i IN THE COURT OF "INSOLVENCY OF THE STATE OF SOUTH AUSTRALIA, ADELAIDE EXERCISING are ee FEDERAL JURISDICTION IN BANKRUPTCY BANKRUPTCY DISTRICT OF THE STATE OF SOUTH AUSTRALIA Re: Linda Merle DUNN Bankrupt Ex Parte Linda Merle DUNN and Aprlicant DIRECT-MIX CONCRETE PTY. LINITED Respondent Judgment of His Honour Judge Rogerson delivered the 2nd day of April, =a —— —— te err worse RSS a A ee a ee This application was made by Mrs. Linda Merle Dunn, against whom a sequestration order was made on 14th April 1978. The applicant's husband, Mr. T.J. Dunn was made bankrupt at the same time, by a separate sequestration order, Both orders were made in the absence of the applicant and her husband. However, they appeared at the Court, . apparently almost immediately after the orders had been made, where- upon according to the transcript, the following conversation took place: "HIS HONOUR: come since, These people were called at 10.35, and have I will tell them what has happened. Mr, T.J. Dunn and Mrs. L.M. Dunn, this matter, I am afraid, was just dealt with. Is there anything you want to tell me about why an order for bankruptcy in the estates of yourself and your wife should not be made? THE DEBTOR: HIS HONOUR: order? THE DEBTOR: HIS HONOUR: Wo. You did not come here to resist or oppose the No. The order stands ......." The applicant said in evidence before me that the learned Judge had not spoken to her separately but had called her husband forward and that the above conversation had been with him, She said that it was not until later tha} day that she had realised, after attending at the Official Receiver's Office, that she had had the right to "appeal against", as she put it, the making of the sequestration order. The petitioning creditor had obtained judgment by default against the applicant and her husband on 3rd October 1977 but its solicitors promised not to enforce the judgment pending further negotiations. In December 1977 solicitors instructed by the applicant's husband sought' to have the gudgment set aside. Supporting the application was an aee/2Ze affidavit sworn by the solicitor appearing for the applicant and her | husband, which averred,as the ground for setting aside the judgment against the applicant, merely that the solicitor had been infomned by the applicant's husband that the applicant had a good defence to the petitioning creditor's action. The application to set aside the judgment on that ground failed. I am hardly surprised that it did, though it may be that it would have succeeded if the facts which \ emerged during the course of the hearing before me had been put before the learned Speciai Magistrate. ; The applicant was served with and failed to comply with a Bankruptcy Notice and, on 28th March, 1978, was served with the Creditor's Petition. The affidavit of service states that the applicant said, when asked if she was indebted to the petitioning creditor in the sum of $4,310.99, "You'll have to check that with my husband, I don't know", When asked a question in very similar terms on service upon her of the Bankruptcy Notice, she had replied "I don't really know", The applicant submitted a Statement of Affairs to the Official Receiver on 18th July, 1978, This listed the petitioning creditor as a creditor for the sum of $4,310.99 but, in the right hand column, which is headed "Nature of Debt", she wrote the words "Concrete - dis- puted", The applicant consulted a solicitor - the first time she had had independent legal advice on other than matrimonial matters - in August 1978. Delays which are not I think attributable to the applicant ensued, but eventually this application, under Section 99 (1) of the Bankruptcy Act, 1966, (referred to hereafter as "the Act"), was lodged in November 1979, the Official Receiver having admitted 1 the creditor's proof of debt. This debt was a judgment debt, and was, indeed, the judgment debt from which the applicant's act of bankruptcy and her subsequent bankruptcy resulted. ' Mr. Kandelaars appeared for the applicant and Mr. Clarke for the respondent creditor, The day before the hearing I saw counsel in chambers, to discuss at their request the order in which lhe hearing should proceed. This is a matter which may be of some importance, particularly when, as in the present case, the debt whose admission is complained of is a judgment debt (indeed, the judgment debt upon which the act of bankruptcy and the sequestration order were founded) and the applicant seeks to "go behind" that judgment. I will deal first with the situation where the debt whose admission is complained of is not a judgment debt. There is some assistance to be gained here from an examination of the procedure which is followed in hearing applications under Section 104 of the Act. Here it seems to be established that the procedure is that of a re- hearing of the dissatisfied creditor's claim. It is not that of an appeal against the trustee's decision. But the two situations are not identical. In an application ' under Section 104 of the Act there is no direct adversary. The i applicant under that section is a creditor complaining about the correctness of the decision of the trustee in rejecting his proof of debt. In applications under Section 99 of the Act, however, there is necessarily an immediate conflict of interest between the creditor whose claim the trustee has admitted and the other creditor, or the bankrupt, who alleges that it has been wrongly admitted. (A trustee who applies under this section will be seeking to have corrected a decision by himself or some earlier trustee, without having any ' financial interest in the outcome). Thus, although under both sections of the Act a decision of the trustee is complained of, in applications under Section 99 a claim already granted by the trustee, - and thus, ' in a way, + a "vested right", - is challenged by an adversary, whereas under Section 104 no "vested right" has emerged and there is no adverse ' party to challenge the claim. It seems to ine, however, that the essential feature of applications under both sections is that the Court is being asked to vary the decision of a trustee, and if a re-hearing is considered to be the correct procedure in applications under Section 104 then it seems to me that it is appropriate to proceed by way of re-hearing in an application under Section 99. I am also led to that conclusion by the fact that the trustee is not required to be given notice of the application, the matter being apparently regarded as being one ,solely between the applicant and the creditor whose admitted proof is challenged. I cannot think, if the procedure was intended to be -! that of an appeal, that the trustee whose decision is challenged should , not be required to be notified. Nevertheless, I think that before the creditor whose claim is challenged should be called upon once again to put forward his claim the applicant should first put forward some plausible and apparently bona fide reason why the creditor should be obliged to do so. Jf such a reason has been advanced by the applicant I can see no hardship, or at any rate none which cannot be redressed by an appropriate order for costs, in the creditor having once again to put forward his claim, if he thinks fit. (He should, I think, be at liberty to adduce further evidence). The facts on which the creditors claim are based are within his own knowledge, And if, as in the present case, his claim is in respect of a judgment debt production of evidence of the judgment will in ordinary circumstances suffice to discharge the burden upon him. The trustee, in my opinion, would act correctly in admitting a proof of debt upon such evidence, at least if there were nq suggestion that the judgment was challenged. The application which came before me was, however, somewhat more complicated. The applicant's case as pleaded, and as supported by affidavit evidence, was such as to satisfy me that I should call on the respondent again to prove its claim on a re-hearing of the matter. one/5e < . - 5 = "But the essence of the applicant's case was an attack on the judgment, on which, no doubt, the Official Receiver relied, and on which I too, would, in the absence of challenge, have relied as sufficiently establishing the respondent's claim. The applicant had decided not again to attempt to have the judgment set aside, nor to appeal against the refusal to do so, but sought to "go behind" that judgment on the ground that there had never been a contractual debt owing to the respondent. It is, I think, open to the Court to hear an application under Section 99 of the Act notwithstanding that the debt complained of is a judgment debt, and to "go behind" that judgment when considering such an application. (See re Flanagan N.S.W. 370 of 1972, at page 3). In determining whether it should "go behind" the judgment the Court should pay close attention to the requirements for going behind i judgments on the hearing of creditor's petitions. The burden of persuading the Court that it should go behind the judgment will be on the applicant, just as it is on the debtor on the hearing of a cred- itor's petition, and the matters which must be established are, I think,,. the same. Where the judgment was by default an allegation, which the Court regards as bona fide, that no real debt lay behind the judgment, will be sufficient, In other cases, there must be made out a prima facie case of fraud, collusion, miscarriage of justice, or something of | comparable seriousness. But once that burden has been discharged then L the Court must enquire fully into the facts of the case in which the judgment was given, and here the burden of proof lies on the respondent, The situation is, however, confused somewhat by the fact that the Court may already have been obliged to hear evidence adduced by the applicant about the facts of that case in order to determine whether there is sufficient ground for going behind the judgment. Ideally, that question should be dealt with in isolation, and decided in favour 00/6. ; yr 6 - of the applicant, before the respondent is required again to prove his claim that the applicant is in fact indebted to him, If the formen issue is decided against the applicant, that ends the matter. But pnactical considerations, including the need to make the most efficient use of the Court's time, may dictate that evidence on both questions should be heard before a decision is made on the preliminary issue, otherwise two days may be partly taken up, when one would suffice. A further and to my mind potentially more serious difficulty in hearing all the evidence "in a lump" is that the applicant who gives his evidence on both issues may be put in the position of having to counter the substantive case against him before the evidence in support of that case has been given by the respondent, although the burden of establishing that case is on the latter. However, ina case such as the present, where the issues are pncomplicated and agreed on in advance I dg not think that any injustice might result which could. not be cured by permitting evidence in rebuttal if that proved to be necessary. I should say that counsel in this case desired that the issues and their arguments be not split. The respondent, called upon to estaplish his claim, gave, as I have said, prima facie proof of the debt by proving the judgment creating it. It then became necessary for me to rule on whether I should "go behind" that judgment and thus require the respondent to prove the validity of the contractual debt in respect of which the judgment was given. The judgment was a default judgment and although it appears that solicitors had been instructed by the applicant's hus- band after the Summons was received it also appears that the applicant had no knowledge either of this or of the fact that an application had later been made to set the judgment aside. The applicant had no independent legal advice and seems to have left everything to her husband. Thus, when asked when she became aware that the respondent eee/7e was holding her liable she said it was when she got the Summons, Asked what she did when she received the Summons she said "I was surprised, and I spoke to my husband about it. He said not to worry about it, that he would organise things' She said that he did not say how he would be going about that, and that she did not become aware of what action he subsequently took. When she was served with the Bankruptcy Notice she said that she spoke to her husband again, but nothing was done "He just said 'I will. fix it', and I left it at that", I have already referred to the applicant's remarks to the process server when served with the Bankruptcy Notice and the Petition, and to the ground so cursorily put forward for setting aside the judgment. In the circumstances, although some legal assistance was obtained by the respondent's husband, apparantly on her behalf as well as his own, I think that I oyght to regard this as a case where the applicant was not independently, and certainly not sufficiently, rep- resented at the time of the default gudgment and of the application to set that judgment aside, and that this is a case where it is proper to "go behind" the judgment, The respondent was thus called upon again to prove his claim, but this time to prove not merely that there was a judgement in his favour but that that judgment was properly based on the substantive contractual liability of the applicant. The grounds on which the respondent!s claim is based are set out in an affidavit in support of a notice of intention to oppose the application, the affidavit being that of Mr. W.J. Mitchell, the respondent's Sales Manager. The respondent maintains that "the applicant was either a partner with her husband in a concrete business or alternatively that as a principal she gave authority to her husband to order gopds on her behalf from the respondent company for which she is liable for payment". The affidavit makes certain «./8. ~ 8 - allegations of fact in support of these contentions, which I need not ay this point refer to, as Mr. Mitchell also gave oral evidence and I can consider those matters when I deal with the oral evidence. ; It 1S, however, necessary for me to say that Mr. Clarkeargued what . appear to me to be two further points of law, namely, and in short, that the applicant, even if not a partner, had represented herself to be such, or had suffered herself to be so represented; the respon- dent here relied on Section 14 of the Partnership Act, 1891-1975. Mr. Kandelaars alsq raised, perhaps, since the respondent did not, un- ,necessarily, the question of the applicant's husband having apparent authority as her agent. I will, however, deal with this issue also. There are thus five questions to be dealt with. First, was the applicant in partnership with her husband? Secondly, did she rep- resent herself to be a partner? Thirdly, did she suffer herself to be represented to be a partner? Fourthly, did she, apart from any question of actual or supposed partnership, give actual authority to her husband as her agent to order goods on her behalf. Fifthly, did she so act as to lead the respondent to believe that her husband was her agent. No suggestion was made by the respondent that the applicant was in any other way than those mentioned above estopped from denying ; the respondent's claim, and I will therefore not canvass the question of an estoppel arising outside the fields of partnership or of agency. The debt alleged by the respondent arose out of the supply of concrete - on a large number of separate contracts of sale ~ between 1st October, 1974 and 31st July, 1977. The respondent had been supplying concrete to the applicant's husband on a C.0.D. basis at the end of 1975, and there is no doubt that the concrete supplied to the applicant's husband on a C.0.D. basis was supplied to him alone. In, 1¢ appears, January, 1976 the applicant's husband sought the supply of concrete on credit, The form of application was tendered in 00/9 evidence. It was filled in by Mr. Mitchell, (who is now its Sales Manager, and who gave evidence), during the course of a telephone conversation with the applicant's husband. It is obviously incomplete, several spaces being unfilled. Nothing appears in the spaces beside the printed words "Requested by", "Approved by", "Applicants name", "Phone", or "Private address". It is not signed by any applicant. Opposite the printed words "Business name" appear the names "T.J. and L.M. Dunn", and against the words "Business address" appears the address "17 Isabella Christies Dns". (The applicant and her husband , then resided at 17, Isabella Road, Morphett Vale, South Australia, and the applicant still does. However, she and her husband separated, first in January, 1978 and then,after a brief re-union, again separated . some months tater, The applicant does not know the present whereabouts , of her husband). Against the printed word "Bankers" appear the initials "C.B.A." and ™/y", and against the words "Credit Limit required" the sum "$1,000", The names of two firms appear as referees. There appear also the words "Kentwood Homes" (said in evidence to be a project on which the applicant's husband was working) and "Purchasing own home', ' As a result of this application credit was granted by the respon- dent, on a 30 day basis and numerous sales of concrete were sub- sequently made leading to debits far in excess of the $1,000 limit mentioned in the application, The applicant said that she had never at any time authorised her husband to obtain supplies from the respon- dent. Mr. Mitchell said that it was Terry Dunn (the applicant's husband) who had asked him to open the account, that the applicant was not known to him, and that the application was made out in the t name of T.J. and L.M. Dunn because that was the name Terry Dunn asked j,; him to fill it out in. Mr. Mitchell said that the applicant had given 22/10. , ~ 10 = him no instructions in relation to the application form, that she was not known to him, that he did not know her initials, and that all the information was given to him by the applicant's husband. He said that all the concrete which was supplied C.0.D. was supplied to the applicant!s husband, and that he had at that time no knowledge of the applicant, He later said that the applicant never conveyed to him a desire to have the 30 day account opened in her name. Mr. Mitchell said that he had very little knowledge of the applicant's husband's operations prior to the opening of the account. He was asked what transpired when he was approached for an account, and replied "He asked me whether we would grant him a credit. He did tell " me that he had been working in the public service, that he had given that away and that he was going to do concrete full time from that point on", There 1s, of course, no doubt that the applicant's husband was liable to the respondent for the amount claimed. In the early days of the relationship bills were settled promptly, put payments became erratic and the account fell into arrears. State- ments of account were sent monthly to the then matrimonial home addressed to "T.J. and L.M. Dunn", and invoices were sent weekly. The accounts were paid by cheque, usually posted, though on occasions picked up by Mr. Mitchell from the applicant's husband at the latter's place of work. The cheques were drawn on a joint business account, of which I shall say more later, The applicant said that her husband kept the cheque book fon that account in the car used for business purposes. She said that she had occasionally, at her husband's directions, drawn cheques on that account, There was no evidence, however, that any cheque drawn by her had been received by the respon- dent. Mr. Mitchell was asked if 1t was reasonable to infer that "such accounts as went out in the name of T.J. aud L.M. Dunn did so because of the opening of the accqunt in those names and not because of any wee / 11. ea | , subsequent history of banking, business accounts! (sic). He replied "The accounts were sent out under that name because that is what (the applicant's husband) applied to have them sent out as", I might mention at this stage that the respondent's internal records did not refer to the account under both sets of initials on all occasions, but I attach no importance to this, except in one minor respect. Mr. Mitchell said that he had spoken on the telephone about over-. due accounts to the applicant's husband and to the applicant. He was ' asked the tenor of his conversation with the applicant and said "I informed her that the account was overdue and we would require a cheque. That was basically it". He was asked "Was anything ever con- veyed to her about names on the account?" and replied "No, it was never mentioned", He was asked "Did she ever speak for or against | any partnership?" and replied "No, she did not", He described her ; | response as being neutral. In cross-examination Mr. Mitchell said ' that it was' the applicant's husband whom he was seeking to contact at home, but said it did not really matter who he spoke to, as what he wanted was to get the message across that he wanted the money that was due. I will consider first the question of whether there was a part- nership between the applicant and her husband. If there was, there can pe no doubt that the applicant was indebted to the respondent. The' respondent relied heavily on a form of "Authority for Operations" dated 12th March 1976 and signed by the applicant's husband and the applicant. The bank concerned was the Australia and New Zealand Banking Group Limited, (which I will refer to as the "A.N.Z. bank'). The form is a printed form, appropriate for "Partnership or Firm (not Sole Proprietorships)"., It refers several times, though in very small ' print, to "partnership" and "partners", often, however, for some reason treating as alternatives "partnership" and "firm", or "partners" and "members of firm", The word "Partnership" has on one of these occasions oe -/126 been struck out of the words "Partnership/Firm", though there is no way of knowing by whose hand or at whose instance. portion of the form is, however, in a hand which 1s oby1ously not that of the applicant or of her husband. Notwithstanding the struck out word, the small print and the circumstances of signing which I will shortly refer to there can be little doubt that so far as the bank is concerned the applicant would be bound as a partner by her signature and liable to the bank as such. The respondent, however, cannot rely on the document as creating any such contractual obligation. a It relies on it as evidence that the applicant regarded herself as being in partnership with her husband. Why, if she was not, would she have signed the form as a partner/ member of a firm? But although it is evidence of there having at that All the handwritten ° time been a partnership it is not, vis-a-vis the respondent, conclusive,' and must be looked at along with the other evidence on the matter. Moreover, its weight as evidence will depend on the-circumstances in which the form was signed by the applicant. I must therefore now say something about the banking arrangements of the applicant and her husband. Up to a date in March, 1976, the applicant and her husband had a joint personal cheque account with another bank. joint accounts since marriage, but had no the applicant's husband have a sole business account. They had always had business account, nor did They decided to change theic bank because the A.N.Z. bank was willing, and their then bank was not, to advance them money to buy a motor car for their domestic use. The applicant's husband went to the A.N.Z. bank. I do not know what discussions took place there, but, according to the applicant, her husband brought home two forms of "authority for operations" which she signed. She never went into the bank. One form was for a "Joint Account {including Trustees, Executors and Admin- 000/13. < - 13 - ' istrators)", It ig dated 11th March, 1976. The other was that to which I have previously referred, The applicant was questioned about signing these forms, Her examination-in-chief 1s as follows:- Do you have a precise recollection of completing the documents, or are you merely able to recognise your signature?---Really only recognise my signature. HIS HONOUR: We will number these two exhibits separately. Make A3 a copy of the authority for operation of a joint account including trustees, executors, administrators, Make the copy of the authority for operations headed partnership or firn, not sole proprietorships, A4. MR. KANDELAARS; Can you recall the circumstances in which you signed this document?---No. Did you attend the bank?---No. HIS HONOUR: Where did you do it?---My husband would bring the forms home. He always did that. Did he bring these ones home?---I cannot remember, but I never went to the bank. MR. KANDELAARS: If you look at the authority for operations, partnership or firm, can you recall whether the signing of that document ever gave rise to discussion about entering a partnership with your husband?---No, You will see that it talks of partnership or firm in the name of T.J. & L.M. Dunn; did that suggest to you that you were in partnership with your husband as far as this concrete contracting business was concerned?---No, I always just signed. As I said, he changed his banks that regularly. He would bring things home and I would gust sign them. I never looked into it as being a partnership to his business, He would just say, "sign here", and that is what I did. 000/14, « - 14 - You will note there are two authorities for operations, one for a josnt account and one for this partnership or firm account; if you were not in partnership, what was the object in completing those authorities?---I do not know." Her cross-examination is as follows:- "Looking at the exhibit before you now, which is the application form for partnership or firm, can you repeat what your thoughts were when your husband came home with this application?---I was not happy with it. Why did you sign it then?---I just always did. I might have yoiced my opinion, put - - - I think you will find Terry had already resigned from the government. I did go along with him to a certain extent, Did you read it before you signed it?---No, I never did. He just would say sign it, and I signed it. You did not notice tmmediately above, to the left of your signature, "Full names of all partners, members of firm'?---No. You did not notice that there was, 'Full name of partnership or firm|'?---I did not read it. You did not notice where it says, "We the undersigned being all of the present partners in the partnership of the firm"? ~--No. So you just blindly signed the form without reading the contents? ~--I did. Did you think that a bit foolhardy at the time?---I did not at the time; I dq now." To support its contention that there was a partnership the res- pondent sought to show that the applicant had been in receipt of a share of the profits of the concreting business. Such a receipt is 0/15, ~ iD - ' prima facie evidence of partnership, but does not itself make the recipient a partner. The applicant said {hat there had been no profits, and it 1s true that the business eventually became insolvent. ° However, there is no doubt that the business produced income, and that the applicant's household was maintained by that income. The applicant said that the money which went into the joint personal account at the bank was "wages", or "living money", and I do not think that the regular housekeeping money which the applicant received from her husband, nor the money which she was given to pay gas and other bills, although it derived from the concreting business, can be regarded as being a share of the profits on that business. These payments are, in my view, more consistent with a self-employed man giving money to his wife to run the housetiold than they are with a partnership in which the profits were shared. A number of other facts are consistent with there actually having been a parinership. Invoices and accounts from the respondent came to the house in goint names, and nothing was done by the applicant to have this altered. On the other hand, she said she attached no sig- nificance to this, and said that accounts usually came in joint names. She said that she could sdentify the respondent's business letters from their named envelopes, and did not open business mail. Again, the applicant dr-w some cheques on the yoint business account. On the other hand, she said that she drew few, and always on the express instruction of her husband. . Against there having been a partnership there is a great deal of evidence, none of it decisive in itself, but, taken as a whole, in- consistent with the relationship of partnership. There was no part- nership agreement. The applicant vas strongly opposed to her husband leaving the Public Service and going into the concreting business, though, no doubt, she made the best of it once he had done so, «++/16. A ete meee ee ee ee ee eee - 16 - He began work in it apparently as a partner with another man, The applicant was quite young and had little business experience, though she had briefly managed a dress shop. She did not declare any money emanating from the concreting business in her own income tax returns. Her husband never sent in any income tax returns in respect of a partnership or, it would appear for the relevant period, at all. No attempt was thus made to use the device of partnership to reduce income tax. 'The business account cheque book was kept in her husband's car. She did noc open business mail, or take any interest in the bills. and invoices. The car which her husband used for business was *registered in his name alone, and was sold by him as being his own. It had been paid for in cash from her husband's own funds. Her husband refused to discuss the state of the business with her. She was sur- prised to reseive the Summons, and did nct know that her husband had tried to get the judgment set aside. I have already mentioned her replies to the server of the bankruptcy documents and to her disputing the debt in her Statement of Affairs. Notwithstanding the applicant's signature on the bank form, and the other more equivocal, evidence in favour of there having been a partnership, 1] am quite certain that that relationship did not exist as between the applicant and her husband. I turn now to the second pleaded allegation of the respondent, that the applicant, as principal, gave authority to her husband to order goods on her behalf, I will then deal with the three remaining issues, all of which involve in one or another way questions of ostensible or apparent, as opposed to actual, authority and which require closer attention. There 1s no evadence on which I could find that the applicant had expressly authorised her husband to aot as her agent in ordering goods from the respondent, nor is there any from which I could infer a grant of authority. There was in my view no relationshig of tan ee ,—", a - 17 = principal and agent between the applican:: and her husband in respect of any dealings with the respondent. That is not to say that the respondent through its employees may not have thought that there was, though I would have serious doubts even as to that. On the other hand -! I think that the respondent may well have believed that the applicant and her husband were in partnership. If it did, the crucial questions will be, was the conduct of the applicant responsible for that belief, . and was that belief the cause of credit being granted to the applicant', husband? I will consider first the effect of Section 14 (1) of the Part- nership Act, 1891-1975. The sub-section is as follows:- "Every one who by words spoken or written or by conduct represents himself, or who knowingly suffers himself to be represented, as a partner in a particular firm, is , liable as a partner to any one who has on the faith of any such representation given credit to the firm, whether the representation has or has not been made or communicated to the person so giving credit by or with the knowledge of the apparent partner making the representation, or suffering it to be made." BPirst, did the applicant herself represent herself to be a partner of her husband, before or on the opening of the 30 day credit account by the respondent? If not then, did she so represent herself thereafter? If she did 1t is immaterial that the applicant's representation was conveyed to the respondent by some medium without ' the applicant's knowledge. However, the respondent must not only have received the representation but must also have given credit to the applicant on the faith of the representation. I can find no evidence that any such representation was made by the applicant either by words or conduct, to the respondent or to 126/18. . | - 18 - anyone else, before the respondent agreed to open the credit account. After the account was opened invojces and statements in respect of goods supplied were sent by the respondent, addressed to the applicant and her husband. The applicant was aware that mail so addressed was emanating from the respondent. There is no evidence that any of the fey cheques which she drew on the business account was payable to the respondent. The applicant in fact did not com- municate with the respondent in any way about these matters. Her explanation that they were business letters and that she gave them to her husband to deal with is consistent with her contention that a there was no partnership, but the question here is not whether there was a partnership but whether the applicant represented that there was. Does her silence and inactivity amount to a representation? It clearly does not amount to a representation by words. Does it amount to a representation by conduct? I think not. There must be, I think, something positive done by way of conduct or behaviour for that conduct | or behaviour to be a representation. The next clause of the subsection | deals with the case where the supposed partner does nothing, and her liability here is restricted to where what is knowingly suffered to be made is a representation by some other person. It is, I think, the case that, under the common law of estoppel, silence may be treated as if it were a representation in some circumstances, for example, where a person is under a legal duty to make disclosure of a fact, but does not do so, his conduct in remaining silent may be deemed to have been a representation of the non-existence of that fact. But I do not think that there was any such legal duty on the applicant in the present case, Such a duty has been held to exist where the person remaining silent has knowledge that another person is acting under the mistaken belief that the former is under a binding obligation to him, and in a manner consistent only with the existence of such an obligation. Spiro v. Lintern (1973) 3 All E.R. 319. Even if this doctrine applies — : 20/195 to the statutory doctrine of estoppel enacted in Section 14 (1) of the Partnership Act, (1891-1975), I do not think that the applicant believed, or should be taken to have believed, that the respondent, in supplying concrete at the places where her husband was working, was acting in a manner consistent only with her being liable to the respondent as partner of her husband. Nor can I find any indication that in her sole personal contact with any representative of the respondent, that is, in the telephone calls received from Mr. Mitchell, the applicant represented to him that she was a partner of her husband, | .even if she did not say that she was not. And, in any event, no ' credit was given on the faith of any such representation, even if there was one. The credif had already been given when the goods, which were at the time of those telephone conversations unpaid for, had been supplied. This brings me to the question of whether the applicant knowingly suffered her husband to represent to the respondent that she was his partner, The only possible representation by her husband to the res- pondent which might have been to that effect before or at the opening of the credit account was that the business name vas said by him to be "T.J. and L.M. Dunn", The name of the applicant for credit is not entered in the space provided for it on the form filled in by Mr. Matchell. I would have thought that this would have been a more important item so far as liability was concerned than the alias, if there was one, under which the applicant for credit was trading. Be that as it may, even if there was a representation therein that the applicant in this case was his partner I am satisfied that the applicant knew nothing of it, and did not knowingly suffer it to be made, Did the applicant's husband, at any time after the opening of the account, make any representation to the respondent that the applicant was his partner? If so, did the applicant knowingly suffer .../20, te - 20 - him to make it, did the respondent thereafter grant credit to the applicant, and did it do so on the faith of the applicant's husband's representation? Where, at common law, the representation which was made was made py the person sought to be estopped, as in Spiro v. Lintern (supra), it is not open to him to say that he diq not know of the falsity of the representation if he had acted in sych a way that a reasonable man would take the representation as being true. However, under Section 14 of the Partnership Act the person estopped is not the person, Who makes the representation but the person who knowingly suffers that ! representation to he made. I take it that the word "knowingly" means that there must be actual knowledge that the representation is to be made, but thaf the effect of the representation is to be judged by the effect it would have upon the mind of a reasonable man, whether or not the person knowing that representation was to be made knew that it would have that effect, Under Section 14 there must not only pe knowledge that the | representation is to be made, but also a "suffering" of its being made by a medium who is not in fact authorised to make, or instigated into making, the representation but who is allowed or permitted to do so. If a representation is made against the will, or without the knowledge, ° of the person sought to be bound by the representation it follows that that person is not bound by it. I think that if the person sought to be bound has no power to prevent the representation being made he cannot, even if he knows that it is to be made, be said to suffer it. It may well be the same if, at least on reasonable grounds, he believes that he does not have the power. Looking again at the facts of the present case, was there a representation by the applicant's husband that the applicant was his partner? On the evidence, that representation can have arisen only in his having, in payment of accounts sent to him and the applicant, we /24y, a ee a - 21 - signed cheques bearing the name of himself and the applicant, It appears that those accounts of the respondent which were met were paid by cheques drawn by the applicant's husband. The applicant saw envelopes from the respondent which were addressed to her husband and herself, and knew that they contained invoices. She must have known that her husband had paid at least some of the accounts of the respondent by cheque, and knew that the business account cheque forms had her name printed on them as joint operator of the account. There is no evidence that she actempted to prevent her husband from paying the respondent's accounts with cheques hearing her printed name, though not signed py her, I think that it is possible to regard the applicant's husband's conduct in so behaving as amounting to a representation that the person named on the forms of the cheques used to pay business debts was in partnership with him. I think that the awareness that her husband was so acting which the applicant had must be taken as being knowledge of his representation. 1 think that, because it was open to her to cancel her authority to the bank to operate the account in their joint names she may be taken to have "suffered" what her husband was doing. But I do not think that it was on the faith of such representation that the respondent gave credit to the supposed "fira". In respect of the goods paid fon by at any rate the first of such cheques there was ob- viously no such giving of credit, for that had been previously done. There was, moreover, not a scrap of evidence that the respondent acted on the faith of these representations in continuing to supply goods on credit. The erratic and inconsistent way in which payments were recorded by the respondent is some indication of its attitude to the question of with whom it was dealing. But I think that, quite apart from the lack of such evidence there is no doubt that, if the respon- dent granted eredit to the "firm", and not to the person who actually 002/22. eres cotta tanh a en a a ee + — — _—— - ct me -~ 22 - applied for credit, i.e. the applicant's husband, it did so because of his initial representation, when he opened the account, that the 'business name" of the person seeking credit was "T.J. and L.M. Dunn", And, as I have said, the applicant knew nothing of that representation, and did not therefore "knowingly suffer" it to be made. Moreover, if it were necessary so to hold, I think that I would find it to be the case that Mr. Mitchell initially decided to grant credit to the husband, of whom alone he made enquiries as to credit-worthiness, and sought the business name recorded on the form of application for the purpose of ensuring that the accounts were sent to the proper person, and not because he was relying on the fact that he believed that the applicant was in partnership with her husband as a factor in deciding to supply goods, of a limited value, on credit, when they were ordered by the applicant's husband as, it appears, they invariably were. I turn, finally, to the question of whether the applicant was harsh to the respondent under the agency doctrine of apparent or ostensible authority. I have above dealt with the closely related doctrine of partnership law which appears in Section 14 of the Part- nership Act. In the case of agency, the doctrine requires that a person represents, or permits it to be represented, not that he is a partner but that a person purporting to act for him has his authority to act on his behalf as his agent. It is also required, similarly to Section 14 of the Parrnership Act, that the third person dealing with the supposed agent does so on the faith of such representation. I have above disposed of the question raised by the respondent of whether the applicant had given actual authority to her husband to act as her agent. In respect of the question whether she was bound through the application of the doctrine of apparent authority I must also give a negatiye reply. I do not think either that the applicant made, or permitted, any representation fo the respondent that her «++ /23. ~ ae ee re -~ 23 - husband was her agent with authority to buy goods on her behalf. Further, there was no evidence that the respondent at any time thought that the relationship of principal and agent existed between the applicant and her husband. The respondent in fact dealt with the applicant's husband as if he were a principal, though, no doubt, in the belief, however ill-founded in fact, that he was in partnership with the applicant. Nothing was supplied to the applicant'on the faith of any representation that her husband was her agent. I have no reason to doubt that the respondent acted in good faith when it sued the applicant and when it petitioned for the sequestration orden that was made. For the reasons I have given above I now find that the respondent did not have a valid claim against the applicant. It is unfortunate that what I believe to be the true position has taken so long to emerge. In part, the respondent cannot be held blame- less for if it had made further enquiries when it opened the account it would, I think, have realised what the true situation was and could . have better safeguarded itself. But the greater part of the blame lies with the applicant, who, no doubt in which she now regards as a foolish and unjustified reliance on her husband, did nothing to bring the true situation to the knowledge of the respondent, the court in which she yas sued, and the court which made her bankrupt. Apart ' from the costs of this application I do not think that her omissions ; have caused the respondent to incur costs which it might otherwise have avoided, because the applicant's husband was sued, and was made bankrupt in the same proceedings as those taken against the applicant, and he remains bankrupt. I order that the respondent's proof of debt, which was adnitted in the sum of $4,310.99, be expunged. I also order that the applicant, although her application has been successful, should pay half of the cpstg incurred by the respondent in opposing this application.