Old v McInnes and Hodgkinson [2011] NSWCA 410

Old v McInnes and Hodgkinson [2011] NSWCA 410

There was no binding and enforceable agreement or contract for Mr McInnes to pay a premium for goodwill when entering the partnership; upon dissolution, the goodwill of the HOM partnership ceased, and Mr Hodgkinson and Mr McInnes did not appropriate the former partnership's goodwill by continuing business—only sources of that goodwill/assets were transferred; equitable compensation for Mr Old's breach of fiduciary duty in taking client files should not reflect loss of goodwill, as none remained after dissolution; the primary judge's costs orders miscarried as to the premium proceedings and were otherwise properly discretionary in the partnership proceedings, subject to no effective...

Parties
Appellant/cross Respondent: Fraser Patison Old; First Respondent/first Cross Appellant: Kenneth John McInnes; Second Respondent/second Cross Appellant: Hugh Rudyard Hodgkinson
Jurisdiction
Australia
Judgment Date
22 December 2011
Procedural Posture
Appeals (two Combined) From Decisions in Partnership and Contract Disputes / Court of Appeal, Determination of Appeals and Cross Appeals From Supreme Court (equity/trial Division)
Outcome
Appeal in No. 184482 of 2004 dismissed; cross-appeal allowed. Appeal in No. 187484 of 2004 allowed in part; cross-appeal dismissed; orders in the terms set out in the judgment (including costs and account variations).
Legal Topics
Partnership Dissolution, Goodwill, Breach of Fiduciary Duty, Contracts for Payment for Goodwill, Equitable Compensation, Costs — Offers of Compromise/calderbank Offers
Partnership Equity Contract Civil Procedure Costs Partnership Dissolution Goodwill Breach of Fiduciary Duty +3 more

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Parties

Fraser Patison Old

Appellant/cross Respondent

Kenneth John McInnes

First Respondent/first Cross Appellant

Hugh Rudyard Hodgkinson

Second Respondent/second Cross Appellant

Procedural Posture

Appeals (two Combined) From Decisions in Partnership and Contract Disputes / Court of Appeal, Determination of Appeals and Cross Appeals From Supreme Court (equity/trial Division)

Legal Issues

  1. 1 Whether there was a binding agreement for payment by incoming partner for share of goodwill (premium proceedings)
  2. 2 Whether, upon dissolution, one firm appropriated goodwill or sources of goodwill of the former partnership and whether equitable compensation should reflect reduction in value of goodwill
  3. 3 Whether costs orders below miscarried in respect of both the premium and partnership proceedings (including effect of offers of compromise and alleged Calderbank offers)

Ratio Decidendi

There was no binding and enforceable agreement or contract for Mr McInnes to pay a premium for goodwill when entering the partnership; upon dissolution, the goodwill of the HOM partnership ceased, and Mr Hodgkinson and Mr McInnes did not appropriate the former partnership's goodwill by continuing business—only sources of that goodwill/assets were transferred; equitable compensation for Mr Old's breach of fiduciary duty in taking client files should not reflect loss of goodwill, as none remained after dissolution; the primary judge's costs orders miscarried as to the premium proceedings and were otherwise properly discretionary in the partnership proceedings, subject to no effective...

Court Disposition

Appeal in No. 184482 of 2004 dismissed; cross-appeal allowed. Appeal in No. 187484 of 2004 allowed in part; cross-appeal dismissed; orders in the terms set out in the judgment (including costs and account variations).

Orders

  • In CA 2004/184482: (1) Appeal dismissed. (2) Leave to cross-appeal (McInnes) granted. (3) Cross-appeal (as to costs) allowed. (4) Costs order of Young JA set aside. (5) Old to pay McInnes' costs below. (6) Old to pay McInnes' costs of appeal and cross-appeal. (7) No order as to costs for Hodgkinson.
  • In CA 2004/187484: (1) Appeal allowed in part. (2) Orders varied: amounts $47,644 (McInnes & Hodgkinson) and -$95,288 (Old) deleted from statement of account; new entitlements declared: Hodgkinson $104,432, Old $83,933, McInnes $130,014. (3) Debts and interest adjusted as specified in judgment. (4) Leave to...