Pirrottina v Pirrottina

[2024] NSWSC 558

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Pirrottina v Pirrottina [2024] NSWSC 558

Hearing dates:

11-12, 18-20 March 2024

Date of orders:

14 May 2024

Decision date:

14 May 2024

Jurisdiction:

Equity

Before:

Rees J

Decision:

(1)   Declare that the partnership between the plaintiff and defendant was dissolved on 8 January 2022.

(2)   Declare that the defendant has an equitable interest in the land identified in the survey annexed to the Amended First Statement of Cross-Claim and the improvements thereon (the Lot), located on the property known as 2018 Wisemans Ferry Road off Mangrove Mountain (the Property).

(3)   Declare that the plaintiff holds his title to the Property on trust for the defendant to the extent of the defendant’s equitable interest in the Lot.

(4)   Direct the defendant to obtain an updated valuation of the market value of the Property from Kent Wood within 28 days, with the cost of the updating report to be borne by the defendant in the first instance, until the issue of costs is determined.

(5)   Order the defendant to acquire the plaintiff’s interest in the Property for 40% of the updated market value, such purchase to be completed within 28 days of receipt of the updated valuation or such other date as may be agreed by the parties.

(6)   Direct the parties to bring in orders within 14 days in respect of:

(a)   the appointment of a referee to determine whether the remaining disputed items of plant and equipment are partnership assets, and to take an account;

(b)   the buy-out of partnership assets in the possession of each partner; and

(c)   how the parties wish to proceed in respect of costs.

(7)   Parties to notify any errors or omissions within 14 days.

(8)   Liberty to apply in respect of Orders 4 to 6.

Catchwords:

CLIENT LEGAL PRIVILEGE – waiver – whether executor can waive testator’s privilege to advance personal interests – at [6]-[10]

ESTOPPEL BY REPRESENTATION – 30 years ago, farming parents offer to buy land for son in recognition of years of unpaid labour – son asks for second house to be built on farm instead – parents represent that the house and surrounding land (the Lot) are his – 8 years later, parents transfer farm to the son and his brother as tenants-in-common in equal shares – son’s interest not discussed at time of transfer, nor mentioned in parents’ later wills – principles at [160]-[167], [171], [173] – whether representations made by the parents subject to conditions, at [174] – son has equitable interest in the Lot.

PERSONAL EQUITY – principles at [182]-[188] – whether brother held his half-share on trust for the son – brother knew of the other’s equitable interest –whether necessary to find “superadded” factor such as acknowledgement, agreement or undertaking to act in accordance with equitable interest – Presbyterian Church v Scots Church [2007] NSWSC 676 considered – not necessary where brother not a third party – brother’s legal interest subject to constructive trust in respect of the Lot.

ESTOPPEL BY ACQUIESCENCE – principles at [200]-[201] – son undertakes renovations on the Lot over 20 years – his brother remains silent – brother estopped from denying equitable interest in Lot.

JUDICIAL SALE – s 66G(1), Conveyancing Act 1919 (NSW) – principles at [242]-[247] – not relevant to discretion that son’s interest is more than 50% – Callahan v O’Neill [2002] NSWSC 877 considered –order refused where inconsistent with equitable obligation.

PARTNERSHIPS – date of dissolution – s 32(c), Partnership Act 1892 (NSW) – principles at [135]-[137] – ‘in principle’ agreement to dissolve partnership – infer partners did not wish to continue the partnership from date of AVO.

PARTNERSHIP ASSETS – whether farm is a partnership asset – ss 20(1), 21, Partnership Act 1892 (NSW) – principles as [143]-[146] – no express agreement – whether implied agreement – farm not included in partnership accounts – farm was partners’ personal property.

REALISING PARTNERSHIP ASSETS – whether a buy-out order should be made – principles at [251]-[261] – brothers continue to farm separately – some assets are fixtures, warranting a buy-out by owner of farm where asset is affixed – consideration of cost of appointing receiver – unlikely to produce better outcome on sale of second-hand farm equipment and vehicles.

UNCLEAN HANDS – principles at [210] – mortgage payments paid by partnership 50:50, without taking into account son’s interest in the Lot – son did not control payment of mortgage – no relation between alleged impropriety and equitable interest.

LACHES – principles at [215]-[217] – equitable interest not raised when legal title was transferred – parents since passed away – no knowledge that brother did not deny equitable interest until shortly before action.

EQUITABLE COMPENSATION – principles at [235]-[237] – difficulty in ascribing value to the Lot where no separate title – market value with separate title discounted to reflect possibility that farm would be sold notwithstanding parents’ wish to keep it in the family and the parents unable to buy their son another property.

Legislation Cited:

Conveyancing Act 1919 (NSW), s 66G

Evidence Act 1995 (NSW), 140(2)

Partnership Act 1892 (NSW), ss 20(1), 21, 26(2), 32(c), 35 and 39

Cases Cited:

Attorney-General (NT) v Maurice (1986) 161 CLR 475

Bahr v Nicolay (No 2) (1988) 164 CLR 604

Bant v Bant [2003] WASC 137

Bassett v Cameron [2021] NSWSC 207

Bell Group Ltd (in liq) v Westpac Banking Corp (No 9)and (No 10) (2008) 39 WAR 1; [2008] WASC 239; [2009] WASC 107

Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060

Blackwell v Blackwell [2020] NSWSC 1208

Bonzalie v Cullu [2013] NSWSC 1576

Bova v Avati [2009] NSWSC 921

Breskvar v Wall (1971) 126 CLR 376

Briginshaw v Briginshaw (1938) 60 CLR 336; [1938] HCA 34

Brooks v Young (2018) ALR 329

Bullivant v Attorney-General for Victoria [1901] AC 196

Cain v Cain (2007) 13 BPR 24,963

Calacoci v Calacoci [2020] NSWSC 476

Callahan v O’Neill [2002] NSWSC 877

Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129

Carter v Brine [2015] SASC 204

Chia v Ireland [2000] SASC 47

Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55

Crago v McIntyre [1976] 1 NSWLR 729

Crawley v Short (2009) 262 ALR 654; [2009] NSWCA 410

D Capital 2 Pty Ltd v Western (2022) 20 BPR 42919; [2022] NSWSC 1064

Delaforce v Simpson-Cook [2010] NSWCA 84

Dempster v Mallina Holdings Ltd (1994) 13 WAR 124

DHJPMPty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728

Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247

Drummond v Drummond [1999] NSWSC 923

Duke Group Ltd (In liq) v Alamain Investments Ltd (2003) 232 LSJS 58

E Co v Q [2018] NSWSC 442

Evans v Evans [2011] NSWCA 92

FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552

Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411

Ford v Princehorn; Estate of Ford [2012] NSWSC 1165

Foundas v Arambatzis [2020] NSWCA 47

Fragar v Fragar [2024] NSWSC 193

Frazer v Walker [1967] 1 AC 569

Gerovich v Gerovich (as executor of the estate of Gerovich) [2018] WASC 153

Gillespie v Gillespie [2013] QCA 099; [2013] 2 Qd R 440

Gillettv Holt [2001] Ch 210

Gritzman v McRae [2022] NSWSC 745

Harvey v Harvey (1970) 120 CLR 529

HeggiesBulkhaul Ltd v Global Minerals Australia Pty Ltd (2003) 59 NSWLR 312; [2003] NSWSC 851

Horn v GA & RG Horn Pty Ltd [2022] NSWSC 1519

Houghton v Imner (No 155) Pty Ltd (1997) 44 NSWLR 46

In the matter of Lorebray Pty Ltd [2023] NSWSC 1650

In the Will of Greer (1911) 11 SR (NSW) 21

Ithaca Ice Works Pty Ltd v Queensland Ice Supplies Pty Ltd [2002] QSC 222

Jennings v Rice [2002] EWCA Civ 159

Jones v Dunkel (1959) 101 CLR 298

Kelly v Kelly (1990) 92 ALR 74

Laird v Vallance [2023] VSCA 138

Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (Uncle Bens) (1994) 126 ALR 58

Lawfund Australia Pty Ltd v Lawfund Leasing Pty Ltd (2008) 66 ACSR 1

Lewis v Nortex Pty Ltd (in liq) [2004] NSWSC 1143

Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491

Loughran v Loughran (1934) 292 US 216

Lucas v Lucas [1962] Qd R 205

Matsen v Matsen [2008] NSWSC 135

McNicholas v Sarandopoulos [2018] NSWSC 576

Miles v Clarke [1953] 1 All ER 779

Mullins v Laughton [2003] Ch 250

Ngatoa v Ford (1990) 19 NSWLR 72

Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383

Nocton v Lord Ashburton [1914] AC 932

O’Brien v Komesaroff (1982) 150 CLR 310

O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262

Orr v Ford [1989] HCA 4; (1989) 167 CLR 316

PrusGrzybowski v Everingham (1986) 44 NTR 7

Q v E Co [2020] NSWCA 220

Ramsay v BigTinCan Pty Ltd (2014) 101 ACSR 415; [2014] NSWCA 324

Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068

Reynolds v Medway [2013] NSWSC 206

Ryan v Starr [2005] NSWSC 170

Saffron v Cowley [2012] NSWSC 1108

Savage v Lunn [1998] NSWCA 204

Sergei Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297

Sidhu v Van Dyke (2014) 251 CLR 505

Skrimshire v Melbourne Benevolent Asylum (1894) 20 VLR 13

Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198

Syers v Syers (1876) 1 App Cas 174

The New South Wales Trotting Club Limited v The Council of the Municipality of The Glebe (1937) 37 SR (NSW) 288

The Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (2007) 64 ACSR 31; [2007] NSWSC 676

Thorner v Major [2009] 1 WLR 776; [2009] UKHL 18

Walton v Walton [1994] CA Transcript No 479

Wantagong Farms Pty Ltd as Trustee for the Bulle Family Trust v Bulle [2015] NSWSC 1603

Warman International Ltd v Dwyer (1995) 182 CLR 544; 128 ALR 201

Watson v Foxman (1995) 49 NSWLR 315

Williams v Legg (1993) 29 NSWLR 687

Williams v Nicoski [2003] WASC 131

Willmott v Barber (1880) 15 Ch D 96

Woodson (Sales) Pty Ltd v Woodson (Australia) Pty Ltd (1996) 7 BPR 14,685

Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15

Texts Cited:

Ian Spry, The Principles of Equitable Remedies (9th ed, 2014, Thomson Reuters)

Keith Fletcher, The Law of Partnership in Australia (9th ed, 2007, Lawbook Co)

Roderick I’Anson Banks, Lindley & Banks on Partnership (21st ed, 2022, Thomson Reuters)

Category:

Principal judgment

Parties:

Rocco Pirrottina (Plaintiff)
Saverio Pirrottina (Defendant)

Representation:

Counsel:
C Wood SC / J Hart (Plaintiff)
M Ashhurst SC / K Dyon (Defendant)

Solicitors:
Williams The Law Firm (Plaintiff)
Cara Marasco & Co (Defendant)

File Number(s):

2022/358515

JUDGMENT

1. HER HONOUR: This case concerns a dispute between two brothers, on the dissolution of their partnership. The plaintiff is Rocco Pirrottina. The defendant is Saverio (Sam) Pirrottina. The brothers were engaged in citrus production at orchards in Mangrove Mountain and Kulnura, New South Wales, and the sale of produce at Flemington Markets in Sydney. The brothers were effectively given this business by their parents, Saverio and Rosa Pirrottina (Mr and Mrs Pirrottina Snr), twenty years earlier.

2. A portion of the proceedings has been expedited, to determine, essentially, five issues:

1. When did the partnership come to an end?

2. Is the Mangrove Mountain farm a partnership asset?

3. Does Sam have an equitable interest in an acre of land on the Mangrove Mountain farm (the Lot), on which a house was built and in which Sam has lived for 28 years, as a consequence of representations made by Mr and Mrs Pirrottina Snr that the Lot and the house were his?

4. When the parents later transferred the Mangrove Mountain farm to the brothers as tenants-in-common in equal shares, did Rocco acquire his interest subject to a personal equity in favour of Sam, such that Rocco holds his title on trust for Sam in respect of the Lot? Alternatively, is Rocco estopped from suggesting otherwise, including by reason of Sam’s improvements to the Lot in the 20 years which followed?

5. What orders, if any, should be made for the sale of the Mangrove Mountain farm and other partnership assets, either under s 66G of the Conveyancing Act 1919 (NSW) or the Partnership Act 1892 (NSW)?

3. A referee will determine which of the remaining disputed items of plant and equipment belonged to the partnership. A referee will also provide an account, where both brothers are concerned that the other has used partnership funds for their own benefit.

Whether executor can waive testator’s client legal privilege for own purpose

4. An initial issue arose as to whether Rocco could have access to his parents’ privileged communications – in relation to their Wills and the transfer of the Mangrove Mountain farm to the brothers – where Rocco had been an executor of his parents’ estates. I declined to permit the parties to access the privileged material. These are my reasons for so doing.

5. Rocco and his sister, Angelina, were joint executors of their father’s estate. Rocco and Sam were joint executors of their mother’s estate. Angelina’s attitude to Rocco’s application for access was not known. Sam opposed access. Rocco submitted that he was nonetheless entitled to see the documents, as an executor of both estates.

6. Client legal privilege continues after the death of a privilege holder and will generally enure for the benefit of their successors in title until waived by a person or entity competent and able to waive it: Bullivant v Attorney-General for Victoria [1901] AC 196 at 206 (per Lord Lindley); Lake Cumbeline Pty Ltd v Effem Foods Pty Ltd (Uncle Bens) (1994) 126 ALR 58 at 64-65 (per Tamberlin J). Usually, it will be the privilege holder’s executor or administrator who may waive such privilege: Prus Grzybowski v Everingham (1986) 44 NTR 7 at 12 (per Kearney J).

7. An executor is in a position akin to that of a trustee, owing fiduciary obligations to the beneficiaries of the estate: Brooks v Young (2018) ALR 329 at [89]. These obligations include avoiding conflicts, or potential conflicts, between the executor’s personal interests and the interest of the estate which they are bound to protect: Brooks v Young at [93] (per Doyle J); Gritzman v McRae [2022] NSWSC 745 at [185] (per Ward CJ in Eq). For example, an executor falls foul of the “no conflict” rule by purchasing property from the estate without authorisation under the Will, the Court or the consent of the beneficiaries: see In the Will of Greer (1911) 11 SR (NSW) 21 at 22. So too where an executor authorises payment of their commission out of the assets of the estate without the consent of the beneficiaries: Saffron v Cowley [2012] NSWSC 1108 at [11] (per White J). Or where an executor withholds an interim distribution to the beneficiaries until their commission had been paid: Ford v Princehorn; Estate of Ford [2012] NSWSC 1165 at [41]-[42] (per White J).

8. Similarly, an executor is not entitled to be indemnified out of the estate for costs incurred to further the executor’s personal interest, as opposed to administration of the estate: Drummond v Drummond [1999] NSWSC 923 at [47] (per Austin J). It has been said that executors who pursued “a purely selfish interest” were “not fighting for the estate any more than if they were not executors at all”: Skrimshire v Melbourne Benevolent Asylum (1894) 20 VLR 13 at 18 (per Madden CJ).

9. Rocco accepted that he did not intend to use the privileged documents for the purposes of administering his parents’ estates, where the administration of both estates had been completed sometime earlier. Rather, the documents were sought to understand the testamentary intention of the parents in relation to the equitable interest sought to be established by Sam. By these means, Rocco sought to defend the contention that his half-interest in the land was subject to the asserted equitable interest, or that he held his legal interest on trust for Sam. That is, Rocco’s waiver of his parents’ privilege would be for the purpose of advancing Rocco’s personal interests.

10. Client legal privilege is a principle “of great importance to the protection and preservation of the rights, dignity and freedom of the ordinary citizen under the law and to the administration of justice and law … That being so, it is not to be sacrificed even to promote the search for … truth in the individual case”: Attorney-General (NT) v Maurice (1986) 161 CLR 475 at 490 (per Deane J). While Rocco may be entitled, as an executor, to waive privilege, doing so in this instance would not be a waiver with a view to discharging his duties as executor, nor would it be in the interests of the beneficiaries per se, but in his own interests. On the face of it, the application for access is inconsistent with an executor’s obligation to avoid conflicts between their personal interests and the interests of the estate. I am not satisfied in these circumstances that Rocco (or Sam) should be permitted to access the privileged documents and thereby abrogate the fundamental protection afforded to the parents by privilege.

Evidentiary matters

11. As these proceedings are configured, Rocco bears the onus to prove that the Mangrove Mountain farm was a partnership asset, while Sam bears the onus of establishing an equitable interest in the Lot and a personal equity vis a vis Rocco. The standard of proof remains the balance of probabilities qualified having regard to the gravity of the questions to be determined: s 140(2) Evidence Act 1995 (NSW); Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 362.

12. The critical events occurred in 1994, that is, 30 years ago. As such, the passage of time may have exacerbated the general problem that recollections given in the course of legal proceedings may be distorted, albeit innocently, by a desire to succeed. As McLelland CJ in Eq noted in Watson v Foxman (1995) 49 NSWLR 315 at 319:

“… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”

13. To the problems caused by the passage of time, and the associated loss of memory and records, may be added the problem that the partnership, and Mr and Mrs Pirrottina Snr’s earlier business, appears to have involved significant amounts of cash. As a consequence, proving who paid what and when posed difficulties for both brothers, of the kind described by Hammerschlag J in Sergei Sergienko v AXL Financial Pty Ltd [2021] NSWSC 297 at [1].

14. As for lay witnesses, Rocco gave evidence and relied on the evidence of his sister Vincenza (who was not required for cross-examination) and renderer, Douglas Cetinic.

15. Sam gave evidence and relied on the evidence of partnership accountant, Antonio Tisano, wife Marisa, sons Saverio (Sammy) and Joseph, sister Angelina and brother-in-law Rocco Marando, father-in-law Tommaso Falvo, aunt Caterina Deidda, long-time family friends Frank Lopresti and Pasquale Macri, bricklayer Joseph Vumbaca, carpenter John Leccas, builder Christopher Hajje and renderer Richard Cetinic (being the brother of Douglas Cetinic, with whom Richard had fallen out). All were cross-examined. Sam also relied on the evidence of plumber Laurie Douglas, roof tiler Terry Lamb, carpenter Bass Yasin and painter Phillip Lagana, none of whom were required for cross-examination; I accept their evidence.

16. The main contest, in terms of credibility, was between the brothers. Rocco gave evidence in a guarded and evasive manner. Having sworn multiple affidavits, it was not until the witness box that Rocco denied critical conversations. In the circumstances, I have attached little weight to these late denials. Rocco gave inconsistent answers: for example, see [53], [100]. Rocco ultimately appeared to have taken a particularly dogged stance vis a vis his brother, as Rocco considered that the way things had worked out was “not fair”. Rocco’s evidence was also at odds with the evidence of a large number of other witnesses, many of whom were one-step removed from the brothers’ battle. In the event of conflict, I have preferred the evidence of more impartial witnesses, such as Mr Tisano, Mr Marando, Ms Deidda, Mr Lopresti, Mr Macri and the various tradespeople, to that of Rocco.

13. Sam was an enthusiastic and passionate witness who was keen to volunteer fervent remarks. He appeared honest. Sam readily accepted that he got some of the details in his earlier affidavits wrong, given that events happened a long time ago, but was emphatic that his recollection of the critical conversation with his parents in 1994 was correct. Sam was more circumspect and less bitter in respect of his brother than was the reverse. I have generally preferred his evidence to that of Rocco in the event of conflict between them. That said, I have accepted a more dilute form of Sam’s evidence, to compensate for what appeared to be a slight tendency to overstate the position.

14. Mr Tisano gave evidence reluctantly, having previously refused to provide an affidavit “because I did not want to be involved”. Mr Tisano declined to sign a second affidavit prepared by Sam’s solicitor, as Mr Tisano did not think it was relevant. Mr Tisano gave evidence in an impartial manner; he appeared honest and credible. I accept his evidence.

15. Marisa appeared to answer honestly and made reasonable concessions. Marisa became tearful on occasion. Marisa readily acknowledged that she harboured anger towards Rocco, but denied that it had affected her approach to giving evidence. I have generally accepted her evidence, save that there was a slight tendency to over-state the cost of renovations when compared with the evidence of the tradespeople on the same subject. Sammy seemed straightforward. Joseph was a serious, somewhat nervous and careful witness who appeared credible; I accept his evidence.

16. Angelina gave evidence in a clear and strong manner. Her evidence had a slightly partisan quality – she was definitely supporting Sam – but was nonetheless a credible witness. Angelina’s husband, Mr Marando, seemed to enjoy a little bit of distance between himself and the main protagonists. I accept his evidence.

17. Mr Falvo was a retired builder. He seemed credible and also experienced at giving evidence. Mr Falvo’s evidence hit a delicate subject, concerning his daughter Marisa’s elopement with Sam. Mr Falvo said he accepted what they did and blessed them and was happy with what had happened, where it was clear that he was then estranged from his daughter for many years. Mr Falvo’s answers to these questions, presumably intended to smooth over deep rifts between himself and his daughter, did not detract from his overall credibility.

18. Ms Deidda was Mrs Pirrottina Snr’s sister. Ms Deidda appeared to take giving evidence very seriously. She was a credible witness. I have generally accepted her evidence, albeit some of the details of events long ago may not have been correct, for example, she recalled Mr Pirrottina Snr telling her that he had bought the Kulnura farm for both brothers, where it may have been just for Rocco: see [56].

19. As for expert witnesses, the parties jointly instructed valuation expert, Kent Wood. Mr Wood was cross-examined; no issues of credit arose. Sam also instructed an actuarial expert, Douglas McBirnie, to value Sam’s life interest in the house and the Lot; Mr McBirnie was not required for cross-examination.

20. Finally, a party’s failure to produce documentary evidence to corroborate their account, where they might be expected to be in possession of such documents, may give rise to an inference that such documents as they may be expected to have would not support their account: Jones v Dunkel (1959) 101 CLR 298 at 320 (per Windeyer J). I have drawn this inference, for example, where Rocco stated that he paid for the Kulnara farm but did not tender his bank statements for the bank accounts from which the payments were said to have been made: see [59].

Mangrove Mountain orchard

25. Mr and Mrs Pirrottina Snr separately immigrated to Australia in the 1950s from the Calabria region in Italy. They married in Leichhardt and became co-owners of a farm at Mangrove Mountain, on which they established citrus orchards and built a homestead. Their produce was sold at Flemington Markets. Mr Pirrottina Snr did the physical work. Mrs Pirrottina Snr was in charge of the money.

26. Mr and Mrs Pirrottina Snr had several children. Relevantly, the oldest child, Rosa, lived with the parents at Mangrove Mountain until both parents had passed away. (Rosa also assisted her mother with the paperwork for the family business, as Mrs Pirrottina Snr was illiterate.) After Rosa came twins, Vincenza and Sam. Two more children followed, then the defendant Rocco and, finally, Angelina. Relations between family members appear to have been eventful. As Sam’s son, Joseph, said, “from a very young age, there’s always been family disputes with not only my father and my uncle, but multiple family members.”

27. Sam left school aged 14 to work on the Mangrove Mountain farm. Sam eventually wanted to take over the family business; as the oldest son, he wanted to continue what his parents had created. Sam learnt how to run the farm and pack fruit. He travelled to Flemington Markets on Saturdays with his father. When Sam turned 18, he took on more responsibility and began driving the fruit truck to market with his father several days a week. In return, Mr and Mr Pirrottina Snr paid for the things which Sam needed day-to-day, including food and clothes. They bought Sam a car and gave him pocket money when he needed money to pay for things. Sam said he did not receive any other money for his work on the farm.

28. Four years later, Sam was joined on the farm by Rocco, who left school aged 13. As Sam recalled it, Rocco helped their mother do inside jobs around the house to cover what she could not do when she was working outside, and occasional farm work. Rocco did not cavil with this description. Rocco was paid differently than Sam for his work on the farm, receiving a weekly wage.

Sam’s house

29. By 1994, Sam was 26 years old and had been working full-time on the Mangrove Mountain farm for 12 years. As described by Sam in his first affidavit, in September 1994, Mr Pirrottina Snr commented on how hard Sam had worked for so long, “you never wanted a wage and have nowhere for you to go when you get married”. Mr Pirrottina Snr asked Sam whether he wanted his parents to buy him a block of land on which to build a house when he got married. Sam replied that he would rather build his house on the Mangrove Mountain farm, so that he did not have to travel to work.

30. Mrs Pirrottina Snr asked Sam where he wanted to build his house. Sam walked over to a homestead window and pointed to an area that had old lemon trees planted on it, about 80 metres from the homestead and a little bit out of the way, bordered by the driveway, a drainage passage and the main orchard. The area was about one acre (referred to in these proceedings as the Lot). Mrs Pirrottina Snr said, “That’s fine that’s what we will do, that’s where we will build your house and that will be yours.”

31. The next day, Sam told Rocco, then aged 20, that Sam was going to build his house on the farm, “Dad and Mum said I could yesterday”. Rocco asked Sam why he wanted to build on the Mangrove Mountain farm, “Why don’t we just buy another block?” Sam repeated that he wanted to build his house on the Mangrove Mountain farm so that he did not have to travel to work. Rocco said, “I won’t do that. I don’t want to live here on the farm.” Rocco asked Sam where he wanted to build and Sam indicated the same area as he had pointed out to his parents, being the Lot.

32. In his fourth affidavit, Rocco replied to Sam’s first affidavit but did not refer to Sam’s evidence of this important conversation. In Rocco’s fifth affidavit, he responded to “key allegations” in Sam’s first affidavit but, again, made no reference to Sam’s evidence of this conversation. In examination-in-chief, however, Rocco said, “I didn’t have no conversation with him.”

33. Angelina recalled in her affidavit that, in 1994, at the family dinner table, Sam said that he wanted to build his family home on the farm “because this is where my life is and I want to continue to grow the family business”. The parents agreed that this made sense as Sam was going to continue to run the family business. Mr Pirrottina Snr said they had worked hard to build the business and wanted it to stay in the family. They were happy to give Sam the land and to build a house for him to make his home and property so that he could “continue to grow the business” and, “hopefully, it [would] stay in the family for generations”. Rocco denied this portion of Angelina’s affidavit in his affidavit in reply, albeit his denial appeared to be confined to the words attributed to him. In cross-examination, however, Rocco also denied that the words attributed to others were said in his presence.

34. In 1995, Ms Deidda visited her sister at Mangrove Mountain. Mrs Pirrottina Snr told Ms Deidda that she and her husband had decided to build a house on the farm for Sam, “We offered to buy him a house but he told us that he wanted to live on the farm so, rather than buying a house, we are going to build a second house on the farm for Sam. This will be where he will be able to raise his family when he eventually gets married.” Ms Deidda added, “She said she was going to build a house for him so that he'd have something to leave for his kids, for his children.” Ms Deidda denied that she did not contact Mr and Mrs Pirrottina Snr between 1990 and 2004 due to a falling out, “Not at all”.

35. Rocco did not cavil with Sam’s evidence of the critical conversation with him in his many affidavits. Nor did Rocco cavil with Angelina’s description of a similar conversation around the family dinner table, other than the words attributed to him. I infer that Rocco agreed with Sam and Angelina’s description of conversations on this topic. It is inherently likely that the Pirrottina family discussed the construction of a second house on the Mangrove Mountain farm at length, from the inception of the idea until completion of construction, this being a substantial endeavour to be undertaken in plain sight of the homestead and for one only of the Pirrottina children. Precisely why this was being done, and for that particular child, was likely discussed on a number of occasions. Where Rocco lived in the homestead with his parents, it is likely that he participated in these conversations.

36. I attach little weight to Rocco’s late denials. I generally preferred Sam’s evidence to that of Rocco in the event of conflict between them. Further, Sam’s evidence is corroborated by Ms Deidda’s evidence of her conversations with Mrs Pirrottina Snr. I find that the conversation between Mr and Mrs Pirrottina Snr and Sam, and then between Sam and Rocco relaying the substance of that conversation, took place as described by Sam. Noteworthy, Rocco asked Sam why he wanted to build on the Lot rather than the alternative, being that “we just buy another block?”, and Rocco indicated that he would have chosen the latter if it were him. This indicates that Rocco understood that Sam was choosing to have the parents build him a house on the Lot and foregoing the offer of a block of land elsewhere.

37. Soon after Sam’s conversation with his parents, he went with Mrs Pirrottina Snr to look at project homes. Sam chose a home he liked. Sam and Mrs Pirrottina Snr chose the style and the fixtures. According to Angelina, when others, including Rocco, criticised these choices, Mrs Pirrottina Snr said, “If Sam likes it that’s okay, it’s not our house!”

38. In November 1994, Meriden Classic Homes drew up plans for Mr and Mrs Pirrottina Snr for a 2-storey, 4 bedroom house with rumpus room, double garage and study. Mr and Mrs Pirrottina Snr lodged a development application with the local council, but the application was refused; the council would not allow two houses on the property. A council officer advised that the only way the parents could get another dwelling on the property was to frame the application as being for a workers’ cottage. Meriden Classic Homes lodged an application with council to build a “workers’ cottage” on the land in the location that Sam had agreed with his parents. The application was approved. Angelina said that it was never intended, however, that Sam’s house would just be a workers’ cottage.

39. In July 1995, a survey was undertaken of existing structures, noting the proposed location of the new dwelling. In August 1995, building approval was issued. By late 1995, work had commenced. In February 1996, Meriden Classic Homes rendered its final account, totalling $182,643. Mr and Mrs Pirrottina Snr paid the bill. As Sam explained, “Because from the age that I left school at the age of 14, I worked my entire six to seven days a week with mum and dad without a wage and that was their contribution of paying me back for what I had put into the business.”

40. In November 1995, while his house was under construction, Sam met Marisa’s parents with a view to commencing a courtship. Sam and Marisa became engaged in March 1996. Marisa’s parents then regularly visited the Pirrottina family at Mangrove Mountain, occasionally staying the night with Mr and Mrs Pirrottina Snr. Mr Falvo recalls visiting the farm in early 1996 and walking with Rocco and Mr Pirrottina Snr near where a new house was being built, to look at a pipe from which spring water was being extracted. The house was then at “lock up stage”, with debris from builders and subcontractors left around the site. The new house and its surroundings was then as pictured below:

41. According to Mr Falvo, Mrs Pirrottina Snr joined them and pointed at the house that was being built and said, “this house we give to Sam and Marisa. Once they get married, they will live in it as their home.” In his reply affidavit, Rocco did not respond to Mr Falvo’s evidence of their walk to the spring water pipe, nor Mrs Pirrottina Snr’s comment about Sam’s house.

42. Mr Falvo recalled that they walked around the house; Mrs Pirrottina Snr wanted to know his opinion, as a builder, on the quality of the building work. Mrs Pirrottina Snr pointed to the roadway that provided access to the property and asked Mr Falvo for a favour, “Could you contribute towards the house by constructing a driveway from the road down to the house and a footpath around the house and landscape all the areas surrounding the house.” Mr Falvo said that was the least he could do and he would start as soon as possible.

43. According to Mr Falvo, Rocco and Mr Pirrottina Snr were present during this conversation. Rocco denied this conversation occurred. In cross-examination, however, Rocco was less clear, saying he could not recall whether he was there when Mr Falvo first visited the Mangrove Mountain farm, then said he was not at the inspection described by Mr Falvo, but could not explain why he had not previously denied being present in his earlier affidavit. I prefer Mr Falvo’s evidence, particularly given Rocco’s failure to squarely deny his participation in this conversation until the witness box.

44. In April 1996, Mr Falvo organised plant, labour and material to create a concrete driveway to connect the new house to the unsealed road which extended from the public road to Mr and Mrs Pirrottina Snr’s homestead. Mr Falvo arranged for the construction of concrete pathways, to provide pedestrian access from the unsealed roadway to the new house. Having completed the driveway and pathway, Mr Falvo arranged for landscaping on the part of the property that he understood to be Sam and Marisa’s, based on what Mr and Mrs Pirrottina Snr had pointed out to him as the area that formed part of Sam and Marisa’s property and which required landscaping.

45. Mr Falvo said the concreting work took three weeks and landscaping took another three weeks. On several occasions, Rocco drove over in an old ute to say hello and complimented the quality and finish of the work, saying “Sam and Marisa will be so happy in the house, thank you so much for helping”. Mr Falvo paid for the works, which was about $70,000. Had he undertaken the work for a client, he would have charged $94,500. Mr Falvo said that he would not have undertaken the work free of charge if he had not been convinced that Mr and Mrs Pirrottina Snr intended the house to be for his daughter and grandchildren.

46. Mr Falvo was clear about his recollection of the conversation with Mrs Pirrottina Snr and emphatic that he would not have undertaken the work on site absent what she said. I accept his evidence. It is likely that Mr Falvo would not have undertaken what appears to have been a fairly large job, and funded the associated costs himself, absent a clear indication that his daughter would receive a substantial and long-term benefit from the new house.

47. In about September 1996, before Sam and Marisa were married, Mr Falvo said he suggested to Sam that he should think about moving to Sydney, as they could start a development company and make a lot of money as Mr Falvo was a licensed builder. Mr Falvo felt that farming was a very hard game and wanted his daughter to live near him. According to Mr Falvo, Sam paused for a moment and said, “No I can’t do that, I have to stay on the farm. My parents just gave me a house on the farm and I promised my parents that I would help them carry on the business.” I accept Mr Falvo’s evidence, which indicates that Sam then understood that the house was his.

48. On 13 October 1996, Sam and Marisa eloped to Queensland, returning to the Mangrove Mountain farm in early November 1996. On their return, Sam asked Mrs Pirrottina Snr, “What do we do now mum. We are not married yet.” Mrs Pirrottina Snr said that, as far as she was concerned, they were married, “so you have your house go and move into it and we will organise a wedding.” Mrs Pirrottina Snr gave Sam the keys to the house and said, “I’ve finished it. Go and move into your house with Marisa”. Marisa recalled that Mrs Pirrottina Snr stood with her in the new house and apologised that the house was not fully furnished, “but this is your house and you and Sam can finish it off however you like.”

49. I accept that Mrs Pirrottina Snr said these things. I have already found that Mr and Mrs Pirrottina Snr told Sam in 1994 that they would build Sam’s house on the Lot “and that will be yours”. Over the next two years, the parents actioned that promise by making an unsuccessful application to council for approval, followed by a successful application, and then funded construction. Noteworthy is the size and scale of the house funded by the parents, where the plans were finalised while Sam was a bachelor. Sam’s house was obviously intended by Mr and Mrs Pirrottina Snr to house not only their son but also his future wife and children.

50. The parents clearly intended that Sam would live there for years to come, with a view to continuing to run the family business, being an activity in which he was then fully engaged, and had been for some 12 years. Whatever unhappiness may have arisen from the elopement, the parents’ wish to see their son established in his own home with a wife was about to be realised. By her assurances given to the couple at this time, Mrs Pirrottina Snr confirmed that the house was theirs. Marisa said she was always made to feel comfortable by Mr and Mrs Pirrottina Snr and Rocco in her home “and I could do whatever I wanted in my home and was never made to feel as though I may one day be required to move out of my home.”

51. In October 1996, Sam and Marisa Pirrottina obtained a building and contents insurance policy on the home, which they have continued ever since. Sam said he paid the insurance premiums from his own funds. Mrs Pirrottina Snr, however, took care of gas and electricity bills through the family business. In November 1996, Sam and Marisa began living in the new house. Sam and Marisa married in December 1996, holding their wedding reception in the yard. Once married, Sam began to receive a wage from his parents of $500 a week. A year later, after the birth of their first child, Sam’s wage increased to $1,000 a week, where it stayed for more than a decade.

41. Ms Deidda recalls visiting her sister in 1997, when Mrs Pirrottina Snr showed her around the newly constructed house and said “we have built this house for Sam”; in conversations thereafter, Mrs Pirrottina Snr referred to the house as “Sam’s house”. According to Sam and Angelina, their parents and siblings always referred to the house as “Sam’s house”.

42. In sharp contrast, Rocco said in cross-examination that the house was “always known as the workers’ cottage” by the family. He smiled when denying that the family called the house “Sam’s place” but then agreed it was always referred to as Sam’s house. Rocco accepted that the only time the house had ever been described as a workers’ cottage was on a development application, as a means to ensure that the council would give consent to the works going ahead. Rocco’s witness, Douglas Cetinic, also referred to Sam’s house as “the workers’ cottage” in his affidavit, but agreed in cross-examination that everyone referred to the house as “Sam’s house”. The first time he had known it to be referred to as a workers’ cottage was in the affidavit prepared for him. It is clear from the evidence that the house was known to all as Sam’s house. Rocco’s efforts to suggest otherwise damaged his credibility: see likewise [84].

Rocco’s farm

54. On 11 September 1999, Rocco was the successful bidder at auction for a farm in Kulnura, which had a house and was planted with citrus trees (Rocco’s farm). Rocco exchanged contracts to buy the farm for $600,000. A letter from his solicitor recorded that Rocco had paid a 10% deposit of $60,000, with settlement on 22 October 1999. Rocco arranged finance with National Australia Bank (NAB) to fund the balance of the purchase price. The loan was for $500,000, secured by a mortgage over the Kulnura property, a guarantee given by Mr and Mrs Pirrottina Snr and a further mortgage over Mr and Mrs Pirrottina Snr’s property in Booker Bay. Rocco continued to live with his parents at the Mangrove Mountain farm. He rented out the house on the Kulnura property. (Rocco’s bank statements for an NAB account ending 8618 are in evidence from December 2013 on, which indicate that he was then receiving rent of $450 a week.)

55. Rocco’s farm, and its orchards, were effectively deployed in the family business. Fruit from the orchards on Rocco’s farm was harvested and sold by the parents’ business. Mr and Mrs Pirrottina Snr retained the revenue. Electricity costs for Rocco’s farm were paid from the parents’ business bank account, as was oil, petrol, fertiliser and chemicals. Workers from the Mangrove Mountain farm also worked on Rocco’s farm. There were no separate workers working only on Rocco’s farm. Machinery from the Mangrove Mountain farm was also used on Rocco’s farm to do the farmwork. Sam said “I was there every week working, spraying, picking and whatever work that had to be required to be done, planting, whatever.” In addition, the trees on Rocco’s farm were progressively re-planted. (The extent to which the trees on Rocco’s farm are the property of the partnership, as well as the irrigation system and various equipment, will be determined by the referee.)

56. Rocco said he paid the deposit for Rocco’s farm by cheque from his NAB cheque account. Apart from his parents’ guarantee, Rocco said his parents did not make any other contribution to the purchase of the Kulnura farm. In contrast, Ms Deidda visited her sister and brother-in-law in September 1999. Mrs Pirrottina Snr said that they had just put down a $60,000 deposit on a farm, “we intend to expand the business”. Mr Pirrottina Snr showed Ms Deidda the cheque book and cheque butt for the deposit. Ms Deidda had the impression that Mr Pirrottina Snr was very proud. Ms Deidda said “I can never forget it. My brother-in-law … was over the moon. He was excited. He’d just put a $60,000 on a farm not far from this other one, and he’d bought it for the two boys.”

57. According to Sam, his father also told him that the parents had paid a $60,000 cheque for the deposit on the Kulnura farm. In an affidavit sworn in later family provision proceedings, Angelina prepared a schedule of gifts made by her mother to her siblings. Amongst these was $600,000 said to have been given to Rocco in 1999 towards the purchase of the Kulnura property. Angelina said she completed this table based on what she had been told by her parents, “My mum said we have bought Rocco’s house now too”. In these proceedings, Angelina recalled her parents discussing that they had to get a property for Rocco, as Sam had his home on the Mangrove Mountain farm. Mr Pirrottina Snr said, “now that we have set up Sam with his own house we need to help you Rocco have a roof over your head for when you settle down. After the problem we had with Sam’s house, we can’t have any more houses on this property so we have decided to help Rocco to buy a property close by so that he will be close to work and we can extend the family business with more citrus trees.” Rocco denies this.

58. As I understood it, the extent to which Mr and Mrs Pirrottina Snr paid for Rocco’s farm was relevant to whether Rocco would have agreed to the transfer of the family business and Mangrove Mountain farm to himself and Sam on the terms proposed. As to whether the deposit for Rocco’s farm was paid by himself or his parents, a bank statement for the parents’ NAB business cheque account (ending 4498) is in evidence for the period from 21 August to 20 September 1999. The bank statement does not record a payment of $60,000. However, the financial statements for the parents’ business for the 1997 financial year indicate that the parents then had a bank overdraft and five NAB loan accounts in respect of their business. As such, it is unlikely that the NAB cheque account was the parents’ only cheque account. Where the evidence of Ms Deidda, Sam and Angelina is also consistent with the parents buying the farm for Rocco, rather than for the parents’ business, the parents may also have paid the deposit from a personal, rather than business, bank account. No bank statement is in evidence for such an account.

59. Further, Rocco has not tendered the bank statement from his cheque account, evidencing his payment of the deposit. Rocco said he also paid stamp duty of $22,494, referred to in a letter from his solicitor, by a cheque from his NAB account, but no bank statement is produced by him to corroborate this either. Nor, for that matter, is there any evidence as to who paid the remaining $40,000 of the purchase price, being the gap between the deposit and the NAB loan. Rocco’s evidence is not corroborated by contemporaneous records, where such records were presumably available to him. (I say this because, although the bank statement would have been from 1999, the parents’ bank statement from this year was exhibited to Rocco’s affidavit.) I infer that Rocco’s bank records would not have assisted him.

60. Given the non-production of corroborative records by Rocco, together with the evidence of Ms Deidda, Angelina’s affidavit prepared in the family provision proceedings, and the evidence of Angelina and Sam in these proceedings, I find that Mr and Mrs Pirrottina Snr paid the deposit on Rocco’s farm. The running expenses for Rocco’s farm were also paid by Mr and Mrs Pirrottina Snr. Rocco earned rental income from the house on Rocco’s farm, which he was able to deploy to make mortgage payments, where he continued to live in his parents’ home at Mangrove Mountain. By these means, Mr and Mrs Pirrottina Snr provided Rocco with assistance, both directly and indirectly, to acquire Rocco’s farm. I do not accept that the parents’ only financial assistance provided to Rocco to buy his farm was the provision of a guarantee.

The partnership

61. According to both brothers, in 2001, Mr and Mrs Pirrottina Snr raised concerns with Sam and Rocco that their siblings would break up the parents’ business. Mr Pirrottina Snr said, “we want to transfer the land and business to you both because we don’t want the business broken up by your siblings. We want you both to run the business as partners but we will still have final say on any decisions after we transfer the land and business to you.” Sam and Rocco agreed. Mr Pirrottina Snr said that Sam and Rocco would need to take over the business loan. Further, “When we transfer it over, we don’t want you to sell it, we want you to continue running it. It is something that we built up from nothing.” The sons agreed.

62. On 1 September 2002, the parents transferred the Mangrove Mountain farm to Sam and Rocco as tenants-in-common in equal shares for nil consideration. Sam and Rocco refinanced their parents’ mortgage over the Mangrove Mountain farm, funded by a loan from NAB in the amount of $495,000, secured by a mortgage for which they were jointly liable. Other than taking over the mortgage, the sons were not required to make any further payment to their parents. The sons also granted their parents a 50-year lease of the homestead, rent-free, until both parents had passed away.

63. In October 2002, Sam and Rocco opened a business cheque account with NAB (ending 0808). (Bank statements from this account are only in evidence from December 2014 on.) Mortgage payments were paid from this account, that is, the mortgage was paid by the business. Rocco also had a credit card associated with the account, to pay bills and buy fuel. Electricity and gas bills for Sam’s house were now paid from this account, together with electricity and other expenses for Rocco’s farm. Whilst the new partnership bank account was in Sam and Rocco’s names, Mrs Pirrottina Snr continued to control the account and make payments made from it, with the assistance of Rosa. In January 2003, Mr Tisano assisted Sam and Rocco to obtain an Australian Business Number (ABN) for a family partnership trading as “S & R Pirrottina”.

64. Sam said that both parents remained involved in the business but to a lesser extent. Mrs Pirrottina Snr was still responsible for the money. Sam ran the farm day-to-day. Rocco said that very little changed when the farm and the parents’ business was transferred to him and Sam. In an affidavit sworn in later family provision proceedings, Angelina said, “It was [Sam] who ran the business. He was assisted by Rocco.” The father continued to work in the business until his early 80s. Sam “was running the business with Mum and Dad who were still working. My siblings and I helped. Dad stopped working when he reached his early 80s. Mum stopped working only a few months before she died.”

65. In May 2003, the parents executed mutual Wills. It is sufficient to set out the terms of Mr Pirrottina’s Will, which noted at the outset:

“I acknowledge that I have already given my Farming Business and my Farm Property equally to my sons SAVERIO JNR and ROCCO.”

66. “Farming Business” was defined to mean Mr Pirrottina’s “citrus farming business and orchard (including all the trees and fruit and all the plant and equipment associated with that business) which [he] carr[ied] on from [his] Farm Property”. “Farm Property” meant the land and fixtures at the Mangrove Mountain property. Noteworthy, the parents drew a distinction between the business and the Mangrove Mountain farm. Also noteworthy, the Wills made no mention of any proprietary right conferred on Sam in respect of the Lot or Sam’s house.

67. In June 2003, Mr Marando visited the Mangrove Mountain farm with his parents, to ask for Angelina’s hand in marriage. During the visit, Mr Marando and his father were given a tour of the farm by Mr Pirrottina Snr and Angelina’s brothers. Mr Pirrottina Snr pointed out the second house on the property and said “that is Sam’s house”. Rocco told Mr Marando that his house was at Kulnura. Later that day, Rocco took Mr Marando to the Kulnura house and said “[M]um and dad have helped us all get our own homes and we all have our own homes.” (Rocco denies this; I prefer Mr Marando’s evidence in the event of conflict between them.) Mr Marando said he had heard Mr Pirrottina Snr say on several occasions, when other family members were present including Rocco, “when I die, Sam will be here. Rocco’s got his home everyone’s got their own house.” In 2004, Angelina married and left the Mangrove Mountain farm to live with her husband. Rosa and Rocco continued to live in the farmhouse with Mr and Mrs Pirrottina Snr.

Improvements to Sam’s house

68. By 2004, Sam and Marisa had four children, including Sammy and Joseph, aged from 2 to 7. Sam and Marisa began the first of several renovations and improvements to their house and the Lot. It is not in dispute that Rocco was aware that his brother was undertaking these improvements and renovations. Rocco agreed that there were numerous times when Sam or Marisa asked for his opinion in respect of the proposed works to Sam’s house. Rocco agreed that he helped organise and perform some of the work. The issue was who paid for it.

69. Rocco said (but not until his eighth affidavit) that Mrs Pirrottina Snr paid for the improvements from business funds. Rocco said he often observed tradespeople approaching his mother for payment at his mother’s house. On being told the cost, Mrs Pirrottina Snr would go to another room and come back with cash and pay the tradesmen. Rocco said he did not object to the improvements “because during this period Mum was still in charge of the finances and I would not go against the wishes of Mum.” Rocco did not think that the money being spent on Sam’s house was necessary “but mum wanted to do it”. He thought that the money could have been spent in a different way in the partnership.

70. Sam and Marisa put on a significant amount of evidence, including calling nine tradespeople, to prove that the renovations were personally funded. It is convenient to now deal with this evidence. In October 2004, Sam and Marisa borrowed some $28,000 from NAB to landscape the area around their house. According to Sam, he talked to Rocco and his parents about the landscaping at the time. Sam said he discussed the landscape design with Rocco, who said it was a good idea. Rocco also helped with the tractor to prop up one of the landscaping supports. Sam said the works were paid for with personal funds. A local landscape specialist was paid $20,000 and a further $7,282 from Sam and Marisa’s personal bank account ending 1263. It appears from the bank statements that this was the case and I so find.

71. In about 2005, Mr Lecca was asked by Sam to replace the kitchen in his house at the Mangrove Mountain farm. Sam said he talked about the fact that he was replacing the kitchen with his parents and Rocco. Sam recalled telling Rocco that the new kitchen had cost him $25,000 but he was happy with what Mr Lecca had done. Mr Lecca agreed that occasionally he went to the parent’s homestead for lunch, prepared by Sam’s sister, Rosa, but denied that he was paid cash there. He was emphatic that he was “never” paid by Mrs Pirrottina Snr. Mr Lecca said he was paid some $20,000 by Sam. Marisa said the cost was some $25,000, paid in cash.

72. In 2008, Sam and Marisa installed air conditioning in their house at a cost of some $10,000. Sam said he and his family slept at Mrs Pirrottina Snr’s house that summer, as it was air conditioned, and Rocco suggested that they get air conditioning installed at his place. Marisa said the works were paid for by her and Sam from their personal funds.

Business interruptions and changes

73. In April 2010, Sam was in a serious road accident and was in a coma for a number of months. Sam needed to learn to walk and talk again. He could not work for some nine months until January 2011, when he started working part-time and returned to full-time work by 2011. During this period, the whole Pirrottina family worked together to run the Mangrove Mountain farm. Angelina said, “the family was told that [Sam] would not survive … During this time … Rocco … was running the business. … The whole family assisted during this time with the business focussing on the basics to keep it going. I and my siblings as well as family friends assisted during this challenging time.” It appears that, as a result of Sam’s prolonged incapacity, Rocco took on a more significant role in the partnership, where Sam was the lead partner before the accident.

74. From 2014 onwards, Rocco also took over the weekly banking of deposits of takings from the family business. Rocco took the cash takings home from the Flemington Markets. Rosa banked the cash until 2015. From then on, Rocco did the banking as well. (It should not be thought that the business was entirely cash: the partnership’s regular customers and wholesale accounts were paid by cheque or direct transfer into the partnership account.)

75. In 2015, Rocco also took over the responsibility for paying bills. Rocco had an office in Mr and Mrs Pirrottina Snr’s house where he did the paperwork. Marisa said that Rocco did all the paperwork in his office, “He was the only one who had access to that office, the only one with a key.” Rocco continued to pay the gas and electricity for Sam’s house (and expenses for Rocco’s farm) from the partnership bank account.

An extension and renovations

76. In 2014, Marisa complained that more room was needed at the house for their growing children; she asked whether a games room and barbecue area could be added. According to Marisa, Sam was reluctant to spend the money, but Rocco told his brother “spend some money … and make [your wife] happy.” (Rocco denies this conversation.) Sam recalled discussing this matter with his parents and Rocco before deciding to extend the house.

77. Mr Marando is a builder. Sam asked him to help with the extensions. Mr Marando recalled discussing the renovation with Mr and Mrs Pirrottina Snr. According to Mr Marando, Rocco was present and said, “it’s his house he can do what he wants I don’t live there.” (Rocco denies this). Mr Marando drew up some plans, which the couple were happy with. The renovation entailed an extension to the side of the house to incorporate a games room/family room and a pergola.

78. Work began in the kitchen area, as a leak had caused the tiles to dislodge. In August 2014, Sam and Marisa made a claim on their home insurance policy for repairs. Sam paid the excess in relation to the claim. The scope of works included removing kitchen cabinets and a benchtop, replacing water-damaged flooring and tiles in the kitchen, dining, entry and lounge and cleaning the house on completion of repairs. New tiles were ordered (with some $4,000 paid in cash). Rocco helped jack hammer the old tiles. Marisa decided to change the light fitting in the kitchen and she asked Rocco what he thought of some options. Rocco replied, “It is your house Maris[a]. … you do what you want.”

79. In October 2014, Sam and Marisa obtained a further home loan with NAB for $60,000, paying out their existing home loan (from account ending 1603), which had some $2,800 remaining. Sam said the funds to pay for the renovation came from the NAB loan together with income generated from two investment properties. In addition, his father-in-law, Mr Falvo, had given Marisa $50,000 in November 2013. Sam also received weekly cash payments for his work in the family business. It does appear from the bank records that Sam and Marisa obtained a second loan from NAB to fund these renovations and I so find.

80. In October 2014, Marisa obtained quotes to install stairs in her house, for some $3,200. In November 2014, Marisa ordered wardrobes for some $4,300. In January 2015, a plan of extension was prepared for the ground floor. Building supplies were obtained including steel reinforcing for some $1,500. Doors and windows were ordered for some $6,500. Roof frames and trusses were ordered for some $6,500. More tiles were ordered for some $3,400 and Sam paid a $1,000 deposit using his credit card. Sam said Mrs Pirrottina Snr paid for a steel beam.

81. Sam said he asked Rocco if he knew any tradespeople who might be able to help out and he suggested some names. (Rocco had recently undertaken a renovation on Mr and Mrs Pirrottina Snr’s homestead.) In evidence are a number of quotes and invoices for building materials and contractors over this period. Rocco also assisted Mr Marando, often making comments that that was not the way that Rocco would do it but “it’s their house and if they are happy, well it has nothing to do with me”. (Rocco denies this). Sam recalled that, during the renovations, Rocco would often say to him, “You stick to growing oranges and lemons and let me and Marisa spend your money on your house”. Sammy said he also worked with Rocco to install some stairs and lights. Rocco also helped erect a steel beam for the extension. Here is the extension as ultimately constructed:

82. Mr Vumbaca is a bricklayer who has known the Pirrottina family for many years. In 2015, Sam called him and said he was doing some extensions to his house at Mangrove Mountain and asked him to assist with bricklaying. According to his handwritten note, on 10 March 2015, Mr Vumbaca started work on “Sam job” and finished on 20 March 2015; he was paid a total of $3,150 in cash. Mr Vumbaca said he was paid by Sam and not Mrs Pirrottina Snr. Mr Vumbaca and Marisa initially gave the figure of $6,000 as the money paid to Mr Vumbaca. Mr Vumbaca had recently found his contemporaneous note recording the hours spent and money received for work done for Sam. The note was authentic, documenting a much reduced sum from that earlier estimated by Mr Vumbaca in his affidavit. Mr Vumbaca said the higher figure given in his affidavit was given as an estimate, as he was not home when he received a call from Sam’s solicitor “and I just gave a rough estimate … But I knew that it probably wasn’t as much as what I said, so then I just went through my files and found the paperwork.” When shown Mr Vumbaca’s handwritten note, Marisa agreed that the amount was “probably” $3,150, “It was a while back, but I do remember … and have a bit of recollection of what was going on through my renovations.”

83. Mr Lamb is a roof tiler who has done work for the Pirrottina family over many years. He tiled the extension on Sam’s house and, six to 12 months later, also tiled a pergola. A couple of days after completion of the extension, Sam came to Mr Lamb’s house and gave him the money in cash; Mr Lamb cannot remember how much the job cost. Sammy accompanied his father to Mr Lamb’s house to drop off the money. Sammy and his father also bought some motorbikes from Mr Lamb at the same time. A couple of days after completing the pergola, Mr Lamb went to Sam’s house to be paid. Sam gave him cash. Mr Lamb cannot remember how much he was paid.

84. Work continued on Sam and Marisa’s house. Sam said the bricks for the extension did not match the existing house. Rocco suggested that he render the house and offered to ring Douglas Cetinic, who had rendered the parents’ house a few years earlier. Rocco agreed that he organised for the “workers’ cottage” to be rendered by Mr Cetinic. In May 2015, Douglas Cetinic prepared a quote in his handbook for work on “Sam’s house”. Sam said Rocco was present when Mr Cetinic came to look at the job.

85. Douglas Cetinic was a slightly nervous witness who seemed straightforward. According to his affidavit, Douglas Cetinic said he dealt with Mrs Pirrottina Snr in respect of payment. He would have lunch or coffee with her, when she would ask how much was owed and then pay him in cash. Rocco said he had lunch with Mr Cetinic at his mother’s house when his mother paid Mr Cetinic some $12,000 in cash. In cross-examination, Mr Cetinic agreed that there were three payments, of which one came from Sam and the others came from the mother.

86. Douglas Cetinic’s brother, Richard, recalled that in 2015 he and his brother, together with a couple of other workers, worked on Sam’s house. Richard Cetinic recalled it well as Marisa prepared memorable meals for the workers at lunchtime. Richard was present on a couple of occasions and heard Sam say to his brother Douglas, “how much do I have to give you?” Douglas told Sam an amount of money and Sam asked Marisa to go and get the money. Marisa returned with cash which was handed to Douglas. Richard never saw Mrs Pirrottina Snr give any cash to his brother during the period that they were working on Sam’s house. Richard Cetinic was also a credible witness.

87. Richard Cetinic did not agree that his brother used to go and have a meal at Mrs Pirrottina Snr’s house, or that his brother dealt with matters like invoicing and payment with Mrs Pirrottina Snr. Rather, Richard was there at the dinner table in Sam’s house when his brother was getting paid. Against this, Douglas Cetinic was emphatic that his brother never saw him get paid, “I always get paid when I’m on my own. People just don’t pay you in front of people. It just doesn’t happen.”

88. Marisa denied that Mrs Pirrottina Snr paid Douglas Cetinic for this work but recalled that she collected cash which she kept in the house in her office under key “on around 3 occasions” which she gave to Sam to pay Mr Cetinic. Marisa said she would have known if her mother-in-law had paid Douglas Cetinic, “She would have said so”. Sammy also recalls seeing his parents get cash to pay Douglas Cetinic. Sammy saw this happen twice. The first occasion was after he had helped Mr Cetinic unload the materials from his truck and the second occasion was after the first rendering coat had been done.

89. According to Douglas Cetinic’s notebook, Mrs Pirrottina paid him $3,000 for materials. He started the job on 20 May 2015 and “Mrs Pirrottina paid 6k”. He returned to complete the job on 7 August 2015, where the balance was paid by Mrs Pirrottina. It is unclear from his notebook whether “Mrs Pirrottina” was Marisa or her mother-in-law. A further page in Mr Cetinic’s notebook appears to record the progress of the job when work began, including payments made for materials and owed to workers. This page records “Sam paid $3,000”, with the balance owing of $6,222. A further $3,000 was then paid (by whom is not specified) leaving a balance of $3,222. Putting these two pages of the notebook together, it would appear that Sam, rather than his mother, paid $3,000 at the outset of the job for materials whilst his mother likely paid the rest. In this dispute between Sam and Rocco, Richard Cetinic has clearly sided with Sam whilst Douglas Cetinic has sided with Rocco. I defer to Douglas Cetinic’s notebook which, I am satisfied, is a contemporaneous record of a quotation followed by the execution of the work. From this document, Sam paid $3,000 in cash for materials whilst his mother paid some $6,000 for the balance of the job.

90. Laurie Douglas is a plumber who had done work with the Pirrottina family for many years. In 2015, Sam asked Mr Douglas to do plumbing on the extension to his house at Mangrove Mountain. Mr Douglas ran pipes and connected the sink in the gazebo, connected the flue to a pizza oven installed as part of the extension and did plumbing work to the bathroom that was being renovated. He was paid some $2,000 in cash. Sam asked his wife Marisa to get the money. Marisa left the room and returned with the cash. Mr Douglas said he was not paid by Mrs Pirrottina Snr or anyone else in relation to the work which he did.

91. Mr Hajje is a builder who has done work for the Pirrottina family over the years. Mr Hajje gave evidence in a perfectly fair and open manner; I accept his evidence. In 2015, he built a spa cabana and did other odd jobs, including installing shelving in the garage. By September 2015, the works were partially complete as shown in a photograph taken by Mr Hajje. He spent about five days working at Sam’s house, assisted by a couple of workers. On the last day of the job, Sam asked how much he owed Mr Hajje; it was about $6,000. Sam asked Marisa to go and get the money and she left the room and returned with cash, which was provided to Mr Hajje.

92. Bass Yasin is a carpenter and renovator who appears to have supervised this renovation for two weeks, including a renovation of the back laundry, hanging internal doors, constructing a dividing wall, electrical work and work on the pergola. Mr Yasin brought a team of workers, including an electrician and a tiler. Sam paid him more than half of the verbal quote given at the beginning and the rest in full when the job was complete. Sam handed both amounts to Mr Yasin in cash. Sam said the renovation of the laundry cost some $11,000, and he spoke to Rocco about this renovation. Marisa said these works were paid for by her and Sam from their personal funds.

93. Marisa compiled a spreadsheet based on invoices which she still has, tallying the total renovation cost to some $205,000. Marisa also kept some contemporaneous notes of the money that she and Sam paid out during the course of the renovation. Marisa said these notes did not record all of the transactions, as she often forgot to make notes or was distracted with other things. Marisa attached her notes to her third affidavit, together with invoices to support the renovation costs set out in her first affidavit. Marisa said that she found her notes amongst the invoices, as she kept everything together.

94. Mr Marando was paid some $51,000 in cash by Sam for the work. Marisa’s note includes “money given” to, apparently, Mr Marando. The source of the money paid is not stated in the note. However, Marisa says that, during the renovations, Sam gave her invoices and asked her to make the payments for materials and tradespeople. Marisa paid using cash and funds from their joint personal bank account. Marisa stored cash in a black filing cabinet at her home, “It was accumulated wages for my husband and we had an end of year bonus as well.”

95. In 2016 or 2017, painter Phillip Lagana painted the interior of Sam’s house and spent one day painting the exterior, but did not finish the job as he had to do another job in Sydney. According to Sam, Rocco suggested Mr Lagana for this job. Marisa said that Mr Lagana suggested that she leave the yellow on the exterior of the house and Marisa went up to the shed and talked to Rocco about this. Rocco said “it’s your house … but it doesn’t go with the render, you should paint it the one colour.” Mr Lagana charged Sam $300 a day. The job took a number of weeks. Each Friday, Sam asked Marisa to get the money owed to Mr Lagana. Marisa left the room and returned with cash, which was handed to Mr Lagana. Mr Lagana does not recall the exact amount that he was paid. Sam said the house was repainted at a cost of some $4,000.

96. In 2017, Sam said that the new roof tiles on the extension did not look the same as the original house and Rocco suggested that he get a local tradesman to repaint the roof in one colour. Sam did so and paid the tradesman $4,500 from his personal funds.

97. In June 2017, Sam placed a deposit of some $8,000 with Sheds n Homes. This was paid from Sam and Marisa’s account ending 1263. Marisa said she and her husband built a shed to accommodate their cars at a cost of some $32,000. Sam said he discussed this with his parents and Rocco; he discussed with Rocco the best way to approach the works and he gave Sam his advice. Here is the shed:

98. In January 2018, Sam sold an investment property at Anna Bay, receiving some $340,000 in net proceeds. Sam said he used some of the proceeds of sale to fund renovations.

99. For completeness, Mrs Pirrottina Snr had the front door of her house changed and made bigger. Marisa commented to Rocco that the new door looked amazing. Rocco suggested that Marisa replace the door at her house as well, although suggested that she first finish the tiling of the front verandah. in November 2021, Mr Hajje returned to Sam’s house, installing a new front door, shelving and attending to maintenance. This work took about a week. On the last day of the job, Sam asked how much he owed Mr Hajje; it was about $2,000. Sam asked Marisa to go and get the money and she left the room and returned with cash which was provided to Mr Hajje. Marisa said she got the cash ready to pay Mr Hajje, about $4,000, which she got from her office and gave to Sam to pay Mr Hajje. Marisa said that the front door was replaced at a cost of $3,000. Flyscreens on the door and windows were also replaced at a cost of $4,000. These works were paid for by her and Sam from their personal funds. Sam and Rocco had sold an investment property in Forster in June 2020, receiving $232,300 each. Sam said he used some of this money to fund the renovations.

100. As to whether Sam paid for the improvements and extensions, as opposed to Mrs Pirrottina Snr, it was not until Rocco’s eighth affidavit that he disputed that the improvements were funded by Sam. I attach little weight to Rocco’s late assertion that his mother funded the improvements. It was not until cross-examination that Rocco said there were records kept by the partnership in the office as to the cost of the improvements on Sam’s house. (It will be recalled that Rocco maintained the partnership books and records in his office, in the years before the brothers fell out.) Rocco agreed that he had not mentioned this earlier and should have done so. Rocco then agreed that he was unable to point to any partnership accounts that showed that the money used for the improvements came from the partnership, “It was all cash”. Rocco then said that there were no handwritten records of any partnership money used to carry on the works, to his knowledge.

101. Where the earliest of the renovations were undertaken 20 years ago, it is perhaps unsurprising that Sam and Marisa did not have a comprehensive collection of contemporaneous documents in respect of the work. To this may be added the problem associated with the fact that many of the tradespeople were paid in cash.

102. I have approached the evidence of two of the tradespeople with caution. Mr Leccas and Mr Vumbaca’s evidence had a partisan air. Mr Vumbaca was keen to emphasise that he was paid by Sam, and not by Mrs Pirrottina Snr, whether in answer to a question or otherwise. Where Mr Vumbaca’s contemporaneous note is silent as to precisely who paid him, and given his initial inflation of the amount paid, I have approached his evidence with caution. I did not have the same hesitation in respect of the evidence given by the other seven tradespeople called, who said they were paid by Sam and Marisa, although I preferred Douglas Cetinic’ contemporaneous note to Richard Cetinic’s evidence.

103. Having regard to the bank statements, surviving contemporaneous records, and the evidence of the tradespeople overall, I find that Sam and Marisa funded the improvements to Sam’s house and the Lot from 2004 on. The various renovations, extensions and improvements were effected with the knowledge of Mr and Mrs Pirrottina Snr and Rocco, who had no objection to Sam outlaying his funds in this manner. Mrs Pirrottina Snr did make some of the cash payments to at least one tradesperson, Douglas Cetinic. Whether that cash came from the partnership, from the parents personally, or was cash held by Mrs Pirrottina Snr but due to Sam, is not known. Mrs Pirrottina Snr also paid for the steel beam. While Mr and Mrs Pirrottina Snr appear to have been prone to acts of parental generosity (including helping both Sam and Rocco buy various investment properties), the evidence suggests that payments by the parents on Sam’s renovations were minimal in the scheme of things.

Relations sour

104. Rocco moved out of his parents’ home to Rocco’s farm after he was married in October 2016, aged 42 years. Rocco started a young family.

105. In December 2018, Mr Pirrottina Snr passed away, aged 87 years. Angelina agreed that, during the course of the administration of her father’s estate, she did not come across any documents which suggested that Sam owned the house on the Mangrove Mountain farm, “There was no document, we all knew that that was Sam’s house though.” Nor was there any discussion with her parents or her siblings that Sam, Marisa and his family would one day have to move off the Mangrove Mountain property.

106. Sam and Rocco’s working relationship fell into difficulty. Rocco put this down to when he got married. Sam did not agree that his relationship with Rocco became more tense when he was introduced to Rocco’s now wife, “No. I baptised his daughter.” Rather, Sam said that after Mr Pirrottina Snr died, he started to look at transactions made from the partnership account and to challenge Rocco on some of this expenditure. In early 2019, Sam obtained historical bank statements from the NAB for the partnership bank account. Sam said that, after this, “It got a little bit sour, because there was a lot of things there that I did not understand.” In part, this was because the business which ran a local petrol station also traded as a language school; Sam misunderstood that his brother was using partnership funds to pay for his wife’s language courses. At trial, Sam accepted that the payments were, in fact, for fuel.

107. From early 2020, Sam stopped going to Rocco’s farm, as it was not fruit-picking season and there was not much work to do. In April 2020, Flemington Markets was closed due to COVID-19 and no fruit was picked from either farm until the markets reopened in July 2020. During that time, Rocco did not let Sammy, or anyone else, go to his farm and, according to Sam, “we never went back to work on [Rocco’s farm] after this time.” For one or two weeks in July 2020, Rocco brought fruit from his farm to be mixed with fruit from the Mangrove Mountain farm and sold at the markets, but then stopped doing so. According to Sam, Rocco refused to let Sam go to Rocco’s farm; Rocco said he would rather let the fruit “rot on the ground”. Sam said his relationship with Rocco was not good at that time.

A buy-out

108. In September 2020, Sam arranged a meeting with Rocco, Mrs Pirrottina Snr, Mr Tisano and long-time family friends, Mr Lopresti and Mr Macri, to discuss his concerns about Rocco’s use of partnership funds. Those in attendance gave evidence as to what happened. Their evidence was similar, but not the same. Nor would one expect their recollections to be identical. Mr Lopresti is now aged 84. While Mr Lopresti said he had good recall of the meeting, his recollection was (unsurprisingly) imperfect; he did not recall Mr Tisano taking Mrs Pirrottina Snr out of the meeting when she became distressed. Beyond this, he was a fair and measured witness. Mr Macri, a friend of Mr and Mrs Pirrottina Snr for some 50 years, was a fair and kind man; I accept his evidence.

109. It is tolerably clear what happened. The meeting was held in Mrs Pirrottina Snr’s dining room. Sam presented bank statements, highlighted with entries that he thought were irregular. Rocco denied that the entries related to his personal expenses. Communications between the brothers quickly degenerated. Mr Macri recalled that Mrs Pirrottina Snr was “a bit stressed” when the two brother “started screaming at each other”.

110. As Mr Lopresti recalled it, Mrs Pirrottina Snr said, “The only solution is that you both separate and go your own ways. Sam will buy Rocco out of the farm and continue to run the farm with his family.” Mr Lopresti understood that Sam and Rocco had equal shares in both the Mangrove Mountain and Kulnura farms and suggested that both properties be valued to enable the buy-out. Rocco replied, “That’s my farm. It has nothing to do with this farm.” Mrs Pirrottina Snr explained, “Yes, the other farm belongs to Rocco and the home Sam and [his] family built on this farm belongs to Sam … that’s what my husband wanted and that’s the way it has to be.” Mr Lopresti recalls that Mrs Pirrottina Snr said these words “very firmly and no one disputed that comment”. As Sam recalled it, he asked “What about my house?” and Mrs Pirrottina Snr said, “That’s your house” and Rocco did not say anything in response.

111. As Mr Macri recalled it, he said “It’s obvious that you are not going to come to any agreement. Why don’t you put the farm on the market and sell it?”. Rocco said, “Well, Sam can buy me out. We have to get the property valued and he can buy my share.” At this point, Sam said, “What about my house?” Mrs Pirrottina Snr said, “No, your house is yours and nobody will kick you out of your house”. Rocco did not challenge that comment. Mr Macri also recalls Mrs Pirrottina Snr saying, “Rocco has already got his farm. Sam, you buy-out Rocco from this farm.”

112. As Mr Tisano recalled it, Sam said he would get a valuation, including Rocco’s farm, “because it was bought with money from the business”. Rocco retorted, “Well, if my property is to be included, I want Sam’s house to be included in the calculation.” Sam rejoined, “So now you want to kick me out of my own house”. Mrs Pirrottina Snr said, “No one will kick you out of your house. That’s your house”. Mr Tisano said he walked Mrs Pirrottina Snr out of the room as “I saw that she was distressed and … the argument – between Rocco and Saverio was not that nice. They were using bad words and screaming etc and I thought to myself that it was not the right environment for Mrs Pirrottina to be present.” When they returned, someone said to Mr Tisano that the farm and the business would be valued and Sam would buy-out Rocco. Rocco’s farm and Sam’s house would not be included in the valuation. No one objected to that statement. Mr Lopresti recalled Mrs Pirrottina Snr said that the Mangrove Mountain farm should be valued and Sam should buy-out Rocco’s share. Both Sam and Rocco said words to the effect, “Yes we will value the farm [and] deduct the value of Sam’s house and Sam can buy Rocco’s share”.

228. Mr Wood agreed that he did not value the business, nor goodwill, nor take into account fluctuations in business conditions such as the price of fruit, when valuing the Mangrove Mountain farm. He did not take into account the extent to which the trees would generate revenue from fruit sales. This is unsurprising, where Mr Wood was not instructed to do so, in a joint letter of instruction. I do not agree that Mr Wood’s valuation should be put to one side, for failing to value the farm on a basis other than that which he was jointly instructed to. Apart from criticising Mr Wood’s valuation, Rocco did not proffer an alternate valuation, either on a going concern basis or at all. Nor is it obvious that Mr Wood, or another valuer, would be able to value the Lot on the assumptions proffered by Rocco at trial. Nor do such assumptions strictly align with the parties’ understanding of Sam’s interest in the Lot, being that the parents had given him the Lot and he owned it.

229. Ascribing a value to the Lot is thus difficult. This problem does not go away, whether orders are made for equitable compensation, a judicial sale or a buy-out. In all scenarios, a figure must be ascertained. The principles in respect of assessing equitable compensation may assist.

Equitable compensation

235. The object of equitable compensation is to restore persons who have suffered loss to the position in which they would have been if there had been no breach of the equitable obligation: Nocton v Lord Ashburton [1914] AC 932 at 952 (per Viscount Haldane LC); O'Halloran v RT Thomas & Family Pty Ltd (1998) 45 NSWLR 262 at 272 (per Spigelman CJ). Compensation is ordinarily computed by reference to the detriment suffered by the plaintiff: Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 at [171] (per Sackville AJA; Meagher JA and Barrett JA agreeing).

236. Common law considerations of remoteness and foreseeability are generally irrelevant; in assessing compensation, the courts apply common sense views as to what loss resulted from the breach and so falls to be compensated: Canson Enterprises Ltd v Boughton & Co (1991) 85 DLR (4th) 129 at 163, followed in Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 at [35]. The amount of compensation is to be assessed at the time of trial, with the full benefit of hindsight and common sense, not at the date of breach: O’Halloran v RT Thomas & Family Pty Ltd at 273 at 276. Where a defendant’s actions have made the assessment of loss difficult, the Court should assess compensation in a robust manner and resolve doubtful questions against that party: Houghton v Imner (No 155) Pty Ltd (1997) 44 NSWLR 46 at 59 (per Handley JA with whom Mason P and Beazley JA agreed); Ramsay v BigTinCan Pty Ltd (2014) 101 ACSR 415; [2014] NSWCA 324 at [122].

237. Assessing equitable compensation can be extremely difficult, where the best the court can do is to make a “guesstimate”; the court must do the best it can on the evidence available: Peter Young et al, On Equity (1^st ed, 2009, Lawbook Co) at 1116 citing Ithaca Ice Works Pty Ltd v Queensland Ice Supplies Pty Ltd [2002] QSC 222 at [17] (per Philippides J). Just as with the assessment of common law damages, the Court may discount or adjust the amount of compensation akin to a Sellars discount: On Equity at 1116, citing Dempster v Mallina Holdings Ltd (1994) 13 WAR 124. The cardinal principle is that the remedy must be fashioned to fit the nature of the case and the particular facts: Warman International Ltd v Dwyer (1995) 182 CLR 544; 128 ALR 201 at 210 (per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ).

238. The breach of equitable obligation for which compensation may be awarded in this case is Rocco’s denial of Sam’s equitable interest in the Lot. The detriment suffered by Sam as a consequence is the value of that equitable interest at the time of trial. I consider that the value of the equitable interest falls within the range of figures considered by Mr Wood and Mr McBirnie. Using the rate applied by Mr Wood of $10 per square metre for the farm land, the Lot would be valued at $50,640, which is too low given the development of the Lot beyond agricultural land. The value of the residence alone, being $509,250, is also too low as it makes no allowance for the value of the acre of land on which the residence stands.

239. The valuation of $1.76 million is probably too high, where the Lot does not, in fact, have a separate title to the rest of the farm. The parties never envisaged that it would. The parties did understand, however, that the parents had given Sam the Lot and he owned it. It was also envisaged that Sam would continue to live on the Lot as the Pirrottina family continued to run the farm. However, there was always a risk that things may change, such that the farm would have to be sold, for example, if the citrus orchards proved unprofitable. If things had changed before Mr and Mrs Pirrottina Snr died, then Sam would reasonably expect that his parents would ‘make it up to him’ if they were in a position to do so, by buying him another property for Sam and his family to live.

240. To restore Sam to the position he would have been in if Rocco had recognised Sam’s interest in the Lot, I consider that the valuation of $1.76 million should be discounted to take into account the risks inherent in the equitable interest conferred by the parents, where Sam was living on property owned by others, and things may change. The discount should be modest, say 20%, where Mr and Mrs Pirrottina Snr’s generosity to their children would likely have provided a form of insurance against this risk. A rough and ready way of checking this is to take the mid-point between the value of the Lot as agricultural land plus the value of the residence (together some $560,000) and the value of the Lot with separate title. The mid-point is $1.16 million. This is two-thirds of the value of the Lot with separate title, akin to a 33% discount for vicissitudes. Having regard to the figures reached by both experts, and two means of discounting market value to take into account the facts of this case, I consider that the value of the Lot for the purposes of equitable compensation, payment to Sam on sale of the farm or any buy-out is 75% of $1.76 million, being $1.32 million. Such a figure represents 20% of the value of the Mangrove Mountain farm.

241. The value of the farm appears to have increased from the first valuation obtained in October 2020, to the updated valuation in August 2021 until Mr Woods’ valuation in July 2023. The first and second valuations were not admitted as evidence of value, but I note the upward trend nonetheless. A further 10 months has passed since Mr Woods’ valuation. To ensure that Rocco’s position is not compromised, Mr Wood should provide an updated valuation of the Mangrove Mountain farm, with equitable compensation, any payout to Sam on judicial sale or a buy-out figure to comprise 20% of that valuation. Sam and Rocco share the remaining interest in the Mangrove Mountain farm equally, being 40% each.

Judicial sale

242. Pursuant to s 66G(1) of the Conveyancing Act, the Court “may” appoint a trustee for the sale of real property held in co-ownership. The sub-section confers a limited discretion on the Court to refuse to make an order under the sub-section: Ngatoa v Ford (1990) 19 NSWLR 72 at 77 (per Needham J). The discretion enables the Court to refuse an order for sale where the order would be inconsistent with some proprietary right, or some contractual or fiduciary obligation with which an order for sale would be inconsistent: Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068 at 1068 (per Myers J); Williams v Legg (1993) 29 NSWLR 687 at 693 (per Handley, Sheller and Cripps JJA). The Court has no general discretion to refuse an application on broad grounds of hardship or unfairness: McNamara at 1068; Woodson (Sales) Pty Ltd v Woodson (Australia) Pty Ltd (1996) 7 BPR 14,685 at 14,701 (per Santow J).

243. The co-owner who opposes the s 66G application bears the onus of establishing a basis for refusing such an order: Woodson (Sales) Pty Ltd v Woodson (Australia) Pty Ltd (1996) 7 BPR 14,685 at 14,701 (per Santow J). The Court will “usually consider it appropriate to make an order unless persuaded by cogent arguments from those who oppose”: Cain v Cain (2007) 13 BPR 24,963 at [9] (per Young CJ in Eq). For example, a s 66G order was refused in Williams v Legg, where the applicant received a testamentary gift of a half interest in a property, subject to a condition that the co-owner be permitted to live in the house as long as he wished. The Court held that the applicant was not entitled to an order for sale, as such an order would defeat the limitation to which the gift was subject: at 694. More recently, a s 66G order was refused in Fragar v Fragar [2024] NSWSC 193, where the applicant held her interest in the property on trust for the partners of a partnership “and it would be entirely inequitable for [the property] to be sold”: at [164] (per Hmelnitsky J).

244. An order may also be refused where it would be inconsistent with an estoppel operating on the party seeking the order or amount to unconscionable conduct. As Santow J explained in Woodson at 14,701:

“These equitable grounds may, in appropriate circumstances, suffice either to justify exercising the discretion to withhold approval, or affect the terms of any such approval if given. In the latter case, any terms imposed upon such a sale should represent no more than the minimum equity needed to remove the benefit obtained unconscionably, or in the case of conventional estoppel, needed to avoid the detriment occasioned by reliance on the relevant shared assumption.”

245. In Woodson, Santow J concluded that the plaintiff was estopped from seeking orders for sale, and had engaged in unconscionable conduct. His Honour proposed orders requiring the outgoing partner to offer their half share of the property to the other party at market value, such orders being sufficient to address the unconscionability but no more: at 14,718.

246. Sam pointed to the fact that, with recognition of his equitable interest in the Mangrove Mountain farm, he could be regarded as owning more than a half-share, relying on Callahan v O’Neill [2002] NSWSC 877 at [8] (per Young CJ in Eq). There, the Chief Judge in Equity noted: (emphasis added)

“It is fairly clear that, as a general rule, any co-owner holding at least 50% of a parcel of real property is entitled almost as of right to an order for partition or sale under s 66G of the Conveyancing Act. It is only in situations where it would, under settled principles, be inequitable to permit such an application, including cases where there has been a contract not to make an application that the order may be refused.”

247. I do not accept the submission that Young CJ in Eq there suggested that, where a co-owner held a greater interest than 50%, that fact would be relevant in the exercise of the court’s discretion to refuse the making of an order. Such a submission had been made elsewhere but not embraced: Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411 at [39] (per Tobias AJA, Bergin CJ in Eq agreeing); Ambrus v Buchanan at [84]-[85] (per Williams J). Given the limited discretion conferred on the Court by s 66G, I do not regard this as a factor which the Court ought have regard “unless on settled principles it would be inequitable to make the order”: Foundas v Arambatzis [2020] NSWCA 47 at [63] (per White JA, Bell P and Basten JA agreeing).

248. I do, however, accept Sam’s submission that the Court may refuse an order for judicial sale where it would be inconsistent with an equitable obligation, namely, Sam’s proprietary interest: Blackwell v Blackwell [2020] NSWSC 1208 at [14] (per Parker J). The fact the Lot cannot be excised from the farm means that Sam’s interest cannot be preserved without preventing the sale of the whole farm. An agreement limiting the manner in which a person may dispose of their interest as a co-owner may also provide a ground for refusal of an application for an order under s 66G: Matsen v Matsen [2008] NSWSC 135 at [63] (per Hamilton J). Rocco accepted transfer of the Mangrove Mountain farm on the condition that he would not sell it but would preserve the status quo, including Sam's interest.

249. I am not forgetting that Sam was partly responsible for the breakdown of the partnership with Rocco. But Sam’s equitable interest in the Lot pre-dated the partnership by eight years and was not dependent on the continuation of the partnership for its existence. Sam stands ready to buy Rocco’s interest in the farm for fair value and, indeed, has been trying to do so since October 2020. Where an order for judicial sale will defeat the interest which the parents sought to convey to Sam, permitting Sam to buy Rocco’s interest at fair value does not prejudice Rocco’s rights but preserve Sam’s equitable interest. I consider in these circumstances that an order for judicial sale should not be made. Rather, the mechanism adopted in Woodson ought be deployed, requiring Rocco to offer his remaining interest in the Mangrove Mountain farm to Sam at market value. If Sam is not willing or able to acquire Rocco’s share at market value within a prompt timeframe, the farm should be sold.

Buy-out of partnership assets?

250. Rocco sought orders appointing receivers to the assets and undertakings of the partnership, to take possession of and sell the assets without security. Rocco submitted that 'buy-out' orders were rare and ought not be made in this case.

251. For his part, Sam sought an order that he acquire Rocco’s interest in the partnership property in the possession of Sam for fair value, with Rocco entitled to buy-out the partnership assets in his possession on the same basis. The valuation exercise could be undertaken as part of the partnership account. In the event that Rocco declined to buy-out Sam’s interest in any such assets, the assets could be sold in connection with the taken of the final partnership accounts. Such an order avoided practical difficulties associated with Sam being required to purchase the farming equipment in his possession at auction, and ensured that Rocco will receive fair value for the equipment.

Principles

252. On the dissolution of a partnership, any partner may to apply to the Court to wind up the business and affairs of the partnership, so that the surplus assets may be distributed to the partners after payment of partnership debts: s 39, Partnership Act 1892 (NSW). As a general rule, in the absence of a provision to the contrary in the partnership agreement, partnership property is to be sold on the dissolution of the partnership. However, the Court has a discretion to determine the mode of sale most beneficial to the parties: Lucas v Lucas [1962] Qd R 205 at 209 (per Gibbs J).

253. Though the precise mode of sale of partnership assets remains a matter for judicial discretion, the “starting point” is that a sale by public auction is the “appropriate order”: Lorebray at [106]; Calacoci v Calacoci [2020] NSWSC 476 at [115]. Notwithstanding this, the Court has a discretion to order a different mode of sale where it is necessary to “achieve fairness and justice between the parties”: Lorebray at [106]; Syers v Syers (1876) 1 App Cas 174; Lucas v Lucas [1962] Qd R 205. The Court’s discretion to make alternative orders is not “constrained to a particular class of case”: Calacoci at [115] citing Lucas v Lucas at 209, 212. One such alternative to sale by public auction is a “buy-out” order, by which one partner is authorised to purchase the share of the other partner or partners in the partnership assets. Such orders are not “unusual”, where a sale by public auction would prove less advantageous to the partners: The Law of Partnership at 253. There is no limit to the matters the Court may consider when determining whether to make these orders: Roderick I’Anson Banks, Lindley & Banks on Partnership (21^st ed, 2022, Thomson Reuters) at 965, [23-326].

254. The seminal case is Syers v Syers [1876] 1 App Cas 174, where one brother provided funds to the other, to establish a music hall and tavern in Oxford Street, London, in return for a 1/8^th share in the profits. On dissolution of the partnership, the Lord Chancellor (Cairns) observed that “the ordinary course would be for the Court to direct the sale of the assets, and if necessary a sale of the concern as a going concern, and to give liberty for proposals to be made by either party to purchase it”. However, “Those provisions are moulded in every case by the court to meet the circumstances of the particular case, and it appears to me that looking at the nature of this business, and looking at the very small interest which was taken in it by the respondent, it would certainly not be desirable in this case to have a sale, or to bring these premises to the hammer for the purpose of ascertaining what sum ought to be given for them”: at 2131 (Lords Chelmsford, Hatherley and O’Hagan agreeing). An enquiry was ordered to value the 1/8^th share in the music hall and tavern sold as a going concern, with the brother who was to continue to operate the business permitted to purchase that share.

255. As Hoffmann LJ is reported to have observed, reproduced by Neuberger J in Mullins v Laughton [2003] Ch 250 at [110]: (emphasis added)

“It is I think notorious in the Chancery Division that Syers v Syers is an authority which is far more frequently cited by counsel than applied. But the discretion which it gives seems to be a valuable one which I think judges should not hesitate to use when it suits the justice of the case.”

256. Syers v Syers was followed in Lucas v Lucas, which concerned the dissolution of a partnership between a father and son carrying on business as farmers and graziers. After the farm was purchased, a house was built on the farm in which the son and his wife lived for some 12 years. On dissolution of the partnership, the father sought an order for sale of the farm. The son opposed an order for sale as he wished to attempt to purchase the farm. As to whether the son should be permitted the opportunity to buy-out his father’s interest in the farm, Gibbs J observed that the facts in Syers were special. At 212 (emphasis added):

“However, it does appear to me that Lord Cairns was stating a general principle, namely that the court has a discretion to determine in any case whether, on the dissolution of a partnership, the ordinary course should be followed, or whether that course should be departed from to meet the circumstances of the particular case. It seems to me that the court’s discretion is not only exercisable in facts such as arose in Syers v Syers, but may be exercised in any appropriate case, although it is true that a most important matter for consideration is that the ordinary course is to direct a sale of the assets by auction.”

257. In Lucas, Gibbs J was satisfied that the matter before his Honour was “one of those exceptional cases in which it is proper to depart from the ordinary course” at 212, [21]. Specifically, the partnership was between the father and son, where the son had lived for a number of years on the partnership property. Further, “The property was purchased for the purpose of the members of the family living on it. The valuation of the partnership property has been made, and there is nothing to cast any doubt upon the accuracy of the valuation. Of course, it is possible that on a sale by auction the property would be more than the valuation figure, just as it is equally possible that it would bring less, but nevertheless, a full valuation of the partnership assets has been made”: at 212. It also appeared that, on the conclusion of the partnership, a substantial sum was owing to the son. Whilst each of these circumstances individually would not of itself have been sufficient to justify the exercise of the Court’s discretion in favour of an order for private sale, when all of the circumstances of the case were taken together “it does seem to me to be proper that I should permit the [son] to purchase the [father’s] interest in the partnership property”: at [25].

257. More recent examples of the application of Syers v Syers assist. In Chia v Ireland [2000] SASC 47 (per Williams J; Prior and Martin JJ agreeing) noted that a buy-out order may be made to require an outgoing partner to sell their share to the continuing partners who wish to carry on the business and are prepared to pay the outgoing partner the market value of their share: at [35].

258. In Calacoci, Lindsay J declined to make a buy-out order where a family partnership had acquired several shops in Manly, from which rental income was received and divided between different family members. The shops, if sold in one line, were valued at $12 million and, if sold individually, at $12.8 million. Whilst the plaintiffs together held a majority (75%) interest in the shops, Lindsay J considered that this was not itself sufficient to support a buy-out order; nor were cost savings or tax advantages to be achieved by this method of sale: at [116]-[117]. Further, at [118]:

“Neither does the plaintiffs’ desire to keep the shops “in the family” carry much weight against the defendants, members of the same family. Having managed the shops for many years, John has no less a connection with them than his siblings. Sentiment aside, the shops represent a financial investment and nothing else.”

260. His Honour considered that the most important consideration was the mode of sale most beneficial to the parties and considered that this was sale by public auction, at which the parties were at liberty to bid.

261. Most recently, in In the matter of Lorebray Pty Ltd [2023] NSWSC 1650, Richmond J declined to make a buy-out order. The parties were the children of a property developer, John McNamee. Through a trust, Lorebray, Mr McNamee engaged in a property development at Brooklyn through a partnership. The partnership was terminated. It was agreed that the property should be sold, but the family members could not agree to whom. The family members also disagreed on the value of the Brooklyn properties, tendering widely disparate valuations ranging from $3.25 million to $8.5 million.

262. Richmond J noted that, whilst the Court had a discretion to make a buy-out order in order to achieve fairness and justice between the parties, in the present case, it was necessary that the order “must ensure that the partnership assets are sold at the best price which can be obtained so that one partner is not placed in a better financial position, as a result of the dissolution, than the other”: at [106]. Where the parties were at odds regarding the value of the land, “The Court should be careful not to create a situation where one partner … is forced to accept a price for the underlying properties, or its interest in the partnership, which is based on a valuation which it does not accept”: at [108]. The appropriate course was to sell the Brooklyn properties in the manner in which the receiver considered would achieve the best price available, being either auction, private treaty or tender.

Conclusion

263. The importance of this issue has declined, as I have concluded that the Mangrove Mountain farm is not a partnership asset.

264. Depending on the referee’s conclusions, some of the partnership assets must, for practical reasons, be bought-out by Rocco, as they are installed on Rocco’s farm. These comprise citrus trees and an irrigation system. Likewise, some partnership assets are fixtures on the Mangrove Mountain farm, such as a grading packing line and components, and a steel fabricated dip tank with conveyor system. Selling these items at a public auction seems unlikely to generate more value for the partners, where any purchaser would be factoring in the cost of dismantling the items, transport and re-assembly.

265. The same practical consideration does not affect the bulk of the remaining partnership assets, which comprise motor vehicles and farm equipment: forklifts, trucks, tractors, trailers, utes, pressure washer, spreader, tables, generators, mowers, post hole drivers, picking and pruning machines, pumps, bobcats and scissor lifts. These vehicles and farm machinery are in the possession of either Sam or Rocco, and are presumably used by each of them in their respective farming operations. Where the partnership came to an end four years ago, it is likely that the brothers have supplemented partnership property in their possession with other needed equipment, in order to operate their farms. As such, they are unlikely to have any particular need to buy-out a piece of equipment which has been in the possession of the other for the past four years.

266. Bearing in mind the costs attending the appointment of a receiver to conduct an auction of second-hand farming vehicles and equipment, I am not satisfied that either brother will do better if these assets are sold at auction rather than each brother buy-out the partnership assets in their possession. Of course, if the brother does not want an asset in their possession, then the other should be given the opportunity to buy it, and if neither is interested, then the item should be auctioned and the proceeds of sale distributed equally between them.

267. The same approach should be taken, I think, in respect of the remaining partnership assets, including those to be considered by the referee. Where it is necessary for some partnership assets to be bought-out, and practical to proceed in this manner in respect of other partnership assets, the utility in appointing a receiver to sell the few assets that remain declines accordingly.

Orders

268. For these reasons, I make the following orders:

1. Declare that the partnership between the plaintiff and defendant was dissolved on 8 January 2022.

2. Declare that the defendant has an equitable interest in the land identified in the survey annexed to the Amended First Statement of Cross-Claim and the improvements thereon (the Lot), located on the property known as 2018 Wisemans Ferry Road off Mangrove Mountain (the Property).

3. Declare that the plaintiff holds his title to the Property on trust for the defendant to the extent of the defendant’s equitable interest in the Lot.

4. Direct the defendant to obtain an updated valuation of the market value of the Property from Kent Wood within 28 days, with the cost of the updating report to be borne by the defendant in the first instance, until the issue of costs is determined.

5. Order the defendant to acquire the plaintiff’s interest in the Property for 40% of the updated market value, such purchase to be completed within 28 days of receipt of the updated valuation or such other date as may be agreed by the parties.

6. Direct the parties to bring in orders within 14 days in respect of

1. the appointment of a referee to determine whether the remaining disputed items of plant and equipment are partnership assets, and to take an account;

2. the buy-out of partnership assets in the possession of each partner; and

3. how the parties wish to proceed in respect of costs.

7. Parties to notify any errors or omissions within 14 days.

8. Liberty to apply in respect of Orders 4 to 6.

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Amendments

29 May 2024 - [3], [7], [89], [92] - minor typographical amendments.

[240] - figure of 32% amended to 20%.

[241] - 32% amended to 20%; 34% amended to 40%.

Decision last updated: 29 May 2024