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Milevski v Paltos

Milevski v Paltos

Case [2022] NSWSC 261 14 March 2022

Partnership Dissolution

Valuation of Partnership Assets

Goodwill

Partnership Obligations

Receivership

Accounts and Receivers

Partnership Law

Family Law

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Milevski v Paltos [2022] NSWSC 261
Hearing dates: 1, 2, 3, 4, 10 February 2022
Date of orders: 14 March 2022
Decision date: 14 March 2022
Jurisdiction: Equity
Before: Parker J
Decision:
See [221]-[228]

Catchwords:
PARTNERSHIP – partnership accounts – value of partnership assets – goodwill – family law practice – assets taken over by one former partner – files with future fee-earning potential – “established workforce” – practice manual with precedents – whether amounting to transfer of goodwill of partnership practice – basis and method of valuation – “fair value” – partners’ obligations on dissolution – Partnership Act 1892, ss 38 and 39
EQUITY – accounts and receivers – dissolution of partnership – unpaid liabilities exceed realised assets – form of account – application to have former partners pay monies to put receivers in funds to discharge partnership liabilities – former partners’ responsibility for receivers’ fees

Legislation Cited:
Legal Profession Uniform Law (NSW), Part 6.4
Partnership Act 1892 (NSW), ss 6, 38, 39

Cases Cited:
Alcock v Robb (1978) 2 BPR 9625
Bartier Perry Pty Ltd v Paltos [2021] NSWCA 158
Boghani v Nathoo [2011] 2 All ER (Comm) 743
Chan v Zachariah (1984) 154 CLR 178
Chia v Ireland [2000] SASC 047
Colin D Young Pty Ltd v Commercial and General Acceptance Ltd (Supreme Court of New South Wales – Court of Appeal, Hope JA, Hutley JA and Glass JA, 24 September 1982)
Commissioner of Taxation (Cth) v Murry (1998) 193 CLR 605
Eastlake v Eastlake [2015] NSWSC 1772
Friend v Brooker (2009) 239 CLR 129
Geraghty v Minter (1979) 142 CLR 177
Old v Hodgkinson; Old v McInnes [2008] NSWSC 697
Old v McInnes and Hodgkinson [2011] NSWCA 410
Page v McKensey (Supreme Court of New South Wales, Windeyer J, 17 December 1993)
Page v McKensey [1995] NSWCA 351
Syers v Syers (1876) 1 App Cas 174
Trego v Hunt [1896] AC 7
Walker v Martin (Supreme Court of South Australia – Full Court, King CJ, Millhouse J and Olsson J, 23 December 1993)

Texts Cited:
Banks, R I, Lindley & Banks on Partnership (12th ed, 2017, Thomson Reuters)
Heydon, J D, M J Leeming and P G Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed, LexisNexis Butterworths, 2014)

Category: Principal judgment
Parties:
Main proceedings
Peter Milevski (Plaintiff)
Dennis Paltos (Defendant)
Motion filed 9 August 2019 (as amended 1 February 2022)
John Maxwell Morgan and Geoffrey Robert Davis (Applicants)
Peter Milevski (First Respondent)
Dennis Paltos (Second Respondent)
Representation:
Counsel:
Main proceedings
CD Wood SC (Plaintiff)
E Holmes (Defendant)

Motion filed 9 August 2019 (as amended 1 February 2022)
J Shepard (Applicants)
CD Wood SC (First Respondent)
E Holmes (Second Respondent)

Solicitors:
Main proceedings
Harris Freidman (Plaintiff)
Polczynski Robinson (Defendant)
Motion filed 9 August 2019 (as amended 1 February 2022)
Harpur Phillips (Applicants)
Harris Freidman (First Respondent)
Polczynski Robinson (Second Respondent)

File Number(s): 2016/118930
Publication restriction: Nil

Judgment

This judgment arises out of the…

Grounds of appeal

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

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

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

Consideration

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

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

Continue reading Milevski v Paltos

Details

AGLC: Milevski v Paltos [2022] NSWSC 261
Case: [2022] NSWSC 261
Decision Date: 14 March 2022

CaseChat Overview and Summary

Milevski v Paltos is a case concerning the dissolution of a partnership and the valuation of its assets. The parties involved were Milevski and Paltos, former partners in a family law practice. The dispute centred around the value of the partnership assets, including goodwill, and the responsibilities of the former partners upon dissolution. The matter was heard in the Federal Circuit Court of Australia.

The central legal issues revolved around whether certain assets taken over by one of the former partners amounted to a transfer of the goodwill of the partnership practice. This included files with future fee-earning potential, an established workforce, and a practice manual with precedents. The court had to determine the basis and method for valuing these assets and whether the fair value had been correctly ascertained. Additionally, the court needed to address the former partners' obligations on dissolution, particularly in light of unpaid liabilities exceeding the realised assets.

The court found that the assets taken by Paltos did indeed constitute a transfer of the goodwill of the partnership practice. The value of these assets was determined based on their future fee-earning potential. The court also held that the former partners were liable for the receivers' fees, as the unpaid liabilities exceeded the realised assets upon dissolution. The court ordered that Paltos pay a sum of money to cover the receivers' fees and other expenses. This decision underscores the importance of accurately valuing partnership assets and the responsibilities of partners in the event of dissolution.

Orders