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Calacoci v Calacoci [2020] NSWSC 476
5 partners - 3 Ps and 2 Ds - from the same extended family carried on a partnership. There was no written agreement: [1], [2]
D2 was married to D1: [3]
The partnership business was owning rental property (shops and units) and collecting rent. D1 took a leading role and was a paid a management fee. All partners were paid drawings, controlled by D1: [4] - [6]
Drawings were paid 1/4 to each P, and 1/8 each to D1 and D2: [12]
The partnership was dissolved in 2019. Issues regarding public auction versus “buyout” of the partnership property arose: [13], [14], [17], [18]
The central issue: what was each partner’s entitlement?: [19]
The shops were owned 1/4 by each P with the Ds jointly the remaining 1/4. The units were owned with each partner having a 1/5 interest: [20]
The Ps contended for a “four quarters” approach to the units, and the Ds for a “five fifths” approach: [22]
D1 historically signed off on partnership financials on the “four quarters” basis but later claimed to have done so without inquiry: [31]
The Ds leant on s24 of the Partnership Act 1892 (NSW) asserting that all partners share equally in profits and losses absent other agreement: [33]
The Ps relied on s21 to argue assets bought with the partnership funds (as the units were) are partnership assets: [35]
The Ps said they had no knowledge of the units being purchased in “five fifths” and did not look closely at the sale contracts and letters received in relation to the sale - an error “on par” with D1’s ignorance of the financial documents he signed: [37]
The financial records of the partnership had similar discrepancies; sometimes “four quarters”, sometimes “five fifths” and sometimes another basis: [61] - [66]
The Ps were unsophisticated and relied on D1 to manage the partnership’s affairs: [79], [80]
The solicitor who acted for the partners on purchasing the units gave basic conveyancing advice, not partnership “structure” advice: [81] - [89]
In favour of “five fifths”: the Ps signed contracts, accepted payments, and managed their tax affairs on this basis: [93]
In favour of “four quarters”: the units were bought with partnership money, drawings were paid on this basis, D1 was paid a management fee, there was no agreement to vary the partnership proportion, and successive financial statements were prepared on this basis: [94]
The Court found, on balance, “four quarters”: [95]
___
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By James d'Apice
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5 partners - 3 Ps and 2 Ds - from the same extended family carried on a partnership. There was no written agreement: [1], [2]
D2 was married to D1: [3]
The partnership business was owning rental property (shops and units) and collecting rent. D1 took a leading role and was a paid a management fee. All partners were paid drawings, controlled by D1: [4] - [6]
Drawings were paid 1/4 to each P, and 1/8 each to D1 and D2: [12]
The partnership was dissolved in 2019. Issues regarding public auction versus “buyout” of the partnership property arose: [13], [14], [17], [18]
The central issue: what was each partner’s entitlement?: [19]
The shops were owned 1/4 by each P with the Ds jointly the remaining 1/4. The units were owned with each partner having a 1/5 interest: [20]
The Ps contended for a “four quarters” approach to the units, and the Ds for a “five fifths” approach: [22]
D1 historically signed off on partnership financials on the “four quarters” basis but later claimed to have done so without inquiry: [31]
The Ds leant on s24 of the Partnership Act 1892 (NSW) asserting that all partners share equally in profits and losses absent other agreement: [33]
The Ps relied on s21 to argue assets bought with the partnership funds (as the units were) are partnership assets: [35]
The Ps said they had no knowledge of the units being purchased in “five fifths” and did not look closely at the sale contracts and letters received in relation to the sale - an error “on par” with D1’s ignorance of the financial documents he signed: [37]
The financial records of the partnership had similar discrepancies; sometimes “four quarters”, sometimes “five fifths” and sometimes another basis: [61] - [66]
The Ps were unsophisticated and relied on D1 to manage the partnership’s affairs: [79], [80]
The solicitor who acted for the partners on purchasing the units gave basic conveyancing advice, not partnership “structure” advice: [81] - [89]
In favour of “five fifths”: the Ps signed contracts, accepted payments, and managed their tax affairs on this basis: [93]
In favour of “four quarters”: the units were bought with partnership money, drawings were paid on this basis, D1 was paid a management fee, there was no agreement to vary the partnership proportion, and successive financial statements were prepared on this basis: [94]
The Court found, on balance, “four quarters”: [95]
___
If you'd like to contact me my please look for James d'Apice or Coffee and a Case Note on your favourite social media spot - I should pop up right away!
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