Lewis v Estate of Juan Martinez

[2025] NSWCA 2

Court of Appeal

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

Lewis v Estate of Juan Martinez [2025] NSWCA 2

Hearing dates:

14, 15 and 17 October 2024

Date of orders:

30 January 2025

Decision date:

30 January 2025

Before:

Payne JA at [1];
Mitchelmore JA at [246];
Stern JA at [247]

Decision:

(1)   Cross-appeal allowed.

(2)   Set aside orders 1-4 made by the primary judge on 8 April 2024 and in lieu thereof order:

(a)   The Further Amended Statement of Claim is dismissed;

(b)   Plaintiff (Mr Lewis) to pay the Respondents’ (the Capital Partners’) costs of the Further Amended Statement of Claim.

(3)   Appeal dismissed.

(4)   Appellant/Cross-respondent (Mr Lewis) to pay the Cross-appellants/Respondents’ (the Capital Partners’) costs of the appeal and the cross-appeal.

Catchwords:

PARTNERSHIP AND JOINT VENTURES – rights and duties between parties – expulsion – whether expulsion valid – interpretation of Partnership Deed – where resolution to waive time and expulsion resolution were voted by a single voting button – whether resolutions required approval of not less than 80% of all Capital Partners

PARTNERSHIP AND JOINT VENTURES – rights and duties between parties – findings of fact – whether appellant lost the opportunity to increase calibration points – whether resolutions proposed for an improper purpose

PARTNERSHIP AND JOINT VENTURES – dissolution – dissolution by court of partnership – whether date of dissolution is the date of the statement of claim or the date of the expulsion resolution – dissolution on just and equitable ground

APPEALS – from exercise of discretion – separate question order – whether primary judge erred in making order for costs for hearing the separate question – whether appellant’s claim sufficiently heard – whether relief granted incomplete

Legislation Cited:

Civil Procedure Act 2005 (NSW) Part 6

Partnership Act 1958 (Vic) ss 24, 26, 28, 29, 30, 36, 37, 39, 47, 48, 68, 69

Uniform Civil Procedure Rules 2005 (NSW) r 36.16

Cases Cited:

Australian Metropolitan Life Assurance Co Ltd v Ure (1923) 33 CLR 199

Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158

Blisset v Daniel (1853) 10 Hare 493; 63 ER 1022

Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49

Burdett-Coutts v IRC [1960] 1 WLR 1027

Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321

Cappe v Tsung [2018] NSWCA 86

Chandrasekaran v Western Sydney Local Health District (t/as Westmead Hospital) (No 2) [2024] NSWCA 21

Commissioner of State Taxation vCyril HenschkePty Ltd (2010) 242 CLR 508; [2010] HCA 43

CVC/Opportunity Equity Partners Ltd v Almeida [2002] UKPC 16

Dibb v Transport for New South Wales (No 2) [2024] NSWCA 176

Dickson v Commissioner of the Australian Federal Police (No 2) [2023] NSWCA 111

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7

FCT v Murry (1998) 193 CLR 605

Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 90 ALJR 270; [2015] HCA 53

Foster v Commissioner of Stamps [1966] WAR 144

General Accident, Fire and Life Assurance Corp v Robertson [1909] AC 404

Hancock v Rinehart [2015] NSWSC 646

Hendry v Perpetual Executors & Trustees Association (1961) 106 CLR 256

House v King (1936) 55 CLR 499

Hurst v Bryk [2002] 1 AC 185

Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361; [2011] HCA 11

Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26

Liao v NSW [2014] NSWCA 71

Lyon v Tweddell (1881) 17 Ch D 529

Majak v Rose (No 5) [2017] NSWCA 238

Manning River Cooperative Dairy Co Ltd v Shoesmith (1915) 19 CLR 714

Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104; [2015] HCA 37

Mullins v Laughton [2003] Ch 250

Murray Darling Basin Authority v Doyle’s Farm Produce Pty Ltd [2021] NSWCA 191

Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1

Paltos v Milevski [2023] NSWCA 7

Pirrottina v Pirrottina [2024] NSWSC 558

Russell v Russell (1880) 14 Ch D 471

Ryder v Frohlich [2004] NSWCA 472

Singh v Singh [2024] NSWSC 932

State of New South Wales v Dargin [2019] NSWCA 47

State Rail Authority (NSW) v Codelfa Construction Pty Ltd (1982) 150 CLR 29

Syers v Syers (1876) 1 App Cas 174

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8

Twenty-First Australia Inc v Shade [1998] NSWSC 325

Variety Video v Jones [2001] NSWSC 5

Wood v Woad (1874) LR 9 Exch 190

Yard v Yardoo Pty Ltd [2007] VSCA 35

Texts Cited:

Elisabeth Peden and John Carter, “The Bonds of Partnership” (2000) 16 Journal of Contract Law 275

Stephen Graw, “Terminating Partnerships by ‘Accepted Repudiation’: the Differing UK and Australian Approaches” Society of Legal Scholars 110th Annual Conference, University of Central Lancashire (3-6 September 2019)

Category:

Principal judgment

Parties:

Gregory William Francis Lewis (appellant/cross-respondent)
Juan Martinez and the persons named in the Schedule (respondents/cross-appellants)

Representation:

Counsel:
F M Douglas KC / J K Carter / J B Douglas (appellant/cross-respondent)
D L Williams SC / A J Barnett (respondents/cross-appellants)

Solicitors:
Bridges Lawyers (appellant/cross-respondent
Gilchrist Connell (respondent/cross-appellants)

File Number(s):

2024/162806
2024/164741
2024/263556

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of New South Wales

Jurisdiction:

Equity

Citation:

Lewis v Martinez and the persons named in the Schedule (No 5) [2024] NSWSC 359;

Lewis v Martinez and the persons named in the Schedule (No 6) [2024] NSWSC 543

Date of Decision:

8 April 2024; 10 May 2024

Before:

Elkaim AJ

File Number(s):

2021/38379

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellant and cross-respondent, Mr Gregory Lewis, was (as the nominated representative of the Lewis Practice Trust) a Capital Partner at the law firm HWL Ebsworth prior to being expelled from the partnership. The 181 respondents and cross-appellants were the other Capital Partners at HWL Ebsworth. HWL Ebsworth’s partnership was governed by a Partnership Deed (the “Deed”).

In July 2020, the first respondent, the Managing Partner of HWL Ebsworth Mr Juan Martinez, proposed selling the partnership through an Initial Public Offering (“IPO”). On 11 August 2020, resolutions were passed regarding the allocation of calibration points. The first respondent proposed that the appellant and two other Capital Partners retire and become Fixed Drawer Partners (“FDP”), excluding them from the proposed IPO. The other nominated partners accepted and became FDPs but the appellant did not. On 13 August 2020, the first respondent gave the appellant notice of a motion to expel him as a Capital Partner. Thereafter various communications were exchanged between the appellant and the first respondent. On 4 November 2020, the first respondent notified the appellant that an expulsion resolution would be put to the partnership in accordance with the Deed.

On 7 November 2020, the first respondent sent an email to the other Capital Partners proposing that the appellant’s Practice Trust be expelled as a Capital Partner with immediate effect (resolution (a)) and that all time limits or other technical requirements be waived and/or abridged (resolution (b)). The email contained “voting buttons” allowing recipients to click a button to vote either “yes” or “no”. 86 of the 181 Capital Partners voted “yes” before voting closed at 5pm on 8 November 2020; 20 voted “yes” after 5pm; 74 did not vote; and one voted “no”.

On 10 February 2021, the appellant commenced proceedings in the Supreme Court against the Capital Partners. On 10 February 2023, Slattery J ordered that the assessment of the quantum of any relief be determined separately from and subsequent to the hearing of all other issues in the proceedings. The primary judge, Elkaim AJ, subsequently delivered two judgments which are the subject of this appeal and cross-appeal: the “(No 5)” judgment and the “(No 6)” judgment. In the (No 5) judgment, his Honour declared that the appellant’s expulsion was invalid by reason of breaches of the Deed and that the partnership was dissolved with effect from 10 February 2021, being the date of the filing of the statement of claim. His Honour ordered that the appellant’s damages arising from the breaches of the Deed, if any, were to be assessed and made a costs order against the respondents. On 15 April 2024, the appellant filed a notice of motion seeking variation of the orders, in particular the date of the dissolution of the partnership. The primary judge dismissed the notice of motion in the (No 6) judgment.

On appeal and cross-appeal, the issues were:

1. whether resolution (b) was invalid because it did not precede resolution (a) and because the two resolutions were voted upon by a single voting button;

2. whether the resolutions required approval of not less than 80% of the total number of Capital Partners rather than 80% of the Capital Partners who voted;

3. whether it was necessary that the reasons for the proposed resolutions be provided;

4. whether the date of termination of the partnership between the appellant and the respondents was the date the resolution was passed, or only later, when the statement of claim was filed;

5. whether the primary judge erred in making an order for costs of the hearing of the separate question;

6. whether the primary judge failed to hear and determine the appellant’s claim in accordance with the order made by Slattery J;

7. whether the appellant lost the opportunity in August 2020 for his calibration points to increase;

8. whether the August and October resolutions or the expulsion resolution, were proposed for the improper purpose of excluding Mr Lewis from participation in the proposed IPO; and

9. whether the relief granted by the primary judge was incomplete.

The Court (Payne JA, Mitchelmore JA and Stern JA agreeing at [246] and [247] respectively) held, allowing the cross-appeal and dismissing the appeal:

On issue (i):

1. Resolution (b) was not invalid. There was no express or implied requirement in the Deed, including the Rules set out in Annexure A to the Deed, that any resolution to waive timing requirements must precede an expulsion resolution or that there be separate voting buttons: at [60]-[85].

Variety Video v Jones [2001] NSWSC 5; Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640, referred to.

On issue (ii):

1. On the proper construction of the Deed and the Rules, an Extraordinary Resolution only needed to obtain the approval of 80% of the Capital Partners voting, rather than 80% of the Capital Partners entitled to vote: at [86]-[95].

On issue (iii):

1. No reason needed to be given for the expulsion of a Capital Partner and expulsion can occur for “any reason the Capital Partners deem appropriate” under cl 20 of the Deed: at [96]-[101].

On issue (iv):

1. It was unnecessary to decide the correct approach as to how the contractual doctrine of “accepted repudiation” might apply to partnerships: at [102]-[107]. However, ss 36(c) and 39 of the Partnership Act support the primary judge’s conclusion that the appellant ceased to be a Capital Partner on the date the statement of claim was filed: at [108]-[111].

Ryder v Frohlich [2004] NSWCA 472, Hurst v Bryk [2002] 1 AC 185, Commissioner of State Taxation vCyril HenschkePty Ltd (2010) 242 CLR 508; [2010] HCA 43, discussed.

1. The appellant did not submit at trial that he remained a Capital Partner. In any event, there is no rule against an order being made that backdates the dissolution of a partnership under s 39 of the Partnership Act: at [192]-[205].

Singh v Singh [2024] NSWSC 932; Pirrottina v Pirrottina [2024] NSWSC 558; Yard v Yardoo Pty Ltd [2007] VSCA 35, considered.

On issue (v):

1. If it were necessary to decide, no order for costs of the separate hearing would be made because it is possible that the appellant would be entitled to only nominal damages: at [113]-[117].

Chandrasekaran v Western Sydney Local Health District (t/as Westmead Hospital) (No 2) [2024] NSWCA 21, Firebird Global Master Fund II Ltd v Republic of Nauru (2015) 90 ALJR 270, noted.

On issue (vi):

1. Insufficient evidence had been led in the first hearing to permit the primary judge to make a determination whether or not to make a buy-out order. The primary judge accepted that the appellant was entitled to lead further evidence and to seek a buy-out order in the second phase of the hearing, despite having declared that the partnership is dissolved: at [130]-[135].

State of New South Wales v Dargin [2019] NSWCA 47, discussed. Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158 and Paltos v Milevski [2023] NSWCA 7, considered.

On issue (vii):

1. The appellant did not demonstrate at the first hearing that he was entitled in August 2020 to any increase in calibration points. This Court was not in a position to make findings about the appellant’s loss of a chance of any increase in calibration points. The appellant was not expelled from the partnership in August 2020 and his calibration points were not reduced until his expulsion: at [136]-[147].

On issue (viii):

1. The appellant never argued at trial that it was an improper purpose of the August and October resolutions simply to exclude Mr Lewis from the IPO, without also asserting that this was done to obtain Mr Lewis’ calibration points. The appellant is not permitted to advance a different case on appeal: at [165]-[168]. Regarding the November resolutions, even if the appellant were permitted to raise this issue, it was not proved that the power was not exercised bona fide for the purpose for which it was conferred: at [169]-[188].

Hancock v Rinehart [2015] NSWSC 646 considered.

On issue (ix):

1. It is undesirable to determine whether a buy-out order should be made instead of an order for damages. In the (No 6) judgment, the primary judge left to the parties to lead further evidence for the making (or non-making) of a buy-out order and the components of such an order at the second stage hearing: at [206]-[217]. There is no sufficient evidence before this Court to identify the components of any “buy-out” order. A buy-out order should not necessarily be made in every case where a breach of a partnership agreement has been found and the partnership is dissolved under the just and equitable ground: at [218]-[221].

Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158 and Paltos v Milevski [2023] NSWCA 7, noted. Mullins v Laughton distinguished.

1. There was no error of principle in the exercise of the discretionary UCPR r 36.16(3A) power. The primary judge appropriately addressed the matters of substance raised by the appellant by leaving open to the appellant to advance his submissions at the second stage of the hearing. It was wrong to assume that, because the primary judge had taken the view that the appellant’s submissions in support of the Notice of Motion ought to have been made on appeal and not to him, he only dealt with the detail of Mr Lewis’ submissions “briefly” : at [225]-[231].

Dibb v Transport for New South Wales (No 2) [2024] NSWCA 176; Dickson v Commissioner of the Australian Federal Police (No 2) [2023] NSWCA 111, cited. Majak v Rose (No 5) [2017] NSWCA 238; House v King (1936) 55 CLR 499, considered.

1. The primary judge did not fail to hear submissions from the appellant about the date of dissolution before delivering the (No 5) judgment. Mr Lewis himself sought a declaration that by filing the statement of claim he had accepted that the partnership was at an end. In any event, the appellant was subsequently given an opportunity to argue the issue which was addressed by the primary judge in the (No 6) judgment: at [232]-[235].

JUDGMENT

1. PAYNE JA: This is an appeal and cross-appeal from two decisions by Elkaim AJ (“the primary judge”): Lewis v Martinez and the persons named in the Schedule (No 5) [2024] NSWSC 359 (the “(No 5)” judgment) and Lewis v Martinez and the persons named in the Schedule (No 6) [2024] NSWSC 543 (the “(No 6)” judgment). As the primary judge’s decision was on a separate question and thus interlocutory, leave to appeal and cross-appeal was required. The Court granted leave to appeal and leave to cross-appeal at the outset of the hearing.

2. The appellant, Mr Gregory Lewis, as the nominated representative of the trustee of the Lewis Practice Trust, was a Capital Partner at the law firm HWL Ebsworth prior to the expulsion of the trustee of the Lewis Practice Trust from the partnership. The 181 cross-appellants were the other nominated representatives of practice trusts participating as Capital Partners at HWL Ebsworth.

3. The reason that the trustees of the various practice trusts, rather than the individual nominated representatives, were identified as Capital Partners was presumably for taxation reasons but that topic was not a matter explored in evidence. The trial and the appeal were conducted on the basis that the partners were, in fact, the individual nominated representatives of the trustee partners. Despite the apparent artificiality of this assumption, I will adopt the parties’ approach.

4. HWL Ebsworth’s partnership was governed by a Partnership Deed dated 20 May 2016 (the “Deed”). The Partnership Rules are in Annexure A to the Deed. The trustee of the appellant’s practice trust became a partner in October 2014.

5. In July 2020, the first respondent, Mr Martinez, suggested the sale of the partnership through an Initial Public Offering (IPO). A “Capital Partner Information Pack” describing the proposed IPO was distributed to the Capital Partners. The summary suggested a possible enterprise value of $1.2 billion which, if raised, would be distributed according to the respective partner’s “calibration points”. As I will explain, net profits of the partnership are to be shared in accordance with the calibration points of each partner. Calibration points are approved by the Capital Partners from time to time and are as set out in the Rules. Rule 8 allowed Mr Martinez to make a recommendation to the Capital Partners as to proposed calibration points for each Capital Partner.

6. On 11 August 2020, resolutions were passed by the Capital Partners about the allocation of calibration points amongst the Capital Partners. Mr Martinez determined that the appellant and two other Capital Partners would retire as Capital Partners and would be offered partnership as Fixed Draw Partners (FDP). As an FDP, the partner would not be entitled to share in the proceeds of any successful IPO. The other Capital Partners nominated in this resolution resigned as Capital Partners and became FDPs. The appellant did not.

7. On 13 August 2020, the appellant received an email from Mr Martinez with the subject “7 Day Notice of Intention to move a resolution to the HWL Ebsworth Lawyers partnership expelling the Lewis HWL Practice Trust as Capital Partner” in the following terms:

To : Gregory Lewis as Trustee of the Lewis HWL Practice Trust and as the Nominated Person.

A resolution will be put to the partnership seeking the expulsion in accordance with the Partnership Deed per the above.

Regards,

Juan Martinez

Managing Partner

8. Thereafter, various communications, including without prejudice negotiations took place between the appellant and Mr Martinez. On 4 November 2020, Mr Martinez refused to withdraw the notice of intention to move the resolution seeking the expulsion of the appellant but gave a commitment to provide 72 hours’ notice before acting on the notice.

9. On 4 November 2020, the without prejudice negotiations having failed, Mr Martinez gave notice to the appellant that a resolution would be put to the partnership seeking his expulsion in accordance with the Deed.

10. The expulsion resolution was emailed to the Capital Partners on 7 November 2020 at 4:38pm. The email was not sent to Mr Lewis. It stated:

Dear All,

Pursuant to the authority provided by our Partnership Deed dated 20 May 2016 I put the following email resolution to the Capital Partnership -

Resolution:

Pursuant to Clause 20 of the Partnership Deed dated 20 May 2016, that the Lewis HWL Practice Trust be expelled with immediate effect from the Partnership.

That all time limits or other technical requirements are hereby waived and/or abridged.

I have applied the voting buttons.

The vote will conclude at 5 pm on 8 November 2020.

Regards

Juan Martinez

Managing Partner.

11. The “voting buttons” allowed recipients of the email to lodge their vote, either “yes” or “no”, by clicking a button on a computer. Only one button could be pressed to record a vote in respect of both the expulsion resolution and the time variation resolution, that is, there was no option to vote “no” to one resolution and “yes” to the other.

12. On 7 November 2020 at 5:24pm, Mr Martinez sent a further email to the other Capital Partners, not including Mr Lewis, in the following terms:

Dear All,

For context of the resolution just put (which I did not want in the formal email with the proposed resolution).

Greg did not accept the FDP designation given to him in the original restructure vote put by Mitch and passed by the partnership. He has been threatening legal action. I have attempted on a without prejudice basis to compromise and reach a solution however this has been unsuccessful and this is now the only option so we can move forward.

Regards,

Juan Martinez

Managing Partner

13. There were 181 Capital Partners on 7 November 2020. 86 voted “Yes” before voting closed at 5pm on 8 November 2020. 20 voted “Yes” after 5pm. 74 Capital Partners did not vote. One voted “no”.

14. On 10 February 2021, the appellant commenced proceedings in the Supreme Court against the remaining Capital Partners.

15. On 10 February 2023, Slattery J made an order in the proceedings that:

5 Pursuant to UCPR Rule 28.2 the assessment of the quantum of any relief to be determined separately from and subsequent to the hearing of all other issues in the proceedings.

16. The matter came before the primary judge to determine the separate question in the (No 5) judgment. On 8 April 2024, the primary judge made the following orders:

1. A declaration that the expulsion of the plaintiff by the resolution put to the defendants on 7 November 2020 was invalid by reason of breaches of the Partnership Deed.

2. A declaration that as between the plaintiff and the defendants the partnership was dissolved with effect from 10 February 2021, being the date of the filing of the statement of claim.

3. An order that the plaintiff’s damages arising from the breaches of the Partnership Deed, if any, are to be assessed.

4. An order that the defendants are to pay the plaintiff’s costs of the hearing in respect of liability, such costs, subject to any consent agreement between the parties, are not to be payable until the conclusion of the proceedings.

5. All other costs are reserved.

6. A direction that all parties provide a representative of the first defendant with a copy of this decision and the decision made on 26 March 2024 (Lewis v Martinez and the persons named in the Schedule (No 4) [2024] NSWSC 308).

17. As I will explain in greater detail, Mr Lewis subsequently sought, by notice of motion, to have the orders varied in substantial respects. The primary judge dismissed the notice of motion in the (No 6) judgment.

Primary Judgment (No 5)

Vote to expel the trustee of the Lewis Practice Trust

18. The primary judge held that the expulsion of the trustee of the Lewis Practice Trust on 7 and 8 November 2020 was invalid because:

[41]   There is no dispute that the resolution could be decided by email and by the use of buttons. But this resolution, says the plaintiff, and I agree, was invalid because:

(1)   The variation of the seven days’ notice should have preceded the expulsion resolution, perhaps to the extent of a separate resolution on a separate day.

(2)   The two resolutions could not be voted upon by a single button which did not allow for one to be considered separate to the other.

19. The primary judge held that the expulsion resolution could only be considered after the requirement for seven days’ notice had been waived. It was not sufficient that the resolution seeking to vary the seven days’ notice was in the same email as the resolution seeking to expel the appellant. The waiver of notice resolution should have preceded the expulsion resolution, perhaps to the extent of a separate resolution on a separate day.

20. The primary judge held that the two resolutions could not be voted upon by a single button which did not allow for one to be considered separately to the other. The primary judge reasoned that being expelled as a Capital Partner was a serious matter, being “a complete, forced, and absolute divorce from the firm”. The primary judge stated that, of the 13 clauses in the Deed that required an Extraordinary Resolution to achieve a particular result, only cl 20 which provided for expulsion dictated seven days’ notice. The primary judge said that it was not sufficient that the voter could press “no” if they disagreed with either resolution because “[i]f they were of the view that expulsion was appropriate it is unlikely they would have considered, separately, the waiver [of notice] resolution”. Had the seven days’ notice period been provided, during this period they might have been “open to persuasion or deeper thought about their intended vote of expulsion”: at [45]. :

21. The primary judge also found that the expulsion resolution was invalid because less than 80% of the Capital Partners voted. At the date of the vote there were 181 Capital Partners. 87 people voted on time, and 107 people voted in total (including late voters). Only one person voted no. If 80% of all 181 Capital Partners was required, then an affirmative vote of either 86 or 106 did not achieve the required 80% vote. If 80% of all Capital Partners who voted was required, as only one person voted “no” out of 87 or 107 people in total, then more than 80% of the votes were “yes”. The primary judge said, “I think I am bound to find that the 80% must be 80% of the whole of the partnership”. Thus, it was concluded that the resolutions were not carried.

Fiduciary duty and alleged improper purpose

22. As explained above, the expulsion resolution occurred in the context of a potential IPO. Mr Lewis submitted to the primary judge that the resolution had an improper purpose as it allocated “disproportionate weighted Calibration Points” to Mr Martinez and was designed “to exclude [Mr Lewis] from participating in the IPO and to enable other Capital Partners (and, in particular, Mr Martinez) to benefit from his expulsion”. Mr Lewis submitted that there was a duty “of utmost good faith owed between partners, and that the expulsion of a partner for the purpose of expropriating a partner’s interest in the partnership violates that duty”.

23. The Capital Partners submitted that the scope of the fiduciary duty did not extend to the consideration of an expulsion because the interests of the partners would obviously be affected by the expulsion. The Capital Partners relied on Noranda Australia Ltd v Lachlan Resources NL (1988) 14 NSWLR 1 at 17, which held:

One way of conceiving of the limit of their fiduciary obligations is to conceive of it as the limit of the activities as to which the parties have mutual trust and confidence in each other. The enjoyment of the rights of ownership is not within this area.

24. The primary judge held that there are two difficulties with applying Noranda:

1. Clause 15(e) of the Deed provided that the Capital Partners must be “just and faithful to the other Capital Partners in all matters relating to the affairs of the Partnership”. An expulsion is an affair of the partnership; and

2. Removing a partner’s rights and expelling that partner from the partnership goes well beyond “the enjoyment of the rights of ownership.” The expulsion of a partner is a matter so grave that it demanded the attention, and due consideration, of those deciding upon the expulsion.

25. The primary judge stated:

[83]   Whichever way one looks at the fiduciary duty, be it on the broad basis suggested by the [appellant], or as confined in the manner put forward by the [cross-appellants], it is fundamental to any conclusion that there must first be identified the existence of an improper purpose. In this case, that must be to find that the reason behind the expulsion was to misappropriate the [appellant’s] calibration points for the benefit of the [cross-appellants], and primarily the [first respondent].

…

[85]   It goes without saying, that taking away the [appellant’s] 16 points, but not increasing the overall number of points, will give other partners a greater share of the enterprise value. However, notwithstanding the increase in the first respondent’s calibration points I do not think an inference can be drawn that the increase is a product of the decrease in the [appellant’s] points. Nor do I think that, in the manner described in Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361, that I could conclude that the [first respondent] deliberately withheld any explanation for the expulsion. It is to be recalled that the [cross-appellants] relied heavily on the terms of the Deed, and in particular cl 20.2 which says that no reason need be given for an expulsion. I do not think I can make the leap from the [first respondent’s] silence on the point to an admission of wrongdoing. It is equally feasible that the contents of his affidavit were dictated by his perception, albeit wrongly, of the validity of the partnership’s processes pursuant to the Deed.

26. Since many Capital Partners lost calibration points, and others increased their calibration points, the primary judge reasoned that it “is equally feasible…that those partners whose points increased derived their benefit not from [Mr Lewis’] points but from other partners who lost points”. The primary judge said that it would be different if Mr Lewis was the only person to have lost points and Mr Martinez was the only person to have gained points, but in “the scheme of multiple increases and decreases I do not think I can make a finding of improper purpose directed at [Mr Lewis’] points”.

27. The primary judge held:

[92]   Accordingly, while I think a fiduciary duty was unquestionably owed between the Capital Partners in considering an expulsion resolution and that the deliberate diminution of a particular partner’s points to enhance those of another partner would be an improper purpose, I am not satisfied that that purpose has been established.

Failure by the Capital Partners to give reasons for Mr Lewis’ expulsion

28. The email sent at 4:38pm on 7 November, quoted above at [10] gave no reasons for the proposed expulsion of Mr Lewis as a Capital Partner. Some reasons were given in a second email sent at 5.24pm, quoted above at [12].

29. In answering the question of whether it was necessary to give reasons for a proposed expulsion, the primary judge noted that cl 20.2(a) of the Deed provided that “no reason need be given for expulsion of a Capital Partner by Extraordinary Resolution”. However, his Honour relied on cl 2.3(b) of the Rules which provided:

2.3 Any proposed email resolution shall include:

(a) the substance of the resolution;

(b) the basis for the resolution with any relevant information;

(c) the time/date by which the vote must conclude; and

(d) apply voting buttons or allow for email vote to accept or reject the proposed resolution(s).

30. The primary judge held that the Capital Partners should have given reasons with the proposed resolution and that it did not matter why Mr Martinez failed to give reasons initially. Although it was not necessary to decide, the primary judge held that the 4.38pm email set out at [10] was in breach of the Rules.

Relief

31. The primary judge was satisfied that the Capital Partners were in breach of the Deed. The Capital Partners accepted that if the November expulsion resolution was invalid, that a declaration to that effect should be made against all of the Capital Partners.

Dissolution of the partnership

32. The primary judge proceeded on the basis that it was common ground that the partnership had come to an end, although the reasons for this agreement differed. The primary judge explained that s 39(f) of the Partnership Act 1958 (Vic) empowered the Court to make the dissolution declaration sought by Mr Lewis on the grounds that it was just and equitable to do so. The dissolution was only between Mr Lewis on the one side and Capital Partners on the other side and had no effect on the partnership as between the Capital Partners themselves.

33. The primary judge stated:

[115]   I did not understand the [Capital Partners] to submit that a dissolution of this type was not appropriate or possible. I think the way to proceed is by way of a declaration in similar terms to that proposed in [2] of the relief claimed in the most recent statement of claim. This would place the dissolution as at the date of the filing of the original statement of claim.

Proposed “buy-out” order

34. Mr Lewis sought “buy-out” orders of the kind made in Syers v Syers (1876) 1 App Cas 174 and Mullins v Laughton [2003] Ch 250 including (as necessary integers of any such order) “the interest of Lewis in the goodwill, debtors, work in progress, cash at bank and other property of HWL Ebsworth” and also in respect of his “share of the net profits of the Partnership to the date on which payment is made to buy-out his interest in the partnership property” based on the calibration points that the appellant had or ought to have had before the August resolution.

35. The Capital Partners opposed the making of such an order on the basis that identifying heads of damages was a topic properly the subject of the assessment process. The primary judge addressed this issue in the following way:

[118]   It is also relevant at this stage to return to the basis upon which I found that [Mr Lewis’] expulsion was invalid, namely that there were breaches of the contractual provisions contained within the Deed. With this in mind I think the alternative order sought by [Mr Lewis], at [5] in the relief claimed in the amended statement of claim, but with some slight amendment, is appropriate. This order will keep alive [Mr Lewis’] contentions as to the nature and heads of the damages which he seeks.

Primary Judgment (No 6)

36. On 15 April 2024, Mr Lewis filed a notice of motion seeking variation of the orders pursuant to r 36.16 of the Uniform Civil Procedure Rules 2005 (NSW):

37. Mr Lewis submitted that the primary judge should exercise the jurisdiction provided by r 36.16 because:

“(a) The appellant’s motion was filed within the 14-day period.

(b) The appellant’s motion does not seek, and it would not otherwise enable, a significant rehearing.

(c) The Orders appear to be affected by a misapprehension of the law (as to the Date of Dissolution Point and the Buy-Out Order Point), by a misapprehension of the appellant’s submissions (as to the Capital Partner Point), and otherwise not dealt with (as to the Loss of Chance Point).

(d) Those misapprehensions cannot be solely attributed to the neglect or default of the appellant because:

(i) As to the Date of Dissolution Point, the matter was not the subject of submissions in closing addresses, and it was not a matter on which the Court invited comment.

(ii) As to the Buy-Out Order Point and the Loss of Chance Point, the Reasons are unclear as to the intention of the Court and the extent to which that intention is reflected in the Orders.

(iii) As to the Capital Partner Point, although the Court misstates the appellant’s position in one part of the Reasons, it correctly states the appellant’s position in another part of the Reasons, and the appellant merely seeks to have the Reasons amended so as to be consistently correct.”

38. The primary judge said:

[5]   Looking at the reasons given in the preceding paragraph, I agree with (a) and (b), I do not agree with (c). It is not necessary to comment on (d).

…

[9]    …[Rule] 36.16 does not provide an opportunity to re-agitate issues within the litigation and should certainly not be treated as an avenue open to a litigant in lieu of an appeal. As I observed during the hearing of the motion, I was under the impression that I was hearing submissions as if on appeal. At one stage Mr Douglas KC said:

“Your Honour as we understand the structure of your Honour's judgment you say repudiation doesn't apply, so we've accepted that and so by the invalid notice which has been given and so what has brought the partnership to an end is the decree that your Honour has made on a just and equitable ground, and so far as that is concerned the statute when it says may be dissolved and the authorities to which we've referred in our written submissions in this application make it very clear that the dissolution operates from the date when the order is made. I'm not aware of a case in which it's been done otherwise. It would seem to me to be contrary to the statute for that to be done. And once that dissolution occurs, then you get the Syers v Syers order. The Syers v Syers order enables one to get such relief in relation to the capital of the partnership that one is able to get, but of course there is the claim for the profits which have been earned up to the date when that decree is made. That doesn't necessarily fit easily within the consent of damages, and it's for that reason and the way your Honour has framed the orders at the moment it would seem to us that the orders would be limited to the date of the invalid notice of termination which in our respectful submission would be wrong in law.”

[10]    His Majesty’s counsel may be right that I am wrong, but that is not a decision for me to make, rather (on the assumption that I disagree) it is a matter for the Court of Appeal to decide if I was “wrong in law.”

39. The primary judge then addressed separately each of the four issues about which the appellant complained.

Issue 1 - The date of dissolution of the partnership

40. The primary judge accepted that the usual position may be that dissolution of a partnership under the just and equitable ground occurs on the date judgment is given but did not accept that “there is a rule to this effect”. His Honour held that he had a discretion to fix a different date of dissolution. In the present case, it was possible to identify the date of dissolution of the partnership as at the date of the filing of the Further Amended Statement of Claim (“FASOC”) in which Mr Lewis sought a declaration that the partnership was at an end.

41. The primary judge concluded that Mr Lewis had pleaded at [91] of the FASOC that the cross-appellants had repudiated the partnership, and that this repudiation was accepted by Mr Lewis’ filing of the FASOC. The primary judge confirmed that at the date of dissolution, under s 39 of the Partnership Act, the just and equitable ground, should be the date of filing the FASOC.

Issue 2 - The making of a “buy-out order”

42. Mr Lewis submitted that the primary judge should have made a “buy-out” order containing all the integers described above.

43. The primary judge quoted the (No 5) judgment at [118] (set out at [35] above) in finding that the “nature and heads of the damages” which the appellant sought are “kept alive”. The primary judge said: “I see no confusion, no misapprehension, and no reason for any variation. The assessment process will take place and will decide upon the nature of the damages which flow from my liability findings. I specifically adopted, with slight amendment, one of the orders sought by [Mr Lewis]”.

44. It followed that the question of whether a “buy-out” order should be made and the components of such an order would be determined in the second tranche of the hearing before the primary judge.

Issue 3 - Whether Mr Lewis remained a Capital Partner

45. Mr Lewis sought to reopen the primary judge’s reasons to allow Mr Lewis to contend that he remained a Capital Partner.

46. The Capital Partners opposed reopening the primary judge’s reasons to allow Mr Lewis to contend that he remained a Capital Partner, because that matter had not been pleaded. Mr Lewis submitted that there was no need for him to plead that he remained a Capital Partner because, as a matter of law, having not been properly expelled from the partnership, he remained a Capital Partner.

45. The primary judge rejected Mr Lewis’ attempt to reopen the primary judge’s reasons to allow Mr Lewis to contend that he remained a Capital Partner. Although Mr Lewis had not acted as nor been treated as a Capital Partner since the purported expulsion, the primary judge said “[t]his was not the appellant’s fault. This is precisely why he now has an entitlement to damages as contemplated by [118] of my reasons”. The primary judge “reject[ed] the notion of any misapprehension”.

Issue 4 - Findings sought about an alleged loss of a chance

48. Mr Lewis sought to contend that he was entitled to findings that he had suffered a loss of a chance to increase his calibration points.

49. The primary judge stated that Mr Lewis’ submission that he could not claim a loss of a chance to increase his calibration points arose from an overly restrictive reading of [118] of the (No 5) judgment. His Honour held that Mr Lewis could, in the second tranche of the hearing, advance a claim for damages on the basis of a lost opportunity to increase his calibration points.

Grounds of Appeal and Cross-Appeal

50. On 17 July 2024, the appellant filed an amended notice of appeal in the proceedings no 2024/162806 which listed 23 grounds. The grounds ranged widely, such that a three-day trial became a full three-day appeal:

Orders dated 8 April 2024

1    The primary judge erred in not determining “all other issues in the proceedings” other than the assessment of the quantum of any relief (as required by Orders dated 10 February 2023).

2    The primary judge erred, in the circumstances of this case, in not determining all issues raised by the appellant and in failing to give reasons with respect to their determination because certain claims made by the appellant have thereby been left undetermined by the Court.

3    The primary judge erred in not concluding that Mr Martinez breached the Partnership Deed in August 2020 by not faithfully discharging his duties to the appellant in relation to the August 2020 recalibration process the subject of August Resolution 1 and by instead designating the appellant as a Fixed Draw Partner and making an impermissible recommendation to Capital Partners that the appellant’s Calibration Points be reduced to zero.

4    The primary judge erred in not concluding that, by designating the appellant as a Fixed Draw Partner in the August 2020 recalibration process, Mr Martinez misled at least some Capital Partners into believing that the appellant had agreed to become a Fixed Draw Partner.

5    The primary judge erred in not concluding that, by August Resolution 1, the appellant lost the chance to have his Calibration Points increased, and that that loss of chance gave rise to a claim in damages.

6    The primary judge erred in not concluding that August Resolution 3, by which the Capital Partners resolved to use Weighted Calibration Points for the allocation of shares in the corporate entity which was to acquire the business of the partnership and to be the subject of an IPO, was unlawful.

7    The primary judge erred in not concluding that, by August Resolutions 1 and 3, Mr Martinez improperly sought to exclude the appellant from participation in the proposed IPO.

8    The primary judge erred in not concluding that, by October Resolution 2, Mr Martinez improperly sought to exclude the appellant from participation in the proposed IPO.

9    The primary judge erred in concluding that it was necessary, in point of law, for his Honour to positively determine the existence of a particular improper purpose in the moving of the Expulsion Motion on 7 November 2020 and in purportedly expelling the appellant, rather than concluding that it was only necessary for his Honour to determine the absence of a proper purpose.

10    The primary judge erred in not concluding that the Expulsion Motion was moved for an improper purpose, namely to give effect to the decision taken by Mr Martinez in August 2020 to exclude the appellant from participation in the IPO and that by moving the Expulsion Motion Mr Martinez (as Managing Partner and agent for the respondents) breached the Partnership Deed and his obligations to the appellant.

11    The primary judge erred in not concluding that the purported expulsion of the appellant involved either a particular improper purpose or the absence of a proper purpose.

12    The primary judge erred in not concluding that, in circumstances where the appellant had presented a prima facie case of impropriety, Mr Martinez deliberately withheld an explanation for the attempted expulsion in his affidavit evidence, and that such deliberate withholding was tantamount to an admission.

13    The primary judge erred in making a declaration that the purported Expulsion Resolution was “invalid” so as to constitute a breach of the Partnership Deed, and not also declaring that the purported Expulsion Resolution was otherwise null and void and of no legal effect.

14    The primary judge erred in concluding that the appellant had not, until closing submissions, stated that his position was that he remained a Capital Partner, because:

(i)    the appellant’s position was at all times (as communicated to the respondents and the Court) that the purported Expulsion Resolution was null and void and of no legal effect;

(ii)    the appellant sought relief in the nature of a buy-out order of his interest in the partnership property, as well as an order that the respondents pay to him his share of the net profits to the date on which any such buy-out order was made;

(iii)    the appellant’s pleaded case involved alternative claims premised on repudiation of the Partnership Deed and relief in equity because the state of law in Australia was uncertain;

(iv)    the appellant had expressly communicated that uncertain state of the law to the Court and the respondents in written submissions in 2022, and the respondents made no objection as to the appellant’s pleaded case.

15    The primary judge erred in making a declaration that, as between the appellant and the respondents, the partnership was dissolved with effect from 10 February 2021 (being the date of the filing of the statement of claim).

16    The primary judge erred in not decreeing that the partnership, as between the appellant and the respondents, be dissolved from the date of judgment.

17    The primary judge erred in characterising the equitable relief sought by the appellant as “specific damages”, and in not making a buy-out order in consequence of the dissolution of the partnership as sought by the appellant.

18    The primary judge erred in limiting the appropriate relief to be granted to damages in consequence of the established breaches of the Partnership Deed.

Orders dated 10 May 2024

19    The primary judge erred in dismissing the appellant’s notice of motion filed on 15 April 2024.

20    The primary judge erred in concluding that because the arguments made by the appellant on his motion could be heard and determined by the Court of Appeal on an appeal, his Honour was precluded from hearing and determining them (and making variation orders in consequence of them) on the appellant’s motion.

21    The primary judge erred in concluding that, in circumstances where his Honour was confronted by fixing the date of dissolution of the partnership at one of two dates, it was proper for his Honour to affix a date without hearing from the parties first.

22    The primary judge erred in concluding that his Honour had not misapprehended the law with respect to the “Buy-Out Order Point” because, by failing to order either a general winding up or buy-out in consequence of the dissolution of the partnership, his Honour has not dealt with the appellant’s extant interest in the partnership property, and an order directing an assessment of damages for breaches of the Partnership Deed is not apt to describe an assessment of the value of the appellant’s interest in the partnership property for the purposes of a buy-out order.

23    The primary judge erred in concluding that the loss suffered by the appellant as a consequence of the purported Expulsion Resolution and declaration that the partnership was dissolved with effect from 10 February 2021 (being the date of the filing of the statement of claim) was remedied by an award of damages.

51. The notice of cross-appeal was dated 8 July 2024. The notice of cross-appeal contained the following eight grounds:

1   The primary judge erred in determining that the resolution of the Capital Partners of the partnership known as HWL Ebsworth (Partnership) on 8 November 2020 by which the first cross respondent was expelled from the Partnership was invalid because of breaches of the Partnership Deed: PJ1 [26], [51], [60], [99]-[103], [118].

2   The primary judge erred in finding that the following resolutions of the Capital Partners of the Partnership made on 8 November 2020:

a.   “Pursuant to Clause 20 of the Partnership Deed dated 20 May 2016, that the Lewis HWL Practice Trust be expelled with immediate effect from the Partnership”;

b.   “That all time limits or other technical requirements are hereby waived and/or abridged”,

were invalid: PJ1 [26], [51], [60].

3 The primary judge erred in finding that resolution (b) was invalid because it did not precede the expulsion resolution: PJ1 [41(1)], [44], [50], [51].

4 The primary judge erred in finding that the two resolutions could not be voted upon by a single voting button which did not allow for one to be considered separate to the other: PJ1 [41(2)], [44], [50], [51].

5   The primary judge erred in finding that an Extraordinary Resolution of the Capital Partners of the Partnership required not less than 80% of the total number of Capital Partners rather than 80% of the Capital Partners who voted in a manner as stipulated by the Rules: PJ1 [58], [59], [60].

6   The primary judge erred in finding:

a.   that it was a precondition for the validity of the resolutions that the proposed resolutions provided reasons for the proposed resolutions: PJ1 [96], [97];

b.    or alternatively, that the second email sent at 5:24pm on 7 November 2020 provided reasons to the extent they were required: PJ1 [96], [97].

7   The primary judge erred in failing to find that the Partnership as between the cross- appellants and the first cross-respondent had been:

a.   terminated by the valid expulsion of the first cross-respondent from the Partnership on 8 November 2020;

b.   alternatively, terminated by the filing and service of the statement of claim on 10 February 2021: PJ1 [109]-[115].

8   The primary judge erred in making an order for costs of the hearing of the separate question in circumstances where the cross-appellants had contended that ultimately no damages would be established: PJ1 [119]-[121].

52. The cross-appellants, the Capital Partners, also filed a notice of contention containing one ground:

The primary judge erred in finding that the Capital Partners of the Partnership owed a fiduciary duty to the plaintiff in considering a motion for the expulsion of the plaintiff from the Partnership: PJ1 [92].

53. The matters addressed by the cross-appeal arise logically before the matters addressed by the appeal. For that reason, it is appropriate to address the cross-appeal first.

Notice of cross-appeal grounds 1-6: Validity of the November 2020 expulsion resolution   

54. Grounds 1-6 concern questions of construction of the Deed and the Rules. The principles of construction were described by the primary judge as being:

[31]   I have referred above to Battle where it was said that an expulsion clause should not be considered loosely. The plaintiff submitted that the method of construction should go further to the extent that there should be a strict construction of the expulsion provisions.

[32]   I was referred to the decision of Meagher J in Cappe v Tsung [2018] NSWCA 86, at [25]:

“The character of these rights and duties justifies a reluctance to find that the parties intended to authorise so substantial a variation. General wording in an express power is insufficient to authorise what would otherwise constitute a breach of fiduciary duty by an agent: Tobin v Broadbent (1947) 75 CLR 378 at 401 (Dixon J). And even specific powers to deal with the property of a minority interest-holder are strictly construed: see Blisset v Daniel (1853) 10 Hare 493 at 506; 68 ER 1022 at 1028 (Page Wood V-C) (as to powers of expulsion between partners); Gambotto v WCP Ltd (1995) 182 CLR 432 at 446 (Mason CJ, Brennan, Deane and Dawson JJ), 452 (McHugh J) (as to powers to appropriate shares in a company).”

[33]   The defendants did not accept the applicability of Cappe and in particular the reliance, for the present case, on Blisset v Daniel (1853) 10 Hare 493; 68 ER 1022. The defendants said I should prefer the interpretation of Callaway JA in the Victorian Court of Appeal as stated in Hanlon v Brookes (1997) 15 ACLC 1626 at 1631:

“Such expressions must always be understood in the context of the case in which they were uttered, and of course it is not the law that, provided the expelled partner’s legal advisers can think of a construction of the partnership agreement that is favourable to him or her, the case is decided in their client’s favour. What is meant is, for example, that, if a 70 per cent majority is required, a 69 per cent majority will not do; that, if 14 days’ notice in writing is required, 13 days’ notice in writing or 15 days’ oral notice is insufficient; and that the requirements are usually mandatory in character and not directory. The last point does not entail that they cannot be waived, nor is waiver excluded by the possibility that seven days’ notice may have provided a “cooling off” period. It means that a purported expulsion without compliance or waiver is invalid. The language of Wallace, P. in Bond v Hale at p. 206 is to be preferred, namely that “a measure of strictness” is in order in the construction of an expulsion clause.”

[34]   The approach in Hanlon was said to be endorsed by Austin J in Variety Video v Jones [2001] NSWSC 5 at [79]:

“The significance of s25 in the present context is that it evidences a legislative policy that no majority of partners can expel any partner unless a power to do so has been expressed between them, and consequently ‘a measure of strictness in the construction of an expulsion clause is in order’ (Bond v Hale, at 206 per Wallace P). It seems to me that observations by Page Wood V-C in Blisset v Daniel (1853) 10 Hare 493; 68 ER 1022, at 505 (1027), to the effect that the construction must be ‘of the strictest character’ and that such a clause ‘will be construed in a court of equity strictly against the partners exercising the power of expulsion’ state the matter too highly. In saying so I respectfully adopt the reasoning of Wallace P in Bond v Hale and Callaway JA in Hanlon v Brookes at 1631-2.”

[35]   The defendants’ submission ultimately suggested this approach:

“Accordingly, in this case there should be “a measure of strictness” of construction in relation to expulsion, rather than a construction that “must be strictly construed” as submitted by the plaintiff.”

[36]   I think that the same result is produced whatever the measure of strictness that is applied. Approaching the matter, as put forward by Austin J in Variety Video, namely by giving effect to “the intention of the parties to the agreement” I should take into account that the Deed reflects an intention of the parties that, firstly, the resolution must be extraordinary, which of itself carries a meaning of ‘out of the ordinary’, and secondly, that expulsion is a very serious step to be taken.

55. In Variety Video v Jones [2001] NSWSC 5 at [75], Austin J said “although consistency of interpretation of commercial agreements by courts is a desirable objective, the first task of any court is to construe the agreement before it”. I agree.

56. I am prepared to assume, as the primary judge found, that the expulsion provisions of the Deed should be construed using "a measure of strictness", reflecting an objective intention of the parties that expulsion be by “Extraordinary Resolution” as defined. This is because exercise of the expulsion power has significant implications for the rights of the affected parties.

57. Nevertheless, it is a task of construction which is engaged. It is only by application of the principles of construction that “a measure of strictness” may be determined and employed. The principles of construction are clear. In Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640 French CJ Hayne, Crennan and Kiefel JJ said:

[35]   Both Verve and the Sellers recognised that this Court has reaffirmed the objective approach to be adopted in determining the rights and liabilities of parties to a contract. The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". As Arden LJ observed in Re Golden Key Ltd, unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption "that the parties … intended to produce a commercial result". A commercial contract is to be construed so as to avoid it "making commercial nonsense or working commercial inconvenience". (footnotes omitted)

58. In Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited (2015) 256 CLR 104; [2015] HCA 37, French CJ, Nettle and Gordon JJ said:

[46]   The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.

[47]   In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.

[48]   Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.

[49]   However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating". It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals. (footnotes omitted)

Grounds 1 and 2 – Conclusions about breaches of the Deed

59. Grounds 1 and 2 of the cross-appeal each express a conclusion that the primary judge erred in finding that the 8 November 2020 resolution of the Capital Partners was invalid because of breaches of the Deed. The findings made supporting the primary judge’s conclusion are the subject of grounds 3-6 of the cross-appeal, to which I now turn.

Grounds 3 and 4 – Order of resolutions and a single voting button

60. As the present question is one of construction, it is important to sketch the essential terms of the Deed.

61. Clause 1 of the Deed includes the following definitions:

1. An Extraordinary Resolution “means a resolution of the Capital Partners passed by not less than 80% of the Capital Partners voting in a manner as stipulated by the Rules from time to time”.

2. A Fixed Draw Partner “means partners appointed by the Managing Partner who do not contribute capital and are ineligible to vote upon partnership resolutions and have a fixed draw of profits as determined by the Managing Partner.”

3. A Unanimous Resolution “means a resolution passed by all Capital Partners voting in a manner as stipulated by the Rules from time to time”.

62. A number of matters should immediately be noted. An Extraordinary Resolution and a Unanimous Resolution, as defined by the Deed, refer to a resolution passed by an identified percentage of the Capital Partners “voting in a manner as stipulated by the Rules from time to time”. The Deed, in terms, identifies the manner of voting by Capital Partners and the central importance of the Rules in that process. As I will explain, the fact that the Deed uses the phrase “voting in a manner as stipulated by the Rules from time to time” for both Extraordinary Resolutions and Unanimous Resolutions is a critical issue of construction that was overlooked by the primary judge.

63. The partnership continues until it is dissolved in accordance with its terms: cl 2.1. Critically, the admission, retirement or expulsion of a Capital Partner will not, without the unanimous consent of the Capital Partners, dissolve the partnership and it is specifically provided that the remaining partners will continue to conduct the practice under the terms of the Deed: cl 2.4.

64. Clause 9.1 provides that unless otherwise stated, all decisions are to be made by a majority of the Capital Partners. Clause 9.2 provides that the “Capital Partners may by Extraordinary Resolution make and vary the Rules for the conduct of meetings”.

65. Importantly, cl 17 of the Deed provides for the consequences of voluntary retirement or the death or permanent disability of a Capital Partner, namely that “[a] Capital Partner who dies or becomes permanently disabled is treated as a partner who has retired voluntarily” and cl 19.1 provides that no payment of goodwill arises on the death or retirement of a Capital Partner.

66. Clause 19 states:

19.1 No Capital Partner is entitled to receive any payment or compensation for any goodwill associated with the Practice or any increase in value of the Partnership assets on a Capital Partner's death or retirement when compared with their value at the date of that Capital Partner's admission or during that Capital Partner's term as a Capital Partner.

19.2 The Capital Partners acknowledge that their only entitlement as Capital Partners is as provided in this deed up to the date that they cease to be a Capital Partner.

67. A Capital Partner leaving the partnership for any reason has only the entitlements of a Capital Partner expressed in the Deed: cll 19.2 and 20.2(d) of the Deed. That is so whether the Capital Partner retires, dies (cl 19.1) or is expelled (cl 20.2(b)). The entitlements of the departing partner are to receive their proportion of undrawn profits as at the date of departure, together with their share of WIP: cll 18.3 and 20.3 of the Deed. The Deed governs the Capital Partners’ rights on expulsion to the exclusion of the Partnership Act provisions which would otherwise apply.

68. At the heart of the cross-appeal is the correct construction of cl 20 of the Deed which deals with the expulsion of Capital Partners. Clause 20 provides:

20. Expulsion of Capital Partners

20.1 Extraordinary Resolution

The Capital Partners may by Extraordinary Resolution expel any other Capital Partner.

20.2 Acknowledgement

The Capital Partners acknowledge and agree that:

(a) no reason need be given for expulsion of a Capital Partner by Extraordinary Resolution;

(b) the intention of the agreement embodied in this deed is to ensure that the Capital Partners shall be at liberty to expel any Capital Partner on the basis that the expelled Capital Partner has no goodwill in the Practice as stipulated in clause 19;

(c) the intention of this deed is to afford flexibility for the Capital Partners to expel any Capital Partner by Extraordinary Resolution for any reason they deem appropriate; and

(d) as and from the date of expulsion of a Capital Partner, that expelled Capital Partner’s Nominated Person shall have no other right or entitlement pursuant to this deed except those entitlements which have accrued to the date of expulsion.

20.3 Consequence of expulsion

Clause 18 applies to a Capital Partner expelled pursuant to clause 20.1 save and except as provided below:

(a) the entitlement to any undrawn net profits and WIP to which that Capital Partner is entitled to be paid having regard to the methodology set out in clause 18.3 shall be paid on the following basis:

(i) within 30 days of expulsion of any Capital Partner the National Finance Manager shall determine an estimate of that Capital Partner’s entitlement to any undrawn net profits and WIP and pay to him/her one half of such estimated entitlement; and

(ii) thereafter within a further 60 days the National Finance Manager shall verify the total entitlement of that Capital Partner and the outstanding balance due to him/her shall be paid immediately;

(b) all provisions of clause 18.1 apply where a Capital Partner is expelled.

For avoidance of doubt, clause 20.3(a) above is subject to clause 20.6.

20.4 Notices

(a) All notices, documents, discussions and matters relating to the expulsion or attempt to expel the offending Capital Partner must be kept confidential by all Capital Partners which confidentiality will remain a continuing obligation notwithstanding the termination of this deed.

(b) At least seven days written notice must be given to all Capital Partners including the Capital Partner proposed to be expelled.

20.5 Variation

The terms of this clause and all procedures referred to in this clause may only be varied by Extraordinary Resolution of the Capital Partners.

20.6 Withholding and set off Monies

In the event of expulsion of a Capital Partner, if:

(a) a liability arises under clause 15.3 as a result of a breach under clause 15.1 or 15.2 by that Capital Partner or its Nominated Person; or

(b) that Capital Partner or its Nominated Person has failed to comply with its obligations under this deed and that failure has, as determined by the Managing Partner (acting reasonably) at the date of expulsion, caused or is likely to cause loss or damage to the Practice,

the Capital Partner's entitlement to its current account may be reduced by an amount equivalent to the loss and damage suffered or incurred by the Practice by reason of the non-compliance and the Managing Partner shall be at liberty to withhold from, that Capital Partner's current account a sum that, in the Managing Partner's opinion (acting reasonably), represents the loss and damage suffered by, or likely to be suffered by the Practice by reason of the non-compliance under this deed pending resolution or determination of any dispute in relation to whether there was any non-compliance under this deed causing loss and damage and if so the quantum of the loss and damage suffered or incurred by reason of the non-compliance under this deed.”

69. A number of initial observations should be made. First, cl 20.5 is a specific power in addition to the general power in cl 9.2 of the Deed. The terms of cl 20.5 are critical. It provides a specific power to vary the terms of cl 20 including all procedures referred to in this clause. In relation to construction of the very restraint that the primary judge found was important, the requirement for seven days’ notice, cl 20.5 of the Deed expressly permitted variation of that seven days’ notice requirement. That is, the notice provisions in cl 20.4 were subject to the specific power of variation by the terms of cl 20.5 itself.

70. Secondly, no finding was made by the primary judge that the terms of the November resolution failed to effect a variation of the notice procedures within the meaning of cl 20.5 and no notice of contention seeking such a finding was filed. Thirdly, the Deed confers specific powers on the Capital Partners to expel another Capital Partner without giving any reason for doing so: cl 20.2(a). Fourthly, Capital Partners are entitled to expel another Capital Partner on the basis that he or she has no entitlement to goodwill of the partnership: cl 20.2(b). I will return to cl 20 later in these reasons.

71. The Rules are important to the determination of this appeal. Decision making occurs pursuant to cl 9 of the Deed and pursuant to the Rules. The Rules are referred to in cl 20 of the Deed and are expressly incorporated in the definitions of Extraordinary Resolution and Unanimous Resolution. The Rules are set out in Annexure A to the Deed. The relevant parts of the Rules are as follows:

1. Rule 1.3 provides that “notice of a meeting of Capital Partners must be given by the Managing Partner at least seven days (or such period as may be agreed upon or ratified by the Capital Partners by Majority Resolution) before the time appointed for the holding of the meeting”.

2. Rule 1.5 provides that “[n]o quorum is required to transact business. A proposed resolution shall be validly dealt with on the basis of any required vote by those Capital Partners voting provided all Capital Partners have been notified of a meeting in accordance with these Rules”.

3. Rule 2 provides explicit permission for email resolutions and the application of voting buttons to accept or reject a proposed resolution or, importantly, “resolutions”:

2.1 The Capital Partners may pass any resolution without a Capital Partners’ meeting being convened but rather via email.

2.2 Any proposed email resolutions can only be initiated by the Managing Partner.

2.3 Any proposed email resolution shall include:

(a) the substance of the resolution;

(b) the basis for the resolution with any relevant information;

(c) the time/date by which the vote must conclude; and

(d) apply voting buttons or allow for email vote to accept or reject the proposed resolution(s). (emphasis added)

72. As I have explained, at [19], the primary judge found that the November resolution was invalid because:

“(1)   The variation of the seven days’ notice should have preceded the expulsion resolution, perhaps to the extent of a separate resolution on a separate day.

(2)   The two resolutions could not be voted upon by a single button which did not allow for one to be considered separate to the other.”

73. I am unable to accept that the Deed and the Rules, properly construed, have this effect. The Deed expressly provided the right to the Capital Partners to expel a Capital Partner. The specific mechanism for effecting an expulsion of a Capital Partner was itself designed to be flexible: cl 20.5 of the Deed; Rule 2.

74. The notice provisions of cl 20.4 were “procedures” within the meaning of cl 20.5, capable of change, including waiver, by Extraordinary Resolution. Rule 2.1 permitted any resolution to be considered by email. Rule 2.3 gave specific permission for voting buttons to be applied to accept or reject the proposed (plural) resolution(s). Rule 1.3 provided specific permission for notice of a meeting to be subject to ratification after the event. These provisions provide express powers which are inconsistent with the primary judge’s conclusion that there was an implicit requirement in the Deed and Rules for a resolution seeking to vary or waive the period of seven days’ notice required by cl 20.4(b) to have preceded the expulsion motion.

75. The making of a resolution “that all time limits or other technical requirements are hereby waived and/or abridged” was within the power in cl 20.5 and cl 9.2 and Rule 1.3. There was no express or implied requirement for the resolution “that all time limits or other technical requirements are hereby waived and/or abridged” to precede the expulsion resolution. The resolutions were designed to be addressed simultaneously. The Capital Partners could vote ‘no’ if they disagreed with either resolution. Specific permission for resolutions (plural) to be addressed by email vote was given by Rules 2.1 and 2.3.

76. There was power to make the Extraordinary Resolution to vary the seven days’ notice required by cl 20.4(b). So much was not doubted by the primary judge. If the intention of the Deed, objectively ascertained, was that a resolution varying the notice provision in cl 20.4(b) had to precede the expulsion resolution there would have been some explicit or implicit support for that conclusion. To the contrary, the Deed and the Rules clearly provide that multiple email resolutions may be voted on at the same time. As I have said, Rule 2.3 provides express power to “apply voting buttons or allow for email vote to accept or reject the proposed resolution(s)” (emphasis added). A requirement for successive resolutions or, in this case, for a particular order of resolutions, is also inconsistent with the express power to ratify, after the event, a change in the meeting notice provisions provided by Rule 1.3.

77. Construing the Deed and the Rules with the same measure of strictness as identified by the primary judge, the resolution that “all time limits and other technical requirements are hereby waived and or abridged” and the order it appeared in the November email were within the specific powers of a meeting considering an expulsion motion: cll 20.5 and 9.2; Rules 1.3 and 2. No reason based on a construction of the Deed and the Rules was identified by the primary judge or Mr Lewis requiring the resolution waiving time limits to precede the expulsion resolution. I accept the Capital Partners’ submission that the primary judge erred in concluding that “[t]he variation of the seven days’ notice should have preceded the expulsion resolution, perhaps to the extent of a separate resolution on a separate day”. Mr Lewis’ complaint about the order of resolutions should have been rejected.

78. As to the second conclusion reached by the primary judge, that use of a single voting button was impermissible, I am likewise unable to agree. Mr Lewis claimed that the single button created a situation where the vote itself was “like a meeting which was null and void and at which no business could be validly transacted”. That is not so. The Rules, which also apply to in-person meetings, are flatly inconsistent with Mr Lewis’ submissions and the conclusion of the primary judge on this issue. Rule 1.3 provides express power that “notice of a meeting of Capital Partners must be given by the Managing Partner at least seven days … before the time appointed for the holding of the meeting”. That notice provision is subject to the parenthetical “or such period as may be agreed upon or ratified by the Capital Partners by Majority Resolution”. In the ordinary course a Majority Resolution is sufficient to reduce the time required from calling a meeting. Non-compliance with the notice provision can be ratified by a meeting of the Capital Partners; that is those present and voting may, by Majority Resolution, ratify, after the event, a non-compliance with the notice provision. This express provision is inconsistent with the construction of the Deed advanced by Mr Lewis and accepted by the primary judge.

79. Further, as I have earlier explained, Rule 2.3 provided specific permission to “apply voting buttons or allow for email vote to accept or reject the proposed resolution(s)”. The Rules specifically envisaged that a single voting button could apply to an email vote on more than one resolution, which may include Extraordinary Resolution(s). It will be recalled that an Extraordinary Resolution is defined in cl 1.1 of the Deed as being “a resolution of the Capital Partners passed by not less than 80% of the Capital Partners voting in a manner as stipulated by the Rules from time to time”. Voting in a manner “as stipulated by the Rules” clearly envisaged that a single voting button could be applied to an email vote on more than one resolution.

80. A Capital Partner was entitled to vote ‘no’ even if he or she agreed with one of the two co-joined resolutions. I would not lightly conclude that a partner of a national law firm faced with the November resolutions would not have understood that by voting “yes” he or she was agreeing with both resolutions. To the extent it is relevant, Mr Lewis, who bore the onus, did not prove that any Capital Partner failed separately to consider the waiver resolution. I do not accept that Mr Lewis’ appeal to the undoubted "seriousness of consequences" means that the Deed and the Rules do not work in the way intended. If any recipient of the email was in any doubt about the meaning of the resolutions, they had the ability to seek clarification and, if not forthcoming, simply to vote “no”.

81. Construing the Deed and the Rules with the same “measure of strictness” identified by the primary judge, the Deed and the Rules expressly permitted the application of a single voting button to accept or reject more than one proposed Extraordinary Resolution. The primary judge erred in concluding that “[t]he two resolutions could not be voted upon by a single button which did not allow for one to be considered separate to the other”. The primary judge should have rejected Mr Lewis’ claim to that effect.

82. There were a number of separate points advanced by Mr Lewis on appeal which were not the subject of findings by the primary judge or any notice of contention advanced by Mr Lewis. I will nevertheless address them briefly.

83. As to the construction of cl 20.5 of the Deed, I reject Mr Lewis’ submission that these grounds of the cross-appeal “must fail” because they do not account for the distinction between variation and waiver. The resolution sought to waive or abridge the notice requirement. On its correct construction, cl 20.5 of the Deed permitted time limits for a particular expulsion vote to be changed or waived. In context, the power to vary “procedures” for a particular vote did not require alteration of the notice obligations for all future cases. Contrary to Mr Lewis’ submissions in this Court, the primary judge did not decide that the power in cl 20.5 was not properly engaged by the November resolution. In context, there was no need to distinguish between a requirement being “varied” or “waived”, because a waiver of the contractual requirement for notice, in context, should be understood as a variation of the procedures provided by cl 20.4(b) of the Deed. The resolution passed as part of the November resolution was a “variation” of a procedure referred to in cl 20 properly made within the meaning of cl 20.5.

84. I reject Mr Lewis’ submission that a “person to whom notice of a meeting is required to be given … cannot themselves waive the obligation of the person convening the meetings … to give notice”. That is the clear meaning of the Deed. There is no issue in this case that every Capital Partner received the November notice and could vote if he or she so chose. I reject Mr Lewis’ submission that the notice provisions could only be waived by Mr Lewis himself. This was not a conclusion reached by the primary judge and no notice of contention was addressed to this issue. In any event, the suggestion that only Mr Lewis could waive the notice requirement in cl 20.4(b) is not what the Deed plainly provides.

85. I would uphold grounds 3 and 4 of the cross-appeal.

Ground 5 - Was the resolution an “Extraordinary Resolution”?

86. It will be recalled that the primary judge found that an Extraordinary Resolution was not carried unless 80% of all Capital Partners voted in favour of the resolution rather than 80% of the Capital Partners who voted. I do not agree.

198. Mr Lewis’ case on appeal, at least until the third day, was that the decision whether to backdate is “not a discretion for the Court”. Although Lyon v Tweddell “might be understood as leaving room for backdating in certain circumstances”, “[t]here is no reason why the approach in Lyon v Tweddell should not be applied according to its terms so that where … the just and equitable ground was invoked in the result of an unsuccessful expulsion attempt … the date of dissolution to be decreed by this Court should have been the date of judgment (and, now, the date of judgment in the Court of Appeal)”. This is because the language of the Act makes clear that, contrary to the language in s 36, s 39 “gives the Court a power to be exercised when the facts that precondition its exercise are established”. It is the exercise of judicial power and not any notice given by a former partner that brings about the dissolution of the partnership.

199. Mr Lewis submitted that this Court should not accord “unwarranted significance” to his pleaded acceptance of repudiation by the Capital Partners. Mr Lewis submitted that his pleading of repudiation at [91] in the FASOC was “pleaded in deference to the obiter statement of McColl JA in Ryder v Frohlich [2004] NSWCA 472”. Finally, Mr Lewis submitted that to the extent the Court had any discretion to exercise the power to backdate, “the discretion miscarried because it deprived Lewis of his proprietary interest in the Partnership property and the share in the Partnership profits”.

200. My reasons for rejecting grounds 15 and 16 may be shortly expressed. Mr Lewis did not submit at the trial that the appropriate date for dissolution was the date of judgment. In any event, it is not correct there is a rule (of construction or otherwise) that an order may not be made backdating (from the date the order is made) the dissolution of a partnership under s 39 of the Partnership Act. Decisions consistent with the existence of such a discretion include Singh v Singh [2024] NSWSC 932 at [32]; Pirrottina v Pirrottina [2024] NSWSC 558 at [134]-[140] (noting an appeal is reserved but not on this issue) and Yard v Yardoo Pty Ltd [2007] VSCA 35 at [104]-[105] where the dissolution of a partnership under provisions equivalent to s 39 of the Partnership Act was backdated. I do not accept Mr Lewis’ written submission that the ability retrospectively to make an order under s 39 is limited to two person partnerships. Neither authority nor principle supports such a limitation.

201. In the present case, on the primary judge’s findings there was every reason to fix the date from which the order took effect as being the date the FASOC was filed by Mr Lewis seeking a declaration that he was no longer a Capital Partner. Contrary to Mr Lewis’ submission, the pleadings contained a clear and unambiguous notice of intention to dissolve the partnership.

202. I would reject grounds 15-16.

Grounds 17-18 and 19-23: “Specific Damages” and Buy-Out orders   

206. By grounds 17-18 Mr Lewis asserted that the primary judge erred in overlooking the fact that the relief he has given to Mr Lewis was incomplete. Mr Lewis submitted this was demonstrated by order 3 made on 8 April 2024 which provided that Mr Lewis’ “damages arising from the breaches of the Partnership Deed, if any, are to be assessed”. The essence of these grounds is that the primary judge failed to comply with his duty to decide upon the fair terms of the dissolution and that he should have made a “buy-out” order.

207. In ground 17, Mr Lewis submitted that “Order 3 by its terms does no more than award Lewis damages arising from the breach of the Partnership Deed”. Mr Lewis submitted that this order awarding damages does not deal with Mr Lewis’ asserted interest in the partnership property, since damages in contract are “designed to put the innocent party in the position he would have been had the breach not occurred” (citing Tabcorp Holdings Ltd v Bowen Investments Pty Ltd (2009) 236 CLR 272; [2009] HCA 8) and in the case of partnerships, “a person who succeeds in challenging the validity of an expulsion has suffered no loss because he can simply return to the body from which he was purportedly expelled” (citing Wood v Woad (1874) LR 9 Exch 190)

208. Mr Lewis submitted that by omitting specific reference in the order to the appellant’s interest in the partnership, the primary judge thereby failed to discharge his duty to “decide upon what fair terms the dissolution should be made” when “dissolving a partnership on equitable grounds”, including that the primary judge failed to “look at all the facts, and do what is equitable between the parties” (citing Lyon v Tweddell at 531).

209. Mr Lewis submitted that a “buy-out order” of the kind made in Mullins v Laughton applying Syers v Syers should have been made by the primary judge at the first stage of the hearing.

210. The steps in Mr Lewis’ arguments are these. First, in the ordinary course, having decided the partnership should be dissolved on the just and equitable ground, the primary judge would have made a general winding up order for the partnership. Secondly, since no party was seeking a general winding up order, a buy-out order of the kind made in Syers v Syers was appropriate “in order to allow the other former partners to carry on the business of the Partnership”. Thirdly, as to the components of such a “buy-out” order, a court that dissolves a partnership “cannot refrain from dealing with the proprietary interests of the former partners … by not either ordering a general winding up or ordering a buy-out, insofar as disposing of the contractual claims between partners does not exhaust equity’s jurisdiction”: Hurst v Bryk at 193-196.

211. The Capital Partners contended, at least in writing, that a buy-out order was not available because Mr Lewis’ equitable claims were rejected; Mr Lewis only succeeded on his contractual claims. In what is in many respects the critical paragraph on relief issues in the (No 5) judgment at [118], which I have set out at [35] above, the primary judge stated that the basis upon which he found that the appellant’s expulsion was invalid was breaches of the Deed, and that damages were therefore appropriate.

212. The Capital Partners submitted that a buy-out order would be incompatible with the finding that the partnership was dissolved with effect from 10 February 2021. As the Capital Partners repeatedly emphasised, this was a “no goodwill” partnership and it was submitted that it followed that there was nothing remaining to “buy-out” given the payments which had already been made to Mr Lewis. The Capital Partners submitted that Mr Lewis was not entitled to any relief by reference to any claimed value of interest in the property of the partnership at the assessment stage; he was entitled to whatever heads of damage he can establish at that stage for breach of contract.

213. What the primary judge actually did about the complaint at the heart of ground 17 was explained in the (No 6) judgment. As I have set out at [43] above, what the primary judge said of the complaint that he had not made a “buy-out” order at this stage was “I see no confusion, no misapprehension, and no reason for any variation. The assessment process will take place and will decide upon the nature of the damages which flow from my liability findings. I specifically adopted, with slight amendment, one of the orders sought by [Mr Lewis]”.

214. I have already expressed doubt about whether the term “specific damages” was a description apt to include the possible making of a “buy-out order”. Nevertheless, it is tolerably clear that in the (No 6) judgment, the primary judge was leaving it open to both parties to lead whatever further evidence they wished to and to agitate for the making (or non-making) of a buy-out order and, if made, the components of such an order at the second stage hearing. The position of the parties was complex.

215. Mr Lewis’ case can be summarised thus:

1. Mr Lewis sought damages at common law. Having decided that equitable relief was appropriate (i.e. dissolution on the just and equitable ground), the primary judge could not make an award of damages. In Cyril Henschke at [22], the High Court endorsed Lord Millett’s statement in Hurst v Bryk at 194 that, “Neither during the continuance of the relationship nor after its determination has any partner any cause of action at law to recover moneys due to him from his fellow partners”. Thus, to the extent the primary judge purported to award common law damages for breach, instead of granting equitable relief in consequence of dissolution, his Honour erred.

2. Mr Lewis submitted that, before the winding up of the partnership, he held a sui generis interest in all of the assets of the partnership: Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 at 327-328. He retained that interest on dissolution pending a final liquidation: Hendry v Perpetual Executors & Trustees Association (1961) 106 CLR 256 at 266.

3. Mr Lewis’ case was that the partnership property he held included goodwill. Goodwill is the right to conduct a business in substantially the same manner and by substantially the same means as have attracted custom to it: FCT v Murry (1998) 193 CLR 605. A mere agreement that a business has no goodwill does not mean that the business has in fact or law no goodwill: Foster v Commissioner of Stamps [1966] WAR 144 at 147.

4. Mr Lewis submitted that the monetary value of his interest is to be assessed on the basis of “a rateable proportion of the total value of the [partnership] as a going concern without any discount for the fact that the holding in question is a minority holding”: CVC/Opportunity Equity Partners Ltd v Almeida [2002] UKPC 16 at [37]. This is “based on a notional sale of the business as a whole to an outside purchaser”: CVC at [41].

5. Mr Lewis submitted that given his interest in the partnership property subsisted until any winding up (or buy-out order) in consequence of the dissolution, “where the partnership business survives the dissolution as a going concern, each partner retains an interest in that business as well as every asset employed in it”: Burdett-Coutts v IRC [1960] 1 WLR 1027 at 1035.

216. The Capital Partners submission was summarised thus:

our position is, …when one comes to relief and if one is seeking to fashion some relief referable to the just and equitable ground one takes into account the fact that this is what's known as a no goodwill partnership for which no payment has been made on entry.

217. I have decided that on the contingent basis I am addressing this ground it is undesirable to determine the issues raised by this ground. Those issues are complex and both parties seek to lead additional evidence on the question of whether a “buy-out” order should be made and, critically, the contents of that order. Identification and quantification of goodwill of a legal partnership can be a challenging task, involving expert evidence. I have earlier referred to Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158 and Paltos v Milevski [2023] NSWCA 7, two decisions reaching different conclusions (based on different expert evidence) about the existence and valuation of goodwill in the same legal partnership.

218. In the course of the three days of submissions on appeal, Mr Williams SC and Mr Douglas KC, whilst continuing to advocate for their primary positions, each accepted that the question of whether a “buy-out” order could be made, including its terms, was a matter which could be agitated at the second stage hearing.

219. I am not satisfied that there is sufficient evidence before this Court for me to identify the components of any “buy-out” order, should I be persuaded one should be made. If it were necessary to do so, I would not interfere in the primary judge’s determination that at the second stage hearing both parties should be permitted to lead whatever further evidence they wished to and to agitate for the making (or non-making) of a buy-out order. Despite the eminence of Neuberger J, it does not follow that in every case where a breach of a partnership agreement has been found and the partnership is dissolved under the just and equitable ground that, necessarily, an order of exactly the same kind made by Neuberger J in Mullins v Laughton should be made.

220. Any attempt by this Court to fashion a buy-out order on the basis of the limited information available is fraught with danger, including the danger of inviting further costly factual disputes which an appellate court is ill designed to resolve. Even if I were persuaded of appealable error in ground 17, the appropriate order would be to remit the matter to the primary judge to determine whether a buy-out order (including where or not it contained a component for goodwill) should be made. Given that the issue would have been addressed in the second stage of the hearing, I would have declined at this stage to interfere.

221. I would reject ground 17.

222. By ground 18 Mr Lewis submitted that, in addition to failing to make a buy-out order, the primary judge erred by limiting the appropriate relief to be granted to damages in consequence of the established breaches of the Deed. Mr Lewis submitted that the primary judge ought to have awarded equitable compensation to him in consequence of the breach of the improper purpose rule and breach of fiduciary duty that, as dealt with in grounds 3-12, the appellant submits the primary judge erred in rejecting.

223. Ground 18 may be dealt with shortly. I have explained in addressing ground 17 that it remained open to Mr Lewis to advance a claim for a buy-out order (including the possible components of that order) at the second stage of the hearing. As I would not allow grounds 3-12 of the appeal it follows that ground 18 must also be dismissed.

224. For essentially the reasons contained in grounds 17-18, in ground 22 Mr Lewis complains that his Honour erred in failing to make orders as to the terms on which the partnership was to be dissolved, including a buy-out order. For the same reasons as I have rejected grounds 17-18, ground 22 should be rejected.

225. Ground 19 is the overarching challenge to the primary judge’s dismissal of the notice of motion under UCPR r 36.16. The substantive grounds are addressed in relation to grounds 20-23. As I will explain, I reject grounds 20-23 and it follows that ground 19 should also be rejected.

226. By ground 20, Mr Lewis complained that the primary judge was incorrect to find, at [9]-[10] of the (No 6) judgment, that, because the submissions made to his Honour appeared to him to be submissions of the kind that might be made on an appeal, it was not appropriate to exercise the power to reopen the judgment. Rather, if an error of form or substance is recognised, such an error should be corrected then and there, rather than involving the parties in an appeal process: Majak v Rose (No 5) [2017] NSWCA 238 at [12]. Mr Lewis submitted that his Honour acted on a wrong principle in the House v King (1936) 55 CLR 499 sense, such that his Honour’s exercise of the discretion enlivened under r 36.16(3A) miscarried.

227. Mr Lewis submitted that the High Court has made clear the nature of its own power to reopen judgments before entry, but the considerations that weigh in the exercise of that power do not apply congruently to lower courts, insofar as those considerations are premised on its role “as a final court of appeal to prevent irremediable injustice being done by a Court of last resort”: State Rail Authority (NSW) v Codelfa Construction Pty Ltd (1982) 150 CLR 29 at 45. I agree with Mr Douglas KC that the principles applied by the High Court about the nature of its own power to reopen judgments before entry do not apply congruently to this Court and no more need be said about them.

228. I reject Mr Lewis’ submission that a fair reading of his Honour’s reasons suggests that, because his Honour had taken the view that Mr Lewis’ submissions in support of the Notice of Motion ought to have been made on appeal and not to him, he only dealt with the detail of Mr Lewis’ submissions “briefly”. To the contrary, the primary judge left open to Mr Lewis to advance at the second stage of the hearing:

1. whether a buy-out order should be made and the integers of that order if made; and

2. whether Mr Lewis could establish any loss of a chance.

229. I have concluded that there was no error of principle in the exercise of the discretionary UCPR r 36.16(3A) power. That power is to be exercised “sparingly and with caution”: Dibb v Transport for New South Wales (No 2) [2024] NSWCA 176 at [8] (Payne, Kirk and Stern JJA). The jurisdiction is directed at where the Court proceeded under a misapprehension, not with deliberate decisions which are said to be incorrect: Dickson v Commissioner of the Australian Federal Police (No 2) [2023] NSWCA 111 at [4] (Meagher and Brereton JJA).

230. The primary judge appropriately addressed the matters of substance raised by Mr Lewis. Mr Lewis was entitled, under the conclusions reached by the primary judge, to agitate at the second stage of the hearing the principal matters about which he complained.

231. I would reject ground 20.

232. By ground 21, Mr Lewis complained that the primary judge erred in failing to hear submissions from him about the date of dissolution before delivering the (No 5) judgment. Mr Lewis submitted that the question of the date of dissolution, and the primary judge’s conclusion that he could select that date as a matter of discretion was arrived at without notice to the parties and was unsupported by authority.

233. Mr Lewis’ submission was that when the matter was argued before the primary judge in respect of the Notice of Motion, neither party took the position that the Court retained a discretion to select for itself the date of dissolution. Mr Lewis submitted that “the procedure in the Equity Division has been” to take “a freer attitude … to reopening decisions than may be the case elsewhere”, citing Twenty-First Australia Inc v Shade [1998] NSWSC 325. Mr Lewis submitted that it would not be improper for his counsel to consider that, before final orders were entered, the parties would have an opportunity to address the court on the precise terms of the orders that would be made, including the date of dissolution (should it be ordered).

234. I reject Mr Lewis’ submission. Mr Lewis himself sought a declaration that by filing the FASOC he had accepted that the partnership was at an end. The primary judge was entitled to determine the date of dissolution having regard to the pleadings and the submissions. In any event, Mr Lewis was subsequently given an opportunity to argue the issue which was addressed by the primary judge in the (No 6) judgment at [12]-[17]. There were extensive submissions made about the date of dissolution at that hearing.

235. I would reject ground 21.

236. By grounds 22 and 23, Mr Lewis submitted that the primary judge erred in failing to make a buy-out order and in awarding him damages for breach of the Deed. It was submitted that both of the parties’ pleadings, insofar as they invoked an accepted repudiation as an automatic dissolution of a multi-person partnership, were wrong in law. The parties’ positions as to the law taken in the pleadings are not binding on the court: Liao v NSW [2014] NSWCA 71 at [211]-[213]. Once the primary judge found that an accepted repudiation did not of itself dissolve the partnership, Mr Lewis’ action for damages for breach of contract was unsustainable, and the Court was required to make orders as to the terms on which the partnership was to be dissolved.

237. As I have explained in dealing with ground 17, whilst the language of “special damages” used by the primary judge was inapt, I am not satisfied that there is sufficient evidence before this Court for me confidently to identify the components of any “buy-out” order, should I be persuaded one should be made. If it were necessary to do so, I would not interfere in the primary judge’s determination that at the second stage hearing both parties should be permitted to lead whatever further evidence they wished to and to agitate for the making (or non-making) of a buy-out order. I would for the same reasons reject grounds 22 and 23.

Application to amend the notice of appeal

238. Late in the afternoon of the third day of an appeal which had been fixed for a two day hearing, Mr Douglas KC sought to amend Mr Lewis’ notice of appeal so that there would be a ground of appeal added in relation to an alleged denial of natural justice:

DOUGLAS: Essentially if we need to have a ground of appeal that he ought to have found having regard to what was said there and elsewhere in his judgment that there was a denial of natural justice. We've made submissions on the matter.

239. That amendment was opposed. Mr Williams SC said:

WILLIAMS: We didn't go into all the authorities on natural justice in any of our submissions. It's been touched upon by some that my friend has gone to, but we haven't prepared a case to meet a non-existent appeal ground and raising it at this time is inconsistent with the overriding purpose. This case has to finish. Your Honours don't need, and we don't wish to engage in, yet another round of submissions about complex questions of natural justice that would arise. In circumstances, we've now had a three-day appeal and the grounds that we come to meet were comprehensive in any event. Very rare that one has to meet 19 ground of appeal, that your Honours shouldn't permit it, is our submission. We're not in a position to deal with it.

240. The Court rejected the proposed amendment and reserved its reasons.

241. My reasons for rejecting the proposed amendment are that it was simply too late to seek such an amendment and the Capital Partners would have been prejudiced by allowing it. The proposed amendment seeks to raise a new case. It is fundamental that parties not be permitted to raise a new case on appeal, especially as here the case had not been identified until the close of the three day oral hearing of the appeal and in circumstances where the documentary record relevant to the proposed ground is incomplete.

242. The proposed amendment is a departure from the appeal that was run. The proposed amendment was only notified at the very end of the third day of the appeal. The appellants should not be permitted to run their case in this way. No explanation was offered for why, in a 23 ground notice of appeal, this proposed new ground had been overlooked. It would be inimical to the dictates of Part 6 of the Civil Procedure Act to permit this late change to the notice of appeal. If allowed, the amendment would have required, at the very least, another round of submissions about complex questions that would arise in circumstances where there was already a multitude of issues. In addition, it is likely that the voluminous appeal record would need to be enlarged, perhaps significantly. I was not satisfied that the Capital Partners were in a position to deal with the issues raised in a timely way.

243. The inevitable result of allowing the very late amendment to the notice of appeal would have been that the matter would not have been concluded. Given the composition of the Court and the time of year, it is likely that the hearing of the appeal would have been adjourned for a very considerable period.

244. For these reasons leave to amend the notice of appeal was refused.

Proposed Orders

245. As I have said, leave to appeal and cross-appeal was granted on 14 October 2024, the first day of the appeal. For the reasons I have given I propose the following orders:

1. Cross-appeal allowed.

2. Set aside orders 1-4 made by the primary judge on 8 April 2024 and in lieu thereof order:

1. The Further Amended Statement of Claim is dismissed;

2. Plaintiff (Mr Lewis) to pay the Respondents’ (the Capital Partners’) costs of the Further Amended Statement of Claim.

3. Appeal dismissed.

4. Appellant/Cross-respondent (Mr Lewis) to pay the Cross-appellants/Respondents’ (the Capital Partners’) costs of the appeal and the cross-appeal.

246. MITCHELMORE JA: I agree with Payne JA.

247. STERN JA: I agree with Payne JA.

**********

Endnotes

25.1 Manner of service

Any notice authorised or required to be given to any individual Capital Partner shall be sufficiently given by leaving it or posting it by prepaid post addressed to that Capital Partner at its last known address.

In the case of a notice to the Capital Partners of the Practice the notice shall be sufficiently given by leaving it at or posting it by prepaid post to the business address of the Practice to the attention of the then Managing Partner.

Any letters sent by ordinary pre-paid post shall be deemed to have been received in the ordinary course of post being two days after posting.