Hardev Singh Purewall+kirpal Kau Purewall+belhar Singh Sanghera+surinder Kaur Sanghera V. Gurbar Kaur Purewall
| Jurisdiction | Scotland |
| Judge | Lord Drummond Young |
| Neutral Citation | [2008] CSOH 147 |
| Court | Court of Session |
| Docket Number | CA37/05 |
| Published date | 21 October 2008 |
| Date | 21 October 2008 |
| Year | 2008 |
| OUTER HOUSE, COURT OF SESSION [2008] CSOH 147 | |
| CA37/05 | OPINION OF LORD DRUMMOND YOUNG in the cause (FIRST) HARDEV SINGH PUREWALL; (SECOND) KIRPAL KAUR PUREWALL; (THIRD) BELHAR SINGH SANGHERA; (FOURTH) SURINDER KAUR SANGHERA Pursuers; against GURBAX KAUR PUREWALL Defender: ________________ |
Pursuers: Davies; Archibald Campbell & Harley W. S.
Defenders: Munro; Brodies LLP
21 October 2008
[1] Prior to 30 November 2003 the parties, together with the defender's late husband, Jaipul Purewall, carried on business in partnership as restaurateurs under the name of Himalaya Tandoori. Their relationship was governed by a contract of partnership dated 4 January 1991 and registered in the Books of Council and Session on 14 January 1991. The defender's late husband died in 2002, and on 22 April 2003 the pursuers served a notice of dissolution of partnership, as permitted by the partnership contract. It is a matter of agreement that the effect of that notice was to dissolve the partnership as at 30 November 2003. Thereafter the defender intimated that she intended to carry on the business of the partnership on her own account, and she has subsequently done so.
[2] Following the dissolution of the partnership, certain provisions of the contract of partnership came into operation. Clause Tenth applies in the event of dissolution of the partnership by notice; that clause provides that, if the parties to whom such notice is given intend to continue the partnership business, a balance sheet is to be made up as at the date of dissolution in terms of clauses Fifth and Ninth (b) in order to show the sum standing at the credit or debit of the retiring partner. If that sum is a credit, clause Tenth (One) states that it should be paid to the retiring partner in accordance with the terms of clause Ninth as if he or she had died at the date of dissolution. Clause Ninth applies "In the event of the determination or dissolution of the partnership" on various bases, including death and permanent incapacity; the effect of clause Tenth (One) is that clause Ninth applies as if the retiring partner or partners had died. So far as material, Ninth (b) is in the following terms:
"A Balance Sheet shall be made up in terms of Clause Fifth hereof (and in which no value shall be placed on the goodwill of the business) as at the date of dissolution.... The sum at credit of the outgoing Partner shall be ascertained from such Balance Sheet and paid by the surviving or continuing Partners to the outgoing Partner... by six equal half yearly instalments commencing six months after the date of determination with interest (in the event of dissolution by permanent incapacity or death but not otherwise) also payable half yearly on the same date [at the Clydesdale Bank's] Base Lending Rate for the time being on the amount from time to time outstanding, with power to the surviving or continuing Partners to anticipate payment of all or any of said instalments with corresponding reduction of interest".
Clause Fifth (a) provides that a balance sheet and relative profit and loss account are to be made up on 31 May in each year by the partnership accountants and that, when these have been signed and docquetted, the balance sheet will fix conclusively the sum at credit or debit of each partner. Clause Fifth (b) makes provision for approval of the balance sheet and profit and loss account prepared by the accountants. If the balance sheet and profit and loss account remain unsigned one month after they have been submitted to a partner they are held to have been approved by him or her unless written objections have been stated by the partner within that period. Thereafter, failing agreement among the partners, any such objections are to be referred to arbitration under clause Thirteenth, and the decision of the arbiter on the objections is to be binding as among the partners.
[3] After dissolution of the partnership, the partnership accountant prepared a draft balance sheet as at 30 November 2003, the date of dissolution, and relative profit and loss account. An amended version of the draft balance sheet and accounts was issued on 8 March 2005. On 4 April 2005 the defender wrote to the partnership accountant indicating that she wished to challenge certain aspects of the draft accounts. The pursuers disputed that her challenge was a valid objection in terms of clause Fifth of the contract of partnership, and claimed that draft balance sheet and accounts had become final. They accordingly raised the present action for payment of the sums that were shown by the draft balance sheet as due to them. In her defences the defender contended that she had validly objected to the accounts in terms of clause Fifth (b) of the contract of partnership and that her objections should be referred to arbitration. Following a debate, I decided that the defender had validly objected to the balance sheet and accounts. Consequently by interlocutor dated 5 December 2006 I sisted the action to permit arbitration to take place. The arbiter heard parties at a proof before answer, and by note dated 3 March 2008 he rejected the defender's objections to the accounts. On 27 March 2008 he issued a final order which held that the final balance sheet as at 30 November 2003 as prepared by the partnership accountants was correct and final. The result of the arbiter's decision is that the pursuers' individual capital accounts as shown on the balance sheet as at 30 November 2003 are as follows:
| First pursuer | £334,320 |
| Second pursuer | £268,375 |
| Third pursuer | £338,596 |
| Fourth pursuer | £268,051 |
[4] The pursuers now conclude for payment of those sums together with certain amounts by way of interest. They aver that under clause Ninth (b) of the contract of partnership the sums due to them fell to be paid by six instalments, starting six months after dissolution of the partnership. Thus the first instalment was payable on 30 May 2004 and further instalments were payable every six months thereafter until 30 November 2006. Interest is averred to be due from 30 November 2003, the date of dissolution of the partnership. It is calculated on the basis that under clause Ninth (b) the interest currently due ought to have been paid every six months, and interest is claimed on the interest that is said to be so due. The defender no longer disputes that the sums standing at the pursuers' individual capital accounts will be due by her. She contends, however, that her obligation to pay those sums crystallized only when they were finally determined; and that occurred when they were determined by the arbiter, on 28 March 2008, that being the date when he issued his order and signed the closing balance sheet. Consequently the defender avers that the first instalment of the sum payable to the pursuers will be due for payment on 28 September 2008, six months after the date of the arbiter's determination. Five further instalments will be due thereafter at six-monthly intervals. No interest is currently due, and interest will only be payable in future if an instalment is paid late. Thus the dispute that now exists between the parties relates to two matters: the date when the sums due to the pursuers by the defender are payable, and the interest that is due on those sums. Both matters turn on the construction of clause Ninth (b) of the contract of partnership. It was agreed that the relevant facts were not contentious and that the matters in dispute could be determined by debate.
Submissions
[5] Clause Ninth (b) of the contract of partnership provides that the sum at credit of the outgoing partner is to be paid "by six equal half yearly instalments commencing six months after the date of determination". At debate counsel for the defender submitted that the expression "date of determination" was crucial. That expression, used in clause Ninth (b), had a meaning different from the expression "date of dissolution" used in the same clause. Different expressions were used in the same subparagraph of the clause, and it was reasonable to assume that the difference in wording was deliberate; thus the intention was that two distinct dates were specified. The word "determine" could in some contexts mean bring to an end, but in clause Ninth (b) the word "dissolution" was used to signify the ending of the partnership, and "determination" referred to the...
To continue reading
Request your trial