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Wang v Rong

Wang v Rong

Case [2015] NSWSC 1419 30 September 2015

Partnership Agreement

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Supreme Court

New South Wales

Amendment notes

Medium Neutral Citation: Wang v Rong [2015] NSWSC 1419
Hearing dates: 30, 31 March and 1 April 2015
Date of orders: 30 September 2015
Decision date: 30 September 2015
Jurisdiction: Equity
Before: Robb J
Decision:
Refer to [123] – [124]

Catchwords:
PARTNERSHIP – principles of partnership law governing remuneration of partners and entitlement to share in profits and contribute to losses – s 24(6) of the Partnership Act 1892 (NSW) – partner’s failure to undertake work in partnership may disentitle that partner to receipt of salary or may be a breach of the partnership agreement subjecting defaulting party to liability to pay damages – ultimately obligations will depend on proper construction of relevant partnership agreement
PARTNERSHIP – agreed statement of issues to be determined – first plaintiff and first defendant entitled to receive payment stipulated in agreement subject to caveats – distribution to partners are to be credited against share of profits – whether the first plaintiff’s failure to work in the partnership business disentitles him to agreed salary distribution – whether implied term in partnership agreement reduces the obligation that fiduciary duties would have otherwise imposed – court finds distribution of ‘salary’ and ‘wages’ was to be paid to partners in proportion to work undertaken, particularly given nature of the business – consideration of surrounding circumstances – evidence does not prove that parties understood the first plaintiff was solely an investor and would not work in the business – post-contract conduct not admissible in construction of present partnership agreement – the first defendant’s conduct is too equivocal to justify finding of admission – first plaintiff not entitled to proportion of salary in the absence of working
Legislation Cited: Civil Procedure Act 2005 (NSW)
Partnership Act 1892 (NSW)
Cases Cited: Agricultural and Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570
Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184
Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640
Johnston v Brightstars Holding Company Pty Ltd [2014] NSWCA 150
Wardle v Agricultural and Rural Finance Pty Ltd [2012] NSWCA 107
Texts Cited: Keith Fletcher, The Law of Partnership in Australia (9th ed 2007, Lawbook Co.)
Geoffrey Morse, Partnership Law (6th ed 2006, Oxford University Press)
Roderick I’Anson Banks, Lindley & Banks on Partnership (19th ed 2010, Thomson Reuters)
Category: Principal judgment
Parties: Jing Chao Wang (first plaintiff)
Rui Zhang (second plaintiff)
Kevin Yu Rong (first defendant)
KK Win Pty Ltd (second defendant)
Representation:
Counsel: C Harris SC (first and second plaintiffs)
S Gray (first and second defendants)
Solicitors: CKSD Lawyers (first and second plaintiffs)
GHS Lawyers (first and second defendants)

File Number(s): 2013/228145
Publication restriction: None

Judgment

Introduction

These proceedings involve a partnership dispute between the plaintiffs, Mr Jingchao Wang and Ms Rui Zhang, and the first defendant, Mr Kevin Yu Rong.
The second defendant, KK Win Pty Ltd (the Trustee), is the trustee of a…

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 Wang v Rong

Details

AGLC: Wang v Rong [2015] NSWSC 1419
Case: [2015] NSWSC 1419
Decision Date: 30 September 2015

CaseChat Overview and Summary

In the case of Wang v Rong, the dispute centred around the partnership agreement between the first plaintiff and the first defendant, and the obligations and entitlements of the parties under the agreement. The first plaintiff alleged that the first defendant failed to pay him his share of the salary as agreed, while the first defendant claimed that the first plaintiff was not entitled to the salary because he did not work in the partnership business. The matter was heard in the Supreme Court of New South Wales.

The court was required to determine the legal issues of whether the first plaintiff's failure to work in the partnership business disentitled him to the agreed salary distribution and whether there was an implied term in the partnership agreement that reduced the obligation that fiduciary duties would have otherwise imposed. The court also had to consider the proper construction of the partnership agreement and the evidence of the parties' intentions and conduct.

The court found that the distribution of 'salary' and 'wages' was to be paid to the partners in proportion to the work undertaken, particularly given the nature of the business. The court considered the surrounding circumstances and the evidence of the parties' intentions and conduct. The court held that the evidence did not prove that the parties understood that the first plaintiff was solely an investor and would not work in the business. The court also held that post-contract conduct was not admissible in the construction of the present partnership agreement. The court found that the first defendant's conduct was too equivocal to justify a finding of admission. The court held that the first plaintiff was not entitled to a proportion of the salary in the absence of working.

The court ordered that the first defendant pay the first plaintiff his share of the salary as agreed, subject to the caveats set out in the partnership agreement. The court also held that the distribution of the salary was to be credited against the first plaintiff's share of the profits.

Orders