ROY v MADDOCKS and ANOR [1997] NSWCA 269

ROY v MADDOCKS and ANOR

SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL

HANDLEY, POWELL and COLE JJA 28 February 1997, 28 February 1997

[1997] NSWCA 269

PARTNERSHIP — interests of partners — ordering of accounts — requirement for certainty

Two brothers, John and Leslie, had been in business as partners since 1926. The partnership business began to be scaled down after 1971. The assets of the partnership included two houses in Croydon, one in the joint names of the partners, the other in Leslie's name. Early in 1987 the latter was sold by the partners. Later that year Leslie applied for orders under s66 G of the Conveyancing Act for sale of the property held in joint names. Neither party sought the winding up of the partnership or the taking of the partnership accounts. In 1991 Bryson J made orders under s66 G. John and his wife borrowed money in 1989 on the security of their own home to pay off a mortgage on the jointly owned property, and in 1991 they commenced proceedings to enforce a charge over that property. In 1992 Hodgson J declared a charge in favour of John's wife for the amount paid to discharge the mortgage but without further interest. John then commenced proceedings seeking a declaration that a property purchased by Leslie in 1987 was an asset of the partnership, or the subject of a constructive trust in his favour, and for the taking of the partnership accounts. The proceedings were dismissed by Hulme J. On appeal it was common ground that it would be futile to order the taking of the partnership accounts.

HELD, dismissing the appeal: (1) A partner has a beneficial interest in all assets of the partnership, which consists of an entitlement to a proportion of the monetary surplus created when the assets are realised and the debts and other liabilities discharged. The share of each partner can only be determined when the liquidation of the partnership has been completed and accounts have been taken. (2) Any difference between the assets taken from or contributed to the partnership by each partner will be reflected in their shares in the partnership. Partnership accounts are required to calculate these entitlements. (3) Although prima facie Leslie had finished up with more assets than John, the Court could not act on a prima facie view of the case. The only way to ascertain the shares of the partners was by taking the partnership accounts. (4) Neither party sought partnership accounts but the Court could grant no other relief.