McKensey v Hewitt [1999] NSWCA 426

McKensey v Hewitt [1999] NSWCA 426

The Deloittes annual fee was payable for the package of benefits under the Deloittes Retirement Agreement, including the Newcastle clients, but those clients were a partnership asset and the annual fee was a partnership liability. The payments were not consideration for personal benefits retained by the appellants, and the respondents, as partners, received the benefit of the asset and bore the burden of the liability in their partnership proportions. Accordingly, the appellants were not obliged to make the disclosure alleged, no breach of fiduciary duty was made out, and the declarations and orders for equitable compensation on the second cross-claim had to be set aside.

Jurisdiction
Australia
Judgment Date
03 December 1999
Procedural Posture
Partnership Dispute Appeal / Appeal to the New South Wales Court of Appeal From Orders of Einstein J in the Supreme Court Equity Division
Outcome
Appeal allowed in part.
Legal Topics
['duty of Good Faith and Disclosure Between Partners' 'breach of Fiduciary Duty' 'equitable Compensation' 'construction of Partnership Related Agreement' 'partnership Assets and Liabilities' 'costs of Cross Claims']
['partnerships' 'equity' 'contract' 'costs'] ['duty of Good Faith and Disclosure Between Partners' 'breach of Fiduciary Duty' 'equitable Compensation' 'construction of Partnership Related Agreement' 'partnership Assets and Liabilities' 'costs of Cross Claims']

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Procedural Posture

Partnership Dispute Appeal / Appeal to the New South Wales Court of Appeal From Orders of Einstein J in the Supreme Court Equity Division

Legal Issues

  1. 1 ['Whether the annual fee of $30,000 payable under clause 14 of the Deloittes Retirement Agreement was consideration for personal benefits obtained by the appellants or for partnership benefits including the Newcastle clients.' 'Whether the appellants owed and breached fiduciary duties by failing to disclose the true nature of the obligation under clause 14 of the Deloittes Retirement Agreement after the respondents became partners.' 'Whether the respondents were entitled to equitable compensation for amounts contributed from partnership funds towards the Deloittes annual fee.' "Whether the trial judge's costs orders should be disturbed."]

Ratio Decidendi

The Deloittes annual fee was payable for the package of benefits under the Deloittes Retirement Agreement, including the Newcastle clients, but those clients were a partnership asset and the annual fee was a partnership liability. The payments were not consideration for personal benefits retained by the appellants, and the respondents, as partners, received the benefit of the asset and bore the burden of the liability in their partnership proportions. Accordingly, the appellants were not obliged to make the disclosure alleged, no breach of fiduciary duty was made out, and the declarations and orders for equitable compensation on the second cross-claim had to be set aside.

Court Disposition

Appeal allowed in part.

Orders

  • ['Appeal allowed in part.' 'Set aside the declarations and orders in paras 5, 6, 7, 8, 9, 10, 11 and 12 of the declarations and orders made by Einstein J on 11 November 1997.' 'Set aside the order in para 15(b) of the declarations and orders made by Einstein J on 11 November 1997 and in lieu thereof order that the...