Jack Marzec v Waclaw Marian (Willy) Lysiak

At 1.45am New York time on 15 September 2008, the famous American investment house Lehman Brothers filed for bankruptcy. Although what followed is now known as the Global Financial Crisis or GFC, its consequences were felt by individuals. These proceedings are one example of those consequences. Without disrespect, I will refer to the parties and others by their given names. References to “$” means Australian dollars unless otherwise stated.

As part of its response to the GFC, on 3 February 2009 the Australian Government announced a national economic stimulus package which included the Homeowner Insulation Program (the “HIP”). At that time the plaintiff (Jack), the first defendant (Waclaw known as Willy) and the second defendant, Willy’s son Julius, were tradesmen of Polish origin working in Sydney. In August 2009 they became involved (to use a neutral word) in a business venture which sought to take advantage of the HIP. That venture operated from premises in Kurnell owned by Julius (the “Kurnell property”). Unfortunately for them, the Government terminated the HIP on 19 February 2010. Their involvement in the HIP was not a financial success.

Jack alleges that his involvement with Willy and Julius in the HIP was a partnership at will which involved three activities:

Jack seeks an accounting and other monetary relief from Willy and Julius because Jack says they are indebted to him for substantial sums of money arising from the alleged partnership and related financial transactions.

Willy admits there was a tripartite partnership in relation to the insulation and solar panels. However, he vehemently denies that Jack has any interest in the lifters. Julius denies being a partner at all.

It is not possible for these reasons to give a final monetary answer as to what Jack or the others may be entitled. At the Court’s direction the parties went some way towards a common position as to what a final accounting might look like in a number of permutations depending upon the Court’s findings on the critical issues. These reasons determine the fundamental question of the existence, membership and business of any partnership and then address several consequential issues to assist the parties in carrying out the accounting. How any residual disputes are to be resolved is considered at the end.

The Court’s main conclusions are:

Jack commenced the proceedings by statement of claim filed on 6 May 2013. Willy was served. Paragraph 1 of the statement of claim pleaded:

On 31 May 2013 the Court made orders for substituted service against Julius.

On 28 June 2013 Julius, who appeared for himself, filed a handwritten defence which simply stated “Not guilty”. Jack agreed to Julius having an opportunity to file an amended defence.

On 23 August 2013 Julius filed a further defence (described as a “defence” rather than an “amended defence”). Although the terms of the defence suggest that it had been prepared with informal legal assistance, Julius continued to appear for himself.

Paragraph 1 of the defence admitted the three areas of business alleged by Jack and that the parties “did agree to carry on a business”. However, it went on to plead that Julius “does not admit the parties agreed to carry on the said business as a partnership”.

On 10 October 2013 Jack obtained default judgment against Willy. Although the affidavit in support of Jack’s application said Willy owed Jack $194,944.25, judgment was only entered for $58,086.16 inclusive of costs.

On 29 November 2013 the Registrar fixed the proceedings before me for hearing on 29 and 30 April 2014.

On 7 March 2014 Willy filed a notice of motion to have the default judgment against him set aside. Willy had retained Mr P Tiernan, solicitor, to appear for him in relation to the proceedings.

Although I was the trial judge, it was only by coincidence that Willy’s motion to set aside the default judgment came before me sitting as Applications Judge on 28 March 2014. As is to be expected on an application of that kind, Willy provided the form of defence on which he proposed to rely if the default judgment was set aside.

Paragraph 1 of that defence (which was ultimately filed as Willy’s defence) pleaded:

Willy also admitted the allegation that the partnership was a partnership at will. However, these admissions are not quite as determinative as they might first appear because Willy’s defence then goes on to deny all of the specific terms of the partnership alleged by Jack, including that the partners would share the profits and bear the losses equally and that they would contribute to the capital of the partnership in equal shares. Therefore, Willy’s formal admission of a partnership does not relieve the Court from having to determine what the terms of any partnership were.

The Court acceded to Willy’s application to set aside the default judgment. Directions were made to prepare the matter for hearing, including fixing 1 May 2014 as an additional hearing date.

The hearing commenced before me on 30 April 2014. However, at the hearing Mr Tiernan was now instructed to appear for Julius. Willy appeared for himself. Mr A. Macauley of Counsel appeared for Jack.

After two days of hearing it became apparent that the matter was not going to be completed within the three days allocated. I made directions including for the parties to attempt to agree on the details of an accounting assuming some permutation of the alleged partnership was established and for the proceedings to be referred to court-annexed mediation. If the mediation failed, the proceedings were fixed for further hearing on 29 September to 1 October 2014.

The mediation was unsuccessful and the hearing continued on the days fixed.

Insofar as the accounting was concerned, shortly before the second round of the hearing Mr Macauley produced a detailed set of submissions setting out an accounting of the relationship between the parties in a number of scenarios which depended upon the Court’s fundamental findings in relation to the existence, membership and business of any partnership. Mr Tiernan responded by a letter which did not find its way into evidence but which apparently agreed with some aspects of Mr Macauley’s proposed accounting and disputed others.

At the conclusion of the hearing, and faced with further detailed written submissions that had been provided by Mr Macauley, Mr Tiernan asked for an opportunity to provide written final submissions on behalf of Julius. In accordance with directions I then made, Mr Tiernan provided detailed written closing submissions on 15 October 2014. Mr Macauley’s further closing submissions in reply on behalf of Jack were received on 28 October 2014.

The task of fact finding in these proceedings was complicated by the now deep bitterness between Jack, on the one hand, and Willy and Julius, on the other hand. Whatever the state of their feelings for each other in 2009 and 2010, by the time of the hearing it was apparent that all they now shared were feelings of anger, antipathy and indignation at having to sue or being sued (as the case may be). There was patently no love lost between them.

I have no doubt that, despite his attempts in the witness box to appear to be calm and in control, Jack felt just as badly towards Willy and Julius as they did to him. I formed the view of Jack that he was coldly determined to pursue the defendants, and that determination coloured his evidence. I consider that he was prone to exaggerated reconstruction. At least some parts of his claim (for example, the cash advances dealt with in paragraphs [172] to [178] below) left the Court with the strong impression that they were an opportunistic attempt to increase the defendants’ potential liability to him.

Furthermore, despite Jack’s assertions of the accuracy of his memory, its fallibility (and hence real potential for unreliability) was demonstrated by Jack’s firm assertion in cross-examination that his company, Jack Marzec Building Services Pty Ltd (“JMBS”), received only one compensation payment from the Government for the closure of the HIP. When presented with further bank records Jack had to concede there were two such payments for which he would have to account.

While Willy spoke and understood English well enough not to require an interpreter, he was nevertheless clearly not fluent in either speaking or written comprehension. Furthermore, having gone to the trouble of setting aside the default judgment with Mr Tiernan’s assistance, Willy represented himself at the hearing. Burdened by those language difficulties, in both his evidence and submissions he vacillated between anger at Jack and careless indifference to the outcome because he said he had nothing and was a pensioner.

Although ultimately represented by Mr Tiernan at the hearing, prior to then Julius had been unrepresented and had prepared most of his evidence himself in a way which did not meet the detail of Jack’s case. Julius gave me the strong impression that he was “in denial” about the proceedings. While his evidence began with the premise that Jack’s various allegations were all untrue, I did not form the view that Julius was a dishonest witness. When confronted with material he candidly made appropriate concessions. However, I came to the conclusion that he hadn’t really turned his mind to the details of the case against him because he could never overcome his incredulity that he was being sued.

In Evans v Braddock [2015] NSWSC 249 Hallen J conveniently gathered together a number of authorities which are relevant to the fact finding exercise in the case at bar. I gratefully adopt his Honour’s summary (from which I have omitted authorities dealing with the evidence of dead people and where many years have passed):

Because of the views which I formed about each of the parties as set out in the preceding paragraphs derived from both their affidavit evidence and observing them in the witness box, I have come to the view that each of them, for different reasons, was not a reliable witness. This unreliability included both a careless disregard for the truth unless confronted with clear, contemporaneous documentary evidence or simply having convinced themselves of their self-interested reconstruction of events.

Accordingly, and bearing in mind the authorities referred to in paragraph [30] above, I have approached the evidence of each of the parties with an equal disinclination to accept their evidence unless there was general agreement between the relevant parties about a particular fact, the fact was in accord with the inherent likelihood of the situation, was supported by what I could be satisfied were reliable, contemporaneous written records or was based upon an admission against interest. However, where such collateral assistance is unavailable and it is necessary to prefer the evidence of one protagonist over the others, I have preferred the evidence of Julius because he seemed to me to be the least unreliable of the three when he had actually turned his mind to the evidence.

I should also record that the vitriol between the parties led to much time being spent on three matters which ultimately proved to be forensic distractions.

First, in an effort to discredit Jack, Willy and Julius sought to establish that, contrary to Jack’s assertions, Jack’s marriage to Ms Lida Aftahi was a sham and that Mr Marzec was in fact in some kind of common law relationship with Lida’s sister, Ms Linda Aftahi. Because of the view I have taken about the parties’ credibility quite apart from this question, it is unnecessary for me to determine this issue. If it were necessary to make a finding, I am not satisfied on the balance of probabilities (taking into account the seriousness of the allegation: s 140(2) of the Evidence Act, 1995 (NSW)) of the matters alleged by Willy and Julius about Jack and the Aftahi sisters. In any event, even if the allegations had been made out I would regard them as being so peripheral to the matters before the Court as to be of no assistance in the fact finding exercise.

A second matter was allegations by Jack that Willy and Julius collected cash from customers in relation to jobs for which they failed to account. One such allegation was that Julius received $10,000 in cash from a homeowner in Dural, Shane Loumbos. Jack called Mr Lucas to say he (Mr Lucas) had seen this occur. Julius subsequently called Mr Loumbos, who said he (Mr Loumbos) had paid the cash to Jack and that Jack had introduced Linda to him (Mr Loumbos) as “my wife”. Jack denied Mr Loumbos’ evidence. This tit for tat completely contradictory evidence makes it difficult for the Court to make any rationally defensible finding and it is not necessary for the Court to do so because of the Court’s approach to allegations of cash receipts generally (as to which see paragraphs [46] and [47] below). Rather, it merely confirms the Court’s conclusion (see paragraphs [31] and [32] above) as to its approach to the evidence of the parties and of a similar view of Linda’s evidence who, whatever else may be the case, was clearly not just Jack’s sister-in-law but also a very close friend.

The third distraction concerned Jack’s allegation that the terms of any partnership had been reduced to writing and signed by him, Willy and Julius at a meeting at Linda’s unit on 28 September 2009. Jack further alleged that Willy and Julius had the only signed copy of the document. Willy and Julius hotly denied these allegations. Jack ultimately abandoned reliance on any alleged written agreement and confined his case to a partnership under the general law including the Partnership Act, 1892 (NSW) (the “Act”).

However, in labelling this third matter a “distraction”, the Court nevertheless accepts Mr Tiernan’s submission that Jack’s abandonment of this part of his case does not mean it should be overlooked in assessing Jack’s credit. Mr Tiernan submitted the abandonment was a tactical decision to downplay the difficulties with Jack’s evidence on this point. As I have noted in paragraph [102] below, there is a significant inconsistency between Jack’s diary, which suggests Jack was at the Kurnell property all day, and Jack and Linda’s evidence of a lengthy meeting at Linda’s unit with Willy and Julius which began at midday and ended with dinner. That inconsistency again fortifies me in approaching Jack (and Linda’s) evidence and his diary (see further paragraph [44] below) with caution.

As part of his evidence, Jack adduced numerous bank and credit card statements and other third party records. Unfortunately for everybody concerned, those records were insufficient to give a full picture of the financial history of the parties’ activities. Jack’s case also depended upon three different sets of records which he had produced himself.

The first records are what Jack referred to as the “Insulation Business Ledger” (the “IBL”). Jack’s evidence was that he maintained the IBL on an almost daily basis recording the income earned from insulation work. It records 49 jobs between 30 November 2009 and 19 February 2010, setting out receipt of the Government insulation subsidy for each such job as well as cash payments recorded as being received by one of Jack, Willy or Julius as the case may be. While there does not appear to be a dispute between the parties about the jobs listed, Willy and Julius dispute the attribution of cash receipts by them.

The second set of records is what Jack referred to as his “Bank Transaction Logbook” (the “Logbook”). Jack’s evidence was that he created the Logbook in or around July 2010 on the advice of his solicitor covering the period August 2009 to the end of June 2010 and setting out:

The third record relied upon by Jack is what he described as his “personal diary”. Jack’s affidavit evidence was that he recorded events in his personal diary throughout each day, often recording things on multiple occasions during any one day. He said that he used it to record:

Jack elaborated further on the diary in cross-examination. The effect of that evidence was that in many ways the diary was more of a note book than a diary. For example, he did not record appointments in the diary next to the time for which those appointments had been fixed. Rather, he made notes starting at the top of the page of the relevant day recording, for example, an appointment in advance. However, he also used the diary to record quotations he had given as well as work done and the payment expected to be received.

Jack’s principal affidavit in the proceedings had annexed to it photocopies of his diary from 18 August 2009 to 30 June 2010. While the original diaries were not tendered into evidence, the Court did have an opportunity to examine one of the originals during the course of the hearing.

In many instances, Jack’s diary was the only apparently contemporaneous record recording the receipt or application of particular funds. However, the Court is not satisfied that the personal diary is a complete or reliable contemporaneous record of the matters which it purports to record, for these reasons:

Mr Tiernan submitted the Court should find the entries in the diary were fabrications, but he did not put this to Jack in cross-examination. However, the Court does not need to go so far as to find that all of the entries were fabrications. Having carefully reviewed the diaries in evidence in their totality, the Court has no doubt that some of the entries are true, contemporaneous entries made on the day on which they appear in the diaries, but it cannot say which ones. However, considering the appearance of the diaries in their totality for the period for which they are in evidence and taking into account what, at the very least, are odd or inexplicable inconsistencies with other events proven in the proceedings of the kind referred to in paragraph [44] above, the Court is not satisfied on the balance of probabilities that every entry is reliable. Jack sought to deploy the diary as a contemporaneous record, necessarily self-serving, in support of his case. The Court’s lack of satisfaction at the reliability of each and every entry in the diary means that the Court does not consider it a reliable source of assistance in its fact finding exercise even on the balance of probabilities.

One significant part of the dispute between the parties arises from allegations made between them about the payment or receipt of sums of money in cash. The Court has already referred to one aspect of this in paragraph [35] above.

These allegations go both ways. For example, Jack alleges that the $1,000 which was undoubtedly withdrawn from JMBS’s CBA account on 28 August 2009 was paid in cash to Julius. Julius denies this. By the same token, Julius alleges that the $10,000 which was undoubtedly withdrawn from Julius’ account on 31 August 2009 was paid in cash to Jack at the latter’s request before Jack went on holiday to New Zealand. Jack denies this. In these cases, and all others like them in these proceedings, the Court is not satisfied on the balance of probabilities that the cash was paid as alleged. The Court will only find (or allow for the purpose of any accounting) the receipt of cash payments where such receipt is supported by the recipient’s bank statements or some other reliable, contemporaneous record. This approach has particular application in the Court’s conclusions concerning the multiple $1,000 cash loans which Jack alleges he advanced to Willy and Julius (see paragraphs [172] to [179] below).

In the following paragraphs I set out the Court’s findings of fact based upon matters that were supported by reliable, contemporaneous records such as bank statements, or were otherwise agreed or were obvious. I also record some of the parties’ assertions about those facts.

Jack is a builder. Willy and Julius are electricians. During the period relevant to these proceedings Jack lived in Nowra but often stayed in Sydney at Ms Lida Aftahi’s South Coogee unit. Willy lived in Woolooware and Julius in Miranda. Jack also had a unit in Maroubra (see paragraph [53] below) but this was let out to a friend.

Willy and Jack met in the mid-1980s when they both worked for the company known as “Spinners”. Willy recognised that Jack was a fellow Pole. Willy and Jack usually spoke to each other in Polish. Julius first met Jack when Julius was an apprentice electrician in about 1993. He was introduced to Jack by Willy. Julius also spoke Polish with Jack as that was the latter’s preferred language in which to communicate.

On 4 January 2000 Lysiak Contracting Pty Ltd (“Lysiak Contracting”) was registered. Willy, Julius and another family member were equal shareholders. Willy was a director from 4 January 2000 to 3 July 2011. Julius was a director from 27 August 2007 to 14 June 2011.

Julius and his father operated Lysiak Contracting from the Kurnell property.

On 30 November 2001 Jack registered JMBS. He was its sole shareholder and director. While its registered office was in Nowra, its principal place of business was given as a unit in McKeon St, Maroubra.

The Court’s findings as to the origins of the business relationship between the parties in August 2009 are dealt with in paragraphs [123] to [144] below.

On 21 August 2009 Jack withdrew $1,000 from JMBS’s account with the Commonwealth Bank (“CBA”).

On 21 August 2009 Julius telephoned and then emailed a supplier of insulation batts in China (“Xiamen Sinroad”).

On 22 August 2009 Julius forwarded to Jack the email he (Julius) had received from Xiamen Sinroad with details of the batts and a reference to a quotation that was not in evidence.

On 24 August 2009 Jack says he withdrew $56,000 from his home loan account. JMBS’s CBA bank statement records a cash deposit of $56,000 into the account followed by a $5,000 withdrawal which Jack says that he gave in cash to Julius and it is so recorded in his diary.

On 28 August 2009 Jack says that he gave Julius a further $1,000 in cash that he withdrew from JMBS’s CBA account. While the withdrawal appears in JMBS’s CBA bank statement, Jack’s diary for that day does not record that payment. However, it does record and there is independent evidence from the JMBS’s CBA bank statement that Jack transferred $55,028 from JMBS’s account to “I & J Lysiak”, being an account operated by Julius and Julius’ wife. Julius’ bank statement records receipt of $55,000 from JMBS on that day. This was to fund the purchase of home insulation.

On 31 August 2009 there was a $10,000 cash withdrawal from Julius’ account. Julius says this was at Jack’s request and that he gave the money to Jack.

On 1 September 2009 Jack went on holidays to New Zealand for about a week.

A different Chinese supplier (“Jiangsu Sainty”) provided a proforma invoice dated 1 September 2009 (made out to the Kurnell property but not addressed to any person or company) for two sizes of batts for US$43,963.89. The payment terms were “30T T/T in advance, 70% against sight of original BOL copy”. Thirty per cent of the quoted sum was US$13,189.16.

By Westpac telegraphic transfer dated 3 September 2009, US$13,189.16 (which, with bank fees, totalled $16,012.09) was transferred to Jiangsu Sainty. The purchaser of the transfer was Lysiak Contracting. The transfer records it was “for 6 containers of glasswool insulation batts – 30 per/cent T/T in advance”. On the same day $17,000 was withdrawn from Julius’ account. $16,012.09 of those funds was used to purchase the telegraphic transfer.

On 29 September 2009 Willy and Julius attended Jack’s wedding to Lida. The date of the wedding is not recorded in Jack’s diary. Willy gave the bride away and Julius was best man. They all had drinks after the wedding at South Sydney Juniors.

In or around October 2009 Jack added Julius and Willy as signatories to JMBS’s CBA account. Each of Julius and Willy was provided with debit cards to access that account.

Between August 2009 and June 2010 Jack also used his Westpac credit card to meet partnership expenses. He also gave Willy and Julius access to that credit card.

On 8 October 2009 Jack opened an account for JMBS with ANZ by an initial deposit of $50,050.00. The source of those funds was Lida.

On 10 October 2009 Jiangsu Sainty issued an invoice to Lysiak Contracting for 700 packages of “glasswool” for US$17,858.80.

On 13 October 2009 $13,950 was withdrawn from Julius’ account.

By ANZ telegraphic transfer dated 23 October 2009, US$11,168.77 (which, with bank fees, totalled $12,273.09) was transferred to Jiangsu Sainty. The applicant for the transfer was Jack and the funds came from the JMBS’s ANZ account. A bill of lading of the same day refers to a cargo of 700 packages of “glasswool” being shipped from Jiangsu Sainty to Lysiak Contracting.

On 26 October 2009 Jiangsu Sainty issued an invoice to Lysiak Contracting for 1680 packages of “glasswool” for US$31,910.43.

By ANZ telegraphic transfer dated 29 October 2009, US$11,168.65 (which, with bank fees, totalled $12,649.09) was transferred to Jiangsu Sainty. The applicant for the transfer was Jack and the funds came from JMBS’s ANZ account.

Sometime in November 2009 Jack telephoned a longstanding acquaintance from the building industry, Clint Lucas. Jack offered Mr Lucas a job which Mr Lucas described in his affidavit as “an installation business that [Jack] had established with the Defendants known as Jack Marzec Building Services”. The offer was conditional on Mr Lucas obtaining certain accreditation and licences, which he did.

On 6 November 2009 the business name “Get Solar Australia” was registered. The registration certificate records Jack, Willy and Julius as the proprietors and the principal place of business as the Kurnell property. The other place of business recorded is Jack’s Nowra address.

A bill of lading for 1680 packages of “glasswool” refers to the consignment shipping from China on 9 November 2009.

On 10 November 2009 a bank account was established with ANZ under the name “Get Solar Australia”. The statements for that account describe the proprietors as “[Jack, Julius and Willy] t/as Get Solar Australia”. On the same day Julius obtained the requisite government accreditation to install solar panels.

The 700 packages of insulation arrived in Sydney on 24 November 2009 and were delivered to Lysiak Contracting at the Kurnell property. JMBS paid the customs broker’s invoice of $12,250.14 by a cheque on 1 December 2009.

The insulation business began operating at the end of November or on 1 December 2009. The installation of insulation was mostly done by Jack and Mr Lucas, the latter being paid as a contractor of JMBS.

The 1680 packages of insulation arrived in Sydney on 16 December 2009 and were delivered to Lysiak Contracting at the Kurnell property. The customs broker’s invoice dated 17 December 2009 was for $22,223.53. JMBS paid the broker $23,805.06 by a cheque cleared on 3 February 2010, although the evidence does not explain the discrepancy.

In late 2009 Willy went to China to investigate potential insulation suppliers.

On 29 December 2009 Julius took out a $30,000 personal loan.

On 19 February 2010 the Government terminated the HIP. In cross-examination Jack described the financial position of the venture at that time as “very bad, no income, everything been rely on my credit, on any, let’s say, cash, on borrowings and so on and, basically, I only supply every money”.

On 7 June 2010 the Commonwealth wrote to “Mr Julius Lysiak, Jack Marzec Building Service Pty Ltd” acknowledging “your organisation’s application under the Insulation Industry Assistance Package”.

On 24 June 2010 there was a meeting between Jack, Willy and Julius and Jack’s solicitor in relation to the debt which Jack alleged Willy and Julius owed him from the failed venture.

On 29 June 2010 Jack opened a new bank account for JMBS (the “New Account”) to which Willy and Julius did not have access because, as Jack acknowledged in cross-examination, by then the Government had terminated the HIP and ‘Get Solar Australia’ had ceased to operate. It is clear that whatever the business arrangements had been between the parties, they were now at an end.

On 12 July 2010 the Commonwealth paid JMBS $12,469.88 under the assistance package.

On 20 July 2010 the Commonwealth wrote to “Mr Jack Lysiak, Jack Marzec Building Service Pty Ltd” acknowledging “your organisation’s application under the Insulation Industry Assistance Package”.

On 4 August 2010 the Commonwealth paid JMBS $10,599.44 into the New Account under the assistance package.

On 10 April 2013 Jack (presumably acting on legal advice prior to commencing these proceedings) gave Willy and Julius this notice:

Jack commenced these proceedings by statement of claim filed on 6 May 2013.

As has been noted (see paragraph [17] above), Willy admits that there was a tripartite partnership (but not its terms) in relation to the insulation and the solar panels, so that the critical question becomes the legal characterisation of Julius’ role. Willy’s admission is not binding against Julius. Nor does it assist in the drawing of any inference that Julius was a partner. The existence, membership and business of an alleged partnership is to be determined from the objective facts (see paragraph [145] below). Willy’s admission, which clearly reflects his subjective state of mind as he made clear during the course of his evidence, does not assist.

As appears from paragraph [8] above, Jack’s case was that the parties agreed to commence and carry on the alleged partnership between August and September 2009. This was particularised as an oral agreement at meetings between them at South Sydney Juniors on or around 20 August 2009 and at Ms Linda Aftahi’s premises at South Coogee in or around September 2009.

It is necessary to consider each of the protagonist’s evidence on these matters.

Jack’s evidence was that on or around 15 or 16 August 2009 Willy rang Jack and invited him to attend a meeting to discuss a business proposition. That meeting occurred on Wednesday, 19 August 2009 when Jack says he met Willy and Julius at South Sydney Juniors for lunch. The only entry in Jack’s diary for 19 August 2009 is “DISCUS BUSINES WITH WILLY” (sic). Jack says he brought along his wife, Lida Aftahi, and her sister, Linda Aftahi to the meeting. Willy, Julius and Jack sat at a separate table from Lida and Linda during the course of lunch to discuss Willy’s business proposal.

In his principal affidavit Jack swore that a conversation occurred to the following effect:

According to Jack, there was then a further meeting the next day (Thursday, 20 August 2009) at the Kurnell property. That meeting was with both Willy and Julius. Jack’s diary only records:

According to Jack, a conversation to the following effect took place:

Jack accepted in cross-examination that by the end of both the first and second meetings there had been no discussion about how any profits were to be divided.

Jack says that from the date of that second meeting, he, Willy and Julius commenced on starting up the insulation business, as well as the solar panel installation and the lifter business.

Finally, Jack relied on his evidence that there was another meeting on or around 28 September 2009 which he had with Willy and Julius at Linda’s unit in South Coogee. Jack says that also present at that meeting was Lida, who did not speak English well so that Linda translated for her into Farsi.

Jack’s account is as follows:

At this point two observations should be made. First, Jack’s diary says nothing about this meeting. Curiously, it contains an entry for that day (which is repeated in identical form over many days in the diary) which says “1 DAY FACTORY”. Second, as noted in paragraph [36] above, Jack ultimately abandoned any reliance on a case which included a written version of the alleged partnership agreement.

Linda gave evidence to the effect that she first met Willy and Julius around August 2009 at South Sydney Juniors and that she recalled Jack, Willy and Julius “holding a private conversation while my sister (Lida) and I talked”. In cross-examination she gave further evidence of a conversation she had with Julius on that occasion in the Club’s smoking area.

Linda also gave evidence about what she described as a long meeting being held at her home in South Coogee on or about 28 September 2009 at which she and Lida were present. She said that she recalled translating into Farsi for Lida what was being said during the meeting because Lida did not speak English well.

Lida was not called to give evidence, although Jack gave evidence that they were still married and that she could have come to Court if required. Later evidence suggested she was in Iran at the time of the hearing. As the issues have fallen out she was not an essential witness and the Court declines to draw the Jones v Dunkel inference sought by Julius.

Jack also called a friend of his, Isaias Valencia. Mr Valencia was not required for cross-examination.

Mr Valencia said that he had met Willy on at least four occasions, each time in the presence of Jack. One of those occasions, in around August 2009 or September 2009, was at South Sydney Juniors where he saw Jack and Willy talking at a table.

Finally, Mr Valencia deposed that in or about September or October 2009 he had a conversation with Willy to the following effect:

Mr Valencia’s evidence makes no mention of every seeing Julius. Nor does the conversation deposed to by Mr Valencia with Willy make any reference to Julius.

Jack also called another friend, Seema Doost.

Ms Doost deposed that she had met Willy on a few occasions through Jack. One such occasion was when she and her husband met Jack and his family for dinner and coffee at South Sydney Juniors when Willy was also present.

Ms Doost also deposed to conversations with Lida and Willy in September or October 2009. The conversation with Lida was said to be to the following effect:

The conversation Ms Doost said she had with Willy was to the effect that Willy said to her “If Lida wants to be a partner in the business with Jack, Julius and myself then she will need to learn English.”

Ms Doost was cross-examined. She confirmed that she had never met or seen Julius before and that when she had met Willy with Jack “they said: “We’re going to be partner together””.

In relation to those conversations the Court notes that in the first of them there is no mention of either Julius or the lifters, whereas in the second while Julius is mentioned as a partner, the extent of the business referred to is not specified. While the Court has concluded (see paragraph [156] below) that Jack, Willy and Julius were partners in the solar panel business, the conversation deposed to by Ms Doost with Willy does not assist in deciding whether the tripartite partnership went beyond the solar panel business. It should also be recalled that Ms Doost speaks of a dinner when Jack says the South Sydney Juniors meeting was a lunch.

Willy’s evidence did not deal directly with the detail of Jack’s evidence. However, notwithstanding Willy’s formal admission of a tripartite partnership in relation to insulation and solar panels, his affidavit evidence made no reference to Julius being a partner in any business. Willy deposed that his business relationship with Jack came to an end in May 2010 when he had a confrontation with Jack because Jack “wanted money for my light-lifters, which is a service I designed and made which lifted solar panels onto a roof”.

Because of both his language difficulties and his belligerent attitude to Jack, much of Willy’s evidence in cross-examination and his oral submissions were difficult to follow. However, some matters were reasonably clear:

Julius steadfastly denied being in attendance at South Sydney Juniors on 19 August 2009. He also denied Jack’s version of the meeting at the Kurnell property which Jack said had occurred the next day. Finally, Julius denied being at any meeting at Linda’s unit on 28 September 2009 or that any written partnership agreement every existed.

Julius admitted being put in funds by Jack in late August 2009 to purchase insulation from China. However, he said that he had done so at Jack’s request because Jack had told him that he was about to go on holidays to New Zealand and would be unable to complete the purchase while he was away.

In relation to the establishment of the partnership, Julius’ evidence was that in 2009 Willy told Julius that Jack was coming over to the Kurnell property to discuss Jack working together with Willy and Julius, Julius’ evidence was that the following occurred in about August 2009:

Under cross-examination Julius maintained his position that the arrangement in relation to the insulation business was not for profits to be split equally but for each of the participants to be remunerated by reference to what work each of them did. While admitting he had received $55,000 from Jack for the purchase of the insulation, Julius’ evidence was that, after returning $10,000 to Jack at the latter’s request just before his New Zealand holiday, Jack had told him to keep any unexpended balance as an advance against what work Julius might do in the future.

In relation to the solar panel business, Julius also said there was no arrangement for equally sharing profits, but that profits would have been divided in accordance with each parties’ contribution of effort. But he also said he felt he was entitled to one-third of the profits. As for the lifters, Julius maintained in cross-examination that while his father had told him that Jack had provided some gratuitous labour over a couple of days in relation to the lifters, the lifter business was Lysiak Contracting’s alone.

As appears from the recitation of the parties’ various versions of events, the events surrounding the formation of any business relationships ultimately fall to be decided by the Court accepting the word of one party against another. Unimpeachable contemporaneous written material and completely independent witnesses are in short supply. Both Mr Macauley and Mr Tiernan provided lengthy and detailed submissions pointing to every conceivable circumstance, some substantive and others (with no disrespect intended) more in the nature of straws in the wind, as to why their respective client’s version of events should be preferred. Not without difficulty, the Court has ultimately come to firm conclusions on the essential findings of fact. The persuasive reasons for those findings are set out in what follows. While I have carefully and anxiously considered all of the detailed written submissions, no disrespect is intended to the industry of the legal representatives by my not setting out and determining every consideration upon which they relied. Apart from anything else, it would make what are already lengthy reasons even longer. The Court’s findings in relation to the formation of the alleged partnership are as follows.

There was a meeting between Jack and Willy at South Sydney Juniors on 19 August 2009. Julius was not present. Neither Mr Valencia’s nor Ms Doost’s evidence supports the conclusion that Julius was at South Sydney Juniors on that day. Furthermore, there is a real possibility that Linda, while attempting to be truthful, confused meeting Julius at South Sydney Juniors on the occasion of Jack and Willy’s meeting with the time she undoubtedly met Julius at the drinks after Lida and Jack’s wedding.

There are two other reasons why the Court prefers Julius’ evidence on this point over Jack’s.

First, Jack’s diary entry for 19 August 2009 “DISCUS BUSINES WITH WILLY” (sic) is inconsistent with Julius being in attendance at the meeting. If the entry was made prior to the meeting, then Willy did not tell Jack that Julius would be present. If he had, the probability is that Jack would have entered the meeting as being with both Willy and Julius. If, contrary to Jack’s evidence, the entry was made after the meeting, then again it is to be expected that if Julius had been present the entry would have recorded this.

Second, Willy and Julius both accept that there was a meeting with Jack at the Kurnell property on 20 August 2009 at which business arrangements were discussed. Willy also accepts that he met with Jack the day before. Neither of them has any particular reason, in the light of those admissions, to maintain that Julius was not present at South Sydney Juniors if that was not the true position.

The only detailed evidence before the Court about what passed between Jack and Willy at South Sydney Juniors is Jack’s account (see paragraph [95] above). Setting aside what the Court has found to be the erroneous suggestion that Julius was in attendance at the meeting, the Court accepts Jack’s account, largely because it is consistent with what the Court finds took place the next day at the Kurnell property and with what in fact happened in the following months in terms of acquiring the insulation and setting up the solar panel business.

Four other significant matters emerge from the fact of the meeting at South Sydney Juniors.

First, as the Court has found, it was between Jack and Willy. This fortifies the Court in the conclusion to which it has come to (see paragraph [135] below) in relation to the meeting the next day at the Kurnell property that the partnership in relation to the insulation business was between Jack and Willy alone. They were the ones who had the longstanding personal connection with, in relation to that business at least, Julius playing only a secondary or assisting role.

Second, even on Jack’s account there was no discussion of the lifters.

Third, there was no discussion in terms of Jack lending money to Willy (or Julius). It is far more plausible that Jack expressed himself, as he says, in terms of “putting in” the money.

Fourth, Willy’s final words (“We will use that money to purchase the installation from China, which will get us started. Once we get the business going we can pay you back”) expressed a term of the arrangement about which the Court has no doubt, namely that the proceeds of the insulation business would first be applied to whatever funds Jack had provided for the purchase of the insulation from China.

Jack, Willy and Julius met the next day (Thursday, 20 August 2009) at the Kurnell property.

The Court prefers Julius’ version of events over Jack’s. Thus, the Court finds the result of that discussion was that:

The Court prefers Julius’ version of events for two reasons.

First, it accords more with the probabilities in the following way. Jack and Julius had met the night before. Julius’ recollection of events has more of the flavour of an occasion where the subject matter was the practical implementation of the proposal that had been discussed the day before by Jack and Willy. That type of meeting seems the more natural consequence of what had passed between them rather than a rehearsal of matters the two older men had discussed the previous day.

Second, having had the advantage of seeing all three protagonists in the witness box, I am left with the strong impression that Jack’s accounts of the meetings, while not necessarily dishonest, are heavily laden with reconstruction based on his view of things after the event. Jack’s account of his recollection of the meetings he says he attended with Jack and Willy is far too neat and covers off the various legal components of Jack’s claim in an organised way that does not correlate at all with the impression which I formed of the parties. This is particularly the case in relation to the words which Jack attributes to Willy in circumstances where Jack maintained that these conversations were conducted in English rather than Polish. Having listened to Willy at some length in Court, Jack’s account of the thorough and systematic way in which Willy is said to have addressed the various elements of their business arrangement does not, with respect, reflect the Willy who appeared before me. There is much force in Mr Tiernan’s submission during final addresses that what these individuals had was not a partnership but rather a shambles. The Court has no doubt the initial meetings would also have had that character. To paraphrase Emmett J (see paragraph [30] above) I am unable to form a sense of actual persuasion that the conversation at the Kurnell property had the detail or precision for which Jack contends.

The Court makes two further findings about the meeting at the Kurnell property. First, because of Julius’ better English skills, Jack asked Julius to order insulation from China for which Jack would provide the funds. Second, as Jack acknowledged in cross-examination (see paragraph [98] above), by the conclusion of this meeting the parties had still not discussed how any profits were to be provided. That fact accords with the Court’s impression of the haphazard way this venture developed between the parties.

Finally, the Court does not accept that there was a meeting of the kind which Jack alleges occurred at Linda’s unit on 28 September 2009. There are three reasons for that conclusion.

First, the reason set out in paragraph [138] above applies equally to the thorough and organised version of events which Jack alleges took place at this meeting. To this the Court adds the silence and inconsistency in Jack’s diary as to this meeting (referred to in paragraph [102] above).

Second, Julius tendered in his case part of an affidavit filed and served in the proceedings sworn by Jack’s solicitor on the record, Mr Russell Byrnes. Mr Byrnes was not required for cross-examination. The part of Mr Byrne’s evidence that was tendered dealt with the meeting between the parties that took place on 24 June 2010 when they attempted to resolve the differences between them. Mr Byrnes’ uncontradicted evidence is that he was told by each of the parties that they had no formal partnership agreement or shareholders agreement.

Third, requests by Jack’s legal advisers for production of a document of the kind alleged to have been produced at the meeting did not yield any document in answer.

The conclusion expressed in paragraph [140] above necessarily means that I do not accept Jack’s and Linda’s evidence on this point. Jack has undoubtedly persuaded himself of his version of events. Linda is clearly a very close friend of Jack’s as well as being his sister-in-law. I readily infer that they would have discussed these events on many occasions. Willy accepted that he had been at Linda’s unit when Jack was there on a number of occasions. Jack and Linda’s recollection in relation to this alleged meeting is in error.

I gratefully adopt the summary of the relevant legal principles set out in the judgment of Ward J (as her Honour then was) in Walters v Scarborough [2011] NSWSC 1380, another case concerning an attempt to take advantage of the HIP: paras 260-266

On the basis of the facts as found in paragraphs [123] to [144] above, the Court concludes (quite apart from Willy’s admission referred to in paragraph [17] above) that Jack and Willy agreed to carry on business in common with a view of profit in relation to the insulation. Accordingly, in accordance with s 1(1) of the Partnership Act 1892 (NSW) (the “Act”), a partnership existed between them in relation to the insulation (the “Insulation Partnership”). The question of the terms of that partnership is considered further in paragraph [153] below.

However, the Court is not satisfied that the Insulation Partnership was carried on as a business with a view of profit in common with Julius. Julius’ role was not that of a partner but rather someone who was working for the Insulation Partnership comprising of his own father and Jack as a longstanding acquaintance or friend of his father’s. This is shown by the division of tasks at, and what occurred during and after, the meeting at the Kurnell property on 20 August 2009. At that time, Willy had already proposed the Insulation Partnership to Jack the night before at South Sydney Juniors. The implementation of that partnership was worked out between them with Julius the next day at the Kurnell property.

In reaching this conclusion I have not overlooked three matters heavily relied upon by Jack.

The first of these was that if (as is found in paragraph [156] below) there was a tripartite partnership in relation to the solar panels, the existence of such a partnership supported the conclusion that Julius was a partner in the Insulation Partnership. I do not agree. As someone who had or was to obtain appropriate accreditation to install the solar panels, Julius was clearly intended to, and did in fact have, a much more integral role in relation to the solar panels than he did in the Insulation Partnership. While his skills were useful and utilised from time to time in the Insulation Partnership, Julius was far more a “key man” in relation to the solar panels than the insulation.

Second, it was submitted for Jack that Julius had to be a member of the Insulation Partnership because it was ridiculous to think that he would undertake the various tasks assigned to him without any idea of what or how he was to be remunerated. This submission was fortified by pouring scorn on Julius’ evidence that Jack had told Julius that the latter could keep whatever was left from the $55,000 which Jack provided to Julius to pay for insulation on account of services rendered and to be rendered by Julius to the Insulation Partnership. It is not necessary for the Court to make a finding as to whether Jack ever said this (see further paragraphs [164] below).

I do not accept this second reason. Assuming in Jack’s favour that he never said Julius could keep any remaining balance of the $55,000, it does not automatically follow that because there was no discussion of Julius’ remuneration for services to be rendered that he was therefore intended to be a partner to share in the profits. This is especially the case where by the end of the meeting at the Kurnell property there had been no discussion about the division of profits. The Court finds it far more accords with the probabilities that Julius was taking the question of his ultimate reward on trust, not least because one of his partners was his own father with whom he was used to working as a co-director of Lysiak Contracting. The arrangements had far more of a “family and friends” character than an arm’s length commercial transaction. Furthermore, the failure to address something as apparently basic as how Julius was to be remunerated is entirely in accord with what the Court is well satisfied was the haphazard way in which the business relationship between the parties began and proceeded. Furthermore, as I find below, as a partner in relation to the solar panels, which was intended to get underway in anticipation of the arrival of the insulation from China, Julius may well have expected some income to start flowing to him from that. On any view, the three protagonists were clearly confident that the Insulation Partnership would be profitable and Julius trusted and expected that he would be remunerated for his contribution.

The third matter was Julius’ access to Jack’s and JMBS’s debit and credit cards in relation to the Insulation Partnership. I regard this fact as neutral. It is equally consistent with Julius being a partner in or merely providing services to the Insulation Partnership.

Insofar as the terms of the Insulation Partnership are concerned, the Court is satisfied that an essential term was that, to the extent that Jack funded the acquisition of the insulation, the income derived from the Insulation Partnership was first to be applied to repay Jack whatever he had advanced to buy the insulation (see further paragraphs [158] to [161] below). He was “putting in” that money on the understanding that he would be getting it back before either he or Willy saw any profits from the Insulation Partnership.

However, the Court is equally satisfied that those funds advanced by Jack were in no sense a loan to Willy. Furthermore, neither Jack nor Willy gave any thought to what would happen if the income of the Insulation Partnership did not exceed what Jack had provided to pay for the insulation. There is no evidence on which to find that Jack was intended to or would in fact have any recourse against Willy for any such a deficit. Jack knew that Willy had no money other than what he might otherwise derive as profits from the Insulation Partnership. In effect, Jack was taking the risk that the income of the Insulation Partnership would not meet the amount of his advances for the insulation but his countervailing security and reward for that risk was first call on the income of the Insulation Partnership before any benefit would enure to Willy.

While the topic of how any profits after repayment of Jack’s insulation advance were to be divided was not expressly discussed between Jack and Willy, Willy conceded that he expected and understood that any such profits would be shared equally with Jack. Subject to the requirement for first repayment of Jack’s funding of the insulation, the Court finds that the conduct of the Insulation Partnership would otherwise be determined in accordance with the Act, Jack and Willy having not provided otherwise.

Insofar as the solar panels are concerned, Mr Tiernan correctly and properly accepted that it was more difficult for Julius to resist the conclusion that he was a partner with Jack and Willy in relation to the solar panel business (the “Solar Panel Partnership”). That is apparent from the outcome of the 28 September 2009 meeting at the Kurnell property. It is put beyond doubt by the registration of the business name “Get Solar Australia” of which all three were registered as proprietors and the opening of a bank account for “Get Solar Australia” of which all three were signatories. Julius ultimately accepted that he expected to receive one third of the profits from “Get Solar Australia”. There is no suggestion that any special terms were agreed between the protagonists in relation to the operation of the Solar Panel Partnership, so it is otherwise governed by the Act.

The final fundamental question for determination is whether or not the lifters were included in either the Insulation Partnership or the Solar Panel Partnership. They were not. They were the business of Lysiak Contracting. The solar lifters were not the subject of the discussions at South Sydney Juniors or the Kurnell property as found by the Court. The Court accepts that Jack may have advanced funds to Willy or Julius that were used for the solar lifters and that he and Mr Lucas provided some assistance in relation to the construction of some of them. However, the explanation for this is to be found in Jack’s being at the Kurnell property in relation to the Insulation Partnership and the Solar Panel Partnership rather than Jack having any interest in the lifters. In reaching this conclusion the Court has not overlooked Mr Valencia’s evidence (see paragraph [108] above). However, the weight of the evidence is against the lifters being part of any partnership.

For the purposes of accounting in relation to the Insulation Partnership, there is a question as to the precise amount advanced by Jack to purchase insulation. The parties agreed that there were only ever two shipments of insulation from China and the key documents in relation to those shipments were belatedly provided by Julius.

The Court finds that the following payments have been clearly proven:

The difficulty is that the two invoices (i.e. not including the proforma invoice which was obviously overtaken by the two actual invoices) issued by Jiangsu Sainty total US$49,769.23 (see paragraphs [68] and [71] above). However, the total of the US dollar amounts paid (see the comments section in the table above) is US$35,526.58. In terms of the documentary evidence there is a lacuna of US$14,242.65. However, there was absolutely no suggestion in the evidence that the insulation was not fully paid for. Equally, there can be no doubt that the only source for any such payment was Jack. The question therefore becomes whether that difference was paid for by Julius from the $55,000 provided to him by Jack for that purpose or by Jack from some other source.

For the purposes of the ultimate accounting and for making final orders in these proceedings, the Court finds that Jack did indeed pay the balance of US$14,242.65. Furthermore, it finds that this payment was made at least in part by the application of the $13,950 withdrawn by Julius on 13 October 2009 from the funds provided to him by Jack for the purchase of insulation (see paragraph [69] above) and which Julius said he used for that purpose.

Jack undoubtedly put other funds into the Insulation Partnership. However, the Court is not satisfied that the arrangement between Jack and Willy giving Jack a right to first repayment of Jack’s insulation advance extended to any other moneys advanced to the Insulation Partnership by Jack. At the time the Insulation Partnership came into existence the parties’ attention was focused on Jack funding the acquisition of the insulation. Insofar as Jack advanced additional moneys to the Insulation Partnership the Court finds they constituted a capital contribution by Jack to be treated in accordance with the provisions of the Act.

The Court has found that Jack advanced Julius $55,000 on 28 August 2009 to be applied by Julius to purchase insulation batts (see paragraph [59] above). Julius did apply $29,962.09 to that purpose (being the sum of the amounts referred to in paragraphs [63] and [69] above). This leaves a balance of $25,037.91.

Even if the Court were to accept Julius’ evidence that Jack had told him that he could apply the available balance toward services Julius was rendering to the Insulation Partnership, it would be of no present assistance to Julius. Beyond only general assertions of what he did, Julius has brought no evidence of the hours he spent working, what he did and what it might be worth. He has raised no defence by way of an estoppel (for example, to the effect that he undertook work in detrimental reliance upon Jack’s representation that he (Julius) would be entitled to keep that balance). Nor has Julius brought a cross-claim in quantum meruit for work done.

The evidence from Julius’ bank statements is that he or his wife (it was a joint account) spent the balance of the $55,000 provided to him by Jack on personal expenses. Julius must repay Jack the balance of $25,037.91 as money had and received.

To the extent that either partnership owned any assets as at 29 June 2010 (the date the Court finds the partnership ended) such as insulation, Jack has not established those assets had any value. There is therefore no need on any accounting to take remaining assets into account.

Jack alleged that at the 28 September 2009 meeting at Linda’s unit, Linda agreed and did in fact lend $10,000 in cash. There was an issue between the parties as to whether this was a loan to Jack or to the partners in the Insulation Partnership.

It is not necessary for the Court to make any finding about these matters. The proceedings were conducted on the basis that there are no external creditors to the Insulation Partnership. It therefore is irrelevant whether Linda advanced the money to Jack alone or to the Insulation Partnership. Jack’s case was that the loan had been repaid to Linda. She agreed.

The only question therefore is the extent to which Jack is able to demonstrate that he applied any of those funds towards partnership expenses. To the extent he did, then those advances are to be treated as contributions of capital by him.

Jack alleged that a $50,000 loan from Lida also arose from the meeting on 28 September 2009 at Linda’s unit.

Again, it is unnecessary for the Court to characterise this arrangement precisely. It is clear from the various bank statements tendered by Jack that there was an advance from Lida that was used to fund the two ANZ telegraphic transfers made in October 2009 to Jiangsu Sainty which totalled $24,922.18 (see paragraphs [70] and [72] above). Those amounts form part of Jack’s insulation advance repayable out of the income of the Insulation Partnership before any question of division of profits between Jack and Willy arises, in accordance with the term identified in paragraph [153] above.

In his verified statement of claim filed on 6 May 2013 Jack alleged that between 8 September 2009 and 27 June 2010 he had advanced $61,000 in cash to Julius by 61 individual withdrawals of $1,000 each made by Jack from his Citibank Visa credit card. However, in paragraph 99 of his principal affidavit sworn on 23 September 2013, Jack gave a more nuanced account saying that, by reference to the Logbook, the loans were in fact as follows:

The fact of the withdrawals has been proved by Jack’s credit card statements, including the date and location. Most were made from an ATM at Maroubra Junction, which Jack explained in his evidence was the closest ATM to Linda’s south Coogee unit, where he often stayed. Other withdrawals were made in various locations, including Nowra.

Jack’s affidavit evidence was:

Willy and Julius denied receiving any such advances from Jack.

In circumstances where Jack himself says he cannot recall to whom he allegedly gave $25,000 of the advances, the Court is unable to find either Willy or Julius liable for those amounts.

In relation to the specific claims of $22,000 against Julius and $14,000 against Willy, the Court is unable, in the face of their denials, to feel an actual persuasion (see Emmett J quoted in paragraph [30] above) so as to be able to find on the balance of probabilities that each and every one of those payments was made as Jack alleges. It is possible that some money may have been given to Willy or Julius but the Court cannot be satisfied which payments and to whom. It is equally plausible that, as Mr Tiernan submitted, Jack habitually made $1,000 withdrawals for his own purposes.

The reasons for the Court’s conclusions expressed in the preceding paragraph are:

Consistently with the view expressed in paragraphs [46] and [47] above, in the absence of either an admission by the recipient or a bank statement verifying the receipt by the recipient of any cash amount which one of the protagonists alleges he paid to or was received by another protagonist, the Court is not satisfied of that fact on the balance of probabilities. This finding extends, for example, to the $10,000 which Julius alleges he paid to Jack at Jack’s request before Jack went on holidays to New Zealand, the $5,000 which Jack said he gave to Julius in cash at the start of the venture and the $1,000 which Jack alleges he loaned in cash to Julius on 28 August 2009.

Each of the protagonists had a debit card linked to JMBS’ CBA account.

Willy admitted responsibility for transactions with his debit card totalling $4,521.48. He did not suggest that any of those expenses were to be related to either the Insulation Partnership or the Solar Panel Partnership rather than being in the nature of personal advances. The Court finds Willy is liable for that amount.

By reference to bank records Jack was able to demonstrate that Julius’ debit card had been used for expenses totalling $2,497.66 and cash withdrawals totalling $1,110. Under cross-examination Julius admitted using this debit card to meet an expense of $806 at the RTA at Miranda and conceded he may have been responsible for a number of other transactions.

The Court has no difficulty drawing an inference that Julius was responsible for all of the amounts on that debit card, totalling $3,507.66. Julius was also unable to demonstrate that any of those expenses were attributable to either the Insulation Partnership or the Solar Panel Partnership and is liable accordingly.

While the Court initially had some doubt, the Court is satisfied that JMBS and Lysiak Contracting were not themselves parties to any partnership but were mere conduits in the relationship between the protagonists. However, Willy and Julius’ liability in relation to the debit cards must be to JMBS as the money came from its account. However, JMBS is not a party to these proceedings. The Court is prepared to make orders for payments in favour of JMBS as though it were a party or, if Willy and Julius do not agree to this course, will permit an amendment to the proceedings to join JMBS as a plaintiff claiming those amounts.

Jack also gave Willy and Julius access to his Westpac credit card and identified $12,169.96 of expenses on that card for which he said he was not responsible and which were not referable to any partnership.

Willy accepted that he was responsible for two transactions totalling $1,070.51. He is personally liable to Jack accordingly.

Julius admitted that he was responsible for two transactions totalling $1,987.82. In addition to that amount, the Court accepts the submission set out in paragraph 103 of Jack’s Outline of Closing Submissions of the Plaintiff dated 1 October 2014 (“Jack’s Outline”) that Julius is also liable to Jack for an additional $909.31 for transactions incurred on Jack’s Westpac credit card.

Willy used Jack’s Citibank credit card to pay for a plane ticket and associated travel package costing $2,160.06 for a trip to China. The Court accepts Willy’s evidence that the trip was undertaken in connection with the Insulation Partnership on the basis that Willy’s evidence is inherently probable because the insulation was being obtained from China. Accordingly, the advance should be treated as part of the capital contributed by Jack to the Insulation Partnership and the trip treated as an expense of the Insulation Partnership.

The Court accepts Jack’s submissions set out in paragraphs 109 to 114 (inclusive) of Jack’s Outline that a payment received by Lysiak Contracting on 8 April 2010 of $2,400 is referable to the Insulation Partnership and four other receipts by Lysiak Contracting totalling $22,781.27 are referable to the Solar Panel Partnership. While those amounts were received by Lysiak Contracting, as directors of that company Willy (in the case of the Insulation Partnership) and Willy and Julius (in relation to the Solar Panel Partnership) are liable for those respective amounts for the purposes of calculating the income of the Insulation Partnership and the Solar Panel Partnership respectively.

For the purposes of the accounting in relation to the Solar Panel Partnership, the Court accepts the submissions in paragraph 118 A to C of Jack’s Outline that Julius received advances totalling $1,355.65. However, conformably with the view that the Court has taken about disputed cash receipts (see paragraphs [46] and [47] above) the Court is not satisfied that Julius is responsible for the three $1,000 withdrawals referred to in paragraph 118D of Jack’s Outline in respect of which Julius denied liability in cross-examination.

Subject to any submissions which the parties may wish to make, the Court proposes to make directions for the parties to complete the accounting exercise and otherwise bring in orders to give effect to these reasons. Insofar as any matters may remain in dispute between the parties as to how that should be done, provision will be made for those matters to be identified with precision and brief written submissions provided in support of the respective positions.

In regard to the exercise upon which the parties must now embark, with the assistance of their legal advisers in the case of Jack and Julius, the Court respectfully urges them to adopt a pragmatic and commercial approach for at least three reasons.

First, the parties and their legal advisers are bound by s 56 of the Civil Procedure Act 2005 (NSW) to facilitate the process of ensuring the just, quick and cheap resolution of the real issues in the proceedings.

Second, the represented parties will have incurred considerable costs in a hearing which was initially estimated for two days but ran for five and generated extensive written submissions. While the amounts involved are undoubtedly and understandably significant to the parties, they are relatively small in terms of both the financial and emotional costs of litigation. The proceedings could have been brought in the District Court.

Third, the Court will in due course hear submissions as to costs. The fact that the proceedings could have been brought in the District Court may have an impact on costs. Furthermore, without in any way prejudging the issue and in ignorance of what, if any, offers may have passed between the parties, the Court observes that there is a real possibility that the end result will be no order as to costs to the intent that each pays his own costs on the basis that each has enjoyed a significant measure of success.