Cavasinni v Cavasinni

Supreme Court of NSW|2004-12-03|Before: Young CJ, McLaughlin J, Young J, Burchett J

CITATION : Cavasinni v Cavasinni [2006] NSWSC 755

HEARING DATE(S) : 6 and 7 September, 1, 2, and 3 December 2004, 4 and 5 April, 16 May, 26 August, 14 December 2005 (written submissions to 10 February 2006)

JUDGMENT OF : Associate Justice McLaughlin at 1

DECISION : Subject to correction of any arithmetical errors, I express my conclusions as follows: (1). Upon inquiry, I find that the sum of $154,907 is due by the Cross-Defendant to the Cross-Claimants, and that the Second Cross-Claimant is entitled to interest in the sum of $242,378 from the First Cross-Claimant and the Cross-Defendant. (2). I refer the matter to Mr. Justice Young to deal with costs.

CATCHWORDS : Partnership. Inquiry. Indebtedness of one partner to other partners. Entitlement to interest by partner who contributes more than his share to partnership.

CASES CITED : Jones v Dunkel (1959) 101 CLR 298

Ferdinando Cavasinni (Plaintiff and Cross-Defendant) PARTIES : Michael Cavasinni (First Defendant and First Cross-Claimant) Francesco Cavasinni (Second Defendant and Second Cross-Claimant)

COUNSEL : Mr. F. Carnovale (Plaintiff and Cross-Defendant) Mr. D. Raphael (First and Second Defendants and First and Second Cross-Claimants)

SOLICITORS : A. B. Mezzanotte (Plaintiff and Cross-Defendant) Costa & Associates (First and Second Defendants and First and Second Cross-Claimants)

25 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3225/98 - FERDINANDO CAVASINNI v MICHAEL CAVASINNI and Anor

JUDGMENT 1 HIS HONOUR: On 30 March 2001 Mr Justice Young published his reasons for judgment in this suit. Short minutes were on 26 April 2001 brought in to give effect to those reasons and to His Honour's conclusions, and His Honour thereupon made orders in accordance with those short minutes. Those orders included, The Court: (1). Orders that the proceedings be referred to the Master, Equity Division, to (a) take account of all the dealings and transactions of the partnership comprising the parties to these proceedings, and of the partners in relation thereto, being a partnership concerning a development venture at 97-103 Sherwood Road, Merrylands, which partnership was established on about 15 April 1987 and terminated on 1 May 1997; and (b) inquire into the amount (if any) which, upon taking of the accounts, is due by the cross-defendant to the cross-claimants or either of them. (2). Directs that the second cross-claimant be the accounting party in relation to the taking of the said accounts. 2 The Second Cross-Claimant is Francesco Cavasinni, who is also the Second Defendant to the proceedings. He is the son of Michele (or Michael or Mick) Cavasinni, the First Cross-Claimant and the First Defendant. Ferdinando Cavasinni, the Plaintiff and the Cross-Defendant, is the brother of Michael and the uncle of Francesco. 3 Further orders (which might be described as the conventional orders in respect to the taking of an account) were made by consent on 21 March 2002. However, it would appear that those orders were never strictly complied with. 4 The matter appears thereafter to have proceeded in a somewhat leisurely fashion until, after a contested hearing in that regard, Acting Justice Burchett on 22 October 2003 made the following substantive order, Direct the Applicant/Defendant to file a further affidavit which shall be in terms adequate to satisfy the balance unsatisfied by the previous affidavit of his obligation pursuant to the order requiring him as accounting party to file and serve an affidavit. Direct that this be done within 14 days. 5 On 30 April 2004 Master Macready (as he then was) made orders in accordance with short minutes of that date. (It is somewhat unclear whether those orders were made by consent.) Those orders were, The Court: (1). Directs the cross-defendant to file and serve all affidavits setting out his surcharges, falsifications and objections, and also all affidavits of evidence in support, by 21 May 2004. (2). Directs that the proceedings be placed in the Master's Callover List for the purpose of fixing a hearing date before the Master for an enquiry into what amount, if any, is owed by the cross-defendant to the cross-claimants in accordance with the orders of Young CJ in Eq of 26 April 2001. 6 The matter has now come before me for the purpose of conducting that inquiry into "what amount, if any, is owed by the cross-defendant to the cross-claimants in accordance with the orders of Young CJ in Eq of 26 April 2001". 7 Upon the information given to the Court by those in the best position to know, being the legal representatives of the respective parties, the Court at callover allocated two days for the conduct of that inquiry, being 6 and 7 September 2004. 8 The inquiry not having concluded within those two days, the matter was adjourned to Wednesday, 1 December 2004, the Court reserving also 2 and 3 December 2004. The inquiry did not conclude within those further three days, and on 3 December 2004 was adjourned to Monday, 4 April 2005, the Court also reserving 5 April 2005. The hearing did not conclude within those further two days, and on 5 April was adjourned to Monday, 16 May 2005 for the conclusion of the evidence, it being envisaged that thereafter written submissions would be lodged by Counsel for the respective parties. 9 Unfortunately, that expectation was not fulfilled. On 16 May 2005 Counsel for the Cross-Claimants informed the Court that he was not in a position to call the oral evidence which had earlier been foreshadowed, and he sought an adjournment and the making of further directions. Those directions included directions concerning the calling of further oral evidence or, in the event (as ultimately occurred) that the Cross-Claimants did not propose to call any further oral evidence, that the Cross-Claimants file and serve written submissions on or before 10 June 2005, with directions for the filing and service of written submissions by the Cross-Defendant in reply on or before 1 July 2005. Consequential directions were also made. 10 The foregoing directions of 16 May 2005 were not complied with. 11 The Plaintiff on 8 August 2005 filed a notice of motion seeking dismissal of the cross-claim of the Defendants. That notice of motion came before me on Friday, 26 August 2005. On that date orders were made by consent for the dismissal of the Plaintiff's notice of motion (with a consequential order for costs in favour of the Plaintiff), and for a fresh timetable for written submissions, that timetable concluding on 7 October 2005. 12 The foregoing timetable was not complied with. Subsequently, it was, by consent of the parties, extended on several occasions. 13 There having been no progress in the interim, the matter was of my own motion listed before me on Wednesday, 14 December 2005. On that date the Court was assured by Counsel for the respective parties that the written submissions would be concluded by 31 January 2006. I noted that upon the filing and service of the foregoing written submissions my judgment herein would stand reserved on that date. In the event, written submissions continued until 10 February 2006. Those written submissions extended over a total (for both parties) of 102 pages. 14 The factual background to the substantive proceedings, and to the present enquiry before me, is set forth in the judgment of Mr. Justice Young of 30 March 2001. His Honour said, at page 23, The further amended cross-claim by prayer 4A claims $170,582 plus interest. The claim is made on the basis that Frank [Francesco Cavasinni] borrowed moneys from Barclays Bank to fund a joint venture at Merrylands between Fred [Ferdinando Cavasinni], Mick [Michele Cavasinni] and Frank. Frank says that Fred still owes his share of the moneys borrowed. Fred's defence merely pleads that Frank is not entitled to the relief sought. Frank says that he borrowed $493,000 from Barclays Bank and moneys from other sources to fund the development. He says that he was the only person who had the capacity to borrow and that it was agreed by and between the joint venturers that each co-venturer would indemnify Frank for one-third of the borrowings. Frank says that he, Frank, borrowed $567,731, Mick contributed $215,986, Fred $135,986, a total of $919,705. One-third of this total is $306,568. This amount, less Fred's contribution, amounts to $170,582.

15 It will be appreciated that the original relief ordered by Mr. Justice Young was in the nature of the taking of an account of a partnership, that being relief of a nature well recognised as capable of being granted by a Court of Equity, and that the orders made on 29 March 2002 for the purpose of implementing His Honour's orders were the orders which are conventionally and usually made in respect to the taking of an account (especially an account of a partnership). 16 However, the effect of the orders of 30 April 2004 was that an inquiry should be conducted as to what amount, if any, is owed by the Cross-Defendant (the Plaintiff) to the Cross-Claimants. 17 The hearing before me has proceeded essentially in respect to that inquiry. The formal taking of an account has largely been superseded by that inquiry, although it will be appreciated that supplementary material relevant to such an account has been of significance in the conduct of that inquiry. 18 The manner in which the hearing has proceeded rather suggests that the parties no longer require that an account of the nature contemplated by the orders of Mr. Justice Young should be taken. The parties would appear to be satisfied if the Court, having conducted the inquiry pursuant to the consent orders of 30 April 2004, were to make a finding of what amount, if any, is owed by the Cross-Defendant to the Cross-Claimants. 19 In regard to this inquiry it should be noted that Mr. Justice Young in the course of his reasons for judgment of 30 March 2001 made some observations concerning any amount which might be owed by the Cross-Defendant to the Cross-Claimants. His Honour said, at page 28, Frank has, in at least an annexure to his affidavit, now produced a sort of account. It is not an account which can be dealt with summarily. Ordinarily, the matter should go to the Master with cross-examination on the account and the filing of surcharges and falsifications with the Master certifying what is due. The Court would not, without that process, unless by consent, and unless it was able to do so on the evidence, merely fix an amount due. Both sides have urged on me that with the small amount involved, they do not want to go to the Master because of the extra costs involved. I do not particularly want to deal with the final amount due because Frank is not entitled to money but merely to an account, and secondly, the evidence is rather sparse. However, it is clear that there is some dispute as to $45,000 of the amount claimed and indeed a concession that this may not be payable. On the other side, Fred does not really dispute the balance claimed, save that he strongly suspects more of Frank's borrowings went for Frank's own purposes, rather than into the joint venture. If one subtracts $45,000 from the amount claimed by Frank, one gets to the sum of $125,582. Frank claims interest. There does not appear to be any agreement for interest in the joint venture so far as the evidence discloses. The joint venture does seem to me to be a partnership because it was an agreement to enter into a business venture, albeit a single business venture, on the basis that profits and losses would be shared equally and capital contributed equally. Section 24(3) of the Partnership Act 1892 provides that where a person has subscribed more than his fair share of capital he is entitled to interest at the rate of 7% from the date where he subscribes more than the others. Frank seems to have paid more than the one-third as at 30 June 1991. The interest on $125,582 at 7% for 9 and three-quarter years is $85,710. (6) The Result of the Money Claim The only order that should be made on the money claim is that there be a reference to the Master to take accounts with Frank being the accounting party. However, if I were to find, pursuant to some concession and consent, an amount due on the money claim, it would be for $211,292. As to costs, … With regards [ sic ] to the money claim, unless there is consent to some other course, the only order that could be made is that there be a proper accounting. However, as Fred has virtually conceded that something is due on the accounts, there should be no order for costs until after the account takes place. If, by concession, there is a verdict for the plaintiffs [ sic ] for $211,292, each party should pay their own costs. However, I merely indicate this as my current feeling and am quite willing to listen to counsels' submissions if they wish to make any. 20 I have already set forth, at least in summary, the factual background (as found by Mr. Justice Young) to the inquiry presently before me. As appears from the foregoing extract from His Honour's judgment, the joint venture between the parties, which related to the construction of townhouses at 97-103 Sherwood Road, Merrylands, constituted a partnership between those three parties. 21 His Honour (at page 26 of his judgment) set forth the issues on the claim by Frank against Fred as follows, Fred's principal answer to Frank's claim is that he has never been given a proper accounting, plus he relies on the Limitation Act 1969. However, he also says that is sure he has already paid his one-third share. Fred's main reasons for taking this attitude are that he says that Frank has under-credited Fred's contribution from Bossley Park and that Frank's borrowings were mainly made for Frank's own purposes and to make up Frank's one-third contribution, rather than on behalf of the joint venture. Fred says his own contribution was half of the Bossley Park proceeds, $150,000, rather than $100,000 for which Frank credits him, $80,000 in cash and work done by D'Aroma Concrete. 22 (The reference in His Honour's judgment to D'Aroma Concrete was to a concreting business conducted by a company, D'Aroma Concrete Pty Limited, which is trustee for a unit trust which at the relevant time was held for both Michael and Fred. That company (to which I shall refer as either "D'Aroma Concrete" or "D'Aroma") was owned by Michael and Fred and their respective wives in equal shares. The reference in His Honour's judgment to Bossley Park was to a property situate in Bossley Road, Bossley Park which had been owned jointly by Michael and Fred, and the proceeds of sale whereof, in an amount of $198,515, represented a contribution, in equal shares, by Michael and Fred to the partnership expenses.) 23 In the present inquiry the Defendants/Cross-Claimants relied upon the following affidavits, Francesco Cavasinni, 11 September 2002 Francesco Cavasinni, 18 November 2003 Alexander Apap, 31 August 2004. 24 The Plaintiff/Cross-Defendant relied upon the following affidavit, Ferdinando Cavasinni, 29 June 2004. 25 Each of the foregoing witnesses was subjected to a very protracted cross-examination by the opposing party.

26 I have already referred to the very considerable quantity of written submissions subsequently presented by Counsel for the respective parties. 27 However, the issues between the parties are essentially simple. They were outlined by Mr. Justice Young in the passages from his judgment which I have set forth. 28 His Honour held that the joint venture between the parties relating to the Merrylands development constituted a partnership between Michael and Frank on the one hand and Fred on the other hand. 29 The construction of the Merrylands townhouses commenced in about May 1990 and occupied, according to Frank, about 17 months. Fred said that it took about 12 months to complete. 30 The first question which I must determine is the total amount which was contributed by the three parties to that development. It was not disputed that those contributions were unequal. The next question which I must determine is the amounts of those contributions, and, in particular, the amount of the contribution by Fred. If Fred's contribution was less than one-third of the total contributions by the three partners, then the difference between Fred's contribution and that one-third is the amount which is due by Fred to Frank and his father. 31 It is appropriate here to observe that the respective contributions of the partners were, in the main, not provided by assets of the partners themselves (apart from the proceeds of sale of Bossley Park), but were largely funded by borrowings by or on behalf of the three partners, such borrowings being made almost entirely from Barclays Bank (although Frank said that he had also borrowed an amount in cash from another source, to which alleged borrowing I shall make further reference later in this judgment). Those contributions were then paid to D'Aroma, which company was the vehicle through which the Merrylands development was substantially funded. 32 In his primary affidavit, that of 11 September 2002, Frank set forth at Schedule 12 (page 50) his summary of the contributions made by each of the three partners to the townhouse development as follows, FRANK MICK FRED TOTAL - 99,255.00 99,255.00 198,510.00 - 80,000.00 - 80,000.00 36,731.00 36,731.00 36,731.00 110,195.00 485,000.00 - - 485,000.00 46,000.00 - - 46,000.00

              567,731.00 215,986.00 135,986.00 919,705.00

======= ======= ======= ======== divided by 3 (261,164) 90,582 170,582 =$306,568. 33 It will be appreciated that the foregoing figures have been quoted by Mr. Justice Young in the extract from his judgment which I have already set forth herein. 34 According to Frank the foregoing contributions by the parties were sourced in the following fashion, set forth in Schedule 1 to his foregoing affidavit (page 1), FUNDS USED TO BUILD TOWNHOUSES 97-101 SHERWOOD ROAD, MERRYLANDS

Sale of Bossley Road, Bossley Park (Residential house) 4/5/1990 funds are deposited into D'Aroma Concrete Pty Ltd cheque account $198,510.25 (refer to Parisi Scarcella Partners, Solicitors (Mick & Fred) settlement statement)

Michele Cavasinni transferred $80,000.00 to State Bank account. Then this account transferred account to D'Aroma Concrete Pty Ltd on 20/4/1990 to pay bills $80,000.00 (Mick)

Sale of lot 103 Sherwood Road, Merrylands (red house) proceeds on 14/8/1991 deposited into D'Aroma Concrete Pty Ltd account to pay bills $110,195.38 (Mick&Frank & Fred) 4. Funds borrowed by Frank (Barclay's Bank and Westpac Bank) to fund balance of townhouse project. 4/12/90 to 30/6/91 $485,000.00 (Frank)

Cash borrowed from Liverpool investor $46,000 $46,000.00 11/9/1991 (Frank) __________ TOTAL $919,705.00 ========= 35 At the conclusion of oral evidence Counsel for Frank handed up an aide-memoire, which emended somewhat the foregoing figures and calculations contained in Schedule 12 and Schedule 1. That aide-memoire is in the following terms, PARTNERSHIP SOURCE OF FUNDS INDIVIDUAL MONEY SUMMARY DESCRIPTION FRANK MICK FRED TOTAL Bossley Road, Bossley Park - 99,255 99,255 185,510 Michael Cavasinni- Term Deposit - 80,00 - 80,00 Red House- Owned by all 3 36,731 36,731 26,731 110,195 Barclays Bank Loan Funds 485,000 - - 485,000 Cash- Liverpool Parisi Partners 46,000 - - 46,000

TOTAL 567,731 215,986 135,986 919,705 Total divided by 3 Each proportion (261,164) 90,582 170,582 $306,568 Corrections By Consent (20,000) 10,000 10,000 20,000 Out of Barclay's Loan Funds (25,000) 12,500 12,500 25,000 _______________________________________________________________ NEW TOTAL 522,731 238,486 158,486 919,705 Total Divided by 3 New Proportion of each Partners (216,163) 68,082 148,082 $306,568.00 respective amount to be paid to Frank FRED NOW OWES $148,082 TO FRANK MICK NOW OWES $68,082 TO FRANK 36 The effect of the aide-memoire is that Frank is now conceding that the total amount advanced by him should be reduced by $45,000, to $522,731, and that the contributions of Mick and Fred respectively should each be increased by $22,500, Mick's contribution being in a total amount of $238,486 and Fred's contribution being in a total amount of $158,486. 37 The simple factual situation concerning the partnership between the three parties relating to the development of the townhouses at Merrylands has been to an extent obscured by arrangements made between those parties relating to the purchase of a property at Lake Heights Road, Lake Heights (referred to as "the Wollongong property").

38 The foregoing essential questions relating to the partnership have also to an extent been clouded and somewhat obscured by evidence concerning the income and the records (many alleged to be unavailable) of D'Aroma. That company did the concreting work on the construction of the Merrylands development, but, far more significantly, that company was the vehicle by which the contributions of the parties funded the townhouse development.

39 Since in a number of instances assertions and denials were not supported by any documentary material, but depended entirely upon the uncorroborated oral evidence of either Frank or Fred, it is appropriate that I should express my views concerning the reliability to be placed upon the evidence of each of those parties. 40 In considering the reliability to be placed upon the evidence of the respective witnesses, it is appropriate to bear in mind that the events which were the subject of that evidence took place almost 16 years ago. It is hardly surprising if, after that considerable lapse of time, the memories of the witnesses are at times unclear or unreliable. 41 I did not regard either Frank or Fred as a witness upon whose oral evidence, unsupported by any documentary material or uncorroborated by the evidence of any other witness, the Court could with any confidence rely, where that evidence was disputed by the other party. No evidence was forthcoming from Michael, and no explanation was offered for the absence of any such evidence. 42 Further, the somewhat curious situation relating to the affidavit evidence of Fred should here be recorded. I have already observed that Fred relied upon his affidavit sworn 29 June 2004. It emerged under cross-examination, however, that that affidavit was prepared by Fred's legal advisors, and was then presented to him. He said that he was told in general terms what it contained, and he then signed it. However, he did not check its contents, and in his oral evidence he gave inconsistent responses concerning his understanding of the contents of the affidavit. In such circumstances the Court can have little confidence in the accuracy or reliability to be placed upon the details set forth in that affidavit. Many of them were inconsistent with the oral evidence given by Fred during the hearing.

43 The essentials of the case were also obscured by evidence concerning what was described as "the old red house", which had been standing upon the Merrylands site at the time when the parties acquired that property, and which thereafter remained on a title separate from that upon which the townhouse development was constructed. The old red house was sold in August 1991, and there was considerable evidence concerning the disposition of the proceeds of sale, in an amount of $110,195 (plus the balance of the deposit of $12,900). That evidence was relevant only to the extent to which it impacted upon the essential questions which I must decide, being the totality of the contributions of the three parties to the partnership, and the amount of the contribution made by Fred to the partnership. As I have already observed, if Fred's contribution was less than one-third, then he is liable to pay the difference to the Cross-Claimants. 44 A number of the figures in the foregoing calculations by Frank were disputed on the part of Fred. At the outset, these disputed matters were set forth in Fred's affidavit of 29 June 2004, to which I have already referred. However, it is appropriate that I should here make the following preliminary observations concerning items now asserted by Frank (or originally appearing in his affidavit) which are disputed by Fred. 45 Ultimately, there appeared to be no dispute on the part of Fred that the townhouse development cost the amount of $918,682 asserted by Frank. Indeed, Fred thought that the townhouses would have cost "a lot more than that". Further, it is revealing that under cross-examination Fred said that whilst he did not agree with the amount that Frank was claiming from him, he did not know how much Frank had contributed to the construction costs. Fred himself agreed that he had made no attempt to work out how much was owed by the one to the other, and said that, whilst he did not believe that he owed Frank anything, and that he had calculated how much he himself had contributed, yet he did not know how much Frank had contributed. 46 Whilst, ultimately, and understandably, Fred did not dispute the reduction made by Frank (described by Frank through his Counsel as a "concession"), by which Frank reduced from $485,000 to $440,000 the advances said by him to have been made by Barclays Bank which he then contributed to the partnership, nevertheless a considerable part of the written submissions on behalf of the Fred was directed to this topic. Somewhat curiously, the attribution to each of Fred and Michael of an additional $22,500 towards their respective contributions to the partnership appeared to have been a source of complaint on the part of Fred, despite the fact that that attribution would, on Frank's calculation, reduce any indebtedness to him by Fred by the amount of $22,500. 47 Although, as I have already observed, Fred did not ultimately dispute the total construction cost in an amount of a little under $920,000, nevertheless he strongly disputed the inclusion in that figure of the net proceeds of sale of the old red house in an amount of $110,195, and disputed the attribution of one-third of those net proceeds, an amount of $36,731, to each of the three partners. According to Fred, neither he nor D'Aroma received any part of the net proceeds of sale of the old red house, and it was submitted on his behalf that the only explanation as to where those funds went was that they went to Frank's own bank account. 48 It is somewhat difficult to understand the approach adopted by Fred in respect to the net proceeds of sale of the old red house. He does not dispute the total cost of the townhouse development in an amount of about $918,682. However, he disputes that there was an equal contribution by each of the three partners towards that cost in an amount of $36,731. 49 It will be appreciated that, whether or not the net proceeds of sale of the old red house were included in the contributions made to the townhouse development, the liability of each of the three partners to that development was one-third of the total cost thereof, being an amount of $306,227. (Frank in Schedule 13 to his affidavit of 11 September 2002 particularised the cost of the development as totalling $918,682 - that figure ultimately being adopted by Fred. The contributions of the partners, however, totalled the somewhat higher figure of $919,705.) If, as Fred asserts, neither he nor D'Aroma received any part of the proceeds of sale of the old red house, then his contribution towards his liability of $306,227 would be reduced by that amount. By the same token, if Fred is correct, Frank's contribution would also be reduced by that amount (as also would Michael's contribution). Those two figures would then cancel each other out. I do not understand the nature of Fred's complaint. 50 It must also be appreciated that, as I have already observed, Fred stated under cross-examination that he had made no attempt to calculate how much was owed by himself or Frank to the other. 51 If, as asserted by Fred, the net proceeds of sale of the old red house went, not into the cost of the townhouse development, but into Frank's own private funds, then each of the three partners should be debited with a notional reduction of $36,731 in the amounts of their respective contributions, and, as I have already observed, those debits as between Frank and Fred would cancel each other out. 52 It was asserted by Fred that payments to various subcontractors who performed work for D'Aroma were made, at least in part, in kind, by D'Aroma performing free of charge work for those subcontractors on other sites. Fred said that there were at least three subcontractors whom D'Aroma paid in that fashion. One such was a subcontractor known as Agati, who did bricklaying work on the townhouses, said to be to the value of $18,000; another was a carpenter whose first name was Joe, who carried out carpentry work on the townhouses, said to be to a value of $16,000; the third was Alex Apap, a builder who assisted with the construction of the townhouses. Fred made no attempt to offer any evidence from Agati or Joe. An affidavit by Mr. Apap was provided on behalf of the Cross-Claimants. He totally rejected the suggestion that he had deducted or offset any moneys due to him by D'Aroma. Ultimately, in his written submissions (paragraph 83) Counsel for the Cross-Defendant stated that the Cross-Defendant does not press for any adjustment to the partnership expenses by reason of any arrangement that D'Aroma may have had with the builder, Alex Apap, in regard to the construction of the townhouses. 53 In the absence of any evidence supporting the foregoing assertion by Fred concerning payments in kind by D'Aroma to various subcontractors, I am not satisfied that such payments took place. 54 It was the evidence of Fred that there was also a worker named Lorenzo Torelli employed by D'Aroma on a subcontract basis to carry out general building and labouring work. Fred said that Torelli worked on the construction of the townhouses for about four days a week for the entire period of their construction (asserted by Fred to have occupied about 12 months from about May 1990 to about May 1991). He said that for about one day a week, on average, Torelli assisted Fred or Michael with contracting work elsewhere for clients of D'Aroma. It was Fred's evidence that during that 12 months period D'Aroma paid Torelli at the rate of $100 a day, in a total amount of about $26,000. Fred asserted that four-fifths of that amount, namely $20,800, was for work performed by Torelli on the townhouses. He said that Frank had not included that cost in the total costs of the construction. 55 No evidence was offered by Torelli in support of Fred's foregoing assertions. Fred, through his Counsel, submitted that the principles enunciated by the High Court of Australia in Jones v Dunkel (1959) 101 CLR 298 have no relevance to the absence of evidence from Agati or Joe or Lorenzo Torelli. Whether or not the foregoing principles in Jones v Dunkel have application to the situation in regard to those witnesses, it seems to me that there is a more fundamental principle involved, being the principle that he who asserts must prove. In respect not only to Agati and Joe but also to Torelli, I am not satisfied, upon the otherwise unsubstantiated evidence of Fred, that the payments asserted by him were paid or, alternatively, that such payments should be treated as constructive payments by the partnership towards the building of the townhouses. 56 It was also Fred's evidence that, in addition to the construction costs listed by Frank and in addition to the foregoing amounts in relation to Agati and to Joe and in relation to Torelli, there was a further amount of about $20,000 of construction expenses paid by cheques drawn on D'Aroma's Westpac Bank account which are not included in the lists provided by Frank. Fred said that he could not tell which cheques they were because Frank had not returned to him the D'Aroma cheque butts for the relevant period. 57 On Fred's evidence, the total construction cost of the townhouses was calculated as follows: In accordance with Frank's lists - $918,682 Less Wollongong subdivision cost - $40,875

              - $877,807
              Less "cash expenses" - $46,000
              ______________

$831,807 Plus Agati, Joe, Torelli and other - $58,600
```
            - $58,600
```
```
            - $890,407
```
58 However, Fred subsequently abandoned his assertion that the cost of the Wollongong subdivision in an amount of $40,875 should be deducted from the total cost of the construction of the townhouse development. Even if Fred had not abandoned his assertion in that regard, I would not have been prepared to take into consideration, as being in any way relevant to the townhouse development which is the subject of the present partnership claim, the cost of the Wollongong subdivision. 59 The partnership expenditure ultimately asserted by Fred was as follows, Total partnership expenses per Frank's accounting (pages 51 to 56 of the attachments to Frank's first affidavit) $918,681 Deduct "cash expenses" appearing at the bottom of page 56 $46,000 _________ Total $872,681 Add Additional expenses - Agati $1,800 Additional expenses - Joe $16,000 Additional construction expenses - Torelli $20,800 Additional construction expenses $20,000

Cost of term deposit $14,000

              $945,281

60 The item of $46,000 is the total of three cash payments allegedly made on behalf of the partnership as being items of expenditure set forth in schedule 13 to Frank's principal affidavit of 11 September 2002. Those three cash items are set forth as follows. Cash John plumBer $9,000 Cash Max tiler $13,000

Cash painter $24,000 Sub total (cash) $46,000 61 According to Frank the foregoing cash expenses were paid by him from cash moneys which he had borrowed in the sum of $46,000 from a man in Liverpool who was a client of a solicitor known to Fred and Michael. It was Frank's evidence that he and Michael collected the cash from the solicitor's office and very shortly thereafter that cash was handed to the three alleged subcontractors in payment of amounts due to them for work on the townhouses. Frank said that the money was paid at Fred's residence, in the presence of Frank, Fred and Michael, and that all three partners participated in the handing over of the cash. 62 Fred totally denied any knowledge of or any participation in such a cash transaction. As I have already recorded, Michael did not give evidence in the present enquiry. Apart from the totally unsupported oral evidence of Frank concerning, first, the cash borrowing from the otherwise unidentified man in Liverpool, said to be a client of the firm of solicitors, Parisi & Partners, at Liverpool, who was said to have handed over to Frank and Michael $46,000 in cash at the solicitor's office, the only documentary material presented in support of these entirely suspicious transactions was a draft agreement bearing date 11 September 1991 between Frank and an unidentified other party, purporting to witness the borrowing by Frank from that other party of $46,000, with repayment within six months, and interest at the rate of 11 percent per annum. The name of the other party and that party's address (other than the word "Liverpool") have been obliterated by a whiting out in the document which is part of schedule 11 to Frank's affidavit of 11 September 2002. 63 No evidence was offered from the solicitor (identified as Mr. Tony Carpentari) who was alleged to have participated in the handing over of the cash moneys, or from the otherwise unidentified lender or from the imprecisely identified tradesmen who were alleged to have been paid in cash. 64 I am not satisfied on the balance of probabilities, first, that a cash borrowing of the nature asserted by Frank was made or, further, that cash payments of the nature asserted by him were made. 65 It follows, therefore, that the "cash expenses" of $46,000 will be deducted from the amount of $918,682, as the total cost of the townhouse development, reducing that figure to $872,682. Further, the amount of Frank's contribution will also be reduced by $46,000 (from $567,731 to $521,731).

66 In accordance with the conclusion which I have already expressed, I am not persuaded that the amounts attributed to Agati, Joe and Torelli should be taken into consideration by adding those amounts to the total cost. Neither do I consider that the "additional construction expenses" of $20,000, asserted by Fred to have been paid by unidentified cheques in unspecified amounts drawn on D'Aroma's Westpac account, have been substantiated. It follows that the appropriate figure for the cost of the development is $872,682. 67 In August 1990 a deposit of $14,000 was made to the State Bank as a term deposit in the names of Michael, Frank and Fred. By August 1993 interest on that deposit had brought its value to $17,250. It was the evidence of Frank that the $14,000 was security for a bank guarantee in favour of the local Council, and that, in that sense, it represented a bond to the Council in relation to the construction of the townhouses. Frank said that the bond was released "a number of years later" when the Council carried out final inspections, and that the funds were "settled" between the partners at that time. Fred's evidence was that he knew nothing more about the deposit than the fact that the deposit had been made. Counsel for the Cross-Defendant in his written submissions (paragraph 99) accepted that it was likely that the amount of this deposit was in fact divided up equally between the parties in or after August 1993. Frank's evidence did not carry the matter any further. 68 If, as would appear to be the case, the deposit was in the nature of a bond in favour of the local Council in respect to the construction of the townhouses, then it should be treated as a partnership asset, and should be brought into account in ascertaining the liability of the partners. 69 It seems to me, therefore, that that additional amount of $17,250 should be added to the foregoing figure of $872,682, to give a figure of $889,932 as the total cost of the townhouse development. It follows, therefore, that each of the parties is liable for one-third of that amount, being $296,644. Fred has, in accordance with the calculations made by Frank, paid $135,986. Fred disputes that figure, only to the extent of rounding up a matter of cents, and bringing that figure to $135,987. However, if the foregoing amount of $17,250 be treated (as I have treated it) as a bond in favour of the local council and thus properly be included (as I have included it) in the cost of the development, then if (as appears to have been the case) that bond, when released, was divided equally between the parties (as the Cross-Defendant in his written submissions accepted was likely), it is appropriate that the contribution by each of the parties should be increased by one-third of that amount, that is, by $5,750. Thus Fred's total contribution should be regarded as $141,737 (being the sum of $135,987 and $5,750). 70 Upon the foregoing calculations, therefore, it will be seen that the liability of each partner will be $296,644 (being one-third of $889,932). Upon my foregoing calculations, Fred should be regarded as having contributed of that amount the sum of $141,737. It follows, therefore, that there is an outstanding liability in Fred to the Cross-Claimants in an amount of $154,907. That is the amount which, upon the present enquiry, is due by the Cross-Defendant to the Cross-Claimants. 71 As I understand it, the effect of section 24(3) of the Partnership Act is to entitle Frank to interest from 30 June 1991 at the rate of 7 percent per annum upon the amount which Frank paid in excess of $296,644. 72 I have already concluded that the total amount asserted by Frank to have been paid by him ($567,731) should be reduced by $46,000, to $521,731. To that figure should be added $5,750 (being one third of the term deposit plus interest), bringing his total contribution to $527,481. Thus, he contributed $230,837 more than his one-third share. He is entitled to interest on that amount at the rate of 7 percent per annum, as prescribed by the foregoing section of the Partnership Act. Upon my calculation that interest from 30 June 1991 totals $242,378. 73 Frank is entitled to receive that interest from the other partners. I have not received submissions as to whether, or how, that interest should be apportioned between them.

74 It follows, therefore, upon my foregoing calculations, that the Cross-Defendant is liable to pay to the Cross-Claimants the sum of $154,907, and that the Second Cross-Claimant is entitled to interest from the First Cross-Claimant and the Cross-Defendant, pursuant to section 24(3) of the Partnership Act 1892, in the sum of $242,378. 75 The orders of 26 April 2001 made by Mr. Justice Young included, as order 4, an order that costs be reserved. The orders were silent as to the costs of the inquiry before me. Accordingly, it will be necessary for His Honour to deal with costs. 76 For the assistance of His Honour, however, I would observe that the Cross-Claimants have been largely successful in their present claim against the Cross-Defendant. They claimed to be entitled to $170,582 from the Cross-Defendant (apart from any question of interest), and I have found that they are entitled to $154,907. Further, the effect of section 24(3) of the Partnership Act is that the Second Cross-Claimant is entitled to interest from the First Cross-Claimant and the Cross-Defendant in the sum of $242,378. 77 Subject to correction of any arithmetical errors, I express my conclusions as follows:

(1). Upon inquiry, I find that the sum of $154,907 is due by the Cross-Defendant to the Cross-Claimants, and that the Second Cross-Claimant is entitled to interest in the sum of $242,378 from the First Cross-Claimant and the Cross-Defendant.

(2). I refer the matter to Mr. Justice Young to deal with costs. **********

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