Shazbot Pty Ltd v Warner Capital Pty Ltd (No 6)

Shazbot Pty Ltd brought an action against Warner Capital Pty Ltd seeking, among other things, an account of partnership assets. Shazbot claimed that it was a partner in a partnership with Warner, which had assets including a building and a bank account. Warner denied that a partnership existed and also denied owing money to Shazbot. The case proceeded to trial before the Federal Court of Australia, where Shazbot succeeded on some claims and Warner on others.

The main legal issues were whether a partnership existed, and if so, what its assets were. The court also had to determine whether third parties, who had received partnership assets, could be ordered to account to the partnership, and what the form of the orders should be. Additionally, the court considered whether costs should follow the event, and if so, how they should be apportioned between the parties.

The court found that a partnership did exist between Shazbot and Warner, and that third parties who had received partnership assets were to account to the partnership jointly and severally with the partners. The court held that there could be no set-off between the third parties’ liabilities to account and distributions to the partners. Regarding costs, the court ordered that costs follow the event, with Shazbot to recover costs from Warner in relation to the successful partnership claims, and Warner to pay Shazbot’s costs solely referable to the unsuccessful non-partnership claim. The court also refused indemnity costs.

The court ordered that Warner was to account to Shazbot for partnership assets, and that Warner was to pay Shazbot’s costs solely referable to the unsuccessful non-partnership claim. The court also directed that Shazbot was to lodge future tax returns for the partnership, and that both parties were to obtain advice on the lodgement of past tax returns.