The Appellant Sued the Respondent - Essay Example

?Part A Background The appellant sued the respondent in the district court purporting that the husband should pay one half of the proceeds from the sale of land to them, and they argued that the respondent should provide all the accounting information relating to the purchases of lease and consequent sale of the land. The defendant should have compensated the plaintiff by giving her half of whatever monies that was supposed to have been paid as rent, of which the defendant did not collect. Q.1 In Byrnes & Anor v Kendle (2009), the parties involved were; Mr Clifford Kendle and Joan Byrnes and her son Martin Byrne, whereby Mr Kendle and Mrs. Byrne had been married in 1970 and separated early in the year 2007. 1 They were aged 57 and 60 years old respectively at the time of their marriage, but previously, both had been in other marriages and each had children from the retrospective unions. Martin Byrnes was one of Mr.’s Byrnes children from a previous marriage. Q.2 Whether a deed in which a Mr. Byrne acknowledged holding a half undivided in the realty purchased and registered exclusively in his name as the sole proprietor in Brighton, South Australia in 1984, or for Mrs Byrnes it amounted to the creation of valid trust? Whether the creation of trust was the real subjective intention of the husband or if it was only obtained objectively from the deed that had been signed according to the acknowledgment trust deed (1989 deed)? If such a trust was created as per the deed, or whether the husband as a trustee was duty bound to lease or let out the property and obligated to receive rental fee on his wife’s behalf? In case such were the case, did Mr Byrne’s failure to collect rent from the son who had leased the property amount to a breach of the trust? If this is the case, did the wife’s knowledge of the Mr. Byrnes son nonpayment of rent considering that she had deliberately avoided taking any action to pressure her husband to collect the rent in the interest of “marital harmony” amount to complicity in the breach of trust? Q.3 a The husband resisted these claims and to that end put forward the following arguments: the deed signed in 1997 could not have created a trust since even when he signed the deed; his intention was not to create trust according to him, the deed was only intended to acknowledge the plaintiffs entitlement to half the proceeds realty upon its sale (Clarke 2011).2 Furthermore, even if he was a trustee as purported by the plaintiff, the 1997 deed did not explicitly denote his duties and responsibilities to the wife, indeed it did not require him to play any active role or perform any duties as one. Therefore, he was not under legal obligation to let out the property or collect the proceeds of such enterprise on behalf of his wife. Finally, the claimed estoppel as defense based on the fact that the wife had Knowledge of the leasers non-payment and took no action to encourage him to take action was acquiescence in the husbands failure to collect the money and thus they were precluded from any rights to make complains about the defendant’s alleged breach of trust as they would have been equally in breach if by virtue of her compliance in his non action. Q.3b The District court found that the plaintiff was entitle to half of the proceeding from the sale of the real estate in line with the stipulation of the 2007 deed: Nevertheless, in regards to being owed half the rent which Mr. Byrens had allegedly failed to collect, it found for the defendant; the court approved the husbands contention that pursuant to the 1997 deed, no trust had been established because the despite the existence of a document on the contrary, the husbands was without the requisite intention. The district court judge made this pronouncement by relying on the high-court’s decision in the: Commissioner of Stamp Duties (Qld) v Jolliffe (1920) where it was determined that in the endeavour to determine the existence of a express trust, evidence may be pursued beyond the deed of trust. In consonance with the defendant’s claims, the judge also ruled that owning to her complacency in the effort to recover the rent, the wife had consented to the failure to collect rent and by her deliberate in-action in the matter to preserve marital harmony she waived her right to relief. 3 Q.4a The plaintiff appealed the ruling of district court that there was no trust created between the two parties based on the presupposition one may transcend the deed to use information outside it to establish trust or lack of thereof, the court found for the plaintiff and the ruling of the district court was consequently overruled. Q.4b French CJ asserted the findings of CJ Doyle that the terms of the 1997 deed are unambiguous, nonetheless, while taking cognizance of the fact that the husband may not have known what he was getting into, that is neither here nor there. According to the high court judges, the intention of the husband when pitted against what he actually said in the deed is immaterial, as such it is not what he meant to say in the deed but what he actually said in the deed that is important. Q.4c Heydon and Crennan JJ asserted that deeds like the constitution or statutes must be considered objectively and only the word on the deed are of any relevance, unless the subject is contesting a matter of misrepresentation in the deed, the subjective intentions therein are irrelevant in the face of legal reason.4 The high court rejected the decision in Jolliffe which the trial judge relied on distinguishing it form the facts of the Byrens v Kender case, claiming that that in Joliffe, the majority denied that any forms of words can be used to construe trust contrary to the creators intention. Q.5 The appellant counsel posited that while the deed did not explicitly describe the duties of the defendant as a trustee, for one he had both power and responsibility to manage the property even after himself and the appellant had vacated from it. He had a fiduciary duty which he exercised by letting out the land to his son, he however breached this duty by failing to collect the rent from the tenant. In his summation, he claimed that when a trust estate includes property or land, the trustees is duty-bound to render it productive whether or not the trustee instrument states that they do so. Ergo, by failing to collect the aforementioned rent, he effectively breached the duty which he had in effect exercised by his action of independently leasing the land out in the first place. Q.6a The Judges in the high court unanimously rejected the decision of the lower court that the husband was a co-owner and Mr. Byrne’s; the court found that the husband was in breach of his duty as a trustee for neglecting to collect the rent from his son. Q.6b The court determined this based on the fact that; the trustee he was duty bound to either do so or evict him and replace him with a paying tenant. On whether the wife acquiescence to the breach of trust; thus, the high court rejected Mr. Byrne’s contention that she waived her right to complain about his inaction by virtue of the fact that she did not discourage it.5 The court ruled that the husband had not established consent from his wife and she had not acted from a knowledgeable point of view in deliberate or calculated inaction to create an impression that his omissions were sanctioned by her. Part B Q.1 The ASIC may direct a company to change its name within a period of two months should the following circumstances arise: If the company had failed to register the name at the time of its registration, if it had breached any of the conditions under subsection 147 on the name’s availability, if the consent that had been allowed to assume the name is withdrawn or the company loses its right to use the name.6 Q.2 “The borrower must call a meeting of debenture holders under the following circumstances whereby if the debenture holders who hold at least 10% of the issued debenture’s issued nominal value direct the borrower to act as such” (283 EA). Furthermore, if the borrower is given direction to that effect in writing at the companies registered office and if the meeting is held for either one of the following reasons: To consider the financial statements that were tabled at the borrowers last AGM or to give trustees direction in regard to its role powers. 7 Q.3 ASIC may give a return of particulars to a company or an entity that is responsible for a registered scheme if it has reason to suspect and/or belief that the particulars on record in regard to the firm or a scheme in a register which it maintains are incorrect. If an approval under the subsection 352(1) allows for the lodgement of a response to a company’s return of particulars ASIC may satisfy the subsection (1) by availing the returns via electronic means by making the return available to the company or its agent by electronic means.8 Q.4 A company must disclose the remuneration paid to its directors in any capacity whether as a director or otherwise if accordingly directed by members who hold at least 5% of votes that may be cast at a general meeting by the firm or no less than a 100 members with voting privileges at the companies AGM.9 Q.5 A company ceases to exist on deregistration, nonetheless, its officials are still liable for actions performed before the deregistration occurred in addition, all property the company held on trust prior to the registration is vested in the common wealth (1A (With the exception of 1A ) vest in ASIC. Under subsection (1A) the ASIC assumes no more powers over the property than those that the company held before deregistration and it is subject to any interest claims that may have been held by the firm. ASIC assumes ownership related powers over the property and the directors of the company are barred for the company’s books for a period of not less than 3 years after deregistration.10 Q.6 Small proprietary companies are not required to prepare audited financial reports unless they have been mandated to do so either by the ASIC or by members in possession of 5% of voting shares and or in special circumstances if the company if managed by a foreign firm. 11 Q.7 CORPORATIONS ACT 2001 - SECT 347A requires directors of a company to pass a solvency resolution after each review date: This is a resolution by the company’s directors on whether or not there is, according to them, judicious grounds to support the belief that the firm will be able to repay its debts when a time comes for them to be paid.12 Q.8 According to The CORPORATIONS ACT 2001 - SECT 288, a company’s records may be kept in electronic form only if they can be made available in hard copy within reasonable time for parties who need to inspect them.13 Part C On initial enactment, Australian partnership legislation adopted provisions substantially borrowing from the Partnership Act 1890 (UK), since inception, this legislation has contained general definitions of partnership.14 Prior to the passing of the aforementioned act, there were a range of definitions of partnerships without a common specific or authoritative definition of the term; in his Seminal text Lord Lindley provided 18 possible definitions of partnerships all drawn from different sources. According to The Partnership Act 1895, 7 (1) Partnership can be described as an association that exist between business partners with a common vision to carry out business to make profit. 15 For a partnership to exist the elements of a statutory partnership relationship must be present and as long as they do, then the partnership will be deemed to exist even if the parties involved had not intended for it to be so. The existence of these elements takes precedence over any documents they may have signed or ratified a document in which they agreed that they would not be partners. These elements are that a business must be carried on, that the persons in common must carry it on and the business must be carried on with a view to make profit. In an event where these elements are missing, the partnership is legally deemed not to exist notwithstanding that the “partners” may have documents stating that they are partners. Notwithstanding the deceptively straightforward definition, the nature of the partnership or determination of whether or not a partnership exists is often difficult to determine. In its simplest form, a business exists as a sole proprietorship in which an individual is solely responsible for all the elements involved in running the business. A sole trader may take a partner in and this will constitute a partnership, they may later transform the business to a company but it remains the same business throughout it is worth noting that “the business” does not take a legal entity until it becomes a company. 16 In Hitchins v Hitchins (1998), two sisters and two brothers jointly owned the interest in a hotel and shopping Centre as well as the partnership tasked with running the investment, the business was relatively profitable and drawings from partnerships were consistently availed to the involved parties. 17The petitioner sought to terminate the relationship and required that their interest in the partnership be sold and that she be the recipient of such amounts as were payable to her form the drawings after the taking of accounts. Ergo, the question brought before the court was whether the relationship that existed among the parties involved in regard to their combined proprietorship of interest in the investment and partnership itself amounted to partnership. His honor Bryson J was ruled that there was no partnership owing to the absence of an agreement in the terms of contract asserting that a partnership existed and also the fact the relationship was not within the parameters of the definition of partnership according to the partnership Act 1891 since they were not in effect carrying on a common business. According to the judge, investing shares the partnership [that was running the business and making drawings form the same cannot rightly be described as a business and can only be considered an investment and thereby nullifying the appellants claim to having been in a partnership. In due consideration of the above case law example, it is important that the rules and by extension, exemptions to the determination of the existence of a partnership are examined, these are: Neither joint property, common property or partial ownership of property constitutes a partnership no obstante that the tenants or owners do or do not share the profits.18 The act of sharing of a business proceeds or net returns is not a qualification for the creation of partnership irrespective of whether the parties sharing these proceeds have or do not have a mutual right or interest in the property from which the aforementioned returns accrue. In addition, while the receipt of a share of the profits is prima facie of the recipient’s partnership in the business, it does not singularly qualify the person as a partner. 19 Notwithstanding, whether or not they describe themselves as partners, two parties will not be considered as partners unless they are carrying out the same business consider the case of In Checker Taxicab Co Ltd v Stone (1930) the issue in contention was whether the relationship between the owner of the cab and the driver was a partnership, if such were the case, the owner would be held responsible for the negligence of the driver.20 The facts presented to the presiding judge were that the driver hired the car form the owner and was bound to return it to the latter’s garage every evening after work, in addition, he was supposed to pay the owner an agreed fraction of the proceeds of the job. The owner had no control over the driver’s action or direct him in any way as pertains the carrying out of his duties, as such the court ruled that the relationship was not a partnership. This was because the two were carrying out separate businesses with the owner hiring out his car and the driver collecting and driving fares, ergo, the driver was an “independent businessperson” and the owner was under no obligation to pay for his (The driver’s) negligence. As aforementioned, the existence of a relationship cannot be determined based on what partners call or do not for that matter call themselves, as such, a relationship is not deemed to be partnership simply because they call themselves such or their governing deed in titles “The covenant or partnership”. Conversely, the absences of the explicit declarations of partnerships do not automatically translate into the absence of a partnership and the proper relationship between parties is only reached after an examination of the substance of the relationship. Nevertheless, it is notable that in case a dispute arises between partners and a third party who is not part of the “partnership” proof of the three essential elements is legally controlling and in such a case, it is the documents rather than the intention that take precedence. However, if the dispute is between the two partners, their intention becomes the controlling factor and the law will take to consideration both the terms and the intentions expresses explicitly or implicitly in the contract. Considering the case of Jackson Advertising Pty Ltd v Volume Sales (1974), which contractually existed as a Joint venture but which the court determined was a partnership.21 The fourth media company (ltd) had signed contracts with several singers including Elton John and Cilla black to promote their public appearances in Australia, a firm named volume sales agreed to finance the contracts and they all signed agreements on 16th September, 1971 to the effect. For the media was to assign fifty percent of the interests in the contract and this was considered a loan to the joint venture made payable before any division of the profits could be carried out by the “Joint ventures”. In addition, all policy matters regarding to the contract were to be agreed on by all the parties involved and the box office monies would be paid into volume sales account which they would operate at their own discretion. In the event of the contracts failure, the whole amount was to be repaid without any deductions whatsoever, however, despite the claim that the relationship was a joint venture; the high court determined the relationship had been a partnership. This was based on the considerations; that the parties were involved in a joint venture in a business enterprise whose ultimate aim was profit; as such they had fulfilled one statutory requirement of partnership.22 The profits were to be shared among the members of the joint venture; as such this was prima farcie evidence albeit not conclusive proof of the existence of a partnership. The policy in the joint venture provided for disputes to be settled through arbitration and there was even an attempt at assignment of half interest in the contracts with two of the singers, furthermore, the agreement reflected the parties’ mutual concern to attain mutual financial stability as is often the case in partnerships. Despite the fact that any relationship according to the information contained herein has the capacity to be a partnership as long as it is within the parameters of the three statutory requirements, there exists certain limitations. Due to some of the formalities that must be complied with in the formation of a partnership, there are two restrictions on a parties’ legal viability for partnership, and these are that a partnership cannot be formed should its formation is unlawful as it would in that case be in contravention of a statute or common law, furthermore, a partnership cannot be formed if the partner does not have the legal capacity to form partnership. Ultimately, from the; evidence laws and the cases examined herein it is clear that a partnership in the sense of the word is not based on the contractual documents or the intention of the “partners” only the existence of activities that satisfy the statutory definition of partnerships can qualify as relationship as a partnership . 23 Bibliography Byrnes & Anor v Kendle [2009] SASC 385 Checker Taxicab Co Ltd v Stone [1930] NZLR 169: 14 Clarke, P. (2011). Equity, trusts and trustees, powers, duties, rights and liabilities of trustees, liability for breach of trust; Byrnes v Kendle. [Online] Available at: http://www.peteraclarke.com.au/2011/08/19/equity-trusts-and-trustees-powers-duties-rights-and-liabilities-of-trustees-liability-for-breach-of-trustbyrnes-v-kendle-2011-hca-26-3-august-2011/ [Accessed 15/08/2013] Commissioner of Stamp Duties v Jolliffe; [1920] 28 CLR 178. Corporations Act 2001 Act No. 50 of 2001 as amended VOLUME 1: Chapters 1–2K (ss. 1 – 282) Egert, Geoffrey (2007) "Defining a Partnership: The Traditional Approach Versus An Innovative Departure - Do Queensland Appeal Court Decisions Point to the Need for a Review of the Traditional Approach to Interpretation Adopted by Australian Courts?,"Bond Law Review: Vol. 19: Iss. 1, Article 5. Gillies, Peter. (2004) Business Law. Federation Press. ISBN 1862875146. [Print] Hitchins v Hitchins (1998) 47 NSWLR 35; 9 BPR 16,659; BC9806650:  Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321; 3 ALR 409; 48 ALJR 217; BC7400033 Karaka, Corey. (2012). Case Note Secret Intentions and Slippery Words: Byrnes v Kendle Sydney Law Review [VOL 34:599] [Online] Available at: http://sydney.edu.au/law/slr/slr_34/slr34_3/SLRv34no3Karaka.pdf [Accessed 15/08/2013] Lindgren Kevin E. and Taylor, P.W. 2012. Lindgren's Business Law of Australia. Dayton, Ohio: LexisNexis. Ludmilla, Robinson. (2011) Back to the Future: Retrogression and the High Court's Decision in Byrnes V Kendle. Academic journal article from University of Western Sydney Law Review, Vol. 15. Partnership Act 1890 - 25 & 26 Vict.Ch.89. (Part 2) HM Revenue & Customs. Partnership Act 1891 Part 2 Division 1 (I c). PARTNERSHIP ACT 1963 - SECT 7(2). Australian Capital Territory Consolidated. Queensland Government. (nd). Guide to operating a business in Queensland Licencing and regulation requirement. [Online] Available at:http://www.business.qld.gov.au/__data/assets/pdf_file/0008/15938/Guide-to-operating-a-business.pdf [Accessed 15/08/2013] The Partnership Act 1895. No. 23 of 1895. Read More