Palmiotti v Palmiotti
[2002] WASC 20
PALMIOTTI -v- PALMIOTTI & ORS [2002] WASC 20
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2002] WASC 20 | |
| Case No: | CIV:2330/1999 | 6 FEBRUARY 2002 | |
| Coram: | MASTER BREDMEYER | 18/02/02 | |
| 7 | Judgment Part: | 1 of 1 | |
| Result: | Application allowed | ||
| B | |||
| PDF Version |
| Parties: | CORRADO PALMIOTTI ANTONIO GIUSEPPE PALMIOTTI CHRISTINE THERESE PALMIOTTI PALMIOTTI & CO PTY LTD (ACN 009 005 261) PASQUALINA PALMIOTTI |
Catchwords: | Pleadings Particulars Strike-out application Interrogatories |
Legislation: | Nil |
Case References: | Palmiotti v Palmiotti & Ors [2001] WASC 132 Palmiotti v Palmiotti & Ors [2001] WASC 228 Nil |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ANTONIO GIUSEPPE PALMIOTTI
First Defendant
CHRISTINE THERESE PALMIOTTI
Second Defendant
PALMIOTTI & CO PTY LTD (ACN 009 005 261)
Third Defendant
PASQUALINA PALMIOTTI
Fourth Defendant
Catchwords:
Pleadings - Particulars - Strike-out application - Interrogatories
Legislation:
Nil
(Page 2)
Result:
Application allowed
Category: B
Representation:
Counsel:
Plaintiff : Mr M S Macdonald
First Defendant : Mr R E Keen
Second Defendant : Mr R E Keen
Third Defendant : Mr R E Keen
Fourth Defendant : Mr R E Keen
Solicitors:
Plaintiff : Macdonald Rudder
First Defendant : Ron Kennealy
Second Defendant : Ron Kennealy
Third Defendant : Ron Kennealy
Fourth Defendant : Ron Kennealy
Case(s) referred to in judgment(s):
Palmiotti v Palmiotti & Ors [2001] WASC 132
Palmiotti v Palmiotti & Ors [2001] WASC 228
Case(s) also cited:
Nil
(Page 3)
1 MASTER BREDMEYER: This is an application by the plaintiff to strike out par 7.7(c) of the further reamended defence of 8 October 2001 (the defence) and for leave to administer certain interrogatories. I will consider the strike-out application first. The application is out of time. It was canvassed in correspondence beforehand. It is a strong application, with good prospects of success and may limit the issues at trial, and I propose to give leave to allow it to be brought out of time.
2 Paragraph 7.7(c) of the defence is in response to par 14(a) of the statement of claim which reads:
"(a) the sum of $154,240.96 (Fund) stood to the credit of the deceased's capital and current account with the third defendant in its capacity as trustee of the Palmiotti Unit Trust as disclosed in the financial statements of the Palmiotti Unit Trust for the year ended 30 June 1998."
3 Paragraph 7.7 of the defence pleads:
"7.7 As to paragraph 14(a) of the Statement of Claim the Defendants:
(a) admit that the balance sheet of the Trust for the year ended 30 June 1998 purported to show a loan account in the deceased's name in the sum of $154,240.86;
(b) otherwise deny each and every allegation therein; and
(c) say that:
(i) the entry in the balance sheet was in error and the Defendants repeat paragraph 6.1(ii) hereof;
(ii) further or alternatively the figure of $154,240.86 was in error as book keeping errors had been made in the past overstating the deceased's capital or interest in capital accounts of the Trust. Further particulars of such errors will be provided prior to trial.
(Page 4)
- (iii) the said fund should have been transferred to the First and Second Defendants in accordance with the deceased's wishes; but
(iv) the said Flynne then failed to record such entry in the accounts of the Trust;"
4 The plaintiff attempted to get summary judgment in the sum of $154,240.86, being part only of its claim, but that application failed before Master Sanderson in Palmiotti v Palmiotti & Ors [2001] WASC 132. The application failed for a number of reasons, but one of them was that in 1995 the deceased decided to gift that sum equally to the first and second defendants and that was only reflected in the 1999 accounts of the trust. If that sum was gifted validly in that way, the plaintiff could not recover it.
5 The plaintiff also brought an application to strike out various parts of the defence and that was considered by Master Sanderson in Palmiotti v Palmiotti & Ors [2001] WASC 228. The plaintiff failed to strike out par 7.7, but in respect of 7.7(c)(ii), the Master considered that the promise to provide particulars of the paragraph was sufficient. Those particulars have now been provided in the defendants' response of 8 October 2001 to the plaintiff's request for particulars of reamended defence.
6 I consider 7.7(c)(i), (iii) and (iv) of the defence go together. That is the first error which the defendants plead. It is, in essence, that in or about February 1995, the deceased decided to divide her interest in the Trust, which ran a crayfishing business, equally between the first and second defendants, save that she was to retain her special unit. It is not stated, but I think it is implied that she intended to gift her interest in the trust to the first and second defendants. Flynne was told of this, but did not arrange for transfers to be signed, and did not reflect these gifts in the accounts of the trust until 1999.
7 Paragraph 7.7(c)(ii) relates to a further, or alternate error, a bookkeeping error, in overstating the deceased's capital, or interest in capital accounts of the trust. The particulars of this error given in answer 4 are lengthy. The most important parts are (d) and (e), which I quote:
"(d) On or about 30 April 1985, the then accountants for the Third Defendant adjusted capital accounts of some of the unit holders in the Palmiotti Unit Trust to show such capital accounts as being:
(Page 5)
- (i) the deceased $144,645.00
(ii) the Second Defendant $79,129.00
(iii) Michele Palmiotti $73,566.00
(iv) Isabella Palmiotti $75,266.00
(v) The First Defendant $73,566.00
__________
$446,172.00
__________
- Such adjustment was made by crediting the First Defendants capital account with approximately half of the capital account of Isabella Palmiotti and by crediting Michele Palmiotti's capital account with approximately one half of the capital account of the Second Defendant.
- (e) As the persons referred to in the immediately preceding paragraph each held 10 units in the Palmiotti Unit Trust their separate unit holdings entitled them to share equally in the capital of the Third Defendant under the provisions of the Unit Trust Deed. Accordingly, as at 30 April 1985 the capital share of each of 5 unit holders should have been $89,234.00 subject to proper accounting appropriations. The adjustment referred to in paragraph (d) caused the deceased to be and to continue to be credited with an excessive share of the Third Defendant's capital."
8 I note that $446,172 ÷ 5 = $ 89,234, and that $144,645 minus $89,234 = $55,411.
9 I have a number of difficulties understanding the particulars given in (d) and (e). Firstly, in (b), which I have not quoted, the amount due to the deceased as at 9 April 1984 was $153,457. How did that sum get reduced to $144,645 as at 30 April 1985? Secondly, were the capital accounts of the unit holders adjusted as recited in (d) with their consent? Their consent would be essential. But I let those questions pass, because the more important plea is in (e). That states that, because the five unit holders in the trust held 10 units each, the accounts should have shown them each holding $89,234 "subject to proper accounting appropriations".
(Page 6)
- The latter words are an inadequate, imprecise particulars. They should spell out what is the proper accounting appropriations. It could mean that the deceased's capital share should have been shown as $89,234 and $55,411 shown as owing to her on her loan account. Is that the error that the accounts as at 30 April 1985, showed her owed capital of $144,645 when they should have shown her owed capital of $89,234, plus $55,411 owing to her on her loan account?
10 That error in the 1985 accounts, begs two questions. Was that 1985 error in the accounts continued until the 1998 accounts? After all, the plea is in relation to the sum of $154,240.86 standing to the credit of the deceased in the trust accounts for the year ended 30 June 1998. If that 1985 error continued in the accounts until 1998, this needs to be stated. Then, the sum shown in the 1998 accounts as owing to the deceased is $154,240.86 and not $144,645. The particulars need to explain how this sum grew.
11 If these particulars were repleaded, they might state that the error in the 1998 accounts was to show $154,240.86 in the deceased's capital account, when it should have shown X plus Y dollars totalling that sum, X being the sum due to her on her capital account and Y being the sum due to her on her loan account. But I ask, more fundamentally, what is the significance of that bookkeeping, or accounting, error? Whether the deceased was owed $154,240.86 on her capital account, or part of that sum on her capital account and the balance on her loan account, makes no difference in the bigger picture. She was still owed a total of $154,240.86 for her financial interest in the trust as at 30 June 1998.
12 I propose to strike out 7.7(c)(ii) of the defence and all of answer 4 of the particulars. I will possibly give leave to replead.
13 I turn now to the plaintiff's application for leave to administer interrogatories to the defendants. The interrogatories are set out in a document dated 11 December 2001. Question 1 relates to a conversation which the first defendant and/or the second defendant had with the deceased in about late 1994 or early 1995. I consider it is not necessary to ask those questions. The defendants' case on this topic is clearly stated in the defence, par 6.1, and in the particulars answer 1. The plaintiff's counsel can ask the first and second defendants the precise words used by the deceased in cross-examination.
14 I will allow question 2 as amended. It relates to the 1997 resolution of the unit holders of the trust whereby it was resolved that Margherita's
(Page 7)
- redemption of five units in the trust in February 1995 was for nil consideration. This reversed the February 1995 resolution whereby she was allowed to redeem five of her units in the trust in consideration for receiving 11 crayfish pot licences owned by the trust. The defence, at par 7.7, is vague as to who got Margherita to sign this resolution, which was, of course, against her interest. It was there said that it was the defendants, or one of them, who presented it to her to sign. The plaintiff wants to ask specifically if it was the second defendant who got Margherita to sign. I consider the plaintiff should be given leave to ask that question. If he gets a "Yes" answer, he will know who to cross-examine on the circumstances of the signing. It will serve to narrow the issues at trial. However, I propose to amend question 2.3 by deleting reference to the names Antonio, Isabella and Pasquale Palmiotti and the words in brackets, as not being necessary. The key issue is the signature of Margherita, and the key question is: Did the second defendant arrange to have it signed by Margherita?
15 In summary, I will give leave to the plaintiff to ask interrogatories 2, 2.1, 2.2, 2.3 (as amended) and 2.4.
16 I will hear the parties on the orders which should follow and on costs.
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