Carpenter v Morris

[2021] NSWSC 1700

Supreme Court

New South Wales

Medium Neutral Citation:

Carpenter v Morris [2021] NSWSC 1700

Hearing dates:

14–28 September 2020

Date of orders:

23 December 2021

Decision date:

23 December 2021

Jurisdiction:

Equity

Before:

Williams J

Decision:

Proceedings dismissed, save in relation to costs which are reserved for determination on the papers.

Catchwords:

PARTNERSHIP – scope of business undertaken in partnership – allegation that director of one partner received partnership monies in which partners were entitled to share equally – claim by other partner against director of first partner for money had and received – whether director unjustly enriched by receipt of partnership monies – recipient liability for breach of partner’s fiduciary duties not an established category of unjust enrichment - claim for taking of accounts of the partnership which came to an end in 2003 – where order sought for the purpose of accounting for two assets – where impossible to identify, quantify or value one of those assets – where other asset was not an asset of the partnership – whether taking of accounts would serve any useful purpose – whether claim for an order for the taking of accounts time barred

CONTRACTS – oral agreements – whether alleged oral agreements entered into and on what terms – alleged repudiation – damages claimed – whether evidence provided rational basis to estimate damages

Legislation Cited:

Limitation Act 1969 (NSW), ss 15 and 55

Mining Act 1992 (NSW), 11

Mining Amendment Act 2008 (NSW)

Partnership Act 1892 (NSW), ss 29, 35, 39, 44

Cases Cited:

Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342

County Securities Pty Ltd v Challenger Group Holdings Pty Ltd [2008] NSWCA 193

Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 

Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61

Re Hillsea Pty Ltd [2019] NSWSC 1152

Lawrence v Ciantar [2020] NSWCA 89

Mulherin v Quinn Villages Pty Ltd [2007] QSC 231

Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257; [2003] HCA 10

Sidameneo (No. 456) Pty Ltd v Alexander (No. 2) [2012] NSWCA 87

Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47

TEC Desert Pty Ltd v Commissioner of State Revenue (2010) 241 CLR 576; [2010] HCA 49

Troulis v Vamvoukakis[1998] NSWCA 237

Wang v Cai [2021] NSWSC 1162

Watson v Foxman (1995) 49 NSWLR 315

Texts Cited:

N/A

Category:

Principal judgment

Parties:

Jimmie Carpenter (First Plaintiff)
Tastex Pty Ltd (Second Plaintiff)
Colin George Morris (First Defendant)
Central West Granite Pty Ltd (Fourth Defendant)
Grandee Quarries Australia Pty Ltd (Seventh Defendant)
John Richard Dunkley (Eighth Defendant)
Robyn Joyce Dunkley (Ninth Defendant)

Representation:

Counsel:
Mr G Curtin SC (First and Second Plaintiffs)
Mr P Tierney (First, Fourth and Seventh Defendants)
Mr S Jayasuriya (Eighth and Ninth Defendants)

Solicitors:
Toby Tancred Solicitor (First and Second Plaintiffs)
Farrell Lusher Solicitors (First, Fourth and Seventh Defendants)
Matthews Williams Solicitors (Eighth and Ninth Defendants)

File Number(s):

2016/159226

Publication restriction:

N/A

Judgment

INTRODUCTION

1. These proceedings arise out of a partnership between the second plaintiff and the fourth defendant during the period from September 1996 to August 2003 and subsequent agreements that the plaintiffs claim to have entered into with the first defendant.

2. In relation to the partnership, the second plaintiff alleges that certain monies paid to the first defendant were partnership moneys to which the second plaintiff and the fourth defendant were equally entitled. The second plaintiff seeks an order that the first defendant pay 50 per cent of those moneys to the second plaintiff as money had and received by the first defendant to the use of the second plaintiff. The second plaintiff also seeks an order for the taking of accounts of the partnership.

3. In relation to the alleged subsequent agreements, the plaintiffs claim damages against the first defendant for alleged repudiation of those agreements. Alternatively, the plaintiffs claim damages for alleged breach of one of those agreements by the first defendant and damages in conversion against the sixth defendant.

4. For the reasons that follow, the plaintiffs’ claims fail.

THE PARTIES AND THE BACKGROUND TO THESE PROCEEDINGS

5. The Grandee Quarry is located at Mulyandry (near Forbes) in New South Wales.

6. The rock mined at the Grandee Quarry is a type of basalt known as gabbro. Gabbro is a shiny black rock, which is cut and polished and is used for purposes such as making kitchen benches, headstones, decorating public buildings and landscaping. ^[1] It is also referred to as dimension stone and granite.

   1. First plaintiff’s affidavit sworn 7 September 2017, paragraph 16.

7. The gabbro mined at the Grandee Quarry generally falls into two categories, described by the parties as first grade rock and second grade rock. First grade rock is uniformly black in colour, with no quartz veins, other impurities or colour variations. Second grade rock has the same composition, structure and hardness as first grade rock, but contains some veins of quartz or other minerals of a different colour. ^[2]

   2. Ibid, paragraphs 18-19.

8. The gabbro mined at Grandee Quarry is marketed under the trade name “Grandee Granite”. ^[3]

   3. Ibid, paragraph 16.

9. In the market into which Grandee Granite was sold, there was generally greater demand for first grade rock than for second grade rock at all times material to this proceeding. At some times, there was no demand for second grade rock at all. ^[4]

   4. Ibid, paragraphs 18-19.

10. Mr Jimmie Carpenter is the first plaintiff. He describes himself as the controller of the second plaintiff, Tastex Pty Ltd (Tastex). Mr Carpenter first began work at the Grandee Quarry in 1984. Relevantly to these proceedings, Tastex extracted granite from the Grandee Quarry during the period from about September 1996 to August 2003 and also during the period from August 2003 until about December 2014.

11. During the September 1996 to August 2003 period, this work was undertaken for a business conducted by Tastex in partnership with the fourth defendant. The fourth defendant is now called Central West Granite Pty Ltd, but was known as CG & JR Morris Pty Ltd until late 1999. I will refer to the fourth defendant as Central West. I will refer to the partnership between Tastex and Central West as the Morris Carpenter Partnership.

12. At the time the Morris Carpenter Partnership commenced in September 1996, Mr Colin Morris and Mr John Morris were the directors of Central West. ^[5] The first defendant, Mr Colin Morris is currently the sole director of that company. As several defendants in this proceeding have the surname Morris, I will refer to them by their first names to avoid confusion. Applying the same convention, I will refer to Mr Carpenter by his first name, Jimmie. No disrespect is intended.

    5. Ibid, paragraph 36.

13. It is common ground that the Morris Carpenter Partnership came to an end in August 2003. Tastex continued to undertake quarrying work at the Grandee Quarry after the partnership ended until about December 2014. The terms of the agreement pursuant to which they did so is one of the issues in dispute in these proceedings. Those activities ceased in about January 2015 when Jimmie and Colin became aware that, as a result of legislative changes to the Mining Act 1992 (NSW) that had commenced on 15 November 2010, the quarrying operations at the Grandee Quarry had been unlawful since 15 November 2011.

14. Mr Damian Morris is the fifth defendant and a director of the sixth defendant, Marble Craft & Granite Supplies Pty Ltd (Marble Craft). Marble Craft was granted exploration licence no. EL8371 in relation to the land comprising the Grandee Quarry on 20 May 2015. ^[6]

    6. Fifth defendant’s affidavit sworn 15 July 2019, paragraphs 2-3.

15. Grandee Quarries Australia Pty Ltd (GQ Australia) is the seventh defendant. It was incorporated on 29 June 2015. Colin and Damian are the directors and shareholders of GQ Australia. ^[7]

    7. Exhibit 10, p 435.

16. GQ Australia has applied for a mining lease in respect of the minerals in the land comprising the Grandee Quarry. As at the date of the hearing, no mining lease had been granted.

17. The Grandee Quarry is situated on two adjacent parcels of land, referred to in these proceedings as Lot 31 and Lot 134. The history of the ownership of these lands, and mining leases in respect of these lands, is referred to in more detail below. Lot 31 is presently owned by Colin (as to 50 per cent), Kathryn Morris (Kathryn) (as to 25 per cent) and Alison Morris (Alison) (as to 25 per cent), as tenants in common. Lot 134 is presently owned by a Mr and Mrs Dunkley, who purchased it from Kathryn and Alison in 2017. Mr and Mrs Dunkley are the eighth and ninth defendants.

18. In the course of the quarrying activities undertaken by the Morris Carpenter Partnership during the September 1996 to August 2003 period, and by Tastex and Jimmie during the August 2003 to December 2014 period, granite boulders, overburden and other material extracted from the land or disturbed during quarrying operations was piled onto Lot 31 and Lot 134. This had also occurred during quarrying activities at the Grandee Quarry prior to the commencement of the Morris Carpenter Partnership in mid-1996.

19. The matters in dispute in these proceedings include issues relating to material that the plaintiffs contend was accumulated on Lots 31 and 134 during the Morris Carpenter Partnership (referred to by the plaintiffs as the 2003 stockpile) and in the period from mid-2003 to the end of 2014 (referred to by the plaintiffs as the 2014 stockpile). The area that the plaintiffs identify as the 2003 stockpile covers a large part of the surface of Lot 31 and Lot 134. The area that the plaintiffs identify as the 2014 stockpile covers a larger part of the surface of both lots. Between them, the 2003 stockpile and 2014 stockpile cover the whole of those parts of Lot 31 and Lot 134 that were used for quarrying operations (as opposed to agricultural or other purposes). It is convenient to adopt the plaintiffs’ terminology in these reasons, although I acknowledge that there are disputes about whether the 2003 stockpile is comprised exclusively of material extracted during the Morris Carpenter Partnership and whether the 2014 stockpile is comprised exclusively of material extracted by Tastex and Jimmie in the August 2003 to December 2014 period. There is also a dispute about whether the 2003 and 2014 stockpiles are now part of the land.

20. Mr and Mrs Dunkley, as the owners of Lot 134, have disclaimed any interest in material accumulated on Lot 134. They did not seek to be heard in the proceedings, save in relation to the terms of any order that may be made for the removal of any stockpiled material from Lot 134 and in relation to costs. ^[8]

    8. Orders made on 17 May 2019; T1.20-2.36.

21. Kathryn and Alison no longer own Lot 134 and do not claim to have any interest in any part of the 2003 stockpile and 2014 stockpile on Lot 134. However, they claim to each have a 25 per cent interest in the parts of those stockpiles that are located on Lot 31 on the basis that they each have a 25 per cent interest in the legal title to Lot 31. ^[9]

    9. T225.18-228.21.

22. Kathryn and Alison were the second and third defendants in these proceedings, but the plaintiffs reached a settlement with them on the morning of the first day of the hearing and a notice of discontinuance against Kathryn and Alison was subsequently filed. As a result of the discontinuance of their claims against Kathryn and Alison and certain amendments made during the course of the hearing, the plaintiffs sought no proprietary relief in respect of the 2003 and 2014 stockpiles.

HISTORY OF GRANDEE QUARRY LAND TITLES AND MINING LEASES

23. The adjacent parcels of land on which the Grandee Quarry is located are: ^[10]

1. the land in folio identifier 31/752938 (Lot 31), which was formerly Volume 15415 Folio 59; ^[11] and

2. the land in folio identifier 134/752949 (Lot 134), which was formerly Volume 14607 Folio 56. ^[12]

   10. Third Further Amended Statement of Claim (3FASOC), paragraphs 3-4; Defences filed by first and fourth to seventh defendants, paragraphs 3-4; First plaintiff’s affidavit sworn 7 September 2017, paragraph 35.

   11. Exhibit 10, p 217.

   12. Exhibit 10, p 219.

24. Prior to 1 June 1994, Lot 31 and Lot 134 were owned by a Mr Peter Sherritt.

25. On 16 February 1988, Mr Sherritt (as lessor) entered into:

1. a lease of the minerals within Lots 31 and 134 with Alison, Kathryn and John Morris (John) as joint tenants (as lessees) for a term commencing on 1 January 1987 and expiring on 31 December 1997; ^[13] and

2. a lease of the minerals within Lots 31 and 134 with Colin and John as joint tenants (as lessees) for a term commencing on 1 January 1998 and expiring on 31 December 2012. ^[14]

   13. First defendant’s affidavit sworn 6 February 2018, paragraph 10.

   14. Ibid.

26. Each lease was registered, but was only recorded on the folio of the register for Lot 134. ^[15] It appears that this is likely to have been an error when the titles were converted from the Volume and Folio references to the Folio Identifiers in about December 1988. In these proceedings, nothing turns on the failure to record the leases on the folio of the register for Lot 31. No party suggested that the leases were not enforceable at all relevant times until 15 November 2011 in respect of the whole of the land comprising the Grandee Quarry.

    15. Exhibit 10, pp 217-219.

27. It is common ground that, at the time the leases were entered into, the owner of the freehold title to the land was entitled to privately mine the gabbro or authorise someone else to do so. The parties refer to the leases as private mining agreements, and I will adopt the same terminology in these reasons. It is convenient to refer to the lease for the period from 1 January 1987 to 31 December 1997 as the first private mining agreement and the lease for the period from 1 January 1998 to 31 December 2012 as the second private mining agreement.

28. A solicitor’s letter dated 12 September 1997 referred to leases in respect of Lot 31 and Lot 134 in favour of Colin and John as joint tenants for a further term from 1 January 2013 to 31 December 2038. [16] However, copies of those leases were not in evidence and there is no evidence that they were registered.

    16. Exhibit 13.

29. The first and second private mining agreements included the following clauses: [17]

“2.   This lease is confined to those parts of the land that comprise the strata seams and beds of granite, diorite and/or gabro which may be got by quarrying and excavations from the surface and open to the daylight and not by underground workings within or under the said lands.

3.   There are included in the said demise and for the purpose thereof the liberties following:

(a) To enter upon the said lands and to search for, dig, work and obtain by excavations and quarryings open to the daylight and not to underground workings, granite, diorite and/or gabro and to carry away and dispose of the same for the benefit of the Lessees;

(b) To place and stack upon the said land granite, diorite, and/or gabro won from the demised lands;

(c) Generally do all things which are convenient or necessary for working, getting, quarrying and disposing of the said granite, diorite and/or gabro and for obtaining the benefits of the rights, liberties and privileges hereby granted.”

17. Clauses 2 and 3: pp 3 and 17 of exhibit CGM1 to the first defendant’s affidavit sworn 6 February 2018.

30. Each private mining agreement obliged the lessee to pay royalties and rent to the lessor. The royalty rate per cubic metre mined was the subject of annual review by reference to increases in the Consumer Price Index. [18]

    18. Clauses 4 and 5: pp 3-4 and 17-18 of exhibit CGM1.

31. Each private mining agreement required the lessee to deliver up the land at the end of the term restored to its condition at the commencement of the lease. If the lessee failed to do so, the lessor was entitled carry out the work necessary to do so and the cost of that work was a debt due by the lessee to the lessor, payable on demand. [19]

    19. Clause 5(ix): pp 5 and 19 of exhibit CGM-1.

32. Each private mining agreement contained a covenant by the lessee not to assign, transfer, demise, sublet or part with the possession of the land or any part thereof without the lessor’s written consent, which was not to be refused in the case of a proposed respectable and responsible assignee, tenant or occupier. [20]

    20. Clause 6 (at pp 5 and 19 of exhibit CGM-1) and Part 2 of Schedule 4 to the Conveyancing Act 1919 (NSW).

33. On 1 June 1994, Colin and John each purchased Lot 31 as tenants in common in equal shares and John purchased the whole of Lot 134 from Mr Sherritt. The transfers were subject to the registered first private mining agreement then on foot and the registered second private mining agreement commencing on 1 January 1998. ^[21]

    21. First plaintiff’s affidavit sworn 7 September 2017, paragraph 34.

34. Thus, at the commencement of the Morris Carpenter Partnership in September 1996, Lot 31 was owned by Colin and John as tenants in common in equal shares and Lot 134 was owned solely by John, whilst Alison, Kathryn and John, as joint tenants, had the leasehold interest in the minerals in both lots. ^[22] Under the first private mining agreement, Alison, Kathryn and John were entitled to quarry, remove and sell the granite and were required to pay an annual rent plus royalties to Colin and John as the owners of Lot 31 and to John as the owner of Lot 134. The rate of royalty per cubic metre mined was the subject of annual review by reference to increases in the Consumer Price Index.

    22. Ibid, paragraph 35.

35. John passed away in September 1997. Lot 134 and his half share of Lot 31 were transferred to Kathryn as the executor of his estate, and subsequently to Kathryn and Alison as the beneficiaries under his last will. The transfers were not registered until August 2008. ^[23] It was not suggested that the delay in registration was relevant to any issue in dispute in these proceedings.

    23. Ibid, paragraph 39.

36. According to Jimmie, the death of John did not result in any change to the manner in which the Morris Carpenter Partnership business was conducted on Lots 31 and 134. ^[24]

    24. Ibid, paragraphs 38 and 42.

37. The legal position from John’s death in September 1997 until the end of the term of the first private mining agreement on 31 December 1997 was that:

1. Lot 31 was owned by Colin and Kathryn (in her capacity as executor of John’s estate) as tenants in common in equal shares;

2. Lot 134 was owned solely by Kathryn (in her capacity as executor of John’s estate);

3. Kathryn and Alison held the leasehold interest in the minerals in both lots, with John’s interest in the first private mining agreement having passed to them as joint tenants on his death;

4. Kathryn and Alison were entitled to quarry, remove and sell the granite pursuant to the first private mining agreement and were obliged to pay annual rent plus royalties to:

1. Colin and Kathryn (as executor of John’s estate) in respect of Lot 31; and

2. Kathryn (again, as executor of John’s estate) in respect Lot 134.

38. On the commencement of the second private mining agreement on 1 January 1998, the leasehold interest in the minerals in both lots was held solely by Colin, as John’s interest in the second private mining agreement as joint tenant with Colin had passed to Colin on John’s death. That private mining agreement entitled Colin to quarry, remove and sell the granite and required him to pay annual rent plus royalties to:

1. himself and Kathryn (as executor of John’s estate) in respect of Lot 31; and

2. Kathryn (again, as executor of John’s estate) in respect Lot 134.

39. That position continued until the Morris Carpenter Partnership came to an end in August 2003.

40. As I have referred to above, Jimmie and Tastex continued to quarry granite at the Grandee Quarry from the end of the Morris Carpenter Partnership in August 2003 until about December 2014. During that period, the only changes to the land ownership and lease arrangements were that:

1. the freehold title to a one half share of Lot 31 and the title to Lot 134 were transferred from Kathryn (in her capacity as executor of John’s estate) to Kathryn and Alison as tenants in common; and

2. the term of the second private mining agreement came to an end on 31 December 2012.

41. It is not clear whether a third private mining agreement applied with effect from 1 January 2013. [25] In any event, amendments to the Mining Act that were introduced by the Mining Amendment Act 2008 (NSW) rendered quarrying activities on the Grandee Quarry unlawful from 15 November 2011 without a mining lease granted by the State. [26] It was the discovery of these legislative changes that caused the parties to cease quarrying operations on the Grandee Quarry at the end of 2014.

    25. See [28] above.

    26. Mining Amendment Act 2008 (NSW), Schedule 1, clauses 2 and 273.

42. Section 11 of the Mining Act provides:

“(1)   For the purposes of this or any other Act or law, it is declared that any mineral that is lawfully mined becomes the property of the person by or on behalf of whom it is mined at the time the material from which it is recovered is severed from the land from which it is mined.

(2)   For the purposes of this or any other Act or law, it is declared that any mineral contained in—

(a)   a stockpile of material that has been lawfully mined for the purpose of enabling the mineral to be recovered, or

(b)   a pile of tailings arising from the recovery of a mineral from material that has been so mined,

remains the property of the person by or on behalf of whom the material was mined and does not become part of the land on which it is situated.

(3)    However, any mineral that has been mined pursuant to a mining lease or mineral claim but is still contained in such a stockpile or pile of tailings when the lease or claim ceases to have effect—

(a)   ceases to be the property of the person by or on behalf of whom the material in the stockpile or pile of tailings was mined, and

(b)   becomes part of the land on which the stockpile or pile of tailings is situated,

at the time the mining lease or mineral claim ceases to have effect.

(4)    This section is subject to the provisions of any private agreement.”

43. The term “stockpile” is not defined in the Mining Act.

44. It is relevant to note that sub-sections (1) and (2) apply to “any mineral that is lawfully mined”, whereas sub-section (3) applies only to “any mineral that has been mined pursuant to a mining lease or mineral claim”.

45. A “mining lease” is defined as a mining lease granted under Part 5 of the Mining Act, including a consolidated mining lease. Part 5 provides for the granting of mining leases by the State, rather than by private landowners who own minerals within their land.

46. A “mineral claim” is defined as a mineral claim granted under Part 9 of the Mining Act, which provides for the State to grant rights to prospect for specific minerals.

47. The private mining agreements that are relevant to these proceedings are not mining leases or mineral claims within the meaning of s 11(3) of the Mining Act.

48. Section 11 has not been amended since the commencement of the Mining Act. It has applied in the terms set out above at all times relevant to these proceedings. The definitions and other provisions referred to above have not been amended in a manner that is relevant to these proceedings.

ISSUES IN DISPUTE

Issues relating to the Morris Carpenter Partnership

49. It is common ground that, during the period from about 1996 until about mid-2003, the Morris Carpenter Partnership conducted the business of mining, cutting, and shaping granite at the Grandee Quarry. The plaintiffs contend, and Central West disputes, that the partnership business also extended to the marketing and sale of that granite. ^[27]

    27. 3FASOC, paragraph 13; Second Further Amended Defence of the Fourth Defendant (D4 Defence), paragraph 13.

50. The partnership agreement between Tastex and Central West provided that the partners in the Morris Carpenter Partnership were required to share expenses equally and entitled to share profits equally. ^[28] However, by reason of the dispute about the scope of the partnership business, there is a dispute about whether the proceeds of sale of that granite was partnership income, or whether the partnership income was limited to a fee paid to the partnership for extracting the granite and cleaning and shaping it in preparation for sale.

    28. Partnership Agreement, clause 9: Exhibit 10, p 207.

51. Grandee Granite was marketed and sold by Mrs Bernice Huggard of W M Ashcroft & Co Pty Limited. The evidence does not reveal any person other than Mrs Huggard who was involved in the business of W M Ashcroft & Co Pty Limited at relevant times. I will therefore simply refer to Mrs Huggard, unless it is necessary to distinguish between her and W M Ashcroft & Co Pty Limited.

52. The proceeds of sale of granite mined from the Grandee Quarry during each month of the Morris Carpenter Partnership were distributed as follows:

1. royalty payments payable under the private mining agreements to Colin, Kathryn and Alison as owners of Lot 31 and Lot 134; [29]

   29. During the hearing, Colin retracted his evidence that Central West (which was not a landowner or lessee) had also received royalty payments: First defendant’s affidavit sworn 6 February 2018, paragraph JC31; First defendant’s affidavit sworn 18 September 2020.

2. a sales commission paid to Mrs Huggard, together with a further payment described as a royalty or “lease premium” and calculated on the basis that she had a 1/6^th interest in Lot 31 and Lot 134 (even though the evidence revealed that Mrs Huggard and W M Ashcroft & Co had only ever had an interest in that land pursuant to an assignment of a 1/6^th interest in a lease that had expired many years before the Morris Carpenter Partnership commenced); ^[30]

3. rental payments to Colin, Kathryn and Alison as landowners under the private mining agreements;

4. a payment to the Morris Carpenter Partnership calculated on the basis of an amount per cubic metre of granite sold. During the period between July 2000 and the end of the partnership in mid-2003, the rate per cubic metre varied between $450 and $500; [31]

5. payment of expenses of the Morris Carpenter Partnership, including equipment leasing costs and weekly wages paid to Jimmie for his labour in mining the granite from the Grandee Quarry. ^[32] These payments were made by Colin or his former wife from the bank account of the Morris Carpenter Partnership, to which Jimmie had no access; and

6. a further payment to Colin, the amount of which varied significantly from month to month. It is convenient to refer to these payments to Colin as the additional monthly payments. During the period from July 2000 to August 2003, the additional monthly payment amount ranged from $862.96 to $16,568.28. The total additional monthly payments made during that period was $246,324.45. [33]

   30. First plaintiff’s affidavit sworn 7 September 2017, paragraph 31; First defendant’s affidavit sworn on 6 February 2018, paragraphs 2 and JC31; T320.3-320.7.

   31. Mrs Huggard’s payment advices: Exhibits 11 and 12.

   32. First plaintiff’s affidavit sworn 7 September 2017, paragraphs 31-32.

   33. First defendant’s affidavit sworn 18 September 2020; Mrs Huggard’s payment advices: Exhibits 11 and 12.

53. It is only the additional monthly payments that are the subject of dispute in these proceedings. In relation to those payments, the plaintiffs allege that: ^[34]

    34. 3FASOC, paragraphs 13(f) and 13G-13M.

1. Mrs Huggard marketed and sold the stone as an agent of the Morris Carpenter Partnership;

2. the proceeds of sale were partnership income;

3. the additional monthly payments were made to Colin at his direction, at the direction of Central West “or by someone at their behest”;

4. the additional monthly payments made to Colin were made in breach of Central West’s fiduciary duty owed to Tastex as its partner in the Morris Carpenter Partnership, and were fraudulent; and

5. Colin knew that his receipt of the additional monthly payments was “wrongful”.

54. The only relief sought by the plaintiffs in relation to the additional monthly payments is an order requiring Colin to repay 50 per cent of the additional monthly payments to Tastex as money had and received. ^[35]

    35. 3FASOC, paragraphs 13M and 26K.

55. The plaintiffs submitted that Central West is “equally liable” in respect of the additional monthly payments under s 29 of the Partnership Act 1892 (NSW). ^[36] That section requires each partner to account to the firm for any benefit derived by the partner without the consent of the other partners from any transaction concerning the partnership or for any use by the partner of partnership property. I did not understand this submission as raising a claim or cause of action in addition to the claim for the taking of accounts of the Morris Carpenter Partnership, to which I refer below. No such additional claim or cause of action was pleaded.

    36. Plaintiffs’ closing submissions, paragraph 34.

56. Despite the numerous amendments made to the pleadings by all parties during the course of the final hearing, the plaintiffs did not plead any claim for relief against Central West for its alleged breach of fiduciary duty in allegedly causing or permitting the additional monthly payments to be made to Colin and did not plead any claim for relief against Colin under the first or second limb of Barnes v Addy. In oral closing submissions, senior counsel for the plaintiffs abandoned a submission that Colin was liable under Barnes v Addy as a constructive trustee. ^[37]

    37. Plaintiffs’ closing submissions, paragraph 35; T450.46-451.8.

57. Colin acknowledges that he received the additional monthly payments but denies that the money out of which the payments were made was partnership income or that his receipt of those payments was wrongful. ^[38]

    38. Second Further Amended Defence of the First Defendant (D1 Defence), paragraphs 13G-13M; First defendant’s affidavit sworn 18 September 2020.

58. Colin contends that: ^[39]

    39. D1 Defence, paragraphs 13(f) and 13G-13M; first defendant’s affidavit sworn 18 September 2020.

1. the business of Morris Carpenter Partnership was limited to extracting and preparing the granite for sale;

2. the income of the Morris Carpenter Partnership was limited to a fee per cubic metre paid to it in respect of all granite sold to customers;

3. Mrs Huggard did not act as the agent of the Morris Carpenter Partnership in marketing and selling the granite;

4. the proceeds of sale of the granite represented income of the lessees under the private mining agreements, and not income of the Morris Carpenter Partnership;

5. it was none of the plaintiffs’ business how the proceeds of sale were distributed, save that the Morris Carpenter Partnership was entitled to the fee per cubic metre sold as its reward for quarrying the granite; and

6. Colin was entitled to receive the additional monthly payments “as an owner”.

59. Colin gave evidence that Mrs Huggard had been marketing and selling granite from the Grandee Quarry since about the 1960s when Colin’s father exercised the mining rights. Colin’s evidence was to the effect that, during the Morris Carpenter Partnership, he had simply continued the arrangements with Mrs Huggard that his father had implemented many years earlier and that Colin had continued in the years prior to the partnership. These arrangements involved Mrs Huggard conducting “overall financial management of the quarry” and distributing the sale proceeds of the granite to W M Ashcroft & Co (sales commission and the royalty referred to above), to members of the Morris family (royalties payable to them as owners or part owners of Lot 31 and Lot 134) and “a payment to the quarry master for recovering the granite”. ^[40]

    40. First defendant’s affidavit sworn 6 February 2018, paragraph 21.

60. There is no dispute that the Morris Carpenter Partnership came to an end in about August 2003. Tastex claims that no account was taken of the partnership assets and liabilities or to formally wind up the affairs of the partnership. ^[41] This is disputed by Central West. Central West claims that there was a settled account, and that Tastex’s former solicitor made an admission with authority on 12 August 2019 that there was a settled account. ^[42]

    41. 3FASOC, paragraph 14.

    42. D4 Defence, paragraph 14.

61. Tastex claims: ^[43]

    43. 3FASOC, prayers 1-4 and 9 and paragraphs 26E and 26K.

1. a declaration that the Morris Carpenter Partnership is dissolved pursuant to s 35 of the Partnership Act;

2. an order for the taking of accounts of and inquiry into:

1. all of the dealings and transactions of the Morris Carpenter Partnership, and of Tastex and Central West as the partners in that partnership, on a wilful default basis or alternatively on a common form basis;

2. the assets and liabilities of the Morris Carpenter Partnership; and

3. the respective interests of Tastex and Central West in the assets of the Morris Carpenter Partnership; and

3. an order that, within 14 days of the taking of accounts, Central West pay to Tastex such amounts as are finally determined to be due to Tastex after all just allowances are made.

62. Central West opposes a declaration that the Morris Carpenter Partnership is dissolved on the basis that there is no purpose to be served by making such a declaration in circumstances where there is no dispute that the partnership came to an end in August 2003. [44]

    44. Defendants’ closing submissions, paragraph 5.

63. Central West opposes an order for the taking of accounts on two grounds:

1. s 15 of the Limitation Act 1969 (NSW) applies, directly or by analogy, to the claim for an order for the taking of accounts; ^[45] and

2. a defence of settled accounts. ^[46]

   45. D4 Defence, paragraph 27.

   46. D4 Defence, paragraph 14.

64. Tastex contends that the limitation defence should be rejected on the basis of alleged fraudulent concealment of the additional monthly payments. [47] Colin and Central West deny that the additional monthly payments were fraudulent or were fraudulently concealed.

    47. Plaintiff’s closing submissions, paragraph 65. This departed from the pleadings, in which the plaintiffs relied on concealment of royalty payments to Central West as fraudulent concealment. This departure was occasioned by Colin’s retraction of his evidence that Central West had received royalty payments and his evidence of the additional monthly payments that he personally received. The defendants did not object to the change in the plaintiffs’ fraudulent concealment allegation that was responsive to the changes in the defendants’ evidence about these matters during the hearing.

65. Tastex contends that the defence of settled accounts is not available because there has not been a settlement of all accounts between the partners in that “there are two assets which have not been settled. That is the 2003 stockpile and the right to mine”. [48] The “right to mine” refers to a right that Colin claims that he and John contributed to the Morris Carpenter Partnership. It will be necessary to say something further about the nature of this contribution later in these reasons.

    48. T441.35-441.42.

66. Central West accepts that all accounts must have been settled in order for the defence of settled accounts to apply. However, it denies that the right to mine was an asset of the Morris Carpenter Partnership and contends that the 2003 stockpile is no longer an asset separate from the land on which it is situated. Alternatively, if the 2003 stockpile is not found to be part of the land, Central West contends that an order for the taking of accounts would be futile because it is not possible to quantify or value the 2003 stockpile. [49]

    49. T468.30-468.47.

Issues relating to the period after mid-2003

67. The plaintiffs plead that they entered into an oral agreement with Colin in or about July 2003, the terms of which were to the following effect: ^[50]

    50. 3FASOC, paragraph 15; T452.17.

1. Colin, through Mrs Huggard as his agent, would procure orders from customers for dimension stone mined at the Grandee Quarry;

2. Colin would administer the business of the mining activities conducted at the Grandee Quarry;

3. Colin and/or Ms Huggard would notify the plaintiffs of quantities of dimension stone required by customers from time to time;

4. the plaintiffs would utilise their own labour, plant, equipment and financial resources to mine, cut, shape and prepare dimension stone for sale at the Grandee Quarry, so as to fill customers’ orders, in return for which Colin, Kathryn and Alison would permit the plaintiffs to extract the dimension stone from the quarry;

5. the plaintiffs were to stockpile in the Grandee Quarry for future sale any second grade dimension stone and boulders which they mined;

6. Colin would do such things as could reasonably be done to procure the sale of the second grade dimension stone and boulders mined and stockpiled in the Grandee Quarry; and

7. if the plaintiffs carried out the works referred to above, they would receive payment at the rates of $600 per cubic metre for first grade dimension stone blocks larger than 1.5m³, $500 per cubic metre for first grade dimension stone blocks smaller than 1.5m³, and $300 per cubic metre for mining and stockpiling second grade dimension stone blocks, with such rates to be paid on sale of the dimension stone.

68. It is convenient to refer to this alleged agreement as the Quarrying Agreement. [51]

    51. In closing submissions, the plaintiffs abandoned their claim that the Quarrying Agreement was later varied in the manner alleged in 3FASOC paragraphs 18A, 19 and 19A: T451.40-451.49.

69. The plaintiffs allege that they entered into a further agreement with Colin in about July 2003 to the effect that the plaintiffs, at their own expense, would expose more of the gabbro deposit in the Grandee Quarry for future mining, in consideration for Colin retaining the plaintiffs for reward to mine, cut, shape and prepare for sale all of the remaining gabbro deposit in the Grandee Quarry. ^[52] The plaintiffs contend that this further agreement included an implied term that Colin do all acts and things necessary on his part to enable the plaintiffs and Colin to perform their obligations under the agreement. ^[53] It is convenient to refer to this alleged further agreement as the Future Mining Agreement.

    52. 3FASOC, paragraphs 18, 19B, 19C; T452.40-452.50.

    53. 3FASOC, paragraph 19E.

70. In the alternative, the plaintiffs pleaded that Colin requested them to expose gabbro for future mining at their own expense. However, the alleged request is not relevant to the claims for relief ultimately pressed by the plaintiffs in closing submissions. ^[54] It is therefore not necessary to determine whether the alleged request was made (which Colin denied) or whether Tastex carried out work in response to it (which Colin also denied).

    54. 3FASOC, paragraphs 18, 19B, 19C; T452.40-452.50; 1D Defence, paragraphs 15, 18, 19B, 19C, 19E.

71. The plaintiffs claim that, during the September 2003 to December 2014 period, they carried out work in accordance with the alleged Quarrying Agreement by mining, cutting, shaping and making ready for sale quantities of first grade dimension stone to fill customers’ orders, and by mining and stockpiling quantities of second grade dimension stone and boulders (this is what the plaintiffs refer to as the 2014 stockpile). ^[55]

    55. 3FASOC, paragraph 16.

68. The plaintiffs acknowledged in their pleading that Colin had honoured the Quarrying Agreement during this period “insofar as [he] paid the Plaintiffs a portion of the dimension stone sale proceeds for sales of First Grade dimension stone as agreed between [Jimmie and Colin].” [56] However, they claim damages for Colin’s alleged breaches of the Quarrying Agreement in failing to make any payment to them in respect of certain specific sales of which they say they were not aware prior to these proceedings. The relevant sales were made in 2016 and the damages claimed are in the amount of $17,850 (plus interest). [57]

    56. 3FASOC, paragraph 17.

    57. 3FASOC, paragraphs 20D, 26F; Exhibit 8, pp 8, 9 and 14; plaintiffs’ closing submissions, paragraphs 113-122.

69. The plaintiffs also claim damages of $5,550 (plus interest) in respect of sales made by Marble Craft from the 2014 stockpile in respect of which the plaintiffs say they did not receive the payment to which they were entitled under the Quarrying Agreement. This claim was made in conversion. Marble Craft is not alleged to be a party to the alleged Quarrying Agreement. [58]

    58. Plaintiffs’ closing submissions, paragraphs 123-131; T464.26-464.36; 3FASOC, paragraphs 22, 26H.

70. Finally, the plaintiffs contend that Colin has repudiated the Quarrying Agreement because he is not ready, willing or able to perform his obligation “to sell the 2014 stockpile” due to his lack of legal authority to sell the 2014 stockpile since November 2011 without the permission of Kathryn and Alison (to the extent that the stockpile is located on Lot 31) and Mr and Mrs Dunkley (to the extent that the stockpile is located on Lot 134). The plaintiffs allege that Colin has taken no steps to obtain that permission, which they say is required because the ownership in the 2014 stockpile reverted to the landowners in November 2011 when quarrying at the Grandee Quarry became unlawful by reason of the amendments to the Mining Act referred to at [42]-[48] above. The plaintiffs’ contentions appear to be based on an assumption that s 11(3) of the Mining Act applied. For the reasons explained at [44]-[47] above, s 11(3) did not apply. It will be necessary to return to these issues later in these reasons.

71. The plaintiffs say that they accepted Colin’s alleged repudiation of the Quarrying Agreement by commencing these proceedings. [59] They claim damages assessed by reference to what they say is the value of the 2014 stockpile. The amount of damages claimed is in the order of $1,200,000 plus interest. [60] The plaintiffs accept that, if they succeed on this claim, they will not be entitled to damages for the alleged breaches of contract and conversion referred at [72]-[73] above.

    59. Plaintiffs’ closing submissions, paragraphs 66-67, 75-89.

    60. Plaintiffs’ closing submissions, paragraphs 90-112.

72. The plaintiffs allege that Colin repudiated the Future Mining Agreement by terminating it in early 2015 on the basis that “the mining license has expired”. [61] The plaintiffs claim damages assessed by reference to what they say is the volume and value of first and second grade dimension stone yet to be mined at the Grandee Quarry. The amount of damages claimed is approximately $4,500,000 (including interest up to the date of the hearing). [62]

    61. Plaintiffs’ closing submissions, paragraphs 149-150; First plaintiff’s affidavit sworn 7 September 2017, paragraph 192; First defendant’s affidavit sworn 6 February 2018, paragraph JC192. This allegation bears some resemblance to the pleading at paragraph 20 of the 3FASOC and the defendants did not take any pleading point.

    62. Plaintiffs’ closing submissions, paragraphs 151-173.

73. Colin denies that he entered into the Quarrying Agreement or the Future Mining Agreement. ^[63] He says that he did enter into an agreement with the plaintiffs after the Morris Carpenter Partnership came to an end, but contends that the agreement was simply that the plaintiffs would mine, cut, shape and prepare dimension stone for sale for a cubic metre rate to be agreed between the plaintiffs and Mrs Huggard and payable at the time of sale of the dimension stone. ^[64]

    63. D1 Defence, paragraphs 15, 18, 19B, 19C, 19E.

    64. D1 Defence, paragraphs 15(d)-(e).

74. Colin denies the plaintiffs’ allegations of breach of the alleged Quarrying Agreement. He acknowledges that the plaintiffs worked to fill orders for dimension stone during the period from 2003 to 2014 in accordance with the agreement that he says they entered into in 2003. ^[65] He admits that the plaintiffs were paid a portion of the sale proceeds of first grade dimension stone during that period and relies on the plaintiffs’ pleading concerning these payments as an admission that no monies are owing to the plaintiffs in respect of dealings prior to December 2014. ^[66]

    65. D1 Defence, paragraphs 16, 19.

    66. D1 Defence, paragraph 17.

75. Colin also denies the alleged repudiation of the Quarrying Agreement. He says that the agreement that he made with the plaintiffs in 2003 came to an end in 2014 by reason of the legislative changes that obliged him to require the plaintiffs to cease quarrying operations. On Colin’s case, that agreement did not concern the sale of any stockpiled second grade material in any event. [67] Colin also disputes the plaintiffs’ contentions concerning the volume and value of dimension stone in the 2014 stockpile.

    67. D1 Defence, paragraphs 20, 20B.

76. In addition to denying the existence of the alleged Future Mining Agreement, Colin disputes the plaintiffs’ contentions concerning the volume and value of dimension stone yet to be mined at the Grandee Quarry.

77. Finally, Colin also relies on s 14 of the Limitation Act in relation his defence to the plaintiffs’ claims for damages for the alleged repudiation of the Quarrying Agreement and the Future Mining Agreement.

78. I note for completeness that, in the plaintiffs’ closing submissions, no claims for relief were pressed against Damian and GQ Australia and that the claim pressed against Marble Craft was limited to the claim for $5,500 referred to at [73] above. The allegations in paragraphs 13A to 13F and paragraphs 22 to 26 and the claims for damages in conversion or equitable damages in paragraph 26H of the Third Further Amended Statement of Claim were abandoned, save for the $5,500 claim against Marble Craft.

79. In summary, the plaintiffs’ claims to be determined are:

1. Tastex’s claim against Colin for 50 per cent of the additional monthly payments as money had and received;

2. Tastex’s claim against Central West for the taking of an account of the Morris Carpenter Partnership and an inquiry into the dealings of the partners on a wilful default basis;

3. Jimmie and Tastex’s claim against Colin for damages for alleged repudiation of the Quarrying Agreement;

4. if their claim in relation to the alleged repudiation of the Quarrying Agreement fails, Jimmie’s and Tastex’s claims:

1. against Colin for alleged breach of the Quarrying Agreement in failing to make any payment to the plaintiffs in respect of a small number of sales from the 2014 stockpile after December 2014; and

2. against Marble Craft for conversion; and

5. Jimmie’s and Tastex’s claim against Colin for damages for alleged repudiation of the Future Mining Agreement.

84. The plaintiffs abandoned all other pleaded causes of action in closing submissions.

SUMMARY OF EVIDENCE AND FINDINGS OF FACT

Introductory observations

85. Much of the evidence relied on by the parties was repetitive, and the evidence of each of Jimmie and Colin suffered from various internal inconsistencies. In those circumstances, I required the parties to prepare written closing submissions identifying with precision the findings for which they contended and the evidence relied on in support of those contentions. The following summary of evidence is therefore drawn primarily from the evidence identified in the parties’ closing submissions.

The quarrying process

86. The Grandee Quarry has been in operation since the early 1960s. [68]

    68. First defendant’s affidavit sworn 6 February 2018, paragraphs 4 and 13.

87. There is no dispute about the process by which granite was extracted at the Grandee Quarry before, during and after the Morris Carpenter Partnership. The gabbro deposit is covered by dirt, shrubs and large trees. An excavator is used to remove trees and vegetation in an area within the quarry identified for mining, and then to scrape away and remove large volumes of earth, loose gabbro boulders of various sizes and loose weathered gabbro overburden and weathered surface rock. Once the rock below the overburden is exposed, blocks are extracted from the gabbro deposit and then cut into dimension. During the cutting process, imperfections such as cracking or a white vein are often encountered in the block. When this occurs, the imperfect rocks or parts of the block (i.e. second grade rock) are ordinarily discarded or moved to another part of the quarry. When the whole of an outcrop of the gabbro deposit has been converted into dimension stone blocks, the process begins all over again in a new location within the quarry. As will be apparent from this description, the quarrying process involves the accumulation of large amounts of rock, boulders, unusable material and offcuts. Some of that material can be sold, although most sales during the periods relevant to these proceedings were of first grade rock. [69]

    69. First plaintiff’s affidavit sworn 7 September 2017, paragraph 25; First defendant’s affidavit sworn 6 February 2018, paragraphs 13 and 20; First plaintiff’s affidavit sworn 20 May 2018, paragraphs 4-5 and 28; Mr Brooke’s affidavit sworn 12 March 2018, paragraph 18.

88. Dr Hans-Dieter Hensel, an expert witness called by the plaintiffs, gave this evidence in relation to the process of quarrying generally: [70]

“Because stone is a work of nature numerous factors impact on the extraction of stone and subsequently the sale of the stone. It is very reasonable to state that quarrying natural stone is a dynamic process. Almost daily challenges present themselves not only with the structure of the stone, the variability in the texture of the stone, the presence of inclusions, the presence of veining, tectonic aspects, weather conditions, machinery breakdowns and repairs, all of which can impact on the bottom line. … Then over-riding all these factors is the uncertainty and volatility of the market. Local and international conditions (such as business relationships and agreements, fashion trends, plus exchange rates, for example) can be major influences in the viability of a dimension stone quarry.”

70. Exhibit 2, paragraph 9.

The operation of the Grandee Quarry prior to the Morris Carpenter Partnership

89. The position that Colin refers to as “quarry master” at the Grandee Quarry has been held by a number of different people and entities over time, including: [71]

    71. First defendant’s affidavit sworn 6 February 2018, paragraph 17.

1. Mr Les Little, for whom Jimmie first began working at the Grandee Quarry in 1984 as a casual labourer; [72]

2. a company controlled by Mr Little (Foduti Pty Ltd) and a company controlled by Mr Peter Simpson (Casalga Pty Ltd) in partnership;

3. Casalga Pty Ltd and Tastex in partnership, after Tastex acquired the interest of Foduti Pty Ltd in the Foduti/Casalga partnership in September 1993 for a sum of $18,500; [73]

4. the Morris Carpenter Partnership formed between Tastex and Central West in September 1996 after Tastex terminated its partnership with Casalga Ltd; [74] and

5. Tastex, from the end of the Morris Carpenter Partnership in 2003 until the end of 2014.

   72. First plaintiff’s affidavit sworn 7 September 2017, paragraphs 7-8.

   73. First plaintiff’s affidavit sworn 7 September 2017, paragraph 14; First defendant’s affidavit sworn 6 February 2018, paragraph 17.

   74. First plaintiff’s affidavit sworn 7 September 2017, paragraph 26.

90. Jimmie gave evidence that, when Tastex terminated its partnership with Casalga Pty Ltd, Tastex purchased the plant and equipment of that partnership. [75]

    75. Ibid, paragraph 26; Exhibit 10, pp 200-202.

Morris Carpenter Partnership

91. Jimmie gave evidence that he had a conversation with Colin on about 30 August 1996 in which Colin suggested that Jimmie go into partnership with Colin and John, saying: “We can do all of the bookwork and arrange the marketing and you can run the Quarry”. [76] Colin does not recall this conversation, or any conversations with Jimmie before entering into the Morris Carpenter Partnership. [77]

    76. Ibid, paragraph 27.

    77. First defendant’s affidavit sworn 6 February 2018, paragraph JC27.

92. The Morris Carpenter Partnership was the subject of a written partnership agreement dated 1 September 1996 between Tastex and Central West (which was then known as CG & JR Morris Pty Ltd). ^[78]

    78. First plaintiff’s affidavit sworn 7 September 2017, paragraph 28; Exhibit 10, pp 203-212.

93. The recitals to the partnership agreement recorded that the parties intended to “carry on in partnership the business of quarrying”.

94. The partnership agreement provided that:

1. the partners were to contribute to the capital of the partnership in equal shares (with any shortfall in a partner’s contribution to be a debt owing by that partner to the partnership, and any excess contribution made by a partner with the consent of the other partner to be a loan owing by the partnership to the partner who made the excess contribution); [79]

2. in the absence of written agreement between the partners to the contrary, the amount standing to the credit of each partner’s capital and personal accounts in the books of the partnership from time to time “shall be deemed to represent the share of the respective partners in the capital account and assets of the partnership”; [80]

3. if a partner was indebted to the partnership, that partner’s share in the partnership property would be deemed to be charged with repayment of that debt; [81]

4. the partners were to bear the expenses of the partnership business in equal shares; [82] and

5. the partners were to share the profits, and bear any losses, of the partnership in equal shares, and neither partner was entitled to withdraw from the partnership any amount on account of its share of the profits without the consent of the other partner. [83]

   79. Clauses 4 and 5.

   80. Clause 6.

   81. Clause 7.

   82. Clause 8.

   83. Clauses 9 and 10.

95. The partnership agreement required proper books of account to be kept and accounts to be prepared as at 30 June each year. [84] Annual financial statements and taxation returns were in fact prepared by the partnership’s accountants on the instructions of Colin and his wife, Carol. [85]

    84. Clauses 13 and 14.

    85. First plaintiff’s affidavit sworn 15 August 2019, paragraph 11; Exhibit 10, pp 1264-1301; T303.38-304.30.

96. Either partner was entitled to withdraw from the partnership at any time on giving three months’ prior notice to the other partner. [86]

    86. Clause 15.

97. There is no dispute that Tastex contributed to the partnership the plant and equipment required to extract the gabbro from the land, cut and shape it in preparation for sale, and load it onto trucks for transport to customers. ^[87]

    87. First plaintiff’s affidavit sworn 7 September 2017, paragraph 30.

98. Colin gave evidence that he and John contributed two additional items of equipment and “the right to mine or quarry”. ^[88] The additional items of equipment were one crane and one compressor, which added to the crane and the three compressors that Tastex had acquired at the end of its partnership with Casalga Pty Ltd and brought in to the Morris Carpenter Partnership. [89]

    88. First defendant’s affidavit sworn 6 February 2018, paragraph JC30; T295.25-295.32; T300.5-300.11; T301.15-301.17.

    89. First plaintiff’s affidavit sworn 7 September 2017, paragraph 30; Exhibit 10, pp 200-202.

99. When the Morris Carpenter Partnership commenced, the right to mine was with Kathryn, Alison and John as joint tenants under the first private mining agreement. [90] Between John’s death one year later and the expiry of the first private mining agreement at the end of 1997, Kathryn and Alison had the right to mine. Colin did not have any right to extract granite from Lot 31 and Lot 134 until 1 January 1998. As I understand the submissions, there is no dispute between the parties that Colin and John caused the “right to mine or quarry” to be contributed to the partnership when it was established in 1996 and that Colin continued to do so after John’s death in 1997. However, the plaintiffs characterise the “right to mine or quarry” as the whole of the rights conferred by the private mining agreements, notwithstanding that those agreements were not assigned to the Morris Carpenter Partnership. The defendants characterise the “right to mine or quarry” as merely an implied licence to access the Grandee Quarry for the purpose of conducting a contract quarrying operation. [91] For the reasons explained at [224]-[227] below, I have found that Colin and John’s contribution to the partnership of the “right to mine or quarry” was, in substance, the assurance that the lessees would permit all of the rights under the private mining agreements to be exercised by and for the benefit of the partnership for the duration of the partnership.

    90. See [34]-[39] above.

    91. Plaintiffs’ closing submissions, paragraph 16; T442.29, T448.38-449.37; defendants’ closing submissions, paragraph 25.

100. Jimmie attended the Grandee Quarry each working day. Colin and John attended less frequently and did not participate in the physical work of quarrying. ^[92]

     92. First plaintiff’s affidavit sworn 7 September 2017, paragraph 31.

101. Mrs Huggard acted as a selling agent for the gabbro mined from the Grandee Quarry. Mrs Huggard notified Jimmie by telephone of the dimensions of stone that she had sold to customers. Jimmie then cut stone blocks to fulfil the customers’ orders and loaded the blocks onto trucks for transport to the customers. ^[93]

     93. First plaintiff’s affidavit sworn 7 September 2017, paragraph 31.

102. Jimmie gave evidence that the market for dimension stone from the Grandee Quarry was inconsistent during the period of the Morris Carpenter Partnership. There was strong demand at times, and no sales at all at other times. [94] Colin did not dispute this evidence, and described Grandee Granite as being in competition with granite quarried and processed in China. [95] In 2002, Jimmie travelled to China together with Colin and Damian to speak with potential buyers of Grandee Granite. [96]

     94. Ibid, paragraph 45.

     95. First defendant’s affidavit sworn 6 February 2018, paragraph 44(d).

     96. First plaintiff’s affidavit sworn 7 September 2017, paragraph 44; First defendant’s affidavit sworn 6 February 2018, paragraph JC44.

103. Customers paid the purchase price for Grandee Granite to Mrs Huggard, who applied the moneys received in the manner set out at [52] above. It is only the additional monthly payments that are the subject of dispute in these proceedings, as I have already noted at [53] above.

104. The evidence includes handwritten records prepared by Mrs Huggard for some months during the period from July 2000 to August 2003. [97] As I have mentioned earlier in these reasons, these records include payment advices addressed to Colin that setting out additional monthly payments made to him totalling $246,324.45 during that period. The monthly amounts varied from between $862.96 to $16,568.28. The average additional monthly payment amount over this period was $6,482.22.

     97. Exhibit 11, pp 5, 8, 15, 21, 23, 28, 33, 39, 45, 51, 57, 63, 74, 79, 80, 88, 94; Exhibit 12, pp 2567, 2573, 2579, 2585, 2592, 2599, 2608, 2615, 2623, 2629, 2638, 2644, 2651, 2658. Although these records are labelled “tax invoices”, it is common ground that they were in fact payment advices issued by Mrs Huggard to Colin: Plaintiffs’ closing submissions, paragraph 18; T313.30-313.47.

95. Colin acknowledged that the additional monthly payments that he received from Mrs Huggard were from the proceeds of sale of granite quarried by the Morris Carpenter Partnership, and that he received those payments in addition to the royalty and lease payments made to him as an owner of Lot 31. He could not recall what the additional monthly payments were for and said that Mrs Huggard would be the only person who could explain it. Colin’s defence went so far as to assert that the payments were made “at the instigation of” Mrs Huggard, but there was no evidence to support this. Colin contended that the monies from which the additional payments were made were not partnership funds. According to Colin, the Morris Carpenter Partnership was only entitled to receive from the sale proceeds of Grandee Granite a fee negotiated with Mrs Huggard per cubic metre of stone quarried. Within the partnership, it was Colin (with the assistance of his wife Carol) who took responsibility for the preparation of the partnership’s financial statements and tax returns and provided information to the partnership’s accountants. Colin did not instruct the accountants to record the additional monthly payments in the partnership’s accounts. He regarded the additional monthly payments as none of Jimmie’s business. That was his response when asked by Jimmie what payments he was receiving. [98]

    98. D1 Defence, paragraph 13M; First defendant’s affidavit sworn 18 September 2020, paragraphs 5-9; T303.38-304.40, 319.27-319.23, 322.20-333.4, 347.18-347.27, 355.20-355.36.

96. The defendants submitted that Jimmie was aware of the additional monthly payments. [99] In support of this submission, the defendants relied on Jimmie’s evidence in cross-examination that:

1. during the period of the Morris Carpenter Partnership, he was always paid a fee per cubic metre for stone that was sold, and the fee was agreed with Mrs Huggard; [100] and

2. he was aware that other payments were made out of the sale proceeds, including payments to Mrs Huggard and the landowners and, by monitoring the market price for granite, he had an idea of what was being paid to the Mrs Huggard and the landowners. [101]

   99. Defendants’ closing submissions, paragraph 24.

   100. T289.40-289.44.

   101. TT289.45-291.5.

107. There is no evidence of the process by which the fee per cubic metre was agreed with Mrs Huggard. However, Jimmie clearly accepted in cross-examination that the fee paid to the Morris Carpenter Partnership was agreed with Mrs Huggard. [102]

     102. T289.40-289.44.

108. Jimmie was aware that Mrs Huggard retained a sales commission plus a royalty or lease premium from the sale proceeds. [103] These proceedings do not involve any dispute concerning those payments to Mrs Huggard.

     103. First plaintiff’s affidavit sworn 7 September 2017, paragraph 31.

109. Jimmie believed that Mrs Huggard deposited the balance of the sale proceeds into the bank account of the Morris Carpenter Partnership, which was operated by Colin and his wife, Carol. From that account, they paid Jimmie a weekly wage and paid other expenses of the partnership. According to Jimmie, Central West kept the balance of the sale proceeds. As I understood his evidence as a whole, Jimmie was referring to his understanding that the balance of the sale proceeds were paid into a bank account that was operated by Colin and Carol, being the Central West side of the Morris Carpenter Partnership, and to which Jimmie had no access. ^[104]

     104. Ibid, paragraph 31.

110. In cross-examination, Jimmie accepted that he knew the price per cubic metre that was being paid to the Morris Carpenter Partnership from time to time, and that he monitored the market prices for granite. He was therefore able to deduce the approximate amount of sale proceeds that was not being paid to the partnership. It is clear from his evidence that he assumed that the landowners were receiving these amounts. Contrary to the submissions made on behalf of the defendants, the evidence does not support a finding that Jimmie knew that Colin was receiving the additional monthly payments over and above royalty and lease payments that he received as an owner of Lot 31. [105]

     105. Ibid, paragraph 48; T289.14-291.4.

111. On the basis of the evidence referred to at [52] and [103]-[104] and [107]-[110] above, I find that Jimmie was not aware of the additional monthly payments made to Colin during the period of the Morris Carpenter Partnership. In fact, those additional monthly payments were not disclosed by Colin’s defence and evidence in these proceedings until Colin served his affidavit sworn on 18 September 2020 during the final hearing.

112. The defendants submitted that the Court should accept Colin’s evidence that Mrs Huggard instigated the additional monthly payments to him. [106] I reject that submission. First, although Colin’s defence pleaded that Mrs Huggard instigated those payments, he did not give evidence to that effect. [107] He described the historical financial arrangements for the Grandee Quarry that were overseen by Mrs Huggard that he says were continued during the Morris Carpenter Partnership. [108] It may be that Mrs Huggard assumed that the Morris Carpenter Partnership was a partnership to act as quarry master (as the previous partnerships appear to have been) and did not extend to the marketing and sale of the granite. If so, Mrs Huggard may have also assumed that Colin was entitled to the additional monthly payments as the lessee under the private mining agreement. However, there is no evidence about whether Mrs Huggard in fact made these assumptions, as she was not called as a witness (despite the plaintiffs indicating during the hearing that they intended to do so). Nor is there any evidence that Colin or any other person provided Mrs Huggard with any information about the partnership or gave her any instructions about the financial arrangements to be made to reflect the partnership agreement. Any such instructions would have been issued by Colin, who managed the bookwork and accounts while Jimmie and Tastex attended to the work of quarrying and preparing the dimension stone for sale. Colin’s evidence is that the historical arrangements simply continued. In those circumstances, the manner in which Mrs Huggard caused the granite sale proceeds to be distributed during the Morris Carpenter Partnership has no rational bearing on the terms of the partnership, which was the subject of a written agreement, the scope of the partnership business or the question whether Colin was entitled to those payments. Colin’s description of the payments as having been “instigated” by Mrs Huggard is both unsupported by the evidence and irrelevant. Mrs Huggard simply continued historical financial arrangements instigated by Colin or members of his family that she was not instructed to change.

     106. Defendants’ closing submissions, paragraph 26.

     107. T332.45-333.4.

     108. See [59] above.

113. For the reasons explained at [215]-[233] below, I have determined that the business of the Morris Carpenter Partnership included not only the extraction, cutting and shaping of granite from the Grandee Quarry, but also the marketing and sale of that finished product. The sale proceeds of that granite were partnership funds, and the additional monthly payments were made out of those funds.

The 2003 stockpile

114. In his first affidavit sworn on 7 September 2017, Jimmie gave evidence that, by the time the Morris Carpenter Partnership came to an end in August 2003, “there was a large volume of second grade rock which I had stockpiled in the quarry, much of which had been buried under shallow mounds of earth”. [109]

     109. First plaintiff’s affidavit sworn 7 September 2017, paragraph 52.

115. Jimmie gave a more detailed description of the 2003 stockpile in his affidavit sworn on 13 February 2020: [110]

“9.   The 2003 Stockpile is comprised of small amounts of first grade rock, larger amounts of second grade rock, boulders, off cuts of rock and overburden. I stockpiled those materials within the quarry in multiple layers of variable depth during the Morris and Carpenter Partnership.

10.   I covered most of the 2003 Stockpile with road base from the quarry, so that machines could drive over it in the course of their mining work. Some of the 2003 stockpiled material is visible now upon the surface of the quarry. Most of the 2003 stockpiled material is located beneath the surface road base.”

110. First plaintiff’s affidavit sworn 13 February 2020, paragraphs 9-10.

116. Jimmie gave no evidence of the estimated volume of second grade rock in the 2003 stockpile. In his affidavit sworn on 13 February 2020, Jimmie deposed: [111]

“I cannot identify a reliable process by which the volume of saleable material within the 2003 Stockpile can be identified, save by excavating that material and physically measuring it.”

111. First plaintiff’s affidavit sworn 13 February 2020, paragraph 11.

117. Even excavation and physical measurement of the stockpiled material would not overcome the problem that, according to Jimmie, approximately half of the area of the 2003 stockpile was placed on top of material that had been stockpiled prior to the commencement of the Morris Carpenter Partnership. [112] It is clear from the evidence that this was not done in any organised or planned way. Rather, Jimmie would push second grade material over the edge of the platform where he was working at any given time and some of the happened to accumulate on top of material had been pushed over the edge of working platforms in the same or a similar location within the quarry in years gone by. [113] Mr Philip Brooke, who worked at the Grandee Quarry from about 1993 until 2005, gave evidence that “we (as in the quarry) were always adding to the pile of second grade rocks when we were trying to quarry the first grade rock or on cutting dimension stone”. Mr Brooke described the second grade rock as “plentiful” and “scattered throughout the quarry” and said that it regularly had to be moved in order to gain better access to new areas for quarrying or to form protective barriers to ensure machinery did not come too close to the edge of a hill. [114] Mr Brooke was not cross-examined.

     112. Ibid, paragraphs 22-23.

     113. First plaintiff’s affidavit sworn 15 August 2019, paragraphs 15-19.

     114. Mr Brooke’s affidavit sworn 12 March 2018, paragraphs 15-16, 19.

118. The defendants’ submissions asserted, without analysis, that Jimmie had affixed the 2003 stockpile to the land by burying it beneath road base. The defendants submitted that the stockpile is therefore part of the land and irrecoverable without an authorisation issued under the Mining Act.

119. Whether the 2003 stockpile has become a fixture and therefore part of the land depends essentially on the intention with which the stockpiled material was left on the land and buried in road base. The intention must be objectively ascertained by reference to the degree of annexation, the object of annexation and any other relevant circumstances. If the material was buried with the intention that it should remain there permanently or for an indefinite or substantial period, that favours the conclusion that the material is a fixture: TEC Desert Pty Ltd v Commissioner of State Revenue (2010) 241 CLR 576; [2010] HCA 49 at [23]-[24] (French CJ, Gummow, Heydon, Crennan and Kiefel JJ).

120. In my opinion, the evidence does not support attributing to Jimmie an intention that the 2003 stockpile would remain buried under the road base material permanently or indefinitely. I refer in particular to the nature of the quarrying process, including the regular movement of second grade material to gain access to new parts of the gabbro deposit within the quarry, and the ready availability of excavators on site to move the 2003 stockpile (or any part of it) as and when required for those operational purposes or if required to fill any orders placed by customers for second grade rock.

121. For those reasons, I reject the defendants’ submission that the 2003 stockpile is part of the land and cannot be extracted without a mining lease or other authorisation. However, the difficulties in identifying the 2003 stockpile and separating it from material excavated and stockpiled before the Morris Carpenter Partnership began, and then identifying and quantifying any saleable material within it, remain.

122. According to Mr Wayne Rowe, a registered land surveyor whose report was tendered by the plaintiffs, it is in fact impossible to quantify the 2003 stockpile. [115] Mr Rowe took aerial photographs of the Grandee Quarry site and relied on Jimmie’s identification of the location of the 2003 stockpile on those photographs. On that basis, Mr Rowe calculated the area of the 2003 stockpile as 20,085m². Mr Rowe was asked to express his opinion about the probable volume of the 2003 stockpile. He gave evidence that the volume of the stockpiled material in the 20,085m² area identified by Jimmie as the 2003 stockpile: [116]

“… cannot be calculated using only the current survey which shows the existing stockpiled rock. For an accurate volume to be calculated a contour survey would have been required prior to any stockpiled material being placed on site and a calculation being made between the two contour surveys to generate a volume.”

115. Exhibit 3.

116. Exhibit 3, p 3 (under the heading “Answer Item A”). Mr Rowe was not cross-examined.

123. The plaintiffs submitted that the 2003 stockpile was an asset of the Morris Carpenter Partnership at the end of the partnership, relying on the following evidence of Colin in cross-examination: [117]

     117. T355.45-356.26; plaintiffs’ closing submissions, paragraph 50.

“Q.    Would you agree that the Morris & Carpenter partnership was determined, that is came to an end, at some stage in 2003?

A.    Thereabouts, yes.

Q.    About sometime around the middle of 2003?

A.    I can't recall exactly, but 2003.

Q.    So at that time, in 2003 when the partnership was determined, you knew there was a, what Mr Carpenter calls a 2003 stockpile?

A.    Yes.

Q.    That was an asset of the partnership, correct?

A.   I - no. I understood it belonged, because of legislation, to the property owners.

Q.    In 2003?

A.    Sorry. No. The legislation was in 2009. Not the entire, not, not the entire stockpile because there had been quite a large amount of it pre‑quarried before Morris & Carpenter, but, but the Morris, the blocks, the second grade blocks quarried by Morris & Carpenter belonged to the Morris & Carpenter partnership, yes.

Q.    And when the partnership was determined, the value of those blocks was never assessed, correct?

A.    That's correct.

Q.    And never accounted for between Tastex and the fourth defendant, correct?

A.    Correct.”

124. In giving that evidence, Colin did accept that the material quarried by the partnership belonged to the partnership. However, Colin’s evidence does not overcome the impossibility of identifying and quantifying that material, which was the subject of Mr Rowe’s evidence referred to above. That problem existed at the end of the Morris Carpenter Partnership in 2003, and has been compounded by the further accumulation of second grade material on the land during the September 2003 to December 2014 period.

End of the Morris Carpenter Partnership

125. It is common ground that Jimmie and Colin made a mutual decision to end the Morris Carpenter Partnership in about August 2003 after the partnership had struggled financially for a period of time. [118]

     118. First plaintiff’s affidavit sworn 7 September 2017, paragraph 48; First defendant’s affidavit sworn 6 February 2018, paragraph JC48; First plaintiff’s affidavit sworn 15 August 2019, paragraph 21.

126. The financial report for the partnership for the year ended 30 June 2003 recorded that the partnership had traded at a profit of $25,784 for that year (before tax) and had a net asset deficiency of $26,767. [119] As I have already mentioned, the financial report was prepared solely on the basis of information provided by Colin and his wife, Carol. Jimmie had no involvement in the preparation of the financial report.

     119. Exhibit 10, pp 1286-1293.

127. The partnership assets included plant and equipment, and the liabilities included finance charges in relation to that plant and equipment. When the partnership came to an end, Jimmie and/or Tastex retained that plant and equipment and took over responsibility for making the payments under the corresponding finance leases. That plant and equipment was used for the ongoing quarrying activities at Grandee Quarry referred to at [167]-[170] below. [120]

     120. T83.44-84.35; see also first plaintiff’s affidavit sworn 7 September 2017, paragraphs 51, 54-55.

128. Jimmie gave evidence that there was no formal winding up of the affairs of the partnership after it came to an end in about August 2003. [121] As the plaintiffs submitted, the financial report and tax return for the year ended 30 June 2003 does not constitute a final account of the partnership for the purpose of s 44 of the Partnership Act 1982 (NSW).

     121. First plaintiff’s affidavit sworn 7 September 2017, paragraph 52.

129. The financial report for the year ended 30 June 2003 did not include the right to mine as an asset of the Morris Carpenter Partnership. The plaintiffs submitted that the Court should infer that no account was taken of the right to mine, [122] which was an asset of the partnership as Colin and John had contributed that right to the partnership at its inception. [123] As I have already mentioned, I have found that the right to quarry was not an asset of the Morris Carpenter Partnership at the end of the partnership. My reasons for that finding are explained at [223]-[227] below.

     122. Plaintiffs’ closing submissions, paragraph 52.

     123. First defendant’s affidavit sworn 6 February 2018, paragraph JC30.

130. The Morris Carpenter Partnership financial report for the year ended 30 June 2003 did not include any stockpiled material as a partnership asset. As I have referred to above, it is common ground that no account was taken of the 2003 stockpile after the partnership ended. [124]

     124. First plaintiff’s affidavit sworn 15 August 2019, paragraph 21; First defendant’s evidence in cross-examination referred to at [117] above.

131. In the course of an exchange of solicitors’ correspondence in August 2019 concerning the preparation of this matter for hearing, the defendants’ solicitors requested that the plaintiffs clarify the basis on which an accounting is sought and asked whether it was alleged that no final accounts had been settled for the partnership. [125] The plaintiffs’ former solicitors replied, relevantly: [126]

“At the risk of repeating the Plaintiffs’ frequently stated position, we confirm:

Accounting:

The Plaintiffs require that an account be taken of the 2003 stockpile in the quarry. On our instructions, other issues arising from the dissolution of the Morris and Carpenter partnership have been resolved between them.

The Plaintiffs seek such orders as will facilitate the sale of the 2003 stockpile and the distribution of the net sale proceeds in accordance with the partnership agreement.”

125. Exhibit 12, pp 2698-2699.

126. Exhibit 12, pp 2700-2701.

132. The defendants rely on this as an admission by the plaintiffs that the 2003 stockpile was the only partnership asset in respect of which no account has been taken. [127]

     127. Defendants’ closing submissions, paragraph 9.

133. The defendants also emphasise that, in cross-examination, Jimmie accepted that he was satisfied with the final arrangements that were put in place in relation to the financial affairs, assets and liabilities of the partnership when it came to an end in 2003. [128]

     128. T84.18-84.21.

Agreement entered into in 2003

134. It is common ground that the plaintiffs and Colin entered into an agreement in relation to the quarrying of granite after the conclusion of the Morris Carpenter Partnership. The dispute relates to the terms of that agreement and the legal consequences of the legislative changes that rendered the ongoing quarrying activities unlawful from 15 November 2011. [129]

     129. See [41]-[48] and [67]-[80] above.

215. This is no dispute that the additional monthly payments were made to Colin out of the net sale proceeds of granite that had been extracted, cut and shaped by the Morris Carpenter Partnership. The question is whether those net sale proceeds were partnership moneys. That turns on whether, on the proper construction of the partnership agreement, the partnership business was limited to extracting the granite and cutting and shaping it in preparation for sale, or whether it extended to the marketing and sale of the granite.

216. I have referred to the terms of the partnership agreement and the contributions of each partner to the partnership at [92]-[99] above.

217. The partnership agreement did not describe the partnership business except in the recitals, which referred to the parties’ intention to “carry on in partnership the business of quarrying”.

218. Colin and Central West relied on four matters in submitting that the partnership business was limited to the extraction, cutting and shaping of granite and did not extend to marketing and sale of the granite.

219. First, Colin and Central West submitted that Jimmie’s evidence of his discussion with Colin which preceded the partnership agreement was limited to running the quarry and doing the quarrying. I reject that submission because it misstates the evidence. I have referred to the evidence of the conversation at [91] above. On Jimmie’s account of the conversation, Colin referred to the running of the quarry as the contribution that Tastex would make to the partnership. The reference to the bookwork and marketing was plainly a reference to the contribution to be made by Colin and John (through their company, Central West).

220. Colin and Central West also relied on evidence given by Jimmie in which he described the quarrying business of the partnership as being conducted on Lot 31 and Lot 134. In my opinion, that evidence merely describes the location where the work of extracting the granite (which was essential to the partnership on any view of the scope of the partnership business) was carried out. It says nothing about whether the business included the sale and marketing of the granite. In any event, the scope of the partnership business falls to be determined in accordance with the partnership agreement, construed in accordance with the principles applicable to the interpretation of commercial contracts. The subjective views of one partner are not relevant to that exercise.

221. Second, it was submitted on behalf of Colin and Central West that there was no assignment of the lessee’s rights under the private mining agreements to the Morris Carpenter Partnership and that Colin’s evidence that he and John contributed the right to mine merely refers to an implied licence for the Morris Carpenter Partnership to access the Grandee Quarry. As I have mentioned earlier in these reasons,[216] Tastex contends that the right to mine involved all of the rights under the private mining agreements and that those rights were an asset of the Morris Carpenter Partnership in respect of which an account was required to be taken when the partnership came to an end.

     216. See [98] above.

222. I accept that there is no evidence that the rights of the lessees under the private mining agreements were assigned by the lessees to the Morris Carpenter Partnership. However, it does not follow that the partnership business was limited in the manner for which Colin and Central West contend. The partnership agreement was made in circumstances where, for many years, the lessees had marketed and sold on their own account granite mined by third parties. Some of those third parties were partnerships, but members of the Morris family (or corporate entities controlled by them) had not been members of those partnerships. Tastex owned the equipment required to continue extracting the granite from the Grandee Quarry after the end of its partnership with Casalga Pty Ltd in 1996. [217] If the partnership business was limited to the extraction, cutting and shaping of granite, Central West had no meaningful contribution to make to the business. [218]

     217. See [88] above.

     218. The crane and compressor contributed by Central West merely added to a crane and three compressors already owned by Tastex: see [98] above. There is no evidence that the crane and compressor contributed by Central West were of any particular importance or value to the partnership business.

223. Rather than engaging Tastex to provide quarrying services, Central West entered into a partnership agreement with Tastex. According to Colin’s own evidence, he and John contributed the “right to mine or quarry” to the partnership. This evidence blurs the lines between Central West (which was entering into the partnership), Colin and John (who were the directors of Central West at that time) and the lessees under the private mining agreements (Kathryn, Alison and John as joint tenants under the first private mining agreement at the time the partnership commenced, and Colin under the second private mining agreement from 1 January 1998). As I have said at [98] above, I understand Colin’s evidence to mean that Colin and John caused the lessees to permit the “right to mine or quarry” to be exercised by the partnership when it was established in 1996 and that Colin continued to ensure that the partnership was permitted to exercise that right after John’s death in 1997.

224. Having regard to the fact that the Morris Carpenter Partnership involved a Morris family entity entering into a partnership with the entity doing the physical quarrying work for the first time in the very long history of the Grandee Quarry, I find that the contribution of “the right to mine or quarry” constituted more than merely permitting Tastex to enter onto Lot 31 and Lot 134 and extract granite. That right had been granted to the previous quarry masters without any partnership. I find that the contribution was, in substance, ensuring that the lessees permitted all of the rights under the private mining agreements to be exercised by and for the benefit of the partnership for the duration of the partnership. This included the right to sell the granite extracted by the partnership from the Grandee Quarry and all of the other rights under clause 3 of the private mining agreements referred to at [29] above. Those rights were subject to the other provisions of those agreements including the prohibition on underground workings in clause 2. Thus, the contribution facilitated the Morris Carpenter Partnership extracting granite and selling the granite for the benefit of the partnership.

225. Whilst the Morris Carpenter Partnership was terminable on three months’ notice, the term of the second private mining agreement did not expire until 2012. It is inherently unlikely in those circumstances that the lessees intended to assign their rights under the private mining agreements to the partnership irrevocably. Even if they had intended to do so, they took no steps to make any such assignment and they were not parties to the partnership agreement. I reject the plaintiffs’ submission that the “right to mine or quarry” contributed to the partnership was an asset that remained with the partnership to be accounted for between the partners when the partnership came to an end. As I have found above, the contribution made by Colin and John was to ensure that that the lessees permitted their rights under the private mining agreements to be exercised by and for the benefit of the partnership for the duration of the partnership.

226. Third, Colin and Central West submitted that the partnership business is described in the partnership agreement as “quarrying”, not “quarrying and marketing”. This submission relies solely on one potential literal meaning of the word “quarrying” (namely extracting, cutting and shaping), ignoring the another potential meaning (extracting, cutting and shaping and selling). The submission also ignores the historical matters and the nature of the parties’ respective contributions to the partnership referred to at [224]-[227], which were circumstances known to both partners at the time the partnership agreement was entered into. Those circumstances form part of the context in which the words “the business of quarrying” in the partnership agreement fall to be construed. Applying the established principles applicable to the construction of commercial contracts such as this partnership agreement, a reasonable business person in the position of the parties with knowledge of the matters referred to at [224]-[227] above would have understood those terms to mean the business of extracting, preparing for sale, marketing and selling granite from the Grandee Quarry: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ); Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [78] (Gageler, Nettle and Gordon JJ); Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16] (Kiefel, Bell and Gordon JJ).

227. I accept that knowledge of s 11 of the Mining Act should also be attributed to the reasonable business person for the purpose of construing the partnership agreement. However, contrary to the submissions made on behalf of Colin and Central West, I do not consider that s 11 supports the construction of the partnership agreement for which they contend. Rather, s 11 begs the question: by whom or on whose behalf was the granite mined? By reason of Colin and John’s contribution to the Morris Carpenter Partnership that I have referred to above, it was mined by and on behalf of the partnership.

228. Fourth, Colin and Central West submitted that the Morris Carpenter Partnership was a partnership at will. As I have referred to at [96] above, either partner was entitled to withdraw from the partnership on three months’ notice. Upon the withdrawal of one partner, the partnership agreement conferred on the remaining partner an option to purchase the withdrawing partner’s interest and set out a process by which the value of that interest and the amount payable were to be determined. In my opinion, these provisions are not relevant to the question of the scope of the partnership business. The purchase and valuation process would work equally well, irrespective of whether the business extended to the marketing and sale of the granite. However, the ability of either partner to withdraw from the partnership on three months’ notice is relevant to my findings of fact above about the substance of the “right to mine or quarry” that Colin and John contributed to the Morris Carpenter Partnership.

229. For those reasons, I reject the submissions made on behalf of Colin and Central West that the four matters referred to above establish that the partnership business was “a service contract for contract quarrying”. I find that the business of the Morris Carpenter Partnership extended beyond contract quarrying and included the marketing and sale of the granite extracted from the Grandee Quarry.

230. For completeness, I note that in support of their contention as to the limited scope of the partnership business and in disputing the plaintiffs’ allegation that the additional monthly payments were fraudulent, Colin and Central West relied on the evidence that the partnership was paid a fee struck with Mrs Huggard per cubic metre of granite sold. It was submitted this and other evidence to which I have referred at [107]-[110] above supports a finding that Jimmie and Tastex knew that net sale proceeds were being retained by Colin and/or Central West. For the reasons explained at [111] above, I have rejected that submission and found that Jimmie and Tastex were not aware of the additional monthly payments.

231. For those reasons, I find that the sale proceeds of granite mined by the Morris Carpenter Partnership were partnership monies and the additional monthly payments made to Colin were paid out of partnership monies.

232. That disposes of all but one of the submissions made on behalf of Colin in defence to Tastex’s claim for moneys had and received. Colin did not rely on any defence of change of position or any limitation defence. The only issue remaining for consideration is Colin’s submission that the claim in money had a received is misconceived because it ignores the existence of the Morris Carpenter Partnership and the interests of the partners and seeks an order for payment directly to Tastex as one of the partners.

233. I accept that submission for the following reasons.

234. The additional monthly payments were made out of the sale proceeds of granite mined by the Morris Carpenter Partnership after the various partnership expenses had been paid. [219] The amounts of those payments represented profits of the partnership, in which Tastex and Central West were entitled to share equally under the terms of the partnership agreement.

     219. See [52] above.

235. The plaintiffs pleaded that Colin accepted the additional monthly payments knowing that they were wrongful, in the sense that they were paid in breach of Central West’s fiduciary obligations owed to the partnership and/or they were fraudulent. [220] The contention that the payments were “fraudulent” involved, in substance, a contention that Colin knew that the payments he received were made out of partnership funds to which Tastex and Central West were entitled. The plaintiffs’ submissions were devoid of any analysis as to how this gave rise to a restitutionary claim for money had and received, as opposed to a claim for knowing receipt of partnership monies paid in breach of a fiduciary obligation owed by Central West to Tastex as its partner. After summarising the evidence, the plaintiffs simply submitted that “the appropriate finding of fact is that the ‘extra payments’ made to Colin were partnership income and belonged to the partnership” and that Colin’s conduct in taking those payments was fraud or wrongful “and Colin is liable to repay 50% to Tastex as money had and received”. [221] As noted at [56] above, no Barnes v Addy claim was pleaded.

     220. 3FASOC, paragraphs 13G-13M.

     221. Plaintiffs’ closing submissions, paragraphs 32-33; see also T450.25-450.45.

236. As the High Court said in Farah Constructions Pty Ltd v Say-Dee Pty Ltd, unjust enrichment is not a definitive legal principle according to its own terms and is not identified by subjective evaluation of what is unfair or unconscionable: (2007) 230 CLR 89; [2007] HCA 22 at [150]-[151] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). Their Honours continued (at [151]):

“The areas in which the concept of unjust enrichment applies are specific and usually long-established. Recipient liability for breach of trust or fiduciary duty has not been one of them.”

239. For those reasons, Colin’s receipt of the additional monthly payments was not unjust in the requisite sense for the purpose of a claim for money had and received, and that claim fails. The plaintiffs did not press any claim against Central West for breach of fiduciary duty. [222]

     222. 3FASOC, paragraphs 13A-13F; T445-446.

240. That conclusion renders it unnecessary to address questions of quantum. However, if the plaintiffs’ claim against Colin for money had and received had succeeded, I would have limited the order for restitution to $123,162.22, being 50 per cent of the total additional monthly payments proved to have been made to Colin out of partnership money during the period from July 2000 to August 2003. It will be recalled that there is no evidence of the amount of any additional monthly payments made to Colin during the period from the commencement of the partnership until June 2000. In circumstances where the plaintiffs departed from their stated intention of calling Mrs Huggard to give evidence, and offered no explanation from that change of course, I would not have accepted the plaintiffs’ submissions that the Court should infer that Colin received a total amount in that earlier period equivalent to the average monthly amount during the later period multiplied by the number of months in the earlier period. There is no rational basis for such an inference, having regard to Dr Hensel’s evidence of the volatility of market prices for granite. To quantify an award based on an inference lacking any rational basis would risk an order for restitution being unjust.

Tastex’s claim for the declaration and the taking of an account

241. The plaintiffs’ closing submissions made no reference to the claim for a declaration that the Morris Carpenter Partnership is dissolved. In circumstances where it is common ground that the partnership came to an end in August 2003, such a declaration would have no utility. Even if the plaintiffs had not impliedly abandoned the claim for the declaration in closing submissions, I would have declined to exercise the Court’s discretion to make the declaration: Sidameneo (No. 456) Pty Ltd v Alexander (No. 2) [2012] NSWCA 87 at [16]. No declaration will be made.

242. I now turn to Tastex’s claim for an order for the taking of accounts of the Morris Carpenter Partnership. Tastex submitted that an order for the taking of accounts is a discretionary remedy that must serve a useful purpose. [223] In my opinion that is correct, even where the order is sought in aid of partners’ rights to have partnership property applied in accordance with s 39 of the Partnership Act: Mulherin v Quinn Villages Pty Ltd [2007] QSC 231 at [22]; Wang v Cai [2021] NSWSC 1162 at [358]. That is to say, an order for the taking of accounts must serve some useful purpose in connection with s 39.

     223. Plaintiffs’ closing submissions, paragraph 55.

243. The plaintiffs submitted that the purpose of the order sought “is to account for the value of the 2003 Stockpile and the value of the right to quarry”. [224]

     224. Plaintiffs’ closing submissions, paragraph 56.

244. I reject the submission that an order for the taking of accounts would serve those purposes.

245. On the basis of the plaintiffs’ own evidence referred to at [87] and [114]-[124] above, it is not possible to identify the 2003 stockpile as distinct from material that accumulated on Lot 31 and Lot 134 prior to the Morris Carpenter Partnership and during the period of more than a decade after the partnership came to an end. It is therefore not possible to identify the quantity of any saleable material within the 2003 stockpile (if any) or the value of that material as at the end of the Morris Carpenter Partnership. Accordingly, an order for the taking of accounts would not serve the first purpose identified by Tastex.

246. As to the second stated purpose, the “right to mine or quarry” was not an asset of the Morris Carpenter Partnership at the end of the partnership for the reasons explained at [223]-[227] above.

247. Those are sufficient reasons to reject Tastex’s claims for an order for the taking of accounts. It is not necessary to determine Central West’s defences of settled accounts and the limitation defence. Had it been necessary to do so, I would have rejected the defence of settled accounts because there has not been a settlement of all accounts, it being common ground that no account was ever taken in respect of the 2003 stockpile. However, I would have held that the claim for the taking of accounts, made some thirteen years after the Morris Carpenter Partnership came to an end, was out of time by reason of s 15 of the Limitation Act 1969 (NSW), either by direct application or applied in equity by analogy. I would have held that there was no fraudulent concealment that defeated the limitation defence by operation of s 55 of the Limitation Act or in equity. The alleged fraudulent concealment related only to the additional monthly payments. Tastex’s recent discovery of those payments during the hearing of these proceedings has nothing to do with its delay in seeking an order for the taking of accounts of the partnership. The existence of a claim for an order for the taking of accounts has not been concealed from Tastex.

Alleged repudiation of the Quarrying Agreement

248. I have found that the parties did not enter into the alleged Quarrying Agreement on the terms claimed by the plaintiffs. Rather, they entered into an agreement that the plaintiffs would mine, cut and shape granite in preparation for sale, Colin would use reasonable efforts to sell the first grade granite and would pay the plaintiffs a fee per cubic metre of granite sold, with the amount of the fee to be determined by the plaintiffs and Mrs Huggard at the time of sale. [225]

     225. See [166] above.

249. As referred to at [74] above, the plaintiffs allege that Colin has repudiated that agreement because he is not ready, willing or able to perform his obligation “to sell the 2014 stockpile” due to his lack of legal authority to sell the 2014 stockpile since November 2011 without the permission of Kathryn and Alison (to the extent that the stockpile is located on Lot 31) and Mr and Mrs Dunkley (to the extent that the stockpile is located on Lot 134). The plaintiffs did not contend that Colin requires an authorisation under the Mining Act (as amended) to sell the stockpile.

250. The plaintiffs have failed to prove the alleged repudiation. Colin’s obligation under the agreement was not to sell the granite, but to use reasonable efforts to sell the first grade granite. The evidence does not establish that he has failed to use reasonable efforts, much less that any such failure amounts to repudiation of the agreement. It is uncontroversial that some sales have been made by Colin and that the plaintiffs have received payment in respect of those sales, with the exception of the two sales made by Colin referred to at [188] above for which the plaintiffs alleged but failed to prove that they did not receive payment. The evidence does not establish whether the lack of further sales is attributable to the state of the market, or Kathryn and Alison’s conduct in selling blocks of granite to customers who might otherwise have purchased from Colin,[226] or a failure on Colin’s part to make reasonable efforts (by marketing the first grade granite and obtaining the permission of the owners of Lot 134 to enter their land in order to remove the granite for sale), or some combination of one or more of these factors. The plaintiffs’ submissions wrongly assume that Colin would have to negotiate to acquire the 2014 stockpile from Kathryn and Alison (as to 50 per cent of the stockpiled material on Lot 31) and Mr and Mrs Dunkley (as to the stockpiled material on Lot 134). [227]

     226. See [178] above.

     227. See [171] above.

251. The plaintiffs’ submissions made a passing reference to the exploration licence granted to Marble Craft as putting beyond doubt that Colin did not intend to obtain the legal right to sell the 2014 stockpile. [228] However, the rights granted to Marble Craft under that exploration licence are to explore for specified minerals, including dimension stone. The exploration licence does not authorise Marble Craft to remove and sell any dimension stone from the land. [229] As I have found at [189]-[190] above, Colin has made payments to the plaintiffs in respect sales of granite made in 2016, after the exploration licence was granted to Marble Craft.

     228. Plaintiffs’ closing submissions, paragraph 108.

     229. Exhibit 10, pp 346-349.

252. The plaintiffs also rely on Colin’s failure to take up two opportunities to sell Grandee Granite to customers with whom the plaintiffs were negotiating in July and August 2019. [230] This is misconceived, as these opportunities arose several years after the plaintiffs say they had already accepted the alleged repudiation by commencing these proceedings. In any event, the plaintiffs’ correspondence informing Colin about the July 2019 opportunity was silent as to price. In those circumstances, Colin’s failure to accept the opportunity cannot be said constitute a failure to use reasonable efforts to sell the first grade material from the 2014 stockpile. The plaintiffs informed Colin that the August 2019 opportunity was for a sale at $508m³, well below the $600m3 that the plaintiffs were seeking to change Colin for extracting the granite from the Grandee Quarry towards the end of 2014. There is no evidence as to whether $508m³ was a reasonable price in the market as at August 2019. An obligation to use reasonable efforts to sell the first grade granite does not require sales at prices below reasonable market prices.

     230. Plaintiffs’ closing submissions, paragraphs 86-89; Exhibit 10, pp 1317-1320.

253. That is sufficient to dispose of the plaintiffs’ claim for damages for repudiation of the alleged Quarrying Agreement. However, even if the plaintiffs had proved that Colin repudiated the agreement that was entered into at some time after September 2003, I would have declined to award any damages in favour of the plaintiffs due to their failure to adduce evidence of:

1. the estimated volume of the 695.367m³ 2014 stockpile that remained available for sale after the sales made by Colin from which he made payments to the plaintiffs, and after the sales made by Kathryn and Alison (in respect of which the plaintiffs have no adduced no evidence about whether they have received payment as part of their settlement of these proceedings with Kathryn and Alison); and

2. the estimated price or prices at which the remaining first grade material in the stockpile would be sold on the market and the estimated fee that would be likely to have been agreed to be paid to the plaintiffs in respect of those sales.

254. The plaintiffs’ submissions did not address either of these two matters. The plaintiffs simply presented a damages calculation based on a volume of 4,000m³ (which I have rejected for the reasons explained at [174]-[186] above), and a price of $300 per cubic metre on the basis that this was the rate agreed between the parties for second grade stone (which I have also rejected for the reasons explained at [134]-[166] above) or alternatively $250 per cubic metre on the basis that this was the upper end of the price range that Jimmie asserted was paid to the plaintiffs for second grade stone during the period after the partnership ended (as to which, see [167]-[170] above).

255. The plaintiffs emphasised that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can, even if some guess work may be involved. It was submitted that the Court must do the best it can in the present case with the evidence available. [231] I reject that submission. Whilst mere difficulty in estimating damages does not relieve the Court from the obligation to estimate them as best it can, the Court should decline to estimate damages where the evidence called on behalf of the claimant fails to provide any rational basis for a proper estimate: Troulis v Vamvoukakis[1998] NSWCA 237 (Gleeson CJ, Mason P and Stein JA agreeing); see also Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257; [2003] HCA 10 at [38] (Hayne J). In this case, for the reasons already explained above, the plaintiffs have failed to adduce evidence that provides a rational basis for estimating, even with some degree of guess work, the damages that they claim to have suffered as a result of Colin’s alleged repudiation of the agreement made after the end of the partnership.

     231. Plaintiffs’ closing submissions, paragraphs 90-112.

256. For all of those reasons, the plaintiffs’ claim for against Colin for alleged repudiation of the Quarrying Agreement fails.

2014 stockpile sales

257. For the reasons explained at [189]-[190] above, the plaintiffs’ claims against Colin for alleged breach of the Quarrying Agreement in relation to two sales after 2014 fails.

258. The plaintiffs’ claim against Marble Craft for damages for conversion in relation to the three sales referred to at [191]-[193] also fails in the absence of any suggestion that the plaintiffs had an immediate right to possession of the stockpiled material at the time of the sales in 2016. Bunnings Group Ltd v CHEP Australia Ltd (2011) 82 NSWLR 420; [2011] NSWCA 342 at [129] (Allsop P, Macfarlan and Giles JJA agreeing). The plaintiffs claim only a contractual right as against Colin to payment out of the sale proceeds of stockpiled granite.

Alleged repudiation of Future Mining Agreement

259. The plaintiffs’ claim against Colin for damages for alleged repudiation of the Future Mining Agreement fails because, for the reasons explained at [134]-[166] above, the plaintiffs have failed to prove that they entered into that agreement with Colin.

260. Even if I had found that the plaintiffs and Colin had entered into the Future Mining Agreement, I would have rejected the plaintiffs’ contention that Colin repudiated that agreement by requiring quarrying activities to cease when he became aware that those activities were unlawful. As a consequence of the amendments to the Mining Act that commenced on 15 November 2010, neither the plaintiffs nor Colin were able to perform their respective obligations under any such agreement. It was in those circumstances that Colin telephoned Jimmie and told him that the “mining licence” had expired and told him to remove Tastex’s equipment and cease quarrying. [232] In my opinion, that would not constitute repudiation by Colin of any Future Mining Agreement (if such an agreement existed). A reasonable person in the plaintiffs’ position would have understood Colin’s communication to be conveying the need for both parties to comply with the law (as amended), rather than renouncing Colin’s obligations under the alleged Future Mining Agreement: Koompahtoo Local Aboriginal Land Council v Sanpine Pty Ltd (2007) 233 CLR 115; [2007] HCA 61 at [44] (Gleeson CJ, Gummow, Heydon and Crennan JJ). In my view, the circumstances would enliven the doctrine of frustration rather than repudiation. Neither the plaintiffs nor Colin relied on the doctrine of frustration, but that does not make the plaintiffs’ submissions in relation to repudiation more persuasive.

     232. First plaintiff’s affidavit sworn 7 September 2017, paragraph 192.

261. Even if I had found that the plaintiffs and Colin entered into the Future Mining Agreement and that Colin had repudiated that agreement, I would have declined to award damages on the basis that the plaintiffs’ evidence fails to provide any rational basis for a proper estimate of the quantum of damages, even allowing for future-looking nature of the assessment and the requirement for some guesswork: see the authorities referred to at [255] above. The fundamental shortcoming in the plaintiffs’ evidence was that they failed to establish a rational basis for estimating the quantity of dimension stone remaining to be mined at the Grandee Quarry [233] and the extent to which such stone would be of first grade or second grade quality. [234]

     233. Including, if the estimate takes into account any underground deposit, the likelihood of underground mining being permitted in the future notwithstanding that it was excluded under the private mining agreements.

     234. See [197]-[213] above.

CONCLUSION AND ORDERS

262. For all of the foregoing reasons, each of the plaintiffs’ claims fails and there will be an order dismissing the proceedings. Ordinarily, costs would follow the event and the plaintiffs would be ordered to pay the costs of the first, fourth to seventh and eighth to ninth defendants. I am not presently aware of any reason why such an order should not be made. However, I will allow the parties the opportunity to be heard about costs, including the eighth and ninth defendants who indicated that they would wish to be heard about the costs orders to be made at the conclusion of the proceedings.

263. The order and directions of the Court are as follows:

1. Order that the proceedings are dismissed, save in relation to the question of costs which is reserved.

2. Direct the plaintiffs and the first, fourth to seventh and eighth to ninth defendants to file and serve by 4pm on 28 January 2022 written submissions of no more than 3 pages in length in relation to the costs of the proceedings.

3. Direct that any party wishing to reply to any other party’s submission in relation to costs file and serve a reply submission of no more than 3 pages in length by 4pm on 4 February 2022.

4. Reserve the question of costs for determination on the papers.

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Endnotes

Decision last updated: 23 December 2021