FGT Custodians Pty Ltd (formerly Feingold Partners Pty Ltd) v Fagenblat [2003] VSCA 33

Court of Appeal (Vic)|2003-04-15|Before: ORMISTON, CHERNOV and EAMES, JJ.A.

For the reasons stated by Ormiston, J.A. I agree that the appeal should be allowed and a new trial be ordered on the terms suggested by his Honour.

This was not a case where the outcome in the trial depended on findings as to the credibility of witnesses. This, then, is not an instance where the trial judge, by virtue of having seen the witnesses, had a significant advantage over the judges in the appellate court in making findings of fact. As Ormiston, J.A. makes clear in his detailed analysis of the evidence, the relevant questions of fact as to the valuation of the partnership primarily fell to be resolved by the drawing of inferences from documentary evidence, and did not turn on assessments of credibility. Indeed, the learned judge did not suggest otherwise, and his one reference to the honesty of the respondent's evidence related to his assertion as to his intention, as at one relevant time, to remain with the firm as a consultant employee. That evidence, even if accepted as honest, in the face of challenge, did not preclude a finding that, objectively, it was not likely that he would do so for a substantial time after 30 June 2000. For the reasons stated by Ormiston, J.A., the conclusion reached by the learned trial judge as to that issue was flawed by significant errors in his analysis of the evidence.

[1] A counterclaim by the appellant was dismissed and is no longer the subject of this appeal.

[2] Mr Borsky also gave direct evidence as to certain events relating to the partnership, but this part of the judgment relates solely to his capacity to give expert evidence. So any reference in paras.[3]-[30] to his evidence should be treated as referring only to his expert evidence.

[4] The passage was cited with approval, but without further exposition, by Cresswell, J. in National Justice Compania Naviera S.A. v. Prudential Assurance Co. Ltd. ("The Ikarian Reefer") [1993] 2 Lloyd's L.R. 68 at 81. It formed the first of seven "propositions" on expert evidence.

[5] In truth his Lordship purported to hand down a judgment, or at least part of a judgment, in an action which had already been settled by the time the so-called judgment was handed down. Indeed, it is pointed out in the statement of facts (at 2337) that one of the terms of settlement was that the judgment "would not be handed down", but the judge was said "in the exercise of his discretion" to have handed down that part of the judgment which dealt with an earlier application that certain expert evidence be declared inadmissible. The object, so it might appear, of the judge was to reject a view as to its admissibility expressed at an earlier pre-trial review by Neuberger, J., which, for better or worse, had been reported in The Times of 9 March 2001.

[6] [2001] 1 W.L.R. 2337. After argument concluded, senior counsel for the appellant very properly drew the Court's attention, on the day the report reached Australia, to the later decision of the Court of Appeal in R. (Factortame Ltd.) v. Secretary of State for Transport, Local Government (etc.) (No. 8) [2002] EWCA Civ 932; [2002] 3 W.L.R. 1104, which disapproved Liverpool etc. Trustees. Factortame (No. 8) will be discussed below.

[8] See Wigmore on Evidence (Chadbourn Revision) Vol. II pp.640, 649 and 799.

[10] See Wigmore, op. cit. Vol. II Chapter 23 paras.555ff.

[11] See per Handley, J.A. in Polycarpou v. Australian Wire Industries (1995) 36 N.S.W.L.R. 49 at 75.

[12] See Wigmore (Chadbourn Revision) Vol. IIIA paras.876, 939, 943 and 991 and in particular Chapter 33 (para.943ff.).

[13] Doubtless counsel has not abandoned the argument, but his recent note (see fn.[) must be taken to acknowledge that the principal authority for the proposition, ]Liverpool etc. Trustees, has now been firmly disapproved in England: see Factortame (No. 8) at 1127 para.[70]; and see below paras.[[]-[].

[17] Different considerations might apply if the expert had been appointed the sole court expert, but it is unnecessary to resolve that question here. Such an expert may be seen to be closer in function to a referee or an assessor.

[18] Cf. Factortame (No. 8) at 1127 para.[70].

[24] Law of Evidence Act 1843 (6 & 7 Vict. c. 85) (U.K.).

[25] See also Cross on Evidence (Aust. loose leaf ed. Service 57) para.[13015] and see also para.[13020].

[26] Cross on Evidence (Aust. loose-leaf ed.) para.[29080] (Service 68).

[27] But not, significantly, in its (full) citation in Factortame (No. 8) at 1126 para.[64].

[30] Whitehouse v. Jordan [1980] 1 All E.R. 650 at 655.

[34] Lord Woolf's earlier Interim Report (1995) on the same subject made even more radical proposals (Ch 23), but they were admittedly tempered in the Final Report (Ch 11).

[35] Similar precepts appear in many jurisdictions, including the Federal Court of Australia, of which we were shown the guidelines laid down by the Chief Justice on 15 September 1998. They are likewise expressed in terms of duties to the Court, but I am not aware of any case in that jurisdiction where the present issue has arisen.

[36] Court of Appeal, Criminal Division, 6 July 1998, unreported.

[37] Provincial Court of British Colombia, 10 November 2000, unreported.

[38] See Northwest Mettech Corp. v. Mettech Services Ltd. (1997) 74 Can. Patent R. (3d) 464 and Hughes v. Haberlin (1997) 49 B.C.L.R. (3d) 366.

[39] 2nd ed. 1999, published after the death of Sopinka, J. See paras.13.1 to 13.7 and 13.77-13.78.

[40] See Sopinka Ch.12, passim. (None of the three Canadian cases is cited.)

[41] 32 C.J.S. Evidence (1996 revn.) s524 at p.328.

[44] Court of Appeal, unreported, 30 August 1996.

[50] Decided on 8 December 1999 but subsequently reported in [2001] CPLR 833. The unreported version appears only on the YAWS website.

[51] See per Lord Woolf, M.R. at 837 paras.[10]-[11] and per Waller, L.J. at 841 para.[25].

[52] At 842 para.[31]. Cited with approval in Factortame (No. 8) at 1126 at [68].

[53] See the propositions described in para.[[] above.

54] Consisting of himself, Robert Walker, L.J. (as he then was) and Clarke, L.J. See at 1137 para.[70].

[57] [2002] N.S.W.S.C. 485. I cannot speak of the significance of the passing of the Evidence Act 1995 (N.S.W.).

[58] There was a fifth partner for the first year, one Linacre.

[59] The judge wrongly found that the memorandum was sent "two weeks" after his resignation: see at para.[20]

[60] The words in bold type appeared in that form in the memorandum.

[63] The appellant contended not merely that this conclusion affected the capitalisation rate but ought also to have led to a reduction in his estimate of future maintainable earnings.

[64] The example given by the witness was of a particular partner leaving a different legal practice to go to Israel after having given either twelve or six months' notice, which had there resulted in a smooth transition and transfer of the departing partner's files to existing partners, but that, if I may say so with respect, assumes that that method of departure was here contemplated. If there was to be a departure in the present case, as in fact it turned out in practice, it was not for the purpose of going overseas, but in order to set up a new practice which would in substance be in competition with at least part of the practice of his former firm. That this was a risk and potential problem was borne out by the relatively early discussion of the nature of a covenant in restraint of trade which the appellant might seek from the respondent.

[65] [1995] HCA 24; (1995) 185 C.L.R. 410 at 429 per Brennan, Dawson and Toohey, JJ.

[66] In the circumstances it seems unreasonable for the judge to have criticised Mr Feingold for having difficulty in accepting that the respondent had been sacked.

[67] No discussion appears in the judgment as to the question of any legal restriction, other than in general terms, and it seems to have been assumed both at trial and on this appeal, without reference to authority, that the respondent might thereafter act for former clients of the firm. Generally this would seem to have been a correct assumption: see Higgins and Fletcher_, The Law of Partnership in Australia and New Zealand_ (8th ed.) pp.235-239; and Heydon, The Restraint of Trade Doctrine (2nd ed.) Chapter 8.

[68] That was the extent of the parties' agreement, but no reference was made in the judgment to that specific term in the minutes of 30 June. As will be remembered, in fact the respondent attended only from 3 July 2000 and did not "require" a pay packet for that week. No party saw the two-day gap as being significant.

[69] The latter statement was qualified to the extent that the judge referred to an alternative view of Mr Borsky's knowledge, namely that (alternatively) he knew that the parties had "entered into bona fide negotiations".

[71] [2002] VSCA 176 at para.[9].

[76] [2000] VSC 78 esp. at paras.[211]-[221].

Even the Civil Procedure Rules 1998

For this purpose it will be necessary to set out considerably more of the factual background leading to the dissolution of partnership, although, with one critical exception, an adequate general description of those matters appears in the judgment given by his Honour on 17 December 2001 reported in [2001] VSC 479.

At a glance

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Judgment (57 paragraphs)

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Legislation Cited (2)

Cases Cited (1)