“The partnership’s book is a liability, not an asset!”

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A and R operated an insolvency practice in partnership. Like many such businesses, it would build up “WIP” in a matter and that WIP would be paid (or not) over time: [3], [4], [6]

The business was profitable: [49]

In September 2014, A ended the partnership electing to go out on their own with most of the business’s book of work: [7] - [10]

A number of pieces of litigation followed. Some led to orders for an account of the partnership to be taken: [5], [14]

This process included the valuation of the partnership’s book *after* the September 2014 dissolution: [12]

A relied on two experts: [19]

The primary judge took little value from A’s experts’ evidence: [20]

Further: the experts gave no evidence of market transactions [22]; it was unlikely that a purchasing IP could demand a “discount” for purchasing the book [23]; and it was unlikely an outgoing IP would pay a purchaser a “discount” sum for taking on the administrations when the outgoing IP could simply resign: [24], [25]

A appealed.

A did so on 5 grounds: (i) a “discount” payment might be available and so should be borne in mind in a valuation [27]; (ii) the nature of the valuation - a hypothetical sale on complicated terms - meant a criticism for a lack of evidence of similar market transactions was inappropriate [28], [29]; (iii) the judge erred in not accepting the evidence of A’s experts [30], [31]; (iv) the judge erred in finding the Court’s power to appoint a replacement IP meant a discount would never be payable [32]; (v) and a failure on the part of the judge to evaluate individually each administration to then determine whether a discount would arise: [36]

The dispute put another way might be that A argued the book was a liability, where R argued it was an asset: [38]

RE (i): After reviewing IPs’s professional obligations, the CoA concluded no hypothetical purchaser of the book could require or accept a “discount” payment without breaching them: [61]

RE (ii): Similarly, this ground was not sufficient to disturb the primary judge’s finding: [66]

RE (iii) and (iv): A’s experts failed to grapple with an IP’s ability to resign from unfunded administrations. Elaborate analysis of the evidence was not required due to this failure to address the real issues: [68], [79], [80]

RE (v): a vendor would not pay a “discount” to a purchaser for buying the IP business, first, because it would be a breach of their professional obligations and, second, (noting the opportunity they have to retire) it would make no financial sense as it would be cheaper to just resign from unwanted administrations: [73]

The position was similar in relation to the bankruptcy trustee appointments: [77], [78]

A’s appeal was dismissed: [1], [81], [82]

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