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High Court of Australia |
UNITED BUILDERS PTY. LTD. v. MUTUAL ACCEPTANCE LTD. [1980] HCA 43; (1980) 144 CLR 673
Company
High Court of Australia
Barwick C.J.(1), Gibbs(2), Stephen(3), Mason(4) and Wilson(5) JJ.
CATCHWORDS
Company - Mortgage - Interest in partnership between two companies - Floating charge given by one company to the other over interest in partnership - Whether void against liquidator and other creditors for non-registration - Priority - Registration of charges - The Companies Act, 1961 (Q.), s. 100.
HEARING
Brisbane, 1980, April 16, 17;DECISION
November 7.2. I agree that, for the reasons expressed by my brother Mason, this appeal should be dismissed. (at p677)
GIBBS J. I have had the advantage of reading the reasons for judgment prepared by my brother Mason. I agree that the charge given by the appellant United Builders Pty. Ltd. ("United") on "all its right title and interest in the partnership" was not a charge on the beneficial interest of United in the various assets of the partnership, but a charge on a particular asset of United, namely the equitable chose in action constituted by its interest in the partnership, and that it was a specific and not a floating charge. I could not usefully add to the reasons given by my brother Mason for reaching this conclusion. (at p677)
2. However, although the appeal should be dismissed, it was not disputed before us that it is necessary to vary the order of the Full Court. The respondent, by a cross appeal, raised two questions. First, it was claimed, and not disputed, that the declaration made by the learned trial judge that the value of the share of United in the partnership at 25th September 1974 was $500,000 does not correctly express the apparent intention of the learned trial judge; the declaration should refer to the unencumbered value of the share. Secondly, the respondent sought to appeal against the dismissal of its counterclaim against United for $951,263.93. Before us, counsel for the respondent did not persist in that appeal but sought leave to withdraw the counterclaim and counsel for the appellants did not object to that course. (at p677)
3. I would dismiss the appeal, but would allow the cross appeal in part and vary the order of the Supreme Court accordingly. (at p677)
STEPHEN J. The issue for decision on this appeal is whether or not an unregistered charge granted by United Builders Pty. Ltd., now in liquidation, to Mutual Acceptance Ltd. over the former's interest in a partnership is "a floating charge on the undertaking or property of the company": The Companies Act of 1961 (Q.), s. 100(3)(d). If it is, the charge will, as against the liquidator and the creditors of United Builders, be void for non-registration; this will advantage one creditor which is the holder of a duly registered mortgage debenture subsequently granted by United Builders. (at p678)
2. An important feature of this case is that United Builders and Mutual Acceptance, the chargor and chargee respectively, were also the only two members of the partnership in question. Thus the charge which Mutual Acceptance took was a charge over the share of its sole partner. (at p678)
3. Clause 1 of the deed of charge begins by providing that United Builders "hereby charges all its right title and interest in the partnership . . . to the following intent and effect". There then follows the statement that this shall be so notwithstanding anything to the contrary contained in the deed of partnership. The clause then continues in three sub-clauses; of these, sub-cl. (i) provides that upon default by United Builders "this charge shall be deemed an automatic and absolute assignment and forfeiture in favour of Mutual Acceptance Limited of United Builders Pty. Ltd.'s interest in the said partnership, property and assets" and goes on to require United Builders in that event to perfect such assignment and to "vest such interest in the partnership, partnership property and assets" in favour of Mutual Acceptance. (at p678)
4. The only other relevant provision of the Deed is sub-cl. (iii) of cl. 1. It reads: "(iii) Save as provided for in this deed the rights, powers, interest and entitlement of United Builders Pty. Ltd. as a partner under the said Deed of Partnership are not abridged or affected in any way". In view of the comprehensive character of the charge, the extent of the rights which this sub-clause preserves for United Builders may not be immediately apparent. Its presence is, I think, to be explained by reference to sub-cl. (i). These sub-clauses are together intended to ensure that unless and until default occurs United Builders will retain its status as an active and competent member of the partnership. (at p678)
5. This brings me to the question of the effect of the words of charge and to the special significance of the fact that the chargee of United Builders' right title and interest in the partnership was also its sole partner. (at p678)
6. The words of charge in the opening provision of cl. 1 are expressed in the present tense and in the most comprehensive manner. They are apt to effect a present charging of all of United Builders' right title and interest in the partnership; not simply United Builders' share in the partnership property but the totality of those rights which United Builders enjoyed as a member of the partnership. Different but no less comprehensive words are used in sub-cl. (i). The rights of United Builders in the partnership were not confined to the right on dissolution to a due proportion of any surplus after realization of assets and payment of debts. They included that sui generis interest which a partner has in partnership assets, being his beneficial interest in every asset of the partnership, although not including title to any specific property of the partnership: Canny Gabriel Castle Jackson Advertising Pty. Ltd. v. Volume Sales (Finance) Pty. Ltd. [1974] HCA 22; (1974) 131 CLR 321, at pp 327-328 . They also comprised various rights conferred upon each partner under the partnership agreement, such as the right to participate in the management of the partnership through appointees to its committee of management, the right to receive half yearly such nett profits of the partnership as might be available for distribution and the right to determine the partnership in the events specified in the partnership deed. (at p679)
7. The respondent has argued that, because of a general principle of partnership law, the charge given by United Builders over "all its right title and interest" could not actually take effect as a floating charge affecting management and other like rights; it should be treated as a fixed charge affecting a more narrowly defined partnership interest. It is trite law that a member of a partnership may not, without the consent of his partners, introduce a stranger into the partnership. Hence no assignment of his share in the partnership to a stranger, whether absolute or by way of security, will entitle the assignee to meddle in any way in the affairs of the partnership. This principle of partnership law now finds expression in s. 31 of the Partnership Act, 1980 (U.K.) and in its counterpart, s. 34 of the Partnership Act of 1891 (Q.). Those sections restrict the right of such an assignee of a partnership share by denying him any right "to interfere in the management or administration of the partnership business or affairs, or to require any accounts of the partnership transactions, or to inspect the partnership books". So long as the partnership continues as a going concern, the assignee's only right "as against the other partners" is to receive the assignor's share of profits; on dissolution he is entitled to the assignor's share of the partnership assets and, for the first time, to an account as from the date of dissolution. (at p679)
8. In the present case, however, there is no assignee, a stranger to the partnership, threatening to intrude into its affairs. Instead it is the only two members of the partnership who have agreed together concerning the partnership rights of one of them. To give precise effect to their agreement would neither offend against general principles of partnership law nor against s. 34 of the Queensland legislation. Consistently with general principle, that section looks only to partnerships in which, in addition to the assigning partner and the assignee, there are "other partners" capable of being affected by the intruding assignee. It is in protection of their interests that the section provides that "as against the other partners" the assignment shall be of quite limited effect so long as the partnership subsists. It has no application to the present case, where there are no such other partners. (at p680)
9. In Palmer v. Thompson (1879) OB & F (SC) 182 , the Supreme Court of New
Zealand was confronted with a situation which, although
involving different
facts, does bear certain similarities. There the assignee was not a partner
but had established contractual relationships
with the other partners in
relation to the assignment. The Court was concerned with the above principle
of partnership law, not at
the time incorporated in any statute. Prendergast
C.J. observed (1879) OB & F at p 190-191 :
"It thus appears that the present case is not the ordinary one of a
partner mortgaging his share in a business, in which case
there is no
privity between the mortgagee and the other partners, but on the contrary
that the security to be given to the plaintiff
was made a matter of contract
between the plaintiff and the defendants . . . "
and went on to refer to
"the various authorities collected in Mr. Justice Lindley's book on
Partnership, which established the general principle that
the mortgagee of
the share of one partner takes subject to the right of the other partners to
continue the partnership, and consequently
to bring subsequent partnership
dealings and transactions into account. The case of Cavander v. Bultee
(1873) LR 9 Ch App 79 , referred
to in the addenda, afterwards went before
the Lords Justices, who affirmed the general principle as stated by Mr.
Justice Lindley,
3rd ed., pp. 93-718 (sic). But our opinion in the present
case stands upon the entirely different ground that the mortgagee has here
acquired rights against the other partners in virtue of a distinct contract
with them."
The present case is a fortiori; it is not "other partners" who have become
parties to a distinct contract with the chargor, the only
other partner is
itself the chargee of its partner's share. (at p680)
10. Somewhat closer to the facts of the present case was Rowe v. Wood (1822) 2 Jac & W 553 (37 ER 740) 1822. Wood, the mortgagee of a mine, became partner in the mining venture with the mortgagor, Rowe, so that he thereafter had a "demand on Rowe's share (in the partnership) for the balance of his account". Wood was in possession and Rowe was seeking the interim appointment of a receiver, which relief Lord Eldon L.C. denied. His Lordship observed (1822) 2 Jac & W, at p 558 (37 ER, at p 741) , at p. 558, that "if they had been merely partners, and no rights had been created by the relation of debtor and creditor, the case would have been very simple", one partner could not have excluded the other from equal management of the partnership business. But his Lordship was obliged to have regard to that other relationship and accordingly "the rules as to partners cannot regulate all their rights" (1822) 2 Jac & W, at p 559 (37 ER, at p 742) . Like Palmer v. Thompson it is an instance where the ordinary situation prevailing as between partners when one has encumbered his share in favour of a stranger is inapplicable, either because, as in Palmer v. Thompson, the other partners have all along been privy to the transaction, or as in Rowe v. Wood (1822) 2 Jac & W 554 (37 ER 740) because, there being only two partners, they also occupy the relationship of debtor and creditor, the latter having taken security over the former's share in the partnership. (at p681)
11. In the present case, in the absence of statutory impediment and of infringement of any principle of partnership law, the charge is free to operate according to its terms; "the rules as to partners" can no more regulate the position than they could in Rowe v. Wood. Those rules being inapplicable, the effect of the charge extends to the whole of United Builders' rights and interest in the partnership. It is in this situation and in the light of the terms of cl. 1 that it must be determined whether the charge operates as a fixed charge or as a floating charge. (at p681)
12. Whether a charge is floating or fixed will depend upon the intention of the parties, to be gathered from the terms of the document creating the charge and from surrounding circumstances. In the present case the words of charge are equivocal as to its precise nature but the surrounding circumstances, together with sub-cll. (i) and (iii), sufficiently reveal an intent that the charge should be a floating, not a fixed, charge. (at p681)
13. Ordinarily, a floating charge is a charge granted over the whole of a company's undertaking or over a class of its assets, such as stock-in-trade or book debts. While the company continues to carry on business, the property so charged will necessarily be subject to change. Unless the charge is permitted to float over the changing mass of charged assets, rather than to fasten upon them once and for all when created, the company will be unable to carry on its business. It is this intention of the parties, that despite the charge, the company should still continue to carry on its business, which, once made manifest, leads to the conclusion that the charge is a floating charge - In re Panama, New Zealand and Australian Royal Mail Co. (1870) LR 5 Ch App 318, at p 322 per Giffard L.J.; Illingworth v. Houldsworth (1904) AC 355, at p 358 per Lord Macnaghten; Evans v. Rival Granite Quarries Ltd. (1910) 2 KB 979, at p 994 per Fletcher Moulton L.J. The characteristic of a floating charge, which enables it to be employed so as to give effect to such an intention of the partners, is that, although it creates an existing charge, it does not "specifically affect any asset subject to it until it crystallizes into a fixed security": Luckins v. Highway Motel (Carnarvon) Pty. Ltd. (1975) 133 CLR 164, at p 173 per Gibbs J. - and see Biggerstaff v. Rowatt's Wharf Ltd. (1896) 2 Ch 93, at p 106 ; Evans v. Rival Granite Quarries Ltd. (1910) 2 KB 979 . (at p682)
14. In the present case, although the charge is not over the fluctuating assets of any business it does extend to rights which United Builders must continue to exercise as an independent partner if it and Mutual Acceptance are to continue together in active partnership. As it is the evident intention of the parties that this shall be the case it follows that the charge must take effect as a floating charge. (at p682)
15. It is revealing to see what would be the result were the charge to be regarded as a fixed charge. In relation to one right of the assigning partner, there would, no doubt, be involved no obvious inconsistency with the intent of the parties. That right, the right on dissolution to an account and to payment of whatever was due on the taking of such account, might be subjected to an immediate fixed charge without doing violence to what may be supposed to have been the parties' intent. It may quite appropriately be subjected to a fixed charge because, on execution of the charge, it is and thereafter remains both ascertained and certain in character, although its value will fluctuate from time to time. However other rights possessed by United Builders as a partner are of a different character. For them to be subjected to an immediate fixed charge would indeed imperil the continued operation of the partnership. (at p682)
16. This may best be shown by reference to these other rights themselves. First, United Builders is entitled to have and maintain equal representation with Mutual Acceptance upon the committee of management, the body responsible for the conduct of the business and affairs of the partnership. Then, the very objects of the partnership are largely dependent upon agreement from time to time between Mutual Acceptance and United Builders; they are expressed to be the development of one specific area of land "and such further or other object or objects as the partners may from time to time mutually agree upon". Again, United Builders is, as a partner, entitled to profits half yearly. It is also entitled, as a partner, to retire from partnership upon three months' notice in writing, receiving from the continuing partner upon such retirement the then nett value of its share in the partnership unless the latter elects instead to seek dissolution. In certain eventualities it is entitled, upon certain terms, to expel the other partner. (at p683)
17. Were the charge to operate as an immediate fixed charge in favour of Mutual Acceptance the consequence in the present case would be that United Builders would thereafter be obliged to exercise all these rights as Mutual Acceptance might direct. In other circumstances this would not, of course, be the consequence: s. 34 of the Partnership Act (Q.) would preserve to United Builders its continued free exercise of these rights. However, since the chargee is the only other partner that section has no application: instead the charge would operate according to its terms, and, being a fixed charge, would in substance bring to an end United Builders' active participation in the partnership. Mutual Acceptance would, in relation to these rights, be in much the same position as is a mortgagee of shares in a company in relation to the control of all the rights attaching to the mortgaged shares, as to which see Puddephatt v. Leith (1916) 1 Ch 200, at p 201 , in argument, and per Sargant J. (1916) 1 Ch, at p 202 ; Wise v. Lansdell (1921) 1 Ch 420, at p 430 ; Morgan v. Gray (1953) 1 Ch 83, at p 86 and generally, Gore-Brown on Companies, 43rd ed. (1977), ch. 21.2. (at p683)
18. The surrounding circumstances, including the express terms of cl. 1, show that this consequence cannot have been intended by the parties to the deed. In particular sub-cl. (iii) reveals a clear intention that United Builders shall, despite its execution of the deed of charge, remain in a real sense an active member of the partnership. (at p683)
19. The conclusion to be drawn is, therefore, that the charge created by cl. 1 of the deed was intended to operate as a floating charge. Not only does this accord with the terms of sub-cl. (iii), it also serves to explain the terms of sub-cl. (i). The event referred to in that sub-clause, the making of default in the terms or conditions of any finance facilities provided by Mutual Acceptance, will be the crystallizing event, as may in any case be gleaned from the recitals in the deed and from the opening words of cl. 1. At first instance and in the Full Court it was held that if sub-cl. (i) were penal in operation its penal provisions were severable. In the absence of detailed argument on this aspect I prefer to express no conclusion on these matters; for present purposes nothing turns upon them. (at p684)
20. In my view Mutual Acceptance's charge is a floating charge; it has not been registered; accordingly it is void as against the liquidator and creditors of United Builders. I would allow the appeal accordingly. (at p684)
MASON J. This is an appeal from the Full Court of Queensland (Kneipp, Sheahan and Demack JJ.) (1979) 4 ACLR 176 which allowed an appeal from a decision of D. M. Campbell J. A number of issues were argued before Campbell J. but the issue before this Court is whether a charge given by United Builders Pty. Ltd. ("United") on 8th March 1973 to Mutual Acceptance Limited ("Mutual") in respect of United's interest in a partnership with Mutual constituted a floating charge so as to require registration under s. 100 (3) (d) of The Companies Act of 1961 (Q.). (at p684)
2. On 31st July 1972 United entered into a deed of partnership with Mutual to "purchase, develop, subdivide and resell land at Currumbin known as Marlin Waters as a joint venture" ("the partnership"). On 8th March 1973 Mutual lent United the sum of $500,000 (for purposes unconnected with the partnership) which was secured by a deed of charge whereby United charged "all its right title and interest" in the partnership ("the deed of charge"). This charge was not registered. A further loan was made to United on 1st March 1974 by TKM Finance (Aust.) Ltd. ("TKM"), then known as Kemsley & Co. Pty. Ltd. This loan was secured by a mortgage debenture which was a floating charge and which was registered on 15th March 1974 ("the mortgage debenture"). (at p684)
3. United fell behind in its repayments under the mortgage debenture and on 20th September 1974 TKM notified United that it was appointing a receiver pursuant to its powers under the debenture. Mutual was similarly notified on 23rd September 1974. On 25th September 1974 Mutual notified United of its determination of the partnership and also of United's default under the deed of charge. A winding-up order was made against United on 13th September 1976. (at p685)
4. This appeal concerns the priority of the two securities given by United. If the deed of charge between United and Mutual is a fixed charge, being earlier in time, it will prevail over the mortgage debenture. If, however, the deed is a floating charge it is required to be registered. (at p685)
5. Sub-sections 100(1),(2) and (3)(d) of The Companies Act of 1961 provide:
"(1) Subject to this Division, where a charge to which this section
applies is created by a company, there shall be lodged
with the Registrar
for registration within thirty days after the creation of the charge a
statement of the prescribed particulars
and -
(a) the instrument (if any) by which the charge is created or evidenced;
or
(b) a copy thereof together with an affidavit verifying the execution of
the charge and also verifying the copy as being a
true copy of the
instrument,
and if this section is not complied with in relation to the charge the
charge shall, so far as any security on the company's
property or
undertaking is thereby conferred, be void against the liquidator and any
creditor of the company.
(2) Nothing in subsection (1) of this section shall prejudice any
contract or obligation for repayment of the money secured
by a charge and
when a charge becomes void under this section the money secured thereby
shall immediately become payable.
(3) The charges to which this section applies are -The deed of charge was not registered under s. 100(1). (at p685)
. . .
(d) a floating charge on the undertaking or property of a company;"
6. At first instance Campbell J. found that the deed of charge was a floating charge. This finding was reversed by the Full Court. The reasoning of Demack J. (with whom Sheahan and Kneipp JJ. agreed) was that United's interest in the partnership was "something quite distinct from its own undertaking". His Honour considered that a fixed charge would not be a serious restriction on the business of the company. Further, his Honour thought that United's interest in the partnership was a "specific identifiable chose in action" which under s. 34 of The Partnership Act of 1891 (Q.), as amended, could be assigned and that the interest was property over which a fixed or specific charge could be given. (at p685)
7. The appellants argue that, although the deed of charge is silent upon the question whether it be a fixed or floating charge, the property which is the subject of the charge is such that the parties must necessarily have contemplated that the charge should operate as a floating security. In essence the argument consists of these propositions: (a) that, although a partner has no title to specific property owned by the partnership, he has a beneficial interest in each and every asset of the partnership; (b) that the deed of charge creates an equitable security over that beneficial interest; and (c) that the equitable security must operate by way of floating charge if the partnership business is to be carried on in a continuous and regular fashion. (at p686)
8. In support of its third proposition the appellant relies heavily on the distinction between a fixed charge and a floating security as it was elaborated by Romer L.J. in In re Yorkshire Woolcombers Association Ltd. (1903) 2 Ch 284, at p 295 . According to his Lordship, a charge is a floating charge if (1) it is a charge on a class of assets of a company present and future; (2) that class is one which in the ordinary course of the business of the company would be changing from time to time; and (3) it is contemplated that, until some future step is taken by or on behalf of those interested in the charge, the company may carry on its business in the ordinary way as far as concerns the particular class of assets. (at p686)
9. Woolcombers (1903) 2 Ch 284 was affirmed on appeal by the House of Lords
in Illingworth v. Houldsworth (1904) AC 355 . Lord Macnaghten
(with whom Lord
James and Lord Lindley agreed) expressed the distinction between a fixed or
specific charge and a floating charge
in the following terms (1904) AC, at p
358 :
"A specific charge, I think, is one that without more fastens on
ascertained and definite property or property capable of being
ascertained
and defined; a floating charge, on the other hand, is ambulatory and
shifting in its nature, hovering over and so to
speak floating with the
property which it is intended to affect until some event occurs or some act
is done which causes it to settle
and fasten on the subject of the charge
within its reach and grasp." (at p686)
10. If the subject of the present charge was the property and undertaking of
United there would be no doubt that the charge was
of the floating variety.
Otherwise United would be unable to dispose of its assets in the ordinary
course of its business and Mutual
would not have the benefit of a charge on
future assets. (at p686)
11. But the problem here is that the property over which the charge has been given is not the undertaking, or any part of the general assets, of United, but its interest in the partnership. It is at this point that the appellants' argument breaks down, for I do not agree with the appellants' second proposition that the charge created an equitable security over United's beneficial interest in each and every asset of the partnership. (at p687)
12. In the deed of charge United charged "all its right title and interest in the partnership" to Mutual. Clause 1 stated that should United default or fail to fulfil any of the conditions in respect of the finance facilities the deed of charge "shall be deemed an automatic and absolute assignment and forfeiture in favour of Mutual Acceptance Limited of United Builders Pty. Ltd.'s interest in the said partnership, partnership property and assets". (at p687)
13. Both the judge at first instance and the Full Court held that, if this clause were penal in operation, it was severable from the charge itself and the charge was a valid simple charge (subject to any requirements of registration). As the question of severability was not fully argued before us, I accept what their Honours have decided. (at p687)
14. The vital question is: What rights passed to Mutual by virtue of the charge over United's right, title and interest in the partnership? The answer to this question is that, according to long established principle, a mortgage or charge over a partner's share or interest in the partnership does not vest any interest in the assets of the partnership against the other partners. What the mortgage or charge does is to confer an entitlement on the holder on dissolution of the partnership in relation to the partner's share of the partnership assets. Section 34 of The Partnership Act specifically provides that a mortgagee is on dissolution entitled to receive the mortgagor's share of the assets and that, for the purpose of ascertaining that share, he is entitled to an account from the other partners as from the date of dissolution. (at p687)
15. This principle does not in my opinion deny the existence of a partner's beneficial interest in each of the partnership assets, but this interest is of a special and non-specific kind (Canny Gabriel Castle Jackson Advertising Pty. Ltd. v. Volume Sales (Finance) Pty. Ltd. [1974] HCA 22; (1974) 131 CLR 321, at pp 327-328 ; Federal Commissioner of Taxation v. Everett [1980] HCA 6; (1980) 143 CLR 440, at pp 446-447 ). In Helmore v. Smith (1887) 35 Ch D 436 , it was recognized that a sheriff under a writ of fi. fa. could sell a partner's chattel interest in the partnership. But, as Lindley L.J. pointed out, the purchaser "has to find out what he has really had assigned to him, and that he can only do by a partnership account" (1887) 35 Ch D, at pp 447-448 . This in itself will virtually ensure a dissolution of the partnership. It is significant that The Partnership Act now provides that a writ of execution shall not issue against any partnership property except on a judgment against the firm (s. 26 (1)) and that the court may by order charge a partner's interest and his share of profits with payment of a judgment debt and by subsequent order appoint a receiver of that partner's share of profits and of any other money which may be coming to him from the partnership (s. 26(2)). What is more, a partnership may at the option of the other partners be dissolved if any partner suffers his share of the partnership property to be charged under the Act for his separate debt (s. 36(2)). (at p688)
16. The vital consideration is that the partner's interest is in truth a chose in action, which, as Everett acknowledged, "consists of a right to a proportion of the surplus after the realization of the assets and payment of the debts and liabilities of the partnership" (1980) 143 CLR, at p 446 . A mortgage or charge is considered to vest rights over that chose in action but it is not considered to carry any title to the specific assets until dissolution. (at p688)
17. It follows that so long as the partnership business is carried on, its assets may be disposed of in the ordinary course of that business free of any claim to title by the holder of a mortgage or charge over a partner's share in the partnership. What I have said applies to an individual who is a partner as well as to a corporate partner. A fixed charge is appropriate to create a security over a partner's share. It gives rise to a present security over the chose in action which is the partner's share. Although it creates no specific interest in the partnership assets until dissolution, this is not because the charge is dormant; it is because the rights conferred by the charge relate to the existing chose in action and that the security over the chose in action confers no entitlement to the assets of the partnership until dissolution. A fixed charge is equally appropriate to secure to a lender rights over a corporate partner's share in a partnership. (at p688)
18. In the result I consider that Mutual's charge was a fixed charge and that it did not require registration. (at p688)
19. Accordingly, I would dismiss the appeal. (at p688)
WILSON J. I agree entirely with Mason J., and would dismiss the appeal. (at p688)
ORDER
Appeal dismissed with costs.Cross appeal allowed in part. No order as to the costs of the cross appeal.
Judgment of the Full Court of the Supreme Court of Queensland varied to provide as follows: -
"Appeal to that Court allowed with costs.
Judgment of D. M. Campbell J. set aside, and in lieu thereto order -
1. That it be declared - (i) that a partnership subsisting between the
plaintiff United Builders Pty. Ltd. and the defendant Mutual
Acceptance
Limited in terms of the deed of partnership dated 31st July 1972 was
determined by notice from the defendant dated 25th
September 1974;
(ii) that the value at the date of dissolution of the said partnership of the
one-half share of the plaintiff United Builders Pty.
Ltd. in the said
partnership unencumbered by any charge was $500,000; and
(iii) that the charge created by the deed of charge given by the plaintiff
United Builders Pty. Ltd. to the defendant on the 8th
March 1973 is a valid
charge upon the share of the plaintiff United Builders Pty. Ltd. in the said
partnership and entitled to priority
over the charge upon the said share in
favour of the plaintiff TKM Finance (Aust.) Ltd. constituted by the mortgage
debenture deed
dated 1st March 1974 given by the plaintiff United Builders
Pty. Ltd. to the plaintiff TKM Finance (Aust.) Ltd.
2. That it be ordered -(iv) that the defendant Mutual Acceptance Limited have leave to withdraw its counter claim for $951,263.93; and
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