KHAFAM DEVELOPMENTS PTY LIMITED v ZEAITER [1996] NSWCA 303

KHAFAM DEVELOPMENTS PTY LIMITED v ZEAITER

SUPREME COURT OF NEW SOUTH WALES — COURT OF APPEAL

HANDLEY JA, SHELLER JA and ABADEE AJA 18 September, 3 October 1996 [1996] NSWCA 303

APPEAL — findings of trial Judge — payment of share of profits to plaintiff — later denial of partnership — unconvincing explanations for payments.

PARTNERSHIP — whether partnership to be inferred from course of dealing — payment of share of profits — effect of.

The appellant sought orders declaring the existence and terms of an informal partnership for the acquisition and sale of two parcels of land to the New South Wales Land and Housing Corporation and the construction of units on that land under contracts with the Corporation. After completion of the building contracts the defendants paid the plaintiff by cheque amounts which they asserted were half the profits from the building contracts. They later denied the existence of any partnership. The trial Judge was not satisfied that an informal partnership which had existed for the acquisition of the sites had been extended to include the development of the sites after they had been sold to the Corporation. On appeal: -

HELD, allowing the appeal: (1) The admissions made by the respondents when paying the cheques must be given great probative value which could only be displaced by convincing explanations: Voulis v Kozary (1975) 180 CLR 177 at 193 applied; (2) The facts relied on by the appellant were "incontrovertibly established" and the respondents' explanations were "glaringly improbable": Devries v Australian National Railway Commission (1993) 177 CLR 472 at 479 applied; (3) These facts led to the conclusion that an informal partnership existed for the development of the land under contracts with the Housing Corporation.

Handley JA. This appeal arises out of a partnership dispute between persons who were formerly close friends. It is common ground that a partnership came into existence in or about October 1988 and the trial Judge so found. However he also found that the partnership had been abandoned at some stage and dismissed the appellant's amended summons which had sought declarations of the existence and terms of the partnership and an order for taking the partnership accounts.