Cappe v Tsung [2018] NSWCA 86

Cappe v Tsung [2018] NSWCA 86

Clause 32 of the Partnership Agreement does not authorise a majority to alter or reallocate the partners' entitlements inter se to the partnership surplus or proceeds of sale; all proceeds received, including cash and shares arising from the sale of partnership assets, must be accounted for as partnership property and divided in accordance with each partner's proportionate interest, unless a clear and contrary agreement to vary those interests is established. Consequently, a resolution by majority under cl 32 cannot deprive a minority partner of their lawful proportionate entitlement to the surplus assets or proceeds of realisation.

Jurisdiction
Australia
Judgment Date
26 April 2018
Procedural Posture
Appeal / Judgment on Appeal
Outcome
Appeal dismissed with costs
Legal Topics
['construction of Partnership Agreement' 'majority Power in Partnerships' 'distribution of Partnership Assets' 'variation of Partner Entitlements' 'fiduciary Duties of Partners']
['partnership Law' 'equity'] ['construction of Partnership Agreement' 'majority Power in Partnerships' 'distribution of Partnership Assets' 'variation of Partner Entitlements' 'fiduciary Duties of Partners']

Case Brief

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Procedural Posture

Appeal / Judgment on Appeal

Legal Issues

  1. 1 ['Whether cl 32 of the Partnership Agreement empowers a special majority of partners to vary the entitlement of partners to share in surplus from proceeds of sale' 'Whether the cash amounts and shares issued were wholly proceeds of partnership property or partly referable to other promises, such as those under Practice Management Agreements']

Ratio Decidendi

Clause 32 of the Partnership Agreement does not authorise a majority to alter or reallocate the partners' entitlements inter se to the partnership surplus or proceeds of sale; all proceeds received, including cash and shares arising from the sale of partnership assets, must be accounted for as partnership property and divided in accordance with each partner's proportionate interest, unless a clear and contrary agreement to vary those interests is established. Consequently, a resolution by majority under cl 32 cannot deprive a minority partner of their lawful proportionate entitlement to the surplus assets or proceeds of realisation.

Court Disposition

Appeal dismissed with costs

Orders

  • ['The appeal is dismissed.' "The Continuing Doctors are to pay Dr Tsung's costs of the appeal."]