Nanevski Developments Pty Ltd v Slaveski; Mega-Top Cargo Pty Ltd v Nanevski Developments Pty Ltd

This judgment resolves, at least as to fundamental matters and some accounting issues, a dispute between two neighbouring families about the terms on which they agreed to purchase and develop two properties in Sans Souci. The venture was conceived in trustful amity, conducted in poorly documented confusion, and concluded in unrelenting acrimony.

The parties declined to follow advice from a solicitor, Mr David Glamcevski, given at the outset that they should record the terms of their arrangement in writing. They have now had to leave it to their lawyers and the Court to determine the legal consequences of what became a commercial debacle, much of which could have been avoided or at least simplified if Mr Glamcevski’s entirely correct advice had been followed.

The Court has heard two sets of proceedings. The principal proceedings concern the legal relationship between some or all of the parties (the Partnership Proceedings). The second action is a money claim begun in the Local Court and then transferred to this Court (the Local Court Proceedings). The Partnership Proceedings concern a venture between the plaintiff, Nanevski Developments Pty Ltd (Nanevski Developments) and the first defendant, Mr Ken Slaveski, to purchase and develop two properties in Sans Souci. Nanevski Developments is the defendant in the Local Court Proceedings.

Nanevski Developments is a building and development company owned and operated by the Nanevski family, which comprises Mr Ivan Nanevski, his wife Mrs Makedonka Nanevski and their son, Mr Tom Nanevski. Ivan and Makedonka are directors of Nanevski Developments and Tom, although not a director of Nanevski Developments, is the company’s Project Officer.

Mr Ken Slaveski and his wife, Mrs Biljana Slaveski, are directors of Mega-Top Cargo Pty Ltd (Mega-Top), which is the fourth defendant in the Partnership Proceedings and the plaintiff in the Local Court Proceedings. Mega-Top operates a freight forwarding and customs broking business, of which Nanevski Developments was a repeat client. Ken and Biljana are also the parents of Mr James Slaveski. Biljana and James are respectively the second and third defendants in the Partnership Proceedings.

Throughout these reasons, and without intending any disrespect, I shall refer to the parties who are natural persons by their given names. I shall also refer, where necessary, to Tom, Ivan, Makedonka and Nanevski Developments collectively as the Nanevski parties, and to Ken, Biljana, James and Mega-Top as the Slaveski parties.

The first property to be developed was at Riverside Drive (Riverside). It was eventually registered in the names of Ken (as to 1%) and James (as to 99%) as tenants-in-common. Riverside was purchased at auction on 7 February 2015 for $2.7 million, with Tom making the successful bid, although his name would not come to be recorded on the title. The purchase of Riverside settled on 8 May 2015.

The second property was at Vista Street (Vista Street). It was eventually registered in the names of Ken and Biljana as joint tenants. Vista Street was purchased at auction on 28 March 2015 for the price of $6.05 million, with Tom again making the successful bid. The purchase of Vista Street settled on 31 July 2015.

The central issue in the Partnership Proceedings is whether the relationship between the parties was a partnership or something to like effect. Declarations are sought as to interests in property, together with claims in conversion and quantum meruit. By a cross-claim, the Slaveski parties seek, in general terms, an accounting arising from whatever the Court finds the basic legal relationship between the parties to have been. In the Local Court Proceedings, Mega-Top brings a money claim against Nanevski Developments in relation to certain formwork and building supplies.

Tom deposed to the following conversation with Mr Glamcevski on or around 4 February 2015, which was not challenged under cross-examination and was corroborated by Mr Glamcevski’s oral evidence (as to which see paragraph [163] below):

This evidence epitomises a number of elements which characterised these proceedings. First, and as has been noted already, the apparent informality of the commercial arrangements between the parties, marked by little or no documentation; second, a substantial degree of dispute as to what was said during particular conversations; third, the critical role of Mr Glamcevski as an independent witness; and, fourth, the rapid breakdown of what were obviously once close relationships between the members of the Nanevski and Slaveski families.

Another aspect of these proceedings was the complexity and density of the facts which the parties asked the Court to consider and find. On the Nanevski parties’ case, those facts were said to prove their overarching contention that Nanevski Developments entered into a partnership, or an equivalent joint venture agreement, with Ken and/or Biljana and/or James Slaveski as at the respective times that Riverside and Vista Street were purchased, notwithstanding that Nanevski Developments was not registered on the title to either of the properties. It follows, according to the Nanevski parties, that Nanevski Developments holds a 50% beneficial interest in each of the properties, which is held on trust by Ken and James (as to Riverside) and by Ken and Biljana (as to Vista Street) respectively.

In answer to the Nanevski parties’ “overarching contention”, the Slaveski parties asserted that the “joint undertaking” between Ken and Nanevski Developments was only to take effect upon “each party contributing 50% to the cost of acquisition of the propert[ies]”. On the Slaveski parties’ case, the facts go to proof that “equalisation” of contributions between the joint venturers did not occur, such that no partnership (entailing equal beneficial interests in Riverside and Vista) ever came into existence between Nanevski Developments and Ken.

It is convenient, in summary, to note that the following concessions were made by counsel for the Slaveski parties during the course of closing submissions (both written and oral):

In light of these concessions, the Slaveski parties maintained their principal argument that, absent an “equalisation” of contributions to the purchase of each property, Nanevski Developments did not receive a beneficial interest in half of each property. Instead, it was argued that the “minimum equity” for the Court to do justice between the parties was to impose a charge on each property in the sum of Nanevski Developments’ contribution to the purchase price.

Senior Counsel for the Nanevski parties contended that, as a matter of law, an equitable charge is an inappropriate remedy in circumstances where it was conceded that Nanevski Developments held a proprietary right (i.e. a beneficial interest) in both Riverside and Vista Street, such that the quantum of such an interest, as opposed to its character, was the primary issue before the Court. So, too, it was submitted that reliance upon the concept of the “minimum equity” is inapt in these proceedings.

I should also record that in answer to a request from the Court, each party submitted a list of issues said to arise for determination by the Court. The Nanevski parties’ list had 36 questions and did not refer to the Local Court Proceedings. The Slaveski parties’ list had 23 questions. While there was clearly overlap between the questions posed, the parties were unable to agree on a joint list. Moreover, the parties’ final submissions did not specifically address either of their lists. I intend no criticism in making that observation. In these reasons the Court will address the matters that were specifically raised in the parties’ final written and oral submissions rather than the lists which, in fairness, were prepared before the real issues in dispute were ultimately crystallised by the course of the hearing.

In summary, for the reasons set out below, the Court has generally preferred the evidence of Mr Glamcevski and the contemporaneous documentary record (which also largely corroborates the evidence of Tom on critical issues) to conclude that there was a partnership between Nanevski Developments and Ken for the purchase and development of Riverside and Vista Street. Subject to any specific agreement otherwise, the parties rights and liabilities fall to be determined by reference to the Partnership Act 1892 (NSW) (the PA). Ken, James and Biljana hold their respective legal interests in those properties on trust for that partnership, which will now have to be wound up under the control of a receiver, who will also have to conduct an account between the partners as part of that winding up. The Court also makes a number of specific findings concerning payments and other allowances that will be relevant to that account.

Dr E M Peden SC and Mr P Knowles of Counsel appeared for the Nanevski parties. Mr C Robinson of Counsel appeared for the Slaveski parties.

The Court finds the facts to be as set out in what follows. Most of those facts appear from contemporaneous documents. Many others were uncontroversial or could not be seriously disputed. Where the Court makes findings below about matters that were seriously in dispute, there is a reference to where the Court’s reasons for that finding can be found. Such findings will also have been made with the benefit of the Court’s conclusions about the credit of the critical witnesses (see paragraphs [148] to [160] below), generally accepting the evidence of Mr Glamcevski and Tom, but not the evidence of Ken (unless against interest, inherently likely or corroborated by an independent witness or contemporaneous document).

Nanevski Developments was incorporated in June 1998. It is a private family company, of which Ivan and Makedonka are directors. Tom is not, and was not throughout the relevant period, a director of Nanevski Developments. Instead, he is employed by the company as a Project Manager, in which capacity he works full-time and is responsible for the day-to-day operations of the business and the advancement of its projects. Nanevski Developments had built and developed duplexes, villas, townhouses and single dwelling houses in the St George area in suburbs such as Sans Souci, Ramsgate and Ramsgate Beach.

At the time of the hearing Tom was 51 years of age and has lived with his parents since 2009. Ivan is 78 years of age and, along with Makedonka, is no longer involved in the day-to-day activities of Nanevski Developments. This is qualified by two matters to which Tom deposed without challenge:

From around 2006 until August 2018, at which point the tensions simmering between Tom and Ken reached their climax, which in turn has culminated in the present proceedings, the Slaveski and Nanevski families were next door neighbours in Sans Souci.

Ken is, and throughout that period was, a director and the company secretary of Mega-Top, which carried on business as a freight forwarding contractor and licensed customs broker. In the course of those operations, Mega-Top operated a warehouse and a fleet of small trucks and drivers, providing limited transportation and delivery services within Sydney. At all relevant times, Mega-Top employed Ms Grace El-Turk as its Financial Controller.

As at October 2014, Nanevski Developments had commenced construction of a nursing home on a site that it owned at Lawson Street, Sans Souci (Lawson Street).

Over time, the relationship between Ken and Tom developed from that of neighbours to that of friends. Their conversations would often touch upon matters of business, including the development of Lawson Street.

It is not in dispute, and forms an aspect of the cases advanced by both sets of parties, that Nanevski Developments engaged the services of Mega-Top for the importation of items including scaffolding, steel and windows which were intended to be used in the development of Lawson Street. For example, on 17 December 2014 a customs broker at Mega-Top sent an email copied to Ken which included:

Another factual matter not in dispute was that, for a period, Ken and Biljana experienced marital difficulties and were separated. However, there was disagreement between the parties as to the duration of that separation, being whether it extended beyond January 2015, as Ken deposed. Nothing turns on when co-habitation resumed. There is certainly evidence that animosity from Ken towards Biljana was still active in 2015 (see paragraph [69] below).

Tom gave evidence of the following conversation “towards the end of 2014”:

This evidence was not challenged in cross-examination and the Court finds this conversation occurred.

In early 2015, the principal of Raine & Horne, Sans Souci was Mr Ray Fadel, who was known to Tom from previous transactions.

During January 2015, Mr Fadel telephoned Tom and they had this conversation:

Following this conversation, Tom attended Riverside and inspected its exterior, which elicited concern as to whether it might be subject to a heritage designation. This concern was allayed following a further telephone conversation with Mr Fadel, who undertook to provide a copy of the contract for the sale of Riverside to Tom.

At some time prior to 21 January 2015, Tom got in touch with Ken and had this conversation:

On 21 January 2015, Mr Fadel emailed a copy of the contract for the sale of Riverside to Tom.

Tom also deposed to having this conversation with Ken at some time prior to 4 February 2015:

On Tom’s evidence, this conversation was followed shortly thereafter by another to the following effect:

Whether conversations to the effect of those recorded in paragraphs [34]–[37] above and in paragraph [41] below occurred between Tom and Ken was a significant point of contention between the parties. The Court finds those conversations did occur. The reasons for that finding are set out in paragraphs [166]-[169] below.

On 4 February 2015, Tom’s solicitors, McGrath, Dicembre & Company (the responsible solicitor being Mr Glamcevski) wrote to the solicitors for the vendor of Riverside:

There was no dispute that both Ken and Tom attended the auction for Riverside on 7 February 2015 and that Tom put the bids. Mr Fadel issued a receipt in Tom’s name for $135,000 paid by cheque (on whose account is not entirely clear) and described it as “5% deposit balance on settlement” in relation to Riverside, which the Court infers was pursuant to an acceptance of Mr Glamcevski’s request set out in the previous paragraph.

This conversation then occurred, on Tom’s evidence, between Ken and Tom:

On 7 February 2015, James, as purchaser, executed the contract for sale of Riverside.

On 9 February 2015, Tom delivered to Ken a bank cheque for $67,500 made out to Ken.

Ms El-Turk’s private bank statement for 9 February 2015 records a debit of $135,000 with the reference “Ken” and a deposit of $67,500 to her account, again with the reference “Ken”.

While Ms El-Turk was not called as a witness, the Court received into evidence as admissions certain parts of an affidavit Ms El-Turk had sworn on 15 May 2019 in relation to Corporations List proceedings brought by Nanevski Developments against Mega-Top in this Court. There was no dispute that Ms El-Turk was the financial controller of Mega-Top under the direction of Ken. She managed Mega-Top’s accounts and also made payments from Ken’s personal accounts, in addition to sometimes advancing her own funds to Mega-Top. The relevant admissions in relation to Riverside are (and the Court finds):

On 11 February 2015, Mr Glamcevski wrote to James concerning the purchase of Riverside, including:

In mid-February 2015, Tom gave Ken $100,000 in cash towards the purchase of Riverside. The reasons for this finding are set out in paragraphs [178] to [187] below.

On 4 March 2015, Tom emailed Mr Glamcevski concerning Vista Street, asking “Can you please see if you can get me 12 months settlement and 5% deposit if successful at auction”.

Ms El-Turk’s bank statement for 5 March 2015 records a credit from “Mega Cargo” described as “Loan repay” in the sum of $47,782.15. This is but one example of many where Ms El-Turk appears to have made loans to and received repayments from her employer Mega-Top, all apparently effected through her role as the company’s financial controller.

On 6 March 2015, Mr Glamcevski wrote to the solicitors for the vendor of Vista Street:

In mid-March 2015, Tom gave Ken $50,000 in cash towards the purchase of Riverside. The reasons for this finding are set out in paragraphs [178] to [187] below.

Sometime before 25 March 2015, Tom contacted Ken to ask if the latter would be interested in joining in the purchase of Vista Street. Ken’s affidavit evidence was that Tom said “Would you like to join me in a 50/50 partnership in the purchase of [Vista Street]?”. Tom’s affidavit evidence was that after telling Ken about Vista Street, the latter said “I would be interested that we can develop it on the same terms as Riverside”. There was no dispute that whatever their arrangement was in relation to Riverside, it also came to apply to Vista Street.

A further admission from Ms El-Turk’s affidavit (see paragraph [45] above) is that on or about 25 March 2015, Ken asked Ms El-Turk to transfer $175,000 to Nanevski Developments for his share of the deposit payable if Vista Street was successfully purchased at auction. An email from Ken to Ms El-Turk of 25 March 2015 making that request was in evidence.

The auction for Vista Street took place on 28 March 2015. There was no dispute that both Ken and Tom were in attendance and that the latter again put the bids, acquiring the property for $6,050,000 in the name of Nanevski Developments.

The unchallenged evidence of the real estate agent, Ms Pollard, was that the $302,500 deposit for Vista Street was paid on the day of the auction by a bank cheque for $150,000 and a company cheque from Nanevski Developments for $152,500.

In late March or early April 2015, Tom gave Ken $50,000 in cash towards the purchase of Riverside. The reasons for this finding are set out in paragraphs [178] to [187] below.

On 2 April 2015, Ken sent Tom this text message:

On 9 April 2015, Mr Glamcevski wrote to the proper officer of Nanevski Developments (marked for Tom’s attention) concerning the purchase of Vista Street:

Ms El-Turk’s bank statement for 28 April 2015 records a withdrawal described as “Loan” of $100,000.

On 2 May 2015, Ken emailed Tom concerning the purchase of Riverside:

I interpose that the fact Ken was asking Tom which interest rate is “suitable” is evidence of the understanding which the Court finds that he had that both parties would be liable for the loan as between themselves.

On 3 May 2015, this text message exchange took place between Ken and Tom:

Ms El-Turk’s bank statement for 5 May 2015 shows an internet withdrawal with the reference “OSR” (the Office of State Revenue) in the sum of $134,010.00, which the Court finds is for the stamp duty on the purchase of Riverside.

Mega-Top’s general ledger headed “Loan Grace El-Turk” records transactions between Ms El-Turk and Mega-Top between 7 January 2015 and 6 May 2015 totalling $350,000.

Ms El-Turk’s bank statement for 7 May 2015 records a withdrawal of $300,000 which the Court finds relates to the Riverside settlement. Her bank statement also includes a number of credits which are described as “Megacargo Loan Repay”, which the Court finds are references to repayments to her by Mega-Top of funds she had advanced to it.

Ken’s bank account statement for 7 May 2015 includes a debit of $308,016.35 with the particulars “Property Settlement”.

Although dated 1 May 2015, there was no dispute that this was an error for 11 or 12 May 2015, Mr Glamcevski wrote to James confirming that settlement of “Your purchase of the abovementioned property …[Riverside] was effected on the 8th May 2015” and enclosing a settlement statement. The settlement statement recorded an allowance for a deposit of $135,000 (being 5%).

On 20 May 2015, Tom and Ken had the following text message exchange:

On 21 May 2015, Ken sent text messages to Tom which included:

The evidence included minutes of meeting which Ken admitted he prepared for Mega-Top of a meeting dated 22 May 2015 at which he, Bilyana and Grace were present. The first item was:

On 25 May 2015, Ken emailed Grace at 10.44am:

At 12.09pm on 25 May 2015, Ken sent this text message to Tom:

Three different bank records, all dated 25 May 2015, record total transfers with reference “Ken Slaveski” from Mega-Top to Nanevski Developments totalling $500,000.

Mega-Top’s bank statement for 25 May 2015 includes a deposit to the account of $100,000.

Also on 25 May 2015, Ken emailed Mr Jeff Schembri, a financial consultant, which included:

Mr Schembri replied:

Ken sought advice from a business consultant, Mr Mark Bonney, about how to structure the purchase of Vista Street. On 3 June 2015, Mr Bonney emailed Ken and Mr Schembri, including:

Ken accepted that he gave the instructions set out under “Facts” to Mr Bonney. He also acknowledged that he did not take Mr Bonney’s advice about obtaining legal advice for the purposes of preparing a unitholder’s agreement. The subject of the email was “Slaveski Super fund Property purchase and development using SMSF”.

Mr Schembri obtained a valuation report for Lawson Street as at 16 June 2015 which described the property as “The property comprises a vacant parcel of land that has been excavated for basement parking”. The report included photographs showing the site had been “excavated and piled”.

It appears that difficulties with obtaining finance caused a delay in the settlement of the purchase of Vista Street and, ultimately, a change in the purchaser.

On 19 June 2015, Makedonka contacted Mr Glamcevski. They had a discussion in Macedonian. Mr Glamcevski recorded the attendance in a file note under the hearing “Nanevski Developments – purchase [XX] Vista Street”:

Also on 19 June 2015 at 11.17am, Mr Glamcevski emailed Tom and Ken concerning Vista Street:

At 12.56pm on 19 June 2015, Ken emailed Mr Glamcevski and Tom:

On 24 June 2015, Mr Glamcevski wrote to the solicitors for the vendor of Vista Street:

Mr Glamcevski’s evidence, which the Court accepts, was that the reference to “our clients” was to Nanevski Developments (Tom, Makedonka and Ivan) and Ken and Biljana.

On 29 June 2015, Mr Glamcevski emailed Tom and Ken about the subject “Nanevski Developments Pty Ltd” and including:

On 6 July 2015, Mr Glamcevski forwarded to Ken and Tom a letter from the vendor’s solicitors in relation to Vista St which included:

On 8 July 2015 at 11.43am, Mr Glamcevski emailed Ken, Biljana and Tom:

Mr Glamcevski’s evidence, which the Court accepts, was that he had referred in the email to “Biljana & Tom” because he understood they were contributing equally.

By email sent at 4.55pm that day copied to Biljana and Tom, Ken replied “I will get grace to arrange the bank cheque”.

The evidence included a receipt signed by the real estate agent Ms Pollard in relation to Vista Street dated 9 July 2015 for $302,500 which noted “Received from Tom Nanevski, Nanevski Developments Pty Ltd”.

On 9 July 2015 at 9.55am, Mr Schembri emailed Ken, including:

Later that evening, Ken (who was overseas at the time) replied to Mr Schembri, including:

On 28 July 2015 at 3.55pm, Mr Glamcevski emailed Biljana, Ken and Tom confirming that settlement of the purchase of Vista Street would occur within a day or two. His email continued:

Later that evening, Ken emailed Tom and Biljana with the subject heading “Vista Street/NAB Loan”:

On 3 August 2015, Mr Glamcevski wrote to Ken, Biljana and the proper officer of Nanevski Developments referring to the settlement of “Your purchase” of Vista Street. Mr Glamcevski’s evidence, which the Court accepts, was that he was instructed by all of them to send the information, which included the settlement sheet, to both the Nanevski and Slaveski interests. The letter included a document headed “Cheques on settlement”:

On 18 August 2015, Ms El-Turk sent an email to Tom, copied to Ken with the subject heading “Reconciliation” and including:

The attachment set out a reconciliation in relation to Ken and Tom’s respective contributions in relation to the purchase of Vista Street, premised upon an obligation upon each of them to contribute as to 50% including as to their liability for any loans. This reconciliation refers to $500,000 as “advanced by Ken to Tom for Lawson”.

On 19 August 2015, Grace El-Turk sent an email to Tom, copied to Ken with the subject line “NAB Loan documents”:

On 3 September 2015 Mr Glamcevski, acting on instructions he received from Ken and Tom, wrote to another solicitor in relation to Vista Street:

Mega-Top’s bank statement for 9 September 2015 records a deposit of $100,598.04 and then two deposits on 10 September 2015 totalling $910,000.

On 3 December 2015, Ken emailed Tom, including:

The evidence included a copy of a cheque drawn on Nanevski Developments bank account dated 8 April 2016 payable to Ken for $275,000. It was signed by Ivan and Tom said that the cheque was written out by him in Ken’s presence.

On 13 April 2016, there was this text exchange between Ken and Tom:

On 13 April 2016, Tom emailed to Ken an estimate for the demolition of the existing house at Riverside of $15,004.

On 14 April 2016, Ken submitted a building approval form in relation to Riverside. This described Ken as the applicant and was signed by Ken and James as the owners. It indicated that Tom would be carrying out the work. However this gave as a builder’s licence number Tom’s Certificate IV Building & Construction number rather than a builder’s licence number. The estimated cost of the development was recorded as $850,000 and described as “demolish existing 3 bedroom house and construction of two storey attached dual occupancy”.

On 25 May 2016, a construction certificate was issued in relation to Riverside by Camile Haddad, referring to Nanevski Developments as the applicant and attaching the application completed by Tom including being signed by him as the owner. The work the subject of the application and certificate was recorded as having an estimated cost of $830,000 and being for “bulk excavation, piling and shoring only”.

By an invoice dated 29 July 2016 (with the due date being the same date) CF Piling Group Pty Ltd (CF Piling) sent a bill to Nanevski Developments addressed to Riverside for “design and install a secant pile wall and capping beam including bracing and dewatering” for $862,400.

On 1 August 2016, Ms El-Turk emailed Tom on the subject of “Land tax” including:

There was in evidence a search of Nanevski Developments builder’s licence which commenced on 19 September 2016 for a three year period. The licence class was “builder” and it was subject to conditions that it was “only for contracts not requiring insurance under the Home Building Compensation Fund”, that condition being in place from 19 September 2016 to 31 December 2017.

In early 2017, Tom organised a surveyor to provide a report in relation to Vista Street. Mr Glamcevski’s evidence, which the Court accepts, is that this occurred after Mr Glamcevski had spoken to both Ken and Tom on site and indicated that he needed a survey.

In January 2017, Mr Glamcevski arranged for Ken and Tom to attend a conference with Mr Michael Tanevski of Counsel concerning an encroachment issue in relation to Vista Street. On 17 January 2017, Mr Tanevski wrote to Mr Glamcevski providing his advice and referring to “our conference with Mr Slaveski and his joint venture partner, Mr Nanevski, on 13 January 2017”.

On 10 February 2017 Ken emailed Tom on the subject “Tom Balance”:

On 3 March 2017, Mr Glamcevski emailed the surveyor in relation to Vista Street, including:

On 4 May 2017, Ken emailed Tom forwarding an email from Ms El-Turk of 1 May 2017. The subject was “Outstanding owing on Riverside and Vista”. Ken’s email said:

The summary referred to in Ken’s email was an email from Ms El-Turk to Ken of 1 May 2017 which included:

On 2 July 2017, there was this text exchange between Tom and Ken:

On 3 July 2017, Ken sent Tom this text:

On 7 August 2017, Ken sent an email to Tom asking him to look into something which had been received from Council. What had been received from Council was a letter dated 2 August in relation to Riverside enclosing a notice of intention to give an order about the works being carried out on Riverside as not being in accordance with Council’s approval.

On 15 August 2017, Ken sent Tom a text which included:

By a notice dated 2 November 2017, the certifier for Riverside sent a notice to Ken setting out an order requiring, among other things, the demolition or removal of two swimming pools said to have been erected without prior development consent at Riverside and otherwise to cease work on the site until various matters were complied with.

On 15 November 2017, Mr Glamcevski sent a tax invoice addressed to both Ken and Tom in relation to a dispute with a neighbour concerning Riverside.

On 22 December 2017, Ms El-Turk sent an email to Tom, copied to Ken concerning “payment” and stating “Please find bank receipt for payment made today”. The bank receipt showed a payment from Mega-Top Cargo to Nanevski Developments of $50,000.

On 3 January 2018, Ms El-Turk sent an email to Tom, copied to Ken, with the subject matter “expenses” and a message “Please see the attached spreadsheet regarding the expenses. You can call me if you need to go through it.” The spreadsheet is a reconciliation of liability for expenses premised upon each of Ken and Tom being liable for 50%.

On 9 January 2018, Ken sent Tom this text message:

On 17 January 2018, Ken sent this text to Tom:

On 9 February 2018, Ms El-Turk sent an email to Ken and Tom with the subject “Payment” and attaching a payment report. This records a payment from Mega-Top to Nanevski Developments with the reference “Ken Slaveski” for $40,000.

On 4 May 2018, Ken sent an email to Tom on the subject of “Riverside Drive project” which included:

There was in evidence a building contract dated 8 May 2018 between Ken and Tom in relation to Riverside where the contract price was varied from $850,000 to $749,000.

On 16 July 2018, referring to a meeting “mediated” by Mr Glamcevski at an RSL Club, Ken sent an email marked “without prejudice” to Grace El-Turk, but intended as a draft then to go to David Glamcevski, which included:

It then goes on with various matters that have now become the subject of dispute between the parties. I record that while marked “without prejudice”, the document was included in the evidence without objection and referred to by both parties.

Ken sent a copy of this “without prejudice” email to David Glamcevski on 16 July 2018. On 23 July 2018, Mr Glamcevski responded to Ken:

The draft “without prejudice” letter subsequently formed the text of an email from Ken to Tom on 31 July 2018 regarding and setting out Ken’s assertions regarding the dispute between them.

On 3 August 2018, Tom sent an email to Ken concerning Riverside which included:

By letter date 20 September 2018, solicitors acting for Ken and James wrote to solicitors acting for Nanevski Developments. That letter, the subject matter of which was specified as Riverside, included:

On 18 October 2018, Mr Glamcevski sent an email to someone by the name of “Alex” who, according to Mr Glamcevski’s evidence, may have been an architect. That email included Mr Glamcevski saying that “I confirm that I acted for and on behalf of Ken and Biljana Slaveski and Nanevski Developments Pty Ltd as a Joint Venture Purchase of [Vista Street]”.

These proceedings were commenced by a summons filed on 16 May 2019.

In Maria Saravinovska v Krste (Chris) Saravinovski; Chris Saravinovski v George Saravinovski (No 6) [2016] NSWSC 964 (Saravinovski (No 6)), I set out a summary of the principles relevant to fact finding where there are disputed facts:

I have applied these principles in finding the facts in this case.

For the Nanevski parties, Tom, Ivan, Makedonka, Mr Glamcevski and Ms Phillippa Wood gave evidence and were cross-examined. Their other two witnesses, the real estate agent Ms Pollard and Mr C A Derham of C F Piling were not cross-examined Other than a truck driver employed by Mega-Top, Mr George Ivanoski, Ken was the only witness for the Slaveski parties. This latter point founded a submission, advanced on behalf of the Nanevski parties, that the Court should draw an inference of the kind contemplated in Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 in relation to each of Biljana, James and Ms El-Turk.

Where the evidence of a witness might be expected to have been relevant to a particular issue, and there is no proper explanation for the absence of that witness, either or both of the inferences identified by Heydon, Crennan and Bell JJ as the majority in Kuhl v Zurich Financial Services (2011) 243 CLR 361; [2011] HCA 11 (Kuhl) at 384 are available to be drawn by the Court:

There was no suggestion that any of Biljana, James and Ms El-Turk was unavailable to give evidence. There was evidence that they were all in Sydney. Biljana and James were parties who obviously could have given relevant evidence. By Ken’s own admission, the various Mega-Top financial records were prepared by Ms El-Turk and she was the one who could provide any reliable financial information (Tcpt, 6 October 2021, p353(14-25)). In a case where there were serious disputes about who had paid what to whom, including funds paid by Ken, the Court has no difficulty in concluding that Ms El-Turk is likely to have been able to give relevant evidence.

The Court accepts Dr Peden SC’s submission that both of the inferences referred to in Kuhl should be drawn in relation to these three witnesses: that their evidence would not have assisted the Slaveski parties’ case and that the Court can draw, with greater confidence, any inference unfavourable to the Slaveski parties, if any of those witnesses appears to have been in a position to cast light on whether the inference should be drawn. As to the latter, I have not overlooked that the principle is facultative: the inference can only be drawn where there is already admissible evidence for the particular fact in issue.

Mr Glamcevski gave evidence in the Nanevski parties’ case under subpoena. The Court Book included a summary proof of evidence, but this was not admitted as proof of its contents. Mr Glamcevski’s evidence was elicited from him in the witness box.

Mr Glamcevski was admitted as a solicitor of this Court in December 1990 and at the relevant times was an employed solicitor of the legal practice known as McGrath, Dicembre & Company. He presented as an experienced solicitor and a forthright and careful witness. At various times he had acted for both the Nanevski parties and the Slaveski parties.

Mr Glamcevski was the only disinterested critical witness in the proceedings. He had no reason to do anything other than his best to tell the truth as he recalled it. The Court was left with no doubt that he was a truthful witness whose evidence could and should be relied upon.

It was submitted for Ken that while Mr Glamcevski’s credit was not in issue, the Court should bear in mind that he only could give evidence of what he had been told by the parties. That is true but, in the Court’s view, what he was told by the parties at the relevant times is the best evidence of the arrangements between them and to provide the primary factual basis upon which to ascertain their contractual intention objectively.

Mr Robinson’s cross-examination of Tom did demonstrate some inaccuracies and exaggerations in his evidence. However, the difficulty for the Slaveski parties’ attack on Tom’s credit was, as I understood it, that the burden of their submissions depended upon persuading the Court that Tom had engaged in a pattern of conduct intended to mislead or deceive Ken. However, as Mr Robinson ultimately accepted, the gravamen of those allegations was never put to Tom in cross-examination. In those circumstances, the Slaveski parties’ submissions on Tom’s credit were little more than an assertion that the Court should find Tom was a less reliable witness than Ken.

In this same context, it is convenient at this point to record that Mr Robinson’s submissions at various times referred to deceit on the part of Tom, although whether in the tortious sense or as an imprecise reference to the equitable doctrine of unclean hands was not always clear. For the avoidance of doubt, I accept Dr Peden SC’s submission that neither the tort of deceit nor unclean hands had been pleaded and were no part of the case.

Even allowing for some degree of exaggeration in his evidence, the Court accepts Tom as a generally reliable witness on the essential matters in dispute. That is not to suggest that the Court adopts a position of uncritical acceptance of all of Tom’s evidence. Having regard to the considerations identified by McClelland J in Watson v Foxman (see paragraph [138] above) the Court adopts the prudential approach of accepting Tom’s evidence insofar as it is inherently credible or is supported by contemporaneous documentary evidence. As it happens, no essential conclusion in these proceedings solely depends upon Tom’s evidence alone or upon something on which he was challenged in cross-examination.

The starting point for the assessment of Ken as a witness must be his own Counsel’s description that Ken was “difficult, obstinate, argumentative”. However, Mr Robinson went on to submit that while Ken “set out to argue the point with [Dr Peden SC] on just about everything she said” he wasn’t dissembling (Tcpt, 8 October 2021, pp 425(44); 26(1)). Mr Robinson submitted that what might be perceived to be a seriously unsatisfactory aspect of Ken as a witness could be explained by the fact that he clearly felt wronged by what he perceived had happened.

Mr Robinson’s description of Ken as “difficult, obstinate, argumentative” was, with respect, entirely accurate. However, I do not accept the explanation for his conduct proffered on his behalf. I accept Dr Peden SC’s submission that Ken was a clearly unsatisfactory witness upon whose uncorroborated evidence no reliance can be placed as truthful. This is because my firm impression of Ken’s evidence as he gave it, and reinforced by reviewing the transcript of his cross-examination, was that he was clearly determined not to tell the truth but to resist at every turn saying anything that might permit any recovery by the Nanevski parties.

Three examples will suffice. The first concerns the payment of the 50% deposit for Riverside, an amount of $67,500. There was no dispute that Tom went to Mega-Top’s office and gave Ken a bank cheque for $67,500. Ken’s position was he did not understand the purpose of the cheque – evidence that I find in and of itself incredible. He gave this evidence (Tcpt, 5 October 2021, p 263(16-18)):

Shortly after, I had this exchange with Ken (Tcpt, 5 October 2021, p 263(28-41)):

Ken was then taken to Ms El-Turk’s evidence (see paragraph [44] above) that he had told her that the cheque for $67,500 was for Riverside, but was only prepared to say that “It’s possible” (Tcpt, 5 October 2021, p 266(28)) or “It’s possible yes. It may be true, yes, your Honour” (Tcpt, 5 October 2021, p 266(36)).

Ken was then taken Ms El-Turk’s email to Tom and himself of 19 August 2015 (see paragraph [99] above) which expressly referred to Tom having paid the deposit of $67,500. Having seen that document, and acknowledging that “he trusted Grace to work out the true figures” (Tcpt, 5 October 2021, p 269(10)), he nevertheless gave this answer (Tcpt, 5 October 2021, p 269(39-45)):

Finally, Ken was taken to his own email to Tom of 2 May 2015 (see paragraph [60] above) in which he accepted (Tcpt, 5 October 2021, p 272(12)) that he had made the calculation in that email on the basis that each side had paid 50% of the deposit. This exchange with Dr Peden then occurred (Tcpt, 5 October 2021, p 272(14-20)):

A second example concerns whether Tom had paid Ken an amount of $150,000, reducing the balance said to be owing to $510,000. Tom was taken to his text of 15 August 2017 (see paragraph [120] above), in which he referred to “the balance owing which is now down to $510k”. He then suggested that only Mega-Top or Ms El-Turk could have the necessary records to demonstrate what had been paid. I then had this exchange with Ken (Tcpt, 6 October 2021, p 353(29-44)):

Other simple concessions in the face of contemporaneous documents were also not forthcoming. They enlisted answers such as “That’s a possibility. That was an option, doctor” (Tcpt, 6 October 2021, p 297(50)). Or, finally, when asked about the delivery of windows for both Riverside and Lawson Street, Ken answered (Tcpt, 6 October 2021, p 324(40-47)):

What emerged clearly from Ken’s cross-examination was his now deep-seated animosity towards Tom. Ken was not prepared to make the smallest concession that might assist Tom’s case, even in the face of his (Ken’s) own contemporaneous records. The Court has no hesitation in concluding that Ken was not a witness whose uncorroborated evidence can be relied upon. His evidence has only been given weight where it was inherently probable, against interest or corroborated by independent evidence (such as Mr Glamcevski) or reliable contemporaneous documents.

Ivan, Makadonka and Ms Wood were all witnesses whose evidence was ultimately peripheral to the central issues. No submission was made on behalf of the Slaveski parties that, insofar as their evidence was ultimately relevant, it should not be accepted.

Ken and Tom’s accounts of how they came to know about Riverside and their conversations before it was purchased were very different in many respects, not all of them material to any matter seriously in issue. The Court has preferred Tom’s version because of its overall credit finding about Ken (see paragraph [170] above), and because Tom’s version is corroborated by Mr Glamcevski’s evidence and is consistent with the documentary record such as it is, in particular Mr Glamcevski’s letter of 4 February 2015 (see paragraph [39] above) and Ken’s texts about his marital issues and not wanting his involvement known at Mega-Top. The Court also draws more easily the inference that James was only nominally on the title of Riverside by reason of James’ failure to give evidence.

Not only does the letter extracted at paragraph [39] above accord with the evidence that Tom would instruct Mr Glamcevski to negotiate the terms recorded therein, with Tom recorded personally as the “prospective purchaser”, but Tom’s relevant affidavit evidence is largely consistent with Mr Glamcevski’s oral evidence-in-chief. In particular, Mr Glamcevski was not cross-examined on the following evidence as to a conference that he participated in with Tom and Ken during or around the week of 9 February 2015, that is, after the purchase of Riverside by James (and Ken) at the auction on 7 February 2015 (Tcpt, 1 October 2021, pp 169-171):

Secondly, when the evidence of Mr Glamcevski was put to Ken during his own cross-examination, he contended that it was “wrong” (Tcpt, 5 October 2021, p 241(39)). However, shortly thereafter, Ken gave this evidence, answering questions about discussions he had with a solicitor other than Mr Glamcevski (Tcpt, 5 October 2021, p 245(28)):

A further factor in support of Tom’s evidence regarding conversations with Ken preceding the purchase of Riverside is that Tom placed the successful bid at the auction on 7 February 2015. This particular fact was entirely uncontroversial.

As I have already noted, by the end of the hearing there was no real dispute that some kind of a “50/50 relationship” had come into existence between the Nanevski parties and the Slaveski parties. The only real issues in dispute were what was the legal character of that relationship and was it conditional upon Tom having provided 50% of the capital for the purchases of Riverside and Vista Street?

The Court finds, by reference to the conversations set out in paragraphs [34] to [37] above, and having regard to the totality of the correspondence which is set out in the recitation of the facts above (including documents of which Ken was the author), that on or about 4 February 2015 a partnership came into existence between Nanevski Developments and Ken as the partners for the purchase and redevelopment of Riverside. The subject matter of the partnership was shortly thereafter extended to include the purchase and redevelopment of Vista Street. I shall refer to this in the balance of these reasons as the Partnership. The Court is well satisfied on the balance of probabilities the relationship agreed between Nanevski Developments and Ken was them “carrying on a business in common with the view of profit” as defined in s 1(1) of the PA. It was, in lay terms, an arrangement where each of Nanevski Developments and Ken was ultimately responsible as between themselves for 50% of the expenses in the hope of receiving 50% of any profit upon the sale of the two developments.

Any suggestion made on behalf of the Slaveski parties that the relationship of partnership was not intended to, and did not, arise unless and until Nanevski Developments had contributed 50% of the capital required to purchase Riverside and Vista Street is rejected. The significance of such a precondition is that had it existed, it formed the basis of the Slaveski parties’ contention that the appropriate form of relief would reflect the equitable interests of the parties by reference to their contributions to the purchase price of the two properties and the improvement in the value of those properties to the extent they could be identified as being referable to the activity of either party.

Again, quite apart from the oral evidence, such a precondition is completely inconsistent with the documentary record, including documents produced by Ms El-Turk that have been set out above. It does not appear in correspondence until relations between the parties had broken down and Ken sent his email to Tom concerning Riverside on 4 May 2018 (see paragraph [128] above). It was repeated by Tom in his without prejudice email to Ken of 3 August 2018 (see paragraph [134]) above. The Court concludes that any such suggestion by Ken was a self-interested reconstruction advanced after relations between the parties had broken down.

There is nothing in the documentary exchanges between the parties before the breakdown in their relationship that supports such a precondition. The documents produced by, for example, Mr El-Turk at various points in the relationship do not support it. Those documents, and the documentary record generally, reflects the essence of what the parties had agreed, namely that they would be ultimately each liable as to 50% for the costs of the project (including loans and interest) in return for 50% of any profits.

Furthermore, the Court accepts Dr Peden SC’s rhetorical submission that even if it was apparent that most, if not all of the finance, would have to be sourced through Ken, if there was any precondition of the kind which he now suggested, then why did he did not seek to withdraw from the project much earlier than he in fact did?

There was no written partnership agreement between Nanevski Developments and Ken. The terms and other incidents of the Partnership are therefore governed by the PA, save to the extent that they may have agreed otherwise. Given the Court has accepted that the conversation set out in paragraph [37] above took place, the only other specific agreement which the Court finds in relation to the Partnership is that Nanevski Developments was entitled to charge $120 plus GST per hour for consultancy work for liaising with Council, architects, planners and the like. Furthermore, the parties agreed that construction work to be undertaken by Nanevski Developments would be charged to the partnership at cost in relation to material, and in relation to labour at cost plus 30%.

Finally, the facts which have been set out above amply demonstrate that insofar as Ken, James and Biljana are registered proprietors of either Riverside or Vista Street, they were recorded as such only for the purposes and benefit of the Partnership without any intention on anyone’s part that they should be beneficial owners. While that finding is based upon the facts recited above, the conclusion is drawn more easily by reason of the failure of Biljana and James to give evidence and the related finding that their evidence would not have assisted the Slaveski parties’ case. It could not be, and was not, suggested that any of Ken, Biljana or James had any basis to believe that their presence on the titles of the properties was because they held their respective interests beneficially.

For the reasons given in the preceding paragraph the Court finds that Ken, James and Biljana hold their respective interests in either Riverside or Vista Street on trust for the Partnership.

The Court also accepts Dr Peden SC’s submission that the Partnership has not come to an end. In particular, it was not brought to an end by the correspondence set out paragraph [135] above. This is because what was purported to be terminated by the correspondence was confined to Riverside. As the Partnership which the Court has found related to both Riverside and Vista Street, it is the development of those two properties which would constitute the “single adventure or undertaking” for the purposes of s 32(b) of the PA, which provides that the Partnership is dissolved “by termination of that adventure or undertaking”.

The findings made in the preceding paragraphs will have to be given effect by a declaration of the existence of the Partnership, its dissolution by the Court under s 35(f) of the PA and the appointment of a receiver to wind up the Partnership. A declaration as to the terms identified in paragraph [172] above will also be made.

Having made these fundamental findings, it is then necessary to turn to some specific issues in dispute between the parties about which submissions were made.

The Court has accepted Tom’s evidence that he made three cash payments totalling $200,000 to Ken after the auction of Riverside but before the settlement of the purchase. These were $100,000 in mid-February 2015, $50,000 in mid-March 2015 and a further $50,000 in late March or early April 2015.

Tom’s evidence was that in mid-February 2015 Ken had asked if Tom could contribute $200,000 towards the purchase of Riverside. In answer to Tom’s question of whether it should be in cash or by cheque, Tom’s evidence was that Ken replied “Cash works better for me. I don’t know what’s happening with Biljana. We’re trying to work it out but I don’t know if we’re going to get back together. Cash would be much better for me”.

Tom was challenged about this evidence in cross-examination, but adhered to it.

There are five reasons why the Court accepts Tom’s evidence and finds that Nanevski Developments contributed $200,000 in cash towards the purchase of Riverside.

First, for the reasons set out in [148] to [160] above the Court has preferred Tom as a witness of credit over Ken’s evidence.

Second, and by way of corroboration, there is objective approximately contemporaneous evidence that Ken and Biljana had separated and that Ken did not want Biljana to know, at least at that time, about his investment in Riverside and subsequently Vista Street (see paragraphs [29], [57] and [69] above). In other words, the Court accepts that Ken had a motive to receive money in cash as a means of concealing it from Biljana.

Third, in the course of his cross-examination about this, Tom made clear that he was aware of the documents referred to in paragraph [185] below which attributed a $200,000 payment by Tom to Vista Street. Knowing that there was contemporaneous evidence acknowledging at least a payment of $200,000, it makes no sense that Tom would invent what would otherwise be extravagant evidence about cash payments in relation to Riverside.

Fourth, as Dr Peden SC submitted, there was evidence of cash dealings between the parties. Ken accepted that he was comfortable with receiving cash (Tcpt, 5 October 2021, p 287(11-12)). More pertinently to the present question, Ken was taken in cross-examination to the documents referred to in paragraph [187] below and this exchange took place (Tcpt, 5 October 2021, pp 288(44) -289(25)):

Fifth, the Court is fortified in drawing this conclusion because Ms El-Turk was not called to give evidence and her evidence would not have assisted the Slaveski parties.

In reaching this conclusion, I have not overlooked the documents from 2017 which refer to the payment of $200,000 towards Vista Street (see paragraph [113] and [116] above). In that regard, I make two observations.

First, notwithstanding those documents, I remain actually satisfied on the balance of probabilities by Ken’s evidence for the reasons I have just set out. Having received the funds in cash, there is no evidence as to when and in what circumstances Ms El-Turk became aware of the $200,000 payment. This could only have been from Ken and when that occurred in the course of the two purchases remains unknown.

Second, even if my conclusion is wrong as to when and in what circumstances the $200,000 was paid, there can be no doubt, based on Ms El-Turk’s documents, that $200,000 was received by Ken from Tom which should be credited to Nanevski Developments’ account in the Partnership in determining the parties’ respective contributions to their project of developing the two properties.

There was no challenge to Tom’s evidence that Nanevski Developments paid 50% of the mortgage payments as directed by Ms El-Turk. The evidence before the Court was that it paid $229,695.84 towards the Riverside mortgage and the Court finds accordingly. Those payments ceased when Ken caused this to occur. On any winding up, each parties’ ongoing obligation, as between themselves, to meet 50% of the mortgage payments will have to be taken into account.

There was no dispute that Tom organised and supervised the carrying out of construction work at Riverside. Ken accepted that Tom organised the work (Tcpt, 5 October 2021, p 281(5)).

There was in evidence in these proceedings spreadsheets and invoices said to prove the payments made by Nanevski Developments towards Riverside. However, this aspect of the matter was not the subject of any real examination by either party. Because the Court will, in the absence of agreement by the parties otherwise, appoint a receiver to wind up the Partnership, this will also necessarily involve a taking of accounts by the receiver. The value of payments and other contributions by both parties to the benefit of the Partnership will be a matter for the receiver to the extent the parties are unable to agree what they were.

It is convenient at this point to deal with Nanevski Developments’ claim in quantum meruit, including insofar as it may have extended to compensation which it could claim for consultancy work undertaken by Tom. Had the Court accepted that there was no partnership, a claim in quantum meruit could be advanced, together with (but confined as to quantum by) any applicable contract: Mann v Paterson Constructions Pty Limited (2019) 267 CLR 560; [2019] HCA 32. However, that is not what is to occur.

Having found the Partnership, upon its winding up and the taking of accounts Nanevski Developments will be entitled to claim credit for its contributions, including Tom’s consultancy services at the agreed rate to the extent they can be proven to the receiver’s satisfaction. The Court admitted Tom’s evidence of his recollection as to how many hours he worked on the developments. However, given Dr Peden SC’s indication that if the Court appointed a receiver and there was to be an accounting, the vouching of the extent of contributions would be a matter for the receiver, it is not appropriate for the Court to make any findings other than as to the terms on which Nanevski Developments could charge for Tom’s consultancy services. It will be a matter for Nanevski Developments to satisfy the receiver by any of Tom’s own evidence, any records or expert evidence as to the extent of the services provided by Tom.

There was no dispute that, as a condition of extending the time for settlement of the purchase of Vista Street, the vendor required the full 10% deposit to be paid. Five per cent had already been paid (see paragraph [55] above).

There was also no dispute between the parties that the additional 5% - $302,500 – was paid by a bank cheque on 9 July 2015 provided by Ken through Mega-Top. The dispute was whether Tom had paid $302,500 in cash to Ken for the purposes of funding that bank cheque.

It is convenient to set out such surrounding circumstances as have been objectively proven:

Ken’s affidavit evidence was:

Dr Peden SC submitted that the Court should accept that Tom had provided the $302,500 to Ken for these reasons:

On behalf of the Slaveski parties, Mr Robinson submitted:

The Court does not accept Dr Peden SC’s submission that any equivalence can be drawn between the $200,000 payment and the payment now under consideration. This is because while the Court was satisfied that around March 2015 Ken was trying to conceal what was happening from Biljana, that was evidently not the case by 9 July 2015. Biljana was copied on relevant correspondence.

Nevertheless, the Court accepts Tom’s evidence that he provided to Ken the cash that was used to purchase the bank cheque because:

In reaching this conclusion, I have not overlooked, in particular, Mr Robinson’s submissions recorded in paragraphs [200(2)] and [200(3)] above. The Court accepts that Ken left Australia on the afternoon of 7 July 2015. That means that Tom’s date of 8 July 2015 for the provision of the funds must be incorrect, but that error is insufficient to cast decisive doubt on the evidence. The Court accepts Dr Peden SC’s submission that given there are least two or three days earlier on which the parties were on notice that the additional deposit may be required, there was time for the funds to be provided by Tom to Ken before Ken left for overseas. Furthermore, in his evidence Tom does not put a specific date on when he had the conversation with Ken concerning the need to provide the additional deposit other than “early July 2015”.

The second matter is Mr Robinson’s possible explanation for why the real estate agent, Ms Pollard, made the 9 July Receipt out in favour of Nanevski Developments. While I accept it is a possible explanation, it is unsupported by any evidence. In the absence of the author of the receipt, Ms Pollard, being cross-examined by Mr Robinson it is, with respect, no more than a speculation which is insufficient to outweigh the considerations I have identified in paragraph [202] above.

There was no challenge to Tom’s evidence that Nanevski Developments paid 50% of the mortgage payments as directed by Ms El-Turk. The evidence before the Court was that it paid $474,909.32 towards the Vista Street mortgage and the Court finds accordingly. Those payments ceased when Ken instructed Ms El-Turk to change the bank account in March 2019. On any winding up, Nanevski Developments’ ongoing obligation to meet 50% of the mortgage payments will have to be taken into account.

The same conclusions on this topic are made in relation to Vista Street as for Riverside (see paragraphs [191] to [194] above.

There is no doubt that Nanevski Developments left form work and scaffolding at Vista Street. In what can only be a regrettable reflection of the animosity between the parties, Nanevski Developments sues the Slaveski parties for conversion of that formwork and scaffolding and, in response, Ken and Biljana sue Tom and Nanevski Developments for trespass by reason of the scaffolding and formwork being left at Vista Street.

While these claims were pressed, such that the Court must deal with them, they were the subject of minimal evidence and relatively general submissions. As will be apparent to any reader of this judgment, the parties’ forensic attentions were firmly concentrated elsewhere.

Whatever might otherwise be the merits of these claims, the Court concludes that neither side has established loss.

Tom’s evidence in relation to the formwork and scaffolding, albeit admitted over objection, was:

Tom’s evidence is, with respect, insufficient to enable the Court to be actually satisfied either of the quantities involved or their value. It is well understood that all evidence is to be weighed according to the proof which it is in the power of the party to have provided. Evidence expressed in terms of approximations from the mouth of even a qualified witness are, in a claim such as this, insufficient to prove a claim said to be worth approximately $500,000. Nanevski Developments, it can be expected, should have been in a position to prove by documents including financial records and asset registers, the quantity of the items and for how much they had been purchased. Similarly in relation to the scaffolding, the Court cannot accept as of sufficient weight a statement that something was “therefore valued at and worth $51,000”. The Slaveski parties were correct in their forensic decision not to challenge this evidence beyond objecting to it. It is of insufficient weight even if it was admitted. Assuming everything else in Nanevski Developments’ favour, it has failed to prove loss or put the Court in a position to value any such loss.

Ken and Biljana’s claim in trespass was equally thin. In his closing written submissions, Mr Robinson submitted that as a result of the trespass constituted by the formwork and scaffolding (assuming it to be a trespass), there was a period during which Vista Street was unable to be rented out. The foregone rent for that period was the measure of damages. I understood that to be claim for mesne profits. However, the Court’s attention was not directed to any evidence, and there was certainly no expert evidence, as to what that rental might have been. Again, assuming without deciding everything else in Ken and Biljana’s favour, any damages have not been proven.

Both the conversion and the trespass claims will be dismissed. If Mega-Top still has any of the formwork and scaffolding it should be returned to Nanevski Developments. No basis for a claim for storage costs has been made out.

The Nanevski parties read an affidavit of Mr C A Derham, the founder and managing director of CF Piling. He was not required for cross-examination. CF Piling undertook the installation of secant piling walls at Riverside.

Mr Derham was not required for cross-examination His affidavit included:

It was Tom’s evidence that he entered into a barter arrangement with Mr Derham that the invoice for $862,400 would be satisfied by sheet piles which Tom had ordered from China for Riverside. Dr Peden SC submitted that there was no reason why contribution by an “in kind” payment should be treated any differently from a cash payment. She contended that because the cost of the piling work was $862,400, Nanevski Developments should receive the benefit of $862,400 in any partnership accounting because the sheet piling was provided in exchange for piling work of that value.

The Court accepts the first part of that submission, namely that on any final accounting of the parties’ contributions to the Partnership, Nanevski Developments should be credited for the arrangement which it entered into with CF Piling. However, the Court does not accept the second part of the submission. The amount for which Nanevski Developments should be credited is not the value of the invoice. What Nanevski Developments contributed was the sum of money it paid for the sheet piling, which it then happened that CF Piling accepted in full and final satisfaction of the invoice.

While the Court was not expressly taken to it, the evidence included a list of expenses prepared on behalf of Nanevski Developments in relation to Riverside. This included a reference to “Shunli Enterprise International Limited” for “sheet pile supplier in China” with an amount of $125,475.60 recorded as the expense. If the Court has misunderstood that evidence, Nanevski Developments will be entitled to draw that to the Court’s attention as part of the working out of this judgment. On the assumption that the Court has understood the evidence correctly, on any winding up of the Partnership Nanevski Developments should be given a credit of $125,475.60 to reflect its contribution to the Partnership by making the barter arrangement with CF Piling.

It was submitted for Tom that no allowance should be permitted for any time expended in management by Ken because Ken had no skill or experience as a builder and worked in a full time job approximately 40-50 hours a week.

Unlike the position in relation to Nanevski Developments where rates for Tom’s services, the Court has found, were agreed between the partners, there is no suggestion that there was any agreement that Ken was to be remunerated. Ken’s role was primarily as an investor.

The answer to this issue is provided by s 24 of the PA, which sets out the rules for the conduct of the partnership subject to any express or implied agreement otherwise. Section 24(1)(6) provides that “No partner shall be entitled to remuneration for acting in the partnership business”. There being no agreement otherwise, Ken is not entitled to an allowance in respect of his time in relation to the affairs of the Partnership.

The closing submissions on behalf of Ken raised an issue concerning claims of defective work by Nanevski Developments at Riverside. While there were references to such claims in the evidence, they were not the subject of the proceedings. In those circumstances, it is not appropriate for this Court to express any view about what whether or not such matters can be raised by either party in the winding up of the Partnership by the receiver. That will be a matter for the receiver.

I did not understand it to be seriously in contention, but for the avoidance of doubt make clear that insofar as Vista Street has been rented, that rental is income to the Partnership and should be accounted for as such on the winding up.

It was submitted for Tom that the Slaveski parties should not be entitled to claim costs incurred after April 2019 when Nanevski Developments were excluded from the Partnership. I do not agree. As I have found elsewhere (see paragraph [175] above) the partnership has not been terminated. In the absence of agreement, it will be a matter for the receiver to determine what are proper partnership costs which each party is entitled to claim after April 2019.

There ultimately did not appear to be any dispute between the parties that, if the Court was satisfied that there was a Partnership, there should be an accounting. Any such accounting should be performed by the receiver as part of the winding up of the Partnership.

The Slaveski parties’ cross claim included a prayer for judgment in favour of Megatop against Nanevski Developments for $590,000 plus interest at the rate of 4.5% per annum. This was a reference to three advances (the making of which was not in contest) to Nanevski Developments on 25 May 2015 of $500,000 (see paragraph [73] above), 22 December 2017 for $50,000 (see paragraph [123] above) and 9 February 2018 for $40,000 (see paragraph [127] above). This was a claim in debt.

It was contended for the Nanevski parties that these three advances were not a loan on special terms from Megatop to Nanevski Developments but were rather contributions by Ken to the Partnership. By the end of the hearing, when it came to final submissions, Mr Robinson made no submissions in support of this claim beyond noting in his written submissions:

With respect, Mr Robinson was right to emphasise other aspects of his client’s case rather than this one. The Court accepts Dr Peden SC’s submission that the totality of the evidence makes it clear that these amounts were advanced by Ken (albeit sourced from Mega-Top) to Nanevski Developments in the course of the Partnership. Before turning to specific aspects of the evidence, the Court also notes that Ken never had any conversation with Tom that a loan was being made for $500,000 (or the later amounts) to be charged at a particular interest rate. Even under cross-examination, Ken did not positively suggest that he had reached such an agreement with Tom (Tcpt, 6 October 2021, pp 334(47) – 335(7)):

Turning to the specific evidence:

For these reasons, the Court concludes that there was never any loan of the kind alleged from Mega-Top to Nanevski Developments. The relevant advances were advances by Ken to the Partnership and in respect of which he should receive credit on the winding up. It follows that this aspect of the Slaveski parties’ cross claim fails.

This was another aspect of the proceedings to which little attention was given, especially in closing submissions. It turned on three alleged representations:

Before turning to consider briefly these representations, the Court concludes that, whatever else may be said about them, these claims must fail for want of proof of loss. As Dr Peden SC submitted, the particulars of damage pleaded in relation to the first and second representations (the pleading refers to the third representation but this must be an error) was that “The cross claimants will provide evidence from a Quantity Surveyor of what an accurate estimate of the cost of the Works would have been”. No such evidence was tendered.

Furthermore, particulars were given in relation to the whole of the misleading and deceptive conduct claim including “cost of rectification works, the actual cost to construct the duplex above $800,000 and additional holding and borrowing costs”. However, no attention to these matters was given in the evidence.

The final paragraph of the cross claim, while not pleading a material fact, asserted that “particulars of the actual loss and damage will be incorporated into the forensic accountant’s report used for the account to be taken with respect to paragraphs 1 to 18 of this cross-claim”. No such forensic accounting report was in evidence.

Finally, conscious presumably of this complete lack of evidence of damage, Mr Robinson’s closing written submissions included:

The course “foreshadowed” in those submissions is one which the Court neither could nor should entertain. UCPR Part 29, r 29.4 provides that “Unless the Court orders otherwise, proceedings are to be listed for trial generally, that is, for hearing of all questions and issues arising on every claim for relief in the proceedings”. The proceedings were listed before me for trial generally. No application had been made for damages to be quantified separately from and after the determination of all other issues in the proceedings. At least so far as the Court is aware, the first suggestion that any such application might be made was in Mr Robinson’s closing written submissions provided for the last day of the hearing.

Dr Peden SC was entitled to conduct the hearing on the basis that there was no evidence of the particularised losses in relation to this part of the claim, such that the claim must therefore fail. That is the Court’s conclusion.

Were it necessary to do so, the Court would in any event have concluded:

Megatop sued Nanevski Developments for $14,048.61 in relation to formwork.

Nanevski Developments did not dispute that the formwork was supplied, or delivered, or paid for by one or other of the Slaveski parties. However, Nanevski Developments’ defence was that the formwork was purchased for work on Riverside, in particular the construction of swimming pools.

Tom was not cross-examined on this evidence in his affidavit and, consistently with its view of Tom’s credit, the Court accepts it to be true:

It follows that Mega-Top does not have a cause of action against Nanevski Developments in relation to the formwork. Mega-Top has a claim against the Partnership which will have to be taken into account as part of the winding up. In reaching this conclusion, I have not overlooked the evidence called by the Slaveski parties from a truck driver for Mega-Top, Mr G Ivanovski. He was not required for cross-examination and his evidence was that he delivered the formwork to Lawson Street. However, the Court accepts Dr Peden SC’s submission that the fact that the formwork (and in this case not all of it, only so much as constitutes $3,765 of the claim relating to what was delivered on 5 February 2016) was delivered to Lawson Street does not mean that it was used at Lawson Street instead of Riverside.

This is a claim by Mega-Top against Nanevski Developments in respect of a large number of windows imported from Macedonia by Nanevski Developments. The claim is for $20,636.18 for freight and delivery services and $79,828.67 for storage.

Beyond noting the existence of this claim in his closing written submissions, Mr Robinson did not advance any written or oral submissions specifically directed to this claim beyond answering a question from me as to whether whatever windows were left could be collected by the Nanevski parties (the answer was yes). As with the formwork claim, the Court accepts Dr Peden SC’s submission that insofar as the windows related to Riverside, Mega-Top’s claim is against the Partnership and will need to be accounted for in the winding up.

The basis of this conclusion is that the evidence demonstrates that, contrary to Mega-Top’s pleading, not all of the windows were for Lawson St, and that Ken was aware of this:

Insofar as some of the windows covered by these shipments and charges were imported for Riverside, then the Court finds those shipping, storage and handling costs were incurred by Mega-Top for the Partnership. Contrary to the submission put for the Nanevski parties, the Court accepts that those storage costs, insofar as they relate to windows for use by the Partnership, would be attributable to the Partnership even after the breakdown in the relationship between them to the extent those costs were not the product of unreasonable delay thereafter on the part of Ken. If delay was an issue, it would be one for the receiver on the winding up of the Partnership. However, it is not an issue because of the Court’s conclusion in paragraph [249] below.

Insofar as some of the windows were imported for use at Lawson Street, there was no dispute that these would not fall into any accounting for the Partnership to the extent there was any liability for them in Nanevski Developments to Mega -Top.

However, the Court finds that Nanevski Developments satisfied whatever obligations it had to Mega-Top in relation to the windows that were purchased for Lawson Street. That finding is based on acceptance of Tom’s evidence that a container of windows was delivered to Lawson Street on or about 10 May 2017, corroborated by a Mega-Top invoice of 8 May 2017 and a Nanevski Developments cheque butt evidencing payment of that invoice on 9 May 2017.

Finally, insofar as the claim includes storage costs, the Court was not taken to any evidence that Ken reversed his earlier position (evidenced by his text message of 3 May 2015 referred to in paragraph [245(1)] above) that the windows could be stored in his warehouse. In the absence of such evidence, the Court concludes that Mega-Top is not entitled to charge for storage of the windows for Riverside or Lawson Street at its warehouse because the Court draws the obvious inference from the text exchange that Ken was permitting storage of all of the windows at his warehouse gratis as a simple and obvious gesture of goodwill and to the benefit of the Partnership. It is clear that at that time there was still a relationship of trust between the parties such that there would have been no reason for Ken to differentiate between storing windows only for Riverside as opposed to Lawson St. In other words, he was happy to do a favour to Tom insofar as he also agreed to store windows intended for Lawson Street.

For these reasons, Mega-Top’s windows claim in the Local Court proceedings fails.

The parties will be given an extended opportunity to agree short minutes of order to give effect to these reasons, including it is to be hoped as to the identity of a receiver and as to costs. They are also at liberty to draw to the Court’s attention if there is any specific finding as to amounts in dispute which they contend was sought and has not been made, or which they now seek on the evidence before the Court (and only that evidence), that may be of assistance in the accounting that must take place as part of the winding up of the Partnership.

Finally, the winding up of the Partnership, including the sale of Riverside and Vista Street, and the detailed accounting as between the parties that will be essential to any winding up, will almost certainly be complex, extended and expensive. That is an outcome which, to my observation and with no disrespect intended, is something which the parties to this case will only find to be a further burden they are ill equipped to bear. I therefore urge the parties, with the assistance of their legal advisers, to give serious consideration to whether the winding up of the Partnership including the allocation of credits and debits to each partner’s account, can be agreed through mediation or some other informal process with the benefit of the Court’s findings in these reasons. Such a process will necessarily involve broad strokes and concessions on both sides, but experience suggests is likely to be to the parties’ overall economic and emotional advantage.