The seemingly endless wrangling over money owing by one insolvency practice partner to his former practice partner might actually be reaching a conclusion eight years after the pair split, with a NSW Supreme Court judge yesterday ruling on the final issues in dispute.
“The defendants ask me to accept that, faced with the need to give up the administrations, outgoing practitioners would pay $1.9 million for the privilege of having someone else take over those administrations.” Justice Guy Parker.
In Shazbot Pty Ltd v Warner Capital Pty Ltd (No 3) [2023] NSWSC 527 Justice Guy Parker dismissed the remaining arguments of defendant Anthony Warner and directed he and former partner Steve Kugel to undertake “the necessary calculations of the amount owing between the parties on the final balance of the partnership account”.
Since 2014 when the pair’s relationship imploded Warner and Kugel have been warring over just about every element of a professional partnership that can be disputed. Warner even challenged Justice Parker’s October 2018 finding that the pair’s business relationship was a partnership.
He failed in that and yesterday the judge declined to find in Warner’s favour on the questions of valuing an insolvency practice and valuing an insolvency practice website.
“I have concluded that the defendants have failed to establish that, as they claim, the book of administrations had a substantial negative value, much less what that value was; and so too have the defendants failed to establish a value for the Insolvency Experts website, and it follows that no value has been established for the websites retained by Mr Warner either,” the judge said.
Warner did not respond to iNO‘s enquiries by deadline, and Kugel, who is overseas, couldn’t be contacted.
His honour’s judgment however contains a wealth of considerations for any insolvency practitioner considering getting out of the game and hoping to offload an active book of external administrations.
For example, Warner had contended that given the unique nature of an insolvency practice, the vendors of a book of administrations might well have to discount the book’s value or even pay a sum to the acquirer.
This argument was formulated on the basis that when he and Kugel split, Warner took on the great bulk of the administrations and their work-in-progress.
In defending Kugel’s claims Warner engaged Cor Cordis director Michael Hird and dVT Group partner Suelen McCallum to provide expert testimony in support but Kugel’s counsel refuted their reasoning at length and his honour also expressed some skepticism with their methodologies.
“The defendants ask me to accept that, faced with the need to give up the administrations, outgoing practitioners would pay $1.9 million for the privilege of having someone else take over those administrations,” the judge opined.
Adjourning the hearing until 2:00pm today, the judge also instructed the arch enemies to try and agree to orders as to costs in respect of this latest as well as his previous judgments. If not, a new battle front in this attritional brouhaha is guaranteed to open.
Further reading:
Partnership stoush for trial but who’ll do the tax?
Liquidator appeals partnership finding
Ownership scrutinised as ex-partners fight over WIP
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