Court of Appeal
Supreme Court
New South Wales
- Amendment notes
Medium Neutral Citation: Warner Capital Pty Ltd v Shazbot Pty Ltd [2020] NSWCA 121 Hearing dates: 12 and 13 March 2020 Decision date: 25 June 2020 Before: Macfarlan JA at [1]
Meagher JA at [2]
Gleeson JA at [3]Decision: (1) Appeal allowed in part as to grounds 5, 6, 7, 8 and 9(a)(i) and (c)(i).
(2) Cross appeal dismissed.
(3) Set aside orders 4, 5, and 8 made by the primary judge on 16 September 2019.
(4) Vary orders 6 and 7 made by the primary judge on 16 September 2019 by deleting the words “to the Receiver” wherever appearing in orders 6(a), (b), (c) and 7(a) and (b).
(5) Order that it is a condition of the relief granted by the primary judge on 16 September 2019, as amended by order (4) above, that Shazbot Pty Ltd transfer to Warner Capital Pty Ltd its share in CRS Warner Kugel Pty Ltd and its units in the CRS Warner Kugel Unit Trust.
(6) Remit the matter to the primary judge for the taking of accounts, with the following directions:
(a) within 21 days of these orders, the parties’ legal representatives are to confer and attempt to reach agreement as to the quantum of each item of income the subject of the account and the value of the assets and liabilities of the Partnership Firm as at 22 September 2014 (as defined in order 1 made on 16 September 2019), and to file a document recording the extent of any agreement as to the account required to be given by the plaintiffs and the defendants respectively;
(b) within 42 days of these orders, to the extent that the parties are unable to agree on narrowing the scope of the account:
(i) the first, third and fourth defendants shall file their detailed account verified by affidavit with respect to the matters identified in order 6(a), (b) and 7(b), (c) made on 16 September 2019, as amended by order 4 above;
(ii) the first and second plaintiffs shall file their detailed account verified by affidavit with respect to each item referred to in order 6(c) and 7(a) made on 16 September 2019, as amended by order 4 above;
(iii) direct that the items of each said account shall be numbered consecutively;
(iv) the account shall also state what the plaintiffs and defendants respectively claim to be the assets and liabilities of the Partnership Firm as at 22 September 2014, and the value thereof, to the extent that those matters are not agreed pursuant to the direction in 6(a) above.
(c) the primary judge shall give such further directions with respect to the inquiry as considered necessary.
(7) Direct the parties to file and serve short written submissions (not exceeding five pages) on the question of costs of the appeal and cross-appeal as follows:
(a) appellants’ submissions within 7 days;
(b) respondents’/cross-appellants’ submissions within a further 7 days;
(c) appellants’/cross-respondents’ submissions in reply…
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- Case
- [2020] NSWCA 121
- Decision Date
CaseChat Overview and Summary
The legal issues before the Court of Appeal included determining whether the parties’ insolvency practice was a partnership, and if so, how the partnership assets and liabilities should be accounted for and valued upon dissolution. Specifically, the court was required to consider the appropriate method for valuing work in progress, distinguishing between its "collectible" component and "goodwill." Furthermore, the court examined whether a director had breached fiduciary duties owed to a shareholder in relation to the transfer of a share for nominal consideration during the dissolution of the partnership.
The Court of Appeal allowed the appeal in part, finding that the primary judge's orders required variation. The court clarified that the insolvency practice was to be treated as a partnership for the purpose of taking accounts. It directed that the matter be remitted to the primary judge for the taking of accounts, with specific directions for the parties to confer and attempt to reach agreement on the quantum of income and the value of assets and liabilities. The court also ordered that a condition of the relief granted by the primary judge was the transfer of a specific share and units between the parties. The court dismissed the cross-appeal and set aside certain orders made by the primary judge, while varying others to remove references to a receiver.
Orders
Orders of the court
(1) Appeal allowed in part as to grounds 5, 6, 7, 8 and 9(a)(i) and (c)(i).
(2) Cross appeal dismissed.
(3) Set aside orders 4, 5, and 8 made by the primary judge on 16 September 2019.
(4) Vary orders 6 and 7 made by the primary judge on 16 September 2019 by deleting the words “to the Receiver” wherever appearing in orders 6(a), (b), (c) and 7(a) and (b).
(5) Order that it is a condition of the relief granted by the primary judge on 16 September 2019, as amended by order (4) above, that Shazbot Pty Ltd transfer to Warner Capital Pty Ltd its share in CRS Warner Kugel Pty Ltd and its units in the CRS Warner Kugel Unit Trust.
(6) Remit the matter to the primary judge for the taking of accounts, with the following directions:
(a) within 21 days of these orders, the parties’ legal representatives are to confer and attempt to reach agreement as to the quantum of each item of income the subject of the account and the value of the assets and liabilities of the Partnership Firm as at 22 September 2014 (as defined in order 1 made on 16 September 2019), and to file a document recording the extent of any agreement as to the account required to be given by the plaintiffs and the defendants respectively;
(b) within 42 days of these orders, to the extent that the parties are unable to agree on narrowing the scope of the account:
(i) the first, third and fourth defendants shall file their detailed account verified by affidavit with respect to the matters identified in order 6(a), (b) and 7(b), (c) made on 16 September 2019, as amended by order 4 above;
(ii) the first and second plaintiffs shall file their detailed account verified by affidavit with respect to each item referred to in order 6(c) and 7(a) made on 16 September 2019, as amended by order 4 above;
(iii) direct that the items of each said account shall be numbered consecutively;
(iv) the account shall also state what the plaintiffs and defendants respectively claim to be the assets and liabilities of the Partnership Firm as at 22 September 2014, and the value thereof, to the extent that those matters are not agreed pursuant to the direction in 6(a) above.
(c) the primary judge shall give such further directions with respect to the inquiry as considered necessary.
(7) Direct the parties to file and serve short written submissions (not exceeding five pages) on the question of costs of the appeal and cross-appeal as follows:
(a) appellants’ submissions within 7 days;
(b) respondents’/cross-appellants’ submissions within a further 7 days;
(c) appellants’/cross-respondents’ submissions in reply (if any) within a further 5 days.
(8) For the avoidance of doubt, the question of costs of the proceedings below is to be determined by the primary judge.
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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