Pirrottina v Pirrottina

1. [1]

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

2. [2]

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

3. [3]

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

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

1. [4]

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

2. [5]

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

3. [6]

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

4. [7]

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

5. [8]

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

6. [9]

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

7. [10]

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

Evidentiary matters

1. [11]

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

2. [12]

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

3. [13]

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

4. [14]

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

5. [15]

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

6. [16]

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

7. [17]

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

8. [18]

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

9. [19]

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

10. [20]

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

11. [21]

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

12. [22]

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

13. [23]

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

14. [24]

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

Mangrove Mountain orchard

1. [25]

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

2. [26]

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

3. [27]

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

4. [28]

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

Sam’s house

1. [29]

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

2. [30]

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

3. [31]

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

4. [32]

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

5. [33]

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

6. [34]

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

7. [35]

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

8. [36]

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

9. [37]

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

10. [38]

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

11. [39]

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

12. [40]

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

13. [41]

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

14. [42]

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

15. [43]

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

16. [44]

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

17. [45]

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

18. [46]

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

19. [47]

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

20. [48]

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

21. [49]

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

22. [50]

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

23. [51]

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

24. [52]

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

25. [53]

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

Rocco’s farm

1. [54]

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

2. [55]

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

3. [56]

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

4. [57]

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

5. [58]

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

6. [59]

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

7. [60]

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

The partnership

1. [61]

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

2. [62]

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

3. [63]

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

4. [64]

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

5. [65]

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

6. [66]

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

7. [67]

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

Improvements to Sam’s house

1. [68]

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

2. [69]

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

3. [70]

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

4. [71]

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

5. [72]

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

Business interruptions and changes

1. [73]

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

2. [74]

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

3. [75]

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

An extension and renovations

1. [76]

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

2. [77]

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

3. [78]

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

4. [79]

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

5. [80]

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

6. [81]

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

7. [82]

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

8. [83]

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

9. [84]

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

10. [85]

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

11. [86]

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

12. [87]

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

13. [88]

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

14. [89]

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

15. [90]

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

16. [91]

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

17. [92]

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

18. [93]

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

19. [94]

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

20. [95]

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

21. [96]

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

22. [97]

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

23. [98]

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

24. [99]

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

25. [100]

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

26. [101]

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

27. [102]

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

28. [103]

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

Relations sour

1. [104]

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

2. [105]

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

3. [106]

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

4. [107]

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

A buy-out

1. [108]

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

2. [109]

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

3. [110]

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

4. [111]

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

5. [112]

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

6. [113]

   In his first affidavit, Rocco agreed that there was consensus that Sam would buy-out Rocco’s interest from the business, equipment and land. In a later affidavit, Rocco denied that Sam raised the issue of his house at the meeting or that his mother said the words attributed to her by Mr Macri or Mr Lopresti.

7. [114]

   Sam’s son Joseph said that a few weeks after the meeting, he was returning from the markets with Rocco and asked when he was going to get the guns that his grandfather had promised him and Sammy. Rocco said that, now that he and Sam had agreed to go their separate ways “and if [I] get everything that I want, you and Sammy will get the guns.” Joseph asked his uncle what it is that he wanted, and Rocco replied “Nonna said your house will be excluded from everything and everything will be split 50/50”. Rocco denies this conversation.

8. [115]

   Of the five witnesses who gave evidence as to the discussion at the September 2020 meeting, Rocco’s evidence is inconsistent with the others, of whom three could be described as both credible and relatively impartial. I prefer the evidence of the disinterested participants, being Mr Tisano, Mr Lopresti and Mr Macri, to that of Rocco. These gentlemen were unfamiliar with the precise ownership arrangements of the citrus farms. Their various suggestions as to how the brothers should part ways had the consequence that the brothers’ interest in both farms was elucidated. Initially, it was suggested – either by one of these gentlemen or by Sam – that Rocco’s farm should be valued as forming part of the partnership. This was firmly rejected by Rocco, and endorsed by Mrs Pirrottina Snr, who together made plain that that was Rocco’s farm. Apparently, by way of counter-attack, Rocco suggested that the Mangrove Mountain farm, including Sam’s house, should be valued or sold, which prompted Sam to seek clarification from Mrs Pirrottina Snr that his interest in Sam’s house was also protected. Mrs Pirrottina Snr readily confirmed that this was the case, and Rocco did not demur. I do not accept Rocco’s evidence that Sam did not raise the issue of his house at the meeting; it is likely that Sam did so, where Rocco suggested that Sam’s interest in the house should be ignored for the purposes of a buy-out.

9. [116]

   Sam and his family were then living on the Mangrove Mountain farm. Rocco and his family were now living on Rocco’s farm. It likely suited both men to remain in their respective locations. Mrs Pirrottina Snr obviously wanted this too. As Mr Lopresti recalled it, Mrs Pirrottina Snr also made plain that that was what her husband had wanted, that is, that Sam’s house belonged to him. The brothers agreed that Sam would buy-out Rocco’s interest in the Mangrove Mountain farm and the family business but, in calculating a buy-out figure, Sam’s house would be deducted from the valuation of the Mangrove Mountain farm. Rocco’s farm would also be excluded.

10. [117]

    Three weeks later, Mrs Pirrottina Snr passed away, aged 80 years. Sam took over the partnership accounts and responsibility for banking cash takings. Rocco did not argue with this, because he thought he was going to exit the business soon.

11. [118]

    In October 2020, Sam obtained a valuation of the Mangrove Mountain farm from Colliers for the purpose of “First Mortgage Security and Partnership Dissolution”. The valuation documented the improvements on the site, including the various sheds and two homesteads, being the main homestead and “Homestead 2 (Sam’s)”. Colliers valued the property at $4.73 million, of which $303,000 was referable to Sam’s house, the enclosed entertaining area and four bay garage. Sam’s house was then as follows:

12. [119]

    Sam said he spoke to Rocco about the Colliers valuation and said, “All we have to do is to take off the valuation for my house” and Rocco agreed. Rocco did not deny this conversation until the witness box. A further valuation was obtained in November 2020 from Blue Gum Asset Advisory in respect of plant, machinery and equipment.

13. [120]

    In May 2021, Sam’s solicitor wrote to Rocco, noting their instructions that the brothers had agreed to dissolve the business partnership and to transfer Rocco’s interest in the Mangrove Mountain property to Sam. Sam proposed to pay Rocco some $2.48 million, being half of the value of the Mangrove Mountain property and the business, including plant, stock, fruit plantings, equipment and machinery less Sam’s house.

14. [121]

    In May 2021, Rocco said that Sam picked some oranges from Rocco’s farm, as Rocco grew an early variety and Sam did not then have fruit on the Mangrove Mountain farm. However, once the crop was ready for harvesting on the Mangrove Mountain farm, Sam stopped picking fruit from Rocco’s farm. In June or July 2021, Rocco said he asked Sam when they were going to start picking lemons from Rocco’s farm. Sam said they were not going to pick the fruit on Rocco’s farm as it was unsaleable. Rocco picked and sold the remainder of the crop.

15. [122]

    Rocco continued to work several days a week at the Mangrove Mountain farm or at Flemington Markets and continued to receive weekly payments. However, from around July 2021, Sam no longer agreed to pay the expenses of Rocco’s farm from the partnership bank account, as fruit had not been picked from that farm for the benefit of the partnership for about a year by that time. Rocco said that, since 23 August 2021, he has paid for all running expenses in relation to Rocco’s farm. Sam stopped paying the electricity bills for Rocco’s farm in September 2021, but Sam’s gas and electricity bills continued to be paid by the business.

16. [123]

    In August 2021, Rocco instructed Colliers to provide an updated assessment of the value of the Mangrove Mountain farm, which was provided in September 2021; the market value was now $5 million. In November 2021, Sam’s solicitor emailed Rocco’s solicitor seeking comments in relation to a Deed proposing that Rocco sell his interest in the Mangrove Mountain farm for some $2.3 million and plant and equipment for some $274,000. Rocco’s solicitor provided his comments on 23 November 2021, adding a further clause:

17. [124]

    I infer that the clause was prepared on Rocco’s instructions and in accordance with his agreement and understanding. It records Rocco’s then understanding that Sam owned Sam’s house and the improvements.

An AVO

1. [125]

   Tempers frayed. On 8 January 2022, the police made a provisional apprehended violence order (AVO) against Rocco at the request of Sammy, following an argument at the Mangrove Mountain farm. According to Rocco, he went to Sam’s house to ask for his share of the previous year’s profits and was told that he was “getting nothing [as] you did not work”. Rocco became very upset, took the keys to the trucks and left. He was so angry at the time that he did not remember what he said during the argument. Rocco said he was later acquitted (whether Rocco was formally charged, or the AVO contested or withdrawn is unclear).

2. [126]

   In any event, the police attended the Mangrove Mountain farm to speak to Sam and Sammy, before visiting Rocco. The police made a 40-minute ‘body cam’ recording of their attendance, on which Rocco relied. Sammy described what prompted the argument with Rocco. In short, the brothers had agreed to part ways but, for the last few weeks, Rocco had not been coming to work. Rocco texted Sammy asking for his weekly payment and Sammy replied that he would pay “when you come to work”. This prompted an angry reply from Rocco, who said he was going to drive over straight away. Rocco arrived at the Mangrove Mountain farm soon afterwards; Sammy described an altercation. In cross-examination, Sammy denied that he had made up the allegation of an assault, “To be honest with you, I actually had all the videos and everything on my phone, I just didn’t put that towards the police. He’s my uncle, I didn’t want no problems, you don’t do that.”

3. [127]

   The ‘body cam’ recording continued. Sam complained inter alia that Rocco had been showing up for work just three days a week but still receiving a full wage. Finally, in a passage relied on by Rocco, Sam said “cause when we bought his place years ago [Rocco] said ok we’ll put this place under my name right and then when we pay that off we will buy another one because it’s 50/50. We’ll buy another one so we’re equal. And I, this was always me yeah no problem. Then a few years ago I said to him … we are in a half comfortable position now [and Rocco said] I never said that. I said well so how does that work out, you own half my house, but you got a three million dollar property there and on top of that he scores another house at Bensville off mum.” In cross-examination, Sam explained that, in saying these words to the police officer, he meant “So [Rocco] thinks he owns half my house. He thought that, not me … why would I spend all that money on my house if he owned half my house?”

4. [128]

   Rocco relied on Sam’s comments to the police as an admission against interest. Reading the comment in the context of the transcript as a whole, I consider that Sam’s statement recorded Rocco’s view, noting Sam’s preface, “so how does that work out”. Having listened to the recording, it is also possible that Sam’s comment reflected his understanding at the time. It is not clear. If the ‘body cam’ recording is an admission against interest, it is of insufficient probative value to outweigh the import of other evidence.

5. [129]

   Since the AVO, Rocco has not been able to attend the Mangrove Mountain farm to work, and has not worked in the business at all. Nor has Rocco continued to receive his weekly payment of $1,000 from the business. Rocco said the partnership came to an end on this date. Sam said that about two weeks after the incident which gave rise to the AVO, he stopped making any payment to Rocco in connection with the family business.

6. [130]

   Since February 2022, Sam has seen Rocco each week selling fruit from Rocco’s farm at Flemington Markets; Rocco has not provided the proceeds of these sales to the partnership. Sam started paying his own electricity bills but continued to pay the gas bills from the partnership bank account as the gas to the farm and Sam’s house was by the provision of gas cylinders, billed by a single invoice. The gas used at Sam’s house was minimal compared to the gas used by the business, including a drying tunnel to dry and wax fruit. In June 2022, Sam opened a new NAB bank account ending 8882 to conduct the partnership business, due to difficulties he was having getting authorisation from Rocco to pay the bills of the business.

7. [131]

   On 6 July 2022, Rocco’s solicitor wrote to Sam’s solicitor noting that Rocco’s position was that “the partnership was dissolved when your client elected not to harvest the crop on [his] farm in May 2021 or in January 2022 where [Sam] advised there were no profits … However, if it is determined that the partnership was not dissolved at the above points in time then we hereby give notice of dissolution of the partnership.” Further, Sam’s home was said to be a partnership asset as it pre-existed the formation of the partnership. Improvements which had been made to the house since then were said to be for Sam’s benefit. Rocco’s solicitor was instructed not to proceed with the Deed of Dissolution and Contract for Sale. Rather, Rocco would consent to a joint application to the Court for an order dissolving the partnership and appointing a receiver.

These proceedings

1. [132]

   In November 2022, Rocco commenced these proceedings, seeking declarations and orders to dissolve the partnership, identify partnership assets, appoint receivers and take accounts.

2. [133]

   In March 2023, Sam filed a cross-claim, seeking a declaration that he has an equitable interest in the Lot, as identified in a survey, and the improvements on the Lot. The Lot and improvements may be seen side-to-side below: (the dotted line is an easement for electricity and may be ignored for present purposes)

When did the partnership end?

1. [134]

   Rocco sought a declaration that the partnership was dissolved on 8 January 2022 by excluding him from the partnership or, alternatively on 6 July 2022, by correspondence. Sam favoured the latter date. Alternatively, Rocco sought an order under s 35(c), (d) or (f) of the Partnership Act 1892 (NSW) that the partnership be dissolved.

2. [135]

   Section 32(c) of the Partnership Act provides:

3. [136]

   Absent express provision, a partnership is ordinarily terminable at will; a partner is not required by an obligation of good faith to remain in partnership with another with whom they no longer wish to be associated: Lawfund Australia Pty Ltd v Lawfund Leasing Pty Ltd (2008) 66 ACSR 1 at [32]-[33] (per Brereton J); Bova v Avati [2009] NSWSC 921 at [27] (per Ward J). A notice of termination must be in writing for partnerships at will constituted by a deed (s 26(2), Partnership Act 1892), but not otherwise.

4. [137]

   Notice of intention to dissolve a partnership must be “clear and unambiguous”: McNicholas v Sarandopoulos [2018] NSWSC 576 at [34] (per Emmett AJA). Notice of termination may be inferred from conduct: Reynolds v Medway [2013] NSWSC 206 at [40] (per Sackar J). In Bonzalie v Cullu [2013] NSWSC 1576, Robb J endorsed the learned authors’ statement of principle in Keith Fletcher, The Law of Partnership in Australia (9th ed, 2007, Lawbook Co): “What conduct will constitute notice is a question of fact. The test appears to be: ‘Is the conduct such that a fair inference can be drawn that the partner does not wish the partnership to continue’?”: at [77].

5. [138]

   An ‘in principle’ deal to dissolve the partnership was struck at the meeting in September 2020. To implement that deal, valuations were obtained and updated. Legal documents were prepared and amended. In parallel, the business limped along but was different, where the brothers anticipated that they would soon be running separate endeavours. Control of the finances was passed to Sam. The pooling of fruit from both farms dwindled. Rocco protested when the financial support for Rocco’s farm stopped. Sam protested when Rocco did not maintain working hours but expected full wages.

6. [139]

   Where this partnership was not constituted by a deed, it was not necessary for a notice of termination to be in writing. It was sufficient that notice was clear and unambiguous, where notice may be inferred from conduct. The question is when can a fair inference be drawn that one or both partners did not wish the partnership to continue. There are a wide range of dates on which it could be said that the conduct of the partners clearly evidenced that they did not wish to continue.

7. [140]

   Of the two alternative dates proffered by Rocco, I consider that 8 January 2022 is the date on which the partnership was dissolved. From this date, Rocco ceased to do any work for the partnership, or receive any funds from the partnership. The fruit grown on the two farms had not been pooled for some time. I do not find, despite Rocco’s repeated submission, that Sam was responsible for the partnership coming to an end; both brothers contributed to the breakdown of their working relations.

Partnership assets

1. [141]

   Rocco seeks a declaration that the partnership property included the Mangrove Mountain farm, where the parties agreed that the property would be used for partnership purposes and proceeded to do so.

2. [142]

   Sam contends otherwise, submitting that the farm was not purchased by the partnership nor recorded in the partnership accounts as an asset. Further, the farm was transferred in September 2002 but the partnership did not come into existence until January 2003; there was no evidence of conversion of the Mangrove Mountain farm into a partnership asset.

3. [143]

   Section s 20(1) of the Partnership Act defines “partnership property” as “All property, and rights and interests in property, originally brought into the partnership stock or acquired, whether by purchase or otherwise, on account of the firm, or for the purposes and in the course of the partnership business …” Section 21 of the Partnership Act provides that, absent contrary intention, property purchased with partnership money is deemed to be bought on account of the partnership.

4. [144]

   Property used by a partnership can remain the separate property of a partner and not become partnership property: Williams v Nicoski [2003] WASC 131 at [249] (per Barker J). Whether the property of a partner becomes partnership property depends on the acts and intentions of the parties: O’Brien v Komesaroff (1982) 150 CLR 310; (1980) 41 ALR 255 at 263 (per Mason J). The partners’ agreement on this subject may be express or implied, where the conduct of the partners evinces such an understanding: The Law of Partnership in Australia at [5.10].

5. [145]

   In relation to implied agreements, Harman J suggested that an agreement implied by the Court should be no more than is “absolutely necessary to give business efficacy”: Miles v Clarke [1953] 1 All ER 779 at 782. However, the High Court suggested that this “may overstate the position” and instead emphasised that “it would plainly be wrong to ascribe agreement to the parties unless their dealings clearly point in that direction”: Kelly v Kelly (1990) 92 ALR 74 at 79. Before implying an agreement, the Court will consider all circumstances surrounding the purchase of the property: Gerovich v Gerovich (as executor of the estate of Gerovich) [2018] WASC 153 at [47], cited with approval in Bassett v Cameron [2021] NSWSC 207 at [614]. The fact that the agreed partnership accounts do not record a property as belonging to the partnership, nor credit the partners as having contributed capital to the extent of that asset, but treat the asset as outside the partnership is significant: Harvey v Harvey at 555 (per Menzies J).

6. [146]

   As Gibbs J observed in Lucas v Lucas [1962] Qd R 205, the ultimate test in determining what is partnership property is the agreement of the parties; where there is no express agreement, “it is necessary to have regard to the source whence the property was obtained, the purpose for which it was used, and the manner in which it has been dealt with, and the rules laid down in … the Partnership Act”: at [6]. More recently, see Fragar v Fragar [2024] NSWSC 193 at [124]-[132] (Hmelnitsky J). The party asserting that property is owned by the partnership bears the onus of proof: Harvey v Harvey (1970) 120 CLR 529 at 549 (per Barwick CJ); Bant v Bant [2003] WASC 137 at [9] (per Wheeler J).

7. [147]

   There was no express agreement that the Mangrove Mountain farm would be owned by the partnership. As to whether there was an implied agreement, four features warrant consideration.

8. [148]

   First, it appears that the partnership was established in a series of steps, beginning with the transfer of the Mangrove Mountain farm and refinance of the parents’ business loan in September 2002 and culminating the acquisition of an ABN on 1 January 2003. Rocco understood that the partnership was formed on 1 January 2003. This accords with the draft Deed prepared by the brothers to dissolve the partnership, which recorded that the partnership commenced on that date. (Whilst the deed was never executed, Rocco’s solicitor did not seek to amend this part of the deed when it was circulated by Sam’s solicitor.) On the pleadings, however, the parties agree that the partnership was formed on or about the date of the transfer. In these circumstances, I cannot accept Sam’s submission relying on the absence of evidence of conversion of the Mangrove Mountain farm into a partnership asset after January 2003.

9. [149]

   Second, the partnership used the Mangrove Mountain farm for its business activities. The same can be said, however, for Rocco’s farm, and there was no suggestion that that farm was a partnership asset. Nor is it necessary to imply an agreement that the Mangrove Mountain farm would be a partnership asset from this fact alone. A partnership may use an asset owned by a partner. In such a case, the partnership may pay the partner for use of their asset by, say, the payment of rent. No rent is recorded in the partnership accounts either, although, as both partners also owned the Mangrove Mountain farm, such an arrangement may have resulted in them simply paying rent to themselves.

10. [150]

    Third, Mrs Pirrottina Snr, and later Rocco, made mortgage payments for the Mangrove Mountain farm from the partnership bank account. It will be recalled that the parents required the sons to obtain this loan to pay out the parents’ business loan. (The amount of the loan was recorded in the partnership accounts as goodwill.) Mrs Pirrottina Snr treated the loan repayments as an expense of the business. I am reluctant to speculate as to why she did this, or why Rocco continued to do this after he took over the task of paying partnership bills.

11. [151]

    Finally, the manner in which the partnership dealt with the Mangrove Mountain farm in its accounts is significant. Mr Tisano prepared the partnership accounts and tax returns, as well as those of Mr and Mrs Pirrottina Snr and Rocco. Mr and Mrs Pirrottina Snr recorded “Land Cost" in their 1997 financial statements. Presumably, this was a reference to the Mangrove Mountain farm. Rocco's farm was acquired in 1999, in his name and not in the parents' names, notwithstanding that Rocco's farm was used in the family business and the parents assisted him to buy it. After the brothers formed their partnership, the Mangrove Mountain farm was not listed as an asset in the partnership accounts.

12. [152]

    Mr Tisano said he did not include the Mangrove Mountain farm in the partnership accounts as he had always been instructed by the brothers, and also by their parents, that the farm was never to be included as an asset of the partnership. Mr Tisano agreed that he included assets such as building and machinery that were used to derive income for the partnership as assets in the accounts, but not the farm on which the fruit trees were planted, “That been instructed to me not to include it.”

13. [153]

    It does appear that, historically, the parents had recorded the Mangrove Mountain farm as a partnership asset but took a different approach when Rocco's farm was acquired and, later, when the Mangrove Mountain farm was transferred to their sons. The parents and their sons gave specific instructions to Mr Tisano not to include the Mangrove Mountain farm, or Rocco's farm, in the partnership accounts. Consistently with this, I note that Mr and Mrs Pirrottina Snr drew a clear distinction between the business and the Mangrove Mountain farm in their Wills in 2003: see [66]. Again, I am reluctant to speculate as to why they did this, but the change of accounting treatment appears to have been deliberate. The conduct of the partners as recorded in their accounts strongly points in the direction of an understanding that the Mangrove Mountain farm remained the separate property of the brothers and did not become partnership property.

14. [154]

    Whilst Rocco said he believed that the Mangrove Mountain farm was an asset of the partnership, this is insufficient to discharge the onus of proving that the farm is an asset of the partnership. As such, I conclude that the Mangrove Mountain farm is owned by the sons in their personal capacity.

Estoppel by encouragement

1. [155]

   The next issue is whether Sam had an equitable interest in the Lot before the Mangrove Mountain farm was transferred by Mr and Mrs Pirrottina Snr to Sam and Rocco in 2002. Sam contended that, as a consequence of his conversation with his parents in September 1994 (see [29]), Mr and Mrs Pirrottina Snr agreed that, in lieu of purchasing a block of land for their son – in appreciation for the work he had done for the family business and for the work he would do in the future – they would instead give him the Lot and build a house on the Lot for him. His parents represented that the Lot and house would belong to him. Further, Sam contends that his parents represented that they would not sell the Mangrove Mountain property and intended that it remain in the Pirrottina family. This representation was said to be implied by the parents’ conduct in building the family business and fostering Sam’s role in that business. Further, Sam contended that shortly before he moved into the completed project home in 1996, Mrs Pirrottina Snr made further representations, on behalf of both parents, that the house and the Lot belonged to Sam: see [48].

2. [156]

   To the knowledge of his parents, Sam contends that he was induced by the representations made in 1994 and 1996 to assume that the Mangrove Mountain farm would not be sold and would remain in the Pirrottina family. Further, Sam assumed that the Lot and house belonged to him and he was entitled to occupy both for his lifetime. In reliance on these representations, Sam declined his parents’ offer to buy him a block of land on which to build his house. Instead, Sam moved into the house and lived there, making it his home and continuing to work in the family business at a level of remuneration below the market rate. Sam refrained from purchasing another home to live in with his family and did not seek legal advice as to the steps necessary to formally transfer the Lot or the home into his name. Sam also accepted a gift from his father-in-law to construct the driveway and pathways, together with landscaping works, on the Lot.

3. [157]

   Sam contended that he relied on his parents’ representations to his detriment, and would suffer detriment if there was a departure from the assumption induced by their representations. Specifically, Sam forewent the opportunity to have his parents buy a block of land for him, and would have no home of his own. Sam lost employment opportunities, which he did not explore in reliance of his parents’ representations. Sam contended that he lost the opportunity to have the Lot formally transferred into his name, lost income and lost the opportunity to have an alternate gift from his father-in-law. Sam contended that it was reasonable for him to make the assumptions he did, in reliance on his parents’ representations. In the circumstances, departure by his parents from those representations would have been unconscionable. As such, his parents were estopped from resiling from the representations and held their title to the Mangrove Mountain property on trust for Sam to the extent of his interest in the Lot or house.

4. [158]

   Rocco denied that Sam then had an equitable interest in the Lot. Any promise made by the parents was said to be too vague to give rise to any equitable rights and, given the lack of specifics, any reliance on such a promise was said not to be reasonable. Nor did the implied representation arise in the circumstances, having regard to Rocco’s role in the family business.

5. [159]

   Further, Rocco contended that the parents could not give part of the Mangrove Mountain farm to Sam as it could not be subdivided; the parents and Sam were said to have known this at the time. As such, it was impossible for the Lot to belong to Sam, and Sam knew it. In the circumstances, resiling from any representation would not be unconscionable. Rather, the house was funded by the family business to improve the value of the Mangrove Mountain farm, where one of the proposed uses of the house was as a “workers’ cottage”. Any assumption made by Sam was not reasonably made or, alternatively, limited to an assumption that Sam could occupy the workers’ cottage as long as the partnership relationship with Rocco remained on foot. Nor could Sam be said to have relied on his parents’ representations to his detriment, where he lived rent-free in a house paid for by his parents, who also paid expenses in respect of the house.

6. [160]

   As Ball J summarised the principles in Wantagong Farms Pty Ltd as Trustee for the Bulle Family Trust v Bulle [2015] NSWSC 1603 at [60]-[73], estoppel by encouragement is a type of proprietary estoppel. An estoppel by encouragement “comes into existence when an owner of property has encouraged another to alter [their] position in the expectation of obtaining a proprietary interest and [they], in reliance on the expectation created and encouraged by the property owner, ha[ve] changed [their] position to their detriment. If these matters are established equity may compel the owner to give effect to that expectation in whole or in part”: Delaforce v Simpson-Cook [2010] NSWCA 84 at [21] (per Handley AJA).

7. [161]

   There are three main elements, being an assurance, reliance and detriment. As Walker LJ observed in Gillett v Holt [2001] Ch 210, these elements cannot be treated as “watertight compartments” and often overlap, “the fundamental principle that equity is concerned to prevent unconscionable conduct permeates all the elements of the doctrine. In the end the court must look at the matter in the round”: at 225. As Walker LJ also observed in Jennings v Rice [2002] EWCA Civ 159, “The cases show a wide range of variation in … the quality of the assurances which give rise to the claimant's expectations and the extent of the claimant's detrimental reliance on the assurances. The doctrine applies only if these elements, in combination, make it unconscionable for the person giving the assurances … to go back on them”: at [44].

8. [162]

   Looking at each element in turn, the assurance which engenders the expectation of the party asserting the estoppel must possess some level of clarity: Wantagong at [63]. Ball J there relied on the formulation of Hoffman LJ in Walton v Walton [1994] CA Transcript No 479, “The promise must be unambiguous and must appear to have been intended to be taken seriously. Taken in its context, it must have been a promise which one might reasonably expect to be relied upon by the person to whom it was made”: Wantagong at [63].

9. [163]

   Where the parties involved are family members, the law does not require certainty in the promise or representation. Equitable estoppel may arise notwithstanding that the representation would be insufficiently certain to support a contract and may arise from vague assurances; the focus is on the expectation which it creates rather than the promise: DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728 at [54]-[55]. As Lord Walker observed in Cobbe v Yeoman's Row Management Ltd [2008] UKHL 55 at [68]: (emphasis added)

10. [164]

    The assurance “need not depend on the words of a single conversation, but could arise from conduct over a period of time”: Evans v Evans [2011] NSWCA 92 at [107] per Campbell JA (with whom Giles JA and Sackville AJA agreed). The assurance may be express or implied from conduct or even silence. In Q v E Co [2020] NSWCA 220, Meagher JA explained at [15] and [17]: (citations omitted)

11. [165]

    For example, in Thorner v Major [2009] 1 WLR 776; [2009] UKHL 18, the defendant’s indirect and implied representations to the plaintiff that he would inherit the farm, on which the plaintiff continued to work without payment for years, was enough despite the absence of any direct statement to that effect, where the defendant was not prone to communication at all and, given the context, was readily understood by the plaintiff as a promise to leave him the farm. Lord Rodger concluded at [26]:

12. [166]

    As to reliance, the question is twofold: did the plaintiff in fact rely on the representations, and would the plaintiff have acted differently if the promises had not been made: Wantagong at [83]. Put another way, the extent to which it is unconscionable for the representor to seek to resile from the position expressed in their assurances to the plaintiff may be gauged by reflecting on the plaintiff’s likely response if the representator had advised at the outset that they would depart from the representation: Sidhu v Van Dyke (2014) 251 CLR 505 at [77] (per French CJ, Kiefel, Bell and Keane JJ). The promises relied upon do not have to be the sole inducement for the reliance; it is sufficient if they are an inducement: Gillett v Holt at 226; Sidhu at 526.

13. [167]

    As to detriment, the question is whether the plaintiff would have been better off if they had not relied on the representation: Wantagong at [90]. The relevant detriment is not the loss flowing from non-fulfilment of the promise but whether departure from the promise would be unconscionable in all the circumstances. The required detriment must be substantial, which depends on whether it would be unjust or inequitable to allow the assurance to be disregarded: Wantagong at [68]-[69]. For example, in Wantagong the plaintiff stood to benefit in ways not anticipated when his parents made representations concerning a proprietary interest in the family farm. Ball J held that it was not unconscionable to permit the parents to depart from the representations, as otherwise the plaintiff “would be benefitted at the expense of his siblings in a way that was neither anticipated nor intended when his parents sought to achieve a just distribution of assets that they had accumulated”: at [93].

14. [168]

    As to suggested assurances in this case, I have found that the parents made the 1994 representations. I have found that Mrs Pirrottina Snr made the 1996 representations. There was no evidence suggesting that Mr Pirrottina Snr then held a different view to that expressed by his wife. I note also Mrs Pirrottina Snr’s comments in September 2020, as recalled by Mr Lopresti, that Mrs Pirrottina Snr said that the house “belongs to Sam … that’s what my husband wanted”: see [110]. As such, I find that the representations made by Mrs Pirrottina Snr in 1996 expressed the intentions of both parents.

15. [169]

    I do not accept that the express representations were too vague or lacked specificity. Mrs Pirrottina Snr said the area of land indicated by Sam, bounded by the driveway, a drainage passage and the main orchard, on which the parents would build him a house, “will be yours”. True it is that the parents and Sam do not appear to have gone into detail as to how this would be achieved, from a legal perspective. That is, the focus was not on intangible legal rights but on the tangible property which Sam expected to get. They did not stop to reflect whether some further legal transaction was necessary to complete the promised title: Cobbe at [68], followed in Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 at [150] (per Gleeson JA, Beazley P and Leeming JA agreeing).

16. [170]

    Nor do I accept that the parents and Sam were then aware that it was impossible to subdivide the Lot from the Mangrove Mountain farm. The evidence indicates that the family became aware, during the course of seeking development approval to construct Sam’s house, that it was not possible to build two houses on the property. The evidence does not indicate that the family enquired as to whether it was possible to subdivide the farm, nor that they had any interest in doing so, where they intended that the Mangrove Mountain farm would stay in the Pirrottina family.

17. [171]

    The fact that the representor made a will shortly after the representation was said to have been made, but in terms inconsistent with the alleged promise, indicates that the representation was not in fact made: Bassett v Cameron [2021] NSWSC 207 at [536] (per Ward CJ in Eq); Laird v Vallance [2023] VSCA 138 at [90]. These cases were relied on by Rocco, where the parents’ subsequent wills made no mention of Sam’s equitable interest in the Mangrove Mountain farm: see [65]-[66]. However, unlike Bassett v Cameron or Laird v Vallance, Mr and Mrs Pirrottina Snr’s wills were made after they had divested their interest in the Mangrove Mountain farm. It is one thing to be said to have represented that you would, for example, leave your farm to a particular child and subsequently make a will leaving that farm to others. Here, having already transferred the Mangrove Mountain farm to Sam and Rocco, it was unnecessary for the parents to address that subject in their wills at all, where the Mangrove Mountain farm would not form part of their estates.

18. [172]

    As for the implied representation – that the parents would not sell the Mangrove Mountain farm but intended that it remain in the Pirrottina family – Mr and Mrs Pirrottina Snr obviously wanted the farm and business to stay in the family. Angelina’s recollection of family discussions on this subject in 1994 is echoed in Sam and Rocco’s recollection of their parents making the same point to them in 2001: the parents wanted to transfer the farm to those of their children who were then interested in continuing to run the business, being Sam and Rocco, on the condition that they did not sell the farm. The parents were trying to protect their life’s work from the predation of those of their children who did not wish to continue the family business, which the parents had built up “from nothing”.

19. [173]

    Rocco submitted that no implied representation arose in the circumstances, given his own role in the family business. A similar argument was accepted in Laird v Vallance [2023] VSCA 138 at [83], where the plaintiff’s claim rested on a representation that the family farm would be left to him, in circumstances where other children also contributed to running the farm. However, when the express representations were made in 1994 and 1996, Sam was taking the lead, of the children, in his commitment to continue the family business: see [27]-[28], [33]. That is not to say that Rocco did not also work on the farm. That is not to say that Rocco’s role did not increase years after the implied representation was said to have been made, following Sam’s car accident. But it is to say that I am satisfied that the implied representation was made at the time alleged, from 1994 to 1996, and, in any event, before 2002.

20. [174]

    Rocco also submitted that the parents’ representations, if made, were subject to conditions, being the continuation of the partnership and a harmonious relationship between the brothers. Reliance was placed on Horn v GA & RG Horn Pty Ltd [2022] NSWSC 1519, where Meek J considered whether a promise to leave a farm in a will was conditional on the property continuing to be used in the family as an “ongoing farm”. Whilst his Honour accepted that some generalised statements had been made by the deceased to that effect, Meek J did not regard such statements as “conditions”: at [983]. Here, there is no evidence that such conditions was discussed or even “generalised statements” made. Further, the parents’ assurances were given six to eight years before the partnership was formed. I am not satisfied that the parents’ representations were subject to such conditions, where the partnership had yet to be mooted.

21. [175]

    As to reliance, Sam said he assumed that the house and the Lot were his. Sam knew from when he moved into his house that there was no separate title or subdivision that gave him the right to the Lot but said “My mother and father’s word was good enough as a contract.” Sam never thought about the fact that there was no separate title; he just relied on his parents’ promise. I accept that Sam relied on his parents’ representations. Sam took his parents at their word and believed that the Lot and the house were his and that the Mangrove Mountain farm would stay in the family. Sam would have acted differently if the representations had not been made, specifically, he would have taken up his parents’ offer to buy him a block of land on which to build his own home.

22. [176]

    As to detriment, this element falls to be considered in circumstances where the parents never sought to depart from their assurances. The parents’ professed motivation for transferring the Mangrove Mountain farm to Sam and Rocco was to keep the farm and the business in the Pirrottina family by entrusting these assets to those of their children who were prepared to continue the business and who had agreed not sell the farm. There is no suggestion that the parents thereby sought to interfere with Sam’s interest in the Lot or Sam’s house.

23. [177]

    Considering detriment and unconscionability in this hypothetical context, Sam both benefited from, and suffered detriment, as a consequence of reliance on his parents’ assurances. Sam suffered a detriment as he forewent his parents’ offer to buy him a block of land on which he could build a house in favour of a house being constructed on the Lot. Sam and his wife also forewent the possibility of a financial contribution to their married life from Mr Falvo in favour of his contribution to the construction of a driveway, footpath and landscaping around the house. Sam ignored his father-in-law’s offer of a job in Sydney in property development, although there is no evidence that such a career would have been more financially advantageous than continuing to live and work on the Mangrove Mountain farm. Nor is there evidence that, when continuing to work in the family business, Sam was paid at a level of remuneration below the market rate. Against this, Sam received a benefit in the form of rent-free housing, with utilities paid by his parents.

24. [178]

    Nonetheless, the detriment suffered by turning down his parents’ offer to buy him a block of land of his own, rather than accommodation attended with the uncertainties of living on someone else’s property, was a substantial detriment. In the circumstances, I consider that the elements of estoppel by encouragement are established such that Sam had an equitable interest in the Lot as a consequence of his parents’ representations, on which he relied to his detriment, making it unconscionable for the parents to go back on their word, if they had chosen to do so.

A personal equity?

1. [179]

   Sam seeks a declaration that Rocco holds his half-share of the Mangrove Mountain farm on trust for Sam to the extent of Sam’s equitable interest in the Lot. Alternatively, Sam seeks a declaration that he is entitled to occupy the Lot, with a right of way, rent-free, for so long as he occupies the Lot as his home. Sam contends that the Mangrove Mountain farm was transferred to himself and Rocco in 2002 subject to his equitable interest. Sam contends that, prior to the transfer, Rocco was aware of Sam’s equitable interest. Further, Rocco was aware of the representations made by the parents to Sam in respect of the Lot, his reliance on those assurances and the detriment he would now suffer if the representations were now departed from.

2. [180]

   Further, Sam contends that, prior to the transfer, Rocco represented to Mr and Mrs Pirrottina Snr and Sam that, if the property was transferred to the brothers, then Rocco would not sell the farm but would continue to run the family business from the Mangrove Mountain farm. Rocco is said to have acknowledged or represented to the parents and Sam that his interests would be preserved following the transfer. That acknowledgement is said to have been implied by Rocco’s conduct, including his silence as to Sam’s interest at the time the transfer was discussed and the fact that Rocco never challenged the existence of Sam’s interest in the Lot, including when Mr Falvo completed the road and landscaping works around Sam’s house. Similarly, Rocco is said to have represented by implication that, if the transfer took place, he would not interfere with Sam’s interest.

3. [181]

   Rocco contended that there was no personal equity here as the relevant promises were not made by Rocco but by Mr and Mrs Pirrottina Snr. Nor did he take title to the Mangrove Mountain farm with notice of Sam’s interest, or with any apprehension that Sam would one day claim more than a half-share of the property.

4. [182]

   A "personal equity" is simply the right to access the courts of equity, that is, a personal right to seek an equitable remedy. Indefeasibility of title "in no way denies the right of a plaintiff to bring against a registered proprietor a claim in personam, founded in law or in equity, for such relief as a court acting in personam may grant”: Frazer v Walker [1967] 1 AC 569 at 585 (per Lord Wilberforce); approved in Bahr v Nicolay (No 2) (1988) 164 CLR 604 in respect of the Torrens system: at 637 (per Wilson and Toohey JJ).

5. [183]

   The indefeasibility provisions do not protect a registered proprietor from the consequences of their own actions, where those actions give rise to a personal equity in another, such an equity arising from conduct of the registered proprietor before or after registration: Bahr v Nicolay at 638. As Brennan J there observed at 654:

6. [184]

   The reported cases are largely concerned with the circumstances in which a personal equity will bind a third party, commonly, a purchaser of land under a contract for sale of land. The import of these cases is that, in order to give rise to a personal equity, the registered proprietor must have notice together with “the additional factor to be superadded” being “some form of acknowledgment of the unregistered interest, or an agreement or undertaking to act in accordance with it, from which the registered proprietor later resiles”: The Presbyterian Church (NSW) Property Trust v Scots Church Development Ltd (2007) 64 ACSR 31; [2007] NSWSC 676 at [112] (per Young CJ in Eq), following Heggies Bulkhaul Ltd v Global Minerals Australia Pty Ltd (2003) 59 NSWLR 312; [2003] NSWSC 851 at [103] (per Austin J).

7. [185]

   For example, in Bahr v Nicolay, Mr and Mrs Bahr sold and leased back land, in order to raise funds to develop the site. The contract of sale provided that, on the expiration of the lease, Mr and Mrs Bahr could buy back the land for a set price. The purchaser later refused to sell back the land. Mr and Mrs Bahr's contractual right was a personal equity enforceable against the registered proprietor, not precluded by indefeasibility of title, as the registered proprietor accepted the transfer of the land on terms that they would be bound by the contract.

8. [186]

   Another example was given in Loke Yew v Port Swettenham Rubber Co Ltd [1913] AC 491. If an agent purchased land for their principal but then registered title in their own name, "The Court can order him to do his duty just as much in a country where registration is compulsory as in any other country…": at 504-505 (per Lord Moulton). In Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198, a contract for sale of land annexed an unregistered lease between the vendor and tenant. By the contract, the purchaser agreed to abide by the terms of the lease. On becoming the registered proprietor, the purchaser sought to evict the tenant. The contract gave rise to a personal equity, the enforcement of which was not precluded by registration: at 212 (per Wood J).

9. [187]

   Finally, in Ryan v Starr [2005] NSWSC 170, a contract for sale of land required the purchasers to acknowledge an unregistered easement between the vendor and their neighbour. On becoming registered proprietors, the purchasers refused to register the easement. While there were no personal dealings between the neighbour and the purchaser, White J concluded that the neighbour was entitled to rely on the "personal equity" exception to indefeasibility. His Honour followed Barwick CJ in Breskvar v Wall (1971) 126 CLR 376 at 384-385, who observed:

10. [188]

    A constructive trust was imposed, where the purchasers were well aware of what they had agreed to such that their subsequent repudiation of the neighbour's interest was unconscionable.

11. [189]

    Rocco denies being aware of Sam’s interest at the time of the transfer in 2002. Rocco said he believed that he was receiving half of the partnership assets equally, of which the farm was a part, without any encumbrance. Rocco said that, if he had known that Sam would later claim that the farm was not owned 50/50, he would have raised this with his parents and insisted that Sam pay a greater share of the loan repayments; he would not have agreed to take on an equal liability for the loan from the NAB. Rocco said “I wouldn’t have tooken the offer on” if he had understood that Sam was receiving an additional interest in the Lot, as Rocco already had debts in respect of Rocco’s farm, “I had a lot of debts over me. … I wouldn’t have gotten into that loan if I knew I was not receiving 50% of everything.” Further, “I wouldn’t have, cause that was not fair. I wouldn’t have signed up that deal.”

12. [190]

    Rocco said that, unlike his other siblings, his parents did not buy a property for him and the only assistance given was to act as guarantors for his loan to purchase the farm. He would also have objected to Mrs Pirrottina Snr paying the electricity, gas and other payments in respect of Sam’s house and refused to allow Sam to make those payments from partnership funds. The fact that Rocco proceeded to pay half of the loan repayments, and not object to the payment of utilities for Sam’s house, was said to corroborate the fact that Rocco was not aware of Sam’s interest at the time of the transfer.

13. [191]

    There was an air of unreality to Rocco’s evidence. As Rocco agreed in cross-examination, he knew that he was getting a good deal when his parents transferred the Mangrove Mountain farm to himself and Sam. The debt that he and Sam were taking on was much less than the value of the Mangrove Mountain farm. Further, Sam and Rocco accepted the transfer of the business on the basis that their parents continued to have the final say on business decisions. The loan repayments were made from the partnership bank account, which was operated by Mrs Pirrottina Snr. As such, any decision on the use of partnership funds to make the loan repayments was left by Rocco to his mother. For practical purposes, Rocco had little say in the matter.

14. [192]

    Nor is it entirely clear on what basis Rocco would have objected to Mrs Pirrottina Snr paying the electricity and gas for Sam’s house, where she was making the same payments in respect of Rocco’s farm. Nor do I accept that Mr and Mrs Pirrottina Snr did not assist Rocco financially to buy Rocco’s farm. Nor is it obvious that the loan in respect of Rocco’s farm would have precluded him from taking on half of the parents’ business loan. The parents were meeting the running expenses of Rocco’s farm. As a consequence of Rocco continuing to live with his parents, he was able to use rent from the house on Rocco’s farm to assist in making mortgage payments in respect of that farm. I do not accept Rocco’s evidence on this score.

15. [193]

    I have found that Sam reported the parents’ 1994 representations to Rocco the following day. I have accepted Angelina’s evidence of conversation on this subject at the Pirrottina family kitchen table, which included Rocco: see [35]. I have also found that Rocco was present when Mrs Pirrottina Snr repeated the substance of the parents’ 1994 representations to Mr Falvo in early 1996: see [1]-[43]. As such, Rocco was aware of the assurances made by Mr and Mrs Pirrottina Snr to Sam in respect of the Lot and the house. Rocco also knew that Sam had relied on those assurances to his detriment, by foregoing the opportunity to have the parents buy him a block of land: see [1]. Over the next six to eight years, Sam’s house was built on the Lot, on which Mr Falvo also constructed a footpath, road and hard landscaping. All of this took place in clear view of Rocco, who was living with his parents in the adjacent homestead. I find that Rocco was aware of Sam’s interest at the time of the transfer.

16. [194]

    In 2002, when Mr and Mrs Pirrottina Snr transferred the Mangrove Mountain farm to Sam and Rocco as tenants-in-common in equal shares, Sam’s right to occupy the Lot and house was not re-visited. Nor does the evidence suggest that the parents intended, by the transfer, to defeat or diminish Sam’s interest: see [176]. Rocco understood that he was going to get title to the Mangrove Mountain land but that his parents were going to maintain control over the land, its improvements and buildings. Rocco and Sam promised that they wouldn’t sell the land. Rocco agreed that he and Sam accepted the land on these conditions. The conditions, while not legally enforceable, indicate the parties’ intentions that, apart from the change in registered proprietors, the conduct of the family business and the occupation of the Mangrove Mountain land would continue as before.

17. [195]

    Sam contended that Rocco acknowledged or represented by silence that Sam’s interest would be preserved. But is it necessary to find some “superadded” factor, such as some form of acknowledgement of Sam’s interest, or an agreement or undertaking to act in accordance with it, in a case such as this? I think not, where the principles summarised in Presbyterian Church v Scots Church are in respect of property transactions with third parties. Rocco was not a third party, but a family member with intimate knowledge of the arrangements made between his parents and Sam in respect of the Lot and Sam’s house.

18. [196]

    Sam’s interest in the Lot and Sam’s house was not discussed at the time of the transfer, as the continuation and preservation of Sam’s interest ‘went without saying’. Each of Mr and Mrs Pirrottina Snr, Sam and Rocco intended and understood that the Mangrove Mountain farm was being transferred from the parents to the sons in order to preserve the status quo, save for the identity of the registered proprietors. Indeed, the only reason the registered proprietors were being changed was to preserve the existing arrangements for the Pirrottina family going forward. This is not a case where Rocco knew something which he did not disclose and, thus, it is not necessary to consider whether he had a duty to say something. Rocco did not think he was getting a half-share in the Mangrove Mountain farm, including a half-share in the Lot and Sam’s house, but kept this to himself. Rocco was of the same mind as his parents and brother. He knew that the parents were giving the Mangrove Mountain farm to himself and his older brother subject to Sam’s existing rights and interests.

19. [197]

    To now depart from the basis upon which Rocco agreed to accept the transfer of title to the Mangrove Mountain farm amounts to an unconscionable attempt to deny the unregistered interest which Rocco undertook to subject his registered title. This attracts the intervention of equity. I will return to what relief, if any, should be granted at [224].

Alternative estoppel claims

1. [198]

   If I am wrong about Sam’s claim based on a personal equity, then Sam seeks a declaration that Rocco is estopped from denying Sam’s interest in the Lot. Sam said he was induced by the representation made by Rocco to the parents shortly before the transfer (see [61]), together with subsequent implied representations by silence in the face of Sam’s continued occupation and improvement of Sam’s house, that Rocco would not seek to sell the Mangrove Mountain farm, that the Lot belonged to Sam and that Sam was entitled to occupy the Lot for his lifetime. In reliance on Rocco’s representations, Sam continued to live in his house and conduct himself in the manner earlier described (at [156]), and also to carry out further improvements to his home at his expense. Sam would now suffer detriment if there was a departure from the assumptions that he made, induced by Rocco’s representations, from which it would be unconscionable for Rocco to now resile. Alternatively, Sam claims that an estoppel by acquiescence operated, relying on essentially the same material facts.

2. [199]

   Rocco denied that an implied representation by silence was made and further said that the improvements were paid for by the family business or the partnership. Rocco denied that he induced Sam to assume anything or that any reliance was reasonable or sensible. Rather, Sam and his family lived, and continue to live, in the house rent-free. Sam took a risk in paying money towards a property over which he had no specific legal rights.

3. [200]

   The principles in respect of estoppel by representation are set out at [160]-[167]. The elements of estoppel by acquiescence are similar; the only difference is that the defendant makes a passive, rather than an active, representation by remaining silent whilst aware of the plaintiff’s erroneous assumption that they have a proprietary interest in the defendant’s property: Carter v Brine [2015] SASC 204 at [327] (per Blue J); E Co v Q [2018] NSWSC 442 at [921]-[922] (per Ward CJ in Eq).

4. [201]

   Estoppel by acquiescence arises “where a person improves land in the mistaken assumption that it is his own, the true owner being aware of the mistake and deliberately doing nothing to undeceive the other”; in such a case a Court of Equity, so far as it can, will prevent the owner from profiting by the mistake: The New South Wales Trotting Club Limited v The Council of the Municipality of The Glebe (1937) 37 SR (NSW) 288 at 308 (per Jordan CJ). The owner may be precluded from exercising their legal right where “he has so far acquiesced in the mistaken view of another person that circumstances exist which do not in fact exist, that it would be an act of fraud on his part for him to assert and insist on his strict legal right as against that person”: Willmott v Barber (1880) 15 Ch D 96 at 105-106 (per Fry J).

5. [202]

   I have already found that Rocco was aware of the assurances made by Mr and Mrs Pirrottina Snr to Sam in respect of the Lot and the house in the 1990s. Rocco knew that Sam had relied on those assurances to his detriment, by foregoing the opportunity to have the parents buy him a block of land. There is no dispute that, when Mr and Mrs Pirrottina Snr transferred the Mangrove Mountain farm in 2002, Rocco represented to his parents and Sam, that the brothers would not sell the land and would continue the family business.

6. [203]

   Sam said they did not discuss his house or the Lot at the time of the transfer, and so he assumed that nothing had changed and the house and the Lot remained his. Sam said that if he had known that one day Rocco would say that Sam’s house was not his house or his land, then Sam would have asked his parents to make the position formal in a legal sense at the time when the farm was transferred or would have asked them to buy him another house.

7. [204]

   In the 20 years which followed, Sam renovated and extended the house and improved the Lot, in plain sight and in consultation with his parents and brother. Sam said he talked to his parents and Rocco about the work he was doing on his house and land. No one ever suggested that it was not his house or his land. Based on this assumption, Sam carried out this work at his expense, continued to live at the house and continued to work on the Mangrove Mountain farm for the modest amounts he was paid. Sam said he would not have done these things if the house and land were not his. Rather, he would have accepted his parents’ offer to buy him a house and land elsewhere. Sam maintained that he would not have spent all that money on his house if he did not have the right to live there.

8. [205]

   Rocco said he did not object to the improvements being performed because, in his mind, while Sam received the immediate benefit, Rocco would also benefit from an increase in the value of the farm as a whole as he said he believed he was entitled to 50% of the farm. However, Rocco agreed that he never claimed to any of the family members that he had an interest in Sam’s house. Rocco agreed that he never once said to Sam that it was good that he was improving his house, where Rocco owned half of the house.

9. [206]

   I have found that Sam and Marisa funded the improvements to Sam’s house and the Lot from 2004 on, albeit with some assistance from Mr and Mrs Pirrottina Snr which was minimal in the scheme of things. I do not accept Rocco’s evidence that he refrained from objecting to the work as he perceived that these improvements also benefitted him, given his half-interest in the Mangrove Mountain farm. Rather, Rocco understood that his parents had given Sam the house. Mrs Pirrottina Snr’s statements that that was the case, at the meeting in September 2020, were not contradicted by Rocco. Further, in November 2021, Rocco instructed his solicitor to add a clause to the proposed Deed recording Sam’s “ownership interest” in the house and surrounding improvements: see [123]-[124]. Rocco understood that Sam was entitled to live there with his wife and family and, as a consequence, was also entitled to improve and extend Sam’s house as he saw fit to make his family comfortable.

10. [207]

    There is no dispute that Rocco represented to Mr and Mrs Pirrottina Snr, shortly before the transfer, that he would continue to run the family business with Sam and not sell the farm. Over the next 20 years, Rocco said nothing whilst Sam continued to occupy and improve Sam’s house. The renovations and extensions were substantial. The cost exceeded the initial amount outlaid by the parents to build the house in 1996 (accepting, of course, that building costs likely increased over time). Rocco never suggested that Sam was not entitled to treat the Lot and Sam’s house as his own, and to renovate it accordingly. This amounted to a representation by silence that Rocco recognised Sam’s interest in the Lot. I am satisfied that Sam relied on Rocco’s express representations to the parents, and his implied representation by silence, when Sam continued to outlay substantial funds to improve the Lot and the house. I am also satisfied that Sam would now suffer a detriment if Rocco resiled from those representations. In all of the circumstances, I consider that it would be unconscionable to permit Rocco to do so.

11. [208]

    If it be the case that Sam’s understanding of his interest in the Lot and the house was mistaken, and Rocco correctly understood that he had a half-share in the Mangrove Mountain farm unencumbered by Sam’s interest, then I am also satisfied that estoppel by acquiescence has been established. Sam assumed that the Lot, and the house built on it, was his. Rocco was aware of Sam’s assumption. Over a 20 year period, Sam improved the Lot on the basis of that assumption, whilst Rocco chose not to disabuse his brother of that assumption. This gives rise to estoppel by acquiescence, as it would be unconscionable in these circumstances for Rocco to benefit from his brother’s sustained expenditure and improvement of the property over 20 years by insisting on Rocco’s strict legal rights.

Unclean hands

1. [209]

   Rocco maintained that equity would not assist Sam, as he was said to have unclean hands, relying on Meek J’s summary of the doctrine in D Capital 2 Pty Ltd v Western (2022) 20 BPR 42919; [2022] NSWSC 1064 at [881]-[899]. This situation was said to have come about where Sam allowed the partnership to make the mortgage payments and expenses associated with Sam’s home. Sam was said to have thereby breached the ‘no profit’ rule by accepting a benefit in excess of his 50% interest in the partnership, where the Lot was part of the mortgaged land. Sam was said to have been thereby enriched by partnership payments in excess of his 50% entitlement, and without the fully informed consent of Rocco.

2. [210]

   The principles are set out by Campbell J in Black Uhlans Inc v New South Wales Crime Commission [2002] NSWSC 1060 at [137]-[150], distilled in Lewis v Nortex Pty Ltd (in liq) [2004] NSWSC 1143 at [137]-[138] and D Capital 2 Pty Ltd v Western at [881]-[899]. In short, the Court looks at the past conduct of the applicant towards the defendant. There is a limit on the types of conduct which will be material, where equity does not demand that applicants “have led blameless lives” (Loughran v Loughran (1934) 292 US 216 at 219 (Brandeis J) and is uninterested in “general naughtiness”: FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552 at 554 (per Young J). Specifically, the conduct must have an “immediate and necessary relation to the equity sued for”: Lewis v Nortex at [138]. Further, there is no general rule in equity that, where there has been any impropriety, equity will allow the loss to lie where it falls: Lewis v Nortex at [138]. Rather, even where there has been some impropriety, equity may not flatly refuse relief, but may grant relief conditioned to ensure that a wrongdoer does not have the benefit of his wrongdoing.

3. [211]

   When the Mangrove Mountain farm was transferred to Sam and Rocco in 2002, it was Mrs Pirrottina Snr who decided what would be paid from the partnership bank account, and Rocco consented to this. The extent to which the mortgage payment was made from the partnership bank account, or apportioned between the brothers to take into account Sam’s house, was a decision made by Mrs Pirrottina Snr, with which her sons did not demur. Likewise, the extent to which the utilities for Sam’s house (and Rocco’s farm) were paid from the partnership bank account was determined by Mrs Pirrottina Snr. In 2015, Rocco took over this task and continued to make mortgage payments, and pay for the utilities on Sam’s house (and Rocco’s farm), as his mother had done before him.

4. [212]

   It was not until after an ‘in principle’ buy-out agreement had been reached in September 2020, that Sam took over the role of paying bills from the partnership bank account, and Rocco did not argue with this either. Sam continued to make mortgage payments and pay for the utilities on Sam’s house (and Rocco’s farm) as Rocco and their mother had done before him. After the partnership came to an end, which I found occurred in January 2020, Sam stopped paying the electricity for his house from the partnership account, but continued to pay for gas through that account, for reasons earlier set out. Mortgage payments were suspended in March 2020.

5. [213]

   I am not satisfied that Sam had ‘unclean hands’ in these circumstances, where he was not responsible for making the decisions as to how the mortgage repayments and utilities would be paid by the partnership from 2002 to 2020. To the extent that Sam made these payments from 2020 on, he followed what had been done before by Mrs Pirrottina Snr and Rocco. His impropriety in doing so is not obvious. Nor is there any immediate or necessary relation between any such impropriety and the equitable interest. This defence has no application.

Laches

1. [214]

   Rocco contended that any equitable relief should be refused on the grounds of laches, acquiescence and delay. Rocco submitted that the time for Sam to raise his interest in the Lot was when the farm was transferred in 2002, when Mr and Mrs Pirrottina Snr were both alive and could readily address his claim. Further opportunities were said to arise when the parents’ wills were later admitted to probate. Rocco has been thereby prejudiced, since “[b]y the lapse of time, vital evidence necessary for meeting the plaintiff's claim has been lost”: Crago v McIntyre [1976] 1 NSWLR 729 at 748 (Holland J).

2. [215]

   The defence of laches comprises three components: knowledge of the wrong, delay and unconscionable prejudice caused by the delay: Crawley v Short (2009) 262 ALR 654; [2009] NSWCA 410 at [163] (per Young JA, Allsop P and Macfarlan JA agreeing). The question is whether, in all the circumstances, “it would be practically unjust to give a remedy” Crawley at [164]. As Young JA further stated at [175]:

3. [216]

   In respect of the plaintiff’s knowledge of the wrong, knowledge encompasses knowledge of the facts giving rise to the cause of action and, as such, the "availability of the means of knowledge is as good as knowledge": Savage v Lunn [1998] NSWCA 204 (unreported) at 3 (per the court); Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) and (No 10) (2008) 39 WAR 1; [2008] WASC 239; [2009] WASC 107 at [9306] (per Owen J). As Dr I. C. F. Spry states in his treatise, The Principles of Equitable Remedies (9th ed, 2014, Thomson Reuters) at 447, "[i]t is ordinarily sufficient that the plaintiff has been put on suspicion, that is, that he is aware of sufficient matters to raise in his mind a doubt whether an infringement of his rights has taken place."

4. [217]

   In respect of the element of unconscionable prejudice, there must be substantial detriment, not merely a trivial inconvenience, caused by the plaintiff’s delay: Duke Group Ltd (In liq) v Alamain Investments Ltd (2003) 232 LSJS 58; [2003] SASC 415 at [153] (per Doyle CJ); Bell Group Ltd (in liq) v Westpac Banking Corp (No 9) and (No 10) at [9314] (per Owen J). Prejudice may arise where evidence is lost or witnesses have passed away. In this respect, the issue is not whether evidence per se may have been lost; rather, it is whether evidence that "may have cast a different complexion on the matter has been lost”: Orr v Ford [1989] HCA 4; (1989) 167 CLR 316 at 330 (per Wilson, Toohey and Gaudron JJ); Gillespie v Gillespie [2013] QCA 099; [2013] 2 Qd R 440 at [94]-[95] (per Margaret Wilson J, McMurdo P and White JA agreeing).

5. [218]

   Sam did not raise his interest in the Lot or his house at the time of the transfer. Sam did not think he needed to have a legal document in respect of his house, “That was my house that my mother and father built for me to raise my family, and it was the Italian way, being the oldest son that was running my family business.”

6. [219]

   It is not entirely clear why Sam should have raised his interest in the Lot when the parents’ wills were admitted to probate, where the Mangrove Mountain farm did not form part of the parents’ estates. In any event, Sam did not take the opportunity when his father passed away, in 2018, to get his mother to sign a piece of paper confirming that he had an interest in the house. Sam said, “I didn’t think I had to”.

7. [220]

   Sam and Rocco were the executors of their mother’s Estate. Sam agreed that he was dealing with a solicitor at the time in respect of the administration of the estate but did not think to raise his interest in the farm with the solicitor, “I didn’t think I had to. … My house was never an issue. … No one ever raised it because everyone knew it was my house. It was always referred to as my house.” Also relevant, I note that three weeks before Mrs Pirrottina Snr died, Sam reached an agreement with his brother, in the presence of Mr Tisano, Mr Lopresti and Mr Macri, which provided a way to buy-out Rocco’s share in the partnership and the Mangrove Mountain farm, excluding the value of Sam’s house, such that there was then no particular reason to think that his interest in his house was not adequately acknowledged and protected.

8. [221]

   Sam proceeded to obtain a valuation, which separately identified Sam’s house and put a value of the extent to which it contributed to the value of the Mangrove Mountain farm, for the purpose of deducting this from the ‘buy-out’ figure. Draft deeds were exchanged, which recognised Sam’s “ownership interest” in the house and its surrounding improvements. The first time that Sam’s equitable interest was denied was in Rocco’s letter before action of 6 July 2022.

9. [222]

   As to Sam’s knowledge of the wrong, there is no evidence that Sam was aware, nor put on suspicion, of sufficient matters to raise in his mind a doubt that Rocco would deny Sam’s equitable interest until July 2022. Rather, Sam’s interest had been affirmed by Mrs Pirrottina Snr in September 2020, with which Rocco did not demur. Sam’s interest had been acknowledged by Rocco’s addition to the draft Deed in November 2021. I consider that Sam only acquired sufficient knowledge shortly before commencement of these proceedings, such that there is no relevant delay.

10. [223]

    If I am wrong about this, then nor do I consider that any unconscionable prejudice was caused by delay. The relevant prejudice is said to be the loss of the parents’ evidence. As already noted, the issue is not whether evidence per se may have been lost, but whether evidence that may have cast a different complexion on the matter has been lost: Orr v Ford at 330. There was evidence at trial as to what the parents would have said in respect of Sam’s interest, as Mrs Pirrottina Snr articulated her views on this subject at the meeting of September 2020, when she also said “that’s what my husband wanted”. Neither son expressed any disagreement with their mother’s statements at the time. This defence fails.

Equitable relief

1. [224]

   Sam seeks a declaration that he has an equitable interest in the Lot, together with a declaration that Rocco holds his title to the Mangrove Mountain farm on trust for Sam to the extent of his equitable interest. Sam submitted that the fact that the Lot was not capable of subdivision did not preclude such relief, where Sam did not seek separation of the farm into two portions. Rather, the appropriate relief to satisfy Sam’s expectation and to achieve justice between the parties was to order a buy-out of Rocco’s interest (excluding the Lot) by Sam. In the alternative, Sam sought an order that, upon any sale of the Mangrove Mountain farm, he receive a sum representing the value of the Lot and improvements, or equitable compensation.

2. [225]

   Rocco submitted declaratory relief ought not be granted where the parents and Sam were said to have known that a separate title for the Lot was impossible. The Court ought not declare a trust over a portion of the Mangrove Mountain farm in the face of local government planning instruments; equity should follow the law. Declaration of a trust would affect Rocco’s ability to realise his interest in the land. Any relief should be in the form of equitable compensation, limited to the value of the improvements which Sam paid for personally. Further, Rocco submitted that Sam was wholly responsible for the breakdown of relationship between the brothers and the resulting dissolution of the partnership. In these circumstances, it was not unconscionable to sell the Mangrove Mountain farm. (I have earlier rejected this submission; both brothers contributed to the breakdown of the partnership.) Rocco sought an order under s 66G of the Conveyancing Act 1919 that a trustee be appointed for sale, with either party entitled to buy the property, whether at auction or otherwise, without payment of a deposit and by setting off that party’s entitlements to the proceeds against the money bid or offered.

3. [226]

   Where Rocco took the 2002 transfer subject to Sam’s unregistered interest, and then repudiated that unregistered interest after becoming the registered proprietor, equity may compel him to honour the unregistered interest by imposing a constructive trust: Bahr v Nicolay at 654. I see no reason to depart from that course in this case. True it is that declaration of such a trust will affect Rocco’s ability to recognise his interest in the land. That is the purpose of the equitable remedy: to address the unconscientious insistence by the legal owner of property that they own title free of the equitable interest: Ryan v Starr at [92].

4. [227]

   Rocco fully appreciated that he took title to the Mangrove Mountain farm subject to Sam’s interest and should not now be permitted to sell the farm as if that interest does not exist. The fact that the Lot cannot be sub-divided from the rest of Mangrove Mountain farm does not preclude the imposition of a constructive trust, but may have implications for what should happen next, where Rocco wishes to realise his interest in the property.

5. [228]

   It is timely to consider the expert evidence in respect of the value of the Mangrove Mountain farm and the Lot. This is relevant to any award of equitable compensation, any amount to be paid to Sam following a judicial sale, or calculation of any buy-out figure to be paid to Rocco. It may also be relevant to which equitable remedy should be deployed in this case.

6. [229]

   In May 2023, Parker J made orders, by consent, for the appointment of a joint expert to value the Mangrove Mountain farm and the Lot. In June 2023, valuer Mr Wood was jointly instructed to value the Mangrove Mountain farm and separately value the Lot “assuming that the Lot does not form part of the Mangrove Mountain Farm but has a right of access.”

7. [230]

   On 14 July 2023, Mr Wood valued Mangrove Mountain farm at $6.5 million. This figure comprised $4,047,000 in respect of the land alone, adopting a rate of $10 per square metre. To this was added the value of the orchards and improvements. Mr Wood regarded the property as “a prime parcel of real estate”. Mr Wood separately valued the Lot at $1.25 million, to which he added the value of the residence ($509,250), resulting in a total of $1.76 million. In doing so, Mr Wood assumed (as he had been instructed) that the Lot had separate title and a right of access to the public road.

8. [231]

   Sam also instructed actuary, Mr McBirnie, to value Sam’s life interest in the house and the Lot. The actuary took the value of the Lot as opined by Mr Wood, and apportioned 68.6% of the valuation ($1,207,000) to the value of Sam’s life interest and the remaining 31.4% ($553,000) to a remainder interest.

9. [232]

   Rocco submitted that Mr Wood did not value the Mangrove Mountain farm as part of a business. It was said to be worth more as a going concern. Nor did Mr Wood take into account the goodwill, or plant and machinery that would enable a person to conduct a profitable business from the land. His valuation was said to be outdated. A buy-out order may give Sam a windfall gain in acquiring an ongoing business, deny Rocco the opportunity to buy the Mangrove Mountain farm and was said to be inequitable. Further, Mr Wood’s assessment of the value of the Lot was said to be of little weight as it assumed “… separate title to the land and the provision of an access road”. Neither was the case. It was said to be unsafe to proceed on the basis of this valuation.

10. [233]

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

11. [234]

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

12. [235]

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

13. [236]

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

14. [237]

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

15. [238]

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

16. [239]

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

17. [240]

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

18. [241]

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

19. [242]

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

20. [243]

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

21. [244]

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

22. [245]

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

23. [246]

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

24. [247]

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

25. [248]

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

26. [249]

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

Buy-out of partnership assets?

1. [250]

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

2. [251]

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

3. [252]

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

4. [253]

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

5. [254]

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

6. [255]

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

7. [256]

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

8. [257]

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

9. [258]

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

10. [259]

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

11. [260]

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

12. [261]

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

13. [262]

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

14. [263]

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

15. [264]

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

16. [265]

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

17. [266]

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

18. [267]

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

Orders

1. [268]

   For these reasons, I make the following orders:

   1. (1)

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

   2. (2)

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

   3. (3)

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

   4. (4)

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

   5. (5)

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

   6. (6)

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

   7. (7)

      Parties to notify any errors or omissions within 14 days.

   8. (8)

      Liberty to apply in respect of Orders 4 to 6.