Lastavec & Anor v Effective Security Pty Ltd
[2022] QCA 171
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- Unreported Judgment
- Appeal Determined - Special Leave Discontinued (HCA)
- Lastavec & Anor v Effective Security Pty Ltd[2022] QCA 171
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Lastavec & Anor v Effective Security Pty Ltd[2022] QCA 171
Lastavec & Anor v Effective Security Pty Ltd[2022] QCA 171
SUPREME COURT OF QUEENSLAND
CITATION: | Lastavec & Anor v Effective Security Pty Ltd & Anor [2022] QCA 171 |
PARTIES: | PAUL LASTAVEC (first applicant) MARIA TOPIC (second applicant) v EFFECTIVE SECURITY PTY LTD ACN 079 315 549 (first respondent) STEVEN FRANCIS LASTAVEC (second respondent) |
FILE NO/S: | Appeal No 276 of 2022 DC No 13 of 2010 |
DIVISION: | Court of Appeal |
PROCEEDING: | Application for Leave s 118 DCA (Civil) |
ORIGINATING COURT: | District Court at Brisbane – [2021] QDC 314 (Richards DCJ) |
DELIVERED ON: | 6 September 2022 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 5 May 2022 |
JUDGES: | Morrison and McMurdo JJA and Boddice J |
ORDERS: |
|
CATCHWORDS: | PARTNERSHIP – DISSOLUTION AND WINDING UP – EFFECT OF DISSOLUTION – RIGHTS OF INDIVIDUAL PARTNERS – where the applicants and respondents entered into a partnership to conduct a business of land development – where the partnership was dissolved in 2010 – where in the conduct of the partnership business there were two projects – where the first project made a profit and the second a loss – where the business was profitable overall – where the profits were to be shared equally between the applicants and respondents – where the judgment sum was arrived at by apportioning the loss on the second project between the two sides without accounting for the first project – where the applicants had not received the return of any capital which they had contributed contrary to s 47 Partnership Act 1891 (Qld) – whether the applicants should be paid their capital contributions and one half of the undistributed partnership profits Partnership Act 1891 (Qld), s 47 Creswick v Creswick & Ors; Tabtill Pty Ltd & Ors v Creswick [2011] QCA 66, cited |
COUNSEL: | L V Amerena for the applicants A I O'Brien and M A Windsor for the respondents |
SOLICITORS: | Robinson Locke Litigation Lawyers for the applicants Small Myers Hughes for the respondents |
- [1]MORRISON JA: I agree with the reasons prepared by McMurdo JA and the orders his Honour proposes.
- [2]McMURDO JA: There are two applications for leave to appeal from a judgment of the District Court. In the first application, the applicants are Paul Lastavec and his partner, Maria Topic, whom I will call the applicants. Paul Lastavec is the father of Steven Lastavec, who is one of the respondents. The other respondent is Steven Lastavec’s company. I will call them the respondents. They filed a cross-appeal, which should be treated as an application for leave to appeal.
- [3]In 2006, these four parties entered into a partnership to conduct a business of land development.
- [4]Their partnership was dissolved in 2010, after they had fallen into dispute in the previous year. This proceeding was commenced in May 2010. It is unnecessary to explore how and why this case took so long to litigate, before it was concluded on 10 December 2021, when the trial judge (Richards DCJ) made the final orders which are now challenged.[1] She declared that the partnership was dissolved on 19 March 2010 and held that the applicants were liable to pay to the respondents the sum of $57,630.56 together with interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) from 31 May 2011 to that date. She otherwise dismissed the respondents’ cross-claim.
- [5]In the conduct of the partnership business, there were two development projects. The first in time was what was called the Treetops project. The other was called the Stowe Road project.
- [6]The Treetops project was profitable. Consistently with the judge’s findings in an earlier judgment which she delivered on 10 June 2021 (the preliminary judgment),[2] that project yielded a profit in excess of $500,000, from which each side received a distribution of $109,276.29 and the balance was reinvested in the partnership business.
- [7]The Stowe Road project was unprofitable. It was not completed, because by then the partners were in dispute. The applicants were insisting upon seeing the partnership records, which were held by the respondents, and in that circumstance, the applicants were not prepared to provide further funds for the completion of the project. On the findings of the judge, the Stowe Road project made a loss of $115,261.11.
- [8]The judgment sum of $57,630.56 was arrived at by apportioning the loss on the Stowe Road project equally between the two sides. The judge reasoned that as the respondents had borne the entirety of that loss, the applicants should make a payment by which the loss would be borne equally. The partnership agreement had no written terms but it was undisputed that the partners were entitled to share equally in the profits of the business, and had to contribute equally towards the losses whether of capital or otherwise sustained by the firm.[3]
- [9]Unfortunately, the arguments which were presented to the judge did not make it clear that any monetary adjustment between the parties had to be made by reference to both projects, and not just the Stowe Road project. Because the funds of the partnership were at all times in the hands of the respondents, the undistributed profits from the Treetops project had remained with them. Over the two projects, there was an amount of well in excess of $200,000 which represented undistributed profits, and the applicants had not received the return of any of the capital which they had contributed.
- [10]For the reasons that follow, the judge ought not to have ordered the applicants to pay anything, and ought to have ordered that they be paid their capital contributions and one half of the undistributed partnership profits.
- [11]The respondents’ application for leave to appeal challenges the finding that the applicants were not obliged to contribute further funds, whilst they had been denied access to the books and records. For the reasons that follow, the judge correctly decided that issue and that application should be refused.
The preliminary judgment
- [12]The preliminary judgment was the outcome of a two day hearing conducted by the judge in October 2020. It was conducted according to a consent order made on 5 August 2020, which limited the hearing to the determination of certain issues which were “necessary for the Court to determine to allow an order for the taking of [an] account (and directions) to be made in this proceeding.”[4] Those issues expressly included the questions of:
- (a)the terms of the partnership agreement;
- (b)the capital and funding contributions made by each of the partners to the partnership, including the nature and sum of such contributions;
- (c)whether each of the expenses and adjustments as claimed in an affidavit of Steven Lastavec were expenses and adjustments which should be allowed;
- (d)the determination of the quantum of receipts obtained, and expenses incurred in relation to another proposed development, described as the Dawson Highway project;
- (e)the impact of delay and loss of evidence on the proceedings and the account;
- (f)the distributions made to each of the partners out of the assets of the partnership (including profits);
- (g)the date on which the partnership was terminated; and
- (h)whether there had been any breaches of the partnership agreement.
- (a)
- [13]By then the parties had obtained a report from an independent accountant, Mr Ponsonby (the Ponsonby report). It contained calculations of the profits of the partnership for each of its two projects and its overall profit position as an aggregate of them.
- [14]The judge recorded that it was common ground that the partnership agreement included terms that:
- (a)the partnership comprised the four parties to the proceeding;
- (b)the parties had agreed that the partnership business would be conducted through the respondent company, which would be the proprietor of any land;
- (c)the company would “hold all of the finances and accounts of the partnership”;
- (d)the applicants and the respondents respectively would be entitled to a fifty per cent share in any of the partnership profits, or would bear equally any partnership losses;
- (e)the partnership’s profits from the Treetops project would be invested into the Stowe Road project; and
- (f)Paul Lastavec would handle the day to day operations of both developments.
- (a)
- [15]It thereby appeared that the parties were not in dispute as to the terms of the partnership, which was the first of the issues to be decided at this hearing. The judge recorded that it was also accepted by the parties that they were to provide equal funding for the projects. And the consensus was that although all land was to be held in the name of the company, it was simply the vehicle by which partnership property would be held.[5]
- [16]As to the capital and funding contributions made by the partners, the judge made these findings:[6]
“The applicants contributed $299,307.18 to the initial development and $22,000.00 at a later date. I do not accept that Paul Lastavec contributed a further $50,000.00 by way of repayment of the initial distribution. His evidence in relation to that sum generally was unreliable and vague.
The respondents contributed the remainder of the capital and funding in the partnership.”
- [17]As to that fourth issue, the judge made the following findings by reference to the Ponsonby report. She noted the common ground that Mr Ponsonby’s alternative calculations of the profits, was the calculated profit under what he described as scenario 2 which was appropriate, subject to certain suggested adjustments which required the judge to make findings.
- [18]The first of those adjustments was for the amount of GST paid for the Treetops project. The issue about that was resolved in the respondents’ favour. Mr Ponsonby had underestimated the GST. On the judge’s findings, an amount of $198,675 was paid, as against Mr Ponsonby’s estimate of $144,749. The difference was $53,926, and Mr Ponsonby’s profit calculation was to be reduced by that amount. However, by an error in the judgment, the difference was said to be $61,983.[7]
- [19]Mr Ponsonby’s calculation used an amount of $521,625 as the cost of the Treetops land. The judge said that the parties were agreed that the land was purchased, in fact, for $560,000 so that there should be an adjustment of the profit calculation by reducing the profit for the difference of $38,375.[8] It is convenient at this point to note that the applicants, in their submissions in a subsequent hearing which resulted in the judgment under appeal, questioned whether that specific reduction was appropriate upon the suggested basis that Mr Ponsonby had already allowed for the difference elsewhere in his calculations.[9] That suggestion was incorrect. The applicants were referring to Mr Ponsonby’s calculation of a balance sheet item, not the calculation of any component of the profit figure.
- [20]It is unnecessary to discuss the other findings by the judge by which Mr Ponsonby’s calculation of the profit from the Treetops project was to be adjusted. Those findings were accepted by the parties in the subsequent hearing.
- [21]On the judge’s findings, Mr Ponsonby’s calculation of profit was to be adjusted to result in a profit of $541,073.71. Allowing for the judge’s arithmetical error in calculating the adjustment for GST, the adjusted profit should have been an amount of $549,130.71.[10]
- [22]The judge found that the applicants received a total of $109,276.29 on completion of the Treetops project. She also found that “the respondents then made a distribution to themselves of $109,276.29”.[11] The balance, her Honour said, was put into the Stowe Road project.[12] On those findings, again with an adjustment for the error for GST, the amount which was invested in the Stowe Road project was $330,578.13.[13]
- [23]The judge made a number of adjustments to Mr Ponsonby’s calculations of the profit (or loss) for the Stowe Road project.[14]
- [24]Mr Ponsonby calculated a profit on the Stowe Road project of $7,031.[15] The judge recorded the agreement of the parties that there were additional expenses to be added to Mr Ponsonby’s calculations, including the cost of the acquisition of land described as Lot 21. The judge referred to the cost of that land at $62,500, although the parties had agreed that the amount was $63,500. The adjustments made by the judge to the Ponsonby calculations for this project are accepted as correct. Adjusting for that typographical error for Lot 21, the result was a loss on the Stowe Road project of $115,261.11. As noted already, one half of that amount was later ordered to be paid by the applicants.
- [25]The next of the issues for determination within the preliminary judgment was the impact of the delay in the litigation including the loss of documentary evidence. The judge noted that the respondents had experienced two floods after the termination of the partnership, which, they suggested, had caused a loss of a significant number of documents which would have evidenced expenses of the partnership beyond those allowed by Mr Ponsonby. She accepted that whilst those documents might have assisted the respondents, she saw no unfairness to them in the circumstance where they had chosen to ignore the applicants’ requests for documents from the outset of the proceeding and before any such documents might have been lost.[16]
- [26]The judge noted that it was common ground that the partnership was terminated on 19 March 2010.
- [27]She found that the respondents had wrongly failed to provide the books of account of the partnership on the applicants’ request, in breach of the terms of the partnership agreement and in breach of what her Honour regarded as a fiduciary duty which the respondents owed.[17] She accepted that because the partnership books had not been provided for the applicants’ inspection, the applicants were not obliged to provide any further capital and their refusal to do so was not a breach of the partnership agreement.
- [28]The preliminary judgment was delivered on 10 June 2021, when the judge ordered the parties to provide written submissions “as to the form of the final orders and as to costs.”
The judgment under appeal
- [29]The parties provided written submissions on 17 June 2021, and again on 28 June and 5 July 2021. Further submissions were made in a hearing on 12 August 2021. These arguments were resolved by the judge in the judgment under appeal.
- [30]In that judgment, the judge referred to something of a change of course by the parties. Her Honour said that at the original hearing (in October 2020), she had been asked to make findings on specific issues, from which Mr Ponsonby was then to prepare a “final account”, but that subsequently the parties had asked her to make final orders.[18]
- [31]Her Honour continued:
“[4] The applicant’s initial application sought an order that the first and second respondent’s account to the first and second applicants in the sum of $345,633.00. This figure was based on the Ponsonby report. Consent orders then led to the trial in October last year. Upon delivery of the judgment the applicants now claim that an accounting should be done in accordance with s 47 of the Partnership Act 1891 (Qld). The respondents submit that in light of the way the trial was run by both parties that this method was of accounting was abandoned and it should be simply calculated on a running accounts basis. Further the respondents submit that if that is not the case then the respondents contributed a significant amount of further capital that should be taken into account in a calculation under s 47 of the Act.
[5] Mr Amerena for the applicants submitted that if s 47 is to be applied in the way submitted by the respondents then the court does not have jurisdiction to hear the matter and it should be sent to the Supreme Court for a rehearing. The respondents have indicated that if there is an excess of jurisdiction his clients abandon that excess so that the matter can be resolved.”
- [32]The judge referred to a new argument for the applicants that some of the expenses which had been attributed to the projects had not been paid by one or other of the respondents, but by the second respondent’s wife and by some other companies controlled by the second respondent. Therefore, it was maintained, it was not known who paid those expenses. Her Honour rejected that submission, holding that to the extent that expenses were paid by third parties, they were paid on behalf of the respondents; they were not donations.[19]
- [33]The judge rejected a further submission for the applicants, namely that she had been wrong to find in the preliminary judgment that the respondents contributed the remainder of the capital and funding in the partnership.[20] She also rejected other arguments for the applicants to the effect that the respondents had acted in breach of fiduciary duty and had gone “outside the ordinary and proper conduct of the business of the partnership.”[21]
- [34]Save for the question of the application of s 47 of the Partnership Act, the judge’s rejection of those arguments is not challenged in this Court.
- [35]The judge then turned to the submissions on behalf of the respondents, and reasoned as follows:
“[9] Mr O'Brien, on behalf of the respondents, submitted that the way in which the partnership was accounted for was on a running account basis and that the profit or loss at the end was simply to be divided in the proportion of the capital contributions and the agreement that they should share in the profit and the loss. He submits further that it is simply impossible to do a s 47 accounting at this late stage. There was no suggestion of a s 47 accounting at the trial and the way in which the case was run was that this was an informal partnership operated at the time and that expressly, or at least impliedly, it was going to be done on the running account balance which is detailed at paragraph [7.3] of Mr Ponsonby’s report. I accept this proposition. I also accept that the partnership ran at a loss.
[10]I do not accept the suggestion that the expenses that were paid, whether they be paid by loan from Melinda Lastavec or from another family company should be excluded from any calculation of profit or loss. I accept that they were the expenses paid through the partnership to keep it going by the respondents. I further accept the respondents’ submissions that despite the fact that the applicants did not contribute to the partnership equally, that there should be an even distribution and I accept that the outcome is that tabled at page 9 of the submissions of the respondents dated 17 June 2021, with the exception that there should be an adjustment on the Stowe Road land for the acquisition of Lot 21 Stowe Road from $62,500.00 to $63,500.00. I find that the partnership incurred a total loss of $115,261.11 and the equal distribution of loss is $57,630.56.”
- [36]It was declared that the partnership was dissolved on 19 March 2010. The applicants were held to be jointly liable to account to respondents in the sum of $57,630.56 plus interest. The respondents’ amended application was otherwise dismissed. The applicants’ amended originating application, which had sought an amount of $345,633, was dismissed.
Section 47
- [37]Section 47 of the Partnership Act 1891 (Qld) provides:
“47Rule for distribution of assets on final settlement of accounts
In settling accounts between the partners after a dissolution of partnership, the following rules are, subject to any agreement, to be observed—
- (a)losses, including losses and deficiencies of capital, are to be paid first out of profits, next out of capital, and lastly, if necessary, by the partners individually in the proportion in which they were entitled to share profits;
- (b)the assets of the firm including the sums (if any) contributed by the partners to make up losses or deficiencies of capital, are to be applied in the following manner and order—
- (i)in paying the debts and liabilities of the firm to persons who are not partners in the firm;
- (ii)in paying to each partner rateably what is due from the firm to each partner for advances as distinguished from capital;
- (iii)in paying to each partner rateably what is due from the firm to each partner in relation to capital;
- (iv)the ultimate residue (if any) is to be divided among the partners in the proportion in which profits are divisible.”
- [38]The respondents argue that it was too late for the applicants to rely upon s 47 once the preliminary judgment had been given. They point to the long history of their litigation. In 2015, the applicants had sought and obtained orders that a forensic accountant be appointed to undertake an accounting of the partnership. Mr Ponsonby was appointed in 2018 and his report was given in 2019. In March 2020, the applicants were said to have confirmed their position that the Ponsonby report was to be the basis for an order for an account. The agreed issues for trial did not refer to the application of s 47. It was not until after the preliminary judgment that the applicants had suggested an operation of s 47. Consequently, it is said, the applicants were taken to have agreed that in settling the accounts between the partners after the dissolution of their partnership, the rules set out in s 47 were not to be followed.
- [39]It is obviously correct to say that it was not until after the preliminary judgment that the applicants’ case sought to have the position between the partners determined according to the rules under s 47. At the same time however, there were no other rules which had been agreed between the parties, or even suggested by the applicants, by which their dispute was to be resolved. The history of this litigation gives the impression that, as the judge recorded in the final judgment, the parties had thought that it was Mr Ponsonby who would ultimately resolve their dispute. Whilst it is correct to say that s 47 was not raised until after the preliminary judgment, there is no basis to conclude that the partners had agreed to displace the rules prescribed by s 47, and that the applicants had thereby compromised their entitlements to the return of their capital and to their share of the profits.
- [40]At first sight, the operation of those rules in this case might seem to be problematic, in the absence of any finding as to what constituted the assets of the firm. However that is not a difficulty, as I will now explain.
- [41]At all times, all of the partnership property and funds were in the hands of the respondents, or more precisely, the respondent company. That was according to the agreement of the parties that the business of the partnership would be conducted by the company, and that the company “would hold all of the finances and accounts of the partnership.”
- [42]The partnership business was profitable. The amount of its ultimate profit can be seen from the Ponsonby report, adjusted according to the judge’s findings. The partnership derived an overall profit of $433,869.60.[22] As the parties had agreed, the profit was to be enjoyed equally between the two sides of this litigation. A critical error made by the judge, in accepting an argument for the respondents, was to apportion only the loss on the Stowe Road project without at the same time apportioning the profit on the Treetops project. The loss on the Stowe Road project, in the amount of $115,261.11, was not calculated by bringing into account any of the profit on the Treetops project, and nor should it have been.
- [43]That error, however, was not the only problem. What also had to be considered was the capital which had been contributed by the applicants and if any of it had been returned. Because the partnership business was indisputably profitable, it followed that each side should have been able to obtain the return of capital as well as its share of the profits.
- [44]Whatever capital contributions were made by the respondents, none of those contributions were irrecoverable, because the business had been profitable. The return of the respondents’ capital contributions could not be seen from accounts of the partnership, because all of the funds were at all times in the company’s hands. But again, because the business was profitable, the company must have recovered its capital contributions, whatever they may have been.
- [45]However, the applicants had not recovered their capital contributions. That was effectively still in the hands of the respondent company.
- [46]Consequently, the amount which would have to be paid by the respondents to the applicants, to have the applicants recover their capital as well as their share of the profits, was an amount of $428,965.69.[23]
- [47]That result would be consistent with the rules set out in s 47(b). Because the respondents mixed the partnership funds with the company’s own funds, there was unlikely to have been, in the company’s hands in 2021, a sum of money which represented the assets of the partnership. But to the extent that the respondents used partnership funds for their own purposes (beyond returning the capital they had contributed), they were and would remain bound to restore those funds to the partnership. Any debts and liabilities of the firm to persons who were not partners in the firm had been paid in full. (There is no indication otherwise and again, the partnership business was profitable overall.) From the assets of the firm there had to be paid to each partner what was due for advances and then what was due to each partner in relation to capital. Again, because the partnership business was profitable, there should have been no shortfall in the return of funds contributed, either by advances or in relation to capital. The “ultimate residue” in this case would be the overall profit of the business, which was to be divided in the agreed proportions of 50/50.
Outcome upon the applicants’ application for leave to appeal
- [48]The applicants should be granted leave to appeal. The appeal should be allowed by setting aside the second order made in the District Court on 10 December 2021 and substituting an order that the first and second respondents pay to the first and second applicants the sum of $428,965.69, together with interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) from 31 May 2011 to the date of this judgment.
The appeal by the company and Steven Lastavec
- [49]On behalf of the company and Steven Lastavec, an application for leave to cross-appeal was filed on 20 January 2022. This was filed 10 days beyond the permitted time for a cross-appeal, the final judgment having been given on 10 December 2021. A further irregularity was that this challenge to the judgment should have been by a notice of appeal, rather than a cross-appeal, because the challenge was to an order made by the judge which was not the subject of the notice of appeal by Paul Lastavec and Maria Topic.[24]
- [50]The respondents challenge the judge’s finding, by which their cross-application was otherwise dismissed, that the applicants breached the partnership agreement by not contributing capital to the Stowe Road project.
- [51]The judge found that the respondents breached the terms of the partnership by not producing the partnership records upon the applicants’ request. Her Honour reasoned that the applicants were entitled to refuse to contribute more money into the project until they were given the records, or as she said, until the applicants were given the means to discern whether the money was being used wisely or productively.[25]
- [52]Her Honour found, in the respondents’ favour, that it was a term of the partnership agreement “that there would be capital and funding contributions made as required.” She referred to an affidavit of Paul Lastavec in which he said that the agreement was that “the Applicants on one hand and the Respondents on the other, would each put up 50 per cent of the finances for funding the development …”.[26] On the basis of that evidence, the judge found that the parties agreed that they would contribute equally to the development and that they would share the profits.[27] Her Honour noted that the applicants, in cross-examination, accepted that they would have contributed further by raising money on a mortgage of Maria Topic’s property, “in the normal course of events if required.”[28]
- [53]The judge found that at relevant times, the respondents were in possession of every document which the applicants were wanting to inspect.[29] She held that the parties having agreed that the accounts for the partnership would be kept by the respondents, there was a breach of the partnership agreement by failing to make the accounts available for inspection by the applicants.[30] Further, by s 31(1) of the Partnership Act, partners in a firm are bound to render true accounts and full information of all things affecting the partnership to any partner, and by s 27(1)(i), subject to any contrary agreement, the partners are entitled to have access to, and inspect and copy any of the partnership books.
- [54]There is a challenge to those findings in the submissions for the respondents. It is said that whilst the respondents were obliged to keep records of the partnership business, they were not obliged to act as the firm’s accountant. The argument is that the applicants should have yielded to the respondents’ insistence that an independent accountant prepare the partnership accounts from the records. But that was no basis for refusing access to the records as the respondents did.
- [55]The question then is whether the judge was correct to find that the applicants’ obligation to make equal contributions of capital was dependent upon the due provision to them of access to the books and records of the firm.
- [56]The respondents argue that there was an error by the judge in not making a finding as to what constituted the books of the firm and whether, in the absence of the assistance of an independent accountant, access to the books would have permitted the financial position of the partnership to be understood. The argument is that there were no books here which would have done so, which is why the respondents had pressed for the appointment of an independent accountant. The evident answer to that submission is that the respondents had undertaken to maintain the books and records of the partnership. It was no answer for the respondents to say that whatever it was which they could have produced would not have revealed very much. That did not excuse them from permitting access to what they did have. To the extent that this was a problem which resulted from their failure to keep books and records of the firm separate and distinct from those of the company and its business, that was no answer to the applicants’ entitlement to access of such records of the partnership which existed.
- [57]The respondents complain that they were denied procedural fairness in the judge’s determination of this question. They say that at no point until after the hearing in October 2020 did the applicants raise the argument. It is said that they did so only by the delivery of closing submissions on 9 November 2020. The respondents replied to those submissions on 13 November 2020, saying that this was a new argument which should not be considered given that, it was suggested, the trial had concluded. The judge did not rule upon that submission but instead her Honour accepted the applicants’ argument in the preliminary judgment which she gave in the following year. The consequence, the respondents argue, is that they lost the opportunity to adduce further evidence to meet this argument. It is said that Steven Lastavec may have adduced evidence as to whether it was to be implied that the appellants would not contribute any further funds once they had made a request to review the books and that request was not acceded to. Just what that evidence might have been is not revealed. It is said that he may have adduced evidence “as to the precise accounting documents he had available to him”. Again, the content of that evidence is not revealed.
- [58]Further, although these findings were made in the preliminary judgment, no orders were then made. It was open to the respondents to seek to adduce further evidence after the preliminary judgment and ahead of the judgment under appeal. In any case, no application was made to adduce that evidence even before the preliminary judgment, and the respondents do not point to any reasonable basis for assuming that the judge would not consider the submissions which she received from the applicants on the point.
- [59]The respondents argue that the evidence made it “obvious” that the applicants were not ready, willing and able to contribute their share of the necessary funds for the Stowe Road project. They complain that this issue was not considered by the judge. The applicants assumed a burden of proving that they were ready, willing and able to provide the necessary funds,[31] but sought to do so by reference to evidence that the necessary funds could have been raised by borrowing on Maria Topic’s home, and the applicants say that this evidence was unchallenged.[32] No contrary evidence is indicated by the respondents’ submissions. Although the respondents did not accept that the applicants were ready, willing and able to provide further funds if they had to do so, their submissions demonstrate no basis for disturbing the judge’s findings which accept that the applicants could have done so.
- [60]For these reasons, the respondents have not demonstrated a justification for interfering with the judge’s findings which resulted in the dismissal of their application (other than for the payment of their share of the losses on Stowe Road project).
- [61]The respondents’ application, filed on 20 January 2022, should be refused.
Costs
- [62]The parties should have 21 days from the date of this Court’s judgment to make any submissions as to the costs in this Court or in the District Court, such submissions to be made in writing and not to exceed five pages in length.
Orders
- [63]There should be orders as follows:
- Grant leave to appeal.
- Allow the appeal by:
- setting aside order number 2 made in the District Court on 10 December 2021; and
- substituting an order that the first and second respondents pay to the first and second applicants the sum of $428,965.69 together with interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld) from 31 May 2011 to the date of this judgment.
- Refuse the application for leave to cross-appeal filed on 20 January 2022.
- Direct the parties to provide written submissions as to the costs of the proceedings in this Court or in the District Court, within 21 days from the date of this Court’s judgment, such submissions to be made in writing and not to exceed five pages in length.
- [64]BODDICE J: I agree with McMurdo JA.
Footnotes
[1]Lastavec & Anor v Effective Security & Anor [2021] QDC 314.
[2]Lastavec & Anor v Effective Security Pty Ltd & Anor [2021] QDC 82.
[3]Partnership Act 1891 (Qld) s 27(1)(a).
[4]AR 127.
[5]Preliminary judgment [56].
[6]Ibid.
[7]Preliminary judgment [58].
[8]Preliminary judgment [19], [59].
[9]AR 283 at note 22.
[10]$61,983 less $53,926 plus $541,073.71.
[11]Preliminary judgment [23].
[12]Preliminary judgment [25].
[13]AR 272: $322,521.13 plus $8,057.
[14]It is to be noted that his calculations for this project included relevant components for what might have proceeded as the Dawson Highway project.
[15]AR 389.
[16]Preliminary judgment [69].
[17]Preliminary judgment [89].
[18]Final judgment [2].
[19]Final judgment [6].
[20]As had been found at paragraph [56] of the preliminary judgment.
[21]Final judgment [8].
[22]$549,130.71 (Treetops) less $115,261.11 (Stowe Road).
[23]One half share of the profits of $433,869.60 plus capital of $321,307.18 less interim distribution of $109,276.29.
[24]Creswick v Creswick & Ors; Tabtill Pty Ltd & Ors v Creswick [2011] QCA 66.
[25]Preliminary judgment [89].
[26]Preliminary judgment [84].
[27]Preliminary judgment [85].
[28]Ibid.
[29]Preliminary judgment [88].
[30]Preliminary judgment [89].
[31]Their submissions dated 9 November 2020, paragraph 41: AR 201.
[32]Applicants’ submissions dated 9 November 2020: AR 202.