Edwards v Mercer [No 2]
[2013] WADC 161
•25 OCTOBER 2013
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: EDWARDS -v- MERCER [No 2] [2013] WADC 161
CORAM: MCCANN DCJ
HEARD: 20 JUNE 2013 (and subsequent written submissions)
DELIVERED : 25 OCTOBER 2013
FILE NO/S: CIV 1368 of 2011
BETWEEN: GREGORY MATTHEW EDWARDS
Plaintiff
AND
CHONTALL MERCER
Defendant
Catchwords:
Loan and partnership agreements - Unsettled accounts - Settlement of partnership accounts - Turns on own facts
Legislation:
Nil
Result:
Judgment for the plaintiff in the sum of $139,963.22
Representation:
Counsel:
Plaintiff: Mr B P Wheatley
Defendant: In Person
Solicitors:
Plaintiff: Mossensons
Defendant: Not applicable
Case(s) referred to in judgment(s):
Edwards v Mercer [2012] WADC 176
MCCANN DCJ:
Introduction
In this matter the plaintiff, Mr Edwards, claimed moneys due and owing to him from the defendant, Ms Mercer, in respect of a partnership which they conducted from 20 November 2006 until 31 July 2008.
On 20 December 2012 I delivered a judgment (Edwards v Mercer [2012] WADC 176) in which I found ([203]), amongst other things, that the partnership traded at a loss at all material times, that the partnership accounts had not been settled by the parties and that the defendant was indebted to the plaintiff in the sum of $41,110.37 pursuant to a collateral agreement between them ('the Westpac personal loan agreement').
I ordered ([209]) that the parties confer with a view to producing settled accounts in accordance with my reasons. I gave liberty to apply in respect of interest on any judgment sum(s) and in relation to costs.
Mr Edwards' accountants prepared draft accounts and his lawyers submitted them for Ms Mercer's consideration. Her lawyers replied in detail but never submitted her version of the accounts.
Eventually I listed the matter for hearing and settlement of the accounts before myself on 20 June 2013. Shortly before the hearing Ms Mercer terminated her lawyers' retainer and went on the record herself. Her counsel, Mr Spyker, attended the hearing to confirm the position and get off the record. There was no appearance by Ms Mercer herself, although she was aware of the hearing.
I decided of my own motion to grant her more time to respond to Mr Edwards' draft accounts and made orders to that effect. Owing to an administrative error in my office, those orders were sent to the wrong address, but that problem was corrected. Still Ms Mercer made no contact with the court.
The court later learned from Mr Edwards' lawyers that Ms Mercer had moved address, but still lived in the same street as before. However, she had not altered her address for service. My associate recently spoke to her on the telephone and she is aware of the matter being listed for final judgment.
The plaintiff's costs were taxed and I assume that the defendant was aware of that process.
Meanwhile, I considered the draft accounts and caused a letter to be written to Mr Edwards' lawyers on 10 September 2013 bearing on one aspect (item 8: see [13] below). That correspondence was also copied to Ms Mercer at her address for service on the record.
Under cover of a letter dated 19 September 2013 (copied to Ms Mercer), and in response to my associate's letter dated 10 September 2013, Mr Edwards' lawyers submitted a revised summary of the partnership accounts.
In all the circumstances I am satisfied that the plaintiff has had every reasonable opportunity (and some) to comment on the draft accounts and to submit her own version. I am satisfied that she has made a deliberate decision not to do so, which is consistent with the personality traits that I commented upon in my earlier decision ([139] and [157]). I am satisfied that it is appropriate to proceed to give this decision.
The plaintiff's draft accounts
The revised summary account submitted on Mr Edwards' behalf is as follows:
| Trading as Chantall Mercer & Greg Edwards Partners' Profit Distribution Summary For the year ended 30 June 2009 (Dated 19 September 2013) | ||
| 2009 $ | ||
| 1. Partners' Share of Profit/Loss | ||
| · Chantall C Mercer | -$ 9,928.00 | |
| · Gregory M Edwards | -$ 9,928.00 | |
| Total Profit (Loss) | -$19,856.00 | |
| Chantall C Mercer | ||
| Opening balance – CCM | -$26,226.00 | |
| Profit/Loss distribution for year | -$ 9,928.00 | |
| Closing Balance of Partners Equity | -$36,154.00 | |
| Total Proprietors Funds | -$36,154.00 | |
| Gregory M Edwards | ||
| Opening balance – GME | $39,402.00 | |
| Contributions – GME | $ 6,680.00 | |
| Profit/Loss distribution for year | -$ 9,928.00 | |
| $36,154.00 | ||
| Closing Balance of Partners Equity | $36,154.00 | $36,154.00 |
| Adjustments for additional capital contributed by GME as per reasons | ||
| 2. Plaintiffs Loans: [191] | $54,327.70 | |
| 3. Interest on Loans: [185] | $30,745.53 | |
| 4. Rent for Shop 26 Oct 2006: [195] | $ 3,010.00 | |
| 5. Citibank & Macquarie Bank Credit Cards: [198] | $ 6,661.00 | |
| 6. Income Tax Returns P48, P71 & P80 but not referred to in reasons | $ 5,940.00 | |
| 7. Omnilux and Dermobrasion lease payments: [205] Half of 2-7 above ($158,787.33) | $58,103.10 | $ 79,393.67 |
| 8. Westpac Personal Loan: [201] – $41,110.37 x 77.6% | $ 31,901.64 | |
| Sub‑total | $147,449.31 | |
I am not in agreement with item 8 which does not fully deal with the problem in its predecessor. The plaintiff has elected to have judgment for the sum of $41,110.37 owing pursuant to the Westpac personal loan agreement. For the reasons given at [201] – [202] of my earlier decision, 77.6% of that sum ($31,901.64) becomes Ms Mercer's capital contribution to the firm and the final partnership accounts must reflect that. Hence the need for item 8 of the summary. It is also necessary to bring to account the repayments which she made pursuant to the Westpac personal loan agreement ($1,488) as a capital contribution to the firm, making a total capital contribution of $33,389.64. However, contrary to item 8, Ms Mercer thereupon becomes entitled to set‑off one half of that sum ($16,694.82) against the amount which she owes the plaintiff.
Subject to that matter, I am satisfied that the draft accounts including the summary provided to the court on 19 September 2013 are in order and in accordance with my findings and reasons.
Against that background, I make the following determination of the parties' entitlements:
(i)Closing balance of partners' equity (item 1: credit balance in Mr Edwards' favour): $36,154
(ii)Adjustments for additional capital contributed by Mr Edwards (items 2‑7: credit balance payable to Mr Edwards):$79,393.67
(iii)Adjustment for additional capital contributed by Ms Mercer (item 8: credit balance payable to Ms Mercer): $16,694.82
(iv)Final balance of partners' equity (credit balance in Mr Edwards' favour): $98,852.85
In summary, the plaintiff is entitled to judgment on the settled accounts in the sum of $98,852.85. To this should be added the sum of $41,110.37 which he has elected to receive pursuant to the Westpac personal loan agreement. In total, the plaintiff is entitled to judgment in the sum of $139,963.22.
I will hear the parties in relation to interest on the judgment sum and costs incurred since 20 December 2012.
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