Naumburger in his capacity as Executor of the estate of the late Harry Norman Freedman v Berger [2019] NSWSC 1700 (3 December 2019)

Last Updated: 3 December 2019

Supreme Court New South Wales

Case Name:	Naumburger in his capacity as Executor of the estate of the late Harry Norman Freedman v Berger
Medium Neutral Citation:	[2019] NSWSC 1700
Hearing Date(s):	24 July 2019; 5 August 2019
Date of Orders:	3 December 2019
Decision Date:	3 December 2019
Jurisdiction:	Equity
Before:	Ward CJ in Eq
Decision:	1. Order the parties on or before 20 December 2019 to serve on the other party a list of all MBBF and personal matters taken by that party (or in the case of the respondents, by the late Mr Freedman himself or in partnership with Ms Gopalan) after the dissolution of the MBBF partnership on 21 June 2013 and, in respect of each such matter, to provide details of all costs or fees recovered in respect of those files; the costs written off or discounted on those files; the details of creditors paid and the amounts so paid; and the amounts of any moneys collected and not paid to creditors in respect of those files. 2. Dismiss with costs the notice of motion filed by the defendants seeking the appointment of a receiver in respect of the dissolved MBBF partnership. 3. List the matter for further directions at 9am on 11 February 2020 before Ward CJ in Eq.
Catchwords:	CIVIL PROCEDURE — Interim preservation — Appointment of receiver – in relation to a dissolved law practice – where principal proceedings include a claim against the applicant in relation to misappropriated partnership funds – whether a receiver will be appointed practically as a matter of course – whether would be futile to appoint a receiver – whether it would be ruinous to appoint a receiver – application dismissed with costs – not appropriate for a receiver to be appointed as not a proper use of partnership funds and not in the interests of the partnership’s creditors.
Legislation Cited:	Supreme Court Act 1970 (NSW), s 67 Uniform Civil Procedure Rules 2005 (NSW), r 26.4
Cases Cited:	Berger v Council of the Law Society of New South Wales [2019] NSWCA 119 Bernard v Davies (1862) 32 LJ Ch 41 Boehm v Goodall [1911] 1 Ch 155 Bolton v Darling Downs Building Society [1935] St R Qd 237 Byrne v Byrne [2011] NSWSC 1437 Choudhri v Palta [1994] 1 BCLC 184; [1992] BCC 787 Cuming v Hennessy [2005] NSWSC 1219 Daniels v Smith [2006] NSWSC 1424 Davey v Donnelly (Supreme Court (NSW), McLelland J, 16 May 1991, unrep) Duffy v Super Centre Development Corporation Ltd (1967) 1 NSWLR 382 Eady v Eady [1895] NSWLawRp 25; (1895) 16 LR (NSW) Eq 70 Fitz-Gibbon v Khoury (Supreme Court (NSW), Powell J, 1 March 1985, unrep) Gumbleton v Hewitt [2012] NSWSC 886 Hill v Venning (1979) 4 ACLR 555 In re Hallett’s Estate; Knatchbull v Hallett (1880) 13 Ch D 696 Liquor National Wholesale Pty Ltd v The Redrock Co Pty Ltd [2007] NSWSC 392 Morkaya v Parkinson; Parkinson v Morkaya [2008] NSWSC 1050 Price v Price [1904] ArgusLawRp 23; (1904) 29 VLR 719 Rosanove v O’Rourke [1988] 1 Qd R 171 Rowlands v MacDonald [2002] NSWSC 282 Shirlaw v Taylor [1991] FCA 415; (1991) 31 FCR 222 Tate v Barry [1928] NSWStRp 41; (1928) 28 SR (NSW) 380 Toker v Akgul (Court of Appeal (NSW), 2 November 1995, unrep)
Texts Cited:	P Radan, Principles of Australian Equity and Trusts (3rd ed, 2016, LexisNexis Butterworths) P W Young, C Croft and M L Smith, On Equity (9th ed, 2009, LawBook Co) R I Banks (ed), Lindley & Banks on Partnership (19th ed, 2017, Sweet & Maxwell)
Category:	Procedural and other rulings
Parties:	Rodney Naumburger in his capacity as Executor of the estate of the late Harry Norman Freedman (First Plaintiff) Adrian Rudy Freedman and Ty Matthew Freedman as trustees of the MAHD MBBF Trust (Second and Third Plaintiffs) Victor Berger (First Defendant) Victor Berger as trustee of the Berger MBBF Trust (Second Defendant)
Representation:	Counsel: CF Stanford (Plaintiffs, Solicitor) First Defendant (in person) Solicitors: Stanford Lawyers (Plaintiffs)
File Number(s):	2013/327799
Publication Restriction:	Nil

JUDGMENT

1. HER HONOUR: Before me for hearing on 24 July 2019 and 5 August 2019 was an application by the defendant (Mr Victor Berger) who is named as a defendant both in his personal capacity and as co-trustee of the Berger MBBF Trust brought by notice of motion filed 27 June 2019 for the appointment of receivers to the dissolved legal practice of Milne Berry Berger & Freedman (MBBF) and consequential orders.
2. The respondents to the notice of motion are Mr Rodney Naumburger (in his capacity as the executor of the estate of the late Mr Harry Norman Freedman) (the first plaintiff in the principal proceedings) and Mr Adrian Rudy Freedman and Mr Ty Matthew Freedman (in their capacity as trustees of the MAHD MBBF Trust) (the second and third plaintiffs in the principal proceedings). I refer to them collectively as the respondents and plaintiffs interchangeably. They oppose the application.
3. The principal claim in the proceedings is a claim by the respondents (in their capacity as plaintiffs) against Mr Berger for a sum of about $58,000 (for half the deposit and proceeds of a particular sale transaction) and for misappropriation of partnership funds following the end of the MBBF partnership. Also sought in the principal proceedings (but no longer pressed on the basis that it is submitted that this would now be futile, see T 14; 24/7/19) was an order for the appointment of a receiver.
4. The motion was listed for hearing in the applications list. I heard the motion on 24 July 2019. Mr Berger, a former solicitor, appeared for himself on the application. After I had heard the application and had reserved judgment, Mr Berger communicated with my chambers complaining that he had been denied procedural fairness by not being able to make his submissions “as planned” (a complaint that he later clarified as being that his opponent, Mr Stanford, had delivered his documents “very late in the piece” and that he, Mr Berger, did not have the same opportunity that his opponent had had). Without entering into debate as to the merits of that complaint (though it should be noted that Mr Berger had in my opinion had ample opportunity on 24 July 2019 to put whatever submissions he wanted to put in relation to his application), and with a view to the just, quick and cheap resolution of the real issues in dispute, I listed the matter for further oral submissions to be made by Mr Berger after usual court sitting hours on 5 August 2019 and (over the objection of the respondents) heard those submissions. To a large extent those submissions replicated the submissions that had already been made by Mr Berger on 24 July 2019, though on the later occasion Mr Berger took me through a supplementary folder of documents in support of his application.
5. Having considered those as well as the earlier submissions, I am of the view that it is not appropriate (particularly having regard to the history of the matter and the limited funds that are apparently available to bear the costs of a receivership) to make the orders sought by Mr Berger. I set out my reasons for that conclusion below.

Background

6. The following summary of the background is taken from the materials and submissions put before me on this application. I make no findings here as to any disputed facts referable to the substantive dispute between the parties.
7. As adverted to above, the principal proceedings relate to disputes arising out of the dissolution on 21 June 2013 of MBBF, the legal practice conducted for some time (in different iterations – see below) by the late Mr Freedman and Mr Berger (in partnership for some of that period with Ms Mittu Gopalan). At the time of dissolution of the partnership, the late Mr Freedman and Mr Berger were the two equity partners, and Ms Gopalan was a salaried partner.
8. The legal practice formerly known as Milne Berry Berger Solicitors (MBB) was conducted from on or about 1 July 1997 until 1 July 2010 by the late Mr Freedman and Mr Berger. Then, from 1 July 2010, the legal practice was conducted under the name MBBF by the late Mr Freedman, as trustee of the MAHD MBBF trust, and Mr Berger, as trustee of the Berger MBBF Trust.
9. The partnership traded from a property at Gladesville (the Gladesville property), which was owned jointly, in equal shares, by the late Mr Freedman and Berfox Pty Ltd (Berfox) (a company of which Mr Berger was a director and shareholder and whose affairs were conducted or managed by Mr Berger) and from another property in Elizabeth Street, Sydney.
10. On or about 29 May 2013, following an audit of the Berger MBBF’s trust account in April 2013, the Law Society of New South Wales (Law Society) commenced an investigation into suspected breaches of the trust account regulations relating to the MBBF practice.
11. On 17 June 2013, following that investigation, the Law Society concluded that there was a deficiency in the Berger MBBF trust account of $205,258.86, which had been wrongly remitted out of the trust account by Mr Berger.
12. On or about 20 June 2013, Mr Freedman, in his own capacity and as trustee of the MAHD MBBF Trust, sent notice to Mr Berger dissolving the partnership on and from 21 June 2013. (Mr Berger harbours suspicions as to the timing of the decision to terminate the partnership – see below; however, nothing turns on this for the purposes of the present application.)
13. The respondents say that on or about 21 June 2013, Mr Berger paid the sum of $205,258.86 into the Berger MBBF trust account (being the amount of the deficiency identified by the Law Society’s report).
14. On 1 July 2013, the Law Society resolved: that Mr Berger had misappropriated trust funds; to suspend his practising certificate; and to appoint Mr Rick Flynn as Manager of the Berger MBBF trust account. (There was litigation arising out of that suspension, to which Mr Berger has referred to in his submissions but it is not necessary here to go into the details of that litigation.)
15. On or about 30 July 2013, Mr Freedman and Berfox entered into a contract to sell the Gladesville property. Mr Freedman and Berfox retained MBBF to act for them on their sale of the Gladesville property. Mr Berger was the MBBF partner responsible for the conduct of the sale of the Gladesville property.
16. Following termination of the MBBF partnership, Mr Freedman and Ms Gopalan together commenced a new legal practice in partnership (Messrs Freedman and Gopalan); and Mr Berger commenced trading under the previous firm name (MBB) under the supervision of another solicitor (his cousin, Mr Tibby Morgenstern).
17. Following the termination of the partnership, Mr Freedman and Mr Berger entered into an agreement as to the winding up of the affairs of MBBF, including the collection of debtors, banking of debtors funds recovered into MBBF’s bank account and payment of creditors from those funds.
18. On 30 October 2013, Mr Freedman commenced the present proceedings against Mr Berger. The claim brought against Mr Berger in these proceedings is: for an amount of $57,333.75 (being Mr Freedman’s half share of the deposit and an alleged disparity in the amounts of the balance proceeds of sale received by Mr Freedman and Berfox following the sale of the Gladesville property); that Mr Berger misappropriated trust and other moneys of MBBF and its clients (in that, after the dissolution of the partnership, Mr Berger billed files of MBBF clients for which he was the responsible partner, took steps to recover fees and pursued debtors, and, after recovering fees from debtors, did not deposit all recovered fees into a joint MBBF bank account but instead appropriated at least about $663,310.81 to his own use and benefit); and that Mr Berger has failed to render true accounts and information in relation to a substantial number of client files, totalling $581,698.
19. In his defence to the claim brought by the plaintiffs, Mr Berger has pleaded as follows. He admits that he was personally responsible for the conduct of the sale of the Gladesville property; however, he says that he conducted the sale as a director of Berfox ([17A] of his defence); he disputes that the deposit for the sale of the Gladesville property was paid to the agent to hold on trust pending completion of the sale ([18] of his defence); he says that he has accounted to Mr Freedman for his one half share of the deposit ([19] of his defence); and agrees that Mr Freedman’s one half share of the deposit was paid to himself but says that he was entitled to take the money (on the basis that Mr Freedman was indebted to him for certain moneys) ([20] of his defence). Mr Berger agrees that he received the “disparity” amount and says that he received it as fees and disbursements for the sale ([17B] of his defence). He otherwise denies liability to Mr Freedman as claimed.
20. Mr Berger generally admits that he owed Mr Freedman fiduciary and other duties, and claims that Mr Freedman similarly owed fiduciary and other duties to him; generally denies that he breached his fiduciary and other duties and misappropriated clients’ costs to himself; admits that, following the dissolution of the MBBF partnership he billed files of MBBF clients for which he was the responsible partner, took steps to recover fees and pursue debtors, and after recovering fees from debtors of MBBF did not deposit all recovered fees into a MBBF bank account but does not admit that he appropriated at least about $663,310.81 for his own use and benefit. Mr Berger denies that he has failed to pay to the respondents (i.e., the plaintiffs) their entitlement, and says that he has accounted to them ([48] of his defence; and Schedule 1 thereto).
21. Mr Berger says that Mr Freedman and Ms Gopalan have failed to account in a substantial number of matters of which they had carriage ([60] of his defence and Schedules 1 and 2 thereto).
22. Further, Mr Berger filed a cross-claim but has since discontinued that cross-claim.
23. On 7 April 2015, Mr Freedman died. On 16 November 2015, Mr Naumburger (an accountant whose firm had provided accounting services to the MBBF partnership or legal practice) was appointed executor of Mr Freedman’s deceased estate.
24. On 27 November 2015, the late Mr Freedman’s sons (Mr Adrian Freedman and Mr Ty Freedman) were appointed trustees of the MAHD MBBF Trust.
25. The status of progress of the principal proceedings is not clear. From the Court file it appears that nothing has been filed since the amended defence was filed on 17 July 2019.

Submissions of Mr Berger (the defendant)

26. In the first instance, by way of submissions, Mr Berger relied upon an affidavit sworn by him on 22 July 2019 in which he deposed to various facts, matters and circumstances as to his claim that the late Mr Freedman and his successors (the plaintiffs) have failed to act in the best interests of MBBF (including, their alleged failure to exercise rights which Mr Berger says he and the plaintiffs had “to bind the partners of Freedman & Gopalan” and “in so doing acquiesced in actions which denied MBBF rights it had to inspect documents so as to get in its assets”). Reliance was also placed on an affidavit sworn by Mr Berger on 3 June 2019. (A further affidavit filed on 27 June 2019 was not read but documents annexed thereto were tendered.)
27. Mr Berger maintains that he seeks to protect the assets of MBBF and that includes to: take action duly to recover debtors and/or work in progress from its clients; appoint a receiver to take such action on behalf of MBBF “since the efforts to achieve same by the parties jointly has proved unmanageable and unduly delayed which has resulted in loss and it appears there is no other course available than such actions by a receiver”; and protect the interests of creditors. In oral submissions the basis on which he sought the appointment of receivers was put by Mr Berger by reference to the “great difficulty” he says there has been in reaching agreement on a variety of matters and where information he says has not been forthcoming despite his vigorous efforts to obtain partnership records (T 12.26; 24/7/19). Emphasis is placed on the fact that there is no good will as a result of past history between the parties (T 12.38, 24/7/19).
28. Mr Berger relies on the proposition that a receiver will be appointed practically as a matter of course (Tate v Barry [1928] NSWStRp 41; (1928) 28 SR (NSW) 380 (Tate v Barry)). He does not believe that the appointment could cause serious loss or hardship; says (as adverted to above) that in the circumstances of this matter there is no value of goodwill; and maintains that it is prejudicial to MBBF that the property of MBBF “is not in all respect [sic] under the management of any sole person”. Mr Berger argues that it is materially beneficial to MBBF to enable an independent person to act as receiver to manage MBBF “and under that persons supervision that person engages others, as is reasonable”. Mr Berger believes the delay in such an appointment has seriously prejudiced MBBF.
29. Mr Berger further contends that provision of security for the receiver’s costs is not necessary in circumstances where MBBF has approximately $85,000 in the trust account of the respondents’ solicitor (Mr Charles Stanford) and submits that it would be appropriate for orders to be made for the immediate payment of all funds in such trust account be paid to the receiver appointed or as such receiver directs.
30. Mr Berger says that Mr David Solomons, who has consented to being appointed as receiver of MBBF, is not previously known to him and is not intended to be engaged in any capacity other than as such receiver by him or anyone associated with him.
31. In oral submissions on 24 July 2019, Mr Berger made clear that he wants the receiver to recover money from former clients and, if not recovered, to investigate action taken by the former partners of the firm (including him – in that he says that he expects equally to be examined by the receiver – T 31.21; 24/7/19) in relation to the debtors and for an accounting of sums received (see T 12; 24/7/19).
32. His complaint is that there has been no bookkeeping or accounting work and nothing done other than the tax returns from 2013 (the response from Mr Stanford to this is that there were substantial fees owed to Mr Naumburger for work previously done and no funds for such an exercise).
33. Emphasis is placed by Mr Berger on two particular sums of money that he says, if recovered, would be enough to pay out the creditors (T 13.16, 24/7/19): first, a sum that he asserts Mr Freedman directed to be paid to Mr Freedman’s ex-wife (Ms Dina Glass) out of court proceedings in which the firm had acted and had obtained a costs order in her favour (an amount of $157,000); and, second, an amount of over $130,000 in cash that he claims was paid by a creditor (a Mr Grigora) (and that he believes was not properly accounted for) (see T 13.4; 24/7/19) (and see also the discussion at T 30; 24/7/19).
34. (Pausing here, as to the first of those complaints Mr Stanford says that “arguably” Mr Berger would be entitled only to half the costs and that in any event the quantum claimed does not take into account that one of the costs in those proceedings was counsel fees. Further, he says that this was the subject of an agreement between the late Mr Freedman and Mr Berger before Mr Freedman died (T 16.50; 24/7/19). Mr Berger denies that there was ever an “agreement” in relation to the sums in respect of Ms Glass (T 23.17; 24/7/19); he says that in November 2011 a document was left on his desk which is how he found out about the money that had been received in September 2009 (T 23-24; 24/7/19).)
35. On the present application, on 24 July 2019, Mr Berger raised a multitude of complaints, including: as to a dispute with Ms Gopalan in relation to documents; as to the reliability of the figures put forward by Mr Stanford (which he says are “awfully rubbery”); and as to obfuscation and delay (on the part of the respondents) in the process of winding up the partnership (see T 28; 24/7/19).
36. Mr Berger says that it took the respondents three years to file their statement of claim and another year or so to appoint a joint accountant (and then some ten months to issue letters to creditors) (T 18; 24/7/19). Mr Berger says that he has recovered $10,000 from one debtor; and that there are “serious matters” as to discounts and write-offs (T 18.48; 24/7/19).
37. At the hearing on 24 July 2019 (see T 19.8; 24/7/19), Mr Berger accused the other side of taking money as a result of which he says he is now facing bankruptcy. (Though foreshadowed by Mr Berger more than once, it does not appear that any trustee in bankruptcy has yet been appointed to his estate.) Mr Berger accuses the respondents of frustration of the winding up of the partnership. He says that Mr Freedman could have helped to recover money and did not do so; and he says that the respondents have played “ducks and drakes” in relation to receipt and management of funds (T 22.35, 24/7/19). Mr Berger says that he wants receipts from 2013 onwards – an account of receipts and distributions after the date of the “Dunne report” (i.e., a report by a bookkeeper, Ms Frances Dunne – discussed further below) to which Mr Stanford has referred (T 29; 24/7/19).
38. More than once, Mr Berger has emphasised that he relies on contemporaneous documents; he says that Mr Naumburger’s figures amount to speculation; and that the schedules to the statement of claim are arithmetically wrong (T 19; 24/7/19).
39. Although he has discontinued his cross-claim (as noted above), Mr Berger says he will allege the matters previously raised in his cross-claim in his defence to the proceedings (T 20; 24/7/19).
40. Mr Berger spoke about issues in relation to recovery of debts and write-offs of discounts (T 29.2; 24/7/19). He says that serious matters arise in that regard. He clearly wants an investigation into what happened in the course of the partnership (not just as to the position now the partnership has been dissolved) and complains that he was barred and excluded from the premises (T 31.31; 24/7/19). He says he is seeking a review by the receiver to do precisely the same thing as if this were a court proceeding; and that it is a “mathematical enquiry” (T 31.6; 24/7/19).
41. As already noted, after judgment was reserved, Mr Berger forwarded supplementary submissions and an additional court book (the contents of which were not tendered as such but will be treated as part of his submissions). In oral submissions on 5 August 2019, Mr Berger, in terms of any further submissions, was content to rely upon the affidavits he had filed and the submissions that he had filed; but drew attention to particular documents in the additional court book (explaining the significance he attributes to them).
42. Mr Berger’s submission was that this matter involves “a very, very serious and unfortunate case of credit” (T 3.47; 5/8/19). Mr Berger submitted that much of what the respondents (i.e., the plaintiffs) had to say was not supported by contemporaneous documents; and that assertions were made by Mr Stanford that are contradicted by documents.
43. As to the documents to which I was taken during the hearing of the supplementary submissions, they were as follows.
44. First, Mr Berger drew my attention to email communications between Ms Gopalan and Mr Freedman in late May 2013 apparently relating to the imminent receipt of funds in a particular matter, in which Mr Freedman posed the question “[d]o we need to discuss how to deal with that money?” and then in a subsequent email said “[s]hould we hide it somewhere em?” to which Ms Gopalan responded with a “smiley face” icon. (I assume that “em” was a reference to Ms Gopalan as in a previous email in the chain of email communications Mr Freedman started an email to Ms Gopalan with “[h]i emmy”.) Mr Berger maintains that the request was a peculiar request to be made in an email and that, for something as serious as that, they would have had a discussion about it or they have done it before. Mr Berger asked rhetorically how often did this “happen after the event” and says that he was greatly troubled by that approach which he apprehends or is concerned was “a fairly routine kind of approach to the affairs of the firm” (T 4; 4/8/17).
45. Mr Berger said that he had often worried about the fact that the partnership had been dissolved on 30 June 2013 but, “[f]or some reason, on 21 June 2013, the partners decided to dissolve it that day”. He suspects that this was something to do with the timing of money coming to the office and says that the appointment of a receiver will very quickly determine if he is right or wrong. He says that doing that process as a court process would be a costly, time-consuming exercise, “demanding a lot of wasted time of the Court and cost to the State”.
46. Second, Mr Berger pointed to an email from Mr Freedman to Ms Gopalan indicating that the relationship between the two partners was more than a professional one. Mr Berger says that that is a troubling thing, noting that “they are engaged in a process of dissolving a practice which has been in operation at that time, 80 years, now it’s 95 years since it’s been established”. He explained that it was a “very bewildering and distressing state of affairs” with which he now has to deal.
47. Third, Mr Berger referred to a series of emails between a Mr Don Doolan and himself. From his email details it appears that Mr Doolan was an accounts bookkeeper with whom Mr Berger had liaised with a view to him accepting an engagement as a debt collector client. Mr Berger relies on these emails to demonstrate that Mr Stanford’s recollection (in his affidavit at [16]) as to a conversation with Mr Doolan on 17 June 2016 is inconsistent with the email communications. What Mr Stanford deposes is that he had a telephone conversation with Mr Doolan (whom the parties had retained to collect certain assets of the partnership – debtors and some of the work in progress) in which Mr Doolan said, in effect, that he resigned his retainer following approaches and comments by Mr Berger; that Mr Berger wanted him to do the debt collection for the money he was owed; and that Mr Berger had been abusive and argumentative. Mr Berger rejects the suggestion by Mr Stanford that he (Mr Berger) was trying to favour his own creditors (i.e., his own work in progress and debtors) as against the work in progress and debtors of his partner; and says that the emails would prove that to the contrary. His complaint appears to be that Mr Stanford has not properly or responsibly deposed to the matters relating to this issue. Mr Berger’s complaint is that (see T 5.23; 5/8/19):

... I am trying to deal with it as best I can, and as truthfully as I can. These people have, in effect, destroyed my reputation. They’ve caused me to lose all my assets by spreading these stories and by even continuing, under affidavit, sworn documents, to say things that are not supported by, by contemporaneous records, to which they have access ... .

48. The email communications range from dates from 2013 through to April 2016. It is difficult to draw anything from those communications as to the reliability or otherwise of the account Mr Stanford deposes he was given by Mr Doolan (nor is it relevant to the present issue, as I explain in due course).
49. Fourth, Mr Berger next points to emails and other documents relating to the separation of Mr Freedman and Mr Freedman’s wife (Ms Glass). Mr Berger says that he had access to part of the partnership records in relation to the separation file in circumstances where he was “looking for the $157,000” that he said Mr Freedman’s wife denied ever having received (and which he says Mr Freedman told the Office of the State Legal Services Commissioner he gave to her or directed to her). Mr Berger emphasises a portion of what appears to be the text of a letter from Mr Freedman to Ms Glass (referred to as a draft proposal that Mr Freedman was apparently proposing to send to Ms Glass and about which he was seeking his solicitor’s thoughts). In particular, Mr Berger emphasises that (in part of the draft proposal that Mr Freedman was proposing to send to Ms Glass in which reference was made to Mr Freedman’s decision to split with Mr Berger) Mr Freedman refers to an “uncomfortable issue” between he and Ms Glass being the “need to account for the legal costs” in the Michell Sillar case, which it is said Ms Glass had negotiated and which it is said resulted in the payment of $120,000 to them personally “even tho[ugh] it was with respect to legal costs payable to the firm”; and in which concern was expressed that there might be tax consequences involved. Reference is also made to a passage that reads “[w]hile I appreciate that what we did not was not 100% kosher, I have never considered it to be morally wrong”. The context in which that remark is made includes the statement by Mr Freedman that:

VB [Mr Berger, presumably] had, and has, been using the resources of the firm for his own personal benefit for decades, and up until recently I have not held him to account. It was only until after three years ago when we introduced a very helpful management system of regular weekly reports did it become apparent as to the extent of what he was doing and the cost to the firm. At that time we had huge arguments and I demanded he repay all the disbursements he had taken out f [sic] the firm in recent times. This led to him looking thru the files and discovering the Michel[l] Sillar issue.

50. Mr Berger says (on its face inconsistently with the proposition that he found the separation file when he was looking for a $157,000 sum) that he found those papers on his desk and he assumes that a staff member must have left them there for him to become aware of the transaction.
51. Mr Berger emphasises that he is being sued by the plaintiffs for the disbursements and says in relation to this amount (which he says in a later email is acknowledged as having been paid), $8,000 of which was part of a process in the firm, that he obtained nothing for the work that he did for himself, nor did he claim any fees from Mr Freedman for work he did for himself. As to the case referred to in the above emails, it is said that costs were awarded by the court to a successful litigant and that “[t]hese people [i.e., Mr Freedman and Ms Glass] simply directed the costs to themselves”.
52. Mr Berger also perceives there to be contradictions as to the amount of moneys paid to Mr Freedman’s barrister who was briefed on his separation and property settlement (referring to a sum of $20,000 and a sum of $157,000) and informing me that the issue of Counsel’s fees was a matter of “having some accounting” between he and his partner some six months before (the barrister’s brief being said to be in February 2012).
53. The submission for Mr Berger in this regard was that “there are a whole list of contradictions that appear which unfortunately for them [i.e., the plaintiffs/respondents], [are] contained in contemporaneous records”, including reference to an issue between Mr Freedman and Ms Glass about who owned the Bondi property in which they lived. Mr Berger submitted in relation to the Bondi property that (from T 7.3; 5/8/19):

... Now it was in Mrs Glass’s name. That’s the wife of Mr Freedman. But it was half owned by each other. Now that throws up other problems, your Honour, for these people. First of all, in a property settlement it was finally accepted it was a property of the partner’s, of family, of a husband and wife. There, I’ve attached there, your Honour will find, a, a, a list of assets that they - a, a schedule, a, a spreadsheet by Mrs Glass of their assets and liabilities, and she shows the parties having total assets of about $5 million and shared, looking at different ratios given what they’ll settle on their property matter is concerned, at least $2 million each.
There’s a statement behind that where, where there’s a form of application for the finance completed where Mr Freedman puts the property value at $8 million where Mrs Glass had put the property value at about $5 million. But here is, here’s an estate which I’m told by Mr Stanford, that’s my partner, it’s got - the assets over liabilities in the court file, in the probate application, surplus $68,000. Now one has to ask oneself, “Well, how is that, how is that so?” Now Mr - the plaintiff is an accountant, close friend of Mr Freedman. He swore the executor’s affidavit. I don’t know how it’s possible that the affidavit would show that the estate is worth $68,000. But there’s, there are documents there which would suggest quite significantly a different state of affairs.

54. Fifth, Mr Berger took me to an itemised bill in a matter where Mr Berger says that Mr Freedman handled the Local Court proceedings. Mr Berger says that the matter could not be heard because a second application to vacate the hearing was refused by the magistrate. He says that Mr Stanford speculates that he (Mr Berger) was to blame for this. He says (from T 7.32; 5/8/19):

... That’s what it is, speculation. They make up stories to speculate about what is evil about me.
Now in that particular matter, they, they tell the Court that I took care of the Local Court matter and I was to blame, I was to blame for the matter being so badly prepared, a whole page of directions being made, not, not complied with, and the magistrate refused a second application to, to set - to vacate the hearing, because she would not allow us to file affidavits which were late. Now that’s a kind of - what the parties are willing to do to create a state of affairs and appearance about what - whether my word is true or not. Your Honour, these people are bolstering their case which has no foundation - I’m, I’m reasonably confident, your Honour, one can’t be in court, but I’m, there’s no foundation that any monetary claim against me in the Supreme Court proceedings, the main action, and, and not only that, I have directed their attention to emails that prove it, but they won’t bother reading them, your Honour. That’s the problem.
... Now your Honour, I’ve seen no evidence as is claimed by the other side that they paid the disbursements, the barristers’ fees nor the, nor the filing fees of the Court. So there’s nothing produced. I’ve asked for material, I get nothing. There’s no document produced to support contemporaneously versions of facts which they give which are absolutely diametrically opposed by documents which are contemporaneous, which I have and they had access to.

55. As to the assessment of costs which Mr Berger says he had sought against Ms Glass for the sum of $157,000, Mr Berger says that the assessment was unsuccessful principally because the assessor took the view that Mr Berger could not claim legal fees because he was suspended from practice. Mr Berger accepts that he did not seek to have that decision reviewed (he says he was constrained in what he could spend his money on, particularly because he was defending himself in respect of Law Society proceedings) but he says that in the correspondence Ms Glass says throughout that she has not received papers; and he argues that the fundamental point is that Ms Glass never denies that she received the money (just that she says she had not received documents). He says the “peculiar thing” is that Ms Glass never lodges an objection (rather, she threatens to refer Mr Berger and his cousin, a solicitor, Mr Morgenstern, to the Law Society “because we’re recovering money that I believed as a partner I’m entitled to claim from her” and that “[h]er husband directed it to her”). Mr Berger says he had no other way to try and get the money from her.
56. Mr Berger says that it was at a conference on 17 December 2016 that Ms Glass said for the first time (in four years) that she did not receive the money (having been through an assessment process “where she did not utter those words”); pointing out that this is in the face of the email where Mr Freedman talked to her about the dilemma they were facing over the $120,000 amount. Mr Berger says that Mr Naumburger was copied into that email and Mr Berger there mentioned concerns he had about the unpaid income tax and says that he is not prepared to be left in a position where he could get into trouble about unpaid tax. Mr Berger then appears to have reported this transaction to various entities (including the Australia Taxation Office (ATO), the Prime Minister and the Treasurer) as to unpaid tax, from whom he says he has heard nothing; and nothing from anyone on behalf of the plaintiffs.
57. Sixth, is an email from Mr Berger’s secretary attaching an extract from a “Combined Matter Ledger as at 20/07/15” in relation to the Glass file and a “Dispute Michell Sillar” file, in which email Mr Berger’s secretary asserts that someone has deliberately destroyed records. Mr Berger says that there are parts missing in those files (i.e., the Glass file, where it is said that all the correspondence virtually is missing and there has been some interference with the financial records; and another file of his other partner in terms of fees that she ought to have paid but has not paid).
58. Seventh, Mr Berger points to an email dated 26 September 2011 from Mr Freedman to him which refers to “[t]he personal disbursements you took from the firms overdraft without discussing with me (now adjusted)”. He says that this is part of the litigation against him in the main claim and that the claim against him is not only the disbursements (which he says that this document acknowledges he paid, being a $8,000 adjustment between them); rather, he says that they are claiming all fees on all files which Mr Berger handled to do with his family and himself. Mr Berger’s complaint to me is that “they don’t look at the emails ..., but they take - issue proceedings willy-nilly” (T 11.32; 5/8/19).
59. As to the submissions made by Mr Stanford about the importance of paying creditors, Mr Berger’s complaint is that he had asked for a list of creditors time and time again; and that he was not told. He says that one creditor he did know about (the service provider for the firm’s computers) had been very supportive but had recently had to sue the plaintiffs (something to which Mr Berger points in order to say “this is the plaintiffs through their solicitor telling your Honour how virtuous they are about paying creditors and don’t let the receiver get some fees to check on us, pay, pay me first, Mr Stanford, pay me as a priority, and then your Honour, oppose the receiver who they were sought in the first instance”).
60. Following his survey of the above documents, Mr Berger submitted that this is a situation “classically deserving of proper review by a receiver and not to take up the time of this Court and the cost of this Court and the allowing of further delays, obfuscation and delay by the plaintiffs simply causing expense to everybody so that they can keep concealing their dishonesty”. He submits that:

... in those circumstances, the most - the, the, the, the most just, quick and cheap approach to getting to the bottom of this whole saga your Honour, is to have a receiver appointed who independently and objectively calls us both to account, helps pay the creditors and helps to properly adjust moneys between the parties which, your Honour, they can’t challenge me anywhere near and nor can they challenge me anywhere in, in the deception that I discovered that they were engaged in for a long time and as far back as 2009 and 2010 ... .

61. As to the issue regarding the client, Mr Grigora, Mr Berger emphasises that the client claims he paid Mr Freedman $130,000 cash for fees; that when Mr Berger found out about the matter being unpaid, he found $30,000 in the ledgers and “not charged”, and that he then found a document which said “don't send out a costs agreement”. Mr Berger said:

... that’s how I felt and I stumbled [on] that your Honour, because I was chasing creditors with oppression and obstructions - sorry not creditors, debtors, with oppression, obstruction I received for four years your Honour and longer not to do anything to chase up money that they had not been chasing, and I can only speculate as to how they conducted their affairs in terms of property of the partnership and property accounting to the firm.

62. Mr Berger again claims he has supported all his submissions and assertions with contemporaneous records; and that Mr Stanford has provided few documents to support his assertions and/or submissions. He submits that Mr Stanford would have access to all relevant material including emails and financial records (and submits that Mr Stanford ought not be allowed to rely upon his assertions and/or submissions without attaching and/or tendering such documents). Mr Berger says that:

I believe I have demonstrated ... the considerable and serious errors he is relying upon. The frequency and availability of contrary evidence, I believe, suggests that is intentional. It is patently apparent he has chosen not to check many of his assertions and/or submissions.

63. Mr Berger further says that he was advised by his counsel many times that he could not proffer evidence as to the differences between he and his partners as it was not relevant to the issues; and that the “closest” he came to so doing was: tendering the itemised bill in the matter of Dina Glass to Beech-Jones J; tendering the letter of Mr Freedman to Ms Gopalan to the Registrar of the Court of Appeal; and calling for cross-examination of Mr Freedman and Ms Gopalan in the proceedings before Beech-Jones J (as to whether their relationships with him were “toxic”; to which Mr Freedman is said to have responded “no” and Ms Gopalan “yes”).
64. Mr Berger says that Mr Naumburger was the accountant and Mr Naumburger’s firm was the auditor of MBBF; that neither he nor any accountant has done accounts as to the dissolved partnership since dissolution; and that insofar as Mr Naumburger claims there are unpaid fees he (Mr Berger) would like to be informed what fees have been charged and paid for accounting work for his late partner.
65. Mr Berger says that his former partners have, since early 2012, conducted the accounts of MBBF (Ms Gopalan having been managing partner since about 2008 and she and Mr Freedman having sacked the firm’s manager in about late 2011, without informing him of their actions). Mr Berger says that his serious concerns were “heightened” on intentions to dissolve being expressed in about June 2012; and that his “initial many requests” made in early 2013 to be included in decisions were never facilitated (and cheque signing was possible without his signature being needed).
66. Mr Berger says that there were a considerable number of meetings with Mr Naumburger and his partner and their staff with Mr Berger’s partners, and emails between them, without Mr Berger being included. He says that his partners had absolute discretion as to payments and he is puzzled why they did not pay his firm fully. Mr Berger says that it “is easy to say shortage of funds however the list of creditors and total due is relatively small and none have taken action for over 5 years”. He says that gross turnover was over $3 million and that it is surprising he has not been paid and he has not agitated for payment.
67. Mr Berger says that MBBF was, at July 2012, a practice of three offices, three partners, five employed solicitors and about 30 staff. He recounts the history of the development of the firm and says that the practice was “trashed” by his partners in the period October 2012 to 21 June 2013 and that:

Their goal it, appeared to me, was to take over the Dunne & Bradstreet work and otherwise the practice. The latter has been accomplished and avoidance of accounting is being sought to be accomplished principally by exhausting my resources. My family has lost over $3,000,000 which comprised about 12 properties and now we have assets of about $15,000 and no properties. I accept I made an error in the belief I was able to retain the Domabyl monies which I did since I expected my partners would block my receipts. In all other respects I have believed I tried to obey my duties and achieve the best interests of my clients and to be a model in all I have done. The Domabyl transaction was properly recorded in our records, correspondence, including her family, and financial records in the usual way. I accepted the likelihood that my receiving the funds it would be interfered with. I always said anytime Mr Freedman wanted 50% I would pay him. I was aware from about early 2011 my partners read my emails and indeed invited them to continue to and I declined advice I should change my password.

68. Mr Berger says it is surprising that the auditor appears never to have asked Mr Freedman about the payment directed to Ms Glass and that it is claimed the bills and payments in the matter of Domabyl (the subject of action by the Law Society against Mr Berger) to MBBF, which he says were conducted in the usual way, were not noticed. Mr Berger asserts that he promptly paid all he had been paid in the Domabyl matter back to the trust account of MBBF but that Mr Freedman has never repaid the money of which he had benefit (about $15,000). He submits:

Surely, I was entitled to expect protection against payment to members of the family of Mr Freedman as Mr Freedman ought to have been from payments to my family which indeed was raised against me by the auditor and no remarks ever about the payment to the wife of Mr Freedman of which they ought to have been aware and I believe were.

69. Mr Berger notes that Mr Naumburger has sworn (or affirmed) no affidavits in these proceedings especially such as include financial records “which, no doubt, are sourced from him” and that he (Mr Berger) has asked for such source documents as he has and, in the main, they have not been provided, yet Mr Stanford has referred to financial data such as that which is attached to the affidavit of Mr Freedman sworn on 25 October 2013; and the Schedules to the amended statement of claim. Mr Berger complains that “Mr Stanford appears to believe he need not produce the source document”.
70. Mr Berger complains (again) as to “rubbery figures” in the affidavit of Mr Stanford sworn 2 July 2019 and to the said Schedules. As to Schedule 1 to the statement of claim (claimed to be a list of matters in which the sums referred to have not been paid to MBBF and for which Mr Berger is said to be liable) Mr Berger says that often there is a reference to incorrect amounts. As to Schedule 2 to the statement of claim, he says that his defence has replied thereto and that, again, most, if not all, have been paid to accounts of MBBF. He says that there is reference to incorrect sums and that the same five sums are repeated in a cycle about 11 times and are “clearly wrong”. It is submitted that the total of the sums far exceeds that typed as $581,698. Mr Berger says there appears to have been little if any reference to the accounts of MBBF whenever figures have been referred to and the source documents are not produced.
71. Furthermore, he complains that there have been, without his knowledge and approval, considerable write-offs and discounts such that such moneys were not to be recovered and no documents produced. He says that Mr Naumburger knew the office practice of MBBF that all write-offs and/or discounts were to continue to be recovered except if the partners agreed otherwise. He says that he has not agreed but to a small fraction of the quantum of what appears to have been permanently written-off and/or discounted which on its face is over $1 million since about 2012.
72. Attached to his supplementary submissions are: Schedule of Discounts which Mr Berger says were discovered by accident by his secretary (and that he asked for explanation several times and never received any), noting that at the bottom of page 8 of the Schedule of Discounts there is a sum which is $295,322.47 discounted by Mr Freedman between about July 2012 and May 2013. He says that he has, since early 2013, questioned these discounts and has had no reply. He compares this with the discounted $48,035.18 figures on page 22 for him for about the same period. Reference is made to the Profit and Loss Statement of MBBF year ended 30 June 2013 at page 4 which records “Adjustment of Fees (re Debtors) $493,496.65”. Reference is also made to a letter of Ms Gopalan to Mr Stanford dated 19 January 2019 (where Mr Berger complains that she speaks of “write-off she instructed to Mr Naumburger however no details are provided”).
73. Mr Berger says that the principal proceedings were initiated by Mr Freedman in late October 2013, with the knowledge of Mr Freedman of: Mr Berger’s claim as to the moneys paid to Ms Glass and without regard for the indemnity rule upon which the order for costs relies; that he received cash and there were irregularities in the accounts in the matter of Grigora including instructions not to issue a costs agreement; Mr Berger’s email to him of 20 October 2013 (part of annexure "B" to Mr Berger’s affidavit of 3 June 2019) in which Mr Berger informed him that he was retaining various sums he had collected as to fees paid by some clients as a set off against moneys he owed Mr Berger. Mr Berger maintains that he has throughout tried to be transparent “to the optimum”.
74. Mr Berger says that Mr Freedman’s relationship with Ms Gopalan appears to have been in existence since late 2006; that its existence was brought to his attention by her husband in about May 2012; and that the “already toxic” relation between he and Ms Gopalan since mid-2011 led to Ms Gopalan refusing to attend meetings of partners and soon thereafter none was held. Mr Berger points to an email from Mr Freedman to Ms Gopalan dated 1 February 2011 a copy of which he found on his desk in about mid 2013; and a memorandum prepared by him as to him being informed by the husband of Ms Gopalan about the relationship between she and Mr Freedman, copies of which he said he gave of each to Mr Stanford on 24 July 2019.
75. As to the matters to which Mr Stanford has deposed in his affidavit sworn 22 July 2019, Mr Berger says as follows.
76. First, that there were no material discussions after about late December 2012. He says that his partners operated in secrecy and used MBBF staff and resources to prepare their set; he points to emails where he asked his staff to inform him what they were doing; and says that the wall in the reception towards which clients walk towards on entry was repainted and MBBF signage replaced with that of F&G without notice to him; that on departure property his partners wanted which included paintings and books; and that Ms Gopalan asked him to pay for 50% of the furniture and equipment “forgetting F&G took about 80%. The atmosphere was toxic”.
77. As to the authorities provided by Mr Stanford, Mr Berger complains that he was only able at the hearing to say one sentence (in effect that nothing in them militates against the appointment of a receiver being made in this case) but then says that “[i]ndeed there is not much to be said, I believe”. As adverted to above, he submits that the principle in Tate v Barry “that a receiver will be appointed as of course” should stand as the remaining authorities relied upon are distinguishable on their facts such that this matter would not fall into the situation where the exceptions and/or other alternatives arise.
78. As to the “rubbery figures”, Mr Berger says that he had recovered at least $250,000 in the following matters: Senes (about $30,000 from damages he claimed from Counsel for negligent advice otherwise the matter was one of his few contingency matters); Redman (about $120,000 as a result of assessment and negotiations); Valore (about $50,000 as a result of assessment and demands to the solicitor who was to have kept the funds in his trust but had given them to his client (and he says it was necessary to threaten bankruptcy)); Sajadi (about $54,000 (submitting that there were “particularly difficult recoveries” and Mr Freedman was unsupportive of his efforts and in most cases he had to meet the disbursements)).
79. As to the position with Mr Doolan (who was appointed as a debt collection agent), Mr Berger has attached, he says, all emails with him and has marked parts that he says show: he was a colleague in a networking organisation BNI who offered debt recovery; Mr Berger sought to collect for all outstanding sums due to MBBF; Mr Doolan declined to proceed ultimately as he ceased debt recovery services; and Mr Emanuel Calligeros (who is an accountant who was to supervise recovery in his email to Mr Naumburger and Ms Gopalan of 27 May 2015) explains some past events and why he did not wish to continue. Mr Berger says that Mr Stanford has not provided any material from Mr Doolan and Mr Berger “cannot comprehend how he records what he has” (as to the circumstances in which Mr Doolan is said to have said he ceased the retainer).
80. As to Ms Dunne’s report, to which reference is made in Mr Stanford’s affidavit (as adverted to above at [37]), Mr Berger says that he never criticised her report; that he said indeed it was “very good” and that it prompted many issues for him about which he drafted an email of questions (dated 3 December 2016). Mr Berger’s criticism, rather, was her ten months’ delay in issue of demands and lack of follow up. He says that Mr Stanford has trivialised the delay.
81. As to the Schedules, Mr Berger says that his partners paid the benefits to staff who continued with them and did not pay benefits to the staff who stayed with Mr Berger; that, despite his opposition, they paid Ms Gopalan $15,153.32 for long service leave that she did not take (but chose instead to continue to work and be paid “even though [MBBF] had ample staff”). In any event, he complains that none of the figures has been checked on his behalf.
82. Mr Berger says: that he had recovered almost all his debtors except a small amount in which he did not have the funds to meet disbursements; that he did not focus only upon chasing debtors of Mr Freedman; and that the emails in relation to Mr Doolan corroborate that. He says that Mr Stanford was vigorous about his matters and that he did not object to Mr Stanford dealing with them if he wished. Mr Berger also says that “statute barring” was a frequent topic on his emails “but it did not appear to interest Mr Stanford and the Plaintiffs”; and that there are many debts of $3,000 they have ignored despite Mr Berger’s reminders.
83. As to the respondents’ submissions on the present application, Mr Berger reiterates that he does not agree with them. He says that he has dealt with comparison of expense to ventilate these issues through court process compared to independent receiver. He maintains that the latter would be far less costly and says it is likely one or each party would call expert evidence. He says the following as to particular submissions: as to [28(a)], it was a set off; [28(b)] and [28(c)] no particulars are provided and he would welcome the receiver investigating them; as to [29(b)], that there are fiduciary duties by each partner to each other; as to [30] and [33] there are no particulars provided. As to the submission that his is “chasing rabbits”, Mr Berger denies this and denies that he was “ever other than willing to set a bench mark of $3,000”.
84. As to the list at [50], he says that much was made of creditors chasing the plaintiffs; that most, if not, are statute-barred, “and, surprisingly, few appear to have done anything for 5 years”. As to Citibank, he says that since 2013 he has asked for all invoices and on three occasions was given statements only which do not give proper details. He notes that he issued a subpoena to Citibank earlier this year and says that there are charges which need explanation. He says that initially Mr Freedman, and since then the plaintiffs, claimed he had used $4,000 for his benefit; that the sum was about $600 in November 2012, in error, and repaid immediately after he checked and that he never otherwise used that card but used his own with Citibank.
85. As to [70] of the submissions (which lists reasons why the court should not exercise its discretion in appointing a receiver in favour of Mr Berger) he said that the respondents should not be allowed to rely upon this and distract the court from considering the facts and issues as to collection and disbursement of the moneys of MBBF.
86. As to [97] (relating to material that had been requested by Mr Berger which the plaintiffs indicated they did not possess), he submits that the receiver can address this and has more authority to address lack of cooperation.
87. As to [103] (where the plaintiffs submit that it is open to the court to conclude that in making this application, Mr Berger is: using another avenue to try again to “wrestle control” of the collection of debts; using what money the parties have collected to fund his desire to gain control; and using what money the parties have collected to fund the receiver to pursue certain of Mr Berger’s desires such as investigate the plaintiffs’ collection of Mr Freedman’s debtors and monies written off and or discounted by Mr Freedman) he says that the plaintiffs acknowledge not having “direct evidence”, and that Mr Stanford admits to engaging in speculation. Mr Berger refers to his letter to the assessor dated 9 July 2019 where there is reference to speculation that Mr Berger has created false documents. Mr Berger says he would accept either party being given the opportunity to provide the contemporaneous records upon which each relies.
88. Mr Berger says the position at [106] of the submissions (in relation to the MBBF debts now being statute-barred) has been exclusively caused to occur both by lack of action by Mr Freedman and dilatory conduct of the plaintiffs and that the respondents should be accountable for that conduct.
89. As to [111]-[113] of the respondents’ submissions (relating to the lien for the costs of Stanford Lawyers), Mr Berger maintains that this is an extraordinary proposition and should be refused. He says:

... Indeed, Mr Stanford has remarked from time to time that he was not being paid. I responded each time with disbelief and cautioned him against it. He on no occasion intimated his desire now expressed. I believe, and I regret, there is ample revealed about the manner in which Mr Stanford has conducted himself in this matter as between us and I regret to say on considerable occasions towards the Court. I believe I have demonstrated some as occurred in respect of the conduct of this motion both orally and in writing. He has demonstrated disrespect for the Court and his duties to the Court. He has not produced his costs agreement. He seems to be ignoring the indemnity rule. He has been liberal in making assertions and/or submissions which misrepresent true facts and events. This request is but one more illustration of his propensity to be disingenuous. It is as well revealing of the cynicism of the Plaintiffs and Mr Stanford when considering the assertion I wish to use the funds available for my ends and they openly concede that is their goal.

90. At [114] of the respondents’ submissions (where it is stated that the plaintiffs assert a constructive trust and/or lien over the assets of MBBF to satisfy the claim they have brought against the defendant for misappropriation of assets of the partnership), he submits there is no foundation for this assertion.
91. As to [115]-[116] (where it is said by the plaintiffs that a person who is owed fiduciary obligations can trace assets in which he or she had a beneficial interest where there had been a breach of fiduciary obligations), he agrees “subject to the same right in [his] favour”.
92. As to [120] (where the plaintiffs submit that there is an alternative to the appointment or a receiver, being that the parties should be ordered to exchange details of the files, the amounts of debtors and WIP billed and recovered costs written off and creditors paid and the whereabouts of any funds collected that exceed creditors paid and outlines a proposed timetable for this to occur), it is submitted that if this or a “similar timetable driven course of events” is to be ordered the parties should provide some contemporaneously with each other. It is submitted that, given the history of the matter since mid-2012 especially that of the delays in the main proceedings and debt recovery, his affidavit of 3 June 2019 provides in effect a chronology. He says that:

... Whereas any remarks against me by Mr Stanford, which I submit are exaggerated, as to delay and my contribution to same [sic] were made from the bar table. The conduct of the Plaintiffs and Mr Stanford would cause prospects of a just, quick and cheap outcome concluded being doubtful. The frequency of Mr Stanford making unsupported assertions and/or submissions causes one to believe it is futile to cause me provide information without there being a contemporaneous exchange with that to be provided by the Plaintiffs. I note that to date little has been provided by the Plaintiffs and they are likely to claim they are unable to by reason of actions of Ms Gopalan against whom they have made only superficial effort or to say I have not complied.

93. Mr Berger believes there is ample proof of over almost six years “uncooperative conduct by the late Mr Freedman and the plaintiffs with the motive of exhausting [him] financially” and believes that further opportunity to do so “ought to be considered with highest caution”. Mr Berger submits that the most just, quick and cheap course to follow is the appointment of a receiver and he says that he does not have any faith or confidence in any other alternative which allows either party without penalty to obfuscate or delay.
94. Mr Berger disagrees to a condition precedent, especially when it is directed only at him. He argues that the receiver will treat both parties in equal fashion and obtain what he considers is required in the interest of MBBF.
95. As to [125]-[126] of the respondents’ submissions (where it is submitted that:, if Mr Berger wishes the discretion to be exercised in his favour then he ought first “fulfil his own legal and equitable obligations to his former partner’s executor and trustees, arising out of the subject matter of the dispute”; and that Mr Berger has not come to equity with clean hands) , Mr Berger says that:

There appears a distinct inclination on the part of Mr Stanford and the Plaintiffs to caste judgement [sic] and obligations upon me when same should, on any view, apply equally to all parties. I believe such conduct is grossly mischievous and mischief is revealed too often in the conduct of Mr Stanford and the Plaintiffs, including assertions and/or submissions of the Plaintiffs.

96. Mr Berger says that any criticism he has directed at Mr Stanford he has done so “reluctantly and unhappily”.

Submissions of the respondents (the plaintiffs)

97. The respondents acknowledge that they previously sought the appointment of a receiver to the dissolved legal partnership. However, they submit that it would now be futile to appoint a receiver. They argue that the previous need for the appointment of a receiver has been overtaken by events, namely the agreements between the parties to act in recovering debts owing to the partnership (which has had some success) and they say that the present circumstances of the case (namely, the fact some money has been recovered and creditors paid but that other debtors may now be statute-barred) do not necessitate or justify the appointment of a receiver and that a receiver would effectively go over the same ground that the parties have already covered.
98. It is submitted that the amount of costs that would be paid to the receiver would outweigh any costs that could be recovered and would deplete the moneys available to pay the creditors of the partnership and expose the parties to actions by third parties; and that Mr Berger is attempting to use the receiver to investigate matters that are relevant to his prior cross-claim against the plaintiffs (which he has discontinued) as well as his counter claims in his defence, and in so doing is using the receiver to gather evidence to bring and or prove his case at the cost of the plaintiffs.
99. In support of their opposition to the motion, the respondents rely upon the affidavits of Mr Freedman affirmed 25 October 2013, and Mr Stanford sworn 22 July 2019.
100. Mr Stanford, notes that Mr Freedman, in his affidavit affirmed 25 October 2013, deposed that: the assets of MBBF as at the time of dissolution comprised unbilled Work in Progress (WIP) of $1,360,125.33 and debtors of $1,450,226.37 (a total $2,810,351.70); other assets such as equipment were transferred in specie to the individual partners by agreement between themselves; and that the amount of liabilities at the time of dissolution was $1,221,665.71. Mr Stanford has calculated the balance, as at the date of dissolution of MBBF, to be $1,588,685.99.
101. Mr Freedman in his affidavit affirmed 25 October 2013 said that he collected approximately $163,000, which he says was paid into the MBBF bank account for payment of invoices. Annexed to Mr Stanford’s 22 July 2019 affidavit is a schedule prepared by Messrs Freedman and Gopalan Solicitors of amounts recovered from MBBF clients (totalling $141,040.88). Mr Stanford notes that Mr Freedman, in his affidavit affirmed 25 October 2013, deposed that Mr Berger had collected about $42,000 and paid that into the MBBF bank account up to 27 August 2013. (As noted above, Mr Berger, in Schedules 1 and 2 of his defence, sets out the amounts he claims to have recovered.)
102. Mr Stanford deposes that on 29 September 2014, Mr Freedman and Mr Berger participated in a mediation, following which they entered into a Binding Heads of Agreement (see Annexure “A” to Mr Stanford’s affidavit sworn 22 July 2019), in which the parties estimated their debtors and WIP at $8 million. It is noted that in that estimate Mr Berger indicated a preparedness to discount the original estimates by 20% “to cover risk of reduction, cost of assessment process and bad debts” (which the respondents submit is a relevant consideration when considering what costs, if any, a receiver could recover).
103. Mr Stanford submits that, since the mediation, the parties have worked together to identify debtors and WIP worth chasing for payment; and that they have consulted and identified the files with the highest amount outstanding to pursue. It is noted that the parties have recovered moneys from clients of MBBF, the amounts of which have, by agreement, been deposited into Stanford Lawyers Law Practice trust account; and that the parties have, by agreement, engaged the services of two debt collection agencies, Credit Collections Services Group Pty Ltd (CCSG) and Marshall Freeman Collections. It is said that CCSG has had some success in recovering moneys; but that Marshall Freeman Collections did not have any success; and that the present balance of moneys collected and deposited into Stanford Lawyers Law Practice trust account is $84,089.67.
104. The respondents argue that (given the responses of debtors, or the lack thereof, and given the time that has elapsed since the dissolution of the partnership) the debt collection agencies have now indicated that in their opinion the debts are uneconomical to pursue, or statute-barred; and that they intend to close their files. They submit that even though a receiver may be appointed, that may not guarantee success in recovery of the full amount or of any amounts of all debts and that a receiver may well likewise form the view that it is uneconomical to recover the debts, in which case what money the partnership has (which could otherwise be used to pay its creditors) will have been wasted.
105. As noted earlier, following dissolution of the MBBF partnership, the Law Society appointed Mr Richard Flynn as Manager of the partnership’s trust account and a controlled money account in respect of the remaining funds of a client of MBBF. Mr Stanford has deposed that he is informed by Mr Flynn that: the balance of the MBBF trust account is $44,232.24; and that the balance of the moneys held in a controlled monies account with Macquarie Bank Ltd in relation to a particular matter (the Domabyl matter) is $16,344.54, thus totalling $60,576.78.
106. The respondents believe there is also an amount of $13,498.73 in credit in a bank account for the balance of moneys paid regarding the partnership’s purchase of a photocopier (a payment referable it seems to a company known as Mitronics).
107. The respondents say that they are aware of outstanding creditors of the MMBF Partnership totalling $206,835.74 (see Mr Stanford’s submissions at [50]), including an ATO partnership tax debt in the sum of $73,800.61.
108. The respondents note that s 67 of the Supreme Court Act 1970 (NSW) (Supreme Court Act) confers a wide discretion to appoint a receiver, on terms, where it appears to the court to be just and convenient to do so. It is submitted that although, historically, it was considered that when an action was brought seeking the winding up of a partnership already dissolved, the plaintiff was entitled, as a general rule, and practically as a matter of course, to the appointment of an interim receiver (see Tate v Barry), that is no longer the case. It is submitted that, notwithstanding that general rule, it is now equally well established that it is not inevitable that in any such case an interim receiver and manager will be appointed as a matter of course but, rather, that there is a residual discretion as to whether any appointment should be made (referring to Fitz-Gibbon v Khoury (Supreme Court (NSW), Powell J, 1 March 1985, unrep) (Fitz-Gibbon v Khoury), and that the surrounding circumstances must be taken into account (Rowlands v MacDonald [2002] NSWSC 282 (Rowlands v MacDonald) at [28]). It is noted that in Davey v Donnelly (Supreme Court (NSW), McLelland J, 16 May 1991, unrep) (Davey v Donnelly), McLelland J said:

Nevertheless the court has an over-riding discretion in the matter, and for substantial cause shown will refuse, or limit the terms of, the appointment of a receiver.

109. The respondents submit that in Davey v Donnelly, in deciding to appoint a receiver, his Honour considered that the evidence revealed aspects of the conduct of the defendants that gave added weight to the plaintiff’s case for appointment of an interim receiver, and that the events demonstrated lack of good faith by the defendants, which his Honour said reinforced the legitimacy of the plaintiff’s desire that the winding up should be taken out of the defendant’s hands.
110. In the present case, the respondents submit that there is no evidence regarding aspects of their conduct concerning the collection of debts, nor any lack of good faith by them, such that would justify the appointment of a receiver.
111. Reference is made to Lindley & Banks on Partnership (R I Banks (ed), Lindley & Banks on Partnership (19th ed, 2017, Sweet & Maxwell) (Lindley)) at 23-160, where it is said that “there is nothing approaching a presumption that a receiver will be appointed in such a case, and sufficient grounds will always have to be shown, as the Court of Appeal made clear in Toker v Akgul.”
112. The respondents submit that Toker v Akgul (Court of Appeal (NSW), 2 November 1995, unrep), is authority for the proposition that an application for appointment will not be granted as a matter of routine and that in every case it will be necessary to show sufficient grounds for the appointment and that the expense associated therewith will not be disproportionate to the nature and value of the partnership business (see Lindley at 23-157).
113. As to the exercise of the discretion to appoint a receiver, it is noted that the power is not unfettered (P Radan, Principles of Australian Equity and Trusts (3rd ed, 2016, LexisNexis Butterworths) at 992 (Principles of Australian Equity and Trusts)) and that the power of appointment:

... is an extraordinary and drastic remedy to be exercised with utmost care and caution and only where the court is satisfied there is imminent danger of loss if it is not exercised [Bond Brewing Holdings Ltd v National Australia Bank Ltd [1991] VicRp 31; (1990) 1 ACSR 445 at 458].

114. It is noted that, when exercising its discretion as to whether an appointment should be refused, the court may take into account whether the consequences of such an appointment will be “ruinous” (see Fitz­Gibbon v Khoury at 12 and the cases there cited).
115. The respondents submit that it would be ruinous to appoint a receiver in the circumstances of this case where: the partnership has been dissolved; following the dissolution of the partnership, Mr Freedman and Mr Berger collected debts and paid creditors; Mr Berger admits in his defence (at [42]) that he has collected debts owing to the partnership, which he has kept for himself (such that the respondents say that there is no utility in a receiver being appointed to collect debts from Mr Berger where he has already collected such debts); the parties themselves have appointed a debt collection agency which has recovered as much as it can; debts may now be statute-barred; there are limited funds available; the receiver would charge fees and may not be able to do better than what the parties have already done; the depletion of funds would not leave any moneys to pay existing creditors; and the depletion of funds would leave the parties exposed to claims by creditors.
116. It is noted that in Liquor National Wholesale Pty Ltd v The Redrock Co Pty Ltd [2007] NSWSC 392 (Redrock Co), Brereton J, as his Honour then was, declined to order the appointment of a receiver (having considered whether the appointment would be “ruinous” and having been of the view that irremediable prejudice would be occasioned to the defendants by appointing a receiver, putting them into default of their obligations to third parties).
117. The respondents submit that this conclusion should be drawn in the present case, further submitting that the appointment of a receiver could be even more ruinous to them because, if Mr Berger files a debtor’s petition (as it is said he has indicated he will do), then the respondents (i.e., the plaintiffs in the main proceedings), as the remaining partners, will be saddled with and could be liable for the whole amounts of the partnership’s debts.
118. The respondents note that one of the factors that Young CJ in Eq took into account in Cuming v Hennessy [2005] NSWSC 1219 (Cuming v Hennessy), when deciding not to appoint a receiver was that there was no threat that the capital assets of the partnership were being diminished (see at [15]). The respondents submit that in the present case, the assets of the partnership have been largely dealt with such that there is no threat to capital assets being diminished that would justify ordering the appointment of a receiver.
119. The respondents acknowledge that in Rowlands v MacDonald Barrett J, as his Honour then was, identified (at [30]) two factors that pointed strongly towards the appointment of a receiver: first, the parties being in serious dispute (making co-operation sufficiently problematic as to warrant the introduction of a third party); and, second, irregularities in the partnership’s financial affairs.
120. The respondents submit that this decision ought be distinguished: first, on the basis that that dispute concerned an ongoing partnership that included a residential property that was being occupied by one of the parties, whereas in the present case the partnership was terminated some years ago; second, that the parties here have collected debtors and paid creditors; third, that the parties have engaged a bookkeeper (Ms Dunne) to write to debtors; fourth, that the parties have engaged two debt collection agencies (Patterson Hardman/CCSG and Marshall Freeman Collections) with some limited success; fifth, that what debts are existing are now probably statue-barred; and finally, that any irregularity in the partnership’s financial affairs was caused by Mr Berger’s own conduct (referring to Berger v Council of the Law Society of New South Wales [2019] NSWCA 119 (Berger v NSW Law Society)).
121. The respondents note that the partnership was dissolved on 21 June 2013 and submit that, given the parties have been active in pursuing debts and paying creditors, there is no imminent danger of loss that would justify the court exercising its discretion and appointing a receiver.
122. Further, the respondents submit that the discretion to appoint a receiver should not be exercised in favour of Mr Berger in circumstances where: Mr Berger has misappropriated assets of MBBF in the circumstances set out in Berger v NSW Law Society and has engaged in professional misconduct (by the conduct there identified) (see [272], [274], [299], [302], [303], [306], [315]-[318], [348]-[355] and [372]); Mr Berger has admitted in his defence that he collected the debts of the partnership and failed to bank them to the partnership account; Mr Berger has stated to the court that he intends to file a debtor’s petition but so far has not taken any steps to do so, thus leaving the respondents in the position of having to litigate their claim in the knowledge that if they are successful they will not be able to recover any judgment against him; and Mr Berger is seeking to use the court process to recover money for his own purposes before he becomes bankrupt, and thereby avoid any liability to the respondents, and has discontinued his cross-claim against the respondents such that he does not have a claim against the respondents that warrants the court entertaining his application and/or granting his application.
123. In relation to s 67of the Supreme Court Act, the respondents submit that this requires the court, when exercising its discretion, to take into account settled legal principles so as to protect the parties’ rights and prevent damage, and to achieve justice between the parties. They submit that the appointment of a receiver would be “ruinous” for the parties (particularly the respondents) if Mr Berger files a debtor’s petition, such that it would not do justice between the parties.
124. It is noted that, in considering whether to appoint a receiver, the court should be concerned to ensure that there is no other way of resolving the dispute between the parties (see Lindley at 23-157). The respondents submit that there are other alternatives to the appointment of a receiver, which the court should order (as to which see further below), and the listing for hearing and determination of their claim and Mr Berger’s defence.
125. As to the question of the receiver’s remuneration, it is noted that r 26.4 of the Uniform Civil Procedure Rules 2005 (NSW) provides that a receiver is to be allowed such remuneration (if any) as may be fixed by the court. The respondents note that the proposed receivers’ charges are some $588.50 per hour including GST. It is submitted that this is at the higher end of fees charged by receivers (pointing to Mr Stanford’s evidence of enquiries made to other receivers) and therefore the potential partnership moneys available to the parties will be depleted faster if is a receiver is (or receivers are) appointed.
126. It is noted that a receiver appointed by the court is entitled to be properly remunerated (Price v Price [1904] ArgusLawRp 23; (1904) 29 VLR 719); and that normally the receiver: looks to the assets to which the appointment relates (Eady v Eady [1895] NSWLawRp 25; (1895) 16 LR (NSW) Eq 70; Boehm v Goodall [1911] 1 Ch 155; Rosanove v O’Rourke [1988] 1 Qd R 171); is entitled to assert a lien over them (Bernard v Davies (1862) 32 LJ Ch 41 at 43; Shirlaw v Taylor [1991] FCA 415; (1991) 31 FCR 222); and is entitled to be paid remuneration in priority to the claim of creditors (Hill v Venning (1979) 4 ACLR 555), unless the appointment relates to property encumbered in favour of those creditors (Choudhri v Palta [1994] 1 BCLC 184; [1992] BCC 787).
127. The respondents submit that, given the proposed receivers’ rates and the work they would need to do, what little money that exists in the MBBF trust account, MBBF controlled moneys account and in the Stanford Lawyers Law Practice trust account would be depleted quickly leaving nothing to pay existing creditors of MBBF.
128. The respondents argue that the expense of appointing a receiver would be potentially disproportionate. They note that in Lindley at 23-153, the authors say:

Even before the advent of the Civil Procedure Rules, the courts had regard to the potentially disproportionate expense of appointing a receiver and it would now seem likely that an application for such relief will be subject to particularly careful scrutiny in terms of overriding objective. In addition, it would seem that the court will not, in general, favour a receivership which will have an extended duration. For this reason, the current editor is fortified in his view that the appointment of a receiver (or a receiver and manager) should normally be regarded as a remedy of last resort.

and that Young CJ in Eq, as his Honour then was, said in Cuming v Hennessy at [6] that “one must be very careful when there is a partnership with only modest assets, and where the income is likely to be very small, to put in a receiver because the current scale of fees of receivers is $480 to $520 an hour for a principal, with pro rata for lesser mortals in the receiver’s organisation. Taking time for familarisation and looking at the figures, it does not take very long for one hundred hours work to be done and that can mean a bill of up to $50,000”.

129. The respondents also note the further comments of Young CJ in Eq in Cuming v Hennessy regarding a partner post a bond for the receiver’s fees (at [6]):

... It is unfair to ask a receiver to take such a task on-board unless he or she has some security for the fees. That is why in small partnership matters I usually require that where there is a dispute between partners as to whether a receive is necessary, and one partner insists on it, that that partner post a bond so that in the first instance the first one hundred hours’ work of the receiver is secured.

130. It is noted that an applicant for the appointment of a receiver is usually required to give an undertaking as to damages as “the price to be paid” for the order (Duffy v Super Centre Development Corporation Ltd (1967) 1 NSWLR 382 at 383-4).
131. The respondents submit that, in the circumstances, and having regard to the comments of Young CJ in Eq, if the court is inclined to order the appointment of a receiver, then it should order that Mr Berger post a bond of $50,000 to cover the receiver’s fees; and that Mr Berger should be ordered to provide details of creditors paid, and the amounts of any moneys collected and not paid to creditors before appointing a receiver.
132. The respondents submit that Mr Berger has an ulterior motive for the appointment of a receiver, noting that during the course of the matter Mr Berger has expressed: his frustration regarding Mr Freedman’s (as well as Ms Gopalan’s) collection of the plaintiffs’ debts; his suspicion that since the termination of the partnership, Mr Freedman (as well as Ms Gopalan) has received moneys from debtors for which an account has not been made to the partnership; and his frustration with the lack of success of the debt collection agencies in collecting debts. The respondents maintain that the position of Mr Berger is that he is trying to appoint a receiver in effect to continue his own litigation at partnership expense (T 17; 24/7/19). Mr Stanford describes Mr Berger as a “control freak” and points to difficulty working together (T 25; 24/7/19).
133. It is noted that on 6 August 2018 Mr Berger served upon the respondents a notice to produce; and that on 7 August 2018, Mr Berger issued and served a subpoena upon Ms Gopalan; the material there being sought being, for all intents and purposes, identical and quite extensive (going to the essence of Mr Berger’s frustration and suspicion regarding the accounts of the MBBF partnership as well as Mr Freedman and Ms Gopalan’s actions and attempt to obtain the information). The respondents say that they do not possess the material requested (and, if they do, then they received them from Mr Berger); that Ms Gopalan sought to have it set aside; and that Mr Berger, at the directions hearing before the court on 4 June 2019, sought, and was granted, leave to discontinue his application for orders that Ms Gopalan comply with his subpoena.
134. The respondents note that in his email to the court on 30 May 2019, Mr Berger stated that due to his personal circumstances he is not in a position to continue his defence of the matter, would discontinue his cross-claim, intended to consent to the orders of the court in relation to his defence and intended to lodge a debtor’s petition. Subsequently, Mr Berger filed his defence to the amended statement of claim, in which, in answer to the respondents’ claim for relief he says:

... and whether any dealing and transaction occurred at any time and to provide that the receiver do all things reasonable to recover monies owed to the partnership and if [sic] which ought not to have been charged.

135. The respondents submit that it is open to infer that in making this application, Mr Berger is: “using another avenue” and “using what money the parties have collected” to fund “his desire to wrestle control of the collection of debts”; and using what money the parties have collected to fund the receiver to pursue his desire to: investigate the respondents’ collection of Mr Freedman’s debtors and moneys written-offs and/or discounted, and investigate Ms Gopalan’s collection of Mr Freedman’s debtors and moneys written off and/or discounted by Mr Freedman. The respondents submit that in those circumstances it would be an improper use of the court’s powers to appoint a receiver.
136. Reference is made to Principles of Australian Equity and Trusts, where it is noted that the appointment of a receiver by the court does not vest any property in the receiver (Bolton v Darling Downs Building Society [1935] St R Qd 237). Thus, it is said that the receiver has no right of action in his name for recovering property that is subject to the receivership; and must apply for leave to sue in the name of the entity entitled to sue.
137. The respondents further submit that, given the partnership dissolved on 21 June 2013, the debts of the partnership may be now statute-barred, meaning that whilst the parties could write to debtors and request payment, they would not be able to commence and maintain proceedings for recovery. Indeed, the respondents note that the debt collection agencies engaged by the parties have indicated as much. Accordingly, it is submitted that it would be a waste of effort and money to appoint a receiver to “chase” debts that are statute-barred.
138. The respondents also argue that the receiver has a potential conflict of interest. They note that Mr Berger has informed the court that he intends to lodge a debtor’s petition, and that he has asked Mr Solomons and Mr Robinson to consent to being his trustee in bankruptcy (referring to the correspondence dated 31 May 2019 annexed to Mr Berger’s affidavit sworn 3 June 2019). The respondents submit that if Mr Solomons and Mr Robinson become both receivers to MBBF and Mr Berger’s trustee in bankruptcy they will place themselves in a position in which it could be perceived that they could prefer Mr Berger’s personal position to that of their position as receivers of MBBF. Accordingly, they submit that they should not be allowed to be in a position where they could be perceived to be in conflict.
139. A lien for the costs of Stanford Lawyers is also raised as a factor to take into account. The respondents note that since the time of agreement between the parties to deposit moneys collected into Stanford Lawyers Law Practice trust account, Mr Stanford has: been involved in the recovery and receipt into his trust account of moneys owing from one client of MBBF, Mr Sajadi; instructed and communicated with Pattison Hardman/CCSG regarding collection of debtors of MBBF; and has receipted into his trust account moneys collected and paid their fees from the trust. Mr Stanford says that since receiving instructions in this matter, he has not received payment of his costs or disbursements; and that there is an equitable lien over the relevant moneys in the Stanford Lawyers Law Practice trust account.
140. The respondents submit that if the appointment of a receiver is ordered, then the court should first order the payment of Mr Stanford’s fees associated with: recovering and receipting into trust the moneys paid by Mr Sajadi; instructing and communicating with Pattison Hardman/CCSG regarding collection of debtors of MBBF; as well as receipting into his trust moneys collected and paying their fees from the trust.
141. Further, it is noted that the respondents assert a constructive trust and/or lien over the assets of MBBF to satisfy the claim they have brought against Mr Berger for misappropriation of assets of the partnership. It is noted that in In re Hallett’s Estate; Knatchbull v Hallett (1880) 13 Ch D 696 Jessel MR held that a person who was owed fiduciary obligations was able to trace assets in which he or she had a beneficial interest where there had been a breach of fiduciary obligations. Accordingly, the respondents submit that their claim would have priority ahead of any claim by a receiver and so the appointment of a receiver would be futile as against the plaintiffs’ claim.
142. As to the costs of the motion, the respondents say that if Mr Berger succeeds in his motion, as a litigant in person, he is not entitled to costs; and that if Mr Berger is not successful in his motion, Mr Berger should be ordered to pay the respondents’ costs of and associated with the motion.
143. The respondents submit that the appointment of a receiver will be a costly exercise that will deplete what little money has been recovered and deprive the payment of existing creditors.
144. They submit that there is an alternative to the appointment of a receiver and that is that the parties should be ordered to exchange details of their files, the amounts of debtors, WIP billed, recovered costs written off, creditors paid and the whereabouts of any funds collected that exceed creditors paid. In that regard, they proposed a timetable which would require Mr Berger within four weeks to prepare and serve upon the respondents a list of all MBBF and personal matters Mr Berger took after the dissolution of the MBBF partnership on 21 June 2013 and, in respect of each such matter: detail the costs he and/or Mr Morgenstern recovered, detail the costs he and/or Mr Morgenstern wrote off and or discounted, provide details of creditors paid and the amounts, and the amounts of any moneys collected and not paid to creditors. It is submitted that within a further four weeks after the defendant has provided his list, the respondents would: prepare and serve upon the defendant a list of all MBBF and personal matters Mr Freedman took after the dissolution of the MBBF partnership on 21 June 2013 and, in respect of each such matter: detail the costs recovered, detail the costs written off, provide details of creditors paid, and the amounts of any moneys collected and not paid to creditors; and that the matter then be listed for directions eight weeks hence.
145. The respondents note that in Cuming v Hennessy Young CJ in Eq, speculated that the parties could work out a “system whereby work in progress and allied matters could be finalised in a far more inexpensive way than by putting in a receiver” and commended the parties for considering an alternative to the appointment of a receiver (namely, mediation).
146. The respondents point to the observations of Brereton J in Morkaya v Parkinson; Parkinson v Morkaya [2008] NSWSC 1050 at [20]:

... But despite the potentially ruinous consequences, if the parties are in intractable dispute appointment of a receiver may be inevitable. If the court is to decline to appoint a receiver in such circumstances, it will usually require that there be some mechanism in place to provide comfort to the court and to the party not in control as to the interim management of the partnership business ... .

147. Finally, as an example of the maxim that he who seeks equity must do equity, the respondents submit that if the court is inclined to exercise its discretion and grant the request for the appointment of a receiver, then it is incumbent upon Mr Berger first clearly and precisely to articulate, in respect of each of his MBBF and personal matters, the details of: costs he and/or Mr Morgenstern recovered; costs he and/or Mr Morgenstern have written off; creditors paid and the amounts; and the amounts of any moneys collected and not paid to creditors.
148. The respondents submit that if Mr Berger wishes equity to exercise its discretion in his favour then he should first fulfil his own legal and equitable obligations to his former partner’s executor and trustees, arising out of the subject matter of the dispute (i.e., the partnership) and account for the above.
149. Finally, the respondents submit that in the context of Mr Berger appropriating to himself and his subsequent firm, MBB, monies collected from MBBF debtors, rather than paying the moneys into the MBBF partnership account and refusing Mr Freedman’s requests that he do so, and now seeking to use what money has been collected to embark on his quest to appoint a receiver to try to recover moneys before he intends to go bankrupt, Mr Berger is not coming to equity with clean hands.

Determination

150. Long Innes J said in Tate v Barry (at 383) that:

It must now, I think, be regarded as settled that in a suit instituted in Equity for the winding up of a partnership already dissolved, or for the dissolution of an admitted partnership in which it is clear that dissolution will be granted at the hearing, the plaintiff is entitled as a general rule, and practically as a matter of course, to the appointment of an interim receiver ... .

151. However, more recently that has not been the position adopted in this Court in cases such as Cuming v Hennessy and Gumbleton v Hewitt [2012] NSWSC 886 (Gumbleton v Hewitt), where it has been recognised that the question whether a receiver will be appointed in such circumstances remains a question of discretion and requires a consideration of all the relevant circumstances.
152. In Cuming v Hennessy, having said (at [1]) that, for the purpose of appointment of an interim receiver “one merely looks to see whether the plaintiff has set up a prima facie case that there is a partnership”, Young CJ in Eq (as his Honour then was) outlined some of the principles relating to the appointment of a receiver in relation to the dissolution of a partnership (from [7]ff), as follows:

The traditional law is as M McLelland J said in Davey v Donnelly (16 May 1991, unreported):

“Where there are proceedings for the winding up of a partnership, the existence and dissolution of which are not in contest, the plaintiffs are, generally speaking, entitled to have an interim receiver appointed almost as a matter of course. ... The rationale of this rule is that no partner has any greater right than the others to wind up the partnership affairs to the exclusion of those others. Nevertheless, the Court has an over-riding discretion in the matter, and for substantial cause shown will refuse, or limit the terms of, the appointment of a receiver.”

That statement was based on the case of Tate v Barry [1928] NSWStRp 41; (1928) 28 SR (NSW) 380 at 383, and on the then current edition of Lindley on Partnership.
However, as Mr Burke for the defendant has reminded me, the current edition of Lindley, the 19th, has modified that statement and in the 18th edition, at paragraph 23.160, the learned editor says:

“Lord Lindley's use of the expression “almost as a matter of course" in relation to appointments following a general dissolution should not be taken too literally: there is nothing approaching a presumption that a receiver will be appointed in such a case and sufficient ground will always have to be shown, as the Court of Appeal made clear in Toker v Akgul (2 November 1995, unreported).”

That attitude was adopted by Barrett J in this Court in Rowlands v Macdonald [2002] NSWSC 282 and by Le Miere J in Western Australia in Moloney v Piachniarski [2004] WASC 240; (2004) 51 ACSR 564 at 573.

153. In Gumbleton v Hewitt, Rein J noted that in Cuming v Hennessy Young CJ in Eq “accepted that the appointment of a receiver, although usual, is not something which will occur in every case without consideration of its appropriateness”. In Daniels v Smith [2006] NSWSC 1424 (cited in Byrne v Byrne [2011] NSWSC 1437 by Barrett J, as his Honour then was), Brereton J (as his Honour then was) said (at [8]-[9]):

In Cuming v Hennessy [2005] NSWSC 1219 (28 November 2005) Young CJ in Eq described to [sic] the substantial cost of installing a receiver in a partnership with only modest assets and to the development of the law since 1928. His Honour referred to Davey v Donnelly (NSWSC, unreported, 16 May 1991 - BC9101992), in which McLelland J, as he then was, having acknowledged the rule that where there were proceedings for the winding up of a partnership, the existence and dissolution of which were not in contest, the plaintiff was entitled to have an interim receiver appointed almost as a matter of course - the rationale being that no partner had any greater right than the others to wind up the partnership affairs to the exclusion of the others - added that the court had an over-riding discretion in the matter, and for substantial cause shown would refuse, or limit the terms of, the appointment of a receiver.
Young CJ in Eq, in Cuming v Hennessy , also referred to Rowlands v MacDonald [2002] NSWSC 282, in which, after referring to Tate v Barry, Barrett J observed that though the case was one in which the conditions for the application of the general principles were satisfied, the remedy remained discretionary, and that, in the words of Powell J in Fitz-Gibbon v Khoury (NSWSC, unreported, 1 March 1985), the court must pay attention to the surrounding circumstances:

“This general rule notwithstanding, it is equally well established that it is not inevitable that, in any such case, an interim receiver and manager will be appointed, and that the Court retains a residual discretion as to whether any appointment should be made; one of the bases upon which, in an appropriate case, an appointment will be refused, is that the consequences of such an appointment will be ‘ruinous’ (see, for example, Walters v Taylor (1807)15 Ves 16; [1807] EngR 206; 33 ER 658; Tate v Barry [1928] NSWStRp 41; (1928) 28 SR (NSW) 380; Sobel v Boston [1975] 2 All ER 282).”

154. In Redrock Co, Brereton J (as his Honour then was) noted some other “balance of convenience considerations” as including: the costs of the receivership; the ultimate saleability of the business and the price that might be realised; and the fact that the asset which it recovers “might well be a diminished one” (see at [53]).
155. The authors of On Equity (9th ed, 2009, LawBook Co), (P W Young, C Croft, M L Smith) (at [16.680]) say that:

... Traditionally, on the breakdown of a partnership, the partners were considered to be entitled to have a receiver appointed to the partnership property. However, over time, the court’s approach has changed – the matter is now one for the discretion of the court, and a receiver is no longer appointed “almost as a matter of course”. [footnotes omitted]

noting that “[o]ne of the matters considered in the exercise of this discretion is whether the appointment would be “ruinous” to the business or undertaking in question” (citing Cuming v Hennessy; Fitz-Gibbon v Khoury; Redrock Co at [50]; and Rowlands v MacDonald at [29]).

156. What is abundantly clear in the present case (and, ironically, was reinforced by the supplementary submissions made by Mr Berger on 5 August 2019 when the hearing of his application was effectively reopened following his complaint as to procedural fairness) is that there is an ongoing dispute as to the dealings between the partners of the now dissolved legal practice.
157. Mr Berger harbours suspicions as to misconduct (professional or otherwise) on the part of his former partners and has obviously trawled through the records available to him (and wishes a receiver to be appointed to trawl further through the partnership records) in order to determine whether, for example, there was proper adherence to firm policies (or perhaps inter-partner agreements) as to write-offs, discounts, collection of work in progress and the like.
158. Mr Berger has accused his former partners, in effect, of tax evasion (in the letters sent to the authorities) and of other unethical conduct. (It would appear from some of the correspondence to which Mr Berger directed my attention that there were similar suspicions harboured by one or both of his former partners in relation to his conduct (the respondents would no doubt say that those suspicions were warranted in light of the Law Society findings against Mr Berger but here is not the place to comment on those findings).)
159. In the submissions before me, emphasis was placed by Mr Berger on the manner in which the costs of proceedings involving Ms Glass were dealt with (his suspicions no doubt being fuelled by the text of the communications between Mr Freedman and Ms Glass to which my attention was drawn but which might well have been explicable in a more innocuous way) and in relation to the client file in which he says an amount of cash was paid to his former partner and for which he says his former partner did not account to the partnership (about which there is no basis for me to form any view).
160. Insofar as the complaints made by Mr Berger relate to breaches or otherwise of duties owed between the partners or of agreements between the partners, those are matters that will arise for determination (if at all) in the context of the matters raised in the principal proceedings. It suffices to note here that there is obviously a depth of suspicion, mistrust and aggravation on Mr Berger’s part and I can only assume any ill-feeling is reciprocated by Ms Gopalan (having regard to some of the material to which Mr Berger referred, including her apparent acknowledgment of the toxicity of their relationship and her refusal to attend meetings of the partners from mid-2011).
161. The significance of the above is that my perception is that Mr Berger is indeed seeking to air his partnership disputes, and have an investigation of matters relating to those disputes, under the auspices of a receivership where the costs will be borne by the relatively small amounts presently to the credit of the partnership (and, to the extent that this exhausts the partnership funds, effectively at the expense of the creditors). The argument that if one or both of the two main disputed debts is or are recovered this will fund the receivership begs the question, in that it assumes the success of those efforts (which, if they were to prove unsuccessful, would conversely be likely to exhaust the partnership funds).
162. Mr Berger complains of delay and obfuscation; and he expresses considerable frustration at the position in which he now finds himself. Wherever the rights and wrongs of his complaints may lie, it is not to my mind a proper use of partnership funds (particularly after the debt collection efforts that have already been undertaken) now to expend further funds on the appointment of a receiver. In particular, I do not accept that it is in the interests of the partnership’s creditors to expend the small sums presently available on further costs of an exercise that I am not persuaded is sufficiently likely to bear fruit in order for that expenditure to be proportionate to any recovery therefrom (and which appears to be designed in no small measure to settle outstanding scores between the partners in their personal disputes).
163. I emphasise the position of creditors in this regard because the position as between the partners themselves is one in respect of which I consider it likely that both sides have played a part – and that this can be ventilated in the principal proceedings in due course without the need for the receiver to investigate Mr Berger’s allegations for him at the expense of the partnership (and thus potentially the creditors).
164. I understand that Mr Berger challenges the figures that have been put forward by the respondents and by their solicitor as being “rubbery”. Nevertheless, at this stage that is the material that is before me. Moreover, Mr Berger himself is not prepared (or financially able) to put forward security for the receiver’s costs.
165. Mr Berger’s position, as I understand it, is that if a receiver is not appointed then, through Mr Freedman’s and the respondents’ actions (or inaction) or delay, his former partners will have brought about a position whereby he faces bankruptcy and may have lost the ability to recover from various of the debtors. From his perspective, I can understand his frustration. However, insofar as debts are (or are likely to be) presently statute-barred, there can be no useful purpose served in appointing a receiver to investigate their collection – particularly in light of the fact that efforts have already been made for the collection of many of the debts. Insofar as this means that Mr Berger’s position has been prejudiced by the conduct of those other parties, if he has a cause of action against them then it is a matter for him to pursue it. However unpalatable as it is for Mr Berger insofar as his personal position is concerned, I consider that the focus needs to be on what is a sensible way forward in the interests of creditors. And I have concluded that that is not by way of the appointment of a receiver in circumstances where I consider that would be futile and where the only real purpose that would thereby be served would be to give Mr Berger a further opportunity to air his many complaints as to his former partners’ conduct at someone else’s expense.
166. Accordingly, I will dismiss Mr Berger’s notice of motion. I consider that a regime of the kind proposed by the respondents (with some amendment to take into account Mr Berger’s criticisms) is a sensible means of progressing the matter in accordance with the statutory mandate for the just, quick and cheap resolution of the real issues in dispute; and that the dispute between Mr Berger and his former partners, if it is to be pursued, should be dealt with in the ordinary course in the principal proceedings.
167. As to costs, I see no reason why costs should not follow the event.

Orders

168. For the above reasons, I make the following orders:
     • (1) Order the parties on or before 20 December 2019 to serve on the other party a list of all MBBF and personal matters taken by that party (or in the case of the respondents, by the late Mr Freedman himself or in partnership with Ms Gopalan) after the dissolution of the MBBF partnership on 21 June 2013 and, in respect of each such matter, to provide details of all costs or fees recovered in respect of those files; the costs written off or discounted on those files; the details of creditors paid and the amounts so paid; and the amounts of any moneys collected and not paid to creditors in respect of those files.
     • (2) Dismiss with costs the notice of motion filed by the defendants seeking the appointment of a receiver in respect of the dissolved MBBF partnership.
     • (3) List the matter for further directions at 9am on 11 February 2020 before Ward CJ in Eq.

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