Cheng v Lam [No 8]
[2022] WASC 122
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: CHENG -v- LAM [No 8] [2022] WASC 122
CORAM: TOTTLE J
HEARD: 15 DECEMBER 2021
DELIVERED : 12 APRIL 2022
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
Catchwords:
Practice and procedure - Application for further orders to give effect to account - Turns on own facts
Legislation:
Nil
Result:
Application dismissed
Category: B
Representation:
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 |
Case(s) referred to in decision(s):
Cheng v Lam [No 2] [2018] WASC 199
Cheng v Lam [No 2] [2021] WASCA 196
Cheng v Lam [No 3] [2020] WASC 45
Cheng v Lam [No 4] [2020] WASC 175
Cheng v Lam [No 5] [2021] WASC 129
Cheng v Lam [No 6] [2021] WASC 265
Cheng v Lam [No 7] [2021] WASC 417
TOTTLE J:
Introduction
These reasons address further issues that have emerged in the taking of accounts following the dissolution of the partnerships between the parties. The taking of accounts was the subject of orders made by Chaney J on 28 June 2018 (the June 2018 orders) following the delivery of judgment in the action. These reasons assume familiarity with Chaney J's reasons,[1] the report of Registrar Whitbread on the taking of the accounts,[2] and my reasons for decision concerning earlier interlocutory disputes.[3]
[1] Cheng v Lam [No 2] [2018] WASC 199.
[2] Cheng v Lam [No 3] [2020] WASC 45.
[3] Cheng v Lam [No 4] [2020] WASC 175; Cheng v Lam[No 5] [2021] WASC 129; Cheng v Lam[No 6] [2021] WASC 265; Cheng v Lam[No 7] [2021] WASC 417.
On 26 November 2021 I made orders that included an order to the effect that the Independent Accounting Expert (the IAE) be directed to adjust certain amounts contained in her earlier report of 2 February 2021.
The IAE adjusted her report in accordance with the orders and an amended report dated 3 December 2021 was attached to an affidavit filed and served on 6 December 2021. Relevantly the amended report recorded a net balance of $137,229 in favour of the plaintiff and the second defendant by counterclaim before any account was taken of funds held in an 'escrow account' pursuant to orders of the Family Court.[4]
[4] Affidavit of Louise Marie Sales affirmed 6 December 2021, annexure C - items 494 and 497 of Appendix C/9.
The issues for determination were brought before the court by a minute of proposed orders for directions filed by the first and second defendants on 8 December 2021 and a revised minute of orders filed by the plaintiff on 14 December 2021.
The plaintiff sought orders that the IAE be directed to make further adjustments to her report, alternatively, that the IAE be directed 'to prepare balance sheets and capital accounts for the eight partnerships to 30 June 2018' and for that purpose the IAE be provided with additional information, primarily various financial statements prepared by the plaintiff herself. The full text of the orders sought by the plaintiff is reproduced in appendix 1 to these reasons.
The first and second defendants sought orders to the effect that the plaintiff and second defendant to the counterclaim account for the value of unsold partnership properties they wished to keep in their names by making a payment in respect of the value (determined by reference to a valuation that was obtained at an earlier stage in the proceedings), alternatively that the properties be sold and the proceeds of sale be dealt with in the manner set out in the proposed orders. The first and second defendants proposed that they purchase the interest of the plaintiff and second defendant by counterclaim in certain properties. The full text of the orders sought by the first and second defendants is reproduced in appendix 2 to these reasons.
Each side opposes the making of the orders proposed by the other -there is no common ground as to the next steps.
At the hearing on 15 December 2021, I made an order that the report of the IAE dated 3 December 2021 should be adopted. Before turning to the orders themselves some preliminary observations are useful.
Preliminary observations
As Chaney J recorded in the primary judgment the claims between the parties arise from the breakdown of a family arrangement that involved investments in property developments over a period of approximately 12 years ending in 2012. There were no formal agreements and conventional financial statements were not prepared in respect of each development. Against that background the taking of the accounts was always going to be a difficult exercise and (at the risk of understatement) so it has proved to be.
The preparation of the IAE's report was intended to be the final step that would enable a balance to be determined and an order for payment to be made thereby bringing this litigation to an end.
Both sides contend, however, that there are a number of matters that must be determined before the dispute can be finalised, though there is only a very modest level of agreement as to what those matters are. Without being exhaustive, the outstanding matters identified by each side include:
(a)From the plaintiff's perspective:
(i)the preparation of financial statements to record in the form of conventional profit and loss statements and balance sheets, the financial status of each partnership; and
(ii)the payment of additional sums she contends are due to her that have not been recognised by the account.
(b)From the perspective of the first and second defendants:
(i)the plaintiff should be required to pay 'the partnership' for each unsold property she wishes to retain in her name;
(ii)alternatively, the unsold properties in the plaintiff's name must be sold and the proceeds of sale applied in the payment of debts and, in the case of 250C Ewen Street, in the reimbursement of capital contributions to the first and second defendants;
(iii)the plaintiff should be ordered to sell her interest in properties jointly owned by the plaintiff and the first and second defendants (167 and 167A Lockhart Street) to the first and second defendants and that the sale of the plaintiff's interest in respect of 167A Lockhart Street should involve no payment of cash to the plaintiff rather the consideration should be taken to be the capital contributions made by the first and second defendants to the purchase and development costs;
(iv)unit 1, 84 Matlock Street - an unsold property in the first defendant's name should be treated as owned by the first defendant and not be the subject of any obligation to account because the first and second defendants contributed the entire capital required for its purchase and development.
An isolated area of common ground appears to be that the account will need to be updated to reflect interest and costs associated with bank loans, rental income since 28 June 2018, and, if properties are sold, the actual sale proceeds and the actual selling costs.
The substantive relief sought by each side was the taking of an account.[5] Neither side sought the orders required to effect a winding up of the partnerships, that is, the selling of the properties, the application of the proceeds of sale in repayment of debts and liabilities, the repayment of advances, the repayment of capital and the division of any residue, and, the preparation of final accounts.
[5] Cheng v Lam [No 2] [5] - [7].
The normal rule in the event of a general dissolution of a partnership is that each partner is entitled to insist that all partnership property is sold.[6] No doubt for their own reasons neither side has insisted on a sale of the partnership properties.
[6] Lindley & Banks on Partnership (20th ed, 2017) [23-188].
My overarching observation is that the parties' proposed orders seek outcomes that cannot be achieved within the present proceedings. The only process before the court is the taking of accounts. It is important to emphasise that the taking of the accounts is directed to determining a balancing figure to be paid by one party to the other. Each side is trying to build into the process of the taking of accounts certain steps that it considers are required to achieve a winding up of the partnerships but the taking of accounts is not a process that can be adapted to wind up the partnerships. Directions hearings convened to finalise the taking of accounts following the adoption of Registrar Whitbread's report are ill-suited to the resolution of the issues generated by the ongoing disputation between the parties concerning the winding up of the partnerships. The taking of accounts and the winding up are inter-related in terms of subject matter but procedurally they are distinct.
The court should assist the parties to resolve as much of their dispute as falls within the ambit of these proceedings as is possible and to be as flexible in approach as is permitted by the scope of the remedy of an account. Very regrettably (because it would seem that further proceedings will be required) the relief sought by the parties in the orders proposed by them falls outside the June 2018 orders and outside the scope of the proceedings.
The orders proposed by the plaintiff
Paragraph 1 of the plaintiff's minute proposed that the IAE be directed to make further adjustments to her report. As I have explained in earlier reasons the time for proposing adjustments to the IAE's report, of the nature proposed by the plaintiff, has passed.[7] In reality the adjustments proposed by the plaintiff constitute collateral attacks on Registrar Whitbread's report.
[7] Cheng v Lam [No 2] [2021] WASCA 196 [16]
The alternative order proposed in par 2 of the plaintiff's minute - that the IAE be directed to prepare balance sheets and capital accounts for the eight partnerships - revisits an issue that has already been determined against the plaintiff, namely that the taking of accounts required the preparation of conventional financial statements. The preparation of such statements was not required by the orders for the taking of accounts - it was not even an order the plaintiff asked the court to make in the writ or in her further amended statement of claim. There is no basis upon which the court could or should make such an order.
The plaintiff advanced no cogent reason why the court should not adopt the IAE's report of 3 December 2021. The IAE had undertaken the task that she was required to undertake. There was no further work for the IAE to do. In order to progress this matter it was appropriate to adopt the IAE's report of 3 December 2021.
The orders proposed by the first and second defendants
In my judgment the orders proposed by the first and second defendants fall outside of the terms of the June 2018 orders. The express terms of the June 2018 orders contemplate only one payment being made between the parties, being that provided for by order 7 which was as follows:
Any party to the account found liable to the other party to the account do pay to that other party the amount due within 28 days of the Order being made that such party is liable to another party to make such payment.
Further the June 2018 orders do not provide for the sale of any of the properties that were the subject of the partnerships that remained unsold. At [131] of his judgment, Chaney J stated:
Treatment of unsold properties
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.
This approach to unsold properties was reflected in order 4(f) of the June 2018 orders which was as follows:
For accounting, there should be no distinction drawn between the developed properties which were sold, and those that are yet unsold. The value of the unsold properties are to be treated as a receipt of value of those properties 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.
The first and second defendants contended that orders 4(a) and 4(f) of the June 2018 orders provided for the framework for dealing with unsold properties following the taking of an account. Paragraph 4(f) is set out above. Paragraph 4(a) was as follows:
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 or borrowings 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 repayment of any payments made a party to the agreement in discharge of such costs and expenses other than by use of the parties joint funds or 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.
Paragraph 4(a) sets out the basis for the taking of accounts in an entirely orthodox manner. It is not directed to, and makes no provision for, the sale of properties following the taking of an account. I do not accept the contention that the June 2018 orders provide the framework for the sale of the properties following the taking of the account but, in any event, the taking of the accounts has not been completed.
Mr McGowan, counsel for the first and second defendants, contended that a sale of the unsold properties (or payment of their value by the plaintiff) was required because:[8]
the figure of [$137,000 - the net balance in the IAE report] proceeds on the assumption [the plaintiff] retains the properties in her name whereas the taking of account brings to account all of the properties as to their value, in other words, a notional sale for that purpose at which there would be a net figure. So unless and until that step is taken, the proposition advanced by the plaintiff is inherently artificial.
[8] ts 1182.
A difficulty with this contention is that the Registrar's report treated the value of the unsold properties as matters to be taken into account (as directed by order 4(f)) in calculating the balance between the parties, see, as to 78C Edgecumbe Street, [580] - [587] of the report, and as to 250C Ewen Street, item 319 [408] and [556] - [566] of the report (though I observe there was an issue between the parties as to the value to be attributed to 78C Edgecumbe Street for the purposes of the account[9] - it is not clear whether any value has, in fact, been taken up in the IAE's report). My understanding of the underlying rationale for the order proposed by the first and second defendants is that the account has been prepared on the hypothesis that the plaintiff will account for the value of the unsold properties in her name and that until she actually accounts for that value, by payment, no order for payment in her favour of any balance notionally found to be due to her on the taking of the account should be made. Assuming this understanding to be correct it highlights that the taking of the account and the winding up of the partnerships are related but distinct processes.
[9] Cheng v Lam [No 6] [23] - [34]
Further, proposed order 2 of the first and second defendants' orders proposes that the plaintiff and the second defendant by counterclaim pay 'the partnership' the value of the unsold properties - it is not clear to whom payment is to be made and it is not clear how the proceeds should be applied.
My preliminary observations about the limited nature of the taking of accounts process apply to the proposed orders for the reimbursement to the first and second defendants of their capital contributions and to the proposed treatment of unit 1, 84 Matlock Street.
Finally, there is no basis upon which the court could make orders to the effect that the first and second defendants be entitled to keep their interests in 167 and 167A Lockhart Street and compel the plaintiff to sell her interest in those properties to the first and second defendants.
The outcome
I have made the order adopting the IAE's report but I am not prepared to make any of the orders proposed by the parties.
Chaney J concluded his judgment with the following observation:[10]
... 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.
[10] Cheng v Lam [No 2] [136].
The parties' minutes of proposed orders suggest that they are still a long way from a final resolution of their dispute. As I hope is clear from these reasons, the taking of account procedure is not an appropriate vehicle for the determination of the outstanding issues. I take this opportunity to repeat Chaney J's suggestion that the parties look at alternative ways of resolving their differences.
The matter will be listed for a strategic conference to consider the steps that are required to finalise the accounts that can be the subject of directions.
Appendix 1
1.(1) The IEA is directed to extract from the TOAL (Schedule B) recast “DFA” Mary and Chan's share of the surplus monies of the partnerships contained in the TOAL (Schedule B) recast “DFA” based upon Items 22 & 45 (73 Main Street), 122 & 160 (78 Edgecumbe Street), 180 & 204 (111 Shakespeare Avenue), 269 & 296 (70 Edgecumbe Street), 329 & 361 (250 Ewen Street) and 410 & 467 (82 and 84 Matlock Street) and to allocate Mary and Chan's share of the surplus monies of the partnerships as an additional entitlement of Mary and Chan in addition to Items 494 and 497.
(2) The IEA be directed to adjust her report of 2 February 2021 by:
(a) adding to Item 113 rent of $109,403; and
(b)to make any adjustments to her report that result.
(3) The IEA be directed to adjust her report of 2 February 2021 by adjust Item 485 by
(a)removing GST from her calculation; and
(b)allowing 33.3% of the net profit inclusive of GST at Item 402 (instead of Item 403) and to make any adjustments to report that result.
2.Alternatively to the order sought in para 1, Ms. Delbridge (IAE) is to prepare balance sheets and capital accounts for the 8 partnerships to 30 June 2018 (with the inclusion of interest and costs expenses incurred from Commonwealth Bank Home Loans 5110311108 and 422911901 as set out in the affidavit of F Lam of 30 March 2020 being brought to account since 30 June 2018 to the date of the IAE's report) and after making the adjustments ordered in para 1 of the orders made by Justice Tottle on 26 November 2021 and she is to receive the following additional information and source documents being: -
(a)From Exhibit 40, the Affidavit of Mary Yuen Shan Cheng sworn 16 May 2019 only the following:
Income Statement Partnership 1 - 17 and 17A Darch Street
Statement of Financial Position Partnership 1 - 17 and 17A Darch Street, Yokine
Notes to Financial Statements Partnership 1 - 17 and 17A Darch Street, Yokine
Income Statement Partnership 1 - 83, 85, 87 and 89 Roberts Street, Osborne Park
Statement of Financial Position Partnership 1 - 83, 85, 87 and 89 Roberts Street, Osborne Park
Notes to Financial Statements Partnership 2 - 73 Main Street, Osborne Park
Reconciliation Report - 83, 85, 87 and 89 Roberts Street, Osborne Park
Income Statement Partnership 3 - 111 Shakespeare Avenue, Yokine
Statement of Financial Position Partnership 3 - 111 Shakespeare Avenue, Yokine
Notes to Financial Statements Partnership 3 - 111 Shakespeare Avenue, Yokine
Income Statement Partnership 3 - 111A, B and C Shakespeare Avenue, Yokine
Statement of Financial Position Partnership 3 - 111A, B and C Shakespeare Avenue, Yokine
Notes to Financial Statements Partnership 3 - 111A, B and C Shakespeare Avenue, Yokine
Reconciliation Report Partnership 3 - 111A, B and C Shakespeare Avenue, Yokine
Income Statement Partnership 4 - 78A, B, C and D Edgecumbe Street, Como
Statement of Financial Position Partnership 4 - 78A, B, C and D Edgecumbe Street, Como
Notes to Financial Statements Partnership 4 - 78A, B, C and D Edgecumbe Street, Como
Income Statement Partnership 5 - 167 Lockhart Street
Statement of Financial Position Partnership 5 - 167 Lockhart Street
Notes to Financial Statements Partnership 5 - 167 Lockhart Street
Income Statement Partnership 6 - 70A and 70B Edgecumbe Street, Como
Statement of Financial Position Partnership 6 - 70A and 70B Edgecumbe Street, Como
Notes to Financial Statements Partnership 6 - 70A and 70B Edgecumbe Street, Como
Income Statement Partnership 7 - 250A, B, C and D Ewen Street, Woodlands
Statement of Financial Position Partnership 7 - 250A, B, C and D Ewen Street, Woodlands
Notes to Financial Statements Partnership 7 - 250A, B, C and D Ewen Street, Woodlands
Income Statement Partnership 8 - Units 1 to 6, 84 Matlock Street, Mount Hawthorn
Statement of Financial Position Partnership 8 - Units 1 to 6, 84 Matlock Street, Mount Hawthorn
Notes to Financial Statements Partnership 8 - Units 1 to 6, 84 Matlock Street, Mount Hawthorn
(b)And from Ex 40 annexure “MC3” all source documents regarding financial statements for the properties referred to above.
(c)Exhibit 41 Affidavit of Mary Yuen Shan Cheng 28th May 2019 “MC 4” further source document to financials documents in Exhibit 40.
(d)The reasons and findings of Justice Chaney dated the 28th of June 2018.
(e)Books of account financial records bank statements and any other information of the parties requested by the IAE from the parties, and the parties provide to Ms Delbridge any additional information requested within seven (7) days of any such request.
3.The costs of carrying out the tasks in Order 1 alternatively 2(a) to (e) be jointly paid by the Plaintiff and the First and Second Defendants.
4.By 23 December 2021 the First and Second Defendant file and serve any submissions they wish to make in opposition to the Orders sought in paragraphs 1 and 2.
5.The matter be listed for a further hearing before Justice Tottle on a date to be fixed on 15 December 2021.
6.Within fourteen (14) days of the making of this Order the First and Second Defendants pay all monies owing to the Commonwealth Bank of Australia on CBA Loan 511031108 and Loan 422911904.
7.The Costs of the Directions Hearing be reserved.
Appendix 2
1.Order for costs pursuant to Order 4 of Orders made 26 November 2021.
21 July 2021 Preparation for and appearance on Special Appointment in Judge's Chambers $2,178.00 5 August 2021 Appearance at Reserved Decision and argument as to further Orders in the matter. $968.00 13 October 2021 Special Appointment in Judge's Chambers $2,178.00 26 November
2021Attending on reserved decision and further directions. $968.00 Total $6,292.00 80% of total $5,034.00 Further Direction Orders
Chaney J's judgment of 28 June 2018 provided the framework in dealing with unsold properties following the taking of the account as found at Paragraph 131 and the subsequent Orders made at 4A and 4F, therefore the Defendants seeks the following Orders in the settlement of the Account, when considering the Plaintiff (Mary) and Second Defendant By Counter Claim (Chan) profit share from the partnership developments and capital contributions made to the partnership have already been accounted at Account Item 494 (ultimate balance save adjustments).
2.The Plaintiff and Second Defendant By Counterclaim are required to pay the-partnership forthwith the receipt of values for the unsold partnership properties they wish to keep in their names or in part, per the licensed valuation in order to finalise the ultimate balance in accordance with Chaney J's Orders of 28 June 2018.
3.Alternatively, if the Plaintiff and Second Defendant By Counterclaim are unable to repay the receipt of value amounts to the partnership, these unsold partnership properties, in their names or in part, are to be disposed of as follows:
78C Edgecumbe Street Como
a.Within 30 days this property be listed for sale with a local licensed real estate agent nominated by the Defendants.
b.The net sales proceeds are to be used to discharge the cost and expenses in accordance with Justice Chaney's Order 4A (28 June 2018).
LiabilitiesOutstanding
i.Mortgage to Commonwealth Bank against Loan 511031108. Amount owing as 21 August 2021 is $1,626,083.
ii.Caveat lodged by Chemech Pty Ltd over unpaid building contract. Amount owing of $1,038,000 (at Account Item 115) is based on Agreed Facts (9.21, 11.4, 11.9, 11.14, 11.19) and the finding made by Registrar Whitbread at [250].
iii.Any unpaid rates and charges pertaining to local and water authorities.
250C Ewen Street Woodlands
c.Within 30 days this property be listed for sale with a local licensed real estate agent nominated by the First and Second Defendants.
d.The net sales proceeds are to be used to discharge the cost and expenses in accordance with Justice Chaney's Order 4A (28 June 2018).
Liabilities Outstanding & Capital Contributions made by the Defendants
i.Caveat lodged by Chemech Pty Ltd over unpaid building contract. Amount owing of $527,000 (at Account Item 323) is based on Agreed Facts (13.3, 13.9, 13.11 and 13.19) and findings made by Registrar Whitbread at [412] – [419].
ii.Any unpaid rates and charges pertaining to local and water authorities.
iii.The balance following the payment of the liabilities to then reimburse the Capital Contributions made by Frank & Andrea in the sum of $1,158,730 (Account Item 349), as per findings made by Registrar Whitbread at [420] – [421] is based on agreed facts 12.9 & 12.10.
167 (Lot 2) Lockhart Street Como
e.Since the First and Second Defendant (Frank and Andrea), Plaintiff (Mary) and Second Defendant By Counterclaim (Chan) co-owns this property in equal shares, the First and Second Defendant seek to retain this property already in their names evinced by their capital contributions in the sum of $1,130,096 (Account Item 226), findings made by Registrar Whitbread at [318] is based on agreed facts 14.11 & 14.12.
f.The First and Second Defendant further seeks to purchase (either through themselves and/or nominee) the equal quarter share each registered in the Plaintiff and Second Defendant By Counterclaim's name at the prorated valuation of $720,000 (Account Item 215) provided by Valuation WA. That is, $360,000 for the purchase of the remaining half share of the Plaintiff and Second Defendant By Counterclaim.
g.The purchase proceeds are to be used to discharge the cost and expenses in accordance with Justice Chaney's Order 4A (28 June 2018).
Liabilities Outstanding
i.Mortgage to Commonwealth Bank against Loan 422911904. Amount owing as 21 August 2021 is $661,309.
ii.Any unpaid rates and charges pertaining to local and water authorities.
167A (Lot 1) Lockhart Street Como
h.Since the First and Second Defendant (Frank and Andrea), Plaintiff (Mary) and Second Defendant By Counterclaim (Chan) co-owns this property in equal shares, the First and Second Defendant seek to retain this property already in their names evinced by their capital contributions in the sum of $1,130,096 (Account Item 226), findings made by Registrar Whitbread at [318] is based on agreed facts 14.11 & 14.12.
i.The First and Second Defendant further seeks the transfer (either to themselves and/or nominee) the equal quarter share each registered in the Plaintiff and Second Defendant By Counterclaim's name at the prorated valuation of $800,000 (Account Item 216) provided by Valuation WA. That is, $400,000 for the transfer of the remaining half share of the Plaintiff and Second Defendant By Counterclaim.
The transfer treatment is on the basis of capital contributions since Frank and Andrea contributed $1,130,096 for their 50% share against the Total Cost of Development (including 167B Lockhart St) being $1,319,828 at Account Item 213. Furthermore, this is considering Chan and Mary's capital contributions have been accounted for in their net position at Item 494, and there are no liabilities save any unpaid rates and charges which are to be borne by the Defendants and the Cost of the Development.
When considering Justice Chaney's Order 4A (28 June 2018), any sales proceeds or transfer distribution would be;
Liabilities Outstanding & Capital Contributions made by the Defendants
i.Any unpaid rates and charges pertaining to local and water authorities.
ii.Capital Contributions made by the Defendants (Frank & Andrea) in the sum of $1,130,096 (Account Item 226), findings made by Registrar Whitbread at [318] is based on agreed facts 14.11 & 14.12.
4.With respect to the unsold partnership property in the First Defendant's name, ie. Unit 1, 84 Matlock Street Mount Hawthorn, the First Defendant seek no further requirement to account following the dissolution date since the property is no longer a partnership property in accordance with Order 4A and the fact the entire capital contributions as found by the Registrar was made by Frank and Andrea and in accordance with Chaney J's Order 4(a), this property had been settled pursuant to those orders.
The particulars are:
a.This property is in the First Defendant's sole name and he seeks to retain this property.
b.The capital contributions made by the partners towards this development is such that Chan and Mary did not contribute capital towards this project and Frank and Andrea contributed $988,245 in capital as outlined below:
Capital Contributions Made By Partners
i.Frank & Andrea - $988,245 (Account Item 455) a finding made by Registrar Whitbread at [533] – [540].
ii.Chan & Mary - Nil (Account Item 460) a finding made by Registrar Whitbread at [543] – [547].
c.The liabilities outstanding on this property is owed to Chemech Pty Ltd for the unpaid building contract. As of the dissolution date, the First Defendant has assumed the outstanding liabilities associated with this property and since the property is already in the First Defendant's sole name, no further treatment or adjustment is required.
Liabilities Outstanding
i.Caveat lodged by Chemech Pty Ltd over unpaid building contract. Amount owing of $2,088,004 (at Account Item 412) is based on the finding made by Registrar Whitbread at [530].
5.Following the treatment (sale and/or transfer) of all the unsold partnership properties, the IAE is to provide her final adjustment at Item 494 incorporating the additional interest and cost associated with the two CBA home loans at the settlement of these unsold properties; rental income or benefits received by the partners in accordance with Chaney J's order.
6.On the settlement of the Account, the party (or partners) owing the ultimate balance at Item 494 is to pay the other party the amount forthwith.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
RC
Associate to the Honourable Justice Tottle
12 APRIL 2022
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