

if either partner can in a dif atrongly to the interest"--that refuted. They receded from their way, and furthermore the construc- Provision S

to how the goodwill clause, which, of course, will will would be a partner because no

mention goodwill; because you is the position which we have offer of a settlement. We hoped for tion of the document itself was so must be paid for.

are said to fix the value upon it. one would give more, and in this taken up throughout-that it was

That makes it absolutely clear of particular case thers would be only really inserted by a prudent and a settlement and that is the position far from bearing him out, is ahsol-

Now my Lords Mr. Potter: We read it as casli. what the continuing partner has one bidder. Now, my Lord, I will far seeing solicitor to provide to we hoped to reach the second time, gopie extent for what might hap-and we will be fortified by a decision clauses 11,15 and 14 which my friend He must pay $150,000 in instal- to pay in each case absolutely, show you how inequitable such a pen. I would refer your Lordships of the Court that the agreemont in calls taking over clauses are clausesents or in cash. If it covers my Lord. Therefore, as I have construction might be how far it years. If he is absent from the

that, he pays in instalments, but said already, it is entirely un-

from the intention of the Colony for more than two years for to Mr. Deacon's letter of the 21st. volves what we say it does. Then, which enable the continuing partner I don't think it affects the argu- necessary as a mere matter of October, 1913, page 95 of your

draughtsmen that a partner mighty reason whatever, the continu

ing partner is entitled to purchase Lordships, file. (Letter quoted). there can be no question that to purchase the share of another ment at all, if we have to pay draughtsmanship.

partner under certain condition for the goodwill separately,

be totally disregarded at the while The lattor winds up with the settlement will be affected. It only and under certain eventualities whether he page it at once. The Chief Justice: The word of either party, and obtain the busi- the share at the same rate. Sup- interests of both parties that been decided, it would lead to a recept my learned friend's argument you effect statement thatthat it is in the means that if this question bad not Furthermore, my Lords, if you no- Now, my Lords, if in fact "share"

ness in this way. Take Clause 11 Posing ho is absent by reason of the same result Mr. Potter: Supposing you which provides for the case of bank sickness, then the other partner they should come to am arrange- ment, if possible--that is, the posing of the settlement which had that a sale as a going concern can the sale of the business as a leave it goodwill, etc., in clause.

going concern because this is 14, now, my Lord, you give the ruptcy (Clause quoted). According if he chooses, purchase the argument in clause 15, and the been come to.

be ordered under clause 16, assum-practically a going concern; continuing, partner power to buy to my friend, there is no obligation partner's share of the goodwill and position we have taken up je Mr. Sharp: Before I sit down, at ing that being a successful argu- furthermore, it is true the sale the share of the partner absent on the continuing partner to do that, other assests. What would a Court lotting us come to an arrsoge- the request of muy solicitors, I must ment, then clauses 11,13 and 14 as a going concern and that is within the clause. You know According to my friend he would of Equity think of the parties if Both Mr. Shewan and Mr. Tomes correct an error which I am sure my practically bring into effect the our understanding and the or- the share has to be ascertained say I will not exercise my opinion, instead of doing that he said ""I are clearly indicated in clause 15. learned friend Mr. Alabaster would very same thing which is brought dinary accepted meaning of the in the manner provided in the We, for ourselves, do not wish, not have fallen into if he was aware into effoot in clause 16, except that word "sale as a going concern," osse of the share of the meaning I will come into the open market am not going to do that at all, I am It is true you are ill and an invalid to exercise them, but to let us that the balance sheet of 1012, which under clause 1o the purchasing part they have got to be affected partner. It is merely asking under Clause 15, knowing full well going to come under Clause 16.

as in Olause 15. That there your Lordships what is the mean that no other party will come in, come to an arrangement, if possi- is the one we have had to use for the ner is not fixed down to any price should be equal sale at a pur- ing of share; it must include and if he does, I can get the basiat homes that does not, matter to ble; and, my Lords, our acts bear purposes of argument and we have and in the other clauses he is. That chase under 15. The draughts goodwill, because Clause 12 says ness. He comes into the market me; I am going to get the business out words. We offered Mr. Tomes only accepted for the purposes of is accepting Mr. Alabaster's arga man in 11, 13 and 14 disso, so there you have a specific that if this share was to be sold,

ment. Those powers given to

}

WAS

we would be either buyer or seller, argument, we actually received it ment that you can order a sale tinguished between properly and case in which you may exclude and purchaser the good will, and the for whatever I can't They may say and we offered a price higher than when the dispute between the par- under clause 16. Then there is no goodwill; there is no answer to goodwill altogether, and although whole of the business perhaps for that is the contract between the he has offered. There are offers ties arose and Mr. Showan says clear practical distinction between 11,13 it, and perhaps the other side will excluded the documente make nothing, at any rate, for a sum vory parties. Is it Our construction is fram both..

sides, there ly he does not accept it, he does and 14 and clause 10, in either case say and it is perhaps what the it clear what "share" meant much less than was contemplated that that is not the contract, and were two proposals handed not take the figures as correct, he the continuing partner purchases the President has in his mind "Oh, And the net result le that the by the parties thonisalves. My Lords again I say if that is the contract,

you want a fixed price for the matter of draughtsmanship is: in writing

the Chief has not signed it. I do not wish to share and the other partner does so goodwill". My Lords, this point absolutely unnecessary. It is that the intention? If your what is the use of Clause 141 Under. Clause 15, the invalid would hays Justice from each side, both go any further than say given by There are two clauses which deal with is under Clause 12, an entirely absolutely unnecessary for the Lordships should say that is the in- of them perfectly fair. I have fr. Alabastor's client, insolvent, the purchase, the doorment says so. different clause clauses 11, 13 draughtsman to carefully put intention, and you will if you accept the weapon; the invalid would say no gripiam”: tau make of Mr.! Homes's effon Ah was that Mr. Shown at that time was insolvent, The Fresident: There is this differ and 14 are enabling clauses. You property and goodwill every my friend's argument, you might as "If you are going to have this buri- Shewan hould sell for $148,000 is untrus can show at that ence, under clause 15 the stranger can wipe clause 12 absolutely out time as he does it is the only well wipe out this Clause from the nose, you w 468 matter of foot, they refused time Mr. Showan was very largely can come in under 11,18 and 14 he of the document, my Lords, if explanation forthcoming, and the dead at once, because I conless which is a fair one." Then take the

you like, and clauses 11, 13 and only explanation forthcoming it. Me, Slade put it at $25,000, solvent. I am sure it was a mis onnnot."

14 would still give the continuing from the other side. The only cannot see what possible, use it can ase of death. If the continuing

Wor

will have to pay a price