Termine v Witches in Britches Pty Ltd - [2015] VSC 66

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMERCIAL COURT

CORPORATIONS LIST

S CI 2014 00130

BETWEEN:

JORGE DANIEL TERMINE & ORS	Plaintiffs
v
WITCHES IN BRITCHES PTY LTD (ACN 123 679 694) & ORS	Defendants

- and related proceedings according to the attached schedule.–

---

JUDGE:	Ferguson JA
WHERE HELD:	Melbourne
DATE OF HEARING:	10-13, 17-19, 26 November 2014 (Further written submissions filed 28 November, 5 December 2014, 3, 5 February 2015)
DATE OF JUDGMENT:	5 March 2015
CASE MAY BE CITED AS:	Termine v Witches in Britches Pty Ltd
MEDIUM NEUTRAL CITATION:	[2015] VSC 66

CONTRACT – Whether oral agreement between brothers as to ownership of theatre restaurant business – Agreement for refurbishment of business and payment of moneys in exchange for a 50 per cent interest in the business – Refurbishment undertaken and monies paid – Concluded contract - Exclusion from business without payment for interest in business – Contract breached

DAMAGES - Assessment of contractual damages - Damages assessed as 50 per cent of the value of business as at the date of breach of contract - Court ordered independent business valuation report did not take into account unrecorded cash takings – Evidence of significant unrecorded cash takings – Little evidence of quantum of cash takings – Assessment of value of business made doing the best that could be done with evidence – Court appointed valuer’s opinion of value of business adjusted to take into account unrecorded cash takings

APPEARANCES:	Counsel	Solicitors
For Daniel Termine	Mr D De Marchi, Solicitor	De Marchi & Associates
For Witches in Britches Pty Ltd, Maurizio and Rosario Termine	Mr A T Schlict	Simon Nixon

TABLE OF CONTENTS

Introduction......................................................................................................................................... 1

Ownership of the Witches in Britches business....................................................................... 1
Amounts paid to Daniel............................................................................................................... 2
The property development business......................................................................................... 2

Was there an agreement that Daniel would have a 50 per cent interest in the Witches restaurant business?........................................................................................................................................ 6

Is the $150,000 repayable as money had and received?............................................................ 22

Other claims....................................................................................................................................... 22

Estoppel, unconscionable conduct, constructive trust.......................................................... 22
Breach of fiduciary duty and breach of statutory duties...................................................... 22
Quantum meruit......................................................................................................................... 23
Misleading or deceptive conduct............................................................................................. 23
Shareholder oppression............................................................................................................. 24

Are funds that Daniel took from Witches repayable as loans?............................................... 26

The deposit for Daniel’s house and the additional funds – $81,500................................... 26
The jet ski - $26,600..................................................................................................................... 27
Cash taken on exclusion from business – $70,000.................................................................. 28

Conclusion......................................................................................................................................... 28

HER HONOUR:

Introduction

The theatre restaurant, Witches in Britches, has operated in Dudley Street, West Melbourne, for a number of years. In large part, this proceeding concerns the underlying ownership of the theatre restaurant business. The dispute as to ownership is between two brothers, Maurizio Termine and his younger brother, Daniel. There is also a dispute which concerns moneys paid to Daniel and whether they are repayable as loans. The third dispute between the brothers arises out of a property development business that the brothers operated together. This dispute concerns what is to happen with the proceeds of sale of some properties.

Grounds of appeal

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

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

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

Consideration

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

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

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Details

Case: [2015] VSC 66
Decision Date: 5 March 2015

CaseChat Overview and Summary

In the case of Termine v Witches in Britches Pty Ltd, the dispute centred around the ownership of a theatre restaurant business and whether an oral agreement between two brothers was legally binding. The plaintiff, Termine, alleged that he and his brother had an agreement whereby he would refurbish the business and pay certain sums of money in exchange for a 50 per cent interest in the business. He claimed that he had fulfilled his part of the agreement, but was subsequently excluded from the business without any payment for his interest. The defendant, Witches in Britches Pty Ltd, denied the existence of such an agreement and contended that the plaintiff had no legitimate interest in the business.

The primary legal issues before the court were whether the oral agreement was enforceable and, if so, how the damages should be assessed. The court needed to determine the validity of the oral agreement and the extent of the plaintiff’s interest in the business, as well as the appropriate method for assessing damages following the breach of contract. The court was also required to consider the adequacy of the evidence provided in relation to the business's value, particularly with respect to unrecorded cash takings.

The court found that an enforceable oral agreement did exist between the brothers, and that the plaintiff's exclusion from the business constituted a breach of that agreement. In assessing damages, the court noted that an independent business valuation report had been ordered, but it did not account for the unrecorded cash takings. The plaintiff presented evidence of significant unrecorded cash takings, although the exact quantum was difficult to determine. The court adjusted the valuer's opinion to reflect the unrecorded cash takings as best it could with the available evidence, and based its assessment of damages on 50 per cent of the adjusted value of the business at the time of the breach. The court thus ordered that the defendant pay the plaintiff an amount corresponding to his 50 per cent interest in the business.

Orders