Graziano v Graziano

Case [2010] SASCFC 76

SUPREME COURT OF SOUTH AUSTRALIA

(Full Court)

GRAZIANO v GRAZIANO

[2010] SASCFC 76

Judgment of The Full Court

(The Honourable Justice Anderson, The Honourable Justice White and The Honourable Justice Peek)

21 December 2010

CONTRACTS - PARTICULAR PARTIES - PARTNERS

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - FORMATION OF CONTRACTUAL RELATIONS - AGREEMENTS CONTEMPLATING EXECUTION OF FORMAL DOCUMENT - WHETHER CONCLUDED CONTRACT

The appellant and the respondent are two brothers who conducted a business in partnership - the respondent claimed that he and the appellant had reached a binding agreement for the termination of their partnership, including agreement as to the entitlement to the proceeds of a total and permanent disablement insurance policy on the life of the appellant - the appellant submitted that the termination agreement was not binding, and fell into the third category of agreement considered in Masters v Cameron (1954) 91 CLR 353 - the trial Judge held in favour of the respondent, and held that under the termination agreement, the appellant was entitled to the insurance proceeds to the partnership.

Whether the trial Judge erred in finding that there was a binding termination agreement between the brothers - whether the trial Judge erred in finding that the partnership was entitled to the proceeds of the insurance claim, and, accordingly, that it was open to the parties in their termination agreement to agree upon the disposition of the insurance proceeds.

Held:  (White J, Anderson and Peek JJ agreeing)  appeal dismissed - the trial Judge was correct in finding that a binding agreement was reached - as the appellant is entitled to the insurance proceeds under the termination agreement, it is unnecessary to consider his contention that those proceeds were his in any event, and were not an asset of the partnership.

Godecke v Kirwan (1973) 129 CLR 629; Chan v Zacharia (1984) 154 CLR 178; Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1981-2) 149 CLR 337; Australian Energy Ltd v Lennard Oil NL [1986] 2 Qd R 216; Doug Rea Enterprises Pty Ltd v Hymix Australia Pty Ltd [1987] 2 Qd R 495; Winks v WH Heck & Sons Pty Ltd [1986] 1 Qd R 226; County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193; Carmichael v National Power PLC [1999] 1 WLR 2042; Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540; Commercial Bank of Australia Ltd v GH Dean & Co Pty Ltd [1983] 2 Qd R 204; Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; GR Securities Pty Ltd v Baulkham Hills Private Hospital Pty Ltd (1986) 40 NSWLR 631; B Seppelt & Sons Ltd v Commissioner for Main Roads (1975) 1 BPR 9147; Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653; Elmslie v Federal Commissioner of Taxation (1993) 118 ALR 357; Curtis v Sheffield (1882) LR 21 Ch D 1; Associated Grocers Co-operative Ltd…

Continue reading Graziano v Graziano

Sign in free to access the full text

Details
AGLC
Graziano v Graziano [2010] SASCFC 76
Case
[2010] SASCFC 76
Decision Date

CaseChat Overview and Summary

The appeal concerned a dispute between two brothers, the appellant (Bruno) and the respondent (Antonio), who had conducted a business in partnership. The respondent claimed that a binding agreement had been reached for the termination of their partnership, which included terms regarding the entitlement to the proceeds of a total and permanent disablement insurance policy on the appellant's life. The appellant contended that this termination agreement was not binding, arguing it fell within the third category described in *Masters v Cameron* (1954) 91 CLR 353, where parties intend to be bound only upon the execution of a formal document. The trial judge had found in favour of the respondent, determining that the appellant was entitled to the insurance proceeds under the termination agreement.

The legal issues before the Full Court of the Supreme Court of South Australia were whether the trial judge erred in finding that a binding agreement for the termination of the partnership had been concluded, and whether the trial judge had correctly determined the appellant's entitlement to the insurance proceeds under that agreement. A further issue arose from the appellant's attempt to reopen his case after the close of evidence to lead expert testimony on handwriting verification, which the trial judge had refused.

The Full Court dismissed the appeal. It found that the trial judge's conclusion that a binding agreement existed was sound, and that the appellant's argument that the agreement was subject to a formal document was not made out. The Court noted that the appellant's attempt to reopen his case to call handwriting evidence was a discretionary matter for the trial judge, and that the judge had provided detailed reasons for refusing the application, including the irrelevance of the proposed evidence to the core issues, conflicting evidence from the appellant himself, and concerns about unduly protracting the trial. The Court held that no error of the kind required to interfere with a discretionary decision under *House v The King* (1936) 55 CLR 499 had been demonstrated.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

On the appeal, Bruno did not seek to disturb any of the Judge’s findings based upon credibility. He contended, however, that acceptance of Antonio’s evidence did not warrant the legal and factual conclusions of the Judge.Background Circumstances to the Partnership Termination Before 1987, Bruno, Antonio and other members of their family were engaged in a horticultural partnership business at Bowhill near Mannum. In addition, Bruno and Antonio conducted in partnership a separate market garden business at Sunnyside which is also near Murray Bridge. At one stage they and another brother had also operated in partnership a hotel at Birdwood. However, by about mid 1987, each of Bruno and Antonio had ceased participation in these partnerships. In late 1987 or early 1988, Bruno and Antonio commenced a new business in partnership at Pooraka, using the name Hard Produce Services. The business involved the packing, wholesaling, distributing, transporting and processing of produce for the Pooraka Fruit and Vegetable Market. Later it became more of a transport business, particularly in relation to the supply and distribution of fruit and vegetables. The brothers did not have a written partnership agreement. They had a verbal agreement that they would have equal shares in the partnership and that Antonio would split his share with his wife for taxation purposes.[6] The brothers treated themselves as equal partners.[6] Ibid at [20]. The Judge found that Antonio had greater business acumen than Bruno. Antonio was responsible for matters of administration and finance, whereas Bruno’s principal (and considerable) contribution was the provision of his physical labour.[7] The Judge found that Antonio did not have a sophisticated understanding of the matters relevant to the finances and the operation of a business. Accordingly, both Bruno and Antonio were accustomed to relying significantly on the partnership’s accountant, Mr Bartholomeus, for advice, and to document in an appropriate way the decisions they made about the conduct of their business.[7] Ibid at [8]. The two brothers bought a property at Pooraka on which to conduct the business. On the advice of Mr Bartholomeus, they acquired a shelf company, Quintile Pty Ltd, to be the purchaser. Each of Bruno and Antonio held 50 per cent of the shares in Quintile, and each was a director. The purchase price of the land was about $750,000. Initially the brothers had both vendor and bank finance but, in 1990, the Commonwealth Bank of Australia (CBA) became the partnership’s principal financier. In addition to the Pooraka land itself, the security to the CBA included mortgages over a property owned by Antonio and his wife and over a property at Brighton owned by Bruno. Bruno also gave security to the CBA over a term deposit of $150,000.[8][8] Ibid at [15]. Initially, the partnership business prospered. In about 1995, the focus of the business changed as growers commenced to deal more directly with the major supermarket chains. The brothers then became more involved in the transporting of produce and less involved in its wholesaling, processing and packaging.[9] The Judge found that the division of roles between the brothers continued. Antonio continued to be responsible for the commercial and administrative side of the business, whereas Bruno worked in the yard with the trucks. The partnership employed about 20 employees, including Mr Scholefield, an accountant.[9] Ibid at [54].

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

ANDERSON J (dissent) WHITE J (dissent) PEEK J
In these circumstances, the point now raised by Bruno seems more technical than substantive in nature. In my opinion, it is not a ground for interfering with the Judge’s decisions or orders.Conclusion Concerning the September 1999 Agreement In my opinion, each of Bruno’s criticisms of the Judge’s conclusions concerning the Termination Agreement should fail.Refusal of Application to Reopen After the completion of the evidence but before hearing the final submissions, the Judge refused an application by Bruno for permission to reopen his case. Bruno wished to lead evidence from a Mr Talbot-Wilson who has some expertise with respect to handwriting and signature verification. The Judge refused that application. Bruno’s notice of appeal contained a ground contending that that decision was wrong. His summary of argument provided to the Court in advance of the hearing did not contain any submissions to support the ground. On the hearing of the appeal, counsel said that his instructions were to the effect that the ground should be maintained but that he could not usefully advance an argument to support it. The Judge gave detailed reasons for his refusal of permission to reopen. They included the following:1.Mr Talbot-Wilson’s proposed evidence, although more wide-ranging, went principally to the question of whether Bruno’s signature on a notice of resignation as a director of HBS International Pty Ltd was genuine. However, in the course of the opening of Bruno’s case, counsel for Bruno had indicated that that issue was not relevant to the issues to be determined by the Judge.[66] The Judge himself considered that he did not have to resolve the question of the genuineness of the signatures in order to resolve the issues in the trial.[67]2.During the course of his evidence, Bruno had at times given conflicting evidence about whether certain signatures were his. The Judge said that he could not discern any material difference between signatures acknowledged by Bruno to be his, on the one hand, and those which he did not acknowledge as his, on the other. The Judge thought that Bruno’s evidence about his signatures had at times “an almost surreal and sometimes ludicrous aura”.[68]3.Mr Talbot-Wilson’s proposed evidence would, in some respects, conflict with Bruno’s because he considered that certain signatures which Bruno had acknowledged as his own were in fact not genuine. [69]4.The Judge was concerned about the trial becoming protracted unduly if permission to reopen was granted.[70]5.Finally, the Judge considered that Bruno had been given ample opportunity previously to pursue any concerns which he had about the genuineness of signatures on documents relating to the partnership business.[71][66] Graziano v Graziano [2009] SADC 132 at [155]-[156].[67] Ibid at [163].[68] Ibid at [157].[69] Ibid at [158].[70] Ibid at [164].[71] Ibid. The decision concerning an application to reopen to call further evidence is very much a discretionary decision. A trial judge is much better placed to determine that issue than is a court on appeal. An appellate court would only interfere with such a decision on House v The King[72] grounds. As noted earlier, counsel for Bruno on the appeal did not consider that an argument in support of this ground of appeal could be usefully made. Implicit in this was a concession that the Judge had not made any error of the House v The King kind.[72] (1936) 55 CLR 499.

Ratio Decidendi

Legal Principle Established

Established by: PEEK J

Full text does not contain this section.