Palermo v Palermo

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.