Larkin v Groeger

• Jurisdiction: Ireland
• Judge: Mr. Justice Barrington
• Judgment Date: 26 April 1988
• Neutral Citation: 1988 WJSC-HC 2526
• Docket Number: Record No. 162 Sp/1987
• Court: High Court
• Date: 26 April 1988

1988 WJSC-HC 2526

THE HIGH COURT

Record No. 162 Sp/1987

LARKIN v. GROEGER

IN THE MATTER OF THE ARBITRATION ACTS 1954 / 1980 AND IN THE MATTER OF AN APPLICATION BY MICHAEL LARKIN

CLAIMANT/PLAINTIFF

AND

RICHARD GROEGER AND GEORGE EATON

RESPONDENTS/DEFENDANTS

Citations:

BOTHE V AMOS 1975 2 AER 321

PJ VAN DER ZIJDEN WILDHANDEL V TUCKER & ANOR 1976 I LlLR 341

OLEIFICIO ZUCCHI V NORTHERN SALES 1965 2 LlLR 496

FAURE FAIRCLOUGH LTD V PREMIER OIL & CAKE MILLS 1961 LlLR 237

GKN CENTRAX GEARS LTD V MATBRO LTD 1976 2 LlLR 555

LYON V TIDDELL 17 CH 529

GERAGHTY V BUCKLEY UNREP CARROLL 06.10.86 1987/3/666

WILKINSON V PAGE 1 HARE 276

AMES V MILWARD 8 TAUNTON 637

SNELL'S EQUITY 19ED P49

LINDLEY PARTNERSHIP 15ED P691

HALSBURY'S LAWS 4ED V35 PARA 164

HALSBURY'S LAWS 4ED V2 PARA 622

Synopsis:

PARTNERSHIP

Dissolution

Partners — Conduct — Partnership deed — Terms ignored — Inference from conduct — ~See~ Arbitration, award — (1987/162 Sp — Barrington J. — 26/4/88)

|Larkin v. Groeger|

ARBITRATION

Award

Review — Uncertainty — Error of law — Evidence — Admissibility — Partnership — Dissolution resulting from conduct of partners — The plaintiff and the defendants had been members of a partnership of accountants and auditors which had been formed by a partnership deed dated 7/8/81 — The agreement contained an arbitration clause and provided, inter alia, that the partnership could be terminated by a partner giving three months notice of termination — The partnership business was to be conducted in part of certain premises held by the plaintiff under a lease for a term of years — He agreed to grant the partnership a sub-lease of part of the demised premises and on 7/8/81 he demised part of his premises to the partnership for the term of nine years at the yearly rent of #15,25O subject to the covenants and the conditions therein contained — The sub-lease contained provision for the payment of the reserved rent quarterly in advance and for the payment of interest on gales of rent which remained unpaid — Serious disputes arose between the parties — The partnership failed to pay the rent reserved by the sub-lease and accruing after 31/3/82 and the plaintiff then failed to pay the rent reserved by the lease — The lessors commenced forfeiture proceedings and the plaintiff's interest in the premises demised by the lease terminated on 6/2/83 — The disputes were referred to arbitration — The arbitrator heard evidence on 13 days over a period of 17 months ending in December, 1986 — During the proceedings before the arbitrator the second defendant was cross-examined on behalf of the plaintiff and, when a particular subject was introduced, the second defendant intimated that the first defendant would deal with that subject — The first defendant was cross-examined about the particular subject but, when counsel turned to the other matters in dispute, the first defendant objected on the ground that, in his opinion, the second defendant had covered all other matters — The arbitrator allowed the first defendant to withdraw on the condition that the entire of his evidence would he disregarded — The second defendant was then examined and cross- examined about the particular subject — The arbitrator delivered his award in January, 1987 — In his award the arbitrator, inter alia, disallowed most of the claims made by the plaintiff and by the defendants — The arbitrator found that a valid partnership had been created by the said agreement, that the partnership had not been determined pursuant to the terms thereof, that the parties had not acted in accordance with the terms of the partnership agreement during its existence, and that the said agreement "had effectively ceased to operate by April, 1983" — The arbitrator ordered the defendants to pay to the plaintiff #20,501 in respect of the defendants” occupation of the partnership premises, a sum of #7,640 in respect of the plaintiff's loss of assets and fixtures, and a sum of #l7,000 general damages — The arbitrator ordered that one half of the costs of the arbitration and of the arbitrator's costs be borne by the plaintiff and that the other half be borne by the defendants — The plaintiff claimed in the High Court an order setting aside the award on the grounds of uncertainty, inconsistency and errors of law — Held, in affirming the award, that the arbitrator had found, in effect, that the partnership terminated on 3l/3/83 by the conduct of the partners, and that there was sufficient evidence to support that finding: ~Bothe v. Amos~ [1975] 2 ALL E.R. 321 considered — Held that the arbitrator appeared (a) to have accepted the defendants” contention that the plaintiff was aware of the partners” decision to stop paying the rent reserved by the sub-lease and (b) to have taken the view that it would be unreasonable, in those circumstances, to allow interest on the arrears of rent due under the sub-lease — Held that the arbitrator was entitled to take that view and that he had allowed a reasonable sum for the use and occupation of the partnership premises by the partners for the period from the last payment of the rent reserved by the sub- lease to the date when the plaintiff's own title was extinguished —Held that counsel had been entitled to cross-examine the first defendant at large and that the arbitrator's ruling on the matter, made when the defendants” solicitor and counsel were absent, was irregular — Held, however, that the plaintiff had not suffered any injustice by reason of the course adopted by the arbitrator — Held that the arbitrator, being satisfied that the defendants had lost a cash receipt book, was entitled to accept from the defendants photostat sheets of pages of relevant entries and to admit such sheets as evidence for the purpose of the arbitration — (l987/162 Sp — Barrington J. — 26/4/88)

|Larkin v. Groeger|

1 Judgment of Mr. Justice Barrington delivered the 26th day of April 1988.

2 This is an application to set aside an arbitrator's award and to obtain ancillary relief.

3 The Plaintiff and the Defendants are all accountants and were formerly partners. Unhappy differences arose between them and the present case is but the latest step in protracted litigation in which allegations and counter allegations of a most serious kind have been made.

4 The partnership was governed by a deed of partnership dated the 7th day of August 1981. This provided that the parties should become partners in the profession of auditors, accountants, management consultants, personnel consultants and taxation consultants from the 1st day of July 1981 under the style or form of Groeger, Eaton and Larkin and Michael Larkin and Associates.

5 The partnership was to continue until determined by at least three months' notice in writing given by any partner to the others to expire at any time. The partnership deed contained an arbitration clause which could be invoked in the event of a dispute arising between the partners.

6 The partnership practice was to be carried on at 81 Merrion Square, Dublin 2. These were premises held under lease by the present Plaintiff Mr. Larkin and it was agreed that the partnership should sub-lease portion of these premises from him. A sub-lease was accordingly entered into on the 7th of August 1981 between the present Plaintiff on the one hand and the partnership on the other hand under which the present Plaintiff agreed to lease to the partnership portion of No. 81 Merrion Square for a term of nine years from the 1st of July 1981 at a yearly rent of £15,250 subject to the covenants and conditions therein contained. The lessor's covenants included the usual covenant for quite enjoyment and the lease was subject, inter alia, to the proviso that in the event of the rent due under the lease being unpaid at the expiration of seven days after becoming due and payable the same "shall" until paid or until earlier re-entry by the lessor bear interest calculated on a day to day basis at a rate which was to be 5% over the Dublin intra Bank rates on sums of equivalent amount.

7 By an indenture of even date with the lease the present Plaintiff convenanted to obtain the consent of the superior lessor to the granting of the lease within a period of six months from August 7th 1981. It is common case that the Plaintiff never in fact obtained this consent although, strangely enough, the sub-lease was deposited with, and accepted by, the bank as a security to secure the partnership's overdraft with the bank.

8 One of the matters agreed between the prospective partners was that the Defendants should pay to the Plaintiff the sum of £90,000. There is a dispute between the parties as to the precise reason for this payment but the Defendants maintain that it was paid on the understanding that the Plaintiff's personal practice was to contribute to the partnership not less than £90,000 in gross fees earned and charged for the year ending the 30th of June 1982. In the event of the Plaintiff's practice failing to contribute this there was to be a "clawback" arrangement under which the Defendants were to be entitled, upon demand made, to repayment of every pound by which the Plaintiff's contribution fell short of £90,000. The Defendants maintain that the Plaintiff's practice yielded less than £60,000 so that they demanded, and claimed to be entitled to, a repayment of £30,000. The first proceedings between the parties were High Court proceedings in which the present Defendants were Plaintiffs and the present Plaintiff was Defendant. These proceedings were issued on the 23rd of February 1984 and in them the present Defendants claimed payment of the said sum of £30,000.

9 The next set of proceedings were issued on the 24th of September 1984 and in them the present Defendants and others were Plaintiffs and the present Plaintiff was Defendant. In these proceedings the present Defendants claimed a declaration that the...