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Carlen v Drury (1812) 35 ER 61

Carlen v Drury (1812) 35 ER 61


Citation:Carlen v Drury (1812) 35 ER 61

Link to case on WorldLII.

Rule of thumb 1:If a person has been accused of gross misconduct, can they be removed from a business partnership? Yes, gross misconduct can lead to a partner being removed from the business partnership in some instances.

Rule of thumb 2:If a person has a contract stating that alternative dispute resolution is to be followed, can the other party go straight to Court? No, where there is an alternative dispute resolution which has not been followed, the Court is forbidden from adjudicating.

Judgment:

The basic facts of this case were that under the Articles of Association the process was that the managers were to be selected by a vote, but, if any manager was believed to be guilty of gross misconduct, and a process was followed as stipulated under the Articles of Association to have this declared, then an application could be made to have the partnership formally dissolved by law. A declaration of gross misconduct and interdict was sought from the Court due to the alleged misconduct. The Court held that where there was a clause requiring certain alternative dispute resolution mechanisms to be followed, then these had to be followed or the Court did not have authority to intervene in the dispute. The Court emphasised that before any partnership could be dissolved the process under the Articles must be dissolved, although the exception was if one of the partners engaged in crime and this was the reason for the motion being sought.

Ratio-decidendi:

Lord Eldon, ‘I agree with what has been urged for the Plaintiffs, that, if the Means of Redress, provided by the Parties themselves in the Articles, are not effectual, this Court will interfere... If however, a Case of Delinquency should be clearly made out, I do not hesitate to declare, the Court would act: but there must be a positive Necessity for the Interference of the Court, arising from the Refusal or Neglect of the Committee to act. That may raise a Case for prompt and immediate Interference; which I cannot say exists at present.... but, confining myself to the Object of the present Motion, I think I cannot now interfere: the Plaintiffs having a Remedy in their own Hands, to which they have not resorted: desiring to be understood, not to repudiate the Jurisdiction; but that I will not interfere, before the Parties have tried that Jurisdiction, which the Articles have themselves provided...’

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Warning: This is not professional legal advice. This is not professional legal education advice. Please obtain professional guidance before embarking on any legal course of action. This is just an interpretation of a Judgment by persons of legal insight & varying levels of legal specialism, experience & expertise. Please read the Judgment yourself and form your own interpretation of it with professional assistance.