Nutech Wall & Ceiling Systems v VMF Holdings (NSW) [2008] NSWSC 980

New South Wales Supreme Court

CITATION : Nutech Wall & Ceiling Systems v VMF Holdings (NSW) [2008] NSWSC 980

HEARING DATE(S) : 2 September 2008; 12 September 2008

JUDGMENT DATE : 19 September 2008

JURISDICTION : Equity

JUDGMENT OF : White J

DECISION : Counsel for the defendants to bring in short minutes of order in accordance with reasons.

CATCHWORDS : JOINT VENTURE - expert to determine profit or loss of joint venture - date for striking accounts - profit or loss to be determined at the time of completion of the projects not the date of termination of the joint venture - whether referee's report should be adopted in part and conclusion drawn as to alleged profit of joint venture on basis of materials before referee - question referred back - no question of principle.

LEGISLATION CITED : Partnership Act 1892 (NSW)

CASES CITED : Beale v Trinkler [2007] NSWSC 1058 ACE Project Group Pty Ltd v Ginger Development Enterprises Pty Ltd [2006] NSWSC 962

Nutech Wall & Ceiling Systems Pty Ltd PARTIES : v VMF Holdings (NSW) Pty Ltd & 6 Ors

FILE NUMBER(S) : SC 2904/02

COUNSEL : Plaintiff: A Ogborne 4th-7th Defendants: N Cotman SC and I Griscti

SOLICITORS : Plaintiff: Miller Noyce 4th-7th Defendants: Dennis & Company Solicitors

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

WHITE J

Friday, 19 September 2008

2904/02 Nutech Wall & Ceiling Systems Pty Ltd v VMF Holdings (NSW) Pty Ltd & 6 Ors JUDGMENT 1 HIS HONOUR: On 4 December 2007, Mr Andrew Ross of Ferrier Hodgson was appointed as a referee to inquire into and report on the question of what was the profit and loss of the joint venture alleged in paras 29 and 31 of the plaintiff's amended statement of claim. Whilst there is a dispute as to the identity of the parties to the joint venture, it is common ground that a joint venture was entered into. It is also common ground that the joint venture commenced on 1 April 2001. It is also common ground that various projects were completed, or commenced, or obtained, pursuant to the joint venture. The plaintiff alleges that the defendants repudiated the joint venture agreement and that it accepted that repudiation by notice of termination of 9 April 2002. Whilst the defendants deny that the joint venture agreement was repudiated, it is common ground that the joint venture agreement was terminated on 9 April 2002. 2 Whilst neither the plaintiff nor the defendants plead that the joint venture amounted to a partnership, it is common ground that the parties to the joint venture, whoever they might be, were to make their particular contributions to the joint venture. It is also common ground that the profits of the joint venture were to be shared equally between whomever were the parties to it. So far as appears from the pleadings, the joint venture has all the hallmarks of a partnership. 3 Mr Ross provided his report on 1 May 2008. A central issue he had to decide was whether the profit or loss of the joint venture should be determined as at 9 April 2002 when the joint venture was terminated, or whether the profit or loss should be struck after completion of the projects which were the subject of the joint venture. The plaintiffs contended for the former position. They contended that the profit or loss of the joint venture should be struck as at 9 April 2002 without regard to the ultimate profit or loss of the projects which had been entered into prior to the termination of the joint venture. The defendants contended to the contrary. The referee accepted the plaintiff's submission. One of the assumptions he made in his report was that the joint venture between the parties ended on 9 April 2002. He said that if that assumption should change then his report might also. 4 The fourth to seventh defendants filed a notice of motion on 18 June 2008 seeking an order that the issue of adoption of the referee's report not be determined until after determination of the question whether the proper time for striking final accounts for the joint venture was as at 9 April 2002. The fourth to seventh defendants sought an order that the report ought not be adopted insofar as it accounted for the results of the joint venture on the basis that it did not include the profit and loss of all of the contracts the subject of the joint venture up to their completion. Those defendants sought an order that a further question be referred to the referee for determination, namely, what was the profit or loss of the joint venture on the assumption that the income and expenses of the joint venture projects after 9 April 2002 until the completion of the projects contracted as at 9 April 2002 were to be taken into account in determining the profit or loss of the joint venture. 5 By notice of motion filed on 23 June 2008, the plaintiff sought an order that the Court adopt the referee's report, save in certain respects relating to a particular project with whose treatment the plaintiffs disagreed. The plaintiff's position was that the referee was correct in striking the profit of the joint venture as at 9 April 2002 without regard to the ultimate profits or losses on the projects which formed part of the joint venture as at that date. 6 However, on the hearing of the notices of motion, the plaintiff accepted that the accounting should be made on the basis of a winding-up of the joint venture, that is, having regard to the profits and losses of each of the projects which were joint venture projects. 7 This concession was well based. Even if the joint venture were not a partnership, the principles in relation to the dissolution of partnerships would be applicable by analogy. Section 38 of the Partnership Act 1892 (NSW) provides: " 38 Continuing authority of partners for purposes of winding-up After the dissolution of a partnership the authority of each partner to bind the firm, and the other rights and obligations of the partners continue, notwithstanding the dissolution, so far as may be necessary to wind up the affairs of the partnership, and to complete transactions begun but unfinished at the time of the dissolution, but not otherwise. " 8 In Beale v Trinkler [2007] NSWSC 1058, Brereton J said (at [11]-[12]): " [11] ... between dissolution of a partnership (whether by notice or otherwise) and its winding up, neither partner is entitled to appropriate for his or her own use the assets of the partnership, at least without the consent of the other. If one partner is permitted to carry on the partnership business pending winding up, he or she does so as quasi-receiver or trustee for the partners, according to their ultimate entitlements as may be determined upon the taking of accounts.