Tuna Tasmania Pty Ltd v Allison - [2003] TASSC 4

[2003] TASSC 4

CITATION: Tuna Tasmania Pty Ltd v Allison [2003] TASSC 4

PARTIES: TUNA TASMANIA PTY LTD (ACN 066 776 985)

v
ALLISON, Paul Francis

TITLE OF COURT:  SUPREME COURT OF TASMANIA
JURISDICTION:  ORIGINAL
FILE NO/S:  M361/2001
DELIVERED ON:  20 February 2003
DELIVERED AT:  Hobart
HEARING DATE:  11 December 2002
JUDGMENT OF:  Cox CJ

CATCHWORDS:

Partnership - Rights and duties of partners inter se - Fiduciary relationship - Duties owed by virtue of the existence of a partnership or ordinarily subsisting before definition by formal agreement, breach giving rise to caveatable interest as beneficiary of constructive trust.

Birtchnell v Equity Trustees, Executors and Agency Company Ltd (1929) 42 CLR 384; United Dominions Corporation Ltd v Brian Pty Ltd (1984 - 1985) 157 CLR 1, referred to.

Partnership Act (Tas) 1981, s6.
Aust Dig Statutes [12]

REPRESENTATION:

Counsel:
             Applicant:  T J Williams
             Respondent:  J Murphy
Solicitors:
             Applicant:  Gunson Williams
             Respondent:  John White

Judgment Number: [2003] TASSC 4
Number of paragraphs: 15

Serial No 4/2003
File No M361/2001

TUNA TASMANIA PTY LTD (ACN 066 776 985)
v PAUL FRANCIS ALLISON

REASONS FOR JUDGMENT COX CJ

20 February 2003

By an originating application dated 3 December 2001, the applicant sought an order that the respondent show cause why the caveat lodged by him with Australian Shipping Registration Office in relation to the ship "Cape Cleveland" should not be removed. The caveat was lodged on 21 September 2001 by the respondent, who claimed an interest in the ship which he described as "an equitable interest as beneficial owner in the ship under a 50% constructive trust". The sole evidentiary material relied upon by the applicant was an affidavit sworn by John Frederick Farrer, one of its directors, to the effect that the applicant is the owner of the "Cape Cleveland". A copy of the caveat was annexed to it.

The respondent filed two affidavits sworn by himself and one by Stephen Chaplin. Both deponents were cross-examined on their affidavits, but their assertions were not contradicted. The respondent's affidavits were somewhat confused and prolix and his oral evidence verbose and difficult at times to follow. Nevertheless, the substance of his evidence was to the effect that he had considerable experience in the fishing industry and that in September 1994 he had met Farrer in Melbourne for the purposes of discussing a joint fishing venture. Over the next few months agreement was reached that they go into business as equal partners, the business to be conducted through a unit trust of which the applicant company, which was to be formed, should act as trustee. Farrer was to arrange the formation of the unit trust and the incorporation of the appellant company. The agreement was that Farrer and the respondent were to be the directors of the company together with another associate of the respondent, one Lowe. Each of Farrer and the respondent was to own 50 per cent of the shares in the company and of the units in the unit trust. 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: [2003] TASSC 4
Decision Date: 20 February 2003

CaseChat Overview and Summary

In the Supreme Court of Tasmania, Tuna Tasmania Pty Ltd (Applicant) sought an order that Paul Francis Allison (Respondent) show cause why a caveat he lodged in relation to the ship "Cape Cleveland" should not be removed. The Respondent claimed an equitable interest in the ship, asserting that it was held under a 50% constructive trust. The Applicant, through an affidavit from one of its directors, claimed sole ownership of the ship. The Respondent alleged that he had entered into a partnership agreement with the Applicant's director, John Frederick Farrer, to establish a fishing venture. The partnership agreement stipulated that each party would own 50% of the shares and units, and profits would be shared equally. However, the Respondent discovered that he had been excluded from the partnership, and Farrer and his wife were the sole directors and shareholders of the Applicant company.

The legal issues before the court were whether there was an arguable case for finding a partnership agreement and if the Respondent had a claim for a constructive trust over the assets of the partnership, including the "Cape Cleveland". The court found that there was an arguable case for the existence of a partnership agreement, and the Respondent's contributions to the partnership had been taken advantage of by Farrer. The Respondent had placed trust and confidence in Farrer to establish the business structure, and Farrer had breached the fiduciary duties owed to the Respondent. The court held that the Applicant company held the assets, including the "Cape Cleveland", on constructive trust for the Respondent to the extent of 50%. The balance of convenience favoured the retention of the caveat, provided the Respondent commenced proceedings against the Applicant promptly. Therefore, the application for the unqualified removal of the caveat was refused, subject to the Respondent commencing proceedings within 14 days and delivering a statement of claim within 21 days.

Orders