I delivered the principal judgment in this matter on 8 April 2024 (Lewis v Martinez and the persons named in the Schedule (No 5) [2024] NSWSC 359). I made the following declarations and orders:
"1. A declaration that the expulsion of the plaintiff by the resolution put to the defendants on 7 November 2020 was invalid by reason of breaches of the Partnership Deed.
2. A declaration that as between the plaintiff and the defendants the partnership was dissolved with effect from 10 February 2021, being the date of the filing of the statement of claim.
3. An order that the plaintiff's damages arising from the breaches of the Partnership Deed, if any, are to be assessed.
4. An order that the defendants are to pay the plaintiff's costs of the hearing in respect of liability, such costs, subject to any consent agreement between the parties, are not to be payable until the conclusion of the proceedings.
5. All other costs are reserved.
6. A direction that all parties provide a representative of the first defendant with a copy of this decision and the decision made on 26 March 2024 (Lewis v Martinez and the persons named in the Schedule (No 4) [2024] NSWSC 308)."
On 15 April 2024, the plaintiff filed a notice of motion seeking variation of the orders, in particular Order 2. My power to make the orders sought in the motion is said to arise from r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW). It is not suggested that r 36.17 (the slip rule) is applicable.
The motion is supported by an affidavit of Mr Benjamin Dibden dated 15 April 2024. Mr Dibden is the plaintiff's solicitor. The affidavit quotes an order made by Slattery J on 10 February 2023 and annexes some pages from the transcript of the hearing before me. The order made by Slattery J was:
"Pursuant to UCPR Rule 28.2 the assessment of the quantum of any relief to be determined separately from and subsequent to the hearing of all other issues in the proceedings."
The plaintiff submitted that I should exercise the jurisdiction provided by r 36.16 because:
"(a) The plaintiff's motion was filed within the 14-day period.
(b) The plaintiff's motion does not seek, and it would not otherwise enable, a significant rehearing.
(c) The Orders appear to be affected by a misapprehension of the law (as to the Date of Dissolution Point and the Buy-Out Order Point), by a misapprehension of the plaintiff's submissions (as to the Capital Partner Point), and otherwise not dealt with (as to the Loss of Chance Point).
(d) Those misapprehensions cannot be solely attributed to the neglect or default of the plaintiff because:
(i) As to the Date of Dissolution Point, the matter was not the subject of submissions in closing addresses, and it was not a matter on which the Court invited comment.
(ii) As to the Buy-Out Order Point and the Loss of Chance Point, the Reasons are unclear as to the intention of the Court and the extent to which that intention is reflected in the Orders.
(iii) As to the Capital Partner Point, although the Court misstates the plaintiff's position in one part of the Reasons, it correctly states the plaintiff's position in another part of the Reasons, and the plaintiff merely seeks to have the Reasons amended so as to be consistently correct."
Looking at the reasons given in the preceding paragraph, I agree with (a) and (b), I do not agree with (c). It is not necessary to comment on (d).
The decision I gave on 8 April 2024 was a final decision. It is not to be varied other than in special circumstances. The plaintiff referred me to this overall statement of principle in Johnson v McKinnon (No 2) [2022] NSWCA 22, at [5]:
"Uniform Civil Procedure Rules 2005 (NSW), r 36.16, provides for the setting aside of a judgment upon a motion filed before, or within 14 days after, it is entered, or if it is a default judgment or one given in the absence of a party. The judgment of this Court was neither a default judgment nor given in the absence of a party. The present motion was filed within the relevant 14-day period. However, that does not of itself entitle the applicant to a reconsideration of the judgment. The power to reconsider on such an application is subject to the significant limitation imposed by the public interest in maintaining the finality of litigation, which requires great caution in its exercise, especially where what is sought would have the practical effect of re-opening the proceedings to enable a significant rehearing. The power is to be exercised only in special circumstances, such as where the existing judgment or order is shown to be affected by some relevant irregularity (such as a failure to afford a party a proper opportunity to be heard), or by a misapprehension of law or fact or of a party's evidence or submissions, which cannot be solely attributed to the neglect or default of the party seeking a reopening, and not to provide a backdoor method by which unsuccessful appellants can re-argue their appeal. And while the scope of any re-opening will depend on the nature of the error or misapprehension, generally the power ought not be exercised to permit a general re-opening of the case; in particular, it is not the purpose or scope of r 36.16 to provide an avenue to raise new grounds of appeal that were not advanced in the appeal, to reagitate arguments that have already been considered by the Court, or to complain of wrong decisions by the appellate court. In this respect, there is a distinction between the court acting upon a misapprehension as to the facts or the relevant law, on the one hand, and, on the other, the court reaching a conclusion which, in the view of the applicant for reconsideration, involves error."
The defendants also relied upon Johnson and in addition referred me to another decision of the NSW Court of Appeal, Majak v Rose (No 5) [2017] NSWCA 238, from [12]-[13]:
"12. The rule is, like all rules made under the Uniform Civil Procedure Act 2005 (NSW), subject to the "overriding purpose" of facilitating the "just, quick and cheap resolution of the real issues" between the parties to litigation (s 56). It does not give a licence to disgruntled litigants to re-agitate, in the hope of obtaining a more favourable outcome, issues that have been determined against them. Nor does it make of a court some sort of magic pudding from which unsuccessful litigants may take slice after slice, ever hopeful that the next will be more palatable than the last. The rule has a serious, but limited, purpose which is to permit readily identifiable, readily rectifiable, inadvertent errors to be corrected without the complication and expense of an appeal (or, in the case of this Court, an application for special leave to the High Court). Abuse of the rule is detrimental to the administration of justice in unnecessarily and unfairly (to other litigants) taking up the time of the court. Nor does abuse of the rules facilitate the just, quick, and cheap resolution of the issues between parties. On the contrary, unwarranted reliance on r 36.16 is oppressive to the successful party and a drain on the Court's resources.
13. It is well established that a court's jurisdiction to set aside orders should be exercised sparingly and with caution, having due regard to the importance of the finality of litigation (see, for example, Wentworth v Woollahra Municipal Council (No 2) (1982) 149 CLR 672 at 684; [1982] HCA 41; State Rail Authority of NSW v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 38; [1982] HCA 51; Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 302; [1993] HCA 6; Rockcote Enterprises Pty Ltd v FS Architects Pty Ltd (No 2); Carelli v FS Architects Pty Ltd (No 2) [2008] NSWCA 205 at [9])."
In State of New South Wales v Hollingsworth (No 2) [2023] NSWCA 283 the above principles were emphasised, from [17]-[18]:
"17. As is well-established, the power conferred by UCPR, r 36.16 is to be exercised "sparingly and with caution" having regard to the importance of the finality of litigation, and "does not give a licence to disgruntled litigants to re-agitate, in the hope of obtaining a more favourable outcome, issues that have been determined against them": Majak v Rose (No 5) [2017] NSWCA 238 ("Majak") at [12]-[13] (Leeming and Simpson JJA, Emmett AJA). The purpose of the power is "to permit readily identifiable, readily rectifiable, inadvertent errors to be corrected without the complication and expense of an appeal": Majak at [12].
18. In Autodesk v Dyason (No 2) (1993) 176 CLR 300 at 302-303; [1993] HCA 6 Mason CJ said:
'What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing.
…
However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put ... The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases.'"
It can be immediately seen from the above decisions that r 36.16 does not provide an opportunity to re-agitate issues within the litigation and should certainly not be treated as an avenue open to a litigant in lieu of an appeal. As I observed during the hearing of the motion, I was under the impression that I was hearing submissions as if on appeal. At one stage Mr Douglas KC said:
"Your Honour as we understand the structure of your Honour's judgment you say repudiation doesn't apply, so we've accepted that and so by the invalid notice which has been given and so what has brought the partnership to an end is the decree that your Honour has made on a just and equitable ground, and so far as that is concerned the statute when it says may be dissolved and the authorities to which we've referred in our written submissions in this application make it very clear that the dissolution operates from the date when the order is made. I'm not aware of a case in which it's been done otherwise. It would seem to me to be contrary to the statute for that to be done. And once that dissolution occurs, then you get the Syers v Syers order. The Syers v Syers order enables one to get such relief in relation to the capital of the partnership that one is able to get, but of course there is the claim for the profits which have been earned up to the date when that decree is made. That doesn't necessarily fit easily within the consent of damages, and it's for that reason and the way your Honour has framed the orders at the moment it would seem to us that the orders would be limited to the date of the invalid notice of termination which in our respectful submission would be wrong in law."
His Majesty's counsel may be right that I am wrong, but that is not a decision for me to make, rather (on the assumption that I disagree) it is a matter for the Court of Appeal to decide if I was "wrong in law."
I will deal briefly with each of the four areas in which it is asserted I suffered from a misapprehension of the law or the plaintiff's submissions or did not deal with a particular matter.
[3]
The date of dissolution point
The plaintiff approached this point on the basis that I must have had a misapprehension because there was no choice but to order that the date of dissolution was the date of my judgment. There certainly are a number of authorities that suggest that the date should be the date of judgment. For example, in Williams v Nicoski [2003] WASC 131 Barker J said at [320]:
"I should add in passing that, even if this were a case where it was appropriate to decree the dissolution of the partnership under the "just and equitable" ground of s46 it would not appear appropriate retrospectively to set the date of dissolution as at 22 December 1997, as counsel for Ms Nicoski contends in the alternative. S46 does not specify the date on which a partnership will stand dissolved; accordingly, the old law still applies. As Lindley and Banks on Partnership (above) at [24 ‑ 88] state, the rule was and still is that, where the order of the Court is necessary for the dissolution of the partnership, the dissolution will, in the absence of special reasons, date from the judgment, as stated in Lyon v Tweddell (1881) 17 Ch D 529. The learned editor adds:
"The court can, of course, declare a partnership dissolved with effect from a date earlier than the judgment where the dissolution resulted from the service of a notice [footnote omitted] or the occurrence of some other determining event specified in the Act or in the agreement [footnote omitted]. Although there is one New Zealand authority [Phillips v Melville [1921] NZLR 571] which appears to be authority for the proposition that the Court can order a dissolution retrospectively [footnote omitted], the partnership was at will and was clearly dissolved by the service of the writ [footnote omitted]. If the decision went any further than merely recognising this, it was, in the current editor's view, per incuriam [footnote omitted]." (emphasis in original).
In the last (omitted) footnote, the learned editor states that in Phillips v Melville [1921] NZLR 571, Cooper J purported to follow the decision in Unsworth v Jordan (above), which was clearly a case involving a partnership at will."
There seems little doubt that the partnership in the present case was a partnership at will. The reference to Phillips v Melville [1921] NZLR 571 suggests that a partnership can be dissolved retrospectively. In addition, in Williams, the following appears from [271]:
"In Pearce v Lindsay (1860) 3 De GJ & Sm 139 it was held that the filing of a defence denying the existence of a partnership was, at common law, a sufficient notice to terminate a partnership agreement under hand. In Unsworth v Jordan [1896] WN 2(5), the Court recognised that notice sufficient to terminate an oral partnership at will could be inferred when one party issued and served a summons seeking a dissolution of the partnership and taking of accounts. Syers v Syers (1876) 1 App Cas 174 decided that the mere service of pleadings in which the existence of the partnership is denied is an effective notice for the purpose of terminating a partnership at will, where a partnership had in fact existed. All that is required of the notice is that it should be clear and unambiguous: see Syers v Syers (above) at 183 per Lord Cairns. Indeed, it appears that it is not necessary that the partner giving such notice appreciates its legal effect: Toogood v Farrell [1988] 2 EGLR 233, cited by Lindley and Banks on Partnership (above) at [24‑21]."
While I accept that the 'usual' position may be that dissolution occurs on the date of judgment, I do not accept that there is a rule to this effect and that there is no discretion as to a different time of dissolution or that I was not able to retrospectively set the date of dissolution as at the date of the filing of the statement of claim.
In addition, as I was reminded more than once by the defendants, the plaintiff did not plead the dissolution should occur from the date of judgment. I would accept that such a pleading would not be necessary if there was no choice as to the date of dissolution. However, as seen above, that is not the case.
Further, although the plaintiff pleaded repudiation as an option, he nevertheless suggested that if there had been a repudiation it was accepted by the filing of the statement of claim, which in turn would have dictated the date of dissolution. I specifically, at [115], stated that:
"I think the way to proceed is by way of a declaration in similar terms to that proposed in [2] of the relief claimed in the most recent statement of claim. This would place the dissolution as at the date of the filing of the original statement of claim."
Accordingly, I reject the plaintiff's submissions on the date of dissolution point.
[4]
The buy-out order point
The plaintiff's complaint here seems to arise from the terms of [118] of my principal judgment. This paragraph needs to be read in the light of at least the two preceding paragraphs:
"116 In relation to specific damages the plaintiffs sought 'buy-out' orders both in respect of "the interest of Lewis in the goodwill, debtors, work in progress, cash at bank and other property of HWL Ebsworth" and also in respect of the plaintiff's "share of the net profits of the Partnership to the date on which payment is made to buy out his interest in the partnership property" based on the calibration points that the plaintiff had before the August resolution or ought to have had.
117 The defendants opposed the making of a buy-out order, and in fact, any definitive damages order. Senior counsel said:
"One thing that we contend is that this stage of the proceedings isn't about identifying heads of damages and how much or how little or whether they are applicable or not, this is about whether an entitlement to declarations exist, whether an entitlement to buyout orders exist, whether entitlement to damages, if any, or compensation, if any, exists. This isn't the time for your Honour to consider whether there's been a loss of reputation, for example, that's a matter of an assessment. This isn't the time for your Honour to do anything in our respectful submission other than say, in light of these findings, there'll be an order for equitable compensation, if any, or damages, if any, which is then the subject of the assessment process."
118 It is also relevant at this stage to return to the basis upon which I found that the plaintiff's expulsion was invalid, namely that there were breaches of the contractual provisions contained within the Deed. With this in mind I think the alternative order sought by the plaintiff, at [5] in the relief claimed in the amended statement of claim, but with some slight amendment, is appropriate. This order will keep alive the plaintiff's contentions as to the nature and heads of the damages which he seeks."
I specifically said in [118] that the "nature and heads of the damages" which the plaintiff seeks are kept alive. This followed my quoting senior counsel for the defendants stating that damages should be part of the assessment process. I see no confusion, no misapprehension, and no reason for any variation. The assessment process will take place and will decide upon the nature of the damages which flow from my liability findings. I specifically adopted, with slight amendment, one of the orders sought by the plaintiff.
[5]
The Capital Partner point
The issue here seems to be whether or not the plaintiff should have pleaded that he remained a Capital Partner. At [112] I said:
"Similar to Ryder, the plaintiff, as described above, and defendants do not assert that the partnership continues to exist with the plaintiff continuing, until now, to be a Capital Partner. I think the practicality of the situation was summed up in this discussion I had with Mr Williams SC:
'HIS HONOUR: Mr Williams, what I'm trying to finesse out of you is you having pointed out the way the matter is pleaded, that if I'm against you on the validity of the expulsion, there really is no issue about repudiation.
WILLIAMS: Precisely. One can get there in a number of ways, but that's one way of getting there. What we do oppose is any effort in light of the pleading for the plaintiff to now contend that he is a partner, because we would have done something about that, had that been the contention.'"
The plaintiff says that there was no need for him to plead that he remained a Capital Partner because, as a matter of law, having not been properly expelled he logically remained a Capital Partner. I accept that, as I stated at [108], the plaintiff's written submissions said that the plaintiff remains a Capital Partner. However, there was no pleading to that effect and the reality of the situation was that following the purported expulsion the plaintiff had not acted as, nor was treated as, a Capital Partner. This was not the plaintiff's fault. This is precisely why he now has an entitlement to damages as contemplated by [118] of my reasons.
Again, I reject the notion of any misapprehension.
[6]
The loss of a chance point
This point also arises from an overly restrictive reading of [118] of my reasons. The plaintiff seems to be suggesting that I had blocked his opportunity to claim damages for a loss of chance. I will repeat the final sentence of [118]:
"This order will keep alive the plaintiff's contentions as to the nature and heads of the damages which he seeks."
The confinement asserted by the plaintiff simply does not exist. If otherwise provable, I can see no reason why the plaintiff cannot recover damages for a loss of chance (see for example Tabet v Gett (2010) 240 CLR 537; [2010] HCA 12.)
Finally, the plaintiffs written submissions refer to the possibility of confusion as to the meaning of my reasons in [13] of the principal judgment, in particular whether I was making findings or only referring to the defendants contentions. I think this point was discussed during the hearing but in case of doubt [13] is confined to the defendants submissions.
[7]
Conclusion and orders
The result of all of the above is that I do not see any entitlement of the plaintiff to an order pursuant to r 36.16. I make the following orders:
1. The plaintiff's notice of motion filed on 15 April 2024 is dismissed.
2. The plaintiff is to pay the defendants costs of the motion.
3. The costs referred to in the previous order are not recoverable until the completion of the whole of the proceedings.
[8]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 10 May 2024