Partnership characterisation depends on real relation; where control and capital remain with one party, no partnership.

Characterisation of a partnership depends on the real relation of the parties shown by all relevant facts; where an instrument's terms and the parties' conduct reserve control, capital interest and management to one party, make remuneration contingent on profits, prohibit contribution or dealing by the other, and provide no sharing of losses, the arrangement operates as a master and servant or principal agent relationship rather than a partnership, and therefore does not create a firm for tax registration purposes.

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Issues: (i) Whether the document relied upon by the appellant creates a relation of partnership between the appellant and his brother.

Analysis: The Court examined the real relation between the parties having regard to all relevant facts including prior agency/master-servant relationship, conduct in assessment proceedings, accounting treatment, and the terms of the purported partnership deed. The deed described the estate as capital but expressly prohibited the brother from contributing to or dealing with the estate and provided that on dissolution the estate would revert to the appellant. The deed made the brother principally responsible for performing work, maintaining accounts subject to the appellant's inspection and approval, submitting annual estimates for the appellant to pass, and restricted the brother from advancing moneys; remuneration to the brother was contingent on profits and no provision was made for sharing losses. The Court noted authorities where documents were construed in favour of partnership but distinguished them on facts showing consistent conduct and mutual management; here the combination of contractual terms and conduct showed continuation of a master-servant or principal-agent relationship rather than a partnership.

Conclusion: The Court held that the document did not create a partnership between the appellant and his brother; the High Court's conclusion that no true partnership existed was upheld and the appeal dismissed.

Final Conclusion: On the facts and terms of the instrument taken together with the parties' conduct, the relationship remained that of master and servant/agent and not a partnership; accordingly the appellant's challenge to the tax authorities' refusal to register a firm fails.

Ratio Decidendi: Determination of partnership depends on the real relation of the parties shown by all relevant facts; where a document's terms and the parties' conduct reserve control, capital interest, and management to one party and provide no provision for sharing losses, the arrangement does not, as a matter of law, create a partnership.

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