Feridun Akcan v Gabriel Cross

[2013] NSWSC 802

Supreme Court

New South Wales

Medium Neutral Citation:	Feridun Akcan v Gabriel Cross [2013] NSWSC 802
Hearing dates:	11-22 March 2013 and 9-10 April 2013
Decision date:	12 June 2013
Jurisdiction:	Equity Division
Before:	Rein J
Decision:	Partnership between the plaintiff and the defendants established. Plaintiff is entitled to one third of the of the net partnership profits from the commencement of the partnership to 30 June 2010, but subject to adjustment for unpaid wages.
Catchwords:	PARTNERSHIP - whether the plaintiff was a one third partner with the defendants - whether the partnership terminated - quantum of profit share
Legislation Cited:	Evidence Act 1995 (NSW)
Cases Cited:	In Re Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1; (1983) 44 ALR 607; (1983) 70 FLR 447; (1983) 83 ATC 4015; (1983) 13 ATR 825 Bales & Anor v Mills [2011] NSWCA 226; (2011) 81 NSWLR 498; (2011) 282 ALR 336 Birtchnell v Equity Trustees Executors and Agency Co Ltd (1929) 42 CLR 384; [1929] ALR 273; (1929) 3 ALJR 236 Browne v Dunn (1893) 6 R 67 Chan v Zachariah (1984) 154 CLR 178; (1984) 53 ALR 417; (1984) 58 ALJR 353; [1984] HCA 36 Pearce v Lindsay (1860) 3 De GJ & Sm 139, 46 ER 591 Petelin v Cullen (1975) 132 CLR 335 Pooley v Driver (1876) 5 Ch D 458 Ryder v Frohlich [2004] NSWCA 472 Smith v Baker [1977] 1 NZLR 511 Vines v Australian Securities and Investment Commission (ASIC) [2007] NSWCA 75
Texts Cited:	Keith Fletcher, The Law of Partnership in Australia, 9th ed, 2007, Law Book
Category:	Principal judgment
Parties:	Feridun Akcan (Plaintiff) Gabriel Cross (First Defendant) Rosabelle Cross (First Defendant)
Representation:	Counsel: Mr Evans (Plaintiff) Mr Silver (First and Second Defendants) Solicitors: ELG Legal (Plaintiff) Rockwell Oliver (First and Second Defendants)
File Number(s):	2010/40732

Judgment

1. REIN J: The plaintiff Mr Feridun Akcan (also known as Adam Akcan) ("Mr Akcan") brings these proceedings against his sister, Mrs Rosabelle Cross ("Mrs Cross") and his brother-in-law Mr Gabriel Cross ("Mr Cross"), claiming that all three of them entered into a partnership agreement in connection with a restaurant business to be known as Rosabelle's Bistro and to be conducted at the Drummoyne Sailing Club in Drummoyne, Sydney ("the Club"). I shall refer to the business as "the Bistro". Mr Evans of counsel appears for Mr Akcan and Mr Silver of counsel appears for Mr and Mrs Cross.

1. The Bistro commenced operation in May 2007 and continues today. Mr and Mrs Cross dispute that any agreement was reached for Mr Akcan to become a partner and they deny that he ever became a partner.

1. There is no dispute that Mr Akcan, who was friendly with the social manager of the club at the time, Mr Mike Wroblewski ("Mr Wroblewski"), became aware that the Club was unhappy with the performance of its existing caterer in early 2007 and that they were looking to terminate that caterer's license and install a new licensee. Mr Akcan says he informed the Crosses of the Club's intention and they expressed interest in the prospect of establishing a restaurant at the Club. He then organised a meeting between the Crosses and Mr Wroblewski, which he (Mr Akcan) also attended. There is no dispute that Mr Akcan did not tell Mr Wroblewski or anybody at the Club then, or until January 2010, that he was one-third partner in the business as he claims he is. The license, which was entered into, was between the Club and the Crosses only.

1. There is no dispute that Mr Akcan carried out bookkeeping work for the Bistro between September 2007 and June 2008. There is no dispute that he was paid $5K in December 2008. The Crosses assert that the payment of $5K was made for the bookkeeping work. Mr Akcan says that he received the $5K as a share of profits and that, at the same time, $5K was also paid to each of Mr and Mrs Cross. The accounting records, which Mr Akcan prepared, do show the payment of the $5K to all three of them on the same date in December 2007 and no description is provided in the books of what the payment was for. Mr Akcan also claims that he received another $65K by way of profit distribution. Mr and Mrs Cross deny that they paid anything more than $5K to Mr Akcan.

1. The accounts of what was said and occurred between April 2007 and 2010, and even beyond, diverge considerably between the plaintiff and the defendants. The credit of Mr Akcan is impugned by the defendants and the credit of the defendants is impugned by the plaintiff.

1. There are two central issues in the case:

(1)   Did Mr Akcan and the Crosses agree that Mr Akcan would be a one-third partner in the Bistro business ("the partnership issue")

(2)   If Mr Akcan is a partner in the business, what is the true profit of the partnership for the relevant period of the partnership ("the profit issue"). The issue involves the sub-issue of what is the relevant period of the partnership ("the period of partnership issue")

The Partnership Issue: General

1. This issue depends wholly on whether:

(1)   The plaintiff's evidence of what was said is accepted

(2)   The admissions said to have been made by the Crosses, which are relied on by the plaintiff, are established. This involves not only the evidence of the parties but of third parties who were called in the plaintiff's case.

1. Relevant to (1) and (2) are other matters also disputed relating to:

(1)   What Mr Akcan was bringing to the partnership.

(2)   Whether Mr Akcan did work in or for the Bistro other than the accounting work, which it is agreed he did perform.

(3)   The character of the $5K payment and whether a further $65K was paid to Mr Akcan out of the partnership by way of distribution of profit.

(4)   Why Mrs Cross signed the Contested Partnership Document dated in late 2009 or early 2010 which purports to record a partnership agreement (which is Exhibit B and which I shall refer to as "the Contested Partnership Documents") and two further copies signed by her (which are Exhibit Y).

(5)   Why Mr Akcan was to be a silent partner

1. Also relevant, or potentially relevant, in determining the answer to the partnership issue are matters connected with the profit issue. For this reason, I shall endeavour to summarise the profit issue before commencing on a consideration of the partnership issue.

The Profit Issue

1. The plaintiff claims that the net profits of the Bistro business are not those stated in the BAS returns provided to the Australian Taxation Office, but in fact much higher. The plaintiff advances several reasons for that contention but has been hampered in a number of respects from establishing the real figures because:

(1)   The cash registers when inspected in early 2010 (at the commencement of these proceedings) did not contain any data prior to 12 February 2010.

(2)   The defendants have not produced print-outs from the cash registers prior to 12 February 2010. The only print-outs prior to 12 February 2010 are two cash register print-outs for September and October 2007 held by Mr Akcan.

(3)   The defendants have produced very little primary documentation in relation to the business. For example, no cheque butts have been produced. No notebooks detailing takings have been produced either.

(4)   The wages books show payment to staff in far lower amounts then the amounts noted as "paid" by Mr Cross on the employee timesheets.

1. The plaintiff claims that the earnings have been understated in the profit and loss statement filed for the Bistro by reason of the following matters:

(1)   The understatement of the gross earnings

(2)   The overstatement of expenses by virtue of:

(a)   Including as expenses amounts incurred in another business of the defendants,

(b)   Inflated payments as income to the defendants and their children,

(c)   The payment of other monies to the defendants on their behalf such as legal fees.

Earnings

1. The plaintiff's case that the defendants had understated income in the BAS returns filed on behalf of the Bistro, originally was based largely on the existence of two pages of cash register reports known as B1 and C1 found at 7190 and 7205 of Exhibit A7 respectively. The plaintiff's case was that those reports for March and April 2010 reflect takings of the Bistro between the dates listed on the reports and that those takings are much higher than the amounts reported by the defendants. The defendants' response was that B1 and C1 do not reflect the takings only for March and April respectively but effectively contain the sum of earnings from each day of the month of both February and March (i.e. "day 1" equals the sum of 1 February and 1 March, "day 2" equals the sum of 2 February and 2 March etcetera) for B1 and both March and April for C1 within the respective period. Expert evidence was relied on by both parties and at the end of the cross examination the plaintiff was forced to accept that the defendants' contentions about B1 and C1 were correct.

1. The plaintiff alleged that the Bistro profit, as reported in its BAS statements, had been reduced by the inclusion of losses attributable to a clothing business conducted by the defendants. To explain this it is necessary to state that the Bistro was actually run by a company AADD Limited ("AADD"). AADD is a trustee for a trust established by the defendants. AADD operated both the Bistro and a quite separate clothing business. I raised with the parties a concern about the partnership claim of the plaintiff given the interposition of AADD but there was no dispute that I could treat AADD as the corporate vehicle by which the defendants took part in the Bistro business: see T381-383, T900.46-901.39 and T905.42-49.

1. The defendants accept that losses from the clothing business are not to be a deducted from the Bistro business in determining what are the relevant profits to part of which the plaintiff lays claim. The defendants also accept that some expenses claimed by AADD, such as the legal fees connected with these proceedings, should not be deducted in calculating the net profits which, if the plaintiff is otherwise entitled, are to be divided by three. The claim for overpayment of wages to the Crosses or their children was not pressed.

1. The plaintiff sought to derive support for its theory of understatement of earnings by two further documents, being Cash Register reports of September and October 2007 (see Exhibit F and H). These reports recorded earnings at a higher level than that reflected in the BAS return for April to October 2007. Exhibits F and H were documents which the plaintiff obtained when he was carrying out the bookkeeping work and were, he says, unintentionally retained by him when he ceased to be the bookkeeper and Mrs Cross asked him to return all papers. The plaintiff says he did not appreciate the significance of the documents or recall that he had them until after the commencement of the proceedings. I shall refer to the plaintiff's claim on the basis of those documents as the "proportional approach" for reasons explained later in these reasons.

1. The plaintiff also seeks to rely on another aspect of B1 and C1, which was not mentioned in the expert reports that were relied on when the case opened and was not mentioned in opening. I shall refer this further aspect as "the transactional approach" for reasons which I shall explain later in these reasons.

1. On the last day of the hearing agreement was reached between the parties for a timetable for the provision of written submissions on the issue of quantum. In accordance with the timetable I received submissions from Mr Evans and Mr Silver on 2 May 2013. I shall refer to the plaintiff's closing submissions on quantum as "PCSQ" and the defendants' closing submissions on quantum as "DCSQ". I had, by the time of oral submissions on 10 April 2013, received detailed written submissions from Mr Silver and Mr Evans on topics other than quantum which submissions I shall refer to as the Plaintiff's Closing Submissions ("PCS"), Defendants' Closing Submissions ("DCS") and Plaintiff's Closing Submissions in Reply ("PCSR"). After the last round of submissions Mr Evans sent further short submissions but the defendants solicitors objected to reliance being placed on those later submissions and no application for leave to serve the submissions out of time was sought and I accordingly have had no regard to them.

The Partnership Issue: Detail

1. Mr Akcan's case on the existence of a partnership had these elements:

(1)   He identified the opportunity for a bistro at the Club and raised the prospect of partnership with his sister after which Mr Cross and his sister said they would like to go into partnership with him.

(2)   In the conversation, in which the partnership proposal was first discussed with the defendants, Mr Cross said:

OK then, let's do it together, we will pay for the wages, rent, food and other expenses that might surface. Rosabelle and I will each need a wage and after all the expenses, we will split the profit 50/50.

to which Mr Akcan claims he said:

That's not fair. You two are doing all the work and paying for the business expenses and I would be getting half of the profits after all the expenses are deducted.

and proposed a one third distribution of profits which was accepted (see Mr Akcan's affidavit of 3 July 2011, Exhibit A2, p 20082).

(3)   He wanted to be a silent partner and that is why he never mentioned to Mr Wroblewski or the directors of the Club his involvement in the business.

(4)   His reason for wanting to be and remain a silent partner was because he believed that his brother Aydogan (also known as Chris) Akcan ("Chris") would be very angry if he learned about that and that it would affect his business with Chris. Chris and Mr Akcan were themselves in partnership operating a wholesale and retail jewellery business. Chris had been in partnership with Mr Cross another business venture, which ended in acrimony between Chris and Mr Cross. Mr Akcan says he told the defendants that he did not want Chris to find out about the partnership and that Mr Cross said "[y]ou can be a silent partner. No one needs to know": see paragraph 15 of Mr Akcan's affidavit of 3 July 2011 (all reference to Mr Akcan's affidavit are to this affidavit unless otherwise specified).

(5)   He could contribute to the partnership with his experience in the food industry and management skills.

(6)   He told the Crosses he would be willing to help in the business "when needed" although he seemed to accept that it would be Mr and Mrs Cross who would be working long hours in the Bistro. In one of the conversations (see para 26 of his affidavit) he said:

Yes. I will help as much as I can. I will be able to help you during the day for a couple of hours and I will come over after I finish work.

and see also T110.1-27 and T111.19-29.

(7)   He offered to pay $10K towards the cost of hiring a consultant, but his offer was declined and even a consultant was in fact engaged by Mr and Mrs Cross.

(8)   That following the agreement reached between himself and the Crosses he arranged for them all to attend at the chambers of Mr Rory McCrudden, a barrister. Mr McCrudden is a good friend of Mr Akcan's and was known to the Crosses as such. Mr Akcan and Mr McCrudden claim that at the meeting, held in Mr McCrudden's chambers, Mr McCrudden was informed that Mr Akcan and the Crosses had decided to enter into a partnership to run the Bistro.

(9)   That he performed work at and for the Bistro and:

(a)   In the first 6 to 8 months he was working "about 3 to 6 hours per day" in the Bistro (Exhibit A2, p 20110, Mr Akcan's affidavit, para 99) but later this declined to much less time and later altogether ceased: see Mr Akcan's affidavit, para 100, and T208.

(b)   He obtained samples of chefs' uniforms (see Exhibit A2, p20090, para 43).

(c)   He helped hire staff including interviewing Mr Widjaja as head chef.

(d)   He helped resolve a dispute between the chefs in the first half of 2008.

(e)   He purchased sample meat containers (see Mr Akcan's affidavit, para 55, Exhibit A2 p 20095) and he organised the purchase of crockery. He purchased some samples of equipment such as plates, cutlery, tea towels and the like.

(f)   He drove to Cabramatta with Mr Cross to purchase pans, knives and forks for the Bistro (for which purchases he was reimbursed by Mr Cross) (see Mr Akcan's affidavit, para 51, Exhibit A2, p 20093).

(g)   He arranged for Mr and Mrs Cross to meet his contact in China to enable them to buy accessories for the Bistro: see para 86.

(10)   Subsequently Mr Akcan and Mr Cross told other people (other then Mr McCrudden) about the partnership between them ("the partnership admissions"). The people to whom (in addition to Mr McCrudden) these admissions are said to have been made by Mr Cross are Mr Kadir Nedjat ("Mr Nedjat"), Mr Ilker Bicer ("Mr Bicer"), Mr Nhat (Kevin) Nguyen "Mr Nguyen") and Mr Eddie Isaac ("Mr Isaac").

(11)   He was paid $5K in December 2007 as a partnership profit distribution (as were, he claims, Mr and Mrs Cross) and that he was subsequently paid another $65K in small lump sums of a similar order to the first payment in circumstances I shall describe.

(12)   He later asked Mr Cross for paperwork showing how his share of profits was calculated and that Mr Cross promised to do so but never did provide him with the paperwork (see para 129 of Mr Akcan's affidavit, Exhibit A2, p 20118) and that he asked Mr Cross for access to the cash register, which Mr Cross refused: para 130.

(13)   That in late 2009 or early 2010 he took to Mrs Cross, and separately to Mr Cross, three copies of the Contested Partnership Document which was signed by Mrs Cross but not Mr Cross. One of the three copies of the document was tendered at the beginning of the hearing and marked Exhibit B. At the end of the hearing, two further copies of the document, also signed by Mrs Cross were tendered and marked Exhibit Y. The three documents are not dated and the date it was signed by Mrs Cross is in dispute.

(14)   Mr Akcan submits that Mr Cross deliberately wiped information in the cash registers of the Bistro on 11 or 12 February 2010 within a week of Mr Akcan threatening to commence proceedings.

(15)   The Crosses have not produced cash register reports or other financial records for the period May 2007 to February 2010.The only records in evidence are those for September and October 2007, which, as I have mentioned above, were held by Mr Akcan.

1. The defendants do not now dispute that they came to learn about the possibility of a catering opportunity at the Club from, directly or indirectly, Mr Akcan: see T447.3-15). They point out however that:

(1)   The opportunity was one publicly advertised on the internet (T98.35 - 43).

(2)   Mr Akcan, although friendly with Mr Wroblewski, did not have control over who could apply and Mr Akcan in fact had told someone else, a friend, about the Club: see T100.3-9.

(3)   They had extensive experience in the food industry having run Manly Ocean Foods, a fish and chip shop at Manly, for a number of years.

(4)   Mr Akcan was a jeweller who had virtually no experience in the food industry.

(5)   Mr Akcan's claims to have extensive experience in the food industry were demonstrated to be false.

(6)   Mr Akcan's claim that he was friends with officers and directors of the Club (other than Mr Wroblewski) was demonstrated to be false.

1. The defendants also point out that Mr Akcan's explanation for wanting to be a silent partner was shown to be false because Chris said that he would not have been angry to learn that Mr Akcan was in partnership with Mr Cross and Mrs Cross rather only "disappointed" him a "little": see T292.38. Further, the defendants submit that while Mr Akcan says that he told people about the partnership, he did so in circumstances where he had no reason to inform them of that fact.

1. The defendants dispute that Mr Akcan did perform any significant work at the Bistro and have called evidence from a number of witnesses to support their contention. They also point out that even on the plaintiff's own evidence:

(1)   He went overseas for almost two months shortly after the Bistro opened.

(2)   He did not spend very much time at the Bistro after the first 6 months, although he did eat there quite often. He had, even on his own evidence, virtually no involvement with the Bistro in 2009.

(3)   What he says he did is very limited, and did not involve any regular contribution except for bookkeeping for which he was remunerated (see T208-209). Further, Mr Akcan admits that once the Bistro was up and running he did not go there to work but that he would occasionally go there to eat.

(4)   Chris and Mr Akcan were close and, according to Chris, did discuss matters generally (see T290.37-T291.11) and he never mentioned the Bistro partnership to Chris, although I note that Chris' evidence at T291.19-25 reduces the significance of the earlier statements.

The Plaintiff's Credibility

1. There are a number of matters which undermined the plaintiff's credibility and his version of events. He frequently failed to answer questions directly and he was far from an impressive witness. His command of English is, to my observation, very good although at several points he sought to rely on the fact that English is his second language as an explanation for his difficulties in cross examination (see T122.47-T123.1, in particular but also T111.2-4, T160.17-26, T170.33-34) which I did not find convincing. The further matters are:

Inconsistencies in the plaintiff's evidence

(1)   Mr Akcan was evasive when asked about who his friends were as he limited his definition of a friend to someone he sees once a week: see T55.4-7. Mr Silver submitted that this was to reduce the prospect that his friends, upon whose affidavits he relies, would be seen as partisan. Those friends were not reluctant to admit their friendship with Mr Akcan.

(2)   The document at Exhibit A2 (pp 20179-20183) being a document created by the plaintiff in his own hand is curious. The plaintiff says that he copied the contents of that document from a "spreadsheet" in the handwriting of Mr Cross which he had in his possession (see para 149 of Mr Akcan's affidavit, Exhibit A2, p 20122). The document records a total sales figure for the Bistro of $1,440,260 which when compared to the BAS return showing $1,074,992 involves a $365,268 discrepancy. His explanation as to why he would go to the trouble of writing out the contents when the simple act of photocopying its contents would have been a much more efficient method of copying the document was not at all convincing particularly since he claims that the spreadsheet was in Mr Cross' handwriting and a photocopier was available to him a short distance from his house (see T259-262). This induces doubt as to the authenticity of that document and Mr Akcan's veracity. Further, Mr Akcan says that he did not speak to either of the defendants about the content of this document (see T260-261) and he was the bookkeeper for the Bistro when he claims he saw it.

(3)   In support of his ex parte application for injunctive relief in this Court he asserted that he observed that Mr Cross never allowed persons other then Mrs Cross or his son to operate the cash register. There was evidence from other witnesses that Mr Cross did permit staff to operate the cash register. When cross examined about the inaccuracy of his assertion Mr Akcan said he was intending in his affidavit to be only dealing with the early period of the Bistro (see T223.21-45). That is not how the affidavit reads and there would be little point in referring to the early period.

(4)   The plaintiff attended a Club board meeting, with Mr Ahmed Nedjat and Mr Kadir Nedjat on 6 January 2010 claiming that Mr Cross had bribed the Club's general manager in order to obtain an extension of the license. He also told the Club that he and the Nedjats would be able to better run the Bistro. Both of these statements seemed to be designed to produce the effect that the Crosses would loose the license. Mr Akcan denied that that was his intention but admitted that is how his actions appear: see T280.9-15. Mr Akcan claimed (see T276-277) that he brought Mr Kadir Nedjat because Mr Kadir Nedjat was the person with the information about the bribery and he denied that Mr Ahmed Nedjat attended the meeting. Mr Fletcher's evidence, to which I refer later, if accepted establishes that Mr Akcan's evidence was false both in regard to who was making the allegation and who was present. It also demonstrates that the reason Mr Akcan brought the Nedjats with him was because he was proposing to the Club that he and the Nedjats would together run the Bistro. This attempt to obtain the license (whether with or without the Nedjats) has wider importance for reasons I shall explain below.

(5)   He claimed that when he received the $5K (which he says was a distribution to him at the same time as to Mr and Mrs Cross) he was not concerned about the profit saying to Mr Cross "Listen, I don't need it, keep it, invest it back into the business"(see T147.20-23) a statement which was not contained in his affidavit. On his evidence he did not, in fact, return the cheque.

The plaintiff's role and input as a partner

(6)   Mr Akcan claims that the defendants were willing to give him a 50% share in the business (which he suggested should be reduced to a one third share) even though he was to make no financial contribution and, on his case, the work he was to perform was limited and in a context where he was already a partner in a jewellery business. This of itself seems unlikely.

(7)   Contrary to the impression given by his affidavit evidence, the work that he performed in the Bistro was limited even on his own evidence in cross examination and the evidence of Mr Wroblewski. It is even more limited if the unchallenged evidence of Mr Fletcher and Mr Eagleton from the Club is accepted. Mr Fletcher and Mr Eagleton's evidence corroborates the evidence of Mr and Mrs Cross that Mr Akcan did no work in the Bistro (except for the bookkeeping) although their visits to the Bistro were not regular and tended to be in the evening.

(8)   Mr Wroblewski says he did observe Mr Akcan doing some work at the Bistro, but since he left the Club in 2008 (see T309.28-29) the period is limited. What he saw Mr Akcan do is take plates from tables and ask customers if they enjoyed their meals: see T308.10-T309.20. Mr Wroblewski says Mr Akcan was at the Bistro for meals and he did carry out bookkeeping there. Mr Isaac's evidence was that Mr Akcan ordered goods and resolved problems. Mr Kadir Nedjat gave evidence that Mr Akcan ordered goods, ran the business when the Crosses were on holiday, on one occasion paid staff wages and on another occasion reimbursed Mr Kadir Nedjat for paying for a delivery.

(9)   From the plaintiff's version of his conversations with the defendants about the claimed partnership nothing emerges as to what it was that the defendants thought they were getting in having the plaintiff as a partner: see [18] above. There was evidence that he had informed the defendants about the opportunity and introduced them to Mr Wroblewski but the opportunity to become the new operator was publicly advertised on the internet accessible to anyone as Mr Akcan conceded (see T98.36-30). It was not demonstrated that his limited connection with the Club helped the defendants obtain the licence. I think that there is much force in the defendants' submission that it is highly improbable that the defendants would be willing to offer 50% share of the business (or a one third share) to someone who was to put in no capital and not to run, or be significantly involved in, the business, and who had no substantial experience in catering. It is possible, however, that the defendants believed that Mr Akcan had influence with the Club, and could help them obtain the license.

(10)   Mr Akcan asserted in his affidavit of 3 July 2011 at para 7 (Exhibit A2, p 20077) that he was well known to some of the directors of the Club and in cross examination (see T57.10-14) he said that he was friends with them, but in fact only Mr Wroblewski was his friend and he was forced to admit (at T57.35-44) that not only were none of the other directors his friends but he did not know any of them personally. When confronted with this at T118.22-23 the plaintiff said "what I meant is that is what I thought, I have met some of them": see T188.24 and T57.44.

(11)   Mr Akcan said at T188.38 that Mr Wroblewski "had all the information to do with the bistro" but Mr Wroblewski said that he did not have answers to most of the questions asked of him (see T300.29-41), and that he did not have a role in the decision-making as to who should obtain the license. It is clear from the evidence of Mr Henke and Mr Fletcher that Mr Akcan had no connection with them over the process of approval of the defendants as licensees, but I should note that Mr Akcan did not claim in these proceedings that he had played a role in the approval process.

(12)   Mr Akcan sought to present himself as having an expertise in the catering industry but cross examination demonstrated that he had exaggerated his engagement with the catering industry (see T79.29-35 and T79.50-80.1) since all he had done for Mr Nedjat Senior was menial work of clearing tables and chopping vegetables and that he had used the BBQ on family occasions. It was never put to the defendants that they had any understanding that Mr Akcan had any relevant experience in regard to running a restaurant. They knew that he was in the jewellery business and after the Bistro opened they were willing for him to carry out a bookkeeping role. Mr Akcan's claim that there was little practical difference between a jewellery store and a restaurant (see T77.29-32) was difficult to accept. The exaggerated expertise was designed to give plausibility to his contention that the defendants were willing to bring him into the partnership.

(13)   Mr Akcan admitted that his evidence about having done the bookwork at Mr Nedjat Senior's restaurant was false (see T85.14-15) as was his evidence of having done purchasing, sales and bookwork for the jewellery business (see T85.19-23).

(14)   Mr Akcan did claim that he was responsible for bringing a number of persons to work at the Bistro. These were few and his role was decidedly vague.

(15)   He did say that when the Crosses were away he would look after the business. I asked him what he meant by that and the following exchange occurred at T246.39-T247.13:

A. If there was any problems I was resolving it. We washed the cutlery and we wrapped them up in napkins. So whenever that happened I would sit on the table I would do that.

Q. You would wrap the cutlery and the napkins?

A. Yes, whatever it needed, your Honour.

Q. Tell me what you say you were doing when they were away. I need to understand what you say about this?

A. When they were away his son would take care of the cash register or sometimes if his son had gone to the bathroom some other staff would take care of the cash registers, take the orders. So if there was any problem, complaint they would come to me and I would say "I will take care of it and I will fix the problem up".

Q. If there was a problem or complaint that's what you say you were dealing with?

A. Yes.

Q. What else were you doing?

A. As in working wise, your Honour?

Q. Tell me what you were doing?

A. That's what I was doing. I was basically making sure that everything was running.

(16)   Another matter to which he deposed was the resolution of a dispute about who should be head chef. Mr Cross and Mr Abraham Cross and Mr Markrey Juan denied that Mr Akcan ran the meeting (see affidavit of Mr Juan dated 1 March 2012, paras 18-22, Exhibit A6, 6341,), and Mr Widjaja did not say that he did. On their evidence Mr Akcan's involvement was minimal and according to Mr Abraham Cross his father told Mr Akcan that he was not part of the meeting. Mr Widjaja did say, however, that Mr Akcan spoke at the meeting.

Operations and practices of the alleged partnership

(17)   Even on the plaintiff's evidence there is a surprising absence of inquiry and involvement in the financial affairs of the partnership, particularly after the time that he ceased to carry out the bookkeeping. For example, he never discussed at the commencement of the supposed partnership as to when profits would be distributed and how profits would be calculated. He never requested access to accounts from Mr Antonious, the accountant for the Bistro. The cross examination at T257-270 highlights much of the difficulty in endeavouring to assess what really happened. Mr Akcan says that, having observed that the Bistro was doing well while he was the bookkeeper, he asked Mr Cross how the Bistro was progressing and Mr Cross said it was not making much profit. Mr Akcan says that he did not challenge Mr Cross' description because he thought there might be a debt they wanted to take care of and he wished to speak with Mrs Cross about that first, however she told him there was not: T262-263. Although initially Mr Akcan asserted that Mr Cross was hiding the profitability from him, this changed to an assertion that Mr Cross was not accurately describing what the financial records they both could see demonstrated, namely that the Bistro was starting to be successful. Against the background that Mr Akcan ceased to be a bookkeeper in June 2008, Mr Silver embarked on an endeavour to ascertain when it was that Mr Akcan became concerned that he was not receiving his fair share of partnership profits and what he did about it but answers to these questions did not emerge from the cross examination. An awareness that the Bistro was making profit that was not being shared equally between the partners, one could anticipate, would have lead the disgruntled partner raising his concerns with his co-partners immediately but no such conversation was initiated following the sighting of the original of the financial spreadsheet which the plaintiff rewrote (Exhibit A2, pp 20179-20183), or Mr Cross' failure to provide paperwork. No other action was taken at the time by Mr Akcan: see also T129 and paragraph 112 and Mr Akcan's affidavit, Exhibit A2, pp 20113-20114.

(18)   He claims that his sister often left him payments of cash for his share of the partnership profits under his pillow or otherwise handed him cash and never with any paperwork. The plaintiff lived at home with his mother. His version of events was that he never told his mother that he was a silent partner in the Bistro, because he did not want Chris to find out about it. He says he never queried the defendants as to the level of "distribution" or how it was calculated: T254.7-8. In this context, I should note that the plaintiff produced no evidence that he had declared income from the partnership in his tax returns, although he said that he had included it. He also claimed that he had kept a record of the payments he received but said that he had either thrown it out or lost it: see T253.43-44 and T256.36.

(19)   Mr Akcan did not agree that receiving profit distributions in cash with no documentation was highly irregular: see T253.13. In his jewellery business there was a specific agreement about end of financial year distributions and the distribution was made by cheque (see T69-71). This further reduced the likelihood that Mr Akcan would accept a completely random distribution of profits.

(20)   Related to the previous point is that after the commencement of the Bistro he never did have any discussions with the defendants that could be described as a partnership meeting or a discussion as to why no such meetings had been held.

(21)   When I asked the plaintiff whether he was expecting to contribute to the losses he said that the defendants and he had discussed this and "if it made a loss it would be out of them": see T112.16-21. He then said they had not discussed it: see T112.30-34 and see T113.16-19 and T196.15-36. In his affidavit he said nothing about the topic of losses having been discussed: T118.37.

The secrecy surrounding the silent partnership

(22)   The plaintiff, who says that his reason for keeping the partnership a secret was so that Chris would not find out, told persons who had no need to know about the partnership: see for example Mr Kadir Nedjat's affidavit of 4 July 2011 at p 20279.

(23)   Chris said that the plaintiff had always been honest with him and he thought it was out of character for the plaintiff not to have told him that he was going into business with Mr and Mrs Cross.

(24)   Mr Akcan's explanation for not informing the Club of his involvement in the partnership was difficult to extract: see T175.36-T177.36.

(25)   The failure to inform the Club that he was (as he claims) a silent partner has a dual dimension. If his reason for not wanting to be known as a partner in the Bistro was simply to avoid angering his brother Chris, which is the plaintiff's explanation, there was no reason not to tell the Club. If the reason for not telling the Club was a concern that they would not be happy there was a silent partner involved then the failure to tell the Club was deceitful. The plaintiff does not say that he did not tell the Club of his involvement for any particular reason other than that he was a silent partner and he thought "they are not supposed to know" (T177.30) even though he admits that he knew the Club was keen to avoid absentee owners: T44.48, T45.3 and T81.1-6. In my view the desire to avoid the Club realising that he was a partner when he knew he would have a very limited involvement is a far more likely explanation for his silence and I found his explanation that he feared difficulties arising with his brother as implausible.

(26)   Mr Akcan had difficulty explaining why he had told employees of the Bistro that he was a partner: T190.1.

(27)   He says that to the employees whom had he had informed of the partnership he told them not to tell his family or the Club of his involvement (see T192.19-39) but at T193.36 he said he "might" have told them to keep it quiet. However, his affidavit did not reveal such instructions and none of the witnesses he called gave evidence that he had.

(28)   The plaintiff says he told Mr Antonious about the partnership. If Mr Akcan had, in fact, told Mr Antonious that he was a partner in the Bistro it is inherently unlikely that Mr Antonious would have said nothing at all in response: see T173.28-31. Mr Antonious was subpoenaed by the plaintiff to give evidence but was not called and according to Mr Akcan, Mr Antonious told him that he did not recall such a conversation: see T197.45-12. The plaintiff's failure to call Mr Antonious does not establish that he did not tell Mr Antonious about the partnership but the lack of corroboration is relevant in a context where the plaintiff's credibility is weak. Even on his own evidence he did not make arrangements with Mr Antonious to be appraised of the profit or to be given copies of the "partnership" accounts and he was never provided with them. He had exercised such rights in relation to the jewellery business: see T74.30-42. The need for access to the accounts would have been more acute if Mr Akcan was conscious or concerned that Mr Cross was understating the profitability.

Meetings with Mr McCrudden

(29)   His evidence about Mr McCrudden's role in relation to the draft the Contested Partnership Document was evasive and unconvincing: see T229.10-T231.23. It included a denial that Mr McCrudden had suggested what became the Contested Partnership Document (T270.4-8) followed by an assertion that it was Mr McCrudden who suggested it: T270.24-31.

(30)   The purpose of the first McCrudden meeting, according to Mr Akcan, was to have Mr McCrudden look at the lease (license agreement in fact: see T199.44-46) and obtain his views but Mr McCrudden said that the purpose of the first meeting was that the parties wanted him to draw a partnership agreement and "to act as a solicitor, basically" (see para 8 of Mr McCrudden's 29 June 2011 affidavit, Exhibit A12, p 12030 and see T418.32-39) which drafting Mr McCrudden says he told Mr Akcan and the Crosses he, as a barrister, would not do.

The Contested Partnership Document

1. The plaintiff's says that raised a concern with Mr McCrudden when the latter told him that he was going away and since Mr McCrudden had been a witness to the partnership it would be desirable that Mr Akcan obtain something in writing. Mr Akcan does not in his affidavit describe any meeting with the defendants in 2009 which triggered a concern on his part and I have already referred to the opacity of his evidence at T267 to T272. Mr Nguyen's evidence (see T393 - 395) was that Mr Akcan told him that there had been "dishonesty" and "trouble" in the business and that Mr Akcan wanted to clarify the position: see also para 112 of Mr Akcan's affidavit. Mr Kadir Nedjat's and Mr McCrudden's evidence point to Mr Akcan having informed Mr McCrudden about problems with profits that led to Mr McCrudden to recommend the Contested Partnership Document and see also T270.10-35.

1. Mr Akcan says that he took he took the Contested Partnership Document (in triplicate) to Mrs Cross but his affidavit is silent as to the date this occurred. Mr Akcan says the following conversation took place:

Rosabelle said: Why did you not call me ?

I said: I tried but you did not pick up. Now that the bistro is doing well you know we don't have a partnership agreement

Rosabelle said: Yes Rory would not do it.

I said: Well he is going overseas for a year or two and in case something goes wrong we do not have anything in writing. I have a short statement which says we are partners.

Rosabelle said: Let me have a look at it. Why three copies? One for me, one for you and Gabby and one for safety.

He said that he handed her three identical pages and she read them. Then the following conversation took place:

I said: It just shows that we are all partners

Rosabelle said: OK

Mr Akcan says she signed three copies and the meeting was pleasant and agreeable. Mr Akcan then signed the three copies in front of her. He asked her where Gabrielle was and she told Mr Akcan that he was at the Club.

1. On the plaintiff's case the Contested Partnership Document contained the terms of the partnership as agreed in April 2007 and yet, on his own evidence, one of the terms contained in the Contested Partnership Document, namely that the partnership would be reviewed at the end of the license period, was not mentioned in the discussions in 2007. Mr Akcan had some difficulty explaining what the clause meant: see T272.35-46 and T273.15-21. A term that, according to Mr Akcan, was mentioned in 2007 is that Mr and Mrs Cross would be paid $1K a week for their work in managing the Bistro however this term does not find its way into the Contested Partnership Document.

1. I shall deal now with other witnesses called by Mr Akcan.

Mr McCrudden

1. Mr Rory McCrudden is a barrister who works almost exclusively in the criminal jurisdiction. He is a friend of the plaintiff and showed sufficient interest in the case to be present in Court on a number of occasions after he had been cross examined.

1. His involvement in the case had these elements:

(1)   The plaintiff and defendants attended a meeting in his chambers in about May 2007 ("the first McCrudden meeting"). This is the meeting to which I have earlier referred.

(2)   The plaintiff and he says both defendants attended a further meeting in Mr McCrudden's chambers a week or so after the first meeting ("the second McCrudden meeting").

(3)   In early 2010 (according to Mr McCrudden) Mr McCrudden drafted what became the Contested Partnership Document, which the plaintiff sought to have the Crosses sign, and which Rosabelle did sign.

(4)   When the plaintiff commenced these proceedings Mr McCrudden acted for him and drafted the Summons and a number of the affidavits. He says he realised later that he had a conflict of interest and ceased acting. It transpires, from another witness' evidence that whilst acting for Mr Akcan, Mr McCrudden went to the Club seeking to examine the Bistro's cash registers and when told he should not come in to the Bistro he still entered the Bistro and took photographs of the cash registers: see Mr Laslo Rac's affidavit of 11 December 2010 at pp 6332-6333.

1. Mr McCrudden's affidavit evidence had these key points:

(1)   Before the first McCrudden meeting the plaintiff called him and said (see his para 2 affidavit of 12 March 2013):

Rory, my sister and her husband and I are taking up a bistro as a business. We want to come and see you about it.

(2)   At the first McCrudden meeting Mr Cross said in the presence of the plaintiff and Mrs Cross:

(a)   "We are all going into the Bistro business at the Drummoyne Sailing Club. We have had a good look at it and it is a gold mine" (para 4 of the affidavit of 29 June 2011).

(b)   "At first we suggested that we would be, that is Rosabelle and me, would have 50% and Adam would have the other fifty but Adam said we should be equal partners, with one third each, Adam, Rosabelle and me" (para 5)

(c)   "Gabe and Rosabelle will run the business on a day to day business. Adam will be a silent partner". (para 6)

(d)   Mr McCrudden says he asked:

"Why is Adam a silent partner?"

The plaintiff replied:

"To keep peace in the family. Gabby was in partnership with my brother and it did not end well."

Mr McCrudden said:

"It does not matter anyway because he is responsible for his own tax on his share."

(para 7)

(e)   "Adam has set it up. He has spoken to the directors of the club and we have a great opportunity but he will be a silent partner. Rosabelle and I will run the day-to-day business of the Bistro. We will each take a wage of $1,000 per week because we will be there 7 days a week. Adam is going to work in Bistro when it is necessary but he said does not want to take a wage because he will be working in his own business. After that the profit will be split three ways. We want you to draw up a partnership contract between the three of us for one third each."

The plaintiff said: "That's correct". (para 8).

(f)   Mr McCrudden said:

"Adam should take a wage and everything should be recorded. You will need to see a solicitor to get your partnership contract done. I am a barrister. We don't do things like that" (para 9)

(g)   "We have a lease for three years". (para 10)

To which Mr McCrudden replied:

"That is not a lease. It is a licence. You do not have the same protections you might have under a lease. The licence does not include any option for renewal. If you make a monster profit in the first three years there is no guarantee you guys will be able to continue with the business. I suggest that you try to negotiate a lease and get a solicitor to handle it. If Adam is to be a silent partner it should be in the names of Gabe and Rosabelle only".

(para 11)

(3)   Mr McCrudden says that at the second meeting the plaintiff told him in the presence of Mr and Mrs Cross:

We have reached an agreement with the management of the Club. We will be moving in soon.

(para 12)

(4)   Mr McCrudden says that he heard Mr and Mrs Cross on a number of other occasions refer to the plaintiff as "my partner" or "our partner" and frequently heard the plaintiff refer to the defendants as "my partners" (para 15).

(5)   He says that Mr Cross told him that members of an Irish Dance Group, with which Mr McCrudden was connected and which was to perform at the Club, could eat at the Bistro for free and that Mr Cross had added "I am sure Adam will agree". He also said that the plaintiff paid him $200 for the performance to be passed on to the dance group.

(6)   He drafted the Contested Partnership Document.

(7)   Mr McCrudden in his second affidavit dated 12 March 2013 said that he did not act for any of them and did not take instructions from them. He said he has "only a rudimentary knowledge of lease matters".

1. In answer to allegations made by the defendants in their affidavits, Mr McCrudden:

(8)   Denied that the plaintiff said "I've told Rory about your new Bistro venture and he is happy to look at the contract for you"

(9)   Denied that anything had been said to the effect that only the defendants were to purchase the business of the Bistro.

(10)   Denied that he said he had read through the license and that it looked to him like a fairly standard licence agreement.

(11)   Denied that Mr Cross had said "[m]y main concern is that the club has offered us a license and not a lease".

(12)   Denied that he had said: "[t]here are a number of areas here which should be raised with the club, and I am prepared to do that informally on your behalf".

(13)   Denied that he said: "After I have spoken to the club, I will report back".

(14)   Denied that he had ever approached the Club on behalf of the parties or spoke to any one at the Club on behalf of the parties.

(15)   Says that if he had seen the defendants in relation to a matter not concerning the plaintiff he would have asked the plaintiff to leave.

(16)   Denied that he read the license or said he had, other than in ascertaining that it did not contain an option for renewal.

(17)   Says he formed the impression that none of the parties had read the license.

(18)   Said he could not recall asking the name of the President of the Club and being informed that it was Paul Henke but did not dispute that he did ask that question and was informed of the President's identity.

1. Mr McCrudden was cross examined (see T409-T434) and there are a number of aspects of Mr McCrudden's evidence that are troubling:

(1)   On Mr McCrudden's affidavit he appeared to be giving advice to the parties and yet in cross examination he seemed to want to avoid such a conclusion. He is vague on what he understood his role was at the first meeting and even vaguer about the second meeting.

(2)   He claimed that he looked at the license agreement but only to ascertain if there was an option clause and says this in a context where he believed that none of the parties present had read the license agreement.

(3)   The Contested Partnership Document is not dated and Mr McCrudden's first affidavit at paragraph 19 is silent as to when and how he came to be drafting it.

(4)   He says that he advised the parties to see a solicitor to draft a partnership agreement at the first meeting because that is not a barrister's role but three years later he prepared the Contested Partnership Document. He was unable to recall, he said, of why he was being asked to draft the document when Mr Akcan attended the house of Mr Ahmed Nedjat, a mutual friend: see T423-425. When he drafted it, he had no notes from which to refer. Mr and Mrs Cross were also persons to whom, he says, he gave advice but he later he drafted the Contested Partnership Document without their input. Mr McCrudden's inability to recall details of his conversation with Mr Akcan in 2010 contrasts with his recollection of his conversations three years earlier than that.

(5)   He agreed to act for Mr Akcan in these proceedings notwithstanding his lack of knowledge and expertise in civil matters and the fact that, if he had acted for Mr Akcan, on his evidence, he had also previously acted for the Crosses in the very matter the subject of dispute.

(6)   Although he did not admit that he did so it appears from another of the plaintiff's witnesses, Mr Eddie Isaac, that he drafted an affidavit for Mr Isaac whilst Mr Akcan was present. Further, Mr Kadir Nedjat said that Mr McCrudden had, to some degree, suggested to him that conversations with Mr Cross about the partnership had taken place.

(7)   He says he did not ask the parties what they wanted his advice for. He denied that he gave "advice on a partnership or what it meant or what the legal concepts of it were" (T417.33-43) and did not say that he had in his affidavit. His evidence in cross examination at T418.30-419.27 included an assertion that the advice he gave was what is set out in his affidavit.

(8)   He does not deny having asked the name of the Club president but gives no explanation as to why he would have asked that question.

(9)   He volunteered in answer to the question whether he knew Mr Eddie Isaac that his best recollection "is that he is a plumpish fellow". That answer is surprising because Mr Isaac is quite the opposite of plump and his distinguishing feature is his considerable height. The discrepancy between Mr McCrudden's description and Mr Isaac's real appearance seems to have been designed to distance himself from his conference with Mr Isaac.

(10)   Mr McCrudden was very defensive in the witness box, perhaps due in part to his discomfort at having to admit that he saw witnesses for the purpose of this case at the home of Mr Nedjat Senior (see T416.16) drafted the Contested Partnership Document when he says he had told the parties that barristers did not perform such work, conducted work for which he did not charge and in respect of which he kept no notes, advising clients in an area of law about which (on his evidence) he knew very little and acting for Mr Akcan in a case where he himself was a potential witness.

(11)   He said that Mrs Cross had said something about partnership and was cross examined about that at T429:

Q. Well said what?

A. Mentioned the word "partner". It was a word that was used a lot. It was used in different meanings, I suppose. It was a happy occasion. "We are going to make a fortune together." So, the implication there is they're all in it together.

(12)   He denied that the whole purpose of the meeting was to discuss the license: see T429.21-24.

(13)   The Contested Partnership Document which Mr McCrudden drafted had these unusual aspects:

(a)   It contains a statement of the parties being advised to obtain advice "from a competent solicitor" which seemed designed to protect Mr McCrudden not the parties and that statement was anachronistic since three years had already passed since the first and second McCrudden meetings.

(b)   It does not refer to the plaintiff being a silent partner.

(c)   It contains a term dealing with review that had not been agreed by the "partners" because they did not discuss the matter even on the plaintiff's version.

(d)   It contains a reference to each party looking after "their own tax" which is a somewhat surprising inclusion and again something that the parties had not discussed or agreed on although on Mr McCrudden's evidence he told them that that was a feature of partnership.

(e)   It bears no date, and have no provision for a date, leaving it open to be presented as something prepared and executed at the commencement of the alleged partnership.

1. At the end of Mr McCrudden's evidence, I was left with the impression that Mr McCrudden was a person whose evidence needed to be approached with caution. I should point out however that at T418 - T419 Mr Silver put to Mr McCrudden that he had given advice at the first meeting about how the silent partnership should be dealt with and that he had given advice about the nature of partnership. That line of questioning and the admissions that were obtained reinforced Mr McCrudden's evidence that Mr Akcan and the Crosses had told him there was a partnership between them.

1. Mr Silver launched a concerted and extensive attack on Mr McCrudden's credibility and his reliability: see paras 120 to 146 of DCS. Mr Evans protested that much of what was asserted was not open to Mr Silver to put given the content of the cross examination. I should note that it had been agreed by counsel that no Browne v Dunn point would be taken (see T151.3-4) see Browne v Dunn (1893) 6 R 67 and see In Re Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1. I will say more about the Browne v Dunn point below.

Mr Ilker Bicer, Mr Edward Isaac, Mr Nhat Nguyen and Mr Kadir Nedjat

1. Mr Ilker Bicer is a friend of Mr Akcan who met Mr Akcan through Mr Akcan's older sister and her husband Mr Chris Gregory. Mr Bicer swore two affidavits of 17 April 2011 and 3 July 2011. In the first affidavit, Mr Bicer says that after he met Mr and Mrs Cross at a dinner in April 2008, he supplied crockery to the Bistro. In 2008 Mr Akcan organised a meeting between Mr Bicer, Mr Akcan and the Crosses at the Club. At the meeting, Mr Bicer says he said to Mr Cross "[t]his looks like you got a good little business" to which Mr Cross replied "well it's not mine. Adam and my wife are partners" (see para 9). Mr Bicer says that Mr Akcan was actively involved in the conversation about the order for crockery. Mr Bicer swore a second affidavit of 3 July 2011 which contains largely the same evidence as the first affidavit, however he added that in their meeting about ordering crockery he thought Mr Cross did not appear interested and said words to the effect "[t]hat is more Adam's department" (see para 12). The second affidavit also added the fact that the dinner in April 2008 was the first time that Mr Bicer had met Mr and Mrs Cross.

1. Mr Edward Isaac was a chef at the Bistro from 2007 to mid 2008 is a friend of Mr Akcan. Mr Isaac swore an affidavit of 2 July 2011. Mr Isaac says that he secured the position as chef at the bistro through Mr Akcan, who offered him the position. When Mr Akcan offered him a position, Mr Akcan told Mr Isaac that he was in partnership with Mr and Mrs Cross. After this conversation, Mr Isaac says he attended the Bistro and met Mr and Mrs Cross. Mr Isaac says he asked Mr Cross if Adam is a partner in the business because he wanted to know who he is working for and Mr Cross responded that Mr Akcan is a "silent partner". Mr Isaac says that Mr Akcan had told him on two separate occasions that if he has a problem go to Mr and Mrs Cross first and then, if they are unable to fix it, then go to Mr Akcan. Mr Isaac said that "eventually" it was Mr Akcan, as opposed to Mr Cross, who would organise to provide Mr Isaac with goods that he requested. Mr Isaac said that in early 2008, Mr Akcan attended a meeting to resolve a dispute between the head chef, Victor, and the sous chef, Mr Widjaja, where Mr Akcan talked through the problem with the staff and he eventually made the decision that Victor is stay as Head Chef and, as a result, Mr Widjaja resigned. In relation to the cash register, Mr Isaac said in his affidavit that no staff members were allowed to use the cash register except for Mr Cross, however he noticed that Mr Kadir Nedjat used the cash register. Mr Isaac's evidence concerning that aspect was undermined by his answers in cross examination.

1. Mr Nhat Nguyen is a friend of Mr Akcan and swore and affidavit dated 27 June 2011. Mr Nguyen has been a friend of Mr Akcan for more than 14 years and met Mr and Mrs Cross 10 years ago. Mr Nguyen says he helped Mr Akcan find suppliers for cutlery and meat for the bistro business. Mr Nguyen says that from 2007 to 2010 he ate regularly at the Bistro, visiting less in 2010. Mr Nguyen states that on a few occasions when he ate there, Mr Cross would not accept payment from Mr Nguyen because he is a friend of Mr Akcan. On one occasion, Mr Nguyen asserts, Mr Cross said "we cant [sic] take your money because Adam is a partner in the business". On another occasion, in the first six months of 2008, Mr Cross invited Mr Nguyen to drink a coffee with him while Mr Akcan was doing paper work. Mr Cross laughed and said, at least on one occasion, to Mr Nguyen "[e]ven silent partners will have to do some of the paperwork": see para 14, Exhibit A2, p 20264.

1. Mr Nguyen states in his affidavit that in late 2009 that Mr Akcan picked him up in his car from Mr Nguyen's home and they drove to Lane Cove. Neither Mr Akcan nor Mr Nguyen explain why Mr Akcan wanted Mr Nguyen to accompany him (or gave an explanation) or why Mr Akcan was showing him the documents (see Mr Akcan's affidavit, para 159, Exhibit A2, p 20124). Mr Akcan handed Mr Nguyen three pieces of paper, all of which are identical. These documents are three copies of the Contested Partnership Document (Exhibit B). Mr Nguyen did not go with Mr Akcan when Mr Akcan went to see Mrs Cross in and then near Mrs Cross' daughter's shop in Lane Cove, but stayed in the area. After fifteen to thirty minutes, he says, Mr Akcan returned to his car. Mr Nguyen says that one of the documents had both Mr Akcan's and Mrs Cross' signatures on it. Then Mr Akcan suggested that they go to the Club to ask Mr Cross to sign the document, however, Mr Nguyen says when they arrived at the Club Mr Cross was not there.

1. Mr Kadir Nedjat has been a friend of Mr Akcan's for 12 years and met him through his father, Mr Ahmed Nedjat. Mr Kadir Nedjat swore an affidavit 4 July 2011. Mr Nedjat says that in 2007, Mr Akcan offered him a position to manage the front of the Bistro. When Mr Kadir Nedjat met Mr and Mrs Cross in 2007 he says that Adam introduced Mr and Mrs Cross as his partners, and Mr and Mrs Cross smiled and nodded. Mr Kadir Nedjat says that Mr Akcan told him, in the presence of Mr Cross, that because he is "a silent partner" Mr Kadir Nedjat should go to Mr Cross first that if he has any problems and then, if Mr Cross is not responsive, to Mr Akcan. In March 2008, Mr Nedjat says that there was a dispute between the head chef and the sous chef. Mr Cross told Mr Nedjat that Mr Akcan would be coming in later and "he will decide" (see para 10, Exhibit A2, p 20280). Later, there was a meeting between Mr and Mrs Cross, the head chef, the sous chef and Mr Akcan. Mr Nedjat said he heard Mr Akcan say "Victor stays as head chef. Andreas is the sous chef. That is my decision" (see para 10, Exhibit A2, p 20280)

1. Mr Kadir Nedjat says that Mr Akcan reimbursed him money that the Bistro owed him for paying for a delivery, Mr Akcan would run the business when Mr and Mrs Cross were on holidays and on one occasion Mr Akcan paid the staff wages when Mr Cross had failed to do so. He says Mr Akcan organised cutlery, pots and pans and the like when Mr Nedjat told him they were needed.

1. Mr Kadir Nedjat says that on a few occasions he observed Mr Cross accepting orders and payment for food without entering the data into the cash registers. On other occasions, Mr Nedjat said he saw Mr Cross enter the details of the orders into the cash register with a zero charge. I think cross examination significantly weakened his evidence on this point.

1. Mr Kadir Nedjat says that in mid to late 2009 he was at his family home with his father, Mr McCrudden and Mr Akcan when Mr McCrudden drafted what is now the Contested Partnership Document.

1. I did not think that cross examination of Messrs Bicer, Nguyen or Isaac demonstrated that they had given false or dishonest testimony, and nor was I left with the impression that they had been evasive or that they had answered questions in a less than candid manner. Having said that however, I need to record some aspects of their, and Mr Nedjat's, evidence which affects my reception of their versions of events:

(1)   Each of them (and Mr Wroblewski) is a friend of Mr Akcan. Not only that but Mr Nguyen and Mr McCrudden are involved in the narrative beyond the admissions. Mr Nguyen is the same person who accompanied Mr Akcan for his visit to Mrs Cross (and to Mr Cross) to obtain signatures on the Contested Partnership Document. Mr Kadir Nedjat and Mr Ahmed Nedjat accompanied Mr Akcan to the Club on 6 January and on Mr Fletcher's evidence was said by Mr Akcan to be the persons with whom he wanted to run the Bistro at the Club. Further, it seems that Mr Akcan was present when Mr Kadir Nedjat (T349.35-350) and Mr Isaac (T400.13) saw Mr McCrudden for the purpose of preparation of their affidavits and that Mr McCrudden told Mr Isaac what he needed. Further, Mr Akcan spoke to Mr Isaac the day before Mr Isaac gave evidence in Court: T399.40-T400.4. Mr Kadir Nedjat admitted that Mr Akcan had spoken to him at the time of preparation of his affidavit and that he suggested to him that the conversations about the partnership had taken place (see T35-39) and that Mr McCrudden had done so as well but "not so much". He also said in his affidavit that he heard his father and Mr McCrudden discussing the problems Mr Akcan was having with the Crosses concerning the "profits" of the Bistro and that he, Mr Kadir Nedjat, called Mr Akcan to the house following which Mr McCrudden prepared the Contested Partnership Document: see para 28-29.

(2)   The conversations seemed to involve Mr Cross making admissions rather readily. This is particularly so with Mr Bicer's evidence. Moreover, Mr McCrudden's evidence of Mr Cross' admissions are almost identical with Mr Akcan's evidence of what Mr Cross said to him at their first meeting.

(3)    The defendants contended that the admissions could not be relied on to establish a partnership for which otherwise there is no evidence. I am unable to accept that submission in that form because there are some items of evidence apart from the admissions which are suggestive of a partnership and the admissions, if accepted as having been made, are important in determining whether the plaintiff's allegation that there was a partnership is made out.

1. It was not put to Mr McCrudden, Mr Bicer, Mr Isaac or Mr Nguyen that the reason that they were giving their evidence (including claimed admissions) was because they are friends of Mr Akcan. Mr Evans claimed that it is not open to Mr Silver to impugn these witnesses' credit by asserting that their evidence was motivated by a desire to assist Mr Akcan.

1. In this case there was no doubt that by the affidavits served the defendants contradicted the evidences of these witnesses. There was no dispute on the witnesses' part (or on Mr Kadir Nedjat's part) that they are friends of Mr Akcan. Although there was a suggestion that Mr McCrudden was a friend of the Crosses as well and he said he had acted for Mrs Cross in a matter connected with her daughter's dress shop and Mr Isaac had worked at the Bistro and left on good terms.

1. When counsel agreed that no Browne v Dunn point would be taken the result, on my understanding, is that it was not necessary for counsel to put all of the matters asserted by counsel's own client to a witness who had given contrary evidence. Usually an agreement of this kind is made because it is clear there is a controversy about fact X or Y relevantly through the affidavits served by each side and counsel do not wish to expend time formally putting every contested allegation to every witness. The question arises as to whether it is necessary for counsel who wises to impugn a witness' veracity on some ground outside the factual matters to which that witness has deposed, and to which witnesses for counsel's client have responded or had the opportunity to respond, must put that particular matter to the witness. The rule in Browne v Dunn has often been described as a rule of fairness not only to a party but to the witness if a finding adverse to the witness is to be made: see Vines v Australian Securities and Investment Commission (ASIC) [2007] NSWCA 75, Bales & Anor v Mills [2011] NSWCA 226. I accept that it is open to counsel to submit that it is relevant in assessing a witness' reliability that the person is, or is not, connected with, or friendly with, or employed by a party without counsel having put to the witness that his or her evidence is less reliable by virtue of that fact. However, in my view, counsel ought not be permitted to assert that a witness' evidence was fabricated because of friendship with the party calling that witness without putting that proposition to the witness in question. Similarly if it is to be submitted that the evidence which a witness has given in his affidavit or in Court is evidence that was "fed" by the party calling that witness or by that party's legal advisor, then I think that proposition should be squarely put to the witness. Mr Silver did obtain an admission from Mr Nedjat that I have earlier described and an admission from Mr Isaac that Mr Akcan had been present with Mr McCrudden when Mr Isaac's affidavit was prepared. Mr Silver did ask them both about the process they went through in preparing their affidavits but did not put to either of them that the evidence they had given was false and had come from Mr Akcan or Mr McCrudden. He did challenge Mr Bicer and Mr Nguyen's evidence but did not put to them that their evidence was not their own. Mr Silver did not put to Mr Nedjat that the content of the critical conversations deposed to by him had come from Mr Akcan or Mr McCrudden.

Mr Cross' credibility

1. Mr Cross (like the plaintiff) tended to give unresponsive answers. There are a number of aspects of his evidence that lead me to conclude that he is an unreliable witness.

(1) There are clear and significant discrepancies between the wages shown in the wage book and the amounts in the time sheets. Mr Cross admitted that he had written the word "PAID" on the timesheets and had undertaken the calculations as set out on the timesheets but he denied that the amounts noted on the timesheet recoded what had been paid by him to the employees. I am persuaded that the figures recorded on the time sheets are the amounts paid to the employees and that the figures in the wages book, reflected also in the BAS statements, are an understatement of wage payments. Mr Cross, even though he had sought and has been granted a certificate under s 128 of the Evidence Act 1995 (NSW), would not admit that the "PAID" endorsement and his signature reflected what he had paid to the relevant employees. This has a dual consequence - it demonstrates that Mr Cross is prepared to act dishonestly for his own benefit and also that he was not truthful in this Court.

(2)   Mr Cross denied that he was made aware of the Club's interest in licensing a new caterer by the plaintiff. Mr Wroblewski said that Mr Cross had told him that the plaintiff had told him about the Club's interest which was not challenged in cross examination: see T302-310 and para 6 of Mr Wroblewski's affidavit, and seemed to be accepted in submissions: see DCS, p 38.

(3)   I found his evidence as to the discrepancy between takings revealed in October 2007 and the amount declared as implausible. He attempted to attribute the rather large difference to errors made by the staff on the cash register. I can readily accept that a small number of errors might be made but the cash register allows for transactions to be voided or cancelled and Mr Cross was unable to identify any staff member who had made the significant errors, which had led to the large discrepancy in question.

(4)   Mr Cross' failure to retain print outs from the cash register before 12 February 2010 was surprising given the need to retain records for tax purposes: see T521-522. Mr Cross claimed that he did not rely on these print outs for his business as cash in hand was the best information as to earnings, but the full receipts would be a very useful record and much more likely to be acceptable to any person investigating the Bistro's earnings.

(5)   The defendants have produced not a single cheque butt from the business prior to 12 February 2010 or other record. The defendants rely on the evidence of Ms Bechara (their former solicitor who was asserting a lien for unpaid fees over documents held by her) that the defendants did produce cheque butts to her but after Ms Bechara was cross examined she produced all remaining documents in her possession and no cheque butts were produced. The defendants did not seek to question Ms Bechara further about her production to the Court. Unless Ms Bechara failed to comply with the orders made for production, and it was not suggested she had, the sum total of all documents produced by her establishes, on the balance of probabilities, that she did not receive any cheque butts notwithstanding her evidence on 19 March 2013 that she had.

(6)   The visit to Mr McCrudden is incongruous if it had nothing to do with the plaintiff since Mr and Mrs Cross had previously used their own lawyers and Mr Cross had never used Mr McCrudden for legal work connected with his business. Mr Cross' said that Mr Akcan accompanied him to meetings with Mr McCrudden because he needed Mr Akcan to show him where Mr McCrudden's chambers were. This explanation was itself very weak but even more so given his acceptance that he went back with Mr Akcan to Mr McCrudden's chambers on the second occasion. Mrs Cross' presence at the first meeting is relevant too since her evidence was that she left management of the financial side of the business to Mr Cross (see T721.26-39) and she would not have needed to be present to discuss the terms of the license. Indeed, she said that she had attended on the understanding that she had to sign the license, yet Mr Cross did not say that was the reason for attending on Mr McCrudden.

(7)   Mr Cross asserted that Mr McCrudden had undertaken to contact the Club's solicitor and discuss the clause of the license, which implicitly suggests that that is how the clause was changed. However, there is no evidence that Mr McCrudden did contact Mr Henke and Mr Henke, a witness for the defendants, gave no such evidence.

(8)   I did not find Mr Cross' account of why he paid $5K to himself and his wife in December 2009 convincing. His reason for appointing Mr Akcan as bookkeeper, when he already had a bookkeeper, emerged in cross examination. It was based, he said, on the problem that the current bookkeeper was taking records away from the Bistro and lived at a considerable distance from the Bistro. He said in cross examination that when Mr Akcan sought payment it was calculated on the same amount as the existing bookkeeper. Mr Cross had not said anything about the conversation with Mr Akcan in his affidavit and nor did he say that he told Mr Akcan that he wanted him to carry out the bookkeeping at the Bistro. Mr Akcan did carry out the work at the Bistro until June 2008 but Mr Cross says he decided not to continue using Mr Akcan because he says it meant having to wait to the next day to speak with Mr Akcan: see T708.34-39. He does not say that he enquired of Mr Akcan whether he had the appropriate skills to carry out the bookkeeping.

(9)   Mr Cross' evidence (see para 88 of his affidavit dated 1 March 2012, Exhibit A6, p 6015) for not looking at the content of the Contested Partnership Document Mr Akcan put in front of him in January 2010 at the Bistro was that he did not have his glasses, which was somewhat implausible.

1. I should mention that the plaintiff's submissions seek to ascribe to Mr Cross the deliberate deletion of data from the Bistro cash registers. The case against Mr Cross on this has the following steps:

(1)   The plaintiff advised the defendants of his intentions to start proceedings on 27 January 2010.

(2)   On 11 February 2010 the data from Cash Register 1 ("CR1") was wiped.

(3)   On 12 February 2010 the data from Cash Register 2 ("CR2") was wiped.

(4)   Mr Cross says that on 11 February he was told that CR1 was not working but he could not remember who told him. He proffered power surge as a likely cause but there is no evidence of any other equipment being damaged and repaired.

(5)   The defendants never informed the experts retained by the plaintiff that data had been removed from CR1 and CR2.

(6)   It should be inferred that the deletion was deliberate to prevent the plaintiff having access to it and hence discovering that earnings were in fact greater than the amount declared.

(7)   It should be inferred that deletion was implicit recognition that the plaintiff was a partner because there would have been no reason to hide the true figures if the plaintiff was not a partner. Similarly, the attempts by the defendants to hinder or obstruct the plaintiff's experts from obtaining information for the period from 11 February 2010 also demonstrates the defendants implicit recognition of the plaintiff's status as a partner.

1. I agree that the deletion of the data looks suspicious but a central flaw in the plaintiff's argument is that it ignores the fact that the data on both CR1 and CR2 was deleted, not by Mr Cross but by Mr Birdsall, the cash register technician. His evidence was that having failed to be able to have the machine operate properly he decided to clear the data (which, he now concedes, was by way of a data clear rather than a RAM clear) and without reference to Mr Cross. It seems that Mr Birdsall believed that the cause of the CR1 problem was lightning and he decided, without even testing CR2, to clear it as well. Again that was without reference to Mr Cross, when Mr Birdsall brought back CR1 to the Bistro.

1. I accept Mr Birdsall's evidence. Indeed I do not think cross examination established any basis to reject it and, accepting his evidence as I do, the removal of data cannot be ascribed to Mr Cross.

1. There was an incident in relation to the testimony of both Mr and Mrs Cross which I should record. When Mr Cross was called to give evidence he did not take an oath but rather an affirmation: T435.8. Mr Evans took this up with him (see T488-489) and asked how could Mr Cross, a man very connected with the Church, who greeted the interpreter for Mrs Akcan (the plaintiff's mother) Mr George Alkan with the sign of the cross, not take an oath. Mr Cross' explanation was that he did not want to touch the bible and hence chose to make an affirmation. Mr Cross asserted that Mr Alkan had not touched the bible when he had been sworn as interpreter. Mr Evans then asked Mr Cross if he was willing, like Mr Alkan on his assertion, to take an oath without touching the bible and Mr Cross said he was and he did so. I myself had no recollection of Mr Alkan not touching the bible but I accept that it is possible he did not. When Mrs Cross gave evidence she also refused to touch the bible when she took an oath. I found the refusal to hold the bible surprising but I am not able to determine whether what Mr Cross said about the Syrian Orthodox Church's attitude is true or false and although Mr Evans invited me to treat this as a matter going against Mr Cross (and Mrs Cross' credibility) I am not able to do so.

1. There are two further events on which Mr Evans sought to rely and which I need to describe. In February 2010 a meeting was organised between the defendants and Mr Akcan with a monk in the Syrian church. The purpose of the meeting was to try to resolve the conflict which had arisen between the plaintiff and the Crosses and that attempt failed. Shortly after that Mr Akcan commenced proceedings against the Crosses and a few weeks after that Mr Akcan sought orders for inspection of the defendants cash registers at the Club. The plaintiff claims that his attempts to examine the cash registers were met with significant obstruction, and there was controversy brought about by Ms Bechara's refusal to permit an expert retained by Mr Akcan to take away copies of the print outs that he had obtained, unless he signed a document that he did not wish to sign (and validly so) and allegations about how that was handled.

1. Mr Evans made the point that the willingness of the defendants to attempt a quasi mediation with a monk in a context where they deny any agreement for partnership is surprising. It is not uncommon for defendants to be willing to attend mediations where the plaintiff's case is weak or even groundless and I do not think it is safe to draw any conclusions from a party's willingness to discuss resolution. I might add that a rather odd feature of the informal settlement negotiation in the opposite direction is that Mr Akcan himself did not actually attend but rather had Chris attend on his behalf.

1. So far as the obstruction that Ms Bechara is said to have engaged in is concerned, Mr Evans' theory was that the unwillingness to give the plaintiff's free access was a tacit admission that there was a partnership. Why, he asked rhetorically, would the defendants wish to minimise the access of Mr Akcan to the partnership records if he was not a partner. On the defendants' case, he contended it would not matter how much the partnership had earned. I accept that a person who had nothing to fear about the conclusion on whether a partnership existed might very will be relaxed about evidence which would establish that the business, said to be the subject of the partnership, had earned a lot of money but again there are many cases in which a defendant strongly contests quantum even where the defendant's primary case is that no amount is payable at all.

1. The second problem here is that there is no proof that the overly zealous stance of Ms Bechara was as a result of instructions, or even that Ms Bechara's attempt was designed to prevent the documents which had been printed from being obtained. It was not established that the defendants were persons responsible for the refusal to hand over material and there was no evidence that either of them acted in an intimidating manner towards Mr Sidoropolous (see T889-890). Whilst it might well be appropriate to treat the actions of a solicitor as those of the client on normal agency principles, I do not think that that approach can apply here to ascribe "guilty intent" to Mr and Mrs Cross. The plaintiff's point about the lack of information is tied to the undisputed fact that data was removed from both registers in February 2010. I have, however, already pointed out that there is no evidence that Mr and Mrs Cross wiped the information from the computer even though I agree that the timing of the data being wiped rather suggested that the defendants had some involvement in that. Mr Cross' evidence about a power surge was not corroborated by anyone except that Mr Birdsall thought that the damage was caused by lightening. The plaintiff tendered a report from the Bureau of Meteorology which seemed to rule out electrical storm on 9 February 2010 (or 10 February). Given that Mr Cross did not maintain that the cash register was damaged by electrical storm (see T474) the significance of the bureau's report is very limited.

(11)   Not one partnership meeting occurred and not one discussion occurred about how and when profit would be calculated and distributed.

(12)   He met with the Club officers in 2010 and made allegations of bribery (which allegations were not substantiated) and offered to run the Bistro (with Mr Nedjat (Senior) and, on Mr Fletcher's evidence, Mr Kadir Nedjat) which is inimical to the claimed partnership interest in the Bistro (see T274-277).

1. On the other hand in support of the plaintiff's case are these key matters:

(1)   Mr Akcan accompanied Mr and Mrs Cross to a meeting with Mr McCrudden in connection with the Bistro on two occasions, in the case of Mr Cross, and at least one, in the case of Mrs Cross, and arranged the first meeting. Mr Cross agreed to attend a meeting with a barrister who was a close friend of Mr Akcan rather than use one of the solicitors who he normally used. The conversation with Mr Akcan which Mr Cross agreed he had with Mr Akcan following the receipt of the license agreement must have been well after the Club had given approval since the defendants had even moved in to the Club, and Mr Cross' evidence that he rang Mr Akcan to tell him that he and Mrs Cross had been successful in obtaining the license (T469.42-48) did not fit either in timing or with what he said in his affidavit at para 47: see Exhibit A6, p 6099 where he says he told Mr Akcan he had received the draft license and that he needs to obtain legal advice.

(2)   Mr Akcan gave evidence that before approaching the Crosses with his partnership proposal he had approach a friend to the same end but the friend had not wished to take up the proposal. Mr Cross (para 21) said that Mr Akcan had mentioned the fact that he had spoken to a friend about the opportunity giving some credence to Mr Akcan's claim that he was looking for partnership.

(3)   Mr Akcan received $5K in December 2007 at the same time that Mr and Mrs Cross received the same amount. Mr and Mrs Cross have not provided a convincing explanation as to why that money was paid without any reckoning of "fees" and of why they received payment of $5K on the same day.

(4)   Mr Akcan carried out the bookkeeping for the Bistro from September 2007 to June 2008 in circumstances where the defendants give no explanation of a discussion with him that might constitute a retainer.

(5)   Mr Akcan did attend the chefs meeting and spoke at it. He spoke in terms attested to by Mr Widjaja, a witness called by the defendants, that were consistent with him being a partner in the Bistro.

(6)   Mr Akcan seems to have organised some crockery and some pots and pans and cutlery for the Bistro and samples, cleared away plates and folded napkins on occasions. Mr Cross accepted that he may have told Mr Akcan that the Bistro needed more crockery or cutlery (see Exhibit A6, p 6023). It seems unlikely that he would mention this if the topic was of no concern to Mr Akcan.

(7)   I have referred to the limited input from Mr Akcan but there is no doubt that he drew the opportunity for the Bistro to the Crosses attention. Although I think it is clear that Mr Akcan's connections with the Club were not critical in obtaining the license, it is entirely possible that the Crosses thought that his connections were important.

1. I return to the topic of the evidence of Messrs McCrudden, Bicer Nedjat, Mr Nguyen and Mr Isaac as to admissions said to have been made by Mr Cross.

1. I am unable to conclude that Mr Bicer, Mr Isaac and Mr Nguyen have falsely sworn to the admissions they say were made when the cross examination did not impair their credibility and, even less so, when there are at least some other items of evidence that support Mr Akcan's claim to a partnership. Nor is it easy to conclude that, although not deliberately false, their evidence of what they each say they heard Mr Cross say on different occasions ought be treated as unreliable. Moreover, Mr McCrudden has given evidence of significant admissions made by Mr and Mrs Cross which cannot be ignored when considering the totality of the evidence and even allowing for the concerns about his evidence to which I have earlier referred. I do not accept that Mr McCrudden and Mr Akcan's evidence about what occurred at the first McCrudden meeting can be seen to have been completely eroded by cross examination of Mr Akcan at T200.48-T201.18 as contended by Mr Silver: see DCS para 144.

1. I have omitted Mr Nedjat from the comments in the preceding paragraph because I do have some concerns about his reliability but I do not intend by that omission to express a view that he has been demonstrated to have given deliberately false evidence. The admissions that he has deposed to are not significantly different to those attested to by the other witnesses for the plaintiff.

1. Mr and Mrs Cross have not provided a convincing explanation as to why they went on two occasions (in the case of Mr Cross, and at least one occasion in the case of Mrs Cross) to see Mr McCrudden with Mr Akcan if he had no involvement with the business. Mr Cross also provided no convincing explanation of why he was calling Mr Akcan about his problems with the license and accepting Mr Akcan's suggestion that they see Mr Akcan's good friend Mr McCrudden when Mr Cross had access to other lawyers.

Findings of Principal Facts

1. I make the following findings of fact:

(1)   Mr Cross rang Mr Akcan to tell him about his concerns about the license and not to tell him that he and his wife had been successful in the tender. Mr and Mrs Cross accepted Mr Akcan's suggestion that they see Mr McCrudden and Mr Cross attended Mr McCrudden's chambers twice with Mr Akcan. I do not accept that Mr Akcan was in attendance only because he knew where Mr McCrudden's chambers were located or because he was "family".

(2)   Mr Cross did, early in the life of the Bistro, on a number of occasions describe Mr Akcan as being in partnership with himself and his wife.

(3)   Mrs Cross signed the Contested Partnership Document knowing what the content of the document was or accepting Mr Akcan's description of it as an acknowledgment of partnership.

(4)   Mr Cross arranged for a payment of $5K to each of Mr Akcan himself and his wife as a distribution of partnership profits.

(5)   Mr Akcan's involvement with the Bistro was limited apart from the bookkeeping but he did undertake some activities and have some involvement consistent with him having an interest in the business. In the early days of the Bistro and up to the first half of 2008 he did assist albeit in a limited way, such as clearing away plates, speaking to customers, and wrapping cutlery. Mr Akcan sought to assist in matters involving the kitchen staff including attending a meeting of the chefs and speaking at that meeting in a manner consistent with him having an interest in the Bistro and in obtaining samples for the Bistro and organising the purchase of some kitchen accessories.

(6)   I find that Mr Akcan endeavoured to obtain the Bistro license for himself (and the Nedjats) in early January 2010.

(7)   Whilst the motive for admitting Mr Akcan into the partnership is vague, it may well have been in part arisen because Mrs Cross was close to Mr Akcan and because he had brought the opportunity to them with the real possibility that the Crosses were under the impression that Mr Akcan had more influence with the Club than he in fact did. The Crosses entrusted Mr Akcan with the bookkeeping which seems to reflect their view that he had some business skills. I think it is likely that Mr Cross came to realise that he had unwisely granted Mr Akcan a share of the profits for so little input and possible that Mr Akcan appreciated the grant to him of the one third share was unduly advantageous which may have caused him to be less than forceful about his rights.

(8)   In the view of the findings in (1) to (5) and having regard to (7), and notwithstanding (6) and my significant concerns about Mr Akcan's credibility, I accept Mr Akcan's evidence that Mr and Mrs Cross and he agreed to enter into a partnership together to conduct the Bistro in the terms set out at paras 21 and 26 of his affidavit and that he did perform some work other than bookkeeping at and in connection with the Bistro, at least in its first year.

1. I should note that I have given consideration to the possibility that the plaintiff and the defendants did agree on a partnership in April 2007 but that by June 2008 (when Mr Akcan ceased to carry out the bookkeeping role) had agreed expressly or implicitly that the partnership was at an end. That scenario would help explain some (but not all, by any means) of the troubling features of the evidence of both parties but neither Mr Akcan nor the defendants contended for such a finding even on an alternative basis and accordingly I have not embarked on a detailed analysis of it.

Conclusion on Partnership

1. For the reasons given I conclude that Mr Akcan and Mr and Mrs Cross were each one-third partners in the Bistro.

Partnership Period

1. The defendants contend that, if contrary to their principal contention that there was no partnership between themselves and Mr Akcan, the partnership came to an end by 30 June 2010. The defendants rely on the following matters:

(1)   The agreed terms of the partnership was three years based on the Contested Partnership Document and the fact that the license was for three years: see T272.11-14.

(2)   The accusation by Mr Akcan that Mr Cross had bribed Mr Eagleton to obtain a renewal of the license and Mr Akcan's bid to take over the Bistro were inconsistent with the relationship of mutual trust and confidence inherent in a partnership: see Birtchnell v Equity Trustees Executors and Agency Co Ltd (1929) 42 CLR 384 per Dixon J at p 407 on this fundamental aspect of the partnership relationship.

(3)   Alternatively, Mr Akcan's actions in

(a)   accusing Mr Cross of bribery and trying to take over the Bistro license for himself (and the Nedjats) and

(b)   his lack of involvement in the Bistro by 2009 (see T111, T121, T111.36 and Mr Akcan's affidavit, para 100, Exhibit A2, p 20110)

constitute an abandonment of the partnership: see Ryder v Frohlich [2004] NSWCA 472 at [12], [49] - [51], [124] - [125], [135] - [138] and see Keith Fletcher, The Law of Partnership in Australia, 9th ed, 2007, Law Book, pp 232-233. See also Pearce v Lindsay (1860) 3 De GJ & SM 139, 46 ER 591 cited in Fletcher, The Law of Partnership in Australia and Smith v Baker [1977] 1 NZLR 511 in which Pearce v Lindsay was applied.

1. I do not accept the contention that the partnership was expressly stated to be for a period of 3 years. Mr Akcan or the Crosses led no evidence to that effect. The Contested Partnership Document does not so provide either. It simply speaks of a review at the end of the 3 years. The fact is, however, that the partnership having no specific term is a partnership at will which could be terminated on reasonable notice. That fact and the impending expiration of the license are relevant matters in determining how the events of early 2010 are to be interpreted.

1. I think it is probable that Mr Cross became aware of the bribery allegations because Mr Henke interviewed him following Mr Akcan's allegations. There is also the rather strange circumstance that after Mr Akcan had been rebuffed by the Club he then approached Mr Cross to have him sign the Contested Partnership Document. It is not clear whether Mrs Cross signed the Contested Partnership Document before or after the 6 January 2010 but if it was before it was, on the balance of probabilities, it was not long before. I think it is more likely that that the approach to Mrs Cross occurred after 6 January 2010.

1. Mr Evans disputes that Mr Akcan's approach to the Club in January 2010 was conduct in breach of the partnership but in my view it is aptly so described. In Fletcher, supra p 232, the learned author states that termination can be inferred from the conduct of the parties. In Pearce, supra, at p 14, the question posed was whether there was "conduct on the part of the Plaintiff" showing that the partnership was on his part considered to have been at an end: p 146 per Lord Turner with whom Lord Campbell agreed. Mr Akcan's actions were inconsistent with him wishing the partnership to continue. Mr Cross' rejection of the existence of the partnership was itself inconsistent with him wishing a partnership to continue.

1. Having regard to the totality of the circumstances including Mr Akcan's complete lack of involvement in the business (in any capacity by late 2009 and early 2010), I am satisfied that the partnership by reason of the conduct of the parties ended in the first half of 2010 and no later than 30 June 2010. Silent partners normally supply capital but it is theoretically possible for a partner to provide no capital and to perform no work: see Pooley v Driver (1876) 5 Ch D 458 at 473 per Jessel MR. It was not, however, Mr Akcan's position that he was required to do nothing in return for his one-third share. By late 2009 (and on his own evidence, contrary to the position at the commencement of the Bistro) that was the situation. This state of affairs and his actions in relation to the bribery allegation and attempt to obtain the license to the exclusion of the Crosses and Mr Cross' refusal to admit that a partnership existed point to an abandonment by two of the three partners of the partnership.

1. This does not mean that what occurred after 30 June 2010 and beyond is irrelevant as a partner continues, after termination, to have obligations to his or her fellow partners in relation to partnership assets: see Chan v Zachariah (1984) 154 CLR 178. It would appear to be necessary to appoint a receiver who can determine what use has been made of the partnership assets from 30 June 2010 and how that use is to be accounted for. There may be difficulties in determining what are the partnership assets (a matter adverted to by Mr Silver in submissions) particularly since the Club had apparently not reviewed the licence but allowed it to continue on a month-to-month basis and hence raising questions about the utility and cost of such a step. I will provide the parties with the opportunity to make submissions as to precisely what orders should be made and how the partnership is to be formally wound up.

Profits

1. I shall now give consideration to the amount to which the plaintiff is entitled.

The quantum of Mr Akcan's claim

1. Mr Akcan claims, through the PCSQ, that he is entitled to $1.884M. That calculation is made up of the following elements:

(1)   One third of the profit contained in the tax returns for the Bistro adjusted to allow for removal of deductions which do not relate to the Bistro ("the BAS return basis"), i.e. $485, 348 plus.

(2)   One third of the revenue which he claims was not declared by the defendants, i.e. $1, 585, 860 based on what has been described as "the transactional method" mid range average sales per transaction (see page 10 PCSQ) from November 2007 to February 2013, or alternatively one third of the revenue described by means of the BAS returns basis plus an uplift of 13.2% the "the proportional method" from April 2007 until 31 March 2013, i.e. $947, 946.60: see paras 40-41 of PCSQ.

(3)   $70K already received.

1. The transactional method is based upon an examination of B1 and C1, which record a total number of transactions on the cash register. Mr Evans presents a complicated theory, which has at its base a premise that not all transactions have been accounted for and utilising an average transactional value. I am using this truncated description because the defendants contend that Mr Akcan should not be permitted to advance a case for profits based on this theory for reasons I shall explain.

1. When Mr Evans opened the case for Mr Akcan on the first day he outlined the case for undeclared income as being based on a report by Mr Izzet in which Mr Izzet concluded that the defendants had understated the profits of the business by a figure of over $5M: see T11.

1. Mr Izzet's report was based upon an assumption that the B1 and C1 reports disclosed the real earnings for March and April 2010, in contrast to the declared earnings. I have referred to that assumption previously and to the fact that it had now been accepted that it is an erroneous assumption. For that reason, much of the Izzet report was objected to and effectively not pressed (see T922) and the remaining material, dealing with other topics, was either conceded or rejected (T922-926). Further colour to the importance of B1 and C1 assumptions can be seen at T476-487.

1. Later in the proceedings and after the defendants had been cross examined and on the first of two days for submissions, Mr Evans sought to tender a new report from Mr Izzet (see T866-873) but I ruled that it was too late for Mr Akcan to serve and rely on that report: see T873. Mr Evans, in effect, seeks to advance the same case that Mr Izzet's new expert report was to support, without any expert evidence.

1. Mr Silver, in DCSQ, objects to dealing with a case on quantum that is entirely different to that which the defendants came to Court to meet. That case relied on an assumption, which the defendants, justifiably as matters turned out, regarded as erroneous. Mr Silver submits that the defendants should not have to deal with a complex new theory about documents and their meaning, which was not articulated until closing submissions. I accept that submission and do think it is appropriate to require the defendants to meet a case that was not identified in opening, or indeed until very late in the hearing, and which could involve quite extensive and detailed expert assistance if it is to be countered.

1. I therefore will pay no regard to any case for losses based on the transactional approach.

1. Mr Evans has a fall back position, which is the proportional approach. This is based on the discrepancy between the figures contained in September and October 2007 cash register reports (and which spans the period from the commencement of trading until 31 October 2007) and the BAS returns for those months. Mr Akcan points to the fact that the cash register reports reveal total sales of 15% more than the BAS returns, and he says that all of the earnings for April 2007 to October 2007 should be taken to be as contained in Exhibits F and G.

1. I have referred earlier to the fact that I did not find Mr Cross' explanation for the discrepancy plausible. Mr Evans submits that it is appropriate to utilise that same 13.2% uplift for all the BAS figures (as adjusted) thereafter. The 13.2% is the percentage differential between September and October 2007 till takings and the declared BAS figures. I have also referred to the paucity of records for the Bistro prior to February 2010, which would enable the plaintiff to better mount a claim for understatement of income until February 2010. I do not think that the Court is precluded in such circumstances from placing heavy reliance on what limited information there is.

1. Accordingly I accept that the starting point is that earnings should be treated as being, on the balance of probabilities, 13.2% higher than those declared through the BAS statements subject however to two matters. The first is that the uplift ought not extend beyond February 2010 being the date from when cash register sales information is available. Secondly, it is clear that the defendants have significantly understated the wages paid. If the full level of wages were declared the profits would accordingly have been reduced, and it is entirely possible this would equal or exceed the 13.2% uplift figure since wages are such a significant proportion of the expenses of the Bistro. I will provide the parties with an opportunity to calculate the amount of the 13.2% uplift until February 2010 and to calculate the total of undeclared wages up to that time, provided the figures to support those calculations are available in the evidence already before the Court. There will need to an adjustment to allow for earnings from February 2010 up to 30 June 2010 to which Mr Akcan is also entitled.

Conclusion

1. I conclude therefore, that the plaintiff is entitled to:

(1)   One third of the profits arising out the net earnings as declared in AADD's BAS Statements from the commencement of the partnership up until 30 June 2010, with

(a)   the adjustments that have already been agreed in relation to the period until February 2010 and referred to in [14] above, taken into account for the period until 30 June 2010.

(b)   An adjustment of gross earnings to be increased reflecting the 13.2% understatement of earnings referred to in [99] - [100] above but only until 12 February 2010.

(c)   An adjustment to the net earnings in the period until 30 June 2010 arising out of the understatement of wages

(2)   Less $70K from which Mr Akcan says he has received.

1. I have referred to the need for the partnership assets to be ascertained and dealt with from 30 June 2010 (see [89] above).

1. I will provide the parties with an opportunity to provide submissions on the following:

(1)   The amount that the defendants are required to pay to the plaintiff in accordance with the calculations referred to in the preceding paragraphs,

(2)   The orders to be made including how the partnership is to be wound up, and

(3)   Costs.

Referral

1. It is clear that there is a significant discrepancy between the wages book and the timesheets for employees. I shall direct the Registrar to provide a copy of this judgment to the Office of State Revenue so that, if that office deems it appropriate, enquiries can be made as to whether the Bistro business has under paid amounts due. The exhibits should be retained for one year to enable the Office of State Revenue or another relevant government department, if appropriate, and if entitled, to seek access.

**********

Decision last updated: 18 June 2013