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Forster v Ampcorp Pty Ltd[2009] QDC 402

Forster v Ampcorp Pty Ltd[2009] QDC 402

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.
  1. The counterclaim is dismissed.
  1. 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.
  1. 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 established

PROCEDURE – 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, cited

Dart Industries Inc v Décor Corporation Pty Ltd (1992-1993) 179 CLR 101, cited

DiCarlo v Dubois & Ors [2002] QCA 225, applied

Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, applied

Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397, cited

Fraser Edminston Pty Ltd v A.G.T. (Qld) Pty Ltd [1988] 2 Qd R 1, cited

Hospital 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), applied

Megan 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, cited

Quinn 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, cited

Schipp v Cameron, Harrison & Ors [1999] NSWSC 997, applied

Southern Cross Management Pty Ltd v Ensham Resources Pty Ltd & Ors [2006] QCA 233, applied

Sunrice 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), distinguished

Todrell Pty Ltd v Finch (No. 2) [2008] 2 Qd R 95, cited

United Dominions Corporation Ltd v Brian Pty Ltd (1985) 156 CLR 1, applied

Warman International Ltd v Dwyer (1994-1995) 182 CLR 544, applied

COUNSEL:

C. Johnstone for the first and second plaintiffs and the defendant added by counterclaim

M. Quinn (Solicitor) for the first and second defendants

SOLICITORS:

Plastiras Lawyers for the first and second plaintiffs and the defendant by counterclaim

Q5 Law appeared for the first and second defendants

Agreed Statement of Facts [1]

  1. [1]
    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.
  1. [2]
    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.
  1. [3]
    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]
  1. [4]
    The joint venture undertook three projects, which have all been completed, being:
  1. (a)
    the Lilla Street Project;
  1. (b)
    the Tilley Street Project; and
  1. (c)
    the Keenan Street Project.

(each as described in the amended statement of claim)[4]

  1. [5]
    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]
  1. [6]
    The defendants dispute this amount or that they are obliged to account at all.

Legal Issues

  1. [7]
    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.
  1. [8]
    In addition to disputing the plaintiffs’ claim, the defendants counterclaim against them and the defendant added by counterclaim.
  1. [9]
    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.
  1. [10]
    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 alternative, are liable to the defendants for an amount to be assessed upon taking an account of the undertakings for the joint venture.
  1. [11]
    In addition, there are claims for interest pursuant to the SCA and costs.
  1. [12]
    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

  1. [13]
    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.
  1. [14]
    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.
  1. [15]
    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.
  1. [16]
    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 firstnamed 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]
  1. [17]
    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]
  1. [18]
    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.
  1. [19]
    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]
  1. [20]
    Accordingly I proceed on this basis rather than the assertion in paragraph 5 of the defence, which has a different emphasis.
  1. [21]
    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]
  1. [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

  1. (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.”
  1. [23]
    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.
  1. [24]
    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;

  1. (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;
  1. (c)
    The [BLC] was secured by property of which the First Defendant was the sole registered proprietor;
  1. (d)
    There was no agreement that the [BLC] required the consent of all parties to be operated;
  1. (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.”
  1. [25]
    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.
  1. [26]
    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”);

  1. (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;
  1. (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.”

  1. [27]
    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.
  1. [28]
    The defendants admit that the joint venture agreement took effect as a contract, subject to the denials as to its terms.

Lilla Street Project

  1. [29]
    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.
  1. [30]
    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.
  1. [31]
    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.
  1. [32]
    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

  1. [33]
    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 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.
  1. [34]
    There is no dispute that this project commenced in or about September 2002 and concluded in or about March 2003.
  1. [35]
    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.
  1. [36]
    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

  1. [37]
    With reference to Mr Quinn’s concession,[24] there can be no issue about the matters set out in paragraphs [38] to [39].
  1. [38]
    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]
  1. [39]
    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:
  1. (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
  1. (b)
    which was sold by the first defendant some time in 2006 for $160,000.[26]
  1. [40]
    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.
  1. [41]
    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.
  1. [42]
    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.
  1. [43]
    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

  1. [44]
    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

  1. [45]
    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 firstnamed second defendant (Mr Cusworth).
  1. [46]
    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]

  1. [47]
    Mr Forster is the sole director of the second plaintiff,[28] which is an investment vehicle and not a mortgage broking business.[29]
  1. [48]
    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]
  1. [49]
    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.
  1. [50]
    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]
  1. [51]
    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]
  1. [52]
    On the first evening, the discussion about the joint venture was limited to the Lilla Street Project.[43]
  1. [53]
    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]
  1. [54]
    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]
  1. [55]
    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]
  1. [56]
    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]

Lilla Street Project

  1. [57]
    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]
  1. [58]
    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]
  1. [59]
    It was common ground that Ms Forster entered into the contracts to purchase No. 3 and No. 5 Lilla Street.[51]

No. 3 Lilla Street

  1. [60]
    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]
  1. [61]
    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]
  1. [62]
    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]

No. 5 Lilla Street

  1. [63]
    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]
  1. [64]
    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]
  1. [65]
    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]

No. 42 Woodcliffe Crescent

  1. [66]
    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]
  1. [67]
    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]
  1. [68]
    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.
  1. [69]
    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.
  1. [70]
    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]
  1. [71]
    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 crossexamination 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.
  1. [72]
    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]

Group Kildey

  1. [73]
    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]
  1. [74]
    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]
  1. [75]
    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.
  1. [76]
    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]
  1. [77]
    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]
  1. [78]
    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]
  1. [79]
    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]
  1. [80]
    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 was $269,000.[94]  Mr Forster said that the acquisition of the units were the true benefit of this project.[95]
  1. [81]
    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.
  1. [82]
    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]
  1. [83]
    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]
  1. [84]
    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

  1. [85]
    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]
  1. [86]
    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 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]
  1. [87]
    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]
  1. [88]
    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]
  1. [89]
    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]
  1. [90]
    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.
  1. [91]
    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]
  1. [92]
    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]

Tilley Street Project

  1. [93]
    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]
  1. [94]
    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]
  1. [95]
    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]
  1. [96]
    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.
  1. [97]
    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]
  1. [98]
    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]
  1. [99]
    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]
  1. [100]
    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]
  1. [101]
    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]
  1. [102]
    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]
  1. [103]
    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]
  1. [104]
    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]
  1. [105]
    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]
  1. [106]
    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]
  1. [107]
    The Tilley Street properties were completed and sold around March 2003 before the Keenan Street properties.[135]
  1. [108]
    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]
  1. [109]
    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]
  1. [110]
    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]
  1. [111]
    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]
  1. [112]
    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]
  1. [113]
    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]
  1. [114]
    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]
  1. [115]
    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]
  1. [116]
    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]

Keenan Street Project

  1. [117]
    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]
  1. [118]
    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]
  1. [119]
    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.
  1. [120]
    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]
  1. [121]
    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]
  1. [122]
    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]
  1. [123]
    In late August 2003, at Mr Cusworth’s request he and Mr Forster met to discuss the project.  At this meeting, Mr Cusworth asked if the Forsters could prepare their figures.  He said he was going to prepare his figures.  As a result, Mr Forster’s understanding was that Ampcorp was going to settle an account to enable the Cusworths to have exclusive use of No. 43A Keenan Street for their own benefit.  This would involve constructing a house or selling the property in their own right without consulting the Forsters.  In other words, although Ampcorp owned the property on behalf of the joint venture, Mr Cusworth wanted to have exclusive ownership and offered to settle for a figure.  He proposed that he would buy it.  Mr Forster understood that Mr Cusworth would get his figures together so that their wives could sit down and work out the quantification of who contributed what and who owed what, as they had done in relation to the Tilley Street project.[170]
  1. [124]
    Mr Cusworth said that no amounts or property values were discussed at this meeting.[171]  Mr Cusworth did not have a purchase figure because the accounting for the Keenan Street property had not been done.  There was an undertaking to deliver figures.[172]  Mr Forster denied saying at this meeting that the property was worth $200,000.  Although, he concedes that he might have mentioned this at a later stage.[173]  He said that he repeatedly asked Mr Cusworth for figures, which were finally presented in November 2003.  These requests were made by phone every week or second week.[174]
  1. [125]
    Mr Forster said that he had figures because he and his wife had spent money on the Keenan Street project for the stamp duty, house relocation costs, and demolition costs, with the last payment being the $40,000 from the sale of the Tilley Street property, which was deposited into Ampcorp’s business line of credit.  Mr Forster said they had basically handed over all of the money available from the sale of the Tilley Street property to help get the project finished as quickly as they could.[175]
  1. [126]
    The 1 November 2003 figures were hand delivered to the Forsters’ residential letter box.  Mr Cusworth had advised Mr Forster that they would be delivered in this way, as he and his family were departing for a holiday.[176]
  1. [127]
    The figures were in an unsigned “without prejudice” letter of 21 November 2003, together with some summaries.[177]  It was suggested that the Cusworths would pay $33,485.06 to keep the Keenan Street property, to which they had applied a sale value of $140,000 which was in dispute.  It was a figure that had been reached by their accountant.  This was the first time that Mr Forster had seen these figures.  He said there was no previous discussion about what the land was worth.[178]
  1. [128]
    Mr Forster said that having regard to the previous communications between them, he was surprised by this letter which he felt was very abrasive.  The venture had not retained solicitors.  Although there were engagements of solicitors, particularly with the purchase of the properties.  The Forsters and Fast Track had engaged Rod Holloway and Company, who participated in the sales of all the properties.  For the Keenan Street property, Mr Cusworth had retained Mr Quinn who was then of Bennett Philp.[179]
  1. [129]
    Mr Forster said that it took about 17 days of almost daily phone calls and messages before Mr Cusworth responded.  He also sent emails, such as Exhibit 10 dated on 23 November 2003, rejecting the proposed claim for settlement and advising that he would be prepared to discuss the issue with him properly rather than by written correspondence.[180]
  1. [130]
    On 9 December 2003, Mr Forster and Mr Cusworth had a telephone conversation during which Mr Cusworth stated that he believed that the property value was $140,000.  This was disputed and the conversation became quite heated.  On 11 December 2003, Mr Forster sent him an email suggesting an amicable meeting on the following day.[181]  This did not occur and was arranged for 13 December 2003.
  1. [131]
    This meeting was at the Forsters’ home with all parties. It was agreed that a valuation be obtained for the property. This was done by Herron Todd White. It was believed that it came back at $150,000. As indicated, the property was sold for $162,000. During the meeting a phone call was also made to Mr Cusworth’s accountant, Graham Donnelly, to go through the figures.  He emailed a document which had several spreadsheets.  There was a discussion with Mr Donnelly about the GST credits which had not been calculated in his figures.  He was to deliver the working figures that he had used to make his calculations.[182]  Nothing was resolved by the end of the meeting.  It was followed up by emails trying to clarify the position.[183]
  1. [132]
    Mr Cusworth gave Mr Forster authority to speak to his accountant and his solicitor, Mr Quinn.[184]  Mr Forster subsequently sent two emails to Mr Donnelly without receiving a response.  On 9 January 2004 Mr Donnelly advised that he was not in a position to respond directly without express instructions from his client.[185]
  1. [133]
    On 7 January 2004, Mr Cusworth wrote another “without prejudice” letter to the Forsters, which refers to “ongoing discussions regarding the finalisation of the joint venture” on the three identified projects.  This attached an amended project summary suggesting two options.  The first was that Keenan Street be sold to an arms length third party.  The second was that the Forsters purchase it from Ampcorp at a price determined by a mutually acceptable independent valuer.  Both options made reference to “50% of the net profit” on the Keenan Street property.  There were associated calculations on the consequential payments which would then have to be made to finalise the joint venture, depending on what option was chosen.[186]
  1. [134]
    This was hand delivered to him by Mr Cusworth.  Mr Forster declined both options.  Mr Cusworth accepts that this letter was sent to Mr Forster on his behalf and with his authority.  He agrees that there is nothing in it to suggest that there was no amount outstanding to the Forsters from the joint venture.  He also accepts that it contained nothing to suggest that the Forsters owed any money under the joint venture.[187]
  1. [135]
    On 23 February 2004, Mr Forster on behalf of Fast Track emailed Mr Cusworth and sought an update on whether his solicitors had managed to come to some reconciliation with an easement for 43A Keenan Street.  The email ends on the note of hoping “we can have a brief meeting to get the final figures sorted out”.[188]
  1. [136]
    This email was in the context of Mr Grosskopf, the purchaser of 43B Keenan Street, wanting an undertaking that a highset property would not be built on the adjacent vacant allotment that would impede his view.  There was a special condition in the contract that there would be no building above a certain height and it was to be a certain distance back from the street.  There was to be some sort of easement established to satisfy the contract.  According to Mr Foster, this was an arduous and lengthy process, which was concluded around November 2004.  Mr Grosskopf had put a caveat on the land to protect his interests until an appropriate easement was registered.  Mr Cusworth told Mr Forster that he had the matter in hand, and that he and his solicitor were going to try to negotiate with the purchaser and his lawyers.[189]
  1. [137]
    On 23 February 2004 an email was sent by Mr Forster on behalf of Fast Track to Mr Cusworth asking that he forward copies of bank statements for Ampcorp from 1 July 2003 to 31 January 2004, and also the easement document that he had signed and delivered back to the purchaser.[190]
  1. [138]
    Mr Forster believes that following this there was a meeting at Mr Cusworth’s house where Mr Cusworth produced the easement document prepared by the purchaser’s solicitors.  They agreed that the document gave greater benefits to the purchaser than had been discussed at a meeting in about June or July 2003 between Mr Cusworth, Mr Quinn, the purchaser and his solicitor.  They agreed that they would not sign that document and would return it because it was incorrect and was going to significantly devalue the land.[191]
  1. [139]
    On 3 March 2004 an email was sent by Mr Forster on behalf of Fast Track asking Mr Cusworth to have the original easement documents returned from the purchaser’s lawyers and provide a copy of the replacement document.  He also asked for a copy of the plan which formed part of the proposed easement.  This was to enable them to proceed towards a settlement proposal.  He suggested a further meeting when Mr Cusworth physically held these documents.  This was forwarded again on 12 March 2004.[192]
  1. [140]
    Mr Cusworth said that the 2004/05 discussions between them were not as amicable as they had been earlier in the relationship.  He said that he felt he was continually being interrogated about things that he did not believe were reasonable.  He described the relationship as having “soured” somewhat.[193]
  1. [141]
    Mr Forster received in an envelope left at his house an handwritten letter written by Mr Cusworth, which on the basis of the information contained in it would have been sent on 27 April 2004.[194]  This was said to be put together “to get a final chapter in this project” and suggested two options:
  1. (1)
    Mr Forster indicate by 9.00 am on the following day that he and his wife would pay $96,495.16 to Ampcorp for full and final payment to purchase the Keenan Street property.  This payment would settle all monies owing by them to Ampcorp or by Ampcorp to them.
  1. (2)
    The property got sold the next day at 9.00 am and Ampcorp pay the difference between the after commission sale price and $96,495.16, that is $159,500 less real estate commission.  The cheque would be $58,567.34.

Mr Cusworth concedes that he did not say in the letter that he and his wife did not owe money to the Forsters or that they were under no obligation to account to each other for the costs and expenses of the joint venture.[195]

  1. [142]
    Mr Forster phoned Mr Cusworth and allowed him to sign a contract in accordance with option 2.  He also told him to go back to the real estate agent to get them to make their best offer.  They agreed that the best price they would receive was $165,000.  He said that Mr Cusworth had clear instructions to counteroffer for $165,000.  However, when he received the contract, this figure was not written in it.  This contract subsequently fell over.[196]  As indicated the property sold for $162,000.

Reconciliation of joint venture

  1. [143]
    In July or August of 2004 the Forsters had a meeting at their home with Mr Cusworth.  Mr Cusworth proposed that the Forsters pay out what was owing on the business line of credit, which Mr Forster thought was a “convenient amount” given that it now included other non-project related withdrawals.  Mr Forster thinks that he made an offer of $70,000.  Mr Cusworth said that he would speak to his wife.  But ultimately there was no response to this proposal.[197]
  1. [144]
    In August 2004 the Forsters were aware that the Cusworths were going to buy a unit at the Lilla Street property. To pay the deposit, Mr Cusworth had sought a bank guarantee, which had been withdrawn at the last moment because of the caveat over the land at Keenan Street.  This purchase was a separate transaction involving neither one of the ground floor units nor taking an option on an upstairs unit.  Mr Forster raised with him when they were going to get paid about $25,000 for the Lilla Street Project.  Mr Cusworth responded that they would pay them later when they had funds from the Keenan Street Project.  Mr Forster asked him how he could have the money to pay the deposit and not have the money to pay them.  Mr Cusworth responded along the lines, “Would it please you, if I lost the unit?”[198]
  1. [145]
    The Cusworths engaged solicitors to represent them in relation to the caveat. The Forsters do not dispute that these costs were necessarily incurred.[199]  They believed that they were competently represented.  Mr Grosskopf did not make any claims against the Forsters or Fast Track.[200]
  1. [146]
    Mr Forster became aware in about November 2004 that the caveat had been registered.  He asked Mr Cusworth to advise of the details of the caveat so that they could have the property revalued so as to then work out what was going to happen with either one of them buying out the other or selling the property.[201]
  1. [147]
    Mr Forster organised another valuation through Herron Todd White, which was $150,000 or $160,000.  That valuation was shown to Mr Cusworth in a meeting.  At this stage the Forsters and the Cusworths were still communicating.[202]
  1. [148]
    Mr Forster said that the dispute with the defendants arose from January 2005.  He considered that up until that point of time the communications were positive, amicable, and open.[203]
  1. [149]
    On 5 July 2005 lawyers acting for the Cusworths and Ampcorp enclosed financial information calculating that the Forsters owed the Cusworths $11,799.99 regarding the joint venture projects.[204]  Mr Forster said that although “we were pretty much in agreement with the figures they had given us”,[205] he believed there had simply been an accounting error with an equalisation payment by Mr Donnelly.[206]
  1. [150]
    He said he had not previously been aware that Mr Cusworth claimed they owed him money.  Mr Cusworth had never said he was under no duty to account to him or that the joint venture partners would never be obliged to account to each other.[207]
  1. [151]
    Mr Johnstone put to Mr Cusworth that this is the first time it was suggested that money was owed by the Forsters arising from the joint venture.  Mr Cusworth responded affirmatively, but said it was agreed that the joint venture would be complete at the end of the last transaction.  This was when the title was received for the units at Lilla Street Project on 11 May 2005.  He said only then could they clearly identify all the costs incurred and quantify or account for the profit or loss.[208]

Evidence of Mr Gwynne

  1. [152]
    As indicated, Mr Gwynne is the expert accountant retained by the plaintiffs[209] to prepare an account in relation to the financial matters in dispute between the parties.  In addition to his forensic accountant’s report (Exhibit 2), a number of associated documents were tendered.  These were a separate compilation to the relevant annexures (Exhibit 3) and appendices (Exhibit 4) to his report, a list of amendments required to be made to his original report (Exhibit 5) and the amended pages of that report (Exhibit 6).[210]
  1. [153]
    It was agreed that it was not necessary to call evidence[211] to formally prove the documents that give rise to the amounts in the schedule of the report.
  1. [154]
    My Gwynne gave evidence explaining his methodology, the assumptions that he made, and his conclusions.  He explained his methodology as followed:[212]

“In reaching that figure I’ve looked at each of the three projects that were undertaken by the parties and the information provided to me.  In order to account for them as joint ventures I’ve summarised the outgoings for each of the projects, the cost to purchase the properties, the cost to renovate the properties and I’ve also collated information as the revenues received on the sale of those properties and I’ve allocated those between the parties as to who funded the cost, so the purchase costs and the renovation costs, and who received the benefit of the proceeds of the sale.  In relation to the proceeds from the sale less the cost that creates a joint venture profit, if you like, and then having regard to which of the parties contributed the moneys and which of the parties received the benefit of the proceeds I then calculated what I term an equalisation payment and that equalisation payment was to represent an amount that one party was to pay the other party so at the end of the project each party had the appropriate share of profits after accounting for all costs and revenues flowing through the projects.”

  1. [155]
    The annexures and appendices included some documents which had been prepared by or on behalf of both parties. For example, insofar as the defendants are concerned, Annexures 3 (Defendants’ Summary of Woody Point Project), 6 (Defendants’ Assessment of Tilley Street Profit), 8 ( Defendants’ Summary of the Tilley Street Project) and 11 (Defendants’ Summary of Keenan Street Project); and Appendices “A” (Spreadsheet for the Tilley Street Project prepared by Ms Forster at the Cusworth residence based on receipts read to her by Ms Cusworth), and “M” and “T” (MYOB summaries of Job Transactions for Ampcorp Pty Ltd t/a MJC Building Const.).  Mr Gwynne proceeded on the basis that the plaintiffs agree with those calculations and schedules prepared by the defendants.[213]
  1. [156]
    In Exhibit 2, Mr Gwynne states:

“1.1 Based on the information provided to me and the instructions and assumptions outlined I this report I have completed my assessment of the accounting of the residential development joint ventures known as Woody Point Project (“Woody Point”), Tilley Street Project (“Tilley Street”) and Keenan Street Project (“Keenan Street”).

1.2 Based on my assessment I have determined the amount to be paid by the parties to the joint ventures in respect of each project in order that the joint venture parties contributions to the projects are equal.”

  1. [157]
    As indicated, his opinion is that an amount of $62,667 is payable by the defendants to the plaintiffs; based on $25,306 being the amount due to the plaintiffs for the Lilla Street Project, $42,586 being the amount due to the defendants for the Tilley Street Project and $79,947 being the amount due to the plaintiffs for the Keenan Street Project.[214]
  1. [158]
    Consistently with the methodology to which he testified, he states:

“2.2 I have calculated the amounts payable in the above table on the basis that the parties to the joint ventures agreed that the profits (or losses) of each joint ventures were to be shared equally between them after taking into account expenses incurred, capital contributed, and proceeds from the sales of the relevant properties.”

  1. [159]
    The report includes a disclaimer that:[215]
  • it has been prepared on the basis of information supplied to him as detailed in the document;
  • should further information be subsequently made available to him that materially affects his opinions, he reserves the right to amend his report; and
  • he does not imply and it should not be construed, unless otherwise stated, that he has verified any of the information provided to him, or his inquiries could have verified any matter which more extensive examination might disclose.
  1. [160]
    Mr Quinn crossexamined him about the assumptions that he made, and the fact that they were based on the information provided to him by the plaintiffs.  The implicit criticism in the questions and the express criticism in the final submissions is that he relied upon this information, including the statement of claim as correct without making any further inquiry.
  1. [161]
    This particularly emerges with reference to the crossexamination about his declaration as an independent expert that:

“I have made all of the inquiries I believe are necessary and appropriate and to my knowledge there have not been any relevant matters omitted from this report, except as otherwise specifically stated in the report.”[216]

  1. [162]
    When questioned about this, he said that he based his report on the information provided to him which he understood was the only information available. However, he conceded that while he made inquiries of Mr Forster, he did not make any inquiries of the defendants.  Further, he accepted that he did not seek any further instructions for matters that he assumed from the plaintiffs or the instructing solicitors, although he agreed those inquiries would have been relevant.[217]
  1. [163]
    In relation to this, he explained the reason that he did not make inquiries about any documentation that might have been in possession of the defendants was because when he was briefed he was told that they were the only documents that were available. He also agreed that it was his understanding that he had been provided with all the relevant documents that were available.[218]
  1. [164]
    It is relevant that, at least insofar as the utility of Mr Gwynne’s making any inquiries of documents from the defendants is concerned, an affidavit by Mr Cusworth sworn on 27 November 2007 and which is on the court file deposes to neither the first nor second defendant having any documents in their power, possession or control that are relevant to these proceedings.

Plaintiffs’ submissions[219]

  1. [165]
    Mr Johnstone states that the plaintiffs’ primary claim is for account.[220]
  1. [166]
    He correctly submits that it is a remedy in equity which is available to various categories of relationships as described in Equity Doctrines and Remedies 3rd Ed, by Meagher, Gummow and Lehane at [2504].  His argument is that the evidence demonstrates that the relationship between the parties in the form of the joint venture falls within the following three of those categories:

“[2054] …

First, where there were mutual accounts: in such cases equity always decreed an account unless the accounts were extremely simple; and mutual accounts were accounts where there were receipts and payments on both sides, not merely receipts and payments on one side (in which case it is no more than a question of set off).  Secondly, where although the right relied on by the plaintiff was legal, the parties stood in a quasi-fiduciary relationship or a relationship of confidence.  A typical example was the principal and agent relationship. … Thirdly, where the Court ordered general administration of a dissolved partnership.” (my emphasis)

  1. [167]
    It is submitted that the plaintiffs, through Mr Gwynne, have provided an account of the joint venture,[221] which relies on the costs and expenses tables of both parties; and that the defendants have not provided any other account.  It is therefore argued that it is an unchallenged mutual account.
  1. [168]
    Reference is made to the defendants’ counterclaim by which it is pleaded that the parties are obliged to account to each other, and that on the taking of such account, monies will be found owing to the defendants by the plaintiffs from the joint venture.[222]  Therefore, it is submitted that the liability of the parties to account to each other is not in dispute on the defendants’ pleading which simply denies that the amount claimed is representative of any fair and equitable calculation of the plaintiffs’ interest in the joint venture.
  1. [169]
    It is submitted that on the pleadings alone, and the agreed statement of facts, the court should order an account to be taken; and the question is whether Mr Gwynne’s report is sufficient for the order to be that it constitute the account of the joint venture.
  1. [170]
    It is submitted that the evidence before the court demonstrates that the relationship between the plaintiffs and the defendants in the form of the joint venture was of the type which falls within all three categories of relationship described by Meagher, Gummow and Lehane.
  1. [171]
    The argument is that the parties were in a partnership and therefore were (and remain) in a fiduciary relationship; and accordingly there is an extant duty on both parties to account. It is submitted that the joint venture was a partnership in everything except name in that it was a relation between the parties carrying on a business in common with a view to profit within s 5 of the Partnership Act 1891 (the PA).  Reference was also made to s 5A and s 31 of the PA[223] and Lindley and Banks on Partnership 16th Ed, at 5-24 in support of this proposition.
  1. [172]
    However, it is submitted that the remedy sought does not actually require a finding that a partnership existed under the PA because of the existence of a fiduciary relationship between the parties. This submission is made with reference to United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1 per Gibbs CJ at 7-8; Mason, Brennan and Deane JJ at 10-11 and Dawson J at 15-16.  In conjunction with this it is submitted that the defendants’ pleading in paragraph 20(b)(v) “there was no breach … of any … fiduciary obligation on the part of the Defendants which would render the Defendants liable to account to the Plaintiffs” is wrong as a matter of fact and law.  It is said that neither the PA nor equity requires such a breach to be demonstrated before the liability to render account arises.
  1. [173]
    The submission is that there is no material difference between the relationship of United Dominions Corporations and Brian, and the present parties because in each case the parties entered into the joint venture for the chance of mutual benefit and gain; profits were to be shared; each partner was an equal participant with joint decisions and collaboration on projects; there was an exchange of mutual trust and confidence having regard to the fact that each party would account for their costs and expenses incurred separately in furtherance of a project to the joint venture; and the joint venture property was acquired by individual joint venturers on behalf of (and therefore on trust for) the joint venture as a whole.
  1. [174]
    Accordingly, it is asserted that there is an inescapable conclusion that in consequence there was a relationship between the parties that was fiduciary in nature.
  1. [175]
    The fiduciary obligations which are said were and remain on the parties to the proceeding as a consequence of their relationship arising from the joint venture are summarised by reference to the judgment of Chesterman J in Southern Cross Management Pty Ltd v Ensham Resources Pty Ltd & Ors [2005] QCA 233 at [576] to [579].  This includes the obligation of fiduciaries to account to each other in accordance with the remarks of Deane J in Chan v Zacariah (1983-1984) 154 CLR 178 at 199 as cited at [578] as follows:

“… the principle of equity is that a person who is under a fiduciary obligation must account to the person to whom the obligation is owed for any benefit or gain (i) which has been obtained or received in circumstances where a conflict … existed between his fiduciary duty and his personal interest in the pursuits … of such a benefit or gain, or (ii) which was obtained or received by use of or by reason of his fiduciary position or of opportunity of knowledge resulting from it.  Any such benefit or gain is held by the fiduciary as constructive trustee.”[224]

  1. [176]
    Accordingly, it is submitted that the obligation on the parties to account to each other for their costs and expenses paid, and monies received, is clear. Reference is also made to the statement in Lindley on Partnership 14th Ed, at 533 that:

“The right of every partner to have an account from his co-partners of their dealings and transactions is too obvious to require comment.”[225]

  1. [177]
    Reference is also made to Idacorp Pty Ltd v Freshglen Pty Ltd (unreported, Supreme Court of Queensland, 26 February 1999) and Schipp v Cameron, Harrison & Ors [1999] NSWSC 997.
  1. [178]
    In circumstances where all the land acquired by the parties was acquired for the purposes of the joint venture, and all monies expended thereon and the receipts from sales were expenses and receipts of the joint venture, it is submitted that they were fiduciaries and the defendants are liable to account to the plaintiffs.
  1. [179]
    It is submitted that the defendants acknowledge this obligation by reference to correspondence by Mr Cusworth which it is asserted contained admissions of the defendants’ liability to make payments to the plaintiffs on account of the joint venture.[226]  Further, it was submitted that Mr Cusworth agreed in his evidence that in none of his correspondence did he ever deny the existence of a duty to account, nor did he claim that an amount was owed by the plaintiffs to the defendants.[227]
  1. [180]
    Reference is made to emails from Mr Forster to Mr Cusworth which contain various requests, or assertions as to amounts owing from the defendants to the plaintiffs or otherwise questions in relation to the remaining joint venture property at that time.[228]  It is said that in circumstances where Mr Cusworth did not deny receiving them, he did not respond at all, let alone in a manner consistent with the defendants’ claim that there is no liability to account, or if there is, money is owed to the defendants.
  1. [181]
    As I have stated, the plaintiffs claim that Mr Gwynne’s evidence is that of an unchallenged mutual account.
  1. [182]
    It is submitted that this is the only proper accounting evidence as to what the account of the joint venture is. It is said that, other than in respect of particular costs and expenses relating to the Keenan Street Project, which the plaintiffs have challenged and which have not been included in Mr Gwynne’s report, the schedules and supporting documents relied upon by him and set out in the annexures and the appendices to his report were tendered as Exhibits 3 and 4 as proof of the matters contained in them; and the plaintiffs were not crossexamined at all on the correctness or otherwise of those documents, or the annexures and appendices to the report.
  1. [183]
    It is submitted that the report is unchallenged except to he extent that questions were asked about certain assumptions made in his report. However, the point is made that no alternatives were suggested to him. Further, it was submitted that Mr Forster gave uncontradicted or unchallenged evidence which demonstrated the correctness of these assumptions.
  1. [184]
    In addition, it is submitted that Mr Cusworth did not challenge the conclusions in the report; the defendants led no evidence against any of Mr Gwynne’s summaries; he was not shown any documents, which the defendants suggested should have been taken into account in preparing the report, nor was he taken through any of the report or documents relied on and challenged about any matter.
  1. [185]
    It is said that although Mr Gwynne responded in cross-examination to some questions about GST treatment in the accounts and his related assumptions, Mr Cusworth said nothing about this, and was not asked if what Mr Gwynne had said was correct, and nor is there any other evidence before the court that anything in the report is incorrect.
  1. [186]
    It is noted that no documents were put to Mr Gwynne for his consideration as to whether, had he known about them, his conclusion may have been different; and the defendants chose not to lead any expert evidence to challenge him.
  1. [187]
    Further, it is said that Ms Forster, who prepared the summaries of the defendants’ expenses in relation to the projects on which Mr Gwynne relied, was never challenged about their accuracy; Mr Cusworth gave no evidence about this; and no document was tendered which contradicts this evidence.
  1. [188]
    Accordingly, it is submitted that this report should be accepted by me as accurately reflecting the joint venture accounts, including the amount payable by the defendants to the plaintiffs pursuant to the terms of the joint venture.
  1. [189]
    Reference is made to Mr Gwynne’s examination of an account prepared by the defendants or their accountant at Annexure 11.[229]  His evidence was that he could not understand how the calculations had been made.  To try to make sense of them, he reproduced them in Table 12,[230] and said that the defendants’ summary appeared to be flawed.
  1. [190]
    The point is made that he was also not challenged about this in cross-examination; he was asked no questions about Annexure 11 or Table 12; Mr Cusworth was not questioned about Annexure 11; he did not swear to its accuracy; and he did not give evidence about the other amounts that he claims the plaintiffs owe the defendants or that the defendants owe the plaintiffs.
  1. [191]
    In particular, it is said that he was not asked about Annexure 14,[231] which is the basis of the defendants’ counterclaim.  Accordingly, it is submitted that the counterclaim must be dismissed with indemnity costs.
  1. [192]
    In these circumstances, it is submitted that I can accept the report in its entirety and give judgment in favour of the plaintiffs for an account in the sum assessed by Mr Gwynne.
  1. [193]
    Alternatively, it is submitted that if I am not prepared to assess the amount payable on account by the defendants, I should uphold the plaintiffs’ claim for damages in contract.
  1. [194]
    The contract is admitted.[232]  It is submitted that the defendants have breached it by retaining the amount due to the plaintiffs pursuant to the joint venture and therefore should pay damages for such breach.  This amount is also said to be the sum assessed by Mr Gwynne.
  1. [195]
    In each case, in addition to costs, it is submitted that interest pursuant to s 47 of the SCA should be awarded from 5 July 2005 or otherwise from 24 January 2006, as pleaded.  The former date is based on the evidence that the joint venture was terminated by sending a lawyer’s letter on behalf of Ampcorp enclosing the financial information calculating that the plaintiffs owed the defendants $11,799.99 regarding the joint venture projects.
  1. [196]
    The plaintiffs also refer to my power to order that an account be taken.[233]
  1. [197]
    In the event that I am unwilling to give judgment for the amount determined by Mr Gwynne, and would rather appoint a special reference for this purpose,[234] a proposed order has been provided.  Reference is made to Quinn Villages v Mulherin [2006] QSC 163 where Chesterman J ordered the defendant to pay to the plaintiff such amount as is found due by an expert appointed by the court, pursuant to a clause of the development agreement between the parties.

Defendants’ submissions

  1. [198]
    Mr Quinn submits that the matters pleaded by the plaintiffs in support of their claim are deficient in that they do not provide a factual or legal basis upon which the relief sought can properly be granted.
  1. [199]
    This submission is made on the basis of a review of the evidence, by virtue of which he submits the tested evidence of the plaintiffs’ witnesses does very little to support the matters pleaded by them such that much of the pleadings become meaningless.
  1. [200]
    In particular, he submits that the evidence of Mr Gwynne is clearly unreliable such that it could not possibly be used for an account of the nature claimed by the plaintiffs.  As he puts it, there is evidence of a “hot dispute” between the parties as to what the financial outcomes of the joint venture were.
  1. [201]
    He made reference to Mr Gwynne’s declaration that he had made all necessary enquiries being limited to his reliance on the material that he had been briefed with by the plaintiffs.  In addition, while the Forsters testified as to the accuracy of his report, they had relied entirely on his conclusions for this purpose and had not independently verified it.
  1. [202]
    Mr Quinn rejected the plaintiffs’ submissions that on the basis of the counterclaim the liability of the parties to account to each other is not in dispute.  He explained that the purpose of the counterclaim was to balance the proceedings.  As he put it:[235]

“If there is going to be an account, my client ought not be limited to the amount they had previously claimed, if it ultimately turned out to be that some money was owed to them.

By the same token, if your Honour finds in favour of my submissions that an account can’t be ordered … our counterclaim simply doesn’t exist.  If your Honour orders an account is to be taken … the submission is that our counterclaim stands.”

His final submission that “the plaintiffs’ claim ought to be dismissed with costs in favour of the defendants and the counterclaim dismissed with no order as to costs” must be read in this light.

  1. [203]
    He submits that there is a demonstrable misunderstanding by the plaintiffs as to the nature of the remedy of an account, arising from the fact that in addition to seeking an account of the monies received by the defendants in the joint venture, they usurp the court’s discretion by indicating that upon taking the account the amount awarded should be the same as identified by Mr Gwynne.
  1. [204]
    It is submitted that Mr Gwynne’s report is not a proper account for this purpose because of the unreliability of his evidence and he has only considered the material provided by the plaintiffs.
  1. [205]
    In his submission, because the account is a discretionary remedy, the court must carefully look at the surrounding circumstances behind the dispute, including deciding whether it involves a contractual relationship or a fiduciary one, before exercising that discretion. Reference is made to the decision of White J in Sunice Pty Ltd as Trustee of the Sunice Investment Trust v Wendy’s Supa Sundaes (Qld) Pty Ltd & Ors (unreported, Supreme Court of Queensland, 23 October 1998).  In that case, her Honour said at [12]:

“The plaintiff contends for an express trust or, alternatively, some other fiduciary relationship between the parties which gives rise to an obligation to account.  The defendants on the other hand submit that the relationship between them is defined and governed entirely by the detailed provisions of the franchise agreement and that equitable relationships have no part to play.  That there is a contractual relationship is not inimical to a fiduciary relationship, but if such a relationship is to exist it must accommodate itself to the terms of the contract, Hospital Products Ltd v United Sates Surgical Corporation (1984) 156 CLR 41 per Mason J at p 97.”

  1. [206]
    It is submitted on the basis of Warman International Ltd v Dwyer (1994-1995) 182 CLR 544 that an account will only be ordered if the fundamental liability to account is established, and the court will not order the taking of an account if there remains issues alive that form the basis of the account since the party calling for an account must at the end of the account be entitled to the sum found due.[236]
  1. [207]
    Next it is submitted with reference to Dart Industries Inc v Décor Corporation Pty Ltd (1992-1993) 179 CLR 101 and Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22 at [200] that the plaintiff must first make an election between damages and an account for profits, and no such election has been made in the present case.[237]
  1. [208]
    With reference to Dart Industries, it is also said that an account of profits cannot be ordered in aid of a common law right with some exceptions, and this leaves only the plaintiffs’ claim for equity.
  1. [209]
    Therefore, it is submitted that the court must find the existence of a fiduciary relationship between the parties and to do so it is commonly accepted that fiduciaries obligations in a joint venture will only arise when it is analogous to a partnership: Schipp v Cameron, Harrison & Ors.
  1. [210]
    It is submitted with reference to Rapid Metal Developments (Australia) Pty Ltd v Rosato [1971] Qd R 82 at 88 that an action for an account does not create a new cause of action nor is it a substitution for a trial.  Actions for account only regulate the procedure to be used in aid of the substantive rights arising from the other sources put in issue in the main action.
  1. [211]
    Mr Quinn submits that the essential requirements for an account are:
  1. (a)
    there must be a relationship between the plaintiffs and the defendants as the accounting party that entitles the plaintiffs to an account;
  1. (b)
    the plaintiffs must show that monies have come into the defendants’ hands in circumstances where the defendants ought to account to the plaintiffs and therefore establish the primary liability;
  1. (c)
    there must be no dispute as to the fundamentals on which the liability to pay would be based (with reference to Rapid Metal Developments at 89; and
  1. (d)
    rule 527(2) of the UCPR must be complied with in identifying:
  1. (i)
    the transaction or series of transactions of which the account is to be taken;
  1. (ii)
    the basis of the account;
  1. (iii)
    the period of the account.
  1. [212]
    It is submitted that in this case, the fundamentals upon which any liability (although it is denied) arises are squarely in dispute.
  1. [213]
    Mr Quinn submits that in looking at the real situation between the parties, the evidence shows that while there was an agreement about the existence of a joint venture, the projects essentially ran parallel to each other, with the respective parties maintaining independent legal ownership, independent financial arrangements and independent advice from professionals, with the only thread linking the projects being the agreement and the work performed by Ampcorp at both sites.[238]  In relation to the role of Ampcorp, reference was made to Mr Forster’s evidence that if it had not been by way of the joint venture, he would have had to engage a builder on contract to work on the projects.
  1. [214]
    I was also referred to Brooker v Friend and Brooker and Anor [2006] NSWCA 385 as a case in which the court declined to allow the claim of a fiduciary relationship to mask the true nature of the relationship between parties to a joint venture, saying at [26] “The fiduciary label is often invoked in a conclusory sense and it frequently disguises as much as it reveals.”[239]
  1. [215]
    Megna v Blamey and Anor (unreported, Supreme Court of NSW Equity Division, 15 September 1997) is referred to as a case of somewhat similar facts in which Bryson J expressed the view that it was inappropriate to bring the proceedings in the Equity Division.[240]
  1. [216]
    With reference to Warman International Ltd v Dwyer at 559-560 it is submitted that in deciding whether to order an account, the principle is that the specific remedy must be particular to the facts of the case.[241]
  1. [217]
    It is then said that the factors to be considered before ordering an account include but are not limited to:
  1. (a)
    the nature of the property taken or used by the defendants;[242]
  1. (b)
    the relationship between the profit made by the defendants and the scope of the fiduciary relationship;[243]
  1. (c)
    the fiduciary’s skill, contributing to the account; especially as there can be no guarantee against sudden losses, disappointments and reverses in business fortune, nor can such be reasonably foreseen;[244]
  1. (d)
    whether the fiduciary has introduced his or her own capital to which results increased the profit;[245]
  1. (e)
    whether there is a pre-agreed arrangement for profit sharing; and
  1. (f)
    interest, taxation and other fiscal matters.
  1. [218]
    It is submitted that there is no evidence in this case as to how the parties report the dealings in their separate financial statements and income tax returns, and there is a clear dispute between the parties about the application of GST that remains unresolved.
  1. [219]
    In any event, it is submitted that even if I were to find that a relationship existed and the necessary elements were present that entitled the plaintiffs to an account, it must also, in reliance on Warman International Ltd v Dwyer, make due allowance for the following factors:
  1. (a)
    the expenses incurred in the establishment of the business;
  1. (b)
    the skill displayed by those in the establishment, operation, marketing and promotion of the business;[246]
  1. (c)
    the expertise involved in the establishment and operation of the business;[247]
  1. (d)
    the capital contributed by the fiduciary, both directly and indirectly;[248]
  1. (e)
    the resources contributed by the fiduciary, both directly and indirectly;[249] and
  1. (f)
    the time the fiduciary spent in establishment and operation of the business.[250]
  1. [220]
    It is submitted that in considering these matters, regard must be had to the evidence of Mr Cusworth and what are said to be the admissions by the Forsters in cross-examination, which it is asserted were to the effect that the contribution of the defendants to the overall project significantly outweighed the contributions of the plaintiffs having regard to both financial and nonfinancial matters and indirect and direct contributions, by virtue of the fact that the plaintiffs’ business suffered as a result of its involvement in the joint venture.
  1. [221]
    It is also submitted that consideration must be given to the “clean hands doctrine”, which requires the plaintiffs who seek equity to do equity. This is by virtue of the financial benefit said to be obtained by the plaintiffs from arranging finances for the various joint venture properties in circumstances where none of the commissions received had been reported to the defendants or the joint venture.
  1. [222]
    Furthermore, it is submitted that if I were to find the existence of a fiduciary relationship, the plaintiffs were in breach of it by not having disclosed the benefits they received from arranging finance for the joint venture activities.
  1. [223]
    Therefore, it is submitted that it is not equitable to allow the plaintiffs to be compensated for an infringement of their alleged rights when they have committed the very same act.
  1. [224]
    Finally, on the issue of the remedy of account, it is submitted that the defendants are entitled to ordinary equitable defences[251] and that:
  1. (a)
    waiver applies to the Lilla Street Project because there is evidence that the receipt by the Forsters and the Cusworths of a unit each at a discounted price in the ultimate development was fair and reasonable compensation for their involvement in the venture;
  1. (b)
    the defendants are entitled to an equitable set off in relation to the other projects because of the financial benefit received by the plaintiffs for arranging the finance.
  1. [225]
    In relation to the claim for damages for breach of contract, it is submitted that it cannot succeed because:
  1. (a)
    no such breach is pleaded in the statement of claim;
  1. (b)
    notwithstanding the agreed statement of facts, there is no evidence of a breach because there is a contest as to the entirety of the terms of the contract and what they mean;
  1. (c)
    even if the court was to make findings about the contractual terms, there is nothing pleaded with regard to those terms about a breach nor is there evidence offered by the plaintiffs as to the occurrence of the breach;
  1. (d)
    it is embarrassing in the extreme to infer, without specific reference in the pleadings, that the measure of damages for breach of contract could be the same as the sum claimed in respect of the account, having regard to the equitable and discretionary nature of the latter remedy; and
  1. (e)
    there is no evidence that the amount assessed by Mr Gwynne are damages logically flowing from any breach of the contract.

Discussion

Order for account

Existence of relevant relationship between the parties

  1. [226]
    The plaintiffs must establish that there is a relationship between them and the defendants which gives rise to the plaintiff’s entitlement to account.[252]
  1. [227]
    As set out in Equity Doctrines and Remedies, which is cited at paragraph [166] above, one of these categories of relationship is where the parties stand in a quasifiduciary relationship or a relationship of confidence.
  1. [228]
    I do not find it necessary in this case to determine whether or not the joint venture agreement can be categorised as a partnership agreement, as argued by the plaintiffs so as to satisfy another of the categories of relationship identified in that text, because in accordance with the approach of Einstein J in Schipp v Cameron, Harrison & Ors at [707], the principle appears to be that the court will find a fiduciary relationship exited between the parties to a joint venture when it is analogous to a partnership.  As his Honour said:

“…

[712] It does not seem to me that in determining the existence and scope of fiduciary duties in the case of a joint venture arrangement, it is necessary to attempt to fit the particular relationship into the legal category of ‘partnership’ as set out in the Partnership Act.  In my view, the better approach is to consider whether or not the joint venture possesses characteristics which the courts have recognised as being inherent in the partnership relationship.  The difference between this approach and the previous one is that while the elements of a partnership relationship are identical, the statutory definition entails a more limited inquiry and requires each part of the definition of ‘partnership’ to be made out.  In contrast, the second approach allows a court to find that a partnership existed on the basis of one, or a number, of dominant aspects of the relationship.  This permits the fiduciary duties to be moulded to the character of the particular relationship.

[713] In Birtchnell v Equity Trustees, Executors and Agency Co Ltd (1929) 42 CLR 384 at 407-408, Dixon J identified two distinctive features of a partnership relationship:

The relation is based, in some degree, upon mutual confidence that the partners will engage in some particular kind of activity or transaction for the joint advantage only.  In some degree, it arises from the very fact that they are associated for such a common end and are agents for one another in its accomplishment.’

[714] The House of Lords in Cocks v Hickman (1860) 11 HL Cas 267 at 304 stated that the real basis of liability in partnership was ‘in truth, the liability of a principal for the acts of his agent’.  However, when determining whether or not a joint venture will attract fiduciary obligations akin to those owed by members of a partnership to one another, whether or not the relationship between the participants in a joint venture is characterised by an element of mutual trust and confidence is the overriding consideration.  Dawson J in United Dominions Corp v Brian concluded that:

‘Of course, in a partnership the parties are agents for each other and this may constitute a separate reason for the fiduciary character of the partnership.  There may be no such agency between participants in a joint venture but, as Dixon J pointed out in Birtchnell v Equity Trustees, Executors & Agency Co Ltd (1929) 42 CLR 384 at 407-408, even in a partnership it is really the mutual confidence between partners which imposes fiduciary duties upon them and the same confidence may, in appropriate circumstances, be found to exist between participants in a joint venture.’” (my emphasis)

  1. [229]
    Accordingly, in that case Einstein J found that the joint participation of the parties in the joint venture gave rise to fiduciary obligations because they had mutual confidence in each other in the pursuit of the objectives of the joint venture agreement.[253]
  1. [230]
    In addition to the observations of Dawson J, in United Dominions Corp v Brian Gibbs CJ said at 7-8:

“Although it is not easy to attempt to define the circumstances in which a fiduciary relationship will be found to exist (see the discussion in Hospital Products Ltd v United Sates Surgical Corporation) there was, in the circumstances of the present case, a relationship between U.D.C. and Brian based on the same mutual trust and confidence, and requiring the same good faith and fairness, as if a formal partnership deed had been executed.” (my emphasis)

  1. [231]
    The joint reasons of Mason, Brennan and Deane JJ in that case include at 10-11:

“The term ‘joint venture’ is not a technical one with a settled common law meaning.  As a matter of ordinary language, it connotes an association of persons for the purposes of a particular trading, commercial, mining or other financial undertaking or endeavour with a view to mutual profit, with each participant usually but not necessarily contributing money, property or skill.  Such a joint venture … will often be a partnership.  The term is, however, apposite to refer to a joint undertaking or activity carried out through a medium other than a partnership. … The borderline between what can properly be described as a ‘joint venture’ and what should more properly be seen as no more than a simple contract relationship may on occasion be blurred. ... One would need a more confined and precise notion of what constitutes a ‘joint venture’ than that which the term bears as a matter of ordinary language before it could be said by way of a general proposition that the relationship between joint venturers is necessarily a fiduciary one. … The most that can be said is whether or not the relationship between joint venturers is a fiduciary one will depend upon the form which the particular joint venture takes and upon the content of the obligations which the parties to it have undertaken.” (my emphasis)

  1. [232]
    In Fraser Edminston Pty Ltd v A.G.T. (Qld) Pty Ltd Williams J said at 11 with reference to Hospital Products Limited v United States Surgical Corporation (1984) 156 CLR 41, 68:

“As Gibbs CJ pointed out … the categories of relationships giving rise to fiduciary relationships are not closed, and the answer to the question whether a fiduciary relationship existed cannot be answered conclusively by considering whether or not the parties fall within one of the accepted categories.  His Honour’s analysis of the authorities in that case indicates that where the facts show the relationship was based on mutual confidence there may arise fiduciary obligations which may be enforced in a court of equity.” (my emphasis)

  1. [233]
    In Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd & Ors Chesterman J referred at [576] to what he described as the well-known passage from Mason J in that case, as follows:

“The critical feature of (fiduciary relationships) is that the fiduciary undertakes or agrees to act for or on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a practical or legal sense.”

As his Honour observed at [577] these remarks have been endorsed by Gleeson CJ, Gaudron and Gummow JJ in Concut Pty Ltd v Worrell (2002) 75 ALJR 312 at 3156.

  1. [234]
    Chesterman J also said at [579] with reference to Bristol and West Building Society v Mathew (1998) Ch 1 at 18, that the “concept of loyalty” is said to be the essence of the fiduciary relationship.
  1. [235]
    In Idacorp Pty Ltd v Freshglen Pty Ltd Muir J said at [56]:

“Even if no agreement was actually concluded, as the land had been acquired with the common understanding that it would be joint venture property and the parties had proceeded on that shared understanding, it is plain that Freshglen owed fiduciary obligations to Idacorp in respect of the land.  It is well established that a fiduciary relationship with attendant fiduciary obligations will arise:-

‘… between prospective parties who may have embarked upon the conduct of the partnership business or venture before the precise terms of any partnership agreement have been settled. … Likewise the relationship between prospective partners or participants in a proposed partnership to carry out a single joint undertaking or endeavour will ordinarily be fiduciary if the prospective partners have reached an informal arrangement to assume such a relationship and have proceeded to take steps involved in its establishment or implementation.’

United Dominions Corp Ltd v Brian Pty Ltd (1985) 157 CLR 1 at 11-112.  See also the discussion by Wilcox J in Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FLR 300 at 311-312.”

  1. [236]
    It is regrettable in hindsight that Mr Forster denied the defendants’ request to reduce the joint venture agreement to writing because of the time and cost that he believed would be involved.
  1. [237]
    However, at least there was an informal relationship between the parties which involved them entering into the joint venture for the purpose of developing residential properties for mutual benefit and gain, and by virtue of which they completed the Lilla Street, Tilley Street and Keenan Street Projects. This is not in dispute.
  1. [238]
    Importantly, it is also not in dispute that the profits (or losses) of the joint venture were to be shared equally between the plaintiffs and the defendants in accordance with the following terms:

“that in respect of each development project, the plaintiffs and defendants would be reimbursed their costs incurred in respect of that project, and the balance, being profit (or loss) would be shared equally between the plaintiffs and the defendants.”

Accordingly, each of the parties was an equal partner.

  1. [239]
    Although Mr Cusworth denied that the parties were partners in the true sense of the word, he described them as business associates doing a joint venture together pursuant to an agreement that was in trust and in kind in circumstances in which they were friends.  In fact, he described it as an agreement that they go ahead to do the project for the benefit or the loss of each.
  1. [240]
    There is no doubt that the relationship of the parties in the execution of this joint venture was collaborative. This is emphasised by Mr Cusworth’s answer to the following question by Mr Johnstone:

“But of course the problem with Lilla is you could never have shared in it if they hadn’t been able to pay for 3 Lilla Street?- - After the deal was done that was evident.  But without both parties the collaboration couldn’t have worked.[254] (my emphasis)

  1. [241]
    Mr Forster was not challenged on his evidence that 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; and there were several meetings daily in some cases to make sure that they did not jeopardise the project.
  1. [242]
    Mr Cusworth said expressly that at the time of entering into the Heads of Agreement on 25 April 2002 it was collaborative and communications between the parties were very positive.  Although, he said that the relationship had “soured” somewhat by 2004/2005.
  1. [243]
    It was also recognised that each of the parties would contribute to the joint venture by virtue of their particular skills and expertise. As Mr Forster said without challenge, part of the agreement was that Mr Cusworth was capable of contributing skills and expertise in building and construction, and he was capable of contributing the borrowing capacity that Mr Cusworth did not have to finance the developments proposed by the joint venture.[255]This is consistent with Mr Cusworth’s evidence 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) to buy real estate.  They were in the business of building, whereas the Forsters were in a better financial position than them.[256]
  1. [244]
    Significantly, I am satisfied that the joint venture properties were acquired by the individual joint venturers on behalf of (and therefore on trust for) the joint venture as a whole as submitted by Mr Johnstone.
  1. [245]
    This finding is in accordance with the agreed statement of facts whereby, as stated, the joint venture was for the purposes of developing residential properties for mutual benefit and gain, and it was in pursuance of this that the three projects were undertaken.
  1. [246]
    Therefore it was in furtherance of this purpose that the decision was made that the Lilla Street Project properties were purchased in Ms Forster’s name, the Tilley Street Project property was purchased by the second plaintiff, Fast Track, and the Keenan Street property was purchased in Ampcorp’s name.
  1. [247]
    In Exhibit 22 Mr Cusworth accepts that to purchase No. 3 Lilla Street the Forsters used the equity in the property to secure finance and to service a line of credit.  Ms Forster was liable in respect of these borrowings.  As quoted above, he accepted that if the Forsters had not done this, the deal would not have happened, while stressing the importance of the collaboration of both parties for this to work.  This collaboration included Ampcorp refurbishing the property to allow it to be tenanted.  Ms Forster’s evidence was that she never considered No. 3 Lilla Street to be her sole property.[257]
  1. [248]
    Ms Forster also entered into a contract as the purchaser of No. 5 Lilla Street, including a non-refundable deposit.  Although, because Group Kildey took over the contract, Ms Forster never paid for this property.
  1. [249]
    Ms Forster also did not have to pay for No. 42 Woodcliffe Crescent because it was transferred to Ampcorp, which bought it from her to distribute debt ownership widely.  Ampcorp borrowed money for this purpose, which was secured over the property and by an existing mortgage over the Cusworths’ residential property.
  1. [250]
    It was not disputed that 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.
  1. [251]
    Accordingly, Fast Track obtained finance to acquire the Tilley Street property, secured against the house on the property and Forsters’ personal residential property and another investment property; and Ampcorp purchased the Keenan Street property through a line of credit in its name secured over the property, as well as some equity linkage with the Cusworths’ residence.
  1. [252]
    Further, in relation to the Lilla Street Project, under the Heads of Agreement with Group Kildey the parties would each receive a payment of $220,000 cash plus unencumbered title to a ground floor unit in the development; and after Fast Track had received the sale proceeds from the Tilley Street Project, which were to repay loans that it and the Forsters had obtained in respect of the development, the balance of the funds were deposited into the business line of credit available to Ampcorp to assist in completion of the Keenan Street Project.
  1. [253]
    The fact that each of these properties was an asset of the joint venture is illustrated by the defendants’ pleading in relation to the Keenan Street property that it was an asset of the joint venture.[258]  Further, as stated in paragraph [37] above, in light of Mr Quinn’s concession that the defence and counterclaim is to be read in light of the agreed statement of facts, there can be no issue that this property, although registered in the name of Ampcorp, properly formed an asset of the joint venture and was owned in equity by the plaintiffs as to 50%.
  1. [254]
    Therefore, as intended, the debt ownership was widely distributed between the parties on the basis that in accordance with the joint venture agreement, in respect of each development project, the parties would be reimbursed the costs incurred for that project; and the balance shared equally between them. This can only rationally have been on the basis that all properties were owned for the benefit of the joint venture and none of the parties was the independent legal owner who could do what they wanted with it. I reject Mr Quinn’s submission to the contrary.
  1. [255]
    This is consistent with the fact that each party accounted for their costs and expenses separately in furtherance of a joint venture project. In relation to this, Mr Forster gave unchallenged evidence that whatever expenses were encountered by each of the parties would be assessed and quantified at the end of the project and the profits or losses from that project would be shared 50:50.  Consistently with this, Mr Cusworth agreed that both sides had to reconcile with costs and expenses paid by them in respect of each project and, as a consequence of the costs and expenses of each side being put together, they had reached a different conclusion. This is confirmed by the 5 July 2005 letter from Irish Bentley Lawyers, which claimed that the amount now sought by the counterclaim of $11,799.99 was owed to the defendants by the plaintiffs.
  1. [256]
    This is also consistent with the approach taken by the parties to the quantification and reconciliation of their costs and entitlements under the joint venture agreement. For example, in relation to the building work carried out by Ampcorp of the Tilley and Keenan Street Projects for which Mr Cusworth was working at cost plus wages that were being paid by the joint venture, he said that 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 the month.
  1. [257]
    It is relevant that Mr Cusworth’s decision to charge the joint venture at “cost only” with no margins, commissions, overheads or profits was a business decision made in the hope of getting a profit at the end of the joint venture in which both parties could share.
  1. [258]
    The collaboration of the parties in the quantification and reconciliation of their costs and entitlements is also demonstrated by the unchallenged evidence of:
  • the meeting at the Forsters’ home, where the Cusworths gave them details and receipts to enable them to complete the accounting of their expenses in relation to the Lilla Street Project, as a result of which Ms Forster prepared a running balance of the expenses they had incurred which was given to the Cusworths in late September or October 2002.
  • the Cusworths’ request that payment for the Lilla Street Project be deferred until the completion of the Keenan Street Project, at which time calculations for all the projects would be consolidated.
  • Ms Forster and Ms Cusworth jointly did a quantification of the Tilley Street Project which involved Ms Cusworth reading each receipt to Ms Forster who entered it into a spreadsheet.[259]
  1. [259]
    Consistently with this, Mr Cusworth wrote a “without prejudice” letter of 7 January 2004 on behalf of Ampcorp referring to “our ongoing discussions regarding the finalisation of the joint venture” on the three projects.  This letter, which attached an amended project summary suggesting two options, both with reference to “50% of the net profit” on the Keenan Street property, concluded:

“The above amounts do not include additional costs incurred by both parties since the attached worksheets were prepared and would need to be adjusted accordingly.

Would you please consider the above two options at your earliest convenience so that this matter can be finalised.”[260]

Mr Cusworth agreed that there was nothing in this letter to suggest that there was no amount outstanding to the Forsters from the joint venture; and that it contained nothing to suggest that the Forsters owed any money under the joint venture.

  1. [260]
    Further, Mr Cusworth’s handwritten letter to the Forsters, which I have concluded would have been sent on 27 April 2004, was said to be put together “to get a final chapter in this project.”[261]  Again, Mr Cusworth conceded that he did not say in the letter that he and his wife did not owe money to the Forsters or that they were under no obligation to account to each other for the costs and expenses of the joint venture.
  1. [261]
    In these circumstances, I consider that having regard to the form of this joint venture and the obligations and understandings of the parties, it was analogous to a partnership in that it involved a relationship based on mutual trust that the parties would engage in the project for their joint advantage. Notwithstanding that the relationship between the parties deteriorated over the course of the joint venture the correspondence that I have identified from Mr Cusworth proceeds on the basis that this continued to be the case, despite disagreement as to the ultimate consequence of the reconciliation of their entitlements at the end of the venture.
  1. [262]
    In my view, it is clear that mutual trust and confidence was the overriding consideration, requiring good faith and fairness. As Mr Cusworth said, it was an agreement that was “in trust and in kind”.
  1. [263]
    It was an agreement in which each party agreed to act for and on behalf of the interests of the other party in the exercise of powers and discretions which affected the interests of the others in a practical sense.
  1. [264]
    As a consequence, I find that to adopt the language of Einstein J in Schipp v Cameron, Harrison & Ors at [719], that the joint participation of the parties in the joint venture agreement gave rise to fiduciary obligations.  As I have said, it is unnecessary for me to determine whether or not this agreement can be categorised as a partnership agreement because, as in that case, it is enough “that each of the parties had placed, as I find they had, mutual confidence in each other in the pursuit of the objectives of the joint venture agreement.”
  1. [265]
    This is not a case where in the words of Mason P in Brooker v Friend & Brooker and Anor at [26] the fiduciary label disguises as much as it reveals.  Rather, it is one which is akin to the circumstances in which McColl JA found a fiduciary relationship existed between the parties in that case, as expressed at [153]-[154]:

“[153] In my view, however, the evidence established a fiduciary relationship between the parties arising from the mutual trust and confidence they reposed in each other from the outset of their business relationship.  Their initial agreement that their relationship be conducted on a ‘50:50’ basis was important.  It demonstrated that despite their recognition that their respective contributions might differ, they were equal participants in the business.  Their mutual trust was manifest in the conversations to which the appellant deposed concerning borrowing from family and friends.  As Mr Forster submitted, the fact that each borrowed unequal amounts and incurred personal liability to lenders to keep the company going, supported the proposition that there was an understanding between them, based on their mutual trust and confidence, to equalise their contributions to the business at an appropriate time.

[154] … They ensured by their joint, but unequal, borrowings from their family and friends that the business could be kept afloat.  In this respect, they undertook to act in the interests of each other in a manner which affected their interests in a practical sense and, to that extent, in my view stood in a fiduciary relationship: see Hospital Products v United States Surgical Corporation (at 96-97), per Mason J.”

  1. [266]
    Before concluding discussion of this issue, I refer to Mr Quinn’s submission that because the remedy of account is a discretionary one a court must look at all the surrounding circumstances before exercising it, including whether it was a contractual relationship or a fiduciary one.  Reference is made to the decision of White J in Sunice Pty Ltd as Trustee of the Sunice Investment Trust v Wendy’s Supa Sundaes (Qld) Pty Ltd & Ors where as previously observed at [12] her Honour said:

“That there is a contractual relationship is not inimical to a fiduciary relationship, but if such a relationship is to exist it must accommodate itself to the terms of the contract.”

  1. [267]
    However, as is readily apparent from the above analysis of the circumstances surrounding this joint venture and the agreed terms of the venture, this is not a case like that in which White J concluded in a prima facie way without finally deciding the matter at [17]:

“that the contractual relationship between the parties is so precise in its regulation of what each party may do that there is no scope for the creation of a fiduciary duty such as to give rise to the right of account.”

  1. [268]
    In this case, the agreed terms of the joint venture as stated at paragraph [3] above is one of the circumstances that I have taken into account in finding that the joint venture agreement gave rise to fiduciary obligations.
  1. [269]
    Accordingly, I find that the parties stood in a fiduciary relationship or a relationship of confidence such as to give rise to an entitlement to account.

Whether the circumstances are such that the defendants ought to account to the plaintiffs[262]

  1. [270]
    In paragraph 20(b)(v) of the amended defence and counterclaim, there is a general denial that the defendants are liable to account to the plaintiffs because “there was no breach … of any fiduciary obligation.”
  1. [271]
    However, I agree, as submitted by Mr Johnstone, a “breach” of a fiduciary obligation is not required to be demonstrated before the liability to render account arises, in the sense that, as stated in Warman International Ltd v Dwyer per Mason CJ, Brennan, Deane, Dawson and Gaudron JJ at 557, the authorities in Australia and England deny that the liability of a fiduciary to account depends upon detriment to the plaintiff or the dishonesty and lack of bona fides of the fiduciary.  Their Honours said that a fiduciary must account for a profit or benefit if it was obtained by reason of his fiduciary position or by reason of his taking advantage of opportunity or knowledge derived from his fiduciary position; and it is no defence that the fiduciary acted honestly and reasonably.[263]  The point is that a fiduciary is not entitled to make a profit out of, or by reason of, a fiduciary position without the knowledge and assent to the person to whom the fiduciary duty is owed.[264]  As also stated by Deane J in Chan v Zacharia where Deane J at 199:

“Stated comprehensively in terms of liability to account … that constructive trust arises from the fact that a personal benefit or gain has been so obtained or received and it is immaterial that there is no absence of good faith or damage to the person to whom the fiduciary obligation was owed. … The principle governing the liability to account for a benefit or gain as constructive trustee is applicable to fiduciaries generally including partners and former partners in relation to their dealings with partnership property and the benefits and opportunities associated therewith or arising therefrom.”[265]

  1. [272]
    In considering the issue of whether the plaintiffs have established that the defendants ought to account to them, it is relevant that, as accepted by Mr Cusworth in his letter sent on 27 April 2004, he and his wife did not say that the parties were not obliged to account to each other for the costs and expenses of the joint venture.  Rather, as emphasised by the Irish Bentley letter of 5 July 2005, the defendants asserted that the plaintiffs ought to account to them.  Although I note Mr Quinn’s submission that these attempts to reconcile the joint venture were not an admission of an obligation on the part of the defendants to account, I do not consider that there is any other rational and logical explanation for this.  I consider that the parties recognised this obligation, but, as Mr Cusworth said, they reached different conclusions.  That must be a reference to reaching different conclusions of who was obliged to account to whom and the quantum of that account.
  1. [273]
    Consideration of this issue necessarily overlaps with the next question of whether there is any dispute as to the fundamentals on which liability to pay would be based. This is because an account cannot be ordered where there are disputed questions of fact such that an account will only lie where there is no dispute as to the basis of liability to pay: Rapid Metal Developments (Australia) Pty Ltd v Rosato at 89-90.[266]
  1. [274]
    Having regard to this dispute, the evidence that the defendants are obliged to account to the plaintiffs and the quantum of that account is provided by Mr Gwynne who, on the basis of his forensic analysis, has concluded that an amount of $62,667 is payable by the defendants to the plaintiffs.
  1. [275]
    Mr Quinn is critical of Mr Gwynne in his submissions.  As indicated, he submits that having regard to the challenges to his evidence, he is clearly unreliable and his report cannot be conceived as a proper account in circumstances where he has only considered material and statements provided by the plaintiffs.
  1. [276]
    He also argues that the plaintiffs are seeking to usurp the court’s discretion by indicating that upon taking the account, the amount awarded should be the same as identified in his report.
  1. [277]
    I do not consider that the plaintiffs have attempted to usurp the court’s discretion in this way. Mr Gwynne’s evidence, including his reports and associated documents, which were tendered without objection and without the need to formally prove the documents on which he relied, is simply presented as with any other evidence for me to assess and reject as I see fit.
  1. [278]
    However, his is the only expert accounting evidence placed before the court as to what the account of the joint venture is. He was not shown any documents which it was suggested he should have taken into account in preparing the report. Nor did Mr Cusworth produce any such documents in the course of his evidence.  This is undoubtedly because, as Mr Cusworth has previously deposed, the defendants do not have any documents in their power, possession or control relevant to these proceedings.
  1. [279]
    The challenge to Mr Gwynne’s evidence was confined to crossexamining him regarding the assumptions made in that report.  It is on the basis of these challenges that Mr Quinn’s criticisms are based.
  1. [280]
    It is therefore necessary to analyse these matters in Mr Gwynne’s cross-examination on which Mr Quinn relies to assess the weight of these criticisms.
  1. [281]
    The first matter identified relates to paragraph 5.1 of Mr Gwynne’s report, which is to the effect that in or around November 2000 the plaintiffs and the defendants commenced a number of property development activities as joint venturers.  In crossexamination he said that this assumption was based on the statement of claim and he was not briefed with the defence.  However, with the exception of the reference to “November” rather than “October”, this is in accordance with the agreed statement of facts.  It is also in accord with the evidence.  This general introductory background statement is, in any event, irrelevant to Mr Gwynne’s conclusion.
  1. [282]
    It is submitted that he did not apportion the amount shown at paragraph 6.4.3 of the report (and Appendix C) because he assumed the statements from the Plaintiffs that it was correct and he made no independent enquiry of his own.  This is a reference to inclusion in the plaintiffs’ contributions to the Lilla Street Project, of solicitors’ fees paid to Rod Holloway & Co.  The issue of apportionment arose in relation to an item to advise on the “heads of agreement with Group Kildey and general advice in relation to the same, advice as to stamp duty implications, Capital Gains Tax and security issues.”  Mr Gwynne responded that it was his understanding that the Heads of Agreement formed part of the joint venture.  He said that this was a determination that he made from his reading.  In my view, on any view of the evidence, this did form an integral part of the joint venture in relation to developing the Lilla Street Project for the mutual benefit and gain of the parties.  As Mr Cusworth conceded, if the venture had stopped with this project, everyone would have won because both parties had worked hard to acquire an apartment worth a sum of money, and they had gained something worth more than they spent.  The Heads of Agreement, although not a term of the joint venture, was central to achieving this result, as were the associated matters related to stamp duty implications, Capital Gains Tax and security issues.  Therefore, I do not consider that Mr Gwynne erred in making this assumption and not apportioning the amount claimed in the solicitor’s invoice.
  1. [283]
    The next submission was that he did not make an independent inquiry concerning his assumption in paragraph 6.7.2 that the sale price of the plaintiffs’ No. 3 Lilla Street property was $220,000.  As he accepted in cross-examination, while he had been provided with a copy of the settlement notice of the defendants’ sale of No. 42 Woodcliffe Crescent for that amount, he was not provided with a similar statement in relation to No. 3 Lilla Street.  He could not specifically recall if he asked for this.[267]  Therefore, Mr Quinn submits that he did not make any independent inquiry.  He agreed that if this assumption was wrong that would have an impact on his conclusion as to the amount owing.  However, I find that the sale price of the plaintiffs’ unit was $220,000.  This was a term of the Heads of Agreement in relation to the sale of both properties.[268]  It was Mr Forster’s evidence that each of the parties received $220,000 in accordance with this.  It was never suggested in crossexamination or the evidence of Mr Cusworth that the payments received were not in accordance with the Heads of Agreement.  Therefore, I do not consider that Mr Gwynne erred by proceeding on this basis.
  1. [284]
    It was also submitted that he did not make an independent inquiry in relation to his assumption in paragraph 6.7.3 that the parties agreed that the units they received (were entitled to receive) in the developed complex on the Lilla Street Project site were of equal value.  He is criticised for not even asking the plaintiffs about this.  However, Mr Forster gave clear evidence that the units were of equal value.  He testified that the agreed value reached by the parties with Group Kildey for each of the ground floor units was $269,00.  He said it was simply agreed between the parties that he and Ms Forster would have first choice of the ground floor units because they had made the greatest contribution, and there were no protests or complaints about this.[269]  While he accepted that he chose the unit that was most appealing to him and had a better aspect, he was adamant that it was not intended that this would result in it having a higher value, as is apparent from his response to this in crossexamination:[270]

“It was your intention that those benefits would ultimately reflect a higher value, is that correct?- - - I would suggest that the value of the two units was deemed as the same price on the agreement with Group Kildey.

I’ll ask you about your intentions.  Was it your intention that those aspects you’ve just identified would ultimately result in a higher value?- - - No.” (my emphasis)

It was not specifically put to him that the contrary was the case.  Mr Cusworth gave no evidence on this issue which contradicted him.  In these circumstances, I find on the basis of Mr Forster’s evidence that both units were assigned the same value for the purpose of the dealings with Group Kildey and accordingly for the purposes of the joint venture.  Therefore, again I consider that Mr Gwynne did not err in proceeding on the basis of this assumption.

  1. [285]
    Mr Quinn’s next point with reference to paragraph 7.1 is that he agreed that both parties are correct in stating that the Tilley Street Project was a loss.  As he and each of the parties have proceeded on this basis, his acceptance of this proposition cannot be argued to have altered his conclusion.
  1. [286]
    The next criticism relates to his failure to make any inquiry of the plaintiffs as to the source of the funding for the purchase of the Tilley Street property. This relates to paragraph 7.6.2, which makes the assumption that the source was from the plaintiffs (Fast Track) based on the statement of claim.  However, not only was this in accordance with Mr Forster’s evidence[271] and the settlement statement for the purchase,[272] but also Mr Cusworth’s evidence-in-chief.[273]  Therefore, I find that Fast Track was the source of this funding and Mr Gwynne did not err by proceeding on this basis.
  1. [287]
    It was also submitted that in relation to paragraph 8.4.3 he relied on the original annexure to the plaintiffs’ first statement of claim.  That paragraph is as follows:

“Both the Plaintiffs and the Defendants summaries at Annexures 10 and 11 include interest costs incurred by Ampcorp totalling $31,711.  These charges relate to a Suncorp Metway Business Line of Credit (#050219860) (“BLOC”) which was used by the Defendant to fund contributions to the JV.  The Plaintiff has identified payments made from this facility which they contend did not relate to the Keenan St JV.[274]  Accordingly I have undertaken an assessment of the interest charges to this account that related to these payments, and have adjusted for this.  The total adjustment calculated by me is $1,701 as detailed in Appendix Y.”

  1. [288]
    Mr Forster was specifically referred to this paragraph and identified the payments which the plaintiffs contend did not relate to the Keenan Street Project with reference to the Suncorp Metway Business Line of Credit Statements.[275]  He referred to a withdrawal of $30,900 which he said was the deposit by the Cusworths for their personal unit at the Lilla Street Development and which was paid to the trust account of a firm of solicitors who had no involvement in the Keenan Street Project to which the line of credit related.[276]  He also identified internet transfers of $20,000, $15,000, $5,000 and two of $4,000 when he said the Keenan Street Project was stalled and no expenses were payable to this extent.[277]  His evidence was that he was familiar with the account number to which these transfers were directed, and it was a personal overdraft facility for Ampcorp which was independent of the business line of credit from which it was agreed all payments were to be made for the Keenan Street Project.[278]
  1. [289]
    Neither Mr Forster nor Ms Forster were challenged about this evidence in crossexamination.  Mr Cusworth was not asked any questions about it, whether with reference to Annexures 10 and 11 or Appendix Y, or otherwise.  He did not produce any documents in the course of his evidence.  Again, this is likely to be because, as previously indicated, the defendants do not have any documents in their power, possession or control relevant to these proceedings.  Accordingly, I find that the payments identified by Mr Forster did not relate to the Keenan Street Project.  Therefore, Mr Gwynne was correct to proceed on this basis and to make the adjustment of $1,701, as detailed in Appendix Y.
  1. [290]
    A similar submission is made in relation to paragraph 8.6.1 which relates to Table 11 of the report which sets out the basis of his assessment that the defendants owe the plaintiffs $79,947 in relation to the Keenan Street Project, and is as follows:

“I have noted in Annexure 13 the source of the information, and have adopted the Plaintiffs summary to arrive at the profit in the above table.  (I note that the Defendant’s summary shows a profit of some $33,000.  Refer to Annexures 10 and 11).”

  1. [291]
    However, again neither Mr Forster nor Ms Forster were challenged about this summary in crossexamination; Mr Cusworth was asked no questions about it, whether with reference to Annexures 10, 11, 13 or otherwise; and he did not produce any documents in the course of his evidence.  Therefore, I consider that Mr Gwynne did not err by adopting the plaintiffs’ summary for the purposes of making his assessment.
  1. [292]
    Mr Quinn asserted that Mr Gwynne admitted that stamp duty expenses were an acquisition cost and should properly have been included in the joint venture accounting.[279]  While this is true, Mr Gwynne’s evidence was that this was included in the overall accounting for the project, as is apparent from the following exchange during crossexamination:[280]

“Thank you.  Is – when you make reference to stamp duty in some of your calculations is that a revenue – is that an expense that goes into a profit and loss calculation or is it an acquisition cost?-- Well, for the purpose of the joint venture it would be – it’s a cost of acquiring and – a cost of acquiring the property to – it’s an overall revenue calculation as is the cost of acquiring a property.

But you exclude those in some of your calculations, the cost of acquiring the property on the basis they want to be separated out for ease of reference?-- For ease of reference within my calculation-----

Yes?-- ----- but I still – I include them in the overall accounting.  That’s right, so they’re not – they’re – none of those expenses are excluded, they’re just, I guess, re-presented – separated and represented.” (my emphasis)

Accordingly, there is no basis for the criticism of Mr Gwynne in this regard.

  1. [293]
    A submission was also made in relation to Mr Gwynne’s evidence concerning paragraph 8.6.2, which is as follows:

“The Defendants MYOB summary of the Keenan ST JV expenses at Appendix T is unlikely to include GST on most expenses listed.  This means that the expenses adopted in the above summary will be excluding GST, and the GST component may be in the vicinity of $10,826 (i.e. $108,257 x 10%).  Accounting for this may reduce the JV profit by the value of GST not shown in the MYOB summary.”

  1. [294]
    The submission was that he admitted that GST is not a relevant consideration for entities that are registered for GST when reporting their income and expenditure, and that GST should not impact on a statement of profit.[281]  While this is true, it was never put to him that his assumption about GST was wrong or that it had been incorrectly treated by him in coming to his conclusions.  Mr Cusworth was not referred to this paragraph during his evidence and said nothing contrary to the evidence of Mr Gwynne about this.  Again, no documents were produced which contradicted his approach to this issue.  Therefore, there is no basis for me to conclude that Mr Gwynne erred in proceeding on this assumption or treating GST in the manner he did in making his assessment.
  1. [295]
    Mr Quinn then refers to the reference in paragraph 9.1 to the defendant’s “statement of claim” when it must have been a reference to their “counterclaim”.  However, as he said in asking the question of Mr Gwynne, “it’s something very minor, I just want to clarify.”[282]  Having succeeded in clarifying this matter, the point does not affect his conclusion in any way, and it does not cause me to regard his evidence as unreliable such as it could not properly be used for an account in the nature claimed by the plaintiffs.
  1. [296]
    Mr Quinn also refers to paragraph 9.2, which is as follows:

“Attached at Annexure 3 is a more detailed analysis of the Defendants accounting for Woody Point JV, assessing an amount of $22,400 due the Plaintiff.  This varies to the above table by an amount of $216, however I have not been provided with information that explains this variation.”

His point again is that Mr Gwynne admitted that he did not seek access to any further information which would explain this variation.

  1. [297]
    Annexure 3 is described as the “Defendants Summary of Woody Point Project”.  This is a reference to the Lilla Street Project.  The table referred to is based on the calculations attached to the 5 July 2005 Irish Bentley Lawyers letter calculating the amount owed by the Forsters to the Cusworths as $11,799.99, which is equivalent to the amount the subject of the counterclaim.  This calculation is based on $22,616 being payable to the plaintiffs for the Lilla Street Project.
  1. [298]
    Although this submission is expressed in the outline as being made in circumstances where Mr Gwynne had access to “the solicitors and the Defendants”, this must be taken as a reference to the plaintiffs’ solicitors and the plaintiffs, because he clearly had no direct access to the defendants or their solicitors.[283]  However, it is difficult to see what information the plaintiffs or their solicitor could provide him on this issue.  In any event, the point is irrelevant to Mr Gwynne’s ultimate conclusion because, having noted the variation, he concluded that the amount owing to the plaintiffs was the higher figure of $25,306.  Accordingly, the fact that such a variation exists does not affect his conclusion.
  1. [299]
    There was also criticism in the outline that Mr Gwynne did not request from the “Plaintiffs or their solicitors and … from the Defendants or their solicitors” in relation to paragraph 9.4, which stated:

“Due to the lack of documentation supporting the Defendants summary, I have been unable to properly assess the accuracy of this.”

  1. [300]
    When cross-examined about this, he said that he was told by his instructors that the information he had was all that was available. He was then asked a series of questions to elicit that he did not request any information from the defendants.[284]  During oral submissions, Mr Quinn had to concede that the answer to this proposition so far as the defendants were concerned was probably Mr Cusworth’s affidavit that they did not have any documents in their power, possession or control relevant to these proceedings.  There is no reason to reject his evidence that on the basis of what he had been told on behalf of the plaintiffs, there were no further documents available.  There was no suggestion by Mr Cusworth or in crossexamination of Mr Gwynne that there were in fact any other documents in existence on which he should have relied, and nor was he shown any documents which it was suggested he could have taken into account in preparing his report.  I therefore find that there was no other documentation available which would enable him to properly assess the accuracy of the defendants’ summary, and therefore affect his conclusion.
  1. [301]
    A submission was also made about paragraph 9.5.3, which provided, in relation to a comment by Mr Gwynne, that the summary supporting the defendants’ claim in Annexure 8 for the Tilley Street Project appears incomplete, as follows:

“The contributions recorded in annexure 8 as being made by the Plaintiff to the Defendant total $189,441.  The Plaintiffs records show payments totalling $208,296.  The difference is 1/11th of the payments, which is GST.  The Plaintiff has not claimed input tax credits in relation to these payments.  The issue of GST is further discussed at paragraph 8.6 above.”

  1. [302]
    Mr Quinn’s point was that notwithstanding his statement that the difference “is” GST, he admitted under crossexamination that this was an “assumption” merely because it was equal to 1/11 of the amount in question.[285]
  1. [303]
    The sum of $189,441 was described in Annexure 8 (Defendants Summary of Tilley Street Project) as payments to Ampcorp.  In the context of the evidence, this can only be payment for the costs incurred by Ampcorp in undertaking the building work for the Tilley Street Project.  The sum of $208,296.38 is calculated in Appendix L (Fast Track Home Loans – ANZ Summary).  Mr Forster gave evidence-in-chief about each of these figures.[286]  In relation to Annexure 8, he said that the amount refers to payment to Mr Cusworth less the GST that was retained or forwarded on to the Tax Office.  In relation to the other figure which had also been incorporated by Mr Gwynne into Annexure 9 (Vincents Analysis of the Tilley Street Project), he said that this was the gross amount paid to Mr Cusworth, in terms of payments from Fast Track to Ampcorp as reimbursement for invoices received from various contractors engaged to do renovations on the house.  He said that he did not claim an input tax credit on the GST.
  1. [304]
    Mr Foster was not challenged about this evidence in crossexamination; Ms Forster was not asked about it; Mr Cusworth gave no evidence to contradict it; and he was not shown Annexure 8, Annexure 9 or Appendix L for comment.  Therefore, I consider that Mr Gwynne’s assumption in paragraph 9.5.3 was based on unchallenged evidence and is also logical; and I do not consider that he erred in proceeding on this basis.
  1. [305]
    A submission is made about paragraph 9.6 concerning the Keenan Street Project, which is as follows:

“The details supporting the Defendants claim are attached at Annexure 11.  Following my review of the information provided I identified additional expenses that related to this project, and have accounted for the final selling price of the remaining property (which was estimated in the summary at Annexure 11).  My analysis is attached at Annexure 12.”

  1. [306]
    The submission is that he admitted that he had estimated the final selling price of the last property and/or assumed the amount in Annexure 11 as being correct, notwithstanding the fact that he now knew that the property sold in 2006 for approximately $160,000.
  1. [307]
    Annexure 11 is the “Defendants Summary of the Keenan Street Project”.  Annexure 12 is Mr Gwynne’s “Comparisons of the Plaintiffs and Defendants Keenan Street Summaries”.  In Annexure 11 the “Value of remaining property at 43 Keenan Street” is given as $160,000.  I note that in Annexure 10, which is the “Plaintiffs Summary of Keenan Street Project”, the same value is given.  Mr Gwynne has then transferred these figures into Annexure 12, his comparison document.
  1. [308]
    When cross-examined about this, Mr Gwynne actually said:

“That $160,000 was based on … the defendants summary at my annexure 11.”

This is not a statement that he had estimated or assumed this amount as being correct, notwithstanding that he knew what the property sold for.  He is simply restating the figures provided by the parties and used them for comparison.  However, when he made his assessment in Table 11[287] he relied on the true sale price of $162,000, which is established by Appendix Y.

  1. [309]
    Therefore, the reference by him in Annexures 11 and 12 to $160,000 did not erroneously affect his final assessment.
  1. [310]
    Mr Quinn makes a submission in relation to Annexure 7, which was taken from a letter by the plaintiffs’ solicitors to the defendants’ solicitors and contains the following in relation to the Tilley Street Project:[288]

“A copy of a schedule compiled by your client’s accountant, Graham Donnelly of Profit Power, Accountants is enclosed and marked ‘B’.

Our client agrees with most of the figures contained in this schedule, except for:

  1. (a)
    The amount that should be recorded at the conclusion as being owed by our client to your client is 50% of $17,924.96 (being $8,962.48), less the assessed loss of $510.24 – which was the amount calculated by Mrs Foster and Mrs Cusworth from their full accounting of this project’s invoices and payments.
  1. (b)
    The final figure of $52,298.96 as provided by Mr Donnelly is incorrect as your client has already been paid $189,441.20 (see ‘Payments received’ four lines from the bottom of the schedule) from the proceeds of the sale of this property, thus leaving a shortfall to him of 50% of $17,924.96, less $510.24 = $8,452.24.”

There is an asterisk to the right of (b) and underlining running to the right commencing at “.24” where it first appears in the last line.

  1. [311]
    When cross-examined, Mr Gwynne could not be sure if he had marked the page in this way.  However, he agreed that he would have taken “some” notice of the two paragraphs.
  1. [312]
    Consequently, Mr Quinn submits that he admitted that he took a “lot” of notice of this, notwithstanding it was a mere assertion by the plaintiffs’ solicitors, in producing his report.
  1. [313]
    Proceeding on the basis of his evidence that he took some notice of this, Mr Gwynne’s reference to Annexure 7 in his report at paragraph 7.2 is as follows:

“The Defendant has determined the amount of $52,298 based on the schedule at Annexure 8.  The Plaintiffs calculation substantially relies on this, however, the Plaintiff considers that certain transactions have not been correctly treated (Annexure 7).”

  1. [314]
    Mr Gwynne then proceeds to summarise how, based on the information provided and adjustments made, he assessed that the plaintiffs owed the defendants $42,586 in relation to the project.
  1. [315]
    Again, as Mr Johnstone observes, Mr Forster was not challenged that the propositions in Annexure 7 were incorrect.  Ms Forster was not questioned about it.  Mr Cusworth was not asked about it or shown Annexure 7.  Therefore, he gave no evidence to contradict this.  In these circumstances, I do not consider that Mr Gwynne erred by taking some notice of the two paragraphs in the annexure.  Further, I do not consider that it erroneously affected his final assessment.
  1. [316]
    Mr Quinn then makes a submission that when questioned about annexure 13 and the duplicated costs being identified only as $870, which was contrary to his calculations for the interest adjustment, Mr Gwynne stated that he relied on the statement of claim and did not seek any further information from any party.
  1. [317]
    This submission appears to join two separate matters about which Mr Gwynne was questioned.  The reference to calculations for interest adjustment must be to paragraph 6.4.3, which I have previously addressed.  He was questioned about this adjustment again immediately after he was cross-examined concerning the duplicated costs, but clearly told Mr Quinn that the amounts of duplicated costs were not used to adjust the interest.  Consequently, I will address only the submission about the duplicated costs.
  1. [318]
    In Annexure 13, which is Mr Gwynne’s analysis of the Keenan Street Project, he has omitted what he has labelled as “duplicated costs” in the sum of $3,110.50 (rounded up to $3,111) from his assessment.  Mr Quinn pointed out that in Annexure 10 (Plaintiffs Summary of Keenan Street Project) only two items are listed as duplicated fees.  These are a bank fee of $750 and pest control of $120.  Mr Quinn pointed out that the other two amounts which were included to total $3,111 were “Wright Brothers” and a refund for temporary fencing, being amounts of respectively $1,818 and $422.50.  In fact, the question asked was not whether the duplicated costs were identified as only $870 but whether the other two amounts were included at his insistence based on his review of the MYOB summary.  Mr Gwynne’s response was that they were not included on his insistence, on the basis that they had been eliminated by the plaintiffs.[289]
  1. [319]
    Consequently, as Mr Johnstone submits, Mr Quinn’s point is really that the wrong label was applied by Mr Gwynne in saying that the whole of the $3,111 was duplicated costs, but that Mr Quinn did not suggest to him that the accounting was wrong.
  1. [320]
    Of course, it may also be that Mr Quinn was again saying that Mr Gwynne was relying on information that he obtained from the plaintiffs and did not make any further inquiries.
  1. [321]
    However, in relation to this, Mr Forster gave evidence that he had produced Annexure 10 and explaining why he had eliminated these four items of cost totalling $3,111 from the costs claimed to have been incurred by the defendants.  Again, neither he nor his wife were challenged that this evidence was incorrect.  Mr Cusworth was not asked about or shown Annexures 10 or 13.  Therefore, the evidence was uncontradicted.  Accordingly, I find that the items identified by Mr Forster did not relate to the Keenan Street Project.  Therefore, Mr Gwynne was not incorrect in proceeding on this basis and to make an adjustment of $3,111 in calculating the amount owing, however he labelled this sum.
  1. [322]
    The penultimate submission about Mr Gwynne’s evidence related to a handwritten notation which appeared on Appendix B,[290] which is described by Mr Gwynne as “Forsters Outlays 5 Lilla Street and 42 Woodcliffe Street”.  The document itself has another written notation, “Forsters Outlays “SOC1” “A” Statement of Claim”.  This document was prepared by Ms Forster with Mr Forster’s assistance on the basis of bank statements and receipts received.  She said that a copy was given to the Cusworths but there was no discussion about it.[291]  This onepage document has a typed heading of “5 Lilla Street” above columns headed “Date”, “Item”, “Money in”, “Money out” and “Balance”.  The handwritten notation to which the submission relates is “& Woodcliffe”, which has been inserted after “5 Lilla Street” in the heading.  Ms Forster also said that it was not in her handwriting.[292]
  1. [323]
    Annexure B contains figures from 22 November 2000 to 30 November 2003.  The first entry is a $10,000 deposit for 5 Lilla Street, dated 22 November 2000.  This is shown as being reimbursed to the same value on 14 November 2001.  The next three entries, one on 22 November 2000 and two on 28 November 2000, are deposits for Woodcliffe Street totalling $5,000.  These are also shown as being reimbursed to the same value on 5 March 2002.  There are no other entries identified as relating to Woodcliffe Street.  Ms Forster said these were the only expenses in this document which she identified as being attributable to Woodcliffe Crescent.[293]
  1. [324]
    The other entries are generally monthly interest payments. Although, there are items for rates adjustment, solicitors outlays, stamp duty, insurance, interest term deposit and keys cut Lilla Street. The final balance is $7,747.68. This has been transferred into Annexure 4, which is Mr Gwynne’s calculation of the contribution of the joint venture parties and his assessment of what was owed by the defendants to the plaintiffs in relation to the Lilla Street Project.
  1. [325]
    In cross-examination, after agreeing that the Woodcliffe Crescent notation was not written by him, Mr Gwynne said that he did not do an exercise of pulling out the different expenses related to 5 Lilla Street or 42 Woodcliffe Crescent.[294]
  1. [326]
    On this basis, Mr Quinn submits that when questioned about Annexure B and the handwritten notation, he stated “that he did not make that notation and admitted that he did not go through that document and identified which expenses related to Lilla Street and which related to Woodcliff [sic] nor did he seek clarification or instructions from the plaintiffs.”[295]
  1. [327]
    The issue of who added the handwritten notation is irrelevant to Mr Gwynne’s final assessment.  For the same reasons as I have previously given, there is no basis for me to conclude that the fact that Mr Gwynne did not seek clarification from the plaintiffs about this erroneously affected his assessment.
  1. [328]
    Perhaps from Mr Quinn’s response to me during oral argument, his real complaint is that Mr Gwynne did not allocate the expenses between the two properties.[296]
  1. [329]
    However, in my view, it was not necessary for him to do so as I accept Ms Forster’s unchallenged evidence that the only expenses in the document attributable to 42 Woodcliffe Crescent which was bought from her by Ampcorp were those which in total were $5,000 for the deposit and the subsequent reimbursement of that amount.  Mr Cusworth concluded in cross-examination that he may have reimbursed her for the deposit paid by her when she purchased that property.[297]
  1. [330]
    Consequently the “Money in” and Money out” items in relation to 42 Woodcliffe Crescent cancel each other out, and there is nothing in the balance calculated in this document that relates to this property.  That balance relates solely to the Forsters’ outlays for the 5 Lilla Street property.  Therefore there was no need for Mr Gwynne to allocate the expenses between these two properties in making his assessment of what was owed by the defendants to the plaintiffs in relation to the Lilla Street Project.
  1. [331]
    The final submission related to Mr Gwynne’s declaration that he had made all necessary inquiries.  Mr Quinn referred to his evidence that he had relied on the material that he had been briefed with.  He submitted that Mr Gwynne admitted:

“he had in fact not made any enquiries of any person and had relied entirely on the brief provided to him to prepare his report and that such enquiries as identified above would have been relevant and that he did not make any such enquiries.”[298]

  1. [332]
    However, Mr Gwynne did not say that he had not made additional inquiries of any person.  His evidence was that he had made inquiries of Mr Forster.[299]  Further, his declaration was that he had made all of the inquiries he believed were necessary.[300]
  1. [333]
    While it is true that he accepted not making any inquiries of the defendants, it is difficult to see why such an inquiry was necessary or would be of any value in light of the evidence of Mr Cusworth’s 27 November 2007 affidavit that the defendants did not have any documents in their power, possession or control that are relevant to the proceedings.
  1. [334]
    Further to his, when he was briefed, he was told that the documents with which he was provided were the only documents that were available; and he therefore understood that he had been briefed with all relevant documents that were available. Therefore, it is difficult to see why it would be necessary or of value to seek any further instructions from the plaintiffs or the instructing solicitors, as was suggested to him in crossexamination.
  1. [335]
    As Mr Johnstone also observed during oral argument, there was no suggestion by Mr Cusworth or in crossexamination of Mr Gwynne that there were any other documents on which he should have relied, nor was he shown any documents which it was suggested he should have taken into account in preparing his report.
  1. [336]
    Therefore, as I have previously concluded, I do not consider that the fact Mr Gwynne did not make further inquiries of any of the parties or instructing solicitors to determine if further information was available involved an error that affected his assessment.  In my view, he was correct in saying that he made all of the inquiries he believed were necessary and appropriate, and there is no evidence that had he made any further inquiries that this would have revealed any additional documents or other information which would have been relevant to or affected this assessment in any way.
  1. [337]
    On the basis of this analysis I reject Mr Quinn’s criticism of Mr Gwynne.  I find that he is a reliable witness and his report is a proper account for the purposes of determining whether the circumstances are such that defendants ought to account to the plaintiffs.
  1. [338]
    In the course of this analysis I have also resolved a number of the issues which were said to be in hot dispute between the parties as to what the financial outcome of the joint venture was. Ultimately I consider that I am in a position to resolve all disputed questions of fact so as to resolve any dispute as to the liability to pay.
  1. [339]
    On the basis of Mr Gwynne’s evidence, which is the only expert accounting evidence placed before the court as to what the account of the joint venture is, I find that the circumstances are such that the defendants ought to account to the plaintiffs in respect of the joint venture entered into between them in October 2000.

Whether there is any dispute as to the fundamentals on which the liability to pay would be based[301]

  1. [340]
    In determining this question which I have previously identified, I address the balance of the submissions advanced by Mr Quinn.
  1. [341]
    It was submitted that there was no evidence before the court as to how the parties reported the dealings in their separate financial statements and tax returns, and there is a clear dispute between the parties as to the application of GST, and that remains unresolved, even by Mr Gwynne.
  1. [342]
    The fact is that neither party placed evidence before the court as to how they reported their dealings concerning the joint venture in their separate financial statements and tax returns. I can only base my decision on the evidence that was placed before the court, absent any speculation as to what other evidence there may be, and what it may have revealed. Similarly, Mr Gwynne can only base his assessment on the information made available to him, in circumstances where there was no suggestion by Mr Cusworth or in his crossexamination that there were in fact any other documents which he should have taken into account.
  1. [343]
    In relation to the approach to the application of GST, the only specific criticism that was made of Mr Gwynne’s approach to this is addressed at paragraphs [293] to [294] above.  For the reasons given in paragraph [294], there is no basis for me to conclude that Mr Gwynne erred in proceeding on the basis of the assumption that he made about this or treating GST in the manner he did in making his assessment.  As I pointed out again, no documents were produced with contradicted his approach to this issue.
  1. [344]
    Mr Quinn places particular reliance on the proposition arising from Warman International Ltd v Dwyer that in deciding whether to order an account due allowance must be made for the fiduciary’s skill contributing to the account and the other direct and indirect financial and noncontributions by the defendants.[302]
  1. [345]
    In relation to this, he submits that in considering these matters the court will have regard to:

“the evidence of Mr Cusworth and also the admission made by Mr & Mrs Forster in cross examination that the contribution of the Defendants to the overall project significantly outweighed the contributions of the Plaintiffs when having regard to both financial and non financial matters and indirect and direct contributions by virtue of the fact that the Plaintiffs’ business [sic] suffered as a result of its involvement in the Joint Venture and same was admitted by the Plaintiffs.”[303]

  1. [346]
    I do not consider that Mr and Mrs Forster made any such admissions.  In any event it is relevant that in Warman International Ltd v Dwyer it was said:

“It is for the defendant to establish that it is inequitable to order an account of the entire profits.”[304]

It was also said:

“However as a general rule, in conformity with the principle that a fiduciary must not profit from a breach of fiduciary duty, a court will not apportion profits in the absence of an antecedent arrangement for profit sharing but will make allowance for skill, expertise and other expenses.” (my emphasis)[305]

  1. [347]
    In the present case, irrespective of who has the burden of proof, there is an antecedent arrangement for profit sharing as set out in paragraph [3] of the agreed statement of facts.  It is this which governs the apportionment of profit (or loss) between the parties.  It is expressed that this is to occur equally, taking into account the costs incurred by each.  This overrides making any allowance for skill, expertise and other expenses, except to the extent that they are quantifiable costs of the joint venture.
  1. [348]
    It is clear from Mr Cusworth’s evidence that this is the basis on which he contributed his skill and expertise as a builder to renovate the houses at Tilley and Keenan Streets.  Although he was doing this through Ampcorp at cost plus wages with no margins, commissions, overheads, or profits, he made this decision because it was hoped to get a profit at the end of the joint venture in which both parties would share.  He accepted that he was making a business decision to proceed in this manner and also not to tender for third party building jobs.
  1. [349]
    Therefore it was the antecedent arrangement for profit sharing which governed the joint venture, and which enabled the costs incurred by each of the parties to be taken into account so as to equalise the profit (or loss) between them. It is these costs which have been taken into account by Mr Gwynne in assessing the amount owed by the defendants to the plaintiffs.  In these circumstances the fact that the defendants contributed skill and expertise to the joint venture and their business suffered as a result is not an indirect cost which the defendants are entitled to have taken into account in deciding whether to order an account in respect of the joint venture or the quantum of that account.
  1. [350]
    As I have indicated Mr Quinn also submitted that with regard to the “clean hands” doctrine, the plaintiffs[306] were in breach of any fiduciary relationship that I find existed, by not disclosing the benefits they received from arranging finance for the joint venture activities.  It is therefore submitted that it is not equitable to allow the plaintiffs to claim and be compensated for an infringement of their alleged rights whey they have in fact committed the very same act.
  1. [351]
    However, I agree with Mr Johnstone’s submission that the fact of the plaintiffs receiving ongoing commission payments as a result of Mr Forster setting up the business line of credit in Ampcorp’s name for the Keenan Street Project, through Syatt Pty Ltd of which he was a director,[307] was an arrangement which was independent of the joint venture.  As he submits, it is a consequence of Mr Cusworth or Ampcorp choosing to have Mr Forster, through this company, arrange the finance for the purposes of the defendants’ contribution to the joint venture, rather than going direct to the bank or using the services of another mortgage broker.  Mr Forster gave unchallenged evidence that he was the Cusworths’ finance broker.  Mr Cusworth said that after the commencement of the joint venture all of the sourced funding was sorted out by Mr Forster in his capacity as my finance broker.[308]  Therefore Mr Cusworth would have expected in accordance with normal finance broking arrangements that a commission would be received by the plaintiffs for arranging this finance for the purposes of the joint venture.  In these circumstances neither Mr nor Ms Forster was not making a profit out of, or by reason of, their fiduciary position by receiving these payments without the knowledge and assent of the defendants and in conflict with their interests.[309]  Neither the crossexamination nor the evidence Mr Cusworth suggests otherwise.  For completeness I observe that as Mr Johnstone submitted, Mr Cusworth never asserted that the commissions should be contributed to the joint venture accounts or that they were ever the property of the joint venture.
  1. [352]
    Therefore I reject Mr Quinn’s argument that it is not equitable to allow “the plaintiffs” to obtain an account from the defendants.
  1. [353]
    Finally, Mr Quinn relies on the equitable defence of waiver in respect of the Lilla Street Project on the basis that the evidence shows that the parties had agreed, that receipt by each of them at a discounted price in the ultimate development was fair and reasonable compensation for whatever their involvement may have been in the joint venture; and in relation to the two remaining projects the defendants are entitled to an equitable set off of the financial benefit received by the plaintiffs for arranging finance.
  1. [354]
    However, neither the defence of waiver nor the set off has been pleaded.[310]  They have emerged for the first time in submissions.  This is notwithstanding the fact that r 150(1)(s) of the UCPR specifically requires waiver to be pleaded; and as stated in Civil Procedure Queensland Vol 1 at 8303, “The set off should be included as part of the defence and the general rules as to pleading should be followed:  rr 149-55 and particulars where necessary should be supplied.”  In my view failure to plead either of these matters breaches r 149(c) which requires that each pleading must state specifically any matter which if not stated specifically may take another party by surprise.
  1. [355]
    In any event I agree with Mr Johnstone that the assertion of the defence of waiver is inconsistent with the defendants’ own case which as set out in the Irish Bentley letter of 5 July 2005 acknowledges that they owe $22,615.77 to the plaintiffs.  In other words they accepted that notwithstanding that pursuant to the Heads of Agreement the parties were to received $220,000 cash plus the unencumbered title to a ground floor unit in the development, on the basis of the terms of the agreement the profit (or loss) was still to be shared equally between the parties, through a payment calculated by reimbursing each party for their costs in respect of the project.  The defendants have simply calculated a lesser payment than the $25,306 claimed by the plaintiffs.  Also consistent with this approach is Annexure 3 to Mr Gwynne’s report (Defendants Summary of Woody Point Project).  This is further supported by Ampcorp’s letter (with Mr Cusworth recorded as Director) of 21 November 2003 to the Forsters identifying the Lilla Street Project as part of the joint venture and stating, “After careful consideration, we have consulted our accountant and prepared a reconciliation of the contributions, gains and losses of each of us with regard to each of the abovementioned projects.”  On the basis of these calculations and in the 7 January 2004 letter from Mr Cusworth on behalf of Ampcorp to the Forsters, the Lilla Street Project is referred to as part of the project and the options suggested for finalisation of the venture include, “Ampcorp would also pay two additional amounts of $22,300.70 and $510.24 being amounts owing to you on the Double Bay Project and Tilley Street respectively.”  As previously indicated, the Double Bay Project is another name for the Lilla Street Project.  Perhaps the point is best made by Mr Cusworth’s evidence 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 each reached a different conclusion.
  1. [356]
    Further, Mr Forster gave unchallenged evidence as summarised at paragraphs [86] to [90] above about discussions between the parties with a view to the reconciliation of the Lilla Street Project which resulted in acceptance of Mr Cusworth’s suggestion that payment be deferred until the completion of the Keenan Street Project.  Mr Cusworth’s participation in these discussions is inconsistent with Mr Quinn’s suggestion that there was a waiver in the profit (or loss) sharing arrangements calculated in accordance with the terms of the joint venture agreement due to the Heads of Agreement with Group Kildey.
  1. [357]
    Mr Cusworth gave no evidence in support of this defence.  Accordingly even if the defence of waiver had been properly pleaded I would reject it as inconsistent with the evidence.
  1. [358]
    I have come to the same conclusion about the equitable set off which is now claimed. My reasons are the same as set out in paragraph [351] above in rejecting Mr Quinn’s submission that the receipt of undisclosed commissions by the plaintiffs as a result of Mr Forster, through Syatt Pty Ltd setting up the business line of credit in Ampcorp’s name, make it inequitable to allow the plaintiffs to obtain an account from the defendants.
  1. [359]
    By addressing these issues and coming to the conclusions stated I have resolved the disputes as to the fundamentals on which the liability for the defendants to pay the plaintiffs in respect of the account depends.
  1. [360]
    For completeness I note that having regard to the manner in which the case was conducted and argued the issues identified in paragraphs [22], [23], [26] and [27] above do not affect this conclusion.  I do not consider that paragraphs [22] and [23] affect Mr Gwynne’s conclusion and he was not the subject of cross-examination or criticism based on his approach to this issue.  In relation to paragraphs [26] and [27] the case proceeded on the basis that the relevant Heads of Agreement was that entered into on 24 and 25 April 2002, and not that of 22 June 2001 which is referred to in the amended defence and counterclaim.

Conclusion

  1. [361]
    In these circumstances I find that the essential requirements for an account have been established as follows:
  1. (a)
    that at the relevant times the parties stood in a fiduciary relationship or a relationship of confidence such as to give rise to an entitlement to account;
  1. (b)
    that the defendants ought to account to the plaintiffs; and
  1. (c)
    that no dispute remains as to the fundamentals on which the liability to pay are based.
  1. [362]
    In accordance with s 527(2) of the UCPR I find:[311]
  1. (i)
    that the series of transactions of which the account is to be taken are those in relation to a joint venture entered into between the plaintiffs and the defendants in October 2000 in respect of which three projects were undertaken and completed, being:
  1. (a)
    the Lilla Street Project
  1. (b)
    the Tilley Street Project; and
  1. (c)
    the Keenan Street Project.
  1. (ii)
    the basis of the account is the report of Mr Gwynne (Exhibit 2);
  1. (iii)
    the period of account is from and including October 2000 to and including 5 July 2005.[312]
  1. [363]
    On the basis that I find Mr Gwynne to be a reliable witness and that his report is a proper account for this purpose, and rejecting the criticisms made of the basis and results of his calculations and assessments I accept this report as accurately reflecting the joint venture accounts.  I consider that it is a fair and equitable calculation of the plaintiffs’ interest in the joint venture between the parties.  Therefore I am able to determine the quantum of the account.  The quantum I determine in accordance with that report is $62,557.
  1. [364]
    Therefore I order that 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.

Breach of Contract

  1. [365]
    In the light of this finding it is not necessary for me to determine the alternative claim for breach of contract.

Counterclaim

  1. [366]
    It also follows that I reject the defendants’ contentions that the plaintiffs and the defendants added by counterclaim are jointly and severally indebted to the defendants for the sum of $11,799.99 or that they are liable to the defendants for an amount to be assessed upon taking an account of the undertakings of the joint venture. Therefore I dismiss the counterclaim.

Other Orders

  1. [367]
    I order that the defendants pay the plaintiffs interest pursuant to s 47 of the SCA from 5 July 2005.[313]

Costs

  1. [368]
    The successful plaintiffs seek an order that the defendants pay their costs of the proceedings. In respect of the counterclaim costs are sought on the indemnity basis.

Costs of the claim

  1. [369]
    In relation to the plaintiffs’ claim the starting point is the general rule expressed in r 681(1) of the UCPR that costs should follow the event.  As the plaintiffs have been wholly successful there is no reason to depart form this rule, or the ordinary position under r 702(1) that costs be assessed on the standard basis.

Costs of the counterclaim

  1. [370]
    In relation to the counterclaim, the position of the defendant by counterclaim also has to be considered.
  1. [371]
    Under r 703(1) of the UCPR I have a discretion to order that costs be assessed on the indemnity basis.  The principles relevant to the recovery of indemnity costs are well established.  They are found, for example, in the judgment of White J, with whom the other members of the court agreed, in Di Carlo v Dubois & Ors [2002] QCA 225, applying Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225, Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 and Rosniac v Government Insurance Officer (1997) 41 NSWLR 608.
  1. [372]
    In Di Carlo v Dubois her Honour said, commencing with a reference to Shepherd J in Colgate-Palmolive:

“[37] …At pp 232-4 his Honour recognised that the categories in which the discretion may be exercised are not closed.  Woodward J at 637 in Fountain said that there needs to be some special or unusual feature in the case to justify a court departing from the ordinary practice.  Sheppard J instanced the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud; misconduct that causes loss of time to the court and the other parties; the fact that the proceedings were commenced at or continued for some ulterior motive; or in wilful disregard of known facts; or clearly established law; the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions; the imprudent refusal of an offer to compromise; and costs against a contemnor.

[38] The New South Wales Court of Appeal in Rosniac v Government Insurance Office (1997) 41 NSWLR 608 noted at 616 that the discretion to depart from the usual party and party basis for costs is not confined to the situation “of what Gummow J described as the “ethically or morally delinquent party”’ in Botany Municipal Council v Secretary, Department of the Arts, Sport, the Environment, Tourism and Territories (1992) 34 FCR 412 at 415.  Their Honours observed however, that:

‘… the court requires some evidence of unreasonable conduct, albeit that it need not rise as high as vexation.  This is because party and party costs remain the norm, although it is common knowledge that they provide an inadequate indemnity.  Any shift to a general or common rule that indemnity costs should be the order of the day is a matter for the legislature or the rule maker.’”

  1. [373]
    The basis for the plaintiffs’ argument that the counterclaim must be dismissed with indemnity costs is advanced in their Outline of Argument as follows:

“59. The defendants expressly declined to lead expert evidence and did not lead any accounting evidence.

  1. The defendants, have not challenged the report at all.
  1. Mr Gwynne also examined the account prepared by the defendants or their account [sic] at Annexure 11 and contained at page 47 of his report.  His expert evidence was that as an accountant, he could not understand at all how the final calculations had been made in that document.  He said that those calculations did not make sense at all.  To try and make sense of them, he reproduced them in table 12 at paragraph 17 and said that the defendants’ summary appeared to be ‘flawed’.
  1. He was not challenged about this evidence in cross-examination.  He was not asked any questions about table 12 or Annexure 11.
  1. Mr Cusworth did not say anything about Annexure 11, not even to swear to its accuracy.  Mr Cusworth similarly did not give any evidence about the other amounts he claims to owe the plaintiffs, or that the plaintiffs owe him, (for example, he was not asked anything about annexure 14 at page 53 of Mr Gwynne’s report which is the basis of the defendants’ counterclaim, the counterclaim must be dismissed with indemnity costs.)”
  1. [374]
    The plaintiffs then went on to argue in paragraph 64 that:

“The Court should give judgment in favour of the plaintiffs for an account in the sum assessed by Mr Gwynne.  The Court has observed Mr Gwynne and the fact that his report is unchallenged except to the extent that questions were asked about certain assumptions therein, and about which Mr Forster gave evidence which was not contradicted nor challenged which demonstrated the correctness of those assumptions.”

  1. [375]
    In finding in favour of the plaintiffs I have essentially accepted this argument.
  1. [376]
    The issue of the reliability of Mr Gwynne’s evidence and whether it could be relied upon as a proper account for the purposes of the claim was inextricably linked with the counterclaim as demonstrated by my conclusion that my finding in favour of the plaintiffs on this issue also determined the counterclaim in their favour.
  1. [377]
    As Mr Quinn recognised if I was to find in favour of his submissions that an account could not be ordered the counterclaim did not exist, but if I ordered that an account be taken the counterclaim stands.  Presumably this was a reference to my ordering that an account be taken by ordering the appointment of a special referee because I was unwilling to give judgment for the amount determined by Mr Gwynne.  In that case as recognised by the plaintiffs in the terms of the draft order which they provided for this purpose, an issue for determination would be:

“the total of amount of the Equalisation Payments (Total Payment Due) due from the plaintiffs to the defendants, or visa versa, in respect of the joint venture.” (my emphasis)

Therefore this terminology allowed for the possibility of the special referee determining that the total payment in respect of the joint venture, would be due from the plaintiffs to the defendants.

  1. [378]
    In these circumstances the defendants were entitled to allow the counterclaim to stand for my consideration on the basis, as submitted by Mr Quinn:

“If there is going to be an account, my client ought not be limited to the amount they had previously claimed, if it ultimately turned out to be that some money was owed to them.”

  1. [379]
    I consider, that as in the case of the claim, the issue of whether Mr Gwynne’s evidence was reliable and could be relied upon as a proper account was also relevant to the determination of the counterclaim; and therefore it was not unreasonable for Mr Quinn on the defendants’ behalf to challenge the assumptions upon which Mr Gwynne’s expert opinion was based to assist in this determination.
  1. [380]
    Although I have reached a contrary conclusion in relation to Mr Gwynne’s evidence, the extent to which it has been necessary for me to analyse each of the criticisms advanced of his evidence and methodology by Mr Quinn confirms that this was not an unreasonable approach.  I have formed this view notwithstanding the criticisms that have been made by the plaintiffs in paragraphs 59-63, which ultimately must relate to the way in which Mr Quinn chose to present the defendants’ case, including through the questions he asked of all witnesses.  I consider that notwithstanding this Mr Quinn was entitled to make these submissions about the evidence of Mr Gwynne on the basis of his cross-examination and seek my adjudication in respect of them.
  1. [381]
    I do not consider that the conduct of the case on behalf of the defendants comes within any of the principles or guidelines identified in Colgate-Palmolive [314] or otherwise is unreasonable, or to adopt the language of Chesterman J in Todrell Pty Ltd v Finch (No. 2) [2008] 2 Qd R 95 at [4] that this is a case where there is “something irresponsible about the conduct of the losing party which exposed its opponent to costs which should, in fairness, be ordered on the indemnity basis.”  To also adopt the language in Fountain I do not find that there is a special or unusual feature in this case to justify me departing from the ordinary practice.
  1. [382]
    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.
  1. [383]
    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.
  1. [384]
    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.”
  1. [385]
    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.
  1. [386]
    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.
  1. [387]
    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.
  1. [388]
    As such the addition of Mr Forster as a defendant to the counterclaim was neither unreasonable nor did it prolong the case.
  1. [389]
    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

  1. [390]
    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.
  1. The counterclaim is dismissed.
  1. 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.
  1. 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.

Footnotes

[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.

[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.

[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.

[4]These projects are more fully described in the statement of claim as:

 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”).

[5]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).

[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.

[7]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.

[8]Filed on 25 March 2009.

[9]Filed on 26 March 2009.

[10]Filed on 26 March 2009.

[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.

[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.

[18]T 3-76.

[19]T 3-42.

[20]T 2-21.

[21]T 3-86.

[22]T 3-22.

[23]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 vendors contracts binding it to deliver unencumbered title to Units 2 and 3 in the completed development.”

[24]This includes his agreement that paragraph 20(c) of the defence and counterclaim be struck out.

[25]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.

[27]Where there is a difference between the evidence of the Forsters and Mr Cusworth, this is identified.

[28]T 2-18.

[29]T 2-92.

[30]T 2-19.

[31]T 3-66.

[32]T 2-19.

[33]T 2-20.

[34]T 3-67.

[35]T 3-66.

[36]T 3-76.

[37]T 3-95.

[38]T 3-76.

[39]T 3-77.

[40]T 2-22.

[41]T 3-3.

[42]T 3-9.

[43]T 2-24.

[44]T 2-94.

[45]T 2-95.

[46]T 3-42.

[47]Ibid.

[48]T 2-22.

[49]Ibid.

[50]T 2-23.

[51]T 2-23.

[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.

[57]T 3-24.

[58]T 3-30.

[59]T 3-34.

[60]T 2-25.

[61]T 2-34.

[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.

[66]T 2-25.

[67]Ibid.

[68]T 2-24.

[69]T 3-43.

[70]T 3-30; T 3-52.

[71]T 3-30.

[72]T 3-18.

[73]T 3-85.

[74]T 2-29; 3-18; 3-52.

[75]T 3-57.

[76]T 3-82.

[77]T 3-55.

[78]T 3-55.

[79]T 3-83 with reference to Mr Gwynne’s report at p 84.

[80]T 2-25.

[81]T 2-97.

[82]Mr Gwynne’s report at p 123.

[83]T 3-46.

[84]T 3-47.  See also Exhibit 23, which are notes of a meeting with Mr Kildey.

[85]T 2-24.

[86]T 3-48.

[87]See Exhibit 25.  As indicated, this is inconsistent with the date of 22 June 2001 mentioned in the Defence and Counterclaim.

[88]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.

[90]T 2-27.  The settlement statement is dated 19 September 2002.

[91]T 2-27.

[92]T 3-31.

[93]T 2-25 to 2-26; see also Heads of Agreement, Clause 8.

[94]T 2-26.

[95]T 3-15.

[96]T 2-26.

[97]T 3-15.

[98]T 2‑26.

[99]T 2-27.

[100]T 3-77.

[101]T 2‑28 to 2‑29.

[102]T 2-29 to 2-30.

[103]T 3-4.

[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”).

[105]T 2-31.

[106]T 2-32.

[107]T 2-31.  The modified document is at p 84 of the expert report.

[108]T 2-32.

[109]T 2-32 to T 2-33.

[110]T 3-31.

[111]T 3-33.

[112]T 3-59 to 3-60.

[113]T 3-77 to 3-78.

[114]T 2-33.

[115]T 3-60.

[116]Ibid.

[117]T 2-33.

[118]Ibid.

[119]Ibid.

[120]T 2-34.

[121]T 2-98; T 3-64.

[122]T 3-64.

[123]T 3-65.

[124]T 2-34 to 2-35.

[125]T 2-35.

[126]T 3-8.

[127]T 2-35.

[128]T 2-36.

[129]T 2-40; 3-24.

[130]T 2-98.  This is a mortgage broker business (see T 2-94).

[131]T 2-35.

[132]T 2-36.

[133]T 3-65.

[134]T 2-37.

[135]Ibid.

[136]T 3-78.

[137]T 3-81.

[138]T 3-69.

[139]T 2-37.

[140]T 3-80.

[141]T 2-37.

[142]Ibid.

[143]T 3-65.

[144]T 3-78 to 3-79.

[145]T 2-38.

[146]T 2-40.

[147]T 3-7.

[148]T 2-40.

[149]Ibid; T 2-41; T 2-47; see also expert report at 117.

[150]T 3-73.

[151]T 2-44 to 2-45; this is Appendix J at 100-107 of the expert report.

[152]T 2-35.

[153]T 3-25.

[154]T 2-38.

[155]T 2-39.

[156]Ibid; T 2-56; T 3-4.

[157]T 3-3 to T 3-4.

[158]T 2-39; 2-94.

[159]T 2-59.

[160]T 3-19.

[161]Exhibit 9.

[162]T 2-39.

[163]T 2-42.

[164]Ibid.

[165]T 2-58.

[166]T 3-4.

[167]T 3-9.

[168]T 2-43.

[169]T 3-74 (evidence of Mr Cusworth).

[170]T 2-43 to 2-44.

[171]T 3-6.

[172]T 2-46.

[173]T 3-6.

[174]T 2-46.

[175]T 2-47.

[176]Ibid.

[177]The letter is Exhibit 7.

[178]T 2-47 to 2-48.

[179]T 2-50.

[180]T 2-48.

[181]T 2-61; and the email which is Exhibit 11.

[182]T 2-51 to T 2-52; and the email which is Exhibit 12.

[183]T 2-60.

[184]Exhibit 13 is the document that Mr Cusworth handed to Mr Forster with the phone number of each person.

[185]T 2-64.

[186]T 2-64 to T 2-65; and the letter which is Exhibit 16.

[187]T 3-92.

[188]Exhibit 17.

[189]T 2-67.

[190]Exhibit 18.

[191]T 2-70; T2-72; Mr Forster said that he had not been present at this meeting which Mr Cusworth had told him about.  He said that he had not been invited to this meeting.

[192]T 2-74 to T 2-75; and the email which is Exhibit 19.

[193]T 3-73.

[194]T 2-54 to T 2-55; and the letter which is Exhibit 8.

[195]T 3-91.

[196]T 2-57.

[197]T 2-75 to T 2-76.

[198]T 2-76; T 2-79.

[199]T 3-4.

[200]T 3-12.

[201]T 2-77.

[202]Ibid.

[203]T 3-14.  He had met with Mr Cusworth in January 2005 (see T 2-77).

[204]Exhibit 21.

[205]T 2-75.

[206]T 2-78.

[207]T 2-75.

[208]T 3-94.

[209]His qualifications were admitted at T 1-32.

[210]An amended report including those amendments was substituted for the original report during the trial.

[211]T 1-16.

[212]T 1-36.

[213]Exhibit 2, paragraph 2.5 at 6.

[214]Ibid, paragraph 2.1 at 5.

[215]Ibid, paragraphs 10.1 to 10.2 at 21.

[216]Ibid, paragraph 4.1(ii) at 7.

[217]T 1-64.

[218]T 1-67.

[219]See Outline of Argument for Plaintiffs; T 4-20 to 4-27; 4-42 to 4-43.

[220]As indicated, Mr Johnstone conceded that equitable damages are no longer an issue for consideration.

[221]Exhibit 2.

[222]This is a reference to paragraphs 27 and 28 of the amended defence and counterclaim which are summarised at paragraph [10] above.

[223]Section 31 of the PA provides that:

“(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.

[224]This was also applied in Fraser Edminston Pty Ltd v A.G.T. (Qld) Pty Ltd [1998] 2 Qd R 1 per Williams J at 11.

[225]Cited with approval by Muir J in Mulherin as t’ee for the HD Mulherin Family Trust v Quinn Villages Pty Ltd [2007] QSC 231 at [20].

[226]Exhibits 7, 8 and 16.

[227]This is a reference to Mr Cusworth’s cross‑examination at T 91-92.

[228]This is a reference to Exhibits 11, 14, 15, 17 and 20.

[229]Exhibit 2 at 47.

[230]Ibid at 20.

[231]Ibid at 53.

[232]See paragraph [28] above.  The admission is subject to denials as to its terms.

[233]Uniform Civil Procedure Rules 1999 (UCPR) rr 527 and 528.

[234]Rule 501 of the UCPR.

[235]T 4-33.

[236]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.”

[237]However, as Mr Johnstone correctly submits, this election arises between an account and equitable damages, and not in respect of an account and damages for breach of contract, as in this case.  This is particularly clear from Farah.  In any event, as Mr Johnstone submits, if it is necessary to make an election, this is done by pleading in the alternative.

[238]Mr Johnstone correctly responds at T 4-24 to 4‑25 that this is contrary to the evidence, the defendants’ pleading and the agreed statement of facts.  He observed that the evidence was that all the properties were owned for the benefit of the joint venture and none of the parties was the independent legal owner who could do what they wanted with it; and if there was independent legal advice, it was still paid for by the joint venture.

[239]Per Mason P.  It is to be noted, however, that McColl JA at [153] found that the evidence in that case established a fiduciary relationship between the parties arising from the mutual trust and confidence they reposed in each other from the outset of their business relationship.  Batsen JA at [191] also 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.

[240]However, this statement is qualified by “having regard to the remedy to which the plaintiff was entitled and the amount recovered.”  The catchwords refer to this as a contract case in which the plaintiff’s claim that there was an oral agreement to adjust for unequal contributions succeeded.  In my view, it is distinguishable from the circumstances of this case.

[241]The relevant statement at 559 of Warman is that “It is necessary to keep steadily in mind that the remedy must be fashioned to fit the nature of the case and the particular facts.”  After citing the relevant authority, their Honours said, “But the basic principle remains that a principal who so elects is entitled to an account of profits, subject to considerations of the kind already mentioned.”  These considerations are that “It will be defeated by the equitable offences such as estoppel, acquiescence and delay.”

[242]Warman at 560.

[243]Ibid.

[244]Ibid at 561.  This statement was made with reference to dealing with a business as opposed to a specific asset.  Further, at 562, it was said, “However, as a general rule, … a court will not apportion profits in the absence of an antecedent arrangement for profit sharing but will make allowance for skill, expertise and other expenses.”  There was an antecedent agreement for profit sharing in the present case.

[245]Ibid.

[246]See also Warman at 558, where reference is made to Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41 per Mason J at 110; and also Warman at 530.

[247]Ibid at 570.

[248]Ibid at 561 and 570.

[249]Ibid.

[250]Ibid at 561 (with reference to “efforts”).

[251]Ibid at 559.

[252]This is the first essential requirement identified by Mr Quinn in his submissions; see paragraph [211] above.

[253]At [717] to [718] reference was made to the similar approach by Ryan J in Pacific Coal Pty Ltd v Indemitsu (Qld) Pty Ltd (unreported, Supreme Court of Queensland, 21 February 1992).  I note that Schipp v Cameron, Harrison & Ors was upheld on appeal save for certain cost-related matters, see Outline of Argument for the Plaintiffs at [39].

[254]T 3-77.

[255]See paragraph [53] above.

[256]T 3-42.

[257]T 3-30.

[258]Paragraph 20(b)(i) of the defence and counterclaim.

[259]T 3-33.

[260]Exhibit 16.

[261]Exhibit 8.

[262]This is the second essential element identified by Mr Quinn in his submissions.

[263]See also p 558.

[264]Ibid at 563.

[265]This was also applied in Fraser Edminston Pty Ltd v A.G.T. (Qld) Pty Ltd at 11.

[266]As there stated, “these questions must first be decided in the ordinary way upon evidence.”

[267]T 1-56.

[268]Exhibit 25, paragraphs 4 and 6.

[269]T 2-26.

[270]T 3-15.

[271]T 2-40.

[272]Exhibit 2, Annexure “K” at 109, which describes the matter as “FAST TRACK HOME LOANS p/f Clarke”.

[273]T 3-64.

[274]This was a reference to paragraph 22 of the statement of claim and the annexure to that statement of claim (see T 1-58 and T 1-63), which has been omitted from the amended statement of claim.  Although, I do not consider that this omission is relevant to the present issue, because the proposition remains that Mr Gwynne is criticised for relying on information provided to him by the plaintiffs without making further inquiry.

[275]Exhibit 9.

[276]T 2-85.

[277]T 2-85 to T 2-86.

[278]T 2-86.

[279]T 1-59.

[280]Ibid.

[281]T 1-60.

[282]Ibid.

[283]Mr Quinn conceded this at T 4-30.

[284]T 1-60.

[285]Ibid.

[286]T 2-92.

[287]Exhibit 2 at 17.

[288]T 1-44.

[289]T 1-63.

[290]Exhibit 2 at 65.

[291]T 3-32 to T3-33.

[292]T 3-35.

[293]Ibid.

[294]T 1-64.

[295]Submissions on behalf of the defendants, paragraph 43(r).

[296]T 4-32.

[297]T 3-82.

[298]Submissions on behalf of the Defendants, paragraph 43(5).

[299]T 1-64.

[300]See the declaration set out in paragraph [161] above.

[301]This is the third essential element identified by Mr Quinn in his submissions.

[302]See paragraphs [217] and [219] above.

[303]Submissions on behalf of the Defendants, paragraph 72.  I proceed on the basis that this was intended to be a reference to the Defendants’ business suffering.

[304]At 561.

[305]Ibid at 562.

[306]Having regard to paragraph 7(e) of the amended defence and counterclaim this must be taken as a reference to Fast Track.

[307]As stated at paragraph [119] above, I proceed to address this issue on the basis that the practical result of this arrangement was that the financial benefit was received by Mr and Ms Forster, although it was made through the company.

[308]T 3-67.

[309]Therefore there is no breach of the principle expressed in Warman International Ltd v Dwyer at 563 referred to in paragraph [271] above.

[310]As indicated above paragraph 7(e) of the amended defence and counterclaim asserts that Fast Track received commission, payment or fee, for arranging the business line of credit.  However, no set off was claimed on this basis.

[311]This was in fact the fourth essential element identified by Mr Quinn in his submissions.

[312]This is the date of the Irish Bentley letter of 5 July 2005 calculating that the plaintiffs owed the defendants $11,799.99, the amount which is the subject of the counterclaim.  I consider that the joint venture was terminated on this date.

[313]Ibid.

[314]I note that one of those principles referred to was the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud.  In relation to this at T 3-12 Mr Quinn put a proposition to Mr Forster alleging that he fraudulently suggested to his solicitor that fees incurred on non-joint venture files be put into an invoice so he could recover it as part of the joint venture.  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.

Close

Editorial Notes

  • Published Case Name:

    Forster & Anor v Ampcorp Pty Ltd & Ors

  • Shortened Case Name:

    Forster v Ampcorp Pty Ltd

  • MNC:

    [2009] QDC 402

  • Court:

    QDC

  • Judge(s):

    Irwin DCJ

  • Date:

    06 Nov 2009

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Bevis v Priebe[1998] 2 Qd R 1; [1997] QCA 345
1 citation
Birtchnell v The Equity Trustees Executors & Agency Coy Ltd (1929) 42 CLR 384
2 citations
Botany Municipal Council v Secretary, Department of the Arts (1992) 34 FCR 412
1 citation
Bristol and West Building Society v Mothew (1998) Ch 1
1 citation
Brooker v Friend and Brooker and Anor [2006] NSWCA 385
3 citations
Chan v Zacharia (1984) 154 CLR 178
3 citations
Cocks v Hickman (1860) 11 HL Cas 267
1 citation
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 F.C.R 225
3 citations
Concut Pty Ltd v Worrell (2002) 75 ALJR 312
1 citation
Dart Industries Inc v Dcor Corp Pty Ltd (1993) 179 CLR 101
2 citations
Di Carlo v Dubois [2002] QCA 225
2 citations
Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22
2 citations
Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
3 citations
Fraser Edmiston Pty Ltd v AGT (Qld) Pty Ltd[1988] 2 Qd R 1; [1986] QSC 226
2 citations
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
5 citations
Mulherin v Quinn Villages Pty Ltd [2007] QSC 231
3 citations
Quinn Villages Pty Ltd v Mulherin [2006] QSC 163
2 citations
R v Coyne [2005] QCA 233
2 citations
R v Shepherd [2006] QCA 233
1 citation
Rapid Metal Developments (Australia) Pty Ltd v Rosato [1971] Qd R 82
4 citations
Ravinder Rohini Pty Ltd v Krizaic (1991) 30 FLR 300
1 citation
Rosniac v Government Insurance Office (1997) 41 NSW LR 608
3 citations
Schipp v Cameron, Harrison & Ors [1999] NSWSC 997
4 citations
Todrell Pty Ltd v Finch[2008] 2 Qd R 95; [2007] QSC 386
2 citations
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 157 CLR 1
4 citations
United Dominions Corporation Ltd v Brian Pty Ltd (1985) 56 CLR 1
1 citation
Warman International Ltd v Dwyer (1995) 182 CLR 544
12 citations

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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