Background
Brothers Jason and Habib Habchi made a 2014 “Family Agreement” after Jason had contributed funds toward resolving Habib’s tax dispute. The agreement provided that, in exchange for control of specified accumulated properties, Jason would make Habib a 50:50 partner in property developments and purchases after the agreement, including an Indooroopilly development. The primary judge held that the arrangement created a partnership, which ended on 21 September 2017.
The primary judge found that Jason had failed to account to Habib for profits from the Indooroopilly, Stones Corner and The Gap developments. The judge also answered a separate question concerning 2 City Road, Beenleigh, finding that Habib was entitled to 50% of its net sale proceeds. That property had been bought through a Jason-associated corporate trustee and later sold after Habib’s involvement in the ownership structure had changed.
The Court’s Holding
The Court of Appeal dismissed Jason’s challenge to the finding concerning the three developments, but varied its wording. Once the Family Agreement was found to have created a partnership, Jason was obliged under the Partnership Act 1891 (Qld) to provide true accounts and full information about matters affecting the partnership. That obligation was not contingent on first determining whether Jason had recovered all amounts he claimed he was entitled to recoup. It continued to assist the winding up of the dissolved partnership.
The court set aside the answer to the City Road question. Although the pleadings, evidence and broadly framed question had put Jason on notice that a separate agreement might be relevant, Habib had not actually pressed a claim for relief based on that agreement at trial. The primary judge should not have decided the issue on that unargued basis without giving the parties, particularly Jason, an opportunity to be heard. Jason showed a reasonable possibility of practical prejudice, including on potential set-off and variation issues. The matter was remitted to the primary judge for appropriate disposition.
Key Takeaways
- A partner must provide true accounts and full information about partnership affairs, including after dissolution while the partnership is being wound up.
- The obligation to provide information does not depend on first resolving competing claims for reimbursement or priority payments.
- A court must give parties an opportunity to address a basis for relief that was not pressed in the conduct of the trial, even if it was potentially available on the pleadings or evidence.
Why It Matters
The decision distinguishes between an obligation to disclose partnership information and a final entitlement to receive profits. In disputes involving informal family business arrangements and assets held through related entities, parties cannot avoid accounting obligations by pointing to unresolved reimbursement claims or complex ownership structures.
It also underscores that the real issues at trial are shaped by how parties actually conduct the case. A broadly drafted question or pleading does not permit a court to grant relief on an abandoned or unargued foundation without procedural fairness.