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HWL Ebsworth to look at ‘puzzling’ discovery in IPO stoush with former partner
A court ordered HWL Ebsworth to take another look at its “puzzling” discovery material as a former disgruntled capital partner who alleges he was cut out of the abandoned IPO float ramps up his legal fight.
Gregory Lewis has told the NSW Supreme Court it was “not plausible” his former firm and managing partner Juan Martinez disclosed all material related to his expulsion in mid-August 2020 following a dispute about his entitlements in the then-potential ASX listing.
Mr Lewis suggested the firm holds documents “it is likely to have concealed or at the very least that it is implausible that there are no such documents” created by the firm from 26 July 2020 up until he was notified of a vote for his expulsion on 13 August.
Justice Michael Slattery said HWL Ebsworth’s contentions that all possible searches had been conducted “are not persuasive”.
“In ordinary business and professional practice, it would be surprising if other documents were not created between 26 July 2020 and 13 August 2020,” Justice Slattery said in his judgment late this week.
“The uncontested facts and already discovered documents raise many questions to the reasonable observer about documents that it would reasonably be expected as having been generated between Mr Martinez and the management team prior to August 13.”
Justice Slattery ordered the firm either swear an affidavit confirming the accuracy of the present list of documents within 21 days or to use that time to “thoroughly check and revise the present list”.
Mr Lewis was party to the partnership deed prior to his expulsion and was one of 182 capital partners in the firm at the time.
He alleged HWL Ebsworth’s capital partners breached the deed and the Partnership Act 1958 by passing a resolution to expel him, which he claims was “null and void and of no legal effect”.
Further to this, Mr Lewis alleged he was denied the opportunity to participate in the initial public offering (IPO) float and has sought relief requiring the capital partners to buy him out, valued at around $4.4 million.
In support of his submission that HWL Ebsworth had additional documents, Mr Lewis set out a timeline of conversations between himself and Mr Martinez from 26 July. HWL Ebsworth will contest this.
In the first, Mr Martinez informed the capital partners about the proposal to transfer the firm’s practice to a corporate entity.
Between then and 2 August, Mr Lewis made a case for an increase in his calibration points and “clearly assumes” he would be participating in the IPO, “at no less than the level of his existing calibration points”.
On the afternoon of 5 August, Mr Lewis said he received an email from Mr Martinez that “caused him great shock and distress”.
In it, Mr Martinez informed Mr Lewis he was not proposed to be a participant “given his contribution, performance and overdrawing”.
By the time an email was shared with partners on 11 August about the proposed IPO, Mr Lewis said he learnt he had been made a fixed draw partner, rather than a capital partner, without his consent. He said senior partners voted for the IPO on the belief he consented to this.
On 13 August, the court heard the exchanges between Mr Lewis and Mr Martinez allegedly “changed gear from the prior diplomatic correspondence to something frostier”.
In the “watershed” email, Mr Martinez asked Mr Lewis if his intention was to continue with the “agitation” of the IPO issue and, if it was, he would “need to take a different approach to that which I intended, which was to engage in a sensible discussion about a path forward”.
Mr Lewis told the court he took this as a “veiled threat”, and the same day, he received a seven-day notice about the vote to expel him.
In considering the likelihood of additional documents, Justice Slattery said Mr Lewis was “treated differently” than other capital partners, so it then “stands to reason that the grounds for treating him differently must have been the subject of some decision-making process”.
“And the complexity of the relevant considerations for the management team to treating Mr Lewis differently imply that members of the HWLE management team probably generated some documents, individually or collectively, reflecting the way they worked through those considerations,” Justice Slattery said.
Naomi Neilson
Naomi Neilson is a senior journalist with a focus on court reporting for Lawyers Weekly.
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