Walters v Scarborough

Credibility 241Before turning to the determination of the legal issues before me, I note that issues of credibility arise in circumstances where much of the evidence relied upon by both sides consists of the respective protagonists' accounts of the many conversations that seem to have taken place during the 7 month period in question. Mr Bell notes that the critical conversation(s) on which the allegation of a partnership or joint venture is based are those set out in paragraphs [17] and [18] of Mr Walters' affidavit and that there is no independent corroboration of those conversations. (In that regard, the Skype communications between the two parties take on added significance in pointing to which of the different accounts of the various conversations is the more credible.) 242Mr Bell points to various matters in support of the proposition that Mr Walters was not a reliable witness. 243First, he refers to the contradictory evidence as to the timing of the conversation on 20 August 2009 (to which I have referred above) in which the payment of around $10,000 by Mr Scarborough to Mr Walters was discussed (the competing versions being para [79] of Mr Scarborough's affidavit and para [17] of Mr Walters' second substantive affidavit). In this regard, the Skype transcript (at CB 217A) clearly supports Mr Scarborough's version of events (at least in relation to timing). Furthermore, the complaint made at CB 218 of the Skype transcript as to late government payments is inconsistent with Mr Walters' version of the conversation. As to the reasoning underlying the request that the payment be in an amount less than $10,000, there seems no logical reason why Mr Scarborough would have requested this (or would have had any problem with bank reporting) and his Skype communications suggest that it was Mr Walters who had a concern as to what the liquidators might seek to do. It was put to Mr Walters (and is consistent with what happened) that he had sought to keep his name out of business arrangements over the period (including when he later set up Premier Installations). 244The conclusion I have drawn on this point is that, overall, Mr Scarborough's version of the conversation is the more likely and that what Mr Walters was seeking to do at this time was to ensure that the liquidators of Heaven & Earth had no knowledge of the payment(s) in question lest that provoke an enquiry or claims by the liquidators in relation to that amount. 245Secondly, Mr Bell points to the incompleteness of the Skype records (which belies Mr Walters' evidence as to their accuracy) and to the inconsistent evidence given by Mr Walters as to the reason for this (variously put as printer/photocopier problems). I do not draw any adverse inference out of the inconsistency in Mr Walters' answers in relation to the printer/photocopier issue (since it seems to me that he was referring to two functions of the same machine and generally confused as to the questioning). However, the juxtapositioning of some of the entries does cause me some concern and suggests that there should be caution as to the weight to be placed generally on the Skype transcript or at least those portions where there is obviously some missing and/or duplicated transcript. 246Mr Bell submits that the incompleteness of the records means that Mr Walters cannot be believed and that there is a reasonable inference that the missing pages do not assist Mr Walters' case. Insofar as I am invited to draw a Jones v Dunkel inference in this regard, I formed the view that Mr Walters' confusion in the witness box was genuine and that, other than treating the transcripts with some caution I should not draw the inference that Mr Walters is not to be believed as a whole simply by reason that the records are incomplete. The bulk of the material produced (and I have read the transcripts of the conversations between Mr Scarborough and Mr Walters very carefully in this regard) is consistent with the general time frame of events as can be deduced from the other documents (such as the money transfers and the like) and seems to me unlikely to have been concocted (since that would presumably require a considerable effort not only to manufacture a consistent exchange of communications but to reproduce them in the form they are in - profanities, crude jokes, reference to State of Origin matches and all). In any event, I note that such an inference would not permit a conclusion that the missing pages were damaging to Mr Walters' case. 247Thirdly, Mr Bell submits that the suggestion by Mr Walters that the purchase of batts from China would be financed without any additional capital (after the initial 4 container loads), on the basis that deposits from customers would provide the necessary funding, defies commonsense. He notes that Mr Scarborough paid $329, 666.83 for the importation of 24 containers on 26 July 2009 ([102]). Even taking into account the dispute as between Mr Walters and Mr Scarborough as to the amount paid by Mr Chin by way of deposit for the order he had placed and time of that payment ($98,000 in July according to Mr Walters; $102,363.64 as invoiced on 11 August 2009 according to Mr Scarborough), there would have remained a shortfall of some $200,000 to be paid for those container loads. (Mr Bell notes that the evidence is that this was paid by Mr Scarborough and that there is nothing to suggest that Mr Walters had any capacity to pay this or a half share of this.) Further, I note that the suggestion that the purchases would be funded by customer deposits, while initially put forward in discussions (i.e. that the acquisition of the batts would be self-funded), is inconsistent with the later discussions (initiated seemingly by Mr Walters) as to approaches to be made to investors in order to finance the acquisition of the later container loads, to which I have referred above. 248Mr Bell also points out that the cost of the importation was calculated at about $24 per bag ($8 per bag having been suggested to be half the notional profit per bag) but that nowhere does Mr Walters suggest how he was to find his share of the costs. In that regard, even during the hearing, the position adopted by Mr Walters seemed to be that, having paid $20,000 or thereabouts for his initial "contribution", he is now entitled to a half share (assuming that be the genesis of the $8 per bag figure he says was agreed) of all of the batts imported (some $296,000) without having contributed anything financially in relation to the later container loads (and in circumstances where almost half of the imported batts remain unsold and have not been used by Mr Scarborough in the conduct of the AAA Trade Power business). While I consider that Mr Walters' position in this regard is extraordinary, I think this is a matter that goes to the objective unlikelihood of a partnership/joint venture of the kind that Mr Walters claims rather than to his overall credibility. 249Mr Bell puts forward the proposition that, as a matter of commonsense, it is unlikely that any commitment as to a partnership or joint venture would have been made at a time when Messrs Walters and Scarborough were investigating the importation of batts without knowing final prices, other costs or availability. While I accept the force of that submission, it must be balanced against the evidence of Mr Scarborough himself that earlier financial transactions had taken place between the parties without any documentation. Moreover the tone of the Skype exchanges suggests an entrepreneurial tendency on the part of both businessmen, who may well have proceeded without a considered business plan in advance. 250Fourthly, Mr Bell submits that Mr Walters' evidence is an attempt to present the picture that he did all the work (in identifying the overseas suppliers of batts and in arranging for their importation); whereas Mr Scarborough also made enquiries of suppliers in China (via Alibaba) (CB 109A); had located Mr Peng of Double Egret (CB 111) from whom the batts were ultimately acquired; and had worked out the cost of importing the batts (CB 112A, CB 113, CB 113A, CB116). In relation to this submission, it seems to me that both parties seem to have sought to downgrade the contribution of the other. The Skype communications support the conclusion that both parties expended time and effort (albeit in some cases late at night when it might be that other business ventures had been completed for the day) in seeking to put in place arrangements for the importation of the batts. 251As to the contribution of the initial sum of approximately $20,000, it is submitted by Mr Bell that the parties had helped each other in the past and it would not therefore be unusual for Mr Scarborough to ask Mr Walters to make a payment of this kind (as a loan or advance). He also points out that the payments Mr Walters claimed to have made were drawn from funds held in First Art's accounts (although Mr Walters' evidence was that he had deposited personal funds in that account for that purpose). Mr Bell also notes that the initial invoices for the batts were in the name of Heaven & Earth (not in the names of Mr Scarborough and Mr Walters.) 252I accept that the payment of around $20,000 might well have been made simply by way of a loan or advance by Mr Walters (having regard to the history of the parties' relationship) and this would be consistent with Mr Walters later seeking reimbursement of that amount as (on one view of things) he did on 20 August 2009. However, Mr Scarborough himself seems to have treated that sum (however it might originally have been characterised or regarded) as Mr Walters' 'investment' in what might loosely be described as the joint endeavour in which the pair were then engaged in relation to the importation of at least the first 4 container loads. The fact that the money was paid via Mr Walters' company seems to me not to be material since the parties both treated it as his 'contribution' (whether that be a partnership contribution, as Mr Walters contends, or a contribution by way of loan, as Mr Scarborough contends). 253As to the credit of Mr Scarborough, much weight was put by Mr Sneddon on Mr Scarborough's conduct in relation to Annexure J - the fact that on his own evidence he was willing to mislead those with whom he had dealt and the circumstances in which Annexure J was created. As I understand it, I am invited to draw the inference that this email was, contrary to Mr Scarborough's evidence, never sent and was created in an attempt to bolster Mr Scarborough's version of events. 254Mr Bell submits that the conduct of Mr Scarborough in expressing his discomfort at representing to others that the two men were business partners (and his admission in the witness box that he had engaged in misleading behaviour in that regard, including volunteering further examples of that conduct) is to seen as going to his credit. I accept that Mr Scarborough did not shy away from admitting that his conduct (if his version of events were to be accepted) did not reflect well on him. I have considered what conclusions can be drawn from the Annexure J evidence. It seems to me that I can place little reliance either way on that evidence. I cannot be satisfied that Mr Walters in fact received the email (assuming it was sent), particularly since it seems likely that had it been received and read, it would have provoked an outraged response having regard to other communications in August. (Therefore, insofar as Mr Bell relies upon a failure by Mr Walters to allege a partnership/joint venture at this time, I draw no such inference.) However, I am also not satisfied that I should draw the conclusion that no such email was sent (notwithstanding the features of the email to which I have referred). 255Mr Bell also notes that Mr Walters did not tell Mr Scarborough that he had registered * Aussie Insulations * and that Mr Walters did not set up a separate bank account for that company. As to those matters, the registration of the company would be consistent with Mr Walters having simply proceeded on the understanding that the information given in relation to personal details for the setting up of the Aussie Batts company covered any alternative company. Hence the incorporation of the company is not something I see as tantamount to going behind Mr Scarborough's back as was submitted. However, the failure to report to Mr Scarborough on its registration may be more significant in that Mr Walters had not been shy in reporting on steps he had otherwise taken in relation to the batts. 256As to the bank account, there is evidence in the Skype communications that Mr Walters had requested the setting up of a second bank account and that Mr Scarborough had agreed to this. Coupled with the fact that a second bank account was in fact established, this lends some credence to the proposition that Mr Scarborough was doing so in response to Mr Walters' request and for the purpose of a proposed joint venture arrangement if and when that was ultimately agreed between them or temporarily to deal with the orders that had then been placed. However, the request for the AAA Trade Power No 2 account is inconsistent with the second plaintiff being the corporate vehicle for the two. Therefore the evidence on this aspect seems internally inconsistent. 257The position of Mr Scarborough (that he had asked Mr Walters if he minded talking to Mr Peng and seeing what his production was and if available placing orders as he was "idle at that particular time" (T 118.3)) seems inconsistent with the suggestion that Mr Walters was busy with the hamburger business and thus could not have spent as much time as he said he did on the importation of the batts. Similarly, his position that Mr Walters carried out the investigations and work he did purely out of friendship is inconsistent with the tenor of the Skype conversations. 258Ultimately, I make no credit findings against the two protagonists save to note that unless corroborated by contemporaneous material, I treat both of their accounts of the relevant events with some scepticism.

(i) Was there a partnership? 259At the outset I note that it is pointed out by Mr Bell that there is no mention in the Skype communications from February to August 2009 of a partnership or a partnership arrangement or a joint venture (nor was there reference to matters such as partnership accounts or books, finance for the partnership business, or how profits were to be distributed, no budgets or business plans). Mr Bell notes that even in the 26/27 August 2009 emails, Mr Walters refers to a "business agreement" rather than a partnership or a joint venture and does not identify the business agreement. 260How the parties may have described their business relationship (or their involvement in business) is not of itself determinative of the characterisation of that relationship ( Adam v Newbigging (1888) 13 App Cas 308 at 316; Weiner v Harris [1910] 1 KB 285 at 290). Hence the description by Mr Scarborough of himself as Mr Walters' business partner (even leaving aside his explanation of why that was done) would not of itself be conclusive. That must a fortiori be the case where, as here, there is little to suggest that the parties turned their minds, when they commenced discussing the importation of the ceiling batts, to how they were to document their arrangements in that regard.

• Indicia of partnership 261The definition of partnership in s 1(1) of the Partnership Act 1982 (NSW) is the relation which exists between persons carrying on business in common with a view of profit. Section 2 of the Act sets out various rules to which regard shall be had in determining whether a partnership does or does not exist. Those include the rule that the sharing of gross returns does not of itself create a partnership (s 2(2)) and that the receipt by a person of a share of the profits of a business is prima facie evidence that the person is a partner in the business (s 2(3)). 262The intention to make a profit is said to lie "at the very heart" of the partnership relationship, being "the grand characteristic of every partnership, and is the leading feature of nearly every definition of the term" ( Lindley & Banks On Partnership (18 th edn) at [2-07]). The learned authors go on to note (at [2-09]) that even where there is a genuine view of profit a partnership will only exist if the profits are intended to be realised for the common benefit of the participants, drawing a distinction with the position where the participants might enter into an association for the purpose of improving the individual profitability of each firm's business (citing an unreported decision of Dyson J in the Civil Division of the High Court in the UK in Brostoff v Clark Kenneth Leventhal , March 11,1996). (While it seems to me that it is not inconceivable that a partnership might be structured in order to produce separate benefits for the partners or their separate business interests, it also suggests that there might not be a common benefit (or a profit intended to be drawn from the partnership or venture as such) if what the parties here were contemplating was the joint importation of goods a portion of which would be separately sold or used by each in his own business with a view to making profit in that business. I do not suggest that this renders untenable a conclusion that there was a partnership or joint venture for the importation alone, but simply that it is a factor to take into consideration.) 263Apart from the identifying feature of partnership being that there be an enterprise with a view to the sharing of profit (as opposed simply to the sharing of gross returns), various factors have been identified as relevant in cases such as Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) (1974) 131 CLR 321 at 327), United Dominion Corporation Ltd v Brian (1985) 157 CLR 1 and Industrial Equity Ltd v Lyons (NSWSC unreported, Cohen J, 15 October 1991). Those factors include how the policy of the business undertaking or commercial enterprise was to be determined; whether there was property held jointly or on trust for the parties; and the contribution made by each of the parties to the responsibility and control of the undertaking. In Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd (1996) S.L.T 186 (to which reference is made in Lindley & Banks at [2-11]), the potential key features of a partnership were noted by Lord Coulsfeld, sitting in the Inner House in Scotland, as being mutual agency; participation in profits; sharing of losses; common capital; and the basic unassignability of the partnership relationship. 264While the sharing of losses during the term of the partnership does not appear to be an essential characteristic of a partnership (having regard to the definition and rules for which provision is made in the Act), the absence of any arrangement as to how costs are to be borne or losses shared may well be indicative of the existence or otherwise of a partnership. ( Lindley & Banks note, in a footnote to the discussion in [2-10] as to whether it is essential to a partnership that there be as an object the division of profits, the reported observation of Pumfrey J in Davies v Newman (2000) W.L.1841655, that it is of the essence of a partnership that both profits and losses are shared, but go on to express the view that under the UK legislation there is not a requirement that a partnership have as its object not only the acquisition but also the division of profits.) 265I also note the observation in Lindley & Banks at [5-07] that: ... Although partnerships and joint ventures obviously have a number of common characteristics, in some instances the two expressions appear to be used interchangably, whilst in others the joint venture is recognised as a relationship quite separate and distinct from partnership. In the current editor's view, whilst it can properly be said that all partnerships involve a joint venture, the converse proposition manifestly does not hold good. [reference being made to Spree Engineering and Testing Ltd v O'Rourke Civil and Structural Engineering Ltd May 18, 1999, NLC 299058403] ... it cannot be assumed that the participants in a transaction described as a joint venture do not each intend to carry on their own separate businesses [referring to share farming and oil exploration ventures by way of example] (my emphasis) 266I note that (in the absence of any written agreement defining the relationship when the parties), the intention of the parties must be objectively ascertained from their words and conduct. What is important in this regard is the substance of the transaction ( Canny ).
• Commercial venture 267As at March 2009, was there a joint business or commercial venture in contemplation? The Skype communications certainly suggest that in March there was in contemplation by both parties the importation of ceiling batts and Mr Walters' involvement to some degree in that process. I am by no means persuaded that at that stage the parties were proposing jointly to be engaged in the sale of the imported batts and it is clear that at no time were they proposing jointly to be involved in the installation of the imported batts (at most, Mr Scarborough suggesting that he was prepared to make his infrastructure available for Mr Walters to use if the latter obtained orders for the batts). Mr Scarborough's business (under the AAA Trade Power name) was treated by both as separate from any business venture in which Mr Walters was then proposing to become involved (as evidenced by Mr Walters' separate application for registration as an authorised installer and the setting up of Oz Insulations as a registered business name). 268I consider that there was a change in the focus of the parties during the course of the Skype communications such that by the time that the first order was placed in June it appears that the parties were contemplating not only that they would be jointly involved in the importation of the batts but also that they would share in the profits to be made from the on-sale of the batts. However, I do not accept that the mechanism by which this was to occur was ever ultimately agreed between the two.
• View of profit 269Was the common enterprise one with a view of profit? Certainly, each of the men was looking for business opportunities from which to make profits for himself (and, on Mr Scarborough's account of events, he felt sorry for Mr Walters in the financial position he was in and saw this as a way to assist Mr Walters to make some money). As noted earlier, an agreement to share profits and losses is seen as being generally of the essence of a partnership contract. Lindley & Banks notes Lord Lindley's explanation for this: Whatever difference of opinion there may be as to other matters, persons engaged in any trade, business, or adventure upon the terms of sharing the profit and losses arising therefrom, are necessarily to some extent partners in that trade, business or adventure. 270Thus it is said that, subject to exceptional cases, persons who agree to share profits and losses will normally find themselves treated as partners ( Lindley & Banks at [5-25]). Here, there is little to suggest how the parties contemplated that any losses were to be borne (nor as to how the costs were to be allocated in order to permit the calculation of profit - a matter of no little import when it is appreciated that what Mr Walters is seeking is a substantial sum of money representing what he contends was an agreement payment of $8, or half the anticipated profit, per bag in respect of the subsequent container loads imported but without any liability for the costs of the purchase and importation of those batts). 271There were discussions on Skype from which it may be inferred that the parties assumed there would be a joint sharing of profit in some fashion though the mechanics of this (and how it was to be calculated) were not precisely outlined. (Insofar as Mr Walters relies on the agreement he says was reached in the 12/15 March conversations as to the 50/50 profit split and Mr Scarborough relies on the June conversation in which he says agreement was reached as to the payment of a commission per bag, I treat both parties' accounts of oral conversations with some caution unless corroborated in the contemporaneous written communications between the parties.) 272Mr Walters asserts that each of the men had agreed to contribute $20,000 as his "share" or his initial contribution to the costs of importing the batts, and some support for that may be derived from the fact that Mr Scarborough did not later challenge the underlying assumption on which Mr Walters made reference to this in the Skype communications. That said, insofar as Mr Walters seemed (albeit confused in his evidence on this issue) to accept that in August 2009 he was seeking reimbursement of this amount, then that is inconsistent with it being some form of capital contribution to a partnership or joint venture and is more consistent with it being a loan or advance to assist Mr Scarborough. Mr Scarborough accepted that some of the costs were to be shared (namely, the cost of the initial trip to China suggested by him in relation to the sourcing of the product) but again suggests that this was assistance from Mr Walters on the basis of their friendship. 273Where, as here, there is a clear conflict between the parties as to whether there was a partnership or joint venture and, if so, on what terms, regard needs to be paid to what in fact happened. There is no dispute that a payment was made (if not personally by Mr Walters then through his company, First Art) of the initial deposit for the purchase of the first order of batts. Although Mr Scarborough accepted that he was responsible for payment of the balance of the purchase price, that would be consistent with either side's version of events. That said, Mr Scarborough did not correct Mr Walters when the latter referred in Skype communications to the $20,000 as his contribution nor did he cavil with the suggestion that this represented a half share of the costs when Mr Walters offered to provide funds for the final payment in respect of that first order. 274At least at the outset there was no bank account set up for the purpose of any business partnership (and, perhaps significantly, it was not until around the time of the subsequent container orders that Mr Walters seems to have seen this as necessary or desirable). Nevertheless, there were discussions as to the steps to be taken as to the application for a trade mark and for the setting up of a company in which it seems to have been intended that Mr Walters would be involved. 275The request for invoices to be put into the name of AAA Trade Power is another matter that might be consistent with either version of events - it is not surprising that Mr Scarborough took objection to the invoices being in the name of Heaven & Earth at least once that company was subject to external administration but such a concern would equally be indicative of his understanding that the orders were being placed for his business purposes alone (and for that purpose he would presumably need to have the invoices in the correct business name for tax or other reasons). 276By around June 2009, the discussions between the two were clearly proceeding on the basis that there was a profit to be made by each out of the importation and sale or use of the batts (though such a profit seems to have been contemplated as arising for each in respect of his individual business) and at least by July/August Mr Walters had in mind what arrangements might need to be made for the financing of the later orders.
• Policy of joint venture 277As to the policy of the joint venture, this factor focuses attention on how the parties' affairs (said to be the subject of the joint venture or partnership) are to be determined - who it is that makes the decisions as to what is done in the context of that association. (So, for example, it is said in Lindley & Banks at [15-01] that it is inherent in the contract of partnership that each partner will have the right to participate in the management and administration of the partnership, thus is might be thought that if one party has no involvement in the making of decisions then this is not consistent with a partnership. Nevertheless, a right to participate in management can be modified by agreement (see s 24(1)(5) of the Act) and it is by no means unusual for there to be partnerships in which different partners have different responsibilities.) 278Insofar as a right to direct or control the policy of the common enterprise may be a relevant factor to take into account in determining whether there is a partnership, it seems from the Skype communications that at least at the outset Mr Walters deferred to Mr Scarborough for decisions in relation to the sourcing of the batts (consistent with Mr Scarborough's view that all Mr Walters was doing was giving him assistance at a time when Mr Walters may not have been fully employed). Nevertheless, as time went on the Skype communications also show instances where Mr Scarborough sought Mr Walters' opinion on various issues. Hence, I think little can be drawn from the evidence in relation to this factor.
• Property 279As to the indicator that there be discernible partnership "property", there is little doubt that what the two men were involved in was the importation of ceiling batts and hence there is something clearly identifiable as partnership property. While it is not clear is whether it was the common intention of the parties that the batts so acquired were to be joint property, the fact that both contributed the funds for the purchase of the first 4 container loads seems to me to warrant the conclusion that those batts were batts in which both Mr Scarborough and Mr Walters had an interest (and hence that could be regarded as capable of forming partnership property).

Conclusion as to issue (i) 280At the outset I note that even on Mr Walters' version of events, any partnership or joint venture seems to have been one between he and Mr Scarborough, not one to which the then yet to be incorporated company (Aussie Insulations) was not a party (even though the proposed venture may have been intended to be carried out through a corporate vehicle such as that company). 281As to whether there came into existence a partnership between Mr Scarborough and Mr Walters (or a joint venture, using that term as a description of the effect of their relationship and not suggesting that it has any technical legal meaning) in March 2009, as contended for by Mr Walters, I have concluded that there did not. 282I note that in UDC v Brian , Mason, Brennan and Deane JJ said (at 10): The term "joint venture" is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots' law, "adventure") will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a "joint venture" and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred. (my emphasis) 283So, for example, in IEL v Lyons (where there was a joint venture), the question was whether that was such as would amount in law to a partnership, whatever name the parties may have put on that relationship. Cohen J noted that the phrase "joint venture" (which the parties there had adopted) did not establish any particular form of relationship. In both UDC and IEL v Lyons it was recognised that there may be a joint venture which does not constitute a partnership (as is also recognised in the extract from Lindley & Banks cited earlier). 284As at March/April 2009 and even later, Mr Scarborough and Mr Walters were clearly discussing (both on Skype and in their coffee shop meetings, though I do not accept the accuracy of the respective accounts of the latter) arrangements for a joint venture (in the sense of an activity in which they would be mutually engaged) in relation to the importation of ceiling batts but I am not satisfied that these discussions had resulted in a partnership (i.e. a joint commercial enterprise "with a view of profit" in the sense that the parties were to share the profits and losses of the enterprise, whether equally or otherwise) or joint venture analogous to a partnership of the kind alleged (i.e. for the joint importation and joint sale of the batts so imported). 285The initial discussions (insofar as they may have contemplated that Mr Walters would have an opportunity to make money from the sale of the imported batts) seemed to proceed on the basis that Mr Scarborough was to be in a position to use the batts for his own business and that any sale of the batts to third parties would be a separate matter. Hence any joint enterprise at that stage seems to have been one in which the pair were jointly involved in importation but would make any profit from the sale or use of the batts separately in the context of their respective business operations. 286As the discussions continued, and the excitement at the business opportunity presented by the importation of the batts became more palpable, discussion took place as to the proposed mechanics for what seems to have been envisaged as a jointly owned vehicle through which the batts might be sold (and as to the mechanism by which intellectual property in the packaging of the batts could be protected by way of trade mark). However, I am not satisfied that those discussions ever reached a concluded agreement as to the arrangements such that a conclusion could be drawn that a partnership or joint venture had come into existence.

(ii) If there was a partnership or joint venture for the importation and sale of batts, what were its terms? 287In light of the finding in (i) above, this issue does not arise. However, if it had (such that at least by around the time that the first (or subsequent) order(s) of batts were placed, there was a mutual understanding or arrangement that the parties would work together for the importation and then sale of the batts through a joint vehicle of some kind, so as to give rise (contrary to the conclusion I have reached) to a partnership or joint venture at that stage (which I note is not the one in the terms pleaded by the plaintiffs)), then it seems to me that it is clear that any such arrangement was one under the terms of it was recognised that there was also to be a sharing of the capital required for the joint venture (and I would infer in the absence of anything to the contrary that the capital contribution, and costs of the venture, would be shared equally). This seems recognised by Mr Walters' concerns as to how finance could be arranged for the funding of the subsequent purchase orders. Secondly, I would have found that under such an arrangement Mr Scarborough was to have the ability to make use of some or all of the batts (subject to any third party orders for which deposits had been accepted) for his own business (albeit, on Mr Walters' version of events, on the basis that he would pay an amount per bag so used). The significance of the last proposition is that it could not be said that the fact that Mr Scarborough (after the breakdown in the relationship) had used some of the batts in the conduct of the AAA Trade Power business amounted to breach of any fiduciary obligations arising out of any such joint venture. 288In other words, even if a partnership or joint venture had been established, I would not have found that it was on the terms pleaded by the plaintiffs (though nor would I have found it as limited as the agreement asserted by Mr Scarborough). Further, I would not have found that Mr Scarborough was in breach of any fiduciary obligation not to take for his own benefit a profit made available through the importation of the batts (since it was contemplated at the outset of the arrangements that he could do so). The only issue in that event would be a claim for any monetary amount payable by Mr Scarborough under the terms of the arrangement for so doing. 289I also note that if (as I consider is the case) there was no partnership and at most there was merely an unincorporated joint venture between the parties (in the sense of an undertaking in which they were mutually engaged), it is by no means the case that a fiduciary duty would flow therefrom. In UDC, Mason, Brennan and Deane JJ said (at 11-12): The most that can be said is that whether or not the relationship between joint venturers is fiduciary will depend upon the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken . If the joint venture takes the form of a partnership, the fact that it is confined to one joint undertaking as distinct from being a continuing relationship will not prevent the relationship between the joint venturers from being a fiduciary one. In such a case, the joint venturers will be under fiduciary duties to one another, including fiduciary duties in relation to property the subject of the joint venture, which are the ordinary incidents of the partnership relationship, though those fiduciary duties will be moulded to the character of the particular relationship: see, generally, Birtchnell v. Equity Trustees, Executors & Agency Co. Ltd (1929) 42 CLR 384 at pp. 407-409.) 290In the present case, the arrangements between Mr Scarborough and Mr Walters seem to me to go no further than to amount to informal arrangements under which each considered there was an opportunity to make a business profit for himself. I do not see the relationship between them as one of such trust and confidence as to import fiduciary obligations on either of them in relation to their dealings with the overseas suppliers or otherwise. Even had such an obligation arisen (so as to preclude one from taking for himself a benefit intended to be enjoyed jointly), that would at most seem to have precluded Mr Scarborough from taking the benefit of the warehouse lease in the name of AAA Trade Power alone (it would not have precluded him from making use of the batts in the course of the AAA Trade Power installation business) and since the lease in question was a short term lease it is hard to see what damage would have been sustained from the diversion of that opportunity (on a Keech v Sandford (1726) 25 ER 223 type claim). 291As to the exclusion of Mr Walters from dealing with the importation and sale of the batts from 29 August 2009, even assuming that I had been satisfied that there was a partnership or analogous joint venture, in the absence of a term specifying the manner in which that arrangement could be brought to an end, it seems to me that such a relationship must have been terminable at will (at least on the provision of reasonable notice). Given that one of the fundamental aspects of a partnership relationship is the subsistence of mutual trust (see Birtchnell ), the fact that this had clearly gone (at least on the part of Mr Scarborough) by 29 August 2009 means that it would surely have been open to him to bring any such partnership or joint venture to an end at that point. I do not see Mr Walters having any claim for damages or for equitable compensation as a result of the relationship having been brought to an end in those circumstances (and irrespective of whether or not the suspicions on Mr Scarborough's part or his criticisms of Mr Walters' moods or conduct were warranted) provided only that Mr Scarborough was by then genuinely of the view that the parties could no longer work together (as I accept he was). 292Leaving aside any claims arising out of the alleged breaches of fiduciary obligations (which must fail for the reason that I am not satisfied that there were fiduciary obligations owed by Mr Scarborough or, if there were, that they have been breached by reason of his conduct in terminating Mr Walters' involvement in relation to the importation of the batts and using the batts for his own business purposes), where does that leave the parties? No claim was made based on the failure of what might be seen as the joint enterprise or undertaking in which the parties were involved (of the kind of claim considered in Muschinski v Dodds ). 293In Baumgartner v Baumgartner, Mason CJ, Wilson and Deane JJ referred to the result reached by Deane J in Muschinski as an application of the general equitable principle which restores to a party contributions which he or she has made to a joint venture which fails when the contributions have been made in circumstances in which it was not intended that the other party should enjoy them referring to what Deane J said (at [620]) namely that a constructive trust may arise when an assertion of a legal right would be unconscionable: Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that that other party would so enjoy it. The content of the principle is that, in such a case, equity will not permit the other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable to do so .... 294It has been recognised that these principles may in an appropriate case be applied in a commercial context. Thus, in Liquor National Wholesale Pty Limited v Redrock Co Pty Limited [2007] NSWSC 392 at [42], Brereton J (recognising that the principle explained by Deane J in Muschinski has potential application in commercial joint ventures) expressed the principle at [42] that "where money or other property is paid or applied on the basis of some consensual joint relationship or endeavour which fails without attributable blame, equity will intervene where it is unconscionable to draw a line leaving assets and liabilities to be owned and borne according to where they may, prima facie, lie, to the intent that the parties recover what they have contributed to the failed joint venture". 295Caution has, however, been advocated in imposing a proprietary remedy of this kind, not least because of the priority it gives the beneficiary over unsecured creditors (see Bathurst City Council v PWC Properties Pty Limited [1998] HCA 59; (1998) 195 CLR 566 at [585]) and in such circumstances it is incumbent to consider whether there is an appropriate equitable remedy falling short of the imposition of a trust ( Giumelli v Giumelli [1999] HCA 10; (1999) 196 CLR 101 at [113]). 296It seems to me that the present case might well have fallen within the concept of a joint relationship or endeavour (which has failed without attributable blame), in which expenditure is shared for the common benefit (though that benefit was to be independently acquired in the parties' separate businesses) so as to give rise to the question whether it would be unconscionable for one party (Mr Scarborough) to retain the benefit of the other (Mr Walters)'s contributions. 297Had such a question arisen, I would have been inclined to the view that, in relation to the first 4 container loads (to the purchase of which Mr Walters contributed around $15,000 and costs in relation to which were borne by Mr Walters bringing his monetary contribution to around $20,000), it would be unconscionable for Mr Scarborough to retain the profits from the sale of those containers without accounting to Mr Walters for the contribution he had made to their acquisition (though that would have to take into account the sum of around $10,000 the benefit of which has already been made available to Mr Walters). That would result in a payment to Mr Walters of not more than around $10,000 on the evidence before me. There would be no unconscionability in the retention of profits referable to the subsequent container loads to the acquisition of which Mr Walters made no monetary contribution at all. Therefore, any such claim would have resulted in only a nominal amount (if at all) in favour of Mr Walters. In any event, the plaintiffs' claim was not put on this basis and I have not heard submissions on this issue. Hence it is inappropriate to make any findings in this regard. 298For completeness, I should note that had I found the arrangements between Mr Scarborough and Mr Walters to have constituted a partnership or analogous joint venture, by reference to the Skype discussions and the actions taken by the parties from March through to August 2009, I would not have found that the terms of that arrangement entitled Mr Walters to a notional half profit share (or to $8 per bag) for those batts which are unsold and remain in storage. Further, I would have held that Mr Walters had an obligation to account for half of the costs incurred in the importation, storage and sale of the batts, when determining any profit share to which he was entitled under those partnership arrangements. The suggestion that Mr Walters should be paid a substantial sum of money for unsold batts to the acquisition of which he did not contribute any funds (based on the assertion that Mr Scarborough has, by excluding Mr Walters from the alleged partnership, taken those batts for himself) is not a suggestion which I consider has any merit.

Orders 299Having regard to the above findings, it seems to me that the appropriate orders are to dismiss the proceedings with costs. I will hear submissions from Counsel in that regard.

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