Shazbot Pty Ltd v Warner Capital Pty Ltd (No 2) [2019] NSWSC 1114

Shazbot Pty Ltd v Warner Capital Pty Ltd (No 2) [2019] NSWSC 1114

The final orders should provide for dissolution of the partnership as at 22 September 2014, appointment of a receiver to wind up the partnership, and for the partners and relevant entities to account to the receiver for income collected or collectable (including WIP as at dissolution) and capital assets appropriated. The process should be administrative via a receiver, not adversarial via a referee. Mr Kugel is entitled to share in the WIP, subject to proper accounting, and Shazbot Pty Ltd is entitled to account for its share in Debtfree Pty Ltd due to Mr Warner's breach of fiduciary duty.

Parties
First Plaintiff: Shazbot Pty Ltd; Second Plaintiff: Steven Barry Kugel; First Defendant: Warner Capital Pty Ltd; Second Defendant: Anthony John Warner; Third Defendant: Clarence Street Partners Pty Ltd; Fourth Defendant: Debtfree Pty Limited
Jurisdiction
Australia
Judgment Date
30 August 2019
Procedural Posture
Equity Proceedings (partnership Dispute, Account, Receivership) / Post Merits, Final Orders Following Principal Judgment
Outcome
Final orders made providing for dissolution and winding up of the partnership, appointment of receiver, accounts to be taken, and declarations regarding breach of fiduciary duty. Parties to lodge written submissions on form of proposed orders within 14 days.
Legal Topics
Dissolution of Partnership, Winding Up, Receivership, Account of Profits, Breach of Fiduciary Duty
Equity Partnerships Trusts Dissolution of Partnership Winding Up Receivership Account of Profits Breach of Fiduciary Duty

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Parties

Shazbot Pty Ltd

First Plaintiff

Steven Barry Kugel

Second Plaintiff

Warner Capital Pty Ltd

First Defendant

Anthony John Warner

Second Defendant

Clarence Street Partners Pty Ltd

Third Defendant

Debtfree Pty Limited

Fourth Defendant

Procedural Posture

Equity Proceedings (partnership Dispute, Account, Receivership) / Post Merits, Final Orders Following Principal Judgment

Legal Issues

  1. 1 Form of final orders for dissolution and winding up of partnership
  2. 2 Entitlement to uncollected work in progress (WIP) at dissolution
  3. 3 Approach to accounting and valuation of partnership assets (including WIP and goodwill)

Ratio Decidendi

The final orders should provide for dissolution of the partnership as at 22 September 2014, appointment of a receiver to wind up the partnership, and for the partners and relevant entities to account to the receiver for income collected or collectable (including WIP as at dissolution) and capital assets appropriated. The process should be administrative via a receiver, not adversarial via a referee. Mr Kugel is entitled to share in the WIP, subject to proper accounting, and Shazbot Pty Ltd is entitled to account for its share in Debtfree Pty Ltd due to Mr Warner's breach of fiduciary duty.

Court Disposition

Final orders made providing for dissolution and winding up of the partnership, appointment of receiver, accounts to be taken, and declarations regarding breach of fiduciary duty. Parties to lodge written submissions on form of proposed orders within 14 days.

Orders

  • Declare that Mr Warner and Mr Kugel carried on business in partnership from 19 September 2007 acting as company liquidators etc. (Partnership Act 1892 (NSW))
  • Declare that the partnership was dissolved by agreement on 22 September 2014.