Ryder v Frohlich [2006] NSWSC 833

Ryder v Frohlich [2006] NSWSC 833

As at 2 March 2001, the partnership’s primary asset (the right of the partners to manage the Diversified Fund on behalf of Coastal and share net profits) ceased to exist when Mr. Ryder left; the business could not legally or practically continue. There was no market or buyer for the business, and valuation evidence on behalf of Mr. Frohlich (preferred over that for Mr. Ryder) demonstrated the business was worthless at that date. No moneys were owing to Mr. Ryder, and in fact Mr. Ryder owed moneys on the cross-claim, the quantum being agreed.

Parties
First Plaintiff: Nicholas John Ryder; Second Plaintiff: Protected Equity Investments Pty Limited (ACN 086 671 516); First Defendant: Peter Frohlich; Second Defendant: Coastal Capital Limited (ACN 061 336 445)
Jurisdiction
Australia
Judgment Date
18 August 2006
Procedural Posture
Equity Proceedings (partnership) / Determination on Remitter From Court of Appeal as to Value of Partnership Assets and Indebtedness at Dissolution
Outcome
Application dismissed as to value in favour of plaintiff; cross-claim by Mr. Frohlich succeeds; declaration of indebtedness made; costs and final orders referred to Court of Appeal.
Legal Topics
Valuation of Partnership Assets, Goodwill, Partnership Dissolution, Indebtedness Between Partners
Partnership Law Equity Valuation of Partnership Assets Goodwill Partnership Dissolution Indebtedness Between Partners

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Parties

Nicholas John Ryder

First Plaintiff

Protected Equity Investments Pty Limited (ACN 086 671 516)

Second Plaintiff

Peter Frohlich

First Defendant

Coastal Capital Limited (ACN 061 336 445)

Second Defendant

Procedural Posture

Equity Proceedings (partnership) / Determination on Remitter From Court of Appeal as to Value of Partnership Assets and Indebtedness at Dissolution

Legal Issues

  1. 1 What was the nature and value of the partnership assets as at 2 March 2001?
  2. 2 Were any moneys owing to Mr. Ryder referable to the value of the partnership business as at 2 March 2001?
  3. 3 Is Mr. Ryder indebted to Mr. Frohlich as alleged in the cross-claim?

Ratio Decidendi

As at 2 March 2001, the partnership’s primary asset (the right of the partners to manage the Diversified Fund on behalf of Coastal and share net profits) ceased to exist when Mr. Ryder left; the business could not legally or practically continue. There was no market or buyer for the business, and valuation evidence on behalf of Mr. Frohlich (preferred over that for Mr. Ryder) demonstrated the business was worthless at that date. No moneys were owing to Mr. Ryder, and in fact Mr. Ryder owed moneys on the cross-claim, the quantum being agreed.

Court Disposition

Application dismissed as to value in favour of plaintiff; cross-claim by Mr. Frohlich succeeds; declaration of indebtedness made; costs and final orders referred to Court of Appeal.

Orders

  • As at the date of termination of the partnership (2 March 2001): (i) the partnership had no assets, and the value was nil; (ii) no moneys were owing to Mr. Ryder referrable to the value of the business as at 2 March 2001, and Mr. Ryder owed moneys to Mr. Frohlich.
  • Mr. Ryder is indebted to Mr. Frohlich in the sum of $29,650.