Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321
Partnership; creation of partnership; partnership distinguished from joint venture.
Facts: Fourth Media Management Pty Ltd (the promoter) entered into contracts with singers Elton John and Cilla Black for public performances in Australia. Volume Sales (Finance) Pty Ltd (VSF) agreed with the promoter that VSF would make available a sum of money as a loan, sufficient to finance the concerts and, in return, VSF was to be given a one-half interest in the contracts and to perform the said contracts as a 'joint venture'. The agreement provided that, after VSF had been repaid the loan and other expenses, any profits made by the concerts were to be shared equally between the promoter and VSF.
Issue 1: Was the agreement between the promoter and VSF a joint venture or a partnership?
Decision: On the facts, the promoter and VSF had entered into a partnership.
Reason: Although the parties had described their agreement as a joint venture, they had in fact created a partnership because the essential elements of partnership existed on the facts. In particular, the promoter and VSF had joined together in carrying out a commercial enterprise with a view to profit. The profits were to be divided, business policies were to be agreed, and the expenses of the enterprise shared.
Issue 2: What was the legal nature of VSF's interest in the box office proceeds?
Decision: Before the distribution of any profits made by the partnership, VSF had an equitable interest in any such profits.
Reason: As regards the nature of a partner's interest in partnership property (including profits made) the court said (at [10]):
"The partner's share in the partnership property is not a title to specific property but a right to his proportion of the surplus after the realization of assets and the payment of debts and liabilities. However, it has always been accepted that a partner has an interest in every asset of the partnership and this interest has been universally described as a "beneficial interest", notwithstanding its peculiar character. The assets of a partnership, individually and collectively, are described as partnership property … This description acknowledges that they belong to the partnership, that is, to the members of the partnership."