Cibalevski v Ristevski (No. 2)

No judgment structure available for this case.

IN THE COUNTY COURT OF VICTORIA

Revised from Tape

Not Restricted

AT MELBOURNE
CIVIL DIVISION
COMMERCIAL LIST

EXPEDITED CASES DIVISION

Case No. CI-09-00883

ROBERT CIBALEVSKI (No. 2)	Plaintiff
v
SASO RISTEVSKI	Defendant

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JUDGE:	HER HONOUR JUDGE KENNEDY
WHERE HELD:	Melbourne
DATE OF HEARING:	19 May 2010
DATE OF JUDGMENT:	19 May 2010
CASE MAY BE CITED AS:	Cibalevski v Ristevski (No. 2)
MEDIUM NEUTRAL CITATION:	[2010] VCC 0503

REASONS FOR JUDGMENT

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Catchwords: Partnership dispute – valuation of partnership assets– reference to a special referee – adoption of a report by Court – principles applied in Wenco Industrial Pty Ltd v W.W Industries Pty Ltd & Anor [2007] VSCA 191 – County Court Civil Procedure Rules 2008 r 50.01 and 50.04

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr. S. Stuckey	Novatsis Alexander
For the Defendant	In person
HER HONOUR:

1 Mr Cibalevski has sought an Order to the effect that the Court should adopt the report of Mr Russell Munday dated 17 March 2010, pursuant to Rule 50.04 of the County Court Civil Procedure Rules 2008.

Background
2 In Reasons for Decision of 16 October 2009, I determined that Mr Cibalevski was entitled to an amount equal to half the value of the partnership assets net of any liabilities of the relevant business known as “Lalor Aquarium & Pet Supplies” assessed as at 2 December 2008, which amount should be paid to Mr Cibalevski by Mr Ristevski. I further determined that Mr Cibalevski was entitled to a payment equal to seven per cent per annum on the amount of his share of the partnership assets assessed as at 2 December 2008, pursuant to s.46 of the Partnership Act 1958, which amount shall be paid to Mr Cibalevski by Mr Ristevski.
3 I directed that the parties should attempt to agree on the said values in an attempt to provide an appropriate order to finally dispose of this proceeding. However, no agreement was forthcoming.
4 In the result, on 10 December 2009, and pursuant to Rule 50.01, the Court stated a question for referral as follows:
“What was the value of the assets of the business conducted by the parties and known as “Lalor Aquarium and Pet Supplies” carried on from 16 May Road, Lalor, 3075, (“the business”), as at the date 2 December 2008?”

5          I referred the question to a member of the Institute of Chartered Accountants nominated by the Chief Executive Officer of that body to give that person’s opinion with respect to that question. This approach was supported by both counsel then appearing – Mr Stuckey of counsel for Mr Cibalevski and Mr Evans of counsel for Mr Ristevski.
6          The court (and Mr Ristevski) were subsequently provided with a report of a Mr Munday, of Munday Wilkinson, Chartered and Forensic Accountants dated 17 March 2010 (the report). I have read and considered that report. The conclusion in that report is that the value of the business as at 2 December 2008 is $112,500.
7          Mr Ristevki appeared, unrepresented, today (his solicitor having formally withdrawn this morning). Mr Stuckey appeared for Mr Cibalevski. I heard submissions from Mr Stuckey, and Mr Ristevski; Mr Ristevski providing a two page summary of the points that he wished to make.
8 The narrow issue then, is whether the Court should, in the interests of justice, adopt the report pursuant to Rule 50.04.

Principles
9 The applicable principles are set out by Their Honours Redlich, Bongiorno JJA and Beach AJA in the case of Wenco Industrial Pty Ltd and W.W. Industries Pty Ltd & Anor .[1]
[1] [2009] VSCA 191 and particularly at [17]

Submissions of Mr Ristevski
10 A number of matters raised by Mr Ristevki were irrelevant to the question that I have to determine in this case, for example:

•

Mr Ristevki’s complaints about the visits to his business of Mr Willoughby (who had been appointed to conduct a sale of the business which sale has not taken place);

•

concerns as to the date of photographs provided by Mr Willoughby; and

•

allegations that Mr Willoughby’s statement that he did not have all the up-to-date financials was “a lie” is of no consequence given the report is correctly directed to the value of the business as at 2 December 2008.

11        Nevertheless, there are two matters that were raised by Mr Ristevski that warrant some consideration.
12        The first is that he suggested that the $93,000 profit figure used by Mr Munday had actually been used up “to pay for bills.”
13        At pages 15-16 of the report, Mr Munday examines the profit of the business using two methods:

• firstly, based on the Collins Analysis books which had previously been referred to in the trial of this matter and were prepared by both members of this partnership; and
• secondly, to derive the profit from the profit and loss statements that were produced by Mr Ristevski’s accountant.
If there is unrecorded expenditure, it is not appropriate for this Court to further investigate that matter at this late stage. Mr Munday appears to have acted on the basis of the evidence before him in a rational and reasonable way and I see no error in what he has endeavoured to do on the best evidence available to him.
14        The second matter that was raised by Mr Ristevski was the question of the multiplier. He suggested that he had contacted the Small Business Association and obtained a multiplier of some 1.14. He therefore challenged the appropriateness of the multiplier of 2 to 2.5 that Mr Munday utilised in the capitalisation of future maintainable earnings (CFME) method at page 20 of his report.
15        However, in his oral submission it appeared that Mr Ristevski had sought to obtain information about the “rule of thumb” multiplier which Mr Munday also values as a lower amount of some 1 to 1.4 (and see and cf paragraph 6.12, and paragraphs 6.18 to 6.19 wherein he explains the reason for the difference). In any event, I see no evidence of irrationality or error in the way that Mr Munday has gone about the exercise of assessing the value on the basis of both rule of thumb and CFME. The values of the appropriate multipliers are squarely within the scope of his expertise.
16        It follows that I am not satisfied that I should reject the report on the basis of the matters raised by Mr Ristevski.

Resolution
17 In terms of the principles cited in Wenco:

•

the interests of justice do warrant the adoption of this report which provides sound reasons for conclusions reached. The report was also produced after opportunity has been given to both parties to be heard. Thus at page 2 of that report it appears that Mr Ristevski was given opportunity to provide a submission on 22 February 2010, although on 10 March 2010, he advised that he had no further information to provide;

•

the referral to an expert was intended to be a form of resolution on the question I raised as an alternative to orthodox litigation. There is no warrant to treat it as some kind of “warm-up for further investigation”, which unfortunately appears to be what Mr Ristevski, to some extent, wishes to do;

•

no question of law is raised; Mr Munday appears to have addressed himself to the correct question asked of him;

•

the report provides a thorough analytical and scientific approach to the assessment of the question for reference. In those circumstances, I do have a disposition towards acceptance of the report;

•

there is no error of principle, absence or jurisdiction or other error that Mr Ristevski identified or that I have been able to ascertain;

•

it is not a desirable outcome that the findings of fact should be re- agitated in this matter, particularly where the parties have already been through a trial of some four days;

•

the purposes of Rules 50.01 and 50.04 would, in my view, be frustrated if I were to go on and consider further any of the questions of fact on which the report is based;

•

I have taken into account the futility in the cost of further litigation in relation to this dispute and the interests of finality;

•

it does not appear to me that I would have reached a different conclusion to Mr Munday, but even if I would have reached a different conclusion it is not a proper basis on which to reject this report. No reason, in my view, has been suggested to do so.
18 The Wenco factors therefore favour the adoption of the report.

Conclusion
19 In all the circumstances then, and in the interests of justice, I am prepared to make an order that the Court adopt the report of Russell Munday dated 17 March 2010 pursuant to Rule 50.04

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Citations

Cibalevski v Ristevski (No. 2) [2010] VCC 503

Cases Citing This Decision

0

Cases Cited

2

Statutory Material Cited

0

Director of Public Prosecutions v Samu [2007] VSCA 191

Wenco Industrial Pty Ltd v WW Industries Pty Ltd [2009] VSCA 191

•	Mr Ristevki’s complaints about the visits to his business of Mr Willoughby (who had been appointed to conduct a sale of the business which sale has not taken place);
•	concerns as to the date of photographs provided by Mr Willoughby; and
•	allegations that Mr Willoughby’s statement that he did not have all the up-to-date financials was “a lie” is of no consequence given the report is correctly directed to the value of the business as at 2 December 2008.

•	the interests of justice do warrant the adoption of this report which provides sound reasons for conclusions reached. The report was also produced after opportunity has been given to both parties to be heard. Thus at page 2 of that report it appears that Mr Ristevski was given opportunity to provide a submission on 22 February 2010, although on 10 March 2010, he advised that he had no further information to provide;
•	the referral to an expert was intended to be a form of resolution on the question I raised as an alternative to orthodox litigation. There is no warrant to treat it as some kind of “warm-up for further investigation”, which unfortunately appears to be what Mr Ristevski, to some extent, wishes to do;
•	no question of law is raised; Mr Munday appears to have addressed himself to the correct question asked of him;
•	the report provides a thorough analytical and scientific approach to the assessment of the question for reference. In those circumstances, I do have a disposition towards acceptance of the report;
•	there is no error of principle, absence or jurisdiction or other error that Mr Ristevski identified or that I have been able to ascertain;
•	it is not a desirable outcome that the findings of fact should be re- agitated in this matter, particularly where the parties have already been through a trial of some four days;
•	the purposes of Rules 50.01 and 50.04 would, in my view, be frustrated if I were to go on and consider further any of the questions of fact on which the report is based;
•	I have taken into account the futility in the cost of further litigation in relation to this dispute and the interests of finality;
•	it does not appear to me that I would have reached a different conclusion to Mr Munday, but even if I would have reached a different conclusion it is not a proper basis on which to reject this report. No reason, in my view, has been suggested to do so.

[2010] VCC 503

19 May 2010