1.The appeal should be dismissed, save that order 3 made by the primary judge be set aside and the following order be substituted:; "3.The matter be remitted to the Master to determine:; (a) as at the date of termination of the partnership (being 2 March 2001):; (i) the nature and value of the partnership assets, including the nature of the "right" Mr Ryder and Mr Frohlich had to manage the Diversified Fund and whether it had a goodwill value which survived the dissolution of the partnership (but not including any other interest in the Diversified Fund); (ii) whether monies were owing to Mr Ryder referable to the value of the business as at 2 March 2001 and whether Mr Ryder owed monies to Mr Frohlich - being those referred to in Mr Frohlich's cross-claim; (b) whether, in the light of the identification of the partnership assets and their use, if any, after 2 March 2001, Mr Ryder is entitled to a share of profits pursuant to s 42 of the Partnership Act 1892 (NSW) and, if so, to determine the amount of that share; (c) in the light of the findings made, the respective indebtedness of Mr Ryder and Mr Frohlich."; 2. The appellants to pay 80% of the costs of the appeal.
CATCHWORDS:
CONTRACT - PARTNERSHIPS - Agreement between first appellant and first respondent to establish hedge investment fund - identity of partners - TERMINATION - term of partnership agreement that each partner would contribute equally in terms of time and effort - first respondent left partnership to take up full-time employment - whether partnership agreement terminated - whether first respondent accepted first appellant's repudiation - principles concerning repudiation and partnerships - Abandonment - whether partnership agreement abandoned - Conduct of trial - terms of referral to Master - Estoppel - whether appellants estopped from asserting any share in the business or profits after the termination date. (D)
LEGISLATION CITED:
Corporations Law s 9, s 88, s 601FA Partnership Act 1890 (Imp) s 35(d) Partnership Act 1892 (NSW) s 26, s 30, s 32, s 35, s 42
CASES CITED:
Carter, J.W. Breach of Contract (The Law Book Company Limited, 2nd Ed, 1991) Carter and Harland, Contract Law in Australia (Butterworths, 4th Ed) Chitty on Contracts (Sweet & Maxwell, 28th Ed) Lindley & Banks on Partnership (Sweet & Maxwell, 17th Ed, 1995) Peden, Elisabeth & J.W. Carter, The Bonds of Partnership, (2000) 16 Journal of Contract Law at 277-281 Australian Broadcasting Corporation v XIVth Commonwealth Games Limited (1988) 18 NSWLR 540 Australian Energy Limited v Lennard Oil NL (No 2) [1988] 2 Qd R 230 Barclay's Bank Trust Co Limited v Bluff [1982] 1 Ch 172 Black Clawson International Ltd v Papierwerke Waldhof-Aschaffenburg AG [1981] 2 Lloyd's Rep 446
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.
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AGLC
Ryder v Frohlich [2004] NSWCA 472
Case
[2004] NSWCA 472
Decision Date
CaseChat Overview and Summary
The appeal concerned a dispute between the first appellant, Mr Ryder, and the first respondent, Mr Frohlich, regarding a partnership agreement to establish a hedge investment fund. The central issue was whether the partnership agreement had been terminated and, if so, the consequences of that termination.
The court was required to determine whether the partnership agreement had been terminated, specifically whether Mr Frohlich's departure from the partnership to take up full-time employment constituted a repudiation of the agreement, and if Mr Ryder had accepted such repudiation. Further, the court had to consider whether the partnership agreement had been abandoned and whether the appellants were estopped from asserting any claim to a share in the business or its profits after the termination date.
The court reasoned that the terms of the partnership agreement, which stipulated equal contribution of time and effort by each partner, were fundamental. Mr Frohlich's departure to pursue full-time employment was found to be a significant departure from these terms. The court applied principles concerning repudiation and abandonment of partnership agreements, considering the conduct of the parties. The appeal was dismissed, with the exception of one order which was remitted to the Master for further determination.
The matter was remitted to the Master to ascertain the nature and value of partnership assets as at the termination date, including the value of the right to manage the Diversified Fund and any surviving goodwill. The Master was also tasked with determining any monies owing between the parties as at that date, and whether Mr Ryder was entitled to a share of profits made after the termination date pursuant to section 42 of the Partnership Act 1892 (NSW), and to determine the respective indebtedness of Mr Ryder and Mr Frohlich. The appellants were ordered to pay 80% of the costs of the appeal.
Orders
Orders of the court
1.The appeal should be dismissed, save that order 3 made by the primary judge be set aside and the following order be substituted:; "3.The matter be remitted to the Master to determine:; (a) as at the date of termination of the partnership (being 2 March 2001):; (i) the nature and value of the partnership assets, including the nature of the "right" Mr Ryder and Mr Frohlich had to manage the Diversified Fund and whether it had a goodwill value which survived the dissolution of the partnership (but not including any other interest in the Diversified Fund); (ii) whether monies were owing to Mr Ryder referable to the value of the business as at 2 March 2001 and whether Mr Ryder owed monies to Mr Frohlich - being those referred to in Mr Frohlich's cross-claim; (b) whether, in the light of the identification of the partnership assets and their use, if any, after 2 March 2001, Mr Ryder is entitled to a share of profits pursuant to s 42 of the Partnership Act 1892 (NSW) and, if so, to determine the amount of that share; (c) in the light of the findings made, the respective indebtedness of Mr Ryder and Mr Frohlich."; 2. The appellants to pay 80% of the costs of the appeal.