Old v McInnes and Hodgkinson [2011] NSWCA 410

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Old v McInnes and Hodgkinson [2011] NSWCA 410 Hearing dates: 1 and 2 November 2011 Decision date: 22 December 2011 Before: Beazley JA at [1] Giles JA at [42] Meagher JA at [43] Decision: In appeal No. 184482 of 2004: (1) Order that the appeal be dismissed. (2) Grant leave to the first respondent to cross-appeal from Order 2 made on 10 December 2010. (3) Order that the cross-appeal be allowed. (4) Order that Order 2 made by Young JA on 10 December 2010 be set aside. (5) Order that the cross-respondent pay the first respondent's costs of the proceedings in the Court below. (6) Order that the appellant pay the first respondent's costs of the appeal and cross-appeal. (7) Order that there be no order as to the costs of the second respondent of the appeal and cross appeal. In appeal No. 187484 of 2004: (1) Order that the appeal be allowed in part. (2) Order that Order 4(a) made by Young JA on 10 December 2010 be varied by amending the statement of account marked "A" in the column headed "Final Amount" by deleting the amount of $47,644 in respect of Mr McInnes and Mr Hodgkinson and the amount of -$95,288 in respect of Mr Old. (3) Order that Orders 4(c) to (f) made by Young JA on 10 December 2010 be varied to read as follows: (c)declares that the parties' entitlements to those funds are as follows: (i) Hugh Rudyard Hodgkinson: $104,432 (ii) Fraser Patison Old: $83,933 (iii) Kenneth John McInnes: $130,014 (d)declares that on the balance of the partnership's accounts, excluding interest: (i) Fraser Patison Old owes Kenneth John McInnes $22,193; (ii) Hugh Rudyard Hodgkinson owes Kenneth John McInnes $1,694; (e)declares that Fraser Patison Old is liable to pay interest up to judgment on 10 December 2010 pursuant to s 100 of the Civil Procedure Act as follows: (i) to Hugh Rudyard Hodgkinson from 1 July 2004: $20,948 (ii) to Kenneth John McInnes from 1 July 2004: $20,948 (f)the Court gives judgment: (i) for Hugh Rudyard Hodgkinson against Fraser Patison Old for $20,148; (ii) for Kenneth John McInnes against Fraser Patison Old for $43,141; (iii) for Kenneth John McInnes against Hugh Rudyard Hodgkinson for $1,694. (4) Grant leave to the respondents to cross-appeal from Order 5 made by Young JA on 10 December 2010 (5) Order that the cross-appeal be dismissed. (6) Order that there be no order as to the costs of the appeal and that the respondents pay the appellant's costs of the cross-appeal. (7) Grant liberty to the parties to apply to the Registrar within seven days of the date of these orders to vary Orders 2 or 3 above if they do not give effect to the decision in this appeal [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: PARTNERSHIP - dissolution - former partners continuing to trade but as two separate firms - one firm making use of sources of goodwill of former partnership - distinction between goodwill and sources of goodwill - breach of fiduciary duty - removing and retaining files - whether equitable compensation include amount for reduction in value of goodwill CONTRACT - whether binding agreement for payment by incoming partner for share of goodwill COSTS - exercise of discretion - whether costs of partnership dissolution proceedings should be borne equally by partners - whether offers of compromise comply with UCPR r 20.6(2) Legislation Cited: Civil Procedure Act 2005 (NSW), ss 14, 56, 98 Uniform Civil Procedure Rules 2005 (NSW), rr 20.26, 42.1, 42.13, 42.13A, 42.15A Cases Cited: Bellevarde Constructions Pty Ltd v CPC Energy Pty Ltd [2008] NSWCA 228 at [51] Brambles Holdings Ltd v Bathurst City Council [2001] NSWCA 61; (2001) 53 NSWLR 153 Branir Pty Ltd v Owston Nominees (No. 2) Pty Ltd [2001] FCA 1833; (2002) 117 FCR 424 Calderbank v Calderbank (1975) 3 WLR 586 Clifton v Palumbo [1944] 2 All ER 497 Commonwealth of Australia v Gretton [2008] NSWCA 117 Computer Machinery Co Ltd v Drescher [1983] 1 WLR 1379; [1983] 3 All ER 153 Dean v Stockland Property Management Pty Ltd & Anor (No. 2) [2010] NSWCA 141 Elite Protective Personnel Pty Ltd v Salmon [2007] NSWCA 373 Federal Commissioner of Taxation v Murry [1998] HCA 42; (1998) 193 CLR 605 Geraghty v Minter (1979) 142 CLR 177 Hamer v Giles (1879) 11 Ch D 942 at 944 Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Australia) Pty Ltd (1988) 5 BPR 11,110 Jones v Bradley (No 2) [2003] NSWCA 258 Leichhardt Municipal Council v Green [2004] NSWCA 341 Life Insurance Co of Australia Ltd v Phillips (1925) 36 CLR 60 Meekin Enterprises v Gersbach (McClelland CJ in Eq, 6 August 1997) Monie v Commonwealth of Australia (No 2) [2008] NSWCA 15 Nine Network Pty Ltd v Kennedy Miller Television Pty Ltd [1994] NSWCA 235 O'Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 275 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 Robb v Allcock (1978) 2 BPR 9630 SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 South Eastern Sydney Area Health Service v King [2006] NSWCA 2 Target Holdings Ltd v Redferns [1996] AC 421 Thorby v Goldberg (1964) 112 CLR 597 Tonelli v Komirra Pty Ltd [1972] VR 737 Trustee for the Salvation Army (NSW) Property Trust & Anor v Becker (No. 2) [2007] NSWCA 194 Walker v Martin (23 December 1993 - BC 9300519) Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15; (2003) 212 CLR 484 Category: Principal judgment Parties: In each appeal: Fraser Patison Old (Appellant/Cross Respondent) Kenneth John McInnes (First Respondent/First Cross Appellant) Hugh Rudyard Hodgkinson (Second Respondent/Second Cross Appellant) Representation: Counsel: S.R. Donaldson SC, R.D. Marshall, B.A. Arste (Appellant/Cross Respondent) G. Inatey SC, M. Condon (Respondents/Cross Appellants) Solicitors: Horowitz & Bilinsky (Appellant/Cross Respondent) Griffith Nicholson Lawyers (Respondents/Cross Appellants) File Number(s): CA 2004/184482 CA 2004/187484 Decision under appeal Citation: Old v Hodgkinson; Old v McInnes [2008] NSWSC 697 Old v Hodgkinson; Old v McInnes [2009] NSWSC 1160 Old v Hodgkinson; Old v McInnes [2010] NSWSC 1335 Old v Hodgkinson Before: Young CJ in Eq/Young JA File Number(s): SC 2004/1063 SC 2004/4064