Perricoota Boat Club Investments Pty Limited v Anthony Rupert Watson

Supreme Court of NSW|2014-03-17

Judgment 1I have to decide three questions preliminary to all other issues in this case namely: (a)Did the Plaintiff pay the deposits as set out in paragraphs 10, 18 or alternatively 23A of the Second Further Amended Statement of Claim? (b)If yes to (a) above, was there a reconciliation agreement entered into by the Plaintiff, First Defendant and Second Defendant, the effect of which was to prevent the Plaintiff from claiming and/or the Defendants from repaying any deposits and/or damages claimed by the Plaintiff, until such a reconciliation was completed? (c)Were there partnerships or joint ventures known as the Deep Creek Marina Joint Venture and the Perricoota Marina Village Joint Venture as alleged in the First Defendant's Defence to the Second Further Amended Statement of Claim at paragraphs 18 and 20 and was the Plaintiff a member of any such partnership or joint venture? 2The matter was heard on 17 and 18 March 2014 Mr W Alstergren SC and Mr D Briggs of counsel appeared for the plaintiff. Mr Gunning of counsel appeared for the first defendant (Mr Watson) Mr Pesman SC appeared for the second defendant Hillington Valley Pty Ltd ("Hillington"). Although it filed a defence, the third defendant, Ozzie Erections Pty Ltd ("Ozzie") did not appear at the hearing. 3The hearing involved 1750 pages of document and receiving oral evidence from Mr Watson and the controllers of the other parties namely Mr Bares of Hillington and Mr Jarman of the plaintiff. Each was cross-examined. I do not consider that any of them was doing other than giving me his genuine recollection: nor was any of them adversely effected by cross examination. However the major difficulty in this case lies in the reconciliation of the contemporaneous documents with a recollection of the three men. 4In 2006 to 2009 the parties were interested in developing land at Moama which fronted the Murray River. Pursuant to this interest the parties entered into a number of contracts which, using the designation which the parties ascribed to them, were as follows.

The First Land Contract 5This was made in May 2006 with the three defendants as vendors and the plaintiff and the second defendant as purchasers the price being $800,000 with a 10% deposit. The consequence of this contract would be that, on completion, the plaintiff, Mr Watson and Hillington would have one third each of moorings 2 and 3 and 18 to 21 of a proposed sub-division. The plaintiff paid $60,000 deposit and Hillington $20,000 deposit. 6The first land contract was rescinded by deed in October 2006. That deed also rescinded the contract for purchase for part of Lot 16. The plaintiff's $60,000 deposit was returned to it. At least this is the theory, what actually happened I am about to relate.

The Second Land Contract 7This was made in October 2006 and covered much of the same land with the same parties. The price was $600,000 with a 10% deposit. The plaintiff says that it paid its $60,000 deposit on or about the 20th of October 2006. This occurred by a payment of $149,375 which is split as the $60,000 for the second land contract and $89,375 as part of the purchase price of Lot 16. The plaintiff purported to terminate the second land contract, I will consider the details later.

The Second Lot 16 Contract 8The contract to sell Lot 16 was made about the 20th of October 2006. The vendors were Hillington, Ozzie and Mr Watson (one third each). The purchasers were Hillington, Mr Watson and the plaintiff. The price was $909,304 with a 10% deposit i.e. $99,034 9This contract was in due course completed, though it was necessary to obtain bank finance to do so.

The First Mooring Contract 10This was made in May 2007. The vendors were Mr Watson, Hillington and Ozzie. The purchase price was $450,000. The contract obliged the plaintiff to pay a deposit of $45,000 and also a $180,000 instalment of the purchase price. The land involved was Lots 26, 27 and 28 of a proposed plan of sub-division. 11The plaintiff says it paid the $225,000 deposit and instalment by three instalments in April to May 2007. The defendants do not deny that money was paid but say that the money was paid to them as members of the Deep Creek Marina and Perricoota Marine Village joint ventures. 12The First Mooring Contract was rescinded by deed in December 2007. The plaintiff says that it was a term of the deed that the deposit be refunded. The defendants say that the monies paid were to go to the Deep Creek Marina and Perricoota Marine Village joint ventures to be retained until final accounting in the joint venture.

The Second Mooring Contract 13This was made in December 2007 with Mr Watson as vendor and the plaintiff as purchaser. It covered moorings 5, 6, 7, 20 and 21, The price was $450,000 with a $45,000 deposit and a requirement to pay the first instalment of purchased money of $180,000. 14It will be observed that apparently lots 20 and 21 were covered by both the second land contract and the second mooring contract. I say apparently, because it is not completely clear that lots 20 and 21 in the deposited plan are referred to or mooring portions 20 and 21, but, for present purposes, I will assume that the lands were identical. 15The plaintiff says in paragraph [10] of the second further amended statement of claim that on or about 20 October 2006 the plaintiff by a solicitor and pursuant to instructions from the defendants paid the deposit for the second land contract. It particularises this by referring to the payment of $149,375. 16In paragraph [18] it alleges that it paid the $225,000 on the First Mooring Contract. Paragraph 23A reads: By a verbal agreement between Mr Paul Jarman of the plaintiff, the First Defendant and Mr Gary Bares of the Second Defendant, prior to execution of the Second Mooring Contract it was agreed that the Deposit paid under the First Mooring Contract which had not been returned by the Vendors was to be applied as the Deposit under the Second Mooring Contract. 17The plaintiff says that the Second Mooring Contract has come to an end and it is entitled to recover its deposit and instalment. In their pleadings the defendants denied that the Second Mooring Contract had been terminated, indeed the point was certainly debateable. However, in his cross-examination Mr Watson conceded it was rescinded in March 2009. 18The plaintiff basically claims return of the $60,000 deposit on the Second Land Contract and the $225,000 from the First Mooring Contract. The defendants, apart from putting various matters in issue, say that $60,000 was never paid by way of deposit on the Second Land Contract but rather the $60,000 paid was in connection with the second sale of Lot 16 Contract and that in any event the plaintiff is not entitled to be repaid any of these monies until after final accounts are taken in the joint venture. 19There is very little material to tie in any joint venture with the payment of deposit under any of the contracts. As these factual matters relate both to questions (a) and (c) it is best, briefly, to set out the relevant material at this stage. There is an agreement sometimes called "Perricoota Implementation Agreement" and sometimes "Development Heads of Agreement" made on the 20th of May 2006. The parties were Hillington, Ozzie, Mr Watson and Mr Jarman. Mr Jarman was a party because at that stage the plaintiff had not been incorporated but was incorporated shortly after. I will set out clauses 2 and 8 of this document: Parties Intentions 2. It is the Parties' intention with this Agreement to enter into a confidential binding agreement that sets out the process the Parties will take to achieve the Parties aim of Subdividing Lot 13 into five (5) new Titles and transfer three (3) if this, being referred to as pt. 17, pt. 18 and pt. 20, to a new entity called the First New Owner and one (1) Title, being referred to as pt. 19 (which shall include the land described as pt 14 and pt 15 on the plan) to another separate entity called the Second New Owner. It is also the Intention of the parties to subdivide Lot 23 and part of Lot 222 into a number of new Titles. Two (2) of those Titles, being the land referred to as pt. 2 and part of pt. 3 are to be transferred to the Second Land Owner. The Parties will prior to the Subdivisions take the appropriate steps to enter into Community and Neighbourhood Management Schemes over Lot 23, Lot 221 and Lot 222. The Parties will also enter into such contracts and agreements as is necessary to create, transfer and consolidate all Commercial rights throughout Lot 23, Lot 221 and Lot 222, the Deep Creek Marina and Perricoota Marine Village within one entity referred to herein as Perricoota Boat Club and such entity shall be owned and controlled by the principals behind the Second Land Owner. It is further intended that the Parties shall enter into a Management agreement with Jarman providing him with the rights and obligations associates with the management of the Perricoota Boat Club and provide for the payment of a Management fee to Jarman. Enforceability 8. The Parties agree and acknowledge that this Agreement shall be enforceable between the Parties creating a requirement to assist in achieving and comply with the aims set out herein. 20Significantly, there was no reference in this document at all to the obligation of any of the parties to contribute funds to the joint venture or who could call upon them to do so and no reference to taking any accounts. The main thrust of the document is to enable the parties to request assistance from each other to achieve the aims of the agreement. 21I must say that generally there was a rather surprising lack of documents that one would expect with the transactions that took place amongst the parties. 22For instance no settlement sheet was produced in connection with the completion of the sale of Lot 16. Such a document may have given the court some important information. It is difficult however, to know who to blame for this, although the plaintiff is the prime suspect. Normally both the vendor's and the purchaser's solicitors would have copies. 23Furthermore the sparse amount of detail in the few trust account records produced again causes difficulties. 24Probably these matters reinforce the inference that cash was short and was spent where it had to be spent and that the parties kept records to a minimum in accordance with the view of many business people that paperwork is an expensive luxury. 25Mr Watson conceded under cross-examination that this agreement had been superseded. It is clear that apart from Lot 16 the agreement does not appear to have been consummated. 26There was also an agreement called a Joint Venture Agreement between Hillington and the plaintiff. The agreement involved the formation of a new company Perricoota Boat Club Development Pty Limited. This never occurred. The agreement would seem never to have had any operation. Indeed no witness appears ever to have heard of a company by that proposed name. Again it is significant there was no document dealing with the making of contributions and reconciliation of accounts. 27Those were the only documents in the case that had any reference to a joint venture. Mr Watson says that he thought that there may have been another document which he cannot now find but that was fairly ephemeral. There seems little doubt that there was an intention generally amongst the parties that they would jointly cooperate in exploiting their land at Moama. Mr Bares said that there was an intention that there be a joint speedboat recreational facility from adjoining berth in the Perricoota Marina. It is true as Mr Alstergren pointed out that joint ventures can take many different forms (United Dominions Corporation Ltd v Brian Pty Ltd [1985] HCA 49; 157 CLR 1 at 10 to 11) but both in documents and what happened on the ground does not demonstrate anything more than a general intention to cooperate. Furthermore, it is significant that the various parcels of land and moorings were held in individual names. 28I believe that I have now canvassed all the relevant facts necessary to answer all the three questions and I will now turn to answer the three questions.

Question (a) 29There are two amounts in issue, $60,000 and $225,000. It is only with respect to the former that payment is in issue. 30The plaintiff says that when the Second Land Agreement was ended, the deposit of $60,000 was, under the deed of rescission, to be refunded to it and this did not occur. The defendants say that no deposit was ever in fact paid under that agreement. 31There is no doubt and it is common ground that the solicitors for the first and second defendant as a result of the Deed of Rescission returned the deposit of $60,000 paid on the First Land Contract to the plaintiff solicitors. As at that date the plaintiff's solicitor held $149,375 on behalf of the plaintiff, $60,000 related to the deposit on the First Land Contract and $89,375 related to the deposit of the Lot 16 Contract. Shortly thereafter the Second Land Contract was entered into the deposit being the same as under the First Land Contract namely $60,000. 32On the 16th of October 2007 the plaintiff's solicitor records a file note as a result of a phone call from Mr Jarman. It noted the instruction that when the funds arrived $50,000 must be transferred to Ozzie and the remainder to Mr Watson. I rejected part of Mr Jarman's affidavit on this transaction but gave leave to supplement it. He said at T8 "the deposit money was the monies which had been returned to BizLaw and I was asked by the Vendors to distribute the money in a certain way". He pointed out he was asked by Mr Watson, Mr Bares and Stephen Robinson who controlled Ozzie. 33The questioning then went: Q: And they asked you to do what? A: They asked me to distribute the funds in a certain way in relation way to these deposits. Q: And what was the certain way? A: It was a payment to go to Ozzie Erections of $50,000 and the remaining funds to go to Anthony Watson. Q: And did they say anything further in relation to that request? A: That they required it to be done as soon as possible. 34Mr Jarman also said that he had conversations with Mr Watson with respect to the repayment of both the $60,000 and the $225,000 on more than one occasion and the response was "I have not got the money, but I will make endeavours to pay you back". 35BizLaw then created a document (CB190) headed "Authority to Pay Funds" which carried out Mr Jarman's instructions. The document is dated 20 October 2006 but is only signed by Mr and Mrs Bares. However, it contains these words "this payment shall constitute deposit paid pursuant for the contract of sale between Hillington Valley Pty Ltd and Ozzie Erections Pty Ltd and Anthony Rupert Watson to Hillington Valley Pty Ltd Perricoota Boat Club Investments Pty Ltd and Anthony Rupert Watson". 36Mr Pesman and Mr Gunning say this document must be fairly conclusive that the monies paid were not the deposit on the Second Land Contract but were in connection with the sale of Lot 16 saying it is particularly significant that Ozzie was a party to the Lot 16 Contract but not to the Second Land Contract. 37Mr Alstergren says that even if this is so, (which he does not concede) the $60,000 could form part of the $99,375 paid to Mr Watson. However, this is most unlikely as the Lot 16 Contract involved $89,375. 38As I indicated earlier the Contract over Lot 16 was duly completed. 39On the other side of the argument it is significant that no one has ever claimed that the plaintiff should pay any more monies as a deposit on the Second Land Contract nor did anyone ever complain that the required deposit had not been paid. All Mr Watson would say when questioned was that he was not organising the contracts or deposit. Mr Alstergren also says that if the defendants view was correct there is an unexplained overpayment of $60,000 on the Lot 16 Contract. It is hard to see that a business man would just lose sight of his $60,000 that he paid in connection with the First Land Contract. 40Furthermore, there is the evidence that I have referred to recently that when asked for the return Mr Watson said, "I have not got the money but I will make endeavours to pay you back'", not that the money was not due because it was to be part of the final accounting in some joint venture. 41It is a difficulty in this case that there are inconsistencies. It may be because different solicitors were dealing with different parts of the matter or it may be that there was little actual cash being handled by the parties and corners have to be cut. The basal facts are that the $60,000 was the plaintiff's money. His explanation on which he was not cross-examined was that he instructed that the monies to be paid out covered by the authority of the 20th of October 2007 by the other parties who needed money is probably the reason why the authority at CB190 was created. I think it would be wrong to overemphasise its importance. 42I consider that it is more likely than not, on the material which I have recited, that the $60,000 flowing from the rescinded First Land Contract did flow into the Second Land Contract though I do concede that there are inconsistencies. 43Mr Gunning put that the plaintiff's claim failed with respect to the $225,000 because the Second Mooring Contract was void. Voidness was claimed for two reasons: (1)BizLaw had a conflict of interest when the contract was prepared. (2)Some of the land in this contract had already been sold and was covered by the Second Land Contract. 44Even assuming the correctness of the underlying facts neither point would mean that the Second Mooring Contract was void. It is not unusual for solicitors to act for both parties in a conveyancing transaction. Again there is nothing to stop a person entering into two contracts to sell the same piece of land. The usual consequence is that specific performance is granted in respect of one and damages in respect of the other: See Craney v Bugg [1971] 1 NSWLR 13. 45Accordingly, I answer question (a) "Yes".

Question (b) 46There is no doubt that in one sense there was a joint venture being carried on amongst the parties. There is no doubt that the documents contain statements of intention to do this. However, the way the documents were prepared and signed and what happened subsequently shows that the original intention was not always carried out as circumstances changed the intentions and the arrangements changed, partly, it would appear, due to the GFC. 47The dealings between the parities involve two tracts of land, which are joined. These are identified as the Deep Creek Marina, which is to the west, and the Perricoota Marina Village to the east. 48Although some of the activities of the so-called joint venture were to be carried on each tract there was no overarching agreement dealing with the two areas. There was no agreement between the parties as to when contribution for development expenses, which one would expect would occur, would have to be paid could be compelled nor any mention of how the joint venture could be terminated. There were of course some particular provisions such as requirements of the vendors to comply with council requirements at their own expense but there was no general scheme for funding any common venture. 49I have already considered the two "joint venture" documents, and it is clear from what I have said that they could not constitute any joint venture. 50It is just not sufficient in the documents that have been tendered nor in the conduct of the parties to enable me to hold that there was any joint venture. 51At a late stage the parities considered dealing with some of the matters that were concerning them by the execution of a Memorandum of Understanding. The second draft of this memorandum is in CB542 to 544. The document was never executed, however, the defendants say that it contains evidence of what the parties acknowledged as being the situation. 52CB543 sets out part of the draft Memorandum of Understanding, being the section headed "joint venture". Section A under this heading is as follows "The Parties acknowledge that there is to be a reconciliation of their capital and loan contributions in respect of Lot 16/DP270076 (Lot 16)." 53Although the defendants say this is significant in showing there was a joint venture and there was to be a reconciliation to my mind it operates in some respects in the opposite direction, that is that any joint venture was confined to the land held by the parties as to one third tenant in common namely Lot 16. 54I find it odd that there was such emphasis in the first defendant's submission on there being a reconciliation agreement. Questioning of counsel suggested that even he was not too clear what was meant by the word reconciliation. I can see no evidence that the parties ever agreed, apart from Lot 16, as to on what principles there was to be any accounting for their various expenses over the two tracts of land. Indeed there being so many separate contracts would indicate that it was more likely than not that each would pay for their own piece of land. Apart from some rather nebulous provisions in clause 12 of the Joint Venture Development Agreement there was nothing ever laid down as to how capital should be contributed so it might just be possible to infer that it would be in accordance with the share of the property that each owned. However, that is speculative. 55There is not the evidence to show that there was any reconciliation agreement. 56Even if there had of been a reconciliation agreement of the kind suggested by Mr Watson, it is difficult to imagine that it could have been of a kind that would make the plaintiff liable to account to the other joint venturers. If this were the case it would mean that the plaintiff having paid the deposit, and later terminating the contract due to lack of performance, would then be liable to account to the other joint venturers for a share of the deposit which it alone had paid, and this in circumstances where the other joint venturers were arguably responsible for the lack of performance. 57Accordingly, I answer this question "No".

Question (c) 58I think it follows from what I have said above that this question should also be answered "No". 59As I indicated yesterday I am merely going to announce my answers to the questions and give my reasons at this stage. Mr Alstergren says that an appropriate consequential order is that Mr Watson should be ordered to pay $285,000 plus interest from 21st of March 2009. It would seem to me that in a case of money had and received the cause of action accrues and, accordingly, interest normally flows from the time when the defendant no longer has any right to retain the money see Nu-Line Constructions Pty Ltd v Fowler [2014] NSWCA 51. 60Although Mr Alstergren also asks for an order against Hillington, there is insufficient material to justify such an order. There is no evidence that Hillington was ever in receipt of any part of the $60,000 deposit paid in respect of the Second Land Contract. Hillington was not even a party to the First Mooring Contract, as it never executed it. 61If it were not for the cross-claims, which I have not yet considered, I would think the order against Mr Watson is the appropriate order to make. I have been told that the cross-claims do not affect the plaintiff's entitlement to monies and if that is so, then a verdict should be given now. However, the best course is to stand the matter over for a couple of weeks so that these reasons can be digested and full attention given to the consequences. 62The only other matter is the question of costs. Essentially this claim is a Common Law claim for money had and received, the amount involved is only about $300,000. Normally a common law claim for that amount if brought in the Supreme Court would not carry costs. Mr Alstergren strongly resisted my suggestion that there should be no order as to costs and that matter can be considered when the matter is next in the list. 63Accordingly, all I will do at this stage is to publish these reasons, answer the questions in accordance with the answers I have already stated, and stand the matter over for orders to be brought in. It will also be necessary to consider making case management orders for the continuation of the remaining issues in the proceedings.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 April 2014

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