Lewis v Martinez and the persons named in the Schedule (No 5) [2024] NSWSC 359

Lewis v Martinez and the persons named in the Schedule (No 5) [2024] NSWSC 359

The expulsion of the plaintiff was invalid because the defendants breached the Partnership Deed. The required seven days' written notice for an expulsion resolution was not validly displaced: the variation resolution came after the expulsion resolution and both were bundled into a single vote, undermining the purpose of the notice period. Further, an Extraordinary Resolution required approval by not less than 80% of the whole Capital Partnership, and neither 86 nor 107 affirmative votes out of 181 Capital Partners satisfied that requirement. The email resolution also failed to include reasons as required by the Rules, although the invalidity of the resolutions was otherwise sufficient....

Jurisdiction
Australia
Judgment Date
08 April 2024
Procedural Posture
Equity Proceeding Concerning Partnership Expulsion, Alleged Breaches of a Partnership Deed, and Dissolution of Partnership / Liability and Relief Hearing; Assessment of Quantum of Any Relief Ordered to Be Determined Separately and Subsequently Pursuant to UCPR Rule 28.2
Outcome
The plaintiff succeeded on liability in establishing that the 7 November 2020 expulsion was invalid by reason of breaches of the Partnership Deed. The alleged improper purpose was not established. The partnership was declared dissolved as between the plaintiff and defendants, and damages, if any, are to be assessed.
Legal Topics
['expulsion of Partner' 'construction of Partnership Deed' 'extraordinary Resolution' 'notice Requirements' 'fiduciary Duties and Good Faith Between Partners' 'improper Purpose' 'dissolution on Just and Equitable Grounds' 'assessment of Damages']
['partnership Law' 'equity' 'contract Law'] ['expulsion of Partner' 'construction of Partnership Deed' 'extraordinary Resolution' 'notice Requirements' 'fiduciary Duties and Good Faith Between Partners' 'improper Purpose' 'dissolution on Just and Equitable Grounds' 'assessment of Damages']

Case Brief

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Procedural Posture

Equity Proceeding Concerning Partnership Expulsion, Alleged Breaches of a Partnership Deed, and Dissolution of Partnership / Liability and Relief Hearing; Assessment of Quantum of Any Relief Ordered to Be Determined Separately and Subsequently Pursuant to UCPR Rule 28.2

Legal Issues

  1. 1 ['Whether the resolution put to Capital Partners on 7 November 2020 validly expelled the plaintiff under cl 20 of the Partnership Deed.' "Whether the seven days' written notice requirement for expulsion could validly be waived or varied by a bundled resolution using a single voting button." 'Whether an Extraordinary Resolution required approval by 80% of all Capital Partners or 80% of Capital Partners who voted.' 'Whether the expulsion power was exercised for an improper purpose, namely to exclude the plaintiff from the IPO process and benefit other Capital Partners, particularly Mr Martinez.' 'Whether reasons for the proposed email resolution were required and whether the plaintiff was denied an opportunity to be heard.' 'Whether the partnership should be dissolved as between the plaintiff and the defendants on just and equitable grounds.' 'What relief should follow, including declarations, assessment of damages, and costs.']

Ratio Decidendi

The expulsion of the plaintiff was invalid because the defendants breached the Partnership Deed. The required seven days' written notice for an expulsion resolution was not validly displaced: the variation resolution came after the expulsion resolution and both were bundled into a single vote, undermining the purpose of the notice period. Further, an Extraordinary Resolution required approval by not less than 80% of the whole Capital Partnership, and neither 86 nor 107 affirmative votes out of 181 Capital Partners satisfied that requirement. The email resolution also failed to include reasons as required by the Rules, although the invalidity of the resolutions was otherwise sufficient....

Court Disposition

The plaintiff succeeded on liability in establishing that the 7 November 2020 expulsion was invalid by reason of breaches of the Partnership Deed. The alleged improper purpose was not established. The partnership was declared dissolved as between the plaintiff and defendants, and damages, if any, are to be assessed.

Orders

  • ['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.' 'A declaration that as between the plaintiff and the defendants the partnership was dissolved with effect from 10 February 2021, being the date of...