Court of Appeal
Supreme Court
New South Wales
Medium Neutral Citation: Warner Capital Pty Ltd v Shazbot Pty Ltd [2024] NSWCA 245 Hearing dates: 19 March 2024 Decision date: 15 October 2024 Before: Gleeson JA at [1];
White JA at [2];
Kirk JA at [82]Decision: Appeal dismissed with costs.
Catchwords: PARTNERSHIPS AND JOINT VENTURES – partnership accounts – valuation of uncompleted insolvency administrations – where taking of account required hypothetical valuation of work in progress and residual goodwill of insolvency practice – whether lack of comparable transactions determinative – whether hypothetical vendor would pay a “discount” to hypothetical purchaser to acquire book of administrations – where impermissible for insolvency practitioner to require or accept a “discount” to take on book of administrations – where insolvency practitioner able to resign or seek leave to resign from unprofitable administrations.
Legislation Cited: Bankruptcy Act 1966 (Cth), s 180
Corporations Act 2001 (Cth), ss 473(1), 545, 595
Cases Cited: In Re Trocevski (Trustee), Moran A Bankrupt [2023] FCA 355
Re Abdulrahman (Bankrupt) (No 2) [2011] FCA 899
Re Gollant [2017] FCA 1158
Shazbot Pty Ltd v Warner Capital Pty Ltd(No 2) [2019] NSWSC 1114
Shazbot Pty Ltd v Warner Capital Pty Ltd (No 5) [2023] NSWSC 1322
Shazbot Pty Ltd v Warner Capital Pty Ltd (No 6) [2024] NSWSC 81
Shazbot Pty Ltd v Warner Capital Pty Ltd [2018] NSWSC 1645
Spencer v The Commonwealth of Australia (1907) 5 CLR 418; [1907] HCA 82
Category: Principal judgment Parties: Warner Capital Pty Ltd (First Appellant)
Anthony John Warner (Second Appellant)
Clarence Street Partners Pty Ltd (Third Appellant)
Debtfree Pty Ltd (Fourth Appellant)
Shazbot Pty Ltd (First Respondent)
Steven Barry Kugel (Second Respondent)Representation: Counsel:
Solicitors:
J Stoljar SC / J R Anderson (Appellants)
E Finnane / D Farinha (Respondents)
Emerson Lewis (Appellants)
Uther Webster & Evans (Respondents)
File Number(s): 2023/191618 Decision under appeal
- Court or tribunal:
- Supreme Court
- Jurisdiction:
- Equity
- Citation:
Shazbot Pty Ltd v Warner Capital Pty Ltd (No 3) [2023] NSWSC 527
Shazbot Pty Ltd v Warner Capital Pty Ltd (No 4) [2023] NSWSC 1001
- Date of Decision:
- 18 May 2023
- Before:
- Parker J
- File Number(s):
- 2015/119465
HEADNOTE
[This headnote is not to be read as part of the judgment]
The second appellant (Mr Warner) and the second respondent (Mr Kugel) were insolvency practitioners who conducted their practice through a partnership known as CRS Warner Kugel from 19 September 2007 to 22 September 2014. The remaining parties in these proceedings were the companies controlled by Mr Warner and Mr Kugel. The partnership was profitable, and in the three years from 30 June 2012 to 30 June 2014 the net profits of the practice exceeded $1.8 million per annum. In September 2014, Mr Warner decided to bring the partnership to an end and to continue the insolvency practice by himself. At the date of dissolution of the partnership, the firm had on foot 461 insolvency administrations. The significant majority of…
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- Case
- [2024] NSWCA 245
- Decision Date
CaseChat Overview and Summary
The central legal issue before the Court was how to value the uncompleted insolvency administrations for the purpose of taking the partnership accounts. This required determining whether a hypothetical valuation of work in progress and residual goodwill was permissible, and if so, how such a valuation should be conducted, particularly in the absence of comparable transactions. The Court also had to consider whether a hypothetical vendor would offer a discount to a hypothetical purchaser to acquire the book of administrations, and conversely, whether an insolvency practitioner could lawfully require or accept such a discount.
The Court reasoned that the valuation of the uncompleted administrations required a hypothetical approach, acknowledging that a lack of comparable transactions did not render such a valuation impossible. It held that a hypothetical vendor would not offer a discount to a hypothetical purchaser to acquire the book of administrations. The Court further determined that it was impermissible for an insolvency practitioner to require or accept a discount to take on such a book, as an insolvency practitioner retained the right to resign or seek leave to resign from unprofitable administrations.
The appeal was dismissed with costs.
Orders
Orders of the court
Appeal dismissed with costs.
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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