(d) that Howard Media has at no time prepared any partnership tax returns or financial statements and that the practice of the parties has been for the "debt due" to A M Marketing to be invoiced.
24 Mr Priestley also relied on the fact that the parties own no joint property (apart from the "Better Business" magazine in respect of which a 50% share of the magazine was A M Marketing's agreed remuneration) and the fact that each of the companies was undertaking other work during the supposed duration of the partnership. He submitted that, in truth, there was no business being carried out in common by the parties: cf s 1 Partnership Act 1892.
25 Mr Priestley also submitted that the Court should decline to exercise its discretion in favour of Howard Marketing having regard to the conduct of that company, both before the commencement of the proceedings in the Local Court and during the course of those proceedings. He pointed in particular to a number of admissions of the debt due, together with the fact that Howard Media has not conducted the litigation in a timely fashion. He invited the Court to infer that Howard Media's present application is more concerned with deferring the payment of a due debt than with any question of jurisdiction.
26 I accept that, taken at face value, the various admissions by Howard Media of some debt due to A M Marketing are inconsistent with the existence of a partnership agreement. As noted by McColl JA in Zisis at [34]:
"the relationship between partners is not that of debtor and creditor unless and until the partnership accounts have been finally taken after dissolution and a balance has been ascertained to be owing from one to another".
27 However, I do not think it necessarily follows that Howard Media's defence and cross-claim are obviously lacking in merit or, to adopt the language of Bryson J in Sanderson Motors at [7], that they should not receive judicial consideration.
28 In my view, the letter from the principal of A M Marketing referred to above is not necessarily inconsistent with the partnership agreement alleged by Howard Media. If there was an oral partnership agreement, as alleged, the terms of that letter may readily be construed as a separate agreement requiring the parties to account at certain times, which is not necessarily inconsistent with the existence of a partnership.
29 Further, it may not be completely correct to say that the agreement did not contemplate the sharing of losses. I note that the arrangement set out in the letter provided, after payment to each company of one-third of the advertising revenue in respect of a publication, that 50% of the balance be paid to each of them. The "balance" referred to appears to be the balance of funds in the jointly-operated account. That, in practice, meant that the parties were at least to share the burden of any bad debts, at least so long as there were funds in that account.
30 In any event, as submitted by Mr Docker, it is arguable that in the absence of an express provision for the sharing of losses, the arrangement nevertheless made such provision impliedly: see Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 at 327.6.
31 There are other features of the arrangements between the parties that are consistent with the existence of a partnership agreement. These include the agreement to share profits, the fact that both companies combined their efforts in the business of producing identified magazines with a view to mutual profit and the fact that each was entitled to the repayment of expenses out of a jointly operated bank account controlled by both of them.
32 I accept, as submitted by Mr Priestley, that the agreement to share profits is not determinative (see s 2 Partnership Act and Elkin & Co Pty Ltd v Specialised Television Installations Pty Ltd [1961] SR (NSW) 165 at 169). Nevertheless, it is a factor that supports the claim.
33 As noted by Mr Docker, I do not need to determine whether or not there is a partnership, nor is it appropriate for me to embark on a consideration of the merits of Howard Media's defence and cross-claim (or the proposed amended cross-claim) at this stage. It is enough to say that I am satisfied that there are reasonable grounds for those claims.
34 As to whether the conduct of Howard Media should disentitle it from the relief claimed, I am not satisfied that there has been undue delay in the proceedings in the Local Court. The contention that a partnership agreement existed between the parties was made in the defence first filed in those proceedings. To the extent that Howard Media has been slow to refine its cross-claim and to recognise that the Local Court had no jurisdiction to hear it, I am not satisfied that is due to any delay or deliberate obfuscation on its part.
35 Mr Priestley submitted that it is open to Howard Media to pursue its cross-claim as a separate proceeding in this Court. The difficulty with that course, however, is that the existence of the partnership agreement is pleaded in defence of the debt claimed in the Local Court. Plainly, the interests not only of the parties but of the public would be best served by having all of the issues in dispute determined at the one time. Further, I accept, as submitted by Mr Docker, that if the Local Court were to make a finding that no partnership agreement exists, that would create an issue estoppel which may prevent Howard Media from pursuing its cross-claim.
36 I accept that there is considerable force in the submissions put by Mr Priestley that Howard Media's admissions of a debt due are inconsistent with the existence of a partnership agreement. However, for the reasons set out above, it appears to me that there is a respectable argument as to the existence of such an agreement which warrants judicial consideration. That, in my view, is sufficient reason for hearing the proceedings in this Court.
37 Mr Priestley submitted, in the alternative, that if the Court is inclined to grant the relief sought by Howard Media, only part of the dispute should be permitted to proceed and that there should be judgment for A M Marketing in respect of the admitted debt. He submitted that the order permitting Howard Media to prosecute its claim in this Court should be conditional upon that judgment debt being paid within fourteen days. I do not accept that submission. To isolate a particular part of the dispute would prejudge the very issues sought to be agitated in the proceedings. In my view, however, it is appropriate to order Howard Media to pay the admitted part of the claim into Court as a condition of the transfer. Mr Docker indicated that Howard Media would be prepared to consent to a condition in those terms.