Ryder & 1 Ors v Frohlich & 1 Ors [2004] NSWCA 472

New South Wales Court of Appeal

CITATION : Ryder & 1 Ors v Frohlich & 1 Ors [2004] NSWCA 472 HEARING DATE(S) : 4 - 5 November 2004 JUDGMENT DATE : 21 December 2004

JUDGMENT OF : Hodgson JA at 1; Ipp JA at 2; McColl JA at 17 DECISION : 1.The appeal should be dismissed, save that order 3 made by the primary judge be set aside and the following order be substituted:; "3.The matter be remitted to the Master to determine:; (a) as at the date of termination of the partnership (being 2 March 2001):; (i) the nature and value of the partnership assets, including the nature of the "right" Mr Ryder and Mr Frohlich had to manage the Diversified Fund and whether it had a goodwill value which survived the dissolution of the partnership (but not including any other interest in the Diversified Fund); (ii) whether monies were owing to Mr Ryder referable to the value of the business as at 2 March 2001 and whether Mr Ryder owed monies to Mr Frohlich - being those referred to in Mr Frohlich's cross-claim; (b) whether, in the light of the identification of the partnership assets and their use, if any, after 2 March 2001, Mr Ryder is entitled to a share of profits pursuant to s 42 of the Partnership Act 1892 (NSW) and, if so, to determine the amount of that share; (c) in the light of the findings made, the respective indebtedness of Mr Ryder and Mr Frohlich."; 2. The appellants to pay 80% of the costs of the appeal.

CATCHWORDS : CONTRACT - PARTNERSHIPS - Agreement between first appellant and first respondent to establish hedge investment fund - identity of partners - TERMINATION - term of partnership agreement that each partner would contribute equally in terms of time and effort - first respondent left partnership to take up full-time employment - whether partnership agreement terminated - whether first respondent accepted first appellant's repudiation - principles concerning repudiation and partnerships - Abandonment - whether partnership agreement abandoned - Conduct of trial - terms of referral to Master - Estoppel - whether appellants estopped from asserting any share in the business or profits after the termination date. (D) Corporations Law s 9, s 88, s 601FA LEGISLATION CITED : Partnership Act 1890 (Imp) s 35(d) Partnership Act 1892 (NSW) s 26, s 30, s 32, s 35, s 42 Carter, J.W. Breach of Contract (The Law Book Company Limited, 2nd Ed, 1991) Carter and Harland, Contract Law in Australia (Butterworths, 4th Ed) Chitty on Contracts (Sweet & Maxwell, 28th Ed) Lindley & Banks on Partnership (Sweet & Maxwell, 17th Ed, 1995) Peden, Elisabeth & J.W. Carter, The Bonds of Partnership, (2000) 16 Journal of Contract Law at 277-281 Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 Australian Energy Limited v Lennard Oil NL (No 2) [1988] 2 Qd R 230 Barclay's Bank Trust Co Limited v Bluff [1982] 1 Ch 172 Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd's Rep 446 Blacktown Concrete Services Pty Limited v Ultra Refurbishing & Construction Pty Limited (In Liq) (1998) 43 NSWLR 484 Chandroutie v Gajadhar [1987] 1 AC 147 Chilean Nitrate Sales v Pansuiza Compania de Navegacion SA (The Hermosa) & Marine Transportation Co [1982] 1 Lloyd's Rep 570 CIC Insurance Limited v Bankstown Football Club Limited (1995) 8 ANZ Ins Cas 61-232 Cutts v Holland [1965] Tas SR 69 Darlington Futures Limited v Delco Australia Pty Limited [1986] HCA 82; (1986) 161 CLR 500 D T R Nominees Pty Limited v Mona Homes Pty Limited [1978] HCA 12; (1978) 138 CLR 423 Equuscorp Pty Limited v Glengallan Investments Pty Limited [2004] HCA 55; (2004) 211 ALR 101 Ermogenous v Greek Orthodox Community of SA Inc [2002] HCA 8; (2002) 209 CLR 95 Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420 Foran v Wight [1989] HCA 51; (1989) 168 CLR 385 Freeth v Burr (1874) LR9CP 208 Heyman v Darwins Limited [1942] AC 356 Hitchman v Crouch Butler Savage Associates (1983) 80 LS Gaz 550; (1983) 127 Sol Jo 441b Hochster v De la Tour (1853) 2 El & Bl 678; (1853) 118 ER 922 Holland v Wiltshire [1954] HCA 42; (1954) 90 CLR 409 Hudson Crushed Metals Pty Ltd v Henry [1985] 1 Qd R 202 Hugh Stevenson & Sons Ltd v Aktiengesellschaft fur Cartonnagen-Industrie [1917] 1 KB 842 Hugh Stevenson & Sons Ltd v Aktiengesellschaft fur Cartonnagen-Industrie [1918] AC 239 CASES CITED : Hurst v Bryk [2002] 1 AC 185 In re Ruddock (1879) 5 VLR (IP & M) 51 In the matter of ACN 007 764 249 (in liq) (formerly Adelaide Industrial Equipment); Smith v Deputy Commissioner of Taxation (Full Court of the Federal Court of Australia, 22 November 1996, unreported) Jorgensen v Boyce (1896) 22 VLR 408 Karacominakis v Big Country Developments Pty Limited [2000] NSWCA 313; [2001] ANZ ConvR 513; [2001] ANZ ConvR 577 Lakshmijit v Sherani [1974] AC 605 Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd [1989] HCA 23; (1989) 166 CLR 623 Lombok Pty Limited v Supetina Pty Limited (1987) 14 FCR 226 Lukin v Lovrinov & Anor [1998] SASC 6614 Marminta Pty Limited v French [2003] QCA 541 M'Lure v Ripley (1850) 2 Mac & G 274; (1850) 42 ER 105 Mullins v Laughton [2002] EWHC 2761 (Ch); [2003] Ch 250 Pacific Carriers Limited v BNP Paribas [2004] HCA 35; (2004) 78 ALJR 1045 Palmer v Moore [1900] AC 293 Peter Turnbull & Co Pty Ltd v Mundus Trading Co (Australasia) Pty Ltd [1954] HCA 25; (1954) 90 CLR 235 Photo Productions Limited v Securicor Transport Limited [1980] AC 827 Progressive Mailing House Pty Ltd v Tabali Pty Ltd [1985] HCA 14; (1985) 157 CLR 17 Repatriation Commission v Nation (1995) 57 FCR 25 Ripley v M'Lure (1849) 4 Ex 345; 154 ER 1245 Ross T Smyth & Co Limited v T D Bailey Son & Co [1940] 3 All ER 60 Ryder & Anor v Frohlich & Anor [2004] NSWSC 418 Shevill v Builders Licensing Board [1982] HCA 47; (1982) 149 CLR 620 Summer v The Commonwealth [1918] HCA 33; (1918) 25 CLR 144 Syers v Syers v Paraire (1876) 1 App Cas 174 Thompson v De Lissa (Supreme Court of New South Wales, unreported, 16 February 1990) Toll (FGCT) Pty Limited v Alphapharm Pty Limited [2004] HCA 52 Tropical Traders Limited v Goonan [1964] HCA 20; (1964) 111 CLR 41 Universal Cargo Carriers Corporation v Citati [1957] 2 QB 401 Wallera Pty Limited v CGM Investments Pty Limited [2003] FCAFC 279 Wood Factory Pty Limited v Kiritos Pty Limited (1985) 2 NSWLR 105 Nicholas John Ryder (First Appellant) PARTIES : Protected Equity Investments Pty Limited (ACN 086 671 516) (Second Appellant) Peter Frohlich (First Respondent) Coastal Capital Limited (ACN 061 336 445) (Second Respondent) FILE NUMBER(S) : CA 40476/04 I M Wales SC/M W Young (Appellants) COUNSEL : B W Walker SC/R G McHugh (Respondents) (4 November 2004) R G McHugh/S T Chrysanthou (Respondents) (5 November 2004) SOLICITORS : Grahame Jackson & Associates (Appellants) Speed and Stracey Lawyers Pty Ltd (Respondents)