Small v Harrison [2004] NSWSC 612

New South Wales Supreme Court

CITATION : Small v Harrison [2004] NSWSC 612 HEARING DATE(S) : 7 July 2004 JUDGMENT DATE : 7 July 2004 JURISDICTION: Equity JUDGMENT OF : Campbell J DECISION : Declarations made

CATCHWORDS : PARTNERSHIP - rights and duties of partners inter se - one partner uses partnership money without consent of the other to partly finance purchase of property - right of non-consenting partner concerning that property - PARTNERSHIP - dissolution and winding up - one partner has used partnership assets to partly finance purchase of real estate held in his own name, without consent of his partner - rights of non-consenting partner to that property in the winding up LEGISLATION CITED : Partnership Act 1892 CASES CITED : Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 PARTIES : Christopher Gerard Small - Plaintiff Noel Elliott Harrison - Defendant FILE NUMBER(S) : SC 5445/03 COUNSEL : A D Justice - Plaintiff No appearance - Defendant SOLICITORS : McNamara & James - Plaintiff No appearance - Defendant

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

CAMPBELL J

WEDNESDAY 7 JULY 2004

5445/03 CHRISTOPHER GERARD SMALL v NOEL ELLIOTT HARRISON JUDGMENT – Ex Tempore 1 HIS HONOUR: This is a hearing of a separate question which arises in a partnership dispute between the plaintiff and the defendant. It has proceeded on a basis where the defendant has not attended today, after having appeared in the proceedings and after having been notified that the matter would be set down for hearing in his absence, if he did not attend court on the date when the matter was in fact set down for hearing. The defendant has been called outside the Court and has not appeared today. 2 The evidence establishes that a partnership was entered in August 2000, between the plaintiff and the defendant, concerning the supply and installation of air-conditioning and refrigeration equipment. Their business was located in Grafton, and went by the name of Clarence Air-conditioning & Refrigeration. The plaintiff did work involving installation of the equipment while the defendant attended to the business side of things. 3 On 7 July 2003 the plaintiff served a notice of dissolution of the partnership. That notice of dissolution had the effect of dissolving the partnership immediately. 4 At the time of dissolution it appears that the plaintiff took with him various items belonging to the partnership, including certain records. Amongst those records he found several pages from a contract for sale of land, undated, but containing a cooling-off certificate bearing the date 12 July 2002, whereby the defendant purchased land located at 207 Prince Street, Grafton, for a sum of $162,000. The agent named in that contract is Bailey & Gough Real Estate. 207 Prince Street Grafton is the place where, from September 2002, the partnership business had been carried on. It was also the place where the defendant lived. 5 Also amongst the papers, which the plaintiff took with him, was a three page document dated 12 July 2002, headed "Authority and Direction." It was an authority given by the defendant, to his solicitor, concerning the purchase of the property at 207 Prince Street, Grafton. Each page of it was signed by the defendant. It said that the defendant confirmed his instructions for the solicitor to act on his behalf in connection with his purchase of the property on the following basis: "1. I have agreed for the Purchase price to be increased from $158,000.00 now to $162,000.00; 2. I confirm my advice to you that I have obtained verbal approval for finance of $126,000.00 from Bananacoast Community Credit Union Limited ("BCCU"), however, such approval is subject to satisfactory valuation being received by the Credit Union. I further confirm my advice to you that I was previously made bankrupt in 1995 and that I have only just been released on 4 July 2002 from the full effects of such bankruptcy and that I have fully disclosed such facts of bankruptcy to Mr Terry Marsh at BCCU and notwithstanding such facts, the Credit Union has verbally approved my application for finance. Apart from the above loan amount of $126,000.00, I have sufficient funds to complete my purchase (subject to your advice as contained in point 3 below); 3. I confirm that I have already paid the agent a "holding deposit" of $2,000.00 from the partnership account that I conduct with Mr Chris Small, my business partner. I further confirm that I will be drawing a cheque for $14,200.00 (representing the balance 10% deposit payable) from such business account, and that I shall be delivering this to the agent (Bailey & Gough First National). I further confirm your advice to me that in view of the fact that I am purchasing the property in my own name and for my personal residential use, that I am intermingling my partner's money with my money and that if my partner has not consented to such intermingling, that I will face legal action for the recovery of same, including potential criminal proceedings. 4. I intend instructing the agent to exchange Contracts for the purchase of the subject property without any conditions, notwithstanding your advice to me that I should be attempting to negotiate that the Contract for Sale be subject to and conditional upon at least some or all of the following conditions:-