Ross v Ross - [2004] WASC 102

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION: ROSS & ANOR -v- ROSS & ORS [2004] WASC 102

CORAM: WHEELER J

HEARD: 16 OCTOBER 2003

DELIVERED : 24 MAY 2004

FILE NO/S: CIV 2302 of 1995

BETWEEN: RAYMOND ARTHUR ROSS
BERNADINE ROSS
Plaintiffs
AND
CLIVE MICHAEL ROSS
JENNIFER ROSS
First Defendants
CLYDE LYNDON ALLEN
CARINE INGA ALLEN
Second Defendants

Catchwords:

Turns on own facts

Legislation:

Nil

Result:

Counterclaim dismissed

Category: B

Representation:

Counsel:

Plaintiffs:     In person
First Defendants            :     In person
Second Defendants        :     No appearance

Solicitors:

Plaintiffs:     In person
First Defendants            :     In person
Second Defendants        :     No appearance

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

Nil

Case(s) also cited:

Nil

WHEELER J: These reasons should be read together with my reasons for decision in this matter dated 26 November 1998 (Library No 980679), and with some supplementary reasons which I delivered on 5 February 1999 (Library No 990035).
In accordance with orders I made on 26 November 1998, Registrar Rimmer took an account of moneys paid by the first defendants (hereafter "the defendants") towards the costs of construction of the residence in question and by report dated 12 June 2003 reported to the Court in relation to that account. As appears from that report, the taking of accounts has been very protracted. It commenced before Registrar Powell on 30 April 1999 and was transferred to Registrar Rimmer, with hearing dates interspersed with lengthy periods of adjournment continuing through to July 2002. There were, I think, some 13 hearing days in all and the transcript of the accounting before the Registrar runs to over 1,000 pages.
At first blush, the amount of Court time devoted to the accounting appears to be extraordinary, when regard is had to the fact that the total amount claimed to have been expended by the first defendants up to 31 July 1998 was $210,133.19, of which $64,416.65 appears to have been disputed. However, the wholly disproportionate expenditure of time and effort on this matter is explained by two factors. The first is the extreme hostility and distrust between the parties, upon which I commented in my earlier reasons. This appears to have prevented them arriving at any sensible compromise. That factor was aggravated somewhat by the fact that one of the parties was always acting in person while, during the course of the accounting, the other decided that because of the expense of legal representation, it was necessary for him, too, to act in person.
The second factor was, as the Registrar noted in his report, that there was in numerous – perhaps most – cases, a lack of direct evidence as to the precise expense being incurred and as to its purpose. Often, the claim for expenses was made through a process of reconstruction with reference by the defendants to composite withdrawals of money from their cash management account or on occasion from their personal cheque account. Invoices and receipts were difficult to marry up, where they had been kept at all. Often, diary notes made by Mrs Jennifer Ross were the only source of explanation for a payment and, as the Registrar noted, in some cases the evidence consisted of the bare assertion that the expense was incurred on the property in some way. In order to convey something of the flavour of the process, I note that in reading the transcript of the accounting I encountered on one occasion a dispute as to an amount of 80 cents, while on another there was a claim for a sum of approximately $24.00 which was said in evidence on behalf of the defendants to represent the price of a carton of beer; the carton of beer was in turn asserted to have been paid to some construction workers who were by that means enticed from a construction site nearby to perform a small amount of work on the residence in question.
At the end of that process, the Registrar allowed $34,651.05 worth of claims in full, and partially allowed other claims in an amount of $5,494.95. The total of the disputed amount which was disallowed was therefore $24,033.35. There was a further amount representing agreed fuel expenses of $1,200. The total amount which the accounting reveals to have been spent on construction of the house is therefore calculated as follows:

Total amount claimed by defendants (from affidavit of J A Ross 14/5/99):	$210,133.19
Less amounts disallowed:	$ 24,033.35
Plus agreed fuel:	$ 1,200.00
Total construction sum:	$187,299.84

Before I turn to the orders which should be made following from the Registrar's report, I should deal with certain submissions made by Mr Clive Ross and Mr Raymond Ross in relation to the report. Since they share the same surname, for convenience I refer to them, without intending any disrespect, as Clive and Raymond respectively. Each of them, for different reasons, suggests that I should reject all or part of the report and each suggests conclusions which I should reach in lieu thereof. In my view, the various contentions made by each of them lack substance. They can be dealt with fairly broadly.
Turning first to Clive's submissions, they are as follows. First, it is alleged that the Registrar failed to apply the correct standard of proof, that being proof on the balance of probabilities. However, the Registrar expressly noted in his report that the balance of probabilities was the standard which he was adopting.
Next, it is complained that the Registrar made "subjective adjustments" to costs claimed. It is said that those adjustments were contrary to the view I had expressed in my reasons of November 1998 that, since the defendants should account for actual expenditure, it would not be appropriate to order that a quantity surveyor provide a report on the likely expenditure. That submission misunderstands the thrust of the reasons and the role of the Registrar. He did not, in my view, adopt the role of an expert quantity surveyor; rather, he was performing the very difficult task of estimating, having regard to the documents and the oral evidence, what was the probable expenditure of the defendants on a variety of items, where the actual expenditure was not clear from the written materials alone.
Clive also submits that the Registrar has disallowed costs that are "without question costs associated and related to ownership of the property". The answer to this submission is that the Registrar was required to report in relation to construction, and not in relation to ownership. In my earlier reasons, I made findings in relation to the adjustments which should be made in relation to certain ownership costs, being rates, taxes and insurance. I will make those adjustments when I come to finalise my orders. So far as any other "ownership" costs are concerned, they should have been raised with me at trial in the same way that rates and taxes were raised, if there was intended to be any claim in respect of them.
Clive sought to adduce in evidence before me an affidavit of a builder confirming certain payments made to the builder. However, that affidavit is dated 22 August 2003, and postdates the Registrar's report. There is no reason why it could not have been adduced in evidence before the Registrar, and it would not be appropriate for me to have any regard to it at this stage.
Paragraphs 8 and 9 of Clive's submissions complain about a disallowance of a variety of items, or their disallowance in part. Having reviewed the schedule of discovered documents and the evidence, I can only say that those disallowances and partial disallowances seem to me to represent a reasonable exercise of judgment by the Registrar in a difficult situation. For example, there is a complaint that an amount of $3,800 has been disallowed on a total claim of $9,800 for cabinet work. The only documentation supporting that claim for cabinet work is the various statements from the defendants' cash management account, which was accompanied by the oral evidence of the defendants reconstructing the purpose of the various withdrawals. It was up to the Registrar to assess the extent to which he accepted that evidence of reconstruction. In relation to certain other of the items, while there was a receipt or document identifying the expense (eg in relation to the telephone account) the evidence reveals persistent difficulty on the part of the defendants in distinguishing between those amounts which should have been their personal responsibility as tenants, those amounts which might be said to be attributable to "ownership", and those amounts related to construction, this last being the issue for the Registrar.
Paragraph 10 attempts to reargue the dispute which arose before the Registrar as to the proper interpretation of certain receipts and certain evidence relating to items claimed to relate to the supply of paving bricks for the property. In my view, the rebuttal evidence of the plaintiff, who called a witness from that company, supports the Registrar's disallowance of the relevant items.
For the reasons given above, I would not reject any aspect of the Registrar's report based upon the submissions made by Clive on behalf of the first defendants. Turning to the submissions of the plaintiffs, they can be characterised as follows.
Raymond attacks the first defendants' record keeping generally, not without reason. However, he in essence submits that only unambiguous documents have evidentiary value, and that no evidentiary weight should be given to the oral evidence of the defendants. In my view, it was open to the Registrar, having regard to the indisputable fact that a house was built, to common knowledge of the way in which house construction is generally carried out in Western Australia, and by reference to the oral evidence of the defendants supported by such documents as there were, to arrive at a conclusion as to the amount probably spent by the defendants in relation to the various disputed items. In other words, I reject the submission that where the only or principal support for claimed expenditure was the oral evidence of the defendants together with records of withdrawals from their own bank accounts, that those items of expenditure should all have been disallowed.
Next, Raymond undertook his own reconstruction of the probable total cost of construction by reference to matters such as the amounts withdrawn from the defendants' bank accounts, the original estimate provided by the defendants to him, the amount for which the construction was insured, and so on. Those were all matters which could have been argued before me as alternative ways in which a figure for the cost of construction might have been arrived at. However, at trial the plaintiff claimed an accounting. Provided the accounting has been properly carried out, as in my view it has, it is not now open to him effectively to contend for some alternative method of assessment.
Raymond also suggests that he should be permitted to seek the review of all those many items which were said to have been conceded by his solicitor. I am not persuaded that those concessions were made without instructions. It was therefore, in my view, proper for the Registrar to allow those items which were conceded, and I would not revisit them.
There is a particular challenge to the evidence relating to curtains and blinds. It is asserted by Raymond that the cost of providing expensive curtains is not a cost of construction and a property being constructed for sale or rent, as this was, would be provided with only basic décor. However, there was oral evidence which the Registrar accepted that the curtains in question were sold (as either fixtures or chattels, it is not clear which) with the house. The expenditure may or may not have been prudent, but the Registrar accepted that it was a cost actually incurred.
Finally, it is submitted by Raymond that he made a concession in respect of fuel which he should not have made and which he was, in effect, "ambushed" into making. Although there is much to be said for his submission that the amount in question appears on its face to be excessive, I note that the question of fuel was raised at a very early stage before the Registrar, on 24 August 1999. In those circumstances, I would not now revisit any concession which had been made in respect of fuel.
As with the defendants' submissions, it is my view that nothing in the plaintiffs' submissions should cause me to reject the Registrar's report. I therefore accept that report in full together with its annexure.
Accepting a construction cost of $187,299.84, as calculated above, it is now necessary for me to make an adjustment, as foreshadowed in my reasons of 26 November 1998, in relation to rates, taxes and insurance. It is not possible to arrive at the correct amount with absolute precision. It is not clear from the Registrar's schedule whether certain items of insurance are insurance merely for the building, or for contents, or for contents and building combined. Similarly, there is an ambiguity in relation to some of the water accounts, as to whether they are for excess water, or are rates or adjustments in respect of rates. The totals of the rates, taxes and insurance over the relevant period, which have not been otherwise allowed by the Registrar, come to approximately $3,000. As an estimate, it seems to me appropriate to make an allowance in favour of the defendants in the sum of $1,000 in respect of those amounts; that is, to proceed on the basis that Raymond should pay them the sum of $1,000 in respect of those amounts.
If the cost of construction of the residence was $187,299.84, as I have found, then the agreement as I found it to be would have required Raymond to contribute 50 per cent of that amount, being $93,649.92, together with the sum of $1,000 to which I have referred in relation to the rates and taxes, making a total of $94,649.92.
In their counterclaim, by the amended defence and counterclaim dated 6 March 1996, the defendants pleaded that the plaintiffs had contributed $94,558.34 towards construction of the property. The amount which the plaintiffs pleaded that they contributed was very similar. There is a slight discrepancy between the amount pleaded in the amended statement of claim filed 16 May 1996 and in the plaintiffs' answers to the first defendants' request for further and better particulars dated 16 May 1996. In each of those documents the costs of purchase of the land and construction of the residence was aggregated, but when one subtracts from the sums pleaded half of the purchase price of the land, it appears that each of the two figures pleaded by the plaintiffs is within a few hundred dollars of that pleaded by the defendants (the figure in the statement of claim being slightly higher and that in the particulars slightly lower than the defendants' figure).
Having regard to the imprecision inherent in the entire process of taking of account, it seems to me that it is not necessary to make a precise finding as to the amount contributed by the plaintiffs. On either the plaintiffs' or the defendants' pleaded figures, it seems to me that the only reasonable conclusion is that the amount contributed by the plaintiffs is so close to the amount which the accounting reveals on the balance of probabilities to have been one half of the cost of construction, that no further payment should be ordered either from the plaintiffs to the defendants or vice versa in respect of construction.
It follows from that, that I would dismiss the first defendants' counterclaim, which is pleaded in par 16 of the amended defence and counterclaim of 6 March 1996.
There remains then only the question of the costs of the accounting. As to that, the submissions of the defendants were that the majority of the disputed costs were allowed, and that the plaintiff should therefore bear the costs of the account taking. The submission of the plaintiff was that because of the defendants' failure to maintain or provide even the most basic records, the accounting had taken a great deal longer than was necessary and its cost had been very significantly increased. It was further submitted that approximately 50 per cent of the sum disputed had been disallowed and that the plaintiff had been successful in the substantive proceedings from which the accounting flowed. For all of those reasons, it was submitted that the defendants should pay the plaintiffs' costs of the accounting.
Having regard to the way in which the action developed, it seems to me that a principal purpose of the accounting was in order to ascertain whether or not the defendants' counterclaim could be made out. For the reasons which I have given, it could not. In that sense, the first defendants were unsuccessful. Further, while there seems to have been intransigence on both sides, and a distinct tendency to what could only be called "nit picking" on both sides, there is considerable substance in the submission that the inadequacy and confusion of the first defendants' records significantly contributed to the cost of the accounting. While the first defendants were "successful" in the accounting to the extent that the majority of the disputed costs were allowed, there was a very significant quantum of claimed costs which were disallowed. For those reasons – that is, both because it is appropriate in my view to regard the plaintiff as the "successful" party overall, and because, in my view, the defendants' contribution to the undue length of the accounting was significantly greater than that of the plaintiffs – it is my view that the defendants should be ordered to pay a substantial proportion of the plaintiffs' costs, ("costs" being the costs charged by solicitors, while they were acting, and Raymond's airfares when he acted in person).
Given the history of this matter it is my view that neither the parties nor the public should be put to the needless expense which a taxation would be likely to involve. I will therefore fix the costs, after the parties have been afforded an opportunity to provide written submissions in relation that issue.
Finally, I would note that when I made orders in relation to this matter on 5 February 1999, I ordered that execution of the sum payable by the first defendants to the plaintiffs be stayed in an amount of $7,500. It appears from the Court record that the amount actually paid by the first defendants to the plaintiffs' solicitors exceeded that which the defendants were required to pay as a result of that order, so that on my calculation the balance of the previous judgment still owing by the first defendants to the plaintiffs is now in the sum of $4,524. I would order that the stay of execution which I ordered previously be discharged, so that that sum is now due and payable by the first defendants.

Conclusion: Orders

The orders I make are:-
1.The Registrar's report of 12 June 2003 be accepted.
2.The first defendants' counterclaim be dismissed.
3.The stay of execution ordered by me on 5 February 1999 be discharged.
4.The plaintiffs file, and serve on the first defendants, within 28 days of delivery of this judgment, written submissions as to the amount of the plaintiffs' costs of the accounting, not to exceed three A4 pages, together with copies of any invoices and receipts relied upon.
5.Within 21 days after the time limited by Order 4 (ie 49 days from delivery of this judgment) the first defendants file, and serve on the plaintiffs, any submissions in reply, not to exceed three A4 pages.