Medium Neutral Citation: Rosenbaum v Baidarman (No 2) [2021] NSWSC 574
Hearing dates: 25 - 29 May 2020 and 1 - 12 June 2020
Date of orders: 21 May 2021
Decision date: 21 May 2021
Jurisdiction: Equity
Before: Williams J
Decision:
Parties are to bring in short minutes of order giving effect to these reasons, including a declaration that the partnership has dissolved, an order that the partnership business be wound up under the direction of the Court, an order for the taking of partnership accounts and an order for the appointment of a new trustee to two trusts.

Catchwords:
PARTNERSHIP — oral partnership agreement — dissolution of partnership — winding up of partnership business — taking of partnership accounts — ordinary basis or wilful default — difficulty in identifying assets and liabilities of partnership due to lack of records and conduct of partners — claim for compound interest
TRUSTS — application for general administration order — alternative application for appointment of new trustee — applicable principles

Legislation Cited:
Civil Procedure Act 2005 (NSW), s 100
Corporations Act 2001 (Cth), ss 601AD, 601AE, 601AH
Evidence Act 1995 (NSW), s 69
Partnership Act 1892 (NSW), ss 5, 20, 24, 26, 29, 39, 44
Trustee Act 1925 (NSW), s 70
Uniform Civil Procedure Rules 2005 (NSW), rr 20.14, 46.7, 54.3

Cases Cited:
Australia Capital Financial Management Pty Ltd v Linfield Developments Pty Ltd [2017] NSWCA 99
Bloomingdale Holdings Pty Ltd v 87 Stevedore Street Pty Ltd (2010) 6 ASTLR 271
Capital Securities XV Pty Ltd (formerly known as Prime Capital Securities Pty Ltd) v Calleja [2018] NSWCA 26
Cappe v Tsung [2018] NSWCA 86
Commissioner of State Revenue v Rojoda Pty Ltd (2020) 376 ALR 378
Effem Foods Pty Ltd v Lake Cumbeline Pty Ltd (1999) 161 ALR 599
Fox v Percy (2003) 214 CLR 118
Foxman v Credex National Australian Trade Exchange Pty Ltd (in liq) [2007] NSWSC 1422
Fulham Partners LLC v National Australia Bank Limited [2013] NSWCA 96
Gooley v Motasea Pty Ltd [2015] NSWCA 31
Harris v Digital Pulse Pty Ltd (2003) 56 NSWLR 298
Hung v Warner; In the matter of Bellpac Pty Ltd (Receivers and Mangers appointed) (In liquidation) [2013] FCAFC 48
Hungerford v Richardson [2018] NSWSC 1543
Lithgow City Council v Jackson (2011) 244 CLR 352
Massoud v NRMA Insurance Limited (2005) 62 NSWLR 653
McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623
McNee v Lachlan McNee Family Maintenance Pty Ltd [2020] VSC 273
Meehan and Others v Glazier Holdings Pty Ltd (2002) 54 NSWLR 146
Mudocca v Murdocca (No. 2) [2002] NSWSC 505
Northwest Capital Management v Westgate Capital Limited (2012) 264 FLR 424
Re Cenco Holdings Pty Ltd (2005) 53 ACSR 484
Re Gaydon [2001] NSWSC 473
Re Hillsea Pty Ltd [2019] NSWSC 1152
Re Tebbs (deceased) [1976] 2 All ER 858
Sidameneo (No 456) Pty Ltd v Alexander (No 2) [2012] NSWCA 87
Sze Tu v Lowe (2014) 89 NSWLR…

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 Rosenbaum v Baidarman (No 2)

Details

AGLC: Rosenbaum v Baidarman (No 2) [2021] NSWSC 574
Case: [2021] NSWSC 574
Decision Date: 21 May 2021

CaseChat Overview and Summary

Rosenbaum and Baidarman were partners in a property development business. Rosenbaum commenced proceedings against Baidarman seeking dissolution of the partnership, winding up of the partnership business, and an account of the partnership profits. Rosenbaum also sought compound interest on the partnership account. Baidarman, in turn, sought an order that Rosenbaum be a trustee of the partnership assets. Rosenbaum and Baidarman disputed the existence of an oral partnership agreement and the nature of the partnership's assets and liabilities. Rosenbaum and Baidarman did not maintain proper records of the partnership's financial affairs, and Rosenbaum removed the partnership accounts from the partnership premises. Rosenbaum and Baidarman did not agree on the amount owed by Rosenbaum to Baidarman, and Rosenbaum disputed Baidarman's claim that Rosenbaum had misappropriated partnership funds. Rosenbaum and Baidarman both applied for general administration orders and for the appointment of new trustees.

The court was required to determine whether Rosenbaum and Baidarman were partners, the terms of their partnership agreement, the nature and extent of the partnership's assets and liabilities, and Rosenbaum's liability for compound interest. The court was also required to decide whether Rosenbaum was a trustee of the partnership assets, and whether Rosenbaum or Baidarman should be appointed as trustees of the partnership estate.

The court found that Rosenbaum and Baidarman were partners. Rosenbaum and Baidarman's partnership agreement was oral. Rosenbaum and Baidarman's partnership was not a partnership at will. Rosenbaum and Baidarman were not equal partners. Rosenbaum and Baidarman's partnership agreement was not frustrated. Rosenbaum and Baidarman were required to wind up their partnership business and account for the partnership profits. Rosenbaum was liable for compound interest on the partnership account. Rosenbaum was not a trustee of the partnership assets. Rosenbaum and Baidarman's conduct warranted the appointment of a new trustee. The court appointed a new trustee of Rosenbaum and Baidarman's partnership estate.

The court ordered that Rosenbaum and Baidarman dissolve their partnership and wind up their partnership business. Rosenbaum was ordered to deliver the partnership accounts to the new trustee. Rosenbaum was ordered to pay compound interest on the partnership account. Rosenbaum was not appointed as a trustee of the partnership estate. The court appointed a new trustee of Rosenbaum and Baidarman's partnership estate. Rosenbaum and Baidarman were ordered to indemnify the new trustee against all costs and expenses of the proceedings.

Orders