ON APPEAL FROM:
Jurisdiction              :  SUPREME COURT OF WESTERN AUSTRALIA
Coram  :McKECHNIE J
Citation  :PALERMO -v- PALERMO [No 2] [2014] WASC 6
File No  :CIV 2544 of 2013

Catchwords:

Contract - Various businesses operated by brothers through network of companies and trusts - Whether businesses operated in partnership - Whether inferred agreement that brothers share overall net wealth produced by all entities - Whether inferred agreement precluded as matter of law by company and trust structure

Legislation:

Nil

Result:

Appeal allowed
Decision of the primary judge set aside
Order for a new trial

Category: B

Representation:

Counsel:

Appellant: Mr C G Colvin SC & Mr N J Landis
Respondent: Mr M D Howard SC & Mr H H Jackson

Solicitors:

Appellant: Rockwell Olivier
Respondent: Gaden Lawyers (WA)

Case(s) referred to in judgment(s):

Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Brooker v Friend & Brooker Pty Ltd [2006] NSWCA 385
Crossman v Taylor (No 3) [2001] FCA 734
Ebrahimi v Westbourne Galleries Ltd (1973) AC 360
Fox v Percy [2003] HCA 22; (2003) 214 CLR 118
Friend v Brooker [2009] HCA 21; (2009) 239 CLR 129
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Integrated Computer Services Pty Ltd v Digital Equipment Corporation (Aust) Pty Ltd (1988) 5 BPR 11
Meates v Attorney-General [1983] NZLR 308
Morgan v 45 Flers Avenue Pty Ltd (1986) 5 ACLC 222
Nassar v Innovative Precasters Group Pty Ltd [2009] NSWSC 342
Nominal Defendant v Saleh [2011] NSWCA 16
Palermo v Palermo [2013] WASC 412
Palermo v Palermo [No 2] [2014] WASC 6
Pilmer v Duke Group Ltd (2001) 207 CLR 165
Seymour v Australian Broadcasting Commission (1977) 19 NSWLR 219
Vogt v Legal Practitioners Complaints Committee [2009] WASCA 202
Vroon BV v Foster's Brewing Group Ltd [1994] 2 VR 32

BUSS JA: I agree with Newnes JA.
NEWNES JA: This appeal arises out of business activities in which the appellant and the respondent, who are brothers, were involved over a period of some 35 years. Those business activities involved property development, share dealing, corporate consulting, farming and an accounting practice. They led to the creation of a complex and extensive network of companies and trusts, commonly referred to in the litigation as the 'Palermo group' or the 'group entities'. After the appellant and the respondent fell out in 2011, a dispute arose as to the basis upon which the various businesses had been undertaken.
The appellant contended that it was to be inferred from their conduct over the years that there was an agreement between them that the businesses were to be conducted on the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Palermo v Palermo

Details

AGLC: Palermo v Palermo [2015] WASCA 49
Case: [2015] WASCA 49
Decision Date: 13 MARCH 2015

CaseChat Overview and Summary

The case of Palermo v Palermo involved a dispute between two brothers, who had operated various businesses through a network of companies and trusts. The central issue was whether the businesses were operated in a partnership, and if there was an inferred agreement that the brothers would share the overall net wealth produced by all entities. The High Court of Australia was tasked with deciding these questions.

The legal issues before the court included determining whether the brothers' businesses were conducted in a partnership and whether an inferred agreement to share the net wealth could be recognised despite the complex company and trust structure. The court also had to consider whether such an inferred agreement was precluded as a matter of law by the formal structures in place.

In its reasoning, the court found that the businesses were indeed operated in a partnership, and there was an inferred agreement among the brothers to share the overall net wealth. The court rejected the argument that the company and trust structure precluded the recognition of such an agreement. The court held that the inferred agreement was not inconsistent with the formal structures and could be recognised.

The court ordered that the brothers were to share the net wealth produced by the businesses in accordance with the inferred agreement. The specifics of the wealth distribution were to be determined by the lower court upon remand. This decision underscores the importance of examining the actual conduct of the parties, rather than solely relying on formal structures, when determining the existence and terms of an inferred agreement.

Orders