MALCOLM WALTER ATWELL and IAN GEORGE ATWELL as trustees of the Estate of WALTER CHARLES ATWELL on behalf of all other partners in the Atwell Family Agency other than the first defendants -v- ROBERTS [No 3] [2009] WASC 96 (17 April 2009)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : MALCOLM WALTER ATWELL and IAN GEORGE ATWELL as trustees of the Estate of WALTER CHARLES ATWELL on behalf of all other partners in the Atwell Family Agency other than the first defendants -v- ROBERTS [No 3] [2009] WASC 96

BETWEEN : MALCOLM WALTER ATWELL and IAN GEORGE ATWELL as trustees of the Estate of WALTER CHARLES ATWELL on behalf of all other partners in the Atwell Family Agency other than the first defendants

LEIGH ROBERTS as trustee for the Estate of KEITH GILBERT ROBERTS

LEIGH ROBERTS as the trustee of the Estate of HILDA DORCUS ROBERTS

LEIGH ROBERTS as the trustee of the Estate of ADA ETHEL ATWELL

JOHN CHARLES STACY as trustee of the Estate of EDNA PHOEBE PATERSON

EVELYN DIANE BROADLEY as trustee of the Estate of GLADYS JANET ADDISON BROADLEY

MAURICE EUGENE FRICHOT as trustee of the Estate of DOROTHY MAY BECKETT

Partnership - Dissolution - Rights of pre-emption - Negative covenants - Successive partnerships - Alleged breach of pre-emption rights - Admission of subsequent partners - Approval of accounts and distribution of profits - Effect of formation and succession of new partnerships

Equitable relief - Rescission - Specific performance - Injunctions, inquiries or accounts

Deeds - Imperfect execution of partnership deed - Benefits taken under deed

Limitation periods - Whether a specialty or a contract not under seal - Limitation Act 1938 (WA) s 38 - Action on a specialty for debt or covenant

Partnerships - Twenty person rule - Whether joint executors or trustees of a former interest are to count as one or several 'partners' - Effect of transgressing twenty person rule - One of several joint trustees holding partnership interest for the benefit of all trustees

Partnerships - Management committee, remuneration - Undisclosed benefits - Whether partners accountable - Ratification

Equitable defences - Laches - Delay - Acquiescence - Estoppel - Waiver - Application of statutory limitation period by analogy

Property Law Act 1969 (WA)

Trustees Act 1962 (WA)

(b) None of the six impugned transactions should be set aside

(c) Membership of the various partnerships never offended the 20 partner limit

(d) No applicable limitation period either express or by analogy

Second Defendants : Mr M L Bennett and Mr M P Bruce

Adam v Newbigging & Townend (1888) 13 App Cas 308

AMEV-UDC Finance Ltd v Austin [1986] HCA 63; (1986) 162 CLR 170

Austin v Boys [1857] EngR 965; (1857) Beav 598; 53 ER 488

Ballas v Theophilos [1957] HCA 90; (1957) 98 CLR 193

Brown v Fletcher (1884) 5 LR (NSW) 393

Byrne v Reid [1902] 2 Ch 735

Cameron v Murdoch (1986) 63 ALR 575; 60 ALJR 280

Canny Gabriel Jackson Advertising v Volume Sales (Finance) Pty Ltd [1974] HCA 22; (1974) 131 CLR 321

Chang v Registrar of Titles [1976] HCA 1; (1976) 137 CLR 177

Chipper v Octra Nominees Pty Ltd [2006] FCA 1633

Commissioner of State Taxation (WA) v Pollock (1993) 11 WAR 64

CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53; (2005) 224 CLR 98

Dalton v Fitzgerald [1897] 2 Ch 86

Don King Productions Inc v Warren [2000] Ch 291

Duke Group Ltd v Pilmer [1998] SASC 6529; (1998) 144 FLR 1

Elders Trustee & Executor Ltd v Federal Commissioner of Taxation [1961] HCA 1; (1961) 104 CLR 12

Federal Commissioner of Taxation v Everett [1980] HCA 6; (1980) 143 CLR 440

Fox v Clifton [1830] EngR 716; (1830) 6 Bing 776; (1830) 130 ER 1479

Gebauer Nominees Pty Ltd v Cole (No 2) [2008] WASCA 41

Hagan v Waterhouse (1992) 34 NSWLR 308

Heid v Reliance Finance Corp Pty Ltd [1983] HCA 30; (1983) 154 CLR 326

Holme v Hammond (1872) LR 7 Exch 218

Hunter v Hunter [1936] AC 222

Jefferys v Smith [1827] EngR 367; (1827) 3 Russ 158

Kawasaki (Australia) Pty Ltd v ARC Strang Pty Ltd [2008] FCA 461; (2008) 247 ALR 333

Kern Corporation Ltd v Walter Reid Trading Pty Ltd [1987] HCA 20; (1987) 163 CLR 164

Latec Investments Ltd v Hotel Terrigal Pty Ltd (in liq) [1965] HCA 17; (1965) 113 CLR 265

Lovegrove v Nelson [1834] EngR 959; (1834) 3 My & K 1; 40 ER 1

Luke v South Kensington Hotel Company (1879) 11 Ch D 121

Lyle & Scott Ltd v Scott's Trustees [1959] AC 763

Lysaght v Edwards (1876) 2 Ch D 499

Mailer v Clayton (1898) 1 WALR 3

Manchester Ship Canal Co v Manchester Racecourse Co [1901] 2 Ch 37

Master Education Services Pty Ltd v Ketchell [2008] HCA 38; (2008) 249 ALR 44; (2008) 82 ALJR 1322

McLauchlan v Prince [2001] WASC 43

Monarch Petroleum NL v Citco Australia Petroleum Ltd [1986] WAR 310

Muir v City of Glasgow Bank & Liquidators (1879) 4 App Cas 337

Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9

Octra Nominees Pty Ltd v Chipper [2007] FCAFC 92

Pham v Doan [2005] NSWSC 601; (2005) 63 NSWLR 370

Pritchard v Briggs [1980] Ch 338; [1980] 1 All ER 294

Re Riverton Sheep Dip Co [1943] SASR 344

Re Southside Plaza Merchants' Association [1965] NSWR 1454

Redgrave v Hurd (1881) 20 Ch D 1

Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [2008] WASCA 107

Rushton (Qld) Pty Ltd v Rushton (NSW) Pty Ltd [2002] QCA 210; [2003] 1 Qd R 320

Safeguard Industrial Investments Ltd v National Westminster Bank [1981] 1 WLR 286

Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268

SJ Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87

Sky v Body (1970) 92 WN (NSW) 934

Smith v Anderson (1880) 15 Ch D 247

Spence v Crawford [1939] 3 All ER 271

State Government Insurance Commission v Teal [1990] 2 WAR 105

Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 253 ALR 1

Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315

Tennent v City of Glasgow Bank (1879) 4 App Cas 615

Tisdale v Ballanday Pty Ltd [2006] NSWSC 909

Waller v Gipps (1885) 6 LR(NSW) Eq 123

Watson v Federal Commissioner of Taxation (1982) 61 FLR 268

Williams v Commissioner of Inland Revenue (NZ) [1965] NZLR 395

Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410

Ybasco v Dakas & Dakas (1948) 51 WALR 22

Young v Murphy [1996] 1 VR 279

Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560

1 For very many years, members of the Atwell family have owned the land and buildings known as the Atwell Arcade, which runs between High Street and Cantonment Street in the heart of the Fremantle business district. The arcade comprises a number of retail shops and similar premises. From 1964 or earlier the land and buildings have been owned by members of the family partnership whose business it was to manage and let the various premises for profit. At all times the partnership has been known by the name 'Atwell Family Agency' although the membership, and hence the partnerships, have changed many times over the years due to the deaths or retirements of individual partners and their replacement by other members of the families of present or former partners.

2 The partnership lands on which the arcade stands are registered in the names of the three members of the partnership who have been appointed to the management committee of the firm. These partners hold that property on trust for the benefit of the other current partners. The regular routine management of the affairs of the partnership is conducted by a management committee, or managers or accountants employed by the management committee for that purpose. Regular annual general meetings of the partnership have been held over the years and occasionally, as required, special general meetings have also been held. All partners may attend and vote at these meetings. It is at these annual general meetings that, typically, the accounts for the preceding year's operations are presented and approved and the recommendations of the management committee for distribution of profits from the year's trading are considered and, usually, approved.

3 Because of deaths and retirements of members of the firm, and their replacement by other family members as described, the number of partners in the firm has varied over the years. However, for most of the time the persons treated as partners have been about 18 or 19 and sometimes 20 in number. The firm has been at pains to avoid its numbers ever exceeding 20 because of the limitation of members of a partnership to that maximum provided by s 11 of the Partnership Act 1895 (WA). However, there is an issue in this case as to whether or not that objective has been successfully achieved because there are examples where, on the death of a partner, two or more executors or trustees have been appointed, giving rise to a question of whether each of those trustees became a partner in the firm and, if so, with what effect.

4 However, the major issues concern allegations by the plaintiffs that on the deaths or retirements of six former partners during the period between 1983 and 2001, new partners were wrongly admitted to the firm in breach of terms in the partnership agreement which provided that, in such eventualities, a process should be followed which would have given other partners the opportunity to exercise pre-emptive rights to acquire the share of the deceased or retiring partner in the firm rather than permit the transfer of that deceased's or retiring partner's share to others who subsequently became admitted to the firm as new partners or, in some cases, where the acquirer was already a member, his or her share of the partnership then increased.

5 It will be necessary to examine in detail the provisions of the partnership agreement dealing with the treatment of a deceased's or retiring member's share and how that could be dealt with in different eventualities. Those provisions are quite complex and, as this trial demonstrated, do not directly deal with all the eventualities which might arise in such a situation. For the present, it is enough to refer to those provisions compendiously as the 'Pre-emptive Rights Provisions'.

6 Because the plaintiffs contend that these Pre-emptive Rights Provisions were not followed, or not fully followed, on each of the six occasions from 1983 to 2001 which have been identified in the pleadings, they also contend that the persons who were newly admitted to the firm after such changes, or the existing persons whose shares in the partnership were increased because of those changes, were not validly admitted as members or did not have their share in the partnership validly increased, as the case may be. As a consequence, the plaintiffs contend that a variety of relief comprising declarations, injunctions and orders in the nature of specific performance, together with other ancillary relief, should be granted, in effect, to recommit to resolution, in accordance with the requirements of the Pre-emptive Rights Provisions, the disposition of the shares in the partnership of each of those six former members in a way which would offer, to the members of the partnerships at the relevant times, the right to avail of the opportunity to acquire the shares of the deceased or retiring members in accordance with the pre-emptive rights provisions.

7 That such relief, if it were to be granted, would cause difficulty in determining the rights of the persons concerned or affected by such orders can readily be imagined. However, the plaintiffs submit that the difficulties and disruption which would be involved in vindicating the entitlements which they claim to have at law or in equity are no reason to deny relief and that a detailed regime of taking accounts, rescinding arrangements whereby persons became members of the firm or increased their shares, together with appropriate orders for repayment, with or without interest and with or without indemnities, is just the kind of relief that has been granted in equity in partnership and similar disputes over the centuries.

8 The six impugned transactions where there have been changes in the membership or shares held by existing partners in the firm between 1983 and 2001 are by no means all the changes in the membership of the partnerships. The evidence establishes, and it is agreed, that over the period from 16 December 1964 until the commencement of the trial of this action in February 2009 there has been a succession of 36 distinct partnerships in the sense that on the death or retirement of any existing member that particular firm is dissolved and is replaced by a new firm with or without the introduction of a new member or members. The same result occurs whenever a new member becomes a partner even if all former members continue with him or her in the new partnership so established.

9 So numerous are these changes and so particular are the details of the changes that it is impractical to attempt to summarise them here. Fortunately, the parties have agreed upon a document, entitled Chronology Of Successive Partnerships Trading As The Atwell Family Agency dated 13 February 2009, which lists and traces all the successive partnerships and details the particular alterations in them. This document is preceded by similar details of what are referred to as the initial arrangements between older members of the family which existed from time to time between November 1945 and December 1964. These are only of historical interest but are included in the chronology for the sake of completeness. That chronology, accepted in these proceedings as exhibit 94, forms the First Schedule to these reasons.

10 Further, the issues over whether or not the persons who were introduced as partners to the firm after each of the six challenged transactions from 1983 to 2001, were eligible to be admitted, or to have their shares in the firm increased, and the details of their family relationships which condition such eligibility, depend upon an understanding of the family relationships within the larger Atwell dynasty. Precise explanations of all the relationships would be very lengthy and intricate but, again, this is unnecessary because the parties have agreed upon the details of a family tree which show all the material relationships. This is exhibit 65 and forms the Second Schedule to these reasons. It is important to realise that this family tree is not entirely comprehensive. Certain members of different generations of the family have not been included because none of the parties suggests that the eligibility or otherwise of persons who at any time have been admitted to the partnership depends upon establishing descent through those individuals who have been omitted. Accordingly, this family tree is accepted as adequate for the purposes of these proceedings notwithstanding that it does not show all the lineal descendants of Mr and Mrs Henry Atwell who were, respectively, the family patriach and matriarch.

11 The next main controversy in this litigation is over allegations made by the plaintiffs that from about 1974 unauthorised remuneration was paid to the various members of the management committee from time to time and that these payments were not disclosed, and therefore not approved, at any of the general meetings of the firm when the annual accounts were tabled and adopted. Consequently, the plaintiffs seek accounts of all the unauthorised moneys said to have been paid to each of the members of the management committee from time to time; an order for the repayment of the moneys with interest, either simple interest or compound interest; and orders for distribution of the moneys so recovered to the various members of the partnerships affected according to their individual proper shares. It is unnecessary to say anything more about this aspect of the case, which I shall refer to as the 'unauthorised remuneration issue' because, for reasons which will soon appear, it was not tried before me at this hearing.

12 The two plaintiffs, Malcolm Walter Atwell and Ian George Atwell, are the two surviving trustees of the estate of their late father, Walter Charles Atwell, who died on 17 March 1975. Their late mother, Elsie F Atwell, the widow of Walter Charles Atwell, was during her lifetime another co-trustee of her husband's estate and the sole life tenant entitled to the income of his estate. After his death she was the recipient of his estate's share in the profits of the Atwell Family Agency. Mrs Elsie F Atwell died on 9 November 1998 and her two sons, as already mentioned, are the continuing trustees of their father's estate. As trustees they contend that they are partners, or that the estate is a partner and has been a partner in each of the successive partnerships of the family firm from March 1975 to date. The defendants, however, contend that the plaintiffs are not, and never have been, partners.

13 The plaintiffs have also brought these proceedings claiming to be representatives of all present and former partners in the Atwell Family Agency other than the first defendants, asserting that they are entitled to do so under R.S.C. O 18 r 12. The defendants challenge this assertion but are met with a response by the plaintiffs that the defendants took no steps to challenge the assertion of the representative nature of the proceedings and, if there is any defect in the plaintiffs' role as representatives, it is, at the most, an irregularity which has been waived by the advance of this litigation through its many early stages until now.

14 It is most unsatisfactory that this controversy over the representative nature of the plaintiffs' claims has not been raised and resolved before this trial. Because of that neglect there is much to be said, from the standpoint of practical convenience and efficiency, for treating this as being entirely a procedural matter and to let the consequences lie where they fall. However, as the trial proceeded evidence emerged to establish that at least seven other members of the current partnership, not including the first and second defendants, had been informed of the institution of similar prior proceedings by the plaintiffs, and of the assertion by the plaintiffs that they claimed to represent all present or former members of the partnerships, including them. Such notice had not been given to those members by the plaintiffs nor had they been served with these proceedings or consented to the plaintiffs' claim to represent them. Each of those seven wrote to the secretary of the management committee, in varying terms of strong emphasis, advising that they did not approve of the plaintiffs' claiming to represent them, that they did not support the claims being advanced by the plaintiffs, and that they deplored the fact that litigation had been commenced. It seems that no notice of any kind of these present proceedings, let alone the representative character asserted by the plaintiffs, had before this trial been given to former members of previous partnerships or to their executors or personal representatives. When this matter was raised I was informed by counsel for the management committee that many of the members of former family firms from 1983 to date were dead and that difficulties were expected in communicating with their current representatives because, in most cases, their estates had been fully administered.

15 In the event I made orders that the solicitors for the parties should formally notify all the known members of the current partnership of the Atwell Family Agency and give them notice, in a form approved by the court, of the nature and potential effect of these proceedings and that the plaintiffs sought to bring these proceedings as representatives on their behalf. The form of notice approved called upon the recipients, within a limited time, to inform the solicitors for the existing parties or the court if they had any, and if so what, objections to the plaintiffs continuing to act as representative plaintiffs on their behalf. Similar directions were given and a suitable notice settled, with respect to members or representatives of earlier partnerships. I set a directions hearing for 5 March 2009 to deal with the responses to those notices with a view to confirming, or modifying, as may be required, the representative character of the plaintiffs which they have asserted.

16 The named first defendants, Mr Leigh Roberts, Mr Noel Henry Atwell and Mrs Audrey Atwell, are presently the members of the management committee of the firm having been so appointed in October 1989, October 1995 and July 2003 respectively. Accordingly, each is a defendant to the claim for unauthorised remuneration as well as being a defendant as a current partner. However, the plaintiffs have pleaded that there are also two other former members of the management committee, namely Mr H R Atwell from 16 December 1964 to about September 1975 and Mr K G Roberts from 16 December 1964 to March 2003. There is no claim for relief in respect of alleged unauthorised remuneration against Mr H R Atwell. However, there is a claim made against the estate of the late K G Roberts for an account of his share in the alleged committee unauthorised remuneration - see statement of claim prayer for relief par I and par J. Again, however because the trial of the unauthorised remuneration issue did not proceed before me on this occasion, it is not necessary to pursue the significance of this.

17 The second defendants, in their various capacities as trustees of the estates of deceased members of the family who were former partners; in one case as the trustee of an inter vivos trust; and in one other instance as a current continuing partner in the firm, are sued because it is asserted that each of them, or each of the interests which they represent, disposed of or acquired a share or shares in the partnership otherwise than in accordance with the Pre-emptive Rights Provisions giving rise to the transactions which are alleged to be invalid or which the plaintiffs contend should be set aside. The plaintiffs contend that, on behalf of the original unit holders, these defendants should have those transactions rescinded and be ordered to issue appropriate disposal notices for the shares in the partnership which were wrongly and invalidly transferred.

18 The third defendants are the late entrants to this litigation. They were joined by an order which I made on 5 March 2009 as a sequel to the orders which I made during the course of the hearing requiring notice to be given to those members of the current partnership of the Atwell Family Agency whom the plaintiffs claim to represent in their capacities as representative plaintiffs pursuant to the RSC 1971 O 18 r 12.

19 At the directions hearing on 5 March 2009 it emerged that each of the third defendants objected to the plaintiffs purporting to represent them and either wished to take no part in the proceedings or to have an opportunity to do so without consequences as to costs. I therefore joined these eight defendants as one additional set of third defendants, directed that they be given notice of the amended proceedings and of the order joining them and be given an opportunity to appear and be represented but that any appearance or representation, other than by one of them on behalf of the others, would be at their own risk as to costs. The proceedings were further adjourned to allow a period of 28 days to elapse within which any of the third defendants could appear and be represented and apply to make further submissions. That period has passed and none has sought to make submissions.

20 The consequence, therefore is, that the plaintiffs are no longer representatives of any of the third defendants but are regarded as representing other members of the existing firm who have not been joined in these proceedings.

21 This leaves the question of whether or not the plaintiffs represent all other members of former partnerships of this firm including the representatives of deceased former partners. That question was left over for further investigation in the course of this trial but, because of the difficulty of tracing the representatives of former deceased partners, it has not been possible to ascertain who, if any, are the living representatives of those interests. Accordingly on 5 March 2009 when I joined the third defendants, the question of the plaintiffs' claims to represent these other former members of past partnerships was left open to be addressed and resolved later if should it prove necessary.

22 There are three partnership agreements in evidence. The first is a deed dated 16 December 1964 (exhibit 1), the second a deed dated 15 October 1965 (exhibit 2) and the third is described as an indenture made 25 March 1976 (exhibit 3). There is an issue over whether or not this 1976 agreement was validly executed as a deed by all the original partners or has been validly executed as a deed by subsequent partners and, if not, what is the effect of this. However, the parties are agreed, and I accept, that the status of that document, whether a deed, imperfectly executed or otherwise, or an agreement not operating as a deed, relates only to limitation issues. They can be put aside for the time being. It is common ground that the terms of the 1976 agreement (exhibit 3) effectively replaced the two earlier agreements. It is upon the terms of this agreement that the plaintiffs rely.

23 Many of the controversies in this litigation and the problems which have arisen can be seen to have their genesis in the language adopted, no doubt deliberately, by the original parties to the 1976 agreement. The essential problem involves an underlying fallacy that the firm, 'Atwell Family Agency', is a continuing entity which survives, unaffected as to identity, by the deaths or retirements of members.

24 The reason why this is a fallacy is quite fundamental. The point was addressed by the McPherson JA in Rushton (Qld) Pty Ltd v Rushton (NSW) Pty Ltd [2002] QCA 210; [2003] 1 Qd R 320, 323 as follows:

It is an axiom of partnership law that any change in the membership of a partnership occurring, whether by reason of the retirement, expulsion, death or otherwise of a partner, has the consequence of dissolving the partnership: S J Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87, 90-91. After dissolution, the next step is to wind up the affairs of the partnership by realising the assets and paying the debts and liabilities of the firm before distributing the surplus, if any, among the partners according to their rights and interests. See Partnership Act 1891 (Qld), s 42; Partnership Act 1892 (NSW), s 39. Winding up in that way may be avoided if the parties agree on a sale to one or more of the remaining partners of the shares of the outgoing partner, or if there is a provision in the partnership agreement to that effect. This is sometimes described as a technical or notional dissolution, which is something of a misnomer because it is not the dissolution but, at most, the winding up that is notional. The partnership or firm itself is dissolved as soon as there is a change in membership, but the assets and, as between the partners, responsibility for the liabilities of the partnership are taken over by the remaining partners.

25 The interests of each of the partners in this partnership from time to time are described as 'units'. The terms and conditions upon which the parties agree to be bound are contained in 'the schedule' which in turn is referred to as 'the rules of the partnership'. By rule 2 each partner is deemed to hold units in the partnership, and an entry made in the partnership books with the approval of the management committee of a transfer of units is treated as being effective to transfer those units to another, or to a new, partner. As at 1976 there were 142,884 units established in the partnership and different members of the firm held different, sometimes widely different, numbers of units.

26 By cl 2 and 3 of the 1976 partnership agreement provision was made to attempt to establish continuity of the firm as follows:

2: The provisions of this deed shall be deemed to have come into force on the first day of July one thousand nine hundred and seventy five and the partnership shall continue until determined by a majority vote of the partners taken in accordance with the rules.

3. The death or bankruptcy or other disability of any partner shall not determine the partnership as between the remaining partners.

27 The minutes of the annual general meetings of the firms, the correspondence from the management committee and the notices which were given when a partner died or retired and steps were being made to 'offer' his or her units to other members or to admit a new partner clearly indicate that all concerned treated the partnership as having many of the characteristics of a limited liability company. Some of these usages were quite innocuous, such as referring to the committee of management as the 'Board'. There is frequent reference to the annual distributions on account of profits as the payment of 'dividends' for each unit held. Reference to the share of any one partner in the partnership property as determining his or her entitlement to a share in the profits, by the term 'units', is clearly analogous to the concept of a 'share' in a limited liability company. The detailed provisions, yet to be more closely examined, relating to the transfer or sale of units in the event of the death or retirement of a partner, including the transfer or sale to another member of the family who would then become a partner introduce the further fallacy of the transmissibility of the share of the deceased partner, and the preservation of the identity of the firm with a new member.

28 What these provisions overlook is that: (a) a partnership is established by persons who have entered into partnership with one another to carry on business in common with a view of profit (Partnership Act s 7(1)); (b) that the share of a partner in the partnership property at any time is the proportion of the then existing partnership assets to which he or she would be entitled if the whole were realised and converted into money, after all the then existing debts and liabilities of the firm have been discharged (s 33); (c) that the mutual rights and duties of the partners, whether ascertained by agreement or defined by the Act, may be varied by the consent of all the partners, and such consent may be either express or inferred from a course of dealing (s 29); (d) that where no fixed term has been agreed upon for the duration of the partnership, any partner may determine the partnership at any time on giving notice in writing of his intention so to do to all the other partners (s 37); (e) that subject to any agreement between the partners, the partnership is dissolved, if entered into for an undefined time, by any partner giving notice in writing to the other or others of his intention to dissolve the partnership (s 43(c)); and (f) subject to any agreement between the partners every partnership is also dissolved by the death or bankruptcy of any partner and such dissolution shall take effect from the date of the death or bankruptcy (s 44).

29 The effect of cl 3 in the 1976 agreement was to constitute an agreement between the partners for the time being that the death or bankruptcy of a partner would not determine the partnership as between the remaining partners but it nevertheless would, and did, terminate the partnership with that deceased or retiring member, so converting his or her share in the partnership to a monetary entitlement calculated in accordance with s 33 - see also Canny Gabriel Jackson Advertising v Volume Sales (Finance) Pty Ltd [1974] HCA 22; (1974) 131 CLR 321, and Federal Commissioner of Taxation v Everett [1980] HCA 6; (1980) 143 CLR 440, 446 - 447. The 1976 partnership agreement does not prevent an existing partner seeking a dissolution of the partnership by the court on any one or more of the grounds available under s 46 of the Act.

1. The parties agree that upon the terms and conditions of these presents and upon the terms and conditions set out in the Schedule called 'the rules of the partnership' they will carry on the business of property owners under the style of 'ATWELL FAMILY AGENCY' in partnership between themselves and any other persons who may be admitted to partnership in the manner provided in this deed

the surviving or continuing partners for the time being, after the death or retirement of one or more of their former members, remain obliged to carry on the partnership together and to admit to their firm persons entitled to admission as prescribed by the Pre-emptive Rights Provisions, the formation of any new and succeeding partnership still requires the unanimous consent and mutual acceptance of each of the members of the newly formed partnership. Any new partnership is a different association of members.

31 It is by no means uncommon to find in the terms of a partnership agreement provisions enabling the partnership business to continue, without a formal winding up, in the event of the death or retirement of any partner. Nor is it at all uncommon to find provisions entitling an existing partner or his or her executors to introduce into the partnership, in the event of death or retirement or otherwise, a close family member such as son or daughter. Nor is it uncommon to find provisions similar to those existing in this partnership agreement, which provide for the calculation or determination, by valuation or otherwise, of the value of the share of a deceased or retiring member's share in the partnership, without resorting to a general winding up. They often provide for the payment of the value of such a share to the deceased partner's estate or to the retiring partner or as may be directed, and allow the remaining partners, and any new partners, to continue to carry on the business of the former partnership without further liability to the retiring partner or the representatives of the deceased partner. Indeed, in many commercial partnerships such provisions are essential to allow continuity and the preservation of valuable assets such as goodwill and work in progress.

32 Nevertheless, these provisions cannot be effective to exclude the basic principle that any change in the membership of a firm destroys the existing partnership. This very issue was addressed by the Full Court of the Supreme Court of Queensland in SJ Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87. Like the present, that was a case where a partnership referred to the share of the partners as being 'units' and provided that the transfer of a unit did not dissolve the partnership. Of those notions McPherson J, with whom Macrossan and Shepherdson JJ agreed, said:

Implicit in the description 'unit' partnership, is the notion that a partnership like this enjoys a corporate or at least a quasi-corporate existence apart from the members who comprise it. That is, of course, quite foreign to the conception of partnerships as understood by English law, which regards any change in membership as destroying the identity of the firm. See Lindley On Partnership, 15th ed, 34, 50 and 543. Hence it is that under our law the transfer of a share to a non-partner inevitably breaks the continuity of the firm, thus constituting a new firm or partnership of those members of the former partnership who remain, together with the newcomer.

Once this principle is grasped, or rather recalled to mind, it is impossible to give literal effect to a provision like cl 8 of the deed (exhibit 3) in this case that the partnership is a continuing partnership not dissolved by transfer of a unit or other interest in the partnership. At least that is so if what is meant by that clause is that the introduction, whether by addition or substitution, of a new partner effects no dissolution of the existing partnership. If less than that is meant, then it is of no assistance to the appellants' submission in this case. It makes no difference to that conclusion that the partnership agreement here chooses to speak of a 'unit' rather than a share; for a unit is nothing more nor less than the partners' share, or a particle of it, called by another name. Clause 7.2 therefore adds nothing to general principles of a partnership at law in providing, as it does, that no transfer of any unit in the partnership is effective unless the transferee agrees to be bound as a partner of the partnership by the terms of the agreement. Except in a limited sense as mortgagee or as the assignee of the benefit of a share (see Federal Commissioner of Taxation v Everett [1980] HCA 6; (1980) 143 CLR 440, 448 - 449), a person cannot acquire a unit or share in a partnership except by becoming a partner; and, if he becomes a partner, he is necessarily bound by the terms, whatever they may be, of the partnership agreement.

34 In dealing with an issue which also arises in the present case, McPherson J went on to say at 91:

It was nonetheless submitted that it was possible for existing partnership members by their agreement inter se to impose express formal restrictions upon the admission of further individuals to their ranks. So they can; and if they insist upon strict adherence to that formality, the newcomer will never be admitted to their ranks as partner. But that is because, by requiring strict compliance with that formality, they reject him as a partner or, what is the same thing, they refuse to dissolve their existing partnership and form a new partnership of which he is a member. Conversely, however, if they do agree to accept him as a partner, the fact that the requisite formality has not been complied with becomes irrelevant. The newcomer is ex hypothesi not a party to the partnership agreement by which the relevant restriction is imposed, and so is himself not bound by it. The original partners, who are bound by it, may by common consent or acquiescence choose to ignore it. Who, if they do so, is in a position to complain that a term of the original partnership agreement has been disregarded, waived, or set aside? And if both or all agree to disregard it, the result that follows is a new partnership comprising the original partners and the incoming partner now accepted as a member.

35 In the defence filed on behalf of the first and second defendants, as it stood shortly before the trial, there were many detailed pleas relied upon. For reasons which will appear soon it is sufficient now to condense these by identifying the main lines of defence asserted. They are:

(a) that the original partnership agreement of 1976 and rules were only binding on the parties to that instrument and that it ceased to have effect once that original partnership had been dissolved by the first change in partnership or, alternatively, by the first subsequent change in partnership inconsistent with its terms, because the new partners, in each successive partnership, were entitled to waive, adopt or vary any requirement regarding the transfer of units in the partnership and did so;

(b) that each of the new partnerships following upon each of the challenged transactions, accepted and approved the transfer of units to the defendants - reflected in annual reports, meetings and minutes - and the fact that dividends (distributions of profits) had been paid and shared between the members;

(c) for particular reasons specific to the individual named second defendants (eg waiver, consent, etc) a disposal notice for the transfer of the particular units was not required;

(d) a six-year period of limitation applies under the Limitation Act 1935 s 38 and is a defence to the claims advanced in relation to transfer of units occurring in 1983, 1985 and 1986;

(e) that the defences of estoppel, laches and acquiescence arise in relation to each of the impugned transactions.

36 Other defences were raised in relation to the claim for account for the alleged unauthorised remuneration to management committee members but it is not necessary to deal with them now.

37 Very shortly before the trial the defendants sought leave to amend their defence and to introduce another defence with much more elaborate detail in support of these defences and, more particularly, in support of the defences of laches, acquiescence, waiver and estoppel. These changes were apparently in response to the plaintiffs' earlier reply which alleged that there could not be any successful equitable defence of the nature relied upon without proof that the party or parties estopped, acquiescing, delaying or waiving the irregularity or non-conformity with the pre-emptive rights provisions had actual knowledge of the irregularity or non-observance and asserting that the plaintiffs and those whom they sought to represent had not had knowledge, or comprehending knowledge, of the various acts of non-compliance. The plaintiffs also applied for leave to amend their reply in a number of material respects and this led to the defendants seeking leave to file a rejoinder to the amended reply.

38 Counsel for the plaintiffs opposed the amendments sought to the defence on the grounds that they were so extensive that, if granted, they would require extensive further inquiries, new statements from witnesses, possibly from further witnesses and that it would be impossible to proceed with the trial as listed. He sought an order that the defendants should immediately pay a large amount for costs thrown away if the amendments were to be granted and the trial adjourned. He nevertheless pressed for amendments to the reply as sought. Counsel for the defendants maintained that the amendments to the defence sought, and the proposed rejoinder were essential and that the justice of the case required that leave be given even if the trial were to be adjourned but, in that instance, all questions of costs should be reserved for further consideration.

39 This was a most unsatisfactory development to occur so late in a case of this magnitude which has been the subject of much earlier interlocutory management. However, none of the parties desired to proceed with the pleadings as they stood and I was satisfied that if the amendments to the defence sought were to be granted that the plaintiffs could not be expected to proceed with the trial immediately.

40 I therefore explored with counsel the possibility that I should order that the trial proceed but on limited and specified issues which should be capable of determination regardless of the amendments being sought and which might have the potential either to determine the action or to determine significant issues which would then facilitate the resolution of remaining issues either by agreement or by eventual trial on a much more limited basis. I suggested that the parties should attempt to formulate issues for resolution dealing with the following points which could then be tried without the need to address or take evidence on the many fact laden new issues or varied issues arising from the proposed amendments. The points were:

(a) whether the 1976 partnership agreement, and in particular its regime for pre-emptive rights for the acquisition of the units of a deceased or retiring partner, continued to apply after 1976 and especially in relation to the six changes in the partnership occurring between 1983 and 2001 which were challenged by the plaintiffs;

(b) whether the plaintiffs, or the interests which they purported to represent, were entitled to challenge the alleged non-compliance with the Pre-emptive Rights Provisions in relation to each, or any, of the six challenged transactions when, as was apparent, the interests which they represented were partners or a partner in each of the newly formed partnerships established after each of the six transactions;

(c) whether at any material time there had been a breach of the 20-person rule in relation to the membership of the Atwell Family Agency and, if so, whether this affected the situation;

(d) whether there was any statutory limitation period available as a defence to any of the plaintiffs' claims, and if so whether this was 20 years under the Limitation Act s 38(1)(e)(i) or six years under s 38(1)(c)(v); or whether either such limitation period should be applied by way of analogy as a defence to the plaintiffs' claims.

41 Counsel for the parties considered there was potential for a statement of agreed issues along these lines to be prepared and that the trial and determination of them would have the prospect of resolving large areas of dispute and, having regard to the circumstances, the parties should proceed to use the time set aside by the court to hear and determine such issues. Counsel sought an adjournment to negotiate over the exact terms of the proposed questions and to revise the documentary and other evidence which would then be necessary to be adduced for the trial of those issues. I acceded to the request for an adjournment, adjourned the continuation of the trial until the afternoon of 5 February 2009 for further directions. When the matter was called on again counsel announced that they were largely agreed on the issues to be determined and sought a further adjournment until the morning of Monday, 9 February 2009 to rearrange the statements and other documentary evidence required in light of these changes. I acceded to that request and the trial of the specified issues commenced on that day.

42 The principal effect of this arrangement was that all defences involving discretionary considerations, such as whether or not equitable remedies which might be available should be granted in the exercise of discretion, and defences involving a requirement to undertake a close examination of the facts, particularly facts sought to be introduced by the amended pleadings including, but not necessarily limited to laches, waiver, acquiescence, ratification or estoppel, should be excluded from consideration. I gave leave to the defendants to amend the defence as sought; leave to the plaintiffs to amend their reply as sought; and leave to the defendants to file a rejoinder but without prejudice to the right of any of the parties to apply to strike out portion of the proposed amended pleadings or the rejoinder by application on notice to be determined in chambers if required. I reserved all questions of costs, or costs thrown away, by reason of the amendments to the various pleadings and also adjourned all issues of costs arising from the adjournment of the trial generally.

43 By this process the terms which the parties agreed and which I ordered should be stated for trial as separate issues are:

1. Did the pre-emptive rights in the 1976 Partnership Deed (the pre-emptive rights) cease to bind all succeeding Atwell Family Agency partnerships after and by reason of the dissolution which occurred upon:

(i) the transfer of the units by the trustee of the estate of Harold Atwell Adam to Mavis Victoria Adam in 1977;

(ii) the death of Evelyn Rose Adam between 1978 - 1980;

(iii the death of Ada Ethel Atwell on 24 March 1983; or

(iv) any subsequent or other dissolution event

and, if so, which?

2.1 (a) did the terms of the pre-emptive rights provisions contained in the 1976 Deed require that the transfers of the units to Keith Gilbert Roberts in his capacity as trustee of the Hamersley Trust pleaded in pars 14, 16 and 23 of the statement of claim require compliance with those pre-emptive rights?

(b) did any of the disposals complained of in pars 14, 16, 18, 20, 23 and 24 of the statement of claim failed to strictly comply with the pre-emptive rights provisions in the terms contained in the 1976 Deed and, if so, which?

2.2 If the answer to question 2.1 is 'yes', with respect to each disposal in connection with which the answer is 'yes':

2.2.1 (a) Did Malcolm Walter Atwell and Ian George Atwell as trustees of the estate of Walter Charles Atwell deceased (M & I Atwell) become a partner or partners by the 1976 Deed jointly with Elsie Frances Atwell and, if so, did they continue to be a partner or partners of all successive partnerships?

(b) can M & I Atwell complain?

2.2.2 If the answer to question 2.2.1 is 'yes', with respect to each disposal in connection with which M & I Atwell were a partner or person and entitled to complain:

(a) Is the claim of M & I Atwell a claim solely for breach of contract and, if so, what are the implications for limitation periods applying under the Limitation Act 1935 (WA) (the Act) or by analogy?

(b) Is there a fiduciary relationship which may apply to extend the six-year or 20-year limitation period?

(c) Was each subsequent partnership after the 1976 Deed constituted by a deed or by agreement and, if by agreement, is the plaintiffs' claim within s 38(1)(e)(i) of the Act?

(d) Is there a limitation period applying by the Act or by analogy and, if so:

(i) is it six years or 20 years?

(ii) is there a fiduciary relationship which may apply to extend the six-year or 20-year limitation period?

3.1 Do joint trustees of a trust estate count as one member of a partnership for the purposes of s 11 of the Partnership Act 1895 (WA) and s 115 of the Corporations Act 2001 and its predecessors or is each joint trustee a separate member for those purposes?

3.2 If the answer to question 3.1 is that each joint trustee is a member for those purposes, what is the legal affect on the enforceability of the 1976 Deed and subsequent partnerships?

Pre-emptive rights provisions of the 1976 partnership agreement.

44 These pre-emptive rights provisions must, of course, be seen in the context of the 1976 partnership agreement as a whole. For reasons already described and as set out in cl 1, cl 2 and cl 3 of the Atwell Family Agency the business was to be conducted in partnership between the original partners and any other partners who might be admitted to partnership in the manner provided. It was to continue for an indefinite period until determined by majority vote of partners taken in accordance with the rules, and the death, bankruptcy or other disability of any partner should not determine the partnership as between the remaining partners.

45 Clause 4 which identifies the persons who, in certain eventualities, shall become partners provides some initial challenge to ease of construction simply because of its formatting. However, grammatical considerations and the precedent provided by cl 4 of the earlier partnership agreement of 1964 (exhibit 1) leave me in no doubt that it should be construed as if it were set out in the following format:

(a) the legal personal representative of a deceased partner; and

(b) any new trustee of the estate of a deceased partner or of any settlement made by a partner;

(c) any transferees of units in whose names units are entered in accordance with the Rules of the Partnership and who signed their names at the foot of the Rules as persons bound by the Rules

shall be deemed to have become partners subject to the Rules (as they are from time to time in force) of the partnership with the other persons who are then partners and accordingly to be entitled to a share in the assets and as between the partners to be liable to bear a share of the losses of the partnership proportionable to the number of units from time to time entered in their name.

46 The scheme for pre-emptive rights is taken further by the Rules themselves of which the following portions are material:

'Partner' includes any of the parties to this Deed and also any person who upon transmission after the death of any partner or transfer of units in any way permitted by the Rules is entered in the books as the holder of one or more units and who signs his name on the foot of this Schedule as a person intending to become bound by the Rules and 'partners' means the partners for the time being.

...

Part II. Units in the Partnership

(2)(1) Each partner shall be deemed to hold units in the partnership.

(2) An entry made in the books with the approval of the Committee of the transfer of units (if the transfer is not contrary to the Rules) shall be effective without any instrument in writing as evidence of the right to the units so entered but the Committee shall require authority in writing from the persons concerned before an entry is made of a transfer.

(3) Units may be held by any company as a partner

...

Part III Acquisition and disposal of units

1. Without the prior giving of a disposal notice in accordance with Rule 6 and the observance of the requirements of the Rules consequent upon the giving of the notice a partner may acquire units from any other partner at such a price as they shall mutually agree.
2. Without the prior giving of a disposal notice in accordance with Rule 6 or the observance of any requirement of the Rules consequent upon the giving of such a notice:

(a) units standing in the name of a deceased partner may be entered in the names of his legal personal representatives upon their signing their names at the foot of this Schedule as persons bound by the Rules; and

(b) units standing in the names of the legal personal representatives or trustees of the estate of any deceased partner or the trustees of any settlement made by a partner may be entered in the names of new trustees for the time being upon the legal personal representatives or new trustees signing their names at the foot of this Schedule as persons bound by the Rules; and

(c) units standing in the name of a partner may be transferred to his spouse brother or sister or to a child of such partner or in the event of there being no child then surviving such partner to a grandchild of such partner.

1. (1) Except where disposal is permitted without the prior giving of a disposal notice or the observance of any requirements of the Rules consequent upon the giving of such a notice a partner (called 'the disposer') proposing to dispose of all or any of his units shall give notice in writing (called the 'disposal notice') to the Committee that he desires to dispose of the units named in the notice.

(2) The notice shall specify the sum the disposer fixes as the sale price of the units and shall constitute the Committee his agent for the sale of the units to other partners at the price so fixed.

1. Upon receiving a disposal notice the Committee shall inform all partners of the numbers of units available and of the sale price fixed by the disposer. Any partner who desires to purchase any of the units may within 14 days after the Committee informs him of the proposed sale give notice to the Committee of the number he desires to purchase. If two or more partners give notice of their desire to purchase the units should be allocated to them rateably according to their existing holdings so that no purchaser shall receive more than he desires to purchase and entries accordingly shall be made in the books as soon as the purchase money is paid.
2. If the Committee do not within twenty-eight days after being served with the disposal notice effect a sale of all the units named in it the following procedure shall apply:

(a) The Committee shall obtain a valuation of such units from the accountant or accountants for the time being of the partnership and supply a copy thereof to the disposer;

(b) If the disposer does not within 7 days of the receipt of such valuation give notice to the Committee that he does not accept such valuation the sale price of the units shall be as fixed by such valuation;

(c) If the disposer gives notice in accordance with the last preceding paragraph that he does not accept such valuation the Committee shall thereupon obtain a further valuation of such units from a person appointed by the President of the Real Estate Institute of Western Australia and in such a case the sale price of the units shall be as fixed by such further valuation;

(d) The costs of any such further valuations aforesaid shall be borne by the disposer;

(e) If the Committee does not within twenty-eight days after the price of the units has been fixed under the provisions of sub-paragraphs (b) or (c) of this paragraph effect a sale of all the units named in the disposal notice the disposer shall be at liberty to sell the units remaining unsold to any person not being a partner at any price not being less than the valuation price fixed as aforesaid but no sale to any person not being a partner shall be permitted at a lesser price than fixed as aforesaid unless and until the Committee has been advised by the disposer that he is willing to sell at such lesser price and the Committee has given notice to all the partners of such lesser price and no partner within fourteen days after such notice is given gives notice of his desire to purchase at such lesser price in which last event such units shall be sold to such partner or partners in accordance with the Provisions of Article 7;

1. Before any units are entered in the books as belonging to a person not already a partner he shall sign his name at the foot of this Schedule in token of his agreeing to be bound by the Rules;
2. No sale or transfer of units may be permitted at any time if the effect of such sale or transfer is to increase the number of partners in the partnership beyond twenty.

47 The Rules then go on to provide for a general meeting of the firm to be held at least annually, for the Committee or any two partners to convene an extraordinary general meeting; for the establishment of the Committee of Management and for the firm accounts. By Rules 29 and 30 an annual profit and loss account, balance sheet and report of the manager as to the state of affairs of the partnership, together with the amounts of the proposed distributions of profits are to be supplied to each partner.

48 Finally, by Rule 35 there is provision for the alteration of the Rules of the firm as follows:

1. Any of the Rules may be altered from time to time by resolution in general meeting for which the partners holding three-fifths of the units vote and thereafter as so altered the Rules shall continue to have effect as between and to bind all the partners.

49 As noted there are six purported transfers of units which are challenged by the plaintiffs on the grounds that the formalities required by the pre-emptive rights provisions were not followed, or fully followed, leading to the consequence that each of the transfers of units is invalid. These are:

1. The purported transfer of 23,220 units from the estate of Ada Ethel Atwell to the Hamersley Trust in 1983 (Ada Atwell transfer). Ada Ethel Atwell died on 24 March 1983 and this was a transfer consequent upon her death. It was treated as effecting the change from partnership 13 to partnership 14 in the chronology of successive partnerships set out in First Schedule.
2. The purported transfer of 4,267 units from Edna Phoebe Patterson to Noel Atwell on or around 14 February 1985 (the Edna Patterson transfer). This was treated as effecting the change from partnership number 15 to partnership number 16 in the First Schedule. It purported to transfer the units from Mrs Patterson to her nephew Noel Atwell. It was approved by the management committee on 6 March 1985 (exhibit 14).
3. The purported transfer by Gladys Addison Broadley of 2,630 units to Noel Atwell and 1,500 units to the seventh-second-named second defendant (Gary Atwell) on or around 31 March 1985 (the Gladys Broadley transfers). The transfer of units by Mrs Broadley to Noel Atwell was a transfer to her cousin. The second transfer of units to Gary Atwell was also a transfer by her to another cousin. By this date Noel Atwell was already recorded as a partner of the firm. Mrs Broadley's transfer of units to him was approved by the management committee and confirmed at a meeting on 5 September 1985 (exhibit 17(a)). Her second transfer of units to Gary John Atwell was also approved by the management committee and both transfers were approved again at the meeting on 5 September 1985 (exhibit 17(a)). These transactions were treated as effecting the change from partnership No 16 to partnership No 17 listed in the First Schedule.
4. The purported transfer of 23,100 units from Hilda Dorcus Roberts to the Hamersley Trust in 1986 (the Hilda Roberts transfer). Hilda Dorcus Roberts died on 5 January 1986. Her death dissolved partnership No 18 listed in the First Schedule following which those 23,100 units were registered in the name of her son, Keith Gilbert Roberts, as trustee of his mother's estate (see First Schedule partnership 19 - unit-holding 9.3). Subsequently, on or about 17 March 1986, those units were transferred from the estate of Hilda Dorcus Roberts to her son, Keith Gilbert Roberts, as trustee of the Hamersley Trust and the transfer was approved by the management committee (exhibit 24). The Hamersley Trust was constituted by deed of settlement dated 18 December 1972 between Hilda Dorcus Roberts as settlor and her husband Keith Gilbert Roberts as the trustee (exhibit 6A) as later varied by a deed of variation dated 15 December 1988 (exhibit 6B). The point made by the plaintiffs is that under the terms of this Deed cl 6(n), (exhibit 6A) and cl 1 and cl 7 of the deed of variation (exhibit 6B), there is a wide power of variation which would permit the trustee to vary the terms of the trust to include other beneficiaries or classes of beneficiaries so that in December 1988 this power of variation was exercised to include as a potential beneficiary the Sonoma Trust, itself created by deed of 14 December 1988 (exhibit 31). The effect of this power of variation, and its later exercise meant, so it was submitted, that the beneficial title to or the benefit of units in the firm could be transferred to interests outside the limits of the narrow family circle contemplated by Rule 5(c) of the 1976 agreement. This transfer of 23,100 units originally held by Hilda Dorcus Roberts, and then for a short period by her executor and trustee, to the Hamersley Trust was treated as effecting the change from partnership 19 to partnership 20 listed in First Schedule.

50 The plaintiffs refer to the changes in the Atwell Family Agency occurring whenever a member of the firm died or retired as resulting in a number of 'technical' or 'notional' dissolutions of the firm, no doubt due to the provisions of cl 2 of the 1976 agreement which provide that such events should not dissolve the partnership between the remaining members. Such provisions may allow for the partnership to continue with its remaining members although with an obligation to account to the personal representatives of the deceased member, or to the retiring member, for the value of his or her share in the partnership at the date of death or retirement. However, there is still a change in nature, membership and identity of the firm immediately upon the death or retirement of the former member so that the 'continuing partnership' is a new partnership. Even more so, the subsequent admission of another person or persons in the place of the deceased or retiring partner will create another different partnership again. Any change in the membership of the partnership occurring whether by retirement, expulsion, death or otherwise has the consequence of dissolving the partnership: Rushton (Qld) Pty Ltd v Rushton (NSW) Pty Ltd [2002] QCA 210; [2003] 1 Qd R 320 per McPherson JA [9] and [323]..

51 The plaintiffs also submit that the only material asset of the partnership is the real property comprised by Atwell Arcade and that the only business of the partnership is leasing retail space in that arcade. This is enough to show that the firm has more assets than the mere realty because, of necessity, where parts of the arcade are leased, its interest in the freehold is converted to the reversion subject to the leases, and the benefits of the leases and any tenancy agreements resulting in the payment of rents or other remuneration are valuable choses in action. Presumably, the firm also has liabilities if only for rates, taxes and some degree of maintenance of the properties so that, as with any other firm, the interest of the partners at any one time is their aliquot share in the surplus of assets over liabilities at the time when assessment is required. This value may alter significantly according to the state of borrowings or other liabilities at any one time. This is enough to demonstrate that, notwithstanding that the principal asset of the firm may be the interest in the realty, the measure and value of the interests of the partners in the firm at any one time will also depend on many other factors and may well fluctuate.

52 Another way in which the false analogy between this family partnership structure and a company has caused an erroneous approach to the plaintiffs' asserted claims lies in its tendency to treat the 'units' in the partnership as identifiable and continuing items of property which are, essentially, the same in each changing partnership. Nowhere is this more apparent than in the plaintiffs' claims to have the impugned transactions set aside and those 'units' which were the subject of each of those transactions recommitted for disposal in accordance with the Pre-emptive Rights Provisions. An indispensable premise to that claim is the concept that those units are still in existence, can be removed from the persons to whom they were wrongfully transferred, and can then be disposed of afresh to those who were duly entitled to them or to their successors, notwithstanding that there have been many changes and many new partnerships from 1983 until the present - no less than 20 as recorded in the First Schedule.

53 This is wrong because the right of any one partner in the firm of which he or she is currently a member is the right to carry on business together with the specific co-partners with a view to profit and to share the profits of the business of the firm in accordance with the terms of the agreement. The property of the firm, whether it be held on trust or by co-ownership between some or all of the partners, is available for the use of the partnership business. Although each partner has a special equitable interest of a unique kind in the partnership property, that interest cannot be appropriated to the individual partner's use to the exclusion of the firm so long as the partnership subsists. Where a partnership, or some members of the firm on behalf of the partnership or as trustees, hold real property for the partnership, the interests of the partners in all items of real property are in the nature of personality - Partnership Act s 22. It is always the case that the measure of a partner's interest in the assets of the firm is that partner's aliquot share of the net surplus, if any, of all the assets of the firm over its liabilities and the cost of their realisation as in a winding up. That is why the nature of the retired partner's share or the share of a deceased partner in the assets of a firm is in the nature of debt rather than any real interest - Partnership Act s 55 and s 56 and Cameron v Murdoch (1986) 63 ALR 575; 60 ALJR 280.

54 It is not difficult to see why this is so because the mutual agreement between partners is to carry on business together with each other with a view to profit. Partners do not agree to carry on business with some other or others after they have retired from the partnership or when they have died. A partnership including new members who have replaced some or all of the members of an earlier firm which has carried on a similar business is a different firm. A share in one such partnership is not the same as a share in a second, third or other succeeding partnership. There is not, and there cannot be, a series of successions to the same interest or share because that interest or share inevitably changes whenever a new partnership is formed.

55 Accordingly, the 'units' disposed of by the estate of Ada Ethel Atwell were not of the same kind as those disposed of by Keith George Roberts or Hilda Dorcas Roberts or by any of the other disponors. More importantly, because new partnerships into which the recipients of each of those sets of units were admitted have themselves ceased to exist by subsequent deaths and other retirements, there is no possibility of any person becoming entitled to be admitted to any of the new partnerships which was formed immediately after each of the six impugned transactions. Those partnerships have themselves been dissolved and a series of new and different partnerships has successively replaced them.

56 This is but another way of illustrating how the rights of pre-emption and the existence of any legal remedies which might compel the surviving members of a partnership, after the death or retirement of a member, to admit a successor who is desirous and qualified for admission, can only be referable to the single occasion when the question is who are to be the members of the newly formed partnership. Once that has been resolved, whether in accordance with the terms of the 1976 agreement or otherwise by the consent of the members of the new firm, that is the end of the issue. At the latest by the date of formation of the next succeeding partnership, there is no longer a firm in existence to which any such right applied.

57 This reality can be overlooked if the significance of units in the partnership and their meaning is treated, because of practical or commercial reasons, as conferring an interest in valuable freehold properties which are owned by the Atwell Family Agency, and which generate the source of the firm's profits. The continuity of that real property and the ability of its ownership to be transferred, not just from trustees to new trustees, but to third persons if the partnership were ever to be wound up, distracts attention from the facts that the units do not give anything other than a partner's interest, of the special kind described, in any of that property or endure beyond the life of the instant partnership.

58 This makes it timely to consider exactly what in point of law occurs on any occasion when a partner of the Atwell Family Agency dies or retires and procedures are then followed, whether or not in strict conformity with the 1976 partnership agreement, to 'transfer' his or her units, resulting in the admission of a new partner or partners to the succeeding firm or in the increase in the unit holdings of some of the partners of the former firm who have continued in the new and succeeding partnership. The executor of the deceased partner, or the retiring partner on leaving the partnership, has a right to realise the value of the share in the partnership previously held. In the case of a solvent partnership, and even in many insolvent partnerships, that share will have a value which can be quantified. In a case of a winding up the amount of the value of the share would both be identified and satisfied by payment from the net surplus of assets after realisation. However, if there is not to be a full winding up resulting in the sale of the assets then the entitlement of the deceased partner's representatives or the retired partner will have to be satisfied in a different manner. It may be that the deceased's partner's executor does not wish to become a member of the firm, and there may not be a spouse, son, daughter or grandchild of the deceased or retired partner who wishes to join the firm either. There may be many good reasons for this, because of differences in interest, other career choices and a not unreasonable aversion to sharing the responsibilities and liabilities of those persons who wish to continue the business of the firm. In any such case that value of that deceased or retired partner's share will need to be paid out and, if the value can be quantified by agreement or valuation, money will need to be found to make the payment. Normally, that could be expected to come from the continuing partners or, by what amounts to the same thing, by money borrowed or capital introduced on their behalf to defray that obligation. Were that to occur, the procedure followed will be an alternative to a formal winding up so there will be a great incentive for the former partners, who wish to continue in a new firm, to have their liability discharged in a way which does not produce a full winding up. The real point, however, is that the liability to the retired partner or to the executor of the deceased partner for payment out to him or to her of the value of the share of the departed partner is an obligation of all the surviving partners of the former firm.

59 There can also, obviously, be many situations in which the deceased or retired partner can be expected to be replaced by the executor or a close member of the family becoming admitted to the partnership, by the consent of all the other partners, and by being accorded a share in the new partnership equal to the share which his or her forebear had in the firm which had just been dissolved. In such a case, predicated upon the willingness of an eligible successor to join a newly created continuing firm and to hold the same number of units as the person whom he or she replaced, this partnership agreement assumes that there will be no payment made by the firm for the value of the share of the deceased or retired partner. In practical terms, the willing admission of the new partner with a number of units in numerical terms equal to the units held by the departing partner in the former firm is treated as the discharge of the liability of the other members of that earlier firm in exchange for the admission of the new partner into the new firm. Of course, this cannot occur without the consent of the surviving members of the former firm but their consent is apparent from the acceptance of the newcomer into their midst as a partner in the new firm to the same degree as the departing partner held in the old firm. Equally, this cannot happen without the consent of the incoming partner whose consent is apparent by his agreement to join the newly formed firm. In the case of a retired partner this cannot happen without his or her consent because, otherwise, the debt due to him or to her for the value of his or her share in the partnership would not be discharged. Similarly, in the case of a deceased partner it could not happen without the consent of the executor who, whether he agrees to become a partner in the newly created firm, either temporarily during the course of administration or in the longer term, or whether he agrees to some beneficiary appointed by the deceased who is eligible under the terms of the 1976 agreement to be admitted as a partner and who becomes a partner, either eventuality demonstrates the consents of the executor and of those entitled to take a position in the new partnership in exchange for payment of the value of the share in the former firm due to the deceased member.

60 Again, if an executor, beneficiary, spouse, child or grandchild of a former partner does not wish to take a position in the succeeding new firm, the disposal notice procedure can be followed and then those 'units' may be 'purchased' by members of the former firm at an agreed price or valuation or, failing that, purchased by third persons at valuation. Whenever that occurs the person issuing the disposal notice and accepting payment from another partner, an eligible new partner or a third person at the agreed or valued amount of those units can only be regarded as accepting such a payment in discharge of his or her entitlement to payment for the value of the share of the deceased or retired partner in the old firm. Equally, whenever this occurs the continuing members of the old firm, who become members of the succeeding firm, must be regarded as consenting to this procedure by their agreement to allow the 'purchaser' to become a partner in the new firm or to increase his or her share in the new firm.

61 Obviously, the desire for continuity and stability in the operation of the family firm despite changes of membership will constitute a powerful incentive for observance of these procedures by all concerned but these are not the only ways in which such transitions may occur. I have already alluded to the prospect that a retired partner, or the representatives of a deceased partner, may not wish to follow this procedure and instead demand payment of the value of the share in the former partnership and, if this cannot be agreed, seek a winding up order to realise the value of that share. The members of the former firm may not desire to continue business in a new partnership and may themselves decide upon a winding up. Or, what is very similar, some or all of them may not agree to the introduction as a partner of the person who, by the application of the Pre-emptive Rights Provisions, has become entitled to 'purchase' the 'units'. Their refusal to agree to such a person becoming a partner in a newly created firm may constitute a breach of the terms of the 1976 agreement, to which they had bound themselves. But the law will not force people into a partnership with others if they are unwilling to give the consent necessary to the relationship of mutual trust and confidence. In such an eventuality the result may be to compel a winding up of the partnership and to treat the person who had a contractual right to be admitted to the partnership but who was refused admission to participate in the proceeds of the winding up - as is demonstrated by Byrne v Reid [1902] 2 Ch 735; Lovegrove v Nelson [1834] EngR 959; (1834) 3 My & K 1; 40 ER 1; Fox v Clifton [1830] EngR 716; ; and (18th ed) 543.

62 Whichever of these procedures, or any combination of them, may be followed when an alteration of the membership of the Atwell Family Agency firm occurred, the result is the same. Where there is not a general winding up of the assets, the effect is that the incoming partner takes the units of the deceased or retired partner, or has his units increased, and whether this occurred by way of payment or exchange, the entitlement to payment of the value of the share of the deceased or retired partner is thereby satisfied with the consent of all concerned.

63 Once the change has taken place and the new partner admitted to the new firm or the shares of the acquiring partner in the replacement firm correspondingly increased, the share of the deceased or retired partner disappears and the entitlement to payment for its value has been discharged. To say that the 'units' continued in existence is obviously unsupportable. When it is realised that, in the context of this partnership, the term 'units' is only a synonym for 'share', those 'units' too disappear.

Compliance with pre-emptive rights provisions

64 An initial question was raised over whether or not strict, in contrast to substantial, compliance with the pre-emptive rights provisions in the 1976 partnership agreement was essential. The plaintiffs submitted that strict compliance was essential because only then would the pre-emptive rights of those entitled to apply for units, available for disposition, be protected. They submitted that to apply a notion of substantial compliance rather than strict compliance would create more uncertainty than strict compliance: Hunter Resources Ltd v Melville [1988] HCA 5; (1998) 164 CLR 234, 252 per Dawson J and 245 per Wilson J.

65 Counsel submitted that the continuing partners are bound to accept a new partner if the pre-emptive rights provisions are complied with: Lindley & Banks on Partnership [10] - [254], 272 - 273; Lovegrove v Nelson [1834] EngR 959; (1834) 3 My & K 1, 2 (Lord Brougham LC); Byrne v Reid [1902] 2 Ch 735, 740 and 742 - 743. Consequently, it was submitted that the remaining partners, who might, depending upon the circumstances, be entitled to exercise the pre-emptive rights were each in a position analogous to the grantee of an option, and for that matter a grantor - namely that they were entitled to know with certainty whether or not they were bound to accept a new partner: Lewes Nominees Pty Ltd v Strang (1983) 49 ALR 328; 57 ALJR 823, 824.

66 There are limits to the application of these analogies because, as already observed, the so-called 'units' are no more than the share of the deceased or former member's share in the net assets of the partnership and, although the former partners are parties to the contract which created this obligation, the person who might stand to be admitted to the fresh partnership, newly formed, in many cases would not be (the exception being if that person was a member of the former partnership). Furthermore, the admission of the new member to the freshly formed partnership is by the unanimous decision of each of the former partners who, if they choose to do so, accept the newcomer and agree to be partners with him or her. While the former members might be compellable to act in accordance with the terms of the partnership agreement when it comes to identifying a partner eligible for admission, the admission of that new partner is still a voluntary act requiring unanimous consent. It could be prevented or frustrated, for example, if the continuing partnership (less the new member) resolved upon dissolution, or if one or more of those partners successfully were to give a notice of dissolution under s 43, or if there were a dissolution by the court under s 46 or for any other reason. Furthermore, as Rule 35 provides, any of the rules of the partnership agreement might be altered from time to time by a 3/5ths majority of units voted at a general meeting or, by what amounts to the same thing, by the unanimous consent of the partners to admit or refuse a new candidate for the status of partner, regardless of his or her eligibility under the terms of the agreement - SJ Mackie Pty Ltd v Dalziell Medical Practice Pty Ltd [1989] 2 Qd R 87, 91.

67 Accordingly, the question of whether or not strict compliance with the terms of the pre-emptive rights provisions in the 1976 partnership agreement is required or not is a question for decision by the partners of the firm whenever an occasion arises for their potential use. The partners may indeed insist upon strict compliance or they may relax that requirement, make decisions and admit or refuse to admit a new partner or partners without strict compliance as they choose. If the result is that a decision is made to accept, as a member of a newly formed partnership, a candidate who may not be eligible under the terms of cl 4 or any of Rules 4, 5 and 8 or without full compliance with the disposal notice and/or valuation procedure, the unanimous acceptance of that person into the newly formed partnership would nevertheless be entirely sufficient to constitute the fresh partnership and to demonstrate that, on that particular occasion, the partners otherwise entitled to do so did not insist upon strict compliance with the pre-emptive rights provisions.

68 However, it is still necessary to identify the alleged noncompliance with the pre-emptive rights provisions and the alleged ineligibility of persons who the plaintiffs contend were wrongly admitted to the Atwell Family Agency. For this purpose, despite the repetition, I shall restate, more briefly, the six impugned transactions; which are in contention:

1. In 1983, the transfer of 23,220 units from the estate of Ada Ethel Atwell to the Hamersley Trust in 1983.
2. On or about 14 February 1985, the transfer of 4,267 units from Edna Phoebe Paterson to Noel Atwell.
3. On or about 31 March 1985, the transfer of 2,630 units by Gladys Addison Broadley to Noel Atwell and the further transfer of 1,500 units to Gary Atwell.
4. In 1986, the transfer of 23,100 units from Hilda Dorcas Roberts to the Hamersley Trust.
5. On or about 30 June 1986, the transfer of 2,135 units from the estate of Dorothy May Beckett to the Hamersley Trust.
6. On or about 30 June 2001, the transfer of the units the subject of the Ada Atwell Transfer, the Hilda Roberts transfer and the Dorothy Beckett transfer from the Hamersley Trust to Leigh Roberts as trustee for K Roberts, M Lister and the Sonoma Trust.

69 The evidence bearing on the alleged noncompliance with the terms of the partnership of these transactions is to be found in exhibits 36A, 36B and 36C, the latter which comprises pages 13 and 14 of the plaintiffs' written submissions where details are contained in footnotes 26, 28 - 32.

70 In relation to transfers of units to the Hamersley Trust (transactions No 1, No 4 and No 5) the point, already outlined, is that there are or may be, whether originally or in the event of the exercise by the trustee of the power of variation, beneficiaries under the Hamersley Trust who are not within the limited circle of family relationships contemplated by Rule 5.

71 At an earlier de bene esse hearing conducted before a Registrar on 20 August 2008 one of the former accountants for the firm, Mr R F Douglas, was cross-examined about his knowledge, or otherwise, of the eligibility of the 'Hamersley Trust' to become a member of this partnership. That question is unorthodox because there is no entity known as the Hamersley Trust, rather the late Keith G Roberts was trustee under a deed of settlement (exhibit 6A and 6B) of which there were a number of potential beneficiaries. Mr Douglas testified that, at the time he was considering the processing of the transfer of units from the estate of the late Ada Ethel Atwell to the Hamersley Trust, he was aware that Mr Keith Roberts was the prime beneficiary but was uncertain whether he had actually seen the deed of settlement. Having been taken to the terms of the deed he said that he could not recall it having been brought to his attention that the terms of the deed of settlement might be varied and that there might be other beneficiaries introduced who might not be within the defined circle of family relationships (see exhibit 36B). Furthermore, with respect to the Ada Atwell transfer, there is no plea by the defendants that any disposal notice in respect of those units was given to the Committee of Management (the Committee) or by the Committee to the partners of the firm continuing immediately after her death.

72 With respect to the Hilda Roberts transfer (transaction No 4) there is no allegation by the defendants that any disposal notice was given by her to the Committee or by the Committee to the partners.

73 Similarly, with the Edna Paterson transfer (transaction No 2), the Gladys Broadly transfer (transaction No 3) and the Dorothy Beckett transfer (transaction No 5), there is no allegation by the defendants that a valuation performed strictly in accordance with Rule 8(a) or Rule 8(c) was obtained, although the defendants plead that in the case of each of those three transactions a requisite disposal notice was given.

74 At this point it is necessary to notice the submission for the plaintiffs that the obligation to comply with the pre-emptive rights procedures, for disposal notices to be given and for valuations to be obtained where appropriate, arises whenever there is a change in the beneficial interest in the units. They submit that the need to comply with those procedures cannot be avoided merely because the transferee of the units is himself or herself an eligible member who may take under Rule 5 without the need for a disposal notice or compliance with the valuation procedures, if that person holds the benefit of the units for another or others, not within that category - as in the case of an executor, or a trustee of an inter vivos trust. I shall defer, for the moment, the determination of that submission because it is first necessary to appreciate its impact in the situations which existed when each of these six challenged transactions occurred. To do this it will be necessary to return to them in chronological order:

When Ada Ethel Atwell died on 24 March 1983 her nephew, Keith G Roberts, was already a member of the partnership and, indeed, was a member of the Committee (see partnership No 13 listed in Schedule 1). By her last will she appointed Mr K G Roberts as her sole executor and trustee and he obtained probate of that will (exhibit 7). Under the will, all Ms A E Atwell's interests in the Atwell Family Agency were left to this trustee for the time being of the Hamersley Trust who then was the same Mr K G Roberts (exhibit 6A). Accordingly, if one looks at the personal eligibility of Mr K G Roberts to 'acquire' those units without the need for disposal notices or valuations, the first and second defendants submit that he was eligible in his capacity as a legal personal representative of a deceased partner (under clause 4(a)), and he was eligible as the trustee of a settlement made by a partner (Hilda Dorcus Roberts was the settlor of the Hamersley Trust) and he was also a partner of partnership No 13 at the same time (listed in First Schedule). The point by the plaintiffs is that, even if in any of those of those three capacities, Mr Roberts might have been eligible to take the Ada Ethel Atwell units for himself, the prospect that the beneficial interest in them might pass to other more distant beneficiaries under the Hamersley Trust, gave rise to the need to comply with the disposal notice procedure and, if necessary, the valuation procedure.

75 Another submission for the plaintiffs is that when Rule 5(b) permitted units standing in the name of the legal personal representative or trustee of the estate of any deceased partner or the trustees of any settlement made by a partner to be entered in the names of new trustees for the time being, and where cl 4(b), permitted any new trustee of the estate of a deceased or of any settlement made by a partner to become registered as the holder of units, that could not relate to newly created inter vivos trusts. The submission is that only such inter vivos trusts as had previously been established and whose former trustee had previously been recorded as a member of the firm and the holder of those units came within cl 4(5). So it was submitted that the transfer to Mr Roberts as trustee of the Hamersley Trust was not permitted under Rule 5(b) or cl 4(b), because no previous trustee of that trust had been recorded as the holder of those units.

76 I consider that this last submission is well founded and should be accepted so that, if strict compliance with cl 4(b), and Rule 5(b) of the 1976 partnership agreement were insisted upon by the partners making the decision to approve the transfer of the Ada Atwell units in 1983 to Mr Keith G Roberts, in his capacity as trustee of the Hamersley Trust, relying on cl 5(b) would not dispense with the need for a disposal notice or the other steps of valuation if they became necessary.

1. With the transfer of the units formerly held by Edna Paterson in February 1985, the transfer was made to Noel Henry Atwell who was Henry Atwell's son. This was an inter vivos transfer by Mrs Edna Paterson to a cousin who was not a member of the partnership at the time (partnership No 15 listed in Schedule 1) so that he was not an eligible transferee under Rule 4 or Rule 5(c). The defendants plead that a disposal notice was given but it is agreed that the valuation procedures were not strictly complied with.
2. The transfer of units held by Gladys Broadley to Noel Atwell and Garry Atwell in 1985 were also inter vivos transfers. Noel Henry Atwell was, by then, a member of the partnership (partnership No 16 listed in the First Schedule) although it must be noted that the plaintiffs contend that he was wrongly admitted as a partner in March 1985 pursuant to the Edna Paterson transfer. If he was properly a partner of the date of this third impugned transfer in 1985 then he was an eligible transferee without the need for a disposal notice in accordance with Rule 4. However Garry Atwell was not then a partner. He was the son of Lloyd D Atwell, a cousin of Mrs Gladys Addison Broadley and, therefore, not an eligible transferee under Rule 5(c). The position of the defendants in this respect, as already explained, is that disposal notices were given but that the valuation procedure was not strictly complied with. If the partners for the time being in about June 1985 had required strict compliance with the pre-emptive rights procedures in relation to the transfer of units to Mr Gary Atwell then this transaction was not strictly in accordance with those procedures.
3. The Hilda Roberts transfer of 23,100 units to the Hamersley trust in 1986 has already been described. Hilda Dorcus Roberts died on 5 January 1986 appointing her son Keith Gilbert Roberts as her executor who accepted the position and proved her will (exhibit 23). By her will she left the whole of her shares in the units in the Atwell Family Agency to her executor and trustee to be held on the terms of the Hamersley Trust (the deed dated 18 December 1972 - exhibit 6A). At the time of her death and at the time of the transfer of those units Mr K G Roberts was already a member of the partnership, in his personal capacity; as trustee of the Hamersley Trust; and as trustee of his mother's estate (see partnership No 19 listed in the First Schedule). He had also been a member of the earlier partnership when his mother was a member (see partnership number 18 listed in the First Schedule). Subject to the determination of the issue about transfers of an equitable interest in the units, Mr Roberts was therefore eligible to be registered as the holder of his mother's units under Rule 5(b) when this transfer was processed. The remaining issue in this respect is whether or not the possibility of the beneficiaries under the Hamersley Trust might be varied to introduce beneficiaries not within the limited family circle provided by Rule 5(c) meant that the transfer of units to the trustee of the Hamersley Trust required compliance with the disposal notice procedure. This is similar to the issue raised in respect of the Ada Ethel Atwell transfer above.

The extent of the prohibition against disposal of units in this partnership

77 The plaintiffs on the one hand and the first and second defendants on the other are at issue over whether or not the restrictions upon the acquisition or disposal of units in this partnership established by rules 4 to 11 of the rules in the 1976 agreement apply only to the legal ownership of such units (the first and second defendants' position) or must, of necessity, be regarded as extending to the beneficial interest in those units (the plaintiffs' position). Not only does this controversy affect the identity and range of permitted transferees of units with or without the necessity for a disposal notice and possible resort to the valuation procedure, but it also has a significance upon the number of members of the firm because if the persons with beneficial interests are to be numbered as members of the firm the 20 person limit is more readily transgressed and would have been transgressed in cases where the units were transferred to trustees of deceased estates or of deeds of settlement with multiple beneficiaries.

78 The plaintiffs' contentions are most starkly apparent in relation to the transfer of units in the estate of Ada Ethel Atwell to the Hamersley Trust in 1983 (the first impugned transaction), a comparable transfer of units from the estate of Dorothy May Beckett to the Hamersley Trust in June 1986 (the fifth impugned transaction) and the transfer of units in 2001 to the Sonoma Trust (the sixth impugned transaction). The transferee on each occasion was an individual entitled to accept units and become, or to continue as, a member of the partnership without the need for any disposal notices, and thereafter became the sole legal proprietor of those units as recorded in the firm's books. But the fact that he held those units on trust for beneficiaries who were, or who might, in the event of a variation of the terms of the deeds of settlement, be persons outside the scope of the family circle prescribed by the 1976 agreement meant, according to the plaintiffs' submissions, that they were unauthorised transfers because the beneficial interest went, or might go, outside that restricted circle. The first and second defendants simply reject that submission and counter by advancing the argument that there is nothing in the 1976 agreement, nor any principle of law, which would prevent any member of the Atwell Family Agency at any time making an Everett assignment of part or all of his or her interest in the firm or to charge his or her interest for his or her separate debts, notwithstanding that under s 48(2) of the Act such a latter charge may be a ground for dissolution.

79 The plaintiffs acknowledge that while the approach taken by the authorities is not uniform, the preponderance of authorities are to the effect that the word 'transfer' or 'dispose' when used in pre-emptive rights provisions in a company's articles of association or constitution relate only to the transfer or disposition of legal title to shares and not of a beneficial or equitable interest in shares: Safeguard Industrial Investments Ltd v National Westminster Bank [1981] 1 WLR 286, 598, Oliver LJ; Hunter v Hunter [1936] AC 222; Hagan v Waterhouse (1992) 34 NSWLR 308, 388 - 390; and Kawasaki (Australia) Pty Ltd v ARC Strang Pty Ltd [2008] FCA 461; (2008) 247 ALR 333, 348 - 350; Don King Productions Inc v Warren [2000] Ch 291, 335 - 356; and Secure Parking (WA) Pty Ltd v Wilson [2008] WASCA 268 [100] - [102], Buss JA, but contrast Lyle & Scott Ltd v Scott's Trustees [1959] AC 763, 778 and 785 where, in the circumstances of that case, it was held that a prohibition in the company's articles on the transfer of shares applied to the disposal of the beneficial interest in the shares. Whether supports the proposition for which the plaintiffs cited it (it was distinguished in ) or not is questionable but it certainly did not involve the transfer of shares to an eligible transferee who held them as an express trustee for others. That case involved an enforceable contract of sale by an existing shareholder to purchasers outside the permitted scope of transferees. Lords Reid and Keith rejected a submission that the article prohibiting such a transfer was not infringed unless and until the transferee became the legal owner of the shares by registration on the company register. The argument involved the proposition that, until this point, the vendor remained the registered proprietor of the shares and could remain on the register, attend meetings of the company, and vote at the direction of the purchaser. It might be said that, in such a circumstance, the vendor is a constructive trustee of the property sold for the purchaser until completion but, with all respect, I doubt that their Lordships' remarks should be regarded as extending to a case such as the present where the transferee is an eligible acquirer of the units and the only criticism is that he may hold them as a trustee beneficially for others.

80 The submission for the plaintiffs continues by propounding a number of examples (in pars 40 to 45 of their written submissions) seeking to establish that if the prohibition against disposal without compliance with the pre-emptive rights provisions is restricted to legal and not to beneficial interests it may, by a number of devices, be capable of evasion. Without examining minutely the correctness of the assertion that, by such devices, the scheme of pre-emptive rights might be capable of evasion, it is sufficient for the present to assume that it may be. All that this demonstrates is that the regime of pre-emptive rights attempted in the 1976 agreement is not watertight or comprehensive and that, in any event, the plaintiff's contentions are based on the fallacy that the 'units' which are to be transferred are enduring and of the same character for all successive versions of the family partnerships. That the regime specified by the 1976 agreement is not comprehensive is readily apparent from the fact that a retiring partner or the representatives of the deceased partner may not be willing to 'transfer' their 'units' in the partnership to anyone at all and may, instead, demand payment from the continuing members of the former partnership of the value of the share of the deceased or retiring partner's interest or, failing that, seek a dissolution. The fallacy, as already remarked, is the assumption that the units in the partnership are a separate species of property which endure and continue from one partnership to another being analogous to a share in a company with limited liability. Accordingly, I am satisfied that in the context of the 1976 agreement and these various partnerships the restriction upon the transfer or acquisition of 'units' in the partnership relates solely to the legal ownership of such 'units' as demonstrated by the recording of the unit holder's name in the partnership records.

Events confirming the admission of new partners or the increase in existing partners' unit holding after each of the six impugned transactions

81 What is clear beyond any dispute is that after the changes in the partnerships, whether by the introduction of new partners or the increase in the unit holding of existing partners, following each of the impugned six transactions, each newly formed partnership carried on the business of the Atwell Family Agency and treated each of the newly admitted partners, or the partners whose unit holding had been increased by the transaction, as a member of that firm entitled to vote and participate in the distribution of profits in the same way as all the other partners that is, in proportion to the unit holding held for the time being.

82 Annual general meetings of each new firm were held regularly at which the new partner was entitled to attend and vote and sometimes did. Schedules with the accounts were distributed to each of those partners as required by the agreement - see for example exhibits 8(1 - 9), 11, 15, 22, 45 - 47 among others. The Committee produced accounts and made recommendations as to the distribution of profits ('dividends') which, once approved at the AGMs (as they always were), were then acted upon and distributions made to each of the partners so identified including the new partner.

83 This pattern of partnership business and operation continued without objection or protest until about 2003 when allegations that units had been invalidly transferred to partners were first raised by or on behalf of Mr Malcolm Walter Atwell and Mr Ian George Atwell as the surviving trustees of the estate of their late father, W C Atwell. These were later taken up by Mr M W Atwell's son, Mr Raymond Atwell who, while never a partner, had been permitted to attend various AGMs or EGMs of the partnership as a spokesman for his father and uncle, as trustees of the estate of W C Atwell.

84 It follows, therefore, that this process, of treating new members of each successive partnership occurring after these challenged transactions, as regular partners of each succeeding new firm and the sharing of profits with them in proportion to the units held continued without interruption or challenge from 1983, immediately following the first of the challenged transactions - the Ada Atwell transfer - until well after the last of them, the Hamersley Trust transfer in 2001.

85 I have already mentioned how Elsie F Atwell was one of the three joint trustees, with her sons Malcolm Atwell and Ian G Atwell, of the estate of the late Walter C Atwell who died on 17 March 1975. She was also the life tenant of the estate entitled to the whole of the income of the estate with the remainder over to her sons. By all accounts the late Mrs Elsie F Atwell was a very intelligent lady, experienced in business and familiar with the Atwell Family Agency affairs. Both her sons, and her grandson, spoke of her familiarity with the affairs of the partnership; how she collected most, if not all, of the notices, minutes and other correspondence which she received about the affairs of the partnership and how they trusted her to make all necessary decisions about the administration of the partnership on behalf of their father's estate in a general way. Nevertheless, she would discuss, as she considered necessary, any questions of importance with them. After her husband's death Mrs Elsie F Atwell attended most of the general meetings of the Atwell Family Agency as the representative of her husband's estate. It was only after her death that either or both of her sons, Malcolm or Ian, and in some cases her grandson Raymond Atwell attended. There is no evidence nor any suggestion that, during her lifetime, Mrs Elsie F Atwell made any protest or expressed any dissatisfaction about the membership of the partnerships from time to time or suggested that any one or more individual who was being treated as a partner should not be so treated or had wrongly been admitted as a partner. Nor was there any objection to the sharing of profits distributed in the way I have already described.

86 From this acceptance of new partners into the succession of firms as happened from time to time and following each of these six impugned transactions there can be no doubt that all of the members of each newly formed firm accepted each other, and any newcomer or existing partner with an increased unit holding, as a partner in each newly established and continuing firm. Indeed the plaintiffs' statement of claim pleads that some of those so newly introduced had been admitted as members of the firm, including Noel Atwell (pars 10(II) and 27(III) of the statement of claim) and Mr Leigh Roberts (par 27(V) of the statement of claim) notwithstanding the subsequent allegation that the transfers were invalid.

87 Nevertheless, the plaintiffs submit that: the various decisions made to admit new partners after each of the six impugned transactions were all reached without knowledge by the interests which they represent, or at least by the estate of W C Atwell deceased; that the various transferees were ineligible to receive the units and become partners without compliance with the pre-emptive rights provisions; or that in several of the cases while attempts had been made to give disposal notices the procedure had not been strictly observed because of want of compliance with the formalities for valuation. Because they plead that the decisions to admit the new partners, or increase the holdings of former partners, consequent upon the six challenged transactions were not fully informed, or that material information about the need for compliance with the pre-emptive rights provisions was not disclosed, they submit that the decisions to admit those partners are flawed and should be set aside now that the true position, as they contend it to be, has been discovered.

88 Immediately it will be appreciated that there is obviously much scope for controversy about the allegation that these decisions were made without the plaintiffs, or those whom they represent, or other partners for that matter, being sufficiently aware of these allegedly material considerations. Equally, it is obvious that even if such allegations were made out then the defences, either of an absolute or a discretionary kind, involving estoppel, waiver, acquiescence, laches or the like might defeat the plaintiffs' claims. Many such issues are raised in the amendments to the pleadings which have, for the purpose of this trial, been put to one side. Nothing I now say or address can deal with any of those particular pleaded matters which could only be determined after a lengthy hearing and a far more detailed scrutiny of the facts than could be conducted at this trial. I mention this simply to put those considerations to one side so that, notwithstanding a full realisation of their potential significance, the task of deciding the issues raised by these separate questions, might be resolved one way of another without needing to resort to those controversies.

89 In effect, the plaintiffs are seeking to enforce negative covenants contained in the 1976 agreement such as would prevent the transfer of the units or the introduction of new partners, otherwise then in accordance with pre-emptive rights provisions. They also seek relief in the nature of specific performance, not of latent rights of pre-emption, but of the actual rights of pre-emption which would have risen had disposal notices been given where necessary and in accordance with the valuation procedure prescribed. They submit that these rights are recognised and protected in equity and rely on authority which I will examine later in support of that proposition.

90 Nevertheless, the fact is that each of the persons on whose behalf these proceedings have been brought, is one who agreed to the introduction of each new member of the partnership after the impugned transactions or to the increase in the unit holdings of a partner in that new partnership consequent upon the transaction. Simply stated the persons whose the rights of pre-emption are now being sought to be enforced, are all persons who agreed to the admission of the new partner or to the change in the unit holding of the partnership consequent upon a transaction in which it is said that the rights of pre-emption were not observed or fully observed.

91 The admission of each new partner, following upon those transactions, was unconditional. There is no doubt that each newly formed firm carried on business in partnership with a view to profit and in fact shared profits from then on. Each member of the firm was obliged to place, and obviously did place, trust and confidence in each other member in relation to the conduct of the partnership business. Each was liable jointly and severally with each other for the debts and liabilities of the firm. Each new firm could only exist and continue with the mutual consent of each of the participating partners. Carrying on business together in that fashion with a mutual partner is entirely inconsistent with the hypothesis that that partner was not a valid partner, or that the complainant had an enforceable right to exclude that partner from the affairs of the firm and to require that the units which he or she had been required should be offered pro rata to members of the former partnership in accordance with the pre-emptive rights provisions.

92 The only possible conclusion is, that by admitting the new member into the partnership, or increasing the unit holding of an existing member, and then carrying on business in a succession of partnerships, all the members of the newly formed partnerships have agreed upon the admission of that new member and to the shareholding which he or she had in the firm as recorded at the time. That extinguishes any prospect of endurance of the pre-emptive rights except in a case of fraud or misrepresentation which is not alleged here. That being so there is simply no basis to challenge, retrospectively, the admission of those interests into the sequence of partnerships which are recorded in the First Schedule or to seek to set aside those 'transfers' of units.

93 Each succeeding partnership was a separate association of members quite distinct from its predecessor or successor. The members of that particular partnership, so long as it endured, were content, by their mutual acceptance of each other to carry on business in partnership together on the terms which they did. At the termination of each succeeding partnership, by death or retirement of a member, a new partnership came to be formed again, upon terms mutually agreed by its members. Their agreement is patent from the fact of the existence and continuation of the partnership business itself and especially in the sharing of profits. Whatever may have been the potential rights or entitlements of members of a former partnership to seek to acquire units from the retiring partner or the representatives of a deceased partner, the history speaks for itself. Those matters were resolved, either in conformity or not in conformity with the rules, and the terms of the partnership agreement and, the new partnership having been formed, was carried on together with the mutual consent of each member.

Units or shares in the partnership - equitable interest

94 The plaintiffs' claims for relief depend, to a significant extent, upon their contention, already noted, that the right which a member of the partnership of the Atwell Family Agency had at any one time to insist upon strict observance of the pre-emptive rights provisions is a species of property, an equitable interest, not only which endured after an occasion when it had been wrongly disregarded but which takes priority over subsequent proprietary or equitable interests acquired in the partnership and in the partnership property by persons, whom the plaintiffs allege, were wrongly admitted to membership in disregard of the pre-emptive rights provisions. While they acknowledge that the pre-emptive rights provisions in the 1976 agreement are, in substance, negative contractual stipulations (Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8; (2009) 253 ALR 1 [12]) which could attract the grant of an injunction if sought in time to prevent their infringement, the plaintiffs contend that they hold more than a mere contractual right and do, in fact, enjoy an equitable proprietary interest capable of specific performance. Counsel for the plaintiffs accepted the established distinction between an option and a right of pre-emption and accepted that the grant of a right of pre-emption conferred on the grantee no right to call for a transfer of the property unless the grantor chose to fulfil the conditions on which the right became exercisable: Pritchard v Briggs [1980] Ch 338; [1980] 1 All ER 294, 418; and Rosebridge Nominees Pty Ltd v Commonwealth Bank of Australia [2008] WASCA 107 [26]), but submitted that once the pre-emptive right is triggered by a decision to dispose of the property, the grantee has a proprietary interest capable of enforcement in equity which will rank for priority according to the ordinary rules including that, generally speaking, the interest first in time prevails. In support of the proposition that the negative contractual stipulation, once the right of pre-emption is triggered, is converted to an equitable interest capable of specific performance the plaintiffs rely upon , 51; ; and [84] - [135] (Jessup J). And, for the proposition that the order of priorities of competing equitable interests should usually be determined in accordance with time, they rely upon ; ; and ;

95 Associated with these submissions is the further submission that the interest of partners in a partnership is purely equitable: Anning v Anning [1907] HCA 13; (1907) 4 CLR 1049, 1058, 1075 and 1077, and that a partner's interest is described as a 'beneficial interest' and constitutes an equitable interest in each asset of the partnership: Canny Gabriel Castle Jackson Advertising Pty Ltd & Fourth Media Management Pty Ltd v Volume Sales (Finance) Pty Ltd [1974] HCA 22; (1974) 131 CLR 321. Each of those propositions requires closer examination because, although they undoubtedly reflect settled principles, I am not satisfied that they apply in the particular situations here under examination in the face of countervailing principles. The reasons for this have a lot to do with timing.

96 The nature and measure of a partner's interest in partnership property is established by s 33 of the Partnership Act in language indistinguishable from the recognition of that interest in Canny Gabriel - but it is sui generis, a beneficial interest. It constitutes an equitable interest and not a mere equity to set aside or rectify a transaction by means of a court order (Canny Gabriel (328)). In Anning v Anning one of the questions was whether or not a voluntary assignment by deed inter vivos of the grantor's interest in the partnership including livestock, plant and machinery was effectual or whether, being an imperfect gift, it would not be enforced by the court. The unanimous view was that the interest of a partner in the partnership property was an equitable chose of action and, as such, capable of assignment in equity by a voluntary deed without more. This result is entirely consistent with FCT v Everett [1980] HCA 6; (1980) 143 CLR 440 and such a transaction does not result in the dissolution of the partnership nor the creation of the grantee as a member of the partnership.

97 The position, however, changes in the event of a dissolution of a partnership whether by death or retirement of a member or for any other reason. In such an instance the representatives of the deceased partner or the retired partner have an equitable interest in the assets of the firm at the date of dissolution which will quantify the monetary value of the deceased or retired partner's share in the partnership. If that is left in the firm during the process of administration, this will entitle the representatives of the deceased partner or the retiring partner, either to interest or to a share of the profits made since dissolution which is attributable to the use of his share of the partnership assets - s 55, but not to after acquired assets even if purchased with a portion of the profits of the new firm earned after dissolution when the share of the deceased or retiring partner remained with the firm - Cameron v Murdoch.

98 It follows that while the interest of a partner in the partnership property is entirely equitable, the partner's relations with fellow partners, both during the lifetime of the partnership or after dissolution and in the course of a winding up entail not only or exclusively equitable rights or obligations but also contractual obligations as determined by the terms of any applicable partnership agreement. Depending upon the nature of the matter in contention its resolution may entail no more than the application of fixed and established principles of contract but, certainly, in many other instances it may involve the application of equitable principles including principles for determining priorities as between competing proprietary and/or equitable interests.

99 To acknowledge that contractual rights of pre-emption, or other negative contractual stipulations will, in certain circumstances, allow relief to be granted in the form of injunctions, or that in circumstances where a right of pre-emption has been triggered by a decision of the grantor to dispose of the property to which it is subject, it may be enforced by an order in the nature of specific performance and therefore resembles a proprietary interest that does not vindicate the plaintiffs' arguments. For vindication to occur it would be necessary for the pre-emptive right to endure not only after it has, on this hypothesis, been wrongly disregarded by the grantor or others but also up to the point when the intervention of equity is sought. If by this latter date the right has ceased to exist and is incapable of restoration, there is nothing which can be regarded as an equitable interest which might rank in priority with any subsequent interest.

100 The point is that if the right of pre-emption is not utilised by any of the persons who have a right to claim it, and the subject matter is then sold to some third party in a manner which requires the consent of all those who are entitled to enforce the right of pre-emption, that consent terminates the right and for reasons expatiated upon earlier, the inevitable conclusion from the formation of each new succeeding partnership is that this is what occurred.

101 As noted, counsel for the plaintiffs relied on observations by Jessup J in Chipper v Octra Nominees Pty Ltd & Ors [2006] FCA 1633 for the proposition that the combination of the availability of the equitable remedies of injunction to prevent the breach of a negative stipulation in a contract (not to sell without offering the subject matter to a person who had a contractual right of pre-emption) associated with specific performance, or an order in the nature of specific performance, to compel the delinquent vendor to observe the requirements of the right of first refusal, gave rise to a species of property analogous to an equitable interest which would be accorded priority over a later interest of a purchaser acquiring, with notice, property from the vendor in breach of the requirements of a right of pre-emption. Jessup J, at [84] - [125], relied heavily upon Manchester Ship Canal Co v Manchester Race Course Co and appears to have endorsed submissions to that effect. However, an appeal from that decision succeeded in Octra Nominees Pty Ltd v Chipper [2007] FCAFC 92. The appeal was allowed largely because the Full Court of the Federal Court concluded that the holder of the right of first refusal had lost that right upon declining to purchase the property when given the opportunity to do so by the vendor, after which the vendor sold to a third party on the same terms as had been offered. The Full Court held that subsequent minor variations in the terms of the contract of sale to the third party which made the purchase more attractive to the third party did not give rise to an obligation by the vendor to re-offer the property for sale to the holder of the right of first refusal on the modified terms because, by then, a completed and enforceable agreement to sell to the third party purchaser had been reached, notwithstanding that this was later slightly varied in favour of the purchaser. Accordingly, it was not necessary for the Full Court to examine the effect of the alleged breach of the obligation to give a right of first refusal or the nature of equitable relief which would be accessible had that occurred. Nevertheless, Tamberlin, Gyles and Gilmour JJ observed at [56] that:

Considerable caution needs to be exercised when it is sought to convert an in personam contractual promise into what amounts to a new form of property right enforceable against third parties (cf, in another context, Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 at [118] - [120].

102 These observations suggest that it is, at the least, tenuous to treat the rights of a disappointed holder of a right of pre-emption as equivalent to an equitable proprietary interest.

103 More significantly, a distinction between the present case and the facts examined in Octra Nominees both at first instance and on appeal is that in Octra Nominees there was no change or disappearance of the subject matter of the sale - the farming property - nor did the sale of that property to the third party purchaser involve or require any consent by the holders of the right of first refusal to render it effective. Accordingly, I do not consider, with respect, that any of the observations in Octra Nominees (either at first instance or on appeal) requires the recognition of an enduring equitable interest in this present case.

104 Plainly, such a right of pre-emption is different in nature and duration from a partner's interest in an existing partnership or a person's rights to be admitted as a partner to a firm. The latter are valuable rights which will be protected but they are not the only way in which a person may be admitted as a member of a partnership. The members of the firm may mutually agree with each other and a third person to admit him or her to a newly formed firm notwithstanding that the candidate has no legally enforceable right to admission. The decision to admit him and his membership of the firm is valid and effective notwithstanding that the admission is by grace and not by right. Nor is this any less effective because those who agreed to admit the new candidate might have refused to do so or might have insisted that some other person again should have been the only one to be newly admitted. The admission of the new candidate necessarily casts away insistence upon any such rights of pre-emption.

105 The plaintiffs' argument that they have an equitable interest in the units which they contend were wrongly disposed of by or to the second defendants in disregard of the pre-emptive rights provisions rests on very weak foundations. I have already explained how the particular units in the firm available for transfer or disposal under the pre-emptive rights provisions in the event of a death or retirement producing a dissolution of one partnership and the formation of another are essentially monetary claims because the former partnership has become dissolved. Secondly, even if the claims did involve an equitable interest in the property of the (dissolved) partnership the interest will not survive the formation of the new partnership because, the constitution of the partnership having changed, it becomes an interest in a new and different firm.

106 Moreover, the plaintiffs' submissions depend upon the contention that the right of a surviving partner in the dissolved firm to acquire the units of the deceased or retired partner under the pre-emptive rights provisions, once triggered by the decision to dispose of those units, is akin to the interest of the holder of an option to acquire the property subject to the option. That submission invokes the contention that a purchaser under an executory contract of sale has an equitable interest in the property the subject of the purchase and that the vendor becomes trustee of the property for the purchaser. Such propositions, although found in many authorities, are not unqualified. More recent authority, at the highest level, has shown that they are overstated and potentially misleading. The reasons for this and the dangers in classifying a purchaser's interest under an executory contract of sale as an equitable interest in the subject property are fully examined and exposed in Tanwar Enterprises Pty Ltd v Cauchi [2003] HCA 57; (2003) 217 CLR 315 in the unanimous judgment of Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ, especially at [43] - [57]. There, their Honours commenced their analysis by addressing the 'interest' of a purchaser in land the subject of an uncompleted contract starting with the observations of Jessel MR in Lysaght v Edwards (1876) 2 Ch D 499, 506 who described the vendor's position at that point as something between a bare trustee for the purchaser and a mortgagee who in equity is entitled to possession of the land and a charge upon it for the purchase money which, so their Honours remarked at [44], suggested that the purchaser had, before completion, an equitable estate in the land. Then, their Honours observed in [53] that the analogies drawn over a century ago in Lysaght are no longer accepted, referring to Chang v Registrar of Titles ; per Jacobs J at 190 and Deane J in ; , 192 who said:

It is both inaccurate and misleading to speak of the unpaid vendor under an uncompleted contract as trustee for the purchaser.

107 In Tanwar their Honours then observed at [53] that:

In Stern v McArthur [1988] HCA 51; (1988) 165 CLR 489 Gaudron J points out[1988] HCA 51; , 165 CLR 489, 5357, consistently with authority in this court (Brown v Heffer [1967] HCA 40; (1997) 116 CLR 344, 349 and other authorities here omitted), that the 'interest' of the purchaser is commensurate with the availability of specific performance. That availability is the very question in issue where there has been a termination by the vendor for failure to complete as required by the essential stipulation. Reliance upon the 'interest' therefore does not assist, it is bedevilled by circularity.

108 Another example warning against the dangers of assuming the availability of equitable relief and, by that assumption, asserting the presence of an equitable interest or a proprietary right, the very existence of which is indispensable to secure the end claimed, is provided by CPT Custodian Pty Ltd v Commissioner of State Revenue [2005] HCA 53; (2005) 224 CLR 98 which is a case concerning whether the holder of a unit in a particular unit trust whose trustee held land was itself an owner of land, by holding an equitable estate in the freehold of the land held by the trustee, for the purposes of the Land Tax Act 1958 (Vic). The court unanimously rejected the submission of the Commissioner of State Revenue that the unit holder had an interest in the ownership of the land for the purposes of the Land Tax Act and at [17] said:

In Schmidt v Rosewood Trust Ltd [2003] UKPC 26; [2003] 2 AC 709 at 729, the Privy Council recently stressed that the right to seek the intervention of a court of equity to exercise its inherent authority to supervise and, if necessary, to intervene in the administration of trusts 'does not depend on entitlement to a fixed and transmissible beneficial interest'. In a sense, the Commissioner's submissions tend to prove too much (see Schmidt (supra) at [729]). In any event, as Lord Wilberforce emphasised in Gartside v England Review Commissioners [1968] AC 533 at 615 - 618, it is one thing to identify rights protected by a court of equity, and another to identify an interest which has 'the necessary quality of definable extent which must exist before it can be taxed'. In the present case the 'definable extent' is that specified by the definition in the Act. No doubt, unit holders accurately may be said to have had rights protected by a court of equity, but that does not require the conclusion that in the statutory sense they were 'owners' of the land held on the trusts in question - cf Kent v SS Maria Luisa [No 2] [2003] FCAFC 93; (2003) 130 FCR 12 at 34 - 35.

109 In the present case all this means that the plaintiffs' assertion can only be that the rights which continuing partners had immediately on the dissolution of the partnerships leading to the formation of new partnerships after each of the six impugned transactions may potentially have led a court of equity to intervene to protect those rights. This might be done by the grants of injunctions or orders for specific performance if the proper exercise of discretion warranted the grant of such relief and if the interests of other third persons would not be substantially disturbed, and effective restitution being possible. The submission that the plaintiffs have an equitable interest therefore depends upon the court being satisfied that, in all the circumstances, full equitable relief to the extent sought by the plaintiffs, including orders for rescission of the six completed transactions, injunctions, specific performance and accounts and inquiries necessary to achieve adequate restitution were possible and should in the exercise of discretion be granted. This demonstrates just how tendentious it is to assert, without qualification, that the plaintiffs enjoy equitable interests in the units which were, according to them, wrongfully transferred.

110 Earlier I have concluded that any rights which other partners may have had under the pre-emptive provisions at the times when the units the subject of these transactions became available for transfer, had ceased to exist upon the transferees becoming partners of the newly formed partnerships with the consent of all those persons who may have been entitled to insist upon observance of the pre-emptive rights. There are other reasons, which I have also mentioned, which also point unambiguously to the conclusion that no such rights as the plaintiffs seek to assert could possibly have endured, at the latest, beyond the next change in the constitution of the family firm after the impugned transaction. Once these factors are appreciated the plaintiffs' submission that the persons whom they claim to represent have an equitable interest in the partnership property which passed to the six transferees can be seen to be unsustainable.

First group of issues - Did the 1976 partnership agreement and, more particularly, its Pre-emptive Rights Provisions, apply to the impugned transactions

111 Reference has already been made to cl 1 of the partnership agreement of 25 March 1976 which provides that the parties thereto agreed to carry on the business of property owners under the name Atwell Family Agency in partnership between themselves and any other persons who may be admitted to the partnership in the manner provided, all upon the terms of the 1976 document. Subrules 5(a) and (b) provide that legal personal representatives or trustees of former partners, who take a transfer of units and become partners should sign their names at the foot of the schedule as indicating that they are persons bound by the Rules. A similar provision exists for a person not already a partner to sign his or her name at the foot of the schedule in token of agreement to be bound by the rules - rule 9.

112 It is evident from the terms of exhibit 3 that a number of persons who became partners in the firms after the 1976 agreement followed this procedure and signed the document - in a number of instances duly executing it as a deed. These were:

(b) Lucy Mary Ameline Atwell (the wife of Clive Atwell);

(d) Audrey Nancy Atwell (the wife of Henry Russell Atwell);

(e) Leigh Owen Roberts - the son of Keith G Roberts and in his capacity as trustee for:

113 But there have been a number of other changes in the partnerships where the incoming partner did not sign or execute the 1976 agreement, or at least the available copy - exhibit 3. These were:

(a) Mavis Victoria Adam, 1997 (see partnership number 12 in the first schedule);

(b) Kenneth Atwell Adam, 10 January 1984 (see partnership number 15 in the first schedule);

(c) Rosemary June Spurge, 1986 (see partnership number 20 in the first schedule;

(d) Brian Richard Huck, 27 November 1989 (see partnership number 21 in the first schedule);

(e) Kingsley James Adam, 1990 (see partnership number 22 in the first schedule);

(e) Joyce Corona Nicholls, 1993 (see partnership number 23 in the first schedule;

(f) Roderick Harold Adam, 1993 (see partnership number 23 in the first schedule);

(g) Julie May Parr, 26 August 1993 (see partnership number 24 in the first schedule);

(h) Lucy Mary Emeline Atwell, 1996 (see partnership number 25 in the first schedule);

(i) Norma Hull (see partnership number 36 in the first schedule).

114 It is submitted on behalf of the plaintiffs that I should infer that another copy or copies of the 1976 partnership agreement were once in existence and that such a copy was sent to one or more of the newly admitted partners for separate execution and for return to the partnership secretary and that these copies have since been lost or destroyed. I am asked to draw such inferences from correspondence from the partnership secretary or manager from time to time which appears to be forwarding documents to incoming partners for signature and return but where no record of the returned or executed document now exists. I do not consider that I can draw such inferences but, even if I did, the result would not account for all persons known to have been admitted to the firm from 1976 onwards and accepted by other members of the partnership from time to time as co-partners.

115 While I appreciate that this lacks precision, I am satisfied that the probabilities are that some unascertainable number of incoming partners, probably less than 10 over the period from 1977 to 2007, became partners without signing the 1976 partnership agreement or executing it as a deed. The submission for the defendants is that from the time of the first occasion when this happened, this exemplifies an agreement by the partners no longer to be bound by the terms of the 1976 agreement and/or to have varied the terms of the partnership agreement relating to the admission of partners from then on: Firth v Anislake (1964) 108,198 s 5; Lindley & Banks (op cit) 273. However, I do not accept this submission. Although, obviously, I do accept that there were a number of admissions to various of the partnerships in succession without the new partners observing this procedure, I immediately add that each such new partner became bound by the terms of the partnership which existed from time to time, by the very fact of their agreement to join the firm notwithstanding any lack of subscription to or execution of the 1976 agreement: Austin v Boys [1857] EngR 965; (1857) Beav 598; 53 ER 488 and Linley & Banks (op cit) 272 - 273

116 When it comes to determining what the terms and rules of each succeeding partnership were, from time to time, all the indications are that, despite occasional relaxation of the formalities of subscription or execution of the 1976 agreement, and occasional instances where the Pre-emptive Rights Provisions, or the ensuing valuation procedure if rendered necessary, were not strictly or fully observed, that all sequences of the partnership did treat the 1976 agreement as applying to the terms on which they conducted the affairs of the firm. All the minutes of the annual general meetings and the special general meetings indicate that those were the terms and rules by which the affairs of the partnerships were governed. The very controversies from 2003 onwards over whether or not the Pre-emptive Rights Provisions were observed or fully observed were discussed and examined on the basis that they had, or that they had sufficiently been, observed without any suggestion being made that those provisions no longer held sway.

117 I am satisfied, therefore, that despite occasional episodes of new members not signing the 1976 partnership agreement, and some occasions when the formalities were not observed or fully observed, a requirement which could be insisted upon or relaxed with the unanimous agreement of all the members as I am satisfied it was from time to time, the terms of the 1976 agreement and its rules were treated as applying to all successive partnerships from 1976 to date.

The 20 person rule - alleged oversized partnership

118 The defendants allege that in several of the successive partnerships from 1976 onwards the total number of partners exceeded 20 and that, therefore, each such firm was illegally formed or constituted. Various consequences are said to follow from this, namely that because the firm as formed and conducted was illegal, the contract between the parties was tainted with illegality and should not be enforced, and that any equitable relief should be refused. A variation, advanced by the plaintiffs, is that an association of more than 20 persons conducted to carry on business with a view to profit amounts to a managed investment scheme under the Corporations Act 2001 Ch 5C with the consequence that although there may penalties applicable for non-compliance with the performance of obligations relating to managed investment schemes, an unregistered managed investment scheme is not of itself illegal. See Corporations Act 2001 s 9 for definition of 'managed investment scheme' and Ch 5C generally.

119 The issue of whether there was, at any material time, more than 20 partners in the Atwell Family Agency depends upon who is counted as a partner. The question only arises in relation to occasions where a former or retiring partner's place was taken and a new partnership formed by two or more executors of the estate of the deceased partner or trustees of an inter vivos settlement. The obvious and most durable example relates to the representation of the estate of Walter Charles Atwell from the date of the 1976 agreement until the present.

120 There were three trustees: Elsie F Atwell and the plaintiffs, Mr Malcolm Atwell and Mr Ian Atwell. Mrs Elsie F Atwell herself died in 1998, leaving her two sons as the surviving and continuing trustees of the estate of W C Atwell which, at all times since his death, had been treated as a member of the firm. Accordingly, the question is whether these three trustees, later reduced to two, for these purposes should be regarded as numbering three partners, two or only one. If they are counted as three, or as two after the death of Mrs Elsie Atwell; and other co-trustees or administrators are counted in the same way, then some of the succeeding partnerships (see First Schedule, partnerships 11 to 18 and 23 to 34) will be greater than 20 members in aggregate, but the 20 person limit will not be exceeded if the co-trustees or co-administrators are treated as representing only one interest, namely the estate of the deceased.

121 Reference has already been made to the meaning of 'partner' in the rules and to rule 10 which provides that no sale or transfer of units may be permitted at any time if the effect of such sale or transfer is to increase the number of partners beyond 20. Whether the members of the firm from time to time were successful in avoiding a breach of the 20 person rule or not it is evident that they were conscious of the need to observe it and took steps, on legal advice, which they thought would avoid any such transgression. Exhibit 38 is a copy of the minutes of an AGM which the partnership held on the 30th day of June 1966. At that meeting the chairman specifically referred to the 20 person limit and explained that, because of it, the partnership could not accept more than one executor or trustee of the particular interest to be recorded as a member without being in jeopardy of the rule and, for that reason, would require the interests concerned to nominate one person only who would be a partner, perhaps a representative partner, for the estate or trust rather than all executors or trustees.

122 Although this decision occurred before the 1976 partnership agreement, it is by no means insignificant that on 22 April 1975 the partnership, as constituted under an earlier agreement, determined that Malcolm Atwell was not eligible to join the management committee because he was not then a partner of the business (see RTB 23).

123 In the various schedules of membership of the partnerships from time to time which were distributed around the times of the annual general meetings, and in the proposed distributions of profits (see for example exhibits 46 to 48) the partners were listed in way which did not exceed 20 in total but, in some instances, referred to the estate of a deceased former partner where there were two or more executors or trustees as being a single member. It is on this basis that the question of whether or not there was any breach of the 20 person rule must be addressed and, if there was, its consequences decided.

124 Illegality may affect a partnership in several ways. The firm may be formed for the purposes of some illegal enterprise or a legally constituted partnership may engage collectively in illegal conduct. The illegality may arise from the contravention of a statute or at common law such as in the pursuit of some immoral purpose. If its formation, or the conduct of a purpose, contravenes some statutory provision then it will be necessary to consider the effects, express or implied, of the statute upon that situation. As observed by Halsbury's Laws Of England (4th ed, reissue) vol 36[27], an agreement for an illegal partnership will not be specifically enforced even though partly performed, nor can damages be recovered for breach of it. If the whole purpose of the partnership is illegal, the court will not recognise it or enforce any rights which the supposed partners would otherwise have, especially where the parties have agreed to enter as partners into a transaction which they know to be illegal. For applications of this doctrine see Ybasco v Dakas & Dakas (1948) 51 WALR 22 and Pham v Doan [2005] NSWSC 601; [2005] NSWSC 601; (2005) 63 NSWLR 370 [92 - [101] per Barrett J.

125 A statutory limit of 20 persons for a partnership is also to be found in s 33(3)(a) (but with some exceptions) in the former Companies (Western Australia) Code 1981. See also s 14(3) of the Uniform Companies Act - Companies Act (1961) (WA) as the preceding legislative provision to the same effect.

126 Under the Corporations Act 2001 s 115 the number of partners in a trading partnership is now limited to 20 but under the Corporations Regulations reg 2A.1.01 larger maximum numbers have been specified for certain trades or professions, increasing the maximum number in some cases to 50, and in others to 100, for legal practitioners to 400 and for accountants to 1,000. Under s 13(11) and s 13(12) of the Corporations Act a person who participates in the attempted establishment of a partnership of excessive size commits an offence but, by s 103, it is provided that such a transaction is not invalid only because of the contravention of s 115, so that neither the partnership nor partnership transactions become invalid.

127 In Ford's Principles Of Corporations Law (13th ed) the learned authors, R P Austin and I M Ramsay, attribute the establishment of a maximum number of partners under the Partnership Act or analogous companies legislation or corporations laws to the Bellenden Ker report to the Board of Trade in 1837 which suggested that all partnerships consisting of more than 15 members should be illegal unless formed by a registered deed of settlement (Ford's Principles Of Corporations Law [2.120]) and Tomasic, Bottomley and McQueen, 'Corporations Law in Australia' (2nd ed) Federation Press at 1.3.3. The Bellenden Ker investigation and report was a product of concern in the early 19th century about so-called deed of settlement companies where a large partnership would be established by a deed of settlement which set out the rules for the operation of the partnership and where a few of the partners named in the deed acted as trustees to conduct the business of the association on trust for the others (see Ford at 2.120). This provided a mechanism by which large, but unincorporated, associations could operate and trade. Before the Corporations Law1991 was enacted the position taken was that an outsized partnership would be treated as an illegal association and a court would not become involved in the regulation of their affairs - Waller v Gipps (1885) 6 LR(NSW) Eq 123 or their dissolution at the request of any member - Re Riverton Sheep Dip Co [1943] SASR 344 but any third persons who had dealings with such an association, without knowledge of the illegality, might establish a joint and several liability against all the members - Mailer v Clayton (1898) 1 WALR 3 - and could seek an order for the winding up of the association in order to secure their relief - - see generally Higgins & Fletcher, (8th ed) 82 - 83.

128 Now, because of s 115 and s 103 of the Corporations Act 2001 an oversized partnership is not illegal and the court may entertain proceedings and determine the internal affairs and, if necessary, the dissolution. In 1965 in Re Southside Plaza (supra) McClelland CJ in Eq said, at 1456:

I have in mind the statement of the law which appears in Buckley on the Companies Act (13th ed, 736) which is in the following terms:

'But while members participes criminis, or creditors cognisant of an illegality may be unable to pray the exercise of the jurisdiction in their favour, it can hardly lie in a company's mouth to allege its own illegality as a defence; the very fact of its illegality is quite a strong reason for winding it up'.

129 The consequences of illegality or non-compliance with some statutory obligation must be determined as a matter of interpretation arising from the provisions of the applicable legislation: Yango Pastoral Company Pty Ltd v First Chicago Australia Ltd [1978] HCA 42; (1978) 139 CLR 410, 423, Mason J, and Master Education Services Pty Ltd v Ketchell [2008] HCA 38; (2008) 249 ALR 44; (2008) 82 ALJR 1322, 47 - 48 [11]. In this respect, it is notable that non-compliance with the statute now no longer automatically results in invalidity or voidability because of s 115 of the Corporations Act 2001 (WA). That statutory provision can be traced back to the Corporations Law 1991 so the consequences of exceeding the 20 person limit differ according to whether or not the excess occurred before 1 January 1991. At the time Elsie F Atwell was still alive and was recorded as the partner representing the estate of W C Atwell (dec'd).

130 When Mr L O Roberts became registered as a unit holder of units transferred from the estate of Keith G Roberts (dec'd) and, for that matter, as the holder of units coming from other sources, it is not appropriate to treat him, from the point of view of eligibility to accept units, as having a different status depending upon whether he was holding the units for himself personally or as a trustee under the terms of the Hamersley Trust, the Sonoma Trust or any other trust. This is because, as observed by Steytler P in Gebauer Nominees Pty Ltd v Cole (No 2) [2008] WASCA 41, 50:

Trustees are not distinct legal persons in a representative capacity, separate from themselves in a personal capacity. As Gummow J explained in Elders Trustee & Executor Co Ltd v E G Reeves Pty Ltd [1987] FCA 332; (1987) 78 ALR 193, 253 it is fundamental that the common law does not recognise a trustee as having assumed an additional or qualified legal personality.

131 A variation on this principle was addressed by Adam J in The Unissen v Filippini [1967] V.R.7 where, in an action involving the taking of partnership accounts, it became apparent that certain of the income of the partnership for which the account was sought had been derived from illegal gaming operations. His Honour held that where such an illegal transaction had been completed and concluded by payment to the partnership and where the partnership is not illegal in itself, the proceeds of such a completed transaction should be brought into the partnership accounts.

132 The plaintiffs submit that for the purposes of s 11 of the Partnership Act and for the purposes of s 115 of the Corporations Act joint trustees of the estate of W C Atwell must be counted as one partner only. The interest being joint involves each of the four unities and survivorship. They support this submission by contending that, as co-trustees, the three executors are required to act unanimously and are treated by law as constituting one trustee: Luke v South Kensington Hotel Company (1879) 11 Ch D 121, 125 - 126, Jessel MR; In The Estate of William Just (Dec'd) [1973] 7 SASR 508, 513, Jacobs J. As between themselves, joint trustees are not carrying on business in common with a view to profit but constitute one collective trustee to execute the duties of the office of trustees in their joint capacity: In The Estate Of William Just (Dec'd) 513 and, in that capacity, 'hold a single, joint, inseparable office' - Sky v Body (1970) 92 WN (NSW) 934, 935, Street J - contrast the treatment of two trustees who were co-proprietors of shares in a firm in Muir v City of Glasgow Bank & Liquidators (1879) 4 App Cas 337, 380 - 381, per Lord Selborne. An analogy is provided by the nature of the office of joint trustees who jointly own company shares who, because of their status as trustees, have only one vote which must be exercised with the consent of all the joint trustees: and [28] Palmer JA. Likewise, in the case of an inter vivos trust where the trustee is a member of the partnership, it is the single trustee who is the member of the firm and not the trustee plus the beneficiaries or the beneficiaries who are members: , 275, James LJ 280, Brett LJ 284, and Cotton LJ.

133 An assignee of a partner's share in a partnership, whether in whole or in part, does not become a partner and if there is an assignment of the interest to two or more persons that does not increase the size of the partnership: Hocking v Western Australian Bank (1909) 9 CLR 738, Griffith CJ, 743 - 744 and also at 749, and FCT v Everett 448 - 451, at least so long as the assignor remains a member of the partnership and holds the benefit of the assignment on trust for the assignee. It would be otherwise if the other partners recognised the assignee as a member of the firm or conferred the rights of a partner upon the assignee: Jefferys v Smith [1827] EngR 367; (1827) 3 Russ 158; 38 ER 535. In these present cases, the Atwell Family Agency continued to treat Mrs Elsie Atwell as the sole representative of the estate and the fact that Mrs Elsie Atwell, or after her death one of her sons, held that interest upon trust for the persons entitled in distribution under the will of W C Atwell (dec'd) does not constitute those other trustees or the beneficiaries as partners.

134 So, in the present case, when Elsie F Atwell, as one of three joint trustees of the estate of W C Atwell, was listed as a member of the firm for the estate, it was she alone, and not her and her two sons, who was a partner. She had the power to participate in and make decisions relating to the conduct of the affairs of the partnership although, as between herself and her two co-trustees, she required their consent or authority to act in that way. All the indications are that she always possessed that authority but, even if she did not, her actions and decisions would have bound her as a member of the partnership notwithstanding that she may have been accountable to her co-trustees and the estate of the deceased on the basis of wilful default for any losses or other consequences of unauthorised conduct: McLauchlan v Prince [2001] WASC 43, [13] - [14] where the authorities are collected.

135 The more liberal disposition relating to the effects of transgressing the limits on the maximum number of partners contained in the present Corporations Act was first introduced by s 112 of the Corporations Law, which came into effect on 1 January 1991. Accordingly, any breaches of the 20 person rule which occurred after then would not have resulted in illegality so as to produce invalidity.

136 This practice of treating deceased estates as being represented by a single nominee was established as early as 1966 (see First Schedule Partnership Number 2). In partnership number 8 (during 1974) Perpetual Trustees and Keith Gilbert Robbins were joint trustees of the estate of Amy Atwell but were treated as a single unit holder from then on. In partnership No 11 from 18 March 1975 Mrs Elsie Frances May Atwell was treated as a single representative as trustee of the estate of Walter Charles Atwell (dec'd) and that practice continued from then on.

137 There are some examples of one person being treated as a representative of several separate interests in the firm as, for example, Mr K G Roberts being a member in his personal capacity from 25 March 1983 onwards (partnership 14), as an additional member as trustee for the estate of Ms A E Atwell and thereafter as trustee of the Hamersley Trust, and thirdly, together with Perpetual, as a trustee of the estate of Amy Atwell. At those times, Mr Roberts was treated as representing three interests in the partnership but still the total number did not exceed 20. From January 1984 (partnership 15) onwards, Mr K A Adam became a member of the firm following the death of his mother, Mrs Mavis Victoria Adam. His membership was recorded as a trustee for Geoffrey Michael Adam, Patricia Evelyn Hagen and Kenneth Atwell Adam, but again that was, from then on, treated as a single interest. Similarly, from November 1989 (partnership 21) onward Brian Richard Huck became a member of the firm as trustee of the estate of his mother, Edwyna Bertha Huck, but again was treated as representing a single interest. Again from 7 March 1997 (after the 1991 Corporations Law) onwards following the death of Alex Atwell, David Henry Atwell, Malcolm Walter Atwell and Bradley John Atwell were recorded as representatives as the administrators of the estate of Alex Atwell (one of only three known examples of a departure from the one nominee rule for multiple trustees) but they were treated as representing a single interest (partnership number 27).

138 From November 1998 onwards (partnership number 28) Malcolm Walter Atwell and Ian George Atwell were recorded as members as trustees of the estate of Walter Charles Atwell, a second departure from the one nominee for an estate convention, but again were treated as a single interest in a firm totalling 19 members.

139 From March 1997 onwards (partnership number 27) Keith Gilbert Roberts and Leigh Owen Roberts were recorded as trustees of the estate of Amy Atwell, another exception to the single nominee convention, but again were treated as a single interest in a partnership of 19, including other dual trustees for single interests. There are other examples post June 2001 (partnership number 30 and following) of a member being a trustee for several beneficiaries and other beneficiaries under an inter vivos gift - for example, Leigh Owen Roberts as trustee for Kenneth Keith Roberts, Margaret Joy Lister and the Somoma Trust (partnership number 30) but again the trustee was treated as a single interest and from that date onwards the provisions of the Corporations Act applied.

140 Returning to the example of this issue posed by the estate of Walter Charles Atwell being recorded as a member of the partnership at all times from 1976 in circumstances where, until 1998, there were three trustees of the estate of that deceased and since then two trustees, I turn to the terms of the 1976 agreement itself. Each of the original parties to that agreement is identified by name in a manner which treats each interest as being one so that, in respect of this deceased, in the introduction to the agreement the interest is described as 'the trustee of the will of Walter Charles Atwell (dec'd) of the 15th part' and concluding with 'the trustee of the estate of Frank Pusey Atwell (dec'd) of the 20th part'. In the provision for execution each of those 20 parties is to sign and deliver individually so that, in the case of this deceased, the attestation clause is 'The trustee of the will of Walter Charles Atwell, signed, sealed and delivered by the trustee of the will of Walter Charles Atwell in the presence of'. The original of the 1976 agreement makes it clear that, in all probability, the agreement was signed and delivered as a deed by Mrs Elsie F Atwell, and that her signature was duly attested by a witness. However, the document shows that it was also signed by Mr Malcolm Atwell and Mr Ian Atwell, whose signatures were not witnessed and who signed it, as best they can recall, at the request of their mother, on some subsequent occasion, presumably because she thought that it was necessary or desirable. This has been relied upon by counsel for the defendants for a submission that the document was not formally delivered or duly executed as a deed under s 9 of the Property Law Act because of the absence of attestation of the signatures of the two sons. However, I do not accept that submission. Having regard to the structure of the 1976 agreement, and the description of the parties, I consider that it was always intended that only one person would execute, as a deed, the agreement on behalf of his or her interest or the interest which he or she represented and that, in the case of the estate of W C Atwell (dec'd) the approach was to treat the execution of the document by Mrs Atwell as sufficient to bind the estate and to record her, in her capacity as executor or trustee of the estate, as the member of the partnership in the place of the deceased.

141 The defendants submit that the fact that the estate of Walter Charles Atwell continued to derive profits from the firm, and even if one of the three joint executors, namely Elsie Atwell, was a partner in the firm because she was accepted by the firm as the single representative of the estate, that does not mean that the estate was, for all purposes, a partner or that the co-executors were partners. This result is said to arise from a combination of several principles. First, that the assets of a deceased partner should be left in the firm, pending the completion of administration or for a longer period, so that the estate thereby derives income by sharing the profits of the firm rateably according to the value of the assets of the estate left with the firm, does not render the estate, its executor or trustee a partner if the executors or trustees do not interfere or involve themselves in the conduct of the business: Holme v Hammond (1872) LR 7 Exch 218 and Brown v Fletcher (1884) 5 LR (NSW) 393 [400] - [401] where Martin CJ said, of such executors or trustees:

It does not matter that the persons are to receive a proportion of the profits; that does not, of itself, make them partners. That relationship is not shown to exist by the mere fact that the assets of the deceased partner have been allowed to remain in the firm and that the executors had received a share of the profits.

142 Naturally enough, it is possible for an executor or trustee of a former partner to become a member of a new partnership between the surviving partners and the executor or trustee by mutual agreement: Hocking v Western Australia Bank (1909) 9 CLR 738, 748 per Barton J and Watson v Federal Commissioner of Taxation (1982) 61 FLR 268 and, in Elders Trustee & Executor Ltd v Federal Commissioner of Taxation [1961] HCA 1; (1961) 104 CLR 12, especially per Windeyer J at 23.

143 The question of whether any, and if so which, of the trustees of the estate of W C Atwell became a partner in any of the successive family firms requires an analysis of the matters referred to in s 7(2) and s 8 of the Partnership Act which embodied the rules to apply in determining whether or not a partnership exists. In regard to the application of s 7(2) the analysis conducted by Mullighan J in Duke Group Ltd v Pilmer [1998] SASC 6529; (1998) 144 FLR 1 is helpful. The names of Malcolm and Ian Atwell were not directly entered into any of the partnership books or records as the holder of any units; they individually did not receive any correspondence from, or have any other communication with, the partnership or the management committee; and it could hardly be suggested that they, either alone or in combination with their mother, were in partnership with each other together in a larger partnership.

144 Again, all this needs to be assessed from the viewpoint of rule 20 of the 1976 agreement which stipulated that the membership of the firm should never exceed 20 persons. In my view, the correct analysis is that Ada Atwell and her two sons were joint executors and trustees of the late W C Atwell's estate and, as such, were accountable for the share of the income from the firm which came to the estate and which they held on the trusts of the will. However, while it was decided that the estate should be a member of the succeeding and successive partnerships formed after the death of W C Atwell, the method by which this was accomplished was to have one of the trustees, initially the widow, Mrs Elsie Atwell, as the sole representative of the estate, being the partner of the firm. This clearly had a potentiality for adverse consequences for the estate if onerous liabilities were thereby incurred but there is nothing to suggest that this happened. The arrangement was obviously authorised and ratified by the co-trustees because it continued on that basis until the death of Mrs Atwell. Consequently, I am satisfied that there was not, by reason of this arrangement, an occasion where the numbers in the partnership exceeded the statutory limit of 20.

145 I have been pressed with authority that for the estate to be bound all of the three joint trustees should have executed the document and that one trustee did not have the authority to bind the estate. However, the course of events from 1976 until the death of Mrs Elsie Atwell in 1998, followed by transmission of the interest of the estate of W C Atwell to the surviving trustees from then on, can lead to no other conclusion but that all the trustees had agreed to the action of Mrs Elsie Atwell in executing the 1976 agreement on behalf of the estate and in continuing to treat the interest of the estate as one single interest, the proceeds of which were to be shared or distributed in accordance with the will of the deceased. For this reason, therefore, I consider that Mrs Elsie Atwell should be treated as the single nominee of the estate as member of the Atwell Family Agency from 1976 until her death, and to have had the authority of her co-trustees to be, as it were, a trustee for the trustees of the estate interest. There is nothing to suggest that at any time the estate interest was dealt with otherwise than in accordance with the will of the deceased.

146 On the few other occasions where there were other multiple trustees or administrators holding a single interest in the firm a similar procedure was adopted. That being the case, I am not satisfied that there was any occasion when the members of the Atwell Family Agency exceeded the maximum number of 20. I realise that this means, on certain occasions, as in the case of Mrs Elsie Atwell, that the interest which she held in the firm was held on account for others to whom she had obligations as trustee, but that does not make the others partners for the purposes of the 20 person rule or at all.

Was the 1976 agreement a deed and, if so, did it remain a deed?

147 Consistently with the view which I have reached that it was Mrs Elsie F Atwell who was the sole representative of the estate of W C Atwell admitted to the family partnerships after her husband's death, I reach the conclusion that the fact that Malcolm Atwell's and Ian Atwell's signatures on that deed were affixed later and not attested does not detract from the execution of the agreement as a deed by Mrs Atwell on behalf of the estate. In other words, it is the deed to which she, but to which neither of her sons, is a party. The evidence established that the sons' signatures were appended later and were evidently the product of an arrangement by their mother, who did not fully comprehend the necessities or formalities, but those additions do not alter the position that she executed the agreement as a deed.

148 The appearances also are that the agreement was also executed as a deed by each of the original parties, although a number of succeeding members did not execute the document formally as a deed and, in some particular instances, not at all. Nevertheless, I consider that by binding themselves to the terms of that agreement, subject to occasional departure by mutual agreement, and taking benefits in the form of distributions of profits, all members of the partnership from time to time should be taken as being bound by the document as if it were a deed (see authorities mentioned earlier).

149 The 1976 partnership agreement did not contain, and there is no evidence to suggest that there otherwise existed, any provision granting the surviving partners of this firm the right to purchase the share of a deceased partner, or for that matter the continuing partners to purchase the share of a retiring partner. It is not uncommon for such an option to be contained in a partnership agreement and an example is provided in Ballas v Theophilos [1957] HCA 90; (1957) 98 CLR 193. The point at issue in that case was whether or not an option for a surviving partner to purchase the share of the deceased partner's interest in the partnership which contain no specific provision as to the time within which it should be exercised must be exercised within a reasonable time and, if so, whether in that case it had been so exercised. In deciding that the attempt to exercise the option was made too late, both Dixon CJ at 197 and Williams and McTiernan JJ held that it was too long delayed. As Dixon CJ said at 197, the optionee must act with the promptness which is required where there is an opportunity to acquire an asset the value of which is affected by the changed conditions which time and the vicissitudes of business bring.

150 The issues listed for determination before me do not require or permit any finding as to when these contractual rights of pre-emption could be exercised but, as I have already observed, it is apparent that if they are to be exercised at all they must be exercised before the identified subject matter passed into the hands of third parties without notice of the alleged irregularity or, at the latest, while the same subject matter remained in existence and capable of restoration if the circumstances so warranted.

Limitation - a specialty involving an action for debt or covenant

151 The 20-year limitation period prescribed by s 38(1)(e)(i) of the Limitation Act 1935 applies only to an action of covenant or debt. The history of s 38(1)(e)(i) and the nature of actions upon a bond or other specialty were examined closely by Commissioner D R Williams QC in State Government Insurance Commission v Teal (1990) 2 WAR 105 where at 114 the learned commissioner traced the historical antecedents of those legislative provisions before concluding that an action based under s 7(5) of the Motor Vehicle (Third Party Insurance) Act was an action based upon an Act to which the longer 20-year limitation period applied. To the same effect is the decision of Pidgeon J in Commissioner of State Taxation (WA) v Pollock (1993) 11 WAR 64, 68.

152 This special limitation period is not applicable to all actions based on a deed or specialty but, rather, to an action of covenant or debt upon such a specialty. An action of covenant or debt is a special common law claim: AMEV-UDC Finance Ltd v Austin [1986] HCA 63; (1986) 162 CLR 170, 190 , per Mason and Wilson JJ at 190. An action in covenant was the form of action sought to remedy the breach of an agreement, other than for payment of money, contained in a deed. The claim was for damages for the non-fulfilment of the covenant (see Halsbury's Laws of England, 4th ed, vol 37 [92]) and it was an action at common law (see F W Maitland's 'The Court Baron' (Selden Society) vol 4, 115) whereas an action in debt was an action for the recovery of a liquidated sum then due and payable - see Young v Queensland Trustees Ltd [1956] HCA 51; (1956) 99 CLR 560, 567 and was also a common law count.

153 None of the causes of action advanced by the plaintiffs in these proceedings is an action in debt or covenant and, accordingly, the 20-year limitation period prescribed by s 38(1)(e)(i) of the 1935 Limitation Act does not apply. Furthermore, the plaintiffs submit, and I accept, that there is no analogous statutory limitation period for the causes of action relied upon which could or should be applied in the equitable jurisdiction. For a comprehensive examination of when and how a limitation period may be applied by analogy notwithstanding that no statute prescribes a time bar, see Owen J in The Bell Group Ltd [2008] WASC 239, [9267] - [9293]. It follows that if otherwise the plaintiffs were entitled to make out claims for injunctions, orders in the nature of specific performance and/or rescission with or without accompanying accounts, there is no statutory or analogous limitation period in their way. However, this leaves open the discretionary defence of laches which might be invoked to refuse an entitlement to any remedy, but this issue is not before me on the matters ordered to be tried, although it may arise if it ever becomes necessary to try the other issues raised on the amended pleadings.

154 The defendants' position is that because the original 1976 agreement was not executed by all the parties with the formalities of a deed, it takes effect only as a simple contract, or at least only affects those interests who subscribed to it otherwise than as a deed as a normal contract with a six-year limitation period. The alleged shortcomings in the execution of the document as a deed are said to be the absence of a witness when the 1976 agreement was executed by Mr Malcolm Atwell and Ian Atwell as co-trustees with their mother Elsie Atwell on behalf of the estate of W C Atwell, deceased, and (in a number of other instances) where the subscribing partner's signature was not witnessed.

155 Witnessing of a deed was not essential for formal execution at common law but it is under s (9) of the Property Law Act. I have already listed a number of instances in which up to 10 new partners, over a period from 1976 to 2007, were admitted as partners without apparent execution or even subscription of the 1976 agreement. Again without descending to absolute precision, the probabilities are that in several instances the 1976 agreement was not validly executed as a deed by some of the succession of members of the firms. That then provokes a submission by the plaintiffs that, notwithstanding absence of due execution, those parties have taken the benefit of the deed and are therefore bound as if the instrument were a deed, notwithstanding the absence of due execution - see Halsbury's Laws of England (4th ed, reissue) vol 13 [63] and particularly Dalton v Fitzgerald [1897] 2 Ch 86. As was observed by Kennedy J in Monarch Petroleum NL v Citco Australia Petroleum Ltd [1986] WAR 310, 359:

It is abundantly clear that a party who knowingly takes the benefit of a deed is bound by it, although he has not executed it - Lady Naas v Westminster Bank Ltd [1940] AC 366, 373, 406.

156 It is not entirely clear whether this means that the party who did not execute the deed but who took the benefit pursuant to it, is bound by the deed in exactly the same way as if he had executed it - for example, with respect to any relevant limitation period. That was not addressed in Lady Naas v Westminster Bank Ltd but Lord Wright in that case observed at 406 that:

It is true that if she did not execute she was only bound as a promissory, not as a covenantor.

157 which appears to involve a latent implication that the binding nature of the obligation is as a contract but not as a covenant. However, no argument upon, nor reference to, any such distinction was raised in submissions and it is, perhaps, undesirable to reach any view on this aspect.

158 In support of that submission the plaintiffs contend that each of the incoming partners who became a member in accordance with the terms of the 1976 agreement accepted the benefits of the partnership by sharing in the annual distributions of profits and, therefore, are bound by its terms as a deed as fully as they would have been had they formally executed the instrument as a deed.

159 There are, however, two reasons why I consider it is unnecessary to attempt to resolve this particular question and, due to its intricacy and the lack of full argument, I think I should on this occasion avoid the temptation to attempt such a resolution. The first point is the plaintiffs themselves submit that even if it were a deed, the 20-year limitation period would not apply because the plaintiffs' claims are not actions in debt or covenant and, because the relief sought is entirely equitable in nature no statutory limitation period applies or should be adopted by analogy. The second consideration is that my conclusion that, in the events which have happened, the admission of the new partners has meant that all the former partners, including any complaining about lack of observance of the Pre-emptive Rights Provisions, must necessarily be regarded as having consented to the admission of the new partners so that there are no grounds for contending that there had been a breach of the agreed terms of the partnership as applied to the particular transaction nor any basis upon which any relief can or should be granted. That being so, there is no need for me to address the limitation questions further.

Consequences of ineligible partners being admitted as members of the firm or firms by mistake or by ignorance of some admitting partners of the ineligibility

160 This issue arises because the formation of successive partnerships, including each partnership following the admission or enlargement of the interests of individual partners following each of the six impugned transactions, can only mean that the admission of each of those partners, or the enlargement of the interests of a continuing partner following such a transaction, occurred with the consent of the other partners of that firm. Indeed, the continuation of each such partnership with the newly admitted partner or the partner with the enlarged interest, and the sharing of profits during the period of each such firm, can only connote the consent of each of the partners of that firm to carry on business together with each other in partnership with the mutual trust, confidence and acceptance of each other. But, submit the plaintiffs, what if such consent were given by some or all of the partners in ignorance of the ineligibility of the incoming partner or of the ineligibility of the existing partner to enlarge his or her interest in the manner effected? Or, what is similar, what if the admission of such a partner or the enlargement of the interests of another such partner occurred as a result of a mistake by an individual partner about the eligibility of that person?

161 The first thing to be said about this line of submissions is that there cannot at any stage have been any mistake by the other partners about the identity of the incoming partner or of the partner whose interest became enlarged. All were mentioned by name, all were members of the larger family and the introduction and appearance of the new member or the member with the enlarged interest were disclosed at each AGM and in the reports and accounts which were sent to partners in advance of each AGM which proposed the recommended distribution of profits for the particular accounting period.

162 A second observation is that there is no allegation of fraud against the person or persons who became admitted as new partners or whose interests in the firm became enlarged, nor is there any allegation of fraud against the members of the managing committee who processed and recorded the introduction of the new member or the increase in the interest of an existing member, nor against anyone else. Such a right of rescission of a contract resulting in a person induced by fraud or misrepresentation to join the partnership is apparent from Redgrave v Hurd (1881) 20 Ch D 1 and Adam v Newbigging & Townend (1888) 13 App Cas 308, per Lord Halsbury, 314 - 316, per Lord Watson, 320 - 322, and per Lord Herschell, 329, and is recognised by s 54 of the Partnership Act.

163 Thirdly, there is no allegation of any innocent misrepresentation against any of those parties either. It is clear that even if there had been some innocent misrepresentation the agreement which led to each such new partner becoming a member of the firm, or an existing partner whose interest is to be enlarged, has, by the very process of an admission or enlargement, been fully executed, so creating significant difficulties in the way of any claim to rescind that agreement on the grounds of innocent misrepresentation. Here rescission is only available in equity, the court will be less ready to dismantle the transaction: Spence v Crawford [1939] 3 All ER 271, 288, Lord Wright and Redgrave v Hurd (1881) 20 ChD 1. In such a case rescission would only be available if the party so entitled had not affirmed the transaction and if at least substantial restitution to the position which would have obtained had the transaction not been effected were possible.

164 There are cases where rescission of a contract to enter into a partnership has been granted, long after the contract was performed and even in circumstances where it was impossible for there to be a full restitution by the deceived party as, for example, Adam v Newbigging (1888) 13 AC 30 HL. However, upon examination of the reasons given by their Lordships in that case it is apparent that the inability to give restitution was not due to any affirmation of the contract by the deceived partner but that the claim for restitution itself was untenable because no significant value had been obtained by the interest which the claimant acquired in the partnership due to its imminent insolvency. That being the case, the decision does not stand for the proposition involved in the plaintiffs' argument, namely, that after deriving substantial benefits in the way of profits from these partnerships, and without being able to restore the former interest to the disponors who are alleged to have disregarded the pre-emptive rights provisions, it is either unnecessary to be able to give restitution or that, with some adjustments, substantial restitution could be given. That intervention of the rights of innocent third parties may disentitle a claimant to rescission because of inability to achieve restitution, or where no form of restitution is possible because the nature of the interest acquired has changed, is apparent from another decision of the House of Lords in Tennent v City of Glasgow Bank (1879) 4 App Cas 615.

165 In this case, the indications of affirmation by participating in the business of the new partnership and sharing profits are very strong but, even more formidable, is the absence of the prospects of any substantial restitution. The restoration of the parties to the position which would have obtained but for the voidable transaction in the present setting could only ever have occurred before there were any further changes in the partnership such as, for example, the formation of a succeeding partnership by the death or retirement of an existing member or the introduction of another new member. This is because a rescission of the admission of the new partner consequent upon any of the impugned transactions must, of necessity, involve the offering of an opportunity to acquire those units to members of the firm which existed before the new entrant was admitted. The same goes for rescission of the acquisition of further units by a continuing partner. The effect of the pre-emption rights is to confer, only upon those persons, the opportunity to acquire at the agreed or determined price the units of the former member who had died or retired. Once the membership of the partnership has changed by the admission of other members, as a result of subsequent alterations, deaths or retirements or sales or transfers of units between existing partners, there is no longer the same firm nor are the same persons entitled to the benefit of the conditional pre-emptive rights.

166 The evidence is clear beyond any contest that there have been changes in the membership of the firm and the introduction of new partners, or alteration in the extent of the interest of other partners, which have occurred since each of the impugned transactions, the latest of which was in 2001. See the changes which have led to the formation of partnerships 31 to 36 listed in exhibit 94, the chronology of successive partnerships, which is the First Schedule to these reasons. In practical terms this means that even were a claim for rescission based on innocent misrepresentation to have been raised in these pleadings, or even if it were capable of being accommodated on the existing pleadings, it could not lead to the remedy of rescission being granted in respect of any of the six impugned transactions.

167 Accordingly, while the plaintiffs' submissions that a person who enters into a partnership induced by fraud or misrepresentation is entitled to rescind on general equitable principles, the position still is that there are no prospects for rescission on those grounds in the present case. It is now simply impossible for the parties who might, if the situation had been as alleged by the plaintiffs, have had an opportunity to exercise the pre-emptive rights to acquire or enlarge their interests in former partnerships to do so now because each of those former partnerships has been determined and dissolved by the formation of successive partnerships.

Do Malcolm Atwell or Ian Atwell have the standing to complain?

168 The defendants submit that it is not competent for Mr Malcolm Atwell or his brother, Mr Ian Atwell, to challenge the results of the admissions of new partners to the six impugned partnerships because neither was a member of the firm at the time of any of those transactions. The foregoing analysis confirms that neither was a member of any of those partnerships. Nevertheless, the plaintiffs assert that they have a right to sue because they are executors and trustees of the estate of their mother, Elsie F Atwell, who was a member of the partnership at those times. I should also examine the issue from the point of view that they were co-trustees with Elsie F Atwell of the estate of W C Atwell, whom she represented, during the times that she was a member of the various firms.

169 Taking the second point first, it seems to me that in her role as partner of the Atwell Family Agency from 1975 until her death, Mrs Elsie F Atwell was known to represent, and was accepted as representing, the estate of her late husband. It must also have been known in such a family that there were other co-trustees who, for reasons already canvassed, did not become and were not accepted as partners of the firm. Nevertheless, it seems that the choice of the representative of the estate of W C Atwell as a member of the partnership was very largely a matter of decision by those three trustees so that if, for any reason, Mrs Atwell had become incapacitated and could not continue, one of her sons could have taken over as representative of the estate, under rules 5(b) and 9 of the 1976 agreement.

170 On the death of one of the three joint trustees of the estate of W C Atwell, the surviving trustees continued the administration and were entitled to enforce and assert all rights of the estate. Even if the point had been reached where one or other of the sons was entitled to be named as a partner as the single representative of the estate in the place of his mother, but this was not done because the formalities were not carried out, that son would nevertheless be entitled, in equity, to enforce those rights and, if necessary, to compel the observance of the formalities for the execution of all documents to render himself a member of the firm so as to achieve the rights at law that membership entailed. If there was an entitlement to an assignment in equity of an equitable chose in action, then the assignee could sue in his own name - Williams v Commissioner of Inland Revenue (NZ) [1965] NZLR 395, 398 and Norman v Federal Commissioner of Taxation [1963] HCA 21; (1963) 109 CLR 9 - see generally Starke 'Assignment of Choses In Action In Australia' Butterworths 1972, 13 - 18. I therefore proceed on the footing that, subject to achieving compliance with any necessary formalities, the observance of which this court as a court of equity could compel, Malcolm Atwell and Ian Atwell are entitled to represent and vindicate rights associated with the partnership of which any representative of the estate of W C Atwell was, from time to time, a member. Even if they were entirely new trustees of their father's estate, they would have such standing: Young v Murphy [1996] 1 VR 279.

171 The plaintiffs also contend that they are entitled to sue by virtue of their status as executors and trustees of the estate of their late mother. To this the defendants respond by submitting that the plaintiffs do not purport, at least nominally, to sue in their capacities as trustees of their mother's estate. Certainly their names in that specific capacity do not appear as plaintiffs yet they do purport to sue on behalf of all other partners in the Atwell Family Agency and that is sufficient to cloak them in the mantle of trustees of their mother's estate. Even if it were not, the fact is that they are the persons suing and their rights as trustees are not dissociated or separate from their rights as individuals. It seems to me that I should proceed on the footing that they are entitled to vindicate in their own names, whether as identified as, or representative of, a particular trust estate or not, all the rights which they have in any capacity which are vested in their own persons and this is what they are purporting to do. Accordingly, I am satisfied that each of Mr Malcolm Atwell and Mr Ian Atwell has the standing to sue as they are purporting to do in these proceedings.

172 Having reached these conclusions upon the issues raised by the parties, it is now necessary to address specifically the three questions, each with subsidiary questions, ordered to be tried. In view of the conclusions which I have reached, it is neither possible nor appropriate to answer every question or subsidiary question specifically. Rather, I consider I should take the course of answering the substance of each question raised, so far as possible or necessary, having regard to the submissions made by the parties and the implications for the questions of the findings which I have made. Because some of the answers which I propose to give are addressed to such matters of substance rather than to the particular format of some of the questions, it would be possible, if there should be any issue about the form of orders to be made by the court, for the resolution of these questions to take the form of declarations of right which apply in the light of the findings of both fact and law which I have reached. However, whether the orders be made in the form of answers to questions, which, in some instances, are slightly at variance with the questions posed, or whether they be treated as declarations of right seems to me to be no more than a procedural matter but I shall allow counsel an opportunity to make submissions, if they so desire, as to the form in which the orders of the court should be pronounced.

2(a) Neither Malcolm Walter Atwell nor Ian George Atwell was a member of any of the successive firms known as the Atwell Family Agency until 10 November 1998, when they became recorded jointly as a single member of a partnership as the two surviving trustees for the estate of Walter Charles Atwell (see partnership 28 in the First Schedule). They continue jointly as one single member of the current partnership in that capacity.

2(b) Alex Atwell died on 6 March 1997 and from 7 March 1997 his administrators, David Henry Atwell, Malcolm Walter Atwell and Bradley John Atwell, were registered in their capacity as joint administrators as a single member of the partnership.

2(c) David Henry Atwell died in late 2007 and from the date of his death Malcolm Walter Atwell and Bradley John Atwell, as the surviving joint administrators of the estate of Alex Atwell, continued, in their joint capacity, as one single member of the partnership. They continue in that capacity as a single partner of the current firm. However, in the absence of the joinder of his co-administrator, Bradley John Atwell, the plaintiff Malcolm Walter Atwell is unable to represent, and does not represent in these proceedings, the estate of Alex Atwell (dec'd).

2(d) In their capacities as the surviving trustees of the estate of W C Atwell (dec'd), and as trustees of the estate of Elsie F Atwell (dec'd), Malcolm Walter Atwell and Ian George Atwell have the standing to bring this action and to seek the relief claimed in respect of any or all of the six transactions referred to in the statement of claim which they allege were invalid or which they contend should be set aside for want of compliance with the pre-emptive rights provisions contained in the 1976 partnership agreement.

2(e) In respect of each of the disposals challenged by the plaintiffs the claims are based on alleged breaches of contract insofar as they concern claims against the disponors of the units which were transferred, coupled with claims for recission, declarations of priority and incidental relief. So far as the claims are based against the acquirers of the units, they are not claims for breach of contract but for rescission of the contracts between the acquirers, and the disponors of those units, coupled with claims for declarations of priority of equitable interests, and incidental relief.

2(f) No limitation period directly applies to the claims against the acquirers of the units, nor is there any statutory limitation period which might, by analogy in the exercise of discretion, be applied against those claims in equity.

2(g) Accordingly, s 38(1)(c)(v) of the Limitation Act 1935 does not apply to the plaintiffs' claims against the second defendants.

2(h) The limitation period applying to claims by the plaintiffs against the disponors of the units which are subject to each of the six impugned transactions has not been separately addressed or identified in this action so far or in any of the issues ordered to be tried. For that reason, it is undesirable, as well as unnecessary, to attempt to determine whether there is any such statutory limitation period and, if so, what it is.

2(i) It is unnecessary to decide whether or not the 1976 partnership agreement was duly executed as a deed by all the original parties, or whether the members of succeeding partnerships of the firm, the Atwell Family Agency, who did not duly execute that agreement as a deed are nevertheless bound as if each had so duly executed it. Were the 1976 partnership agreement to be treated as a deed binding all members of successive partnerships known by the name Atwell Family Agency, the effect would be to establish a 20-year limitation period under s 38(1)(e)(i) of the Limitation Act 1935 as the period applying to actions for debt or covenant. None of the relief sought by the plaintiffs in these proceedings is available upon an action in debt or covenant.

3.1 The answer to this question depends upon how the partnership treated trustees of a trust estate, whether the estate of a deceased member, or of interests derived under an inter vivos deed of settlement. It is possible for such trustees, if each consents and all other members of the partnership in question also consent, for them each to be admitted as a member of a partnership and so to be partners. In the case of the successive partnerships of the Atwell Family Agency, however, the evidence establishes that the members of the various partnerships deliberately treated the interests of a deceased estate of a former partner or of the trust estate held by an existing partner under a deed of settlement, as a single interest constituting only one member of the partnership. In cases where there were joint trustees for such a trust estate the method of dealing with the participation of that estate in the partnerships varied over time. In some instances, notably in the case of the estate of W C Atwell (dec'd), the practice followed until the death of Mrs Elsie F Atwell in 1998 was to allow only one of several co-trustees of the estate to become a partner in the firm so representing the estate. In other instances, notably with regard to the estate of Alex Atwell, the practice adopted was to record three joint administrators of that joint estate as a single entity representing that estate as a partner. Despite this variation in practice on these and some other occasions the successive partnerships only ever treated such trust estate interests as a single interest. Where joint trustees were registered as the representatives of the estate, they were only ever treated as being a single member of the partnership in question in their joint capacities.

173 The answers given to question 2 mean that the plaintiffs' claims for relief arising out of the impugned transactions must necessarily fail. The answers given could lead to that part of the plaintiffs' claims being dismissed if a motion in that respect were made on behalf of the defendants. That leaves the claims for compensation for alleged unauthorised commissions paid to the management committee which have not been dealt with at all. I will hear submissions from the parties as to how that remaining issue should be dealt with but it would seem appropriate to give directions to allow a trial of that issue to be conducted in the event that those claims are still to be pursued.