Vincenzo Anthony Panetta as Executor of the Estate of Giuseppe Panetta v Panetta - [2007] WASC 188

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: VINCENZO ANTHONY PANETTA as Executor of the Estate of GIUSEPPE PANETTA & ORS -v- PANETTA & ANOR [2007] WASC 188

CORAM: BEECH J

HEARD: 23-26 & 31 JULY 2007

DELIVERED : 27 AUGUST 2007

FILE NO/S: CIV 1135 of 2005

BETWEEN: VINCENZO ANTHONY PANETTA as Executor of the Estate of GIUSEPPE PANETTA
ROSA ALBINA EATON as Executrix of the Estate of GIUSEPPE PANETTA
First plaintiffs
VINCENZO ANTHONY PANETTA
CARMEL PANETTA
Second plaintiffs
AND
DOMENICO PANETTA
SYLVIA PANETTA
Defendants

Catchwords:

Partnership - Dissolution of partnership - Dissolution by agreement - No point of principle

Contract - Implied terms - Oral agreement to dissolve partnership - Whether term that final accounts to be prepared to be implied in agreement - No point of principle

Legislation:

Nil

Result:

Plaintiffs' claims for specific performance and for payment of agreed sums upheld
Defendants' counterclaim C upheld, counterclaims otherwise dismissed

Category: B

Representation:

Counsel:

First plaintiffs                :     Mr K E Yin
Second plaintiffs            :     Mr K E Yin
Defendants:     Mr C M Slater

Solicitors:

First plaintiffs                :     Joe Scurria & Associates
Second plaintiffs            :     Joe Scurria & Associates
Defendants:     Butlers

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

BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266
Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153
Byrne v Australian Airlines Ltd (1995) 185 CLR 410
Lewis v Cook (2000) 18 ACLC 490
Posgold (Big Bell) Pty Ltd v Placer (WA) Pty Ltd (1999) 21 WAR 350

BEECH J: This action is a family partnership dispute. The partnership was dissolved by an oral agreement on 3 November 2003. The plaintiffs sue to enforce some of (what were on their case) the terms of the dissolution agreement. The defendants sue on five counterclaims. Some relate to alleged terms of the dissolution agreement; others to aspects of the partnership.
For reasons explained below, a determination of what was agreed on 3 November 2003 is at the heart of the resolution of most of the issues in this action.
I will begin these reasons by setting out some background facts. I will then summarise the plaintiffs' claims, the defendants' counterclaims and the issues which arise. After making findings as to the chronology of events, I will set out my findings as to what occurred at the meeting of 3 November 2003 during which the dissolution agreement was made. Finally, I will deal in turn with the plaintiffs' claims and defendants' counterclaims.

Background

The following background facts are common ground.
Giuseppe Panetta was, for many years until November 2003, in partnership with two of his sons and their wives.
Giuseppe died in February 2004. The first plaintiffs are the executors of his will.
The second plaintiffs in the action are Vincenzo and Carmel Panetta. Vincenzo, who is known as "Jimmy", is one of Giuseppe's three sons. Carmel is Vincenzo's wife.
The defendants in the action are Domenico and Sylvia Panetta. Domenico, who is known as "Mimi", is the oldest son of Giuseppe; Sylvia is Domenico's wife.
Giuseppe's other son is Cosimo. He was also a witness at the trial.
At trial, counsel and witnesses referred to members of the Panetta family by their familiar names. I will do the same.
As at 3 November 2003, Giuseppe, the second plaintiffs and the defendants were partners in a business known as Panetta Brothers which carried on business at 87‑89 Uduc Road, Harvey. Part of the partnership business involved the sale of fruit and vegetables. Another part involved the sale of cooked poultry and associated products by a "River Rooster" franchise.
The partnership maintained an overdraft account at Westpac, being Account No 036 152 7104 95.
The five partners were jointly and severally liable to the bank pursuant to the terms of the account.
The obligations of the partners under the Westpac account were secured by a mortgage in favour of the bank over the land at Lot 20 Uduc Road, comprised in Certificate of Title 1709 Folio 550. That land was registered in the name of Giuseppe as to a third share; the second plaintiffs as joint tenants as to a third share; and the defendants as joint tenants to a third share, as tenants in common.
Three shops comprised Lot 20 Uduc Road: 87 Uduc Road was the River Rooster business; 89 the fruit and vegetable business; and 91 was rented to a pharmacy business.
On 3 November 2003 the partners made an oral agreement as to the terms upon which the partnership would be dissolved. That an agreement dissolving the partnership was made is common ground. Many of the terms of the agreement alleged by the plaintiff are also common ground. However, there are differences as to what was agreed; those differences give rise to the plaintiffs' primary claim and to some of the defendants' counterclaims.
In attendance at the meeting on 3 November 2003 were Giuseppe and Cosimo (as attorney for his father); Jimmy and Carmel, with Mr Cyril Tolson as their solicitor; and Mimi and Sylvia, with Mr Murray Hutchings as their solicitor.
The following are terms of the agreement which are common ground between the parties. First, the partnership was, as of the date of the agreement, namely 3 November 2003, dissolved. Second, the defendants would be entitled to possession and ownership of the equipment associated with the fruit and vegetable business. Third, the second plaintiffs would be entitled to possession and ownership of the equipment associated with the poultry business. Fourth, following the dissolution of the partnership the second plaintiffs would take over the poultry business and the defendants would take over the fruit and vegetable business, each couple to run such business on their own account and to have no interest in the other's business. Fifth, the second plaintiffs and the defendants would each pay to Giuseppe the sum of $10,000 within 30 days and the defendants would pay to Giuseppe $1,000, being his share of the day's takings on 3 November 2003, and upon receipt of those moneys, Giuseppe would transfer his interest in the partnership to the second plaintiffs and the defendants in equal shares.

The plaintiffs' primary claim for specific performance

The plaintiffs plead that it was an express term of the agreement that the defendants would take all steps and do all things necessary to procure a discharge of Giuseppe and the second plaintiffs from liability for the overdraft account with Westpac, and that the defendants would assume all liability for that account. The plaintiffs' primary claim is for specific performance by the defendants of this term.
The defendants admit that there was such a term of the agreement but plead that it was an express term of the agreement that the defendants' obligation to procure the discharge of the other parties from liability for the overdraft account would arise only after the second plaintiffs had provided the defendants with full and accurate details of the debtors and creditors of the fruit and vegetable business and the poultry business.
The express term alleged by the defendants is denied by the plaintiffs.
The defendants say, in their particulars, that the express term of the agreement arose from conversations between the parties' respective solicitors: Mr Hutchings acting on behalf of the defendants and Mr Tolson acting on behalf of the second plaintiffs. The defendants allege that the material substance of the conversations was that Mr Hutchings informed Mr Tolson that the defendants' obligation to assume liability and procure a discharge of the other parties on the overdraft account would arise only after the second plaintiffs had provided the defendants with full and accurate details of the debtors and creditors of the two businesses.
The plaintiffs also plead and the defendants deny, in their defence, that there was an implied term of the agreement that the defendants would procure a release of the second plaintiffs and Giuseppe and the land from the mortgage. However, it emerged, at an early stage of the trial, that the defendants accept that if the plaintiffs succeed in their claim for specific performance of the defendants' obligation to procure a discharge of the loan agreement constituting the overdraft then, consequently, the defendants are also obliged to procure a discharge of the mortgage securing the loan agreement.
On about 4 November 2003 the defendants took possession of the fruit and vegetable equipment and the second plaintiffs took possession of the poultry equipment. Since then, the defendants have run the fruit and vegetable business, and the second plaintiffs have run the poultry business.
The defendants have not procured a discharge of the other parties from liability for the overdraft account. The defendants admit that the other parties have not been discharged from liability for the account but say that, until full and accurate details of the debtors and creditors of the two businesses have been provided to them, they are under no obligation to procure a discharge of the liability of the other parties. The defendants plead that the second plaintiffs have failed and refused to provide full and accurate details of the debtors and creditors of the two businesses.
The plaintiffs plead and the defendants deny that there was a term of the dissolution agreement that the defendants would have the benefit of all debtors and be liable for all debts owed to creditors of the partnership as at 3 November 2003. The defendants plead that there was an express term that each of the couples would have the benefit of the debtors and be liable for the debts associated with the business each was taking over.
Thus the primary issues in relation to the plaintiffs' main claim appear to be as follows:
(a)whether the oral agreement of 3 November 2003 contained an express term that the discharge of the parties other than the defendants from liability for the overdraft account would occur only after the second plaintiffs had provided full and accurate details of the debtor and creditors of the business of Panetta Brothers;
(b)if so, whether the second plaintiffs have failed to provide full and accurate details of the debtors and creditors of the Panetta Brothers' business, with the consequence that the obligation on the part of the defendants respecting the overdraft account has not yet arisen or ought not be specifically enforced.
As will emerge later in these reasons, resolution of the first of those issues turns primarily upon the resolution of the conflict in the evidence of the witnesses called by the parties as to the events on 3 November 2003 when the dissolution agreement was made.

First plaintiffs' claim for $11,000

As set out above, it is common ground between the parties that it was a term of the dissolution agreement of 3 November 2003 that the second plaintiffs and the defendants would each pay to Giuseppe the sum of $10,000 within 30 days and the defendants would pay to Giuseppe $1,000 being his share of the day's takings on 3 November 2003, and that those payments were, in effect, in satisfaction of Giuseppe's interest in the partnership.
It is also common ground that the defendants have not paid those sums to Giuseppe or to his estate. The first plaintiffs, as executors of Giuseppe's estate, claim those sums.
The defendants plead that shortly after 3 November 2003 Giuseppe advised Mimi on behalf of the defendants that, "in consideration of the things which Mimi had done for him and for the partnership, Giuseppe did not require the defendants to pay the agreed sums of $10,000 and $1,000 to him, and Giuseppe thereby released the defendants from the said debt".
The central issue arising from that defence is legal rather than factual: is the purported release by Giuseppe of the defendants legally enforceable, or is it unenforceable by reason of absence of consideration?

The defendants' counterclaims

The defendant pleads five counterclaims.
The first, referred to as claim A, relates to $80,000 paid when Giuseppe moved into a retirement village known as Hocart Lodge in late 2002. The sum of $80,000 was paid by withdrawing $34,000 from the Panetta Brothers' account and $46,000 from another Westpac account, known as "the Loan Account", in the name of the two couples. The Loan Account was subsequently debited with an amount of $34,000 which was credited to the Panetta Brothers' amount. The net effect is that the $80,000 came from the Loan Account. That much is common ground.
The defendants say that it was agreed that the payment would be made by way of a loan by the two couples to Giuseppe, whereas the plaintiffs plead that this was done as a payment for Giuseppe's benefit, in effect a gift to Giuseppe.
A sum of $74,000 was refunded by Hocart Lodge in the weeks following Giuseppe's death in 2004. The money was initially received by Jimmy who paid it into his personal bank account, withdrew it from that account and paid it into Giuseppe's estate. The defendants claim that the refund should be paid back into the Loan Account, because of the earlier agreement, while the plaintiffs say there is no liability to do so.
Further, the plaintiffs rely upon the agreement of 3 November 2003. The plaintiffs plead that one of the terms upon which the partnership was dissolved was that the other parties would forgive Giuseppe any obligation to repay arising from the payment of $80,000 to Hocart Lodge. So resolution of claim A will require attention to be given to what occurred at the meeting on 3 November 2003.
Claim B also relates to the agreement of 3 November 2003. It is based on the alleged implied term of the agreement that accounts would be prepared for the partnership for the financial year ended 30 June 2003 and for the period from 1 July to 3 November 2003 and that thereafter any amounts found to be due and owing by the second plaintiff to the defendants would be paid by the second plaintiffs and vice versa. The plaintiffs deny that any such term is to be implied. Further, they say that the alleged implied term is inconsistent with the express terms of the agreement, namely that the intention of the parties was for the agreement to be a once and for all resolution of the claims between the parties as partners.
To determine whether the agreement contains the alleged implied term it will, of course, be necessary first to identify the express terms of the agreement.
Claim C does not relate to the agreement of 3 November 2003. Rather, it relates to an account, known as the rent account, held at Westpac and operated by a partnership between the two couples, ie Jimmy, Carmel, Mimi and Sylvia. Into that account moneys were paid from rental properties owned by the parties. That much is common ground.
At the commencement of the trial, the defendants' pleaded claim was that the second plaintiffs withdrew a sum of $57,849.40 from the rent account and used it for their own purposes. The plaintiffs admitted that sums had been withdrawn from the rent account but did not admit the amounts of them. They admitted that moneys had been "applied from time to time to purposes associated with the business and properties owned by the second plaintiffs and the defendants" and otherwise denied the defendants' pleas. They also pleaded that the partners had agreed tacitly, by their conduct, that it was permissible to withdraw monies from the rent account.
However, in the course of the trial (during his opening address) counsel for the defendants provided a schedule which, he explained, reflected the amounts now to be claimed under Claim C. The schedule referred to six cheques totalling $6,391.98.
Claim D relates to moneys paid for the supply of eggs to a business known as Staleys.
The defendants claim that the second plaintiffs received moneys paid to or for the benefit of the partnership, from 1 July 2003 and thereafter, on account of eggs supplied to Staleys. During the trial it emerged that the claim related to supplies of eggs for a total price of about $4,800, on which a profit of about $980 was made. It is that profit which is claimed by the defendants under Claim D.
The plaintiffs say in their defence to counterclaim that an oral agreement was made prior to 23 October 2003 between the two brothers, by which it was agreed that the business of supplying eggs to Staleys would be retained by the second plaintiffs. On that basis it is said by the second plaintiffs that they supplied eggs to Staleys for which funds were paid by Staleys so that amounts payable by Staleys in respect of the supply of eggs were not debts owed to the partnership.
Claim E is based upon a further alleged express term of the agreement of 3 November 2003. The defendants plead that there was a further express term of that agreement that from 3 November 2003 until his death, Giuseppe would be entitled to receive and have the benefit of all rents paid by the tenant in respect of the premises situated at 91 Uduc Road, Harvey, and that, upon Giuseppe's death, the second plaintiff and defendants would be entitled in equal shares to receive the benefit of rent paid by the tenant in respect of the premises.
The plaintiffs deny that there was any term to the effect that upon Giuseppe's death the other parties would be entitled to the rent.
Further, the plaintiffs deny that any premises in Uduc Road were owned by the partnership. They plead that the premises were owned as tenants in common by the deceased as to a third, by the second plaintiffs as to a third and the defendants as to a third. Further, at the occasion of the meeting it is said that all parties acknowledged the deceased was then and always beneficially entitled to the rent from 91 Uduc Road. Mr Tolson is alleged to have said this and, after some discussion, Mr Hutchings is said to have stated that the deceased was entitled to the rent from 91 Uduc Road.
Thus the identification of what was said at the meeting of 3 November 2003 is central to the resolution of Claim E.
It can be seen from this summary of the issues arising in relation to the claims and counterclaims that the determination of what occurred at the meeting of 3 November 2003 is at the heart of most of the issues in this case.
Eight people, including Giuseppe, attended the meeting of 3 November 2003. All of the remaining seven who attended the meeting gave evidence at the trial. The second plaintiffs gave evidence and called Cosimo and Mr Tolson. The defendants gave evidence and called Mr Hutchings.
In several critical respects, the evidence of the plaintiffs and the witnesses they called as to the events at the meeting differed markedly from that of the defendants and Mr Hutchings. With some minor exceptions, the main areas of conflict of evidence reflected the issues arising on the pleadings, as summarised above. For example, the defendants' witnesses all said (in substance) that at the meeting:
(a)Mr Hutchings said, in effect, that the defendants' obligation to take over the overdraft was subject to the information on the customer debts provided by Jimmy being accurate (statement of Mimi [52] ‑ [53]; statement of Sylvia [72] ‑ [73]; statement of Mr Hutchings [48] ‑ [50]); and
(b)it was agreed in substance that Giuseppe would receive the rent from the chemist shop while he was alive and thereafter the rent would be paid to the partnership (Mimi [57]); Sylvia [76]; Mr Hutchings [59]).
The evidence of the plaintiffs' witnesses on those topics was to quite different effect.
In this light it is convenient to approach the resolution of the claims and counterclaims by first finding the facts as to what occurred at the meeting of 3 November 2003.
That process is, I think, assisted by placing the meeting into some context and by setting out a summary of some of the events leading up to and following the meeting.

Chronology of events

Much of what is set out below is common ground or, at least, not in substantial dispute. Insofar as there is any dispute, the following reflect my findings of fact.
In September 2002 Giuseppe moved to the Hocart Lodge retirement village. In December 2002 an amount of approximately $80,000 was paid to Hocart Lodge.
By early 2003 there were significant tensions among the partners of Panetta Brothers.
By letter of 17 April 2003 the managing director of River Rooster, Mr Stephen Hansen, wrote to Jimmy and Mimi Panetta. The letter noted that there was some conflict within the partnership and recommended that the partnership work towards the creation of two independent businesses: River Rooster and Panetta Brothers Fruit and Vegetables.
Following receipt of that letter there was a meeting between Mr Hansen, Giuseppe, Mimi, Sylvia and Jimmy. At the meeting Jimmy invited Mimi to choose a business. Mimi said he wanted to take over the fruit and vegetable business. Jimmy agreed to take over the River Rooster business.
In June 2003 Mimi and Sylvia met with Mr Hutchings, then of Butlers, and Mr Napoli, an accountant. The defendants met with Mr Hutchings and Mr Charlie Napoli to discuss financial and legal matters relevant to their intention to have the partnership dissolved and to take over the fruit and vegetable business.
On 9 July 2003 Mr Hutchings of Butlers wrote on behalf of Mimi and Sylvia to Jimmy, Carmel, Cosimo and Giuseppe. The letter stated that their clients intended to dissolve the partnership as at 18 July 2003 and indicated that they envisaged a conference of all partners to discuss and agree a division of the partnership assets. It was said that the defendants understood the partnership assets to comprise the shops at 87 ‑ 91 Uduc Road, a residential block at the rear of the shop at 93 Uduc Road; the fruit and vegetable and River Rooster businesses; a farming property located in Forestry Road; some home units and an interest in the trotting track.
Jimmy and Carmel appointed Mr Tolson of Tolson & Co to act as their solicitors. Following discussions between Mr Tolson and Mr Hutchings, Butlers wrote on 17 July 2003 withdrawing the notice of dissolution. The letter stated an intention for dissolution to occur as soon as possible, if possible within a period of one month. The letter stated that appraisals of assets would occur so as to enable the defendants to make an offer or convene a conference.
Late in August 2003, Papalia Partners, the partnership's accountants, provided the financial statements for the Panetta Brothers' partnership for the year ending 30 June 2003.
During September 2003 the defendants arranged for Mr Napoli to review the financial statements. On 19 September 2003 Mr Hutchings and Mr Napoli met with the defendants to discuss issues regarding the division of the partnership assets.
By letter of 22 September 2003, Mr Napoli provided a report of matters arising from his review of the financial statements. The report indicated a possible approach to the division of the assets of the partnership which was never adopted by the parties in their negotiations. The report was supplied by Butlers to Mr Tolson by Butlers' facsimile of 30 September 2003.
The facsimile of 30 September 2003 recorded an understanding that some form of agreement had been reached between the parties regarding the division of the two shops. However, it was, on the evidence, common ground that the only agreement reached at that stage was of a temporary nature. It had by then been agreed that the parties would separately operate their respective businesses pending the dissolution of the partnerships.
On 8 October 2003 Sylvia instructed Mr Napoli to establish a new business name and entity to operate the fruit and vegetable business.
On 14 October 2003 Mr Tolson spoke with Jimmy. Mr Tolson recorded the substance of the discussion in a memorandum to his file. In the course of that conversation Jimmy said he was prepared to assign his interest in the fruit and vegetable shop (which was known as Mini Mart) to his brother but he would not accept responsibility for any of the overdraft. He is recorded as having said that he was prepared to let Mimi have the stock, plant and the debtors of the Mini Mart on the condition that Mimi take over the overdraft of approximately $50,000 to $60,000 and that Mimi pay him $6,000. He said that the stock, the debtors and the equipment were worth far in excess of the overdraft and by contrast he (Jimmy) would need to install new equipment in the River Rooster shop which would involve a cash outlay of approximately $60,000. He instructed Mr Tolson to put an offer, in the terms outlined, to Mr Hutchings.
There was also discussion recorded as to what would happen to Giuseppe's 20 per cent interest in the partnership.
As requested, Mr Tolson then telephoned Mr Hutchings to put these proposals to the defendants. Mr Tolson stated to Mr Hutchings that Jimmy was prepared to allow Mimi to take over the Mini Mart on the condition that he (Mimi) take the stock, plant and equipment and debtors and also assume responsibility for the overdraft and that Jimmy be paid $6,000.
On 28 October 2003 Mr Hutchings wrote to Mr Tolson. The letter recorded that the defendants did not accept the offer made in the telephone conversation on 14 October 2003.
The letter proposed that from 1 November 2003 each party take over and operate their respective businesses and continue to contribute, on an equal basis, a sum to the overdraft account to maintain it at a level acceptable to the bank. Thereafter, there would be a stocktake conducted of both businesses and a joint meeting to resolve financial issues or proposals be put regarding ongoing debt reduction.
The next day Mr Tolson and Mr Hutchings spoke by telephone. Mr Hutchings said that his clients were prepared to attend a meeting the following Monday (which was 3 November) at 1 pm at the trotting track. He said that his clients (the defendants) would like to have a valuer value the plant and equipment in each of the shops. Mr Hutchings said that the defendants were looking to do a deal by which they each took their own shop, each paid one half of the overdraft and the debts of each shop would be taken over by the party taking over the shop.
Later that day it was agreed that the valuation could occur over the weekend.
By 3 November 2003, valuations of the plant and equipment of the two shops had been prepared by a firm of valuers, Beevis & Co.
At around midday on 3 November 2003 one of the defendants obtained from Westpac a then current print‑out of the balances of each of the accounts held at the bank.
The balance of the overdraft was shown as $53,849.07.
At about 1 pm on 3 November 2003 the meeting which is at the heart of this litigation occurred. Present at the meeting were Giuseppe, Jimmy and Carmel, Mr Tolson as Jimmy and Carmel's solicitor, Cosimo as Giuseppe's attorney, Mimi and Sylvia, and Mr Hutchings as solicitor for Mimi and Sylvia.
The evidence as to the discussions at the meeting will be dealt with later in these reasons.
Immediately following the meeting a number of the parties went to the shops at Uduc Road. Initially, Jimmy did not attend at the shops. Carmel went on their behalf. She went to the docket books which were under the counter. From those books she wrote a list of the debtors of the business (mistakenly entitled "Creditors") and gave that list (Ex 7) to Mr Hutchings.
In this respect, I am satisfied that Mr Hutchings, who distinctly recalled Jimmy as having provided the debtors' information and having been at the stocktake, was mistaken.
A stocktake then occurred. Jimmy was not present while the stocktake occurred.
Jimmy subsequently arrived. There was some debate about the stocktake regarding cigarettes, which was redone. Jimmy was involved in the cigarette stocktake.
On or around 4 November 2003 Mr Hutchings prepared summaries of the information as to creditors, debtors and stock that had been obtained on the evening of 3 November. That information was attached to Mr Hutchings' facsimile of 11 November 2003 to Mr Tolson. The information as to debtors corresponded to the information in the handwritten list (Ex 7) written by Carmel and given to Mr Hutchings on 3 November 2003.
That facsimile also stated that the list of creditors, as supplied by Mr Tolson's client on 4 November 2003, did not include National Foods or Inghams.
On 10 November 2003 Sylvia telephoned Mr Napoli. His notes record, and I find, that she said to him that they (ie Mimi and Sylvia) "had taken over the overdraft".
Consistent with that view of things, the defendants made some 47 payments on the overdraft from November 2003 until June 2004. The overdraft at one point reached a debit balance of less than $28,000. As at June 2004, when the defendants stopped making payments, the account had a debit balance of about $35,000.
Tolson & Co sent further facsimiles on 13 and 14 November. The facsimile of 14 November 2003 stated that the second plaintiffs had informed Tolson & Co that National Foods and Inghams were creditors of the business as at 4 November, but their accounts had not been received at that date. The letter stated that the accounts should be included in the creditors to be paid by the defendants.
On 18 November 2003 Mr Hutchings wrote to Mr Tolson, attaching updated lists of the fruit and vegetable shop creditors and debtors, River Rooster debtors and a reconciliation list. The copy of that letter tendered at trial did not include all of the attachments but only the updated list of fruit and vegetable shop creditors.
The letter stated that on Mr Hutchings' calculations Jimmy and Carmel would have to pay Mimi and Sylvia the sum of $7,110. It was suggested that, on that basis, Jimmy and Sylvia pay the Pioneer Eggs' accounts and Inghams' accounts totalling $6,388, leaving a balance owing to the defendants of $722.
The plaintiffs pointed out in their submissions that that proposal involved an acceptance of liability on the part of the defendants for the Pioneer Eggs' and Inghams' accounts.
The plaintiffs also pointed out that no complaint was made in the letter of 18 November 2003 that inaccurate figures respecting debtors and creditors had been provided at or after the meeting.
On 24 November 2003 Mr Hutchings again wrote to Mr Tolson. The letter referred to the second plaintiffs' agreement to pay the Inghams' and Pioneer Farms' accounts (as suggested in Mr Hutchings' letter of 18 November 2003), leaving a balance owing of $722.
The letter referred to River Rooster royalties which, it may be surmised, were payable by the River Rooster business as franchisee to its franchisor. The letter stated that the royalties are calculated each Monday and direct debited each Tuesday. The letter recorded that "Our client considers that they are liable for the direct debit dated 4 November 2003 but are not liable for direct debits after this date".
That statement involves, as was pointed out on behalf of the plaintiffs, an acceptance on the part of the defendants that they were liable for a debt of River Rooster calculated on 3 November 2003. That is inconsistent with the defendants' evidence that it was agreed that they were taking over the liabilities only of the fruit and vegetable business, with the liabilities of the River Rooster business being taken over by the second plaintiffs.
The facsimile of 24 November 2003 also set out various debits and credits and proposed that the second plaintiffs pay the total outstanding amount of $3,130 on the River Rooster overdraft. (The account known as River Rooster is distinct from the overdraft account the subject of the plaintiffs' primary claim.)
By letter of 27 November 2003 Tolson & Co stated that the second plaintiffs agreed to pay the total River Rooster overdraft of $3,130. The letter requested that a draft deed of resolution be forwarded to them.
On 28 November 2003 Mr Hutchings wrote again to Mr Tolson. He recorded that he was pleased that agreement had been reached regarding the River Rooster overdraft facility. The letter concluded by stating that they would be in a position to provide a draft of the deed of dissolution of the partnership on Monday 1 December 2003.
No draft of the deed of dissolution was provided on 1 December, or at any time.
Although the evidence in this respect was not clear, it appears that various of the creditors of the partnership, as at 3 November 2003, and being on the list provided on 3 November, were not paid by the defendants in the course of November and December. On 23 December 2003 Mr Tolson wrote to Butlers stating that his client (Jimmy) wanted certain accounts paid because they affected the conduct of his business. The letter requested that the defendants pay those accounts immediately.
On 21 February 2004 Giuseppe died.
Some weeks later Hocart Lodge provided a refund of $75,818. Those funds were ultimately deposited by Jimmy into an account in the name of the estate of Giuseppe.
On 24 May 2004 Butlers, by Mr Hutchings, wrote to Tolson & Co regarding a number of issues between the parties. The letter dealt with a tax liability on the part of Panetta Brothers, a Western Power account and various other matters. The plaintiffs emphasise in their submissions that in the letter of 24 May 2004 it is stated by Mr Hutchings that "Our client took over the liability of the overdraft in November 2003".
In June 2004 the defendants ceased making any payments on the overdraft.
In the second half of 2004 the second plaintiffs, by their solicitors, made various written demands that the defendants procure the discharge of the overdraft.
These proceedings were commenced by the plaintiffs in 2005. Various versions of a defence and counterclaim were filed by the defendants in 2005 and 2006. The counterclaim for the rent on the chemist shop (claim E) was raised for the first time by an amendment in June 2007.

General findings on credibility

Wherever the evidence of the defendants' witnesses conflicts with the evidence of the plaintiffs' witnesses in relation to the meeting of 3 November 2003, I prefer the evidence of the plaintiffs' witnesses.
There are a number of matters which have led me to that view. While I will make some more specific findings later in these reasons, the most significant matters leading me to this view may be summarised as follows: Mr Tolson's notes of the meeting; internal inconsistencies and other aspects of the content of the defendants' witness statements; the manner in which the various witnesses gave their evidence and responded to questions; and the conduct of the defendants and Mr Hutchings after the meeting.
First, Mr Tolson was the only person who took notes during the meeting. A copy of the five pages of handwritten notes taken by Mr Tolson was tendered at trial (Ex 1, Tab 47). Mr Tolson explained, in his evidence, the way in which he took the various pages of notes as the meeting progressed. That evidence was not challenged and I accept it.
Mr Tolson's notes and evidence provide a firm foundation for determining the course of the meeting, including the order in which and context in which various topics were raised, in a way which, in my assessment, no other witness' evidence does.
Second, both of the defendants' witness statements contained some internal inconsistencies in respect of important topics. In their witness statements (Mimi [57], Sylvia [76]), each of them said that it had been agreed that the rent would go to Giuseppe while he was alive (or while he "wanted it") and thereafter it would be paid to the partnership. (The respective paragraphs of the witness statements were in identical terms). However, each witness statement also contained (Mimi [49], Sylvia [67]) the statement, "I don't recall a specific discussion on the rental or the use of the shop rent".
Each of Mimi and Sylvia agreed that that latter‑mentioned part of their witness statement was inconsistent with the part of the witness statement setting out the substance of a discussion agreeing how the rent for the chemist was to be dealt with. Neither offered any explanation for the inconsistency or for the presence in their witness statement of the sentence quoted above.
Further, each witness said, in his or her statement, "I'm not sure whether there was a discussion about money owed to the partnership". A few paragraphs later each witness statement said (again, in identical terms) that Mr Hutchings said in substance that the defendants would take over the fruit and vegetable shop, its plant and equipment and related vehicles and would collect the money owed to the partnership and pay out the overdraft "subject to the information on the customer debts provided by Jimmy being accurate". In cross‑examination, each witness was asked about the fact that their statement set out a recollection that Mr Hutchings said that their agreement was "subject to the information on the customer debts provided by Jimmy being accurate" in circumstances where the witness did not claim any distinct recollection of whether there was a discussion about customer debts. Neither witness offered any explanation for this. In this last respect, the evidence of Mr Hutchings had the same features; when invited to explain how the two features sat together he said that he "[did] not know".
Next, I move to some observations of the way in which individual witnesses gave their evidence and responded to questions.
Nothing emerged in the cross‑examination of Jimmy, in particular in his response to the questions asked, which caused me to doubt the veracity or reliability of his evidence. There were occasions where it appeared to me that he had not understood the substance of a question. However, he seemed to me to do his best to answer questions as accurately and fully as his recall permitted.
Similarly, nothing emerged in the cross‑examination of Carmel which seemed to me to give rise to any reason to doubt the veracity and reliability of her evidence.
Mr Tolson impressed as a careful and precise witness. His evidence was, of course, supported by the notes he took at the meeting. In certain respects Mr Tolson's evidence revealed a clear recollection of particular aspects of the meeting, some of which I refer to further below.
Mimi's evidence in cross‑examination left me with the distinct impression that he had very little reliable recollection of any aspect of the meeting.
I did not find Sylvia to be a reliable witness. A great many of her answers were not responsive to the questions asked of her. I am mindful of the prospect that that may have reflected an imperfect understanding of the questions, or a tendency not to limit answers to questions by a precise analysis of what the question sought. I was, in the end, driven to the conclusion that on a number of occasions she avoided answering a question the answer to which she thought might not be helpful to the defendants' case and chose, instead, to talk about a matter or matters with which she wished to deal.
At other times she appeared to back away from particular admissions which she had earlier made in her evidence, once the relevance of the admissions was clear to her.
Her memory was generally hazy. The only aspects of the meeting of which she purported to have a clear recollection were those relating to the key issues in the case.
In numerous places the defendants' witness statements were in identical words. That was liable to give rise to reason to doubt whether the statement reflected the witness' own expression of what he or she could recall. Those doubts were reinforced by the answers given by each of the defendants in cross‑examination.
Neither in his witness statement nor in his oral evidence did Mr Hutchings claim any recollection of the course of events at the meeting. Rather, he simply said that he did or did not recall discussion of various topics. He did not have any notes. Some further observations relevant to the evidence of Mr Hutchings are set out below.

Fourth, in my opinion the statements and actions of the defendants (and, in certain respects, Mr Hutchings) after the meeting of 3 November 2003 are inconsistent with their evidence as to what occurred at the meeting. That is so, it seems to me, in relation to the overdraft and to the rent in respect of the chemist at 91 Uduc Road.
One week after the meeting of 3 November 2003 Sylvia told her accountant that she and Mimi had taken over the overdraft. Nothing was said to suggest any conditionality of that undertaking. Consistently with that, the defendants started paying the overdraft immediately after the meeting. They made regular payments over the following month. The defendants' conduct in making payments in partial discharge of the overdraft appeared to be inconsistent with their evidence as to what was said at the meeting as regards the overdraft. No explanation was offered for the apparent inconsistency.
Moreover, in May 2004, Mr Hutchings wrote, "Our client took over the liability for the overdraft in November 2003". In his witness statement Mr Hutchings sought to explain that statement in his letter of May 2004. However, I do not regard the attempted explanation offered as a satisfying one. Rather, the more likely conclusion is that what Mr Hutchings wrote in May 2004 reflected his then understanding (which is not consistent with his evidence at trial as to what was said at the meeting of November 2003).
The defendants' evidence was that at the meeting in November 2003 it was agreed that rent from the chemist shop would go to Giuseppe while he was alive but when he died it would go back to the partnership. Giuseppe died three months after the meeting. No claim for the rent was made until 3 1/2 years after his death when the defence and counterclaim was amended in June 2007. No explanation was given by the defendants for this.
I have not had regard to events subsequent to 3 November 2003 so as to construe the words used by the parties in their agreement. Rather, I have had regard to subsequent events insofar as conduct of a person may have been inconsistent with their evidence as to what words were said at the meeting.
Further and more specific reasons for my preference for the plaintiffs' witnesses' evidence over the defendants' witnesses' evidence are set out in my findings as to the meeting of 3 November 2003, to which I now turn.

The meeting of 3 November 2003

The following are my findings as to what occurred at the meeting of 3 November 2003. As will become apparent, my findings rely substantially upon the evidence of Mr Tolson and his notes of the meeting, but I have taken into account the evidence of all the witnesses who attended at the meeting.
I have identified, earlier in these reasons, the persons who attended the meeting.
Copies of the valuations of plant and equipment (Ex 1, Tab 21) dated 3 November 2003 by Beevis & Co were brought to the meeting by the parties. Mr Hutchings had some notes (Ex 1, Tab 46) which he brought to the meeting. The first part of those notes set out figures for each of the two businesses derived from the Beevis valuation. The defendants also brought to the meeting a printout, from Westpac, of the balances of each of the accounts held at the bank (Ex 1, Tab 22). That printout showed the balance of the overdraft as $53,849.07.
The evidence of the second plaintiffs was that Mr Hutchings brought a substantial file which appeared to contain financial information. It is, on the evidence, unclear what precisely Mr Hutchings brought to the meeting. I am not satisfied that he brought substantial financial information, although it is likely that he had with him the accounts for Panetta Brothers for the financial year ended 30 June 2003 and the materials which had been prepared by Mr Napoli and which are referred to earlier in these reasons.
Mr Tolson made the opening comments at the commencement of the meeting. At the outset he identified that the meeting was without prejudice and that he was acting for Jimmy and Carmel but not for Giuseppe.
Soon after this, at a very early stage of the meeting, Jimmy said words to the effect that if he was to get the chook shop, and Mimi was to get the fruit and vegetable shop, then it was only fair that Giuseppe should get the rent from the chemist shop. Mr Tolson commented that that was only fair. (Sylvia agreed, in the course of cross‑examination (t/s 312), that these comments had been made at the meeting.)
No dissent to that view was expressed, at that stage, by Mimi, Sylvia or Mr Hutchings. Later in the meeting the discussion returned to the topic of the rent from the chemist shop.
By way of further opening comments, Mr Tolson observed that the parties should attempt to resolve the matter because the involvement of lawyers was very expensive and that it must be a source of pain to Giuseppe to see his family fighting in the way that they were. Mr Hutchings endorsed those comments.
In the course of the meeting I find that the substantial majority of the discussion occurred between the lawyers. Some of the important parameters of a possible agreement which the parties came to the meeting to negotiate were, by the time of the meeting, already determined. In particular, I find that all of the discussions at the meeting were in an already shared framework, reflected in Jimmy's comments early in the meeting to which I have already referred, that Mimi would take the fruit and vegetable business and Jimmy would take the chook business. (In their evidence as to the meeting, witnesses referred to each brother as taking a business or accepting a liability and so on, as a shorthand reference to the brother and his wife. I will do the same.) There was no discussion or debate about that aspect of how things would proceed. It was, by then, well and truly understood by everyone that that is how the businesses of the partnership would be divided. What had to be discussed and, if possible, agreed were other aspects, such as who would be responsible for creditors and for the overdraft and what would happen to the debts then owed to the partnership.
That explains the course of the discussions at the meeting. By way of overview, what occurred was that such information as was available as to the value of plant and equipment, stock, debtors and creditors and the overdraft was analysed, with a view to identifying what adjustment, by way of payment of a sum of money, needed to be made between Jimmy and Mimi upon a dividing up of the businesses in the way contemplated. Later in the meeting the position of Giuseppe, as an outgoing partner of the partnership, was discussed and was the subject of agreement.
I return to the detailed narrative of what occurred at the meeting.
The lawyers referred to the Beevis valuations. Items were identified within it that needed some adjustments to be made. Those items are identified in Mr Tolson's notes and in his evidence.
The upshot of the discussion in relation to plant and equipment was that, given the differences in value between the plant and equipment which would be received by Mimi (when he took over the fruit and vegetable business) and the plant and equipment which would be received by Jimmy (when he took over the poultry business), it was agreed that Jimmy was entitled to a credit of approximately $14,000 in respect of plant and equipment.
Next, the values of stock were discussed. Estimates of the value of the stock in relation to each of the shops were provided. Although the evidence is not entirely clear, I find that, on the probabilities, each of Jimmy and Mimi provided an estimate for the stock level of the business for which they were responsible. The difference in the level of stock between the businesses gave rise to an agreed adjustment of $7,500 credit in favour of Jimmy.
The discussion then turned to the debtors and creditors of the partnership. Mr Tolson's notes include a precise figure for creditors, namely $20,497. The precision of that figure strongly suggests that it was provided by someone who came to the meeting with information as to the total amount owed to creditors. It is, on the evidence, unclear who provided such information. No witness agreed that he or she came to the meeting with any such information.
It is clear on the evidence that Jimmy generally had the primary responsibility for the collection and recording of accounts and other financial information for the partnership. However, the information as to creditors was available to the defendants. One of them may have accessed the information over the weekend prior to the meeting.
The evidence does not satisfy me, one way or the other, as to which of the parties provided that information.
A number of figures for debtors are set out in Mr Tolson's notes. These are all in round figures in hundreds of dollars. Those figures were, I find, provided by Jimmy. He said in his evidence that he had, on the Saturday immediately before the meeting, done the monthly statements and so was in a good position to give a reasonably accurate estimate of the debtors.
The debtors exceeded the creditors by approximately $5,500 which meant that, if, as was by then contemplated in the discussions, Mimi was taking over the debtors and creditors, then Jimmy was entitled to a credit of $2,750. Mr Tolson said words to this effect and there was, at the meeting, no dispute between the parties in that regard.
The amount of the overdraft ‑ $53,849 ‑ was noted at the meeting. A figure of $27,000 (being approximately half of the amount of the overdraft,) was identified as the adjustment, by way of debit to Jimmy, if Mimi and Sylvia took over the overdraft.
Once the process of identifying adjustments by debits and credits had occurred, one of the lawyers, most likely Mr Hutchings (as it is he who the second plaintiffs recall speaking in this context) said words to the effect that Jimmy would take over the poultry shop and the plant and equipment assets associated with the poultry shop, Mimi would take over the fruit and vegetable shop and the plant and equipment and assets associated with it, Mimi would collect all the debtors, pay the creditors and pay out the bank overdraft and there would be a payment by one to the other in accordance with the adjustment process already described. Agreement was expressed by the other lawyer.
The figures then before the meeting meant that, taking into account the $24,250 credit to Jimmy (being the total of figures for plant and equipment, stock and debtors and creditors) and offsetting that against the approximately $27,000 share of the overdraft, Jimmy would owe Mimi $2,750.
That position is recorded at the top of the fourth page of Mr Tolson's notes (Ex 1, page 185). An additional debit of $1,000 to Jimmy in respect of "Chooks" is recorded in the notes, making a total debit of $3,750. The $1,000 debit regarding chooks was not the subject of evidence at trial, but nothing turns on that.
It is common ground on the evidence that it was agreed that a stocktake of the two businesses would be done to enable the precise amount that Jimmy would have to pay Mimi to be ascertained (by comparing the true stock figures with the estimates which had been given at the meeting). I accept Mr Tolson's evidence (see, especially statement [93] and t/s 213 ‑ 214) to the effect that the same process was agreed to be undertaken in respect of debtors and creditors. I find that it was agreed that, as well as doing a stocktake, the parties would, soon after the meeting, review the figures for debtors and creditors and, comparing the true figures with the estimates provided at the meeting, adjust the amount to be paid by Jimmy to Mimi. That conclusion also finds support in the evidence of Jimmy (t/s 174) and Carmel (t/s 234) in the course of cross‑examination.
In so finding, I reject the evidence of the defendants and Mr Hutchings to the effect that what was said at the meeting was, in substance, that the obligation on the part of the defendants to take over the overdraft was subject to the accuracy of the figures provided by Jimmy in relation to debtors and creditors.
Counsel for the defendants submitted that commercial logic supported the defendants' version of events on 3 November 2003 in that:
•the defendants were much less familiar with the financial side of the partnership;
•the defendants were to use the funds collected from debtors to pay out creditors and the overdraft; and
•they would be unlikely to take on the obligation to pay the overdraft without precise and accurate figures as to debtors and creditors.
I do not accept that argument, although I accept the first of the three points made.
First, on the figures provided at the meeting, the total amount of debtors exceeded creditors by only about $5,500, and so was obviously going to be insufficient to pay out the overdraft of more than $50,000. Moreover, on the evidence before me, no one said at the meeting that the collection of the debts from debtors would be sufficient to pay the overdraft and other creditors.
Next, it is, I think, relevant that the defendants were doing a deal which meant that they got the business Mimi was determined to get, namely the fruit and vegetable business. There is evidence (which I accept) that, at the meeting, Jimmy expressed the view that the fruit and vegetable business was worth four times as much as the poultry business, without any contradiction or debate. (Of course, the making of that statement is not evidence of its truth, but that such a statement was made, reflecting or evidencing Jimmy's state of mind, and not contradicted, seems to me relevant to a consideration of the course of the discussions at the meeting.) Moreover, when asked by Giuseppe how much it would cost to buy out the businesses, Sylvia said they would sell the fruit and vegetable business for $450,000.
In any event, the agreement which I find to have been made, as set out in par [151] - par [154] of these reasons, cannot, it seems to me, be said to lack commercial logic. The two brothers (with their wives) each got a business. There was a rough and ready accounting to analyse the debits and credits between them for the plant and equipment, stock, debtors and creditors and the overdraft. Those figures which were uncertain ‑ stock and debtors and creditors ‑ were to be subject to adjustment by ascertaining more precise figures soon after the meeting. At the end of that process the sum payable by Jimmy to Mimi would be ascertained.
I note that counsel for the defendants accepted that the defendants did not make any claim for a sum of money arising from the adjustment process described in Mr Tolson's evidence. He accepted that counterclaim B was not of that character.
I return to the detailed narrative of events at the meeting. By around this stage of the meeting, agreement was expressed to what had been proposed as to how the businesses and their assets and liabilities would be divided as between Jimmy and Mimi.
In the course of the meeting, somewhere towards the end, the question of the rent for the chemist shop at 91 Uduc Road was again raised, this time by Sylvia. She suggested that Mimi would get 40 per cent, Jimmy 40 per cent and Giuseppe 20 per cent.
Jimmy pulled out the contracts for sale of the three shops, which was one of the two documents he had brought to the meeting. He gave the document to Cyril Tolson who looked at them. Mr Tolson then said words to the effect that "reading this, I believe that Giuseppe Panetta should be entitled to the entire rent of the chemist shop at 91 Uduc Road". (Sylvia agreed, in the course of cross‑examination, that this had occurred at the meeting - t/s 313, although she subsequently appeared to resile from that ‑ t/s 326.)
Jimmy proposed that, as he was taking 87 Uduc Road with the chicken shop, and Mimi was taking 89 Uduc Road with the fruit and vegetable shop, Giuseppe should take the rent for 91 Uduc Road.
I accept the evidence of the second plaintiffs that Mr Hutchings then requested that he and his clients leave the room to discuss it. When they returned Mr Hutchings said that his clients agreed that Giuseppe would take the rent from the chemist shop.
I reject the evidence of the defendants to the effect that the substance of what was said was that Giuseppe would take the rent while he was alive (or while he "wanted it") and that thereafter it would be paid to the partnership.
In so finding I have taken into account a number of matters.
First, I refer to the matters set out under the heading "General findings on credibility".
Next, I note that Mr Tolson's notes record "Full rental from pharmacy to father". There is no qualification recorded as to a different position upon Giuseppe's death.
Third, the logic articulated at the meeting by Jimmy supported an unqualified entitlement for Giuseppe to receive the rent. The sons' freedom to use the premises for their respective businesses was not to cease upon Giuseppe's death, so there might be thought to be no obvious reason why Giuseppe's entitlement to rent for the third unit should cease at his death.
Finally, the evidence of each of the witnesses for the plaintiffs who were cross‑examined on this topic was clear and, it seemed to me, convincing. I refer especially to the evidence of Carmel at t/s 234 ‑ 236 and Cosimo at t/s 249, as well as Mr Tolson at t/s 219. Given Cosimo's role at the meeting of attorney for his father, I think it likely he would have paid particular attention to this aspect of the discussion. Jimmy was not directly challenged in cross‑examination on this point. By contrast, the defendants' witnesses' answers in cross‑examination on this topic involved some qualification to their evidence‑in‑chief in their statements. See, in this regard, Mimi's evidence at t/s 391 ‑ 392 and t/s 396 - 397; Sylvia's evidence at t/s 319 and t/s 327 - 328 and Mr Hutchings' evidence at t/s 409.
Late in the meeting Mimi said words to the effect of "what about the money that was paid to Hocart Lodge from the business?"
I accept the evidence of Mr Tolson and of Jimmy that Jimmy responded immediately with words to the effect that "Dad is owed far far more than the money paid into Hocart Lodge and we should in fact pay him more".
Mr Tolson said, in the course of cross‑examination, that he recalled that at that stage he interrupted the meeting, being annoyed that the two brothers were ignoring the father's contribution. Mr Tolson asked some questions of others at the meeting as to the value of various assets of the partnership and did some rough calculations which are set out on the last page of his notes (Ex 1, page 186) to attempt to estimate what the father's interest in the partnership was worth. Mr Tolson then said that, looking at the figures he had done, Giuseppe had an interest of at least $80,000.
In so finding, I think that Mr Tolson was mistaken in what he said in his witness statement (at [100]) to the effect that no figures for the amount paid to Hocart Lodge were mentioned. Indeed, in the course of cross‑examination Mr Tolson readily agreed that he may well have been mistaken in that respect, in that figures may have been mentioned. Given that Mr Tolson used the figure of $80,000 in what he said at the meeting, I think it likely that that figure had been mentioned to him earlier in that discussion.
After Mr Tolson's comment was made, there was further discussion, in the course of which Mimi and Sylvia left the meeting with Mr Hutchings to discuss the position. The upshot of the discussion was that it was agreed between the parties that each of Jimmy and Mimi would pay their father $10,000 (in addition to the $1,000 in respect of the takings). The payment of $10,000 was to be made within 30 days.
I accept Mr Tolson's evidence that the discussion about Hocart Lodge prompted the agreement to pay Giuseppe $10,000, in that it was the immediate catalyst for the making of the agreement.

Jimmy suggested that the split of the businesses would be effective from the following day, with which Mimi concurred.
Jimmy suggested that the takings from the business for 3 November 2003 be split equally, less $1,000 which would be paid to Giuseppe. Mimi agreed with that proposal.
Mr Tolson said that because the businesses were being disposed of as a going concern there should not be any GST payable. Some agreement was expressed with that.
Mr Hutchings said that he would prepare a deed of dissolution; Mr Tolson agreed with this proposal.
Mr Tolson stated that the stamp duty on the deed to give effect to the dissolution of the partnership would be paid equally. Agreement was expressed to that proposal.
The meeting culminated with Jimmy saying (as was accepted by Sylvia in cross‑examination ‑ t/s 334) "that all we have to do is the stocktake on both businesses tonight and finalise everything tomorrow".
In the light of those findings as to the course of the meeting on 3 November 2003 I turn to the determination of the plaintiffs' claims and of those of the defendants' counterclaims which are affected by events of 3 November 2003.

The plaintiffs' claims

The primary claim – the overdraft account

In the light of my findings as to what was agreed on 3 November 2003, the plaintiffs' claim in relation to the overdraft account must succeed.
The defendants' defence to the claim was that it was expressly agreed that their obligations to discharge the overdraft account arose only after the plaintiff had provided full and accurate information as to the debtors and creditors of the partnership. There was, I find, no such term of the agreement of 3 November 2003. That follows from the factual findings as to the meeting of 3 November 2003 already made. For the sake of completeness, however, I would mention some further matters.
Even if I had accepted the evidence of the defendants' witnesses in relation to the discussion as to the taking over of the overdraft, it by no means follows that the defendants would have succeeded in their defence of this part of the plaintiffs' claim. In that regard I would refer to the following three matters.
First, the evidence of Mr Hutchings was materially different, in its legal effect, from the evidence of the defendants. The evidence of the defendants was in terms that Mr Hutchings said the obligation to take over the overdraft was subject to the accuracy of the information provided by Jimmy at the meeting. By contrast, Mr Hutchings' evidence was, in substance, that he said the "whole deal" was subject to the accuracy of the information provided and to be provided.
As was submitted on behalf of the plaintiffs, acceptance of Mr Hutchings' evidence would not have provided a defence to the claim made. The effect of his evidence was that the agreement as a whole (involving, as it did, the dividing up of the two businesses) was subject to the accuracy of the information. A condition of that character would not entitle the defendants to refuse to perform the obligation to take over the overdraft, while having taken the benefit of the fruit and vegetable business. Rather, the condition arising upon acceptance of Mr Hutchings' evidence would have entitled the defendants to elect not to proceed with the whole of the dissolution agreement. They have not so elected.
Next, the evidence of the defendants themselves did not, directly at least, support the defendants' case as pleaded and particularised. The defendants' evidence was to the effect that their obligations respecting the overdraft were subject to the accuracy of the information already provided (at the meeting) by Jimmy. By contrast, the case as pleaded and particularised was that the obligations respecting the overdraft would arise only after the second plaintiffs have provided the defendants with full and accurate details of the debtors and creditors of the two businesses. In other words, the subject matter of the evidence was the accuracy of the information already provided, whereas the subject matter of the pleading was that further information would be provided and that such further information would be full and accurate.
Counsel for the defendants sought to meet this apparent difficulty by arguing that the express term arising from the defendants' evidence gave rise, on its proper construction, to a further express term to the effect that further information would be provided and that such information would be full and accurate. There are, it seems to me, real difficulties with this argument but it is not necessary to determine it, given my earlier findings.
Finally, if a finding had been made in favour of the term pleaded by the defendants it would then have been necessary for the defendants to have established that the plaintiffs had failed, as at the date of the trial, to provide the defendants with full and accurate details of the debtors and creditors of the two businesses. I am not satisfied that the plaintiffs have so failed.
The defendants invite the conclusion that some of the information as to debtors and creditors provided on 3 November 2003 (both at the meeting, and subsequently on that evening) was inaccurate. They rely, in this respect upon evidence of Sylvia and of Mr Napoli, including annexures E and F to his witness statement. However, acceptance of that evidence would not make the defendants' case. What is missing is evidence to support a conclusion that there remains, as at the time of trial, information as to debtors and creditors which has not yet been provided.
When pressed on this point counsel for the defendants pointed to evidence of Jimmy in cross‑examination. Jimmy conceded in cross‑examination that the detailed analysis of cheques from the rent account set out in his witness statement was "the type of information" which Mimi and Sylvia would require in order to undertake their task of paying off creditors and collecting debtors (t/s 192). However, to my mind, Jimmy's "admission" is of no moment. The information being referred to in cross‑examination was information regarding payments out of the rent account all of which had occurred prior to 3 November 2003. Thus, that information was not relevant to the ascertainment of debtors and creditors of the partnership as at 3 November 2003.
For all these reasons, the plaintiffs' claim for specific performance by the defendants of their obligation to procure a discharge of the overdraft account succeeds.
As a consequence, (bearing in mind the concession referred to in par [23] of these reasons) the defendants are also obliged to procure a discharge of the mortgage securing the obligations under the overdraft facility agreement.

The claim for $11,000

As earlier set out, there is no issue that there was a term of the dissolution agreement that Giuseppe receive $10,000 from each of the first defendants and the second plaintiffs and $1,000 from the defendants for the takings for 3 November 2003. The defendants admit that they have not paid the sum of $11,000 but say they were released from the obligation to pay as a result of what was said between Giuseppe and Mimi some time after 3 November 2003.
Counsel for the defendants accepted (correctly, in my opinion) that, absent a deed, a release of a contractual obligation would be effective only if it were supported by consideration (see, for example, Lewis v Cook (2000) 18 ACLC 490 at 494 ‑ 496 [26] ‑ [36]).
The defendant pleads that Giuseppe released the defendants from the obligations to pay the agreed sums in consideration of "the things which Mimi had done for him and for the partnership". That plea was supported by evidence from Mimi (in his statement at [71]) that his father had said that payment was not required "because of his appreciation for the things I had done for him and the work I had done for the partnership".
In my opinion, the matters pleaded and referred to in Mimi's evidence do not amount to consideration sufficient to give rise to a contract, and so do not give rise to a binding release. Counsel for the defendants submitted that the evidence should be understood as amounting to a "mutual release", arguing that the effect of what was said by Giuseppe was that Giuseppe was releasing Mimi in return for the release by Mimi of obligations owed by Giuseppe to him. I do not accept that argument, because there is no evidence that Giuseppe owed, even arguably, any obligation to Mimi. A statement by father to son of appreciation "for the things [the son] had done for [the father]" falls well short of providing any evidence of the existence or admission by the father of a legal obligation on the part of the father in respect of the (unidentified) things which the son had done for him.
Counsel for the defendants accepted that if there was no evidence that a legal obligation was owed or arguably owed by Giuseppe to Mimi then there was no consideration for the release.
For those reasons, the defendants' defence to this claim fails.
I turn to the defendants' counterclaims.

Defendants' counterclaims

I will deal first with those of the defendants' counterclaims which are based upon express or implied terms of the dissolution agreement of 3 November 2003. Then I will deal with claim A, which the plaintiffs say is barred by a term of the 3 November agreement. Finally, I will deal with the other counterclaims.

Claim E

This claim is based upon what is alleged by the defendants to be an express oral term of the agreement of 3 November 2003. In the light of the findings I have made as to what was said and agreed on 3 November 2003, this claim fails. I have found that there was no term to the effect alleged by the defendants. Rather, I have found that it was a term of the dissolution agreement that the parties agreed that, as between them, Giuseppe would be entitled to the benefit of the rent from the chemist shop at 91 Uduc Road. There was no term to the effect that that entitlement endured only as long as Giuseppe was alive.
Thus, the defendants' counterclaim E fails.
Counsel for the defendants argued that s 34 of the Property Law Act 1969 (WA) somehow affected counterclaim E. As I understood it, the contention was that part of the plaintiffs' reply gave rise to matters which engaged s 34 of the Property Law Act. While it is far from clear to me that that was so, the point does not arise because I have determined that the defendants' counterclaim falls at the first hurdle, namely in failing to prove the term of the agreement of 3 November relied upon by the defendants in support of their counterclaim.
The defendants did not make a claim to the rent based upon an allegation that Lot 20 was, as at 3 November 2003, partnership property and that any agreement to alter the parties' entitlements to share the rent was (somehow) rendered ineffectual by s 34 of the Property Law Act. Rather the claim was based upon an alleged express term of the agreement of 3 November. The defendants have failed to establish that the agreement included the term they alleged.
Further, counsel for the defendants invited the court to determine whether Lot 20 Uduc Road was partnership property. In the light of the findings which I have made, and the observations just made, there seems to me no utility in engaging in that question. The persons present at the meeting of 3 November included all of the partners and all of the named co‑owners of the land. I have found that it was a term of the agreement reached on 3 November 2003, for the dissolution of the partnership, the division of businesses and so on, that the rent received from the chemist shop would go to Giuseppe. Whether, on a detailed analysis, the property should have been taken to be an asset of the partnership, or owned in accordance with what is stated on the certificate of title, does not seem to me to be something which bears, in any significant way, upon the issue for my determination, namely whether the defendants have established the term that they rely upon for claim E. Whether the parties were making the agreement as regards the rent in their character as registered co‑owners of Lot 20, or as partners of Panetta Brothers, does not, on my analysis, shed much light on the critical issues for determination.
For these reasons Claim E of the counterclaim fails.

Claim B

This claim relies upon an implied term.
This is not a case where the parties have made a formal written contract. For that reason, the well‑known criteria for implication of a term stated in BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 do not apply. Rather, the test to be applied is whether the implication of the term is necessary for the reasonable or effective operation of a contract of that nature in the circumstances of the case: Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 422.
The defendants claim that there was an implied term of the agreement of 3 November 2003 that accounts would be prepared for the partnership for the period 1 July 2003 to 3 November 2003 and that any amounts found to be owing by the second plaintiffs to the defendants would be paid by the second plaintiffs and any amounts found to be owing by the defendants to the second plaintiffs would be paid by the defendants.
I do not accept that any such term is to be implied in the agreement of 3 November 2003.
I have made findings as to the express terms of the agreement. In substance I have found that the agreement contained all of the express terms pleaded by the plaintiffs and none of those additional or different terms pleaded by the defendants.
In my opinion the implication of the term relied upon by the defendants is not necessary for the reasonable or effective operation of a contract of the nature of the dissolution agreement of 3 November 2003 in the circumstances of the case. The following matters are relevant to that conclusion.
First, there is, in my opinion, absent a positive basis to justify the implication. Nothing in what was put forward by the defendants seems to me to make the implication necessary in the sense required.
Next, the implied term alleged by the defendants does not seem to me to be congruent with the operation of the express terms of the contract as regards Giuseppe. As at 3 November 2003, the partnership comprised five partners. It was, of course, an express term of the agreement of 3 November 2003 that, upon receipt of the stipulated sums of money, Giuseppe would have no further interest in the partnership. On the defendants' case, accounts would be drawn up for the partnership so as to determine the state of the capital accounts for each partner, including Giuseppe. Any credit or debit on Giuseppe's capital account would be distributed equally between each of the two couples comprising the rest of the partnership. The two couples would then account between each other for their respective debits or credits on their capital account.
The express terms of the agreement, as I have found them, do not, in my opinion, support a conclusion that such accounting would occur, so as to give rise to fundamentally different treatment of Giuseppe from the other partners. Rather, the more likely conclusion is that the rights and obligations of all five of the parties arising from the dissolution agreement were intended to be in satisfaction of and substitution for the rights and liabilities which otherwise would have existed between all of them as partners.
Further, given the express terms of the dissolution agreement, as regards the distribution of the two businesses to each of the two couples, the term sought to be implied by the defendants would give rise to, or be reasonably capable of giving rise to, substantial disputes, in circumstances where the apparent intention of the parties was to resolve all issues between them. For example, upon the implication of the term contended for by the defendants, there would be a question as to how the distribution of each of the two businesses to the respective couples was to be treated in drawing up the final accounts of the partnership. In particular, would any account be taken of goodwill in those businesses? If it were, then there would need to be an accounting, as between the couples, for the relative benefits of the goodwill of each of the businesses which was distributed to the particular couple.
In support of this claim the defendants relied upon the accounting evidence of Mr Napoli. That evidence did not involve taking any account of goodwill. The explanation for that was that goodwill was not shown in the accounts of Panetta Brothers. In turn, that was explained by Mr Brian Hotker, the managing director of Papalia Partners (the partnership's accountants); the accounts were based upon historical cost. Thus, there was no goodwill because the businesses had been originated by the family and not purchased from any other party. However, on the evidence of both accountants, whether goodwill was shown in the accounts would not control whether goodwill should be accounted for upon the distribution of the businesses. Rather, the evidence of both accountants was that, if goodwill did exist in one or both of the businesses, that would generally be taken into account in accounting for the distribution of such business to either of the couples.
The parties cannot, on the evidence, be taken to have contracted on the basis of a shared understanding that there was no goodwill in the businesses. Further, the evidence did not establish, one way or the other, whether either or both businesses had goodwill. So if the term alleged by the defendants were to be implied, I would, on the available material, be unable to be satisfied that the approach taken by Mr Napoli (in not taking into account any question of goodwill) was appropriate. Thus for that additional reason Claim B would have failed. Moreover, the uncertainties inherent in such questions appear to me strongly to militate against the implication of the term contended for by the defendant in the context of an agreement dissolving the partnership.
For these reasons Claim B fails.

Claim A

The defendants plead that in or about September 2002, Jimmy advised them that the sum of $80,000 to pay Hocart Lodge would be lent to Giuseppe by the other partners and repaid after Giuseppe's death from any refund by Hocart Lodge.
Evidence in support of that plea was contained in pars [10] ‑ [16] of Sylvia's witness statement and pars [8] ‑ [13] of Mimi's witness statement. Each witness gave evidence, in the witness statement, of conversations with Jimmy.
In his responsive witness statement Jimmy denied the conversations said to have occurred between him and each of Sylvia and Mimi. Jimmy was not cross‑examined in relation to these issues.
As a result of the cross‑examination of the defendants, I find that their evidence does not establish the agreement pleaded by the defendants. In cross‑examination (t/s 331) Sylvia said, in effect, that she had no conversation with Jimmy on this topic; Jimmy was not speaking to her in that period. Rather, her conversations were with Cosimo (who Jimmy "used" to relate things to them).
Cosimo was not cross‑examined on this topic.
When Mimi was cross‑examined on this topic (t/s 398) the content and manner of his responses were such that I am unable to act on his evidence in this regard.
In closing submissions, counsel for the defendants sought to meet the contention that the defendants' evidence did not support the claim by submitting that, on the evidence as to the meeting of 3 November 2003, the plaintiffs had there admitted the terms of the loan regarding Hocart Lodge. I do not accept that submission. I find that nothing was said at the meeting by the plaintiffs which constituted an unequivocal admission of the agreement, respecting the monies paid to Hocart Lodge, pleaded by the defendants.
For those reasons, Claim A fails.
Although, in the light of that finding, it is not necessary to do so, for the sake of completeness I would mention the question of the effect of the agreement of 3 November 2003 upon any obligation, on the part of Giuseppe's estate, to pass on to the partnership any refund obtained after the death of Giuseppe. It is true, as was emphasised on behalf of the defendants, that nobody at the meeting used words such as "release" or "forgive". Nonetheless, I incline to the view that, taking into account the facts I have found as to the course of the meeting, especially pars [173] ‑ [178] of these reasons, on a proper construction it was a term of the dissolution agreement that the stipulated sum payable to Giuseppe was in full and final satisfaction of all rights against and liabilities to the other four partners, including any liability he had as regards the Hocart Lodge money.

In his submissions that there was no release as regards the Hocart Lodge monies, counsel for the defendants pointed to the following matters:
(a)the accounts for the partnership for the period 1 July 2003 to 3 November 2003 made an adjustment from the 30 June 2003 accounts so as to provide an increase of $80,000 in the debt owed by Giuseppe, being the Hocart Lodge monies;
(b)the 3 November 2003 accounts were prepared after November 2003 and, in this respect, were prepared on Jimmy's instructions;
(c)Jimmy admitted in cross‑examination (t/s 198 ‑ 200) that the accounting treatment of the $80,000 was not consistent with there having been a waiver or release of the $80,000.
However, the evidence of Mr Hotker, who prepared the accounts, explains why the adjustment in respect of the $80,000 was made in the November 2003 accounts. He said that this was done at the suggestion of Mr Laurie Dimasi, a financial planner in Harvey who was assisting Giuseppe. The aim was to reduce Giuseppe's capital account in the partnership, which account was, if in credit, an asset for Centrelink purposes, so as to improve the prospect of Giuseppe obtaining a pension and associated benefits.
I accept that evidence. In that light there is, I find, no inconsistency of the kind argued by counsel for the defendants. The subsequent accounting treatment of the $80,000 does not, I find, bear upon the credibility of Jimmy's evidence on this topic. Insofar as I must construe the words used by the parties in their agreement, the balance of authority favours the view that the subsequent conduct of the parties or some of them is irrelevant to the process of construction, see for example, Posgold (Big Bell) Pty Ltd v Placer (WA) Pty Ltd (1999) 21 WAR 350 at [50] ‑ [51]; Brambles Holdings Ltd v Bathurst City Council (2001) 53 NSWLR 153 at [26].
I move to consider the remaining counterclaims, which do not relate to the agreement of 3 November 2003.

Claim C

As earlier explained, Claim C relates to monies the subject of cheques written on an account in the name of the two couples. Rent received from properties owned by the couples were paid into the account, which was known as the rent account.
At the commencement of the trial the defendants amended the defence, without opposition in this respect, to identify that the partners entitled to the benefit of the rent account were the two couples. Until then the pleading had stated that all five of the partners (ie Giuseppe as well as the two couples) were entitled to the benefit of the rent account.
By the opening of the defence case at the trial, the defendants' counterclaim related to six cheques written on the rent account by Jimmy. The six cheques were written during the period March to July 2003. They totalled $6,391.98. Each was written for a purpose which, on its face, related to Giuseppe. The purposes of the cheques included payments to Hocart Lodge, repairs and insurance for property of Giuseppe, and costs of having a power of attorney drawn for Giuseppe.
The defendants' pleaded case was that the second plaintiff withdrew each sum in question from the rent account and "used it for their own purposes".
The plaintiffs did not lead any evidence to establish that there was any agreement between the four partners permitting the use of moneys in the account for purposes other than expenses of the properties owned by the four partners, or expenses associated with the Panetta Brothers partnership.
Jimmy was cross‑examined, without objection, in relation to these payments, as well as other payments he made from the rent account. It was put to him that each of them was not for a business expense, to which he agreed.
Counsel for the plaintiffs argued, in closing submissions, that the claim should fail because no moneys were shown to have been paid for Jimmy and Sylvia's own purposes.
In response to that submission the defendants moved to amend the pleading in respect to Claim C so as to replace the words "for their own purposes" with "for purposes not related to that partnership and paid the amounts to or for the benefit of Giuseppe". However, I accept the alternative submission of counsel for the defendants that no amendment is necessary. In context, "for their own purposes" can be read as meaning for purposes not related to the partnership. That is consistent with how Jimmy was cross‑examined.
By the time the trial commenced, the rent account was said to be an asset of four partners. Giuseppe was not one of them. In the context of a partnership between the two couples, the plea of a payment for the second plaintiffs' "own purposes" seems to me broad enough to encompass any payment that was not for a purpose of the partners as a whole. While the pleading might have been more clearly expressed, given the tenor of the cross‑examination of Jimmy and the contents of schedule C, the defendants' claim in respect of payments in schedule C was, in my opinion, sufficiently plain.
On the evidence there was, in effect, no dispute that the payments were for a purpose not for the benefit of the partnership.
For these reasons, claim C succeeds.

Claim D

Claim D relates to moneys paid for the supply by the second plaintiffs of eggs to a business known as Staleys. The eggs were supplied for a total price of about $4,800 on which a profit of about $980 was made. That profit is claimed by the defendants under Claim D.
In their defence to the counterclaim, the plaintiffs say that an oral agreement was made between Jimmy, on behalf of Jimmy and Carmel, and Mimi, on behalf of Mimi and Sylvia, by which it was agreed that the second plaintiffs would supply eggs to Staleys.
In their reply to the defence to counterclaim the defendants plead that that agreement was ineffective because the consent of all partners to the earning of profit by the second plaintiffs had not been obtained as was said to be required by s 41 of the Partnership Act 1895 (WA).
In support of their defence to this counterclaim the second plaintiffs led evidence from Jimmy. In [272] of his witness statement he said that in around October 2003 he had a conversation with Mimi concerning Staleys in which he said that he would "keep the business of Staleys", to which Mimi agreed. That evidence, as far as it goes, was not challenged in cross‑examination, although it was put to Jimmy that he had not recorded in his statement a conversation with his father Giuseppe, with Sylvia or with his wife Carmel. Jimmy agreed with that proposition.
The defendants submit that the agreement relied upon by the plaintiffs is ineffectual because the consent of all parties was not obtained.
I do not accept that submission. The parties to the conversation were Jimmy and Mimi. It is pleaded that each acted on behalf of himself and his wife. While there was no direct evidence as to specific authority in this regard, I am satisfied on the whole of the evidence that in relation to partnership, investment property and other business matters, each of the husbands routinely spoke on the joint behalf of himself and his wife, and that all parties acted upon that basis.
There is no evidence of any specific and express authority from Giuseppe in relation to this matter. However, the evidence as a whole seems to me to support the conclusion that, by October 2003, Giuseppe had withdrawn from any active involvement in partnership business, so that he was content for matters to be determined by and between Jimmy and Mimi.
Thus, on my reading of all of the evidence as to the way in which the business of the partnership and the related property investments was conducted, an agreement between Jimmy and Mimi in relation to a topic was, in effect, an agreement of all partners.
I accept Jimmy's evidence that there was an agreement between him and Mimi to the effect of that Jimmy (and Carmel) could keep the business of supplying eggs to Staleys.
For those reasons, Claim D fails.

Conclusion

By way of summary of my major conclusions, I have found that:
(1)I prefer the evidence of the plaintiffs and their witnesses over the evidence of the defendants' witnesses;
(2)The dissolution agreement of 3 November 2003 contained the express terms pleaded by the plaintiffs and did not include the additional or different express terms pleaded by the defendants;
(3)In consequence, the plaintiffs' primary claims for specific performance succeeds;
(4)The defendants' defence to the claims for $10,000 and $1,000 fails because the release by Giuseppe of their liability to pay those sums was not supported by consideration;
(5)Counterclaim A fails because:
(a)the defendants did not prove the agreement said to have been made with the defendants by Jimmy;
(b)anyway the claim would have been extinguished by operation of the dissolution agreement of 3 November 2003;
(6)Counterclaim B fails because the agreement of 3 November 2003 did not contain the implied term upon which the claim is based;
(7)Counterclaim C succeeds because:
(a)it is open on the pleadings, taking into account the course of the trial; and
(b)it is established by the evidence;
(8)Counterclaim D fails because of the agreement between Jimmy and Mimi;
(9)Counterclaim E fails because the agreement of 3 November 2003 did not contain the express term upon which the claim was based.
I will hear from the parties as to the orders appropriate to give effect to these reasons and as to costs.