Cheng v Lam [No 6]
[2021] WASC 265
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: CHENG -v- LAM [No 6] [2021] WASC 265
CORAM: TOTTLE J
HEARD: 21 JULY 2021
DELIVERED : 5 AUGUST 2021
FILE NO/S: CIV 1706 of 2015
BETWEEN: MARY YUEN SHAN CHENG
Plaintiff
AND
FRANCIS HUNG LAM
First Defendant
ANDREA MAN YEE CHENG
Second Defendant
(BY ORIGINAL ACTION)
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
(BY COUNTERCLAIM)
Catchwords:
Practice and procedure - Directions to be made to give effect to account - Turns on own facts
Legislation:
Nil
Result:
Orders made
Category: B
Representation:
Original Action
Counsel:
| Plaintiff | : | Mr M A Tedeschi |
| First Defendant | : | Mr P G McGowan |
| Second Defendant | : | Mr P G McGowan |
Solicitors:
| Plaintiff | : | G A Lacerenza & Associates |
| First Defendant | : | Johnstone Crouse Lawyers |
| Second Defendant | : | Johnstone Crouse Lawyers |
Counterclaim
Counsel:
| First Plaintiff by Counterclaim | : | Mr P G McGowan |
| Second Plaintiff by Counterclaim | : | Mr P G McGowan |
| First Defendant by Counterclaim | : | Mr M A Tedeschi |
| Second Defendant by Counterclaim | : | No appearance |
| Third Defendant by Counterclaim | : | No appearance |
| Fourth Defendant by Counterclaim | : | No appearance |
Solicitors:
| First Plaintiff by Counterclaim | : | Johnstone Crouse Lawyers |
| Second Plaintiff by Counterclaim | : | Johnstone Crouse 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):
Cheng v Lam [No 2] [2018] WASC 199
Cheng v Lam [No 3] [2020] WASC 45
Cheng v Lam [No 4] [2020] WASC 175
Cheng v Lam [No 5] [2021] WASC 129
TOTTLE J:
Introduction
These reasons concern the further directions required to complete the accounts undertaken by Registrar Whitbread in accordance with the orders made by Chaney J on 28 June 2018.[1] Each side of this long running partnership dispute has proposed a set of directions.[2] The proposals differ very significantly in their intent and effect. These reasons assume familiarity with the reasons for adopting the registrar's report published on 22 May 2020[3] and the reasons for approving the appointment of Ms Suzanne Delbridge as an independent accounting expert published on 3 May 2021.[4]
[1] The account is the subject of the Registrar's report published as Cheng v Lam [No 3] [2020] WASC 45 following Chaney J's judgment delivered on 28 June 2018 Cheng v Lam [No 2] [2018] WASC 199.
[2] The plaintiff has filed and served two minutes of directions - the first dated 28 June 2021 and the second dated 19 July 2021 and has served outlines of submissions in support of each minute.
[3] Cheng v Lam [No 4] [2020] WASC 175.
[4] Cheng v Lam [No 5] [2021] WASC 129.
The issues addressed by the parties' proposals may be summarised as follows:
(a)Are there errors or omissions in the report prepared by Ms Delbridge in her capacity as the Independent Accounting Expert (IAE)?
(b)How should rental income received from 78C Edgecumbe Street be treated for the purpose of the account and how should the capital value of 78C Edgecumbe Street be treated for the purposes of the account?
(c)How should income and expenses incurred after the date of dissolution (28 June 2018) be treated?
(d)Should a valuation of unit 1, 84 Matlock Street, Mount Hawthorn be obtained?
(e)What directions should be made for the sale of partnership properties in the co-ownership of the parties?
Ms Delbridge's report
The plaintiff's expert evidence
The procedural background to the production of Ms Delbridge's report and her appointment as the IAE is outlined in my reasons published on 3 May 2021.[5] Among the orders made on 3 May 2021 to give effect to my reasons was an order that:
The plaintiff has leave, at her cost, to engage an independent accountant to adduce evidence in opposition to the adoption of Ms Delbridge's report, limited to identifying any errors or omissions in her calculations. If engaged, the independent account is to be provided with the matters in Order 6, Ms Delbridge's report and all materials provided to Ms Delbridge. (emphasis added)
[5] Cheng v Lam [No 5] [2021] WASC 129.
I have emphasised the limit placed on subject matter of the evidence the plaintiff was granted leave to adduce because the plaintiff has sought to exceed that limit. I add that the limit reflects the confined nature of the task undertaken by Ms Delbridge which was to recalculate amounts in the accounts to reflect objections upheld by the registrar. The exercise was a purely mathematical exercise. The limited nature of the task is apparent from the terms of the order made by me on 15 May 2020 (varied on 27 May 2020 and 3 May 2021) (the Orders). By way of illustration order 7(a) was as follows:
7.The IAE be instructed to carry out the following tasks:
(a)to take the findings made by the Registrar on Items 9, 10, 28, 104, 105, 106, 121, 122, 128, 133, 134, 139, 167, 168, 186, 246, 247, 258, 275, 304, 305, 306, 313, 314, 315, 335, 341, 372, 373, 374, 386, 388, 416, 421, 426, 427, and 432 ([120]) and in each case identify in the First and Second Defendants' account (Schedule B to the Registrar's Report) the item and adjust the amount in accordance with the Registrar's finding and make any consequential changes to the First and Second Defendants' accounts.
There was no requirement for the IAE to consider any aspect of Chaney J's judgment or make any evaluative assessments of the nature that may be required of an accountant who is called on to prepare financial statements in a commercial context. Specifically, there was no requirement for the IAE to make an assessment by reference to Chaney J's reasons of whether other items should be included in the account.
On 21 June 2021 the plaintiff filed and served an affidavit sworn by Mr Michael Lee, a senior and experienced accountant, on 3 June 2021. Mr Lee's affidavit was filed and served purportedly pursuant to the leave granted on 3 May 2021. Mr Lee attached to his affidavit a report commenting on Ms Delbridge's report.
Against that background the plaintiff proposes directions for a process of conferral between Mr Lee and Ms Delbridge.
I set out below the opening paragraphs of Mr Lee's report:
In my nearly 50 years as an accountant in public practice I have only ever once experienced a large-scale property development group that I assisted in the preparation of their work. In that case each property was owned by a company that had its own bank account, prepared annual financial statements, tax returns, was managed by directors and was owned by shareholders. Equity in those property developments was clearly defined and the ultimate results established. In this case the results accruing to the various parties to the property developments is less clear due to the absence of prepared financial statements. Ms. Delbridge has attempted to clarify the position, but it appears that pertinent information has been omitted.
There are significant omissions in Ms. Delbridge's spreadsheets headed 'Schedule B - Recast' and I detail them in the following pages:
Purchase of partnership land and joint bank Loan account findings are missing from the Delbridge report.
The Registrars Report Schedule A at page 45 - 50 under the heading 'Bank Accounts: Bank Loans, Loan Account Transactions (payments into and out of the loan accounts)' contains the findings of His Honour Chaney J for the partnership land purchase and joint loan financing transactions.
Justice Chaney's findings of partnership land purchase transactions and partnership joint loan financing transactions are ignored by Ms. Delbridge the transactions are omitted in her report despite specific transactions outlined in Schedule A page 44 - 46:
It is immediately apparent that Mr Lee's evidence exceeds the leave granted to the plaintiff to adduce evidence directed to any errors or omissions in Ms Delbridge's calculations. Mr Lee's opinions are directed to establishing the proposition that amounts which should have been included in the first and second defendants' account have been omitted. Moreover, Mr Lee's opening remarks foreshadow an attempt by the plaintiff to revisit an issue that has been determined against her, that issue being whether the orders made by Chaney J for the taking of accounts required the preparation of financial statements. This issue has been a recurrent theme in plaintiff's approach to the taking of accounts.
In my view the attempt to adduce Mr Lee's evidence amounts to a collateral attack on the registrar's report and on my decision to adopt the registrar's report. Mr Lee does not identify any particular mathematical errors in Ms Delbridge's calculations. Mr Lee's evidence does not assist the court in progressing the final determination of this matter and, likewise, those paragraphs of the plaintiff's outlines of submissions that rely on Mr Lee's evidence provide no assistance.
The written submissions filed by the plaintiff do, however, raise some specific issues with Ms Delbridge's report and, in one instance, the orders made specifying the tasks to be undertaken. I will deal with the issues relating to the order first.
Order 7(j)
Order 7(j) of the Orders provided: 'By reason of Order 1 relating to item 363, items 377, 404 and 439 to 443 are to be amended to reflect this order'. Item 363 was an item claimed in the first and second defendants' account as 'Interest of David Lam Loans (Land Purchase & Partial Building Cost)'. It was disallowed by the registrar on the basis that there was no evidence to support the item. As explained in my reasons published on 22 May 2020 the item was the subject of a concession by the plaintiff's counsel and thus the objection should not have been upheld. For this reason I did not adopt the registrar's report in so far as it related to item 363 and the effect of Order 7(j) was to direct the IAE to recalculate those items that were affected by the allowance of item 363 to the extent to which that was necessary. The plaintiff objects to item 404 being the subject of Order 7(j). The plaintiff contends that item 404 should not have been included in Order 7(j) because, '[t]his item is completely unrelated to any interest expenses of David Lam arising from item 363 in the sum of $99,515. Item 404 is recorded in Schedule B as 'Net Proceeds from Unit 6, 84 Matlock St Sale: $693,681'.
The plaintiff's submission that item 363 is completely unrelated to item 404 is contradicted by the paragraphs of the registrar's report that deal with items 404 - 408 which I reproduce below:
Items 404 - 408 - Calculation of Unpaid Building Contract Balance after Application of Sales Proceeds per Court Order Methodology
526No objection to determine. Items are a purely mathematical calculation dependant on value of other Items. Objections to constituent Items already determined; save as to one additional finding in respect of Item 404.
527 Item 404 - Objection upheld in part. See Item 363. I am not satisfied that David has made a contribution to the land purchase cost and I do not accept that there is sufficient evidence before me to determine whether David contributed to building costs.
528Further, (taking both the Plaintiff's Schedule and the Plaintiff's Submissions regarding this Item into consideration) the Plaintiff has failed to coherently particularise her assertions in a format which explains how the Plaintiff's amount contended for would (a) differ; or (b) be calculated; or (c) be applied; to the First and Second Defendants' account. Nor has the Plaintiff coherently cross referenced, and support, any assertions by reference to admitted evidence in such a way that she establishes either a surcharge or a falsification. As a consequence, the Plaintiff fails to establish any surcharge or falsification.
529Therefore, whilst I accept the value of the net proceeds of sale of Unit 6/84 Matlock Street were $693,681, I do not allow the reimbursement in the form contended for. I have found that all of the land purchase costs and building costs were incurred (except Item 363). Therefore, in relation to this Item, I find that the stated costs (less Item 363) should all be accounted for in the partnership. Hence, the quantum of this amount is allowed (less Item 363). I do not determine who paid those monies; save that it is a partnership expense and there is no evidence, or contention, that those expenses were paid by the Plaintiff and/or Chan.
I do not accept the plaintiff's submission that item 363 is unrelated to item 404 and accordingly I am not prepared to vary Order 7(j).
Item 486
The next item in Ms Delbridge's calculations about which the plaintiff raises a concern is item 486. Item 486 is an allowance in favour of the first and second defendants in respect of rental income the first and second defendants estimated the plaintiff had received over a period of six years from a partnership property registered in her name, 250C Ewen Street, Woodlands. The allowance claimed by the first and second defendants was $156,000. The registrar did not deal specifically with item 486 in the course of dealing with objections to the first and second defendants' account but commented on the item in the course of dealing with the first and second defendants' contention that the plaintiff had failed to account for rental income from this property. The registrar explained her approach as follows:
564On the Taking of Account I find that the Plaintiff failed to account, at all, for income up to the Dissolution Date. The First and Second Defendants contention (that $156,000 would need to be credited to the First and Second Defendants as shown at Item 486 of Exhibit 3) is speculative. As to rental, however, the First and Second Defendant do not appear to have paid any rent whilst they lived in partnership properties. Given that it is Chan who was apparently living in the subject property (and taking the benefit thereof from the partnership) it would seem inequitable for him to pay rent to the partnership up to the Dissolution Date when other partners (the First and Second Defendants) did not pay rent in respect of their occupation of partnership property. Accordingly, I find that the Plaintiff does not have to bring rent to account.
Ms Delbridge's report includes an allowance in the sum of $156,000 in the first and second defendants' favour in respect of item 486. It appears to me that this allowance does not reflect the registrar's finding. I have not received submissions from the first and second defendants' dealing directly with this point but, subject to hearing their submissions, my provisional view is that this allowance should be removed. I add that this does not reflect any failing on the part of Ms Delbridge as the orders did not require her to make any adjustment to item 486. The plaintiff should have brought this matter to the attention of the court when the orders instructing the IAE were being formulated. The directions to be made should make provision for the first and second defendants to have the opportunity to make submissions in respect of item 486.
Item 487
The next item to which the plaintiff directs the court's attention is item 487. This is similar in nature to item 486 in that it was an allowance claimed by the first and second defendants to account for rental income received by the plaintiff in respect of another partnership property 78C Edgecumbe Street. I address all the issues raised in respect of 78C Edgecumbe Street in the next section of these reasons.
Items 471 and 474
The next issue raised by the plaintiff is that there is a calculation error in Ms Delbridge's report amounting to $7,313. The plaintiff says that the error is to be found in the adding up of various allowances for capital contributions by her and her former husband (items 471 and 474). The alleged calculation error was not raised until late in the day by the plaintiff and was not a matter addressed in oral submissions. I will provide the first and second defendants with the opportunity to respond to this alleged error.
78C Edgecumbe Street
In her report, the registrar outlined the position in respect of 78C Edgecumbe Street as follows:
580Chaney J made a finding that 78C Edgecumbe Street was a partnership asset to be bought to account on the Taking of Account. Accordingly, rental income and expenses for that property are relevant for the Taking of Account up to the date of Dissolution Date.
581The Plaintiff has only disclosed rental evidence (page 186 of Exhibit 40) of $33,000 for the year 2013. That evidence is found at page 908 of Exhibit 40, being a letter from the managing agent, SOCO, advising that the property was rented for $900 per week between 2012 to 2013. No monthly rental income statements nor statements nor bank statements have been provided to support the rental figure. Given that the property is commercial then one might expect that it has been rented for a longer period or periods.
582The Plaintiff has not provided further data because of her belief that there has been an in specie transfer. However, as stated above there is no finding, at trial, as to that fact and, implementing the Orders, 78C Edgecumbe Street remains a partnership asset to be accounted for up to the Dissolution Date Even in regard to the period that the Plaintiff has disclosed the property was rented for she should have disclosed far more, lease agreement/s, rental receipts, bank statements, expenses (for example, rates); all of this information should have been provided.
583For the purposes of the Taking of Account the income and expenses in respect of 78 Edgecumbe Street are relevant up to the Dissolution Date. That they were not provided is a matter of great concern, as it prejudices the First and Second Defendants', and the Plaintiff's position, on the Taking of Account.
584On the Taking of Account I find that the Plaintiff failed to properly account for income and expenses. However, the First and Second Defendants contention (that $169,000 would need to be credited to the First and Second Defendants as shown at Item 487 of Exhibit 3) is speculative. This speculative market value rental should be attributed to the Plaintiff, if a Judge makes such an order, if she fails to comply with any order that the Judge receiving this report may decide to make as to the documents to be provided to the accountant who will apply these findings into the First and Second Defendants' account.
586The benefit that the Plaintiff has received (minus expenses) must be accounted for. My recommendation would be that the accountant can deal with this matter on the papers and if he is not satisfied that a proper accounting can be made from the documents provided to him then this discrete area can either be referred back to a Registrar or, appropriate orders having been made, could be determined by a Judge on the papers.
586As to the capital value, the Plaintiff appears to contend for a figure of $813,000. This is objected to by the First and Second Defendants who say that the finding that should be made is that the value is $893,647.01, being the net proceeds of sale of the adjoining, similar, property 78B Edgecumbe Street (sold on 26 November 2012). This is not a licenced valuation as at the Dissolution Date; it is merely a single comparable sale; which is insufficient to found valuation evidence. There is no direct evidence of the value of 78C Edgecumbe Street as at the Dissolution Date on which a finding as to its value, even in the absence of competing evidence, can be made.
587I find that the question of what figure should be included as the capital value of 78C Edgecumbe Street must be determined by an accountant appointed by the Court (with the assistance of a report from an independent licenced valuer with the relevant expertise).
78C Edgecumbe Street rental income
The Orders directed the plaintiff to provide the IAE with all lease agreements, rental receipts, bank statements and expenses for the period December 2009 to 28 June 2018. The plaintiff's time for compliance with this order was extended to 7 June 2021. On 9 June 2021 the plaintiff's solicitors provided Ms Delbridge with some information in purported compliance with her obligation under the terms of the order. The materials provided by the plaintiff included material relating to rental income received after the dissolution date. The account concerns income received up to the date of dissolution.
As I understand the plaintiff's position, she contends that the net rental income for which she is liable to account is $140,266 and not $169,000, which is the figure contained in the first and second defendants' account and in Ms Delbridge's report. Thus, the plaintiff says that there should be an allowance in her favour of $28,734. The allowance in Ms Delbridge's report is required to be adjusted to reflect the actual rental income received by plaintiff in respect of 78C Edgecumbe Street.
In comparative terms the difference between the parties in respect of this items is minor. The orders contemplated that the IAE calculate the allowance. On reflection I am concerned that following this course may lead to yet further disputation about any determination that may be made by Ms Delbridge and that it may be more efficient and cost effective for this issue to be dealt with by me on a summary basis. By summary basis I contemplate the identification of the areas of contention and the preparation of the materials necessary for me to resolve those contentious areas with the benefit of brief oral submissions from the parties.
78C Edgecumbe Street capital value
The Orders provided for the plaintiff to obtain a valuation of 78C Edgecumbe Street by 7 June 2021 and to provide it to the IAE and to file and serve the same. The plaintiff did not comply with her obligation to obtain a valuation by 7 June 2021 but did provide Ms Delbridge with a valuation of 78C Edgecumbe Street on 21 June 2021 and a further valuation on 15 July 2021. The valuations were in the amounts of $1,050,000 and $1,000,000 respectively.
The plaintiff seeks a direction extending her time for compliance with the Orders to enable her to adduce this valuation evidence. In their written submissions the first and second defendants objected to an extension of time being granted but said that if an extension is granted then they should be provided with an opportunity to obtain a responsive valuation though I note the Orders provided for the first and second defendants to obtain their own valuation.
In the course of oral submissions counsel for the first and second defendants maintained the objection to the plaintiff's time for complying with the order as to valuation evidence being extended but proposed that the figure in the first and second defendants' account for the capital value of 78C Edgecumbe Street should be accepted.
To understand the significance of that submission some context is required.
In his judgment, Chaney J determined that unsold properties should be treated as follows:[6]
131For 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.
[6] Cheng v Lam[No 2] [2018] WASC 199.
78C Edgecumbe Street is a property in the plaintiff's name. For the purposes of the first and second defendants' account 78C Edgecumbe Street had been included at an estimated value of $850,000. This was the figure allowed in the first and second defendants' favour to reflect the fact that 78C Edgecumbe Street was an unsold property in the plaintiff's name that had been a partnership asset.
For the purposes of the account, a reduction in the value of the property equates to a reduction in the amount for which the plaintiff has to account to the first and second defendants. This is presumably why on the taking of the account before the registrar the plaintiff appeared to contend that the capital value of the property was $813,000 and objected to the figure of $850,000. Conversely, from the first and second defendants' perspective, an increase in the value of the property equates to an increase in the amount in respect of which the plaintiff is obliged to account to them.
Counsel for the first and second defendants explained his clients' position as follows:[7]
Because, otherwise, if your Honour [makes an order extending the time for the plaintiff to adduce valuation evidence] it opens a door to the need to accord us the opportunity to obtain our valuation. You then, potentially, have an unresolved dispute between valuers as to a figure, all of which should have taken place in the cauldron of the taking of accounts back before the registrar two years ago. So if that door is open, then that's the consequence. If that door is not open, then the figure is as it appears in the taking of the accounts.
[7] ts, 21 July 2021, 1027.
There was no suggestion by counsel for the first and second defendants that they would seek a compensating benefit elsewhere in the accounting process.
Counsel for the plaintiff objected to the course proposed by the first and second defendants' counsel on the basis that it was 'punitive' to the plaintiff because:[8]
... the higher the assets - the higher the value of the assets, the greater the profit share that everybody gets. So if it's worth $1 million, that's a hundred and fifty thousand dollar difference, and everybody gets their share of the profit.
[8] ts, 21 July 2021, 1031.
From both perspectives, given the intensity of the argument over lesser amounts, the reversal of the parties' positions on the issue of capital value of 78C Edgecumbe Street is puzzling. I do not understand the plaintiff's contention that the concession that the first and second defendants are prepared to make in her favour is punitive. If the property is worth more than $850,000 and the profit should be greater then she is the only person who will benefit. Equally, from the position of the first and second defendants it is difficult to understand why they would wish to challenge the valuations obtained by the plaintiff as the higher value benefits them.
Be that as it may, the first and second defendants' desire to achieve a final outcome is understandable and if they are prepared to make a concession in the plaintiff's favour in respect of the valuation of 78C Edgecumbe Street I do not see any reason why the account should not proceed on that basis.
Income and expenses after the dissolution date
The plaintiff proposed directions which would have the effect of obliging the first and second defendants to provide Ms Delbridge with evidence of rental income received by them from three other partnership properties for the period 1 August 2019 to 30 June 2019. Those properties were 167 Lockhart Street, Como, 167A Lockhart Street, Como and unit 1, 84 Matlock Street, Mount Hawthorn.
There are two reasons why such directions should not be made. The first is the rental income from these properties for that period form no part of the exercise that the Orders provide for the IAE to undertake and it is too late for the plaintiff to make another attempt to vary the Orders. The second, and more fundamental reason, is that the plaintiff's directions misunderstand the nature of the account that has been undertaken. The parties have been required to account to the date of the dissolution of the partnerships (28 June 2018) and not for any later period.
Any accounting for rental income earned after the dissolution date from properties that were formerly partnership properties is a separate exercise. In not acceding to the directions proposed by the plaintiff for the first and second defendants to bring this income into account I am not to be taken to be suggesting that there should not be an accounting for income and expenses between the parties in whose names former partnership properties remain registered.
For the same reason I do not accept the direction proposed by the first and second defendants that Ms Delbridge should be instructed to take into account interest on bank loans up to 30 June 2021.
Unit 1, 84 Matlock Street, Mount Hawthorn
The plaintiff proposes that the first and second defendants be directed to obtain a valuation of unit 1, 84 Matlock Street, Mount Hawthorn. The purpose of this proposed direction is not apparent. The value of unit 1, 84 Matlock Street was dealt with by the registrar in her report as follows:
519I find that the First and Second Defendants have accounted for the valuation of Unit 1/84 Matlock Street in that the respective 2013 valuations of Units 1 and 2 and the prorated value of Unit 1 as against Unit 2 as at 1 August 2018 are a reasonable and pragmatic calculation which can be accepted on a balance of probability. The Plaintiff called no competing expert evidence. The only evidence of a proper commercial valuation of Unit 1/84 Matlock Street has therefore been adduced by the First and Second Defendant. The calculation values the property as at 1 August 2018; which is sufficiently proximate to the Dissolution Date for that valuation to be accepted on the Taking of Account. The figure incorporated in the First and Second Defendants' account is inclusive of GST and I find that to be the correct calculation.
I am satisfied that further directions are not required in respect of the capital value of unit 1, 84 Matlock Street, Mount Hawthorn.
Sale of properties and selling expenses
The parties appear to agree that 167 and 167A Lockhart Street, Como should be sold but do not appear to agree in relation to the sale of any other properties.
The first and second defendants propose that the selling fees included in their account as item 217 (as estimates) should be included in Ms Delbridge's report even though these amounts were not allowed by the registrar on the basis that the costs had not yet been incurred. The first and second defendants propose directions to the same effect in respect of the selling fees of 78C Edgecumbe Street and 250C Ewen Street, Woodlands albeit that the plaintiff does not agree to the sale of these properties.
The disagreement between the parties presents two issues. How should selling fees be dealt with for the purposes of finalising the account and how should the dispute over the sale of those properties about which the parties disagree be dealt with.
As to the selling fees my view is that these should not be included in the account. The registrar disallowed the amounts. There is no reason to allow the issue of selling fees to delay the finalisation of the account. Account can be taken of the actual amounts when the sales take place.
The dispute about the sales of those properties about which there is disagreement is more involved. Ordering sales is not a matter within the scope of giving effect to the account and, at least on the face of it, appears to be outside of the relief claimed by either side to the dispute in the versions of the statement of claim and counterclaim on which the parties proceeded to trial. My provisional view is that the sale of the properties is a matter which should be considered at a strategic conference.
Concluding observation
I have taken the unusual step of publishing written reasons in respect of these directions because the dispute between the parties not only has a long and complicated history but is one which involves considerable detail and the parties' submissions addressed a wide range of issues.
Not all of the observations I have made in these reasons were the subject of submissions at the last directions hearing and, to ensure procedural fairness, I will provide the parties with the opportunity to make further submissions on any matters in these reasons that the parties have not had an opportunity to address - this is not an opportunity to re-present submissions I have rejected. Otherwise the parties should prepare a minute of orders addressing the further directions to be made in a manner that reflects these reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RC
Research Associate to the Honourable Justice Tottle
6 AUGUST 2021
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