Yuill v Kidman - [1910] HCA 63

GEORGE SKELTON YUILL

SYDNEY KIDMAN

RESPONDENT. DEFENDANT,

ON APPEAL FROM THE SUPREME COURT OF

NEW SOUTH WALES. Contract-Construction-Sale of interest in partnership-Agreement to deduct from

purchase money sum payable by vendor as his share of the partnership losses as shown by balance sheets-Undistributed profits of previous years-Right to include in estimate of loss and profits.

The plaintiff and defendant with other persons were partners in two station properties in Western Australia. By agreement, dated 19th February 1908, the plaintiff agreed to sell to the defendant his one-eighth interest in the part- nership, and also in certain travelling stock belonging to the partnership, the consideration money being separately assessed in each case. The agreement provided that any sum payable by the plaintiff as his share of the loss or liabilities of the stations up to 31st December 1907, as shown in the balance sheet up to that date issued by the managers of the stations, should be deducted from the purchase money payable in respect of the travelling stock, and that the travelling stock should be excluded from all calculations of profit and loss. Separate balance sheets for the two stations, including profit and loss accounts, were made up for each year by the partnership, and any profit earned in any year and not distributed was carried forward into the accounts for the following year.

The balance sheet for 1907, which was made up on 25th May 1908, showed a loss on the working of the stations for that year, (excluding the valué of the travelling stock), but also showed undistributed profits carried forward from previous years leaving a balance of profit to the partnership, Held, that

11 CLR 602

there was no sum payable by the plaintiff as his share of the loss or liabilities of the partnership as shown by the balance sheet, and that therefore no deduction could be made by the defendant from the purchase money.

Decision of the Supreme Court, 10th March 1910, reversed.

APPEAL by the plaintiff from the decision of the Supreme Court upon the hearing of a special case stated by consent of the parties. The action was brought to recover the balance of pur- chase money alleged to be due to the plaintiff for his share and interest in certain travelling stock under an agreement dated 19th February 1908, which was in the following terms:- An agree- ment made 19th February 1908, between George Skelton Yuill of Sydney in the State of New South Wales merchant (herein- after called the vendor) of the one part, and Sidney Kidman of Kapunda in the State of South Australia grazier (hereinafter called the purchaser) of the other part. Whereas under the pro- visions of an agreement dated 17th December 1900, and made between Alexander Forrest, Sydney Phillip Emanuel, and Isidore Samuel Emanuel of the first part, the said Sidney Kidman and Charles Nunn Kidman of the second part, the said George Skelton Yuill of the third part, Robert Richards of the fourth…

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 Yuill v Kidman

Details

AGLC: Yuill v Kidman [1910] HCA 63
Case: [1910] HCA 63
Decision Date: 17 November 1910

CaseChat Overview and Summary

The plaintiff, Yuill, appealed to the High Court of Australia from a decision of the Supreme Court of New South Wales. The dispute arose from an agreement for Yuill to sell his one-eighth interest in certain pastoral properties and travelling stock to the defendant, Kidman. The agreement stipulated that any sum payable by Yuill as his share of the partnership's losses or liabilities up to 31 December 1907, as shown in the balance sheet, was to be deducted from the purchase price of the travelling stock. The balance sheet for 1907, issued after the agreement, showed a loss for that year's operations but also included undistributed profits from previous years, resulting in an overall profit for the partnership.

The legal issue before the High Court was whether the phrase "loss or liabilities of the said stations up to 31st December 1907, as shown on the balance sheet up to that date" in clause 4 of the agreement referred only to the financial results of the year 1907, or if it encompassed the partnership's overall financial position as reflected in the balance sheet, including prior undistributed profits. The defendant contended that the balance sheet showed a loss for the year 1907, entitling him to deduct Yuill's share of that loss from the purchase money. The plaintiff argued that the inclusion of prior undistributed profits meant there was no net loss payable by him, and therefore no deduction was permissible.

The High Court, in allowing the appeal, reasoned that the balance sheet, prepared in the manner previously adopted by the partnership and as stipulated by the agreement, included undistributed profits from prior years. When these profits were accounted for, the overall position as shown by the balance sheet up to 31 December 1907 was a profit, not a loss. Consequently, there was no "sum payable by the vendor as his share of the loss or liabilities" as required by clause 4 of the agreement. The Court held that the phrase "up to 31st December 1907" referred to the cumulative position shown in the balance sheet, not solely the transactions of the year 1907.

The High Court ordered that the appeal be allowed, and judgment entered for the plaintiff for the amount deducted, with interest and costs. The defendant was ordered to pay the costs of the appeal.

Orders