Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QDC
  3. 2025
  4. Combis v White Horizon Pty Ltd - [2025] QDC 60

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

Combis v White Horizon Pty Ltd[2025] QDC 60

Combis v White Horizon Pty Ltd[2025] QDC 60

DISTRICT COURT OF QUEENSLAND

CITATION:

Krystyna Allen Trust & Ors v White Horizon Pty Ltd; Krystyna Allen Trust and Ultimate Horizon Trust Partnership (Receivers and Managers Appointed) v Kelly [2025] QDC 60 

PARTIES:

383/17

NICK JIM COMBIS AS RECEIVER OF THE ASSETS AND UNDERTAKINGS OF THE KRYSTYNA ALLEN TRUST AND ULTIMATE HORIZON TRUST (RECEIVER AND MANAGER APPOINTED)

(Plaintiff)

v

WHITE HORIZON PTY LTD AS TRUSTEE OF THE ULTIMATE HORIZON TRUST

(Defendant)

2015/18

NICK JIM COMBIS AS RECEIVER OF THE ASSETS AND UNDERTAKINGS OF THE KRYSTYNA ALLEN TRUST AND ULTIMATE HORIZON TRUST (RECEIVER AND MANAGER APPOINTED)

(Plaintiff)

v

DARRYL KEITH KELLY

(Defendant)

FILE NOS:

383/17 and 2015/18

DIVISION:

Civil

PROCEEDING:

Claim

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

14 May 2025

DELIVERED AT:

Brisbane

HEARING DATE:

14, 15 and 16 April 2025

JUDGE:

Porter KC DCJ

ORDERS:

In 383/17

  1. The claim and the counterclaim be dismissed.

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS BEFORE STATE AND TERRITORY COURTS – PARTNERSHIP – DISSOLUTION AND WINDING UP – where a declaration was sought to dissolve the Partnership – where receivers and managers were appointed to wind up the affairs of the Partnership – whether the receivers could sue to recover a debt shown as due from Mr Kelly to the Partnership recorded in the books of account

RELATIONSHIP BETWEEN PARTNERS – ACTIONS AND PROCEEDINGS AT LAW BETWEEN PARTNERS –where the plaintiff receiver sued White Horizon to recover the balance of a loan account – whether upon dissolution and winding up a partner may bring a cause of action at law to recover monies due from their fellow partner – where both parties conceded that neither party to the White Horizons proceedings has a cause of action in debt against the other and any sums due inter se arise in equity on the taking of an account on dissolution 

CASES:

Commercial Images (Aust) Pty Ltd (In Liq) v Manicaros [2023] QDC 77

Commissioner of State Taxation of the State of South Australia v Cyril Henschke Pty Ltd (2010) 242 CLR 508

Hypec Electronics Pty Ltd (in Liq) v Mead 50 ACSR 448

Re Pinata Pty Ltd (in Liq) [2012] NSWSC 162

LEGISLATION:

District Court of Queensland Act 1967 s. 69

Limitations of Actions Act 1974 ss. 35 and 36

Uniform Civil Procedure Rules 1999 r. 704

SECONDARY MATERIALS:

R. I. Banks, Lindley and Banks on Partnership (Sweet & Maxwell, 21st ed, 2022)

COUNSEL:

L. Henry for the plaintiff

M. Downes for the defendant

SOLICITORS:

HWL Ebsworth for the plaintiff

Mills Oakley for the defendant

SUMMARY

  1. [1]
    The Krystyna Allan Trust (the Allan Trust) and the Ultimate Horizon Trust (the UH Trust) Partnership was a partnership between the trustees from time to time of those two trusts (the Partnership).  It operated from about 2003. From 17 July 2006 the trustee of the Allan Trust was White Rook Pty Ltd (White Rook), and the trustee of the UH Trust was White Horizon Pty Ltd (White Horizon).  Behind the Partnership were two persons; Ms Krystyna Allan (who controlled White Rook) and Mr Daryll Kelly (who controlled White Horizon).  The Partnership business was land development. 
  2. [2]
    Sadly, there was a falling out between Ms Allan and Mr Kelly in about late 2006. This eventually led to the appointment of receivers to the Partnership property by Justice Mullins by orders dated 3 June 2011.
  3. [3]
    In 2014, the receivers brought proceedings in the Magistrates Court against Mr Kelly to recover a debt shown in the Partnership books of account owed by Mr Kelly to the Partnership of $118,134.08 (the Kelly proceedings). 
  4. [4]
    In February 2017, the receivers brought proceedings in this Court against White Horizons to recover a debt shown as due from White Horizons to the Partnership in the Partnership accounts of $363,375, after allowing for a debt shown in the accounts as due from the Partnership to White Horizons of $486,266.  White Horizons defended primarily on the basis that the cause of action in debt was statute barred.  White Horizons counterclaimed for a debt due from the Partnership to White Horizons (the White Horizons proceedings).
  5. [5]
    The Kelly proceedings were transferred to this Court and heard together with the White Horizons proceedings before me commencing 14 April 2025.
  6. [6]
    On 16 April 2025, I made orders in the Kelly proceedings by which judgment was entered for the plaintiff with interest and costs.  I gave reasons on interest and costs at the time.  I informed the parties I would give reasons for my judgment later. In paragraphs [19] to [28] I set out my reasons for giving judgment for the plaintiff in the Kelly proceedings.
  7. [7]
    As to the White Horizon proceedings, on 16 April 2025, both parties submitted that neither the claim nor the counterclaim could be sustained and that both proceedings should be dismissed. Despite that position, I also reserved my decision so that I could explain the outcome of the trial.  For the reasons that follow I find:
    1. That the parties’ joint position was correct and that both proceedings should be dismissed; and
    2. That the parties should bear their own costs.
  8. [8]
    Consistent with the common submission of the parties, I make no orders touching on the entitlement of the receiver to indemnity from the Partnership assets for his own costs.

The Common factual background

  1. [9]
    The Partnership was established in about March 2003.  On 18 March 2003, the Allan Trust and the UH Trust were established with Newsbake Pty Ltd as trustee of both trusts.  I pass over the oddity of Newsbake being the trustee of two trusts said to be in partnership with each other.  A trust is not a legal entity.  At law, the partnership between trusts is between the trustees from time to time of the relevant trusts.  Quite how the Partnership existed with a single trustee is unclear.  Happily, that is not a problem I have to resolve. 
  2. [10]
    The shareholders of Newsbake were Ms Allan and Mr Kelly, so in a broad commercial sense, they conducted the commercial relationship through that company.  On 26 June 2006, perhaps as a result of decaying relations, Newsbake was removed as trustee of both trusts and replaced by Mr Kelly for the Allan Trust and Ms Allan for the UH Trust.  This seems opposite to what might have been expected, assuming the beneficiaries of the Allan Trust were connected with Ms Allan.  It appears this was indeed an error because on 19 July 2006, Ms Allan and Mr Kelly were removed as trustees and White Rook became trustee of the Allan Trust and Mr Kelly’s company, White Horizon, became trustee of the UH Trust. 
  3. [11]
    The 19 July 2006 appointments were by deed.  The content of the deed for the UH Trust was in evidence.  It is reasonable to infer a similar deed was prepared for the Allan Trust.  The terms of the deed were unremarkable, involving vesting of trust property and an undertaking of the new trustee to comply with the terms of the relevant trust deed.
  4. [12]
    Partnership financial accounts and tax returns were prepared for the years to 2005 by an accountant, Mr Densley.  The important 2006 accounts were prepared by another accountant, Mr Wetmore.  They were signed by both parties on about 14 December 2006.  Ms Allan swore that they were difficult to finalise because of antagonism between her and Mr Kelly.  The 2007 accounts were more difficult to prepare according to Ms Allan, and for the same reason.  Having observed Mr Kelly in the witness box, I can well believe it was so.  There was no suggestion to the contrary in cross examination. The 2007 accounts were not finalised nor were tax returns lodged thereafter, until appointment of the receivers. 
  5. [13]
    Despite the commercial relationship between Ms Allan and Mr Kelly decaying from about late 2006, it appears no formal step was taken to resolve the apparent difficulties in the affairs of the Partnership until 2011.  On 12 May 2011, White Rook brought an originating application seeking a declaration that the Partnership was dissolved on 3 November 2009 and for the appointment of receivers and managers to wind up the affairs of the Partnership.
  6. [14]
    Justice Mullins made orders on that application on 3 June 2011. They are not marked by consent and there are no reasons before me, so I am not aware of how the matter proceeded before her Honour.  In any event, her Honour ordered relevantly:
    1. That the Partnership be declared dissolved as at 3 November 2009;
    2. That Mr Combis and Mr Dinoris be appointed to be the receivers and managers of the Partnership to conduct winding up of the Partnership;
    3. That the receivers be given certain powers in winding up the Partnership including:
      1. By order 5(a), to do all things necessary or convenient to wind up the Partnership;
      2. By order 5(f), to negotiate and compromise any debt owed to the Partnership including where there have been mutual credit, mutual debts or other mutual dealings between the Partnership and the partners, for an account to be taken of what is due from one party to another in respect of those mutual dealings and the sum of one party set off set off against any sum due from the other party and only the balance amount is payable by the partnership or the partner.
    4. By orders 7, 8 and 10:

7. That the Receivers and Managers are to distribute any Partnership assets in the following order of priority:

  1.  first, to the payment of any fees and expenses of the Receivers and Managers, their partners and/or their employees as are reasonably incurred in carrying out the terms of this order and their duties as Receivers and Managers;
  1.  second, to the payment of any debts and liabilities of the Partnership to persons who are not partners of the Partnership;
  1.  third, to the payment of any debts and liabilities of the partners of the Partnership;
  1.  fourth, distribute between the partners of the Partnership in equal half shares.

8. That should there be insufficient funds available to the Receivers and Managers to pay in full, the debts and liabilities of the Partnership in accordance with this Order, the Receivers and Managers may determine the proportion of which each Partner must contribute further monies as may be necessary to enable them to satisfy such debts and liabilities, taking into account, the amount that each Partner has already contributed to Partnership expenses.

…

10. That the Receivers and Managers prepare and lodge final accounts of the Partnership.

  1. [15]
    It appears that there were on-going disputes about the accounts of the partnership after appointment of the receivers.  Mr Kelly contended that none of the accounts were accurate reaching back to 2003.  Seemingly as a result, the receivers applied for orders intended to permit them to prepare final accounts on the basis that the 2006 accounts were accurate.  The choice of the 2006 accounts seems explicable on the basis that they were the last set of accounts signed by Mr Kelly and Ms Allan.  The order was served on both partners. 
  2. [16]
    On 26 August 2012, by consent, Justice Fryberg made orders consistent with the application by the receivers. His Honour ordered:
    1. Order 10 of the order of this Honourable Court dated 3 June 2011 be varied, so far as may be necessary, such that the preparation and lodgement, by Peter Dinoris and Nick Combis as Receivers and Managers (Receivers and Managers) of the Krystyna Allen Trust and Ultimate Horizon Trust partnership (Partnership), of accounts of the Partnership on and from 1 July 2006 shall constitute compliance with that order.
    2. For the purpose of complying with order 10 of the order of this Honourable Court dated 3 June 2011, the Receivers and Managers be permitted to rely on the accounts of the Partnership as at 30 June 2006, as originally prepared and signed, as representing the true and correct financial position of the Partnership as at 30 June 2006, being exhibit ‘PD-3’ of the affidavit of Peter Dinoris filed on 10 August 2012.
  3. [17]
    The Partnership accounts showed Mr Kelly was a debtor to the Partnership for some $118,134.08.  On 24 September 2014, the receivers commenced the Kelly proceedings in the Magistrates Court to recover that sum.  Sometime after that, Mr Dinoris retired as a receiver and Mr Combis continued alone.
  4. [18]
    The White Horizons proceedings were commenced in this Court on 2 February 2017.  In 2018, the Kelly proceedings were transferred to this Court, to be heard with the White Horizons proceedings.

The Kelly proceedings

  1. [19]
    The Kelly proceedings are of the simplest kind.  The receiver sues to recover a debt shown as due from Mr Kelly to the partnership recorded in the books of account.  The receiver relied upon the accounts of the Partnership including specific book entries in the journals of the partnership.  There was no challenge to that evidence.
  2. [20]
    The journals demonstrated that the debt arose from a number of specific sources between January 2009 and May 2011.  Relevantly, $50,000 arose from a single payment to Mr Kelly on 16 January 2009.  Ultimately, Mr Kelly’s defence only took issue with the $50,000 payment. 
  3. [21]
    Notwithstanding that, Mr Henry (for the receiver) cross examined about various loan amounts which were plainly referable to a car loan in Mr Kelly’s name.  In the course of doing so, Mr Kelly showed a tendency to cavil with any suggestion which seemed contrary to his interests and to suggest exculpatory justifications for the payments which had never been pleaded in the preceding decade.  Mr Kelly would make a concession on occasion, but only where the evidence before him conclusively demonstrated the correctness of the proposition advanced by Mr Henry.  
  4. [22]
    Kelly’s case on the $50,000 was that while he accepted it had been paid out to him from the Partnership account, he said that he had paid $50,000 in on the same day and that the net payment was nil. It is true that there is a payment into the Partnership account of $50,000 on that day, but it was not recorded as a payment by Mr Kelly.  
  5. [23]
    Mr Kelly was unable to produce any evidence or documentary trail showing that that payment was made by him.  For example, there was no evidence of any debit to any bank account of his for that sum.  He explained that was because the deposit was made in cash.  When asked where he got such a large amount of cash from, he gave evidence of very extensive use of cash by him in his business.  I am willing to accept that Mr Kelly might use cash when he could.  However, I am not persuaded that he made a cash deposit of $50,000 on 9 January 2009.  I reach that view for the following reasons.
  6. [24]
    First, the fact of the deposit being made in cash by Mr Kelly depends entirely on accepting his oral evidence of this fact.  However, observing Mr Kelly in cross examination, his oral evidence of that fact alone was not sufficient to persuade me of the reliability of his assertion. 
  7. [25]
    His evidence was given in a manner heavy on self-justification and long on irrelevant and extravagant explanations of his conduct. Direct answers to fair questions, on the other hand, were rare.  While that is not of itself a reason for rejecting his evidence, it does give one cause for caution in accepting his uncorroborated evidence. While all witnesses can be expected to be interested in their own cause to some degree, Mr Kelly’s manner suggested an unshakeable faith in his cause which affected his reliability as an accurate historian.  Further, Mr Kelly’s story about a $300,000 cash payment he had allegedly received which he apparently volunteered to add credibility to his claimed deposit of $50,000 cash was itself incredible.  This evidence showed a willingness and ability to reconstruct (using that word generously) events in the witness box.
  8. [26]
    Second, a payment of $50,000 in cash is a significant cash transaction.  Even allowing for the passage of time, it is unlikely such a transaction would be unable to be confirmed by some form of documentation, not least because it would have attracted cash reporting obligations of the recipient bank.  Not a single document supporting his account, directly or inferentially, was produced.  Additionally, while the trial occurred many years after the event, the proceedings were originally brought in 2014, much closer to the date of the alleged cash payment.
  9. [27]
    Third, on Mr Kelly’s account he went to a local branch, deposited $50,000 in cash, and then drew down $50,000 from the partnership account the same day.  He gave no explanation for why he would have engaged in that improbable conduct.
  10. [28]
    For those reasons, I am satisfied that the receiver has made out his claim against Mr Kelly.  I have already made orders for judgment, interest and costs in the matter.

The White Horizons proceedings

The pleadings

  1. [29]
    When the necessary but unimportant complexities are stripped away, the Amended Statement of Claim was straightforward.  The plaintiff was the receiver.  He sued White Horizon to recover the balance of a loan account recorded in the books of the Partnership as at 3 June 2011, the appointment date of the receiver.  The sum was pleaded as arising from the balance of the loan account starting from the 2006 accounts signed by Mr Kelly and Ms Allan, when the balance struck at 30 June 2006 was $533,454. 
  2. [30]
    The receiver also pleaded (indirectly) that White Horizons had a ‘negative equity position’ of $85,811 and that the Partnership owed White Horizons $486,226, and therefore claimed payment only of the balance of $363,375 of the White Horizons loan account with the Partnership.
  3. [31]
    The defence and counterclaim went through various iterations, ending with the Fourth Amended Defence and Amended Counterclaim. 
  4. [32]
    The defence did not cavil with the Partnership accounts.  Rather, it pleaded that each individual advance by the Partnership to White Horizons was an individual debt due on demand and that, given the date of the various advances, all the advances were statute barred. 
  5. [33]
    The reply countered that:
    1. The loan account was a running account which comprise a single cause of action from time to time; and
    2. White Horizons acknowledged that debt by its consent to the 2012 Orders, causing time to commence afresh; and alternatively
    3. The claim arose pursuant to a right to equitable account and was thereby not subject to the limitation period specified for recovery of debts.
  6. [34]
    The counterclaim claimed recovery of the $486,226 debt shown as owing by the Partnership to White Horizons and relied upon a letter from the receiver sent in October 2015 (pleaded in the statement of claim) as comprising an acknowledgement of the debt.
  7. [35]
    The receiver replied, pleading that he is entitled to set off the Partnership claim against the White Horizons claim.

The cases at trial

  1. [36]
    The pleadings raised a number of interesting issues relating to the application of the acknowledgment provisions of the Limitations of Actions Act 1974.  I set out the provisions and principal authorities in Commercial Images (Aust) Pty Ltd (In Liq) v Manicaros [2023] QDC 77. 
  2. [37]
    One issue which was whether the consent order made by Justice Fryberg could give rise to an acknowledgment.  It could not because it was not signed by or on behalf of White Horizons.  I briefly expand on this.
  3. [38]
    Section 35 is headed “Fresh accrual of action on acknowledgment or part payment”.  Section 35(3) provides:

Where a right of action has accrued to recover a debt or other liquidated pecuniary claim, or a claim to the personal estate of a deceased person or to a share or interest therein and the person liable or accountable therefore acknowledges the claim or makes a payment in respect thereof, the right shall be deemed to have accrued on and not before the date of the acknowledgement or the last payment. 

[underlining added]

  1. [39]
    Further conditions for the fresh accrual of claims under s. 35(3) are articulated in s. 36.  It provides:

36 Formal provisions as to acknowledgement and part payment

  1.  Every acknowledgement referred to in section 35 shall be in writing and signed by the person making the acknowledgement.
  1.  Any acknowledgement or payment may be made by the agent of the person by whom it is required to be made under section 35 and shall be made to the person or to an agent of the person whose title or claim is being acknowledged or, as the case may be, in respect of whose claim the payment is being made.

[underlining added]

  1. [40]
    Reading the two provisions together, the relevant conditions for the fresh accrual of the claims to the debts by the company are:
    1. First, that the debtor acknowledges the debts;
    2. Second, the acknowledgement is in writing;
    3. Third, the acknowledgement is signed by the debtor or the debtor’s agent; and
    4. Fourth, the acknowledgement is made to the creditor or to an agent of the creditor. 
  2. [41]
    It was initially submitted by the plaintiff that if an acknowledgement was made by an agent of the debtor under s. 36(2), then it did not have to be in writing and signed under s. 36(1).  Ultimately that submission was not pressed, correctly in my view.  Section 36(1) applies to every acknowledgment which shall be in writing and signed, s. 36(2) applies to any acknowledgment which may be made by an agent.  Read together, those provisions communicate that while all acknowledgments must comply with s. 36(1), the mode of compliance may be by the debtor’s agent. 
  3. [42]
    It is not necessary further to deal with the issues which arose at trial in relation to acknowledgement of debts nor any other matter because of the joint concession by both parties, to which I now turn.

The concessions

  1. [43]
    By the third day of the trial, both parties made written concessions that the claim and the counterclaim must be dismissed because no cause of action in debt arose between the parties to the White Horizons proceeding.  Both parties submitted that  claims by partners inter se arise, rather, in equity on the taking of an account on dissolution.
  2. [44]
    That proposition is confirmed by the High Court decision of Commissioner of State Taxation of the State of South Australia v Cyril Henschke Pty Ltd (2010) 242 CLR 508.  In that case, four partners had for many years carried on a well-known wine making business under the name CA Henschke & Co.  One partner retired.  Pursuant to the deed of retirement, the retiring partner received a substantial payment and the remaining three partners continued in partnership on the terms of the existing partnership.  
  3. [45]
    The Commissioner levied stamp duty on the deed of retirement as a conveyance, contending, in effect, that the effect of the deed was to vest personal property of the retiring partner in the continuing partners.  The case turned upon whether the effect of the deed was merely to extinguish the interest of the retiring partner (as the Full Court had found) or to convey the interest of that partner to the continuing partners (as the trial Judge had found).  The High Court agreed with the trial Judge.  In so doing, the joint Judgment articulated the nature of the interest of partners in partnership property as follows:

22 The significance of the interplay between the law of contract and the doctrines and remedies of equity was further explained by Lord Millett in Hurst v Bryk. His Lordship observed that disputes between partners and the dissolution and winding up of partnerships have always fallen within the jurisdiction of the Court of Chancery, and continued:

“This is because, while partnership is a consensual arrangement based on agreement, it is more than a simple contract (to use the expression of Dixon J in McDonald v Dennys Lascelles Ltd); it is a continuing personal as well as commercial relationship. Neither during the continuance of the relationship nor after its determination has any partner any cause of action at law to recover moneys due to him from his fellow partners. The amount owing to a partner by his fellow partners is recoverable only by the taking of an account in equity after the partnership has been dissolved. Only the Court of Chancery was equipped with the machinery necessary to enable such an account to be taken, and the basis upon which the account was taken reflected equitable principles. These could be modified by agreement, but they did not find their source in contract.”

23 This foundation for the engagement of equitable doctrines and concomitant remedies has given rise to judicial consideration of the nature of the interest conferred by equity upon each partner with respect to partnership assets as they exist from time to time and in advance of a “general” dissolution under the control of a court of equity. Neuberger LJ recently described as “conceptually somewhat opaque” the concept of a partner’s share in the partnership assets as understood in the earlier English authorities. However, the matter has received attention in a series of decisions in this Court.

[underlining added]

  1. [46]
    The underlined passage supports the concession made by both counsel.
  2. [47]
    The position is also articulated in a leading English text as follows (footnotes omitted)[1]:

Lord Lindley observed:

“What is meant by the share of a partner in his proportion of the partnership assets after they have been all realised and converted into money, and all the debts and liabilities have been paid and discharged. This it is, and this only, which on the death of a partner passes to his representatives, or to a legatee of his share; which under the old law was considered as bona notabilia; which his bankruptcy passes to his trustee …”.

Although it would be more accurate to speak of a partner’s entitlement to a proportion of the net proceeds of sale of the assets, the correctness of the statement of principle embodied in the above passage cannot seriously be questioned, reflecting as it does the proper application of sections 39 and 44 of the Partnership Act 1890. This approach underlay the decision in Commissioner of State Taxation v Cyril Henschke Pty Ltd and was clearly endorsed by Norris J in Bieber v Teathers Ltd and the Irish court in Re Bloxham.

It also coincides with the conclusion of the Court of Appeal of Victoria in Commissioner of State Revenue v Danvest Pty Ltd, where various Australian authorities, including Commissioner of State Taxation v Cyril Henschke Pty Ltd, were reviewed, even though Lord Lindley’s definition was not, as such, cited by the court. The definition was, however, directly in play in Commissioner of State Revenue v Rojoda Pty Ltd. The decision in Deacon v Yaseen, must, in the above context, be regarded as something of an anomaly.

Accordingly, a partner’s entitlement will reflect not only his capital and current account balances and the size of his capital profit (or asset surplus) share, but also any amounts which he may owe to the firm, e.g. in respect of overdrawings. It is submitted that any attempt to demonstrate that a particular element of a partner’s share, e.g. his entitlement to capital, has an existence independent of the remainder must, in the absence of an express agreement, fail. 

[underlining added]

  1. [48]
    There was no evidence of any specific agreement to the contrary.
  2. [49]
    Both counsel also agreed that the express power conferred on the receivers to sue in order 8 of Justice Mullins’ orders dated 3 June 2011 (see paragraph [14](d) above) did not alter that position.  That is plainly correct as a matter of principle and on the proper construction of the order.
  3. [50]
    As to the former, in Re Pinata Pty Ltd (in Liq) [2012] NSWSC 162, it was submitted that a receiver appointed by deed to the assets of a partnership for the purpose of dissolution and winding up of the partnership did not have power to sue partners for money due to the partnership.  Hammerschlag J agreed:

48 First, it was put on behalf of Hamilton that the deed did not confer upon him the power or authority to sue one or more of the partners on behalf of another or others of them, as the plaintiffs contend he should have done. This submission was put on the basis that cl 3.1.3 of the deed does not comprehend a power in the receivers to commence proceedings by one partner against another or others. Clause 3.1.3 provides that the receivers shall have the powers granted to a liquidator under s 477 of the Corporations Law. Section 477(2)(a) of that enactment provides that a liquidator may bring or defend any legal proceedings in the name and on behalf of the company. It was put that this was not a power to commence proceedings for one partner against others.

49 This is undoubtedly correct.

50 For over 150 years it has been settled that neither during the partnership nor after its termination has any partner a cause of action at law to recover monies due to that partner from his fellow partners. The amount owing to one partner by his or her fellow partners is recoverable only by the taking of an account in equity after the partnership has been dissolved; see Richardson v Bank of England 41 ER 65. This principle has been affirmed by the High Court as recently as 2010; see Commissioner of State Taxation v Cyril Henschke Pty Ltd (above) at 445 [22]; see also Hurst v Bryk [2002] 1 AC 185.

51 Under cl 3.1 of the deed the partners appointed the receivers their agent to wind up the affairs of the partnership. The powers they gave the receivers were given in aid of winding up the affairs of the partnership by gathering in its assets, paying its liabilities and dividing the surplus according to the partners' respective interests in the partnership. Clearly, this does not comprehend power in the receivers to bring proceedings to determine the extent of those interests, including by proceedings to determine monies due to one partner by his or her fellow partners, and on its plain meaning cl 3.1 does not confer such a power. To construe the provision otherwise would place the receivers in an impossible position of conflict and would assume an intention on the part of the partners to have an instrument which envisaged a course directly in conflict with long established principle.

52 In any event, the partners could not validly authorise their agents to bring proceedings which they themselves could not bring; see Peter Watts and FMB Reynolds, Bowstead and Reynolds on Agency (19 th ed, 2011).

53 The only proper course for resolution of the loan, interest, agistment and piping claims was for Pinata to bring proceedings for an accounting, a course which it ultimately took in 2001 and which, for reasons already discussed, failed.

[underlining added]

  1. [51]
    As to the latter, Justice Mullins’ orders would in my view be taken to have been made on the assumption of consistency with the above principles.  So much is more than an assumption, however. The terms of order 5(f) deal specifically with claims inter se and provide a correct method for their resolution, consistent with the above principles.
  2. [52]
    Finally, it remains only to note that the Partnership Act 1891 (Qld) does not appear to modify the general law in this respect.  Indeed, ss 46 and 47 appear to be consistent with the above principles. 
  3. [53]
    Accordingly, neither party to the White Horizons proceedings has a cause of action in debt against the other and any sums due inter se must await the determination of balances due on the taking an account.

Costs 

  1. [54]
    The first issue is what costs order to make in the White Horizons proceedings.  In my view, I should make no order as to costs and leave the parties to bear their own costs.  A different outcome might have followed if the counterclaim could be characterised as entirely defensive.  But it was not.  The defendant’s position was that the plaintiff’s claim was statute barred, but its claim was not.  It pressed for judgment on its counterclaim and dismissal of the claim.  While it is difficult to see how that could have succeeded in the face of a set-off defence, that was the defendant’s position. 
  2. [55]
    Accordingly, I make no order as to costs of the White Horizons proceedings.
  3. [56]
    A second issue is whether I should make an order which denied indemnity of the receiver from the Partnership assets.  Ultimately, both parties submitted I should not do so because that question was properly one for the Court which appointed the receiver.[2]  I am not persuaded that this Court does not have jurisdiction to make an order denying indemnity to the receiver in the circumstances presently before the Court.  In my view, such power could come within the scope of s. 69 District Court of Queensland Act 1967 in a case of this kind.  Further, it might be argued that in this case, the receiver was suing as a trustee and therefore the express power in Rule 704 Uniform Civil Procedure Rules 1999 might be engaged.  However, it is unnecessary to decide the point.  Both parties submit that the matter should be left to the Supreme Court.  And there is much to be said for declining to make orders affecting an officer of the Court appointed by another Court, even if power to do so exists. I will therefore not deal with the question of the receiver’s indemnity.

Footnotes

[1] R. I. Banks, Lindley and Banks on Partnership (Sweet & Maxwell, 21st ed, 2022) 19-08 - 19-09.

[2] Hypec Electronics Pty Ltd (in Liq) v Mead 50 ACSR 448 at [81].

Close

Editorial Notes

  • Published Case Name:

    Krystyna Allen Trust & Ors v White Horizon Pty Ltd; Krystyna Allen Trust and Ultimate Horizon Trust Partnership (Receivers and Managers Appointed) v Kelly

  • Shortened Case Name:

    Combis v White Horizon Pty Ltd

  • MNC:

    [2025] QDC 60

  • Court:

    QDC

  • Judge(s):

    Porter KC DCJ

  • Date:

    14 May 2025

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Commercial Images (Aust) Pty Ltd (in liq) v Manicaros [2023] QDC 77
2 citations
Jump To
Cite 1 - [2023] QDC 77
Cite 2 - [2023] QDC 77
Hurst v Bryk [2002] 1 AC 185
1 citation
Jump To
Cite 1 - [2002] 1 AC 185
tate of South Australia v Cyril Henschke Pty Ltd (2010) 242 CLR 508
2 citations
Jump To
Cite 1 - (2010) 242 CLR 508
Cite 2 - (2010) 242 CLR 508

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.