Forster v Ampcorp Pty Ltd
[2009] QDC 402
•6/11/2009
DISTRICT COURT OF QUEENSLAND
CITATION: Forster & Anor v Ampcorp Pty Ltd & Ors [2009] QDC 402 PARTIES: DEBORAH JEAN FORSTER (First Plaintiff) AND
FAST TRACK HOME LOANS PTY LTD(Second Plaintiff) AND
AMPCORP PTY LTD(First Defendant) AND MARSHALL JOHN CUSWORTH AND DIANE
ELIZABETH CUSWORTH(Second Defendant) AND
BRENDAN LEONARD FORSTER(Defendant added by counterclaim) FILE NO/S: BD 573/06 DIVISION: Civil PROCEEDING: Trial ORIGINATING
COURT:District Court, Brisbane DELIVERED ON: 6 November 2009 DELIVERED AT: Brisbane HEARING DATES: 24, 25, 26, 27 March 2009 JUDGE: Irwin DCJ ORDER:
1.
The first and second defendants account to the first and second plaintiffs in the sum of $62,667 in respect of the joint venture entered into between them in October 2000.
2. The counterclaim is dismissed.
3.
The first and the second defendants pay the first and second plaintiffs interest pursuant to s 47 of the Supreme Court Act 1995 from 5 July 2005.
4.
The first and second defendants pay the costs of the first and second plaintiffs and the defendant by counterclaim, of and incidental to this proceeding to be assessed on the indemnity basis.
CATCHWORDS: EQUITABLE REMEDIES – ACCOUNTS AND
INQUIRIES – where the plaintiffs and defendants entered
into a joint venture arrangement for the purposes of
developing residential properties for mutual benefit and gain
– where the terms of the joint venture were that in respect of
each development project, the plaintiffs and defendants
would each be reimbursed their costs incurred in respect of
that project, being the profit (or loss) shared equally between
them – where the plaintiffs claimed for an account of the
monies received on their behalf by the defendants in respect
of the joint venture between them, and on taking of such
account payment of $62,667 – whether the parties were in a
fiduciary relationship – whether an account should be ordered
– whether the essential requirements for an account had been
establishedPROCEDURE – COSTS – DEPARTING FROM GENERAL RULE – ORDER FOR COSTS ON INDEMNITY BASIS – where successful plaintiffs and defendant added by counterclaim seek costs in relation to the issues raised by the counterclaim – whether plaintiffs could recover costs on the indemnity basis
Partnership Act 1891 s 4, s 5, s 5A and s 31 Uniform Civil Procedure Rules 1999, r 149(c), r 150(1)(s), r 501, r 527, r 528, r 681(1) and r 703(1)
Brooker v Friend and Brooker & Anor [2006] NSWCA 385, applied
Chan v Zacariah (1983-1984) 154 CLR 178, applied Colgate-Palmolive Company v Cussons Pty Limited (1993)
46 FCR 225, citedDart Industries Inc v Décor Corporation Pty Ltd (1992-1993)
179 CLR 101, citedDiCarlo v Dubois & Ors [2002] QCA 225, applied Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA
22, appliedFountain Selected Meats (Sales) Pty Ltd v International
Produce Merchants Pty Ltd (1988) 81 ALR 397, citedFraser Edminston Pty Ltd v A.G.T. (Qld) Pty Ltd [1988] 2
Qd R 1, citedHospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, cited Idacorp Pty Ltd v Freshglen Pty Ltd (unreported, Supreme
Court of Queensland, 26 February 1999), appliedMegan v Blamey and Anor (unreported, Supreme Court of NSW Equity Division, 15 September 1977), distinguished
Mulherin as t’ee for the H.D. Mulherin Family Trust v Quinn
Village Pty Ltd [2007] QSC 231, citedQuinn Villages v Mulherin [2006] QSC 163, cited Pacific Coal Pty Ltd v Indemitsu (Qld) Ltd (unreported, Supreme Court of Queensland, 21 February 1992), cited
Rapid Metal Developments (Australia) Pty Ltd v Rosato
[1971] Qd R 82, (XX)Rosniac v Government Insurance Office (1997) 41 NSWLR
608, citedSchipp v Cameron, Harrison & Ors [1999] NSWSC 997, applied
Southern Cross Management Pty Ltd v Ensham Resources
Pty Ltd & Ors [2006] QCA 233, appliedSunrice Pty Ltd as Trustee of the Sunrice Investment Trust v
Wendy’s Supa Sundaes (Qld) Pty Ltd & Ors (unreported,
Supreme Court of Queensland, 23 October 1998),
distinguishedTodrell Pty Ltd v Finch (No. 2) [2008] 2 Qd R 95, cited United Dominions Corporation Ltd v Brian Pty Ltd (1985)
156 CLR 1, appliedWarman International Ltd v Dwyer (1994-1995) 182 CLR
544, appliedCOUNSEL: C. Johnstone for the first and second plaintiffs and the
defendant added by counterclaimM. Quinn (Solicitor) for the first and second defendants SOLICITORS: Plastiris Lawyers for the first and second plaintiffs and the
defendant by counterclaimQ5 Law appeared for the first and second defendants
Agreed Statement of Facts [1]
[1] Exhibit 1. At T 2-13 and T 2-14, and T 2-18 Mr Quinn, who represented the defendants, conceded that the amended defence and counterclaim are to be read subject to the agreed statement of facts and the admission of para 4(a) of the amended statement of claim, that it was agreed at a meeting in or about November 2000 between the plaintiffs and the defendants at the residence of the second defendant “that the Plaintiffs and the Defendants would establish a joint venture in order to purchase and develop residential property, including the properties referred to in paragraph 2 herein (“the joint venture”). Paragraph 2 referred to the Lilla Street Project. At T 2-10 he said that the amended defence and counterclaim was never intended to depart from this statement; paras [1]-[6] of this decision replicate paras 1-6 of this statement.
In about October 2000, the plaintiffs and the defendants[2] entered into a joint venture agreement for the purposes of developing residential properties for mutual benefit and gain.
[2] In this decision a reference to the defendants is to the first and second defendants unless otherwise indicated. This is to be distinguished from a reference to the defendant added by counterclaim.
The joint venture agreement was oral, although subsequently various contracts and other documents were brought into being in respect of the particular projects undertaken by the joint venturers.
The terms of the joint venture were that in respect of each development project, the plaintiffs and the defendants would each be reimbursed their costs incurred in respect of that project, and the balance, being the profit (or loss) would be shared
equally between the plaintiffs and the defendants.[3]
[3] Mr Quinn conceded at T 1-25 that the agreed statements of facts obviated the necessity for any argument about the terms of the agreement but said that what may or may not have properly been classed as an expense of the joint venture was in issue.
The joint venture undertook three projects, which have all been completed, being:
(a) the Lilla Street Project; (b) the Tilley Street Project; and (c) the Keenan Street Project. (each as described in the amended statement of claim)[4]
[4] These projects are more fully described in the statement of claim as:
The plaintiffs claim an amount of $62,667 is owed by the defendants pursuant to the
joint venture agreement as particularised in the report of Mr Matthew Gwynne.5
The defendants dispute this amount or that they are obliged to account at all.
Legal Issues
The plaintiffs’6 primary claim against the defendants is for:7
•
An account of monies received for or on their behalf by the defendants in respect of the joint venture between them, and on the taking of such account payment of the amount of $62,667.
• Further, or in the alternative, damages for breach of contract in that amount. • Such further or other relief as the court deems appropriate. • Interest pursuant to s 47 of the Supreme Court Act 1995 (Qld) as amended
(SCA).• Costs.
In addition to disputing the plaintiffs’ claim, the defendants counterclaim against them and the defendant added by counterclaim.
It is alleged that the defendant added by counterclaim was at all material times an active participant in the joint venture, by virtue of his directorship of the second plaintiff and in his capacity as a partner of the first plaintiff.
It is claimed that an accounting of the contributions of each party to the joint venture dictates that the plaintiffs and the defendant added by counterclaim are jointly and severally indebted to the defendants for $11,799, or further or in the
Mr Gwynne is a chartered accountant retained by the plaintiffs to prepare an expert account in relation to the financial matters in dispute between the parties. This account is constituted by his report (Exhibit 2) together with his corrections and the result of those corrections (Exhibits 3 to 6).
The amended claim which was dated and filed by leave on 24 March 2009, the first day of the trial, commences “The First Plaintiff claims”. However, it concludes, “The First and Second Plaintiffs make this claim in reliance on the facts alleged in the attached Statement of Claim”; and the statement of claim states that “The Plaintiffs claim”. The claim also contains a notice to the defendants “that you are being sued by the Plaintiffs”. Having regard to this in the context of the statement of claim, the agreed statement of facts and the way in which this case was argued, I proceed on the basis that the reference to “the First Plaintiff” is a drafting error resulting from an omission to amend this to “The Plaintiffs claim:” when the claim was amended.
During his closing address, Mr Johnstone, counsel for the plaintiffs, correctly conceded that equitable damages were no longer an issue for consideration because if there is no fiduciary relationship established as a basis for ordering an account, equitable damages will not be payable. Accordingly, I do not further consider this alternative remedy.
alternative, are liable to the defendants for an amount to be assessed upon taking an
account of the undertakings for the joint venture.
In addition, there are claims for interest pursuant to the SCA and costs.
In response the plaintiffs and the defendant added by counterclaim deny that they owe the monies alleged to the defendants or at all, and that on the taking of an account, any amount will be payable by them to the defendants.
Factual issues
Joint Venture Agreement
When regard is had to the amended statement of claim, amended defence and counterclaim,[8] amended reply and answer,[9] and amended defence of the defendant added by counterclaim,[10] in light of the agreed statement of facts, the disputed factual issues emerge for resolution.
[8] Filed on 25 March 2009.
[9] Filed on 26 March 2009.
[10] Filed on 26 March 2009.
On or about October 2000 the first plaintiff entered into REIQ residential contracts to purchase three waterfront properties situated at 3 Lilla Street, 5 Lilla Street and 43 Woodcliffe Crescent, Woody Point. Although the defendants deny the plaintiffs’ claims that these contracts were entered into on their behalf, this is irrelevant in light of the agreed statement of facts that the plaintiffs and the defendants entered into a joint venture agreement for the purposes of developing residential property for mutual benefit and gain, and the Lilla Street Project, was one of the three completed projects undertaken by the joint venture. Accordingly, whoever the first plaintiff purchased these properties on behalf of, they must all be taken to have become part of the joint venture for the mutual benefit and gain of the plaintiffs and the defendants.
In or about October 2000 the plaintiffs and the defendants held the meeting at the second defendants residence,[11] where it was orally agreed to establish the joint venture to purchase and develop residential property, including the three properties which constituted the Lilla Street Project and that they would determine which entities were to be involved in a particular project carried on by the joint venture on a case by case basis. I proceed on the basis that this agreement was made in October 2000, notwithstanding that the amended statement of claim refers to the meeting taking place in or about November 2000.[12] This is because the agreed statement of facts refers to October 2000, and this is also consistent with the evidence.
[11] It is agreed that the second plaintiff was represented by its sole director, the defendant added by counterclaim, Brendan Foster; and the first defendant was represented by the first-named second defendant, Marshall John Cusworth.
[12] I note that this is admitted by the amended defence and counterclaim.
The evidence in relation to this issue was that in October 2000, the first plaintiff (Mrs Forster), the defendant added by counterclaim, her husband (Mr Forster), and the first-named second defendant (Mr Cusworth) saw that the properties at No. 3 and No. 5 Lilla Street were for sale, when they were together in a car. Ms Forster expressed an interest in buying these.[13] Ms Forster phoned the real estate agent, who she said Mr Cusworth also spoke to.[14] Mr Cusworth said that he made it clear to the real estate agent that they would only be interested in buying Lilla Street if No. 42 Woodcliffe Crescent was for sale.[15] Later that evening, Mr Cusworth
phoned and invited the Forsters to their home to talk about these properties.[16]
According to Mr Forster, Mr Cusworth produced some papers on which he had been doing calculations and said that if they were able to get three adjacent properties they could promote a development. Mr Cusworth said that he and his wife would like to join them and become joint venture partners to acquire an interest in these
properties.[17]
[13] T 2-19.
[14] T 3-28.
[15] T 3-41.
[16] T 2-20; Mr Cusworth agreed that the meeting took place at his residence that evening.
[17] T 2-20 to 2-21.
Mr Cusworth agreed that a joint venture had been entered into. He said that as a consequence of their social and business relationship, they decided it was a good chance to work in a joint venture together. As he put it, the joint venture
“manifested itself”.[18]
[18] T 3-76.
The plaintiffs and the defendants would equally share in the profits (or losses) of a particular project, after taking into account the capital and expenses incurred by them in that project. This proposition is consistent with the agreed statement of facts. It is also consistent with the evidence.
Mr Cusworth said that he made it really clear that he and his wife were not in a financial position to spend large sums of money (including through the first defendant, Ampcorp Pty Ltd) to buy real estate. They were in the business of
building, whereas the Forsters were in a better financial position than them.[19]
Accordingly, Mr Forster testified that they had an understanding that as there was a significant cost to buy these properties and there would be funds needed to be borrowed, the costs and interest on those borrowings would be deemed as expenses. They indicated that whatever expenses were encountered by each of the parties would be assessed and quantified at the end of the project and any profits or losses from that project would be shared 50:50.[20] Mr Cusworth agreed that both sides had to reconcile the costs and expenses paid by each of them in respect of each project and, as a consequence of the costs and expenses of each side being put together,
they have reached a different conclusion.[21]
[19] T 3-42.
[20] T 2-21.
[21] T 3-86.
Accordingly I proceed on this basis rather than the assertion in paragraph 5 of the defence, which has a different emphasis.
Mr Forster agreed that the defendants requested that the agreement be reduced to writing. The assertion at paragraph 3(a) of the defence that he denied this request, is not contradicted. His evidence was that because of cost and time that would be involved to prepare an agreement, they agreed that “our word is our word” and they could consult closely throughout the project, making decisions as circumstances
arose for the benefit of the joint venture to have a successful outcome.[22]
[22] T 3-22.
However, an issue arises in relation to paragraphs 4(e) and (f) of the amended statement of claim, which are as follows:
“(e)
that the interest rate that would be payable on any monies that may be outstanding to the entity/ies in respect of a particular project would be calculated in accordance with the home variable rate of the bank that the Plaintiffs or the Defendants each banked with, based on the prevailing rate of interest as at the date the debt was paid; and
Particulars
Plaintiffs – ANZ Bank
Defendants – Suncorp Metway(f) the Plaintiffs and the Defendants agreed to use a business line of credit account with Suncorp Metway (“BLC account”). This account would be secured against property owned by the joint venture from time to time. The BLC account was to be operated with the consent of both the Plaintiffs and the Defendants.”
By paragraph 6 of the amended defence and counterclaim paragraph 4(e) is denied, and it is said that no arrangements of the recognition or calculation of interest in respect of either party’s contributions was discussed or agreed upon.
By paragraph 7 of the amended defence and counterclaim, the defendants deny paragraph 4(f) and say:
“(a) The [BLC] was solely in the name of the First Defendant; (b) The First Defendant and its directors, the Second Defendant, were and are solely responsible for the repayment of all secured monies including interest, fees and charges;
(c) The [BLC] was secured by property of which the First Defendant was the sole registered proprietor;
(d) There was no agreement that the [BLC] required the consent of all parties to be operated;
(e) The Second Plaintiff, in its capacity as a mortgage originator, arranged for the creation of the [BLC] and received a commission, payment or fee for acting in that capacity.”
In reply the plaintiffs allege that the defendants claimed interest on the BLC account that it drew in respect of the 43 Keenan Street property.
Another issue arises in relation to a document described as a Heads of Agreement entered into with Group Kildey Pty Ltd (Group Kildey) on 22 June 2001, which it is alleged in paragraph 3(b) of the defence and counterclaim, stated inter alia:
“(i) The First Plaintiff was the registered proprietor of 3 Lilla, 5 Lilla Street and 42 Woodcliffe Street, all at Woody Point in the State of Queensland (“the Properties”); (ii) Kildey was granted an option to purchase the properties exercisable upon the occurrence of certain events if Kildey’s proposed development of the Properties;
(iii) Kildey would pay either of the First Plaintiff or Second Defendant a nomination fee in the event that either party nominated a purchaser for a unit in the proposed development.”
Paragraph 3(c) alleged that the Heads of Agreement stated inter alia:
“(i) That upon Kildey’s development application in respect of the Properties being approved and certain other conditions being satisfied, the First Plaintiff and the Defendants would deliver the properties to Kildey in consideration of Kildey transferring title to units 2 and 3 in the proposed development.”
This issue arises because the plaintiffs reply that subject to the admission that the first plaintiff entered into the Heads of Agreement with Group Kildey,[23] the allegations pleaded are denied; and if the defendants are attempting to plead that the Heads of Agreement was somehow a term of the joint venture as between the plaintiffs and the defendants, that is denied.
[23]
The defendants admit that the joint venture agreement took effect as a contract, subject to the denials as to its terms.
Lilla Street Project
The Lilla Street Project was entered into between the first plaintiff on behalf of the plaintiffs and the defendants. The defendants’ denial of this is subject to Mr Quinn’s concession that that is to be read in light of the agreed statement of facts.
This project included, inter alia, moving the houses from 3 Lilla Street and 42 Woodcliffe Crescent and relocating them on to other properties. They were eventually moved on to the properties situated at 32 Tilley Street, Redcliffe and 43 Keenan Street, Margate, respectively. The house situated on 5 Lilla Street, Woody Point was unsuitable for relocation and was demolished.
An issue arises as to when work commenced on the Lilla Street project. The plaintiffs claim that it commenced in or about November 2000 and concluded in or about December 2002. The defendants alleged that the work commenced in early 2001 and constituted a minor refurbishment in anticipation of a tenancy of the property, and this was carried out at cost in accordance with the terms of the agreement between the parties. While the plaintiffs agree that refurbishments were carried out by the defendants, they maintain their allegations and say that the refurbishment works were recorded in expenses for the project.
The plaintiffs rely on Mr Gwynne’s accounting report in support of their claim that $25,306 was owed to them in relation to this project by the defendants as at 24 January 2006, which amount, despite demand remains unpaid. The defendants put that in issue by denying that this is a fair and equitable calculation of the plaintiffs’ interest in the joint venture between the parties.
Tilley Street Project
The Tilley Street Project was entered into between the second plaintiff on behalf of the plaintiffs and the first defendant on behalf of the defendants, with the second plaintiff purchasing the property situated at 32 Tilley Street, Redcliffe in or about
vendors contracts binding it to deliver unencumbered title to Units 2 and 3 in the completed
August 2002. Again, to the extent that the defendants deny this, it is to be read in light of the agreed statement of facts as conceded by Mr Quinn.
There is no dispute that this project commenced in or about September 2002 and concluded in or about March 2003.
The defendants deny the plaintiffs’ claim that the project involved splitting the property into two lots because they say that it was already two existing lots. However, it is agreed that the project involved sliding a house to one of the lots and moving the house from 3 Lilla Street on to the other lot. Both lots were then sold.
On the basis of Mr Gwynne’s report, the plaintiffs say that as at 24 January 2006 they owed $42,586 to the defendants in relation to this project, which amount remains unpaid. The defendants deny that this report is a fair and equitable calculation of the parties’ interest in the joint venture.
Keenan Street Project
With reference to Mr Quinn’s concession,24 there can be no issue about the matters set out in paragraphs [38] to [39].
The Keenan Street Project was entered into by the second plaintiff on behalf of the plaintiffs and the first defendant on behalf of the defendants, with the first defendant purchasing the property situated at 43 Keenan Street, Margate in or about August
2002.25
The project commenced in or about September 2002 and concluded at some stage in late 2005 when the parties failed to agree on the amount payable to the plaintiffs having regard to the value of the property:
(a) which was registered in the name of the first defendant but which properly formed an asset of the joint venture and was owned in equity by the plaintiffs as to 50%; and development.”
This includes his agreement that paragraph 20(c) of the defence and counterclaim be struck out.
The defendants admit in paragraphs 20(a) and (b) of the defence and counterclaim that the project commenced and concluded at the times pleaded by the plaintiffs and the property was an asset of the joint venture.
[26] Mr Gwynne’s report at 154 establishes that the sale price was $162,000 and this is the figure used by him in his calculations.
(b) which was sold by the first defendant some time in 2006 for $160,000.[26]
There is no issue with the defendants’ pleading that the proceeds from the sale were applied in satisfaction of the debt secured over the property by the BLC. However, in light of this, the plaintiffs take issue with the defendants’ contention that no funds from the realisation of the property were received by any of them.
The plaintiffs also take issue with the defendants’ pleading that there was no breach of any contractual or fiduciary obligation of the defendants that would render them liable to account to the plaintiffs in relation to this project.
As with the Tilley Street Project, there is an issue as to whether, as the plaintiffs claim, it was necessary to split the property into two lots to move the 42 Woodcliffe Crescent house on to it. The defendants claim that there were already two existing lots.
The plaintiffs rely on Mr Gwynne’s report in support of their claim that $79,947 was owed to them in relation to this project by the defendants as at 24 January 2006, which amount, despite demand remains unpaid. The defendants put this in issue by denying that this is a fair and equitable calculation of the plaintiffs’ interest in the joint venture between the parties.
Answer to counterclaim
In responding to the counterclaim, the plaintiffs and the defendant added by counterclaim, deny that the defendant added by counterclaim was ever made a party to the joint venture. Accordingly, this is also placed in issue.
Evidence
The plaintiffs adduced evidence from the first plaintiff (Ms Forster), the defendant added by counterclaim (Mr Forster) and Mr Gwynne. The defendants relied solely on the evidence of the first-named second defendant (Mr Cusworth).
As submitted by Mr Johnstone on behalf of the plaintiffs, there is very little difference in the plaintiffs’ and defendants’ evidence as to how the joint venture came into being and how it operated. Where there is a difference, the issues which arise for resolution depend on the interpretation of the dealings between the parties rather than their credibility. This is a result of there being no written record of the joint venture agreement.
Evidence of Mr and Mrs Forster and Mr Cusworth [27]
[27] Where there is a difference between the evidence of the Forsters and Mr Cusworth, this is identified.
Mr Forster is the sole director of the second plaintiff,[28] which is an investment
vehicle and not a mortgage broking business.[29]
[28] T 2-18.
[29] T 2-92.
He first met Mr Cusworth when he was a Metway bank manager.[30] Mr Cusworth believes that the first meeting was in early 1997.[31] Mr Forster says that over the period, which he believed commenced in 1995, to 1999 their business relationship grew into a social relationship, with both he and Mr Cusworth involved in a football
team in which their sons played.[32] Mr Forster described them as good friends.[33]
Mr Cusworth described them as friends since about 1999.[34] He also described it as
a fairly amicable relationship.[35]
[30] T 2-19.
[31] T 3-66.
[32] T 2-19.
[33] T 2-20.
[34] T 3-67.
[35] T 3-66.
The circumstances in which the parties entered into the oral joint venture agreement in about October 2008 and the nature of that agreement are as set out above in paragraphs [16] to [19] and [21]. As stated, this agreement arose out of their social and business relationship.
Mr Cusworth denied that they were partners in the true sense of the word. He described them as business associates doing a joint venture together. It was not a formal agreement in writing, but it was certainly an agreement that was in trust and in kind,[36] in circumstances in which they were friends.[37] He described it as an
agreement that they go ahead and do this project for the benefit or loss of each.[38] Consequently, they worked together.[39][36] T 3-76.
[37] T 3-95.
[38] T 3-76.
[39] T 3-77.
Mr Forster said the arrangement was that there would be a consultative approach as to who paid the costs and expenses, and how they were paid for. There was to be very close communication throughout the project. This involved the party who might incur the expenses ringing the other party to see whether there was an
agreement to that or to identify who would pay for it at that point of time.[40]
However, this approach was not intended to hinder the construction process by
requiring approval for purchase of each individual item of building material.[41]
There was very close communication. There were several meetings daily in some
cases to make sure that they did not jeopardise the project.[42]
[40] T 2-22.
[41] T 3-3.
[42] T 3-9.
On the first evening, the discussion about the joint venture was limited to the Lilla
Street Project.[43]
[43] T 2-24.
Part of the agreement was that Mr Cusworth was capable of contributing skills and expertise in building and construction, and Mr Forster was capable of contributing the borrowing capacity that Mr Cusworth did not have to finance the developments
proposed by the joint venture.[44]
[44] T 2-94.
The conduct of the joint venture in relation to the Tilley and Keenan Street Projects required a builder, although this was not required for the Lilla Street Project. Ampcorp Pty Ltd (Ampcorp) performed all the necessary building tasks for the
Tilley and Keenan Street Projects.[45]
[45] T 2-95.
Ms Cusworth contributed to the joint venture by way of conducting accounting tasks on its behalf and by performing interior and exterior design at Tilley and
Keenan Streets.[46]
[46] T 3-42.
On the day following the initial meeting, Mr Cusworth contacted Graham Kildey of Architects Australia and the principal of Group Kildey, about the project and the concepts available. He also spoke to the Redcliffe City Council as to zone
applications for the site and what could be put there.[47]
[47] Ibid.
Lilla Street Project
The decision was made that the properties for the purpose of this project would be purchased in Ms Forster’s name.[48] This was because the Cusworths did not feel that they were in a position where they could commit to purchasing these properties or
borrowing the money.[49]
[48] T 2-22.
[49] Ibid.
Part of the plan was that a third property would be purchased in addition to No. 3 and No. 5 Lilla Street. There was an exit strategy that if they could not secure the third property, they would have two waterfront residential properties and Mr Cusworth’s company would construct an executive residential home to sell to make a profit for the project. It was taken on trust that the Cusworths would make a
contribution in this respect.[50]
[50] T 2-23.
It was common ground that Ms Forster entered into the contracts to purchase No. 3
and No. 5 Lilla Street.[51]
[51] T 2-23.
No. 3 Lilla Street
Ms Forster paid the purchase price on No. 3 Lilla Street, which had to be settled within 30 days because it was a deceased estate.[52] The Cusworths were not in a position to buy it.[53] Mr Cusworth acknowledged that the beneficiaries of No. 3 Lilla Street were not interested in a development contract and therefore it was necessary to settle it.[54] According to Exhibit 22 written by Mr Cusworth, the Forsters had used the equity in the property to secure finance and to service a line of credit.[55] He accepts that if they had not bought the No. 3 Lilla Street property, the development would not have happened. Although, he said that without both parties,
the collaboration would not have worked.[56]
[52] T 2-23.
[53] T 3-43; T 3-77.
[54] T 3-43.
[55] Mr Cusworth said at T 3-44 that this document was written in early 2001.
[56] T 3-77.
Ms Forster borrowed money in relation to this purchase, for which she and not the
defendants were liable. This was secured by a mortgage over the property.[57]
[57] T 3-24.
The property was rented to tenants until the other properties were sold. The money was accounted for as being part of the joint property.[58] Ampcorp refurbished the property to allow it to be tenanted.[59] This site was ultimately sold to Group Kildey.[60] The house on the site was removed in about September 2002 to
No. 34 Tilley Street.[61]
[58] T 3-30.
[59] T 3-34.
[60] T 2-25.
[61] T 2-34.
No. 5 Lilla Street
This was the third property which the joint venture negotiated to purchase.[62] After protracted negotiations a contract was settled in Ms Forster’s name as purchaser, including a non-refundable deposit.[63] It was subject to obtaining certain development application approvals.[64] It is what is commonly called “developers terms”, where a small deposit is paid and there is a long settlement period to give
opportunity to obtain and meet special conditions of development.[65]
[62] T 2-24.
[63] T 2-24; T 2-25. Although Mr Cusworth wrote in Exhibit 22 that the deposit was fully refundable if the project did not proceed, he agreed in cross-examination at T 3-86 that this was an error.
[64] T 2-24.
[65] T 2-95.
The vendor of No. 5 Lilla Street brought some pressure to bear to have the contract terminated. As a result, Mr Forster, Mr Cusworth and Mr Kildey were in regular
contact with Mr Forster’s solicitor, Rod Holloway, in order to preserve the site.[66]
[66] T 2-25.
Ultimately, an agreement was reached with Group Kildey, which paid for the site and took over the contract. A transfer document was signed with Group Kildey. Therefore, Group Kildey purchased the site and Ms Forster never paid for it. Legal title was never transferred into her name. Although she was named as the purchaser
on the contract, the payment came from Group Kildey.[67]
[67] Ibid.
No. 42 Woodcliffe Crescent
It was discussed with the Cusworths from the first evening that this property was to be incorporated into the joint venture.[68] As with No. 5 Lilla Street, this was able to
be bought on a development contract for 12 months.[69]
[68] T 2-24.
[69] T 3-43.
In order to distribute the debt ownership widely, this property was transferred on the same day to Ampcorp, which bought it from Ms Forster.[70] As a result, Ms Forster did not have to pay for the property.[71]Any costs incurred by Mr Cusworth in relation to this would be incorporated as his costs within the project.[72] The property was bought for the same price that Ms Forster had purchased it for. Mr Quinn agreed that this was common ground, the contract price being $200,000 in each
case.[73]
[70] T 3-30; T 3-52.
[71] T 3-30.
[72] T 3-18.
[73] T 3-85.
Ampcorp borrowed money to complete the purchase. This funding was arranged by Mr Forster through Suncorp Metway.[74] Exhibit 26 is the finance contract, and suggests that this funding became available on 6 February 2002. $213,825 were secured over the property and by an existing mortgage over the Cusworths’ residential property. Settlement occurred on 27 February 2002.
[74] T 2-29; 3-18; 3-52.
According to Exhibit 28, the settlement statement prepared by the plaintiffs’ solicitor Rod Holloway, the amount payable on settlement of this purchase from Ampcorp from Ms Forster was $211,934.38. This included $5,000 for which Ms Forster was named as the payee, $5,992 for which Rod Holloway & Co. Trust Account was the payee, and an handwritten entry of $5,600.
Mr Cusworth’s evidence-in-chief was that the $5000 was to offset some of the
interest component for Ms Forster’s borrowings to secure No. 3 Lilla Street.[75]
However, in cross-examination he conceded that this may in fact have been a
reimbursement for the deposit paid by her when she purchased the property.[76]
[75] T 3-57.
[76] T 3-82.
In evidence-in-chief, Mr Cusworth said in accordance with the settlement statement
that the $5,992 was paid to the solicitor as “Stamp Duty on the Prior Contract”.[77]
However, in Exhibit 27, which is a handwritten document created by Mr Cusworth in relation to this purchase, $5,600 is shown as a payment to his solicitor for The Office of State Revenue Stamp Duty. Mr Cusworth agreed that where $5,600 appeared in Exhibits 27 and 28, it referred to the same thing.[78] He agreed in cross-examination that $5,600 appeared as a stamp duty expense for him and his
wife in a document typed by Ms Forster from information that they had given her.[79]
Mr Cusworth accepted that if Ampcorp paid the same purchase price as Ms Forster, he would have paid the same amount of money for stamp duty as had been paid by Ms Forster.
[77] T 3-55.
[78] T 3-55.
[79] T 3-83 with reference to Mr Gwynne’s report at p 84.
This site was ultimately sold to Group Kildey.[80] The house on the block was moved to Keenan Street. This was Mr Cusworth’s idea, which Mr Forster thought was a good concept. Mr Forster proposed additional ventures of the same nature, but Mr Cusworth was only interested in doing a venture in relation to the removal of this house.[81] The second plaintiff, Fast Track Home Loans Pty Ltd (Fast Track),
paid $6,000 to Wright Brothers for them to move this house.[82]
[80] T 2-25.
[81] T 2-97.
[82] Mr Gwynne’s report at p 123.
Group Kildey
The parties put this project to the open market for sale.[83] In mid to late 2001
Mr Kildey expressed a desire to engage in dialogue about buying the project.[84]
[83] T 3-46.
[84] T 3-47. See also Exhibit 23, which are notes of a meeting with Mr Kildey.
The venture parties entered into an arrangement with Group Kildey to develop the site by building residential units.[85] They negotiated what they thought was
equitable in their best interests.86
[85] T 2-24.
As indicated, this involved Group Kildey purchasing No. 3 Lilla Street and No. 42 Woodcliffe Crescent from Mrs Forster and Ampcorp respectively and taking over the contract for No. 5 Lilla Street and purchasing that site.
Ultimately, on the basis of Heads of Agreement entered into between the parties and Group Kildey on 25 April 2002,87 title in the properties was transferred to Group Kildey. Mr Cusworth said that communications between the parties were very positive at this stage. He said, “It was collaborative at that time and it was all pretty
positive about the outcome.”88
The arrangement under the Heads of Agreement was that the parties would each receive a payment of $220,000 cash plus the unencumbered title to a ground floor unit in the development. As indicated, Clause 8 of the Heads of Agreement included that “Upon notifying the vendors in writing that it intends to proceed with the development, Group Kildey will provide to the vendors contracts binding it to deliver to the vendors unencumbered title to Units Nos 2 and 3 in the completed
development.” As a result, neither party incurred a loss in selling the properties.89
According to Mr Forster, payment was made to the Cusworths some time in September 2002 and they were able to close their mortgage and deposit the surplus
funds into their bank account.90
The Forsters received their payment in December 2002.91 It was used to pay off their loan. Although, Ms Forster was not sure what happened to the balance of the
funds.92
In acquiring the ground floor units, both parties had the option to upgrade to a higher level unit on payment of the necessary price difference between the agreed value of the ground floor unit and the price of the higher level units.93 The agreed value reached by the parties with Group Kildey for each of the ground floor units
T 3-48.
See Exhibit 25. As indicated, this is inconsistent with the date of 22 June 2001 mentioned in the Defence and Counterclaim.
T 3-58.
| 89 | T 2-25. As indicated, Mr Quinn agreed that it was common ground that the contract price for 42 Woodcliffe Crescent was $200,000. Appendix H to the expert report at p 94 establishes that the sale price was $220,000. |
T 2-27. The settlement statement is dated 19 September 2002.
T 2-27.
T 3-31.
was $269,000.94 Mr Forster said that the acquisition of the units were the true
benefit of this project.95
Mr Forster said that it was agreed with the Cusworths that he and Ms Forster have first choice of the ground floor units because they had made the greatest contribution. There were no protests or complaints about this arrangement.96 He said that although they chose the unit which was most appealing to them, it was not their intention that this would result in it having a higher value.97 However, neither of the parties signed for the units allocated to them on the ground floor.
The Forsters, in Ms Forster’s name, ultimately exercised the option available to each of the parties outside the venture by giving up the ground floor unit to pay the
premium to increase it to a second level unit.98
The Cusworths did not move into their unit, so that two ground floor units could be merged into a double-sized residence for another couple. They took another three-
bedroom unit on the ground floor. As Mr Forster said, this was their choice.99
The units were not built at this stage. As a result, neither party obtained the originally intended downstairs units. The parties received title to the units in May 2005 in the development which was called “Double Bay”.
Discussion about reconciliation of Lilla Street Project
Mr Cusworth conceded that if the joint venture had stopped at the Lilla Street project, despite the fact that on the figures there was a cash loss, everybody would have won because both parties had worked hard to acquire an apartment worth a sum of money. Both gained something worth a lot more than they spent. As he
said, “If we had stopped it there, we would have been winners.”100
Mr Forster said that there were initial discussions about the monies expended and received as part of the joint venture around September 2002, when the Cusworths
T 2-25 to 2-26; see also Heads of Agreement, Clause 8.
T 2-26.
T 3-15.
T 2-26.
T 3-15.
T 2-26.
T 2-27.
T 3-77.
received their payment. The discussion was initiated by Mr Forster by phone. He asked Mr Cusworth to prepare their expenses and information so that they could quantify what was paid by them as their contribution to the project at that point. Simultaneously, the Forsters prepared their figures that calculated their contribution.
The purpose was to enable their separate contributions to be calculated.[101]
[101] T 2-28 to 2-29.
There was a meeting at the Forsters’ home, where the Cusworths gave them details and receipts to enable the Forsters to complete the accounting of their expenses. On this basis, Ms Forster prepared a running balance sheet of the expenses they had incurred. In late September or October 2002 Mr Forster gave this to the Cusworths.[102] He did not believe that this was discussed at the time because they were waiting until the realisation of the Keenan Street Project and the finalisation of
the joint venture to do the accounting.[103]
[102] T 2-29 to 2-30.
[103] T 3-4.
In December 2002, when the Forsters received payment from Group Kildey, they approached the Cusworths with their figures and gave them a quantification of what they felt was the difference between what each party had received. It quantified what the Forsters considered was owed to them as a result of their participation in
the joint venture.[104]
[104] T 2-28. Reference is made to the expert report at 61, where there is a schedule of expenses prepared by Ms Forster and given to the Cusworths in relation to the expenses for Lilla Street (“Forsters’ outlays”).
In December the Forsters met the Cusworths and discussed the accounts. The Forsters asked for payment at this point of time.[105] They believed that they had contributed a greater amount of money to the project. They had divided in half the figures that Ampcorp and the Cusworths had contributed, and those contributed by them and done an equalisation payment.[106] Mr Cusworth phoned him back later that evening and indicated there was some challenge with the calculations because they had quantified a capital payment, being a loan repayment instead of the interest
costs on the loan. As a result, the Forsters did some modified figures.[107]
[105] T 2-31.
[106] T 2-32.
[107] T 2-31. The modified document is at p 84 of the expert report.
Mr Forster says that he subsequently asked the Cusworths whether they could complete the payment, which he considered was owing by them. Mr Cusworth said they were struggling and could not meet the payment. This was because they were deep into completing the Tilley Street Project. There was a lot of money being spent on developing that site. Mr Forster took it on face value that they were struggling because Mr Cusworth was receiving wages for working in that project. The property for the Keenan Street Project had also been acquired around this time, although no works had commenced.[108] As a result, the question of accounting remained unresolved.
[108] T 2-32.
According to Mr Forster, there was a further meeting with the Cusworths seven months later, as he was their finance broker and they were purchasing a house. He asked whether they could meet the Lilla Street Project payments now they were reducing their home loan debt. They said that they did not feel that they could and asked if payment could be deferred until the completion of the Keenan Street Project. They would settle on the payment for the Lilla Street Project and all calculations for the Tilley and Keenan Street Projects would be consolidated at that
time.[109]
[109] T 2-32 to T 2-33.
Ms Forster said that after her initial involvement in the joint venture, she did not have much involvement in the day-to-day mechanics of the other developments,
which were mainly handled by her husband.[110]
[110] T 3-31.
Tilley Street Project
When the parties entered into the joint venture, it was not intended to do the other projects in addition to Lilla Street. The Tilley Street Project occurred because around June 2002 Mr Cusworth wanted to relocate the house from No. 42 Woodcliffe Crescent to another site.[111] He raised this with Mr Forster after he had spoken to Mr Kildey who intended to demolish the three houses on the Lilla Street Project sites, and agreed that the house could be moved from the site at no cost to him.[112] Therefore, Mr Cusworth saw an opportunity that the joint venture could
make revenue from this.[113]
[111] T 3-33.
[112] T 3-59 to 3-60.
[113] T 3-77 to 3-78.
Mr Forster testified that he objected to this proposal because this was probably the most impressive of the three houses and the joint venture owned half of it. According to him, Mr Cusworth suggested they find another project and Mr Forster
agreed.[114]
[114] T 2-33.
According to Mr Cusworth, it was Mr Forster who thought that the project could be expanded. Mr Cusworth said that because of his financial position he wanted to keep the project small. He did not want to put his family into debt any more than he had to. However, he said that Mr Forster convinced him that they should expand at
this point.[115]
[115] T 3-60.
Mr Cusworth said that because he wanted to put some structure into an agreement, he adjusted a partnership agreement given to him by his accountant, Graham Donnelly. However, Mr Forster declined. Mr Cusworth said that because they were already in the development, he just went from there.[116] The reasons given by Mr Forster for declining this request are set out at [21] above.
[116] Ibid.
It was decided to move not only the house at No. 42 Woodcliffe Crescent, but also the house at No. 3 Lilla Street and find an alternative property to locate them on. The original intention was to do a quick “fix and flick”, which was to “fix them up
and sell them at a quick profit”.[117]
[117] T 2-33.
As a result, there was a quick milk run tour by Mr Forster and Mr Cusworth with John Wright from Wright Brothers House removals to find a property to relocate
them.[118]
[118] Ibid.
The 42 Woodcliffe Crescent house was ultimately not moved to Tilley Street[119]. It was moved to Keenan Street. The house from No. 3 Lilla Street was moved to Tilley Street. This could have happened in around September 2002.[120] As part of
the venture, this house had to be reconfigured and refurbished by Ampcorp.[121]
[119] Ibid.
[120] T 2-34.
[121] T 2-98; T 3-64.
Labour employed by one of Mr Cusworth’s companies did some preparation work on the house so that it was ready to be transported.[122] Ms Cusworth did the interior design and exterior design colours, kitchen layouts, laminex choices, paint colours,
tiles, bathroom vanities, kitchen etc to ensure a good end product.[123]
[122] T 3-64.
[123] T 3-65.
There was an existing house centrally located at Tilley Street. The side was sawn off, it was moved over and lifted and put on No. 32 Tilley Street. The block was on
two titles and was ultimately sold separately as Nos 32 and 34 Tilley Street.[124]
[124] T 2-34 to 2-35.
The property at Tilley Street was purchased by the second plaintiff, Fast Track Home Loans Pty Ltd (Fast Track), because the transactions had to be completed very quickly and there was not sufficient time to formalise a new company of which Mr Forster and Mr Cusworth could be joint directors.[125] Mr Forster says that he consulted with the defendants about the terms of the contracts during several phone
calls.[126]
[125] T 2-35.
[126] T 3-8.
In these circumstances, it was agreed that Mr Forster would purchase a property in the name of Fast Track and Mr Cusworth would purchase a property in the name of Ampcorp.[127] As a result, Fast Track bought the Tilley Street property and Ampcorp
bought the Keenan Street property.[128]
[127] T 2-35.
[128] T 2-36.
Fast Track obtained finance to acquire it, secured against the house on the property and the Forsters’ personal residential property and their Redcliffe investment property.[129] The finance was arranged by another company called Syatt Pty Ltd, of
which Mr Forster is a director.[130]
[129] T 2-40; 3-24.
[130] T 2-98. This is a mortgage broker business (see T 2-94).
Mr Forster said that the Tilley Street property was purchased on behalf of the joint venture and as such it was regarded as property of that venture. He said that they
were going to split the profits or loss of the transaction 50:50.[131]
[131] T 2-35.
Mr Forster said that at this time the relationship between the joint venturers was very strong and very positive. He described it as a relationship of great trust between the two families.[132] Mr Cusworth confirms that they still had great correspondence, with relevant and frequent discussions about the house.[133] As such, Mr Forster said that they were not looking over each other’s shoulders to find out who was spending what. They were relying upon each other to provide details in
due course.[134]
[132] T 2-36.
[133] T 3-65.
[134] T 2-37.
The Tilley Street properties were completed and sold around March 2003 before the
Keenan Street properties.[135]
[135] Ibid.
It is common ground that the Tilley Street project did not make any money. Ampcorp did the building work.[136] Mr Cusworth denies that the reason for the loss was because this work cost more than estimated. He said that was because the
properties sold for lower than anticipated.[137]
[136] T 3-78.
[137] T 3-81.
Mr Cusworth said that the agreement between the parties was that Ampcorp through MJC Building Contractors, was to carry the cost burden in relation to the Tilley and Keenan Street projects because they held a building licence. They were to tabulate the accounts and sit down with the Forsters in the third week of each month to
ensure their account for works outstanding was met by the end of each month.[138]
[138] T 3-69.
Mr Forster said that the project failed because, despite their agreement that it would cost $40,000 each to renovate the houses at Tilley Street, there was $150,000 overrun.[139] Mr Cusworth denies there was a cost overrun, but accepts that the development costs were more than the estimates.[140] According to Mr Forster, these were the costs of the various building contractors and suppliers for timber, roofing,
etc.[141]
[139] T 2-37.
[140] T 3-80.
[141] T 2-37.
Mr Cusworth was doing the renovation at cost plus his wages. Therefore, the joint venture paid his wages during the course of the project.[142] He said that it became evident that it was necessary to do more than the tick and flick in order to get a
marketable product for these houses.[143]
[142] Ibid.
[143] T 3-65.
According to him, Ampcorp charged the joint venture for the costs of building at “cost only” with no margins, commissions, overheads, or profits. The reason it did not charge for profit is that it was hoped to get a profit at the end of the joint venture in which both parties could share. He accepted that he was making a business decision in the hope that he could achieve a profit out of the work being done as part of the joint venture at Tilley Street, although there was always a risk that there might be a loss. He said that the same applied to Keenan Street, where he charged the joint venture at cost in anticipation of a profit at the end of the project. He agreed that he made this decision rather than to tender for third party building jobs at the same time. This was because he had to do whatever he could to complete the
projects.[144]
[144] T 3-78 to 3-79.
Mr Forster said that after Tilley Street was sold, there was no further discussion about accounting because the Forsters had pretty much satisfied themselves that they were going to receive their payment that the end of the Keenan Street
project.[145]
[145] T 2-38.
He said that when the sale proceeds from Tilley Street were received by Fast Track in about March 2003, they were used to repay the loans that Fast Track had obtained as well as the private loans that the Forsters had organised because of the cost overrun.[146] The defendants were not parties to this transaction.[147] The balance of the funds were transferred to Ampcorp to assist in the completion of the Keenan Street Project. The funds were not used against the debt which had been incurred
otherwise than as a result of the joint venture.[148]
[146] T 2-40.
[147] T 3-7.
[148] T 2-40.
Therefore, $40,000 was deposited into the business line of credit available to Ampcorp. This was by a cheque drawn on 1 April 2003, made to Ampcorp to keep it in funds for Keenan Street.[149] Mr Cusworth agrees with this, although he complains that he had to chase Mr Forster to go through the final account so that he and his wife could be reimbursed for the funds they had expended on the project to that time. He said that until that time, he and his wife had covered the costs out of their personal savings. He said that any other outstanding accounts were absorbed
by them through whatever funds they had.[150]
[149] Ibid; T 2-41; T 2-47; see also expert report at 117.
[150] T 3-73.
Ms Forster and Ms Cusworth had sat down and done a quantification of the Tilley
Street project as to who had contributed what, and who owed what to whom.[151]
[151] T 2-44 to 2-45; this is Appendix J at 100-107 of the expert report.
Keenan Street Project
The Keenan Street property was purchased in the name of Ampcorp,[152] although the Forsters paid for the transfer stamp duty.[153] Like the Tilley Street Project, this was a block on two titles (Nos 43A and 43B). It was bought with a house on one of the lots (No. 43A). The house from No. 42 Woodcliffe Crescent was slid on to the other lot.[154] The house was then elevated with steel stumping on a concrete base. According to Mr Forster, it was pretty much left this way from September 2002 until the proceeds were received from the Tilley Street sale in March 2003. This gave sufficient funding to advance completion of the house. Although because the
Tilley Street property made a loss, these funds were pretty much borrowed.[155]
[152] T 2-35.
[153] T 3-25.
[154] T 2-38.
[155] T 2-39.
These funds were provided through a Suncorp Metway business line of credit in Ampcorp’s name and secured over the Keenan Street property, as well as some equity linkage with the Cusworths’ residence.[156] The Cusworths were guarantors of this loan. Neither the Forsters nor Fast Track had any liability in respect of this
credit facility.[157]
[156] Ibid; T 2-56; T 3-4.
[157] T 3-3 to T 3-4.
Mr Forster set up the line of credit through Syatt Pty Ltd.[158] Upfront commission and ongoing management fees, known as trailer payments, were received from Suncorp Metway every month based on the balance of the loan.[159] None of the commissions were reported back to the joint venture.[160] For the purposes of deciding the issues that arise in this case I proceed on the basis that the practical result was that although the arrangements were made through the company, the financial benefit was received by Mr and Ms Forster.
[158] T 2-39; 2-94.
[159] T 2-59.
[160] T 3-19.
This line of credit appears to have been established on 11 September 2002, with a credit limit of $243,800.[161] It was to be used exclusively for and only for expenses that were incurred by the purchase and development of the Keenan Street property.[162] There was discussion between Messrs Forster and Cusworth about
this.[163]
[161] Exhibit 9.
[162] T 2-39.
[163] T 2-42.
Nos 43A and 43B Keenan Street did not settle at the same time. No. 43B settled first in August 2003 for $285,000.[164] Exhibit 9 is the line of credit and shows two payments of settlement proceeds. This was on 19 and 20 August 2003 for $156,053.63 and $126,627.59 respectively.[165] This seems to have been paid by two cheques. The purchaser was a Mr Grosskopf. The Forsters do not claim that the contract of sale was less than the actual value of the property.[166] The plaintiffs were
not parties to this contract which was with Ampcorp.[167]
[164] Ibid.
[165] T 2-58.
[166] T 3-4.
[167] T 3-9.
The joint venture was not deemed to be finished at this stage because No. 43A Keenan Street had not been sold. It was now a vacant allotment because the house had been dismantled and removed due to a high asbestos content. No funds were received from it for the joint venture. According to Mr Forster, it cost them money.[168] The cost of demolition was $4,500. The vacant land was put on the market and ultimately sold for $162,000. The proceeds of this sale went to clear the
outstanding business line of credit debt that had accumulated for Ampcorp.[169]
[168] T 2-43.
[169] T 3-74 (evidence of Mr Cusworth).
In particular I do not consider that the case has been prolonged by the defendants making or maintaining the counterclaim, including by adding Mr Forster as a defendant to it.
With reference to the maintenance of the counterclaim, as is apparent from the previous discussion it and the claim are inextricably linked, and the determination of the issues in respect of both were based on the same evidence.
This was not altered by adding Mr Forster as a defendant to the counterclaim. Although he was never a party to the joint venture, as demonstrated by the terms of the agreed statement of facts, as the evidence established he was, as alleged in the counterclaim, “an active participant in the joint venture, by virtue of his directorship of the Second Plaintiff and in his capacity as a partner of the First Plaintiff.”
Not only did Mr Forster represent the second plaintiff at the meeting with the defendants (Mr Cusworth, representing the first defendant) where it was agreed to establish the joint venture, but as Ms Forster said, after her initial involvement in the Lilla Street Project, she did not have much involvement in the day-to-day mechanics of the other developments, which were mainly handled by Mr Forster.
In addition, it was Mr Forster through Syatt Pty Ltd, of which he was a director, who set up the line of credit for Ampcorp for the purposes of the Keenan Street Project. As has previously been discussed, it was the consequential commissions which I have regarded as being received by the plaintiffs for the purpose of this decision, that have been the subject of the argument that it is not equitable to allow them to claim and be compensated for the infringement of their alleged rights when they in fact committed the very same act. Because of the inextricable link between the claim and counterclaim, this issue was relevant to the determination of both.
In these circumstances Mr Forster would have been required to give evidence on the same issues concerning both the claim and counterclaim whether he had been added as a defendant to the counterclaim or not.
As such the addition of Mr Forster as a defendant to the counterclaim was neither unreasonable nor did it prolong the case.
In these circumstances although I consider the plaintiffs and the defendant added by counterclaim are entitled to their costs of and incidental to this proceeding, I do not consider that they should be ordered on the indemnity basis in respect of the counterclaim.
Conclusion
I order that the defendants pay the costs of the plaintiffs and of the defendant by counterclaim, of and incidental to this proceeding to be assessed on the standard basis.
Orders
1. The first and second defendants account to the first and second plaintiffs in the sum of $62,667 in respect of the joint venture entered into between them in October 2000.
2. The counterclaim is dismissed.
3. The first and the second defendants pay the first and second plaintiffs interest pursuant to s 47 of the Supreme Court Act 1995 from 5 July 2005.
4. The first and second defendants pay the costs of the first and second plaintiffs and the defendant by counterclaim, of and incidental to this proceeding to be assessed on the standard basis.
• 3 and 5 Lilla Street and 42 Woodcliffe Crescent, Woody Point, Qld (“the Lilla Street Project”). • 32-34 Tilley Street, Redcliffe, Qld (“the Tilley Street Project”). • 43 Keenan Street, Margate, Qld (“the Keenan Street Project”).
| However, the Heads of Agreement tendered as Exhibit 25, which was signed as vendors by Ms Forster and Mr Cusworth on behalf of the first defendant as well as the purchaser, Group Kildey Pty Ltd, was dated on 24 and 25 April 2002 and the relevant paragraph 8 was, “Upon notifying the vendors in writing that it intends to proceed with the development Group Kildey will provide to the |
“(1) Partners in a firm, other than an incorporated limited partnership, are bound to
render true accounts … to any partner …”.
By virtue of s 4 of the PA, persons who have entered into a partnership with one another are for the purposes of that Act collectively called a firm.
| Although this proposition is not in accordance with my interpretation of this decision, assuming it to be the case, my response is that as stated by Muir J in Mulherin as t’ee for The HD Mulherin Family Trust v Quinn Villages Pty Ltd at [20] with reference to similar expressions of principle, “while no doubt accurate in the context in which they were made, [they] hardly propound a universal truth. For example, upon dissolution of a partnership an account is normally ordered. Lord Lindley wrote in Lindley on Partnership that, ‘The right of every partner to have an account for his co-partners of their dealings and transactions is too obvious to require comment.’ It is generally not necessary for a partner seeking an account to establish that monies will be found due to him.” |
concluded that the conduct of the parties over the years demonstrated the existence of a fiduciary
relationship, in the nature of a joint venture. A declaration of equal contribution was made.This question was rightly objected to, and upon reflection Mr Quinn withdrew the question. The matter was not pressed and did not lengthen the hearing.
0
9
0