Segal v Sharma [2020] NSWCA 314

Segal v Sharma [2020] NSWCA 314

Clause 3.9 recorded a funding arrangement between the three doctor principals about how losses would be paid for between them in accordance with ownership proportions, but it did not contain a personal promise by Dr Sharma or the unitholders to pay SWR, nor did it operate as a guarantee or indemnity for the trustee. Accordingly Dr Sharma was not liable to SWR for a 40% share of the Unit Trust's losses, and Dr Segal's cross-claim as assignee failed. In any event, clause 3.9 would have referred to audited financial accounts, providing an additional reason to dismiss the appeal.

Jurisdiction
Australia
Judgment Date
09 December 2020
Procedural Posture
Appeal Concerning Construction and Interpretation of Contractual Provisions Governing Profits and Losses of a Radiology Practice Conducted Through a Unit Trust / Appeal From the District Court of New South Wales, [2020] NSWDC 121, Decided 22 April 2020 by Russell SC DCJ
Outcome
Appeal dismissed.
Legal Topics
['construction and Interpretation of Contract' 'unit Trust' 'profit and Loss Sharing' 'liability for Trust Losses' 'audited Financial Accounts' 'agreed Determination of Commercial Arrangements']
['contracts' 'trusts'] ['construction and Interpretation of Contract' 'unit Trust' 'profit and Loss Sharing' 'liability for Trust Losses' 'audited Financial Accounts' 'agreed Determination of Commercial Arrangements']

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Procedural Posture

Appeal Concerning Construction and Interpretation of Contractual Provisions Governing Profits and Losses of a Radiology Practice Conducted Through a Unit Trust / Appeal From the District Court of New South Wales, [2020] NSWDC 121, Decided 22 April 2020 by Russell SC DCJ

Legal Issues

  1. 1 ['Whether Dr Sharma was liable under clause 3.9 of the Deed of Agreement to pay SWR a 40% share of the losses of the SWR Unit Trust' 'If Dr Sharma was liable under clause 3.9, whether clause 3.9 only applied to losses based on audited financial accounts of the SWR Unit Trust' 'If Dr Sharma was liable under clause 3.9, whether clause 3.9 ceased to apply to losses once there had been an agreed determination under clause 5.9.5 of the Deed of Agreement']

Ratio Decidendi

Clause 3.9 recorded a funding arrangement between the three doctor principals about how losses would be paid for between them in accordance with ownership proportions, but it did not contain a personal promise by Dr Sharma or the unitholders to pay SWR, nor did it operate as a guarantee or indemnity for the trustee. Accordingly Dr Sharma was not liable to SWR for a 40% share of the Unit Trust's losses, and Dr Segal's cross-claim as assignee failed. In any event, clause 3.9 would have referred to audited financial accounts, providing an additional reason to dismiss the appeal.

Court Disposition

Appeal dismissed.

Orders

  • ['Appeal dismissed.' "Appellants pay the first respondent's costs of the appeal."]