Two parties ran a business through two companies they owned, but no joint reports were made to the Israeli Tax Authority, there were no separate signatory rights, and they did not bear the profits and risks equally. When they parted ways, one of the parties sought to receive all of the business accounts in order to estimate his share of the profits, contending that the parties operated as a partnership.
The Court held that a partnership did not exist between the parties and therefore there is no entitlement to the remedy of accounts. In order to be entitled to provision for account, the applicant must demonstrate the existence of a special relationship, such as a partnership. Generally, the existence of a non-partnership corporate structure, such as a company, excludes the existence of a partnership, except in cases of a family company operating as a quasi-partnership. In order to review the existence of a partnership, it is necessary to review whether the parties have an equal right to manage the business, mutual right to charge each other in the business, manner of reporting to the tax authorities, sharing both profits and risks, etc. Here, the business was not a family business and therefore the fact that they operated through companies negates the existence of a partnership. Furthermore, the signatory rights did not give the parties the right to charge the business without the other's signature and the reports to the tax authorities were made within the framework of the companies and the existence of the parties' partnership was not reported. In addition, the parties did not share losses and profits were not divided equally. Therefore, there is no partnership and there is no entitlement to provision of accounts.