Giumelli & Anor v Giumelli

[1998] HCATrans 367

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Perth  No P55 of 1997

B e t w e e n -

GIOVANNI GIUMELLI and ROSA GIUMELLI

Appellants

and

ROBERT JOHN GIUMELLI

Respondent

GLEESON CJ

McHUGH J
GUMMOW J
KIRBY J
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT PERTH ON TUESDAY, 20 OCTOBER 1998, AT 10.59 AM

Copyright in the High Court of Australia

MR A.R. CASTAN, QC:  May it please the Court, I appear with my learned friend, MS F.G. PHILLIPS, for the appellant.  (instructed by Michael Rennie)

MR M.J. McCUSKER, QC:  May it please the Court, I appear with my learned friend, MR R.A. HARRISON, for the respondent.  (instructed by Dwyer Durack)

GLEESON CJ:   Yes, Mr Castan.

MR CASTAN:   If the Court pleases, this appeal raises at least two interesting dilemmas, a dilemma that has been much debated in relation to the concepts that found estoppel, the dilemma of the operation of what is termed, sometimes, reliance detriment as against expectation detriment and, secondly, the dilemma of the way in which it is posed by the way in which a constructive trust can be used and on one view of it the interesting question of whether the constructive trust is truly an institution, a separate set of proprietary rights obstructing ‑ ‑ ‑

GUMMOW J:   These obstructions have misdirected attention in this litigation, if I may say so.

MR CASTAN:   In one sense, that is true.

GUMMOW J:   Now, on page 891 you seek an order that the claim be dismissed.  Do you still persist with that?  Ground 1 of your appeal.

MR CASTAN:   Yes, the orders we seek are expressed in our submissions.

GUMMOW J:   They involve some moderation with what you have said, do they not?

MR CASTAN:   Yes, they do and what we say is that the order of his Honour Justice Nicholson should be restored.

GUMMOW J:   But not in respect – what, just in respect of the house?

MR CASTAN:   Just in respect of the house.

GUMMOW J:   Nothing more.

MR CASTAN:   And nothing more.

KIRBY J:   You cross‑appealed against that order in the Full Court?

MR CASTAN:   We did and at special leave stage we indicated that we abandoned any resistance to the order of his Honour Justice Nicholson and that we accepted that that order in relation to the house ‑ ‑ ‑

GUMMOW J:   I know you said that but then you put on the notice of appeal. 

MR CASTAN:   Perhaps I should make it clear that our position is that we do not persist in seeking any order that seeks to go behind the order of his Honour Justice Nicholson.  In substance, we say he was right and we accept that Dillwyn v Llewelyn and the whole line of cases that followed that, of course, which would apply to what has been termed the second promise and the expenditure of actual money by ‑ ‑ ‑

GUMMOW J:   Well that would leave two issues, I suppose.  The first one would be whether the subject matter should not be more than the house.

MR CASTAN:   Yes.

GUMMOW J:   That is to say whether the Full Court is not correct in saying the reliance on detriment or lack of detriment was erroneous is a factor to be used by Justice Nicholson to deny anything more than the house.

MR CASTAN:   Quite.

GUMMOW J:   That would be one issue, and another issue would be whether or not there should be more than a mere indebtedness, whether that should not be charged on the whole of the land, to overcome any conveyancing difficulties and to overcome the difficulty that this is a going concern with an orchard business being conducted there.

MR CASTAN:   And if the issue was merely whether the charge for the amount expended, as his Honour Justice Nicholson found, whether the charge extends to the whole of the land if I have understood what your Honour has put to me ‑ ‑ ‑

GUMMOW J:   Yes, but to secure what?

MR CASTAN:   To secure the amounts that his Honour Justice Nicholson found was the ‑ ‑ ‑

GUMMOW J:   And if you fail on the other issue, more than that.

MR CASTAN:   More than that if it is held that there is, in substance, a greater detriment.

GLEESON CJ:   Mr Castan, a very small matter.  Is there anywhere in the papers where we can find a plan which shows the relationship between the promised lot and the whole of the Dwellingup property?

MR CASTAN:   There is but without ‑ ‑ ‑

GUMMOW J:   Without it it is rather hard to make sense of the Full Court’s order.

MR CASTAN:   It is hard to make sense of it.  It is at page 743.  We have attempted to do a little better by having aerial photographs taken which are relatively current and therefore we put them in only by way of assistance to the Court rather than as, I might term, evidentiary material.

KIRBY J:   This involves drawing a slightly different perimeter, as I understand it, which would take in the home in which the respondent lived.

MR CASTAN:   Part of the difficulty ‑ ‑ ‑

GLEESON CJ:   Just before we ask Mr McCusker what attitude he has towards these photographs, can I ask you a related question.  On page 20 of your written submissions, in the last paragraph immediately preceding number 71 there is what looks like a fairly significant assertion of fact.  I do not remember seeing any reference to that in the judgments.  Is that fact established in evidence, because it sounds like the sort of fact that might also be established by these photographs?

MR CASTAN:   Yes.  What occurred at the time when submissions were called for for the purpose of the kind of orders that should be made by the Full Court, in view of the findings which it had made, part of the submission put by the then respondents, Mr and Mrs Giumelli senior, was that it was necessary to take into account what had occurred on the land since the time when Robert had left in 1985, in order to make an order, if they were going to fashion an order along the lines of a constructive trust as found by the majority, that took account of that improvement that had occurred in the intervening 13 years.  Material was submitted, including affidavit material, going to that issue which is expressed in that point.  It was not accepted by their Honours below.  It was rejected.

GLEESON CJ:   That, no doubt, is why I saw no reference to what looks like some important factual material in the judgments.

MR CASTAN:   There is no reference to it and the attempt to – part of the difficulty in this case, part of what we complain of, is that the fashioning of the remedy having determined, as their Honours did, that there should be something more than just the house and that it should include the orchard or the promised lot, however it might be delineated - and there was debate about that before their Honours in the Full Court when it came to determining the form of the actual order - but part of the difficulty was, and we complain of this now, that the court did not make any order that took into account in substance two vital factors.

One is that the work that was carried out on the land was the work of the partnership and a non‑party to this litigation was a participant in the partnership, a partner, namely Steven Giumelli, and that in giving a remedy of the kind that the court did below, to ignore, what we will call for this purpose, third party rights, the rights of a person not party to a litigation but a partner in the partnership which has carried out the work on the land, to not take that into account, on the one hand, that is to say his interest in the partnership and the activities that have gone on in the intervening 13 years, and to not take into account the improvements on the land to which the ongoing partners had contributed – leaving aside question of increase in value of land by reason of ordinary inflation - would be to do an inequity as against both the present appellants and a non‑party.

GLEESON CJ:   I understand that entirely but are we invited to deal with this appeal on the basis of the facts as asserted on page 20 of your written submissions, that is to say, that thousands of fruit trees have been planted on the land since the respondent left, that sheds and coolrooms have been constructed and that large amounts of money have been expended on water supply and storage systems.  They sound like very relevant facts if they have been proved in evidence.

MR CASTAN:   They have not been proved in evidence in the relevant sense because the question of the kind of remedy that was fashioned by their Honours in the Full Court did not arise at all below.

KIRBY J:   Yes, but should we be receiving this additional factual assertion if it is not in evidence at the trial?

MR CASTAN:   In our respectful submission, it is not possible to deal with the appeal without taking account of it and we are in the dilemma that it was refused by the court below when the ‑ ‑ ‑

GLEESON CJ:   Is there a ground of appeal complaining of the rejection of evidence?

MR CASTAN:   I think not but it was at the stage, of course - it was not a rejection of evidence at trial.  It was a case of rejection of evidence at the stage when it became apparent that what was being suggested was a constructive trust which would lead to the transfer of the whole of the land comprising a particular view of what the promised lot encompassed as at 199 ‑ ‑ ‑

GUMMOW J:   Your complaint really is that the Full Court should not have, itself, administered this remedy.  It should have said, if it was so minded, “Justice Nicholson got the wrong remedy.  We think this is the right sort of remedy.”  It has got to go back to work out how it fits in the facts which can then be led now knowing what the remedy is going to be?

MR CASTAN:   Precisely, your Honour, and taking into account the factors I have mentioned ‑ ‑ ‑

GUMMOW J:   You say we should do what the Court of Appeal should have done?

MR CASTAN:   Should have done, but can I draw your Honour’s attention to one other ‑ ‑ ‑

GUMMOW J:   But you need some footing to show that it should go back, as it were.

MR CASTAN:   Yes, your Honour, but can I take your Honours to one other factor that is absolutely critical to evaluating both this and the rest of the case.  I would ask your Honours to turn to page 757 of the appeal book, volume 4.

KIRBY J:   You had withdrawn the tender at the first trial.  It would seem that we cannot receive it if, in fact, it indicates facts that have occurred since the trial.

MR CASTAN:   There is no question that indicates that it is since the trial.  It is a current photograph and I can only ask your Honours at this stage ‑ ‑ ‑

KIRBY J:   Well, unless Mr McCusker consented for the purpose of illustrating an argument, I do not see how we can receive it.

MR CASTAN:   I do not think he does even for that purpose.

MR McCUSKER:    No, your Honours, I do not.

GLEESON CJ:   We began this discussion to which you generously responded by the offer of some photographs showing sheds and coolrooms by asking whether there is, in evidence, a plan of some kind that shows the relationship between the so‑called promised lot and the Dwellingup property generally.

MR CASTAN:   The nearest we can come to it is at page 743 and following but it does not quite provide the answer to the question that your Honour the Chief Justice posed to me.  It certainly encompasses some, at least, of that area which is marked to the bottom of the plan which includes the words “new brick house”, “new dam”, “main orchard”, “shed (and new coolrooms)”, “small transportable asbestos house (Steven’s)”, “closed road” over the left, “new orchard” and there is a ‑ ‑ ‑

GUMMOW J:   How would the order of the Full Court work on this plan?

MR CASTAN:   Well, there are two views about that also, your Honour.  It is not entirely clear what the order of the Full Court means but reading it literally ‑ ‑ ‑

GUMMOW J:   I mean, if it was an order for specific performance it would be unintelligible in a contract case.

MR CASTAN:   In our respectful submission, it has got severe deficiencies but I will illustrate them by reference to plan.  Taking it literally as it stands, what it refers to is a line to be drawn as to the southern boundary, to the immediate south of the house on the northern section of the property.

KIRBY J:   Where is that on 743?

MR CASTAN:   If one goes to 746, your Honour, I think it might be most helpful.  There are two views of where that is as a matter of construction of what their Honours said, because there are two houses.

KIRBY J:   Yes, but their Honours did reserve liberty to apply to a single judge for the purpose of clarifying the carrying into effect of their orders.

MR CASTAN:   Yes.  Taken literally, it would mean a line drawn to the immediate south of what is described as “small transportable asbestos house (Steven’s)” and one would find a narrow strip with a line drawn just to the south and extending from west to east.  Your Honours will see the small dark block marked “small transportable asbestos house”.  That is the house on the northern part of the property.

GLEESON CJ:   I think that is what is said in the submissions to be a mistake or a slip.

MR CASTAN:   And presumably it has been said that is a slip and what was intended was the house which, undoubtedly, is the house that was the subject of his Honour Justice Nicholson’s order which is the house marked “new brick house (Robert’s)” and if the order is construed as taking a line immediately to the south of that “new brick house (Robert’s)” then the line is drawn directly again from the western to the eastern boundary from right to left given that north is the bottom of the page on this sketch.

GUMMOW J:   Now would either of these lots be landlocked with no public road access?  They would both have public road access, would they?

MR CASTAN:   I think they would if we are talking about the effect of a line drawn as I just described.

KIRBY J:   I thought one of your submissions says they would be landlocked.

MR CASTAN:   No, that relates to the problem with the brick house in isolation.

KIRBY J: I see.

GLEESON CJ:   This may be something on which you rely, but that subdivision, if I can use that expression, gives Robert not only the new orchard but also what is called the main orchard.

MR CASTAN:   Yes, it does.

GLEESON CJ:   Is there any other orchard on this entire property?

MR CASTAN:   I am instructed it has been extended somewhat since the time of the order but not to a point where it would extend further south than the line drawn directly across the property west to east.

KIRBY J:   Is not what the Full Court tried to do was to make orders which would not only say what they had in mind but, as far as possible, indicate precisely what ought to be done but leave it to a single judge - instead of sending the whole thing back to the single judge, leave it to the single judge to determine where the perimeters should be if there were then a dispute which the parties could not sort out.

MR CASTAN:   That is one way of seeing what they have done, yes, your Honour.

GUMMOW J:   But what criteria was the judge to apply?

KIRBY J:   Presumably the reasons of the Full Court.

MR CASTAN:   Presumably the reasons.

GUMMOW J:   Which do not tell one.  I mean, it is a difficult one.

MR CASTAN:   We are unable to say.  One of the arguments here, of course, is that there is total uncertainty as to what was the promise.

GLEESON CJ:   Just take this one subject, that is, who was going to get the old orchard or, I am sorry, what is referred to on this plan as the “main orchard”.

MR CASTAN:   If one takes the line as being immediately to the south of “new brick house (Robert’s)”, then Robert takes the whole of the main orchard as well as the new orchard.

GLEESON CJ:   As well as the new orchard.

MR CASTAN:   Yes, your Honour, and no allowance is made for whatever went before him or whatever has occurred subsequently.

GLEESON CJ:   I may have not read the judgment with sufficient care but that comes as a surprise.

MR CASTAN:   I do not think there is any contest that that is what ‑ ‑ ‑

GLEESON CJ:   It was the contemplation of the Full Court that the effect of the order they made would be that Robert would get both the main orchard and the new orchard.

MR CASTAN:   Yes, your Honour.  In considering these matters can I take your Honours to page 756 to 757 before going any further where your Honours will see certain relief that is sought.  The relief that is sought is not the relief sought in this action.  There is another action on foot and, I think it is fair to say that looking at it now it seems that difficulties have arisen.  I will try and put it as neutral as I can.  Difficulties have arisen by reason of the fact that the two actions were not consolidated or, at least, heard together.

GUMMOW J:   Well, Steven was a party to this one, was he not, in he winding up sought of the partnership?

MR CASTAN:   Yes, this is a partnership action.  Your Honours will see at page 753 the commencement of an amended statement of claim which names Robert Giumelli as the plaintiff, Giovanni and Rosa Giumelli as the first defendant and they are collectively identified as first defendant.  That is important because some confusion arises later between party numbers.  Steven Giumelli, second defendant and Tony Giumelli, third defendant.

Steven Giumelli and Tony Giumelli are sons also of the Giumelli parents.  They are not parties to these proceedings that have come through to this Court and the proceedings, in essence, are partnership proceedings in which Robert, as a partner, seeks the taking of partnership accounts, makes various claims in relation to his entitlement.  Those proceedings were issued in 1986 as your Honour will see from the top of page 753, some four years before the current proceedings in which we now appear before your Honours were initiated.  They have moved astonishingly slowly and have still not reached the trial stage.  There has been no trial in this partnership action although a number of interlocutory steps have been taken.

The relief commences at the bottom of page 756 after reciting the existence of a partnership and various alleged refusals on the part of the partners to give access to books and many of the usual pleas that one would see in a partnership action where a partner claims to have been excluded or denied his share of partnership proceeds:

AND the plaintiff seeks the following relief –

and then there is a declaration at the foot of 756 for the existence of a partnership for certain years –

the plaintiff and the first and third defendants from 1974 to 1978;

…..the plaintiff and the first defendant from 1978 to 30 June 1984 ‑

keeping in mind the first defendant encompasses our clients, the parents.  Thirdly:

A declaration that a partnership existed…..1 July 1984 to 31 May 1985, or alternatively…..to the date of dissolution –

between the plaintiff and the first and second defendants.  The second defendant, in this context, is Steven Giumelli.  Then 4, and 4 is of great significance:

A declaration that the Pickering Brook property and the Dwellingup property were and/or are assets of the said partnerships or, alternatively, a declaration that the said partnerships have a charge over the Pickering Brook property and the Dwellingup property to the extent of the value of the improvements thereto.

Now it is the latter half of that relief, in our respectful submission  ‑ ‑ ‑

KIRBY J:   This is in proceedings which have not yet been heard ‑ ‑ ‑

MR CASTAN:   Not yet.

KIRBY J:    - - - and which, I agree with you, it seems astonishing it was not consolidated with these proceedings but obviously any such declaration would now have to be made in the light of declarations which have been made in the current proceedings.

MR CASTAN:   Yes, or alternatively, as we would submit, declarations should not be made in these proceedings or should not have been made, as we would submit, which did not take into account the existence, particularly of the second part of this claim.

KIRBY J:   Yes, but did you ask that the proceedings be consolidated and heard together?

MR CASTAN:   I do not think we did.

KIRBY J:   Well.

MR CASTAN:   I simply observe that these proceedings have gone through a mixed history but one is, nevertheless, left when – if, one gets to a stage as the Full Court did, where they were about to make an order - did make an order, in effect, ordering that there be vested in Robert Giumelli, a member of a partnership who, by reason of the promises made, the whole of the promised lot including the partnership assets, if we can call them that, that exist as improvements on that land, then, in our respectful submission, that court and, in turn, this Court must take into account that there exists a claim for a charge by the partnership over that land in respect of those improvements.

What lies at the heart of our criticism of their Honours in the Full Court is that they have treated the detriment that Robert has suffered by reason of the fact that value has accrued arising from his work to land which is registered in the names of his parents without regard to the fact that that value was added to that land by him in his capacity as a partner.  He was not doing it alone.  The partnership was adding value to the land.

Applying the principles that his Honour Justice Nicholson applied to the residence itself, one can see the way the argument would be framed that the partnership, all of them, at any given point of time, might be able to say, “We are improving this land.  We are investing funds of the partnership in the land and substantial work on the part of all of the partners on land that is registered only in the names of two of the partners.  We, the partners as a whole, say that just as if the land was land belonging not to two other of the partners but to some other person who stood by, equity might well say - there may be arguments the other way, but equity may well say those partners have expended all this trouble and effort and partnership money on planting trees and improving this land in accordance with the long established kind of principles and their recent elucidation arising from Dillwyn v Llewellyn.  One could see the way the argument would be framed for the partnership to make such a claim in relation to the land that has been worked by the partnership. 

The problem with the analysis undertaken by their Honours was that their Honours treated Robert Giumelli as though he was the sole person and failed to take into account that the work that he was doing and the so‑called detriment as they attributed it in so far as they treated it as a detriment issue, the detriment that he was supposedly undertaking was continuing to work as a partner on this land and improving the value of the land.

GUMMOW J:   But if you are right about this and if the orders made by the Full Court which create these proprietary interests of trustee and beneficiary should not have been made, but that there should have been relief nevertheless, could not these matters be taken into account in valuing the amount of any charge in favour of Mr McCusker’s client?

MR CASTAN:   Yes, if it was confined to Robert’s interest as a partner in the value of the improvements made.  In other words, the same principle that applied in relation to the house, that his Honour Justice Nicholson applied in relation to the house of spending one’s money on a house on someone else’s land are relatively well-established principles.

KIRBY J:   That may not be what the equities in the case required because the ownership of the land was reserved by the parents to themselves.  The partnership did not get its hands on that and, Robert, at least as I understand it, worked for 15 years for $40,000 so that the solution that you suggest is not going to be found, it seems to me, by severing the rights of the partnership and the rights of the parents because the promises were made by the parents.

MR CASTAN:   In our respectful submission, it is if one takes into account that as a partner Robert was benefiting from the development of the other property, the Pickering Brook property.

KIRBY J:   He was not benefiting very much, he was benefiting over 15 years of $40,000.

MR CASTAN:   That would depend on the result of whether the capital improvement, of course, is in accordance with those same principles, something for which the partnership can gain the protection of equity.  The very same principles we are talking about here in relation to Robert apply equally to Steven.

KIRBY J:   Yes, I take that point but I may have missed it but I do not see in either Justice Nicholson’s reasons or in the reasons of any of the members of the Full Court the point that you are now making to us which is, effectively, that before embarking upon the equitable remedies that are appropriate to the case you really have to solve the partnership suit.  I see the force of that argument but I think this is being raised for the first time in this Court, and that is what I am concerned about.

MR CASTAN:   It is not, in this sense, that part of the argument before their Honours below was that when one looks to the detriment that was necessary, as it was submitted must be found, that Robert has suffered, it was strongly put to their Honours below on behalf of the parents that he continued to work in the partnership and that you cannot assume - yes, of course, it may be said he worked very hard, he was paid very little and so on but that is not an answer if, in fact, he had partnership rights.  This is not a case where ‑ ‑ ‑

KIRBY J:   I hope you will point us to somewhere later where that point is made and it is said that you cannot determine these parties their rights by orders until you resolve that point.

MR CASTAN:   I am not sure.  I will certainly have a look.

KIRBY J:   I do not remember reading it.

MR CASTAN:   I am not sure it was put in that way, your Honour.  What was put is that ‑ ‑ ‑

KIRBY J:   That is how you are putting it now.

MR CASTAN:   No, no.  Yes, it is, because it follows if one looks at the analysis that was undertaken by his Honour Justice Nicholson for his refusal to grant the further relief that, ultimately, the Full Court did grant in relation to the third promise, in relation to the promised lot, his reason is precisely that.  His reason, and I will take your Honours to that in his reasons, but that is precisely what he said.  He said there is no detriment in the relevant sense because what he did was he came back and worked as a partner.  In that partnership he has his rights such as they are.  It is true, he did not say, “I do not know what they are” but he said that whatever they be, that is the basis on which he came back and worked.

GLEESON CJ:   I may have misunderstand the facts, Mr Castan, and correct me if I am wrong, but I thought that was part of the distinction between the new orchard and the main orchard.  I thought it was the respondent’s case that he was promised that the new orchard would belong to him and him alone and that part of the work that he did was not, if that promise were fulfilled, for the benefit of the partnership but was intended to be for his own benefit which he never actually received.

MR CASTAN:   I have to say that we have not proceeded in the case on the basis of that distinction, your Honours.

GLEESON CJ:   I will see if I can find what it was that put it in my mind.

MR CASTAN:   It is rather that what their Honours below said is, “There is a promise in respect of the promised lot which is assumed to encompass the whole of the existing orchards if you come back and work the new orchard” but what his Honour Justice Nicholson was at pains to stress and the reason, in his case, for rejecting any estoppel in relation to the third promise, in relation to what has been called the promised lot, is precisely because there was no detriment.  He was there acting as a partner.

If I can have a moment I will just find the passage.  It is at page 795 starting at 794 and it does, in our respectful submission, reflect exactly what has been put.  I concede it has been put here in a somewhat more stark fashion.  Towards the foot of 794:

In the case of the second promise the detriment to the plaintiff is constituted by the expenditure of money and labour on the house without the acquisition of title to it.  This is a detriment which the defendant failed to act to avoid.

In the case of the third promise it has not been shown that by the rejection of the job offer and return to work in the partnership the plaintiff has suffered a detriment.  The plaintiff was a member of the partnership and chose to continue in it.  The consequence of the third promise was that he did not relinquish his partnership.  In my view that cannot be a detriment in itself.

The plaintiff did not lead any evidence on the salary or other rewards which he would have received from employment with his father‑in‑law.  I consider it open to inference from the fact that he was offered employment that he would have been remunerated.  Given that he was not paid wages by the partnership it is more probable than not that he would have received by way of wages from such employment more than he received in cash and kind from the partnership.  It was established that his cash receipts from the partnership were minimal; namely, that he received approximately $40,000 by way of partnership drawings over 15 years.  Any remuneration he may have received from employment elsewhere would more probably than not have exceeded such drawings.

KIRBY J:   That does not seem a particularly bold assumption.

MR CASTAN:   Not at all, your Honour.

However, no evidence was led on cash accrued in his share of the profits from the partnership.  No case has been made for the plaintiff that what he would have received from such employment would have been more than he received by continuing as a member of the partnership; that is, that his continuance as a partner was a detriment.  His work for the partnership is a matter for the taking of account as between him and the partnership, in respect of which the plaintiff has another action on foot.

CALLINAN J:   Mr Castan, that sum of $40,000, do I understand that to be cash that was received by him?

MR CASTAN:   Cash drawings.

CALLINAN J:   Was there, in addition, a loan account in the partnership accounts in his favour showing him as having an entitlement to more than $40,000?

KIRBY J:   The accounts, as I understand it, did make tax claims in respect of notional salaries which were paid to the respondent.  I think that was the reason why the accountant, in the first place, suggested that the sons be brought into the partnership without capital.

MR CASTAN:   Yes, but, I think, with great respect to your Honour Justice Kirby, that is not the answer to his Honour Justice Callinan’s question.  The answer to your Honour Justice Callinan’s question is that there has been a determination in the partnership action.  There have been a number of interlocutory orders in that action.

One of them was made on 11 June 1991 before Master Bredmeyer in the Supreme Court of Western Australia and, in that stage of the proceedings, judgment was entered for the plaintiff, that is Robert Giumelli, in the sum of $145,106 less $90,000 paid, balance $55,106, and he goes on to consider interest.  So, the answer to your Honour’s question is yes, there were substantial additional monies.  I will not exaggerate.  It was $145,000 due to him of which $90,000 was treated as having been, in effect, drawn or paid.

KIRBY J:   Is that the final resolution of the partnership claim?

MR CASTAN:   No, your Honour.

KIRBY J:   That is only as to the amount of salary, is it, because presumably it would not be all that difficult to find out what was attributed to notional salary paid to him and then deduct from that what he actually received.

CALLINAN J:   That is based on profits.  You see, in addition to salary there may have been an entitlement to partnership profits.

MR CASTAN:   Yes.  Well, he does not go into that.  The very short reasons of Master Bredmeyer do not go into that but what they do say is:

The balance sheet for the partnership at the relevant date valued the capital account of the plaintiff at $145,106.00. 

An accountant had done it ‑ ‑ ‑

KIRBY J:   This is not income.  This is not his salary.  This is purely his share of the increase in the capital value of the partnership profit.

MR CASTAN:   I hesitate to respond to that, your Honour.  It is not clear and, perhaps most pertinently, the issue that I have referred to in the relevant paragraph of the relief claimed in the statement of claim in the partnership action, namely a claim that all of the improvements on the parents’ registered title property belong to the partnerships and then, in turn, claim for that as being accruing to the partnership and then a claim for a quarter of that has not yet been determined.  That is why the matter is still pending.

KIRBY J:   Is picking up the point that Justice Gummow asked you that you are submitting that the Court of Appeal erred in the relief it gave, it ought perhaps to have clarified whatever the principles were but then sent the application of the principles back to a single judge of the Supreme Court of Western Australia where, if there were any sense, there would be a consolidation of the partnership claim to wrap up all of the matters in the one hearing as ought to have been done in the first instance but was not?

MR CASTAN:   Yes, subject to this, your Honour, that we would not concede that the court got the principles right.  I think that was inherent in the proposition as your Honour put it to me.

KIRBY J:   No, I was not suggesting, I am just saying that they ought to have dealt with whatever the principles were and then not themselves endeavoured to make the orders which you say, in fairness, in particular to Steven, a third party who was not a party to these proceedings, could not be made without taking into account his entitlement, the entitlement of all members of the partnership including the respondent himself, and it was at that time that the appropriate order should be made which would make sure that orders were not made which did not take into account the distribution of the partnership.

MR CASTAN:   Precisely, your Honour.  Yes, it would be necessary to do that.

KIRBY J:   I wish that had been made clearer before the Full Court, because I do not see that their Honours have addressed that issue and I would be surprised if they failed to address it if it had been put to them.  I can see the force of the point, but I am saying that the proper place to put it is in the Full Court, not this Court.

MR CASTAN:   His Honour Justice Nicholson so found.  It was put to him and he accepted it and said at line 55 on page 795:

His work for the partnership is a matter for the taking of account as between him and the partnership, in respect of which the plaintiff has another action on foot.

Now, the matter was argued before him and it was argued that there was no detriment because he was continuing as a partner and the matter should be resolved in the partnership as between the partners and if the partnership, as it clearly does on the statement of claim, has a claim for the improvements on land which the partnership undoubtedly did improve but which the partnership did not own, then all of the partners, arguably, depending on one’s view of the principles and so on, in their respective proportions - and some partners left.  There is also a brother, Tony, who is a defendant in that action and was a partner for an overlapping period.  It is simply, in our respectful submission, when one comes to deal with it in the way that the court did below, what the court should have done, in our respectful submission, is precisely what his Honour Justice Nicholson did in relation to this issue.  If all that happened, and I say all that happened - I understand that there was a complexity of circumstances and that all of these parties are people who live a life and have lived all their lives working extremely hard ‑ ‑ ‑

GLEESON CJ:   Mr Castan, I am looking at the bottom of page 873 where what were called the assurances on which reliance was placed is set out.  At line 50 the appellant said that he was assured by his parents:

that the orchard block –

and I take that to be the block including the main orchard and the new orchard –

was to be subdivided –

and I take that to mean separated from the rest of the Dwellingup property to the south of it –

and put in my name I wanted to go ahead and develop all of this block into a producing orchard.

And he said it was said to him:

that the more orchard he would develop the better off he would be.

So, whether you look at it from the point of view of the parents or whether you look at it from the point of view of the other partners, he says that he was told that the entirety of the orchard, new and old, or main and new, was going to be his.  Now, was there anybody else except the plaintiff himself who developed that new orchard and planted the trees?

MR CASTAN:   Yes, your Honour, Steven Giumelli had been working there since he was 15 ‑ ‑ ‑

GLEESON CJ:   On the main orchard and the new orchard?

MR CASTAN:   Yes, and he had a house, as your Honour saw from the – a fibro house, not as substantial a house – he lived there and he worked there and he has continued to work there.

GLEESON CJ:   Under the order made by the Full Court, who was to get the house, the not very substantial house, in which Steven Giumelli lived?

MR CASTAN:   Robert, and Steven was to be put out without having been a party to the proceedings and without having been heard on it, and we say that is what has gone wrong.

GLEESON CJ:   Is that adverted to anywhere in the reasons of the Full Court, the consequences of these orders on Steven?

MR CASTAN:   It is.  The effect on Steven is not but in dealing with the question of detriment, their Honours acknowledge – I take your Honours to the judgment of Justice Ipp at page 878.  He deals with this in the context of joint endeavour, picking up from Muschinski v Dodds and Baumgartner, a concept that was developed by this Court, and ‑ ‑ ‑

GUMMOW J:   This is a case of a straight old-fashioned partnership.

MR CASTAN:   Yes, your Honour.

GUMMOW J:   You need to get into Muschinski v Dodds on one way or the other.

MR CASTAN:   We would respectfully submit, nothing to do with it, but the last paragraph starting at line 35:

Undoubtedly, the partnership consisting of the respondents, the appellant and his siblings constituted a joint endeavour.

Now, that alone, we would respectfully submit, demonstrates manifest error.  Whatever their Honours in Muschinski and Baumgartner meant by the concept of a joint endeavour in the de facto relationship cases, they certainly did not mean that one could take an action of this kind between one son and his parents, where admittedly, as their Honours are aware, siblings are also partners, and then to say that is a joint endeavour in the sense in which this Court meant it in Muschinski ‑ ‑ ‑

GLEESON CJ:   How many siblings are they talking about there?

MR CASTAN:   Two others.

GLEESON CJ:   Namely?

MR CASTAN:   Namely, Steven and Tony, who by the ‑ ‑ ‑

GLEESON CJ:   I thought Tony left the partnership.

MR CASTAN:   He did, but in the partnership ‑ ‑ ‑

KIRBY J:   And the respondent left the partnership at a certain point, did he not?

MR CASTAN:   And the respondent left the partnership.  What happened was that Tony left the partnership at an earlier stage, but he is named as a defendant in that partnership action, because there is some overlap between the time when Tony left and Robert started, and then there is further overlap during Robert’s continuing as a partner for the period when Steven is brought in as a partner.  So that in the partnership action, the two siblings are both joined because over the respective periods, if one is taking a totality of the partnership accounts, one needs to deal with Robert and Tony and the parents for the earlier period and Robert and Steven and the parents for a later period and Robert just with the parents for some part of the intermediate period.

GLEESON CJ:   The daughters were never in the partnership?

MR CASTAN:   The daughters were not in the partnership.  Now, they go on:

However the relationship between the appellant and the respondents was more complex than a mere partnership. The partnership conducted the orchard business on the properties owned by the respondents in Dwellingup and Pickering Brook.  Any income so derived by the partnership was shared between the partners who, of course, included the appellant and the respondents.  In addition, the appellant’s labour (together with the labour of other members of the family) and the partnership’s funds were used to effect improvements on these properties.

So their Honours were acutely aware of the fact that it was not just a case like the de facto cases where there are two parties.

GLEESON CJ:   Both at first instance and in the Court of Appeal, it was held that the parents promised Robert that he would get both orchards?

MR CASTAN:   Yes, your Honour.

GLEESON CJ:   What I wanted to ask you about that was:  was there any finding about whether that promise was known to the siblings who were there busily developing the orchards?

MR CASTAN:   I cannot answer that immediately, your Honour; I would have to check whether – I can only say that I would assume from my current knowledge of this matter that they must have known ‑ ‑ ‑

GLEESON CJ:   Anyway, there is no challenge to that finding of fact in this Court.

MR CASTAN:   It is not suggested it was a secret and it is no challenge to the finding of fact.  And then his Honour goes on:

Accordingly, while those improvements increased the value of the respondents’ assets, they did not provide any corresponding capital accretion to the appellant.

We would respectfully submit “to the partnership which was engaging in the capital accretion”.

The partnership –

and then he does acknowledge it –

had no security of tenure over the properties.  There was an obvious risk to the partners, other than the respondents, that there would be inadequate compensation for their work on the properties were the partnership to terminate.

And no doubt that is so, and no doubt that is why we get prayer for relief 4 in the partnership action, seeking either a claim that the land belongs to the partnership or a charge, the value of the improvements on land which does not belong in totality to the partnership.

The appellant was well aware of this risk and it was for that reason that he sought promises and reassurances from the respondents that he would be given the promised lot. Those promises and reassurances constituted some security to the appellant and he was comforted by the fact that the fulfilment thereof would represent an additional reward for his labours over and above the drawings from the partnership to which he was entitled.

In all these circumstances the joint endeavour –

that is picking up the language of Muschinski –

between the appellant and the respondents was constituted by the partnership, together with the understanding between them that the promised lot would be transferred to the appellant in return for him remaining as a partner, and working on the Dwellingup property for their mutual benefit.

GUMMOW J:   That is a different joint endeavour to the one at page 878, line 36, because that has the siblings in it.

MR CASTAN:   Yes, your Honour.

GUMMOW J:   It disappeared by page 879, line 20, and that is your complaint.

KIRBY J:   Presumably behind that idea was the idea that in due course the appellant would get the new orchard and in due course Steven would take some other part of the very large property, which was a very valuable property.  That presumably was what was inferred from the fact that the parents said, “Well, you can have this corner, you can have this bit, and Steven will get some other part and Tony will get some other part when we pass on”.

MR CASTAN:   Perhaps “when we pass on”.  There is no evidence about what promises, if any, were made to – not to Tony, your Honour, to Steven.

KIRBY J:   Tony, by this stage, had gone on.

MR CASTAN:   He had left, at the time when this falling out ‑ ‑ ‑

KIRBY J:   So it was to Steven that the major – but the greater part of the property would remain available to the gift by the parents to Steven, Steven being the younger person.

MR CASTAN:   He was somewhat younger.  This is all occurring, of course, in 1984 and 1985.

GLEESON CJ:   The appellant was not only to get the new orchard though, was he; he was to get the main orchard as well as the new orchard?

MR CASTAN:   Yes, and if one was to hypothesise, as your Honour Justice Kirby has done, then what Steven would get, if he inherited the rest of the land or some portion of the land, would be totally undeveloped land, land which was valued by the valuer, who did the valuation for the purpose of the house block, pursuant to the order of his Honour Justice Nicholson.  He valued the land on which the house was situated as $71.

KIRBY J:   But the whole area was valued at one stage at $800,000 or more, but that was back in 1984.

MR CASTAN:   Yes, but the question, of course, then is:  what is the value of the undeveloped land as against the developed land?  This brings us back into this question of the kind of charge that is sought in the partnership action by the partners for the improvements, which all of the partners have put in to the land, and that is ‑ ‑ ‑

KIRBY J:   Well, your clients were the one common factor in the defendants who would have had the interest and perhaps the family association and reason to say, “Now, steady on, you can’t go into dealing with this until you resolve the partnership suit”, and I do not see that that was ever said in plain terms.  You have got to eke it out of other inferences and words, but you were not saying either to Justice Nicholson or to the Full Court nor taking any action by way of seeking consolidation, as you could have, the sort of submissions you are now putting to us.

MR CASTAN:   Well, with respect, your Honour, we were, and Justice Nicholson’s judgment reflects it; he makes the precise point, there is another action on foot, he is working as a partner, he has got another action on foot, those matters will be sorted out, there is no detriment in the relevant sense for the purpose - and he was dealing with it in the estoppel context at least.

KIRBY J:   I am talking of a short, crisp, procedural submission; do not go on with this until you have the partnership matter before you or have resolved it.  I can see a tremendous force in that submission, but I am looking for it and I do not see it.

MR CASTAN:   I cannot say whether or not that submission was made.  I cannot respond to your Honour with any assurance that that was or was not made.  What is clear is that it was clear beyond contradiction that this was a partnership and that the partnership action was on foot first and if one could infer anything at all, it was that Robert saw that the partnership action might not be all that successful, for whatever reason, or that it might not ultimately yield the benefits that he hoped for, and he then commenced, forty years after commencing the partnership action, the action in what was thought at first to be an action in contract or estoppel.

GLEESON CJ:   Mr Castan, you made a point a moment ago about what may be the important factual aspect of these promises or assurances.  Was any time frame put around these assurances of a transfer of the promised lot to the respondent?

MR CASTAN:   No, your Honour.

GLEESON CJ:   I just have in mind that part of the promised lot was a producing orchard which, as I understand it, represented the entire source of income of the partnership.

MR CASTAN:   Not quite, your Honour.

GLEESON CJ:   Well, a substantial part of it.

MR CASTAN:   A part, because the partnership also had another property.

GLEESON CJ:   At Pickering Brook.

MR CASTAN:   Yes.

GLEESON CJ:   In so far as the main orchard represented a significant part of the income of the partnership, it was important to the partnership whether that transfer would take place in a year or in five years or in 20 years, or when the parents died.

MR CASTAN:   Yes.

KIRBY J:   But, on the other hand, one of the motivations for at least one of the three promises was to try to keep the respondent’s first marriage together and when he was under pressure, his first wife having left him to go off and take a job, it was at that point that a promise was made, and presumably was not in contemplation that it would be five years, 20 years or on the death of the parents; it was rather more quickly that the property would be passed to him.

MR CASTAN:   Well, there is no reference to time frame, your Honour, with the greatest of respect, and it ‑ ‑ ‑

KIRBY J:   No, there is no specific reference, but if its purpose was to save the marriage ‑ ‑ ‑

MR CASTAN:   No, with the greatest of respect, it cannot be said that its purpose was to save the marriage and, in fact, there is a specific finding that it would be wrong to attribute an element of detriment to the fact that ‑ ‑ ‑

KIRBY J:   That is a different point.  It may not be detriment in law, but that is what triggered - the wife was saying - her parents were saying, “You have no security in this property, and I’m going back to live with my parents”, and the parents of the respondent, your clients, then, as I understand it, said, “Well, we will take steps to transfer the property into your name”, and that was one of the promises which the primary judge upheld.  The facts here are quite complex.  I may have got them wrong, but correct me if I am wrong.

MR CASTAN:   At page 796 his Honour Justice Nicholson makes specific findings about the marriage issue, and I would not want your Honour to be proceeding on a basis of some assumption other than the finding.

KIRBY J:   Justice Nicholson seemed to me to have a rather narrow view of detriment, but you say that his Honour was accurately differentiating detriment to the respondent and detriment to the partnership which included the respondent.

MR CASTAN:   Precisely; he correctly made the distinction, with the greatest of respect, your Honour, and in the circumstances it is not possible to – well, perhaps I should just read briefly the passage.  At line 12 there is a reference to further detriment:

A further detriment claimed by the plaintiff was that, in reliance on the third promise, he assumed full responsibility for the planning and planting of the “new orchard”, a new 15 acre section of orchard.  I am not satisfied that he acted so as to alter his position on the faith of this promise.  At all times the new orchard was being developed by the plaintiff as manager of the Dwellingup property.  Although he was completely responsible for clearing, preparing and planting the area he continually kept the first defendant informed of progress.  To my mind this is consonant with the duties expected of a manager of the property.  It is not enough to suggest that the duties associated with the managerial responsibility of the new orchard, albeit in excess of the responsibility for the older established orchard, were assumed solely in reliance on this third promise.  The funds expended on the development of the new orchard were advanced by the partnership.  In my opinion the development of the new orchard was executed in the interests of the partnership of which the plaintiff was a member.  If the development improved the profitability of the partnership the plaintiff stood to gain not to lose.  It was not a detriment in the required sense.

Then he goes on in direct reference to a matter that your Honour raised with me:

It was not contended that the break-up of the plaintiff’s first marriage in itself was a relevant detriment resulting from his reliance on the third promise.

It was not even contended that it was so, and therefore ‑ ‑ ‑

KIRBY J:   I was merely putting it in the context of your answer to the Chief Justice’s question, that if you are looking at the time frame, the time frame was not on the death of the parents.  The time frame was a prompt transmission of part of a lot of the property to him because of the pressure he was putting on the parents, because of the pressure that was being put on him by his first wife.

MR CASTAN:   Well, I would only demur, with the greatest of respect, to your Honour’s use of the wording “prompt”.

KIRBY J:   How can it be other than prompt?

MR CASTAN:   I just respectfully submit that the material does not support any view about what the time frame was to be; in fact, what it supports is that the matter was ‑ ‑ ‑

KIRBY J:   You simply look to its purpose.  Its purpose was to respond to the pressure that the parents-in-law were saying, “You have no security in this property and our daughter is not going off with a person who doesn’t have a secure interest – she wants to come home”.

GUMMOW J:   But security may have been the promise rather than its…..in a family situation when one ‑ ‑ ‑

KIRBY J:   I think that the parents-in-law, and hence putting pressure on the respondent, wanted something a little more tangible.

MR CASTAN:   Yes, but the situation occurs ‑ ‑ ‑

KIRBY J:   There had been promises before and they had not been delivered.

MR CASTAN:   The situation occurred where that marriage broke up relatively quickly.

KIRBY J:   When he said, “I’ve got too much to lose.  I’ve got this promise, I’ve got too much to lose, I’m going back to my orchard, which I have a promise that I am going to get another lot”.

MR CASTAN:   Yes, and his wife refused to go with him, for whatever reasons.  Now, the whole detail of the underlying reasons for matrimonial break‑up are inevitably complex and were not the subject of detailed evidence in this case, and I would respectfully submit that attempting to speculate on the role that the marital break‑up played is extraordinarily difficult, even in the most ordinary case.

CALLINAN J:   Mr Castan, why was not the Dwellingup property part of the partnership assets?  I know that is what the learned trial judge found, but it does not seem to have been treated any differently from the other property, apart from the erection of the house.

MR CASTAN:   It was no different from the other property, your Honour; they were both assets of the parents alone, registered ‑ ‑ ‑

GUMMOW J:   Well, they had the legal title.

MR CASTAN:   They had the legal title, registered in their name, whether or not they in some ‑ ‑ ‑

CALLINAN J:   But the Pickering Brook title was similarly registered  ‑ ‑ ‑

MR CASTAN:   Yes, they were identical, both registered only in the parents’ name.  Whether or not equity might, as claimed in that paragraph 4, impose some charge or some equity might arise as between the partnership and the registered owners, is a matter to be perhaps raised and debated as between the whole of the partners and the registered owners in the appropriate action.  The difficulty with the way this matter has proceeded is that it has gone off on this estoppel tangent, if I may say so, and his Honour Justice Nicholson has correctly perceived that there is a partnership aspect to this, there is profit in the partnership, and potentially there is gain in the partnership for a person who works in the partnership business and he therefore says you cannot give effect to that as a detriment to a person who chooses to continue in a business relationship and be the manager of this property, looking to ‑ ‑ ‑

CALLINAN J:   Mr Castan, was the case conducted on both sides on the footing that the Dwellingup property was not a partnership asset?

MR CASTAN:   Yes, your Honour, it was.

CALLINAN J:   Whereas the Pickering Brook property was treated ‑ ‑ ‑

MR CASTAN:   The same.

KIRBY J:   No, the parents kept the title to all of the land in their own hands; it was never released to the partnership.

MR CASTAN:   Yes, that is correct, and the question that is raised in the partnership action and, as we have earlier said, properly raised there and can only really be dealt with there, is whether or not some equity arises, given the enormous amount of improvement that has been put into the property, registered in the names of only two of a partnership at various times of up to five people.  Now, that has not been litigated and not litigated here, and the attempt to squeeze, if I may say so, with respect, into this setting the notions of constructive trust, as has occurred in the Full Court or, as his Honour Justice Rowland did in the Full Court, to say, well, of course there is a detriment because he did not get what was promised to him, what his Honour Justice Rowland did, he did not go down the constructive trust road, but his Honour, in our respectful submission, erroneously went down what might be called the expectation detriment road.

GLEESON CJ:   The point that is being made on the top of page 879 is that the very reason the appellant sought the assurances concerning the promised lot was that he was not content to rely upon his interest as a partner.

MR CASTAN:   Yes, your Honour.

GLEESON CJ:   So that the proposition that by reason of his partnership interest he suffered no detriment or did not relevantly alter his position has to be reconciled with or related to that proposition, does it not?  He was saying to his parents, “I want those orchards, I want that lot.  It’s not good enough for me that I rely upon my rights as a partner”.

MR CASTAN:   And, all that does, your Honour, is bring into existence another bare promise.  It brings into existence a bare promise, unsupported by consideration, and if one then analyses it in terms of estoppel, the detriment in not having the lot transferred is the self-evident one – expectation is not fulfilled – that is a self-evident proposition.

KIRBY J:   There is the fact that he then went back when he had some other opportunity to do something else and on the faith of the promise he expended efforts in improving the property, and apparently there were drains and lots of other things ‑ ‑ ‑

MR CASTAN:   He did a lot of work on it, as did the other partners.

GLEESON CJ:   But in a situation where, according to the finding at the bottom of page 878, he believed that all that work he was doing was for his benefit alone and not for the benefit of his parents or for the benefit of Steven.

CALLINAN J:   And that is supported by the fact that, if Dwellingup is not a partnership asset, then he is putting labour and work in over and above a partnership contribution to a non-partnership asset.

MR CASTAN:   Well, he is doing the same as the other partners are doing, the same as his brothers are doing, who are working to build up the partnership business and without the security of tenure over the land, which is undoubtedly improving in value by reason of the work and development that is going on.

CALLINAN J:   But simply, if Dwellingup is not a partnership asset, then any contribution to it is not a contribution made in the performance of any partnership activity by him.

MR CASTAN:   Well, with respect, that would not follow, your Honour, because the only activity being carried on by him is in the course of the partnership; that is the only work he is doing.  He was employed by the partnership and that is all he ‑ ‑ ‑

CALLINAN J:   What about Pickering Brook?  That seems to have been regarded as a partnership asset and he was still working on that, was he not?

MR CASTAN:   No, he was not working on that, his parents were working on that and he was deriving the benefit as a partner, such as it is and such as has been found on the taking of accounts, which includes the funds which were generated by Pickering Brook and, if it is ultimately found that Pickering Brook also, to the extent it has been improved, is subject to a charge in favour of the partners, if there be such a finding, he will benefit from that.

GLEESON CJ:   Suppose the evidence had been as brutal as this - and I am not suggesting it was, Mr Castan -  suppose his father-in-law had said to him, “You’re a mug; you’re working in this way on property that belongs to your parents and if you cross them, they’ll throw you off the land, you’re crazy to do that”.  And he responds by going to his parents and saying, “I’m not prepared to continue working on that basis unless you promise me you’ll transfer these orchards and this promised lot to me”, and they say, “Yes, we’ll do that”, and he goes ahead and works for them.  Is there a detriment involved in that?

MR CASTAN:   In our respectful submission, no; there is no detriment, there is an expectation.  It is essential to distinguish between the expectation that if not fulfilled gives rise to the loss of the expectation, undoubtedly, but that does not answer the question of whether equity in the situation of the estoppel analysis will provide a remedy.  The remedy must be, as we would respectfully submit, and as this Court has developed closer focus on what remedy is provided in these sorts of promissory estoppels, it is sometimes called, or equitable estoppel type of cases.  The remedy is focused on the reliance detriment.  What your Honour has stated is what their Honours in the Full Court stated, which is to say, “Manifestly, we cannot resist this, manifestly his expectation was dashed; he lost the expectation, the fulfilment of the promise”.