Australia, Jan. 11 -- New South Wales Land and Environment Court issued text of the following judgement on Dec. 16:

1. These complex proceedings arose out of a partnership between the third plaintiff, Ms Wei, and the first defendant, Ms Lei. I have now made final orders disposing of all of the substantive claims for relief in the proceedings. In this judgment I deal with questions of costs.

2. I delivered my first judgment in the proceedings on 29 September last year, following a trial in August: Shun Sheng Pty Ltd v Lei [2023] NSWSC 1176 ("J1"). The judgment dealt with most, but not all, of the substantive claims for relief. Two claims were reserved.

3. There followed several further interlocutory hearings which resulted in a further three judgments dealing with interlocutory issues. In the course of that process, I made some further substantive orders on 15 December last year.

4. Following a further hearing, I delivered a judgment on the reserved claims in late August this year: Shun Sheng Pty Ltd v Lei (No 5) [2024] NSWSC 1109 ("J5"). The orders made in that judgment disposed of the last of the substantive prayers for relief.

5. This judgment assumes familiarity with my judgments of September last year and August this year. Abbreviations used in those judgments are also used in this judgment.

6. As already mentioned, the proceedings were complex, involving multiple parties and multiple claims. The disputes and claims for determination at trial may be summarised as follows:

7. Partnership termination claim: It was common ground that the business the subject of the proceedings had originally belonged to Ms Wei and Ms Lei, as individuals, in partnership, using, at various times, different companies as nominees for the partnership. In October 2021, Ms Wei changed the locks at the partnership premises and definitively excluded Ms Lei (there was a dispute about the extent to which Ms Lei had been participating in the partnership over the preceding two years). It was common ground that, if not terminated earlier, the partnership ended at that point.

8. It was also common ground that in the ordinary course, upon termination, Ms Wei and Ms Lei would each have been entitled to receive a half share of the net proceeds of realising the partnership assets, including the goodwill of its business, and that each of them would be obliged, as part of the winding up process, to account for any partnership monies or other partnership assets appropriated by them (it was alleged by Ms Wei that Ms Lei had appropriated takings of the partnership, and Ms Lei claimed that Ms Wei had herself appropriated funds).

9. But Ms Wei contended that these prima facie entitlements had been displaced by a contrary agreement between the parties. The alleged agreement had three main features. First, the dissolution allegedly took effect on 30 June 2019. Second, Ms Lei allegedly agreed to leave the partnership business to Ms Wei and to surrender any entitlement to an account from Ms Wei or a half share of the other partnership assets. Third, however, Ms Lei allegedly agreed that she would remain liable to account for the partnership monies she had allegedly appropriated, and would pay Ms Wei a sum, later allegedly agreed at $1.1 million, on account of that liability.

10. Ms Lei, in her cross-claim, contended to the contrary and sought an order for winding up as at October 2021 with accounts from both parties in accordance with their prima facie entitlements. She also sought to have an independent accountant, Mr Alan Hayes, appointed as receiver for the purpose of winding up the partnership, including the conduct of any necessary accounting proceedings in favour of the partnership. For her part, Ms Wei took the position that, even if her termination claim was unsuccessful, no receiver should be appointed, and the parties should conduct the winding up themselves.

11. Guarantee claim: Ms Wei alleged that Mr Kitsos, Ms Lei's husband, had guaranteed Ms Lei's obligations under the termination agreement. Ms Wei thus sought judgment against Mr Kitsos for $1.1 million, together with any additional amount that should be found liable on account, against Mr Kitsos as well as Ms Lei.

12. Rent claim: The partnership business operated from commercial premises owned by another company belonging to Ms Wei, Sunshine Island. Sunshine Island alleged that potential arears of rent were outstanding under the tenancy agreement with the partners. Sunshine Island sought judgment against Ms Lei for the allegedly outstanding amount. No claim was made against Ms Wei, but later, by points of cross-claim, Ms Lei sought contribution from her to the extent that the rent claim succeeded.

*Rest of the document and Footnotes can be viewed at: (https://www.caselaw.nsw.gov.au/decision/193be6305157520196d406ff)

Disclaimer: Curated by HT Syndication.