New South Wales Supreme Court CITATION : Salib v Gakas; Newport Pacific Pty Ltd v Salib [2010] NSWSC 505 This decision has been amended. Please see the end of the judgment for a list of the amendments. HEARING DATE(S) : 22-26 February, 8 & 9 March 2010 JUDGMENT DATE : 21 May 2010 JURISDICTION : Equity JUDGMENT OF : Ward J DECISION : Dismiss plaintiff's claim in proceeding 2007/00256633 Judgment for plaintiff in proceedings 2008/00278795 CATCHWORDS : PARTNERSHIP - principles concerning existence of partnership - whether business relationship constituted a partnership entitling Ms Salib to share of capital of business - HELD - no partnership but arrangement whereby Ms Salib provided administrative services in return for commission on profits earnt - RESTITUTION - whether Ms Salib had been overpaid commission by mistake - whether final payment made by Mr Gakas was due to a mistaken belief as to accuracy of calculations concerning Ms Salib's entitlement or was to determine business relationship between them on a final basis - HELD - final payment was not made under a mistake although earlier payments were made under a mistake LEGISLATION CITED : Limitation Act 1969 (NSW) Partnership Act 1892 (NSW) Adam v Newbigging (1888) 13 App Cas 308 Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662 Badeley v Consolidated Bank (1888) 38 Ch D 238 BSP Technical Services Pty Limited v AMEV-UDC Finance Limited (unreported, Hodgson J, 25 March 1985 Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) (1974) 131 CLR 321; (1974) 3 ALR 409 Cartwright v Rowley (1799) 2 Esp 723; 170 ER 509 Commercial Bank of Australia v Younis [1979] 1 NSWLR 444 Cribb v Korn (1911) 12 CLR 205; [1911] HCA 9 David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; (1992) 109 ALR 57 Elkin & Co v Specialised TV Installations [1961] SR (NSW) 165; (1959) 77 WN (NSW) 844) Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89; (2007) 236 ALR 209 Gould v Vaggelas (1985) 157 CLR 215 Henville v Walker (2001) 206 CLR 459 Hybernia Management & Development Co v Newfoundland Steel Inc (1996) NFLD & PEIR 90 In re Young: Ex parte Jones [1896] 2 QB 484 CASES CITED : Industrial Equity Limited v Lyons (NSWSC unreported, Cohen J, 15 October 1991) Kelly v Solari (1841) 9 M & W 53; 152 ER 24 Lumbers v W Cook Builders Pty Limited [2008] HCA 27; (2008) 232 CLR 635; (2008) 247 ALR 412 Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705 Malco Engineering Pty Limited v Ferreira & ors (1994) 10 NSWCCR 117 Mollwo, March & Co v Court of Wards (1872) LR 4 P.C. 419; 17 ER 495 Momentum Productions Pty Limited v Lewarne [2009] FCAFC 30; (2009) 268 FCR; (2009) 254 ALR 471 Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221; (1987) 69 ALR 577 Phillips-Higgins v Harper [1954] 1 QB 411; [1954] 2 All ER 51 San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340 Television Broadcasters Limited v Ashton's Nominees Pty Limited [No 1] (1979) 22 SASR 552 Torrens Aloha Pty Ltd v Citibank NA [1997] FCA 77; (1997) 72 FCR 581; (1997) 144 ALR 89; (1997) 35 ATR 36 United Dominion Corporation Limited v Brian [1985] HCA 49; (1985) 157 CLR 1; (1985) 60 ALR 741 United Builders Pty Limited v Mutual Acceptance Limited (1980) 144 CLR 673; (1980) 33 ALR 1 Wasada Pty Limited v State Rail Authority of New South Wales (No.2) [2003] NSWSC 987 Weiner v Harris [1910] 1 KB 285 Wiltshire v Kuenzli (1945) 63 WN (NSW) 47 Halsbury Laws of Australia, Butterworths TEXTS CITED : Lindley & Banks on Partnership 18th ed, Sweet & Maxwell, 2002 Mason K., Carter J. and Tolhurst G., Mason & Carter's Restitution Law in Australia Butterworths, 2008 2007/00256633 Hyam (aka Helen) Salib (Plaintiff) PARTIES : William Gakas (Defendant) 2008/00278795 Newport Pacific Pty Ltd (Plaintiff) Hyam (aka Helen) Salib (Defendant) FILE NUMBER(S) : SC 2007/00256633; 2008/00278795 2007/00256633 J Morahan (Plaintiff) COUNSEL : J Simpkins SC with T Anderson (Defendant) 2008/00278795 J Simpkins SC with T Anderson (Plaintiff) J Morahan (Defendant) 2007/00256633 Brydens Law Office (Plaintiff) SOLICITORS : Alfred J Morgan & Son (Defendant) 2008/00278795 Alfred J Morgan & Son (Plaintiff) Brydens Law Office (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION WARD J 21 May 2010 07/256633 HYAM (aka HELEN) SALIB V WILLIAM GAKAS 08/278795 NEWPORT PACIFIC PTY LIMITED V HYAM (aka HELEN) SALIB JUDGMENT 1 Before me for hearing together were two related proceedings, broadly comprising disputes between Ms Hyam (Helen) Salib, on the one hand, and Mr William Bronius Gakas and a company incorporated by him (Newport Pacific Pty Limited), on the other hand, arising out of the breakdown in late 2006 of a business relationship between Ms Salib and Mr Gakas. For some time from about 2000, the two had worked together in relation to a furniture importing business carried on by a separate company (Kent Newport Pty Limited), which had also been incorporated by Mr Gakas. The capacity in which they had worked together in relation to that business is one of the principal matters of contention between the two. 2 Ms Salib pleads, in summary, that she and Mr Gakas had entered into an oral partnership agreement (terminable at will) under which they agreed to carry on a furniture importation and distribution business through Kent Newport (paras 1-3, Amended Statement of Claim in the first set of proceedings). In the witness box, Ms Salib was adamant that the partnership was one which was between herself and Mr Gakas personally "through him and his businesses" (T 40.40; T 40.34; T 165.41). Although Ms Salib accepted that the moneys she received through her involvement in the furniture importation business were paid out of Newport Pacific (T 166.17), she emphasised that she had no agreement or partnership with Newport Pacific (T 166.10), the arrangement being one which she says was between herself, Mr Gakas and Kent Newport (the latter not being a party to either of the sets of proceedings). The precise nature of the alleged partnership arrangements seemed to vary somewhat as between what was pleaded and what Ms Salib recounted in the witness box (she being adamant when giving evidence that the arrangement was one in which she owned a percentage of Kent Newport (see for example T 44.15), though this was not pleaded as such). 3 Mr Gakas (and Newport Pacific), on the other hand, deny that there was any partnership with Ms Salib and say that there was no more than a contractual arrangement between Ms Salib and Newport Pacific, pursuant to which Ms Salib was retained to provide administrative services to that company and was to be remunerated by way of a commission calculated by reference to a portion of the net operating profits of Newport Pacific (and paid to various companies in accordance with invoices prepared by Ms Salib). 4 Both parties agree that the broad structure of the overall business enterprise (if I may call it that) was that Kent Newport was the entity which carried out the furniture importation business (importing furniture, invoicing overseas suppliers and on-selling the furniture to Harvey Norman Holdings Limited or a company within the Harvey Norman Group) and that, in consideration of the provision by Newport Pacific to Kent Newport of office staff and administrative services, all of the profits earned by Kent Newport were transferred to Newport Pacific. According to Mr Gakas, Newport Pacific had an additional role in that it was responsible for all design and necessary work to produce the range of furniture for the business (and that it expended funds in the acquisition of samples for that purpose), since Kent Newport's role was limited to matters requiring or relating to the utilisation of the line of credit provided to it through the Harvey Norman Group (T365.15). 5 Ms Salib's view of the overall corporate structure seems to have been that this was as a vehicle to maximise tax benefits for her and Mr Gakas (T 41.2; T 40.29). 6 As I understand it, the only substantial purchaser for which Kent Newport sourced furniture from overseas from 2001 was the Harvey Norman Group (although Mr Gakas said that in about 2000/2001 he had sourced some furniture for two or three other customers) and furniture orders were not placed with overseas suppliers without there first being a Harvey Norman purchase order. The benefit of this arrangement was that at any particular time Kent Newport had the comfort of knowing that there was an end purchaser in some way committed to purchase the goods (subject to the furniture being of 'good quality' – T 331), though the actual on-sale did not take place until individual stores within the group placed orders for delivery of stock. Reliance is placed by Ms Salib's accountant (Mr Gamal Kolta) on this 'unique' feature of the business relationship between Mr Gakas' companies and the Harvey Norman Group to warrant a valuation of stock otherwise than in accordance with what is accepted to be the standard accounting practice for valuation of inventories. 7 Following the transfer of the profits of Kent Newport to Newport Pacific (by way of management or administration fees) a share of the net profits in Newport Pacific's hands was distributed to Ms Salib through a succession of corporate entities. (According to Ms Salib this occurred simultaneously with the distribution from Kent Newport to Newport Pacific and was a straight percentage calculation - T 57.16.) (Ms Salib's percentage share was initially calculated after adjustments for a percentage of some of the company's expenses which Ms Salib had agreed to bear and, at a later point, made on a gross profit basis with Ms Salib's company then being invoiced for that share of the relevant company expenses.) Significantly, there seems to have been a ready acceptance (or perhaps an assumption) that Mr Gakas' share of the profits in the hands of Kent Newport would be left in the business and/or distributed by way of dividend in due course – something consistent with this being, in substance, Mr Gakas' business from which Ms Salib through her retainer by Newport Pacific was earning a share of the profits. There seems to have been no suggestion that any calls for capital were made on Ms Salib throughout the term of the business relationship. 8 The payments representing Ms Salib's share of the net profits of Newport Pacific were made on receipt of invoices prepared by Ms Salib which variously described the invoiced amount as being either by way of administration fees and services or as commission (and which seem to have been recorded in the books and accounts of Ms Salib's companies as commission). 9 Ms Salib attributed the wording of the invoices (that wording on its face being inconsistent with the payments amounting to a partnership draw or partnership share of profits) to the fact that the accounting software was not a customised programme and it depended on whatever button came up first (T 57.29; T 57.36). Ms Salib said that she simply pushed a button to generate an invoice quickly ("in a nano second" T 56.46) and without regard to the description of the fee or service for which the invoice was being rendered (it being 'just one small line' T 58.19) – accepting that there might well be some invoices which said 'commission'. She attributed the treatment of those amounts in the accounts of her companies to the manner in which her accountant had prepared the accounts and again apparently paid scant regard thereto (see eg T 92.22) (nor, she says, would she have cared less how her companies' accounting records been created, they being "my books and my books alone" (T 93.39). 10 It is agreed between the respective parties that the net operating profits in the hands of Newport Pacific were to be paid to Ms Salib and to Mr Gakas in accordance with an agreed proportion (which varied over time from an initial 30%/70% percentage split, in Mr Gakas' favour, to an increased percentage for Ms Salib of 35%), their disagreement being as to whether that represented a partnership drawing by Ms Salib or a commission pursuant to her retainer. (It is not clear to me whether Mr Gakas has in fact received his 70% (or, as varied, 65%) distribution of profits from Newport Pacific in each of the years from 2001 to 2006, a matter which Mr Kolta has assumed in his calculation of the moneys said to be owing to Ms Salib. However, this would become relevant only if it were to be necessary to calculate the entitlement of Ms Salib on dissolution of their arrangements to a share, as a partner, of the assets of the partnership she contends was in place with Mr Gakas, since such a calculation must inevitably take into account any liabilities of the partnership.) 11 In early December 2006, for reasons which it is not necessary for the purposes of these proceedings for me to determine (and which may indeed be the subject of litigation elsewhere), the business relationship between Ms Salib and Mr Gakas broke down. In his 13 March 2009 affidavit (para 41), Mr Gakas says that Ms Salib orally tendered her resignation on 29 November 2006 (after he informed her that she was not invited to a meeting with Harvey Norman at which a possible sale of the business or part of the business to her was to be discussed). Ms Salib denies that the conversation to which Mr Gakas deposed in this regard took place (para 35 of her affidavit of 19 May 2009). Ms Salib contends that Mr Gakas gave her notice of an intention to dissolve the partnership and/or repudiated the partnership agreement during a conversation in December 2006 (which, on her evidence, must have been on or before 4 December 2006). 12 Ms Salib accepts that she ceased work with Mr Gakas and Newport Pacific on or about 4 December 2006 and Ms Salib's own pleadings proceed on the basis that the business relationship between them came to an end at that time. 13 At some stage on 4 December 2006, going through to the early hours of 5 December 2006, Ms Salib prepared a calculation, based on the Newport Pacific 'figures', of what she regarded as owing to her (the note she prepared for Mr Gakas is not precise in this regard but does refer to payment of an outstanding amount). Ms Salib prepared a note, which she left for Mr Gakas' attention, in which she foreshadowed a discussion as to the final payment to her (and expressed the view that she was sure agreement could be reached for an amount in respect of office furniture and the like). Ms Salib says that with the note she left the workings or paperwork on which she had based her calculations, to enable Mr Gakas to check her figures. Mr Gakas denies receiving anything other than the note. 14 (The relevance of the question whether Ms Salib's calculations, a copy of which were annexed to Mr Kolta's affidavit, were left with her 5 December note is as to the knowledge or understanding of Mr Gakas at the relevant time as to what was comprised by the sum specified in the invoice ultimately paid by Newport Pacific on 6 December 2006. From those calculations Mr Kolta itemised the components of that sum as being stock value as at 4 December 2006, cash at bank and outstanding debtors, less outstanding trade loans and an item 'JOD' – a 35% portion of that figure, together with a 35% portion of a sum allocated to 'new recliners/products', totalling $518,065.55.) 15 An invoice dated 4 December 2006 in the sum of $518,065.55 plus GST was prepared by Ms Salib on her then company (Blue Coast Pty Ltd)'s letterhead. (Ms Salib's note suggests that there was an earlier invoice in a somewhat smaller sum left with the 5 December 2006 note, but there is no copy of any such invoice in evidence.) 16 The circumstances in which Ms Salib rendered the invoice, and in which it was paid in full by Newport Pacific, are in dispute between the parties but it is accepted by both sides that on 6 December 2006 Mr Gakas gave Ms Salib a cheque (drawn payable to Blue Coast) for the full amount of the invoice dated 4 December 2006. There is also no dispute that on 6 December 2006, when the cheque was provided to Ms Salib, she (and Mr Gakas) signed a document (titled "Receipt") acknowledging the receipt of those moneys. However, in evidence before me there were two versions of that document. One was produced in evidence by Mr Gakas, being a computer generated document with three lines of text and bearing the handwritten signatures of the two parties (to which I will refer as the "3-line receipt"). The other was produced in evidence by Ms Salib, being a photocopy (but not necessarily the original photocopy she had received) of what seems to be a version of the 3-line receipt but containing only the first line of text (to which I will refer as the "1-line receipt"). 17 Given that both parties accept that only one document was signed by way of receipt on that date (and the expert evidence is that the 1-line receipt must have been produced from the 3-line receipt or an earlier version of that receipt), there are only two alternative conclusions open to be drawn. Either the genuine receipt (that being the one actually signed by the parties) was the 1-line version (to which two extra lines have subsequently been added to the existing text) or the genuine receipt was the 3-line version and the photocopy tendered in evidence by Ms Salib is the result of someone subsequently masking two lines which were contained in the original signed version. This gives rise to clear issues of credit (which I address in due course). Suffice it at this point to note that not only is there a question as to which of the two versions of the receipt in evidence is the one that was actually signed by both Ms Salib and Mr Gakas on 6 December 2006 but also there is a dispute as to the status of that document (namely, whether it operated as a release or merely as a receipt). 18 In the first set of proceedings, Ms Salib seeks orders consequent upon what she says is the dissolution (or repudiation by Mr Gakas) of her alleged partnership with Mr Gakas. While the relief Ms Salib seeks is principally for an inquiry to be taken as to the assets and liabilities of the partnership on a winding up of that partnership and judgment for any amount found to be owing to her, evidence was adduced from Mr Kolta to the effect that (irrespective of the claim Ms Salib is bringing in relation to the share she claims of the assets of the (alleged) partnership on its dissolution), Ms Salib has been underpaid the sum of $165,889.99 during the course of her business relationship with Mr Gakas up to 6 December 2006. This is said to arise by reference to certain expenses (described as discrepancies) which Mr Kolta says were wrongly included as Newport Pacific expenses in the calculation of the payments made to Ms Salib over the relevant period but which it is said were amounts paid by way of bonus to Mr Gakas, or management fees paid to the Gakas Family Trust, or fees for artwork paid to Mr Gakas' wife's superannuation fund or private expenses paid for Mr Gakas or his family. (The discrepancies so identified by Mr Kolta are based on assumptions made by him or instructions given to him by Ms Salib. While some have been accepted by Mr Gakas' current accountant, Mr Janes, who has adjusted his corresponding calculations accordingly, others are not conceded.) 19 For Mr Gakas and Newport Pacific (to whom I will refer jointly as the Gakas interests), it is contended that even if (contrary to their primary position) it were to be found that there was a partnership between Mr Gakas and Ms Salib and that (in accordance with that partnership agreement) Ms Salib was entitled as at December 2006 to 35% of the profits of the partnership, the financial consequence of such a finding would not mean that there is an entitlement on the part of Ms Salib to a payment of the kind suggested on the figures produced by Mr Kolta. 20 Senior Counsel for the Gakas interests, Mr Simpkins SC, submits that the calculations advanced by Mr Kolta (even apart from the fact that they assume an entitlement to a share of the unsold stock) are based upon an incorrect valuation of the stock on hand (Mr Kolta using the retail value of the stock for that purpose). It is said, for the Gakas interests, that the relevant accounting standards which should be adopted would require the valuation of unsold stock at the lower of either the cost of the stock or the net realisable value of the stock. There is also a dispute as to the correct figure to be used as representing the stock on hand at the relevant date (whether that be 4 December 2006, when Ms Salib calculated her entitlements and about the time at which she ceased work for the business, or 31 December 2006, being the date on which the relevant financial quarter ended). 21 It is further contended by the Gakas interests that even if there was a partnership as alleged by Ms Salib in the first set of proceedings there is no resulting entitlement of Ms Salib to, or interest of Ms Salib in, any share of the unsold stock or any other assets held by Kent Newport or Newport Pacific, given that the partnership she asserts was one between the two individuals (and that the entitlements of the partners, as between themselves, must be dependent on the terms of their agreement). The Gakas interests contend that the agreement with Ms Salib went no further than to a share of profits (after the exclusion of certain expenses) and that Ms Salib has no entitlement (whether she be a partner or not) to any share in the capital or assets of Newport Pacific (to the former of which, at least, it seems to be accepted that she did not contribute, though Ms Salib contends that she made a significant contribution to the building up of the business over the years after the incorporation of Kent Newport). 22 Newport Pacific claims that Ms Salib was overpaid (under what it contends was the retainer of Ms Salib by Mr Gakas on its behalf to provide administrative services to it) close to $800,000 in the period from financial year 2001 to 31 December 2006 and, in the second set of proceedings, an order is sought for the recovery of the sums said to have been overpaid to Ms Salib by way of commission (after adjustments, totalling $799,889.97). 23 The claim for overpayment of commission does not turn on any issue in relation to the methodology for valuation of stock (the applicable valuation methodology being relevant only if Ms Salib is entitled, as a partner, to a share of the unsold stock on dissolution of the partnership). Further, it seems to be accepted by accountants for both sides that, over the financial years up to 30 June 2006, there was a net overpayment to Ms Salib (after offsetting any amounts underpaid in one or more of those years) of some amount (the precise quantum of which depends on what adjustments should be made to reflect any incorrect inclusion in the profit calculations of private or non-business expenses for Mr Gakas or his family). 24 On the calculations put forward for the Gakas interests (and accepting the force of some but not all of Mr Kolta's expense adjustments), the overpayment to 30 June 2006 amounts to $172,752.60. On the calculations put forward for Ms Salib, the overpayment to that date is considerably less, some $55,681.11 (even assuming all of Mr Kolta's expense adjustments are correct). 25 As for the period from July 2006 until the termination of Ms Salib's business relationship with Mr Gakas, it seems to be accepted by both parties that the sum paid to Ms Salib on 6 December 2006 is greatly in excess of any entitlement she had if that entitlement was limited to a 30/35% share of profits (whether by way of commission or profit share). 26 The principal basis on which recovery of overpaid commission was pressed was that of a claim for moneys had and received (on the basis of payment under an operative mistake of fact) but alternative claims are made on the basis of the alleged breach by Ms Salib of a contractual or tortious duty of care. 27 Handed up to me in court on 17 February 2010 was a statement of accounting issues prepared by Mr Simpkins for consideration by the respective experts. I directed the accounting witnesses (Mr Kolta, Mr Janes and Mr Jugmans) to confer in relation to certain of those issues in order to see if agreement could be reached on those issues; and a joint report was duly prepared dated 23 February 2010 in relation to the accounting (but not expense adjustment) issues, the conclusions stated in which I refer to in due course. Issues 28 As will be apparent from the above introduction, the issues in the two proceedings are to some extent interlinked. Taken as a whole, the issues in the proceedings are: (i) Was there a partnership between Ms Salib and Mr Gakas (pursuant to an oral agreement) as alleged by Ms Salib or was there simply a contractual arrangement (also oral) under which Ms Salib was retained to provide administrative services for Newport Pacific in return for remuneration based on a percentage share of profits of the company, as contended by Mr Gakas? (ii) If there was a partnership between Ms Salib and Mr Gakas, as alleged, pursuant to which the two parties agreed to carry on business together, through Kent Newport, was Ms Salib entitled as a partner to receive any (and if so what) proportion of the capital or assets of that partnership (and what did any such partnership capital/assets comprise) when the partnership came to an end in December 2006? (iii) Is Newport Pacific entitled to recover from Ms Salib the amount it claims ($799,889.97) or any other amount by way of overpaid commissions for the period from 2001 to 2006, whether as moneys had and received or by way of damages for breach by Ms Salib of an implied duty of care in the alleged retainer agreement or for breach of a duty of care arising independently of such agreement? 29 In determining the latter two issues, a number of accounting issues have been identified. Mr Simpkins categorised the accounting issues in the proceedings as falling within three broad headings – first, how the amount payable to Ms Salib (whether for commission, on Mr Gakas' case, or as her profit share, on Ms Salib's case) was to be calculated for the period from 1 July 2006; secondly, whether Ms Salib is entitled to any, and if so what, capital payment (which logically could only be the case, if at all, if Ms Salib establishes first that there was a partnership in existence and, secondly, that it extended to a share of capital/assets); and, thirdly, whether or not in relation to the earlier of the accounting periods (ie up to 30 June 2006) there was any overpayment or underpayment of commission (or profit share) to Ms Salib. 30 The particular matters thrown up in addressing those issues, as I understand them, are (adopting consecutive numbering for those issues to follow on from the issues listed in paragraph 29 above): (iv) If there was a partnership between Ms Salib and Mr Gakas, pursuant to which Ms Salib was entitled to a share of capital: (a) what account must be made for any liabilities of the partnership (including any undistributed profits to Mr Gakas)? (b) what accounting principles should be used to value the inventory of the partnership on its dissolution or termination? (c) (assuming stock on hand comprised part of the partnership capital or assets) should stock be valued at retail value or at the lower of cost or net realisable value? (v) In determining any entitlement on Ms Salib's part to unpaid profits (on an enquiry of the kind Ms Salib seeks) or, conversely, in determining whether there has been an overpayment of commission to Ms Salib (as claimed by Mr Gakas for the period from 1 July 2006 to the end of December 2006): (a) should the appropriate date for determining the value of closing stock be 4 December 2006 or 31 December 2006? (b) if the appropriate date is 4 December 2006, what stock quantities should be used for the calculation? (c) should stock be valued at retail value (as Mr Kolta contends) or at the lower of cost or net realisable value (as the two accountants called for the Gakas interests – Mr Janes and Mr Jugmans - contend)? (d) if stock should be valued at the lower of cost and net realisable value, should that value be determined by replacement value as an approximation of the actual cost (as Mr Janes contends) or the "retail method" (as Mr Jugmans contends, though I note that he ultimately seems to have accepted that Mr Janes' approach might be preferable)? (e) if the retail method ought to be applied, what gross profit percentage should be used (noting that 51.1% was the figure suggested by Mr Jugmans)? (f) if, in the calculations before the court, the closing stock figure is calculated on a different basis to the opening stock figure (ie as at 4 December 2006 rather than 31 December 2006), should any (and, if so, what) adjustment be made to the opening stock figure? and, in relation to the period from 2001 to 4 December 2006, (g) having regard to the correct opening and closing stock figures, what commission was Ms Salib entitled to receive for the period 2001-2006? (h) should any adjustment (beyond that accepted in the calculations prepared by Mr Janes) be made for amounts which Mr Kolta says should be excluded as private expenses of Mr Gakas? Summary 31 For the reasons set out below, I am of the view that the above questions should be answered as follows: (i) There was not a partnership between Ms Salib and Mr Gakas as alleged. Rather, there was an agreement reached between Ms Salib and Mr Gakas in 2000, whereby Ms Salib was retained to provide administrative services to Newport Pacific in return for remuneration (paid at her request to various corporate entities over the relevant period) calculated by reference to the net operating profits of Newport Pacific. (ii) In light of my finding in (i), the question as to how any partnership assets should be distributed on dissolution of the partnership does not arise. However, had I been satisfied that there was a partnership between Ms Salib and Mr Gakas, as alleged by Ms Salib, pursuant to which they agreed to carry on business together (through Kent Newport) in the importation and on-sale of furniture to members of the Harvey Norman Group, I would nevertheless have found that Ms Salib's entitlement as a partner in that partnership did not extend beyond her right to receive a 35% percentage share of the net operating profits of Newport Pacific (after deduction of certain expenses for which Mr Gakas conceded he was responsible, such as his salary and motor vehicle expenses), less expenses for which Ms Salib herself was responsible; and hence that Ms Salib was not entitled on a winding up or dissolution of the partnership to receive any portion of the capital or assets of the partnership (whatever may have been comprised thereby). The arrangements between Mr Gakas and Ms Salib, even if (contrary to my conclusion) they constituted a partnership as a matter of law in my view were at all times limited to an entitlement on Ms Salib's part to a share of the operating profits (not an entitlement to a share of capital or other assets). (iii) Even accepting that Ms Salib owed a duty of care in the performance of her duties (whether as an implied term of her contract of retainer or otherwise arising at common law), I am not satisfied that Newport Pacific has established any breach by Ms Salib of such a duty of care in relation to the manner in which the book-keeping or accounting materials were prepared by her over the years or in her calculation of what she considered were her entitlements either during the course of her retainer or on the termination of her business relationship with the Gakas interests. As to the claim for moneys had and received, by reference to the alleged overpayment of commissions totalling $799,889.97, I am not satisfied that the moneys paid to Ms Salib's company (Blue Coast) on 6 December 2006 were paid under any mistake of fact, or mistaken belief on the part of Mr Gakas, that this was the actual sum due and owing to Ms Salib. Rather, on the evidence, I find that the moneys paid by Mr Gakas on 6 December 2006 were paid by him in the knowledge (and thus accepting the risk) that the calculations may not have been accurate (hence his attempt on 5 December 2006 to check those calculations with Mr Kolta) and with the intent (and, no doubt, fervent hope in the circumstances of the business relationship breakdown) of bringing his business relationship with Ms Salib finally to an end. (The reliance said to have been placed by Mr Gakas on the alleged representations made by Ms Salib, for the purpose of the estoppel claim in the first set of proceedings, and the emphasis placed by him on the 3-line receipt, also seems to me to be consistent with Mr Gakas, and through him Newport Pacific, intending the payment made on this date to bring to an end any further business claims by Ms Salib or any of her companies – even though in terms Ms Salib had not agreed personally to release Mr Gakas.) Accordingly, there is no operative mistake so as to enliven a claim for unjust enrichment or for moneys had and received in respect of the 6 December 2006 payment. I accept, however, that moneys paid to Ms Salib's companies over the period from the financial year ended June 2001 to the financial year ended 30 June 2006 (purportedly representing 30% or 35% of net operating profits as the case may be) were made by Mr Gakas in reliance on the accuracy of Ms Salib's calculations. To the extent that those have been shown to be in error (noting that no defence based on a change of position has been pleaded and accepting Mr Janes' calculations in this regard), I find that Mr Gakas is entitled to recover the sum of $172,752.60 as moneys had and received, having offset the underpayments in certain of those years. (iv) Again, in light of the findings I have made (in (i) and (ii)) above, this question does not arise. However, had I found that there was a partnership between Ms Salib and Mr Gakas pursuant to which Ms Salib was entitled to a share of the capital of that partnership, then I would have found that: (a) account must be made for any liabilities of the partnership (including any undistributed profits to Mr Gakas) when determining the respective entitlements of the partners on dissolution of the partnership; and (which again I do not) had I also considered that the capital included stock held by Kent Newport, then I would further have found that: (b) the Australian accounting standard (AASB 102 Inventories ) should be used to value the inventory of the partnership on its dissolution or termination; (c) any stock held by Kent Newport did not constitute an asset of the partnership between Ms Salib and Mr Gakas but that if it were necessary to value stock on hand for the purposes of an inquiry taken at the dissolution of the partnership between Ms Salib and Mr Gakas as to the value of that stock as an asset of the partnership, then the stock should be valued in accordance with AASB 102 Inventories at the lower of cost and net realisable value; and I would have referred the matter for an account to be taken of the partnership's assets and liabilities, as I am not satisfied that all the relevant material to enable me to carry out that task was before me. (v) In determining whether there has been any overpayment of the 30/35% profit share payable to Ms Salib (whether that share be payable by way of commission or as a partner profit share) as at 6 December 2006: (a) the appropriate date for determining the value of closing stock is 4 December 2006 (that being the date on which the business relationship came to an end); (b) the stock quantities to be used are those contained in the Stock Valuation summary as at 4 December 2006 printed from the Quickbooks accounting programme (a copy of which is Annexure A to the affidavit sworn 16 February 2010 of Ms Sonya Farrawell, the accreditated Quickbooks consultant who gave evidence in these proceedings); (c) although not the usual methodology indicated under the AASB 102 Inventories, stock should be valued by reference to the historical basis on which commission entitlements were calculated and stock was valued in the books of Kent Newport over the relevant period; (d) this question does not strictly arise given my findings above but, had it been necessary to determine this (ie had it been found that unsold stock in the hands of Kent Newport should be valued, for the purposes of calculating commission of profit share payable to Ms Salib during the course of her business relationship with Mr Gakas, at the lower of cost and net realisable value), then I consider that that value would best be determined by reference to the "retail method", as explained by the accounting expert called for the Gakas interests, Mr Claude Jugmans even though the replacement method might also have been acceptable from an accounting viewpoint (since Mr Janes' calculations based on the 'replacement cost' method still involved a measure of estimation and since Mr Jugmans was the only wholly independent accounting witness); (e) again, in the light of the findings I have made, this question does not strictly arise; however, had it been necessary to determine, I would have applied a gross profit margin derived from the average obtained over the previous 3 years' sales, as indicated by Mr Janes (on the basis that Mr Jugmans confirmed the appropriateness of such a figure and it allowed greater account to be made of the historical performance of the company); (f) I do not see any logic in calculating the closing stock figure on a different basis to the opening stock figure, when determining the amount of commission (or percentage profit share) payable to Ms Salib (nor was any such logic suggested); accordingly, I consider that adjustment would have been necessary to calculate opening and closing stock on the same basis, had 31 December 2006 been the appropriate date for the latter; (g) I would adopt the calculations of Mr Janes (as adjusted by him following the matters raised by Mr Kolta) for the period through to end June 2006 in respect of the amount Ms Salib was entitled to receive for that period as I am not satisfied that any further adjustment has been shown to be warranted in terms of the expenses attributed to Newport Pacific. In light of my finding in (iii) above, it is immaterial what commission or profit share Ms Salib was in fact entitled to receive for the period from 1 July 2006 to 4 December 2006. (If that were to be necessary to determine, then I would take refuge in the evidence of Mr Janes that this could readily be determined, having regard to my findings above as to the closing stock quantities and the methodology of valuation, and I would leave that task to those better qualified than I in accountancy.) (h) I do not consider that any adjustment (beyond that inherent in the revised calculations prepared by Mr Janes) is warranted, in light of the evidence given by Mr Gakas as to the so-called discrepancies; (in that regard, even though Mr Gakas accepted that the payment in 2006 to his granddaughter of a sum of $1,800 was probably a way of giving her pocket money, he nevertheless gave an explanation for what she had done for the business in order to earn that pocket money; similarly, even though he conceded that part of a $6,000 odd payment was referable to private travel, it was in the context of a trip which he said had a component of business purpose to it and it is impossible for me to assess how that apportionment should be carried out). Proceedings Partnership dispute 32 The subject matter of the first set of proceedings (07/256633), which were commenced by Ms Salib against Mr Gakas, is the partnership dispute, namely the allegation by Ms Salib that she and Mr Gakas entered into an oral partnership agreement on or about October 2000, pursuant to which it was agreed that they would carry on (in partnership) the business of importing and distributing furniture (for on-sale to Harvey Norman Holdings Limited). 33 The alleged terms and conditions of the partnership agreement, as pleaded, include that the business of the partnership be conducted through Kent Newport; that Ms Salib and Mr Gakas would share in the profits and bear the losses of the said partnership business in specified shares (initially 30%:70% as between Ms Salib/Mr Gakas and, as later varied, 35%:65% as between the two); that the assets of the business would belong to Ms Salib/Mr Gakas in the same proportions; and that the partners would contribute to the expenses of the partnership business in the same proportionate shares. 34 Ms Salib's claim relates to the cessation of her business relationship with Mr Gakas. (Given that Ms Salib accepts that the partnership was terminable at will, the dispute is not as to the termination of the relationship as such. Rather, it is as to the financial consequences which followed therefrom.) In paragraphs 8A and 8B of the Amended Statement of Claim filed by Ms Salib on 4 December 2007, it is alleged that in or about December 2006 Mr Gakas gave notice (in a conversation with Ms Salib) that he intended to dissolve the partnership and that both the partnership and the partnership agreement were dissolved at that time. Further, or in the alternative, it is alleged in paragraphs 9 and 10 of the Amended Statement of Claim that, in or about December 2006, Mr Gakas repudiated the partnership agreement, which repudiation was accepted by Ms Salib who left the premises of the business and ceased involvement in the business. From the evidence on both sides it would seem that the time at which any such conversation took place must have been no later than 4 December 2006 (since that was the date on which Ms Salib commenced to calculate her 'final' payment). 35 By way of relief, Ms Salib seeks a declaration that the partnership was dissolved as from December 2006; orders that the partnership business be wound up under the direction of the court, that a receiver and manager be appointed to the partnership business and consequential orders following such an appointment; an order for an account to be taken of all the dealings and transactions of the partnership; an order that an inquiry be held as to what the assets of the partnership consisted of and as to the respective interests of the partners therein; and judgment for an amount for which Ms Salib is found to be entitled following the inquiry in respect of her interest in the partnership and its assets, and/or damages. 36 In paragraph 9 of the relief sought in the Amended Statement of Claim, there is a reference to goodwill as an asset of the alleged partnership. In that regard, Counsel for Ms Salib (Mr Morahan) recognised that there would be a question as to whether any goodwill now remains in the business (or could be reinstated) in circumstances where the business enterprise between Mr Gakas' companies and Harvey Norman was terminated in early 2007 (and, I might add, where there is evidence that Ms Salib unsuccessfully sought in early 2008 to resurrect that or a similar business relationship with Harvey Norman). In those circumstances, it is difficult to see that any goodwill in the business of the Gakas interests (attributable as it seems to have been to the relationship with its only substantial sole customer, the Harvey Norman Group, through which its line of credit arrangements subsisted) could now remain or have any value. 37 By Amended Defence to the Amended Statement of Claim, filed by Mr Gakas on 11 September 2009, Mr Gakas denies the alleged agreement in relation to the partnership. Mr Gakas says, in essence, that his working relationship with Ms Salib arose out of her retainer in October 2000 to provide administrative duties for Newport Pacific. 38 Mr Gakas says that he and his wife had, prior to June 2000, operated an importing business and that, during 2000, he had created another company (Kent Newport) to operate with Newport Pacific in the business of importing furniture for Harvey Norman Holdings Limited (this being what is defined in the Amended Defence as "the business"). At the time of commencement of the business it is said by Mr Gakas (and not challenged by Ms Salib) that Newport Pacific had approximately $52,000 in funds (to which there is no suggestion that Ms Salib had contributed). 39 It is asserted by the Gakas interests that, during October 2000, Mr Gakas and Ms Salib reached an oral agreement that she would perform administrative duties for Newport Pacific (or, as pleaded, in the operation of 'the business') and would receive a commission on the net profits of 'the business' at the rate of 30% (later increased to 35% effective from November 2005). In paragraph 1(e) of the Amended Defence it is alleged that it was not a term of the contract that Ms Salib would share any losses of 'the business'. (Ms Salib's contention to the contrary, though reflected in her pleading both in its original form and as amended, was not addressed in Ms Salib's affidavit evidence.) 40 Mr Gakas admits that Ms Salib left the business in December 2006 but says (in the particulars to paragraph 6 of the Amended Defence) that Ms Salib did so having resigned from the company following an unsuccessful attempt to purchase the business from him. There is evidence that in the period 2006/7 there was some consideration given to a sale of the business to, and purchase of the business by, Ms Salib. This did not eventuate. 41 Ms Salib was paid the sum of $569,872.11 on 6 December 2006. (It is relevant to note that this was considerably in excess of the total amounts which had been paid to Ms Salib in previous financial years in respect of her entitlements, whether or not those entitlements be properly characterised as being to a commission or to a partnership profit share.) 42 Mr Gakas alleges (in paragraph 12 of the Amended Defence) that on receipt of this sum Ms Salib waived any further rights she may have had against 'the business' (relying in this regard on a document titled "Receipt" and dated 6 December 2006, which was signed by both Ms Salib and Mr Gakas in front of a witness, Ms Debra Hutchen, who gave evidence in the proceedings of the circumstances in which this took place). It is further pleaded in paragraph 13 of the Amended Defence that, in making that payment, Mr Gakas relied on Ms Salib's calculations and her representations to him that the payment of that amount represented her entitlements until the date of her resignation, and that Ms Salib is now estopped from pursuing a claim for any further payments. 43 (The Gakas interests nevertheless seek, through the second proceedings, to reopen the accuracy not only of the final payout but also as to the earlier payments made to Ms Salib. Mr Simpkins noted, in answer to a question I had raised on this point, that no release by Newport Pacific of any claim it might have against Ms Salib in this regard was pleaded and that Ms Salib had made it clear that she alleged no such release - T 390.49). 44 In paragraph 10 of the Amended Defence, Mr Gakas asserts that Ms Salib was overpaid 'commission' (at that stage put as being in the sum of $853,901.65). It is this allegation that forms the nub of the second set of proceedings (in which Newport Pacific seeks to recover that overpayment, the quantum of which has been reduced to $799,889.97 following acceptance by Mr Gakas' accountant of certain adjustments raised by Mr Kolta). Dispute as to alleged overpayment of commission 45 In the second set of proceedings (08/278795), Newport Pacific claims repayment from Ms Salib of the sum of $799,889.97 and/or damages pursuant to the alleged overpayment of commission by Newport Pacific to Ms Salib (under the alleged retainer agreement for the provision of administrative services by Ms Salib) over the period from October 2000 to December 2006. 46 Under its Amended Statement of Claim, which was filed in court on 22 February 2010, Newport Pacific asserts that it retained Ms Salib to perform administrative duties in return for a fixed commission (which varied from 30% to 35% over the relevant period of time) of any net profits generated by Newport Pacific. 47 The claim for recovery of these moneys is based alternatively on a claim for monies had and received and on claims for breach of an implied term of the retainer agreement (that Ms Salib would take all reasonable care in her performance of the administrative duties) or of a tortious duty of care owed to Newport Pacific in relation to the calculation and payment of sums payable by Newport Pacific under the retainer agreement (paragraphs 21, 18 and 24, respectively of the Amended Statement of Claim). While each of those claims is pressed before me, Mr Simpkins indicated that the Gakas interests accept that the strongest of those claims is for moneys had and received. 48 In this regard, Mr Simpkins quite fairly concedes that if Mr Gakas had paid the money, not caring whether it had been properly validated and simply in order to finalise matters with Ms Salib, then this would be a payment which was voluntary in character. However, Mr Simpkins submits that the evidence demonstrates a belief on Mr Gakas' part as to Ms Salib's entitlements at the time the payment was made and hence that, prima facie, there is an entitlement to recovery in the absence of any injustice being pleaded and established. 49 It is alleged that, during the period from October to December 2006, sums paid by Newport Pacific to Ms Salib under the agreement by way of commission were in the amount of $2,131,699.72 (paragraph 14) whereas Newport Pacific should only have made payments representing commission in the sum of $1,087,299.98 (paragraph 15). In addition, salary and superannuation payments are said to have been made by Newport Pacific to Ms Salib as particularised in paragraph 16 of the Amended Statement of Claim. In all, Newport Pacific claims the sum of $799,889,97 as monies had and received by Ms Salib and, in the alternative, damages. 50 In paragraph 4 of her Defence, filed in November 2008, to Newport Pacific's claim, Ms Salib denies the alleged retainer agreement but goes on by way of further pleading to say "and further says that [in] or about October 2000 the parties entered into an agreement which established a partnership between them ("the partnership")" (my emphasis). As a strict matter of pleading, it can thus be seen that there is an inconsistency between the allegation of partnership here made (as being one between Ms Salib and Newport Pacific) and the allegation made in the first set of proceedings (that being a partnership between Ms Salib and Mr Gakas personally). The explanation for this seems likely to be simply an error in preparation of the Defence, since no partnership between Ms Salib and Newport Pacific was pressed during the hearing (and, indeed, in the witness box Ms Salib expressly disavowed any such partnership T 166.10). I think it fair to say that the case proceeded on the basis that the only partnership in fact being alleged by Ms Salib was one between herself and Mr Gakas personally (albeit that Ms Salib's allegation that this was through Kent Newport verged at times on an allegation that there was a tripartite partnership of some kind – T 165.41). 51 It is alleged (in paragraph 13 of the Defence) that the said partnership agreement (pleaded as containing the same broad terms as those set out in the first set of proceedings) was repudiated in or about December 2006 by the 'defendant', although (again read having regard to what is pleaded in the first set of proceedings and the conduct of the case at trial) it seems clear that the pleading is intended to aver that the partnership agreement was repudiated by Newport Pacific (not Ms Salib herself). Facts Events pre-2000 52 It is not disputed that Mr Gakas had, for some years prior to the events in question, worked in the furniture business. In Mr Gakas' affidavit of 13 March 2009, he deposes to having been involved in the furniture business from the 1960's. 53 By the time the events the subject of these proceedings took place, Mr Gakas was aged about 70 (and had experienced some problems with his health). 54 At some stage in or about the mid-1990's, Ms Salib was employed as a bookkeeper or to perform some clerical duties by Mr Gakas' then company. Ms Salib (in her affidavit of 7 August 2008) says she was employed from 1994 to 1997 by W B Gakas & Co as a bookkeeper. Mr Gakas says that, in fact, his business was not called W B Gakas & Co at the time but he accepted that Ms Salib had performed some clerical duties for his company around 1994. That said, Mr Gakas also says that in 1995 he closed the business down after he was diagnosed with cancer. Mr Gakas says that he later restarted his furniture business (as Gakas HN Pty Limited, which was incorporated on 30 May 1996) with his son, Darius, and that in 1998 the name of the company changed to Newport Pacific. On 26 March 1999, Mr Gakas' wife, Ms Diane Eddington, became the sole director and secretary of the company. Mr Gakas and his wife held the two issued shares in the company (and still do). Arrangements with Harvey Norman Group in 2000 55 Mr Gakas says that from the period 1999 to 2000 he carried on some business involving the importation and wholesaling of furniture and that in early 2000 he had discussions with representatives from the Harvey Norman Group in which the prospect of the Harvey Norman Group providing finance in order to enable Mr Gakas to take on a role of importing furniture for the Group was raised (para 13 of Mr Gakas' affidavit). 56 Kent Newport was incorporated on 13 June 2000. Mr Gakas was its sole director and secretary. The shareholding was again held as to one share each by Mr Gakas and his wife. Mr Gakas says that Kent Newport was incorporated in order to deal with the financing and management of importation of furniture and to take a line of credit to be provided by the Harvey Norman Group in relation to the role he was then considering taking on for the Group or within the Group. (Mr Gakas, in the witness box, explained that the function of Kent Newport surrounded the exercise of the line of credit made available to it through the Harvey Norman Group.) 57 In July 2000, fixed and floating charges over Kent Newport and Newport Pacific were put in place. Mr Gakas said, and was not challenged on this in cross-examination, that in accordance with his arrangements with Harvey Norman Group the authority to transfer moneys from Kent Newport to Newport Pacific was required to issue from Harvey Norman Group and that he, Mr Gakas, was the only one who had the authority to make such a request from Harvey Norman. 58 A copy of the letter of offer from ANZ for access to a line of credit of up to $1.3 million was Annexure B to Mr Gakas' 13 March 2009 affidavit. Also annexed was the acceptance and a surety acknowledgment apparently required in that regard. 59 Mr Gakas says, and it does not seem to be disputed, that Ms Salib was not involved in any discussions or negotiations between himself and the Harvey Norman Group in relation to the establishment and financial arrangements with the Harvey Norman Group. More relevantly, these discussions seem to have taken place well prior to the time at which Ms Salib says she was consulted with a proposal to become a partner in the enterprise (which casts doubt on the content of the discussions which she says took place at that later time). 60 The significance of this goes, in part, to Ms Salib's evidence that she was first approached by Mr Gakas in late 2000 to become involved in the business. By that time, on Mr Gakas' account of events (which is supported by the documentary evidence as to when Kent Newport was incorporated and when the line of credit was established), the arrangements in relation to the proposed venture between Mr Gakas and the Harvey Norman Group were already in place. Nevertheless, Ms Salib in her oral evidence stressed that "…. Kent Newport was formed when we started the business, it did not exist before. It did not exist before our conversation to start the business again. It was only formed when the discussion took place to start the business" (T 42.7) Ms Salib's involvement with Newport Pacific 61 Ms Salib's involvement with Newport Pacific came about following an approach made to her by Mr Gakas. However, even apart from the question of the time at which this approach was made, there are significant differences in the respective accounts of what had occurred on that occasion. 62 Ms Salib, in her first affidavit of 7 August 2008 (paras 6/7), says that in late 2000 Mr Gakas came to her house at Malabar and told her that he was thinking of getting into the furniture business with Harvey Norman again; that he was too old and no bank would finance him; and that he asked if she wanted to go into partnership together. (By this stage, of course, depending on how 'late' is "late 2000", Mr Gakas had already secured a line of credit through Harvey Norman and well knew that he was proposing to restart his business and that Harvey Norman was supportive of that proposal.) 63 According to Ms Salib's affidavit, her immediate response to this (not only remarkably forthcoming but also, on her version of events, without there having been any opportunity for or discussion with her then husband, the joint owner of the home) was "yes, if necessary I can put my house up as equity for the money required to commence the business. If I am putting my house up I would expect to get 70% of any profits" and that Mr Gakas said 'OK' to that. Apart from the fact that this seems an extraordinary alacrity to enter into onerous financial obligations, there is then a complete reversal when, according to Ms Salib, the week after that initial conversation (and thus presumably also in late 2000) Mr Gakas told her that Harvey Norman was putting the money up and that she would not have to put up her home, her reaction to Mr Gakas' reported statement that he wanted 70% of the profits and she could have 30% was a ready acceptance without demur. (In the witness box, Ms Salib said this was the subject of some complaint by her but there was no account of this in her affidavits). 64 Ms Salib said that Mr Gakas told her in this conversation that the business would pay a wage until there was "enough fat" to draw down profit shares. Ms Salib also said that Mr Gakas told her that she would have to pay 30% of associated expenses and that she agreed to this. (Ms Salib points to this as an agreement that she would bear her proportion of the losses of the business, though it is by no means apparent that this was the import of what was agreed.) 65 In this conversation Ms Salib says that Mr Gakas said that they would have to establish a company to do the buying and this would be called 'Kent Newport'. (However, by this stage (late 2000), Kent Newport was already incorporated, thus casting doubt on Ms Salib's recollection of events.) 66 Apart from the fact that the chronology of events, as deposed to by Ms Salib, puts her initial discussions with Mr Gakas at some time after Kent Newport and the ANZ line of credit (through Harvey Norman) had already been established, there is a distinct air of unreality as to the alacrity with which (according to Ms Salib's evidence) she not only acceded to the proposition that she enter into a business partnership with Mr Gakas (there being no suggestion of any previous attempt by him to seek out third party partners) but offered her home (jointly owned with her then husband but without his consent) as security for a venture as to which she had (on her own account) almost no information other than the bare bones of what was proposed. 67 Even on the more detailed version of events given by Ms Salib in the witness box, a matter itself the subject of criticism by Mr Simpkins, the manner in which Ms Salib says events unfolded seems hardly credible. 68 In the witness box, Ms Salib said for the first time that she had spoken with Mr Gakas on the telephone before the meeting at her Malabar home. She says that in that conversation Mr Gakas told her what his and Harvey Norman's intentions were (inconsistent with the suggestion in her affidavit that Mr Gakas thought he was too old to go back into business). Ms Salib says that Mr Gakas did not tell her what the proposed business would be (as she already knew what the business was because it was identical … "the same setup that he had before whenever I worked for him…" T 224.11). Later she said that she did not know when he approached her if he was supplying Harvey Norman (T 227.15). This evidence must be seen in the context that Ms Salib's previous work for Mr Gakas was over a limited period and when there is no suggestion that she was then privy to his business arrangements. 69 The evidence as to the offer Ms Salib says she made to put up her house as security was, I think, revealing. Ms Salib accepted that at that stage Mr Gakas had not told her anything that permitted her to understand the amount of money likely to be required to commence the business (T 226.17; T 226.34) but said "even up to a million dollars was fine", though professing that she knew it would not be that amount. At best, this suggests a degree of impetuosity and willingness to jump headfirst into serious business arrangements with almost no information as to the terms of those arrangements. At worst, it seems to be a wholesale reconstruction of events. This is compounded by the fact that (on Ms Salib's version of events) she was prepared to commit her husband to such an arrangement without even bothering to discuss it with him. At first, in cross-examination, Ms Salib said that she had consulted her former husband as to the issue of putting up their home as security (T 226.44), then she corrected that evidence saying "No, actually I had it [the conversation with her husband] afterwards because as soon as I spoke to Mr Gakas I told him afterward and my ex-husband did not agree. So I had made my decision on my own because I was the sole income earner anyway. It didn't matter" (T 226.48). Insofar as Mr Simpkins submits that Ms Salib's account of the relevant conversations is extraordinary (by reference to the cross-examination at T 220.47 to T 233.11), I am inclined to agree. 70 Even apart from the ease with which Ms Salib dismissed the question whether her co-owner would agree with what she was proposing, the facts are that Ms Salib accepted that she did not know how much money would be involved in raising funds on the security of her home (T 227.36) or how long they would be required (T 227.36) and said that she didn't care (T 227.40). She expressed supreme confidence in the future profitability of a business about which she knew almost nothing other than that it would mirror the previous setup (about which it is not clear what she knew). She said that she had worked with Mr Gakas for 'several' years before that (T 227.44), seemingly an exaggeration of itself, but had no idea how substantial the business would be (T 228.11). It is difficult to accept Ms Salib's broad brush account of events in this regard. This gives cause to doubt similar broad assertions by Ms Salib (such as "one hundred percent that 30% what was in Kent Newport is mine and 70% is William Gakas'" – T 42.35) 71 According to Mr Gakas, he says that he discussed no business matters with Ms Salib at her home in Malabar. He admits that he approached Ms Salib and that he made the suggestion to her (in a conversation he placed as being about July 2000 after a trip to China to source potential products for the venture with the Harvey Norman Group - in para 20, saying that his conversation with Ms Salib was "at that time") in a conversation in his office at Botany that Ms Salib might work for Newport Pacific (para 19). Mr Gakas said "at the time I could not offer Ms Salib a salary other than a small wage because there was no income for the business, but I wanted her to work for me because she had been a good worker when I had previously employed her …". 72 Mr Gakas says that after July 2000, he invested $46,000 in Newport Pacific, using a direct deposit and a payment of an outstanding debt to him (and that his wife invested $15,000). Ms Eddington, in her affidavit, confirmed that in 2000 she had invested a sum of $15,000 in Newport Pacific. She was not cross-examined on that evidence. In the witness box, Mr Gakas asserted that steps to set up the business took place in early 2000. 73 Mr Gakas' evidence was that he did not discuss with Ms Salib either the creation of Kent Newport or his financial arrangements with Harvey Norman (para 17). Insofar as this evidence was intended to suggest that he did not habitually discuss financial information with office staff, I note that there was some evidence from Ms Hutchen to the effect that Mr Gakas had on one occasion referred to his credit arrangements with Harvey Norman for the purchase of stock in a conversation with her (see para 16, affidavit of 6 February 2009), which suggests that Mr Gakas may not generally have been as reticent in discussing with his office staff the details of his business arrangements as his evidence would imply. 74 Mr Gakas says that at the start of their business relationship (as at August 2000) he was paying Ms Salib $225.00 per week as a part-time worker. He said "it was very complicated because of her desire not to disqualify her family from the right to receive Government benefits". (In passing, I note that this seems consistent with the evidence which emerged during the hearing from Ms Salib as to the manner in which she later structured her affairs with Newport Pacific at least in part so as to avoid them being taken into consideration during her divorce proceedings, a matter to which I will return in due course.) Profit share arrangement 75 On either account, it seems that the working relationship between the two did not commence until around August 2000 and that shortly thereafter a percentage profit share arrangement (not necessarily in place of the weekly wage, since that seems to have continued) was agreed. Mr Gakas says that in about August or September 2000 Ms Salib said that she wanted more money and wanted some other kind of arrangement; and that he offered her a commission. Mr Gakas said that Ms Salib wanted 50% and that he said that he would agree to 30% on net profits (not receipts, para 23 of his affidavit of 13 March 2009, as subsequently amended). (Mr Morahan points to the immediacy with which Mr Gakas (on his own account) accepted Ms Salib's request for a percentage profit share arrangement as an indicator that there was a partnership – I would have been more inclined to see this as a preparedness to link remuneration to profits at a time when the business was still being established and hence perhaps more economically advantageous than a straight out salary arrangement. However, this was not really explored and I doubt whether it takes matters very far.) Incorporation of Silver Coast 76 Ms Salib incorporated a company (Silver Coast Pty Ltd) on 10 November 2000. Ms Salib and her then husband were directors of the company. Ms Salib says that Silver Coast was to be the vehicle into which her net profit from the "business" would pass (para 11 of her affidavit). (In cross-examination, Ms Salib said, quite candidly, that Silver Coast was purely for taxation purposes to minimise her tax profits at the end of the year (T 59.47).) Ms Salib says that approximately 12 months after the business commenced 'the partners' started to draw profit shares (para 13 of her affidavit). 77 From 2001 until early 2004, Ms Salib's (initial 30% and then later 35%) profit share (or commission) was paid to Silver Coast. Ms Salib also received a small salary (and the benefit of superannuation payments) throughout the period from 2000 to 2006. 78 Mr Gakas says that Newport Pacific gave Silver Coast a loan of $2,456 on 9 March 2001 and a further sum of $5,000 on that date. It is not clear to me to what this evidence related. No claim seems to be made for repayment of any loan to Silver Coast, nor is there any evidence (other than Mr Gakas' assertion) to support the characterisation of either of these payments as a loan. Draft deed of agreement prepared for Ms Salib 79 In about May 2001, Ms Salib gave Mr Gakas a draft deed of agreement which had been prepared by a solicitor friend of Ms Salib's, apparently on Ms Salib's instructions. It would seem that this was an attempt by Ms Salib to record either the basis of their then working relationship or of the relationship she wished to put in place going forward. This seems to have been around the time when, on both accounts, distributions were first made to Ms Salib's company referable to the first year's profits of Newport Pacific. 80 It is quite understandable that Ms Salib would have wished for her working arrangements (whatever they were or were to be) to be formally documented and so it does not seem to me that anything can be drawn simply from the fact that she had proffered such a document. However, nor is there any suggestion that Mr Gakas agreed with the content of the draft deed of agreement. Therefore one might think there is little to be read into this. Ms Salib said in cross-examination that Mr Gakas never agreed to sign anything – that he "refused to sign a document from the outset" (T 44.22) and that "Mr Gakas' motto was his word is his honour. Everything is verbal" – T 56.2. However, Mr Gakas seems to have been perfectly capable of committing in writing to financial written arrangements with ANZ. 81 The draft deed would be revealing to the extent that it was based on Ms Salib's instructions (and might therefore be thought to reflect her then understanding or wishes as to the business relationship with Mr Gakas). In that regard, I note that the draft deed was prepared naming as the proposed parties as Silver Coast, Newport Pacific and Kent Newport (but not Mr Gakas himself). The draft recited an agreement of the parties to use their 'contacts and expertise' to import into and to sell furniture in Australia. (It is not suggested that either Silver Coast or Ms Salib had any overseas contacts at that stage to assist with the importation of furniture, nor that Ms Salib had any particular expertise in the furniture business prior to her entry into the working relationship with Newport Pacific.) The body of the agreement was largely blank but contemplated that the responsibilities to be undertaken for various aspects of the business by each of the proposed parties would be set out in the document. 82 The draft made provision only for the division of profits from the importation and sale of the business and not for any sharing of losses. Therefore, even had an agreement been entered into in those terms, there might still have been a dispute as to whether the arrangement constituted a partnership or was simply a commercial joint venture between the parties which fell short of giving rise to a partnership at law. 83 In any event, for present purposes it is relevant to note first that the proposed parties to the deed did not include Mr Gakas (though it is Mr Gakas with whom Ms Salib says she was in partnership) and that the draft deed does not record any arrangement as to the sharing of losses in relation to the joint venture (though it is impossible to know whether that reflected Ms Salib's instructions or whether the substance of the proposed arrangements in this regard was simply a matter left to the purview of her solicitor friend in the drafting of the deed). Ms Salib's role in the business 84 There was, perhaps not surprisingly, conflicting evidence given by each of Ms Salib and Mr Gakas as to Ms Salib's role and the level of her involvement in the business. I have no doubt, having regard to Ms Salib's emphatic evidence in the witness box (T 59-60), that she considered that she had made a substantial contribution to the business and that she believed the attempts by Mr Gakas to characterise this as simply clerical or administrative work are not accurate. Mr Gakas, on the other hand, was keen to downplay the significance of Ms Salib's role in the company business. 85 Mr Gakas does agree that Ms Salib accompanied him on some buying trips to Asia (T 357.43), which may suggest that Ms Salib's involvement in the business of the company was more than merely administrative. Moreover, I note that Ms Salib was described by one of the Harvey Norman group representatives (Marshall Mills) in an internal email as Mr Gakas' 'business offsider', which suggests that (whatever her actual position) the image conveyed to at least one of the persons dealing with Newport Pacific was that Ms Salib was involved with the business at something more than an administrative level. Ms Salib called evidence from one business associate, Mr Primerano (who is admittedly a friend of hers) to the effect that Mr Gakas had introduced Ms Salib to him on one occasion as his partner (T 200). However, Mr Primerano was unable to point to any other conversation in which this was said and was unable to give the context of that discussion. Mr Simpkins pointed to the absence of corroborating evidence for this. It was suggested to Mr Primerano, but not accepted by him, that his recollection was not clear in relation to this one conversation (which he had no other reason to recall and of which he had taken no notes and which he had only been asked to recount relatively recently and many years after the conversation is said to have occurred). I saw no reason not to accept his evidence. I think, however, that relatively little weight can be placed on what is at best a single comment from the (no doubt many) customers of Kent Newport as to Ms Salib's status in the company, particularly when the word 'partner' seems to be used in a variety of contexts in modern day parlance (and could, for example, have been understood in the context of the conversation to which Mr Primerano deposed as a reference to a business offsider or co-venturer rather than partner strictly so-called). I do not think this evidence is sufficient to outweigh the lack of any business documentation to support the allegation of a partnership. 86 There was evidence that for a time Ms Salib was permitted by Mr Gakas to use business cards (which she or her husband had caused to be printed) in which she was described as 'director' (T 418.23) (though Ms Salib was never in fact a director of Newport Pacific) and that Ms Salib became angry when Mr Gakas' wife (the sole director of Newport Pacific) had business cards reprinted for Ms Salib showing her as 'General Manager'. (Ms Hutchen deposed to Ms Salib having thrown the replacement cards into the bin.) 87 In the event, I think it unnecessary ultimately to make any finding as to the precise tasks fulfilled by Ms Salib in that it seems apparent, even on Mr Gakas' evidence, that Ms Salib was performing more than simply clerical or secretarial roles (and Ms Eddington's apparent willingness to hold her out as the company's general manager, in lieu of its director, supports this). 88 From a financial point of view, however, Ms Salib was never the sole signatory on company cheques (as confirmed by one of the company's office assistants, Ms Overman, in her affidavit of 2 December 2008) and held no formal role as an officer of the company. Of relevance to the second set of proceedings seems to be the evidence of Ms Overman, insofar as she has deposed to Ms Salib not being authorised to sign cheques as a sole signatory (and to her observation that previously Ms Salib had prepared all figures in arriving at what she was to be paid by the company over the relevant period). 2004 89 Of difficulty for Ms Salib to reconcile with her partnership claim, was that during 2004 she was recorded on the books of Newport Pacific as an employee and the company in due course issued a group certificate for Ms Salib in that period. (In some respects this evidence cuts both ways, as it suggests that for the period prior to this Ms Salib was not treated as an employee. However, it does cast significant doubt on the assertion that there was a partnership in existence in 2004 – and Mr Simpkins placed emphasis in cross-examination on the failure of Ms Salib to make any reference to this in her affidavit material.) 90 Ms Salib's explanation for what occurred is that during January 2004, she was going through divorce proceedings, Ms Salib says that she told Mr Gakas that she was going to resign from Silver Coast making her ex-husband the sole director (because her husband had refused to resign). Up to then, Ms Salib had rendered invoices to Newport Pacific on the letterhead of Silver Coast (the income from which being described in the books of Silver Coast as commission). Ms Salib said in cross-examination not only that Mr Gakas had recommended that she start a new company (T 80.33) but also that he had said that he could be a director of that company. 91 Ms Salib says that she couldn't change the corporate vehicle in which she was receiving distributions from Newport Pacific because she would then have been working for nothing (T 78.48) (on the basis that she says there were freezing orders in place issued by the Family Court) (T 80.48). On her version of events, Mr Gakas said that "… it is best to set up another company. He advised me not so much advised, we had a discussion. If anything, I said to him I can't it is not worth it to me. I would be working for nothing. He said he could even be a director. I said, no, I would not put him through that" (T 79.7). 92 Ms Salib denied that this was to hide assets from her husband (T 80.1) but her evidence varied considerably in this regard and ultimately I formed the view that any restructure of her arrangements during that period was precisely for that reason. 93 In any event, whether or not Mr Gakas had recommended that she do so, and it seems to me not outside the realms of possibility that he would have done so (having incorporated at least two companies himself through which to run his business enterprises), Ms Salib did cause to be incorporated a new entity in substitution for Silver Coast (Betta Coast Pty Ltd). Ms Salib said in her affidavit that she was the sole signatory of Betta Coast and that her profit share from the business went into Betta Coast. The wording of her affidavit seems carefully chosen in that regard, since, as was clear from the company search put in evidence by the Gakas interests, Ms Salib was neither a director nor shareholder of Betta Coast and her evidence is that she drew no profits from Betta Coast until it was subsequently closed down. Ms Antonella Vitale (a friend of Ms Salib's) was the director, public officer and sole shareholder of Betta Coast, not Ms Salib, yet Ms Salib signed the accounting documentation in place of Ms Vitale (under a letter authorising her to do so) and Ms Vitale's discretionary trust rendered at least some invoices for services rendered to the company which on paper was Ms Vitale's own company. 94 It was difficult to see any commercial purpose for such an arrangement (when it seemed that Ms Salib regarded the company as hers at all times) if it were not an attempt to shield those assets from disclosure in the Family Court proceedings then ongoing. Nevertheless, Ms Salib said at first that it was not to avoid the company being regarded as one of her assets (T 80.26; T 81.27; T 82.5) or to hide earnings from her husband in the Family Court (T. 34.34). Ms Salib (confronted by the evidence she had sworn in her Family Court proceedings in which no disclosure was made of any partnership interest in a partnership with Mr Gakas, and in which no reference was made to her beneficial interest in Betta Coast) denied initially that the shareholding in Betta Coast was on her behalf (T 64.17). However, later in cross-examination (and an example of her inconsistency in the witness box) Ms Salib conceded that she was always the beneficial owner of Betta Coast (T 64.40, T 64.32, T 64.47), explaining the lack of reference to this in her other proceedings as being on the basis that there was only a verbal agreement (T 59.1;.11), and agreed that the decision not to be a director or shareholder of the company was because of the Family Court proceedings (T 35.29) and to avoid disclosure of her arrangement with Mr Gakas (T 35.47). She then asserted that the Betta Coast arrangements were "Under Mr Gakas' advice" (T 38.27), though at most it seems that she recalls him telling her that she could or should incorporate a new company. 95 Not only did Ms Salib incorporate a new company, she accepts that for a 'short' period during 2004 her 'partnership' with Mr Gakas came to an end and she was an employee only (with the title General Manager) for that period (T 60.42; T 74.39), consistent with the issue of group certificates by the company noting Ms Salib as an employee over this period. (This was put forward as an explanation for the fact that her affidavit material in the Family Court proceedings (Exhibits 1, 2 and 3) did not refer to any partnership interest in a business with Mr Gakas; according to Ms Salib this was correct as there was no partnership during that period.) I observed Ms Salib to be quite defensive in the witness box in relation to the issue of a change in the nature of the working relationship in 2004 and her insistence that this was for a short period only and was at Mr Gakas' suggestion reinforced this. The suggestion that this was necessary in some way to keep the business going was not explained (T 74.39). 96 Again, Ms Salib said that this was on Mr Gakas' recommendation (T 77.6) until she finished her family law matter (T 74.40; T 60.34). Her evidence in this regard was somewhat confused. Ms Salib accepted that she was Newport Pacific's employee (T 62.8) and that her role was in general management (T 62.11) but says that this was "under Bill Gakas' suggestion" – T 62.20. Ms Salib accepted that it was uncertain at the time if the 'partnership' would start again (T 77.18) and then almost immediately said that it was not uncertain but it was just that she had to sort out her affairs first (T 77.21). She also said that Mr Gakas had been constantly pressuring her as to what was happening with her company (though why he would have felt the need to exert any such pressure is not obvious). 97 What was left open in particular was the question as to how, if any partnership that had been brought into existence in 2000 had come to an end in January 2004 (as Ms Salib is adamant it was, in circumstances where that was of arguable importance in maintaining the integrity of her evidence in the Family Court proceedings themselves), that partnership could later have been resurrected (or a new partnership constituted in its place) without anything resembling a new agreement with Mr Gakas to that effect. Be that as it may, a group certificate was issued in 2004 showing the payment of wages to Ms Salib and she accepted that she was an employee at the time (also accepting that Silver Coast was not at the time in partnership with Mr Gakas or any of this companies – T 74.45; .49). 98 Ms Salib asserted that the partnership was resurrected in June 2004 but there is a dearth of evidence to support this (or even the more likely suggestion that if a new partnership came into existence this was in 2005). Ms Salib also (in seeming contradiction with her earlier evidence) then suggested that there was a partnership interest in January 2005 through Betta Coast and through Newport Pacific – T 63.30 – T 64.17). 99 Ms Salib ultimately accepted that for the whole of the time that Betta Coast was in a relationship with Mr Gakas or one of his companies (up until the time that Blue Coast was incorporated) her only role was as a permanent part-time employee as General Manager of Newport Pacific (T 62.35; T 62.50). 100 This evidence needs to be seen in the light of the Family Court documents on which Ms Salib had relied in her dispute with her ex-husband. There was no disclosure in that court of any alleged partnership with Mr Gakas or his companies. The Financial Statement sworn by her (25 January 2005) Ex 1, disclosed her position as a permanent part-time employee of Newport Pacific as at January 2005. The documents recorded a 'nil' partnership income (Ms Salib said that she received no money from Betta Coast until it closed down – T 64.4.) However, Ms Salib maintained that "our deal, Bill Gakas' Mr Gakas' deal and I continued on, hence Blue Coast" (T 63). 101 Mr Simpkins submits, in effect, that, if Ms Salib's present claim is a genuine claim, then Ms Salib must have deliberately withheld information from the Family Court in order to minimise her former husband's financial entitlements on the dissolution of their marriage. Certainly, if Ms Salib was being honest in her disclosures to the Family Court (and did not really have any partnership assets as at 2005) then her claim against Mr Gakas fails unless there was some subsequent partnership arrangement. It seems to me that there is force in that submission. 102 The explanation given by Ms Salib in the witness box for the fact that there had been no disclosure in the Family Court proceedings of the partnership she now alleges was that the partnership (as I understand it, the partnership between her and Mr Gakas) had come to an end on 3 January 2004 (T 74.10). (Mr Simpkins places emphasis on the fact that the evidence included the pause recorded in the transcript at T 74.31.) Ms Salib's evidence is that she resigned from Silver Coast on 3 January 2004 and therefore as at the date that she signed the Family Court affidavit in January 2004 (Ex 2), she actually did not have a partnership interest (this being a matter of which she had refreshed her memory overnight by reference to her affidavit). 103 When taken to the fact that she had disclosed no interest in Betta Coast, Ms Salib said that she did not believe that she had to disclose her (ultimately acknowledged – T 64.25) beneficial interest in Betta Coast in her Family Court proceedings because it was not recorded on paper (T 64.15-35). (At T 64.35 she said "..but there was no legal document to show that I was a partner, a sole trader or proprietor" and insisted that "on paper" it was not untrue to say that she had no interest in a business including a business operated by a proprietary company or involving a partnership (as the document which is Exhibit 1 required her to disclose) because there was "no paper to prove it" – T 65.25). I have difficulty in accepting that this could have been the advice given to Ms Salib had she made clear to her lawyers acting in the Family Court proceedings the basis of the Betta Coast arrangements now asserted. 104 I was left with the impression that in fact the business relationship between Mr Gakas and Ms Salib had remained relatively constant throughout (albeit that Ms Salib had used a number of corporate entities through which to receive her remuneration and that there had been a change in the percentage remuneration during that period) and that Ms Salib tended to choose whatever label suited her interests when characterising the business relationship as a partnership or as an employment relationship at any particular time. The matter which has given me some pause is the fact that, whatever the arrangements were before January 2004, there does not seem to have been an understanding that Ms Salib was an employee at that time (as no group certificate was issued for her until the certificate relating to employment from January 2004), which confirms that there was some change in the formal nature of their working relationship. However, this circumstance seems equally consistent with the arrangement to January 2004 (and from the end of the acknowledged employment relationship) being a retainer between Ms Salib's successive companies and Newport Pacific for the provision of administrative services, as there being a partnership of the kind for which Ms Salib contends (and many other factors pointing to a contractual retainer than a partnership). 105 Mr Simpkins also notes that there was inconsistency in Ms Salib's evidence as to who (she or Mr Gakas) had raised what was to be done about the situation in June 2004 (T 77.38 cf T 77.29 and T 78.12) and points out that the suggestion that Ms Salib was concerned that an asset freezing order would preclude her operating in business lacked credibility when there was no evidence that it had come to an end in June 2004, when Ms Salib says that the partnership was revived (T 78.44) (though that date itself was the subject of inconsistent evidence – Ms Salib elsewhere saying that the partnership was revived when Blue Coast was incorporated (T 62.50). 106 The only way in which the existence of a partnership interest as now claimed could be read consistently with a truthful stance in the Family Court proceedings would be if (as Ms Salib contends) there was a period in which she was not in fact a partner (and if that is the case then the difficulty I have is in seeing where it is established that any such partnership interest later revived) or if she was truly mistaken as to what she had to disclose at the time (which is difficult to accept when she had the benefit of legal advice at the time). 2005 107 Ms Salib says that in 2004 or 2005 her "profit percentage" was increased to 35%, following a conversation in which Mr Gakas had said to her (apparently out of the blue) "you are doing such a great job I think your share of the profits should be 35%". Mr Gakas, on the other hand, says that in about October 2005 he had a conversation with Ms Salib in which she said she wanted him to increase her commission to 50% and he agreed only to increase it to 35%. 108 Given the fact that it seems it was Ms Salib who, throughout the relationship, seems to have pressed Mr Gakas to formalise its terms or to acknowledge her position in some way (both with the presentation of the draft agreement in 2001 and later when, he says, she pressured him to sign a letter of intent in case he did not survive an operation he was to undergo) and seems to have had a (no doubt understandable) focus on maximising her returns from the business (having at the outset asked for a 70% share, for example), and given that there seems little reason other than benevolence for Mr Gakas himself to have suggested an increase at that stage, I think it more likely that Mr Gakas' account is what occurred. However, nothing ultimately seems to turn on this, it being simply another occasion where the evidence of the two principal witnesses differed in a way which was hard to reconcile. It is nevertheless accepted that Ms Salib's share of profits (however the two characterised this) as from around 2005 through to the termination of the business relationship in 2006 was increased to 35%. 109 In 2005, Ms Salib says there was a change of procedure in relation to the manner in which her payments were received. She says that Mr Gakas told her that "Rather than you calculate profits less expenses and receive a cheque from Newport Pacific, Newport Pacific should give you a cheque for the gross profit and Newport Pacific invoice you for expenses and you give me a cheque for those expenses" (para 37, affidavit of 7 August 2008). Mr Gakas in his affidavit in response did not correct Ms Salib's account of this conversation. The significance of the change in the manner in which expenses for which Ms Salib was to be liable to contribute was not made clear to me. As I understand it, the thrust of this evidence, for Ms Salib, was that nothing could be said to be drawn from the fact that her company was being separately invoiced for expenses (rather than there being a netting off of profit before distributions were made to it). I draw no inference as to the existence or otherwise of a partnership from the method employed to adjust the respective shares of expenses. 110 What is relevant, however, is that the arrangement between Ms Salib and Mr Gakas was that the calculation of Ms Salib's profit share (or commission) was to be carried out after taking into account (and excluding) those expenses for which each of the pair was to be personally responsible. In Mr Gakas' case, for example, it was accepted that he was to bear his motor vehicle expenses. There does not, therefore, seem to have been a wholesale sharing of expenses. While the Gakas interests place some weight on this, it seems to me that it is not a fact on which a great deal of weight should be placed. The more relevant point to note is that a sharing of expenses (however those expenses are to be comprised) would not, I would have thought, ordinarily be seen as the same as an agreement to be responsible (whether equally or in the parties' proportionate shares) for any losses the business might incur. While some losses might perhaps be treated as expenses in the accounts, I would not have expected that this would follow for overall business losses. (Tested in this way, had Kent Newport been sued for non-payment of moneys due on the importation of the goods, or for damages for faulty goods on-sold to Harvey Norman, there is nothing to suggest that Ms Salib had accepted any liability to contribute to such losses.) 111 While on the topic of expenses, I note that Mr Morahan placed weight on the manner in which Mr Gakas had recorded his credit card expenses, when submitting them for reimbursement, as amounting to an acknowledgement that there was a partnership in existence. In evidence before me were a small number of Mr Gakas' credit card statements over the period from November 2001 (adverse comment was made as to the fact that only 7 of a possible 72 statements were produced but that may simply be the product of statements having been mislaid or not retained over the period – I cannot draw any inference that the missing ones were not produced because they contained damaging annotations, as was suggested by Mr Morahan, particularly in circumstances where those produced did contain annotations which gave rise to some comment). The credit card statements in question (pp 225 – 251 Exhibit A) contained handwritten annotations against the particular entries to indicate how reimbursement or responsibility for the items was to be borne as between Mr Gakas personally (indicated by the initials WBG or B or the like), his wife (Di), Kent Newport (KN) and Newport Pacific (NP or N/P). What were unexplained were entries designated as (PART or PAR or P). Those entries appeared only on 2 statements – a statement of November 2001 and a statement of 2004 (in the latter the letter "P" appearing and being crossed out and replaced with "KN"). The entries to which those annotations related were mainly entries for telecommunications or telephone payments, with one entry for a restaurant at La Perouse. 112 The annotations in question were acknowledged to be in the handwriting of Mr Gakas. It was submitted by Mr Morahan that the annotations suggested that Mr Gakas knew these were partnership expenses to be subject to normal percentage division of such expenses. Mr Gakas said that he did not know what those annotations meant. Other annotations (N/P, meaning Newport Pacific, and B or WG, meaning himself), Mr Gakas was readily able to explain. He suggested that it could be a reference to "part payment" but gave that answer rather tentatively "It could be I don't know I can't recall" (T 340.12). (I should add that I can draw nothing from the fullstop appearing after the entry "Part", which might have been thought to indicate an abbreviation of, say, the word 'partnership', in circumstances where there was a fullstop against most of the annotations made by Mr Gakas and, as far as that can be discerned from the limited number of statements in evidence, seems more likely to be a matter of habit and not as signifying anything in particular.) 113 The meaning of the relevant annotations ultimately remained a mystery. One possibility might have been that it was a reference to 'Pacific' as a short way of referring to Newport Pacific, but this is inconsistent with entries for 'N/P' appearing on the same page (see p 225). Another is that it meant what Mr Gakas suggested and that this was an item to be apportioned as between two or more entities, but if so that does not seem to accord with the way those items were treated in the company's cash book, nor is there any indication given to the office staff, by reason of such an annotation, as to how the apportionment is to be effected. The third possibility is that this was indeed a reference to a partnership then in existence, but if so it is not apparent how that was reflected in the accounts themselves. 114 Ms Overman (whose task it was over the period from 2004 to write up the items in the cashbook) was asked in cross-examination what her understanding of the annotation was. She could not recall but, like Mr Gakas (and without there being any suggestion that she was aware of his earlier response), suggested it might mean 'part payment'. I find that significant at least to the extent that Ms Overman's initial reaction to the entry when placed in front of her was not to attribute it to any partnership, nor did she seem to recall any process of treating items with entries of this kind in any particular way. However, if the annotation "part" as appearing in the credit card statements was a reference to part payment as suggested by Ms Overman (her evidence in my view being no more than a helpful guess at what might have been the case), this could not be discerned from the manner of treatment of those expenses when recorded in the company's cash book. When taken to the cash book and one of those entries was traced through by Ms Overman, it seemed that, whatever the annotation may have been intended by Mr Gakas to mean, the expense was simply treated as a Newport Pacific expense. (And there is no suggestion that Newport Pacific was party to any partnership with Ms Salib.) That said, if the annotations were, as suggested by Ms Overman, to mean part payment, there is nothing to suggest that there was any attribution of those to an apportionment of the payments as between various entities. Ultimately, I think that little weight can be placed on these entries (but even if they do support the inference that Mr Gakas was aware there was a partnership of some kind with Ms Salib at that time, they cast no light on the terms attaching to that partnership arrangement and they do not address the situation after June 2004 or perhaps October 2005 at which time Ms Salib says that the partnership revived). Incorporation of Blue Coast 115 In October 2005, after her divorce, Ms Salib incorporated a further company, Blue Coast Pty Ltd, as the company through which her profit share and expenses for the business were thereafter to be paid. "Testamentary" letter 116 In December 2005, shortly before Mr Gakas was due to undergo open heart surgery, he signed a letter (dated 20 December 2005) that had been typed and was countersigned by his wife, noting that it was to be held by his solicitor, David Morgan. Mr Gakas says that he signed the letter as Ms Salib was putting pressure on him at that stage to do so in case he died (T 351.12). The letter stated "in case of my death the following instructions will apply" and provided for a series of steps to take place involving the sale of stock, the sale of samples, settling of credits and payment of charges and then said that the net figure after settlement was to be distributed 35% to Ms Salib and 65% to his estate. Much weight is placed by Ms Salib on this letter as implicitly acknowledging the existence of a partnership. Mr Gakas said (T 349.21) that Ms Salib wanted to make sure that the profits 'of hers' would be distributed properly, though he did accept (T 350.36) that the letter went beyond purely a distribution of a 35% commission and contemplated a complete division of the assets of the business. The impression conveyed by the dismissive manner in which Mr Gakas gave his evidence on this issue ("That's if I died" – T 350.36) was that this was likely to be an instance of a situation where Mr Gakas simply was not prepared to engage in confrontation with Ms Salib (much as his reaction was to her ongoing use of the business cards that he had wanted her to have reprinted – he just "let it go" even though he was not happy with it – T 335). 117 The fact that Mr Gakas may have been prepared to direct a division of the business in the fashion outlined in this letter after his death does not, it seems to me, amount to a tacit acknowledgement that this was something to which Ms Salib was already entitled. Indeed, had Ms Salib already had such an entitlement a letter of this kind would not strictly have been necessary (other than as further confirmation of the position). Therefore, while I accept that Mr Gakas' willingness to contemplate the arrangement set out in the 'testamentary' letter (and that his wife, who was a co-shareholder in the company, had apparently not demurred from that proposition) is a factor which might point to there being a partnership of some kind with Ms Salib, it does not seem to me to outweigh the factors pointing against such a partnership. Ms Salib's interest in acquiring the business 118 Evidence was adduced by way of affidavit from a Mr Anthony Laurence Atkins (affirmed on 16 September 2009), a business importer, to the effect that during one of his business visits to the Botany premises of Newport Pacific, in approximately 2006, he had had a conversation with Ms Salib in which she referred to the fact that Mr Gakas had gone into hospital for an operation (and thus which must on Mr Gakas' evidence as to the surgery have taken place in about January 2006) in which he says that Ms Salib said: "You know, we should form a partnership and take over Bill's business . I know all his contacts and I have all the information we all need" (my emphasis) and that he (Mr Atkins) had responded "you mean steal it?", to which Ms Salib had said "yes". While Ms Salib denies that conversation, Mr Atkins was not required for cross-examination on his affidavit evidence. A discussion to that effect would be consistent with the interest which Ms Salib had already expressed in acquiring or taking over the business – a matter which Ms Salib says she raised (in different ways – ie as to her becoming a shareholder or a director of the business or as to Mr Gakas' retirement from the business) over the years. I see no reason not to accept that Mr Artkins recalled such a conversation taking place. The significance of it seems to me to be not so much that Ms Salib might have suggested an underhand way of acquiring the business contacts of Mr Gakas but that it indicates an appreciation that this was 'Bill's business' and that she had no entitlement to the business as such (as opposed to her profit share). That said, given the scope for misunderstanding as to what Ms Salib meant by whatever she actually said in that conversation, I do not place a large amount of weight on that evidence. 119 Ms Salib's interest at about this time in putting in place arrangements by which she would take over the business at about this time does not appear to be in doubt. Ms Salib, on her own evidence had been keen to take over the business when Mr Gakas retired. Mr Gakas says that in November 2006 Ms Salib expressed an interest in purchasing part of the business. (The reference to a 'part' of the business would be consistent with the assertions made by Ms Salib in relation to a partnership between the two, since on her version of events there remained a majority share of the business in which she had no interest.) Mr Gakas says (para 37 of his 13 March 2009 affidavit) that Ms Salib wanted 49% of the business for which she would pay him $100,000 plus approximately $1 million (for stock 'adjustment', storage, debtors and other adjustments), and that at the end of the following year Ms Salib was to pay him a further sum of $100,000 for the remaining share of the company. Ms Salib denies the account given in paragraph 37 of Mr Gakas' affidavit in relation to this discussion (para 33 affidavit 19 May 2009). However, Ms Salib says (para 53 of her 7 August 2008 affidavit) that she had told Mr Gaskas that when he was ready to retire she was ready to take the whole business over and that there was a discussion about payment of goodwill plus the value of the stock in that context. Somewhat inconsistently with this, at least on my reading of the affidavits, is the account given in her 19 May 2009 affidavit that she had requested ownership of 50% of the company but that Mr Gakas insisted on retaining a controlling interest. (Of course, on Ms Salib's account of events, if she already held a 35% partnership interest in the business, moving to a 50% share would mean no more than the acquisition of a 15% interest.) 120 In any event, it seems that there was at least some discussion in late 2006 in which a buy-out of the business was discussed (and without there being specific reference, on either party's account, of any interest already held by Ms Salib in the business). 121 For his part, Mr Gakas seems to have been willing to contemplate a buy-out from the business (whatever his share might have been). (Perhaps tellingly, no consideration seems to have been given by either of Ms Salib or Mr Gakas to Ms Eddington's position as shareholder in the company when the buy-out arrangements were being discussed – both seeming to regard this as Mr Gakas' business to sell.) 122 Mr Gakas says that on 27 November 2006 he arranged a meeting with representatives from Harvey Norman to discuss Ms Salib taking a share of the business. The fact that a meeting was arranged (whatever be the purpose of that meeting) was confirmed by the evidence (in his affidavit sworn 1 September 2009) of Mr Marshall Mills, a company finance executive employed with one of the Harvey Norman Group entities), who also was not cross-examined as to this part of his evidence, in which he referred to a proposed meeting with Mr Gakas and Ms Salib in November 2006. Annexure A to Mr Mills' affidavit is a copy of an internal email sent by him on 28 November 2006, which conveys his understanding at the time that: Helen, Bill's offsider has asked to buy into Bill's business and Bill has agreed to sell, subject to agreement by Harvey Norman and subject to her giving the same security charges and guarantees that Bill currently … has in place to Harvey Norman 123 In fact, no meeting with Harvey Norman representatives to discuss a buy-out by Ms Salib took place in her presence and, on Mr Gakas' evidence, it was her exclusion from the meeting with Mr Mills which precipitated the termination of his business relationship with Ms Salib. At this point, again, the versions of what transpired again differ markedly. Termination of business relationship 124 Mr Gakas says that Ms Salib resigned on 29 November 2006, after he told her that she was not invited to be present for the meeting with Harvey Norman at which her purchase of a share of the business was to be discussed (para 41 of his affidavit). One of the office administrative staff at the time (Ms Debra Hutchen) confirmed that a meeting had been arranged by Mr Gakas with Mr Mills and deposed to there being a 'big argument' between Ms Salib and Mr Gakas when the former was told that she was not invited to attend the meeting. No content of the argument to which Ms Hutchen referred was provided by her. 125 Ms Salib's account of events is that it was Mr Gakas who indicated his intention to dissolve the partnership at about this time. Ms Salib's payment calculations 126 Whoever it was who in fact brought matters to a head, it seems that by the close of business on 4 December 2006 it was Ms Salib's understanding that the business relationship was at an end and that this was something also understood by Mr Gakas. In paragraph 37 of her affidavit, Ms Salib says that she returned to the office on the night of 4 December 2006 "… because I knew Mr Gakas would not be there". Annexed to Mr Kolta's affidavit of 3 September 2009 (pp 172/173) are copies of computer printouts that indicate that material was printed from the Kent Newport records at 3.38pm that day. Assuming that Ms Salib printed this while in the office (and I note that this is part of the material which Ms Salib says she left for Mr Gakas to enable him to review her payment calculations), this would put Ms Salib in the office towards the middle of the afternoon on that day. 127 According to Ms Salib, after calculating the 'figures' to the best of her ability, she left Mr Gakas a note (dated 5 December 2006) on his desk at 1.30am and left the office. The 'figures' to which Ms Salib referred were, as I understand it, those which Ms Salib believed represented her entitlements on the business relationship coming to an end. She referred to these in her affidavit as being the 'outstanding monies'. The note (about which I will say more shortly) referred to Ms Salib coming in to collect the 'final payment'. 128 Ms Salib's preliminary calculations came to a figure of about $380,000. The note made no reference to the manner in which that monetary sum had been calculated, other than insofar as it seemed to be predicated on moneys sitting in the 'combined' Newport Pacific bank accounts at that time. Ms Salib's note also contemplated that there might be further adjustment (at least in relation to the outstanding container loads) and referred to negotiation in relation to any claim for office furniture, computers or the like. Ms Salib says that she left her 'workings' attached to the note (T 24.49), those being identified as including the pages at pp162/163 and 164/165 of the Court Book (as well as the material attached to Mr Kolta's affidavit – Annexure J, pp 168-175) (T 25.45 and T 26.30). Those pages in question came, according to Ms Salib, from the Quickbooks programme used by the company (T26.43). 129 Ms Salib explained (at T 26.14) that: I would input the stock in the Quick Books programme. I would push the button, the stock valuation summary, push the button and it produced the report. 130 The provenance of the documents in question became an issue in the proceedings and I gave leave for a computer to be set up in the courtroom and a demonstration to take place of the manner in which documents can be printed from the QuickBooks software (though in the demonstration it was conceded that the software version 07/08 there being used was a more up to date version than the version which Ms Salib could have used when printing documents on 4 December 2006). I consider the results of this exercise in due course. 131 The documents which Ms Salib says she left with the note comprised her working out of the amounts comprising stock held by Kent Newport, cash in bank and outstanding debtors, less the trade debtors and an item described as JOD. A 35% portion of the total of those items accords with the amount claimed in the invoice actually paid by Newport Pacific on 6 December 2006 (but seemingly not with the preliminary calculations referred to in Ms Salib's 5 December 2006 note – the relevance of this being that Mr Gakas denies receiving anything more than the note itself). Nevertheless, insofar as at least some of the pages show a printout date of 4 December 2006 there would seem to be no logic in Ms Salib not having left the calculations in the office when she left in the early hours of the morning of 5 December 2006. (An explanation for Mr Gakas not having received them might perhaps be the fact that Ms Salib's note says the workings out were left on Ms Overman's desk but she says in the witness box that the note itself was left on Mr Gakas' desk, so it may well be that Mr Gakas simply did not have regard to any material on Ms Overman's desk.) 132 Reproduced below is the complete text of the typewritten note, a copy of which is annexure H to Mr Gakas' affidavit of 13 March 2009, which (with my emphasis) read: It's 1.31am, I am about to leave now … I did the best that I can to get the figures as close as possible … You currently have over $403,000 in the Newport Pacific accounts (combined) … I'll be in at 10am Wednesday to collect the first cheque for the amount of $350,000 plus GST total being $380,000 – my invoice for same is attached. According to my figures the difference that you would still owe would be $107,405.22 + GST should total $118,145.74. We can discuss/work out the difference on Wednesday and I'll do another invoice accordingly. As discussed, this amount is to be paid by this Friday 9/12/06 if you don't go to China or 15/12/06 if you do. I started working out the outstanding containers; I'm only halfway through … I'll finish them off asap and advise you of approx. figure $$$… I have also worked out all expenses to be paid by me to date and left a copy on Rhonda's desk to include in accounts accordingly, I will give you the cheque when I collect my final payment . We can also then discuss how much u offer for office furniture, computers etc . Stationery is full of cartridges, etc. at full price and that totals to quite a bit – I am sure we can come to some kind of agreement . HELEN S 5/12/06 133 There are a number of points to note about this communication. First, it is written from the standpoint that there is a 'final' amount to be paid – therefore that the business relationship, such as it was, had either come to an end or was about to do so. Secondly, whatever the basis of their arrangement, a figure of $380,000 is well in excess of a 35% share of the moneys said to have been in the combined Newport Pacific bank accounts so would seem to have referred to something more than simply net profits (even if, which seems unlikely, it could have been assumed that the cash in bank represented net profits). Thirdly, the total payable according to Ms Salib's figures was in the order of $500,000 ($380,000 plus $118,145.74), which is far in excess of the amount historically paid for a full year's 'commission' or 35% profit share up to that point (and therefore cannot have represented simply a 35% profit share for six months on any view of things, unless business in the second half of 2006 had been well and truly booming). (Mr Morahan relies on this last point to submit that Mr Gakas was thus on notice that this payment was for something other than the 35% commission and that he therefore cannot have been labouring under any mistake that this was Ms Salib's actual commission entitlement, a matter to which I return in due course.) Fourthly, although the note refers to an invoice being attached, none is in evidence and (as noted above) there is a dispute as to whether any papers were left with the note. Fifthly, the tone of the note is by no means threatening. It contemplates that there may be some adjustment, and expresses a willingness to defer payment of part of the amount in order to accommodate Mr Gakas' travel arrangements. Therefore, whatever may have been said by Ms Salib at an earlier stage, the note itself is not phrased as a non-negotiable demand. Finally, there is a reference to an offer being made for office furniture/computers and the like. Mr Morahan relies upon this as indicative of a partnership arrangement. It seems to me to be capcable of more than one interpretation. While it is certainly couched in terms which suggest that Ms Salib was believed (or was asserting) that she was entitled to be paid something for the office furniture/equipment, it could equally have been no more than an ambit claim on her part. 134 Mr Gakas (at para 45 of his affidavit) deposes to having found a memorandum from Ms Salib dated 5 December 2006 (para 45 of his affidavit 13 March 2009). Mr Gakas also says that Ms Salib arrived in his office around 11am on 5 December 2006 and that she then presented him with an invoice from her company for $569,872.11. (Pausing there, Mr Gakas' phone records show a call being placed to Mr Kolta at around 10am that morning. Therefore, if Mr Gakas did speak to Mr Kolta at that time as to the verification of Ms Salib's calculations and he had not by then (as I understand his evidence to be) received any invoice from Ms Salib, then any discussion with Mr Kolta could only have been in relation to the broad figures contained in the note (and any material in fact provided with it and collected by him). 135 As noted, the only invoice in evidence is an invoice dated 4 December 2006 on the letterhead of Blue Coast and addressed to Newport Pacific (which is annexure K to Mr Gakas' affidavit of 10 September 2009). It purports to be an invoice for administration and service fees as at 4 December 2006. It is submitted by Mr Simpkins that this date is likely to be an error as it pre-dates the calculations on the short typed memo of 5 December 2006. While it is by no means inconceivable that the relevant invoice pre-dated the 5 December note (given the lateness of the hour at which Ms Salib seems to have been preparing her calculations), say if the invoice was prepared late in the evening on 4 December and the note was created as the last thing before Ms Salib left the office in the early hours of 5 December, the difficulty is that the invoiced amount is not consistent with the amounts referred to in the note (and Ms Salib's own evidence refers to some adjustment of the amount of the invoice). Therefore, on balance I would infer that the invoice in evidence is one which was prepared at the earliest at some time after Mr Gakas had found the 5 December note from Ms Salib and perhaps not until 6 December when the payment was made (though that does not explain the date remaining on the invoice unchanged – something made more inexplicable by reference to the evidence Ms Salib gave of her usual practice in printing invoices (in a nano second) just by pushing a button). 136 Mr Gakas says that Ms Salib came into the office on 5 December 2006 and that they had a conversation (which Ms Salib denies) in words to the following effect (para 45 of his affidavit): Gakas: I don't understand this amount. How has it been calculated? Salib: Pay me that or I will charge you with sexual harassment. Gakas: Don't threaten me. Salib: I'll do it. They will believe me because I am a woman. 137 Though denying that conversation (and not referring in her affidavit to any attendance at the office that day), Ms Salib does not seem to deny that she attended the office on 5 December 2006. However, Ms Salib says that she had a telephone conversation with Mr Gakas in which he asked her to come in to collect the moneys. Ms Salib says that in that conversation she referred to the "outstanding moneys" and suggested that Mr Gakas pay her either $200,000 or half the amount in a couple of days and the rest when he returned from China. She says that she did this so as to give time for the company accountant, Mr Kolta, to check all figures and for Mr Gakas to come up with the appropriate funds (para 37 of her affidavit). (As with much of her evidence, Ms Salib was somewhat imprecise as to what had been said – in the witness box she said the figure she suggested as the initial payment could have been $200,000 or $300,000.) Mr Gakas' reaction to 5 December note 138 Mr Gakas says that he was going to China on 7 December 2006 and then to Europe and therefore that he had no opportunity to check Ms Salib's calculations. However, as noted earlier, he says that he telephoned Mr Kolta on 5 December 2006 and, relevantly, he says (though Mr Kolta denies) that he asked Mr Kolta to check the calculations. He says he had a conversation in words to the effect "she's worked it out herself and I've paid her some, but can you check the figure". 139 There is, as noted above, evidence of a telephone call having been placed to Mr Kolta's mobile telephone number on that date. Annexed to Mr Gakas' affidavit of 12 February 2010 are telephone records, which confirm a call being placed to Mr Kolta's number by Mr Gakas at 10.01am that day. Mr Kolta, however, denies that there was a conversation to the effect asserted by Mr Gakas (and, at least in one respect, Mr Gakas' version of the conversation seems inconsistent with the facts in that there is no evidence that any money had been paid by Mr Gakas on that date - rather, the money was paid on 6 December 2006). 140 Of some significance in my view is that before the meeting on 6 December 2006, Mr Gakas also contacted his solicitors. He says that he asked them to prepare a document confirming that "everything that was owing to Ms Salib was included in her calculation" (para 46 of his affidavit). Presumably, it was the giving of these instructions which resulted in the preparation of a draft deed by Mr Gakas' solicitors (which was presented to Ms Salib on 6 December 2006 but which she refused to sign). This suggests that Mr Gakas was looking at that stage to finalise his financial arrangements with Ms Salib once and for all (consistent with Mr Gajas not taking up the invitation to defer payment of the full amount until a later time). 6 December 2006 141 Ms Salib attended the office on 6 December 2006. When she did so, Mr Gakas gave Ms Salib a cheque for $569,872.11 (what Ms Salib described as 'the whole outstanding amount'). Ms Salib said that: "When I went to collect the cheque, after including some reductions for outstanding customers in storage that had been faxed after my calculations, as well as inclusions for photocopying machines and the like , Mr Gakas handed me a cheque for the whole outstanding amount." (my emphasis) 142 (I must say that I considered Ms Salib to have been genuinely bemused in the witness box as to why anyone would do so without checking the figures first. It seemed to me, from that, that Ms Salib had anticipated that Mr Gakas would review the figures (or get Mr Kolta to review them) to satisfy himself as to the amount claimed in the invoice and that she had not expected him simply to adopt her figures – perhaps as she seems also to have anticipated that there might be a process of negotiation in relation to any amount she wanted to be paid for office furniture and the like.) 143 The circumstances in which that final amount was paid are relevant both to the claim made by Ms Salib (since Mr Gakas relies upon the document signed on that occasion as giving rise to an estoppel to defeat Ms Salib's claim) and to Newport Pacific's claim for moneys had and received (which depends upon the payment having been made under an operative or causative mistake by Mr Gakas as to the amount representing Ms Salib's entitlements as at that date. Documentation prepared for the 6 December meeting 144 As noted earlier, it is not disputed that a document was signed by both parties at the time the cheque was provided by Mr Gakas. Nor is there any dispute that, at that time, Mr Gakas had provided to Ms Salib a deed of release which he requested her to sign. However, there is a clear conflict on the evidence as to what was actually signed on that day. It is necessary to consider in some detail the manner in which the document was prepared. 145 A draft deed of release and a receipt (the latter apparently being a stand alone document as there was no reference to it in the draft deed of release) were prepared and forwarded to the offices of Newport Pacific by Mr Gakas' lawyers on the morning of 6 December 2006. (These, it would seem, are the documents prepared in response to Mr Gakas' earlier instructions for confirmation that the payment included all Ms Salib's entitlements – in other words the solicitors were contemplating that there would be a formal acknowledgement by Ms Salib to that effect.) 146 Ms Hutchen deposed to the receipt of an email from Alfred J Morgan & Son, solicitors, annexing a draft deed of release and receipt on that day. A copy of an email sent at 10.12am on 6 December 2006 from Ms Thorpe at Alfred J Morgan to Mr Gakas at Newport Pacific is annexed to Ms Hutchen's affidavit. It read: Hello Mr Gakas Finally, attached is the deed of release and form of receipt for execution by Helen. However, in David's absence today, he wishes me to confirm his recommendation not to do it this way. Hope all goes well. 147 The introductory word "finally" may suggest that there had been some delay in the provision of the draft documentation and/or that there had been some urgency perceived as attaching to its preparation. In any event, attached to that email was a draft deed of release and a one page document titled 'receipt' (Annexure B to Ms Hutchen's affidavit). In the draft deed the name of Newport Pacific was wrongly noted (the words 'Newport' and 'Pacific' being transposed). Ms Hutchen noted this and contacted Ms Thorpe to advise her of the error in the company name. A revised draft deed was shortly thereafter forwarded by email (correcting the name of Newport Pacific but making no other changes) to Ms Hutchen by Ms Thorpe at 10.23am that day. (It is not clear why a simple typographical error of that kind could not have been made by Ms Hutchen herself, without the need for amendment at the solicitors' end but no issue was raised as to this.) 148 It appears that a copy of the initial draft deed (ie, with the mistake in the company name) was then forwarded by facsimile transmission to Kent Newport (marked to the attention of 'Di', which the Gakas interests accept is likely to be a reference to Mr Gakas' wife), since the copy of that draft deed in evidence before me bears a fax imprint suggesting that it was received by Kent Newport at 10.33am on that date. (Ms Hutchen, who I regret to say was not the most co-operative witness in the witness box, was unable to recall whether she had faxed this document to Ms Eddington.) 149 For the Gakas interests, it is said that the preparation of the draft deed of release and receipt followed a threat by Ms Salib to charge Mr Gakas with sexual harassment. On the evidence before me, this could only refer back to the conversation which Mr Gakas alleges took place on 5 december 2006 and which Ms Salib denies. (I note, in this regard, that Mr Simpkins objected to any evidence in Ms Salib's affidavit (or other affidavits served in Ms Salib's case) in relation to matters relating to alleged sexual harassment but that, nevertheless, by this submission the Gakas interests would appear at the very least to acknowledge that there had been, at or around the time that Ms Salib ceased working with Mr Gakas, a suggestion that such an allegation would be made, if it had not already been made by Ms Salib.) 150 While it seems that part of the background to the events of 6 December was an allegation (or perhaps more accurately an apprehension on Mr Gakas' part that there would be an allegation) of sexual harassment made against Mr Gakas, any suggestion that the sum paid by Mr Gakas on 6 December 2006 was a payment made under duress does not accord with the tenor of the note left by Ms Salib on 5 December 2006 (nor does it seem consistent with Mr Gakas' willingness to proceed to pay the Blue Coast invoice without insisting upon a signed release in his favour or any acknowledgement by Ms Salib that this payment was to put to an end any claim of that kind). Furthermore, by the time that he made the payment Mr Gakas had obtained at least some brief legal advice in relation to his position (albeit advice which he chose to ignore, having been 'strongly' advised against the course of action he was apparently proposing to take). 151 The draft deed of release which was provided to Ms Salib on 6 December 2006 refers to the parties (Newport Pacific, Kent Newport and Mr Gakas) "and other associated entities" as having "been in a business relationship with Helen Salib for a number of years; Newport Pacific Pty Ltd for a short period as an employer of Helen Salib". (Interestingly, though this was not a matter raised in submissions, the draft deed therefore seems to have been prepared on the assumption that there had been some form of business association or relationship involving not only Newport Pacific but also Kent Newport and Ms Salib.) 152 The draft deed refers to a dispute having arisen between Ms Salib and the Gakas Group, and to the parties wishing to resolve their differences. Recital B says: … in consideration for the payment of the sum of $ in response to an invoice issued by Helen Salib and the agreement to resolve a further claim being an additional payment in respect of a usual business transaction due to Helen Salib in or about one month from the date of this deed then Helen Salib wishes to agree to release each and all of the Gakas Group from any claim, debt or other entitlement to her. 153 Not surprisingly (if for no other reason than the undesirable element of uncertainty inherent in an agreement to a release of all claims other than "one further claim" which is not specifically identified), Mr Gakas' lawyer recommended against execution of the deed (a recommendation which, despite its strength, Ms Hutchen was unable to recall whether she had passed on to Mr Gakas). 154 Relevantly, for present purposes, also provided to Ms Salib with the draft deed was the document titled 'receipt'. In the version sent through by his lawyers, this document read (with my emphasis): Receipt I, Helen Salib acknowledge receipt of the sum of $ and I have no further claim against William Bronius Gakas, Kent Newport Pty Ltd or Newport Pacific Pty Ltd or any other associated companies of the Gakas Group. Dated: ___________________signature Helen Salib 155 In her affidavit of 3 February 2010, Ms Hutchen says that in a telephone conversation with Ms Thorpe, from the solicitors' office, Ms Thorpe told her that the receipt had to be copied and pasted onto Newport Pacific letterhead. Ms Hutchen recalls so doing. (In submissions it seemed to be suggested by Mr Morahan that there had been no cutting and pasting, but it is not clear to me the basis on which that was contended. The text of the draft receipt as emailed seems to me to accord in a number of respects with the signed versions in evidence.) 156 (The cutting and pasting exercise which Ms Hutchen says she undertook may well be the explanation for a feature of the formatting of the final version of the receipt on which Mr Morahan placed some weight, namely the spacing on the first line, to which I will refer shortly.) 157 Ms Hutchen's evidence was that she copied and pasted the receipt onto Newport Pacific letterhead and that she also inserted the amount that Ms Salib was to be paid. She does not say how it is that she was informed of the particular amount to be inserted – I can only assume that this came from Mr Gakas, but if so that must have been after Ms Salib produced the final version of the receipt or at least told him what that figure was. As noted above, Ms Salib's account of events was that there had been some adjustments to the amount of the calculations which meant that the invoiced sum was greater than that included in her 5 December note. Ultimately, nothing seems to turn on this other than that the fact that the amount was still being adjusted as at about 6 December is not consistent with the note of 5 December constituting a non-negotiable demand by Ms Salib. 158 Ms Hutchen says that the amount that she inserted into the receipt was not the end of a sentence (as opposed to being at the end of the first line). She is confident as to this because she says that if the monetary amount had been at the end of the sentence she would have written "only" after the amount (in accordance with her usual practice). (This would explain the lack of a full stop at the end of the first line on the 3-line receipt tendered by Mr Gakas but not on the 1-line receipt tendered by Ms Salib). 159 Ms Hutchen also said in her affidavit that before she printed the receipt she asked Ms Overman to come and check it; and that she remembers Ms Overman leaning over her shoulder to look at the computer screen to check the figure. Ms Overman's evidence was not consistent with this account. Ms Overman does say, however, that she was shown the document by Mr Gakas on that date. I think nothing turns on the discrepancy between Ms Hutchen's and Ms Overman's evidence on this point. 160 Ms Hutchen says that she printed the deed of release and the receipt; and that she gave them both to Mr Gakas who was upstairs in his office at the time; she says that Ms Salib was with Mr Gakas at the time and that when she gave Mr Gakas the documents he asked her to stay and witness the signatures. Ms Hutchen says "he then gave the documents to Ms Salib, I observed Ms Salib read the documents and I recall her saying words to the effect, "I'm not signing that"." 161 This is consistent with the account given by Ms Salib to the effect that she had refused to sign about 15 pages of documents which had been prepared by Alfred J Morgan. (I note that the deed of release in the form annexed to Ms Hutchen's affidavit is no more than four pages with the one page receipt following, so the reference to a 15 page document seems to be an exaggeration.) 162 In her first affidavit, Ms Salib went on to say that she refused to sign the documents because "I did not consider the amount paid was complete including because there was no component for goodwill" (not because of any other reason). Ms Salib says she asked Mr Gakas what about goodwill and how much he was going to give her for the goodwill and he said he did not have any money, he had to borrow to pay the cheque. (Ms Salib also says in that affidavit that Mr Gakas said to her "are you intending to sue me for sexual harassment?" (a question which logically could only have been put if the issue of sexual harassment had already been raised between them) to which she did not answer.) 163 Ms Hutchen says she recalled Ms Salib and Mr Gakas having a conversation about the documents (it appears this was after Ms Salib had refused to sign them) but cannot recall what was said (which might suggest that it is unlikely that there was any reference to a sexual harassment claim in that conversation as this might be something more likely to have remained in Ms Hutchen's mind, even though it has been four years after the relevant event – though having regard to the manner with which Ms Hutchen gave her evidence generally it may not be safe to draw that conclusion – T407.15 in which Ms Hutchen was at pains to point out that "I've had a life in the last 4 years" and demanded to know if Mr Morahan remembered everything about the last 4 years also). 164 Ms Hutchen did recall that there was to be an amendment and says that she was given a document to amend by Mr Gakas, which she did. She could not remember whether it was the deed or the receipt that required amendment and she could not remember the amendment she had made. However, she says that she knew that the amendment did not involve amending the receipt simply to make it a one-line document. 165 Ms Hutchen says that she recalls returning downstairs to where Mr Gakas and Ms Salib were waiting (after amending whatever document it was that she had amended) and gave Mr Gakas the 'receipt' (which suggests that it was the receipt that had been amended and not the deed); that Mr Gakas gave it to Ms Salib to read who then signed it and that she, Ms Hutchen, then signed it to witness Ms Salib's signature. Ms Hutchen says that she then witnessed Mr Gakas' signature after he in turn signed it and that she went downstairs to copy the documents and brought them back to Mr Gakas. She says that she gave Mr Gakas the original and Ms Salib the copy. (Ms Hutchen was not asked whether she was able to identify the copy she gave to Ms Salib amongst the versions of that document in court.) 166 The significance of the evidence as to the preparation of the receipt is obviously that there are two versions of that document (bearing the signatures of the respective parties and of Ms Hutchen) in evidence. Exhibit 13 is the 3-line receipt which bears the handwritten signatures of Mr Gakas and Ms Salib (and Ms Hutchen's signature as a witness to both). (A copy of this was Annexure K to Mr Gakas' affidavit of 3 March 2009 and thus something of which Ms Salib's solicitors, if not Ms Salib, must have been aware from the time of service of that affidavit.) Ms Salib's affidavit sworn in January 2010 annexes for the first time the document which purports to be a photocopy of the signed 3-line receipt but from which two of the three lines on the Gakas' version are missing. 167 The document which bears the original handwriting reads as follows: Receipt Blue Coast Pty Ltd acknowledge receipt of the sum of $569,872.11 and I have no further claim relating to my business association with, Kent Newport Pty Ltd or Newport Pacific Pty Ltd The document then provides for formal execution (it being signed sealed and delivered) by each of Mr Gakas and Ms Salib (Mr Gakas indicated as signing for Kent Newport/Newport Pacific and Ms Salib as signing for Blue Coast). 168 It can be seen from this that certain changes have been made from the version sent through by Ms Thorpe. Apart from inclusion of the payment amount, there are two relevant changes. First, the acknowledgment of receipt of payment is, on each of the signed versions, given by Blue Coast and not by Ms Salib personally. Whether this was an amendment made by Ms Hutchen at the time the document was copied and pasted from the solicitors' draft or not until after the document was presented to Ms Salib and had become the subject of debate between Mr Gakas and Ms Salib is not clear. (I note that there was no change to the text of the document to reflect the change from a personal acknowledgment to a company acknowledgment – the subject of the verb remaining "I" rather than "it".) 169 More significantly, in light of Ms Salib's evidence, are the following two changes from the solicitors' draft. First, the acknowledgment that Blue Coast has no further claim, in the 3-line receipt makes no reference (unlike the solicitors' draft) to there being no further claim against Mr Gakas himself. The fact that there was at some stage a reference to him in the document seems apparent from the superfluous comma appearing before the name "Kent Newport" in the signed version. It therefore seems likely that the version first presented to Ms Salib for signing did include Mr Gakas' name. The deletion of Mr Gakas' name from the receipt would be consistent with what Mr Gakas said was Ms Salib's stated refusal to sign a document in relation to Mr Gakas (though Ms Salib says that her opposition to the document was that it was a release and that she was not going to sign anything without solicitors' advice). Secondly, it describes the further claim so being disavowed as any further claim 'relating to my business association with' Kent Newport or Newport Pacific rather than referring to there being no further claim 'against' them. (This would be consistent with a refusal of Ms Salib to do more than acknowledge a final payment of her business entitlements but reserving any personal claim for harassment or otherwise against Mr Gakas, although there is no way of knowing when that change was made). Mr Morahan submits that as this latter explanation was not put to Ms Salib it cannot be accepted as being the interpretation accorded to the document. However, insofar as there has clearly been an amendment from the version as submitted by the lawyers, it seems to me that either this was at Mr Gakas' instigation (before the document was presented to Ms Salib) or was made after Ms Salib had refused to sign a document releasing Mr Gakas (or, on her version of events, releasing anyone at all). 170 Emphasis is placed by Mr Simpkins on the fact that the document which appears as Annexure K to Mr Gakas' affidavit (the original of which is Exhibit 13) was not the subject of any response by Ms Salib for some ten months after it first appeared as an annexure to his affidavit (a fact Ms Salib attributes to her solicitor only drawing it to her attention in January this year). It seems to me that I can put little weight on the lateness of Ms Salib's challenge to the veracity of the version appearing in Mr Gakas' affidavit because I am not satisfied, as a general matter, that Ms Salib displayed careful attention to detail in the preparation of her affidavits (see eg T 95.35) (which seems to be apparent even treating her own evidence of matters she claims to have 'forgotten' to put in the affidavit or left to her solicitors as being somewhat self-serving – T 68.24; T 95.35) and this may well have extended to the review of the affidavits served by the Gakas interests. 171 The 1-line receipt (being the photocopy receipt which is annexed to Ms Salib's affidavit) is the same as Exhibit 13 but without the second and third lines following the first line. It reads simply: Receipt Blue Coast Pty Ltd acknowledge receipt of the sum of $569,872.11 172 There is no full stop after the monetary amount on the first line and the spaces for execution by the signatories appear at exactly the same point on the page in the photocopy document as they do in the document bearing the handwritten signatures. 173 Ms Salib is adamant that this is not the document which she signed and that the receipt that she signed did not include the words "and I have no further claim …". Ms Salib says she recalls that, prior to signing the receipt, Mr Gakas had asked her to sign a document that contained words to that effect but that upon reading the document she had a conversation with him to the effect that she said "I will not sign anything without first getting legal advice". Ms Salib says that Mr Gakas insisted upon a receipt (though she told him, in effect, that the banking of the cheque should be sufficient by way of receipt) and that she then said "Fine. You can change this receipt to read only 'Blue Coast acknowledges receipt of the sum of $569,872.11'". (That would explain the change from a reference to "Helen Salib" in the first line to the reference to an acknowledgement by "Blue Coast" in that line, and might explain the inconsistent terminology in the document – namely the use of the first person in the phrase "I have no further claim". However, what it does not explain is the deletion or addition of the second and third lines. Arguably, it would be consistent with a refusal by Ms Salib to release Mr Gakas, that his name (but no more) be removed from the second and third lines of the document). 174 Ms Hutchen was shown both annexures. Ms Hutchen says that the 3-line receipt is the document that the parties signed on 6 December 2006 and that she witnessed. She says that for two reasons – first, because she says she knows that the document she witnessed had more than one line and, secondly, because of her memory of the circumstances in which the document was both generated and signed (as set out in her affidavit and summarised above). 175 Ms Overman swore an affidavit on 29 January 2010. She recalls being shown the document by Mr Gakas on 6 December 2006. (She does not say that she was shown the document by Ms Hutchen.) Ms Overman says that she does not recall ever seeing the second document before. She says in para 6: I expressly recall the document Mr Gakas showed me stating words to the effect 'there would be no further claim' because I thought to myself that this meant Newport was paying whatever it owed her and we would not see her again. (The evidence as to Ms Overman's state of mind when she saw the receipt I read as going solely to the reason she is able now to recall its contents.) 176 Ms Salib's account as to why the discrepancy between the two documents was not the subject of earlier comment is that the document which was annexed to Mr Gakas' affidavit was only brought to her attention by her solicitors on 12 January 2010 and that until that time she had assumed that the reference to that document in the body of his affidavit was to the copy she held (T 208.10). (If so, it is difficult to make sense of the pleading that this amounted to a release. However, I take into account that Ms Salib is not a lawyer and may not have appreciated the significance of the assertion as to a release, and may well not have checked the annexures to the affidavit herself.) It seems to me quite likely that had this been drawn to Ms Salib's attention earlier then Ms Salib would simply have proffered her explanation at an earlier time. Hence I think little weight attaches to the lateness of the challenge raised by Ms Salib in relation to the document. 177 In cross-examination it was put to Ms Salib that the issue she had with signing this 'receipt', in the form it had been put to her, was the release of Mr Gakas. However, Ms Salib denied that she had simply asked for Mr Gakas' name to be removed. At 210.22, Ms Salib said: Mr Gakas's name is in there. Why would I ask that [for his name to be removed]. Then why would I still sign the receipt if Mr Gakas' name was still on it [in the execution clause] if I insisted on not signing anything. 178 What Ms Salib objected to, vociferously it would seem, was signing a document that constituted a release. (Hence, she said that had she seen any reference in Mr Gakas' affidavit to a release she would have been alerted to the issue earlier about the receipt – "I will be honest with you, when I was reading the affidavit I was seeing red. I was very unhappy about what was in there. So no I didn't see a release. I saw smoke" – T208.18). Ms Salib accepted that she had demanded that the document be changed and that she had signed something (and could not recall what it had been called) but was adamant that she would not have signed a release without legal advice (T 212.15) (though she was apparently willing to proffer a mortgage over her home without any such consultation). I accept Ms Salib's evidence that she had no intention of signing a release, at least in relation to the claims she had against Mr Gakas. I think the evidence is consistent with Ms Salib having focussed her thoughts on that aspect of any release. It seems to me that the concept of Ms Salib preparing calculations for a 'final' payment suggests that what she was contemplating was a resolution of her claimed business entitlements and that (though she now denies this) she may not have been so adamantly opposed to signing a document acknowledging that she had no further claims in that regard. 179 Mr Simpkins submits that as there was no cross-examination of Mr Gakas or the witnesses for the Gakas interests to suggest that they had deliberately added anything to the document after it was signed, that is the end of the matter and that it should be accepted that the original document was that comprised by Exhibit 13 (the 3-line receipt). It seems to me that I need not rest my decision on this aspect of the case on the ambit of cross-examination of the Gakas witnesses because I am satisfied on the forensic evidence that the document as signed is more likely than not the 3-line version. 180 I should note, for completeness, that Mr Simpkins submitted that if there had been any forgery by Mr Gakas it bordered on the inconceivable that he would not have included a release for himself as well as his companies for all claims. That may well be logical. However, the fact that there may have been too limited a release to serve Mr Gakas' interests would not have persuaded me that he did not alter the document had the evidence otherwise led me to that view (he may well, for example, on that hypothesis have considered that a personal release would be a step too far in view of Ms Salib's adamance that she would not sign a release and was threatening claims against him personally.) 181 Similarly, as noted above, I place no weight on the delay by Ms Salib in raising the discrepancy, which could have been due to a number of factors other than a deliberate manipulation of the document as submitted by Mr Simpkins. I would also not have been persuaded to the view that the alteration was one effected by Ms Salib simply by reference to the fact that Ms Salib was uncertain what happened to the original copy she claimed to have received of the document (T 180.35) or was unable to ascertain which, of a variety of photocopies, was the original photocopy or the evidence (described by Mr Simpkins as bizarre) that although Ms Salib said she had not requested the receipt and thought it unimportant she would nevertheless have put it with what she said was her important papers in a white envelope. All those matters would seem to me to be reasonably explicable otherwise than by reference to a deliberate alteration of the document on Ms Salib's part. I note that Mr Simpkins also points to the lack of any attempt by Ms Salib to establish that the allegedly genuine photocopy had been seen by anyone else at any earlier point of time. However, that may well have been simply because she had not shown it to anyone. 182 Ultimately, what persuades me that Exhibit 13 (the 3-line version) is the genuine document is the evidence of Ms Moussa and the evidence of the circumstances in which the document was created from the version sent by Mr Gakas' lawyers. 183 The formatting anomaly I referred to earlier (on which Mr Morahan places emphasis) (and which is noted without comment as to its significance by the forensic expert) is that at the end of the first line (which does not have a full stop on either version) of the 3-line document there is enough room to fit the words "and I" (and perhaps even the words "and I have") but those words do not appear until the commencement of the second line. Much was made, by Mr Morahan, of the spacing between lines one and two of Exhibit 13. As I understood the thrust of this submission, it was that the spacing made it more likely that the document (as originally signed) contained only the one line and that the two subsequent lines had been added after Ms Salib had already signed and been given a copy for her records of the document. (Of course, this thesis does not explain the lack of a full stop at the end of the first line.) (Nor does it address the evidence of the forensic expert, Ms Candice Moussa, to the effect that it would be unlikely that had the next two lines been added to the page after the document was signed they would have been able to be placed so precisely in terms of the horizontal and vertical alignment and orientation of the added text compared with the existing text. – Ex 24) 184 The draft receipt as sent to Ms Hutchen by Mr Gakas' lawyers also left a blank at the end of the first line (no doubt to allow for insertion of the relevant amount) and then commenced on the second line with the words "and I have no further claim". It seems to me more likely to be the case that in the original version (as copied and pasted across into a Newport Pacific document by Ms Hutchen) there was some form of line break after the space left for the amount to be inserted so as to have the effect that the words "and I have" would necessarily always commence on a new line (rather than the words running on automatically at the end of the first line after the payment amount had been inserted). 185 Ms Moussa's conclusion (at para 7 of her report) was that the 1-line receipt had its origins in the 3-line receipt or an earlier version of that receipt, due to the coincidence in the relative alignment and spacing of the text, the shapes and relative positioning of the signature components as well as the positioning of the signatures in relation to one another and to the surrounding text. It does not seem to me that there is any real doubt as to that conclusion. 186 Ms Moussa observed no discrepancies in the font style and/or size of the subject text compared with the surrounding text on the 3-line receipt; nor did she observe any anomalies in the horizontal or vertical alignment or orientation of the subject text. She explained why one would reasonably expect there to be such anomalies if the text had been added subsequently (due to the fact that the precise positioning of added text relative to existing text on a document is ultimately determined by the printer and dependent on technical matters in that regard) (para 8). 187 As I understand the expert evidence (and I saw no reason not to accept Ms Moussa's evidence) the 3-line receipt (bearing the handwritten signatures) is most likely to be the document as actually signed by the signatories at the time. Ms Moussa considered that the possibility if the 1-line receipt being a true reproduction of the genuine document was unlikely (para 16). I accept Ms Moussa's evidence. I note in that regard that, then given that both parties accept that there was only one receipt signed, this leads to the inevitable conclusion that the document annexed to Ms Salib's affidavit is the product of some alteration (presumably by covering up the second and third lines when the document was copied). 188 I accept the evidence of Ms Moussa. I consider it significant that the spacing on the receipt is consistent with the form in which it was sent through from Mr Gakas' lawyers (which suggests that there is no sinister meaning to be attached to the additional space at the end of the first line) and that the amendments from the version sent through by Ms Thorpe (assuming the document as signed to have been the three line version) are consistent with Ms Salib refusing to sign a document giving up any claim she might have against Mr Gakas personally (but with her having already put forward her claim for her 'final' entitlements vis a vis the companies in the Gakas group). 189 Therefore, I find that the document signed on 6 December 2006 is the version, which is Exhibit 13. I consider below the impact of this finding on issues of credit as between Mr Gakas and Ms Salib. (While it is conceivable that there is an explanation consistent with someone else having altered the document and Ms Salib then having been presented with an altered copy on 6 December 2006, the only person who would have been in a position seemingly to do this would be Ms Hutchen and there seems no reason for her to have done so nor was it suggested that she did. It seems to me that this possibility can be dismissed as far-fetched.) Nature of 6 December payment 190 This brings me to a consideration of what the payment made on 6 December 2006 represented. 191 Ms Salib, at para 56 of her 7 August 2008 affidavit (her first affidavit), says she believed that the cheque provided to her on 6 December 2006 constituted 35% of the net value of stock on the premises (which would be consistent with the comment in her 5 December note that there were three outstanding container loads remaining to be reviewed). However, that seems to be inconsistent with her reference to this as an 'outstanding amount' (there being no entitlement to this on either party's version of events while the business relationship was ongoing) and inconsistent with the fact that the invoice (as were most of the earlier invoices) in its terms related to a fee for administration services. 192 Nevertheless, the very quantum of the final invoice makes it unlikely, in view of the historical commission payments, to have been a claim for 35% of the profits alone and surely could not have been seen as such by Mr Gakas. Therefore whether or not Mr Gakas had in front of him the supporting documentation, I cannot accept that he regarded this simply as a claim for a 35% profit share or commission. 193 In response to paragraph 56 of Ms Salib's affidavit, Mr Gakas, in his affidavit of 10 September 2009, said "the amount of $569,872.11 was paid by Newport Pacific for no other reason than to bring to an end the business relationship with Ms Salib. It was certainly not paid because of any assault, despite the fact that the payment had been demanded under threat by Ms Salib that she would seek to have me charged with sexually assaulting her if I did not pay her." (para 18) (my emphasis). (For the record, I note that Mr Gakas denies that he has ever assaulted Ms Salib and says that this is a complete fabrication by her – para 16.) 194 Mr Gakas says in his affidavit that he trusted and relied upon the representations made to him by Ms Salib in her 4 December invoice to the effect that the figure there stated was the figure she should receive from Newport Pacific for her work until the date of the resignation; that he relied on the representation in agreeing to make the payment (noting that in fact the figure also included three containers of stock that had not been delivered to the business) (para 19); and that he relied on the statement that Ms Salib had made on 6 December 2006 that she was glad to receive the money as she no longer wanted anything more to do with him or Pacific (my emphases). The statement in question (set out in para 49 of Mr Gakas' affidavit was: Salib: I'm over this. I'm glad I'm free. I don't want anything more to do with you or your company. I have had many offers from other people, you'd be amazed." 195 Mr Gakas said that he trusted Ms Salib (pointing out that she controlled the books) and that he trusted what she put in the invoice was her money (T 344.11) and certainly he appears to have largely if not wholly left the accounts and records of the company to Ms Salib and the office staff to deal with. 196 In relation to the statement Mr Gakas attributed to Ms Salib (to which Ms Salib makes no response in any of her affidavits and therefore apparently does not deny), Mr Gakas says the only conclusion he could draw from that comment was a confirmation of his understanding that the figure of $569,872.11 represented Ms Salib's profit share entitlement. That may be the case, but if so it appears to indicate that he understood that this was a payment which, once made, would represent the final wash-up of moneys owing to Ms Salib at the conclusion of her working relationship with him and he was proceeded to make that payment knowing that he had been unable to check the details (apparently having doubts as to the accuracy insofar as he tried to check the details and against his solicitors' advice). 197 It is significant in my view that Mr Gakas said he made the final payment quickly because "I want to finish. I want to finish" (T 344.4); that he didn't want any further problems (T 344.7). When asked what Mr Gakas' intention was when he paid the money he said: We would be finished. Go away and have the money. and That Blue Coast will not claim against Newport Pacific Pty Ltd or Kent Newport Pty Ltd for anymore entitlements of money, something liker that. So, that was the notation and that is how it was. 198 I expressly allowed cross-examination on the above issue as going to the estoppel claim made by Mr Gakas against Ms Salib (it being conceded by Mr Morahan that there was no plea that there had been a binding agreement or release by Mr Gakas or Newport Pacific in respect of any claim for overpayments made to Ms Salib). Mr Simpkins, having objected to that line of cross-examination, made it plain that he did so on the basis that there was no pleaded argument that there was a binding arrangement in relation to the payment of the money and he did not object to the evidence being adduced on the estoppel/waiver claim. Mr Morahan confirmed that the cross-examination was not going to any issue not pleaded. (I note this because it seems to me that the intention of Mr Gakas when he made the payment is also relevant to the allegation in the second set of proceedings as to the existence of a mistaken belief, a matter I will address in due course, but that this evidence does no more than confirm the belief I have formed by reference to the balance of the evidence that Mr Gakas was not operating under any mistaken belief as to Ms Salib's entitlement when he paid the money but did so in order to resolve matters with Ms Salib and bring the business relationship to an end.) (I also note that the import of Mr Gakas' evidence at T 392.8 was that he wanted Ms Salib to forgo all claims but that he should not be so foreclosed, a matter which it would arguably have been incumbent on him to draw to Ms Salib's attention before accepting any release which might have been proffered by her in the belief on her part that it represented an end to the disputes – though on her evidence no such issue would arise, as she denies any release was given at all.) January 2007 199 Mr Gakas says that in January 2007, after he returned from China, he made contact with Mr Kolta and asked him whether he had checked Helen's calculation. Although, in his initial affidavit, Mr Gakas said that he did so on a number of occasions from 8 January 2008, his phone records show (and he corrected his evidence in this regard) that his first call to Mr Kolta after his return from China was on 15 January 2007. There seems no doubt that he made a number of calls to Mr Kolta. What he was seeking to discuss with him may be a different issue, since it is only Mr Gakas who gives evidence as to that. 200 In any event, Mr Gakas ultimately terminated Mr Kolta's retainer as the company accountant. According to Mr Gakas this was due to Mr Kolta's inability to verify Ms Salib's calculations as requested. (Mr Gakas says that Mr Kolta said he could not do so because Ms Salib had refused to talk to him about the payments and Mr Kolta then terminated his services.) Mr Kolta in the witness box seemed, not improperly, to be concerned as to any conflict if he were to discuss one client's affairs with another. 201 It appears that Mr Kolta's services were not in fact terminated until some time around March 2007, Mr Kolta preparing the first quarter activity instalment for the businesses before his services were terminated. After that, a new accountant, Mr Nick Janes, was appointed to act for the Gakas interests. 202 Mr Gakas refers (in para 52 of his affidavit) to a subsequent meeting he had with Ms Salib (he says at her request) at a coffee shop in Botany on 9 January 2007 in which he says Ms Salib said to him "I've been thinking. Your business should belong to me. We can do this two ways, the easy way or the hard way …" the easy way being that he agree to her demands, the hard way being that "I will charge you with sexual harassment and I will make sure your name is mud. I will destroy you …". Ms Salib denies this conversation. 203 Mr Gakas also refers (in para 53 of his affidavit) to a further conversation on 15 January 2007 in which he says that Ms Salib said "if you give me your business I will withdraw the charges of sexual harassment against you. I will sign an agreement. You have one hour to think this over" and he said that she should put her demands in writing. (As I understand it, Ms Salib also denies this conversation.) 204 Whatever be the case as to threatened proceedings in January 2007, Mr Gakas' affidavit of 13 March 2009 (para 87) refers to allegations having been made in new and separate proceedings brought against him in both the New South Wales Anti Discrimination Board and the New South Wales District Court, which may well encompass allegations of the kind apparently aired (if not in January 2007 in the conversations which Ms Salib denies then in December 2006) insofar as something must have given rise to an anticipation on Mr Gakas' part that Ms Salib might commence proceedings (or else the question put to her on 6 December seems odd). This may also explain the cryptic reference in the draft December deed to a further claim not to be the subject of a release (although I note that was referred to in the draft deed as a claim in respect of a usual business transaction, which one would hope a sexual harassment claim would not be). Further discussions about purchase of business 205 At around this time, it seems that there were ongoing discussions in relation to the possible purchase by Ms Salib of the business. (According to Ms Salib, the first discussions about her acquisition of a shareholding in Kent Newport in fact commenced in late 2002, but she was quick to add that she "owned 35% of what was in Kent Newport anyway" (T 44.8/.15). 206 In evidence before me was a copy of a letter (described in Mr Gakas' affidavit para 15 as a letter of Ms Salib's intention to purchase the business) of 29 February 2007 from Mr Kolta to Mr Gakas' solicitors in which Mr Kolta writes that "I have been told by William Gakas and Helen Salib that Gakas is going to sell 49% of his share in the company to Helen Salib on consideration of $100,000." This did not proceed. Termination of Harvey Norman arrangements 207 On 5 December 2007, the Harvey Norman Group sent a letter to Mr Gakas informing him that Kent Newport's services were no longer required. Although the letter said this was "due to our change in retail direction, we no longer require the services of Kent Newport", in the witness box, Mr Gakas attributed the cessation of the business relationship with Harvey Norman to the fact that litigation had been commenced, saying that his arrangements with the Group gave them the right to terminate the arrangement if Mr Gakas were to become involved in litigation. Attempt by Ms Salib to resurrect the business 208 According to affidavit evidence of Mr Marcus Nelson (sworn 29 September 2009), a former product and marketing manager at Harvey Norman, who was not required for cross-examination, he had a conversation with Ms Salib in February 2008 in which Ms Salib suggested to him that she could pick up where Mr Gakas had left off in relation to the business (Mr Gakas' business having by then been closed down). (Mr Nelson annexed an email he had sent internally in relation to that approach which refers to such an approach and appears to constitute a contemporaneous record of his understanding of that conversation.) Litigation 209 Ms Salib commenced her proceedings in this Court in September 2007. It was not until after those proceedings were commenced that Newport Pacific commenced its proceedings seeking to reopen the finality of the payment made in December 2006 and the question as to the proper calculation of the earlier commission payments (thus suggesting, perhaps, that Mr Gakas had indeed considered the December 2006 payment to be in final resolution of any claims in relation to the business relationship). Credit of witnesses 210 In circumstances where there is no ready way to reconcile the evidence given by Ms Salib with that of Mr Gakas on a number of critical issues (such as the initial conversations as to the business arrangements between them and the identification of the receipt), there is a clear issue of credit as between the two principal witnesses in this case. 211 Mr Simpkins raised six matters as going adversely to the credit of Ms Salib. 212 First, he referred to the circumstances in which there were two versions of the 'receipt' in existence (in relation to which he submitted the only conclusion which could be reached was that one of the parties had produced a concocted document and he invited me to conclude this must have been Ms Salib). On that issue, for the reasons indicated above, I have accepted Mr Gakas' version of events as the more credible. 213 Secondly, he referred to the contradictory assertions as to the existence of a partnership which emerged in Ms Salib's family court proceedings. In that regard, I cannot lightly conclude that Ms Salib was prepared to put before the Family Court a version of events inconsistent with the facts. I think it likely that Ms Salib took whatever steps she considered (or was advised) were appropriate in order legitimately to protect her position. I would accept that, at least as at January 2004, there was no longer any partnership in existence (if indeed there had been one earlier than that), since Ms Salib was keen to treat her business relationship at that stage as no more than an employment relationship and this seems to be confirmed by the issue of a group certificate referable to that period. It seems to me that, having done so, and having gone on oath in other proceedings to that effect, she cannot now suggest that it was something else (nor, to be fair to her, did she seek in the witness box to do so – although until her cross-examination there had been no suggestion in her pleading and affidavit evidence that she was other than in a partnership arrangement throughout the whole of the period). 214 In any event, there is no documentation (tax returns, partnership returns, other partnership documentation) of any kind that would suggest that there was any partnership in existence. It seems to me that the most likely conclusion to draw is that the position as put before the Family Court was correct in that there was no partnership interest held by Ms Salib at the relevant time (or indeed at any time) in any business operated by Mr Gakas. 215 Thirdly, Mr Simpkins points to the inadequacy of the details of partnership contained in Ms Salib's first affidavit (sworn 7 August 2008) in these proceedings and her explanation for the absence of a more complete account in that affidavit. True it is, that in cross-examination Ms Salib gave a more detailed account of her initial discussion with Mr Gakas concerning the partnership arrangements. Her oral evidence included, relevantly, a discussion as to the sharing of any losses that the business might incur (T 94.20). (Insofar as Mr Simpkins notes that it also included a reference to the same role as Mr Gakas' son Darius had had in the business (T 99.5) that seems less significant.) Ms Salib was challenged on this in the witness box and her explanation was that this was a summarised document (T 96; T 97.15; T 100.50 – T 101.13; T 99.50) and that she had provided a more detailed statement to her lawyers (though no such document could be produced by her, due she says to a loss of computer information in a power surge this year, and the material from her solicitors' file was not enlightening in this regard). 216 I consider that Ms Salib showed a tendency to exaggerate in the witness box (such as her statements as to the frequency of discussions with Mr Gakas as to matters such as the shareholding of Kent Newport or what was to happen to her company during the divorce or, more critically, as to the sharing of losses T95.44 – as to which no evidence had been previously led) and to embellish her affidavit account of events when giving her oral evidence (on various matters including her alleged offer to proffer her house as security and her evidence as to requests to be made a director and in relation to the evidence proffered very late in the piece as to the initial arrangement being a one-third/two thirds split). On a number of occasions she made broad assertions in the witness box which she was then forced to retract (such as the denial of a beneficial interest in Betta Coast). On other aspects of the matter she was inconsistent in her evidence (such as the date on which she said the 'partnership' revived). It seemed to me that Ms Salib had fixed firmly in her mind what she thought was relevant to assert in these proceedings and that, at least at the outset, was focussed more on the manner in which she believed Mr Gakas had behaved towards her in a personal sense at the expense of focussing on as complete an account as could be given of the facts on which she relied for the partnership allegations which she has now pursued. However, even if so, it meant that her evidence gave the impression that it was broad brush (such as her assertions of confidence in the success of a business about which she had very few details (T 94.35; T 99.21); similarly, her disinterest in what the books and records of her companies and of the invoices rendered by them actually said – Ms Salib's evidence being that the invoices could have made reference to climbing up a tree for all she cared (T 136.2), it being the figures that were important, (see T 92.22, T 93.12;) and she regarded it as a waste of time to customise the invoice descriptions when she had other things to do (T 125.7). Ms Salib offered up answers at times which seemed to be on the spur of the moment and without much thought (a prime example of that, on an issue which was of little weight, was the evidence as to Ms Salib's recollection of the colour background for the Quickbooks computer programme when it appeared on the computer screen). In part I consider that this was probably due to Ms Salib being a voluble witness and simply saying the first thing that came into her head (and I accept that she had little forewarning of the demonstration that she would be required to undertake). However, it meant that caution was required before in accepting Ms Salib's broad assertions, no matter how firmly they were made by her. I considered that Ms Salib's account of many of the relevant conversations may well have been influenced by her view in hindsight of what happened (such as the business success). 217 Fourthly, reference is made to the evidence (which I am invited to reject) that Ms Salib had offered her house as security for the business (T 95.40, T 98.15, T 99.15, T 223.14, T 223.37, T 225.9) and that she had her then husband's consent thereto (T 226.40-50). Mr Simpkins noted that Mr Gakas had not been called to give evidence in these proceedings (though that is perhaps hardly surprising if, as the indications seem to be, the divorce was not amicable). As I have indicated above, I find Ms Salib's account of the initial conversations difficult to accept, not least because of the implausibility of such an important matter as mortgaging one's matrimonial home being discussed in such a throwaway manner. Ms Salib's evidence was that she did so because of the utmost faith she had in Mr Gakas and the success of his business venture. That may well be the case, but if so it would indicate in my view a more gullible personality than Ms Salib appeared, from the thrust of her evidence, to have. 218 Fifthly, Mr Simpkins notes that the stock valuation figures on which Ms Salib calculated her final entitlements did not correspond with the figures extracted by Ms Farrawell from the Quickbooks accounting programme (and there was no cross-examination of Mr Gakas or his former employees, Ms Hutchen or Ms Overman, to suggest that there had been any manipulation of that computer data after Ms Salib left the business). While I prefer the evidence of Ms Farrawell in this regard, it seems to me quite plausible that Ms Salib (not an accredited Quickbooks consultant) may have sought to adapt the format of the stock summaries so as to make them more easy for her to use in practice; and I am not convinced that Ms Salib's evidence as to how she printed the relevant stock valuation summaries suggests any sinister manipulation of data on her part. (Produced late in the hearing was a copy of a document which Mr Kolta said had been sent to him by Ms Salib when he was acting as the company accountant and it appeared to be in the same form as the documentation from December 2006.) That said, I consider that the most reliable evidence is the stock valuation summary as extracted from the company's accounting records and I accept Ms Farrawell's evidence in this regard. 219 Finally, Mr Simpkins notes that there was no cross-examination of either Mr Atkins or Mr Nelson, from which it is said that their evidence should be accepted as to Ms Salib's attempts to procure for herself the Harvey Norman business both during and after the course of her business relationship with Mr Gakas. I consider that Mr Nelson's evidence does not take matters very far since the approach by Ms Salib according to him was after the arrangements with the Gakas interests had come to an end. I consider that some weight can be placed on Mr Atkins' evidence insofar as it suggests a consciousness that the business of Newport Pacific/Kent Newport belonged not to Ms Salib but to Mr Gakas and his wife. 220 The evidence which has most troubled me as to the credit of Ms Salib is her evidence in relation to the receipt. I am unable to accept that the document annexed to Ms Salib's affidavit is the document as signed by both parties on 6 December 2006. This leaves little room for a finding consistent with Ms Salib's credibility on that evidence, given that Ms Salib was adamant that she had not signed any such document. 221 Where the veracity of part of a witness' evidence is not accepted (or is in doubt), a careful assessment of the rest of that evidence is required in order to determine its honesty and reliability (per Handley JA in Malco Engineering Pty Limited v Ferreira & ors (1994) 10 NSWCCR 117, though there a case where a finding of perjury had been made on one part of the evidence). Though this does not mean that the balance of that witness' testimony can never be accepted without corroboration (Heydon JA, as his Honour then was, in Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705, at 719), it does mean that the remaining evidence should be closely scrutinised. Therefore, the import of my rejection of Ms Salib's evidence in relation to the receipt is that I have exercised caution in assessing the balance of her evidence. 222 Where that may be most pertinent is in the assessment of the evidence as to the stock valuation summaries. In that regard, however, I considered that Ms Salib's evidence as to why different versions of the document were created or relied upon by her seemed to me to be logical and it did not seem to be suggested that there was any attempt to manipulate the records in relation to particular stock items which might suggest an attempt to 'skew' the profit calculations in Ms Salib's failure. Therefore, the reliance I place on Ms Farrawell's evidence should not be read as an adverse finding in respect of Ms Salib's credibility as such. 223 As to Mr Gakas, his evidence was given in a far less loquacious manner. He professed not to recall a number of matters relating to the accounting details of the companies, but that would be consistent with him leaving those matters to others. His inability to recall the meaning of the annotations on his American Express credit cards was a matter of adverse comment by Mr Morahan but in the end there was little in the cashbook review carried out in the witness box by Ms Overman to suggest that there was any particular treatment accorded to the items in question which might support the claim that there was a partnership. 224 Overall, where there was a conflict in the evidence between Mr Gakas and Ms Salib I considered that his evidence was the more credible. What I do not, however, accept (as I think it inconsistent with the circumstances in which the draft deed of release and receipt were prepared) is that Mr Gakas made the payment in December 2006 trusting to the accuracy of Ms Salib's calculations or under any mistake of fact as to the accuracy of those records. I consider this further in addressing the claim for overpayment of moneys. 225 As to the balance of the witnesses, it is probably not necessary for me to say very much. Ms Hutchen was inexplicably truculent and defensive but that may well be her natural demeanour. Ms Overman was quite the opposite and more than willing to assist the court in reviewing the company's records. While there were aspects of Ms Hutchen's evidence which I found hard to accept (such as that she would not recall if her normal practice was to convey urgent recommendations of legal advice to her employer), I accept the evidence of both Ms Hutchen and Ms Overman. I do not separately address the expert evidence at this point, having dealt with it in the context of the respective issues on which it was adduced. 226 I turn then to the issues for determination. Issues (i) Was there a partnership? 227 As noted earlier, the only partnership pleaded in the first set of proceedings (and, despite the pleading in the second set of proceedings, the only partnership seemingly pressed at the hearing – see T 166.10; T 165.15) was a partnership between Ms Salib and Mr Gakas, that being a partnership (according to Ms Salib) whereby they jointly agreed to carry on business through a series of corporate structures (those on Mr Gakas' side already being in existence at the time Ms Salib says he approached her with the proposal of a partnership). Ms Salib's evidence was, however, contradictory in this regard, since she was adamant at the outset of her cross-examination that she owned a portion of Kent Newport itself (through her partnership with Mr Gakas). 228 Mr Simpkins submits that the arrangement was not one of a partnership; rather, it was one whereby, in return for the provision of administrative services in the nature of bookkeeping, Ms Salib was entitled at first to 30% of the net profits and then later to 35% of the net profits of Newport Pacific but had no entitlement to stock or other assets of the company. Indicia of partnership 229 The definition of partnership in s 1(1) of the Partnership Act 1892 (NSW) is the relation which exists between persons carrying on business in common with a view of profit. Section 2 of the Act sets out various rules to which regard shall be had in determining whether a partnership does or does not exist. Those include the rule that the sharing of gross returns does not of itself create a partnership (2(2)) and that the receipt by a person of a share of the profits of a business is prima facie evidence that the person is a partner in the business (2(3)). 230 The intention to make a profit is said to lie "at the very heart" of the partnership relationship, being "the grand characteristic of every partnership, and … the leading feature of nearly every definition of the term" (per Lord Lindley, Mollwo, March & Co v Court of Wards (1872) LR 4 P.C. 419; 17 ER 495, Lindley & Banks on Partnership 18th ed, Sweet & Maxwell, 2002, at [2-07]). That said, the sharing of profits per se does not give rise to a partnership (whether under the Act s 2(3) or at common law – see Lindley LJ (as his Lordship then was) in Badeley v Consolidated Bank (1888) 38 Ch D 238), the sharing of profits is only prima facie evidence of a partnership. 231 At common law, it was the agreement to share profits and losses which was said to be the "characteristic – if not the essence of a partnership contract" Lindley & Banks, at [5-25], citing Lord Lindley's explanation that "…persons engaged in any trade, business, or adventure upon the terms of sharing the profits and losses arising therefrom, are necessarily to some extent partners in that trade, business or adventure". In all cases, however, it is a question of discerning the parties' intentions (In re Young: Ex parte Jones [1896] 2 QB 484). 232 While a profit sharing agreement may point to the existence of a partnership it is not determinative. Mr Simpkins placed reliance in that regard on Wiltshire v Kuenzli (1945) 63 WN (NSW) 47; Television Broadcasters Limited v Ashton's Nominees Pty Limited [No 1] (1979) 22 SASR 552 and noting that whether a partnership exists is a mixed question of fact and law (Momentum Productions Pty Limited v Lewarne [2009] FCAFC 30; (2009) 268 FCR; (2009) 254 ALR 471, at [47]). 233 In determining the characterisation, as a matter of law, of the business relationship between Ms Salib and Mr Gakas between 2000 and 2006 (in the absence of any written agreement defining that relationship), the intention of the parties must be objectively ascertained from their words and conduct. The description that the parties may themselves have placed on their relationship (and even the introduction of Ms Salib to Mr Primerano for example) is not conclusive (Adam v Newbigging (1888) 13 App Cas 308, at 316; Weiner v Harris [1910] 1 KB 285, at 290, Lindley and Banks, at [5-03]). The parties' private intentions are said to be irrelevant in determining this question (Halsbury Laws of Australia, Butterworths, at 305.15). The important question is the substance of the transaction (Canny Gabriel Castle Jackson Advertising Pty Limited v Volume Sales (Finance) (1974) 131 CLR 321, at 327; (1974) 3 ALR 409), having regard to all the circumstances of the relationship. 234 Apart from the "grand characteristic" that there be an enterprise with a view to the sharing of profit (as opposed simply to the sharing of gross returns), various factors have been identified as relevant in cases such as Canny Gabriel Castle v Volume Sales, United Dominion Corporation Limited v Brian [1985] HCA 49; (1985) 157 CLR 1; (1985) 60 ALR 741 and Industrial Equity Limited v Lyons (NSWSC unreported, Cohen J, 15 October 1991). Those factors include how the policy of the business undertaking or commercial enterprise was to be determined; whether there was property held jointly or on trust for the parties; and the contribution made by each of the parties to the responsibility and control of the undertaking. Mr Simpkins submits that, also of relevance, are matters such as the source of funds, control of business and character of the profits received. No one factor is determinative. 235 I consider below the various factors which have been identified by the courts in determining whether, as a matter of law, there is a partnership. Commercial venture 236 There was clearly a commercial venture in which Kent Newport was engaged. Kent Newport was the entity responsible for the importation and on-sale of the furniture to Harvey Norman and had entered into the financing arrangements (supported by a line of credit arranged through Harvey Norman) for that purpose. While Newport Pacific provided administrative and management services to Kent Newport, in consideration for which Kent Newport transferred to it the whole of its operating profit, there is no suggestion that there was any partnership between those two corporate entities. 237 Both Mr Gakas and Ms Salib played a role in the provision by Newport Pacific of services to Kent Newport. However, Ms Salib was not a director or officer of either company, nor was she a shareholder of either company. The level at which it is said that there was a partnership was between Mr Gakas and Ms Salib. Insofar as Ms Salib says it was agreed between the two of them for the furniture importation business to be conducted through other corporate entities, it is relevant to note that those were entities controlled and operated by Mr Gakas and in the establishment of which she played no part. There seems to have been no commercial impetus for Mr Gakas to offer a partnership in order to secure the services of someone in Ms Salib's position, at least at the outset of the business enterprise, where she was providing no startup capital and had no experience in the furniture industry but was to fulfil a largely administrative role. (While, equally, it might be thought that remuneration based on a percentage of profits would be unusual in such a situation, it might well be that there was perceived to be a business incentive in linking remuneration to profits in the context of a business which was starting up again from a standing base. Certainly, Mr Gakas did not seem to have anticipated that the business would be as successful as it was and may not therefore have anticipated that a profit share would be as lucrative as it was.) 238 The difficulty I have in seeing the business of Kent Newport and/or that of Newport Pacific as part of a joint commercial venture between Ms Salib and Mr Gakas is that Newport Pacific was already an established company (and had carried on business in the importation and wholesale of furniture) for some time prior to the discussions said to have given rise to the partnership and Kent Newport itself seems to have been established (and the financing arrangements agreed) before the time at which Ms Salib says that she had any discussions with Mr Gakas about the alleged partnership or the setting up of the business. 239 On Ms Salib's recollection of the timing of the initial discussions with Mr Gakas (ie late 2000) the arrangements with Harvey Norman had already been put in place by Mr Gakas at that stage (which casts doubt on her version of the conversation as its content is clearly inconsistent with this). Even if her recollection of the timing of the initial discussion was incorrect and the discussion took place in around June 2000, even on her own account it was Mr Gakas who set up the line of credit arrangements with Harvey Norman on his own account (so even if he had initially approached Ms Salib to participate in a joint commercial venture, within a week that need had dissipated and the rationale for a partnership of the kind Ms Salib asserts would seem to have disappeared as well). 240 Thereafter, on both parties' accounts, the arrangements between the two related to the basis on which Ms Salib would provide administrative services to Newport Pacific and the remuneration she would receive for this. Hence it was recognised, quite fairly, by Mr Morahan that there was a possible difficulty for Ms Salib in establishing that the business venture was one to be carried on 'in common' between the two. That said Mr Morahan submits that the facts do establish that there was a single commercial venture in common with a view to profit. He points to Ms Salib's evidence that she was approached by Mr Gakas in relation to her assistance in starting up the business (a matter cast in doubt by the fact that the business was at least in train by the time Ms Salib says she was approached by Mr Gakas) and submits that there is no reason to doubt that Ms Salib offered to put her house up as security for that business. It is said that it is inherently unlikely that the discussions about the setting up of the business were as brief and simple as Mr Gakas' account suggests (and that the speed with which it was agreed that Ms Salib would have a 30% share of net profits is indicative of a partnership). 241 While the evidence of Mr Gakas in this regard could certainly be said to be brief, this would not necessarily be surprising if Mr Gakas (as he says was the case) was simply seeking Ms Salib's assistance in an administrative role (of the kind which she had previously performed for his companies). What does seem to me to be inherently unlikely is the proposition that someone in Ms Salib's position (the sole income earner as she said that she was) would have rushed in to offer (as she says she did) her house (co-owned with her then husband) as security for a business venture of this kind on the basis of so little information as that which Ms Salib says was given to her at the time. Ms Salib's explanation for this seems to be one arrived at with the considerable benefit of hindsight. Even if Ms Salib had been so confident of the success of the proposed business that she was prepared (seemingly without obtaining any professional advice) to offer her house as security for the loan, this does not explain how she could have felt able to do so without seeking her husband's concurrence to the proposal. (The fact that she was the single income earner would not, in the absence of some arrangement, have entitled Ms Salib to commit her husband to a loan security arrangement without his consent, for example.) 242 Mr Simpkins, quite fairly in my view, was critical of Ms Salib's evidence of the initial discussion as having been considerably embellished in the witness box from that which she had given in her first affidavit (and after first having had difficulty recounting the discussion at T 221-223 and T 229.40 – T230.25). So, for example, Mr Simpkins pointed to the evidence given in the witness box by Ms Salib (T 223.39 – 225.5) that the new business would be the 'same set up' as before; that Ms Salib had complained about Mr Gakas' subsequent proposal to take 70% (T 230.44 – T 231.4); that what was discussed was a 2/3:1/3 split not a 70:30 split as Mr Gakas said he had had with his son Darius (T 231.38 – T 232.15; T 232.38-.49; T 232.4 - .35) 243 Most relevantly, it seems to me, is the evidence that Ms Salib gave in the witness box (but not in her affidavit) that there was an express agreement to make up losses (T 94.3 – T 100.45). At T 99.9 – 99.21 Ms Salib said: He said I will be taking his son's place as part of the partnership setup. So I asked him "does that mean we would share everything, expenses, what have you". He said "yes of course. When you share expenses that means if we do not make any money you will not make any money". I told him, "I'm confident it will work. I have told you I will put my house up and I will mortgage it to do this business." And then I asked him "what are we going to import". He told me he had already been conversing with Harvey Norman, they wanted him to start importing recliners, and that's why he approached me to do it. Even though he had another partner at the time, Tony Atkins, he told me he doesn't want to do business with him. He said "we have worked together before, so I thought I would approach you now that your kids are older you might be able to do it". I said "of course I will". 244 In that regard, one might think that such an important part of any partnership arrangement would have been discussed up front and that if Ms Salib was assuming a liability for 30% of any losses this would have been at the forefront of her mind (not something recalled only much later in the proceedings). In that regard, the evidence given by Ms Salib in relation to the sharing of losses seems largely to reflect a belief on her part that if the business did not make a profit then she would not make any money (which is not the same as a sharing of losses) (see T 94.11/.23 for example). (I note that the draft deed of agreement prepared by Ms Salib's lawyer friend in 2001 made no reference to any sharing of losses.) 245 The business relationship with Harvey Norman was one established and managed by Mr Gakas alone, which ultimately seems to have been a precipitating factor in Ms Salib's decision to leave the business (although it appears that she also had other more personal difficulties in working with Mr Gakas, to which oblique reference was made in his own evidence). 246 I have real doubts as to whether there was a joint commercial venture between Ms Salib and Mr Gakas, as opposed to a commercial venture of Mr Gakas' companies in which Ms Salib was invited to play an administrative or other role. Even had I considered that there was a commercial joint venture in common between the two this would not necessarily have led to a finding of partnership. 247 I note that in UDC v Brian, Mason, Brennan and Deane JJ said (at 10): The term "joint venture" is not a technical one with a settled common law meaning. As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually (but not necessarily) contributing money, property or skill. Such a joint venture (or, under Scots' law, "adventure") will often be a partnership. The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership: such as a company, a trust, an agency or joint ownership. The borderline between what can properly be described as a "joint venture" and what should more properly be seen as no more than a simple contractual relationship may on occasion be blurred . (My emphasis) 248 Therefore, even if there was a joint venture between the parties, the question (as in IEL v Lyons), would be whether the joint venture between the parties in this case is that which would amount in law to a partnership. In IEL v Lyons, Cohen J noted that the phrase "joint venture" (which the parties there had adopted) did not establish any particular form of relationship. In both UDC v Brian and IEL v Lyons it was recognised that there may be a joint venture which does not constitute a partnership. View of profit 249 Assuming, for present purposes that there was a common enterprise, was it one with a view of profit? Clearly, Ms Salib had an interest in securing a share of the profits of the enterprise. She says she was confident from the start that the business would be a success. 250 However, generally, what is required is more than an agreement to share profits. It is said that it is an agreement to share both profits and losses which is generally of the essence of a partnership contract. Lindley & Banks notes Lord Lindley's explanation for this (at [5-25]): Whatever difference of opinion there may be as to other matters, persons engaged in any trade, business, or adventure upon the terms of sharing the profit and losses arising therefrom, are necessarily to some extent partners in that trade, business or adventure. 251 Thus it is said that, subject to exceptional cases, persons who agree to share profits and losses will normally find themselves treated as partners (Lindley & Banks, at [5-25]). However, the agreement to share losses must generally extend also to the making good of losses (Lindley & Banks, at [5-27]). 252 It is, of course, not necessary that profits be split 50/50 for there to be a partnership. Therefore the fact that the division of profits was an unequal one would not preclude there being a partnership. However, an arrangement for the receipt of a share of profits will not necessarily be sufficient (see Phillips-Higgins v Harper [1954] 1 QB 411; [1954] 2 All ER 51 in this regard.) Mr Simpkins notes that the payment of a servant or agent of a share of the profits or by way of a share of the profits is one of the exceptions to the prima facie rule regarding the evidence of partnership (Lindley & Banks [5-23]; Halsbury's Laws of Australia, at [305-75] both noting that a worker remunerated by share of profits is not a partner, at least where no partnership is intended). 253 What seems to me to be relevant here is that certain expenses of both parties were excluded from the calculation of profit (in Ms Salib's case she was required to reimburse the company for those expenses having taken a share of gross profit). However, while Ms Salib bore a share of the expenses for the company there is nothing, other than her belated assertion, to suggest that she had any liability for any losses of the business and in that regard (though not necessarily in other matters, such as the lateness of her evidence challenging the receipt documentation) I think it is significant that this evidence emerged only after it must have become apparent to Ms Salib that the sharing of losses was an issue in the proceedings. Policy of joint venture 254 As to the policy of the joint venture, it is said in Lindley & Banks, at [15-01] that it is inherent in the contract of a partnership that each partner will be remunerated and have the right to participate in the management and administration of the partnership, referring to Hybernia Management & Development Co v Newfoundland Steel Inc (1996) NFLD & PEIR 90, 107 (see also BSP Technical Services Pty Limited v AMEV-UDC Finance Limited (unreported, Hodgson J, 25 March 1985); United Builders Pty Limited v Mutual Acceptance Limited (1980) 144 CLR 673, at 379; (1980) 33 ALR 1; though a right to participate in management can be modified by agreement - s 24(1)(5) of the Act). In Cribb v Korn (1911) 12 CLR 205; [1911] HCA 9, one party's right to direct or control the other was seemingly a relevant factor to take into account. 255 Here, there was evidence as to the respective roles of Ms Salib and Mr Gakas in the business. Significantly, it was Mr Gakas who had sole responsibility and authority (subject to approval from Harvey Norman) for the transfer of funds from Kent Newport to Newport Pacific (and hence was in a position directly to control whether there was in fact any profit available for distribution out of Newport Pacific at any given time. 256 Although it is not inconsistent with the notion of partnership that, just as some partners may have different roles or contributions to make to the partnership, some may have greater responsibility or control over decision making. However, here it is difficult to see Ms Salib as having any decision making role as to matters relating to the underlying commercial venture, let alone the partnership she asserts was in existence with Mr Gakas. Although I do not see this factor as decisive in determining whether there was a partnership (and if so what it comprised), had it been necessary, I would have found that it was Mr Gakas who was the controlling mind, so to speak, of the Newport Pacific business and its commercial venture with Kent Newport and that this was a factor tending against the existence of a partnership between Mr Gakas and Ms Salib. Property 257 While it is suggested in Lindley & Banks, at [5-32] that it is not necessary that there be joint property for there to be a partnership, the authors nevertheless note that in cases where one person owns property and the other possesses a particular skill and they agree that the latter should have control of the property for their mutual benefit and that they should divide the profits derived from its employment between themselves, it may be no easy task to identify whether or not a partnership has been created. In those cases it is said that "everything will depend on the terms of the parties' agreement and on their underlying intention". 258 That difficulty becomes very evident in this case when the problem is approached from the opposite perspective. If the partnership was, as contended, one between Ms Salib and Mr Gakas, what was the property of the partnership (and what were the assets to which Ms Salib now asserts an entitlement)? The stock was held at all relevant times by Kent Newport and then on-sold by it. Any entitlement to profits out of Kent Newport arose in the form of a claim by Newport Pacific for remuneration for its services (and the arrangement pursuant to which those were provided does not seem to have been reduced to a written agreement). Ms Salib, to all practical intents and purposes, was dependent on Newport Pacific making a claim for remuneration against Kent Newport before there would be any profits in Newport Pacific's hands to which she herself could make any claim. (Therefore, even if there were to be a partnership it is difficult to see that on its dissolution Ms Salib would have anything more than a claim for any profits referable to remuneration earnt but not yet recouped by Newport Pacific.) Matters relied upon by respective parties 259 As to the indicia of partnership, Mr Morahan points to the following: (i) the initial conversations about a joint common intention to run the business, to make a profit and to split net profits in a certain percentage with the liability of Ms Salib for a certain percentage of the expenses (Mr Morahan submitting that it is inherently likely that Ms Salib offered to mortgage her house in order to be able to inject enough capital into the business simply to get it going) – the difficulty I have in this regard is accepting that such an offer was made, particularly when it is suggested it was made without reference to Ms Salib's then husband whose consent as a co-owner of the property would have been necessary; (ii) the actions of the parties in splitting the net profits in the agreed proportions and splitting the expenses in the agreed proportions. (noting that Ms Salib said in her oral evidence that she considered herself to be liable in the proportion agreed to any creditor of the business) – again, while I accept that there was an agreement as to the sharing of profits and (certain) expenses in particular proportions, this is not necessarily determinative and I do not accept that there was any discussion about the liability for losses per se; (iii) the use of the word 'partner' by Mr Gakas to describe Ms Salib in the conversation to which Mr Primerano deposed – even accepting that this occurred I doubt much weight can be placed upon it (this being one instance alone and the term 'partner' in modern parlance covering a multitude of sins); (iv) the use of the business card by Ms Salib with the word "director" on it (which it was submitted is the sort of word that a partner in a business venture would use), in circumstances where Mr Gakas knew that Ms Salib was not a director of Newport Pacific but allowed this to keep Ms Salib happy – I find it difficult to attach much weight to this in that I do not see that allowing Ms Salib to use one inaccurate title on business cards amounts to an acceptance of another; (v) the "testamentary letter" of 20 December 2005 on the letterhead of Kent Newport (Annexure I to the affidavit of Mr Gakas sworn 10 September 2009), which it was submitted contained directions bearing a 'striking similarity' to the regime for the distribution of assets on a final settlement of accounts as found in s 44 of the Partnership Act – while this has given me pause ultimately I consider that the letter is consistent with an arrangement of the kind which Mr Gakas accepts was in place – that the net profits (after sale of stock and the like) were to be shared in the specified proportions – and that it may have indicated no more than that if he died a similar distribution of net profits should take place (but not indicating any distribution of capital or other assets); (vi) the annotations "part" "par" or "p" by Mr Gakas on his American Express statements (said to indicate that particular expenses were partnership expenses) – this seems to me to be the strongest factor pointing to a partnership. While I considered that Mr Gakas was not particularly forthcoming in his evidence on this point, ultimately there is insufficient in this one factor to tip the balance in favour of a partnership particularly in circumstances where there are other potential explanations for those annotations; and (vii) the circumstances of the final payment, which Mr Morahan submits reflect an acceptance by Mr Gakas of the partnership arrangement. In particular, Mr Morahan relies on the non-threatening tone of Ms Salib's 5 December note and submits that the methodology in working out the amount claimed (a division of at least some of the assets of the business, such as cash at bank), once accepted by Mr Gakas in the form of payment of that sum, amounts to an acknowledgement of Ms Salib's right to assets of the business, not just to a share of net profits, and therefore goes in an evidentiary way to the question of the existence of a partnership. Ultimately the difficulty I have with this submission is that it seems to me that the evidence is compelling in that the payment by Mr Gakas was made to settle matters with Ms Salib and in the hope that this would bring an end to their business relationship. I do not see it as an acceptance of any particular method of calculation as such. 260 For Mr Gakas, Mr Simpkins notes the following objective indicators said to be inconsistent with any partnership: (i) the business was carried on by Kent Newport and Newport Pacific; Ms Salib was neither a director or shareholder of either of those entities; and neither Kent Newport nor Newport Pacific was alleged (or has been established) to be the real or ostensible agent of Ms Salib for the purposes of her carrying on the alleged partnership business with Mr Gakas; (ii) each of Newport Pacific and Kent Newport was incorporated prior to the initial discussions with Ms Salib and in each case Mr Gakas or his wife was the sole director and together they held all the issued shares; (iii) no ABN was registered for the alleged partnership and no tax return was submitted for the alleged partnership; (iv) Ms Salib made claims for payments for her share of the profits through corporate entities that characterised the claims as arising from an arrangement for commission or provision of administrative services and the company's financial records were written up consistently with this; (v) Ms Salib made no disclosure in personal tax returns of partnership income; (vi) the draft deed of agreement submitted by Ms Salib to Mr Gakas in 2001 did not include terms that could be expected if a partnership had been entered into or was intended to come into being (though it seems to me that this may well have been a function of incomplete or preliminary instructions only having been provided at that stage of the relationship); (vii) the affidavit sworn by Ms Salib in her family law proceedings made no reference to any interest in the partnership; (ix) no document produced before or during the currency of the relationship described it as a partnership (though this may be due to the reluctance Ms Salib identified on the part of Mr Gakas to sign anything); (x) when the relationship ended Ms Salib signed the 'receipt' document describing it as a "business association" (though I doubt that a great deal of weight can be placed on this without knowing the circumstances in which that addition to the document was made and, in particular, at whose suggestion); and (xi) the arrangement was one to share some, but not all, expenses (with no reference to losses). 261 Of those factors, I place little weight on (vi), (ix) and (x) but I consider the others to be significant. Mr Simpkins further submits that even if Ms Salib's evidence as to the nature of the arrangements discussed with Mr Gakas were to be accepted this is insufficient to establish a partnership between her and Mr Gakas, principally because there was no discussion as to the sharing or making good of any losses of the business. Conclusion 262 Balancing the above, what seems to me to be critical is that not only was there no financial or business documentation of the kind one might expect to find for a business partnership: no ABN was obtained for the partnership; no separate partnership bank account was set up as between Ms Salib and Mr Gakas; there was no written partnership agreement; no tax returns were lodged for that partnership; and Ms Salib's tax returns did not disclose the alleged partnership (though they did mention a partnership between Ms Salib and her former husband concerning a commercial property - Exhibit 12), but also Ms Salib's own documents are inconsistent with the existence of a partnership: her Ms Salib's claims for profit share were made, through her corporate entities, for 'commission' and 'administrative service' fees (although Ms Salib explained that by reference to the limitations in the computer programme for printout of invoices, it is something which could have been manually prepared and I can only assume that if Ms Salib's account of the process is correct then she was not concerned as to the accuracy of the description of the services rendered on the tax invoices), her Family Court documents failed to disclose any such interest and for at least part of the period (during 2004) she says that there was no partnership but simply an employment relationship. Ms Salib contributed towards some but not all of Newport Pacific's expenses. She contributed no capital and there is nothing other than her assertion to suggest she would have been liable for any losses. While a joint signatory of the company cheques, there is nothing to suggest that she was in a position to direct or commit the company to any relevant policy and it seems to have been regarded by Ms Salib and others as Mr Gakas' business. 263 Of less weight, but still of relevance is the fact that the discussions held by Ms Salib with others as to the business of Mr Gakas, such as Mr Mills' account of her discussion with him, and the discussions as to her buying Mr Gakas out of the business when he was ready to retire, are consistent with her understanding being that the business was his and her attempting to secure it for herself.) 264 The only factors which seem to point against such a conclusion are the so-called 'testamentary' letter, which I consider can be read consistently with Mr Gakas' version of events, and the curious annotations on Mr Gakas' American express statements, the meaning of which is unclear and which do not appear to have been interpreted by Ms Overman (when writing up the cash book) in a way consistent only with the existence of a partnership. 265 Therefore, I am not persuaded that there was a partnership between Ms Salib and Mr Gakas as alleged. (ii) If there was a partnership is Ms Salib entitled to a share of capital/assets? 266 The second issue is as to whether, if there was a partnership, Ms Salib was entitled, as a partner, to any portion of the capital of the partnership. Tied up with this is the issue whether, if Ms Salib was entitled to a portion of the capital of the partnership, the stock on hand in Kent Newport represents capital of the partnership between Ms Salib and Mr Gakas. 267 Even if a partnership is found, which is not the case in light of my finding above, it is submitted by Mr Simpkins that it does not follow that the partners necessarily have a share in what would normally be considered the entitlements to partnership. Rather, the parties' rights and duties would in each case be determined by the terms of the specific agreement or the act itself (Lindley & Banks, at [5-26]) and citing Elkin & Co v Specialised TV Installations [1961] SR (NSW) 165, at 169; (1959) 77 WN (NSW) 844). 268 Here, the only discussions between the parties, even on Ms Salib's version of events, went no further than the distribution of profits and sharing of expenses. Ms Salib contributed no capital and there is no evidence that she separately obtained any interest in any of the assets of the partnership. Furthermore, the relevant assets (stock in hand or trade debtors) were assets of a corporate entity with which she has not pleaded there was any partnership arrangement – Kent Newport. 269 I am unable to conclude that even if there had been a partnership as alleged Ms Salib would have been entitled to a share of the capital of that partnership (given the lack of any contribution to the capital required to establish the business in the first place and the lack of any evidence of an agreement as to capital contributions then or later). As to a share of the assets of the partnership, again there was no apparent discussion between the parties in relation to what was to happen when the business came to an end and no indication (other than a reference in the 5 December note to Ms Salib's confidence that an agreement could be reached in relation to office furniture and the like) that Ms Salib was to have a share in the physical assets of Newport Pacific. For that reason any enquiry I would have ordered would have been limited to an enquiry as to the calculation of the profit share entitlement having regard to the liabilities of the partnership. 270 It is further said by the Gakas interests that there is no basis on which to infer that Mr Gakas took out his entitlements if, as is not conceded, there was a partnership. I accept that had I found a partnership in respect of which Ms Salib was entitled to a share of the assets on dissolution, account would have to have been made of any entitlement by Mr Gakas to profits not distributed to him over the years and for which the partnership remained liable. 271 In view of the above findings it is not necessary for me to determine the defence based on estoppel. Had it been necessary to do so, I would have found that Mr Gakas did rely on what transpired on 6 December (including the signing of the 3-line receipt) as bringing to an end his working relationship with Ms Salib and resolving all claims in relation to that business association (and with that her claim to entitlements by way of commission). (As I see it, that is a fundamental difficulty for Newport Pacific has in establishing its claim to moneys had and received, which I consider below.) 272 While the deletion, from the receipt, of Ms Salib's name (and its substitution by her company Blue Coast) as the party giving the acknowledgement suggests that Mr Gakas must have been aware that Ms Salib was not prepared to provide a personal release in his favour, the insertion of the words 'business association' (however that came about) is consistent with the parties having drawn a distinction between a 'final' payment in respect of any entitlement to remuneration or business entitlement on the one hand and any other claim that Ms Salib might have. What the parties do not appear clearly to have drawn a distinction between (over the course of their business relationship) was the distinction between the individuals concerned and their respective corporate entities. 273 Had it been necessary I would have found that Ms Salib was estopped from now asserting a claim to further remuneration or partnership entitlements notwithstanding that she had not signed the receipt in a personal capacity. (iii) Claim for overpaid commission 274 Two broad issues arise in the second set of proceedings, namely whether, as a matter of fact, Ms Salib has been overpaid by way of commission over the relevant period and, if so, whether Newport Pacific is entitled to recover part or all of the overpayments as a matter of law. On Mr Janes' calculations, Ms Salib's companies were paid a total of $2,344,869.69 including GST over the years. That includes the very large sum paid in December 2006. 275 Mr Simpkins accepts that on any view of the case (ie, whether or not she was a partner) as at the termination of the business relationship in early December 2006, Ms Salib was entitled to 35% of the net profits of Newport Pacific. However, if (as I have found) Ms Salib was not a partner in the business enterprise with Mr Gakas, then her entitlement to remuneration (or commission) calculated by reference to a percentage of the profits of Newport Pacific would cease once she resigned or the retainer agreement was otherwise terminated. Hence, the relevant calculation would be as to the net operating profits of Newport Pacific for the period through from 1 July 2006 to around 4 December 2006 (not 31 December 2006). (Mr Kolta's figures, to the extent that they look at the net operating profit of Newport Pacific as at 31 December 2006, therefore seem to be referable to the incorrect period.) 276 On the other hand, if Ms Salib were to have been Mr Gakas' partner, as alleged by her, then (apart from her entitlement to a profit share up to the time of dissolution of the partnership) the question would be as to her entitlement on the dissolution of the partnership. I accept Mr Simpkins' submission that Ms Salib could not in those circumstances maintain a claim both to a 35% share of profits referable to any unsold stock and a 35% share of the value of that stock on a winding up of the partnership (as that would be double counting). Had Ms Salib been a partner of Mr Gakas, and had she been entitled to a share of more than the net operating profits of Newport Pacific (contrary to my findings above) then I would have considered it appropriate for there to be an enquiry as to any share to which she was found to be entitled of the then assets of the partnership on a notional winding up of the partnership at that date. This would give rise, inter alia, to the question whether the stock on hand held by Kent Newport was an asset of the partnership between Ms Salib and Mr Gakas to which either could have asserted an entitlement (and hence whether any valuation of the stock was necessary to be carried out whether at 4 December 2006 or at 31 December 2006). In light of my findings above, this issue does not arise. 277 Both accountants have taken as the starting point for their calculations the net profits before tax of Newport Pacific and then added back the amounts referable to Ms Salib's superannuation and other expenses and those of Mr Gakas (in each case to produce an adjusted profit figure representing the net profit of Newport Pacific had there been no distributions by or on behalf of either of them). 278 In general, I should note that where there is an issue of accounting principle in dispute as amongst the respective accountants, I would adopt the view expressed by Mr Jugmans. Each of Mr Kolta and Mr Janes, to varying degrees, seemed to me to be arguing the case for his client(s) (with Mr Janes, this appears particularly to be the case by reference to some of the comments made by him in his affidavit – such as the gratuitous comment as to whether GST had been paid by Silver Coast on the income received by it; with Mr Kolta it was apparent in his ready acceptance of assumptions based on the instructions given to him by Ms Salib). Mr Jugmans, on the other hand, does not appear to have had any affiliation with either side and he gave his evidence as a disinterested professional with expertise in the area. I found him to be a thoughtful and objective witness. Calculation of entitlements from 1 July 2006 279 Mr Kolta has calculated that for the six month period to 31 December 2006, Ms Salib was entitled to the sum of $196,004.78 (Annexure J to Mr Kolta's 3 September 2009 affidavit) which he says represented 35% of $350,195.98 (the unadjusted net profit figure he has assumed for Newport Pacific for that period based on an assumed net profit for Kent Newport of $1,294,311.56) (although on my calculations the entitlement so claimed is more than a 35% share of the adjusted net profit figure from which he said it was derived). Mr Janes' calculation of the amount payable for that period, on the other hand, is $55,860.71 (Annexure B to the affidavit of Mr Janes of 5 September 2009) based on an unadjusted net profit(loss) before tax of Newport Pacific of ($595,130.25) after assuming a net profit figure for Kent Newport of $348,985.33. 280 The principal difference between the respective calculations lies in the value attributed by the accountants to the closing stock in the books of Kent Newport. However, before addressing the issues relating to the proper methodology for valuation of stock, there are some preliminary questions, the first of which is whether the date for determining the closing stock should be 4 December or 31 December 2006. 4 December v 31 December 281 When calculating the net profits for any particular period, the value of the closing stock is relevant as, by comparison with the opening stock for the relevant period, it enables a profit figure to be obtained – Ms Salib's entitlements (whether as partner or otherwise), at least while the business relationship remained on foot, being calculated by reference to a percentage of the net profits of Newport Pacific. 282 Although Mr Kolta's calculations (and Mr Janes' comparative calculations) are for the whole of the six month period through to 31 December 2006, it does not seem to me that this is the correct period. I accept Mr Simpkins' submission in that regard. It seems to be accepted by both sides that Ms Salib's business relationship with Mr Gakas came to an end by 4 December 2006 at the latest. Thereafter, whether or not she had been a partner, Ms Salib had no continuing entitlement to any share of the net operating profits of Newport Pacific (though as a partner she may have had a claim for recovery of the capital or assets of the partnership which might have included the value to be obtained through a winding up of the partnership perhaps). Therefore, I consider that the correct date for calculation of Ms Salib's entitlements for the period up to the termination of her working arrangements with Mr Gakas is 4 December 2006. What are the relevant stock quantities? 283 The next question which arises is as to what stock quantities should be used for the calculation of profits as at 4 December 2006. Mr Kolta has used a figure of $1,404,422.23 for the value of closing stock as at 4 December 2006 based on the stock valuation summary printed off by Ms Salib (Exhibit A pp 162-3) (see para 12(vii)(a) of Mr Kolta's affidavit of 3 September 2009) on or about 4 December 2006. Ms Salib gave evidence as to how she had produced the stock valuation summary (T 108.8-.44). 284 Mr Janes, on the other hand, used a calculation of stock on hand as at 31 December 2006 (Exhibit 18) which, for the reasons indicated above, seems to me to be the incorrect date. As at 31 December 2006, the closing stock in the Kent Newport accounts was $459,096. Mr Kolta expressed the opinion that the net profit of Kent Newport would have increased over the period to 31 December 2006, based on the assumption that the stock on hand at 4 December remained part of the inventory at 31 December 2006, and hence he assessed the net profit for that period at $350,158.98. Mr Janes' response is that this assumes a profit achieved through negative sales. 285 There was in evidence a stock valuation summary as at 4 December 2006 which was extracted from the QuickBooks accounting programme used by Kent Newport by Ms Farrawell. Ms Farrawell gave evidence that she accessed the Quickbooks data file in December 2009 and produced extracts of the Stock Valuation Summary as at both 4 December 2006 and at 31 December 2006. She exported those files to Excel and forwarded them to Mr Janes (who then carried out an analysis of the information contained in those documents). The information extracted from the company's records disclosed 5,066 items of stock as at 4 December at a retail value of $1,030,896.04. The corresponding record as at 31 December 2006 revealed a total of 5,578 stock items at a retail value of $1,188,069.04. (A review of the items on the respective documents suggests that there may have been some additional stock acquisitions in the interim period.) 286 I consider that the most reliable stock quantity information would be that extracted from Quickbooks by Ms Farrawell. Her evidence was that the audit trail for the Quickbooks programme had not been altered (T 454.40). Accepting that it may well have been convenient for business purposes for Ms Salib to adapt the Quickbooks classification of stock and to use a modified stock list, it seems to me that there is nevertheless no reason not to use the computer stock listing which would seem to be the primary evidence of what stock was in the system at any particular date. Ms Farrawell confirmed that there were no changes to the relevant data on the system (T 454.36-.42, 455.7-.25). Her evidence (which I ultimately admitted as expert evidence, though it was initially tendered as evidence of her observations as to the operation of the computer software) was given in a professional manner and with care not to exceed the bounds of what she had herself been able to test. I considered her evidence of the computer programme, having regard to her expertise, to be the most reliable. Of significance, in that regard, was that Ms Farrawell was able to explain (by reference to particular features on the documents) why it could not have been the case that the stock valuation summary records which Ms Salib said had been printed directly from the Quickbooks programme had in fact been printed from the system. I accept that evidence. As I understand her evidence, the stock valuation summary (on which Ms Salib relied for her December calculations and indeed in the form which Ms Salib had previously forwarded to Mr Kolta) must have been produced from an Excel version of the document (thus allowing for the possibility that there had been amendments made to the order and content of the information contained in the Excel version from that appearing in the primary computer records as they were maintained and appeared in the Quickbooks programme). 287 Thus, for the purposes of determining what stock was on hand as at wither 4 December 2006 or 31 December 2006, I consider that the Quickbooks records should be used. Valuation methodology 288 The next issue, having determined the likely stock quantities on hand as at 4 December 2006, is to determine whether stock should be valued at retail value (as is Mr Kolta's opinion) or at the lower of cost and net realisable value (as Mr Janes and Mr Jugmans contend) and, if not at retail value, whether replacement value should be used as an approximation of actual cost or whether the value should be determined by what is referred to as the retail method (and in that instance, what gross profit percentage should be applied). 289 It seems that all three accountants who gave evidence were agreed that the usual method for valuation of unsold stock would be that set out in AASB 102 Inventories. That provides for stock to be valued at the lower of cost and net realisable value. However, Mr Kolta says that this did not apply to Kent Newport as it had only one customer (the Harvey Norman Group) and that customer had provided a line of credit used to finance the purchase of the stock. Therefore, it was said to be appropriate for stock to be valued in the Kent Newport books at retail value (as there was comfort that Harvey Norman would purchase all of the stock). 290 Mr Kolta said that the accounts had historically been prepared using the retail value (though this was inconsistent with the actual notes to the accounts (T 251-257), which he accepted indicated that the relevant accounting standard had been applied). Mr Kolta's explanation for the apparent error in the notes to the accounts was that it was very difficult to change the pro forma notes to the accounts. That explanation seems to me to miss the point. Mr Kolta appears to have prepared accounts which do not, as in effect stated therein, apply the Australian Accounting Standards as to the method of valuation of stock inventory. Whether or not, as he maintains, the use of retail value is warranted in this particular case (due to the unique arrangement whereby there was, in effect, a captive market for the goods and it could be assumed that the goods would be on-sold, since goods were not purchased overseas and imported without orders having first been placed by the Harvey Norman Group – though the orders were not in fact delivered to stores until particular stores placed orders), this does not explain the difficulty with the admittedly incorrect statement in the notes to the accounts. 291 I note in passing that at least two of the items noted in the QuickBooks stock valuation summary of 4 December 2006 (with the comparative analysis as furnished to the experts – Annexure B to the joint experts' report) were given no value on the basis that they were 'Obsolete', which suggests that there may have been some residual risk (however small) that some items were not ultimately sold, but there was no explanation for this so I cannot assume that this is the proper reading of those entries. In any event, this seems to me to be beside the point. The hiatus between importation and on-sale of goods must have left open the possibility that goods would not always be sold (or not always for the retail value attributed to them in the accounts). 292 Mr Jugmans made it clear that it is a matter for the company (meaning by this its shareholders) of a non-reporting entity such as Newport Pacific to make its own decision as to what valuation methodology should be used. This suggests that, whatever may have been the historical basis on which stock was to be valued in the books of the company, the question as to what method should now be adopted could conceivably depend on the purpose for which that methodology is to be used. (I add here that there is nothing to suggest that Mr Gakas had any role in approving the use of any particular accounting methodology beyond any role he had in approving the company accounts which in their terms suggested that the basic accounting standards were being applied. I also note that although Ms Salib said that she and he, or perhaps she and Mr Gakas' wife, had signed off on the Kent Newport returns, she was rather vague as to this – T 59.24.) 293 Given that, as I understand the accounting evidence, this is a decision which, in general, it would be open for the company in question as a non-reporting entity to make, I would have thought the appropriate approach to adopt when calculating whether there had been an overpayment of commission in any particular year would be to continue to adopt the approach followed by the company historically (and in this case, therefore, to adopt the retail value of the stock). 294 However, on a winding up of the company it is possible that a different approach might be warranted. At that point, absent some argument that one or other of the parties was estopped from proceeding on a valuation of the stock in accordance with the accounting standards, I would have thought it made sense for those standards to be applied (and hence for stock to be valued at the lower of cost and net realisable value). Here, there seems nothing to suggest that on a winding up of Kent Newport, or a partnership involving its business, something other than the standard accounting approach should be adopted. Therefore, if it were to have been the case that Ms Salib had an entitlement as a partner to a share of the unsold stock in hand at the time of dissolution of the partnership I would have been inclined to the view that such a share should be valued by applying the normal accounting approach (at the lower of cost and net realisable value) unless (properly advised) the company had approved some other method of valuation. 295 To the extent that the question of stock valuation is relevant when considering the claims made by Newport Pacific for breach of a duty of care by Ms Salib, it seems to me to be difficult for Newport Pacific to argue that there has been any breach of duty by Ms Salib in performing her administrative tasks in such a fashion as to lead to the cost of the stock in the books of the company being recorded as it was, when the accounts were to be reviewed in any event by a qualified accountant and particularly where the accounting evidence was that this was not necessarily an inappropriate method in some (albeit perhaps limited) cases. The fact that it would have negative tax implications for the shareholders of the company (T 266.18-.36, T 314.20) is something one might have expected the accountant to raise, not something of which Ms Salib should be assumed to have been aware. (Mr Jugmans' evidence on this issue seemed more balanced than that of Mr Janes who rejected outright any possibility that inventory could properly be valued in that way.) 296 Therefore, for the purposes of determining whether there has been any breach of duty in relation to the calculation of the payment of commissions to Ms Salib, I am not satisfied that the use of the Kolta method is so inappropriate as to suggest any breach of a duty of care. I would have been inclined to think that the practice historically adopted as between Ms Salib and Mr Gakas would be the appropriate measure, in circumstances where the accounts had been prepared on a particular basis and no objection had been made thereto in the past. (In saying this, however, I should not be taken as accepting the generalised assertion made by Ms Salib to the effect that she and Mr Gakas (or perhaps she and Ms Eddington) had signed off the relevant accounts in the past.) Use of retail method 297 If valued at the lower of cost and realisable value, the question whether "retail method" is to be used was also an issue. Mr Jugmans' evidence was that, in the absence of costing records, it was permissible to determine cost using the "retail method" as described in para 3.9 of his report (referring to para 22 AASB Inventories), to which both Mr Janes and Mr Kolta seem to be agreed. However, Mr Janes said that reliance could be placed in this case on the existing supplier invoices in order to extrapolate the likely replacement cost. Mr Janes' analysis covered, he said, about 70% of stock items, which translated to around 86% of retail value. Mr Jugmans seems to have accepted in the joint conference that Mr Janes' method of valuing stock (by reference to an analysis of suppliers' invoices) would be preferred. (Mr Kolta did not comment on this as he was of the view that the stock should not be valued on the retail method, but rather should be valued at retail value.) Although Mr Janes was cross-examined on the thoroughness of his calculations as to the replacement value method, it did not seem to me that any fatal flaw had been exposed in those calculations. That said, where Mr Jugmans was of the view that the retail method was appropriate if replacement cost could not be determined and where, as here, it was not necessarily the case that all records were available from which replacement method could accurately be determined, I would have been inclined to prefer the approach recommended by Mr Jugmans in the first instance. 298 If the retail method is applied then it seems that the appropriate gross profit margin is to be one derived from the historic gross margin. Mr Jugmans had applied the weighted average of the adjusted gross margin achieved by Kent Newport over the two and a half years ended 31 December 2006 (51.1%). Mr Janes agreed that the appropriate gross profit margin to be used should be based on the historic gross margin actually achieved in prior periods and for that purpose considered that the periods over which the weighted average should be measured were the three years to 20 June 2006 (not the six month period to 31 December 2006) and after conferring amongst the experts, Mr Jugmans agreed that the figure suggested by Mr Janes would be appropriate. I would have seen no reason not to adopt that conclusion. 299 In determining commission, it seems undeniable that the same valuation method should be applied for valuing opening stock as is used for valuing closing stock. If the retail method were to be used for this purpose then the opening stock figure would need to be reduced by the appropriate gross profit margin. 300 Varying calculations based on the differing assumptions were put before me. Mr Simpkins submitted (para 74) that calculation of commission as at 31 December 2006 using the retail value of closing stock as at that date ($1,089,708) would result in $298,318.49 (35% of $852,338.55) and that Ms Salib would have been overpaid the sum of $415,751.84 (using the retail value as the costing method less the $31,072.26 contribution to expenses). By contrast, the calculation of commission using the cost value (as determined by the retail method and using a gross profit margin of 51.1%) was said to result in a reduction of the Kent Newport net profit transferred to Newport Pacific from $1,294,311.56 to $661,090.07 and hence the adjusted operating profit of Newport Pacific being $443,208.19 resulting in a figure for commission for Ms Salib of $155,122.86 (para 89 of Mr Simpkins' submissions) and an overpayment of $558.947.47 less $31,072.36 contribution to expenses (since Ms Salib received the total sum for the 6 months of $714,070.33). Alternatively, if the valuation of stock were to be undertaken in the method Mr Janes had done, it is said that this results in a transfer of $348,985.33 to Newport Pacific, an unadjusted operating loss in Newport Pacific of ($595,130.25) and an adjusted operating profit within Kent Pacific of $159,602.03, on the basis of which it is said that Ms Salib was overpaid $627,137.36 less $31,072.26 which she contributed to expenses (para 90 of Mr Simpkins' submissions). 301 The calculations on which Mr Kolta based his conclusion that there was an underpayment from April 2001 to December 2006 of $165,889.00 seem to have assumed that the underpayment of commission was $386,504.39 (rather than $298,318.49 if the retail value costing is correct) and that Ms Salib was entitled to $518,065.55 for stock cash at bank and debtors (the calculation of stock for this purpose being at 4 December 2006 not 31 December as the former calculation was, and applying the retail value). 302 The effect of the above views would be that if it had been necessary to calculate Ms Salib'e entitlement to commission for the period from 1 July 2006 to 4 December 2006 the appropriate basis would be to do so on the basis of that historically adopted by the parties, by using the retail value of stock but that if stock were to be valued for other purposes then I would have thought the applicable method would be to determine the lower of cost and net realisable value using the retail method, as advocated by Mr Jugmans but with a gross profit margin determined in accordance with Mr Janes' suggested period. Adjustments 303 The other matter going to any assessment of whether there was an overpayment of commission relates to what adjustments if any need to be made for expenses wrongly included in the net profit calculations. Mr Kolta identified a number of anomalies, largely (it seems) on the basis of his instructions or assumptions which he was asked to make as to who was to bear certain expenses as between Ms Salib and Mr Gakas or as to the question to what certain expenses related. Mr Janes reviewed those adjustments and confirmed that management fees referable to the Gakas Family Trust (and certain other items) should not have been added back into the calculation of the adjusted Newport Pacific profit. 304 Mr Morahan submits that the classes of anomalies identified in Mr Kolta's report are well founded. In addition to those accepted by Mr Janes, Mr Morahan says that additional adjustment remains necessary to account for personal overseas travel of Mr Gakas (including trips to Mexico and Romania, which Mr Gakas said were for business), expenses for samples (as to which it was put to Mr Gakas that certain telegraphic transfers were not for legitimate business expenses) and other items such as rental for art works, amounts paid to Mr Gakas' granddaughter and the annual subscriptions to Mr Gakas American Express card should not have been included. 305 In Mr Gakas' affidavit of 12 February 2010 he responded to various of the other asserted discrepancies identified to in Mr Kolta's affidavit of 3 September 2009 in relation to anomalies. In particular, he says that: (a) credit cards were used to pay both business and private expenses but only business expenses were claimed in the business; the annual fee was claimed in full as it carried with it travel insurance; (b) fees for artwork leased from the DE Superannuation Fund were, he says, business expenses because the art was displayed in the office of Kent Newport and Newport Pacific; (c) salary to a Ms Y Gakas (Mr Gakas' granddaughter) was for short-term employment for business purposes (though in the witness box accepting that this was largely a way of providing her with pocket money); (d) travel and sample expenses related to business expenses; (e) donations and repairs were considered to be business expenses because they were incurred in the process of running the business. 306 Mr Gakas says that Mr Kolta was responsible for checking Mr Newport's accounts and had prepared those accounts for the period; that Mr Kolta had never raised any issue until he was asked to prepare a report for Ms Salib nor had he contacted Newport to advise that new accounts would need to be raised in order to take into account the alleged discrepancies. 307 In general, Mr Kolta's assessment of discrepancies seems to have been based on assumptions made by him or instructions received by him from Ms Salib. Mr Gakas had an explanation for the various items which had not been conceded by Mr Janes. There is nothing to gainsay that explanation. (He was cross-examined, for example, as to whether there had in fact been any payment for samples and as to whether the payment of certain overseas moneys had been a method of avoiding the payment of tax in this country. He responded to those issues with explanations which on their face are not fanciful and it does not seem to me that I am in a position to make any finding contrary to Mr Gakas on those amounts.) I would accept the adjusted calculations of Mr Janes in this respect (largely because it does not seem to me that Mr Kolta had any evidence to support his assertion that the amounts should have been dealt with in a fashion other than that which he had himself originally adopted in the books of account). The amounts paid to Mr Gakas' granddaughter (even if a way of providing her with pocket money) were, according to Mr Gakas, in payment for steps taken by her in relation to the company. The travel expenses (of a relatively minor amount) which Mr Gakas conceded were a mixture of business and private expense, are nevertheless amounts as to which there is no information available to me to make any assessment in relation thereto. Overpayment/underpayment 308 Once Ms Salib's entitlement to commission has been assessed for the period through to 4 December 2006, it needs to be offset for the payments made to her referable to the same period. The payments made to Ms Salib for the six months to 31 December 2006 totalled $682,998.07 ($714,070.33 - $31,072.26), though these comprised in the main the payment referable to what Ms Salib claimed was her partnership entitlement. 309 It is submitted by Mr Simpkins (and seems from the above to be the case) that the total payments made over the period from 2001 to the end of 2006 greatly exceeded Ms Salib's entitlement to commission even on Mr Kolta's calculations, since those calculations assumed an entitlement to recovery of $165,988.99 only after showing a claim for a share of capital of $518,065.55 (Mr Kolta's affidavit, paragraph 12 (vii)(b)(c)). Mr Simpkins submits that the only issue with Mr Janes' calculations (as adjusted) is whether Mr Kolta's claim to private expenses needs to be considered, beyond those accepted by Mr Janes in his recalculation which reduced the claim from $853,901.65 to $799,889.97. It is said that none of the balance of Mr Kolta's adjustments has been made good. In substance that seems to me to be the case. Accordingly, it seems to me that Newport Pacific has established that there was not only a net overpayment in the period through to 30 June 2006 but a much more substantial overpayment in the period from 1 July 2006 to the end of that year. Unjust enrichment claim 310 It seems to be accepted by Mr Kolta (and hence, as I understand it, by Ms Salib) that there was some overpayment of commission to her over the relevant period. Is that amount (however it be properly calculated) recoverable by Newport Pacific? 311 In relation to any overpayment to Ms Salib, Newport Pacific contends that its strongest claim is in relation to a claim for moneys had and received. 312 Mr Simpkins submits that Newport Pacific (through Mr Gakas) mistakenly believed in the accuracy of Ms Salib's invoices and notes indicating her entitlements to pay, on the faith of which payments were made to Ms Salib from a period from 2001 to 4 December 2006 (reference is made to paras 45-47 of Mr Gakas' affidavit of 13 March 2009, para 10 of his affidavit of 10 September 2009, and to his evidence at T 385.10-385.50; T 387.45). The mistake is said to be that the amount paid to Ms Salib was the amount to which she was in fact entitled. 313 In relation to the final payment of $569,872.11, it is submitted that this occurred 'partly' because of Mr Gakas' mistaken belief as to the accuracy of Ms Salib's invoice (when Ms Salib made her calculations on an incorrect assumption that she was entitled to 35% of the business' stock, cash and outstanding debtors and mistakenly calculated the value of stock in any event). 314 It is submitted that Mr Gakas believed that the final amount sought by Ms Salib represented her final commission charged at 35% net profit and that he relied upon the accuracy of the 4 December 2006 invoice from Ms Salib to Newport Pacific (and the note she had provided setting out her entitlements) in making the payment of $569,872.11. 315 Mr Morahan submits that Mr Gakas must have known that such a payment was well in excess of the share of net profits which Ms Salib had previously received. He submits that the payment made on 6 December was a voluntary payment, in the sense that Mr Gakas knew, at the time the payment was made, all the relevant circumstances and yet chose to pay Ms Salib rather than to withhold payment, so that no action for moneys had and received can be maintained (relying on Cartwright v Rowley (1799) 2 Esp 723, at 723; 170 ER 509, at 510, cited in David Securities Pty Ltd v Commonwealth Bank of Australia (1992) 175 CLR 353; (1992) 109 ALR 57, at 69). 316 As to the nature of the payment, Mr Simpkins submits that it cannot be seen as an acknowledgement by Mr Gakas of Ms Salib's entitlement to assets of the business, on the basis that it was a response to a demand from Ms Salib in the context of a threat to charge Mr Gakas with sexual harassment. In that context an issue might also arise as to the voluntariness of the payment. 317 Mr Morahan submits that Ms Salib provided Mr Gakas with notes detailing the calculation of this final pay out sum so that Mr Gakas had adequate opportunity to have the figures checked and to ascertain what he now says is inaccurate. There is, however, some doubt as to what documentation, if any, was left with the note of 5 December 2006 and therefore I cannot be confident that Mr Gakas had knowledge of all the relevant matters from which to assess for himself the accuracy of the figures. That said, unless Mr Gakas paid no attention to the payments out from his business over the years it is hard to believe that he could have understood the claim made by Ms Salib on 5 December to be one related solely to what he understood to be her entitlement to commission. It should have been apparent to Mr Gakas that the payment, being over $500,000 could not have represented a six month 35% share of net profits unless the business for that period had been performing well in excess of the earlier years (when annual payments of commission to Ms Salib did not exceed $300,000). Mr Gakas surely did not need his accountant to confirm to him that this payment must have been in relation to more than a 35% commission payment. 318 Further, I have difficulty accepting Mr Gakas' assertions as to reliance on Ms Salib's final figures, when it seems from his evidence that his first response was to chase up the accountant to verify those very calculations. The fact that he later chose to proceed without having been able to verify the calculations (or that, as submitted by Mr Simpkins, he did not have a realistic opportunity to do so) seems to me to be beside the point when considering whether Mr Gakas had relevantly relied on the accuracy of Ms Salib's calculations. I do not accept that he did so. His conduct in seeking confirmation from Mr Kolta is quite inconsistent with this. 319 Mr Morahan submits that the final payment was made by way of a settlement of outstanding claims between the parties. I think there is force in that submission. Mr Gakas was being told that he had the opportunity to check Ms Salib's figures and he made some attempt to do so. His concern at the time seems to have been (by reference to his instructions to his lawyers) to ensure that this was a final resolution of Ms Salib's claims. In those circumstances, knowing that he had not been able to obtain verification from Mr Kolta and in the face of advice from his lawyers against so doing, Mr Gakas sought from Ms Salib an acknowledgment as to the finality of the payment and proceeded to make payment to her without reserving his position as to any inaccuracy in the calculations. 320 It is not sufficient for Newport Pacific to establish that the calculation of Ms Salib's entitlements (if that is what he understood the payment to represent) was incorrect. It is necessary for Newport Pacific to establish the existence of some recognised qualifying or vitiating factor, which operates to make Ms Salib's retention of the sum received 'unjust' in the relevant sense. Deane J in Pavey & Matthews Pty Ltd v Paul [1987] HCA 5; (1987) 162 CLR 221; (1987) 69 ALR 577 emphasised (at [14]) that to identify the basis of such actions as restitution was "not to assert a judicial discretion to do whatever idiosyncratic notions of what is fair and just might dictate". 321 In David Securities, at 378-379, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ said that: … it is not legitimate to determine whether an enrichment is unjust by reference to some subjective evaluation of what is fair or unconscionable. Instead, recovery depends upon the existence of a qualifying or vitiating factor such as mistake, duress or illegality. (my emphasis) 322 That restitution, on the basis of unjust enrichment, will be available only where a recognised 'unjust' factor has been established, was again affirmed by the High Court in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89; (2007) 236 ALR 209, where Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ stated at [150]-[151]; First, whether enrichment is unjust is not determined by reference to a subjective evaluation of what is unfair or unconscionable: recovery rather depends on the existence of a qualifying or vitiating factor falling into some particular category; Australia and New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662 at 673 per Mason CJ, Wilson, Deane, Toohey and Gaudron JJ; David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 at 379 per Mason CJ, Deane, Toohey, Gaudron and McHugh JJ. In David Securities Pty Ltd v Commonwealth Bank of Australia [1992] HCA 48; (1992) 175 CLR 353 at 379, Mason CJ, Deane, Toohey, Gaudron and McHugh JJ gave as instances of a qualifying or vitiating factor mistake, duress or illegality. 323 In Lumbers v W Cook Builders Pty Limited [2008] HCA 27; (2008) 232 CLR 635; (2008) 247 ALR 412, Gummow, Hayne, Crennan and Kiefel JJ stated (at [80]) that; … where one party (in this case, Builders) seeks recompense from another (here the Lumbers) for some service done or benefit conferred by the first party for or on the other, the bare fact of conferral of the benefit or provision of the service does not suffice to establish an entitlement to recovery … (my emphasis) 324 In a passage, the earlier edition of which was approved by Campbell J in Wasada Pty Limited v State Rail Authority of New South Wales (No.2) [2003] NSWSC 987, at [16], Mason, Carter and Tolhurst, in Mason & Carter's Restitution Law in Australia, state at [166]: 'Unjust' is the 'generalisation of all the factors which the law recognises as calling for restitution'. Because we need to search for recognised factors, examination of which involves an analysis of case law, the reference to 'injustice', as an element of unjust enrichment, is not a reference to judicial discretion. Normal judicial processes are involved and it is only in cases where there is no recognised basis for saying that injustice has arisen that problems can arise. 325 One of the categories of case in which it is recognised that the facts give rise to a prima facie obligation to make restitution, as noted in Australia & New Zealand Banking Group Ltd v Westpac Banking Corporation [1988] HCA 17; (1988) 164 CLR 662, (at p 673 per Mason CJ, Wilson, Deane, Toohey and Gaudron JJ) is the receipt of a payment which has been made under an operative mistake. (In David Securities the High Court unanimously rejected the notion that such a mistake need be fundamental, emphasising, at 43, the requirement that the mistake be causative.) 326 Thus, to establish a right to restitution on the basis of a mistake the plaintiff must not only have held the relevant mistaken belief (whether that be a mistake of fact or law) but also the mistake must be causative of the payment or conferral of the benefit (David Securities, per Mason CJ, Deane, Toohey, Gaudron, at 378-379 and per McHugh JJ, at [43] making it clear that the prima facie entitlement to recover moneys paid under a mistake depends upon the appearance that the moneys were paid by the payer "in the mistaken belief that he or she was under a legal obligation to pay the moneys or that the payee was legally entitled to payment of the moneys"). 327 A plaintiff may be relevantly mistaken, and entitled to restitution, even where the mistaken belief is his or her own fault, provided that payment was made as a result of the mistake (Commercial Bank of Australia v Younis [1979] 1 NSWLR 444, at 450; David Securities; Kelly v Solari (1841) 9 M & W 53, at 59; 152 ER 24, at 26, per Parke B). As Parke B. said in Kelly v Solari: If, indeed, the money is intentionally paid, without reference to the truth or falsehood of the fact, the plaintiff meaning to waive all inquiry into it, and that the person receiving shall have the money at all events, whether the fact be true or false, the latter is certainly entitled to retain it ; but if it is paid under the impression of the truth of a fact which is untrue, it may, generally speaking, be recovered back, however careless the party paying may have been, in omitting to use due diligence to inquire into the fact. (my emphasis) 328 In David Securities the High Court did not expressly address the appropriate test for causation in this context, remitting the case to the trial judge to determine whether the payments were made 'because of' the mistaken belief (David Securities, at 386). Nevertheless, it could be inferred from the High Court's rejection of the requirement of fundamentality the question would turn on whether the mistake was a 'significant' or 'dominant' cause of the relevant payment. By way of analogy in Gould v Vaggelas (1985) 157 CLR 215, at 216, per Wilson J; at 250-251, per Brennan J; San Sebastian Pty Ltd v The Minister (1986) 162 CLR 340, at 366, per Brannan J; Henville v Walker (2001) 206 CLR 459, at 493, per McHugh J, the test was whether the mistake was a reason for the enrichment. 329 Mason CJ, Deane, Toohey, Gaudron and McHugh JJ in David Securities (at [36]) addressed the question of the voluntariness of the payment or election by the payer: The payment is voluntary or there is an election if the plaintiff chooses to make the payment even though he or she believes a particular law or contractual provision requiring the payment is, or may be, invalid, or is not concerned to query whether payment is legally required; he or she is prepared to assume the validity of the obligation, or is prepared to make the payment irrespective of the validity or invalidity of the obligation, rather than contest the claim for payment. We use the term "voluntary" therefore to refer to a payment made in satisfaction of an honest claim, rather than a payment not made under any form of compulsion or undue influence. 330 It seems to me that there is a relevant distinction between the making of the final payment and the earlier commission payments. As to the earlier payments, there is no reason not to accept the evidence of Mr Gakas that he made those payments in reliance upon a belief as to the accuracy of Ms Salib's calculations. This is supported by the evidence of Ms Overman as to the manner in which Mr Gakas made those payments (without question, Ms Salib having prepared all the figures). Therefore, I consider that Newport Pacific has established an entitlement to recovery of any overpayments established in the years through to the end of June 2006 (after offsetting any established underpayments in that period). 331 Where I am not satisfied is that Newport Pacific has established that the final payment was made under an operative or causative mistake. 332 Whether or not Mr Gakas had available to him at the time (as Ms Salib suggests he did) sufficient documentation to explain and detail the method of calculation of the amount claimed by Ms Salib, and whether or not he appreciated (from the unusual quantum of the sum) that it had been prepared on the basis that Ms Salib was entitled to more than a 35% share of commission, the evidence is inconsistent with Mr Gakas relying on the accuracy of Ms Salib's figures at all. The initial enquiry made by Mr Gakas of Mr Kolta to check and confirm Ms Salib's calculation and final figures is inconsistent with him placing reliance on the accuracy of Ms Salib's figures. The very fact that Mr Gakas felt a need to check the figures indicates that there was the existence of doubt in his mind concerning the accuracy of Ms Salib's calculations. Where there is this existence of doubt it is difficult to find that Mr Gakas was operating under a mistaken belief that Ms Salib's calculations were correct. 333 Further, not only does the existence of doubt speak to whether a mistake existed at all, it indicates that Mr Gakas was prepared to proceed in the knowledge that there was a risk that the figures might not be accurate. In this regard, the enquiry made of his solicitors is relevant. What Mr Gakas clearly wanted was to obtain finality by means of the payment of the amount claimed. In those circumstances I cannot find that there was an operative mistake which renders retention by Ms Salib of the final payment unjust. It seems to me that Mr Gakas, knowing that the figures had not been checked, nevertheless chose to make the payment (and assumed the risk that Ms Salib might be claiming more than that to which she was strictly entitled) in order to achieve a final resolution of her claims (and, when she would not sign the deed of release, he did so on the basis of the more limited acknowledgement in the receipt signed by her). 334 Moreover, insofar as I find that the final payment was made by Newport Pacific in order finally to determine the business relationship between the parties (and to encompass any claim which might be made in the context of that business association), even had there been a mistaken belief on Mr Gakas' part as to the accuracy of Ms Salib's calculation of entitlement to commission (and I find that there was no such belief) was one which would not seem to me to have been causative of the payment in question. 335 I find that the payment by Newport Pacific on 6 December 2006 was a voluntary payment in the sense referred to in David Securities and hence that the claim for moneys had and received has not been established in relation to that payment. 336 Insofar as I have found that there is an entitlement to recover for overpayments in the earlier years, and some of those payments were made more than 6 years before these proceedings were commenced, no limitations defence was pleaded and in any event to the extent that such claims are based on a mistaken payment, then s 56 of the Limitation Act 1969 (NSW) would apply to defer the reckoning of time until such time that the mistake was discovered, or would have been discoverable with reasonable diligence (Torrens Aloha Pty Ltd v Citibank NA [1997] FCA 77; (1997) 72 FCR 581; (1997) 144 ALR 89; (1997) 35 ATR 36). Breach of duty claims 337 Little emphasis was placed on these claims during the hearing. Mr Morahan points to the fact that no particulars of the alleged breaches of duty (assuming a duty of care to have arisen) were provided. It may well be the case that no such particulars were ever sought. In any event, in circumstances where the methodology used for valuation of the stock was one apparently applied or approved by the company's then accountant (and the evidence from Mr Jugmans was to accept that in certain situations use of other than the standard methodology for valuation of inventories might be appropriate) it is difficult to argue that Ms Salib's use of such methodology evidences any breach of a duty of care on her part. Similarly, the fact that she seems to have exported data from the Quickbooks programme into Excel spreadsheets so as to re-order stock valuation summaries in a form she considered more workable in a business context does not of itself suggest a breach of a duty of care on her part. 338 I find that Newport Pacific has not established its alternative claims for damages for breach of any duty of care. Conclusion 339 For the reasons set out above, I find as follows. 340 In the first set of proceedings, I find that there was no partnership of the kind alleged between Ms Salib and Mr Gakas and therefore that Ms Salib's claim against Mr Gakas fails. 341 In the second set of proceedings, I find that Newport Pacific has established a claim for recovery of overpayments of commission in the period through to the end of June 2006 but not otherwise and that it has not established a claim for damages for breach of duty. The net overpayments for the period through to 30 June 2006 (taking into account the underpayment for the 2003 financial year and the adjustments accepted by Mr Janes) amount to $172,752.60. In terms of the claim for interest, it seems to me that the appropriate order may be to award interest from 1 July 2006 (on the basis that the amount repayable by Ms Salib is an aggregate sum taking into account underpayments over that period). Alternatively, it may be appropriate for there to be an offset for interest on the underpayments over the relevant period against the interest payable on the overpayments from the date of payment. However, I will hear any submissions in that regard. 342 Subject to any correction on the applicable mathematics, having regard to my findings in principle, I order as follows: 1. I dismiss the plaintiff's claim in proceedings 07/256633. 2. I order the defendant in proceedings 08/278795 to pay to the plaintiff the sum of $172,752.60 by way of overpaid commission for the period through to 30 June 2006 and otherwise dismiss the plaintiff's claim in these proceedings. 343 I will list the matter for a convenient time to hear any submissions as to costs or as to the computation of interest on the net amount to be repaid by Ms Salib by way of overpaid commission. ********** 01/06/2010 - In para 99, second line the word "Graham" has been replaced by "Gakas"In para 341, third sentence, "2007" has been replaced by "2006" - Paragraph(s) 99, 341 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. 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