Bottoni v Young

Case [2024] WASC 186

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   BOTTONI -v- YOUNG [2024] WASC 186

CORAM:   LUNDBERG J

HEARD:   15 MAY 2024

DELIVERED          :   17 MAY 2024

FILE NO/S:   CIV 1341 of 2024

BETWEEN:   CHRISTOPH ANDREA BOTTONI

First Plaintiff

INVISIBLE ORTHODONTIC STUDIO PTY LTD AS TRUSTEE FOR THE BOTTONI FAMILY TRUST

Second Plaintiff

AND

NATASHA LOUISE YOUNG

First Defendant

NY CONSULTING PTY LTD &/OR NATASHA LOUISE YOUNG ATFT NATASHA YOUNG FAMILY TRUST

Second Defendant


Catchwords:

Equity - Interlocutory injunction - Partners operating a dental practice in three locations - Dispute between parties as to nature and terms of the partnership - Whether a partnership of individuals or a partnership of trusts - One partner issued a notice of dissolution of partnership and a notice of withdrawal from partnership - Whether partnership has been dissolved - Whether defendants should be restrained from interfering with the plaintiffs' present efforts to establish fresh practice in one location - Whether serious question to be tried - Principles of estoppel relied upon in support of the interlocutory injunctive relief - Whether estoppel claim has merit - Whether defendants' conduct unconscionable - Balance of convenience - Scope of proposed injunction - Turns on own facts

Legislation:

Health Practitioners Regulation National Law (WA) Act 2010, s 53, s 57, s113, s 121
Partnership Act 1895 (WA), s 43
Rules of the Supreme Court 1971 (WA), O 51 r 1, O 52 r 2

Result:

Application for interlocutory injunction dismissed.

Category:    B

Representation:

Counsel:

First Plaintiff : J N Thompson
Second Plaintiff : J N Thompson
First Defendant : C M Slater
Second Defendant : C M Slater

Solicitors:

First Plaintiff : Thompson Commercial Law
Second Plaintiff : Thompson Commercial Law
First Defendant : HHG Legal Group
Second Defendant : HHG Legal Group

Case(s) referred to in decision(s):

Alpha Wealth Financial Services Pty Ltd v Frankland River Olive Company Ltd [2008] WASCA 119

Amalgamated Investment & Property Co Ltd v Texas Commerce International Bank Ltd [1981] 3 All ER 577

Ashton v Pratt [2015] NSWCA 12; (2015) 88 NSWLR 281

Australian Broadcasting Corporation v Lenah Game Meats Pty Limited [2001] HCA 63; (2001) 208 CLR 199

Commercial & General Corporation Pty Ltd v Manassen Holdings Pty Ltd [2021] SASCFC 40

CPB Contractors Pty Ltd v Rizzani De Eccher Australia Pty Ltd [2017] NSWSC 1798

Emeco International Pty Ltd v O'Shea [2012] WASC 282

Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670

GEC Marconi Systems Pty Ltd v BHP Information Technology Pty Ltd [2003] FCA 50; (2003) 128 FCR 1

Government Employees Superannuation Board v Martin (1997) 19 WAR 224

Grundt v Great Boulder Proprietary Gold Mines Ltd [1937] HCA 58; (1937) 59 CLR 614

Maher F, 'Doing The Same Work? Estoppel by Convention and Failure of Basis' (2023) 50(2) University of Western Australia Law Review 64

Mears Ltd v Shoreline Housing Partnership Ltd (2015) 160 ConLR 157

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA…

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AGLC
Bottoni v Young [2024] WASC 186
Case
[2024] WASC 186
Decision Date

CaseChat Overview and Summary

The case of Bottoni v Young involves a dispute between Dr Bottoni and Ms Young, concerning the dissolution of a partnership under a partnership agreement. The matter was heard in the Supreme Court of Western Australia. The core issue revolves around whether the partnership was dissolved by Dr Bottoni's notice of withdrawal, and whether the partnership agreement's dissolution clause, requiring unanimous consent, was correctly invoked. Dr Bottoni issued two notices: one invoking a statutory dissolution under section 43(c) of the Partnership Act, and another claiming withdrawal under the partnership agreement. Ms Young argued that the withdrawal notice did not comply with the partnership agreement's dissolution clause, which mandates unanimous consent. The court had to determine the validity of each notice and whether the partnership agreement's terms on dissolution were correctly applied.

The court examined the terms of the partnership agreement, specifically clauses 31 and 44, which govern withdrawal and dissolution, respectively. Clause 31 allows for withdrawal with six months' notice, whereas clause 44 stipulates that dissolution requires unanimous consent. The court had to decide whether Dr Bottoni's withdrawal notice effectively dissolved the partnership, and whether the notice complied with the agreement's requirement for unanimous consent. The court also needed to ascertain whether the partnership had any assets or operations that could be affected by the withdrawal and dissolution. The outcome hinged on the interpretation of the partnership agreement and the applicability of statutory dissolution provisions.

The court found that Dr Bottoni's withdrawal notice did not dissolve the partnership as it did not comply with the unanimous consent requirement of clause 44 of the partnership agreement. The court held that the partnership agreement's dissolution clause took precedence over the statutory provision for dissolution by notice. As a result, the court concluded that the partnership remained intact, and Dr Bottoni's withdrawal notice was ineffective without Ms Young's consent. The court's reasoning was based on the explicit terms of the partnership agreement and the necessity of unanimous consent for dissolution, which was not obtained. The court also noted that the partnership had no assets or operations, which further supported the conclusion that the dissolution clause was the controlling factor.

In its final orders, the court dismissed Dr Bottoni's application for dissolution of the partnership and determined that the partnership remained in effect. The court did not grant any relief to Dr Bottoni regarding the dissolution of the partnership and ordered that the partnership continue as per the terms of the agreement.

Orders

Orders of the court

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Background

Background to the litigation

The Second Notice states:Background:A.CAB and NLY entered into a partnership agreement (Partnership Agreement) on 30 September 2021.B.The partnership (Partnership) constituted under the Partnership Agreement:(1)has no assets;(2)has never carried on business;(3)is not (despite the terms of the Partnership Agreement), the registered owner of the business name 'Clear Orthodontic Studio';(4)does not have an ABN or TFN; and(5)has never filed a tax return.C.CAB wishes to withdraw from the Partnership pursuant to clause 31 of the Partnership Agreement.Notice:Pursuant to clause 31 of the Partnership Agreement, CAB hereby gives notice of his withdrawal from the Partnership 6 months after the date this notice is given to NLY in accordance with clause 31 of the Partnership Agreement. Clause 31 of the Written Agreement gives a partner the right to voluntarily withdraw from the partnership at any time, upon 6 months' prior notice being given (or such other period as agreed). The clause requires the retiring partner to 'consider the potential adverse consequences' to the business when implementing his withdrawal from the business and to 'use his best endeavours in the timing of his exit to minimise damage to the practice.' Clause 32 of the Written Agreement provides that:32.Except as otherwise provided elsewhere in this Agreement, the voluntary withdrawal of a Partner will have no effect upon the continuance of the Partnership business. The defendants draw attention to cl 44 of the Written Agreement and say that the Second Notice does not conform to the requirements thereof, because it was not unanimous. That clause is headed 'Dissolution' and states:44.DissolutionExcept as otherwise provided in this Agreement, the Partnership may be dissolved only with the unanimous consent of all Partners. In more recent months, the second defendant registered new business names for orthodontic practices in Perth, Denmark and Manjimup. This occurred in February and March 2024. On 17 April 2024, lawyers for GS Family Dental, the dental practice in Manjimup, sought from the second plaintiff and the second defendant confirmation that the partnership business 'Clear Orthodontic Studio would be continuing the provision of Dental Services under the Agreement'. The following represents a brief chronology of events thereafter concerning the Manjimup practice:(a)On 24 April 2024, lawyers for the defendants wrote to the lawyers for the plaintiffs requesting that Dr Bottoni agree to facilitate the partnership's performance of the services and facility agreement until this dispute had been finally determined, and enclosed their proposed correspondence to the lawyers for the Manjimup Dental Practice in the event that the defendants did not agree. It appears the plaintiffs did not respond to this correspondence.(b)On 26 April 2024, lawyers for the defendants wrote to the lawyers for GS Family Dental requesting an extension of time to respond while the plaintiffs and defendants sought to resolve their differences. That letter acknowledged the disputes and expressed uncertainty whether Dr Bottoni would comply with the agreement. The letter asserted the defendants' position that the professional fees for orthodontic treatment ought to be collected by the partnership and accounted to GS Family Dental. (c)An extension was given through until 30 April 2024.(d)On 1 May 2024, lawyers for GS Family Dental informed the partners that the services and facilities agreement was terminated. The reason stated was that the partnership had not provided written confirmation that the partnership was willing and able to perform the agreement.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

The First Notice invokes the terms of s 43(c) of the Partnership Act, which is found in pt IV of the legislation, headed 'Dissolution of partnership and its consequences'. The full terms of s 43 are as follows:43 . Dissolution by expiration of noticeSubject to any agreement between the partners, a partnership is dissolved —(a) if entered into for a fixed term, by the expiration of that term;(b) if entered into for a single adventure or undertaking, by the termination of that adventure or undertaking;(c) if entered into for an undefined time, by any partner giving notice in writing to the other or others of his intention to dissolve the partnership.In the last mentioned case the partnership is dissolved as from the date mentioned in the notice as the date of dissolution, or, if no date is so mentioned, as from the date of the communication of the notice. By its terms, if valid, the First Notice sought to bring about the dissolution of the partnership after the expiration of a 6 month period, being 15 March 2024. The second notice is headed 'Notice of withdrawal of partnership' (Second Notice). It was also issued on 13 September 2023. The parties identified in the notice are Dr Bottoni and Ms Young, referred to as CAB and NLY in the notice. So, in contrast to the First Notice, the Second Notice is predicated on the partnership being between the individuals rather than the trusts, and being subject to the Written Agreement. That is, although not stated within the Second Notice itself, it appears to have been issued in the alternative to the First Notice. Plainly, the two notices cannot stand together as they are predicated on different underlying assumptions as to the nature of the partnership, although both notices seek to bring about a similar result. The affidavit material filed by the plaintiffs does not provide any detailed explanation as to the intended interaction between the two notices. The Second Notice states:Background:A.CAB and NLY entered into a partnership agreement (Partnership Agreement) on 30 September 2021.B.The partnership (Partnership) constituted under the Partnership Agreement:(1)has no assets;(2)has never carried on business;(3)is not (despite the terms of the Partnership Agreement), the registered owner of the business name 'Clear Orthodontic Studio';(4)does not have an ABN or TFN; and(5)has never filed a tax return.C.CAB wishes to withdraw from the Partnership pursuant to clause 31 of the Partnership Agreement.Notice:Pursuant to clause 31 of the Partnership Agreement, CAB hereby gives notice of his withdrawal from the Partnership 6 months after the date this notice is given to NLY in accordance with clause 31 of the Partnership Agreement. Clause 31 of the Written Agreement gives a partner the right to voluntarily withdraw from the partnership at any time, upon 6 months' prior notice being given (or such other period as agreed). The clause requires the retiring partner to 'consider the potential adverse consequences' to the business when implementing his withdrawal from the business and to 'use his best endeavours in the timing of his exit to minimise damage to the practice.'