Mulherin v Quinn Villages Pty Ltd
[2007] QSC 231
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- Notable Unreported Decision
- Mulherin v Quinn Villages Pty Ltd[2007] QSC 231
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Mulherin v Quinn Villages Pty Ltd[2007] QSC 231
Mulherin v Quinn Villages Pty Ltd[2007] QSC 231
SUPREME COURT OF QUEENSLAND
CITATION: | Mulherin as t’ee for The HD Mulherin Family Trust v Quinn Villages P/L [2007] QSC 231 |
PARTIES: | HENRY MULHERIN as trustee for the HD MULHERIN FAMILY TRUST No. 4 |
FILE NO/S: | Supreme Court No. 10807 of 2006 |
DIVISION: | Trial Division |
PROCEEDING: | Trial |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 31 August 2007 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 6, 7, August 2007 |
JUDGE: | Muir J |
ORDER: | 1. Order that the proceedings be dismissed
|
CATCHWORDS: | EQUITY – EQUITABLE REMEDIES – ACCOUNTS AND INQUIRIES – JURISDICTION GENERALLY – where plaintiff and defendant entered into agreement to develop land – where agreement terminated by defendant – where defendant succeeded in its claim for capital contributions from plaintiff allegedly owing under agreement – where plaintiff seeks account of defendant’s expenditure – where parties in fiduciary relationship – whether account should be ordered – whether plaintiff must establish its entitlement to moneys in order for court to order account – whether account a discretionary remedy EQUITY – ESTOPPEL – GENERAL PRINCIPLES – where plaintiff and defendant entered into agreement to develop land – where agreement terminated by defendant – where defendant succeeded against the plaintiff in its claim for capital contributions owing under agreement – where plaintiff now seeks account of defendant’s expenditure – where plaintiff seeks to rely on evidence of a variation of the agreement – whether plaintiff is precluded from relying on the variation due to res judicata or issue estoppel Adams v Bank of New South Wales [1984] 1 NSWLR 285, applied Brown v Rivlin, unreported, February 1, 1983 (C.A.T. No. 56) [1984] CLY, p 138, cited Chan v Zacharia (1984) 154 CLR 178, cited Doss v Doss (1843) 3 MOO Ind App 175, cited Hurst v Bryk [1997] 2 All ER 283; [2000] 2 WLR 740, cited Marshall v Bullock, unreported, March 27, 1998 (CA UK), cited Phillips v Phillips (1862) 4 De G F & J 208; 45 ER 1164, applied Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, applied Quinn Villages Pty Ltd v Mulherin [2006] QSC 163, cited Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2005] QSC 233, cited Warman International Ltd v Dwyer (1995) 182 CLR 544, applied |
COUNSEL: | AJH Morris QC with him I Erskine for the plaintiff S Couper QC for the defendant |
SOLICITORS: | Gateway Lawyers for the plaintiff Plastiras Lawyers for the defendant |
Introduction
- The plaintiff Dr Mulherin (in his capacity as trustee for the HD Mulherin Family Trust No. 4) and the defendant Quinn Villages Pty Ltd entered into an agreement dated 13 January 1999 for the purposes of defining the basis upon which they would carry out a residential development on the Queensland sunshine coast to be described as “Coolum Fairways”. The development was not a success. It was contemplated that it be undertaken in two stages. Stage 1 was completed at a loss. Stage 2 had not commenced when the agreement was terminated by Quinn Villages by notice in writing dated 12 August 2003.
- In reliance, inter alia, on clause 27.3 of the agreement, Quinn Villages claimed from Dr Mulherin a capital contribution of $400,000 which it asserted was owing under the agreement and $573,698, being one half of expenditure under the agreement by Quinn Villages in excess of payments made by Dr Mulherin.
- Clause 27 of the agreement provided:
“27.1 The Parties record that it is their intention to carry out the Project on the basis of a sharing of risk on a 50% to 50% basis.
…
27.3 … each Party indemnifies and agrees to keep the other always indemnified in respect of any liability, loss, claim or expense it may incur as a result of its participation in this Agreement and the carrying out of the Project to the extent that the Party suffers loss, liability, claim or expense which is over and above its assumed liability of 50% of the risk.”
- Dr Mulherin refused to meet the demand claiming that the agreement was not binding on him and that his relationship with Quinn Villages was that of lender and borrower.
Supreme Court proceedings BS 11187 of 2003
- Quinn Villages commenced proceedings in the Supreme Court on 4 December 2003 (“the first action”) claiming the above moneys “being the amount of the liability, loss, claim or expense which Quinn Villages has incurred as a result of its participation in the …Agreement and the carrying out of the project, in excess of Quinn Villages’ assumed liability of 50 percent of the risk, pursuant to clause 27.3 of the …Agreement”.
- In the alternative, it claimed damages for breach of contract. There were other claims and allegations. It was alleged that the agreement had been terminated by Quinn Villages on 12 August 2003 through acceptance by Quinn Villages of Dr Mulherin’s repudiatory conduct.
- Also claimed was a declaration that Dr Mulherin was obliged to indemnify Quinn Villages with respect to any liability of Quinn Villages to Global Management Corporation Pty Ltd and Monarch Building Systems Pty Ltd. Monarch is a builder which had been engaged by Quinn Villages to undertake construction work for stage 1 of the project. Global was the stage 1 project manager. Global claimed an entitlement to Project Management Fees under an agreement entered into between it and Quinn Villages. Monarch had commenced proceedings in the Supreme Court of Queensland claiming moneys under a construction agreement entered into between it and Quinn Villages in respect of stage 1.
- On 5 July 2006,[1] Chesterman J, contrary to Dr Mulherin’s contentions, concluded that he was a participant in the project and liable to make contributions pursuant to clause 27. Chesterman J held that Dr Mulherin had affirmed the agreement. His Honour accepted Quinn Villages’ contention that the agreement had been terminated by the letter of 12 August 2003.
- There was a dispute as to the sum which Dr Mulherin was liable to contribute which Chesterman J considered himself unable to resolve on the evidence before him. With the agreement of the parties he ordered Dr Mulherin to pay to Quinn Villages “such amount as is found due by the expert, appointed by the Court for that purpose, pursuant to clause 27.3 of the… agreement”. The expert was to report to the court in July 2006 but for various reasons the expert’s report is yet to be finalised.
- The claim for a declaration in respect of liability to Global and Monarch was adjourned on the basis that at the time of the trial it was not possible to determine whether any liability of Quinn Villages to Global and/or Monarch would fall within the terms of clause 27.3.
- At the time of trial the land destined to be developed in stage 2 of the project (“the balance parcel”) had not been developed or sold. Statutory trustees for sale of the balance parcel were appointed in October 2006 and, at the time of trial of these proceedings, a contract for the sale of the land for a price of approximately $1,200,000 was on foot.
- An appeal from Chesterman J’s decision was dismissed.
The claims in these proceedings
- Dr Mulherin seeks an account of:
- all money received and disbursed in respect of the project by Quinn Villages and any entity related to Quinn Villages;
- all profits and benefits derived directly or indirectly in consequence of Quinn Villages’ interest in the project by the defendant and any associated entity of Quinn Villages;
- all sales of residential units erected on the land the subject of the agreement.
Also claimed are:
- an enquiry as to whether any joint venture assets have been applied by Quinn Villages for its own benefit or for the benefit of an associate or otherwise than for the joint benefit of Quinn Villages and Dr Mulherin;
- an order that Quinn Villages pay Dr Mulherin any moneys found due to him upon the taking of such accounts or enquiries;
- a declaration that Dr Mulherin is not liable to Quinn Villages in respect of any claim by Monarch or Global.
- On the trial of the proceedings Senior Counsel for Dr Mulherin stated that the claim for declaratory relief would not be pursued.
- The claims for an account and enquiry are based on an allegation that the agreement gave rise to a fiduciary relationship between Quinn Villages and Dr Mulherin which imposed on the former a duty to account to the latter with respect to all receipts and outgoings of the project and all profits and benefits derived from the project by Quinn Villages, its agents or associates. It is further alleged that Quinn Villages held on trust for itself and Dr Mulherin the net proceeds of sale of project land in accordance with clause 25 of the agreement as varied and was obliged to make payment in accordance therewith. It is alleged that by a variation of the agreement on or about 20 June 2001 a new clause 25 was inserted in the agreement. The agreement is alleged to be evidenced by a facsimile dated 13 June 2001 to Darren Palmer signed by Dr Mulherin and Mr Quinn and by a facsimile dated 18 June 2001 from Nicol Robinson Halletts to Mr Quinn and Dr Mulherin which facsimile was signed by Mr Quinn and countersigned by Dr Mulherin.
The claim for an account
- Dr Mulherin’s contention that the agreement gave rise to a fiduciary relationship between the parties is accepted by Quinn Villages. It is said by Dr Mulherin to flow from for existence of the fiduciary relationship that Quinn Villages must “account … for any benefit or gain obtained or received where a conflict (or a significant possibility of a conflict) exists between [Quinn Villages’] fiduciary duty and [its] personal interest in the pursuit or possible receipt of such benefit or gain.” Reference is made in support of that proposition to Chan v Zacharia[2], Warman International Ltd v Dwyer[3], Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd.[4]
- The account is resisted by Quinn Villages on the basis that before an account is ordered Dr Mulherin must establish that he is entitled to some moneys from Quinn Villages even though the quantum of the sum may not presently be identifiable. Reliance is placed on the following observations of Dr Lushington in Doss v Doss:[5]
“A decree for an account is not, as appears to have been assumed, a mere direction to inquire and report. It proceeds, and must always proceed, upon the assumption that the party calling for it is entitled to the sum found due. It is a decree affirming his rights, only leaving it to be enquired into, how much is due to him from the party accounting.”
- The learned authors of Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies,[6] observe in reliance in part on Doss v Doss:[7]
“In any case where a plaintiff seeks the remedy of an account, he must prove, inter alia, that the defendant is an accounting party, and that he, the plaintiff, is entitled to some sum from the defendant, although he is uncertain what is the quantum of that sum. He must do more than demonstrate that he might be owed some money, or that he wants, as it were, to have a kind of general discovery.”
- In Re Sharpe,[8] Drummond J observed:
“The taking of an account is only appropriate once it has been established that the parties involved are in an accounting relationship with each other, that is, only once it has been established that one party is liable to pay to the other anything that is found, on the taking of the account, to be due to that other: Rapid Metal Developments (Australia) Pty. Ltd. v Rosato (1971) Qdr 82 at 88-90; Rockhampton Permanent Building Society v Petersen (1986) 1 Qdr 128 at 130 and Lang v Simon (1952) 53 SR (N.S.W.) 508 at 514.”
His Honour went on to quote, with approval, the passage from Doss v Doss set out above.
- The statement of Dr Lushington relied on by Quinn Villages and the other expressions of principle to which reference has been made, whilst no doubt accurate in the context in which they were made, hardly propound a universal truth. For example, upon the dissolution of a partnership an account is normally ordered.[9] Lord Lindley wrote in Lindley on Partnership[10] 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”. It is generally not necessary for a partner seeking such an account to establish that moneys will be found due to him.
- The same may be said of a mortgagor seeking an account of the mortgagee in a redemption action and of a fiduciary seeking an account when there are mutual accounts between the fiduciary and the defendant i.e. where each of two parties has received and paid money on the other’s account.[11]
- The remedy of account is an equitable one which is discretionary,[12] and will not be ordered if an account will serve no useful purpose.[13] It is argued on behalf of Quinn Villages that even if an account is an available remedy it would not be ordered in the exercise of the court’s discretion. The matters which are said to count against the exercise of the discretion are as follows:
- The evidence which shows that the books and records of Quinn Villages in relation to the project were open for inspection by Dr Mulherin at all times.
- The absence of evidence of deficiencies in the way in which the books were kept.
- The fact that it was not until after the dismissal of his appeal from the decision in the action that Dr Mulherin sought an account.
- Income tax returns for years ended 30 June 2000, 2001, 2002, 2003 and 2004 were prepared and submitted in respect of the joint venture.
- In 2003 a firm of consulting engineers reviewed the project accounts with a view to reconciling the respective contributions of the parties under the agreement and a copy of their findings was provided to Dr Mulherin.
- Quinn Villages also relies on the following evidence of an accountant, Mr O'Brien. He was engaged to do the books of account of the project from about October 2000. When he commenced his duties, he reconciled the project bank accounts. He also answered queries concerning the project accounts raised with him by Dr Mulherin from time to time. Those queries led to the production of a number of financial reports which were the subject of discussion at meetings between him and Dr Mulherin.
- It emerged from the cross-examination of Dr Mulherin that in respect of the sales of lots in stage 1, Nicol Robinson Halletts, solicitors, were acting on behalf of Dr Mulherin and Quinn Villages and that they attended to the release in each case of Dr Mulherin’s second mortgage over the property. Dr Mulherin approved each contract of sale before it was entered into and was aware of the sale price. In respect of the last five lots sold, release of the mortgage was attended to by Dr Mulherin’s own solicitor. The balance proceeds of sale were required to be paid in to Nicol Robinson Halletts’ trust account before payment from the trust account to meet joint venture expenses. Any balance was then required to be paid in accordance with clause 25 of the agreement.
- The order made in the Action on 21 June 2006 appointed Mr Hellen, an expert to report to the Court on:
“(a)whether the payments in [Dr Mulherin’s] ‘Schedule in response to further and better particulars dated 11 May 2005 and 19 July 2005’ which are not admitted in the said schedule, were payments made for expenses of the … Project…; and
(b)whether such payments were made with funds provided by or on behalf of Quinn Villages.”
- The further and better particulars of 11 May 2005 and 19 July 2005 were particulars of the allegations in paragraph 21 of the statement of claim concerning the amounts claimed as cost overruns which had been expended by Quinn Villages and not reimbursed to it from some other source. The schedule however did itemise some credits received by Quinn Villages.
- Having considered the particulars at great length and having conducted detailed inspections of the underlying documentation provided to Mr Hellen, Dr Mulherin concluded that some of the expenditure has not been properly verified. He has identified one claim (a payment of $75,000 to Ash Morgan Winthrop) which he claims was wrongly made, and has a raised a query in respect of a sum of $158,304. He concedes however that the latter payment, which is recorded in a bank statement of a company related to Quinn Villages, shows an amount paid on behalf of Quinn Villages. Mr Hellen is in the process of completing his investigations which have been delayed, in part, through the failure on the part of Dr Mulherin to provide information. In addresses, Dr Mulherin’s counsel conceded that the findings made by Mr Hellen would be binding on the parties.
- Asked what the point was of having an account now whilst the sale of the balance parcel remained incomplete and whilst the Global and Monarch litigation was on foot, counsel for Dr Mulherin responded that in consequence of Mr Hellen’s report Dr Mulherin may be ordered to pay certain moneys under clause 27 of the agreement, whereas “it may well be the case that his liability, as determined by Mr Hellen, will be extinguished by his entitlement to participate in the proceeds of sale of [the balance parcel] … and an entitlement to participate in GST credits and, for what they are worth, trade dollars”. He pointed out that the litigation may not be resolved for a considerable length of time. The reference to “trade dollars” is a reference to the trade dollars which formed part of the purchase price of some of the lots. Those dollars, the value of which is questionable, are held by Quinn Villages pursuant to the agreement. It is conceded that any order for an account cannot cover the same ground as that covered by Mr Hellen’s exercise.
- Having regard to the foregoing, the expenses and payments the subject of the account sought by Dr Mulherin are limited to sums paid by the project financier or from the proceeds of sale. There has been no evidence of any wrongful or erroneous payment or misapplication of funds. Nor is there a pleaded allegation to that effect, except in relation to the application of clause 25 as amended. I will come to that provision later.
- I have concluded that an account should not be ordered for a number of reasons. Firstly, in my view, the account would be premature. It would achieve nothing more than an identification, subject to the Hellen accounting, of the current state of accounts between the co-venturers. Another account would need to be ordered after the production and confirmation of the Hellen accounting and after all assets of the joint venture had been realised and all liabilities ascertained. It is desirable that there be only one account of what is or isn’t owed between the parties and “little bits of accounts” should not be ordered.[14]
- If any accounting is to be ordered, it would be sensible also to defer that until results of Mr Hellen’s enquiries were available. There is also something oppressive in the way in which Dr Mulherin has sought his further account. It was always open to him to claim such an account in the alternative in conjunction with the accounting ordered by Chesterman J. He chose not to take this course, probably as a tactical decision based on the lack of evidence that there is anything untoward with the way in which the accounts of the project have been kept.
The variation of Clause 25
- Although the defence denies the existence of the alleged variation agreement, the denial was not maintained on the trial. The new clause 25 provided, in summary, that the proceeds of sale of “Developed Lots” were to be paid in the following order:
- Payment of the costs of sale including commission, marketing fees, legal expenses and mortgagee’s costs;
- Payment to the project financier of the amount required by it to discharge its mortgage over the lot in question;
- $800,000 to Dr Mulherin plus any additional capital contributed by him;
- $400,000 to Quinn Villages;
- $500,000 to Dr Mulherin;
- $400,000 to Mr Quinn;
- Reimbursement proportionally to the parties of any additional capital contributions made by them excluding moneys repaid to Dr Mulherin under (c) above;
- $500,000 to Quinn Villages;
- The balance equally between the parties.
Is Dr Mulherin precluded from relying on the varied clause 25 by operation of the doctrines of res judicata and issue estoppel? – Quinn Villages’ contentions
- In the first action Quinn Villages claimed against Dr Mulherin pursuant to clause 27 of the agreement, which provided for each party to indemnify the other against 50% of project liabilities, losses, claims and expenses sustained by that party.
- It was alleged in paragraph 4(j) of the statement of claim in the first action that upon the sale of Developed Lots the proceeds of sale would be applied in the manner set out in clause 25.1 of the Development Agreement. Paragraph 4(f) of the statement of claim provided that the Advance would be repaid to Dr Mulherin from funds drawn down on the Development Loan if such funds were available in accordance with clause 25.1(c) of the Development Agreement.
- Paragraph 9 of the statement of claim alleged that the amount secured under the Development Loan was not sufficient to meet budgeted Project Costs as well as allow payments in reduction of the Advance.
- The amended defence did not admit the allegations in paragraphs 4, 19 and 21 of the statement of claim. An issue on the trial which had to be resolved in order to determine Quinn Villages’ entitlement to an indemnity under clause 27 was whether income from project sales was sufficient to meet costs and leave any surplus and, furthermore, whether Quinn Villages had made the additional payments it claimed to have made.
- Reliance is placed on the following passages in the reasons for judgment:
a.“The developed lots in stage one sold for less than the cost of development … the plaintiff made good most of the losses, though the defendant has contributed some moneys;[15]
b.“It follows that the defendant has failed to refute the plaintiff’s claim that he should contribute equally to the expenses incurred with respect to the project, pursuant to cl 27.3 of the Agreement.”[16]
c.“It is clear on the evidence that there will be no profit from the project up to the time of rescission and no moneys will be payable by the plaintiff to the defendant.”[17]
- Paragraph [73] of the reasons contains a finding that Dr Mulherin had no continuing interest in the project. Reliance on that conclusion was disavowed by Senior Counsel for Quinn Villages on the appeal. Senior Counsel for Quinn Villages, before me, accepted that the balance land was project land in which Dr Mulherin had an interest under the agreement.
- That Quinn Villages’ claim for payment of moneys was squarely based on an equalising of contributions and expenditure may be seen from paragraph 29 of the statement of claim. It commences as follows:
“In the premises pleaded in paragraphs 4(o), 4(p), 25, 26, 27 and 28 above, Mulherin is liable to indemnify Quinn Villages in the sum of $973,698.50, being the amount of the liability, loss, claim or expense which Quinn Villages has incurred as a result of its participation in the Development Agreement and the carrying out of the Project, in excess of Quinn Villages’ assumed liability of 50% of the risk, pursuant to clause 27.3…”
- Paragraphs 25, 26, 27 and 28 deal with: the capital contributions of the parties to the project; Quinn Villages’ advances to the project and with the incurring by Quinn Villages of project debts totalling $1,259,057.
- Paragraphs 4(o) and 4(p) refer to the terms of clause 27. Under clause 27 a party which had incurred an expense was entitled to recover from the other party half of the amount of that expense, provided that at the time such recovery was claimed the claimant had contributed to the capital of the joint venture a sum at least equal to that contributed by the other party. That is because the indemnity was limited to loss, liability, claim or expense “which is over and above [a party’s] assumed liability of 50% of the risk”. In order for Quinn Villages to recover under clause 27 half of moneys paid by it, it may not have been necessary for it to establish the amount of project outgoings but that is not how its case was pleaded. The pleaded case was that because of a shortfall in moneys payable under the Development Loan and in income from the sale of Developed Lots, Quinn Villages had made the additional payments of $1,259,047 to meet the shortfall.
Res judicata and issue estoppel – conclusions
- Quinn Villages claimed in the first Action that:
- Dr Mulherin agreed to advance $400,000 to the project (“the Advance”) which would be repaid from moneys drawn down under the Development Loan, if such funds were sufficient. Otherwise, the Advance would be repaid under clause 25.1(c) of the Development Agreement (para 4);
- upon the sale of Developed Lots the proceeds of sale would be applied, first in payment of the costs of sale, then in reduction of the Development Loan, then to Quinn Villages to the extent of the difference between the amount received by Quinn Villages under clause 8.1 and $400,000 and then to Dr Mulherin “to the extent of $400,000 in respect of the Advance; (para 4(j))
- in the premises pleaded in paragraphs 4 (a), 4(b), 4(j), 4(k), 18, 19, 20 and 21, Quinn Villages and Dr Mulherin have contributed capital for the Project respectively in the amounts of $800,000 and $400,000; (paras 25 and 26)
- project income from the sale of Developed Lots was not sufficient, after deduction of sale costs and repayments in reduction of the Development Loan,[18] to leave any surplus (para 19);
- no payments from surplus Project Income were made to Quinn Villages in the manner contemplated by clause 8.1 and clause 25.1(c) of the Development Agreement (para 20);
- Quinn Villages made additional payments in respect of Project Costs and incurred further debts in connection with the Project in an amount of $1,259,047 in excess of those budgeted for and paid for from moneys drawn down under the terms of the Development Loan (para 21);
- the payments referred to in para 21 constitute an advance by Quinn Villages over and above the capital contribution required of it under clause 4.1 of the agreement (para 22);
- Dr Mulherin is liable to indemnify Quinn Villages for one half of such payments less $111,660 being the amount of further advances by Dr Mulherin to the project (para 29).
- It is plain from the pleadings that the precise amount of any loss suffered by the Project could not be established at the time of trial. Quinn Villages sought declarations that Dr Mulherin was obliged to indemnify Quinn Villages with respect to any liability of it to Global Management and Monarch Building Systems. The determination of those claims and of any counterclaims by Quinn Villages was needed before a final balance for the project could be struck. Furthermore, the balance land remained to be sold and the net proceeds of sale realised.
- Paragraphs 18, 19 and 20, considered collectively, alleged that there were no moneys available for payment to Dr Mulherin in reduction of the Advance or to Quinn Villages as there were no surplus moneys from sales of Developed Lots after deduction of sale costs and repayment in reduction of the development loan. Under both the varied clause 25.1 and the original clause 25.1, as pleaded, proceeds of sale of Developed Lots were to be applied firstly in payment of the costs of sale and secondly in reduction of the Development Loan.
- The statement of claim also alleged the existence of a payment regime in accordance with clause 25.1 of the Development Agreement which affected the rights of Dr Mulherin to repayment of the advance and to payment of proceeds of sale of Developed Lots.[19]
- The estoppel on which Quinn Villages relies is encapsulated in the following passages from the reasons of Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Pty Ltd:[20]
“In this situation we would prefer to say that there will be no estoppel unless it appears that the matter relied upon as a defence in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it. Generally speaking, it would be unreasonable not to plead a defence if, having regard to the nature of the plaintiff's claim, and its subject matter it would be expected that the defendant would raise the defence and thereby enable the relevant issues to be determined in the one proceeding.
…
It has generally been accepted that a party will be estopped from bringing an action which, if it succeeds, will result in a judgment which conflicts with an earlier judgment.
…
The likelihood that the omission to plead a defence will contribute to the existence of conflicting judgments is obviously an important factor to be taken into account in deciding whether the omission to plead can found an estoppel against the assertion of the same matter as a foundation for a cause of action in a second proceeding.”
- The reference to “situation” in the first of the above passages is to a plaintiff who has brought a new action after the dismissal of an earlier action.
- The amended statement of claim in these proceedings alleges:
- A breach by Quinn Villages of the Development Agreement as varied by the new clause 25.1 and a breach of Quinn Villages’ fiduciary and accounting duties.[21]
- A breach by Quinn Villages in failing to pay Dr Mulherin net proceeds of sale in accordance with the Development Agreement as varied.
- Dr Mulherin thus wishes to advance arguments which conflict directly with a basic premise of Quinn Villages’ case in the first action; namely that there were no surplus moneys from the proceeds of sale available for payment to either party. Dr Mulherin’s case also, at least potentially, raises a question of the interrelationship of clause 27 and the new clause 25. Both of these matters are “so relevant to the subject matter of the first action that it would have been unreasonable not to rely [on them]”. Clause 25 played a significant role in Quinn Villages’ pleading in the first action and it was unreasonable for Dr Mulherin not to assert in the first action that there was a new and quite different clause 25, as he now does, which bears directly on his entitlement to the net proceeds of sale.
- There is also the potential that Dr Mulherin’s new arguments, if accepted, would conflict with the order in the first action that Dr Mulherin pay to Quinn Villages such amount as is found due pursuant to clause 27.3 of the Development Agreement.
- Dr Mulherin advanced no reason for not relying on the new clause 25 in the first action and it is reasonable to conclude that it was not raised as a result of a tactical decision. There was no suggestion that the variation of the Development Agreement was simply overlooked.
- For the above reasons, I find that Dr Mulherin is estopped from relying on the new clause 25 alleged by him to assert the existence or breach of obligations and the existence of rights relating to the payment or non payment of proceeds of sale of Developed Lots.
Conclusion
- For the above reasons, the proceedings will be dismissed and Dr Mulherin will be ordered to pay Quinn Villages' costs.
Footnotes
[1] Quinn Villages Pty Ltd v Mulherin [2006] QSC 163.
[2] (1984) 154 CLR 178 at 198-199
[3] (1995) 182 CLR 544 at 557.
[4] [2005] QSC 233.
[5] (1843) 3 MOO Ind App 175 at 196-7.
[6] 4th ed, in paragraph 25-025.
[7] (1843) 3 MOO Ind App 175.
[8] Fed Ct, Drummond J, 11 December 1992 (unreported) at paragraph 5.
[9] See eg 35 Halsbury’s Laws of England 4th ed (reissue) paras 139, 140 and Lindley & Banks on Partnership 18th ed pp 611-612.
[10] 14th ed, p 553.
[11] See eg. Phillips v Phillips (1861) 4 De G F & J 208; (1961) 45 ER 1164.
[12] Warman International Ltd v Dwyer (1995) 182 CLR 544 at 559.
[13] Lindley & Banks on Partnership 18th ed, at 612; Marshall v Bullock, unreported, March 27, 1998 (CA England), Brown v Rivlin, unreported, February 1, 1983 (CAT No 56); [1984] CLY, p 138 and Hurst v Bryk [2000] 2 WLR 740, 748B.
[14] See the discussion in Adams v Bank of New South Wales [1984] 1 NSWLR 285, at 296.
[15] Para [1].
[16] Para [58].
[17] Para [72].
[18] The “Development Loan” is identified in paragraph 4 of the statement of claim as a loan defined in clause 1.1 of the Development Agreement “in an amount sufficient to meet Project Costs and to allow periodic payments to Mulherin in reduction of the” sum of $400,000 agreed to be advanced by Dr Mulherin.
[19] Paragraph 4(f), (j) and (k).
[20] (1981) 147 CLR 589 at 602, 603.
[21] Statement of claim, paragraphs 16 and 17.