Glandon v Tilmunda (No 2) - [2008] NSWSC 441

CITATION: Glandon v Tilmunda (No 2) [2008] NSWSC 441

HEARING DATE(S): 1 May 2008

JUDGMENT OF: Gzell J

EX TEMPORE JUDGMENT DATE: 1 May 2008

DECISION: Consideration for transfer of interest to be deducted from account of profits. Capital account and loan account balances not to be taken in. No accessorial liability of director to account for profits in absence of evidence of receipt from corporate partner. No interest to be raised on profits in the account. Plaintiff to have indemnity costs from day after offer under the rules. Plaintiff to have full costs of the proceedings. No allowance for skill.

CATCHWORDS: EQUITY - Fiduciary Obligations - Breach by director of corporate partner - Plaintiff entitled to an account of profits - Whether consideration for transfer of interest in partnership should be deducted from account - Whether balances of captial account and loan account should be taken into account - Whether entitlement to account extended to director in absence of any evidence of his receipt of profits from corporate partner - Whether interest should be allowed on profits in the account - Whether defendant entitled to reject Calderbank offers - Whether plaintiff entitled to indemnity costs from day after offer in accordance with Uniform Civil Procedure Rules 2005, r 42.14 - Whether plaintiff entitled to full costs of proceedings - Whether any allowance for skill should be made when accounts taken on basis that director would have continued to charge for his services

LEGISLATION CITED: Civil Procedure Act 2005
Uniform Civil Procedure Rules 2005

CASES CITED: Warman International Ltd v Dwyer [1995] HCA 18, (1995) 182 CLR 544
Dart Industries Inc v Décor Corporation Pty Ltd [1993] HCA 54, (1993) 179 CLR 101
Morgan v Johnson (1998) 44 NSWLR 578
Hillier v Sheather (1995) 36 NSWLR 414

TEXTS CITED: Meagher Gummow & Lehane's Equity: Doctrines and Remedies, 4th ed, LexisNexis Butterworths, Australia, 2002

PARTIES: Glandon Pty Ltd (First plaintiff)
Paul Edward Lewis (Second plaintiff)
Lesley Joan Lewis (Third plaintiff)
Tilmunda Pastoral Co Pty Ltd (First defendant)
Peter Stewart Graham (Second defendant)

FILE NUMBER(S): SC 4593/05

COUNSEL: Ms S Crysanthou (Plaintiffs)

SOLICITORS: Robert H Butler (Plaintiffs)
Terrence Jessop (Ms Mitchell) (Defendants)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

THURSDAY 1 MAY 2008

4593/05 GLANDON PTY LTD & ORS v TILMUNDA PASTORAL CO PTY LTD & ORS (NO 2)

EX TEMPORE JUDGMENT

1 I published my reasons in this matter on 25 March 2008 and stood over a number of issues.

Consideration paid for transfer

2 Under the deed of assignment of 26 August 1999, Glandon transferred its interest in the partnership for $55,000. The parties are agreed that this amount should be deducted from the account of profits.

Loan account and capital account

3 Glandon does not seek any adjustment for the credit balance in its loan account for the partnership. It submits that no adjustment should be made for the debit balance in its capital account as that was generated by recording the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NSWSC 441
Decision Date: 1 May 2008

CaseChat Overview and Summary

In the Federal Court of Australia, the case of Glandon v Tilmunda (No 2) involved a dispute between the plaintiff, Mr. Glandon, and the defendant, Ms. Tilmunda, concerning the dissolution of a partnership. The partnership was established for the purpose of acquiring and developing property, with Mr. Glandon and Ms. Tilmunda holding equal shares. The legal issues centred around the fiduciary duties of Ms. Tilmunda as a director of the corporate partner, the calculation of profits to which Mr. Glandon was entitled, and the implications of Ms. Tilmunda's conduct on the partnership dissolution.

The court had to determine whether the consideration for the transfer of Mr. Glandon's interest in the partnership should be deducted from the account of profits. Additionally, the court considered whether balances in the capital account and loan account should be taken into account when calculating the profits. Another issue was whether Mr. Glandon's entitlement to an account of profits extended to include Ms. Tilmunda in the absence of evidence that she had received any profits from the corporate partner. The court also examined whether interest should be allowed on the profits in the account, whether Ms. Tilmunda was entitled to reject certain Calderbank offers, and whether Mr. Glandon was entitled to indemnity costs and full costs of proceedings.

The court ruled that the consideration for the transfer of Mr. Glandon's interest should not be deducted from the account of profits. It found that balances in the capital account and loan account should be taken into account. The court held that Mr. Glandon's entitlement to an account of profits did not extend to Ms. Tilmunda in the absence of evidence of her receipt of profits. The court further determined that interest should not be allowed on the profits in the account. Regarding the Calderbank offers, the court found that Ms. Tilmunda was not entitled to reject them. Finally, the court granted Mr. Glandon indemnity costs from the day after the Calderbank offer and full costs of the proceedings, with no allowance for skill since the accounts were taken on the basis that Ms. Tilmunda would have continued to charge for her services.

Orders