Supreme Court New South Wales Medium Neutral Citation: Jack Marzec v Waclaw Marian (Willy) Lysiak [2015] NSWSC 647 Hearing dates: 29-30 April, 29-30 September, 1 October 2014 (Further written submissions 15, 28 October 2014) Date of orders: 28 May 2015 Decision date: 28 May 2015 Jurisdiction: Equity Division Before: Kunc J Decision: Parties to undertake accounting of partnerships as found Catchwords: PARTNERSHIP – Existence, members, subject matter and terms of alleged partnership – No issue of principle – Partnership Act, 1892 (NSW) Legislation Cited: Civil Procedure Act 2005 (NSW) Evidence Act, 1995 (NSW) Partnership Act, 1892 (NSW) Cases Cited: Evans v Braddock [2015] NSWSC 249 Walters v Scarborough [2011] NSWSC 1380 Category: Principal judgment Parties: Jack Marzec (Plaintiff) Waclaw Marian (Willy) Lysiak (First Defendant) Julius Waclaw Lysiak (Second Defendant) Representation: Counsel: A.J. Macauley (Plaintiff) Waclaw Marian (Willy) Lysiak – In person P.A. Tiernan (Second Defendant) Solicitors: Russell C Byrnes (Plaintiff) P.A. Tiernan (Second Defendant) File Number(s): 2013/140096 Publication restriction: No Judgment Summary 1. At 1.45am New York time on 15 September 2008, the famous American investment house Lehman Brothers filed for bankruptcy. Although what followed is now known as the Global Financial Crisis or GFC, its consequences were felt by individuals. These proceedings are one example of those consequences. Without disrespect, I will refer to the parties and others by their given names. References to "$" means Australian dollars unless otherwise stated. 2. As part of its response to the GFC, on 3 February 2009 the Australian Government announced a national economic stimulus package which included the Homeowner Insulation Program (the "HIP"). At that time the plaintiff (Jack), the first defendant (Waclaw known as Willy) and the second defendant, Willy's son Julius, were tradesmen of Polish origin working in Sydney. In August 2009 they became involved (to use a neutral word) in a business venture which sought to take advantage of the HIP. That venture operated from premises in Kurnell owned by Julius (the "Kurnell property"). Unfortunately for them, the Government terminated the HIP on 19 February 2010. Their involvement in the HIP was not a financial success. 3. Jack alleges that his involvement with Willy and Julius in the HIP was a partnership at will which involved three activities: 1. The supply and installation of residential roof insulation (the "insulation"); 2. The supply and installation of residential solar roof panels (the "solar panels"); and 3. The manufacture and sale of solar panel lifters (the "lifters"). 1. Jack seeks an accounting and other monetary relief from Willy and Julius because Jack says they are indebted to him for substantial sums of money arising from the alleged partnership and related financial transactions. 2. Willy admits there was a tripartite partnership in relation to the insulation and solar panels. However, he vehemently denies that Jack has any interest in the lifters. Julius denies being a partner at all. 3. It is not possible for these reasons to give a final monetary answer as to what Jack or the others may be entitled. At the Court's direction the parties went some way towards a common position as to what a final accounting might look like in a number of permutations depending upon the Court's findings on the critical issues. These reasons determine the fundamental question of the existence, membership and business of any partnership and then address several consequential issues to assist the parties in carrying out the accounting. How any residual disputes are to be resolved is considered at the end. 4. The Court's main conclusions are: 1. A partnership existed between Jack and Willy, but not Julius, in relation to the insulation; 2. A partnership existed between Jack, Willy and Julius in relation to the solar panels; 3. The lifters were not part of any partnership involving Jack; 4. Willy and Julius are indebted to Jack or his company for some expenses charged to certain debit and credit cards; 5. Unless the recipient admits receipt of cash or it is established by a bank statement or other third party record, the various allegations made by the parties against each other of unaccounted for cash receipts are not established. In particular, the Court is not satisfied on the balance of probabilities that each and every one of the $1,000 cash advances Jack alleged he had made to either Willy or Julius was in fact made. The course of the proceedings 1. Jack commenced the proceedings by statement of claim filed on 6 May 2013. Willy was served. Paragraph 1 of the statement of claim pleaded: Between August and September 2009, the Plaintiff and the First and Second Defendants (the Partners) agreed to commence and carry on the following businesses as a partnership (the Partnership): the installation of roof insulation on residential property; the supply and installation of solar panels on residential property; and the manufacture and sale of solar panel lifts. Particulars The Partnership was initially oral and was agreed by the Partners at meetings between them at South Sydney Juniors LEAGUE Club (sic) at Anzac Parade, Kingsford on or around 20 August 2009 and at the premises of the Plaintiff's sister-in-law, Linda Aftahi located XXXXX, South Coogee in or around September 2009. The terms of the Partnership were subsequently reduced to writing and signed by the Plaintiff and the First and Second Defendants in September 2009. The Defendants retained possession of the signed Partnership agreement and the Plaintiff does not have a copy. 1. On 31 May 2013 the Court made orders for substituted service against Julius. 2. On 28 June 2013 Julius, who appeared for himself, filed a handwritten defence which simply stated "Not guilty". Jack agreed to Julius having an opportunity to file an amended defence. 3. On 23 August 2013 Julius filed a further defence (described as a "defence" rather than an "amended defence"). Although the terms of the defence suggest that it had been prepared with informal legal assistance, Julius continued to appear for himself. 4. Paragraph 1 of the defence admitted the three areas of business alleged by Jack and that the parties "did agree to carry on a business". However, it went on to plead that Julius "does not admit the parties agreed to carry on the said business as a partnership". 5. On 10 October 2013 Jack obtained default judgment against Willy. Although the affidavit in support of Jack's application said Willy owed Jack $194,944.25, judgment was only entered for $58,086.16 inclusive of costs. 6. On 29 November 2013 the Registrar fixed the proceedings before me for hearing on 29 and 30 April 2014. 7. On 7 March 2014 Willy filed a notice of motion to have the default judgment against him set aside. Willy had retained Mr P Tiernan, solicitor, to appear for him in relation to the proceedings. 8. Although I was the trial judge, it was only by coincidence that Willy's motion to set aside the default judgment came before me sitting as Applications Judge on 28 March 2014. As is to be expected on an application of that kind, Willy provided the form of defence on which he proposed to rely if the default judgment was set aside. 9. Paragraph 1 of that defence (which was ultimately filed as Willy's defence) pleaded: In relation to paragraph 1 of the Statement of Claim the First Defendant: Admits paragraph 1(a) of the Statement of Claim; Admits paragraph 1(b) of the Statement of Claim; Denies paragraph 1(c) of the Statement of Claim. In further answer to paragraph 1 of the Statement of Claim the First Defendant says that in relation to the particulars at paragraph 1(1) of the Statement of Claim the Plaintiff's so-called sister-in-law (Linda Aftahi) is not the Plaintiff's sister-in-law as alleged, but rather, the wife of the Plaintiff. The First Defendant denies the allegation that any terms of the Partnership were produced in writing or signed by the First Defendant as alleged. 1. Willy also admitted the allegation that the partnership was a partnership at will. However, these admissions are not quite as determinative as they might first appear because Willy's defence then goes on to deny all of the specific terms of the partnership alleged by Jack, including that the partners would share the profits and bear the losses equally and that they would contribute to the capital of the partnership in equal shares. Therefore, Willy's formal admission of a partnership does not relieve the Court from having to determine what the terms of any partnership were. 2. The Court acceded to Willy's application to set aside the default judgment. Directions were made to prepare the matter for hearing, including fixing 1 May 2014 as an additional hearing date. 3. The hearing commenced before me on 30 April 2014. However, at the hearing Mr Tiernan was now instructed to appear for Julius. Willy appeared for himself. Mr A. Macauley of Counsel appeared for Jack. 4. After two days of hearing it became apparent that the matter was not going to be completed within the three days allocated. I made directions including for the parties to attempt to agree on the details of an accounting assuming some permutation of the alleged partnership was established and for the proceedings to be referred to court-annexed mediation. If the mediation failed, the proceedings were fixed for further hearing on 29 September to 1 October 2014. 5. The mediation was unsuccessful and the hearing continued on the days fixed. 6. Insofar as the accounting was concerned, shortly before the second round of the hearing Mr Macauley produced a detailed set of submissions setting out an accounting of the relationship between the parties in a number of scenarios which depended upon the Court's fundamental findings in relation to the existence, membership and business of any partnership. Mr Tiernan responded by a letter which did not find its way into evidence but which apparently agreed with some aspects of Mr Macauley's proposed accounting and disputed others. 7. At the conclusion of the hearing, and faced with further detailed written submissions that had been provided by Mr Macauley, Mr Tiernan asked for an opportunity to provide written final submissions on behalf of Julius. In accordance with directions I then made, Mr Tiernan provided detailed written closing submissions on 15 October 2014. Mr Macauley's further closing submissions in reply on behalf of Jack were received on 28 October 2014. Credibility and fact finding – the parties 1. The task of fact finding in these proceedings was complicated by the now deep bitterness between Jack, on the one hand, and Willy and Julius, on the other hand. Whatever the state of their feelings for each other in 2009 and 2010, by the time of the hearing it was apparent that all they now shared were feelings of anger, antipathy and indignation at having to sue or being sued (as the case may be). There was patently no love lost between them. 2. I have no doubt that, despite his attempts in the witness box to appear to be calm and in control, Jack felt just as badly towards Willy and Julius as they did to him. I formed the view of Jack that he was coldly determined to pursue the defendants, and that determination coloured his evidence. I consider that he was prone to exaggerated reconstruction. At least some parts of his claim (for example, the cash advances dealt with in paragraphs [172] to [178] below) left the Court with the strong impression that they were an opportunistic attempt to increase the defendants' potential liability to him. 3. Furthermore, despite Jack's assertions of the accuracy of his memory, its fallibility (and hence real potential for unreliability) was demonstrated by Jack's firm assertion in cross-examination that his company, Jack Marzec Building Services Pty Ltd ("JMBS"), received only one compensation payment from the Government for the closure of the HIP. When presented with further bank records Jack had to concede there were two such payments for which he would have to account. 4. While Willy spoke and understood English well enough not to require an interpreter, he was nevertheless clearly not fluent in either speaking or written comprehension. Furthermore, having gone to the trouble of setting aside the default judgment with Mr Tiernan's assistance, Willy represented himself at the hearing. Burdened by those language difficulties, in both his evidence and submissions he vacillated between anger at Jack and careless indifference to the outcome because he said he had nothing and was a pensioner. 5. Although ultimately represented by Mr Tiernan at the hearing, prior to then Julius had been unrepresented and had prepared most of his evidence himself in a way which did not meet the detail of Jack's case. Julius gave me the strong impression that he was "in denial" about the proceedings. While his evidence began with the premise that Jack's various allegations were all untrue, I did not form the view that Julius was a dishonest witness. When confronted with material he candidly made appropriate concessions. However, I came to the conclusion that he hadn't really turned his mind to the details of the case against him because he could never overcome his incredulity that he was being sued. 6. In Evans v Braddock [2015] NSWSC 249 Hallen J conveniently gathered together a number of authorities which are relevant to the fact finding exercise in the case at bar. I gratefully adopt his Honour's summary (from which I have omitted authorities dealing with the evidence of dead people and where many years have passed): 70. As was observed by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315, at 318 - 319: "Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances … Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience." 71. In that case, his Honour was talking of a cause of action founded on s 52 of the Trade Practices Act 1974 (Cth) or s 42 of the Fair Trading Act 1987 (NSW): see the discussion by McDougall J in Harbour Port Consulting v NSW Maritime [2011] NSWSC 813, at [10] - [18]. However, as McLelland CJ in Eq also pointed out, the views apply to all types of litigation. 72. I also remember what was said by Emmett J (as his Honour then was) in Warner v Hung, in the matter of Bellpac Pty Ltd (Receivers and Managers Appointed) (In Liquidation) (No 2) [2011] FCA 1123; (2011) 297 ALR 56, at [48]: "When proof of any fact is required, the Court must feel an actual persuasion of the occurrence or existence of that fact before it can be found. Mere mechanical comparison of probabilities, independent of any belief in reality, cannot justify the finding of a fact. Actual persuasion is achieved where the affirmative of an allegation is made out to the reasonable satisfaction of the Court. However, reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequences of the fact to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding are considerations that must affect whether the fact has been proved to the reasonable satisfaction of the Court. Reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-2)." 73. The credibility of a witness and his, or her, veracity may also be tested by reference to the objective facts proved independently of the evidence given, in particular by reference to the documents in the case, by paying particular regard to his, or her, motives, and to the overall probabilities: Armagas Ltd v Mundogas S.A. (The "Ocean Frost") [1985] 1 Lloyd's Rep 1, per Robert Goff LJ, at 57. Also see, In the matter of Kit Digital Australia Pty Ltd (in liq) [2014] NSWSC 1547, per Black J, at [7]. … 75. In this regard, I have also found useful what Lord Pearce wrote, in his dissenting speech in Onassis v Vergottis [1968] 2 Lloyd's Rep 403, at 431: "Credibility involves wider problems than mere 'demeanour' which is mostly concerned with whether the witness appears to be telling the truth as he now believes it to be. Credibility covers the following problems. First, is the witness a truthful or untruthful person? Secondly, is he, though a truthful person, telling something less than the truth on this issue, or, though an untruthful person, telling the truth on this issue? Thirdly, though he is a truthful person telling the truth as he sees it, did he register the intentions of the conversation correctly and, if so, has his memory correctly retained them? Also, has his recollection been subsequently altered by unconscious bias or wishful thinking or by overmuch discussion of it with others? Witnesses, especially those who are emotional, who think that they are morally in the right, tend very easily and unconsciously to conjure up a legal right that did not exist. It is a truism, often used in accident cases, that with every day that passes the memory becomes fainter and the imagination becomes more active. For that reason a witness, however honest, rarely persuades a Judge that his present recollection is preferable to that which was taken down in writing immediately after the accident occurred. Therefore, contemporary documents are always of the utmost importance. And lastly, although the honest witness believes he heard or saw this or that, is it so improbable that it is on balance more likely that he was mistaken? On this point it is essential that the balance of probability is put correctly into the scales in weighing the credibility of a witness, and motive is one aspect of probability. All these problems compendiously are entailed when a Judge assesses the credibility of a witness; they are all part of one judicial process and in the process contemporary documents and admitted or incontrovertible facts and probabilities must play their proper part." … 77. Finally, I should mention an article by the former the Chief Judge at Common Law, P McClellan entitled "Who Is Telling the Truth? Psychology, Common Sense and the Law" (2006) 80 ALJ 655, in which he wrote, at 665, quoting a passage from the "Guidelines Relating to Recovered Memories" (2000) of the Australian Psychological Society: "Memory is a constructive and reconstructive process. What is remembered about an event is shaped by how that event was experienced, by conditions prevailing during attempts to remember, and by events occurring between the experience and the attempted remembering. Memories can be altered, deleted and created by events that occur during and after the time of encoding, during the period of storage, and during any attempts at retrieval." 1. Because of the views which I formed about each of the parties as set out in the preceding paragraphs derived from both their affidavit evidence and observing them in the witness box, I have come to the view that each of them, for different reasons, was not a reliable witness. This unreliability included both a careless disregard for the truth unless confronted with clear, contemporaneous documentary evidence or simply having convinced themselves of their self-interested reconstruction of events. 2. Accordingly, and bearing in mind the authorities referred to in paragraph [30] above, I have approached the evidence of each of the parties with an equal disinclination to accept their evidence unless there was general agreement between the relevant parties about a particular fact, the fact was in accord with the inherent likelihood of the situation, was supported by what I could be satisfied were reliable, contemporaneous written records or was based upon an admission against interest. However, where such collateral assistance is unavailable and it is necessary to prefer the evidence of one protagonist over the others, I have preferred the evidence of Julius because he seemed to me to be the least unreliable of the three when he had actually turned his mind to the evidence. 3. I should also record that the vitriol between the parties led to much time being spent on three matters which ultimately proved to be forensic distractions. 4. First, in an effort to discredit Jack, Willy and Julius sought to establish that, contrary to Jack's assertions, Jack's marriage to Ms Lida Aftahi was a sham and that Mr Marzec was in fact in some kind of common law relationship with Lida's sister, Ms Linda Aftahi. Because of the view I have taken about the parties' credibility quite apart from this question, it is unnecessary for me to determine this issue. If it were necessary to make a finding, I am not satisfied on the balance of probabilities (taking into account the seriousness of the allegation: s 140(2) of the Evidence Act, 1995 (NSW)) of the matters alleged by Willy and Julius about Jack and the Aftahi sisters. In any event, even if the allegations had been made out I would regard them as being so peripheral to the matters before the Court as to be of no assistance in the fact finding exercise. 5. A second matter was allegations by Jack that Willy and Julius collected cash from customers in relation to jobs for which they failed to account. One such allegation was that Julius received $10,000 in cash from a homeowner in Dural, Shane Loumbos. Jack called Mr Lucas to say he (Mr Lucas) had seen this occur. Julius subsequently called Mr Loumbos, who said he (Mr Loumbos) had paid the cash to Jack and that Jack had introduced Linda to him (Mr Loumbos) as "my wife". Jack denied Mr Loumbos' evidence. This tit for tat completely contradictory evidence makes it difficult for the Court to make any rationally defensible finding and it is not necessary for the Court to do so because of the Court's approach to allegations of cash receipts generally (as to which see paragraphs [46] and [47] below). Rather, it merely confirms the Court's conclusion (see paragraphs [31] and [32] above) as to its approach to the evidence of the parties and of a similar view of Linda's evidence who, whatever else may be the case, was clearly not just Jack's sister-in-law but also a very close friend. 6. The third distraction concerned Jack's allegation that the terms of any partnership had been reduced to writing and signed by him, Willy and Julius at a meeting at Linda's unit on 28 September 2009. Jack further alleged that Willy and Julius had the only signed copy of the document. Willy and Julius hotly denied these allegations. Jack ultimately abandoned reliance on any alleged written agreement and confined his case to a partnership under the general law including the Partnership Act, 1892 (NSW) (the "Act"). 7. However, in labelling this third matter a "distraction", the Court nevertheless accepts Mr Tiernan's submission that Jack's abandonment of this part of his case does not mean it should be overlooked in assessing Jack's credit. Mr Tiernan submitted the abandonment was a tactical decision to downplay the difficulties with Jack's evidence on this point. As I have noted in paragraph [102] below, there is a significant inconsistency between Jack's diary, which suggests Jack was at the Kurnell property all day, and Jack and Linda's evidence of a lengthy meeting at Linda's unit with Willy and Julius which began at midday and ended with dinner. That inconsistency again fortifies me in approaching Jack (and Linda's) evidence and his diary (see further paragraph [44] below) with caution. Credibility and fact finding – Jack's records 1. As part of his evidence, Jack adduced numerous bank and credit card statements and other third party records. Unfortunately for everybody concerned, those records were insufficient to give a full picture of the financial history of the parties' activities. Jack's case also depended upon three different sets of records which he had produced himself. 2. The first records are what Jack referred to as the "Insulation Business Ledger" (the "IBL"). Jack's evidence was that he maintained the IBL on an almost daily basis recording the income earned from insulation work. It records 49 jobs between 30 November 2009 and 19 February 2010, setting out receipt of the Government insulation subsidy for each such job as well as cash payments recorded as being received by one of Jack, Willy or Julius as the case may be. While there does not appear to be a dispute between the parties about the jobs listed, Willy and Julius dispute the attribution of cash receipts by them. 3. The second set of records is what Jack referred to as his "Bank Transaction Logbook" (the "Logbook"). Jack's evidence was that he created the Logbook in or around July 2010 on the advice of his solicitor covering the period August 2009 to the end of June 2010 and setting out: 1. all the loans he alleged he made to Willy and Julius and, on his view, the partnership; 2. all the partnership expenses which he had met using his and JMBS's debit and credit cards; and 3. all the expenses incurred on his and JMBS' credit or debit card which he maintained had been incurred by Willy or Julius without his authorisation and were not related to the business ventures between them. In preparing the Logbook Jack worked from memory, cross-referencing bank statements or his personal diary. 1. The third record relied upon by Jack is what he described as his "personal diary". Jack's affidavit evidence was that he recorded events in his personal diary throughout each day, often recording things on multiple occasions during any one day. He said that he used it to record: 1. personal loans that he gave to Willy and Julius; 2. partnership jobs which he worked on, the income earned from those jobs and in what form (e.g. cash, Government rebate etc.) payment was to be received; and 3. other events associated with the alleged partnership, including expenses incurred and loans made to the partnership. 1. Jack elaborated further on the diary in cross-examination. The effect of that evidence was that in many ways the diary was more of a note book than a diary. For example, he did not record appointments in the diary next to the time for which those appointments had been fixed. Rather, he made notes starting at the top of the page of the relevant day recording, for example, an appointment in advance. However, he also used the diary to record quotations he had given as well as work done and the payment expected to be received. 2. Jack's principal affidavit in the proceedings had annexed to it photocopies of his diary from 18 August 2009 to 30 June 2010. While the original diaries were not tendered into evidence, the Court did have an opportunity to examine one of the originals during the course of the hearing. 3. In many instances, Jack's diary was the only apparently contemporaneous record recording the receipt or application of particular funds. However, the Court is not satisfied that the personal diary is a complete or reliable contemporaneous record of the matters which it purports to record, for these reasons: 1. The diary does not include significant events relied upon by Jack. So, for example, while it records the meeting said to have occurred at the South Sydney Juniors Leagues Club ("South Sydney Juniors") on 19 August 2009, there is no reference to either the meeting at the Kurnell property on 20 August 2009 or the significant meeting which Jack alleged occurred at Linda's unit on 28 September 2009. As to the latter, while Jack's evidence was that the meeting occurred at Linda's unit over many hours on that day, the diary records "1 day factory" meaning that he spent the whole day working at the Kurnell property. 2. Of the $61,000 Jack alleges he advanced to Willy and Julius in $1,000 cash advances, the diary (giving Jack the complete benefit of any doubt) refers to payments which may be $20,450 of them but even those entries are not completely consistent with Jack's Citibank credit card statements. (On this topic see also paragraph [178(4)] below.) Nor does the diary make any reference to the alleged $1,000 cash payment which Jack says that he gave Julius on 28 August 2009. However the diary does record the $55,000 transfer to Julius. Both withdrawals are proven by JMBS's CBA bank statement but it is completely inexplicable that if such critical transactions were recorded contemporaneously in the diary, Jack would include the $55,000 but not the $1,000. 3. The diary does not record a number of major payments in connection with the purchase of the insulation that were undoubtedly made and which Jack has been able to prove by other means. There is no record against the relevant days for either of the telegraphic transfers to the Chinese supplier on 23 and 29 October 2009 (see paragraphs [70] and [72] below) or the payments to the customs broker (see paragraphs [77] and [79] below). 4. The diary includes a series of pages (e.g. for 24 December 2009 and following) where Jack has sought to summarise various jobs and payments. Those summaries are not derived solely from the contents of the diary. So much is apparent when, for example, in the summary on the page for 28 December 2009 the alleged payment of $1,000 on 28 August 2009 does not appear but it does record the transfer to the Chinese supplier of $12,273.09 on 23 October 2009 (the latter not otherwise being recorded in the diary). 5. Entries which appear consistently (the best example is "1 DAY FACTORY") appeared from my examination of the original diary to be so similar in appearance as to handwriting and pen that they gave the appearance of having been written serially rather than as individual daily entries. This appearance is emphasised when such entries are on the same page as entries about financial transactions with Willy or Julius on different parts of the page apparently written by Jack but in a different pen and slightly different style. 6. The diary does not record the outcomes or the terms of any discussions of the critical meetings which Jack alleges occurred. 7. The diary does not record other significant events such as Jack's marriage to Lida or his holiday to New Zealand (see paragraphs [61] and [64] below). 1. Mr Tiernan submitted the Court should find the entries in the diary were fabrications, but he did not put this to Jack in cross-examination. However, the Court does not need to go so far as to find that all of the entries were fabrications. Having carefully reviewed the diaries in evidence in their totality, the Court has no doubt that some of the entries are true, contemporaneous entries made on the day on which they appear in the diaries, but it cannot say which ones. However, considering the appearance of the diaries in their totality for the period for which they are in evidence and taking into account what, at the very least, are odd or inexplicable inconsistencies with other events proven in the proceedings of the kind referred to in paragraph [44] above, the Court is not satisfied on the balance of probabilities that every entry is reliable. Jack sought to deploy the diary as a contemporaneous record, necessarily self-serving, in support of his case. The Court's lack of satisfaction at the reliability of each and every entry in the diary means that the Court does not consider it a reliable source of assistance in its fact finding exercise even on the balance of probabilities. Credibility and fact finding – cash payments 1. One significant part of the dispute between the parties arises from allegations made between them about the payment or receipt of sums of money in cash. The Court has already referred to one aspect of this in paragraph [35] above. 2. These allegations go both ways. For example, Jack alleges that the $1,000 which was undoubtedly withdrawn from JMBS's CBA account on 28 August 2009 was paid in cash to Julius. Julius denies this. By the same token, Julius alleges that the $10,000 which was undoubtedly withdrawn from Julius' account on 31 August 2009 was paid in cash to Jack at the latter's request before Jack went on holiday to New Zealand. Jack denies this. In these cases, and all others like them in these proceedings, the Court is not satisfied on the balance of probabilities that the cash was paid as alleged. The Court will only find (or allow for the purpose of any accounting) the receipt of cash payments where such receipt is supported by the recipient's bank statements or some other reliable, contemporaneous record. This approach has particular application in the Court's conclusions concerning the multiple $1,000 cash loans which Jack alleges he advanced to Willy and Julius (see paragraphs [172] to [179] below). The facts 1. In the following paragraphs I set out the Court's findings of fact based upon matters that were supported by reliable, contemporaneous records such as bank statements, or were otherwise agreed or were obvious. I also record some of the parties' assertions about those facts. 2. Jack is a builder. Willy and Julius are electricians. During the period relevant to these proceedings Jack lived in Nowra but often stayed in Sydney at Ms Lida Aftahi's South Coogee unit. Willy lived in Woolooware and Julius in Miranda. Jack also had a unit in Maroubra (see paragraph [53] below) but this was let out to a friend. 3. Willy and Jack met in the mid-1980s when they both worked for the company known as "Spinners". Willy recognised that Jack was a fellow Pole. Willy and Jack usually spoke to each other in Polish. Julius first met Jack when Julius was an apprentice electrician in about 1993. He was introduced to Jack by Willy. Julius also spoke Polish with Jack as that was the latter's preferred language in which to communicate. 4. On 4 January 2000 Lysiak Contracting Pty Ltd ("Lysiak Contracting") was registered. Willy, Julius and another family member were equal shareholders. Willy was a director from 4 January 2000 to 3 July 2011. Julius was a director from 27 August 2007 to 14 June 2011. 5. Julius and his father operated Lysiak Contracting from the Kurnell property. 6. On 30 November 2001 Jack registered JMBS. He was its sole shareholder and director. While its registered office was in Nowra, its principal place of business was given as a unit in McKeon St, Maroubra. 7. The Court's findings as to the origins of the business relationship between the parties in August 2009 are dealt with in paragraphs [123] to [144] below. 8. On 21 August 2009 Jack withdrew $1,000 from JMBS's account with the Commonwealth Bank ("CBA"). 9. On 21 August 2009 Julius telephoned and then emailed a supplier of insulation batts in China ("Xiamen Sinroad"). 10. On 22 August 2009 Julius forwarded to Jack the email he (Julius) had received from Xiamen Sinroad with details of the batts and a reference to a quotation that was not in evidence. 11. On 24 August 2009 Jack says he withdrew $56,000 from his home loan account. JMBS's CBA bank statement records a cash deposit of $56,000 into the account followed by a $5,000 withdrawal which Jack says that he gave in cash to Julius and it is so recorded in his diary. 12. On 28 August 2009 Jack says that he gave Julius a further $1,000 in cash that he withdrew from JMBS's CBA account. While the withdrawal appears in JMBS's CBA bank statement, Jack's diary for that day does not record that payment. However, it does record and there is independent evidence from the JMBS's CBA bank statement that Jack transferred $55,028 from JMBS's account to "I & J Lysiak", being an account operated by Julius and Julius' wife. Julius' bank statement records receipt of $55,000 from JMBS on that day. This was to fund the purchase of home insulation. 13. On 31 August 2009 there was a $10,000 cash withdrawal from Julius' account. Julius says this was at Jack's request and that he gave the money to Jack. 14. On 1 September 2009 Jack went on holidays to New Zealand for about a week. 15. A different Chinese supplier ("Jiangsu Sainty") provided a proforma invoice dated 1 September 2009 (made out to the Kurnell property but not addressed to any person or company) for two sizes of batts for US$43,963.89. The payment terms were "30T T/T in advance, 70% against sight of original BOL copy". Thirty per cent of the quoted sum was US$13,189.16. 16. By Westpac telegraphic transfer dated 3 September 2009, US$13,189.16 (which, with bank fees, totalled $16,012.09) was transferred to Jiangsu Sainty. The purchaser of the transfer was Lysiak Contracting. The transfer records it was "for 6 containers of glasswool insulation batts – 30 per/cent T/T in advance". On the same day $17,000 was withdrawn from Julius' account. $16,012.09 of those funds was used to purchase the telegraphic transfer. 17. On 29 September 2009 Willy and Julius attended Jack's wedding to Lida. The date of the wedding is not recorded in Jack's diary. Willy gave the bride away and Julius was best man. They all had drinks after the wedding at South Sydney Juniors. 18. In or around October 2009 Jack added Julius and Willy as signatories to JMBS's CBA account. Each of Julius and Willy was provided with debit cards to access that account. 19. Between August 2009 and June 2010 Jack also used his Westpac credit card to meet partnership expenses. He also gave Willy and Julius access to that credit card. 20. On 8 October 2009 Jack opened an account for JMBS with ANZ by an initial deposit of $50,050.00. The source of those funds was Lida. 21. On 10 October 2009 Jiangsu Sainty issued an invoice to Lysiak Contracting for 700 packages of "glasswool" for US$17,858.80. 22. On 13 October 2009 $13,950 was withdrawn from Julius' account. 23. By ANZ telegraphic transfer dated 23 October 2009, US$11,168.77 (which, with bank fees, totalled $12,273.09) was transferred to Jiangsu Sainty. The applicant for the transfer was Jack and the funds came from the JMBS's ANZ account. A bill of lading of the same day refers to a cargo of 700 packages of "glasswool" being shipped from Jiangsu Sainty to Lysiak Contracting. 24. On 26 October 2009 Jiangsu Sainty issued an invoice to Lysiak Contracting for 1680 packages of "glasswool" for US$31,910.43. 25. By ANZ telegraphic transfer dated 29 October 2009, US$11,168.65 (which, with bank fees, totalled $12,649.09) was transferred to Jiangsu Sainty. The applicant for the transfer was Jack and the funds came from JMBS's ANZ account. 26. Sometime in November 2009 Jack telephoned a longstanding acquaintance from the building industry, Clint Lucas. Jack offered Mr Lucas a job which Mr Lucas described in his affidavit as "an installation business that [Jack] had established with the Defendants known as Jack Marzec Building Services". The offer was conditional on Mr Lucas obtaining certain accreditation and licences, which he did. 27. On 6 November 2009 the business name "Get Solar Australia" was registered. The registration certificate records Jack, Willy and Julius as the proprietors and the principal place of business as the Kurnell property. The other place of business recorded is Jack's Nowra address. 28. A bill of lading for 1680 packages of "glasswool" refers to the consignment shipping from China on 9 November 2009. 29. On 10 November 2009 a bank account was established with ANZ under the name "Get Solar Australia". The statements for that account describe the proprietors as "[Jack, Julius and Willy] t/as Get Solar Australia". On the same day Julius obtained the requisite government accreditation to install solar panels. 30. The 700 packages of insulation arrived in Sydney on 24 November 2009 and were delivered to Lysiak Contracting at the Kurnell property. JMBS paid the customs broker's invoice of $12,250.14 by a cheque on 1 December 2009. 31. The insulation business began operating at the end of November or on 1 December 2009. The installation of insulation was mostly done by Jack and Mr Lucas, the latter being paid as a contractor of JMBS. 32. The 1680 packages of insulation arrived in Sydney on 16 December 2009 and were delivered to Lysiak Contracting at the Kurnell property. The customs broker's invoice dated 17 December 2009 was for $22,223.53. JMBS paid the broker $23,805.06 by a cheque cleared on 3 February 2010, although the evidence does not explain the discrepancy. 33. In late 2009 Willy went to China to investigate potential insulation suppliers. 34. On 29 December 2009 Julius took out a $30,000 personal loan. 35. On 19 February 2010 the Government terminated the HIP. In cross-examination Jack described the financial position of the venture at that time as "very bad, no income, everything been rely on my credit, on any, let's say, cash, on borrowings and so on and, basically, I only supply every money". 36. On 7 June 2010 the Commonwealth wrote to "Mr Julius Lysiak, Jack Marzec Building Service Pty Ltd" acknowledging "your organisation's application under the Insulation Industry Assistance Package". 37. On 24 June 2010 there was a meeting between Jack, Willy and Julius and Jack's solicitor in relation to the debt which Jack alleged Willy and Julius owed him from the failed venture. 38. On 29 June 2010 Jack opened a new bank account for JMBS (the "New Account") to which Willy and Julius did not have access because, as Jack acknowledged in cross-examination, by then the Government had terminated the HIP and 'Get Solar Australia' had ceased to operate. It is clear that whatever the business arrangements had been between the parties, they were now at an end. 39. On 12 July 2010 the Commonwealth paid JMBS $12,469.88 under the assistance package. 40. On 20 July 2010 the Commonwealth wrote to "Mr Jack Lysiak, Jack Marzec Building Service Pty Ltd" acknowledging "your organisation's application under the Insulation Industry Assistance Package". 41. On 4 August 2010 the Commonwealth paid JMBS $10,599.44 into the New Account under the assistance package. 42. On 10 April 2013 Jack (presumably acting on legal advice prior to commencing these proceedings) gave Willy and Julius this notice: Notice dissolving partnership subsisting without deed To Waclaw Marian Lysiak and Julius Waclaw Lysiak. I hereby give you notice that the partnership subsisting between you and me in the business of the installation of roof insulation on residential property; the supply and installation of solar panels on residential property; and the manufacture and sale of solar panel lifts under the name style or firm of Get Solar Australia and carried on by Waclaw Marian Lysiak, Julius Waclaw Lysiak and Jack Marzec is hereby dissolved and I request that you will concur with me in taking the necessary steps for winding up the affairs of the said partnership in order that all the engagements of the partnership may be discharged and the remaining effects disposed of and converted and the moneys arising from them divided between us in proportion to our respective shares. Dated this 10th day of April 2013. Signature of Jack Marzec 1. Jack commenced these proceedings by statement of claim filed on 6 May 2013. The evidence in relation to the formation of the partnership 1. As has been noted (see paragraph [17] above), Willy admits that there was a tripartite partnership (but not its terms) in relation to the insulation and the solar panels, so that the critical question becomes the legal characterisation of Julius' role. Willy's admission is not binding against Julius. Nor does it assist in the drawing of any inference that Julius was a partner. The existence, membership and business of an alleged partnership is to be determined from the objective facts (see paragraph [145] below). Willy's admission, which clearly reflects his subjective state of mind as he made clear during the course of his evidence, does not assist. 2. As appears from paragraph [8] above, Jack's case was that the parties agreed to commence and carry on the alleged partnership between August and September 2009. This was particularised as an oral agreement at meetings between them at South Sydney Juniors on or around 20 August 2009 and at Ms Linda Aftahi's premises at South Coogee in or around September 2009. 3. It is necessary to consider each of the protagonist's evidence on these matters. 4. Jack's evidence was that on or around 15 or 16 August 2009 Willy rang Jack and invited him to attend a meeting to discuss a business proposition. That meeting occurred on Wednesday, 19 August 2009 when Jack says he met Willy and Julius at South Sydney Juniors for lunch. The only entry in Jack's diary for 19 August 2009 is "DISCUS BUSINES WITH WILLY" (sic). Jack says he brought along his wife, Lida Aftahi, and her sister, Linda Aftahi to the meeting. Willy, Julius and Jack sat at a separate table from Lida and Linda during the course of lunch to discuss Willy's business proposal. 5. In his principal affidavit Jack swore that a conversation occurred to the following effect: During this conversation, Willy said to me (in words to the effect): "I am broke. I lost my money with a form-worker in Brisbane for whom I was making metal frames." I said that I was sorry to hear that. Willy then brought up a business idea which he had, and said (in words to the effect): "You're aware of the current insulation programme that the Government has for installing insulation in houses – the government pays a subsidy for installing insulation because it saves energy." I responded (in words to the effect): "Yes I have heard about that scheme. I have been looking into that business myself." Willy said in response (in words to the effect): "Great. Julius and I are also looking into solar power installation – the government has a rebate scheme for solar panels. Perhaps we could do something together installing insulation and solar panels and take advantage of these new government schemes." Julius said to me (in words to the effect): "I already have a licence to install solar panels." After having raised the prospect of going into business together to install insulation and solar panels, Willy asked me (in words to the effect): "Have you got any money at the moment that you could put into this business. We [scil, Willy, Julius and myself] could set up a new business. We would contribute but we've lost all our money with this guy up in Brisbane." I said in response (in words to the effect): "I don't have any saving which I could contribute, but I have some property which I could probably get a loan against – I believe I could get around $70,000, I would be comfortable putting that much in." Willy said (in words to the effect): "We'll use that money to purchase the insulation from China, which will get us started. Once we get the business going we can pay you back." At the end of the conversation I said to Willy and Julius (in words to the effect): "I will think about your proposal and get back to you". We then rejoined Lida and Linda. 1. According to Jack, there was then a further meeting the next day (Thursday, 20 August 2009) at the Kurnell property. That meeting was with both Willy and Julius. Jack's diary only records: 1 DAY WORKING IN FACTORY SIDE (CLEANING THE METALS, SOME REPAIR, APPLY PRIMER FOR TRILEY WEELS) (sic) 1. According to Jack, a conversation to the following effect took place: Further details concerning the structure of the business were discussed at the meeting. At one point Willy said (in words to the effect): "Each of us will own one third of the business. Jack you will put up the money that we need to run the business and to pay for the insulation business, as neither Julius nor I have any money. We'll borrow that money from you personally, but we'll pay you back from our share of the receipts from the business as soon as money from the insulation jobs starts to come in. Since you're borrowing the money, Julius and I will cover the interest costs." Willy also said in this meeting (in words to the effect): "We can make a vacuum cleaner to clean out ceilings prior to putting in new insulation. I also have an idea of making lifters that will lift up solar panels onto rooves – we can also sell those to other people installing solar panels." I said it sounded good and said (in words to the effect): "It sounds like a good plan. I'm in. I'll start loaning you money you need to purchase the insulation." Julius then said (in words to the effect): "That's great to hear. We should sit down so we can record all the terms of our partnership – that way we all know what we're entitled to. We'll own the business in equal shares but we'll pay out the income to you first to cover the loans you'll have given to get the business started." I agreed and so did Willy. Also discussed at this meeting was the acquisition of the initial insulation. Willy said to me (in words to the effect): "Julius and I have already been in talks with a broker in Sydney to buy insulation from China – its good quality and we've got a good deal on price … We'll need you to provide the fund to buy the insulation as Julius and I can't provide our share of the cost. We'll each pay you back one third of the cost once the business gets going." I said (in words to the effect): "Well I am prepared to lend you [scil. Willy and Julius] your share of the money required to pay the insulation… as I said before I think $70,000 would be as much as I could lend." Willy said in response (in words to the effect): "Okay. Given that limit, and the need to buy insulation by the container, we'll be able to buy five containers of insulation. That will cost about $90,000 in total, with Julius and I each borrowing our $30,000 share from you." I agreed and said (in words to the effect): "Okay, I'll transfer to you the money shortly." 1. Jack accepted in cross-examination that by the end of both the first and second meetings there had been no discussion about how any profits were to be divided. 2. Jack says that from the date of that second meeting, he, Willy and Julius commenced on starting up the insulation business, as well as the solar panel installation and the lifter business. 3. Finally, Jack relied on his evidence that there was another meeting on or around 28 September 2009 which he had with Willy and Julius at Linda's unit in South Coogee. Jack says that also present at that meeting was Lida, who did not speak English well so that Linda translated for her into Farsi. 4. Jack's account is as follows: Willy and Julius arrived around midday. Julius stayed until the end of the meeting, which finished at around 6pm. Willy stayed until after 6pm, accompanying Linda, Lida and myself to dinner at South Sydney Juniors Rugby League Club. Julius had to leave beforehand to attend to his wife who was suffering from pregnancy complications. During the meeting I recall Willy saying in words to the effect: "It's a good idea to put in writing our arrangement between ourselves about this new business." Willy, Julius and I then discussed at length about the business and Willy began to write down on a piece of paper to what they were agreeing. Willy said (in words to the effect): "The partnership will comprise three businesses – the insulation business, the solar installation business and the business of selling solar panel lifters … You'll provide funds to meet expenses and working capital and then, when the business is up and running, you'll be paid back from the receipts, plus interest since you're borrowing the money to contribute. Julius and I will also pay you back the money which you have loaned us to cover our share of the cost of the insulation." Willy then said (in words to the effect): "And the business account will only be used for business expenses – not for our private expenses." To which I agreed. I raised at that meeting the fact that I would initially meet a lot of the expenses of the business. I recall saying (in words to the effect): "I'm happy to meet the expenses of the business until we get established. I will use my credit cards and I will add you [sci;. Willy and Julius] as signatories to my business account [scil. my CBA Company Account]. I will also get you your own cards, so that you will be able to pay for expenses when I am not around … Of course, my card is only to be used to pay expenses relating to our business … Further, as the government rebate is to be paid into my business account, we'll have to sit down regularly and decide how to split the money." At the end of the meeting with Willy, Julius and myself signed the document that Julius had written up, and which recorded the details of our conversation and what we had agreed. Julius took that document and said to me (in words to the effect): "I have to go, sorry I can't stay for dinner. I'll take this [the signed document] and have it typed up and put into the proper form. We can then sign it." 1. At this point two observations should be made. First, Jack's diary says nothing about this meeting. Curiously, it contains an entry for that day (which is repeated in identical form over many days in the diary) which says "1 DAY FACTORY". Second, as noted in paragraph [36] above, Jack ultimately abandoned any reliance on a case which included a written version of the alleged partnership agreement. 2. Linda gave evidence to the effect that she first met Willy and Julius around August 2009 at South Sydney Juniors and that she recalled Jack, Willy and Julius "holding a private conversation while my sister (Lida) and I talked". In cross-examination she gave further evidence of a conversation she had with Julius on that occasion in the Club's smoking area. 3. Linda also gave evidence about what she described as a long meeting being held at her home in South Coogee on or about 28 September 2009 at which she and Lida were present. She said that she recalled translating into Farsi for Lida what was being said during the meeting because Lida did not speak English well. 4. Lida was not called to give evidence, although Jack gave evidence that they were still married and that she could have come to Court if required. Later evidence suggested she was in Iran at the time of the hearing. As the issues have fallen out she was not an essential witness and the Court declines to draw the Jones v Dunkel inference sought by Julius. 5. Jack also called a friend of his, Isaias Valencia. Mr Valencia was not required for cross-examination. 6. Mr Valencia said that he had met Willy on at least four occasions, each time in the presence of Jack. One of those occasions, in around August 2009 or September 2009, was at South Sydney Juniors where he saw Jack and Willy talking at a table. 7. Finally, Mr Valencia deposed that in or about September or October 2009 he had a conversation with Willy to the following effect: Willy: "I am starting a business with Jack installing solar panels on roofs and installing insulation in roofs." Mr Valencia: "Are you going to be doing anything else to make the jobs productive?" Willy: "Yes we are also going to design lifters to lift the solar panels and insulation batts onto the roofs of houses. We are also going to need to have a trailer that can carry all of the equipment". 1. Mr Valencia's evidence makes no mention of every seeing Julius. Nor does the conversation deposed to by Mr Valencia with Willy make any reference to Julius. 2. Jack also called another friend, Seema Doost. 3. Ms Doost deposed that she had met Willy on a few occasions through Jack. One such occasion was when she and her husband met Jack and his family for dinner and coffee at South Sydney Juniors when Willy was also present. 4. Ms Doost also deposed to conversations with Lida and Willy in September or October 2009. The conversation with Lida was said to be to the following effect: Lida: "Now that I am married in Australia, I would like to have a business here. That means that I have to go back to Iran to organise some money to invest in the business." Ms Doost: "What business are you going to invest in?" Lida: "Jack and Willy need some money for the business they are doing with installing insulation and solar panels. I am going to go in as partners with them." 1. The conversation Ms Doost said she had with Willy was to the effect that Willy said to her "If Lida wants to be a partner in the business with Jack, Julius and myself then she will need to learn English." 2. Ms Doost was cross-examined. She confirmed that she had never met or seen Julius before and that when she had met Willy with Jack "they said: "We're going to be partner together"". 3. In relation to those conversations the Court notes that in the first of them there is no mention of either Julius or the lifters, whereas in the second while Julius is mentioned as a partner, the extent of the business referred to is not specified. While the Court has concluded (see paragraph [156] below) that Jack, Willy and Julius were partners in the solar panel business, the conversation deposed to by Ms Doost with Willy does not assist in deciding whether the tripartite partnership went beyond the solar panel business. It should also be recalled that Ms Doost speaks of a dinner when Jack says the South Sydney Juniors meeting was a lunch. 4. Willy's evidence did not deal directly with the detail of Jack's evidence. However, notwithstanding Willy's formal admission of a tripartite partnership in relation to insulation and solar panels, his affidavit evidence made no reference to Julius being a partner in any business. Willy deposed that his business relationship with Jack came to an end in May 2010 when he had a confrontation with Jack because Jack "wanted money for my light-lifters, which is a service I designed and made which lifted solar panels onto a roof". 5. Because of both his language difficulties and his belligerent attitude to Jack, much of Willy's evidence in cross-examination and his oral submissions were difficult to follow. However, some matters were reasonably clear: 1. He agreed he had met with Jack at South Sydney Juniors to discuss their venture, but Julius was not present. 2. Jack did not lend him any money as his (Julius') share for the purchase of the insulation. However, Jack was to be paid back the funds he had provided for the purchase from the income of the insulation venture. Only then would the parties begin to share any profits equally. However, such equal sharing was Willy's expectation rather than something that had been discussed. 3. Willy admitted he had dined at Linda's unit with Jack but denied any meeting there where the business venture was discussed. Julius had not been present when he (Willy) had been at Linda's unit. 4. He adhered to his position that while Jack helped over a couple of days building lifters, the lifters were no part of his business arrangement with Jack. 1. Julius steadfastly denied being in attendance at South Sydney Juniors on 19 August 2009. He also denied Jack's version of the meeting at the Kurnell property which Jack said had occurred the next day. Finally, Julius denied being at any meeting at Linda's unit on 28 September 2009 or that any written partnership agreement every existed. 2. Julius admitted being put in funds by Jack in late August 2009 to purchase insulation from China. However, he said that he had done so at Jack's request because Jack had told him that he was about to go on holidays to New Zealand and would be unable to complete the purchase while he was away. 3. In relation to the establishment of the partnership, Julius' evidence was that in 2009 Willy told Julius that Jack was coming over to the Kurnell property to discuss Jack working together with Willy and Julius, Julius' evidence was that the following occurred in about August 2009: Jack Marzec came to my property at XXX Kurnell ("the Kurnell Property"). There was a brief discussion between Jack Marzec, my father and myself. Several things were agreed at this meeting including the following: (a) Due to Jack Marzec's poor English communication, I would do the quotes for ceiling insulation. (b) Jack and his friend Clint Lucas, would do the labour to install the batts in the ceiling cavity. (c) My father would provide the industrial vacuum cleaner, supply the trailers, one table-top truck and one van. The truck and van were jointly owned by myself and my father. (d) The Kurnell Property could be used to store the insulation batts in shipping containers. (e) Because of the expected delay in obtaining imported insulation batts in sufficient quantity, it was decided that we start "Get Solar Australia" (registered business) which was solar panel installations. I was the only accredited person for this work. Neither Jack nor my father had accreditation. 1. Under cross-examination Julius maintained his position that the arrangement in relation to the insulation business was not for profits to be split equally but for each of the participants to be remunerated by reference to what work each of them did. While admitting he had received $55,000 from Jack for the purchase of the insulation, Julius' evidence was that, after returning $10,000 to Jack at the latter's request just before his New Zealand holiday, Jack had told him to keep any unexpended balance as an advance against what work Julius might do in the future. 2. In relation to the solar panel business, Julius also said there was no arrangement for equally sharing profits, but that profits would have been divided in accordance with each parties' contribution of effort. But he also said he felt he was entitled to one-third of the profits. As for the lifters, Julius maintained in cross-examination that while his father had told him that Jack had provided some gratuitous labour over a couple of days in relation to the lifters, the lifter business was Lysiak Contracting's alone. Findings in relation to the formation of the partnership 1. As appears from the recitation of the parties' various versions of events, the events surrounding the formation of any business relationships ultimately fall to be decided by the Court accepting the word of one party against another. Unimpeachable contemporaneous written material and completely independent witnesses are in short supply. Both Mr Macauley and Mr Tiernan provided lengthy and detailed submissions pointing to every conceivable circumstance, some substantive and others (with no disrespect intended) more in the nature of straws in the wind, as to why their respective client's version of events should be preferred. Not without difficulty, the Court has ultimately come to firm conclusions on the essential findings of fact. The persuasive reasons for those findings are set out in what follows. While I have carefully and anxiously considered all of the detailed written submissions, no disrespect is intended to the industry of the legal representatives by my not setting out and determining every consideration upon which they relied. Apart from anything else, it would make what are already lengthy reasons even longer. The Court's findings in relation to the formation of the alleged partnership are as follows. 2. There was a meeting between Jack and Willy at South Sydney Juniors on 19 August 2009. Julius was not present. Neither Mr Valencia's nor Ms Doost's evidence supports the conclusion that Julius was at South Sydney Juniors on that day. Furthermore, there is a real possibility that Linda, while attempting to be truthful, confused meeting Julius at South Sydney Juniors on the occasion of Jack and Willy's meeting with the time she undoubtedly met Julius at the drinks after Lida and Jack's wedding. 3. There are two other reasons why the Court prefers Julius' evidence on this point over Jack's. 4. First, Jack's diary entry for 19 August 2009 "DISCUS BUSINES WITH WILLY" (sic) is inconsistent with Julius being in attendance at the meeting. If the entry was made prior to the meeting, then Willy did not tell Jack that Julius would be present. If he had, the probability is that Jack would have entered the meeting as being with both Willy and Julius. If, contrary to Jack's evidence, the entry was made after the meeting, then again it is to be expected that if Julius had been present the entry would have recorded this. 5. Second, Willy and Julius both accept that there was a meeting with Jack at the Kurnell property on 20 August 2009 at which business arrangements were discussed. Willy also accepts that he met with Jack the day before. Neither of them has any particular reason, in the light of those admissions, to maintain that Julius was not present at South Sydney Juniors if that was not the true position. 6. The only detailed evidence before the Court about what passed between Jack and Willy at South Sydney Juniors is Jack's account (see paragraph [95] above). Setting aside what the Court has found to be the erroneous suggestion that Julius was in attendance at the meeting, the Court accepts Jack's account, largely because it is consistent with what the Court finds took place the next day at the Kurnell property and with what in fact happened in the following months in terms of acquiring the insulation and setting up the solar panel business. 7. Four other significant matters emerge from the fact of the meeting at South Sydney Juniors. 8. First, as the Court has found, it was between Jack and Willy. This fortifies the Court in the conclusion to which it has come to (see paragraph [135] below) in relation to the meeting the next day at the Kurnell property that the partnership in relation to the insulation business was between Jack and Willy alone. They were the ones who had the longstanding personal connection with, in relation to that business at least, Julius playing only a secondary or assisting role. 9. Second, even on Jack's account there was no discussion of the lifters. 10. Third, there was no discussion in terms of Jack lending money to Willy (or Julius). It is far more plausible that Jack expressed himself, as he says, in terms of "putting in" the money. 11. Fourth, Willy's final words ("We will use that money to purchase the installation from China, which will get us started. Once we get the business going we can pay you back") expressed a term of the arrangement about which the Court has no doubt, namely that the proceeds of the insulation business would first be applied to whatever funds Jack had provided for the purchase of the insulation from China. 12. Jack, Willy and Julius met the next day (Thursday, 20 August 2009) at the Kurnell property. 13. The Court prefers Julius' version of events over Jack's. Thus, the Court finds the result of that discussion was that: 1. Due to Jack's less adequate English skills, Julius would do the quotes for ceiling insulation. 2. Jack and Mr Lucas would do the labour to install the batts in the ceiling cavity. 3. Willy would provide the industrial vacuum cleaner, supply the trailers, one table-top truck and one van. 4. The Kurnell property could be used to store the insulation batts in shipping containers. 5. Because of the expected delay in importing insulation, Jack, Willy and Julius would start to undertake solar panel installations, for which Julius as a qualified electrician would get accreditation. (The Court finds Julius was in error insofar as he suggested in evidence he was accredited at that time.) 1. The Court prefers Julius' version of events for two reasons. 2. First, it accords more with the probabilities in the following way. Jack and Julius had met the night before. Julius' recollection of events has more of the flavour of an occasion where the subject matter was the practical implementation of the proposal that had been discussed the day before by Jack and Willy. That type of meeting seems the more natural consequence of what had passed between them rather than a rehearsal of matters the two older men had discussed the previous day. 3. Second, having had the advantage of seeing all three protagonists in the witness box, I am left with the strong impression that Jack's accounts of the meetings, while not necessarily dishonest, are heavily laden with reconstruction based on his view of things after the event. Jack's account of his recollection of the meetings he says he attended with Jack and Willy is far too neat and covers off the various legal components of Jack's claim in an organised way that does not correlate at all with the impression which I formed of the parties. This is particularly the case in relation to the words which Jack attributes to Willy in circumstances where Jack maintained that these conversations were conducted in English rather than Polish. Having listened to Willy at some length in Court, Jack's account of the thorough and systematic way in which Willy is said to have addressed the various elements of their business arrangement does not, with respect, reflect the Willy who appeared before me. There is much force in Mr Tiernan's submission during final addresses that what these individuals had was not a partnership but rather a shambles. The Court has no doubt the initial meetings would also have had that character. To paraphrase Emmett J (see paragraph [30] above) I am unable to form a sense of actual persuasion that the conversation at the Kurnell property had the detail or precision for which Jack contends. 4. The Court makes two further findings about the meeting at the Kurnell property. First, because of Julius' better English skills, Jack asked Julius to order insulation from China for which Jack would provide the funds. Second, as Jack acknowledged in cross-examination (see paragraph [98] above), by the conclusion of this meeting the parties had still not discussed how any profits were to be provided. That fact accords with the Court's impression of the haphazard way this venture developed between the parties. 5. Finally, the Court does not accept that there was a meeting of the kind which Jack alleges occurred at Linda's unit on 28 September 2009. There are three reasons for that conclusion. 6. First, the reason set out in paragraph [138] above applies equally to the thorough and organised version of events which Jack alleges took place at this meeting. To this the Court adds the silence and inconsistency in Jack's diary as to this meeting (referred to in paragraph [102] above). 7. Second, Julius tendered in his case part of an affidavit filed and served in the proceedings sworn by Jack's solicitor on the record, Mr Russell Byrnes. Mr Byrnes was not required for cross-examination. The part of Mr Byrne's evidence that was tendered dealt with the meeting between the parties that took place on 24 June 2010 when they attempted to resolve the differences between them. Mr Byrnes' uncontradicted evidence is that he was told by each of the parties that they had no formal partnership agreement or shareholders agreement. 8. Third, requests by Jack's legal advisers for production of a document of the kind alleged to have been produced at the meeting did not yield any document in answer. 9. The conclusion expressed in paragraph [140] above necessarily means that I do not accept Jack's and Linda's evidence on this point. Jack has undoubtedly persuaded himself of his version of events. Linda is clearly a very close friend of Jack's as well as being his sister-in-law. I readily infer that they would have discussed these events on many occasions. Willy accepted that he had been at Linda's unit when Jack was there on a number of occasions. Jack and Linda's recollection in relation to this alleged meeting is in error. Application of legal principles to the facts as found 1. I gratefully adopt the summary of the relevant legal principles set out in the judgment of Ward J (as her Honour then was) in Walters v Scarborough [2011] NSWSC 1380, another case concerning an attempt to take advantage of the HIP: paras 260-266 260. How the parties may have described their business relationship (or their involvement in business) is not of itself determinative of the characterisation of that relationship ( Adam v Newbigging (1888) 13 App Cas 308 at 316; Weiner v Harris [1910] 1 KB 285 at 290). Hence the description by Mr Scarborough of himself as Mr Walters' business partner (even leaving aside his explanation of why that was done) would not of itself be conclusive. That must a fortiori be the case where, as here, there is little to suggest that the parties turned their minds, when they commenced discussing the importation of the ceiling batts, to how they were to document their arrangements in that regard. Indicia of partnership 261. The definition of partnership in s 1(1) of the Partnership Act 1982 (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 (s 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 (s 2(3)). 262. 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 is the leading feature of nearly every definition of the term" ( Lindley & Banks On Partnership (18th edn) at [2-07]). The learned authors go on to note (at [2-09]) that even where there is a genuine view of profit a partnership will only exist if the profits are intended to be realised for the common benefit of the participants, drawing a distinction with the position where the participants might enter into an association for the purpose of improving the individual profitability of each firm's business (citing an unreported decision of Dyson J in the Civil Division of the High Court in the UK in Brostoff v Clark Kenneth Leventhal , March 11,1996). (While it seems to me that it is not inconceivable that a partnership might be structured in order to produce separate benefits for the partners or their separate business interests, it also suggests that there might not be a common benefit (or a profit intended to be drawn from the partnership or venture as such) if what the parties here were contemplating was the joint importation of goods a portion of which would be separately sold or used by each in his own business with a view to making profit in that business. I do not suggest that this renders untenable a conclusion that there was a partnership or joint venture for the importation alone, but simply that it is a factor to take into consideration.) 263. Apart from the identifying feature of partnership being 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 Jackson Advertising Pty Ltd v Volume Sales (Finance) [1974] HCA 22; (1974) 131 CLR 321 at 327), United Dominion Corporation Ltd v Brian [1985] HCA 49; (1985) 157 CLR 1 and Industrial Equity Ltd 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. In Dollar Land (Cumbernauld) Ltd v CIN Properties Ltd (1996) S.L.T 186 (to which reference is made in Lindley & Banks at [2-11]), the potential key features of a partnership were noted by Lord Coulsfeld, sitting in the Inner House in Scotland, as being mutual agency; participation in profits; sharing of losses; common capital; and the basic unassignability of the partnership relationship. 264. While the sharing of losses during the term of the partnership does not appear to be an essential characteristic of a partnership (having regard to the definition and rules for which provision is made in the Act), the absence of any arrangement as to how costs are to be borne or losses shared may well be indicative of the existence or otherwise of a partnership. ( Lindley & Banks note, in a footnote to the discussion in [2-10] as to whether it is essential to a partnership that there be as an object the division of profits, the reported observation of Pumfrey J in Davies v Newman (2000) W.L.1841655, that it is of the essence of a partnership that both profits and losses are shared, but go on to express the view that under the UK legislation there is not a requirement that a partnership have as its object not only the acquisition but also the division of profits.) 265. I also note the observation in Lindley & Banks at [5-07] that: ... Although partnerships and joint ventures obviously have a number of common characteristics, in some instances the two expressions appear to be used interchangeably, whilst in others the joint venture is recognised as a relationship quite separate and distinct from partnership. In the current editor's view, whilst it can properly be said that all partnerships involve a joint venture, the converse proposition manifestly does not hold good. [reference being made to Spree Engineering and Testing Ltd v O'Rourke Civil and Structural Engineering Ltd May 18, 1999, NLC 299058403] ... it cannot be assumed that the participants in a transaction described as a joint venture do not each intend to carry on their own separate businesses [referring to share farming and oil exploration ventures by way of example] (my emphasis) 266. I note that (in the absence of any written agreement defining the relationship when the parties), the intention of the parties must be objectively ascertained from their words and conduct. What is important in this regard is the substance of the transaction (Canny). 1. On the basis of the facts as found in paragraphs [123] to [144] above, the Court concludes (quite apart from Willy's admission referred to in paragraph [17] above) that Jack and Willy agreed to carry on business in common with a view of profit in relation to the insulation. Accordingly, in accordance with s 1(1) of the Partnership Act 1892 (NSW) (the "Act"), a partnership existed between them in relation to the insulation (the "Insulation Partnership"). The question of the terms of that partnership is considered further in paragraph [153] below. 2. However, the Court is not satisfied that the Insulation Partnership was carried on as a business with a view of profit in common with Julius. Julius' role was not that of a partner but rather someone who was working for the Insulation Partnership comprising of his own father and Jack as a longstanding acquaintance or friend of his father's. This is shown by the division of tasks at, and what occurred during and after, the meeting at the Kurnell property on 20 August 2009. At that time, Willy had already proposed the Insulation Partnership to Jack the night before at South Sydney Juniors. The implementation of that partnership was worked out between them with Julius the next day at the Kurnell property. 3. In reaching this conclusion I have not overlooked three matters heavily relied upon by Jack. 4. The first of these was that if (as is found in paragraph [156] below) there was a tripartite partnership in relation to the solar panels, the existence of such a partnership supported the conclusion that Julius was a partner in the Insulation Partnership. I do not agree. As someone who had or was to obtain appropriate accreditation to install the solar panels, Julius was clearly intended to, and did in fact have, a much more integral role in relation to the solar panels than he did in the Insulation Partnership. While his skills were useful and utilised from time to time in the Insulation Partnership, Julius was far more a "key man" in relation to the solar panels than the insulation. 5. Second, it was submitted for Jack that Julius had to be a member of the Insulation Partnership because it was ridiculous to think that he would undertake the various tasks assigned to him without any idea of what or how he was to be remunerated. This submission was fortified by pouring scorn on Julius' evidence that Jack had told Julius that the latter could keep whatever was left from the $55,000 which Jack provided to Julius to pay for insulation on account of services rendered and to be rendered by Julius to the Insulation Partnership. It is not necessary for the Court to make a finding as to whether Jack ever said this (see further paragraphs [164] below). 6. I do not accept this second reason. Assuming in Jack's favour that he never said Julius could keep any remaining balance of the $55,000, it does not automatically follow that because there was no discussion of Julius' remuneration for services to be rendered that he was therefore intended to be a partner to share in the profits. This is especially the case where by the end of the meeting at the Kurnell property there had been no discussion about the division of profits. The Court finds it far more accords with the probabilities that Julius was taking the question of his ultimate reward on trust, not least because one of his partners was his own father with whom he was used to working as a co-director of Lysiak Contracting. The arrangements had far more of a "family and friends" character than an arm's length commercial transaction. Furthermore, the failure to address something as apparently basic as how Julius was to be remunerated is entirely in accord with what the Court is well satisfied was the haphazard way in which the business relationship between the parties began and proceeded. Furthermore, as I find below, as a partner in relation to the solar panels, which was intended to get underway in anticipation of the arrival of the insulation from China, Julius may well have expected some income to start flowing to him from that. On any view, the three protagonists were clearly confident that the Insulation Partnership would be profitable and Julius trusted and expected that he would be remunerated for his contribution. 7. The third matter was Julius' access to Jack's and JMBS's debit and credit cards in relation to the Insulation Partnership. I regard this fact as neutral. It is equally consistent with Julius being a partner in or merely providing services to the Insulation Partnership. 8. Insofar as the terms of the Insulation Partnership are concerned, the Court is satisfied that an essential term was that, to the extent that Jack funded the acquisition of the insulation, the income derived from the Insulation Partnership was first to be applied to repay Jack whatever he had advanced to buy the insulation (see further paragraphs [158] to [161] below). He was "putting in" that money on the understanding that he would be getting it back before either he or Willy saw any profits from the Insulation Partnership. 9. However, the Court is equally satisfied that those funds advanced by Jack were in no sense a loan to Willy. Furthermore, neither Jack nor Willy gave any thought to what would happen if the income of the Insulation Partnership did not exceed what Jack had provided to pay for the insulation. There is no evidence on which to find that Jack was intended to or would in fact have any recourse against Willy for any such a deficit. Jack knew that Willy had no money other than what he might otherwise derive as profits from the Insulation Partnership. In effect, Jack was taking the risk that the income of the Insulation Partnership would not meet the amount of his advances for the insulation but his countervailing security and reward for that risk was first call on the income of the Insulation Partnership before any benefit would enure to Willy. 10. While the topic of how any profits after repayment of Jack's insulation advance were to be divided was not expressly discussed between Jack and Willy, Willy conceded that he expected and understood that any such profits would be shared equally with Jack. Subject to the requirement for first repayment of Jack's funding of the insulation, the Court finds that the conduct of the Insulation Partnership would otherwise be determined in accordance with the Act, Jack and Willy having not provided otherwise. 11. Insofar as the solar panels are concerned, Mr Tiernan correctly and properly accepted that it was more difficult for Julius to resist the conclusion that he was a partner with Jack and Willy in relation to the solar panel business (the "Solar Panel Partnership"). That is apparent from the outcome of the 28 September 2009 meeting at the Kurnell property. It is put beyond doubt by the registration of the business name "Get Solar Australia" of which all three were registered as proprietors and the opening of a bank account for "Get Solar Australia" of which all three were signatories. Julius ultimately accepted that he expected to receive one third of the profits from "Get Solar Australia". There is no suggestion that any special terms were agreed between the protagonists in relation to the operation of the Solar Panel Partnership, so it is otherwise governed by the Act. 12. The final fundamental question for determination is whether or not the lifters were included in either the Insulation Partnership or the Solar Panel Partnership. They were not. They were the business of Lysiak Contracting. The solar lifters were not the subject of the discussions at South Sydney Juniors or the Kurnell property as found by the Court. The Court accepts that Jack may have advanced funds to Willy or Julius that were used for the solar lifters and that he and Mr Lucas provided some assistance in relation to the construction of some of them. However, the explanation for this is to be found in Jack's being at the Kurnell property in relation to the Insulation Partnership and the Solar Panel Partnership rather than Jack having any interest in the lifters. In reaching this conclusion the Court has not overlooked Mr Valencia's evidence (see paragraph [108] above). However, the weight of the evidence is against the lifters being part of any partnership. Accounting – Jack's insulation advance 1. For the purposes of accounting in relation to the Insulation Partnership, there is a question as to the precise amount advanced by Jack to purchase insulation. The parties agreed that there were only ever two shipments of insulation from China and the key documents in relation to those shipments were belatedly provided by Julius. 2. The Court finds that the following payments have been clearly proven: Date Amount Comments 3 Sept 09 $16,012.09 This is the Westpac telegraphic transfer of US$13,189.16 being one-third of the price quoted in Jiangsu Sainty's proforma invoice and derived from the $55,000 Jack provided to Julius: see paragraphs [62] and [63] above. 23 Oct 09 $12,273.09 This is the first ANZ telegraphic transfer of US$11,168.77 to Jaingsu Sainty arranged by Jack using funds sourced from Lida: see paragraphs [70] above. 29 Oct 09 $12,649.09 This is the second ANZ telegraphic transfer of US$11,168.65 to Jaingsu Sainty arranged by Jack using funds sourced from Lida: see paragraph [72] above. 1 Dec 09 $12,250.14 This is the payment by JMBS of the customs broker's invoice for the first shipment of insulation: see paragraph [77] above. 3 Feb 10 $23,805.06 This is the payment by JMBS of the customs broker's invoice from the second shipment of insulation: see paragraph [79] above. Total $76,989.47 1. The difficulty is that the two invoices (i.e. not including the proforma invoice which was obviously overtaken by the two actual invoices) issued by Jiangsu Sainty total US$49,769.23 (see paragraphs [68] and [71] above). However, the total of the US dollar amounts paid (see the comments section in the table above) is US$35,526.58. In terms of the documentary evidence there is a lacuna of US$14,242.65. However, there was absolutely no suggestion in the evidence that the insulation was not fully paid for. Equally, there can be no doubt that the only source for any such payment was Jack. The question therefore becomes whether that difference was paid for by Julius from the $55,000 provided to him by Jack for that purpose or by Jack from some other source. 2. For the purposes of the ultimate accounting and for making final orders in these proceedings, the Court finds that Jack did indeed pay the balance of US$14,242.65. Furthermore, it finds that this payment was made at least in part by the application of the $13,950 withdrawn by Julius on 13 October 2009 from the funds provided to him by Jack for the purchase of insulation (see paragraph [69] above) and which Julius said he used for that purpose. Accounting – other funds advanced to the Insulation Partnership by Jack 1. Jack undoubtedly put other funds into the Insulation Partnership. However, the Court is not satisfied that the arrangement between Jack and Willy giving Jack a right to first repayment of Jack's insulation advance extended to any other moneys advanced to the Insulation Partnership by Jack. At the time the Insulation Partnership came into existence the parties' attention was focused on Jack funding the acquisition of the insulation. Insofar as Jack advanced additional moneys to the Insulation Partnership the Court finds they constituted a capital contribution by Jack to be treated in accordance with the provisions of the Act. Accounting – the balance of the money Jack gave Julius 1. The Court has found that Jack advanced Julius $55,000 on 28 August 2009 to be applied by Julius to purchase insulation batts (see paragraph [59] above). Julius did apply $29,962.09 to that purpose (being the sum of the amounts referred to in paragraphs [63] and [69] above). This leaves a balance of $25,037.91. 2. Even if the Court were to accept Julius' evidence that Jack had told him that he could apply the available balance toward services Julius was rendering to the Insulation Partnership, it would be of no present assistance to Julius. Beyond only general assertions of what he did, Julius has brought no evidence of the hours he spent working, what he did and what it might be worth. He has raised no defence by way of an estoppel (for example, to the effect that he undertook work in detrimental reliance upon Jack's representation that he (Julius) would be entitled to keep that balance). Nor has Julius brought a cross-claim in quantum meruit for work done. 3. The evidence from Julius' bank statements is that he or his wife (it was a joint account) spent the balance of the $55,000 provided to him by Jack on personal expenses. Julius must repay Jack the balance of $25,037.91 as money had and received. Accounting – remaining assets 1. To the extent that either partnership owned any assets as at 29 June 2010 (the date the Court finds the partnership ended) such as insulation, Jack has not established those assets had any value. There is therefore no need on any accounting to take remaining assets into account. $10,000 from Linda 1. Jack alleged that at the 28 September 2009 meeting at Linda's unit, Linda agreed and did in fact lend $10,000 in cash. There was an issue between the parties as to whether this was a loan to Jack or to the partners in the Insulation Partnership. 2. It is not necessary for the Court to make any finding about these matters. The proceedings were conducted on the basis that there are no external creditors to the Insulation Partnership. It therefore is irrelevant whether Linda advanced the money to Jack alone or to the Insulation Partnership. Jack's case was that the loan had been repaid to Linda. She agreed. 3. The only question therefore is the extent to which Jack is able to demonstrate that he applied any of those funds towards partnership expenses. To the extent he did, then those advances are to be treated as contributions of capital by him. $50,000 from Lida 1. Jack alleged that a $50,000 loan from Lida also arose from the meeting on 28 September 2009 at Linda's unit. 2. Again, it is unnecessary for the Court to characterise this arrangement precisely. It is clear from the various bank statements tendered by Jack that there was an advance from Lida that was used to fund the two ANZ telegraphic transfers made in October 2009 to Jiangsu Sainty which totalled $24,922.18 (see paragraphs [70] and [72] above). Those amounts form part of Jack's insulation advance repayable out of the income of the Insulation Partnership before any question of division of profits between Jack and Willy arises, in accordance with the term identified in paragraph [153] above. The alleged personal loans to Willy and Julius 1. In his verified statement of claim filed on 6 May 2013 Jack alleged that between 8 September 2009 and 27 June 2010 he had advanced $61,000 in cash to Julius by 61 individual withdrawals of $1,000 each made by Jack from his Citibank Visa credit card. However, in paragraph 99 of his principal affidavit sworn on 23 September 2013, Jack gave a more nuanced account saying that, by reference to the Logbook, the loans were in fact as follows: 1. $22,000 to Julius between 8 September 2009 and 21 October 2009, with each entry recorded in the Logbook as "loan to Julius to help manage finance problem". Some of these withdrawals were on consecutive days (e.g. 17 and 18 September 2009; 24, 25, 26 September 2009; 18, 19, 20, 21 October 2009). 2. $14,000 to Willy between 27 October 2009 and 27 November 2009 with each entry recorded (with inconsequential variations) in the Logbook as "Loan to Willy Lysiak to help manage finance problem". Again, a number of these withdrawals were on consecutive days. 3. The balance of $25,000 comprising: 1. $1,000 on 22 October 2009 with a narrative in the Logbook that refers to neither Willy nor Julius. 2. $2,000 (11 November 2009 and 28 February 2010) which appear in Jack's credit card statement but not in his Logbook (as to which the Court infers Jack missed these when preparing the Logbook). 3. $2,000 (25 and 26 November 2009) recorded in the Logbook but with no narrative as to the recipient. 4. A further $20,000 between 28 November 2009 and 27 June 2010 recorded in the Logbook but with no narrative as to the recipient. 1. The fact of the withdrawals has been proved by Jack's credit card statements, including the date and location. Most were made from an ATM at Maroubra Junction, which Jack explained in his evidence was the closest ATM to Linda's south Coogee unit, where he often stayed. Other withdrawals were made in various locations, including Nowra. 2. Jack's affidavit evidence was: Almost immediately after I came back from holiday in New Zealand, Julius approached me on 8 September 2009 asking (in words to the effect): "Jack can I borrow some money? I have got outstanding money payable on the home loan and I'm going to lose the house if I don't start making payments." I agreed and withdrew $1,000 cash using my Citibank credit card. Similar requests continued until June 2010, with Willy asking me during this period to borrow money because of personal finance problems. On each occasion Willy or Julius would ask me for money they said (in words to the effect: "Jack I need some money to pay these overdue phone bills" Or "Jack I need some money to pay these water rates" or "Jack can I borrow some money to pay my apprentice." Each time I went and withdrew $1,000 cash using my Citibank credit card. I recorded each of these loans as they occurred in my Bank Transaction Logbook. Altogether I lent Willy and Julius $61,000 by making $1,000 withdrawals using my Citibank credit card during 8 September 2009 to 27 June 2010. 1. Willy and Julius denied receiving any such advances from Jack. 2. In circumstances where Jack himself says he cannot recall to whom he allegedly gave $25,000 of the advances, the Court is unable to find either Willy or Julius liable for those amounts. 3. In relation to the specific claims of $22,000 against Julius and $14,000 against Willy, the Court is unable, in the face of their denials, to feel an actual persuasion (see Emmett J quoted in paragraph [30] above) so as to be able to find on the balance of probabilities that each and every one of those payments was made as Jack alleges. It is possible that some money may have been given to Willy or Julius but the Court cannot be satisfied which payments and to whom. It is equally plausible that, as Mr Tiernan submitted, Jack habitually made $1,000 withdrawals for his own purposes. 4. The reasons for the Court's conclusions expressed in the preceding paragraph are: 1. Jack did not strike me as being either naïve or profligate. The fact that he should continue over a period of nine months – including when it was apparent that the business ventures between the protagonists were clearly hopeless – simply hand over wads of $1,000 in cash in response to non-specific requests for funds strikes me as highly improbable. This is all the more so when, on Jack's case, he had already lent each of Willy and Julius $30,000 for insulation. Jack accepted in cross-examination that he knew from as early as mid-September 2009 that Willy and Julius could not repay him other than from income they earned from the insulation. Jack also accepted in cross-examination (see paragraph [82] above) that when the Government terminated the HIP on 19 February 2010 the financial position of the venture was very bad and that everything depended on the money he advanced. It is inconceivable in those circumstances that he should have continued, on his case, to have made such advances to Willy and Julius. 2. Mr Macauley submitted that Jack's specific claims were made more plausible by his acceptance that there was no record upon which he could rely where there was no narrative provided in his Logbook. On the contrary, the fact that a large part of the claim is not particularised in the Logbook gives rise to real doubt in the Court's mind as to the validity of this claim. That is because Jack's own evidence was that the Logbook was prepared by him in July 2010 on the advice of his solicitor with (quoting Jack's principal affidavit) "as much detail about each of the loans or expenses as I remembered, and which my bank statements or my personal diary contained". No explanation was offered by Jack as to why he was able to attribute in his Logbook the loans during 2009 to Julius and then Willy but (accepting his evidence that the Logbook was created in or around July 2010) was unable to recall the reason for alleged advances as late as 28 May 2010 or 28 June 2010. 3. Related to the previous point is a troubling anomaly in relation to the Logbook. As the Court has just recorded, Jack said that he created the Logbook in or around July 2010. However, in his evidence about the $1,000 cash advances (set out in paragraph [174] above) he said that he "recorded each of these loans as they occurred in my bank transaction Logbook". This obvious inconsistency was not put to Jack in cross-examination. However, assuming in Jack's favour that the latter statement was an error on his part, it is a type of error which fortifies the Court's concerns that Jack had a predisposition to assert contemporaneity when in fact his evidence (in this case the Logbook) was a reconstruction (as Jack had quite properly explained). 4. Jack's diary entries, such as they are, make the position more doubtful, not least because (with two exceptions) there are no references to the $1,000 credit card withdrawals. This is completely inconsistent with Jack's assertion of his daily use of his diary to record matters. The diary says nothing of any withdrawals in the period 8 September 2009 to 8 October 2009 or from 28 November 2009 to June 2010. Between 8 October 2009 and 27 November 2009 there are two $1,000 references, one for $1,100 and four apparently cumulative sub-totals ($5,000, $3,000, $4,200 and $5,150) all of which total $20,450. However, the cumulative sub-totals do not always appear to reconcile with preceding $1,000 payments and the Court cannot be certain they were not after the event reconciliations. Furthermore, Jack's attempts at reconciliation which appear in the last pages of the 2009 diary do not capture the vast majority of the alleged $1,000 payments. On any view, $40,550 of the $61,000 is not referred to anywhere in Jack's diary, nor is $15,550 of the $36,000 which Jack definitively claims from Willy and Julius. 5. As has been observed, many of the withdrawals are on consecutive or closely connected days. Again it seems to the Court highly improbable that if Julius or Willy wanted money, they should be asking for it in daily amounts apparently unrelated to specific amounts required to be paid. Although Jack referred in cross-examination to Julius wanting more than $1,000 from time to time so that the daily $1,000 ATM limit meant multiple daily withdrawals were required, there is no suggestion in Jack's affidavit evidence or his diary or the Logbook that, for example, there were specific requests for an amount of say, $3,000 which were only able to be met by three $1,000 withdrawals over three days due to the limit on ATM withdrawals. The examples he proffered in evidence (see paragraph [174] above) did not suggest large amounts. 6. Mr Tiernan drew attention to various bank statements in evidence which demonstrated that by the end of September 2009 $13,000 cash in $1,000 tranches had been withdrawn with the Citibank credit card, but on 22 September 2009 $1,900 cash was deposited into JMBS's CBA account and $11,500 cash was deposited into JMBS's CBA account on 1 October 2009. It was also drawn to attention that on 30 March 2010 the bank statements showed that Jack withdrew $1,000 from the JMBS ANZ account and deposited it directly into Linda's ANZ account. Mr Macauley submitted these transactions were nothing more than coincidences. However, I am of the view that those events support Mr Tiernan's submission that Jack habitually made $1,000 withdrawals and that Jack may have used some of them for his own purposes. 7. Jack sought to demonstrate by reference to various of Julius' accounts that were in evidence that Julius was in very poor financial circumstances at the time of the advances allegedly made to him. Those accounts certainly demonstrate that. However, it is very odd that there are no deposits into any of those accounts referable to a date on or around when Jack made the withdrawals with his Citibank credit card that he said he passed on to Julius. The Court accepts Mr Tiernan's submissions that one could expect at least some of the alleged advances to have found their way into one of Julius' accounts. Furthermore, Julius gave evidence that around the time of the alleged advances he was able to sell some assets to provide cash before he took out a personal loan of $30,000 on 29 December 2009 (being two months after the last advance Jack was able to allege he made to Julius). The fact of the personal loan was proven by Julius' bank statements. Other cash payments or receipts 1. Consistently with the view expressed in paragraphs [46] and [47] above, in the absence of either an admission by the recipient or a bank statement verifying the receipt by the recipient of any cash amount which one of the protagonists alleges he paid to or was received by another protagonist, the Court is not satisfied of that fact on the balance of probabilities. This finding extends, for example, to the $10,000 which Julius alleges he paid to Jack at Jack's request before Jack went on holidays to New Zealand, the $5,000 which Jack said he gave to Julius in cash at the start of the venture and the $1,000 which Jack alleges he loaned in cash to Julius on 28 August 2009. Expenses and withdrawals made from JMBS' CBA account 1. Each of the protagonists had a debit card linked to JMBS' CBA account. 2. Willy admitted responsibility for transactions with his debit card totalling $4,521.48. He did not suggest that any of those expenses were to be related to either the Insulation Partnership or the Solar Panel Partnership rather than being in the nature of personal advances. The Court finds Willy is liable for that amount. 3. By reference to bank records Jack was able to demonstrate that Julius' debit card had been used for expenses totalling $2,497.66 and cash withdrawals totalling $1,110. Under cross-examination Julius admitted using this debit card to meet an expense of $806 at the RTA at Miranda and conceded he may have been responsible for a number of other transactions. 4. The Court has no difficulty drawing an inference that Julius was responsible for all of the amounts on that debit card, totalling $3,507.66. Julius was also unable to demonstrate that any of those expenses were attributable to either the Insulation Partnership or the Solar Panel Partnership and is liable accordingly. 5. While the Court initially had some doubt, the Court is satisfied that JMBS and Lysiak Contracting were not themselves parties to any partnership but were mere conduits in the relationship between the protagonists. However, Willy and Julius' liability in relation to the debit cards must be to JMBS as the money came from its account. However, JMBS is not a party to these proceedings. The Court is prepared to make orders for payments in favour of JMBS as though it were a party or, if Willy and Julius do not agree to this course, will permit an amendment to the proceedings to join JMBS as a plaintiff claiming those amounts. Westpac credit card expenses 1. Jack also gave Willy and Julius access to his Westpac credit card and identified $12,169.96 of expenses on that card for which he said he was not responsible and which were not referable to any partnership. 2. Willy accepted that he was responsible for two transactions totalling $1,070.51. He is personally liable to Jack accordingly. 3. Julius admitted that he was responsible for two transactions totalling $1,987.82. In addition to that amount, the Court accepts the submission set out in paragraph 103 of Jack's Outline of Closing Submissions of the Plaintiff dated 1 October 2014 ("Jack's Outline") that Julius is also liable to Jack for an additional $909.31 for transactions incurred on Jack's Westpac credit card. Jack's Citibank credit card 1. Willy used Jack's Citibank credit card to pay for a plane ticket and associated travel package costing $2,160.06 for a trip to China. The Court accepts Willy's evidence that the trip was undertaken in connection with the Insulation Partnership on the basis that Willy's evidence is inherently probable because the insulation was being obtained from China. Accordingly, the advance should be treated as part of the capital contributed by Jack to the Insulation Partnership and the trip treated as an expense of the Insulation Partnership. Amounts received by Lysiak Contracting 1. The Court accepts Jack's submissions set out in paragraphs 109 to 114 (inclusive) of Jack's Outline that a payment received by Lysiak Contracting on 8 April 2010 of $2,400 is referable to the Insulation Partnership and four other receipts by Lysiak Contracting totalling $22,781.27 are referable to the Solar Panel Partnership. While those amounts were received by Lysiak Contracting, as directors of that company Willy (in the case of the Insulation Partnership) and Willy and Julius (in relation to the Solar Panel Partnership) are liable for those respective amounts for the purposes of calculating the income of the Insulation Partnership and the Solar Panel Partnership respectively. Drawings by Julius from the Solar Panel Partnership 1. For the purposes of the accounting in relation to the Solar Panel Partnership, the Court accepts the submissions in paragraph 118 A to C of Jack's Outline that Julius received advances totalling $1,355.65. However, conformably with the view that the Court has taken about disputed cash receipts (see paragraphs [46] and [47] above) the Court is not satisfied that Julius is responsible for the three $1,000 withdrawals referred to in paragraph 118D of Jack's Outline in respect of which Julius denied liability in cross-examination. Next steps 1. Subject to any submissions which the parties may wish to make, the Court proposes to make directions for the parties to complete the accounting exercise and otherwise bring in orders to give effect to these reasons. Insofar as any matters may remain in dispute between the parties as to how that should be done, provision will be made for those matters to be identified with precision and brief written submissions provided in support of the respective positions. 2. In regard to the exercise upon which the parties must now embark, with the assistance of their legal advisers in the case of Jack and Julius, the Court respectfully urges them to adopt a pragmatic and commercial approach for at least three reasons. 3. First, the parties and their legal advisers are bound by s 56 of the Civil Procedure Act 2005 (NSW) to facilitate the process of ensuring the just, quick and cheap resolution of the real issues in the proceedings. 4. Second, the represented parties will have incurred considerable costs in a hearing which was initially estimated for two days but ran for five and generated extensive written submissions. While the amounts involved are undoubtedly and understandably significant to the parties, they are relatively small in terms of both the financial and emotional costs of litigation. The proceedings could have been brought in the District Court. 5. Third, the Court will in due course hear submissions as to costs. The fact that the proceedings could have been brought in the District Court may have an impact on costs. Furthermore, without in any way prejudging the issue and in ignorance of what, if any, offers may have passed between the parties, the Court observes that there is a real possibility that the end result will be no order as to costs to the intent that each pays his own costs on the basis that each has enjoyed a significant measure of success. ********** 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. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 May 2015