Cheng v Lam [No 2]

[2018] WASC 199

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CIVIL

CITATION:   CHENG -v- LAM [No 2] [2018] WASC 199

CORAM:   CHANEY J

HEARD:   9, 16-20 & 24 APRIL 2018

DELIVERED          :   28 JUNE 2018

PUBLISHED           :   28 JUNE 2018

FILE NO/S:   CIV 1706 of 2015

BETWEEN:   MARY YUEN SHAN CHENG

Plaintiff

Applicant

AND

FRANCIS HUNG LAM

First Defendant

ANDREA MAN YEE CHENG

Second Defendants

Applicant

FRANCIS HUNG LAM

First Plaintiff by Counterclaim

ANDREA MAN YEE CHENG

Second Plaintiff by Counterclaim

AND

MARY YUEN SHAN CHENG

First Defendant by Counterclaim

CHAN THANH LAM

Second Defendant by Counterclaim

DAVID CUONG CHAN LAM

Third Defendant by Counterclaim

TINH AU

Fourth Defendant by Counterclaim

Catchwords:

Partnership - Series of joint property developments - Whether developments carried out under single partnership agreement - Whether series of partnerships - Different participants in some developments - Liability to account - turns on own facts

Legislation:

Nil

Result:

Orders for accounts to be taken

Category:    B

Representation:

Original Action

Counsel:

Plaintiff	:	Mr M A Tedeschi
Applicant	:
First Defendant	:	Mr P G McGowan
Second Defendants	:	Mr P G McGowan
Applicant	:

Solicitors:

Plaintiff	:	G A Lacerenza & Associates
Applicant	:
First Defendant	:	G V Lawyers Pty Ltd
Second Defendants	:	G V Lawyers
Applicant	:

Counterclaim

Counsel:

First Plaintiff by Counterclaim	:	Mr P G McGowan
Second Plaintiff by Counterclaim	:	Mr P G McGowan
First Defendant by Counterclaim	:	Mr G A Lacerenza
Second Defendant by Counterclaim	:	No appearance
Third Defendant by Counterclaim	:	No appearance
Fourth Defendant by Counterclaim	:	No appearance

Solicitors:

First Plaintiff by Counterclaim	:	GV Lawyers
Second Plaintiff by Counterclaim	:	GV Lawyers
First Defendant by Counterclaim	:	G A Lacerenza & Associates
Second Defendant by Counterclaim	:	No appearance
Third Defendant by Counterclaim	:	No appearance
Fourth Defendant by Counterclaim	:	No appearance

Case(s) referred to in decision(s):

Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321

Fazio v Fazio [2012] WASCA 72

Juul v Northey [2010] NSWCA 211

United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1; [1985] HCA 49

CHANEY J:

Introduction

1. The claims in these proceedings arise from a breakdown in a family arrangement which involved investments in property developments over a period of about 12 years between 2001 and 2012. 

2. The parties are all related and it is convenient to refer to them by the names that they apparently usually use and by which they were referred at trial.  No disrespect is intended by that approach.

3. The plaintiff, Mary Yuen Shan Cheng (Mary) is the former wife of the second defendant by counterclaim, Chan Thanh Lam (Chan).  Their marriage came to an end in 2012.  The first defendant, Francis Hung Lam (Frank) and the second defendant, Andrea Man Yee Cheng (Andrea) are husband and wife.  Frank is the brother of Chan.  The third defendant by counterclaim, David Cuong Chan Lam (David) is a brother of Chan and Frank.  The fourth defendant by counterclaim, Tinh Au (Ivan) is an uncle of Chan, Frank and David.

4. Following the breakdown of the plaintiff's marriage, proceedings for property settlement were instituted by Mary in the Family Court of Western Australia (Family Court proceedings).  Frank, Andrea and a company controlled by them, Chemech Pty Ltd, were also respondents with Chan to the Family Court proceedings.  Another company through which Chan conducted business, CMF Engineering Pty Ltd, was also a respondent.  It appears that the Family Court proceedings are yet to be finalised because of uncertainty as to the extent of the property of the parties of the marriage.  That uncertainty arises because of the unresolved questions as to entitlements to the proceeds of the family property investments.  I understand that these proceedings are intended to clarify that position.

5. The case concerns the terms under which the purchase and development, or proposed development, of a number of properties were undertaken, and the terms of an arrangement which resulted in some development of a ninth property (Spencer Avenue property).  It is common ground that it is necessary for an account to be taken between the plaintiff and the defendants once findings are made as to the terms of their agreements to develop the properties.

6. In her statement of claim, as it was finally amended at trial, the plaintiff contended that four projects were undertaken pursuant to an oral partnership agreement made in or about September 2001.  She sought a declaration as to the existence of a partnership on the terms she specified, and for an order that the defendants account to her in relation to the partnership projects.

7. The defendants deny that there was an agreement on the terms claimed by the plaintiff, but plead that there were eight development projects for which an account must be taken on the basis of separate agreements in relation to each project.  The separate agreements are said to be substantially on the same basic terms other than as to the participants in each project.  The defendants counterclaim for declarations as to the terms of the agreements and for an order for an account to be taken on each project.  As discussed below, a claim for an account in relation to the Spencer Avenue property was abandoned by the defendants at trial.

8. In her initial reply and defence to counterclaim, the plaintiff denied that the additional property developments referred to by the defendants formed any part of a partnership or joint venture.  In subsequent amendments to that pleading, culminating in  her further amended reply and defence to counterclaim (FARDC), the plaintiff admitted that there were partnership dealings in respect of eight properties but denied that an account must be taken in relation to all eight properties to determine the respective entitlements of the parties.[1]  Notwithstanding that denial, the balance of the FARDC pleaded considerable detail as to the financial circumstances of all eight projects and the Spencer Avenue property.  The basis upon which it is contended by the plaintiff that an account should not be taken in respect of the additional transactions identified by the defendants is not apparent from the FARDC.  Counsel for the plaintiff, Mr Tedeschi, indicated, on the fifth day of hearing, that contrary to the pleaded position, the plaintiff accepted that there should be an order for an account in relation to all eight properties.[2]

   [1] Further Amended Reply and Defence to Counterclaim [1(a)].

   [2] ts 449.

9. In the course of the trial, counsel for the defendants, Mr McGowan, advised that the defendants' claim for an account in relation to the Spencer Avenue property was abandoned on the basis, as I understand it, that the defendants accept that, upon sale of the second of the two subdivided blocks resulting from development of that property, all parties received their proper entitlements.  On that basis no account was necessary and there was no basis upon which one could be ordered.  For reasons that will emerge, the plaintiff maintained that it is necessary to analyse the dealings relating to the Spencer Avenue property because she contends that the proceeds of sale of that property were not distributed in accordance with the agreement alleged by the defendants, but rather funds received by the defendants should be treated as contributions to other projects by the plaintiff and Chan.

10. As will be seen, when property developments involved Mary and Chan, either or both of them might be registered on titles or might be party to borrowings used in the project.  All parties accepted that, for the purpose of these proceedings, the interests of Mary and Chan should be construed as joint interests regardless of in whose name transactions may have occurred or properties were registered.

11. In February and March 2016, each of the second, third and fourth defendants by counterclaim filed a notice of intention to abide the decision of the court and did not thereafter participate in the proceedings other than as witnesses called by the defendants.

Issues for determination

1. In October 2017, the defendants sought an order that preliminary issues be determined at trial.  The issues identified by the defendants were, first the terms of the agreements between the parties with respect to the purchase and development of the nine properties referred to in their pleadings, second whether any of the agreements in respect of any of the developments constituted a partnership, and third the entitlement of each of the parties to profits arising from the developments and the basis for calculation of that proportionate entitlement.  That application was opposed by the plaintiff.  The proposal to split the trial was discussed with the parties at a directions hearing on 14 December 2017.  The plaintiff's opposition to splitting the trial was based on the assumption that, given that both parties sought 'a full and general account … of all assets, money, debtors, liabilities, and credits', that account would be taken and settled by the judge at trial.  In other words, the plaintiff contemplated that the court would first determine the terms of the agreements upon which the property developments proceeded, receive all of the financial books and records relating to the projects, and then prepare a full and general account on the basis of those findings.  The defendants' application to split the trial was based on that assumption.  At the directions hearing, both parties accepted that it was neither appropriate nor practical for the court to undertake that exercise at trial.  Rather, they accepted that the principal issue at trial would be as to the terms of the agreement or agreements under which the property developments proceeded and as to whether there is a liability on any party to account in relation to the projects on the basis of those agreements.  The question of the preparation and settling of the account itself was, the parties agreed, a matter to be undertaken subsequent to the trial in the light of the findings made.

2. It is clear that the preparation of a full general account in relation to transactions extending over 12 years and involving either the four projects initially identified by the plaintiff, or the eight projects identified by the defendants, would involve a great deal of analysis of financial documents, and is not an appropriate task to be undertaken by a judge at trial by working through vast amounts of financial documentation.  Rather, if there is a determination that a party should account in respect of those transactions, the appropriate remedy, and in fact a remedy which the parties respectively seek, is for the accounting party to provide an account that can then be settled by a registrar of the court if there is a dispute as to its contents.  What is necessary in these proceedings is that the basis of the account be identified.

3. At the commencement of the trial, I requested the parties provide an agreed statement of the issues, either legal or factual, which need to be determined in order that the basis upon which the account might be taken is sufficiently clear.  The parties each provided a list of what they identified as the issues for determination.  The defendants list of issues identified only two issues.  First was as to the terms of the agreement between the parties in respect of the various developments.  The second was as to the meaning of capital contribution.

4. The plaintiff provided a list of nine issues.  The first two issues coincided with the defendants' first issue, namely the terms of the agreements under which the property developments proceeded.  That is the principal issue to which falls for determination.

5. The remaining seven issues identified by the plaintiff were as follows:

   (3)How each property purchase was funded by the parties including:

   (a)Individual cash contributions by the parties;

   (b)Bank funding;

   (c)Use of sale proceeds made by the parties from the sale of developed land;

   (d)Repayment of any loans taken out to fund the purchase and development of the properties;

   (e)The repayment of interest on any loans taken out to fund the purchase and development of the property;

   (f)Whether the parties made a contribution towards the purchase of the properties as a result of the matters referred to in paragraphs 3(a) to (e) above.

   (4)How each property development was funded by the parties including:

   (a)Individual cash contributions by each of the parties;

   (b)Bank funding;

   (c)Use of sale proceeds made by the parties from the sale of developed lots;

   (d)Repayment of any loans taken out to fund the purchase and development of the properties;

   (e)The repayment of interest on any loans taken out to fund the purchase and development of property;

   (f)Whether the parties made a contribution towards the purchase of the properties as a result of the matters referred to in paragraphs 4(a) to (e) above

   (5)Whether in breach of the Partnership Agreement the First and Second Defendant drew monies from four Commonwealth Bank accounts numbers 702643203, 10747764, 422911904 and 511031108 and paid them into the Commonwealth Streamline saver personal account 100547872 in the names of the First and Second Defendants and if they did, the amount they drew.

   (6)The destination and application of the settlement proceeds in respect to all the properties purchased and subsequently developed.

   (7)The application of the net proceeds of sale paid to the parties after the development of the properties when those funds were paid and to who?

   (8)Whether the parties received the transfer of a property or properties in specie from the net proceeds of the development of the eight properties and if so, when and in what proportions?

   (9)Whether the First and Second Defendants received monies which were the property of the Plaintiff because of the sale and the settlement of sale of 8A Spencer Avenue and 17 Darch Street, Yokine and if so, the amounts.

6. To a certain extent, some of the issues referred to by the plaintiff are relevant to the determination of the nature and terms of the agreement under which the property developments proceeded.  For the most part, however, those matters are issues to be resolved in the context of the accounting process.  They are not issues which arise for determination at this stage of the proceedings.  To a significant extent, the transactions referred to are the subject of an eleven volume financial report prepared by Mr Charles Napoli, an accounting expert, for the purposes of the Family Court proceedings (Barrington report).  The parties filed a statement of agreed facts which consisted of agreements as to transactions identified by Mr Napoli in relation to the various property transactions.  Most of those transactions do not assist in determination of the issue I have to decide, but will be relevant in the eventual accounting process.  The agreed facts will be of assistance in settling the account between the parties and it is common ground that they will bind the parties in that process.

7. There are matters which were dealt with in the evidence in these proceedings which are capable of resolution, and which will inform the basis upon which any account is to be provided.  Those issues are:

   (i)How the costs of development are to be assessed and brought to account.

   (ii)How a payment to Frank and Andrea from the sale of the Spencer Avenue property should be treated for accounting purposes.

   (iii)How properties which remain unsold should be treated for the purpose of the account as between the parties.

The property developments

Unless otherwise indicated, the following information has been extracted from the parties' Statement of Agreed Facts.

17 Darch Street

1. The first project undertaken jointly between the parties was 17 Darch Street, Yokine (Darch Street property).  The Darch Street property was purchased in November 2001.  It was purchased in the names of Mary and Frank, as tenants in common in equal shares.  The contract price was $231,000.  A loan from the Commonwealth Bank of Australia (CBA), being loan account 677 848 505, was used to purchase the property. The loan was in the names Mary, Chan, Frank, and Andrea and was for a sum of $250,000.

2. The Darch Street property was then subdivided to create two lots, being 17 Darch Street Yokine and 17A Darch Street Yokine.  The subdivided lots were placed in the names of Mary and Frank as tenants in common in equal shares.  The properties were sold as follows:

   (1)17A Darch Street was sold in September 2003.  The contract price was $140,000. The net proceeds of sale, being $138,946.83, were deposited into CBA loan account 677 848 505.

   (2)17 Darch Street was sold in October 2009. The contract price was $895,000.  The net proceeds of sale, being $877,764.14, were deposited into CBA bank account 10054782, in the names of Frank and Andrea.

73 Main Street

1. The second project undertaken was the purchase and development of 73 Main Street, Osborne Park (Main Street property) which the parties purchased in August 2005 in the names of Frank, Chan and David as joint tenants. 

2. Frank contends that, notwithstanding what the title shows, the agreement was that he was entitled to a 50% share and Chan and David were entitled to a 25% share each.  The contract price for the Main Street property was $403,000.  A loan from the CBA, being loan account 702 643 203, was obtained to purchase the Main Street property.  The loan was in the names of Mary, Chan, Frank, Andrea and David and was for a sum of $431,100.

3. The property was subsequently subdivided into four lots which became known as 83, 85, 87 and 89 Roberts Street, Osborne Park respectively.  All four properties were in the names of Frank, Chan and David. The lots were developed and units constructed on each lot.  The properties were sold as follows:

   (1)83 Roberts Street was sold in March 2007.  The contract price was $440,000.  The net proceeds of sale, being $428,741.35, were deposited into CBA loan account 702 643 203.

   (2)85 Roberts Street was sold in November 2007.  The contract price was $585,000.  The net proceeds of sale, being $576,886.05, were deposited into CBA bank account 10747764, in the names of Mary, Chan, Frank, Andrea and David.

   (3)87 Roberts Street was sold in March 2007.  The contract price was $575,000.  The net proceeds of sale, being $564,080.95, were deposited into CBA bank account 10747764.

   (4)89 Roberts Street was sold in November 2007.  The contract price was $445,000.  The net sale of proceeds, being $435,193.41, were deposited into CBA bank account 10054782, and subsequently transferred into a number of accounts[3] including three transfers to CBA loan account 511 031 108 totalling $297,000 and a transfer of $90,000 to CBA account 10747764.

111 Shakespeare Avenue

[3] Statement of Agreed Facts dated 6 April 2018 [22].

1. The third project was the purchase and development of 111 Shakespeare Avenue, Yokine (Shakespeare Avenue property), which the parties purchased in January 2008.

2. The Shakespeare Avenue property was purchased in the names of Mary and Chan as joint tenants as to one half, and Frank and Andrea as joint tenants as to one half, with each couple having an equal share in the property as tenants in common.  The contract price for the property was $720,000.  A loan from the CBA, being loan account 422 911 904, was obtained to purchase the Shakespeare Avenue property.  The loan was in the names of Mary, Chan, Frank and Andrea and was for a sum of $750,450.

1. The Shakespeare Avenue property was subdivided into three lots, being 111A, 111B, and 111C Shakespeare Avenue, Yokine.  Units were developed on each lot.  111A was registered in the names of Mary, Chan, Frank and Andrea.  111B was registered in the names of Mary and Chan as joint tenants.  111C was registered in the names of Frank and Andrea as joint tenants.

2. The properties were sold as follows:

   (1)111A Shakespeare Avenue was sold in September 2009. The contract price was $735,000.  The net sale proceeds, being $713,980.98, were deposited into CBA loan account 422 911 904.

   (2)111B Shakespeare Avenue was sold in May 2010.  The contract price was $731,000.  The net sale proceeds, being $714,456.26, were deposited into CBA account 10054782. $400,000 was then deposited into CBA loan account 422 911 904, and the remaining net sale proceeds were deposited in an unknown account.

   (3)111C Shakespeare Avenue was sold in March 2010.  The contract price was $739,000.  The net sale proceeds, being $723,040.04, were deposited into CBA account 10054782.  The funds were subsequently taken from that account and $200,000 deposited into CBA loan account 511 031 108, and $520,000 deposited into CBA loan account 422 911 904.

78 Edgecumbe Street

1. The fourth project was the purchase and development of 78 Edgecumbe Street, Como (78 Edgecumbe Street property), which the parties purchased in February 2007.

2. The 78 Edgecumbe Street property was purchased in the names of Mary, Frank and Andrea as tenants in common in equal shares.  The contract price for the property was $962,500.  A loan from the CBA, being loan account 511 031 108, was obtained to purchase the 78 Edgecumbe Street property.  The loan was in the names of Mary, Frank and Andrea and was for the sum of $1,000,600.  The 78 Edgecumbe Street property was subdivided into four units, being 78A, 78B, 78C and 78D Edgecumbe Street, Como.  78A was registered in the name of Andrea, 78B was registered in the name of Frank, 78C was registered in the name of Mary, and 78D was registered in the names of Mary, Frank and Andrea as tenants in common in equal shares.

3. The properties were sold as follows:

   (1)78A Edgecumbe Street was sold in December 2009. The contract price was $1,070,000.00.  The net proceeds of sale, being $1,049,463.05, were deposited into CBA account 10054782.  $300,000 was subsequently transferred to CBA loan 511 031 108, and $200,000.00 transferred to CBA loan 422 911 904.

   (2)78B Edgecumbe Street was sold in November 2012.  The contract price was $910,000.  The net proceeds of sale, being $893,647.01, were deposited into two separate accounts. $293,159.61 was deposited into CBA account 10054782, and the remaining $600,000 was deposited into Australia and New Zealand Banking Group Ltd (ANZ) account 181 962 937, in the name of Frank.

   (3)78D Edgecumbe Street was sold on or around April 2010.  The contract price was $925,000.  The net proceeds of sale, being $909,997.09, were deposited into two separate accounts. $907,980.63 was deposited into CBA account 10054782, and $2,106.46 was taken by ANZ to discharge mortgage L241952.

   78C Edgecumbe Street remains unsold and registered in Mary's name.

250 Ewen Street

1. 250 Ewen Street, Woodlands (Ewen Street property) was purchased by the parties in June 2010 although settlement occurred in October 2010.  The Ewen Street property was purchased in the names of Mary, Andrea and David as tenants in common with 50% to Andrea, 25% to Mary and 25% to David.  The contract price was $920,000.

2. The parties agree that a loan in the sum of $600,000 was obtained from ANZ loan account 181 962 937, in the name of Frank. The parties also agree that another loan in the sum of $480,000 was obtained from ANZ loan account 202 440 901, in the names of Frank and his mother, Ngoc Mai Tran.

3. Mary asserts that funds to purchase the Ewen Street property were sourced from a third loan, said to be in the sum of $1,000,600 from CBA loan account 511 031 108, in the names of Frank, Mary and Andrea. The security address for that loan is said to be 78C Edgecumbe Street, Como.  That assertion is not agreed by the defendants and I do not accept it.  The other two loans were sufficient to meet the cost of the Ewen Street property.

4. The Ewen Street property was subdivided into four lots, being 250A, 250B, 250C and 250D Ewen Street, Woodlands.  250A was registered in David's name, 250B and 250D were registered in Andrea's name, and 250C was registered in Mary's name.

5. The properties were sold as follows:

   (1)250A Ewen Street was sold in or around December 2013.  The contract price was $932,000.  The net proceeds of sale were received by David.  No details have otherwise been provided as to the net sale proceeds.

   (2)250B Ewen Street was sold in October 2012.  The contract price was $850,000.  The net proceeds of sale totalled $831,448.68.  Half of the net sale proceeds (being $415,724.34) were applied to ANZ loan account 181 962 937, and the other half were applied to ANZ loan account 202 440 901.

   (3)According to Frank, 250D Ewen Street was sold in or around October 2016.[4]  The contract price was $818,500.  No details have been provided as to the net sale proceeds.  Mary claims that the net sale proceeds were received by Andrea.[5]

   250C Ewen Street remains unsold.

167 Lockhart Street

[4] Exhibit 50, witness statement of Frank Lam dated 6 April 2018 [217].

[5] Exhibit 40, witness statement of Mary Yuen Shan Cheng dated 13 April 2018 [206].

1. 167 Lockhart Street, Como was purchased by the parties in March 2010 (Lockhart Street property).

2. The Lockhart Street property was purchased in the names of Mary and Chan as joint tenants, and Frank and Andrea as joint tenants, with each couple having an equal share in the property as tenants in common.  The contract price was $1,150,000.  Two redraws were made to purchase the property.  One redraw was made from CBA loan account 511 031 108 in the sum of $490,000, and another from CBA loan account 422 911 904 in the sum of $710,000, in the names of Mary, Andrea and Frank.

3. The Lockhart Street property was subdivided into two lots, 167 and 167A Lockhart Street.  Both properties were registered in the names of Mary and Chan as joint tenants, and Frank and Andrea as joint tenants, and with each couple having an equal share in the property as tenants in common.  The two properties remain unsold.

82 and 84 Matlock Street

1. 82 and 84 Matlock Street, Mt Hawthorn were purchased by the parties in April 2010 (Matlock Street property).  The Matlock Street property was purchased in the names of Frank, Chan and David as tenants in common in equal shares.  The contract price was $1,200,000.

2. Three redraws were made to purchase the property.  One redraw was made from CBA loan account 422 911 904 in the sum of $350,000, another was made from the same loan account in the sum of $170,000, and another from CBA loan account 511 031 108 in the sum of $200,000.  There is disagreement between the parties as to the source of unknown purchase monies used to obtain the Matlock Street property.  The sum of the unknown purchase monies is $420,153.

3. The Matlock Street property was subdivided into six lots, being units 1 to 6, 84 Matlock Street, Mt Hawthorn.  Units 1 and 3 were registered in the name of Frank, units 2 and 4 were registered in the name of David, unit 5 was registered in the name of Chan, and unit 6 was registered in the names of Frank and David as joint proprietors.  The six lots were developed, with units 1 and 2 being commercial units, and units 3 to 6 being residential units.

4. The properties were sold as follows:

   (1)Unit 3 was sold in September 2013.  The contract price was $725,000.  No details have been provided as to the net sale proceeds and the destination of the net sale proceeds.

   (2)According to Frank and Andrea, unit 4 was sold in November 2013.[6]  The contract price was $719,000.  No details have been provided as to the net sale proceeds and the destination of the net sale proceeds.

   (3)According to Mary, unit 5 was sold in April 2013.[7]  The contract price was $725,000.  No details have been provided as to the net sale proceeds and the destination of the net sale proceeds.  Mary claims that Chan has not accounted for the proceeds of sale of unit 5.

   (4)Unit 6 was sold in September 2013.  The contract price was $712,500.00.  No details have been provided as to the net sale proceeds and the destination of the net sale proceeds.

   Units 1 and 2 remain unsold.

70 Edgecumbe Street

[6] Further Further Re-amended Defence and Counterclaim dated 6 March 2018.

[7] Further Re-amended Reply and Defence to Counterclaim dated 21 March 2018.

1. The parties' final project was the purchase and development of 70 Edgecumbe Street, Como (70 Edgecumbe Street property).  The parties purchased the 70 Edgecumbe Street property in September 2010, in the names of Andrea, Chan and Ivan as tenants in common with 50%, 25% and 25% shares respectively.  The contract price was $840,000.

2. Three redraws were made by the parties to purchase the 70 Edgecumbe Street property.  One was from CBA loan account 511 031 108 in the sum of $75,000, another from CBA loan account 422 911 904 in the sum of $162,000, and another from CBA loan account 511 031 108 in the sum of $600,000.

3. The 70 Edgecumbe Street property was subdivided into two lots, 70A and 70B Edgecumbe Street, Como.  70A was registered in Andrea's name, and 70B was registered in Chan and Ivan's names as tenants in common in equal shares.  The properties were sold as follows:

   (1)According to Mary, 70A Edgecumbe Street was sold in or around November 2015.[8]  The contract price was $1,350,000.00. No details have been provided as to the net sale proceeds and where the proceeds were deposited.

   (2)70B Edgecumbe Street was sold in or around December 2011. The contract price was $1,250,000.  Half of the net sale proceeds were paid out to ANZ account 110 169 229 in the name of Ivan, and the other half were deposited into a joint CBA account 10499792 in the names of Mary and Chan.

Remaining unsold properties

[8] Exhibit 40, revised statement of Mary Yuen Shan Cheng dated 13 April 2018 [249].

1. The properties that are unsold are:

   (1)78C Edgecumbe Street, Como registered in Mary's name;

   (2)250C Ewen Street, Woodlands registered in Mary's name;

   (3)167 Lockhart Street, Como registered in the names of Mary and Chan in joint tenants of one half as tenants in common with Frank and Andrea as joint tenants of the other half;

   (4)167A Lockhart Street, Como registered in the names of Mary and Chan in joint tenants of one half as tenants in common with Frank and Andrea as joint tenants of the other half; and

   (5)Units 1 and 2, 84 Matlock Street, Mt Hawthorn registered in the names of Frank and David respectively.

Summary of loan accounts

1. Although somewhat incomplete, the evidence reveals the following transactions in the various loan accounts used by the parties in the various projects.

   (1)CBA loan account 677 848 505 - Mary, Chan, Andrea and Frank (original loan $250,000):

   Payments out:

(a) Darch Street property (November 2001) $231,000

Payments in:

(a) Sale 17A Darch Street (September 2003) $138,946

(2)CBA loan account 702 643 203 - Mary, Chan, Frank, Andrea and David:

Payments out:

(a) Main Street property (August 2005) $403,000

Payments in:

(a) Sale 83 Roberts Street (March 2007) $428,741

(3)CBA loan account 422 911 904 - Mary, Chan, Andrea and Frank:

Payments out:

(a)	Shakespeare Avenue property (January 2008)	$720,000
(b)	Redraw for Lockhart Street property (March 2010)	$710,000
(c)	Two redraws for Matlock Street property (April 2010)	$520,000
(d)	Redraw for 70 Edgecumbe Street property (September 2010)	$162,000

Payments in:

(a)	Transfer from account 10054782 (part proceeds sale 78A Edgecumbe Street)	$200,000
(b)	Sale 111A Shakespeare Avenue (September 2009)	$713,950
(c)	Transfer from account 10054782 (part proceeds sale 111B Shakespeare Avenue May 2010)	$400,000
(d)	Transfer from account 10054782 (part proceeds sale of 111C Shakespeare Avenue March 2010)	$520,000

(4)CBA loan account 511 031 108 - Mary, Andrea and Frank:

Payments out:

(a)	78 Edgecumbe Street property (February 2007)	$962,500
(b)	Redraw for Lockhart Street property (March 2010)	$49,000
(c)	Redraw for Matlock Street property (April 2010);	$200,000
(d)	Two redraws for 70 Edgecumbe Street property (September 2010)	$675,000

Payments in:

(a)	Three transfers from account 10054782 (part proceeds sale 89 Roberts Street December 2007)	$297,000
(b)	Transfer from account 10054782 (part proceeds sale of 111C Shakespeare Avenue March 2010)	$200,000
(c)	Transfer from account 10054782 (part proceeds sale of 78A Edgecumbe Street December 2009)	$700,000

(5)ANZ loan account 181 962 937 - Frank:

(a) Ewan Street property

(6)ANZ loan account 202 440 901 - Frank and Ngoc Mai Tran:

Payments out:

(a) Ewen Street property (part payment October 2010) $600,000

Payments in:

(a)	Part proceeds sale 78B Edgecumbe Street November 2012	$600,000
(b)	Part proceeds sale 250B Ewan Street October 2012	$415,724

(7)CBA account 10747764 – Mary, Ivan, Frank Andrea and David

There is no evidence of payments out of this account.

Payments in:

(a)	Sale 85 Roberts Street (November 2007)	$576,886
(b)	Sale 87 Roberts Street (March 2007)	$564,080
(c)	Transfer from account 10054872 (part proceeds sale 89 Roberts Street December 2007)	$90,000

(8)CBA account 10054782 – Frank and Andrea

Payments out:

(a)	Three transfers to CBA account 511 031 108 (part proceeds sale of 89 Roberts Street, December 2007)	$297,000
(b)	Transfer to account 422911904 (proceeds of sale of 111B Shakespeare Avenue May 2010)	$410,000
(c)	Transfer to CBA account 10747764 (part proceeds sale of 89 Roberts Street, December 2007)	$90,000
(d)	Transfer to unknown account (balance proceeds sale 111B Shakespeare Avenue	$314,456
(e)	Transfer to account 511031108 (part proceeds sale of 111C Shakespeare Avenue March 2010	$200,000
(f)	Transfer to account 422911904 (part proceeds sale 111C Shakespeare Avenue March 2010)	$520,000
(g)	Transfer to account 511031108 (part proceeds sale of 78A Edgecumbe Street December 2009)	$300,000
(h)	Transfer to account 422911904 (part proceeds sale of 78A Edgecumbe Street December 2009)	$200,000

Payments in:

(a)	Sale 89 Roberts Street (November 2007)	$435,193
(b)	Sale of 17 Darch Street (October 2009)	$877,764
(c)	Sale of 111B Shakespeare Avenue (May 2010)	$714,456
(d)	Sale of 111C Shakespeare Avenue (March 2010)	$723,040
(e)	Sale of 78A Edgecumbe Street (December 2009)	$1,049,463
(f)	Part sale 78B Edgecumbe Street (November 2012)	$293,159
(g)	Part sale 78D Edgecumbe Street (April 2010)	$907,980

(9)CBA account 10499792 - Mary and Chan

Payments in:

(a) Part proceeds sale 70B Edgecumbe Street (December 2011) $625,000

(10)ANZ Mortgage L241952 – borrowers not identified

Payments in:

(a) Part proceeds 78D Edgecumbe Street (December 2011) $625,000

(11)ANZ account 202440901 – Frank and Ngoc Mai Tran (Frank's mother)

Payments out:

(a)	Part purchase of Ewan Street (October 2010)	amount unclear
(b)	Part proceeds sale 250B Ewan Street	$415,724

(12)There are a number of substantial payments or receipts the source or destination of which are unclear on the evidence.  These include:

(a)	the source of the payment for the balance of the purchase price of the Matlock Street property	$420,153
(b)	proceeds of sale 250D Ewan Street	$818,500
(c)	proceeds of sale unit 3 Matlock Street (September 2013)	$725,000
(d)	proceeds of sale of unit 4 Matlock Street (November 2013)	$719,000
(e)	proceeds of sale of unit 5 Matlock Street (April 2013)	$725,000
(f)	proceeds of sale of unit 6 Matlock Street (November 2013)	$712,000
(g)	proceeds of sale of unit 70A Edgecumbe Street	$1,350,000

(13)In addition, David received $932,000 from the sale of 250A Ewen Street which he accepts is his full entitlement in relation to that project.  Similarly, Ivan received $625,000 into his account with the ANZ bank which he accepts represents his full entitlement in relation to the 70 Edgecumbe Street development.

Nature and terms of agreements to develop properties

1. The threshold issue between the parties in these proceedings is whether all of the development projects were carried out pursuant to an express oral agreement, made in September 2001, to form a partnership on particular terms, as asserted by the plaintiff, or whether separate oral agreements were made in relation to each development property on the terms pleaded by the defendants.

2. Before turning to the evidence concerning that issue, it is instructive to review the history of the plaintiff's pleadings in relation to the agreement which she asserts.

3. The statement of claim was initially filed on 20 August 2015.  At that stage, the only parties to the proceedings were Mary, Frank and Andrea.  The statement of claim pleaded that, in or about November 2001, Mary, Frank 'and/or' Frank and Andrea started to carry on a partnership business of land purchases for the purpose of development into multiple dwellings.  Paragraph 2 of the original statement of claim read:

   2.The partnership formed was oral and related to specific projects only (single adventure) from time to time and the terms included inter‑alia -

   PARTICULARS

   [a]All participating parties had equal shares in capital and profits of the specific adventure;

   [b]Alternatively in lieu of distribution of profits each party would receive a titled property in his or her name by way of distribution being an equal share in the value of the equity generated by the project;

   [c]The First Defendant Francis was the Managing partner entrusted to exercise such powers in the management of the project/s for the benefit of the parties and to be carried out:-

   (i)in good faith;

   (ii)to fulfil and comply with all legal obligations arising from the projects/development;

   (iii)to act in the best interest of the parties to the adventure;

   (iv)not to improperly use the role of the managing partner to gain a personal advantage or provide advantage to a third party;

   (v)not to purposefully cause a detriment to the other party/ies;

   (vi)to keep all party/parties adequately informed of each stage of the project development;

   (vii)to account to the party/parties the financial position and all relevant financing, sales and taxation liabilities;

   (viii)to prepare for the party/parties Partnership filing and lodgement of Tax Returns, BAS and/or Annual GST Returns.

4. On 22 September 2015, Frank and Andrea filed a defence and counterclaim.  That pleading was subsequently amended so as to join Chan, David and Ivan as second, third and fourth defendants by counterclaim respectively.  I will return to the terms of the defence and counterclaim below.

5. Particulars of par 2 of the statement of claim were provided in May 2016.  In response to a request to state each act, fact, matter or circumstance upon which it is alleged that all participating parties had equal shares in capital and profits of the specific adventure, the plaintiff responded:

   Pursuant to the oral agreement to form an oral partnership entered into between the parties.  The parties being Mary (the plaintiff), Francis (the first defendant, also known as Frank) and/or Andrea (second defendant) as the parties would agree from time to time depending on the project selected.

1. In respect to par 2(b) of the statement of claim, the plaintiff provided the following particulars:

   The parties, subject to the said development were registered on title as equal registered owners as tenants in common equal shares alternatively as sole registered proprietors, alternatively as both, by virtue of agreement between the parties, as directed by the first defendant.  This arrangement applied to the following developed properties:

   •17 Darch Street, Yokine

   •111 Shakespeare Avenue, Yokine

   •78 Edgecumbe Street, Como

   •250 Ewen Street, Woodlands

2. It can be immediately observed that there is an internal inconsistency between the pleading of a partnership between Mary, Frank and Andrea in November 2001 in which the partners had equal shares in capital and profits and the pleading in the particulars of agreements 'from time to time' involving different parties.  It is also difficult to understand how the particulars to par 2(b) can be said to particularise a term of an oral agreement made in 2001.  Rather, the particulars would seem to amount, rather confusingly, to a plea as to performance of the pleaded term.

3. The statement of claim remained in its original form until amendment on 2 March 2018.  In that amendment, the plaintiff amended par 1 so as to include her former husband, Chan, as a participant in the 'partnership business of land purchases for the purpose of development into multiple dwellings (projects) with a view to making a profit'.  Pleas as to Frank's duties as manager of the partnership business were deleted, but instead it was pleaded that Frank would be responsible for the financial aspects of the business and maintain accurate financial records, inventory and compliance with regulations and statutory obligations regarding property purchases and developments.  Amendments were then made to refer to express oral agreements from time to time in relation to the four projects said to be 'partnership projects' including express oral agreements as to different profit shares amongst different participants in those projects.  In addition, it was pleaded that in or about March 2010, it was expressly orally agreed between Frank on behalf of himself and Andrea, and Chan on behalf of himself and Mary, to purchase the properties at 167 and 167A Lockhart Street, Como as a partnership project to develop at a profit, and that profit would be shared equally between Frank and Andrea as to half, and Mary and Chan as to half.  The following paragraphs were then added to the statement of claim:

   7.By reason of forming a partnership or partnerships as aforesaid and by their conduct in relation to the purchase funding development and sale or transfer of the properties hereinbefore referred to and as a matter of law:

   (i)All property and rights and interest in property originally brought into the partnership, whether by purchase or otherwise for the purposes and during the partnership business are partnership property, and must be held and applied by the partners exclusively for the purposes of the partnership, and in accordance with the Partnership Agreement: Section 30(1) Partnership Act 1895 (WA);

   (ii)Subject to any agreement, express or implied, and between the partners, all partners are entitled to share equally in the capital and profits of the business, and must contribute equally towards the losses, whether of capital or otherwise sustained by the firm: Section 34(1) Partnership Act 1895 (WA);

   (iii)The partnership books are to be kept at the place of business of the partnership and every partner may, when he thinks fit, have access to and inspect and copy them: Section 34(8) Partnership Act 1895 (WA);

   (iv)Partners are bound to render true accounts and full information of all things affecting the partnership to any partner: Section 39 Partnership Act 1895 (WA);

   (v)Every partner must account to the firm for any benefit derived by him, without the consent of the other partners, from any transaction concerning the partnership, or from any use by him of the partnership, or property: Section 40 Partnership Act 1895 (WA);

   …

   11.The partnership or series of partnerships hereinbefore referred to were dissolved.

   Particulars

   (a)In relation to the 78C Edgecumbe Street property by the completion of the project and receipt of title on or about 3 December 2009 as set out in paragraph 4(c) hereof;

   (b)In relation to the 250C Ewen Street property by the completion of the project and receipt of titles on or about 22 May 2012 as set out in paragraph 5(c) hereof;

   (c)In relation to 167 and 167A Lockhart Street, Como by the completion of the purchase of those properties and the receipt of titles on or about 16 March 2010.

   (d)By Notice of Dissolution of the partnership or series of partnerships given by the Plaintiff to the Defendants on or about 7 May 2015 or alternatively by the commencement of this action on or about the 20 August 2015.

4. A further amendment was made to the statement of claim on 23 March 2018, but only to add to the prayer for relief a claim for a declaration 'that all above described property interests registered in the name of the plaintiff form part of the distribution made to the plaintiff of the partnership property interests referred to herein'.

5. The trial was listed for 10 days to commence on 16 April 2018, but because of the unavailability of Mr Napoli during the listed dates, his evidence was taken on 9 April 2018.  On 13 April 2018, the plaintiff filed a minute of proposed amendments to the statement of claim and leave to amend in those terms was given at the commencement of the trial on 16 April 2018.  The amendments included changing the date of the oral partnership agreement from November 2001 to September 2001, and deleting par 2(a) of the statement of claim and substituting the following:

   All participating parties would equally contribute capital to the specific venture/ventures and would be entitled to equally share in the profit of the specific venture/ventures.

6. The reference to 'series of partnerships' in par 11 was deleted as were particulars (a), (b) and (c) of that paragraph.  The claim for a declaration in the prayer for relief was also amended to delete reference to a series of partnerships.

7. The trial then proceeded.  The evidence was completed by Friday 20 April 2018.  At the commencement of the final day, and after the plaintiff's case had closed and Frank and Andrea had given their evidence, the plaintiff moved for, and was granted, leave to make a further amendment to the statement of claim.  The amendments comprised further changes to the particulars to par 2.  Paragraphs 2(a) and (b) were amended as follows (with the changes underlined):

   (a)All participating parties would equally borrow monies and contribute such capital to the specific venture/ventures as they could and would be entitled to equally share in the profit of the specific venture/ventures;

   (b)Further or alternatively in lieu of distribution of profits each party would receive a titled property in his or her name by way of distribution being an equal share in the value of the equity generated by the project/s or the profit share was to be calculated based upon legal ownership of the properties;

8. The plaintiff's claim is based upon the existence of an express oral partnership agreement made in September 2001.  Paragraphs 2(a) and 2(b) of the statement of claim identify express oral terms.  It might reasonably be expected that the plaintiff's evidence of the agreement, to which the pleading suggests she was a party, would address conversations in which contribution to capital and alternative distributions of capital were discussed.  As will be seen, the plaintiff's evidence did not support the express oral terms pleaded.

9. Andrea and Frank's defence and counterclaim was first served on 22 September 2015.  It denied a partnership agreement in the terms pleaded, but asserted that joint ventures between Mary and Chan and Frank and Andrea involved not just the three properties and developments specified in the statement of claim, but rather involved nine properties for which an account must be taken to determine the respective parties' entitlements.  Paragraph 2 of the statement of claim was denied and in particular it was denied that all participating parties had equal shares in the capital and profits of each venture.

10. The defence and counterclaim was further amended on 25 November 2016.  That amendment pleaded separate oral agreements made at specified times in respect to the different property developments, and specifically 17 Darch Street, 78 Edgecumbe Street, 150 Ewen Street, 73 Main Street, 111 Shakespeare Avenue, 167 and 167A Lockhart Street, 82 and 84 Matlock Street and 70 Edgecumbe Street.  In each case, it was said that the agreement was to purchase the particular property and develop it with a view to making a profit. The ownership arrangements in relation to each property are pleaded.  The defendants then plead a material term of each agreement which is substantially to the same effect in each case.  That is that it was a term of the agreement in each case that any proceeds made from the development and sale of the property concerned were to be applied first in payment of any mortgage over the property, then in payment of all costs and expenses incurred in relation to the acquisition, development and sale of the property 'and repayment of any payments made by' the parties participating in the project and the balance (profit) to be divided between the participating parties 'in proportion to the contributions that each of them had made to the purchase and development of the property'.

11. The defendants' pleading as to the terms of the agreements remained unchanged through to trial.

12. Against that background to the pleadings, I turn to the evidence in relation to the agreements pleaded.

The plaintiff's evidence as to agreements

1. Before turning to the plaintiff's evidence as to the agreements, it is necessary to say something about her credibility.  I did not find the plaintiff a reliable witness.  In cross examination she was reluctant to answer many questions and I am satisfied that that was because she was fearful the answers would damage her case.

2. There was a noticeable disconnect between the plaintiff's pleaded versions of discussions or agreements in relation to the various property investments and the plaintiff's evidence of those discussions.  Those disparities need to be seen in the context of the numerous amendments to the statement of claim outlined above.

3. For example, at par 6 of the statement of claim the plaintiff pleads that in or about September 2001 it was expressly orally agreed between Mary, Andrea and David to include David in the purchase and development of the Ewan Street property, so that the shares would be 50% to Andrea and 25% to each of Mary and David.  In her statement of evidence‑in‑chief, the plaintiff said that she and Chan had looked at the Ewen Street property when it had been on the market on an earlier occasion.  When it again came on the market, she and Chan drove to the property.  She said that Chan then contacted Frank by telephone in her presence to notify him that they believed it was a good development and that it should be purchased for the family business.  She continued:

   Before the purchase of the property, Chan told me that he had a meeting with [Frank] to discuss the project.  Chan told me he had discussed with [Frank] that the property would be shared as to Mary 25% share David 25% share and Andrea 50% share.  I said words to the effect that I agreed.[9]

   [9] Plaintiff's revised witness statement, exhibit 40 [180].

4. The plaintiff made no mention in her witness statement of any other discussion or agreement between herself, Andrea and David in the terms pleaded, and was unable to provide any explanation as to why that was so.  When cross‑examined on that point, she merely asserted that it was a different conversation to those referred to in her witness statement, but it did occur.  I do not accept that assertion.  I am satisfied that the evidence of Frank, Andrea, David and Chan to the effect that discussions concerning proposed projects and purchases were, as the passage of Mary's evidence‑in‑chief set out above illustrates, between the brothers and that, at least in Mary's case, were then relayed to her by Chan.  I find that Mary was not a party to discussions about development projects with Frank or with David.

5. A similar disparity appears between the plaintiff's pleading in the FARDC in relation to the discussions leading to the purchase of the Main Street property[10] and her evidence of those conversations in her witness statement.[11]  In relation to the Shakespeare Avenue property, the plaintiff pleaded that it was expressly orally agreed between her, Frank, Andrea and Chan that the property would be developed to be shared between them as to one half to Frank and Andrea as joint tenants and one half to Mary and Chan as joint tenants.  In her witness statement she said that after she and Chan located the investment opportunity, Chan went to see Frank and told her that he had discussed the potential with Frank and Andrea and decided to buy and develop the site with them, and that Chan and she decided to proceed with the purchase.[12]  That evidence is more consistent with the Defendants' case that the oral agreement in relation to the Shakespeare Avenue property was made between Chan and Frank in terms that the property would be held as to one half to Frank and Andrea as joint tenants and one half to Mary and Chan as joint tenants.[13]

   [10] FARDC [8].

   [11] Plaintiff's revised witness statement, exhibit 40 [72].

   [12] Plaintiff's revised witness statement, exhibit 40 [102].

   [13] FARDC [6BA] – [6BC].

6. Mary is a qualified accountant.  She explained that from around 1997, she and Chan had involvements with various other extended family members in businesses including an engineering consultancy through CMF Engineering Pty Ltd, Desique Products (a business of importing and selling homewares) and in 2006, Simpliciti Pty Ltd, which was engaged in importing building fittings and other materials.  In relation to the discussions leading to the purchase of 22 Darch Street, Mary's evidence‑in‑chief was as follows:

   49.After Chan and I had inspected the property there was a meeting between Chan and I, Francis and Andrea at 22 Darch Street, Yokine.  We all discussed buying the property and words to the effect were said by all present that we would buy the property.  Chan spoke to all involved because of its potential and said the property would be rented back to existing tenants until we decided collectively in the future to redevelop the block.  It was discussed between us that Frank would hold title on behalf of himself and Andrea and I would hold title on behalf of Chan and myself as to a half share for each couple.  It was also discussed between us that the profit from the purchase and development would be shared equally between Chan and myself as to half and Francis and Andrea as to half.  The people who were present at the meeting said words to the effect that they agreed to that profit sharing.

   50.There were only four (4) of us involved Chan, Mary, Francis and Andrea.  We were sitting in the front lounge room.  Chan told Francis that their uncle was not interested in buying 17 Darch Street.  Chan stated that the four of us should buy the property as it was a good opportunity.

   50A.Chan told us we could purchase 17 Darch Street and develop it in the future for a profit.  If there were insufficient funds, one subdivided block could be sold providing funding for the development.  It was also discussed we could after the purchase of land it could be subdivided and developed, sold and the surplus funds would be rolled over to buy another suitable block of land which would be subdivided and developed.

   50B.Francis stated that we should get a loan for the initial financing and that there were some requirements to be met in obtaining the loan such as serviceability of the loan.  Words to the effect were said by the four of us that it was agreed by the four of us that we would all borrow jointly to acquire the loan and that we would purchase 17 Darch Street as the first investment property of the family business and that we would each have half share (per couple) since we would borrow jointly.

7. Mary also gave evidence of discussions leading to the purchase of each of the other properties the subject of these proceedings.  What can be immediately noticed is that Mary's evidence‑in‑chief made no mention of any discussion that the parties would 'contribute such capital … as they could' or as to distribution of profits by way of receipt of 'a titled property'.

8. In cross‑examination, Mary said that in September 2001, she, Chan, Frank and Andrea sat down somewhere and specifically agreed that all participating parties would equally contribute capital to the specific venture or ventures and would be entitled to equally share in the profit of the specific venture or ventures.[14]  She asserted that capital contributions were contributed equally through borrowing but accepted that if one party were to contribute a lesser amount to capital than the others then that party would receive a lesser share of the profit.[15]

   [14] ts 249.

   [15] ts 250, 255.

9. It is necessary, in the context of consideration of that evidence to try to understand what the parties are referring to when they use the expression 'contribution' and 'capital contribution'.  The defendants' pleadings that first raised the issue of profit share by reference to contributions asserted that proceeds from the sale of the developed properties would be distributed after payment of all costs in proportion to the contributions that each participant made to the purchase and development of the property.  As will be seen Frank's evidence speaks in terms of profit share being determined on the basis of 'financial contribution' or 'contributions'.  There is no reference to 'capital contributions'.  Chan's evidence used the same expressions.  The reference to capital arose in the statement of claim in its various iterations.  The references morphed from the parties having 'an equal share in the capital and profits' to the parties 'equally [contributing] capital' and finally to the parties 'equally borrowing monies and [contributing] such capital as they could'.

10. Mary was cross‑examined as to her understanding of her pleaded case as it stood at the time of the cross‑examination (being that the parties would 'equally contribute capital').  She agreed with the proposition that 'capital' means 'net worth or your interest in'.[16]  The cross‑examination followed:

    [16] ts 248.

    And you say that it was a part of that agreement that – and this is what you say was said:

    All participating parties would equally contribute capital to the specific venture or ventures and would be entitled to equally share in the profit of the specific venture/ventures.

    That's your case, isn't it? ---Yes.

    That's what you say the four of you somewhere, during the course of September 2001, sat down and specifically agreed? ---Yes.

    So amongst other things, you say you all agreed that everybody would contribute capital equally? ---Yes.

    And if you contributed capital equally, then you would share in the profits equally; that’s what you’re saying, isn't it? ---Yes.

    And it means, doesn't it, if you don't contribute equally to the capital, then you don't contribute equally to the profits? --- We did not say that. We said that we will borrow and we will contribute equally. 

    To the capital?  To the capital? --- We borrowed equally. 

    No, no. Ms Cheng, these are the words that are now used in the pleading, which was announced this morning as your amended case – your case.  You saw this amendment in draft before it was shown to his Honour, didn’t you? ---Yes.

    And you approved of it? ---Yes.

    And you were asked specifically whether it accorded with your instructions and you obviously said yes, it does and what you're saying – what your case is – that each of the parties who participated would equally contribute capital? ---Yes.

    That's what you say was said? ---Yes.

    Those words? ---Yes.

    That's what you put in and get out is the profit, isn't it? ---Yes.

    And you're saying you have to contribute capital equally and you can share in the profits equally? ---Yes.[17]

    [17] ts 249 – 250.

1. On the basis of that cross‑examination, the defendants submitted that the plaintiff's references to capital contributions can only mean financial contributions made by a party over and above borrowings internal to the project.  There are two reasons why I reject that submission.  The first is that it is plain that Mary's first response to questions about her pleadings as to capital contributions was a reference to funds contributed through borrowings.  While it might be accepted that the concept of capital may have a particular usage in the preparation of financial statements,[18] I have no doubt that the plaintiff, or more likely her legal advisers, was not intending the word 'capital' other than as a reference to money used in the project however that money may have been raised.  The expression 'financial capital' is commonly used as a reference to available funds whether by borrowings or equity.  Although it is difficult to clearly discern what the plaintiff was attempting to convey by her various amendments to her pleading, it is possible to read her references to 'capital' and 'contribution' as a reference to joint borrowings.  That construction is more consistent with her evidence as to the arrangements between the parties.

   [18] In closing submissions, the defendants referred to the Framework for the Preparation and Presentation of Financial Statements (June 2014) published by the Australian Accounting Standards Board.  Given that this publication post‑dated relevant events in this action, it is nonsense to suggest it might be used as an aid to construction of any agreement between the parties.

Defendants' evidence as to agreements

1. Because of inconsistences discussed below between Frank's evidence in these proceedings on the one hand and his evidence on oath in the Family Court proceedings and some contemporaneous documents on the other hand, I did not find Frank to be a reliable witness.

2. Frank is a property developer and said that he had been involved in developing properties over the past 19 years, during which time he had invested in over 30 projects and built over 200 houses and apartments.  He said that, of those, nine projects were with family.  He said that agreements with family members about property developments were oral and were discussed and agreed usually between him and his brothers Chan and David following identification of developments.  He said that he had not had a speaking relationship with his former sister‑in‑law, Mary, for over 20 or more years.  In his evidence‑in‑chief, Frank said:[19]

   11.It was discussed with my brothers that upon the sale of each of the properties, the construction and development costs will be deducted and reimbursed to the initial contributors before the profits could be distributed to the family members in accordance with their respective contributions made.  Mortgages over the properties would also need to be paid down to enable the sales to proceed or in some cases refinancing or security substitution was required.

   12.Andrea and I both made financial and non-financial contributions personally and via Chemech Pty Ltd.

   No objection was taken to that generalised and summary evidence.

   [19] Exhibit 50, witness Statement of Frank Lam dated 6 April 2018 [11] ‑ [12].

3. In relation to 17 Darch Street, Yokine, Frank said that the development project was discussed between Chan and himself, and that Chan nominated Mary as the legal proprietor for his share.  He said that Chan and he 'agreed that the net proceeds (after all borrowing cost and interest on fund advancement) would be distributed to the legal owners and prorated based on the financial contributions made'.

4. Frank said that the purchase price was met from the CBA loan account 577 848 505.  That is not in dispute.  He said that the deposit of $1,000 for the purchase of the property was paid by Chan and Mary, and stamp duty in the sum of $6,977 was paid by him through CBA account 10043621, which was his own account.  As noted earlier, following the subdivision of the Darch Street property into two lots, one lot, being 17A Darch Street, was sold for $140,000 and the proceeds deposited into the CBA loan account through which the property had been purchased.  Frank then constructed a residence on the remaining block as owner/builder, and lived in that residence for about three years with Andrea and their daughter.  It was eventually sold for $895,000 in October 2009.  The proceeds were paid into a CBA bank account 10054782 in the names of Frank and Andrea.

5. The defendants tendered a file of documents said to evidence the defendants' and Chemech's capital contributions to the various projects.  In relation to the Darch Street property, Frank claims to have paid stamp duty in the sum of $6,977, interest on CBA loan 677 848 505 in the sum of $20,515, additional costs and expenses of $6,113, repayment of CBA loan account 677 848 505 of $156,712 and the costs of building the residence on 17 Darch Street at $188,000 making a total contribution of $378,317.  As I understand the defendants' case, as against that contribution by them, they assert that Mary and Frank contributed only $1,000 by way of deposit.  Chan's evidence was that that sum was subsequently repaid to him by Frank.  The consequence appears to be that, on the defendants' case, notwithstanding that Mary and Chan had undertaken personal liability by borrowing funds to purchase the Darch Street property and remained liable for those funds after the sale of the first subdivided block, the whole of the profit on the development was to go to Frank and Andrea.

6. The evidence does not suggest that any of the parties sought to identify with any clarity what payments constituted 'contributions to the purchase and development of the property'.  For example, whether payment of rates or other incidental expenses, or maintenance expenses during the period that a party occupied and utilised properties were to be considered contributions for the relevant purpose.  It is not clear whether the cost of construction, for which Frank was entitled to be paid, were to be considered a contribution.  Nor is it apparent that the benefit enjoyed by Frank and Andrea was to be brought to account.

7. Those uncertainties tend to weigh against the likelihood of an agreement in the terms suggested by the defendants.

8. In the Family Court proceedings, Frank swore several affidavits.  In an affidavit dated 11 December 2012, Frank referred to the arrangements in relation to his family's involvement in investment properties.  He said:[20]

   34.We would usually agree that Andrea and I would assume majority holding of the property due to our majority financial contribution and lending capacity personally and through Chemech.  Percentage holding would usually also depend on the subdivision or development potential, tax position and also to allow a complete and uncomplicated legal ownership of the land following subdivision.  For example, if a block could be divided into 4 lots, then Andrea and I would assume 50% and David and Chan 25% (or Mary) each.

   35.If the developments only involved Chan (or Mary) and I (or Andrea), depending on where the running debt Chan owed Chemech and/or myself was at during that time, this would dictate the percentage share‑holding of new developments Chan would be apportioned due to the opportunity costs of the financial contribution I would be making.

   36.Andrea, David and myself would generally provide the funds for the projects, or otherwise obtain the bank loans for the same.  Andrea and myself would usually meet the mortgage repayments for those projects which are funded by bank loans.

   37.Upon the sale of the properties, the construction and development costs are deducted and reimbursed to the initial contributors before the profits are distributed to the family members as per their legal entitlements under the respective titles.

   [20] Exhibit 30, Affidavit of Francis Hung Lam dated 11 December 2012 [34] – [37].

9. In relation to the Darch Street property, Frank said:[21]

   92.The development project for 17 Darch Street main block was informally discussed between Chan and myself.  Mary and Andrea were both made aware of the plans.  Chan nominated Mary as the legal proprietor for his share.  It was agreed that the net proceeds from the sale of each subdivided lot would be given to the proprietor of the respective lot.

   [21] Exhibit 30, Affidavit of Francis Hung Lam dated 11 December 2012 [92].

10. In relation to the Main Street property, Frank said that the project was informally discussed between Chan, David and himself and that they agreed that 'net profits would be distributed as per the legal ownership'.  He said that after the development of the four units on Main Street, sale proceeds amounted to $2,003,630.47.  He said that the total net profit after deducting the total purchasing and development costs, including repayment of the loan used to purchase the property and the amount owed to himself and Andrea, including loan interest payments which were made, was $782,518.53.  He said that the net profit was divided as per the legal ownership, with Chan receiving 25% of the net profit.

11. In relation to the Shakespeare Avenue property, Frank said that the development was informally discussed between himself and Chan, and that they 'agreed that the net profits would be distributed as per the legal ownership'.  He said that the net profit was eventually divided as per legal ownership.

12. The same arrangement, namely that net profits would be distributed 'as per legal ownership' was said to have been made in relation to the Edgecumbe Street property, Como, the  Ewen Street property, 167 and 167A Lockhart Street, the Matlock Street property and the Edgecumbe Street property.[22]

    [22] Exhibit 30, Affidavit of Francis Hung Lam dated 11 December 2012 [92], [117], [140], [162], [198], [220] and [238].

13. In an affidavit to the Family Court dated 13 November 2012, Frank also outlined the financial background to the family property investments.  He said as follows:[23]

    [23] Exhibit 51, Affidavit of Francis Hung Lam dated 13 November 2012 [9] - [22].

    9.Our family is involved in investment properties.  I am responsible for this and work full time in the business.  We buy properties, develop and sell them for a profit.  The properties for the projects would be identified and researched.  Then the acquisition and funding would be discussed with the other family members.

    10.Agreements were often informal due to the closeness of the family but are discussed (usually with Chan, David and I) following identification of developments.

    11.Over the last 11 years, Andrea and I and/or Chemech would fund most of the properties.

    12.Over the years, Andrea and I have involved Chan and Mary in the development projects due to our mutual affiliation and Chinese family background.  We have also involved my brother David, and cousin Tinh Au in the development projects.

    13.In each case of our dealings, I have kept a running account of our dealings and the amounts owed to Andrea, myself and/or Chemech, and set off against the net proceeds distributed to Chan and Mary.  A copy of the running account is attached and marked Annexure 'A'.

    14.The total of these running costs owed to Andrea, myself and/or Chemech by Chan and Mary is over $2.7m.

    15.The running account debt is made up in this way:

    (a)once a property is identified, usually either I or Andrea (or both) or Chemech fund the acquisition, subdivision and redevelopment and construction costs.  That is normally done through a combination of equity contribution by us and debt;

    (b)having identified a property, I would discuss with my brothers the most advantageous way the property should be owned.  The purpose of involving my family in this way is that they benefit from any profit made (to the extent of their agreed ownership share);

    (c)generally, the main contributions to these property ventures by family members other than myself and Andrea are non‑financial.  For instance, as can be seen from the running account, the only financial contribution actually made by Chan and Mary is limited to the deposit of $1,000 made on 10 September 2001 and the further sum of $406,998 made on 17 December 2009 which was from the sale of a property they owned separately.  All other contributions shown on that running account are credits for their share of profits made from the developments;

    (d)on the debit side of the running total is all the costs attributable to their percentage interest in the various property developments they have been involved in.  Those costs include acquisition costs, borrowing costs, construction costs and so on, as well as a sum of $42,900 paid out on 24 June 2009 to fund a share purchase they wished to make.

    16.As against this running account (or which can be added to it) is their current percentage ownership in the following properties:

    (a)167/167a Lockhard Street, Como … 50%

    (that property is held 50% by Chan and Mary and 50% by Andrea and I);

    (b)82-84 Matlock Street, Mount Hawthorn … 33%

    (that property is held 33% by Chan, 33% by David and 33% by me);

    (c)78c Edgecumbe Street, Como … 100%

    (that property is held in Mary's name);

    (d)250c Ewen Street, Woodlands … 100%

    (that property is held in Mary's name).

    17.As can be seen from the running account, there have been costs incurred to purchase and develop these properties which have not been paid for and which costs (until the properties are sold) are funded mainly through debt owed to banks and by monies contributed by Andrea, myself or Chemech, as well as by the contribution of Mary and Chan referred to above.

    18.The value of Chan's and Mary's share in the realizable market value of these properties is $2,725,000.

    19.Further to this may be added the sum of $546,411 currently in the joint account in the name of Chan and Andrea and which had previously been held by the Public Trustee.

    20.The monies in that joint account were generated by the sale of the property at 70B Edgecumbe Street, Como which was held in the name of Chan (as to 50%) and our cousin Tinh Au (as to 50%).  The net proceeds generated from the sale were $1,220,984.73, of which the Public Trustee (who was then representing Chan's interest) retained half thereof or approximately $610,492.37.  (I understand some $55,000 has been paid out to Chan and/or Mary already from those funds, leaving a balance of approximately $545,000.)

    21.However, against those proceeds no cost of developing 70B Edgecumbe Street, Como has been paid.  Andrea and I had paid for the original property; the company Chemech had carried out the sub-division and construction of the new development.  None of those costs had been paid or accounted for.  Those costs amount to approximately $989,577.07.  The Public Trustee, and then Chan and Mary, were requested to pay from the net proceeds retained at settlement Chan and Mary's share of those costs (amounting to $494,778.53) but Mary refused the request and the monies now sit in the joint account.  (The costs of $494,778.53 are reflected in the running account and are shown as land acquisition cost of $219,779.00 on 21 September 2010 and construction cost of $275,000.00 on 11 November 2010.  The balance is interest costs.)

    22.If these amounts are compiled, the position (on the assumption that Andrea and I assume the liability for the CBA loans 511031108 and 42291104) is as follows:

    (a)Chan and Mary hold properties and the join account to the value of $3,271.411;

    (b)Chan and Mary owe the Second, Third and Fourth Respondents the amount of $2,743,221;

    (c)the value of Chan's and Mary's share in these properties (less the debt) is $528,190.

14. The spreadsheet referred to in the affidavit was not attached to the copies of the affidavit tendered in this trial for reasons which were not explained.  If, as the affidavit suggests, a running account was maintained throughout the period that developments were undertaken, that would be a significant factor going to the manner in which the parties conducted themselves which might inform the conclusions to be drawn as to the basis upon which they undertook the property projects.[24]  The fact that neither the plaintiff not the defendants sought to produce the spreadsheet, notwithstanding the cross‑examination of Frank in relation to the contents of his Family Court affidavits and the tender of those affidavits without annexures, supports an inference that the spreadsheets did not reflect the contentions of either the plaintiff or the defendants in these proceedings.  That inference is consistent with the evidence of Frank in the Family Court that is set out above, including his reference to 'all other contributions shown on the running account [being] credits for their share of profits made from the developments'.

    [24] Fazio v Fazio [2012] WASCA 72 [193] (Murphy JA with whom Pullin JA & Newnes JA agreed).

15. Various documents produced at trial that appear to be contemporaneous records of various transactions are inconsistent with the existence of an agreement in the terms contended for by the defendants.  The first of those are two rental property worksheets in relation to the Darch Street property.  One is for the period 8 November 2001 to 30 June 2002 and, the other for the period 1 July 2002 to 6 May 2003.  Those documents set out the rental income and the expenses in relation to the property including interest on loans.  Rental loss is shown in relation to both periods, and the document apportions that loss as to 50% to Frank and Andrea, and 50% to Chan and Mary.  The document bears Chan's handwriting and Mary said that Frank prepared that document.[25]  In his evidence in chief, Frank asserted the paragraphs of Mary's witness statement dealing with those statements to be untrue, but did not identify precisely what parts of the paragraphs were untrue, nor did he provide any explanation of the documents.[26]  In cross‑examination, Frank said that he did not prepare the document but he had previously seen a similar document.  He was not pressed on when that was, but he agreed that he did not 'quarrel with the contents of the document and the timing' and acknowledged that he had written on the document that the rental loss should be divided in half.[27]

    [25] Exhibit 40, witness statement of Mary Nguyen Chan Cheng 13 April 2018 par 41 – 42(a), annexure MC14.

    [26] Exhibit 50, witness statement of Frank Lam dated 6 April 2018 [179].

    [27] ts 520.

16. The further document produced by Mary was a rental property worksheet for the Shakespeare Avenue property 10 April 2008 to 30 June 2008.  That document showed an equal split of rental loss between Frank, Andrea, Chan and Mary.  Frank said that he did not prepare the document but was not asked any further questions about it.[28]

    [28] ts 522.

17. A further document produced was headed 'Desique Total Expenses 101023-1-CGT Edgecumbe & Shakespeare'.[29]  That document set an analysis of the profit on the sale of the units developed on the Shakespeare Avenue property.  It apportioned the capital gains equally between Frank, Andrea, Chan and Mary.  Frank said that he did not know who prepared the document but that he recalled seeing a similar document around 18 December 2009.

    [29] Exhibit 40, witness statement of Mary Nguyen Chan Cheng dated 13 April 2018 [41], annexure MC 16.

18. A further document prepared consisted of what appears to be an email trail attaching the capital gains tax calculation for the Shakespeare Avenue property referred to above, and a document entitled 'Desique Reconcile 100628-1.xls'.  The email chain appears to have been initiated by an email from '[email protected]', an email apparently associated with the defendants business Chemech Pty Ltd, to '[email protected]', which I take to be Chan's email address.  The email appears to have been forwarded from Chan to Mary on 26 October 2010.  The email then appears to have been forwarded by Mary, although it is not apparent to whom it was forwarded.  The way in which the document was compiled in the trial bundle and dealt with by the witnesses calls for some care in assessing its weight.  The document is, however, consistent with the proposition that documents being exchanged in relation to the Shakespeare Avenue property in 2010 appear to be drawn on the basis of shares in profit (or capital gain) between the four participants[30] in accordance with the interests registered on title.

    [30] MC 185.

1. Similarly, an email dated 16 October 2011 from the Chemech email address to Chan sets out the income and expenses in relation to the Matlock Street property and the Lockhart Street property.  The entitlements to income, and responsibility for expenses, is apportioned in accordance with the titles to those properties.[31]

   [31] MC 104.

2. It is not necessary to resolve the dispute on the evidence as to who prepared the documents referred to above.  Frank agreed that information of the type contained in the documents was 'shared around, because some of the expenses is actually sent to them, some of it is sent to me'.[32]  Whoever prepared the documents, there does not appear to be any issue that they, or similar documents, were accepted as reflecting the position between the parties, and were apparently used to enable the parties to prepare their tax returns.[33]  Frank agreed that for the purpose of their tax returns, profit share was returned 'under whatever proprietorship arrangement it was at the time'.[34]

   [32] ts 526.

   [33] ts 526.

   [34] ts 464.

3. There is no evidence by way of contemporaneous documents which is consistent with the formulation of the basis for profit share for which the defendants contend in this action.  There are documents which are consistent with the clear account of the approach to property developments explained by Frank in his Family Court affidavits.

4. Chan gave evidence that he had always said to Mary that profit distribution in family projects was based on financial contributions.  In relation to the Darch Street property, he said:

   I recall Frank telling me that if I was interested that he could obtain the loan from his serviceability and cover any stamp duty, fees and charges associated with the purchase.  He advised me when I had the funds available I could repay him or if not I could provide whatever I could afford and we could profit share based on contribution.[35]

   [35] Exhibit 57, witness statement of Chan Tanh Lam dated 3 April 2018 [52].

5. Chan said that he and Frank never determined Chan's profit distribution 'because we couldn't as it became a running account'.  He continued:

   Any perceived profit from the development would then be applied to offset the funds advanced or bank loans for other developments already purchased or under construction which involved us.

6. In relation to the Main Street property, Chan said that he, Frank and David discussed the project and that they 'all agreed that if you could not contribute financially, the net profit would be adjusted based on who put in the most money after the consideration of the loans'.

7. In relation to the Shakespeare Avenue property, Chan said that he and Frank again discussed profit share and 'agreed it would be based on financial contribution similar to the discussion had earlier with 73 Main Street Osborne Park'.  In relation to Edgecumbe Street he said that he and Frank discussed the project which came up just after completion of the Main Street project when they were still trying to sell off units.  He said that Frank knew of his financial position but said 'pay me when you sell off 8 Spencer Avenue Yokine … and we'll look at the profit share based on contribution'.

8. Chan said that when the Ewen Street property became available, Frank presented him and David with 'the chance to invest in this property'.  He and Frank agreed that the profit share was to be based on financial contributions similar to the Main Street development.  Evidence to the same effect was given in relation to the Lockhart Street property and Matlock Street property.

9. In relation to the 70 Edgecumbe Street property, Chan said that Frank indicated that he was interested in one of the two blocks that could be developed and that Chan and Ivan could 'assume 50% of each of the other subdivided block'.  He said that he and Ivan discussed the project and agreed that Ivan would come up with funds for his share of the development and his profit would then be based on legal ownership of the subdivided half.  He said that Frank advised him that he would provide financial funding to complete the development of Chan's share with the understanding that the profit share would be based on financial contributions.

10. The thrust of Chan's evidence was to the effect that he and Mary made virtually no contributions to any of the developments and that their shares were funded by Frank and Andrea.  It can be seen from the summaries of the sources and destinations of funds for the purchases and sales of various developments does not support that proposition.  The purchase of the Darch Street property was funded by joint borrowings between Mary, Chan, Frank and Andrea.  The proceeds of sale of 17A Darch Street were used to partially repay those borrowings.  Much larger proceeds of the sale of 17 Darch Street went into an account belonging to Frank and Andrea.  There does not appear to be any accounting for Chan and Mary's entitlements in relation to that project.  The purchase of the Main Street property was funded by a bank loan taken out by Mary, Chan, Frank, Andrea and David.  That loan appears to have been substantially repaid from the sale of the first developed unit, 83 Roberts Street.  Proceeds of the other Roberts Street units went either to Frank and Andrea's account, or to CBA account 107474764 which belonged to Mary, Chan, Frank, Andrea and David and which was used to fund the Shakespeare Avenue property purchase.  78 Edgecumbe Street was purchased by a loan taken out in the names of Mary, Frank and Andrea.  The proceeds of the sale of the units developed went to the account used to purchase Shakespeare Avenue or in repayment of the account used to purchase the 78 Edgecumbe Street property.  The proceeds of the sale of 78D Edgecumbe Street were, apart from a small amount used to pay off ANZ mortgage, paid into an account belonging to Frank and Andrea.

11. These transactions illustrate that funds to which Chan and Mary may have been entitled to was used to either pay down costs associated with the purchase of the property, to fund further projects or was paid into an account in the names of Frank and Andrea which from time to time was used to fund other projects.

12. The suggestion that is implicit in Chan's evidence, namely that he participated in these transactions over a period of some 10 years on the basis that he and Mary were making no contributions which would entitle them to share in the profits, is inherently unlikely.  They undertook personal liabilities for borrowings which placed them at substantial risk, and it is implausible that they would have done so if their contribution through borrowings did not provide any entitlement to a return.  Although Chan says that he made no contribution to interest payments, it appears that to some extent interest on borrowings was met by drawing down of unused loan funds for which he and Mary were jointly and severally liable or were met from funds generated by earlier projects.

13. David gave evidence that Frank told him that, in most developments, Frank would also pay for Chan's or Mary's financial share of the development, and that 'Frank would share part of the profits of the development with Chan because of his financial circumstance'.  In relation to the Main Street property, David said that, prior to the offer being made on the property, he had discussions with Frank and Chan and they said words to the effect that they agreed that profits would be split between the parties less any borrowings or loans and interest, adjusted based on who made the financial contributions towards the project.  He said they agreed Frank would assume 50% holdings, and he and Chan would each hold 25% following subdivision.  How that relates to the asserted agreement that shares would be based upon financial contributions is not apparent.

14. Evidence to the same effect was given by David in relation to the Ewen Street property.  In relation to the Matlock Street property, he gave evidence to the same effect but said that in that case, each of he, Frank and Chan would assume a 33.33% holding.  David gave evidence that after the Matlock Street property was subdivided into six units, he took ownership of units 2 and 4 and a half share in unit 6.  As noted earlier, Frank took units 1 and 3 and a half interest with David in unit 6, and unit 5 was registered in the name of Chan.  When unit 4 was sold, the proceeds were paid entirely to David.  When unit 6 was sold, David said that he and Frank agreed that his share of the profit on that unit would be applied to the outstanding building cost.  He said that when units 1 and 2 are eventually sold, there would be adjustments of the allocation of profit based on 'financial contribution and adjusted entitlement'.

15. The witness statement of Ivan was tendered without him being required for cross‑examination.  His evidence went to his arrangements in relation to his investment in the 70 Edgecumbe Street property which was to the effect that he was required to, and did, meet his portion of the purchase and development cost.  He subsequently received his proportion of the proceeds of sale.  As to the arrangements between Frank and Chan, he said that he recalled Chan telling him about a funding arrangement he had with Frank for the purchase of property, construction costs and other costs but said he was not aware of the details.  Rather, he was only mindful of his own share of the development costs.  Ivan's evidence takes matters little further.  It shows no more than that he took a proportionate share of the investment, paid a proportionate amount of the costs, and received a proportionate share of the proceeds of sale.  That appears to be the only transaction in which he was involved with the family, or at least the only one of which was there was evidence.  It sheds little, if any, light on the nature of the arrangements as between Frank and Andrea on the one hand and Mary and Chan on the other.

Conclusions as to the agreements

1. I accept that, shortly prior to the purchase of the Darch Street property, it is likely that Chan and Frank reached a general understanding that they might undertake a series of property transactions.  I am also satisfied that each of Chan and Frank discussed developments from time to time with their spouses and that, at least in Chan and Mary's case, they agreed between themselves to participate in particular investments.  I find, however, that those discussions and understandings did not amount to a partnership agreement on the terms pleaded by the plaintiff.  Rather, I find that, from time to time, as investment opportunities were identified, the parties reached agreement to jointly undertake the purchase and development of the identified property.  The particular parties to a particular development venture were determined by agreement in relation to each venture.  Similarly, the interests to be held by the participants was determined in the context of each separate venture.

2. The more difficult question is as to the terms of the agreements in relation to each development, and thus the basis upon which an account needs to be taken.

3. The difficulty arises because these transactions were undertaken in the context of family relationships.  The arrangements were informal.  No terms of any agreement or arrangement are documented.  Different bank accounts and loans were used to fund investments, and there appears to have been a flexible intermingling of the proceeds of sales of one development in accounts used to fund other developments.  At no point does it appear that, as between Frank and Andrea on the one hand, and Mary and Chan on the other, anyone paused to take an account to ascertain a snapshot of their respective entitlements.  The dealings were built on trust between all parties which evaporated when the relationship between Mary and Chan soured.

4. The alternative formulation of the terms of the project agreements proffered by the defendants is not consistent with what limited contemporaneous documentation is available, and is wholly inconsistent with what Frank swore on oath to be the arrangement in his evidence to the Family Court.  As I have observed above, the notion that Mary and Chan undertook significant borrowing risks on the basis that, if they became able to make a financial contribution beyond their borrowings they would accrue some entitlement to profit, is inherently unlikely.  What is far more likely is that they joined in the borrowing necessary to undertake the purchases on the basis that that would entitle them to the agreed share of the project, including their proportionate share of the profit.  In all the circumstances, I do not accept the evidence of the defendants to the effect that the profit was to be shared on the basis of 'contribution' where contribution means only funds advanced towards a project other than by way of joint borrowings.

5. I am mindful that as between Frank and Chan (or Mary), it is clear that Frank assumed responsibility for payment of some expenses such as interest on borrowings and outgoings on the properties and appears to have met a far greater proportion of those expenses than did Chan or Mary.  It may well be that the funds that he used to meet those payments were drawn from accounts into which proceeds of sales of properties, to which Mary and Chan had some entitlement, had been paid.  For example, significant amounts of sale proceeds found their way into Frank and Andrea's CBA account 10054782 from the sale of units from the Shakespeare Avenue property and 17 Darch Street.  I am satisfied however that, to the extent that Frank provided financial support to Chan (and Mary), he did so because of what he described to the Family Court as 'the closeness of the family' and due to his 'mutual affiliation and Chinese family background' and the expectations that money advanced by him would be repaid before profits on the developments were calculated.

6. Having found the evidence of both sides unreliable, the terms of the development agreements can only be ascertained by reference to the conduct of the parties.  That conduct includes the manner in which individual titles were distributed, the apparent acceptance of documents which showed entitlements proportionate to ownership shares, and the description of what was contained in a running account referred to in Frank's Family Court affidavit.  Those matters lead me to conclude that the terms upon which each of the eight property investments proceeded were those pleaded by the defendants save as to the method of division of profit.  That is, any proceeds realised from the sale of the relevant property was to be applied first in payment of any borrowings used to purchase or develop the property; second, in payment of all costs and expenses incurred in the purchase and development of the property; and third, in repayment of any amounts paid by any of the participants towards the maintenance or development of the properties.  Any balance then remaining was to be divided between the participants in the project in proportion to their interests registered against the title to the project property at the time of its purchase.

Should an account be ordered

1. There was no issue between the parties that an account as between them was necessary, and by the end of the trial there was no issue that account should relate to all eight of the developed properties.  Nor did I take it that there was any issue between the parties that it was the first defendant, Frank, who should be called upon to account.  That is essentially because it was Frank who principally had control of and dealt with funds in relation to the projects.

2. In Juul v Northey[36] McColl JA, with whom Basten and Campbell JJA agreed, identified the elements of a cause of action for the taking of an account as follows:

   The authors of Meagher, Gummow & Lehane, Equity Doctrines and Remedies 4^th ed (2002) LexisNexis (MGL) (at [25–025]) describe the matters the applicant for an order for accounts must establish as follows:

   In any case where a plaintiff seeks the remedy of an account, he must prove, inter alia, that the defendant is an accounting party, and that he, the plaintiff, is entitled to some sum from the defendant, although he is uncertain what is the quantum of that sum.  He must do more than demonstrate that he might be owed some money, or that he wants, as it were, to have a kind of general discovery.  The locus classicus in this regard is the judgment in Doss v Doss (1843) 3 Moo Ind App 175 at 196 ‑ 7; 18 ER 464 at 472 by Dr Lushington, who said:

   It is also fit to state, that in the course of these proceedings, issues were asked for on the part of the Appellants to try the validity of the Will and the Deeds.

   Again, it must be remembered that the Decree cannot stand unless it be first clearly proved that the Appellants are, if anything should be found due to the Respondents arising from the acts and dealings of Ramchund, liable to answer that demand; we cannot make a Decree, ordering them to account, without first determining that they are liable to pay if anything be found due.

   A Decree for an account is not, as appears to have been assumed, a mere direction to inquire and report.  It proceeds, and must always proceed, upon the assumption that the party calling for it is entitled to the sum found due. It is a Decree affirming his rights, only leaving it to be inquired into, how much is due to him from the party accounting. (emphasis added)

   [36] Juul v Northey [2010] NSWCA 211 [185].

3. The ultimate balance of an account as between Mary and Chan on the one hand and Frank and Andrea on the other is likely to produce a balance in favour of Mary and Chan.  I am mindful, however, that Mary retains several properties in her name which will need to be brought to account, as will properties standing the names of other participants.  How that might affect the ultimate balance is presently unclear.  It is not necessary to finally determine whether the accounting will result in a sum being due to Mary and Chan from Frank and Andrea, because both parties seek an account and seek payment to them of any balance found due.  It is clear that there is an entitlement, of any party to whom a balance of funds is due, to an order in their favour for payment of that balance.  In practical terms, it is Frank who should provide that account, and I propose to so order.

Spencer Avenue property

1. Paragraph 6F of the FARDC pleaded:

   8 Spencer Avenue, Yokine was purchased on or about 26 October 1999 by the Plaintiff and the Second Defendant by counterclaim for $221,500.

   (a)The property was to be used by the Plaintiff and the Second Defendant by counterclaim as their principal place of residence.

   (b)By an oral agreement made between the First Defendant and the Second Defendant by counterclaim (on behalf of himself and the Plaintiff) in or about March 2001 the First Defendant agreed to advance monies to carry out renovation and construction of a property on 8 Spencer Avenue, Yokine when he had the funds available.  Around July 2003, the First Defendant started preparing development plans for the development.

   (c)It was agreed between the First Defendant and the Second Defendant by counterclaim (on behalf of himself and the Plaintiff) that in return for such advance, the First Defendant was to receive a 1/3 share of any profits when the properties were sold.

   (a)The property was subdivided into two lots, 8 and 8A Spencer Avenue Yokine.

   (e)The Plaintiff and the Second Defendant by counterclaim remained the joint proprietors of the two lots now created.

   (f)Chemech Pty Ltd was engaged to carry out construction and renovation of the two lots.

   (g)The renovation cost was $60,000.

   (h)The construction cost for 8A Spencer Avenue was $218,278.

   (i)The Plaintiff and the Second Defendant by counterclaim sold 8 Spencer Avenue in or about April 2007 for $552,500.

   (j)The Second Defendant by counterclaim has made partial payments amounting to $123,415 towards the construction costs of 8A Spencer Avenue.

   (k)The renovation cost of $60,000 for 8 Spencer Avenue and the remaining construction cost of $94,863 for 8A Spencer Avenue are still outstanding.

   (l)The Plaintiff and the Second Defendant by counterclaim sold 8A Spencer Avenue in or about 18 December 2009 for $845,000.

   (m)On settlement of 8A Spencer Avenue, Yokine, the Second Defendant by counterclaim paid the First Defendant $406,998 against his liability to pay the First Defendant 1/3 of the profit pursuant to the agreement reached as set out in paragraph 6F(c).

1. Most of the facts pleaded in par 6F were not in issue.  The plaintiff did, however, deny the agreement pleaded in par 6F(b).  She contended that the payment of $406,998, was not paid against any liability to the first defendant for a share of the profit on the sale of the Spencer Avenue property but was rather paid by way of contribution to the later property developments.

2. As noted earlier, the defendants' claim for an account in relation to the Spencer Avenue property was ultimately not pursued on the basis that they accepted that the amount paid to Frank and Andrea namely $406,998, was a payment in full discharge of the obligation to pay for the renovation and construction work and one third of the profit made on sale of 8A Spencer Avenue.  The only issue for determination is therefore whether the payment of $406,998 was paid pursuant to the agreement alleged by Frank, or whether there was no such agreement, and the amount was paid as a contribution to the ongoing development projects by Mary and Chan.

3. Chan gave evidence which confirmed that he and Frank made the agreement pleaded in par 6F, and said that the payment of $406,997.65 was deposited to Frank and Andrea's CBA bank account 10054782 in repayment of unpaid building costs and one third profit share as agreed.

4. Frank's evidence set out how the amount which he and Andrea received was calculated.  He said that he calculated that the profit that Chan and Mary made from the project was approximately $756,400, so that 33% share would equate to $252,153 which, together with the balance owing in relation to construction costs of $154,863, amounted to $406,998.

5. A review of the evidence as to the costs of purchase and development of the Spencer Avenue property, and the receipts on sale of the two properties, demonstrates, at least very closely, that the figure for profit utilised in Frank's calculation is correct.

6. Mary's evidence in relation to the Spencer Avenue property, contained in her responsive witness statement to the witness statement of Frank dated 6 April 2018,[37] is difficult to follow because of obviously incorrect references to paragraph numbers in Frank's statement and references to documents by incorrect annexure numbers.  To the extent that her evidence can be followed, however, Mary provided no explanation as to how the figure of $406,998 was arrived at.  The amount paid is obviously not a round number and implies that it is the product of some calculation or is directed to some particular liability or expense.  The fact that the amount coincides with the amount payable in accordance with what is said to have been the agreement between Frank and Chan strongly supports the conclusion that there was such an agreement.

   [37] Exhibit 41, revised responsive witness statement of Mary Yuen Shan Cheng to the witness statement of Frank Lam dated 6 April 2018.

7. I am mindful that in par 15(c) of Frank's affidavit to the Family Court dated 13 November 2012 (which is set out above at [88]), Frank describes the payment of $406,998 made on 17 December 2009 as a 'financial contribution actually made by Chan and Mary'.  However, that proposition is said to be shown from the running account attached to the affidavit (but not produced in these proceedings) which may well have included transactions relating to the Spencer Avenue property, including building costs incurred by Frank. The reference in the affidavit to contributions may well therefore have been a reference to funds paid by Mary and Chan in the course of all transactions including the Spencer Avenue developments.

8. Because of the correlation between the amount paid on sale of 8A Spencer Avenue and the amount which would have been payable under the agreement as alleged by Frank and Chan, I accept their evidence on that issue.  As a result, the sum of $406,998 should not be brought to account as a contribution by Mary and Chan to any of the other eight developments.  The agreement in relation to the Spencer Avenue property has been completely performed.

Bringing costs of development to account

1. For each of the developments the subject of this action, the participants entered into a lump sum building contract with Chemech Pty Ltd for the construction of developments (save for the Darch Street property which was constructed by Frank under an owner builder licence).  Evidence to that effect was given by Frank,[38] Chan,[39] Ivan in relation to the 70 Edgecumbe Street property,[40] and David in relation to the Main Street property and the Ewen Street property.[41]

   [38] Exhibit 50, witness statement of Frank Lam dated 6 April 2018 [33], [47], [61], [93], [123] and [133].

   [39] Exhibit 57, amended witness statement of Chan Tanh Lam dated 3 April 2018 [24].

   [40] Exhibit 56, amended witness statement of Tinh Au dated 23 March 2018 [23], [24].

   [41] Exhibit 60, amended witness statement of David Cuong Chan Lam [25].

2. Mary denied the existence of the building contracts, although she was never a party to any of them, and suggested that development was to be undertaken at cost with no profit to be made by the builder, Chemech Pty Ltd.  That proposition was not put to any of the defendants' witnesses.  The lump sum building contracts are included in the relevant volumes of the Barrington report.  There is no basis to ignore those contracts or somehow treat them as ineffective.  I reject the suggestion that building work in relation to the various projects was undertaken other than in accordance with the contracts.

3. I also note in passing that the existence of formal building contracts is entirely consistent with what I have found to be the nature in terms of the agreements upon which the projects were undertaken.  That the parties approached the development costs on a commercial basis, and created a liability on behalf of the project participants to the builder, albeit one related to them, is, like borrowings to purchase the property, consistent with the participants assuming risk on the basis of ultimately sharing profits.

4. For the purpose of the accounts to be prepared, development costs should be assessed by reference to the relevant building contracts.

Treatment of unsold properties

1. For the purpose of accounting, there should be no distinction drawn between the developed properties which were sold, and those that are as yet unsold.  The value of unsold properties should be treated as, in effect, a receipt of value of those properties in accordance with the title ownership.  For example, a property in Mary or Chan's name should be accounted for as a receipt by them of the value of that property.  How such interest might ultimately be adjusted, and whether properties need to be sold for that purpose, is a matter to be determined by the parties once the account is settled.

Dissolution of partnerships

1. It is clear that the activities in relation to all of the partnership agreements are complete, save for the taking of an account, and, if necessary, the realisation and distribution of partnership assets.  The plaintiff and the defendants seek a declaration that the partnership or partnerships between them is or are dissolved.  I am satisfied that such a declaration should be made.  The partnerships were essentially single venture partnerships.[42]

   [42] That a partnership business may consist of a single venture has been recognised in cases like Canny Gabriel Castle Jackson Advertising Pty Ltd v Volume Sales (Finance) Pty Ltd (1974) 131 CLR 321 and United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1; [1985] HCA 49 [15].

Conclusion

1. There should be an order that the first and second defendants do account to the plaintiff and the second defendant by counterclaim in relation to those parties' respective entitlements under partnership agreements relating to the purchase, development and sale of each of the following properties:

   (a)17 Darch Street, Yokine;

   (b)73 Main Street, Osborne Park;

   (c)111 Shakespeare Avenue, Yokine.

   (d)78 Edgecumbe Street, Como;

   (e)167 and 167A Lockhart Street, Como;

   (f)70 Edgecumbe Street, Como;

   (g)250 Ewen Street, Woodlands; and

   (h)82 and 84 Matlock Street, Mount Hawthorn.

2. The account should be based on the following findings:

   (1)The accounts are to be prepared on the basis that each agreement giving rise to the interests of the parties to that agreement provided that the proceeds of the relevant development and sale of the property are to be applied first in payment of any mortgage over the property, then in payment of all costs and expenses incurred in relation to the acquisition, development or sale of the property, and then in repayment of any payments made by a party to the agreement in discharge of such costs and expenses other than by use of the parties' joint funds or joint borrowings, with the balance to be divided in accordance with the interest of the parties as reflected on the title to the relevant property at the time of its purchase by the parties.

   (2)Entitlements and liabilities of either the plaintiff or the second defendant by counterclaim, whether separate or joint, are to be treated in all cases as joint entitlements.

   (3)The interests of parties other than the plaintiff, first defendant, second defendant, and second defendant by counterclaim in any of the projects referred to are to be taken to have been settled upon completion of those projects so that there is no further liability to account in relation to those interests.

   (4)For the purpose of the account, costs of development are to be brought to account on the basis of the lump sum building contract prices for the development applicable in each case.  Any balance due in relation to a building contract which remains unpaid is to be taken as an expense of the partnership and be taken as payable from the net proceeds of sale of the properties concerned.

   (5)Proceeds paid to the first and second defendants from the sale of 8A Spencer Avenue are not to be treated as a contribution by the plaintiff and second defendant by counterclaim to any of the other partnership projects referred to above.

3. There should be further orders specifying the time within which the first and second defendants are to file and serve accounts, in relation to each partnership.  The plaintiff and the second defendant by counterclaim should be at liberty within a specified period of service on them of the account to apply to a registrar for directions as to the manner in which any dispute as to any item of the accounts is to be resolved.  There should be an order that the accounts be settled by a registrar.  There should be an order that any party to the account found liable to another party to the account pay that other party the amount due within a specified time.  I will hear the parties as to the precise orders to be made, and as to costs.

The way forward

1. The Barrington report comprises eleven volumes of detailed financial analysis.  Very few of the many financial transactions identified in the Barrington report appear to be in dispute.  There are a number of issues which arose in these proceedings which were not matters upon which the Barrington report expressed an opinion, or could have expressed an opinion.  A great deal of additional work is still required in order to finalise the accounts.  No doubt the parties will be facing very considerable further costs, and the process of settling the account itself could be one of very considerable complexity if there are, as there presently appears still to be, extensive disputes about various transactions.  It is to be hoped that, the basic elements of the account having been determined, the parties and their advisors can take a pragmatic and proportionate approach to resolving the question of the parties' respective entitlements and obligations.  Undoubtedly, the costs of these proceedings to date has been very significant, and there is a serious risk that costs will, if they have not already, become quite disproportionate to what is at stake.  The parties should look for alternative ways of resolving their differences rather than engaging in protracted litigation in order to finally settle the accounts.

   I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

   TS
   ASSOCIATE TO THE HONOURABLE JUSTICE CHANEY

   2 JULY 2018