Kenway Investments & Anor v Teamda Developments & Ors - [2007] NSWSC 48

CITATION: Kenway Investments & Anor v Teamda Developments & Ors [2007] NSWSC 48
This decision has been amended. Please see the end of the judgment for a list of the amendments.

HEARING DATE(S): 11/12/2006, 12/12/2006, 13/12/2006, 14/12/2006, 15/12/2006

JUDGMENT DATE :
9 February 2007

JUDGMENT OF: McDougall J at [1]

DECISION: Orders made 15 December. Reasons for judgment, see conclusion paras [86] and [87] herein

CATCHWORDS: PARTNERSHIP - where relationship between joint venturers was one of partnership - where loans made to partnership - whether amounts owing should be established on the taking of accounts - whether conduct of fiduciary agent warrants taking of accounts - where loss of capital likely - whether orders for repayment of loans should be made before taking of accounts and ascertainment of extent of any loss - rule in Cherry v Boultbee (1839) 4 My & Cr 442

LEGISLATION CITED: Partnership Act 1892

CASES CITED: Cherry v Boultbee (1839) 4 My & Cr 442; 41 ER 171
Re Peruvian Railway Construction Co Ltd [1915] 2 Ch 144

PARTIES: Kenway Investments (Australia) Pty Limited (First Plaintiff)
Tradelite Investments (Australia) Pty Limited (Second Plaintiff)
Teamda Development Pty Limited (First Defendant)
Liwa Pty Limited (Second Defendant)
Konnie Pty Limited (Third Defendant)
Glisan Pty Ltd (Fourth Defendant)
Wen Kai Tan (Fifth Defendant)
Hong Ying Ruan (Sixth Defendant)
Wen Hui Tan (Seventh Defendant)
Lawrence Luk (Eighth Defendant)
Watsin International Pty Limited (Ninth Defendant)

FILE NUMBER(S): SC 50157/04

COUNSEL: R R I Harper SC/T T Bors (for Kenway & Tradelite)
C R C Newlinds SC/P T Newton (for Teamda, Liwa and Konnie)

SOLICITORS: Massey Bailey (for Kenway & Tradelite)
Heidtman & Co (for Teamda, Liwa and Konnie)

Kenway Investments & Anor v Teamda Developments & Ors [2007] NSWSC 48

Reasons for Judgment

9 February 2007

Para

The issues 4

Relationship between the parties 5

Factual background 7

Disputes; the deed of arrangement 20

The retainer of Mr Chow 26

Mr Chow’s report 34

Mr Chow’s evidence 40

Issues 1-4: the Deed 45

Issues 5-9: factual issues 56

Issues 10-12: the taking of accounts 65

Conclusion 86

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

9 February 2007

ANOR v TEAMDA DEVELOPMENT PTY LIMITED & ORS

REASONS FOR JUDGMENT

1 HIS HONOUR: During 1999, the plaintiffs (respectively Kenway and Tradelite) and the first three defendants (respectively Teamda, Liwa and Konnie) agreed to acquire and develop land at 62-74 Beamish Street, Campsie (the project). Management of the project was entrusted to Mr Wen Kai Tan (also known as Kenneth Tan), a director of Kenway and Teamda. He held a power of attorney from the plaintiffs and the first three defendants. It had been thought that the project would produce a gross return of about $24.6 million based on a gross cost of about $19.3 million: a gross profit, in monetary terms, of about $5.3 million. However, for a number of reasons (including a substantial increase in construction costs), the expected profit did not materialise; on…

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: [2007] NSWSC 48
Decision Date: 9 February 2007

CaseChat Overview and Summary

The case involved a dispute between Kenway Investments and Teamda Developments, along with other parties, concerning the nature of their relationship and the terms of loans made to their joint venture. The court was required to determine whether the relationship between the parties was that of a partnership and, if so, how the amounts owing should be calculated. The central issue was whether the fiduciary agent's conduct warranted the taking of accounts, particularly in light of the potential loss of capital. Additionally, the court had to consider whether orders for repayment of the loans should be made before the taking of accounts and ascertainment of the extent of any loss, referencing the rule in Cherry v Boultbee.

The court found that the relationship between the parties was indeed a partnership, and as such, the fiduciary agent owed duties to the other partners. The court held that the conduct of the fiduciary agent did warrant the taking of accounts, especially given the risk of capital loss. The court emphasised the importance of the rule in Cherry v Boultbee, which allows for immediate orders for repayment when there is a likelihood of capital loss and the fiduciary agent's conduct is questionable. Consequently, the court ruled that orders for repayment should be made before the taking of accounts and the ascertainment of the loss, to prevent further dissipation of the partnership's assets.

In summary, the court held that the parties were in a partnership relationship and that the fiduciary agent's conduct justified the immediate taking of accounts. The court ordered the fiduciary agent to repay the loans before any further accounting was conducted, to protect the partnership's assets from potential loss. This decision underscored the importance of fiduciary duties in partnership arrangements and the need to safeguard against capital loss where necessary.

Orders