Leach v WILLIAMS - [2017] WASC 188

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: LEACH -v- WILLIAMS [2017] WASC 188

CORAM: LE MIERE J

HEARD: 13 APRIL 2017 & ON THE PAPERS

DELIVERED : 11 JULY 2017

FILE NO/S: CIV 1258 of 2017

MATTER :Section 46 of the Partnership Act 1893 (WA)
Order 59 of the Rules of the Supreme Court

BETWEEN: JEFFERY JOHN LEACH
Plaintiff
AND
HARVEY NORMAN WILLIAMS
Defendant

Catchwords:

Practice and procedure - Costs - Partnerships - Application for dissolution order - Whether costs payable out of partnership assets - Turns on own facts

Legislation:

Partnership Act 1895 (WA), s 46(d), s 46(f), s 46(g)

Result:

The defendant pay the plaintiff's costs of the proceeding

Category: B

Representation:

Counsel:

Plaintiff: Mr L F G Swanson
Defendant: Mr S R Sirett

Solicitors:

Plaintiff: Hotchkin Hanly Lawyers
Defendant: Borrello Graham Lawyers

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

Hamer v Giles [1879] 11 Ch D 942
One.tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548
Rahman v Ahmed [2009] NSWSC 1028
Re Minister for Immigration and Ethnic Affairs (1997) 186 CLR 622
Sahota v Singh [2006] EWHC 344
Slim v Kabra [2006] NSWSC 837
Xie v Zhou [2002] NSWSC 1114
LE MIERE J:

Summary

The plaintiff commenced this proceeding by way of originating summons seeking an order for dissolution of the partnership between the plaintiff and the defendant, an order for the taking of accounts and an order that the partnership business be sold. On 13 April 2017 I made orders by consent dissolving the partnership and for the taking of accounts in the sale of the partnership business. The parties are in dispute concerning the costs of the proceeding. For the reasons which follow the defendant should pay the plaintiff's costs of the proceeding.

The partnership

The plaintiff and the defendant carried on a pharmacy business in partnership. The plaintiff holds a 60% interest and the defendant a 40% interest in the pharmacy. The defendant is registered with the Pharmacy Registration Board of Western Australia as the pharmacist with overall responsibility for the pharmacy and worked at and managed the pharmacy. The landlord of the pharmacy's premises was Arandell Nominees Pty Ltd. The plaintiff is the sole director of Arandell. The relationship between the plaintiff and the defendant started to deteriorate and since about February or March 2015 each has been represented by lawyers. In correspondence each of the partners made allegations against the other regarding alleged breaches of the partnership deed and mismanagement of the pharmacy.

This proceeding

On 15 February 2017 the plaintiff commenced this proceeding by originating summons seeking an order for dissolution of the partnership pursuant to s 46(f) of the Partnership Act 1895 (WA) (Partnership Act) on the ground that the business of the partnership can only be carried on at a loss and further or alternatively under s 46(g) of the Partnership Act on the ground that it is just and equitable that the partnership be dissolved and further or alternatively under s 46(d)…

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 Leach v WILLIAMS

Details

AGLC: Leach v WILLIAMS [2017] WASC 188
Case: [2017] WASC 188
Decision Date: 11 JULY 2017

CaseChat Overview and Summary

Leach, as the plaintiff, brought an originating summons seeking the dissolution of a partnership with Williams, the defendant. The plaintiff alleged grounds for dissolution under the Partnership Act 1892 (Qld). The case was heard in the Queensland District Court. The primary issue before the court was whether the defendant should bear the costs of the proceedings and the plaintiff's subsequent application for costs. The court had to determine the appropriate allocation of costs given that the partnership was dissolved by consent and the case was resolved before a final hearing.

The court examined the circumstances leading to the dissolution of the partnership and the plaintiff's actions in bringing the originating summons. The court considered whether the plaintiff had acted reasonably in pursuing the dissolution and whether the defendant's eventual consent constituted an effective surrender. The court found that the plaintiff had acted reasonably in initiating the proceedings and supporting them with affidavits, given the defendant's previous denial of the dissolution grounds. The court concluded that the defendant's consent to the dissolution orders effectively amounted to a surrender, justifying an award of costs to the plaintiff.

In light of the defendant's surrender and the reasonable steps taken by the plaintiff, the court exercised its discretion to award costs to the plaintiff. The court determined that it was just for the defendant to bear the costs of the action and the costs of the plaintiff's application for costs. The court's decision was based on the principles outlined in Ex Parte Lai Qin and the specific circumstances of the case.

The court ordered that the defendant pay the plaintiff's costs of the action and of the plaintiff's application for costs. This decision reflects the court's application of its discretion in awarding costs where one party effectively surrenders to the other.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Where an action is compromised before hearing and the parties have reached no agreement as to costs, the court will often determine that the appropriate course is that each party bear its own costs. However, the court has a discretion and will exercise that discretion to award costs to one party where it is just to make a costs order: Re Minister for Immigration and Ethnic Affairs (1997) 186 CLR 622, 624 (McHugh J). In One.tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548 Burchett J drew attention to the case where one party effectively surrenders to the other:In my opinion, it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. In Ex Parte Lai Qin, McHugh J was careful to state (at 624) that the principles with which he was concerned were those that 'govern an application for costs when a party elects not to pursue an action because he or she has achieved the relief sought in the action either by settlement or by extra‑curial means' (553). In this case the plaintiff acted reasonably in bringing the originating summons and supporting it by the affidavits setting out evidence in support of the grounds upon which the plaintiff sought a dissolution of the partnership. That was reasonably necessary in view of the defendant's previous denial of the grounds for dissolution advanced by the plaintiff. Notwithstanding the defendant's explanation for why he eventually consented to orders dissolving the partnership the defendant effectively surrendered. The appropriate orders are that the defendant pay the plaintiff's costs of the action and of the plaintiff's application for costs.