1. Since each defendant took part in the sale of shares in the
   partnership and in the later administration of the partnership
   business, they are all managing partners.

Rawlings v. General Trading Co. (1921) 1 K.B. 635.

Auctions (Bidding Agreements) Act 1927.

* Court: Hayes, J.

action

Hanari Ahmed Hassan sued Mutassim Mohd Osman, Hamid Mohd Osman,

Mohd Osman Mansour and Fuad Abdel Malik for an account of profits. A

  ermmission/to take accounts was appointed during the hearing, and the

commissioner reported that the plaintiff was entitled to LE.24.493rn(ms.
Each of the four defendants disputed liability.

  Decem~er.1.9,· ..\g48,eUuyCS!·' Jr' .'I'h i s old suit is one of a series

of actions brought by partners in a purchaser's ring in an auction sale
of Government property in 1945. In each case the defendants are drawn
from the present defendants in various combinations. In.each case the
demand is for an account of profits derived from re-sale.

The facts appear from the report of the Commissioner which I accept.

The ring~. was organised by the first three defendants shortly before the
sale on July. 13, 1945. Defendant ~ad came in at once and largely
financed it. Dealers \-iere invited to take LE.5 shares, and a total of
LE.251~ was subscribed. Goods were purchased for LE.2449.660rn(ms and

later resold for LE.2785.130rn(ms. After deducting expenses of ·LE.22.500rn(ms,
the profit available fjor distribut ion',was LE. 312 • 970m/ms ; that is 621rn(ms
per share. The difficulty has arisen largely from the fact that simple
partners expected the profits to exce~d this, so there was a good deal

of dealing in shares at LE.6 per share. In the course of this dealing,

the four defendants presumably seeing the red light, disposed of all their
original shares.

I have carefully considered vlhether the partnership contract vias

illegal as contrary to public policy, either as being in restraint of

trade or as damaging the publio by depressing the price to be obtained

in a sale of public property. In this examination I have. had great
assistance-f'rom Abu Rennat, D.J., who called. to. my attent ion the dissent ing
judgment. of Lord Justice Scrutton in RaWlings v. dtneral Trading Co. (1921)
1 K.B. 635, a judgment which was largely instrumental in bringing about                    

the passing of the Auctions (Bidding ~eements) Act 1927. I do not

think th~t I am c:bliged to find that this bidding agreement was illegal.

It \iaS, I think, a genuine agreement made previous to the auction to purchase
goods upon a joint account. The agreement 'l'las a reasonahle one from the
point of view of the buyers. Even so I might have held it illegal if it
harmed the publio financially, but I do not think it did. The ring- did

not buy in ali the lots offered; about LE.1300 worth ~lent to outsiders.

The price paid vias reasonable: vlitness the small profits ultimately
realised.

On the merits of the case, I find that the plaintiff accept s the
report, and that the defendants do not dispute it, except that Mohd Osman
queries some figures. But all the defendants say that they were not per-
sonally liable. The firm is, but they are not. The remaining question
in issue, therefore is whether the plaintiff, as a shareholder in the
firm, is entitled to an account from the four defendants or any of them.
The plaintiff alleges that the defendants wez-e the managers of the firm,
and in this connection I must sey- that in my opinion the plaintiff was
free to frame his action either under the law of partnership for a breach
of duty bet'l'leen the managing partners and himself or in pure contract for

a breach of an implied contract binding the managers to use due and business
like prndence and care in the business of purchase and re-sale. It would

be supererogatory to consider l-Ihat further claim the plaintiff may have
sounding in tort or equity. I mention this because there had been confusion
in this suit, shoun , for example, by Uatson, D.J. (as he then was), unen

he !··rP.laar.~<?d: "It is, I think, more than possible that in lal1 each case
q)lght to be c':;cinst all the shareholders:" The action is against those
alleged to be the managers and against them only.

Ahmed El Sawi El Senussi, the Corrrnissioner, in , .• hom the court has
confidence, sey-s of the four defendants in his report: "1 am of opinion
that (all four) are responsible ••• because they were the persons who
were conducting the so=cal.Led firm's works in connection .Iith collection
and payment of amounts, sale and delivery." Again, in court on December
6, 1948 he said,on oath, "The four defendants are the people \1ho kept the
goods, received the money and kept the accounts."

As to the defendant, Mutassim, he appeared to.admit the plaintiff's
claim as to LE.3 on the settlement of issues, and queried only the amount,
P.3 which he signed, admits liability for LE.20. The plaintiff's evidence
strongly supports the report. l>lutassim himself said that he received all
the subscriptions and paid the auctioneer at the original sale. He attempts
to show that after the original purchase, the defendant Fuad took over all
the affairs of resale, so that he alone is responsible, for he received

the money. This is hollow. He admits that he participated in the trans-
actions in which shares were bought out at a profit of LE.l in the course

of which incidentally it appears that the managers themselves sold out,

thereb,y securing for themselves a profit of LE.l instead of that actually
realised from resale, ~. 621m/ms. He admits that Fuad gave him LE.800
to 'distribute while others gave him other sums for the same purpose; he
produces his distribution lists in accounts, but it is clear from this

. very transaotion that he continued at this stage to take an active part
;n administration. Finally; his final submission makes it very clear

that he was concerned in the management throughout. He cannot take refuge
in seying that he does not know what tbe other managers did with the money,
for it was his duty to know; it was his duty to the shareholders, whose
money he had taken, to watch over this money, in common with his own, and
to see that they received all to which they were entitled. His own lack
of diligence is not a defence to such an action as the presen~

As to the defendant Hamid, who is Mutassim's brother', the learned

District Judge expressed the opinion that, "It is clear from the evidence
taken that the only persons of the defendants who ar~responsible for
aocounts in this business are the defendants (othe1;'~an Hamid)." I have
already set out the opinion contained in the repo~t. The plaintiff gives
evidence that he oonsidered Hamid as one of the managers, seying he acted
as such. He gives evidence that Hamid held the cash. Further, ·Hamid
aotually admitted liability for a small sum. Hamid's· defence is that he
was merely a depository; he held the money for a time and gave it up on
demand. He also denies receiving any ;oney. But it is clea.r that he was
with 1.1utassim from the start at the scene of the sales, and that he ./as
olosely associated \"ith him and the o.ther defendants in administration.

It is for him to prove that he took the money merely as a banker. In this
he has failed, and I find that he must bear responsibility as a manager.
It may be that he failed to supervise what was going on. If so, he failed

in his duty to his partners, for he held himself out to them as being at

least in part responsible for the finanoial affairs of the firm.

As to the defendant Mohd Osman, he says that he ./as not a manager,
but merely a scribe, and, apparently an unpaid one. Yet he admitted that
he was a shareholder to the tune of LE.70, and the Commissi.oner's rep'ort
shows the ro.mificat ions of his deal ings, p .• 3, en '/hioh he is the chief
signatory, shO\-IS him taking a responsible adminbtrat i ve j.ar-t , He clailns

to have paid out 9v~r LE.307 from his own pocket; this remains an asse~ton~                                                                                   

Although the plaintiff' did not claim that he we,s 11 manager, I have no dou~t

that he \.as. His defenoe amounts to a confession that he neglected the \
interests of those to whom he hsd held himself out as one responsibl.e for

their interests in the venture: He is as slippery as an eel.

Decree accordingly