Hodgins v Hodgins
| Jurisdiction | Ireland |
| Judge | Mr. Justice Tony O'Connor |
| Judgment Date | 23 July 2019 |
| Neutral Citation | [2019] IEHC 577 |
| Docket Number | [2019 No. 3514 P.] |
| Court | High Court |
| Date | 23 July 2019 |
[2019] IEHC 577
THE HIGH COURT
O'Connor Tony J.
[2019 No. 3514 P.]
AND
Partnership – Dissolution – Injunction – Plaintiff seeking an injunction preventing the defendants from taking any steps to bring about the dissolution of a partnership save for where such course of action was expressly permitted by the partnership agreement – Whether the least risk of injustice favoured the refusal of the application by the plaintiff
Facts: The parties executed a partnership agreement on 1st January, 2006, with an addendum dated 11th July, 2012, and were the only partners in the firm of solicitors at 11 Summerhill, Nenagh, Co. Tipperary. The plaintiff, Mr David Hodgins, was given a notice of dissolution dated 28th February, 2019, of his partnership with the defendants, Mr Duncan Hodgins and Ms McKeever, with effect from 31st May, 2019. The notice of dissolution was signed by the first defendant, the brother of the plaintiff, and the second defendant, the first defendant’s wife. This High Court judgment concerned the first relief sought in the notice of motion dated 2nd May, 2019 - “An injunction preventing the Defendants or either of them from taking any steps whatsoever to bring about the dissolution of the partnership known as “David Hodgins & Co. Solicitors” save for where such course of action is expressly permitted by the Partnership Agreement” - pending the determination of the plenary hearing of this action.
Held by O’Connor J that the three-partnership firm in a provincial town, which had one particularly good year, depended on a working relationship between the parties. O’Connor J found that the intransigence since the commencement of this litigation did not augur well for the confidence of employees or clients in the firm. Therefore, O’Connor J held that the balance of convenience favoured a refusal of the specific application in the notice of motion. O’Connor J noted that since Okunade v Minister for Justice [2012] IESC 49, the courts in a mandatory interlocutory injunction application look to see whether there is a strong case and will seek to “lower the risk of injustice” that may arise by the grant of an interlocutory mandatory order.
O’Connor J held that the least risk of injustice favoured the refusal of the application by the plaintiff and the Court would hear counsel in relation to directions in order to bring all of the litigation to an early conclusion so that the parties could concentrate on serving clients and securing the employment of the firm’s staff.
Application refused.
The plaintiff was given a notice of dissolution dated 28th February, 2019, (‘notice of dissolution’) of his partnership with the defendants, with effect from 31st May, 2019. The notice of dissolution was signed by the first named defendant (brother of the plaintiff) and the first named defendant's wife, the second named defendant.
The parties had executed a partnership agreement on 1st January, 2006, with an addendum dated 11th July, 2012, (‘the partnership agreement’) and are the only partners in the firm of solicitors at 11 Summerhill, Nenagh, Co. Tipperary (‘the offices’).
This judgment now only concerns the first relief sought in the notice of motion dated 2nd May, 2019:-
‘An injunction preventing the Defendants or either of them from taking any steps whatsoever to bring about the dissolution of the partnership known as ‘David Hodgins & Co. Solicitors’ save for where such course of action is expressly permitted by the Partnership Agreement ….’
pending the determination of the plenary hearing of this action.
The further relief seeking an injunction preventing the defendants ‘ from informing any third party of the purported dissolution’ was not pursued. Previous applications to Reynolds J. during the month of May 2019, for interim and procedural orders, effectively disclosed to the public that the defendants had given notice of the dissolution.
The plaintiff and the first named defendant swore two affidavits each ending with the first named defendant's affidavit sworn on 4th June, 2019. The second named defendant had authorised and approved the first named defendant's averments in his affidavit.
The action was adjourned to allow the parties attend a mediation on 11th June, 2019, that proved unsuccessful. On the date of the mediation, the defendants instituted proceedings against the plaintiff, having record number [2019 No. 4583 P.], in which they sought various orders under the Partnership Act 1890 (‘1890 Act’), which will be referred to later.
Counsel for the plaintiff opened the application late last Wednesday, 17th July, and following various interchanges with counsel on Thursday, 18th July, I directed:-
(i) The plaintiff to deliver a statement of claim in these proceedings by today along with his defence to the statement of claim in the proceedings having record number [2019 No. 4583 P.] seeking, inter alia, orders pursuant to ss. 32, 35 and 39 of the 1890 Act.
(ii) The defendants to furnish four specific details of files and eight specific proposals and lists of existing and potential clients of the firm from specified dates.
The plaintiff has yet to particularise his claim for the damages sought in these proceedings and directions in that regard can be given next Tuesday, 30th July, 2019, following the plaintiff's review of the details given by the defendants today along with a request for particulars from the defendants that I direct the defendants to serve by 5pm on Thursday, 25th July, 2019. The defendants now must deliver their defence in these proceedings and I will hear counsel about how best to accelerate the prosecution of these proceedings to a plenary trial. The Court will also facilitate applications on the 12th September, 2019, if requested, in relation to further directions.
Irrespective of whether the notice of dissolution is valid, the effect of s. 38 of the 1890 Act is a factor to be considered in the analysis of the ‘ least risk of injustice’ criterion to be applied in this application:-
‘After the dissolution of a partnership the authority of each partner to bind the firm, and the other rights and obligations of the partners, continue notwithstanding the dissolution so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise.’
The plaintiff claims in these proceedings that the notice of dissolution is invalid because there is no general right in the partnership agreement to cause a dissolution by a simple notice. The plaintiff's argument is to the effect that any steps taken by the defendants purportedly on foot of the notice of dissolution ‘ are unlawful and are likely to cause [him] to suffer loss and damage’.
The defendants, however, argue that Clause 2.1 specifically refers to dissolution. It provides:-
‘Subject to the provisions for retirement, expulsion and dissolution hereinafter contained the Firm shall continue during the joints lives of the Partners and the survivors of them.’ (emphasis added).
The defendants further submit that the notice of dissolution accords with the 1890 Act. Section 26(1) of the 1890 Act allows for determination at any time on giving notice. Section 32(c) of the 1890 Act provides that notice to dissolve may be served in a partnership that is entered into for an unidentified time ‘subject to any agreement between the partners’. The defendants contend that the partnership agreement does not contain a term which precludes dissolution by notice.
This Court on an interlocutory application, and particularly in an application where the affidavit evidence contains averments for both sides that are not always reconcilable without cross-examination, cannot determine definitively the central issue about the right to dissolve the partnership practising as David Hodgins & Co Solicitors. Although the submissions of counsel for the plaintiff are rather cogent and persuasive, there are questions which can only be determined following a full plenary hearing of both actions.
The provision for voluntary retirement upon giving 90 days” notice has not escaped the attention of this Court and that the defendants have not availed of this provision. Clause 26.3(d) of the partnership agreement envisages, inter alia, a retiring partner having only 70% of his/her...
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