This is a continuation of my series of posts inspired by my recent acquisition of a set (or a sorts) of the Commonwealth Law Reports. I am reading the case which is on page 50 of each volume. In volume 4, that is Bayne v Blake  HCA 54; (1906) 4 CLR 1 (17 September 1906).
The Misses Bayne’s father was a builder. Their mother, his widow, died in 1885 without having made a will. She left behind substantial real estate and other assets, with a gross value of about ₤17,000 and a net value of about ₤10,000. Some of the properties were encumbered; there was money in a building society.
The sisters, Grace, Lila an Mary (who were twins), were entitled to equal shares of this, but because there was no will, there was nobody appointed as an executor.
It was possible (as it still is) for a person to be appointed as an administrator of the estate, but it was the practice of the court to require the administrator to give an administration bond: that is, security by deed up to a certain amount, a bit like bail really, against the possibility of maladministration of the estate. Grace Bayne, the elder sister, applied for letters of administration. In this case, the bond which would usually be required and was in fact required was in the amount of ₤5,000. However, possibly because Grace was a beneficiary of the estate and presumably had few if any assets other than the share of the estate, her administration bond was required to be supplemented by sureties. This is the bit that I am guessing about a bit, but I assume that this was because in the very circumstances where there was some failure in the administration of the estate, it was as likely as not that Grace Bayne would be in financial difficulties herself.
It was possible to get such trustee or guarantee companies to provide such surety (which they would do by executing a deed in favour of the Chief Justice). Such companies usually charged 2 or 2½ % commission on the amount of the bond, but also required, as a condition of giving the surety, that the beneficiaries or at least the principal beneficiaries indemnify them.
In other words, the effect of the bond in such circumstances would be that, if the estate was administered with only loss to the beneficiearies who had indemnified the surety, then they would get no benefit from the sureties because the sureties would ask to be paid back by the beneficiaries the amount of any claim against them, which in the circumstances of a claim by the indemnifying beneficiaries would be a complete defence to any clame. The sureties would only be there for the benefit of third parties or lesser beneficiaries who had not given the indemnity.
Are you still with me?
Grace, as the elder sister, applied for and obtained appointment as administratix. [We love those trixy words in succession: executrix, administrix, testatrix, dominatrix - spot the odd one out.] Blake & Riggall, a very well established firm of Melbourne solicitors which had acted for their mother (in the 1980s it merged with the Sydney firm Dawson Waldron to become Blake Dawson Waldron which has since been renamed Blake Dawson) acted for her. When the sisters baulked at the ₤100 commission payable to a trustee company to give the guarantee, Mr Blake and Mr Riggall (it actually was Mr Blake and Mr Riggall at that time) agreed to act as sureties instead for a commission of ₤75 only. However, they too were only prepared to do so on terms that the three sisters indemnified them, so that, in 1886, they gave a deed to the chief justice guaranteeing Grace’s performance of her responsibilities as administrix, but had previously received a deed of indemnity from each of the three sisters.
Time passed. It seems the estate was not properly distributed but rather, Grace took over her mother’s previous role in managing the family assets on behalf of the sisters. Some extra speculations were embarked upon for which fresh mortgages were given. Money was of course spent. At some stage the building society failed and ₤700 was lost in the account which was held with it by that time. By the new century, the bulk of the estate had gone. In 1904, according to the accepted procedure for claiming on the bond, the bond was transferred by order of the court from the chief justice to Lila and Mary, so that they could sue Messrs Blake & Riggall for up to ₤5,000 for which they were liable as sureties for the breaches of trust or duty as administrix by their sister, Grace. These were said to be:
- Failure to distribute the estate assets within time or at all;
- payment of a sum of ₤75 out ot the estate (ie, Blake & Riggall’s commission for giving the surety);
- borrowing money upon the security of mortgages resulting in loss of the whole of the estate;
- the continuation of funds in an unauthorized investment, namely, the building society, whereby the greater part of those funds were lost to the estate.
The key point was the indemnity, which Blake & Riggall said was a complete answer to the claim. The Misses Bayne said, in essence:
- the indemnity was void as contrary to public policy, because it robbed them of precisely the protection they needed against maladministration of the estate by their sister which they assumed to the policy basis of the indemnity; and
- the indemnity was also void or voidable because, as Grace’s and also the sisters’ solicitors, Blake & Riggall should have ensured that the sisters had independent advice before entering into a transaction with them – this is because they were in a fiduciary relationship with all three sisters and the deed conferred an advantage on Blake & Riggall and a corresponding disadvantage on the sisters.
At first instance in the Victorian Supreme Court, the judge reserved one question for the full court, namely whether the deed of indemnity was void on public policy. When the full court held that it was not (it might be borne in mind that such indemnities were sought and given by trustee companies as a matter of course and the upset from holding otherwise would have been substantial), judgment was given for Blake & Riggall on the indemnity.
The Misses Bayne appealed direct to the High Court. That is the decision which has occasioned this note.
Griffith CJ and Barton J both thought there was something fishy about an administration bond with some kind of secret side indemnity, and they would have struck the indemnity down as being illegal for that reason. O’Connor J thought there was nothing contrary to public policy in beneficiaries indemnifying administrators: the public policy of the administration bond was the protection of the public – ie, creditors of the estate, which is the point he concludes on page 50 of the CLR. If you want to track that down on the Austlii version above, the passage runs from “relinquishment by a beneficiary” to ”My learned brother the Chief Justice has.”
Blake & Riggall said that they would never have given the bond if they weren’t given the indemnity (which in fact they had been given first), so that the sisters could not simultaneously “approbrate and reprobrate.” The bond and the indemnity were the one transaction. The High Court did not agree. They saw them as separate transactions, and Blake & Riggall as the family solicitors in a fiduciary relationship with all three sisters. The deed was voidable by the sisters as a transaction entered into by them with their trusted family solicitors and to those solicitors’ advantage without the benefit of any independent advice. Blake & Riggall couldn’t rely upon it in their defence so the matter would have to go back to the Supreme Court for determination of damages caused by the breaches of duty by Grace.
To pause for a moment, the allegation was that Grace had administered the estate and lost it, yet it was Blake & Riggall, a reputable firm, who were facing the call to make it good. If not their Waterloo (in the Napoleonic, not the Wellingtonian, sense) then at the least it was their Hawkins v Clayton.
A storm of litigation followed. Well, that’s not quite correct, because of course the litigation was already well advanced when it reached the High Court. Lila and Mary Bayne had already been sent bankrupt in February 1906 for the costs of the initial proceedings, even though they were appealing that decision to the High Court.
In November 2006, Blake & Rignall applied to the Privy Council and obtained leave to appeal from the judgment of the High Court.
On the application of Blake & Riggall, the High Court granted a stay on the judgment in December 1906.
The Misses Bayne applied to the High Court for the stay to be lifted so that the remaining factual elements of their claim could be determined. That application was at first refused Bayne v Blake  HCA 71; (1907) 4 CLR 944 (15 March 1907) by Griffith CJ, and then subsequently, when further evidence was brought and the matter argued again, granted on 27 March 1907. So far as the High Court was concerned, this meant that the Supreme Court should go ahead with assessing the damages to be claimed under the bond.
In May 1907 the Victorian Supreme Court annulled the bankruptcy order against Mary Bayne. Prior to that she had failed to appear for examination by Mr Bailleau, her (modern terminology) trustee in bankruptcy. In July 1907 Mary Bayne commenced proceedings against Bailleau and Blake & Riggall for damages of ₤20,000 in relation to the warrant and also, in Blake & Riggall’s case, for applying to send her bankrupt at all. At some stage, Bailleau, Blake & Riggall obtained summary judgment against her: that is, the judge threw out her case as hopeless. Mary Bayne appealed to the High Court.
In July 1907 on the application of Blake & Riggall, the Victorian Supreme Court adjourned the proceedings indefinitely - in effect the same thing as a stay. Hodge J said: :—”The matter is now before the final Court of Appeal, and I think it would be a wicked waste of public time and a wicked waste of the private moneys of the parties to conduct the inquiry whilst that appeal is pending.”
In the meantime, the High Court set aside the sequestration order against Lila Bayne in September 1907: Bayne v Baillieu  HCA 39; (1907) 5 CLR 64 (9 September 1907). Although there might be circumstances where it was justifiable to sequestrate someoone’s estate on the basis of a judgment which was under appeal, that would require evidence that the creditor had reason for requiring the estate to be administered by the insolvency courts pending the appeal, which was not available in this case.
In October 2007, the Misses Bayne made a further application to the Victorian Supreme Court for their damages to be determined – apparently this involved an inquiry by the chief clerk. The Victorian chief justice knocked them back, saying: “:—”The High Court cannot direct the Chief Clerk of the Supreme Court to proceed with these inquiries; and I am not the servant of the High Court, so that anything I do must be as a Judge of the Supreme Court, according to the procedure of this Court, and there is no authority for the present application in the Rules of this Court.”
This drew forth a very tart response from Griffith CJ on behalf of the full High Court in Bayne v Blake  HCA 5; (1908) 5 CLR 497 (19 March 1908) , where he said:
“Although the learned Chief Justice is not a servant of this Court, yet he is a citizen, and he is a member of a Court of the Commonwealth, and, by the express language of sec. V. of the Commonwealth of Australia Constitution Act, “all laws made by the Parliament of the Commonwealth under the Constitution, shall be binding on the Courts, Judges, and people of every State, and of every part of the Commonwealth, notwithstanding anything in the laws of any State.” The learned Chief Justice is therefore bound by the Judiciary Act 1903 just as is any private person, and sec. 37 of that Act expressly says that it shall be the duty of the Court to which a cause is remitted to execute the judgment of the High Court in the same manner as if it were its own judgment. So that the learned Chief Justice, although he is not a servant of this Court, is an officer of the law required by law to execute the orders of this Court. Under these circumstances it is manifest that the order he made is wrong; he had no right to order that the inquiries directed by this Court should be adjourned until the decision of the Privy Council was made known. That was a stay of proceedings which this Court had shortly before declared the Supreme Court had no authority to make.”
It is unclear how far the Supreme Court got in that exercise, because on 26 May 2008 the Privy Council allowed Blake & Riggall’s appeal – Blake v Bayne  UKPCHCA 2; (1908) 6 CLR 179 (26 May 1908). They didn’t agree that B&R were anybody’s solicitors other than Grace’s, which didn’t avail them since, ex hypothesi, she was the party in breach and for whose breach they were suing.
Meanwhile, in the last week of March, Mary Bayne’s appeal against the summary judgment against her claim against Baillieu, Blake and Riggall was heard by the High Court. Judgment is reported as Bayne v Baillieu  HCA 39; (1908) 6 CLR 382 (22 June 1908).
The High Court dismissed the appeal in relation to Baillieu (Barton said it was ‘too plain for argument” that Mary Bayne’s case was hopeless) but said that the judge had been wrong to throw out the case against Blake & Riggall without giving it an opportunity to be determined on the merits.
Since June 1907, Grace and Lila (also referred to as Lilian) had not paid rent for their rented accommodation. In June 1908, after a new owner, one Love, gave them notice to quit, judgment for possession was given in the court of petty sessions. Grace appealed this unsuccessfully to the Supreme Court and then to the High Court, where the matter was heard in March 2009. Mr Gregory appeared for the appellant. Mr Davis, for the respondent, was not called upon – which means there was nothing the court needed to hear from him: the appeal was dismissed. Judgment was given ex tempore: Bayne v Love  HCA 2; (1909) 7 CLR 748 (4 March 1909).
On 16 February 1909, the twins (LE and Mary) were sent bankrupt on what appears mostly to have been the various costs orders. They appealed against these.
LE and Mary also brought fresh proceedings against their sister and Blake & Riggall and a third party, not on the administration bond any more, but alleging substantive breaches of duty in relation to various land dealings of which Blake & Riggall and a third party were aware and for which they were answerable. Summary judgment was given against them in these proceedings in April 1909, on the grounds that the action was frivolous or vexatious and that substantially the action had already been decided in the previous litigation. LE and Mary appealed against this.
Mary Bayne continued with her claim against Blake & Riggall for wrongfully bringing bankruptcy proceedings against her (that is, the first bankruptcy). Lila (aka Lilian: this is why the reports keep on just calling her L E Bayne) was joined as an additional plaintiff. The claims were that Blake & Riggall had fraudulently falsely and maliciously:
- sent them bankrupt without reasonable and probable cause;
- done so by suppression of the truth that there was not an appeal to the High Court;
- done so not for the distribution of the sisters’ estates but in order to prevent them taking their appeal;
- despite a stay of proceedings on the debt founding the bankruptcy, caused the trustee, Baillieu to apply for warrants for their arrest when they didn’t respond to examination summonses.
Mary and L.E. were unsuccessful at trial. Rather amazingly, in what must have seemed to the Misses Bayne as an obdurate and scandalous failure to see the bleeding obvious, the trial judge seems to have positively found that Blake & Riggall were not actuated in taking the insolvency proceedings by a desire to prevent the appeal going on, but by a desire to recover any property the appellants might have in satisfaction of their claim for costs.
As Griffith CJ commented on the appeal:
As I understand that finding, it is that the respondents had not that object in view in any way—that it was quite absent from their minds. If that is the meaning of the finding, I have very great difficulty in accepting that conclusion on the evidence before us.
Nevertheless, the appeal to the High Court was dismissed: Bayne v Blake (No 1)  HCA 55; (1909) 9 CLR 347 (10 September 1909). At least judgment was reserved. The problem was that damage needed to be shown, which was hard in the face of the final judgment of the Privy Council, even though one result of the bankruptcy orders was that the Misses Bayne only had ₤20 to brief counsel on that appeal.
Griffith CJ said:
But there is one thing quite clear, namely, that, assuming this was an abuse of process of Court and that it is actionable, actual damage is an ingredient of the action, just as it is in an action for fraud. Fraud without damage is not a cause of action. Therefore, the appellants in order to succeed must show that they have sustained some damage owing to the improper conduct of the respondents, and the connection between the conduct and the damages must be such that the Court can take notice of it. Now the damage the appellants have sustained, assuming either of the causes of action to lie, undoubtedly is that they were seriously hampered in the defence of their case, and so much so that they practically became inopes consilii. But it has been determined by the highest Court of Appeal that the appellants never had a cause of action, so that they have only been hampered in putting forward an untenable claim. In my opinion the Court cannot take notice of that as damage to sustain their present cause of action. That the appellants never had a cause of action has been decided in litigation between the same parties, and even if it appeared in the clearest way that the judgment was mistaken, or was given upon mistaken evidence, or that fresh evidence had been discovered—no matter what the circumstances were—so long as that stands as the final judgment between the parties their claim is untenable, and I do not think that being hampered in such an action can be regarded as giving rise to a cause of action.
For that reason I think the appellants fail. As to the other points, I reserve my judgment until the question arises for decision, which I think will be never.
Hardly an encouraging note.
On 30 September 1909 the twins’ last two appeals (on the fraudulent prosecution of bankruptcy and the “fresh” claim about breaches of duty) were heard by the High Court. Lila appeared in person – that is, they were both unrepresented. Both appeals were dismissed: Bayne v Blake (No 2)  HCA 61; (1909) 9 CLR 360 (30 September 1909) and Bayne v Blake (No 3)  HCA 60; (1909) 9 CLR 366 (30 September 1909).
The truth is by now more than ever lost in the mists of time. An unwarranted slur upon the upright conduct of the reputable solicitors, Blake & Riggall? A terrible wrong done to the vulnerable orphans? So far as the actual losses to the “estate” are concerned, there is much at least initially appealing in the findings of the Privy Council, which really amounted to the view that in substance the estate was distributed and the sisters agreed that Grace would run the show on their behalf as their mother had before them. It is telling that at the meeting (leaflet above, from the National Library – see formal notice below) Mr Fitzgerald stated that:
“the three sisters are absolutely united and at one in this matter, and have been so all through. And their interests are and have been throughout identical – that is to say if victory is theirs, they will all share it equally, and if defeat is theirs, they will all suffer it equally.”
The meeting at which the address was given was held to drum up subscriptions for a fund to support a fresh appeal to the Privy Council. The justification for this offered by Mr Fitzgerald is misrepresentations by which (so Misses Bayne said) the special leave to appeal to the Privy Council had been obtained, the unfairness of the circumstances where, with only ₤20 brief fee, their counsel only spoke for two hours on the actual appeal (which does rather colour the superficial attraction of the Privy Council’s findings of “fact”, and the undesirability of the Privy Council hearing appeals on purely domestic matters. The pamphlet records a unanimous resolution to collect funds for this purpose. Presumably it was printed after the meeting, in anticipation of the second meeting and in order to solicit donations.
Mr Fitzgerald claims at the meeting that he and other legal advisers had formed the view that the initial claim under the administration bond was too narrow and that it trapped the Misses Bayne in technicalities. This makes me wonder whether he had, in an informal way, advised them in their “fresh” claim which had gone beyond the bond.
I’ve been unable to establish whether anything came of it.
Picture at head of post reproduced from the following pamphlet held in the National Library:
Bayne v. Blake & Riggall : address / delivered by W.J.P. Fitzgerald, at a public meeting held on 18th July, 1912 at Sargent’s Cafe, Elizabeth Street.
Fitzgerald, W. J. P.
s.n., [Melbourne : 1912]
SR N 080 PAM v. 247, no. 4490 mcN 1475 item 4490 RAS mcN 1475 item 4490 (806270)