Gumbleton v Hewitt - [2012] NSWSC 886

Supreme Court

New South Wales

Medium Neutral Citation: Gumbleton v Hewitt [2012] NSWSC 886
Hearing dates: 13 July 2012
Decision date: 13 July 2012
Jurisdiction: Equity Division
Before: Rein J
Decision:
1. Partnership dissolved as and from 26 November 2010.
2. Under the circumstances, it is not appropriate to burden the partnership with costs for appointment of a receiver.

Catchwords:
PARTNERSHIP - rights and duties of partners inter se - where defendant removed money to which defendant was not entitled from partnership bank account -breach of partnership relationship or conduct justifying termination of the partnership
PARTNERSHIP - dissolution and winding up - by the court - where size of partnership is not substantial - where some partnership assets very likely could not be traced but in respect of which the plaintiff seeks no relief - where there is no appearance by the defendant - where neither party seeks appointment of receiver - not appropriate to appoint receiver
Legislation Cited: Civil Procedure Act 2005
Partnership Act 1892
Cases Cited: Cuming v Hennessey [2005] NSWSC 1219
Daniels v Smith [2006] NSWSC 1424
Category: Principal judgment
Parties: Edward Gary Gumbleton (Plaintiff)
John Patrick Hewitt (Defendant)
Representation: Counsel:
D Mackay (Plaintiff)
No appearance by the defendant
Solicitors:
McCartney Young Lawyers (Plaintiff)
No appearance by the defendant

File Number(s): SC 2011/362591

ex tempore Judgment

These proceedings concern a partnership established in February 2007 by the plaintiff, Mr Edward Gary Gumbleton, and the defendant, Mr John Patrick Hewitt, for the purchase, rearing and sale of cattle. The business was quite successful, and cattle were purchased, and reared, and then sold.

From the original $25,000 that each partner contributed, there was a significant profit, achieved by reason of the sale of cattle. Documents relating to the sale of cattle produced under subpoena by Ian Weir and Son Pty Ltd can be found as Exhibit C.

The plaintiff discovered that the defendant had removed two significant amounts from the partnership account conducted with the Summerland Credit Union. The removals can be found on the Summerland Credit Union bank statements in annexure A to the affidavit of Mr Gumbleton dated 22 May 2012 (see Tab 8 of Exhibit A), and was firstly an amount of $18,850, and secondly an amount of $79,400.

The plaintiff's position is that those withdrawals were made without his approval. The plaintiff alleges that the monies were paid into an account solely in the name of Mr Hewitt. The relevant account into which the monies were paid is found in documents produced by the Commonwealth Bank of Australia on subpoena in Exhibit B.

The plaintiff claims that the partnership has come to an end by virtue of this breach of partnership duty, and he has made demands for the return of the money and the winding up of the partnership or for the termination of the partnership and accounting of profits: see letter of Ms Michelle McCartney dated 6 April 2011 in annexure G to the affidavit of Mr Gumbleton dated 12 October 2011 at…

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.

Continue reading Gumbleton v Hewitt

Details

AGLC: Gumbleton v Hewitt [2012] NSWSC 886
Case: [2012] NSWSC 886
Decision Date: 13 July 2012

CaseChat Overview and Summary

In the matter of Gumbleton v Hewitt, the dispute involved the dissolution and winding up of a partnership. The plaintiff sought to dissolve the partnership and wind up its affairs due to alleged breaches of partnership by the defendant. The matter was heard in the Supreme Court of Queensland. The central issue was whether the defendant's actions constituted a breach of partnership sufficient to justify the termination of the partnership and whether the court should order the dissolution and winding up of the partnership.

The court examined the nature and extent of the defendant's conduct, specifically whether the removal of funds to which the defendant was not entitled from the partnership bank account constituted a breach of partnership. The court considered whether such conduct could be seen as a material breach of the partnership agreement or a fundamental breach of the partnership relationship. Given the lack of substantial partnership assets and the plaintiff's lack of interest in pursuing the tracing of specific assets, the court assessed whether dissolution was appropriate. Additionally, the absence of the defendant and the lack of requests from either party for the appointment of a receiver were significant factors in the court's decision.

The Supreme Court concluded that the defendant's actions did amount to a breach of the partnership agreement and the partnership relationship. The court found that these breaches were sufficient to justify the termination of the partnership. Given the circumstances, including the small size of the partnership, the likely irretrievability of some assets, and the lack of requests for a receiver, the court determined that appointing a receiver was not appropriate. Consequently, the court ordered the dissolution of the partnership and directed the winding up of its affairs.

Orders