In the matter of Michelle Esther Harpur [2011] NSWSC 389

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Michelle Esther Harpur [2011] NSWSC 389 Hearing dates: 13 April 2011 Decision date: 13 April 2011 Jurisdiction: Equity Division Before: Ball J Decision: See paragraph 5 of the judgment Catchwords: PARTNERSHIP - receivership - winding down - payment of receiver - whether sum should be retained by receiver to cover contingent liabilities Category: Procedural and other rulings Parties: Michelle Esther Hapur (First Plaintiff) The Partners of Coudert Brothers Australia (Second Plaintiff) Representation: Counsel: S M Golledge (First Plaintiff) M Aitken (Plan Administrator) Solicitors: Blake Dawson (First Plaintiff) Duncan Cotterrill (Plan Administrator) File Number(s): 2006/259053

Judgment 1HIS HONOUR: On 29 September 2006 the court made an order that the partnership of Coudert Brothers Australia be dissolved and that Mr John Maxwell Morgan be appointed receiver of the partnership, in effect to wind down the affairs of the partnership and distribute its property, including the payment of just debts. One of the orders made by the court at that time (order 4L) was an order that the funds retained by the receiver not be reduced below $500,000 and that the receiver should retain those funds until further order on account of any contingent liabilities of the partnership, including any claims of professional negligence. 2Since that time the affairs of the partnership have largely been wound down. The principal step that remains to be taken is for the payment of the receiver's fees and associated costs and the distribution of any surplus. 3On 9 September 2010 Slattery J made an order varying order 4(L), to permit some of the costs of the receivership to be paid out of the $500,000 that was to be retained. The receiver now seeks a further variation to that order. The effect of that order would be to delete the requirement that any amount of the $500,000 be retained. If the order is varied the receiver proposes to pay his own costs and outstanding fees of the receivership and to pay any balance into court. The reason the balance is to be paid into court is that there are competing claims to that balance brought by the plan administrator of Coudert Brothers International, who claims that any surplus arising from the receivership belongs to the plan administrator, and by the equity partners of the Australian partnership, who claim that they are entitled to any surplus. 4In my opinion it is appropriate to vary the order in the way sought by the receiver. I say that for several reasons. First, despite the fact that the partnership was dissolved effectively over five years ago there has been no claim or no indication of a claim against the partnership for professional negligence or any other reason. In those circumstances it appears to be highly unlikely that any claim will be made. Second, the amount that is sought to be distributed from the surplus that the receiver currently holds clearly takes priority over any contingent claim that might exist since the relevant amounts relate to the receivership. Third, there appears to be limited utility to the order in any event. The partners of the Australian firm remain liable to pay any contingent claim that may emerge. Theoretically, there is a possibility a claim could emerge at any time, and that more than one claim could emerge. Having regard to these matters it seems to me there is limited utility in retaining what remains of the $500,000. Fourth, the consequence of the existing order is that it is not possible for the receivership to be brought to an end, with the result that what money remains is likely to be dissipated over time. In my opinion it is in no one's interest for that to happen. 5For those reasons I am prepared to make the orders sought by the receiver.