Home | Databases | WorldLII | Search | Feedback High Court of Fiji

Waterhouse v Waterhouse [2002] FJHC 32; Hbc0342j.2001s (2 October 2002)

IN THE HIGH COURT OF FIJI
(AT SUVA)

CIVIL ACTION NO. HBC 342 of 2001S

Between:

WILLIAM WATERHOUSE
and
ROBERT WATERHOUSE
Plaintiffs

and

JOHN KNIGHT WATERHOUSE (JUNIOR)
and
MARGARET ANN WATERHOUSE
(as executors and trustees of the estate
of John Knight Waterhouse (Senior))
First Defendants

And

FRANCIS PETER GRANT
Second Defendant

And

WILLIAM WATERHOUSE
Third Defendant

And

ROSS GEORGE McDONALD
Fourth Defendant

V. Kapadia for the Plaintiff
P.I. Knight for the First Defendants
T. Tuitoga for the Fourth Defendant
No appearance by the Second and Third Defendants

JUDGMENT

The Plaintiffs are turf accountants. Their partnership trades under the name “Waterhouse Group” (the Australian Partnership) and operates betting shops throughout Australia.

For many years a sister organisation “Grants Waterhouse Agency” (the Fiji Partnership) has also traded in Fiji. It has a number of betting shops in Fiji some patronised by well known turfite members of the Fiji establishment.

The Fiji Partnership had three partners. They were John Knight Waterhouse (Senior) and the Second and Third Defendants. John Knight Waterhouse (Senior) who was William Waterhouse’s brother died in July 1998. John Knight Waterhouse (Junior) is his son and one of the executors of the estate.

Owing to the fact that, apart from the annual charity races held at Nadi, organised horse racing does not take place in Fiji the Fiji betting shops offer punters the opportunity to bet on the outcome of races held in Australia at meetings such as Randwick, Doomben, Eaglefarm, Bendigo, Rosehill and so on.

In order to enable punters as fully as possible to participate in the events taking place in Australia a substantial body of information has to be sent from Australia to Fiji. This includes the fields, listing horses, jockeys, barrier draws, numbers, scratchings and prices. Also sent up to Fiji are newspapers, magazine articles and form guides. Most importantly the Australian radio broadcast of each race is relayed up to Fiji by telephone so that it can be broadcast live in each of the betting shops in Fiji as the race actually takes place. These services were provided for the Fiji Partnership by the Australian Partnership which charged for them. It is the payment of the charges for the services which is the issue between the Plaintiffs and the First Defendants.

According to the affidavit of John Knight Waterhouse (Junior) filed on 12 August 2002 his father expressed concerns to him in 1998, about the way in which the Fiji Partnership was being run. John Knight Waterhouse (Junior) came to Fiji to investigate. Following this investigation legal proceedings were begun in the High Court of Fiji, Action No. 148 of 1998 by John Knight Waterhouse (Senior). As a result of these proceedings the Fourth Defendant was appointed receiver and manager of the Fiji Partnership. In April 2000 the Fourth Defendant sold the Fiji Partnership and he now holds proceeds of sale and other assets of the partnership amounting to $569,000.00. It is this sum which the Plaintiffs seek to recover by their proceedings herein begun by writ issued on 6 August 2001. The present application is a summons for summary Judgment against the Defendants brought under the provision of RHC O14.

On 19 September I was advised by Counsel for the Fourth defendant that he did not wish to oppose the application. The Second and Third Defendants have filed acknowledgements of service of the writ indicating that they do not wish to defend. The position therefore is that the issue is only joined between the Plaintiffs and the First Defendants.

The following affidavits were filed:

1. William Waterhouse, 8 July 2002;
2. John Knight Waterhouse, 12 August 2002;
3. William Waterhouse, 13 September 2002;
4. John Knight Waterhouse, 24 September 2002;
5. Louise S. Raedler-Waterhouse, 24 September 2002;
6. Angelie Mangraviti, 24 September 2002.
   

In his first affidavit John Knight Waterhouse (Junior) advances two principal arguments in support of his submission that the amount claimed by the Plaintiffs is excessive. First he says that a report into the affairs of the Fiji Partnership commissioned in 1998 by the Fourth Defendant contained qualifications relating to the charges. These qualifications may be seen at Exhibit JKW1, page 2 paragraphs 1.1.3, 1.1.3.1, 1.1.3.2; page 11 paragraph 3.5.2.3, page 13 paragraph 3.5.2.7 and page 14 paragraph 3.5.3.3. They indicate that the basis of the charges by the Australian Partnership for the information and support provided was not known, that the charges had been incurred and paid for for several years but although there was nothing to suggest that they had ever been disputed before it was not known whether a more favourable rate might have been negotiated.

The second argument was that John Knight Waterhouse (Senior) had not approved the payments of the charges. This was because although he was a partner in the Fiji Partnership he took little active part in the affairs of the partnership which was largely left in the hands of the Second and Third Defendants. Mr. Knight submitted that the First Defendants were entitled to have the charges properly accounted for and justified.

Mr. Kapadia’s submission in answer was simple and straightforward. Referring to Sections 6 and 7 of the Partnership Act (Cap 248) he suggested that the charges incurred by the Fiji Partnership not only bound the partnership but were also binding on the partners. Whether or not John Knight Waterhouse (Senior) actually approved the charges was irrelevant since the fact that a partner is a sleeping partner does not affect the binding nature of contracts made on behalf of the partnership in the normal course of its business (Beckham v. Drake [1841] EngR 1096; (1841) 9 M&W 79).

In my opinion these submissions are unanswerable. As I see it, while a partner can certainly disagree with a pending partnership decision and, if his argument prevails, prevent that decision being taken, a partner cannot avoid being bound by decisions already taken. In the present case the First Defendants appear to want to undo decisions already reached and contracts already entered into and completed. In my opinion that course is not open to them.

In my view the First Defendants’ case has two further important weaknesses. The first is that apart from asserting that the charges were excessive no evidence at all to support that contention has been advanced. There is nothing, for example, to suggest that another firm of turf accountants in Australia might have been able to provide the necessary services at a significantly cheaper rate.

The second weakness is that contracting parties may, for their own reasons, decide to pay rather more than the absolute minimum available in the market for the goods or services which are being provided. They may do this for a variety of reasons and those reasons will not ordinarily be questioned by the Court. Some people pay more because the services being provided are more convenient, more flexible or more friendly. Sometimes people even pay more because they wish to confer an additional benefit on the service provider.

In my opinion, notwithstanding the reservations expressed about these charges by the chartered accountants they were charges incurred in the normal course of partnership business by the Fiji Partnership. They are not now open to review.

In my Judgment the First Defendants have no reasonably arguable defence to the Plaintiffs claim. They have a counterclaim which I declined to strike out and which stands on its own feet and can be separately argued. There will be Judgment for the Plaintiffs in the amount claimed.

M.D. Scott
Judge

2 October 2002