Trident Austwide Pty Ltd v Bagcorp Pty Ltd as trustee for the Rico Tea Trust

1. [1]

   Until 5 November 2021, the parties carried on business as partners in the Madura Tea Estates partnership pursuant to the terms of a written agreement. On that day, the plaintiff (Trident) retired from the partnership, having first given notice of its intended retirement some months before.

2. [2]

   The partnership agreement provides that the partnership shall not be dissolved by reason only of the retirement of a partner. Although the agreement contains provisions which allow the remaining partners to purchase the retiring partner’s interest as of right at a “fair” value, the remaining partners did not avail themselves of those pre-emptive rights. Nor did they avail themselves of their right to cause Trident’s interest to be offered for sale.

3. [3]

   The dispute concerns the amount to which Trident is entitled following its retirement. Trident’s case, in short, is that its entitlement is to be determined in the manner described by Goff J (as his Lordship then was) in Sobell v Boston [1975] 2 All ER 282 and subsequent authority, namely on an account by first ascertaining the value of the partnership including goodwill as a whole as at 5 November 2021, and then multiplying that value by its own partnership share of 19%.

4. [4]

   The remaining partners’ case is cast somewhat differently. They contend that Trident is entitled to the “market value” of its 19% interest as ascertained by the referee appointed by the Court, Ms Rebecca Conoulty. Ms Conoulty has expressed the opinion that the market value of Trident’s 19% interest is worked out broadly in the same manner as that for which Trident contends but, critically, by then reducing the resulting value to reflect appropriate discounts for lack of control and lack of marketability. I will describe the way the remaining partners describe the issue in more detail below.

Background

1. [5]

   The Madura Tea Estates partnership consisted of growing, importing and blending tea, manufacturing tea products for sale, and of marketing, distributing and selling those products through supermarkets around the country. The business was and remains profitable.

2. [6]

   By 2021, the partnership was being conducted on the basis of a written Partnership Agreement dated 1 February 2018 (the Partnership Agreement). The other partners at the time of Trident’s retirement were Bagcorp Pty Ltd as trustee for the Rico Tea Trust (Bagcorp), Headcrest Pty Ltd as trustee for the Davey Family Trust (Headcrest) and Broadbond Pty Ltd (Broadbond). They are, respectively, the first, second and third defendants to these proceedings.

3. [7]

   The partners’ interests were as follows:

   1. (1)

      Trident: 19%

   2. (2)

      Bagcorp: 52%

   3. (3)

      Headcrest: 10%

   4. (4)

      Broadbond: 19%

4. [8]

   The Partnership Agreement is in familiar form at least so far as concerns the sharing of profits and losses, contributions of and entitlements to capital, partnership drawings and the like. It is relevant to note that partners are “entitled to the capital and the property for the time being of the Partnership and to the goodwill of the Business in their respective shares”: clause 2(4)(b).

5. [9]

   It is necessary to refer to clauses 5(1) and (2) at length:

6. [10]

   Clause 5(4) is entitled “Termination for Breach of Agreement”. It enumerates a number of matters giving rise to a right of “the other Partners to terminate the Partnership so far as it concerns the Defaulting Partner by giving one month’s prior notice in writing to the Defaulting Partner (‘Expulsion Notice’)”.

7. [11]

   Clause 5(4)(b) then states:

8. [12]

   Clause 5 also includes the following:

9. [13]

   On 10 May 2021, Trident gave notice of its intention to retire pursuant to clause 5 of the Partnership Agreement.

10. [14]

    The remaining partners did not exercise their right to acquire Trident’s interest, nor did they elect to offer Trident’s share to a qualified person in accordance with clause 5(1)(c).

11. [15]

    Following the giving of notice of its retirement, Trident commissioned a valuation of its interest in the partnership to provide a basis on which to agree a price for the remaining partners to acquire its interest. The parties attended a mediation on 22 November 2021 but were unable to resolve their dispute. It is not altogether clear what the extent of their dispute was as at November 2021, although there is no doubt that they were at least in dispute as to the value of Trident’s interest.

12. [16]

    Subsequent events reveal a fairly deep level of discord between Mr Bright, who is the principal of Trident, on the one hand, and the principals of the first and second defendants, on the other. In circumstances where Trident no longer presses for the appointment of a receiver to the partnership it is not necessary for me to comment on those subsequent events in any detail.

13. [17]

    The proceedings were commenced by summons filed on 31 May 2022. The plaintiffs were Trident and Broadbond. Broadbond is a company associated with Mr Bright but it did not retire from the partnership. An amended summons filed on 23 July 2023 removed Broadbond as a plaintiff and instead joined it as the third defendant, which was appropriate having regard to the fact that it did not seek any relief but was otherwise a necessary party.

14. [18]

    The amended summons seeks a range of declarations as to the history of the dispute, including declarations as to the formation of the partnership. Relevantly, it includes:

15. [19]

    The amended summons also sought orders for the appointment of receivers to the partnership (and associated relief) and for a declaration that Trident is entitled to a share of profits subsequent to retirement in accordance with s 42 of the Partnership Act 1892 (NSW).

16. [20]

    On 20 March 2023, Bagcorp filed a cross-summons in which it sought the following relief:

17. [21]

    The reference in that pleading to dissolution reflected the fact that the original summons had sought orders that the partnership be dissolved. Shortly prior to the commencement of the hearing, Trident notified the Court and the parties that it did not press for the appointment of receivers.

18. [22]

    Bagcorp brought an application for the question of the valuation of Trident’s partnership interest to be referred to a referee pursuant to Uniform Civil Procedure Rules 2005 (NSW) r 20.14. That application, together with Bagcorp’s application for leave to file the cross-summons, came before Richmond J on 17 March 2023. In the course of considering those applications, his Honour pointed out to the parties that the question of what is to occur when a partner retires but where there has otherwise been no general dissolution of the partnership was considered in a line of cases commencing with Sobell v Boston. His Honour particularly drew attention to what Goff J said commencing at page 286d of the report.

19. [23]

    The reference to Sobell v Boston appears to have brought some clarity to the parties’ approach to the issues in dispute. It soon became apparent that the parties were willing for a referee to be appointed by consent. As to the terms of reference, his Honour indicated that it would be appropriate to ask the referee’s opinion on the valuation issue identified at page 286d of Sobell v Boston, namely:

20. [24]

    The consent order appointing the referee was relevantly in these terms:

21. [25]

    At an early stage of her engagement, Ms Conoulty sought clarification of the basis on which she was required to prepare her report. She wrote:

22. [26]

    There apparently followed an informal conference with Ms Conoulty at which the basis of her valuation was discussed. There is no evidence as to what occurred at that conference, but Bagcorp says that it is evident that the parties agreed that Ms Conoulty should prepare her report on the basis of “market value”.

23. [27]

    It is certainly the case that Ms Conoulty did prepare her report on a “market value” basis. That is clear from the report itself, where Ms Conoulty explains the basis of her valuation. However, it was equally apparent from the earliest stage that the parties had differing views as to what a market valuation of Trident’s partnership share actually involved. So far as Trident was concerned, it contended that the appropriate approach was that laid down in Sobell v Boston and later cases. Trident contended that it was inappropriate here for the value of its interest to be ascertained on the basis of discounts for lack of control and lack of marketability. It also contended that any such discounts should be less than might otherwise be appropriate for a minority parcel for a range of reasons to do with the history of the partnership and its particular business.

24. [28]

    The significance of all of this procedural background to the appointment of the referee and to the manner in which she approached the valuation is central to the defendants’ case. Their central argument is that it is not open to Trident to contend for a valuation of its interest on any basis different from what it “agreed” for the purpose of preparation of the referee’s report. They argue that Trident “agreed” that the referee was to express an opinion on the market value of Trident’s interest and that it was from that point bound to accept the outcome of her “market value” valuation, regardless of whether the referee accepted its argument that it was appropriate in a case such as this to proceed in the manner described in Sobell v Boston and subsequent cases.

25. [29]

    Before I deal with the substance of that argument, it is relevant to say something about Ms Conoulty’s report. The report is lengthy and detailed. At the same time, it is well reasoned and very clearly expressed. It has been of enormous assistance to the Court in resolving this dispute. It has also been of obvious assistance to the parties, because it has facilitated the resolution of their dispute without the need to engage competing valuers. It has been carefully drafted in the light of the parties competing contentions about discounts and has therefore placed the parties and the Court in a position to reach a final conclusion on the question of valuation whatever the outcome on that particular issue.

26. [30]

    Ms Conoulty summarised her methodology and conclusions as follows:

27. [31]

    The question of the appropriate discounts for lack of control (label H) and lack of marketability (label K) was addressed in detail in the body of the report and in the appendices. Label G was described as the “pro-rata equity value” of the partnership.

Identifying the issues in dispute

1. [32]

   The main issue in dispute was said by the parties to be, in broad terms, the value of Trident’s 19% interest in the Madura Tea Estates partnership as at 5 November 2021 and the appropriateness of discounts for lack of control and marketability in arriving at that value. However, to describe the matter in that way tends to obscure the real issue in dispute.

2. [33]

   Trident says that in circumstances where there has been no general dissolution of the partnership (which is common ground here: see clause 5(9) of the Partnership Agreement set out above), it is entitled to be paid an amount on retirement by the continuing partners on account of its partnership interest. It is this amount that may be recovered as a debt: s 43 of the Partnership Act. In Trident’s view, the real issue in dispute is the amount to which it is entitled on account. The valuation issue is really a question of ascertaining the amount to which it is so entitled.

3. [34]

   The defendants see the issue somewhat differently. On their case, it is necessary to identify the value of Trident’s 19% interest but the determination of that issue is a necessary stepping-stone to a later transaction. Once the valuation issue is determined, they say that it will be necessary for the defendants to decide whether they wish to purchase Trident’s interest at that value or whether some other unspecified course should be taken. I infer that one such course may be the sale of the business and the winding up of the partnership. The cross-summons seeks a so-called Syers order (that is, an order that Trident sell its share to the continuing partners: see Syers v Syers (1876) 1 App Cas 174) but only in the event the court makes an order dissolving the partnership and in any event only if they are successful on the valuation question. By the time of the hearing, the prospect of general dissolution and receivership had gone away, but the defendants made clear that they still sought the Syers order in the event they were successful on the valuation question. The defendants accepted that there had been a technical dissolution of the partnership on Trident’s retirement. However, it is apparent from their other contentions (as just mentioned) that they deny that Trident is entitled to an account.

Trident’s entitlement upon retirement

1. [35]

   At common law and in the absence of any agreement, the retirement of a partner usually resulted in the general dissolution of the partnership. The retiring partner’s remedy in the absence of agreement was for the assets of the partnership to be brought in and sold, the debts paid off and the surplus distributed after the taking of partnership accounts: Syers v Syers at 181. This was and still is often done by the appointment of receivers.

2. [36]

   The situation is different where a partner retires from a continuing partnership. In that case, the retiring partner is generally not entitled to the same remedies as are available following a general dissolution of the partnership (ie, appointment of a receiver for the sale of assets). In Sobell v Boston, a partner retired from a law partnership pursuant to an agreement whereby he withdrew and the remaining partners continued to practice without him. There was a dispute as to his entitlement on retirement and he sought orders for the appointment of receivers on the ground that, properly understood, the agreement was for the dissolution of the partnership. That argument was rejected. Instead, Goff J held as I have extracted above at [23].

3. [37]

   Sobell v Boston has been relied on for that proposition in Australia: see for example Truong v Lam [2009] WASCA 217 at [24]-[29], and also at [38]; Chia v Ireland [2000] SASC 47 at [37]; and Fazio v Fazio [2012] WASCA 72 at [59]-76].

4. [38]

   Despite what was said in Sobell v Boston it is still sometimes said that retirement from a continuing partnership gives rise to a notional or technical dissolution: Chia v Ireland at [45]. Consistently with those cases, the parties here took the view that Trident’s retirement gave rise to a technical dissolution but not a general dissolution. The difference between those two concepts was described by the High Court in Commissioner of State Taxation (SA) v Cyril Henschke Pty Ltd (2010) 242 CLR 508; [2010] HCA 43 at [11]-[12]; see also Mark Blackett-Ord and Sarah Haren, Partnership Law (6th ed, 2020, Bloomsbury Professional) at 16.1.

5. [39]

   Nothing particularly turns on the content of the expression “technical dissolution” here, save that it is a convenient way of saying that Trident’s retirement did not give rise to a general dissolution of the partnership. Regardless of whether Trident’s retirement did or did not give rise to a technical dissolution, and regardless of what else that expression might mean, there was no general dissolution.

6. [40]

   Trident’s entitlement on account must first be ascertained by reference to the Partnership Agreement which, as I have noted, entitles it to its partnership share of partnership property and to its share of the goodwill of the business. There was no suggestion that I should read this provision as referring only to book values. Given that the pre-emptive provisions of the Partnership Agreement dealing with retirement were not engaged, Trident’s position under the Partnership Agreement would appear to be that it is entitled to an account for its partnership share of the partnership property including goodwill, at market value.

7. [41]

   Authority generally supports the taking of an account in these circumstances by calculating the outgoing partners aliquot share of the enterprise value as at the date of retirement. In Chia v Ireland, the Court held that the appropriate measure of Dr Ireland’s entitlement on retirement from a medical practice was “her proportionate share in the net proceeds remaining after all the partnership assets have been sold and after payment of the partnership debts and discharging liabilities.” That must be understood as a reference to a notional sale as a going concern, which is how it was understood in Truong v Lam at [28].

8. [42]

   Leaving aside the question of what the parties agreed about the basis of valuation in the course of their communications with the referee, the cases to which I have referred support the position for which the plaintiff contends. The amount to which Trident is entitled from the continuing partners is an amount equal to its share of the value of the enterprise as a whole as if on a taking of accounts as at that date of retirement. Its entitlement is not simply to the amount for which its partnership interest might have been sold to a willing but not anxious purchaser on that date.

9. [43]

   The second defendant referred me to the decision of Black J in Byrne v AJ Byrne Pty Ltd [2012] NSWSC 667. In that case, the plaintiff was a minority shareholder in a company that his Honour at paragraph [78] described as a quasi-partnership company. The plaintiff sought orders under s 233(1)(d) of the Corporations Act 2001 (Cth) for the other shareholders to acquire his shares at a price that did not include any minority discount. One of the bases on which the plaintiff sought to demonstrate that there had been oppression was that the other shareholders had at no point been willing to purchase the plaintiff’s shares without a minority discount.

10. [44]

    The plaintiff’s proposition was that, in determining the price at which shares were to be purchased by order made under s 233, it is generally inappropriate for those shares to be valued on the basis of minority discounts. It followed, so the argument seemed to go, that the majority’s continuing refusal to make an offer for his shares at an undiscounted price was a species of oppression, even where oppression was otherwise not made out.

11. [45]

    As his Honour pointed out at paragraph [62], there is an important distinction between the question of whether oppression is established, on the one hand, and the valuation issues that can arise when oppression is established and a buy-out order is sought, on the other. His Honour nonetheless proceeded to deal with the plaintiff’s argument on its terms. In the course of doing so, his Honour referred to a series of authorities in which it had been held that where a s 233 buy-out order was made it was usually inappropriate to require the plaintiff’s shares to be valued on the basis of minority discounts (such as for example discounts for lack of control, liquidity and marketability). So, for example, his Honour referred at [64] to Re Bird Precision Bellows Ltd [1984] Ch 419 at 430 where Nourse J observed:

12. [46]

    His Honour also referred to Dynasty Pty Ltd v Coombs (1995) 59 FCR 122 and O’Neill v Phillips [1999] 1 WLR 1092.

13. [47]

    However, his Honour also pointed out that the situation is different where a minority shareholder seeks to exit the company, rather than being unilaterally excluded from it. His Honour referred in this respect to what had been said by Austin J in Tomanovic v Argyle HQ Pty Ltd [2010] NSWSC 152 at [140] and to the reasons of Lord Millett in CVC/Opportunity Equity Partners Ltd v Demarco Almeida [2002] UKPC 16; [2002] 2 BCLC 108, where his Lordship said at [39]:

14. [48]

    Black J observed that cases in which minority discounts had been rejected were cases in which the plaintiff was an “unwilling seller in the sense that the sale of his or her shares has been forced upon him or her by the majority’s conduct”. His Honour said at [70]:

15. [49]

    The defendants here particularly relied on these aspects of what was said in Byrne v AJ Byrne Pty Ltd. They submitted that Trident was in the position of a minority shareholder wanting to sell its shares in circumstances where it has not been forced to do so. They submitted that if Trident were to sell its 19% partnership interest to an outsider, that outsider would only be willing to pay a price that reflected minority discounts and that it would therefore be inappropriate and unfair to require the continuing partners to pay Trident an undiscounted price to purchase its interest.

16. [50]

    I am unable to accept that what Black J said in Byrne v AJ Byrne Pty Ltd about the position of a shareholder seeking to sell out of a quasi-partnership company assists the defendants here. Trident is not seeking to sell its partnership interest to anybody. The “substance of the transaction” is not a sale of its interest to the remaining partners. Rather, Trident is seeking payment of its entitlement on retirement. On my understanding of how that entitlement arises, set out above, Trident seeks a payment to it, as a debt, of the amount for which the continuing partners are required to account to it in consequence of its retirement. The measure of that entitlement is not what Trident might fetch for its 19% interest on the open market; it is its 19% share of the value of the partnership, including goodwill, as at the date of retirement. The cases cited by Black J in Byrne v AJ Byrne Pty Ltd, if anything, tend in my view to reinforce Trident’s case that it would be unfair to require its interest to be discounted in circumstances where the defendants could then sell the business as a going concern and obtain a windfall gain.

17. [51]

    Finally, I do not accept that the result I have reached involves any unfairness to the continuing partners, as they submitted. They had a contractual right to acquire Trident’s partnership interest for fair value, which they declined. They also had a contractual right to require Trident’s interest to be offered to an appropriate third party, which they also declined. Had the partners wished that on retirement a partner was not entitled to an account, but only to the fair or market value of its proportionate interest as if on sale, they could have incorporated such a term into the Partnership Agreement. They might also have included a term, sometimes seen in a professional partnership, that a retiring partner was not entitled to anything other than a nominal amount in relation to the goodwill of the firm.

18. [52]

    The defendants’ main case at the hearing was that Trident had agreed that Ms Conoulty should adopt a “market value” approach in preparing her report and that it was not now open to Trident to resile from that approach. Given that Ms Conoulty concluded that a market value of Trident’s interest was to be ascertained after minority discounts, they submitted that any attempt to persuade the Court to a different conclusion was an impermissible attempt to relitigate the merits of the arguments about market value which, they said, Ms Conoulty had resolved. They referred me to Chocolate Factory Apartments v Westpoint Finance & Ors [2005] NSWSC 784 (Chocolate Factory) at [7(7)], [7(9)] and [7(12)].

19. [53]

    I am unable to accept that argument for several reasons. The first is that the plaintiff quite clearly submitted to Ms Conoulty that she should not apply minority discounts because, as a matter of law, that would be inappropriate. The plaintiff may have “agreed” that Ms Conoulty should adopt a market value but it cannot seriously be suggested that it agreed to be bound by a report that was in its view contrary to what the law required.

20. [54]

    Secondly, I do not understand Trident’s contention to involve a rejection of market value in any event. Its case all along has been that it was entitled to 19% of the market value of the partnership as a whole.

21. [55]

    Thirdly, as I explain below, Ms Conoulty has not attempted to resolve the present issue as a valuation issue “on the merits”. She has instead recognised that, as Trident contended, there may yet be legal reasons why it is inappropriate to apply minority discounts and, to that extent, she has quite properly stayed out of the fray. Ms Conoulty further made clear what the valuation would be if Trident’s methodology was accepted. The airing and resolution of the present dispute about discounts does not involve the re-litigation of an issue otherwise resolved by the valuer. I note in this regard that Ms Conoulty took care to address all of the parties’ lengthy and detailed contentions as to an appropriate minority discount (that is, if one was required at all) but neither party seeks to re-argue the merits of any part of that analysis.

22. [56]

    Fourthly, even if the above were not the case, I still have a discretion to adopt a referee’s report only partially, or to vary it in any way: see UCPR r 20.24(1) and (although referring to a previous version of the relevant rules) Chocolate Factory at [7(4)]. Given the appropriate valuation method is (at best for the defendants) a mixed question of law and fact, even if Trident had acted in the way the defendants suggest, there may well have been occasion for me to exercise my discretion to ensure the valuation adopted in this proceeding accurately reflects the relevant law. Further, the nature of the question of valuation methodology as a mixed question of law and fact lessens the force of the defendants’ reliance on McDougall J’s warning in Chocolate Factory that “Generally, the referee’s findings of fact should not be re-agitated in the Court”. I note also the qualification “generally”.

23. [57]

    The defendants submitted that if Trident wished to dispute the basis of the referee’s valuation, it should have brought the matter back to Court to be determined in an interlocutory skirmish. I disagree. No doubt that is something Trident could have attempted to do. But it was necessary to obtain the referee’s report either way and, in the events which have happened, no party has been either delayed or prejudiced by the fact that the issue has been resolved at a final hearing with the benefit of a well-reasoned referee’s report.

24. [58]

    The plaintiff submitted that if I were to accept its argument about the inappropriateness of minority discounts, the Court should adopt the referee’s report but at the same time exclude (or decline to adopt) those parts of Ms Conoulty’s conclusions that applied minority discounts. The defendants submitted, correctly in my view, that it was not appropriate in the present circumstances for the Court to adopt the report on terms that effectively redrafted its conclusions.

25. [59]

    Given that the report accommodates the views of all parties on the question of minority discounts and given that Ms Conoulty has made clear what the correct value of Trident’s interest is on either view, it is appropriate simply to adopt the whole of her report. That does not however mean that I must adopt her conclusion as to the “market value” of Trident’s interest. The conclusion I expressed above was that the real question for determination is the value of Trident’s entitlement on retirement and not the market value of its interest as if on sale, which is the matter on which Ms Conoulty expressed her ultimate conclusion. I am nonetheless able to reach a firm conclusion as to the real matter in dispute on the basis of Ms Conoulty’s report. As she points out at [19]-[20], 19% of the enterprise value of the partnership as at 5 November 2021 is the amount at Label G set out at [30] above. I note that the parties were in agreement that it was appropriate for the Court to adopt the mid-point of Ms Conoulty’s valuation range.

26. [60]

    The defendants submitted that even this conclusion involved a rewriting of Ms Conoulty’s report. They submitted that Ms Conoulty did not express any truly alternative conclusion as to the value of Trident’s interest. They submitted that Ms Conoulty may have reached a different conclusion on the question of value if she were instead to proceed on the basis I have described.

27. [61]

    I do not accept that submission. The material which the parties provided to Ms Conoulty made it very clear that the plaintiff contended that her valuation should (a) proceed on the basis of no minority discount at all but (b) if there was to be a minority discount, then it should be ascertained having regard to a range of matters which they identified.

28. [62]

    Prior to finalising her report, Ms Conoulty gave the parties an opportunity to comment on a draft. Counsel for the plaintiff took that opportunity to emphasise that Trident’s position was as I have just mentioned, namely that as a matter of law the valuation exercise did not require her to discount her valuation for minority interests (he referred among other things to s 43 of the Partnership Act 1892) but that she should in any event determine any discount in the manner for which the plaintiff otherwise contended. He specifically submitted that she should “provide two alternative valuations [of] Trident’s share in the partnership (a pro rata market value and a discounted value) and allow the court to determine the appropriate basis to ultimately apply.” His reference to a pro rata market value was a reference to Trident’s “share of the partnership, with the value of the partnership to be calculated on a market basis”.

29. [63]

    That is precisely what Ms Conoulty did. Her reference at [23(b)], set out at paragraph [30] above, to whether discounts were required as a matter of law and to the appropriate conclusion in the event she were wrong about this matter is quite clearly a reference to the dispute now before me. The reasons which Ms Conoulty gave for reaching a different conclusion were hardly surprising, particularly given the form of question which the parties posed to her. Her reasoning includes the uncontroversial propositions that Trident did not have a controlling interest in partnership affairs and that, as a 19% partner, it could not expect to be able to convert its interest to cash as might be the case with, say, shares in a public company.

30. [64]

    However, as I have sought to explain, the question for determination is not what a willing but not anxious buyer would pay for Trident’s 19% interest in the partnership, but the amount to which it is entitled from the continuing partners “on account” following retirement.

31. [65]

    Ms Conoulty’s report, which I adopt, allows me to determine that amount on the basis for which Trident contends to be the sum of $4,245,162.

Orders

1. [66]

   Trident submitted that I should make orders in the following form:

2. [67]

   As to the first four orders, notwithstanding that some such declarations are sometimes seen in the cases, it is not apparent to me that there is any particular need for the court to make them here. The defendants submitted that they were all matters that are uncontentious and that there is no utility in making them. I agree.

3. [68]

   As to costs, it is appropriate that the parties’ costs come out of the value of the partnership, at least notionally: Hamer v Giles (1879) 11 ChD 942 at 942 per Jessel MR.

4. [69]

   It is also appropriate in my view that there be no order as to the second defendant’s costs: Statham v Shephard (No 2) (1974) 23 FLR 244 at 246; HP Mercantile Pty Ltd v Hartnett [2017] NSWCA 79 at [14].

5. [70]

   In Gilmore Finance Pty Ltd v Aesthete Pty Ltd (No 2) [2023] NSWCA 31, the Court of Appeal considered an application for costs by successful unitholders who had been separately represented in the appeal. The Court rejected their application, saying at paragraph [10]:

6. [71]

   The defendants here are in the same position. The second defendant submitted that there had been a real possibility of conflict between the defendants because there was no agreement as to who among them would have to bear the cost of buying out the plaintiff. However, that was not a question that arose in the proceedings. It may perhaps have arisen on the cross-claim if a Syers order had been made. But, even there, it was clear that the second defendant simply supported the relief sought by the first defendant. No defendant contended at any point for an outcome different to what any other defendant contended. The second defendant also pointed out that there had been some submissions put by it that were not put by the first defendant. That, however, is not a circumstance that takes the matter outside the scope of what was said in HP Mercantile or Gilmore Finance: see G E Dal Pont, Law of Costs (4th ed, 2018, LexisNexis Australia) at 11.52.

7. [72]

   I will therefore make the costs orders proposed by Trident.

8. [73]

   The parties informed me that they may yet be in a position to reach a conclusion as to the amount of costs and that I should therefore not make final orders just yet. The benefit of having some agreement about costs is that I will then be in a position to make final orders disposing of the whole of the matter. If the question of costs were to go to assessment, it would be impossible to make a final order as to Trident’s entitlement until the outcome of that process were known.

9. [74]

   I will not make any final orders at this stage. I will instead ask the parties to bring in short minutes of order on or before 14 May 2024. If they cannot be agreed, the parties are directed to bring in competing short minutes, together with submissions of no more than five pages, by that date.