Harris v Byerley [1918] HCA 34; (1918) 25 CLR 55 (26 June 1918)

HIGH COURT OF AUSTRALIA

Harris Defendant, Appellant; and Byerley Plaintiff, Respondent.

H C of A

On appeal from the Supreme Court of Queensland.

26 June 1918

Griffith C.J., Gavan Duffy, Powers and Rich JJ.

Feez K.C. and Douglas, for the appellant.

Macgregor and Walsh, for the respondent.

Feez K.C. and Douglas.

Macgregor and Walsh were not called upon on this point.

Griffith C.J.

The agreement of 10th April 1912 is an agreement between the appellant and the respondent, and governs their rights. Our duty is to say what they are. The agreement was an agreement for services, under which the respondent was to manage a business or businesses for the appellant for a remuneration part of which consisted of 50 per cent. of the net profits of the businesses in excess of £3,000 per annum. It was obviously necessary that in order to ascertain the amount of those profits a calculation, based upon the business operations, should be made by someone. The parties agreed that it should be made by the accountant or auditor of the businesses, and that his computations should be final.

Clause 12 of the agreement was as follows: "For the purpose of computing the amount of the said commission and for all other purposes (if any) the balance-sheet or profit and loss account of the said businesses prepared and certified by the auditor or accountant for the time being of the said W. J. P. Harris shall be conclusive and binding on both parties."

Within the ambit of his authority, therefore, the computation of the auditor was to be final. But what was his authority? It was to make out a balance-sheet or "profit and loss" account of each year's transactions, so showing the net profits of the businesses. But it did not extend any further. Clause 12 must be read with the rest of the agreement, including clause 16, called the Arbitration Clause, which provided that in the case of any dispute or difference arising between the parties as to the amount of the remuneration payable under any of the foregoing stipulations, or as to the validity of any notice, or as to the construction of those presents, or as to any other matter or thing arising thereunder or in the course of the employment of the respondent, every such dispute and matter in difference should be referred to arbitration in accordance with the Interdict Act of 1867. The terms of this clause are unlimited.

The appellant contends that the power of the auditor extended not only to deciding matters of computation, but to determining finally what matters should be taken into account as receipts or disbursements proper to be regarded as part of the business transactions, irrespectively of their real nature. One matter so dealt with is the income tax on the profits of the businesses, the whole of which has been debited against the appellant. It is impossible, reading the agreement as a whole, especially in face of the unlimited terms of the Arbitration Clause, to hold that the auditor had such an unlimited power. In my opinion his authority did not extend to determining the principles upon which an amount should or should not be taken into account. If he did so, his certificate was, to that extent, waste paper. Whether the particular matters complained of by the appellant were matters within or beyond his jurisdiction is the other point in the appeal. So far as the first point is concerned, in my judgment it fails, and the Court, whose jurisdiction is not ousted by clause 16, must proceed to deal with the objections in detail.

Gavan Duffy J.

I agree.

Powers J.

I agree.

Rich J.

I agree.

As to the other question raised in the appeal—namely, as to the correctness of the accounts in respect of the various items which the appellant contended were wrongly directed by the Judge at the trial to be allowed to the respondent—the parties, after the above judgment had been delivered, arrived at an agreement by virtue of which the judgment of Chubb J. was to be varied by entering judgment for the respondent for £1,500 with costs of the action to be taxed; and, in addition, the amount of £2,348 14s. 9d. paid into Court together with the accrued interest thereon was to be paid out to the respondent's solicitors, and the costs of the appeal, agreed at £150, were to be paid by the appellant to the respondent.

Order accordingly.

Solicitors for appellant, Foxton, Hobbs & Macnish, for B. M. Lilley, Rockhampton.

Solicitors for respondent, Crouch & Eden.