McKensey v Hewitt

[1999] NSWCA 426

NSW Court of Appeal

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Interrogate

Catchwords

1. Partnership
2. › Fiduciary duties between partners
3. › Duty of good faith and disclosure
4. › Whether failure to disclose details of pre-existing agreement to incoming partners constituted breach of fiduciary duty
5. › Whether payments under agreement were personal benefits or partnership liabilities
1. Partnership
2. › Partnership assets and liabilities
3. › Clients acquired under retirement agreement
4. › Whether clients were partnership asset and annual fee was partnership liability
5. › Obligation of incoming partners to contribute to pre-existing liabilities
1. Contract
2. › Construction
3. › Meaning of 'the foregoing' in consideration clause
4. › Whether consideration clause limited to specific preceding clauses or encompassed all preceding clauses
1. Appeal
2. › Costs
3. › Discretion of trial judge
4. › Whether discretion exercised under misapprehension of fact

Quick Take

Where clients acquired under a retirement agreement are a partnership asset and the acquisition cost is a partnership liability, incoming partners who become entitled to the benefit of the asset are also obliged to bear the burden of the liability. The existing partners are not required to disclose to incoming partners the source of the partnership liability or that their contributions are going to meeting it, and failure to do so does not constitute a breach of fiduciary duty.