Lewin and Others v Neylan (C.A. 23/1933.) [1937] EACA 5 (1 January 1937)

## COURT OF APPEAL FOR EASTERN AFRICA.

Before ABRAHAMS, C. J., Ag. P. (Uganda), LUCIE-SMITH, Ag. C. J. (Kenya), and HORNE. J. (Kenva).

## ARTHUR CORRIE LEWIN AND FOUR OTHERS (Appellants) (Original Plaintiffs)

DENNIS NOLAN NEYLAN (Respondent) (Original Defendant). C. A. 23/1933.

Constructive partnership based on conduct of parties—Indian Contract Act, section 239—Definition of partnership.

$Held$ (10-1-34).—That the evidence as to the conduct of the parties justifies a finding that a partnership was created. Figgis, $K. C.,$ for Respondents.

## Respondent absent, unrepresented.

$\mathcal{M}_{\mathcal{A}}$

The plaint filed in the Supreme Court of Kenya prayed, inter alia, for a declaration of the existence of a binding agreement between themselves, the plaintiffs (appellants) and the defendant (respondent), for a partnership on the terms set out in the plaint. The defendant joined issue, denying the allegations in the plaint and alleging that there was no privity of contract between the plaintiffs two, three, four and five and himself. Defendant admitted an agreement for a partnership with the first plaintiff, and set forth in his defence the terms and conditions on which the partnership was to be created. The defendant further denied that the first plaintiff was at any time authorized to form a syndicate or to bring into the syndicate any new or further part-The trial judge found that there existed a partnership ners. between the first plaintiff and the defendant in respect of certain gold-mining claims at Kakamega, and adjudicated upon the contributions payable by the parties towards the partnership assets.

Figgis.—The question is actually one of fact, to be ascertained from the evidence before the trial judge, who viewed such evidence as was called at the trial from the wrong angle, and did not give sufficient weight to the evidence brought by the joint plaintiffs. Had due weight been given to all the evidence, and to section 239 of the Indian Contract Act, the Court would have been bound to find for the plaintiffs. On questions of fact referred to Bigsby v. Dickinson (1876), 4 Ch. Div. 24; Coghlan v. Cumberland (1898), 1 Ch. Div. 704; Khoo Sit Hoh and Others v. Lim Thean Tong (1912), A. C. 323; Silver v. Ocean Steamship Co.; Ltd. (1930), 1 K. B., p. 436. Exhibit 2 was a proposal by the Lessos Syndicate, dated 25th January, 1933, made by the first plaintiff to the defendant, which should be interpreted to put beyond doubt the fact that the first plaintiff sought an option

on behalf of himself and others of the syndicate to purchase the whole of the defendant's claims. That proposal was duly accepted by the defendant on 27th January, 1933.

ABRAHAMS, C. J., Ag. P.—This is an appeal against the judgment of Thomas, J. The material facts are briefly these: It is common ground that the respondent had certain gold-mining claims at Kakamega, and was desirous of developing them, and that the first-named appellant, Brigadier-General Lewin, who had some money with which he thought he would like to speculate in Kakamega, was introduced to the respondent and came to a partnership arrangement with him. A syndicate was formed called the Bahati Syndicate, but the respondent contended that it was formed by himself and General Lewin only, and that he was to bring into it his mining interests and claims, which were to be valued at £100, and to put up the further sum of $£100$ within two years subject to certain contingencies which it is not necessary to discuss.

General Lewin's account of the transaction between himself. and Mr. Nevlan is entirely different. He says it was agreed to form a syndicate with a capital of $£1,500$ , that he was to contribute £300, the respondent £200, and that two ladies, named Mrs. Stanning (who later became Mrs. Lewin) and Miss Higgin, would put in $£200$ each by means of an arrangement with General Lewin. As regards the remaining £600, General Lewin undertook to raise it, and says he had authority to raise it. He found a Mr. Mackinlay with £100, who introduced a Mrs. Martin with £100. Miss Higgin, in evidence, stated that she had a discussion with General Lewin and Mr. Neylan in which an option to purchase the Syndicate's claims by another syndicate called the Lessos Vale was discussed. Miss Higgin said she considered she was being treated as a partner, and if her evidence is to be believed the discussions as narrated by her do not appear to me to be reasonably consistent with any other hypothesis. $Mr.$ Mackinlay testified to a meeting with General Lewin and Mr. Nevlan, during which a discussion took place when he considered he was being treated as a member of the Syndicate. Major Knapman, of the Lessos Vale Syndicate, gave evidence of negotiations between himself and Mr. Neylan for the purchase by his syndicate of the Bahati Syndicate claims. He says that Mr. Neylan gave him an option, and later on informed him of General Lewin's interest in the Bahati Syndicate, and requested him not to inform General Lewin about the option. Major Knapman said he got the impression that General Lewin, Mr. Neylan. and a Mr Mackinnon (or it might have been Mackinlay) were members of the Bahati Syndicate; that Mr. Neylan was annoyed at the number of people in the Syndicate; that he admitted three being in the Syndicate, and was annoyed at the remaining three ladies being in the Syndicate. In further support of the case for

the plaintiffs, a document was put in recording the terms of the proposal by the Lessos Vale Syndicate. This document (Exhibit 2), after reciting the terms of this proposal, terminates as follows: "Provided that Mr. D. Neylan accepts this proposal, I on behalf of the remaining members of the Bahati Syndicate agree... Signed, Arthur C. Lewin." The document was countersigned by the Secretary of the Lessos Syndicate, and two days later Mr. Neylan appended his signature under the word "Accepted".

The sole witness for the defence was Mr. Nevlan himself. He agreed that he and General Lowin had arranged to form the Bahati Syndicate, and that each was to contribute £200. He admitted meeting Miss Higgin and Mr. Mackinlav, but denied that he had any notion that either was interested in his claims, and further denied that he had authorized General Lewin to bring in the ladies.

The learned Judge dismissed the claim. He said that on the whole he preferred the statement of the terms of the agreement as made by the defendant. He commented on the evidence of Miss Higgin and Mr. Mackinlay in these terms: "The third and fifth plaintiffs in their evidence talk of having been treated as though they were partners; but neither is able to say that any definite terms were ever mentioned in their presence and that of the defendant." He also observed that he did not consider it necessary to go into the evidence piecemeal since he was satisfied that, even if the first plaintiff had been authorized to secure partners and capital, he was not entitled to make any terms he wished, and that such terms as he suggested were arranged by him were so uncertain that it would be impossible to enforce them.

Now it seems to me quite clear that if the learned Judge had accepted the evidence for the plaintiffs, and rejected that of the defendant, the above-mentioned comments would have been adquately answered. General Lewin's evidence was to the effect that he was authorized to find further capital up to a certain amount. He says in his evidence (page 8 of the record) that he had already two friends prepared to put in £200 apiece, and he mentioned their names—Mrs. Stanning (now Mrs. Lewin) and Miss Margaret Higgin. He further says that with regard to the remaining £600 required he said that he would raise it. I am of the opinion that if General Lewin's evidence is to be accepted, two matters are quite clear: one, that he was authorized to find the amount he mentions, and the other that so long as this amount was found it was immaterial to Mr. Neylan who contributed it and in what shares.

Then there is Miss Higgin's evidence. She says that the Lessos Vale had proposed an option, and Mr. Neylan had brought the terms on a piece of paper and they were discussed, and that Mr. Neylan was anxious for the document to be signed. She says

that General Lewin said that they two were not alone in the Syndicate, and that Mrs. Stanning, Mr. Mackinlay and Mrs. Martin were also interested. She then says that the paper was signed (it was not produced at the trial, whatever it was), and Mr. Neylan asked if she had any other suggestions to make, and she said "No". I am of the opinion that, if this evidence is to be accepted, it is sufficiently clear that Miss Higgin was regarded as a partner, and that she corroborates General Lewin in respect to the details of his arrangement with Mr. Neylan.

Mr. Mackinlay testifies to a discussion that took place between General Lewin, Mr. Neylan and himself. A difficulty that Mr. Neylan said he was having with a syndicate known as the Harries Syndicate was mentioned. The exact words of importance Mr. Mackinlay used in his evidence are as follows: "He (that is, Mr. Nevlan) thought that he had rather let us down, and that possibly we would like to look elsewhere. He though that he had treated us very fairly, and if we were prepared to back him for further prospecting he said that he would carry on. At this interview, I thought that he was treating me as a member of the Syndicate."

Now it has been said that a Court of Appeal should be slow to reverse the finding of a Court of First Instance on facts, since it has not had the advantage of seeing the witnesses. At the same time it has also been pointed out that an appeal is in the nature of a re-hearing, and I opine that if a Court of Appeal feels certain that the Judge in the Court below has come to a wrong conclusion, because he has failed to take into due account important facts or has drawn the wrong inferences from evidence adduced, it should reverse his finding. In this instance, I feel that I have an unusual measure of freedom, inasmuch as the learned Judge does not appear to have made any comments on the demeanour of any of the witnesses, or has in any way indicated what impression any of them made upon him, beyond observing that the business method of General Lewin left much to be desired.

Looking first at the general probabilities, is it likely that General Lewin, Miss Higgin and Mr. Mackinlay would have fraudulently colluded to obtain shares in Mr. Neylan's claims? They are either truthful or wilfully dishonest. There is no reason to mince matters, for there is no room for honest error in their evidence. I find it hard to believe in the existence of such an arrangement.

Also is it likely that General Lewin, liaving entered into the partnership arrangement of £200 apiece described by the respondent, would have the effrontery to introduce four other persons as partners and enlarge the capital to £1,500 without authority, especially if any capital less than $£5,000$ was useless, as the respondent says on page 45 of the record?

Further, the answer that the respondent has to the evidence of Miss Higgin is that he did meet her and "just showed her round as a matter of interest"; and his answer to the evidence of Mr. Mackinlay is that Mr. Mackinlay was called in by General Lewin, who asked whether the respondent minded his (Mr. Mackinlay's) listening. In my opinion, both explanations to the detailed statements of Miss Higgin and Mr. Mackinlay are very weak.

Then we have the peculiar wording of Exhibit 2. If General Lewin and Mr. Neylan were the only members of the Syndicate, what did Mr. Neylan understand by "the remaining members of the Bahati Syndicate" on whose behalf General Lewin executed the document and whose existence Mr. Neylan recognized by signing the document? These must obviously have been members other than General Lewin and Mr. Neylan, and this document goes further than any other evidence to confirm General Lewin.

According to Mr. Neylan himself, he first heard on the 19th January, 1933, of the people brought in by General Lewin, and on the 21st of that month he told Major Knapman that he would not object to Mr. Mackinlay coming in, but objected to the women. Yet on the 27th of the month he signed Exhibit 2.

In my opinion, the learned Judge ought to have accepted the evidence for the appellants and rejected that of the respondent. I consider that the former is so strong that if the learned Judge had dealt with it in the way in which it should have been dealt with and had rejected it, he would have acted unreasonably. As it is, with all due respect to the learned Judge, I consider he viewed this action from a wrong angle. I am of opinion that the appellants are entitled to the declaration prayed for in paragraph 12 (a) of the plaint. If I understood him aright, Mr. Figgis admitted that no other order is necessary. I would therefore allow the appeal to that extent, with costs here and in the Court below.

LUCIE-SMITH, Ag. C. J.-I am in entire agreement with the judgment of the learned President. It appears to me that the Exhibit 2 put in by the plaintiff, which was signed by him "on behalf of the remaining members of the Bahati Syndicate" on the 25-1-33, and "accepted" by the defendant on the 27-1-33, puts the matter beyond all dispute.

HORNE, J.-I agree with the judgment read by the learned President.