iii. the assets to be acquired by this partnership would be owned equally so that upon termination of the partnership, when matters were brought to account, whoever had brought in the funding, would receive that back at 8% capitalised and the balance should be divided equally between them [no issue ever being taken as to the disclosed fact that Mr Magafas represented his group and through it his family, in all of his dealings with Mr Carantinos].
63 Agreement had been reached on the above parameters. There were then discussions about getting advice in relation to the sort of structure needed to operate the partnership/joint-venture and the discussions included reference to whether what had been discussed should be operated through a company structure or a trust structure or a combination. One important element was that Mr Magafas wished to ensure that the foundation was protected from third party claims and was hence concerned to ensure that the assets were held by a corporate entity. Ultimately that corporate entity, Pac Com, was incorporated on 15 January 1997 with Mr Carantinos and Mr Magafas as sole directors and equal shareholders each holding 100 shares. Mr Carantinos was appointed company secretary.
64 Mr Magafas gave evidence that following the above exchange with Mr Carantinos, Mr Magafas caused payments to be made to Communicado on his understanding that these funds were to support the company yet to be formed to represent the partnership. The finding is that this was a shared understanding.
65 The evidence does establish that between November 1995 and March 2002, approximately $480,000 was paid by the Magafas Group of Companies to Communicado. The plaintiffs contend and the Court accepts that this evidence, read in the light of the arrangements reached in the discussions between the two men, constitutes a powerful indication of the existence of a partnership or a joint venture between the two men.
66 It can now be seen that the basis upon which these funds were paid forms the critical divide on the evidence given by the respective main actors. To the contrary of the evidence given by Mr Magafas, Mr Carantinos contends that the funds so paid were purely and simply genuine payments as the consideration for consultancy and other advice and assistance which he gave to the group over the years across which these funds were paid, as is said to be documented by the invoices which he sent to the group generally correlating with the payments from that group. There is an absolute denial of the proposition that the funds were by agreement simply paid to Mr Carantinos' business trading as Communicado, to bolster its sales figures. There is an absolute denial that these monies were paid for the purpose of developing any cashbox for any partnership/joint-venture. Mr Carantinos has given evidence born out by the tendered tax returns that the receipt of those funds from Mr Magafas were declared as business income in the tax returns of Communicado/Mr Carantinos as that is what they were. It is perhaps convenient at this point in time to observe that on the evidence, across at least the 1995 and 1996 financial years, in general terms the invoices approximated the sum of $100,000 per year.
67 It seems convenient albeit again at this early stage of these reasons, to make clear that the finding of the Court based upon all of the evidence is that the agreement between the parties was always that Mr Carantinos would be compensated by receiving 50% of the profit of the material developments the subject of any joint-venture/partnership activities engaged in. There was never ever any suggestion, arrangement or agreement for Mr Carantinos to receive remuneration of any type, whether for management fees, administration expenses, advice or otherwise and whether to come from Mr Magafas or from the Booth Group.
68 The finding is that the substratum of the agreements and arrangements reached was based upon the proposition that the essential provision of the funding would be from the Magafas Group which was seen as likely able to handle this parameter, with Mr Carantinos providing his skills and time in relation to locating real estate development properties and carrying out the general administrative and other work [as for example dealing with councils for development consents] necessitated when such a property would become a target for acquisition. The agreement of course permitted either party to contribute capital and in that event interest at 8% capitalised would be paid on such funds to such contributing party. Indeed Mr Carantinos conceded that Mr Magafas was to be the funder for the Pac Com purchases [transcript 579.25].
The version of the relevant conversation given by Mr Carantinos
69 The version of the relevant conversation put forward by Mr Carantinos [13 September 2006 affidavit at [136] et seq] had been as follows:
[136] Sometime in early January 1997, after I had received the above letter from Balmain MB, I had a conversation with Tony.