Seven Fields Operations v Dime Citrus
[2012] VSC 546
•23 November 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. S CI 2009 04900
| SEVEN FIELDS OPERATIONS PTY LTD (ACN 106 499 656) | Plaintiff |
| v | |
| DIME CITRUS PTY LTD (ACN 131 357 536) | First Defendant |
| A & A HASHIM PTY LTD (ACN 110 198 242) | Second Defendant |
| ANDREW HASHIM | Third Defendant |
| ARTANE HASHIM | Fourth Defendant |
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JUDGE: | BELL J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8-9 November 2012 | |
DATE OF JUDGMENT: | 23 November 2012 | |
CASE MAY BE CITED AS: | Seven Fields Operations v Dime Citrus & Ors | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 546 | |
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AGENCY – contract for purchase of citrus fruit – whether purchasing company was agent for partnership as undisclosed principal – liability of partnership for debt – joint liability of single partner of partnership for whole of debt – whether whole debt could be recovered from single partner sued personally without suing partnership – ‘joint’ – ‘joint and several’ – Partnership Act 1958 (Vic) s 13.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr A Kirby | McMahon Clarke Legal |
| No appearance for the Defendants |
HIS HONOUR:
By writ and amended statement of claim, Seven Fields Operations Pty Ltd sought judgment in the sum of $571,621.04 against Dime Citrus Pty Ltd, A&A Hashim Pty Ltd and Andrew and Artane Hashim, who are husband and wife. In this trial of that proceeding, judgment is pressed only against Artane Hashim. Her solicitor appeared seeking leave to withdraw, which I gave. He told the court that he thought she was in Cyprus and that he had no instructions. She has failed to appear personally. Of the remaining defendants, Dime Citrus has been deregistered, A&A Hashim Pty Ltd is in liquidation and Andrew Hashim is bankrupt. They too have failed to appear.
In material parts, the amended statement of claim alleges that ‘A&A Hashim’ (not the company of the same name) was a partnership which, as undisclosed principal, purchased a substantial quantity of citrus fruit through Dime Citrus from Seven Fields. It is alleged that the amount of $571.621.04 remains outstanding on the balance of account with respect to those purchases, which Andrew Hashim and Artane Hashim (as partners) are jointly and severally liable to pay. Judgment in that amount is deliberately sought from Artane Hashim alone as she is the only defendant from whom execution is likely to be effective.
The evidence in this proceeding is constituted by affidavits of Gregory Joseph McMahon (a director of Seven Fields) dated 4 November 2012 and Helen Aggeletos (the managing director of a fruit packing company, P Costi & Sons Pty Ltd) dated 8 November 2012, which are being used with my leave. Oral evidence was given by Brett Edward Jackson (the marketing manager of Seven Fields) and Cetin Al (a partner in another fruit packing company, Meyva Produce). Many documents from the courtbook were also received into evidence.
The documentary evidence establishes that, between about 5 June 2008 and 30 September 2008, Seven Fields supplied citrus fruit to Dime Citrus on a running account for a total price of $974,886.44. Payments were made on that account in the sum of $403,265.40, leaving a balance outstanding of $571,621.04, which remains unpaid. The relevant invoices are contained in the courtbook and have been received into evidence. They are summarised in the document which I marked ‘MFI2’ and which was relied on by counsel for Seven Fields. The bank documents supporting the payments are likewise in evidence and summarised in that document.
It is clear on the established principles that, if the citrus fruit was purchased from Seven Fields by Dime Citrus for Andrew and Artane Hashim as undisclosed principals in partnership, then Seven Fields will be able to recover the outstanding amount directly from them.[1] I turn now to an examination of that question.
[1]Siu Yin Kwan v Eastern Insurance Co Ltd [1994] 2 AC 199, 207 (Privy Council).
In my view, the evidence that the citrus fruit was purchased by Dime Citrus for the A&A Hashim partnership is overwhelming. It consists of the personal evidence given by affidavit and orally and the documentary evidence to which I have referred.
From the side of Seven Fields, the evidence of the transactions shows that the company agreed to supply citrus fruit to Dime Citrus after an agreement to that effect was entered into between Seven Fields and Dime Citrus through Andrew Hashim who, on the evidence, was acting on behalf of Dime Citrus. Under that agreement, the fruit was supplied in bins during the 2008 harvest season on a ‘farm gate’ basis. A ‘farm gate’ sale is one in which the fruit is supplied by the seller to the buyer for a set price (here, per bin), usually to be collected by the buyer from the supplier. The fruit then becomes the property of the buyer who is responsible for payment to the seller of the purchase price. The involvement of the A&A Hashim partnership was not disclosed by Andrew Hashim or anybody acting on behalf of Dime Citrus to Seven Fields. The background of the transaction and the role of the individuals concerned on both sides were described fully in the evidence.
From the side of the A&A Hashim partnership, Seven Fields has established on the evidence that the partnership existed at all material times and was, in fact, the real buyer of the citrus fruit. I find that Dime Citrus was the agent of the partnership in the transaction with Seven Fields.
The existence of the partnership is amply established by the documentary evidence, including business cards, business activity statements and facsimile transmissions, all of which are in the name of ‘A&A Hashim’. In Artane Hashim’s amended defence she admits:
(a) the existence of a family partnership with the entity name ‘Andrew & Artane Hashim’, which has the ABN 66 491 747 066 …; and
(b) that she is a partner of the Partnership.
The existence of the partnership is also admitted in the affidavits of documents of Artane Hashim dated 14 October 2010 and 23 December 2010. I have considered other parts of those affidavits which suggest that the partnership was not engaged in any business. I reject that proposition as contrary to the whole of the evidence.
The next question in the proceeding is whether the partnership was the undisclosed principal in the transaction for the purchase of the fruit. A positive answer must be given to that question because Dime Citrus was simply a conduit for the partnership as the principal. That is established by the personal evidence which was given both by affidavit and orally, as well as the documentary evidence relating to the payments which were made by P Costi and Meyva Produce to A&A Hashim or to Artane Hashim on their behalf. In summary, that evidence establishes that A&A Hashim treated the fruit as their partnership property and sold it to P Costi and Meyva Produce, to whom they caused it to be delivered. Most of the payments by P Costi and Meyva Produce for the fruit were, on the insistence of Andrew or Artane Hashim, made to the partnership or ‘A Hashim’. On Andrew Hashim’s insistence, one cheque which was issued to Dime Citrus by Ms Aggeletos was actually re-issued to ‘A&A Hashim’. A few only of such payments were made to Dime Citrus. The evidence relating to the payments is summarised in the document which I marked ‘MFI3’ which was relied on by counsel for Seven Fields.
There is no evidence of any significant business activity by Dime Citrus in relation to the transactions. That company had a short life and was controlled by Andrew Hashim as the sole director and shareholder. The evidence establishes that Andrew Hashim was acting on behalf of Dime Citrus in the pre-contractual negotiations with Seven Fields. But on the evidence, Dime Citrus, on the actual but non-disclosed authority of Andrew and Artane Hashim as partners, was acting as the agent for that partnership. That agency is to be inferred from all of the circumstances, particularly the relative business inactivity of Dime Citrus, the chain of possession of and subsequent dealings with the fruit (which Andrew and Artane Hashim personally controlled and undertook), particularly the arrangements for the delivery and on-selling of the fruit to P Costi and Meyva Produce, and the collection of the payments for that fruit from those companies by Artane Hashim and the partnership.
Seven Fields brought the proceedings against Andrew and Artane Hashim (as the third and fourth defendants) as individuals and not as a firm of partners. The debt was pleaded and now has been established to be one owing by the partnership. As I have pointed out, it is alleged that Artane Hashim is jointly and severally liable for that debt.
That expression ‘joint and several’ may be a convenient way to describe the liability of partners in practical terms but it is not legally accurate. Under s 13 of the Partnership Act 1958 (Vic), Artane Hashim is jointly liable for the debt with her husband, the other partner.[2] Nevertheless, by the long established principles, as a partner she has unlimited personally liability in respect of the whole of that joint partnership debt.[3] Seven Fields has the right to elect to proceed and seek judgment against her personally for that whole amount and without suing the partnership, which it has done. Artane Hashim probably has contribution rights against her husband as the other partner, although he is bankrupt. As it happens, neither Andrew nor Artane Hashim have made contribution claims in this proceeding. Because the liability is joint and not several, Seven Fields could not hereafter proceed against Andrew Hashim as the other partner who is jointly liable; subject to certain possible exceptions, the judgment against Artane Hashim will be a bar to any such proceeding.[4] That is not an issue here. The point is, having established the existence of the debt owing to it by the partnership in fact, Seven Fields is entitled in law to an order for payment of the amount of that debt by Artane Hashim personally as one of the partners without any order being made against the partnership.
[2]See Stephen Graw, An Outline of the Law of Partnership (4th ed, 2011) [4.390].
[3]Roderick I’Anson Banks, Lindley & Banks on Partnership (19th ed, 2010) [13-14]; Keith Fletcher, The Law of Partnership in Australia (9th ed, 2007) [1.60]; Abbott v Smith (1774)n 96 ER 559, 560 (De Gray CJ for the court).
[4]Kendell v Hamilton (1879) App Cas 505, 518 (Earl Cairns LC).
Seven Fields also put its case on the alternative ground of unjust enrichment. On the findings of fact I have made, that ground is not available. Any payments received by Andrew or Artane Hashim were on behalf of the partnership, not Seven Fields.
There will judgment for Seven Fields in the sum of $571,621.04 plus interest and costs against Artane Hashim.
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