Davy v Garrett

JurisdictionEngland & Wales
Date1877
CourtCourt of Appeal
[COURT OF APPEAL] DAVY v. GARRETT. [1877 D. 167.] 1877 Dec. 6. 1878 Jan. 11, 12. HALL, V.C., JAMES, BAGGALLAY and THESIGER, L.JJ.

Practice - Rules of Court, 1875, Order XXVII., r. 1; Order XIX., rr. 2, 4, 24, 25, 27 - Prolixity - Pleading calculated to embarrass opposite Party - Pleading Evidence - Allegation of Fraud.

Although the Court of Appeal will not readily interfere with the discretion of the Court of first instance in a matter of procedure, it is its duty to exercise its own discretion as to whether a pleading is so framed as to embarrass the opposite party. In a case, therefore, where a statement of claim was in the opinion of the Court of Appeal calculated to embarrass the Defendants by reason of ils stating immaterial facts, and setting out at great length documents which could not be material except as evidence by way of admission, it was ordered to be struck out, though a motion for that purpose had been dismissed with costs by the Court below.

The rule that evidence is not to be pleaded applies to admissions as well as to other evidence.

THIS was an application by the Defendant Parry that the statement of claim might be struck out or amended so as not to embarrass the Defendant.

The action was by Davy Brothers, on behalf of themselves and all other the unsatisfied creditors of Froom & Co., against Garrett, New, and Parry, and the allegations in the statement of claim were to the following effect:—

1. Froom for many years carried on an extensive business in Russia as an engineer under the style of Froom & Co. 2. Towards the end of 1875 Froom was in difficulties, and resolved under the advice of his legal adviser, Mr. Lischine, to resort to administration or liquidation according to Russian law. 3. In December, 1875, he sent a circular letter to his creditors, including the Plaintiffs. (This letter was set out verbatim.) 4. In the meantime proceedings for administration had been taken in the Commercial Court of St. Petersburg, and on the 23rd of December, 1875 (old style), the following balance-sheet was presented, and on the 30th of December, 1875 (old style), administration was granted. (The balance-sheet was set out verbatim.) 5. That it would be seen from the balance-sheet that the debts to English creditors amounted to £45,770; those to Russian creditors hardly to one-fourth of that sum. 6. That the credit side of the balance-sheet shewed a statement of assets, and a deficiency of somewhat more than £2200. 7. On the 8th of January, 1876, Froom wrote a letter to Baines, an English creditor, which was set out verbatim, containing a statement of the debtor's affairs, and stating the advice given him by Lischine. 8. A similar letter was sent to others of Froom's creditors. 9. Lischine continued to be Froom's adviser in respect of the moneys mentioned in the claim. 10. On the 31st of December, 1875 (old style), a meeting of creditors was held at St. Petersburg, at which resolutions were passed appointing Linde, Friewirth, and Lischine administrators, and conferring upon them certain powers for winding up the estate. (These resolutions were set out verbatim.) 11. The Plaintiffs were creditors for £265 and had received nothing. 12. In reply to an application for information made by Turton & Co., who were creditors, Froom wrote to them a letter on the 26th of January, 1876, stating that there would be a meeting next day in London called by the Defendant New; that New had been at St. Petersburg, knew Froom's business, and was willing to aid to establish it properly, for that he knew it to be a good business, and its difficulties temporary. (This letter was set out verbatim.) 13. That on the 28th of January Turton & Co. received from Froom's London office a memorandum (set out verbatim) giving notice of a meeting of creditors in London on the 4th of February. That with such circular was inclosed a power of attorney to Lischine to act for the creditors. That a copy of the same power of attorney was sent to most or all of the English creditors, but none returned it executed. 14. A bout the same time several English creditors, among whom were the Defendants, took steps for getting the English creditors to act in concert; and on the 27th of January a circular was issued making proposals to this end, on the footing of buying out the Russian creditors, and carrying on the business. Those creditors who were not willing to subscribe to carry it on were to receive 7s. 6d. in the pound. This circular, which was set out verbatim, was signed by the Defendants and two other creditors. 15. Garrett and New were chiefly responsible for the circular, and took the most active part in the matter. 16. It was contemplated from the first that there should be two classes of English creditors: the one preferring to accept a composition, the other electing to wait and aid the business with funds; and the trustees to be appointed were to be trustees for both classes. 17. This paragraph gave an account of the meeting on the 4th of February, stating that Garrett and New were present, but not saying whether the Plaintiffs were there or not; and that some creditors were willing to subscribe funds to buy out the Russian creditors and carry on the business till the subscribing creditors were paid in full. The majority would not subscribe, but were willing to accept a composition of 7s. 6d. in the pound. At this meeting Garrett and New and Parry were unanimously chosen trustees to represent all the English creditors; and certain resolutions were drawn up and signed by twelve creditors, by which the signatories agreed to provide pro ratâ sums to an amount not exceeding £10,000 to enable the trustee to settle the Russian liabilities, and pay the 7&S 6&D composition. 18. Garrett & New assumed the power of letting other creditors come in to sign, and the names were given of six creditors who thus came in. 19. The subsequent proceedings at the meeting were not intended to vary the resolution that the trustees should represent all the English creditors, and the Defendants accepted the trusteeship as trustees for all. 20. A few days later a circular letter with a copy of the above resolutions “was sent out to some of the creditors.” (This letter was set out with a form of memorandum authorizing the Defendants to act for the creditor signing it.) 21. The Plaintiffs did not sign the memorandum, nor did the general body of creditors do so. 22. Soon after the meeting New and Parry went to St. Petersburg and assumed to act as representing all the English creditors. 23 set out in full a letter of the 26th of February, 1876, from a person writing on behalf of Froom to the Plaintiffs stating that a committee of three trustees from the largest of the English creditors was endeavouring to arrange Froom's debts in England, and named the Defendants as being such trustees. 24. The Plaintiffs thereupon wrote to Garrett, and received an answer, dated the 10th of March, 1876, which was set out, giving the impression that there would be hardly anything for the English creditors. 25. A report by the trustees addressed to the subscribers to the trust fund, but communicated to “all or many” of the other creditors, was set out at length, adverting to the possibility of the estate being sold to them by the administrators. 26. Letter from Turton & Co., non-syndicate creditors, to Garrett, his answer, and Turton & Co.'s reply, set out at length. 27 stated that a meeting of syndicate creditors was held on the 2nd of June, 1876, and set out a circular letter sent by the trustees to the creditors, which stated the resolutions there passed, the principal one being that the trustees were requested to arrange terms with the non-assenting creditors, namely, to ascertain which of them would join the syndicate in raising the £6000 now required, and which of them would accept a dividend of not more than 5s. in the pound payable by bills extending over twelve months. A long letter from Lischine, which was referred to in the report, was also set out at length, and the letter concluded by suggesting that the creditors who had not joined the syndicate should hold a meeting and determine as to joining the syndicate or accepting a dividend. 28. That Lischine had throughout been employed by the Defendants as their legal adviser in respect of Froom's affairs, and gave them full information as to the requirement of Russian law as to proving debts and otherwise, and that the Defendants were well aware of the necessity for carrying in the claims of creditors, and of the times when such claims should be carried in, but that they nevertheless made no communication to any creditor on the subject. 29. Letter by Plaintiffs to Garrett on the 19th of June, 1876, asking for a statement of Froom's affairs, and reply of Garrett on the 22nd, stating that he was not able to send any reliable statement, both set out at length. 30 alleged that the Defendants, being such trustees as aforesaid, never gave the non-syndicate creditors any warning that in the event of their debts not having been proved in Russia before the close of the administration they would be altogether excluded. That the Defendants were aware of the result of neglect to prove, but that the other creditors were ignorant of it, and...

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1 books & journal articles
  • Belmont Finance Ltd. v. Williams Furnishing Ltd.
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    • The Modern Law Review No. 42-6, November 1979
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    ...5 of the relief claimed. This seems to be a clear allegation of fraud according to the example given by Thcsiger L.J. in Davy V. Garretr, 7 Ch.D. 473, 489. a 119781 3 W.L.R. 724-725, per Buckley L.J. and per Goff L.J. at p. 732. 4 See ibfd. at p. 725. 6 Per Buckley L.J. at p. 725. This appr......

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