Momentum Productions Pty Limited v Lewarne [2009] FCAFC 30

FEDERAL COURT OF AUSTRALIA

Momentum Productions Pty Limited v Lewarne [2009] FCAFC 30

PARTNERSHIP – Statutory definition of – Requirement of carrying on business in common – What constitutes – Necessity for mutuality – Whether necessary for persons to be agents of each other – Payment of capital sum by co-participant in proposed business – Whether capital contribution to partnership or loan to business principal – Agreement to share profits – Whether sufficient to sustain proposition of partnership – Whether discounted by other factors. PARTNERSHIP – Existence of – Intention of parties – Whether all had agreed to share in losses as well as profits – Whether necessity for symmetry in putative partners' contributions – Whether all partners need to have rights to participate in management of business, including in decisions on admission of new partners. PARTNERSHIP – Managing partner operating through service company – Whether company a partner as such – Whether company held assets and operated business as a trustee. PARTNERSHIP – Managing partner receiving capital contribution from another partner and using it to discharge mortgage over property of which former became registered proprietor – Use of property as security for loans made to partnership business – Whether breach of fiduciary obligation by managing partner – Whether obliged to account to other partner for the amount of capital contribution. PARTNERSHIP – Partner with de factor control over partnership assets using them for own purpose in breach of fiduciary duty – Duty to account – Whether this made him a debtor to himself. PERSONAL PROPERTY – Valuation – Pending court proceedings seeking compensation for damage to business – Whether an asset of business – Whether value could be placed on pending proceedings. EQUITY – Managing partner receiving capital contribution from another partner and using it to discharge mortgage over property of which former became registered proprietor – Use of property as security for loans made to partnership business – Whether breach of fiduciary obligation by managing partner – Whether obliged to account to other partner for the amount of capital contribution. Partnership Act 1892 (NSW) ss 1(1), 2(1), 24(1), 26, 31(1), 32, 44(b) Amadio Pty Ltd v Henderson (1998) 81 FCR 149, 172 Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153 Cox v Hickman (1860) 8 HL Cas 268 De Tastet v Shaw (1818) 1 B & Ald 664 (106 ER 244) Duke Group Limited (in liq) v Pilmer (1999) 153 FLR 1 Green v Hertzog [1954] 1 WLR 1309 Holme v Hammond (1872) LR 7 Ex 218 Integrated Computer Services Pty Ltd v Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110 International Harvester Company of Australia Pty Ltd v Carrigan's Hazeldene Pastoral Company (1958) 100 CLR 644 Lang v James Morrison & Company Limited (1911) 13 CLR 1 Richardson v The Bank of England (1838) 4 My & Cr 165 (41 ER 165) Toyota Motor Corporation Australia Limited v Ken Morgan Motors (1994) 2 VR 106 I'Anson Banks, RC, Lindley & Banks on Partnership, 18th Ed., 2002 MOMENTUM PRODUCTIONS PTY LIMITED and RICHARD JAMES SCOTTS v RICHARD JOHN LEWARNE