• Lawyers in Sydney
• Lawyers in Melbourne
• Lawyers in Brisbane
• Lawyers in Perth
• Family lawyers
• Employment lawyers
• Criminal lawyers
• Wills and estates lawyers
• Find a lawyer

Legislation Cited: Civil Procedure Act 2005 (NSW)
Corporations Act 2001 (Cth)
Partnership Act 1892 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited: Curac v Morey-Hype [2006] NSWSC 1171
Hamod v New South Wales [2011] NSWCA 375
Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213
Peter Holmes Investments Pty Ltd v S&C Nicola Pty Ltd (No 3) [2024] NSWSC 965
Pirrottina v Pirrottina (No 2) [2024] NSWSC 1053
Segal v Sharma [2022] NSWSC 496
Segal v Sharma; In the matter of South West Radiology Pty Ltd (No 3) [2026] NSWSC 543
Shazbot Pty Ltd v Warner Capital Pty Ltd (No 6) [2024] NSWSC 81
Singh v Singh (No 2) [2024] NSWSC 1269

Texts Cited: N.A.

Category: Costs

Parties: 2018/190679
Phillip Segal (plaintiff)
Praneal Dutt Sharma (first defendant)
Greg Chen (second defendant)
Adam Preiner in his capacity as receiver and manager of the property, assets and undertaking of the SWR Holding Unit Trust (third defendant)
Glenn Ian Livingstone in his capacity as liquidator, receiver and manager of South West Radiology Pty Limited (In Liquidation) in its own right and in its capacity as trustee of the SWR Holding Unit Trust (fourth defendant)
2018/381397
Praneal Sharma & Associates Pty Ltd (first plaintiff)
Praneal Dutt Sharma (second plaintiff)
South West Radiology Pty Ltd (Administrator Appointed) (first defendant)
Phillip Segal (second defendant)
Yanyi Pty Ltd (third defendant)
Melita Segal as trustee for Segal Family Trust (fourth defendant)
Rosalina Chen as trustee for Yanmin Trust (fifth defendant)

Representation: 2018/190679
Counsel:
P Segal (self-represented) (plaintiff)
E T Finnane (first defendant)
J Hynes (fourth defendant)
No other appearances
Solicitors:
Uther Webster & Evans (first defendant)
Bridges Lawyers (fourth defendant)
No other appearances
2018/381397
Counsel:
E Finnane (plaintiffs)
P Segal (self-represented) (second defendant)
J Hynes (liquidator/receiver) (interested party)
No other appearances
Solicitors:
Uther Webster & Evans (plaintiffs)
Bridges Lawyers (liquidator/receiver) (interested party)
No other appearances

File Number(s): 2018/190679; 2018/381397

Publication restriction: N.A.

JUDGMENT

Background

1. On 18 May 2026, I gave reasons in relation to two applications. The first application concerned a notice of motion filed by Dr Praneal Sharma on 22 December 2025 by which he sought payment out of funds held in Court, representing the proceeds of two dissolved partnerships. The second concerned an interlocutory application filed on 23 December 2025 by Mr Glenn Livingstone, the liquidator and receiver of South West Radiology Pty Limited (in liquidation) (SWR), seeking judicial advice concerning the proper treatment of those funds. Both applications involved the question of whether any set-off pursuant to s 553C of the Corporations Act 2001 (Cth) should be applied. I answered that question in the negative, as contended for by Mr Livingstone and contrary to Dr Sharma’s submissions. The interlocutory application also sought ancillary orders, including the approval of Mr Livingstone’s remuneration. My reasons were published as Segal v Sharma; In the matter of South West Radiology Pty Ltd (No 3) [2026] NSWSC 543.

2. After delivering my reasons, I gave the parties an opportunity to provide short minutes of order to give effect to my reasons and dispose of the two applications. The parties were able to agree (or not oppose) various orders but remained in dispute about some questions as to costs. These reasons deal with that dispute.

3. The proceedings have a complex history which I do not need to canvass in these reasons. Much of the history is addressed in reasons delivered by Slattery J: see Segal v Sharma [2022] NSWSC 496. My earlier reasons address what I referred to as the tail end of the proceedings. For present purposes, those reasons should be taken as read. I will use the same abbreviations that are used in my earlier reasons.

The dispute about costs

4. The principal protagonists in the earlier proceedings before me were Dr Sharma and Mr Livingstone. The dispute between the parties, on both applications, turned on a novel and reasonably difficult question concerning the application of s 553C of the Corporations Act.

5. Mr Livingstone and Dr Sharma largely agree about the appropriate orders. In broad terms, they agree that a portion of Mr Livingstone’s costs, as well as Dr Sharma’s costs, should be paid from the funds held in Court on behalf of the Segal/Sharma partnership and the Segal/Sharma/Chen partnership.

6. Dr Sharma submits that his costs should be paid from the partnership funds held in Court because, following dissolution of the partnership, the partners retained rights and obligations in respect of the steps necessary to wind up partnership affairs, pursuant to s 38 of the Partnership Act 1892 (NSW). He submits that his unsuccessful set-off argument was advanced for the benefit of all partners and was reasonably arguable. He seeks reimbursement of his ordinary (not indemnity) costs from the partnership funds in proportion to the funds held for each partnership and asks for those costs to be fixed as a gross sum of $48,870.66 to avoid further delay and expense. As to Mr Livingstone’s costs, Dr Sharma supports a compromise under which 50% of Mr Livingstone’s costs are borne by the partnership funds, which reflects an estimate of the portion of the work attributable to the set-off question. Dr Sharma submits that Mr Livingstone’s costs, in relation to the s 553C issue, should be fixed on a gross sum basis in the amount of $41,706.76.

7. Mr Livingstone submits that, being substantially successful in both applications, including on the issue of whether a statutory set-off under s 553C of the Corporations Act applied, he holds a clear entitlement to costs. He argues that because the dispute arose in the context of an external administrator’s application for judicial advice on a complex and novel issue, it is appropriate for both his costs and Dr Sharma’s costs relating to the set-off issue to be paid from the partnership funds held in Court. Mr Livingstone submits that the Court benefitted from having competing submissions on the question.

8. Mr Livingstone initially agreed that his costs to be paid out of the partnership assets in respect of the s 553C issue should be fixed in the amount of $41,706.76. He subsequently took the position that he should have a further $19,500.80 added to that amount on account of the legal costs incurred for work undertaken following judgment (including the costs of preparing evidence and submissions in relation to the contest about costs). He seeks a gross sum costs order fixed at $61,207.56. Dr Sharma does not agree to the additional amount.

9. The orders propounded by Dr Sharma and Mr Livingstone are opposed by Dr Phillip Segal. Dr Segal was not an active participant at the hearing before me but is a party and has an interest in the outcome. Dr Segal submits that costs should follow the event. He contends that Dr Sharma was wholly unsuccessful in advancing the set-off argument and resisting the orders sought by Mr Livingstone. He argues that Mr Livingstone’s costs should not be paid from partnership or liquidation assets, as doing so would diminish funds available to other interested parties, including himself. He submits that Dr Sharma (and his related company) should pay Mr Livingstone’s costs on the ordinary basis. Dr Segal also submits that Dr Sharma’s own costs should not be reimbursed from the partnership funds because Dr Sharma pursued the litigation in his own interests, seeking a larger distribution through the proposed set-off.

Determination and orders

10. Subject to the area of disagreement, I am satisfied that the orders propounded by Mr Livingstone and Dr Sharma are appropriate.

Dr Sharma’s costs

11. While it might be accepted that Dr Sharma did not participate in the proceedings purely out of altruism, his arguments, had they succeeded, would have benefitted the partners in both partnerships. This is because, if a s 553C set-off was available, the practical consequence was that all of the funds in Court would be remitted to the partners, and SWR would have no assets: see Segal v Sharma (No 3) at [24]. Dr Sharma’s role in these proceedings can therefore properly be seen as one undertaken in the winding up of the affairs of the partnerships.

12. The overall financial interests of Dr Sharma and Dr Segal is complicated by the fact that they each have interests as partners and as creditors of SWR. Their relative interests as partners and as creditors do not align. However, I do not see that as detracting from the need to wind up the partnership in a manner that is most favourable to the partners in their capacity as partners. Dr Greg Chen does not oppose a gross sum costs order in favour of Dr Sharma.

13. In Shazbot Pty Ltd v Warner Capital Pty Ltd (No 6) [2024] NSWSC 81, Parker J held:

[66] Both parties agreed that the traditional rule in partnership actions was that, generally, the costs of proceedings for the winding up of a partnership were paid out of the partnership assets. But that general rule did not apply in all cases. In Meekin v Gersbach (Supreme Court of New South Wales, 6 August 1997, unrep), McLelland CJ in Eq stated, at 2:

The distinction to be drawn is between proceedings which are necessary for the administration of partnership assets where there is no relevant fault on either side, on the one hand, and proceedings which are rendered necessary by reason of the default of one of the partners, on the other. When the proceedings are caused by such default there is normally good reason not to order payment of costs out of the partnership assets, but rather to order costs against the partner in default, at least up to the conclusion of the hearing …

[67] His Honour went on to quote from the 16th edition of Lindley & Banks on Partnership (R I’Anson Banks, Lindley & Banks on Partnership (16th ed, 1990, Sweet & Maxwell)) at [23–112]:

… it has long been an established rule that all the costs of dissolution proceedings should be paid out of the partnership assets, unless there is a good reason for making some other order. Where, however, such proceedings are, in reality, commenced in order to obtain an adjudication on some disputed claim between the partners, the unsuccessful litigant will normally be ordered to pay the costs up to the date of trial.

[68] In Murray v Feros [2019] NSWSC 260 (a case referred to by both parties in their submissions), at [51]–[52], I described proceedings of the type referred to in Lindley & Banks’ second proposition, by way of shorthand, as “adversarial”. The current edition (R I’Anson Banks, Lindley & Banks on Partnership (21st ed, 2022, Thomson Reuters)) at [23–204]–[23–206] emphasises the court’s overriding discretion but is otherwise in substantially the same terms.

14. In Peter Holmes Investments Pty Ltd v S&C Nicola Pty Ltd (No 3) [2024] NSWSC 965, Parker J at [54] quoted the above passage in Shazbot, and held:

Accounting proceedings are an ordinary incident of the winding up of a partnership by the Court. The general rule that the costs of the proceedings are ordinarily paid out of the partnership assets unless the need for the accounting results from some default on the part of one of the partners, therefore applies to such proceedings.

15. Hamilton J in Curac v Morey-Hype [2006] NSWSC 1171 held at [5]:

… the rule is “to pay the costs of an action for dissolution out of the partnership assets unless there is good reason to the contrary”. The basis for this as illustrated by Jessel MR in Hamer v Giles (1879) 11 Ch D 942 is that these costs should be treated as part of the “necessary administration” of the partnership. If, of course, some substantive dispute between the parties is also determined in the winding up proceedings, then the situation changes and there is a reversion to the ordinary rules as to costs…

Hamilton J’s observations were quoted with approval in Pirrottina v Pirrottina (No 2) [2024] NSWSC 1053 at [52] (Rees J) and Singh v Singh (No 2) [2024] NSWSC 1269 at [36] (Pike J).

16. Dr Sharma’s application for a gross sum costs order is supported by the affidavit evidence of Mr Michael Garvin, who is Dr Sharma’s solicitor. He gives evidence about Dr Sharma’s actual costs and applies a discount of 20% to the solicitor costs to identify the figure of $48,870.66 as an amount to reflect costs that would likely be recoverable on the ordinary basis. The principles as to the power to make a gross sum costs order are well-established: see Manariti Plumbing Pty Ltd v Universal Property Group Pty Ltd (No 2) [2025] NSWCA 185 at [30]-[38] (Free JA, McHugh and Ball JJA agreeing).

17. I am satisfied that there should be a gross sum costs order in Dr Sharma’s favour in that amount. It is desirable that this order be made to facilitate the efficient dissolution of the partnerships with minimum expense.

Mr Livingstone’s costs

18. Mr Livingstone incurred costs by seeking judicial advice in relation to the set-off issue and also in respect of the application for approval of his remuneration. As to remuneration, Mr Livingstone’s application was not opposed by Dr Sharma. The costs associated with that application are properly a cost in the external administration of SWR and should be borne out of the assets of the company. They should not be borne by Dr Sharma personally. That outcome is reflected in the orders propounded by Mr Livingstone and Dr Sharma.

19. There remains the question of whether the costs incurred by Mr Livingstone in contesting the question about the operation of s 553C of the Corporations Act should be borne by Dr Sharma alone or by the partnerships. The s 553C issue arose both on the notice of motion filed by Dr Sharma by which he sought payment out of funds held in Court, and the interlocutory application filed by Mr Livingstone seeking judicial advice. Mr Livingstone was successful. I accepted his contention that s 553C had no application in the circumstances and granted the judicial advice that he sought. He is entitled to have an order for costs. The question for determination concerns who should pay those costs.

20. The position reached by agreement between Mr Livingstone and Dr Sharma (which is not opposed by Dr Chen), is that in respect of the set-off issue, Mr Livingstone should recover 50% of his costs calculated on the ordinary basis for the period up to 18 May 2026 from the assets of the partnerships. The 50% figure reflects a compromise having regard to: (a) the fact that Mr Livingstone would have made the application for directions irrespective of opposition from Dr Sharma; and (b) Mr Livingstone applied for relief that was not opposed by Dr Sharma, including approval of remuneration and the discharge from his role as receiver and manager. The affidavit of Mr Benjamin Dibden, who is Mr Livingstone’s solicitor, persuades me that, having regard to the time spent in preparation and the hearing in respect of the issues, the figure of 50% reflects a reasonable division of costs as between the application for remuneration and discharge on the one hand and the issue of set-off under s 553C on the other.

21. I am satisfied that it is reasonable that the partnerships bear the burden of 50% of Mr Livingstone’s costs (calculated on the ordinary basis). The reason for that is the same as the reason why the partnerships should bear Dr Sharma’s own costs (on the ordinary basis). The contest should properly be seen as arising out of the proper dissolution of the partnerships.

22. The s 553C question that arose for determination in the earlier proceedings before me was novel and not without difficulty. I was assisted by submissions advanced by counsel for Dr Sharma. Although the submissions did not succeed, they were not without merit. Dr Sharma’s participation in those proceedings did not relevantly lengthen the hearing. Having a contradictor will often facilitate the proper disposition of an application and did so on this occasion. Dr Sharma’s contentions were made in the interests of maximising the return to the partners in their capacity as partners and the partnerships should bear those costs.

23. The gross sum amount of $41,706.76 for Mr Livingstone’s costs up to 18 May 2026 is supported by Mr Dibden’s evidence. I am satisfied that there should be a gross sum costs order in this amount.

24. Mr Livingstone seeks a further $19,500.80 as an additional amount for costs and disbursements incurred since 18 May 2026. That is mainly on account of the time and cost spent negotiating the final form of orders, preparing the evidence on the application for final orders, and the preparation of submissions. Of the $19,500.80, $11,000 reflects counsel costs. The effect of the claim for the additional $19,500.80 is that this amount would be borne by the partners rather than from the assets of SWR.

25. As to the claim for the additional $19,500.80, I propose to take a broad brush and impressionistic approach: see Harrison v Schipp (2002) 54 NSWLR 738; [2002] NSWCA 213 at [22] and Hamod v New South Wales [2011] NSWCA 375 at [819]-[820].

26. I accept that Mr Livingstone has been put to additional cost because of the dispute about the proper orders as to costs. Part of that cost was incurred because of the opposition from Dr Segal. However, some of the costs would naturally have arisen in any event as part of his application for remuneration and discharge. There was some compromise between Dr Sharma and Mr Livingstone about costs, but it was still necessary for evidence to be prepared to support the agreed position as to costs.

27. I consider that of the $19,500.80 in costs incurred by Mr Livingstone in respect of the work done after 18 May 2026, approximately 50% (being $10,000) should be borne by the partners and the balance should be recovered out of the assets of SWR in the external administration of the company.

28. I am satisfied that there should be a gross sum costs order in Mr Livingstone’s favour in the amount of $51,706.76. It is desirable that this order be made to facilitate the efficient winding up of the partnerships with minimum future expense. The effect of the order is that Mr Livingstone will recover that amount from the assets of the partnerships, reflecting his success against them on the s 553C set-off issue. The balance of his costs will be recoverable in the winding up of SWR, in accordance with s 556 of the Corporations Act.

29. For these reasons, I will make the notes, directions and orders set out below. I have taken the proposed order provided to me by Mr Livingstone and Dr Sharma and made changes to allow for my reasons and to correct for various typographical errors.

THE COURT NOTES THAT:

1. There are funds held in Court in Supreme Court of New South Wales Proceedings No. 2018/190679 (the Partnership Proceedings) on behalf of the Segal Sharma Partnership (the SSP) and the Segal Sharma Chen Partnership (the SSCP).

THE COURT DIRECTS THAT:

2. Pursuant to s 90-15 of Schedule 2 of Corporations Act 2001 (Cth) (the Corporations Act), Glenn Ian Livingstone (Livingstone) in his capacity as:

(a) liquidator of South West Radiology Pty Ltd (in liquidation) ACN 106 041 007 (the Company); and (b) receiver and manager of the property, assets and undertaking of the SWR Holding Unit Trust (the Trust),

is justified in not applying any set-off with respect to the debts owed by:

(c) the SSP to the Company in its capacity as trustee of the Trust; and (d) the SSCP to the Company in its capacity as trustee of the Trust.

THE COURT ORDERS THAT:

The funds held in Court

3. Pursuant to r 55.11 of the Uniform Civil Procedure Rules 2005 (NSW) (the UCPR) the sum of $382,754 be paid to Livingstone from the funds held in Court in the Partnership Proceedings on behalf of the Segal Sharma Partnership, to be disbursed in accordance with these orders.
4. Pursuant to r 55.11 of the UCPR the sum of $40,000 be paid to Livingstone from the funds held in Court in the Partnership Proceedings on behalf of the Segal Sharma Chen Partnership, to be disbursed in accordance with these orders.
5. Following compliance with Orders 3 and 4 above, pursuant to r 55.11 of the UCPR, Praneal Sharma and Praneal Sharma & Associates Pty Ltd’s costs and Livingstone’s costs of and incidental to the notice of motion filed on 22 December 2025 and prayers 1, 2, 3 and 4 of the interlocutory process filed on 23 December 2025 (the Costs), be paid from the balance of the funds held in Court in these Proceedings on behalf of the SSP and the SSCP in the following proportions:

(a) 85.09% of the Costs are to be paid from the funds held on behalf of the SSP; and (b) 14.91% of the Costs are to be paid from the funds held on behalf of the SSCP.

6. Following compliance with Order 5 above, pursuant to r 55.11 of the UCPR:

(a) the amount of $119,900 be deducted from the balance of the monies held in Court on behalf of the SSCP and credited to the balance of the monies held in Court on behalf of the SSP; (b) the balance of the monies held in Court on behalf of the SSCP (after the deduction referred to in paragraph 6(a) above) be paid out of Court as follows:

(i) 40% to be paid to the Plaintiff (Phillip Segal); (ii) 40% to be paid to the First Defendant (Praneal Sharma); and (iii) 20% to be paid to the Second Defendant in the 2018/190679 proceedings (Greg Chen);

(c) the balance of the monies held in Court on behalf of the SSP (including the amount of $119,900 credited under paragraph 6(a) above) be paid out of Court as follows:

(i) 50% to be paid to the Plaintiff (Phillip Segal); and (ii) 50% to be paid to the First Defendant (Praneal Sharma).

Remuneration of the Receiver

7. The remuneration of Livingstone in acting as the receiver and manager of the property, assets and undertakings of the Trust for the period 11 September 2024 to 31 October 2025 be determined in the sum of $16,188.50 (excluding GST).
8. The remuneration of Livingstone in acting as the liquidator of the Company for the period 17 September 2019 to 31 October 2025 be fixed in the sum of $150,964.75 (excluding GST).

Other orders

9. Livingstone be permitted to draw from the amounts received under Orders 3 and 4, the amount referred to in Order 7, together with any other costs incurred by Livingstone of and incidental to these Proceedings, which have not been satisfied by Order 5 above.
10. After compliance with Order 9 above, any surplus held by Livingstone from the sums paid under Orders 3, 4 and 5 of these Orders:

(a) be treated as an asset recovered in the winding-up of the Company; and (b) be distributed in accordance with s 556 of the Corporations Act.

11. The requirements in r 26.5 of the UCPR for Livingstone in acting as the receiver and manager of the property, assets and undertakings of the Trust to file and pass accounts be dispensed with.
12. Livingstone be discharged as receiver and manager of the Trust, this order to take effect following:

(a) compliance with Order 9 above; and (b) the completion of the steps referred to in [87] of the Affidavit of Glenn Ian Livingstone sworn 17 November 2025 (to the extent that they apply to the Trust).

13. For the avoidance of doubt, Livingstone will remain in office as liquidator following these orders and finalise the affairs of the winding up of the Company and the distribution of the funds of the Company, including those referred to in Order 10 above, in accordance with s 556 of the Corporations Act.
14. The costs referred to in Order 5 be fixed as follows:

(a) Livingstone’s costs are fixed in the amount of $51,706.76. (b) Praneal Sharma and Praneal Sharma & Associates Pty Ltd’s costs are fixed in the amount of $48,870.66.

15. Orders 3, 4, 5, 6, 9, 10, 11 and 12 be stayed for a period of 28 days from the date of these Orders.

**********