Gordon v Gonda
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE ROMER |
| Judgment Date | 03 May 1955 |
| Judgment citation (vLex) | [1955] EWCA Civ J0503-2 |
| Date | 03 May 1955 |
| Court | Court of Appeal |
[1955] EWCA Civ J0503-2
In The Supreme Court of Judicature
Court of Appeal
The Master Of The Rolls (Sir Raymond Evershed).
Lord Justice Hodson and
Lord Justice Romer.
Mr K. E. SHELLEY, Q. C. and Mr D. W. FALCONER (instructed by Messrs Halsey, Lightly & Hemsley) appeared on behalf of the Appellant (Defendant).
Mr J. G. STRANGMAN. Q. C. and Mr G. B. H. DILLON (instructed by Messrs Hardman, Phillips & Mann) appeared on behalf of the Respondent (Plaintiff).
This is an appeal from an Order of Mr Justice Roxburgh made on further hearing of an application, which was in turn made in pursuance of the directions given by an earlier Order at the trial of the action. The Order appealed from was that the Defendant should pay to the Plaintiff the sum of £1,871. 6. 6d., being interest at the rate of 5 per cent per annum on £3,333. 10. Od. from the 30th September, 1943, to the 22nd December, 1954. It is the claim of the Appellant, who is the Defendant, that the Order was wrong in directing payment of any sum for interest; alternatively, that the figure of 5 per cent should be changed to a less amount, such as 4 per cent.
As Mr Shelley has stated in the course of his argument, and particularly in his reply, the whole question undoubtedly turns on the true meaning and effect of the first Order, made at the trial, to which I have already alluded. I will therefore begin my Judgment by turning to that Order and reading the relevant part of it. It was dated the 26th January, 1954, and, after reading the Pleadings and a certificate of certain funds in Court, and on hearing the evidence and what was alleged, the Order proceeds: "This Court doth declare that the Plaintiff was upon the allotment to the Defendant of 100 shares of £1 each in Aerolectric Mouldings Limited pursuant to the agreement dated the 17th November, 1939, mentioned in the Pleadings beneficially entitled to one moiety of the said 100 shares and that the Defendant is accountable to the Plaintiff for one moiety of the consideration which was payable to or receivably by the Defendant upon the sale by him of the said 100 shares to Holoplast Limited under" another agreement which is there specified. The Order proceeded then to direct the following inquiries: "(1) An inquiry what was the consideration payable to or receivable by the Defendant upon the said saleby him to Holoplast Limited of the said 100 shares in Aerolectric Mouldings Limited. (2) An inquiry what has become of the said consideration and of any moneys shares or other property of which the same consisted. (5) An inquiry what payments or distributions by way of interest dividend or bonus have been made upon any of the said moneys shares or other property, (4) And the said inquiries are to be conducted upon the footing that each of the inventions which are the subject-matter of" certain Letters Patent mentioned "fell within the ambit of the agreement between the Plaintiff and the Defendant. And the Plaintiff is to be at liberty to apply for such further inquiries or accounts or for such Order for payment or transfer by the Defendant to the Pliaintiff, or as the Plaintiff may direct as may be necessary or proper to give effect to the aforesaid declaration and to the findings on the aforesaid inquiries". The Order which Mr Justice Roxburgh made arose out of the exercise by the Plaintiff of that final liberty bo avply, the Summons which I have mentioned being a Summons in exercise of that liberty, following upon the results of the earlier inquiries. It will be necessary for me to expand and explain the Judgment, and that I shall presently do; but, reverting again to the main question as formulated by Mr Shelley: What does that Order mean?
At first sight, I must confess that it would appear to me quite plain that the effect of the Order was to declare the Defendant to have been a trustee for the Plaintiff of a one-half share, or of one-half of the shares, 100 shares, in Aerolectric Mouldings Limited which were issued to or allotted to the Defendant pursuant to the agreement mentioned in the Order. To state, as the Order states, that the Plaintiff was upon the allotment of those shares beneficially entitled to a moiety of them is to my mind exactly the samething as to say that the Defendant, upon the shares being allotted to him, was a trustee as to a moiety of them for the Plaintiff, the beneficial owner. If that view is the right view (as I shall, I hope, show), everything else seems to me to follow; but, as the learned Judge Mr Justice Roxburgh observed, the form of the Order which I have read is in a sense an unexpected form of Order when regard is had to the Pleadings in the action which are themselves read into the Order. As Mr Justice Roxburgh observed at the very opening of the Judgment appealed from: "Having looked at the transcript of the Judgment of Mr Justice Danckwerts, I am quite unable to ascertain the precise circumstances under which this partnership action became converted into something else, but converted into something else it certainly was, and the Order" - that is the Order which I have read - "certainly is not such an Order as would normally be made in a partnership action". From that circumstance, with which I concur, I think have flowed the present tears. I turn, therefore, to the Pleadings which, as I have said, are read in the Order. The Statement of Claim, which was considerably amended, I think may be sufficiently stated in summary form as amounting to an allegation that at a date in August 1958 the Plaintiff and the Defendant, who were both Hungarian nationals, entered into a partnership agreement in the Hungarian language, the purpose of the partnership being that the firm, the two of them, should exploit and turn to account certain inventions with which the Defendant had been busying himself and for which the Plaintiff was willing to provide finance. The partnership agreement, or a translation of it, is in fact to be found set out in full in the Judgment of Mr Justice Danckwerts where that Judgment is reported in the Reports of Patent Cases, Volume 71, at page 123. I do not propose to refer further to it, because for present purposes Ithink my summary will suffice; but the Statement of Claim goes on to set out a considerable subsequenthistory to the effect that the Defendant added further inventions to those with which he had originally been concerned and to relate also the circumstances of the war which had caused the Plaintiff and the Defendant to be separated from each other. At the end of the body of the claim the prayer was thus expressed by amendment: first, "A declaration that the Defendant is accountable to the Plaintiff for one-half of all shares or other property or assets moneys or other benefits obtained by the Defendant under or as a result of or in any way arising out of the agreement of 17th November, 1959" that being the agreement which resulted in the allotment of the Aerolectric shares; then, alternatively, a declaration that there had been a partnership, for dissolution of the partnership, and accounts and inquiries and so forth.
Now, I think it is quite true to say that, notwithstanding the first form of declaration prayed for, which I have read in full and which was added by amendment, the whole substance of the Statement of Claim was an allegation that there had been a partnership between the Plaintiff and the Defendant and, moreover, that certain later inventions or developments of the original invention made by the Defendant had been the subject of or comprehended within the partnership agreement; and, indeed, as Mr Strangman agreed at the trial before Mr Justice Danckwerts, the only real matter of fact which fell to be determined, and which was determined in favour of the Plaintiff, was: Did the partnership agreement, did the joint venture (as Mr Strangman preferred to call it) comprise, or did it not comprise, the later and, as it turned out, successful inventions of the Defendant? On that issue the Judge, who took plainly a somewhat strongly adverse view of the Defendant as a witness, found in the Plaintiff's favour.
I must, however, now state (though again I hope to do so briefly) what the history of the matter was, I have said that the original partnership agreement (for so it is described in the Statement of Claim) was made in August 1938. Certain patent specifications had then been filed, both in this country and in Germany. The next event is the agreement of the 17th November, 1939, referred to in Mr Justice Danckwerts' Order and in the first prayer in the Statement of Claim, which was an agreement between the Defendant and an English syndicate for the formation of the company which was known or became known as Aerolectric Limited to which the early original inventions or what represented the inventions of the Defendant should be transferred. By that time the war with Germany had started, though not with Hungary. The Plaintiff was apparently in Hungary, and the Defendant was in England. Then the next event was that on the 24th February, 1940, Aerolectric Mouldings Limited was incorporated, and its capital of £300 in 300 shares of £1 each was issued, as to one-third of them - that is, 100 such shares - to the Defendant, credited as fully paid, in consideration for the transfer of these inventions or patents.
Now, assuming that the Statement of Claim is established (as I think it was) these two persons are at this date in 1940 still partners together, the partnership agreement comprehending the exploitation of the Defendant's inventions. The Defendant has, acting within the scope (as I assume) of his authority as a partner, transferred to Aerolectric the existing patents in consideration of 100 Aerolectric shares which would be at this stage a partnership asset. Then occurs an important event, namely, that on the...
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