Court of Appeal
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Paltos v Milevski [2023] NSWCA 7 Hearing dates: 21 September 2022 Date of orders: 10 February 2023 Decision date: 10 February 2023 Before: Macfarlan JA at [1];
Kirk JA at [72];
Basten AJA at [73]Decision: (1) Dismiss the appeal, with costs.
(2) Dissolve the stay granted on 15 August 2022, of the judgment and orders below.
(3) Order that the sum of $25,000 paid by the appellant by way of security for costs of the appeal be released to the respondent.
Catchwords: PARTNERSHIPS AND JOINT VENTURES —winding up of two person solicitors’ partnership — many partnership assets transferred by receivers to new firm established by one former partner — held that goodwill not transferred as no continuity of business — in any case, goodwill claim erroneously based on assumption that hypothetical purchaser would have benefit of broad non-compete covenant by former partners
Cases Cited: Admiral International Pty Ltd [2022] NSWCA 277
Alcock v Robb (1978) 2 BPR 9625
Bartier Perry v Paltos [2021] NSWCA 158
Commissioner of Taxation v Murry (1998) 193 CLR 605; [1998] HCA 42
Geraghty v Minter (1979) 142 CLR 177; [1979] HCA 42
Inland Revenue Commissioners v Muller & Co’s Margarine Ltd (1901) AC 217
McFadden v Commissioner of Stamp Duties (NSW) (1980) 11 ATR 1
Old v McInnes and Hodgkinson [2011] NSWCA 410
Page v McKensey (Supreme Court of New South Wales, 17 December 1993)
Placer (Granny Smith) v Thiess Contractors [2003] HCA 10; (2003) 77 ALJR 78
Ryder v Frohlich [2004] NSWCA 472
Commissioner of State Revenue (WA) v Placer Dome Inc (2018) 265 CLR 585; [2018] HCA 59
Walker v Martin (unreported, 23 December 1993)
Category: Principal judgment Parties: Dennis Paltos (Appellant)
Peter Milevski (Respondent)Representation: Counsel:
Solicitors:
Q Rares / N Bailey (Appellant)
C D Wood SC (Respondent)
Tsolakis Solicitors (Appellant)
Harris Friedman Lawyers (Respondent)
File Number(s): 2022/126858 Decision under appeal
- Court or tribunal:
- Supreme Court
- Jurisdiction:
- Equity
- Citation:
- Date of Decision:
- 14 March 2022
- Before:
- Parker J
- File Number(s):
- 2016/118930
HEADNOTE
[This headnote is not to be read as part of the judgment]
In 2000 Mr Dennis Paltos started his own law firm, Paltos & Co, Solicitors. Mr Peter Milevski was initially employed as a law clerk and then as a solicitor in 2003. In 2010 they commenced a partnership and signed several documents which enabled Mr Milevski to purchase a 30% interest and provided that on the death or total and permanent disablement of one of the partners, the other partner would be entitled to purchase that partner’s interest.
In December 2015 Mr Paltos suffered several strokes and was hospitalised. He ceased to attend the practice and was unable to undertake legal work. Mr Milevski took over supervision of his files. In January 2016…
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- AGLC
- Paltos v Milevski [2023] NSWCA 7
- Case
- [2023] NSWCA 7
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court were whether the partnership's goodwill had been transferred to the new firm and, if so, on what basis its value should be assessed. Specifically, the court considered whether the continuity of the business was sufficient to establish a transfer of goodwill and whether the assumption of a broad non-compete covenant by a hypothetical purchaser was a valid consideration in valuing the goodwill.
The Court of Appeal held that the goodwill had not been transferred to the new firm. This conclusion was based on the finding that there was no continuity of the business in a manner that would permit the transfer of goodwill. Furthermore, the court found that even if goodwill had been transferred, the claim for its value was erroneously based on the assumption that a hypothetical purchaser would benefit from a broad non-compete covenant from the former partners, which was not a permissible basis for valuation in this context.
The appeal was dismissed, with costs awarded to the respondent. The stay granted on the judgment and orders below was dissolved, and the sum of $25,000 paid by the appellant as security for the costs of the appeal was ordered to be released to the respondent.
Orders
Orders of the court
(1) Dismiss the appeal, with costs.
(2) Dissolve the stay granted on 15 August 2022, of the judgment and orders below.
(3) Order that the sum of $25,000 paid by the appellant by way of security for costs of the appeal be released to the respondent.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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