Supreme Court of WA|2010-10-01|Before: Martin CJ

FAZIO -v- FAZIO [2010] WASC 263 (1 October 2010)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

Mark Anthony CONLAN as Executor of the estate of VINCENZO FAZIO

Equity - Trusts - Express Trusts - Turns on own facts

Partnerships - Retirement of partners - Abandonment - Abrogation - Repudiation - Turns on own facts

Partnerships - Breach of agreement for partnership - Turns on own facts

Partnerships - Dissolution and winding up - Order by the court - Turns on own facts

Submissions to be provided regarding relief in defendants' counterclaim

First Plaintiff : Mr C R C Newlinds SC & Mr J C Giles

Second Plaintiff : Mr C R C Newlinds SC & Mr J C Giles

First Defendant : Mr C L Zelestis QC & Mr P K Walton

Second Defendant : Mr C L Zelestis QC & Mr P K Walton

Third Defendants : Mr C L Zelestis QC & Mr P K Walton

Waltons Stores (Interstate) Ltd v Maher [1988] HCA 7; (1988) 164 CLR 387

1 Vincenzo Fazio (known as Vince) and his wife Guiseppina Fazio, migrated to Australia from Italy in 1952 with their three-month old son, Giacomino Fazio (known as Jack). Their second child, Ridolfo Rosario Fazio (known as Rudy) was born in Perth in 1961. Their third child, Sarina (now Sarina Koleszko) was born in Sicily in 1967 while the family was visiting Italy. (Because many of the participants in the events giving rise to these proceedings have the same surname, I will refer to members of the Fazio family by their first names only. I mean no disrespect by this practice.)

2 In 1956 Vince started a limestone quarrying and stone masonry business known as Italia Limestone Company (Italia Limestone), in partnership with a number of other Italian immigrants. The composition of the partnership changed over the years, as some proprietors left, and were replaced by others. By the late 1960s, the proprietors of the business were members of the Fazio family, members of the Mignacca family and members of the Catalano family. At some point around then, or perhaps in the early 1970s, Vince and Guiseppina brought Jack into the partnership, giving him an equal portion of their share in the partnership business. In December 1975, the Fazio partners acquired the interest of the Mignacca partners, whereafter the Fazio partners held two-thirds of the interest in the partnership, and the Catalano partners one-third.

3 Jack worked in the partnership business and was paid wages. However, there was disharmony between Jack and his father, Vince, and in 1984, Jack ceased to work in the business, although he asserts that from time to time thereafter he did have some participation in the affairs of the business. Generally speaking, after 1984, the documents and records relating to the partnership do not record or suggest that Jack remained a partner.

4 The relationship between Jack and his father deteriorated further over time, and in the five years prior to Vince's death in 2007, there were a number of incidents involving hostility and aggression as between the two men. Jack's relationship with his father impacted adversely upon his relationship with his siblings, and he became estranged from them, as well as from his parents.

5 In the meantime, despite some fluctuating fortunes, particularly in the early part of the 1990s (when the business was under significant financial pressure), the partnership's business prospered, and assets were acquired by various corporate entities related to and controlled by the proprietors of the partnership. Often those assets included land in proximity to the outer suburbs of Perth, which was quarried for limestone used in building houses and in other construction work in those suburbs, or in coastal groynes. As Perth expanded in size, land which had been purchased for quarrying became suitable for residential development and increased substantially in value. The business also became a substantial enterprise, and had a significant turnover.

6 In 1994 and again in 2002, in the course of family gatherings, Jack complained that Rudy was being given preferential treatment by Vince, in the form of revenue from the Italia Limestone business. This led to an altercation on each occasion. In the latter part of 2003, Jack wrote to the partnership accountants asserting that he was a partner and seeking access to all partnership records which they held. The accountants did not state a definitive position on the subject of his interest in the partnership, but refused him access to the partnership records which they held.

8 These proceedings were commenced on 12 March 2008. In these proceedings Jack and Maria assert that Jack remained a partner in the business at all times, or alternatively, that his mother, and the estate of his late father are estopped from denying that he holds a portion of their interest in the partnership. They further assert that various corporate entities hold assets on behalf of the partnership, as a consequence of which Jack holds an equitable interest in those assets. They also assert that Jack relied to his detriment upon representations by his father to the effect that he would receive one-third of all family assets before or upon his death, so that the executors of that estate and the corporate entities holding assets acquired by Vince, or on his behalf, are now estopped from denying that assertion, and are obliged to fulfil Jack's expectation.

9 For the reasons which follow, I have concluded that the plaintiffs' claim should be dismissed. I am satisfied that Jack resigned from and surrendered his interest in the partnership in 1984 with the concurrence and agreement of the other partners. I have concluded that there were no promises or representations by Vince or Guiseppina to Jack or Maria, or conduct inducing a mistaken belief on their part, upon which Jack relied to his detriment, such that either Guiseppina or the estate of Vince would be estopped from denying Jack an interest in the partnership, or in the assets of the partnership or in one-third of Vince's estate. I am also satisfied that there is no basis for concluding that the various assets held by the corporate entities which are party to these proceedings are held on trust for the partnership or the proprietors of the partnership, save to the extent that those proprietors have interests in express trusts of which the relevant company is trustee, or an interest in the company itself as a shareholder.

10 The plaintiffs are Jack Fazio and his wife, Maria. They married in April 1977, and have three sons, Vincenzo (who I shall call Vince junior as the parties did), Anthony and Phillip. Unfortunately, in the family schism which gave rise to these proceedings, Vince junior has become aligned with members of the family other than his parents. He and his wife, Alissa, gave evidence on behalf of the defendants.

11 The first two defendants are Rudy and Guiseppina Fazio respectively. The third defendants are Mr and Mrs Catalano, the proprietors of a one-third interest in the partnership to which I have referred. The first to third defendants were represented by the same solicitors and counsel.

12 The remaining ten defendants took no active part in the proceedings and all but one filed appearances submitting to any orders the court might make.

13 The fourth defendant is the executor of the estate of Vince Fazio.

14 The fifth defendant is Anham Nominees Pty Ltd (Anham). It was incorporated in January 1977, and is the trustee of the V Fazio Family Trust, which was established by a deed of trust dated 5 May 1977. The trust is a discretionary trust. The beneficiaries of the trust are the children of Vince, their children and grandchildren, and Vince and Guiseppina. Anham is sued in its own right and in its capacity as trustee of the V Fazio Family Trust.

15 The sixth defendant is Roadstone Quarries Pty Ltd (Roadstone). It carried on the business previously carried on by the partnership between 2000 and 31 December 2006.

16 Danehill Nominees Pty Ltd (Danehill) is the seventh defendant. It was incorporated in May 1978, and operates as the trustee of the FSC Unit Trust, which was established by deed of trust dated 12 July 1978. 150 units have been issued in the FSC Unit Trust. 100 of those units are held by Anham as trustee for the V Fazio Family Trust. The remaining 50 units are held by Dangan Nominees Pty Ltd (Dangan) as trustee for the Catalano Family Trust. It will thus be seen that, generally speaking, the units in the FSC Unit Trust, of which Danehill is the trustee, are held by companies representing the Fazio and Catalano families, and in the same proportion as those families held their interest in the Italia Limestone Partnership. Danehill is sued in its own right and in its capacity as trustee of the FSC Unit Trust.

17 Dangan is the eighth defendant. As I have mentioned, it is the trustee of the Catalano Family Trust. Dangan is sued in its capacity as trustee of the Catalano Family Trust.

18 Italia Holdings Pty Ltd (Italia Holdings) is the ninth defendant. It holds land in Wattleup Road, Wattleup which the plaintiffs assert is held on trust for the partnership.

19 Renmore Pty Ltd (Renmore) is the tenth defendant. It was incorporated in December 1986, and is the trustee of the Renmore Trust which was established by deed of trust dated 5 December 1986. The trust is a unit trust. 60 units in the Renmore Trust have been issued. 40 of those units were held by Vince prior to this death, and following his death, by Eight Decades Pty Ltd, in each case as trustee of the Vince Fazio Trust. The remaining 20 units have at all times been held by Dangan as trustee for the Catalano Family Trust. Again, it will be seen that the unit holdings in the Renmore Unit Trust generally reflect the family interests in the partnership. Renmore is sued in its own capacity, and as trustee of the Renmore Trust.

20 The Vince Fazio Trust was established by a deed of trust dated 25 July 1985. It is a discretionary trust. The beneficiaries are Vince, Rudy and Sarina.

21 Italia Stone Group Pty Ltd (Italia Stone) is the eleventh defendant. It has carried on the business previously carried on by the partnership following the transfer of that business from Roadstone to Italia Stone with effect from 1 January 2007.

22 Blueland Holdings Pty Ltd (Blueland) is the twelfth defendant. It is sued in its own capacity, and as trustee of the Ridolfo Fazio Family Trust.

23 The thirteenth defendant is Ridgecap Pty Ltd (Ridgecap), which is sued in its own capacity and in its capacity as trustee for the S & R Catalano Family Trust.

24 The pleadings occupy more than 250 pages of text. What follows is an attempt to distil from the pleadings the main issues which remained alive at the conclusion of the trial.

25 The plaintiffs assert in their statement of claim that Jack Fazio was first admitted to the Italia Limestone partnership in or about 1961 (therefore at the age of nine), with a one-ninth interest in the partnership, being one-third of the interest held by him and his parents, which was in turn a one-third interest in the partnership. However, at trial, the plaintiffs presented their case on the basis that Jack became a partner not later than 1968, when a partnership agreement was prepared showing Jack as the proprietor of one-ninth share in the partnership. Whether or not that agreement was ever executed by all the parties to it is one of the issues I have to determine, given that the only copy of the agreement currently in existence has not been executed by Mr and Mrs Mignacca.

26 The plaintiffs assert that Mr and Mrs Mignacca retired from the partnership in or about January 1976, with the result that a new partnership was established in which Jack and his parents each held a two-ninth interest, and Mr and Mrs Catalano each held a one-sixth interest. They assert that the partnership continued, with those proprietors holding those interests until Vince died on 5 August 2007, whereafter his interest passed to his estate. They further assert that the current partners, other than Jack and Mr and Mrs Catalano, have denied, and continue to deny Jack's interest in the partnership.

27 The plaintiffs further assert that at some point between 1979 and 1983, or alternatively, in or about 1988, Rudy was purportedly admitted as a partner in the partnership. They assert that Jack has not consented, and does not consent to the admission of Rudy to the partnership with the consequence that Rudy is not a partner.

28 The plaintiffs further assert that the partnership agreement prepared in 1968, and to which I have referred, contains provisions prohibiting partners from transferring any of their share or interest in the partnership. They assert that each of Vince and Guiseppina breached that prohibition by purporting to give Rudy a share of their interest in the partnership. They further assert that under the terms of the 1968 agreement, in the event of breach, a partner not in breach is entitled to serve notice requiring the partner or partners in breach to retire from the partnership, after which the continuing partners have the option of acquiring the share of the retiring partner.

29 The plaintiffs assert that in late February and early March 2008, Jack exercised the rights conferred upon him under the 1968 agreement, by serving notices of breach and of exercise of option to purchase upon Guiseppina and Vince's estate, with the consequence that he is entitled to acquire their interests in the partnership.

30 In the alternative, Jack seeks an order for the winding up of the partnership either at the time he purportedly retired in or about 1984, or at the time the partnership dissolved upon the admission of Rudy as a partner, or as a result of its dissolution upon the death of Vince in 2007.

31 In the alternative, the plaintiffs assert that by reason of the doctrine of estoppel, Rudy, Guiseppina and the executor of Vince's estate hold two-ninths of the partnership on trust for Jack, and one-third of Vince's estate, and one-third of a broader class of assets described as 'the Fazio Family Assets' on trust for Jack. Those assets are particularised, and essentially comprise every asset acquired by Vince, or in which Vince acquired an interest, through any corporate entity or trust.

32 In support of that assertion, the plaintiffs plead that at all material times since 1961 Jack believed and expected that two-ninths of the partnership was his, and that one-third of the Fazio family assets other than the partnership assets would be transferred to him on or before the death of Vince.

33 The plaintiffs assert that Vince knew of Jack's belief and expectation, and provide particulars of that assertion which refer to a series of events and transactions between 1976 and 2005.

34 The plaintiffs further assert that Jack relied upon that belief and expectation to his detriment, by providing advice to Vince in relation to aspects of the partnership's business, and making various contributions to the partnership and to the wealth of the Fazio family, which are particularised. The actions taken by Jack which are said to support that proposition are alleged to have occurred between 1973 and 1995.

35 The plaintiffs further assert that Vince knew of, encouraged and induced Jack's belief and expectation, which is said to give rise to a promissory estoppel. In addition, the plaintiffs assert an entitlement to a proprietary estoppel arising from benefits conferred in respect of assets owned by the defendants, or in which they have an interest.

36 The plaintiffs further assert that various corporate entities, some of which are defendants and some of which are not, hold assets on trust for the partnership, and that as a result Jack, as a partner, is entitled to an interest in those assets.

37 Jack seeks declaratory relief, or alternatively, orders winding up the partnership or requiring payment of his share of partnership profits since his resignation, together with an order for the taking of all necessary accounts and assessments.

38 The defendants admit that Jack was admitted to the partnership in or before December 1975. However, they deny that the 1968 agreement was ever fully executed, or that the partnership was ever conducted according to its terms, and assert that the partnership agreement was oral.

39 They assert that Rudy was admitted as a partner on 18 June 1979, and that Jack retired from the partnership with effect from 1 July 1984, pursuant to an agreement made on or about 22 June 1984, to the effect that he relinquished all his interest in the partnership in favour of the continuing Fazio family partners.

40 The defendants further assert that Jack received consideration in return for his retirement from the partnership, in the form of Vince agreeing to make available to Jack and Maria the proceeds of sale of a property at 223 South Terrace, Fremantle, the transfer of an estate in fee simple in land at 21 Barrett Street, Spearwood, the preparation of a set of architect's plans for the construction of a house at 21 Barrett Street, Spearwood at Vince's expense, and to release Jack from all debts and liabilities of the partnership.

41 In the alternative, the defendants assert that Jack abandoned his interest in the partnership, or alternatively, his interest in the partnership was mutually abrogated, or in the further alternative, that Jack repudiated the partnership agreement, which repudiation was accepted by the continuing partners.

42 The defendants further assert that Jack's claims are precluded by the provisions of the Limitation Act 1935 (WA), or if that Act does not apply directly to the causes of action asserted, by analogy to the Act. Further, the defendants assert that Jack acquiesced in the conduct of which he now complains - namely, the denial of his interest in the partnership. Further, they assert that Jack's delay in bringing these proceedings is such that he should be denied relief in equity, by the operation of the doctrine of laches.

43 The defendants further assert that Jack is estopped from claiming the relief he seeks because of his failure to participate in the business or affairs of the partnership, his participation in activities unrelated to the affairs of the partnership and, in some cases, adverse to the interests of the partnership and his failure to assume his liabilities and responsibilities as a partner.

44 The defendants further allege that various benefits were conferred upon Jack and Maria because Jack was not a member of the partnership. They assert that if Vince and Guiseppina had known that Jack intended to assert an interest in the partnership, they would not have conferred those benefits upon Jack and Maria.

45 By their counterclaim, the first to third defendants seek declarations as to the business and assets of the partnership since 1999.

46 It will thus be seen that the principal issues which I have to determine are:

(1) Was Rudy admitted to the partnership in or about 1979 or perhaps at some later date?

(2) Did Jack retire from the partnership by mutual agreement in 1984?

(3) If Jack did not retire from the partnership in July 1984, did he abandon his interest in the partnership, or was there a mutual abrogation of that interest, or did he repudiate the partnership agreement, which repudiation was accepted by the continuing partners?

(4) Is Jack now estopped from asserting an interest in the partnership?

(5) Are Guiseppina and the estate of Vince estopped from denying that Jack is entitled to one-third of their interest in the partnership?

(6) Has Jack validly exercised an option to acquire the interest of each of Guiseppina and the estate of Vince in the partnership such that he can now enforce the purchase of those interests?

(7) Is Jack entitled to an order winding up the partnership, and if so, with effect from what date?

(8) Are the defendants estopped from denying Jack's entitlement to one-third of the various assets described as the Fazio family assets?

(9) Are the various assets identified in the pleadings held by various corporate entities on trust for the partnership?

(10) Are Jack's claims precluded by the Limitation Act, acquiescence, or the equitable doctrine of laches.

47 These are the principal issues which I have to determine. However, because of the myriad events and transactions which are said to be relevant to the resolution of these principal issues, there are a number of subsidiary issues which I will have to determine, including in particular a number of issues relating to a number of transactions undertaken by the participants in the events giving rise to these proceedings over a lengthy period of years.

48 In this section of my reasons I will set out the detailed findings of fact which I make from the evidence adduced at trial. Where there are conflicts in that evidence, I will set out my reasons for the findings which I have made. It is, however, appropriate for me to commence with some general observations about the view I have taken of the evidence.

49 A significant number of witnesses were called, including many (but not all) of the principal players. Of course, one of the most significant players, Vince, is deceased. The other principal witnesses were required to give evidence of events which took place over the course of many years. One of the most significant periods in the history of the various events involving the Fazio family which were addressed by the evidence was the period between 1982 and 1984, leading up to Jack's departure from full-time engagement in the Italia Limestone business. That period was more than 25 years prior to the trial. It would not be reasonable to expect any witness to have a precise recollection of the exact sequence of events, or of particular dates, or of the precise terms used in conversations at that time. Accordingly, I have allowed a significant degree of latitude in evaluating evidence given by witnesses of events and conversations which took place many years ago.

50 It is also clear from all the evidence I have heard that over the years a profound schism has developed within the Fazio family. The conflict between Jack and his father, Vince, was protracted and increasingly bitter. It eventually reached the point where their differences were irreconcilable, although that point does not appear to have been reached until a few years prior to Vince's death. Other members of the family became embroiled in this conflict, and clear lines of demarcation emerged between the factions within the family. The bitterness which resulted has, predictably and understandably, had an impact upon the perceptions of many of those who gave evidence at trial. It was inevitable that, when giving their evidence, their perspective of the events which they witnessed would be influenced by the position which they occupied in the family conflict to which I have referred. This observation extends not only to members of the Fazio family, but also to other witnesses who became aligned with one of the groups within the family conflict, such as Mr Levin, and Ms Rebelo. In evaluating the oral testimony of the witnesses, in most cases, it has been necessary for me to take this factor into account, and to recognise that very few of the witnesses called can be said to have been impartial and that, without any suggestion of dishonesty or invention, their evidence has inevitably been influenced by their partiality.

51 Given the inherent doubts which must attend oral recollections of events which occurred many years ago, in most instances decades earlier, and the partiality of most of the witnesses, I have placed significant weight upon contemporaneous documentary evidence and upon the inferences properly drawn from that evidence. Where it is possible to establish objective facts from that evidence, I have then assessed the oral testimony in light of the inherent probabilities of a particular version of events, in the context of the established objective facts.

52 I am not convinced that any witness gave evidence which he or she knew to be false. As will be seen, however, I have in many instances rejected the oral testimony that was given by one or other witness as a result of the process I have just described. In those instances, generally speaking, I consider that the evidence which I have rejected was given because of the insidious influence and effect of the family conflict which I have described upon the honest recollection and perception of the witness.

53 There are very few instances in which I have relied upon demeanour in making my findings. For example, although I have rejected significant aspects of the testimony given by each of Jack and Maria, I have not placed significant reliance upon their demeanour while giving evidence in arriving at my conclusions. On the contrary, the impression which I formed from their demeanour at the time of giving their evidence was that, in general, each was doing their best to provide truthful answers to the questions posed, but that their perception, and the accuracy of their recollections, have been overtaken by the conflict to which I have referred. In some instances, however, I have concluded that their evidence has been fashioned to assist the case which they seek to advance.

54 There were, however, some witnesses whose demeanour caused me to doubt their credibility generally. Mr Levin and Ms Rebelo were the most significant. Their aggression and hostility during cross-examination, and their evasion of the questions posed caused me to conclude that each had come to court in order to give the evidence which best suited the defendants' case. Of course, that does not mean that all the evidence which they gave was false. However, my impression of their demeanour has meant that, generally speaking, I have not accepted their oral testimony unless it is corroborated by contemporaneous documents or other less contentious evidence, or is inherently plausible.

55 There were also aspects of the evidence given by Rudy and Sarina which caused me to doubt their credibility, although not to the extent of the doubts which I formed in relation to the credibility of Mr Levin and Ms Rebelo. It was clear from their demeanour when giving evidence, that each of Rudy and Sarina, perhaps understandably, were overtly endeavouring to adopt the position which supported the defendants' case. In numerous instances, each evaded questions to which the answers were likely to be detrimental to the defendants' case. On other occasions, they provided answers which were not responsive to the question asked, but which were detrimental to the plaintiffs' case. I have approached their evidence with some reservation.

56 There was a body of evidence led on the broad topic of the deterioration of the interpersonal relationships within the family group. Various assertions were made about derogatory remarks having been made by one or other family member about other members of the family. There are some specific instances of family altercations, such as the Sunday dinner incident in 1994, the baptism lunch incident in 2002, and the altercation in the Italia Limestone office in 2006, where things were said that are directly relevant to the matters in issue, and in particular, on the subject of whether Jack remained a partner. In the reasons that follow I will set out the specific findings I make in relation to those incidents. However, the evidence went beyond those specific incidents, and covered a number of other occasions where things were allegedly said that are not directly relevant to the specific issues in these proceedings, although they do shed light upon the general deterioration of interpersonal relationships within the family group. I have not found it necessary to make specific findings in relation to that broader category of evidence, although I have concluded that the acrimony between Jack and Maria on the one hand, and the other members of the family on the other, ran deeper and started earlier than Jack and Maria suggested in their evidence.

57 There was also a considerable body of evidence led about the work done by Jack in connection with Fazio family business interests prior to June 1984, when the defendants assert that he resigned from the partnership. Because it is common ground that Jack was a partner until at least June 1984, the precise extent of the work which he did, and the contribution which he made to the development and enhancement of the Fazio family businesses is not critical to the resolution of the contentious issues in the case. I accept that the extent of the work which he did is relevant to an assessment of the likelihood of him resigning from the partnership in June 1984, and to an assessment of the likely terms of such a resignation, if it did occur, but it is sufficient for those purposes to make a fairly broad assessment of the extent of his contribution up to that time. I am satisfied from the evidence that Jack undertook significant work in relation to the market gardens and orchards which the family owned (not the partnership), and later worked long and hard, in a labouring capacity, in connection with the limestone business run by the partnership. I am also satisfied that Jack generally considered that he was inadequately remunerated given the extent of the work that he performed. I will make specific findings below in relation to Jack's involvement in major transactions involving the Fazio family businesses, and the partnership prior to June 1984.

58 Jack was born on 27 July 1952 in Sicily. His parents brought him to Australia with them when they migrated in the latter part of 1952.

59 In about 1956, Vince commenced a business quarrying and supplying limestone in partnership with his wife Guiseppina and a number of other Italian immigrants, including Sebastiano Galati, Leo Gigilia, Nino Pruiti, and perhaps his brother, Francesco Fazio. Over time there were various changes in the composition of the partnership which it is unnecessary to chronicle. By 1968 the partnership business was primarily conducted by three men - Vince, Carmelo Mignacca and Sebastiano (Sam) Catalano. The Fazio, Mignacca and Catalano families each had a one-third interest in the partnership, although that interest was spread among family members. In the case of the Catalanos, the interest was held equally by Sam Catalano and his wife, Rosaria (who each held one-sixth shares). In the case of the Mignacca family, the interests were held by Carmelo and his wife, Giacomina (who each held one-sixth shares). In the case of the Fazio family, the interests were held by Vince, Guiseppina and Jack (who each held one-ninth shares).

60 A document was tendered in evidence taking the form of a partnership agreement between the seven persons to whom I have referred, purporting to record the terms upon which they had agreed to carry on business in partnership under the name 'Italia Limestone Co' (tb 1/27). The typed text of the document refers to an agreement made in June 1968, although no particular date in June of that year has been entered in the appropriate place by manuscript. The document appears to have been signed by each of the Fazio partners, and each of the Catalano partners, but has not been signed by either Carmelo or Giacomina Mignacca.

61 The document was found amongst Carmelo Mignacca's papers following his death in February 2003, by his son, Frank Mignacca. Following Vince's death in August 2007, Frank Mignacca, accompanied by his brother, Ross Mignacca, gave the document to Jack.

62 No other version of the document has been discovered by any party to these proceedings. There is no evidence that the document was ever referred to or relied upon by anyone involved in the conduct of the partnership prior to its production to Jack in the latter part of 2007.

63 Clause 12 of the document includes a covenant by each partner that they will not, 'without the consent of the others ... sell or transfer or otherwise dispose of their share or interest in the firm, or any part thereof'. Clause 13 provides that in the event of breach of the partnership agreement by any partner:

[T]he other partners or any of them may within one (1) calendar month after becoming aware thereof by notice in writing request such partner to retire from the partnership and the party receiving such notice shall be deemed to have retired on the date of receipt of such notice.

64 Clause 14 provides that in the event that a partner retires from the partnership pursuant to any of its express provisions, then the other partners, or any of them, may within two calendar months after such retirement exercise an option to purchase the share of the retiring partner. The value of the retiring partner's share is, pursuant to that clause, to be mutually agreed, or in default of agreement, determined by arbitration.

65 Clause 15 provides that the partnership is not to be terminated upon the death of a partner.

66 As I have already noted, Jack purported to enforce these provisions in 2008 when, on about 28 February, he purported to serve notice pursuant to cl 13 upon each of his mother, and the estate of his late father, asserting that they had breached cl 12 of the agreement by transferring part of their interest in the partnership to Rudy. From the findings of fact which I make below, it is abundantly clear that such notice was not served within one month of Jack becoming aware of the purported assignment of an interest in the partnership to Rudy. On or about 6 March 2008, Jack purported to serve notice pursuant to cl 14 of the agreement, exercising the option to acquire the partnership interest of each of his mother and the estate of his late father. It is therefore necessary to determine whether, in 2008, when those notices were served, the 1968 document embodied the terms upon which the partnership was then conducted (assuming, of course, that Jack was still a partner at that time).

67 The first question to be addressed is whether I should infer, from the form of the document and its provenance that it is more likely than not that the document was executed by all partners, including the Mignaccas. The plaintiffs ask me to draw that inference on the basis that if the document was circulated amongst the partners for execution, it is likely that the Mignaccas would have received the document executed by all other partners, and in return provided the document which they themselves had executed to the other partners.

68 This is pure conjecture. The document appears to have been prepared by solicitors. In the normal course, one would have expected those solicitors to secure execution by all parties and attend to the stamping of duly executed copies, which would then be provided to the parties to the agreement. There is no version of the document in existence which suggests that this ever occurred. Nor is there any evidence to suggest that the document has ever been referred to, or relied upon, by any member of the partnership prior to its production to Jack in the latter part of 2007.

69 The Mignaccas retired from the partnership with effect from 1 January 1976. A document has been tendered in evidence taking the form of a draft agreement for dissolution of partnership apparently prepared on 10 May 1976 (tb 1/74). That document recites that the partners of Italia Limestone Co had carried on their business 'under verbal [sic: oral] terms and conditions'. There is no evidence that the draft document was ever finalised or executed.

70 An unexecuted deed of dissolution of partnership was also tendered in evidence (tb 1/83). The document provides that the parties to the deed were to be the seven partners to whom I have referred. That document also recites that the parties had carried on business under the name 'Italia Limestone Co' 'under the verbal [sic: oral] terms and conditions'.

71 That document appears to have been prepared by Messrs Lavan & Walsh, solicitors. It bears the initials 'PEF', which suggests that it was prepared by Mr Pierre Edmond Frichot, who served as Vince's solicitor for many years, until his untimely death in a motor vehicle accident.

72 Although the documents relating to the dissolution of the partnership involving the Mignaccas which were prepared in 1976 and 1977 were not executed, they support the inference, which I draw, that someone involved with the partnership instructed solicitors, at or about that time, that there was no written partnership agreement.

73 Having regard to that inference, and the fact that there is no evidence that the 1968 document was ever referred to or relied upon by any member of the partnership prior to its production to Jack in late 2007, I am not prepared to draw the inference propounded by the plaintiffs to the effect that the document was executed by the Mignaccas. I therefore find that the document was never executed by all partners. As I have mentioned, there is no evidence that the document was otherwise adopted by the partners so as to govern the terms of their partnership, and I therefore conclude that the 1968 document was never of any effect.

74 Further and in any event, as I have mentioned, the partnership to which the 1968 document related was dissolved by the retirement of the Mignaccas from the partnership on 31 December 1975. As there is no evidence that the members of the new partnership which was created with effect from 1 January 1976 adopted the 1968 document as a document which embodied the terms of their agreement (indeed, there is evidence to the contrary, in the form of the draft documents to which I have referred), it is, I think, clear on any view that the 1968 document did not govern the partnership either at the time of Vince's death in August 2007, or at the time Jack purported to serve notices pursuant to its terms in 2008.

75 I do not overlook Jack's evidence to the effect that he saw the 1968 document in or about 1979, when he was working full-time for Italia. He asserts that he saw it in a box of documents at the Italia office. However, if he did see it (which I doubt), he does not assert that he saw a version of the document signed by the Mignaccas.

76 Jack went to boarding school in New Norcia from 1966 to 1972 inclusive, between the ages of 13 and 20 years. He was required to repeat at least one and perhaps two years of his studies at New Norcia, and left that school without qualifying for university entrance. However, after returning to Perth, he attended John Curtin High School during 1973 and matriculated. He commenced studying law at the University of Western Australia in 1974, but failed the exams at the end of that year. In 1975, he enrolled to study accounting at the Western Australian Institute of Technology, but dropped out of his studies later that year. At about this time he was also working in the family's market garden. Later he also worked in the limestone business.

77 Jack met Maria in late 1975 and they were engaged to marry on 21 August 1976. They married on 2 April 1977.

78 In the meantime, the limestone business conducted by the partnership had been adversely affected by the increasing practice of using cement slabs as housing foundations instead of limestone blocks. The business diversified into quarrying and supplying limestone for use as road rubble, and the supply of limestone blocks for substantial earthworks.

79 In addition to his interest in Italia Limestone, Mr Mignacca operated a home building business in which the Fazios had an interest. In 1975, it was agreed that the Fazios would surrender their interest in the building business, and the Mignaccas would surrender their interest in the limestone business. Through that arrangement the Fazio family acquired the Mignacca family's interest in the limestone business. As from 1 January 1976, the Fazio family collectively held a two-thirds interest in the limestone partnership, and the Catalanos, a one-third interest. The Fazio family interest was held by Vince, Guiseppina and Jack in equal shares, and the Catalano interest by Sam and Rosaria in equal shares.

80 Jack asserts that he identified a property situated at 14 - 16 South Terrace, Fremantle known as Casablanca as a potential acquisition, and recommended it to his father (Jack xn 26). In November 1973, the property was acquired by Vince and Guiseppina as joint tenants for a price of just under $64,000 (tb 1/65). The property remains in the family and is now worth a lot more.

81 As I have mentioned, during 1973, Jack was studying for his matriculation at John Curtin High School. In cross-examination he accepted that he had no capacity to contribute financially to the purchase of the property (ts 421.5). It follows that Jack was not foregoing any opportunity by recommending the property to his father.

82 The defendants assert that I should not accept Jack's uncorroborated assertions as to his role in the purchase. However, Jack's evidence on this topic is not contradicted, nor is it glaringly improbable. I am therefore prepared to accept that he played some role in the procurement of the Casablanca property. I do not consider it is necessary to determine the precise extent of that role, as whatever its extent, it did not involve any foregone opportunity, and is incapable of creating any equitable interest in the property. Although Jack was a member of the partnership at this time, there can be no suggestion that the property was acquired on behalf of the partnership (as the Catalanos and Mignaccas would then have had an interest). Any role which Jack played in the procurement of the property is properly referrable to his interest, as a son, in acquisitions made by his parents.

83 Jack gave evidence that in about 1974, when holding power of attorney for his father (who was in Italy) to be exercised to acquire a house in Essex Street, Fremantle, he learnt about another property, an old boarding house in that street, which was a better acquisition (Jack xn 148). He asserts that he recommended the boarding house to his father, who agreed, and acquired the property in or about 1974 for $33,000. The property was sold during the 1980s for about $500,000. Again, Jack accepted in cross-examination that he had no capacity to make any financial contribution to the purchase of this property at the time it was acquired (ts 421.4).

84 The defendants assert that I should reject Jack's uncorroborated evidence on this topic. However, I take the same view as I have taken in relation to the Casablanca property. While Jack's evidence is uncorroborated, it is not contradicted, nor glaringly improbable. It is unnecessary to determine the precise extent of his involvement, if any, in the acquisition of the Essex Street boarding house. This is because at the time of its acquisition, Jack was still a student and there was not any opportunity foregone. Nor could his role have given rise to any equity in the property, nor could it be suggested that the property was acquired on behalf of the partnership of which Jack was a member (and of which the Catalanos and Mignaccas were also members).

85 Jack gave evidence that in about 1975, when working in the market garden, he came to know the owner of Lot 11, Hurst Road, Henderson (Jack xn 157). He asserts that he observed a significant limestone resource on the property when he visited it, and recommended to his father that he consider acquiring it. Jack states that he introduced his father to the owner, who agreed that Vince would have first right of refusal if he ever decided to sell the land.

86 A document was tendered in evidence which establishes that in August 1992, the owners of that property granted Vince an option to acquire the property for the sum of $200,000 (tb 13A/7211). The option was to remain current until 31 October 1992.

87 Other documents tendered in evidence establish that Vince, as trustee of the Fazio Family Trust, entered into a contract to acquire the land for $230,000 in April 1996 (tb 24/11467), and that settlement of the purchase took place in May 1996 (tb 24/11482).

88 In cross-examination, Jack accepted that he had no part whatever in the negotiations relating to the grant of the option in 1992, or the acquisition of the land in 1996 (ts 429).

89 Again, the defendants assert that I should reject Jack's uncorroborated testimony on this topic. However, it is unnecessary for me to determine that contention because, even taking Jack's evidence at its highest, it is highly improbable that whatever he did in 1975 played any significant part in Vince's acquisition of the property more than 20 years later. Given that Jack accepts that he played no part whatever in that acquisition, whatever he may or may not have done in 1975 is incapable of giving rise to any possible equity in the property. Nor was any opportunity foregone by Jack in 1975, as no opportunity arose until many years later, at a time when he was no longer involved. Nor was the property acquired for the partnership, but, rather, by Vince as trustee of the Fazio Family Trust.

90 The property situated at 223 South Terrace was acquired by Vince during 1976. The contract for its acquisition has not been produced in evidence, but a settlement statement relating to the transaction and dated 31 May 1976 has been received in evidence, which shows that the contract must have been entered into prior to that date (tb 1/80). The transfer of land from the vendor to Vince is also in evidence, and is dated 25 June 1976 (tb 1/81).

91 Jack and Maria met in late 1975 and, as I have mentioned, they were engaged on 21 August 1976. It follows that the property was acquired by Vince several months before their engagement and well before their wedding on 2 April 1977.

92 Jack's evidence-in-chief was to the effect that he had wanted to buy the property at 223 South Terrace, and just before his wedding, asked his father to pay him sufficient funds by way of back wages or profit distribution from the partnership to enable him to acquire it (Jack xn 54). He asserted that his father replied by saying that he would buy the property for him as a wedding gift, but that he would hold the title until he was sure that the marriage would last. His evidence was that the property was acquired shortly before the wedding.

93 That evidence is inconsistent with the documents which establish that Vince contracted to acquire the property prior to Vince and Maria becoming engaged, and within about six months of them commencing their friendship. It is unlikely that Vince would have been acquiring the property for Jack and Maria at that time.

94 Jack's attention was drawn to the inconsistencies between his evidence-in-chief and the documents establishing the time of Vince's acquisition of 223 South Terrace during cross-examination. Jack sought to justify his evidence-in-chief by placing an entirely artificial construction upon the words he had used (ts 336). His dissembling answers, and his reluctance to acknowledge that his evidence-in-chief was wrong, when plainly it was, reflect adversely upon his general credibility.

95 Maria's evidence-in-chief also misstates the sequence of events relating to the acquisition of 223 South Terrace. She asserted that the property was promised to her and Jack as a wedding present, and that she thought it was strange, in that context, that the property was not purchased in Jack's name (Maria xn 14 and 21). Given the timing of the acquisition, the reason the property was purchased in Vince's name was because, at the time it was purchased, it was not purchased as a gift for Jack and Maria.

96 However, the fact that Jack and Maria have misstated the sequence of events relating to the acquisition of 223 South Terrace does not mean that the general thrust of their evidence, to the effect that Vince promised the property to them as a wedding present, must be rejected. That general thrust is corroborated by a body of other evidence. During 2007, a statement of the evidence-in-chief to be given by Vince at the trial of proceedings in this court concerning the Mandurah land (Tranchita v Danehill Nominees Pty Ltd, CIV 1124 of 2004) was prepared, presumably on Vince's instructions, and signed by Vince (tb 35A/17284). Paragraph 60 of that statement asserts:

When Jack Fazio and Maria married, Guiseppina and I gave them as wedding presents:

(a) a shop and house on South Terrace; and

(b) a block in Barrett Road, Spearwood.

97 The assertion concerning the block in Barrett Street, Spearwood is plainly incorrect, as that property was not acquired until many years after Jack and Maria married. However, the assertion in respect of the property on South Terrace is corroborated by Vince's will made on 18 September 2006, in which he recited in that he had given Jack assets during his lifetime, including as a gift in the 1970s, a shop and house on the corner of South Terrace and King William Street, Fremantle (cl 25).

98 Evidence was also given by Guiseppe Monastra. He is the husband of Jack's cousin, Nancy, who is the daughter of Vince's brother, Frank. Mr Monastra worked for Vince as a plastering contractor for about 15 years after migrating to Australia in 1977. He became very friendly with Vince. His evidence was that at about the time Jack and Maria were married in 1977, Vince told him that the house in South Terrace was a wedding gift to Jack (G Monastra xn 14). According to Mr Monastra, Vince repeated that statement on many occasions. Sarina also confirmed that the property was discussed as a wedding gift within the family (ts 742).

99 Further corroboration is provided by objective events which are not in issue. Shortly after Jack and Maria married, Vince spent significant amounts of his own time and money renovating and refurbishing the property. There was never any suggestion that Jack and Maria should reimburse Vince for this work, which is consistent with the notion that the property was a gift to them. Vince also acquired a significant quantity of lighting, at his expense, for use by Jack and Maria in the lighting business which they subsequently established in that part of the premises which comprised a shop, and this was also a gift.

100 Further, in later years, after the lighting business had been wound down and was no longer conducted from those premises, Jack and Maria vacated the property and leased it to others. They received the rental (Jack xn 81). There is no evidence to suggest that they had to seek Vince's permission to do any of these things. On the contrary, the evidence strongly suggests that Jack and Maria treated the property as their own, without any interference by Vince, after they married.

101 That conclusion is strongly reinforced by the fact (elaborated below) that Jack proffered the South Terrace property in part payment for the Mandurah land in early 1984, at a time when that land was to be acquired by Jack and Maria and the Merlinos, and before there was any suggestion that Vince would be taking an interest in the Mandurah purchase (Jack xn 99). That fact demonstrates that Jack considered that he was able to commit the South Terrace property to a transaction without Vince's prior consent. That commitment also occurred before there can be any suggestion that either the South Terrace property, or the transfer of title to the South Terrace property was being proffered by Vince as partial consideration for Jack's retirement from the partnership. Accordingly, I reject Rudy's evidence to the effect that Vince said to him that the use of the South Terrace land as consideration for the purchase of Jack and Maria's interest in the Mandurah land was linked to Jack's retirement from the partnership (Rudy xn 380).

102 Legal title to the South Terrace property was in fact never transferred to Jack and Maria. The property remained registered in Vince's name until it was transferred to the vendor of the Mandurah land as part of the consideration for the acquisition of that land. It may be that the land was not transferred into Jack and Maria's name because Vince was concerned that if the land was transferred into Maria's name, it would be lost to the family in the event that Jack and Maria's marriage did not last. There is some support for that view in Maria's evidence (ts 555), however, it was denied by Guiseppina in cross-examination (ts 782). It may also be that the transfer did not take place because it would have incurred stamp duty unnecessarily, given that the title was held within the family. However, even if Vince was initially reluctant to transfer title to Jack and Maria because of uncertainties about the durability of their marriage, I am satisfied that this was no longer an operative factor in early 1984, when Jack initially committed the South Terrace property to the Mandurah transaction. Jack and Maria had by then been married for almost seven years. By 1984, Maria had borne Jack three sons, and Vince could not have entertained any reasonable doubt as to their commitment to each other.

103 For these various reasons I find that although the South Terrace property was not initially acquired by Vince as a gift for Jack and Maria, he promised the property to them as a wedding gift at the time of their wedding. I further find that the gift was unconditional, and that if there was any initial reluctance by Vince to transfer the property into the names of Jack and Maria, there was no such reluctance in 1984. I further find that between 1977 and 1984, Jack, Maria and Vince proceeded upon the common understanding that Jack and Maria were the owners of the South Terrace property, notwithstanding that it had not been transferred to them (that is, in legal terms, Jack and Maria were donees in equity but not in law).

104 Rudy gave evidence-in-chief to the effect that he had never heard any suggestion that South Terrace had been a wedding present for Jack and Maria (Rudy xn 400). He maintained that assertion notwithstanding his acceptance that he probably read Vince's witness statement at the time the Tranchita proceedings were under way, in which Vince asserts that the South Terrace was a wedding gift for Jack and Maria (ts 685). His steadfast maintenance of the proposition that Vince never said to him, or in his presence, that the South Terrace property was a gift to Jack and Maria is highly improbable, given all the other evidence to which I have referred, and the inherent likelihood of a gift of that magnitude being discussed within the family. Further, Sarina confirmed in cross-examination that Rudy had been involved in such discussions (ts 742). Rudy's maintenance of his improbable position reflects adversely on his general credibility.

105 As I have mentioned, after they married, Jack and Maria moved into 223 South Terrace and started a lighting business from the shop which formed part of those premises. Vince purchased part of the initial stock of lighting as part of his gift to the newly married couple. Jack worked full-time in the lighting business in 1977 and 1978, although in late 1978 he returned to work part-time in the Italia Limestone business. During 1979, he commenced working full-time for the limestone business, leaving Maria to run the lighting business. That business ceased to operate from the shop premises at South Terrace in the latter part of 1981, although the remaining stock, with some additional purchases to make up orders, was sold sporadically over the next few years.

106 Jack asserts that in or about 1979, when his father was in Italy, he learnt that a property adjoining the Casablanca property was available for sale. He further asserts that he telephoned his father in Italy and suggested that they negotiate for the purchase of the property. His father accepted that suggestion, and Jack obtained an offer to purchase the property which he retained until his father returned from Italy and accepted the offer. The transfer relating to the land tendered in evidence suggests that the agreement for the acquisition of the property may in fact have been entered into in late 1978, rather than 1979 (tb 1A/259). The property was in fact acquired by Anham, and was still owned by that entity at the time of Vince's death, when it had appreciated very significantly in value.

107 The defendants assert that Jack's uncorroborated evidence as to his role in the acquisition of this property should be rejected. However, that evidence is not contradicted, nor is it inherently implausible. But even taking Jack's evidence at its highest, it does not disclose any opportunity foregone by Jack, nor any conduct on his part which would be capable of creating any equitable interest in the property in his favour.

108 In 1979, Jack identified a warehouse for sale at 5 Beach Street, Fremantle. He introduced his father to the property, and his two cousins, Sam Fazio and Vince Calalesina. It was agreed that the property would be purchased through a syndicate representing essentially four interests. Vince's quarter interest was acquired through Anham. Sam Fazio acquired a one-fourth interest, as did Vince Calalesina and his wife, as joint tenants, as did Jack and Maria, as joint tenants.

109 Although Jack's evidence is that the property cost approximately $73,000 (Jack xn 152), the transfer which is in evidence (tb 1A/294) reveals that the purchase price was $80,000.

110 According to Jack, each holder of a one-fourth share contributed $5,000 towards the purchase, and the balance was borrowed.

111 The property was rented, and the net rental, after deducting costs, was distributed amongst the syndicate members according to their interests (tb 3/1147). In May 1992, Jack and Maria sold their interest in the property for a substantial profit. These facts are not contentious.

112 However, I digress to observe that I am quite unable to see how they support the plaintiffs' case. Although Jack asserts that he suffered detriment in the form of his time and effort spent locating and negotiating the acquisition of the property, those efforts were undertaken in the advancement of his own interests, as a purchaser of an interest in the property. There is no suggestion that the equitable interests in the Beach Street property were held upon trust for any different entities, or in any different proportions than the legal interests. There is no suggestion that the partnership was involved in the transaction, as the Catalanos did not have an interest. If anything, the transaction shows that as early as 1979, Jack and Maria took a specific interest in an investment, in their own names, using their own money, as did Vince, albeit through a corporate vehicle. This is one of the many transactions which count against the plaintiffs' proposition that all assets acquired, in whatever names and by whatever entities, should be regarded as 'Fazio family assets', or partnership assets.

Was Rudy admitted to the partnership? - 1979

113 According to the records maintained, pursuant to the provisions of the Business Names Act 1962 (WA), on 25 June 1979, a document was lodged pursuant to the provisions of that Act asserting that, with effect from 18 June 1979, 'Randolfo [sic: Ridolfo] Fazio' commenced carrying on business under the name Italia Limestone Co, in addition to the persons previously carrying on business under that name (tb 1/133). The document which was lodged in June 1979 is no longer available, but its effect has been recorded by the department responsible for the maintenance of business name records. There is no reason to doubt that a notice to that effect was lodged on the date shown in the register. Whether, and if so when, Rudy became a partner in Italia Limestone is one of the contentious issues in these proceedings, to which I will return much later in these reasons.

114 Jack asserted in his evidence that in 1979 he spent a lot of time looking for new limestone resources to assist Italia Limestone to compete with one of its significant competitors - WA Limestone (Jack xn 165). He asserts that he found a property in Gibbs Road, Wanneroo on which he observed a high ridge of limestone in the middle of the property. The property bore a sign which suggested that it was to be subdivided in the future.

115 According to Jack, he contacted the selling agents and obtained information as to the lots which were for sale. He was directed by those agents to the owner, Mr Godecke, with whom he spoke (Jack xn 166).

116 Jack asserted that after making initial contact with Mr Godecke, he took Vince out to meet Mr Godecke with a view to negotiating the purchase of the land containing the limestone resource. He asserts that he participated in those negotiations, which led to the acquisition of a valuable limestone resource.

117 Guiseppina asserts in her evidence that Jack had nothing to do with the identification of the Wanneroo land, although it is not clear from her evidence just how she might be in a position to know, one way or the other, about the degree of Jack's involvement (Guiseppina xn 299).

118 At all events, the documents tendered in evidence establish that at some time prior to October 1982, Danehill obtained an option to acquire a parcel of the land (tb 2/624). Further, by agreements dated 27 October 1983, Vince and Guiseppina contracted to acquire two undivided third shares in lots 103 and 106, and Sam and Rosaria Catalano contracted to acquire the remaining undivided third share in each of those lots (tb 2/839 and tb 2/847). Transfers of lots 103 and 104 to the Fazios and the Catalanos in the interests I have described were executed in October 1983 (tb 6A/3025 and tb 6A/3042), and in respect of lot 106, in December 1985 (tb 4/1975.1).

119 Other lots in the same area were purchased by other related entities years later. Lot 102 was purchased by Renmore in September 1989 (tb 10/5148), lots 105 and 107 by Rudy, Sarina and her (now) ex-husband in 1994, when Danehill was under financial pressure from its bankers (tb 10/5518), and lot 101 was purchased by Vince (as to two third shares), and Dangan (as to a one-third share) in August 1997 (tb 26/12454.5). Jack does not suggest that he was involved in any way in these later purchases.

120 There is contention between the parties as to the extent to which Jack was involved, if at all, in identifying the land and in the initial negotiations with the vendor. His evidence on the topic is uncorroborated (Mr Godecke is apparently not well enough to give evidence), and is only contradicted by Guiseppina's general assertions. However, it seems to me that nothing turns upon these contentions because, as Jack accepts, he was a partner in Italia Limestone at the time negotiations took place for the acquisition of an interest in some of the land by Vince on behalf of the persons and entities I have set out. Because of the association between those persons and entities and the partnership, it could be expected that the limestone resources on the land would be made available to the partnership if required. If, and to the extent that, Jack was involved in the acquisitions, it was entirely consistent with his interest as a member of the partnership. As he was not involved in any of the transactions which took place after mid 1984, the extent of his involvement in the Wanneroo land acquisitions prior to mid 1984 sheds no light upon the question of whether he remained a partner thereafter. And taking Jack's evidence at its highest, his role in the identification of the land and the negotiations for its acquisition is incapable of giving rise to an equitable interest in the land.

121 Jack also gave evidence of a conversation which he had with his father in early 1984 relating to his acquisition of a block in the vicinity of the Wanneroo land in his own right (Jack xn 175). According to Jack, his father said to him that if he acquired a block in his own name, he would be in a position of conflicting interest with Sam Catalano, and that if the land was to be acquired, it should be acquired by the partnership, in which Jack had a one-third share of the Fazio interest. If Vince made those statements in early 1984, they were true, because Jack undoubtedly had such an interest in the partnership at that time. Accordingly, that conversation, if it took place, also sheds no light upon the question of whether Jack remained a partner after 1984. The fact that Jack was proposing to acquire an interest in the land in his own right might also be seen as inconsistent with the general thrust of his proposition to the effect that all assets acquired should be regarded as 'Fazio family assets' in which he had or would receive an interest, although I do not exclude the possibility that Jack wanted an interest in the land in his own right, exclusive of other family members.

122 Jack asserted in evidence that in or about 1980 or 1981 he located a block of land in Mayor Road, Cockburn from which Italia Limestone extracted a quantity of limestone pursuant to an agreement with Cockburn Cement (Jack xn 176). According to Jack, the agreement with Cockburn Cement was negotiated by his father. The defendants assert that I should reject Jack's evidence on this topic, which is uncorroborated. However, although the evidence is not corroborated, nor is it contradicted. In any event, as with the Wanneroo land, it does not seem to me that anything turns upon whether or not Jack played any role in identifying a business opportunity for Italia Limestone at a time when, on any view, he was a partner. Whether or not Jack played such a role sheds no light on the question of whether, three or four years later, he retired from the partnership.

123 Jack asserted in evidence that in about 1981 or 1982 he found land with a quarry and large limestone deposits in Kerosene Lane, Baldivis (ts 177). He says that he drew the land to the attention of his father, who made some inquiries about the prospect of purchasing it, and was advised that it was being purchased by another.

124 In cross-examination, Jack accepted that nothing came from the information he gave to his father (ts 437). He accepted that there was no opportunity for him to derive a personal advantage, because the land had already been taken up by WA Limestone.

125 On Jack's evidence, at the time he drew the land to his father's attention, he was undoubtedly a partner in Italia Limestone. Accordingly, as with the other topics most recently considered, I am quite unable to see how this evidence, even if accepted, advances the plaintiffs' case in any material way.

126 Jack gave evidence that in late 1983 he was in the office of a surveyor when he noticed plans on the surveyor's desk which related to a sandpit in Miguel Road, Naval Base (Jack xn 179). He described it as a new sandpit (ts 438). However, that evidence is not correct. A document prepared in support of an application for an excavation licence in March 1984 records that sand had been excavated from the site over the preceding two years (tb 2/934.6-7). Further, Ms Livia Ronci gave evidence to the effect that she and her husband, Vince Ronci, identified the site in late 1982, and negotiated a licence agreement with the owner of the site for the extraction of sand (L Ronci xn 32). They were subsequently approached by WA Limestone, who were interested in acquiring a portion of the business of extracting sand at Miguel Road (L Ronci xn 41). Although Ms Ronci cannot remember precisely how it came about, she became aware that WA Limestone were also proposing that Italia Limestone should become involved in the business as well. In the result, it was agreed that the Roncis would retain 25% of the business, the Della Bonnas (being persons associated with WA Limestone) would have 50%, and Italia Limestone 25% (L Ronci xn 46).

127 Ms Ronci asserted in cross-examination that Jack had nothing to do with the Miguel Road sandpit (ts 843). However, her attention was drawn to a statement she had previously signed, in 1993, in which she asserted that Vince had wanted Jack to be involved, but that everyone else was opposed to that (ts 845).

128 Jack's evidence was to the effect that he suggested to his father that he be allowed the opportunity to operate the sandpit himself, splitting the profits equally with Italia Limestone. He asserts that after initially agreeing, his father resiled, and proposed that WA Limestone should be brought in to take an interest in the sandpit. Jack further asserts that some months later his father justified his refusal to give him a personal stake in the project on the basis that he was a partner in Italia Limestone (Jack xn 184). If in fact Vince did adopt that position, it was justifiable because, of course, at that time Jack was a partner in Italia Limestone.

129 It is clear that Jack did not acquire a personal stake, separate from his interest in the partnership, in the business of extracting sand from the Miguel Road sandpit. Once again, his evidence that he sought a personal interest, separate from his interest in the partnership, is somewhat inconsistent with the general proposition that he understood that he would in any event receive one-third of all 'Fazio Family Assets'. Further, if and to the extent that he was involved in identifying this opportunity (which seems very doubtful in the light of Ms Ronci's evidence), his actions would be entirely consistent with, and referable to, his interest in the Italia Limestone partnership, and sheds no light upon the question of whether he remained a partner after 1984.

130 Jack's evidence-in-chief was that he became aware of the Mandurah land in December 1983, when his father was in Italy (Jack xn 98). He asserted that just before Christmas, on a trip to Madora Bay with a mutual friend, Ross Merlino, he saw a sign advertising land for sale. He looked at the land and saw that it contained a huge resource of limestone. He contacted the selling agent advertised on the sign, who referred him to another agent with whom he negotiated for the acquisition of the land.

131 However, in cross-examination Jack gave a somewhat different version. He stated that before his father went to Italy, his father told him that someone might contact him in relation to some land in Mandurah (ts 348). He went on to say that in December, he was approached by Mr Ray Ayres, a real estate agent, who is not one of the real estate agents to whom he referred in his evidence-in-chief. He stated that Mr Ayres approached him while he was at Vince's house and advised him of the opportunity to purchase the Mandurah land. According to Jack, it was pure coincidence that he happened to be driving in the Mandurah area with Ross Merlino after that conversation (ts 349 - 350). That assertion was an implausible attempt to reconcile the two versions of evidence he had given in relation to the identification of the land.

132 Jack maintained in his evidence-in-chief that he negotiated the acquisition of the land while his father was in Italy (Jack xn 100). He asserted that his father returned from Italy in about February 1984, after which he introduced him to the Mandurah land, and suggested that he might acquire an interest in it (Jack xn 101). These assertions are not correct.

133 There is a body of evidence which establishes that in the latter part of 1983, Vince returned to Italy with the body of his late father, in order to make arrangements for his late father to be buried in his native Sicily. The death certificate relating to Vince's father establishes that he died on 11 September 1983 (tb 2/830). International movement records maintained by the Department of Immigration record that Vince left Australia on 23 September 1983, and returned on 17 October 1983 (tb 38/18538). Those records are consistent with evidence given by others, including Guiseppe Monastra, to the effect that Vince only spent a few weeks in Italy when he returned to bury his father (ts 612). According to the international movement records, the next time Vince departed Australia was 2 February 1986. I see no reason to doubt the accuracy of the records recording these movements, especially given that the movements which they record fit in with the established date of the death of Vince's father, and the evidence of Mr Monastra as to the length of time Vince was overseas. I do not overlook the statement signed by Vince in 2007 as the evidence to be given by him in the Tranchita proceedings in which he asserted that the land was identified while he was overseas, and that the first he heard of the transaction was in July 1984 after the transaction had been consummated (tb 35A/17291 - 17294). Those assertions cannot be correct, as it is clear from the evidence to which I will refer that finance was being sought on behalf of Danehill by February 1984, which could not have occurred without Vince's knowledge. Further, Vince signed the contract for the acquisition of the land on 9 May 1984, in his capacity as a director of Danehill.

134 It follows that I do not accept Jack's evidence that he did not involve his father in the initial negotiations for the acquisition of the Mandurah land because he was overseas. Further, his evidence that he did not telephone his father to discuss the matter with him because he was overseas is also implausible, given the relative ease with which such a call could have been made.

135 Maria also gave evidence to the effect that the Mandurah land transaction occurred when Vince was overseas and was first discussed with Vince just after he returned from Italy (Maria xn 66 and ts 556 - 559). That evidence must also be wrong, although, of course, it coincides with the evidence given by Jack. This strongly suggests that she and Jack had discussed the sequence of events relating to the Mandurah transaction prior to giving their evidence, and had agreed upon a unified position.

136 A contract for the acquisition of the Mandurah land dated 28 December 1983 was tendered in evidence (tb 2/872). The contract describes the purchasers as Jack, Maria, Rosario Merlino and Loredana Merlino (his wife) 'and/or their nominees'. The purchase price specified in the contract is $610,000. By special condition 4, the vendor, Benara Nominees Pty Ltd agreed to take the properties known as Lot 8 Jones Road, O'Connor and 233 South Terrace, Fremantle for the sums of $65,000 and $155,000 respectively in part-payment of the purchase price. It is common ground that the reference to 233 South Terrace is a typographical error, and should be read as a reference to 223 South Terrace.

137 Other conditions of the contract made completion subject to approval of subdivision of the land within 90 days, and the grant of approval for the extraction of limestone within a similar period. Unfortunately, the copy of the contract tendered in evidence is incomplete, and it is not clear whether the contract was conditional upon the grant of finance to the purchasers.

138 I accept Jack's evidence that he had not spoken to Vince at the time he negotiated for the acquisition of the land and entered into this contract. However, I do not accept that the reason he had not done so was because Vince was in Italy. Rather, I find that the reason Jack had not spoken to Vince about the acquisition was because he intended to acquire the land in his own interest, in conjunction with the Merlinos, and only involve Vince to the extent necessary to make up any shortfall in funding the acquisition.

139 When asked, in cross-examination, if he would have been happy in December 1983 if Italia had taken over the whole deal, Jack replied:

It would have been ideal for me but that was not the position. I wanted a slice of the land too and I was quite happy to take 100 acres paid for and get rid of my debts. (ts 357)

140 It is quite implausible for Jack to suggest that it would have been ideal from his perspective for Italia to have taken the whole deal. He negotiated the transaction without reference to his father or Mr Catalano. He was joined in that endeavour by his friend, Mr Merlino who had no interest in Italia Limestone. There was no reference to Italia Limestone in the contract which was signed on 28 December 1983. It is clear from his evidence generally that Jack saw this transaction as potentially very beneficial, and wished to obtain a significant portion of that benefit in his own right. I do not accept that he was primarily motivated by the interests of the partnership when negotiating for the acquisition of the Mandurah land.

141 As I have earlier noted, it is significant that Jack committed to provide the South Terrace property in part-payment of the purchase price without prior reference to Vince. This is only consistent with an understanding on his part that he was entitled to deal with that property as he chose. Further, although there is evidence that Vince tried to dissuade Jack and Maria from parting with the South Terrace property, there is no evidence to suggest that he ever threatened to block its sale into the Mandurah transaction by refusing to transfer the land (which was, of course, still registered in Vince's name).

142 Jack subsequently approached various friends and acquaintances with a view to putting together a syndicate to acquire the land. At some point in that process he approached his father. It is not clear precisely when that occurred, but it must have been before the latter part of February 1984, because documents have been tendered showing that applications for finance were being prepared in the latter part of that month showing that Danehill wished to borrow funds to be used in part to purchase an interest in the Mandurah land (tb 2/915). There are various iterations of a letter from Danehill's accountants, Francis A Jones & Associates Pty Ltd, applying for finance for this purpose around that time in evidence (see tb 2/922, 2/928, 2/930 and 2/932).

143 By the iteration dated 29 February 1984, the application for finance was prepared not only on behalf of Danehill, but on behalf of other prospective purchasers, including Jack and Maria, and various others. In that iteration, reference was made to the vendors taking a property worth $155,000 owned by Jack and Maria. Presumably by then, Vince must have been aware of the proposal to vend the South Terrace property into the transaction.

144 Subsequent iterations of the letter from Francis A Jones & Associates applying for finance also refer to the transfer of the South Terrace property in part-payment of the purchase price of the Mandurah land. There is no evidence to suggest that Jack's retirement from the partnership was in contemplation, or the subject of discussion between him and his father as early as December 1983, when the South Terrace property was first committed to the Mandurah land transaction. Nor is there any evidence to suggest that Jack's retirement from the partnership was in contemplation by February 1984. But by at least February 1984, it must have been clear to all concerned that the South Terrace property was to be transferred to the vendor of the Mandurah land, and while Vince was not enthusiastic about that aspect of the transaction, he made no attempt to prevent it (ts 362). Because the evidence establishes that it was agreed not later than February 1984 that the South Terrace property would be transferred, and that Jack and Maria would receive the benefit of that transfer, I do not accept that this aspect of the Mandurah transaction had anything to do with Jack's retirement from the partnership.

145 Accordingly, I do not accept Rudy's evidence that he was told by Vince that Jack had been given the South Terrace property as part of the consideration for his retirement from the partnership (Rudy xn 330 and 375 - 386). That evidence is inconsistent with the written statement made by Vince in the course of the proceedings relating to the Mandurah land in 2007, which Rudy admits he read, without demur. I consider that Rudy has placed a particular complexion upon his recollection of the events of the time so as to coincide with the position adopted by the defendants in their opposition to the plaintiffs' case.

146 In the result, the Mandurah land was acquired pursuant to a contract executed on 9 May 1984 (tb 2/995). The contract price remained $610,000, and the syndicate members took an undivided interest in the land equal to the proportion of the purchase price which they supplied. Danehill acquired a 150/610ths interest, and MG Constructions Pty Ltd (MG Constructions) acquired a 100/610ths interest. MG Constructions Pty Ltd is a company controlled by Jack and Maria. Danehill acquired the largest share of the property, and MG Constructions, the second largest share. The balance was spread among numerous other parties.

147 It was a condition of the contract that settlement occur simultaneously with settlement of the sale of the South Terrace property, and another property in Spearwood, which were to be provided in part-payment of the purchase price.

148 While it is possible, on the defendants' case, that there may have been some discussion concerning Jack's retirement from the partnership by early May 1984, there is no evidence to that effect. Accordingly, the terms of this contract, executed by Vince on behalf of Danehill in early May are also inconsistent with the proposition that the transfer of the South Terrace property was part of an agreement relating to Jack's retirement from the partnership.

149 The acquisition of the Mandurah land was financed in part by funds advanced by Perpetual Trustees WA Ltd against the security of a mortgage over the Mandurah land. The mortgage was executed on 20 June 1984 (tb 2/1044). It provides that the partners of Italia Limestone are to be an additional covenantor, promising to repay the funds advanced ($260,000). The document lists those partners as Vince, Guiseppina, Jack, Rudy and the Catalanos (tb 2/1065).

150 The plaintiffs assert that it is improbable that Jack would have entered into this document as an additional covenantor only two days before he executed a form providing notice under the Business Names Act that he would be ceasing to trade as a proprietor of the partnership with effect from 1 July 1984. However, it is to be remembered that a company controlled by Jack and Maria, MG Constructions, was one of the principal covenantors, and that Jack had an interest in the finance being granted other than through his interest in the partnership. Accordingly, I do not consider his execution of the mortgage on 20 June 1984 to tell strongly against the proposition that he also executed the business names form two days later.

151 I reject Jack's evidence that he was substantially motivated by the interests of the partnership in undertaking the Mandurah land transaction. I find that he was primarily motivated by his own interests which were, in this transaction, quite separate from the interests of his parents and the Catalanos, who took their interests in the acquisition through their interest in Danehill. The fact that Jack was motivated to take a quite separate and distinct interest in the transaction is somewhat inconsistent with the proposition that he was to acquire a one-third interest in all 'Fazio family assets', or that he relied upon representations by his father as to his interest in the partnership, or as to his interest in the 'Fazio family assets' when structuring his affairs and undertaking transactions and investments over this period. There is no aspect of the Mandurah land transaction which supports the plaintiffs' case. Further, Jack's transparently disingenuous attempts to distort the true nature of that transaction reflect adversely on his credibility generally.

152 However, for the reasons I have given, I do not accept the defendants' proposition that Vince only agreed to transfer the South Terrace property as part of the consideration for the Mandurah land pursuant to an agreement for the relinquishment of Jack's interest in the partnership.

153 A considerable body of evidence was led concerning agreements allegedly made in relation to the acquisition and development of land situated in Barrett Street, Spearwood (lot 209). That is because the findings made with respect to the issues concerning lot 209 Barrett Street shed light upon the question of whether Jack relinquished his share in the partnership in 1984.

154 Jack and Maria assert that Jack and Vince had a significant disagreement around the middle of 1982 following Jack's repeated requests for greater remuneration for the work he was doing for the partnership. They allege that when Vince refused to permit Jack to be paid more money, Jack ceased working for the partnership between about May and August 1982, during which time he worked part-time in real estate, and part-time in the lighting business, Western Décor. On their version of events, Vince sent intermediaries, being his brother Frank, and Frank's son Sam to try and persuade Jack to resume working in the limestone business, and authorised them to offer to pay Jack a lump sum of $12,000, and to give to Jack and Maria a vacant block in Barrett Street, Spearwood on which Vince would build a house up to a value of $120,000 free of cost to Jack and Maria. It is said that Jack accepted this offer when it was put to him, and returned to work in the limestone business until he was injured in the course of that work in October 1984. After Jack ceased work in the limestone business, he exchanged the block for his share in land which he acquired in Maddington with others, for the purposes of development and resale, before Vince had built any house on the block. They further allege that Vince arranged for Jack to be given a 10% interest in Lime Industries business some years later, to compensate Jack and Maria for Vince's failure to build the house which he had promised. Of course, absent such an explanation, the transfer to Jack of a specific interest in a business in which the partnership held its own interest would be inconsistent with his assertion that he remained a member of the partnership.

155 On the other hand, the defendants assert that there was no agreement for the transfer of an interest in lot 209 Barrett Street to Jack and Maria until mid-1984, when it was agreed that they would receive the block as part of the settlement relating to Jack's surrender of his interest in the partnership.

156 Jack and Maria's version of these events is inconsistent with a number of facts incontrovertibly established by contemporaneous documentary evidence, and is, in some respects inherently implausible. For the reasons which I will now give, I do not accept their evidence on this topic.

157 Jack's evidence-in-chief was that in early 1982 he said to his father that Italia had to pay him a reasonable wage or profit distribution. According to Jack, his father refused and they argued, with the result that in May 1982 he delivered an ultimatum, to the effect that unless he was paid a reasonable wage or share of the profits he would have to find himself another job. Jack stated that when his father refused to accede to his request, he ceased working for Italia in about May 1982 (Jack xn 182).

158 His evidence was that he endeavoured to calculate the amount he should have been paid over the years that he had worked for Italia, taking into account an appropriate hourly rate, and penalty loadings for overtime. He asserts that he calculated an entitlement to approximately $300,000 (Jack xn 85).

159 This assertion is inherently implausible. The contemporaneous accounting records and documents provide a yardstick for assessing levels of wages and income around this time. Those records, including records of payments made by the partnership and statements of income made by various people working in manual trades, suggest that gross incomes for manual work around this time could have been expected to be between $15,000 and $25,000 per annum (tb 2/966 et seq). In that economic scale, Jack's assertion of a calculated entitlement to back-pay in the vicinity of $300,000 must be a gross exaggeration.

160 Jack stated that in August 1982 his uncle Frank Fazio and his cousin Sam Fazio came to his house and told him that at the request of Vince, they had come to attempt to persuade him to return to work at Italia (Jack xn 86). They said that Vince had authorised them to offer Jack an immediate payment of $12,000, a block of land in Barrett Street, and up to $120,000 towards the cost of building a house on that block over about the next two years. According to Jack, they also said that Vince had agreed that he would receive a regular reasonable weekly wage or profit distribution. He says that he accepted the offer, and returned to work.

161 Jack's evidence was that he was not paid a regular wage or profit distribution until the middle of December 1982, when he was paid about $250 per week net of tax, which he estimated was an underpayment of about $300 per week (Jack xn 188). Jack's estimate of an appropriate income at that time (of around $30,000 per annum) confirms my view that his evidence that he estimated he was entitled to around $300,000 by way of arrears cannot be accepted.

162 Jack further gave evidence to the effect that nothing was done in relation to the construction of the house promised by his father until 1984, when Colleen Fleming (now Rebelo) gave him a contract for the construction of the house which he signed (Jack xn 87). He asserted that she told him that he had to write in that the contract price was $120,000, which he refused to do because he was concerned this would amount to an acknowledgement that he had to pay $120,000. He asserted that this caused a dispute between him and his father. As I will record below, that assertion is incompatible with the documentary evidence which shows that Fazio Homes was proceeding to obtain the approvals necessary to construct the house throughout the latter part of 1984. Jack's evidence was that after he stopped working for Italia Limestone in October 1984, he decided to use his interest in the Barrett Street lot to acquire an interest in a property development in Maddington.

163 Maria's evidence-in-chief was to the effect that she and Jack and their children had moved into the house at 71 Birchley Road occupied by Jack's parents while they were in Italy (Maria xn 33). However, they remained in the house after Jack's parents returned from their trip. She also gave evidence of repeated discussions between Jack and Vince concerning Jack's claim for a regular income. Her evidence-in-chief was that one night in 1982 there was a massive argument arising from Jack's complaints that he was not receiving sufficient income, after which Vince gave Jack $1,000 (Maria xn 52 - 56). However, soon after there was another argument after Jack asked for a greater amount. Her evidence was that she, Jack and the children left the house immediately and spent the night on the floor of the house of a friend (Maria xn 56 - 57).

164 She stated that this occurred in May 1982, and that Jack worked in the lighting business for two to three months thereafter. In her evidence-in-chief, she corroborated Jack's evidence of the discussions between Jack and Frank and Sam Fazio (Maria xn 61 - 62).

165 Frank Fazio passed away before the trial of these proceedings. His son Sam (Sebastiano) gave evidence corroborating Jack and Maria's evidence of the discussion in 1982 in which he and his father had intervened on behalf of Vince to try and persuade Jack to return to work at Italia (Sam xn 4). So, the evidence given by Jack, Maria and Sam Fazio, in the form of the witness statements which they adopted as their evidence-in-chief, was generally consistent. However, it unravelled in cross-examination.

166 In cross-examination Jack acknowledged that nowhere in the witness statement which formed his evidence-in-chief did he relate any direct conversation which he had with Vince concerning these matters (ts 302 - 303). Further, it was pointed out to him that lot 209 Barrett Street was acquired by Danehill in February 1983 (tb 2/651 - 2/654). This fact, incontrovertibly established by the documentary evidence, posed two obvious problems for Jack's version of events. First, in August 1982 when, according to the plaintiffs the agreement relating to Barrett Street was brokered, there is no evidence to suggest that Vince had a block in Barrett Street to offer Jack and Maria. Second, if by 2 January 1983, when the agreement for the acquisition of lot 209 Barrett Street by Danehill appears to have been executed (tb 2/651), there was an agreement to give the land to Jack and Maria, it is most likely that it would have been transferred to them, instead of Danehill (in which the Catalanos had an interest). At the very least, one would have expected the land to be acquired by the Fazio family, not Danehill.

167 These problems for the plaintiffs version of events were no doubt evident from the documents included within the trial bundle. In cross-examination Jack sought to overcome these difficulties by asserting that Frank and Sam Fazio told him that the block in Barrett Street had not been purchased yet, but was under agreement, and that the agreement involved the exchange of the Barrett Street block from a third-party in return for a property in Marvell Avenue held by Danehill (ts 305).

168 The latter assertion is corroborated by documents which suggest that lot 209 Barrett Street was acquired as part of a transaction for the sale of land by Danehill (tb 2/655). However, it is clear that this transaction was not documented until early February 1983. If, as the plaintiffs assert, there was by then an agreement that lot 209 Barrett Street would go to Jack and Maria, there is no reason why the transaction would not have been documented accordingly, and the land transferred to Jack and Maria at that time.

FAZIO -v- FAZIO [2010] WASC 263 (1 October 2010)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (543 paragraphs)

FAZIO -v- FAZIO [2010] WASC 263 (1 October 2010)

FAZIO -v- FAZIO [2010] WASC 263 (1 October 2010)

Was Rudy admitted to the partnership? - 1979

Jack ceases employment at Italia - October 1984

Correspondence and notices following Vince's death in 2007

Transfer of the business to Roadstone Quarries Pty Ltd and Italia Stone Group Pty Ltd

Did Jack retire from the partnership by mutual agreement in 1984?

Abandonment, abrogation or repudiation of Jack's interest in the partnership

Is Jack estopped from asserting an interest in the partnership?

Are Guiseppina and the estate of Vince estopped from denying that Jack is entitled to one-third of their interest in the partnership?

Has Jack exercised an option to acquire the interests of each of Guiseppina and the estate of Vince in the partnership?

Are the defendants estopped from denying Jack's entitlement to one-third of the various assets described as 'Fazio family assets'?

Are the various assets identified in the pleadings held by various corporate entities on trust for the partnership?

The Limitation Act, acquiescence and laches

Legislation Cited (1)

Cases Cited (2)