Creggan Holdings Pty Ltd as trustee for the Gwendoline Trust v Rizzi as trustee for the Boston Investment Trust [No 3]
[2023] WASC 65
•3 MARCH 2023
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: CREGGAN HOLDINGS PTY LTD AS TRUSTEE FOR THE GWENDOLINE TRUST -v- RIZZI AS TRUSTEE FOR THE BOSTON INVESTMENT TRUST [No 3] [2023] WASC 65
CORAM: ARCHER J
HEARD: 1 MARCH 2023
DELIVERED : 1 MARCH 2023
PUBLISHED : 3 MARCH 2023
FILE NO/S: CIV 1670 of 2020
BETWEEN: CREGGAN HOLDINGS PTY LTD AS TRUSTEE FOR THE GWENDOLINE TRUST
First Plaintiff
GRANT STREET PTY LTD AS TRUSTEE FOR THE SECOND JOHN THOMPSON SUPERANNUATION FUND
Second Plaintiff
AND
RICCARDO RIZZI AS TRUSTEE FOR THE BOSTON INVESTMENT TRUST
Defendant
RICCARDO RIZZI AS TRUSTEE FOR THE BOSTON INVESTMENT TRUST
Plaintiff by counterclaim
CREGGAN HOLDINGS PTY LTD AS TRUSTEE FOR THE GWENDOLINE TRUST
GRANT STREET PTY LTD AS TRUSTEE FOR THE SECOND JOHN THOMPSON SUPERANNUATION FUND
Defendant by counterclaim
Catchwords:
Application for directions on an account
Legislation:
Nil
Result:
Application granted
Representation:
Counsel:
| First Plaintiff | : | G D Cobby SC & J Moore |
| Second Plaintiff | : | G D Cobby SC & J Moore |
| Defendant | : | No Appearance |
| Plaintiff by counterclaim | : | No Appearance |
| Defendant by counterclaim | : | G D Cobby SC & J Moore |
Solicitors:
| First Plaintiff | : | Roe Legal Services |
| Second Plaintiff | : | Roe Legal Services |
| Defendant | : | Not Applicable |
| Plaintiff by counterclaim | : | Not Applicable |
| Defendant by counterclaim | : | Roe Legal Services |
Case(s) referred to in decision(s):
Creggan Holdings Pty Ltd as trustee for the Gwendoline Trust v Rizzi as trustee for the Boston Investment Trust [2022] WASC 6
Creggan Holdings Pty Ltd as Trustee for the Gwendoline Trust v Rizzi as Trustee for the Boston Investment Trust [No 2] WASC 64
Re Ellis; Ellis v Ellis [2015] WASC 77
ARCHER J:
(This judgment was delivered extemporaneously on 1 March 2023 and has been edited to correct matters of expression, include references and add formatting.)
Introduction
The director of the plaintiffs (Mr Thompson) and the defendant (Mr Rizzi) were involved in business for over 20 years. Mr Thompson has an accounting qualification. Mr Rizzi is, among other things, a builder. Through different corporate entities, they developed several properties. They worked well together and made money.
Around 2018, disputes arose between Mr Thompson and Mr Rizzi in relation to a development they were undertaking at 3 Sarich Way, Bentley (Property). Those disputes led to these proceedings.
In September and October 2021, there was a seven day trial in this matter. Mr Rizzi represented himself in the trial.
On 14 January 2022, I delivered judgment (Primary Judgment).[1] By that time, Mr Rizzi was represented.
[1] Creggan Holdings Pty Ltd as trustee for the Gwendoline Trust v Rizzi as trustee for the Boston Investment Trust [2022] WASC 6.
I found for the plaintiffs. I then heard from the parties' legal representatives as to the appropriate orders to reflect the reasons in the Primary Judgment. I then made those orders the same day (my Orders).
The form of my Orders was largely agreed between the parties, apart from 5 matters:
a.Two disputes related to costs.
b.The identity of the person who should sell the property. In relation to this, I made an order in terms accepted by Mr Rizzi.[2]
c.When the property would go to auction. I proposed a compromise, which Mr Rizzi accepted.[3]
d.An issue in relation to the setting of a reserve price, which was not really pressed.[4]
[2] See ts 678 (the plaintiffs' counsel) and ts 680 - 681 (the defendant's counsel).
[3] See ts 685.
[4] See ts 685 - 686.
Both sides wanted an account to be taken before a registrar, and agreed various orders in relation to the taking of the account. I relevantly ordered:
16.An account be taken between the parties in relation to their respective entitlements relating to the purchase, development and sale of the Property.
17.The account be taken before a Registrar of this Honourable Court.
18.The account is to be based on the following findings: [which were then listed]
I also made programming orders for the taking of the account and made an order giving the parties liberty to apply.
On 11 February 2022, the plaintiffs filed their account.
On 11 March 2022, Mr Rizzi gave notice that he disputed the account.
A hearing was conducted before Registrar Griffin on 24 May 2022. Following the hearing, Registrar Griffin made orders (Registrar's Orders). Orders 1 and 2 imposed obligations on the plaintiffs. Those orders were:
1.In accordance with O 45(6) of the Rules of the Supreme Court 1971 (WA), the plaintiffs provide to the defendant vouchers, receipts or documentation by 12 July 2022.
2.The vouchers, receipts or documentation required by Order 1 be produced in an electronic format to the defendant’s solicitors and numbered consecutively, with reference to the corresponding item number in the plaintiffs’ Account to which each voucher relates.
The plaintiffs' solicitor, Mr Mason, has deposed that those orders were complied with on 12 July 2022.[5]
[5] Affidavit of Andrew John Mason, filed on 7 November 2022 (Mason Affidavit) [5].
The registrar also ordered Mr Rizzi to file his objection by 6 September 2022. That deadline was subsequently extended, by consent, to 8 September 2022. On that date, Mr Rizzi filed his objections.
On 7 November 2022, and after conferral, the plaintiffs filed an application (Application) seeking further orders from me relating to the conduct of the account.
The Application
By the Application, the plaintiffs seek orders that:
1.The Project Cost Schedule[6] (PCS) stand as prima facie evidence of the truth of specified matters for each item listed on the PCS prior to 30 March 2015; and
2.That specified items be considered in the taking of the Account.
[6] Exhibit 4.266.
In relation to the first order sought, the plaintiff relies on O 45 r 4 of the Supreme Court Rules 1971 (WA) (Supreme Court Rules), which provides:
The Court may, either by the judgment or order directing an account to be taken or by any subsequent order, give special directions with regard to the mode in which the account is to be taken or vouched, and in particular may direct that in taking the account, the books of account in which the accounts in question have been kept shall be taken as prima facie evidence of the truth of the matters therein contained, with liberty to the parties interested to take such objections thereto as they may be advised.
The Application was supported by an affidavit sworn by the plaintiffs' solicitor, Mr Mason.[7]
[7] Mason Affidavit.
Mr Mason's affidavit attaches the letters of conferral. In particular, Mr Rizzi’s solicitors said in a letter dated 16 September 2022:[8]
The onus falls on the plaintiffs' [sic] to adduce all vouchers, receipts and documentation in support of its account. The evidence adduced in connection with the project costs schedule in the trial below has no bearing on this onus.
[8] Mason Affidavit page 60.
The plaintiffs responded by noting O 36 r 9 of the Supreme Court Rules, by which all evidence taken at a hearing or trial may be used in any subsequent proceedings in the same cause or matter.
The plaintiffs ask that I determine their Application given:
a.the position adopted by Mr Rizzi and his solicitors in the taking of the account to date;
b.there is no right of appeal from a registrar’s decision made or given in proceedings to which O 61 Supreme Court Rules applies;[9]
c.the plaintiffs seek orders for particular categories to be included in the account; and
d.I had the benefit of hearing the evidence at trial relevant to the manner in which the account should be taken.
[9] See O 60A r 4(3)(b) of the Supreme Court Rules.
On 9 December 2022, by consent, the plaintiffs' Application was ordered to be listed for a special appointment and programming orders were made. The special appointment was listed for 1 March 2023.
On 24 January 2023, Mr Rizzi filed a notice that he intended to act in person.
On 30 January 2023, the Court received a letter from Mr Rizzi dated 20 January 2023, titled 'Written Submission' (Written Submissions).
Mr Rizzi's Written Submissions did not contain any substantive submissions on the particular orders sought in the Application. However, Mr Rizzi contended that I should not deal with the Application for several reasons. The first of those reasons was based on an allegation of bias based on critical comments I made in the Primary Judgment in relation to Mr Rizzi's evidence. I dismissed that allegation earlier today.[10]
[10] Creggan Holdings Pty Ltd as Trustee for the Gwendoline Trust v Rizzi as Trustee for the Boston Investment Trust [No 2] [2023] WASC 64.
The other reasons are discussed next.
Should I refuse to hear the Application?
In his Written Submissions, Mr Rizzi submits:[11]
[11] Mr Rizzi's Written Submissions pages 2 - 3.
2.[By p]aragraph 17 of the Orders made 14 January 2022, copy enclosed, you gave authority to the Registrar to deal with The Account.
3.The vouching issue was dealt with by Registrar Griffin on 24 May 2022 after hearing extensive arguments from Barristers for both sides, Ms. Julie Moore for the Plaintiff and Mr. Stefan Tomasich for the Defendant.
4.Orders were made by Registrar Griffin on 24 May 2022, copy enclosed, dealing with the vouching issue.
5.Paragraph 1, Orders made by Registrar Griffin on the 24 May 2022 are specific.
6.Seven months have passed and The Plaintiffs continue not to comply with the Orders made by Registrar Griffin on 24 May 2022.
7.The Plaintiffs are in contempt of Court.
8.Roe Legal [the plaintiffs' solicitors] are resubmitting to you because they believe they have the ear of the Judge and you are sympathetic to their cause.
9.The matter should be referred back to Registrar Griffin who should then strike out and make enforcement orders.
10.By hearing the Plaintiffs application you are undermining the system and Registrar Griffin's authority which you delegated to her.
11.The current Plaintiffs application deals with 2 issue[s], vouching and effectively deleting the word 'proper' from paragraph 14 of the Orders made 14 January 2023.
As to the last point, Order 14 of my Orders provided that '[t]he net proceeds of the sale of the Property after payment of all proper costs, charges and expenses of the sale, be paid into court to the credit of this action to abide further order.'
Having regard to the fact that Mr Rizzi is unrepresented, I would construe his Written Submissions as contending as follows:
1.As I had ordered that an account by taken by a registrar, it would undermine the registrar's authority if I was to deal with the Application.
2.The 'vouching' issue has already been dealt with by the registrar after a contested hearing. Therefore, the plaintiffs are improperly seeking to relitigate the same issue before me.
3.The Application seeks to, in effect, delete the word 'proper' from paragraph 14 of my Orders.
4.The plaintiffs have failed to comply with order 1 of the registrar's Orders.
Before addressing these contentions individually, I note that, when Mr Rizzi was represented, his solicitors consented to orders by which the Application was listed before me for a special appointment.
Would it undermine the registrar's authority?
In his Written Submissions, Mr Rizzi submits that, as I had ordered that an account be taken by a registrar, it would undermine the registrar's authority if I was to deal with the Application.
I do not accept this.
Order 45 of the Supreme Court Rules deals with accounts and inquiries. As noted earlier, the plaintiff relies on O 45 r 4 in relation to the first order sought.
Order 45 r 12 provides:
If a registrar or other proper officer, but not a master, is taking an account or making an inquiry, a party has the right to have the proceedings adjourned to a judge in person without any further summons for that purpose.
The plaintiffs submit that, by this rule, they have the right to bring the Application before me.
The plaintiffs refer to O 61 division 6, which deals with masters' and registrars' certificates.
Rules 25 to 28 of O 61 deal with proceedings before a master under a judgment. Under r 27, '[a]ny party may, before the proceedings before the master are concluded, apply to the judge for the determination of any question arising in the course of the proceedings'. Rule 28 provides a right of appeal (to the Court of Appeal) against a master's certificate.
By contrast, by O 60A r 4(3)(b), there is no right of appeal against a decision of a registrar given in proceedings to which O 61 applies. Instead, O 61 r 28A provides that, where proceedings under a judgment have been heard by a registrar, a party to the proceedings may apply by summons for an order of a judge discharging or varying the certificate.
The plaintiffs submits that O 60A and O 61 support their contention that, by O 45 r 12, they have the right to bring the Application before me. They submit that O 45 r 12 operates to give the parties the same right in relation to the taking of an account before a registrar as exists, by O 61 r 27, when an account is being taken by a master.
In the alternative, the plaintiffs submit that, if they do not have a right to bring the Application before me by O 45 r 12, they would seek leave under O60A r 2A(b) for the Application to be dealt with by me. That rule relevantly provides that, if an application made to the Court requests the exercise of a power that is exercisable by a registrar, the application must be dealt with by a registrar unless a judge has granted leave for the application to be dealt with by a judge.
I accept that, by O 45 r 12, the plaintiffs have the right to bring the Application before me. The words of the rule are clear and unqualified. This construction is further supported by the context of O 61.[12]
[12] See also Re Ellis; Ellis v Ellis [2015] WASC 77 [140].
Given that the plaintiffs have the right to bring the Application before me, my dealing with the Application would not undermine the registrar's authority to take the account
If I am wrong about the plaintiffs having a right under O 45 r 12, I would grant leave under O60A r 2A(b) for the Application to be dealt with by me. In particular, the Application is based upon the evidence at trial and the proceedings themselves. I have a far greater familiarity with those matters than the registrar, having conducted the trial. Giving leave would not undermine the registrar's authority to take the account. The registrar's jurisdiction to deal with matters arising under the Account, such as this Application, is not exclusive.
Are the plaintiffs seeking to relitigate a matter already determined by the registrar?
In relation to Mr Rizzi's submission that the 'vouching' issue has already been dealt with by the registrar after a contested hearing, this is essentially an allegation that the plaintiffs were seeking to relitigate the same issue before me.
I do not accept this.
The hearing before the Registrar
The hearing to which Mr Rizzi refers was the hearing before Registrar Griffin on 24 May 2022.
Prior to that hearing, both parties filed materials indicating their competing views.
The plaintiffs filed an affidavit and a minute of proposed orders. The plaintiffs essentially sought to limit the ability of Mr Rizzi to object to only:
a.matters on the PCS arising after 30 March 2015; and
b.matters not on the PCS.
That is, the plaintiffs sought to prevent Mr Rizzi from objecting to items on the PCS up to 30 March 2015 (Proposed Objection Restriction).
Mr Rizzi filed submissions and a minute of proposed orders. Mr Rizzi relevantly sought orders that, by 7 June 2022,
a.the plaintiffs provide vouchers, receipts or documentation;
b.those documents be produced in an electronic format to Mr Rizzi’s solicitors and numbered consecutively, with reference to the corresponding item number in the Plaintiffs’ Account to which each voucher relates.
In relation to the plaintiffs’ Proposed Objection Restriction, Mr Rizzi submitted to the registrar:[13]
It is not permissible for a registrar to depart from the mode of the taking of the account (and its disputation) as specified by the orders made by Archer J: Re Ellis [31]. It is not appropriate, nor permissible, for the limits sought by the plaintiffs to be imposed.
[13] Defendant’s Submissions for Directions Hearing on 24 May 2022 filed 24 May 2022 [16].
In my view, this must have been intended to be a reference to paragraph 140 of Re Ellis; Ellis v Ellis,[14] in which Heenan J said:
If a registrar is taking the account pursuant to an order of the court, the mode of taking the account will be specified by the order of the court or judge and cannot be departed from even by consent unless application is made to the trial judge to vary the original order
[14] Re Ellis; Ellis v Ellis [2015] WASC 77.
In effect, Mr Rizzi submitted to the registrar that only I could make such an order, not the registrar.
As noted earlier, the registrar made orders requiring the plaintiffs to produce vouchers. Those orders have been complied with.
The registrar further ordered that Mr Rizzi file a list of the matters which he disputed, the basis of the dispute, and the amount he considered to be correct.
Discussion
The first order sought in the Application does not seek to prevent Mr Rizzi from objecting to items on the PCS up to 30 March 2015. Rather, it seeks that the PCS be prima facie evidence of the matters specified up to that date. That is, the proposed order does not seek to obtain from me what was sought from the registrar by the Proposed Objection Restriction. If I make the order, Mr Rizzi will be entitled to object to any entry.
Accordingly, the plaintiffs are not seeking to relitigate a matter already determined by the registrar.
Does the Application effectively seek to delete the word 'proper'?
Mr Rizzi submits that the Application seeks to, in effect, delete the word 'proper' from paragraph 14 of my Orders.
Order 14 of my Orders provided that '[t]he net proceeds of the sale of the Property after payment of all proper costs, charges and expenses of the sale, be paid into court to the credit of this action to abide further order.'
The second order the plaintiffs seek in the Application is an order that specified items be considered in the taking of the Account. These are:
a.The costs, charges and expenses incurred in relation to the sale of the Property.
b.The costs incurred by Ms Thompson, as Manager, to complete the works required by Annexure C of the contract of sale of the Property dated 4 April 2022 prior to its variation on 31 August 2022.
Contrary to Mr Rizzi's submissions, the plaintiffs are not seeking to, in effect, delete the word 'proper' from paragraph 14 of my Orders. Rather, they are seeking to establish that the specified matters should properly be considered in the taking of the Account.
Whether or not they have established that is a separate issue, and is discussed later.
Did the plaintiffs fail to comply with the Registrar's Orders?
In relation to Mr Rizzi's submission that the plaintiffs have failed to comply with order 1 of the Registrar's Orders, Mr Mason deposes in his affidavit that orders 1 and 2 of those orders were complied with. Mr Mason deposes that this was done by way of an online dropbox website accessible by way of a link, which was emailed to Mr Rizzi's solicitors on 12 July 2022. Mr Mason attaches to his affidavit a copy of that email.[15]
[15] Mason Affidavit [5] and AJM-1.
I suspect that Mr Rizzi's statement that plaintiffs have failed to comply with order 1 stems from the fact that the plaintiffs have not provided documentation for each item they claim. The obligation imposed on the plaintiffs by order 1 is to provide all the documentation that is within their power to provide. The plaintiffs would not be in breach of the order for failing to provide documents that they do not have.
Mr Thompson gave evidence in the trial to explain why, for the purposes of discovery, he had listed certain documents as no longer being in his possession. He explained that he had kept, in the PCS files, bank statements for each of the months with the invoices associated with the entries for each month. He said that he had realised, when he went to gather those documents for discovery purposes, that the invoices for the months around about 2012 were missing. He appears to have surmised that the documents went missing at the same time as his office computer had been interfered with, in mid-2019, by a person who must have had access to his office as there had not been a break-in.[16] Although I had some concerns about Mr Thompson's memory in certain respects, I was satisfied that Mr Thompson was a credible and reliable witness.[17] There is no reason to doubt his evidence in relation to this issue.
[16] ts 117 - 119.
[17] Primary Judgment [30].
Mr Thompson also gave evidence that he never received invoices when Mr Rizzi paid expenses on behalf of the project. He said that Mr Rizzi would give him only cheque books. Mr Thompson or his assistant would then enter the details from the stubs into the records.[18] Again, there is no reason to doubt Mr Thompson's evidence in relation to this issue.
[18] Further Affidavit of John Guest Thompson sworn 27 August 2021 [20].
There is no reason to doubt Mr Mason's evidence that the Registrar's Orders were complied with. I accept that the plaintiffs have provided all the vouchers, receipts, or documentation in their possession.
Accordingly, I do not accept that the plaintiffs failed to comply with the Registrar's Orders.
Allegation of delay
Mr Rizzi's Written Submissions further allege that the plaintiffs' solicitors would actively seek to delay the resolution of the proceedings. The history of the proceedings does not support this contention.
The orders sought in the Application
The PCS
The first order sought in the Application is that the PCS stand as prima facie evidence of the truth of the following matters for each item listed on the PCS prior to 30 March 2015:
a.Each expense was incurred on the date set out in the PCS.
b.Each expense was paid to the identified payee specified in the PCS.
c.Each expense was paid in the amount set out in the PCS.
d.Each expense was paid by the party set out in the PCS.
e.Each expense related to the subject matter of goods or services identified in the PCS.
f.Each expense was as a joint expense of the Plaintiffs and the Defendant.
g.Each expense was incurred in the design and construction of the buildings known as Building A, B, C and D on the property at 3 Sarich Way.
Plaintiffs' case on the PCS
The plaintiffs submit that it would be inappropriate if every item had to be proved, due to the following circumstances:[19]
[19] Plaintiffs' Submissions in Support of Further Orders on the Account filed 7 November 2022 (Plaintiffs' Submission) [6.1] - [6.6].
6.1Throughout the construction of the property at 3 Sarich Way, Mr Thompson prepared and maintained a Project Cost Schedule (PCS) (Exhibit 4.266). During the trial, Mr Thompson was questioned extensively over the preparation of the PCS.[20] Mr Thompson gave evidence that:
[20] T145 - 148, T170 - T172, T184 - T188, T217 - T218, T220 - T224.
6.1.1It was his role to maintain a ledger of expenses paid being the PCS.[21]
[21] Exhibit 5.1 Affidavit of John Guest Thompson sworn 28 July 2021 at [45], T145.
6.1.2Mr Thompson, along with his employee, maintained the PCS up to 13 May 2021.[22]
[22] Exhibit 5.2 Further Affidavit of John Guest Thompson sworn 27 August 2021 at [14], [23].
6.1.3The PCS recorded expenses related to the project at 3 Sarich Way based on invoices, receipts and other payment records.[23]
[23] Exhibit 5.2 Further Affidavit of John Guest Thompson sworn 27 August 2021 at [14], [23].
6.1.4Payments made by the Plaintiff were paid by Mr Thompson personally by electronic transfer or entered into the banking system for Mr Thompson to authorise payment.[24]
[24] Exhibit 5.2 Further Affidavit of John Guest Thompson sworn 27 August 2021 at [15].
6.1.5The payments were entered into the PCS including the date, payee, invoice number, bank transfer number and amount of GST.[25]
[25] Exhibit 5.2 Further Affidavit of John Guest Thompson sworn 27 August 2021 at [16].
6.1.6The PCS was reconciled monthly; checking that the bank statement matched to invoices recorded in the PCS. [26]
[26] Exhibit 5.2 Further Affidavit of John Guest Thompson sworn 27 August 2021 at [19].
6.1.7Payments made by the Defendant were recorded based on cheque book stubs provided by the Defendant and were also recorded on the PCS.[27]
[27] Exhibit 5.2 Further Affidavit of John Guest Thompson sworn 27 August 2021 at [20].
6.2The Defendant admitted at trial that:
6.2.1Aside from two specific entries, the PCS schedule was correct up until 30 March 2015.[28]
6.2.2The PCS contained the project costs for the construction of the building on 3 Sarich Way up to March 2015.[29]
6.3There was evidence that the Defendant was kept up to date on the status of the PCS[30] and did not request to see the invoices which supported the PCS.[31] In relation to items incurred prior to March 2015, the Defendant allowed the PCS to stand unchallenged for over 7 years.
6.4The Defendant gave further evidence that there was an arrangement for certain bills, in respect of which the Defendant would check invoices, highlight and initial the amount owing and either pay the invoice and provide the invoice to Mr Thompson to pay and have recorded.[32]
6.5Mr Thompson gave evidence that he no longer had in his possession documents supporting the project cost schedule which are now missing in odd circumstances.[33]
6.6The account has been prepared based upon the PCS. The Plaintiffs have reconciled each item in the account with supporting documents (being bank statements and invoices where available) in accordance with orders by Registrar Griffin made on 24 May 2022.
[28] T536, T537, T571.
[29] T536.
[30] Exhibit 5.2 Further Affidavit of John Guest Thompson sworn 27 August 2021 at [26].
[31] T544.
[32] T544.
[33] T - T119.
In dealing with Mr Rizzi's contention that the plaintiffs had not complied with the Registrar's Orders, I gave additional detail of the matters referred by the plaintiffs in their submissions at paragraphs 6.1.7 and 6.5.
In relation to paragraph 6.2.1 of the plaintiffs' submissions, the two entries to which Mr Rizzi objected were an entry of $11,944 (NEC rent) and an entry of $5,923.46 (Martin).[34]
[34] ts 536 - 537 and 571.
Both entries to which Mr Rizzi objected post-dated March 2015.[35]
a.In relation to the payment to Martin, I ruled in the Primary Judgment that it should be taken into consideration in the account.[36]
b.In relation to the NEC rent, this was rent that NEC paid in relation to the building on 3 Sarich Way before it was demolished.[37] During the trial, Mr Rizzi objected to the manner in which it had been recorded. However, Mr Rizzi consented to it being included as something to be considered in the taking of the account.[38]
[35] See ts 186 - 188 and ts 221 - 224, and Project Costs Schedule Trial Bundle 1738 and 1742.
[36] Primary Judgment [173] - [177].
[37] ts 223 and 628.
[38] See order 18(e) of my Orders.
During the trial, Mr Rizzi also submitted a response to the plaintiffs' document titled 'Items to be taken into consideration in taking of Account'.[39] In his response, Mr Rizzi stated:
THIS ACCOUNT SHOULD BE KNOWN AS THE BUILDERS LEDGER OR THE PCS ( PROJECT COST SCHEDULE )
ITEM 1 IS AN AGREED SHARED COST AND SHOULD INCLUDE:
( A )$ 1 M ADD BACK PAYABLE BY THE PLAINTIFF`S [sic] TO THE DEFENDANT IN FULL PAYMENT OF THE PLAINTIFF`S [sic] SHARE OF THE BUILDERS FEE.
( B )PAYMENT MADE TO BRIAN MARTIN DATED 17 SEPTEMBER 2015 FOR $ 5,923.46 SHOULD NOT BE INCLUDE IN THE SHARED COSTS AND SHOULD BE AT MR THOMPSON[‘S] SOLE COST
( C )REMOVE THE NEC RENT COLLECT ON 3 MAY 2019 FOR $ 11,944.31
( D )THE BUILDERS LEDGER SHOULD BE CLOSED OFF AS AT 30 MARCH 2015 AND THE CLOSING BALANCES AS AT 30 MARCH 2015 BE ENTERED AS THE OPENING BALANCES ON THE OWNERS LEDGER.
[39] 'Items to be taken into consideration in taking of Account Defendant's Response' email to the Court on 27 October 2021.
The plaintiffs are not seeking an order that the PCS be conclusive proof of the matters listed. Rather, they seek that it be prima facie evidence of the matters listed.
The plaintiffs note that there are 1021 expense line items and 49 income line items on the PCS. The first 714 items relate to expenses up to 30 March 2015.
Defendant's submissions
As noted earlier, Mr Rizzi's Written Submissions did not contain any substantive submissions on the particular orders sought in the Application. I have dealt above with the issues that were raised in those Written Submissions.
Mr Rizzi elected not to attend the special appointment to make oral submissions.
Conclusion
In my view, it would be contrary to the interests of justice and efficient case management to require the parties and the registrar to go behind the 714 entries in the PCS prior to 30 March 2015, without some reason to do so.
Mr Rizzi gave sworn evidence that the PCS was accurate for all entries up to 30 March 2015. He filed a document seeking that its closing balance as at that date be accepted, and used as the opening balance in a ledger that would carry on from that date.
The direction sought by the plaintiffs does not prevent Mr Rizzi from raising specific objection in relation to any particular items. The plaintiffs seek only that those early entries be treated as prima facie evidence of the truth of the various matters listed.
It is plainly in the interests of justice and efficient case management that this order be made.
The additional items
The second order sought in the Application is that the following items be considered in the taking of the Account:
a.The costs, charges and expenses incurred in relation to the sale of the Property.
b.The costs incurred by Ms Thompson, as Manager, to complete the works required by Annexure C of the contract of sale of the Property dated 4 April 2022 prior to its variation on 31 August 2022.
The plaintiffs' submissions succinctly set out the basis upon which they seek this order:[40]
[40] Plaintiffs' Submissions [13] - [24].
13.The orders made on 14 January 2022 provided for:
13.1Payment of proper costs, charges and expenses of the sale to be deducted from the proceeds of the sale of the property (Order 14); and
13.2An account to be taken between the parties in relation to their respective entitlement relating to the sale of the property (Order 16).
13.3Items to be considered in taking of the account (Order 18(b) - (r)).
14.The costs of the sale of the property was not included as an item to be included in the taking of the account, nor the expenses incurred by the manager in relation to the sale.
15.The manager, Mrs Thompson, executed a contract for the sale of the property dated 4 April 2022[41]. The contract required the seller to complete the works contained in Annexure C including the;
[41] Mason Affidavit Annexure AJM-9.
15.1 laying of concrete at the rear carpark dirt pad;
15.2 installation of four toilet blocks;
15.3 installation of ceilings;
15.4 installation of lighting;
15.5 lifts to be operational and ready for use;
15.6 installation of flooring; and
15.7 installation of air conditioning.
16.The Defendant's views were sought on the contract for sale. On 5 April 2022, the Defendant responded 'Please ask Mrs Thompson to process the offer and if agreeable sign under authority of the Court Orders otherwise make an appropriate counter offer as she sees fit. As required by Court order, I confirm my complete co operation in supporting you in the sale process.'[42].
[42] Mason Affidavit Annexure AJM-11.
17.Given there was no objection to the terms of the contract executed, the manager engaged Buildwell Group to organise and manage the performance of the works it contemplated.
18.Preliminary steps had also been undertaken to complete the balance of the works required by the contract including:
18.1 ordering carpets; and
18.2partitioning works required for the installation of toilet blocks and ceiling works.
19.At the time the works were initiated, they were necessary for the parties to comply with the obligations in Annexure C of the contract of sale.
20.The requirement to concrete the carpark was a requirement of the Town of Victoria Park development approval for the demolition of the NEC building.[43].
[43] Mason Affidavit Annexure AJM-13
21.The total invoice for the carpark works is $133,630 not including GST of which Ms Thompson has paid $36,748.25. The balance currently remains outstanding.
22.No invoices have yet been rendered for the works relating to the carpets and partitioning works.
23.On 31 August 2022, Mrs Thompson executed a variation to the contract to purchase the property, the effect of which was to waive the requirement to complete the works listed in Annexure C. There is no further requirement to conduct any works on the property.
24.In the circumstances, the Plaintiff seeks further orders for the following items to be included in the account:
24.1The costs, charges and expenses incurred in relation to the sale of the property.
24.2The costs incurred by Ms Thompson, as Manager, to complete the works required by Annexure C of the contract of sale of the Property dated 4 April 2022 prior to its variation on 31 August 2022.
Defendant's submissions
Again, and as noted earlier, Mr Rizzi's Written Submissions did not contain any substantive submissions on the particular orders sought in the Application. Mr Rizzi elected not to attend the special appointment to make oral submissions.
Discussion
The manager appointed to sell the property, Ms Thompson, executed a contract (Contract) for the sale of the property that required the seller to undertake the works in Annexure C (Works).
Mr Rizzi was asked for his views on the Contract. He did not object.
Costs were incurred to perform the Works, until the Contract was varied so as to waive the requirement to complete the Works.
Had Mr Rizzi wished to object to the costs being incurred, the time to do so was when he was asked for his views on the Contract.
In the circumstances, it is entirely appropriate that those costs be included in the taking of the Account.
Orders
Accordingly, I would make orders in terms of orders 1 and 2 of the plaintiffs' minute of proposed orders filed 4 November 2022.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
KH
Associate to the Honourable Justice Archer
3 MARCH 2023
0
3
1