Paltos v Milevski

[2023] NSWCA 7

NSW Court of Appeal

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Interrogate

Catchwords

1. Partnership
2. › Dissolution and winding up
3. › Two-person solicitors' partnership
4. › Goodwill
5. › Whether goodwill transferred on dissolution
6. › Whether continuity of business necessary for goodwill to subsist
7. › Whether transfer of individual partnership assets carries goodwill
1. Partnership
2. › Dissolution and winding up
3. › Valuation of goodwill
4. › Capitalisation of maintainable earnings method
5. › Whether valuation must account for absence of non-compete covenants by former partners
6. › Whether valuation should reflect value to hypothetical third party purchaser rather than special value to acquirer
1. Partnership
2. › Dissolution and winding up
3. › Goodwill
4. › Distinction between goodwill and sources of goodwill
5. › Whether sale of assets of business involves sale of goodwill

Quick Take

Where a small professional partnership's business is brought to an end and the partners separate, the goodwill ceases to exist even if one partner acquires most of the partnership's tangible and intangible assets; any valuation must be by reference to what a hypothetical third party purchaser would pay, taking into account the absence of non-compete covenants.