Eden Construction Pty Ltd and Cesare Filardo v State of New South Wales

[2010] ACTSC 96

EDEN CONSTRUCTION PTY LTD and CESARE FILARDO v STATE OF NEW SOUTH WALES [2010] ACTSC 96 (27 July 2010)

PROCEDURE – application to add partnership as plaintiff in action – evidence of existence of partnership inadequate – application refused.

EX TEMPORE JUDGMENT

Business Names Act 1963 (ACT), s 5
Partnership Act 1963 (ACT), s 6
Partnership Act1892 (NSW)
Court Procedures Rules 2006 (ACT), r 285, r 286(1) and r 286(3)

Baxt, Bialkower and Morgan, Guidebook to Partnership Law (CCH Australia, 2^nd ed., 1984)

No. SC 750 of 2008

Judge:             Penfold J
Supreme Court of the ACT

Date:              27 July 2010

IN THE SUPREME COURT OF THE     )
  )          No. SC 750 of 2008
AUSTRALIAN CAPITAL TERRITORY           )          

EDEN CONSTRUCTION PTY LTD
  (ACN 054 090 372)

First plaintiff

CESARE FILARDO

Second plaintiff

v

STATE OF NEW SOUTH WALES

Defendant

ORDER

Judge:  Penfold J
Date:  27 July 2010
Place:  Canberra

THE COURT ORDERED THAT:

1. The application to add “Ces and Maggie Filardo trading as C & M Civil Contractors” as a plaintiff in this action is refused.

Background

1. [By consent orders made on 1 February 2010, the action by the first plaintiff (Eden Construction Pty Ltd) was dismissed.

1. An application was made by the second plaintiff, Cesare Filardo, the Managing Director of Eden Construction, to add “Ces and Maggie Filardo trading as C & M Civil Contractors” as a plaintiff in this action.  This reflects a claim made by Mr Filardo that the cause of action originally pleaded by Eden Construction and dismissed against that plaintiff can be made out by a partnership called C & M Civil Contractors.

1. The application was refused in the course of argument on 26 July 2010. The next morning, Mr Filardo sought to re-agitate the application. Counsel for the respondent asked me to provide a judgment if the application was, in effect, refused again].

The law

1. The starting point of my consideration of this application is the Court Procedures Rules 2006 (ACT). Rule 285 defines “partnership proceeding”. Rule 286(1) says, “Two or more partners may start a proceeding in the partnership name”, and r 286(3) says “The partnership name used in a partnership proceeding must be the name of the partnership when the cause of action arose”.

1. The Rules then define “partnership” (in the Dictionary) by referring to the Partnership Act 1963 (ACT), and that’s what I’m going to rely on at this stage, but my reading is that the ACT Act is relevantly identical to the New South Wales Partnership Act 1892 which presumably would have been relevant if there were a partnership established by Mr Filardo and his wife.

1. The definition of a “partnership” at s 6 of the Partnership Act is:

a partnership is the relation between people carrying on a business in common with a view of profit and includes an incorporated limited partnership.

1. The reference to an incorporated limited partnership is not relevant in this case.  The Partnership Act then goes on to set out a list of matters, in particular activities, relationships and other matters which do not, of themselves, demonstrate that a partnership is in existence or indeed do not create a partnership. 

1. The question in this case is whether there is a partnership such that that partnership could institute proceedings under the ACT Court Procedures Rules. 

The evidence

1. What I have in front of me, as evidence of this partnership, is two letters [sent to other businesses involved in the events giving rise to these claims] with letterhead, which I note don’t purport to mention the name of any partners; they simply mention a business name.  Those letters do not mention either Mr or Mrs Filardo by name but are simply headed “C & M Civil Contractors” with an address in the ACT.  I also have material in a number of affidavits (for example, the affidavit of Maggie Filardo affirmed on 1 June 2010 that contains the statement, “My husband and I formed a partnership/firm in the name of C & M Civil Contractors”). 

1. The two letters, it seems to me, cannot by themselves, possibly not even with other documents, be evidence of the creation of a partnership in any way.  Among other things they do not provide any link between the business name used at the top of the page and the people who are now claiming to be the partners in a partnership of that name.  What they do do, and this is not directly relevant to my conclusions, but is worth noting, is that they appear to indicate a possible breach of the applicable business names legislation.  Again, I rely on the ACT legislation on the assumption that the New South Wales legislation, which was presumably relevant, is similar. 

1. Section 5 of the Business Names Act 1963 (ACT) says:

A person must not alone, or with anyone else, carry on business in the ACT under a business name if –

(a)    the business name is not registered under this Act for each person carrying on the business. 

1. Now, what is at the top of the letters, at most, is a business name and there is, as I’ve already indicated, no evidence before me that that business name has ever been registered, let alone that it’s ever been registered as belonging to a partnership. 

1. The affidavits that I mentioned – I’ve quoted the contents of one of those affidavits and my recollection is that there are others where similar statements, but similarly non-specific statements, have been allowed to remain in evidence – simply do not provide any information about any of the matters that provide the elements of the partnership.  They do not indicate a business was to be carried on.  There is no indication of the nature of the relationship, and in particular the “in common” element, and there’s no evidence of the intention of “for profit” (except so far as that could have been inferred from some of the comments in other affidavits which have in fact been struck out, about the reasons for using the business name, and indeed, about the reasons for purporting to be operating as some sort of partnership).

Evidencing a partnership

1. It is true that there is no requirement in the law that a partnership must be in writing, but there is a requirement to evidence the partnership, or rather, to evidence the partnership agreement.  In the absence of anything in writing giving any sort of indication of the operations of the partnership, it would be necessary to provide reasonably substantial evidence of the activities of the partners and how they reflect an agreement to form a partnership.

1. I refer to a brief passage from Baxt, Bialkower and Morgan, Guidebook to Partnership Law (CCH Australia, 2^nd ed., 1984).  That textbook says, at page 44:

An agreement may be evidenced by a course of dealings, or a combination of some writing and some other form of activity.  Of course the writing will be an important factor in determining whether a partnership does exist and what are the terms of the partnership...  [T]he court will look at more than the mere writing used by the persons concerned in specific cases.

Indeed, sometimes the court will ignore the writing to look at other factors in determining whether a partnership exists, and to what extent the persons concerned are being bound by the formalities of a partnership.  Clearly, the more specific and detailed the writing, the less likely are the persons concerned to be faced with difficult and expensive partnership disputes. 

The need for writing, especially if tax or other advantages are to be sought in a partnership arrangement, cannot be overemphasised.

Conclusion

1. Where that takes me is that there is simply no basis on which I could find that a partnership exists of the sort that would be recognised under partnership legislation and therefore of the sort which could be recognised under the Court Procedures Rules as a party, indeed as a plaintiff, in litigation in this Territory.

Order

1. Accordingly, the application that was made and dealt with yesterday, and sought to be revived this morning, is refused, and I will not entertain any further argument that that application should be reconsidered.

   I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of her Honour, Justice Penfold.

   Associate:

   Date: 7 September 2010

Counsel for the second plaintiff:                   Self represented
Counsel for the defendant:  Mr R Hunt
Solicitor for the defendant:  Bartier Perry Solicitors
Date of hearing:  27 July 2010
Date of judgment:  27 July 2010