LAW REPORTS.

Dominion, Volume 3, Issue 783, 5 April 1910, Page 9

LAW REPORTS.

COURT OF APPEAL

THE INCOME TAX CASE TO BE HEARD.

THE LIST ARRANGED.

The first sitting of the Court of Appea} for the year opened yesterday, the Bench comprising: the Chief Justice (Sir Robert Stout), Mr. Justice Williams, Mr. Justice Edwards, Mr. Justico Cooper, and Mr. Justice Chapman.

Mr.C.P. Skorrett, ICC, moved to have Bowroa Bros.' caso in connection .with income tax returns added to the list for hearing at the present session. Leave was granted to add the case.

The Court went Dver tlio list, and arranged to take the cases in the following order:— 1. James Watt and Louis Cohen v. Aubrey James Willis, case on appeal. i: The Huddart-Parkor Company Proprietary, Limited, v. Charles Stafford Nixon,' special caso removed. 8. James Paton Watt and others v. Walter Henry Wilson and others, case on appeal. i. James Holt v. John Holt and others, caso removed. . ' 5: His Majesty the King y. Arnold Hare, case stated. 6. The Land Transfer Act—John CampJioll v. the' District. Land Registrar at Auckland, motion for costs. : ,7. The , Gisborne Harbour, Board v. Frank Brayton Barker and Percival ■Barker, case on appeal, or His Majesty; the King v. Henry Stephen Coburn,- Crown case reserved, or The Lav Practitioners Act and re Hall, case -reserved. ■• ■■ ■ 10. Bowron Brothers v.' Bishop and another, motion for prohibition.' ■. .

SOLICITOR AND CLIENT. . AN IMPORTANT POINT AEGUED. The Chief Justice, Mr. Justice Williams, and Chapman heard the appeal pfJaines Paton Watt and Louis Cohen, co-partners' and solicitors, of Wanganui, versus- Aubrey James Willis, farmer, of,Wanganui. Mr. Martin Chapman,. K.C., with him Mr. S. A." Atkinson, appeared, for the appellants, .and Mr. George Hutchison, • of Wanganui, for tho respondent. In opening the case, Atr. Chapman said that tae appeal was in regard to a judgment of Mr.-Justice Edwards, .delivered in a case on appeal from the decision of the' magistrate, at•' Wanganui. The ■ caso before the magistrate, Mr, William Kerr, S.M.i was an action on a' bill of costs, the. claim .being .473 Gs. 9d.,: for profes--sional services rendered. A counter-claim put forward by the defendant, Willis, stated that in October, 1904, he employed the plaintiffs to; act for-him in preparing a lease of certain land, on the left bank of tho Wanganui Eiver, from Harry Cowper to himself (the defendant). The defendant stated that ho. was not aware of; the state of the title to the land, but relied upon the advice and skill of' his solicitors to protect his interests in thopreparation of the necessary documents. Harry Cotyper saw, tho solicitors (plaintiffs), and the deed of lease as , prepared by thqm was duly executed. Willis was notr aware then that the deed purported to be a lease direct from Harry Cowper, as owner, to, him (Willis), as lessee, instead of-being an. .under-lease—Hany Cowper himself being the lessee and riot the owner of the land. Willis alleged in his counter-claim that Messrs. Watt and'Cohen knew this, or, if not, that it was a matter, which it was their duty to ascertain. In June, 1908, Willis entered into an agreement' with one Stephen Milner for. the salo of,the goodwillof his lease. Milner afterwards refused to complete tho contract; In this connection,' Willis consulted Messrs. Watt and Cohen as to; the-enforcement of the agreement, and? theiolicltbrs advised that Willis hada gpod cause of. action against Milner. Belying upon the., advice and skill" of Messrs. Watt' and-. ■ Cohen } as Solicitors, Willis authorised them to proceed in the Supreme Court for. specific performance. On the trial of the action in September, 1908, at the circuit sittings of the Supreme . Court at Wanganui, • it wi3 disclosed that the... lease held. by Willis, (plaintiff Jn that, case) was in. effectan under-lease.". Judgment ; was therefore given for the defendant in the action, with costs against Willis amounting to .£37 15s.- 2d..' (paid):- Willis counter-: claimed .£2O ; for damage suffered, as he alleged, through the negligence of his solicitors, .in addition to amounts for costs. The-magistrate held that Mr. Watt: was guilty of actionable negligence, and gave judgment for Willis against the legal .firm for'.the amounts of costs, disallowing the;.item of j>2o. ; . . •. When the matter was brought before Mr. Justice Edwards on appeal, his Honour said that the more skilful and hotter method of preparing a sub-lease was,, in ms opinion, to refer in distinct terms to the head-lease. It was, however, a very common practice not to' do so,. and his Honour was not prepared to say that a solicitor who followed a practice commonly followed by. reputable practitioners was, upon that account, guilty of negligence.'lt was quite, clear, however, that the form of the lease was not the cause of .tho failure, of the action taken by Willis against Milner. The magistrate had hold that the .result of- the I pm-tnership relation'between Mr. Watt and Mr. Cohen was that the whole know-1 ledgo of each partner with respect to professional work done by cither partner on behalf of the partnership must be 1 imputed to the .other; so that in this case Mr. Cohen (who was in charge of the common law branch of. the film's business) must bo deemed to have kubwn that the lease referred to in the contract between Willis and Milner was a sublease, and Mr. Watt (who had. control of the conveyancing department) must be deemed to have known the nature and form of the contract, and that Mr. Cohen was instituting a suit for enforcing specific performance of tho contract. No authority had been cited for this proposition, and his Honour was quite satisfied Mat it was erroneous. Each partner was, of course liable-for the'acts and defaults or the other within tho scope of the partnership business, but this depended upon-their mutual agency, and had nothing to do with the doctrine upon which the magistrate-relied in imputing to each" partner all the knowledge of facts possessed by the other. There was evidence that it was hoped that the issue of the' writ would induce Milner to complete his purchase, without tho necessity for prosecuting the suit, but, assuming, without deciding, that this justified Mr Cohen \ I A-.'f- S ? ln f-n the - l writ w itbout inquiry into Willis's title, it could, not (if it was his .duty so to inquire) justify, him in prosecuting the suit, after Milner's defence had been filed,. without making such inquiry. The; following questons arose, oontimied his Honour:— .

(1) Is it a duty which ought to be discharged by every solicitor before commencing an action on behalf of a client for -specific performance to inquire into feViwf-H •"' and 'i° £atisf J" him sc» that that title is one which can be forced upon an.unwilling'purchaser? If this question was determined in the affirmative then, ns it must be shown that the breach of duty had resulted'in. the loss, the second guestion arose: (2) Is a solicitor who institutes an action for specific performance, and who acts also as counsel in the matter required to possess such knowledge of the law as will enable him to advise Ks client that, under tho contract for the sale of .a lease, an under-lease cannot be forced upon ah unwilling purchaser? Tho ordinary practice in England, in such cases, said his Honour, was to lay a case before counsel, and. to act upon his advice. In Now Zealand, where tho professions were combined, it was not the general practice to lay a case before counsel prior to instituting an action. In this case, Mr. Cohen acted both as solicii tor and counsel in the suit against Ifilner, as he had a right to-.do, unless instructed by his client to tho contrary, v It appeared to his Ilonour that in the Dominion gentlemen who. acted both as solicitors and. counsel in matters. in which, according to English practice, counsel were generally retained to advise, might reasonably be expected to possess tho higher degree of efficiency which, in theory at least, counsel should possess. There could be no doubt that experienced

counsel, if ho had been asked to adyiee as to the institution of tho action against Milner upon a. case which disolosed onlysuch facts as were in Mr. Cohon's possession, would either have callod for further information, or would have drawn attention to the fact that the' plaintiffin such an action conld not succeed unless he could establish a good title. If a solicitor proceeded after such an intimation, without inquiry into his client's title, ho would, in his Honour's opinion, be , guilty of actionablo negligence. Thero could be no doubt that, if the contract and Willis's title had been laid before experienced counsel, he would have advised that Willis could not succeed in tho suit against Milner, if the objection upon which the suit failed were taken. Upon these grounds his Honour considered that,'as Mr. Cohen had acted both as solicitor and counsel in tho action against Milner, he failed to give his client the bene6t of such skill and care as Willis was entitled to receive from him, and that Willis's loss was attributable entirely to such failure. The appeal was dismissed, with ten guineas costs. . Mr. Chapman, in the course of his address, said that the Court had to consider what was in Mr. Cohen's mind. Ihere was no suggestion that Mr. Cohen, knowing a thing ought to have been done, deliberately neglected to do it. The duty of a solicitor in preparing a case was to see tho witnesses and exhibits, and make a thorough investigation in that way.

The Chief Justice: It is never done, and he cannot be blamed if he takes tho word of his client that a certain statement made by his client can be corroborated. ■■■.■- ■ . Mr. Justice Chapman: It appears that Mr. Cohen read the lease through, and saw nothing to induce him to inquire into the title. 'Mr. Chapman: Of course we see now what ho might have done. i4 Mr. Hutchison urged that the proposition set out by' Mr. Justice Edwards in nis judgment, where he referred to the duty of: counsel in such a case, was sound law, and should be adopted by the Court of Appeal. The judgment of the Court was reserved.