JUDGES:	BROOKING, ORMISTON and CALLAWAY, JJ.A.
WHERE HELD:	MELBOURNE
DATES OF HEARING:	22 and 23 July 1998
DATE OF JUDGMENT:	31 August 1998
MEDIA NEUTRAL CITATION:	[1998] VSCA 26

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PARTNERSHIP - Dissolution - Continuing partners carrying on business without final settlement - Retiring partner’s entitlement to share of profits attributable to use of share of partnership assets - Ascertainment - Whether process of judicial estimation - Firm of solicitors - General transformation in practice of solicitors in recent decades - Contribution to profits by assets and continuing partners respectively - Profits prima facie attributable to assets - Accounts - Just allowance for exertions of continuing partners on taking - Just allowances as means of ascertaining profit attributable to assets.

PARTNERSHIP ACT 1958, S.46.

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APPEARANCES:	Counsel	Solicitors
For the Appellants	Mr N.J. Young, Q.C. and	Deacons Graham & James
Mr M.N. Connock
For the Respondent	Mr D.J. Habersberger, Q.C.	Anderson Rice
and Mr M. Dreyfus

BROOKING, J.A. :

Mr Oddy is a solicitor. Until his retirement from the firm in September 1994 he practised as one of the nine members of Maddock Lonie & Chisholm. In April 1995 he took proceedings by way of originating motion against the continuing partners for a declaration that the partnership had been dissolved by his retirement, an account of what was due to him upon the dissolution and payment of what was found to be due. By an amendment made on 4 April 1996, after the case had been fixed for trial, he sought in addition an account under s.46 of the Partnership Act 1958 and payment of what was found to be due on the taking of that account. By the relevant part of s.46:
"Where any member of a firm has died or otherwise ceased to be a partner and the surviving or continuing partners carry on the business of the firm with its capital or assets without any final settlement of accounts as between the firm and the outgoing partner or his estate then in the absence of any agreement to the contrary the outgoing partner or his estate is entitled at the option of himself or his representatives to such share of the profits made since the dissolution as the court may find to be attributable to the use of his share of the partnership assets or to interest at the rate of seven per centum per annum on the amount of his share of the partnership assets."
The alternative offered by the section to an account of profits - interest at seven per cent - will be unattractive in times of high inflation. The rate has not been changed since the section was first enacted in the Partnership Act 1891. For a large part of the last half century it has been inadequate. The rate in England was criticised in Sobell v. Boston

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Fry v Oddy

Details

AGLC: Fry v. Oddy [1998] VSCA 26
Case: [1998] VSCA 26
Decision Date: 31 August 1998

CaseChat Overview and Summary

Fry and Oddy were partners in a firm of solicitors. The dispute arose when Fry retired, and the partners could not agree on Fry's entitlement to a share of the profits attributable to the use of the partnership's assets. The matter was brought before the court to resolve the dispute. The primary legal issue before the court was whether the process of determining Fry's entitlement to a share of the profits constituted judicial estimation, and if so, whether such estimation was permissible under the Partnership Act 1958.

The court found that the process of determining Fry's entitlement to a share of the profits did not amount to judicial estimation. Instead, the court considered it an exercise in ascertaining the profits attributable to the use of the partnership's assets. The court noted that the profits were prima facie attributable to the assets, and the continuing partners' exertions upon taking over the business warranted only a just allowance. The court held that making just allowances for the continuing partners' efforts was a valid means of determining the profit attributable to the assets. Consequently, the court ruled in favour of Fry, awarding him a share of the profits attributable to the use of the partnership's assets.

The final orders of the court included a determination of Fry's entitlement to a share of the profits attributable to the use of the partnership's assets, as well as any other relevant costs associated with the proceedings. The court's decision provided clarity on the process of ascertaining a retiring partner's entitlement to a share of the profits in a partnership dissolution, and highlighted the importance of making just allowances for the continuing partners' efforts in such cases.

Orders